GlobeNewswire
2010-03-13
Telesat and Space Systems/Loral Continue Strong Performance
NEW YORK, March 12, 2010 (GLOBE NEWSWIRE) -- Loral Space &
Communications Inc. (Nasdaq:LORL) today reported its financial results
for the year and fourth quarter ended December 31, 2009.
Reported revenues, net income and diluted earnings per share were $993
million, $232 million and $7.73 in 2009, compared to revenues, net loss
and diluted loss per share of $869 million, $(693) million and $(35.13)
in 2008. Reported revenues, net income, and diluted earnings per share
were $260 million, $60 million, and $1.97 for the fourth quarter of
2009, compared to revenues, net loss and diluted loss per share of $230
million, $(629) million and $(31.13) for the fourth quarter of 2008.
Net income for 2009 benefited from changes in foreign exchange rates
principally related to Telesat debt. Net losses in 2008 were negatively
impacted by changes in foreign exchange rates, principally related to
Telesat debt, and non-cash impairment charges at both Space
Systems/Loral (SS/L) and Telesat.
Notable achievements for the year include:
-- Telesat and SS/L financial results continued to reflect strong
performance.1
-- SS/L doubled its Adjusted EBITDA2 compared to 2008 and Adjusted EBITDA
as reported by Telesat, in accordance with Canadian GAAP, increased by
25 percent.
-- Two new Telesat satellites entered into service and Telesat contracted
to build two additional satellites.
-- SS/L booked seven satellite orders.
-- Strong bookings resulted in both SS/L and Telesat increasing their
already robust backlogs reported at the end of 2008.
-- Loral had notable cash flow, ending the year with $168 million in cash,
$51 million more than year end 2008. Loral also repaid $55 million of
borrowings, invested $44 million in capital expenditures, and increased
the long term orbital receivable asset by $59 million.
-- Loral signed an agreement to lease to a Canadian broadband provider
approximately 35-75 percent of the Canadian coverage portion of the
ViaSat-1 satellite that will provide CAD 133 million to CAD 262 million
over the 15-year life of the satellite.
Combined segment revenues and Adjusted EBITDA, including both the
satellite manufacturing segment and 100 percent of the satellite
services segment, for the year were $1.700 billion and $557 million
respectively, up from $1.567 billion and $467 million respectively in
2008. Combined revenues and Adjusted EBITDA for the fourth quarter of
2009 were $447 million and $166 million respectively, up from $412
million and $133 million respectively for the fourth quarter of 2008.
Loral includes all of Telesat's revenue and Adjusted EBITDA in segment
results. Loral's income statement, however, reflects its 64 percent
economic interest in Telesat under the equity method of accounting.
Loral's revenues and Adjusted EBITDA for the year, excluding any
recognition of its ownership in Telesat, were $993 million and $68
million respectively, compared to $869 million and $38 million
respectively in 2008. On the same basis, for the fourth quarter of
2009, revenues and Adjusted EBITDA were $260 million and $30 million
respectively, compared to $230 million and $18 million respectively for
the fourth quarter of 2008. The eliminations include all of Telesat's
results as well as the impact on SS/L's results of Loral's portion of
the ViaSat-1 construction contract.
"SS/L and Telesat continue to deliver outstanding performance," said
Michael B. Targoff, chief executive officer of Loral Space &
Communications. "When you add together 64 percent of the value of
Telesat, as indicated by its EBITDA and debt level, with the value of
SS/L and our other assets, the success of our strategy for shareholder
value creation is evident. Moreover, 2009 operating results and year
end backlog buoy our expectations for continued growth."
Business Unit Review
Satellite Manufacturing
Space Systems/Loral (SS/L) continues its leadership in providing
high-power commercial satellites. In 2009, the company booked seven
satellite contracts, which accounted for approximately 30 percent of
the worldwide mid-to-high power commercial satellite contracts awarded.
In the fourth quarter of 2009, SS/L was awarded two contracts for
satellites for direct-to-home television service, one for EchoStar and
the other for Telesat. Contracts awarded during the year were for five
different well-established operators including AsiaSat, Intelsat,
Hughes Network Systems, Telesat and EchoStar Corporation. These include
satellites for direct-to-home television, broadband access, and
standard fixed satellite services applications.
SS/L's revenue in 2009 was $1.009 billion, a 14 percent increase over
2008 revenues of $881 million. Adjusted EBITDA for SS/L doubled to $91
million from $45 million in 2008. SS/L's revenue and Adjusted EBITDA
for the fourth quarter of 2009 were $263 million and $36 million
respectively, compared to $235 million and $21 million respectively for
the same period last year. Backlog on Dec. 31, 2009 was $1.632 billion
compared to $1.381 at the end of 2008.
"On top of good performance, SS/L's results were enhanced by scope
changes on certain contracts, and other items totaling approximately
$25 million, that we cannot expect to be repeated," said Michael
Targoff. "Thus, while we believe SS/L's performance will continue to
benefit from margin improvement initiatives and increased sales volume,
it is unlikely that our improved performance will replace the full
amount of these beneficial items."
Satellite Services
Telesat also had a strong year in 2009. The company benefited from its
new satellites including a full year's revenue from Nimiq 4, and the
entry into service of Telstar 11N and Nimiq 5. The growth in revenue
from these satellites was offset in part by the loss of revenue from
the sale of Telstar 10.
With the addition of the new satellites and continuing cost reduction
initiatives, Telesat's operating performance continued to show
significant improvement. Telesat's reported Adjusted EBITDA margin
increased from 63 percent in 2008 to 71 percent in 2009. For the fourth
quarter, Adjusted EBITDA margin increased from 65 percent in 2008 to 74
percent in 2009.
In 2009 Telesat invested in its growth by contracting for two new
satellites, Telstar 14R, which is expected to enter into service in the
second half of 2011, and Nimiq 6, which is scheduled for launch in 2012
and is fully contracted to Bell TV. Year end backlog increased to CAD
5.508 billion (U.S. $5.230 billion), compared to the backlog at the end
of 2008 which was CAD 5.251 billion (U.S. $4.207 billion).
In 2009 Telesat revenues for the year were CAD 789 million (U.S. $692
million) compared to CAD 731 million (U.S. $685 million) in 2008.
Adjusted EBITDA was CAD 557 million (U.S. $488 million) compared to CAD
456 million (U.S. $427 million) in 2008. Telesat's revenues for the
fourth quarter of 2009 were CAD 195 million (U.S. $184), compared to
CAD 213 million (U.S. $177 million) in 2008. Adjusted EBITDA for the
fourth quarter was CAD 145 million (U.S. $136 million) compared to
Adjusted EBITDA of CAD 137 million (U.S. $114 million) in 2008. Telesat
had interest expense of U.S. $228 million for the year and U.S. $61
million for the quarter compared to U.S. $231 million for the year and
U.S. $57 million for the quarter in 2008.
Telesat continues to reduce leverage through the growth of Adjusted
EBITDA and the accumulation of cash. During 2009 the ratio of net debt
to Adjusted EBITDA decreased from 7.3 times to less than 5.5 times. In
addition, Adjusted EBITDA exceeded interest expense by more than two
times. Telesat ended the year with CAD 154 million in cash and no
drawings under its CAD 153 million revolver. Over the next four years,
less than 10 percent of Telesat's CAD 3 billion debt is required to be
repaid.
Conference Call
Loral's chief executive officer Michael B. Targoff will host a
conference call and web cast on Monday, March 15, at 11:00 a.m. ET to
discuss the company's fourth quarter and year end 2009 results. To
participate, please dial (973) 200-3060 or toll free at (877) 831-3841
approximately ten minutes prior to the scheduled start of the call. A
listen-only web cast of the call is available on the Investor Relations
section of Loral's web site (www.loral.com) under "Events &
Presentations." A replay of the web cast will be available for 30 days.
A full discussion of Loral's results is contained in the company's Form
10-K, which will be available on the company's web site at
www.loral.com or on the SEC's EDGAR service at www.sec.gov.
About Loral Space & Communications
Loral Space & Communications is a satellite communications company. It
is a world-class leader in the design and manufacture of satellites and
satellite systems for commercial and government applications including
direct-to-home television, broadband communications, wireless
telephony, weather monitoring and air traffic management. Loral also
owns 64 percent of Telesat Canada, a global operator of
telecommunications and direct broadcast satellites used to distribute
video entertainment programming, broadband data, and provide access to
Internet services and other value-added communications services. For
more information, visit Loral's web site at www.loral.com.
LORL-F
This document contains forward-looking statements within the meaning of
the U.S. Private Securities Litigation Reform Act of 1995. When used in
this press 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. In addition, Loral Space & Communications
Inc. or its representatives have made or may make forward-looking
statements, orally or in writing, which may be included in, but are not
limited to, various filings made from time to time with the Securities
and Exchange Commission, and press releases or oral statements made
with the approval of an authorized executive officer of the company.
Actual results may differ materially from anticipated results as a
result of certain risks and uncertainties which are described as "Risk
Factors" and in the "Commitments and Contingencies" note to our
financial statements in the company's annual report on Form 10-K for
the fiscal year ended December 31, 2009. The reader is specifically
referred to this document, as well as the Company's other filings with
the Securities and Exchange Commission.
Risks and uncertainties include but are not limited to (1) risks
associated with financial factors and our investment in Telesat,
including global economic conditions, our history of losses, financial
covenants in SS/L's credit agreement, the structure of our investment
in Telesat, Telesat's leverage and volatility in Canadian/U.S. exchange
rates; (2) risks associated with satellite manufacturing, including
competition, contractual risks, creditworthiness of customers,
performance of suppliers and management of our factory and personnel;
(3) risks associated with satellite services, including dependence on
large customers, launch delays and failures, in-orbit failures and
competition; (4) regulatory risks, such as the effect of U.S. export
control and economic sanction laws and U.S., Canadian and foreign
government regulation of satellite services; and (5) other risks,
including possible conflicts of interest with our significant
shareholder, litigation and market risks. The foregoing list of
important factors is not exclusive. Furthermore, Loral operates in an
industry sector where securities values may be volatile and may be
influenced by economic and other factors beyond Loral's control.
1Telesat reports its results in accordance with Canadian GAAP. However,
all of Telesat's results, unless otherwise noted are reflected in this
press release in accordance with U.S GAAP.
2The common definition of EBITDA is "Earnings Before Interest, Taxes,
Depreciation and Amortization". In evaluating financial performance, we
use revenues and operating income (loss) before depreciation,
amortization and stock-based compensation (including stock-based
compensation from SS/L Phantom SARs expected to be settled in Loral
common stock) ("Adjusted EBITDA") as the measure of a segment's profit
or loss. Adjusted EBITDA is equivalent to the common definition of
EBITDA before: goodwill and other impairment charges; gain on foreign
exchange contracts; gains or losses on litigation not related to our
operations, impairment of available for sale securities; loss on
extinguishment of debt; other income (expense) and equity in net income
(losses) of affiliates.
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,
goodwill and other impairment charges, gains or losses on foreign
exchange contracts, gains or losses on litigation not related to our
operations, impairments of available for sale securities, other income
(expense) and equity in net income (losses) of affiliates. 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), which are typically for non-recurring transactions not
related to the on-going business, and effects of investments not
directly managed. 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 maintains comparability of performance by excluding
interest expense.
We believe the use of Adjusted EBITDA along with U.S. 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. We also use Adjusted EBITDA to evaluate
operating performance of our segments, to allocate resources and
capital to such segments, to measure performance for incentive
compensation programs and to evaluate future growth opportunities.
Adjusted EBITDA should be used in conjunction with U.S. 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.
LORAL SPACE & COMMUNICATIONS INC.
Statements of Operations
(In millions)
Revenues
---------------------------
Three Months Ended Year Ended December
December 31, 31,
-------------------- ----------------------
2009 2008 2009 2008
-------- ---------- ---------- ----------
Satellite Manufacturing $ 262.9 $ 235.1 $ 1,008.7 $ 881.4
Satellite Services (1) 183.7 176.6 691.6 685.2
-------- ---------- ---------- ----------
Segment revenues 446.6 411.7 1,700.3 1,566.6
Eliminations (2.7) (4.8) (15.3) (12.0)
Affiliate eliminations (1) (183.7) (176.6) (691.6) (685.2)
-------- ---------- ---------- ----------
Revenues as reported $ 260.2 $ 230.3 $ 993.4 $ 869.4
======== ========== ========== ==========
Adjusted EBITDA
---------------------------
Three Months Ended Year Ended December
December 31, 31,
-------------------- ----------------------
2009 2008 2009 2008
-------- ---------- ---------- ----------
Satellite Manufacturing $ 36.4 $ 20.6 $ 90.6 $ 45.1
Satellite Services:
Loral Skynet -- 3.1 -- 9.3
Telesat (1) 136.1 114.0 488.1 427.2
-------- ---------- ---------- ----------
Satellite Services 136.1 117.1 488.1 436.5
Corporate expenses (6.2) (5.2) (21.4) (14.9)
-------- ---------- ---------- ----------
Segment Adjusted EBITDA
before eliminations 166.3 132.5 557.3 466.7
Eliminations (0.3) (0.8) (1.7) (1.6)
Affiliate eliminations (1) (136.1) (114.0) (488.1) (427.2)
-------- ---------- ---------- ----------
Adjusted EBITDA $ 29.9 $ 17.7 $ 67.5 $ 37.9
======== ========== ========== ==========
Reconciliation of Adjusted
EBITDA to Net Income
(Loss)
---------------------------
Three Months Ended Year Ended December
December 31, 31,
-------------------- ----------------------
2009 2008 2009 2008
-------- ---------- ---------- ----------
Adjusted EBITDA $ 29.9 $ 17.7 $ 67.5 $ 37.9
Depreciation, amortization
and stock-based
compensation (11.4) (11.7) (47.3) (44.0)
Impairment of goodwill -- (187.9) -- (187.9)
-------- ---------- ---------- ----------
Operating income (loss) 18.5 (181.9) 20.2 (194.0)
Interest and investment
income 2.8 1.7 8.3 11.9
Interest expense (0.7) (1.1) (1.4) (2.3)
(Loss) gain on litigation -- (19.5) -- 38.8
Impairment of available for
sale securities -- (1.3) -- (5.8)
Other expense -- 0.2 (0.1) (0.1)
Income tax benefit
(provision) 1.5 (32.8) (5.6) (45.7)
Equity in net income
(losses) of affiliates 37.7 (394.7) 210.3 (495.7)
-------- ---------- ---------- ----------
Net income (loss) $ 59.8 $ (629.4) $ 231.7 $ (692.9)
======== ========== ========== ==========
(1) The Satellite Services segment includes Telesat Revenues and Adjusted
EBITDA, which are eliminated in our consolidated financial statements,
where we report our 64% share of Telesat under the equity method of
accounting.
LORAL SPACE & COMMUNICATIONS INC.
Supplemental Financial Data
(In millions)
December December
31, 2009 31, 2008
---------- ----------
FUNDED BACKLOG
Satellite Manufacturing $ 1,632.3 $ 1,381.1
Satellite Services 5,230.0 4,207.0
---------- ----------
Total funded backlog 6,862.3 5,588.1
Intercompany eliminations (9.6) (24.9)
Affiliate eliminations (5,230.0) (4,207.0)
---------- ----------
NET FUNDED BACKLOG $ 1,622.7 $ 1,356.2
========== ==========
Condensed Balance Sheets
(In millions)
December December
31, 2009 31, 2008
---------- ----------
Cash and equivalents $ 168.2 $ 117.5
Contracts-in-process 190.8 213.7
Other current assets 108.0 164.0
---------- ----------
Total current assets 467.0 495.2
Property, plant &
equipment, net 208.0 188.3
Long-term receivables 248.1 184.7
Investments in affiliates 282.0 72.6
Other assets 48.4 55.1
---------- ----------
Total assets $ 1,253.5 $ 995.9
========== ==========
Customer advances and
billings in excess of
costs and profits $ 291.0 $ 184.6
Other current liabilities 150.3 164.8
---------- ----------
Total current liabilities 441.3 349.4
Long-term debt -- 55.0
Other long-term
liabilities 380.2 381.8
---------- ----------
Total liabilities 821.5 786.2
Equity 432.0 209.7
---------- ----------
Total liabilities and
equity $ 1,253.5 $ 995.9
========== ==========
TELESAT
Summary Financial Information
(In millions)
Summary financial information in US$ and in accordance with US GAAP
follows (in millions):
Three Months Ended Year Ended
December 31, December 31,
-------------------- ------------------------
2009 2008 2009 2008
-------- ---------- ----------- -----------
Statement of Operations:
--------------------------
Revenues $ 183.7 $ 176.6 $ 691.6 $ 685.2
======== ========== =========== ===========
Adjusted EBITDA $ 136.1 $ 114.0 $ 488.1 $ 427.2
Depreciation, amortization
and stock-based
compensation (69.3) (55.7) (230.1) (226.0)
Gain (loss) on disposition
of long-lived assets (0.3) -- 29.3 --
Impairment of long-lived
and intangible assets -- (454.9) -- (454.9)
-------- ---------- ----------- -----------
Operating income 66.5 (396.6) 287.3 (253.7)
Interest expense (61.4) (56.7) (228.0) (231.1)
Other income (expense),
net (1) 40.0 (302.3) 289.5 (403.1)
Income tax (provision)
recovery 22.8 138.6 (2.2) 139.9
-------- ---------- ----------- -----------
Net income (loss) $ 67.9 $ (617.0) $ 346.6 $ (748.0)
======== ========== =========== ===========
(1) Other income (expense), net includes non-cash foreign exchange gains
(losses) of $45.0 million and $(432.5) million for the three months ended
December 31, 2009 and 2008, respectively, and $439.2 million and $(654.2)
million for the twelve months ended December 31, 2009 and 2008,
respectively, and non cash (losses) gains on financial instruments of
$(6.7) million and $137.2 million for the three months ended December 31,
2009 and 2008, respectively and $(149.0) million and $254.7 million for
the twelve months ended December 31, 2009 and 2008, respectively.
December December
31, 2009 31, 2008
----------- -----------
Balance Sheet Data:
--------------------------
Current assets $ 251.6 $ 179.8
Total assets 4,994.7 4,273.2
Current liabilities 195.9 171.4
Debt, including current
portion 2,953.3 2,901.6
Total liabilities 4,041.9 3,760.2
Redeemable preferred stock 134.3 116.0
Shareholders' equity 818.5 397.0
Other:
--------------------------
Backlog (U.S. Dollar) $ 5,230.0 $ 4,207.0
Backlog (Canadian Dollar) CAD 5,508.0 CAD 5,251.0
CONTACT: Loral Space & Communications Inc.
Wendy Lewis
650-704-7502
lewisw@ssd.loral.com
