Quarterly Commentary

Transcription

1 ( millins) Quarter Ended June 30, 2016 July 27, 2016 Secnd Quarter 2016 Perfrmance Summary In the secnd quarter f 2016, we cntinued t advance the imprtant perating pririties that will psitin us fr future grwth. We successfully launched a satellite supprting Direct t Hme ( DTH ) televisin services in Latin America, and ur remaining tw 2016 launches are n schedule. We signed the first fficial cntract under ur glbal bradband mbility service ffering, IntelsatOne Flex, and we transitined custmer netwrks nt ur first high thrughput Intelsat Epic NG satellite, Intelsat 29e, receiving utstanding reviews frm ur custmers. In additin, we prgressed ur liability management prcess, which is imprtant t enhancing ur capital structure. We cmpleted tw senir secured ntes issuances in March and June 2016, which cmbined ttaled nearly $1.75 billin, the prceeds f which were used, in part, t cmplete pen market and privately negtiated repurchases f certain utstanding ntes and tender ffers fr certain ntes. A prtin f the remaining prceeds will prvide balance sheet liquidity. Secnd quarter 2016 revenue was $542 millin, a 9 percent decline as cmpared t revenue f $598 millin in the secnd quarter f Adjusted EBITDA 1 f $411 millin declined 13 percent frm Adjusted EBITDA f $473 millin in the secnd quarter f Althugh headwinds cntinue t exist in ur business, as described belw, ur launch prgram and strategy executin are in line with the Guidance we issued n February 22, 2016 and cnfirmed tday. These $700 $600 $500 $400 $300 $200 $100 $0 Secnd Quarter Revenue and Adjusted EBITDA $598 2Q15 $473 $542 2Q16 $411 Revenue AEBITDA headwinds include pricing pressure, reflecting versupply cnditins f wide-beam capacity fr certain regins and applicatins, pint-t-pint telecmmunicatins infrastructure services reaching end f lifecycle and limited new U.S. gvernment pprtunities, cmpunded with cntinued currency challenges in certain cuntries. These trends will pressure ur revenue perfrmance until new marketable inventry frm ur fur planned 2016 satellite launches enters service and begins t generate incremental revenue in the secnd half f the year.

2 Cntracted backlg at June 30, 2016 was $9.2 billin, representing expected future revenue under existing cntracts with custmers, cmpared t $9.3 billin at March 31, At ver 4.1 times trailing 12 mnths revenue (frm July 1, 2015 t June 30, 2016), ur backlg remains sizable and prvides a slid fundatin fr predictable cash flw and investment in ur business Operatinal Pririties: Expanding Service Offerings t Drive Differentiatin and Accelerate Adptin f High Thrughput Satellite Services We are pursuing five peratinal pririties as we psitin fr grwth. Our strategy is centered n cntinuing t prvide infrastructure t ur current sectrs, such as media, netwrk services and gvernment, but with an emphasis n services and innvative technlgies that will psitin us t cmpete fr apprximately $3.3 billin in incremental revenue pprtunity thrugh 2021 fr sustainable, new applicatins with high traffic vlumes and that feature attractive grwth rates. The applicatins cmprising this grwth pprtunity include bradband fr enterprise, wireless infrastructure, Internet f Things, and cmmercial aernautical and maritime mbility and gvernment. At the same time, we will cntinue t supprt the needs f ur media custmers with current and incremental capacity fr DTH and ther distributin applicatins. Prgress n Our 2016 Operatinal Pririties: Maintain ur design, manufacturing and launch schedule fr the next generatin Intelsat Epic NG high thrughput satellite ( HTS ) fleet and ther satellites in ur plan t ensure availability f new, differentiated inventry t drive revenue grwth; Intelsat 31 successfully launched n June 9 and cmmenced service in late July. Intelsat 31, f which the Ku-band prtin is fully cntracted fr a 15-year perid, prvides capacity and resilience fr DIRECTV Latin America. Demnstrating the imprtance f backwards cmpatibility, within days f Intelsat 29e entering service, existing netwrks transitined seamlessly nt the platfrm. Later in the quarter, we began t bring up new netwrks n Intelsat 29e. Perfrmance is at r abve specificatin n the satellite, prviding imprved efficiency and thrughput fr custmers. The balance f ur 2016 launch prgram remains n-track. We are scheduled t launch Intelsat 33e and Intelsat 36 n an Arianespace launcher n August 24, 2016 (see table belw fr ur cmplete launch plan). Since April 27, 2016, Intelsat has signed 20 additinal Intelsat Epic NG agreements with custmers, spanning applicatins including mbility, enterprise and fixed and wireless infrastructure, and featuring a lng-term cmmitment frm TIM Brazil, a leading Brazilian wireless peratr. Of the ttal megahertz cntracted since April 27, 2016, the majrity is incremental business. Cntract terms n the entire Intelsat Epic NG satellites cntinue t be favrable, with the average cntract length n grwth services ranging frm five t six years; this is lnger than that f the average fleet-wide netwrk services cntract. 2

3 Drive innvatin t create next generatin slutins, including cllabrating with grund technlgy manufacturers and ther partners t ensure ptimized perfrmance, ecnmics and simplified access fr Intelsat Epic NG fr applicatins including bradband infrastructure, mbility, gvernment, media and enterprise slutins; Intelsat emphasizes supprting innvatin n the grund as well as in the sky in rder t develp technlgies that can pen larger and faster grwing applicatins, stimulating demand fr ur satellite slutins. Kymeta, a cmpany which Intelsat is investing in and partnering with, recently prvided anther demnstratin f its flat-panel antenna technlgy t the autmtive sectr, using Intelsat s capacity t deliver bradband internet access t cars at the TU- Autmtive Detrit event. Overall, Kymeta cntinues t make prgress twards entering cmmercial prductin with its 70 cm, electrnically steerable antenna in Smaller and mre capable antennas are expected t enable simplified access fr ur netwrk services and mbility custmers. Develp applicatin-specific capacity and new service fferings that supprt the grwth bjectives f ur custmers acrss ur business in the media, netwrk services and gvernment sectrs, including mbility applicatins, and invest in ur vide neighbrhd rbital lcatins t supprt lng-term grwth gals; Intelsat attained an imprtant milestne in its strategy t differentiate its glbal high thrughput services with a managed services ffering. In the secnd quarter, Intelsat signed a glbal maritime services prvider t IntelsatOne Flex under a cntract that allws the custmer t ramp a thrughput cmmitment ver time and acrss regins. Cmmercial services are expected t begin n IntelsatOne Flex in the secnd half f Maintain ur leadership in gvernment services, fcusing n gvernment prjects that require end-t-end netwrk respnsibilities and cmplex netwrk supprt, thereby imprving ur value prpsitin t gvernment custmers seeking affrdable slutins frm a trusted cmmercial prvider; Our gvernment business subsidiary, Intelsat General Crpratin ( Intelsat General ), recently cmpleted a series f demnstratin tests fr targeted custmers f ur Intelsat Epic NG high thrughput technlgy. The tests, perfrmed using a Gilat antenna with a 6 by 6 flat panel array, enabled the delivery f a high definitin ( HD ) televisin stream frm the small antenna t the recently launched Intelsat 29e satellite at a rate f 3.9 Mbps, using nly 15 MHz f bandwidth. Bth the frward and return links carried data streams three t fur times greater than previusly pssible with traditinal wide beam satellites. The tests demnstrated the ptential perfrmance fr use with a new generatin f small Class III remtely pilted aircraft, als knwn as RPAs, that is cming int service fr use in bth military peratins and ther nn-military gvernment and cmmercial applicatins, thus expanding the addressable market fr ur services. 3

4 ( millins) Optimize use f ur spectrum rights and glbal presence t maximize market access and cntinuity, particularly in attractive regins, while maintaining investment discipline; In the secnd quarter f 2016, Intelsat annunced its intent t build Intelsat 39, a satellite that will be psitined at 62 E, replacing Intelsat 902. The Ministry f Transprt and Cmmunicatin f Myanmar is the first custmer n the satellite, and will use services n Intelsat 902 and Intelsat 906 until Intelsat 39 is placed int service. The Ministry f Transprt and Cmmunicatin will use the satellite service t prgress its deplyment f 3G wireless infrastructure and t expand bradband access fr businesses in the cuntry, as is described in mre detail belw. Q Business Highlights and Custmer Set Perfrmance All 2016 cmparisns are t 2015 unless nted therwise Netwrk Services Netwrk Services Quarterly Revenue Netwrk Services revenue was $350 $228 millin in the secnd quarter f 2016, $300 $271 $263 $245 a $42 millin, r 16 percent, decrease frm $228 $228 $250 the prir year quarter and flat as cmpared t the first quarter f The largest factrs cntributing t the decline were terminated trunking services and pricing $200 $150 $100 $50 $0 pressure n renewals and new business, reflecting the cmpetitive envirnment. The decline als reflects the expected, and 2Q15 3Q15 4Q15 1Q16 2Q16 previusly disclsed, cnclusin f the channel service type. Secnd Quarter Netwrk Services Highlights and Business Trends: Intelsat cntinues t build the backlg cmmitments fr ur next generatin Intelsat Epic NG fleet, while als bking new business and renewals n ur wide beam assets. In the secnd quarter f 2016, we signed agreements supprting netwrks in the enterprise, mbility and telecm infrastructure sectrs. In many cases, ur slutins use multiple satellites within the Intelsat Glbalized Netwrk. Netwrk Services backlg expanded by 7 percent ver the prir year quarter. Cntracts signed in the secnd quarter include: Intelsat is the leading prvider f FSS capacity and services fr bradband maritime applicatins. In the secnd quarter f 2016, Marlink, a leading prvider f maritime services, selected Intelsat t deliver fast, high quality bradband cnnectivity t the Mediterranean Shipping Cmpany ( MSC ) cruise ships. Marlink will use a cmbinatin f transpnder and managed services using ur wide beam C- and Ku-band satellite slutins frm nine Intelsat satellites initially and Ku-band high thrughput spt beams frm Intelsat 29e and as well as Intelsat 33e when this satellite enters service in the furth quarter f At the end f May 2016, MSC Cruises began t apply the benefits f the Intelsat Epic NG high thrughput cnnectivity abard the MSC Divina, ne f the wrld s largest cruise ships. 4

5 We designed ur Intelsat Epic NG technlgy t deliver higher perfrmance and better ecnmics t ur wireless infrastructure custmers, allwing custmers t deply 3G and 4G capabilities int less densely ppulated regins served by their netwrks. During the quarter, Intelsat clsed the first Intelsat Epic NG wireless infrastructure cntract in Brazil, with ne f the cuntry s largest wireless peratrs. TIM Brazil will use Intelsat 29e t expand 2G, 3G and 4G services thrughut the remte regins within the cuntry. By integrating Intelsat Epic NG technlgy int its wireless infrastructure, TIM will expand its service territry, ffer its custmers new services and reduce its ttal cst f wnership. As discussed in the Operatinal Pririties sectin, the Ministry f Transprt and Cmmunicatin f Myanmar will utilize C- and Ku-band services n Intelsat 902 and Intelsat 906 t significantly enhance the Myanmar gvernment s netwrk as well as ther mbile peratrs netwrks. By integrating satellite slutins int its wn mbile netwrks, the Ministry f Transprt and Cmmunicatin will increase verall netwrk bandwidth and reliability as it expands 2G and 3G services int the mre remte areas f Myanmar, while als expanding high speed bradband and internet cnnectivity t businesses and cmmunities thrughut the cuntry. In 2018, MOTC will be the first custmer n the recently annunced Intelsat 39 satellite, the replacement spacecraft fr Intelsat 902 at the 62 E rbital lcatin. Office des Pstes et Telecmmunicatins f French Plynesia ( OPT French Plynesia ) signed a new and expanded cntract fr Ku-band satellite slutins n Intelsat 18 t further expand its wireless infrastructure. Intelsat s satellite slutins will enable OPT French Plynesia t meet the fast grwing mbile bradband and Internet needs f businesses and cmmunities in the mre remte islands f the archipelags lcated in the Suth Pacific. Enterprise netwrks - large private data netwrks that use satellite slutins because f gegraphic reach, efficient bradcast transmissins and reliability - represent ne f the largest applicatins within ur netwrk services business. Industry surces such as Nrthern Sky Research frecast that enterprise netwrks will becme a $2.9 billin applicatin by 2021, reflecting an expected six-year cmpund annual grwth rate f 4 percent. Enterprise cntracts signed during the secnd quarter include: Saudi Telecmmunicatin Cmpany ( STC ), the largest telecm peratr in Saudi Arabia, has expanded its relatinship with Intelsat and entered int a new cntract fr satellite services n Intelsat 15. The additinal cnnectivity frm Intelsat 15 will enable STC t grw VSAT services fr crprate netwrks in the banking, gvernment, and il & gas sectrs perating in the Kingdm f Saudi Arabia. AfricaOnline, a whlly-wned subsidiary f Gndwana Internatinal Netwrks, a leading prvider f cmmunicatins slutins acrss Africa, partnered with Intelsat t prvide a managed bradband internet service fr Sub-Saharan Africa. Intelsat will prvide satellite services via Intelsat 28, and Gndwana will prvide grund supprt and netwrk management services frm AfricaOnline s facilities at Hartebeesthek in Suth Africa. Tgether, Intelsat and Gndwana will deliver high-quality, Ku-band bradband service n a virtual netwrk peratr, r VNO, basis t expand internet access thrughut Sub-Saharan Africa. 5

6 ( millins) On a glbal basis, grwth pprtunities fr ur netwrk services business include increased demand fr aernautical mbility, Internet f Things and maritime mbility applicatins, and high thrughput capacity fr fixed and mbile bradband applicatins fr telecmmunicatins prviders and enterprise netwrks. On a cmbined basis, these applicatins are expected t grw frm a $4 billin pprtunity in 2015 t a $7 billin pprtunity in In additin t Intelsat 29e, which entered service in the first quarter f 2016, ver the next 12 mnths, we expect t access new inventry frm tw ther satellites entering service: Intelsat 33e and Intelsat 32e. Media Media Quarterly Revenue Media revenue was $211 millin in the $250 $222 $217 $219 $212 $211 secnd quarter f 2016, an $11 millin, $200 r 5 percent, decrease t the prir year quarter. Revenue declines were $150 primarily related t the previusly $100 reprted transitin f sme U.S. media $50 custmers t new cmpressin standards, which resulted in reduced $0 vlume and lwer revenues in Eurpe related t the impact f currency 2Q15 3Q15 4Q15 1Q16 2Q16 fluctuatins in Russia. As cmpared t the first quarter f 2016, media revenues were essentially flat. Secnd Quarter Media Highlights and Business Trends: Business in the secnd quarter was driven primarily by renewing cntracts related t Intelsat s media distributin neighbrhds in Asia, Eurpe and Latin America; verall, apprximately 80 percent f ur media revenues are generated by ur distributin and DTH neighbrhds. Our vide neighbrhds prvide excellent value and represent differentiated capacity that delivers millins f viewers t cntent wners. The value f ur vide neighbrhds remains slid with strng demand, reflecting ur ability t deliver a maximum audience fr cntent wners. Trinity Bradcasting Netwrk, the wrld s largest religius televisin netwrk and America s mstwatched faith-based prgramming channel, renewed its cntract n Intelsat s premier vide neighbrhd, Galaxy 14, lcated at 125 W, t deliver its prgramming t millins f viewers in Nrth America. Reaching mre cable subscribers than any ther satellite serving the regin, Galaxy 14 distributes mre than 200 channels in Nrth America, nearly 100 f which are HD. KDDI Crpratin, a Japan-based glbal telecmmunicatins cmpany, is utilizing Intelsat Epic NG t prvide cst-effective, reginalized, vide cntributin and backhaul services at the upcming Games in Ri de Janeir, Brazil, the 26th Games fr which Intelsat has distributed cntent t viewers arund the wrld. Intelsat will supprt KDDI s cntributin services fr a Tier 1 glbal media custmer via a reginalized C-band beam frm Intelsat 29e, enabling mre cst efficient transmissin f HD vide signals frm sprts venues at the Games t the Internatinal Bradcast Center in Ri de Janeir. Given the high fill rates n ur mst ppular vide neighbrhd satellites, the grwth catalyst fr ur media business is ur 2016 launch prgram featuring the launch f tw DTH satellites fr which the Kuband paylads are fully-cntracted. Intelsat 31 entered service in late July Intelsat 36 is planned fr launch n August 24, 2016, and supprts grwth fr ur Suth Africa DTH neighbrhd at 68.5ºE. Intelsat 36 is scheduled t enter service in the furth quarter f

7 ( millins) Gvernment Gvernment Quarterly Revenue Sales t gvernment custmers generated revenue f $94 millin in the secnd quarter f 2016, a $2 millin, r 2 percent, decrease as cmpared t the prir year quarter. Revenue was weighted mre heavily t nnetwrk services as cmpared t the prir year quarter. The current prtin f nnetwrk services as a percentage f ttal gvernment revenue is 61 percent, as cmpared t the secnd quarter f 2015, when the prtin was 59 percent. $250 $200 $150 $100 $50 $0 $95 $95 $100 $104 $94 2Q15 3Q15 4Q15 1Q16 2Q16 Secnd Quarter Gvernment Highlights and Business Trends: Stability in this sectr is demnstrated by Intelsat General s attractive renewal rates n the prvisin f cmmercial satellite services t the U.S. gvernment; ur renewal rates fr n-netwrk and ff-netwrk services are extremely high, n par with thse experienced at the peak f last military cnflict. In the secnd quarter, we received rders fr apprximately 3,150 MHz f capacity, successfully cmpleting a substantial prtin f the planned 2016 renewals. The renewals primarily use nnetwrk capacity. The rders in the quarter included a sizeable, multi-year renewal frm a nn-u.s. gvernment custmer. On July 22, 2016, we were ntified that the CBSP (Cmmercial Bradband Satellite Prgram) Satellite Services Cntract ( CSSC ), which is the replacement fr a cntract we currently hld, was awarded t anther bidder. If n prtest is filed, the decisin will becme final within 10 days f receiving the ntice. The exact schedule fr the transitin f services is unknwn at this time. We received a cntract mdificatin in April 2016 that wuld allw fr certain f ur currently prvided services t be extended fr a perid f up t six mnths; hwever, under the terms f the cntract mdificatin, thse extensins culd be cancelled at any time. As f the secnd quarter 2016, ur gvernment business is stable. Our revenue utcme ver the balance f 2016 is highly dependent upn the duratin f the CBSP cntract extensins. We believe that ur business activity in this custmer set reflects the current temp f ur end-custmers peratins. Still, visibility remains limited, with the pace f RFP issuance and subsequent awards remaining slw, as well as increasing use f lwest price technically acceptable, r LPTA, evaluatin frmats fr awards f new business. Over the mid-term, ur strategy t grw ur gvernment business includes prviding mbility services t the U.S. gvernment fr aernautical and grund mbile requirements, especially as ur next generatin Intelsat Epic NG services are activated, demnstrating capabilities such as high perfrmance t small antennas, as described abve under the Operatinal Pririties sectin. We are als psitining t prvide satellite-related peratins supprt as the gvernment cnsiders cmmercializatin f certain satellite peratins capabilities. 7

8 Fleet and Operatins Update The statin-kept 36 MHz equivalent unit cunt n ur wide-beam fleet was apprximately 2,125 at the end f the secnd quarter f Utilizatin was at 76 percent, reflecting a slight increase primarily related t units under cntract fr mbility applicatins. The HTS Intelsat Epic NG unit cunt was unchanged frm the first quarter, with 270 units in service. Intelsat currently has eight satellites in the design and manufacturing stages that are cvered by ur capital expenditure plan. In additin, we are wrking n three ther satellites, including tw custm paylads being built n third-party satellites and a jint venture satellite. Our Intelsat 31 satellite was launched n June 9, 2016 and entered service in late July Arianespace is scheduled t launch ur tw remaining 2016 satellites, Intelsat 33e and Intelsat 36, n August 24, Our satellites and third-party paylads and jint venture prject currently in the design and manufacturing stages are nted belw. Intelsat Epic NG -class satellites are nted with a small e fllwing the satellite number. 8

9 ( millins) Secnd Quarter 2016 Financial Perfrmance Quarterly Ttal Revenue and Adjusted EBITDA $750 $500 $598 $581 $571 $553 $542 $473 $458 $453 $418 $411 Revenue AEBITDA $250 $0 2Q15 3Q15 4Q15 1Q16 2Q16 Cash Flws During the secnd quarter f 2016, net cash used in perating activities was $11 millin. Cash paid fr interest in the secnd quarter was $355 millin, net f $30 millin which was capitalized. Under existing debt agreements, Intelsat makes significantly greater interest payments in the secnd and furth quarters as cmpared t the first and third quarters f the year. Capital expenditures were $190 millin, resulting in free cash flw used in peratins 1 f $202 millin fr the secnd quarter f Our ending cash balance at June 30, 2016 was $970 millin. In additin, ur balance sheet included $480 millin f restricted cash. In July 2016, we used the restricted cash t repurchase debt utstanding upn cmpletin f previusly cmmenced tender ffers, described belw. 9

10 Capital Markets and Debt Transactins In the secnd quarter and thrugh July 15, 2016, Intelsat cntinued its liability management prcess, including: An issuance in June f $490 millin aggregate principal amunt f 9.5% Intelsat Jacksn Hldings S.A. ( Intelsat Jacksn ) Senir Secured Ntes due The repurchase in May f apprximately $460 millin in aggregate principal amunt f Intelsat Jacksn s utstanding 6 5/8% Senir Ntes due 2022, creating a net gain n early extinguishment f debt f apprximately $131 millin. The cmpletin f tender ffers in July resulting in the repurchase f apprximately $674 millin in aggregate principal amunt f Intelsat Jacksn s utstanding 6 5/8% Senir Ntes due This will create a net gain n early extinguishment f debt f apprximately $216 millin in the three mnths ending September 30, We appreciate the cllabrative and cnstructive relatinships built with the investment cmmunity during the curse f these and earlier financial transactins and the alignment f interests as we strive t d what is right fr ur cmpany and we enhance the financial health f ur business. We cntinue t lk fr pprtunities t enhance ur capital structure in furtherance f ur liability management prcess. 10

11 2016 Outlk Intelsat reaffirmed its revenue and capital expenditures guidance issued n February 22, 2016: We cntinue t expect full year 2016 revenue f $2.14 billin t $2.20 billin. Adjusted EBITDA Guidance: Perfrmance is expected t range frm $1.625 billin t $1.675 billin, reflecting lwer revenue and increased perating csts, as we develp ur service infrastructure. Capital expenditure guidance remains as fllws: Guidance FY 2016 FY 2017 FY 2018 Capital Expenditures $725M - $800M $625M - $700M $425M - $525M Our capital expenditure guidance includes capitalized interest. The annual classificatin f capital expenditure and prepayments culd be affected by the timing f achievement f cntract, satellite manufacturing, launch and ther milestnes. Our net number f transpnder equivalents is expected t increase by a cmpund annual grwth rate, r CAGR, f 10 percent as a result f all f ur satellites entering service between January 1, 2016 and December 31, This aligns with the launches f the Intelsat Epic NG high thrughput satellites, the first f which entered service in the first quarter f 2016, and the secnd f which is scheduled t launch in August 2016 and enter service by year-end Cash Taxes: We expect annual cash taxes t be apprximately $30 millin t $35 millin. Stephen Spengler, Chief Executive Officer, Jacques Kerrest, Executive Vice President and Chief Financial Officer, 1 In this quarterly cmmentary dcument, financial measures are presented bth in accrdance with U.S. GAAP and als n a nn- GAAP basis. EBITDA, Adjusted EBITDA ( AEBITDA ), free cash flw frm (used in) peratins and related margins, and adjusted net incme included in this cmmentary are nn-gaap financial measures. Please see the cnslidated financial infrmatin fund in ur earnings release and available n ur website fr infrmatin recnciling nn-gaap financial measures t cmparable U.S. GAAP financial measures. 11

12 Safe Harbr Statement Sme f the infrmatin and statements in this quarterly cmmentary and certain ral statements made frm time t time by Intelsat s representatives cnstitute "frward-lking statements" that d nt directly r exclusively relate t histrical facts. When used in this quarterly cmmentary, the wrds may, will, might, shuld, expect, plan, anticipate, prject, believe, estimate, predict, intend, ptential, utlk, and cntinue, and the negative f these terms, and ther similar expressins are intended t identify frward-lking statements and infrmatin. Frward-lking statements include: ur expectatin that the launches f ur satellites in the future will psitin us fr grwth; ur plans fr satellite launches in the near t mid-term; ur guidance regarding ur expectatins fr ur revenue perfrmance, including in ur different custmer sets, and Adjusted EBITDA perfrmance in 2016; ur capital expenditure guidance fr 2016 and the next several years; ur expectatins as t the increased number f transpnder equivalents n ur fleet ver the next several years; ur expectatins as t the level f ur cash tax expenses in the future; and ur belief that as we execute n ur initiatives, we will build the inventry and service capabilities t allw us t capture future grwth, including in emerging pprtunities. Frward-lking statements reflect Intelsat's intentins, plans, expectatins, anticipatins, prjectins, estimatins, predictins, utlk, assumptins and beliefs abut future events and are subject t risks, uncertainties and ther factrs, many f which are utside f Intelsat's cntrl. Imprtant factrs that culd cause actual results t differ materially frm the expectatins expressed r implied in the frward-lking statements include knwn and unknwn risks. Sme f the factrs that culd cause actual results t differ frm histrical results r thse anticipated r predicted by these frward-lking statements include: risks assciated with perating ur in-rbit satellites; satellite launch failures, satellite launch and cnstructin delays and in-rbit failures r reduced perfrmance; ptential changes in the number f cmpanies ffering cmmercial satellite launch services and the number f cmmercial satellite launch pprtunities available in any given time perid that culd impact ur ability t timely schedule future launches and the prices we pay fr such launches; ur ability t btain new satellite insurance plicies with financially viable insurance carriers n cmmercially reasnable terms r at all, as well as the ability f ur insurance carriers t fulfill their bligatins; pssible future lsses n satellites that are nt adequately cvered by insurance; U.S. and ther gvernment regulatin; changes in ur cntracted backlg r expected cntracted backlg fr future services; pricing pressure and vercapacity in the markets in which we cmpete; ur ability t access capital markets fr debt r equity; the cmpetitive envirnment in which we perate; custmer defaults n their bligatins t us; ur internatinal peratins and ther uncertainties assciated with ding business internatinally; and litigatin. Knwn risks include, amng thers, the risks described in Intelsat s annual reprt n Frm 20-F fr the years ended December 31, 2015 and its ther filings with the U.S. Securities and Exchange Cmmissin, the plitical, ecnmic and legal cnditins in the markets we are targeting fr cmmunicatins services r in which we perate and ther risks and uncertainties inherent in the telecmmunicatins business in general and the satellite cmmunicatins business in particular. Because actual results culd differ materially frm Intelsat's intentins, plans, expectatins, assumptins and beliefs abut the future, yu are urged t view all frward-lking statements with cautin. Intelsat des nt undertake any bligatin t update r revise any frward-lking statements, whether as a result f new infrmatin, future events r therwise. Cntact Dianne VanBeber Vice President, Investr Relatins and Cmmunicatins dianne.vanbeber@intelsat.cm