Logo Logo 2016 Annual
Performance Summary

FINANCIAL INFORMATION

Our results demonstrate our continued progress on financial and operating priorities to support our long-term growth strategy and business transformation.

2016 marked a number of strategic milestones for Intelsat as we continued to focus on bringing high performing, more efficient and accessible satellite technology into service. We successfully launched four new satellites, introduced our IntelsatOne® Flex and IntelsatOne® Prism managed services and continued to make progress on bringing new, innovative ground and antenna technology to market with our partners, Kymeta and Phasor.

2016 revenue and Adjusted EBITDA1, of $2.188 billion and $1.651 billion, respectively, declined 7 percent and 11 percent, respectively, as compared to the prior year results, in-line with our guidance set early in 2016. 2016 results reflected continued pricing pressure resulting from oversupply conditions of widebeam capacity, reduced revenue from point-to-point telecommunications infrastructure services moving to fiber alternatives and limited new U.S. government opportunities as compared to the prior year. However, these trends were partially offset as new satellites entered service as the year progressed, including two fully committed direct-to-home satellites and two of our new Intelsat EpicNG satellites.

In 2016, we saw a decrease in our 2016 Adjusted EBITDA1 margin of 75 percent of revenue, as compared to 79 percent of revenue in 2015, reflecting an increase in bad debt, primarily related to certain customers in the Latin America region, and staff-related expenses.

Contracted backlog ended the year at $8.7 billion, as compared to $8.9 billion at September 30, 2016. At 4.0 times trailing 12 months revenue (from January 1, 2016 to December 31, 2016), our backlog remains sizable and we believe it provides a solid foundation for predictable cash flow and investment in our business. The largest proportion of our backlog is related to our long-term media contracts.

In 2016, we invested $733 million for satellites and other property and equipment as we continue to build and launch satellites that enhance our Globalized Network.

$733 million

We invested $733 million for satellites and other property and equipment as we continue to build and launch satellites that enhance our Globalized Network.

Intelsat’s Capital Structure

Over the course of 2016, a number of our subsidiaries, including Intelsat Jackson Holdings S.A. (“Intelsat Jackson”), Intelsat Luxembourg S.A. (“Intelsat Luxembourg”), and Intelsat Connect Finance S.A. (“ICF”) conducted a number of liability management initiatives, with the objective of enhancing liquidity, addressing maturities and capturing value for our shareholders. The individual transactions are summarized below and outlined in greater detail in Intelsat’s annual report for the year ended December 31, 2016, filed with the SEC on Form 20-F in February 2017.

DEBT TRANSACTION


SUMMARY

COMPLETION DATE
Intelsat Jackson Senior Secured Notes Offering
  • Intelsat Jackson completed an offering of $1.25 billion aggregate principal amount of its 8% Senior Secured Notes due 2024 (the “2024 Secured Jackson Notes”) for cash.
March 2016
Intelsat Jackson Notes Repurchases
  • Intelsat Jackson repurchased $459.7 million in aggregate principal amount of its outstanding 65/8% Senior Notes due 2022 (the “2022 Jackson Notes”), and
  • Intelsat Jackson recognized a net gain on early extinguishment of debt of $131.4 million.
May 2016
Subsidiary Guarantee of Intelsat Jackson's 65/8% Senior Notes due 2022
  • Intelsat Jackson and each of the subsidiaries of Intelsat Jackson that guarantees loans under Intelsat Jackson's Secured Credit Agreement executed a supplemental indenture to the indenture governing the 2022 Jackson Notes, following the execution of which such subsidiaries became guarantors of the 2022 Jackson Notes.
May 2016
Intelsat Jackson Tender Offers and Senior Secured Notes Issuance
  • Intelsat Jackson completed an issuance of $490 million aggregate principal amount of 9½% Senior Secured Notes due 2022 (the “2022 Secured Jackson Notes”) with an original issue discount of 2.0%.
May 2016
Intelsat Jackson Tender Offers and Senior Secured Notes Issuance
  • Net proceeds of the sale of the 2022 Jackson Notes were used to repurchase $673.5 million aggregate principal amount of the 2022 Jackson Notes pursuant to terms of previously commenced Tender Offers.
  • Recognized a net gain on early extinguishment of debt of $219.6 million.
July 2016
Intelsat Jackson Debt Exchange and Consent Solicitation
  • Intelsat Jackson completed a debt exchange receiving $141.4 million aggregate principal amount of 2022 Jackson Notes in exchange for $99.7 million aggregate principal amount of newly issued 2024 Secured Jackson Notes and $17.0 million in cash.
  • Intelsat Jackson also received a consent from holders of $141.5 million principal amount of 2022 Jackson Notes in exchange for $9.2 million in cash to amend the indenture governing the 2022 Jackson Notes.
September 2016
First 2018 Intelsat Luxembourg Exchange
  • ICF completed a debt exchange, receiving $377.6 million aggregate principal amount of Intelsat Luxembourg's 6¾% Senior Notes due 2018 (the “2018 Luxembourg Notes”) in exchange for $132.1 million aggregate principal amount of its newly issued unsecured 12½% Senior Notes due 2022 (the “2022 ICF Notes”) and $226.5 million in cash (the “2018 Luxembourg Exchange”).
December 2016
2021 Intelsat Luxembourg Exchange
  • ICF completed a debt exchange, receiving $979.2 million aggregate principal amount of Intelsat Luxembourg's 7¾% Senior Notes due 2021 (the “2021 Luxembourg Notes”) in exchange for $538.4 million aggregate principal amount of its newly issued 2022 ICF Notes and $29.4 million in cash (the “2021 Luxembourg Exchange”).
  • Recognized a net gain on early extinguishment of debt of $609.8 million.
December 2016
2023 Intelsat Luxembourg Exchange
  • ICF completed a debt exchange, receiving $111.7 million aggregate principal amount of Intelsat Luxembourg's 81/8% Senior Notes due 2023 (the “2023 Luxembourg Notes”) in exchange for $61.4 million aggregate principal amount of newly issued 2022 ICF Notes and $3.3 million in cash (the “2023 Luxembourg Exchange”).
  • ICF recognized a net gain on early extinguishment of debt of $69.4 million.
December 2016
Intelsat Luxembourg Exchange Offer
  • Intelsat Luxembourg completed a debt exchange (the "Second 2018 Luxembourg Exchange”) where it exchanged $403.3 million aggregate principal amount of the 2018 Luxembourg Notes for an equal aggregate principal amount of newly issued unsecured 12½% Senior Notes due 2024 (the “2024 Luxembourg Notes”).
  • This exchange included the tender of $377.6 million aggregate principal amount of 2018 Luxembourg Notes held by ICF as a result of the December 2016 ICF exchange transactions, together with $25 million aggregate principal amount of 2018 Notes that Intelsat Luxembourg repurchased in the fourth quarter of 2015.
January 2017

1In this 2016 Annual Report, financial measures are presented both in accordance with U.S. GAAP and also on a non-U.S. GAAP basis. EBITDA, Adjusted EBITDA ("AEBITDA"), free cash flow from (used in) operations and related margins included in this Annual Report are non-U.S. GAAP financial measures. Please see the consolidated financial information found in our found in our Annual Report on Form 20-F and available on our website for information reconciling non-U.S. GAAP financial measures to comparable U.S. GAAP financial measures.