News Release Contact Dianne VanBeber Vice President, Investor Relations and Communications

Transcription

1 News Release Cntact Dianne VanBeber Vice President, Investr Relatins and Cmmunicatins Intelsat Reprts Third Quarter 2013 Results Revenue f $652 millin, unchanged as cmpared t Q3 2012, nnetwrk services grw by 1.7%, ffset by declines in lwer-margin ffnetwrk services Net incme attributable t Intelsat S.A. f $88 millin includes a $29 millin discrete tax benefit and cmpares t a Q net lss f $35 millin, Q3 diluted EPS f $0.75 Free cash flw frm peratins 1 f $333.4 millin; cash balance f $404 millin as f September 30, 2013 Debt prepayment f $100 millin in the furth quarter f 2013; ttal 2013 debt decline f $617 millin December 31, 2012 thrugh Octber 31, 2013 $10.3 billin cntracted backlg prvides visibility fr future revenue and cash flw Intelsat updates 2013 revenue guidance t reflect pressures in gvernment services and Africa regin; revenue expected within ne half percent f the lwer end f the previusly established range; Adjusted EBITDA 1 margin guidance maintained Luxemburg, 31 Octber 2013 Intelsat S.A. (NYSE: I), the wrld s leading prvider f satellite services, tday reprted revenue f $651.8 millin and net incme attributable t Intelsat S.A. f $87.8 millin, r $0.75 per share n a diluted basis, fr the three mnths ended September 30, The cmpany als reprted EBITDA 1, r earnings befre net interest, taxes and depreciatin and amrtizatin, f $493.6 millin, and Adjusted EBITDA 1 f $508.4 millin, r 78 percent f revenue, fr the three mnths ended September 30, Intelsat CEO Dave McGlade said, Intelsat s third quarter perfrmance was led by grwth in its media and netwrk services custmer sets. We generated free cash flw frm peratins f $333 millin, reflecting the benefits f lwer interest rates as a result f ur refinancing activities and the debt retirements achieved thus far in 2013, as we furthered ur prgress n reducing leverage and creating equity value. Despite the slid perfrmance, we are managing thrugh tw trends affecting ur revenue grwth and ur perating expense prfile. These include revenue declines due t n-ging effects f the U.S. gvernment reduced spending and budget

2 Business Highlights sequestratin. It als includes the impact f fiber deplyments and the versupply envirnment in Africa, which affects ur netwrk services business. McGlade cntinued, While these issues will cntinue t influence near-term results, ur lng-term utlk remains psitive as we execute n ur tw-phase strategy t deliver returns t equity investrs: use near-term imprving cash flws t de-lever ur balance sheet, while psitining the cmpany fr rganic grwth upn the entry int service f ur new Intelsat Epic NG satellites beginning in 2016, which supprt the grwth plans fr existing and future custmers. During the quarter, we annunced the first custmer fr Intelsat 33e, the secnd Intelsat Epic NG satellite, launching in This cntributed t ur strng backlg f $10.3 billin, which prvides visibility int revenue and cash flw, and stability t ur business. Intelsat prvides critical cmmunicatins infrastructure t custmers in the netwrk services, media and gvernment sectrs. Our custmers use ur services fr bradband cnnectivity t deliver fixed and mbile telecmmunicatins, enterprise, vide distributin and fixed and mbile gvernment applicatins. Intelsat s netwrk services business, which prvides bradband infrastructure fr fixed and wireless telecmmunicatins and enterprise and mbility applicatins, accunted fr 46 percent f Intelsat s ttal third quarter 2013 revenue, and at $299.9 millin, increased ne percent as cmpared t the third quarter In the third quarter 2013, grwth in transpnder and managed services revenue fr mbility, enterprise, and wireless telecmmunicatins backhaul applicatins was ffset by reduced revenue frm channel services, which has been declining due t migratin t fiber. Intelsat s large and diversified infrastructure is used by leading fixed and wireless telecmmunicatins prviders t extend their service regins and enhance backbne netwrks. Demand is especially strng in emerging regins, with subscriber grwth, expanding service territries, and data cnnectivity requirements creating need fr expanded 2G and 3G infrastructure. In the third quarter, Intelsat received multi-year, multitranspnder new and renewed cntracts frm a number f wireless peratrs in Latin America, including Cnsrci Ecuatrian de Telecmunicacines S.A. and Telefónica Móviles S.A.C. Subsequent t quarter end, GCI, the largest telecmmunicatins cmpany in Alaska, recently signed a lng-term agreement fr a prtfli f new and renewed C- and Ku-band services. GCI uses Intelsat s capacity t prvide telecmmunicatins infrastructure thrughut Alaska, supprting critical distance learning and telemedicine slutins. Mbility applicatins are a majr surce f new demand within ur netwrk services business, particularly fr Ku-band spectrum. This business includes bradband cnnectivity fr maritime and cmmercial aernautical cnsumer netwrks. In the third quarter, new activity included: Panasnic Avinics Crpratin, a glbal leader in in-flight entertainment and cmmunicatins, signed a lng-term cntract fr services n the Intelsat 33e satellite, the secnd f Intelsat s planned next generatin Epic NG satellites expected t launch in

3 As was annunced in September 2013, Panasnic Avinics will use the capacity t extend its glbal netwrk frm Eurpe thrugh the Middle East and Nrth and Suth East Asia, cmplementing the Nrth America t Eurpe infrastructure prvided by the previusly cntracted capacity n Intelsat 29e. The business envirnment in Africa is increasingly cmpetitive with respect t netwrk services applicatins. This regin is characterized primarily by versupply frm traditinal satellite peratrs and fiber alternatives, bth f which serve t slw ur aggregate netwrk services revenue grwth. Intelsat is clsely mnitring ur business in the regin while cntinuing ur fcus n furthering ur lng-term strategic relatinships with the cntinent s mst intensive users f satellite capacity. Intelsat s media business, which prvides satellite capacity and terrestrial services fr the transmissin f entertainment, news, sprts and educatinal prgramming fr apprximately 300 bradcasters, cntent prviders and direct-t-hme ( DTH ) platfrm peratrs wrldwide, accunted fr 34 percent f ur revenue fr the quarter ended September 30, Third quarter revenue f $221.8 millin increased fur percent as cmpared t the third quarter f 2012, as service vlume increased fr DTH and cable and bradcast prgram distributin applicatins. Cntracts with media custmers in the third quarter and Octber 2013 included: Discvery Cmmunicatins, the wrld s #1 nnfictin media cmpany, recently signed an agreement fr capacity fr new and renewed transpnder services n the Intelsat 19 satellite, expanding the distributin f its prgramming. Intelsat 19 hsts the leading vide neighbrhd in the Pacific Ocean regin, and reaches mre than 37 millin Pay TV subscribers. Deutsche Telecm affiliate Slvak Telecm, the largest telecm cmpany perating in Slvakia, signed a lng-term agreement fr multiple transpnders at the Intelsat 1 West neighbrhd, which is a leading ht-spt fr Eastern Eurpe media applicatins. Slvak Telecm will use the capacity t prvide DTH services. Glbecast France, signed a lng-term renewal fr multiple transpnders n Intelsat 903 fr use in prviding DTH services distributed by Orange t the French Caribbean islands. The Eurpean Bradcasting Unin ( EBU ), signed a lng-term cmmitment fr capacity n ur vide distributin neighbrhd at East, n the Intelsat 805 satellite that will be replaced by Intelsat 34 when it launches in Intelsat 805, with its high penetratin f cable headends, will prvide the EBU with transmissin capacity t supprt its cverage f varius sprts events scheduled t take place in Latin America frm 2014 t Intelsat s gvernment business, which prvides highly custmized, secure cmmercial satellitebased slutins t value-added service prviders, gvernment and military custmers, accunted fr 19 percent f ur revenue fr the quarter ended September 30, Third quarter revenue f $121.7 millin decreased ten percent as cmpared t third quarter 2012 results, with the majrity f the decline in lwer-margin ff-netwrk revenue. Tw previusly awarded, but prtested, cntracts have been reslved in the favr f ur Intelsat General Crpratin subsidiary and its prime cntractrs. The tw awards under the Custm SatCm Slutins cntract feature the prvisining f ver 350 MHz f n- 3

4 netwrk capacity n nine Intelsat satellites prviding varius reginal cverages, as well as use f the IntelsatOne SM grund infrastructure. Implementatin f bth netwrks will span a 4-mnth perid with all services activated by December Intelsat s capacity is used t prvide bradband infrastructure fr use in reginal and glbal netwrks. With respect t the effects f sequestratin, the pace f RFP issuance and awards remains slwer than usual and custmers cntinue t cnslidate services and evaluate requirements. Visibility remains limited fr the gvernment business fr the balance f 2013 and int Intelsat expects limited shrt-term effects directly related t the Octber 2013 U.S. gvernment shutdwn. In Octber 2013, Intelsat prepaid $100 millin f debt under ur Intelsat Jacksn secured term lan facility fr a 2013 year-t-date ttal reductin f debt f $617 millin. Intelsat s cash balance at September 30, 2013 was $404 millin. Intelsat s average fill rate n ur apprximately 2,175 statin-kept transpnders was 78 percent at September 30, N significant fleet changes ccurred during the perid. Intelsat has n satellite launches planned fr the balance f Our next launch planned fr secnd half f 2014 is Intelsat 30, the first f tw satellites prviding services fr DTH service prvider DirecTV-Latin America. Financial Results fr the Three Mnths ended September 30, 2013 On-Netwrk revenue generally includes revenue frm any services delivered via ur satellite r grund netwrk. Off-Netwrk and Other revenue generally includes revenue 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 Revenue als includes revenue frm cnsulting and ther services and sales f custmer premises equipment. Ttal revenue fr the three mnths ended September 30, 2013 decreased by $3.1 millin t $651.8 millin, as cmpared t $654.9 millin fr the three mnths ended September 30, By service type, ur revenue increased r decreased due t the fllwing: On-Netwrk Revenue increased by $9.9 millin, r 2 percent, t $589.4 millin: Transpnder services an aggregate increase f $7.9 millin, primarily due t an $8.1 millin increase in revenue frm capacity sld t media custmers largely in the Latin America and Caribbean, the Asia-Pacific and the Africa and Middle East regins fr DTH and prgrammingdistributin applicatins. An additinal $2.4 millin f the increase reflects grwth in revenue frm netwrk services custmers fr wireless telecmmunicatins infrastructure primarily in the Latin America and Caribbean regin, and fr enterprise netwrk applicatins in the Asia-Pacific and Nrth America and Eurpe regins, ffset by declines in the Africa and Middle East regin. Als, revenues frm gvernment applicatins declined by $2.6 millin due t pressures frm the U.S. gvernment budget sequestratin. Managed services an aggregate increase f $7.3 millin, largely due t a $5.8 millin increase in revenue frm netwrk services custmers fr new bradband services fr mbility 4

5 applicatins, primarily in the Eurpe and Nrth America regins, wireless telecmmunicatins backhaul infrastructure in the Asia-Pacific regin, and a $1.8 millin increase in revenue frm hybrid infrastructure slutins sld t gvernment custmers. Channel an aggregate decrease f $5.3 millin related t the cntinued migratin f internatinal pint-t-pint satellite traffic t fiber ptic cable, a trend that we expect will cntinue. Off-Netwrk and Other Revenue decreased by $13.0 millin, r 17 percent, t $62.4 millin: Transpnder, MSS and ther ff-netwrk services an aggregate decrease f $10.4 millin, primarily due t declines in services fr gvernment applicatins, including reduced sales f ffnetwrk transpnder services, custmer premises equipment and mbile satellite services ( MSS ). Satellite-related services an aggregate decrease f $2.6 millin, primarily due t decreased revenue frm flight peratins supprt fr third-party satellites and gvernment prfessinal services. Changes in perating expenses, interest expense, net, and ther significant incme-statement items are described belw. Direct csts f revenue decreased by $9.2 millin, r 9%, t $93.7 millin fr the three mnths ended September 30, 2013, as cmpared t the three mnths ended September 30, The decrease was primarily due t $5.3 millin in lwer cst f MSS and ff-netwrk fixed satellite services ( FSS ) capacity purchased primarily related t slutins sld t ur gvernment custmer set, a decrease f $3.8 millin in cst f sales fr custmer premises equipment, and $2.9 millin in staff-related expense. These decreases were partially ffset by an increase f $4.1 millin in csts related t a jint venture. Selling, general and administrative expenses increased by $9.2 millin t $56.3 millin fr the three mnths ended September 30, 2013 as cmpared t the three mnths ended September 30, The increase was principally due t an $11.0 millin increase in bad debt expense due t cllectin challenges with a limited number f custmers, primarily in the Africa and Middle East regin. Als cntributing t the increase was an incremental $3.0 millin in staffrelated expenses, primarily share-based cmpensatin csts, partially ffset by a decrease f $5.3 millin in prfessinal fees. Depreciatin and amrtizatin expense decreased by $6.1 millin t $185.9 millin fr the three mnths ended September 30, 2013, as cmpared t the three mnths ended September 30, This decrease was primarily due t a net decrease f $20.1 millin in depreciatin expense due t the timing f certain satellites becming fully depreciated and changes in estimated remaining useful lives f certain satellites, and a decrease f $2.4 millin in amrtizatin expense primarily due t changes in the expected pattern f cnsumptin f amrtizable intangible assets, largely ffset by an increase f $16.6 millin in depreciatin expense resulting frm the impact f satellites placed int service during

6 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. As f September 30, 2013, we als held interest rate swaps with an aggregate ntinal amunt f $1.6 billin t ecnmically hedge the variability in cash flw n a prtin f the flating-rate term lans under ur senir secured credit facilities. The swaps have nt been designated as hedges fr accunting purpses. Interest expense, net decreased by $63.3 millin, r 20%, t $249.4 millin fr the three mnths ended September 30, 2013, as cmpared t $312.7 millin fr the three mnths ended September 30, The decrease in interest expense, net was principally due t the fllwing: a net decrease f $67.9 millin in interest expense as a result f ur debt fferings, debt prepayments and redemptins in 2013; a net decrease f $7.9 millin in interest expense as a result f the decrease in the interest rate under the Intelsat Jacksn Secured Credit Agreement; and a net decrease f $6.1 millin in interest expense as a result f ur debt fferings and redemptins in 2012; partially ffset by an increase f $20.7 millin resulting frm lwer capitalized interest f $10.8 millin fr the three mnths ended September 30, 2013, as cmpared t $31.5 millin fr the three mnths ended September 30, 2012, resulting frm decreased levels f satellites and related assets under cnstructin. Nn-cash items in interest expense, net were $5.9 millin fr the three mnths ended September 30, 2013, 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 cmparable amunt fr the three mnths ended September 30, The 2012 lss included the write-ff f unamrtized debt issuance csts in cnnectin with the prepayment f $112.2 millin f New Dawn Satellite Cmpany, Ltd. debt frm cash prceeds f an insurance claim. Other expense, net was $0.4 millin fr the three mnths ended September 30, 2013, as cmpared t $22.0 millin fr the three mnths ended September 30, The 2012 third quarter included $21.0 millin f expenses related t the expiratin f an uncnsummated third-party investment cmmitment. Our benefit frm incme taxes was $30.3 millin fr the three mnths ended September 30, 2013, as cmpared t a benefit f $1.5 millin fr the three mnths ended September 30, The difference was principally due t a discrete benefit related t freign tax credits that we recgnized in the three mnths ended September 30, Cash paid fr incme taxes, net f refunds, ttaled $5.8 millin and $7.6 millin fr the three mnths ended September 30, 2013 and 2012, respectively. 6

7 EBITDA, Adjusted EBITDA and Other Financial Metrics EBITDA f $493.6 millin fr the three mnths ended September 30, 2013 reflected an increase f $22.6 millin frm $471.0 millin fr the same perid in Adjusted EBITDA decreased by $2.7 millin t $508.4 millin, r 78 percent f revenue, fr the three mnths ended September 30, 2013, frm $511.1 millin, r 78 percent f revenue, fr the same perid in At September 30, 2013, Intelsat s cntracted backlg, representing expected future revenue under cntracts with custmers, was $10.3 billin, as cmpared t $10.4 billin at June 30, The mix f backlg cntinues t reflect prprtinally less backlg frm gvernment custmers, related in part t the U.S. budget sequestratin. 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. 7

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 $ 297,050 45% $ 299,862 46% Media 212,584 32% 221,823 34% Gvernment 135,336 21% 121,708 19% Other 9,976 2% 8,451 1% $ 654, % $ 651, % By Service Type Three Mnths Ended September 30, 2012 Three Mnths Ended September 30, 2013 On-Netwrk Revenues Transpnder services $ 487,035 74% $ 494,947 76% Managed services 69,751 11% 77,008 12% Channel 22,744 4% 17,471 3% Ttal n-netwrk revenues 579,530 89% 589,426 90% Off-Netwrk and Other Revenues Transpnder, MSS and ther ff-netwrk services 60,844 9% 50,443 8% Satellite-related services 14,572 2% 11,975 2% Ttal ff-netwrk and ther revenues 75,416 12% 62,418 10% Ttal $ 654, % $ 651, % Free Cash Flw Frm Operatins Free cash flw frm peratins 1 was $333.4 millin during the three mnths ended September 30, This reflects cash interest paid in the third quarter f nly $36 millin, primarily due t the prepayment in the secnd quarter f $137.1 millin f accrued interest that typically wuld have been paid in the third quarter. Cash interest was als lwer because debt issued in refinancings in the secnd quarter f 2013 will have n interest payment due until the first quarter f 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, 2013, ttaled $144.1 millin. 8

9 Financial Outlk 2013 with Updated Revenue Guidance Tday, Intelsat updated its revenue guidance t primarily reflect the adverse influence f sequestratin and reduced U.S. gvernment spending n cmmercial satellite cmmunicatins services, as well as cmpetitive pressures n netwrk services in Africa. Intelsat nw expects full-year 2013 revenue will be belw the lwer end f the previusly cmmunicated range f $2.615-$2.640 billin by rughly ne half percent. The cmpany s current view is that these cnditins will cntinue as we plan fr Intelsat cnfirmed that it expects Adjusted EBITDA margin perfrmance fr the full year 2013 will be cnsistent with recent perids. Our 2013 capital expenditure guidance fr the three calendar years 2013 thrugh 2015 (the Guidance Perid ) is unchanged, and assumes investment in ten satellites in the manufacturing r design phase during the Guidance Perid, including ne destryed in a launch failure in February We expect t launch fur satellites in 2014 and 2015, during the Guidance Perid, with cnstructin n the five remaining satellites extending beynd the Guidance Perid. By the cnclusin f the Guidance Perid in 2015, ur ttal transmissin capacity is expected t increase mdestly frm levels at year end The first f ur new Intelsat Epic NG high-thrughput satellites is expected t launch in 2015 and enter service in 2016, significantly increasing ur ttal transmissin capacity. Cnsistent with prir guidance, we expect ur capital expenditures t range frm $600 millin t $675 millin in 2013, and $575 millin t $650 millin in Fr 2015, we anticipate capital expenditures f $775 millin t $850 millin. Our capital expenditures guidance includes capitalized interest. During the Guidance Perid, we expect t receive significant custmer prepayments under ur existing custmer service cntracts, fr which we are cnfirming existing guidance. Significant prepayments are currently expected t range frm $100 millin t $125 millin in 2013, and frm $75 millin t $100 millin in Our 2015 prepayment guidance is $25 millin t $50 millin. The annual classificatin f capital expenditure and prepayments culd be affected by the timing f achievement f cntract, satellite manufacturing, launch and ther milestnes In this release, financial measures are presented bth in accrdance with GAAP and als n a nn-gaap basis. EBITDA, Adjusted EBITDA, free cash flw frm (used in) 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 Thursday, Octber 31, 2013, 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 website, investrs sectin: T participate n the live call, participants shuld dial frm Nrth America, and frm all ther lcatins. The participant pass cde is Participants will have access t a replay f the 9

10 cnference call thrugh Nvember 7, The replay number fr Nrth America is , and fr all ther lcatins it is The participant pass cde fr the replay is Abut Intelsat Intelsat (NYSE: I) is the leading prvider f satellite services wrldwide. Fr almst 50 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 cause actual results t differ frm histrical results r thse anticipated r predicted by these frward-lking statements include: risks assciated with perating ur inrbit 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; 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; litigatin; risks assciated with investing in a cmpany existing under the laws f the Grand Duchy f Luxemburg; and inadequate access t capital markets. Knwn risks include, amng thers, the risks described in Intelsat s prspectus dated April 17, 2013, 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. 10

11 INTELSAT S.A. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS ($ in thusands, except per share amunts) Th re e M n th s En d e d Th re e M n th s En d e d Revenue $ 654,946 $ 651,844 Operating expenses: Direct csts f revenue (excluding depreciatin and amrtizatin) 102,908 93,716 Selling, general and administrative 47,070 56,289 Depreciatin and amrtizatin 191, ,891 Lsses n derivative financial instruments 12,037 7,866 Ttal perating expenses 353, ,762 Incme frm peratins 300, ,082 Interest expense, net 312, ,409 Lss n early extinguishment f debt (3,106) - Other expense, net (21,980) (396) Incme (lss) befre incme taxes (36,866) 58,277 Benefit frm incme taxes (1,517) (30,297) Net incme (lss) (35,349) 88,574 Net incme attributable t nncntrlling interest (81) (776) Net incme (lss) attributable t Intelsat S.A. $ (35,430) $ 87,798 Net incme (lss) per cmmn share attributable t Intelsat S.A.: Basic $ (0.43) $ 0.83 Diluted $ (0.43) $

12 INTELSAT S.A. UNAUDITED RECONCILIATION OF NET INCOME (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 Net incme (lss) $ (35,349) $ 88,574 Add (Subtract): Interest expense, net 312, ,409 Lss n early extinguishment f debt 3,106 - Benefit frm incme taxes (1,517) (30,297) Depreciatin and amrtizatin 191, ,891 EBITDA $ 470,951 $ 493,577 EBITDA Margin 72% 76% Nte: EBITDA cnsists f earnings befre net interest, 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. 12

13 INTELSAT S.A. UNAUDITED RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED 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 Net incme (lss) $ (35,349) $ 88,574 Add (Subtract): Interest expense, net 312, ,409 Lss n early extinguishment f debt 3,106 - Benefit frm incme taxes (1,517) (30,297) Depreciatin and amrtizatin 191, ,891 EBITDA 470, ,577 Add (Subtract): Cmpensatin and benefits 1,167 4,663 Management fees 6,266 - Lsses n derivative financial instruments 12,037 7,866 Nn-recurring and ther nn-cash items 20,711 2,318 Adjusted EBITDA $ 511,132 $ 508,424 Adjusted EBITDA Margin 78% 78% Nte: Intelsat calculates a measure called Adjusted EBITDA t assess the perating perfrmance f Intelsat S.A. Adjusted EBITDA cnsists f EBITDA 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 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 gains (lsses) n derivative financial instruments, ur management believes that Adjusted EBITDA prvides a useful means f evaluating the success f ur perating activities. We als use 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 Adjusted EBITDA facilitates cmparisn f ur results with thse f cmpanies having different capital structures. 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. 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. 13

14 INTELSAT S.A. CONSOLIDATED BALANCE SHEETS ($ in thusands) As f De c e mb e r 3 1, As f (Un a u d ite d ) ASSETS Current assets: Cash and cash equivalents $ 187,485 $ 404,371 Receivables, net f allwance f $23,583 in 2012 and $36,615 in , ,539 Deferred incme taxes 94,779 94,389 Prepaid expenses and ther current assets 38,708 51,864 Ttal current assets 603, ,163 Satellites and ther prperty and equipment, net 6,355,192 5,809,137 Gdwill 6,780,827 6,780,827 Nn-amrtizable intangible assets 2,458,100 2,458,100 Amrtizable intangible assets, net 651, ,354 Other assets 417, ,395 Ttal assets $ 17,265,846 $ 16,862,976 LIABILITIES AND SHAREHOLDERS' DEFICIT Current liabilities: Accunts payable and accrued liabilities $ 178,961 $ 122,189 Taxes payable 9,366 - Emplyee related liabilities 46,590 31,768 Accrued interest payable 367, ,936 Current prtin f lng-term debt 57,466 56,598 Deferred satellite perfrmance incentives 21,479 21,703 Deferred revenue 84,066 79,480 Other current liabilities 72,715 70,926 Ttal current liabilities 838, ,600 Lng-term debt, net f current prtin 15,846,728 15,330,051 Deferred satellite perfrmance incentives, net f current prtin 172, ,555 Deferred revenue, net f current prtin 834, ,370 Deferred incme taxes 286, ,347 Accrued retirement benefits 299, ,072 Other lng-term liabilities 300, ,534 Sharehlders' deficit: Cmmn shares (1) 832 1, % Series A mandatry cnvertible junir nn-vting preferred shares - 35 Paid-in capital (1) 1,519,429 2,093,993 Accumulated deficit (2,759,593) (3,087,904) Accumulated ther cmprehensive lss (118,428) (108,536) Ttal sharehlders' deficit (1,357,760) (1,101,357) Nncntrlling interest 45,670 41,804 Ttal liabilities and sharehlders' deficit $ 17,265,846 $ 16,862,976 (1) Cmmn shares and paid-in capital amunts reflect the retractive impact f the Class A and Class B share reclassificatin int cmmn shares and the share splits related t ur Initial Public Offering. 14

15 INTELSAT S.A. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS ($ in thusands) Th re e M n th s En d e d Th re e M n th s En d e d Cash flws frm perating activities: Net incme (lss) $ (35,349) $ 88,574 Adjustments t recncile net incme (lss) t net cash prvided by perating activities: Depreciatin and amrtizatin 191, ,891 Prvisin fr dubtful accunts 1,053 12,047 Freign currency transactin lss 2, Gain (lss) n dispsal f assets (71) 4 Share-based cmpensatin 1,062 4,559 Deferred incme taxes (3,477) (32,097) Amrtizatin f discunt, premium, issuance csts and related csts 13,676 5,951 Lss n early extinguishment f debt 3,106 - Unrealized (gains) lsses n derivative financial instruments (698) 841 Terminatin f third-party cmmitment csts and expenses 21,000 - Other nn-cash items 3,854 4,467 Changes in perating assets and liabilities: Receivables (6,044) 7,268 Prepaid expenses and ther assets 6, Accunts payable and accrued liabilities (21,794) 196,252 Deferred revenue 7,445 8,829 Accrued retirement benefits (4,987) (3,313) Other lng-term liabilities (2,000) (2,380) Net cash prvided by perating activities 177, ,516 Cash flws frm investing activities: Payments fr satellites and ther prperty and equipment (including capitalized interest) (238,340) (144,105) Other investing activities - (1,000) Net cash used in investing activities (238,340) (145,105) Cash flws frm financing activities: Repayments f lng-term debt (138,641) (20,254) Repayment f ntes payable t frmer sharehlders (416) - Payment f premium n early extinguishment f debt (2) - Prceeds frm issuance f lng-term debt 190,000 - Stck issuance csts - (306) Dividends paid t preferred sharehlders - (2,755) Principal payments n deferred satellite perfrmance incentives (4,318) (4,157) Capital cntributin frm nncntrlling interest 6,104 6,104 Dividends paid t nncntrlling interest (2,109) (2,540) Other financing activities Net cash prvided by (used in) financing activities 50,618 (23,418) Effect f exchange rate changes n cash and cash equivalents (2,450) (414) Net change in cash and cash equivalents (12,859) 308,579 Cash and cash equivalents, beginning f perid 254,146 95,792 Cash and cash equivalents, end f perid $ 241,287 $ 404,371 15

16 INTELSAT S.A. UNAUDITED RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW FROM (USED IN) OPERATIONS ($ in thusands) T h re e M n th s E n d e d S e p te m b e r 3 0, T h re e M n th s E n d e d S e p te m b e r 3 0, Net cash prvided by perating activities $ 177,313 $ 477,516 Payments fr satellites and ther prperty and equipment (including capitalized interest) (238,340) (144,105) Free cash flw frm (used in) peratins $ (61,027) $ 333,411 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 excludes prceeds resulting frm settlement f insurance claims, and 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. 16