Dick Tracy calling JohnnyIrish. Come in Irish

here's Homer's reply to our discussion about capex on the recent sat-launch:

first my question to homer:

Hey Homer . . .

little help please . . .

what costs, if any (I throw that in for Irish) are yet to be accounted for with the recent sat launch?

please refer to daily intraday thread for 7/21/09 . . around Page 5

just trying to figure what capex costs if any will show up in Q3

Thank you.


now Homer's answer:

That's a good question... the problem I see is that the launch took place after Midnight on July 1st in Kazakhstan, which is the start of Q3; but it was after 4pm in EDT, still in Q2. LOL

I do believe that the bulk of the expenses had to be paid just prior to launch, which implies Q2. There may have been some more expenses booked in Q3 -- plus there is milestone payments which can last for years.

I would guess that the bulk of the costs will be booked in Q2 -- with some carryover into Q3. Knowing how much this is, will be nearly impossible without Sirius actually saying so on their next conference call.

There will be some capex in Q3 to account for, with the construction of FM-6 still underway; plus it depends on when XM will pay the remaining amounts on XM-5, which I believe there are some remaining. I believe they may have deferred them into 2010... but those dates always seem to be fluid.


hey john/163888 . . if you're out there . . better start getting those asymetrical stones stockpiled for the CC . . lol

I stand by my statement,which is trying to read the filings and what Mel said,
FM-5 which is a Sirius Sat that was just launched,was already paid for and accounted for,with $15 mil tied up in Arbitration as SXM thinks it is due back for delays...Now i showed how most,if not all,of XM-5 is already paid for and accounted for in Annual report by XM,it is done and in storage awaiting launch,which is pushed back to Jan 2010 at earliest,which is when launch payment will be made(this the 3Q Capex payment Mel was referring to in Quote).XM-6 is on the drawing board and at SXM discretion to delay or cancel...

Could be wrong,but i'm 99% confident in this statement..

Good reporting S-Kill,you lured Homer out of Semi-retirement,now if we can get John to stop serving his Ice Cream cones and stay permanetly retired,I can dodge those Jagged edged stones he has be amassing this past few months....LOL

Quote:

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Originally Posted by JohnnyIrishXM

if we can get John to stop serving his Ice Cream cones and stay permanetly retired,I can dodge those Jagged edged stones he has be amassing this past few months....LOL

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interesting . . I was under the impression that "john" was the general contractor building the ice cream shop for a customer . . It didn't even occur to me that he would be building it for his own use . .

hmmmm . . . I picture john all dressed-up in "kitchen whites," big apron, little paper cap, big red bow tie, black steel-toed shoes, standing behind the counter on a black rubber jute mat, still all pissed-off cuz it took 18 months to get those dumpster approvals . . . could you imagine john serving-up an ice cream cone to some poor kid who doesn't know what flavor he wants . . would be like the "cone nazi" instead of the "soup nazi" (seinfeld episode)

"No cone for you, you twit . . . next! Frickin kids today have no logic or common sense." :)

Quote:

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Originally Posted by JohnnyIrishXM

Now i showed how most,if not all,of XM-5 is already paid for and accounted for in Annual report by XM,it is done and in storage awaiting launch,which is pushed back to Jan 2010 at earliest,which is when launch payment will be made(this the 3Q Capex payment Mel was referring to in Quote).

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Irish, I know I might be parsing words here, or even mixing-up the quotes, but please indulge me and take one more look at "this" quote from Mel . .

Faber: -- BUT LET'S TALK ABOUT THE FUTURE HERE.

Karmazin: AND I THINK THAT IS THE FUTURE, OKAY? I THINK THE FACT THAT WE HAVE IDENTIFIED IMMEDIATELY $400 MILLION OF SYNERGY ON VIRTUALLY EVERY LINE ITEM OF THE P&L, SYNERGIES THAT WE ARE VERY, VERY CONFIDENT TO BE ABLE TO DELIVER NET OF THE COST BEFORE 2009. SO WHEN YOU TAKE THAT SYNERGY AND YOU ADD IT TO THE COMBINED COMPANY, YOU GET, FOR THE FIRST TIME, POSITIVE EBITDA. NOW, IN MY OPINION, POSITIVE EBITDA ISN'T THE SAME THING AS MAKING MONEY.SO, WE'LL HAVE $300 MILLION OF EBITDA IN 2009, AND BUT FOR A PAYMENT CONNECTED WITH THE SATELLITE, SIRIUS IS PUTTING UP A NEW SATELLITE IN '09, AND WE HAVE ONE PAYMENT -- BEFORE THAT SATELLITE, WE WILL BE FREE CASH FLOW POSITIVE.

this is the part that draws my attention . . . and consternation:

"AND BUT FOR A PAYMENT CONNECTED WITH THE SATELLITE, SIRIUS IS PUTTING UP A NEW SATELLITE IN '09, AND WE HAVE ONE PAYMENT"

so this is why I believe that there is "one payment" that has not yet been processed in 2009 related to the "Sirius" satellite just recently launched on June 30, 2009/July 1, 2009 (depending which time zone, LOL - thanks Homer). How much that "one payment" amounts to is anyone's guess but I would "think" it could be sizeable if it is the difference between being FCF positive and not being FCF positive for the whole year?

whadda ya think Irish?

Tyler . . . care to weigh in?

now here is the other quote that has garnered our attention:

Murray Arenson - Janco Partners

Thank you. Good morning. I wondered if you’d talk about -- you mentioned that you believe you are sufficient in terms of cash resources to take you through not only 2009 but 2010. I wonder if you could just provide a little bit more color on the path to get there in terms of where you are sitting right now, what you think expenditures are going to look like, whether they are related to capital or satellite launches, things like that, and kind of how you get there?

Mel Karmazin

Murray, we’re not -- we are providing guidance on EBITDA but not on other measures going forward at this point and so I don’t think there’s a lot more we can say today than we’ve already put out there. I think that, just to remind you of some of the things, I think you do know that there is a launch of the Sirius 5 satellite scheduled for the end of the second quarter of this year. It was reported in some of the industry press or in the satellite industry that C-Launch has encountered some conflicts from both government launches as well as supply issues of engines and that could push the XM5 launch, which was scheduled for the December/January timeframe out to the -- potentially the third or fourth quarter of 2010, and then we remain on schedule for fourth quarter 2011 launch of the Sirius 6 satellite, which is then hopefully all three launches are successful. That will represent really an end of satellite replacement spending for probably four or so years after that. We wouldn’t expect to pick it back up again until the 2015 timeframe.



The important part here is:

"I think that, just to remind you of some of the things, I think you do know that there is a launch of the Sirius 5 satellite scheduled for the end of the second quarter of this year."

My read on this is that Mel is implicitly cautioning/reminding Murray that there will be a capex charge associated with this satellite . . . and here's the association between Mel's answer and Murray's question . . .


"I wonder if you could just provide a little bit more color on the path to get there in terms of where you are sitting right now, what you think expenditures are going to look like, whether they are related to capital or satellite launches, things like that, and kind of how you get there?"

ha - looks like I'm talking to myself too. ;)

Look you bastards, I looked for, bought, developed, and ran the places, from signing the checks right down to cleaning the bathrooms. I would not ask the kids to do anything I would not do myself. Also it was one place that took that long, it is not the norm and it only was 3 months on just a dumpster, the rest was the lot spilt, drainage, (those asswipes made me provide for a 100 year rain (the worst rain that could happen in a 100 year time frame), storage and dispersal on site instead of letting me tie into their storm sewers.), and going to the city councel to over turn a ruling of the site planning commission. All that on a site that met all the ordinances and parking space requirments. Those cocksacks did not even give me credit for 3 spaces I was going to create on the street after I developed the property, THAT WERE NOT THERE BEFORE. All that for a icecream place with a full grill (new air system).

So when I see people write, "well it has only been a year", is it any wonder why I say; "Do you understand how short a timeframe that really is."



Sirius Roadkill, I have already put those quotes up and was my main concern as to the CAPEX.


JohnnyIrishXM, Just so you know I saw your comment on the other thread about the FCF and stock options, I just wanted to tell you that The stock options are not included in FCF that is ONE big reason FCF and true profit are not the same.



P.S. Sorry for the top part going so long, as you can tell even after this long it is still a sticky point with me.

JohnnyIrishXM, After being in this company for so long and seeing so many CC, if there is one thing I can say is that when you think there are no more cost to be added in, POP GOS THE WEISEL.

Quote:

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Originally Posted by john

P.S. Sorry for the top part going so long, as you can tell even after this long it is still a sticky point with me.

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I love the top part (also love pop tarts) . . same stuff goes on here with local zoning/planning boards yanking-around applicants . .

what you do here, however, is you ask around and find out who the "in-attorney" is for local planning issues . . he is usually the treasurer or VP of the local republican or democrat club . . then, depending on which party is in power at the time of your site plan application . . . hire the attorney with the corresponding party . .

this attorney will never lose; the planning/zoning board members are appointed by mayor and council . . use the right attorney and the approvals will sail through . . even where the lot is undersized for the zone or requires a use variance . . it will sail through

these are the dirty little secrets of local govt that most people never come into contact with

Quote:

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Originally Posted by john

Look you bastards, I looked for, bought, developed, and ran the places, from signing the checks right down to cleaning the bathrooms. I would not ask the kids to do anything I would not do myself. Also it was one place that took that long, it is not the norm and it only was 3 months on just a dumpster, the rest was the lot spilt, drainage, (those asswipes made me provide for a 100 year rain (the worst rain that could happen in a 100 year time frame), storage and dispersal on site instead of letting me tie into their storm sewers.), and going to the city councel to over turn a ruling of the site planning commission. All that on a site that met all the ordinances and parking space requirments. Those cocksacks did not even give me credit for 3 spaces I was going to create on the street after I developed the property, THAT WERE NOT THERE BEFORE. All that for a icecream place with a full grill (new air system).

So when I see people write, "well it has only been a year", is it any wonder why I say; "Do you understand how short a timeframe that really is."



Sirius Roadkill, I have already put those quotes up and was my main concern as to the CAPEX.


JohnnyIrishXM, Just so you know I saw your comment on the other thread about the FCF and stock options, I just wanted to tell you that The stock options are not included in FCF that is ONE big reason FCF and true profit are not the same.



P.S. Sorry for the top part going so long, as you can tell even after this long it is still a sticky point with me.

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John i understand about EPS and stock and FCF,but the point was, if we would have positive EPS and stock and other charges go against FCF in getting positve EPS..we know they will have 43mil in one time related charges to off set EPS..but as you say and i agree,this company and actually any company not making money will always pile on one time charges to take a higher loss for tax purposes,now is the politically correct time to do it..

Now give me a chocalate cone with Jimmies you numnut,and hold the variance's...:p

Quote:

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Originally Posted by Sirius Roadkill

Irish, I know I might be parsing words here, or even mixing-up the quotes, but please indulge me and take one more look at "this" quote from Mel . .

Faber: -- BUT LET'S TALK ABOUT THE FUTURE HERE.

Karmazin: AND I THINK THAT IS THE FUTURE, OKAY? I THINK THE FACT THAT WE HAVE IDENTIFIED IMMEDIATELY $400 MILLION OF SYNERGY ON VIRTUALLY EVERY LINE ITEM OF THE P&L, SYNERGIES THAT WE ARE VERY, VERY CONFIDENT TO BE ABLE TO DELIVER NET OF THE COST BEFORE 2009. SO WHEN YOU TAKE THAT SYNERGY AND YOU ADD IT TO THE COMBINED COMPANY, YOU GET, FOR THE FIRST TIME, POSITIVE EBITDA. NOW, IN MY OPINION, POSITIVE EBITDA ISN'T THE SAME THING AS MAKING MONEY.SO, WE'LL HAVE $300 MILLION OF EBITDA IN 2009, AND BUT FOR A PAYMENT CONNECTED WITH THE SATELLITE, SIRIUS IS PUTTING UP A NEW SATELLITE IN '09, AND WE HAVE ONE PAYMENT -- BEFORE THAT SATELLITE, WE WILL BE FREE CASH FLOW POSITIVE.

this is the part that draws my attention . . . and consternation:

"AND BUT FOR A PAYMENT CONNECTED WITH THE SATELLITE, SIRIUS IS PUTTING UP A NEW SATELLITE IN '09, AND WE HAVE ONE PAYMENT"

so this is why I believe that there is "one payment" that has not yet been processed in 2009 related to the "Sirius" satellite just recently launched on June 30, 2009/July 1, 2009 (depending which time zone, LOL - thanks Homer). How much that "one payment" amounts to is anyone's guess but I would "think" it could be sizeable if it is the difference between being FCF positive and not being FCF positive for the whole year?

whadda ya think Irish?

Tyler . . . care to weigh in?

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S-kill,if going by this quote i have put in bold below,can we agree that if there is no Capex or over 20mil in capex for 2Q that it is accounted for going forward for FM-5?The quote says payment before Sat launch,which is 2Q..

AND BUT FOR A PAYMENT CONNECTED WITH THE SATELLITE, SIRIUS IS PUTTING UP A NEW SATELLITE IN '09, AND WE HAVE ONE PAYMENT -- BEFORE THAT SATELLITE, WE WILL BE FREE CASH FLOW POSITIVE.

Remember mel made this statement before all the new rev sources we have now and with 300 mil EBITDA for year we wouldn't be FCF +,as you can see with 108 mil EBITDA in 1Q was only neg 4mil FCF...

Quote:

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Originally Posted by Sirius Roadkill

I love the top part (also love pop tarts) . . same stuff goes on here with local zoning/planning boards yanking-around applicants . .

what you do here, however, is you ask around and find out who the "in-attorney" is for local planning issues . . he is usually the treasurer or VP of the local republican or democrat club . . then, depending on which party is in power at the time of your site plan application . . . hire the attorney with the corresponding party . .

this attorney will never lose; the planning/zoning board members are appointed by mayor and council . . use the right attorney and the approvals will sail through . . even where the lot is undersized for the zone or requires a use variance . . it will sail through

these are the dirty little secrets of local govt that most people never come into contact with

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Sirius Roadkill, we first tried that, the in town attorneys wanted nothing to do with it they had other projects of their own going and said basically good luck dealing with those people. To be fare it was not the Major and City Councel and three members (two of which where also on the city councel) it was with the 4 other members on the site plan board. There own city attorney told them they could not do this (on a item, on the record in the meeting) and they still did. After the meeting, I told my attorney what frick is this, their own attorney said they could not do this, lets just take them to court. He told me believe me the last thing you want to do is take the city to court, until it is the last thing possible, it will cost you alot more time and money. He then said, we should just wait and give them enough rope to hang themselves.


P.S. I have delt with the citys attorney before in another city site plan (the firm must handel other cities). There, I was asking for a variance for the lot area (I was about 1200 sq. ft. short), and I got it. This was not the first time dealing with a city, so believe me I know how to kiss ass.

Quote:

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Originally Posted by JohnnyIrishXM

S-kill,if going by this quote i have put in bold below,can we agree that if there is no Capex or over 20mil in capex for 2Q that it is accounted for going forward for FM-5?The quote says payment before Sat launch,which is 2Q..

AND BUT FOR A PAYMENT CONNECTED WITH THE SATELLITE, SIRIUS IS PUTTING UP A NEW SATELLITE IN '09, AND WE HAVE ONE PAYMENT -- BEFORE THAT SATELLITE, WE WILL BE FREE CASH FLOW POSITIVE.

Remember mel made this statement before all the new rev sources we have now and with 300 mil EBITDA for year we wouldn't be FCF +,as you can see with 108 mil EBITDA in 1Q was only neg 4mil FCF...

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hmmm . . . hmmmm . . . hmmm . . . still a tough call here . . . suppose Homer's scenario of a 7/1 expensing date applies? Also, I am a bit reluctant to interpret the quote as implying "before launch"

Now I could see how you come to the conclusion that "putting up a new satellite" potentially means the launch payment only and not the capital cost of the sat itself . . . and I dig your assessment of the "business sense" argument for how the payments would be structured . . . but, hypothetically speaking, what if the bird you just put-up but have not yet taken control of does not perform to spec and you never actually take control

Is there no portion of the capital cost that Loral makes good on? (I suppose there could be an escrow reserve for a final payment that might not get released)

I don't know Irish . . . I just don't know; I do feel strongly that we will be cutting a check for more than just launch . . . but when and how much I do not know . .

How come Tyler won't weigh-in on this??

This should end Capex for Sats for good,found this in the 2Q report,SXM must have floated a bond for construction of the fm-5 and XM-5 and XM-6 sats because they are expensing it in interest and cap interest in reports,posting it here..

http://www.sec.gov/Archives/edgar/da...67355/d10q.htm

page 10-12 of 10-Q report


--------------------------------------------------------------------------------

SIRIUS XM RADIO INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Dollar amounts in thousands, unless otherwise stated)



(8) Property and Equipment

Property and equipment, net, consists of the following:




June 30,
2009 December 31,
2008
Satellite system
$ 1,423,591 $ 1,414,625
Terrestrial repeater network
108,823 109,228
Leasehold improvements
43,016 42,878
Broadcast studio equipment
49,565 49,186
Capitalized software and hardware
134,800 132,555
Satellite telemetry, tracking and control facilities
56,441 56,217
Furniture, fixtures, equipment and other
58,940 57,995
Land
38,411 38,411
Building
56,302 56,392
Construction in progress
567,637 474,716

Total property and equipment
2,537,526 2,432,203
Accumulated depreciation and amortization
(846,662 ) (728,727 )

Property and equipment, net
$ 1,690,864 $ 1,703,476


Construction in progress consists of the following:




June 30,
2009 December 31,
2008
Satellite system
$ 543,103 $ 449,129
Terrestrial repeater network
18,747 19,070
Leasehold improvements
4 —
Other
5,783 6,517

Construction in progress
$ 567,637 $ 474,716


Depreciation and amortization expense on property and equipment was $57,477 and $27,113 for the three months ended June 30, 2009 and 2008, respectively, and $119,413 and $54,019 for the six months ended June 30, 2009 and 2008, respectively.

Satellites

SIRIUS’ initial three orbiting satellites were successfully launched in 2000. Our spare SIRIUS satellite was delivered to ground storage in 2002. SIRIUS’ three-satellite constellation and terrestrial repeater network were placed into service in 2002. On June 30, 2009, SIRIUS launched a satellite into a geostationary orbit. This satellite will be put into service with SIRIUS’ other three orbiting satellites.

SIRIUS has an agreement with Space Systems/Loral for the design and construction of a sixth SIRIUS satellite. In January 2008, SIRIUS entered into an agreement with International Launch Services to secure a satellite launch on a Proton rocket. This agreement provides us the flexibility to defer this launch date or to cancel that launch upon payment of a cancellation fee.

XM owns four orbiting satellites; two of which, XM-3 and XM-4, currently transmit the XM signal and two of which, XM-1 and XM-2, serve as in-orbit spares. The XM satellites were launched in March 2001, May 2001, February 2005 and October 2006.

Space Systems/Loral has constructed a fifth satellite, XM-5, for use in the XM system. XM has entered into an agreement with Sea Launch to secure a launch for XM-5. In June 2009, Sea Launch filed for bankruptcy protection under Title 11 of the United States Code and as a result, XM recorded a charge of $24,196 to Restructuring, impairments and related costs in our unaudited consolidated statements of operations for amounts previously paid, including capitalized interest.



12

Excellent find Irish!!!

That puts it to bed . .