XM Canada reports third quarter financial results
Monday July 16, 11:28 am ET
>> Achieved 269,900 subscribers
Operating highlights:
- Announced XM Satellite Radio is the exclusive satellite radio provider of the NHL for the next eight seasons until 2015
- 150,000 General Motors vehicles equipped with factory-installed satellite radios on the road
- Increased retail distribution network with a year-to-date addition of more than 500 new locations, achieving a total of more than 3,300 retail locations
- Achieved 269,900 subscribers
- Improved performance in automotive sector with XM Canada now leading with over 80 per cent market share of factory-installed satellite radios
- Increased to 120 channels to provide more unique content and programming choices than any other satellite radio provider in Canada <<
TORONTO, July 16 /CNW/ - Canadian Satellite Radio Holdings Inc. ("CSR") (TSX:XSR - News), today reported its financial results for the third quarter ended May 31, 2007 based on the achievement of 269,900 subscribers.
"Our second anniversary is quickly approaching and marks a departure from our phase one launch period into a new phase of growth and development," said John Bitove, Chairman and CEO of Canadian Satellite Radio Holdings Inc. "We are pleased with our performance this quarter, and as we move forward we will continue to search for new opportunities to maintain our aggressive growth strategy and build our subscriber base. Our long-term agreement with the NHL is an example of our commitment to growth."
Financial results
For the three-month period ended May 31, 2007, XM Canada reported revenue of $5.7 million, an increase of 144 per cent over the third quarter of 2006. This increase in revenue is the direct result of an increase in our subscriber base. Revenue to XM Canada is generated by subscriptions, activation fees, sale of merchandise and advertising sales on Canadian-produced channels.
Adjusted operating loss(1) for the three-month period was $9.8 million, an improvement of $3.4 million over the third quarter of 2006. Adjusted operating loss is expected to improve as we continue to grow our subscriber base and manage operating expenses.
For the third quarter, Average Revenue Per Unit (ARPU) was $11.70, a decrease of $1.30 from the third quarter of 2006. We incurred Subscriber Acquisition Costs (SAC) of $40 per gross addition, a decrease of $29 from our third quarter of 2006. Cost Per Gross Addition (CPGA) was $178, a decrease of $63 over our third quarter of 2006.
The decline in ARPU and SAC from the third quarter of 2006 is primarily due to our fiscal 2007 holiday promotion, which included service credits and hardware rebates that are being amortized as a reduction of revenues over the term of the subscriber payment plan, as well as the introduction of multi-year plans during 2006 and an increasing number of family plan activations. The decline in SAC is also due to an increasing number of subscriber additions through our automotive partnerships. CPGA decreased due to a decrease in both SAC and advertising and marketing expenses.
Operational expenses for the three-month period ended May 31, 2007 included general and administrative expenses of $3.6 million, marketing spend of $5.0 million and cost of revenue of $6.3 million.
------------------------
(1) Adjusted operating loss defined in Consolidated Statement of
Operations and Deficit.
Conference Call / Webcast
John I. Bitove, Chairman and Chief Executive Officer and Michael Washinushi, Chief Financial Officer will discuss the third quarter results on Monday, July 16, 2007 at 2 p.m. (EDT). To participate in the conference call, please dial 1-416-644-3414 (Toronto) or 1-800-733-7571 (Toll Free).
A live audio webcast (listen-only mode) of the conference call will be available at
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID(equal sign)1908940
and www.cdnsatrad.com. The slides to accompany the financial results are found at www.cdnsatrad.com.
An archived recording of the conference will be available at 1-416-640-1917 (Toronto) or 1-877-289-8525 (Toll-free) (Passcode: 21237883 followed by the number sign.) on July 16, 2007 after 4 p.m. EDT until July 30, 2007 at 11:59 p.m. EDT.
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)
May 31, August 31,
2007 2006
$ $
Assets
Current assets
Cash 10,296,978 45,188,214
Short term investment 5,349,500 -
Accounts receivable 3,674,574 2,125,367
Inventory 162,659 600,124
Prepaid expenses and other assets 4,735,505 6,882,247
Restricted investments 13,362,233 13,663,023
----------------------------
37,581,449 68,458,975
Restricted investments 12,777,479 19,370,939
Deferred financing costs 4,628,780 5,146,280
Property and equipment 21,604,010 23,221,760
Contract rights, distribution rights and
computer software 225,138,064 239,648,067
----------------------------
Total assets 301,729,782 355,846,021
----------------------------
----------------------------
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities 16,198,105 13,516,770
Deferred revenue 7,649,117 2,969,366
----------------------------
23,847,222 16,486,136
Long-term debt 108,056,466 110,660,000
Deferred revenue 3,285,406 1,032,289
Long-term obligations 361,774 310,405
----------------------------
Total liabilities 135,550,868 128,488,830
----------------------------
Shareholders' Equity
Share capital 312,785,862 312,595,362
Contributed surplus 29,229,378 26,344,137
Deficit (175,836,326) (111,582,308)
----------------------------
Total shareholders' equity 166,178,914 227,357,191
----------------------------
Total liabilities and shareholders' equity 301,729,782 355,846,021
----------------------------
----------------------------
Canadian Satellite Radio Holdings Inc.
Interim Consolidated Statement of Operations and Deficit (Unaudited)
Three months ended Nine months ended
May 31, May 31,
2007 2006 2007 2006
$ $ $ $
Revenue 5,710,886 2,340,969 14,411,140 3,531,909
--------------------------------------------------------
Operating expenses
Cost of revenue 6,288,948 5,918,027 19,208,952 14,237,726
Indirect costs - - - 827,125
General and
administrative 3,632,199 3,435,982 12,571,509 13,036,452
Special charges 573,400 - 573,400
Stock-based
compensation 720,032 691,251 2,407,573 22,935,797
Marketing 5,047,684 6,230,690 20,574,356 20,246,285
Amortization of
intangible assets
and property and
equipment 5,606,096 5,252,920 16,810,627 10,444,230
--------------------------------------------------------
21,868,359 21,528,870 72,146,417 81,727,615
--------------------------------------------------------
Loss before the
undernoted (16,157,473) (19,187,901) (57,735,277) (78,195,706)
Interest revenue 434,731 1,172,632 1,936,112 1,617,969
Interest expenses 3,819,342 3,849,197 11,641,210 4,506,123
Foreign exchange
gain (6,273,883) (1,460,860) (3,186,357) (2,112,090)
--------------------------------------------------------
Net loss for the
period (13,268,201) (20,403,606) (64,254,018) (78,971,770)
Deficit -
Beginning of
period (162,568,125) (67,446,894) (111,582,308) (8,878,730)
--------------------------------------------------------
Deficit - End of
period (175,836,326) (87,850,500) (175,836,326) (87,850,500)
--------------------------------------------------------
--------------------------------------------------------
Basic and fully
diluted loss per
common share (0.28) (0.43) (1.35) (2.66)
--------------------------------------------------------
--------------------------------------------------------
Canadian Satellite Radio Holdings Inc.
Reconciliation of Loss before the undernoted to Adjusted Operating Loss
3 Months Ended 3 Months Ended
May 31, 2007 May 31, 2006
Loss before the undernoted as reported (16,157,473) (19,187,901)
Add back non-Adjusted Operating Loss items
included in Operating loss
Amortization 5,606,096 5,252,920
Stock-Based Compensation 720,032 691,251
Costs paid by parent company 51,822 0
Adjusted Operating Loss (9,779,523) (13,243,730)
Adjusted Operating Loss
-----------------------
Adjusted Operating Loss is defined as Loss before the undernoted excluding
amortization, stock-based compensation to employees, directors, officers and
service providers, and non-cash costs paid by 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.
Canadian Satellite Radio Holdings Inc.
Interim Consolidated Statement of Cash Flows (Unaudited)
Three months ended Nine months ended
May 31, May 31,
2007 2006 2007 2006
$ $ $ $
Cash provided by
(used in)
Operating activities
Net loss for the
period (13,268,201) (20,403,606) (64,254,018) (78,971,770)
Add (deduct):
Non-cash items
Costs paid by
parent company 51,822 - 151,833 2,862,764
Stock-based
compensation
expense 720,032 691,251 2,407,573 22,935,797
Amortization of
intangible
assets 4,820,642 4,601,802 14,464,695 9,289,276
Amortization of
property and
equipment 785,454 651,118 2,345,932 1,154,954
Accrued interest
- debt 3,625,781 (460,000) 3,637,928 (460,000)
Accrued interest
receivable (275,032) - (1,000,624) -
Amortization of
deferred
financing costs 172,500 - 517,500 -
Interest
accretion expense 8,814 5,470 26,142 21,879
Unrealized
foreign exchange
gains (6,279,858) (1,083,296) (2,461,028) (1,793,087)
Net change in
non-cash working
capital related
to operations 2,472,975 (3,252,145) 9,479,580 (4,428,400)
-------------------------------------------------------
Net cash used in
operating
activities (7,265,071) (19,249,406) (34,684,487) (49,388,587)
-------------------------------------------------------
Investing activities
Restricted investments - - (41,015,595)
Payment of interest
from restricted
investments - - 7,458,750
Purchase of short
term investments - (5,850,000)
Purchase of property
and equipment (123,248) (590,830) (1,464,960) (20,337,412)
Purchase of computer
software (176) (520,088) (78,191) (5,934,363)
-------------------------------------------------------
Net cash used in
(provided by)
investing
activities (123,424) (1,110,918) 65,599 (67,287,370)
-------------------------------------------------------
Financing activities
Initial public
offering - net of
issuance costs - - - 50,042,354
Shares issued to
CSR Investments - - - 15,000,000
Deferred financing
costs - (600,000) - (5,245,471)
Proceeds from
long-term debt - - - 115,420,000
-------------------------------------------------------
Net cash provided by
financing activities - (600,000) - 175,216,883
-------------------------------------------------------
Foreign exchange
losses on cash held
in foreign currency (742,834) (1,094,720) (272,348) (1,598,540)
-------------------------------------------------------
Change in cash
during the period (8,131,329) (22,055,044) (34,891,236) 56,942,386
Cash - Beginning
of period 18,428,307 78,997,450 45,188,214 20
-------------------------------------------------------
Cash - End of
period 10,296,978 56,942,406 10,296,978 56,942,406
-------------------------------------------------------
-------------------------------------------------------
Supplemental cash
flow disclosures
Rights acquired
through issuance
of shares - 14,740,988 - 245,152,988
Property and
equipment purchases
in accounts payable - 561,642 - 561,642
Computer software
purchases in
accounts payable - 914,045 - 914,045
Prepaid advertising
purchased through
issuance of equity - - 2,000,000
Additions to property
and equipment and
long-term obligations
for asset retirement
obligations - - 512,873
For further information
For investor information, please contact: (416) 408-6899, investor.relations@xmradio.ca
For media information, please contact: Wilcox Group, (416) 203-6666, XMradio@wilcoxgroup.com
Source: Canadian Satellite Radio Holdings Inc.; XM Canada
http://biz.yahoo.com/cnw/070716/xm_canada_q3_results.html?.v=1
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