Telesat Reports Results for the Second Quarter Ended June 30, 2013 OTTAWA, Aug. 1, 2013 (GLOBE NEWSWIRE) -- Telesat Holdings Inc. ("Telesat") (TELSAT 11 11/01/15 Corp) (TELSAT 12 1/2 11/01/17 Corp) today announced its financial results for the three and six month periods ended June 30, 2013. All amounts are in Canadian dollars and are reported under International Financial Reporting Standards ("IFRS") unless otherwise noted. For the quarter ended June 30, 2013, Telesat reported consolidated revenues of $216 million, an increase of approximately 7% ($14 million) compared to the same period in 2012. Revenue growth was principally the result of the entry into commercial service of the Nimiq 6 and Anik G1 satellites in June 2012 and May 2013, respectively. Operating expenses of $49 million were 6% ($3 million) lower than for the same period in 2012 related primarily to lower compensation expenses. Adjusted EBITDA^1 was $172 million, an increase of 10% ($16 million) over the same period in 2012. The Adjusted EBITDA margin^1 for the second quarter of 2013 was 80%, compared to 77% in the same period in 2012. For the six month period ended June 30, 2013, consolidated revenues were $435 million, an increase of approximately 9% ($37 million) compared to the same period in 2012, primarily reflecting the addition of the Nimiq 6 satellite in 2012, the addition of the Anik G1 satellite in 2013, and higher equipment sales. Operating expenses were $99 million, a decrease of 27% ($36 million) compared to 2012 related primarily to special compensation payments to executives and certain employees in connection with the cash distribution made to Telesat's shareholders in 2012. The Adjusted EBITDA margin^1 for the first half of 2013 was 79%, compared to 78% in the same period in 2012. Telesat's net income for the quarter was $15 million compared to net loss of $244 million for the quarter ended June 30, 2012. For the six month period ended June 30, 2013, the net loss was $83 million, compared to a net loss of $145 million in 2012. Results in both the second quarter and first half of 2013 were favorably impacted by an increase in revenues, lower operating expenses, reduced losses on refinancing and by non-cash gains on changes in the fair value of financial instruments, partially offset by increased non-cash losses on foreign exchange related to the translation of Telesat's US dollar denominated debt balances into Canadian dollars. "I am very pleased with the meaningful growth in revenue and Adjusted EBITDA we achieved in the second quarter compared to the same period last year," commented Dan Goldberg, Telesat's President and CEO. "In light of our strong growth in the first half of the year, the recent entry into service of our Anik G1 satellite, and our industry-leading contractual backlog, we are well positioned to continue to grow our business this year and beyond." Business Highlights *Telesat has contracted with Astrium SAS to procure a powerful, multi-mission satellite that will replace and expand on Telstar 12 at 15 degrees West. This new state-of-the-art satellite, which Telesat expects to launch in late 2015, will utilize high throughput capabilities and offer superior performance to meet the growing needs of broadcast, corporate, government and enterprise users, including demand for aero and maritime services. The satellite will offer a high level of flexibility with coverage of Europe, the Americas, the Middle East, Africa, the Caribbean, North Sea, Mediterranean and South Atlantic regions. *On May 8, 2013, commercial service began on Telesat's new Anik G1 satellite, which was launched on April 15, 2013. Anik G1 is located at 107.3 degrees West Longitude orbital location providing a range of communications services, including direct-to-home ("DTH") video for Canada, X-band for government applications in the Americas and Pacific Ocean Region, and C-band and Ku-band services in South America. At June 30, 2013: *Telesat had contracted backlog for future services of approximately $4.9 billion. *Fleet utilization was 91% for Telesat's North American fleet and 77% for Telesat's international fleet.The fleet utilization reflects the entry of Anik G1 into commercial service. *On April 2, 2013, Telesat Canada and Telesat LLC re-priced and amended their existing credit agreement, dated March 28, 2012 (the "Credit Agreement"). The amendment converted $34 million from Canadian to U.S. dollars and decreased the interest rates on the Canadian Term Loan B Facility and U.S. Term Loan B Facility by 0.50%. The amendment also decreased the interest rate floors on the debt to 1.00% and 0.75% for the Canadian Term Loan B Facility and U.S. Term Loan B Facility, respectively. The permitted leverage ratio to incur first lien debt is now 4.25:1.00 which represents a change from the prior 4.00:1.00 senior secured leverage ratio test in the Credit Agreement. *On May 1, 2013, Telesat Canada and Telesat LLC completed the redemption of all of their 12.5% Senior Subordinated Notes due November 1, 2017, issued under an indenture dated as of June 30, 2008. The redemption took place at a price equal to 106.25% of the principal amount of the Senior Subordinated Notes. Telesat's report on Form 6-K for the quarter ended June 30, 2013 has been filed with the U.S. Securities and Exchange Commission (SEC) and may be accessed on the SEC's website at www.sec.gov. Telesat has scheduled a conference call on Thursday, August 1, 2013 at 10:30 a.m. ET to discuss its financial results for the quarter ended June 30, 2013 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 (800) 396-7098.Callers outside of North America should dial +1 (416) 695-7848. The conference reference number is 4154285.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 one hour after the end of the call on August 1, 2013, until 11:59 p.m. ET on August 15, 2013.To access the replay, please call +1 (800) 408-3053.Callers outside of North America should dial +1 (905) 694-9451.The access code is 9330944 followed by the number sign (#). All Adjusted EBITDA and Adjusted EBITDA margins included in this release are non-IFRS financial measures, as described in the End Notes section of this release. For information reconciling non-IFRS financial measures to the most comparable IFRS financial measures, please see the consolidated financial information below. 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 "expect", "will", "would", "well positioned to" 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 Holdings Inc.'s Annual Report on Form 20-F for the fiscal year ended December 31, 2012 as well as Telesat Canada's other filings with the United States Securities and Exchange Commission (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: risks associated with operating satellites and providing satellite services, including satellite construction or launch delays, launch failures, in-orbit failures or impaired satellite performance, volatility in exchange rates and risks associated with domestic and foreign government regulation. The foregoing list of important factors is not exhaustive. The information contained in this news release reflects Telesat's beliefs, assumptions, intentions, plans and expectations as of the date of this news release. Except as required by law, Telesat disclaims any obligation or undertaking to update or revise the information herein. About Telesat (www.telesat.com) Telesat is a leading global satellite operator, providing reliable and secure satellite-delivered communications solutions worldwide to broadcast, telecom, corporate and government customers. Headquartered in Ottawa, Canada, with offices and facilities around the world, the company's state-of-the-art fleet consists of 14 satellites, and the Canadian payload on ViaSat-1 with another satellite under construction. Telesat also manages the operations of additional satellites for third parties. Privately held, Telesat's principal shareholders are Canada's Public Sector Pension Investment Board and Loral Space & Communications Inc. (Nasdaq:LORL). Telesat Holdings Inc. Condensed Consolidated Statements of Income (Loss) For the period ended June 30 Three months Six months (in thousands of Canadian 2013 2012^(2) 2013 2012^(2) dollars) (unaudited) Revenue $216,350 $201,913 $435,198 $398,171 Operating expenses (49,373) (52,418) (99,363) (135,751) 166,977 149,495 335,835 262,420 Depreciation (52,668) (51,079) (102,578) (101,039) Amortization (8,190) (9,150) (16,354) (18,252) Other operating losses, net (2,033) (18) (1,562) (76) Operating income 104,086 89,248 215,341 143,053 Interest expense (54,049) (64,225) (115,879) (118,938) Loss on financing (134) (54,164) (18,493) (76,052) Interest and other income 10,591 246 10,976 971 Gain (loss) on changes in fair value of financial 72,405 (149,990) 17,218 (89,017) instruments (Loss) gain on foreign (100,513) (53,745) (168,074) 5,027 exchange Income (loss) before tax 32,386 (232,630) (58,911) (134,956) Tax expense (17,468) (10,949) (23,589) (10,354) Net income (loss) $14,918 $(243,579) $(82,500) $(145,310) Telesat Holdings Inc. Condensed Consolidated Balance Sheets (in thousands of Canadian dollars) June 30, 2013 December 31, 2012 (unaudited) Assets Cash and cash equivalents $131,418 $180,961 Trade and other receivables 54,247 63,762 Other current financial assets 7,173 6,799 Prepaid expenses and other current assets 25,743 22,946 Total current assets 218,581 274,468 Satellites, property and other equipment 2,024,924 2,090,754 Other long-term financial assets 33,907 131,535 Other long-term assets 3,171 4,692 Intangible assets 842,985 858,697 Goodwill 2,446,603 2,446,603 Total assets $5,570,171 $5,806,749 Liabilities Trade and other payables $28,181 $35,709 Other current financial liabilities 83,313 90,591 Other current liabilities 117,691 77,930 Current indebtedness 44,836 31,953 Total current liabilities 274,021 236,183 Long-term indebtedness 3,285,718 3,374,977 Deferred tax liabilities 480,273 485,163 Other long-term financial liabilities 182,509 281,462 Other long-term liabilities 400,916 402,232 Total liabilities 4,623,437 4,780,017 Shareholders' Equity Share capital 656,556 656,394 Accumulated earnings 289,850 373,042 Reserves 328 (2,704) Total shareholders' equity 946,734 1,026,732 Total liabilities and shareholders' equity $5,570,171 $5,806,749 Telesat Holdings Inc. Condensed Consolidated Statements of Cash Flows For the six months ended June 30 (in thousands of Canadian dollars) (unaudited) 2013 2012^(2) Cash flows from operating activities Net loss $(82,500) $(145,310) Adjustments to reconcile net loss to cash flows from operating activities: Amortization and depreciation 118,932 119,291 Deferred tax expense 5,917 10,177 Unrealized foreign exchange loss (gain) 172,915 (11,399) (Gain) loss on derivatives (17,218) 89,017 Share based compensation 4,843 598 Loss on disposal of assets 1,562 76 Loss on financing 18,493 76,052 Interest expense on employee benefit plans 1,320 1,608 Other (18,113) (24,428) Customer prepayments on future satellite services -- 38,345 Insurance proceeds -- 314 Repurchase of stock options and exercise of share (1,196) -- appreciation rights Operating assets and liabilities 48,109 (2,038) Net cash from operating activities $253,064 $152,303 Cash flows used in investing activities Satellite programs $(33,506) $(121,852) Purchase of other property and equipment (5,082) (5,051) Purchase of intangible assets (6) -- Proceeds from sale of assets 1,022 20 Net cash used in investing activities $(37,572) $(126,883) Cash flows used in financing activities Proceeds from indebtedness $-- $3,099,658 Proceeds from issue of promissory note -- 145,466 Repayment of indebtedness (249,017) (2,601,803) Repayment of senior preferred shares -- (141,435) Payment of premium on early retirement of (13,793) (39,444) indebtedness Payment of debt issue costs (810) (48,140) Return of capital to shareholders -- (586,202) Dividends paid on preferred shares (10) -- Satellite performance incentive payments (2,324) (2,008) Net cash used in financing activities $(265,954) $(173,908) Effect of changes in exchange rates on cash and cash $919 $(369) equivalents (Decrease) in cash and cash equivalents $(49,543) $(148,857) Cash and cash equivalents, beginning of period 180,961 277,962 Cash and cash equivalents, end of period $131,418 $129,105 Supplemental disclosure of cash flow information Interest received $440 $835 Interest paid $114,386 $132,310 Income taxes paid $10,377 $2,114 Telesat's Adjusted EBITDA margin^1: Three months Six months (in thousands of Canadian 2013 2012^(2) 2013 2012^(2) dollars) (unaudited) Net income (loss) $14,918 $(243,579) $(82,500) $(145,310) Tax expense 17,468 10,949 23,589 10,354 (Gain) loss on changes in fair value of financial (72,405) 149,990 (17,218) 89,017 instruments Loss (gain) on foreign 100,513 53,745 168,074 (5,027) exchange Interest and other income (10,591) (246) (10,976) (971) Loss on financing 134 54,164 18,493 76,052 Interest expense 54,049 64,225 115,879 118,938 Depreciation 52,668 51,079 102,578 101,039 Amortization 8,190 9,150 16,354 18,252 Other operating losses, net 2,033 18 1,562 76 Special compensation and benefit expense for 301 6,576 1,663 43,578 executives and employees Non-recurring professional fees associated with financing and special -- (168) -- 1,916 payments to independent directors Non-cash expense related to 4,800 299 4,843 598 share-based compensation Adjusted EBITDA $172,078 $156,202 $342,341 $308,512 Revenue $216,350 $201,913 $435,198 $398,171 Adjusted EBITDA Margin 79.5% 77.4% 78.7% 77.5% End Notes ^1 The common definition of EBITDA is "Earnings Before Interest, Taxes, Depreciation and Amortization." In evaluating financial performance, Telesat uses revenue and deducts certain operating expenses (including share based compensation expense and unusual and non-recurring items, including restructuring related expenses) to obtain operating income before interest, taxes, depreciation and amortization ("Adjusted EBITDA") and the Adjusted EBITDA margin (defined as the ratio of Adjusted EBITDA to revenue) as measures of Telesat's operating performance. Adjusted EBITDA allows Telesat and investors to compare Telesat's operating results with that of competitors exclusive of depreciation and amortization, interest and investment income, interest expense, taxes and certain other expenses. Financial results of competitors in the satellite services 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 Telesat and investors to compare operating results exclusive of these items. Competitors in the satellite services industry have significantly different capital structures. Telesat believes the use of Adjusted EBITDA improves comparability of performance by excluding interest expense. Telesat believes the use of Adjusted EBITDA and the Adjusted EBITDA margin along with IFRS financial measures enhances the understanding of Telesat's operating results and is useful to Telesat 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 withIFRS financial measures and is not presented as a substitute for cash flows from operations as a measure of Telesat's liquidity or as a substitute for net income as an indicator of Telesat's operating performance. ^2 A change in accounting policy has resulted in a change to the 2012 comparative figures.For more information on the impacts of the change, please refer to note 3 of Telesat's condensed consolidated interim statements, filed with the SEC on a Form 6-K dated today. CONTACT: Michael Bolitho, Telesat +1 (613) 748-8700 ext. 2336 (firstname.lastname@example.org)
Telesat Reports Results for the Second Quarter Ended June 30, 2013
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