Sirius Satellite Radio Inc
Total Page:16
File Type:pdf, Size:1020Kb
SIRIUS SATELLITE RADIO INC FORM 10-K (Annual Report) Filed 3/12/2004 For Period Ending 12/31/2003 Address 1221 AVENUE OF THE AMERICAS 36TH FLOOR NEW YORK, New York 10020 Telephone 212-899-5000 CIK 0000908937 Industry Broadcasting & Cable TV Sector Services Fiscal Year 12/31 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR FISCAL YEAR ENDED DECEMBER 31, 2003 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER 0-24710 SIRIUS SATELLITE RADIO INC. (EXACT NAME OF REGISTRANT IN ITS CHARTER) DELAWARE 52-1700207 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NUMBER) INCORPORATION OF ORGANIZATION) 1221 AVENUE OF THE AMERICAS, 36TH FLOOR NEW YORK, NEW YORK 10020 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 584-5100 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NAME OF EACH EXCHANGE TITLE OF EACH CLASS: ON WHICH REGISTERED: -------------------- -------------------- None SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Common Stock, par value $.001 per share (TITLE OF CLASS) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes [x] No [ ] On March 5, 2004, the aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, using the closing price of the Registrant's common stock on such date, was $2,723,909,711. The number of shares of the Registrant's common stock outstanding as of March 5, 2004 was 1,230,757,540. DOCUMENTS INCORPORATED BY REFERENCE Information included in our definitive proxy statement for our 2004 annual meeting of stockholders to be held on May 25, 2004 is incorporated by reference in Items 10, 11, 12, 13 and 14 of Part III of this report. SIRIUS SATELLITE RADIO INC. 2003 FORM 10-K ANNUAL REPORT TABLE OF CONTENTS ITEM NO. DESCRIPTION PAGE -------- ----------- ---- PART I Item 1. Business.................................................... 2 Item 2. Properties.................................................. 22 Item 3. Legal Proceedings........................................... 23 Item 4. Submission of Matters to a Vote of Security Holders......... 23 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters....................................... 24 Item 6. Selected Consolidated Financial Data........................ 24 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations................................. 25 Item 7A. Quantitative and Qualitative Disclosures About Market Risks..................................................... 42 Item 8. Financial Statements and Supplementary Data................. 42 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.................................. 42 Item 9A. Controls and Procedure...................................... 42 PART III Item 10. Directors and Executive Officers of the Registrant.......... 42 Item 11. Executive Compensation...................................... 42 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters................ 43 Item 13. Certain Relationships and Related Transactions.............. 43 Item 14. Principal Accountant Fees and Services...................... 43 PART IV Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K....................................................... 43 Signatures 1 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS The following cautionary statements identify important factors that could cause our actual results to differ materially from those projected in forward-looking statements made in this Annual Report on Form 10-K and in other reports and documents published by us from time to time. Any statements about our beliefs, plans, objectives, expectations, assumptions, future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as 'will likely result,' 'are expected to,' 'will continue,' 'is anticipated,' 'estimated,' 'intends,' 'plans,' 'projection' and 'outlook.' Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this Annual Report on Form 10-K and in other reports and documents published by us from time to time, particularly the risk factors described under 'Business -- Risk Factors' in Part I of this Annual Report on Form 10-K. Among the significant factors that could cause our actual results to differ materially from those expressed in the forward-looking statements are: our competitive position versus XM Satellite Radio, the other satellite radio service provider in the United States, which has substantially more subscribers than us and may have certain competitive advantages; our dependence upon third parties to manufacture, distribute, market and sell SIRIUS radios and components for those radios; the unproven market for our service; and the useful life of our satellites, which have experienced circuit failures on their solar arrays and other component failures and may not be covered by insurance. Because the risk factors referred to above could cause actual results or outcomes to differ materially from those expressed in any forward- looking statements made by us or on our behalf, you should not place undue reliance on any of these forward-looking statements. In addition, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which the statement is made, to reflect the occurrence of unanticipated events or otherwise. New factors emerge from time to time, and it is not possible for us to predict which will arise or to assess with any precision the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. ITEM 1. BUSINESS We are a provider of satellite radio service, currently offering over 100 streams -- 61 streams of commercial-free music and over 40 streams of news, sports, talk, entertainment, traffic, weather and children's programming -- to subscribers throughout the continental United States. Our 61 original streams of commercial-free music are produced at our national broadcast studio in New York City and cover virtually every genre of music. Our non-music streams include programming from CNN, ESPN, NPR, FOX News, The Weather Channel and traffic for America's top 20 markets from Westwood One, a leading provider of traffic reports. We are also the leading satellite radio provider of live sports programming, featuring up to 40 National Hockey League and National Basketball Association games each week, and have agreed to broadcast all National Football League games and become the Official Satellite Radio Partner of the NFL. Our primary source of revenue is subscription fees, with most of our customers subscribing to SIRIUS on either a monthly or annual basis. We also derive revenue from activation fees, the sale of advertising on our non-music channels and the direct sale of SIRIUS radios. As of December 31, 2003, we had 261,061 subscribers. To receive our service, subscribers use SIRIUS radios, which are sold by automakers, mobile audio dealers and other retailers. Currently, the majority of our subscribers purchase their SIRIUS radios at Best Buy, Circuit City and other national, regional and local retailers. SIRIUS radios are currently offered under brands such as Kenwood, JVC, Audiovox and Clarion at over 6,500 retail 2 locations. In addition, we recently announced agreements for SIRIUS radios to be sold in over 7,000 RadioShack stores nationwide and by EchoStar's DISH Network, which has over nine million satellite television subscribers across America. We expect an increasing number of subscribers to be generated through our relationships with car companies. SIRIUS radios are currently offered as an option in over fifty car models. We have exclusive agreements with DaimlerChrysler, Ford and BMW to offer SIRIUS radios as factory or dealer-installed equipment in Chrysler, Dodge, Jeep, Mercedes, Ford, Lincoln, Mercury, Volvo, Mazda, Jaguar, Land Rover, BMW and MINI vehicles and Freightliner and Sterling heavy trucks. We also have relationships with Nissan, Infiniti, Volkswagen and Audi to offer SIRIUS radios as factory or dealer-installed equipment in their vehicles.