Telesat Achieves Strong Growth in Second Quarter & First Half of 2009



    OTTAWA, Aug. 10 /CNW/ - 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 (No.). 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 (No.).
    

    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                 Three Months               Six Months
    (in thousands of 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, December 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                 Three Months               Six Months
    (in thousands of Canadian
     dollars) (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                 Three Months               Six Months
    (in thousands of Canadian
     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
    





For further information:

For further information: Vanessa Brûlé, Telesat, (613) 748-8700 ext.
2407, (vbrule@telesat.com)

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TELESAT CANADA

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