OTTAWA, Nov. 9, 2009 (GLOBE NEWSWIRE) -- Telesat Holdings Inc. (Telesat) today announced its unaudited financial results for the three and nine month periods ended September 30, 2009. Unless otherwise stated herein, all amounts are in Canadian dollars.
For the three month period ended September 30, 2009, Telesat reported consolidated revenues of $187 million, an increase of approximately 9% ($15 million) compared to the same period in 2008. The increased revenue was primarily the result of the commencement of service on Nimiq 4 and Telstar 11N as well as the impact of the stronger U.S. dollar on the conversion of our U.S. dollar denominated revenues into Canadian dollars, partially offset by the sale of Telesat's interest in Telstar 10. Adjusted EBITDA(1) for the third quarter was $129 million, an increase of $19 million (18%) compared to the same quarter last year. Adjusted EBITDA margin was 69% for the quarter, compared to 64% for the same period in 2008. Telesat reported net income for the three months ended September 30, 2009 of $203 million. The gain on the sale of Telesat's interest in Telstar 10 was $35 million. The impact on net income of a non-cash foreign exchange gain related to Telesat's U.S. dollar denominated debt, partially offset by non-cash losses on financial instruments, was $178 million.
For the nine month period ended September 30, 2009, consolidated revenues were $592 million. Adjusted EBITDA for the first nine months of 2009 was $416 million and the Adjusted EBITDA margin was 70%. Net income was $351 million. Revenues, Adjusted EBITDA, and net income increased by $88 million, $103 million, and $502 million respectively compared to the same period in 2008.
Dan Goldberg, Telesat's President and CEO, commented: "I'm very pleased with Telesat's strong financial and operating performance in the third quarter and first nine months of this year. We continue to achieve meaningful growth in revenue, Adjusted EBITDA and improvements to our Adjusted EBITDA margin compared to the same periods last year. With the recent entry into service of Nimiq 5, Telstar 14R under construction, and a recently announced new satellite, Nimiq 6, planned for Bell TV, Telesat remains well positioned for the balance of this year and beyond."
Business Highlights
* At September 30, 2009: o Telesat had contracted backlog for future services of approximately $4.8 billion. o Fleet utilization was 84% for Telesat's North American fleet, and 72% for Telesat's international fleet. In the third quarter, Telesat sold its interest in Telstar 10, which reduced utilization in the international fleet. o On September 18, 2009, Telesat announced the successful launch of its Nimiq 5 satellite. Nimiq 5 entered commercial service at the 72.7 degrees West orbital location on October 10, 2009. Telesat also announced that EchoStar Corporation, which had previously contracted for half the capacity of Nimiq 5, has committed to use all of the Nimiq 5 capacity for the 15-year manufacturer's design life of the satellite. o On September 17, 2009, Telesat announced that Bell TV, the leading provider of direct-to-home services in Canada, has agreed to utilize a new Telesat direct broadcast satellite, Nimiq 6, which is planned to commence construction in the first quarter of 2010. Telesat is now in the process of procuring Nimiq 6 and expects to reflect the anticipated revenues from this new satellite in its contractual backlog once the agreement with the satellite manufacturer is completed. o In July 2009, Telesat announced its decision to procure the Telstar 14R/Estrela do Sul 2 replacement satellite which is expected to be operational in the 63 degrees West orbital location in the second half of 2011. o On July 9, 2009, Telesat sold its interest in the Telstar 10 satellite and transferred certain related customer contracts to the satellite's owner in exchange for a total price of approximately US$69 million. Previously reported discussions regarding the potential sale of Telesat's interests in another one of its international satellites and related assets have terminated. o As of September 30, 2009, our estimate of the expected end-of- commercial-service life for our Anik F1 satellite was 2016, as compared to our previous estimate, which was 2013.
All Adjusted EBITDA and Adjusted EBITDA margins included in this release are non-GAAP financial measures, as described in the End Notes section of this release. For information reconciling non-GAAP financial measures to the most comparable GAAP financial measures, please see the consolidated financial information below.
Telesat will post its unaudited Quarterly Report for the three and nine month periods ended September 30, 2009 on its website at www.telesat.com under the tab "Media Room" in the "Investor Relations" section. This information will also be furnished within the next week to the U.S. Securities and Exchange Commission by Telesat Canada on Form 6-K and may be accessed at the SEC's website at www.sec.gov.
Conference Call
Telesat has scheduled a conference call for Monday, November 9, 2009 at 10:30 a.m. EST to discuss its financial results for the three and nine month periods ended September 30, 2009 and other recent developments. The call will be hosted by Daniel S. Goldberg, President and Chief Executive Officer, and Michel Cayouette, Chief Financial Officer, of Telesat.
Dial-in Instructions: The toll-free dial-in number for the teleconference is +1 (877) 240-9772. Callers outside of North America should dial +1 (416) 340-8527. The access code is 4032467. Please allow at least 15 minutes prior to the scheduled start time to connect to the teleconference. Dial-in Audio Replay: A replay of the teleconference will be available beginning at 1:00 p.m. EST November 9, 2009, until 11:59 p.m. EST on November 23, 2009. To access the replay, please call +1 (800) 408-3053. Callers outside of North America should dial +1 (416) 695-5800. The access code is 5486854 followed by the number sign (#).
Forward-Looking Statements Safe Harbour
This news release contains statements that are not based on historical fact and are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this news release, the words "scheduled for", "planned", "will", or "expected" or other variations of these words or other similar expressions are intended to identify forward-looking statements and information. Actual results may differ materially from the expectations expressed or implied in the forward-looking statements as a result of known and unknown risks and uncertainties. Detailed information about some of the known risks and uncertainties is included in the "Risk Factors" section of Telesat Canada's final prospectus filed with the United States Securities and Exchange Commission (SEC) on June 29, 2009 as well as Telesat Canada's other filings with the SEC which can be obtained on the SEC's website at http://www.sec.gov. Readers are specifically referred to those documents. Known risks and uncertainties include but are not limited to: risks associated with operating satellites and providing satellite services, including satellite construction or launch delays, launch failures, in-orbit failures or impaired satellite performance and risks associated with domestic and foreign government regulation. The foregoing list of important factors is not exclusive. The information contained in this news release reflects Telesat's beliefs, assumptions, intentions, plans and expectations as of the date of this news release. Telesat disclaims any obligation or undertaking to update or revise the information herein.
About Telesat (www.telesat.com)
Headquartered in Ottawa, Canada, with offices and facilities around the world, Telesat is the fourth largest fixed satellite services operator. The company provides reliable and secure satellite-delivered communications solutions to broadcast, telecom, corporate and government customers. Telesat has a global state-of-the-art fleet comprised of 12 in-orbit satellites, has 1 more satellite presently under construction, and manages the operations of 13 additional satellites for third parties. Telesat is privately held. Its principal shareholders are Canada's Public Sector Pension Investment Board and Loral Space & Communications Inc. (Nasdaq:LORL).
Telesat Holdings Inc. Consolidated Statements of Earnings (Loss) FOR THE PERIOD ENDED SEPTEMBER 30 (in thousands of Canadian dollars) Three Months Nine Months (unaudited) 2009 2008 2009 2008 ------------------------------------------ ---------------------- Operating revenues Service revenues 181,984 166,660 578,228 483,741 Equipment sales revenues 4,994 5,540 13,982 20,656 ------------------------------------------ ---------------------- Operating revenues 186,978 172,200 592,210 504,397 ------------------------------------------ ---------------------- Amortization 58,526 57,371 183,399 173,433 Operations and administration 55,609 57,684 173,107 176,736 Cost of equipment sales 3,734 4,575 12,150 16,490 ------------------------------------------ ---------------------- Total operating expenses 117,869 119,630 368,656 366,659 ------------------------------------------ ---------------------- Earnings from operations 69,109 52,570 223,554 137,738 Interest expense 67,134 64,083 204,933 185,120 Other expense (income) (211,544) 55,712 (360,505) 107,527 ------------------------------------------ ---------------------- Earnings (loss) before income taxes 213,519 (67,225) 379,126 (154,909) Income tax expense 10,095 (5,121) 27,742 (3,801) ------------------------------------------ ---------------------- Net earnings (loss) applicable to common shares 203,424 (62,104) 351,384 (151,108) ========================================== ======================= Telesat Holdings Inc. Consolidated Balance Sheets (in thousands of Canadian dollars) September 30, December 31, (unaudited) 2009 2008 Assets Current assets Cash and cash equivalents 116,509 98,539 Accounts receivable 60,182 61,933 Current future tax asset 1,877 2,581 Other current assets 29,110 49,187 ------------------------------------------------------------------- Total current assets 207,678 212,240 Satellites, property and other equipment, net 1,930,862 1,883,576 Other long-term assets 40,267 42,303 Intangible assets, net 532,379 582,035 Goodwill 2,446,603 2,446,603 ------------------------------------------------------------------- Total assets 5,157,789 5,166,757 =================================================================== Liabilities Current liabilities Accounts payable and accrued liabilities 62,676 44,455 Other current liabilities 141,974 142,432 Debt due within one year 21,583 23,272 ------------------------------------------------------------------- Total current liabilities 226,233 210,159 Debt financing 3,065,723 3,513,223 Future tax liability 295,406 266,372 Other long-term liabilities 601,640 566,136 Senior preferred shares 141,435 141,435 ------------------------------------------------------------------- Total liabilities 4,330,437 4,697,325 ------------------------------------------------------------------- Shareholders' equity Common shares (74,252,460 common shares issued and outstanding) 756,414 756,414 Preferred shares 541,764 541,764 ------------------------------------------------------------------- 1,298,178 1,298,178 ------------------------------------------------------------------- Accumulated deficit (475,068) (826,452) Accumulated other comprehensive loss (5,762) (7,742) ------------------------------------------------------------------- (480,830) (834,194) ------------------------------------------------------------------- Contributed surplus 10,004 5,448 ------------------------------------------------------------------- Total shareholders' equity 827,352 469,432 =================================================================== Total liabilities and shareholders' equity 5,157,789 5,166,757 =================================================================== Telesat Holdings Inc. Consolidated Statements of Cash Flows FOR THE PERIOD ENDED SEPTEMBER 30 (in thousands of Canadian dollars) Three Months Nine Months (unaudited) 2009 2008 2009 2008 ------------------------------------------- ---------------------- Cash flows from operating activities Net earnings (loss) 203,424 (62,104) 351,384 (151,108) Adjustments to reconcile net earnings (loss) to cash flows from operating activities: Amortization 58,526 57,371 183,399 173,433 Future income taxes 10,525 (6,356) 30,970 (9,170) Unrealized foreign exchange loss (gain) (281,429) 136,542 (467,209) 211,355 Unrealized loss (gain) on derivatives 88,532 (79,514) 131,567 (119,728) Dividends on preferred shares 3,216 2,475 10,141 7,380 Stock-based compensation expense 1,488 -- 4,556 -- Gain (loss) on disposal of assets (36,380) 3,425 (34,658) 695 Other 5,660 (10,206) (10,716) (30,675) Customer prepayments on future satellite services 1,039 2,809 4,348 23,180 Operating assets and liabilities 29,057 43,753 6,937 31,102 ------------------------------------------- ---------------------- 83,658 88,195 210,719 136,464 ------------------------------------------- ---------------------- Cash flows (used in) from investing activities Satellite programs (97,734) (85,138) (218,915) (206,885) Property additions (1,766) (2,720) (4,798) (6,423) Insurance proceeds -- -- -- 4,006 Proceeds on disposals of assets 70,769 24 71,294 4,632 ------------------------------------------- ---------------------- (28,731) (87,834) (152,419) (204,670) ------------------------------------------- ---------------------- Cash flows from (used in) financing activities Debt financing and bank loans -- 50,924 23,880 183,482 Repayment of bank loans and debt financing (7,880) (5,787) (46,341) (76,599) Capital lease payments (10,302) (22,464) (13,816) (27,905) Satellite performance incentive payments (1,353) (977) (4,340) (2,829) ------------------------------------------- ---------------------- (19,535) 21,696 (40,617) 76,149 ------------------------------------------- ---------------------- Effect of changes in exchange rates on cash and cash equivalents 321 781 287 1,659 Increase (decrease) in cash and cash equivalents 35,713 22,838 17,970 9,602 Cash and cash equivalents, beginning of period 80,796 28,967 98,539 42,203 ------------------------------------------- ---------------------- Cash and cash equivalents, end of period 116,509 51,805 116,509 51,805 =========================================== ====================== Supplemental disclosure of cash flow information Interest paid 41,594 45,538 206,750 200,477 Income taxes paid 1,823 245 5,818 1,077 ------------------------------------------- ---------------------- 43,417 45,783 212,568 201,554 ------------------------------------------- ---------------------- The following table reconciles our Net earnings (loss) applicable to common shareholders to our Adjusted EBITDA(1) and presents our Adjusted EBITDA margin(1): FOR ENDED SEPTEMBER 30 (in millions of Canadian dollars) Three Months Nine Months (unaudited) 2009 2008 2009 2008 -------------------------------------------- ------------------- Net earnings (loss) applicable to common shares 203.4 (62.1) 351.4 (151.1) Income Tax Expense 10.1 (5.1) 27.7 (3.8) Other expense (income) (211.5) 55.7 (360.5) 107.5 Interest Expense 67.1 64.1 204.9 185.1 Amortization 58.5 57.4 183.4 173.4 Restructuring charges 0.3 0.1 4.2 1.8 Non cash expense related to stock compensation 1.5 -- 4.6 -- -------------------------------------------- ------------------- Adjusted EBITDA 129.4 110.1 415.7 312.9 ============================================ =================== Operating Revenues 187.0 172.2 592.2 504.4 Adjusted EBITDA Margin 69% 64% 70% 62%
End Notes
(1) The common definition of EBITDA is "Earnings Before Interest, Taxes, Depreciation and Amortization." In evaluating financial performance, we use revenues and deduct certain operating expenses (including making adjustments to operating expenses for stock based compensation expense and unusual and non-recurring items, including restructuring related expenses) to obtain operating loss/income before depreciation and amortization ("Adjusted EBITDA") and Adjusted EBITDA margin (defined as the ratio of Adjusted EBITDA to operating revenues) as measures of our operating performance. Adjusted EBITDA allows us and investors to compare our operating results with that of competitors exclusive of depreciation and amortization, interest and investment income, interest expense, and certain other expenses. Financial results of competitors in our industry have significant variations that can result from timing of capital expenditures, the amount of intangible assets recorded, the differences in assets' lives, the timing and amount of investments, the effects of other income (expense), and unusual and non-recurring items. The use of Adjusted EBITDA assists us and investors to compare operating results exclusive of these items. Competitors in our industry have significantly different capital structures. The use of Adjusted EBITDA improves comparability of performance by excluding interest expense. We believe the use of Adjusted EBITDA and Adjusted EBITDA margin along with GAAP financial measures enhances the understanding of our operating results and is useful to us and investors in comparing performance with competitors, estimating enterprise value and making investment decisions. Adjusted EBITDA as used here may not be the same as similarly titled measures reported by competitors. Adjusted EBITDA should be used in conjunction with GAAP financial measures and is not presented as a substitute for cash flows from operations as a measure of our liquidity or as a substitute for net income as an indicator of our operating performance.