Telesat Achieves Record Financial Results in 2009
GlobeNewswire
2010-03-03
OTTAWA, March 3, 2010 (GLOBE NEWSWIRE) -- Telesat Holdings Inc.
(Telesat) today announced its financial results for the three month and
one year periods ended December 31, 2009. Unless otherwise stated
herein, all amounts are in Canadian dollars.
For the one year period ended December 31, 2009, Telesat reported
consolidated revenues of $787 million, an increase of approximately 11%
($76 million) compared to the same period in 2008. Increased revenues
were primarily from Telesat's three new satellites (Nimiq 4 launched in
late 2008 as well as Telstar 11N and Nimiq 5 launched in 2009) and
foreign exchange rate movements, offset by the sale of Telesat's
interest in Telstar 10, the removal of Nimiq 3 from service, and lower
North American enterprise revenues. In 2009, operating expenses were
approximately $37 million (14%) less than 2008, primarily as a result
of lower compensation and administrative expenses and reduced revenue
related expenses. Adjusted EBITDA1 for 2009 was $560 million, an
increase of 25% ($113 million) and the Adjusted EBITDA margin1 was 71%,
compared to 63% for 2008. Net income was $414 million, compared to a
loss of $822 million in 2008. 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
$366 million, compared to a loss of $446 million in 2008. No asset
impairment losses were recorded in 2009, compared to a $485 million
loss in 2008.
For the three month period ended December 31, 2009, Telesat reported
consolidated revenues of $195 million, a decrease of approximately 6%
($12 million) compared to the same period in 2008. The year over year
decrease was primarily the result of the sale of Telesat's interest in
Telstar 10, the removal of Nimiq 3 from service, lower North American
enterprise revenues and foreign exchange rate movements, offset by
revenues from Telstar 11N and the recently launched Nimiq 5 satellite.
Adjusted EBITDA for the fourth quarter was $145 million, an increase of
$10 million (8%) compared to the same quarter last year, a result of a
$22 million (31%) reduction in expenses primarily related to lower
revenue related expenses and certain one time reductions in
compensation costs. Telesat reported net income for the three months
ended December 31, 2009 of $63 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 $37 million.
"2009 was a record year for Telesat," commented Dan Goldberg, Telesat's
President and CEO. "We achieved the highest levels of revenue and
EBITDA in our history, launched and brought into service two new
satellites, and meaningfully increased our operating efficiencies and
EBITDA margin. With the recent entry into service of Telstar 11N and
Nimiq 5, the future launch of the Telstar 14R and Nimiq 6 satellites
presently under construction, and our continued operating discipline
and focused execution, we believe Telesat remains well positioned for
2010 and beyond."
Business Highlights
-- At December 31, 2009:
-- Telesat had contracted backlog for future services of approximately $5.5
billion.
-- Fleet utilization was 84% for Telesat's North American fleet and 74% for
Telesat's international fleet.
-- In December 2009, Telesat procured Nimiq 6, a new direct broadcast
satellite from Space Systems/Loral (SS/L) for delivery in mid-2012.
Nimiq 6 will utilize the proven SS/L 1300 platform and will provide 32
high powered Ku-band transponders during its planned 15 year mission
life. Bell TV has agreed to lease all of the capacity on Nimiq 6 for its
lifetime. Nimiq 6 will result in meaningful incremental revenue and
EBITDA for Telesat and has significantly increased Telesat's already
industry leading contractual backlog to revenue ratio.
-- Nimiq 5 was successfully launched in September 2009 and entered
commercial service at the 72.7 degrees West orbital location on October
10, 2009. EchoStar Corporation has committed to use all of the Nimiq 5
capacity for the 15-year manufacturer's design life of the satellite.
-- 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. Telstar 14R is anticipated to be operational in the second half
of 2011 and will have substantially more capacity and greater
flexibility than Telstar 14.
-- 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 total proceeds of approximately US$69
million.
-- In February 2009, Telesat successfully launched Telstar 11N, which
entered commercial service on March 31, 2009.
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 Annual Report on Form 20-F for the year ended
December 31, 2009 on its website at www.telesat.com under the tab
"Media Room" in the "Investor Relations" section. This information will
also be filed with the U.S. Securities and Exchange Commission and may
be accessed at the SEC's website at www.sec.gov.
Telesat has scheduled a conference call to discuss its financial
results for the three month and one year periods ended December 31,
2009 and other recent developments for Wednesday, March 3, 2010 at
10:30 a.m. EST. 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 4047784. 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.
ET March 3, 2010, until 11:59 p.m. ET on March 17, 2010. 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 Harbor
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", "believe",
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 Form 20-F for the period ended
December 31, 2009, filed with the United States Securities and Exchange
Commission (SEC) on March 3, 2010. This filing can be obtained on the
SEC's website at http://www.sec.gov. 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 of 12
satellites, with two more 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 DECEMBER 31 Three Months Twelve Months
(in thousands of Canadian dollars)
(unaudited) 2009 2008 2009 2008
Operating revenues
Service revenues 188,910 197,050 767,138 680,791
Equipment sales revenues 6,078 9,928 20,060 30,584
------------------------------------- --------- ---------- ---------- ----------
Total operating revenues 194,988 206,978 787,198 711,375
------------------------------------- --------- ---------- ---------- ----------
Amortization 73,468 62,207 256,867 235,640
Operations and administration 46,583 70,814 219,690 247,550
Cost of equipment sales 4,230 7,878 16,380 24,368
Impairment loss on long-lived assets -- 2,373 -- 2,373
Impairment loss on intangible assets -- 483,000 -- 483,000
------------------------------------- --------- ---------- ---------- ----------
Total operating expenses 124,281 626,272 492,937 992,931
------------------------------------- --------- ---------- ---------- ----------
Earnings (loss) from operations 70,707 (419,294) 294,261 (281,556)
Interest expense (68,635) (72,521) (273,568) (257,641)
(Loss) gain on financial instruments (2,903) 131,958 (134,402) 251,686
Gain (loss) on foreign exchange 40,054 (472,262) 500,862 (698,056)
Other income (expense) 663 (252) 31,859 (1,713)
------------------------------------- --------- ---------- ---------- ----------
Earnings (loss) before income taxes 39,886 (832,371) 419,012 (987,280)
Income tax (expense) recovery 22,793 161,078 (4,949) 164,879
------------------------------------- --------- ---------- ---------- ----------
Net earnings (loss) applicable to
common shares 62,679 (671,293) 414,063 (822,401)
===================================== ========= ========== ========== ==========
Telesat Holdings Inc.
Consolidated Balance Sheets
December December
31, 31,
(in thousands of Canadian
dollars) (unaudited) 2009 2008
--------------------------- ---------- ----------
Assets
Current assets
Cash and cash equivalents 154,189 98,539
Accounts receivable 70,203 61,933
Current future tax asset 2,184 2,581
Other current assets 29,018 49,187
--------------------------- ---------- ----------
Total current assets 255,594 212,240
Satellites, property and
other equipment, net 1,926,190 1,883,576
Other long-term assets 41,010 42,303
Intangible assets, net 510,675 582,035
Goodwill 2,446,603 2,446,603
--------------------------- ---------- ----------
Total assets 5,180,072 5,166,757
=========================== ========== ==========
Liabilities
Current liabilities
Accounts payable and
accrued liabilities 43,413 44,455
Other current liabilities 127,704 142,432
Debt due within one year 23,602 23,272
--------------------------- ---------- ----------
Total current liabilities 194,719 210,159
Debt financing 3,013,738 3,513,223
Future tax liability 269,193 266,372
Other long-term liabilities 671,523 566,136
Senior preferred shares 141,435 141,435
--------------------------- ---------- ----------
Total liabilities 4,290,608 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 (412,389) (826,452)
Accumulated other
comprehensive loss (7,422) (7,742)
--------------------------- ---------- ----------
(419,811) (834,194)
--------------------------- ---------- ----------
Contributed surplus 11,097 5,448
--------------------------- ---------- ----------
Total shareholders' equity 889,464 469,432
--------------------------- ---------- ----------
Total liabilities and
shareholders' equity 5,180,072 5,166,757
=========================== ========== ==========
Telesat Holdings Inc.
Consolidated Statements of Cash Flows
FOR THE PERIOD ENDED DECEMBER 31 Three Months Twelve Months
(in thousands of Canadian dollars)
(unaudited) 2009 2008 2009 2008
------------------------------------- --------- ---------- ---------- ----------
Cash flows from operating activities
Net earnings (loss) 62,679 (671,293) 414,063 (822,401)
Adjustments to reconcile net earnings
(loss)
to cash flows from operating
activities:
Gross profit on sales-type lease
Amortization 73,468 62,207 256,867 235,640
Future income taxes (26,372) (166,781) 4,598 (175,951)
Unrealized foreign exchange (gain)
loss (56,923) 484,090 (524,132) 695,445
Unrealized loss (gain) on
derivatives 2,835 (128,203) 134,402 (247,931)
Dividends on senior preferred shares 3,399 2,475 13,540 9,855
Stock-based compensation expense 1,093 5,448 5,649 5,448
Loss/(Gain) on disposal of assets 1,228 (443) (33,430) 252
Impairment losses -- 485,373 -- 485,373
Other (35,299) (13,444) (46,015) (44,119)
Customer prepayments on future
satellite services 78,618 65,407 82,966 88,587
Customer refunds (17,566) -- (17,566) --
Operating assets and liabilities 372 (1,374) 7,203 48,859
------------------------------------- --------- ---------- ---------- ----------
87,532 123,462 298,145 279,057
------------------------------------- --------- ---------- ---------- ----------
Cash flows (used in) from investing
activities
Satellite programs (39,168) (56,878) (258,083) (263,763)
Property additions (1,320) (2,439) (6,118) (8,862)
Proceeds on disposals of assets -- 488 71,400 5,120
Insurance proceeds -- -- -- 4,006
------------------------------------- --------- ---------- ---------- ----------
(40,488) (58,829) (192,801) (263,499)
------------------------------------- --------- ---------- ---------- ----------
Cash flows from (used in) financing
activities
Debt financing and bank loans -- 3,205 23,880 186,687
Repayment of bank loans and debt
financing (7,514) (14,961) (53,855) (91,560)
Capitalized debt issuance costs -- -- -- (19,131)
Capital lease payments (804) (3,049) (14,620) (30,954)
Satellite performance incentive
payments (1,078) (695) (5,418) (3,524)
Preferred dividends paid -- -- -- --
------------------------------------- --------- ---------- ---------- ----------
(9,396) (15,500) (50,013) 41,518
------------------------------------- --------- ---------- ---------- ----------
Effect of changes in exchange rates
on cash and cash equivalents 32 (2,399) 319 (740)
Increase in cash and cash equivalents 37,680 46,734 55,650 56,336
Cash and cash equivalents, beginning
of period 116,509 51,805 98,539 42,203
------------------------------------- --------- ---------- ---------- ----------
Cash and cash equivalents, end of
period 154,189 98,539 154,189 98,539
===================================== ========= ========== ========== ==========
Supplemental disclosure of cash flow
information
Interest paid 80,983 86,307 287,733 286,784
Income taxes paid 681 7,789 6,499 8,866
------------------------------------- --------- ---------- ---------- ----------
81,664 94,096 294,232 295,650
------------------------------------- --------- ---------- ---------- ----------
The following table reconciles our Net earnings (loss) applicable to
common shareholders to our Adjusted EBITDA1 and presents our Adjusted
EBITDA margin1:
FOR THE YEAR ENDED DECEMBER 31 Three Months Twelve Months
(in thousands of Canadian dollars) 2009 2008 2009 2008
---------------------------------- --------- ---------- ---------- ----------
Net earnings (loss) applicable to
common shares 62,679 (671,293) 414,063 (822,401)
Income tax expense (recovery) (22,793) (161,078) 4,949 (164,879)
Loss (gain) on financial
instruments 2,903 (131,958) 134,402 (251,686)
Loss (gain)on foreign exchange (40,054) 472,262 (500,862) 698,056
Other expense (income) (663) 252 (31,859) 1,713
Interest Expense 68,635 72,521 273,568 257,641
Amortization 73,468 62,207 256,867 235,640
Impairment losses -- 485,373 -- 485,373
Unusual & non-recurring items (589) 715 3,563 2,559
Non cash expense related to stock
compensation 1,093 5,448 5,649 5,448
---------------------------------- --------- ---------- ---------- ----------
Adjusted EBITDA 144,679 134,449 560,340 447,464
---------------------------------- --------- ---------- ---------- ----------
---------------------------------- --------- ---------- ---------- ----------
Operating Revenues 194,988 206,978 787,198 711,375
Adjusted EBITDA Margin 74% 65% 71% 63%
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.
CONTACT: Telesat Holdings Inc.
Michael Bolitho
+1 (613) 748-8700 ext. 2336
ir@telesat.com
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