Paul Blalock - Senior Vice President of Investor Relations Mel Karmazin - Chief Executive Officer and Director James Meyer - President of Sales and Operations William Prip - David Frear - Chief Financial Officer and Executive Vice President

David Gober - Morgan Stanley Vijay Singh - Janco Partners, Inc. Barton Crockett - Lazard Capital Markets LLC

Good morning. And welcome to the SiriusXM Radio's Full Year and Fourth Quarter 2010 Earnings Conference Call. [Operator Instructions] At this time, I would like to turn the call over to William Prip, Senior Vice President, Treasurer and Investor Relations. Mr. Prip, please go ahead.

Thank you Nikky. And good morning, everyone. Welcome to SiriusXM Radio's earnings conference call. Today Mel Karmazin, our CEO will be joined by David Frear, EVP and CFO. They will review SiriusXM's full year 2010 financial results. At the conclusion of our prepared remarks, management will be glad to take your questions. Jim Meyer, President of Operations and Sales and Scott Greenstein, President and Chief Content Officer, will also be available for the Q&A portion of the call. First, I would like to remind everyone that certain statements made during the call might be forward-looking statements as the term is defined in the Private Securities Litigation Reform Act of 1995. These and all forward-looking statements are based on management's current beliefs and expectations and necessarily depend upon assumptions, data or methods that may be incorrect or imprecise. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. For more information about those risks and uncertainties, please see SiriusXM's SEC filings. We advise listeners to not rely unduly on forward-looking statements and disclaim any intent or obligation to update them. As we begin, I would like to advise our listeners that the today's results will include discussions about both actual results and adjusted results. All discussions of adjusted operating results exclude the effects of stock-based compensation and certain purchase price accounting adjustments. I will now hand the call over to Mel Karmazin.

Thanks, Will. And good morning, everyone. 2010 was a remarkable year for satellite radio. If there ever any doubts about the viability of a SiriusXM, our 2010 results put those doubts to rest. Today, we have a respected brand that is coveted as a must have product for discerning American consumers. In addition, the business community at large cannot ignore the strong economic drivers inherent in our unique business model. Technology changes have transformed the media landscape over the past 10 years creating winners and losers along the way. I'm proud to say that we are clearly in the first camp. We are no longer a long-shot concept and company. I believe we are increasingly viewed as a sure thing. Let me quickly review the company's important financial results in 2010. Revenue grew by over 14% to $2.82 billion, a record for the company. At the same time, we managed our expenses aggressively allowing only a 7% increase in cash operating expenses. Most of the expense increases were revenue related or related to our growth in subscribers. Consequently, adjusted EBITDA grew by over 35% to $626 million, which was another record for the company. After only two years of positive adjusted EBITDA, our margin was 22%. We anticipate significant margin expansion in the years ahead with an operating margin over 40% at maturity. As those investors who have known me for a long time appreciate, the most important measure of a business' success to me is free cash flow. It's free cash flow that enables you to pay down debt, make acquisitions or return capital to shareholders. In that regard, we generated $210 million of free cash flow in 2010. That's despite launching a satellite last year and paying for a great deal of the construction of another satellite that will launch later this year. Free cash flow was also a record amount for the company. That's two consecutive years of strong free cash flow generation, $185 million in 2009, and $210 million in 2010. What a difference from of the over $500 million of negative free cash flow in 2008. And free cash flow over the next several years should ramp dramatically given that we will not be spending any cash on satellite capital expenditures following this year's launch of SIRIUS 6 nor will we be a meaningful income tax payer. Importantly, our operational metrics in 2010 were as gratifying as our financial results. Subscriber net additions were 1.4 million strong in 2010, representing a year-over-year growth rate of nearly 8%. That's pretty impressive growth for a business that had already scaled to be one of the largest subscriber businesses in this country by the end of 2009. We ended the year with $20.2 million subs, which was another record for SiriusXM. In addition to the strong gross adds, principally a result of improved auto sales, I'm proud to say that this growth in our subscriber base was also the result of improvements in our subscriber metrics from its 2009 levels. The rate at which we converted consumers on trials to self-pay subscribers grew from 45.4% to 46.2% while we also reduced our self-pay churn from 2.0% from 1.9%. The fact that we grew our self-pay base by nearly 1 million subscribers is an astonishing achievement, 6x as many new customers chose to pay for our service in 2010 than in 2009. This clearly demonstrates that consumers love SiriusXM given their willingness to pay for our service when they have a plenty of free audio entertainment alternatives available to them. Content is what matters. It was great news for our subscribers and our shareholders that we were able to extend Howard Stern’s contract and also the NFL until 2015. We will continue to deliver to subscribers the best content in radio. We also anticipate that our programming costs will continue to decline in absolute dollars and also as a percentage of revenue. Also very importantly, Howard and the NFL are available on smart phones with the SiriusXM app, and that will also please subscribers. As smart phones continue to emerge, SiriusXM will be a content leader there as well. From whatever perspective you look at SiriusXM today, as a consumer, a lender or a shareholder, the company is respected and offers a unique value proposition. To the consumer, we offer a tremendous array of diverse audio content at a modest cost. What else is available to the American consumer that provides a comparable level of daily satisfaction at a cost of less than $0.50 a day? To our lenders, our performance over the past quarters has provided as steadily improving credit profile that has rewarded them with a very good return on the risk they've taken when deciding to lend to us. Our debt investors today view us as a significantly better credit risk than they did in the recent past and we expect that our continued growth will provide us even better borrowing rates in the future. From our shareholders’ perspective, we enjoy a premium valuation versus most of our competitors in the media space. Clearly, the equity market now better appreciates the strength of our business model, particularly the expected free cash flow generation characteristics of the company in the coming years. Luckily for our shareholders, I believe we have the assets, financial flexibility and business savvy to satisfy the growth expectations inherent in our valuation today. I expect that we will continue to dominate paid audio entertainment in the years ahead. So let's talk about the future, both near term and long. As usual for us, we are cautious starting the year but I'm happy to announce today that we are providing guidance for 2011 that keeps us on a growth trajectory that is similar to the growth that we experienced last year. We expect to generate approximately $3 billion in revenue and $715 million in adjusted EBITDA. We also expect free cash flow to approach $300 million this year. Operationally, we are forecasting to add another 1.4 million net subscribers by the end of the year and to experience full-year conversion and self-paid churn rates, similar to the strong levels we enjoyed in 2010. Our entire organization is working tirelessly to introduce SiriusXM 2.0 into the marketplace retail segment in 2011. I'm really excited about the evolution in our service. As I mentioned earlier, SiriusXM 2.0 promises increased content and functionality to our subscribers. We are expecting to expand our audio content lineup by a significant number of channels. That should make our already robust content offering even better. You should expect us to offer additional data service over time as well. We are also planning some exciting improvements in functionality. An electronic program guide will be available that lets you know what's on all of our channels. Our subscribers will be able to buy music from their radio. We'll also include pause, resume, and replay as well as record and playback capabilities. We believe these improvements will enhance the customer experience and make our service that much more differentiated and superior to the alternatives out there and therefore, that much more indispensable to our subscribers. We'll also look to enhance the value of being a SiriusXM subscriber in other ways. We received very positive feedback about the Paul McCartney concert we presented last December that celebrated SiriusXM achieving over 20 million subscribers. You should expect that we will be doing more of these events in 2011 as well. Our priorities for 2011 are to end the year reporting record revenue, record subs, record EBITDA and most importantly, free cash flow. The theme running through everything I just mentioned is simple, we know we have a great service that people want. We want consumers to crave SiriusXM even more and establish an enduring loyalty to our brand. To accomplish this, we plan to continually invest in new services, functionality and especially programming that continually enhances the value proposition and encourages consumers to not hesitate at each opportunity to become a self-pay subscriber. We want to become a no-brainer when American consumers are deciding how to allocate their precious household budgets. I believe this commitment to serving the wants and needs of our subscribers and having the financial wherewithal to meet that commitment, will translate into sustained growth and strong and consistent improving financial results, which we hope will further translate to incremental shareholder value creation. From my perspective, the long-term investment thesis is actually pretty straightforward. We intend to offer service to consumers that they will want for a long time. The opportunity for acquiring new customers is growing both through additional improvements in the auto sector as well as the used car opportunity we've spoken about. The combination of these two factors should allow us to generate steady top-line growth over the next several years, then slap that expectation against the strong operational leverage characteristics of this business and we should be a significant free cash flow generator over the next several years. Growing EBITDA, no satellite CapEx, reduced interest payments and no meaningful income taxes will contribute to our dramatic free cash flow growth. So the obvious question that arises from this is what will we do with the cash that we accumulate over time. There are only three things a company can deal with a significant amount of excess cash, pay down debt, buy assets to grow the business or return capital to the shareholders. Our board of directors will consider all the alternatives and make the big decision that is in the best interest of our shareholders. Long term, we expect to maintain some debt leverage at SiriusXM. As a subscription based business, we can probably tolerate a significant amount of leverage but just assume we keep leverage at a modest level like 3x adjusted EBITDA. In that case, we clearly would not be diverting much of the future cash generation toward reducing debt. In fact, we might more likely increase gross indebtedness overtime as we continue to grow the business. So will we buy assets with our excess cash? Perhaps, but we haven't seen anything yet that's worthy of any meaningful investment or acquisition. Then will we return capital to shareholders, although I certainly can't quantify the amount or the timing for this, I think it is reasonable to expect that the company will return capital to shareholders over time. Obviously, this perspective can change if we modify the financial policy around leverage I just mentioned or should we find some new technology or a company to buy, that we believe provides a long-term strategic advantage for our shareholders. So stay tune on this front. As we expect to be near our target leverage ratio in the not-too-distant future. Without everyone at the company focused exclusively on profitable growth, we will not be able to deliver the free cash flow growth that we and our shareholders want and expect. In that regard, I am confident that we have the focus at the board level, among the leadership and deep within the organization. Our employees are encouraged to think continually about growing the top line, managing costs and delivering economic profits. We do this by continually improving programming, investing in technology, whether customer facing or deployed internally to make us a more efficient and enhancing the customer experience in all ways, including the customer care process. We are focused in this way because we understand and appreciate the power of competition. We live with intense competition to the first day we began broadcasting and every paying customer we've acquired over the years came aboard because we've offered something different and better than the alternatives out there. But like most areas of modern life, alternatives to the consumers are ever increasing, and we're up for the challenge. The media business has always been highly competitive and things will continue to evolve in the years to come. There will be winners and losers as the media landscape changes over time and I am confident that SiriusXM will again be in the winner’s circle. For any company to succeed in a changing environment, it needs to stay relevant and I think strategically not only about what consumers want today but what they will want in the future. Change is always accompanied by opportunities and challenges. We are ready to keep grabbing those opportunities as they arise. I believe the best days for SiriusXM are yet to come. We fully expect to hit it out of the park in 2011. With that, I'll hand the call over to David to discuss additional details about our 2010 financial and operating results.

Thanks, Mel. SiriusXM turned in a much better year than expected in the face of a slow improvement in the economy. While North American auto sales were up to 10% from 2009 at 11.6 million units, they were still down 12% from 2008 and 28% from 2007’s 16.1 million vehicle pace. While the economy has improved, unemployment remained high, job creation’s low, housing values haven't improved much and consumer credit remains scarce. Nevertheless, in a clear demonstration of the strength of our subscriber based business model, SiriusXM delivered record results, solidly beating guidance we raised 3x in the course of the year, finishing a 20.2 million subs, over $2.8 billion in revenue, $626 million in EBITDA and $210 million in free cash flow. In delivering over 1.4 million net adds in 2010, our self-pay subscriber base grew by approximately 1 million to 16.7 million subscribers and the funnel of paid and unpaid trials ready for conversion grew by 700,000, finishing the year at 4.3 million. While growth additions expanded by 25% over 2009, total deactivation declined. Self-paid churn improved by 11 basis points, finishing the year at 1.92% and the conversion rate of auto trials improved to 46.2%. With the slow but steady economic recovery and improving marketing practices, we are seeing improvements in conversion rates across virtually all auto manufacturers. The effect of these improvements on our overall conversion rate is somewhat muted by shifts in market share among the auto manufacturers as lower converting brands picked up share in North American auto sales. Revenues were up 14% at $2.8 million, ARPU of $11.73 per month was up 7% for the year. The last three quarters for ARPU were roughly flat at $11.80. In December, we adjusted the U.S. Music Recovery fee down to $1.40 from $1.98 for primary subscriptions, while leaving the multi-subscriber U.S. Music Recovery fee unchanged at the $0.97. Under the terms of the FCC merger order, we are allowed to pass on to our subscribers any increases in royalty costs incurred to since March 2007. The adjustment in December was implemented to ensure that we do not recover more than what is allowed under the merger order. Ad sales we're up 25% over 2009 as we continue to outperform both the radio market and the national ad market. Since 2008, EBITDA has improved by $760 million. Revenues are up $400 million over that two-year period and cash operating expenses are down by $360 million. The principal drivers of the expense reductions are: Sales and marketing costs, down $120 million; programming and content, down nearly $100 million; and SAC is down $80 million on a 20% improvement in SAC per gross ad. We continued to grow revenue faster than expenses. Our EBITDA margin expanded to 22.1% for the year and to 38.1% on a pre-SAC basis. Contribution margin rose to 71.2% for the year, the 1.2% increase in contribution margin, also the similar rise in SAC as a percentage of revenue, which was driven by the 25% increase in gross additions in the year. Fixed-cost improvements drove the nearly four-point improvement in EBITDA margin. This incredible performance in the income statement has dropped straight through to free cash flow, which has also improved by about $760 million since 2008. Our free cash flow for 2010 improved to $210 million, significantly above our $150 million guidance despite an increase of $63 million in capital expenditures. We successfully placed XM-5 in orbit in the fourth quarter of 2010. XM-5 will serve as an in-orbit spare for both the Sirius and XM fleets protecting our customers and our revenues from a degradation of service in the event of a satellite anomaly. In the fourth quarter of 2011, we will complete our satellite replacement cycle with the launch of SIRIUS 6. We expect our satellite capital expenditures to decline by approximately $90 million in 2011 and by another $100 million in 2012. We do not expect to begin construction of another satellite before late 2016 or 2017. As a result of the successful launch of XM-5, we no longer believe SIRIUS-4, which we've kept as a ground spare, will be used in our satellite operations. As a result, we have recorded a $56 million charge to restructuring, impairments and related costs in the quarter to write off the remaining book value of this satellite. In October, we issued $700 million of 7 5/8% Unsecured Notes due 2018, the proceeds of which will be used to retire the 11 1/4% Senior Secured Notes due 2013. We recorded a charge of $85 million in the fourth quarter in connection with the retirement of the 11 1/4%s. This issue followed our successful $800 million placement of 8 3/4% Unsecured Notes due 2015 in March 2010. The proceeds of which were used to retire secured debt due in 2012 and our 9 5/8% Notes due in 2013. Over the course of 2010, we issued $1.5 billion of unsecured debt at very attractive single-digit coupons, retired secured debt and pushed out maturities by three to five years. The improvements in EBITDA and free cash flow have also resulted in dramatically improved leverage in the balance sheet. Our net debt to adjusted EBITDA has improved from 5.8x at the end of 2009 to 4.2x at the end of 2010. This improvement in leverage allowed us to merge the Sirius and XM entities in January 2011, simplifying our capital structure and eliminating unnecessary administrative costs. Since December, we've also bought back $131 million of debt, including the remaining $37 million of the 11 1/4% Notes and $94 million of the 3 1/4% converts due in October 2011. We now have only $104 million of scheduled debt maturities between now and the middle of 2013. As a final note, our two Canadian affiliates have reached an agreement to merge subject to shareholder and regulatory approval as well as certain other conditions. Canadian Satellite Radio, a public company traded on the Toronto Stock exchange under the symbol XFR, will issue approximately 58% of its equity to the shareholders of a Sirius Canada in the merger. CSR's shareholder meeting is on Thursday of this week, February 17. The CRTC, the Canadian equivalent of the FCC, has announced that it will hold a hearing on the merger on March 7. The Competition Bureau, which is Canada's equivalent of the Department of Justice, is also reviewing the transaction. SiriusXM will own about 37% of the economic interest following the merger. This represents approximately 45.5 million XSR shares. As part of the merger, CSR will repay all amounts outstanding under the XM credit facility, and SIRIUS Canada is expected to make a cash distribution to its equity holders. We expect the transaction to close in the second quarter. With that, Operator, I'd like to open it up for questions.

[Operator Instructions] And your first question comes from Barton Crockett with Lazard Capital Markets. Barton Crockett - Lazard Capital Markets LLC: I wanted to ask about the focus on returning capital to shareholders. Get a little bit more kind of elaboration on a couple of points. One is, is it safe to assume the preference that is going to be for share repurchase over dividend. And then secondly, in order to buy back shares, could you talk about how the Liberty shareholdings play into your evaluation? In other words, are you constrained in your ability to repurchase near term by the desire not to trip a change in control for the NOLs given their 40% ownership? Is there a need to have some type of agreement with them to proceed? Do you see their shareholdings potentially the source of shares you’d repurchase or is your preference more to buy back from the publicly traded stock?

On the NOL front, Barton, 382 of the Tax Code will constrain or influence what we do for probably the next year or a little bit more than. Under that section of the code, you're always looking at a three-year window for change of control. And we clearly wouldn't want to trip the change of control because that would limit or affect the way in which we utilize our NOLs. But once we get to the second quarter of 2012, we are beyond the three years since Liberty made their investment and we start over again with respect to the 382 calculation. So, I think that, as it relates to tax issues, that you should think of us unconstrained starting in the second quarter of 2012.

I think date for Liberty is March of 2012, when that gets triggered. And regarding what exactly we're going to do, obviously, that will be a board decision. We have already had a discussion at the board level about what we should do with our free cash flow. No determination has been made. Historically, I've always believed that a share buyback is a more tax efficient way of returning capital to shareholders as compared to a dividend. But clearly, that's not anything that has been determined. We certainly have not heard anything specific from liberty about their interest in having less ownership in the company. So certainly, from where I'm sitting today, we are not thinking about using the free cash flow to buy in Liberty shares as much as we might be thinking about using it for our public float. Barton Crockett - Lazard Capital Markets LLC: And then switching gears a little bit, given that we are right here on the cusp of Pandora's IPO filing, I was wondering if you could talk a little bit about your ability to include a Pandora style feature in satellite radio? There has been some discussions from various sources about patents. Is this a feature that -- the ability to select personalized music stream online, is that something you could include within satellite radio? Is that something that you think makes sense? Is it technologically feasible to do?

Certainly, without speaking to specifically to Pandora, there is an awful lot of IP audio content that's out there and virtually all of them have a music recommendation engine or algorithms that enable you to sort of target a little bit more your channels. Most of those companies today, when you pick a channel that you want, are limited by the number of plays you have from a single artist because of the digital royalty act. So, we think that our channels, curated channels, are something that is very desirable to the consumer if you take a look at our time spent listening, which we do and we compare it to the time spent listening of a lot of the IP channels, we see a greater satisfaction from our content. But having said that, certainly, there is nothing that would preclude us from doing what you said, in an IP part of the distribution that we do to consumers. Clearly, if, in fact it was something that we believed that our subscribers would want, we would absolutely do that. We think that there is an awful lot of people who like the, Slacker, Pandora, Last.fm, iheart services because it's free. Nothing is really free because the way they make their money is they make you listen to commercials and a lot of that IP content as they get and try to get more and more revenue are going to be running more and more commercials. And again, we like our business model, which is principally subscription driven as compared to the model of where you're offering service for free and running commercials, that sounds an awful lot like Terrestrial Radio.

And our next question will come from Vijay Jayant[ph] with Citadel Securities. Please go ahead.

Looking at your guidance Mel, it suggests that there’s certainly no ARPU growth in 2011 based on your revenue expectations there, at least for the moment. Can you just talk about long term, you've never really have had any rate increases on the platform, and you added a lot more content over the years. And the price gap potentially sort of goes away hopefully this year. Can you talk about long-term pricing in general, please?

Certainly, we believe that our original price point of $12.95 when we started was attractive. We priced it that way because we wanted to grow our subscribers as rapidly as we could. We believe that we would get more subscribers at $12.95 than we would at $16.95 or at a higher price. So that was the determination then. Since the price was put in 2002, we added a great deal of content. Howard Stern was added, the NFL was added, we added NASCAR. So we believe that we offer great value to our subscribers. We are constantly looking at ways of continuing our growth and not pricing ourselves at a point that would really hamper our growth. But I think like all businesses, you should assume that the company is going to increase prices in the future. You just need to do that to remain profitable and to continue to invest in content. We have not certainly announced anything at this point in the way of increased prices. But the reality of it is, is that it's something that you should expect will happen in the future.

And our next question will come from Michael Pace with JPMorgan.

Just a follow-up from Barton's first question on the capital structure. Just to be clear, was that 3x leverage target or goal -- do you think about that on a gross or net basis? And then if we fast forward to when returning capital to shareholders might be appropriate and we look at the balance sheet then you still have a maturity profile whether there's a fair amount of debt that comes due in 2013 through 2015. Two questions on that. Would you feel the need to clear a longer runway before returning capital to shareholders? And then what would be kind of a goal if you had a blank piece of paper for the debt capital structure in terms of a more traditional secured, unsecured debt capital structure to minimize interest costs.

So let me start, and David pipe in as well. What you have to factor in is the extraordinary amount of free cash flow that the company's operations are generating. So in taking a look at what our longer-term debt profile is, you really do need to factor in what we will be going into those years with cash on those balance sheet and I believe that where we are today, certainly we don't see any impediment to the debt maturities not being able to easily being handled by our cash that we would have on hand. When I take a look at it, it's not a perfect science and the three [3x] isn't a number that's written in concrete, but I tend to take a look at it from a net debt point of view. Again, I don't want to front run anything that the board is going to do because this decision is obviously a board decision, but I think we all agree that having a leverage in our type of business of somewhere around three is appropriate. We get there rather quickly. We believe in our business model. We believe in free cash flow generation that is going to enable us to very comfortably deal with the debt that's on the balance sheet. And regarding debt in general, we believe that having a certain amount of leverage is appropriate. We think shareholders benefit from having a certain amount of leverage. Think of that unsecured debt is a better for us particularly with where we are in our strength today and think that a capital structure that would have a certain amount of debt unsecured and enabling us to use all the cash that we have in excess of the leverage we think is appropriate. We would use to buy back our stock or some other way of returning capital to shareholders.

I just want to reemphasize the point that Mel made in there. We believe that we will very comfortably cover our 2013 to 2015 maturities out of the cash flow of the business. We think that it will give us an opportunity to potentially do new financings to -- out in that timeframe, to keep the debt, let's say sort of at the $3 billion level that it's at now that we will be able to do enter into new financing arrangements at significantly improved pricing from what's on the balance sheet today. With respect to secured versus unsecured. If you look at the difference in execution in the marketplace and what you can get in rates, right now, there's not enough of a benefit in the rate reduction to merit giving up the security. Clearly, if that changes and the gap widens between secured and unsecured, it’s certainly a tool we can use.

And our next question will come from David Gober with Morgan Stanley. David Gober - Morgan Stanley: One on the top line and one on the cost structure. In terms of the subscriber guidance, [indiscernible] a little bit conservative and I know you guys have been conservative in the past. Particularly, last year the initial guidance I think was 500,000 sub-adds so clearly -- there could be upside. But just curious in terms of the inputs there what you guys are assuming in terms of SAR and how do we think about -- I know you guys have mentioned that auto trends should be better and conversion rates and churn should be relatively stable. But I would think that at the end of the day, that should result in a higher net ad number rather than a flat one. I'm just curious if there's anything that I'm missing there in terms of the math?

You are not missing anything at all. I think it just is really us going in and not really knowing enough about how many cars that are going to be sold. We've tracked all of the organizations that provide guidance on SAR , including our partners who all do it. And today, they seem to be inching up every single day. I get a revised SAR number. Steve Rattner was on CNBC this morning, talking about how he believes that the number will be over 13 in this year and 14 in 2014. He is the car czar, ex-car czar, so he might know something about it. But we certainly are thinking of a SAR number that is around the mean number today, which is about the 12.5 million and that's where the numbers seem to fall. You should assume that if, in fact, the car sales are greater than that, then our subscriber numbers will grow. That there is nothing we’re signaling at all. All we're doing, is saying it's early in the year, we don't know exactly what's going to happen on the car level. We still think that the number is around 15 million, which is the replacement number of cars that should be sold to just replace the cars on the road. So we believe that there is upside, not just in 2011, but in subsequent years in so far as car sales go. And our penetration level has been picking up a little bit actually, so we're in the low 60% and we don't see that changing. Higher car sales, higher penetration, good conversion would get us to a different subscriber number but we don't have the confidence today to give you that number. David Gober - Morgan Stanley: And I guess just on the cost side. A couple of little ones. G&A looked like it ticked up a little bit in the fourth quarter. I'm curious if there is any one-time or anything kind of interesting going on there? And in terms of customer-care costs, I think Mel, you've mentioned investing and making sure that the consumer experience is as good as possible. It seem like there's a little bit of tick up there in the fourth quarter. So, I'm just curious on this. Anything that is going on there?

Let me just deal with the customer care point and David will do the rest. We have been investing significantly in trying to improve that customer-care experience. We think that it's really important. Churn is a big priority for our company and a big focus point. We spent a good amount of money last year on IT that enables us to improve that customer-care experience. We've introduced a new unified website that has a soft launch going on right now that has a lot more customer-care features as part of it to enable us not just long-term improve cost, but more importantly, improve the customer-care experience. And let me turn it over to David to answer the...

Just to finish up on customer care in the quarter. We have two things, one unusual and one kind of recurring that came up. Christmas is always a little bit of extra staffing in customer care and we still do a good amount of volume around Christmas time. We also have a lot of renewals that come through the holiday season. So there is a seasonal ramp up in staffing and training in the fourth quarter. We also -- in early November put both platforms of subscribers onto the same system, so an integration of our subscriber management system. And so in the quarter, we had a reasonably significant amount of training that went on to ensure that agents were familiar with the platform. And any time you integrate a big subscriber system like that, you're also going to have edge cases where you're going to drive more calls from customers into the call center. On the G&A front, you should really think of it as litigation spending. We've got -- as we've disclosed before, we've got some suits out there that we are actively pursuing, and we're hopeful of resolving those in the course of this year and seeing G&A come back down.

And our next question will come from Vijay Singh with Janco Partners. Vijay Singh - Janco Partners, Inc.: I just have a question on XM 2.0. I just wanted to see with the increased bandwidth, what kind of demographics you'll be targeting and what kind of a new programming would be coming on? Or just to get a direction as to -- if there is an incremental opportunity for the company?

I think that we will certainly have the additional bandwidth, which will enable us to do additional programming. It's not like we are suddenly saying that now we are going to go to a much younger demographic than we have historically programmed to, mainly because again, we are principally in the subscription business and we are focused on generating revenues and going after our best subscribers. So we think that there are additional channels that we will be adding. They will be complementary along the lines they will be probably be somewhere on the edges because of the fact that we do have the ability to add some new genres of music and programming. But it's not a wholesale shift that's going to say it. One of the things of that you should assume though, not on an age issue, but from a demographic point of view, we certainly will be targeting Hispanics more than we have done to date. And we haven't finalized it yet. But we will have a suite of channels that we believe appeal to what is the fastest-growing part of the U.S. population, which is Hispanics and it's an area that we have been underperforming in, so we think that, that represents a great opportunity.

And we will take our next and final question from Martin Pyykkonen from Wedge Partners. Please go ahead.

Wanted to ask you on the conversion rate. As you look at your financial capacity, obviously much improved over the last couple of years. Are there areas you might look at to, invest in to drive that conversion rate higher over the next year to two? Obviously, you can't control the SAR but curious if you think that has upside? It is a higher conversion rate built into your -- at maturity operating margin being over 40% meaningfully higher than the current mid-to-high 40% conversion rate?

So let me start it out and then Jim can add to it. I think, generally we feel as managers like we can do a better job in conversion but we feel like we can do a better job on everything, we do every day. And so we'd like to improve it. We spend a lot of time with our automotive partners making sure that we are getting the customer name and address data coming across to us quickly and accurately, striking while you still have that new car smell in the car is something that we know makes a difference in conversion rate and smarter in the kinds of messages and the cadence of the messaging that produces higher conversion rates. We do a lot of tests, a lot of different programs, and try to measure statistically what creates a difference in the rate. And then the last piece is that we have an opportunity in reactivating radios as well, which is not necessarily part of the conversion rate we report. But an important part of the business where we are spending a lot of effort in, finding out where the best information is on, who those new used car buyers are and what we can do to reactivate more radios that are out there on the road.

I think, just to amplify what David said. We've been at this a long time. We still continue to learn new things every month. I think over the course of the plan our assumption is that conversion remains in the mid-to-high 40%. And we don't see any magic bullet that magically takes it into the mid-50%. That's not to say it's not out there and that's not to say we're not committed to continue to work on it and we will continue to work on it.

We don't have any plan of significantly increasing our expenditures in order for us to get the conversion rate up. We believe that by just best practices and doing things longer and smarter, the conversion rate will go up but won't require any additional material expenditures.

So [ph] say is that your guidance kind of long-term operating margin over 40% at maturity is not predicated on any conversion rate up, meaningfully from where it is today?

That is correct.

Thank you everyone for joining us. Have a good day.