OTTAWA, Aug. 10, 2009 (GLOBE NEWSWIRE) -- Telesat Holdings Inc. (Telesat) today announced its unaudited financial results for the three and six month periods ended June 30, 2009. Unless otherwise stated herein, all amounts are in Canadian Dollars (CAD).
For the three month period ended June 30, 2009, Telesat reported consolidated revenues of $201 million, an increase of approximately 19% ($32 million) compared to the same period in 2008. The increased revenue was primarily the result of the commencement of service on Nimiq 4 in October, 2008 and the impact of the stronger U.S. dollar on the conversion of Telesat's U.S. dollar denominated revenues into Canadian dollars. Telesat also reported Adjusted EBITDA(1) for the second quarter of $142 million, an increase of $38 million (36%) compared to the same quarter last year. Adjusted EBITDA margin(1) was 71% for the quarter, compared to 62% in 2008. Telesat reported net income for the three months ended June 30, 2009 of $187 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 $190 million.
For the six month period ended June 30, 2009, consolidated revenues were $405 million. Adjusted EBITDA for the first half of 2009 was $286 million and the Adjusted EBITDA margin was 71%. Net income was $148 million. Revenues, Adjusted EBITDA, and net income increased by $73 million, $83 million, and $237 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 second quarter and first half of this year. We achieved meaningful growth in revenue, Adjusted EBITDA and our Adjusted EBITDA margin compared to the same periods last year as a result of the entry into service of Nimiq 4, higher utilization of our international satellite fleet and our continued focus on improving our cost structure and operating efficiency. Although the broader economic environment presents certain challenges, Telesat remains well positioned at this time given the strong momentum achieved to date, our significant contractual backlog and the recent addition of Telstar 11N and planned launch of Nimiq 5 later this year."
Business Highlights
* At June 30, 2009:
* Telesat had contracted backlog for future services of
approximately $5.1 billion.
* Fleet utilization was 83% for Telesat's North American fleet,
and 75% for Telesat's international fleet. Telstar 11N entered
into service during the second quarter, increasing the number of
available transponders in the international fleet.
* Nimiq 5 remains under construction and is anticipated to be
launched later this year.
* In July 2009, Telesat announced its decision to procure a
replacement for the Telstar 14/Estrela do Sul satellite at its
current 63 degrees West orbital location. The new high powered
Ku-band satellite will be known as Telstar 14R in most service
regions and Estrela do Sul 2 in Brazil, and will have 58
transponder equivalents (36 MHz). Telesat anticipates the new
satellite will be operational in the second half of 2011. Telesat
has selected Space Systems/Loral as the manufacturer for Telstar
14R and International Launch Services for the satellite's launch
into geostationary orbit.
* In July 2009, Telesat terminated its leasehold 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. As previously reported, Telesat
remains in discussions regarding the potential sale of its
interests in one of its international satellites and related
assets. Any potential transaction is subject to further due
diligence and other conditions and Telesat cannot at this time
assess the probability of concluding any transaction under
discussion or under what terms, including price, these assets may
be sold.
* On August 3, 2009, Telesat Canada completed an offer to exchange
(1) any and all of its US$693 million outstanding principal amount
of restricted 11.0% Senior Notes due 2015 for an equal amount of
registered 11.0% Senior Notes due 2015 and (2) any and all of its
US$217 million outstanding principal amount of restricted 12.5%
Senior Subordinated Notes due 2017 for an equal amount of
registered 12.5% Senior Subordinated Notes due 2017. Holders of
US$683 million outstanding principal amount of the 11.0% Senior
Notes due 2015 and all of the 12.5% Senior Subordinated Notes due
2017 exchanged their restricted notes for registered notes.
Telesat LLC is the co-issuer of the notes.
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 Canada's unaudited Quarterly Report for the three and six month periods ended June 30, 2009 will be posted 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 to discuss its financial results for the three and six months periods ended June 30, 2009 for Monday, August 10, 2009 at 10:30 a.m. EDT. The call will be hosted by Dan 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 (866) 266-1793. Callers outside of North America should dial
+1 (416) 340-2218. The access code is 4012137 followed by the
number sign (#). 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. EDT August 10, 2009, until 11:59 p.m. EDT on August 24,
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 2106624 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 "believes", "expects", "plans", "may", "will", "would", "could", "should", "anticipates", "estimates", "project", "intend" or "outlook" 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. Readers are specifically referred to that document, 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. Known risks and uncertainties include but are not limited to: (1) financial risks, including economic downturns, restrictions imposed by covenants contained in the agreements governing Telesat's debt, Telesat's leverage, volatility in exchange rates, and Telesat's dependence on a few large customers for a significant proportion of its revenue; (2) risks associated with operating satellites and providing satellite services, including satellite construction or launch delays, launch failures, in-orbit failures or impaired satellite performance, the ability to obtain or renew satellite insurance at all or on reasonable terms, and competition from other providers of telecommunications services; (3) risks associated with domestic and foreign government regulation; and (4) other risks, including potential conflicts of interest with Telesat's significant shareholders, litigation, and market risks. 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.
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 Telesat's 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 other expense. 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 allows 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 facilitates 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 comparable to similarly titled measures reported by competitors. Adjusted EBITDA should be used in conjunction with GAAP financial measures and is not presented as an alternative to cash flow from operations as a measure of our liquidity or as an alternative to net income as an indicator of our operating performance.
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 11 in-orbit satellites, has 2 more satellites 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 JUNE 30
(in thousands of Three Months Six Months
Canadian dollars) (unaudited) 2009 2008 2009 2008
------------------------------------------------ -----------------
Operating revenues
Service revenues 197,438 161,892 396,244 317,081
Equipment sales revenues 3,744 7,584 8,988 15,116
------------------------------------------------ -----------------
Operating revenues 201,182 169,476 405,232 332,197
------------------------------------------------ -----------------
Amortization 63,600 57,317 124,873 116,062
Operations and administration 59,259 59,564 117,498 119,052
Cost of equipment sales 4,034 5,879 8,416 11,915
------------------------------------------------ -----------------
Total operating expenses 126,893 122,760 250,787 247,029
------------------------------------------------ -----------------
Earnings from operations 74,289 46,716 154,445 85,168
Interest expense 66,729 55,699 137,799 121,037
Other expense (income) (192,878) (39,051) (148,961) 51,815
------------------------------------------------ -----------------
Earnings (loss) before income
taxes 200,438 30,068 165,607 (87,684)
Income tax expense 13,392 17,658 17,647 1,320
------------------------------------------------ -----------------
Net earnings (loss)
applicable to common shares 187,046 12,410 147,960 (89,004)
------------------------------------------------ -----------------
Telesat Holdings Inc.
Consolidated Balance Sheets
June 30, Dec. 31,
(in thousands of Canadian dollars) (unaudited) 2009 2008
---------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents 80,796 98,539
Accounts receivable 54,532 61,933
Current future tax asset 2,559 2,581
Assets held for sale 44,569 --
Other current assets 35,376 49,187
---------------------------------------------------------------------
Total current assets 217,832 212,240
Satellites, property and other equipment, net 1,873,360 1,883,576
Other long-term assets 35,259 42,303
Intangible assets, net 544,218 582,035
Goodwill 2,446,603 2,446,603
---------------------------------------------------------------------
Total assets 5,117,272 5,166,757
=====================================================================
Liabilities
Current liabilities
Accounts payable and accrued liabilities 42,718 48,792
Other current liabilities 123,376 138,095
Debt due within one year 21,035 23,272
---------------------------------------------------------------------
Total current liabilities 187,129 210,159
Debt financing 3,330,510 3,513,223
Future tax liability 286,355 266,372
Other long-term liabilities 548,295 566,136
Senior preferred shares 141,435 141,435
---------------------------------------------------------------------
Total liabilities 4,493,724 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 (678,492) (826,452)
Accumulated other comprehensive loss (4,654) (7,742)
---------------------------------------------------------------------
(683,146) (834,194)
---------------------------------------------------------------------
Contributed surplus 8,516 5,448
---------------------------------------------------------------------
Total shareholders' equity 623,548 469,432
---------------------------------------------------------------------
Total liabilities and shareholders' equity 5,117,272 5,166,757
=====================================================================
Telesat Holdings Inc.
Consolidated Statements of Cash Flow
FOR THE PERIOD ENDED
JUNE 30
(in thousands of
Canadian dollars) Three Months Six Months
(unaudited) 2009 2008 2009 2008
---------------------------------------------- ---------------------
Cash flows from operating
activities
Net earnings (loss) 187,046 12,410 147,960 (89,004)
Adjustments to reconcile
net earnings (loss) to
cash flows from
operating activities:
Amortization 63,600 57,317 124,873 116,062
Future income taxes 18,598 15,174 20,445 (2,814)
Unrealized foreign
exchange loss (gain) (286,509) (25,214) (185,780) 74,813
Unrealized loss (gain)
on derivatives 96,890 (20,857) 43,035 (40,214)
Dividends on preferred
shares 3,215 2,475 6,925 4,905
Stock-based
compensation expense 1,492 -- 3,068 --
Other (4,745) (13,435) (14,654) (23,199)
Customer prepayments on
future satellite
services -- 2,841 3,309 20,371
Operating assets and
liabilities (53,489) (14,139) (22,121) (12,651)
---------------------------------------------- ---------------------
26,098 16,572 127,060 48,269
---------------------------------------------- ---------------------
Cash flows used in
investing activities
Satellite programs (30,878) (75,766) (121,180) (121,747)
Property additions (1,418) (1,478) (3,032) (3,703)
Insurance proceeds -- 4,006 -- 4,006
Proceeds on disposals
of assets 522 3,948 525 4,608
---------------------------------------------- ---------------------
(31,774) (69,290) (123,687) (116,836)
---------------------------------------------- ---------------------
Cash flows from (used in)
financing activities
Debt financing and bank
loans 23,880 61,475 23,880 132,558
Repayment of bank loans
and debt financing (29,706) (17,444) (38,461) (70,812)
Capital lease payments (1,078) (2,488) (3,514) (5,441)
Satellite performance
incentive payments (1,765) (1,659) (2,987) (1,852)
---------------------------------------------- ---------------------
(8,669) 39,884 (21,082) 54,453
---------------------------------------------- ---------------------
Effect of changes in
exchange rates on cash
and cash equivalents (633) (635) (34) 878
Increase (decrease) in
cash and cash
equivalents (14,978) (13,469) (17,743) (13,236)
Cash and cash
equivalents, beginning
of period 95,774 42,436 98,539 42,203
---------------------------------------------- ---------------------
Cash and cash
equivalents, end of
period 80,796 28,967 80,796 28,967
============================================== =====================
Supplemental disclosure
of cash flow information
Interest paid 118,852 72,825 165,156 114,794
Income taxes paid 1,323 345 3,995 832
---------------------------------------------- ---------------------
120,175 73,170 169,151 115,626
---------------------------------------------- ---------------------
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 THE PERIOD ENDED JUNE 30 (in thousands of Canadian Three Months Six Months dollars) (unaudited) 2009 2008 2009 2008 ------------------------------------------------ ----------------- Net earnings (loss) applicable to common shares 187,046 12,410 147,960 (89,004) Income tax expense 13,392 17,658 17,647 1,320 Other expense (income) (192,878) (39,051) (148,961) 51,815 Interest expense 66,729 55,699 137,799 121,037 Amortization 63,600 57,317 124,873 116,062 Unusual & non-recurring items 3,083 481 3,876 1,709 Non-cash expense related to stock compensation 1,492 -- 3,068 -- ------------------------------------------------ ----------------- Adjusted EBITDA 142,464 104,514 286,262 202,939 Operating revenues 201,182 169,476 405,232 332,197 Adjusted EBITDA margin 71% 62% 71% 61% Note: Unusual & non-recurring Items are restructuring related expenses