MARTHA
STEWARTviva
The HighwayThe Verge
INDIE
EWTN
the
message P O T U S the
Met Opera
CATHOLIC
CHANNEL
WRN
ESPN
ESPN’s
Sports Talk Channel
Radio Highway
Siriusly Sinatra
Real JAZZ
SIRIUS XM
FC
SYMPHONY HALL
SiriusXM College Sports Nation electric
areadeep tracks
Liquid Metal
WORLD
The Bridge
Bluegrass Junction Jam On
PEARL JAM
Sirius XM
the coffee
N P R Ta l k LOFT
E STREET RADIO
O C TA N E NFL
spa
house
CNBC
STUDIO
The Spectrum
npr now
on
’
E STREET RADIO
Family Talk
FOX
NEWS
spa
Faction
Blue Collar BUSINESS
Ozzy’s Boneyard
Chansons
OutQ
CNN
escape
AMI
NBA
MSNBC
C-SPAN
LAUGH
MAD DOG
ESPN XTR A
HLN
ROAD DOG TRUCKING
CNN
VIVID RADIO
Elvis RADIO
THE SPECTRUM
the
heat
PuLSe RADIO
HIPHOP
NATION
BACK SPIN
OPRAH
R ADIO
viva
Spa
Classıc vinyl
USA
JOINT
D e e p Tra c k
’60son6
SOUL TOWN
Love STARS 70s 7
OUTLAW FOX
the PuLSe
E Street Radio
EWTN
THE
VILLAGE LOFT
PRIME COUNTRY
SHADE 45 BPM
SERVICE
THE
HAIR NATION
OZZY’s
BONEYARD
Classics
Heart
&Soul Radio
FACTION
Heart
&
OWN BBC
msnbc
Soul
THALL
LITHIUM
RURAL RADIO
54
ICEBERG
NFL
SiriusXM FANTASY SPORTS RADIO
CFL
ICI R a DIO-C a N a D a P re MI ère
CHANNEL CANADA LAUGHS
POP2K
The Bridge
the
Ica
NASCAR son
E LV IS
Deep Tracks
bpm
THE OPIE & ANTHONY CHANNEL
POTUS
ON BROADWAY Disney heat E S P N
DOCTOR RADIO JOiNT CBC music
Pearl Jam
PINK FLOYD
CNN
the JOiNT
S I R I U S X M CHILL
IZOD
INDIE
CFL
bpm
CANADA THE GROOVE
Caliente
TALKS
Joint CNN CINEMAGIC
O U T L AW CO U N T RY
NBA 20on20
CHILL electric area
COMEDY
Bloomberg ’80s 8
CENTRAL Entertainment RADIO
on
SHADE
45
ELVIS RADIO PRIME COUNTRY ’40s 4
ALT NATION EMINEM
BLUEGRASS ’50s 5 F OX X H O L E
KIDS JAM
JUNCTION
a
a a a re ère
SPORTS RADIO
SIRIUSXM PATRIOT
T H E H I G H W AY
SiriusXM College Sports Nation
RADIO
enLighten
on
THE CATHOLIC CHANNEL
R a d i o M a r g a r i t av i l l e
MLB NETWORK RADIO the LOFT
SiriusXM OutQ
ON
ICI R DIO-C N D
radio 3
HIPHOP
NATION
HOWARD ’90s on 9
PEARL JAM
STERN
xmu
NETWORK
radio one
LATITUDE FRANCO
POP2K
SYMPHONY
HALL
FOX
Classic NEWS
CANADA
REWIND
HAIR NATION
Patriot
360
LIQUID METAL AMI
Annual Report 2013
Sirius XM Canada Holdings Inc.
Heart & Soul
The Spectrum
1 st WAVE
P
MI
GRAT E FU L D E A D CH A N N E L attitude
BB KING’S BLUESVILLE
ESCAPE
SIRIUS MLB CBC
Octane
on
B.B. KING’S BLUESVILLE
OUTQ
RADIO
ICEBERG
PLACE
The M e ssa g e
KFPRAISE
KIRK FRANKLIN’S
SIRIUS CHILL the blend
XMRADIOALT NATION
FRANCO
ICEBERG
Radio Disney
GRATEFUL DEAD
PUBLIC
ICEBERG
Elvis NHL
Blue Collar Comedy
First Wave
LATITUDE FRANCO
NETWORK
RADIO
S I R I U S X M spa
SPORTS
BONE YARD
bpm
ZONE SPORTS
PLAYBYPLAY
Chansons
LAUGH USA
THE SPECTRUM
BBC
GARAGE WATERCOLORS
RAW DOG UNDERGROUND
Chansons MULTICULTURAL radio
Vivid Radio
MET OPERA RADIO
On Broadway
C O M E D Y E STREET RADIO
SIRIUS XM
HITS 1
CANADA
Dear Shareholders,
2013 was a successful year for SiriusXM Canada, one in which we met or exceeded all of the goals we
set. We grew subscribers, launched our pre-owned vehicle program, secured renewals with the CRTC
and a major OEM partner, and released our streaming technology platform (“Satellite 2.0”) offering.
We achieved record levels of revenue, adjusted EBITDA1 and free cash flow, and exited the year with
a strong balance sheet to help support our growth efforts.
Our strong operational and financial performance enabled us to pay $54 million in shareholder
dividends. These dividends, coupled with strong price appreciation that saw our share price almost
double during the course of the year, provided our shareholders with a substantial total return.
While we are proud of the progress we have made over the last year, we are now turning our full
attention to the growth potential of our business for fiscal 2014 and beyond. Our strategic priorities
remain largely intact, and our ability to achieve them will be paramount to our success.
Growing Subscribers
Our subscribers are the backbone of our business and we continue to develop innovative ways to
keep them engaged and entertained. Since the merger of Sirius Canada and XM Canada two years
ago, we’ve recorded a net increase of more than 440,000 total subscribers. This is a significant number
and a testament to the execution of our overall strategy and the value of our service offerings. With
more than 2.4 million Canadians subscribing to satellite radio, SiriusXM Canada is the largest media
subscription business in the country2.
Rising penetration rates, as our satellite receivers were integrated into more new vehicle models, played
a key role in our subscriber growth in fiscal 2013. Since 2009 our penetration rate has increased from
33% to 58%. Now, more than 250 vehicle models are currently factory-installed with SiriusXM satellite
receivers.
Capitalizing on the Pre-Owned Vehicle Opportunity
Our expansion into the pre-owned vehicle market has been a success so far. Since the launch in Q2
of fiscal 2013, we have enrolled more than 800 franchised dealers in the program. This represents a
significant opportunity for us, given that this pre-owned market is twice the size of the new vehicle market.
And it’s only going to get bigger. New satellite-enabled vehicles that roll off the line today become
a pre-owned vehicle opportunity down the road. Currently, there are approximately five million satelliteradio-enabled vehicles on the road in Canada. This number is expected to exceed ten million by the
end of 2018.
We have plans to drive penetration and conversion within this market; the aforementioned franchise
dealers and non-franchised dealers will be our primary focus in the near term. A longer-term goal is
to expand the program to include one-to-one sales for vehicles that are sold privately through various
internet-based portals.
Delivering Strong Financial Results
Our strong financial results are a direct reflection of the steady rise in subscribers, a key growth lever
for SiriusXM Canada. Year-over-year, revenue increased $29.3 million, or 11 percent, to $288.9 million.
This year, we grew Adjusted EBITDA 48 percent to a record $68.7 million. We also achieved our first
full year of positive net income with $12.2 million reaching the bottom line. Finally, free cash flow growth
of 35 percent was also impressive, rising to $49.6 million in fiscal 2013.
Our strong financial performance enabled us to return capital directly back to shareholders. This year,
we announced a special one-time dividend, and implemented a regular quarterly dividend, which we
subsequently increased 27 percent during the year, returning a total of $54 million back to shareholders.
1. Adjusted EBITDA is defined as earnings before integration, severance and merger costs, stock-based compensation, interest income and
expense, taxes, amortization, fair value adjustments arising due to purchase price accounting, gain on revaluation of derivative, and foreign
exchange gains and losses.
2. A
s per available information, October 2013. Data excludes the non-comparable business segments of the above companies (i.e., Wireless
and Wireline) and compares the relevant segments only. Source – Various company filings.
More Content, More Places, More Control
Our ability to provide subscribers with entertainment that is unmatched is critical to our success.
We will continue to provide our subscribers with the exclusive, world-class and compelling content
they love. While we believe the car will always be a pillar of strength for us, with the launch of
Satellite 2.0 we continue to offer our subscribers more ways to connect with our content, including
on smartphones and tablets and through our new browser-based player and mobile apps. We’re focused
on providing access to our content on all types of devices, anytime, anywhere. Lastly, we’re giving
our subscribers the ability to personalize our content with innovative new tools and features. With
the advent of MySXM, our subscribers now have more control than ever over the content they love.
Make no mistake: we have a strong competitive position in the entertainment market. We have exclusive
and compelling content, available on a broad range of devices with the ability to customize the listening
experience. We give our subscribers what they want, where they want it, and how they want it.
Market Recognition
While our record financial results may speak for themselves, we were extremely pleased to receive
additional industry recognition. In February 2013, for the fourth consecutive year, we were named as
one of Canada’s Best Managed Companies. This designation, bestowed by Deloitte, CIBC Commercial
Banking, National Post, Queen’s School of Business and MacKay CEO Forums, honours Canadian
companies that have demonstrated exceptional business results following a rigorous and independent
evaluation process. We were also recognized by Profit Magazine as one of Canada’s 500 fastest growing
companies based on five-year revenue growth.
2014 and Beyond
There is no doubt that our market will continue to evolve. Over the last 10 years, we have been
witness to remarkable change within our industry. The result is a wide array of choice for consumers.
Within this changing landscape, we are proud of what we have achieved and excited by the
opportunities in front of us. With our growing subscriber base, recurring revenue stream, strong cash
flow, exclusive content portfolio, and market leading technology, we are in an enviable competitive
position; one capable of providing our current and future subscribers with an unmatched entertainment
experience and our shareholders with a solid return on investment.
I would like to thank our business partners, our Board of Directors, and our employees for their
unwavering support and dedication over the last year. To all of our shareholders and prospective
shareholders, I look forward to updating you on our progress as fiscal 2014 unfolds.
Sincerely,
Mark Redmond
President and Chief Executive Officer
Forward-Looking Statements
Certain statements included in this letter may be forward-looking in nature. Such statements can be identified by the use of forward-looking
terminology such as “expects,” “may,” “will,” “should,” “intend,” “plan,” or “anticipates” or the negative thereof or comparable terminology, or
by discussions of strategy. Forward-looking statements include estimates, plans, expectations, opinions, forecasts, projections, targets, guidance,
or other statements that are not statements of fact, including with respect to future performance. Statements regarding our past performance
should not be interpreted as projections or forecasts of future performance.
Although SiriusXM Canada believes that the expectations reflected in forward-looking statements are reasonable, it can give no assurance
that such expectations will prove to have been correct, including with respect to the ability of the Company to pay dividends in the future.
SiriusXM Canada’s forward-looking statements are expressly qualified in their entirety by this cautionary statement. SiriusXM Canada makes
no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date any such
statement is made, except as required by applicable law. Additional information identifying risks and uncertainties is contained in Sirius XM
Canada Holdings Inc.’s filings with the Canadian securities regulators, available at www.sedar.com.
MARTHA
STEWARTviva
The HighwayThe Verge
INDIE
EWTN
the
message P O T U S the
Met Opera
CATHOLIC
CHANNEL
WRN
ESPN
ESPN’s
Sports Talk Channel
Radio Highway
Siriusly Sinatra
Real JAZZ
SIRIUS XM
FC
SYMPHONY HALL
SiriusXM College Sports Nation electric
areadeep tracks
Liquid Metal
WORLD
The Bridge
Bluegrass Junction Jam On
PEARL JAM
Sirius XM
the coffee
N P R Ta l k LOFT
E STREET RADIO
O C TA N E NFL
spa
house
CNBC
STUDIO
The Spectrum
npr now
on
’
E STREET RADIO
Family Talk
FOX
NEWS
spa
Faction
Blue Collar BUSINESS
Ozzy’s Boneyard
Chansons
OutQ
CNN
escape
AMI
NBA
MSNBC
C-SPAN
LAUGH
MAD DOG
ESPN XTR A
HLN
ROAD DOG TRUCKING
CNN
VIVID RADIO
Elvis RADIO
THE SPECTRUM
the
heat
PuLSe RADIO
HIPHOP
NATION
BACK SPIN
OPRAH
R ADIO
viva
Spa
Classıc vinyl
USA
JOINT
D e e p Tra c k
’60son6
SOUL TOWN
Love STARS 70s 7
OUTLAW FOX
the PuLSe
E Street Radio
EWTN
THE
VILLAGE LOFT
PRIME COUNTRY
SHADE 45 BPM
SERVICE
THE
HAIR NATION
OZZY’s
BONEYARD
Classics
Heart
&Soul Radio
FACTION
Heart
&
OWN BBC
msnbc
Soul
THALL
LITHIUM
RURAL RADIO
54
ICEBERG
NFL
SiriusXM FANTASY SPORTS RADIO
CFL
ICI R a DIO-C a N a D a P re MI ère
CHANNEL CANADA LAUGHS
POP2K
The Bridge
the
Ica
NASCAR son
E LV IS
Deep Tracks
bpm
THE OPIE & ANTHONY CHANNEL
POTUS
ON BROADWAY Disney heat E S P N
DOCTOR RADIO JOiNT CBC music
Pearl Jam
PINK FLOYD
CNN
the JOiNT
S I R I U S X M CHILL
IZOD
INDIE
CFL
bpm
CANADA THE GROOVE
Caliente
TALKS
Joint CNN CINEMAGIC
O U T L AW CO U N T RY
NBA 20on20
CHILL electric area
COMEDY
Bloomberg ’80s 8
CENTRAL Entertainment RADIO
on
SHADE
45
ELVIS RADIO PRIME COUNTRY ’40s 4
ALT NATION EMINEM
BLUEGRASS ’50s 5 F OX X H O L E
KIDS JAM
JUNCTION
a
a a a re ère
SPORTS RADIO
SIRIUSXM PATRIOT
T H E H I G H W AY
SiriusXM College Sports Nation
RADIO
enLighten
on
THE CATHOLIC CHANNEL
R a d i o M a r g a r i t av i l l e
MLB NETWORK RADIO the LOFT
SiriusXM OutQ
ON
BB KING’S BLUESVILLE
ICI R DIO-C N D
radio 3
PEARL JAM
STERN
xmu
NETWORK
radio one
LATITUDE FRANCO
HAIR NATION
Patriot
POP2K
HIPHOP
NATION
SYMPHONY
HALL
FOX
Classic NEWS
CANADA
REWIND
360
LIQUID METAL AMI
Heart & Soul
The Spectrum
1 st WAVE
P
MI
GRAT E FU L D E A D CH A N N E L attitude
HOWARD ’90s on 9
ESCAPE
SIRIUS MLB CBC
Octane
on
B.B. KING’S BLUESVILLE
OUTQ
RADIO
ICEBERG
PLACE
The M e ssa g e
KFPRAISE
KIRK FRANKLIN’S
SIRIUS CHILL the blend
XMRADIOALT NATION
FRANCO
ICEBERG
Radio Disney
GRATEFUL DEAD
PUBLIC
ICEBERG
Elvis NHL
Blue Collar Comedy
First Wave
LATITUDE FRANCO
NETWORK
RADIO
S I R I U S X M spa
SPORTS
BONE YARD
bpm
ZONE SPORTS
PLAYBYPLAY
Chansons
LAUGH USA
THE SPECTRUM
BBC
GARAGE WATERCOLORS
RAW DOG UNDERGROUND
Chansons MULTICULTURAL radio
Vivid Radio
MET OPERA RADIO
On Broadway
C O M E D Y E STREET RADIO
Management’s
Discussion and Analysis
SIRIUS XM
HITS 1
CANADA
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
Management’s discussion and analysis (“MD&A”) discusses the significant factors affecting the results of operations
and financial position of Sirius XM Canada Holdings Inc. (“SXM”, “we”, “us”, “our” or the “Company”).
This MD&A which is current as of November 14, 2013, should be read in conjunction with the Company’s audited
Consolidated Financial Statements dated August 31, 2013 and notes attached thereto and other recent securities
filings available on SEDAR at sedar.com.
The financial information presented herein has been prepared on the basis of IFRS and is expressed in Canadian
dollars unless otherwise noted.
The Class A Subordinate Voting Shares of SXM trade on the Toronto Stock Exchange (TSX) under the stock symbol
XSR.
Forward-Looking Disclaimer
This discussion contains certain information that may constitute forward-looking statements within the meaning of securities laws. These
statements relate to future events or future performance and reflect management’s expectations and assumptions regarding the growth,
results of operations, performance and business prospects and opportunities of the Company on a consolidated basis. In some cases,
forward-looking statements can be identified by terminology such as “may”, “would”, “could”, “will”, “should”, “expect”, “plan”, “intend”,
“anticipate”, “believe”, “estimate”, “predict”, “potential”, “continue”, “seek” or the negative of these terms or other similar expressions
concerning matters that are not historical facts. In particular, statements regarding the Company’s objectives, plans and goals, including
future operating results, economic performance and subscriber recruitment efforts involve forward-looking statements. A number of factors
could cause actual events, performance or results to differ materially from what is projected in the forward-looking statements.
Although the forward-looking statements contained in this discussion are based on what management of the Company considers are
reasonable assumptions based on information currently available to it, there can be no assurance that actual events, performance or results
will be consistent with these forward-looking statements, and management’s assumptions may prove to be incorrect.
Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from any future results, performance or achievements expressed
or implied by the forward-looking statements. Our financial projections are based on estimates regarding expected future costs and expected
revenue, which are fully described in this MD&A.
Among the significant factors that could cause our results to differ from those expressed in the forward-looking statements are:







The Company’s reliance on its exclusive relationship with Sirius XM Radio Inc. (“Sirius XM”);
The Company’s competitive position versus other forms of audio and video entertainment;
The Company’s reliance on automakers and automobile industry sales in Canada;
General economic conditions in Canada;
The Company’s ability to manage customer attrition and average monthly subscription revenue per subscriber;
The impact of any application of or changes to governmental regulations, including any copyright legislation; and
The factors discussed in the section entitled “Risks and Uncertainties” of this MD&A and in the section entitled “Risk Factors” in
the Company’s Annual Information Form for the financial year ended August 31, 2013.
Other than as required by applicable Canadian securities law, the Company does not update or revise any forward-looking statements to
reflect new information, future events or otherwise. These forward-looking statements are subject to risks and uncertainties that could cause
actual results or events to differ materially from expectations. These include but are not limited to the risk factors included in this MD&A
(including those listed under the heading “Risks and Uncertainties”) in addition to the risks itemized in our Annual Information Form (“AIF”)
for the fiscal year ended August 31, 2013. Readers are advised to review these risk factors for a detailed discussion of the risks and
uncertainties affecting the Company’s business. Readers should not place undue reliance on forward-looking statements.
1
Sirius XM Canada Holdings Inc. Annual Report 2013
Management’s Discussion and Analysis
Year Ended August 31, 2013
This MD&A contains the following sections:
Forward-Looking Disclaimer .........................................................................................................1
Overview..........................................................................................................................................2
Developments during the Year ......................................................................................................4
Financial and Operational Highlights ............................................................................................5
Summary of Financial and Operating Results ..............................................................................7
Discussion of Financial and Operating Results ...........................................................................10
Liquidity and Capital Resources ..................................................................................................24
Off-Balance Sheet Arrangements................................................................................................27
Arrangements, Relationships and Transactions with Related Parties ......................................27
Critical Accounting Estimates and Judgments ...........................................................................29
International Financial Reporting Standards (“IFRS”) ..............................................................32
Risks and Uncertainties ................................................................................................................33
Outstanding Share Data and Other Information .......................................................................36
Definitions of Industry Terminology ...........................................................................................37
Non-GAAP Financial Measures ...................................................................................................38
Overview
Our Business and Strategy
SXM is one of the largest Canadian subscription based media companies as measured by the number of
subscribers, with 2.4 million subscribers1. We have the second highest radio revenues of any company in Canada
with an estimated 14% market share2. Our vision is to be the leading premium digital audio entertainment and
information service provider in Canada. Our strategy is founded on the principles of acquiring subscribers in a cost
effective manner, retaining subscribers through enhancing the value proposition to our subscribers and improving
business efficiencies.
Satellite Radio in Canada offers 120 - 130 channels, including commercial-free music as well as news, talk, sports and
children’s programming. This includes over 12 Canadian channels designed and developed from studios in Toronto,
Montreal and Vancouver. We continue to leverage our unique programming assets, such as our broadcasting
agreement with the Canadian Broadcasting Corporation (“CBC”) and the Canadian Football League (“CFL”). The
Company also has access to content through agreements between Sirius XM Radio Inc. and the National Hockey
League (“NHL”), the National Football League (“NFL”), Major League Baseball (“MLB”), Oprah Winfrey, Howard
Stern, NASCAR, the Professional Golfers’ Association of America (“PGA”) and others.
In-Vehicle: New and used car strategy
From an in-vehicle perspective the Company has a two-pronged strategy based on both new and pre-owned vehicles
to increase subscribers. Our target market in Canada includes more than 23 million registered vehicles on the road,
and approximately 1.77 million new vehicles forecasted to be sold in calendar year 20133. Currently all major
automobile manufacturers in Canada have agreements with SXM for the installation of satellite radios. We are the
leader in digital audio entertainment distribution and information delivered via satellite to new vehicles sold in
1
As per available information, October 2013. Data excludes the non-comparable business segments of the above companies (i.e. Wireless and
Wireline) and compares the relevant segments only. Source – Various company filings.
2
3
Based on the CRTC’s Communication Monitoring Report, published September 2013.
DesRosiers automotive report published in September 2013.
TSX: XSR
Sirius XM Canada Holdings Inc. Annual Report 2013
Page 2
2
Management’s Discussion and Analysis
Year Ended August 31, 2013
Canada. The Satellite radio service is expected to be factory-installed in approximately 58% of new vehicles to be
sold in model year 2013. Currently it is estimated that there are approximately 5.0 million satellite radio enabled
vehicles in the marketplace as at August 31, 2013.
Aftermarket and other platforms
Along with the in-vehicle experience, consumers can also enjoy satellite radio out of their vehicles, using portable
radio receivers, by streaming content to the home, on their desktops and using apps built for mobile devices. SXM
satellite radio receivers are available at leading retailers across Canada such as Best Buy, Canadian Tire, Costco,
Future Shop, The Source, Wal-Mart, Target and other national, regional and independent retailers.
Base and Premier services
Our primary source of revenue is subscription fees, with most of our customers subscribing on a multi-year, annual,
quarterly, or monthly basis. Discounts are offered for long-term, prepaid subscription plans, as well as discounts for
multiple subscriptions. Other sources of revenue include music royalty fees, activation and other subscription-related
fees, advertising revenues, the direct sale of satellite radios and accessories through our call centres and website,
and other ancillary services such as data and weather services. As indicated below, the Company now offers a range
of additional services in addition to its base subscription offering.
In certain instances, automakers include a subscription to our radio services in the sale or lease of their vehicles.
The length of these prepaid subscriptions varies from three to twelve months. In certain instances we also receive
subscription payments from automakers in advance of our service being activated. We also reimburse various
automakers for certain costs associated with the installation of satellite radios in their vehicles. These costs which
we include as subsidy costs tend to follow seasonal patterns based on manufacturing schedules by the automakers
and tend to be higher in the second half of the fiscal year. Consequently operating income, EBITDA, Free Cash Flow
and other financial metrics may vary on a quarterly basis.
Strategic Goals
While we intend to continue our efforts to minimize costs in all areas of the business, our strategic priorities are to
grow the subscriber base through initiatives in three areas: New vehicles, pre-owned vehicles and advanced
technologies related to the SXM 2.0 architecture and increase profitability and free cash flow. Acquiring subscribers
through the new vehicle segment of the market remains our most attractive and significant opportunity to grow our
subscriber base.
The company is expected to benefit from strong fundamentals that underpin new vehicle sales which are expected
to generate steady growth of approximately 2% to 3% over the next few years, according to industry consultant
DesRosiers Automotive. Our goal is to increase penetration from the current level of approximately 58% to above
60% in the next couple of years.
Pre-owned vehicles have now emerged as a new and important opportunity for us. As initial purchasers begin to
trade in their satellite-radio equipped models for newer vehicles this leaves a significant number of satellite-equipped
used vehicles. The market for pre-owned vehicles can be divided in three categories: Certified Pre-owned (“CPO”),
Franchised Dealers and Non-Franchised & Private Sales. Our focus will be on the CPO and Franchised Dealers
categories as these areas provide the most significant opportunities given they have a higher proportion of vehicles
equipped with a satellite receiver. We continue to work hard to sign up both CPO programs with OEM partners
and franchised dealers. On the franchised dealer side, our focus is on high-volume, high-vehicle penetration dealers
– these are the dealers that really have the opportunity to grow trial subscribers in SiriusXM satellite equipped
vehicles. In the CPO segment, we anticipate adding an additional ten partners in 2014 in addition to the current
three we already have. On the Franchised Dealers side we have over 800 dealers that are now actively participating
in the program.
3
TSX: XSR
Page 3
Sirius XM Canada Holdings Inc. Annual Report 2013
Management’s Discussion and Analysis
Year Ended August 31, 2013
Our third strategic imperative is continued innovation to ensure we remain relevant as the market for audio
entertainment evolves. We will continue to make investments in several areas of the business to ensure our
subscribers can consume our content via both satellite and Internet Protocol (“IP”) delivered technologies. We
believe SiriusXM’s two platforms (Satellite and IP) and service provides a significant advantage over IP-only
competitors.
Developments during the Year
Dividend Policy, Initiation of Quarterly Dividends and Special Dividend
To return value to the shareholders, on November 16, 2012, the Board of Directors instituted a dividend policy and
announced a special dividend and initiation of quarterly dividends equal to $0.0825 to all issued and outstanding Class
A Subordinate Voting Shares (“Class A Shares”) and Class C Non-Voting Shares (“Class C Shares”) and one-third
of $0.0825 to Class B Voting Shares (“Class B Shares”). After four dividend payments, including the special dividend,
On July 10, 2013, the Board of Directors announced an increase in the quarterly dividend payable under the policy
of approximately 27% to $0.1050 per Class A Share and Class C Share and $0.0350 per Class B Share, which was
paid on August 22, 2013.
Renewal of CRTC License
On November 16, 2012, the Canadian Radio-television and Telecommunications Commission (CRTC) renewed the
Company’s broadcast license for a six-year period expiring on August 31, 2018. The CRTC granted the Company’s
request to operate under a unified license for both the XM and Sirius broadcasting undertakings. Under the renewed
terms of the license, the Company must contribute to eligible initiatives under the CRTC’s Canadian Content
Development (CCD) framework; previously the Company had contributed under the former Canadian Talent
Development (CTD) regime. The Company’s CCD contribution obligations have been lowered to 4% of eligible
revenues, from a 5% CTD contribution requirement under the previous license. This renewal provides cost visibility
with regards to these fees for a six-year period and improves the Company’s cost structure.
Premier Programming and price increase
As of October 1, 2012, the Company increased its price on the primary monthly service package from $14.99 to
$15.99 at the time of customer subscription renewal. During the first quarter, the Company also introduced Premier
Programming for subscribers. New Premier subscriptions offer Sirius subscribers the ability to access an array of
premium XM content including the NHL, PGA Tour, Oprah Radio etc., while giving XM subscribers the ability to
access premium Sirius content including Howard Stern, NFL play-by-play and more. Premier subscriptions are
available at an additional monthly cost of $4.00. The Company also has a bundled price plan at a $21.99 per month.
With the launch of Satellite Radio 2.0, the Company enhanced its listener experience with the recent introduction
of new internet radio apps for Apple iOS and Android with more content, personalization, on-demand functionality
and access to more than 200 shows. These apps for Apple iOS and Android essentially extend the Company’s
entertainment offering beyond the home or vehicle. The internet radio service also offers on-demand functionality,
giving subscribers access to more than 200 shows. Pricing for SXM Internet Radio is $4.00 a month with a satellite
radio subscription.
The Company believes that a combination of the aforementioned price increase as well as incremental charges for
both its Premier Programming and Internet Radio service have resulted in a marginal increase to ARPU in fiscal 2013
and have also positively impacted revenue and Adjusted EBITDA, notwithstanding a marginal increase in churn.
TSX: XSR
Sirius XM Canada Holdings Inc. Annual Report 2013
Page 4
4
Management’s Discussion and Analysis
Year Ended August 31, 2013
Recognition among Best Managed Companies and 500 Fastest Growing Companies
In February 2013, the Company was named as one of the Canada’s Best Managed Companies for the fourth
consecutive year. The Best Managed award and designation honours Canadian companies that have demonstrated
exceptional business results following a rigorous and independent evaluation process. The award is supported by
Deloitte, CIBC Commercial Banking, National Post, Queen's School of Business and MacKay CEO Forums. In June,
2013, the Company was recognized as one of the fastest growing companies in Canada (based on five-year revenue
growth) by Profit Magazine, which publishes its ranking of the 500 fastest growing companies in Canada.
Financial and Operational Highlights
The following are highlights for the three months (“quarter”) and year (“full year”) ended August 31, 2013 in
comparison to the quarter and full year results for the period ended August 31, 2012.
Fourth Quarter Ended August 31, 2013

Revenue increased by 11.2% to $75.7 million from $68.1 million; an improvement of $7.6 million;

EBITDA4 improved by 37.8% to $16.1 million from $11.7 million; an improvement of $4.4 million;

Adjusted EBITDA

Operating income improved by 134.7% to $7.1 million from $3.0 million; an improvement of $4.1 million;

Net income of $4.1 million compared to a net income of $6.1 million, a reduction of $2.0 million;

Earnings per share (EPS) of $0.03 compared to earnings per share of $0.05, a reduction of $0.02 per share.

Cash from operations increased by 42.3% to $14.8 million from $10.4 million; an improvement of $4.4 million;

Free Cash Flow increased by 14.0% to $9.7 million from $8.5 million; an improvement of $1.2 million.
4, 5
improved by 35.6% to $16.6 million from $12.2 million; an improvement of $4.4 million;
6
4
Full Year Ended August 31, 2013

Revenue increased by 11.3% to $288.9 million from $259.6 million; an improvement of $29.3 million;

EBITDA increased by 55.8% to $66.2 million from $42.5 million; an improvement of $23.7 million;

Adjusted EBITDA increased by 47.6% to $68.7 million from $46.6 million; an improvement of $22.1 million;

Operating income improved by 978.6% to $30.7 million from $2.8 million; an improvement of $27.9 million;

Net income of $12.2 million compared to a net loss of $4.2 million; an improvement of $16.4 million;

Earnings per share of $0.10 compared to a loss per share of $0.03; an improvement of $0.13 per share.

Cash from operations increased by 46.7% to $60.3 million from $41.1 million; an improvement of $19.2 million;
6
Non-GAAP measure – See definition in the section entitled “Non-GAAP Financial Measures”.
A reconciliation of Operating Income to Adjusted EBITDA (a non-GAAP measure) is provided on page 18 under the table
entitled “Adjusted EBITDA Reconciliation”.
6 Earnings per share is based on both Basic and Diluted earnings per share.
4
5
5
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Page 5
Sirius XM Canada Holdings Inc. Annual Report 2013
Management’s Discussion and Analysis
Year Ended August 31, 2013

Free Cash Flow increased by 35.4% to $49.6 million from $36.6 million; an improvement of $13.0 million;

Ending Self-Paying Subscribers of 1,727,400 and Total Subscribers of 2,427,100.
TSX: XSR
Sirius XM Canada Holdings Inc. Annual Report 2013
Page 6
6
Management’s Discussion and Analysis
Year Ended August 31, 2013
Summary of Financial and Operating Results
The following tables present a summary of the Company’s audited Consolidated Statement of Operations and
Balance Sheet as well as financial and operating metrics for the year ended August 31, 2013 (“full year”, “FY”), the
comparative periods ended August 31, 2012 along with the unaudited financial results for the three months ended
August 31, 2013 (“Quarter”, “Q4”) in comparison to the same period ended August 31, 2012. For more details,
please refer to the Company’s audited Consolidated Financial Statements as of August 31, 2013.
Statement of Operations and Comprehensive
Income (Loss)
(in $ 000's, except earnings per share)
Full year ended
August 31, August 31,
2013
2012
Revenue
75,739
68,119
288,901
259,620
Operating expenses
Operating costs
Integration. Severance and merger costs
Depreciation and amortization
Operating income
59,603
9,065
7,071
56,405
2
8,699
3,013
222,651
35,576
30,675
215,703
1,383
39,689
2,844
175
(3,513)
2,240
(145)
(1,244)
133
(3,984)
1,217
336
(2,299)
686
(15,411)
2,291
(676)
(13,109)
361
(16,700)
1,213
(210)
(15,336)
5,828
(1,750)
714
5,402
17,565
(5,375)
(12,492)
8,313
4,078
6,117
12,191
(4,179)
0.03
0.05
0.10
(0.03)
Finance Costs, net
Interest income
Interest expense
Gain on revaluation of derivative
Foreign exchange (loss)
Finance Costs
Income (Loss) before income tax
Income tax (expense) recovery
Net income (loss) and comprehensive income
(loss)
Basic and fully diluted (loss) earnings per share
7
Three months ended
August 31,
August 31,
2013
2012
TSX: XSR
Page 7
Sirius XM Canada Holdings Inc. Annual Report 2013
Management’s Discussion and Analysis
Year Ended August 31, 2013
August 31, 2013
As at
August 31, 2012
ASSETS
Current assets
Cash, cash equivalents, and short-term investments
Accounts receivable
Prepaid expenses
Inventory
Total current assets
Long-term prepaids
Property and equipment
Intangible assets
Deferred tax asset
Goodwill
Total assets
49,236
13,359
6,779
234
69,609
100
5,980
152,217
54,484
96,733
379,122
51,035
12,133
3,361
324
66,854
79
7,617
175,986
59,858
96,733
407,128
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade and other payables
Due to related parties
Interest Payable
Current portion of deferred revenue
Provisions
Total current liabilities
Deferred revenue
Other long-term liabilities
Due to related parties
Long-term debt
Provisions
Total liabilities
47,145
9,621
2,704
144,885
1,328
205,684
17,105
1,669
2,391
143,707
323
370,879
39,086
6,776
2,704
137,554
1,286
187,406
21,019
6,903
1,208
144,993
344
361,873
Shareholders' equity
Share capital
Contributed surplus
Accumulated deficit
Total shareholders' equity
Total liabilities and shareholders' equity
151,975
6,161
(149,713)
8,243
379,122
148,393
5,058
(108,196)
45,255
407,128
Balance Sheet
(in $ 000's)
TSX: XSR
Sirius XM Canada Holdings Inc. Annual Report 2013
Page 8
8
Management’s Discussion and Analysis
Year Ended August 31, 2013
Summarized Financial Metrics
Three months ended
August 31,
August 31,
2013
2012
August 31,
2013
Full year ended
August 31,
2012
12,191
0.10
66,250
22.9%
68,722
23.8%
49,633
94,471
1.37
(4,179)
(0.03)
42,533
16.4%
46,562
17.9%
36,646
93,958
2.02
(in $ 000's, except as indicated)
Net Income (loss)
EPS (Basic and Diluted)
EBITDA
EBITDA margin (%)
Adjusted EBITDA
Adjusted EBITDA margin (%)
Free Cash Flow
7
Net debt
Net debt to Adjusted EBITDA (times)
7
9
4,078
0.03
16,136
21.3%
16,570
21.9%
9,704
94,471
1.37
6,117
0.05
11,712
17.2%
12,220
17.9%
7,292
93,958
2.02
As defined in the section entitled “Non GAAP Financial Measures”
TSX: XSR
Page 9
Sirius XM Canada Holdings Inc. Annual Report 2013
Management’s Discussion and Analysis
Year Ended August 31, 2013
Discussion of Financial and Operating Results
The following table is a summary of the key subscriber metrics that the Company uses to help measure the
performance of its operations. Please refer to the section “Definitions of Industry Terminology” at the end of this
MD&A for an overview of the subscriber metrics noted below.
Summarized Operating Metrics
Three months ended
August 31,
August 31,
2013
2012
Full year ended
August 31,
August 31,
2013
2012
(in 000's, except as indicated)
Ending Self-Pay Subscribers
Ending Total Subscribers
Average Self Pay Churn (%)
ARPU ($)
SAC ($)
CPGA ($)
Subscriber Data
1,727
2,427
1.78%
$11.72
$40
$76
1,584
2,206
1.71%
$11.65
$46
$76
Three months ended
August 31,
August 31,
2013
2012
1,727
2,427
1.95%
$11.64
$44
$73
1,584
2,206
1.92%
$11.60
$49
$75
August 31,
2013
Full year ended
August 31,
2012
Beginning Subscribers
Net Additions
Ending Subscribers
2,321,900
105,200
2,427,100
2,116,900
89,300
2,206,200
2,206,200
220,900
2,427,100
1,983,100
223,100
2,206,200
Self-Paying
Paid Promotional
Non Paid Promotional
Ending Subscribers
1,727,400
567,800
131,900
2,427,100
1,584,400
516,500
105,300
2,206,200
1,727,400
567,800
131,900
2,427,100
1,584,400
516,500
105,300
2,206,200
63,200
42,000
105,200
77,400
11,900
89,300
143,000
77,900
220,900
191,600
31,500
223,100
Self -Pay
Paid/Non Paid Net Additions
Total Net Additions
The following section compares the results of operations for the quarter ended August 31, 2013 to the quarter
ended August 31, 2012.
TSX: XSR
Sirius XM Canada Holdings Inc. Annual Report 2013
Page 10
10
Management’s Discussion and Analysis
Year Ended August 31, 2013
Subscribers
2,427,100
699,700
1,727,400
Q4 2013
Self Paying
2,206,200
621,800
1,584,400
Q4 2012
Paying & Non Paying Promotional
As at August 31, 2013, we had total subscribers of 2,427,100, representing 1,727,400 Self-Paying Subscribers and
699,700 Paid Promotional Subscribers and Non Paid Promotional Subscribers. Self-Paying Subscribers increased 9.0%
versus the end of the fourth quarter of 2012, driven largely by growth in the number of OEM additions during the
period. OEM net additions decreased in the fourth quarter of 2013 compared to the fourth quarter of 2012 due to
the effects of higher churn, offset by higher subscribers from both win-back initiatives and the used-car initiative
announced earlier during the year. Paid Promotional Subscribers and Non-Paid Promotional Subscribers increased
by 12.5% compared to the corresponding period of 2012 due to an increase in the penetration rate and to an
increase in vehicle sales of approximately 3.4%. Trial subscribers in the Paid and Non Paying Promotional category
serve as the funnel for the net additions in future periods with timing of these additions dependent on the length of
the trial period with the OEM, which spans three to twelve months depending on the OEM agreement. Although,
the Company continues to grow its subscriber base, the pace of growth of the self-paying base has declined marginally
as we attempt to balance both subscriber growth and ARPU in order to maximize revenue and profitability.
11
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Page 11
Sirius XM Canada Holdings Inc. Annual Report 2013
Management’s Discussion and Analysis
Year Ended August 31, 2013
Churn
1.78%
Q4 2013
1.95%
1.92%
FY 2013
FY 2012
1.71%
Q4 2012
Self-pay monthly churn increased to 1.78% in the fourth quarter of 2013 from 1.71% in the corresponding quarter
of 2012 due to a combination of the price change implemented in the first quarter and to changes to the pricing for
online listening. For the full year ended August 31, 2013, self-pay monthly churn was 1.95% compared to 1.92% for
the year ended August 31, 2012. Churn increased year-over-year on a full-year basis due primarily to the base
subscription price increase in addition to the changes to the pricing for online listening.
ARPU
$11.72
Q4 2013
$11.65
Q4 2012
$11.64
FY 2013
$11.60
FY 2012
ARPU was $11.72 and $11.65 for the fourth quarters of 2013 and 2012, respectively. The increase in ARPU relative
to the comparative quarter last year is due primarily to an increase in the base subscription price and also to onetime credits, somewhat mitigated by the following:
TSX: XSR
Sirius XM Canada Holdings Inc. Annual Report 2013
Page 12
12
Management’s Discussion and Analysis
Year Ended August 31, 2013
(i)
an increase in automotive Self-Paying Subscribers which have a lower ARPU due to higher price
discounts being offered to these subscribers;
revenue from some customers on lifetime plans being fully amortized;
discounted pricing on win-back initiatives.
(ii)
(iii)
ARPU is below the basic service price due to promotions offered to new OEM Self-Paying Subscribers, Paid
Promotional Subscriptions by automakers, family plan subscribers, discounts offered to renewing Self-Paying
subscribers across all channels and discounted multi-year plans that provide the Company with a working capital
benefit as long term subscriptions are paid for in advance. As the Company continues to increase its subscriber base,
it is anticipated that ARPU may fluctuate due to multi-year plans and promotional discounts offered to attract and
retain its Self-Paying subscriber base. In 2013, ARPU increased marginally as the positive effects of the pricing changes
more than offset the dilutive effects of the items mentioned above. On a full-year basis, ARPU was $11.64 for the
period ended August 31, 2013 compared to $11.60 for the period ended August 31, 2012.
Revenue
Revenue includes subscription revenue, activation fees, sale of merchandise through direct fulfillment channels,
advertising revenue from Canadian-produced channels and certain other revenue. Revenue also includes the impact
of fair value adjustments as a result of purchase price accounting.
Revenue ($ millions)
$288.9
$75.7
Q4 2013
$259.6
$68.1
Q4 2012
FY 2013
FY 2012
 Fourth Quarter: Revenue increased by $7.6 million or 11.2%, to $75.7 million in the fourth quarter of
2013 from $68.1 million in the fourth quarter of 2012. The increase was attributable to the increase in
the subscriber base along with a modest increase in ARPU of 0.6%.
 Full Year: Revenue increased by $29.3 million or 11.3% to $288.9 million in 2013 from $259.6 million
in 2012. The increase is due to the Company’s larger subscriber base and also to the slight increase in
ARPU.
13
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Page 13
Sirius XM Canada Holdings Inc. Annual Report 2013
Management’s Discussion and Analysis
Year Ended August 31, 2013
Operating Expenses
Operating Expenses
Three months ended
August 31, 2013
August 31, 2012
% of
Revenue
(in $000’s)
Full year ended
August 31, 2013
August 31, 2012
% of
Revenue
% of
Revenue
% of
Revenue
Revenue share and royalties
Customer care & billing ops
Cost of merchandise
Broadcast and operations
Programming and content
Total cost of revenue
23,083
4,813
1,164
468
1,688
31,216
30.5%
6.4%
1.5%
0.6%
2.2%
41.2%
22,649
4,441
849
466
1,543
29,947
33.2%
6.5%
1.2%
0.7%
2.3%
44.0%
89,870
19,352
3,420
1,651
7,683
121,976
31.1%
6.7%
1.2%
0.6%
2.7%
42.2%
84,193
17,578
3,052
1,729
9,728
116,280
32.4%
6.8%
1.2%
0.7%
3.7%
44.8%
General and administrative
Information Technology
Stock based compensation
Overhead costs
2,009
3,355
399
5,763
2.7%
4.4%
0.5%
7.6%
2,548
2,145
333
5,026
3.7%
3.1%
0.5%
7.4%
8,895
11,202
2,257
22,355
3.1%
3.9%
0.8%
7.7%
11,223
11,604
1,493
24,320
4.3%
4.5%
0.6%
9.4%
Marketing support
Subsidies and distribution
Marketing
Marketing costs
Total operating expenses
1,709
11,067
9,848
22,624
59,603
2.3%
14.6%
13.0%
29.9%
78.7%
1,477
11,943
8,012
21,432
56,405
2.2%
17.5%
11.8%
31.5%
82.8%
7,431
42,872
28,017
78,320
222,651
2.6%
14.8%
9.7%
27.1%
77.1%
7,132
43,776
24,194
75,103
215,703
2.7%
16.9%
9.3%
28.9%
83.1%
Cost of Revenue
Cost of Revenue increased by $1.3 million or 4.2% to $31.2 million in the fourth quarter of 2013 from $29.9 million
in the fourth quarter of 2012. On a full-year basis, Cost of Revenue increased by $5.7 million or 4.9% to $122.0
million in 2013 from $116.3 million in 2012. The reasons for the increase in cost of revenue are discussed below.
Cost of revenue is comprised of the following:
Revenue share & royalties – This category includes license payments to Sirius XM, revenue share payments
to the OEM partners, CRTC fees, CRTC mandated CCD contributions, and copyright royalties payable to
rights holders for the public performance and the reproduction of musical works, performers’ performances
and sound recordings.
 Fourth Quarter: Revenue share & royalties increased by $0.5 million or 1.9%, to $23.1 million in the
fourth quarter of 2013 from $22.6 million in the fourth quarter of 2012. Revenue share & royalties
increased due to higher revenue in the current quarter offset by a reduction in the CCD rate from 5%
to 4% compared to the corresponding period last year. As a percentage of total revenue, revenue share
& royalties decreased to 30.5% in the fourth quarter of 2013 from 33.2% in the fourth quarter of 2012.
The reduction in the CCD rate and the lower overall revenue share rate paid to various automakers
were the key drivers in the overall reduction in the revenue share and royalties rate. The Company
has revenue sharing arrangements with certain automotive partners with varying rate structures, thus
a change in vehicle mix of the underlying subscriber base due to market share changes by OEMs or a
change in the rate paid to each OEM will affect the overall revenue sharing rate.
 Full Year: Revenue share and royalties increased by $5.7 million or 6.7% to $89.9 million in 2013 from
$84.2 in 2012. Revenue share & royalties increased in 2013 compared to 2012 due to higher revenues
in the current year. The increase in revenue share and royalties was mitigated by a lower CCD rate
TSX: XSR
Sirius XM Canada Holdings Inc. Annual Report 2013
Page 14
14
Management’s Discussion and Analysis
Year Ended August 31, 2013
and a lower overall revenue share rate paid to various automakers compared to last year. As a
percentage of total revenue, revenue share & royalties decreased to 31.1% in 2013 from 32.4% in the
same period prior year.
Customer care & billing operations – This category consists primarily of personnel and related costs
associated with the ongoing operations of call centres as well as credit card payment processing fees. The
Company operates onshore and offshore customer support centres through third party vendors.
 Fourth Quarter: Customer care & billing operations costs increased by $0.4 million or 8.4% to $4.8
million in the fourth quarter of 2013 from $4.4 million in the fourth quarter of 2012. Customer care &
billing operations costs are primarily driven by the volume derived from the Company’s growing
subscriber base.
 Full Year: Customer care & billing operations costs increased by $1.8 million or 10.1% to $19.4 million
in 2013 compared to $17.6 million in 2012 while Self-Paying subscribers increased 9.0% year-over-year.
Customer care & billing operations costs increased as a result of a higher volume of calls due to the
larger subscriber base. These costs are primarily driven by the volume derived from the Company’s
growing subscriber base as well as by incremental costs related to pricing changes implemented during
the year.
Monthly Customer Care and Billing Costs per Self-Paying Subscriber ($/Sub)
 Fourth Quarter: As shown below, monthly customer care & billing costs per Self-Paying Subscriber
decreased slightly to $0.97 in the fourth quarter of 2013 from $1.00 in the fourth quarter of 2012 as
the increase in subscriber growth outpaced the increase in customer care costs as a portion of these
costs is fixed and in the short run does not increase with increase as the volume of calls increase.
 Full Year: Customer care & billing costs per Self-Paying Subscriber decreased to $0.98 in 2013 from
$1.00 in 2012 as costs did not increase in proportion to the growth in the subscriber base.
Monthly Customer Care and Billing per Self-Paying Subscriber ($/Sub)
$0.97
Q4 2013
15
TSX: XSR
$1.00
$0.98
Q4 2012
FY 2013
$1.00
FY 2012
Page
152013
Sirius XM Canada Holdings Inc. Annual
Report
Management’s Discussion and Analysis
Year Ended August 31, 2013
Cost of merchandise – The Company sells merchandise directly to new subscribers, existing subscribers
who purchase additional radios, and to commercial accounts through our online store and call centres. Cost
of merchandise consists primarily of the cost of radios, accessories and related fulfillment costs associated
with the direct sale of this merchandise.
 Fourth Quarter: Cost of merchandise increased by $0.4 million or 37.1% to $1.2 million in the fourth
quarter of 2013 from $0.8 million in the fourth quarter of 2012. These costs are primarily driven by
the volume of radios sold, which are mostly affected by promotional programs. Cost of merchandise
increased year-over-year primarily due to a 47.0% increase in sales volume.
 Full Year: Cost of merchandise increased by $0.4 million or 12.1% to $3.4 million in 2013 compared
to $3.0 million in 2012. Cost of merchandise increased year-over-year due to a 21.0% increase in sales
volume.
Broadcast & operations – Broadcast expenses include costs associated with the management and
maintenance of systems, software, hardware, production and performance studios used in the creation and
distribution of Canadian-produced channels. Operations expenses include operating costs of facilities, the
terrestrial repeater network and information technology expenses related to the broadcast facilities.
 Fourth Quarter: Broadcast & operations expenses remained unchanged at $0.5 million for the fourth
quarters of 2013 and 2012.
 Full Year: Broadcast & operations expenses decreased by $0.1 million or 4.5% to $1.6 million in 2013
from $1.7 million in 2012. These expenses declined marginally compared to the same period prior year
due to the Company’s ongoing efforts to gain efficiencies in all areas of the business.
Programming & content – Includes the creative, production and licensing costs for live NHL programming
associated with the Company’s Canadian-produced channels, which includes third party content acquisition
that are driven by programming initiatives. Programming & content also includes licensing costs paid to the
CBC. The Company views programming & content as a cost of attracting and retaining subscribers. The NHL
License cost is amortized over the NHL season, which generally runs for a nine-month period beginning in
October of each year.
 Fourth Quarter: Programming & content expenses increased by $0.2 million or 9.4%, to $1.7 million
in the fourth quarter of 2013 from $1.5 million in corresponding quarter of 2012. The increase is due
to additional programming costs associated with the launch of several new Canadian channels, including
Canada Talks, Canada Laughs and Multicultural Radio.
 Full Year: Programming & content expenses decreased by $2.0 million or 21.0% to $7.7 million in 2013
from $9.7 million in 2012. The decrease is due to lower costs associated with the NHL license in the
current period offset by additional costs associated with the launch of several new Canadian channels.
During the year, the Company realized approximately $2.1 million in one-time savings due to the
shortened NHL season.
Marketing support – Marketing support includes staffing costs directly associated with facilitating the sale
of radio receivers through third party distribution channels, costs for converting OEM trial customers into
Self-Paying Subscribers, retention costs, costs incurred by win-back initiatives and costs associated with
marketing the SXM brand.
TSX: XSR
Sirius XM Canada Holdings Inc. Annual Report 2013
Page 16
16
Management’s Discussion and Analysis
Year Ended August 31, 2013
 Fourth Quarter: Marketing support expenses increased by $0.2 million or 15.7% to $1.7 million in the
fourth quarter of 2013 from $1.5 million in the corresponding quarter of 2012 primarily due to higher
employee related costs.
 Full Year: Marketing support expenses increased by $0.3 million or 4.2% to $7.4 million in 2013 from
$7.1 million in 2012 due primarily to higher employee related costs.
Subsidies – These direct costs include the subsidization of radios, commissions paid to retail partners for the
sale and activation of radios, chipset costs, warranty costs and certain promotional costs.
 Fourth Quarter: Subsidy costs decreased by $0.8 million or 7.3% to $11.1 million in the fourth quarter
of 2013 from $11.9 million in the fourth quarter of 2012. Subsidy costs decreased due to a reduction
in hardware costs resulting from of a lower number of radios sold through the retail channel partially
offset by higher costs in the OEM channel as a result of a higher number of vehicles installed with
satellite receivers compared to the same period prior year.
 Full Year: Subsidy costs decreased by $0.9 million or 2.1% to $42.9 million in the fourth quarter of
2013 from $43.8 million in the fourth quarter of 2012. Higher subsidy costs in the OEM channel
resulting from a higher volume of vehicles shipped during the current period versus the comparative
period last year were offset by lower average chipset costs and lower costs in the aftermarket channel
driven by lower commissions and promotional spending.
SAC
$46
$49
$44
$40
Q4 2013
Q4 2012
FY 2013
FY 2012
Subscriber Acquisition Costs8 – SAC was $40 and $46 for the fourth quarters of 2013 and 2012, respectively.
SAC decreased relative to the comparative quarter as a higher proportion of gross additions generated by
win-back activities in the current period compared to the corresponding period prior year. The Company
does not incur additional subsidy costs for customers acquired through the win-back channel. SAC also
decreased as a higher proportion of gross subscriber additions were generated through the OEM channel
8 Subscriber acquisition cost includes subsidy costs and net costs related to equipment sold directly to the consumer divided by total gross
additions excluding the Non-Paid Promotional Subscribers for the period.
17
TSX: XSR
Page 17
Sirius XM Canada Holdings Inc. Annual Report 2013
Management’s Discussion and Analysis
Year Ended August 31, 2013
where the per-unit cost is lower for subscribers gained through this channel as compared to the per-unit cost
in the retail channel. While SAC may fluctuate on a quarterly basis, we anticipate that annual SAC will likely
remain within a narrow range going forward. On a full year basis, SAC was $44 and $49 for 2013 and 2012,
respectively. SAC decreased during the period as a higher proportion of gross additions was generated
through win-back activities in the current year compared to the corresponding period prior year. SAC also
decreased on a full-year basis as a higher proportion of gross subscriber additions was generated through the
OEM channel where the per unit costs is lower for subscribers gained through this channel as compared to
the subscribers gained through the retail channel.
Marketing – Includes costs related to communications associated with converting trial subscribers to SelfPaying subscribers such as mailing and telephone costs, retail advertising through various media, co-operative
advertising with distribution partners, sponsorships, and ongoing market research. These costs fluctuate based
on the timing of these activities.
 Fourth Quarter: Marketing expenses increased by $1.8 million or 22.9% to $9.8 million in the fourth
quarter of 2013 from $8.0 million in the comparable quarter in 2012 primarily due to a larger outbound
telemarketing campaign in respect of the Company’s free listening promotional program, higher spend
on media related advertising, higher costs to support the used vehicle program, and higher spending on
product development activities to support growth initiatives.
 Full Year: Marketing expenses increased by $3.8 million or 16.1% to $28.0 million in 2013 from $24.2
million in 2012. This increase is due to higher spend on both outbound telemarketing campaigns and
free listening programs.
CPGA
$76
Q4 2013
$76
Q4 2012
$73
FY 2013
$75
FY 2012
Cost Per Gross Addition – CPGA remained flat at $76 for the fourth quarters of 2013 and 2012. CPGA remained
unchanged period-over-period as the effect from higher marketing and subsidy costs was offset by higher year-overyear gross additions from win-back activities. The Company currently does not anticipate any meaningful changes in
CPGA as both SAC and variable marketing spend stabilize going forward. CPGA is generally lower for subscribers
gained through the pre-owned market as compared to subscribers gained through the new vehicle channel. On a full
year basis, CPGA was $73 and $75 for 2013 and 2012 respectively. CPGA declined in 2013 compared to the
TSX: XSR
Sirius XM Canada Holdings Inc. Annual Report 2013
Page 18
18
Management’s Discussion and Analysis
Year Ended August 31, 2013
corresponding period in the prior year as the effect from a higher proportion of gross additions being generated by
win-back activities was more than offset by the effect of higher combined subsidy and marketing costs.
General & Administrative Expenses
General & administrative expenses primarily include compensation, public company costs, office occupancy
expenses and other corporate expenses.
 Fourth Quarter: General & administrative expenses decreased by $0.5 million or 21.2% to $2.0 million
in the fourth quarter of 2013 from $2.5 million in the fourth quarter of 2012.The decrease is due to
lower legal expenses, lower employee related costs partially offset by higher facilities expenses. In the
comparative period prior year, the Company incurred significantly higher legal expenses in respect of
its CRTC license renewal, which was renewed for a six-year period expiring on August 31, 2018.
 Full Year: General & administrative expenses decreased by $2.3 million or 20.7% to $8.9 million in
2013 from $11.2 million in 2012. In the prior year, the Company incurred significantly higher legal
expenses in respect of its CRTC license renewal, the preparation of a prospectus and to execute onetime post-merger corporate harmonization projects.
Information Technology
Information Technology expenses primarily include costs related to our subscriber management systems, data
processing, communications cost, network infrastructure cost and people costs.
 Fourth Quarter: Information technology expenses increased by $1.2 million or 56.4% to $3.3 million
in the fourth quarter of 2013 from $2.1 million in the fourth quarter of 2012. The increase is a result
of higher capitalization costs in the comparative period last year as internal staff and third parties spent
a significant portion of time working on capital projects primarily related to system enhancements to
update the Company’s Subscriber Management System (“SMS system”), while in the current quarter
third party costs were primarily related to non-capital projects. The increase in information technology
expenses is also due to higher consulting fees and higher costs due to increased headcount to support
the operation of our subscriber management systems.
 Full Year: Information technology expenses decreased by $0.4 million or 3.5% to $11.2 million in 2013
from $11.6 million in 2012. The decrease is a result of increased capitalization of labor costs in the
current year as a larger proportion of employees’ time was dedicated to capital projects. Information
technology expenses also decreased due to a reduction in third party related costs and lower corporate
expenses partly offset by higher employee related costs resulting from an increase in headcount.
The Company will seek to realize further synergies by consolidating subscriber management systems across a single
platform. This consolidation initiative necessitates additional capital investment over the next 12 months.
Severance and merger costs
Severance and merger costs include restructuring costs incurred as a result of the merger.
 Fourth Quarter: The Company did not incur any severance and merger costs in fourth quarter of
2013 compared to $0.1 million in the fourth quarter of 2012.
 Full Year: The Company did not incur any severance and merger costs in 2013 compared to $1.4
million in 2012.
19
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Page 19
Sirius XM Canada Holdings Inc. Annual Report 2013
Management’s Discussion and Analysis
Year Ended August 31, 2013
Stock-based Compensation
Stock-based compensation expenses are related to the issuance of stock options, Restricted Stock Units (RSUs) and
Performance Stock Units (PSUs). The PSUs are subject to minimum performance targets. The Company recognizes
a compensation expense in operating costs for the market value of each RSU and PSU at the date of grant. The
Company expects RSUs and PSUs to be settled through the payment of shares.
 Fourth Quarter: Stock-based compensation expenses increased by $0.1 million to $0.4 million in the
fourth quarter of 2013 from $0.3 million in fourth quarter of 2012. The increase in stock-based
compensation is a result of RSUs and PSUs granted in the first quarter to certain employees. The
number of PSUs that may vest will vary based on the Company meeting specified non-market
performance targets, ranging from nil if minimum performance targets are not met, to a maximum of
366,700 units.
 Full Year: Stock-based compensation expenses increased by $0.8 million to $2.3 million in 2013 from
$1.5 million in 2012. The increase in stock-based compensation is a result of a one-time expense of
$0.5 million associated with options granted to the Board of Directors in the first quarter which vested
immediately and RSUs and PSUs granted in the first quarter to the certain employees. Of the $2.3
million in stock based compensation expense, $1.7 million was expensed for the stock option based
awards, while $0.8 million was expensed in respect of RSUs and PSUs.
As of August 31, 2013, the Company had the following stock options outstanding:
Stock Options Outstanding
Weighted Average
Remaining Contractual
Life (years)
Weighted Average
Exercise Price
4.9
$3.40
3,226,975
1,212,950
2,014,025
$4.76
749,700
225,000
524,700
At September 1, 2012
Granted
Vested
Vested
Unvested
-
500,050
(500,050)
Exercised
$2.84
(790,750)
(790,750)
-
Forfeited
$4.73
(747,825)
(547,875)
(199,950)
$3.60
2,438,100
599,375
1,838,725
At August 31, 2013
-
Total
5.2
Restricted and Performance Stock Units
On November 16, 2012, the Company granted 200,190 RSUs and maximum 390,280 PSUs to some of its employees
as a form of incentive compensation. RSUs and PSUs cliff vest in three years, and can be settled in cash or shares at
the discretion of the Company’s Board of Directors. The PSUs are subject to minimum performance targets and
the amount of PSUs that may vest will vary based on the Company meeting specified performance targets, ranging
from nil if minimum performance targets are not met, to a maximum of 366,700 units. The grant date fair value for
both RSUs and PSUs is $4.71 per unit.
The RSUs and PSUs grant certain employees either a cash or share based payment equal to the weighted average
price of the Company’s common share on the Toronto Stock Exchange (“TSX”) in the five trading days preceding
the end of a three-year performance period multiplied by the number of units that vest. For the PSUs, the number
of units that vest will vary based on the achievement of non-market performance measures. The Company recognizes
compensation expense in operating costs for each RSU and PSU expected to vest equal to the market value of the
Company’s common share less the net present value of the expected dividend stream at the date on which RSUs
TSX: XSR
Sirius XM Canada Holdings Inc. Annual Report 2013
Page 20
20
Management’s Discussion and Analysis
Year Ended August 31, 2013
and PSUs are awarded to each participant. For PSUs expected to be settled in shares, the compensation expense is
prorated over the performance period reflecting changes in the number of PSUs expected to vest until the end of
the performance period based on the achievement of non-market performance measures. Forfeitures are estimated
at the grant date and are revised to reflect a change in expected or actual forfeitures.
Since the settlement method of the RSUs and PSUs is at the discretion of the Company’s Board of Directors, and
the Company does not have a prior practice of settling in cash and currently intends to settle the awards by issuing
shares, the Company accounts for RSUs and PSUs compensation related expense using the equity settlement
method.
As at August 31, 2013, the number of non-vested RSUs is 187,980 units. The number of PSUs that may vest based
on conditions existing at the balance sheet date is 265,857 units.
Depreciation and amortization
 Fourth Quarter: Depreciation and amortization expenses increased by $0.4 million to $9.1 million in
the fourth quarter of 2013 from $8.7 million in the fourth quarter of 2012. The increase is a result of
an increase in amortization on activation fees resulting from a reduction in the amortization period
from 40 months to 20 months, amortization due to commencement of amortization of the SMS project
in the second quarter, accelerated amortization of leaseholds until December 2013 for one of the
previous studio locations offset by lower amortization of intangible assets of approximately $1.7 million
due to the end of the first term of an OEM contract.
 Full Year: Depreciation and amortization expenses decreased by $4.1 million to $35.6 million in 2013
from $39.7 million in 2012. The decrease is a result of lower amortization of intangible assets of
approximately $5.3 million due to an OEM contract being fully amortized, full amortization of certain
repeater and equipment assets, partly offset by higher amortization due to the commencement of
amortization of the Company’s Subscriber Management System, an increase in amortization on
activation fees resulting from a reduction in the useful life and related amortization period from 40
months to 20 months and accelerated amortization of leaseholds related to Company’s previous studio
location.
EBITDA
$66.3
$42.5
$16.1
Q4 2013
21
TSX: XSR
$11.7
Q4 2012
FY 2013
FY 2012
Page 21
Sirius XM Canada Holdings Inc. Annual Report 2013
Management’s Discussion and Analysis
Year Ended August 31, 2013
The Company uses EBITDA and its variants such as Adjusted EBITDA, as included in the Non-GAAP Financial
Measures section, to gauge the performance of the business. The table below is a reconciliation of the Income
(loss) before taxes to EBITDA and Adjusted EBITDA.
Adjusted EBITDA: Reconciliation
Three months ended
August 31, August 31,
2013
2012
Full year ended
August 31,
August 31,
2013
2012
In ($ 000’s)
Income/(Loss) before income taxes
Net Interest expense & income
Foreign exchange loss & gain on revaluation
of derivatives
Operating income
5,828
3,338
714
3,851
17,565
14,725
(12,492)
16,339
(2,095)
(1,553)
(1,616)
(1,003)
7,071
3,013
30,675
2,844
9,065
8,699
35,576
39,689
EBITDA
16,136
11,712
66,250
42,533
Stock-based compensation
399
333
2,257
1,493
Integration, restructuring and merger costs
2
1,383
Fair value adjustments*
35
173
215
1,152
Adjusted EBITDA
16,570
12,220
68,722
46,562
* Fair value adjustment relates to a reduction in revenue due to the valuation of deferred revenue under purchase price accounting.
Depreciation and amortization
 Fourth Quarter: EBITDA improved by $4.4 million or 37.8% to $16.1 million in the fourth quarter of
2013 from $11.7 million in the fourth quarter of 2012. EBITDA improved compared to the same period
last year primarily due to a $7.6 million revenue improvement offset by higher Cost of Revenue of $1.3
million, higher general administrative and information technology costs of $0.7 million, higher marketing
expenses of $1.2 million and higher stock based compensation of $0.1 million. As a percentage of
revenue, EBITDA improved to 21.3% in the fourth quarter of 2013 from 17.2% in the fourth quarter
of 2012. The improvement in EBITDA is a function of operational leverage as costs do not increase in
lockstep with revenue leading to a higher proportion of profit flowing through to EBITDA.
 Full Year: EBITDA improved by $23.8 million or 55.8% to $66.3 million in 2013 from $42.5 million in
2012. EBITDA improved year-over-year primarily due to a $29.3 million revenue improvement, lower
severance and merger costs of $1.4 million and lower support costs in general administrative and
information technology cost category of $2.7 million, offset primarily by higher Cost of Revenue of
$5.7 million, higher stock based compensation of $0.8 million and higher marketing costs of $3.2 million.
As a percentage of revenue, EBITDA improved to 22.9% in 2013 from 16.4% in 2012. The improvement
in EBITDA is a result of operational leverage as well as a one-time benefit of approximately $2.1 million
due to lower NHL license expense during the year. Excluding the one-time benefit of $2.1 million,
EBITDA margin would have been 22.2%.
TSX: XSR
Sirius XM Canada Holdings Inc. Annual Report 2013
Page 22
22
Management’s Discussion and Analysis
Year Ended August 31, 2013
Adjusted EBITDA
$68.7
$46.6
$16.6
Q4 2013
$12.2
Q4 2012
FY 2013
FY 2012
Adjusted EBITDA
 Fourth Quarter: Adjusted EBITDA improved by $4.4 million or 35.6% to $16.6 million in the fourth
quarter of 2013 from $12.2 million in the fourth quarter 2012. Adjusted EBITDA improved compared
to the same period last year primarily due to a $7.6 million revenue improvement offset by higher Cost
of Revenue of $1.3 million, higher general administrative and information technology expenses of $0.7
million, and higher marketing costs of $1.2 million. As a percentage of revenue, Adjusted EBITDA
increased to 21.9% in the fourth quarter of 2013 from 17.9% in the fourth quarter of 2012.
 Full Year: Adjusted EBITDA improved by $22.1 million or 47.6% to $68.7 million in 2013 from $46.6
million in 2012. Adjusted EBITDA improved compared to the same period last year primarily due to a
$29.3 million revenue improvement, lower general administrative and information technology costs of
$2.7 million, offset by higher Cost of Revenue of $5.7 million, and higher marketing costs of $3.2 million.
As a percentage of revenue, Adjusted EBITDA increased to 23.8% in 2013 from 17.9% in the
comparative period of 2012. The improvement in Adjusted EBITDA is due to both operational leverage
and to a one-time benefit of approximately $2.1 million due to lower NHL license expense during the
year. Excluding the one-time benefit of $2.1 million, the Adjusted EBITDA margin would have been
23.1%.
Income Taxes
 Fourth Quarter: For the three months ended August 31, 2013, the Company incurred income tax
expense of $1.7 in fourth quarter of 2013 compared to an income tax recovery of $5.4 million in the
corresponding quarter of 2012.
 Full Year: For the year ended August 31, 2013, the Company incurred income tax expense of $5.4
million in 2013 compared to an income tax recovery of $8.3 million for the year ended August 31,
2012. Income tax expense of $5.4 million is comprised of expense of $4.7 million due to the net income
in the current year and $0.7 million from non-deductible expenses. In 2012, income tax recovery of
$8.3 million is comprised of a recovery of $3.4 million due to the net loss in the year and $5.7 million
23
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Page 23
Sirius XM Canada Holdings Inc. Annual Report 2013
Management’s Discussion and Analysis
Year Ended August 31, 2013
due to a change in the tax rate on the opening deferred taxes, partly offset by non-deductible expenses
of $0.9 million.
Liquidity and Capital Resources
Total cash, cash equivalents and short term investments at the end of the fourth quarter of fiscal 2013 were $49.2
million, a decrease of $2.3 million over the previous quarter. This decrease was mainly due to the payment of
dividends totaling $13.0 million and capital expenditures of $5.1 million, partly offset by cash flow from operations
of $14.8 million and $1.0 million of proceeds from the exercise of options. Cash flow from operations increased
$4.4 million or 42.3% as a result of higher revenues and an improvement in our EBITDA margin compared to the
same quarter prior year. Free Cash Flow increased by $1.2 million in the quarter compared to the same quarter last
year. The increase in Free Cash Flow was primarily due to the increase in cash flow from operations year-over-year
offset by higher capital expenditures primarily related to company’s SMS system. Our financial position remains
strong, driven by robust operating cash flow generation and modest capital expenditure requirements. However,
cash and cash equivalents are not expected to increase in lockstep with Free Cash Flow due to the expected payment
of cash dividends. The result of an improvement in our cash position is an improvement in our risk position through
debt deleveraging. Net debt to Adjusted EBITDA declined to 1.37 times in the current quarter ended August 31,
2013 from 2.02 times in the comparative quarter last year. Debt to Adjusted EBITDA declined to 2.09 times in the
quarter ended August 31, 2013 from 3.11 times in the comparative quarter last year. We expect an increase in
capital expenditure in fiscal years 2014 and 2015 as we unify our subscriber management system and upgrade our
repeater network but anticipate a decline in 2016 and beyond. A substantial portion of our existing debt obligations
does not mature until fiscal 2018 and we currently do not have other obligations requiring meaningful cash outflow
until fiscal 2015 when the Company’s $20 million in convertible debentures comes due.
The Company’s cash flows from operating, investing and financing activities are summarized in the following table:
Cash Flow Data
Three months ended
August 31,
August 31,
2013
2012
Full year ended
August 31,
August 31,
2013
2012
14,825,289
(4,996,263)
(12,056,207)
(2,227,181)
46,305,765
44,078,584
60,251,276
(15,748,263)
(51,459,178)
(6,956,165)
51,034,749
44,078,584
(in $s)
Cash provided by operating activities
Cash used in investing activities
Cash provided by (used in) financing activities
Net Change in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
10,427,052
(1,911,194)
29,830
8,545,688
42,489,061
51,034,749
Three months ended
Free Cash Flow
Cash provided by operating activities
Capital expenditures
Free Cash Flow
TSX: XSR
August 31,
2013
14,825,289
(5,121,338)
9,703,952
Sirius XM Canada Holdings Inc. Annual Report 2013
August 31,
2012
10,427,052
(1,911,194)
8,515,858
41,075,084
(4,428,916)
(11,626,858)
25,019,310
26,015,439
51,034,749
Full year ended
August 31,
2013
60,251,276
(10,618,616)
49,632,660
August 31,
2012
41,075,084
(4,428,916)
36,646,168
Page 24
24
Management’s Discussion and Analysis
Year Ended August 31, 2013
Operating Activities – Cash flow from operating activities primarily consists of net income adjusted for certain noncash items including amortization, deferred tax expense or recovery, stock-based compensation, foreign exchange
gains and losses and the effect of changes in non-cash working capital and accruals for cash interest payments.
 Fourth Quarter: During the current quarter, cash generated from operating activities was $14.8
million, consisting of net income of $4.1 million adjusted for net non-cash expenses and losses of $5.8
million and a $4.9 million increase in working capital. The increase in working capital in the period is
primarily due to a $3.2 million increase in trade payables and other liabilities primarily due to timing of
payments, an increase in deferred revenue of $0.9 million due to higher customer prepayments during
the period along with a decrease in other current assets of $0.8 million during the period.
 Full Year: Cash generated from operating activities was $60.3 million, consisting of net income of $12.2
million adjusted for net non-cash expenses and losses of $42.7 million and a $5.4 million increase in
working capital. The increase in working capital is primarily due to an increase in deferred revenue of
$3.4 million due to customer prepayments during the period, and an increase in liabilities of $4.4 million,
which was partly offset by an increase in accounts receivable of $1.2 million and an increase in prepaid
expenses of $1.2 million.
Investing Activities – Cash flow from investing activities consists primarily of capital expenditures, purchases of
intangible assets relating to computer software, payment of activation fees and purchase of short term investments.
 Fourth Quarter: During the current quarter, cash used in investing activities was $5.0 million consisted
$2.9 million for the purchase of property, equipment and intangible assets and $2.2 million for the
prepayment of property and equipment.
 Full Year: Cash used in investing activities was $15.7 million related to the purchase of property and
equipment, intangible assets and short term investments. During the year, the Company invested $5.3
million in short term investments, $7.6 million of intangible assets, $2.2 million for the prepaying of
property plant and equipment and $0.8 million for purchase of property plant and equipment.
Financing Activities
 Fourth Quarter: During the current quarter, cash used in financing activities was $12.1 million which
consisted of the payment of dividends of $13.0 million, partly offset by cash proceeds of $0.9 million
from the exercise of stock options.
 Full Year: Cash used in financing activities was $51.5 million which consisted of dividend payments
totaling $53.7 million, partly offset by cash proceeds of $2.2 million from the exercise of stock options.
Dividend Policy
The Company’s goal is to maximize shareholder value by generating consistent Free Cash Flow by growing our
revenues primarily through subscriptions as well as maintaining effective cost controls, managing subscriber
acquisition costs and creating a long-term loyal customer base by offering high quality customer service.
The Company regularly assesses ways to deploy capital in the most effective manner and during the first quarter of
2013, the Company instituted a dividend policy. The amount and timing of any dividend is within the discretion of
the Board of Directors. The timing and the amount of dividend payments will depend on the Company’s financial
condition, compliance with the terms and conditions of the Company’s credit and contractual arrangements on an
on-going basis, general business conditions, and other factors that the Board of Directors considers to be relevant.
Subject to such conditions, the Company may pay a quarterly dividend on all of the issued and outstanding Class A
Shares and Class C Shares in the amount of $0.1050 per share, and on all of the issued and outstanding Class B
25
TSX: XSR
Page 25
Sirius XM Canada Holdings Inc. Annual Report 2013
Management’s Discussion and Analysis
Year Ended August 31, 2013
Shares in the amount of $0.0350 per share. No Class C Shares were issued and outstanding at any time, during the
fiscal year.
On July 10, 2013, the Company’s Board of Directors increased the quarterly dividend amount by approximately 27%
to $0.1050 per Class A Share or Class C Share and $0.0350 per Class B Share. This decision was made after a
thorough assessment of Management’s long term financial forecast. The amount of the dividend is subject to a
quarterly review with consideration given to Management’s updated financial forecast as well as the Board of
Directors’ view regarding the appropriate allocation of capital.
During the fiscal year 2013, the company declared and paid the following dividends to shareholders of each of its
Class A Shares and Class B Shares (Class B Shares are entitled to 1/3 the dividend amount per share relative to Class
A Shares and Class C Shares).
Type
Declaration Date
Record Date
Payment Date
Special
Quarterly
Quarterly
Quarterly
Quarterly
Total
November 16, 2012
November 16, 2012
January 14, 2013
April 10, 2013
July 10, 2013
November 28, 2012
November 28, 2012
January 25, 2013
April 22, 2013
July 22, 2013
January 2, 2013
January 2, 2013
March 1, 2013
May 17, 2013
August 22, 2013
As at
Dividend per Class A Share
$0.0825
$0.0825
$0.0825
$0.0825
$0.1050
$0.4350
Total Debt:
Long term debt
(in $s)
Senior Notes
Convertible Notes
Total long term debt
August 31, 2013
As at
August 31, 2012
124,199,370
19,507,824
143,707,194
125,961,507
19,031,312
144,992,819
Senior notes - The Senior notes mature in 2018, and as at August 31, 2013, the principal amount outstanding is
$130.8 million. The Senior notes bear interest at 9.75% payable semi-annually on June 21 and December 21. The
Senior notes are redeemable at the option of the Company on or after June 21, 2014. Any redemption prior to
June 21, 2017 will include an applicable premium of up to 7.3% plus compensatory interest payments to June 21,
2014 for any redemption prior to June 21, 2014. The premium reduces with the passage of time.
Contained in the Company’s senior notes indenture are certain covenants including conditions to be met prior to
the distribution of dividends. The Company is currently in compliance with all conditions and expects to be compliant
before and after the payment of dividends.
Convertible notes - The Company has $20 million aggregate principal amount of 8.0% unsecured subordinated
Convertible notes, due September 12, 2014 outstanding. The interest is payable semi-annually on June 30 and
December 31 and the Convertible note holders may elect to receive interest payments in the form of Class A Shares
of the Company based on the market price of the Class A Shares at the time of the payment.
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Sirius XM Canada Holdings Inc. Annual Report 2013
Page 26
26
Management’s Discussion and Analysis
Year Ended August 31, 2013
The Convertible notes are convertible at the option of the debenture holders at any time at a conversion price of
$5.92 per share. The Convertible notes are redeemable at the option of the Company at any time provided certain
thresholds are met.
Contractual Commitments
The Company has entered into a number of leases and other contractual commitments. The following table
summarizes its outstanding contractual commitments as of August 31, 2013 (in $000’s):
Contracts and Commitments
(1)
– Consolidated
Total
Less than
1 Yr.
1-3 Yrs.
As at August 31, 2013
More than
4-5 Yrs.
5 Yrs.
(in $ 000's)
Operating leases
10,550
2,090
3,377
2,466
2,616
NHL agreement
19,700
12,200
7,500
Principal on 9.75% senior notes
130,771
130,771
Interest on 9.75% senior notes
63,751
12,750
25,500
25,500
Principal on 8.0% convertible notes
20,000
20,000
Interest on 8.0% convertible notes
1,924
1,600
324
Service provider agreements
CBC
19,300
2,500
4,200
4,200
8,400
Sirius XM
1,584
404
809
371
Others
15,421
10,587
3,883
952
Advertising and marketing (2)
9,892
5,583
2,464
1,721
124
Total
292,893
47,714
68,057
165,982
11,140
Notes:
1. The Company must pay certain royalties for the use of music under Canadian copyright law outlined in tariffs certified
by the Copyright Board of Canada. The Company also pays license royalties to Sirius XM and fees to certain OEMs.
These arrangements have not been included in the table above because the specific amounts payable are contingent on
the Company’s revenue and/or subscriber levels, which themselves are subject to various economic assumptions, future
results and cannot be estimated.
2. Includes amounts under agreement with: Corus Entertainment Inc. (Corus) for the purchase of $0.4 million of advertising
from Corus over the next year; and with GMCL for $3.0 million of advertising and marketing until November 2018.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
Arrangements, Relationships and Transactions with Related Parties
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Sirius XM Canada Holdings Inc. Annual Report 2013
Management’s Discussion and Analysis
Year Ended August 31, 2013
Related parties of the Company include shareholders with a significant interest in the Company. Significant
shareholders of the Company include Sirius XM, The Canadian Broadcasting Corporation (“CBC”), Slaight
Communications Inc. (“Slaight”), and Obelysk Media Inc. (“Obelysk” formerly known as JBM Properties Inc. and
CSRI Inc.), a company controlled by John I. Bitove. Related parties also include companies controlled or influenced
by these shareholders and members of the Board of Directors, management and immediate family members of
management or shareholders with significant influence.
The balances outstanding with the related parties are set out in Note 9 of the Company’s annual consolidated
financial statements.
Transactions with CBC – The Company has a 17-year agreement with the CBC effective until August 24,
2022. This agreement is a non-exclusive, non-transferable license agreement whereby the Company has
distribution rights to transmit channels currently owned by the CBC within Canada.
The incurred costs during the year ended August 31, 2013 primarily related to the CBC license agreement and
advertising was $3,165,443 (2012- $4,197,150).
As at August 31, 2013, amounts due to CBC related to the transactions described above also include a noninterest bearing promissory note of $402,777 (2012 - $402,777).
Transactions with Slaight – As at August 31, 2013, amounts due to Slaight include non-interest bearing
promissory notes of $402,777 (2012 - $402,777).
Transactions with Sirius XM – In 2005, Sirius Canada, as one of the predecessors of the Company, entered
into a license and service agreement with Sirius XM whereby the Company acquired the right to distribute the
Sirius network channels owned or licensed by Sirius XM within Canada. In return, the Company is obligated to
pay Sirius XM a percentage of its gross revenue, to a maximum of 15%, and reimbursement of other charges
paid on Sirius’ behalf.
In 2011, the Company acquired a license and technical service agreement with Sirius XM whereby the Company
acquired the right to distribute the XM network channels owned or licensed by Sirius XM. In return, the
Company is obligated to pay Sirius XM a percentage of subscriber revenue (15%), activation charges, fees under
the Technical Service Agreement and reimbursement of other charges paid on SXM’s behalf.
The costs incurred during the year ended August 31, 2013 related to the Sirius XM agreements was $41,773,994
(2012 - $39,197,060).
In addition to the amounts expensed above for the year ended August 31, 2013, intangible assets of $5,537,697
(2012 - $2,672,703) relating to XM activation fees and computer software, net of amortization are presented
within the balance sheet. During the year ended August 31, 2013, cash payments related to these intangible
assets made to Sirius XM totaled $3,953,974 (2012 - 1,700,212).
As at August 31, 2013, amounts due to Sirius XM include a non-interest bearing promissory note of $402,778
(2012 - $402,778).
Transactions with John I. Bitove, Obelysk and its affiliates – In 2011, the Company entered into a
reimbursement agreement with Obelysk for the purchase of third party advertising services. The Company has
agreed to reimburse Obelysk a total amount of $208,000 over the next three years for these advertising services.
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Management’s Discussion and Analysis
Year Ended August 31, 2013
The Company incurred costs from Obelysk and other entities affiliated with Obelysk and John I. Bitove, including
costs associated with the reimbursement agreement. These costs were related to advertising, business events,
use of a broadcast centre, and operating costs. During the year end ended August 31, 2013, the costs totaled
$97,985 (2012 - $143,252). As at August 31, 2013, the balance due was $21,000 (2012 - $15,478).
In 2012 the Company incurred costs on behalf of an entity affiliated with Obelysk and John I. Bitove for costs
related to management of a call centre operation. During the year ended August 31, 2012, the total cost
incurred was $36,534 which was reimbursed by Mobilicity.
Critical Accounting Estimates and Judgments
In our 2013 Annual Audited Consolidated Financial Statements and Notes thereto, as well as in our 2013 Annual
MD&A, we have identified the accounting policies and estimates that are critical to the understanding of our business
operations and our results of operations.
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the actual results. The estimates and assumptions that are critical to the determination of
carrying values of assets and liabilities are addressed below.
Impairment of non-financial assets
The impairment test on non-financial assets, which are comprised primarily of property and equipment, intangible
assets and goodwill, is carried out by comparing the carrying value of a CGU that includes these assets to the
recoverable amount of a CGU. The recoverable amount of a CGU is the higher of fair value less costs to sell, and
its value in use.
Goodwill and indefinite lived intangibles are tested at least annually for impairment. For the purpose of impairment
testing, goodwill is tested for impairment using the fair value less cost to sell model at the operating segment level.
The business is managed as one operating segment based on how financial information is produced internally for the
purposes of making operating decisions.
In assessing the Company’s broadcast license for impairment, the Company compares the aggregate recoverable
amounts of the assets and related liabilities included in a CGU to its respective carrying amount. For the purpose of
the impairment test carried out during the year ended August 31, 2013 the CGU was equivalent to the Sirius XM
business. During the year, the Sirius and XM licenses were combined into one license which resulted in a change in
CGUs from the prior year. In the prior year, the CGUs, for purpose of testing the broadcast licenses, were at the
XM and Sirius levels.
In assessing both the goodwill and broadcast license for impairment, the Company compares the aggregate
recoverable amount consisting of the sum of its quoted equity market capitalization and the fair value of its debt to
the carrying value of its net assets excluding long term debt. An impairment charge is recognized to the extent that
the carrying value exceeds the recoverable amount. In the prior year, the recoverable amount of the XM and Sirius
CGUs was determined using a discounted cash flow model.
No impairment charges have arisen as a result of the reviews performed during the year ended August 31, 2013 or
August 31, 2012. Reasonably possible changes in key assumptions would not cause the recoverable amount of
goodwill or the broadcast license to fall below the carrying value.
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Sirius XM Canada Holdings Inc. Annual Report 2013
Management’s Discussion and Analysis
Year Ended August 31, 2013
Stock-based Compensation
The estimated fair value of stock awards granted to employees as of the date of grant is recognized as compensation
expense over the period in which the related employee services are rendered. For stock options granted to nonemployees, the estimated fair value of stock awards granted to non-employees is recognized as expense over the
period in which the related goods or services are rendered. The determination of the fair value of stock awards
includes the use of option pricing models and the use of the following estimates: expected volatility, expected option
life and expected interest rates.
In addition to granting stock options, the Company also grants restricted stock units (“RSUs”) and performance
stock units (“PSUs”). For expenses associated with RSUs and PSUs, please see the section entitled “Stock-Based
Compensation” in the “Discussion of Financial and Operating Results” in this MD&A.
Revenue Recognition
Revenue from subscribers consists of our monthly subscription fee (including the music royalty fee), which is
recognized as the service is provided, and a non-refundable activation fee that is recognized on a pro-rata basis over
an estimated term of the subscriber relationship (currently 20 months), which is based upon management’s analysis
of historical churn rates. We continually review this estimate. If the actual term of our subscriber relationships is
significantly greater than our current estimate of 20 months, the period over which we recognize the non-refundable
activation fee will be extended to reflect the actual term of our subscriber relationships. Fees received in advance
are recognized as deferred revenue. Sales incentives, consisting of discounts and rebates to subscribers, offset earned
revenue.
Income taxes
The recognition of deferred tax assets is based on whether it is more likely than not that sufficient and suitable
taxable income will be available in the future against which the reversal of temporary differences can be deducted.
The Company’s assessment is based upon existing tax laws and estimates of future taxable income. If the assessment
of the company’s taxable income in the future increases or decreases, or its ability to utilize the underlying future
tax deductions changes, the Company would be required to recognize more or less of the tax deductions as deferred
tax assets, which would decrease or increase the income tax expense in the period in which this is determined.
As at August 31, 2013, the Company has recognized deferred tax assets of $54,483,616 (2012 - $59,858,394) on the
basis that realization of the tax benefit is probable. However, the Company has not recognized deferred tax assets
of $43,273,000 in respect of losses amounting to $163,294,000, on the basis that the Company does not have
sufficient evidence that it is probable they will be utilized.
For the year ended August 31, 2013 and August 31, 2012, deferred taxes were reported using a combined income
tax rate of 26.5%, based on the 2012 Ontario budget which froze the general income tax rate at 11.5%, until the
province returns to a balanced budget, and the expected timing of reversals.
At August 31, 2013, taxation years dating back to the period ended August 31, 2006 are open for review at the
discretion of various taxation authorities and are subject to audit uncertainties.
During October 2013, upon the completion of its audit of the 2006 taxation year, CRA is proposing to disallow the
deduction of non-capital losses and eligible capital expenditures related to deductions taken on payments made to
XM and certain OEMs. Should the Company not be successful in sustaining its filing position, the impact would be a
reduction in deferred tax assets of approximately $18,000,000 (representing tax losses and tax basis of $68,000,000).
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Sirius XM Canada Holdings Inc. Annual Report 2013
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Management’s Discussion and Analysis
Year Ended August 31, 2013
In addition, unrecognized tax losses of $43,273,000 (representing tax losses of $163,294,000) would no longer be
available to be carried forward against future taxable income.
The Company obtained legal tax advice in filing its original tax position and continues to be confident of its filings.
The position continues to be supported by the Company’s tax legal advisors. The Company expects that the filing
position will be sustained upon full examination of the facts by CRA, or if required by the federal courts. The
Company will continue to vigorously defend its position and it believes it will be successful.
From time to time the Company may be engaged in legal proceedings or claims that have arisen in the ordinary
course of business. The outcome of all of the proceedings or claims against the Company, are subject to future
resolution, including the uncertainties of litigation. Based on information currently known to the Company,
management believes that the probable ultimate resolution of any such proceedings and claims will not have a
material adverse effect on the financial condition of the Company taken as a whole.
The CRA is proposing to reassess filing positions taken in a prior year and is proposing to assess material amounts
for withholding taxes and interest and penalties related to certain transactions which would be payable should the
Company’s filing position not be sustained. The Company has not recognized a provision for any amounts related
to the proposed amounts as it believes CRA’s proposal has no merit. The Company will continue to vigorously
defend its position and it believes it will be successful in defending its position.
The calculation of current and deferred taxes involves significant estimation and judgment in respect of certain items
whose tax treatment cannot be finally determined until resolution is reached with the Canada Revenue Agency
(“CRA”). The final resolution of the audit of the 2006 taxation year may result in adjustments to the recognized and
unrecognized deferred tax assets. Note 7 and note 19 of the Company’s annual consolidated financial statements
provide additional information regarding income taxes and any related contingencies.
Disclosure Controls and Procedures
Management has designed disclosure controls and procedures to provide reasonable assurance that material
information relating to the Company is made known to it by others. As at August 31, 2013, the Chief Executive
Officer and the Chief Financial Officer, with participation of the Company’s management, have concluded that the
design and operation of the Company’s disclosure controls and procedures were effective to provide that
information required to be disclosed by the Company in reports that it files or submits under the applicable Canadian
securities laws is (i) recorded, processed, summarized and reported within the time periods specified in applicable
rules and forms and (ii) accumulated and communicated to management, including our Chief Executive Officer and
Chief Financial Officer, to allow timely decisions regarding required disclosure. Due to the inherent limitations in
control systems and procedures, their evaluation can provide only reasonable, not absolute, assurance that such
disclosure controls and procedures are operating effectively. A control system, no matter how well conceived or
operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
Changes in Internal Control over Financial Reporting
During the three months ended August 31, 2013, there were no changes in the Company’s internal controls over
financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal
control over financial reporting.
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Sirius XM Canada Holdings Inc. Annual Report 2013
Management’s Discussion and Analysis
Year Ended August 31, 2013
International Financial Reporting Standards (“IFRS”)
Accounting standards issued but not yet effective
Certain pronouncements were issued by the IASB or IFRIC that are effective for accounting periods beginning on
or after January 1, 2013 unless otherwise noted. The Company has assessed the impact of these standards and
amendments listed below, and determined there are no material impacts to the Company’s financial statements.
IFRS 10, Consolidated Financial Statements replaces the guidance on “consolidation” in IAS 27 – Consolidated and
Separate Financial Statements and Standing Interpretations Committee (“SIC”) 12 – Consolidation – Special Purpose
Entities. The new standard contains a single consolidation model that identifies control as the basis for consolidation
for all types of entities, including special purpose entities. The new standard also sets out requirements for situations
when control is difficult to assess, including circumstances in which voting rights are not the dominant factor in
determining control.
IFRS 12, Disclosure of Interests in Other Entities establishes disclosure requirements for interests in other entities,
such as subsidiaries, joint arrangements, associates, and unconsolidated structured entities. The standard carries
forward existing disclosures and also introduces significant additional disclosure that address the nature of, and risks
associated with, an entity’s interests in other entities.
IAS 1, Presentation of Financial Statements was amended to require entities to group items presented in “other
comprehensive income” into two categories. Items will be grouped together based on whether those items will or
will not be classified to profit or loss in the future.
The following revised standards and amendments are effective for annual periods beginning on or after January 1,
2013 with earlier application permitted, unless otherwise noted. The Company has not yet assessed the impact of
these standards and amendments or determined whether it will early adopt them.
IFRS 9, Financial Instruments (Classification and Measurement) replaces the guidance on “classification and
measurement” of financial instruments in IAS 39 – Financial Instruments – Recognition and Measurement. The new
standard requires a consistent approach to the classification of financial assets and replaces the numerous categories
of financial assets in IAS 39 with two categories, measured at either amortized cost or at fair value. This is effective
for accounting periods beginning on or after January 1, 2015.
IFRS 13, Fair Value Measurement defines “fair value” and sets out in a single standard a framework for measuring fair
value and requires disclosures about fair value measurements. The new standard reduces complexity and improves
consistency by clarifying the definition of fair value and requiring its application to all fair value measurements.
IAS 32, Financial Instruments (Presentation) was amended to clarify existing application issues related to the offsetting
requirements. Specifically, the amendments clarify the meaning of “currently has a legally enforceable right of setoff” and “simultaneously realization and settlement”.
IFRIC 21, Levies was issued to clarify that an entity recognizes a liability for a levy when the activity that triggers
payment, as identified by the relevant legislation, occurs. It also clarifies that a levy liability is accrued progressively
only if the activity that triggers payment occurs over a period of time, in accordance with the relevant legislation.
For a levy that is triggered upon reaching a minimum threshold, the interpretation clarifies that no liability should be
recognized before the specified minimum threshold is reached. This is effective for annual periods beginning on or
after January 1, 2014.
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Sirius XM Canada Holdings Inc. Annual Report 2013
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Management’s Discussion and Analysis
Year Ended August 31, 2013
Risks and Uncertainties
This section outlines some of the risks that could affect our business, financial condition and results of operations and
should be considered in connection with any forward looking statements in this document. For a detailed description
of risk factors associated with the Company, readers are advised to review the “Risk Factors” section of the Company’s
AIF dated November 14, 2013.
We rely on our exclusive relationship with Sirius XM for the provision of our Satellite Radio Services and
other offerings.
The Company has various agreements with Sirius XM to provide satellite digital audio radio services, or SDARS, in
Canada. Its success as a business depends on Sirius XM’s cooperation and its programming content, satellite network
and underlying technology, as well as Sirius XM’s operational and marketing efficacy, competitiveness, finances,
regulatory status and overall success in the U.S. Because of the Company’s dependency on Sirius XM, should Sirius
XM’s business suffer as a result of increased competition, increased costs of programming, satellite malfunctions,
regulatory changes, adverse effects of litigation or other factors, its business may suffer as well. Furthermore, a breach
of its agreement with Sirius XM or a failure by Sirius XM to perform its part of the agreement would have detrimental
financial consequences to the Company’s business. Although not material for several years, we may not be able to
renew or extend our agreements with Sirius XM on favorable terms.
We face substantial competition and that competition is likely to increase over time.
In seeking market acceptance, we encounter competition for both listeners and advertising revenues from many
sources including traditional and digital AM/FM radio, Internet-based audio providers; direct broadcast satellite
television audio service, and digital cable systems that carry audio service. Our ability to retain and attract subscribers
depends on our success in creating and providing popular or unique music, entertainment, news and sports
programming. Our subscribers can obtain certain similar content for free through terrestrial radio stations or Internet
radio services. Audio content delivered via the Internet, including through mobile devices, is increasingly competitive
with our services. A number of automakers and aftermarket manufacturers have introduced, or will shortly introduce,
factory-installed radios capable of accessing Internet delivered audio programming and music services
Unlike satellite radio, traditional AM/FM offers free broadcast reception supported by commercial advertising, rather
than by a subscription fee. Many radio stations offer information programming of a local nature, such as traffic and
weather reports, which we are not permitted to offer under our CRTC broadcasting license. To the extent that
consumers place a high value on these features of traditional AM/FM radio, we are at a competitive disadvantage to
the dominant providers of such audio entertainment services.
Internet radio and music services often have no geographic limitations and can provide listeners with radio
programming from across the country and around the world. Major media companies and online-only providers
make high fidelity digital streams available over the Internet for free, or in some cases, for less than the cost of
satellite radio subscriptions. We expect that improvements in higher bandwidth, faster mobile Internet connections,
and evolving features and programming selection will make Internet radio a more significant competitor in the future.
Mobile devices like smartphones and tablets, some of which have the capacity of interfacing with vehicles, have
become popular. These smartphones and other devices can typically play recorded or cached content and access
Internet radio via dedicated applications or browsers. The Apple iPhone, iPad, and iPod Touch, mobile devices using
Google’s Android platform, Microsoft’s Windows Phone platform, and Blackberry Ltd.’s Blackberry mobile devices
allow their users to download and purchase music through dedicated applications and built-in web browsers. These
applications are often free to the user and offer music and talk content as long as the user is subscribed to a
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Sirius XM Canada Holdings Inc. Annual Report 2013
Management’s Discussion and Analysis
Year Ended August 31, 2013
sufficiently large mobile data plan. Leading audio smartphone radio applications available in Canada include Slacker,
Rdio, Stitcher, and TuneIn Radio. Certain of these applications also include advanced functionality, such as
personalization and song skipping, and allow the user to access large libraries of content and podcasts on demand.
Although presently available Internet radio and music services have drawbacks such as hardware requirements and
download bandwidth and network availability constraints, which we believe make satellite radio a more attractive
option to consumers, Internet-based radio and services are becoming increasingly competitive as quality improves
and costs are reduced. On October 1, 2012, the Company introduced a new Internet offering, SiriusXM Internet
Radio. SiriusXM Internet Radio offers subscribers exclusive Internet channels, and on-demand programming via
SiriusXM Internet Radio.
Third generation (“3G”) and Long Term Evolution (LTE) mobile networks have enabled a steady increase in the
audio quality and reliability of mobile audio streaming, and this is expected to further increase as LTE networks
become the standard. We expect that improvements from higher bandwidths, wider programming selection and
advancements in functionality are likely to continue making smartphone applications an increasingly significant
competitor.
A number of automakers have deployed or are planning to deploy integrated multimedia systems in dash boards,
such as Ford’s SYNC, Toyota’s Entune, and BMW/Mini’s Connected systems. These systems can combine control
of audio entertainment from a variety of sources, including traditional radio broadcasts, satellite radio, smartphone
applications and stored audio, with navigation and other advanced applications. Live Internet radio and other data is
typically pulled into the car via a Bluetooth link to an Internet-enabled smartphone, and the entire system may be
controlled by touchscreen or voice recognition. Other systems are equipped with their own dedicated mobile
Internet connection. These advanced systems enhance the attractiveness of our Internet-based competition by
making such applications more prominent, easier to access and safer to use in the car.
Rapid technological and industry changes could adversely impact our Satellite Radio Services.
The audio entertainment industry is characterized by rapid technological change, frequent new product innovations,
changes in customer requirements and expectations, and evolving standards. Competing technologies and services
may emerge quickly. If we are unable to keep pace with these changes, our business may be detrimentally affected.
Products using new technologies, or emerging industry standards, could make our Satellite Radio Services less
competitive in the marketplace.
Our business depends in large part upon automakers, whose sales are dependent on general
macroeconomic conditions.
The Company has agreements with majority of the Canadian auto manufacturers for factory installation of satellite
radios in new cars in Canada. We spend a significant amount of money on marketing expenditures towards auto
manufacturers’ initiatives, and purchasers of these new vehicles represent a substantial proportion of our subscriber
base. The sale and lease of these vehicles with satellite radios is an important source of subscribers for our Satellite
Radio Services.
Automotive sales and production are dependent on many factors, including the availability of consumer credit,
general economic conditions, consumer confidence, and fuel costs. To the extent vehicle sales by automakers decline
or the penetration of factory-installed satellite radios in those vehicles is reduced, subscriber growth for the
Company may be adversely impacted.
General economic conditions may adversely affect the Company’s financial results, financial position and
business
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Management’s Discussion and Analysis
Year Ended August 31, 2013
The Company’s business plans contain assumptions predicated on an economy that is expected to improve as it pertains
to vehicle sales. However there are no assurances that our assumptions will materialize. The Company’s ability to
continue to generate solid revenue growth and year-over-year improvement in financial results may be negatively
affected should Canadian demand for automobiles equipped with the satellite receiver decline in a significant manner.
Higher than expected costs of attracting new subscribers, higher subscriber turnover could each adversely
affect our financial performance and operating results.
We are still spending substantial funds on advertising, marketing and subsidizing costs of radio devices in transactions
with car and radio manufacturers, retailers and other parties to attract new subscribers. Our ability to maintain positive
free cash flow and remain profitable depends on our ability to continue to maintain or lower these acquisition costs. If
the costs of attracting new subscribers and retaining subscribers are greater than expected, our financial performance
and results of operations could be adversely affected.
We are experiencing, and expect to continue to experience, subscriber turnover, or churn. We cannot predict the
amount of churn we will experience over the longer term. If we are unable to retain our current subscribers, or the
cost of retaining subscribers is higher than we expect, our financial performance and operating results could be
adversely affected.
We must maintain and pay copyright license fees for music rights which may increase and become more costly
than expected.
We require music royalty arrangements with the following Canadian copyright collectives in order to operate our
Satellite Radio Services and online offerings: the Society of Composers, Authors and Music Publishers of
Canada/Société canadienne des auteurs, compositeurs et éditeurs de musique (SOCAN), Re:Sound, and CSI Inc.,
(CSI), the joint venture of The Canadian Musical Reproduction Rights Agency Ltd. (CMRRA) and The Society for the
Reproduction Rights of Authors, Composers and Publishers in Canada Inc./Société du droit de reproduction des
auteurs, compositeurs, et éditeurs au Canada (SODRAC) Inc. SOCAN administers the public performance right
with respect to musical works. Re:Sound administers the right to equitable remuneration for the public performance
and communication to the public by telecommunication of performers’ performances and sound recordings. CSI
administers the reproduction right with respect to musical works.
The Company’s online offerings are subject to SOCAN Tariff 22.D, which was certified for the years 1996-2006. The
Company continues to pay copyright royalties for its online use of musical works at the rates set out in Tariff 22.D.
SOCAN has since submitted successor tariffs for the subsequent years. SOCAN’s proposed rates are higher than the
certified Tariff 22.D rate. As the Company’s online offerings evolve or if the Copyright Board chooses to modify the
structure of SOCAN’s online tariffs, our online offerings may become subject to a different SOCAN tariff.
Re:Sound does not yet have a certified tariff and royalty rate for the public performance and communication to the
public of sound recordings and performers’ performances over the Internet, but has submitted proposed rates for
the years 2009, 2010, 2011, 2012, and 2013. Re:Sound’s proposed rates are very high and it is not clear whether
Re:Sound’s proposed tariffs capture our online activities. During the year the Copyright Board of Canada held a
hearing to consider Re:Sound’s proposed Internet tariffs for the years 2009 to 2012. Once certified, the Re:Sound
online tariff will be retroactive to 2009; and may apply to the Company’s online services.
On June 29, 2012, Parliament passed the Copyright Modernization Act (Bill C-11), an Act to amend the Copyright
Act (Canada). As of November 14, 2013, certain provisions of the Copyright Modernization Act relating to
protections afforded to sound recordings have yet to come into force. Under current Canadian copyright law,
American makers of sound recordings are not eligible for equitable remuneration for the public performance or
communication to the public of their sound recordings in Canada. As a result, the Company is not required to pay
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Sirius XM Canada Holdings Inc. Annual Report 2013
Management’s Discussion and Analysis
Year Ended August 31, 2013
Re:Sound royalties for the use of United States sound recordings on the Satellite Radio Services or our online
offerings. Certain portions of the Copyright Modernization Act are likely to extend the right of equitable
remuneration to United States sound recordings. These provisions are set to come into force once the WIPO
Performances and Phonographs Treaty comes into force in Canada. It is expected that this will occur during calendar
2014, and that as a result of United States sound recordings becoming eligible for equitable remuneration, there will
be an increase in royalties the Company is required to pay to Re:Sound that may have a material impact on the
Company’s financial results. The Company believes that it has adequate initiatives planned to offset the potential
impact of such an increase.
The transition of some automaker partners from the Sirius Radio Service to the XM Radio Service may increase
our royalties payable to Sirius XM, which may impact our financial performance.
The Sirius Radio Service and XM Radio Service infrastructures are distinct platforms, operating on different
frequencies and servicing satellite radios specific to each network. As mentioned in “Recent Developments - Unified
Branding and Operations”, in the AIF, the Company is increasingly delivering services under the SiriusXM brand.
SiriusXM branded satellite radios operate on the XM Radio Service infrastructure. As a result, automakers that
previously installed Sirius Radio Service radios in their vehicles are migrating to XM Radio Service radios. Royalties
to Sirius XM for radio installed in these transitioning automakers are thus increasingly payable under the XM Licence
Agreement where previously they had been payable under the Sirius Licence Agreement. As the royalty rate under
the XM Licence Agreement is higher than that under the Sirius Licence Agreement, this transition may increase the
Company’s overall costs in providing the Satellite Radio Services, potentially impacting our financial performance.
Foreign currency risk
The Company is exposed to fluctuations of the Canadian dollar in relation to the US dollar due to its current liabilities
in respect of the NHL and other payments to Sirius XM, which are denominated in US dollars. Management has not
engaged in mitigating this risk through formal hedging strategies. A one percent change in the exchange rate represents
less than $0.3 million impact to the cash flows of the Company.
In addition to above mentioned risks, the Company also faces risks of disruption to its network infrastructure of
terrestrial repeaters due to natural disasters; risks of adverse impact of litigation, claims, copyright and other
infringements, risks related to change in regulation and consumer protection laws, and piracy of its content.
Outstanding Share Data and Other Information
The Company is authorized to issue an unlimited number of Class A Shares, an unlimited number of Class B Voting
Shares and an unlimited number of Class C Non-Voting shares. As at November 14, 2013, there were 75,853,212 fully
paid and non-assessable Class A Shares and 144,275,309 fully paid and non-assessable Class B Voting Shares outstanding.
There are currently no Class C Non-Voting shares outstanding. A total of 2,438,100 stock options were outstanding
under the Company’s stock option plan. Additional information concerning the Company, including our AIF for the
fiscal year ended August 31, 2013, is available on SEDAR at www.sedar.com.
Assuming conversion of the Class B Shares, which are convertible into Class A Shares on a 3 to 1 basis, the total
number of Class A Shares outstanding would be 123,944,981.
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Management’s Discussion and Analysis
Year Ended August 31, 2013
Definitions of Industry Terminology
In addition to our results reported in accordance with IFRS, we use certain non-GAAP financial indicators, including
non-GAAP information and operating measures for internal planning purposes and as a basis for investors and
analysts to evaluate and compare the periodic operating performances and value similar companies in our industry,
although our metrics may not be comparable to similarly titled metrics of other companies. Subsequent to the closing
of the merger, the Company conducted a metrics review and realignment exercise. Therefore, some metrics may
not be comparable to metrics disclosed publicly by the Company prior to the consummation of the merger. Provided
below are the definitions of metrics.
(a) Average Monthly Subscription Revenue Per Subscriber (ARPU): derived from the total of earned
subscription revenue and the music royalty fee and activation fees, divided by the monthly weighted average
number of Self-Paying subscribers and a portion of the Paid-Promotional Subscribers where consumers have
already started to consume their promotional service. ARPU is a measure of operational performance and
not a measure of financial performance under IFRS. We believe ARPU is a useful measure of our operating
performance and is a significant basis used by management to measure the operating performance of our
business. This non-GAAP measure, which uses certain revenue line items from our Consolidated Statement
of Operations and Comprehensive Income, should be used in addition to, but not as a substitute for, the
analysis provided in the Consolidated Statement of Operations and Comprehensive Income. ARPU may
fluctuate based on promotions, changes in our subscription rates, as well as the adoption rate of annual and
multi-year prepayment plans, multi-radio discount plans (such as the family plan), commercial plans and
premium services.
(b) Cost Per Gross Addition (CPGA): includes the amounts in SAC, as well as marketing, which includes
advertising, media and other discretionary marketing expenses divided by the number of total gross
additions excluding Non-Paid Promotional subscribers. CPGA costs do not include the costs of marketing
staff. CPGA is a measure of operational performance and not a measure of financial performance under
IFRS. We believe CPGA is a useful measure of our operating performance and is a significant basis used by
management to measure the operating performance of our business. This non-GAAP measure, which uses
certain expense line items from our Consolidated Statement of Operations and Comprehensive Income,
should be used in addition to, but not as a substitute for, the analysis provided in our financial statements.
(c) Monthly customer care and billing costs per Self-Paying Subscriber: is calculated by dividing the total
customer care and billing costs by average Self-Paying subscribers for the period.
(d) OEM: refers to original equipment manufacturer. OEM, as it relates to the Company’s satellite radio
business, includes automotive manufacturers with which the Company has a contractual agreement in place
to factory install a satellite radio in the particular manufacturer’s vehicles.
(e) Self-pay churn: is defined as Self-Pay Subscriber deactivations for the period divided by the average number
of Self-Pay Subscribers for the period divided by the number of months in the period.
(f) Subscribers:
a.
Self-Paying Subscribers: subscribers who are receiving and have paid or agreed to pay for
our satellite radio service by credit card, prepaid card or invoice.
b. Paid-Promotional Subscribers: Subscribers currently in a trial period and vehicles factoryactivated with one of the SXM services, whereby automakers have agreed to pay for all or a
portion of the trial period service.
c.
37
TSX: XSR
Non-Paid Promotional Subscribers: subscribers currently in a trial period and vehicles
factory-activated with one of the SXM services, whereby the Company has agreed to
Page 37
Sirius XM Canada Holdings Inc. Annual Report 2013
Management’s Discussion and Analysis
Year Ended August 31, 2013
compensate certain automakers to install satellite radios and the automakers have agreed to
promote the trial period service to the consumer. Automakers are not paying for any portion
of the trial period service.
(g) Subscriber Acquisition Costs (SAC): includes Subsidies costs and net costs related to equipment sold
directly to the consumer divided by total gross additions excluding the Non-Paid Promotional Subscribers
for the period. SAC is a measure of operational performance and not a measure of financial performance
under IFRS. Management believes SAC is a useful measure of the operating performance of the business.
This non-GAAP measure, which uses certain expense line items from our Consolidated Statement of
Operations and Comprehensive Income, should be used in addition to, but not as a substitute for, the
analysis provided in the Consolidated Statement of Operations and Comprehensive Income. In our financial
statements, most of our Subscriber Acquisition Costs are captured in the marketing section.
(h) Subscription Revenue: consists primarily of monthly subscription fees (including Music Royalty Fee) for
our satellite radio service charged to consumers, commercial establishments and businesses that purchase
or lease vehicles for use in their business and is recognized as the service is provided. Promotions and
discounts are treated as a reduction to revenue over the term of the plan purchased by the Subscriber.
Subscription revenue growth is predominantly driven by growth in our subscriber base but is also affected
by fluctuations in the percentage of subscribers in our various discount plans, family plans as well as changes
in our subscription rates.
Non-GAAP Financial Measures
(a) EBITDA: is defined as earnings before interest income and expense, taxes, amortization, gain on revaluation
of derivatives and foreign exchange gains and losses.
(b) Adjusted EBITDA: is defined as earnings before integration, severance and merger costs, stock-based
compensation, interest income and expense, taxes, amortization, fair value adjustments arising due to
purchase price accounting, gain on revaluation of derivative and foreign exchange gains and losses.
(c) Free Cash Flow: is defined as cash provided by operating activities less capital expenditures for the purchase
of property and equipment and intangible assets.
(d) Cost of Revenue: includes revenue share and royalties, customer care and billing operations expenses, cost
of merchandise, broadcast and operations expenses and programming and content expenses.
(e) Net Debt: is defined as the total debt (Senior and Convertible Notes) less cash, cash equivalents and short
term investments.
(f) Net Debt to Adjusted EBITDA: is defined as the net debt at the end of the period divided by 12-months
of trailing adjusted EBITDA. This ratio is used by investors as a measure of company-specific risk.
TSX: XSR
Sirius XM Canada Holdings Inc. Annual Report 2013
Page 38
38
MARTHA
STEWARTviva
The HighwayThe Verge
INDIE
EWTN
the
message P O T U S the
Met Opera
CATHOLIC
CHANNEL
WRN
ESPN
ESPN’s
Sports Talk Channel
Radio Highway
Siriusly Sinatra
Real JAZZ
SIRIUS XM
FC
SYMPHONY HALL
SiriusXM College Sports Nation electric
areadeep tracks
Liquid Metal
WORLD
The Bridge
Bluegrass Junction Jam On
PEARL JAM
Sirius XM
the coffee
N P R Ta l k LOFT
E STREET RADIO
O C TA N E NFL
spa
house
CNBC
STUDIO
The Spectrum
npr now
on
’
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Family Talk
FOX
NEWS
spa
Faction
Blue Collar BUSINESS
Ozzy’s Boneyard
Chansons
OutQ
CNN
escape
AMI
NBA
MSNBC
C-SPAN
LAUGH
MAD DOG
ESPN XTR A
HLN
ROAD DOG TRUCKING
CNN
VIVID RADIO
Elvis RADIO
THE SPECTRUM
the
heat
PuLSe RADIO
HIPHOP
NATION
BACK SPIN
OPRAH
R ADIO
viva
Spa
Classıc vinyl
USA
JOINT
D e e p Tra c k
’60son6
SOUL TOWN
Love STARS 70s 7
OUTLAW FOX
the PuLSe
E Street Radio
EWTN
THE
VILLAGE LOFT
PRIME COUNTRY
SHADE 45 BPM
SERVICE
THE
HAIR NATION
OZZY’s
BONEYARD
Classics
Heart
&Soul Radio
FACTION
Heart
&
OWN BBC
msnbc
Soul
THALL
LITHIUM
RURAL RADIO
54
ICEBERG
NFL
SiriusXM FANTASY SPORTS RADIO
CFL
ICI R a DIO-C a N a D a P re MI ère
CHANNEL CANADA LAUGHS
POP2K
The Bridge
the
Ica
NASCAR son
E LV IS
Deep Tracks
bpm
THE OPIE & ANTHONY CHANNEL
POTUS
ON BROADWAY Disney heat E S P N
DOCTOR RADIO JOiNT CBC music
Pearl Jam
PINK FLOYD
CNN
the JOiNT
S I R I U S X M CHILL
IZOD
INDIE
CFL
bpm
CANADA THE GROOVE
Caliente
TALKS
Joint CNN CINEMAGIC
O U T L AW CO U N T RY
NBA 20on20
CHILL electric area
COMEDY
Bloomberg ’80s 8
CENTRAL Entertainment RADIO
on
SHADE
45
ELVIS RADIO PRIME COUNTRY ’40s 4
ALT NATION EMINEM
BLUEGRASS ’50s 5 F OX X H O L E
KIDS JAM
JUNCTION
a
a a a re ère
SPORTS RADIO
SIRIUSXM PATRIOT
T H E H I G H W AY
SiriusXM College Sports Nation
RADIO
enLighten
on
THE CATHOLIC CHANNEL
R a d i o M a r g a r i t av i l l e
MLB NETWORK RADIO the LOFT
SiriusXM OutQ
ON
BB KING’S BLUESVILLE
ICI R DIO-C N D
radio 3
PEARL JAM
STERN
xmu
NETWORK
radio one
LATITUDE FRANCO
HAIR NATION
Patriot
POP2K
HIPHOP
NATION
SYMPHONY
HALL
FOX
Classic NEWS
CANADA
REWIND
360
LIQUID METAL AMI
Heart & Soul
P
MI
KFPRAISE
KIRK FRANKLIN’S
SIRIUS CHILL the blend
XMRADIOALT NATION
FRANCO
ICEBERG
Radio Disney
GRATEFUL DEAD
PUBLIC
ICEBERG
Elvis NHL
Blue Collar Comedy
NETWORK
S I R I U S X M spa
SPORTS
BONE YARD
bpm
ZONE SPORTS
PLAYBYPLAY
Chansons
LAUGH USA
First Wave
LATITUDE FRANCO
RADIO
THE SPECTRUM
BBC
GARAGE WATERCOLORS
RAW DOG UNDERGROUND
Chansons MULTICULTURAL radio
Vivid Radio
MET OPERA RADIO
On Broadway
C O M E D Y E STREET RADIO
Consolidated Financial Statements
August 31, 2013 & 2012
The Spectrum
1 st WAVE
GRAT E FU L D E A D CH A N N E L attitude
HOWARD ’90s on 9
ESCAPE
SIRIUS MLB CBC
Octane
on
B.B. KING’S BLUESVILLE
OUTQ
RADIO
ICEBERG
PLACE
The M e ssa g e
SIRIUS XM
HITS 1
CANADA
November 14, 2013
November 14, 2013
Independent Auditor’s Report
Independent Auditor’s Report
To the Shareholders of
To the Shareholders of
Sirius XM Canada Holdings Inc.
Sirius XM Canada Holdings Inc.
We have audited the accompanying consolidated financial statements of Sirius XM Canada Holdings Inc.
We have audited the accompanying consolidated financial statements of Sirius XM Canada Holdings Inc.
and its subsidiary, which comprise the consolidated balance sheets as at August 31, 2013 and August 31,
and its subsidiary, which comprise the consolidated balance sheets as at August 31, 2013 and August 31,
2012 and the consolidated statements of operations and comprehensive income (loss), changes in
2012 and the consolidated statements of operations and comprehensive income (loss), changes in
shareholders’ equity and cash flows for the years then ended, and the related notes, which comprise a
shareholders’ equity and cash flows for the years then ended, and the related notes, which comprise a
summary of significant accounting policies and other explanatory information.
summary of significant accounting policies and other explanatory information.
Management’s responsibility for the consolidated financial statements
Management’s responsibility for the consolidated financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with International Financial Reporting Standards, and for such internal control
statements in accordance with International Financial Reporting Standards, and for such internal control
as management determines is necessary to enable the preparation of consolidated financial statements
as management determines is necessary to enable the preparation of consolidated financial statements
that are free from material misstatement, whether due to fraud or error.
that are free from material misstatement, whether due to fraud or error.
Auditor’s responsibility
Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with Canadian generally accepted auditing standards. Those
We conducted our audits in accordance with Canadian generally accepted auditing standards. Those
standards require that we comply with ethical requirements and plan and perform the audit to obtain
standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free from material
reasonable assurance about whether the consolidated financial statements are free from material
misstatement.
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the auditor’s judgment,
the consolidated financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements,
including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control
whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order
relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order
to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by
appropriateness of accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements.
management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a
basis for our audit opinion.
basis for our audit opinion.
PricewaterhouseCoopers LLP
PricewaterhouseCoopers
LLP
PwC Tower, 18 York Street,
Suite 2600, Toronto, Ontario, Canada M5J 0B2
PwC
Tower,
18
York
Street,
2600, Toronto, Ontario, Canada M5J 0B2
T: +1 416 863 1133, F: +1 416Suite
365 8215
T: +1 416 863 1133, F: +1 416 365 8215
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
41
Sirius XM Canada Holdings Inc. Annual Report 2013
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of Sirius XM Canada Holdings Inc. and its subsidiaries as at August 31, 2013 and August 31, 2012
and their financial performance and their cash flows for the years ended August 31, 2013 and
August 31, 2012 in accordance with International Financial Reporting Standards.
“signed by PricewaterhouseCoopers LLP”
Chartered Professional Accountants, Licensed Public Accountants
Sirius XM Canada Holdings Inc. Annual Report 2013
42
CONSOLIDATED BALANCE SHEETS
At
(Canadian dollars)
ASSETS
Current assets
Cash and cash equivalents
Short-term investments
Accounts receivable
Prepaid expenses
Inventory
Total current assets
Long-term prepaid expenses
Property and equipment
Intangible assets
Deferred tax assets
Goodwill
August 31,
2013
August 31,
2012
4
44,078,584
5,157,798
13,359,446
6,778,736
234,349
51,034,749
—
12,133,138
3,361,448
324,316
5
6
7
8
69,608,913
100,157
5,979,911
152,217,165
54,483,616
96,732,525
66,853,651
79,410
7,617,399
175,986,331
59,858,394
96,732,525
379,122,287
407,127,710
47,145,257
9,620,750
2,704,449
144,885,091
1,327,974
205,683,521
39,085,800
6,775,601
2,704,449
137,554,399
1,285,587
187,405,836
17,105,210
1,669,229
2,390,608
143,707,194
323,112
21,019,320
6,902,537
1,208,332
144,992,819
344,112
370,878,874
361,872,956
151,794,596
6,161,440
(149,712,623)
8,243,413
148,393,493
5,057,501
(108,196,240)
45,254,754
379,122,287
407,127,710
Notes
14
14
Total assets
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade and other payables
Due to related parties
Interest payable
Current portion of deferred revenue
Provisions
Total current liabilities
Deferred revenue
Other long-term liabilities
Due to related parties
Long-term debt
Provisions
14
9
10
11
14
9
10
11
Total liabilities
Shareholders' equity
Share capital
Contributed surplus
Accumulated deficit
Total shareholders' equity
Total liabilities and shareholders’ equity
See accompanying notes
12
Contracts, Contingencies and Commitments (note 19)
Approved by Board of Directors
(signed) John I. Bitove
John I. Bitove, Director
43
(signed) Anthony Viner
Anthony Viner, Director
Sirius XM Canada Holdings Inc. Annual Report 2013
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Total
For the year ended August 31
(Canadian dollars)
Notes
Balance, September 1, 2011
Net loss for the year
Share
Contributed
Accumulated
Shareholders'
Capital
Surplus
deficit
Equity
147,169,430
—
4,324,032
—
(104,017,424)
(4,178,816)
47,476,038
(4,178,816)
Stock-based compensation
13
—
1,493,400
—
1,493,400
Stock options exercised
13
1,224,063
(759,931)
—
464,132
148,393,493
5,057,501
(108,196,240)
45,254,754
Balance, August 31, 2012
Balance, September 1, 2012
Net income for the year
13
148,393,493
5,057,501
(108,196,240)
12,190,542
45,254,754
12,190,542
Stock-based compensation
13
—
2,257,295
—
2,257,295
Dividends
12
—
—
(53,706,925)
(53,706,925)
Stock options exercised
13
3,401,103
(1,153,356)
—
2,247,747
Balance, August 31, 2013
13
151,794,596
6,161,440
(149,712,623)
8,243,413
See accompanying notes
Sirius XM Canada Holdings Inc. Annual Report 2013
44
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
For the year ended August 31
(Canadian dollars)
2013
2012
15
288,900,782
259,619,500
Operating costs
16
222,650,627
215,703,343
Integration, severance and merger costs
16
—
1,383,105
Depreciation and amortization
5, 6
35,575,596
39,689,053
30,674,559
2,843,999
Revenue
Notes
Operating expenses
Operating income
Finance costs, net
Interest income
Interest expense
10
Foreign exchange loss
Gain on revaluation of derivative
14
Finance costs, net
Net income (loss) before income tax
Income tax (expense) recovery
7
Net income (loss) and comprehensive income (loss)
Basic and diluted earnings (loss) per share
17
686,132
360,906
(15,410,960)
(16,699,532)
(675,789)
(210,372)
2,291,378
1,213,473
(13,109,239)
(15,335,525)
17,565,320
(12,491,526)
(5,374,778)
8,312,710
12,190,542
(4,178,816)
0.10
(0.03)
See accompanying notes
45
Sirius XM Canada Holdings Inc. Annual Report 2013
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the year ended August 31
(Canadian dollars)
Cash provided by (used in)
OPERATING ACTIVITIES
Net income (loss) for the year
Add(deduct) items not involving cash
Amortization of intangible assets
Depreciation of property and equipment
Loss on disposal of property and equipment
Deferred tax recovery
Stock-based compensation
Accrued interest
Interest accretion
Revaluation of derivatives
Foreign exchange losses
Net change in non-cash working capital and deferred
revenue related to operations
Cash provided by operating activities
INVESTING ACTIVITIES
Purchase of property and equipment
Purchase of intangible assets
Prepayment of property and equipment
Purchase of short-term investments
Interest received on short-term investments
2013
2012
12,190,542
(4,178,816)
33,167,880
2,407,716
11,109
5,374,778
2,257,295
—
954,375
36,899,668
2,789,385
—
(8,312,710)
1,493,400
(5,088)
950,583
10
(2,291,378)
769,540
(1,213,473)
3,010
18
5,409,419
60,251,276
12,649,125
41,075,084
5
6
(753,788)
(7,624,829)
(2,240,000)
(5,306,295)
176,649
(728,425)
(3,700,491)
—
—
—
(15,748,263)
(4,428,916)
(53,706,925)
2,247,747
—
—
(51,459,178)
—
464,132
(917,700)
(11,173,290)
(11,626,858)
(6,956,165)
51,034,749
44,078,584
25,019,310
26,015,439
51,034,749
Notes
6
5
5
7
13
10
14
14
Cash (used in) investing activities
FINANCING ACTIVITIES
Payment of dividends
Proceeds from exercise of stock options
Repayments of debt
Payment of related party promissory notes
Cash (used in) financing activities
Net (decrease) increase in cash and cash
equivalents during the year
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
12
13
10
9
See accompanying notes
Sirius XM Canada Holdings Inc. Annual Report 2013
46
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND NATURE OF BUSINESS
Sirius XM Canada Holdings Inc. (the “Company” or “SXM”) was incorporated on July 31, 2002 for the purpose
of establishing and operating a Canadian satellite radio service. The Company broadcasts music, sports, talk,
entertainment and other content on a subscription fee basis in Canada. Subscribers can also receive certain content
over the Internet and mobile devices. The Company’s Satellite radios are primarily distributed through
automakers (“OEMs”), through retail locations and through the Company’s website. SXM has agreements with
every major automaker to offer satellite radios as factory installed or dealer installed equipment in their vehicles.
The Company operates and markets itself as SiriusXM Canada. On January 15, 2013, the Company changed its
name from Canadian Satellite Radio Holdings Inc. to Sirius XM Canada Holdings Inc. to reflect the Company’s
unified branding and operations. The Company is incorporated and domiciled in Canada. The Company’s head
office is located at 135 Liberty Street, 4th Floor, Toronto, Ontario, M6K 1A7.
In November 2012, the Canadian Radio-television Telecommunications Commission (“CRTC”) granted the
Company a single license with extended term of six years from December 1, 2012 to August 31, 2018.
These financial statements were approved by the Board of Directors for issue on November 14, 2013.
2. SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies used in the preparation of these consolidated financial statements are described
below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of Preparation and Measurement
The Company prepares its consolidated financial statements in accordance with Canadian generally accepted
accounting principles ("Canadian GAAP"), defined as International Financial Reporting Standards (“IFRS”) as set
out in the Handbook of The Canadian Institute of Chartered Accountants. The preparation of consolidated
financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also
requires management to exercise judgment in applying the Company’s accounting policies. The areas involving a
higher degree of judgment or complexity, or areas where assumptions are significant to the consolidated financial
statements are disclosed later in this note.
The consolidated financial statements have been prepared under the historical cost convention, except for certain
financial assets and liabilities measured at fair value, including embedded derivatives.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date, regardless of whether that price is directly observable or
estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company
takes into account the characteristics of the asset or liability if market participants would take those characteristics
into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or
disclosure purposes in these consolidated financial statements is determined on such a basis, except for sharebased payment transactions that are within the scope of IFRS 2, leasing transactions that are within the scope of
IAS 17, and measurements that have some similarities to fair value but are not fair value, such as net realizable
value in IAS 2 or value in use in IAS 36.
2
47
Sirius XM Canada Holdings Inc. Annual Report 2013
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In addition, for financial reporting purpose, fair value measurements are categorized into Level 1, 2 or 3 based on
the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to
the fair value measurement in its entirety, which are described as follows:



Level 1 - inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the
entity can access at the measurement date;
Level 2 - inputs are inputs other than quoted prices included within Level 1, that are observable for the
asset or liability, either directly or indirectly; and
Level 3 - inputs are unobservable inputs for the asset or liability.
Consolidation
The consolidated financial statements consolidate the accounts of Sirius XM Canada Holdings Inc. and its
subsidiary, Sirius XM Canada Inc.
Subsidiaries are those entities which Sirius XM Canada Holdings Inc. controls by having the power to govern the
financial and operating policies. The existence and effect of potential voting rights that are currently exercisable
or convertible are considered when assessing whether Sirius XM Canada Holdings Inc. controls another entity.
Subsidiaries are fully consolidated from the date on which control is obtained by Sirius XM Canada Holdings Inc.
and are de-consolidated from the date that control ceases. All intercompany transactions, balances and unrealized
gains and losses from intercompany transactions are eliminated on consolidation.
Business combinations
The Company uses the acquisition method of accounting to account for business combinations. The consideration
transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and
the equity interests issued by the Company. The consideration transferred includes the fair value of any asset or
liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as
incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination
are measured initially at their fair values at the acquisition date. The Company recognizes any non-controlling
interest in the acquiree on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s
proportionate share of the acquiree’s net assets. The excess of the consideration transferred, the amount of any
non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the
acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of
consideration transferred, non-controlling interest recognized and previously held interest measured is less than the
fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognized
directly in the income statement.
Foreign currency translation
Items included in the financial statements of each consolidated entity in the Sirius XM Canada Holdings Inc.
group are measured using the currency of the primary environment in which the entity operates (the “functional
currency”). The functional currency of all entities in the group is the Canadian dollar. The consolidated financial
statements are also presented in Canadian dollars.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency
transactions and from the translation at year-end of monetary assets and liabilities denominated in currencies other
than an operation’s functional currency are recognized in the statement of operations and comprehensive income.
3
Sirius XM Canada Holdings Inc. Annual Report 2013
48
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Cash and cash equivalents
Cash and cash equivalents consist of cash on deposit and short term highly liquid investments with original
maturity of three months or less that are subject to an insignificant risk of changes in value.
Short-term investments
Short-term investments represent investments in corporate bonds, which have original maturities in excess of three
months but less than twelve months. These investments are being accounted for at amortized cost.
Prepaid expenses
Prepaid expenses consist primarily of prepayments for goods and services, including marketing payments and
performance rights fees paid relating to future periods. These amounts are deferred and expensed as the goods or
services are used by the Company.
Financial instruments
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual
provisions of the instrument. Financial assets are derecognized when the rights to receive cash flows from the
assets have expired or have been transferred and the Company has transferred substantially all risks and rewards of
ownership. Financial liabilities are derecognized when the obligation specified in the contract is discharged,
cancelled or expires.
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally
enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the
asset and settle the liability simultaneously.
At initial recognition, the Company classifies its financial instruments in the following categories depending on
the nature of the financial instrument and the purpose for which the instruments were acquired:
(i) Financial assets and liabilities at fair value through profit or loss: A financial asset or liability is
classified in this category if acquired principally for the purpose of selling or repurchasing in the short
term.
(ii) Available-for-sale investments: are non-derivatives that are either designated in this category or not
classified in any of the other categories. The Company currently does not have any available-for-sale
investments.
(iii) Held-to-maturity: are non-derivative financial assets with fixed or determinable payments that the
Company intends and is able to hold to maturity and that do not meet the definition of loans and
receivables and are not designated on initial recognition as assets at fair value through profit or loss or as
available for sale. Held-to-maturity investments are measured at amortized cost.
(iv) Loans and receivables: are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. The Company’s loans and receivables are comprised of trade receivables
and cash and cash equivalents, and are included in current assets due to their short-term nature. Loans
and receivables are initially recognized at the amount expected to be received less, when material, a
discount to reduce the loans and receivables to fair value. Subsequently, loans and receivables are
measured at amortized cost using the effective interest rate method less a provision for impairment.
4
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Sirius XM Canada Holdings Inc. Annual Report 2013
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(v) Financial liabilities at amortized cost: include trade and other payables, due to related parties, other longterm liabilities, and long-term debt. Trade and other payables are initially recognized at the amount
required to be paid less, when material, a discount to reduce the payables to fair value. Subsequently,
trade and other payables are measured at amortized cost using the effective interest rate method. Longterm debt is recognized initially at fair value, net of any transaction costs incurred, and subsequently at
amortized cost using the effective interest rate method.
Financial liabilities are classified as current liabilities if payment is due within twelve months.
Otherwise, they are presented as non-current liabilities.
(vi) Derivative financial instruments: Derivatives are initially recognized at fair value on the date a derivative
contract is entered into and would be subsequently re-measured at their fair value. The Company has not
entered into any standalone derivative instruments.
(vii)Embedded derivatives: are separated from the host contract and accounted for separately if the economic
characteristics and risks of the host contract and the embedded derivative are not closely related, a
separate instrument with the same terms as the embedded derivative would meet the definition of a
derivative, and the combined instrument is not measured at fair value through profit or loss. Liabilities
related to embedded derivatives are included in trade and other payables. Gains or losses arising from the
changes in fair value are presented in the income statement as gain (loss) on revaluation of derivatives in
the period in which they arise.
Compound financial instruments
Compound financial instruments issued by the Company comprise of convertible notes that can be converted to
share capital at the option of the holder. The number of shares potentially issuable does not vary with changes in
the fair value of the underlying shares (see Note 10 for further details).
The liability of a compound financial instrument is recognized initially at the fair value of a similar liability that
does not have an equity conversion option. The equity component is recognized initially at the difference between
the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any
directly attributable costs are allocated to the liability and equity components in proportion to their initial carrying
amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at
amortized cost using the effective interest method. The equity component of a compound financial instrument is
not re-measured subsequent to initial recognition except on conversion or expiry.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement
of the liability for at least 12 months after the end of the reporting period.
Impairment of financial assets
At each reporting date, the Company assesses whether there is objective evidence that a financial asset is impaired.
If such evidence exists, the Company recognizes an impairment loss, as follows:
(i) Financial assets carried at amortized cost: The loss is the difference between the amortized cost of the
loan or receivable and the present value of the estimated future cash flows, discounted using the
instrument’s original effective interest rate. The carrying amount of the asset is reduced by this amount
either directly or indirectly through the use of an allowance account.
5
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50
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ii) Available-for-sale financial assets: The impairment loss is the difference between the original cost of the
asset and its fair value at the measurement date, less any impairment losses previously recognized in the
statement of operations and comprehensive income. This amount represents the cumulative loss in
accumulated other comprehensive income that is reclassified to net income. The Company currently does
not have any available for sale financial assets.
Impairment losses on financial assets carried at amortized cost are reversed in subsequent periods if the amount of
the loss decreases and the decrease can be related objectively to an event occurring after the impairment was
recognized.
Inventory
Inventory is stated at the lower of cost and net realizable value. Cost of sales is determined using the average
weighted cost method. The entire balance consists of finished goods. The cost of finished goods comprises
invoiced cost, shipping costs and other costs directly attributable to acquiring the inventory. Net realizable value
is the estimated selling price less estimated selling expenses. If the carrying value exceeds net realizable value, a
write down is recognized. The write-down may be reversed in a subsequent period if the circumstances which
caused it to exist no longer exist.
Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified
as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are
charged to the income statement on a straight-line basis over the period of the lease.
Leases where the Company has substantially all the risks and rewards of ownership are classified as finance leases.
Finance leases are capitalized at the lease’s commencement at the lower of the fair value of the leased property
and the present value of the minimum lease payments. The Company does not have any finance leases.
Property and equipment
Property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset. When parts of an item of
property and equipment have different useful lives, they are accounted for as separate items (major components)
of property and equipment.
The cost of replacing a part of an item of property and equipment is recognized in the carrying amount of the item
if it is probable that the future economic benefits embodied within the part will flow to the Company, and its cost
can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and
maintenance are charged to the income statement as incurred.
Depreciation is calculated using the straight-line method to allocate their cost to their residual values over their
estimated useful lives, as follows:
Terrestrial repeaters
Computer hardware
Office equipment
Furniture and fixtures
7 years
3-5 years
3-5 years
7 years
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Sirius XM Canada Holdings Inc. Annual Report 2013
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Broadcast studio equipment
Leasehold improvements
3-10 years
Term of lease
Depreciation methods, useful lives and residual values are reviewed at least at each financial year end and adjusted
if appropriate prospectively.
Intangible assets
The Company’s intangible assets include distribution rights with automotive companies, subscriber relationships,
XM activation fees, rights to use trademarks and computer software, and licenses with finite useful lives. These
assets are capitalized and amortized on a straight-line basis in the statement of operations and comprehensive
income over the period of their expected useful lives as follows:
General Motors of Canada Limited
(GMCL) distribution rights
Honda distribution rights
Nissan distribution rights
Hyundai distribution rights
Toyota distribution rights
Subscriber relationships
XM activation fees
NHL Trademark
Computer software
Computer software licenses
7.4 years
2.8 years
4.8 years
0.9 years
5.6 years
3.5 years
1.7 years
4.2 years
3-5 years
Term of license
Intangible assets are stated at cost less accumulated amortization. Intangible assets related to computer software
and licenses and XM activation fees are measured at cost paid to third parties. Other intangible assets were
acquired as part of the business combination, and were initially recorded at their estimated fair value at the date of
the business combination.
XM activation fees comprise activation fees relating to XM subscribers, paid to Sirius XM Radio Inc. (”Sirius
XM”). These are included in intangible assets and amortized over the estimated life of the subscriber relationship.
Amortization methods and amortization periods are reviewed at least at each financial year end and adjusted if
appropriate prospectively. Intangible assets with indefinite lives, which comprise the Company’s broadcast
licenses, are not amortized. The Company has determined the broadcast license has an indefinite life as the license
can be renewed without substantial cost. Intangible assets with indefinite lives are reviewed each period to
determine whether events and circumstances continue to support an indefinite useful life assessment for that asset.
The broadcast license is tested for impairment at least annually or when an indicator of impairment exists.
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated
amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their
estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting
period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible with
indefinitely useful lives are that acquired separately are carried at costs less accumulated impairment losses.
Cost related to research activities for internally generated assets is recognized as an expense in the period when it
is incurred.
An internally-generated intangible asset arising from development (or from the development phase of an internal
project) is recognized as an intangible asset if, and only if, all of the following have been demonstrated:

The technical feasibility of completing the intangible asset so that it will be available for use or sale.
Sirius XM Canada Holdings Inc. Annual Report 2013
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Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





The intention to complete the intangible asset and use or sell it.
The ability to use or sell the intangible asset.
How the intangible asset will generate probable future economic benefits.
The availability of adequate technical, financial and other resources to complete the development and to
use or sell the intangible asset.
The ability to measure reliably the expenditure attributable to the intangible during its development.
The amount initially recognized for internally-generated intangible assets is the sum of the expenditure incurred
from the date when the intangible asset first meets the recognition criteria listed above. Subsequent to initial
recognition, internally-generated intangible assets are reported at cost less accumulated amortization and
accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the net identifiable assets of the
acquired subsidiary at the date of acquisition. Goodwill is tested at least annually for impairment in accordance
with the policy on impairment of non-financial assets and is carried at cost less accumulated impairment losses.
Goodwill is allocated to each cash-generating unit (“CGU” or “CGUs”) that is expected to benefit from the related
business combination. Impairment losses on goodwill are not reversed.
Impairment of non-financial assets
Property and equipment and definite life intangible assets are tested for impairment when events or changes in
circumstances indicate that the carrying amount may not be recoverable. For the purpose of measuring
recoverable amounts, assets are grouped at the lowest levels for which there are separately identifiable cash
inflows (CGUs). Recoverable amount is the higher of an asset’s fair value less costs to sell and value in use (being
the present value of the expected future cash flows of the relevant asset or CGU, as determined by management).
Goodwill, indefinite lived intangible assets and intangible assets not yet available for use are reviewed for
impairment annually or at any time if an indicator of impairment exists. Management monitors and tests goodwill
for impairment based at the CGU level to which the goodwill relates.
The Company evaluates impairment losses, other than goodwill impairment, for potential reversals when events or
circumstances warrant such consideration and accordingly, goodwill is assessed for impairment together with the
assets and liabilities of the related segment.
Employee benefits
Group Registered Retirement Savings Plan
The Company sponsors a Group Registered Retirement Savings Plan ("RRSP") (the "Plan") for eligible
employees. The Plan allows eligible employees to voluntarily contribute to a Group RRSP subject to certain
defined limitations. Currently, the Company matches 100% of an employee's voluntary contributions, up to 4% of
an employee's pre-tax base salary, in the form of cash contributions. Company payments to the Group RRSP are
charged to expense as the contributions become payable.
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Sirius XM Canada Holdings Inc. Annual Report 2013
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Stock-based compensation
Stock option awards
The Company grants stock options to certain employees, directors and senior officers. Stock options vest either
immediately or equally over either four or five years and expire after seven years. Each tranche of an award is
considered a separate award with its own vesting period and grant date fair value. The fair value of each tranche is
determined as at the date of grant using the Black-Scholes option pricing model. Compensation expense is
recognized over the tranche’s vesting period by increasing contributed surplus based on the number of awards
expected to vest. The number of awards expected to vest is reviewed at least annually, with any change in
estimate recognized immediately in compensation expense with a corresponding adjustment to contributed
surplus.
Non-market performance and service conditions are included in assumptions about the number of options that are
expected to vest. The total expense is recognized over the vesting period, which is the period over which all of the
specified vesting conditions are to be satisfied.
When the options are exercised, the Company issues new shares. The proceeds received net of any directly
attributable transaction costs are credited to share capital.
Restricted stock units (RSUs) and performance stock units (PSUs)
For each RSU and PSU granted, the Company recognizes compensation expense equal to the market value of a
Class A common share of the Company at the date of grant based on the number of RSUs and PSUs expected to
vest, recognized over the term of the vesting period, with a corresponding credit to contributed surplus for equity
settled RSUs and PSUs. RSUs and PSUs vest over a three year period and the number of PSUs that will vest will
vary depending on meeting performance conditions attached to the award.
Compensation expense is adjusted for subsequent changes in management’s estimate of the number of RSUs and
PSUs that are expected to vest. The effect of these changes is recognized in the period of change. Upon settlement
of equity settled RSUs and PSUs, any difference between the cost of the shares purchased on the open market and
the amount of credited to contributed surplus is reflected in accumulated deficit. Vested RSUs and PSUs are
settled in common shares, at the discretion of the Board of Directors, however they may be settled in cash.
Currently the Company expects all RSUs and PSUs to be settled in shares.
Termination benefits
The Company recognizes termination benefits when it is demonstrably committed to terminating the employment
of current employees according to a detailed formal plan without the possibility of withdrawal. Benefits falling
due more that twelve months after the end of a reporting period are discounted to their present value.
Provisions
Provisions are recognized when the Company has a present legal or constructive obligation as a result of past
events, it is more likely than not that an outflow of resources will be required to settle the obligation, and the
amount can be reliably estimated. Provisions are measured at management’s best estimate of the expenditure
required to settle the obligation at the end of the reporting period, and are discounted to present value where the
effect is material. The Company performs evaluations to identify onerous contracts and, where applicable, records
provisions for such contracts. Provisions include the following:
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Sirius XM Canada Holdings Inc. Annual Report 2013
54
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
i)
Product obligations - A provision for product obligation is due to the Company’s operating relationship with
distributors and retailer vendors. There is a constructive obligation that the Company will subsidize discounts
and provide price protection in order to move existing obsolete products in order to sell new products.
ii) Decommissioning liabilities - A provision is made for the present value of the future costs of retiring
terrestrial repeater equipment and restoration of leased facilities to their original state at the end of the lease
term. The estimated costs are computed based on management’s estimate of the fair value of the expenditures
expected to be required to settle the obligations using a pre-tax discount rate, updated at each reporting date,
which reflects current market assessments of the time value of money and the risks specific to the obligations.
The corresponding amount is capitalized as part of property and equipment and depreciated over the period
from the lease inception until the time the Company expects to remove the terrestrial repeater equipment and
vacate the premises, with the liability accreted over the same period. Any adjustment arising from the
assessment of estimated decommissioning cost is capitalized, while the charge arising from the accretion of
the discount applied to the decommissioning liabilities is treated as a component of interest expense in the
statement of operations and comprehensive income.
Income tax
Income tax comprises current and deferred tax. Income tax is recognized in the statement of operations and
comprehensive income except to the extent that it relates to items recognized directly in equity, in which case the
income tax is also recognized directly in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted, or substantively
enacted, at the end of the reporting period, and any adjustment to tax payable in respect to previous years.
In general, deferred tax is recognized in respect of temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax is not
recognized if it arises from the initial recognition of goodwill or the initial recognition of an asset or liability in a
transaction other than a business combination that, at the time of the transaction, affects neither accounting nor
taxable profit or loss. Deferred tax is provided on temporary differences arising on investments in subsidiaries,
except in the case of subsidiaries, where the timing of the reversal of the temporary difference is controlled by the
Company and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax is determined on a non-discounted basis using tax rates and laws that have been enacted or
substantively enacted at the balance sheet date and are expected to apply when the deferred tax asset or liability is
settled. Deferred tax assets are recognized to the extent that it is probable that future taxable profit will be
available against which the deductible temporary differences can be utilized.
Deferred tax assets and liabilities are presented as non-current.
Revenue recognition
The Company derives revenue primarily from subscription and activation fees (net of customer rebates earned),
equipment sales and advertising. Revenue is measured at the fair value of the consideration received or receivable.
The Company recognizes revenue when the amount of the revenue and costs can be reliably measured; when it is
probable that future economic benefits will flow to the Company; and when specific criteria have been met for
each of the Company’s activities, as described below.
10
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Sirius XM Canada Holdings Inc. Annual Report 2013
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Subscription and activation fees
The Company recognizes subscription fees as service is provided to the subscriber. Subscription fees include
music royalty fees and other fees. Prepaid subscription fees billed in advance are recorded as deferred revenue
and recognized as revenue ratably over the term of the applicable subscription plan.
At the time of sale, certain vehicle owners purchasing or leasing a vehicle with a subscription to the Company’s
service typically receive between a three-month and one-year prepaid subscription. Prepaid subscription fees
received from automakers are recorded as deferred revenue and amortized to revenue ratably over the service
period, upon activation. The Company reimburses automakers for certain costs associated with the satellite radio
installed in the applicable vehicle at the time the vehicle is manufactured. The associated payments to the
automakers are included in subscriber acquisition costs, which are part of sales and marketing. Although the
Company receives payments for the subscription from the automakers, they do not resell the service; the
automakers facilitate the sale of the service to their customers, acting similarly to an agent for the Company. The
Company is principally obligated in these relationships as the Company is responsible for providing the service to
the customers, including being obligated to the customers in the case of an interruption of service.
Sales incentives consisting of rebates to customers are accounted for as reductions of revenue when the revenue is
recognized or the incentive is offered. Certain fees billed to automakers for services offered to automobile
purchasers during the promotional periods are offset by amounts paid to the automakers for subsidies related to the
sale of the automobiles with the Company’s product.
Activation fees are recognized evenly over the estimated term of a subscriber relationship which is based upon
historical customer subscription terms. The Company currently estimates this period to be 20 months. Fees
received in advance are recognized as deferred revenue.
Equipment sales
Equipment revenue from the direct sale of satellite radios and accessories is recognized upon shipment. Shipping
and handling costs billed to customers are recorded as revenue. Shipping and handling costs associated with
shipping goods to customers are recorded within cost of service expense.
Under IAS 18, the Company recognizes revenue for sales of bundled packages, which might include a radio,
activation and/or service component, by allocating the consideration received based on the relative fair values of
the individual components, consisting of service fees (subscription and activation fees) and equipment sales.
Objective and reliable evidence of fair value exists for all units of accounting in the arrangement.
Advertising revenue
The Company recognizes advertising revenue from the sale of advertisements in the period in which the
advertising is broadcast.
Broadcast license and renewal costs
All costs related to renewing the broadcast license are expensed as incurred.
CRTC and Canadian Content Development Obligations
Under conditions of its broadcasting license from CRTC, the Company is obligated to contribute a percentage of
its gross revenues from its satellite radio undertaking on qualifying Canadian Content Development (“CCD”).
11
Sirius XM Canada Holdings Inc. Annual Report 2013
56
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Programming royalty arrangements
The Company is responsible for the payment of copyright royalties with a number of Canadian copyright
collectives. The Company accrues these royalties based on tariffed rates that have been set for previous periods by
the Copyright Board of Canada. The cost of these royalty arrangements is expensed as an operating expense.
Sales and marketing costs
Sales and marketing includes advertising and costs for media and events, which are expensed as incurred as an
operating expense.
Marketing also includes incentives and subsidies to retailers and manufacturers to promote the distribution of
radios with the capacity to receive either XM satellite digital radio programming (“XM radios”) or Sirius satellite
digital radio programming (“Sirius radios”). These costs are expensed at the time of payment which approximates
the timing of the sale or activation of the XM radios and Sirius radios.
Subsidies and distribution costs
Subsidies and distribution costs consist of costs incurred to acquire new subscribers and include hardware
subsidies paid to radio manufacturers, distributors and automakers, including subsidies paid to automakers who
include a satellite radio and a prepaid subscription to the Company's service in the sale or lease price of a new
vehicle or offer a free trial; subsidies paid for chip sets and certain other components used in manufacturing radios;
device royalties for certain radios; commissions paid to retailers and automakers as incentives to purchase, install
and activate radios; and provisions to reduce inventory to net realizable value.
Subsidies paid to radio manufacturers and automakers are expensed on shipment of the product or activation of the
radio, based on contractual terms. Commissions paid to retailers and automakers are expensed on either the
purchase or activation of radios, based on contractual terms.
Earnings (loss) per share
Basic earnings per share (“EPS”) is calculated by dividing the net income (loss) for the period attributable to the
Company’s equity owners by the weighted average number of common shares outstanding during the period.
Diluted EPS is calculated by adjusting the weighted average number of common shares outstanding for dilutive
instruments. The Company has the following categories of dilutive potential shares: convertible debt, stock
options, restricted stock units and performance stock units. The number of shares included with respect to stock
options is computed using the treasury stock method. The convertible debt is assumed to have been converted into
shares, and net income is adjusted to eliminate the interest expense less the tax effect.
Accounting standards issued but not yet effective
Certain pronouncements were issued by the IASB or IFRIC that are effective for accounting periods beginning on
or after January 1, 2013 unless otherwise noted. The Company has assessed the impact of these standards and
amendments listed below, and determined there are no material impacts to the Company’s financial statements.
IFRS 10, Consolidated Financial Statements replaces the guidance on “consolidation” in IAS 27 – Consolidated
and Separate Financial Statements and Standing Interpretations Committee (“SIC”) 12 – Consolidation – Special
Purpose Entities. The new standard contains a single consolidation model that identifies control as the basis for
consolidation for all types of entities, including special purpose entities. The new standard also sets out
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Sirius XM Canada Holdings Inc. Annual Report 2013
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
requirements for situations when control is difficult to assess, including circumstances in which voting rights are
not the dominant factor in determining control.
IFRS 12, Disclosure of Interests in Other Entities establishes disclosure requirements for interests in other entities,
such as subsidiaries, joint arrangements, associates, and unconsolidated structured entities. The standard carries
forward existing disclosures and also introduces significant additional disclosure that address the nature of, and
risks associated with, an entity’s interests in other entities.
IAS 1, Presentation of Financial Statements was amended to require entities to group items presented in “other
comprehensive income” into two categories. Items will be grouped together based on whether those items will or
will not be classified to profit or loss in the future.
The following revised standards and amendments are effective for annual periods beginning on or after January 1,
2013 with earlier application permitted, unless otherwise noted. The Company has not yet assessed the impact of
these standards and amendments or determined whether it will early adopt them.
IFRS 9, Financial Instruments (Classification and Measurement) replaces the guidance on “classification and
measurement” of financial instruments in IAS 39 – Financial Instruments – Recognition and Measurement. The
new standard requires a consistent approach to the classification of financial assets and replaces the numerous
categories of financial assets in IAS 39 with two categories, measured at either amortized cost or at fair value.
Most of the requirements for financial liabilities were carried forward unchanged from IAS 39. However, some
changes were made to the fair value option for financial liabilities to address the issue of own credit risk. This is
effective for accounting periods beginning on or after January 1, 2015.
IFRS 13, Fair Value Measurement defines “fair value” and sets out in a single standard a framework for measuring
fair value and requires disclosures about fair value measurements. The new standard reduces complexity and
improves consistency by clarifying the definition of fair value and requiring its application to all fair value
measurements.
IAS 32, Financial Instruments (Presentation) was amended to clarify existing application issues related to the
offsetting requirements. Specifically, the amendments clarify the meaning of “currently has a legally enforceable
right of set-off” and “simultaneously realization and settlement”.
IFRIC 21, Levies was issued to clarify that an entity recognizes a liability for a levy when the activity that triggers
payment, as identified by the relevant legislation, occurs. It also clarifies that a levy liability is accrued
progressively only if the activity that triggers payment occurs over a period of time, in accordance with the
relevant legislation. For a levy that is triggered upon reaching a minimum threshold, the interpretation clarifies that
no liability should be recognized before the specified minimum threshold is reached. This is effective for annual
periods beginning on or after January 1, 2014 and cannot be early adopted.
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
Estimates and judgments are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
Critical accounting estimates and assumptions
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will,
by definition, seldom equal the actual results. The estimates and assumptions that are critical to the determination
of carrying values of assets and liabilities are addressed below.
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58
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Impairment of non-financial assets
The impairment test on non-financial assets, which are comprised primarily of property and equipment, intangible
assets and goodwill, is carried out by comparing the carrying value of a CGU that includes these assets to the
recoverable amount of a CGU. The recoverable amount of a CGU is the higher of fair value less costs to sell, and
its value in use.
Goodwill and indefinite lived intangibles are tested at least annually for impairment. For the purpose of
impairment testing, goodwill is tested for impairment using the fair value less cost to sell model at the operating
segment level. The business is managed as one operating segment based on how financial information is produced
internally for the purposes of making operating decisions.
In assessing the Company’s broadcast license for impairment, the Company compares the aggregate recoverable
amounts of the assets and related liabilities included in a CGU to its respective carrying amount. For the purpose
of the impairment test carried out during the year ended August 31, 2013 the CGU was equivalent to the Sirius
XM business. During the year, the Sirius and XM licenses were combined into one license which resulted in a
change in CGUs from the prior year. In the prior year the CGUs for purpose of testing the broadcast licenses were
at the XM and Sirius levels.
In assessing both the goodwill and broadcast license for impairment, the Company compares the aggregate
recoverable amount which is fair value less cost to sell (and is determined based on the value of the Company’s
quoted shares and the estimated fair value of its debt) to the carrying value of its net assets excluding long term
debt. An impairment charge is recognized to the extent that the carrying value exceeds the recoverable amount. In
the prior year, the recoverable amount of the XM and Sirius CGUs was determined using a discounted cash flow
model.
No impairment charges have arisen as a result of the reviews performed during the year ended August 31, 2013
and August 31, 2012. Reasonably possible changes in key assumptions would not cause the recoverable amount of
goodwill or the broadcast license to fall below the carrying value.
Income taxes
The recognition of deferred tax assets is based on whether it is more likely than not that sufficient and suitable
taxable income will be available in the future against which the reversal of temporary differences can be deducted.
The Company’s assessment is based upon existing tax laws and estimates of future taxable income. If the
assessment of the company’s taxable income in the future increases or decreases, or its ability to utilize the
underlying future tax deductions changes, the Company would be required to recognize more or less of the tax
deductions as deferred tax assets, which would decrease or increase the income tax expense in the period in which
this is determined.
The calculation of current and deferred taxes involves significant estimation and judgment in respect of certain
items whose tax treatment cannot be finally determined until resolution is reached with the Canada Revenue
Agency (“CRA”). The final resolution of the audit of the 2006 taxation year may result in adjustments to the
recognized and unrecognized deferred tax assets. See note 7 and note 19 for additional information.
Provisions
Considerable estimation is used in measuring and recognizing certain provisions and the exposure to contingent
liabilities. Management also applies judgment in determining the likelihood that a pending litigation or other
claim will succeed or a liability will arise, and to quantify the possible range of the final settlement. Provisions
that include estimation and judgment include liabilities related to product obligations, where the Company may be
required to make payments to retailers to facilitate sale of radios held by retailers.
14
59
Sirius XM Canada Holdings Inc. Annual Report 2013
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Revenue recognition
As described in Note 3, the Company assessed the criteria for the recognition of revenue related to arrangements
that have multiple components as set out in IAS 18 – Revenue. Judgment is necessary to determine when
components can be recognized separately and the allocation of the related consideration allocated to each
component.
Stock options
Assumptions are used in the underlying calculation of fair values of the Company’s stock options. Fair value is
determined using the Black-Scholes pricing model.
Significant changes in the assumptions, including those with respect to future business plans and cash flows, could
materially change the recorded carrying amounts.
Intangible assets
Amortization of intangible assets involves the use of estimates for determining the expected useful lives of
intangible assets. Estimates of the average life of a subscriber relationship are based on historical experience.
Estimates related to distribution rights are based on their contractual periods taking into account known renewal
options.
Critical judgments in applying accounting policies
The following critical judgments that were made by management have the most significant effect on the amounts
recognized in the financial statements.
Determination of cash generating units
Goodwill and indefinite lived intangibles are required to be tested for impairment at least annually by comparing
the recoverable amount of the CGU which includes these assets to their recoverable amount. The Company
performs an impairment test at June 1 of each year. The Company’s broadcast license is tested for impairment
along with other assets including the subscriber relationships, distribution rights and property and equipment at a
CGU level that is equal to the Sirius XM business. The Company applies significant judgment in determining the
lowest level for which the assets generate independent cash inflows as well as the recoverability of its CGU.
Given that the Company has a single license, which is required to operate the business, the conclusion is that there
is one CGU for the purposes of indefinite lived intangible asset impairment testing.
4. INVENTORY
Inventory consists of radios held for sale through our website and is as follows:
At
Finished goods
August 31,
2013
August 31,
2012
$
$
234,349
324,316
The amount of inventory recognized as an expense in operating costs for the year ended August 31, 2013 was
$2,438,784 (2012 - $2,643,270).
15
Sirius XM Canada Holdings Inc. Annual Report 2013
60
Sirius XM Canada Holdings Inc.
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. PROPERTY AND EQUIPMENT
5. PROPERTY AND EQUIPMENT
At September 1, 2011
At September
Cost
Cost
Accumulated
depreciation
Accumulated
Net book value
1, 2011
depreciation
Net
At September
1, book
2011 value
Additions
At September 1,
Depreciation
Additions
Closing net book value
At August Depreciation
31, 2012
Cost
Closing net
Accumulated depreciation
2011
book value
At August 31, 2012
Net book value - August 31, 2012
Cost
Accumulated depreciation
At September 1, 2012
Additions Net book
Disposals
Depreciation
9,827,452
(3,630,444)
At August Additions
31, 2013
Cost
Disposals
Accumulated depreciation
Depreciation
Net book value - August 31, 2013
Closing net book value
1,598,222
241,973
9,827,452(1,167,482)3,444,928
(788,967)
(73,631)
18,518
(4,860)
9,680,308
(330
9,680,308
13,658
726,476
21
(1,167,482)
13,658
430,7402,655,961
168,342
—
3,300
13,658
430,740
4,536,501
10,073,550
3,459,697
245,273
4,536,501 1,595,9402,628,834
(5,537,049)
4,536,501
4,536,501
(1,486,927)
3,049,574
(1,906,605)
(504,205)
(830,863)
(1,406,266)
2,628,834
189,674
10,073,550
(241,066)
9,724
189,674
168,342
3,300
129,844
(84,755)
(39,317)
533,078
132,325
13,658
—
7,617,399
(2,789,385)
15,917,262
221
12
(403,234)
(8,299,863)
221
129,844
7,617,399
245,273
9,724
53
(9,503)
7,617,399
(403
781,337
221
12
—
(3,515)
—
(7,594)
(11,109)
(686,414)
(138,551)
(34,649)
(206)
(60,969)
(2,407,716)
4,536,501
2,471,034
51,1232,628,834
179,877
3,988,311
(1,517,277)
3,049,574
2,471,034
528,614
— 1,472,231
(1,421,108)
316,872
—
176,731
—
(9,709)
—
132,325
132,325
61,281
85,716
479,725
(3,515)
12
16,507,420
—
(7
(34,649)
(206)
(60
51,123
179,877
167,022
6
3,988,311
1,472,231
316,872
176,731
47
(7,023,976)
(1,517,277)
(1,421,108)
(136,995)
(9,709)
(418
3,049,574
2,471,034
51,123
179,877
167,022
6
(686,414)
(138,551)
2,471,034
10,073,550
3,049,574
51,123
179,877
167,022
(418,444)
221
5,979,911
167,007
(10,527,509)
(1,486,927)
(136,995)
189,674
167,022
—
21
(84
(9,503)
1,595,940
54
(13,437)
—
10,073,550
Net book value - August 31, 2013
430,740
(13,437)
—
221
(112,948)
129,844
(7,023,976)
Cost
Accumulated depreciation
132,325
3,459,697
—
(73,631)
214,599
(5,537,049) 189,674 (830,863)
2,628,834
132,325 (1,406,266)
221
528,614
—2,628,83485,716
167,007
4,536,501
189,674
—
At August 31, 2013
(112,948)
15,675,811
214,599
168,342
—
430,740 (788,967)
168,342
6,197,008
2,655,961
(241,066)
(39,317)
246,098 189,674 477,078
2,628,834
132,325
Furniture
fixture
18,518
(5,995,503)
2,655,961
6,197,008
477,078
(504,205)
544,718
Broadcast
Total
equipment
241,973
(330,119)
(3,630,444)
2,655,961
(1,906,605)
Furniture
and
Office
fixtures
equipment
1,598,222
(4,860)
6,197,008
246,098
—
1, 2012
3,444,928
Broadcast
equipment
Computers
6,197,008
value - August 31, 2012 —
Closing netAt
book
value
September
61
Office
Leaseholds
equipment
Repeaters Computers
Leaseholds
Repeaters
61,281
5,979,911
16
Sirius XM Canada Holdings Inc. Annual Report 2013
Sirius XM Canada Holdings Inc.
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. INTANGIBLE ASSETS
6. INTANGIBLE ASSETS
Computer
software &
licenses
At September 1, 2011
CostAt
September 1, 2011
Accumulated
Cost amortization
Net Accumulated
book value
amortization
At September 1, 2011
Net book value
Additions
At September
Amortization
1, 2011
Additions
Closing net book value
7,727,677
Computer
CRTC
software
&
license
licenses
85,800,000
CRTC
GMCL
license
22,300,001
Honda
Nissan
Hyundai
GMCL
22,714,521
5,408,219
—
7,727,677
953,798
85,800,000
(6,773,879)
21,798,877
953,798
85,800,000
21,472,668
5,242,072
5,078,714
953,798
21,798,877
—
953,798
—
—
—
—
85,800,000(8,394,612)
21,798,877
(3,006,741)
(1,162,188)
—13,078,056
4,079,884
4,831,547
Amortization
At August
31, 2012
5,078,714
85,800,000
(501,124)
(166,147)
85,800,000(1,241,853)
22,300,001
18,792,136
21,798,877
—
—
22,714,521
5,408,219
(9,636,465)
(1,328,335)
85,800,000
18,792,136
13,078,056
4,079,884
Accumulated amortization
At September 1, 2012
Additions
Net book value
Amortization
- August 31, 2012
Closing net book value
At September
At August
31, 2013
4,831,547
7,375,784
(1,994,354)
10,212,977
1, 2012
20,120,809
Accumulated amortization
(9,907,832)
Net book value - August 31, 2013
10,212,977
Closing net book value
85,800,000
—
4,831,547
—
(3,507,865)
(9,636,465)
—
85,800,000
—
18,792,136
4,079,884
—
(3,006,742)
(8,259,826)
(1,138,572)
85,800,000
15,785,394
4,818,230
2,941,312
85,800,000
7,375,784
85,800,000
22,300,001
—
(6,514,607)
85,800,000
15,785,394
(1,994,354)
10,212,977
18,792,136
5,408,219
—
(17,896,291)
(2,466,907)
4,818,230
2,941,312
85,800,000
(3,006,742)
15,785,394
—
1,693,665
—
—
—
—
17,357,040
(1,162,188)
1,410,044
—2,104,290
28,533,334
5,242,072
—
13,078,056
—
—
—
—
—
13,078,056
—22,714,521
—
40,761,905
6,335,342
22,714,521
13,078,056
2,805,722
(6,335,342)
22,300,001
18,792,136
269,167
13,078,056
85,800,000
—
4,831,547
CostAdditions
Amortization
(7,923,600)
18,792,136
21,654,573
21,472,668
(5,354,838) 5,242,072
(4,297,533)
(8,394,612)
22,300,001
12,755,147
21,472,668
—
(3,507,865)
85,800,000
5,354,838
(3,006,741)
—
4,831,547
42,800,000
218,222,679
206,113,620 (116,904)
(3,208)
85,800,000
Cost
2,922,626
NHL
trademark
269,167
40,761,905
(980,504)2,805,722(287,345)
12,755,147
At August 31, 2012
272,375
fees
5,242,072 (1,241,853)
5,354,838 (166,147)
21,654,573
—21,472,668(501,124)
(7,923,600)
Net book value - August 31, 2012
21,941,918
Toyota
(12,109,059) 2,922,626
272,375
Accumulated amortization
4,831,547
6,335,342
Hyundai
XM
Subscriber
activation
relationships
Total
(3,208)
(2,038,095)
6,335,342(116,904)
21,941,918
Cost
Closing net book value
Nissan
NHL
trademark
(980,504) 5,408,219
(287,345)
22,714,521
85,800,000
(1,200,965)
XM
activation
fees
Toyota
Honda
(6,773,879)
(1,200,965)
Distribution Rights
Distribution Rights
—
(8,259,826)
4,818,230
5,354,838
5,354,838(701,432)
21,654,573
(552,788)
(12,228,571)
(5,354,838)
21,941,918
1,966,040
(4,584,878)
(555,996)
17,357,040
1,410,044
4,079,884
5,408,219
(1,328,335)
17,357,040
4,079,884—
—
(4,297,533)
6,772,379
42,800,000
(818,336)
(14,266,666)
2,104,290
28,533,334
17,357,040
2,805,722
269,167
(36,899,668) 2,805,722
1,693,665
175,986,331
(552,788)
2,922,626
—
206,113,620
269,167
—
(701,432)
224,943,814
1,410,044
(48,957,483)
175,986,331
2,104,290
6,335,342
21,941,918
1,966,040
2,922,626
(6,335,342)
(4,584,878)
(555,996)
(818,336)
—
—
17,357,040
1,410,044
2,022,930
(3,929,896)
(1,908,488)
13,427,144
1,524,486
4,079,884
—
21,941,918
—
3,988,970
—
(8,514,774)
(2,464,484)
(1,138,572)
—
13,427,144
2,941,312
21,654,573
1,524,486
2,104,290
28,533,334
—
(701,430)
(12,228,572)
1,402,860
16,304,762
—
17,357,040
175,986,331
9,398,714 2,104,290
1,410,044
(33,167,880)
152,217,165
1,410,044
2,104,290
—2,922,626
42,800,000
—
227,997,064
2,022,930
(1,519,766)
(26,495,238)
(75,779,899)
1,402,860
16,304,762
—
—
(3,929,896)
13,427,144
(1,908,488)
152,217,165
1,524,486
—
(701,430)
1,402,860
At August 31, 2013
Cost
20,120,809
85,800,000
22,300,001
22,714,521
5,408,219
—
21,941,918
3,988,970
2,922,626
Accumulated amortization
(9,907,832)
—
(6,514,607)
(17,896,291)
(2,466,907)
—
(8,514,774)
(2,464,484)
(1,519,766)
Net book value - August 31, 2013
10,212,977
85,800,000
15,785,394
4,818,230
2,941,312
—
13,427,144
1,524,486
17
1,402,860
Sirius XM Canada Holdings Inc. Annual Report 2013
62
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. INCOME TAXES
The statutory income tax rate was calculated using the income tax rates applicable federally and in the province of
Ontario. The provisions for income taxes included in the consolidated statement of operations differ from the
statutory income tax rate for the years ended August 31, 2013 and August 31, 2012 as follows:
For the year ended August 31
Net income before taxes
Statutory tax rate
Income tax expense at statutory tax rate
Permanent items- non deductible
Rate differential
Difference between deferred tax rate and current tax rate
Change in tax rates on opening deferred taxes
Prior year adjustments
Deferred tax
Income tax expense (recovery)
2013
2012
17,565,320
(12,491,526)
26.50%
27.08%
4,654,810
683,660
(3,382,705)
817,918
—
—
55,251
(5,690,433)
36,308
(112,741)
5,374,778
(8,312,710)
$
$
For the year ended August 31, 2013 and August 31, 2012, deferred taxes were reported using a combined income tax
rate of 26.5%, based on the 2012 Ontario budget which froze the general income tax rate at 11.5%, until the province
returns to a balanced budget, and the expected timing of reversals. Deferred taxes are as follows:
August 31,
2013
August 31,
2012
$
$
—
1,279,882
529,621
1,202,174
Non-capital loss carry forwards
70,052,429
79,848,959
Total deferred tax assets
70,582,050
82,331,015
Book value in excess of tax basis
Deferred tax liability on broadcast license
Deferred tax liability on other intangibles
(227,300)
(11,368,500)
(4,502,634)
—
(11,368,500)
(11,104,121)
Total deferred tax liability
(16,098,434)
(22,472,621)
54,483,616
59,858,394
At
Tax basis in excess of book value
Other
Net deferred tax asset
18
63
Sirius XM Canada Holdings Inc. Annual Report 2013
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred tax assets expected to be recovered within 12 months are $9,700,000. Deferred tax assets expected to be
recovered after more than 12 months are $44,783,616.
At August 31, 2013, the Company has approximately $428,000,000 in Canadian non-capital tax losses available to
be applied against future years' taxable income, which expire as follows:
2025
2026
2027
2028
2029
2030
2031
2032
$
218,000,000
66,000,000
46,000,000
26,000,000
21,000,000
41,000,000
3,000,000
7,000,000
428,000,000
As at August 31, 2013, the Company has recognized deferred tax assets of $54,483,616 (2012 - $59,858,394) on the
basis that realization of the tax benefit is probable. However, the Company has not recognized deferred tax assets of
$43,273,000 in respect of losses amounting to $163,294,000, on the basis that the Company does not have sufficient
evidence that it is probable they will be utilized.
At August 31, 2013, taxation years dating back to the period ended August 31, 2006 are open for review at the
discretion of various taxation authorities and are subject to audit uncertainties.
During October 2013, upon the completion of its audit of the 2006 taxation year, CRA is proposing to disallow the
deduction of non-capital losses and eligible capital expenditures related to deductions taken on payments made to
XM and certain OEMs. Should the Company not be successful in sustaining its filing position, the impact would be a
reduction in deferred tax assets of approximately $18,000,000 (representing tax losses and tax basis of $68,000,000).
In addition, unrecognized tax losses of $43,273,000 (representing tax losses of $163,294,000) would no longer be
available to be carried forward against future taxable income.
The Company obtained legal tax advice in filing its original tax position and continues to be confident of its filings.
The position continues to be supported by the Company’s tax legal advisors. The Company expects that the filing
position will be sustained upon full examination of the facts by CRA, or if required by the federal courts. The
Company will continue to vigorously defend its position and it believes it will be successful.
8. GOODWILL
The following table discloses the change in goodwill for the years ended August 31, 2013 and August 31, 2012:
At
August 31,
2013
August 31,
2012
Balance - beginning of year
96,732,525
96,732,525
—
—
96,732,525
96,732,525
Goodwill acquired (impaired)
Balance - end of year
19
Sirius XM Canada Holdings Inc. Annual Report 2013
64
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company performs its annual test for goodwill impairment at June 1. No impairment charges have arisen as a
result of the reviews performed during the year ended August 31, 2013 and August 31, 2012. Reasonably possible
changes in key assumptions would not cause the recoverable amount of goodwill or the broadcast license to fall
below the carrying value.
9. RELATED PARTY TRANSACTIONS
Related parties of the Company include shareholders who have significant interest in the Company. Significant
shareholders of the Company include Sirius XM, The Canadian Broadcasting Corporation (“CBC”), Slaight
Communication Inc. (“Slaight”), and Obelysk Media Inc. (“Obelysk”, formerly known as CSRI Inc. and JBM
Properties Inc.), a company controlled by John I. Bitove. Related parties also include companies controlled, jointly
controlled or influenced by these shareholders. Related parties also include members of the Board of Directors,
management and immediate family members of management or shareholders with significant influence. These
transactions are recorded at the exchange amount.
Amounts due to related parties
At
CBC
Slaight
Sirius XM
Obelysk (including related parties of Obelysk)
Less: current portion
Long-term portion
August 31,
August 31,
2013
2012
784,149
402,777
10,803,432
665,145
402,777
6,900,533
21,000
15,478
12,011,358
7,983,933
(9,620,750)
(6,775,601)
2,390,608
1,208,332
Related party transactions
(i) Transactions with CBC
The Company entered into a 17 year agreement with CBC effective until August 24, 2022. This agreement is a
non-exclusive, non-transferable license agreement whereby the Company has distribution rights to transmit
channels currently owned by the CBC within Canada.
The Company incurred costs during the year ended August 31, 2013 primarily related to the CBC license
agreement and advertising in the amount of $3,165,443 (2012 - $4,197,150).
As at August 31, 2013, amounts due to CBC related to the transactions described above also include a noninterest bearing promissory note of $402,777 (2012 - $402,777).
(ii) Transactions with Slaight
As at August 31, 2013, amounts due to Slaight are comprised of a non-interest bearing promissory note of
$402,777 (2012 - $402,777).
20
65
Sirius XM Canada Holdings Inc. Annual Report 2013
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(iii) Transactions with Sirius XM
In 2005, Sirius Canada, as one of the predecessors of the Company, entered into a license and service agreement
with Sirius XM whereby the Company acquired the right to distribute the Sirius network channels owned or
licensed by Sirius XM within Canada. In return, the Company is obligated to pay Sirius XM a percentage of its
gross revenue, to a maximum of 15%, and reimbursement of other charges paid on Sirius’ behalf.
In 2011, the Company acquired a license and technical service agreement with Sirius XM whereby the Company
acquired the right to distribute the XM network channels owned or licensed by Sirius XM. In return, the
Company is obligated to pay Sirius XM a percentage of subscriber revenue (15%), activation charges, fees under
the Technical Service Agreement and reimbursement of other charges paid on SXM’s behalf.
The costs incurred during the year ended August 31, 2013 related to the Sirius XM agreements was $41,773,994
(2012 - $39,197,060).
In addition to the amounts expensed above for the year ended August 31, 2013, intangible assets of $5,537,697
(2012 - $2,672,703) relating to XM activation fees and computer software, net of amortization are presented
within the balance sheet. During the year ended August 31, 2013, cash payments related to these intangible
assets made to Sirius XM totaled $3,953,974 (2012 - 1,700,212).
As at August 31, 2013, amounts due to Sirius XM include a non-interest bearing promissory note of $402,778
(2012 - $402,778).
(iv) Transactions with John I. Bitove, Obelysk and its affiliates
In 2011, the Company entered into a reimbursement agreement with Obelysk for the purchase of third party
advertising services. The Company has agreed to reimburse Obelysk a total amount of $208,000 over the next
three years for these advertising services.
The Company incurred costs from Obelysk and other entities affiliated with Obelysk and John I. Bitove,
including costs associated with the reimbursement agreement. These costs were related to advertising, business
events, use of a broadcast centre, and operating costs. During the year end ended August 31, 2013, the costs
totaled $97,985 (2012 - $143,252). As at August 31, 2013, the balance due was $21,000 (2012 - $15,478).
In 2012 the Company incurred costs on behalf of an entity affiliated with Obelysk and John I. Bitove for costs
related to management of a call centre operation. During the year ended August 31, 2012, the total cost incurred
was $36,534 which was reimbursed by Mobilicity.
Compensation of key management
Key management includes the CEO and his direct reports who make up the Company’s Executive Committee.
Compensation awarded to key management, and the composition thereof, included:
For the year ended August 31
Salaries and short-term employee benefits
Share-based payments
2013
2012
2,993,369
1,131,835
3,600,191
948,979
4,125,204
4,549,170
21
Sirius XM Canada Holdings Inc. Annual Report 2013
66
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. DEBT
Senior
notes
Convertible
notes
US$ Senior
notes
Total
At September 1, 2011
Foreign exchange translation
Interest accretion
Derivative revaluation
Debt repayment
126,719,584
—
441,922
(1,200,000)
—
18,522,652
—
508,661
—
—
901,048
16,652
—
—
(917,700)
146,143,284
16,652
950,583
(1,200,000)
(917,700)
At August 31, 2012
125,961,506
19,031,313
—
144,992,819
As at September 1, 2012
Interest accretion
Derivative revaluation
Debt repayment
125,961,506
477,864
(2,240,000)
—
19,031,313
476,511
—
—
—
—
—
—
144,992,819
954,375
(2,240,000)
—
At August 31, 2013
124,199,370
19,507,824
—
143,707,194
Senior notes
The Company has outstanding Senior notes (the “Senior notes”) due in 2018, and bear interest at 9.75% payable
semi-annually on June 21 and December 21. The Senior notes are unsecured. Fees incurred as part of the issuance
were included in the carrying value of the notes and will be amortized to interest expense using the effective interest
rate method. The effective interest rate for the Senior notes is 10.4%. The Senior notes are redeemable at the option
of the Company on or after June 21, 2014. Any redemption prior to June 21, 2017 will include an applicable
premium of up to 7.3%. The premium varies based on the date of redemption. This redemption right has been
determined to be an embedded derivative that is required to be bifurcated from the underlying debt and accounted for
as a derivative at fair value, with changes in fair value recorded in the consolidated statement of operations and
comprehensive income. As at August 31, 2013 the fair value of the derivative was $3,440,000 (2012 - $1,200,000)
which has been recorded against the carrying value of the Senior notes.
The principal balance outstanding as at August 31, 2013 was $130,771,000 (2012 - $130,771,000), and included in
Interest payable at August 31, 2013 was $2,437,783 (2012 - $2,437,783). During the year ended August 31, 2013
the cash interest expense was $12,750,173 (2012 - $12,750,173).
Convertible notes
The Company has outstanding unsecured subordinated Convertible notes (the “Convertible notes”) due September
12, 2014, and bear interest at 8.0% payable semi-annually, on June 30 and December 31. The debenture holders may
elect to receive interest payments in the form of Class A Subordinate Voting Shares of the Company based on the
market price at the time of the payment.
The Convertible notes are convertible at the option of the debenture holders at any time at a conversion price of
$5.92 per share. The notes are redeemable at the option of the Company at any time provided certain thresholds are
met. This financial instrument contains both a liability and an equity element. The Company assigned the residual
22
67
Sirius XM Canada Holdings Inc. Annual Report 2013
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
amount of $1,539,196 to the equity component. Over the term of the Convertible notes, the liability will be accreted
to its estimated future payment amount with the increase in liability value recorded as interest expense over the
period the liability is outstanding. The effective interest rate based on the liability element is 11.0%.
The principal balance outstanding as at August 31, 2013 was $20,000,000 (2012 - $20,000,000), and included in the
Interest payable balance as at August 31, 2013 was $266,666 (2012 - $266,666). During the year ended August 31,
2013 the cash interest expense for the Convertible notes was $1,600,000 (2012 - $1,600,000).
As at August 31, 2013 Sirius XM held $4.0 million of the Convertible notes and shareholders of Obelysk, including
John I. Bitove, the Chairman of the Company and a shareholder held $1.7 million of the Convertible notes (2012 $4.0 million and $1.7 million respectively).
US$ Senior notes
During the year ended August 31, 2012, the Company settled all outstanding principal and interest related to the US$
Senior notes due in 2014. These US$ Senior notes had an interest rate of 12.75% and the effective interest rate was
12.8%.
23
Sirius XM Canada Holdings Inc. Annual Report 2013
68
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. PROVISIONS
Product
Obligations
Legal
Claims
Other
Total
1,280,357
643,200
697,197
2,620,754
507,194
—
396,716
903,910
Unused amounts reversed
(272,070)
(108,027)
(344,271)
(724,368)
Paid during period
(635,424)
(535,173)
—
(1,170,597)
At August 31, 2012
880,057
—
749,642
1,629,699
Current
880,057
—
405,530
1,285,587
—
—
344,112
344,112
At August 31, 2012
880,057
—
749,642
1,629,699
At September 1, 2012
Charged/(credited) to the statement of operations and
comprehensive income:
880,057
—
749,642
1,629,699
Additional provisions
487,656
—
41,795
529,451
(271,361)
(293,567)
—
(214,497)
At September 1, 2011
Charged/(credited) to the statement of operations and
comprehensive income:
Additional provisions
Non-current
Unused amounts reversed
(22,206)
—
Paid during period
(214,497)
—
At August 31, 2013
1,131,010
—
520,076
1,651,086
Current
1,131,010
—
196,964
1,327,974
—
—
323,112
323,112
1,131,010
—
520,076
1,651,086
Non-current
At August 31, 2013
The product obligations provisions are in place for the movement of obsolete inventory that require assistance to be
sold at retailers. Contractual obligations set forth by existing arrangements also require funds to be set aside for
products that will become end of life.
The legal provision previously in place was settled and paid out in the prior year.
Other provisions relate to decommissioning liabilities and an amount related to potential obligation to a supplier.
24
69
Sirius XM Canada Holdings Inc. Annual Report 2013
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. SHARE CAPITAL
The Company's authorized share capital consists of the following:



Unlimited number of subordinate voting Class A shares with no par value and no fixed dividends;
Unlimited number of voting Class B shares with no par value and no fixed dividends; and
Unlimited number of non-voting Class C shares with no par value and no fixed dividends.
Class B Voting Shares are convertible at any time at the holder’s option into fully paid and non-assessable Class A
Subordinate Voting Shares upon the basis of one Class A Subordinate Voting Share for three Class B Voting Shares.
Each Class B Voting Share participates in the equity of the Company on a per share basis equal to one third of the
rate of participation of the Class A Subordinate Voting Shares and the Class C Non-voting Shares.
In the twelve months ending August 31, 2013 Obelysk converted 28,500,000 Class B shares to 9,500,000 Class A
shares.
In the twelve months ending August 31, 2013 Sirius XM Radio Inc. converted 9,499,999 Class B shares to 3,166,667
Class A shares.
In the twelve months ending August 31, 2012 Obelysk and Slaight completed a secondary offering of 8,000,000
Class A shares. As part of this transaction Obelysk and Slaight converted 24,000,000 Class B shares to 8,000,000
Class A shares. In addition, Obelysk converted another 330,974 Class B shares to 110,325 Class A shares during the
year.
In the twelve months ending August 31, 2012 Sirius XM Radio Inc. converted 8,287,617 Class B shares to 2,762,539
Class A shares.
In November 2012, the Board of Directors instituted a dividend policy and announced a special dividend and
initiation of quarterly dividends equal to $0.0825 to all issued and outstanding Class A and Class C shares and
$0.0275 for Class B shares. In July 2013, the dividend per share was increased to $0.1050 per Class A Share and
$0.0350 per Class B Share. Total dividends payable and paid for the year ended August 31, 2013 was $53,706,925.
25
Sirius XM Canada Holdings Inc. Annual Report 2013
70
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Sirius XM Canada Holdings Inc.
SHARE CAPITAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SHARE CAPITAL
Common Shares
Common Shares
Share Capita
Class A
Class B
Total
Common Shares
Number
Class A
Common Shares
Carrying
Class B
Number
of Shares
Carrying
Value
Number
At September 1, 2011
At September
1, 2011of employee stock
Issued
on exercise
Issued on exercise of employee stock
options
of Shares
Value
50,013,838
of Shares
70,411,369
50,013,838
70,411,369
218,498,526
Conversion
of shares by related party
Conversion of shares by related party
10,872,864
10,872,864
11,458,841
11,458,841
(32,618,591)
AtAtAugust
31,2012
2012
August 31,
61,194,252
61,194,252
83,094,273
83,094,273
185,879,935
At September 1, 2012
61,194,252
options
At September 1, 2012
Issued on exercise of employee stock
optionson exercise of employee stock
Issued
options
Conversion of shares by related parties
At August 31,
Conversion
of2013
shares
At August 31, 2013
by related parties
307,550
790,750
307,550
1,224,063
83,094,273
61,194,252
3,401,103
1,224,063
—
Number
of Shares
Carrying
Value
218,498,526
76,758,061
—
Share Capital
Carrying
Number ValueCarrying
of Shares
76,758,061
268,512,364
—
Number
Total
307,550
Value
1,224,063
(32,618,591) (21,745,727)
(11,458,841)
247,074,187
148
247,074,187
148
790,750
3
—
790,750
3,401,103
3,401,103
(37,999,999)
147,879,936
13,349,318
74,651,669
99,844,694
1
185,879,935 247,074,187
65,299,220
65,299,220
148,393,493
—
99,844,694
12,666,667
307,550
(21,745,727)
148,393,493
790,750
13,349,318
147
—
(11,458,841)
247,074,187
12,666,667
268,512,364
—
65,299,220
74,651,669
of Shares
147,169,430
185,879,935
83,094,273
C
185,879,935
(13,349,318)
65,299,220
— (25,333,332)
—
—
51,949,902
151,794,596 (25,333,332)
(37,999,999) 222,531,605
(13,349,318)
147,879,936
51,949,902
222,531,605
151
26
71
Sirius XM Canada Holdings Inc. Annual Report 2013
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. STOCK-BASED COMPENSATION
Details of Stock-Based Compensation Expense
Reflected in the Consolidated Statements of Operations and Comprehensive Income (Loss) as employee benefits
expenses are the following stock-based compensation amounts:
For the year ended August 31
Stock option awards
Restricted stock units
Performance stock units
Stock-Based Compensation Expenses
2013
2012
1,685,095
237,007
1,493,400
—
335,193
—
2,257,295
1,493,400
(a) Stock option awards
The Company uses stock option awards as a form of providing additional incentives to attract and retain employees,
directors and senior officers of the Company. The stock option plan permits the Board of Directors of the Company
to grant employees, directors and senior officers stock options to purchase common shares up to a maximum of 10%
of the number of shares outstanding. Under the plan, unless otherwise fixed by the Board, options expire on the
seventh anniversary of the grant date. Any option not exercised prior to the expiry date will become null and void.
In connection with certain Substitution Events or Change of control transactions, as these terms are defined in the
plan, including a take-over bid, merger or other structured acquisition, the Board of Directors may accelerate the
vesting date of all unvested options such that all optionees will be entitled to exercise their full allocation of options.
The following table presents a summary of the activities related to the Company’s share option plans for the years
ended August 31, 2013 and August 31, 2012.
Stock Options Outstanding:
Weighted
Average
Remaining
Contractual
Life (years)
Weighted
Average
Exercise
Price
Total
Vested
Unvested
At September 1, 2011
Granted
Vested
Exercised
Forfeited
5.4
$3.28
$3.53
—
$1.51
$4.43
3,173,592
637,500
—
(307,550)
(276,567)
1,515,167
—
180,000
(307,550)
(174,667)
1,658,425
637,500
(180,000)
—
(101,900)
At August 31, 2012
4.9
$3.40
3,226,975
1,212,950
2,014,025
At September 1, 2012
Granted
Vested
Exercised
Forfeited
4.9
$3.40
$4.76
—
$2.84
$4.73
3,226,975
749,700
—
(790,750)
(747,825)
1,212,950
225,000
500,050
(790,750)
(547,875)
2,014,025
524,700
(500,050)
—
(199,950)
At August 31, 2013
5.2
$3.60
2,438,100
599,375
1,838,725
27
Sirius XM Canada Holdings Inc. Annual Report 2013
72
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Stock options granted:
On November 16, 2012, the Company granted stock options to the Board of Directors and members of the
Company’s management team for 749,700 Class A Subordinate Voting Shares with an exercise price of $4.76. The
exercise price was less than or equal to the market price of the shares at the time of grant. The options vest
immediately or over 4 years. The fair value of the options was estimated using the Black-Scholes option pricing
model. The following assumptions were used for the tranches within the grant:
Weighted Average
Fair value
Risk-free interest rate
Expected dividend yield
Expected share price volatility
Expected time until exercise
$2.21
1.4%
7.0%
57.6%
4.5
On November 21, 2011, the Board of Directors approved 637,500 options for grant with an exercise price of $3.53.
The exercise price was equal to the market price of the shares at the time of Board of Director approval. These
options have been granted to members of the Company’s management and employees. The fair value of the options
was estimated using the Black-Scholes option pricing model. The following assumptions were used for the tranches
within the grant:
Weighted Average
Fair value
Risk-free interest rate
Expected dividend yield
Expected share price volatility
Expected time until exercise
$1.59
1.3%
0.0%
84.7%
4.0
(b) Restricted and Performance Stock Units
On November 16, 2012, the Company granted 200,190 RSUs and maximum 390,280 PSUs to some of its employees
as a form of incentive compensation. RSUs and PSUs cliff vest in three years, and can be settled in cash or shares at
the discretion of the Company’s Board of Directors. The PSUs are subject to minimum performance targets and the
amount of PSUs that may vest will vary based on the Company meeting specified performance targets; as at August
31, 2013, the range is from nil if minimum performance targets are not met, to a maximum of 366,700 units. The
grant date fair value for both RSUs and PSUs is $4.71 per unit.
The RSUs and PSUs grant certain employees to either a cash or share based payment equal to the weighted average
price of the Company’s common share on the Toronto Stock Exchange (“TSX”) in the five trading days preceding
the end of a three year performance period multiplied by the number of units that vest. For the PSUs, the number of
units that vest will vary based on the achievement of non-market performance measures. The Company recognizes
compensation expense in operating costs for each RSU and PSU expected to vest equal to the market value of the
Company’s common share less the net present value of the expected dividend stream at the date on which RSUs and
PSUs are awarded to each participant. For PSUs expected to be settled in shares, the compensation expense is
prorated over the performance period reflecting changes in the number of PSUs expected to vest until the end of the
28
73
Sirius XM Canada Holdings Inc. Annual Report 2013
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
performance period based on the achievement of non-market performance measures. Forfeitures are estimated at the
grant date and are revised to reflect a change in expected or actual forfeitures.
Since the settlement method of the RSUs and PSUs is at the discretion of the Company’s Board of Directors, and the
Company does not have a prior practice of settling in cash and currently intends to settle the awards by issuing
shares, the Company accounts for RSUs and PSUs compensation related expense using the equity settlement method.
As at August 31, 2013, the number of non-vested RSUs is 187,980 units. The number of PSUs that may vest based
on conditions existing at the balance sheet date is 265,857 units.
29
Sirius XM Canada Holdings Inc. Annual Report 2013
74
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. FINANCIAL INSTRUMENTS
The Company has designated the following classifications for its financial assets and financial liabilities:
Cash and cash equivalents are classified as loans and receivables with a total carrying value of $44,078,584 at
August 31, 2013 (2012 - $51,034,749).
Short-term investments are classified as held-to-maturity investments, which are measured at amortized cost using
the effective interest rate method. Interest of $67,606 in relation to these instruments was recognized in the financial
statements for the year ended August 31, 2013 (2012 - nil).
Accounts receivable are classified as loans and receivables, which are measured at amortized cost using the effective
interest rate method. No interest in relation to these instruments was recognized in the financial statements for the
year ended August 31, 2013 and August 31, 2012.
Trade and other payables, and amounts due to related parties are classified as other financial liabilities, which are
measured at amortized cost using the effective interest rate method. No interest expense in relation to these
instruments was recognized in the financial statements as at August 31, 2013 and August 31, 2012.
Long term debt and other long-term liabilities are classified as other financial liabilities and measured at amortized
cost using the effective interest rate method.
At
Financial Assets
Loans and receivables
Cash and cash equivalents
Trade Receivables
Held-to Maturity Investments
Financial Liabilities
Amortized cost
Trade and other payables
Due to related parties
Other long-term liabilities
Senior notes
Interest payable on Senior notes
Liability component of Convertible
notes
Interest Payable on Convertible notes
August 31,
2013
August 31,
2012
44,078,584
13,359,446
51,034,749
12,133,138
57,438,030
63,167,887
5,157,798
—
47,145,257
39,085,800
12,011,358
7,983,933
1,669,229
124,199,370
6,902,537
125,961,506
2,437,783
2,437,783
19,507,824
19,031,313
266,666
266,666
207,237,487
201,669,538
2,291,378
1,213,473
Fair value through profit and loss
Other derivative liabilities
75
30
Sirius XM Canada Holdings Inc. Annual Report 2013
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market prices. Market risk includes foreign exchange risk, interest rate risk and other price risk.
To perform a sensitivity analysis, the Company assesses the impact of hypothetical changes in interest rates and
foreign currency exchange rates on foreign currency denominated and interest-bearing financial instruments.
Information provided by the analysis does not represent the Company's view of future market changes, nor does it
necessarily represent the actual changes in fair value that would occur under normal market conditions because, of
necessity, all variables other than the specific market risk factor are held constant. In reality, changes in one factor
may result in a change to another, which may magnify or counteract the sensitivities.
Foreign currency risk
The Company is exposed to fluctuations of the Canadian dollar in relation to the US dollar, resulting from US dollardenominated cash, accounts receivable, and certain liabilities.
Most of the Company's revenue and expenses are received or paid in Canadian dollars. The Company's only
exposure to material foreign currency risk is with respect to payments under OEM agreements, and the NHL contract
and a license and service agreement with Sirius XM.
Given that the Company's exposure is limited to the aforementioned payments, management does not actively
manage this risk. The Company does not currently use foreign currency derivatives.
As at August 31, 2013, the Canadian/U.S. foreign exchange rate was 1.053. Assuming that all other variables remain
constant, a decrease of 10% (with opposite impacts on an increase of similar proportion) in the Canadian dollar
would have the following impact on the ending balances of certain balance sheet items:
At
Assets
Cash
Trade receivables
Liabilities
Trade and other payables
Due to related parties
Net foreign exchange loss
August 31,
2013
(240,587)
(24,626)
820,653
694,398
1,249,838
The impact on the net income is equivalent to the net foreign exchange gain presented in the table above. There is no
impact on comprehensive income.
Interest rate risk
The Company is subject to interest rate risk from changes in interest rates on the Company's cash balances. The
interest rates on the Company’s Senior notes and Convertible notes are fixed and therefore the Company is not
31
Sirius XM Canada Holdings Inc. Annual Report 2013
76
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
exposed to material interest rate risk. Consequently, the Company does not use interest rate derivative instruments to
manage exposure to interest rate fluctuations.
Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing
to discharge an obligation. The Company is exposed to credit risk, primarily in relation to its cash and cash
equivalents, short-term investments and accounts receivable, all of which are uncollateralized.
The carrying amounts of these financial assets represent the maximum credit exposure which was as follows:
At
Cash and cash equivalents
Short-term investments
Accounts receivable
August 31,
2013
44,078,584
5,157,798
13,359,446
August 31,
2012
51,034,749
—
12,133,138
The Company's objective is to minimize its exposure to credit risk in order to prevent losses on financial assets by
placing its cash with major chartered Canadian banks. All of these chartered Canadian banks have a risk rating of B
or higher per Moody’s. Due to their short-term nature and placement with major chartered Canadian banks, cash is
not exposed to material credit risk.
With respect to short-term investments, there is some risk that the issuer will fail to honour the promise to pay
interest and repay the principal on the maturity date. The Company has managed its exposure to the risk by choosing
investments with short-term nature, high credit ratings and low volatility placed with companies with strong
investment grade ratings.
With respect to accounts receivable, exposure to credit risk varies due to the composition of individual customer
balances. Subscription fees are received through either credit card payments or cheque remittances from subscribers
or OEMs.
The Company assesses the credit risk of accounts receivable by evaluating the age of accounts receivable based on
the invoice date. Accounts receivable are considered past due 31 days after the invoice date. The following table
sets out details of the aging of accounts receivable that are outstanding and past due:
At
Current
31-60 days
61-90 days
Over 90 days
August 31,
2013
10,265,611
2,282,586
374,847
436,402
13,359,446
August 31,
2012
7,937,852
3,037,316
493,850
664,120
12,133,138
No past due accounts have been renegotiated with different terms.
The Company has a concentration of credit risk with certain OEMs who are billed for trial subscriptions. Within
accounts receivable that are outstanding, $4,862,840 is due from Chrysler Canada, and $3,002,940 is due from Ford
of Canada. The Company believes that the concentration of credit risk of the remainder of accounts receivable is
32
77
Sirius XM Canada Holdings Inc. Annual Report 2013
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
limited as accounts receivable are widely distributed among many subscribers across Canada and there are no
specific types of customers that have unique characteristics.
Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial
liabilities that are settled by delivering cash or another financial asset. Company's management believes that cash
flows from operations should be sufficient to cover committed cash requirements for capital investments, working
capital and potential dividends in the future.
Cash flow forecasting is performed by the Company to ensure it has sufficient cash to meet operational needs while
maintaining sufficient headroom at all times so that the Company does not breach borrowing limits or covenants
(where applicable) on any of its borrowing facilities. Such forecasting takes into consideration the Company’s debt
financing plans, covenant compliance, compliance with internal balance sheet ratio targets and, if applicable external
regulatory or legal requirements. Surplus cash held by the Company over and above balance required for working
capital management are transferred to money market funds. At the reporting date, the Company held money market
funds of $10,033,616 (2012 - $10,041,409) that are expected to readily generate cash inflows for managing liquidity
risk.
The table below analyses the Company’s non-derivative financial liabilities into relevant maturity groupings based
on the remaining period from the balance sheet date to the contractual maturity date. The amounts disclosed in the
table are the contractual undiscounted cash flows.
Less than 1
year
Trade and other payables
Trade and other payables*
Due to related parties
Due to related parties*
Other long-term liabilities
Other long-term liabilities*
Principal on 9.75% Senior notes
Interest on 9.75% Senior notes
Principal on 8.00% Convertible notes
Interest on 8.00% Convertible notes
41,408,959
5,736,298
3,859,045
5,761,705
—
—
—
—
—
—
—
—
—
—
1,208,332
1,182,276
374,076
950,910
—
—
159,404
184,839
—
—
130,771,000
25,500,345
—
Total
41,408,959
5,736,298
5,067,377
6,943,981
718,319
950,910
130,771,000
63,750,863
—
—
12,750,173
25,500,345
—
—
—
1,600,000
20,000,000
324,384
—
—
20,000,000
1,924,384
231,165
57,931
—
—
289,096
71,347,345
48,389,922
156,430,749
1,393,171
277,561,187
Interest on NHL Trademark*
Total
August 31, 2013
More than 5
1- 3 years
4-5 years
years
—
* Balance denominated in US dollars and converted to Canadian dollars, subject to fluctuations in exchange rate
33
Sirius XM Canada Holdings Inc. Annual Report 2013
78
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2012
Less than
1 year
1- 3 years
4-5 years
More than
5 years
Total
36,572,823
—
—
—
36,572,823
Trade and other payables*
2,512,977
—
—
—
2,512,977
Due to related parties
2,924,788
—
—
1,208,332
4,133,120
Due to related parties*
3,850,813
—
—
—
3,850,813
Other long-term liabilities
—
734,835
—
—
734,835
Other long-term liabilities*
—
6,167,702
—
—
6,167,702
Principal on 9.75% Senior notes
—
—
—
130,771,000
130,771,000
12,750,000
25,500,000
25,500,000
12,750,000
76,500,000
Trade and other payables
Interest on 9.75% Senior notes
Principal on 8.00% Convertible notes
Interest on 8.00% Convertible notes
Interest on NHL Trademark*
Total
—
20,000,000
—
—
20,000,000
1,600,000
1,733,000
—
—
3,333,000
476,943
256,569
—
—
733,512
60,688,344
54,392,106
25,500,000
144,729,332
285,309,782
* Balance denominated in US dollars and converted to Canadian dollars, subject to fluctuations in exchange rate
Fair value
As at August 31, 2013, the fair value of the short-term investments is $5,200,398 (2012 - nil) and is determined using
the market price of the publicly traded bonds.
The carrying value of the Senior notes is $124,199,370 while the face value of the Senior notes is $130,771,000. The
fair value of the Senior notes is $144,828,883 and is determined using the market price of the publicly traded Senior
notes.
The carrying value of the debt component of the Convertible notes is $19,507,824 while the face value of the
Convertible notes is $20,000,000. The fair value of the Convertible notes is $20,661,039 and is estimated using a
discounted future cash flow valuation model. This model includes observable inputs such as contractual payment
terms, maturity dates and relevant market interest rates, as well as unobservable inputs, such as a credit spread
attributable to the Company’s own credit risk.
Financial instruments carried at fair value are grouped into different valuation levels; the fair value of the senior debt
embedded derivative is classified as level 2. The levels are defined in Note 2.
34
79
Sirius XM Canada Holdings Inc. Annual Report 2013
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Capital disclosures
The Company's objectives when managing capital are to:
(a) maintain financial flexibility to meet financial obligations and growth objectives; and
(b) maintain a capital structure that allows multiple financing options to the Company should a financing need arise.
The Company defines the capital that it manages as its long-term debt and shareholders' equity.
Senior notes
Convertible notes
Shareholders' (equity)
Total capital
Cash
August 31,
2013
August 31,
2012
(124,199,370)
(19,507,824)
(8,243,413)
(151,950,607)
44,078,584
(125,961,506)
(19,031,313)
(45,254,754)
(190,247,573)
51,034,749
In managing capital, the Company focuses on liquid resources available for operations. The need for sufficient
liquid resources is considered in the preparation of an annual budget and in the monitoring of cash flows and actual
operating results compared to the budget.
The basis for the Company's capital structure is dependent on the Company's expected growth, financial obligations
and changes in the business. To maintain or adjust its capital structure, the Company may issue additional shares or
raise debt.
The Company's objectives and strategies are reviewed periodically.
35
Sirius XM Canada Holdings Inc. Annual Report 2013
80
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. REVENUE
For the year ended August 31
Broadcasting
Equipment
2013
286,069,482
2,831,300
2012
257,342,544
2,276,956
288,900,782
259,619,500
16. OPERATING EXPENSES
Operating costs
For the year ended August 31
2013
2012
Revenue share & royalties
89,869,730
84,192,958
Customer care and billing operations
19,351,598
17,578,124
Costs of merchandise
3,420,428
3,051,909
Broadcast and operations
1,650,548
1,729,199
Programming and content
7,683,345
9,728,030
General and administrative
8,894,846
11,222,888
11,202,385
11,603,735
Stock-based compensation
2,257,295
1,493,400
Marketing support
7,431,159
7,132,398
Subsidies
42,872,026
43,776,251
Marketing
28,017,267
24,194,451
222,650,627
215,703,343
Information technology
Operating costs
Included in the expenses above are wages and benefit expense for the year ended August 31, 2013 $17,684,668
(2012 - $17,238,329).
Integration, severance and merger costs
For the year ended August 31, 2012, the Company incurred expenses in the amount of $1,383,105, including
$863,828 in severance and legal costs.
36
81
Sirius XM Canada Holdings Inc. Annual Report 2013
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. EARNINGS PER SHARE
For the year ended August 31
Numerator:
Net income (loss) for the year
Net income (loss) for the year, basic and diluted
2013
2012
12,190,542
12,190,542
(4,178,816)
(4,178,816)
Weighted average number of shares outstanding:
Basic
Diluted
123,454,881
124,334,090
123,065,353
123,065,353
0.10
0.10
(0.03)
(0.03)
Earnings (loss) per share:
Basic
Diluted
The stock options where the exercise price is above the average share price during the period and where vesting is
contingent on performance conditions that were not met as at August 31, 2013 and the potential shares issuable
related to the Convertible notes were not included in the computation of diluted loss per share as they would have
been anti-dilutive for the periods presented.
18. SUPPLEMENTAL CASH FLOW DISCLOSURE
The net change in non-cash working capital balances related to operations consists of the following:
2013
2012
Accounts receivable
(1,226,308)
(1,414,462)
Prepaid expenses
(1,226,187)
48,441
89,967
1,941,122
Trade, other payables and provisions
5,582,248
2,334,378
Due to related parties
4,027,425
745,399
Deferred revenue
3,416,582
11,493,635
(5,254,308)
(2,499,388)
5,409,419
12,649,125
For the year ended August 31
Decrease (increase) in assets
Inventory
Increase (decrease) in liabilities
Long-term liabilities
Net change in non-cash working capital related to operations
37
Sirius XM Canada Holdings Inc. Annual Report 2013
82
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Operating activities include the following payments and receipts:
2013
2012
646,678
14,350,173
360,906
14,429,138
—
—
For the year ended August 31
Interest income received
Interest paid
Taxes paid
19. CONTRACTS, CONTINGENCIES AND COMMITMENTS
Operating lease commitments
Future minimum annual lease payments under operating leases for office spaces and terrestrial repeater sites are
approximately as follows. The annual minimum lease payments in the following table do not include any common
costs, such as property taxes and utilities, which cannot be determined in advance. The leases range in length from
one to seven years, and majority of the lease agreements are renewable at the end of the lease period at market rate.
$
2014
2015
2016
2017
2018
Thereafter
2,090,454
1,930,471
1,446,889
1,311,150
1,155,224
2,616,016
10,550,204
The above includes $495,171 in operating lease commitments with CBC. The total lease expenditure included in
operation costs for the year ended August 31, 2013 is $1,777,649.
National Hockey League
The Company has commitments to reimburse Sirius XM for a portion of its obligations under a term sheet signed on
September 9, 2005 between Sirius XM and the National Hockey League to secure satellite radio National Hockey
League broadcast and marketing rights. The remaining term of the agreement between Sirius XM and the National
Hockey League is 2 years and $19.7 million.
The Company recognizes the periodic cost of the programming on a straight-line basis in which the Company
broadcasts the program while the payments vary as noted below. The Company accounts for the difference between
the periodic cost of the services and the amount paid in each period as another financial liability. The periodic
service cost reflects the fees over the term of the arrangement less the interest component determined using the
effective interest rate method.
38
83
Sirius XM Canada Holdings Inc. Annual Report 2013
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Contractual payments under the contract are as follows:
$
2014
2015
12,200,000
7,500,000
19,700,000
Service provider agreements
The Company has commitments with CBC of $19.3 million and Sirius XM of $1.6 million which are detailed within
Note 9 and included in amounts below.
The Company has an agreement between SXM and Accenture Inc. (Accenture) for maintenance and development
services for SXM’s customer care and billing system. Under this agreement, the Company is committed to pay $7.66
million over the remaining term of the agreement. The Company accounts for the cost of services provided by
Accenture on a straight-line basis over the term of the agreement while payments are set out below. The difference
between the periodic cost of the services and the amount paid in each period is accounted for as another financial
liability. The periodic service cost reflects the fees over the term of the arrangement less the interest component
determined using the effective interest rate method.
Total contractual payments to service providers under contracts are as follows:
$
2014
2015
2016
2017
2018
Thereafter
13,490,982
5,628,031
3,263,335
3,184,486
2,337,943
8,400,000
36,304,777
Advertising and marketing commitments
The Company has agreements which commit the Company to $8 million of expenditures related to advertising and
marketing and joint advertising with commercial partners. This total includes an arrangement between SXM and
Corus Entertainment Inc. (Corus) for the purchase of advertising. The Company has an agreement with GMCL for
advertising and marketing. Over the next 5.3 years, the Company will spend $3.0 million in advertising and
commissions with GMCL.
39
Sirius XM Canada Holdings Inc. Annual Report 2013
84
Sirius XM Canada Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Total contractual payments under the advertising and marketing contracts are as follows:
$
2014
2015
2016
2017
2018
Thereafter
5,582,610
1,394,900
1,068,814
884,799
836,618
123,806
9,891,547
Broadcast license
As a condition of the broadcast license from the CRTC, the Company must contribute a minimum of 4% of the gross
revenues of the satellite radio undertaking to eligible third parties directly connected to the development of Canadian
musical and artistic talent during each broadcast year over the current license term. Upon license renewal from
CRTC, effective December 1, 2012, the Company’s annual contribution level was lowered from 5% to 4% of its
prior year revenues. Accordingly, for periods prior to December 1, 2012, the amount paid is 5% of prior year
revenues, and 4% thereafter. These amounts are recognized as an operating expense.
Performance rights
The Company’s satellite radio and internet radio services rely upon licenses granted under the Copyright Act
(Canada) in order to make use of the music components of our programming. On April 11, 2009, the Copyright
Board of Canada issued the certified statement of royalties to be collected by the Society of Composers, Authors and
Music Publishers of Canada (SOCAN), Re:Sound, formerly the Neighboring Rights Collective of Canada (NRCC),
and by CMRRA/SODRA Inc. (CSI), (together, “the Collectives”) in respect of multi-channel subscription satellite
radio services. In accordance with the prescribed rates under the Satellite Radio tariff, the Company must remit
approximately 6% of the Company’s gross satellite radio-related revenues to the Collectives. The Company is
currently paying or accruing for the royalties using prescribed rates under past certified tariffs, or by agreement.
Contingencies
From time to time the Company may be engaged in legal proceedings or claims that have arisen in the ordinary
course of business. The outcome of all of the proceedings or claims against the Company, are subject to future
resolution, including the uncertainties of litigation. Based on information currently known to the Company,
management believes that the probable ultimate resolution of any such proceedings and claims will not have a
material adverse effect on the financial condition of the Company taken as a whole.
The CRA is proposing to reassess filing positions taken in a prior year and is proposing to assess material amounts
for withholding taxes and interest and penalties related to certain transactions which would be payable should the
Company’s filing position not be sustained. The Company has not recognized a provision for any amounts related to
the proposed amounts as it believes CRA’s proposal has no merit. The Company will continue to vigorously defend
its position and it believes it will be successful in defending its position.
40
85
Sirius XM Canada Holdings Inc. Annual Report 2013
Corporate Information
BOARD OF DIRECTORS
AUDITOR
John Bitove
Chairman
Dara Altman
Pierre Boivin
Timothy Casgrain
David Coriat
Philip Evershed
David Frear
Guy Johnson
Anthony Viner
PricewaterhouseCoopers LLP
Toronto, ON
SENIOR OFFICERS
Mark Redmond
President & Chief Executive Officer
Michael Washinushi
Chief Financial Officer
CORPORATE HEADQUARTERS
135 Liberty Street, 4th Floor
Toronto, ON M6K 1A7
ANNUAL GENERAL & SPECIAL MEETING
Wednesday, January 15, 2014, 10:00 a.m.
TMX Broadcast Centre
130 King Street West
Toronto, ON
Sirius XM Canada Holdings Inc. Annual Report 2013
TRANSFER AGENT
CST Trust Company
Toronto, ON
LEGAL COUNSEL
Oliver Jaakkola
Senior Vice President & General Counsel
SiriusXM Canada
CLASS A SUBORDINATE VOTING SHARES
Sirius XM Canada Holdings Inc.
Class A Subordinate Voting Shares are
traded on the Toronto Stock Exchange
(TSX) under the trading symbol “XSR”.
INVESTOR RELATIONS
Morlan Reddock
Director Treasury & Investor Relations
SiriusXM Canada
416-513-7418
[email protected]
Aaron Kabucis
TMX Equicom
416-815-0700 ext. 230
[email protected]
86
COMMERCIAL-FREE MUSIC
POP
02SiriusXM Hits 1 –
Top 40 Hits
03Top 20 on 20
04’40s on 4
05’50s on 5
06
’60s on 6
07’70s on 7
08’80s on 8
09’90s on 9
10
Pop2K – 2000s Pop Hits
15The Pulse – 2000s
and Today
16The Blend – Lite Pop Hits
17SiriusXM Love
163Chansons – SiriusXM’s
“chansons” music channel
173The Verge – Best New
Rock with Unsigned
Artists
75SiriusXM Pops –
Classical Pops
76Symphony Hall –
Traditional Classical
HIP-HOP, R&B & REGGAE
SPORTS
42The Joint – Reggae
44
Hip-Hop Nation
45Shade 45 – Eminem’s
Uncut Hip-Hop
46Backspin – Old Skool Rap
47The Heat – R&B Hits
48Heart & Soul – Adult
R&B Hits
49Soul Town – Classic
Soul/Motown
50The Groove – Old School
R&B
84ESPN Radio – ESPN’s
Sports Talk Channel
85ESPN XTRA – The Latest
Sports News
86Mad Dog Sports Radio –
“Mad Dog” Russo Takes
on Sports
87
SiriusXM Fantasy Sports
88SiriusXM NFL Radio
89
MLB Network Radio
90SiriusXM Nascar Radio
91SiriusXM College
Sports Nation
92SiriusXM Sports Zone –
Sports Games and Talk
93SiriusXM PGA TOUR
Radio
93Sports Play-by-Play –
Horse Racing Talk & MLB
Play-by-Play (Sirius Only)
94SiriusXM FC – Your
SiriusXM Home for Soccer
177-189MLB Play-by-Play
190-193Sports Play-by-Play –
NCAA Play-by-Play
204-208Sports Play-by-Play – Live
Sports Play-by-Play
211SiriusXM NHL Network
Radio
212SiriusXM NHL Network
Radio Info
213-216 NHL Hockey Play-byPlay
218-222 NBA Play-by-Play
225Sports Play-by-Play –
NFL, NASCAR, college
sports and more
209
IZOD IndyCar
211
Sports Play-by-Play
213-220Sports Play-by-Play
800-830NFL Play-by-Play
(Online Only)
880-909NBA Play-by-Play
(Online Only)
960-969Sports Play-by-Play
(Online Only)
ELECTRONIC, DANCE & LATIN
165Multicultural Radio –
The Cultures of Canada
174Influence Franco – The
New Indie Pop Alternative
ROCK
19Elvis Radio
20E Street Radio – Bruce
Springsteen 24/7
21Underground Garage
– Little Steven’s
Underground Garage
22Pearl Jam Radio
23Grateful Dead Channel
24Radio Margaritaville
25Classic Rewind – ’70s
& ’80s Classic Rock
26Classic Vinyl – ’60s & ’70s
Classic Rock
27Deep Tracks – Deep
Classic Rock
28The Spectrum – Adult
Album Rock
29Jam On – Jam Bands
30The Loft – Contemporary
Eclectic
31The Coffee House
– Acoustic SingerSongwriters
32The Bridge – Mellow Rock
33First Wave – Classic
Alternative
34Lithium – ’90s
Alternative/Grunge
35Sirius XMU – Indie Rock
36Alt Nation – New
Alternative Rock
37Octane – New Hard Rock
38Ozzy’s Boneyard – Classic
Hard Rock
39Hair Nation – ’80s Hair
Bands
40Liquid Metal – Heavy
Metal
41Faction – Music of Action
Sports with Tony Hawk
161Iceberg – Canadian Rock
Music
162CBC Radio3 – Emerging
Canadian Artists
164Attitude Franco – The
New Rock Alternative
171CBC Music: Sonica – Adult
Alternative Artists
51BPM – Dance Hits
52Electric Area –
Progressive House,
Trance & Electro
53SiriusXM Chill –
Smooth Electronic
54Studio 54 Radio –
Classic Dance & Disco
150Caliente – Tropical
Latin Music’
760Viva – Contemporary
Latin Pop & Ballads
(Online Only)
COUNTRY
56Willie’s Roadhouse –
Classic Country
58Prime Country – ’90s
Country & More
59The Highway – New
Country
60Outlaw Country –
Rockin’ Country Rebels
61Bluegrass Junction
166FrancoCountry –
Francophone & Canadian
country-folk
741The Village – Folk
(Online Only)
CHRISTIAN
63The Message – Christian
Pop & Rock
64Kirk Franklin’s Praise –
Gospel
65enLighten – Southern
Gospel
JAZZ, BLUES & STANDARDS
66Watercolors – Smooth/
Contemporary Jazz
67Real Jazz – Classic Jazz
68Spa – New Age
69Escape – Beautiful Music
70B.B. King’s Bluesville
71Siriusly Sinatra – Sinatra/
American Standards
72On Broadway –
Show Tunes
750Cinemagic – Movie
Music (Online Only)
CLASSICAL
74Met Opera Radio –
Opera/Classical Vocals
NEWS, TALK,
ENTERTAINMENT,
FAMILY & HEALTH
TALK & ENTERTAINMENT
80RURAL Radio –
Agriculture &
Western Lifestyle
81Doctor Radio – Real
Doctors Helping
Real People
100Howard 100 – The
OFFICIAL Howard
Stern Channel
101Howard 101 – The Stern
Show West Coast Replay
& Special Programs
102Vivid Radio – Superstars,
Celebs, Hot Sex, More
104Indie – Indie Talk Radio
107SiriusXM Stars – Celebrity
Hosts & Lifestyle Shows
109OutQ – Gay & Lesbian
Radio
122NPR Now – NPR News
& Conversation
124POTUS – Politics of
the United States
125SiriusXM Patriot –
Conservative Talk
127SiriusXM Progress –
Liberal Talk
128Road Dog Trucking Radio
– Just for Truckers
167Canada Talks – Canadian
Current Affairs & Talk
204
Oprah Radio
205
SiriusXM Public Radio
206The Opie & Anthony
Channel
COMEDY
95Comedy Central Radio –
Uncut stand-up direct
to your brain
96The Foxxhole – Your
All-Access Pass to the
World of Jamie Foxx
97Blue Collar Comedy
98Laugh USA – Family
Comedy
99Raw Dog Comedy –
Comedy Uncensored
168Canada Laughs –
Canada’s Extraordinary
Comedy
FAMILY & KIDS
78Kids Place Live
79Radio Disney
82Radio Classics – Classic
Radio Shows
RELIGION
129The Catholic Channel
130EWTN – Global Catholic
Radio Network
131Family Talk –
Christian Talk
NEWS
112CNBC
113
FOX Business
114FOX News Channel
115CNN
116HLN
117MSNBC
119Bloomberg Radio
120C-SPAN Radio
122NPR Now
169CBC Radio One
170Première – Radio-Canada
News & Information
172Canada 360 by AMI –
Canada’s News/Weather
by AMI-Audio
INTERNATIONAL
118BBC World Service News
Canadian Radio Content
French
* Some channel numbers vary depending
on Sirius or XM lineup. Please see
www.siriusxm.ca/channelguide for full
accurate listings.
135 LIBERTY STREET, 4TH FLOOR
TORONTO, ON M6K 1A7
CANADA
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