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þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
New York, New York 10016
(Address of principal executive offices)
Telephone: (212) 697-1105
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Name of each exchange on which registered | |
Common stock, $.01 par value | NASDAQ |
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
Part and Item Number of | ||
Document | Form 10-K into which incorporated | |
Loral Notice of Annual Meeting of Stockholders and Proxy Statement for the Annual Meeting of Stockholders to be held May 18, 2010 | Part II, Item 5(d) Part III, Items 11 through 14 |
INDEX TO ANNUAL REPORT ON FORM 10-K
For the Year Ended December 31, 2009
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13 | ||||||||
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Exhibit 10.23 | ||||||||
Exhibit 10.31 | ||||||||
Exhibit 21.1 | ||||||||
Exhibit 23.1 | ||||||||
Exhibit 23.2 | ||||||||
Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 32.1 | ||||||||
Exhibit 32.2 |
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Year ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Total segment revenues | $ | 1,008 | $ | 881 | $ | 814 | ||||||
Eliminations | (15 | ) | (12 | ) | (53 | ) | ||||||
Revenues from satellite manufacturing as reported | $ | 993 | $ | 869 | $ | 761 | ||||||
Segment Adjusted EBITDA before eliminations(1) | $ | 91 | $ | 45 | $ | 35 | ||||||
(1) | See Consolidated Operating Results in Management’s Discussion and Analysis of Financial Condition and Results of Operations for significant items that affect comparability between the periods presented (see Note 15 to the Loral consolidated financial statements for the definition of Adjusted EBITDA). |
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• | in Europe, Middle East, Africa: Eutelsat, SES Astra, Arabsat, Nilesat, HellaSat and Turksat; |
• | in Asia: AsiaSat, Measat, Thaicom, APT, PT Telkom, and Optus; and |
• | in Latin America: Satmex, Star One, Arsat and HispaSat. |
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Expected | ||||||||||||||||||||||||||
Orbital Location | Manufacturer’s | End-of- | ||||||||||||||||||||||||
Regions | Launch | End-of-Service- | Orbital | Transponders(1) | ||||||||||||||||||||||
Covered | Date | Life | Maneuver Life(1) | C-band(2) | Ku-band(2) | Ka-band | L-band(3) | Model | ||||||||||||||||||
Nimiq 1 | 91.1°WL Canada, | May 1999 | 2011 | 2024 | — | 32@24MHz | — | — | A2100 AX | |||||||||||||||||
Continental United | (Lockheed Martin) | |||||||||||||||||||||||||
States | ||||||||||||||||||||||||||
Nimiq 2(4) | 91.1°WL Canada, | December 2002 | 2015 | 2021 | — | 11@24MHz | — | — | A2100 AX | |||||||||||||||||
Continental United | (Lockheed Martin) | |||||||||||||||||||||||||
States | ||||||||||||||||||||||||||
Nimiq 4 | 82° WL Canada | September 2008 | 2023 | 2027 | 32@24 MHz | 8@54 MHz | E3000 (EADS Astrium) | |||||||||||||||||||
Nimiq 5 | 72.7° WL Canada, Continental United States | September 2009 | 2024 | 2035 | 32@24MHz | SS/L 1300 | ||||||||||||||||||||
Anik F1(5) | 107.3°WL South America | November 2000 | 2016 | 2016 | 12@36MHz | 16@27MHz | — | — | BSS702 (Boeing) | |||||||||||||||||
Anik F2 | 111.1° WL Canada, | July 2004 | 2019 | 2027 | 24@36MHz | 32@27MHz | 31@56/112 MHz | — | BSS702 | |||||||||||||||||
Continental United | 6@500MHz | (Boeing) | ||||||||||||||||||||||||
States | 1@56/112MHz | |||||||||||||||||||||||||
Anik F1R(3) | 107.3° WL North America | September 2005 | 2020 | 2023 | 24@36MHz | 32@27MHz | — | 2@20MHz | E3000 (EADS Astrium) | |||||||||||||||||
Anik F3 | 118.7°WL Canada, | April 2007 | 2022 | 2026 | 24@36MHz | 32@27MHz | 2@75MHz | — | E3000 (EADS Astrium) | |||||||||||||||||
Continental United | (500MHz) | |||||||||||||||||||||||||
States | ||||||||||||||||||||||||||
Telstar 11N | 37.55° WL North and Central America, Europe, Africa and the maritime Atlantic Ocean region | February 2009 | 2024 | 2026 | 39@27/54MHz | SS/L 1300 | ||||||||||||||||||||
Telstar 12(6) | 15°WL Eastern United | October 1999 | 2012 | 2016 | — | 37@54MHz | — | — | SS/L 1300 | |||||||||||||||||
States, SE Canada, | ||||||||||||||||||||||||||
Europe, Russia, Middle | ||||||||||||||||||||||||||
East, South Africa, | ||||||||||||||||||||||||||
portions of South and | ||||||||||||||||||||||||||
Central America | ||||||||||||||||||||||||||
Telstar | 63°WL Brazil And | January 2004 | 2019 | 2011 | — | 9@72MHz | — | — | SS/L 1300 | |||||||||||||||||
14/Estrela | portions of Latin | 9@36MHz | ||||||||||||||||||||||||
do Sul | America, North | 2@28MHz | ||||||||||||||||||||||||
America, Atlantic | 1@56MHz | |||||||||||||||||||||||||
Ocean | ||||||||||||||||||||||||||
Telstar 18(7) | 138° EL India, South | June 2004 | 2017 | 2018 | 17@36MHz | 6@54MHz | — | — | SS/L 1300 | |||||||||||||||||
East Asia, China, | 1@54MHz | 1@40MHz | ||||||||||||||||||||||||
Australia And Hawaii |
(1) | Telesat’s current estimate of when each satellite will be decommissioned, taking account of anomalies and malfunctions the satellites have experienced to date and other factors such as remaining fuel levels, consumption rates and other available engineering data. These estimates are subject to change and it is possible that the actual orbital maneuver life of any of these satellites will be shorter than Telesat currently anticipates. Further, it is anticipated that the payload capacity of each satellite may be reduced prior to the estimated end of commercial service life. For example, Telesat currently anticipates that it will need to commence the turndown of transponders on Anik F1 in 2011, as a result of further degradation in available power. | |
(2) | Includes the DBS Ku-Band, extended C-band and extended Ku-band in certain cases. | |
(3) | Telesat does not provide service in the L-band. The L-band payload is licensed to Telesat’s customer by the FCC. |
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(4) | It is expected that the available capacity in Nimiq 2 will be reduced over time as a result of power system limitations due to malfunctions affecting available power. The number of Ku-band transponders stated above refers to the number of active saturated Ku-band transponders as of December 31, 2009. | |
(5) | Anik F1’s commercial service life is constrained by power availability. | |
(6) | Telstar 12 has 38 54 MHz transponders. Four of these transponders are leased to Eutelsat to settle coordination issues and Telesat leases back three of these transponders. | |
(7) | Includes 16.6 MHz of C-band capacity provided to the Government of Tonga in lieu of a cash payment for the use of the orbital location. The satellite carries additional transponders (the “APT transponders”), not shown on the table, as to which APT has a prepaid lease through the end of life of the satellite in consideration for APT’s funding a portion of the satellite’s cost. This transaction was accounted for as a sales-type lease, because substantially all of the benefits and risks incident to the ownership of the leased transponders were transferred to APT. Telesat has agreed with APT among other things that if Telesat is able to obtain the necessary approvals and licenses from the U.S. government under U.S. export laws, it would transfer title to the APT transponders on Telstar 18 to APT, as well as a corresponding interest in the elements on the satellite that are common to or shared by the APT transponders and the Telesat transponders. As required under its agreement with APT, Telesat acquired two transponders from APT for an additional payment in August 2009. |
• | Satmex 5: Three-36MHz Ku-band transponders; |
• | Satmex 6: Two-36MHz C-band transponders; Two-36MHz Ku-band transponders; and |
• | Agila 2 (Mabuhay): Two-36MHz C-band transponders and five and one half 36 MHz Ku-band transponders |
Telstar 14R | Nimiq 6 | |||
Orbital Location | 63oWL | TBD | ||
Regions Covered | South America, | Canada, | ||
Continental US, | Continental US | |||
Andean Region, | ||||
North and Mid-Atlantic Ocean Region | ||||
Planned In-Service Date | Second half of 2011 | Mid-2012 | ||
Manufacturer’s End-of- Service-Life | 2026 | 2027 | ||
Customer Committed Capacity | — | 100% | ||
Transponders: | ||||
Ku-band | 58 @36 MHz | 32 @ 24 MHz | ||
Model | SSL 1300 | SSL 1300 |
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Year ended December 31, | ||||||||||||
2009 | 2008 | 2007(1) | ||||||||||
(In millions) | ||||||||||||
Revenue: | ||||||||||||
Total segment revenues | $ | 692 | $ | 685 | $ | 241 | ||||||
Eliminations | — | — | (2 | ) | ||||||||
Affiliate eliminations(2) | (692 | ) | (685 | ) | (118 | ) | ||||||
Revenues from satellite services as reported | $ | — | $ | — | $ | 121 | ||||||
Adjusted EBITDA: | ||||||||||||
Total segment Adjusted EBITDA | $ | 488 | $ | 436 | $ | 118 | ||||||
Eliminations | — | — | (2 | ) | ||||||||
Affiliate eliminations(2) | (488 | ) | (427 | ) | (65 | ) | ||||||
Adjusted EBITDA from satellite services after eliminations(3) | $ | — | $ | 9 | $ | 51 | ||||||
(1) | Satellite Services segment’s performance for 2007 includes Loral Skynet through October 30, 2007 and Telesat for the period from October 31, 2007 to December 31, 2007. | |
(2) | Affiliate eliminations represent the elimination of amounts attributable to Telesat. | |
(3) | See Consolidated Operating Results in Management’s Discussion and Analysis of Financial Condition and Results of Operations for significant items that affect comparability between the periods presented (see Note 15 to the consolidated financial statements for the definition of Adjusted EBITDA). |
Telesat | ||
For the Period from | ||
January 1, | ||
2007 to | ||
October 30, | ||
2007 | ||
Total operating revenues | CAD 457.8 | |
Adjusted EBITDA | CAD 263.2 |
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• | Risk Factors Associated With Satellite Manufacturing |
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• | Risk Factors Associated With Satellite Services |
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High | Low | |||||||
Year ended December 31, 2009 | ||||||||
Quarter ended December 31, 2009 | $ | 34.89 | $ | 24.74 | ||||
Quarter ended September 30, 2009 | 29.06 | 19.27 | ||||||
Quarter ended June 30, 2009 | 34.83 | 19.75 | ||||||
Quarter ended March 31, 2009 | 22.90 | 8.90 | ||||||
Year ended December 31, 2008 | ||||||||
Quarter ended December 31, 2008 | $ | 15.86 | $ | 6.04 | ||||
Quarter ended September 30, 2008 | 18.81 | 13.29 | ||||||
Quarter ended June 30, 2008 | 25.42 | 15.02 | ||||||
Quarter ended March 31, 2008 | 34.20 | 21.78 |
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(In thousands, except per share data)
Successor Registrant | Predecessor Registrant | |||||||||||||||||||||||
For the Period | For the Period | |||||||||||||||||||||||
October 2, | January 1, | |||||||||||||||||||||||
2005 to | 2005 to | |||||||||||||||||||||||
Year Ended December 31, | December 31, | October 1, | ||||||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | 2005 | |||||||||||||||||||
Statement of operations data: | ||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Satellite Manufacturing | $ | 993,400 | $ | 869,398 | $ | 761,363 | $ | 636,632 | $ | 161,069 | $ | 318,587 | ||||||||||||
Satellite Services | — | — | 121,091 | 160,701 | 36,096 | 110,596 | ||||||||||||||||||
Total Revenues | 993,400 | 869,398 | 882,454 | 797,333 | 197,165 | 429,183 | ||||||||||||||||||
Operating income (loss) from continuing operations(1) | 20,211 | (193,977 | ) | 45,256 | 29,818 | (4,945 | ) | (67,095 | ) | |||||||||||||||
Gain on discharge of pre-petition obligations and fresh-start adjustments(2) | — | — | — | — | — | 1,101,453 | ||||||||||||||||||
Income (loss) from continuing operations before income taxes and equity in net income (losses) of affiliates(3)(4) | 26,975 | (151,523 | ) | 157,786 | 30,117 | (5,395 | ) | 1,022,651 | ||||||||||||||||
Income tax (provision) benefit | (5,571 | ) | (45,744 | ) | (83,457 | ) | (20,880 | ) | (1,752 | ) | 10,901 | |||||||||||||
Income (loss) from continuing operations before equity in net income (losses) of affiliates | 21,404 | (197,267 | ) | 74,329 | 9,237 | (7,147 | ) | 1,033,552 | ||||||||||||||||
Equity in net income (losses) of affiliates(5) | 210,298 | (495,649 | ) | (21,430 | ) | (7,163 | ) | (5,447 | ) | (2,796 | ) | |||||||||||||
Income (loss) from continuing operations | 231,702 | (692,916 | ) | 52,899 | 2,074 | (12,594 | ) | 1,030,756 | ||||||||||||||||
Gain on sale of discontinued operations, net of taxes(6) | — | — | — | — | — | 13,967 | ||||||||||||||||||
Net income (loss) | 231,702 | (692,916 | ) | 52,899 | 2,074 | (12,594 | ) | 1,044,723 | ||||||||||||||||
Net (income) loss attributable to noncontrolling interest | — | — | (23,240 | ) | (24,794 | ) | (2,667 | ) | 126 | |||||||||||||||
Net income (loss) attributable to Loral Space & Communications Inc. | 231,702 | (692,916 | ) | 29,659 | (22,720 | ) | (15,261 | ) | 1,044,849 | |||||||||||||||
Preferred dividends | — | (24,067 | ) | (19,379 | ) | — | — | — | ||||||||||||||||
Beneficial conversion feature related to the issuance of Loral Series A-1 Preferred Stock(7) | — | — | (25,685 | ) | — | — | — | |||||||||||||||||
Net income (loss) applicable to Loral Space & Communications Inc. common shareholders | 231,702 | (716,983 | ) | (15,405 | ) | (22,720 | ) | (15,261 | ) | 1,044,849 | ||||||||||||||
Basic earnings (loss) per share: | ||||||||||||||||||||||||
Continuing operations | $ | 7.79 | $ | (35.13 | ) | $ | (0.77 | ) | $ | (1.14 | ) | $ | (0.76 | ) | $ | 23.37 | ||||||||
Discontinued operations | — | — | — | — | — | 0.32 | ||||||||||||||||||
Earnings (loss) per share | $ | 7.79 | $ | (35.13 | ) | $ | (0.77 | ) | $ | (1.14 | ) | $ | (0.76 | ) | $ | 23.69 | ||||||||
Diluted earnings (loss) per share: | ||||||||||||||||||||||||
Continuing operations | $ | 7.73 | $ | (35.13 | ) | $ | (0.77 | ) | $ | (1.14 | ) | $ | (0.76 | ) | $ | 23.37 | ||||||||
Discontinued operations | — | — | — | — | — | 0.32 | ||||||||||||||||||
Earnings (loss) per share | $ | 7.73 | $ | (35.13 | ) | $ | (0.77 | ) | $ | (1.14 | ) | $ | (0.76 | ) | $ | 23.69 | ||||||||
Cash flow data: | ||||||||||||||||||||||||
Provided by (used in) operating activities | 154,562 | (202,210 | ) | 27,123 | 88,002 | (38,531 | ) | (143,827 | ) | |||||||||||||||
(Used in) provided by investing activities(8) | (48,750 | ) | (47,308 | ) | 61,519 | (175,978 | ) | (5,089 | ) | 194,707 | ||||||||||||||
(Used in) provided by financing activities | (55,155 | ) | 52,372 | 39,510 | (1,278 | ) | 120,763 | — |
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Successor Registrant | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Balance sheet data: | ||||||||||||||||||||
Cash and cash equivalents | $ | 168,205 | $ | 117,548 | $ | 314,694 | $ | 186,542 | $ | 275,796 | ||||||||||
Short-term investments | — | — | — | 106,588 | — | |||||||||||||||
Total assets | 1,253,452 | 995,867 | 1,702,939 | 1,729,911 | 1,678,977 | |||||||||||||||
Debt, including current portion | — | 55,000 | — | 128,084 | 128,191 | |||||||||||||||
Non-current liabilities | 380,143 | 381,836 | 289,602 | 321,015 | 403,374 | |||||||||||||||
Equity | ||||||||||||||||||||
Loral Space & Communications Inc. shareholders’ equity | $ | 431,991 | $ | 209,657 | $ | 973,558 | $ | 647,002 | $ | 627,164 | ||||||||||
Noncontrolling interest | — | — | — | 214,256 | 200,000 | |||||||||||||||
Total equity | $ | 431,991 | $ | 209,657 | $ | 973,558 | $ | 861,258 | $ | 827,164 | ||||||||||
(1) | During 2008, we recorded a goodwill impairment charge of $187.9 million. In connection with the Telesat transaction, which closed on October 31, 2007, we recognized a gain of $104.9 million in 2007 on the contribution of substantially all of the assets and related liabilities of Loral Skynet to Telesat. See Note 6 to the Loral consolidated financial statements. | |
(2) | In connection with our emergence from Chapter 11 and our adoption of fresh-start accounting on October 1, 2005, we recognized a gain on discharge of pre-petition obligations and fresh-start adjustments of $1.101 billion, related interest expense of $13.2 million related to the holders of claims to be paid in cash and a tax benefit of $15.4 million, each of which is reflected separately in our statement of operations. | |
(3) | In connection with the Telesat transaction during 2007, we recognized a gain on foreign exchange contracts of $89.4 million (see Note 13 to the Loral consolidated financial statements). | |
(4) | During 2008, we recorded income of $58.3 million related to a gain on litigation recovery from Rainbow DBS and a loss of $19.5 million related to the award of attorneys’ fees and expenses to the plaintiffs for shareholder litigation concluded during 2008. | |
(5) | Beginning October 31, 2007, our principal affiliate is Telesat. Loral also has investments in XTAR and joint ventures providing Globalstar service, which are accounted for under the equity method. On December 21, 2007 Loral agreed to sell its interest in Globalstar do Brasil S.A. which resulted in Loral recording a charge of $11.3 million in 2007 (see Note 6 to the Loral consolidated financial statements). | |
(6) | During the period January 1, 2005 to October 1, 2005, we recorded a gain from the sale on March 17, 2004 of our North American satellites and related assets. | |
(7) | As of December 23, 2008, in accordance with a court ordered restated certificate of incorporation, the previously issued Loral Series-1 Preferred stock was cancelled. As the fair value of Loral’s common stock from January 1 to December 23, 2008 was less than the conversion price ($30.1504), we did not record any beneficial conversion feature during 2008 (see Note 10 to the Loral consolidated financial statements). | |
(8) | Cash flow (used in) provided by investing activities includes cash flow provided by (used in) investing activities of discontinued operations for the period January 1, 2005 to October 1, 2005. |
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Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Satellite Manufacturing | $ | 1,008.7 | $ | 881.4 | $ | 814.3 | ||||||
Satellite Services | 691.6 | 685.2 | 241.2 | |||||||||
Segment revenues | 1,700.3 | 1,566.6 | 1,055.5 | |||||||||
Eliminations(1) | (15.3 | ) | (12.0 | ) | (55.2 | ) | ||||||
Affiliate eliminations(2) | (691.6 | ) | (685.2 | ) | (117.8 | ) | ||||||
Revenues as reported(3) | $ | 993.4 | $ | 869.4 | $ | 882.5 | ||||||
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Satellite Manufacturing | $ | 90.6 | $ | 45.1 | $ | 34.5 | ||||||
Satellite Services | 488.1 | 436.5 | 118.4 | |||||||||
Corporate expenses | (21.4 | ) | (14.9 | ) | (37.9 | ) | ||||||
Segment Adjusted EBITDA before eliminations | 557.3 | 466.7 | 115.0 | |||||||||
Eliminations(1) | (1.7 | ) | (1.6 | ) | (6.1 | ) | ||||||
Affiliate eliminations(2) | (488.1 | ) | (427.2 | ) | (65.3 | ) | ||||||
Adjusted EBITDA | $ | 67.5 | $ | 37.9 | $ | 43.6 | ||||||
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Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Adjusted EBITDA | $ | 67.5 | $ | 37.9 | $ | 43.6 | ||||||
Depreciation, amortization and stock-based compensation(4) | (47.3 | ) | (44.0 | ) | (103.3 | ) | ||||||
Impairment of goodwill(5) | — | (187.9 | ) | — | ||||||||
Gain on contribution of Loral Skynet(6) | — | — | 104.9 | |||||||||
Operating income (loss) | 20.2 | (194.0 | ) | 45.2 | ||||||||
Interest and investment income | 8.3 | 11.9 | 39.3 | |||||||||
Interest expense(7) | (1.4 | ) | (2.3 | ) | (2.3 | ) | ||||||
Gain on foreign exchange contracts | — | — | 89.4 | |||||||||
Gain on litigation, net | — | 38.8 | — | |||||||||
Impairment of available for sale securities | — | (5.8 | ) | — | ||||||||
Loss on extinguishment of debt | — | — | (16.2 | ) | ||||||||
Other (expense) income | (0.1 | ) | (0.1 | ) | 2.4 | |||||||
Income tax provision | (5.6 | ) | (45.7 | ) | (83.5 | ) | ||||||
Equity in net income (losses) of affiliates | 210.3 | (495.7 | ) | (21.4 | ) | |||||||
Net income (loss) | $ | 231.7 | $ | (692.9 | ) | $ | 52.9 | |||||
(1) | Represents the elimination of intercompany sales and intercompany Adjusted EBITDA, primarily for satellites under construction by SS/L for Loral and its wholly owned subsidiaries and for Satellite Services leasing transponder capacity to SS/L. | |
(2) | Represents the elimination of amounts attributed to Telesat whose results are reported in our consolidated statements of operations as equity in net income (losses) of affiliates. |
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(3) | Includes revenues from affiliates of $92.1 million, $84.0 million and $22.0 million for the years ended December 31, 2009, 2008 and 2007, respectively. | |
(4) | Includes non-cash stock-based compensation of $7.5 million, $7.6 million and $26.3 million for the years ended December 31, 2009, 2008 and 2007, respectively (see Note 10 to the financial statements). | |
(5) | During the fourth quarter of 2008, we determined that the implied fair value of SS/L goodwill had dropped below its carrying value, and we recorded this impairment charge. | |
(6) | In connection with the Telesat transaction, which closed on October 31, 2007, we recognized a gain on the contribution of substantially all of the assets and related liabilities of Loral Skynet to Telesat (see Note 6 to the financial statements). | |
(7) | Interest expense for the year ended December 31, 2007 includes a reduction of $9 million resulting from the reduction of warranty liability. |
% Increase | ||||||||||||||||||||
(Decrease) | ||||||||||||||||||||
Year Ended | 2009 | 2008 | ||||||||||||||||||
December 31, | vs. | vs. | ||||||||||||||||||
2009 | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Revenue from Satellite Manufacturing | $ | 1,008 | $ | 881 | $ | 814 | 14 | % | 8 | % | ||||||||||
Eliminations | (15 | ) | (12 | ) | (53 | ) | 25 | % | (77 | )% | ||||||||||
Revenue from Satellite Manufacturing as reported | $ | 993 | $ | 869 | $ | 761 | 14 | % | 14 | % | ||||||||||
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Revenue from Satellite Services | $ | — | $ | — | $ | 123 | ||||||
Eliminations | — | — | (2 | ) | ||||||||
Revenue from Satellite Services as reported | $ | — | $ | — | $ | 121 | ||||||
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% Increase | ||||||||||||||||||||
(Decrease) | ||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||
Year Ended December 31, | vs. | vs. | ||||||||||||||||||
2009 | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Cost of Satellite Manufacturing includes: | ||||||||||||||||||||
Cost of Satellite Manufacturing before specific identified charges | $ | 836 | $ | 749 | $ | 653 | 12 | % | 15 | % | ||||||||||
Depreciation, amortization and stock-based compensation | 44 | 39 | 36 | 13 | % | 8 | % | |||||||||||||
Cost of Satellite Manufacturing | $ | 880 | $ | 788 | $ | 689 | 12 | % | 14 | % | ||||||||||
Cost of Satellite Manufacturing as a % of Satellite Manufacturing revenues as reported | 89 | % | 91 | % | 91 | % |
Year Ended | ||||||||||||
December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Cost of Satellite Services includes: | ||||||||||||
Cost of Satellite Services before specific identified charges | $ | — | $ | — | $ | 42 | ||||||
Depreciation and amortization | — | — | 44 | |||||||||
Cost of Satellite Services | $ | — | $ | — | $ | 86 | ||||||
Cost of Satellite Services as a% of Satellite Services revenues as reported | 71 | % |
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% Increase | ||||||||||||||||||||
(Decrease) | ||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||
Year Ended December 31, | vs. | vs. | ||||||||||||||||||
2009 | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Selling, general and administrative expenses includes: | ||||||||||||||||||||
Selling, general and administrative expenses before specific charges | $ | 85 | $ | 87 | $ | 133 | (2 | %) | (35 | )% | ||||||||||
Litigation costs | 3 | 5 | 11 | (40 | %) | (58 | )% | |||||||||||||
Stock based compensation | 5 | 5 | 23 | — | (77 | )% | ||||||||||||||
Selling, general and administrative expenses as reported | 93 | $ | 97 | $ | 167 | (4 | %) | (42 | )% | |||||||||||
% of revenues as reported | 9 | % | 11 | % | 19 | % |
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Consideration received for the contribution of Loral Skynet to Telesat Holdco: | ||||
Cash and marketable securities | $ | 61.5 | ||
Fair value of equity in Telesat Holdco | 670.5 | |||
Total consideration | 732.0 | |||
Book value of contributed net assets of Loral Skynet | 440.5 | |||
Consideration in excess of book value | $ | 291.5 | ||
Gain recognized | $ | 104.9 | ||
Year Ended | ||||||||||||
December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Interest and investment income | $ | 8 | $ | 12 | $ | 39 |
Year Ended | ||||||||||||
December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Interest cost before capitalized interest | $ | 1 | $ | 3 | $ | 12 | ||||||
Capitalized interest | — | (1 | ) | (10 | ) | |||||||
Interest expense | $ | 1 | $ | 2 | $ | 2 | ||||||
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Year Ended | ||||||||||||
December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Telesat | $ | 213.2 | $ | (479.6 | ) | $ | (1.8 | ) | ||||
XTAR | (2.7 | ) | (16.1 | ) | (10.6 | ) | ||||||
Other | (0.2 | ) | — | (9.0 | ) | |||||||
$ | 210.3 | $ | (495.7 | ) | $ | (21.4 | ) | |||||
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For the period | For the period | |||||||||||||||||||||||
October 31, | October 31, | |||||||||||||||||||||||
2007 | 2007 | |||||||||||||||||||||||
Year Ended December 31 | to December 31, | Year Ended December 31 | to December 31, | |||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | 2007 | |||||||||||||||||||
(In Canadian dollars) | (In U.S. dollars) | |||||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||||||
Revenues | 788.7 | 731.1 | 114.5 | 691.6 | 685.2 | 117.8 | ||||||||||||||||||
Operating expenses | (232.0 | ) | (275.3 | ) | (51.0 | ) | (203.4 | ) | (258.0 | ) | (52.5 | ) | ||||||||||||
Impairment of long-lived and intangible assets | — | (485.4 | ) | — | — | (454.9 | ) | — | ||||||||||||||||
Depreciation, amortization and stock-based compensation | (262.5 | ) | (241.1 | ) | (40.0 | ) | (230.2 | ) | (226.0 | ) | (41.2 | ) | ||||||||||||
Gain on disposition of long-lived assets | 33.4 | — | — | 29.3 | — | — | ||||||||||||||||||
Operating income | 327.6 | (270.7 | ) | 23.4 | 287.3 | (253.7 | ) | 24.1 | ||||||||||||||||
Interest expense | (260.0 | ) | (246.5 | ) | (40.2 | ) | (228.0 | ) | (231.1 | ) | (41.3 | ) | ||||||||||||
Other income (expense) | 330.1 | (430.1 | ) | (44.3 | ) | 289.5 | (403.1 | ) | (45.6 | ) | ||||||||||||||
Income tax (provision) benefit | (2.5 | ) | 149.2 | 59.8 | (2.2 | ) | 139.9 | 61.5 | ||||||||||||||||
Net income (loss) | 395.2 | (798.1 | ) | (1.3 | ) | 346.6 | (748.0 | ) | (1.3 | ) | ||||||||||||||
Average exchange rate for translating Canadian dollars to U.S. dollars | 1.1405 | 1.0670 | 0.9720 |
As of December 31, | As of December 31, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(In Canadian dollars) | (In U.S. dollars) | |||||||||||||||
Balance Sheet Data: | ||||||||||||||||
Current assets | 265.0 | 219.1 | 251.6 | 179.8 | ||||||||||||
Total assets | 5,260.4 | 5,208.1 | 4,994.7 | 4,273.2 | ||||||||||||
Current liabilities | 206.3 | 208.9 | 195.9 | 171.4 | ||||||||||||
Long-term debt, including current portion | 3,110.4 | 3,536.5 | 2,953.3 | 2,901.6 | ||||||||||||
Total liabilities | 4,257.0 | 4,582.9 | 4,041.9 | 3,760.2 | ||||||||||||
Redeemable preferred stock | 141.4 | 141.4 | 134.3 | 116.0 | ||||||||||||
Shareholders’ equity | 862.0 | 483.8 | 818.5 | 397.0 | ||||||||||||
Period end exchange rate for tanslating Canadian dollars to U.S. dollars | 1.0532 | 1.2188 |
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2009 | 2008 | |||||||
Satellite Manufacturing | $ | 1,632 | $ | 1,381 | ||||
Satellite Services | 5,230 | 4,207 | ||||||
Total backlog before eliminations | 6,862 | 5,588 | ||||||
Satellite Manufacturing eliminations | (9 | ) | (25 | ) | ||||
Satellite Services eliminations | (5,230 | ) | (4,207 | ) | ||||
Total backlog | $ | 1,623 | $ | 1,356 | ||||
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Level 1 | Level 2 | Level 3 | ||||||||||
(In thousands) | ||||||||||||
Assets: | ||||||||||||
Marketable securities | $ | 856 | $ | — | $ | — | ||||||
Derivatives, net | $ | — | $ | 3,873 | $ | — | ||||||
Non-qualified pension plan assets | $ | 2,791 | $ | — | $ | 81 |
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December 31, | December 31, | |||||||||||
Maturity | Currency | 2009 | 2008 | |||||||||
(In CAD millions) | ||||||||||||
Senior Secured Credit Facilities: | ||||||||||||
Revolving facility | October 31, 2012 | CAD or USD equivalent | — | — | ||||||||
Canadian term loan facility | October 31, 2012 | CAD | 185 | 195 | ||||||||
U.S. term loan facility | October 31, 2014 | USD | 1,777 | 2,087 | ||||||||
U.S. term loan II facility | October 31, 2014 | USD | 152 | 179 | ||||||||
Senior notes | November 1, 2015 | USD | 703 | 819 | ||||||||
Senior subordinated notes | November 1, 2017 | USD | 220 | 256 | ||||||||
CAD | 3,037 | 3,536 | ||||||||||
Current portion | CAD | (23 | ) | (23 | ) | |||||||
Long term portion | CAD | 3,014 | 3,513 | |||||||||
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Payments Due by Period | ||||||||||||||||||||
Less than | More than | |||||||||||||||||||
Total | 1 Year | 1-3 Years | 4-5 Years | 5 Years | ||||||||||||||||
Operating leases(1) | $ | 42,202 | $ | 10,737 | $ | 14,167 | $ | 7,282 | $ | 10,016 | ||||||||||
Unconditional purchase obligations(2) | 468,514 | 305,623 | 162,891 | — | — | |||||||||||||||
Other long-term obligations(3) | 44,259 | 23,116 | 18,076 | 494 | 2,573 | |||||||||||||||
Revolving credit agreement(4) | — | — | — | — | — | |||||||||||||||
Total contractual cash obligations(5) | $ | 554,975 | $ | 339,476 | $ | 195,134 | $ | 7,776 | $ | 12,589 | ||||||||||
Total | Amount of Commitment Expiration Per Period | |||||||||||||||||||
Amounts | Less than | More than | ||||||||||||||||||
Committed | 1 Year | 1-3 Years | 4-5 Years | 5 Years | ||||||||||||||||
Stand by letter of credit | $ | 4,291 | $ | 4,291 | $ | — | $ | — | $ | — | ||||||||||
(1) | Represents future minimum payments under operating leases with initial or remaining terms of one year or more. | |
(2) | SS/L has entered into various purchase commitments with suppliers due to the long lead times required to produce purchased parts. | |
(3) | Represents our commitment in connection with an agreement entered into between Loral and ViaSat for the purchase by Loral of a portion of the ViaSat-1 satellite which is being constructed by SS/L for ViaSat as well as commitments for related gateway infrastructure and equipment (see Note 16 to the financial statements). | |
(4) | On October 16, 2008, SS/L entered into a Credit Agreement with several banks and other financial institutions. The Credit Agreement provides for a $100 million senior secured revolving credit facility. The Revolving Facility includes a $50 million letter of credit sublimit. The Credit Agreement is for a term of three years, maturing on October 16, 2011 (see Note 8 to the financial statements). No amounts were outstanding under the Credit Agreement at December 31, 2009. | |
(5) | Does not include our liabilities for uncertain tax positions of $111.3 million. Because the timing of future cash outflows associated with our liabilities for uncertain tax positions is highly uncertain, we are unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities (see Note 9 to the financial statements). Does not include obligations for pensions and other postretirement benefits, for which we expect to make employer contributions of $28.9 million in 2010. We also expect to make significant employer contributions to our plans in future years. |
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Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Revenues | $ | 92.1 | $ | 84.0 | $ | 22.0 | ||||||
Elimination of Loral’s proportionate share of (profits) losses relating to affiliate transactions | (10.1 | ) | (5.0 | ) | 1.9 | |||||||
Profits (losses) relating to affiliate transactions not eliminated | 5.7 | 2.8 | (1.1 | ) |
Foreign Currency | U.S.$ | |||||||
(In millions) | ||||||||
Future revenues — Japanese Yen | ¥ | 35.1 | $ | 0.4 | ||||
Future expenditures — Japanese Yen | ¥ | 4,613.7 | $ | 50.0 | ||||
Contracts-in-process, unbilled receivables — Japanese Yen | ¥ | 75.4 | $ | 0.8 | ||||
Future revenues — EUROs | € | 4.4 | $ | 6.3 | ||||
Future expenditures — EUROs | € | 2.4 | $ | 3.4 |
To Sell | ||||||||||||
At | At | |||||||||||
Euro | Contract | Market | ||||||||||
Amount | Rate | Rate | ||||||||||
Maturity | (In millions) | |||||||||||
2010 | € | 19.2 | $ | 29.4 | $ | 27.5 | ||||||
2011 | 23.5 | 35.7 | 33.7 | |||||||||
€ | 42.7 | $ | 65.1 | $ | 61.2 | |||||||
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Loral Space & Communications Inc.
New York, New York
March 15, 2010
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Name | Age | Position | ||||
Michael B. Targoff | 65 | Chief Executive Officer since March 1, 2006, President since January 2008 and Vice Chairman of the Board of Directors since November 2005. Prior to that, founder of Michael B. Targoff & Co. | ||||
Avi Katz | 51 | Senior Vice President, General Counsel and Secretary since January 2008. Vice President, General Counsel and Secretary from November 2005 to January 2008. Vice President, General Counsel and Secretary of Old Loral from November 1999 to November 2005. | ||||
Richard P. Mastoloni | 45 | Senior Vice President of Finance and Treasurer since January 2008. Vice President and Treasurer from November 2005 to January 2008. Vice President and Treasurer of Old Loral from February 2002 to November 2005. Vice President of Old Loral from September 2001 to February 2002. | ||||
Harvey B. Rein | 56 | Senior Vice President and Chief Financial Officer since January 2008. Vice President and Controller from November 2005 to January 2008. Vice President and Controller of Old Loral from April 1996 to November 2005. | ||||
John Capogrossi | 56 | Vice President and Controller since January 2008. Executive Director, Financial Planning and Analysis, from October 2006 to January 2008. Assistant Controller from November 2005 to October 2006. Assistant Controller of Old Loral from January 2001 to November 2005. |
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Index to Financial Statements and Financial Statement Schedule | F-1 | |||
Loral Space & Communications Inc. and Subsidiaries: | ||||
Report of Independent Registered Public Accounting Firm | F-2 | |||
Consolidated Balance Sheets as of December 31, 2009 and 2008 | F-3 | |||
Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007 | F-4 | |||
Consolidated Statements of Equity for the years ended December 31, 2009, 2008 and 2007 | F-5 | |||
Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007 | F-6 | |||
Notes to Consolidated Financial Statements | F-7 | |||
(a) 2. Financial Statement Schedule | ||||
Schedule II | F-61 | |||
Separate Financial Statements of Subsidiaries not consolidated Pursuant to Rule 3-09 of Regulation S-X | ||||
Telesat Holdings Inc. and Subsidiaries: | ||||
Report of Independent Registered Chartered Accountants | F-62 | |||
Consolidated Statements of Earnings (Loss) for the years ended December 31, 2009, 2008 and 2007 | F-63 | |||
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2009, 2008 2007 | F-64 | |||
Consolidated Statements of Shareholders’ Equity for the year ended December 31, 2009 with comparative figures for the periods ended December 31, 2008, December 31, 2007, October 30, 2007 | F-65 | |||
Consolidated Balance Sheets as of December 31, 2009 and 2008 | F-66 | |||
Consolidated Statements of Cash Flow for the years ended December 31, 2009, 2008 and 2007 | F-67 | |||
Notes to the 2009 Consolidated Financial Statements | F-68 |
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Exhibit | ||||
Number | Description | |||
2.1 | Debtors’ Fourth Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code dated June 3, 2005(1) | |||
2.2 | Modification to Debtors’ Fourth Amended Plan of Reorganization Under Chapter 11 of the Bankruptcy Code dated August 1, 2005(2) | |||
2.3 | Letter Agreement among Loral Space & Communications Inc., Loral Skynet Corporation, Public Sector Pension Investment Board, 4363205 Canada Inc. and 4363213 Canada Inc. dated December 14, 2006(5) | |||
2.4 | Share Purchase Agreement among 4363213 Canada Inc., BCE Inc. and Telesat dated December 16, 2006(5) | |||
2.5 | Letter Agreement among Loral Space & Communications Inc., Public Sector Pension Investment Board and BCE Inc. dated December 16, 2006(5) | |||
2.6 | Asset Transfer Agreement, dated as of August 7, 2007, by and among 4363205 Canada Inc., Loral Skynet Corporation and Loral Space & Communications Inc.(7) | |||
2.7 | Amendment No. 1 to Asset Transfer Agreement, dated as of September 24, 2007, by and among 4363205 Canada Inc., Loral Skynet Corporation and Loral Space & Communications Inc.(8) | |||
2.8 | Asset Purchase Agreement, dated as of August 7, 2007, by and among Loral Skynet Corporation, Skynet Satellite Corporation and Loral Space & Communications Inc.(7) | |||
3.1 | Restated Certificate of Incorporation of Loral Space & Communications Inc. dated May 19, 2009(19) | |||
3.2 | Amended and Restated Bylaws of Loral Space & Communications Inc. dated December 23, 2008(15) | |||
3.3 | Amendment No. 1 to Bylaws of Loral Space & Communications dated January 12, 2010(23) | |||
10.1 | Credit Agreement, dated as of October 16, 2008, among Space Systems/Loral, Inc., as Borrower, the several lenders from time to time party thereto, Bank of America, N.A., as Documentation Agent, ING Bank, N.V., as Syndication Agent, and JPMorgan Chase Bank, N.A., as Administrative Agent(14) | |||
10.2 | Parent Guarantee Agreement, dated as of October 22, 2008, by Loral Space & Communications Inc. in favor of JPMorgan Chase Bank, N.A., as Administrative Agent.(14) | |||
10.3 | Ancillary Agreement, dated as of August 7, 2007, by and among Loral Space & Communications Inc., Loral Skynet Corporation, Public Sector Pension Investment Board, 4363205 Canada Inc. and 4363230 Canada Inc.(7) | |||
10.4 | Adjustment Agreement, dated as of October 29, 2007, between Telesat Interco Inc. (formerly 4363213 Canada Inc.), BCE Inc. and Telesat(9) | |||
10.5 | Omnibus Agreement, dated as of October 30, 2007, by and among Loral Space & Communications Inc., Loral Skynet Corporation, Public Sector Pension Investment Board, Red Isle Private Investments Inc. and Telesat Holdings Inc. (formerly 4363205 Canada Inc.)(9) | |||
10.6 | Shareholders Agreement, dated as of October 31, 2007, between Public Sector Pension Investment Board, Red Isle Private Investments Inc., Loral Space & Communications Inc., Loral Space & Communications Holdings Corporation, Loral Holdings Corporation, Loral Skynet Corporation, John P. Cashman, Colin D. Watson, Telesat Holdings Inc. (formerly 4363205 Canada Inc.), Telesat Interco Inc. (formerly 4363213 Canada Inc.), Telesat and MHR Fund Management LLC(9) | |||
10.7 | Consulting Services Agreement, dated as of October 31, 2007, by and between Loral Space & Communications Inc. and Telesat(9) | |||
10.8 | Indemnity Agreement, dated as of October 31, 2007, by and among Loral Space & Communications Inc., Telesat, Telesat Holdings Inc., Telesat Interco Inc. and Henry Gerard (Hank) Intven(9) | |||
10.9 | Acknowledgement and Indemnity Agreement, dated as of October 31, 2007, between Loral Space & Communications Inc., Telesat, Telesat Holdings Inc. (formerly 4363205 Canada Inc.), Telesat Interco Inc. (formerly 4363213 Canada Inc.) and McCarthy Tétrault LLP(9) | |||
10.10 | Amended and Restated Registration Rights Agreement dated December 23, 2008 by and among Loral Space & Communications Inc. and the Persons Listed on the Signature Pages Thereof(15) |
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Exhibit | ||||
Number | Description | |||
10.11 | Letter Agreement, dated as of June 30, 2009, by and among Loral Space & Communications Inc, MHR Capital Partners Master Account LP, MHR Capital Partners (100) LP, MHR Institutional Partners LP, MHRA LP, MHRM LP, MHR Institutional Partners II LP, MHR Institutional Partners IIA LP and MHR Institutional Partners III LP.(20) | |||
10.12 | Partnership Interest Purchase Agreement dated December 21, 2007 by and among GSSI, LLC, Globalstar, Inc., Loral/DASA Globalstar, LP, Globalstar do Brasil, SA., Loral/DASA do Brasil Holdings Ltda., Loral Holdings LLC, Global DASA LLC, LGP (Bermuda) Ltd., Mercedes-Benz do Brasil Ltda. (f/k/a DaimlerChrysler do Brasil Ltda.) and Loral Space & Communications Inc.(10) | |||
10.13 | Beam Sharing Agreement, dated as of January 11, 2008, by and between Loral Space & Communications Inc. and ViaSat Inc.(11) | |||
10.14 | Satellite Capacity and Gateway Service Agreement dated as of December 31, 2009 between Loral Space & Communications Inc. and Barrett Xplore Inc.(22) | |||
10.15 | Employment Agreement between Loral Space & Communications Inc. and Michael B. Targoff dated as of March 28, 2006 and amended and restated as of December 17, 2008(17) ‡ | |||
10.16 | Form of Officers’ and Directors’ Indemnification Agreement between Loral Space & Communications Inc. and Loral Executives(3) ‡ | |||
10.17 | Officers’ and Directors’ Indemnification Agreement between Space Systems/Loral, Inc. and C. Patrick DeWitt dated November 21, 2005(3) ‡ | |||
10.18 | Loral Space Management Incentive Bonus Program (Adopted as of December 17, 2008)(15) ‡ | |||
10.19 | Loral Space & Communications Inc. 2005 Stock Incentive Plan (Amended and Restated as of April 3, 2009)(18) ‡ | |||
10.20 | Form of Amended and Restated Non-Qualified Stock Option Agreement under Loral Space & Communications Inc. 2005 Stock Incentive Plan for Senior Management dated as of December 21, 2005 and amended and restated as of November 10, 2008(17) ‡ | |||
10.21 | Non-Qualified Stock Option Agreement under Loral Space & Communications Inc. 2005 Stock Incentive Plan between Loral Space & Communications Inc. and Michael B. Targoff dated March 28, 2006(4) ‡ | |||
10.22 | Restricted Stock Unit Agreement dated March 5, 2009 between Loral Space & Communications Inc. and Michael B. Targoff(16) ‡ | |||
10.23 | Restricted Stock Unit Agreement dated March 5, 2010 between Loral Space & Communications Inc. and Michael B. Targoff †‡ | |||
10.24 | Restricted Stock Unit Agreement dated March 5, 2009 between Loral Space & Communications Inc. and C. Patrick DeWitt(16) ‡ | |||
10.25 | Option Agreement dated October 27, 2009, between Loral Space & Communications Inc. and Michael B. Targoff(21) ‡. | |||
10.26 | Form of Restricted Stock Unit Agreement dated October 27, 2009 between Loral Space & Communications Inc. and Loral executives(21) ‡ | |||
10.27 | Form of Phantom Stock Appreciation Rights Agreement relating to Space Systems/Loral, Inc. dated October 27, 2009 between Loral Space & Communications Inc. and Loral and SS/L executives(21) ‡ | |||
10.28 | Form of Director 2006 Restricted Stock Agreement(6) ‡ | |||
10.29 | Form of Director 2007 Restricted Stock Agreement(6) ‡ | |||
10.30 | Form of Director 2008 Restricted Stock Agreement(17) ‡ | |||
10.31 | Form of Director 2009 Restricted Stock Unit Agreement† ‡ | |||
10.32 | Form of Employee Restricted Stock Agreement(6) ‡ | |||
10.33 | Amended and Restated Space Systems/Loral, Inc. Supplemental Executive Retirement Plan (Amended and Restated as of December 17, 2008)(15) ‡ | |||
10.34 | Loral Savings Supplemental Executive Retirement Plan (Amended and Restated as of December 17, 2008)(15) ‡ |
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Exhibit | ||||
Number | Description | |||
10.35 | Loral Space & Communications Inc. Severance Policy for Corporate Officers (Amended and Restated as of December 17, 2008)(15) ‡ | |||
14.1 | Code of Conduct, Revised as of June 11, 2008(13) | |||
21.1 | List of Subsidiaries of the Registrant† | |||
23.1 | Consent of Deloitte & Touche LLP† | |||
23.2 | Consent of Deloitte & Touche LLP† | |||
31.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 302 of the Sarbanes-Oxley Act of 2002† | |||
31.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 302 of the Sarbanes-Oxley Act of 2002† | |||
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002† | |||
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002† | |||
9.1 | Credit Agreement, dated as of October 31, 2007, among Telesat Interco Inc. (formerly 4363213 Canada Inc.), Telesat Holdings Inc. (formerly 4363205 Canada Inc.), 4363230 Canada Inc., Telesat LLC, certain subsidiaries of Telesat Holdings Inc., as guarantors, the lenders party thereto from time to time, Morgan Stanley Senior Funding, Inc., as administrative agent, and Morgan Stanley & Co. Incorporated, as collateral agent for the lenders, UBS Securities LLC, as syndication agent, JPMorgan Chase Bank, N.A., The Bank of Nova Scotia, as issuing bank, and Citibank, N.A., Canadian Branch or any of its lending affiliates, as co-documentation agents, and Morgan Stanley & Co. Incorporated, UBS Securities LLC and J.P. Morgan Securities Inc., as joint lead arrangers and joint book running managers(9) | |||
99.2 | Articles of Incorporation of Telesat Holdings Inc. (formerly 4363205 Canada Inc.)(9) | |||
99.3 | By-Law No. 1 of Telesat Holdings Inc. (formerly 4363205 Canada Inc.)(9) | |||
99.4 | Letter Agreement dated March 28, 2008 among Loral Space & Communications Inc., Loral Skynet Corporation, Public Sector Pension Investment Board, Red Isle Private Investment Inc. and Telesat Holdings Inc.(12) |
(1) | Incorporated by reference from the Company’s Current Report on Form 8-K filed on June 8, 2005. | |
(2) | Incorporated by reference from the Company’s Current Report on Form 8-K filed on August 5, 2005. | |
(3) | Incorporated by reference from the Company’s Current Report on Form 8-K filed on November 23, 2005. | |
(4) | Incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed on March 28, 2006. | |
(5) | Incorporated by reference from the Company’s Current Report on Form 8-K filed on December 21, 2006. | |
(6) | Incorporated by reference from the Company’s Current Report on Form 8-K filed on May 29, 2007. | |
(7) | Incorporated by reference from the Company’s Current Report on Form 8-K filed on August 9, 2007. | |
(8) | Incorporated by reference from the Company’s Current Report on Form 8-K filed on September 27, 2007. | |
(9) | Incorporated by reference from the Company’s Current Report on Form 8-K filed on November 2, 2007. | |
(10) | Incorporated by reference from the Company’s Current Report on Form 8-K filed December 21, 2007. |
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(11) | Incorporated by reference from the Company’s Current Report on Form 8-K filed on January 16, 2008. | |
(12) | Incorporated by reference from the Company’s Current Report on Form 8-K filed on March 31, 2008. | |
(13) | Incorporated by reference from the Company’s Current Quarterly Report on Form 10-Q filed on June 16, 2008. | |
(14) | Incorporated by reference from the Company’s Current Report on Form 8-K filed on October 22, 2008. | |
(15) | Incorporated by reference from the Company’s Current Report on Form 8-K filed on December 23, 2008. | |
(16) | Incorporated by reference from the Company’s Current Report on Form 8-K filed on March 10, 2009. | |
(17) | Incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008 filed on March 16, 2009. | |
(18) | Incorporated by reference from the Company’s Current Quarterly Report on Form 10-Q filed on May 11, 2009. | |
(19) | Incorporated by reference from the Company’s Current Report on Form 8-K filed on May 20, 2009. | |
(20) | Incorporated by reference from the Company’s Current Report on Form 8-K filed on June 30, 2009. | |
(21) | Incorporated by reference from the Company’s Current Quarterly Report on Form 10-Q filed on November 9, 2009. | |
(22) | Incorporated by reference from the Company’s Current Report on Form 8-K filed on January 7, 2010. | |
(23) | Incorporated by reference from the Company’s Current Report on Form 8-K filed on January 15, 2010. | |
† | Filed herewith. | |
‡ | Management compensation plan. |
66
Table of Contents
LORAL SPACE & COMMUNICATIONS INC. | ||||
By: | /s/ MICHAEL B. TARGOFF | |||
Michael B. Targoff | ||||
Vice Chairman of the Board, Chief Executive Officer and President Dated: March 15, 2010 | ||||
Signatures | Title | Date | ||
/s/ MICHAEL B. TARGOFF | Vice Chairman of the Board, Chief Executive Officer and President | March 15, 2010 | ||
/s/ MARK H. RACHESKY, M.D. | Director, Non-Executive Chairman of the Board | March 12, 2010 | ||
/s/ SAI S. DEVABHAKTUNI | Director | March 12, 2010 | ||
/s/ HAL GOLDSTEIN | Director | March 12, 2010 | ||
/s/ JOHN D. HARKEY, JR. | Director | March 12, 2010 | ||
/s/ ARTHUR L. SIMON | Director | March 12, 2010 | ||
/s/ JOHN P. STENBIT | Director | March 12, 2010 | ||
/s/ HARVEY B. REIN | Senior Vice President and CFO (Principal Financial Officer) | March 15, 2010 | ||
/s/ JOHN CAPOGROSSI | Vice President and Controller (Principal Accounting Officer) | March 15, 2010 |
67
Table of Contents
Loral Space & Communications Inc. and Subsidiaries | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 | ||||
F-61 | ||||
Separate Financial Statements of Subsidiaries not consolidated Pursuant to Rule 3-09 of Regulation S-X | ||||
Telesat Holdings Inc. and Subsidiaries: | ||||
F-62 | ||||
F-63 | ||||
F-64 | ||||
F-65 | ||||
F-66 | ||||
F-67 | ||||
F-68 |
F-1
Table of Contents
Loral Space & Communications Inc.
New York, New York
March 15, 2010
F-2
Table of Contents
December 31, | ||||||||
2009 | 2008 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 168,205 | $ | 117,548 | ||||
Contracts-in-process | 190,809 | 213,651 | ||||||
Inventories | 83,671 | 109,755 | ||||||
Other current assets | 24,343 | 54,286 | ||||||
Total current assets | 467,028 | 495,240 | ||||||
Property, plant and equipment, net | 207,996 | 188,270 | ||||||
Long-term receivables | 248,097 | 184,701 | ||||||
Investments in affiliates | 282,033 | 72,642 | ||||||
Intangible assets, net | 20,300 | 31,578 | ||||||
Other assets | 27,998 | 23,436 | ||||||
Total assets | $ | 1,253,452 | $ | 995,867 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 86,809 | $ | 91,052 | ||||
Accrued employment costs | 44,341 | 41,819 | ||||||
Customer advances and billings in excess of costs and profits | 291,021 | 184,592 | ||||||
Income taxes payable | 1,539 | 233 | ||||||
Other current liabilities | 17,608 | 31,678 | ||||||
Total current liabilities | 441,318 | 349,374 | ||||||
Borrowings under revolving credit facility | — | 55,000 | ||||||
Pension and other postretirement liabilities | 226,190 | 230,660 | ||||||
Long-term liabilities | 153,953 | 151,176 | ||||||
Total liabilities | 821,461 | 786,210 | ||||||
Commitments and contingencies | ||||||||
Equity: | ||||||||
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued and outstanding | — | — | ||||||
Common Stock: | ||||||||
Voting common stock, $.01 par value; 50,000,000 shares authorized, 20,390,752 and 20,286,992 shares issued and outstanding | 204 | 203 | ||||||
Non-voting common stock, $0.1 par value; 20,000,000 shares authorized, 9,505,673 issued and outstanding | 95 | 95 | ||||||
Paid-in capital | 1,013,790 | 1,007,011 | ||||||
Accumulated deficit | (519,220 | ) | (750,922 | ) | ||||
Accumulated other comprehensive loss | (62,878 | ) | (46,730 | ) | ||||
Total equity | 431,991 | 209,657 | ||||||
Total liabilities and equity | $ | 1,253,452 | $ | 995,867 | ||||
F-3
Table of Contents
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Revenue from satellite manufacturing | $ | 993,400 | $ | 869,398 | $ | 761,363 | ||||||
Revenue from satellite services | — | — | 121,091 | |||||||||
Total revenues | 993,400 | 869,398 | 882,454 | |||||||||
Cost of satellite manufacturing | 880,486 | 787,758 | 688,991 | |||||||||
Cost of satellite services | — | — | 86,213 | |||||||||
Selling, general and administrative expenses | 92,703 | 97,015 | 166,936 | |||||||||
Gain on recovery from customer bankruptcy | — | (9,338 | ) | — | ||||||||
Impairment of goodwill | — | 187,940 | — | |||||||||
Gain on contribution of Loral Skynet | — | — | (104,942 | ) | ||||||||
Operating income (loss) | 20,211 | (193,977 | ) | 45,256 | ||||||||
Interest and investment income | 8,307 | 11,857 | 39,279 | |||||||||
Interest expense | (1,422 | ) | (2,268 | ) | (2,312 | ) | ||||||
Gain on foreign exchange contracts | — | — | 89,364 | |||||||||
Gain on litigation, net | — | 38,823 | — | |||||||||
Impairment of available for sale securities | — | (5,823 | ) | — | ||||||||
Loss on extinguishment of debt | — | — | (16,155 | ) | ||||||||
Other (expense) income | (121 | ) | (135 | ) | 2,354 | |||||||
Income (loss) before income taxes and equity in net income (losses) of affiliates | 26,975 | (151,523 | ) | 157,786 | ||||||||
Income tax provision | (5,571 | ) | (45,744 | ) | (83,457 | ) | ||||||
Income (loss) before equity in net income (losses) of affiliates | 21,404 | (197,267 | ) | 74,329 | ||||||||
Equity in net income (losses) of affiliates | 210,298 | (495,649 | ) | (21,430 | ) | |||||||
Net income (loss) | 231,702 | (692,916 | ) | 52,899 | ||||||||
Net income attributable to noncontrolling interest | — | — | (23,240 | ) | ||||||||
Net income (loss) attributable to Loral Space & Communications Inc. | 231,702 | (692,916 | ) | 29,659 | ||||||||
Preferred dividends | — | (24,067 | ) | (19,379 | ) | |||||||
Beneficial conversion feature related to the issuance of Loral Series A-1 Preferred Stock | — | — | (25,685 | ) | ||||||||
Net income (loss) applicable to Loral Space & Communications Inc. common shareholders | $ | 231,702 | $ | (716,983 | ) | $ | (15,405 | ) | ||||
Basic and diluted income (loss) per share: | ||||||||||||
Basic income (loss) per share | $ | 7.79 | $ | (35.13 | ) | $ | (0.77 | ) | ||||
Diluted income (loss) per share | $ | 7.73 | $ | (35.13 | ) | $ | (0.77 | ) | ||||
Weighted average shares outstanding: | ||||||||||||
Basic | 29,761 | 20,407 | 20,087 | |||||||||
Diluted | 29,981 | 20,407 | 20,087 | |||||||||
F-4
Table of Contents
Series A-1 | Series B-1 | Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible | Convertible | Common Stock | Other | |||||||||||||||||||||||||||||||||||||||||||||||||
Preferred Stock | Preferred Stock | Voting | Non-Voting | Accumulated | Comprehensive | |||||||||||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | Paid-In | Earnings | Income | Noncontrolling | Total | ||||||||||||||||||||||||||||||||||||||||||||
Issued | Amount | Issued | Amount | Issued | Amount | Issued | Amount | Capital | (Deficit) | (loss) | Interest | Equity | ||||||||||||||||||||||||||||||||||||||||
Balance, January 1, 2007 | 20,000 | $ | 200 | $ | 644,708 | $ | (37,981 | ) | $ | 40,075 | $ | 214,256 | $ | 861,258 | ||||||||||||||||||||||||||||||||||||||
Uncertain tax positions, cumulative effect upon adoption | (6,238 | ) | (6,238 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to Loral Space & Communications Inc. | 29,659 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | (3,558 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income | 26,101 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Series -1 preferred stock | 137 | $ | 40,237 | 859 | $ | 253,013 | (8,864 | ) | 284,386 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of Series -1 preferred stock as payment for dividend | 5 | 1,636 | 42 | 12,764 | 14,400 | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Loral Skynet preferred stock as payment for dividend to non controlling interest | 23,343 | 23,343 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of Loral Skynet preferred stock | (237,599 | ) | (237,599 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | 108 | 1 | 1,920 | 1,921 | ||||||||||||||||||||||||||||||||||||||||||||||||
Shares surrendered to fund withholding taxes | (20 | ) | — | (982 | ) | (982 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Stock based compensation | 205 | 2 | 26,345 | 26,347 | ||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | (19,379 | ) | (19,379 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2007 | 142 | 41,873 | 901 | 265,777 | 20,293 | 203 | — | — | 663,127 | (33,939 | ) | 36,517 | — | 973,558 | ||||||||||||||||||||||||||||||||||||||
Net loss | (692,916 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | (83,247 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive loss | (776,163 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Series -1 preferred stock as payment for dividend | 3 | 822 | 78 | 23,427 | 24,249 | |||||||||||||||||||||||||||||||||||||||||||||||
Shares surrendered to fund withholding taxes | (18 | ) | (338 | ) | (338 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Stock based compensation | 12 | 7,621 | 7,621 | |||||||||||||||||||||||||||||||||||||||||||||||||
Series-1 preferred dividends | — | 618 | — | 4,179 | 4,797 | |||||||||||||||||||||||||||||||||||||||||||||||
Cancellation and conversion of Series-1 preferred stock to non-voting common stock | (145 | ) | (43,313 | ) | (979 | ) | (293,383 | ) | 9,506 | $ | 95 | 336,601 | ||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | (24,067 | ) | (24,067 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2008 | — | — | — | — | 20,287 | 203 | 9,506 | 95 | 1,007,011 | (750,922 | ) | (46,730 | ) | — | 209,657 | |||||||||||||||||||||||||||||||||||||
Net income | 231,702 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | (16,148 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income | 215,554 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | 74 | 1 | 1,403 | 1,404 | ||||||||||||||||||||||||||||||||||||||||||||||||
Shares surrendered to fund withholding taxes | (43 | ) | (1,559 | ) | (1,559 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Stock based compensation | 73 | 0 | 6,935 | 6,935 | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2009 | — | — | — | — | 20,391 | $ | 204 | 9,506 | $ | 95 | $ | 1,013,790 | $ | (519,220 | ) | $ | (62,878 | ) | — | $ | 431,991 | |||||||||||||||||||||||||||||||
F-5
Table of Contents
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Operating activities: | ||||||||||||
Net income (loss) | $ | 231,702 | $ | (692,916 | ) | $ | 52,899 | |||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||
Non-cash items | (164,785 | ) | 762,210 | (59,211 | ) | |||||||
Changes in operating assets and liabilities: | ||||||||||||
Accounts receivable | — | — | 64,828 | |||||||||
Contracts-in-process | (7,913 | ) | (216,354 | ) | (60,880 | ) | ||||||
Inventories | 17,482 | (12,787 | ) | (15,872 | ) | |||||||
Long-term receivables | (5,565 | ) | 13,947 | (266 | ) | |||||||
Other current assets and other assets | 2,806 | 3,393 | 6,369 | |||||||||
Accounts payable | (5,628 | ) | 23,681 | 6,041 | ||||||||
Accrued expenses and other current liabilities | (9,611 | ) | (22,455 | ) | 15,866 | |||||||
Customer advances | 80,350 | (19,710 | ) | (17,751 | ) | |||||||
Income taxes payable | 21,426 | (55,034 | ) | 28,719 | ||||||||
Pension and other postretirement liabilities | (4,158 | ) | (19,010 | ) | 8,663 | |||||||
Long-term liabilities | (1,544 | ) | 32,825 | (2,282 | ) | |||||||
Net cash provided by (used in) operating activities | 154,562 | (202,210 | ) | 27,123 | ||||||||
Investing activities: | ||||||||||||
Capital expenditures | (43,557 | ) | (64,559 | ) | (95,761 | ) | ||||||
Decrease (increase) in restricted cash in escrow | 10 | 18,637 | (19,709 | ) | ||||||||
Proceeds received for the contribution of Loral Skynet net of cash contributed | — | — | 57,591 | |||||||||
Distribution from an equity investment | 277 | — | 2,955 | |||||||||
Proceeds from the sale of short-term investments and available-for-sale securities | — | 162 | 468,571 | |||||||||
Purchase of short-term investments | — | (500 | ) | (350,895 | ) | |||||||
Investments in and advances to affiliates | (5,480 | ) | (1,048 | ) | (1,233 | ) | ||||||
Net cash (used in) provided by investing activities | (48,750 | ) | (47,308 | ) | 61,519 | |||||||
Financing activities: | ||||||||||||
(Repayments) borrowings under SS/L revolving credit facility | (55,000 | ) | 55,000 | — | ||||||||
Debt issuance costs | — | (2,628 | ) | — | ||||||||
Proceeds from term loan (Loral Skynet Notes refinancing facility) | — | — | 141,050 | |||||||||
Repayment of Loral Skynet Notes | — | — | (126,000 | ) | ||||||||
10% redemption fee on extinguishment of Loral Skynet Notes | — | — | (12,600 | ) | ||||||||
Preferred stock issuance costs | — | — | (8,864 | ) | ||||||||
Proceeds from the sale of Series-1 preferred stock | — | — | 293,250 | |||||||||
Redemption of Loral Skynet Preferred Stock | — | — | (237,599 | ) | ||||||||
Proceeds from the exercise of stock options | 1,404 | — | 2,097 | |||||||||
Cash dividends paid on Loral Skynet Preferred Stock | — | — | (11,824 | ) | ||||||||
Other | (1,559 | ) | — | — | ||||||||
Net cash (used in) provided by financing activities | (55,155 | ) | 52,372 | 39,510 | ||||||||
Increase (decrease) in cash and cash equivalents | 50,657 | (197,146 | ) | 128,152 | ||||||||
Cash and cash equivalents — beginning of year | 117,548 | 314,694 | 186,542 | |||||||||
Cash and cash equivalents — end of year | $ | 168,205 | $ | 117,548 | $ | 314,694 | ||||||
F-6
Table of Contents
F-7
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-8
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Level 1 | Level 2 | Level 3 | ||||||||||
(In thousands) | ||||||||||||
Assets: | ||||||||||||
Marketable securities | $ | 856 | $ | — | $ | — | ||||||
Derivatives, net | $ | — | $ | 3,873 | $ | — | ||||||
Non-qualified pension plan assets | $ | 2,791 | $ | — | $ | 81 |
F-9
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Years | ||
Land improvements | 20 | |
Buildings and building improvements | 10 to 45 | |
Leasehold improvements | 2 to 17 | |
Equipment, furniture and fixtures | 5 to 10 |
F-10
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-11
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-12
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-13
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Non-cash operating items: | ||||||||||||
Gain on contribution of Loral Skynet | $ | — | $ | — | $ | (104,942 | ) | |||||
Equity in net (income) losses of affiliates | (210,298 | ) | 495,649 | 21,430 | ||||||||
Deferred taxes | (192 | ) | 29,385 | 32,205 | ||||||||
Depreciation and amortization | 39,796 | 36,367 | 76,910 | |||||||||
Stock based compensation | 7,514 | 7,621 | 26,347 | |||||||||
Provisions for inventory obsolescence | 1,042 | — | 543 | |||||||||
Warranty expense accruals (reversals) | (65 | ) | 431 | (18,879 | ) | |||||||
Provisions for (recoveries of) bad debts on billed receivables | 2,759 | 700 | (1,917 | ) | ||||||||
Adjustment to revenue straightlining assessment | — | — | (204 | ) | ||||||||
Write-off of construction in process | — | — | 2,164 | |||||||||
Loss on disposition of fixed assets | — | 63 | — | |||||||||
Loss on extinguishment of debt | — | — | 16,155 | |||||||||
Impairment of goodwill | — | 187,940 | ||||||||||
Impairment of available for sale securities | — | 5,823 | — | |||||||||
Curtailment gain | — | — | (1,686 | ) | ||||||||
Amortization of prior service credit and actuarial gains | 412 | (3,200 | ) | (3,285 | ) | |||||||
Gain on disposition of an orbital slot | — | — | (3,600 | ) | ||||||||
Amortization of fair value adjustments related to orbital incentives | (664 | ) | (3,088 | ) | — | |||||||
Gain on disposition of available for sale securities | — | (162 | ) | (11,088 | ) | |||||||
Unrealized (gain) loss on non-qualified pension plan assets | (831 | ) | 1,391 | — | ||||||||
Non-cash net interest | (1,582 | ) | (149 | ) | — | |||||||
(Gain)/loss on foreign currency transactions and contracts | (2,676 | ) | 3,439 | (89,364 | ) | |||||||
Net non-cash operating items | $ | (164,785 | ) | $ | 762,210 | $ | (59,211 | ) | ||||
Non-cash investing activities: | ||||||||||||
Available for sale securities received in connection with the sale of Globalstar do Brazil | $ | — | $ | 6,000 | $ | — | ||||||
Capital expenditures incurred not yet paid | $ | 3,091 | $ | 1,706 | $ | — | ||||||
Investment in affiliate not yet paid | $ | — | $ | 1,048 | $ | — | ||||||
Non-cash financing activities: | ||||||||||||
Issuance of restricted stock | $ | 1,591 | $ | — | $ | — | ||||||
Issuance of preferred stock by subsidiary as payment for dividend | $ | — | $ | — | $ | 23,343 | ||||||
Issuance of Loral Series-1 Preferred Stock as payment for dividend | $ | — | $ | 24,248 | $ | 14,400 | ||||||
Accrued dividends on Loral Series-1 Preferred Stock | $ | — | $ | 4,797 | $ | 4,979 | ||||||
Issuance of non-voting common stock and cancellation of Loral Series-1 Preferred Stock | $ | — | $ | 336,696 | $ | — | ||||||
Supplemental information: | ||||||||||||
Interest paid | $ | 2,164 | $ | 2,380 | $ | 24,891 | ||||||
Tax (refunds) payments | $ | (17,972 | ) | $ | 29,835 | $ | 5,292 | |||||
Cash paid for reorganization items: | ||||||||||||
Professional fees | $ | (160 | ) | |||||||||
F-14
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-15
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Proportionate | ||||||||||||||||||||||||
Share of Telesat | Accumulated | |||||||||||||||||||||||
Foreign Currency | Unrealized Gains | Other | Other | |||||||||||||||||||||
Translation | (Losses) on | Postretirement | Comprehensive | Comprehensive | ||||||||||||||||||||
Adjustments | Derivatives | Investments | Benefits | Income (Loss) | Income (Loss) | |||||||||||||||||||
Balance at January 01, 2008 | $ | 498 | $ | — | $ | 442 | $ | 35,577 | $ | — | $ | 36,517 | ||||||||||||
Period Change | (498 | ) | 18,182 | (325 | ) | (100,606 | ) | — | (83,247 | ) | ||||||||||||||
Balance at December 31, 2008 | — | 18,182 | 117 | (65,029 | ) | — | (46,730 | ) | ||||||||||||||||
Period Change | — | (11,900 | ) | 658 | 233 | (5,139 | ) | (16,148 | ) | |||||||||||||||
Balance at December 31, 2009 | $ | — | $ | 6,282 | $ | 775 | $ | (64,796 | ) | $ | (5,139 | ) | $ | (62,878 | ) | |||||||||
F-16
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Foreign currency translation adjustments: | ||||||||||||
Cumulative translation | $ | — | $ | (498 | ) | $ | 211 | |||||
Derivatives: | ||||||||||||
Unrealized (loss) gain on foreign currency hedges, net of tax benefit of $1,132 in 2008 | (94 | ) | 20,965 | — | ||||||||
Less: reclassification adjustment for gains included in net income, net of tax provision of $1,132 in 2008 | (11,806 | ) | (2,783 | ) | — | |||||||
Unrealized gain (loss) on derivatives, net | (11,900 | ) | 18,182 | — | ||||||||
Unrealized gain on investments: | ||||||||||||
Unrealized gain (loss) on available-for-sale securities, net of tax benefit of $2,339 and $1,976 for 2008 and 2007, respectively | 658 | (3,685 | ) | (2,850 | ) | |||||||
Less: reclassification adjustment for losses included in net income, net of tax provision of $2,338 in 2008 and tax benefit of $4,542 in 2007 | — | 3,360 | (6,546 | ) | ||||||||
Unrealized gain (loss) on investments, net | 658 | (325 | ) | (9,396 | ) | |||||||
Postretirement benefits: | ||||||||||||
Net actuarial (losses) gains, net of tax provision of $37 and $6,532 for 2008 and 2007, respectively | (179 | ) | (97,360 | ) | 10,121 | |||||||
Amortization of actuarial gains and prior service credits | 412 | (3,246 | ) | (2,000 | ) | |||||||
Less: reclassification due to contribution of Loral Skynet, net of tax benefit of $3,015 | — | — | (2,494 | ) | ||||||||
Postretirement benefits | 233 | (100,606 | ) | 5,627 | ||||||||
Proportionate share of Telesat other comprehensive income: | ||||||||||||
Proportionate share of Telesat Holdco other comprehensive income | (5,139 | ) | (4,065 | ) | — | |||||||
Less: reclassification of our proportionate share of Telesat Holdco other comprehensive income | — | 4,065 | — | |||||||||
Unrealized gain (loss) of our proportionate share of Telesat Holdco other comprehensive income, net | (5,139 | ) | — | — | ||||||||
Other comprehensive loss | $ | (16,148 | ) | $ | (83,247 | ) | $ | (3,558 | ) | |||
December 31, | ||||||||
2009 | 2008 | |||||||
U.S. government contracts: | ||||||||
Amounts billed | $ | 520 | $ | 2,218 | ||||
Unbilled receivables | 1,566 | 2,448 | ||||||
2,086 | 4,666 | |||||||
Commercial contracts: | ||||||||
Amounts billed | 123,514 | 120,237 | ||||||
Unbilled receivables | 65,209 | 88,748 | ||||||
188,723 | 208,985 | |||||||
$ | 190,809 | $ | 213,651 | |||||
F-17
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Long-Term | ||||
Receivables | ||||
2010 | $ | 6,654 | ||
2011 | 7,202 | |||
2012 | 14,545 | |||
2013 | 28,616 | |||
2014 | 15,417 | |||
Thereafter | 182,317 | |||
254,751 | ||||
Less, current portion included in contracts-in-process | (6,654 | ) | ||
Long-term receivables | $ | 248,097 | ||
December 31, | ||||||||
2009 | 2008 | |||||||
Land and land improvements | $ | 26,852 | $ | 26,913 | ||||
Buildings | 68,698 | 59,038 | ||||||
Leasehold improvements | 11,133 | 10,870 | ||||||
Equipment, furniture and fixtures | 156,669 | 133,916 | ||||||
Satellite capacity under construction (see Note 16) | 27,412 | 10,478 | ||||||
Other construction in progress | 17,243 | 21,863 | ||||||
308,007 | 263,078 | |||||||
Accumulated depreciation and amortization | (100,011 | ) | (74,808 | ) | ||||
$ | 207,996 | $ | 188,270 | |||||
F-18
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
December 31, | ||||||||
2009 | 2008 | |||||||
Telesat Holdings Inc. | $ | 208,101 | $ | — | ||||
XTAR, LLC | 72,284 | 70,547 | ||||||
Other | 1,648 | 2,095 | ||||||
$ | 282,033 | $ | 72,642 | |||||
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Telesat Holdings Inc. | $ | 213,241 | $ | (479,579 | ) | $ | (1,792 | ) | ||||
XTAR, LLC | (2,743 | ) | (16,070 | ) | (10,585 | ) | ||||||
Other | (200 | ) | — | (9,053 | ) | |||||||
$ | 210,298 | $ | (495,649 | ) | $ | (21,430 | ) | |||||
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Revenues | $ | 92,144 | $ | 83,974 | $ | 21,968 | ||||||
Elimination of Loral’s proportionate share of (profits) losses relating to affiliate transactions | (10,071 | ) | (4,969 | ) | 1,935 | |||||||
Profits (losses) relating to affiliate transactions not eliminated | 5,671 | 2,808 | (1,082 | ) |
F-19
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Current assets | $ | 25,360 | ||
Property, plant and equipment, net | 443,776 | |||
Foreign currency contracts | 83,614 | |||
Goodwill | 42,246 | |||
Intangible assets, net | 50,404 | |||
Other assets | 3,183 | |||
Total assets | $ | 648,583 | ||
Current liabilities | $ | 181,045 | ||
Long-term liabilities | 27,000 | |||
Total liabilities | $ | 208,045 | ||
Consideration received for the contribution of Loral Skynet to Telesat Holdco: | ||||
Cash and marketable securities | $ | 61,480 | ||
Fair value of equity in Telesat Holdco | 670,562 | |||
Total consideration | 732,042 | |||
Book value of contributed net assets of Loral Skynet | 440,538 | |||
Consideration in excess of book value | $ | 291,504 | ||
Gain recognized | $ | 104,942 | ||
F-20
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
For the Period | ||||||||||||
October 31, | ||||||||||||
2007 | ||||||||||||
Year Ended December 31, | to December 31, | |||||||||||
2009 | 2008 | 2007 | ||||||||||
Statement of Operations Data: | ||||||||||||
Revenues | $ | 691,566 | $ | 685,187 | $ | 117,767 | ||||||
Operating expenses | (203,417 | ) | (258,010 | ) | (52,484 | ) | ||||||
Gain on disposition of long-lived assets | 29,311 | — | — | |||||||||
Impairment of long-lived and intangible assets | — | (454,896 | ) | — | ||||||||
Depreciation, amortization and stock-based compensation | (230,176 | ) | (225,949 | ) | (41,200 | ) | ||||||
Operating income (loss) | 287,284 | (253,668 | ) | 24,083 | ||||||||
Interest expense | (227,986 | ) | (231,062 | ) | (41,375 | ) | ||||||
Other income (expense) | 289,442 | (403,102 | ) | (45,550 | ) | |||||||
Income tax (expense) benefit | (2,185 | ) | 139,872 | 61,520 | ||||||||
Net income (loss) | 346,555 | (747,960 | ) | (1,322 | ) |
Year Ended December 31, | ||||||||
2009 | 2008 | |||||||
Balance Sheet Data: | ||||||||
Current assets | $ | 251,573 | $ | 179,769 | ||||
Total assets | 4,994,684 | 4,273,162 | ||||||
Current liabilities | 195,890 | 171,423 | ||||||
Long-term debt, including current portion | 2,953,281 | 2,901,620 | ||||||
Total liabilities | 4,041,932 | 3,760,164 | ||||||
Redeemable preferred stock | 134,291 | 116,044 | ||||||
Shareholders’ equity | 818,461 | 396,954 |
F-21
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-22
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Revenues | $ | 32,038 | $ | 20,405 | $ | 19,339 | ||||||
Operating expenses | (34,594 | ) | (34,500 | ) | (24,015 | ) | ||||||
Depreciation and amortization | (9,618 | ) | (9,650 | ) | (9,747 | ) | ||||||
Operating loss | (12,174 | ) | (23,751 | ) | (14,423 | ) | ||||||
Gain on settlement of Arianespace incentive cap | 11,668 | — | — | |||||||||
Net loss | (4,849 | ) | (28,597 | ) | (18,421 | ) |
December 31, | ||||||||
2009 | 2008 | |||||||
Balance Sheet Data: | ||||||||
Current assets | $ | 10,372 | $ | 9,107 | ||||
Total assets | 107,084 | 115,437 | ||||||
Current liabilities | 45,672 | 41,314 | ||||||
Total liabilities | 67,882 | 79,386 | ||||||
Members’ equity | 39,202 | 36,051 |
F-23
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
2009 | 2008 | |||||||
Balance as of January 1, | ||||||||
Goodwill | $ | 187,940 | $ | 227,058 | ||||
Accumulated impairment losses | (187,940 | ) | — | |||||
— | 227,058 | |||||||
Reversal of uncertain tax positions due to expiration of statute of limitations | — | (531 | ) | |||||
Reversal of valuation allowance on deferred tax assets | — | (38,587 | ) | |||||
Impairment loss | — | (187,940 | ) | |||||
Balance as of December 31, | ||||||||
Goodwill | 187,940 | 187,940 | ||||||
Accumulated impairment losses | (187,940 | ) | (187,940 | ) | ||||
$ | — | $ | — | |||||
Weighted Average | ||||||||||||||||||
Remaining Amortization | December 31, 2009 | December 31, 2008 | ||||||||||||||||
Period | Gross | Accumulated | Gross | Accumulated | ||||||||||||||
(Years) | Amount | Amortization | Amount | Amortization | ||||||||||||||
Internally developed software and technology | 2 | $ | 59,027 | $ | (45,972 | ) | $ | 59,027 | $ | (35,154 | ) | |||||||
Trade names | 16 | 9,200 | (1,955 | ) | 9,200 | (1,495 | ) | |||||||||||
Total | $ | 68,227 | $ | (47,927 | ) | $ | 68,227 | $ | (36,649 | ) | ||||||||
2010 | $ | 9,190 | ||
2011 | 2,931 | |||
2012 | 2,314 | |||
2013 | 460 | |||
2014 | 460 |
F-24
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
December 31, | ||||||||
2009 | 2008 | |||||||
Gross fair value adjustments | $ | (36,896 | ) | $ | (36,896 | ) | ||
Accumulated amortization | 16,446 | 19,084 | ||||||
$ | (20,450 | ) | $ | (17,812 | ) | |||
December 31, | ||||||||
2009 | 2008 | |||||||
Letters of credit outstanding | $ | 4,921 | $ | 4,927 | ||||
Borrowings | — | 55,000 | ||||||
Interest rate on revolver borrowings | — | 4.2575 | % |
Year Ended December 31, | ||||||||
2009 | 2008 | |||||||
Interest expense (including commitment and letter of credit fees) | $ | 1,168 | $ | 323 | ||||
Amortization of issuance costs | 878 | 183 |
F-25
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
• | SS/L must not permit its consolidated leverage ratio as of (i) the last day of any period of four consecutive fiscal quarters or (ii) the date of incurrence of certain indebtedness to exceed 3.50 to 1.00 from October 16, 2008 to September 29, 2009, 3.25 to 1.00 from September 30, 2009 through December 30, 2009 and 3.00 to 1.00 from December 31, 2009 and thereafter until the Maturity Date. |
• | SS/L must maintain a minimum consolidated interest coverage ratio of at least 3.50 to 1.00 as of the last day of any fiscal quarter for the period of four consecutive fiscal quarters ending on such day. |
F-26
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Current: | ||||||||||||
U.S. Federal | $ | 2,597 | $ | (21,213 | ) | $ | 31,142 | |||||
State and local | 3,166 | 37,572 | 19,712 | |||||||||
Foreign | — | — | 398 | |||||||||
Total current | 5,763 | 16,359 | 51,252 | |||||||||
Deferred: | ||||||||||||
U.S. Federal | (669 | ) | 29,574 | 45,173 | ||||||||
State and local | 477 | (189 | ) | (12,968 | ) | |||||||
Total deferred | (192 | ) | 29,385 | 32,205 | ||||||||
Total income tax provision | $ | 5,571 | $ | 45,744 | $ | 83,457 | ||||||
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Unrecognized tax benefits | $ | (2,817 | ) | $ | 25,962 | $ | 12,652 | |||||
Interest expense | 4,426 | 6,169 | 4,186 | |||||||||
Interest income | — | — | (41 | ) | ||||||||
Penalties | 701 | 9,427 | 303 | |||||||||
Total | $ | 2,310 | $ | 41,558 | $ | 17,100 | ||||||
F-27
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Tax provision( benefit) at U.S. Statutory Rate of 35% | $ | 9,441 | $ | (53,033 | ) | $ | 55,225 | |||||
Permanent adjustments which change statutory amounts: | ||||||||||||
State and local income taxes, net of federal income tax | 16,703 | 1,496 | (5,101 | ) | ||||||||
Equity in net income (losses) of affiliates | 73,604 | (173,477 | ) | (7,162 | ) | |||||||
Impairment of goodwill | — | 65,779 | — | |||||||||
Losses in litigation | 526 | 6,815 | — | |||||||||
Tax gain on transfer of Loral Skynet assets to Telesat | — | — | 16,419 | |||||||||
Provision for unrecognized tax benefits | 1,356 | (5,811 | ) | 8,370 | ||||||||
Nondeductible expenses | 2,076 | 1,501 | 2,682 | |||||||||
Change in valuation allowance | (96,617 | ) | 202,510 | 16,287 | ||||||||
Other, net | (1,518 | ) | (36 | ) | (3,263 | ) | ||||||
Total income tax provision | $ | 5,571 | $ | 45,744 | $ | 83,457 | ||||||
F-28
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Balance at January 1 | $ | 108,592 | $ | 59,903 | $ | 42,484 | ||||||
Increases related to prior year tax positions | 8,855 | 5,312 | 157 | |||||||||
Decreases related to prior year tax positions | (1,969 | ) | (1,225 | ) | (342 | ) | ||||||
Decrease as a result of statute expirations | (3,178 | ) | (1,832 | ) | — | |||||||
Decrease as a result of tax settlements | (4,887 | ) | — | (1,508 | ) | |||||||
Increases related to current year tax positions | 12,711 | 46,434 | 21,707 | |||||||||
Decrease for indemnified liabilities transferred to Telesat and recorded in other long term liabilities | — | — | (2,595 | ) | ||||||||
Balance at December 31 | $ | 120,124 | $ | 108,592 | $ | 59,903 | ||||||
F-29
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-30
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
December 31, | ||||||||
2009 | 2008 | |||||||
Deferred tax assets: | ||||||||
Postretirement benefits other than pensions | $ | 28,912 | $ | 28,321 | ||||
Inventoried costs | 17,932 | 19,456 | ||||||
Net operating loss and tax credit carryforwards | 180,874 | 199,460 | ||||||
Compensation and benefits | 29,339 | 20,663 | ||||||
Deferred research & development costs | 10,646 | 14,126 | ||||||
Income recognition on long-term contracts | 21,475 | 13,382 | ||||||
Investments in and advances to affiliates | 67,883 | 138,524 | ||||||
Other, net | 5,378 | 7,370 | ||||||
Federal benefit of uncertain tax positions | 22,488 | 21,431 | ||||||
Pension costs | 67,421 | 69,772 | ||||||
Total deferred tax assets before valuation allowance | 452,348 | 532,505 | ||||||
Less valuation allowance | (414,038 | ) | (487,762 | ) | ||||
Net deferred tax asset | 38,310 | 44,743 | ||||||
Deferred tax liabilities: | ||||||||
Property, plant and equipment | (16,819 | ) | (18,637 | ) | ||||
Intangible assets | (8,776 | ) | (13,582 | ) | ||||
Total deferred tax liability | (25,595 | ) | (32,219 | ) | ||||
Net deferred tax asset | $ | 12,715 | $ | 12,524 | ||||
F-31
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-32
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Cash | PIK Dividends | Total | ||||||||||||||||||
Payment Date | Dividend Period | Dividends | Shares | Amount | Dividends | |||||||||||||||
November 5, 2007 | 7/14/07 to 11/05/07 | $ | 8,790 | — | $ | — | $ | 8,790 | ||||||||||||
July 13, 2007 | 1/14/07 to 7/13/07 | 1,260 | 61,282 | 12,260 | 13,520 | |||||||||||||||
January 12, 2007 | 7/14/06 to 1/13/07 | 1,770 | 55,434 | 11,090 | 12,860 |
F-33
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Year Ended | ||||||||
December 31, | ||||||||
2009 | 2007 | |||||||
Risk — free interest rate | 2.72 | % | 4.5 | % | ||||
Expected life (years) | 4.67 | 2.80 | ||||||
Estimated volatility | 64.77 | % | 32.8 | % | ||||
Expected dividends | None | None | ||||||
Weighted average grant date fair value | $ | 11.39 | $ | 23.46 |
Weighted | ||||||||||||||||
Weighted | Average | Aggregate | ||||||||||||||
Average | Remaining | Intrinsic | ||||||||||||||
Exercise | Contractual | Value | ||||||||||||||
Shares | Price | Term | (In thousands) | |||||||||||||
Outstanding at January 1, 2009 | 2,034,202 | $ | 27.81 | 3.2 years | — | |||||||||||
Granted | 125,000 | $ | 35.00 | |||||||||||||
Exercised | (363,125 | ) | $ | 28.37 | ||||||||||||
Forfeited | (10,000 | ) | $ | 28.44 | ||||||||||||
Outstanding at December 31, 2009 | 1,786,077 | $ | 28.20 | 2.3 years | $ | 6,523 | ||||||||||
Vested and expected to vest at December 31, 2009 | 1,786,077 | $ | 28.20 | 2.3 years | $ | 6,523 | ||||||||||
Exercisable at December 31, 2009 | 1,692,327 | $ | 27.82 | 2.1 years | $ | 6,523 | ||||||||||
Weighted Average | ||||||||
Grant- Date | ||||||||
Shares | Fair Value | |||||||
Non-vested restricted stock at January 1, 2009 | 95,705 | $ | 42.43 | |||||
Granted | 8,000 | $ | 33.58 | |||||
Vested | (55,492 | ) | $ | 43.01 | ||||
Forfeited | (2,687 | ) | $ | 46.65 | ||||
Non-vested restricted stock at December 31, 2009 | 45,526 | $ | 39.91 | |||||
F-34
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Year Ended December 31, | ||||
2009 | ||||
Risk — free interest rate | 1.581 | % | ||
Estimated volatility | 59.83 | % | ||
Expected dividends | None | |||
Weighted average grant date fair value | $ | 8.51 |
Weighted | ||||||||
Average | ||||||||
Grant- Date | ||||||||
Shares | Fair Value | |||||||
Non-vested RSUs at January 1, 2009 | — | |||||||
Granted | 223,250 | $ | 11.03 | |||||
Vested | — | — | ||||||
Forfeited | — | — | ||||||
Non-vested RSUs at December 31, 2009 | 223,250 | $ | 11.03 | |||||
F-35
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Weighted | ||||||||
Average | ||||||||
Grant- Date | ||||||||
Shares | Fair Value | |||||||
Non-vested SS/L Phantom SARs at January 1, 2009 | — | |||||||
Granted | 540,000 | $ | 6.53 | |||||
Vested | — | — | ||||||
Forfeited | — | — | ||||||
Non-vested SS/L Phantom SARs at December 31, 2009 | 540,000 | $ | 6.53 |
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Total intrinsic value of options exercised | $ | 1,578 | $ | — | $ | 2,930 | ||||||
Total fair value of restricted stock vested | 1,395 | 1,131 | 3,016 | |||||||||
Total fair value of stock awards vested | 1,591 | — | — |
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In thousands) | ||||||||||||
Common and potential common shares: | ||||||||||||
Weighted average common shares outstanding | 29,761 | 20,407 | 20,087 | |||||||||
Stock options | 48 | — | — | |||||||||
Unvested restricted stock units | 115 | — | — | |||||||||
Unvested restricted stock | 4 | — | — | |||||||||
Unvested SARS | 53 | — | — | |||||||||
Common and potential common shares | 29,981 | 20,407 | 20,087 | |||||||||
F-36
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In thousands) | ||||||||||||
Stock options outstanding | 125 | 2,034 | 2,052 | |||||||||
Shares of non-vested restricted stock | 30 | 96 | 142 | |||||||||
Non-vested restricted stock units | 8 | — | — | |||||||||
F-37
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Pension Benefits | Other Benefits | |||||||||||||||
Year Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(In thousands) | (In thousands) | |||||||||||||||
Reconciliation of benefit obligation | ||||||||||||||||
Obligation at beginning of period | $ | 380,919 | $ | 367,870 | $ | 66,587 | $ | 73,788 | ||||||||
Service cost | 9,436 | 9,214 | 863 | 1,056 | ||||||||||||
Interest cost | 24,447 | 23,367 | 3,965 | 4,108 | ||||||||||||
Participant contributions | 1,455 | 1,385 | 1,863 | 1,792 | ||||||||||||
Actuarial loss (gain) | 27,366 | 2,146 | (1,764 | ) | (9,393 | ) | ||||||||||
Benefit payments | (23,547 | ) | (22,630 | ) | (4,122 | ) | (4,764 | ) | ||||||||
Curtailment gain | — | (433 | ) | — | — | |||||||||||
Obligation at December 31, | 420,076 | 380,919 | 67,392 | 66,587 | ||||||||||||
Reconciliation of fair value of plan assets | ||||||||||||||||
Fair value of plan assets at beginning of period | 211,982 | 284,283 | 742 | 955 | ||||||||||||
Actual return on plan assets | 42,643 | (80,059 | ) | 5 | 27 | |||||||||||
Employer contributions | 22,526 | 27,904 | 2,019 | 2,732 | ||||||||||||
Participant contributions | 1,455 | 1,385 | 1,863 | 1,792 | ||||||||||||
Benefit payments | (22,440 | ) | (21,531 | ) | (4,122 | ) | (4,764 | ) | ||||||||
Fair value of plan assets at December 31, | 256,166 | 211,982 | 507 | 742 | ||||||||||||
Funded status at end of period | $ | (163,910 | ) | $ | (168,937 | ) | $ | (66,885 | ) | $ | (65,845 | ) | ||||
Pension Benefits | Other Benefits | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Actuarial (loss) gain | $ | (78,028 | ) | $ | (80,213 | ) | $ | 8,464 | $ | 7,216 | ||||||
Amendments-prior service credit | 25,392 | 28,111 | 2,485 | 2,966 | ||||||||||||
$ | (52,636 | ) | $ | (52,102 | ) | $ | 10,949 | $ | 10,182 | |||||||
Pension Benefits | Other Benefits | |||||||
Actuarial (loss) gain during the period | $ | (1,898 | ) | $ | 1,719 | |||
Amortization of actuarial loss (gain) | 4,083 | (471 | ) | |||||
Amortization of prior service credit | (2,719 | ) | (481 | ) | ||||
Total recognized in other comprehensive income | $ | (534 | ) | $ | 767 | |||
F-38
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Pension Benefits | Other Benefits | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Current Liabilities | $ | 1,236 | $ | 1,070 | $ | 3,369 | $ | 3,051 | ||||||||
Long-Term Liabilities | 162,674 | 167,867 | 63,516 | 62,794 | ||||||||||||
$ | 163,910 | $ | 168,937 | $ | 66,885 | $ | 65,845 | |||||||||
Pension Benefits | Other Benefits | |||||||||||||||||||||||
For the Year Ended December 31, | For the Year Ended December 31, | |||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | 2007 | |||||||||||||||||||
Service cost | $ | 9,436 | $ | 9,214 | $ | 10,145 | $ | 863 | $ | 1,056 | $ | 1,607 | ||||||||||||
Interest cost | 24,447 | 23,367 | 22,455 | 3,965 | 4,108 | 4,995 | ||||||||||||||||||
Expected return on plan assets | (17,176 | ) | (24,469 | ) | (23,768 | ) | (50 | ) | (72 | ) | (36 | ) | ||||||||||||
Amortization of prior service credit | (2,719 | ) | (2,718 | ) | (2,784 | ) | (481 | ) | (480 | ) | (553 | ) | ||||||||||||
Amortization of net actuarial loss (gain) | 4,083 | (18 | ) | (59 | ) | (471 | ) | (30 | ) | 111 | ||||||||||||||
Curtailment gain | — | (433 | ) | (2,345 | ) | — | — | (1,862 | ) | |||||||||||||||
Net periodic cost | $ | 18,071 | $ | 4,943 | $ | 3,644 | $ | 3,826 | $ | 4,582 | $ | 4,262 | ||||||||||||
For the Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Discount rate | 6.50 | % | 6.50 | % | 6.00%/6.50 | % | ||||||
Expected return on plan assets | 8.00 | % | 8.50 | % | 8.50 | % | ||||||
Rate of compensation increase | 4.25 | % | 4.25 | % | 4.25 | % |
December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Discount rate | 6.00 | % | 6.50 | % | 6.50 | % | ||||||
Rate of compensation increase | 4.25 | % | 4.25 | % | 4.25 | % |
F-39
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
1% Increase | 1% Decrease | |||||||
Effect on total of service and interest cost components of net periodic postretirement health care benefit cost | $ | 313 | $ | (260 | ) | |||
Effect on the health care component of the accumulated postretirement benefit obligation | $ | 4,759 | $ | (3,826 | ) |
Actual Allocation | ||||||||||||||||
December 31, | Target Allocation | |||||||||||||||
2009 | 2008 | Target | Target Range | |||||||||||||
Equities | 59 | % | 51 | % | 60 | % | 50-65 | % | ||||||||
Fixed Income | 41 | % | 49 | % | 40 | % | 35-50 | % | ||||||||
100 | % | 100 | % | 100 | % | 100 | % | |||||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Target Allocation | ||||||||
Target | Target Range | |||||||
U.S. Large Cap Equities | 35 | % | 30-40 | % | ||||
U.S. Small Cap Equities | 5 | % | 3-7 | % | ||||
Non-U.S. Equities | 15 | % | 10-20 | % | ||||
Alternative Equity Investments | 5 | % | 0-15 | % | ||||
Total Equities | 60 | % | 50-65 | % | ||||
Fixed Income | 35 | % | 30-40 | % | ||||
Alternative Fixed Income Investments | 5 | % | 0-15 | % | ||||
Total Fixed Income | 40 | % | 35-50 | % | ||||
Total Target Allocation | 100 | % | 100 | % | ||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Fair Value Measurements | ||||||||||||||||||||
at December 31, 2009 | ||||||||||||||||||||
Quoted Prices | ||||||||||||||||||||
In Active Markets | Significant | Significant | ||||||||||||||||||
For Identical | Observable | Unobservable | ||||||||||||||||||
Assets | Inputs | Inputs | ||||||||||||||||||
Total | Percentage | Level 1 | Level 2 | Level 3 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Asset Category | ||||||||||||||||||||
Cash | ||||||||||||||||||||
Equity securities: | ||||||||||||||||||||
U.S. large-cap(1) | $ | 79,854 | 31 | % | $ | 79,854 | ||||||||||||||
U.S. small-cap(2) | 13,087 | 5 | % | 13,087 | ||||||||||||||||
Non-U.S.(3) | 45,957 | 18 | % | 45,957 | ||||||||||||||||
Alternative investments: | ||||||||||||||||||||
Equity long/short fund(4) | 5,468 | 2 | % | $ | 5,468 | |||||||||||||||
Private equity fund(5) | 6,245 | 3 | % | 6,245 | ||||||||||||||||
150,611 | 59 | % | 138,898 | 11,713 | ||||||||||||||||
Fixed income securities: | ||||||||||||||||||||
Commingled funds(6) | 98,998 | 39 | % | 98,998 | ||||||||||||||||
Alternative investments: | ||||||||||||||||||||
Distressed opportunity limited partnership(7) | 3,204 | 1 | % | 3,204 | ||||||||||||||||
Diversified alternatives fund(8) | 3,135 | 1 | % | 3,135 | ||||||||||||||||
Other limited partnerships(9) | 218 | 218 | ||||||||||||||||||
105,555 | 41 | % | 98,998 | 6,557 | ||||||||||||||||
$ | 256,166 | 100 | % | $ | 237,896 | $ | 18,270 | |||||||||||||
(1) | Investments in common stocks that rank among the largest 1,000 companies in the U.S. stock market. | |
(2) | Investments in common stocks that rank among the small capitalization stocks in the U.S. stock market. |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(3) | Investments in common stocks of companies from developed and emerging countries around the world. | |
(4) | Investments primarily in long and short positions in equity securities of U.S. and non-U.S. companies. This fund has semi-annual tender offer redemption periods on June 30 and December 31. | |
(5) | Fund invests in portfolios of secondary interest in established venture capital, buyout, mezzanine and special situation funds on a global basis. The Company committed to invest up to $10 million in this fund. $6.95 million has been invested through December 31, 2009. Fund is valued on a quarterly lag with adjustment for subsequent cash activity. | |
(6) | Investments in bonds representing many sectors of the broad bond market with both short-term and intermediate-term maturities. | |
(7) | Investments mainly in discounted debt securities, bank loans, trade claims and other debt and equity securities of financially troubled companies. This partnership has a one year lock-up period with semi-annual withdrawal rights on June 30 and December 31 thereafter. Our initial investment was made August 3, 2009. | |
(8) | Fund is a fund of hedge funds. Fund is closed and currently unwinding its holdings. The remaining portfolio is illiquid and could take four or five years, possibly more to liquidate. Fund is valued on a one month lag with adjustment for subsequent cash activity. | |
(9) | Company invested in other partnerships that have reached their end of life and have closed and are unwinding their holdings. Mainly partnerships that provided mezzanine financing. |
Fair Value Measurements Using Significant | ||||||||||||||||||||||||
Unobservable Inputs (Level 3) | ||||||||||||||||||||||||
Private | Equity | Distressed | Diversified | Other | ||||||||||||||||||||
Equity | Long/Short | Opportunity | Alternatives | Limited | ||||||||||||||||||||
Fund | Fund | Ltd. Partnership | Fund | Partnership | Total | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Beginning balance at January 1, 2009 | $ | 6,645 | $ | — | $ | — | $ | 8,735 | $ | 402 | $ | 15,782 | ||||||||||||
Unrealized gain/(loss) | (1,050 | ) | 468 | 204 | (525 | ) | 192 | (711 | ) | |||||||||||||||
Realized gain/(loss) | — | — | — | (1,095 | ) | (344 | ) | (1,439 | ) | |||||||||||||||
Purchases | 650 | 5,000 | 3,000 | — | — | 8,650 | ||||||||||||||||||
Sales | — | — | — | (3,980 | ) | (32 | ) | (4,012 | ) | |||||||||||||||
Ending balance at December 31, 2009 | $ | 6,245 | $ | 5,468 | $ | 3,204 | $ | 3,135 | $ | 218 | $ | 18,270 | ||||||||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Other Benefits | ||||||||||||
Gross | Medicare | |||||||||||
Pension | Benefit | Subsidy | ||||||||||
Benefits | Payments | Receipts | ||||||||||
2010 | $ | 25,798 | $ | 4,295 | $ | 304 | ||||||
2011 | 26,605 | 4,671 | 337 | |||||||||
2012 | 26,765 | 4,901 | 372 | |||||||||
2013 | 27,102 | 5,067 | 405 | |||||||||
2014 | 27,857 | 5,240 | 442 | |||||||||
2015 to 2019 | 150,512 | 28,241 | 2,736 |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Foreign Currency | U.S.$ | |||||||
(In thousands) | ||||||||
Future revenues — Japanese Yen | ¥ | 35,062 | $ | 380 | ||||
Future expenditures — Japanese Yen | ¥ | 4,613,707 | $ | 50,018 | ||||
Contracts-in-process, unbilled receivables — Japanese Yen | ¥ | 75,430 | $ | 818 | ||||
Future revenues — EUROs | € | 4,420 | $ | 6,335 | ||||
Future expenditures — EUROs | € | 2,370 | $ | 3,397 |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
To Sell | ||||||||||||
At | At | |||||||||||
Euro | Contract | Market | ||||||||||
Maturity | Amount | Rate | Rate | |||||||||
(In thousands) | ||||||||||||
2010 | € | 19,210 | $ | 29,389 | $ | 27,529 | ||||||
2011 | 23,493 | 35,663 | 33,650 | |||||||||
€ | 42,703 | $ | 65,052 | $ | 61,179 | |||||||
Asset Derivatives | ||||||||
Balance Sheet Location | Fair Value | |||||||
(In thousands) | ||||||||
Derivatives designated as hedging instruments | ||||||||
Foreign exchange contracts | Other current assets | $ | 1,860 | |||||
Foreign exchange contracts | Other assets | 1,846 | ||||||
3,706 | ||||||||
Derivatives not designated as hedging instruments | ||||||||
Foreign exchange contracts | Other assets | 167 | ||||||
Total Derivatives | $ | 3,873 | ||||||
Amount of Gain | ||||||||||||||||||||
(Loss) | Gain Reclassified from | Loss on Derivative | ||||||||||||||||||
Recognized | Accumulated | Ineffectiveness and | ||||||||||||||||||
in OCI on | OCI into Income | amounts excluded from | ||||||||||||||||||
Derivatives in Cash Flow | Derivative | (Effective Portion) | Effectiveness Testing | |||||||||||||||||
Hedging Relationships | (Effective Portion) | Location | Amount | Location | Amount | |||||||||||||||
(In thousands) | (In thousands) | (In thousands) | ||||||||||||||||||
Foreign exchange contracts | $ | (274 | ) | Revenue | $ | 11,806 | Revenue | $ | (1,085 | ) | ||||||||||
Foreign exchange contracts | $ | 180 | — | Interest income | $ | (72 | ) |
Gain | ||||||||
Recognized in Income | ||||||||
Cash Flow Derivatives Not Designated as | on Derivative | |||||||
Hedging Instruments | Location | Amount | ||||||
(In thousands) | ||||||||
Foreign exchange contracts | Revenue | $ | 335 |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
2009 | 2008 | 2007 | ||||||||||
Balance of deferred amounts at January 1 | $ | 36,255 | $ | 35,026 | $ | 53,872 | ||||||
Warranty costs incurred including payments | (1,239 | ) | (956 | ) | (10,790 | ) | ||||||
Accruals relating to pre-existing contracts (including changes in estimates) | 2,151 | 2,185 | (8,056 | ) | ||||||||
Balance of deferred amounts at December 31 | $ | 37,167 | $ | 36,255 | $ | 35,026 | ||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-48
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-49
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Gross | Sublease | |||||||||||
Rent | Income | Net Rent | ||||||||||
Year ended December 31, 2009 | $ | 16,337 | $ | — | $ | 16,337 | ||||||
Year ended December 31, 2008 | $ | 12,154 | $ | (6 | ) | $ | 12,148 | |||||
Year ended December 31, 2007 | $ | 26,302 | $ | (76 | ) | $ | 26,226 |
2010 | $ | 10,737 | ||
2011 | 8,356 | |||
2012 | 5,811 | |||
2013 | 3,774 | |||
2014 | 3,508 | |||
Thereafter | 10,016 | |||
$ | 42,202 | |||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-51
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-52
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-53
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(In thousands)
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In thousands) | ||||||||||||
Revenues | ||||||||||||
Satellite manufacturing: | ||||||||||||
External revenues | $ | 901,283 | $ | 785,534 | $ | 739,815 | ||||||
Intersegment revenues(1) | 107,401 | 95,913 | 74,500 | |||||||||
Satellite manufacturing revenues | 1,008,684 | 881,447 | 814,315 | |||||||||
Satellite services revenues(2) | 691,566 | 685,187 | 241,156 | |||||||||
Segment revenues before eliminations | 1,700,250 | 1,566,634 | 1,055,471 | |||||||||
Intercompany eliminations(3) | (15,284 | ) | (12,049 | ) | (55,250 | ) | ||||||
Affiliate eliminations(4) | (691,566 | ) | (685,187 | ) | (117,767 | ) | ||||||
Total revenues as reported | $ | 993,400 | $ | 869,398 | $ | 882,454 | ||||||
Segment Adjusted EBITDA | ||||||||||||
Satellite manufacturing | $ | 90,565 | $ | 45,055 | $ | 34,479 | ||||||
Satellite services(2) | 488,149 | 436,514 | 118,385 | |||||||||
Corporate(5) | (21,371 | ) | (14,875 | ) | (37,935 | ) | ||||||
Adjusted EBITDA before eliminations | 557,343 | 466,694 | 114,929 | |||||||||
Intercompany eliminations(3) | (1,673 | ) | (1,569 | ) | (6,075 | ) | ||||||
Affiliate eliminations(4) | (488,149 | ) | (427,176 | ) | (65,283 | ) | ||||||
Adjusted EBITDA | 67,521 | 37,949 | 43,571 | |||||||||
Reconciliation to Operating Income | ||||||||||||
Depreciation, Amortization and Stock-Based Compensation | ||||||||||||
Satellite manufacturing | (44,203 | ) | (38,646 | ) | (36,282 | ) | ||||||
Satellite services(2) | (230,176 | ) | (220,843 | ) | (85,905 | ) | ||||||
Corporate | (3,107 | ) | (5,342 | ) | (22,270 | ) | ||||||
Segment depreciation before affiliate eliminations | (277,486 | ) | (264,831 | ) | (144,457 | ) | ||||||
Affiliate eliminations(4) | 230,176 | 220,843 | 41,200 | |||||||||
Depreciation, amortization and stock-based compensation as reported | (47,310 | ) | (43,986 | ) | (103,257 | ) | ||||||
Satellite manufacturing — impairment of goodwill | — | (187,940 | ) | — | ||||||||
Satellite services — gain on contribution of Loral Skynet | — | — | 104,942 | |||||||||
Operating income (loss) as reported | $ | 20,211 | $ | (193,977 | ) | $ | 45,256 | |||||
Capital Expenditures | ||||||||||||
Satellite manufacturing | $ | 26,426 | $ | 53,883 | $ | 37,477 | ||||||
Satellite services(2) | 231,654 | 255,506 | 88,647 | |||||||||
Corporate | 17,131 | 10,676 | 37 | |||||||||
Segment capital expenditures before eliminations(6) | 275,211 | 320,065 | 126,161 | |||||||||
Affiliate eliminations(4) | (231,654 | ) | (255,506 | ) | (30,400 | ) | ||||||
Capital expenditures as reported | $ | 43,557 | $ | 64,559 | $ | 95,761 | ||||||
As of December 31, | ||||||||
2009 | 2008 | |||||||
(In thousands) | ||||||||
Total Assets(6) | ||||||||
Satellite manufacturing(7) | $ | 863,866 | $ | 799,476 | ||||
Satellite services(8) | 5,202,785 | 4,273,162 | ||||||
Corporate | 181,485 | 196,391 | ||||||
Total Assets before affiliate eliminations | 6,248,136 | 5,269,029 | ||||||
Affiliate eliminations(4) | (4,994,684 | ) | (4,273,162 | ) | ||||
Total assets as reported | $ | 1,253,452 | $ | 995,867 | ||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(1) | Intersegment revenues include $92 million, $84 million and $22 million for the years ended December 31, 2009, 2008 and 2007, respectively, of revenue from affiliates. | |
(2) | Satellite Services for 2009 and 2008 represents Telesat. Satellite Services for 2007 includes Loral Skynet for the period January 1, 2007 to October 30, 2007 and Telesat for the period October 31, 2007 to December 31, 2007. Satellite services Adjusted EBITDA also includes approximately $9 million for the year ended December 31, 2008, related to the distribution from a bankruptcy claim against a former customer of Loral Skynet. | |
(3) | Represents the elimination of intercompany sales and intercompany Adjusted EBITDA, primarily for satellites under construction by SS/L for Loral and its wholly owned subsidiaries and for satellite services leasing transponder capacity to SS/L. | |
(4) | Affiliate eliminations represent the elimination of amounts attributable to Telesat whose results are reported under the equity method of accounting in our consolidated statements of operations (see Note 6). | |
(5) | Includes corporate expenses incurred in support of our operations and includes our equity investments in XTAR and Globalstar service providers. | |
(6) | Amounts are presented after the elimination of intercompany profit. | |
(7) | During 2008, we determined that the implied fair value of SS/L goodwill had decreased below its carrying value, and we recorded an impairment charge for the entire goodwill balance of $187.9 million to reflect this impairment. | |
(8) | Includes $2.3 billion and $2.0 billion satellite services goodwill related to Telesat as of December 31, 2009 and 2008, respectively. |
For the Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
United States | $ | 534,294 | $ | 612,282 | $ | 702,605 | ||||||
United Kingdom | 101,499 | 68,956 | 45,596 | |||||||||
Canada | 92,094 | 83,767 | 43,552 | |||||||||
Spain | 85,499 | 25,506 | 385 | |||||||||
Luxembourg | 61,673 | 11,398 | — | |||||||||
The Netherlands | 59,509 | 50,110 | 6,849 | |||||||||
People’s Republic of China (including Hong Kong) | 54,677 | 13,236 | 47,591 | |||||||||
Other | 4,155 | 4,143 | 35,876 | |||||||||
$ | 993,400 | $ | 869,398 | $ | 882,454 | |||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
For Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In thousands) | ||||||||||||
Revenues from Telesat satellite construction contracts | $ | 92,095 | $ | 83,767 | $ | 21,548 | ||||||
Milestone payments received from Telesat | 89,419 | 79,107 | 20,064 |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-57
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
For Year Ended December 31, | ||||||||
2008 | 2007 | |||||||
Loral Series-1 Preferred Stock | ||||||||
Dividends paid in the form of additional shares | ||||||||
— Number of shares | 80,423 | 47,762 | ||||||
— Amount | $ | 24,248 | $ | 14,400 | ||||
Loral Skynet Preferred Stock | ||||||||
Dividends paid in cash | $ | — | $ | 4,513 | ||||
Dividends paid in the form of additional shares | ||||||||
— Number of shares | — | 44,539 | ||||||
— Amount | $ | — | $ | 8,908 | ||||
Loral Skynet Notes | ||||||||
Interest payments paid in cash | $ | — | $ | 8,967 | ||||
Redemption premium paid in cash | $ | — | $ | 5,624 | ||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Quarter Ended | ||||||||||||||||
Year ended December 31, 2009 | March 31, | June 30, | September 30, | December 31, | ||||||||||||
Revenues | $ | 212,491 | $ | 271,447 | $ | 249,237 | $ | 260,225 | ||||||||
Operating income (loss) | (5,480 | ) | (7,695 | ) | 14,849 | 18,537 | ||||||||||
Income (loss) before income taxes and equity in net income (losses) of affiliates | (5,180 | ) | (4,563 | ) | 16,012 | 20,706 | ||||||||||
Equity in net income (losses) of affiliates | (5,668 | ) | 85,276 | 93,071 | 37,619 | |||||||||||
Net income (loss) | (10,828 | ) | 74,295 | 108,424 | 59,811 | |||||||||||
Basic and diluted income (loss) per share(1): | ||||||||||||||||
Basic income (loss) per share | (0.36 | ) | 2.50 | 3.64 | 2.01 | |||||||||||
Diluted income (loss) per share | (0.36 | ) | 2.48 | 3.61 | 1.97 |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Quarter Ended | ||||||||||||||||
Year ended December 31, 2008 | March 31, | June 30, | September 30, | December 31, | ||||||||||||
Revenues | $ | 218,537 | $ | 208,061 | $ | 212,519 | $ | 230,281 | ||||||||
Operating income (loss) | (10,810 | ) | 4,536 | (5,795 | ) | (181,908 | )(2) | |||||||||
Income (loss) before income taxes and equity in net income (losses) of affiliates | (4,904 | ) | 60,755 | (5,433 | ) | (201,941 | ) | |||||||||
Equity in net income (losses) of affiliates | (64,537 | ) | 2,838 | (39,353 | ) | (394,597 | )(3) | |||||||||
Net income (loss) | (71,217 | ) | 51,950 | (44,225 | ) | (629,424 | ) | |||||||||
Basic and diluted income (loss) per share(1): | ||||||||||||||||
Basic income (loss) per share | (3.83 | ) | 2.27 | (2.50 | ) | (31.13 | ) | |||||||||
Diluted income (loss) per share | (3.83 | ) | 2.16 | (2.50 | ) | (31.13 | ) |
(1) | The quarterly earnings per share information is computed separately for each period. Therefore, the sum of such quarterly per share amounts may differ from the total for the year. | |
(2) | Includes goodwill impairment charge of $188 million. | |
(3) | Includes our share of Telesat’s non-cash foreign exchange losses, net of non-cash gains on financial instruments, of $295 million and Telesat’s charges for impairment of long-lived and intangible assets of $455 million. |
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VALUATION AND QUALIFYING ACCOUNTS
For the Year Ended December 31, 2009, 2008 and 2007
(In thousands)
Additions | ||||||||||||||||||||
Balance at | Charged to | Charged to | Deductions | Balance at | ||||||||||||||||
Beginning | Costs and | Other | From | End of | ||||||||||||||||
Description | of Period | Expenses | Accounts(1) | Reserves(2) | Period | |||||||||||||||
Year ended 2007 | ||||||||||||||||||||
Allowance for billed receivables | $ | 1,624 | $ | (397 | ) | $ | 20 | $ | (1,024 | ) | $ | 223 | ||||||||
Inventory allowance | $ | 29,598 | $ | (543 | ) | $ | — | $ | (609 | ) | $ | 28,446 | ||||||||
Deferred tax valuation allowance | $ | 304,884 | $ | 16,287 | $ | (34,749 | ) | $ | (45,194 | ) | $ | 241,228 | ||||||||
Year ended 2008 | ||||||||||||||||||||
Allowance for billed receivables | $ | 223 | $ | 700 | $ | — | $ | — | $ | 923 | ||||||||||
Inventory allowance | $ | 28,446 | $ | — | $ | — | $ | (1,246 | ) | $ | 27,200 | |||||||||
Deferred tax valuation allowance | $ | 241,228 | $ | 202,510 | $ | 82,611 | $ | (38,587 | ) | $ | 487,762 | |||||||||
Year ended 2009 | ||||||||||||||||||||
Allowance for billed receivables | $ | 923 | $ | 2,759 | $ | — | $ | — | $ | 3,682 | ||||||||||
Inventory allowance | $ | 27,200 | $ | 1,042 | $ | 55 | $ | — | $ | 28,297 | ||||||||||
Deferred tax valuation allowance | $ | 487,762 | $ | (96,617 | ) | $ | 22,893 | $ | — | $ | 414,038 | |||||||||
(1) | The allowance for long-term receivables is recorded as a reduction to revenues. Changes in the deferred tax valuation allowance which have been charged to other accounts have been recorded in accumulated other comprehensive income (loss), goodwill and other deferred tax assets. | |
(2) | Deductions from reserves reflect write-offs of uncollectible billed receivables, disposals of inventory and reversal of excess deferred tax valuation allowance recorded as a reduction to goodwill. |
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Licensed Public Accountants
Toronto, Canada
March 2, 2010
F-62
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for the years ended December 31, 2009, 2008 and 2007
Predecessor | |||||||||||||||||||
Successor Entity | Entity | ||||||||||||||||||
For the Period | For the Period | ||||||||||||||||||
Year Ended | Year Ended | October 31 to | January 1 to | ||||||||||||||||
December 31, | December 31, | December 31, | October 30, | ||||||||||||||||
(in thousands of Canadian dollars) | Notes | 2009 | 2008 | 2007 | 2007 | ||||||||||||||
Operating revenues | |||||||||||||||||||
Service revenues | 767,138 | 680,791 | 103,509 | 384,428 | |||||||||||||||
Equipment sales revenues | 20,060 | 30,584 | 7,907 | 40,760 | |||||||||||||||
Sales-type lease revenues | — | — | — | 32,599 | |||||||||||||||
Total operating revenues | (4) | 787,198 | 711,375 | 111,416 | 457,787 | ||||||||||||||
Amortization | 256,867 | 235,640 | 40,046 | 105,788 | |||||||||||||||
Operations and administration | 219,690 | 247,550 | 43,276 | 144,307 | |||||||||||||||
Cost of equipment sales | 16,380 | 24,368 | 6,485 | 34,723 | |||||||||||||||
Cost of sales-type lease | — | — | — | 15,519 | |||||||||||||||
Impairment loss on long-lived assets | (10) | — | 2,373 | — | 2,116 | ||||||||||||||
Impairment loss on intangible assets | (11) | — | 483,000 | — | — | ||||||||||||||
Total operating expenses | 492,937 | 992,931 | 89,807 | 302,453 | |||||||||||||||
Earnings (loss) from operations | 294,261 | (281,556 | ) | 21,609 | 155,334 | ||||||||||||||
Interest expense | (5) | (273,568 | ) | (257,641 | ) | (43,861 | ) | (8,548 | ) | ||||||||||
(Loss) gain on financial instruments | (134,402 | ) | 251,686 | 75,098 | (6,653 | ) | |||||||||||||
Gain (loss) on foreign exchange | 500,862 | (698,056 | ) | (118,034 | ) | (935 | ) | ||||||||||||
Other income (expense) | (6) | 31,859 | (1,713 | ) | (1,033 | ) | (379 | ) | |||||||||||
Earnings (loss) before income taxes | 419,012 | (987,280 | ) | (66,221 | ) | 138,819 | |||||||||||||
Income tax (expense) recovery | (7) | (4,949 | ) | 164,879 | 62,170 | (57,077 | ) | ||||||||||||
Net earnings (loss) | 414,063 | (822,401 | ) | (4,051 | ) | 81,742 | |||||||||||||
Net earnings (loss) applicable to common shares | 414,063 | (822,401 | ) | (4,051 | ) | 81,742 | |||||||||||||
F-63
Table of Contents
for the years ended December 31, 2009, 2008, and 2007
Predecessor | |||||||||||||||||
Successor Entity | Entity | ||||||||||||||||
For the Period | For the Period | ||||||||||||||||
Year Ended | Year Ended | October 31 to | January 1 to | ||||||||||||||
December 31, | December 31, | December 31, | October 30, | ||||||||||||||
(in thousands of Canadian dollars) | 2009 | 2008 | 2007 | 2007 | |||||||||||||
Net earnings (loss) | 414,063 | (822,401 | ) | (4,051 | ) | 81,742 | |||||||||||
Other comprehensive income (loss): | |||||||||||||||||
Unrealized foreign currency translation gains (losses) of self sustaining foreign operations, net of related taxes (2009 — $346, 2008 — ($2,090), 2007 — two months — $66, 2007 — ten months — ($827)) | 320 | (7,143 | ) | (599 | ) | 1,715 | |||||||||||
Loss on derivatives designated as cash flow hedges, net of related taxes (2007 — ten months — $9,242) | — | — | — | (19,819 | ) | ||||||||||||
Gain on derivatives designated as cash flow hedges in prior periods transferred to net income in the current period, net of related taxes (2007 — ten months — ($2,605)) | — | — | — | 5,585 | |||||||||||||
Comprehensive income (loss) | 414,383 | (829,544 | ) | (4,650 | ) | 69,223 | |||||||||||
F-64
Table of Contents
for the year ended December 31, 2009 with Comparative Figures for the periods ended
December 31, 2008, December 31, 2007, October 30, 2007
Accumulated | ||||||||||||||||||||||||||||||
deficit and | ||||||||||||||||||||||||||||||
Accumulated | Accumulated | |||||||||||||||||||||||||||||
other | other | Total | ||||||||||||||||||||||||||||
Common | Preferred | Accumulated | comprehensive | comprehensive | Contributed | shareholders’ | ||||||||||||||||||||||||
(in thousands of Canadian dollars) (unaudited) | Notes | shares | Shares | deficit | loss | loss | surplus | equity | ||||||||||||||||||||||
Predecessor entity | ||||||||||||||||||||||||||||||
Balance at January 1, 2007 | 341,116 | — | 386,398 | (2,283 | ) | 384,115 | 184,416 | 909,647 | ||||||||||||||||||||||
Adjustment for changes in accounting policies | — | — | (401 | ) | 1,239 | 838 | — | 838 | ||||||||||||||||||||||
Stock compensation | — | — | — | — | — | 617 | 617 | |||||||||||||||||||||||
Net earnings | — | — | 81,742 | — | 81,742 | — | 81,742 | |||||||||||||||||||||||
Reorganization | (1) | — | — | (579,807 | ) | — | (579,807 | ) | (185,033 | ) | (764,840 | ) | ||||||||||||||||||
Unrealized foreign currency translation gains on translation of self sustaining foreign operations | — | — | — | 1,715 | 1,715 | — | 1,715 | |||||||||||||||||||||||
Gains and losses on derivatives designated as cash flow hedges | — | — | — | (19,819 | ) | (19,819 | ) | — | (19,819 | ) | ||||||||||||||||||||
Gains and losses on derivatives designated as cash flow hedges in prior periods transferred to net income in the current period | — | — | — | 5,585 | 5,585 | — | 5,585 | |||||||||||||||||||||||
Balance at October 30, 2007 (prior to acquisition transactions) | 341,116 | — | (112,068 | ) | (13,563 | ) | (125,631 | ) | — | 215,485 | ||||||||||||||||||||
Telesat Holdings Inc. Acquisition Transactions and adjustments | (341,116 | ) | — | 112,068 | 13,563 | 125,631 | — | (215,485 | ) | |||||||||||||||||||||
Successor entity | ||||||||||||||||||||||||||||||
Balance at October 31, 2007 | ||||||||||||||||||||||||||||||
Common shares issued as part of the sale transaction | (3) | 756,414 | — | — | — | — | — | 756,414 | ||||||||||||||||||||||
Preferred shares issued as part of the sale transaction | (3) | — | 541,764 | — | — | — | — | 541,764 | ||||||||||||||||||||||
Net loss | — | — | (4,051 | ) | — | (4,051 | ) | — | (4,051 | ) | ||||||||||||||||||||
Unrealized foreign currency translation losses on translation of self sustaining foreign operations | — | — | — | (599 | ) | (599 | ) | — | (599 | ) | ||||||||||||||||||||
Balance at December 31, 2007 | 756,414 | 541,764 | (4,051 | ) | (599 | ) | (4,650 | ) | — | 1,293,528 | ||||||||||||||||||||
Net loss | — | (822,401 | ) | (822,401 | ) | (822,401 | ) | |||||||||||||||||||||||
Unrealized foreign currency translation losses on translation of self sustaining foreign operations | — | — | — | (7,143 | ) | (7,143 | ) | — | (7,143 | ) | ||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | 5,448 | 5,448 | |||||||||||||||||||||||
Balance at December 31, 2008 | 756,414 | 541,764 | (826,452 | ) | (7,742 | ) | (834,194 | ) | 5,448 | 469,432 | ||||||||||||||||||||
Stock based compensation | (19) | — | — | — | — | — | 5,649 | 5,649 | ||||||||||||||||||||||
Net earnings | — | — | 414,063 | — | 414,063 | — | 414,063 | |||||||||||||||||||||||
Unrealized foreign currency translation gains on translation of self-sustaining foreign operations | — | — | — | 320 | 320 | — | 320 | |||||||||||||||||||||||
Balance at December 31, 2009 | 756,414 | 541,764 | (412,389 | ) | (7,422 | ) | (419,811 | ) | 11,097 | 889,464 | ||||||||||||||||||||
F-65
Table of Contents
as at December 31, 2009 and 2008
(in thousands of Canadian dollars) | Notes | 2009 | 2008 | |||||||
Assets | ||||||||||
Current assets | ||||||||||
Cash and cash equivalents | 154,189 | 98,539 | ||||||||
Accounts receivable | (8) | 70,203 | 61,933 | |||||||
Current future tax asset | (7) | 2,184 | 2,581 | |||||||
Other current assets | (9) | 29,018 | 49,187 | |||||||
Total current assets | 255,594 | 212,240 | ||||||||
Satellites, property and other equipment, net | (4), (10) | 1,926,190 | 1,883,576 | |||||||
Other long-term assets | (9) | 41,010 | 42,303 | |||||||
Intangible assets, net | (11) | 510,675 | 582,035 | |||||||
Goodwill | (11) | 2,446,603 | 2,446,603 | |||||||
Total assets | 5,180,072 | 5,166,757 | ||||||||
Liabilities | ||||||||||
Current liabilities | ||||||||||
Accounts payable and accrued liabilities | 43,413 | 44,455 | ||||||||
Other current liabilities | (12) | 127,704 | 142,432 | |||||||
Debt due within one year | (13) | 23,602 | 23,272 | |||||||
Total current liabilities | 194,719 | 210,159 | ||||||||
Debt financing | (13) | 3,013,738 | 3,513,223 | |||||||
Future tax liability | (7) | 269,193 | 266,372 | |||||||
Other long-term liabilities | (12) | 671,523 | 566,136 | |||||||
Senior preferred shares | (14) | 141,435 | 141,435 | |||||||
Total liabilities | 4,290,608 | 4,697,325 | ||||||||
Shareholders’ equity | ||||||||||
Common shares (74,252,460 common shares issued and outstanding) | (15) | 756,414 | 756,414 | |||||||
Preferred shares | (15) | 541,764 | 541,764 | |||||||
1,298,178 | 1,298,178 | |||||||||
Accumulated deficit | (412,389 | ) | (826,452 | ) | ||||||
Accumulated other comprehensive loss | (7,422 | ) | (7,742 | ) | ||||||
(419,811 | ) | (834,194 | ) | |||||||
Contributed surplus | (19) | 11,097 | 5,448 | |||||||
Total shareholders’ equity | 889,464 | 469,432 | ||||||||
Total liabilities and shareholders’ equity | 5,180,072 | 5,166,757 | ||||||||
F-66
Table of Contents
for the years ended December 31, 2009, 2008, and 2007
Predecessor | |||||||||||||||||||
Successor Entity | Entity | ||||||||||||||||||
For the Period | For the Period | ||||||||||||||||||
Year Ended | Year Ended | October 31 to | January 1 to | ||||||||||||||||
December 31, | December 31, | December 31, | October 30, | ||||||||||||||||
(in thousands of Canadian dollars) | Notes | 2009 | 2008 | 2007 | 2007 | ||||||||||||||
Cash flows from operating activities | |||||||||||||||||||
Net (loss) earnings | 414,063 | (822,401 | ) | (4,051 | ) | 81,742 | |||||||||||||
Adjustments to reconcile net earnings (loss) to cash flows from operating activities: | |||||||||||||||||||
Gross profit on sales-type lease | — | — | — | (5,881 | ) | ||||||||||||||
Amortization | 256,867 | 235,640 | 40,046 | 105,788 | |||||||||||||||
Future income taxes | 4,598 | (175,951 | ) | (60,653 | ) | 24,292 | |||||||||||||
Unrealized foreign exchange (gain) loss | (524,132 | ) | 695,445 | 105,820 | (10,396 | ) | |||||||||||||
Unrealized loss (gain) on derivatives | 134,402 | (247,931 | ) | (62,754 | ) | 8,907 | |||||||||||||
Dividends on senior preferred shares | (5) | 13,540 | 9,855 | 1,695 | — | ||||||||||||||
Stock-based compensation expense | (19) | 5,649 | 5,448 | — | — | ||||||||||||||
(Gain) loss on disposal of assets | (6) | (33,430 | ) | 252 | 27 | (108 | ) | ||||||||||||
Impairment losses | (10), (11) | — | 485,373 | — | — | ||||||||||||||
Other | (46,015 | ) | (44,119 | ) | (344 | ) | 3,318 | ||||||||||||
Customer prepayments on future satellite services | 82,966 | 88,587 | — | 17,721 | |||||||||||||||
Customer refunds | (17,566 | ) | — | — | — | ||||||||||||||
Operating assets and liabilities | (16) | 7,203 | 48,859 | 205,490 | 27,244 | ||||||||||||||
298,145 | 279,057 | 225,276 | 252,627 | ||||||||||||||||
Cash flows used in investing activities | |||||||||||||||||||
Satellite programs | (258,083 | ) | (263,763 | ) | (15,496 | ) | (183,494 | ) | |||||||||||
Property additions | (6,118 | ) | (8,862 | ) | (14,019 | ) | (5,830 | ) | |||||||||||
Maturity of short-term investments | — | — | 2,312 | ||||||||||||||||
Business acquisitions | (3) | — | — | (3,229,194 | ) | (180 | ) | ||||||||||||
Proceeds on disposals of assets | 71,400 | 5,120 | 25 | 159 | |||||||||||||||
Insurance proceeds | — | 4,006 | — | — | |||||||||||||||
(192,801 | ) | (263,499 | ) | (3,258,684 | ) | (187,033 | ) | ||||||||||||
Cash flows from financing activities | |||||||||||||||||||
Debt financing and bank loans | 23,880 | 186,687 | 2,767,716 | 73,000 | |||||||||||||||
Repayment of bank loans and debt financing | (53,855 | ) | (91,560 | ) | (44,899 | ) | (84,090 | ) | |||||||||||
Capitalized debt issuance costs | — | (19,131 | ) | (83,585 | ) | — | |||||||||||||
Note repayment | — | — | (129,334 | ) | — | ||||||||||||||
Success fee payments | — | — | — | (24,000 | ) | ||||||||||||||
Common shares issued | — | — | 311,124 | — | |||||||||||||||
Preferred shares issued | — | — | 258,833 | — | |||||||||||||||
Capital lease payments | (14,620 | ) | (30,954 | ) | (1,306 | ) | (7,713 | ) | |||||||||||
Satellite performance incentive payments | (5,418 | ) | (3,524 | ) | (4,196 | ) | (2,022 | ) | |||||||||||
(50,013 | ) | 41,518 | 3,074,353 | (44,825 | ) | ||||||||||||||
Effect of changes in exchange rates on cash and cash equivalents | 319 | �� | (740 | ) | 1,258 | (1,676 | ) | ||||||||||||
Increase in cash and cash equivalents | 55,650 | 56,336 | 42,203 | 19,093 | |||||||||||||||
Cash and cash equivalents, beginning of period | 98,539 | 42,203 | — | 38,661 | |||||||||||||||
Cash and cash equivalents, end of period | (16) | 154,189 | 98,539 | 42,203 | 57,754 | ||||||||||||||
Supplemental disclosure of cash flow information | |||||||||||||||||||
Interest paid | 287,733 | 286,784 | 18,339 | 18,139 | |||||||||||||||
Income taxes paid | 6,499 | 8,866 | 343 | 21,347 | |||||||||||||||
294,232 | 295,650 | 18,682 | 39,486 | ||||||||||||||||
F-67
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
F-68
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
F-69
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
Years | ||||
Satellites | 6 to 15 | |||
Transponders under capital lease | 6 to 14 | |||
Earth stations | 5 to 30 | |||
Office buildings and other | 3 to 30 |
F-70
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
F-71
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
Years | ||||
Revenue backlog | 4 to 17 | |||
Customer relationships | 11 to 21 | |||
Favourable leases | 4 to 5 | |||
Concession right | 15 | |||
Transponder rights | 3 to 14 | |||
Patents | 18 |
F-72
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
• | the temporary differences between the carrying amounts of assets and liabilities for accounting purposes and the amounts used for tax purposes |
F-73
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
• | the benefit of unutilized tax losses that will more likely than not be realized and carried forward to future years to reduce income taxes. |
F-74
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
Total | ||||
Cash paid (net of cash acquired) | 3,229,194 | |||
Shares issued | 869,656 | |||
Transaction costs | 32,692 | |||
Purchase price | 4,131,542 | |||
F-75
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
• | Broadcast— distribution or collection of video and audio signals in the North American and International markets which include television transmit and receive services, occasional use, bundled Digital Video Compression and radio services. | ||
• | Enterprise— provision of satellite capacity and ground network services for voice, data, and image transmission and internet access around the world. | ||
• | Consulting and other— all consulting services related to space and earth segments, government studies, satellite control services and R&D. |
Predecessor | |||||||||||||||||
Successor Entity | Entity | ||||||||||||||||
For the Period | For the Period | ||||||||||||||||
Year Ended | Year Ended | October 31 to | January 1 to | ||||||||||||||
December 31, | December 31, | December 31, | October 30, | ||||||||||||||
Revenues | 2009 | 2008 | 2007 | 2007 | |||||||||||||
Broadcast | 406,712 | 345,382 | 52,771 | 254,276 | |||||||||||||
Enterprise | 349,530 | 333,834 | 53,758 | 178,888 | |||||||||||||
Consulting and other | 30,956 | 32,159 | 4,887 | 24,623 | |||||||||||||
Total operating revenues | 787,198 | 711,375 | 111,416 | 457,787 | |||||||||||||
Predecessor | |||||||||||||||||
Successor Entity | Entity | ||||||||||||||||
For the Period | For the Period | ||||||||||||||||
Year Ended | Year Ended | October 31 to | January 1 to | ||||||||||||||
December 31, | December 31, | December 31, | October 30, | ||||||||||||||
Revenues | 2009 | 2008 | 2007 | 2007 | |||||||||||||
Canada | 397,225 | 357,937 | 60,085 | 315,200 | |||||||||||||
United States | 254,685 | 240,505 | 34,352 | 115,993 | |||||||||||||
Europe, Middle East & Africa | 66,028 | 47,014 | 6,403 | 6,549 | |||||||||||||
Asia, Australia | 23,976 | 33,768 | 5,940 | 5,550 | |||||||||||||
Latin America & Caribbean | 45,284 | 32,151 | 4,636 | 14,495 | |||||||||||||
Total operating revenues | 787,198 | 711,375 | 111,416 | 457,787 | |||||||||||||
F-76
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
December 31, | December 31, | |||||||
Satellites, property and other equipment | 2009 | 2008 | ||||||
Canada | 1,448,111 | 1,431,145 | ||||||
United States | 469,508 | 441,809 | ||||||
all others | 8,571 | 10,622 | ||||||
Total satellites, property and other equipment | 1,926,190 | 1,883,576 | ||||||
Predecessor | |||||||||||||||||
Successor Entity | Entity | ||||||||||||||||
For the Period | For the Period | ||||||||||||||||
Year Ended | Year Ended | October 31 to | January 1 to | ||||||||||||||
December 31, | December 31, | December 31, | October 30, | ||||||||||||||
2009 | 2008 | 2007 | 2007 | ||||||||||||||
Debt service costs | 279,432 | 286,794 | 47,535 | 18,060 | |||||||||||||
Dividends on senior preferred shares | 13,540 | 9,855 | 1,695 | — | |||||||||||||
Capitalized interest | (19,404 | ) | (39,008 | ) | (5,369 | ) | (9,512 | ) | |||||||||
273,568 | 257,641 | 43,861 | 8,548 | ||||||||||||||
Predecessor | |||||||||||||||||
Successor Entity | Entity | ||||||||||||||||
For the Period | For the Period | ||||||||||||||||
Year Ended | Year Ended | October 31 to | January 1 to | ||||||||||||||
December 31, | December 31, | December 31, | October 30, | ||||||||||||||
2009 | 2008 | 2007 | 2007 | ||||||||||||||
Interest income | 636 | 1,888 | 301 | 3,130 | |||||||||||||
Interest on performance incentive payments | (4,642 | ) | (4,057 | ) | (499 | ) | (4,078 | ) | |||||||||
Other(a) | 35,865 | 456 | (835 | ) | 569 | ||||||||||||
31,859 | (1,713 | ) | (1,033 | ) | (379 | ) | |||||||||||
(a) | On July 9, 2009, the Company terminated its leasehold interest in the Telstar 10 satellite and transferred certain related customer contracts. The satellite and related revenue backlog and customer relationships were transferred for total consideration of $80 million, of which $8 million are deferred payments recorded in Accounts receivable, with a resulting gain of $34.6 million included in Other. In light of the complexities of the regulatory environment associated with the satellite, and the upcoming requirement to replace Telstar 10, the Company decided to terminate its leasehold interest. |
F-77
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
Predecessor | |||||||||||||||||
Successor Entity | Entity | ||||||||||||||||
For the Period | For the Period | ||||||||||||||||
Year Ended | Year Ended | October 31 to | January 1 to | ||||||||||||||
December 31, | December 31, | December 31, | October 30, | ||||||||||||||
2009 | 2008 | 2007 | 2007 | ||||||||||||||
Income tax expense (recovery) | |||||||||||||||||
Future | 4,598 | (175,951 | ) | (60,653 | ) | 24,292 | |||||||||||
Current | 351 | 11,072 | (1,517 | ) | 32,785 | ||||||||||||
4,949 | (164,879 | ) | (62,170 | ) | 57,077 | ||||||||||||
A reconciliation of the statutory income tax rate, which is a composite of federal and provincial rates, to the effective income tax rate is as follows: | |||||||||||||||||
Predecessor | |||||||||||||||||
Successor Entity | Entity | ||||||||||||||||
For the Period | For the Period | ||||||||||||||||
Year Ended | Year Ended | October 31 to | January 1 to | ||||||||||||||
December 31, | December 31, | December 31, | October 30, | ||||||||||||||
2009 | 2008 | 2007 | 2007 | ||||||||||||||
Statutory income tax rate | 32.3 | % | 33.0 | % | 35.3 | % | 35.3 | % | |||||||||
Permanent differences | (9.6 | %) | (5.9 | %) | (22.1 | %) | (15.4 | %) | |||||||||
Adjustment for tax rate changes | (9.7 | %) | (2.5 | %) | 109.1 | % | (2.4 | %) | |||||||||
Impact of acquisition (see note 3) | — | — | — | 1.8 | % | ||||||||||||
Valuation allowance | (13.4 | %) | (6.8 | %) | (38.3 | %) | 6.5 | % | |||||||||
Future taxes related to other comprehensive income | — | — | — | 4.8 | % | ||||||||||||
Charges reflected in equity | — | — | — | 7.6 | % | ||||||||||||
Other | 1.6 | % | (1.1 | %) | 9.9 | % | 2.9 | % | |||||||||
Effective income tax rate | 1.2 | % | 16.7 | % | 93.9 | % | 41.1 | % | |||||||||
F-78
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
December 31, | December 31, | |||||||
2009 | 2008 | |||||||
Future tax assets | ||||||||
Capital assets | 924 | 8,904 | ||||||
Intangible assets | 6,180 | 9,482 | ||||||
Unrealized foreign exchange loss | 31,867 | 98,087 | ||||||
Investments | 541 | 9,355 | ||||||
Loss carry forwards | 98,024 | 112,386 | ||||||
Other | 8,437 | 5,415 | ||||||
Less: valuation allowance | (45,040 | ) | (101,175 | ) | ||||
Total future tax assets | 100,933 | 142,454 | ||||||
December 31, | December 31, | |||||||
2009 | 2008 | |||||||
Future tax liabilities | ||||||||
Capital assets | (215,162 | ) | (208,115 | ) | ||||
Intangibles | (124,955 | ) | (147,916 | ) | ||||
Derivative liabilities | (21,958 | ) | (47,327 | ) | ||||
Other | (5,867 | ) | (2,887 | ) | ||||
Total future tax liabilities | (367,942 | ) | (406,245 | ) | ||||
Net future income tax liability | (267,009 | ) | (263,791 | ) | ||||
Net future income tax liability is comprised of: | ||||||||
Net future income tax asset — current portion | 2,184 | 2,581 | ||||||
Net future income tax liability — long-term portion | (269,193 | ) | (266,372 | ) | ||||
Net future income tax liability | (267,009 | ) | (263,791 | ) | ||||
Non-Capital | Capital | |||||||
Losses | Losses | |||||||
2027 | 27,027 | — | ||||||
2028 | 309,337 | — | ||||||
2029 | 13,272 | — | ||||||
Indefinite | — | 40,077 |
F-79
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
December 31, | December 31, | |||||||
2009 | 2008 | |||||||
Trade receivables — net of allowance for doubtful accounts | 74,018 | 63,723 | ||||||
Less: long-term portion of trade receivables | (3,815 | ) | (1,790 | ) | ||||
70,203 | 61,933 | |||||||
December 31, 2009 | December 31, 2008 | |||||||||||||||
Current portion | Long term portion | Current portion | Long term portion | |||||||||||||
Net investment in leases(a) | — | — | 2,217 | 30 | ||||||||||||
Income taxes recoverable | 3,487 | — | 3,943 | — | ||||||||||||
Accrued pension benefit (note 20) | — | 14,199 | — | 13,610 | ||||||||||||
Prepaid expenses and deposits(b) | 17,548 | 14,423 | 16,006 | 6,755 | ||||||||||||
Deferred charges(c) | 2,108 | 5,244 | 10,709 | 6,224 | ||||||||||||
Derivative assets (note 18) | — | — | 10,805 | 8,797 | ||||||||||||
Inventories(d) | 5,214 | — | 4,723 | — | ||||||||||||
Other assets(e) | 661 | 7,144 | 784 | 6,887 | ||||||||||||
29,018 | 41,010 | 49,187 | 42,303 | |||||||||||||
(a) | The net investment under sales type leases expired in 2009 (2008 — $2.2 million). | |
(b) | Prepaid expense and deposits includes mainly prepaid insurance for in-orbit satellites, deposits related to foreign taxes, prepaid interest on long term debt, security deposits, and other prepaid expenses. | |
(c) | Deferred charges at December 31, 2009 include the deferred financing charges related to the Canadian term loan facility (note 13) and deferred leasing costs. At December 31, 2008, deferred charges also included costs incurred in relation to deferred revenue. | |
(d) | Inventories are valued at lower of cost and net realizable value and consist of $2.9 million (2008 — $3.8 million) of finished goods and $2.3 million (2008 — $0.9 million) of work in process. Cost for substantially all network equipment inventories is determined on an average cost basis. Cost for work in process and certain one-of-a-kind finished goods is determined using specific identification. All of the inventories have been pledged as security pursuant to the terms of the credit facilities. |
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Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
(e) | Other assets, both short and long term components, include the following: |
December 31, 2009 | December 31, 2008 | |||||||||||||||
Current | Long term | Current | Long term | |||||||||||||
portion | portion | portion | portion | |||||||||||||
Tax indemnification receivable from Loral (note 21) | — | 2,461 | — | 2,862 | ||||||||||||
Investments | — | 475 | — | 637 | ||||||||||||
Long term trade receivables | — | 3,815 | — | 1,790 | ||||||||||||
Investment tax credit benefit | 661 | — | 441 | — | ||||||||||||
Other | — | 393 | 343 | 1,598 | ||||||||||||
661 | 7,144 | 784 | 6,887 | |||||||||||||
Accumulated | Net Book | |||||||||||
Cost | Amortization | Value | ||||||||||
December 31, 2009 | ||||||||||||
Satellites | 2,018,871 | (323,734 | ) | 1,695,137 | ||||||||
Earth stations | 149,085 | (30,083 | ) | 119,002 | ||||||||
Transponders under capital lease | 28,048 | (8,550 | ) | 19,498 | ||||||||
Office buildings and other | 31,735 | (11,548 | ) | 20,187 | ||||||||
Construction in progress | 72,366 | — | 72,366 | |||||||||
2,300,105 | (373,915 | ) | 1,926,190 | |||||||||
December 31, 2008 | ||||||||||||
Satellites | 1,544,396 | (177,768 | ) | 1,366,628 | ||||||||
Earth stations | 139,227 | (19,012 | ) | 120,215 | ||||||||
Transponders under capital lease | 34,189 | (4,943 | ) | 29,246 | ||||||||
Office buildings and other | 36,248 | (8,555 | ) | 27,693 | ||||||||
Construction in progress | 339,794 | — | 339,794 | |||||||||
2,093,854 | (210,278 | ) | 1,883,576 | |||||||||
F-81
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(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
Accumulated | Net Book | |||||||||||
2009 | Cost | Amortization | Value | |||||||||
Finite life intangible assets: | ||||||||||||
Revenue backlog | 268,123 | (77,210 | ) | 190,913 | ||||||||
Customer relationships | 197,920 | (33,140 | ) | 164,780 | ||||||||
Favourable leases | 2,990 | (1,774 | ) | 1,216 | ||||||||
Concession right | 1,404 | (94 | ) | 1,310 | ||||||||
Transponder rights | 29,550 | (7,493 | ) | 22,057 | ||||||||
Patents | 59 | (7 | ) | 52 | ||||||||
500,046 | (119,718 | ) | 380,328 | |||||||||
Indefinite life intangible assets: | ||||||||||||
Orbital slots | 113,347 | — | 113,347 | |||||||||
Trade name | 17,000 | — | 17,000 | |||||||||
Total intangible assets | 630,393 | (119,718 | ) | 510,675 | ||||||||
Goodwill | 2,446,603 | — | 2,446,603 | |||||||||
Goodwill and intangible assets | 3,076,996 | (119,718 | ) | 2,957,278 | ||||||||
F-82
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
Accumulated | Net Book | |||||||||||
2008 | Cost | Amortization | Value | |||||||||
Finite life intangible assets: | ||||||||||||
Revenue backlog | 274,487 | (44,988 | ) | 229,499 | ||||||||
Customer relationships | 207,704 | (14,500 | ) | 193,204 | ||||||||
Favourable leases | 4,816 | (1,987 | ) | 2,829 | ||||||||
Concession right | 1,230 | — | 1,230 | |||||||||
Transponder rights | 28,497 | (3,626 | ) | 24,871 | ||||||||
Patents | 59 | (4 | ) | 55 | ||||||||
516,793 | (65,105 | ) | 451,688 | |||||||||
Indefinite life intangible assets: | ||||||||||||
Orbital slots | 113,347 | — | 113,347 | |||||||||
Trade name | 17,000 | — | 17,000 | |||||||||
Total intangible assets | 647,140 | (65,105 | ) | 582,035 | ||||||||
Goodwill | 2,446,603 | — | 2,446,603 | |||||||||
Goodwill and intangible assets | 3,093,743 | (65,105 | ) | 3,028,638 | ||||||||
December 31, | December 31, | |||||||
2009 | 2008 | |||||||
Short term other liabilities | 127,704 | 142,432 | ||||||
Long term other liabilities | 671,523 | 566,136 | ||||||
799,227 | 708,568 | |||||||
F-83
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
2010 | 2011 | 2012 | 2013 | 2014 | Thereafter | Total | ||||||||||||||||||||||
Deferred revenues and deposits | 73,150 | 36,096 | 36,215 | 34,466 | 32,913 | 184,950 | 397,790 | |||||||||||||||||||||
Derivative liabilities (note 18) | 6,456 | 39,102 | — | — | 139,728 | — | 185,286 | |||||||||||||||||||||
Capital lease liabilities(a) | 3,520 | 3,838 | 4,212 | 4,610 | 4,373 | 787 | 21,340 | |||||||||||||||||||||
Deferred satellites performance incentive payments | 11,030 | 4,713 | 4,087 | 4,338 | 4,682 | 46,958 | 75,808 | |||||||||||||||||||||
Interest payable | 25,212 | — | — | — | — | — | 25,212 | |||||||||||||||||||||
Dividends payable on senior preferred shares (note 14) | — | 25,090 | — | — | — | — | 25,090 | |||||||||||||||||||||
Pension and other post retirement liabilities (note 20) | — | — | — | — | — | 23,827 | 23,827 | |||||||||||||||||||||
Other liabilities(b) | 8,336 | — | — | — | — | 36,538 | 44,874 | |||||||||||||||||||||
127,704 | 108,839 | 44,514 | 43,414 | 181,696 | 293,060 | 799,227 | ||||||||||||||||||||||
(a) | At December 31, 2009, interest payable related to the capital lease liabilities totaled $5.3 million (December 31, 2008 — $9.0 million). | |
(b) | Other liabilities at December 31, 2009 included: promissory note payable to Loral (note 22) of $12.2 million (2008 — $7.4 million), tax indemnifications payable to Loral (note 21) of $7.3 million (2008 — $8.5 million), unfavorable customer revenue backlog of $7.1 million (2008 — unfavorable leases of $1.9 million, and unfavorable customer revenue backlog of $12.8 million), potential income tax liabilities of $7.1 million (2008 — $2.6 million), income taxes payable of $0.1 million (2008 — $0.8 million), and other liabilities of $11.1 million (2008 — $14.5 million). Due to the uncertainty in settlement dates inherent in the long term portion of the other liabilities, they are presented as maturing after 2014. |
December 31, | December 31, | |||||||
2009 | 2008 | |||||||
Senior secured credit facilities(a): | ||||||||
Revolving facility | — | — | ||||||
The Canadian term loan facility | 185,000 | 195,000 | ||||||
The U.S. term loan facility | 1,777,138 | 2,087,010 | ||||||
The U.S. term loan II facility | 152,494 | 179,207 | ||||||
Senior notes(b) | 702,909 | 818,620 | ||||||
Senior subordinated notes(c) | 219,799 | 256,400 | ||||||
Other debt financing | — | 258 | ||||||
3,037,340 | 3,536,495 | |||||||
Current portion | (23,602 | ) | (23,272 | ) | ||||
Long-term portion | 3,013,738 | 3,513,223 | ||||||
(a) | The senior secured credit facilities are secured by substantially all of Telesat’s assets. Under the terms of these facilities, Telesat is required to comply with certain covenants including financial reporting, maintenance of certain financial covenant ratios for leverage and interest coverage, a requirement to maintain minimum levels of satellite insurance, restrictions on capital expenditures, a restriction on fundamental business changes or the creation of subsidiaries, restrictions on investments, restrictions on dividend payments, restrictions on the incurrence of additional debt, restrictions on asset dispositions, and restrictions on transactions with affiliates. The financial covenant ratios include total debt to EBITDA for covenant purposes (earnings before interest, taxes, depreciation, amortization and other charges) and EBITDA for covenant purposes to interest expense. Both financial covenant ratios become tighter over the term of the credit facility. At December 31, 2009 Telesat was in compliance with all of the required covenants. |
F-84
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
Telesat was required to hedge, at fixed rates, prior to February, 2008, 50% of its floating interest rate debt for a three year period ending October 31, 2010. The Company has complied with this obligation. These derivative instruments have not been designated as hedging instruments for accounting purposes. | ||
Each tranche of the credit facility is subject to mandatory principal repayment requirements, which, in the initial years, are generally an annual amount representing 1% of the initial aggregate principal amount, payable quarterly. The senior secured credit facility has several tranches which are described below: | ||
(i) A revolving Canadian dollar denominated credit facility (the “revolving facility”) of up to the Canadian dollar equivalent of $153 million is available to Telesat. This revolving facility matures on October 31, 2012 and is available to be drawn at any time. The drawn loans will bear interest at the prime rate or LIBOR or Bankers’ Acceptance plus an applicable margin of 150 to 250 basis points per annum. Undrawn amounts under the facility are subject to a commitment fee. As of December 31, 2009, other than approximately $0.3 million in drawings related to letters of credit, there were no borrowings under this facility. | ||
(ii) The Canadian term loan facility is a $200 million loan facility denominated in Canadian dollars, bears interest at a floating rate of the Bankers’ Acceptance rate plus an applicable margin of 275 basis points per annum, and has a maturity of October 31, 2012. The required repayments on the Canadian term loan facility, in millions, are as follows: |
Annual | ||||
Repayments | ||||
2010 | 15 | |||
2011 | 90 | |||
2012 | 80 | |||
Total repayments | 185 | |||
(iii) The U.S. term loan is a $1,755 million facility denominated in US dollars bears interest at LIBOR plus an applicable margin of 300 basis points per annum, and has a maturity of October 31, 2014. The average interest rate was 3.80% for the year ended December 31, 2009 (2008 — 6.35%). A total of US $1,720 million ($1,811 million CAD) was drawn at December 31, 2009 (December 31, 2008 — US $1,737 million, $2,128 million CAD). Principal repayments of $4.4 million US Dollars are made on a quarterly basis, with a lump sum repayment of the remaining balance payable on the maturity date. | ||
(iv) The U.S. term loan II is a $150 million delayed draw facility denominated in US dollars bears interest at LIBOR plus an applicable margin of 300 basis points per annum, and has a maturity of October 31, 2014. The average interest rate was 3.80% for the year ended December 31, 2009 (2008 — 6.17%). The U.S. term loan II facility was available to be drawn for 12 months after the closing of the Telesat Canada acquisition to fund capital expenditures. The undrawn amount of the U.S. term loan II was subject to a commitment fee. This facility had US $148 million ($156 million CAD) outstanding at December 31, 2009, which represents the full amounts available, with principal repayments of $0.4 million US Dollars being made on a quarterly basis, with a lump sum repayment of the remaining balance payable on the maturity date. |
F-85
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
(b) | The Senior notes, in the amount of US $693 million ($730 million CAD), bear interest at an annual rate of 11.0% and are due November 1, 2015. The Senior notes include covenants or terms that restrict Telesat’s ability to, among other things, (i) incur additional indebtedness, (ii) incur liens, (iii) pay dividends or make certain other restricted payments, investments or acquisitions, (iv) enter into certain transactions with affiliates, (v) modify or cancel the Company’s satellite insurance, (vi) effect mergers with another entity, and (vii) redeem the Senior notes prior to May 1, 2012, in each case subject to exceptions provided in the Senior notes indenture. | |
(c) | The Senior subordinated notes, in the amount of US $217 million ($229 million CAD), bear interest at a rate of 12.5% and are due November 1, 2017. The Senior subordinated notes include covenants or terms that restrict Telesat’s ability to, among other things, (i) incur additional indebtedness, (ii) incur liens, (iii) pay dividends or make certain other restricted payments, investments or acquisitions, (iv) enter into certain transactions with affiliates, (v) modify or cancel the Company’s satellite insurance, (vi) effect mergers with another entity, and (vii) redeem the Senior subordinated notes prior to May 1, 2013, in each case subject to exceptions provided in the Senior subordinated notes indenture. |
2010 | 2011 | 2012 | 2013 | 2014 | Thereafter | Total | ||||||||||||||||||
35.1 | 110.1 | 100.0 | 20.1 | 1,886.7 | 958.4 | 3,110.4 |
F-86
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
• | The holders of Voting Participating Preferred Shares are not entitled to vote at meetings of the shareholders of the Company on resolutions electing directors. |
• | For all other meetings of the shareholders of the Company, the holders of Voting Participating Preferred Shares are entitled to a variable number of votes per Voting Participating Preferred Share based on the number of Voting Participating Preferred Shares, Non-Voting Participating Preferred Shares and Redeemable Non-Voting Participating Preferred Shares outstanding on the record date of the given meeting of the shareholders of the Company. |
• | The Voting Participating Preferred Shares are convertible, at any time, at the holders’ option into Common Shares or Non-Voting Participating Preferred Shares on a one-for-one basis as long as the result of such conversion does not cause the Company to cease to be a “qualified corporation” within the meaning of the Canadian Telecommunication Common Carrier Ownership and Control Regulations pursuant to the Telecommunications Act (Canada). |
F-87
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
• | The holders of Non-Voting Participating Preferred Shares are not entitled to vote on any matter at meetings of the shareholders of the Company, except in respect of a class vote applicable only to the Non-Voting Participating Preferred Shares. |
• | The Non-Voting Participating Preferred Shares are convertible, at any time, at the holders’ option into Common Shares or Voting Participating Preferred Shares on a one-for-one basis as long as the result of such conversion does not cause the Company to cease to be a “qualified corporation” within the meaning of the Canadian Telecommunication Common Carrier Ownership and Control Regulations pursuant to the Telecommunications Act (Canada). |
• | The holders of Director Voting Preferred Shares are entitled to receive notice of and to attend all meetings of the shareholders of the Company at which directors of the Company are to be elected. The holders of the Director Voting Preferred Shares are not entitled to attend meetings of the shareholders of the Company and have no right to vote on any matter other than the election of directors of the Company. | ||
• | The holders of Director Voting Preferred Shares are entitled to receive annual non-cumulative dividends of $10 per share if declared by the Board of Directors of the Company, in priority to the payment of dividends on the Common Shares, Voting Participating Preferred Shares, Non-Voting Participating Preferred Shares, Redeemable Common Shares, and Redeemable Non-Voting Participating Preferred Shares, but after payment of any accrued dividends on the Senior Preferred Shares. | ||
• | In the event of liquidation, wind-up or dissolution, the holders of Director Voting Preferred Shares are entitled to receive $10 per share in priority to the payment of dividends on the Common Shares, Voting Participating Preferred Shares, Non-Voting Participating Preferred Shares, Redeemable Common Shares, and Redeemable Non-Voting Participating Preferred Shares, but after payment of any accrued dividends on the Senior Preferred Shares. | ||
• | The Director Voting Preferred Shares are redeemable at the option of the Company, at any time, at a redemption price of $10 per share. |
F-88
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
December 31, | December 31, | December 31, | ||||||||||
2009 | 2008 | 2007 | ||||||||||
Cash and cash equivalents is comprised of: | ||||||||||||
Cash | 89,679 | 26,584 | 32,737 | |||||||||
Short term investments, original maturity 90 days or less | 64,510 | 71,955 | 9,466 | |||||||||
154,189 | 98,539 | 42,203 | ||||||||||
Changes in operating assets and liabilities are comprised of: | ||||||||||||
Receivables | (2,021 | ) | (3,303 | ) | (4,718 | ) | ||||||
Other assets | 15,693 | (34,885 | ) | 132,768 | ||||||||
Accounts payable and accrued liabilities | 7,270 | (12,947 | ) | 72,380 | ||||||||
Income taxes payable | (2,906 | ) | 960 | (749 | ) | |||||||
Other liabilities | (10,833 | ) | 99,034 | 5,809 | ||||||||
7,203 | 48,859 | 205,490 | ||||||||||
Non-cash investing and financing activities are comprised of: | ||||||||||||
Purchase of satellites, property and other equipment | 5,026 | 3,595 | 4,767 | |||||||||
Purchase of concession right | — | 1,230 | — | |||||||||
Shares issued in exchange of assets contributed | — | — | 869,656 |
December 31, | December 31, | |||||||
2009 | 2008 | |||||||
Shareholders’ equity, excluding accumulated other comprehensive loss | 896,886 | 477,174 | ||||||
Debt financing | 3,037,340 | 3,536,495 | ||||||
Cash and cash equivalents | 154,189 | 98,539 |
F-89
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
December 31, | December 31, | |||||||
2009 | 2008 | |||||||
Short term derivative assets | — | 10,805 | ||||||
Long term derivative assets | — | 8,797 | ||||||
Short term derivative liabilities | (6,456 | ) | — | |||||
Long term derivative liabilities | (178,830 | ) | (82,255 | ) | ||||
(185,286 | ) | (62,653 | ) | |||||
Fair value methodology: | ||||||||
Net position determined using actively quoted prices (level 1) | — | — | ||||||
Net position determined using observable data or market corroboration (level 2) | 185,286 | 62,653 | ||||||
Net position determined using extrapolated data (level 3) | — | — | ||||||
(185,286 | ) | (62,653 | ) | |||||
F-90
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
Carrying Value | ||||||||||||||||||||
Loans & | ||||||||||||||||||||
December 31, 2009 | HFT | AFS | Receivables | Total | Fair Value | |||||||||||||||
Financial assets | ||||||||||||||||||||
Cash and cash equivalents | 154,189 | — | — | 154,189 | 154,189 | |||||||||||||||
Accounts and notes receivable | — | — | 70,203 | 70,203 | 70,203 | |||||||||||||||
Other assets | 6,970 | 474 | 5,351 | 12,795 | 12,795 | |||||||||||||||
161,159 | 474 | 75,554 | 237,187 | 237,187 | ||||||||||||||||
Carrying Value | ||||||||||||||||
December 31, 2009 | HFT | Other | Total | Fair Value | ||||||||||||
Financial liabilities | ||||||||||||||||
Accounts payable and accrued liabilities | — | 43,413 | 43,413 | 43,413 | ||||||||||||
Debt | — | 3,037,340 | 3,037,340 | 3,104,151 | ||||||||||||
Derivative financial instruments | 185,286 | — | 185,286 | 185,286 | ||||||||||||
Other liabilities | — | 291,412 | 291,412 | 322,187 | ||||||||||||
185,286 | 3,372,165 | 3,557,451 | 3,655,037 | |||||||||||||
F-91
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
Carrying Value | ||||||||||||||||||||
Loans & | ||||||||||||||||||||
December 31, 2008 | HFT | AFS | Receivables | Total | Fair Value | |||||||||||||||
Financial assets | ||||||||||||||||||||
Cash and cash equivalents | 98,539 | — | — | 98,539 | 98,539 | |||||||||||||||
Accounts and notes receivable | — | — | 61,933 | 61,933 | 61,933 | |||||||||||||||
Derivative financial instruments | 19,602 | — | — | 19,602 | 19,602 | |||||||||||||||
Other assets | 14,936 | 637 | 2,202 | 17,775 | 17,775 | |||||||||||||||
133,077 | 637 | 64,135 | 197,849 | 197,849 | ||||||||||||||||
Carrying Value | ||||||||||||||||
December 31, 2008 | HFT | Other | Total | Fair Value | ||||||||||||
Financial liabilities | ||||||||||||||||
Accounts payable and accrued liabilities | — | 44,455 | 44,455 | 44,455 | ||||||||||||
Debt | — | 3,536,237 | 3,536,237 | 2,371,014 | ||||||||||||
Derivative financial instruments | 82,255 | — | 82,255 | 82,255 | ||||||||||||
Other liabilities | — | 291,770 | 291,770 | 195,371 | ||||||||||||
82,255 | 3,872,462 | 3,954,717 | 2,693,095 | |||||||||||||
(1) | Included in cash and cash equivalents are $62.9 million (2008 — $72.0 million) in short term investments classified as level 2 in the fair value hierarchy. |
F-92
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
Allowance for Doubtful Accounts | 2009 | 2008 | ||||||
Balance at January 1 | 5.4 | 4.3 | ||||||
Provision for receivables impairment | 4.1 | 1.6 | ||||||
Receivables written off during the period as uncollectible | (0.8 | ) | (0.5 | ) | ||||
Balance at December 31 | 8.7 | 5.4 | ||||||
F-93
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
In millions of | Carrying | Contractual | After | |||||||||||||||||||||||||||||
Canadian Dollars | Amount | Cash Flows | 2010 | 2011 | 2012 | 2013 | 2014 | 2014 | ||||||||||||||||||||||||
Accounts payable and accrued liabilities | 43,413 | 43,413 | 43,413 | — | — | — | — | — | ||||||||||||||||||||||||
Customer and other deposits | 5,297 | 5,297 | 3,040 | 2,257 | — | — | — | — | ||||||||||||||||||||||||
Other liabilities | 144,680 | 144,680 | 42,601 | 42,013 | 4,088 | 4,338 | 4,682 | 46,958 | ||||||||||||||||||||||||
Derivative financial instruments | 185,286 | 185,286 | 6,456 | 39,102 | — | — | 139,728 | — | ||||||||||||||||||||||||
Long term debt | 3,037,340 | 3,110,396 | 35,063 | 110,065 | 100,063 | 20,064 | 1,886,729 | 958,412 | ||||||||||||||||||||||||
3,416,016 | 3,489,072 | 130,573 | 193,437 | 104,151 | 24,402 | 2,031,139 | 1,005,370 | |||||||||||||||||||||||||
F-94
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
Time Vesting Option Plan | Performance Vesting Option Plan | |||||||||||||||
Weighted- | Weighted- | |||||||||||||||
Average | Average | |||||||||||||||
Number | Exercise | Number | Exercise | |||||||||||||
of Options | Price ($) | of Options | Price ($) | |||||||||||||
Outstanding, January 1, 2009 | 6,846,035 | 11.07 | 894,441 | 11.07 | ||||||||||||
Granted | 608,283 | 11.07 | 743,457 | 11.07 | ||||||||||||
Exercised | — | — | — | — | ||||||||||||
Forfeited | (150,613 | ) | 11.07 | (184,084 | ) | 11.07 | ||||||||||
Expired | — | — | — | — | ||||||||||||
Outstanding December 31, 2009 | 7,303,705 | 11.07 | 1,453,814 | 11.07 | ||||||||||||
Options exercisable at December 31, 2009 | 2,740,969 | 162,091 | ||||||||||||||
Options Outstanding | ||||||||||||
Weighted- | ||||||||||||
Average | Options | |||||||||||
Remaining | Exercisable | |||||||||||
At December 31, 2008 | Number | Life | Number | |||||||||
Exercise price $11.07 | 7,740,476 | 9 years | 1,538,623 |
December 31, | December 31, | |||||||
2009 | 2008 | |||||||
Compensation cost (credited to contributed surplus) | 5,649 | 5,448 | ||||||
Number of stock options granted | 1,351,740 | 7,740,476 | ||||||
Weighted-average fair value per option granted ($) | 4.76 | 8.52 | ||||||
Weighted average assumptions: | ||||||||
Dividend yield | — | % | — | % | ||||
Expected volatility | 30.0 | % | 31.5 | % | ||||
Risk-free interest rate | 2.98 | % | 3.78 | % | ||||
Expected life (years) | 10 | 10 |
F-95
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
Telesat Canada | Skynet | |||||||||||||||
Pension | Other | Other | Total | |||||||||||||
Pension and other benefits | December 31, 2009 | |||||||||||||||
Change in benefit obligations | ||||||||||||||||
Benefit obligation, January 1, 2009 | 126,754 | 12,527 | 8,725 | 148,006 | ||||||||||||
Current service cost | 1,963 | 260 | — | 2,223 | ||||||||||||
Interest cost | 9,470 | 936 | 508 | 10,914 | ||||||||||||
Actuarial (gains) losses | 23,975 | 2,167 | (1,759 | ) | 24,383 | |||||||||||
Benefit payments | (11,899 | ) | (633 | ) | (320 | ) | (12,852 | ) | ||||||||
Employee contributions | 1,714 | — | 21 | 1,735 | ||||||||||||
Benefit obligation, December 31, 2009 | 151,977 | 15,257 | 7,175 | 174,409 | ||||||||||||
Telesat Canada | Skynet | |||||||||||||||
Pension | Other | Other | Total | |||||||||||||
Pension and other benefits | December 31, 2009 | |||||||||||||||
Change in fair value of plan assets | ||||||||||||||||
Fair value of plan assets, January 1, 2009 | 138,293 | — | — | 138,293 | ||||||||||||
Return on plan assets | 20,692 | — | — | 20,692 | ||||||||||||
Benefit payments | (11,899 | ) | (633 | ) | (320 | ) | (12,852 | ) | ||||||||
Employee contributions | 1,714 | — | 21 | 1,735 | ||||||||||||
Employer contributions | 1,946 | 633 | 299 | 2,878 | ||||||||||||
Fair value of plan assets, December 31, 2009 | 150,746 | — | — | 150,746 | ||||||||||||
Funded status | ||||||||||||||||
Plan surplus (deficit) | (1,231 | ) | (15,257 | ) | (7,176 | ) | (23,664 | ) | ||||||||
Unamortized net actuarial (gain) loss | 15,430 | (1,394 | ) | — | 14,036 | |||||||||||
Accrued benefit asset (liability) | 14,199 | (16,651 | ) | (7,176 | ) | (9,628 | ) | |||||||||
F-96
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
Telesat Canada | Skynet | |||||||||||||||
Pension | Other | Other | Total | |||||||||||||
Pension and other benefits | December 31, 2008 | |||||||||||||||
Change in benefit obligations | ||||||||||||||||
Benefit obligation, January 1, 2008 | 163,546 | 16,224 | 8,089 | 187,859 | ||||||||||||
Current service cost | 3,926 | 433 | — | 4,359 | ||||||||||||
Interest cost | 9,271 | 862 | 883 | 11,016 | ||||||||||||
Actuarial (gains) losses | (40,426 | ) | (4,396 | ) | (129 | ) | (44,951 | ) | ||||||||
Benefit payments | (10,884 | ) | (596 | ) | (155 | ) | (11,635 | ) | ||||||||
Employee contributions | 1,321 | — | 37 | 1,358 | ||||||||||||
Benefit obligation, December 31, 2008 | 126,754 | 12,527 | 8,725 | 148,006 | ||||||||||||
Telesat Canada | Skynet | |||||||||||||||
Pension | Other | Other | Total | |||||||||||||
Pension and other benefits | December 31, 2008 | |||||||||||||||
Change in fair value of plan assets | ||||||||||||||||
Fair value of plan assets, January 1, 2008 | 173,457 | — | — | 173,457 | ||||||||||||
Return on plan assets | (29,811 | ) | — | — | (29,811 | ) | ||||||||||
Benefit payments | (10,884 | ) | (596 | ) | (155 | ) | (11,635 | ) | ||||||||
Employee contributions | 1,321 | — | 37 | 1,358 | ||||||||||||
Employer contributions | 4,210 | 596 | 118 | 4,924 | ||||||||||||
Fair value of plan assets, December 31, 2008 | 138,293 | — | — | 138,293 | ||||||||||||
Funded status | ||||||||||||||||
Plan surplus (deficit) | 11,539 | (12,527 | ) | (8,725 | ) | (9,713 | ) | |||||||||
Unamortized net actuarial (gain) loss | 2,071 | (3,705 | ) | — | (1,634 | ) | ||||||||||
Accrued benefit asset (liability) | 13,610 | (16,232 | ) | (8,725 | ) | (11,347 | ) | |||||||||
December 31, | December 31, | |||||||
2009 | 2008 | |||||||
Equity securities | 60 | % | 59 | % | ||||
Fixed income instruments | 37 | % | 39 | % | ||||
Short-term investments | 3 | % | 2 | % | ||||
Total | 100 | % | 100 | % | ||||
F-97
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
Telesat Canada | Skynet | Telesat Canada | Skynet | |||||||||||||||||||||
Pension | Other | Other | Pension | Other | Other | |||||||||||||||||||
December 31, 2009 | December 31, 2008 | |||||||||||||||||||||||
Accrued benefit obligation | ||||||||||||||||||||||||
Discount rate | 7.5 | % | 7.5 | % | 6.0 | % | 7.5 | % | 7.5 | % | 6.5 | % | ||||||||||||
Rate of compensation increase | 3.5 | % | 3.5 | % | — | 3.5 | % | 3.5 | % | 4.3 | % | |||||||||||||
Benefit costs for the periods ended | ||||||||||||||||||||||||
Discount rate | 6.4 | % | 6.4 | % | 6.0 | % | 5.5 | % | 5.5 | % | 6.5 | % | ||||||||||||
Expected long-term rate of return on plan assets | 7.5 | % | — | — | 7.5 | % | — | — | ||||||||||||||||
Rate of compensation increase | 3.5 | % | 3.5 | % | — | 3.5 | % | 3.5 | % | 4.3 | % |
Successor Entity | ||||||||||||||||||||||||||||||||
Telesat Canada | Skynet | Telesat Canada | Skynet | |||||||||||||||||||||||||||||
Pension | Other | Other | Total | Pension | Other | Other | Total | |||||||||||||||||||||||||
Year Ended | Year Ended | |||||||||||||||||||||||||||||||
December 31, 2009 | December 31, 2008 | |||||||||||||||||||||||||||||||
Current service cost | 1,963 | 260 | — | 2,223 | 3,926 | 433 | — | 4,359 | ||||||||||||||||||||||||
Interest cost | 9,470 | 935 | 508 | 10,913 | 9,271 | 862 | 883 | 11,016 | ||||||||||||||||||||||||
Expected return on plan assets | (10,011 | ) | — | — | (10,011 | ) | (12,686 | ) | — | — | (12,686 | ) | ||||||||||||||||||||
Amortization | (65 | ) | (144 | ) | — | (209 | ) | — | — | — | — | |||||||||||||||||||||
Net benefit expense | 1,357 | 1,051 | 508 | 2,916 | 511 | 1,295 | 883 | 2,689 | ||||||||||||||||||||||||
F-98
Table of Contents
Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
Successor Entity | Predecessor Entity | |||||||||||||||||||||||||||
Telesat Canada | Skynet | Telesat Canada | ||||||||||||||||||||||||||
For the Period October 31 to | For the Period January 1 to | |||||||||||||||||||||||||||
December 31, 2007 | October 30, 2007 | |||||||||||||||||||||||||||
Pension | Other | Other | Total | Pension | Other | Total | ||||||||||||||||||||||
Current service cost | 774 | 79 | — | 853 | 3,612 | 396 | 4,008 | |||||||||||||||||||||
Interest cost | 1,513 | 146 | — | 1,659 | 7,149 | 681 | 7,830 | |||||||||||||||||||||
Expected return on plan assets | (2,206 | ) | — | — | (2,206 | ) | (10,610 | ) | — | (10,610 | ) | |||||||||||||||||
Amortization of past service cost | — | — | — | — | — | — | — | |||||||||||||||||||||
Amortization of net actuarial loss | — | — | — | — | 34 | — | 34 | |||||||||||||||||||||
Amortization of transitional (asset) obligation | — | — | — | — | (1,288 | ) | 515 | (773 | ) | |||||||||||||||||||
Additional expense | — | — | — | — | 169 | — | 169 | |||||||||||||||||||||
Net benefit expense (income) | 81 | 225 | — | 306 | (934 | ) | 1,592 | 658 | ||||||||||||||||||||
Aggregate of | ||||||||
Benefit | service and | |||||||
obligation | interest cost | |||||||
As reported | 22,433 | 1,703 | ||||||
Impact of increase of 1% point | 1,938 | 166 | ||||||
Impact of decrease of 1% point | (1,700 | ) | (140 | ) | ||||
Off balance sheet commitments | 2010 | 2011 | 2012 | 2013 | 2014 | Thereafter | Total | |||||||||||||||||||||
Operating leases | 27,100 | 22,875 | 17,962 | 16,493 | 14,910 | 46,564 | 145,904 | |||||||||||||||||||||
Purchase commitments — Satellite programs | 157,925 | 107,233 | 15,412 | 386 | 416 | 7,930 | 289,302 | |||||||||||||||||||||
Purchase commitments — Earth programs | 2,385 | — | — | — | — | — | 2,385 | |||||||||||||||||||||
Purchase commitments — Other programs | 3,686 | — | — | — | — | — | 3,686 | |||||||||||||||||||||
Total off balance sheet commitments | 191,096 | 130,108 | 33,374 | 16,879 | 15,326 | 54,494 | 441,277 | |||||||||||||||||||||
F-99
Table of Contents
Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
F-100
Table of Contents
Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
F-101
Table of Contents
Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
Predecessor | |||||||||||||||||
Successor Entity | Entity | ||||||||||||||||
For the Period | For the Period | ||||||||||||||||
Year Ended | Year Ended | October 31 to | January 1 to | ||||||||||||||
December 31, | December 31, | December 31, | October 30, | ||||||||||||||
2009 | 2008 | 2007 | 2007 | ||||||||||||||
Service revenues | 6,360 | 3,560 | 440 | 139,706 | |||||||||||||
Operations and administration expenses | 8,480 | 6,295 | 825 | 5,340 | |||||||||||||
Capital expenditures — satellites | 97,815 | 83,203 | 12,318 | — |
December 31, | December 31, | |||||||
2009 | 2008 | |||||||
Receivables at end of period | 3,480 | 3,200 | ||||||
Payables at end of period | 8,567 | 13,770 | ||||||
Long term liabilities | 8,068 | — | ||||||
Note and interest payable at end of period | 12,210 | 7,380 |
F-102
Table of Contents
Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
Predecessor | |||||||||||||||||
Successor Entity | Entity | ||||||||||||||||
For the Period | For the Period | ||||||||||||||||
Year Ended | Year Ended | October 31 to | January 1 to | ||||||||||||||
December 31, | December 31, | December 31, | October 30, | ||||||||||||||
2009 | 2008 | 2007 | 2007 | ||||||||||||||
Canadian GAAP — Net earnings (loss) | 414,063 | (822,401 | ) | (4,051 | ) | 81,742 | |||||||||||
(Losses) gains on embedded derivatives(a) | (35,480 | ) | 20,118 | 774 | (5,051 | ) | |||||||||||
Losses on derivatives designated as cash flow hedges under Canadian GAAP(a) | — | — | — | (10,361 | ) | ||||||||||||
Sales type lease — operating lease for U.S. GAAP(b) | 1,514 | 18,808 | 2,748 | (23,617 | ) | ||||||||||||
Capital lease — operating lease for U.S. GAAP(b) | (1,567 | ) | (7,584 | ) | (78 | ) | 9,436 | ||||||||||
Lease amendments(c) | 719 | (1,233 | ) | — | — | ||||||||||||
Dividends on senior preferred shares(d) | 13,540 | 9,855 | 1,695 | — | |||||||||||||
Tax effect of above adjustments(e) | 10,510 | (8,761 | ) | 275 | 9,606 | ||||||||||||
Uncertainty in income taxes(f) | (8,053 | ) | (6,875 | ) | (2,648 | ) | 3,234 | ||||||||||
U.S. GAAP — Net earnings (loss) | 395,246 | (798,073 | ) | (1,285 | ) | 64,989 | |||||||||||
Other comprehensive (loss) earnings items: | |||||||||||||||||
Change in currency translation adjustment | 214 | (7,143 | ) | (599 | ) | 1,715 | |||||||||||
Loss on derivatives designated as cash flow hedges(a) | — | — | — | (7,168 | ) | ||||||||||||
Net actuarial plans cost(g) | |||||||||||||||||
Net actuarial losses | (9,373 | ) | (1,169 | ) | — | (314 | ) | ||||||||||
Net transitional assets | — | — | — | (525 | ) | ||||||||||||
U.S. GAAP — Comprehensive earnings (loss) | 386,087 | (806,385 | ) | (1,884 | ) | 58,697 | |||||||||||
Predecessor | |||||||||||||||||
Successor Entity | Entity | ||||||||||||||||
For the Period | For the Period | ||||||||||||||||
Year Ended | Year Ended | October 31 to | January 1 to | ||||||||||||||
December 31, | December 31, | December 31, | October 30, | ||||||||||||||
2009 | 2008 | 2007 | 2007 | ||||||||||||||
Cumulative translation adjustment, net of tax | (7,528 | ) | (7,742 | ) | (599 | ) | (568 | ) | |||||||||
Loss on derivatives designated as cash flow hedges(a) | — | — | — | (7,168 | ) | ||||||||||||
Net benefit plans cost(g) | |||||||||||||||||
Net actuarial losses | (10,541 | ) | (1,169 | ) | — | (7,448 | ) | ||||||||||
Net transitional assets | — | — | — | 3,980 | |||||||||||||
Accumulated other comprehensive loss | (18,069 | ) | (8,911 | ) | (599 | ) | (11,204 | ) | |||||||||
F-103
Table of Contents
Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
December 31, | December 31, | |||||||
2009 | 2008 | |||||||
Canadian GAAP | 889,464 | 469,432 | ||||||
Adjustments | ||||||||
Gains on embedded derivatives(a) | (14,588 | ) | 20,892 | |||||
Net actuarial losses(g) | (10,541 | ) | (1,169 | ) | ||||
Sales type lease — operating lease for U.S. GAAP(b) | 23,070 | 21,556 | ||||||
Capital lease — operating lease for U.S. GAAP(b) | (9,229 | ) | (7,662 | ) | ||||
Lease amendment(c) | (619 | ) | (1,233 | ) | ||||
Tax effect of above adjustments(e) | 2,024 | (8,486 | ) | |||||
Uncertainty in income taxes(f) | (17,576 | ) | (9,523 | ) | ||||
U.S. GAAP | 862,005 | 483,807 | ||||||
(a) | Derivatives and embedded derivatives |
F-104
Table of Contents
Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
(b) | Sales-type and capital leases | ||
Under U.S. GAAP, if the beginning of a lease term falls within the last 25% of a leased asset’s total estimated economic life; then it can only be classified as a capital lease if the lease transfers ownership at the end of the lease term or there is a bargain purchase option. This exception does not exist under Canadian GAAP, therefore certain leases are reported as a capital lease and sales-type lease respectively under Canadian GAAP, and as operating leases for U.S. GAAP as the limited capital lease criteria were not met. | |||
(c) | Lease amendments | ||
Under Canadian GAAP, when amendments to the provisions of a capital lease agreement result in a change in lease classification from a capital lease to an operating lease, the gain or loss that results from removing the capital lease from the balance sheet is immediately recognized in the statement of earnings. Under U.S. GAAP, if removing the capital lease from the balance sheet results in a gain or loss it is recognized over the remaining term of the lease. Therefore, an adjustment has been made to defer the gain that has been recognized under Canadian GAAP. | |||
(d) | Senior preferred shares | ||
In accordance with U.S. GAAP, the senior preferred shares are classified outside of permanent equity as they are redeemable at the option of the holder. These senior preferred shares are classified as liabilities under Canadian GAAP. This results in a U.S. GAAP reconciling item to reflect the different classification. As a result of this change in classification, the amounts are treated as dividends for U.S. GAAP and interest expense for Canadian GAAP. | |||
(e) | Income taxes | ||
The income tax adjustment reflects the impact the U.S. GAAP adjustments described above have on income taxes. Included in the figures presented in the table above is the effect of tax rate changes applied to the accumulated gains and losses on embedded derivatives and to certain lease transactions classified as operating leases as discussed above. The impact on the statement of operations of the tax rate changes for the year ended December 31, 2009 was a recovery of $1.8 million (2008 — expense of $0.6 million; the two month period ended December 31, 2007 — recovery of $1.3 million; the ten month period ended October 30, 2007 — recovery of $0.2 million). | |||
(f) | Uncertainty in income taxes | ||
Effective January 1, 2007 the Company adopted the recognition requirements of the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48 (FIN 48),Accounting for Uncertainty in Income Taxes, an interpretation of FAS 109. FIN 48, which has been primarily codified into FASB Accounting Standards Codification (“ASC”) Topic 740,Income Taxes, provides specific guidance on the recognition, de-recognition and measurement of income tax positions in financial statements, including the accrual of related interest and penalties recorded in interest expense. An income tax position is recognized when it is more likely than not that it will be sustained upon examination based on its technical merits, and is measured as the largest amount that is greater than 50% likely of being realized upon ultimate settlement. Under Canadian GAAP, significant differences may arise as Telesat recognizes and measures income tax positions, based on the best estimate of the amount that is more likely than not of being realized. |
F-105
Table of Contents
Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
(g) | Net benefit plans cost | ||
Effective December 31, 2006, the Company adopted the recognition requirements of Statement of Financial Accounting Standards (SFAS) No. 158,Employers’ Accounting for Defined Benefit Pension and Other Post Retirement Plans, on a prospective basis. SFAS No. 158 has been primarily codified into ASC 715,Compensation. | |||
This standard requires that the Company recognize the funded status of benefit plans on the balance sheet as well as recognize as a component of other comprehensive income, net of tax, the actuarial losses and transitional asset and obligation. Amounts recognized in accumulated other comprehensive income are adjusted as they are subsequently recognized as components of net periodic benefit cost. | |||
At December 31, 2009, the balance sheet was adjusted such that actuarial losses and the transitional asset and obligation that have not yet been included in net benefit plans cost at December 31, 2009 were recognized as components of accumulated other comprehensive loss, net of tax. The adjustment at December 31, 2009 resulted in an increase of $9.4 million in accumulated other comprehensive loss, net of tax of $3.0 million (December 31, 2008 — an increase of $1.2 million in accumulated other comprehensive loss, net of tax of $0.4 million). |
F-106
Table of Contents
Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
F-107
Table of Contents
Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
F-108
Table of Contents
Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
As of December 31, 2009
Non- | ||||||||||||||||||||||||||||
Telesat | Telesat | Telesat | Guarantor | Guarantor | ||||||||||||||||||||||||
Holdings | LLC | Canada | Subsidiaries | Subsidiaries | Adjustments | Consolidated | ||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||
Current assets | ||||||||||||||||||||||||||||
Cash and cash equivalents | — | — | 137,623 | 14,232 | 2,334 | — | 154,189 | |||||||||||||||||||||
Accounts receivable | — | — | 51,447 | 15,591 | 3,165 | — | 70,203 | |||||||||||||||||||||
Current future tax asset | — | — | 1,703 | 350 | 131 | — | 2,184 | |||||||||||||||||||||
Intercompany receivable | — | — | 249,103 | 150,490 | 120,038 | (519,631 | ) | — | ||||||||||||||||||||
Other current assets | — | — | 13,758 | 8,234 | 7.026 | — | 29,018 | |||||||||||||||||||||
Total current assets | — | — | 453,634 | 188,897 | 132,694 | (519,631 | ) | 255,594 | ||||||||||||||||||||
Satellites, property, and other equipment, net | — | — | 1,446,613 | 457,595 | 21,982 | — | 1,926,190 | |||||||||||||||||||||
Other long-term assets | — | — | 34,101 | 6,249 | 660 | — | 41,010 | |||||||||||||||||||||
Intangible assets, net | — | — | 492,435 | 17,854 | 386 | — | 510,675 | |||||||||||||||||||||
Investment in affiliates | 1,055,989 | — | 1,339,308 | 1,477,582 | 261 | (3,873,140 | ) | — | ||||||||||||||||||||
Goodwill | — | — | 2,005,842 | 343,876 | 96.885 | — | 2,446,603 | |||||||||||||||||||||
Total assets | 1,055,989 | — | 5,771,933 | 2,492,053 | 252,868 | (4,392,771 | ) | 5,180,072 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||
Current liabilities | ||||||||||||||||||||||||||||
Accounts payable and accrued liabilities | — | — | 32,059 | 6,798 | 4,556 | — | 43,413 | |||||||||||||||||||||
Other current liabilities | — | — | 121,140 | 2,397 | 4,167 | — | 127,704 | |||||||||||||||||||||
Intercompany payable | — | — | 108,139 | 411,285 | — | (519,424 | ) | — | ||||||||||||||||||||
Debt due within one year | — | — | 23,601 | 1 | — | — | 23,602 | |||||||||||||||||||||
Total current liabilities | — | — | 284,939 | 420,481 | 8,723 | (519,424 | ) | 194,719 | ||||||||||||||||||||
Debt financing | — | — | 3,013,738 | — | — | — | 3,013,738 | |||||||||||||||||||||
Future tax liability | — | — | 262,913 | 86 | 6,194 | — | 269,193 | |||||||||||||||||||||
Other long-term liabilities | 25,090 | — | 611,776 | 16,370 | 18,495 | (208 | ) | 671,523 | ||||||||||||||||||||
Senior preferred shares | 141,435 | — | — | — | — | — | 141,435 | |||||||||||||||||||||
Total liabilities | 166,525 | — | 4,173,366 | 436,937 | 33,412 | (519,632 | ) | 4,290,608 | ||||||||||||||||||||
Shareholders’ equity | ||||||||||||||||||||||||||||
Common shares | 756,414 | — | 2,320,730 | 1,896,596 | 104,434 | (4,321,760 | ) | 756,414 | ||||||||||||||||||||
Preferred shares | 541,764 | — | — | — | — | — | 541,764 | |||||||||||||||||||||
Accumulated deficit | (412,389 | ) | — | (794,300 | ) | 230,623 | 111,380 | 452,297 | (412,389 | ) | ||||||||||||||||||
Accumulated other comprehensive loss | (7,422 | ) | — | 63 | (11,028 | ) | 3,544 | 7,421 | (7,422 | ) | ||||||||||||||||||
Contributed surplus | 11,097 | — | 72,074 | (61,075 | ) | 98 | (11,097 | ) | 11,097 | |||||||||||||||||||
Total shareholders’ equity | 889,464 | — | 1,598,567 | 2,055,116 | 219,456 | (3,873,139 | ) | 889,464 | ||||||||||||||||||||
Total liabilities and shareholders’ equity | 1,055,989 | — | 5,771,933 | 2,492,053 | 252,868 | (4,392,771 | ) | 5,180,072 | ||||||||||||||||||||
Reconciliation to US GAAP of total shareholders’ equity is as follows: | ||||||||||||||||||||||||||||
Canadian GAAP | 889,464 | — | 1,598,567 | 2,055,116 | 219,456 | (3,873,139 | ) | 889,464 | ||||||||||||||||||||
Income (loss) from equity investments | (27,459 | ) | — | (372 | ) | (372 | ) | — | 28,203 | — | ||||||||||||||||||
Gains (losses) on embedded derivatives | — | — | (14,588 | ) | — | — | — | (14,588 | ) | |||||||||||||||||||
Net actuarial losses | — | — | (10,541 | ) | — | — | — | (10,541 | ) | |||||||||||||||||||
Sales type lease — operating lease for U.S. GAAP | — | — | 23,070 | — | — | — | 23,070 | |||||||||||||||||||||
Capital lease — operating lease for U.S. GAAP | — | — | (9,229 | ) | — | — | — | (9,229 | ) | |||||||||||||||||||
Lease amendments | — | — | — | — | (619 | ) | — | (619 | ) | |||||||||||||||||||
Tax effect of above adjustments | — | — | 1,777 | — | 247 | — | 2,024 | |||||||||||||||||||||
Uncertainty in income taxes | — | — | (17,576 | ) | — | — | — | (17,576 | ) | |||||||||||||||||||
US GAAP | 862,005 | — | 1,571,108 | 2,054,744 | 219,084 | (3,844,936 | ) | 862,005 | ||||||||||||||||||||
F-109
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
For the Year Ended December 31, 2009
Non- | ||||||||||||||||||||||||||||
Telesat | Telesat | Telesat | Guarantor | Guarantor | ||||||||||||||||||||||||
Holdings | LLC | Canada | Subsidiaries | Subsidiaries | Adjustments | Consolidated | ||||||||||||||||||||||
Operating revenues | ||||||||||||||||||||||||||||
Service revenues | — | — | 704,397 | 78,559 | 46,216 | (62,034 | ) | 767,138 | ||||||||||||||||||||
Equipment sales revenues | — | — | 6,696 | 13,570 | — | (206 | ) | 20,060 | ||||||||||||||||||||
Operating revenues | — | — | 711,093 | 92,129 | 46,216 | (62,240 | ) | 787,198 | ||||||||||||||||||||
Amortization | — | — | 198,676 | 47,055 | 11,136 | — | 256,867 | |||||||||||||||||||||
Operations and administration | — | — | 176,085 | 80,554 | 28,004 | (64,953 | ) | 219,690 | ||||||||||||||||||||
Cost of equipment sales | — | — | 5,828 | 10,552 | — | — | 16,380 | |||||||||||||||||||||
Total operating expenses | — | — | 380,589 | 138,161 | 39,140 | (64,953 | ) | 492,937 | ||||||||||||||||||||
Earnings from operations | — | — | 330,504 | (46,032 | ) | 7,076 | 2,713 | 294,261 | ||||||||||||||||||||
Income (loss) from equity investments | 427,603 | — | (3,153 | ) | (5,047 | ) | — | (419,403 | ) | — | ||||||||||||||||||
Interest expense | (13,540 | ) | — | (256,458 | ) | (1,318 | ) | (2,252 | ) | — | (273,568 | ) | ||||||||||||||||
(Loss) gain on financial instruments | — | — | (134,402 | ) | — | — | — | (134,402 | ) | |||||||||||||||||||
Gain (loss) on foreign exchange | — | — | 488,003 | 29,869 | (17,010 | ) | — | 500,862 | ||||||||||||||||||||
Other (expense) income | — | — | 8,192 | 1,321 | 25,059 | (2,713 | ) | 31,859 | ||||||||||||||||||||
(Loss) earnings before income taxes | 414,063 | — | 432,686 | (21,207 | ) | 12,873 | (419,403 | ) | 419,012 | |||||||||||||||||||
Income tax (expense) recovery | — | — | (5,083 | ) | (1,458 | ) | 1,592 | — | (4,949 | ) | ||||||||||||||||||
Net (loss) earnings | 414,063 | — | 427,603 | (22,665 | ) | 14,465 | (419,403 | ) | 414,063 | |||||||||||||||||||
Reconciliation to US GAAP is as follows: | ||||||||||||||||||||||||||||
Income (loss) from equity investments | (32,357 | ) | — | 475 | 475 | — | 31,407 | — | ||||||||||||||||||||
Gains (losses) on embedded derivatives | — | — | (35,480 | ) | — | — | — | (35,480 | ) | |||||||||||||||||||
Sales type lease — operating lease for U.S. GAAP | — | — | 1,514 | — | — | — | 1,514 | |||||||||||||||||||||
Capital lease — operating lease for U.S. GAAP | — | — | (1,567 | ) | — | — | — | (1,567 | ) | |||||||||||||||||||
Lease amendments | — | — | — | — | 719 | — | 719 | |||||||||||||||||||||
Dividends on senior preferred shares | 13,540 | — | — | — | — | — | 13,540 | |||||||||||||||||||||
Tax effect of above adjustments | — | — | 10,754 | — | (244 | ) | — | 10,510 | ||||||||||||||||||||
Uncertainty in income taxes | — | — | (8,053 | ) | — | — | — | (8,053 | ) | |||||||||||||||||||
US GAAP net (loss) earnings | 395,246 | — | 395,246 | (22,190 | ) | 14,940 | (387,996 | ) | 395,246 | |||||||||||||||||||
F-110
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
For the Year Ended December 31, 2009
Non- | ||||||||||||||||||||||||||||
Telesat | Telesat | Telesat | Guarantor | Guarantor | ||||||||||||||||||||||||
Holdings | LLC | Canada | Subsidiaries | Subsidiaries | Adjustments | Consolidated | ||||||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||||||||||
Net earnings (loss) | 414,063 | — | 427,603 | (22,665 | ) | 14,465 | (419,403 | ) | 414,063 | |||||||||||||||||||
Adjustments to reconcile net earnings (loss) to cash flows from operating activities: | ||||||||||||||||||||||||||||
Amortization | — | — | 198,676 | 47,055 | 11,136 | — | 256,867 | |||||||||||||||||||||
Future income taxes | — | — | 6,245 | 271 | (1,918 | ) | — | 4,598 | ||||||||||||||||||||
Unrealized foreign exchange loss | — | — | (509,995 | ) | (12,769 | ) | (1,368 | ) | — | (524,132 | ) | |||||||||||||||||
Unrealized gain on derivatives | — | — | 134,402 | — | — | — | 134,402 | |||||||||||||||||||||
Dividends on preferred shares | 13,540 | — | — | — | — | — | 13,540 | |||||||||||||||||||||
Stock-based compensation expense | — | — | 4,696 | 854 | 99 | — | 5,649 | |||||||||||||||||||||
Loss (income) from equity investments | (427,603 | ) | — | 3,153 | 5,047 | — | 419,403 | — | ||||||||||||||||||||
(Gain) Loss on disposal of assets | — | — | (8,013 | ) | 590 | (26,007 | ) | — | (33,430 | ) | ||||||||||||||||||
Other | — | — | (48,972 | ) | 3,267 | (310 | ) | — | (46,015 | ) | ||||||||||||||||||
Customer prepayments on future satellite services | — | — | 82,066 | 900 | — | — | 82,966 | |||||||||||||||||||||
Customer refunds | — | — | (17,459 | ) | (107 | ) | — | — | (17,566 | ) | ||||||||||||||||||
Operating assets and liabilities | — | — | 22,272 | (21,884 | ) | 6,815 | — | 7,203 | ||||||||||||||||||||
— | — | 294,674 | 559 | 2,912 | — | 298,145 | ||||||||||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||||||
Satellite programs | — | — | (258,083 | ) | — | — | — | (258,083 | ) | |||||||||||||||||||
Property additions | — | — | (5,130 | ) | (722 | ) | (266 | ) | — | (6,118 | ) | |||||||||||||||||
Business acquisitions | — | — | (1,128 | ) | 1,128 | — | — | — | ||||||||||||||||||||
Proceeds on disposal of assets | — | — | 70,942 | 458 | — | — | 71,400 | |||||||||||||||||||||
— | — | (193,399 | ) | 864 | (266 | ) | — | (192,801 | ) | |||||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||||||
Debt financing and bank loans | — | — | 23,880 | — | — | — | 23,880 | |||||||||||||||||||||
Repayment of bank loans and debt financing | — | — | (53,844 | ) | (11 | ) | — | — | (53,855 | ) | ||||||||||||||||||
Capitalized debt issuance costs | — | — | — | — | — | — | — | |||||||||||||||||||||
Capital lease payments | — | — | (11,359 | ) | — | (3,261 | ) | — | (14,620 | ) | ||||||||||||||||||
Satellite performance incentive payments | — | — | (5,418 | ) | — | — | — | (5,418 | ) | |||||||||||||||||||
— | — | (46,741 | ) | (11 | ) | (3,261 | ) | — | (50,013 | ) | ||||||||||||||||||
Effect of changes in exchange rates on cash and cash equivalents | — | — | — | 764 | (445 | ) | — | 319 | ||||||||||||||||||||
Increase (decrease) in cash and cash equivalents | — | — | 54,534 | 2,176 | (1,060 | ) | — | 55,650 | ||||||||||||||||||||
Cash and cash equivalents, beginning of period | — | — | 83,089 | 12,056 | 3,394 | — | 98,539 | |||||||||||||||||||||
Cash and cash equivalents, end of period | — | — | 137,623 | 14,232 | 2,334 | — | 154,189 | |||||||||||||||||||||
F-111
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
Canadian | ||||||||||||
GAAP | Adjustments | US GAAP | ||||||||||
Current assets | 453,634 | 9,363 | 462,997 | |||||||||
Other assets | 34,101 | 83,658 | 117,759 | |||||||||
Goodwill | 2,005,842 | (12,692 | ) | 1,993,150 | ||||||||
Current liabilities | 284,939 | 11,462 | 296,401 | |||||||||
Debt financing | 3,013,738 | 61,593 | 3,075,331 | |||||||||
Future tax liability | 262,913 | 1,060 | 263,973 | |||||||||
Other long-term liabilities | 611,776 | 32,807 | 644,583 | |||||||||
Accumulated deficit | (794,300 | ) | (16,052 | ) | (810,352 | ) | ||||||
Accumulated other comprehensive income (loss) | 63 | (10,541 | ) | (10,478 | ) |
Canadian | ||||||||||||
GAAP | Adjustments | US GAAP | ||||||||||
Current liabilities | 8,723 | 130 | 8,853 | |||||||||
Future tax liability | 6,194 | 247 | 6,441 | |||||||||
Other long-term liabilities | 18,495 | 489 | 18,984 | |||||||||
Accumulated earnings | 111,380 | (760 | ) | 110,620 | ||||||||
Accumulated other comprehensive income | 3,544 | (106 | ) | 3,438 |
F-112
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
As at December 31, 2008
Non- | ||||||||||||||||||||||||||||
Telesat | Telesat | Telesat | Guarantor | guarantor | ||||||||||||||||||||||||
Holdings | LLC | Canada | Subsidiaries | Subsidiaries | Adjustments | Consolidated | ||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||
Current assets | ||||||||||||||||||||||||||||
Cash and cash equivalents | — | — | 83,089 | 12,056 | 3,393 | 1 | 98,539 | |||||||||||||||||||||
Accounts receivable | — | — | 39,153 | 19,680 | 3,100 | — | 61,933 | |||||||||||||||||||||
Current future tax asset | — | — | 928 | 596 | 1,057 | — | 2,581 | |||||||||||||||||||||
Intercompany receivable | — | — | 605,331 | 59,234 | 103,133 | (767,698 | ) | — | ||||||||||||||||||||
Other current assets | — | — | 31,283 | 9,202 | 8,983 | (281 | ) | 49,187 | ||||||||||||||||||||
Total current assets | — | — | 759,784 | 100,768 | 119,666 | (767,978 | ) | 212,240 | ||||||||||||||||||||
Satellites, property, and other equipment, net | — | — | 1,437,490 | 374,436 | 71,650 | — | 1,883,576 | |||||||||||||||||||||
Other long-term assets | — | — | 39,176 | 2,325 | 755 | 47 | 42,303 | |||||||||||||||||||||
Intangible assets, net | — | — | 562,434 | 18,967 | 635 | (1 | ) | 582,035 | ||||||||||||||||||||
Investment in affiliates | 622,417 | — | 1,668,986 | 1,476,399 | 261 | (3,768,063 | ) | — | ||||||||||||||||||||
Goodwill | — | — | 2,005,842 | 343,876 | 96,885 | — | 2,446,603 | |||||||||||||||||||||
Total assets | 622,417 | — | 6,473,712 | 2,316,771 | 289,852 | (4,535,995 | ) | 5,166,757 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||
Current liabilities | ||||||||||||||||||||||||||||
Accounts payable and accrued liabilities | — | — | 24,661 | 15,940 | 3,840 | 14 | 44,455 | |||||||||||||||||||||
Other current liabilities | — | — | 123,740 | 14,766 | 4,163 | (237 | ) | 142,432 | ||||||||||||||||||||
Intercompany payable | — | — | 518,247 | 211,174 | 38,317 | (767,738 | ) | — | ||||||||||||||||||||
Debt due within one year | — | — | 23,260 | 11 | — | 1 | 23,272 | |||||||||||||||||||||
Total current liabilities | — | — | 689,908 | 241,891 | 46,320 | (767,960 | ) | 210,159 | ||||||||||||||||||||
Debt financing | — | — | 3,513,223 | — | — | — | 3,513,223 | |||||||||||||||||||||
Future tax liability | — | — | 255,893 | 267 | 10,212 | — | 266,372 | |||||||||||||||||||||
Other long-term liabilities | 11,550 | — | 505,328 | 24,099 | 25,159 | — | 566,136 | |||||||||||||||||||||
Senior preferred shares | 141,435 | — | — | — | — | — | 141,435 | |||||||||||||||||||||
Total liabilities | 152,985 | — | 4,964,352 | 266,257 | 81,691 | (767,960 | ) | 4,697,325 | ||||||||||||||||||||
Shareholders’ equity | ||||||||||||||||||||||||||||
Common shares | 756,414 | — | 2,320,730 | 1,823,370 | 104,434 | (4,248,534 | ) | 756,414 | ||||||||||||||||||||
Preferred shares | 541,764 | — | — | — | — | — | 541,764 | |||||||||||||||||||||
Accumulated deficit | (826,452 | ) | — | (816,679 | ) | 241,559 | 96,915 | 478,205 | (826,452 | ) | ||||||||||||||||||
Accumulated other comprehensive loss | (7,742 | ) | — | 63 | (14,617 | ) | 6,812 | 7,742 | (7,742 | ) | ||||||||||||||||||
Contributed surplus | 5,448 | — | 5,246 | 202 | — | (5,448 | ) | 5,448 | ||||||||||||||||||||
Total shareholders’ equity | 469,432 | — | 1,509,360 | 2,050,514 | 208,161 | (3,768,035 | ) | 469,432 | ||||||||||||||||||||
Total liabilities and shareholders’ equity | 622,417 | — | 6,473,712 | 2,316,771 | 289,852 | (4,535,995 | ) | 5,166,757 | ||||||||||||||||||||
F-113
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
Non- | ||||||||||||||||||||||||||||
Telesat | Telesat | Telesat | Guarantor | guarantor | ||||||||||||||||||||||||
Holdings | LLC | Canada | Subsidiaries | Subsidiaries | Adjustments | Consolidated | ||||||||||||||||||||||
Reconciliation to US GAAP of total shareholders’ equity is as follows: | ||||||||||||||||||||||||||||
Canadian GAAP | 469,432 | — | 1,509,360 | 2,050,514 | 208,161 | (3,768,035 | ) | 469,432 | ||||||||||||||||||||
Underlying differences in the income (loss) from equity investments | 14,375 | — | (742 | ) | — | — | (13,633 | ) | — | |||||||||||||||||||
Gains (losses) on embedded derivatives | — | — | 20,892 | — | — | — | 20,892 | |||||||||||||||||||||
Net actuarial losses | — | — | (1,169 | ) | — | — | — | (1,169 | ) | |||||||||||||||||||
Sales-type lease — operating lease for U.S. GAAP | — | — | 21,556 | — | — | — | 21,556 | |||||||||||||||||||||
Capital lease — operating lease for U.S. GAAP | — | — | (7,662 | ) | — | — | — | (7,662 | ) | |||||||||||||||||||
Lease amendments | — | — | — | (1,233 | ) | — | (1,233 | ) | ||||||||||||||||||||
Tax effect of above adjustments | — | — | (8,977 | ) | — | 491 | — | (8,486 | ) | |||||||||||||||||||
Uncertainty in income taxes | — | — | (9,523 | ) | — | — | — | (9,523 | ) | |||||||||||||||||||
US GAAP | 483,807 | — | 1,523,735 | 2,050,514 | 207,419 | (3,781,668 | ) | 483,807 | ||||||||||||||||||||
F-114
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
For the Year Ended December 31, 2008
Non- | ||||||||||||||||||||||||||||
Telesat | Telesat | Telesat | Guarantor | guarantor | ||||||||||||||||||||||||
Holdings | LLC | Canada | Subsidiaries | Subsidiaries | Adjustments | Consolidated | ||||||||||||||||||||||
Operating revenues | ||||||||||||||||||||||||||||
Service revenues | — | — | 613,419 | 98,342 | 26,700 | (57,670 | ) | 680,791 | ||||||||||||||||||||
Equipment sales revenues | — | — | 12,459 | 18,296 | — | (171 | ) | 30,584 | ||||||||||||||||||||
Operating revenues | — | — | 625,878 | 116,638 | 26,700 | (57,841 | ) | 711,375 | ||||||||||||||||||||
Amortization | — | — | 179,100 | 36,218 | 20,322 | — | 235,640 | |||||||||||||||||||||
Operations and administration | — | — | 197,506 | 99,267 | 8,438 | (57,661 | ) | 247,550 | ||||||||||||||||||||
Cost of equipment sales | — | — | 9,944 | 14,500 | 104 | (180 | ) | 24,368 | ||||||||||||||||||||
Impairment loss on long-lived assets | — | — | 2,373 | — | — | — | 2,373 | |||||||||||||||||||||
Impairment loss on intangible assets | — | — | 465,900 | 17,100 | — | — | 483,000 | |||||||||||||||||||||
Total operating expenses | — | — | 854,823 | 167,085 | 28,864 | (57,841 | ) | 992,931 | ||||||||||||||||||||
Earnings from operations | — | — | (228,945 | ) | (50,447 | ) | (2,164 | ) | — | (281,556 | ) | |||||||||||||||||
Income (loss) from equity investments | (812,546 | ) | — | (60,468 | ) | (5,130 | ) | — | 878,144 | — | ||||||||||||||||||
Interest expense | (9,855 | ) | — | (245,683 | ) | 25 | (2,128 | ) | — | (257,641 | ) | |||||||||||||||||
(Loss) gain on financial instruments | — | — | 251,686 | — | — | — | 251,686 | |||||||||||||||||||||
Gain (loss) on foreign exchange | — | — | (693,723 | ) | (17,103 | ) | 12,770 | — | (698,056 | ) | ||||||||||||||||||
Other (expense) income | — | — | (3,867 | ) | 913 | 1,242 | (1 | ) | (1,713 | ) | ||||||||||||||||||
(Loss) earnings before income taxes | (822,401 | ) | — | (981,000 | ) | (71,742 | ) | 9,720 | 878,143 | (987,280 | ) | |||||||||||||||||
Income tax recovery (expense) | — | — | 168,454 | (2,730 | ) | (846 | ) | 1 | 164,879 | |||||||||||||||||||
Net (loss) earnings | (822,401 | ) | — | (812,546 | ) | (74,472 | ) | 8,874 | 878,144 | (822,401 | ) | |||||||||||||||||
Reconciliation to US GAAP is as follows: | — | |||||||||||||||||||||||||||
Income (loss) from equity investments | 14,473 | — | (742 | ) | — | — | (13,731 | ) | — | |||||||||||||||||||
Gains (losses) on embedded derivatives | — | — | 20,118 | — | — | — | �� | 20,118 | ||||||||||||||||||||
Sales-type lease — operating lease for U.S. GAAP | — | — | 18,808 | — | — | — | 18,808 | |||||||||||||||||||||
Capital lease — operating lease for U.S. GAAP | — | — | (7,584 | ) | — | — | — | (7,584 | ) | |||||||||||||||||||
Lease amendments | — | — | — | — | (1,233 | ) | — | (1,233 | ) | |||||||||||||||||||
Dividends on senior preferred shares | 9,855 | — | — | — | — | — | 9,855 | |||||||||||||||||||||
Tax effect of above adjustments | — | — | (9,252 | ) | — | 491 | — | (8,761 | ) | |||||||||||||||||||
Uncertainty in income taxes | — | — | (6,875 | ) | — | — | — | (6,875 | ) | |||||||||||||||||||
US GAAP net (loss) earnings | (798,073 | ) | — | (798,073 | ) | (74,472 | ) | 8,132 | 864,413 | (798,073 | ) | |||||||||||||||||
F-115
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
For the Year Ended December 31, 2008
Non- | ||||||||||||||||||||||||||||
Telesat | Telesat | Telesat | Guarantor | guarantor | ||||||||||||||||||||||||
Holdings | LLC | Canada | Subsidiaries | Subsidiaries | Adjustments | Consolidated | ||||||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||||||||||
Net earnings (loss) | (822,401 | ) | (812,546 | ) | (74,472 | ) | 8,874 | 878,144 | (822,401 | ) | ||||||||||||||||||
Adjustments to reconcile net earnings (loss) to cash flows from operating activities: | ||||||||||||||||||||||||||||
Amortization | — | — | 179,100 | 36,218 | 20,322 | — | 235,640 | |||||||||||||||||||||
Future income taxes | — | — | (175,744 | ) | 84 | (291 | ) | — | (175,951 | ) | ||||||||||||||||||
Unrealized foreign exchange loss | — | — | 698,675 | 6,172 | (9,402 | ) | — | 695,445 | ||||||||||||||||||||
Unrealized gain on derivatives | — | — | (247,931 | ) | — | — | — | (247,931 | ) | |||||||||||||||||||
Dividends on preferred shares | 9,855 | — | — | — | — | — | 9,855 | |||||||||||||||||||||
Stock-based compensation expense | — | — | 5,246 | 202 | — | — | 5,448 | |||||||||||||||||||||
(Gain) Loss on disposal of assets | — | 827 | (575 | ) | — | — | 252 | |||||||||||||||||||||
Impairment losses | — | — | 468,273 | 17,100 | — | — | 485,373 | |||||||||||||||||||||
Loss (income) from equity investments | 812,546 | — | 60,468 | 5,130 | — | (878,144 | ) | — | ||||||||||||||||||||
Other | — | — | (41,489 | ) | (745 | ) | (842 | ) | (1,043 | ) | (44,119 | ) | ||||||||||||||||
Customer prepayments on future satellite services | — | — | 88,473 | 114 | — | — | 88,587 | |||||||||||||||||||||
Operating assets and liabilities | — | — | (42,880 | ) | 107,584 | (16,889 | ) | 1,044 | 48,859 | |||||||||||||||||||
— | — | 180,472 | 96,812 | 1,772 | 1 | 279,057 | ||||||||||||||||||||||
F-116
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
Non- | ||||||||||||||||||||||||||||
Telesat | Telesat | Telesat | Guarantor | guarantor | ||||||||||||||||||||||||
Holdings | LLC | Canada | Subsidiaries | Subsidiaries | Adjustments | Consolidated | ||||||||||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||||||
Satellite programs | — | — | (194,542 | ) | (69,221 | ) | — | — | (263,763 | ) | ||||||||||||||||||
Property additions | — | — | (6,505 | ) | (2,304 | ) | (53 | ) | — | (8,862 | ) | |||||||||||||||||
Business acquisitions | — | — | 7,477 | — | — | (7,477 | ) | — | ||||||||||||||||||||
Proceeds on disposal of assets | — | — | 566 | 4,554 | — | — | 5,120 | |||||||||||||||||||||
Insurance proceeds | — | — | 4,006 | — | — | — | 4,006 | |||||||||||||||||||||
— | — | (188,998 | ) | (66,971 | ) | (53 | ) | (7,477 | ) | (263,499 | ) | |||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||||||
Debt financing and bank loans | — | — | 186,687 | — | — | — | 186,687 | |||||||||||||||||||||
Repayment of bank loans and debt financing | — | — | (91,528 | ) | (32 | ) | — | — | (91,560 | ) | ||||||||||||||||||
Capitalized debt issuance costs | — | — | (19,131 | ) | — | — | — | (19,131 | ) | |||||||||||||||||||
Capital lease payments | — | — | (8,197 | ) | (19,816 | ) | (2,941 | ) | — | (30,954 | ) | |||||||||||||||||
Satellite performance incentive payments | — | — | (3,524 | ) | — | — | — | (3,524 | ) | |||||||||||||||||||
Preferred dividends paid | — | — | — | (7,477 | ) | — | 7,477 | — | ||||||||||||||||||||
— | — | 64,307 | (27,325 | ) | (2,941 | ) | 7,477 | 41,518 | ||||||||||||||||||||
Effect of changes in exchange rates on cash and cash equivalents | — | — | — | (1,660 | ) | 920 | — | (740 | ) | |||||||||||||||||||
Increase (decrease) in cash and cash equivalents | — | — | 55,781 | 856 | (302 | ) | 1 | 56,336 | ||||||||||||||||||||
Cash and cash equivalents, beginning of period | — | — | 27,308 | 11,200 | 3,695 | — | 42,203 | |||||||||||||||||||||
Cash and cash equivalents, end of period | — | — | 83,089 | 12,056 | 3,393 | 1 | 98,539 | |||||||||||||||||||||
F-117
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
December 31, 2008 | ||||||||||||
Telesat Canada | �� | |||||||||||
Canadian GAAP | Adjustments | US GAAP | ||||||||||
Current assets | 759,784 | 6,864 | 766,648 | |||||||||
Other long-term assets | 39,176 | 130,775 | 169,951 | |||||||||
Goodwill | 2,005,842 | (12,692 | ) | 1,993,150 | ||||||||
Current liabilities | 689,908 | 8,880 | 698,788 | |||||||||
Debt financing | 3,513,223 | 73,259 | 3,586,482 | |||||||||
Future tax liability | 255,893 | 15,339 | 271,232 | |||||||||
Other long-term liabilities | 505,328 | 12,354 | 517,682 | |||||||||
Accumulated deficit | (816,679 | ) | 16,284 | (800,395 | ) | |||||||
Accumulated other comprehensive income (loss) | 63 | (1,169 | ) | (1,106 | ) |
Non-guarantor | ||||||||||||
Subsidiaries | ||||||||||||
Canadian | ||||||||||||
GAAP | Adjustments | US GAAP | ||||||||||
Current liabilities | 46,320 | 205 | 46,525 | |||||||||
Future tax liability | 10,212 | (491 | ) | 9,721 | ||||||||
Other long-term liabilities | 25,159 | 1,027 | 26,186 | |||||||||
Accumulated earnings | 96,915 | (741 | ) | 96,174 |
F-118
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
For the Period October 31, 2007 to December 31, 2007
Non- | ||||||||||||||||||||||||||||
Telesat | Telesat | Telesat | Guarantor | guarantor | ||||||||||||||||||||||||
Holdings | LLC | Canada | Subsidiaries | Subsidiaries | Adjustments | Consolidated | ||||||||||||||||||||||
Operating revenues | ||||||||||||||||||||||||||||
Service revenues | — | — | 92,882 | 13,395 | 3,396 | (6,164 | ) | 103,509 | ||||||||||||||||||||
Equipment sales revenues | — | — | 544 | 7,416 | — | (53 | ) | 7,907 | ||||||||||||||||||||
Operating revenues | — | — | 93,426 | 20,811 | 3,396 | (6,217 | ) | 111,416 | ||||||||||||||||||||
Amortization | — | — | 28,986 | 6,909 | 4,152 | (1 | ) | 40,046 | ||||||||||||||||||||
Operations and administration | — | — | 31,247 | 19,968 | (1,776 | ) | (6,163 | ) | 43,276 | |||||||||||||||||||
Cost of equipment sales | — | — | 548 | 5,922 | 68 | (53 | ) | 6,485 | ||||||||||||||||||||
Total operating expenses | — | — | 60,781 | 32,799 | 2,444 | (6,217 | ) | 89,807 | ||||||||||||||||||||
Earnings from operations | — | — | 32,645 | (11,988 | ) | 952 | — | 21,609 | ||||||||||||||||||||
Income (loss) from equity investments | (2,356 | ) | — | (11,271 | ) | (751 | ) | — | 14,378 | — | ||||||||||||||||||
Interest expense | (1,695 | ) | — | (41,542 | ) | (9 | ) | (615 | ) | — | (43,861 | ) | ||||||||||||||||
(Loss) gain on financial instruments | — | — | 75,098 | — | — | — | 75,098 | |||||||||||||||||||||
Gain (loss) on foreign exchange | — | — | (118,222 | ) | (708 | ) | 896 | (118,034 | ) | |||||||||||||||||||
Other (expense) income | — | — | (1,114 | ) | 13 | 68 | — | (1,033 | ) | |||||||||||||||||||
(Loss) earnings before income taxes | (4,051 | ) | — | (64,406 | ) | (13,443 | ) | 1,301 | 14,378 | (66,221 | ) | |||||||||||||||||
Income tax recovery/(expense) | — | — | 62,050 | 286 | (166 | ) | — | 62,170 | ||||||||||||||||||||
Net (loss) earnings | (4,051 | ) | — | (2,356 | ) | (13,157 | ) | 1,135 | 14,378 | (4,051 | ) | |||||||||||||||||
Reconciliation to US GAAP is as follows: | ||||||||||||||||||||||||||||
Income (loss) from equity investments | 1,071 | — | — | — | — | (1,071 | ) | — | ||||||||||||||||||||
Gains (losses) on embedded derivatives | — | — | 774 | — | — | — | 774 | |||||||||||||||||||||
Sales-type lease — operating lease for U.S. GAAP | — | — | 2,748 | — | — | — | 2,748 | |||||||||||||||||||||
Capital lease — operating lease for U.S. GAAP | — | — | (78 | ) | — | — | — | (78 | ) | |||||||||||||||||||
Dividends on senior preferred shares | 1,695 | — | — | — | — | — | 1,695 | |||||||||||||||||||||
Tax effect of above adjustments | — | — | 275 | — | — | — | 275 | |||||||||||||||||||||
Uncertainty in income taxes | — | — | (2,648 | ) | — | — | — | (2,648 | ) | |||||||||||||||||||
US GAAP net (loss) earnings | (1,285 | ) | — | (1,285 | ) | (13,157 | ) | 1,135 | 13,307 | (1,285 | ) | |||||||||||||||||
F-119
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
For the Period January 1, 2007 to October 30, 2007
Non- | ||||||||||||||||||||
Telesat | Guarantor | guarantor | ||||||||||||||||||
Canada | Subsidiaries | Subsidiaries | Adjustments | Consolidated | ||||||||||||||||
Operating revenues | ||||||||||||||||||||
Service revenues | 344,191 | 29,211 | 20,870 | (9,844 | ) | 384,428 | ||||||||||||||
Equipment sales revenues | 20,015 | 23,600 | — | (2,855 | ) | 40,760 | ||||||||||||||
Sales-type lease revenues | 32,089 | 510 | — | — | 32,599 | |||||||||||||||
Operating revenues | 396,295 | 53,321 | 20,870 | (12,699 | ) | 457,787 | ||||||||||||||
Amortization | 97,630 | 1,967 | 6,204 | (13 | ) | 105,788 | ||||||||||||||
Operations and administration | 113,716 | 26,862 | 13,563 | (9,834 | ) | 144,307 | ||||||||||||||
Cost of equipment sales | 18,190 | 19,385 | — | (2,852 | ) | 34,723 | ||||||||||||||
Cost of sales-type lease | 14,953 | 566 | — | — | 15,519 | |||||||||||||||
Impairment loss on long-lived assets | 2,116 | — | — | — | 2,116 | |||||||||||||||
Total operating expenses | 246,605 | 48,780 | 19,767 | (12,699 | ) | 302,453 | ||||||||||||||
Earnings from operations | 149,690 | 4,541 | 1,103 | — | 155,334 | |||||||||||||||
Income (loss) from equity investments | 13,241 | — | — | (13,241 | ) | — | ||||||||||||||
Interest expense | (4,679 | ) | — | (3,869 | ) | — | (8,548 | ) | ||||||||||||
(Loss) gain on financial instruments | (6,653 | ) | — | — | — | (6,653 | ) | |||||||||||||
Gain (loss) on foreign exchange | (1,190 | ) | (738 | ) | 993 | — | (935 | ) | ||||||||||||
Other (expense) income | (13,645 | ) | 13,111 | 155 | — | (379 | ) | |||||||||||||
(Loss) earnings before income taxes | 136,764 | 16,914 | (1,618 | ) | (13,241 | ) | 138,819 | |||||||||||||
Income tax recovery (expense) | (55,022 | ) | (3,089 | ) | 1,034 | — | (57,077 | ) | ||||||||||||
Net (loss) earnings | 81,742 | 13,825 | (584 | ) | (13,241 | ) | 81,742 | |||||||||||||
Reconciliation to US GAAP is as follows: | ||||||||||||||||||||
Gains (losses) on embedded derivatives | (5,051 | ) | — | — | — | (5,051 | ) | |||||||||||||
Losses on derivatives designated as cash flow hedges under Canadian GAAP | (10,361 | ) | — | — | — | (10,361 | ) | |||||||||||||
Sales-type lease — operating lease for U.S. GAAP | (23,617 | ) | — | — | — | (23,617 | ) | |||||||||||||
Capital lease — operating lease for U.S. GAAP | 9,436 | — | — | — | 9,436 | |||||||||||||||
Tax effect of above adjustments | 9,606 | — | — | — | 9,606 | |||||||||||||||
Uncertainty in income taxes | 3,234 | — | — | — | 3,234 | |||||||||||||||
US GAAP net (loss) earnings | 64,989 | 13,825 | (584 | ) | (13,241 | ) | 64,989 | |||||||||||||
F-120
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
For the Period October 31, 2007 to December 31, 2007
Non- | ||||||||||||||||||||||||||||
Telesat | Telesat | Telesat | Guarantor | guarantor | ||||||||||||||||||||||||
Holdings | LLC | Canada | Subsidiaries | Subsidiaries | Adjustments | Consolidated | ||||||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||||||||||
Net earnings (loss) | (4,051 | ) | — | (2,356 | ) | (13,157 | ) | 1,135 | 14,378 | (4,051 | ) | |||||||||||||||||
Adjustments to reconcile net earnings (loss) to cash flows from operating activities: | ||||||||||||||||||||||||||||
Amortization | — | — | 28,986 | 6,909 | 4,152 | (1 | ) | 40,046 | ||||||||||||||||||||
Future income taxes | — | — | (60,761 | ) | 110 | (3 | ) | 1 | (60,653 | ) | ||||||||||||||||||
Unrealized foreign exchange loss | — | — | 105,819 | — | — | 1 | 105,820 | |||||||||||||||||||||
Unrealized loss (gain) on derivatives | — | — | (62,754 | ) | — | — | — | (62,754 | ) | |||||||||||||||||||
Dividends on preferred shares | 1,695 | — | — | — | — | — | 1,695 | |||||||||||||||||||||
(Gain) Loss on disposal of assets | — | — | 8 | 19 | — | — | 27 | |||||||||||||||||||||
Loss (income) from equity investments | 2,356 | — | 11,271 | 751 | — | (14,378 | ) | — | ||||||||||||||||||||
Other | — | — | (1,727 | ) | (366 | ) | — | 1,749 | (344 | ) | ||||||||||||||||||
Operating assets and liabilities | — | — | 198,192 | 14,502 | (5,837 | ) | (1,367 | ) | 205,490 | |||||||||||||||||||
— | — | 216,678 | 8,768 | (553 | ) | 383 | 225,276 | |||||||||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||||||
Satellite programs | — | — | (15,496 | ) | — | — | — | (15,496 | ) | |||||||||||||||||||
Property additions | — | — | (7,600 | ) | (6,392 | ) | (26 | ) | (1 | ) | (14,019 | ) | ||||||||||||||||
Business acquisitions | (569,957 | ) | (2,671,335 | ) | 7,713 | 4,370 | 15 | (3,229,194 | ) | |||||||||||||||||||
Proceeds on disposal of assets | — | — | 1 | 24 | — | — | 25 | |||||||||||||||||||||
(569,957 | ) | — | (2,694,430 | ) | 1,345 | 4,344 | 14 | (3,258,684 | ) | |||||||||||||||||||
F-121
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
Non- | ||||||||||||||||||||||||||||
Telesat | Telesat | Telesat | Guarantor | guarantor | ||||||||||||||||||||||||
Holdings | LLC | Canada | Subsidiaries | Subsidiaries | Adjustments | Consolidated | ||||||||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||||||
Debt financing and bank loans | — | — | 2,767,716 | — | — | — | 2,767,716 | |||||||||||||||||||||
Repayment of bank loans and debt financing | — | — | (44,887 | ) | (12 | ) | — | — | (44,899 | ) | ||||||||||||||||||
Capitalized debt issuance costs | — | — | (83,585 | ) | — | — | — | (83,585 | ) | |||||||||||||||||||
Note repayment | — | — | (129,334 | ) | — | — | — | (129,334 | ) | |||||||||||||||||||
Common shares issued | 311,124 | — | — | — | — | — | 311,124 | |||||||||||||||||||||
Preferred shares issued (repurchased) | 258,833 | — | — | — | — | — | 258,833 | |||||||||||||||||||||
Capital lease payments | — | — | (654 | ) | (14 | ) | (639 | ) | 1 | (1,306 | ) | |||||||||||||||||
Satellite performance incentive payments | — | — | (4,196 | ) | — | — | — | (4,196 | ) | |||||||||||||||||||
569,957 | — | 2,505,060 | (26 | ) | (639 | ) | 1 | 3,074,353 | ||||||||||||||||||||
Effect of changes in exchange rates on cash and cash equivalents | — | — | — | 1,113 | 543 | (398 | ) | 1,258 | ||||||||||||||||||||
Increase (decrease) in cash and cash equivalents | — | — | 27,308 | 11,200 | 3,695 | — | 42,203 | |||||||||||||||||||||
Cash and cash equivalents, beginning of period | — | — | — | — | — | — | — | |||||||||||||||||||||
Cash and cash equivalents, end of period | — | — | 27,308 | 11,200 | 3,695 | — | 42,203 | |||||||||||||||||||||
F-122
Table of Contents
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
For the Period January 1, 2007 to October 30, 2007
Non- | ||||||||||||||||||||
Telesat | Guarantor | guarantor | ||||||||||||||||||
Canada | Subsidiaries | Subsidiaries | Adjustments | Consolidated | ||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||
Net earnings (loss) | 81,742 | 13,825 | (584 | ) | (13,241 | ) | 81,742 | |||||||||||||
Adjustments to reconcile net earnings (loss) to cash flows from operating activities: | ||||||||||||||||||||
Gross profit on sales-type lease | (5,936 | ) | 55 | — | — | (5,881 | ) | |||||||||||||
Amortization | 97,630 | 1,967 | 6,204 | (13 | ) | 105,788 | ||||||||||||||
Future income taxes | 25,549 | (224 | ) | (1,033 | ) | — | 24,292 | |||||||||||||
Unrealized foreign exchange (gain) loss | (10,396 | ) | — | — | — | (10,396 | ) | |||||||||||||
Unrealized loss (gain) on derivatives | 8,907 | — | — | — | 8,907 | |||||||||||||||
(Gain) Loss on disposal of assets | (153 | ) | 45 | — | — | (108 | ) | |||||||||||||
Loss (income) from equity investments | (13,241 | ) | — | — | 13,241 | — | ||||||||||||||
Other | 15,186 | (11,868 | ) | — | — | 3,318 | ||||||||||||||
Customer prepayments on future satellite services | 17,721 | — | — | — | 17,721 | |||||||||||||||
Operating assets and liabilities | 25,890 | (925 | ) | 2,279 | — | 27,244 | ||||||||||||||
242,899 | 2,875 | 6,866 | (13 | ) | 252,627 | |||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||
Satellite programs | (183,494 | ) | — | — | — | (183,494 | ) | |||||||||||||
Property additions | (5,026 | ) | (743 | ) | (68 | ) | 7 | (5,830 | ) | |||||||||||
Maturity of short-term investments | 251 | 2,061 | — | — | 2,312 | |||||||||||||||
Business acquisitions | 11,243 | (9,180 | ) | (2,243 | ) | — | (180 | ) | ||||||||||||
Proceeds on disposal of assets | 153 | — | — | 6 | 159 | |||||||||||||||
(176,873 | ) | (7,862 | ) | (2,311 | ) | 13 | (187,033 | ) | ||||||||||||
Cash flows from financing activities | ||||||||||||||||||||
Debt financing and bank loans | 73,000 | — | — | — | 73,000 | |||||||||||||||
Repayment of bank loans and debt financing | (84,041 | ) | (49 | ) | — | — | (84,090 | ) | ||||||||||||
Success fee payments | (23,620 | ) | (380 | ) | — | — | (24,000 | ) | ||||||||||||
Capital lease payments | (4,275 | ) | — | (3,438 | ) | — | (7,713 | ) | ||||||||||||
Satellite performance incentive payments | (2,022 | ) | — | — | — | (2,022 | ) | |||||||||||||
(40,958 | ) | (429 | ) | (3,438 | ) | — | (44,825 | ) | ||||||||||||
Effect of changes in exchange rates on cash and cash equivalents | — | 147 | (1,823 | ) | — | (1,676 | ) | |||||||||||||
Increase (decrease) in cash and cash equivalents | 25,068 | (5,269 | ) | (706 | ) | — | 19,093 | |||||||||||||
Cash and cash equivalents, beginning of period | 24,544 | 9,004 | 5,113 | — | 38,661 | |||||||||||||||
Cash and cash equivalents, end of period | 49,612 | 3,735 | 4,407 | — | 57,754 | |||||||||||||||
F-123