Sirus Annual Report

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A N N U A L P R O X Y

R E P O R T

S T A T E M E N T

TABLE OF CONTENTS

Annual Report Letter to Stockholders Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management’s Report on Internal Control over Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Market for SIRIUS’ Common Stock and Related Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Quantitative and Qualitative Disclosure About Market Risks . . . Reports of Independent Registered Public Accounting Firm . . . Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . Notice of Annual Meeting of Stockholders and Proxy Statement 1 22 23 23 24 26 31

Dear Stockholders,

2004 was by far the most exciting year in the history of SIRIUS. During the year, we announced and began numerous initiatives in programming, product development, and our automotive distribution channel that clearly appealed to consumers and positively positioned us for spectacular growth in the future. We also over delivered on promises to add a large number of new subscribers, to increase our market share and to significantly lower our subscriber acquisition costs, or SAC. Plus, we continued to maintain a strong balance sheet with substantial cash. As we move into 2005, we will continue to make progress in all of these areas while also controlling our costs. Our goal is to build SIRIUS into an entertainment powerhouse, offering the best programming in satellite radio—and in all of radio! The market opportunity for satellite radio is huge. • More than 200 million vehicles are on the road today, and approximately 16-17 million new cars and light trucks are sold each year in the U.S. • There are also more than...