XM Canada reports strong growth for first quarter 2008



    
           Leading position in automotive sector accelerates growth

         Self-paying subscribers grew by 110 per cent year-over-year
    

    TORONTO, Jan. 14 /CNW/ - Canadian Satellite Radio Holdings Inc.
(TSX: XSR) ("CSR") today announced its financial results for the first quarter
ended November 30, 2007.

    First Quarter 2008 Highlights

    Three months ended November 30, 2007 versus three months ended November
30, 2006

    
    -   Subscriber base reaches 350,300, an increase of 86 per cent
    -   Self-paying subscribers grew by 110 per cent to 214,100
    -   Total revenue more than doubles to $8.1 million
    -   Adjusted Operating Loss(*) improves by $2.3 million
    -   Total vehicles with factory-installed XM satellite radios on the road
        or on order increases to 303,000
    -   Completed a private placement of $20 million of convertible unsecured
        subordinated debentures

    Three months ended November 30, 2007 versus three months ended August 31,
2007

    -   Subscriber base increases by 11 per cent
    -   Self-paying subscribers grew by 15 per cent
    -   Total revenue grew by 19 per cent
    -   Adjusted Operating Loss(*) improves by $1.7 million

    (*)See section 3.0 entitled "Operating Definitions" found in Management's
       Discussion & Analysis for the quarter ended November 30, 2007 found at
       www.cdnsatrad.com and www.sedar.com.
    

    "We are off to a strong start in 2008 as we boost performance of our four
key growth drivers which include automotive, retail, programming and other
strategic partnerships," said Michael Moskowitz, president and chief executive
officer of XM Canada. "The automotive sector, the long-term driving force
behind satellite radio, is rapidly growing and now represents more than 30 per
cent of our self-paying subscriber base.
    "Our retail market share has improved significantly with the introduction
of a new line of competitively-priced and technologically-superior products,
the expansion of our distribution channels and the depth of our unrivalled
programming," said Moskowitz. "Our momentum is building and we have yet to
recognize the benefits of our strategic partnerships, which allow us access to
more than 50 million points of contact every year through trial subscriptions
and increased brand awareness. We expect 2008 to be another record year for XM
Canada."

    Financial Performance

    For the three months ended November 30, 2006 and 2007, revenue was
$3.8 million and $8.1 million, respectively, an increase of 113 per cent or
$4.3 million. This increase is directly attributable to our increasing
subscriber base.
    Adjusted Operating Loss for the three months ended November 30, 2006 and
2007 was $12.8 million and $10.5 million, respectively, an improvement of
$2.3 million. Adjusted Operating Loss is expected to improve as XM Canada's
subscriber base continues to grow and we efficiently manage programming,
general and administrative and marketing costs.
    Subscriber Acquisition Cost (SAC) was $46 and $92 for the three months
ended November 30, 2006 and 2007, respectively. The increase in SAC is
primarily attributable to our change in focus from general marketing
activities towards targeted marketing strategies via hardware promotions. In
addition, the increase is offset by a 42 per cent improvement in the Cost Per
Gross Addition (CPGA) to $181 for the quarter ended November 30, 2007 from
$311 for the comparable period in 2006. We expect CPGA to improve on an
annualized basis as we increase gross additions through improved cost
efficient distribution channels. Average Revenue Per Unit (ARPU) was $11.30
and $11.27 for the three months ended November 30, 2006 and 2007,
respectively.
    For the three months ended August 31, 2007 and November 30, 2007, revenue
was $6.8 million and $8.1 million, respectively, an increase of 19 per cent or
$1.3 million. This increase is directly attributable to our growing subscriber
base.
    Adjusted Operating Loss for the three months ended August 31, 2007 and
November 30, 2007 was $12.2 million and $10.5 million, respectively, an
improvement of $1.7 million. Adjusted Operating Loss is expected to improve as
XM Canada's subscriber base continues to grow and we efficiently manage
programming, general and administrative and marketing costs.
    SAC was $58 and $92 for the three months ended August 31, 2007 and
November 30, 2007, respectively. The increase in SAC is primarily attributable
to our change in focus from general marketing activities towards targeted
marketing strategies via hardware promotions. CPGA at $183 and $181 for the
three months ended August 31, 2007 and November 30, 2007, respectively,
remained relatively consistent. ARPU was $11.33 and $11.27 for the three
months ended August 31, 2007 and November 30, 2007, respectively, and also
remained relatively consistent quarter over quarter.
    The non-GAAP measures above should be used in addition to, but not as a
substitute for, the analysis provided in the interim consolidated statement of
operations and deficit.

    Quarterly conference call and audio webcast

    CSR's management team will discuss its financial results for the first
quarter ended November 30, 2007 as part of its Annual General Meeting on
Tuesday, January 15, 2008 at 10 a.m. EST. To participate by conference call,
please dial 416-644-3414 within the Toronto area, or 1-800-733-7571
(toll-free) outside of Toronto. A live audio webcast will be available at
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2112880. The AGM will
be held at The TSX Broadcast Centre located at 130 King Street West, Toronto.
    An archived recording of the conference call will be available from noon
EST on Tuesday, January 15, 2008 until midnight on Friday, February 15, 2008
by dialing 416-640-1917 within the Toronto area, or 1-877-289-8525 (toll-free)
outside of Toronto (passcode 21255460 followed by the number sign).

    About Canadian Satellite Radio Holdings Inc.

    Canadian Satellite Radio Holdings Inc. (TSX: XSR) operates as XM
Canada(TM) and is Canada's premium digital audio entertainment and information
company with the best signal coverage across the country.
    XM Canada offers listeners the most unique Canadian and international
programming including exclusive satellite radio coverage of EVERY NHL(TM)
GAME, as well as PGA TOUR(TM) and Major League Baseball(TM), the deepest
playlist, plus news, talk, sports, entertainment and children's content.
Acura, Buick, Cadillac, Chevrolet, GMC, Harley Davidson, Honda, Hummer,
Hyundai, Infiniti, Lexus, Nissan, Pontiac, Toyota, Saab, Saturn, Suzuki and
Subaru offer XM radios in more than 150 different vehicles for model year
2008.
    XM Satellite Radio Inc. is the number one satellite radio company in
North America with more than 8 million subscribers. In Canada, XM is offered
on TELUS Mobile Radio(TM) and Rogers(TM) Communications wireless, cable and
internet platforms and is also the exclusive music channel provider on Air
Canada's flights and is available in select Avis Budget Group rental vehicles.
    A free three-day trial of XM Radio Online is available at
http://listen.xmradio.ca. Visit www.xmradio.ca for programming and
subscription information.
    To find out more about Canadian Satellite Radio Holdings Inc. (TSX: XSR),
visit our website at www.cdnsatrad.com.

    Forward-Looking Statements

    Certain statements included above may be forward-looking in nature. Such
statements can be identified by the use of forward-looking terminology such as
"expects," "may," "will," "should," "intend," "plan," or "anticipates" or the
negative thereof or comparable terminology, or by discussions of strategy.
Forward-looking statements include estimates, plans, expectations, opinions,
forecasts, projections, targets, guidance or other statements that are not
statements of fact. Although CSR believes that the expectations reflected in
such forward-looking statements are reasonable, it can give no assurance that
such expectations will prove to have been correct. CSR's forward-looking
statements are expressly qualified in their entirety by this cautionary
statement. CSR makes no commitment to revise or update any forward-looking
statements in order to reflect events or circumstances after the date any such
statement is made. Additional information identifying risks and uncertainties
is contained in CSR's filings with the Canadian securities regulators,
available at www.sedar.com.


    
    CANADIAN SATELLITE RADIO HOLDINGS INC.
    INTERIM CONSOLIDATED BALANCE SHEET (UNAUDITED)


                                          November 30, 2007  August 31, 2007
                                          -----------------------------------
    ASSETS

    Current assets

    Cash                                      $   5,073,783    $   9,524,931
    Short term investments                       25,181,793        5,281,000
    Accounts receivable                           5,042,367        4,904,803
    Inventory                                     1,337,297        2,462,975
    Prepaid expenses and other assets             2,871,222        2,401,315
    Restricted investments                       12,489,381       13,043,109
                                          -----------------------------------
                                                 51,995,843       37,618,133
    Restricted investments                        6,034,509        6,301,677
    Property and equipment                       19,905,161       20,878,489
    Contract rights, distribution rights
     and computer software                      215,101,634      219,897,424
                                          -----------------------------------
    Total assets                                293,037,147      284,695,723
                                          -----------------------------------
                                          -----------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities

    Accounts payable and accrued liabilities     22,731,591       19,822,541
    Interest payable                              4,124,116          590,315
    Deferred revenue                             12,140,463       10,445,788
                                          -----------------------------------
                                                 38,996,170       30,858,644
    Long-term debt                              112,783,780      102,978,193
    Deferred revenue                              3,768,420        3,626,134
    Long-term obligations                           385,130          376,316
                                          -----------------------------------
    Total liabilities                           155,933,500      137,839,287
                                          -----------------------------------

    Shareholders' equity

    Share capital                               312,948,883      312,948,883
    Contributed surplus                          36,533,955       30,129,704
    Deficit                                    (212,379,191)    (196,222,151)
                                          -----------------------------------
    Total shareholders' equity                  137,103,647      146,856,436
                                          -----------------------------------
    Total liabilities and shareholders'
     equity                                     293,037,147      284,695,723
                                          -----------------------------------
                                          -----------------------------------




    CANADIAN SATELLITE RADIO HOLDINGS INC.
    INTERIM CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT (UNAUDITED)
    For the three months ended November 30
                                                       2007             2006
                                              -------------------------------

    Revenue                                   $   8,145,951    $   3,838,682
                                              -------------------------------
    Operating expenses

    Cost of revenue                               7,348,843        5,596,666
    General and administrative                    4,305,545        4,814,455
    Stock-based compensation                      1,072,370          845,436
    Marketing                                     7,039,308        6,266,242
    Amortization of intangible assets and
     property & equipment                         5,574,011        5,601,983
                                              -------------------------------
                                                 25,340,077       23,124,782
                                              -------------------------------

    Loss before the undernoted                  (17,194,126)     (19,286,100)
    Interest revenue                                385,373          729,599
    Interest expenses                             3,723,743        3,740,261
    Foreign exchange gain (loss)                  4,375,456       (1,625,194)
                                              -------------------------------
    Net loss and comprehensive loss for
     the period                                 (16,157,040)     (23,921,956)
    Deficit - Beginning of period              (196,222,151)    (111,582,308)
                                              -------------------------------
    Deficit - End of period                    (212,379,191)    (135,504,264)
                                              -------------------------------
                                              -------------------------------
    Basic and fully diluted loss per
     common share                                     (0.34)           (0.50)
                                              -------------------------------
                                              -------------------------------



    CANADIAN SATELLITE RADIO HOLDINGS INC.
    RECONCILIATION OF LOSS BEFORE THE UNDERNOTED
    TO ADJUSTED OPERATING LOSS (UNAUDITED)

    Adjusted Operating Loss is defined as Operating loss before the undernoted
excluding amortization, stock-based compensation to employees, directors,
officers and service providers, and non-cash costs paid by our parent company.
We believe that Adjusted Operating Loss, as opposed to Operating loss or Net
loss, provides a better measure of our core business operating results and
improves comparability.
    This non-GAAP measure should be used in addition to, but not as a
substitute for, the analysis provided in statement of operations. We believe
Adjusted Operating Loss is a useful measure of our operating performance and
is a significant basis used by our management to measure the operating
performance of our business. While amortization and stock-based compensation
are considered operating costs under generally accepted accounting principles,
these expenses primarily represent non-cash current period allocation of costs
associated with long-lived assets acquired or constructed in prior periods and
non-cash employee and service provider compensation. Costs paid by parent
company are non-cash costs related to the licence application process and are
not related to ongoing operations of the business.
    Adjusted Operating Loss is a calculation used as a basis for investors and
analysts to evaluate and compare the periodic and future operating
performances and value of similar companies in our industry, although our
measure of Adjusted Operating Loss may not be comparable to similarly titled
measures of other companies. Adjusted Operating Loss does not purport to
represent operating loss or cash flow from operating activities, as those
terms are defined under generally accepted accounting principles, and should
not be considered as an alternative to those measurements as an indicator of
our performance.


                                                       Three Months Ended
                                                           November 30,
    ($ in thousands)                                   2007             2006
                                              -------------------------------
    Reconciliation of loss before the
     undernoted to Adjusted Operating Loss
    Operating loss before the undernoted      $     (17,194)   $     (19,286)
    Add back non-Adjusted Operating Loss
     items included in Operating Loss
      Amortization                                    5,574            5,602
      Stock-based compensation                        1,072              845
      Costs paid by parent company                       54               49
                                              -------------------------------
    Adjusted Operating Loss                         (10,494)         (12,790)
                                              -------------------------------



    CANADIAN SATELLITE RADIO HOLDINGS INC.
    INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
    For the three months ended November 30

                                                       2007             2006
                                              -------------------------------
    Cash provided by (used in)
    Operating activities
    Net loss and comprehensive loss for
     the period                               $ (16,157,040)   $ (23,921,956)
    Add (deduct): Non-cash items
      Costs paid by parent company                   54,351           49,410
      Stock-based compensation expense            1,072,370          845,436
      Amortization of intangible assets           4,799,404        4,823,499
      Amortization of property and equipment        774,607          778,488
      Accrued interest - debt                     3,533,801        4,100,692
      Accrued interest receivable                  (208,433)        (393,424)
      Interest accretion expense                    198,373          167,364
      Loss on disposal of property and
       equipment                                    187,813                -
      Unrealized foreign exchange loss (gain)    (5,106,587)       1,653,065
    Net change in non-cash working capital
     related to operations                        6,373,742         (334,982)
                                              -------------------------------
    Net cash used in operating activities        (4,477,599)     (12,232,408)
                                              -------------------------------

    Investing activities

    Sale of short-term investments                5,850,000                -
    Purchase of short-term investments          (25,181,793)               -
    Proceeds on sale of property and
     equipment                                       31,022                -
    Purchase of property and equipment              (11,626)      (1,116,174)
    Purchase of computer software                    (4,513)         (24,014)
                                              -------------------------------
    Net cash used in investing activities       (19,316,910)      (1,140,188)
                                              -------------------------------

    Financing activities

    Proceeds from convertible notes              19,396,445                -
                                              -------------------------------
    Net cash provided by financing
     activities                                  19,396,445                -
                                              -------------------------------
    Foreign exchange gain (loss) on cash
     held in foreign currency                       (53,084)         803,646
                                              -------------------------------
    Change in cash during the period             (4,451,148)     (12,568,950)
    Cash - Beginning of period                    9,524,931       45,188,214
                                              -------------------------------
    Cash - End of period                          5,073,783       32,619,264
                                              -------------------------------
                                              -------------------------------
    Supplemental cash flow disclosures

    Utilization of XM credit facility             1,003,615
    

    %SEDAR: 00022901E




For further information:

For further information: Investors, (416) 408-6899,
investor.relations@xmradio.ca; Media, (416) 203-6666, xmradio@wilcoxgroup.com


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