Telesat Reports Results for the Quarter Ended June 30, 2014

Telesat Reports Results for the Quarter Ended June 30, 2014

OTTAWA, July 31, 2014 (GLOBE NEWSWIRE) -- Telesat Holdings Inc. ("Telesat")
today announced its financial results for the three and six month periods
ended June 30, 2014. All amounts are in Canadian dollars and are reported
under International Financial Reporting Standards ("IFRS") unless otherwise
noted.

For the quarter ended June 30, 2014, Telesat reported consolidated revenue of
$226 million, an increase of 5% ($10 million) compared to the same period in
2013. During the quarter, the U.S. dollar was 7% stronger than it was during
the second quarter of 2013, resulting in a positive impact on the conversion
of U.S. dollar denominated revenue and a negative impact on the conversion of
U.S. dollar denominated expenses. When adjusted for foreign exchange rate
changes, revenue increased by 1% ($3 million) compared to the same period in
2013. The increase was mainly related to revenue earned on the Anik G1
satellite which entered into commercial service in May 2013 partially offset
by a decrease in revenue earned on the Nimiq 2 satellite.

Operating expenses of $46 million were 6% ($3 million) lower than the same
period in 2013 or 8% ($4 million) lower when taking into account changes in
foreign exchange rates. Over half of the reduction was due to a decrease in
share-based compensation expense related to stock options granted during the
second quarter of 2013 with the balance of the reduction due to a decrease in
expenses in a number of other areas. Adjusted EBITDA^1 was $183 million, an
increase of 6% ($11 million) compared to the same period in 2013, or an
increase of 3% ($5 million) when adjusted for foreign exchange rate changes.
The Adjusted EBITDA margin^1 was 81% for the second quarter of 2014 compared
to 80% for the same period in 2013.

For the six month period ended June 30, 2014, consolidated revenue was $468
million, an increase of 8% ($33 million) compared to the same period in 2013.
During the first half of 2014, the U.S. dollar was 8% stronger than it was
during the first half of 2013. When adjusted for foreign exchange rate
changes, revenue increased by 4% ($18 million) compared to the same period in
2013. The increase was primarily due to short-term services provided to
another satellite operator and revenue earned on the Anik G1 satellite,
partially offset by a decrease in revenue earned on the Nimiq 2 satellite and
by lower equipment sales. Operating expenses were $93 million, a decrease of
6% ($6 million) compared to the first half of 2013 or 9% ($9 million) when
adjusted for foreign exchange rate changes. The majority of this decrease was
related to lower cost of equipment sales with the balance due to lower
expenses in certain other areas. Adjusted EBITDA^1 was $381 million, an
increase of 11% ($39 million) compared to the same period in 2013, or an
increase of 8% ($27 million) when adjusted for foreign exchange rate changes.
The Adjusted EBITDA margin^1 for the first half of 2014 was 82%, compared to
79% in the same period in 2013.

Telesat's net income for the quarter ended June 30, 2014 was $108 million
compared to net income of $15 million for the same period in 2013. The
favorable variation was principally due to a non-cash gain on foreign
exchange, which was primarily a result of the U.S. dollar weakening during the
quarter relative to the Canadian dollar, positively impacting the translation
of Telesat's U.S. dollar denominated debt into Canadian dollars. Results were
also favorably impacted by higher revenue and lower operating expenses. The
favorable variations were partially offset by a loss on changes in the fair
value of financial instruments in the second quarter of 2014, as compared to a
gain on changes in fair value of financial instruments in the second quarter
of 2013. For the six month period ended June 30, 2014, net income was $80
million, compared to a net loss of $83 million for the same period in 2013.

"I am pleased with our performance in the second quarter of 2014," commented
Dan Goldberg, Telesat's President and CEO. "Through careful and focused
execution, we achieved modest revenue growth, reduced our overall operating
expenses, increased Adjusted EBITDA^1 and expanded our Adjusted EBITDA
margin^1 relative to the same period last year. Our industry-leading
contractual backlog provides visibility into the stability of our future
revenue and cash flow, and anticipated growing demand for satellite services
positions us well to expand our activities going forward."

  *At June 30, 2014:

       *Telesat had contracted backlog for future services of approximately
         $4.7 billion.
         
       *Fleet utilization was 91% for Telesat's North American fleet and 84%
         for its international fleet.
         

  *Effective July 2, 2014, Bezul (''Karim'') Abuani replaced Gordon J. Fyfe
    as a director of Telesat Holdings Inc., Telesat Interco Inc. and Telesat
    Canada, and as a member of the Board of Managers of Telesat LLC.

Telesat's report on Form 6-K for the quarter ended June 30, 2014 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, July 31, 2014 at 10:00
a.m. ET to discuss its financial results for the quarter ended June 30, 2014
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 (866) 226-1792.
Callers outside of North America should dial +1 (416) 340-2216. The conference
reference number is 4181894. 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 July 31, 2014, until 11:59 p.m. ET on August 14, 2014. 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", "position us well" 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, 2013, as well as Telesat'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 dollars)    2014      2013      2014      2013
(unaudited)
Revenue                               $ 225,671 $ 216,350 $ 467,599 $ 435,198
Operating expenses                    (45,710)  (49,373)  (92,799)  (99,363)
                                     179,961   166,977   374,800   335,835
Depreciation                          (54,098)  (52,668)  (108,281) (102,578)
Amortization                          (7,707)   (8,190)   (15,471)  (16,354)
Other operating losses, net           (3)       (2,033)   (68)      (1,562)
Operating income                      118,153   104,086   250,980   215,341
Interest expense                      (53,566)  (54,049)  (107,035) (115,879)
Loss on financing                     --        (134)     --        (18,493)
Interest and other income             1,562     10,591    2,370     10,976
(Loss) gain on changes in fair value  (34,046)  72,405    (12,372)  17,218
of financial instruments
Gain (loss) on foreign exchange       93,951    (100,513) (15,862)  (168,074)
Income (loss) before tax              126,054   32,386    118,081   (58,911)
Tax expense                           (17,763)  (17,468)  (38,052)  (23,589)
Net income (loss)                     $ 108,291 $ 14,918  $ 80,029  $ (82,500)




Telesat Holdings Inc.
Condensed Consolidated Balance Sheets
                                                         
                                                         
(in thousands of Canadian dollars) (unaudited) June 30,    December 31,
                                               2014        2013
Assets                                                    
Cash and cash equivalents                      $ 401,499   $ 298,713
Trade and other receivables                    51,901      50,266
Other current financial assets                 814         7,174
Prepaid expenses and other current assets      24,648      18,665
Total current assets                           478,862     374,818
Satellites, property and other equipment       1,898,598   1,962,759
Deferred tax assets                            8,373       10,024
Other long-term financial assets               31,732      76,006
Other long-term assets                         3,430       2,765
Intangible assets                              832,715     845,286
Goodwill                                       2,446,603   2,446,603
Total assets                                   $ 5,700,313 $ 5,718,261
                                                         
Liabilities                                               
Trade and other payables                       $ 33,499    $ 34,484
Other current financial liabilities            145,864     164,755
Other current liabilities                      87,980      122,058
Current indebtedness                           57,309      57,364
Total current liabilities                      324,652     378,661
Long-term indebtedness                         3,268,474   3,284,502
Deferred tax liabilities                       513,395     515,207
Other long-term financial liabilities          61,706      72,803
Other long-term liabilities                    318,914     345,185
Total liabilities                              4,487,141   4,596,358
                                                         
Shareholders' Equity                                      
Share capital                                  656,660     656,660
Accumulated earnings                           536,032     456,013
Reserves                                       20,480      9,230
Total shareholders' equity                     1,213,172   1,121,903
Total liabilities and shareholders' equity     $ 5,700,313 $ 5,718,261




Telesat Holdings Inc.
Condensed Consolidated Statements of Cash Flows
For the six months ended June 30
                                                                 
(in thousands of Canadian dollars) (unaudited)          2014       2013^(2)
Cash flows from operating activities                              
Net income (loss)                                       $ 80,029   $ (82,500)
Adjustments to reconcile net income (loss) to cash                
flows from operating activities
Depreciation                                            108,281    102,578
Amortization                                            15,471     16,354
Deferred tax (recovery) expense                         (4,348)    5,917
Interest expense                                        107,035    115,879
Interest income                                         (1,306)    (469)
Unrealized foreign exchange loss                        9,390      172,915
Loss (gain) on changes in fair value of financial       12,372     (17,218)
instruments
Share-based compensation                                5,623      4,843
Loss on disposal of assets                              68         1,562
Loss on financing                                       --         18,493
Other                                                   (40,867)   (24,959)
Income taxes paid                                       (61,585)   (10,377)
Interest paid, net of capitalized interest              (99,820)   (111,579)
Interest received                                       1,345      440
Repurchase of stock options and exercise of share       --         (1,196)
appreciation rights
Operating assets and liabilities                        45,081     62,381
Net cash from operating activities                      $ 176,769  $ 253,064
Cash flows used in investing activities                           
Satellite programs, including capitalized interest      $ (30,633) $ (33,506)
Purchase of other property and equipment                (5,922)    (5,082)
Purchase of intangible assets                           (75)       (6)
Proceeds from sale of assets                            --         1,022
Net cash used in investing activities                   $ (36,630) $ (37,572)
Cash flows used in financing activities                           
Repayment of indebtedness                               $ (35,262) $ (249,017)
Payment of premium on early retirement of indebtedness  --         (13,793)
Payment of debt issue costs                             --         (810)
Dividends paid on preferred shares                      (10)       (10)
Satellite performance incentive payments                (2,657)    (2,324)
Net cash used in financing activities                   $ (37,929) $ (265,954)
                                                                 
Effect of changes in exchange rates on cash and cash    $ 576      $ 919
equivalents
                                                                 
Increase (decrease) in cash and cash equivalents        $ 102,786  $ (49,543)
Cash and cash equivalents, beginning of period          298,713    180,961
Cash and cash equivalents, end of period                $ 401,499  $ 131,418

                                                                
                                                                
                                                                
Telesat's Adjusted EBITDA margin^(1)                             
                                                                
                                     Three months        Six months
(in thousands of Canadian dollars)    2014      2013      2014      2013
(unaudited)
Net income (loss)                     $ 108,291 $ 14,918  $ 80,029  $ (82,500)
Tax expense                           17,763    17,468    38,052    23,589
Loss (gain) on changes in fair value  34,046    (72,405)  12,372    (17,218)
of financial instruments
(Gain) loss on foreign exchange       (93,951)  100,513   15,862    168,074
Interest and other income             (1,562)   (10,591)  (2,370)   (10,976)
Loss on financing                     --        134       --        18,493
Interest expense                      53,566    54,049    107,035   115,879
Depreciation                          54,098    52,668    108,281   102,578
Amortization                          7,707     8,190     15,471    16,354
Other operating losses, net           3         2,033     68        1,562
Special compensation, benefits        258       301       532       1,663
expense and severance payments
Non-cash expense related to           2,680     4,800     5,623     4,843
share-based compensation
Adjusted EBITDA                       $ 182,899 $ 172,078 $ 380,955 $ 342,341
                                                                
Revenue                               $ 225,671 $ 216,350 $ 467,599 $ 435,198
Adjusted EBITDA Margin                81.0%     79.5%     81.5%     78.7%
                                                                
                                                                

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 the 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 in making comparisons of 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 for the year ended December 31, 2013
has resulted in a change to the 2013 comparative figures on the condensed
consolidated statements of cash flows. For more information on the impact of
this change, please refer to Note 3 of Telesat's unaudited interim condensed
consolidated financial statements, filed with the SEC on a Form 6-K dated
today.

CONTACT: Michael Bolitho
         Telesat
         +1 (613) 748-8700 ext. 2336
         (ir@telesat.com)
 
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