XM Canada's strong performance for first quarter 2009 reflects successful execution of its strategy



    
    Business and financial measurements continue to gain momentum generating
    third consecutive quarter of positive cash(1)
    

    TORONTO, Jan. 14 /CNW/ - Canadian Satellite Radio Holdings Inc., parent
company of XM Canada ("CSR" or the "Company") (TSX: XSR), today announced
strong financial results for the first fiscal 2009 quarter ended November 30,
2008.
    "Despite prevailing economic headwinds, our performance continued to
improve in the first quarter of 2009, reflecting the successful execution of
our business strategy," said Michael Moskowitz, President and Chief Executive
Officer of XM Canada. "Over the past year, we have made prudent strategic
decisions to reduce costs and to drive revenue through high return initiatives
aimed at growing automotive, optimizing the aftermarket and engendering
loyalty. We believe our solid foundation, focused strategy and ability to
generate positive cash will help us continue to deliver results and mitigate
the impact of a challenging economic climate."

    
    First Quarter 2009 Financial Highlights

    Three months ended November 30, 2008 versus three months ended
    November 30, 2007
    -   Increased total revenue by 53 per cent to $12.5 million
    -   Generated positive cash(1) of $0.5 million
    -   Improved Pre-Marketing Adjusted Operating Profit(2) to $2.5 million
        from loss of ($3.5 million)
    -   Net loss (before foreign exchange gain/loss) improved by $6.3 million
        or 31 per cent

    Recent Business Highlights

    -   Launched XMp3, the world's smallest portable satellite radio and Mp3
        player all in one
    -   Unveiled new enhanced channel lineup, which provides XM Canada
        listeners with new music and entertainment and extends sports
        programming to feature the NBA
    -   Launched enhanced NHL marketing strategy and initiatives, which
        includes acting as title sponsor of the NHL All-Star game and fan
        balloting as well as the Winter Classic
    

    Financial Performance

    Revenue for the three months of fiscal 2009 increased 53 per cent year
over year to $12.5 million from $8.1 million. The increase was primarily
attributable to growth in our subscriber base and an increase in Average
Monthly Subscription Revenue per Subscriber (ARPU).
    ARPU grew 6 per cent to $11.94 for the three months of fiscal 2009 from
$11.27 in the first fiscal quarter of 2008. Some of this growth is
attributable to the fact that a portion of our customer base had not yet
transitioned from our previous basic monthly subscription price of $12.99 to
the new $14.99 price, which took effect for existing subscribers in the first
quarter of 2008. ARPU is below the basic service price due to promotions
offered to new automotive self-paying subscribers, family plan subscribers and
discounted multi-year plans that provide the Company with a significant
working capital benefit.
    Adjusted Operating Profit (Loss) improved by $7.2 million to ($3.3
million) in the first quarter of fiscal 2009 from ($10.5 million) in the first
quarter of 2008. The significant improvement in Adjusted Operating Profit
(Loss) was driven primarily by (i) a $4.3 million revenue improvement, (ii) a
one-time savings of $1.8 million as a result of the modification of a service
provider contract, and (iii) a reduction of $1.3 million in marketing expenses
versus the first quarter of 2008. As we continue to grow our revenue and
manage programming, general & administrative and marketing costs, we expect
Adjusted Operating Profit (Loss) to continue to improve.
    Pre-Marketing Adjusted Operating Profit (Loss) improved to $2.5 million
for the first three months of fiscal 2009 from ($3.5 million) for the first
three months of fiscal 2008, an improvement of $6.0 million. The first quarter
of 2009 is the second consecutive quarter in which we have generated
Pre-Marketing Adjusted Operating Profit since launch. As we continue to grow
our revenue and manage programming and general & administrative costs, we
expect Pre-Marketing Adjusted Operating Profit (Loss) to continue to improve.
    Per Subscriber Acquisition Cost (SAC) decreased 36 per cent year over
year to $59 in the first fiscal quarter of 2009 from $92 in the first fiscal
quarter of 2008. The decrease in SAC is attributable to (i) a higher
proportion of OEM gross additions, which have a lower acquisition cost
compared to the acquisition of retail gross additions, and (ii) a reduction in
spending on retail promotions.
    Cost per Gross Addition (CPGA) declined $51, or 28 per cent, to $130 for
the first fiscal quarter of 2009 from $181 for the first three months of
fiscal 2008. CPGA declined year-over-year as a result of lower SAC, less
advertising and media spend and a shift in expenditure to direct marketing
linked to the automotive business. We expect that we will be able to continue
to leverage CPGA downward as we grow our subscriber base through cost
efficient distribution channels.
    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, 2008 as part of its Annual General Meeting on
Thursday, January 15, 2009 at 10 a.m. EST.
    To participate by conference call, please dial 416-644-3434 within the
Toronto area, or 1-866-250-4892 (toll-free) outside of Toronto. A live audio
webcast will be available at   
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2485560. The AGM will
be held at The TSX Broadcast Centre located at 130 King Street West, Toronto.
    A slide presentation intended for simultaneous viewing will be available
the morning of Thursday, January 15, 2009 at www.xmradio.ca.
    An archived recording of the audio webcast will be available for 90 days
following the original broadcast on CSR's website at: www.xmradio.ca.

    About Canadian Satellite Radio Holdings Inc.

    Canadian Satellite Radio Holdings Inc. (TSX: XSR) operates as XM Canada
and is Canada's premium digital audio entertainment and information company
with the best signal coverage across the country. With 130 digital channels of
choice, XM Canada offers Canadian listeners the most unique and original
Canadian and international programming, including commercial-free music
channels, exclusive live concerts and sports coverage, and the best in talk,
comedy, children's and entertainment programming. A free seven-day trial of XM
Radio Online is available at http://www.xmradio.ca/freetrial/. Visit
www.xmradio.ca for programming and subscription information.

    XM Canada is the satellite entertainment leader in the Canadian
automotive market with long-term factory installation agreements with
manufacturers that own close to 60 per cent share of the domestic vehicle
market. XM's industry-leading products are available at shop.xmradio.ca, and
at retailers nationwide.
    XM programming is available by subscribing directly through XM Canada and
is also available as streams of commercial-free XM music channels on TELUS
Mobile Radio and Rogers Wireless Radio on Demand. XM Canada is the exclusive
music channel provider on Air Canada's flights and is available in select Avis
Budget Group rental vehicles.
    To find out more about Canadian Satellite Radio Holdings Inc. (TSX: XSR),
visit our website at www.xmradio.ca/about/.

    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)

                                           November 30, 2008 August 31, 2008
                                           ----------------------------------
    ASSETS
    Current assets
    Cash                                       $   6,405,456   $   6,344,793
    Short term investments                        11,679,832      11,282,146
    Restricted investments - letter of credit      4,000,000       4,000,000
    Accounts receivable                            4,265,669       5,538,348
    Inventory                                        264,871         229,597
    Prepaid expenses and other assets              2,187,498       2,410,579
    Restricted investments                         7,811,589       6,630,744
                                               ------------------------------
                                                  36,614,915      36,436,207
    Long-term prepaids                             1,576,189       1,381,685
    Property and equipment                        16,980,994      17,748,597
    Contract rights, distribution rights and
     computer software                           195,917,341     200,718,239
                                               ------------------------------
    Total assets                                 251,089,439     256,284,728
                                               ------------------------------
                                               ------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities
    Accounts payable and accrued liabilities      19,942,300      20,618,164
    Interest payable                               5,266,765         849,059
    Deferred revenue                              20,193,592      19,926,157
                                               ------------------------------
                                                  45,402,657      41,393,380
    Long-term debt                               144,650,393     124,856,195
    Deferred revenue                               3,854,112       3,588,033
    Long-term obligations                          3,735,467       2,435,481
                                               ------------------------------
    Total liabilities                            197,642,629     172,273,089
                                               ------------------------------

    Shareholders' equity
    Share capital                                314,834,565     314,834,565
    Contributed surplus                           40,669,914      39,723,905
    Deficit                                     (302,057,669)   (270,546,831)
                                               ------------------------------
    Total shareholders' equity                    53,446,810      84,011,639
                                               ------------------------------
    Total liabilities and shareholders' equity   251,089,439     256,284,728
                                               ------------------------------
                                               ------------------------------



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

                                                        2008            2007
                                               ------------------------------

    Revenue                                    $  12,456,663   $   8,145,951
                                               ------------------------------
    Operating expenses
    Cost of revenue                                7,446,518       7,348,843
    General and administrative                     4,394,479       4,305,545
    Modification of service provider contract     (1,792,256)              -
    Stock-based compensation                         690,363       1,072,370
    Marketing                                      5,731,384       7,039,308
    Amortization of intangible assets and
     property and equipment                        5,572,313       5,574,011
                                               ------------------------------
                                                  22,042,801      25,340,077
                                               ------------------------------
    Loss before the undernoted                    (9,586,138)    (17,194,126)
    Interest revenue                                 193,235         385,373
    Interest expense                               4,856,121       3,723,743
    Foreign exchange gain (loss)                 (17,261,814)      4,375,456
                                               ------------------------------
    Net loss and comprehensive loss for the
     period                                      (31,510,838)    (16,157,040)
    Deficit - Beginning of period               (270,546,831)   (196,222,151)
                                               ------------------------------
    Deficit - End of period                     (302,057,669)   (212,379,191)
                                               ------------------------------
                                               ------------------------------
    Basic and fully diluted loss per common
     share                                             (0.66)          (0.34)
                                               ------------------------------
                                               ------------------------------

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

    Adjusted Operating Profit (Loss) is defined as operating profit (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 Profit (Loss), as
opposed to operating profit (loss) or net profit (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 the Statement of Operations and
Deficit. We believe Adjusted Operating Profit (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 Profit (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 Profit (Loss) may not be comparable
to similarly titled measures of other companies.
    Adjusted Operating Profit (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 Profit (Loss) is defined as Adjusted
Operating Profit (Loss) adding back total marketing expenses. We believe that
Pre-Marketing Adjusted Operating Profit (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 the Statement of Operations and Deficit. We believe Pre-Marketing
Adjusted Operating Profit (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
                                                        November 30,
                                                        2008            2007
                                               ------------------------------

    Reconciliation of loss before the
     undernoted to Adjusted Operating Loss
      Loss before the undernoted                      (9,586)        (17,194)
    Add back non-Adjusted Operating Loss items
     included in Operating Loss
        Amortization                                   5,572           5,574
        Stock-based compensation                         690           1,072
        Costs paid by parent company                      60              54
                                               ------------------------------
    Adjusted Operating Loss                           (3,264)        (10,494)
        Add total marketing                            5,731           7,039
    Pre-Marketing Adjusted Operating Profit (Loss)     2,468          (3,455)



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

                                                        2008            2007
                                               ------------------------------
    Cash provided by (used in)
    Operating activities
    Net loss and comprehensive loss for the
     period                                    $ (31,510,838)  $ (16,157,040)
    Add (deduct): Non-cash items
      Costs paid by parent company                    59,786          54,351
      Stock-based compensation expense               690,363       1,072,370
      Amortization of intangible assets            4,800,898       4,799,404
      Amortization of property and equipment         771,118         774,607
      Accrued interest - debt                      4,417,706       3,533,801
      Accrued interest receivable                    (71,298)       (208,433)
      Interest accretion expense                     244,769         198,373
      Increase in long-term obligations            1,299,986               -
      Loss on disposal of property and equipment      22,516         187,813
      Unrealized foreign exchange loss (gain)     16,443,679      (5,106,587)
    Net change in non-cash working capital
     related to operations                         3,231,318       6,373,742
                                               ------------------------------
    Net cash provided by (used in) operating
     activities                                      400,003      (4,477,599)
                                               ------------------------------
    Investing activities
    Sale of short-term investments                 8,297,326       5,850,000
    Purchase of short-term investments            (8,695,012)    (25,181,793)
    Proceeds on sale of property and equipment             -          31,022
    Purchase of property and equipment               (24,928)        (11,626)
    Purchase of computer software                          -          (4,513)
                                               ------------------------------
    Net cash used in investing activities           (422,614)    (19,316,910)
                                               ------------------------------
    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                              83,274         (53,084)
                                               ------------------------------
    Change in cash during the period                  60,663      (4,451,148)
    Cash - Beginning of period                     6,344,793       9,524,931
                                               ------------------------------
    Cash - End of period                           6,405,456       5,073,783
                                               ------------------------------
                                               ------------------------------

    Supplemental cash flow disclosures
    Utilization of XM credit facility              1,861,410       1,003,615



    ----------------------------------
    (1) Calculated as the change in cash during the period less sale
        (purchase) of short-term investments and restricted investments, net.

    (2) See section 2.0 entitled "Operating Definitions" in Management's
        Discussion & Analysis for the quarter ended November 30, 2008 found
        at www.sedar.com.

    (3) Fixed and marketing costs include customer care & billing,
        broadcast & operations, programming & content, general &
        administrative, marketing support and advertising & marketing and
        excludes subsidies and distributions.
    





For further information:

For further information: Investors: Morlan Reddock, (416) 408-6899,
investor.relations@xmradio.ca; Media: Lorena Cordoba, (416) 924-5700 Ext.
4089, lorena.cordoba@cohnwolfe.ca


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