Intelsat Reports 2006 First Quarter Results; PanAmSat Transaction on Track for Closing in 2nd or 3rd Quarter 2006

Business Wire, May 10, 2006

PEMBROKE, Bermuda -- Intelsat, Ltd., a global satellite communications leader providing services in over 200 countries and territories, today reported results for the three months ended March 31, 2006.

Intelsat, Ltd. and its subsidiaries, referred to as Intelsat or the company, reported revenue of $280.4 million and a net loss of $90.1 million for the quarter ended March 31, 2006.

The company also reported EBITDA, or Intelsat earnings before interest, taxes and depreciation and amortization for the quarter of $180.1 million, or 64 percent of revenue, and the company also reported Sub Holdco Adjusted EBITDA(1) for the same period of $205.9 million, or 73 percent of revenue(2).

"Intelsat continues to produce solid results in its core service offerings, such as lease and managed solutions services to network services and telecom customers. We have also made meaningful progress in reducing operating expense, and as a result, in the first quarter our Sub Holdco Adjusted EBITDA margin improved to 73 percent of revenue," said Intelsat Chief Executive Officer, Dave McGlade. "In addition, backlog at March 31 totaled $3.8 billion, and our steady backlog trend is indicative of good sales activity in our core business."

"The PanAmSat transaction remains a key focus, and we continue to make progress on integration planning and the regulatory approvals needed to close the acquisition. We are also executing on our strategies, which include maximizing the value of our core business, and using our existing assets in new applications, such as Voice Over IP and Internet Protocol television services," CEO McGlade continued.

PanAmSat Merger Update

Intelsat provided an update on the regulatory and operational activities regarding its previously announced acquisition of PanAmSat Holding Corporation. The two pending U.S. regulatory approvals required to close the transaction, the Federal Communications Commission ("FCC") and the Department of Justice ("DoJ"), are still in process and proceeding normally. The company continues to expect that the transaction will receive all approvals necessary in order to close in the second or third quarter of 2006.

Financial Results for the Three Months Ended March 31, 2006

On January 28, 2005, Intelsat, Ltd. was acquired by Intelsat Holdings, Ltd. (the "Acquisition"). For comparative purposes, when we refer in this news release to our results for the three months ended March 31, 2005, we are referring to our combined results for the period from January 1, 2005 through January 31, 2005 and for the period (post-Acquisition) from February 1, 2005 through March 31, 2005.

Total revenue of $280.4 million for the three months ended March 31, 2006 declined $12.7 million, or 4.3 percent, from $293.2 million for the three months ended March 31, 2005. The difference was primarily attributable to reductions in channel services, which decreased $11.7 million to $48.6 million in the period. Mobile satellite services, or MSS, and other revenues declined by $7.4 million, or 41 percent, to $10.7 million for the three months ended March 31, 2006, as compared to $18.1 million in the prior-year period, primarily due to reduced usage of mobile satellite services sold to government customers. These declines were partially offset by increases in managed solutions revenue, which increased $6.7 million, or 27 percent, to $31.3 million for the three months ended March 31, 2006 from $24.6 million for the year-earlier period. Lease revenue was relatively unchanged at $189.8 million for the period ended March 31, 2006 as compared to $190.1 million in the first quarter of 2005.

Total operating expenses for the three months ended March 31, 2006 declined $107.8 million to $249.5 million, from $357.3 million in the same period in 2005, which included a $69.2 million satellite impairment charge due to the failure of the IS-804 satellite in January 2005. Excluding the impairment charge, total operating expense in the first quarter of 2006 decreased $38.6 million, or 13 percent, from $288.1 million for the three months ended March 31, 2005. Depreciation and amortization expense increased $19.5 million, or 14 percent, to $154.6 million for the three months ended March 31, 2006 from $135.1 million for the same period in 2005, primarily due to purchase accounting treatment following the Acquisition, as well as the IA-8 satellite, which entered service in July 2005. Direct cost of revenue declined by $15.7 million, or 22 percent, to $55.1 million for the period from $70.8 million for the same period in 2005, primarily due to the reduction in third party capacity costs related to the decline in MSS and lease service sales to government customers. Selling, general and administrative expense for the first quarter of 2006 was $39.8 million, a decline of $42.1 million from $81.9 million in the three months ended March 31, 2005, which included $49.8 million in professional fees related primarily to the Acquisition.

Income from operations was $30.9 million for the three months ended March 31, 2006 compared with a net loss from operations of $64.2 million for the three months ended March 31, 2005. The increase in income was primarily due to the IS-804 satellite impairment charge. Net loss for the three months ended March 31, 2006 was $90.1 million, compared with net loss of $151.7 million for the three months ended March 31, 2005. The factors described above, offset by higher interest expense in the three months ended March 31, 2006 resulting from the debt issued in connection with the 2005 financings, contributed to the lower net loss in the first quarter of 2006.