Intelsat Reports Third Quarter 2012 Results Successful Intelsat 23 Launch Completes Fifth and Final 2012 Mission

Transcription

1 News Release Cntact Dianne VanBeber Vice President, Investr Relatins and Cmmunicatins Intelsat Reprts Third Quarter 2012 Results Successful Intelsat 23 Launch Cmpletes Fifth and Final 2012 Missin Luxemburg, 5 Nvember 2012 Intelsat S.A., the wrld s leading prvider f satellite services, tday reprted financial results fr the three mnths ended September 30, Intelsat S.A. reprted revenue f $654.9 millin and a net lss f $34.5 millin fr the three mnths ended September 30, The cmpany als reprted Intelsat S.A. EBITDAi, r earnings befre net interest, lss n early extinguishment f debt, taxes and depreciatin and amrtizatin, f $471.1 millin, and Intelsat S.A. Adjusted EBITDAi f $511.3 millin, r 78 percent f revenue, fr the three mnths ended September 30, Cntracted backlg at September 30, 2012, was $10.8 billin. Intelsat CEO Dave McGlade said, In the third quarter, Intelsat achieved steady financial perfrmance and further executed n ur initiatives t serve media, bradband, mbility and gvernment applicatins. Sequential revenue grwth increased as expected, as expansin capacity and a hsted paylad entered service. Overall, we cntinue t expect that full year 2012 revenue results will be slightly psitive as cmpared t McGlade cntinued, Our launch campaign prgressed with successful launches f Intelsat 20 and Intelsat 21 in the third quarter; bth satellites are nw in service. On Octber 14, we cmpleted ur fifth and final launch fr this year, Intelsat 23, which is nw cmpleting in-rbit testing. Demand fr bradband cnnectivity fr mbility applicatins, such as maritime and aernautical, is pening new grwth avenues fr ur satellite infrastructure. As ur glbal Ku-band bradband mbility platfrm nears cmpletin, Intelsat is psitined fr an early lead in serving these imprtant grwth segments.

2 Business Highlights Satellite industry analyst NSR estimates the satellite-based maritime and aernautical cnnectivity segment will grw t an apprximately $950 millin industry-wide pprtunity by As demand fr bradband cnnectivity extends t the skies, Intelsat made further strides in capturing new pprtunities in the emerging cmmercial aernautical cnnectivity segment. In September, Intelsat annunced a new cntract with cmmercial aernautical bradband service prvider Gg, a leader f in-flight cnnectivity and a pineer in wireless in-flight digital entertainment slutins, n nine beams n Intelsat s glbal Ku-band bradband mbility platfrm. Gg will use capacity n the Intelsat 14, Intelsat 19, Intelsat 21, Intelsat 22, and Intelsat 27 satellites t extend its current U.S. dmestic service territry t internatinal regins. In August, Intelsat als annunced that Panasnic Avinics Crpratin ( Panasnic ), the wrld leader in in-flight entertainment and cmmunicatins, had selected the Intelsat Epic NG platfrm fr its next generatin cmmercial aernautical service ffering. Subsequently, Panasnic signed a new agreement fr Ku-band capacity n Intelsat 14, lcated at 315 East, expanding its current aernautical service platfrm. Intelsat s netwrk services business cntinues t experience demand fr fixed, wireless and bradband infrastructure used by telecm peratrs, wireless peratrs and enterprise netwrk prviders. Brazilian telecmmunicatins firm Intelig Telecmunicaces, a subsidiary f Telecm Italia Mviles recently renewed its lng-term cmmitment fr C-band capacity n Intelsat 901 at 342 East t prvide Internet trunking, cellular backhaul and fiber redundancy t remte lcatins in the Amazn regin. Telefnica del Peru, a leading integrated telecmmunicatins peratr, cntracted fr new capacity n Intelsat 1-R at 310 East, migrating later t Intelsat 805 at the same rbital lcatin. The cmpany will use the capacity fr dmestic cellular backhaul and enterprise private data netwrks. isatcm, a data netwrking cmpany, recently signed a multi-year agreement n Intelsat 20. The cmpany plans t use the services t deliver VSAT service t custmers acrss Mnglia. Clar Chile, a subsidiary f America Mvil, recently renewed its multi-year agreement n Intelsat 23 at 307 East fr the distributin f prgramming cntent t cable televisin peratrs, as well as cellular backhaul and crprate VSAT services acrss Chile. Intelsat s media business mmentum cntinued, as use f capacity grew under previus cntractual cmmitments, primarily frm direct-t-hme ( DTH ) service prviders. Additinal cntracts in the perid reflect reginalizatin f cntent, amng ther trends. Intelsat recently annunced new agreements with tw f Bulgaria s tp media cmpanies. NURTS, the primary twer cmpany and sle digital terrestrial televisin ( DTT ) peratr in Bulgaria, will leverage capacity n Intelsat 12 at 45 East t cntribute cntent t its terrestrial twers fr DTT services in Bulgaria. In the secnd agreement, Bulgarian Telecm (VIVACOM), Bulgaria s natinal telecmmunicatins prvider, signed a multi-year agreement n Intelsat 12 t add high-definitin cntent t its DTH platfrm fr delivery in Bulgaria.

3 Multichice Technical Operatins (Pty) Ltd., the leading DTH prvider serving Africa and a subsidiary f Naspers, signed a new agreement fr additinal capacity n Intelsat 904 at 60 East. NTA Nigeria, the natinal bradcaster, recently renewed its cntract fr the distributin f Ku-band DTH vide service t custmers in Eurpe n Intelsat 905 at East. As annunced in September, Mexic-based Grup Televisa renewed its multi-year deals n Intelsat 11 at 317 East and Intelsat 905 at East. The cmpany will prvide prime high-definitin distributin f its Pay TV services fr Latin America s leading cable distributin systems n Intelsat 11, and its Eurpean Pay TV buquet t cable systems n Intelsat 905. Intelsat s executed cntract renewals and expansins in the gvernment sectr reflected slid demand fr mbility applicatins with the high reliability and cverage f Intelsat s extensive fleet. Varius custmers added ver 100 MHz f capacity t existing mbility netwrks, the majrity f which was n the Intelsat fleet. Intelsat General Crpratin, an indirect, whlly-wned subsidiary f Intelsat S.A., was selected as a prime cntractr under the U.S. gvernment s new Custm SATCOM Slutins cntract, a prgram that will prvide end-t-end, turnkey satellite cmmunicatins slutins t military and civilian gvernment users. The prgram, knwn as CS2, is the final segment f the new Future COMSATCOM Services Acquisitin (FCSA) prcurement prcess, managed jintly by the Defense Infrmatin Systems Agency and the General Services Administratin. Intelsat is successfully executing a satellite-launch prgram t expand and refresh its service capacity. The current prgram includes six satellites, five f which have launched in The Intelsat 19 satellite entered int service in August 2012, having suffered damage t ne slar array during its June 2012 launch. Althugh bth slar arrays are deplyed, the pwer available t the satellite is less than is required t perate 100% f the paylad capacity. We have filed a partial lss claim with ur insurer relating t the slar array anmaly. The Intelsat 20 satellite, launched n 2 August 2012, entered int service in September at its rbital destinatin f 68 East, where it is replacing the Intelsat 7 and Intelsat 10 satellites. The Intelsat 21 satellite, launched n 19 August, entered int service in Octber at its rbital destinatin f 302 East, where it replaced the Intelsat 9 satellite. Intelsat 23 was successfully launched n 14 Octber, and is expected t enter service later in the furth quarter 2012 at 307 East, replacing Intelsat 707. Intelsat 23 will prvide C-band services t custmers in the Americas, Eurpe and Africa, and Ku-band cverage fr Latin America. Intelsat s average fill rate n ur apprximately 2,150 statin-kept transpnders was 77 percent at September 30, 2012, reflecting a net increase in transpnders resulting primarily frm the entry int service f the Intelsat 19 and 20 satellites, as well increased active transpnders frm new cntract activity.

4 On Octber 3, 2012, Intelsat Jacksn Hldings S.A. ( Intelsat Jacksn ), a whlly-wned subsidiary f Intelsat S.A., cmpleted an ffering f $640.0 millin aggregate principal amunt f its 6 5 / 8 % Senir Ntes due The net prceeds frm the ffering were primarily used t repurchase r redeem all f Intelsat Jacksn s utstanding 11¼% Senir Ntes due In cnnectin with the tender ffers and redemptin, we expect t recgnize a lss n early extinguishment f debt f $23.6 millin in the furth quarter f 2012, cnsisting f the difference between the carrying value f the debt ultimately repurchased r redeemed and the ttal cash amunt paid (including related fees), and a write-ff f unamrtized debt premium. On Octber 3, 2012, Intelsat Jacksn entered int an Amendment and Jinder Agreement that reduced interest rates applicable t brrwings under Intelsat Jacksn s secured term lan facility and secured revlving credit facility t (i) the Lndn Inter-Bank Offered Rate ( LIBOR ) plus 3.25% r (ii) the Abve Bank Rate ( ABR ) plus 2.25%. Fllwing the amendment, the interest rate may decrease t LIBOR plus 3.00% r ABR plus 2.00% based n the crprate family rating f Intelsat Jacksn frm Mdy s Investrs Service, Inc. The LIBOR and the ABR, plus the applicable margins, will be determined as specified in the applicable agreement and amendment, and LIBOR will nt be less than 1.25% per annum. On Octber 5, 2012, Intelsat Glbal Service LLC, ur indirect subsidiary, cmpleted the sale f ur U.S. administrative headquarters ffice building in Washingtn, D.C., fr a purchase price f apprximately $85.0 millin in cash. The sale will result in a pre-tax gain t be recgnized in the furth quarter f 2012 f apprximately $12 t $13 millin. Upn the clsing f the sale, we entered int an agreement under which we will temprarily lease frm the purchaser a prtin f the prperty. We are currently in the prcess f selecting a lcatin fr a new permanent U.S. administrative headquarters. Intelsat acquired the remaining 25.1% equity f the New Dawn Satellite Cmpany, Ltd. jint venture fr $8.7 millin and retired $82.6 millin in debt incurred by the venture. As a result f the transactin, which was cmpleted in Octber 2012, the satellite, previusly called New Dawn, was renamed Intelsat 28. Because the venture was previusly fully cnslidated in Intelsat s results, n change t revenue r net lss is expected. We will eliminate the redeemable nncntrlling interest in the furth quarter. As f September 30, 2012, the utstanding balance n ur revlving credit facility was $150.0 millin, and availability under the facility was $339.3 millin. Financial Results fr the Three Mnths Ended September 30, 2012 On-Netwrk revenues generally include revenues frm any services delivered via ur satellite r grund netwrk. Off-Netwrk and Other revenues generally include revenues frm transpnder services, Mbile Satellite Services (MSS) and ther satellite-based transmissin services using capacity prcured frm ther peratrs, ften in frequencies nt available n ur netwrk. Off- Netwrk and Other Revenues als include revenues frm cnsulting and ther services and sales f custmer premises equipment. Ttal revenue fr the three mnths ended September 30, 2012, increased by $2.1 millin, t $654.9 millin, as cmpared t the three mnths ended September 30, By service type, ur revenues increased r decreased due t the fllwing:

5 On-Netwrk Revenues: Transpnder services an aggregate increase f $6.9 millin, principally due t an $8.8 millin increase in revenue frm grwth in services sld t media custmers largely in the Eurpe, the Latin America and Caribbean and the Asia-Pacific regins, partially ffset by an aggregate $2.7 millin decrease in revenue frm netwrk services custmers, reflecting a decline in demand frm Eurpe-based custmers fr services prvided in Africa, and an increase in the Latin America and Caribbean regin. Managed services an aggregate decrease f $1.4 millin, largely due t a decrease in revenue frm netwrk services custmers fr internatinal trunking primarily in Africa, a trend that we expect will cntinue due t the migratin f services in this regin t fiber ptic cable, partially ffset by increases in revenue frm bradband services fr mbility applicatins. Channel an aggregate decrease f $3.6 millin related t a cntinued decline frm the migratin f internatinal pint-t-pint satellite traffic t fiber ptic cable, a trend that we expect will cntinue. Off-Netwrk and Other Revenues: Transpnder, MSS and ther ff-netwrk services an aggregate decrease f $2.0 millin, primarily due t declines in ff-netwrk transpnder services fr netwrk services and media custmers. Satellite-related services an aggregate increase f $2.1 millin, primarily due t higher prfessinal fees earned fr prviding gvernment prfessinal services and flight peratins supprt fr third-party satellites as cmpared t the third quarter f Changes in direct csts f revenue, selling, general and administrative expenses, depreciatin and amrtizatin, incme frm peratins, interest expense, net, and ther significant incme-statement items are described belw. Direct csts f revenue decreased by $7.8 millin, r 7%, t $102.9 millin fr the three mnths ended September 30, 2012, as cmpared t the three mnths ended September 30, The decrease was primarily due t $4.4 millin f higher service csts in 2011 assciated with the accunting fr ur revenue and cst-sharing arrangements with JSAT Internatinal, Inc. related t the cnslidatin f the Hrizns Satellite Hldings, LLC ( Hrizns Hldings ) jint venture n September 30, Further, in 2012 there was a $2.2 millin decline in csts attributable t purchases f ff-netwrk fixed satellite services ( FSS ) capacity and ther third-party services, as well as a $1.2 millin decrease in ffice and peratinal expenses. Selling, general and administrative expenses decreased by $3.9 millin, r 8%, t $46.9 millin fr the three mnths ended September 30, 2012, as cmpared t the three mnths ended September 30, The decrease was primarily due t a $2.6 millin decrease in bad debt expense and $1.7 millin f lwer prfessinal fees, partially ffset by a net $1.2 millin increase in staff related expenses largely due t nn-cash stck cmpensatin csts assciated with the amended and restated Intelsat Glbal, Ltd Share Incentive Plan (the 2008 Share Plan ).

6 Depreciatin and amrtizatin expense decreased by $1.9 millin, r 1%, t $192.0 millin fr the three mnths ended September 30, 2012, as cmpared t the three mnths ended September 30, This decrease primarily resulted frm lwer depreciatin expense due t the timing f certain satellites becming fully depreciated, tgether with variatin frm year t year in the expected pattern f cnsumptin f amrtizable intangible assets. Thse decreases were partially ffset by increases frm the impact f satellites placed int service during 2011 and Our incme frm peratins increased by $8.9 millin, t $301.1 millin, fr the three mnths ended September 30, 2012, cmpared t $292.2 millin fr the three mnths ended September 30, 2011, due primarily t the effects described abve, including lwer expenses, mst ntably lwer direct csts f revenue. Incme frm peratins was further affected by: a $12.0 millin lss recgnized n ur derivative financial instruments fr the three mnths ended September 30, 2012, related t the net lss n ur interest rate swaps, which reflects interest expense accrued n the interest rate swaps as well as the change in fair value. Fr the three mnths ended September 30, 2011, we recrded a lss f $5.4 millin n derivative financial instruments. Interest expense, net cnsists f the grss interest expense we incur less the amunt f interest we capitalize related t capital assets under cnstructin and less interest incme earned. Interest expense, net decreased by $5.4 millin, r 2%, t $312.0 millin fr the three mnths ended September 30, 2012, as cmpared t $317.4 millin fr the three mnths ended September 30, The decrease in interest expense, net was principally due t the fllwing: a net decrease f $7.7 millin in interest expense as a result f Intelsat Jacksn s ntes ffering, repurchases and redemptins in the first half f 2012, partially ffset by an increase f $3.0 millin frm lwer capitalized interest resulting frm decreased levels f satellites and related assets under cnstructin. Nn-cash items in ttal interest expense, net were $13.7 millin fr the three mnths ended September 30, 2012, primarily fr amrtizatin f deferred financing fees incurred as a result f new r refinanced debt and the amrtizatin and accretin f discunts and premiums. Lss n early extinguishment f debt was $3.1 millin fr the three mnths ended September 30, 2012, with n similar charge fr the three mnths ended September 30, The 2012 lss was cmprised f the write-ff f unamrtized debt issuance csts in cnnectin with the prepayment f $112.2 millin f New Dawn debt with prceeds received frm an insurance claim. Lss frm previusly uncnslidated affiliates was $20.2 millin fr the three mnths ended September 30, 2011, with n cmparable amunt fr the three mnths ended September 30, 2012, due t the cnslidatin f the Hrizns Hldings jint venture in September 2011.

7 Other expense, net was $22.0 millin fr the three mnths ended September 30, 2012, as cmpared t ther incme, net f $0.6 millin fr the three mnths ended September 30, The difference f $22.6 millin was primarily due t a $21.0 millin charge related t fees and expenses in cnnectin with the expiratin f an uncnsummated third-party investment cmmitment and a $1.4 millin increase in exchange rate lsses, primarily related t ur business cnducted in Brazilian reais and eurs. Our benefit frm incme taxes was $1.5 millin fr the three mnths ended September 30, 2012, as cmpared t a benefit f $42.7 millin fr the three mnths ended September 30, The difference was principally due t the tax benefit assciated with the 2011 Hrizns remeasurement charge and the release f certain valuatin allwances n ur U.S. subsidiary s deferred state tax assets relating t internal subsidiary mergers during the three mnths ended September 30, EBITDA, Intelsat S.A. Adjusted EBITDA and Other Financial Metrics Intelsat S.A. EBITDA f $471.1 millin fr the three mnths ended September 30, 2012, reflected an increase f $4.6 millin frm $466.5 millin fr the same perid in Intelsat S.A. Adjusted EBITDA increased by $9.2 millin, r 2 percent, t $511.3 millin, r 78 percent f revenue, fr the three mnths ended September 30, 2012, frm $502.1 millin, r 77 percent f revenue, fr the same perid in At September 30, 2012, Intelsat s cntracted backlg, representing expected future revenue under cntracts with custmers, was $10.8 billin, cmpared t $10.6 billin at June 30, Intelsat management has reviewed the data pertaining t the use f the Intelsat netwrk and is prviding revenue infrmatin with respect t that use by custmer set and service type in the fllwing tables. Intelsat management believes this prvides a useful perspective n the changes in revenue and custmer trends ver time.

8 Revenue Cmparisn by Custmer Set and Service Type ($ in thusands) By Custmer Set Three Mnths Ended Three Mnths Ended September 30, September 30, Netwrk Services $ 305,875 47% $ 297,050 45% M e dia 204,686 31% 212,584 32% Gve rnme nt 134,108 21% 135,336 21% Othe r 8,212 1% 9,976 2% $ 652, % $ 654, % By Service Type Three Mnths Ended September 30, 2011 Three Mnths Ended September 30, 2012 On-Netwrk Revenues Transpnder services $ 480,159 74% $ 487,035 74% Managed services 71,134 11% 69,751 11% Channel 26,358 4% 22,744 4% Ttal n-netwrk revenues 577,651 89% 579,530 89% Off-Netwrk and Other Revenues Transpnder, MSS and ther ff-netwrk services 62,794 10% 60,844 9% Satellite-related services 12,436 2% 14,572 2% Ttal ff-netwrk and ther revenues 75,230 12% 75,416 12% Ttal $ 652, % $ 654, % Free Cash Flw Frm (Used in) Operatins and Capital Expenditures Free cash flw frm peratins i was negative $61.4 millin during the three mnths ended September 30, Free cash flw frm peratins is defined as net cash prvided by perating activities, less payments fr satellites and ther prperty and equipment (including capitalized interest). Payments fr satellites and ther prperty and equipment during the three mnths ended September 30, 2012, ttaled $238.3 millin. Our capital expenditure guidance fr the perids 2012 thrugh 2014 (the Guidance Perid ) frecasts capital expenditures during thse perids fr ten satellites. This is cmprised f five satellites launched in 2012, fur satellites currently in develpment and ne satellite expected t be rdered during the Guidance Perid. The satellites in develpment and yet t be rdered are expected t be launched frm 2013 t Cnsistent with prir guidance, we expect ur 2012 ttal capital expenditures t range frm apprximately $775 millin t $850 millin. Capital expenditures fr fiscal years 2013 and 2014 are expected t range frm $550 millin t $625 millin

9 and $525 millin t $600 millin, respectively. The annual classificatin f capital expenditure payments culd be affected by the timing f achievement f satellite manufacturing and launch cntract milestnes. During the Guidance Perid, we als expect t receive significant custmer prepayments under ur existing custmer cntracts and under custmer cntracts t be signed in the future. Significant prepayments received in the third quarter f 2012 ttaled $22.0 millin. Prepayments are currently expected t range frm $150 millin t $200 millin in 2012, all under existing cntracts. Prepayments are currently expected t range frm $150 millin t $200 millin in 2013 and $100 millin t $150 millin in 2014, with the majrity f these prepayments cming frm existing custmer cntracts End Ntes i In this release, financial measures are presented bth in accrdance with GAAP and als n a nn-gaap basis. EBITDA, Intelsat S.A. Adjusted EBITDA, free cash flw frm peratins and related margins included in this release are nn-gaap financial measures. Please see the cnslidated financial infrmatin belw fr infrmatin recnciling nn-gaap financial measures t cmparable GAAP financial measures. Cnference Call Infrmatin Intelsat management will hst a cnference call with investrs and analysts at 11:00 a.m. EDT n Mnday, Nvember 5, 2012, t discuss the cmpany s financial results fr the three mnths ended September 30, Access t the live cnference call will als be available via the Internet at the Intelsat Web site: T participate n the live call, participants shuld call (866) frm Nrth America, and +1 (617) frm all ther lcatins. The participant pass cde is Participants will have access t a replay f the cnference call thrugh Nvember 12, The replay number fr Nrth America is (888) and fr all ther lcatins, +1 (617) The participant pass cde fr the replay is Abut Intelsat Intelsat is the leading prvider f satellite services wrldwide. Fr ver 45 years, Intelsat has been delivering infrmatin and entertainment fr many f the wrld s leading media and netwrk cmpanies, multinatinal crpratins, Internet Service Prviders and gvernmental agencies. Intelsat s satellite, teleprt and fiber infrastructure is unmatched in the industry, setting the standard fr transmissins f vide, data and vice services. Frm the glbalizatin f cntent and the prliferatin f HD, t the expansin f cellular netwrks and bradband access, with Intelsat, advanced cmmunicatins anywhere in the wrld are clser, by far. Intelsat Safe Harbr Statement: Sme f the statements in this news release cnstitute "frward-lking statements" that d nt directly r exclusively relate t histrical facts. The frward-lking statements made in this release reflect Intelsat's intentins, plans, expectatins, assumptins and beliefs abut future events and are subject t risks, uncertainties and ther factrs, many f which are utside f Intelsat's cntrl. Imprtant factrs that culd cause actual results t differ materially frm the expectatins expressed r implied in the frward-lking statements include knwn and unknwn risks. Sme f the factrs that culd

10 cause actual results t differ frm histrical results r thse anticipated r predicted by these frward-lking statements include: risks assciated with perating ur in-rbit satellites; satellite launch failures, satellite launch and cnstructin delays and in-rbit failures r reduced perfrmance; ptential changes in the number f cmpanies ffering cmmercial satellite launch services and the number f cmmercial satellite launch pprtunities available in any given time perid that culd impact ur ability t timely schedule future launches and the prices we pay fr such launches; ur ability t btain new satellite insurance plicies with financially viable insurance carriers n cmmercially reasnable terms r at all, as well as the ability f ur insurance carriers t fulfill their bligatins; pssible future lsses n satellites that are nt adequately cvered by insurance; U.S. and ther gvernment regulatin; changes in ur cntracted backlg r expected cntracted backlg fr future services; pricing pressure and vercapacity in the markets in which we cmpete; inadequate access t capital markets; the cmpetitive envirnment in which we perate; custmer defaults n their bligatins t us; ur internatinal peratins and ther uncertainties assciated with ding business internatinally; and litigatin. Knwn risks include, amng thers, the risks included in Intelsat s annual reprt n Frm 10-K fr the year ended December 31, 2011 and its ther filings with the U.S. Securities and Exchange Cmmissin, the plitical, ecnmic and legal cnditins in the markets we are targeting fr cmmunicatins services r in which we perate and ther risks and uncertainties inherent in the telecmmunicatins business in general and the satellite cmmunicatins business in particular. Because actual results culd differ materially frm Intelsat's intentins, plans, expectatins, assumptins and beliefs abut the future, yu are urged t view all frward-lking statements cntained in this news release with cautin. Intelsat des nt undertake any bligatin t update r revise any frward-lking statements, whether as a result f new infrmatin, future events r therwise.

11 INTELSAT S.A. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS ($ in thusands) Th re e M n th s En d e d Th re e M n th s En d e d Revenue $ 652,881 $ 654,946 Operating expenses: Direct csts f revenue (excluding depreciatin and amrtizatin) 110, ,908 Selling, general and administrative 50,767 46,911 Depreciatin and amrtizatin 193, ,972 Lsses n derivative financial instruments 5,356 12,037 Ttal perating expenses 360, ,828 Incme frm peratins 292, ,118 Interest expense, net 317, ,951 Lss n early extinguishment f debt - (3,106) Lss frm previusly uncnslidated affiliates (20,188) - Other incme (expense), net 585 (21,980) Lss befre incme taxes (44,787) (35,919) Benefit frm incme taxes (42,678) (1,517) Net lss (2,109) (34,402) Net (incme) lss attributable t nncntrlling interest 1,667 (81) Net lss attributable t Intelsat S.A. $ (442) $ (34,483)

12 INTELSAT S.A. UNAUDITED RECONCILIATION OF NET LOSS TO EBITDA ($ in thusands) Th re e M n th s En d e d Th re e M n th s En d e d Nin e M n th s En d e d Nin e M n th s En d e d Net lss $ (2,109) $ (34,402) $ (432,350) $ (142,298) Add (Subtract): Interest expense, net 317, , , ,073 Lss n early extinguishment f debt - 3, ,183 46,489 Benefit frm incme taxes (42,678) (1,517) (48,931) (1,110) Depreciatin and amrtizatin 193, , , ,472 EBITDA $ 466,487 $ 471,110 $ 1,420,182 $ 1,420,626 EBITDA Margin 71% 72% 73% 73% Nte: EBITDA cnsists f earnings befre net interest, gain (lss) n early extinguishment f debt, taxes and depreciatin and amrtizatin. Given ur high level f leverage, refinancing activities are a frequent part f ur effrts t manage csts f brrwing. Accrdingly, we cnsider (gain) lss n early extinguishment f debt an element f interest expense. EBITDA is a measure cmmnly used in the FSS sectr, and we present EBITDA t enhance the understanding f ur perating perfrmance. We use EBITDA as ne criterin fr evaluating ur perfrmance relative t that f ur peers. We believe that EBITDA is an perating perfrmance measure, and nt a liquidity measure, that prvides investrs and analysts with a measure f perating results unaffected by differences in capital structures, capital investment cycles and ages f related assets amng therwise cmparable cmpanies. Hwever, EBITDA is nt a measure f financial perfrmance under U.S. GAAP, and ur EBITDA may nt be cmparable t similarly titled measures f ther cmpanies. EBITDA shuld nt be cnsidered as an alternative t perating incme (lss) r net incme (lss), determined in accrdance with U.S. GAAP, as an indicatr f ur perating perfrmance, r as an alternative t cash flws frm perating activities, determined in accrdance with U.S. GAAP, as an indicatr f cash flws, r as a measure f liquidity.

13 INTELSAT S.A. UNAUDITED RECONCILIATION OF NET LOSS TO INTELSAT S.A. ADJUSTED EBITDA ($ in thusands) Three Mnths Ended September 30, 2011 Three Mnths Ended September 30, 2012 Nine Mnths Ended September 30, 2011 Nine Mnths Ended September 30, 2012 Net ls s $ (2,109) $ (34,402) $ (432,350) $ (142,298) Add (Subtract): Interes t expens e, net 317, , , ,073 Ls s n early extinguis hment f debt - 3, ,183 46,489 Benefit frm incme taxes (42,678) (1,517) (48,931) (1,110) Depreciatin and amrtizatin 193, , , ,472 Intels at S.A. EBITDA 466, ,110 1,420,182 1,420,626 Add (Subtract): Cmpens atin and benefits (582) 1,167 4,275 4,705 Management fees 6,217 6,266 18,650 18,797 Lss frm previusly uncnslidated affiliates 20,188-24,658 - Ls s es n derivative financial ins truments 5,356 12,037 24,163 37,651 Nn-recurring and ther nn-cas h items 4,442 20,711 10,672 18,228 Intels at S.A. Adjus ted EBITDA $ 502,108 $ 511,291 $ 1,502,600 $ 1,500,007 Intelsat S.A. Adjusted EBITDA Margin 77% 78% 78% 77% Nte: Intelsat calculates a measure called Intelsat S.A. Adjusted EBITDA t assess the perating perfrmance f Intelsat S.A. Intelsat S.A. Adjusted EBITDA cnsists f EBITDA f Intelsat S.A. as adjusted t exclude r include certain unusual items, certain ther perating expense items and certain ther adjustments as described in the table abve. Our management believes that the presentatin f Intelsat S.A. Adjusted EBITDA prvides useful infrmatin t investrs, lenders and financial analysts regarding ur financial cnditin and results f peratins, because it permits clearer cmparability f ur perating perfrmance between perids. By excluding the ptential vlatility related t the timing and extent f nn-perating activities, such as impairments f asset value and gains (lsses) n derivative financial instruments, ur management believes that Intelsat S.A. Adjusted EBITDA prvides a useful means f evaluating the success f ur perating activities. We als use Intelsat S.A. Adjusted EBITDA, tgether with ther apprpriate metrics, t set gals fr and measure the perating perfrmance f ur business, and it is ne f the principal measures we use t evaluate ur management s perfrmance in determining cmpensatin under ur incentive cmpensatin plans. Adjusted EBITDA measures have been used histrically by investrs, lenders and financial analysts t estimate the value f a cmpany, t make infrmed investment decisins and t evaluate perfrmance. Our management believes that the inclusin f Intelsat S.A. Adjusted EBITDA facilitates cmparisn f ur results with thse f cmpanies having different capital structures. Intelsat S.A. Adjusted EBITDA is nt a measure f financial perfrmance under U.S. GAAP and may nt be cmparable t similarly titled measures f ther cmpanies. Intelsat S.A. Adjusted EBITDA shuld nt be cnsidered as an alternative t perating incme (lss) r net incme (lss), determined in accrdance with U.S. GAAP, as an indicatr f ur perating perfrmance, r as an alternative t cash flws frm perating activities, determined in accrdance with U.S. GAAP, as an indicatr f cash flws, r as a measure f liquidity.

14 INTELSAT S.A. CONSOLIDATED BALANCE SHEETS ($ in thusands, except per share amunts) As f De c e mb e r 3 1, As f (u n a u d ite d ) ASSETS Current assets: Cash and cash equivalents, net f restricted cash $ 294,700 $ 231,246 Restricted cash 94,131 - Receivables, net f allwance f $20,830 in 2011 and $24,406 in , ,169 Deferred incme taxes 26,058 25,925 Prepaid expenses and ther current assets 42,934 53,726 Ttal current assets 789, ,066 Satellites and ther prperty and equipment, net 6,142,731 6,403,078 Gdwill 6,780,827 6,780,827 Nn-amrtizable intangible assets 2,458,100 2,458,100 Amrtizable intangible assets, net 742, ,032 Other assets 447, ,446 Ttal assets $ 17,361,406 $ 17,363,549 LIABILITIES AND SHAREHOLDER'S DEFICIT Current liabilities: Accunts payable and accrued liabilities $ 143,097 $ 113,036 Taxes payable 11,764 - Emplyee related liabilities 43,315 36,124 Accrued interest payable 359, ,830 Current prtin f lng-term debt 164, ,716 Deferred satellite perfrmance incentives 17,715 19,772 Deferred revenue 64,609 81,573 Other current liabilities 76,460 76,974 Ttal current liabilities 881, ,025 Lng-term debt, net f current prtin 15,837,512 15,875,820 Deferred satellite perfrmance incentives, net f current prtin 113, ,992 Deferred revenue, net f current prtin 724, ,164 Deferred incme taxes 265, ,374 Accrued retirement benefits 305, ,450 Other lng-term liabilities 322, ,785 Redeemable nncntrlling interest 3,024 8,744 Sharehlder's deficit: Ordinary shares, $1.00 par value, 100,000,000 shares authrized and 5,000,000 shares issued and utstanding at December 31, 2011 and September 30, ,000 5,000 Paid-in capital 1,571,855 1,589,582 Accumulated deficit (2,608,702) (2,751,643) Accumulated ther cmprehensive lss (111,528) (108,475) Ttal Intelsat S.A. sharehlder's deficit (1,143,375) (1,265,536) Nncntrlling interest 50,926 46,731 Ttal liabilities and sharehlder's deficit $ 17,361,406 $ 17,363,549

15 INTELSAT S.A. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS ($ in thusands) Cash flws frm perating activities: Th re e M n th s En d e d Th re e M n th s En d e d Net lss $ (2,109) $ (34,402) Adjustments t recncile net lss t net cash prvided by perating activities: Depreciatin and amrtizatin 193, ,972 Prvisin fr dubtful accunts 3,612 1,053 Freign currency transactin lss 1,015 2,450 (Gain) lss n dispsal f assets 824 (71) Share-based cmpensatin expense (688) 1,062 Deferred incme taxes (38,349) (3,477) Amrtizatin f discunt, premium, issuance csts and ther nn-cash items 13,281 13,676 Lss n early extinguishment f debt - 3,106 Share in lss frm previusly uncnslidated affiliates 20,189 - Unrealized gains n derivative financial instruments (14,761) (698) Terminatin f third-party cmmitment csts and expenses - 21,000 Other nn-cash items 1,836 3,856 Changes in perating assets and liabilities: Receivables (5,223) (7,486) Prepaid expenses and ther assets (2,589) 6,451 Accunts payable and accrued liabilities (25,482) (22,029) Deferred revenue 89,181 7,445 Accrued retirement benefits (3,262) (4,987) Other lng-term liabilities (1,257) (2,005) Net cash prvided by perating activities 230, ,916 Cash flws frm investing activities: Payments fr satellites and ther prperty and equipment (including capitalized interest) (202,403) (238,340) Capital cntributins t previusly uncnslidated affiliates (6,104) - Lan t affiliated party - (10,000) Other investing activities 4,449 - Net cash used in investing activities (204,058) (248,340) Cash flws frm financing activities: Repayments f lng-term debt (208,125) (138,641) Prceeds frm issuance f lng-term debt 200, ,000 Debt issuance csts (32) - Payment f premium n early retirement f debt - (2) Capital cntributin frm nncntrlling interest - 6,104 Dividends paid t nncntrlling interest - (2,109) Nncntrlling interest in New Dawn Principal payments n deferred satellite perfrmance incentives (3,885) (4,318) Net cash prvided by (used in) financing activities (11,364) 51,034 Effect f exchange rate changes n cash and cash equivalents (1,015) (2,450) Net change in cash and cash equivalents 13,622 (22,840) Cash and cash equivalents, beginning f perid 281, ,086 Cash and cash equivalents, end f perid $ 295,421 $ 231,246

16 INTELSAT S.A. UNAUDITED RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW FROM (USED IN) OPERATIONS ($ in thusands) T hre e Mnths E nde d S e pte mbe r 30, T hre e Mnths E nde d S e pte mbe r 30, Nine Mnths E nde d S e pte mbe r 30, Nine Mnths E nde d S e pte mbe r 30, Net cash prvided by perating activities $ 230,059 $ 176,916 $ 673,220 $ 559,563 Payments fr satellites and ther prperty and equipment (including capitalized interest) (202,403) (238,340) (615,113) (715,101) Free cash flw frm (used in) peratins $ 27,656 $ (61,424) $ 58,107 $ (155,538) Nte: Free cash flw frm (used in) peratins cnsists f net cash prvided by perating activities, less payments fr satellites and ther prperty and equipment (including capitalized interest). Free cash flw frm (used in) peratins is nt a measurement f cash flw under GAAP. Intelsat believes free cash flw frm (used in) peratins is a useful measure f financial perfrmance that shws a cmpany s ability t fund its peratins. Free cash flw frm (used in) peratins is used by Intelsat in cmparing its perfrmance t that f its peers and is cmmnly used by analysts and investrs in assessing perfrmance. Free cash flw frm (used in) peratins des nt give effect t cash used fr debt service requirements and thus des nt reflect funds available fr investment r ther discretinary uses. Free cash flw frm (used in) peratins is nt a measure f financial perfrmance under GAAP, and may nt be cmparable t similarly titled measures f ther cmpanies. Yu shuld nt cnsider free cash flw frm (used in) peratins as an alternative t perating r net incme, determined in accrdance with GAAP, as an indicatr f Intelsat s perating perfrmance, r as an alternative t cash flws frm perating activities, determined in accrdance with GAAP, as an indicatr f cash flws r as a measure f liquidity.