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Intelsat Reports Third Quarter 2010 Results

by david.nunes

Luxembourg, November 8, 2010

Intelsat S.A., the world’s leading provider of fixed satellite services, today
reported results for the three and nine months ended September 30, 2010.
Intelsat S.A. reported revenue of $644.3 million and a net loss of $106.4 million
for the three months ended September 30, 2010. The company also reported
Intelsat S.A. EBITDAi, or earnings before net interest, loss on early
extinguishment of debt, taxes and depreciation and amortization, of $478.1
million, and Intelsat Luxembourg Adjusted EBITDAi of $506.0 million, or 79
percent of revenue, for the three months ended September 30, 2010.
Intelsat CEO Dave McGlade stated, “Today’s report, with solid revenue growth
of 4.3 percent in the third quarter of 2010, as compared to the third quarter of
2009, is in line with our previous indications that we expected to achieve a
higher revenue growth profile in the second half of 2010. Extending the trends
of the past several quarters, strong performance in our government business
outpaced that of our network services and media businesses.”
McGlade continued, “We remain focused on increasing the value of our video
neighborhoods, and on executing our business strategies with respect to
growing applications, such as maritime and government, among others. We are
successfully maintaining our strong contracted backlog, with pre-commitments
from customers for capacity on soon to be launched satellites contributing to
our $9.3 billion backlog at September 30, 2010, and providing visibility and
stability of future cash flows.”
Business Highlights
• Intelsat continues to build its leadership in providing capacity and services for
government applications, with strong renewal rates and contract expansions
supporting growth. Intelsat General Corporation, a wholly-owned subsidiary
of Intelsat S.A., received a contract for on-network transponder services to
support unmanned aerial vehicle communications in North America.
Separately, integration of the Australian Defence Force hosted payload with
Intelsat 22 is proceeding according to schedule. Intelsat expects to deliver
the hosted payload on-orbit when Intelsat 22 launches in early 2012.
• Intelsat remains focused on renewing and expanding service agreements on its valuable regional
video neighborhoods. HBO Latin America Group (HBO LAG) signed a multi-year, multitransponder
contract for capacity to increase its program distribution to viewers across Latin
America. In addition to services on Intelsat’s three leading video neighborhoods serving Latin
America, the agreement also includes a comprehensive teleport restoration program for HBO LAG
via IntelsatONE, Intelsat’s IP/MPLS fiber and teleport network. Separately, ViewAfrica, a leading
provider of global broadcast and transmission services for television and radio channels, extended
its commitment to Intelsat’s leading African video neighborhood at 68.5 degrees East longitude.
The multi-transponder agreement extends ViewAfrica’s current commitment on the Intelsat 10
satellite onto Intelsat 20 following its launch and entry into service in 2012.
• Intelsat is executing its global maritime strategy, which includes deploying customized Ku-band
satellite beams that support always-on broadband connections, by building relationships with the
world’s largest providers of maritime data services. Intelsat announced a multi-transponder, multiyear
agreement with NewWave Broadband, a provider of high-speed maritime services, for
mobility beams on the Intelsat 18 and Intelsat 22 satellites expected to be launched in 2011 and
2012, respectively. In addition, network services provider Vizada expanded and renewed a multiyear
agreement for capacity supporting its global operations, including its Marlink unit, which
supplies voice and data solutions to the maritime industry.
• Cellular backhaul and telecommunications infrastructure continue to be important applications in
Latin America and Africa. Telefónica subsidiary, Colombia Telecomunicaciones S.A. E.S.P.,
Colombia’s leading provider of local and long-distance data and voice services, signed a multiyear
agreement for capacity on three Intelsat satellites supporting cellular backhaul, rural Internet
access and distance learning applications. Separately, France Telecom S.A. renewed and expanded
a portfolio of services that support its global communications network.
• In August 2010, Intelsat announced a replacement satellite for Intelsat 805, to be known as
Intelsat 27. In total, Intelsat currently has nine satellites in development, including Intelsat New
Dawn. Intelsat has three launches scheduled before year-end 2011: Intelsat 17, expected to
launch in the fourth quarter of 2010, Intelsat New Dawn, expected to launch late in the first
quarter of 2011, and Intelsat 18, for which the launch has been rescheduled to late second
quarter 2011, due to manufacturing delays.
• On September 30, 2010, Intelsat Jackson Holdings S.A. completed an offering of $1.0 billion
principal amount of 7¼% Senior Notes due 2020. The majority of the proceeds were used to
repurchase $546.3 million principal amount of Intelsat Corporation’s 9¼% Senior Notes due
2014 and $124.9 million principal amount of Intelsat Corporation’s 6 ⅞% Senior Secured
Debentures due 2028. Subsequent to the quarter close, $34.1 million of the proceeds were used
to repurchase and cancel some of the remaining outstanding Intelsat Subsidiary Holding
Company S.A. 8½% Senior Notes due 2013 via an open market purchase transaction. After
giving effect to the debt repurchases, $227.8 million of the proceeds from the offering remain
available for general corporate purposes, which could include the repayment, redemption,
retirement or repurchase in the open market of other indebtedness of Intelsat S.A. and its
subsidiaries.
• The management of the Galaxy 15 satellite anomaly continues, as the satellite drifts eastward of
111º West longitude. All attempts to recover this satellite are currently expected to be completed
within the next several months; if remaining attempts to recover the Galaxy 15 are unsuccessful,
Intelsat may write down the remaining carrying value of the satellite, which was $34.2M at
September 30, 2010.
• Intelsat’s average fill rate on its approximately 2,125 station-kept transponders was 80 percent at
September 30, 2010.
Financial Results for the Three Months Ended September 30, 2010
Total revenue for the three months ended September 30, 2010 increased by $26.4 million, or 4
percent, to $644.3 million as compared to the three months ended September 30, 2009.
By service type our revenue increased or decreased due to the following:
On-Network Revenues:
• Transponder Services—an aggregate increase of $13.0 million, due primarily to a net increase of
$20.2 million in revenue resulting from favorable terms, new business and renewals from network
services customers primarily in the Africa and Middle East and Latin America and Caribbean regions,
as well as the migration of a customer from managed services to transponder services and growth
in capacity sold by our Intelsat General business. These increases were partially offset by an
aggregate decrease of $7.2 million in revenues related to the IS-4 satellite anomaly, which primarily
affected revenue from customers in the Europe and the Africa and Middle East regions, and the
Galaxy 15 satellite anomaly, which primarily affected revenue from media customers in the North
America region.
• Managed services— an aggregate decrease of $6.7 million primarily due to the migration of a
network services customer from managed services to transponder services.
• Channel— an aggregate decrease of $3.1 million related to a continued decline from the migration
of point-to-point satellite traffic to fiber optic cables, a trend which we expect will continue.
Off-Network and Other Revenues:
• An aggregate increase of $23.0 million, due primarily to a $13.5 million increase in revenues from
transponder services and a $6.9 million increase in mobile satellite services (“MSS”) revenues from
usage-based mobile services, both of which were sold by our Intelsat General business.
Changes in direct costs of revenue, selling, general and administrative expenses, depreciation and
amortization, losses on derivative financial instruments and interest expense, net are described below.
• Direct costs of revenue increased by $18.0 million, or 21 percent, to $104.7 million for the three
months ended September 30, 2010 as compared to the three months ended September 30,
2009. The increase was primarily due to an increase of $17.4 million for purchases of offnetwork
FSS and MSS capacity, primarily related to increased transponder services sold by our
Intelsat General business. Increases in direct costs of revenue also included an increase of $1.9
million in satellite-related insurance costs related to recently launched satellites, partially offset
by a decrease of $2.0 million in cost of equipment primarily related to products sold by our
Intelsat General business.
• Selling, general and administrative expenses decreased by $10.3 million, or 18 percent, to $46.0
million for the three months ended September 30, 2010 as compared to the three months
ended September 30, 2009. The decrease was primarily due to a $5.0 million decrease in bad
debt expense, $2.1 million in lower stock compensation costs associated with the amended and
restated Intelsat Global, Ltd. 2008 Incentive Plan, and a decrease of $1.2 million in staff-related
expenses.
• Depreciation and amortization expense decreased by $1.0 million to $199.0 million for the three
months ended September 30, 2010 as compared to the three months ended September 30, 2009.
The decrease was primarily due to the following:
o a decrease of $16.7 million in depreciation expense due to certain satellites becoming
fully depreciated and the impairment of our IS-4 and Galaxy 15 satellites following the
anomalies that occurred in 2010; and
o a decrease of $3.8 million in amortization expense primarily due to changes in the
expected pattern of consumption of amortizable intangible assets; partially offset by
o an increase of $15.5 million in depreciation expense resulting from the impact of
satellites placed into service during the second half of 2009 and the first quarter of
2010.
• Losses on derivative financial instruments were $19.9 million for the three months ended September
30, 2010 compared to $38.8 million for the three months ended September 30, 2009. For the three
months ended September 30, 2010, the loss on derivative financial instruments related to a $31.7
million loss on our interest rate swaps, partially offset by an $11.8 million gain on our put option
embedded derivative.
• 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
September 30, 2010, we also held interest rate swaps with an aggregate notional amount of
$2.3 billion to economically hedge the variability in cash flow on a portion of the floating-rate term
loans under our senior secured and unsecured credit facilities. The swaps have not been designated
as hedges for accounting purposes. Interest expense, net increased by $8.0 million, or 2 percent, to
$345.5 million for the three months ended September 30, 2010, as compared to $337.5 million for
the three months ended September 30, 2009. The increase in interest expense, net was principally
due to the higher net principal amount of debt outstanding.
• The non-cash portion of total interest expense, net was $81.3 million for the three months ended
September 30, 2010 and included $57.4 million of payment-in-kind interest expense. The remaining
non-cash interest expense was primarily associated with the amortization of deferred financing fees
incurred as a result of new or refinanced debt and the amortization and accretion of discounts and
premiums.
EBITDA, Intelsat Luxembourg Adjusted EBITDA and Other Financial Metrics
Intelsat S.A. EBITDA of $478.1 million for the three months ended September 30, 2010, reflected an
increase of $38.3 million from $439.8 million for the same period in 2009. Intelsat Luxembourg
Adjusted EBITDA increased by $15.1 million, or 3 percent, to $506.0 million, or 79 percent of revenue,
for the three months ended September 30, 2010 from $490.9 million, or 79 percent of revenue, for the
same period in 2009.
Intelsat’s backlog, representing expected future revenue under contracts with customers and Intelsat’s
pro rata share of backlog in its joint venture investments, was $9.4 billion and $9.3 billion as of June
30, 2010 and September 30, 2010, respectively.
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.

Free Cash Flow from Operations and Capital Expenditures
Intelsat generated negative free cash flow from operations i of $17.9 million during the three months
ended September 30, 2010. 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, 2010 totaled $245.8 million, including $3.0 million in consolidated capital expenditures
incurred for the Intelsat New Dawn satellite.
Intelsat is in the process of procuring and building nine satellites that are expected to be launched by
the end of 2012, including the Intelsat New Dawn satellite. In addition to these announced programs,
the company expects to procure one additional replacement satellite during this period. Intelsat expects
2010 total capital expenditures to range from $825 million to $900 million. However, several late 2010
contract milestones could affect the timing of capital expenditure payments between 2010 and 2011.
Expected annual capital expenditure ranges for fiscal years 2011 and 2012 are $800 million to $875
million, and $450 million to $525 million, respectively. This guidance excludes the capital expenditures
associated with the Intelsat New Dawn satellite.

i In this release, financial measures are presented both in accordance with GAAP and also on a non-GAAP basis.
EBITDA, Intelsat Luxembourg Adjusted EBITDA, free cash flow from operations figures 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. Intelsat
Luxembourg Adjusted EBITDA is a term based on Adjusted EBITDA, as defined in the indenture governing the 11¼%
Senior Notes due 2017 and the 11½%/12½% Senior PIK Election Notes due 2017 issued by Intelsat (Luxembourg)
S.A. (the “2017 PIK Notes“) on June 27, 2008. Please see the reconciliations of Intelsat Luxembourg Adjusted
EBITDA to Intelsat S.A. EBITDA provided with the consolidated financial information below.
Conference Call Information
Intelsat management will host a conference call with investors and analysts at 11:00 a.m. EST on
Monday, November 8, 2010 to discuss the company’s financial results for the three months ended
September 30, 2010. 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, United Statesbased
participants should call (800) 322-2803. Non-U.S. participants should call +1 (617) 614-4925.
The participant pass code is 37262729. Participants will have access to a replay of the conference call
through November 15, 2010. The replay number for U.S.-based participants is (888) 286-8010 and for
non-U.S. participants is +1 (617) 801-6888. The participant pass code for the replay is 69652477.

About Intelsat
Intelsat is the leading provider of fixed 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.

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