Intelsat Reports Third Quarter 2012 Results

  Intelsat Reports Third Quarter 2012 Results

Successful Intelsat 23 Launch Completes Fifth and Final 2012 Mission

Business Wire

LUXEMBOURG -- November 05, 2012

Intelsat S.A., the world’s leading provider of satellite services, today
reported financial results for the three months ended September 30, 2012.

Intelsat S.A. reported revenue of $654.9 million and a net loss of $34.5
million for the three months ended September 30, 2012. The company also
reported Intelsat S.A. EBITDA^i, or earnings before net interest, loss on
early extinguishment of debt, taxes and depreciation and amortization, of
$471.1 million, and Intelsat S.A. Adjusted EBITDA^i of $511.3 million, or 78
percent of revenue, for the three months ended September 30, 2012. Contracted
backlog at September 30, 2012, was $10.8 billion.

Intelsat CEO Dave McGlade said, “In the third quarter, Intelsat achieved
steady financial performance and further executed on our initiatives to serve
media, broadband, mobility and government applications. Sequential revenue
growth increased as expected, as expansion capacity and a hosted payload
entered service. Overall, we continue to expect that full year 2012 revenue
results will be slightly positive as compared to 2011.”

McGlade continued, “Our launch campaign progressed with successful launches of
Intelsat 20 and Intelsat 21 in the third quarter; both satellites are now in
service. On October 14, we completed our fifth and final launch for this year,
Intelsat 23, which is now completing in-orbit testing. Demand for broadband
connectivity for mobility applications, such as maritime and aeronautical, is
opening new growth avenues for our satellite infrastructure. As our global
Ku-band broadband mobility platform nears completion, Intelsat is positioned
for an early lead in serving these important growth segments.”

Business Highlights

Satellite industry analyst NSR estimates the satellite-based maritime and
aeronautical connectivity segment will grow to an approximately $950 million
industry-wide opportunity by 2020. As demand for broadband connectivity
extends to the skies, Intelsat made further strides in capturing new
opportunities in the emerging commercial aeronautical connectivity segment.

  *In September, Intelsat announced a new contract with commercial
    aeronautical broadband service provider Gogo, a leader of in-flight
    connectivity and a pioneer in wireless in-flight digital entertainment
    solutions, on nine beams on Intelsat’s global Ku-band broadband mobility
    platform. Gogo will use capacity on the Intelsat 14, Intelsat 19, Intelsat
    21, Intelsat 22, and Intelsat 27 satellites to extend its current U.S.
    domestic service territory to international regions.
  *In August, Intelsat also announced that Panasonic Avionics Corporation
    (“Panasonic”), the world leader in in-flight entertainment and
    communications, had selected the Intelsat Epic^NG platform for its next
    generation commercial aeronautical service offering. Subsequently,
    Panasonic signed a new agreement for Ku-band capacity on Intelsat 14,
    located at 315° East, expanding its current aeronautical service platform.
  *Intelsat’s network services business continues to experience demand for
    fixed, wireless and broadband infrastructure used by telecom operators,
    wireless operators and enterprise network providers.

       *Brazilian telecommunications firm Intelig Telecomunicacoes, a
         subsidiary of Telecom Italia Moviles recently renewed its long-term
         commitment for C-bandcapacity on Intelsat 901 at 342° East to
         provide Internet trunking, cellular backhaul and fiber redundancy to
         remote locations in the Amazon region.
       *Telefonica del Peru, a leading integrated telecommunications
         operator, contracted for new capacity on Intelsat 1-R at 310° East,
         migrating later to Intelsat 805 at the same orbital location. The
         company will use the capacity for domestic cellular backhaul and
         enterprise private data networks.
       *iSatcom, a data networking company, recently signed a multi-year
         agreement on Intelsat 20. The company plans to use the services to
         deliver VSAT service to customers across Mongolia.
       *Claro Chile, a subsidiary of America Movil, recently renewed its
         multi-year agreement on Intelsat 23 at 307° East for the distribution
         of programming content to cable television operators, as well as
         cellular backhaul and corporate VSAT services across Chile.

  *Intelsat’s media business momentum continued, as use of capacity grew
    under previous contractual commitments, primarily from direct-to-home
    (“DTH”) service providers. Additional contracts in the period reflect
    regionalization of content, among other trends.

       *Intelsat recently announced new agreements with two of Bulgaria’s top
         media companies. NURTS, the primary tower company and sole digital
         terrestrial television (“DTT”) operator in Bulgaria, will leverage
         capacity on Intelsat 12 at 45° East to contribute content to its
         terrestrial towers for DTT services in Bulgaria. In the second
         agreement, Bulgarian Telecom (VIVACOM), Bulgaria’s national
         telecommunications provider, signed a multi-year agreement on
         Intelsat 12 to add high-definition content to its DTH platform for
         delivery in Bulgaria.
       *Multichoice Technical Operations (Pty) Ltd., the leading DTH provider
         serving Africa and a subsidiary of Naspers, signed a new agreement
         for additional capacity on Intelsat 904 at 60° East.
       *NTA Nigeria, the national broadcaster, recently renewed its contract
         for the distribution of Ku-band DTH video service to customers in
         Europe on Intelsat 905 at 335.5° East.
       *As announced in September, Mexico-based Grupo Televisa renewed its
         multi-year deals on Intelsat 11 at 317° East and Intelsat 905 at
         335.5° East. The company will provide prime high-definition
         distribution of its Pay TV services for Latin America’s leading cable
         distribution systems on Intelsat 11, and its European Pay TV bouquet
         to cable systems on Intelsat 905.

  *Intelsat’s executed contract renewals and expansions in the government
    sector reflected solid demand for mobility applications with the high
    reliability and coverage of Intelsat’s extensive fleet. Various customers
    added over 100 MHz of capacity to existing mobility networks, the majority
    of which was on the Intelsat fleet.

       *Intelsat General Corporation, an indirect, wholly-owned subsidiary of
         Intelsat S.A., was selected as a prime contractor under the U.S.
         government’s new Custom SATCOM Solutions contract, a program that
         will provide end-to-end, turnkey satellite communications solutions
         to military and civilian government users. The program, known as CS2,
         is the final segment of the new Future COMSATCOM Services Acquisition
         (FCSA) procurement process, managed jointly by the Defense
         Information Systems Agency and the General Services Administration.

  *Intelsat is successfully executing a satellite-launch program to expand
    and refresh its service capacity. The current program includes six
    satellites, five of which have launched in 2012.

       *The Intelsat 19 satellite entered into service in August 2012, having
         suffered damage to one solar array during its June 2012 launch.
         Although both solar arrays are deployed, the power available to the
         satellite is less than is required to operate 100% of the payload
         capacity. We have filed a partial loss claim with our insurer
         relating to the solar array anomaly.
       *The Intelsat 20 satellite, launched on 2 August 2012, entered into
         service in September at its orbital destination of 68° East, where it
         is replacing the Intelsat 7 and Intelsat 10 satellites.
       *The Intelsat 21 satellite, launched on 19 August, entered into
         service in October at its orbital destination of 302° East, where it
         replaced the Intelsat 9 satellite.
       *Intelsat 23 was successfully launched on 14 October, and is expected
         to enter service later in the fourth quarter 2012 at 307° East,
         replacing Intelsat 707. Intelsat 23 will provide C-band services to
         customers in the Americas, Europe and Africa, and Ku-band coverage
         for Latin America.

  *Intelsat’s average fill rate on our approximately 2,150 station-kept
    transponders was 77 percent at September 30, 2012, reflecting a net
    increase in transponders resulting primarily from the entry into service
    of the Intelsat 19 and 20 satellites, as well increased active
    transponders from new contract activity.

  *On October 3, 2012, Intelsat Jackson Holdings S.A. (“Intelsat Jackson”), a
    wholly-owned subsidiary of Intelsat S.A., completed an offering of $640.0
    million aggregate principal amount of its 6^5/[8]% Senior Notes due 2022.
    The net proceeds from the offering were primarily used to repurchase or
    redeem all of Intelsat Jackson’s outstanding 11¼% Senior Notes due 2016.
    In connection with the tender offers and redemption, we expect to
    recognize a loss on early extinguishment of debt of $23.6 million in the
    fourth quarter of 2012, consisting of the difference between the carrying
    value of the debt ultimately repurchased or redeemed and the total cash
    amount paid (including related fees), and a write-off of unamortized debt
    premium.
  *On October 3, 2012, Intelsat Jackson entered into an Amendment and Joinder
    Agreement that reduced interest rates applicable to borrowings under
    Intelsat Jackson’s secured term loan facility and secured revolving credit
    facility to (i) the London Inter-Bank Offered Rate (“LIBOR”) plus 3.25% or
    (ii) the Above Bank Rate (“ABR”) plus 2.25%. Following the amendment, the
    interest rate may decrease to LIBOR plus 3.00% or ABR plus 2.00% based on
    the corporate family rating of Intelsat Jackson from Moody’s Investors
    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 not be less than 1.25% per annum.
  *On October 5, 2012, Intelsat Global Service LLC, our indirect subsidiary,
    completed the sale of our U.S. administrative headquarters office building
    in Washington, D.C., for a purchase price of approximately $85.0 million
    in cash. The sale will result in a pre-tax gain to be recognized in the
    fourth quarter of 2012 of approximately $12 to $13 million. Upon the
    closing of the sale, we entered into an agreement under which we will
    temporarily lease from the purchaser a portion of the property. We are
    currently in the process of selecting a location for a new permanent U.S.
    administrative headquarters.
  *Intelsat acquired the remaining 25.1% equity of the New Dawn Satellite
    Company, Ltd. joint venture for $8.7 million and retired $82.6 million in
    debt incurred by the venture. As a result of the transaction, which was
    completed in October 2012, the satellite, previously called “New Dawn,”
    was renamed Intelsat 28. Because the venture was previously fully
    consolidated in Intelsat’s results, no change to revenue or net loss is
    expected. We will eliminate the redeemable noncontrolling interest in the
    fourth quarter.
  *As of September 30, 2012, the outstanding balance on our revolving credit
    facility was $150.0 million, and availability under the facility was
    $339.3 million.

Financial Results for the Three Months Ended September 30, 2012

On-Network revenues generally include revenues from any services delivered via
our satellite or ground network. Off-Network and Other revenues generally
include revenues from transponder services, Mobile Satellite Services (MSS)
and other satellite-based transmission services using capacity procured from
other operators, often in frequencies not available on our network.
Off-Network and Other Revenues also include revenues from consulting and other
services and sales of customer premises equipment.

Total revenue for the three months ended September 30, 2012, increased by $2.1
million, to $654.9 million, as compared to the three months ended September
30, 2011. By service type, our revenues increased or decreased due to the
following:

On-Network Revenues:

  *Transponder services—an aggregate increase of $6.9 million, principally
    due to an $8.8 million increase in revenue from growth in services sold to
    media customers largely in the Europe, the Latin America and Caribbean and
    the Asia-Pacific regions, partially offset by an aggregate $2.7 million
    decrease in revenue from network services customers, reflecting a decline
    in demand from Europe-based customers for services provided in Africa, and
    an increase in the Latin America and Caribbean region.
  *Managed services—an aggregate decrease of $1.4 million, largely due to a
    decrease in revenue from network services customers for international
    trunking primarily in Africa, a trend that we expect will continue due to
    the migration of services in this region to fiber optic cable, partially
    offset by increases in revenue from broadband services for mobility
    applications.
  *Channel—an aggregate decrease of $3.6 million related to a continued
    decline from the migration of international point-to-point satellite
    traffic to fiber optic cable, a trend that we expect will continue.

Off-Network and Other Revenues:

  *Transponder, MSS and other off-network services—an aggregate decrease of
    $2.0 million, primarily due to declines in off-network transponder
    services for network services and media customers.
  *Satellite-related services—an aggregate increase of $2.1 million,
    primarily due to higher professional fees earned for providing government
    professional services and flight operations support for third-party
    satellites as compared to the third quarter of 2011.

Changes in direct costs of revenue, selling, general and administrative
expenses, depreciation and amortization, income from operations, interest
expense, net, and other significant income-statement items are described
below.

  *Direct costs of revenue decreased by $7.8 million, or 7%, to $102.9
    million for the three months ended September 30, 2012, as compared to the
    three months ended September 30, 2011. The decrease was primarily due to
    $4.4 million of higher service costs in 2011 associated with the
    accounting for our revenue and cost-sharing arrangements with JSAT
    International, Inc. related to the consolidation of the Horizons Satellite
    Holdings, LLC (“Horizons Holdings”) joint venture on September 30, 2011.
    Further, in 2012 there was a $2.2 million decline in costs attributable to
    purchases of off-network fixed satellite services (“FSS”) capacity and
    other third-party services, as well as a $1.2 million decrease in office
    and operational expenses.
  *Selling, general and administrative expenses decreased by $3.9 million, or
    8%, to $46.9 million for the three months ended September 30, 2012, as
    compared to the three months ended September 30, 2011. The decrease was
    primarily due to a $2.6 million decrease in bad debt expense and $1.7
    million of lower professional fees, partially offset by a net $1.2 million
    increase in staff related expenses largely due to non-cash stock
    compensation costs associated with the amended and restated Intelsat
    Global, Ltd. 2008 Share Incentive Plan (the “2008 Share Plan”).

  *Depreciation and amortization expense decreased by $1.9million, or 1%, to
    $192.0 million for the three months ended September 30, 2012, as compared
    to the three months ended September 30, 2011. This decrease primarily
    resulted from lower depreciation expense due to the timing of certain
    satellites becoming fully depreciated, together with variation from year
    to year in the expected pattern of consumption of amortizable intangible
    assets. Those decreases were partially offset by increases from the impact
    of satellites placed into service during 2011 and 2012.
  *Our income from operations increased by $8.9 million, to $301.1 million,
    for the three months ended September 30, 2012, compared to $292.2 million
    for the three months ended September 30, 2011, due primarily to the
    effects described above, including lower expenses, most notably lower
    direct costs of revenue. Income from operations was further affected by:

       *a $12.0 million loss recognized on our derivative financial
         instruments for the three months ended September 30, 2012, related to
         the net loss on our interest rate swaps, which reflects interest
         expense accrued on the interest rate swaps as well as the change in
         fair value. For the three months ended September 30, 2011, we
         recorded a loss of $5.4 million on derivative financial instruments.

  *Interest expense, net consists of the gross interest expense we incur less
    the amount of interest we capitalize related to capital assets under
    construction and less interest income earned. Interest expense, net
    decreased by $5.4 million, or 2%, to $312.0 million for the three months
    ended September 30, 2012, as compared to $317.4 million for the three
    months ended September 30, 2011. The decrease in interest expense, net was
    principally due to the following:

       *a net decrease of $7.7 million in interest expense as a result of
         Intelsat Jackson’s notes offering, repurchases and redemptions in the
         first half of 2012, partially offset by
       *an increase of $3.0 million from lower capitalized interest resulting
         from decreased levels of satellites and related assets under
         construction.

Non-cash items in total interest expense, net were $13.7 million for the three
months ended September 30, 2012, primarily for amortization of deferred
financing fees incurred as a result of new or refinanced debt and the
amortization and accretion of discounts and premiums.

  *Loss on early extinguishment of debt was $3.1 million for the three months
    ended September 30, 2012, with no similar charge for the three months
    ended September 30, 2011. The 2012 loss was comprised of the write-off of
    unamortized debt issuance costs in connection with the prepayment of
    $112.2 million of New Dawn debt with proceeds received from an insurance
    claim.
  *Loss from previously unconsolidated affiliates was $20.2 million for the
    three months ended September 30, 2011, with no comparable amount for the
    three months ended September 30, 2012, due to the consolidation of the
    Horizons Holdings joint venture in September 2011.

  *Other expense, net was $22.0 million for the three months ended September
    30, 2012, as compared to other income, net of $0.6million for the three
    months ended September 30, 2011. The difference of $22.6 million was
    primarily due to a $21.0 million charge related to fees and expenses in
    connection with the expiration of an unconsummated third-party investment
    commitment and a $1.4 million increase in exchange rate losses, primarily
    related to our business conducted in Brazilian reais and euros.
  *Our benefit from income taxes was $1.5 million for the three months ended
    September 30, 2012, as compared to a benefit of $42.7 million for the
    three months ended September 30, 2011. The difference was principally due
    to the tax benefit associated with the 2011 Horizons re-measurement charge
    and the release of certain valuation allowances on our U.S. subsidiary’s
    deferred state tax assets relating to internal subsidiary mergers during
    the three months ended September30, 2011.

EBITDA, Intelsat S.A. Adjusted EBITDA and Other Financial Metrics

Intelsat S.A. EBITDA of $471.1 million for the three months ended September
30, 2012, reflected an increase of $4.6 million from $466.5 million for the
same period in 2011. Intelsat S.A. Adjusted EBITDA increased by $9.2 million,
or 2 percent, to $511.3 million, or 78 percent of revenue, for the three
months ended September 30, 2012, from $502.1 million, or 77 percent of
revenue, for the same period in 2011.

At September 30, 2012, Intelsat’s contracted backlog, representing expected
future revenue under contracts with customers, was $10.8 billion, compared to
$10.6 billion at June 30, 2012.

Intelsat management has reviewed the data pertaining to the use of the
Intelsat network and is providing revenue information with respect to that use
by customer set and service type in the following tables. Intelsat management
believes this provides a useful perspective on the changes in revenue and
customer trends over time.

                                                                    
Revenue Comparison by Customer Set and Service Type
($ in thousands)
                                                                          
By Customer Set
                                       Three Months Ended   Three Months Ended
                                       September 30,        September 30,
                                       2011                 2012
                                                                          
Network Services                       $ 305,875     47%    $ 297,050     45%
Media                                  204,686       31%    212,584       32%
Government                             134,108       21%    135,336       21%
Other                                  8,212         1%     9,976         2%
                                       $ 652,881     100%   $ 654,946     100%
                                                                          
                                                                          
By Service Type
                                       Three Months Ended   Three Months Ended
                                       September 30,        September 30,
                                       2011                 2012
On-Network Revenues
Transponder services                   $ 480,159     74%    $ 487,035     74%
Managed services                       71,134        11%    69,751        11%
Channel                                26,358        4%     22,744        4%
Total on-network revenues              577,651       89%    579,530       89%
Off-Network and Other Revenues
Transponder, MSS and other             62,794        10%    60,844        9%
off-network services
Satellite-related services             12,436        2%     14,572        2%
Total off-network and other revenues   75,230        12%    75,416        12%
Total                                  $ 652,881     100%   $ 654,946     100%
                                                                          

Free Cash Flow From (Used in) Operations and Capital Expenditures

Free cash flow from operations ^ i was negative $61.4 million during the three
months ended September 30, 2012. Free cash flow from operations is defined as
net cash provided by operating activities, less payments for satellites and
other property and equipment (including capitalized interest). Payments for
satellites and other property and equipment during the three months ended
September 30, 2012, totaled $238.3 million.

Our capital expenditure guidance for the periods 2012 through 2014 (the
“Guidance Period”) forecasts capital expenditures during those periods for ten
satellites. This is comprised of five satellites launched in 2012, four
satellites currently in development and one satellite expected to be ordered
during the Guidance Period. The satellites in development and yet to be
ordered are expected to be launched from 2013 to 2016. Consistent with prior
guidance, we expect our 2012 total capital expenditures to range from
approximately $775 million to $850 million. Capital expenditures for fiscal
years 2013 and 2014 are expected to range from $550 million to $625 million
and $525 million to $600 million, respectively. The annual classification of
capital expenditure payments could be affected by the timing of achievement of
satellite manufacturing and launch contract milestones.

During the Guidance Period, we also expect to receive significant customer
prepayments under our existing customer contracts and under customer contracts
to be signed in the future. Significant prepayments received in the third
quarter of 2012 totaled $22.0 million. Prepayments are currently expected to
range from $150 million to $200 million in 2012, all under existing contracts.
Prepayments are currently expected to range from $150 million to $200 million
in 2013 and $100 million to $150 million in 2014, with the majority of these
prepayments coming from existing customer contracts.

End Notes
^i In this release, financial measures are presented both in accordance with
GAAP and also on a non-GAAP basis. EBITDA, Intelsat S.A. Adjusted EBITDA, free
cash flow from operations and related margins included in this release are
non-GAAP financial measures. Please see the consolidated financial information
below for information reconciling non-GAAP financial measures to comparable
GAAP financial measures.

Conference Call Information

Intelsat management will host a conference call with investors and analysts at
11:00 a.m. EST on Monday, November 5, 2012, to discuss the company’s financial
results for the three months ended September 30, 2012. Access to the live
conference call will also be available via the Internet at the Intelsat Web
site: www.intelsat.com/investors/events. To participate on the live call,
participants should call (866) 700-7441 from North America, and +1 (617)
213-8839 from all other locations. The participant pass code is 23902602.
Participants will have access to a replay of the conference call through
November 12, 2012. The replay number for North America is (888) 286-8010 and
for all other locations, +1 (617) 801-6888. The participant pass code for the
replay is 15204284.

About Intelsat

Intelsat is the leading provider of satellite services worldwide. For over 45
years, Intelsat has been delivering information and entertainment for many of
the world’s leading media and network companies, multinational corporations,
Internet Service Providers and governmental agencies. Intelsat’s satellite,
teleport and fiber infrastructure is unmatched in the industry, setting the
standard for transmissions of video, data and voice services. From the
globalization of content and the proliferation of HD, to the expansion of
cellular networks and broadband access, with Intelsat, advanced communications
anywhere in the world are closer, by far.

Intelsat Safe Harbor Statement: Some of the statements in this news release
constitute "forward-looking statements" that do not directly or exclusively
relate to historical facts. The forward-looking statements made in this
release reflect Intelsat's intentions, plans, expectations, assumptions and
beliefs about future events and are subject to risks, uncertainties and other
factors, many of which are outside of Intelsat's control. Important factors
that could cause actual results to differ materially from the expectations
expressed or implied in the forward-looking statements include known and
unknown risks. Some of the factors that could cause actual results to differ
from historical results or those anticipated or predicted by these
forward-looking statements include: risks associated with operating our
in-orbit satellites; satellite launch failures, satellite launch and
construction delays and in-orbit failures or reduced performance; potential
changes in the number of companies offering commercial satellite launch
services and the number of commercial satellite launch opportunities available
in any given time period that could impact our ability to timely schedule
future launches and the prices we pay for such launches; our ability to obtain
new satellite insurance policies with financially viable insurance carriers on
commercially reasonable terms or at all, as well as the ability of our
insurance carriers to fulfill their obligations; possible future losses on
satellites that are not adequately covered by insurance; U.S. and other
government regulation; changes in our contracted backlog or expected
contracted backlog for future services; pricing pressure and overcapacity in
the markets in which we compete; inadequate access to capital markets; the
competitive environment in which we operate; customer defaults on their
obligations to us; our international operations and other uncertainties
associated with doing business internationally; and litigation. Known risks
include, among others, the risks included in Intelsat’s annual report on Form
10-K for the year ended December 31, 2011 and its other filings with the U.S.
Securities and Exchange Commission, the political, economic and legal
conditions in the markets we are targeting for communications services or in
which we operate and other risks and uncertainties inherent in the
telecommunications business in general and the satellite communications
business in particular. Because actual results could differ materially from
Intelsat's intentions, plans, expectations, assumptions and beliefs about the
future, you are urged to view all forward-looking statements contained in this
news release with caution. Intelsat does not undertake any obligation to
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.

                                                              
INTELSAT S.A.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands)
                                                                 
                                                 Three Months    Three Months
                                                 Ended           Ended
                                                 September 30,   September 30,
                                                 2011            2012
Revenue                                          $ 652,881       $ 654,946
Operating expenses:
Direct costs of revenue (excluding               110,668         102,908
depreciation and amortization)
Selling, general and administrative              50,767          46,911
Depreciation and amortization                    193,841         191,972
Losses on derivative financial instruments       5,356           12,037
Total operating expenses                         360,632         353,828
Income from operations                           292,249         301,118
Interest expense, net                            317,433         311,951
Loss on early extinguishment of debt             -               (3,106)
Loss from previously unconsolidated affiliates   (20,188)        -
Other income (expense), net                      585             (21,980)
Loss before income taxes                         (44,787)        (35,919)
Benefit from income taxes                        (42,678)        (1,517)
Net loss                                         (2,109)         (34,402)
Net (income) loss attributable to                1,667           (81)
noncontrolling interest
Net loss attributable to Intelsat S.A.           $ (442)         $ (34,483)
                                                                 

                                                            
INTELSAT S.A.
UNAUDITED RECONCILIATION OF NET LOSS TO EBITDA
($ in thousands)
                                                                 
                   Three Months   Three Months   Nine Months     Nine Months
                   Ended          Ended          Ended           Ended
                   September      September      September 30,   September 30,
                   30,            30,
                   2011           2012           2011            2012
Net loss           $  (2,109  )   $  (34,402 )   $ (432,350  )   $ (142,298  )
Add (Subtract):
Interest              317,433        311,951       992,084         950,073
expense, net
Loss on early
extinguishment        -              3,106         326,183         46,489
of debt
Benefit from          (42,678 )      (1,517  )     (48,931   )     (1,110    )
income taxes
Depreciation and     193,841      191,972     583,196       567,472   
amortization
EBITDA             $  466,487    $  471,110    $ 1,420,182    $ 1,420,626 
                                                                 
                                                                 
EBITDA Margin         71      %      72      %     73        %     73        %
                                                                 

Note:

EBITDA consists of earnings before net interest, gain (loss) on early
extinguishment of debt, taxes and depreciation and amortization. Given our
high level of leverage, refinancing activities are a frequent part of our
efforts to manage costs of borrowing. Accordingly, we consider (gain) loss on
early extinguishment of debt an element of interest expense. EBITDA is a
measure commonly used in the FSS sector, and we present EBITDA to enhance the
understanding of our operating performance. We use EBITDA as one criterion for
evaluating our performance relative to that of our peers. We believe that
EBITDA is an operating performance measure, and not a liquidity measure, that
provides investors and analysts with a measure of operating results unaffected
by differences in capital structures, capital investment cycles and ages of
related assets among otherwise comparable companies. However, EBITDA is not a
measure of financial performance under U.S. GAAP, and our EBITDA may not be
comparable to similarly titled measures of other companies. EBITDA should not
be considered as an alternative to operating income (loss) or net income
(loss), determined in accordance with U.S. GAAP, as an indicator of our
operating performance, or as an alternative to cash flows from operating
activities, determined in accordance with U.S. GAAP, as an indicator of cash
flows, or as a measure of liquidity.

                                                            
INTELSAT S.A.
UNAUDITED RECONCILIATION OF NET LOSS TO
INTELSAT S.A. ADJUSTED EBITDA
($ in thousands)
                                                                 
                   Three Months   Three Months   Nine Months     Nine Months
                   Ended          Ended          Ended           Ended
                   September      September      September 30,   September 30,
                   30,            30,
                   2011           2012           2011            2012
Net loss           $  (2,109  )   $  (34,402 )   $ (432,350  )   $ (142,298  )
Add (Subtract):
Interest              317,433        311,951       992,084         950,073
expense, net
Loss on early
extinguishment        -              3,106         326,183         46,489
of debt
Benefit from          (42,678 )      (1,517  )     (48,931   )     (1,110    )
income taxes
Depreciation and     193,841      191,972     583,196       567,472   
amortization
Intelsat S.A.        466,487      471,110     1,420,182     1,420,626 
EBITDA
Add (Subtract):
Compensation and      (582    )      1,167         4,275           4,705
benefits
Management fees       6,217          6,266         18,650          18,797
Loss from
previously            20,188         -             24,658          -
unconsolidated
affiliates
Losses on
derivative            5,356          12,037        24,163          37,651
financial
instruments
Non-recurring
and other            4,442        20,711      10,672        18,228    
non-cash items
Intelsat S.A.      $  502,108    $  511,291    $ 1,502,600    $ 1,500,007 
Adjusted EBITDA
                                                                 
                                                                 
Intelsat S.A.
Adjusted EBITDA       77      %      78      %     78        %     77        %
Margin
                                                                             

Note:

Intelsat calculates a measure called Intelsat S.A. Adjusted EBITDA to assess
the operating performance of Intelsat S.A. Intelsat S.A. Adjusted EBITDA
consists of EBITDA of Intelsat S.A. as adjusted to exclude or include certain
unusual items, certain other operating expense items and certain other
adjustments as described in the table above. Our management believes that the
presentation of Intelsat S.A. Adjusted EBITDA provides useful information to
investors, lenders and financial analysts regarding our financial condition
and results of operations, because it permits clearer comparability of our
operating performance between periods. By excluding the potential volatility
related to the timing and extent of non-operating activities, such as
impairments of asset value and gains (losses) on derivative financial
instruments, our management believes that Intelsat S.A. Adjusted EBITDA
provides a useful means of evaluating the success of our operating activities.
We also use Intelsat S.A. Adjusted EBITDA, together with other appropriate
metrics, to set goals for and measure the operating performance of our
business, and it is one of the principal measures we use to evaluate our
management’s performance in determining compensation under our incentive
compensation plans. Adjusted EBITDA measures have been used historically by
investors, lenders and financial analysts to estimate the value of a company,
to make informed investment decisions and to evaluate performance. Our
management believes that the inclusion of Intelsat S.A. Adjusted EBITDA
facilitates comparison of our results with those of companies having different
capital structures.

Intelsat S.A. Adjusted EBITDA is not a measure of financial performance under
U.S. GAAP and may not be comparable to similarly titled measures of other
companies. Intelsat S.A. Adjusted EBITDA should not be considered as an
alternative to operating income (loss) or net income (loss), determined in
accordance with U.S. GAAP, as an indicator of our operating performance, or as
an alternative to cash flows from operating activities, determined in
accordance with U.S. GAAP, as an indicator of cash flows, or as a measure of
liquidity.

                                                             
INTELSAT S.A.
CONSOLIDATED BALANCE SHEETS
($ in thousands, except per share amounts)
                                                                
                                               As of            As of
                                               December 31,     September 30,
                                               2011             2012
                                                                (unaudited)
ASSETS
Current assets:
Cash and cash equivalents, net of restricted   $ 294,700        $ 231,246
cash
Restricted cash                                  94,131           -
Receivables, net of allowance of $20,830 in      331,371          326,169
2011 and $24,406 in 2012
Deferred income taxes                            26,058           25,925
Prepaid expenses and other current assets       42,934         53,726     
Total current assets                             789,194          637,066
Satellites and other property and equipment,     6,142,731        6,403,078
net
Goodwill                                         6,780,827        6,780,827
Non-amortizable intangible assets                2,458,100        2,458,100
Amortizable intangible assets, net               742,868          674,032
Other assets                                    447,686        410,446    
Total assets                                   $ 17,361,406    $ 17,363,549 
                                                                
LIABILITIES AND SHAREHOLDER'S DEFICIT
Current liabilities:
Accounts payable and accrued liabilities       $ 143,097        $ 113,036
Taxes payable                                    11,764           -
Employee related liabilities                     43,315           36,124
Accrued interest payable                         359,336          336,830
Current portion of long-term debt                164,818          209,716
Deferred satellite performance incentives        17,715           19,772
Deferred revenue                                 64,609           81,573
Other current liabilities                       76,460         76,974     
Total current liabilities                        881,114          874,025
Long-term debt, net of current portion           15,837,512       15,875,820
Deferred satellite performance incentives,       113,974          157,992
net of current portion
Deferred revenue, net of current portion         724,413          807,164
Deferred income taxes                            265,181          274,374
Accrued retirement benefits                      305,902          284,450
Other long-term liabilities                      322,735          299,785
Redeemable noncontrolling interest               3,024            8,744
                                                                
                                                                
Shareholder's deficit:
Ordinary shares, $1.00 par value,
100,000,000 shares authorized and 5,000,000      5,000            5,000
shares issued and outstanding at December
31, 2011 and September 30, 2012
Paid-in capital                                  1,571,855        1,589,582
Accumulated deficit                              (2,608,702 )     (2,751,643 )
Accumulated other comprehensive loss            (111,528   )    (108,475   )
Total Intelsat S.A. shareholder's deficit        (1,143,375 )     (1,265,536 )
Noncontrolling interest                         50,926         46,731     
Total liabilities and shareholder's deficit    $ 17,361,406    $ 17,363,549 
                                                                

                                                               
INTELSAT S.A.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
                                                                 
                                                 Three Months    Three Months
                                                 Ended           Ended
                                                 September 30,   September 30,
                                                 2011            2012
Cash flows from operating activities:
Net loss                                         $  (2,109   )   $  (34,402  )
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization                       193,841         191,972
Provision for doubtful accounts                     3,612           1,053
Foreign currency transaction loss                   1,015           2,450
(Gain) loss on disposal of assets                   824             (71      )
Share-based compensation expense                    (688     )      1,062
Deferred income taxes                               (38,349  )      (3,477   )
Amortization of discount, premium, issuance         13,281          13,676
costs and other non-cash items
Loss on early extinguishment of debt                -               3,106
Share in loss from previously unconsolidated        20,189          -
affiliates
Unrealized gains on derivative financial            (14,761  )      (698     )
instruments
Termination of third-party commitment costs         -               21,000
and expenses
Other non-cash items                                1,836           3,856
Changes in operating assets and liabilities:
Receivables                                         (5,223   )      (7,486   )
Prepaid expenses and other assets                   (2,589   )      6,451
Accounts payable and accrued liabilities            (25,482  )      (22,029  )
Deferred revenue                                    89,181          7,445
Accrued retirement benefits                         (3,262   )      (4,987   )
Other long-term liabilities                        (1,257   )     (2,005   )
Net cash provided by operating activities          230,059       176,916  
Cash flows from investing activities:
Payments for satellites and other property and      (202,403 )      (238,340 )
equipment (including capitalized interest)
Capital contributions to previously                 (6,104   )      -
unconsolidated affiliates
Loan to affiliated party                            -               (10,000  )
Other investing activities                         4,449         -        
Net cash used in investing activities              (204,058 )     (248,340 )
Cash flows from financing activities:
Repayments of long-term debt                        (208,125 )      (138,641 )
Proceeds from issuance of long-term debt            200,502         190,000
Debt issuance costs                                 (32      )      -
Payment of premium on early retirement of debt      -               (2       )
Capital contribution from noncontrolling            -               6,104
interest
Dividends paid to noncontrolling interest           -               (2,109   )
Noncontrolling interest in New Dawn                 176             -
Principal payments on deferred satellite           (3,885   )     (4,318   )
performance incentives
Net cash provided by (used in) financing           (11,364  )     51,034   
activities
Effect of exchange rate changes on cash and        (1,015   )     (2,450   )
cash equivalents
Net change in cash and cash equivalents             13,622          (22,840  )
Cash and cash equivalents, beginning of period     281,799       254,086  
Cash and cash equivalents, end of period         $  295,421     $  231,246  
                                                                             

                                                            
INTELSAT S.A.
UNAUDITED RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES
TO FREE CASH FLOW FROM (USED IN) OPERATIONS
($ in thousands)
                                                                 
                 Three Months    Three Months    Nine Months     Nine Months
                 Ended           Ended           Ended           Ended
                 September 30,   September 30,   September 30,   September 30,
                 2011            2012            2011            2012
                                                                 
Net cash
provided by      $  230,059      $  176,916      $  673,220      $  559,563
operating
activities
Payments for
satellites and
other property
and equipment      (202,403 )     (238,340 )     (615,113 )     (715,101 )
(including
capitalized
interest)
Free cash flow
from (used in)   $  27,656      $  (61,424  )   $  58,107      $  (155,538 )
operations
                                                                             

Note:

Free cash flow from (used in) operations consists of net cash provided by
operating activities, less payments for satellites and other property and
equipment (including capitalized interest). Free cash flow from (used in)
operations is not a measurement of cash flow under GAAP. Intelsat believes
free cash flow from (used in) operations is a useful measure of financial
performance that shows a company’s ability to fund its operations. Free cash
flow from (used in) operations is used by Intelsat in comparing its
performance to that of its peers and is commonly used by analysts and
investors in assessing performance. Free cash flow from (used in) operations
does not give effect to cash used for debt service requirements and thus does
not reflect funds available for investment or other discretionary uses. Free
cash flow from (used in) operations is not a measure of financial performance
under GAAP, and may not be comparable to similarly titled measures of other
companies. You should not consider free cash flow from (used in) operations as
an alternative to operating or net income, determined in accordance with GAAP,
as an indicator of Intelsat’s operating performance, or as an alternative to
cash flows from operating activities, determined in accordance with GAAP, as
an indicator of cash flows or as a measure of liquidity.

Contact:

Intelsat
Dianne VanBeber
Vice President, Investor Relations and Communications
+1 202-944-7406
dianne.vanbeber@intelsat.com