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 <P STYLE="line-height:1.0pt;margin-top:0pt;margin-bottom:0pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P> <P STYLE="margin-top:4pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>UNITED STATES </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>SECURITIES AND EXCHANGE COMMISSION </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Washington, D.C. 20549 </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center>
<P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>FORM <FONT
STYLE="white-space:nowrap">8-K</FONT> </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center>
<P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>CURRENT
REPORT </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Pursuant to Section&nbsp;13 or 15(d) </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>of the Securities Exchange Act of 1934 </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Date of report (Date of earliest event reported): January 18, 2019 (January&nbsp;17, 2019) </B></P>
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<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:24pt; font-family:Times New Roman" ALIGN="center"><B>Pandora Media, Inc. </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>(Exact name of registrant as specified in its charter) </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center>
<P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD VALIGN="top" ALIGN="center"><B>Delaware</B></TD>
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<TD VALIGN="top" ALIGN="center"><B><FONT STYLE="white-space:nowrap">001-35198</FONT></B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B><FONT STYLE="white-space:nowrap">94-3352630</FONT></B></TD></TR>
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<TD VALIGN="top" ALIGN="center"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>(State or other jurisdiction</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>of incorporation)</B></P></TD>
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<TD VALIGN="top" ALIGN="center"><B>(Commission<BR>File Number)</B></TD>
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<TD VALIGN="top" ALIGN="center"><B>(IRS Employer<BR>Identification No.)</B></TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>2100 Franklin Street, Suite 700 </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>Oakland, CA 94612 </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>(Address of principal executive offices, including zip code) </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>(510) <FONT STYLE="white-space:nowrap">451-4100</FONT> </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>(Registrant&#146;s telephone number, including area code) </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>Not Applicable </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>(Former
name or former address, if changed since last report) </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center>
<P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Check the appropriate box below
if the Form <FONT STYLE="white-space:nowrap">8-K</FONT> filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: </P>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) </P></TD></TR></TABLE>
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<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">Soliciting material pursuant to Rule <FONT STYLE="white-space:nowrap">14a-12</FONT> under the Exchange Act (17
CFR <FONT STYLE="white-space:nowrap">240.14a-12)</FONT> </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left"><FONT STYLE="white-space:nowrap">Pre-commencement</FONT> communications pursuant to Rule <FONT
STYLE="white-space:nowrap">14d-2(b)</FONT> under the Exchange Act (17 CFR <FONT STYLE="white-space:nowrap">240.14d-2(b))</FONT> </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left"><FONT STYLE="white-space:nowrap">Pre-commencement</FONT> communications pursuant to Rule <FONT
STYLE="white-space:nowrap">13e-4(c)</FONT> under the Exchange Act (17 CFR <FONT STYLE="white-space:nowrap">240.13e-4(c))</FONT> </P></TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (&#167;230.405 of this
chapter) or Rule <FONT STYLE="white-space:nowrap">12b-2</FONT> of the Securities Exchange Act of 1934 <FONT STYLE="white-space:nowrap">(&#167;240.12b-2</FONT> of this chapter). </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Emerging growth company&nbsp;&nbsp;&#9744; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">If an emerging
growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section&nbsp;13(a) of the Exchange
Act.&nbsp;&#9744; </P> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="line-height:1.0pt;margin-top:0pt;margin-bottom:0pt;border-bottom:1px solid #000000">&nbsp;</P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Item&nbsp;8.01&nbsp;Other Events. </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">On September&nbsp;23, 2018, Pandora Media, Inc. (&#147;Pandora&#148;) entered into an Agreement and Plan of Merger and Reorganization (the
&#147;Merger Agreement&#148;) with Sirius XM Holdings Inc., a Delaware corporation (&#147;Sirius XM&#148;), and White Oaks Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Sirius XM (&#147;Merger Sub&#148;). On
October&nbsp;25, 2018, Sirius XM Radio Inc., a wholly-owned subsidiary of Sirius XM (&#147;Sirius XM Radio&#148;), Billboard Holding Company, Inc., a wholly-owned subsidiary of Pandora (&#147;New Holding Company&#148;), and Billboard Acquisition
Sub, Inc., a wholly-owned subsidiary of New Holding Company (&#147;Holdco Merger Sub&#148;) entered into a joinder agreement to become parties to the Merger Agreement. Pursuant to the Merger Agreement, and subject to the terms and conditions set
forth in the Merger Agreement, Holdco Merger Sub will merge with and into Pandora (the &#147;holding company merger&#148;), with Pandora surviving the holding company merger as a wholly-owned subsidiary of New Holding Company. Immediately following
the holding company merger, Pandora will be converted into a limited liability company (the &#147;conversion&#148;). Immediately following the conversion, Merger Sub will merge with and into New Holding Company (the &#147;merger&#148;), with New
Holding Company surviving the merger as a wholly-owned subsidiary of Sirius XM. Immediately following the merger, New Holding Company with merge with and into Sirius XM Radio (the &#147;Sirius XM Radio merger&#148; and, together with the holding
company merger, the conversion and the merger and the other transactions contemplated by the Merger Agreement, the &#147;transactions&#148;), with Sirius XM Radio surviving the Sirius XM Radio merger, whereupon the separate existence of New Holding
Company will cease and Pandora will be a wholly-owned subsidiary of Sirius XM Radio. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Following the announcement of the Merger Agreement,
as of the date of this Current Report on Form <FONT STYLE="white-space:nowrap">8-K,</FONT> eight purported class action complaints have been filed on behalf of Pandora&#146;s stockholders against Pandora and its directors and one complaint has been
brought by an individual holder of Pandora common stock; six of these matters in the United States District Court for the Northern District of California, two in the United States District Court for the District of Delaware, and one in the Superior
Court of California for the County of Alameda. The complaints are captioned as follows: <I>Kapela v. Pandora Media, Inc., et al</I>. (N.D. Cal.); <I>Knapp v. Pandora Media, Inc., et al</I>. (N.D. Cal.); <I>Gallant v. Pandora Media, Inc., et al</I>.
(N.D. Cal.); <I>Thompson v. Pandora Media, Inc., et al</I>. (N.D. Cal.); <I>Dawson v. Pandora Media, Inc., et al</I>. (N.D. Cal.); <I>Raul v. Pandora Media, Inc., et al</I>. (N.D. Cal.); <I>Sciabacucchi v. Pandora Media, Inc., et al</I>. (D. Del.);
<I>Staab v. Pandora Media, Inc., et al</I>. (D. Del.); and <I>Irvin v. Pandora Media, Inc., et al.</I> (Cal. Sup. Ct.). The Kapela, Sciabacucchi, and Dawson matters also name Sirius XM and Merger Sub as defendants. The Irvin matter has been
dismissed without prejudice. We refer to these nine actions collectively as the &#147;Merger Litigation&#148;. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Pandora believes that the
claims asserted in the Merger Litigation are without merit and supplemental disclosures are not required or necessary under applicable laws. However, in order to avoid the risk of the Merger Litigation delaying or adversely affecting the
transactions and to minimize the costs, risks and uncertainties inherent in litigation, and without admitting any liability or wrongdoing, Pandora is voluntarily supplementing the Proxy Statement as described in this Current Report on Form <FONT
STYLE="white-space:nowrap">8-K.</FONT> In consideration for these supplemental disclosures, plaintiffs in the actions have agreed to voluntarily dismiss the actions. Pandora and the other named defendants deny that they have violated any laws or
breached any duties to Pandora&#146;s stockholders. Pandora and the other named defendants are providing these supplemental disclosures solely to eliminate the burden and expense of litigation and to avoid any possible disruption to the merger that
could result from further litigation. Nothing in this Current Report on Form <FONT STYLE="white-space:nowrap">8-K</FONT> shall be deemed an admission of the legal necessity or materiality under applicable laws of any of the disclosures set forth
herein. To the contrary, Pandora specifically denies all allegations in the Merger Litigation that any additional disclosure was or is required. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">These supplemental disclosures will not affect the merger consideration to be received by stockholders of Pandora in connection with the
transactions or the timing of the special meeting of the stockholders of Pandora scheduled for January&nbsp;29, 2019, at 9:00 a.m. Pacific time, at Cathedral of Christ the Light Event Center, Conference Room AB, 2121 Harrison St., Oakland, CA 94612.
The Pandora board of directors continues to recommend that Pandora stockholders vote &#147;FOR&#148; the merger agreement proposal and &#147;FOR&#148; the other proposals being considered at the special meeting. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Supplemental Disclosures to Proxy Statement in Connection with the Merger Litigation </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The following disclosures in this Current Report on Form <FONT STYLE="white-space:nowrap">8-K</FONT> supplement the disclosures contained in
the Proxy Statement filed on December&nbsp;20, 2018 in connection with the transactions (the &#147;Proxy Statement&#148;), which is </P>
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available on the Internet site maintained by the Securities and Exchange Commission (the &#147;SEC&#148;) at http://www.sec.gov. The following disclosures should be read in conjunction with the
disclosures contained in the Proxy Statement, which in turn should be read in its entirety. To the extent that information in this Current Report on Form <FONT STYLE="white-space:nowrap">8-K</FONT> differs from or updates information contained in
the Proxy Statement, the information in this Current Report on Form <FONT STYLE="white-space:nowrap">8-K</FONT> shall supersede or supplement the information in the Proxy Statement. All page references are to the Proxy Statement and terms used
below, unless otherwise defined, shall have the meanings ascribed to such terms in the Proxy Statement. </P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left">1)</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">The disclosure in the section entitled &#147;The Transaction&#148; under the heading &#147;Background of the
Transactions&#148;, beginning on page 38 of the Proxy Statement, is hereby amended by replacing the paragraph that begins &#147;On April 18&#148; with the paragraph below (with new text in underline): </P></TD></TR></TABLE>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman">&#147;On April&nbsp;18, 2018, the Pandora board of directors resumed its meeting from the prior day and, after a closed session, the full
Pandora board of directors was joined by Pandora&#146;s management, representatives of Sirius XM, and representatives from Sidley Austin. Members of Pandora&#146;s management updated the Pandora board of directors on current audience trends with
respect to the company&#146;s services, the marketing plan for 2018 and the closing of the company&#146;s acquisition of AdsWizz. Pandora&#146;s management also updated the Pandora board of directors on the company&#146;s recent and forecasted
financial performance and Pandora&#146;s management&#146;s plans for refinancing the company&#146;s outstanding convertible debt to extend the maturity of the notes and improve Pandora&#146;s liquidity. After discussion, the Pandora board of
directors approved the exchange of the company&#146;s 1.75% convertible senior notes due 2020 for a new series of notes and authorized a Transaction Committee to determine the terms of the new notes, the selection of financial advisors and the terms
of the exchange. Pandora&#146;s management also reviewed with the Pandora board of directors its proposed plans regarding enhanced operational efficiency and the status of ongoing negotiations of the company&#146;s music content-licensing
agreements. Messrs. Meyer and Frear and the representatives of Sirius XM departed. Mr.&nbsp;Maffei then discussed with the Pandora board of directors <U>his views of</U> other <U>audio</U> industry participants and <U>potential</U> consolidation
opportunities. Mr.&nbsp;Maffei then left the meeting, representatives of Centerview joined the meeting and the Pandora board of directors continued the meeting with Pandora&#146;s management and representatives of Sidley Austin and Centerview in
attendance. Sidley Austin reviewed with the Pandora board of directors its fiduciary obligations with respect to any consolidation transaction and the various roles that Sirius XM and Liberty Media could play in such a transaction. Representatives
from Centerview also provided business and strategic observations and the Pandora board of directors engaged in a lengthy discussion, focusing on the recent activities of Sirius XM and Liberty Media and Centerview&#146;s perspective on their
investment objective <U>(including the possibility that Sirius XM and/or Liberty Media could decide to pursue a transaction with another audio entertainment industry participant in lieu of an acquisition of Pandora)</U>, the company&#146;s pending
acquisition of AdsWizz and the proposed convertible note exchange. After the discussion, the Pandora board of directors determined that it would continue to pursue its existing strategy and pending transactions (including the convertible note
exchange).&#148; </P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left">2)</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">The disclosure in the section entitled &#147;The Transaction&#148; under the heading &#147;Background of the
Transactions&#148;, beginning on page 38 of the Proxy Statement, is hereby amended by replacing the paragraph that begins &#147;On August 23&#148; with the paragraph below (with new text in underline): </P></TD></TR></TABLE>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman">&#147;On August&nbsp;23, 2018, Mr.&nbsp;Maffei informed Mr.&nbsp;Pruzan that Sirius XM may be willing to explore a transaction at a price of
$9.75 per share. <U>Mr.</U><U></U><U>&nbsp;Maffei suggested that if the Company were not interested in engaging in a transaction, Sirius XM would evaluate the continuing strategic value of its minority investment in Pandora, including the value of
negotiations with third parties that would be interested in pursuing a joint streaming audio strategy and whether to continue to invest executive time and resources on the Pandora board of directors.</U>&#148; </P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left">3)</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">The disclosure in the section entitled &#147;The Transaction&#148; under the heading &#147;Background of the
Transactions&#148;, beginning on page 38 of the Proxy Statement, is hereby amended by adding a new penultimate paragraph on page 51, immediately preceding the paragraph that begins &#147;On October&nbsp;24, 2018&#148;: </P></TD></TR></TABLE>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman">&#147;Beginning on September&nbsp;24, 2018, representatives of Centerview and LionTree began outreach to the potential acquirers to be
contacted during the <FONT STYLE="white-space:nowrap">go-shop</FONT> period, as discussed at the September&nbsp;23, 2018 board meeting and described above. Of the 40 potential parties to be contacted, 30 were strategic parties and 10 were financial
sponsors. The list of potential parties to be contacted was developed by Centerview, LionTree and members of the Pandora board and management, based on their professional judgment. Initial outreach efforts were made to 34 of the parties on
September&nbsp;24, 2018 and the remaining six parties were contacted by October&nbsp;1, 2018. None of the parties contacted expressed interest in receiving information or entering into discussions regarding an alternative transaction. In addition,
no party contacted in respect of a potential sale of or investment in Pandora as part of the strategic review process in 2016 or afterwards was bound by a standstill provision precluding that party from making a topping bid for Pandora after the
acquisition was announced.&#148; </P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left">4)</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">The disclosure in the section entitled &#147;The Transaction&#148; under the heading &#147;Certain Financial
Forecasts&#148;, beginning on page 54 of the Proxy Statement, is hereby amended by adding the following section after the subsection under the heading &#147;Unaudited Forecasted Financial Information&#148; that begins on page 55 and ends on page 60:
</P></TD></TR></TABLE> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">&#147;<I>Additional Unaudited Forecasted Financial Information</I> </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The following tables present the selected additional unaudited forecasted financial information of Pandora prepared by Pandora&#146;s
management, which consist of two different financial and operating scenarios, each for the fiscal years ending 2018 through 2023, and were provided to the members of the Pandora board of directors, Centerview, LionTree and Sirius XM, and, as
described in the &#147;Background of the Transactions&#148; section on pages <FONT STYLE="white-space:nowrap">42-43,</FONT> discussed at the Pandora board of directors meeting on June&nbsp;28, 2018. At the direction of Pandora&#146;s board of
directors, Centerview and LionTree did not consider either of these scenarios for purposes of their respective opinions. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Pandora Scenario 1 Forecasts
</I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Certain unaudited forecasted financial information was initially prepared by Pandora&#146;s management in October 2017 and provided to
the Pandora board of directors. That October 2017 forecast was the basis for the unaudited forecasted financial information provided to the Pandora board of directors in June 2018 and is referred to as the Pandora Scenario 1 Forecasts. </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="64%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="22" ALIGN="center"><B>Pandora Unaudited Forecasted Financial Information</B></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="22" ALIGN="center"><B>(U.S. dollars in millions, except per share data)<SUP STYLE="font-size:85%; vertical-align:top">(a) </SUP></B></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="22" ALIGN="center"><B>Fiscal Years Ending December&nbsp;31,</B></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>2018</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>2019</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>2020</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>2021</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>2022</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>2023</B></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>


<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Advertising</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,067</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,123</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,219</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,331</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,456</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,558</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Subscription&nbsp;&amp; Other</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">471</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">573</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">636</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">686</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">734</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">776</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Total Revenue</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>1,537</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>1,696</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>1,855</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>2,017</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>2,190</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>2,334</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><I>% Growth</I></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>11.0</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>10.3</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>9.4</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>8.7</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>8.6</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>6.6</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Content Costs</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right"> 891</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right"> 916</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right"> 986</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,068</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,131</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,194</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Other COGS</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">120</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">148</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">164</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">179</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">190</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">203</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Total COGS</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>1,011</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>1,064</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>1,150</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>1,247</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>1,321</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>1,397</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Gross Profit</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 526</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 631</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 705</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 770</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 869</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 937</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><I>% Margin</I></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>34.2</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>37.2</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>38.0</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>38.2</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>39.7</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>40.1</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Product Development</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">134</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">171</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">170</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">179</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">186</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">196</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Sales&nbsp;&amp; Marketing</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">438</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">385</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">379</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">390</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">401</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">412</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">General&nbsp;&amp; Administrative</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">112</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">113</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">107</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">108</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">109</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">111</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
</TABLE>
</DIV></Center>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


<Center><DIV STYLE="width:8.5in" align="left">

<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="70%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>


<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Total Operating Expenses</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 683</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>669</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>656</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>678</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 696</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 719</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Operating Income / (Loss)<SUP STYLE="font-size:85%; vertical-align:top">(b)
</SUP></B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>(157</B></TD>
<TD NOWRAP VALIGN="bottom"><B>)&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>(38</B></TD>
<TD NOWRAP VALIGN="bottom"><B>)&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 49</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 92</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 173</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 218</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><I>% Margin</I></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>(10.2</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%)&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>(2.2</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%)&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>2.6</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>4.6</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>7.9</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>9.3</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Depreciation</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">49</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">54</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">53</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">54</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">48</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">48</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Adjusted EBITDA<SUP STYLE="font-size:85%; vertical-align:top">(c) </SUP></B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>(108</B></TD>
<TD NOWRAP VALIGN="bottom"><B>)&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 16</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>102</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>146</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 221</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 266</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><I>% Margin</I></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>(7.0</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%)&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>1.0</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>5.5</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>7.3</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>10.1</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>11.4</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD></TR>
</TABLE> <P STYLE="line-height:8.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000;width:10%">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(a)</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">Certain totals in the tables included in this proxy statement/prospectus may not sum due to rounding. Table
does not reflect stock-based compensation. </P></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(b)</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">Excludes amortization of intangible assets. </P></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(c)</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">Adjusted EBITDA, which is calculated as consolidated net earnings before interest, income taxes, stock-based
compensation expense and depreciation and amortization expense, is a <FONT STYLE="white-space:nowrap">non-GAAP</FONT> financial measure as it excluded these amounts, which are included in net earnings, the most directly comparable measure calculated
in accordance with GAAP. This measure should not be considered as an alternative to net earnings or other measures derived in accordance with GAAP. </P></TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Pandora unaudited forecasted financial information in the Pandora Scenario 1 Forecasts is based on various assumptions, including the
following key assumptions: </P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">approximately <FONT STYLE="white-space:nowrap">$80-90&nbsp;million</FONT> of external marketing spend annually
with increases to efficiency beyond that realized in 2018 <FONT STYLE="white-space:nowrap">to-date;</FONT> </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">hours per active user (&#147;HPA&#148;) would decrease slightly in 2019 and increase after 2020 as new users
expand feature usage; </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">the number of <FONT STYLE="white-space:nowrap">ad-supported</FONT> service users would reach 77.1&nbsp;million by
2025; </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">advertising revenue per thousand listener hours (&#147;RPM&#148;) would increase from $67.49 in 2018 to $79.99 in
2022, including increases in audio RPM, slight decreases in display RPM and increases in video RPM; </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">there would be no material improvement in the monthly free-trial starts for Pandora Plus, while the monthly
free-trial starts for Pandora Premium would improve slightly with the mix shifting towards family plan subscriptions; </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">the percentage of the family plan subscriptions in the new Pandora Premium additions would increase from 5% in
2018 to 8% by 2025; </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">direct Pandora Premium acquisition spending would reach $5&nbsp;million annually by 2020; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt"><FONT STYLE="white-space:nowrap">non-music</FONT> content share would account for 10% of total listening by 2025;
</P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">headcount costs would remain materially flat, with many functions to shift to lower-cost geographies;
</P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">costs saved from the reduction in force plans relative to the end of 2017 run rate would be $70&nbsp;million in
2019 and $100&nbsp;million annually in each of the years from 2020 to 2025, with a component of the savings reinvested; and </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">the stock-based compensation expenses would decrease from $147&nbsp;million in 2019 to $144&nbsp;million in 2023.
</P></TD></TR></TABLE> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Pandora Scenario 3 Forecasts </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In June 2018, Pandora&#146;s management updated the unaudited forecasted financial information that was initially prepared in October 2017 to
present a more optimistic view driven primarily by audience and hours growth from improvements in marketing efficiency, higher marketing spending and growth in audience engagement through </P>
</DIV></Center>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


<Center><DIV STYLE="width:8.5in" align="left">
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
Pandora&#146;s new content and product capabilities, described above as the Scenario 2 Forecasts. The Pandora Scenario 3 Forecasts take an even more optimistic and aggressive spend view than the
Scenario 2 Forecasts on these factors and assumes improvements in financial terms contained in the licensing arrangements for sound recordings, as further described in the key assumptions below. </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="64%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="22" ALIGN="center"><B>Pandora Unaudited Forecasted Financial Information</B></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="22" ALIGN="center"><B>(U.S. dollars in millions, except per share data)<SUP STYLE="font-size:85%; vertical-align:top">(a) </SUP></B></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="22" ALIGN="center"><B>Fiscal Years Ending December&nbsp;31,</B></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>2018</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>2019</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>2020</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>2021</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>2022</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>2023</B></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>


<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Advertising</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,067</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,225</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,397</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,617</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,831</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">2,018</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Subscription&nbsp;&amp; Other</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">471</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">601</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">750</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">880</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1,020</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1,170</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Total Revenue</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>1,537</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>1,826</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>2,146</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>2,497</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>2,851</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>3,188</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><I>% Growth</I></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>11.0</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>18.8</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>17.5</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>16.4</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>14.1</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>11.8</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Content Costs</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right"> 891</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right"> 978</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,145</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,322</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,475</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,642</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Other COGS</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">120</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">151</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">170</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">188</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">203</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">219</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Total COGS</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>1,011</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>1,129</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>1,315</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>1,510</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>1,678</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>1,862</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Gross Profit</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 526</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 696</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 831</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 988</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>1,173</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>1,326</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><I>% Margin</I></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>34.2</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>38.1</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>38.7</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>39.5</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>41.1</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>41.6</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Product Development</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">134</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">173</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">187</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">204</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">217</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">233</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Sales&nbsp;&amp; Marketing</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">438</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">443</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">459</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">493</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">517</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">546</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">General&nbsp;&amp; Administrative</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">112</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">110</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">115</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">123</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">128</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">133</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Total Operating Expenses</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 683</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 726</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 761</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 820</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 862</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 912</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Operating Income / (Loss)<SUP STYLE="font-size:85%; vertical-align:top">(b)
</SUP></B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>(157</B></TD>
<TD NOWRAP VALIGN="bottom"><B>)&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>(30</B></TD>
<TD NOWRAP VALIGN="bottom"><B>)&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 71</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 167</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 311</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 414</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><I>% Margin</I></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>(10.2</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%)&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>(1.6</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%)&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>3.3</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>6.7</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>10.9</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>13.0</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Depreciation</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">49</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">54</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">54</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">57</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">52</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">55</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Adjusted EBITDA<SUP STYLE="font-size:85%; vertical-align:top">(c) </SUP></B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B>(108</B></TD>
<TD NOWRAP VALIGN="bottom"><B>)&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 25</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 124</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 224</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 364</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>$</B></TD>
<TD VALIGN="bottom" ALIGN="right"><B> 469</B></TD>
<TD NOWRAP VALIGN="bottom"><B>&nbsp;</B></TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:3.00px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><I>% Margin</I></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>(7.0</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%)&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>1.3</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>5.8</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>9.0</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>12.8</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><I>&nbsp;</I></TD>
<TD VALIGN="bottom" ALIGN="right"><I>14.7</I></TD>
<TD NOWRAP VALIGN="bottom"><I>%&nbsp;</I></TD></TR>
</TABLE> <P STYLE="line-height:8.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000;width:10%">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(a)</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">Certain totals in the tables included in this proxy statement/prospectus may not sum due to rounding. Table
does not reflect stock-based compensation. </P></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(b)</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">Excludes amortization of intangible assets. </P></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(c)</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">Adjusted EBITDA, which is calculated as consolidated net earnings before interest, income taxes, stock-based
compensation expense and depreciation and amortization expense, is a <FONT STYLE="white-space:nowrap">non-GAAP</FONT> financial measure as it excluded these amounts, which are included in net earnings, the most directly comparable measure calculated
in accordance with GAAP. This measure should not be considered as an alternative to net earnings or other measures derived in accordance with GAAP. </P></TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Pandora unaudited forecasted financial information in the Pandora Scenario 3 Forecasts is based on various assumptions, including the
following key assumptions: </P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">approximately <FONT STYLE="white-space:nowrap">$80-90&nbsp;million</FONT> of external marketing spend annually
with increases to efficiency beyond that realized in 2018 <FONT STYLE="white-space:nowrap">to-date;</FONT> </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">hours per active user (&#147;HPA&#148;) would increase after 2020 as new users expand feature usage;
</P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">the number of <FONT STYLE="white-space:nowrap">ad-supported</FONT> service users would reach 94.7&nbsp;million by
2025; </P></TD></TR></TABLE>
</DIV></Center>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


<Center><DIV STYLE="width:8.5in" align="left">

<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">advertising revenue per thousand listener hours (&#147;RPM&#148;) would increase from $67.49 in 2018 to $77.53 in
2022, including increases in audio RPM, slight decreases in display RPM and increases in video RPM; </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">there would be no material improvement in the monthly free-trial starts for Pandora Plus, while the monthly
free-trial starts for Pandora Premium would improve slightly with the mix shifting towards family plan subscriptions; </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">the percentage of the family plan subscriptions in the new Pandora Premium additions would increase from 5% in
2018 to 39% by 2025; </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">direct Pandora Premium acquisition spending would reach $7&nbsp;million annually by 2020; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt"><FONT STYLE="white-space:nowrap">non-music</FONT> content share would account for 12% of total listening by 2025;
</P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">headcount costs would slightly increase, with many functions to shift to lower-cost geographies;
</P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">costs saved from the reduction in force plans relative to the end of 2017 run rate would be $70&nbsp;million in
2019 and $100&nbsp;million annually in each of the years from 2020 to 2025, with a component of the savings reinvested; and </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">the stock-based compensation expenses would decrease from $120&nbsp;million in 2019 to $94&nbsp;million in 2023.
</P></TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Company completed the acquisition of AdsWizz, Inc. (&#147;AdsWizz&#148;) in May 2018.&nbsp;The Pandora Scenario 1,
1a, 2, and 3 Forecasts, as described in the Proxy Statement and this Form <FONT STYLE="white-space:nowrap">8-K,</FONT> included forecasted financial information for the AdsWizz business starting with the projections for fiscal year 2018 and forward.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">For the foregoing and other reasons, inclusion of the Pandora unaudited forecasted financial information in this proxy
statement/prospectus should not be regarded as a representation by any person that the results contained in the Pandora unaudited forecasted financial information will be achieved.&#148; </P>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">5)</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">The disclosure in the section entitled &#147;The Transaction&#148; under the heading &#147;Opinion of
Pandora&#146;s Financial Advisors&#148;, beginning on page 60 of the Proxy Statement, is hereby amended by, in the subsection <I>&#147;Opinion of Centerview Partners LLC&#148;</I> that begins on page 60, replacing the subsections with the
subheadings &#147;<I>Selected Transactions Analysis</I>&#148;, &#147;<I>Discounted Cashflow Analyses</I>&#148; and &#147;<I>Other Factors</I>&#148; on pages <FONT STYLE="white-space:nowrap">64-68</FONT> with the paragraphs below (with new text in
underline): </P></TD></TR></TABLE> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>&#147;Selected Transactions Analysis </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Centerview performed a selected transactions analysis in which Centerview reviewed and compared certain information relating to the following
selected transactions in the public consumer internet industry in the past five years involving publicly traded target companies with EBITDA margins of less than 20% that Centerview, based on its experience and professional judgment, deemed relevant
to consider in relation to Pandora and the transactions. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The selected transactions were: </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
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<TD WIDTH="28%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="28%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" NOWRAP> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-bottom:1.00pt solid #000000; display:table-cell; font-size:8pt; font-family:Times New Roman; "><B>Announcement Date</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>Acquiror</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>Target</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>EV&nbsp;/<BR>LTM<BR>Revenues</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>Transaction</B><br><B>Value</B><br><B>(in billions)</B></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>


<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">May 2017</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">HomeAdvisor, Inc.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Angie&#146;s List, Inc.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.68x</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.5</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">November 2016</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Adobe Systems Incorporated</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">TubeMogul, Inc.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2.55x</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.5</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">July 2016</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Verizon Communications Inc.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Yahoo! Inc.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.99x</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">4.8</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">May 2015</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Verizon Communications Inc.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">AOL Inc.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.71x</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">4.4</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">February 2015</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Expedia, Inc.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Orbitz Worldwide, Inc.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.72x</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1.6</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">September 2014</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">News Corporation</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Move, Inc.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">3.96x</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1.0</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">No company or transaction used in this analysis is identical or directly comparable to Pandora or the
transactions, respectively. The target companies included in the selected transactions listed above were selected, among other reasons, because they have certain characteristics that, for the purposes of this analysis, may be
</P>
</DIV></Center>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


<Center><DIV STYLE="width:8.5in" align="left">
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
considered similar to certain characteristics of Pandora. The reasons for and the circumstances surrounding each of the selected transactions analyzed were diverse and there are inherent
differences in the business, operations, financial conditions and prospects of Pandora and the target companies included in the selected transactions analysis. Accordingly, Centerview believed that it was inappropriate to, and therefore did not,
rely solely on the quantitative results of the selected transactions analysis. This analysis involves complex considerations and qualitative judgments concerning differences in financial and operating characteristics and other factors that could
affect the public trading, acquisition or other values of the selected target companies and Pandora. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Financial data for the selected
transactions were based solely on publicly available information at the time of the initial announcement of the relevant transactions as noted in the preceding table that Centerview obtained from SEC filings and other publicly available data
sources. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Centerview calculated, for each selected transaction set forth above, among other things, the enterprise value implied for the
applicable target company based on the consideration payable in the applicable selected transactions, which is referred to in this summary of Centerview&#146;s opinion as &#147;TEV,&#148; as a multiple of the target company&#146;s revenue for the
last-twelve-month period (&#147;LTM Revenue&#148;) for which financial information had been made public at the time of the announcement of such transactions. The results of this analysis are summarized as follows: </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>TEV&nbsp;/<BR>LTM&nbsp;Revenue</B></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>


<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">25th Percentile</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.69x</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Median</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.71x</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Mean</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2.10x</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">75th Percentile</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2.34x</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Based on its analysis and other considerations that Centerview deemed relevant in its professional judgment,
Centerview applied a range of TEV / LTM Revenue multiples of 1.75x to 2.50x to Pandora&#146;s last-twelve-month revenue as of June&nbsp;30, 2018 of $1.46&nbsp;billion (excluding revenue of the divested ticket service business) as reflected in public
filings of Pandora, which resulted in a range of implied values per share of Pandora common stock of $7.25 to $10.75, rounded to the nearest $0.25. Centerview then compared this range to the Implied Consideration Value of $10.05. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Discounted Cash Flow Analyses </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Centerview
performed a discounted cash flow analysis of Pandora based on the Pandora Scenario 1a Forecasts and the Pandora Scenario 2 Forecasts, respectively, other Pandora Internal Data and information reflected in public filings of Pandora. A discounted cash
flow analysis is a traditional valuation methodology used to derive a valuation of an asset by calculating the &#147;present value&#148; of estimated future cash flows of the asset. &#147;Present value&#148; refers to the current value of future
cash flows and is obtained by discounting those future cash flows by a discount rate that takes into account macroeconomic assumptions and estimates of risk, the opportunity cost of capital, expected returns and other appropriate factors. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In performing this analysis based on the Pandora Scenario 1a Forecasts, Centerview calculated a range of illustrative equity values for
Pandora by discounting to present value as of June&nbsp;30, 2018, using discount rates ranging from 9.50% to 11.50% (reflecting Centerview&#146;s analysis of Pandora&#146;s weighted average cost of capital in Centerview&#146;s professional
judgment): (a) the forecasted unlevered <FONT STYLE="white-space:nowrap">after-tax</FONT> free cash flows of Pandora over the period beginning June&nbsp;30, 2018 and ending December&nbsp;31, 2025, as reflected in the Pandora Scenario 1a Forecasts
and the assumptions provided by Pandora&#146;s management <U>(which unlevered <FONT STYLE="white-space:nowrap">after-tax</FONT> free cash flows were not adjusted by Centerview)</U>, and (b)&nbsp;a range of illustrative terminal values of Pandora,
calculated by Centerview applying a range of illustrative enterprise value to earnings before interest, taxes, depreciation and amortization (adjusted to include stock-based compensation expense), which is referred to in this summary of
Centerview&#146;s opinion as &#147;Adjusted EBITDA,&#148; multiples of 10.0x to 12.5x, based on Centerview&#146;s experience and professional judgment, to Pandora&#146;s estimated forward Adjusted EBITDA as of December&nbsp;31, 2025, as provided by
Pandora&#146;s management based on Pandora Scenario 1a Forecasts. <U>Centerview used the discount rates ranging from 9.5% to 11.5%, reflecting Centerview&#146;s analysis of Pandora&#146;s weighted average cost of capital, determined using the
&#147;Capital Asset Pricing Model&#148; and based on considerations that Centerview deemed relevant in its professional </U> </P>
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<U>judgment and experience, taking into account certain metrics including yields for U.S. treasury notes, levered and unlevered betas for a comparable group of companies, and market risk and size
premia.</U> Centerview then (i)&nbsp;added the estimated value of the tax benefits from Pandora&#146;s net operating loss carryforwards, as of June&nbsp;30, 2018, and (ii)&nbsp;subtracted from the foregoing results (A)&nbsp;the value of
Pandora&#146;s net debt (calculated as the face value of long-term debt minus cash and cash equivalents) and (B)&nbsp;minority interests, each as of June&nbsp;30, 2018, as reflected in public filings of Pandora. <U>In performing the calculation
referenced in the preceding clause (ii), Centerview relied on Pandora&#146;s June</U><U></U><U>&nbsp;30, 2018 unaudited financial statements included in its Form <FONT STYLE="white-space:nowrap">10-Q,</FONT> for the quarter ended
June</U><U></U><U>&nbsp;30, 2018, which indicated that (A)</U><U></U><U>&nbsp;Pandora had $292,996,000 in cash and $127,791,000 in short-term investments and (B)</U><U></U><U>&nbsp;Pandora&#146;s debt and redeemable convertible stock were comprised
of three separate instruments: (I) 1.75% convertible senior notes due 2020, which had a principal value of $152</U><U></U><U>&nbsp;million; (II) 1.75% senior convertible notes due 2023, which had a principal value of
</U><U>$193</U><U></U><U>&nbsp;million; and (III)</U><U></U><U>&nbsp;redeemable convertible preferred stock, which had a principal value of </U><U>$506</U><U></U><U>&nbsp;million (collectively, the &#147;Pandora Public Debt and Convertible Stock
Information&#148;).</U> Centerview divided the result of the foregoing calculations by the number of fully diluted outstanding shares of Pandora common stock as of September&nbsp;21, 2018 to derive a range of implied values per share of Pandora
common stock of $4.50 to $7.00, rounded to the nearest $0.25. Centerview then compared this range to the Implied Consideration Value of $10.05. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In performing this analysis based on the Pandora Scenario 2 Forecasts, Centerview calculated a range of illustrative equity values for Pandora
by discounting to present value as of June&nbsp;30, 2018, using discount rates ranging from 9.50% to 11.50% (reflecting Centerview&#146;s analysis of Pandora&#146;s weighted average cost of capital in Centerview&#146;s professional judgment): (a)
the forecasted unlevered <FONT STYLE="white-space:nowrap">after-tax</FONT> free cash flows of Pandora over the period beginning June&nbsp;30, 2018 and ending December&nbsp;31, 2025, as reflected in the Pandora Scenario 2 Forecasts and the
assumptions provided by Pandora&#146;s management <U>(which unlevered <FONT STYLE="white-space:nowrap">after-tax</FONT> free cash flows were not adjusted by Centerview)</U>, and (b)&nbsp;a range of illustrative terminal values of Pandora, calculated
by Centerview applying a range of illustrative enterprise value to Adjusted EBITDA multiples of 10.5x to 13.0x, based on Centerview&#146;s experience and professional judgment, to Pandora&#146;s estimated forward Adjusted EBITDA as of
December&nbsp;31, 2025, as provided by Pandora&#146;s management based on Pandora Forecasts&#151;Scenario 2. <U>Centerview used the discount rates ranging from 9.5% to 11.5%, reflecting Centerview&#146;s analysis of Pandora&#146;s weighted average
cost of capital, determined using the &#147;Capital Asset Pricing Model&#148; and based on considerations that Centerview deemed relevant in its professional judgment and experience, taking into account certain metrics including yields for U.S.
treasury notes, levered and unlevered betas for a comparable group of companies, and market risk and size premia.</U> Centerview then (i)&nbsp;added the estimated value of the tax benefits from Pandora&#146;s net operating loss carryforwards, as of
June&nbsp;30, 2018, and (ii)&nbsp;subtracted from the foregoing results (A)&nbsp;the value of Pandora&#146;s net debt (calculated as the face value of long-term debt minus cash and cash equivalents) and (B)&nbsp;minority interests, each as of
June&nbsp;30, 2018, as reflected in public filings of Pandora. <U>In performing the calculation referenced in the preceding clause (ii), Centerview relied on Pandora&#146;s June</U><U></U><U>&nbsp;30, 2018 unaudited financial statements included in
its Form <FONT STYLE="white-space:nowrap">10-Q</FONT> for the quarter ended June</U><U></U><U>&nbsp;30, 2018, which indicated the Pandora Public Debt and Convertible Stock Information.</U> Centerview divided the result of the foregoing calculations
by the number of fully diluted outstanding shares of Pandora common stock as of September&nbsp;21, 2018 to derive a range of implied values per share of Pandora common stock of $8.50 to $11.75, rounded to the nearest $0.25. Centerview then compared
this range to the Implied Consideration Value of $10.05. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Other Factors </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Centerview also reviewed and considered other factors, which were not considered part of its financial analysis in connection with rendering
its opinion, but were referenced for informational purposes, including, among other things, the following: </P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">trading prices for the Pandora common stock during the 52 week period ended September&nbsp;21, 2018, which ranged
from $4.13 to $9.97; </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">publicly available stock price targets of selected research analysts for Pandora common stock, which indicated
stock price targets of $7.00 to $13.00 per share; </P></TD></TR></TABLE>
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<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">Illustrative Present Value of Future Share Price Analysis of Pandora on an EV / Adjusted EBITDA Multiple Basis.
Centerview performed an illustrative analysis of the implied present value of the future price per share of Pandora common stock based on an EV / NTM Adjusted EBITDA multiple (based on the Pandora Scenario 1a Forecasts and the Pandora Scenario 2
Forecasts, respectively): </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">In calculating the implied present value of future share price of Pandora common stock based on the Pandora
Scenario 1a Forecasts, Centerview first calculated a range of implied enterprise values of Pandora at the end of year 2024 by multiplying the estimated NTM Adjusted EBITDA of Pandora (as indicated in the Pandora Scenario 1a Forecasts) at the end of
year 2024 by an NTM Adjusted EBITDA multiple range of 10.0x to 12.5x, based on Centerview&#146;s experience and professional judgment. <U>Based on this calculation, the range of implied enterprise values for Pandora at the end of year 2024 was
$3.7</U><U></U><U>&nbsp;billion to $4.6</U><U></U><U>&nbsp;billion.</U> Centerview then calculated a range of implied equity values of Pandora at the end of year 2024 by (i)&nbsp;adding the estimated value of the tax benefits from Pandora&#146;s net
operating loss carryforwards at the end of year 2024, and (ii)&nbsp;subtracting the estimated net debt of Pandora at the end of year 2024 from the implied enterprise values. <U>Based on this calculation, the range of implied equity values for
Pandora at the end of year 2024 was $4.7</U><U></U><U>&nbsp;billion to $5.6</U><U></U><U>&nbsp;billion.</U> Centerview then divided the implied equity values by the total number of outstanding shares of Pandora common stock on a fully diluted basis.
Centerview then discounted those implied values to June&nbsp;30, 2018 by using an equity discount rate equal to 11.5%, reflecting Centerview&#146;s analysis of Pandora&#146;s cost of equity, <U>determined using the &#147;Capital Asset Pricing
Model&#148; and based on considerations that Centerview deemed relevant in its professional judgment and experience, taking into account certain metrics including yields for U.S. treasury notes, levered and unlevered betas for a comparable group of
companies, and market risk and size premia</U>. The analysis resulted in a range of implied present values of one share of Pandora common stock as of June&nbsp;30, 2018 equal to $5.65 to $6.70; and </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">In calculating the implied present value of future share price of Pandora common stock based on the Pandora
Scenario 2 Forecasts, Centerview first calculated a range of implied enterprise values of Pandora at the end of year 2024 by multiplying the estimated NTM Adjusted EBITDA of Pandora (as indicated in the Pandora Scenario 2 Forecasts) at the end of
year 2024 by an NTM Adjusted EBITDA multiple range of 10.5x to 13.0x, based on Centerview&#146;s experience and professional judgment. <U>Based on this calculation, the range of implied enterprise values for Pandora at the end of year 2024 was
$5.6</U><U></U><U>&nbsp;billion to $6.9</U><U></U><U>&nbsp;billion.</U> Centerview then calculated a range of implied equity values of Pandora at the end of year 2024 by (i)&nbsp;adding the estimated value of the tax benefits from Pandora&#146;s net
operating loss carryforwards at the end of year 2024, and (ii)&nbsp;subtracting the estimated net debt of Pandora at the end of year 2024 from the implied enterprise values. <U>Based on this calculation, the range of implied equity values for
Pandora at the end of year 2024 was $6.8</U><U></U><U>&nbsp;billion to $8.1</U><U></U><U>&nbsp;billion.</U> Centerview then divided the implied equity values by the total number of outstanding shares of Pandora common stock on a fully diluted basis.
Centerview then discounted those implied values to June&nbsp;30, 2018 by using an equity discount rate equal to 11.5%, reflecting Centerview&#146;s analysis of Pandora&#146;s cost of equity<U>, determined using the &#147;Capital Asset Pricing
Model&#148; and based on considerations that Centerview deemed relevant in its professional judgment and experience, taking into account certain metrics including yields for U.S. treasury notes, levered and unlevered betas for a comparable group of
companies, and market risk and size premia</U>. The analysis resulted in a range of implied present values of one share of Pandora common stock as of June&nbsp;30, 2018 equal to $8.56 to $9.94; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">Illustrative Present Value of Future Share Price Analysis of Pandora on an EV / Revenue Multiple Basis.
Centerview performed an illustrative analysis of the implied present value of the future price per share of Pandora common stock based on EV / NTM Revenue multiple (based on the Pandora Scenario 1a Forecasts and the Pandora Scenario 2 Forecasts,
respectively): </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR style = "page-break-inside:avoid">
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<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">In calculating the implied present value of future share price of Pandora common stock based on the Pandora
Scenario 1a Forecasts, Centerview first applied EV / NTM Revenue multiples of 1.50x and 1.75x, respectively, based on Centerview&#146;s experience and professional judgment, to Pandora&#146;s NTM Revenue at the end of year 2020, 2021 and 2022 of
$2.07&nbsp;billion, $2.28&nbsp;billion and $2.46&nbsp;billion, respectively, in each case, as provided by Pandora. <U>Based on this calculation, the range of implied enterprise values for Pandora was $3.3</U><U></U><U>&nbsp;billion to
$3.9</U><U></U><U>&nbsp;billion at the end of year 2020, $3.7</U><U></U><U>&nbsp;billion to $4.2</U><U></U><U>&nbsp;billion at the end of year 2021, and $3.9</U><U></U><U>&nbsp;billion to $4.6</U><U></U><U>&nbsp;billion at the end of year 2022.</U>
Centerview then </P></TD></TR></TABLE>
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calculated the implied equity values of Pandora at the end of each such year by (i)&nbsp;adding the estimated value of the tax benefits from Pandora&#146;s net operating loss carryforwards at the
end of each such year, and (ii)&nbsp;subtracting the estimated net debt of Pandora at the end of each such year from the applicable implied enterprise value. <U>Based on this calculation, the range of implied equity values for Pandora was
$2.6</U><U></U><U>&nbsp;billion to $3.3</U><U></U><U>&nbsp;billion at the end of year 2020, $3.0</U><U></U><U>&nbsp;billion to $4.3</U><U></U><U>&nbsp;billion at the end of year 2021, and $4.1</U><U></U><U>&nbsp;billion to
$4.7</U><U></U><U>&nbsp;billion at the end of year 2022.</U> Centerview then divided the applicable equity values by the total number of outstanding shares of Pandora common stock on a fully diluted basis at the end of each such year. Centerview
then discounted those implied values to June&nbsp;30, 2018 by using an equity discount rate equal to 11.5%, reflecting Centerview&#146;s analysis of Pandora&#146;s cost of equity, <U>determined using the &#147;Capital Asset Pricing Model&#148; and
based on considerations that Centerview deemed relevant in its professional judgment and experience, taking into account certain metrics including yields for U.S. treasury notes, levered and unlevered betas for a comparable group of companies, and
market risk and size premia</U>. The analysis resulted in a range of implied present values of one share of Pandora common stock as of June&nbsp;30, 2018 equal to $6.27 to $7.55; and </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">In calculating the implied present value of future share price of Pandora common stock based on the Pandora
Scenario 2 Forecasts, Centerview first applied EV / NTM Revenue multiples of 1.75x and 2.00x, respectively, based on Centerview&#146;s experience and professional judgment, to Pandora&#146;s NTM Revenue at the end of year 2020, 2021 and 2022 of
$2.38&nbsp;billion, $2.69&nbsp;billion and $2.98&nbsp;billion, respectively, in each case, as provided by Pandora. <U>Based on this calculation, the range of implied enterprise values for Pandora was $4.4</U><U></U><U>&nbsp;billion to
$5.0</U><U></U><U>&nbsp;billion at the end of year 2020, $5.0</U><U></U><U>&nbsp;billion to $5.7</U><U></U><U>&nbsp;billion at the end of year 2021, and $5.5</U><U></U><U>&nbsp;billion to $6.2</U><U></U><U>&nbsp;billion at the end of year 2022.</U>
Centerview then calculated the implied equity values of Pandora at the end of each such year by (i)&nbsp;adding the estimated value of the tax benefits from Pandora&#146;s net operating loss carryforwards at the end of each such year, and
(ii)&nbsp;subtracting the estimated net debt of Pandora at the end of each such year from the applicable implied enterprise value. <U>Based on this calculation, the range of implied equity values for Pandora was $4.5</U><U></U><U>&nbsp;billion to
$5.1</U><U></U><U>&nbsp;billion at the end of year 2020, $5.2</U><U></U><U>&nbsp;billion to $5.8</U><U></U><U>&nbsp;billion at the end of year 2021, and $5.8</U><U></U><U>&nbsp;billion to $6.6</U><U></U><U>&nbsp;billion at the end of year 2022.</U>
Centerview then divided the applicable equity values by the total number of outstanding shares of Pandora common stock on a fully diluted basis at the end of each such year. Centerview then discounted those implied values to June&nbsp;30, 2018 by
using an equity discount rate equal to 11.5%, reflecting Centerview&#146;s analysis of Pandora&#146;s cost of equity<U>, determined using the &#147;Capital Asset Pricing Model&#148; and based on considerations that Centerview deemed relevant in its
professional judgment and experience, taking into account certain metrics including yields for U.S. treasury notes, levered and unlevered betas for a comparable group of companies, and market risk and size premia</U>. The analysis resulted in a
range of implied present values of one share of Pandora common stock as of June&nbsp;30, 2018 equal to $9.02 to $10.43; and </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">Illustrative Future Share Price Analysis of Sirius XM Pro Forma for the transactions on an EV / Adjusted EBITDA
Multiple Basis. Centerview performed an illustrative analysis of the implied future price per share of Sirius XM common stock pro forma for the transactions based on EV / NTM Adjusted EBITDA multiple (based on both the Sirius XM Public Forecasts and
the Pandora Scenario 1a Forecasts and the Pandora Scenario 2 Forecasts, respectively) and assuming, at the direction of Pandora&#146;s management, approximately $50&nbsp;million <FONT STYLE="white-space:nowrap">run-rate</FONT> Synergies to be phased
in over two years after the closing of the transactions: </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">In calculating the illustrative future share price of Sirius XM common stock based on the Sirius XM Public
Forecasts and the Pandora Scenario 1a Forecasts, Centerview first applied EV / NTM Adjusted EBITDA multiples of 17.4x and 18.4x, respectively, based on Centerview&#146;s experience and professional judgment, to Sirius XM&#146;s NTM pro forma
Adjusted EBITDA at the end of year 2018, 2019, 2020 and 2021 (in each case, as indicated in the Sirius XM Public Forecasts and the Pandora Scenario 1a Forecasts). <U>Based on this calculation, the range of implied pro forma enterprise values for
Sirius was $38.1</U><U></U><U>&nbsp;billion to $40.3</U><U></U><U>&nbsp;billion at the end of year 2018, $42.3</U><U></U><U>&nbsp;billion to $44.8</U><U></U><U>&nbsp;billion at the end of year 2019, $46.2</U><U></U><U>&nbsp;billion to
$48.9</U><U></U><U>&nbsp;billion at the end of year 2020, and $50.1</U><U></U><U>&nbsp;billion to $52.9</U><U></U><U>&nbsp;billion at the end of year 2021.</U> Centerview then calculated the implied pro forma equity values of Sirius XM at the end of
each such year by (i)&nbsp;adding the estimated value of the tax benefits from Sirius XM&#146;s pro forma net operating loss carryforwards at the end of each such year, and (ii)&nbsp;subtracting the estimated pro forma net debt of Sirius XM at the
end of each such year from the applicable implied enterprise value. <U>Based </U> </P></TD></TR></TABLE>
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<U>on this calculation, the range of implied pro forma equity values for Sirius was $30.8</U><U></U><U>&nbsp;billion to $33.0</U><U></U><U>&nbsp;billion at the end of year 2018,
$34.6</U><U></U><U>&nbsp;billion to $37.0</U><U></U><U>&nbsp;billion at the end of year 2019, $38.0</U><U></U><U>&nbsp;billion to $40.7</U><U></U><U>&nbsp;billion at the end of year 2020, and $41.4</U><U></U><U>&nbsp;billion to
$44.3</U><U></U><U>&nbsp;billion at the end of year 2021.</U> Centerview then divided the applicable equity values by the total number of pro forma outstanding shares of Sirius XM common stock on a fully diluted basis. The analysis resulted in a
range of illustrative future pro forma Sirius XM share prices of $6.14 to $10.53, implying illustrative future value to Pandora shareholders of $8.84 to $15.16 at the exchange ratio. Centerview compared these implied future pro forma per share
values for Pandora shareholders to a range of $7.06 to $10.88 per share based on an illustrative analysis of the implied value of the future price per share of Pandora common stock based on an EV / NTM Revenue multiple basis; and
</P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">In calculating the illustrative future share price of Sirius XM common stock based on the Sirius XM Public
Forecasts and the Pandora Scenario 2 Forecasts, Centerview first applied EV / NTM Adjusted EBITDA multiples of 17.4x and 18.4x, respectively, based on Centerview&#146;s experience and professional judgment, to Sirius XM&#146;s NTM pro forma Adjusted
EBITDA at the end of year 2018, 2019, 2020 and 2021 (in each case, as indicated in the Sirius XM Public Forecasts and the Pandora Scenario 2 Forecasts). <U>Based on this calculation, the range of implied pro forma enterprise values for Sirius was
$38.3</U><U></U><U>&nbsp;billion to $40.5</U><U></U><U>&nbsp;billion at the end of year 2018, $42.7</U><U></U><U>&nbsp;billion to $45.2</U><U></U><U>&nbsp;billion at the end of year 2019, $47.0</U><U></U><U>&nbsp;billion to
$49.7</U><U></U><U>&nbsp;billion at the end of year 2020, and $51.2</U><U></U><U>&nbsp;billion to $54.1</U><U></U><U>&nbsp;billion at the end of year 2021.</U> Centerview then calculated the implied pro forma equity values of Sirius XM at the end of
each such year by (i)&nbsp;adding the estimated value of the tax benefits from Sirius XM&#146;s pro forma net operating loss carryforwards at the end of each such year, and (ii)&nbsp;subtracting the estimated pro forma net debt of Sirius XM at the
end of each such year from the applicable implied enterprise value. <U>Based on this calculation, the range of implied pro forma equity values for Sirius was $31.0</U><U></U><U>&nbsp;billion to $33.2</U><U></U><U>&nbsp;billion at the end of year
2018, $35.0</U><U></U><U>&nbsp;billion to $37.4</U><U></U><U>&nbsp;billion at the end of year 2019, $38.8</U><U></U><U>&nbsp;billion to $41.5</U><U></U><U>&nbsp;billion at the end of year 2020, and $42.6</U><U></U><U>&nbsp;billion to
$45.6</U><U></U><U>&nbsp;billion at the end of year 2021.</U> Centerview then divided the applicable equity values by the total number of pro forma outstanding shares of Sirius XM common stock on a fully diluted basis. The analysis resulted in a
range of illustrative future pro forma Sirius XM share prices of $6.17 to $10.83, implying illustrative future value to Pandora shareholders of $8.88 to $15.60 at the exchange ratio. Centerview compared these implied future pro forma per share
values for Pandora shareholders compared to a range of $9.01 to $15.26 per share based on an illustrative analysis of the implied value of the future price per share of Pandora common stock based on an EV / NTM Revenue multiple basis.&#148;
</P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left">6)</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">The disclosure in the section entitled &#147;The Transaction&#148; under the heading &#147;Opinion of
Pandora&#146;s Financial Advisors&#148;, beginning on page 60 of the Proxy Statement, is hereby amended by, in the subsection <I>&#147;Opinion of LionTree Advisors LLC&#148;</I> that begins on page 69, replacing the subsections with the subheadings
<I>&#147;Scenario 1a Forecasts&#148;</I> and <I>&#147;Scenario 2 Forecasts&#148;</I> on pages <FONT STYLE="white-space:nowrap">73-74</FONT> with the paragraphs below (with new text in underline): </P></TD></TR></TABLE>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>&#147;Scenario 1a Forecasts </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">For the DCF
analysis with respect to the Pandora Scenario 1a Forecasts, LionTree calculated terminal values for Pandora by applying a range of terminal value multiples of 9.5x to 11.5x <U>(which LionTree selected based on its professional judgment and
experience)</U> to Pandora&#146;s estimated EBITDA for FY 2025 based on the Pandora Scenario 1a Forecasts (which analysis implied exit terminal year EBITDA (including stock based compensation expense) multiples of 11.7x to 14.2x). These terminal
value multiple estimates were derived by LionTree utilizing its professional judgment and experience, taking into account, among other things, estimated operational metrics for Pandora based on the Pandora Scenario 1a Forecasts and the operational
metrics and EBITDA multiples for selected publicly traded companies. The present values of the cash flows and terminal values were then calculated using discount rates ranging from 9.00% to 10.50%, reflecting <U>LionTree&#146;s </U>estimates of
Pandora&#146;s weighted average cost of capital (which we refer to as WACC<U>), which LionTree determined using the capital asset pricing model and based on considerations that LionTree deemed relevant in its professional judgment and experience,
taking into account certain metrics including yields for U.S. treasury notes, market risk premia, levered and unlevered beta and tax rates</U>. In each case, LionTree included the estimated net present value (which we refer to as NPV) of
Pandora&#146;s net operating losses (which we refer to as NOLs) of $179.4&nbsp;million as calculated and provided by Pandora&#146;s </P>
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management using a cost of equity of 10.5%. LionTree then subtracted from the range of implied enterprise values Pandora&#146;s net debt <U>as of June</U><U></U><U>&nbsp;30, 2018 of
$436.7</U><U></U><U>&nbsp;million (which included accrued but unpaid dividends in respect of Pandora&#146;s Series A Convertible Preferred Stock as of September</U><U></U><U>&nbsp;21, 2018)</U> to derive a range of implied equity values for Pandora.
LionTree divided the range of implied equity values it derived by the number of fully diluted outstanding shares of Pandora common stock as of September&nbsp;21, 2018. Using the Pandora Scenario 1a Forecasts, the DCF analysis indicated a standalone
implied per share equity value reference range of $5.53 to $7.81 for the Pandora common stock. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Scenario 2 Forecasts </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">For the DCF analysis with respect to the Pandora Scenario 2 Forecasts, LionTree calculated terminal values for Pandora by applying a range of
terminal value multiples of 10.0x to 12.0x <U>(which LionTree selected based on its professional judgment and experience)</U> to Pandora&#146;s estimated EBITDA for FY 2025 based on the Pandora Scenario 2 Forecasts (which analysis implied exit
terminal year EBITDA (including stock based compensation expense) multiples of 11.7x to 14.1x). These terminal value multiple estimates were derived by LionTree utilizing its professional judgment and experience, taking into account, among other
things, estimated operational metrics for Pandora based on the Pandora Scenario 2 Forecasts and the operational metrics and EBITDA multiples for selected publicly traded companies. The present values of the cash flows and terminal values were then
calculated using discount rates ranging from 9.00% to 10.50%, reflecting <U>LionTree&#146;s</U> estimates of Pandora&#146;s WACC<U>, which LionTree determined using the capital asset pricing model and based on considerations that LionTree deemed
relevant in its professional judgment and experience, taking into account certain metrics including yields for U.S. treasury notes, market risk premia, levered and unlevered beta and tax rates.</U> In each case, LionTree included the estimated NPV
of Pandora&#146;s NOLs of $194.0&nbsp;million as calculated and provided by Pandora&#146;s management using a cost of equity of 10.5%. LionTree then subtracted from the range of implied enterprise values Pandora&#146;s <U>net cash as of
June</U><U></U><U>&nbsp;30, 2018 of $268.7</U><U></U><U>&nbsp;million (which reflects the conversion of all of Pandora&#146;s Series A Convertible Preferred Stock and 1.75% Convertible Senior Notes due 2023)</U> to derive a range of implied equity
values for Pandora. LionTree divided the range of implied equity values it derived by the number of fully diluted outstanding shares of Pandora common stock<B> </B><U>(adjusted to reflect the conversion of all of Pandora&#146;s Series A Convertible
Preferred Stock and 1.75% Convertible Senior Notes due 2023)</U> as of September&nbsp;21, 2018. Using the Pandora Scenario 2 Forecasts, the DCF analysis indicated a standalone implied per share equity value reference range of $9.41 to $12.22 for the
Pandora common stock. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><U>Selected Publicly Traded Companies Analysis for Pandora</U>. Using publicly available information, LionTree
compared selected financial data of Pandora to corresponding financial data for the following publicly traded companies in the subcategories described below: </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><U>Satellite Radio</U> </P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">Sirius XM Holdings Inc. </P></TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><U>Digital Music</U> </P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">Spotify Technology S.A. </P></TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><U>Terrestrial Radio</U> </P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">Entercom Communications Corp. </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">Townsquare Media, Inc. </P></TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><U>Internet</U> </P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">Alphabet Inc. </P></TD></TR></TABLE>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">eBay Inc. </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">Facebook, Inc. </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">Groupon Inc. </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">TripAdvisor, Inc. </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">Twitter, Inc. </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">Yelp Inc. </P></TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Although none of the selected companies is directly comparable to Pandora, the companies included were chosen because they are publicly traded
companies with operations that for purposes of this analysis may, in certain respects, be considered similar to certain operations of Pandora. The analyses necessarily involve complex considerations and judgments concerning differences in financial
and operational characteristics of the companies involved and other factors that could affect the companies differently than they would affect Pandora. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Using publicly available information, for each of the selected companies, LionTree calculated <U>financial ratios (e.g., EBITDA margins, sales
compound annual growth rates (which we refer to as CAGR) and EBITDA CAGR)</U> valuation multiples, including (a)&nbsp;EV as a multiple of sales for the last reported twelve-month (which we refer to as LTM) period and estimated 2018 and 2019 sales
(with respect to estimates, based on consensus equity research analyst estimates), (b) EV as a multiple of EBITDA for the LTM period, and for estimated 2018 and 2019 EBITDA (with respect to estimates, based on consensus equity research analyst
estimates), (c) EV as a multiple of EBITDA for the LTM period (adjusted to include stock based compensation expense), and (d)&nbsp;share price as a multiple of estimated 2018 earnings per share (which we refer to as EPS) and estimated 2019 EPS
(based on consensus equity research analyst estimates). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The <U>financial ratios and</U> multiples of the selected companies were compared
to the corresponding multiples of Pandora derived from (a)&nbsp;the Pandora Scenario 1a Forecasts and Pandora Scenario 2 Forecasts, and (b)&nbsp;the Pandora Scenario 1a Forecasts and Pandora Scenario 2 Forecasts, in each case adjusted to include the
NPV of Pandora&#146;s NOLs of $179.4&nbsp;million and $194.0&nbsp;million, respectively, as calculated and provided by Pandora&#146;s management using a cost of equity of 10.5%. LionTree noted that Pandora&#146;s EBITDA and EPS multiples were
negative or uncharacteristically high because the forecasts included no profitability in the fiscal year ending December&nbsp;31, 2018 and limited profitability in the fiscal year ending December&nbsp;31, 2019, whereas the majority of the selected
companies had meaningful EBITDA and EPS multiples because of significant estimated profitability in such periods (based on consensus equity research analyst estimates).&#148; </P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">7)</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">The disclosure in the section entitled &#147;The Transaction&#148; under the heading &#147;Opinion of
Pandora&#146;s Financial Advisors&#148;, beginning on page 60 of the Proxy Statement, is hereby amended by, in the subsection <I>&#147;Opinion of LionTree Advisors LLC&#148;</I> that begins on page 69, replacing the subsection with the subheading
<I>&#147;Other Matters&#148;</I> that begins on page 77 and ends on page 78 with the paragraphs below (with new text in underline): </P></TD></TR></TABLE>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">&#147;<I>Other Matters</I> </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Pandora board of directors selected LionTree as its financial advisor because LionTree is an internationally recognized investment banking
firm that has substantial experience in transactions similar to these transactions, and because of its significant prior experience with the industries in which Pandora and Sirius XM operate. Pursuant to its engagement letter, Pandora will pay
LionTree $4.0&nbsp;million for its services which, subject to the following sentence, is contingent upon the consummation of the transactions. Pandora paid LionTree $2.0&nbsp;million in connection with LionTree&#146;s delivery of its fairness
opinion, which will be credited against the fee described in the preceding sentence upon the closing of the transactions. In addition, Pandora may pay LionTree an additional fee in its sole discretion in connection with the consummation of the
transactions. <U>Pandora does not anticipate agreeing to pay LionTree an additional fee.</U> Pandora has also agreed to reimburse LionTree for certain expenses and to indemnify LionTree, its affiliates, and certain related parties against certain
liabilities and expenses. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">LionTree and its affiliates have provided investment banking services and capital markets services to
affiliates of Sirius XM and their related entities or entities in which such affiliates or related entities have a significant direct or indirect interest, unrelated to the proposed transactions, for which LionTree and its affiliates received, and
may receive, compensation, including having acted as (a)&nbsp;financial advisor to Charter Communications, Inc., Liberty Global plc, Lions Gate Entertainment Corp., Live Nation Entertainment, Inc. and Starz in connection with a number of
transactions and <FONT STYLE="white-space:nowrap">(b)&nbsp;co-manager</FONT> in connection with certain debt offerings of such entities (including Charter Communications, Inc. and Live Nation Entertainment, Inc.). In the past two years, LionTree has
received approximately $30.4&nbsp;million in compensation in the aggregate for services provided to affiliates of Sirius XM and their related entities or entities in which such affiliates or related entities have a significant direct or indirect
interest. LionTree and its affiliates may in the future provide such services to Pandora, Sirius XM, their respective affiliates and their related entities or entities in which they have a significant direct or indirect interest, and expect to
receive fees for the rendering of these services. In addition, from time to time, John C. Malone, who has significant ownership in Liberty Media, which in turn owns approximately 72.7% of the outstanding Sirius XM common stock as of
December&nbsp;17, 2018, the last practicable date before the filing of this proxy statement/prospectus, and Greg Maffei, who is Chairman of Pandora and Chairman of Sirius XM, have invested in, or alongside with, investment vehicles established by
one or more of LionTree&#146;s affiliates. One or more of LionTree&#146;s affiliates may establish investment vehicles in the future in which affiliates of Sirius XM may invest. In connection with the bankruptcy proceedings of iHeart Media, Inc., in
which Liberty Media owns certain debt securities, LionTree and its affiliates have been engaged to act as a special financial advisor to iHeart Media, Inc. for which LionTree and its affiliates may receive compensation. In the ordinary course of
business, certain of LionTree&#146;s employees and affiliates may hold or trade, for their own accounts and the accounts of their investors, securities of Pandora and Sirius XM and, accordingly, may at any time hold a long or short position in such
securities. In the past two years, LionTree has not received any compensation for services provided to Pandora, excluding compensation paid or to be paid to LionTree pursuant to its engagement in connection with the transactions as described in the
preceding paragraph.&#148; </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Additional Information </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In addition to the Supplemental Disclosures provided above, Pandora is providing the following additional information concerning certain other
relationships that its stockholders might be interested in when considering whether to vote for the proposal to adopt the Merger Agreement. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Mr.&nbsp;Hirschhorn had previous connections from more than a decade ago to a company called Sling Media Inc. (&#147;Sling&#148;), in which
John C. Malone, who has a significant ownership in Liberty Media, through Liberty Media, was one of the initial seed investors.&nbsp;Mr.&nbsp;Hirschhorn was president of Sling from 2006 to 2009. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Bonus Associated with the Transactions </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The disclosure in the section entitled &#147;The Transaction&#148; under the heading &#147;Interests of Pandora&#146;s Directors and Executive
Officers in the Transactions&#148; of the Proxy Statement is hereby amended by adding the following subsection on page&nbsp;85: </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>&#147;</I><B><I>Bonus
Associated with the Transactions</I></B><I> </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">On January&nbsp;17, 2019, the Pandora board of directors approved a $1 million
discretionary cash bonus for Roger Lynch, Pandora&#146;s Chief Executive Officer and President, which will be paid upon the closing of the transactions.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">* * * </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><U>IMPORTANT ADDITIONAL INFORMATION
AND WHERE TO FIND IT </U></B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">This communication is being made in respect of the proposed merger transaction involving Sirius XM Holdings
Inc. (&#147;Sirius&#148;) and Pandora Media, Inc. (&#147;Pandora&#148;).&nbsp;In connection with the proposed merger transaction, Sirius filed a registration statement <FONT STYLE="white-space:nowrap">on&nbsp;Form&nbsp;S-4&nbsp;with</FONT> the SEC
on October&nbsp;31, 2018, which includes a proxy statement of Pandora and a prospectus of Sirius and each party will file other documents regarding the proposed transaction with the SEC.
<FONT STYLE="white-space:nowrap">The&nbsp;Form&nbsp;S-4,&nbsp;as</FONT> amended, was declared effective by the SEC on December&nbsp;20, 2018.&nbsp;This communication does not constitute an offer to sell or the solicitation of an offer to buy any
securities or a </P>
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solicitation of any vote or approval.&nbsp;<B>Before making any voting or investment decision, investors and stockholders of Pandora are urged to carefully read the entire registration statement
and proxy statement/prospectus, when they become available, and any other relevant documents filed with the SEC, as well as any amendments or supplements to these documents, because they will contain important information about the proposed
transaction.</B>&nbsp;The documents filed by Sirius and Pandora with the SEC may be obtained free of charge at the SEC&#146;s website at <U>www.sec.gov</U>. In addition, the documents filed by Sirius may be obtained free of charge from Sirius at
<U>www.siriusxm.com</U>, and the documents filed by Pandora may be obtained free of charge from Pandora at <U>www.Pandora.com</U>. Alternatively, these documents, when available, can be obtained free of charge from Sirius upon written request to
Sirius, 1290 Avenue of the Americas, 11<SUP STYLE="font-size:85%; vertical-align:top">th</SUP>&nbsp;Floor, New York, New York 10104, Attn: Investor Relations, or by <FONT STYLE="white-space:nowrap">calling&nbsp;(212)&nbsp;584-5100,&nbsp;or</FONT>
from Pandora upon written request to Pandora, 2100 Franklin Street, Suite 700, Oakland, California 94612 Attn: Investor Relations or by <FONT STYLE="white-space:nowrap">calling&nbsp;(510)&nbsp;451-4100.</FONT> </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Sirius and Pandora and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of
proxies from the stockholders of Pandora in favor of the approval of the merger. Information regarding Sirius&#146; directors and executive officers is contained in Sirius&#146; Annual Report
<FONT STYLE="white-space:nowrap">on&nbsp;Form&nbsp;10-K&nbsp;for</FONT> the year ended December&nbsp;31, 2017, its Quarterly Reports <FONT STYLE="white-space:nowrap">on&nbsp;Form&nbsp;10-Q&nbsp;for</FONT> the quarterly periods ended March&nbsp;31,
2018, June&nbsp;30, 2018 and September&nbsp;30, 2018 and its Proxy Statement on Schedule 14A, dated April&nbsp;23, 2018, which are filed with the SEC. Information regarding Pandora&#146;s directors and executive officers is contained in
Pandora&#146;s Annual Report <FONT STYLE="white-space:nowrap">on&nbsp;Form&nbsp;10-K&nbsp;for</FONT> the year ended December&nbsp;31, 2017, its Quarterly Reports <FONT STYLE="white-space:nowrap">on&nbsp;Form&nbsp;10-Q&nbsp;for</FONT> the quarterly
periods ended March&nbsp;31, 2018, June&nbsp;30, 2018 and September&nbsp;30, 2018 and its Proxy Statement on Schedule&nbsp;14A, dated April&nbsp;10, 2018, which are filed with the SEC. Additional information regarding the interests of those
participants and other persons who may be deemed participants in the transaction may be obtained by reading the registration statement and the proxy statement/prospectus when they become available. Free copies of these documents may be obtained as
described in the preceding paragraph. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><U>FORWARD-LOOKING STATEMENTS </U></B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">This communication contains &#147;forward-looking statements&#148; within the meaning of the Private Securities Litigation Reform Act of 1995.
Such statements include, but are not limited to, statements about future financial and operating results, our plans, objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by
words such as &#147;will likely result,&#148; &#147;are expected to,&#148; &#147;will continue,&#148; &#147;is anticipated,&#148; &#147;estimated,&#148; &#147;believe,&#148; &#147;intend,&#148; &#147;plan,&#148; &#147;projection,&#148;
&#147;outlook&#148; or words of similar meaning. Such forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and
contingencies, many of which are difficult to predict and generally beyond our control. Actual results and the timing of events may differ materially from the results anticipated in these forward-looking statements. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In addition to factors previously disclosed in Sirius&#146; and Pandora&#146;s reports filed with the SEC and those identified elsewhere in
this communication, the following factors, among others, could cause actual results and the timing of events to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: ability to meet the
closing conditions to the merger, including the approval of Pandora&#146;s stockholders on the expected terms and schedule; delay in closing the merger; failure to realize the expected benefits from the proposed transaction; risks related to
disruption of management time from ongoing business operations due to the proposed transaction; Sirius&#146; or Pandora&#146;s substantial competition, which is likely to increase over time; Sirius&#146; or Pandora&#146;s ability to retain
subscribers or increase the number of subscribers is uncertain; Sirius&#146; or Pandora&#146;s ability to profitably attract and retain subscribers; failing to protect the security of the personal information about Sirius&#146; or Pandora&#146;s
customers; interference to Sirius&#146; or Pandora&#146;s service from wireless operations; Sirius and Pandora engage in substantial marketing efforts and the continued effectiveness of those efforts are an important part of Sirius&#146; and
Pandora&#146;s business; consumer protection laws and their enforcement; Sirius&#146; or Pandora&#146;s failure to realize benefits of acquisitions or other strategic initiatives; unfavorable outcomes of pending or future litigation; the market for
music rights, which is changing and subject to uncertainties; Sirius&#146; dependence upon the auto industry; general economic conditions; existing or future government laws and regulations could harm Sirius&#146; or Pandora&#146;s business; failure
of Sirius&#146; satellites would significantly damage its business; the interruption or failure of Sirius&#146; or Pandora&#146;s information technology and communications systems; rapid technological and industry changes; failure of third parties
to perform; Sirius&#146; failure to comply with FCC requirements; modifications to Sirius&#146; or Pandora&#146;s business plan; Sirius&#146; or Pandora&#146;s indebtedness; Sirius&#146; studios, </P>
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terrestrial repeater networks, satellite uplink facilities or Sirius&#146; or Pandora&#146;s other ground facilities could be damaged by natural catastrophes or terrorist activities; Sirius&#146;
principal stockholder has significant influence over its affairs and over actions requiring stockholder approval and its interests may differ from interests of other holders of Sirius&#146; common stock; Sirius is a &#147;controlled company&#148;
within the meaning of the NASDAQ listing rules; impairment of Sirius&#146; or Pandora&#146;s business by third-party intellectual property rights; changes to Sirius&#146; dividend policies which could occur at any time; and risks related to the
inability to realize cost savings or revenues or to implement integration plans and other consequences associated with mergers, acquisitions and divestitures. The information set forth herein speaks only as of the date hereof, and Sirius and Pandora
disclaim any intention or obligation to update any forward looking statements as a result of developments occurring after the date of this communication. Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only,
are not forecasts and may not reflect actual results. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>SIGNATURES </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" COLSPAN="3"><B>PANDORA MEDIA, INC.</B></TD></TR>
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<TD VALIGN="top">Dated: January&nbsp;18, 2019</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">By:</TD>
<TD VALIGN="bottom" STYLE=" BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000">/s/ Stephen Ben&eacute;</TD></TR>
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<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">Stephen Ben&eacute;</TD></TR>
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<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">General Counsel and Corporate Secretary</TD></TR>
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8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): January 18, 2019 (January 17, 2019)
Pandora Media, Inc.
(Exact name of registrant as specified in its charter)
Delaware
001-35198
94-3352630
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
2100 Franklin Street, Suite 700
Oakland, CA 94612
(Address of principal executive offices, including zip code)
(510)
451-4100
(Registrant's telephone number, including area code)
Not Applicable
(Former
name or former address, if changed since last report)
Check the appropriate box below
if the Form
8-K
filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☒
Soliciting material pursuant to Rule
14a-12
under the Exchange Act (17
CFR
240.14a-12)
☐
Pre-commencement
communications pursuant to Rule
14d-2(b)
under the Exchange Act (17 CFR
240.14d-2(b))
☐
Pre-commencement
communications pursuant to Rule
13e-4(c)
under the Exchange Act (17 CFR
240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this
chapter) or Rule
12b-2
of the Securities Exchange Act of 1934
(§240.12b-2
of this chapter).
Emerging growth company  ☐
If an emerging
growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act. ☐
Item 8.01 Other Events.
On September 23, 2018, Pandora Media, Inc. ("Pandora") entered into an Agreement and Plan of Merger and Reorganization (the
"Merger Agreement") with Sirius XM Holdings Inc., a Delaware corporation ("Sirius XM"), and White Oaks Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Sirius XM ("Merger Sub"). On
October 25, 2018, Sirius XM Radio Inc., a wholly-owned subsidiary of Sirius XM ("Sirius XM Radio"), Billboard Holding Company, Inc., a wholly-owned subsidiary of Pandora ("New Holding Company"), and Billboard Acquisition
Sub, Inc., a wholly-owned subsidiary of New Holding Company ("Holdco Merger Sub") entered into a joinder agreement to become parties to the Merger Agreement. Pursuant to the Merger Agreement, and subject to the terms and conditions set
forth in the Merger Agreement, Holdco Merger Sub will merge with and into Pandora (the "holding company merger"), with Pandora surviving the holding company merger as a wholly-owned subsidiary of New Holding Company. Immediately following
the holding company merger, Pandora will be converted into a limited liability company (the "conversion"). Immediately following the conversion, Merger Sub will merge with and into New Holding Company (the "merger"), with New
Holding Company surviving the merger as a wholly-owned subsidiary of Sirius XM. Immediately following the merger, New Holding Company with merge with and into Sirius XM Radio (the "Sirius XM Radio merger" and, together with the holding
company merger, the conversion and the merger and the other transactions contemplated by the Merger Agreement, the "transactions"), with Sirius XM Radio surviving the Sirius XM Radio merger, whereupon the separate existence of New Holding
Company will cease and Pandora will be a wholly-owned subsidiary of Sirius XM Radio.
Following the announcement of the Merger Agreement,
as of the date of this Current Report on Form
8-K,
eight purported class action complaints have been filed on behalf of Pandora's stockholders against Pandora and its directors and one complaint has been
brought by an individual holder of Pandora common stock; six of these matters in the United States District Court for the Northern District of California, two in the United States District Court for the District of Delaware, and one in the Superior
Court of California for the County of Alameda. The complaints are captioned as follows:
Kapela v. Pandora Media, Inc., et al
. (N.D. Cal.);
Knapp v. Pandora Media, Inc., et al
. (N.D. Cal.);
Gallant v. Pandora Media, Inc., et al
.
(N.D. Cal.);
Thompson v. Pandora Media, Inc., et al
. (N.D. Cal.);
Dawson v. Pandora Media, Inc., et al
. (N.D. Cal.);
Raul v. Pandora Media, Inc., et al
. (N.D. Cal.);
Sciabacucchi v. Pandora Media, Inc., et al
. (D. Del.);
Staab v. Pandora Media, Inc., et al
. (D. Del.); and
Irvin v. Pandora Media, Inc., et al.
(Cal. Sup. Ct.). The Kapela, Sciabacucchi, and Dawson matters also name Sirius XM and Merger Sub as defendants. The Irvin matter has been
dismissed without prejudice. We refer to these nine actions collectively as the "Merger Litigation".
Pandora believes that the
claims asserted in the Merger Litigation are without merit and supplemental disclosures are not required or necessary under applicable laws. However, in order to avoid the risk of the Merger Litigation delaying or adversely affecting the
transactions and to minimize the costs, risks and uncertainties inherent in litigation, and without admitting any liability or wrongdoing, Pandora is voluntarily supplementing the Proxy Statement as described in this Current Report on Form
8-K.
In consideration for these supplemental disclosures, plaintiffs in the actions have agreed to voluntarily dismiss the actions. Pandora and the other named defendants deny that they have violated any laws or
breached any duties to Pandora's stockholders. Pandora and the other named defendants are providing these supplemental disclosures solely to eliminate the burden and expense of litigation and to avoid any possible disruption to the merger that
could result from further litigation. Nothing in this Current Report on Form
8-K
shall be deemed an admission of the legal necessity or materiality under applicable laws of any of the disclosures set forth
herein. To the contrary, Pandora specifically denies all allegations in the Merger Litigation that any additional disclosure was or is required.
These supplemental disclosures will not affect the merger consideration to be received by stockholders of Pandora in connection with the
transactions or the timing of the special meeting of the stockholders of Pandora scheduled for January 29, 2019, at 9:00 a.m. Pacific time, at Cathedral of Christ the Light Event Center, Conference Room AB, 2121 Harrison St., Oakland, CA 94612.
The Pandora board of directors continues to recommend that Pandora stockholders vote "FOR" the merger agreement proposal and "FOR" the other proposals being considered at the special meeting.
Supplemental Disclosures to Proxy Statement in Connection with the Merger Litigation
The following disclosures in this Current Report on Form
8-K
supplement the disclosures contained in
the Proxy Statement filed on December 20, 2018 in connection with the transactions (the "Proxy Statement"), which is
available on the Internet site maintained by the Securities and Exchange Commission (the "SEC") at http://www.sec.gov. The following disclosures should be read in conjunction with the
disclosures contained in the Proxy Statement, which in turn should be read in its entirety. To the extent that information in this Current Report on Form
8-K
differs from or updates information contained in
the Proxy Statement, the information in this Current Report on Form
8-K
shall supersede or supplement the information in the Proxy Statement. All page references are to the Proxy Statement and terms used
below, unless otherwise defined, shall have the meanings ascribed to such terms in the Proxy Statement.
1)
The disclosure in the section entitled "The Transaction" under the heading "Background of the
Transactions", beginning on page 38 of the Proxy Statement, is hereby amended by replacing the paragraph that begins "On April 18" with the paragraph below (with new text in underline):
"On April 18, 2018, the Pandora board of directors resumed its meeting from the prior day and, after a closed session, the full
Pandora board of directors was joined by Pandora's management, representatives of Sirius XM, and representatives from Sidley Austin. Members of Pandora's management updated the Pandora board of directors on current audience trends with
respect to the company's services, the marketing plan for 2018 and the closing of the company's acquisition of AdsWizz. Pandora's management also updated the Pandora board of directors on the company's recent and forecasted
financial performance and Pandora's management's plans for refinancing the company's outstanding convertible debt to extend the maturity of the notes and improve Pandora's liquidity. After discussion, the Pandora board of
directors approved the exchange of the company's 1.75% convertible senior notes due 2020 for a new series of notes and authorized a Transaction Committee to determine the terms of the new notes, the selection of financial advisors and the terms
of the exchange. Pandora's management also reviewed with the Pandora board of directors its proposed plans regarding enhanced operational efficiency and the status of ongoing negotiations of the company's music content-licensing
agreements. Messrs. Meyer and Frear and the representatives of Sirius XM departed. Mr. Maffei then discussed with the Pandora board of directors
his views of
other
audio
industry participants and
potential
consolidation
opportunities. Mr. Maffei then left the meeting, representatives of Centerview joined the meeting and the Pandora board of directors continued the meeting with Pandora's management and representatives of Sidley Austin and Centerview in
attendance. Sidley Austin reviewed with the Pandora board of directors its fiduciary obligations with respect to any consolidation transaction and the various roles that Sirius XM and Liberty Media could play in such a transaction. Representatives
from Centerview also provided business and strategic observations and the Pandora board of directors engaged in a lengthy discussion, focusing on the recent activities of Sirius XM and Liberty Media and Centerview's perspective on their
investment objective
(including the possibility that Sirius XM and/or Liberty Media could decide to pursue a transaction with another audio entertainment industry participant in lieu of an acquisition of Pandora)
, the company's pending
acquisition of AdsWizz and the proposed convertible note exchange. After the discussion, the Pandora board of directors determined that it would continue to pursue its existing strategy and pending transactions (including the convertible note
exchange)."
2)
The disclosure in the section entitled "The Transaction" under the heading "Background of the
Transactions", beginning on page 38 of the Proxy Statement, is hereby amended by replacing the paragraph that begins "On August 23" with the paragraph below (with new text in underline):
"On August 23, 2018, Mr. Maffei informed Mr. Pruzan that Sirius XM may be willing to explore a transaction at a price of
$9.75 per share.
Mr.
Maffei suggested that if the Company were not interested in engaging in a transaction, Sirius XM would evaluate the continuing strategic value of its minority investment in Pandora, including the value of
negotiations with third parties that would be interested in pursuing a joint streaming audio strategy and whether to continue to invest executive time and resources on the Pandora board of directors.
"
3)
The disclosure in the section entitled "The Transaction" under the heading "Background of the
Transactions", beginning on page 38 of the Proxy Statement, is hereby amended by adding a new penultimate paragraph on page 51, immediately preceding the paragraph that begins "On October 24, 2018":
"Beginning on September 24, 2018, representatives of Centerview and LionTree began outreach to the potential acquirers to be
contacted during the
go-shop
period, as discussed at the September 23, 2018 board meeting and described above. Of the 40 potential parties to be contacted, 30 were strategic parties and 10 were financial
sponsors. The list of potential parties to be contacted was developed by Centerview, LionTree and members of the Pandora board and management, based on their professional judgment. Initial outreach efforts were made to 34 of the parties on
September 24, 2018 and the remaining six parties were contacted by October 1, 2018. None of the parties contacted expressed interest in receiving information or entering into discussions regarding an alternative transaction. In addition,
no party contacted in respect of a potential sale of or investment in Pandora as part of the strategic review process in 2016 or afterwards was bound by a standstill provision precluding that party from making a topping bid for Pandora after the
acquisition was announced."
4)
The disclosure in the section entitled "The Transaction" under the heading "Certain Financial
Forecasts", beginning on page 54 of the Proxy Statement, is hereby amended by adding the following section after the subsection under the heading "Unaudited Forecasted Financial Information" that begins on page 55 and ends on page 60:
"
Additional Unaudited Forecasted Financial Information
The following tables present the selected additional unaudited forecasted financial information of Pandora prepared by Pandora's
management, which consist of two different financial and operating scenarios, each for the fiscal years ending 2018 through 2023, and were provided to the members of the Pandora board of directors, Centerview, LionTree and Sirius XM, and, as
described in the "Background of the Transactions" section on pages
42-43,
discussed at the Pandora board of directors meeting on June 28, 2018. At the direction of Pandora's board of
directors, Centerview and LionTree did not consider either of these scenarios for purposes of their respective opinions.
Pandora Scenario 1 Forecasts
Certain unaudited forecasted financial information was initially prepared by Pandora's management in October 2017 and provided to
the Pandora board of directors. That October 2017 forecast was the basis for the unaudited forecasted financial information provided to the Pandora board of directors in June 2018 and is referred to as the Pandora Scenario 1 Forecasts.
Pandora Unaudited Forecasted Financial Information
(U.S. dollars in millions, except per share data)
(a)
Fiscal Years Ending December 31,
2018
2019
2020
2021
2022
2023
Advertising
$
1,067
$
1,123
$
1,219
$
1,331
$
1,456
$
1,558
Subscription & Other
471
573
636
686
734
776
Total Revenue
$
1,537
$
1,696
$
1,855
$
2,017
$
2,190
$
2,334
% Growth
11.0
%
10.3
%
9.4
%
8.7
%
8.6
%
6.6
%
Content Costs
$
891
$
916
$
986
$
1,068
$
1,131
$
1,194
Other COGS
120
148
164
179
190
203
Total COGS
$
1,011
$
1,064
$
1,150
$
1,247
$
1,321
$
1,397
Gross Profit
$
526
$
631
$
705
$
770
$
869
$
937
% Margin
34.2
%
37.2
%
38.0
%
38.2
%
39.7
%
40.1
%
Product Development
134
171
170
179
186
196
Sales & Marketing
438
385
379
390
401
412
General & Administrative
112
113
107
108
109
111
Total Operating Expenses
$
683
$
669
$
656
$
678
$
696
$
719
Operating Income / (Loss)
(b)
$
(157
)
$
(38
)
$
49
$
92
$
173
$
218
% Margin
(10.2
%)
(2.2
%)
2.6
%
4.6
%
7.9
%
9.3
%
Depreciation
49
54
53
54
48
48
Adjusted EBITDA
(c)
$
(108
)
$
16
$
102
$
146
$
221
$
266
% Margin
(7.0
%)
1.0
%
5.5
%
7.3
%
10.1
%
11.4
%
(a)
Certain totals in the tables included in this proxy statement/prospectus may not sum due to rounding. Table
does not reflect stock-based compensation.
(b)
Excludes amortization of intangible assets.
(c)
Adjusted EBITDA, which is calculated as consolidated net earnings before interest, income taxes, stock-based
compensation expense and depreciation and amortization expense, is a
non-GAAP
financial measure as it excluded these amounts, which are included in net earnings, the most directly comparable measure calculated
in accordance with GAAP. This measure should not be considered as an alternative to net earnings or other measures derived in accordance with GAAP.
The Pandora unaudited forecasted financial information in the Pandora Scenario 1 Forecasts is based on various assumptions, including the
following key assumptions:
•
approximately
$80-90 million
of external marketing spend annually
with increases to efficiency beyond that realized in 2018
to-date;
•
hours per active user ("HPA") would decrease slightly in 2019 and increase after 2020 as new users
expand feature usage;
•
the number of
ad-supported
service users would reach 77.1 million by
2025;
•
advertising revenue per thousand listener hours ("RPM") would increase from $67.49 in 2018 to $79.99 in
2022, including increases in audio RPM, slight decreases in display RPM and increases in video RPM;
•
there would be no material improvement in the monthly free-trial starts for Pandora Plus, while the monthly
free-trial starts for Pandora Premium would improve slightly with the mix shifting towards family plan subscriptions;
•
the percentage of the family plan subscriptions in the new Pandora Premium additions would increase from 5% in
2018 to 8% by 2025;
•
direct Pandora Premium acquisition spending would reach $5 million annually by 2020;
•
non-music
content share would account for 10% of total listening by 2025;
•
headcount costs would remain materially flat, with many functions to shift to lower-cost geographies;
•
costs saved from the reduction in force plans relative to the end of 2017 run rate would be $70 million in
2019 and $100 million annually in each of the years from 2020 to 2025, with a component of the savings reinvested; and
•
the stock-based compensation expenses would decrease from $147 million in 2019 to $144 million in 2023.
Pandora Scenario 3 Forecasts
In June 2018, Pandora's management updated the unaudited forecasted financial information that was initially prepared in October 2017 to
present a more optimistic view driven primarily by audience and hours growth from improvements in marketing efficiency, higher marketing spending and growth in audience engagement through
Pandora's new content and product capabilities, described above as the Scenario 2 Forecasts. The Pandora Scenario 3 Forecasts take an even more optimistic and aggressive spend view than the
Scenario 2 Forecasts on these factors and assumes improvements in financial terms contained in the licensing arrangements for sound recordings, as further described in the key assumptions below.
Pandora Unaudited Forecasted Financial Information
(U.S. dollars in millions, except per share data)
(a)
Fiscal Years Ending December 31,
2018
2019
2020
2021
2022
2023
Advertising
$
1,067
$
1,225
$
1,397
$
1,617
$
1,831
$
2,018
Subscription & Other
471
601
750
880
1,020
1,170
Total Revenue
$
1,537
$
1,826
$
2,146
$
2,497
$
2,851
$
3,188
% Growth
11.0
%
18.8
%
17.5
%
16.4
%
14.1
%
11.8
%
Content Costs
$
891
$
978
$
1,145
$
1,322
$
1,475
$
1,642
Other COGS
120
151
170
188
203
219
Total COGS
$
1,011
$
1,129
$
1,315
$
1,510
$
1,678
$
1,862
Gross Profit
$
526
$
696
$
831
$
988
$
1,173
1,326
% Margin
34.2
%
38.1
%
38.7
%
39.5
%
41.1
%
41.6
%
Product Development
134
173
187
204
217
233
Sales & Marketing
438
443
459
493
517
546
General & Administrative
112
110
115
123
128
133
Total Operating Expenses
$
683
$
726
$
761
$
820
$
862
$
912
Operating Income / (Loss)
(b)
$
(157
)
$
(30
)
$
71
$
167
$
311
$
414
% Margin
(10.2
%)
(1.6
%)
3.3
%
6.7
%
10.9
%
13.0
%
Depreciation
49
54
54
57
52
55
Adjusted EBITDA
(c)
$
(108
)
$
25
$
124
$
224
$
364
$
469
% Margin
(7.0
%)
1.3
%
5.8
%
9.0
%
12.8
%
14.7
%
(a)
Certain totals in the tables included in this proxy statement/prospectus may not sum due to rounding. Table
does not reflect stock-based compensation.
(b)
Excludes amortization of intangible assets.
(c)
Adjusted EBITDA, which is calculated as consolidated net earnings before interest, income taxes, stock-based
compensation expense and depreciation and amortization expense, is a
non-GAAP
financial measure as it excluded these amounts, which are included in net earnings, the most directly comparable measure calculated
in accordance with GAAP. This measure should not be considered as an alternative to net earnings or other measures derived in accordance with GAAP.
The Pandora unaudited forecasted financial information in the Pandora Scenario 3 Forecasts is based on various assumptions, including the
following key assumptions:
•
approximately
$80-90 million
of external marketing spend annually
with increases to efficiency beyond that realized in 2018
to-date;
•
hours per active user ("HPA") would increase after 2020 as new users expand feature usage;
•
the number of
ad-supported
service users would reach 94.7 million by
2025;
•
advertising revenue per thousand listener hours ("RPM") would increase from $67.49 in 2018 to $77.53 in
2022, including increases in audio RPM, slight decreases in display RPM and increases in video RPM;
•
there would be no material improvement in the monthly free-trial starts for Pandora Plus, while the monthly
free-trial starts for Pandora Premium would improve slightly with the mix shifting towards family plan subscriptions;
•
the percentage of the family plan subscriptions in the new Pandora Premium additions would increase from 5% in
2018 to 39% by 2025;
•
direct Pandora Premium acquisition spending would reach $7 million annually by 2020;
•
non-music
content share would account for 12% of total listening by 2025;
•
headcount costs would slightly increase, with many functions to shift to lower-cost geographies;
•
costs saved from the reduction in force plans relative to the end of 2017 run rate would be $70 million in
2019 and $100 million annually in each of the years from 2020 to 2025, with a component of the savings reinvested; and
•
the stock-based compensation expenses would decrease from $120 million in 2019 to $94 million in 2023.
The Company completed the acquisition of AdsWizz, Inc. ("AdsWizz") in May 2018. The Pandora Scenario 1,
1a, 2, and 3 Forecasts, as described in the Proxy Statement and this Form
8-K,
included forecasted financial information for the AdsWizz business starting with the projections for fiscal year 2018 and forward.
For the foregoing and other reasons, inclusion of the Pandora unaudited forecasted financial information in this proxy
statement/prospectus should not be regarded as a representation by any person that the results contained in the Pandora unaudited forecasted financial information will be achieved."
5)
The disclosure in the section entitled "The Transaction" under the heading "Opinion of
Pandora's Financial Advisors", beginning on page 60 of the Proxy Statement, is hereby amended by, in the subsection
"Opinion of Centerview Partners LLC"
that begins on page 60, replacing the subsections with the
subheadings "
Selected Transactions Analysis
", "
Discounted Cashflow Analyses
" and "
Other Factors
" on pages
64-68
with the paragraphs below (with new text in
underline):
"Selected Transactions Analysis
Centerview performed a selected transactions analysis in which Centerview reviewed and compared certain information relating to the following
selected transactions in the public consumer internet industry in the past five years involving publicly traded target companies with EBITDA margins of less than 20% that Centerview, based on its experience and professional judgment, deemed relevant
to consider in relation to Pandora and the transactions.
The selected transactions were:
Announcement Date
Acquiror
Target
EV /
LTM
Revenues
Transaction
Value
(in billions)
May 2017
HomeAdvisor, Inc.
Angie's List, Inc.
1.68x
$
0.5
November 2016
Adobe Systems Incorporated
TubeMogul, Inc.
2.55x
$
0.5
July 2016
Verizon Communications Inc.
Yahoo! Inc.
0.99x
$
4.8
May 2015
Verizon Communications Inc.
AOL Inc.
1.71x
$
4.4
February 2015
Expedia, Inc.
Orbitz Worldwide, Inc.
1.72x
$
1.6
September 2014
News Corporation
Move, Inc.
3.96x
$
1.0
No company or transaction used in this analysis is identical or directly comparable to Pandora or the
transactions, respectively. The target companies included in the selected transactions listed above were selected, among other reasons, because they have certain characteristics that, for the purposes of this analysis, may be
considered similar to certain characteristics of Pandora. The reasons for and the circumstances surrounding each of the selected transactions analyzed were diverse and there are inherent
differences in the business, operations, financial conditions and prospects of Pandora and the target companies included in the selected transactions analysis. Accordingly, Centerview believed that it was inappropriate to, and therefore did not,
rely solely on the quantitative results of the selected transactions analysis. This analysis involves complex considerations and qualitative judgments concerning differences in financial and operating characteristics and other factors that could
affect the public trading, acquisition or other values of the selected target companies and Pandora.
Financial data for the selected
transactions were based solely on publicly available information at the time of the initial announcement of the relevant transactions as noted in the preceding table that Centerview obtained from SEC filings and other publicly available data
sources.
Centerview calculated, for each selected transaction set forth above, among other things, the enterprise value implied for the
applicable target company based on the consideration payable in the applicable selected transactions, which is referred to in this summary of Centerview's opinion as "TEV," as a multiple of the target company's revenue for the
last-twelve-month period ("LTM Revenue") for which financial information had been made public at the time of the announcement of such transactions. The results of this analysis are summarized as follows:
TEV /
LTM Revenue
25th Percentile
1.69x
Median
1.71x
Mean
2.10x
75th Percentile
2.34x
Based on its analysis and other considerations that Centerview deemed relevant in its professional judgment,
Centerview applied a range of TEV / LTM Revenue multiples of 1.75x to 2.50x to Pandora's last-twelve-month revenue as of June 30, 2018 of $1.46 billion (excluding revenue of the divested ticket service business) as reflected in public
filings of Pandora, which resulted in a range of implied values per share of Pandora common stock of $7.25 to $10.75, rounded to the nearest $0.25. Centerview then compared this range to the Implied Consideration Value of $10.05.
Discounted Cash Flow Analyses
Centerview
performed a discounted cash flow analysis of Pandora based on the Pandora Scenario 1a Forecasts and the Pandora Scenario 2 Forecasts, respectively, other Pandora Internal Data and information reflected in public filings of Pandora. A discounted cash
flow analysis is a traditional valuation methodology used to derive a valuation of an asset by calculating the "present value" of estimated future cash flows of the asset. "Present value" refers to the current value of future
cash flows and is obtained by discounting those future cash flows by a discount rate that takes into account macroeconomic assumptions and estimates of risk, the opportunity cost of capital, expected returns and other appropriate factors.
In performing this analysis based on the Pandora Scenario 1a Forecasts, Centerview calculated a range of illustrative equity values for
Pandora by discounting to present value as of June 30, 2018, using discount rates ranging from 9.50% to 11.50% (reflecting Centerview's analysis of Pandora's weighted average cost of capital in Centerview's professional
judgment): (a) the forecasted unlevered
after-tax
free cash flows of Pandora over the period beginning June 30, 2018 and ending December 31, 2025, as reflected in the Pandora Scenario 1a Forecasts
and the assumptions provided by Pandora's management
(which unlevered
after-tax
free cash flows were not adjusted by Centerview)
, and (b) a range of illustrative terminal values of Pandora,
calculated by Centerview applying a range of illustrative enterprise value to earnings before interest, taxes, depreciation and amortization (adjusted to include stock-based compensation expense), which is referred to in this summary of
Centerview's opinion as "Adjusted EBITDA," multiples of 10.0x to 12.5x, based on Centerview's experience and professional judgment, to Pandora's estimated forward Adjusted EBITDA as of December 31, 2025, as provided by
Pandora's management based on Pandora Scenario 1a Forecasts.
Centerview used the discount rates ranging from 9.5% to 11.5%, reflecting Centerview's analysis of Pandora's weighted average cost of capital, determined using the
"Capital Asset Pricing Model" and based on considerations that Centerview deemed relevant in its professional
judgment and experience, taking into account certain metrics including yields for U.S. treasury notes, levered and unlevered betas for a comparable group of companies, and market risk and size
premia.
Centerview then (i) added the estimated value of the tax benefits from Pandora's net operating loss carryforwards, as of June 30, 2018, and (ii) subtracted from the foregoing results (A) the value of
Pandora's net debt (calculated as the face value of long-term debt minus cash and cash equivalents) and (B) minority interests, each as of June 30, 2018, as reflected in public filings of Pandora.
In performing the calculation
referenced in the preceding clause (ii), Centerview relied on Pandora's June
30, 2018 unaudited financial statements included in its Form
10-Q,
for the quarter ended
June
30, 2018, which indicated that (A)
Pandora had $292,996,000 in cash and $127,791,000 in short-term investments and (B)
Pandora's debt and redeemable convertible stock were comprised
of three separate instruments: (I) 1.75% convertible senior notes due 2020, which had a principal value of $152
million; (II) 1.75% senior convertible notes due 2023, which had a principal value of
$193
million; and (III)
redeemable convertible preferred stock, which had a principal value of
$506
million (collectively, the "Pandora Public Debt and Convertible Stock
Information").
Centerview divided the result of the foregoing calculations by the number of fully diluted outstanding shares of Pandora common stock as of September 21, 2018 to derive a range of implied values per share of Pandora
common stock of $4.50 to $7.00, rounded to the nearest $0.25. Centerview then compared this range to the Implied Consideration Value of $10.05.
In performing this analysis based on the Pandora Scenario 2 Forecasts, Centerview calculated a range of illustrative equity values for Pandora
by discounting to present value as of June 30, 2018, using discount rates ranging from 9.50% to 11.50% (reflecting Centerview's analysis of Pandora's weighted average cost of capital in Centerview's professional judgment): (a)
the forecasted unlevered
after-tax
free cash flows of Pandora over the period beginning June 30, 2018 and ending December 31, 2025, as reflected in the Pandora Scenario 2 Forecasts and the
assumptions provided by Pandora's management
(which unlevered
after-tax
free cash flows were not adjusted by Centerview)
, and (b) a range of illustrative terminal values of Pandora, calculated
by Centerview applying a range of illustrative enterprise value to Adjusted EBITDA multiples of 10.5x to 13.0x, based on Centerview's experience and professional judgment, to Pandora's estimated forward Adjusted EBITDA as of
December 31, 2025, as provided by Pandora's management based on Pandora Forecasts—Scenario 2.
Centerview used the discount rates ranging from 9.5% to 11.5%, reflecting Centerview's analysis of Pandora's weighted average
cost of capital, determined using the "Capital Asset Pricing Model" and based on considerations that Centerview deemed relevant in its professional judgment and experience, taking into account certain metrics including yields for U.S.
treasury notes, levered and unlevered betas for a comparable group of companies, and market risk and size premia.
Centerview then (i) added the estimated value of the tax benefits from Pandora's net operating loss carryforwards, as of
June 30, 2018, and (ii) subtracted from the foregoing results (A) the value of Pandora's net debt (calculated as the face value of long-term debt minus cash and cash equivalents) and (B) minority interests, each as of
June 30, 2018, as reflected in public filings of Pandora.
In performing the calculation referenced in the preceding clause (ii), Centerview relied on Pandora's June
30, 2018 unaudited financial statements included in
its Form
10-Q
for the quarter ended June
30, 2018, which indicated the Pandora Public Debt and Convertible Stock Information.
Centerview divided the result of the foregoing calculations
by the number of fully diluted outstanding shares of Pandora common stock as of September 21, 2018 to derive a range of implied values per share of Pandora common stock of $8.50 to $11.75, rounded to the nearest $0.25. Centerview then compared
this range to the Implied Consideration Value of $10.05.
Other Factors
Centerview also reviewed and considered other factors, which were not considered part of its financial analysis in connection with rendering
its opinion, but were referenced for informational purposes, including, among other things, the following:
•
trading prices for the Pandora common stock during the 52 week period ended September 21, 2018, which ranged
from $4.13 to $9.97;
•
publicly available stock price targets of selected research analysts for Pandora common stock, which indicated
stock price targets of $7.00 to $13.00 per share;
•
Illustrative Present Value of Future Share Price Analysis of Pandora on an EV / Adjusted EBITDA Multiple Basis.
Centerview performed an illustrative analysis of the implied present value of the future price per share of Pandora common stock based on an EV / NTM Adjusted EBITDA multiple (based on the Pandora Scenario 1a Forecasts and the Pandora Scenario 2
Forecasts, respectively):
•
In calculating the implied present value of future share price of Pandora common stock based on the Pandora
Scenario 1a Forecasts, Centerview first calculated a range of implied enterprise values of Pandora at the end of year 2024 by multiplying the estimated NTM Adjusted EBITDA of Pandora (as indicated in the Pandora Scenario 1a Forecasts) at the end of
year 2024 by an NTM Adjusted EBITDA multiple range of 10.0x to 12.5x, based on Centerview's experience and professional judgment.
Based on this calculation, the range of implied enterprise values for Pandora at the end of year 2024 was
$3.7
billion to $4.6
billion.
Centerview then calculated a range of implied equity values of Pandora at the end of year 2024 by (i) adding the estimated value of the tax benefits from Pandora's net
operating loss carryforwards at the end of year 2024, and (ii) subtracting the estimated net debt of Pandora at the end of year 2024 from the implied enterprise values.
Based on this calculation, the range of implied equity values for
Pandora at the end of year 2024 was $4.7
billion to $5.6
billion.
Centerview then divided the implied equity values by the total number of outstanding shares of Pandora common stock on a fully diluted basis.
Centerview then discounted those implied values to June 30, 2018 by using an equity discount rate equal to 11.5%, reflecting Centerview's analysis of Pandora's cost of equity,
determined using the "Capital Asset Pricing
Model" and based on considerations that Centerview deemed relevant in its professional judgment and experience, taking into account certain metrics including yields for U.S. treasury notes, levered and unlevered betas for a comparable group of
companies, and market risk and size premia
. The analysis resulted in a range of implied present values of one share of Pandora common stock as of June 30, 2018 equal to $5.65 to $6.70; and
•
In calculating the implied present value of future share price of Pandora common stock based on the Pandora
Scenario 2 Forecasts, Centerview first calculated a range of implied enterprise values of Pandora at the end of year 2024 by multiplying the estimated NTM Adjusted EBITDA of Pandora (as indicated in the Pandora Scenario 2 Forecasts) at the end of
year 2024 by an NTM Adjusted EBITDA multiple range of 10.5x to 13.0x, based on Centerview's experience and professional judgment.
Based on this calculation, the range of implied enterprise values for Pandora at the end of year 2024 was
$5.6
billion to $6.9
billion.
Centerview then calculated a range of implied equity values of Pandora at the end of year 2024 by (i) adding the estimated value of the tax benefits from Pandora's net
operating loss carryforwards at the end of year 2024, and (ii) subtracting the estimated net debt of Pandora at the end of year 2024 from the implied enterprise values.
Based on this calculation, the range of implied equity values for
Pandora at the end of year 2024 was $6.8
billion to $8.1
billion.
Centerview then divided the implied equity values by the total number of outstanding shares of Pandora common stock on a fully diluted basis.
Centerview then discounted those implied values to June 30, 2018 by using an equity discount rate equal to 11.5%, reflecting Centerview's analysis of Pandora's cost of equity
, determined using the "Capital Asset Pricing
Model" and based on considerations that Centerview deemed relevant in its professional judgment and experience, taking into account certain metrics including yields for U.S. treasury notes, levered and unlevered betas for a comparable group of
companies, and market risk and size premia
. The analysis resulted in a range of implied present values of one share of Pandora common stock as of June 30, 2018 equal to $8.56 to $9.94;
•
Illustrative Present Value of Future Share Price Analysis of Pandora on an EV / Revenue Multiple Basis.
Centerview performed an illustrative analysis of the implied present value of the future price per share of Pandora common stock based on EV / NTM Revenue multiple (based on the Pandora Scenario 1a Forecasts and the Pandora Scenario 2 Forecasts,
respectively):
•
In calculating the implied present value of future share price of Pandora common stock based on the Pandora
Scenario 1a Forecasts, Centerview first applied EV / NTM Revenue multiples of 1.50x and 1.75x, respectively, based on Centerview's experience and professional judgment, to Pandora's NTM Revenue at the end of year 2020, 2021 and 2022 of
$2.07 billion, $2.28 billion and $2.46 billion, respectively, in each case, as provided by Pandora.
Based on this calculation, the range of implied enterprise values for Pandora was $3.3
billion to
$3.9
billion at the end of year 2020, $3.7
billion to $4.2
billion at the end of year 2021, and $3.9
billion to $4.6
billion at the end of year 2022.
Centerview then
calculated the implied equity values of Pandora at the end of each such year by (i) adding the estimated value of the tax benefits from Pandora's net operating loss carryforwards at the
end of each such year, and (ii) subtracting the estimated net debt of Pandora at the end of each such year from the applicable implied enterprise value.
Based on this calculation, the range of implied equity values for Pandora was
$2.6
billion to $3.3
billion at the end of year 2020, $3.0
billion to $4.3
billion at the end of year 2021, and $4.1
billion to
$4.7
billion at the end of year 2022.
Centerview then divided the applicable equity values by the total number of outstanding shares of Pandora common stock on a fully diluted basis at the end of each such year. Centerview
then discounted those implied values to June 30, 2018 by using an equity discount rate equal to 11.5%, reflecting Centerview's analysis of Pandora's cost of equity,
determined using the "Capital Asset Pricing Model" and
based on considerations that Centerview deemed relevant in its professional judgment and experience, taking into account certain metrics including yields for U.S. treasury notes, levered and unlevered betas for a comparable group of companies, and
market risk and size premia
. The analysis resulted in a range of implied present values of one share of Pandora common stock as of June 30, 2018 equal to $6.27 to $7.55; and
•
In calculating the implied present value of future share price of Pandora common stock based on the Pandora
Scenario 2 Forecasts, Centerview first applied EV / NTM Revenue multiples of 1.75x and 2.00x, respectively, based on Centerview's experience and professional judgment, to Pandora's NTM Revenue at the end of year 2020, 2021 and 2022 of
$2.38 billion, $2.69 billion and $2.98 billion, respectively, in each case, as provided by Pandora.
Based on this calculation, the range of implied enterprise values for Pandora was $4.4
billion to
$5.0
billion at the end of year 2020, $5.0
billion to $5.7
billion at the end of year 2021, and $5.5
billion to $6.2
billion at the end of year 2022.
Centerview then calculated the implied equity values of Pandora at the end of each such year by (i) adding the estimated value of the tax benefits from Pandora's net operating loss carryforwards at the end of each such year, and
(ii) subtracting the estimated net debt of Pandora at the end of each such year from the applicable implied enterprise value.
Based on this calculation, the range of implied equity values for Pandora was $4.5
billion to
$5.1
billion at the end of year 2020, $5.2
billion to $5.8
billion at the end of year 2021, and $5.8
billion to $6.6
billion at the end of year 2022.
Centerview then divided the applicable equity values by the total number of outstanding shares of Pandora common stock on a fully diluted basis at the end of each such year. Centerview then discounted those implied values to June 30, 2018 by
using an equity discount rate equal to 11.5%, reflecting Centerview's analysis of Pandora's cost of equity
, determined using the "Capital Asset Pricing Model" and based on considerations that Centerview deemed relevant in its
professional judgment and experience, taking into account certain metrics including yields for U.S. treasury notes, levered and unlevered betas for a comparable group of companies, and market risk and size premia
. The analysis resulted in a
range of implied present values of one share of Pandora common stock as of June 30, 2018 equal to $9.02 to $10.43; and
•
Illustrative Future Share Price Analysis of Sirius XM Pro Forma for the transactions on an EV / Adjusted EBITDA
Multiple Basis. Centerview performed an illustrative analysis of the implied future price per share of Sirius XM common stock pro forma for the transactions based on EV / NTM Adjusted EBITDA multiple (based on both the Sirius XM Public Forecasts and
the Pandora Scenario 1a Forecasts and the Pandora Scenario 2 Forecasts, respectively) and assuming, at the direction of Pandora's management, approximately $50 million
run-rate
Synergies to be phased
in over two years after the closing of the transactions:
•
In calculating the illustrative future share price of Sirius XM common stock based on the Sirius XM Public
Forecasts and the Pandora Scenario 1a Forecasts, Centerview first applied EV / NTM Adjusted EBITDA multiples of 17.4x and 18.4x, respectively, based on Centerview's experience and professional judgment, to Sirius XM's NTM pro forma
Adjusted EBITDA at the end of year 2018, 2019, 2020 and 2021 (in each case, as indicated in the Sirius XM Public Forecasts and the Pandora Scenario 1a Forecasts).
Based on this calculation, the range of implied pro forma enterprise values for
Sirius was $38.1
billion to $40.3
billion at the end of year 2018, $42.3
billion to $44.8
billion at the end of year 2019, $46.2
billion to
$48.9
billion at the end of year 2020, and $50.1
billion to $52.9
billion at the end of year 2021.
Centerview then calculated the implied pro forma equity values of Sirius XM at the end of
each such year by (i) adding the estimated value of the tax benefits from Sirius XM's pro forma net operating loss carryforwards at the end of each such year, and (ii) subtracting the estimated pro forma net debt of Sirius XM at the
end of each such year from the applicable implied enterprise value.
Based
on this calculation, the range of implied pro forma equity values for Sirius was $30.8
billion to $33.0
billion at the end of year 2018,
$34.6
billion to $37.0
billion at the end of year 2019, $38.0
billion to $40.7
billion at the end of year 2020, and $41.4
billion to
$44.3
billion at the end of year 2021.
Centerview then divided the applicable equity values by the total number of pro forma outstanding shares of Sirius XM common stock on a fully diluted basis. The analysis resulted in a
range of illustrative future pro forma Sirius XM share prices of $6.14 to $10.53, implying illustrative future value to Pandora shareholders of $8.84 to $15.16 at the exchange ratio. Centerview compared these implied future pro forma per share
values for Pandora shareholders to a range of $7.06 to $10.88 per share based on an illustrative analysis of the implied value of the future price per share of Pandora common stock based on an EV / NTM Revenue multiple basis; and
•
In calculating the illustrative future share price of Sirius XM common stock based on the Sirius XM Public
Forecasts and the Pandora Scenario 2 Forecasts, Centerview first applied EV / NTM Adjusted EBITDA multiples of 17.4x and 18.4x, respectively, based on Centerview's experience and professional judgment, to Sirius XM's NTM pro forma Adjusted
EBITDA at the end of year 2018, 2019, 2020 and 2021 (in each case, as indicated in the Sirius XM Public Forecasts and the Pandora Scenario 2 Forecasts).
Based on this calculation, the range of implied pro forma enterprise values for Sirius was
$38.3
billion to $40.5
billion at the end of year 2018, $42.7
billion to $45.2
billion at the end of year 2019, $47.0
billion to
$49.7
billion at the end of year 2020, and $51.2
billion to $54.1
billion at the end of year 2021.
Centerview then calculated the implied pro forma equity values of Sirius XM at the end of
each such year by (i) adding the estimated value of the tax benefits from Sirius XM's pro forma net operating loss carryforwards at the end of each such year, and (ii) subtracting the estimated pro forma net debt of Sirius XM at the
end of each such year from the applicable implied enterprise value.
Based on this calculation, the range of implied pro forma equity values for Sirius was $31.0
billion to $33.2
billion at the end of year
2018, $35.0
billion to $37.4
billion at the end of year 2019, $38.8
billion to $41.5
billion at the end of year 2020, and $42.6
billion to
$45.6
billion at the end of year 2021.
Centerview then divided the applicable equity values by the total number of pro forma outstanding shares of Sirius XM common stock on a fully diluted basis. The analysis resulted in a
range of illustrative future pro forma Sirius XM share prices of $6.17 to $10.83, implying illustrative future value to Pandora shareholders of $8.88 to $15.60 at the exchange ratio. Centerview compared these implied future pro forma per share
values for Pandora shareholders compared to a range of $9.01 to $15.26 per share based on an illustrative analysis of the implied value of the future price per share of Pandora common stock based on an EV / NTM Revenue multiple basis."
6)
The disclosure in the section entitled "The Transaction" under the heading "Opinion of
Pandora's Financial Advisors", beginning on page 60 of the Proxy Statement, is hereby amended by, in the subsection
"Opinion of LionTree Advisors LLC"
that begins on page 69, replacing the subsections with the subheadings
"Scenario 1a Forecasts"
and
"Scenario 2 Forecasts"
on pages
73-74
with the paragraphs below (with new text in underline):
"Scenario 1a Forecasts
For the DCF
analysis with respect to the Pandora Scenario 1a Forecasts, LionTree calculated terminal values for Pandora by applying a range of terminal value multiples of 9.5x to 11.5x
(which LionTree selected based on its professional judgment and
experience)
to Pandora's estimated EBITDA for FY 2025 based on the Pandora Scenario 1a Forecasts (which analysis implied exit terminal year EBITDA (including stock based compensation expense) multiples of 11.7x to 14.2x). These terminal
value multiple estimates were derived by LionTree utilizing its professional judgment and experience, taking into account, among other things, estimated operational metrics for Pandora based on the Pandora Scenario 1a Forecasts and the operational
metrics and EBITDA multiples for selected publicly traded companies. The present values of the cash flows and terminal values were then calculated using discount rates ranging from 9.00% to 10.50%, reflecting
LionTree's
estimates of
Pandora's weighted average cost of capital (which we refer to as WACC
), which LionTree determined using the capital asset pricing model and based on considerations that LionTree deemed relevant in its professional judgment and experience,
taking into account certain metrics including yields for U.S. treasury notes, market risk premia, levered and unlevered beta and tax rates
. In each case, LionTree included the estimated net present value (which we refer to as NPV) of
Pandora's net operating losses (which we refer to as NOLs) of $179.4 million as calculated and provided by Pandora's
management using a cost of equity of 10.5%. LionTree then subtracted from the range of implied enterprise values Pandora's net debt
as of June
30, 2018 of
$436.7
million (which included accrued but unpaid dividends in respect of Pandora's Series A Convertible Preferred Stock as of September
21, 2018)
to derive a range of implied equity values for Pandora.
LionTree divided the range of implied equity values it derived by the number of fully diluted outstanding shares of Pandora common stock as of September 21, 2018. Using the Pandora Scenario 1a Forecasts, the DCF analysis indicated a standalone
implied per share equity value reference range of $5.53 to $7.81 for the Pandora common stock.
Scenario 2 Forecasts
For the DCF analysis with respect to the Pandora Scenario 2 Forecasts, LionTree calculated terminal values for Pandora by applying a range of
terminal value multiples of 10.0x to 12.0x
(which LionTree selected based on its professional judgment and experience)
to Pandora's estimated EBITDA for FY 2025 based on the Pandora Scenario 2 Forecasts (which analysis implied exit
terminal year EBITDA (including stock based compensation expense) multiples of 11.7x to 14.1x). These terminal value multiple estimates were derived by LionTree utilizing its professional judgment and experience, taking into account, among other
things, estimated operational metrics for Pandora based on the Pandora Scenario 2 Forecasts and the operational metrics and EBITDA multiples for selected publicly traded companies. The present values of the cash flows and terminal values were then
calculated using discount rates ranging from 9.00% to 10.50%, reflecting
LionTree's
estimates of Pandora's WACC
, which LionTree determined using the capital asset pricing model and based on considerations that LionTree deemed
relevant in its professional judgment and experience, taking into account certain metrics including yields for U.S. treasury notes, market risk premia, levered and unlevered beta and tax rates.
In each case, LionTree included the estimated NPV
of Pandora's NOLs of $194.0 million as calculated and provided by Pandora's management using a cost of equity of 10.5%. LionTree then subtracted from the range of implied enterprise values Pandora's
net cash as of
June
30, 2018 of $268.7
million (which reflects the conversion of all of Pandora's Series A Convertible Preferred Stock and 1.75% Convertible Senior Notes due 2023)
to derive a range of implied equity
values for Pandora. LionTree divided the range of implied equity values it derived by the number of fully diluted outstanding shares of Pandora common stock
(adjusted to reflect the conversion of all of Pandora's Series A Convertible
Preferred Stock and 1.75% Convertible Senior Notes due 2023)
as of September 21, 2018. Using the Pandora Scenario 2 Forecasts, the DCF analysis indicated a standalone implied per share equity value reference range of $9.41 to $12.22 for the
Pandora common stock.
Selected Publicly Traded Companies Analysis for Pandora
. Using publicly available information, LionTree
compared selected financial data of Pandora to corresponding financial data for the following publicly traded companies in the subcategories described below:
Satellite Radio
•
Sirius XM Holdings Inc.
Digital Music
•
Spotify Technology S.A.
Terrestrial Radio
•
Entercom Communications Corp.
•
Townsquare Media, Inc.
Internet
•
Alphabet Inc.
•
eBay Inc.
•
Expedia Group, Inc.
•
Facebook, Inc.
•
Groupon Inc.
•
Netflix, Inc.
•
Roku, Inc.
•
TripAdvisor, Inc.
•
Twitter, Inc.
•
Yelp Inc.
Although none of the selected companies is directly comparable to Pandora, the companies included were chosen because they are publicly traded
companies with operations that for purposes of this analysis may, in certain respects, be considered similar to certain operations of Pandora. The analyses necessarily involve complex considerations and judgments concerning differences in financial
and operational characteristics of the companies involved and other factors that could affect the companies differently than they would affect Pandora.
Using publicly available information, for each of the selected companies, LionTree calculated
financial ratios (e.g., EBITDA margins, sales
compound annual growth rates (which we refer to as CAGR) and EBITDA CAGR)
valuation multiples, including (a) EV as a multiple of sales for the last reported twelve-month (which we refer to as LTM) period and estimated 2018 and 2019 sales
(with respect to estimates, based on consensus equity research analyst estimates), (b) EV as a multiple of EBITDA for the LTM period, and for estimated 2018 and 2019 EBITDA (with respect to estimates, based on consensus equity research analyst
estimates), (c) EV as a multiple of EBITDA for the LTM period (adjusted to include stock based compensation expense), and (d) share price as a multiple of estimated 2018 earnings per share (which we refer to as EPS) and estimated 2019 EPS
(based on consensus equity research analyst estimates).
The
financial ratios and
multiples of the selected companies were compared
to the corresponding multiples of Pandora derived from (a) the Pandora Scenario 1a Forecasts and Pandora Scenario 2 Forecasts, and (b) the Pandora Scenario 1a Forecasts and Pandora Scenario 2 Forecasts, in each case adjusted to include the
NPV of Pandora's NOLs of $179.4 million and $194.0 million, respectively, as calculated and provided by Pandora's management using a cost of equity of 10.5%. LionTree noted that Pandora's EBITDA and EPS multiples were
negative or uncharacteristically high because the forecasts included no profitability in the fiscal year ending December 31, 2018 and limited profitability in the fiscal year ending December 31, 2019, whereas the majority of the selected
companies had meaningful EBITDA and EPS multiples because of significant estimated profitability in such periods (based on consensus equity research analyst estimates)."
7)
The disclosure in the section entitled "The Transaction" under the heading "Opinion of
Pandora's Financial Advisors", beginning on page 60 of the Proxy Statement, is hereby amended by, in the subsection
"Opinion of LionTree Advisors LLC"
that begins on page 69, replacing the subsection with the subheading
"Other Matters"
that begins on page 77 and ends on page 78 with the paragraphs below (with new text in underline):
"
Other Matters
The Pandora board of directors selected LionTree as its financial advisor because LionTree is an internationally recognized investment banking
firm that has substantial experience in transactions similar to these transactions, and because of its significant prior experience with the industries in which Pandora and Sirius XM operate. Pursuant to its engagement letter, Pandora will pay
LionTree $4.0 million for its services which, subject to the following sentence, is contingent upon the consummation of the transactions. Pandora paid LionTree $2.0 million in connection with LionTree's delivery of its fairness
opinion, which will be credited against the fee described in the preceding sentence upon the closing of the transactions. In addition, Pandora may pay LionTree an additional fee in its sole discretion in connection with the consummation of the
transactions.
Pandora does not anticipate agreeing to pay LionTree an additional fee.
Pandora has also agreed to reimburse LionTree for certain expenses and to indemnify LionTree, its affiliates, and certain related parties against certain
liabilities and expenses.
LionTree and its affiliates have provided investment banking services and capital markets services to
affiliates of Sirius XM and their related entities or entities in which such affiliates or related entities have a significant direct or indirect interest, unrelated to the proposed transactions, for which LionTree and its affiliates received, and
may receive, compensation, including having acted as (a) financial advisor to Charter Communications, Inc., Liberty Global plc, Lions Gate Entertainment Corp., Live Nation Entertainment, Inc. and Starz in connection with a number of
transactions and
(b) co-manager
in connection with certain debt offerings of such entities (including Charter Communications, Inc. and Live Nation Entertainment, Inc.). In the past two years, LionTree has
received approximately $30.4 million in compensation in the aggregate for services provided to affiliates of Sirius XM and their related entities or entities in which such affiliates or related entities have a significant direct or indirect
interest. LionTree and its affiliates may in the future provide such services to Pandora, Sirius XM, their respective affiliates and their related entities or entities in which they have a significant direct or indirect interest, and expect to
receive fees for the rendering of these services. In addition, from time to time, John C. Malone, who has significant ownership in Liberty Media, which in turn owns approximately 72.7% of the outstanding Sirius XM common stock as of
December 17, 2018, the last practicable date before the filing of this proxy statement/prospectus, and Greg Maffei, who is Chairman of Pandora and Chairman of Sirius XM, have invested in, or alongside with, investment vehicles established by
one or more of LionTree's affiliates. One or more of LionTree's affiliates may establish investment vehicles in the future in which affiliates of Sirius XM may invest. In connection with the bankruptcy proceedings of iHeart Media, Inc., in
which Liberty Media owns certain debt securities, LionTree and its affiliates have been engaged to act as a special financial advisor to iHeart Media, Inc. for which LionTree and its affiliates may receive compensation. In the ordinary course of
business, certain of LionTree's employees and affiliates may hold or trade, for their own accounts and the accounts of their investors, securities of Pandora and Sirius XM and, accordingly, may at any time hold a long or short position in such
securities. In the past two years, LionTree has not received any compensation for services provided to Pandora, excluding compensation paid or to be paid to LionTree pursuant to its engagement in connection with the transactions as described in the
preceding paragraph."
Additional Information
In addition to the Supplemental Disclosures provided above, Pandora is providing the following additional information concerning certain other
relationships that its stockholders might be interested in when considering whether to vote for the proposal to adopt the Merger Agreement.
Mr. Hirschhorn had previous connections from more than a decade ago to a company called Sling Media Inc. ("Sling"), in which
John C. Malone, who has a significant ownership in Liberty Media, through Liberty Media, was one of the initial seed investors. Mr. Hirschhorn was president of Sling from 2006 to 2009.
Bonus Associated with the Transactions
The disclosure in the section entitled "The Transaction" under the heading "Interests of Pandora's Directors and Executive
Officers in the Transactions" of the Proxy Statement is hereby amended by adding the following subsection on page 85:
"
Bonus
Associated with the Transactions
On January 17, 2019, the Pandora board of directors approved a $1 million
discretionary cash bonus for Roger Lynch, Pandora's Chief Executive Officer and President, which will be paid upon the closing of the transactions."
* * *
IMPORTANT ADDITIONAL INFORMATION
AND WHERE TO FIND IT
This communication is being made in respect of the proposed merger transaction involving Sirius XM Holdings
Inc. ("Sirius") and Pandora Media, Inc. ("Pandora"). In connection with the proposed merger transaction, Sirius filed a registration statement
on Form S-4 with
the SEC
on October 31, 2018, which includes a proxy statement of Pandora and a prospectus of Sirius and each party will file other documents regarding the proposed transaction with the SEC.
The Form S-4, as
amended, was declared effective by the SEC on December 20, 2018. This communication does not constitute an offer to sell or the solicitation of an offer to buy any
securities or a
solicitation of any vote or approval.
Before making any voting or investment decision, investors and stockholders of Pandora are urged to carefully read the entire registration statement
and proxy statement/prospectus, when they become available, and any other relevant documents filed with the SEC, as well as any amendments or supplements to these documents, because they will contain important information about the proposed
transaction.
The documents filed by Sirius and Pandora with the SEC may be obtained free of charge at the SEC's website at
www.sec.gov
. In addition, the documents filed by Sirius may be obtained free of charge from Sirius at
www.siriusxm.com
, and the documents filed by Pandora may be obtained free of charge from Pandora at
www.Pandora.com
. Alternatively, these documents, when available, can be obtained free of charge from Sirius upon written request to
Sirius, 1290 Avenue of the Americas, 11
th
Floor, New York, New York 10104, Attn: Investor Relations, or by
calling (212) 584-5100, or
from Pandora upon written request to Pandora, 2100 Franklin Street, Suite 700, Oakland, California 94612 Attn: Investor Relations or by
calling (510) 451-4100.
Sirius and Pandora and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of
proxies from the stockholders of Pandora in favor of the approval of the merger. Information regarding Sirius' directors and executive officers is contained in Sirius' Annual Report
on Form 10-K for
the year ended December 31, 2017, its Quarterly Reports
on Form 10-Q for
the quarterly periods ended March 31,
2018, June 30, 2018 and September 30, 2018 and its Proxy Statement on Schedule 14A, dated April 23, 2018, which are filed with the SEC. Information regarding Pandora's directors and executive officers is contained in
Pandora's Annual Report
on Form 10-K for
the year ended December 31, 2017, its Quarterly Reports
on Form 10-Q for
the quarterly
periods ended March 31, 2018, June 30, 2018 and September 30, 2018 and its Proxy Statement on Schedule 14A, dated April 10, 2018, which are filed with the SEC. Additional information regarding the interests of those
participants and other persons who may be deemed participants in the transaction may be obtained by reading the registration statement and the proxy statement/prospectus when they become available. Free copies of these documents may be obtained as
described in the preceding paragraph.
FORWARD-LOOKING STATEMENTS
This communication contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.
Such statements include, but are not limited to, statements about future financial and operating results, our plans, objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by
words such as "will likely result," "are expected to," "will continue," "is anticipated," "estimated," "believe," "intend," "plan," "projection,"
"outlook" or words of similar meaning. Such forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and
contingencies, many of which are difficult to predict and generally beyond our control. Actual results and the timing of events may differ materially from the results anticipated in these forward-looking statements.
In addition to factors previously disclosed in Sirius' and Pandora's reports filed with the SEC and those identified elsewhere in
this communication, the following factors, among others, could cause actual results and the timing of events to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: ability to meet the
closing conditions to the merger, including the approval of Pandora's stockholders on the expected terms and schedule; delay in closing the merger; failure to realize the expected benefits from the proposed transaction; risks related to
disruption of management time from ongoing business operations due to the proposed transaction; Sirius' or Pandora's substantial competition, which is likely to increase over time; Sirius' or Pandora's ability to retain
subscribers or increase the number of subscribers is uncertain; Sirius' or Pandora's ability to profitably attract and retain subscribers; failing to protect the security of the personal information about Sirius' or Pandora's
customers; interference to Sirius' or Pandora's service from wireless operations; Sirius and Pandora engage in substantial marketing efforts and the continued effectiveness of those efforts are an important part of Sirius' and
Pandora's business; consumer protection laws and their enforcement; Sirius' or Pandora's failure to realize benefits of acquisitions or other strategic initiatives; unfavorable outcomes of pending or future litigation; the market for
music rights, which is changing and subject to uncertainties; Sirius' dependence upon the auto industry; general economic conditions; existing or future government laws and regulations could harm Sirius' or Pandora's business; failure
of Sirius' satellites would significantly damage its business; the interruption or failure of Sirius' or Pandora's information technology and communications systems; rapid technological and industry changes; failure of third parties
to perform; Sirius' failure to comply with FCC requirements; modifications to Sirius' or Pandora's business plan; Sirius' or Pandora's indebtedness; Sirius' studios,
terrestrial repeater networks, satellite uplink facilities or Sirius' or Pandora's other ground facilities could be damaged by natural catastrophes or terrorist activities; Sirius'
principal stockholder has significant influence over its affairs and over actions requiring stockholder approval and its interests may differ from interests of other holders of Sirius' common stock; Sirius is a "controlled company"
within the meaning of the NASDAQ listing rules; impairment of Sirius' or Pandora's business by third-party intellectual property rights; changes to Sirius' dividend policies which could occur at any time; and risks related to the
inability to realize cost savings or revenues or to implement integration plans and other consequences associated with mergers, acquisitions and divestitures. The information set forth herein speaks only as of the date hereof, and Sirius and Pandora
disclaim any intention or obligation to update any forward looking statements as a result of developments occurring after the date of this communication. Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only,
are not forecasts and may not reflect actual results.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
PANDORA MEDIA, INC.
Dated: January 18, 2019
By:
/s/ Stephen Bené
Stephen Bené
General Counsel and Corporate Secretary