XM Canada reports third quarter results and first ever positive cash flow quarter



    Strong results reflect continued improvement in subscriber growth, retail
    market share, automotive customer growth, revenue, cost management and
    other key performance metrics

    TORONTO, July 10 /CNW/ - Canadian Satellite Radio Holdings Inc. (TSX:
XSR) today announced its financial results for the third quarter ended May 31,
2008.
    XM Canada also announced today that it achieved positive cash flow(1) for
the first time during the third quarter ended May 31, 2008. This milestone was
attained in only two and a half years.

    
    Third Quarter 2008 Highlights

    Three months ended May 31, 2008 versus three months ended May 31, 2007
    -   Generated positive cash flow of $0.3 million during Q3 2008
    -   Total revenue increased 81 per cent to $10.3 million
    -   Adjusted Operating Loss(2) improved $2.7 million to $7.1 million
    -   Pre-Marketing Adjusted Operating Loss(2) improved $3.4 million to
        $1.3 million
    -   Subscriber base reached 439,900, an increase of 58 per cent
    -   Self-paying subscribers increased 84 per cent to 280,400 as ARPU grew
        to $11.99
    

    "Our achievement of positive cash flow for the quarter, an important
milestone that measures the financial health of the company, demonstrates our
ability to effectively manage costs and working capital while growing our
subscribers and revenue," said Michael Moskowitz, President and Chief
Executive Officer of XM Canada. "We have spent a great deal of time striking a
fine balance between investing in our business to attract new subscribers and
achieving profitability. Our strong financial results reflect our direction to
achieve profitable and sustainable growth, a key factor in determining the
long-term success in the satellite radio industry. Getting our business to
cash flow breakeven has been a key focus of management and we believe that
there will be no further requirement for third party funding going forward."

    
    ------------------------
    (1) Calculated from the Interim Consolidated Statement of Cash Flows
    (Unaudited), positive cash flow is defined as change in cash during the
    period less sale (purchase) of short-term investments, net.

    (2) See section 2.0 entitled "Operating Definitions" found in
    Management's Discussion & Analysis for the quarter ended May 31, 2008
    found at www.cdnsatrad.com and www.sedar.com.
    

    Financial Performance

    Three months ended May 31, 2008 versus three months ended May 31, 2007

    For the three months ended May 31, 2007 and May 31, 2008, revenue was
$5.7 million and $10.3 million, respectively. This 81 per cent increase, or
$4.6 million, is primarily attributable to XM Canada's increasing subscriber
base.
    Adjusted Operating Loss for the third quarter of 2007 was $9.8 million
compared to $7.1 million for the third quarter of 2008, an improvement of
$2.7 million. Pre-Marketing Adjusted Operating Loss, which adds back total
marketing expenses, improved by $3.4 million from $4.7 million in the third
quarter of 2007 to $1.3 million for the third quarter of 2008. Both Adjusted
Operating Loss and Pre-Marketing Adjusted Operating Loss are expected to
improve as XM Canada's subscriber base continues to grow and fixed and
marketing costs are managed efficiently.
    Average Monthly Subscription Revenue per Subscriber (ARPU) increased from
$11.70 in the third quarter of 2007 to $11.99 for the third quarter of 2008.
Much of this growth is attributable to an increasing proportion of our
subscribers transitioning from our previous basic monthly subscription price
of $12.99 to the current price of $14.99.
    Cost per Gross Addition (CPGA) continues to decline year-over-year. CPGA
was $178 for the quarter ended May 31, 2007 compared to $141 for the
comparable period in 2008. XM Canada expects CPGA to decrease on an annualized
basis as it increases gross additions through cost-efficient distribution
channels.
    Subscriber Acquisition Cost (SAC) was $40 for the third quarter of 2007
and $87 for the third quarter of 2008. This increase in SAC is primarily
attributable to a shift in focus from general marketing activities towards
targeted marketing strategies, including hardware promotions that were
combined with prepayment of subsidies in connection with Father's Day gift
giving.

    Three months ended May 31, 2008 versus three months ended
    February 29, 2008

    For the three months ended February 29, 2008 and May 31, 2008, revenue
was $9.2 million and $10.3 million, respectively. This 12 per cent increase is
directly attributable to our growing subscriber base.
    Adjusted Operating Loss for the three months ended February 29, 2008 and
May 31, 2008 was $9.0 million and $7.1 million, respectively, an improvement
of $1.9 million. Pre-Marketing Adjusted Operating Loss, which adds back total
marketing expenses, improved by $0.3 million from $1.6 million in the second
quarter of 2008 to $1.3 million in the third quarter of 2008.
    ARPU was $11.61 and $11.99 for the three months ended February 29, 2008
and May 31, 2008, respectively. The quarter-over-quarter growth in ARPU is due
to an increasing proportion of our subscribers transitioning from our previous
basic monthly subscription price of $12.99 to the price of $14.99.
    CPGA increased from $136 for the three months ended February 29, 2008 to
$141 for the quarter ending May 31, 2008. SAC was $63 and $87 for the three
months ended February 29, 2008 and May 31, 2008, respectively. This increase
in SAC is due to the prepayment of subsidies in connection with gift giving in
advance of Father's Day.
    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 third
quarter ended May 31, 2008 on Thursday, July 10, 2008 at 2:30 p.m. EDT. To
participate in the conference call, please dial 416-644-3414 or 1-800-733-7571
(toll-free). A live audio webcast will be available at
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2113760.
    A slide presentation intended for simultaneous viewing will be available
the afternoon of Thursday, July 10, 2008 at www.cdnsatrad.com.
    An archive of the audio webcast will be available for 90 days following
the original broadcast on CSR's website at: www.cdnsatrad.com.

    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.
    With 130 channels, 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 9 million subscribers. In Canada, XM is offered
on TELUS Mobile Radio(TM) and Rogers(TM) Communications wireless 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, except as required by applicable law. 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)

                                                        May 31,    August 31,
                                                          2008          2007
                                                -----------------------------
    ASSETS
    Current assets
    Cash                                          $  4,365,105  $  9,524,931
    Short term investments                          16,733,319     5,281,000
    Accounts receivable                              6,158,506     4,904,803
    Inventory                                          588,392     2,462,975
    Prepaid expenses and other assets                3,415,863     2,401,315
    Restricted investments                          12,401,609    13,043,109
                                                -----------------------------
                                                    43,662,794    37,618,133
    Restricted investments                                   -     6,301,677
    Deferred financing costs                                 -     4,456,280
    Property and equipment                          18,604,547    20,878,489
    Contract rights, distribution rights
     and computer software                         205,508,253   219,897,424
                                                -----------------------------
    Total assets                                   267,775,594   289,152,003
                                                -----------------------------
                                                -----------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities
    Accounts payable and accrued liabilities        21,059,969    19,822,541
    Interest payable                                 4,375,606       590,315
    Deferred revenue                                16,468,603    10,445,788
                                                -----------------------------
                                                    41,904,178    30,858,644
    Long-term debt                                 115,881,970   107,434,473
    Deferred revenue                                 3,991,077     3,626,134
    Long-term obligations                            2,220,811       376,316
                                                -----------------------------
    Total liabilities                              163,998,036   142,295,567
                                                -----------------------------

    Shareholders' equity
    Share capital                                  314,200,952   312,948,883
    Contributed surplus                             38,513,275    30,129,704
    Deficit                                       (248,936,669) (196,222,151)
                                                -----------------------------
    Total shareholders' equity                     103,777,558   146,856,436
                                                -----------------------------
    Total liabilities and shareholders' equity     267,775,594   289,152,003
                                                -----------------------------
                                                -----------------------------



    CANADIAN SATELLITE RADIO HOLDINGS INC.
    INTERIM CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT (UNAUDITED)


                           Three Months Ended          Nine Months Ended
                      May 31, 2008  May 31, 2007  May 31, 2008  May 31, 2007
                     --------------------------------------------------------

    Revenue             10,335,948     5,710,886    27,677,502    14,411,140
                     --------------------------------------------------------
    Operating expenses
    Cost of revenue      7,951,244     6,288,948    22,463,250    19,208,952
    General and
     administrative      3,720,545     3,632,199    11,722,325    12,571,509
    Special charges              -       573,400             -       573,400
    Stock-based
     compensation          763,397       720,032     2,605,844     2,407,573
    Marketing            5,826,585     5,047,684    20,291,487    20,574,356
    Amortization of
     intangible assets
     and property &
     equipment           5,569,361     5,606,096    16,713,036    16,810,627
                     --------------------------------------------------------
                        23,831,132    21,868,359    73,795,942    72,146,417
                     --------------------------------------------------------
    Loss before the
     undernoted        (13,495,184)  (16,157,473)  (46,118,440)  (57,735,277)
    Interest revenue       285,738       434,731     1,181,142     1,936,112
    Interest expense     4,273,146     3,819,342    12,340,982    11,641,210
    Revaluation of
     derivative            503,600             -       503,600             -
    Foreign exchange
     gain (loss)          (803,122)    6,273,883     5,067,362     3,186,357
                     --------------------------------------------------------
    Net loss and
     comprehensive
     loss for the
     period            (18,789,314)  (13,268,201)  (52,714,518)  (64,254,018)
    Deficit -
     Beginning of
     period           (230,147,355) (162,568,125) (196,222,151) (111,582,308)
                     --------------------------------------------------------
    Deficit - End
     of period        (248,936,669) (175,836,326) (248,936,669) (175,836,326)
                     --------------------------------------------------------
                     --------------------------------------------------------
    Basic and fully
     diluted loss per
     common share            (0.39)        (0.28)        (1.10)        (1.35)
                     --------------------------------------------------------
                     --------------------------------------------------------
    


    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.
    Pre-Marketing Adjusted Operating Loss is defined as Adjusted Operating
Loss adding back total marketing expenses. We believe that Pre-Marketing
Adjusted Operating Loss is a good measure of operating performance before
investing to acquire new subscribers. 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 Pre-Marketing 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.

    
    ($000's)                                             Three Months Ended
                                                        May 31,       May 31,
                                                          2008          2007
                                                -----------------------------
    Reconciliation of loss before the
     undernoted to Adjusted Operating Loss
    Loss before the undernoted                         (13,495)      (16,157)
    Add back non-Adjusted Operating Loss
     items included in loss
      Amortization                                       5,569         5,606
      Stock-based compensation                             763           720
      Costs paid by parent company                          57            52
                                                -----------------------------

    Adjusted Operating Loss                             (7,106)       (9,779)
    Add back total marketing                             5,827         5,048
                                                -----------------------------
    Pre-Marketing Adjusted Operating Loss               (1,279)       (4,731)
                                                -----------------------------
                                                -----------------------------



    CANADIAN SATELLITE RADIO HOLDINGS INC.
    INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)


                           Three Months Ended          Nine Months Ended
                      May 31, 2008  May 31, 2007  May 31, 2008  May 31, 2007
                     --------------------------------------------------------
    Cash provided by
     (used in)
    Operating
     activities
    Net loss and
     comprehensive loss
     for the period   $(18,789,314) $(13,268,201) $(52,714,518) $(64,254,018)
    Add (deduct):
     Non-cash items
      Costs paid by
       parent company       57,004        51,822       167,017       151,833
      Stock-based
       compensation
       expense             763,397       720,032     2,605,844     2,407,573
      Amortization of
       intangible
       assets            4,799,680     4,820,642    14,398,513    14,464,695
      Amortization of
       property and
       equipment           769,682       785,454     2,295,669     2,345,932
      Accrued interest
       - debt            3,586,224     3,625,781     3,785,291     3,637,928
      Accrued interest
       receivable         (198,807)     (275,032)     (407,240)   (1,000,624)
      Interest
       accretion
       expense             298,864       172,500       762,763       517,500
      Increase in long
       term obligations  1,829,145         8,814     1,847,352        26,142
      Revaluation of
       derivative          503,600             -       503,600             -
      Loss on disposal
       of property and
       equipment            33,003             -       239,671             -
      Unrealized
       foreign exchange
       losses (gains)      798,086    (6,379,858)   (5,916,820)   (2,461,028)
    Net change in
     non-cash working
     capital related to
     operations          5,158,818     2,472,975    10,388,715     9,479,580
                     --------------------------------------------------------
    Net cash used in
     operating
     activities           (390,618)   (7,265,701)  (22,044,143)  (34,684,487)
                     --------------------------------------------------------
    Investing activities
    Payment of interest
     from restricted
     investments                 -             -     6,385,200     7,458,750
    Sale (purchase) of
     short-term
     investments, net      (93,498)            -   (10,880,477)   (5,850,000)
    Proceeds on sale
     of property and
     equipment                   -             -        31,022             -
    Purchase of
     property and
     equipment            (128,780)     (123,248)     (322,557)   (1,464,960)
    Purchase of
     computer software           -          (176)       (4,513)      (78,191)
                     --------------------------------------------------------
    Net cash provided
     by (used in)
     investing
     activities           (222,278)     (123,424)   (4,791,325)       65,599
                     --------------------------------------------------------
    Financing activities
    Proceeds from XM
     credit facility       771,019             -     2,289,002             -
    Proceeds from
     convertible notes           -             -    19,396,445             -
                     --------------------------------------------------------
    Net cash provided
     by financing
     activities            771,019             -    21,685,447             -
                     --------------------------------------------------------
    Foreign exchange
     gains (losses)
     on cash held in
     foreign currency        1,334      (742,834)       (9,805)     (272,348)
                     --------------------------------------------------------
    Change in cash
     during the period     159,457    (8,131,329)   (5,159,826)  (34,891,236)
    Cash - Beginning
     of period           4,205,648    18,428,307     9,524,931    45,188,214
                     --------------------------------------------------------
    Cash - End of
     period              4,365,105    10,296,978     4,365,105    10,296,978
                     --------------------------------------------------------
                     --------------------------------------------------------

    Supplemental cash
     flow disclosures
    Utilization of XM
     credit facility     2,361,133             -     6,127,149             -
    

    %SEDAR: 00022901E




For further information:

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


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890