Intelsat Reports Second Quarter 2013 Results

  Intelsat Reports Second Quarter 2013 Results

  *Revenue of $654 million up 2% vs. Q2 2012 on growth from network services
    and media customer sets
  *Net loss attributable to Intelsat S.A. of $408 million includes pre-tax
    charges of $367 million for early extinguishment of debt and $78 million
    of one-time, pre-tax expenses related to April IPO
  *Total debt reduced by $497 million as compared to December 31, 2012
  *$10.4 billion contracted backlog provides visibility for future revenue
    and cash flow

Business Wire

LUXEMBOURG -- August 1, 2013

Intelsat S.A. (NYSE: I), the world’s leading provider of satellite services,
today reported revenue of $653.8 million and a net loss attributable to
Intelsat S.A. of $408.3 million, or $4.19 per share, for the three months
ended June 30, 2013. The net loss includes $366.8 million for pre-tax charges
related to early extinguishment of debt resulting from debt paydowns resulting
from the company’s April 2013 initial public offering and debt refinancing
activity in the second quarter. The company also reported EBITDA^1, or
earnings before net interest, taxes and depreciation and amortization, of
$439.2 million, and Adjusted EBITDA^1 of $509.4 million, or 78 percent of
revenue, for the three months ended June 30, 2013.

Intelsat CEO Dave McGlade said, “With the completion of our April IPO and
successful debt refinancing initiatives in the first half of 2013, we’re
driving a positive cycle of delevering our balance sheet. Lower interest costs
and reduced capital expenditures will enable increased cash flow, which in
turn should allow us to further reduce debt. I’m confident Intelsat is
well-positioned to create value for all of its stakeholders.

“The Intelsat team is executing against our operational priorities for 2013.
New business on video neighborhood satellites and on our broadband mobility
infrastructure is driving on-network revenue growth in our network services
and media businesses. Declines in our government business, due to the U.S.
government budget sequestration and troop drawdowns, were reflected primarily
in off-network revenues. Overall, revenue and Adjusted EBITDA grew at two
percent and four percent, respectively, as compared to the second quarter of
2012.”

McGlade continued, “During the quarter, we furthered our commitment to our
next-generation fleet design, announcing manufacturing commitments for four
additional satellites to be deployed over the coming years as we replace
existing satellites with the innovative, high-throughput and cost-efficient
Intelsat Epic^NG platform. Leading up to the launch of those satellites, we
are working with strategic customers to create portfolios of services on the
current fleet that satisfy today's requirements while providing a bridge to
our customers’ future growth needs on Epic^NG. Progress on this front is
demonstrated in our strong backlog of $10.4 billion, providing visibility into
revenue and cash flow, and stability to our business.”

Business Highlights

Intelsat provides critical communications infrastructure to customers in the
network services, media and government sectors. Our customers use our services
for broadband connectivity to deliver fixed and mobile telecommunications,
enterprise, video distribution and fixed and mobile government applications.

  *Intelsat’s network services business, which provides broadband
    infrastructure for fixed and wireless telecommunications and enterprise
    and mobility applications, accounted for 46 percent of Intelsat’s total
    second quarter 2013 revenue, and at $303.7 million was up four percent as
    compared to the second quarter 2012. In the second quarter 2013, growth in
    transponder and managed services revenue for wireless telecommunications,
    mobility and enterprise applications was offset by reduced revenue from
    channel services, which has been declining due to migration to fiber.

       *Enterprise data networks use Intelsat satellites to deliver broadband
         connectivity across multiple regions or to remote locations. In the
         second quarter, Harris CapRock Communications, the leading global
         provider of managed communications solutions for remote and harsh
         environments, extended its portfolio with Intelsat under a long-term
         agreement covering new and renewed capacity of over 600 MHz on up to
         five satellites. The agreement will allow Harris CapRock to provide
         broadband services to its energy customers in the Americas, Africa
         and the Asia-Pacific region while driving increased control and
         efficiency in its operations, with the potential for migration to
         next generation satellites.
       *In the Middle East, Saudi Telecommunication Company (STC), a provider
         of integrated mobile, fixed and broadband communications services,
         recently renewed its agreement with Intelsat. STC plans to provide
         VSAT services to its oil and gas customers in the Middle East on
         Intelsat 10-02 as part of a multi-year, multi-transponder agreement.
       *Separately, Riyadh-based Saudi Inteltec Skyband renewed its contract
         for advanced VSAT services on Intelsat 15 to customers in Saudi
         Arabia.

    Mobility applications are a major source of new growth, particularly for
    Ku-band spectrum. This business includes broadband connectivity for
    maritime and commercial aeronautical consumer networks. In the second
    quarter, new activity included:

       *A global leader in broadband services recently contracted for new,
         multi-transponder services on Intelsat 905 to provide commercial
         aeronautical services over Europe.
       *Astrium Services, Europe’s leading space technology company, recently
         renewed its contract with Intelsat for the delivery of advanced
         broadband services to maritime customers on the North Sea. As part of
         the agreement, Astrium will use multiple transponders on the Intelsat
         907 satellite, delivering seamless connectivity to its shipping
         customers.

    Intelsat’s large and diversified infrastructure is used by leading fixed
    and wireless telecommunications providers to extend their service regions
    and enhance backbone networks. Demand is especially strong in emerging
    regions, with subscriber growth, expanding service territories, and data
    connectivity requirements creating need for expanded 2G and 3G
    infrastructure. In the second quarter of 2013, contract signings included:

       *Santiago-based Entel Chile, a leading telecommunications provider in
         Chile, recently signed a new agreement on Intelsat 23. Entel Chile
         will provide mobile broadband and telephony services to customers in
         remote areas of Chile, including Easter Island, off the coast of
         South America.

  *Intelsat’s media business, which provides satellite capacity for the
    transmission of entertainment, news, sports and educational programming
    for approximately 300 broadcasters, content providers and direct-to-home
    (“DTH”) platform operators worldwide, accounted for 34 percent of our
    revenue for the quarter ended June 30, 2013. Second quarter revenue of
    $220.5 million increased four percent as compared to the second quarter of
    2012, as service volume increased for DTH and cable and broadcast program
    distribution applications.

    Contracts with media customers in the second quarter included:

       *A major South African broadcaster recently renewed and expanded its
         multi-transponder agreement on Intelsat 20 to support media
         applications in Africa.
       *Separately, Moscow-based Orion Express, a major satellite television
         provider in Russia, recently expanded its relationship with Intelsat,
         signing multi-year commitments for several transponders on Horizons 2
         at 85º East. Orion Express will use the capacity to expand its
         delivery of DTH services to customers across Russia, as well as to
         offer television content delivery services for broadcasters.
       *DIRECTV Sports recently renewed its contract for services via Galaxy
         17. The programmer uses the satellite’s premier video neighborhood to
         deliver its suite of regional sports programming to customers in
         North America.

  *Intelsat’s government business, which provides highly customized, secure
    commercial satellite-based solutions to civilian agencies and the U.S.
    military defense sector, accounted for 19 percent of our revenue for the
    quarter ended June 30, 2013. Second quarter revenue of $122.4 million
    decreased two percent as compared to second quarter 2012 results, as
    declines in lower-margin off-network revenue more than offset increases in
    on-network transponder services revenue from the second quarter 2012 entry
    into service of a payload hosted for the Australia Defence Force and
    increased sales of managed services in support of aeronautical
    applications in Asia.

       *Intelsat General was awarded a new agreement to provide services on
         Galaxy 18. The multi-year agreement will support a ground network for
         the U.S. government.

    With respect to the effects of sequestration, the pace of RFP issuance and
    awards remains slower than usual and customers continue to renew and fund
    contracts on shorter terms than typical and consolidate services where
    possible. Visibility remains limited for the government business for the
    balance of the 2013 fiscal year and into 2014.

  *In the second quarter of 2013, Intelsat completed a number of capital
    markets activities.

       *In April 2013, our subsidiary Intelsat (Luxembourg) S.A. (“Intelsat
         Luxembourg”) issued $500.0 million aggregate principal amount of 6¾%
         senior notes due 2018, $2.0 billion aggregate principal amount of 7¾%
         senior notes due 2021 and $1.0 billion aggregate principal amount of
         8^1/[8]% senior notes due 2023 (collectively, the “Intelsat
         Luxembourg Offerings”).
       *Also in April 2013, we used the proceeds from the April Intelsat
         Luxembourg Offerings to redeem all $2.5 billion aggregate principal
         amount of Intelsat Luxembourg’s outstanding 11½%/12½% senior PIK
         election notes and $754.8 million aggregate principal amount of the
         Intelsat Luxembourg 11¼% senior notes due 2017 (the “2017 Senior
         Notes”).
       *On April 23, 2013, we completed our initial public offering of 22.2
         million common shares and a concurrent offering of 3.5 million Series
         A mandatory convertible junior non-voting preferred shares
         (collectively, the “IPO”). The shares trade on the New York Stock
         Exchange; the common shares under the ticker symbol “I” and the
         preferred shares under the ticker symbol “I PR A.” Net proceeds
         received, after underwriting discounts and commissions, were
         approximately $550 million following exercise of the underwriters’
         overallotment options in both offerings.

         We used a portion of the proceeds from the stock offerings to prepay
         $138.2 million of indebtedness outstanding under our Intelsat Jackson
         Holdings S.A. (“Intelsat Jackson”) $810.9 million senior unsecured
         credit agreement. In May, we used a portion of the remaining proceeds
         to fully redeem our Intelsat Investments S.A. (formerly Intelsat
         S.A.) 6½% senior notes due 2013.

         We incurred $77.7 million of one-time, pre-tax expenses related to
         the IPO (the “Total IPO Charge”), of which $21.3 million related to
         share-based and other compensation expense incurred upon consummation
         of the IPO (the “IPO-related Compensation Charges”).
       *In June 2013, Intelsat Jackson issued $2.0 billion aggregate
         principal amount of 5½% senior notes due 2023 and $635.0 million
         aggregate principal amount of 6^5/[8]% senior notes due 2022 (the
         “2022 Jackson Notes” and collectively, the “June Intelsat Jackson
         Offerings”). The 2022 Jackson Notes were priced at 106.25 for an
         effective yield of 5.76%.
       *Also in June, we used the net proceeds of the June Intelsat Jackson
         Offerings, together with other available cash, to redeem the
         remaining $1.7 billion aggregate principal amount of the Intelsat
         Luxembourg 2017 Senior Notes, and to prepay all amounts outstanding
         (approximately $868 million principal amount) under Intelsat
         Jackson’s two senior unsecured credit agreements.
       *In total, our debt retirement activities resulted in a pre-tax
         early-extinguishment charge of $366.8 million in the quarter ended
         June 30, 2013.

  *Intelsat’s average fill rate on our approximately 2,175 station-kept
    transponders was 78 percent at June 30, 2013. No significant fleet changes
    were conducted during the period.
  *Intelsat has no satellite launches planned for the balance of 2013. We
    have contracted with Arianespace to launch Intelsat 30, the next satellite
    in our fleet program, in the second half of 2014.

Financial Results for the Three Months ended June 30, 2013

On-Network revenue generally includes revenue from any services delivered via
our satellite or ground network. Off-Network and Other revenue generally
includes revenue 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 Revenue also includes revenue from consulting and other
services and sales of customer premises equipment.

Total revenue for the three months ended June 30, 2013, increased by $15.1
million, or two percent, to $653.8 million, as compared to the three months
ended June 30, 2012. By service type, our revenue increased or decreased due
to the following:

On-Network Revenue:

  *Transponder services—an aggregate increase of $17.1 million, due in part
    to an $8.3 million net increase in revenue from network services customers
    based in the Latin America and Caribbean and the North America region, for
    use in wireless telecommunications infrastructure and enterprise networks,
    respectively. An additional $8.1 million of the increase reflects new
    revenue from growth in services sold to media customers largely in the
    Latin America and Caribbean, the Africa and Middle East, and the
    Asia-Pacific regions for DTH and programming-distribution applications.
  *Managed services—an aggregate increase of $8.1 million, largely due to a
    $6.5 million increase in revenue from network services customers for new
    broadband services for mobility applications, primarily in the Europe, the
    North America and the Asia-Pacific regions, and a $2.7 million increase in
    revenue from managed services sold to government customers.
  *Channel—an aggregate decrease of $4.8 million related to a continued
    decline due to the migration of international point-to-point satellite
    traffic to fiber optic cable, a trend that we expect will continue.

Off-Network and Other Revenue:

  *Transponder, MSS and other off-network services—an aggregate decrease of
    $4.1 million, primarily due to declines in sales of off-network
    transponder services for government applications and MSS.
  *Satellite-related services—an aggregate decrease of $1.1 million,
    primarily due to decreased revenue from government professional services
    and flight operations support for third-party satellites as compared to
    the second quarter of 2012.

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 increased by $1.0 million, or 1%, to $100.3
    million for the three months ended June 30, 2013, as compared to the three
    months ended June 30, 2012. Excluding $2.4 million related to the
    IPO-related Compensation Charges, direct cost of revenue decreased $1.4
    million, principally due to $4.7 million in lower cost of MSS and
    off-network fixed satellite services (“FSS”) capacity purchased primarily
    related to solutions sold to our government customer set and a decrease of
    $0.9 million in share-based compensation costs. These decreases were
    partially offset by an increase of $2.9 million in costs related to a
    joint venture and an increase of $1.5 million in expenses related to earth
    station operations.
  *Selling, general and administrative expenses increased by $71.8 million to
    $125.2 million for the three months ended June 30, 2013 as compared to the
    three months ended June 30, 2012. Excluding $56.3 million in professional
    fees mainly associated with the termination of our monitoring fee
    agreement and $18.9 million related to the IPO-related Compensation
    Charges, selling, general and administrative expenses decreased $3.4
    million, principally due to $4.8 million in lower professional fees and a
    decrease of $1.7 million in bad debt expense. These decreases were
    partially offset by an increase of $3.3 million in staff-related expenses,
    including share-based compensation costs.
  *Depreciation and amortization expense decreased by $1.9million to $186.7
    million for the three months ended June 30, 2013, as compared to the three
    months ended June 30, 2012. This decrease was primarily due to a net
    decrease of $21.7 million in depreciation expense due to the timing of
    certain satellites becoming fully depreciated and changes in estimated
    remaining useful lives of certain satellites, a decrease of $2.4 million
    in amortization expense primarily due to changes in the expected pattern
    of consumption of amortizable intangible assets , largely offset by an
    increase of $22.7 million in depreciation expense resulting from the
    impact of satellites placed into service during 2012.
  *Our income from operations decreased by $25.9 million, or 9%, to $255.6
    million for the three months ended June 30, 2013, compared to $281.5
    million for the three months ended June 30, 2012, due primarily to the
    Total IPO Charge of $77.7 million, partially offset by a $20.3 million
    improvement in (gains) losses recognized on our derivative financial
    instruments for the three months ended June 30, 2013, as compared to the
    prior year, related to the net (gain) loss on our interest rate swaps,
    which reflects the change in fair value of the interest rate swaps,
    partially offset by the related interest expense accrued. For the three
    months ended June 30, 2013, we recorded a gain of $4.5 million, as
    compared to a loss on derivative financial instruments of $15.8 million
    for the three months ended June 30, 2012.
  *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. As of June 30, 2013, we also
    held interest rate swaps with an aggregate notional amount of $1.6billion
    to economically hedge the variability in cash flow on a portion of the
    floating-rate term loans under our senior secured credit facilities. The
    swaps have not been designated as hedges for accounting purposes. Interest
    expense, net decreased by $25.7 million, or 8%, to $301.7 million for the
    three months ended June 30, 2013, as compared to $327.4 million for the
    three months ended June 30, 2012. The decrease in interest expense, net
    was principally due to the following:

       *a net decrease of $30.8 million in interest expense as a result of
         our debt offerings, redemptions and credit facility amendments in
         2012; and
       *a net decrease of $16.3 million in interest expense as a result of
         our debt offerings, prepayments and redemptions in 2013; partially
         offset by
       *an increase of $25.1 million resulting from lower capitalized
         interest of $9.8 million for the three months ended June 30, 2013, as
         compared to $34.9 million for the three months ended June 30, 2012,
         resulting from decreased levels of satellites and related assets
         under construction.

    Non-cash items in interest expense, net were $19.3 million for the three
    months ended June 30, 2013, 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 $366.8 million for the three
    months ended June 30, 2013, as compared to $43.4 million for the three
    months ended June30, 2012. The 2013 loss related to the repayment of debt
    in connection with various 2013 refinancings, redemptions, prepayments and
    offerings was primarily driven by a $311.2 million difference between the
    carrying value of the debt repurchased, redeemed or prepaid in the quarter
    and the total cash amount paid (including related fees), together with a
    write-off of $55.6 million of unamortized debt discounts and debt issuance
    costs.

    The 2012 loss related to the repayment of debt in connection with the 2012
    Intelsat Jackson tender offers and redemptions, and was primarily driven
    by a $39.5 million difference between the carrying value of the debt
    repurchased or redeemed and the total cash amount paid (including related
    fees), together with a write-off of $3.9 million of unamortized debt
    premium and debt issuance costs.

  *Other expense, net was $3.2 million for the three months ended June 30,
    2013, as compared to $1.9million for the three months ended June 30,
    2012.
  *Our benefit from income taxes was $8.8 million for the three months ended
    June 30, 2013, as compared to a benefit of $6.8 million for the three
    months ended June 30, 2012. The difference was principally due to the
    recognition of previously unrecognized tax benefits related to the closing
    of an IRS audit of the 2008 and 2009 tax years for our subsidiary,
    Intelsat Holding Corporation, in the three months ended June 30, 2013,
    partially offset by higher earnings in certain taxable jurisdictions.
  *Cash paid for income taxes, net of refunds, totaled $4.2 million and $8.5
    million for the three months ended June 30, 2012 and 2013, respectively.

EBITDA, Adjusted EBITDA and Other Financial Metrics

EBITDA of $439.2 million for the three months ended June 30, 2013, reflected a
decrease of $29.1 million from $468.3 million for the same period in 2012. The
Total IPO Charge of $77.7 million contributed more than 100% of the decline in
EBITDA. Adjusted EBITDA increased by $17.4 million to $509.4 million, or 78
percent of revenue, for the three months ended June 30, 2013, from $492.0
million, or 77 percent of revenue, for the same period in 2012.

At June 30, 2013, Intelsat’s contracted backlog, representing expected future
revenue under contracts with customers, was $10.4 billion, unchanged from
$10.4 billion at March 31, 2013. The mix of backlog continues to reflect
proportionally less backlog from government customers, related in part to the
U.S. budget sequestration.

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
                                   June 30,                June 30,
                                   2012                    2013
                                                                         
Network Services                   $ 292,453     46  %     $ 303,665     46  %
Media                                212,136     33  %       220,526     34  %
Government                           124,961     20  %       122,390     19  %
Other                               9,118       1   %      7,222       1   %
                                   $ 638,668     100 %     $ 653,803     100 %
                                                                         
                                                                         
By Service Type
                                   Three Months Ended      Three Months Ended
                                   June 30,                June 30,
                                   2012                    2013
On-Network Revenues
Transponder services               $ 480,803     75  %     $ 497,872     76  %
Managed services                     67,205      11  %       75,303      12  %
Channel                             23,461      4   %      18,654      3   %
Total on-network revenues            571,469     90  %       591,829     91  %
Off-Network and Other Revenues
Transponder, MSS and other           55,388      9   %       51,311      8   %
off-network services
Satellite-related services          11,811      2   %      10,663      2   %
Total off-network and other         67,199      11  %      61,974      9   %
revenues
Total                              $ 638,668     100 %      653,803     100 %
                                                                             

Free Cash Flow From (Used in) Operations

Free cash flow used in operations^1 was $106.2 million during the three months
ended June 30, 2013. Free cash flow from (used in) operations is defined as
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 excludes $235.0 million of cash proceeds received
from insurance claims during the three months ended June 30, 2013. Payments
for satellites and other property and equipment during the three months ended
June 30, 2013, totaled $169.1 million. Cash flow was also affected by
significant early payments of interest related to second-quarter refinancing
activity.

Financial Outlook 2013 with Updated Prepayments Guidance

Consistent with prior guidance, for the full year 2013 Intelsat expects to
generate revenue of $2,615 million to $2,640 million, and an Adjusted EBITDA
margin consistent with recent periods. Our projected revenue growth reflects
modestly lower U.S. government spending on commercial satellite communications
services; significant reductions in that spending could adversely affect our
revenue.

As previously announced, our 2013 capital expenditure guidance for the three
calendar years 2013 through 2015 (the “Guidance Period”) assumes investment in
nine satellites in the manufacturing or design phase during the Guidance
Period, including one destroyed in a launch failure in February 2013. We
expect to launch four satellites in 2014 and 2015, during the Guidance Period,
with construction on the four remaining satellites extending beyond the
Guidance Period. By the conclusion of the Guidance Period in 2015, our total
transmission capacity is expected to increase modestly from levels at year end
2012. The first of our new Intelsat Epic^NG high-throughput satellites is
expected to launch in 2015 and enter service in 2016, significantly increasing
our total transmission capacity.

Consistent with prior guidance, we expect our capital expenditures to range
from $600 million to $675 million in 2013, and $575 million to $650 million in
2014. For 2015, we anticipate capital expenditures of $775 million to $850
million. Our capital expenditures guidance includes capitalized interest.

During the Guidance Period, we expect to receive significant customer
prepayments under our existing customer service contracts. In an effort to
balance our growth and delevering objectives, today we are updating prepayment
guidance to reflect only amounts currently contractually committed.
Significant prepayments are currently expected to range from $100 million to
$125 million in 2013, and from $75 million to $100 million in 2014, a combined
reduction of approximately $100 million over the two year period from prior
guidance. Our 2015 prepayment guidance remains unchanged at $25 million to $50
million.

The annual classification of capital expenditure and prepayments could be
affected by the timing of achievement of contract, satellite manufacturing,
launch and other milestones.

- - - - - - - - - - - - - - - - - - -

^1In this release, financial measures are presented both in accordance with
GAAP and also on a non-GAAP basis. EBITDA, Adjusted EBITDA, free cash flow
from (used in) 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. EDT on Thursday, August 1, 2013, to discuss the company’s financial
results for the three months ended June 30, 2013. Access to the live
conference call will also be available via the Internet at the Intelsat
website: www.intelsat.com/investors/events. To participate on the live call,
participants should dial 866-700-6293 from North America, and +1 617-213-8835
from all other locations. The participant pass code is 48046899. Participants
will have access to a replay of the conference call through August 8, 2013.
The replay number for North America is 888-286-8010, and for all other
locations it is +1 617-801-6888. The participant pass code for the replay is
68237126.

About Intelsat

Intelsat (NYSE: I) is the leading provider of satellite services worldwide.
For almost 50 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; 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; litigation; risks associated with investing in a company
existing under the laws of the Grand Duchy of Luxembourg; and inadequate
access to capital markets. Known risks include, among others, the risks
described in Intelsat’s prospectus dated April 17, 2013, 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, except per share amounts)
                                                            
                                                            
                                     Three Months Ended     Three Months Ended

                                     June 30, 2012          June 30, 2013
Revenue                              $    638,668           $   653,803
Operating expenses:
Direct costs of revenue
(excluding depreciation and               99,307                100,278
amortization)
Selling, general and                      53,434                125,217
administrative
Depreciation and amortization             188,628               186,745
(Gains) losses on derivative              15,756                (4,457     )
financial instruments
Gain on satellite insurance              -                   (9,618     )
recoveries
Total operating expenses                 357,125             398,165    
Income from operations                    281,543               255,638
Interest expense, net                     327,379               301,685
Loss on early extinguishment of           (43,383   )           (366,794   )
debt
Other expense, net                       (1,906    )          (3,184     )
Loss before income taxes                  (91,125   )           (416,025   )
Benefit from income taxes                (6,797    )          (8,759     )
Net loss                                  (84,328   )           (407,266   )
Net income attributable to               (382      )          (1,039     )
noncontrolling interest
Net loss attributable to             $    (84,710   )       $   (408,305   )
Intelsat S.A.
                                                            
                                                            
Basic and diluted net loss per
share attributable to Intelsat       $    (1.02     )       $   (4.19      )
S.A.
                                                            


INTELSAT S.A.
UNAUDITED RECONCILIATION OF NET LOSS TO EBITDA
($ in thousands)
                                                     
                                         Three Months     Three Months
                                         Ended            Ended
                                         June 30,         June 30,
                                         2012             2013
Net loss                                 $ (84,328)       $ (407,266)
Add (Subtract):
Interest expense, net                    327,379          301,685
Loss on early extinguishment of debt     43,383           366,794
Benefit from income taxes                (6,797)          (8,759)
Depreciation and amortization            188,628          186,745
EBITDA                                   $ 468,265        $ 439,199
                                                          
                                                          
EBITDA Margin                            73%              67%
                                                          

Note:

EBITDA consists of earnings before net interest, 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
ADJUSTED EBITDA
($ in thousands)
                                                                  
                                                 Three Months     Three Months
                                                 Ended            Ended
                                                 June 30,         June 30,
                                                 2012             2013
Net loss                                         $  (84,328 )     $ (407,266 )
Add (Subtract):
Interest expense, net                               327,379         301,685
Loss on early extinguishment of debt                43,383          366,794
Benefit from income taxes                           (6,797  )       (8,759   )
Depreciation and amortization                      188,628       186,745  
EBITDA                                             468,265       439,199  
Add (Subtract):
Compensation and benefits                           2,371           18,445
Management fees                                     6,265           57,954
(Gains) losses on derivative financial              15,756          (4,457   )
instruments
Non-recurring and other non-cash items             (668    )      (1,764   )
Adjusted EBITDA                                  $  491,989      $ 509,377  
                                                                  
                                                                  
Adjusted EBITDA Margin                              77      %       78       %
                                                                             

Note:

Intelsat calculates a measure called Adjusted EBITDA to assess the operating
performance of Intelsat S.A. Adjusted EBITDA consists of EBITDA 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 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 gains (losses) on derivative financial instruments, our
management believes that Adjusted EBITDA provides a useful means of evaluating
the success of our operating activities. We also use 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 Adjusted EBITDA
facilitates comparison of our results with those of companies having different
capital structures.

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.
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 share amounts)
                                                                
                                             As of              As of
                                             December 31,       June 30,
                                             2012               2013
                                                                (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents                    $ 187,485          $ 95,792
Receivables, net of allowance of $23,583       282,214            284,854
in 2012 and $28,692 in 2013
Deferred income taxes                          94,779             94,672
Prepaid expenses and other current            38,708           51,160     
assets
Total current assets                           603,186            526,478
Satellites and other property and              6,355,192          5,834,263
equipment, net
Goodwill                                       6,780,827          6,780,827
Non-amortizable intangible assets              2,458,100          2,458,100
Amortizable intangible assets, net             651,087            609,931
Other assets                                  417,454          414,606    
Total assets                                 $ 17,265,846      $ 16,624,205 
                                                                
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued liabilities     $ 178,961          $ 139,304
Taxes payable                                  9,366              -
Employee related liabilities                   46,590             33,557
Accrued interest payable                       367,686            198,585
Current portion of long-term debt              57,466             56,598
Deferred satellite performance                 21,479             21,533
incentives
Deferred revenue                               84,066             78,827
Other current liabilities                     72,715           71,982     
Total current liabilities                      838,329            600,386
Long-term debt, net of current portion         15,846,728         15,350,921
Deferred satellite performance                 172,663            163,320
incentives, net of current portion
Deferred revenue, net of current portion       834,161            871,140
Deferred income taxes                          286,673            290,278
Accrued retirement benefits                    299,187            274,385
Other long-term liabilities                    300,195            227,710
                                                                
                                                                
Shareholders' deficit:
Common shares ^(1)                             832                1,054
5.75% Series A Mandatory Convertible           -                  35
Junior Non-Voting Preferred shares
Paid-in capital ^(1)                           1,519,429          2,089,250
Accumulated deficit                            (2,759,593 )       (3,175,702 )
Accumulated other comprehensive loss          (118,428   )      (112,140   )
Total shareholders' deficit                    (1,357,760 )       (1,197,503 )
Noncontrolling interest                       45,670           43,568     
Total liabilities and shareholders'          $ 17,265,846      $ 16,624,205 
deficit
                                                                             

^(1) Common shares and paid-in capital amounts reflect the retroactive impact
of the Class A and Class B share reclassification into common shares and the
share splits related to our Initial Public Offering.

                                                           
INTELSAT S.A.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
                                                                
                                             Three Months       Three Months
                                             Ended              Ended
                                             June 30, 2012      June 30, 2013
Cash flows from operating activities:
Net loss                                     $ (84,328    )     $ (407,266   )
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization                  188,628            186,745
Provision for doubtful accounts                3,833              2,103
Foreign currency transaction loss              3,337              2,773
Loss on disposal of assets                     -                  212
Gain on satellite insurance recoveries         -                  (9,618     )
Share-based compensation                       1,097              18,281
Deferred income taxes                          (9,779     )       (2,517     )
Amortization of discount, premium,             14,594             19,321
issuance costs and related costs
Interest paid-in-kind                          3,979              -
Loss on early extinguishment of debt           43,383             366,794
Unrealized (gains) losses on derivative        2,644              (11,367    )
financial instruments
Other non-cash items                           3,636              5,102
Changes in operating assets and
liabilities:
Receivables                                    (6,448     )       (7,265     )
Prepaid expenses and other assets              11,655             20,722
Accounts payable and accrued liabilities       31,262             (122,908   )
Deferred revenue                               63,593             27,644
Accrued retirement benefits                    (11,541    )       (17,217    )
Other long-term liabilities                   (174       )      (8,654     )
Net cash provided by operating                259,371          62,885     
activities
Cash flows from investing activities:
Payments for satellites and other
property and equipment (including              (215,894   )       (169,054   )
capitalized interest)
Proceeds from insurance settlements           -                235,019    
Net cash provided by (used in) investing      (215,894   )      65,965     
activities
Cash flows from financing activities:
Repayments of long-term debt                   (1,330,038 )       (6,715,609 )
Repayment of notes payable to former           (367       )       (670       )
shareholders
Payment of premium on early                    (39,475    )       (311,224   )
extinguishment of debt
Proceeds from issuance of long-term debt       1,296,000          6,214,688
Debt issuance costs                            (19,444    )       (84,948    )
Proceeds from initial public offering          -                  572,500
Stock issuance costs                           -                  (26,377    )
Principal payments on deferred satellite       (3,337     )       (5,117     )
performance incentives
Dividends paid to noncontrolling              (2,418     )      (2,306     )
interest
Net cash used in financing activities         (99,079    )      (359,063   )
Effect of exchange rate changes on cash       (3,337     )      (2,773     )
and cash equivalents
Net change in cash and cash equivalents        (58,939    )       (232,986   )
Cash and cash equivalents, beginning of       313,085          328,778    
period
Cash and cash equivalents, end of period     $ 254,146         $ 95,792     
                                                                
Supplemental cash flow information:
Interest paid, net of amounts                $ 273,688          $ 410,228
capitalized
Income taxes paid, net of refunds              4,210              8,452
Supplemental disclosure of non-cash
investing activities:
Accrued capital expenditures                 $ 61,083           $ 20,009
                                                                

                                 
INTELSAT S.A.
UNAUDITED RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES
TO FREE CASH FLOW FROM (USED IN) OPERATIONS
($ in thousands)
                                                        
                                     Three Months Ended     Three Months Ended
                                     June 30,               June 30,
                                     2012                   2013
                                                            
Net cash provided by operating       $   259,371            $   62,885
activities
Payments for satellites and
other property and equipment
(including capitalized interest)        (215,894   )          (169,054   )


Free cash flow from (used in)        $   43,477            $   (106,169   )
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 excludes proceeds resulting from settlement of insurance claims,
and 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