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____________________________________________________________________________________________________________________________________________________________________________________

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________

FORM 10-Q

_____________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March~~June 3130, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-35878

_____________________________________

INTELSAT S.A.

(Exact name of registrant as specified in its charter)

_____________________________________

Grand Duchy of Luxembourg

98-1009418

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

4, rue Albert Borschette

L-1246

Luxembourg

+352

27 84

1600

(Address of principal executive offices, including zip code)

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of ~~May~~July 331, 2021, 142,184,518 common shares of the registrant were outstanding, with a nominal value of $0.01 per share.

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TABLE OF CONTENTS

		Page
Introduction		3
Financial and Other Information		3
Forward-Looking Statements		3
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets as of December 31, 2020 and March 31, 2021 (Unaudited)	6
	Condensed Consolidated Balance Sheets as of December 31, 2020 and June 30, 2021 (Unaudited)	6
	Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2020 and 2021	7
	Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2020 and 2021	7
	Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2020 and 2021	8
	Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2020 and 2021	8
	Unaudited Condensed Consolidated Statements of Changes in Shareholders' Deficit for the Three Months Ended March 31, 2020 and 2021	9
	Unaudited Condensed Consolidated Statements of Changes in Shareholders' Deficit for the Three and Six Months Ended June 30, 2020 and 2021	9
	Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2021	10
	Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2021	10
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	1112
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3335
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4348
Item 4.	Controls and Procedures	4348
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	4449
Item 1A.	Risk Factors	4449
Item 6.	Exhibits	4550
SIGNATURES		4651

INTRODUCTION

In this Quarterly Report on Form 10-Q, or Quarterly Report, unless otherwise indicated or the context otherwise requires, (1) the terms “we,” “us,” “our,” “the Company” and “Intelsat” refer to Intelsat S.A., and its subsidiaries on a consolidated basis, (2) the term “Intelsat Holdings” refers to our indirect wholly-owned subsidiary, Intelsat Holdings S.A., (3) the term “Intelsat Investments” refers to Intelsat Investments S.A., Intelsat Holdings’ direct wholly-owned subsidiary, (4) the term “Intelsat Luxembourg” refers to Intelsat (Luxembourg) S.A., Intelsat Investments’ direct wholly-owned subsidiary, (5) the term "Intelsat Envision" refers to Intelsat Envision Holdings LLC, Intelsat Luxembourg's direct wholly-owned subsidiary, (6) the terms “Intelsat Connect” and “ICF” refer to Intelsat Connect Finance S.A., Intelsat Envision’s direct wholly-owned subsidiary, and (7) the term “Intelsat Jackson” refers to Intelsat Jackson Holdings S.A., Intelsat Connect’s direct wholly-owned subsidiary. In this Quarterly Report, unless the context otherwise requires, all references to transponder capacity or demand refer to transponder capacity or demand in the C-band and Ku-band frequencies only.

FINANCIAL AND OTHER INFORMATION

Unless otherwise indicated, all references to “dollars” and “$” in this Quarterly Report are to, and all monetary amounts in this Quarterly Report are presented in, U.S. dollars. Unless otherwise indicated, the financial information contained in this Quarterly Report has been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”).

Certain monetary amounts, percentages and other figures included in this Quarterly Report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them.

In this Quarterly Report, we refer to and rely on publicly available information regarding our industry and our competitors. Although we believe the information is reliable, we cannot guarantee the accuracy and completeness of the information and have not independently verified it.

FORWARD-LOOKING STATEMENTS

Some of the statements in this Quarterly Report and oral statements made from time to time by our representatives constitute forward-looking statements that do not directly or exclusively relate to historical facts. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements as long as they are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from the expectations expressed or implied in the forward-looking statements.

When used in this Quarterly Report, the words “may,” “will,” “ might,” “should,” “expect,” “plan,” “anticipate,” “project,” “believe,” “estimate,” “predict,” “intend,” “potential,” “outlook” and “continue,” and the negative of these terms, and other similar expressions are intended to identify forward-looking statements and information. Examples of these forward-looking statements include, but are not limited to, statements regarding the following: our belief that the growing worldwide demand for reliable broadband connectivity everywhere at all times, together with our leadership position in our attractive sector, global scale, efficient operating and financial profile, diversified customer sets and sizeable contracted backlog, provide us with a platform for long-term success; our ability to confirm and consummate a plan of reorganization in the Chapter 11 Cases (as defined below); the effects of the Chapter 11 Cases on our liquidity or results of operations or business prospects; other risks related to the Chapter 11 Cases as described further below; our belief that our next generation software-defined satellites (“SDS”) will provide differentiated inventory to help offset recent trends of pricing pressure, new capacity from other satellite operators, and improved access to fiber links in our network services business; our outlook that the increased volume of services provided by our high-throughput satellites (“HTS”) and SDS over time is expected to stabilize the level of business activity in the network services sector; our expectation that over time incremental demand for capacity to support the new 4K format, also known as ultra-high definition, could offset some of the reductions in demand related to use of compression technologies in our media business; our expectation that our new services and technologies will open new sectors that are much larger and faster growing than those we support today; our belief that supporting our video neighborhoods, employing a disciplined yield management approach across our business units, developing and maintaining strong customer relationships and distribution channels for our primary customer sets, and successfully executing on our business plan to deliver strong operational results will drive stability in our core business; our expectation that scaling our differentiated managed service offerings in targeted growth verticals and leveraging the global footprint, higher performance and better economics of our HTS and SDS platforms, in addition to the flexibility of our innovative terrestrial network, will drive revenue growth; our belief that completing targeted investments and partnerships in differentiated space and ground infrastructure will provide a seamless interface with the broader telecommunications ecosystem; our outlook that seeking partnerships and investments for vertical expansion in the growing mobility sector, for example, through our recent Gogo Transaction (as defined below), and in adjacent space-based businesses, will position us for long-term growth; our belief that investing in and deploying innovative new technologies and platforms will change the types of applications we can serve and increase our share of the global demand for broadband connectivity; our projection that our government business will benefit over time from our agile satellite fleet serving the increasing demands for

mobility services from the U.S. government for aeronautical and ground mobile requirements; our intention to maximize the value of our spectrum rights; our expectations as to our ability to comply with the final U.S. Federal Communications Commission (“FCC”) order regarding clearing C-band spectrum in North America, including the availability of adequate resources and funds required to comply and the receipt of accelerated clearing payments set forth in the FCC order; our belief that developing differentiated managed services and investing in related software- and standards-based technology will allow us to unlock opportunities that are essential to providing global broadband connectivity; the trends that we believe will impact our revenue and operating expenses in the future; our assessments regarding how long satellites that have experienced anomalies in the past should be able to provide service on their transponders; our belief as to the likelihood of the cause of the failure of Intelsat 29e in 2019 occurring on our other satellites; our assessment of the risks of future anomalies occurring on our satellites; our plans for satellite launches in the near-term; our expected capital expenditures in 2021 and during the next several years; our belief that the diversity of our revenue allows us to benefit from changing market conditions and lowers our risk from revenue fluctuations in our service applications and geographic regions; our belief that the scale of our fleet can reduce the financial impact of any satellite anomalies or launch failures and protect against service interruptions; and the impact on our financial position or results of operations of pending legal proceedings.

Forward-looking statements reflect our intentions, plans, expectations, anticipations, projections, estimations, predictions, outlook, assumptions and beliefs about future events. These forward-looking statements speak only as of their dates and are not guarantees of future performance or results and are subject to risks, uncertainties and other factors, many of which are outside of our control. These factors could cause actual results or developments to differ materially from the expectations expressed or implied in the forward-looking statements and include known and unknown risks. Known risks include, among others, the risks discussed in Part I—Item 1A—Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Annual Report”), the political, economic, regulatory 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.

Other factors that may cause results or developments to differ materially from historical results or developments or the forward-looking statements made in this Quarterly Report include, but are not limited to:

•risks associated with operating our in-orbit satellites;

•satellite launch failures, satellite launch and construction delays and in-orbit failures or reduced satellite 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;

•our ability to access capital markets for debt or equity;

•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;

•the impact of the novel coronavirus (“COVID-19”) pandemic on our business, the economic environment and our expected financial results;

•our expectations as to the benefits and impact on our future financial performance associated with the Company’s recent purchase of the equity of Gogo Inc.’s (NASDAQ: GOGO) (“Gogo”) commercial aviation business (the “Gogo Transaction”);

•our ability to successfully integrate Gogo’s commercial aviation business;

•litigation; and

•other risks discussed in our 2020 Annual Report or this Quarterly Report.

Further, many of the risks and uncertainties that we face are currently amplified by, and will continue to be amplified by, the risks and uncertainties regarding the Company and certain of its subsidiaries’ voluntary commencement of cases (the “Chapter 11 Cases”) under title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Eastern District of Virginia (the “Bankruptcy Court”), including but not limited to:

•our ability to improve our liquidity and long-term capital structure and to address our debt service obligations through the restructuring;

•our ability to obtain timely approval by the Bankruptcy Court with respect to the motions that we have filed or will file in the Chapter 11 Cases, including those related to our debtor-in-possession (“DIP”) financing;

•objections to the Company’s restructuring process or other pleadings filed that could protract the Chapter 11 Cases or interfere with the Company’s ability to consummate the restructuring;

•our ability to retain the exclusive right to propose a Chapter 11 plan of reorganization and our ability to achieve confirmation of such plan;

•our ability to develop, obtain support for, confirm and consummate a Chapter 11 plan of reorganization, including the proposed plan of reorganization the Company filed in the Bankruptcy Court on February 12, 2021, as may be modified or amended;

•the length of time that the Company will operate under Chapter 11 protection and the continued availability of operating capital during the pendency of the Chapter 11 Cases;

•our substantial level of indebtedness and related debt service obligations and restrictions, including those expected to be imposed by covenants in any exit financing, that may limit our operational and financial flexibility;

•the conditions to which our ~~debtor-in-possession (“~~DIP”) financing is subject and the risk that these conditions may not be satisfied for various reasons, including for reasons outside of our control;

•our ability to develop and execute our business plan during the pendency of the Chapter 11 Cases;

•increased administrative and legal costs related to the Chapter 11 process;

•potential delays in the Chapter 11 process due to the effects of the COVID-19 pandemic; and

•our ability to continue as a going concern and our ability to maintain relationships with regulators, suppliers, customers, employees and other third parties as a result of such going concern, during the restructuring and the pendency of the Chapter 11 Cases.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee our future results, level of activity, performance or achievements. Because actual results could differ materially from our intentions, plans, expectations, anticipations, projections, estimations, predictions, outlook, assumptions and beliefs about the future, you are urged not to rely on forward-looking statements in this Quarterly Report and to view all forward-looking statements made in this Quarterly Report with caution. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

INTELSAT S.A. (DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

	December 31, 2020		~~March~~June 3130, 2021
			(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,060,917	$	~~814~~631,~~688~~871
Restricted cash	21,130		2627,~~987~~055
Receivables, net of allowances of $40,785 in 2020 and $40,984 in 2021	659,444		833,637
Receivables, net of allowances of $40,785 in 2020 and $29,202 in 2021	659,444		1,022,447
Contract assets	39,774		48,095
Contract assets, net of allowances	39,774		39,280
Inventory	147,094		140,~~603~~302
Prepaid expenses and other current assets	136,611		~~133~~123,~~986~~906
Total current assets	2,064,970		1,~~997~~984,~~996~~861
Satellites and other property and equipment, net	4,757,877		4,~~890~~958,~~921~~927
Goodwill	2,698,247		2,~~694~~695,~~307~~866
Non-amortizable intangible assets	2,295,000		2,295,000
Amortizable intangible assets, net	290,569		~~281~~271,~~589~~405
Contract assets, net of current portion	86,017		81,997
Contract assets, net of current portion and allowances	86,017		76,565
Other assets	605,001		~~602~~627,~~926~~486
Total assets	$	12,797,681	$	12,~~844~~910,~~736~~110
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued liabilities	$	252,998	$	~~291~~300,~~389~~179
Taxes payable	7,493		76,~~871~~436
Employee related liabilities	43,404		4547,~~611~~010
Accrued interest payable	17,747		1718,~~985~~035
Current maturities of long-term debt	5,903,724		5,~~906~~909,~~514~~377
Contract liabilities	157,320		~~762~~848,~~119~~691
Deferred satellite performance incentives	47,377		5256,~~164~~115
Other current liabilities	73,479		7183,~~597~~815
Total current liabilities	6,503,542		7,~~155~~269,~~250~~658
Contract liabilities, net of current portion	1,447,891		1,~~022~~108,~~039~~617
Deferred satellite performance incentives, net of current portion	138,116		~~135~~127,~~077~~774
Deferred income taxes	61,345		6471,~~943~~866
Accrued retirement benefits, net of current portion	129,837		~~124~~118,~~691~~458
Other long-term liabilities	262,900		~~261~~283,~~974~~516
Liabilities subject to compromise	10,168,518		10,169,~~260~~230
Shareholders’ deficit:
Common shares, nominal value $0.01 per share	1,421		1,422
Paid-in capital	2,573,840		2,~~574~~576,~~563~~144
Accumulated deficit	(8,416,410)		(8,~~591~~743,~~286~~592)
Accumulated other comprehensive loss	(80,322)		(7978,~~353~~307)
Total Intelsat S.A. shareholders’ deficit	(5,921,471)		(6,~~094~~244,~~654~~333)
Noncontrolling interest	7,003		65,~~156~~324
Total liabilities and shareholders’ deficit	$	12,797,681	$	12,~~844~~910,~~736~~110

See accompanying notes to unaudited condensed consolidated financial statements.

INTELSAT S.A. (DEBTOR-IN-POSSESSION)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

	Three Months EndedMarch 31, 2020		Three Months EndedMarch 31, 2021
	Three Months EndedJune 30, 2020		Three Months EndedJune 30, 2021		Six Months EndedJune 30, 2020		Six Months EndedJune 30, 2021
Revenue	$	~~458~~482,~~820~~034	$	~~502~~507,~~763~~862	$	940,854	$	1,010,625
Operating expenses:
Direct costs of revenue (excluding depreciation and amortization)	~~105~~106,~~085~~961		~~165~~163,~~233~~317		212,046		328,549
Selling, general and administrative	8063,~~967~~863		~~102~~100,~~614~~161		144,829		202,777
Depreciation and amortization	~~163~~162,~~048~~614		~~165~~168,~~241~~259		325,662		333,499
Impairment of non-amortizable intangible assets	12,200		—
Impairment of non-amortizable intangible and other assets	34,043		—		46,243		—
Other operating expense—C-band	—		5864,~~356~~638		—		122,994
Total operating expenses	~~361~~367,~~300~~481		~~491~~496,~~444~~375		728,780		987,819
Income from operations	97114,~~520~~553		11,~~319~~487		212,074		22,806
Interest expense, net	(~~318~~222,~~329~~533)		(~~132~~129,~~343~~893)		(540,862)		(262,236)
Other income, net	2,~~735~~762		920,~~719~~218		5,496		29,937
Reorganization items	—(298,691)		(5549,~~812~~591)		(298,691)		(105,403)
Loss before income taxes	(~~218~~403,~~074~~909)		(~~167~~147,~~117~~779)		(621,983)		(314,896)
Income tax expense	(~~141~~818)		(73,~~189~~923)		(959)		(11,112)
Net loss	(~~218~~404,~~215~~727)		(~~174~~151,~~306~~702)		(622,942)		(326,008)
Net income attributable to noncontrolling interest	(~~556~~628)		(~~570~~604)		(1,184)		(1,174)
Net loss attributable to Intelsat S.A.	$	(~~218~~405,~~771~~355)	$	(~~174~~152,~~876~~306)	$	(624,126)	$	(327,182)
Net loss per common share attributable to Intelsat S.A.:
Basic	$	(12.5585)	$	(1.2307)	$	(4.40)	$	(2.30)
Diluted	$	(12.5585)	$	(1.2307)	$	(4.40)	$	(2.30)

See accompanying notes to unaudited condensed consolidated financial statements.

INTELSAT S.A. (DEBTOR-IN-POSSESSION)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

					Three Months EndedMarch 31, 2020		Three Months EndedMarch 31, 2021
	Three Months EndedJune 30, 2020		Three Months EndedJune 30, 2021		Six Months EndedJune 30, 2020		Six Months EndedJune 30, 2021
Net loss	$	(404,727)	$	(151,702)	$	(~~218~~622,~~215~~942)	$	(~~174~~326,~~306~~008)
Other comprehensive income (loss), net of tax:
Defined benefit retirement plans:
Reclassification adjustment for amortization of unrecognized prior service credits, net of tax included in other income, net	(626)		(626)		(~~626~~1,252)		(~~626~~1,252)
Reclassification adjustment for amortization of unrecognized actuarial loss, net of tax included in other income, net	1,274		1,672		12,~~274~~548		13,~~595~~267
Other comprehensive income (loss)	648		1,046		~~648~~1,296		~~969~~2,015
Comprehensive loss	(404,079)		(150,656)		(~~217~~621,~~567~~646)		(~~173~~323,~~337~~993)
Comprehensive income attributable to noncontrolling interest	(628)		(604)		(~~556~~1,184)		(~~570~~1,174)
Comprehensive loss attributable to Intelsat S.A.	$	(404,707)	$	(151,260)	$	(~~218~~622,~~123~~830)	$	(~~173~~325,~~907~~167)

See accompanying notes to unaudited condensed consolidated financial statements.

INTELSAT S.A. (DEBTOR-IN-POSSESSION)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT

(in thousands, except where otherwise noted)

	Common Shares
	Number of Shares(in millions)	Amount		Paid-inCapital		AccumulatedDeficit		Accumulated Other Comprehensive Loss		Total Intelsat S.A. Shareholders’ Deficit		NoncontrollingInterest
Balance at December 31, 2019	141.1	$	1,411	$	2,565,696	$	(7,503,830)	$	(63,135)	$	(4,999,858)	$	11,010
Net income (loss)	—	—		—		(218,771)		—		(218,771)		556
Dividends paid to noncontrolling interests	—	—		—		—		—		—		(1,879)
Share-based compensation	1.0	10		971		—		—		981		—
Postretirement/pension liability adjustment, net of tax	—	—		—		—		648		648		—
Adoption of ASU 2016-13	—	—		—		(916)		—		(916)		—
Balance at March 31, 2020	142.1	$	1,421	$	2,566,667	$	(7,723,517)	$	(62,487)	$	(5,217,916)	$	9,687
Net income (loss)	—	—		—		(405,355)		—		(405,355)		628
Share-based compensation				2,737		—		—		2,737		—
Postretirement/pension liability adjustment, net of tax	—	—		—		—		648		648		—
Balance at June 30, 2020	142.1	$	1,421	$	2,569,404	$	(8,128,872)	$	(61,839)	$	(5,619,886)	$	10,315

	Common Shares
	Number of Shares(in millions)	Amount		Paid-inCapital		AccumulatedDeficit		Accumulated Other Comprehensive Loss		Total Intelsat S.A. Shareholders’ Deficit		NoncontrollingInterest
Balance at December 31, 2020	142.1	$	1,421	$	2,573,840	$	(8,416,410)	$	(80,322)	$	(5,921,471)	$	7,003
Net income (loss)	—	—		—		(174,876)		—		(174,876)		570
Dividends paid to noncontrolling interests	—	—		—		—		—		—		(1,417)
Share-based compensation	0.1	1		723		—		—		724		—
Postretirement/pension liability adjustment, net of tax	—	—		—		—		969		969		—
Balance at March 31, 2021	142.2	$	1,422	$	2,574,563	$	(8,591,286)	$	(79,353)	$	(6,094,654)	$	6,156
Net income (loss)	—	—		—		(152,306)		—		(152,306)		604
Dividends paid to noncontrolling interests	—	—		—		—		—		—		(1,436)
Share-based compensation	—	—		1,581		—		—		1,581		—
Postretirement/pension liability adjustment, net of tax	—	—		—		—		1,046		1,046		—
Balance at June 30, 2021	142.2	$	1,422	$	2,576,144	$	(8,743,592)	$	(78,307)	$	(6,244,333)	$	5,324

See accompanying notes to unaudited condensed consolidated financial statements.

INTELSAT S.A. (DEBTOR-IN-POSSESSION)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Three Months EndedMarch 31, 2020		Three Months EndedMarch 31, 2021
	Six Months EndedJune 30, 2020		Six Months EndedJune 30, 2021
Cash flows from operating activities:
Net loss	$	(~~218~~622,~~215~~942)	$	(~~174~~326,~~306~~008)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	~~163~~325,~~048~~662		~~165~~333,~~241~~499
Provision for expected credit losses	1929,~~944~~542		715,~~596~~863
Foreign currency transaction loss	6,380		2,592
Foreign currency transaction (gains) losses	6,927		(147)
Impairment of non-amortizable intangible assets	12,200		—
Loss on disposal of assets	—		41
Share-based compensation	3,706		5,924
Impairment of non-amortizable intangible and other assets	46,243		—
Deferred income taxes	2,181		1,793
Share-based compensation	6,480		12,712
Amortization of discount, premium, issuance costs and related costs	11,196		2,459
Deferred income taxes	5,631		3,471
Amortization of actuarial loss and prior service credits for retirement benefits	659		1,063
Amortization of discount, premium, issuance costs and related costs	17,277		4,978
Unrealized losses on derivative financial instruments	335		—
Non-cash reorganization items	196,974		—
Unrealized (gains) losses on investments and loans held-for-investment	8		(6,274)
Debtor-in-possession financing fees	52,182		—
Amortization of supplemental type certificate costs	—		3,301
Amortization of actuarial loss and prior service credits for retirement benefits	1,317		2,126
Other non-cash items	—		(76)
Unrealized losses on derivative financial instruments	349		—
Unrealized (gains) losses on investments and loans held-for-investment	738		(15,161)
Amortization of supplemental type certificate costs	—		6,398
Other non-cash items	—		(130)
Changes in operating assets and liabilities:
Receivables	~~(939)~~1,266		1922,~~479~~320
Prepaid expenses, contract and other assets	19(28,~~510~~086)		219,~~042~~999
Accounts payable and accrued liabilities	1427,~~743~~539		1027,~~260~~088
Accrued interest payable	~~(757)~~48,775		~~238~~287
Contract liabilities	(640,~~916~~365)		(2147,~~969~~968)
Accrued retirement benefits	(38,~~900~~267)		(511,~~146~~379)
Other long-term liabilities	(812,~~906~~748)		(19,~~810~~629)
Net cash provided by operating activities	1454,~~277~~494		1238,~~407~~360
Cash flows from investing activities:
Capital expenditures (including capitalized interest)	(38199,~~026~~892)		(~~244~~468,~~596~~976)
Acquisition of loans held-for-investment	(1,150)		—
Proceeds from principal payments on loans held-for-investment	724		—
Proceeds from sale of investment	—		15,000
Acquisition of intangible assets	—		(1,085)
Proceeds from principal payments on loans held-for-investment	724		103
Capital contribution to unconsolidated affiliate (including capitalized interest)	(2,692)		—
Acquisition of intangible assets	—		(2,040)
Other proceeds from satellites	5,625		—
Net cash used in investing activities	(32197,~~827~~385)		(~~245~~455,~~681~~913)
Cash flows from financing activities:
Principal payments on deferred satellite performance incentives	(7,806)		(3,570)
Proceeds from debtor-in-possession financing	500,000		—
Dividends paid to noncontrolling interest	(1,879)		(1,417)
Debtor-in-possession financing fees	(52,182)		—
Net cash used in financing activities	(9,685)		(4,987)
Principal payments on deferred satellite performance incentives	(19,195)		(6,921)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(2,007)		(2,111)
Dividends paid to noncontrolling interest	(1,879)		(2,853)
Net change in cash, cash equivalents and restricted cash	(30,242)		(240,372)
Net cash provided by (used in) financing activities	426,744		(9,774)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(3,732)		(1,294)
Net change in cash, cash equivalents and restricted cash	280,121		(428,621)
Cash, cash equivalents, and restricted cash, beginning of period	830,864		1,087,547
Cash, cash equivalents, and restricted cash, end of period	$	~~800~~1,~~622~~110,985	$	~~847~~658,~~175~~926
Supplemental cash flow information:
Cash paid for reorganization items included in cash flows from operating activities	$	—	$	33,078
Interest paid, net of amounts capitalized	282,895		105,467
Income taxes paid, net of refunds	964		475
Supplemental disclosure of non-cash investing activities:
Accrued capital expenditures	$	48,255	$	77,029
Capitalization of deferred satellite performance incentives	—		5,318
Conversion of payment-in-kind interest on loans held-for-investment	—		1,762

See accompanying notes to unaudited condensed consolidated financial statements.


	Six Months Ended June 30, 2020		Six Months Ended June 30, 2021
Supplemental cash flow information:
Cash paid for reorganization items included in cash flows from operating activities	$	28,913	$	91,717
Interest paid, net of amounts capitalized	422,839		208,571
Income taxes paid, net of refunds	2,628		2,546
Supplemental disclosure of non-cash investing activities:
Accrued capital expenditures	$	64,442	$	78,882
Conversion of loans held-for-investment to equity securities	4,802		—
Capitalization of deferred satellite performance incentives	—		5,318
Conversion of payment-in-kind interest on loans held-for-investment	—		1,762

See accompanying notes to unaudited condensed consolidated financial statements.

INTELSAT S.A. (DEBTOR-IN-POSSESSION)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~March~~June 3130, 2021

Note 1—General

Basis of Presentation

The accompanying condensed consolidated financial statements of Intelsat S.A. and its subsidiaries (“Intelsat S.A.,” “we,” “us,” “our” or the “Company”) have not been audited, but are prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. References to U.S. GAAP issued by the Financial Accounting Standards Board (“FASB”) in these footnotes are to the FASB Accounting Standards Codification (“ASC”). The unaudited condensed consolidated financial statements include all adjustments (consisting only of normal and recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of these financial statements. The results of operations for the periods presented are not necessarily indicative of operating results for the full year or for any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Annual Report”), on file with the U.S. Securities and Exchange Commission (“SEC”).

Use of Estimates

The preparation of these condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of these condensed consolidated financial statements, the reported amounts of revenues and expenses during the reporting periods, and the disclosures of contingent liabilities. Accordingly, ultimate results could differ from those estimates.

C-band Spectrum Clearing

On March 3, 2020, the U.S. Federal Communications Commission (“FCC”) issued its final order in the C-band proceeding (the “FCC Final Order”), which, among other things, provides for monetary incentives for fixed satellite services (“FSS”) providers to clear a portion of the C-band spectrum on an accelerated basis (the “Acceleration Payments”). On August 14, 2020, the Company filed its C-band spectrum transition plan with the FCC. On September 17, 2020, the Company announced that it finalized materially all of its required contracts with satellite manufacturers and launch-vehicle providers to move forward and meet the accelerated C-band spectrum clearing timelines established by the FCC.

Under the FCC Final Order, the Company is eligible to receive Acceleration Payments of approximately $1.2 billion and $3.7 billion based on the milestone clearing certification dates of December 5, 2021 and December 5, 2023, with the respective payments expected to be received in the first half of each successive year, respectively, subject to the satisfaction of certain deadlines and other conditions. In addition, under the FCC Final Order, we are also entitled to receive reimbursement payments for certain C-band spectrum clearing expenses incurred, subject to the satisfaction of certain conditions set forth in the FCC Final Order. As of December 31, 2020 and ~~March~~June 3130, 2021, we incurred $405.2 million and $~~606~~805.56 million, respectively, related to expected reimbursable costs associated with the FCC Final Order, which are included within the receivables line item on our condensed consolidated balance sheets. Fulfillment costs incurred as a result of the FCC Final Order, which include costs to pay personnel or third parties to assist with customer reconfiguration and relocation, installation of filters, and program management costs, are expensed as incurred and are included within other operating expense—C-band on our condensed consolidated statements of operations.

Impact of COVID-19 on the Company

As a result of the novel coronavirus (“COVID-19”) pandemic in 2020 and continuing into 2021, in an effort to safeguard public health, governments around the world, including United States (“U.S.”) federal, state and local governments, implemented a number of orders and restrictions on travel and businesses, among other things. Some of these measures remain in effect and have negatively impacted the U.S. and other economies around the world in the short-term, while the long-term economic impact of COVID-19 remains unknown.

The COVID-19 pandemic has had an adverse impact on our business, results of operations and financial condition, a trend we expect to continue. Among the impacts of the COVID-19 pandemic were a reduction of revenue and a decreased likelihood of collection from certain mobility customers and our Intelsat CA (as defined below) business. We continue to closely monitor the ongoing impact on our employees, customers, business and results of operations.

1112

Bankruptcy Accounting

Our consolidated financial statements included herein have been prepared as if we are a going concern and reflect the application of ASC 852, Reorganizations (“ASC 852”). ASC 852 requires the financial statements, for periods subsequent to the commencement of our Chapter 11 proceedings, to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, we classify liabilities and obligations whose treatment and satisfaction are dependent on the outcome of the reorganization under the Chapter 11 proceedings as liabilities subject to compromise on our condensed consolidated balance sheets. In addition, we classify all income, expenses, gains or losses that are incurred or realized as a result of the Chapter 11 proceedings as reorganization items in our condensed consolidated statements of operations. See Note 2—Chapter 11 Proceedings, Ability to Continue as a Going Concern and Other Related Matters.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents consist of cash on hand and highly liquid investments with original maturities of three months or less, which are generally time deposits with banks and money market funds. The carrying amount of these investments approximates fair value. Restricted cash represents legally restricted amounts being held as a compensating balance for certain outstanding letters of credit.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within our condensed consolidated balance sheets to the total sum of these amounts reported in our condensed consolidated statements of cash flows (in thousands):

	As ofDecember 31, 2020		As ~~ofMarch~~ofJune 3130, 2021
Cash and cash equivalents	$	1,060,917	$	~~814~~631,~~688~~871
Restricted cash	21,130		2627,~~987~~055
Restricted cash included in other assets	5,500		~~5,500~~—
Cash, cash equivalents and restricted cash	$	1,087,547	$	~~847~~658,~~175~~926

Receivables and Allowance for Credit Losses

We provide satellite services and extend credit to numerous customers in the satellite communication, telecommunications and video markets, as well as the airline industry. We monitor our exposure to credit losses and maintain allowances for credit losses and anticipated losses. The Company’s methodology to measure the provision for credit losses considers all relevant information, including but not limited to, information about historical ~~collectibility~~collectability, current conditions and reasonable and supportable forecasts of future economic conditions. We believe we have adequate customer collateral and reserves to cover our exposure.

The following table provides a roll-forward of the allowance for credit losses reported within our condensed consolidated balance sheets (in thousands):

Description	Three Months Ended ~~March~~June 3130, 2020				Three Months Ended ~~March~~June 3130, 2021
	Accounts Receivable		Contract Assets		Accounts Receivable		Contract Assets
Balance at January 1	$	40,028	$	—	$	40,785	$	3,889
Balance at April 1	$	51,061	$	1,811	$	40,984	$	4,529
Cumulative-effect adjustment of ASU 2016-13 adoption	—		916		—		—
Charged to costs and expenses	9,771		(173)		8,449		(183)
Charged to costs and expenses	19,049		895		6,956		640
Deductions(1)	(33,254)		—		(20,231)		—
Deductions(1)	(8,016)		—		(6,757)		—
Balance at June 30	$	27,578	$	1,638	$	29,202	$	4,346
Balance at March 31	$	51,061	$	1,811	$	40,984	$	4,529


Description	Six Months Ended June 30, 2020				Six Months Ended June 30, 2021
	Accounts Receivable		Contract Assets		Accounts Receivable		Contract Assets
Balance at January 1	$	40,028	$	—	$	40,785	$	3,889
Cumulative-effect adjustment of ASU 2016-13 adoption	—		916		—		—

Charged to costs and expenses	28,820		722		15,406		457
Deductions(1)	(41,270)		—		(26,989)		—
Balance at June 30	$	27,578	$	1,638	$	29,202	$	4,346

(1)Uncollectible accounts written off, net of recoveries.

Recently Adopted Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting For Income Taxes (“ASU 2019-12”). The standard removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation and calculating income taxes in interim periods. It also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. ASU 2019-12 was adopted in the first quarter of 2021. The adoption of ASU 2019-12 did not have a material effect on our condensed consolidated financial statements and associated disclosures.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). The standard simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts regarding an entity’s own equity. ASU 2020-06 is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. ASU 2020-06 will be effective for the Company for interim and annual periods in fiscal years beginning after December 15, 2021. We are in the process of evaluating the impact that ASU 2020-06 will have on our condensed consolidated financial statements and associated disclosures.

Note 2—Chapter 11 Proceedings, Ability to Continue as a Going Concern and Other Related Matters

Voluntary Reorganization under Chapter 11

On May 13, 2020, Intelsat S.A. and certain of its subsidiaries (each, a “Debtor” and collectively, the “Debtors”) commenced voluntary cases (the “Chapter 11 Cases”) under title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Eastern District of Virginia (the “Bankruptcy Court”). Primary factors causing us to file for Chapter 11 protection included the Company’s intention to participate in the accelerated clearing process of C-band spectrum set forth in the FCC Final Order, requiring the Company to incur significant costs related to clearing activities well in advance of receiving reimbursement for such costs and the need for additional financing to fund the C-band clearing process, service our current debt obligations, and meet our operating requirements, as well as the economic slowdown impacting the Company and several of its end markets due to the COVID-19 pandemic. On August 14, 2020, the Company filed its C-band spectrum transition plan with the FCC. On September 17, 2020, the Company announced that it finalized materially all of its required contracts with satellite manufacturers and launch-vehicle providers to move forward and meet the accelerated C-band spectrum clearing timelines established by the FCC.

The Chapter 11 process can be unpredictable and involves significant risks and uncertainties. Pursuant to various orders from the Bankruptcy Court, the Debtors have received approval from the Bankruptcy Court to generally maintain their ordinary operations and uphold certain commitments to their stakeholders, including employees, customers, and vendors, during the restructuring process, subject to the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code. Our ability to fund operating expenses may be subject to obtaining further approvals from the Bankruptcy Court in connection with the Chapter 11 Cases.

On June 9, 2020, Intelsat Jackson received approval from the Bankruptcy Court (the “DIP Order”) to enter into a non-amortizing multiple draw superpriority secured debtor-in-possession term loan facility (the “DIP Facility”), in an aggregate principal amount of $1.0 billion on the terms and conditions as set forth in the DIP Facility credit agreement (the “DIP Credit Agreement”) with certain of the Debtors’ prepetition secured parties (the “DIP Lenders”), and on June 17, 2020, Intelsat Jackson and certain of its subsidiaries as guarantors (together with Intelsat Jackson, the “DIP Debtors”) entered into the DIP Credit Agreement with the DIP Lenders, as amended by an amendment (“DIP Amendment No. 1”) to the DIP Credit Agreement, dated as of August 24, 2020, ~~and as further amended by~~ a second amendment (“DIP Amendment No. 2”), todated ~~the~~as of November 25, 2020, and a third amendment (“DIP ~~Credit~~Amendment ~~Agreement~~No. 3”), dated as of ~~November~~July 2513, ~~2020~~2021. For additional information regarding the DIP Facility, DIP Credit Agreement, DIP Amendment No. 1, DIP Amendment No. 2 and DIP Amendment No. 23, see Note 12—Debt.

On July 11, 2020, the Debtors filed with the Bankruptcy Court schedules and statements setting forth, among other things, the assets and liabilities of each of the Debtors, subject to the assumptions filed in connection therewith. These schedules and statements may be subject to further amendment or modification after filing.

On February 11, 2021, the Debtors entered into a plan support agreement (together with all exhibits and schedules thereto, the “PSA”) with certain of the Debtors’ prepetition secured and unsecured creditors (the “Consenting Creditors” and together with the Debtors, the “PSA Parties”). The PSA contains certain covenants on the part of the PSA Parties, including but not limited to the Consenting Creditors voting in favor of the Joint Chapter 11 Plan of Reorganization of Intelsat S.A. and Its Debtor Affiliates (as proposed, the “Plan”), and provides that the Debtors shall achieve certain milestones (unless extended or waived in writing). In connection with the PSA, on February 12, 2021, the Debtors filed the Plan and the Disclosure Statement for the Joint Chapter 11 Plan of Reorganization of Intelsat S.A. and Its Debtor Affiliates (the “Disclosure Statement”), which describes a variety of topics related to the Chapter 11 Cases, including (i) events leading to the Chapter 11 Cases; (ii) significant events that took place during the Chapter 11 Cases; (iii) certain terms of the Plan; and (iv) certain anticipated risk factors associated with, and anticipated consequences of the Plan. The Bankruptcy Court is currently scheduled to determine the adequacy of the Disclosure Statement in the second quarter of 2021.

Cases; (iii) certain terms of the Plan; and (iv) certain anticipated risk factors associated with, and anticipated consequences of the Plan. The Bankruptcy Court is currently scheduled to determine the adequacy of the Disclosure Statement in the third quarter of 2021.

While the Chapter 11 Cases are pending, the Debtors do not anticipate making interest payments due under their respective unsecured debt instruments; however, the Debtors expect to make monthly interest payments on their senior secured debt instruments pursuant to the adequate protection requirements under the DIP Order. ~~For~~The contractual interest expense pursuant to our unsecured debt instruments that was not recognized in our condensed consolidated statement of operations was $102.5 million and $192.3 million for the three months ended ~~March~~June 3130, 2020 and 2021, respectively, and $102.5 million and $384.5 million for the ~~contractual~~six months ended June 30, 2020 and 2021, respectively.

interest expense pursuant to our unsecured debt instruments that was not recognized in our condensed consolidated statement of operations was $192.3 million.

Delisting of Intelsat S.A. Common Shares

On May 20, 2020, the New York Stock Exchange (“NYSE”) filed a Form 25 with the SEC to delist the Company’s common shares, $0.01 par value from the NYSE. The delisting became effective 10 days after the Form 25 was filed. The deregistration of the common shares under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) became effective 90 days after the filing date of the Form 25. The common shares remain registered under Section 12(g) and Section 15(d) of the Exchange Act. The Company’s common shares began trading on the OTC Pink Marketplace on May 19, 2020 under the symbol “INTEQ.”

Liabilities Subject to Compromise

Prepetition unsecured liabilities of the Debtors subject to compromise under the Chapter 11 proceedings have been distinguished from secured liabilities that are not expected to be compromised and post-petition liabilities in our condensed consolidated balance sheets. Liabilities subject to compromise have been recorded at the amounts expected to be allowed by the Bankruptcy Court. The ultimate settlement amounts of these liabilities remain at the discretion of the Bankruptcy Court and may vary from the expected allowed amounts.

Liabilities subject to compromise consisted of the following (in thousands):

	As ofDecember 31, 2020		As ~~ofMarch~~ofJune 3130, 2021
Accounts payable	$	9,545	$	10,~~563~~645
Debt subject to comprise	9,782,161		9,782,161
Accrued interest on debt subject to compromise	341,676		341,676
Other long-term liabilities subject to compromise	35,136		34,~~860~~748
Total liabilities subject to compromise	$	10,168,518	$	10,169,~~260~~230

Reorganization Items

The expenses, gains and losses directly and incrementally resulting from the Chapter 11 Cases are separately reported as reorganization items in our condensed consolidated statement of operations.

Reorganization items consisted of the following (in thousands):

	Three Months EndedMarch 31, 2021
	Three Months EndedJune 30, 2020		Three Months EndedJune 30, 2021		Six Months EndedJune 30, 2020		Six Months EndedJune 30, 2021
Professional fees	$	55,782
Adjustment of debt discount, premium and issuance costs	$	196,974	$	—	$	196,974	$	—
Other reorganization costs	30
Debtor-in-possession financing fees	52,182		—		52,182		—
Total reorganization items	$	55,812
Professional fees	48,971		49,591		48,971		105,373
Other reorganization costs	564		—		564		30
Total reorganization items	$	298,691	$	49,591	$	298,691	$	105,403

Going Concern

Our condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the normal course of business. In connection with the preparation of our condensed consolidated financial statements, we conducted an evaluation as to whether there were conditions and events, considered in the aggregate, that raised substantial doubt as to the Company’s ability to continue as a going concern. As reflected in our condensed consolidated financial statements, the Company had cash and cash equivalents of $814.7 million and an accumulated deficit of $8.6 billion as of March 31, 2021. The Company generated income from operations of $11.3 million and a net loss of $174.3 million for the three months ended March 31, 2021.

were conditions and events, considered in the aggregate, that raised substantial doubt as to the Company’s ability to continue as a going concern. As reflected in our condensed consolidated financial statements, the Company had cash and cash equivalents of $631.9 million and an accumulated deficit of $8.7 billion as of June 30, 2021. The Company generated income from operations of $22.8 million and a net loss of $326.0 million for the six months ended June 30, 2021.

In light of the Company’s Chapter 11 proceedings, our ability to continue as a going concern is contingent upon, among other things, our ability to, subject to the Bankruptcy Court’s approval, implement a business plan of reorganization, emerge from the Chapter 11 proceedings and generate sufficient liquidity following the reorganization to meet our contractual obligations and operating needs. As a result of risks and uncertainties related to, among other things, (i) the Company’s ability to obtain requisite support for the business plan of reorganization from various stakeholders, and (ii) the disruptive effects of the Chapter 11 proceedings on our business making it potentially more difficult to maintain business, financing and operational relationships, substantial doubt exists regarding our ability to continue as a going concern.

The 14filing of the Chapter 11 Cases constituted an event of default that accelerated substantially all of our obligations under the documents governing the prepetition existing indebtedness of Intelsat S.A., Intelsat Luxembourg, Intelsat Connect and Intelsat Jackson. As such, we have reclassified all such debt obligations, other than debt subject to compromise, to current maturities of long-term debt on our condensed consolidated balance sheets as of December 31, 2020 and June 30, 2021. For additional discussion regarding the impact of the Chapter 11 Cases on our debt obligations, see Note 12—Debt.

The filing of the Chapter 11 Cases constituted an event of default that accelerated substantially all of our obligations under the documents governing the prepetition existing indebtedness of Intelsat S.A., Intelsat Luxembourg, Intelsat Connect and Intelsat Jackson. As such, we have reclassified all such debt obligations, other than debt subject to compromise, to current maturities of long-term debt on our condensed consolidated balance sheets as of December 31, 2020 and March 31, 2021. For additional discussion regarding the impact of the Chapter 11 Cases on our debt obligations, see Note 12—Debt.

Our condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

Note 3—Acquisition of Gogo’s Commercial Aviation Business

On August 31, 2020, following approval from the Bankruptcy Court, Intelsat Jackson and Gogo Inc. (NASDAQ: GOGO), a Delaware corporation (“Gogo”), entered into a purchase and sale agreement (the “Purchase and Sale Agreement”) with respect to Gogo’s commercial aviation business, consisting of all of the equity interests of Gogo LLC and Gogo International Holdings LLC (collectively known as “~~Gogo~~Intelsat CA”), for $400.0 million in cash, subject to customary adjustments. On December 1, 2020, Intelsat Jackson completed the acquisition pursuant to the terms and conditions of the Purchase and Sale Agreement (the “Gogo Transaction”). Upon completion of the acquisition, the entities comprising the ~~Gogo~~Intelsat CA business became indirect wholly-owned subsidiaries of Intelsat S.A.

~~Gogo~~Intelsat CA is one of the largest global providers of in-flight broadband connectivity. The acquisition of ~~Gogo~~Intelsat CA brings together two complementary enterprises – one of the world’s largest satellite operators with a leading provider of commercial in-flight broadband and entertainment services, to deliver innovation and long-term value to commercial airlines.

The Company accounted for the business combination in accordance with ASC 805, Business Combinations. The Company recorded the acquisition using the acquisition method of accounting and recognized assets and liabilities at their fair value as of the date of acquisition. The Company based the preliminary allocation of the purchase price on estimates and assumptions known at the date of acquisition that are subject to change within the purchase price allocation period, which is generally one year from the acquisition date.

The net payment associated with the transaction was $386.4 million, which represents total cash consideration of $400.0 million, adjusted for estimated closing cash, indebtedness, working capital excess and any transaction expenses. The primary difference between the net payment and purchase consideration of $409.1 million was the settlement of a pre-existing relationship that was favorable to Intelsat S.A.

The following table summarizes the preliminary allocation of the purchase consideration to tangible and intangible assets acquired and liabilities assumed on the acquisition date, based on estimated fair values both as disclosed in the Company’s 2020 Annual Report and as adjusted for measurement period adjustments identified during the first quarter of 2021 (in thousands):

	Purchase Price Allocation
	As of December, 1, 2020 (preliminary)		Measurement Period Adjustments		As of March 31, 2021 (as adjusted)
Assets acquired
Cash and cash equivalents	$	9,867	$	—	$	9,867
Receivables, net of allowances	52,849		138		52,987
Inventory	144,014		(5,619)		138,395
Prepaid expenses and other current assets	36,140		—		36,140
Property and equipment	41,328		8,081		49,409
Amortizable intangible assets
Software	45,464		—		45,464
Trade name	1,000		—		1,000
Goodwill	77,620		(3,940)		73,680
Other assets
Supplemental type certificates	24,253		48		24,301
Line fit certificates	21,776		—		21,776
Other assets	100,566		—		100,566
Total assets acquired	554,877		(1,292)		553,585
Liabilities assumed
Current liabilities
Accounts payable and accrued liabilities	(63,300)		779		(62,521)
Contract liabilities	(13,527)		513		(13,014)
Other current liabilities	(25,472)		—		(25,472)
Noncurrent liabilities	(43,522)		—		(43,522)
Total liabilities assumed	(145,821)		1,292		(144,529)
Total purchase consideration	$	409,056	$	—	$	409,056

The fair value estimates of the net assets acquired are based upon calculations and valuations, and estimates and assumptions regarding certain tangible and identifiable intangible assets acquired and liabilities assumed. The excess of the total consideration over the tangible assets, identifiable intangible assets, and assumed liabilities is recorded as goodwill. Goodwill represents expected synergies in mobility services and connectivity, $63.0 million of which is deductible for tax purposes.

The measurement period adjustments decreased the provisionally recognized goodwill by $3.9 million and have been recognized prospectively, which primarily relate to an $8.1 million adjustment in the provisional value of property and equipment and a $5.6 million adjustment in the provisional value of inventory as a result of additional information obtained during the quarter. These adjustments did not have a material impact on our condensed consolidated balance sheets, statements of operations or cash flows in any periods previously reported.

Gogo CA contributed $56.2 million of revenue and $39.4 million of net loss for the three months ended March 31, 2021, which were included in our condensed consolidated statements of operations. If the acquisition had occurred on January 1, 2020, our unaudited pro forma revenue and net loss would have been $564.2 million and $294.2 million, respectively, for the three months ended March 31, 2020. The unaudited pro forma combined financial information is disclosed for illustrative purposes only, and does not purport to represent what the results of operations would actually have been if the business combination occurred as of the dates indicated or what the results would be for any future periods.

Acquisition-related costs for the three months ended March 31, 2021 amounted to $3.4 million, with no comparable amounts for the three months ended March 31, 2020, which were included within selling, general and administrative expenses in our condensed consolidated statements of operations.


	Purchase Price Allocation
	As of December, 1, 2020 (preliminary)		Measurement Period Adjustments		As of June 30, 2021 (as adjusted)
Assets acquired
Cash and cash equivalents	$	9,867	$	—	$	9,867
Receivables, net of allowances	52,849		138		52,987
Inventory	144,014		(5,619)		138,395
Prepaid expenses and other current assets	36,140		—		36,140
Property and equipment	41,328		6,522		47,850
Amortizable intangible assets
Software	45,464		—		45,464
Trade name	1,000		—		1,000
Goodwill	77,620		(2,381)		75,239
Other assets
Supplemental type certificates	24,253		48		24,301
Line fit certificates	21,776		—		21,776
Other assets	100,566		—		100,566
Total assets acquired	554,877		(1,292)		553,585
Liabilities assumed
Current liabilities
Accounts payable and accrued liabilities	(63,300)		779		(62,521)
Contract liabilities	(13,527)		513		(13,014)
Other current liabilities	(25,472)		—		(25,472)
Noncurrent liabilities	(43,522)		—		(43,522)
Total liabilities assumed	(145,821)		1,292		(144,529)
Total purchase consideration	$	409,056	$	—	$	409,056

The fair value estimates of the net assets acquired are based upon calculations and valuations, and estimates and assumptions regarding certain tangible and identifiable intangible assets acquired and liabilities assumed. The excess of the total consideration over the tangible assets, identifiable intangible assets, and assumed liabilities is recorded as goodwill. Goodwill represents expected synergies in mobility services and connectivity, $64.5 million of which is deductible for tax purposes.

The measurement period adjustments decreased the provisionally recognized goodwill by $2.4 million and have been recognized prospectively, which primarily relate to a $6.5 million adjustment in the provisional value of property and equipment and a $5.6 million adjustment in the provisional value of inventory as a result of additional information obtained during the first half of 2021. These adjustments did not have a material impact on our condensed consolidated balance sheets, statements of operations or cash flows in any periods previously reported.

The following table presents the unaudited pro forma revenue and net loss of the Company, inclusive of Intelsat CA, as if the acquisition had occurred on January 1, 2020, for the three and six months ended June 30, 2020 (in thousands):


	Pro Forma
	Three Months Ended June 30, 2020		Six Months Ended June 30, 2020
Revenue	$	516,070	$	1,080,220
Net loss	(477,133)		(771,294)

The unaudited pro forma combined financial information is disclosed for illustrative purposes only, and does not purport to represent what the results of operations would actually have been if the business combination occurred as of the dates indicated or what the results would be for any future periods.

Acquisition-related costs amounted to $0.1 million for both the three and six months ended June 30, 2020, and $1.6 million and $5.0 million for the three and six months ended June 30, 2021, respectively, which were included within selling, general and administrative expenses in our condensed consolidated statements of operations.

Note 4—Share Capital

Under our Articles of Incorporation, we have an authorized share capital of $10.0 million, represented by 1.0 billion shares of any class with a nominal value of $0.01 per share. At ~~March~~June 3130, 2021, there were approximately 142.2 million common shares issued and outstanding.

Note 5—Revenue

(a) Contract Liabilities

As of December 31, 2020 and ~~March~~June 3130, 2021, we had contract liabilities of $405.2 million and $~~606~~805.56 million, respectively, related to reimbursable costs associated with the FCC Final Order. As of December 31, 2020, these amounts were included within contract liabilities, net of current portion, and as of ~~March~~June 3130, 2021, $698.0 million of these amounts were included within contract liabilities and $107.6 million of these amounts were included within contract liabilities, net of current portion, on our condensed consolidated balance sheets.

For the three months ended ~~March~~June 3130, 2020 and 2021, we recognized revenue of $8651.16 million and $9049.49 million, respectively, and for the six months ended June 30, 2020 and 2021, we recognized revenue of $137.7 million and $140.3 million, respectively, that ~~was~~were included in the contract liability balances as of January 1, 2020 and 2021, respectively.

(b) Assets Recognized from the Costs to Obtain a Customer Contract

For the three months ended ~~March~~June 3130, 2020 and 2021, we capitalized $1.13 million and $23.7 million for costs to obtain a customer contract, respectively, and amortized $1.1 million during each of those periods. For the six months ended June 30, 2020 and 2021, we capitalized $2.4 million and $6.4 million for costs to obtain a customer contract, respectively, and amortized $12.37 million and $2.4 million, respectively. As of December 31, 2020 and ~~March~~June 3130, 2021, capitalized costs to obtain a customer contract amounted to $10.4 million and $1114.83 million, respectively, and were included within other assets in our condensed consolidated balance sheets.

Our remaining performance obligation is our expected future revenue under our existing customer contracts and includes both cancelable and non-cancelable contracts. Our remaining performance obligation was approximately $5.8 billion as of ~~March~~June 3130, 2021. As of ~~March~~June 3130, 2021, the weighted average remaining customer contract life was approximately 3.87 years. Approximately 3834%, 2527%, and 3739% of our total remaining performance obligation as of ~~March~~June 3130, 2021 is expected to be recognized as revenue during 2021 and 2022, 2023 and 2024, and 2025 and thereafter, respectively. The amount included in the remaining performance obligation represents the full-service charge for the duration of the contract and does not include termination fees. The amount of the termination fees, which is not included in the remaining performance obligation amount, is generally calculated as a percentage of the remaining performance obligation associated with the contract. In certain cases of breach for non-payment or customer financial distress or bankruptcy, we may not be able to recover the full value of certain contracts or termination fees. Our remaining performance obligation includes 100% of the remaining performance obligation of our consolidated ownership interests, which is consistent with the accounting for our ownership interest in these entities.

(d) Business and Geographic Segment Information

We operate in a single industry segment in which we provide satellite and other communications services to our customers around the world. Our revenues are disaggregated by billing region, service type and customer set. Revenue by region is based on the locations of customers to which services are billed. Our satellites are in geosynchronous orbit, and consequently are not attributable to any geographic location. Of our remaining assets, substantially all are located in the U.S. ~~Gogo~~Intelsat CA revenues are allocated to the geographic location where the airline customer is domiciled.

	Three Months EndedMarch 31, 2020				Three Months EndedMarch 31, 2021
North America	$	235,005	51	%	$	285,242	57	%
Europe	53,938		12	%	52,637		10	%
Latin America and Caribbean	51,475		11	%	49,706		10	%
Africa and Middle East	61,902		13	%	55,921		11	%
Asia-Pacific	56,500		12	%	59,257		12	%
Total	$	458,820			$	502,763

The following table disaggregates revenue by billing region (in thousands, except percentages):


	Three Months Ended June 30, 2020				Three Months Ended June 30, 2021				Six Months Ended June 30, 2020				Six Months Ended June 30, 2021
North America	$	257,479	53	%	$	287,112	57	%	$	492,483	52	%	$	572,354	57	%
Europe	52,846		11	%	55,512		11	%	106,784		11	%	108,465		11	%
Latin America and Caribbean	54,007		11	%	48,953		10	%	105,482		11	%	98,660		10	%
Africa and Middle East	58,900		12	%	57,551		11	%	120,803		13	%	113,472		11	%
Asia-Pacific	58,802		12	%	58,734		12	%	115,302		12	%	117,674		12	%
Total	$	482,034			$	507,862			$	940,854			$	1,010,625

The following table disaggregates revenue by type of service (in thousands, except percentages):

	Three Months EndedMarch 31, 2020				Three Months EndedMarch 31, 2021
	Three Months EndedJune 30, 2020				Three Months EndedJune 30, 2021				Six Months EndedJune 30, 2020				Six Months EndedJune 30, 2021
On-Network Revenues
Transponder services	$	~~331~~343,~~334~~599	7271	%	$	~~325~~324,~~110~~053	6564	%	$	674,934	72	%	$	649,163	64	%
Managed services	7285,~~261~~050		1618	%	6970,~~626~~228		14	%	157,311		17	%	139,854		14	%
Channel	~~426~~391		—	%	~~194~~186		—	%	816		—	%	381		—	%
Total on-network revenues	~~404~~429,~~021~~040		8889	%	394,~~930~~467		7978	%	833,061		89	%	789,398		78	%
Off-Network and Other Revenues
Transponder, MSS and other off-network services	43,~~688~~617		109	%	4239,~~595~~708		8	%	87,305		9	%	82,303		8	%
Satellite-related services	119,~~111~~377		2	%	9,~~006~~487		2	%	20,488		2	%	18,493		2	%
Total off-network and other revenues	5452,~~799~~994		1211	%	5149,~~601~~195		10	%	107,793		11	%	100,796		10	%
In-flight Services Revenues
Services	—				4457,~~711~~296		911	%	—				102,007		10	%
Equipment	—				116,~~521~~904		21	%	—				18,424		2	%
Total in-flight services revenue	—				5664,~~232~~200		1113	%	—				120,431		12	%
Total	$	~~458~~482,~~820~~034			$	~~502~~507,~~763~~862			$	940,854			$	1,010,625

The following table disaggregates revenue by type of customer application (in thousands, except percentages):

	Three Months EndedMarch 31, 2020				Three Months EndedMarch 31, 2021
	Three Months EndedJune 30, 2020				Three Months EndedJune 30, 2021			Six Months EndedJune 30, 2020				Six Months EndedJune 30, 2021
Network services	$	~~149~~176,~~378~~699	3337	%	$	~~213~~221,~~969~~034	4344%	$	326,077	35	%	$	435,003	43	%
Media	~~205~~202,~~830~~563		4542	%	184,~~953~~153		3736%	408,393		43	%	369,106		37	%
Government	9596,~~752~~106		2120	%	9795,~~913~~843		19%	191,859		20	%	193,756		19	%
Satellite-related services	76,~~860~~666		1	%	56,~~928~~832		1%	14,525		2	%	12,760		1	%
Total	$	~~458~~482,~~820~~034			$	~~502~~507,~~763~~862		$	940,854			$	1,010,625

Our largest customer accounted for approximately 1514% and 11% of our revenue during the three months ended ~~March~~June 3130, 2020 and 2021, respectively, and 15% and 11% during the six months ended June 30, 2020 and 2021, respectively. Our ten largest customers accounted for approximately 42% and 3736% of our revenue during the three months ended ~~March~~June 3130, 2020 and 2021, respectively, and 40% and 36% during the six months ended June 30, 2020 and 2021, respectively.

Note 6—Net Loss per Share

Basic net loss per common share attributable to Intelsat S.A. (“EPS”) is computed by dividing net loss attributable to Intelsat S.A.’s common shareholders by the weighted average number of common shares outstanding during the periods. Diluted EPS assumes the issuance of common shares pursuant to share-based compensation plans and conversion of the Intelsat S.A. 4.5% Convertible Senior Notes due 2025 (the “2025 Convertible Notes”), unless the effect of such issuances would be anti-dilutive.

	Three Months EndedMarch 31, 2020		Three Months EndedMarch 31, 2021
Numerator:
Net loss attributable to Intelsat S.A.	$	(218,771)	$	(174,876)
Denominator:
Basic weighted average shares outstanding (in millions)	141.5		142.2
Diluted weighted average shares outstanding (in millions)	141.5		142.2
Basic EPS	$	(1.55)	$	(1.23)
Diluted EPS	$	(1.55)	$	(1.23)

The following table sets forth the computation of basic and diluted EPS (in thousands, except per share data or where otherwise noted):

In June 2018, Intelsat S.A. completed an offering of $402.5 million aggregate principal amount of its 2025 Convertible Notes. We do not expect to settle the principal amount of the 2025 Convertible Notes in cash, and therefore use the if-converted method for calculating any potential dilutive effect of the conversion on diluted EPS, if applicable. Under the indenture governing the 2025


	Three Months Ended June 30, 2020		Three Months Ended June 30, 2021		Six Months Ended June 30, 2020		Six Months Ended June 30, 2021
Numerator:
Net loss attributable to Intelsat S.A.	$	(405,355)	$	(152,306)	$	(624,126)	$	(327,182)
Denominator:
Basic weighted average shares outstanding (in millions)	142.1		142.2		141.8		142.2
Diluted weighted average shares outstanding (in millions)	142.1		142.2		141.8		142.2
Basic EPS	$	(2.85)	$	(1.07)	$	(4.40)	$	(2.30)
Diluted EPS	$	(2.85)	$	(1.07)	$	(4.40)	$	(2.30)

Due 18to a net loss for each of the three and six months ended June 30, 2020 and 2021, there were no dilutive securities, and therefore, basic and diluted EPS were the same. The weighted average number of common shares that could potentially dilute basic EPS in the future was 22.1 million and 22.7 million for the three months ended June 30, 2020 and 2021, respectively, and 22.3 million and 22.6 million for the six months ended June 30, 2020 and 2021, respectively, primarily consisting of the 2025 Convertible Notes.

Convertible Notes (the “2025 Indenture”), the 2025 Convertible Notes are eligible for conversion depending upon the trading price of our common shares and under other conditions set forth in the indenture until December 15, 2024, and thereafter without regard to any conditions. The commencement of the Chapter 11 Cases constituted an event of default under the 2025 Indenture. See Note 12—Debt for additional information on the impact of the Chapter 11 Cases on our debt obligations.

Due to a net loss for each of the three months ended March 31, 2020 and 2021, there were no dilutive securities, and therefore, basic and diluted EPS were the same. The weighted average number of common shares that could potentially dilute basic EPS in the future was 22.7 million and 22.6 million for the three months ended March 31, 2020 and 2021, respectively, primarily consisting of the 2025 Convertible Notes.

Note 7—Fair Value Measurements

ASC 820, Fair Value Measurements and Disclosure (“ASC 820”) defines fair value, establishes a market-based framework or hierarchy for measuring fair value and provides for certain required disclosures about fair value measurements. The guidance is applicable whenever another accounting pronouncement requires or permits assets and liabilities to be measured at fair value but does not require any new fair value measurements.

The fair value hierarchy prioritizes the inputs used in valuation techniques into three levels as follows:

•Level 1—unadjusted quoted prices for identical assets or liabilities in active markets;

•Level 2—quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted market prices that are observable or that can be corroborated by observable market data by correlation; and

•Level 3—unobservable inputs based upon the reporting entity’s internally developed assumptions which market participants would use in pricing the asset or liability.

Recurring Fair Value Measurements

The tables below present assets measured and recorded at fair value in our condensed consolidated balance sheets on a recurring basis and their corresponding level within the fair value hierarchy (in thousands). No transfers between Level 1, Level 2 and Level 3 fair value measurements occurred for the three and six months ended June 30, 2021.

			Fair Value Measurements as of December 31, 2020
Description	As of December 31, 2020		Level 1		Level 2		Level 3
Assets
Marketable securities(1)	$	5,205	$	5,205	$	—	$	—
Common stock warrant(2)	3,239		—		—		3,239
Total assets	$	8,444	$	5,205	$	—	$	3,239
			Fair Value Measurements as of March 31, 2021
			Fair Value Measurements as of June 30, 2021
Description	As of ~~March~~June 3130, 2021		Level 1		Level 2		Level 3
Assets
Marketable securities(1)	$	5,~~317~~450	$	5,~~317~~450	$	—	$	—
Common stock warrant(2)	8,~~562~~771		—		—		8,~~562~~771
Total assets	$	1314,~~879~~221	$	5,~~317~~450	$	—	$	8,~~562~~771

(1)The valuation measurement inputs of these marketable securities represent unadjusted quoted prices in active markets and, accordingly, we have classified such investments as Level 1 within the fair value hierarchy. The cost basis of our marketable securities was $4.0 million and $3.8 million as of December 31, 2020 and ~~March~~June 3130, 2021, respectively. We sold nominal amounts of marketable securities resulting in a nominal gain during each of the three months ended March 31, 2020 and 2021. These amounts are included in other income, net in our condensed consolidated statements of operations.

amounts of marketable securities resulting in a nominal gain during each of the three and six months ended June 30, 2020 and 2021. These amounts were included in other income, net in our condensed consolidated statements of operations.

(2)We valued the common stock warrant using a valuation technique that reflects the risk-free interest rate, time to maturity, volatility of comparable companies, and the expected transaction price and impact on this asset that may result from a potential merger or acquisition transaction. We identified the inputs used to calculate the fair value as Level 3 inputs and concluded that the valuation in its entirety is classified as Level 3 within the fair value hierarchy.

The following table presents a reconciliation of the common stock warrant, which is measured and recorded at fair value on a recurring basis using Level 3 inputs (in thousands):


	Three Months Ended June 30, 2020		Three Months Ended June 30, 2021		Six Months Ended June 30, 2020		Six Months Ended June 30, 2021
Balance as of beginning of period	$	3,239	$	8,562	$	3,239	$	3,239
Unrealized gain included in other income, net	—		209		—		5,532
Balance as of end of period	$	3,239	$	8,771	$	3,239	$	8,771

	Three Months EndedMarch 31, 2020		Three Months EndedMarch 31, 2021
Balance as of beginning of period	$	3,239	$	3,239
Unrealized gain included in other income, net	—		5,323
Balance as of end of period	$	3,239	$	8,562

Nonrecurring Fair Value Measurements

The carrying values of certain assets may be adjusted to fair value in subsequent periods on a nonrecurring basis if an event occurs or circumstances change that indicate that the asset is impaired or, for investments in equity securities without readily determinable fair values, observable transactions for identical or similar investments of the same issuer support a change in the investment fair value. During the first quarter of 2020, we recognized an impairment of non-amortizable intangible assets of $12.2 million. This fair value measurement is classified as Level 3 within the fair value hierarchy due to the use of significant unobservable inputs. See Note 11—Goodwill and Other Intangible Assets for additional information.

Other Fair Value Disclosures

See Note 10—Investments, Note 11—Goodwill and Other Intangible Assets and Note 12—Debt for fair value disclosures related to our loan receivables, impairment analysis and debt, respectively. The carrying amounts of the Company's other financial instruments are reasonable estimates of their related fair values due to their short-term nature.

Note 8—Retirement Plans and Other Retiree Benefits

(a) Pension and Other Postretirement Benefits

We maintain a noncontributory defined benefit retirement plan covering ~~substantially all of our~~ employees hired prior to July 19, 2001. The cost of providing benefits to eligible participants under the defined benefit retirement plan is calculated using the plan’s benefit formulas, which take into account the participants’ remuneration, dates of hire, years of eligible service and certain actuarial assumptions. In addition, as part of the overall medical plan, we provide postretirement medical benefits to certain current and future retirees who meet the criteria under the medical plan for postretirement benefit eligibility. In 2015, we amended the defined benefit retirement plan to end the accrual of additional benefits for the remaining active participants. We have received authorization from the Bankruptcy Court to continue making contributions in the ordinary course during our Chapter 11 Cases.

The defined benefit retirement plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). We expect that our future contributions to the defined benefit retirement plan will be based on the minimum funding requirements of the Internal Revenue Code and on the plan’s funded status. Any significant decline in the fair value of our defined benefit retirement plan assets or other adverse changes to the significant assumptions used to determine the plan’s funded status would negatively impact its funded status and could result in increased funding in future years. The impact on the funded status is determined based upon market conditions in effect when we completed our annual valuation.

Included in accumulated other comprehensive loss at ~~March~~June 3130, 2021 was $~~112~~111.8 million ($8180.2 million, net of tax) that has not yet been recognized in net periodic benefit cost.

2021

The tables below show the components of net periodic benefit cost (income) for the three and six months ended June 30, 2020 and 2021 (in thousands). These amounts are recognized in other income (expense), net in the condensed consolidated statements of operations.

	Pension Benefits				~~Pension Benefits~~
					Three Months EndedMarch 31, 2020		Three Months EndedMarch 31, 2021
	Three Months EndedJune 30, 2020		Three Months EndedJune 30, 2021		Six Months EndedJune 30, 2020		Six Months EndedJune 30, 2021
Interest cost	$	2,962	$	2,030	$	25,~~962~~925	$	24,~~030~~060
Expected return on plan assets	(5,810)		(5,592)		(511,~~810~~621)		(511,~~592~~183)
Amortization of unrecognized net loss	1,600		2,046		13,~~600~~200		24,~~046~~091
Net periodic benefit income	$	(1,248)	$	(1,516)	$	(12,~~248~~496)	$	(13,~~516~~032)

	Other Postretirement Benefits				~~Other Postretirement Benefits~~
					Three Months EndedMarch 31, 2020		Three Months EndedMarch 31, 2021
	Three Months EndedJune 30, 2020		Three Months EndedJune 30, 2021		Six Months EndedJune 30, 2020		Six Months EndedJune 30, 2021
Interest cost	$	266	$	149	$	~~266~~532	$	~~149~~298
Amortization of unrecognized prior service credits	(636)		(636)		(~~636~~1,272)		(~~636~~1,272)
Amortization of unrecognized net gain	(305)		(347)		(~~305~~610)		(~~347~~693)
Net periodic benefit income	$	(675)	$	(834)	$	(~~675~~1,350)	$	(~~834~~1,667)

(b) Other Retirement Plans

We maintain a defined contribution retirement plan qualified under the provisions of Section 401(k) of the Internal Revenue Code for our employees in the United States. We have received authorization from the Bankruptcy Court to continue making our contributions in the ordinary course during the Chapter 11 Cases. We recognized compensation expense for this plan of $2.32 million and $3.4 million for the three months ended ~~March~~June 3130, 2020 and 2021, respectively, and $4.5 million and $6.8 million for the six months ended June 30, 2020 and 2021, respectively. We also maintain other defined contribution retirement plans in several non-U.S. jurisdictions, but such plans are not material to our financial position or results of operations.

Note 9—Satellites and Other Property and Equipment

(a) Satellites and Other Property and Equipment, net

Satellites and other property and equipment, net were comprised of the following (in thousands):

	As ofDecember 31, 2020		As ~~ofMarch~~ofJune 3130, 2021
Satellites and launch vehicles	$	10,500,021	$	10,~~748~~925,~~817~~098
Information systems and ground segment	1,062,216		1,~~075~~126,~~357~~371
Buildings and other	322,093		~~326~~343,~~599~~952
Total cost	11,884,330		12,~~150~~395,~~773~~421
Less: accumulated depreciation	(7,126,453)		(7,~~259~~436,~~852~~494)
Total	$	4,757,877	$	4,~~890~~958,~~921~~927

Satellites and other property and equipment are stated at historical cost, except for satellites that have been impaired. Satellites and other property and equipment acquired as part of an acquisition are stated based on their fair value at the date of acquisition.

Satellites and other property and equipment, net of accumulated depreciation as of December 31, 2020 and ~~March~~June 3130, 2021, included construction-in-progress of $768.6 million and $~~857~~1.21 ~~million~~billion, respectively. These amounts relate primarily to satellites under construction and related launch services. As of ~~March~~June 3130, 2021, we incurred C-band clearing related costs and expenses of $~~724~~950.76 million, of which $~~632~~794.70 million was capitalized. Of this capitalized amount, $~~604~~764.09 million and $2829.71 million ~~was~~were capitalized as satellites and other property and equipment, net of accumulated depreciation, and other current assets, respectively, in the condensed consolidated balance sheets. An estimated $~~619~~737.5 million of the capitalized costs is expected to be reimbursable under the FCC Final Order.

Interest costs of $46.02 million and $1619.02 million were capitalized for the three months ended ~~March~~June 3130, 2020 and 2021, respectively, and $10.2 million and $35.3 million were capitalized for the six months ended June 30, 2020 and 2021, respectively. Additionally, depreciation expense was $154.45 million and $~~154~~156.87 million for the three months ended ~~March~~June 3130, 2020 and 2021, respectively, and $308.9 million and $311.5 million for the six months ended June 30, 2020 and 2021, respectively.

We have entered into launch contracts for the launch of both specified and unspecified future satellites. Each of these launch contracts may be terminated at our option, subject to payment of a termination fee that increases as the applicable launch date 22

We 21have entered into launch contracts for the launch of both specified and unspecified future satellites. Each of these launch contracts may be terminated at our option, subject to payment of a termination fee that increases as the applicable launch date approaches. In addition, in the event of a failure of any launch, we may exercise our right to obtain a replacement launch within a specified period following our request for re-launch.

approaches. In addition, in the event of a failure of any launch, we may exercise our right to obtain a replacement launch within a specified period following our request for re-launch.

(b) Satellite Launches

Galaxy 30, the first satellite in Intelsat’s Galaxy fleet refresh plan, was successfully launched on August 15, 2020. Galaxy 30 replaced Galaxy 14 at 125ºW serving media customers in the North America region. Galaxy 30 is the first four-frequency Intelsat satellite with C-, Ku-, Ka- and L-band capabilities. In addition, Galaxy 30 offers broadband, mobility and network services to mobile network, enterprise and government customers in the North America region. The satellite also plays an important role in the Company’s U.S. C-band spectrum transition plan. Galaxy 30 entered into service in February 2021.

Note 10—Investments

We have an ownership interest in two entities that meet the criteria of a variable interest entity (“VIE”): Horizons Satellite Holdings LLC (“Horizons Holdings”) and Horizons-3 Satellite LLC (“Horizons 3”), which are discussed in further detail below, including our analyses of the primary beneficiary determination as required under ASC 810, Consolidation (“ASC 810”). We also own noncontrolling investments in equity securities and loan receivables as discussed further below.

(a) Horizons Holdings

Horizons Holdings is a joint venture with JSAT International, Inc. (“JSAT”) that consists of two investments: Horizons-1 Satellite LLC and Horizons-2 Satellite LLC. Horizons Holdings borrowed from JSAT a portion of the funds necessary to finance the construction of the Horizons 2 satellite pursuant to a loan agreement. The borrowing was subsequently repaid. We provide certain services to the joint venture and in return utilize capacity from the joint venture.

We have determined that this joint venture meets the criteria of a VIE under ASC 810, and we have concluded that we are the primary beneficiary because decisions relating to any future relocation of the Horizons 2 satellite, the most significant asset of the joint venture, are effectively controlled by us. In accordance with ASC 810, as the primary beneficiary, we consolidate Horizons Holdings within our condensed consolidated financial statements. Total assets of Horizons Holdings were $14.2 million and $1312.92 million as of December 31, 2020 and ~~March~~June 3130, 2021, respectively. Total liabilities were nominal as of December 31, 2020 and $1.6 million as of ~~March~~June 3130, 2021.

We have a revenue sharing agreement with JSAT related to services sold on the Horizons 1 and Horizons 2 satellites. We are responsible for billing and collection for such services, and we remit 50% of the revenue, less applicable fees and commissions, to JSAT. Amounts payable to JSAT related to the revenue sharing agreement, net of applicable fees and commissions, from the Horizons 1 and Horizons 2 satellites were $1.8 million and $3.30 million as of December 31, 2020 and ~~March~~June 3130, 2021, respectively.

(b) Horizons-3 Satellite LLC

On November 4, 2015, we entered into an additional joint venture agreement with JSAT. The joint venture, Horizons 3, was formed for the purpose of developing, launching, managing, operating and owning a high-performance satellite located at the 169ºE orbital location.

Horizons 3, which is 50% owned by each of Intelsat and JSAT, was set up with joint sharing of management authority and equal rights to profits and revenues from the joint venture. Similar to Horizons Holdings, we have a revenue sharing agreement with JSAT related to services sold on the Horizons 3e satellite. In addition, we are responsible for billing and collection for such services, and we remit 50% of the revenue, less applicable fees and commissions, to JSAT. Amounts payable to JSAT related to the revenue sharing agreement, net of applicable fees and commissions, from the Horizons 3e satellite were $5.0 million and $7.27 million as of December 31, 2020 and ~~March~~June 3130, 2021, respectively.

We have determined that this joint venture meets the criteria of a VIE under ASC 810; however, we have concluded that we are not the primary beneficiary and therefore do not consolidate Horizons 3. The assessment considered both quantitative and qualitative factors, including an analysis of voting power and other means of control of the joint venture, as well as each owner’s exposure to risk of loss or gain. Because we and JSAT equally share control over the operations of the joint venture and also equally share exposure to risk of losses or gains, we concluded that we are not the primary beneficiary of Horizons 3. Our investment, included within other assets in our condensed consolidated balance sheets, is accounted for using the equity method of accounting. The investment balance, which is equivalent to our maximum exposure to loss, was $103.8 million and $103.7 million as of December 31, 2020 and ~~March~~June 3130, 2021, respectively. The investment balance exceeded our equity in the net assets of Horizons 3 by $10.9 million and $10.75 million as of December 31, 2020 and ~~March~~June 3130, 2021, respectively. This basis difference represents the capitalized interest that we incurred in relation to financing our investment, and we recognize it as a reduction of our equity in earnings of Horizons 3 on a straight-line basis ~~over the life of the satellite. We recognized a nominal amount of equity in losses of Horizons 3 in other income, net for each of the three months ended March 31, 2020 and 2021.~~

2223

Inover ~~connection~~the ~~with~~life ~~our~~of ~~investment~~the insatellite. ~~Horizons~~We 3,recognized ~~we entered into~~ a ~~capital~~nominal ~~contribution~~amount ~~and subscription agreement, which requires us to fund our 50% share~~ of ~~the~~equity ~~amounts due~~ in ~~order~~losses toof ~~maintain~~Horizons ~~our~~3 ~~respective 50% interest~~ in ~~the~~other ~~joint venture. Pursuant to this agreement~~income, wenet ~~made~~for ~~contributions~~each of ~~$2.7 million for~~ the ~~year~~three ~~ended~~and ~~December~~six ~~31, 2020 with no comparable amounts during the three~~ months ended ~~March~~June 3130, ~~2021. We received distributions of $9.0 million for the year ended December 31,~~ 2020 ~~with~~and ~~no comparable amounts for the three months ended March 31,~~ 2021. The Company utilizes the cumulative earnings approach to determine whether distributions received from equity method investees are returns on investment or returns of investment. In addition, our indirect subsidiary that holds our investment in Horizons 3 has entered into a security and pledge agreement with Horizons 3, pursuant to which it has granted a security interest in its membership interest in Horizons 3. Further, our indirect subsidiary has granted a security interest to Horizons 3 in its customer capacity contracts and its ownership interest in its wholly-owned subsidiary that holds the FCC license required for the joint venture’s operations.

~~The~~In connection with our investment in Horizons 3e3, ~~satellite~~we entered into ~~service~~a incapital ~~January~~contribution ~~2019.~~and ~~The~~subscription ~~Company~~agreement, ~~purchases~~which ~~satellite~~requires ~~capacity~~us ~~and~~to ~~related~~fund ~~services~~our ~~from~~50% ~~the~~share ~~Horizons~~of 3the ~~joint~~amounts ~~venture,~~due ~~and~~in ~~then~~order ~~sells~~to ~~that~~maintain ~~capacity~~our torespective ~~its~~50% ~~customers.~~interest Wein ~~incurred~~the ~~direct~~joint ~~costs~~venture. ofPursuant ~~revenue~~to ~~related~~this toagreement, ~~these~~we ~~purchases~~made contributions of $52.07 million ~~and~~for ~~$4.5~~the ~~million~~year ended December 31, 2020 with no comparable amounts during the ~~three~~six months ended ~~March~~June 3130, ~~2020~~2021. ~~and~~We ~~2021,~~received ~~respectively.~~distributions ~~The~~of ~~Company~~$9.0 ~~also~~million ~~sells~~for ~~managed~~the ~~ground~~year ~~network~~ended ~~services~~December to31, ~~the~~2020 ~~Horizons~~with 3no ~~joint~~comparable ~~venture~~amounts ~~and~~for ~~provides~~the ~~program~~six ~~management~~months ~~services~~ended ~~for~~June a30, ~~fee~~2021. WeThe ~~recorded~~Company anutilizes ~~offset~~the cumulative earnings approach to ~~direct~~determine ~~costs~~whether ofdistributions ~~revenue~~received ~~related~~from toequity ~~the~~method ~~provision~~investees ofare ~~these~~returns ~~services~~on ofinvestment ~~$1.8~~or ~~million~~returns ~~and~~of $1investment.7 ~~million~~In ~~during~~addition, ~~the~~our ~~three~~indirect ~~months~~subsidiary ~~ended~~that ~~March~~holds ~~31,~~our ~~2020~~investment ~~and~~in ~~2021,~~Horizons ~~respectively.~~3 Onhas ~~the~~entered ~~condensed~~into ~~consolidated~~a ~~balance~~security ~~sheets~~and aspledge ofagreement ~~March~~with ~~31,~~Horizons ~~2021~~3, ~~$0.5~~pursuant ~~million~~to ~~due~~which ~~from~~it ~~Horizons~~has 3granted ~~was~~a ~~included~~security interest in ~~receivables~~its ~~with~~membership nointerest ~~comparable~~in ~~amount~~Horizons as3. ofFurther, ~~December~~our ~~31,~~indirect ~~2020,~~subsidiary ~~and~~has ~~$1.5~~granted ~~million~~a ~~due~~security interest to Horizons 3 ~~was~~in ~~included~~its incustomer ~~accounts~~capacity ~~payable~~contracts and ~~accrued~~its ~~liabilities~~ownership asinterest ofin ~~both~~its ~~December~~wholly-owned ~~31,~~subsidiary ~~2020~~that ~~and~~holds ~~March~~the ~~31,~~FCC ~~2021~~license required for the joint venture’s operations.

The Horizons 3e satellite entered into service in January 2019. The Company purchases satellite capacity and related services from the Horizons 3 joint venture, and then sells that capacity to its customers. We incurred direct costs of revenue related to these purchases of $5.0 million and $4.5 million during the three months ended June 30, 2020 and 2021, respectively, and $10.0 million and $9.0 million during the six months ended June 30, 2020 and 2021, respectively. The Company also sells managed ground network services to the Horizons 3 joint venture and provides program management services for a fee. We recorded an offset to direct costs of revenue related to the provision of these services of $1.8 million and $1.7 million during the three months ended June 30, 2020 and 2021, respectively, and $3.5 million during each of the six months ended June 30, 2020 and 2021. On the condensed consolidated balance sheets as of June 30, 2021, $0.9 million due from Horizons 3 was included in receivables with no comparable amount as of December 31, 2020, and $1.5 million due to Horizons 3 was included in accounts payable and accrued liabilities as of both December 31, 2020 and June 30, 2021.

The Company holds noncontrolling equity investments in ~~six~~five separate privately held companies, including investments in equity securities without readily determinable fair values and common stock warrants.

In accordance with ASC 321, Investments—Equity Securities, we use the measurement alternative to measure the fair value of our investments in equity securities without readily determinable fair values. Accordingly, these investments are measured at cost, less any impairment, and are adjusted for changes in fair value resulting from observable transactions for identical or similar investments of the same issuer. We recognized an increase in fair value relating to investments of $7.7 million for the three and six months ended June 30, 2021, with no comparable amounts for the three and six months ended June 30, 2020, which are recognized in other income, net in our condensed consolidated statements of operations. Additionally, during the second quarter of 2021, we sold all of our interest in one of our investments for $15.0 million, resulting in a gain of $5.3 million for the three and six months ended June 30, 2021, which is recognized in other income, net in our condensed consolidated statements of operations. These investments were recorded in other assets in our condensed consolidated balance sheets and had a total carrying value of $31.9 million and $29.8 million as of ~~both~~ December 31, 2020 and ~~March~~June 3130, 2021, respectively.

We measure our stock warrants at fair value and recognized an increase in fair value of stock warrants of $0.2 million and $5.35 million for the three and six months ended ~~March~~June 3130, 2021, respectively, with no comparable amounts for the three and six months ended ~~March~~June 3130, 2020 (see Note 7—Fair Value Measurements and Note 13—Derivative Instruments and Hedging Activities for additional information). The warrants were recorded in other assets in our condensed consolidated balance sheets and had a cumulative fair value of $3.2 million and $8.68 million as of December 31, 2020 and ~~March~~June 3130, 2021, respectively.

(d) Loan Receivables

The Company has loan receivables from three privately held companies that it is holding for long-term investment. These loan receivables are reported at amortized cost, net of the allowance for credit losses. Amortized cost is the outstanding principal, adjusted for unamortized discounts and deferred transaction costs. The Company recognizes interest income on loan receivables using the effective-interest method applied on a loan-by-loan basis. Direct costs associated with originating loans are offset against any related fees received and the balance, along with any premium or discount, is deferred and amortized as an adjustment to interest income over the term of the related loan receivable using the effective interest method.

Loan receivables were recorded in other assets in our condensed consolidated balance sheets at an amortized cost basis of $71.2 million and $73.~~4 million as of December 31, 2020 and March 31, 2021, respectively. These amounts were net of unamortized discount of $0.~~7 million ~~and $0.1 million, and unamortized deferred transaction costs of $0.2 million and a nominal amount,~~ as of December 31, 2020 and ~~March~~June 3130, 2021, respectively. As of December 31, 2020 and ~~March~~June 3130, 2021, $1.9 million and $12.01 million, respectively, of accrued interest related to our loan receivables was recorded in prepaid expenses and other current assets in our condensed consolidated balance sheets. We recognized interest income related to our loan receivables of $1.0 million for each of the three months ended June 30, 2020 and 2021, and $1.9 million and $12.01 million for the ~~three~~six months ended ~~March~~June 3130, 2020 and 2021, respectively.

A loan is determined to be impaired and placed on non-accrual status when, in management’s judgment based on current information and events, it is probable that the Company will be unable to collect all amounts due under the contractual terms of the applicable loan agreement. We did not recognize any impairment losses related to loan receivables during either of the three months ended March 31, 2020 and 2021.24

~~The~~A ~~fair~~loan ~~value~~is ofdetermined ~~loan~~to ~~receivables~~be isimpaired ~~evaluated~~and placed on ~~a loan~~non-~~by-loan~~accrual ~~basis~~status when, ~~and~~in ismanagement’s ~~determined~~judgment based on ~~assessments~~current ofinformation ~~discounted~~and ~~cash~~events, ~~flows~~it ~~that~~is ~~are considered~~ probable ofthat ~~collection.~~the WeCompany ~~consider~~will ~~these~~be ~~inputs~~unable to becollect ~~Level~~all 3amounts ~~within~~due under the ~~fair~~contractual ~~value~~terms ~~hierarchy~~of ~~under~~the ~~ASC~~applicable ~~820~~loan agreement. ~~The~~We ~~cumulative~~recognized ~~fair~~impairment ~~value~~losses of ~~our~~$0.6 million related to loan receivables asduring ofthe ~~December~~three 31and six months ended June 30, 2020, ~~and~~with ~~March~~no ~~31,~~comparable ~~2021~~amounts ~~was~~for ~~$72.9~~the ~~million~~three and ~~$74.4~~six ~~million~~months ended June 30, ~~respectively~~2021.

The 23fair value of loan receivables is evaluated on a loan-by-loan basis, and is determined based on assessments of discounted cash flows that are considered probable of collection. We consider these inputs to be Level 3 within the fair value hierarchy under ASC 820. The cumulative fair value of our loan receivables as of December 31, 2020 and June 30, 2021 was $72.9 million and $75.9 million, respectively.

Note 11—Goodwill and Other Intangible Assets

(a) Goodwill

As a result of the Gogo Transaction, we provisionally recognized goodwill of $77.6 million as of December 1, 2020, which was subsequently decreased by $32.94 million as a result of measurement period adjustments during the first ~~quarter~~half of 2021. See Note 3—Acquisition of Gogo’s Commercial Aviation Business for additional discussion.

The carrying amounts of goodwill consisted of the following (in thousands):

	As ofDecember 31, 2020		As ~~ofMarch~~ofJune 3130, 2021
Goodwill	$	6,858,447	$	6,~~854~~856,~~507~~066
Accumulated impairment losses	(4,160,200)		(4,160,200)
Net carrying amount	$	2,698,247	$	2,~~694~~695,~~307~~866

(b) Orbital Locations, Trade Name and Other Intangible Assets

Orbital Locations and Trade Name. During the first quarter of 2020, we recognized an impairment of our trade name intangible asset of $12.2 million, which is included within impairment of non-amortizable intangible assets in the condensed consolidated statements of operations.

The carrying amounts of acquired intangible assets not subject to amortization consisted of the following (in thousands):

	As ofDecember 31, 2020		As ~~ofMarch~~ofJune 3130, 2021
Orbital locations	$	2,250,000	$	2,250,000
Trade name	45,000		45,000
Total non-amortizable intangible assets	$	2,295,000	$	2,295,000

Other Intangible Assets. The carrying amounts and accumulated amortization of acquired intangible assets subject to amortization consisted of the following (in thousands):

	As of December 31, 2020						As of ~~March~~June 3130, 2021
	Gross CarryingAmount		AccumulatedAmortization		Net CarryingAmount		Gross CarryingAmount		AccumulatedAmortization		Net CarryingAmount
Backlog and other	$	744,760	$	(722,697)	$	22,063	$	744,760	$	(~~724~~727,~~862~~740)	$	1917,~~898~~020
Customer relationships	534,030		(309,486)		224,544		534,030		(~~314~~319,~~602~~719)		~~219~~214,~~428~~311
Software	45,808		(1,846)		43,962		4647,~~892~~848		(47,~~629~~774)		4240,~~263~~074
Total	$	1,324,598	$	(1,034,029)	$	290,569	$	1,~~325~~326,~~682~~638	$	(1,~~044~~055,~~093~~233)	$	~~281~~271,~~589~~405

Intangible assets are amortized based on the expected pattern of consumption. Amortization expense was $7.8 million and $1011.1 million for the three months ended ~~March~~June 3130, 2020 and 2021, respectively, and $15.6 million and $21.2 million for the six months ended June 30, 2020 and 2021, respectively.

Note 12—Debt

As discussed in Note 2—Chapter 11 Proceedings, Ability to Continue as a Going Concern and Other Related Matters, the filing of the Chapter 11 Cases constituted an event of default that accelerated substantially all of our obligations under the documents governing the prepetition existing indebtedness of Intelsat S.A., Intelsat Luxembourg, Intelsat Connect and Intelsat Jackson. As such, we have reclassified all such debt obligations, other than debt subject to compromise, to current maturities of long-term debt on our condensed consolidated balance sheet as of ~~March~~June 3130, 2021. Any efforts to enforce payment obligations related to the acceleration of our debt have been automatically stayed as a result of the filing of the Chapter 11 Cases, and the creditors’ rights of enforcement are subject to the applicable provisions of the Bankruptcy Code. While the Chapter 11 Cases are pending, the Debtors do not anticipate making interest payments due under their respective unsecured debt instruments; however, the Debtors expect to make monthly interest payments on their senior secured debt instruments pursuant to the adequate protection requirements under the DIP Order.

	As of December 31, 2020				As of March 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
Intelsat S.A.:
4.5% Convertible Senior Notes due June 2025 (1)	$	402,500	$	130,813	$	402,500	$	130,813

	As of December 31, 2020		As of March 31, 2021
	Carrying Value	Fair Value	Carrying Value	Fair Value
Unamortized prepaid debt issuance costs and discount on 4.5% Convertible Senior Notes	—	—	—	—
Total Intelsat S.A. obligations	402,500	130,813	402,500	130,813
Intelsat Luxembourg:
7.75% Senior Notes due June 2021 (1)	421,219	14,743	421,219	8,424
Unamortized prepaid debt issuance costs on 7.75% Senior Notes	—	—	—	—
8.125% Senior Notes due June 2023 (1)	1,000,000	130,000	1,000,000	170,000
Unamortized prepaid debt issuance costs on 8.125% Senior Notes	—	—	—	—
12.5% Senior Notes due November 2024 (1)	403,350	42,352	403,350	62,519
Unamortized prepaid debt issuance costs and discount on 12.5% Senior Notes	—	—	—	—
Total Intelsat Luxembourg obligations	1,824,569	187,095	1,824,569	240,943
Intelsat Connect Finance:
9.5% Senior Notes due February 2023 (1)	1,250,000	334,375	1,250,000	437,500
Unamortized prepaid debt issuance costs and discount on 9.5% Senior Notes	—	—	—	—
Total Intelsat Connect Finance obligations	1,250,000	334,375	1,250,000	437,500
Intelsat Jackson:
9.5% Senior Secured Notes due September 2022	490,000	543,900	490,000	582,488
Unamortized prepaid debt issuance costs and discount on 9.5% Senior Secured Notes	(7,495)	—	(6,507)	—
8% Senior Secured Notes due February 2024	1,349,678	1,373,297	1,349,678	1,396,917
Unamortized prepaid debt issuance costs and premium on 8% Senior Secured Notes	(3,072)	—	(2,854)	—
5.5% Senior Notes due August 2023 (1)	1,985,000	1,349,800	1,985,000	1,210,850
Unamortized prepaid debt issuance costs on 5.5% Senior Notes	—	—	—	—
9.75% Senior Notes due July 2025 (1)	1,885,000	1,347,775	1,885,000	1,168,700
Unamortized prepaid debt issuance costs on 9.75% Senior Notes	—	—	—	—
8.5% Senior Notes due October 2024 (1)	2,950,000	2,079,750	2,950,000	1,858,500
Unamortized prepaid debt issuance costs and premium on 8.5% Senior Notes	—	—	—	—
Senior Secured Credit Facilities due November 2023	2,000,000	2,025,000	2,000,000	2,030,000
Unamortized prepaid debt issuance costs and discount on Senior Secured Credit Facilities	(16,955)	—	(15,628)	—
Senior Secured Credit Facilities due January 2024	395,000	400,925	395,000	401,913
Unamortized prepaid debt issuance costs and discount on Senior Secured Credit Facilities	(1,238)	—	(1,145)	—
6.625% Senior Secured Credit Facilities due January 2024	700,000	714,000	700,000	712,250
Unamortized prepaid debt issuance costs and discount on Senior Secured Credit Facilities	(2,194)	—	(2,030)	—
Superpriority Secured DIP Credit Facilities due July 2021	1,000,000	1,011,250	1,000,000	1,011,250
Total Intelsat Jackson obligations	12,723,724	10,845,697	12,726,514	10,372,868
Eliminations:
8.125% Senior Notes of Intelsat Luxembourg due June 2023 owned by Intelsat Jackson (1)	(111,663)	(14,517)	(111,663)	(62,504)
Unamortized prepaid debt issuance costs on 8.125% Senior Notes	—	—	—	—

	As of December 31, 2020				As of March 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
12.5% Senior Notes of Intelsat Luxembourg due November 2024 owned by Intelsat Connect Finance, Intelsat Jackson and Intelsat Envision (1)	(403,245)		(42,341)		(403,245)		(18,983)
Unamortized prepaid debt issuance costs and discount on 12.5% Senior Notes	—		—		—		—
Total eliminations:	(514,908)		(56,858)		(514,908)		(81,487)
Total Intelsat S.A. debt	15,685,885		11,441,122		15,688,675		11,100,637
Less: current maturities of long-term debt	5,903,724		6,068,372		5,906,514		6,134,818
Less: debt included in liabilities subject to compromise	9,782,161		5,372,750		9,782,161		4,965,819
Total Intelsat S.A. long-term debt	$	—	$	—	$	—	$	—

our debt have been automatically stayed as a result of the filing of the Chapter 11 Cases, and the creditors’ rights of enforcement are subject to the applicable provisions of the Bankruptcy Code. While the Chapter 11 Cases are pending, the Debtors do not anticipate making interest payments due under their respective unsecured debt instruments; however, the Debtors expect to make monthly interest payments on their senior secured debt instruments pursuant to the adequate protection requirements under the DIP Order.

The carrying values and fair values of our notes payable and debt were as follows (in thousands):

(1)In connection with the Chapter 11 Cases, these balances have been reclassified as liabilities subject to compromise in our condensed consolidated balance sheet as of March 31, 2021. As of April 15, 2020, the Company ceased making principal and interest payments, and as of May 13, 2020 ceased accruing interest expense in relation to this long-term debt that was reclassified as liabilities subject to compromise.


	As of December 31, 2020				As of June 30, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
Intelsat S.A.:
4.5% Convertible Senior Notes due June 2025 (1)	$	402,500	$	130,813	$	402,500	$	120,750
Unamortized prepaid debt issuance costs and discount on 4.5% Convertible Senior Notes	—		—		—		—
Total Intelsat S.A. obligations	402,500		130,813		402,500		120,750
Intelsat Luxembourg:
7.75% Senior Notes due June 2021 (1)	421,219		14,743		421,219		8,424
Unamortized prepaid debt issuance costs on 7.75% Senior Notes	—		—		—		—
8.125% Senior Notes due June 2023 (1)	1,000,000		130,000		1,000,000		155,000
Unamortized prepaid debt issuance costs on 8.125% Senior Notes	—		—		—		—
12.5% Senior Notes due November 2024 (1)	403,350		42,352		403,350		54,452
Unamortized prepaid debt issuance costs and discount on 12.5% Senior Notes	—		—		—		—
Total Intelsat Luxembourg obligations	1,824,569		187,095		1,824,569		217,876
Intelsat Connect Finance:
9.5% Senior Notes due February 2023 (1)	1,250,000		334,375		1,250,000		437,500
Unamortized prepaid debt issuance costs and discount on 9.5% Senior Notes	—		—		—		—
Total Intelsat Connect Finance obligations	1,250,000		334,375		1,250,000		437,500
Intelsat Jackson:
9.5% Senior Secured Notes due September 2022	490,000		543,900		490,000		575,750
Unamortized prepaid debt issuance costs and discount on 9.5% Senior Secured Notes	(7,495)		—		(5,491)		—
8% Senior Secured Notes due February 2024	1,349,678		1,373,297		1,349,678		1,393,543
Unamortized prepaid debt issuance costs and premium on 8% Senior Secured Notes	(3,072)		—		(2,631)		—
5.5% Senior Notes due August 2023 (1)	1,985,000		1,349,800		1,985,000		1,111,600
Unamortized prepaid debt issuance costs on 5.5% Senior Notes	—		—		—		—
9.75% Senior Notes due July 2025 (1)	1,885,000		1,347,775		1,885,000		1,093,300
Unamortized prepaid debt issuance costs on 9.75% Senior Notes	—		—		—		—
8.5% Senior Notes due October 2024 (1)	2,950,000		2,079,750		2,950,000		1,740,500
Unamortized prepaid debt issuance costs and premium on 8.5% Senior Notes	—		—		—		—
Senior Secured Credit Facilities due November 2023	2,000,000		2,025,000		2,000,000		2,030,000
Unamortized prepaid debt issuance costs and discount on Senior Secured Credit Facilities	(16,955)		—		(14,267)
Senior Secured Credit Facilities due January 2024	395,000		400,925		395,000		401,913
Unamortized prepaid debt issuance costs and discount on Senior Secured Credit Facilities	(1,238)		—		(1,050)		—
6.625% Senior Secured Credit Facilities due January 2024	700,000		714,000		700,000		712,250
Unamortized prepaid debt issuance costs and discount on Senior Secured Credit Facilities	(2,194)		—		(1,862)		—


	As of December 31, 2020				As of June 30, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
Superpriority Secured DIP Credit Facilities due July 2021	1,000,000		1,011,250		1,000,000		1,003,750
Total Intelsat Jackson obligations	12,723,724		10,845,697		12,729,377		10,062,606
Eliminations:
8.125% Senior Notes of Intelsat Luxembourg due June 2023 owned by Intelsat Jackson (1)	(111,663)		(14,517)		(111,663)		(17,308)
Unamortized prepaid debt issuance costs on 8.125% Senior Notes	—		—		—		—
12.5% Senior Notes of Intelsat Luxembourg due November 2024 owned by Intelsat Connect Finance, Intelsat Jackson and Intelsat Envision (1)	(403,245)		(42,341)		(403,245)		(54,438)
Unamortized prepaid debt issuance costs and discount on 12.5% Senior Notes	—		—		—		—
Total eliminations:	(514,908)		(56,858)		(514,908)		(71,746)
Total Intelsat S.A. debt	15,685,885		11,441,122		15,691,538		10,766,986
Less: current maturities of long-term debt	5,903,724		6,068,372		5,909,377		6,117,206
Less: debt included in liabilities subject to compromise	9,782,161		5,372,750		9,782,161		4,649,780
Total Intelsat S.A. long-term debt	$	—	$	—	$	—	$	—

(1)In connection with the Chapter 11 Cases, these balances have been reclassified as liabilities subject to compromise in our condensed consolidated balance sheet as of June 30, 2021. As of April 15, 2020, the Company ceased making principal and interest payments, and as of May 13, 2020 ceased accruing interest expense in relation to this long-term debt that was reclassified as liabilities subject to compromise.

The fair value for publicly traded instruments is determined using quoted market prices, and the fair value for non-publicly traded instruments is based upon composite pricing from a variety of sources, including market leading data providers, market makers and leading brokerage firms. Substantially all of the inputs used to determine the fair value of our debt are classified as Level 1 inputs within the fair value hierarchy from ASC 820, except our senior secured credit facilities and our 2025 Convertible Notes, the inputs for which are classified as Level 2, and Intelsat Luxembourg’s 8.125% Senior Notes due 2023 and 12.5% Senior Notes due 2024, the inputs for which are classified as Level 3. While the Company’s Chapter 11 proceedings remain ongoing, trading and fair value pricing may be more volatile and limited.

Intelsat Jackson Superpriority Secured Debtor-in-Possession Term Loan Facility

On June 17, 2020 (the “Closing Date”), the DIP Debtors and DIP Lenders entered into the DIP Credit Agreement, a non-amortizing multiple draw superpriority secured debtor-in-possession term loan facility, in an aggregate principal amount of $1.0 billion, on the terms and conditions set forth therein. See Note 2—Chapter 11 Proceedings, Ability to Continue as a Going Concern and Other Related Matters.

Intelsat Jackson borrowed $500.0 million of term loans under the DIP Facility on the Closing Date. Under the DIP Facility, Intelsat Jackson may, at its sole discretion, make incremental draws of the lesser of $250.0 million and the remaining available commitments of the DIP Lenders. Intelsat Jackson made two additional draws of $250.0 million each on November 27, 2020 and December 14, 2020, bringing the total aggregate principal amount outstanding under the DIP Facility to $1.0 billion as of both December 31, 2020 and ~~March~~June 3130, 2021. Drawn amounts under the DIP Facility bear interest at either (i) 4.5% per annum plus a base rate of the highest of (a) the Federal Funds Effective Rate plus ½ of 1.000%, (b) the Prime Rate as in effect on such day and (c) the London Inter-Bank Offered Rate (“LIBOR Rate”) for a one-month interest period on such day (or if such day is not a business day, the immediately preceding business day) plus 1.0%, or (ii) 5.5% plus the LIBOR Rate. For purposes of the DIP Facility, the LIBOR Rate has an effective floor rate of 1.0%. Undrawn amounts under the DIP Facility shall be subject to a ticking fee of 3.6% of the amount of commitments of the DIP Lenders from the entry of the DIP Order until such commitments terminate, which ticking fee shall be payable on the last day of each fiscal quarter prior to the date such commitments terminate and on the date of such termination. If an event of default under the DIP Facility occurs, the overdue amounts under the DIP Facility would bear interest at an additional 2.0% per annum above the interest rate otherwise applicable.

The proceeds of the DIP Facility may be used, among other things, to pay for (i) working capital needs of the DIP Debtors in the ordinary course of business, (ii) potential C-band relocation costs, (iii) investment and other general corporate purposes, and (iv) the ~~costs and expenses of administering the Chapter 11 Cases. The maturity date of the DIP Facility is July 13, 2021, subject to certain extensions pursuant to the terms of the DIP Credit Agreement.~~

costs and expenses of administering the Chapter 11 Cases. The maturity date of the DIP Facility, as amended by DIP Amendment No. 3 discussed below, is July 13, 2022, subject to certain extensions pursuant to the terms of the DIP Credit Agreement.

The DIP Credit Agreement includes customary negative covenants for debtor-in-possession loan agreements of this type, including covenants limiting the Company’s and its subsidiaries’ ability to, among other things, incur additional indebtedness, create liens on assets, make investments, loans or advances, engage in mergers, consolidations, sales of assets and acquisitions, pay dividends and distributions and make payments in respect of junior or prepetition indebtedness, in each case subject to customary exceptions for debtor-in-possession loan agreements of this type.

The DIP Credit Agreement also includes certain customary representations and warranties, affirmative covenants and events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, certain events under ERISA and change of control. Certain bankruptcy-related events are also events of default, including, but not limited to, the dismissal by the Bankruptcy Court of any of the Chapter 11 Cases, the conversion of any of the Chapter 11 Cases to a case under Chapter 7 of the Bankruptcy Code and certain other events related to the impairment of the DIP Lenders’ rights or liens granted under the DIP Credit Agreement.

On 26August 24, 2020, the DIP Debtors and DIP Lenders entered into DIP Amendment No. 1 to the DIP Credit Agreement, and on November 25, 2020, entered into DIP Amendment No. 2, each in connection with the Gogo Transaction (see Note 2—Chapter 11 Proceedings, Ability to Continue as a Going Concern and Other Related Matters for additional information).

~~under~~On ~~the~~July ~~Employee~~13, ~~Retirement~~2021, ~~Income~~the ~~Security~~DIP ~~Act~~Debtors ofand ~~1974,~~DIP asLenders ~~amended,~~entered ~~and~~into ~~change~~DIP ofAmendment ~~control~~No. ~~Certain~~3 ~~bankruptcy-related~~whereby, ~~events~~among ~~are~~other ~~also~~things, ~~events~~the ofparties ~~default,~~agreed ~~including,~~to ~~but~~certain ~~not~~technical ~~limited~~modifications to, the ~~dismissal~~DIP byCredit ~~the~~Agreement ~~Bankruptcy~~that ~~Court~~provided offor ~~any~~the extension of the ~~Chapter~~initial 11scheduled ~~Cases,~~maturity ~~the~~date ~~conversion~~ of ~~any~~July of13, ~~the~~2021, ~~Chapter~~and 11the ~~Cases~~Debtors agreed to awaive ~~case~~certain conditions under ~~Chapter~~the 7PSA. ofIn ~~the~~connection ~~Bankruptcy~~with ~~Code~~DIP ~~and~~Amendment ~~certain~~No. ~~other~~3, ~~events~~the ~~related~~DIP Debtors elected to extend the ~~impairment~~initial ofscheduled ~~the~~maturity ~~DIP~~date ~~Lenders’~~for ~~rights~~one oryear ~~liens~~to ~~granted~~July ~~under~~13, 2022 and paid 1.0% of the ~~DIP~~aggregate ~~Credit~~principal ~~Agreement~~amount in extension fees.

OnThe ~~August~~foregoing ~~24,~~descriptions ~~2020,~~of the DIP ~~Debtors~~Credit ~~and~~Agreement, DIP ~~Lenders~~Amendment ~~entered~~No. ~~into~~1, DIP Amendment No. 12 toand ~~the~~ DIP ~~Credit~~Amendment ~~Agreement,~~No. ~~and~~3 ondo ~~November~~not ~~25,~~purport ~~2020,~~to ~~the~~be ~~DIP~~complete ~~Debtors~~ and ~~DIP~~are ~~Lenders~~qualified ~~entered~~in ~~into~~their ~~DIP~~entirety ~~Amendment~~by ~~No.~~reference 2 to the ~~DIP~~full ~~Credit~~text ~~Agreement,~~of ~~each in connection with~~ the ~~Gogo~~DIP ~~Transaction~~Credit ~~(see~~Agreement, ~~Note~~DIP ~~2—Chapter~~Amendment 11No. ~~Proceedings~~1, ~~Ability~~DIP toAmendment ~~Continue~~No. as2 ~~a Going Concern~~ and ~~Other~~DIP ~~Related~~Amendment ~~Matters~~No. ~~for~~3, ~~additional~~as ~~information)~~applicable.

The foregoing descriptions of the DIP Credit Agreement, DIP Amendment No. 1 and DIP Amendment No. 2 do not purport to be complete and are qualified in their entirety by reference to the full text of the DIP Credit Agreement, DIP Amendment No. 1 and DIP Amendment No. 2, as applicable.

Note 13—Derivative Instruments and Hedging Activities

Interest Rate Cap Contracts

As of December 31, 2020, we held interest rate cap contracts with an aggregate notional value of $2.4 billion that matured in February 2021. The fair value of the interest rate cap contracts as of December 31, 2020 was zero. These interest rate cap contracts, which were entered into in 2017 and amended in 2018, were designed to mitigate our risk of interest rate increases on the floating rate portion of our senior secured credit facilities (see Note 12—Debt). The contracts were not designated for hedge accounting treatment in accordance with ASC 815, Derivatives and Hedging (“ASC 815”), and the changes in fair value of these instruments, net of payments received, were recognized in the condensed consolidated statements of operations during the period of change.

Common Stock Warrant

During 2019, we were issued a warrant to purchase common shares of an investment. We concluded that the warrant is a free-standing derivative in accordance with ASC 815.

The following table sets forth the fair value of our derivatives by category (in thousands):

Derivatives not designated as hedging instruments

Classification

As ofDecember 31, 2020

As ~~ofMarch~~ofJune 3130, 2021

Common stock warrant

Other assets

3,239

8,~~562~~771

The following table sets forth the effect of the derivative instruments in our condensed consolidated statements of operations (in thousands):

Derivatives not designated as hedging instruments	Classification	Three Months EndedJune 30, 2020		Three Months EndedJune 30, 2021		~~Three~~Six Months ~~EndedMarch~~EndedJune 3130, 2020		~~Three~~Six Months ~~EndedMarch~~EndedJune 3130, 2021
Interest rate cap contracts	Loss included in interest expense, net	$	(14)	$	—	$	(~~335~~349)	$	—
Common stock warrant	Gain included in other income, net	—		209		—		5,~~323~~532
Total (loss) gain on derivative financial instruments		$	(14)	$	209	$	(~~335~~349)	$	5,~~323~~532

Note 14—Income Taxes

The Company measures deferred tax assets and liabilities using enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid.

In response to the COVID-19 pandemic, on March 18, 2020, the Families First Coronavirus Response Act (the “FFCR Act”) was enacted, and on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted. The FFCR Act and the CARES Act contain numerous income tax provisions, such as increasing the 30 percent adjusted taxable income threshold to 50 percent for taxable years beginning in 2019 and 2020 for purposes of determining allowable business interest expense deductions. The CARES Act repeals the 80 percent limitation for taxable years beginning before January 1, 2021 (enacted by the U.S. Tax Cut and Jobs Act (the “Act”)), and it further specifies that net operating losses arising in a taxable year beginning after December 31, 2017, and before January 1, 2021, are allowed as a carryback to each of the five taxable years preceding the taxable year of such losses. Modifications to the tax rules for the carryback of net operating losses and business interest limitations resulted in a federal tax refund of approximately $87.14 million and $15.5 million for the three and six months ended ~~March~~June 3130, 2020, respectively. In addition, the CARES Act includes refundable payroll tax credits and deferral of employment side social security payments. As of ~~March~~June 3130, 2021, Intelsat’s payroll deferral amount was approximately $6.8 million.

The majority of our operations are located in taxable jurisdictions, including Luxembourg, the U.S. and the United Kingdom (“UK”). Due to our cumulative losses in recent years, and the inherent uncertainty associated with the realization of taxable income in the foreseeable future, we recorded a full valuation allowance against the cumulative net operating losses generated in Luxembourg. The difference between tax expense (benefit) reported in the condensed consolidated statements of operations and tax computed at statutory rates is attributable to the valuation allowance on losses generated in Luxembourg, the provision for foreign taxes, which were principally in the U.S. and the UK, as well as withholding taxes on revenue earned in some of the foreign markets in which we operate, benefits recorded in 2020 from impacts of the CARES Act and a tax reserve established on certain tax benefits taken on the Base Erosion and Anti-Abuse Tax (“BEAT”).

As of December 31, 2020 and ~~March~~June 3130, 2021, our gross unrecognized tax benefits were $51.4 million and $5355.83 million, respectively (including interest and penalties), of which $47.6 million and $4951.93 million, respectively, if recognized, would affect our effective tax rate. As of December 31, 2020 and ~~March~~June 3130, 2021, we had recorded reserves for interest and penalties in the amount of $0.8 million and $1.02 million, respectively. We continue to recognize interest and, to the extent applicable, penalties with respect to the unrecognized tax benefits as income tax expense. Since December 31, 2020, the change in the balance of unrecognized tax benefits has consisted of an increase of $12.69 million related to current tax positions, and an increase of $01.80 million related to prior tax positions.

We operate in various taxable jurisdictions throughout the world, and our tax returns are subject to audit and review from time to time. We consider Luxembourg, the U.S., the UK and Brazil to be our significant tax jurisdictions. Our subsidiaries in these jurisdictions are subject to income tax examination for periods after December 31, 2015. We believe that there are no jurisdictions in which the outcome of unresolved tax issues or claims is likely to be material to our results of operations, financial position or cash flows within the next twelve months.

~~During~~Effective ~~2019~~January 31, 2020, the ~~Company~~UK ~~made~~formally ~~payments~~exited to the ~~government~~European ofUnion ~~India~~(“EU”). inAs ~~the~~a ~~amount~~result of $7the withdrawal, existing tax reliefs and exemptions on intra-European transactions will likely cease to apply to transactions between UK entities and EU entities.~~0 million~~ In addition, transactions with ~~respect~~non-EU tocountries, ~~ongoing~~such ~~administrative~~as ~~proceedings~~the U.S., Wemay ~~believe~~also itbe isaffected. ~~more~~As ~~likely~~of ~~than~~June ~~not~~30, ~~that~~2021, all relevant tax laws and treaties remained unchanged and the ~~positions~~tax ~~which~~consequences were unknown. Therefore, we have ~~presented~~not inrecognized ~~these~~any ~~matters~~impacts ~~will~~of ~~result~~the withdrawal in athe ~~favorable~~income ~~outcome~~tax ~~for~~provision ~~the~~as ~~Company~~of June 30, 2021. AsWe awill ~~result,~~recognize any impacts to the ~~payments~~tax ~~have~~provision ~~been~~when ~~recorded~~changes in ~~taxes~~tax ~~receivable~~laws or treaties between the UK and the EU or individual EU member states are enacted.

~~Effective~~On ~~January~~December 312, ~~2020~~2019, the UKU.S. ~~formally~~Department ~~exited~~of Treasury and the ~~European~~U.S. ~~Union~~Internal ~~(“EU”)~~Revenue Service released final regulations with respect to the BEAT as enacted by the Act. AsThese aregulations ~~result~~represent the final version of proposed regulations which were released in December 2018. The BEAT is a minimum tax established by the ~~withdrawal~~Act, ~~existing~~which ~~tax~~was ~~reliefs~~signed ~~and~~into ~~exemptions~~law onin ~~intra-European~~December ~~transactions~~2017, ~~will~~that ~~likely~~subjects ~~cease~~certain payments made by U.S. corporations or subsidiaries to ~~apply~~foreign related parties to ~~transactions~~a ~~between~~secondary UKfederal ~~entities~~income ~~and~~tax EUregime ~~entities~~in the U.S. InThe ~~addition,~~final regulations clarify which taxpayers are subject to the BEAT and how the BEAT rules apply to certain payments and transactions. ~~with~~We ~~non-EU~~have ~~countries,~~adopted ~~such~~the final BEAT regulations as of the Urelease date.~~S.,~~ ~~may~~These ~~also~~regulations beare ~~affected.~~effective Asfor the Company as of ~~March~~its tax year ended December 31, ~~2021~~2018. A second set of final regulations was issued on September 1, ~~all~~2020, ~~relevant~~addressing ~~tax~~among ~~laws~~other ~~and~~topics, ~~treaties~~the ~~remained~~application ~~unchanged~~of the BEAT to partnerships and the ~~tax~~application ~~consequences~~of ~~were~~the ~~unknown~~effectively connected income exception to depreciable or amortizable property contributed to a U.S. ~~Therefore,~~partnership weby ~~have~~a ~~not~~foreign ~~recognized~~partner. ~~any~~Similar ~~impacts~~to the first set of ~~the~~final ~~withdrawal~~regulations issued in December 2019, the ~~income~~second ~~tax~~set ~~provision~~of final regulations are effective for the Company as of ~~March~~its tax year ended December 31, ~~2021~~2018. WeThe ~~will~~Company ~~recognize~~recognized ~~any~~the ~~impacts~~BEAT totax impact associated with the ~~tax~~second ~~provision~~set ~~when~~of ~~changes~~final inregulations ~~tax~~related ~~laws~~to orits ~~treaties~~tax ~~between~~year ~~the~~ended UKDecember 31, 2020 and ~~the~~six EUmonths orended ~~individual~~June EU30, ~~member~~2021 ~~states~~in ~~are~~the ~~enacted~~amounts of $8.8 million and $2.8 million, respectively.

On December 2, 2019, the U.S. Department of Treasury and the U.S. Internal Revenue Service released final regulations with respect to the BEAT as enacted by the Act. These regulations represent the final version of proposed regulations which were released in December 2018. The BEAT is a minimum tax established by the Act, which was signed into law in December 2017, that subjects certain payments made by U.S. corporations or subsidiaries to foreign related parties to a secondary federal income tax regime in the U.S. The final regulations clarify which taxpayers are subject to the BEAT and how the BEAT rules apply to certain payments and transactions. We have adopted the final BEAT regulations as of the release date. These regulations are effective for the Company as of its tax year ended December 31, 2018. A second set of final regulations was issued on September 1, 2020, addressing among other topics, the application of the BEAT to partnerships and the application of the effectively connected income exception to depreciable or amortizable property contributed to a U.S. partnership by a foreign partner. Similar to the first set of final regulations issued in December 2019, the second set of final regulations are effective for the Company as of its tax year ended December 31, 2018. The Company recognized the BEAT tax impact associated with the second set of final regulations related to its tax year ended December 31, 2020 and three months ended March 31, 2021 in the amount of $8.8 million and $1.5 million, respectively.29

Note 15—Commitments and Contingencies

On May 13, 2020, Intelsat S.A. and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. As a result of such bankruptcy filings, substantially all proceedings pending against the Debtors have been stayed and prepetition liabilities are subject to compromise. See Note 2—Chapter 11 Proceedings, Ability to Continue as a Going Concern and Other Related Matters.

SES Claim

On July 14, 2020, SES Americom, Inc. (“SES”) filed a proof of claim in the Bankruptcy Court in the amount of $1.8 billion against each of the Debtors. SES asserts that the Debtors owe money (or will owe money) to SES pursuant to certain contractual and fiduciary obligations made in the context of the consortium agreement between Debtor Intelsat US LLC, SES, and other satellite operators (the “Consortium Agreement”). SES claims that it is entitled to 50% of the combined payments that may eventually be payable to the Debtors and SES pursuant to the FCC Final Order, which provides for Acceleration Payments subject to the satisfaction of certain deadlines and other conditions set forth therein. SES’s proof of claim alleges that the Debtors breached the Consortium Agreement by taking the position that the Debtors are not required to split Acceleration Payments with SES and the other members of the consortium. The proof of claim also alleges breach of fiduciary duties and unjust enrichment and seeks monetary and punitive damages. We dispute the allegations in the proof of claim and on October 19, 2020, filed an objection to the claim, which we intend to litigate vigorously. A trial on the SES claim is scheduled to commence on September 20, 2021 in the Bankruptcy Court. To the extent that any portion of SES’s claim is allowed, we have asked the Bankruptcy Court to “equitably subordinate” such claim based on SES’s conduct in matters related to the Consortium Agreement. While the ultimate resolution of the claim is not currently predictable, if there is an adverse ruling, the ruling could constitute a material adverse outcome on our future consolidated financial condition.

Agreement by taking the position that the Debtors are not required to split Acceleration Payments with SES and the other members of the consortium. The proof of claim also alleges breach of fiduciary duties and unjust enrichment and seeks monetary and punitive damages. We dispute the allegations in the proof of claim and on October 19, 2020, filed an objection to the claim, which we intend to litigate vigorously. A trial on the SES claim is scheduled to commence on June 28, 2021 in the Bankruptcy Court. To the extent that any portion of SES’s claim is allowed, we have asked the Bankruptcy Court to “equitably subordinate” such claim based on SES’s conduct in matters related to the Consortium Agreement. While the ultimate resolution of the claim is not currently predictable, if there is an adverse ruling, the ruling could constitute a material adverse outcome on our future consolidated financial condition.

Other Litigation Matters

In the absence of the automatic stay due to the Chapter 11 Cases, we are subject to litigation in the ordinary course of business. Management does not believe that the resolution of any pending proceedings would have a material adverse effect on our financial position or results of operations.

Note 16—Related Party Transactions

(a) Shareholders’ Agreements

Certain shareholders of Intelsat S.A. entered into a shareholders’ agreement in December 2018, which provides, among other things, specific rights to and limitations upon the holders of Intelsat S.A.’s share capital with respect to shares held by such holders.

(b) Governance Agreement

In December 2018, the Company entered into a governance agreement with its shareholder affiliated with Serafina S.A. The agreement contains provisions relating to the composition of the Company’s board of directors and certain other matters.

We have entered into agreements with our executive officers and directors to provide contractual indemnification in addition to the indemnification provided for in our articles of incorporation.

(d) Horizons Holdings

We have a 50% ownership interest in Horizons Holdings as a result of a joint venture with JSAT (see Note 10(a)—Investments—Horizons Holdings).

(e) Horizons-3 Satellite LLC

We have a 50% ownership interest in Horizons 3 as a result of a joint venture with JSAT (see Note 10(b)—Investments—Horizons-3 Satellite LLC).

Note 17—Condensed Combined Debtors' Financial Information

The following presents our Debtors' condensed combined balance sheets as of December 31, 2020 and ~~March~~June 3130, 2021, statements of operations for the three and six months ended ~~March~~June 3130, 2020 and 2021 and ~~statement~~statements of cash flows for the ~~three~~six months ended ~~March~~June 3130, 2020 and 2021. Consolidating adjustments include eliminations of the following:

•investments in subsidiaries;

•intercompany accounts;

•intercompany sales and expenses; and

•intercompany equity balances.

Intercompany balances with non-Debtor affiliates have not been eliminated. On the Debtors’ condensed combined balance ~~sheet~~sheets, these primarily consist of net intercompany trade receivables generated under our Master Intercompany Service Agreement (“MISA”), funding for the operations of non-Debtor affiliates and funding for the acquisition of ~~Gogo~~Intelsat CA. On the Debtors’ condensed combined statements of operations, total reported revenue includes intercompany revenue of $6763.60 million and $70.8 million for the three months ended ~~March~~June 3130, 2020 and 2021, respectively, and $122.5 million and $138.4 million for the six months ended June 30, 2020 and 2021, respectively, primarily consisting of satellite capacity charges. Cost from affiliates primarily relates to sales and technical support services provided to Debtors as specified under the MISA. Investments in non-Debtor affiliates are presented under the equity method of accounting in the condensed combined financial statements set forth below.

2931

DEBTORS' CONDENSED COMBINED BALANCE SHEET

(in thousands, except per share amounts)

	December 31, 2020		~~March~~June 3130, 2021
			(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	879,191	$	~~661~~460,~~505~~617
Restricted cash	20,817		26,682
Receivables, net of allowances of $34,391 in 2020 and $34,541 in 2021	561,573		732,257
Receivables, net of allowances of $34,391 in 2020 and $22,140 in 2021	561,573		922,882
Contract assets	15,474		23,464
Contract assets, net of allowances	15,474		15,066
Inventory	1,347		~~924~~1,075
Prepaid expenses and other current assets	100,021		9387,~~769~~856
Intercompany receivables	678,188		~~723~~799,~~098~~081
Total current assets	2,256,611		2,~~261~~313,~~699~~259
Satellites and other property and equipment, net	4,656,678		4,~~789~~862,~~266~~789
Goodwill	2,624,452		2,624,452
Non-amortizable intangible assets	2,295,000		2,295,000
Amortizable intangible assets, net	245,649		~~238~~231,~~490~~331
Contract assets, net of current portion	26,642		24,591
Contract assets, net of current portion and allowances	26,642		23,275
Investment in affiliates	150,029		9048,~~300~~117
Other assets	357,897		~~359~~390,~~861~~066
Total assets	$	12,612,958	$	12,~~683~~788,~~659~~289
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued liabilities	$	222,876	$	~~289~~342,~~920~~390
Taxes payable	6,743		76,~~593~~694
Employee related liabilities	36,563		3436,~~617~~445
Accrued interest payable	17,747		1718,~~985~~035
Current maturities of long-term debt	5,903,724		5,~~906~~909,~~514~~377
Contract liabilities	146,762		~~755~~841,~~437~~136
Deferred satellite performance incentives	47,377		5256,~~164~~115
Other current liabilities	43,885		4454,~~298~~047
Total current liabilities	6,425,677		7,~~108~~264,~~528~~239
Contract liabilities, net of current portion	1,422,893		~~991~~1,~~318~~072,990
Deferred satellite performance incentives, net of current portion	138,116		~~135~~127,~~077~~774
Deferred income taxes	61,069		6369,~~629~~910
Accrued retirement benefits, net of current portion	129,837		~~124~~118,~~691~~458
Other long-term liabilities	188,394		~~185~~210,~~810~~021
Liabilities subject to compromise	10,168,518		10,169,~~260~~230
Shareholders’ deficit:
Common shares, nominal value $0.01 per share	1,421		1,422
Paid-in capital	2,573,840		2,~~574~~576,~~563~~144
Accumulated deficit	(8,416,410)		(8,~~591~~743,~~286~~592)
Accumulated other comprehensive loss	(80,397)		(7978,~~353~~307)
Total shareholders’ deficit	(5,921,546)		(6,~~094~~244,~~654~~333)
Total liabilities and shareholders’ deficit	$	12,612,958	$	12,~~683~~788,~~659~~289

3032

DEBTORS' UNAUDITED CONDENSED COMBINED STATEMENTS OF OPERATIONS

(in thousands)

	Three Months EndedMarch 31, 2021
	Three Months EndedJune 30, 2020		Three Months EndedJune 30, 2021		Six Months EndedJune 30, 2020		Six Months EndedJune 30, 2021
Revenue	$	~~405~~431,~~281~~334	$	405,550	$	840,751	$	810,831
Operating expenses:
Direct costs of revenue (excluding depreciation and amortization)	6366,~~682~~765		65,465		131,891		129,148
Selling, general and administrative	6153,~~299~~958		57,460		124,544		118,760
Cost from affiliates	129,~~483~~786		11,326		21,448		23,809
Depreciation and amortization	~~153~~157,~~378~~392		155,680		315,168		309,058
Other operating expense—C-band	58,356
Impairment of non-amortizable intangible and other assets	34,043		—		46,243		—
Total operating expenses	349,198
Other operating expense—C-band	—		64,638		—		122,994
Income from operations	56,083
Total operating expenses	321,944		354,569		639,294		703,769
Interest expense, net	(125,779)
Income from operations	109,390		50,981		201,457		107,062
Equity in loss of affiliates	(53,530)
Interest expense, net	(221,934)		(122,649)		(539,681)		(248,428)
Other income, net	11,133
Equity in income (loss) of affiliates	3,267		(40,984)		1,712		(94,513)
Reorganization items	(55,812)
Other income, net	3,432		16,496		12,034		27,630
Loss before income taxes	(167,905)
Reorganization items	(298,691)		(49,591)		(298,691)		(105,403)
Income tax expense	(6,971)
Loss before income taxes	(404,536)		(145,747)		(623,169)		(313,652)
Net loss	$	(174,876)
Income tax expense	(818)		(6,559)		(957)		(13,530)
Net loss	$	(405,354)	$	(152,306)	$	(624,126)	$	(327,182)

3133

DEBTORS' UNAUDITED CONDENSED COMBINED STATEMENT OF CASH FLOWS

(in thousands)

	Three Months EndedMarch 31, 2021
	Six Months EndedJune 30, 2020		Six Months EndedJune 30, 2021
Cash flows from operating activities:
Net loss	$	(~~174~~624,~~876~~126)	$	(327,182)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	~~153~~315,~~378~~168		309,058
Provision for expected credit losses	528,~~960~~325		11,671
Foreign currency transaction loss	324
Foreign currency transaction (gains) losses	(719)		430
Share-based compensation	661
Loss on disposal of assets	—		41
Deferred income taxes	1,560
Impairment of non-amortizable intangible and other assets	46,243		—
Amortization of discount, premium, issuance costs and related costs	2,459
Share-based compensation	6,234		2,178
Amortization of actuarial loss and prior service credits for retirement benefits	1,063
Deferred income taxes	5,631		6,100
Unrealized gains on investments and loans held-for-investment	(13,252)
Amortization of discount, premium, issuance costs and related costs	17,277		4,978
Equity in losses of affiliates	53,530
Non-cash reorganization items	196,974		—
Other non-cash items	(158)
Debtor-in-possession financing fees	52,182		—
Changes in operating assets and liabilities:
Amortization of actuarial loss and prior service credits for retirement benefits	1,317		2,126
Receivables	24,214
Unrealized losses on derivative financial instruments	349		—
Intercompany receivables	(37,943)
Unrealized losses (gains) on investments and loans held-for-investment	721		(29,225)
Prepaid expenses, contract and other assets	8,157
Equity in (income) losses of affiliates	(1,712)		94,513
Accounts payable and accrued liabilities	36,425
Other non-cash items	92		(311)
Accrued interest payable	238
Changes in operating assets and liabilities:
Contract liabilities	(24,329)
Receivables	(79)		27,008
Accrued retirement benefits	(5,146)
Intercompany receivables	(70,970)		(106,845)
Other long-term liabilities	(3,468)
Prepaid expenses, contract and other assets	(34,700)		20,167
Net cash provided by operating activities	28,797
Accounts payable and accrued liabilities	23,791		95,155
Cash flows from investing activities:
Accrued interest payable	48,775		287
Capital expenditures (including capitalized interest)	(243,221)
Contract liabilities	(38,951)		(56,107)
Dividends from affiliates	6,418
Accrued retirement benefits	(8,267)		(11,379)
Net cash used in investing activities	(236,803)
Other long-term liabilities	(11,013)		(8,422)
Cash flows from financing activities:
Net cash provided by (used in) operating activities	(47,458)		34,241
Principal payments on deferred satellite performance incentives	(3,570)
Cash flows from investing activities:
Net cash provided by financing activities	(3,570)
Capital expenditures (including capitalized interest)	(196,043)		(462,583)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(245)
Dividends from affiliates	20,878		7,836
Net change in cash, cash equivalents and restricted cash	(211,821)
Proceeds from sale of investment	—		15,000
Cash, cash equivalents, and restricted cash, beginning of period	900,008
Proceeds from principal payments on loans held-for-investment	724		103
Cash, cash equivalents, and restricted cash, end of period	$	688,187
Capital contribution to affiliates	(9,005)		—
Reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated Debtors' balance sheet to the total sum of these same amounts shown on the condensed consolidated Debtors' statement of cash flows:
Other proceeds from satellites	5,625		—
Cash and cash equivalents	$	661,505
Net cash used in investing activities	(177,821)		(439,644)
Restricted cash	26,682
Cash flows from financing activities:
Total cash, cash equivalents and restricted cash reported in the condensed consolidated Debtors' statement of cash flows	$	688,187
Proceeds from debtor-in-possession financing	500,000		—
Debtor-in-possession financing fees	(52,182)		—
Principal payments on deferred satellite performance incentives	(19,195)		(6,921)
Net cash provided by (used in) financing activities	428,623		(6,921)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	686		(385)
Net change in cash, cash equivalents and restricted cash	204,030		(412,709)
Cash, cash equivalents, and restricted cash, beginning of period	755,313		900,008
Cash, cash equivalents, and restricted cash, end of period	$	959,343	$	487,299
Reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated Debtors' balance sheet to the total sum of these same amounts shown on the condensed consolidated Debtors' statement of cash flows:
Cash and cash equivalents	$	940,366	$	460,617
Restricted cash	18,977		26,682
Total cash, cash equivalents and restricted cash reported in the condensed consolidated Debtors' statement of cash flows	$	959,343	$	487,299

3234

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and their notes included in Item 1—Financial Statements in this Quarterly Report, and with our audited consolidated financial statements and their notes included in our Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Annual Report”). In addition, see “Forward-Looking Statements” for a discussion of factors that could cause our future financial condition and results of operations to be materially different from those discussed below.

Overview

We operate one of the world’s largest satellite services businesses, providing a critical layer in the global communications infrastructure.

We provide diversified communications services to the world’s leading media companies, fixed and wireless telecommunications operators, data networking service providers for enterprise and mobile applications in the air and on the seas, multinational corporations and Internet Service Providers. We are also the leading provider of commercial satellite capacity to the U.S. government and other select military organizations and their contractors.

Our customers use our global network for a broad range of applications, from global distribution of content for media companies to providing the transmission layer for commercial aeronautical consumer broadband connectivity, to enabling essential network backbones for telecommunications providers in high-growth emerging regions.

Our network solutions are a critical component of our customers’ infrastructures and business models. Generally, our customers need the specialized connectivity that satellites provide so long as they are in business or pursuing their mission. In recent years, mobility services providers have contracted for services on our fleet that support broadband connections for passengers on commercial flights and cruise ships, connectivity that in some cases is only available through our network. In addition, our satellite neighborhoods provide our media customers with efficient and reliable broadcast distribution that maximizes audience reach, a technical and economic benefit that is difficult for terrestrial services to match. In developing regions, our satellite solutions often provide higher reliability than is available from local terrestrial telecommunications services and allow our customers to reach geographies that they would otherwise be unable to serve.

Through our recent acquisition of Gogo Inc.’s (“Gogo”) commercial aviation business (“~~Gogo~~Intelsat CA”), we became the global leader in providing in-flight connectivity (“IFC”) and wireless in-flight entertainment (“IFE”) solutions to the commercial aviation industry. Services provided by our ~~Gogo~~Intelsat CA business include passenger connectivity, which allows passengers to connect to the Internet from their personal Wi-Fi-enabled devices; passenger entertainment, which offers passengers the opportunity to enjoy a broad selection of IFE options on their laptops and personal Wi-Fi enabled devices; and Connected Aircraft Services (“CAS”), which offer airlines connectivity for various operations and currently include, among others, real-time credit card transaction processing, electronic flight bags and real-time weather information.

Recent Developments

Voluntary Reorganization under Chapter 11

On May 13, 2020, Intelsat S.A. and certain of its subsidiaries (each, a “Debtor” and collectively, the “Debtors”) commenced voluntary cases (the “Chapter 11 Cases”) under title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Eastern District of Virginia (the “Bankruptcy Court”). Primary factors causing us to file for Chapter 11 protection included the Company’s intention to participate in the accelerated clearing process of C-band spectrum set forth in the U.S. Federal Communications Commission’s (“FCC”) March 3, 2020 final order (the “FCC Final Order”), requiring the Company to incur significant costs related to clearing activities well in advance of receiving reimbursement for such costs and the need for additional financing to fund the C-band clearing process, service our current debt obligations, and meet our operating requirements, as well as the economic slowdown impacting the Company and several of its end markets due to the novel coronavirus (“COVID-19”) pandemic.

On August 14, 2020, the Company filed its C-band spectrum transition plan with the FCC. The FCC Final Order provides for monetary enticements for fixed satellite services (“FSS”) providers to clear a portion of the C-band spectrum on an accelerated basis (the “Acceleration Payments”). On September 17, 2020, the Company announced that it finalized materially all of its required contracts with satellite manufacturers and launch-vehicle providers to move forward and meet the accelerated C-band spectrum clearing timelines established by the FCC. Under the FCC Final Order, the Company is eligible to receive Acceleration Payments of approximately $1.2 billion and $3.7 billion based on the milestone clearing certification dates of December 5, 2021 and December 5, 2023, with the respective payments expected to be received in the first half of each successive year, respectively, subject to the satisfaction of certain deadlines and other conditions set forth therein.

The Chapter 11 process can be unpredictable and involves significant risks and uncertainties. As a result of these risks and uncertainties, the amount and composition of the Company’s assets, liabilities, officers and/or directors could be significantly different

3335

following the outcome of the Chapter 11 Cases, and the description of the Company’s operations, properties and liquidity and capital resources included in this Quarterly Report may not accurately reflect its operations, properties and liquidity and capital resources following the Chapter 11 process.

Pursuant to various orders from the Bankruptcy Court, the Debtors have received approval from the Bankruptcy Court to generally maintain their ordinary course operations and uphold certain commitments to their stakeholders, including employees, customers, and vendors during the restructuring process, subject to the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code. While the Chapter 11 Cases are pending, the Debtors do not anticipate making interest payments due under their respective unsecured debt instruments; however, the Debtors expect to make interest payments on a monthly basis to holders of their senior secured debt instruments. ~~For~~The ~~the three months ended March 31, 2021, the~~ contractual interest expense pursuant to our unsecured debt instruments that was not recognized in our condensed consolidated ~~statements~~statement of operations was $102.5 million and $192.3 million for the three months ended June 30, 2020 and 2021, respectively, and $102.5 million and $384.5 million for the six months ended June 30, 2020 and 2021, respectively.

On June 9, 2020, Intelsat Jackson received approval from the Bankruptcy Court (the “DIP Order”) to enter into a non-amortizing multiple draw superpriority secured debtor-in-possession term loan facility (the “DIP Facility”), in an aggregate principal amount of $1.0 billion on the terms and conditions as set forth in the DIP Facility credit agreement (the “DIP Credit Agreement”), with certain of the Debtors’ prepetition secured parties (the “DIP Lenders”), and on June 17, 2020, Intelsat Jackson and certain of its subsidiaries as guarantors (together with Intelsat Jackson, the “DIP Debtors”) entered into the DIP Credit Agreement with the DIP Lenders, as amended by an amendment (“DIP Amendment No. 1”) to the DIP Credit Agreement, dated as of August 24, 2020, ~~and as further amended by~~ a second amendment (“DIP Amendment No. 2”), todated ~~the~~as of November 25, 2020, and a third amendment (“DIP ~~Credit~~Amendment ~~Agreement~~No. 3”), dated as of ~~November~~July 2513, ~~2020~~2021. For additional information regarding the DIP Facility, DIP Credit Agreement, DIP Amendment No. 1, DIP Amendment No. 2 and DIP Amendment No. 23, see Liquidity and Capital Resources—Debt below.

Update on the Impact of COVID-19 on the Company

The COVID-19 pandemic has had an adverse impact on our business, results of operations and financial condition, a trend we expect to continue. Among the impacts of the COVID-19 pandemic were a reduction of revenue and a decreased likelihood of collection from certain mobility customers and our Intelsat CA business. We continue to closely monitor the ongoing impact on our employees, customers, business and results of operations.

Gogo Transaction

On August 31, 2020, following approval from the Bankruptcy Court, Intelsat Jackson and Gogo entered into a purchase and sale agreement (the “Purchase and Sale Agreement”) with respect to Gogo’s commercial aviation business for $400.0 million in cash, subject to customary adjustments (the “Purchase Price”). The transaction further propels the Company’s efforts in the growing commercial IFC market, pairing our high-capacity global satellite and ground network with Gogo’s installed base of more than 3,000 commercial aircraft to redefine the connectivity experience. In connection with the transactions contemplated by the Purchase and Sale Agreement, the DIP Debtors and DIP Lenders entered into DIP Amendment No. 1 and DIP Amendment No. 2 to our DIP Credit Agreement (see —Voluntary Reorganization under Chapter 11 above). On December 1, 2020, we completed the transaction (the “Gogo Transaction”) and funded the Purchase Price with proceeds from our existing DIP Facility and cash on hand.

3436

A. Results of Operations

Three Months Ended ~~March~~June 3130, 2020 and 2021

The following table sets forth our comparative statements of operations for the periods shown with the increase (decrease) and percentage changes, except those deemed not meaningful (“NM”), between the periods presented (in thousands, except percentages):

Three Months EndedMarch 31, 2020

Three Months EndedMarch 31, 2021

Dollar Change

PercentageChange

Three Months EndedJune 30, 2020

Three Months EndedJune 30, 2021

Dollar Change

PercentageChange

Revenue

~~458~~482,~~820~~034

~~502~~507,~~763~~862

4325,~~943~~828

105%

Operating expenses:

Direct costs of revenue (excluding depreciation and amortization)

~~105~~106,~~085~~961

~~165~~163,~~233~~317

6056,~~148~~356

5753%

Selling, general and administrative

8063,~~967~~863

~~102~~100,~~614~~161

2136,~~647~~298

2757%

Depreciation and amortization

~~163~~162,~~048~~614

~~165~~168,~~241~~259

25,~~193~~645

13%

Impairment of non-amortizable intangible assets

12,200

—

(12,200)

Impairment of non-amortizable intangible and other assets

34,043

—

(34,043)

Other operating expense—C-band

—

5864,~~356~~638

Total operating expenses

~~361~~367,~~300~~481

~~491~~496,~~444~~375

~~130~~128,~~144~~894

3635%

Income from operations

97114,~~520~~553

11,~~319~~487

(86103,~~201~~066)

(8890%)

Interest expense, net

(~~318~~222,~~329~~533)

(~~132~~129,~~343~~893)

~~185~~92,~~986~~640

(5842%)

Other income, net

2,~~735~~762

920,~~719~~218

617,~~984~~456

Reorganization items

—(298,691)

(5549,~~812~~591)

~~(55~~249,~~812)~~100

NM(83%)

Loss before income taxes

(~~218~~403,~~074~~909)

(~~167~~147,~~117~~779)

50256,~~957~~130

(2363%)

Income tax expense

(~~141~~818)

(73,~~189~~923)

(73,~~048~~105)

Net loss

(~~218~~404,~~215~~727)

(~~174~~151,~~306~~702)

43253,~~909~~025

(2063%)

Net income attributable to noncontrolling interest

(~~556~~628)

(~~570~~604)

~~(14)~~24

3(4%)

Net loss attributable to Intelsat S.A.

(~~218~~405,~~771~~355)

(~~174~~152,~~876~~306)

43253,~~895~~049

(2062%)

Revenue

We earn revenue primarily by providing services over satellite transponder capacity to our customers. Our customers generally obtain satellite capacity from us by placing an order pursuant to one of several master customer service agreements. The master customer agreements and related service orders under which we sell services specify, among other things, the amount of satellite capacity to be provided, whether service will be non-preemptible or preemptible and the service term. Most services are full time in nature, with service terms ranging from one year to as long as 16 years. Occasional use services used for video applications can be for much shorter periods, including increments of one hour. Our master customer service agreements offer different service types, including transponder services, managed services, and channel, which are all services that are provided on, or used to provide access to, our global network. We refer to these services as on-network services. Our customer agreements also cover services that we procure from third parties and resell, which we refer to as off-network services. These services can include transponder services and other satellite-based transmission services sourced from other operators, often in frequencies not available on our network, and other operational fees related to satellite operations provided on behalf of third-party satellites.

Our ~~Gogo~~Intelsat CA business generates two types of revenue: service revenue and equipment revenue. Service revenue is primarily derived from connectivity services and, to a lesser extent, from entertainment services, CAS and maintenance services. Connectivity is provided to our customers using both air-to-ground (“ATG”) and satellite technologies. Service revenue is earned by services paid for by passengers, airlines and third parties. Equipment revenue primarily consists of the sale of ATG and satellite connectivity equipment and the sale of entertainment equipment. Equipment revenue also includes revenue generated by our installation of connectivity or entertainment equipment on commercial aircraft.

3537

The following table sets forth our comparative revenue by service type, for the periods below (in thousands, except percentages):

Three Months EndedMarch 31, 2020

Three Months EndedMarch 31, 2021

Increase (Decrease)

PercentageChange

Three Months EndedJune 30, 2020

Three Months EndedJune 30, 2021

Increase (Decrease)

PercentageChange

On-Network Revenues

Transponder services

~~331~~343,~~334~~599

~~325~~324,~~110~~053

(619,~~224~~546)

(26%)

Managed services

7285,~~261~~050

6970,~~626~~228

(214,~~635~~822)

(417%)

Channel

~~426~~391

~~194~~186

(~~232~~205)

(5452%)

Total on-network revenues

~~404~~429,~~021~~040

394,~~930~~467

(934,~~091~~573)

(28%)

Off-Network and Other Revenues

Transponder, MSS and other off-network services

43,~~688~~617

4239,~~595~~708

(13,~~093~~909)

(39%)

Satellite-related services

119,~~111~~377

9,~~006~~487

~~(2,105)~~110

~~(19~~1%)

Total off-network and other revenues

5452,~~799~~994

5149,~~601~~195

(3,~~198~~799)

(67%)

In-flight Services Revenues

Services

—

4457,~~711~~296

Equipment

—

116,~~521~~904

Total in-flight services revenue

—

5664,~~232~~200

Total

~~458~~482,~~820~~034

~~502~~507,~~763~~862

4325,~~943~~828

105%

Total revenue for the three months ended ~~March~~June 3130, 2021 increased by $4325.98 million, or 105%, as compared to the three months ended ~~March~~June 3130, 2020. By service type, our revenues increased or decreased due to the following:

On-Network Revenues:

•Transponder services—an aggregate decrease of $619.25 million, primarily due to ana $1819.92 million net decrease in revenue from media customers, ~~partially~~and ~~offset~~a ~~by an~~ $111.36 million ~~increase~~net decrease from network services customers. The decrease in revenue from media customers was ~~primarily~~driven ~~due~~by to non-renewals, renewals at lower prices, service contractions, and service ~~contractions~~terminations relating to distribution and direct-to-home (“DTH”) solution application customers,. ~~partially~~The ~~offset~~decline byin ~~renegotiated~~revenues ~~contracts~~from ~~and~~network ~~new~~services ~~business~~customers ~~from~~was aprimarily ~~DTH~~due ~~solution~~to ~~application~~non-renewals, ~~customer~~pricing indecreases, ~~Europe~~service contractions, and a service contract termination. ~~The~~These ~~increase~~decreased inrevenues ~~revenue~~were partially offset by increased revenues from network services customers, ~~was~~ primarily due to a renegotiated contract with a maritime mobility customer for a different service mix of revenues previously classified as managed services, and new business and pricing ~~and~~ capacity increases for an enterprise networks customer~~, and a service transfer from managed services to transponder services for a cellular backhaul customer~~. ~~These increased revenues were partially offset by non-renewals, pricing decreases, service contractions, and a service contract termination.~~

•Managed services—an aggregate decrease of $214.68 million, primarily due to a $216.57 million decrease in revenue from network services customers ~~and a $2.0 million decrease in revenue from media customers~~, partially offset by a $1.81 million increase in ~~revenue~~revenues from government customers. The decline in revenues from network services customers was primarily driven by a renegotiated contract with a maritime mobility customer for a different service mix of revenues previously classified as managed services, ~~a service transfer from managed services to transponder services for a cellular backhaul customer, and non-renewals,~~ partially offset by increased revenues from new flex maritime services. The ~~decrease in revenue from media customers was primarily due to a decline in occasional use video services and non-renewals. The~~ increase in revenues from government customers was primarily attributable to new flex services and the entry into service of Galaxy 30, partially offset by non-renewals.

Off-Network and Other Revenues:

•Satellite-related services—an aggregate decrease of $2.1 million, primarily reflecting decreased revenues from professional services supporting third-party satellites.

In-flight Services Revenues:

•Services and equipment—an aggregate increase of $5664.2 million attributable to our ~~Gogo~~Intelsat CA business.

Operating Expenses

Direct Costs of Revenue (Excluding Depreciation and Amortization)

Direct costs of revenue increased by $6056.14 million, or 5753%, to $~~165~~163.23 million for the three months ended ~~March~~June 3130, 2021, as compared to the three months ended ~~March~~June 3130, 2020. The increase was primarily due to a $61.2 million ~~increase~~ in costs attributable to our ~~Gogo~~Intelsat CA business, ~~and~~acquired ~~a $3.3 million increase~~ in ~~staff-related~~December ~~expenses largely relating to our employee retention incentive~~ 2020.

plans. These increases were partially offset by a $3.5 million decrease in third-party managed capacity costs largely related to a government customer.

Selling, General and Administrative

Selling, general and administrative expenses increased by $2136.63 million, or 2757%, to $~~102~~100.62 million for the three months ended ~~March~~June 3130, 2021, as compared to the three months ended ~~March~~June 3130, 2020. The increase was primarily due to a $2830.96 million ~~increase~~ in costs attributable to our ~~Gogo~~Intelsat CA business, ~~and~~ a $74.20 million increase in staff-related expenses largely relating to our employee retention incentive plans., ~~These~~and ~~increases were partially offset by~~ a $133.46 million ~~decrease~~increase in ~~bad~~professional ~~debt expense due to a higher bad debt expense for the three months ended March 31, 2020, largely relating to a certain customer that filed for Chapter 11 bankruptcy protection in 2020~~fees.

Depreciation and Amortization

Depreciation and amortization expense increased by $25.26 million, or 13%, to $~~165~~168.23 million for the three months ended ~~March~~June 3130, 2021, as compared to the three months ended ~~March~~June 3130, 2020. Significant items impacting depreciation and amortization included:

•an increase of $6.7.4 million in depreciation and amortization expense attributable to our ~~Gogo~~Intelsat CA business; and

•an increase of $13.01 million in depreciation expense resulting from the impact of a satellite placed ininto service; partially offset by

•a decrease of $5.4 million in depreciation expense due to the timing of certain satellites becoming fully depreciated.

Impairment of Non-Amortizable Intangible Assets

We recognized an impairment charge of $1234.20 million for the three months ended ~~March~~June 3130, 2020 relating to ~~the~~certain ~~Intelsat~~satellite ~~trade~~and ~~name~~launch ~~intangible~~vehicle ~~asset~~deposits, with no comparable amounts for the three months ended ~~March~~June 3130, 2021. See Item 1, Note 119—~~Goodwill~~Satellites and Other ~~Intangible~~Property ~~Assets~~and Equipment for further discussion.

Other Operating Expense—C-band

Other operating expense—C-band consists of reimbursable and non-reimbursable costs associated with our C-band spectrum relocation efforts. We incurred $5864.46 million of reimbursable and non-reimbursable C-band clearing related expenses for the three months ended ~~March~~June 3130, 2021, with no comparable amounts for the three months ended ~~March~~June 3130, 2020.

Interest Expense, Net

Interest expense, net consists of gross interest expense incurred together with gains and losses on interest rate cap contracts (which reflect the changes in their fair values), offset by interest income earned and interest capitalized related to assets under construction. As of December 31, 2020, we held interest rate cap contracts with an aggregate notional amount of $2.4 billion that matured in February 2021. These interest rate cap contracts were held to mitigate the risk of interest rate increases on the floating-rate term loans under our senior secured credit facilities. The contracts were not designated as hedges for accounting purposes. Interest expense, net decreased by $~~186~~92.06 million, or 5842%, to $~~132~~129.39 million for the three months ended ~~March~~June 3130, 2021, as compared to the three months ended ~~March~~June 3130, 2020, primarily due to the following:

•a decrease of $~~171~~76.4 million in interest expense primarily resulting from Chapter 11 restructuring activities, partially offset by an increase in interest expense recognized on our senior secured credit facilities; and

•a decrease of $1213.01 million due to higher capitalized interest primarily resulting from increased levels of satellites and related assets under construction.

The non-cash portion of total interest expense, net was $26.76 million for the three months ended ~~March~~June 3130, 2021, primarily consisting of interest expense related to the significant financing component identified in customer contracts, amortization and accretion of discounts and premiums and amortization of deferred financing fees.

Other Income, Net

Other income, net was $920.72 million for the three months ended ~~March~~June 3130, 2021, as compared to $2.78 million for the three months ended ~~March~~June 3130, 2020. The net increase in other income was primarily ~~consisted~~driven by a $7.7 million gain due to a change in value of an investment in a third party and a $5.3 million gain on the sale of one of our investments, ~~and~~both ~~lower foreign currency losses~~ of ~~$3.8~~which ~~million~~occurred ~~for~~during the three months ended ~~March~~June 3130, 2021, aswith ~~compared~~no tosimilar activity for the three months ended ~~March~~June 3130, 2020. ~~These~~In addition, we had foreign currency gains ~~were~~in ~~offset,~~2021 as compared to losses in ~~part~~2020, bywith a net ~~decrease~~positive impact of $3.03 million ~~on the sale of assets~~ for the three months ended ~~March~~June 3130, 2021 as compared to the three months ended ~~March~~June 3130, 2020.

Reorganization Items

Reorganization items reflect direct costs incurred in connection with ~~the~~our Chapter 11 ~~Cases~~restructuring activities. ~~Reorganization~~We recorded reorganization items of $55298.87 million and $49.6 million for the three months ended ~~March~~June 3130, 2020 and 2021, respectively. Reorganization items for the three months ended June 30, 2020 primarily consisted of ~~professional~~$197.0 million related to the write-off of debt discount, premium and issuance costs, $52.2 million of financing fees related to the DIP Facility and $49.0 ~~There~~million ~~were~~in noprofessional ~~comparable~~fees. ~~amounts~~Reorganization items for the three months ended ~~March~~June 3130, ~~2020.~~2021 consisted of professional fees.

Income Tax Expense

Income tax expense increased by $73.01 million to $73.29 million for the three months ended ~~March~~June 3130, 2021, as compared to the three months ended ~~March~~June 3130, 2020. The increase was principally attributable to higher income from our U.S. subsidiaries for the three months ended ~~March~~June 3130, 2021, withholding taxes on revenue earned in some of the foreign markets in which we operate, benefits recorded in 2020 from impacts of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), and a tax reserve established on certain tax benefits taken on the Base Erosion Anti-Abuse Tax. (“BEAT”), partially offset by a tax benefit resulting from changes in the UK deferred tax rate.

Cash paid for income taxes, net of refunds, totaled $1.07 million and $02.51 million for the three months ended ~~March~~June 3130, 2020 and 2021, respectively.

Net Loss Attributable to Intelsat S.A.

Net loss attributable to Intelsat S.A. was $~~174~~152.93 million for the three months ended ~~March~~June 3130, 2021, as compared to net loss attributable to Intelsat S.A. of $~~218~~405.84 million for the three months ended ~~March~~June 3130, 2020. The change reflects the various items discussed above.

Six Months Ended June 30, 2020 and 2021


	Six Months Ended June 30, 2020		Six Months Ended June 30, 2021		Dollar Change		Percentage Change
Revenue	$	940,854	$	1,010,625	$	69,771	7%
Operating expenses:
Direct costs of revenue (excluding depreciation and amortization)	212,046		328,549		116,503		55%
Selling, general and administrative	144,829		202,777		57,948		40%
Depreciation and amortization	325,662		333,499		7,837		2%

Impairment of non-amortizable intangible and other assets	46,243		—		(46,243)		NM
Other operating expense—C-band	—		122,994		122,994		NM
Total operating expenses	728,780		987,819		259,039		36%
Income from operations	212,074		22,806		(189,268)		(89%)
Interest expense, net	(540,862)		(262,236)		278,626		(52%)

Other income, net	5,496		29,937		24,441		NM
Reorganization items	(298,691)		(105,403)		193,288		(65%)
Loss before income taxes	(621,983)		(314,896)		307,087		(49%)
Income tax expense	(959)		(11,112)		(10,153)		NM
Net loss	(622,942)		(326,008)		296,934		(48%)
Net income attributable to noncontrolling interest	(1,184)		(1,174)		10		(1%)
Net loss attributable to Intelsat S.A.	$	(624,126)	$	(327,182)	$	296,944	(48%)

Revenue

The following table sets forth our comparative revenue by service type, with Off-Network and Other Revenues shown separately from On-Network Revenues, for the periods shown (in thousands, except percentages):


	Six Months Ended June 30, 2020		Six Months Ended June 30, 2021		Increase (Decrease)		Percentage Change
On-Network Revenues
Transponder services	$	674,934	$	649,163	$	(25,771)	(4%)
Managed services	157,311		139,854		(17,457)		(11%)
Channel	816		381		(435)		(53%)
Total on-network revenues	833,061		789,398		(43,663)		(5%)
Off-Network and Other Revenues
Transponder, MSS and other off-network services	87,305		82,303		(5,002)		(6%)
Satellite-related services	20,488		18,493		(1,995)		(10%)
Total off-network and other revenues	107,793		100,796		(6,997)		(6%)
In-flight Services Revenues
Services	—		102,007		102,007		NM
Equipment	—		18,424		18,424		NM
Total in-flight services revenue	—		120,431		120,431		NM
Total	$	940,854	$	1,010,625	$	69,771	7%

Total revenue for the six months ended June 30, 2021 increased by $69.8 million, or 7%, as compared to the six months ended June 30, 2020. By service type, our revenues increased or decreased due to the following:

On-Network Revenues:

•Transponder services—an aggregate decrease of $25.8 million, primarily due to a $38.1 million net decrease in revenue from media customers, partially offset by a $9.7 million net increase from network services customers. The decrease in revenue from media customers was primarily due to non-renewals, renewals at lower prices, and service contractions relating to distribution and DTH solution application customers, partially offset by new business from a contribution and distribution solution application customer in the Americas and renegotiated contracts and new business from a DTH solution application customer in Europe. The increase in revenue from network services customers was primarily due to a renegotiated contract with a maritime mobility customer for a different service mix of revenues previously classified as managed services, new business and pricing and capacity increases for an enterprise networks customer, and a service transfer from managed services to transponder services for a cellular backhaul customer. These increased revenues were partially offset by non-renewals, pricing decreases, service contractions, and a service contract termination.

•Managed services—an aggregate decrease of $17.5 million, primarily due to a $19.2 million decrease in revenue from network services customers, partially offset by a $2.9 million increase in revenue from government customers. The decline in revenues from network services customers was primarily driven by a renegotiated contract with a maritime mobility customer for a different service mix of revenues previously classified as managed services, a service transfer from managed services to transponder services for a cellular backhaul customer, and non-renewals, partially offset by increased revenues from new flex maritime services. The increase in revenues from government customers was primarily attributable to new flex services and the entry into service of Galaxy 30, partially offset by non-renewals.

In-flight Services Revenues:

•Services and equipment—an aggregate increase of $120.4 million attributable to our Intelsat CA business.

Operating Expenses

Direct Costs of Revenue (Excluding Depreciation and Amortization)

Direct costs of revenue increased by $116.5 million, or 55%, to $328.5 million for the six months ended June 30, 2021, as compared to the six months ended June 30, 2020. The increase was primarily due to $122.4 million in costs attributable to our Intelsat CA business, acquired in December 2020.

Selling, General and Administrative

Selling, general and administrative expenses increased by $57.9 million, or 40%, to $202.8 million for the six months ended June 30, 2021, as compared to the six months ended June 30, 2020. The increase was primarily due to the following:

•$59.4 million in costs attributable to our Intelsat CA business;

•an $11.2 million increase in staff-related expenses largely relating to our employee retention incentive plans; and

•a $4.2 million increase in professional fees; partially offset by

•a $15.6 million decrease in bad debt expense due to higher bad debt expense for the six months ended June 30, 2020, largely relating to a certain customer that filed for Chapter 11 bankruptcy protection in 2020.

Depreciation and Amortization

Depreciation and amortization expense increased by $7.8 million, or 2%, to $333.5 million for the six months ended June 30, 2021, as compared to the six months ended June 30, 2020. Significant items impacting depreciation and amortization included:

•an increase of $14.2 million in depreciation and amortization expense attributable to our Intelsat CA business; and

•an increase of $4.1 million in depreciation expense resulting from the impact of a satellite placed into service; partially offset by

•a decrease of $10.9 million in depreciation expense due to the timing of certain satellites becoming fully depreciated.

Impairment of Non-Amortizable Intangible and Other Assets

We recognized impairment charges of $34.0 million and $12.2 million for the six months ended June 30, 2020 relating to certain satellite and launch vehicle deposits and the Intelsat trade name intangible asset, respectively. No comparable amounts were recognized for the six months ended June 30, 2021. See Item 1, Note 9—Satellites and Other Property and Equipment and Item 1, Note 11—Goodwill and Other Intangible Assets for further discussion.

Other Operating Expense—C-band

Other operating expense—C-band consists of reimbursable and non-reimbursable costs associated with our C-band spectrum relocation efforts. We incurred $123.0 million of reimbursable and non-reimbursable C-band clearing related expenses for the six months ended June 30, 2021, with no comparable amounts for the six months ended June 30, 2020.

Interest Expense, Net

Interest expense, net decreased by $278.6 million, or 52%, to $262.2 million for the six months ended June 30, 2021, as compared to the six months ended June 30, 2020, primarily due to the following:

•a decrease of $247.8 million in interest expense primarily resulting from Chapter 11 restructuring activities, partially offset by an increase in interest expense recognized on our senior secured credit facilities; and

•a decrease of $25.1 million due to a higher capitalized interest primarily resulting from increased levels of satellites and related assets under construction.

The non-cash portion of total interest expense, net was $53.3 million for the six months ended June 30, 2021, primarily consisting of interest expense related to the significant financing component identified in customer contracts, amortization and accretion of discounts and premiums and amortization of deferred financing fees.

Other Income, Net

Other income, net was $29.9 million for the six months ended June 30, 2021, as compared to $5.5 million for the six months ended June 30, 2020. The net increase in other income was primarily driven by a $7.7 million gain due to a change in value of an investment in a third party, a $5.5 million gain due to a change in value of stock warrants we hold, and a $5.3 million gain on the sale of one of our investments, all of which occurred during the six months ended June 30, 2021, with no similar activity for the six months ended June 30, 2020. In addition, we had foreign currency gains in 2021 as compared to losses in 2020, with a net positive impact of $6.0 million for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020.

Reorganization Items

Reorganization items reflect direct costs incurred in connection with our Chapter 11 restructuring activities. We recorded reorganization items of $298.7 million and $105.4 million for the six months ended June 30, 2020 and 2021, respectively. Reorganization items for the six months ended June 30, 2020 primarily consisted of $197.0 million related to the write-off of debt discount, premium and issuance costs, $52.2 million of financing fees related to the DIP Facility and $49.0 million in professional fees. Reorganization items for the six months ended June 30, 2021 primarily consisted of professional fees.

Income Tax Expense

Income tax expense increased by $10.2 million to $11.1 million for the six months ended June 30, 2021, as compared to the six months ended June 30, 2020. The increase was principally attributable to higher income from our U.S. subsidiaries for the six months ended June 30, 2021, withholding taxes on revenue earned in certain non-U.S. jurisdictions in which we operate, benefits recorded in 2020 from impacts of the CARES Act, and a tax reserve established on certain tax benefits taken on the BEAT, partially offset by a tax benefit resulting from changes in the UK deferred tax rate.

Cash paid for income taxes, net of refunds, totaled $2.6 million and $2.5 million for the six months ended June 30, 2020 and 2021, respectively.

Net Loss Attributable to Intelsat S.A.

Net loss attributable to Intelsat S.A. was $327.2 million for the six months ended June 30, 2021, as compared to net loss attributable to Intelsat S.A. of $624.1 million for the six months ended June 30, 2020. The change reflects the various items discussed above.

EBITDA

EBITDA consists of earnings before net interest, loss (gain) 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 our costs of borrowing. Accordingly, we consider loss (gain) 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.

A reconciliation of net loss to EBITDA for the periods shown is as follows (in thousands):

	Three Months EndedMarch 31, 2020		Three Months EndedMarch 31, 2021
	Three Months EndedJune 30, 2020		Three Months EndedJune 30, 2021		Six Months EndedJune 30, 2020		Six Months EndedJune 30, 2021
Net loss	$	(~~218~~404,~~215~~727)	$	(~~174~~151,~~306~~702)	$	(622,942)	$	(326,008)
Add:
Interest expense, net	~~318~~222,~~329~~533		~~132~~129,~~343~~893		540,862		262,236
Income tax expense	~~141~~818		73,~~189~~923		959		11,112
Depreciation and amortization	~~163~~162,~~048~~614		~~165~~168,~~241~~259		325,662		333,499
EBITDA	$	~~263~~(18,~~303~~762)	$	~~130~~150,~~467~~373	$	244,541	$	280,839

Adjusted EBITDA

In addition to EBITDA, we calculate a measure called Adjusted EBITDA to assess the operating performance of Intelsat S.A. Adjusted EBITDA consists of EBITDA of Intelsat S.A. as adjusted to exclude or include certain unusual items, certain other operating expense items and certain other adjustments as described in the table and related footnotes below. 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 impairments of asset value and other non-recurring items, 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

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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, 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.

A reconciliation of net loss to EBITDA and EBITDA to Adjusted EBITDA is as follows (in thousands):

	Three Months EndedMarch 31, 2020		Three Months EndedMarch 31, 2021
	Three Months EndedJune 30, 2020		Three Months EndedJune 30, 2021		Six Months EndedJune 30, 2020		Six Months EndedJune 30, 2021
Net loss	$	(~~218~~404,~~215~~727)	$	(~~174~~151,~~306~~702)	$	(622,942)	$	(326,008)
Add:
Interest expense, net	~~318~~222,~~329~~533		~~132~~129,~~343~~893		540,862		262,236
Income tax expense	~~141~~818		73,~~189~~923		959		11,112
Depreciation and amortization	~~163~~162,~~048~~614		~~165~~168,~~241~~259		325,662		333,499
EBITDA	~~263~~(18,~~303~~762)		~~130~~150,~~467~~373		244,541		280,839
Add:
Compensation and benefits(1)	320,~~706~~149		2021,~~273~~561		23,855		41,834
Non-recurring and non-cash items(2)	104,~~899~~431		6458,~~958~~870		15,329		123,828
Impairment of non-amortizable intangible assets(3)	12,200		—
Impairment of non-amortizable intangible and other assets(3)	34,043		—		46,243		—
Reorganization items(4)	—298,691		5549,~~812~~591		298,691		105,403
Proportionate share from unconsolidated joint venture(5):
Interest expense, net	1,~~080~~045		~~633~~609		2,125		1,242
Depreciation and amortization	2,~~815~~814		2,~~815~~814		5,629		5,629
Adjusted EBITDA(6)(7)	$	~~294~~342,~~003~~411	$	~~274~~283,~~958~~818	$	636,413	$	558,775

(1)Reflects non-cash expenses incurred relating to our equity compensation plans and, ~~for the three months ended March 31, 2021,~~ expenses incurred relating to our employee retention incentive plans in connection with our Chapter 11 proceedings.

(2)Reflects certain non-recurring expenses, gains and losses and non-cash items, including the following: costs associated with our C-band spectrum relocation efforts; professional fees related to our liability management initiatives; merger and acquisition costs; certain research and development costs; amortization of supplemental type certificates; severance, retention and relocation payments; changes in fair value and gains on sales of certain investments; certain foreign exchange gains and losses; and other various non-recurring expenses.

(3)Reflects a non-cash impairment charge recorded in connection with the write-off of certain satellite and launch vehicle deposits for the three and six months ended June 30, 2020, and a trade name impairment (see Item 1, Note 11—Goodwill and Other Intangible Assets) for the six months ended June 30, 2020.

(4)Reflects direct costs incurred in connection with our Chapter 11 ~~proceedings~~restructuring activities. See Item 1, Note 2—Chapter 11 Proceedings, Ability to Continue as a Going Concern and Other Related Matters.

(5)Reflects adjustments related to our interest in Horizons-3 Satellite LLC (“Horizons 3”). See Item 1, Note 10(b)—Investments—Horizons-3 Satellite LLC.

(6)Adjusted EBITDA included $26.14 million and $26.57 million for the three months ended ~~March~~June 3130, 2020 and 2021, respectively, and $52.5 million and $53.2 million for the six months ended June 30, 2020 and 2021, respectively, of revenue relating to the significant financing component identified in customer contracts in accordance with the adoption of ASC 606, Revenue from Contracts with Customers.

(7)Intelsat S.A. Adjusted EBITDA reflected $45.71 million and $4.07 million for the three months ended ~~March~~June 3130, 2020 and 2021, respectively, and $9.8 million and $8.7 million for the six months ended June 30, 2020 and 2021, respectively, of Adjusted EBITDA attributable to Intelsat Horizons-3 LLC, its subsidiaries and its proportionate share of Horizons 3. These entities are considered to be unrestricted subsidiaries under the definitions set forth in our applicable debt agreements.

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B. Liquidity and Capital Resources

Overview

We are a highly leveraged company and our contractual obligations, commitments and debt service requirements over the next several years are significant. At ~~March~~June 3130, 2021, the aggregate principal amount of our debt outstanding not held by affiliates was $15.7 billion. Our interest expense, net for the three and six months ended ~~March~~June 3130, 2021 was $~~132~~129.39 million and $262.2 million, respectively, which included $26.76 million and $53.3 million of non-cash interest expense, respectively. At ~~March~~June 3130, 2021, cash, cash equivalents and restricted cash were approximately $~~847~~658.29 million.

The commencement of the Chapter 11 Cases accelerated substantially all of our outstanding debt. Any efforts to enforce payment obligations related to the acceleration of our debt have been automatically stayed as a result of the filing of the Chapter 11 Cases, and the creditors’ rights of enforcement are subject to the applicable provisions of the Bankruptcy Code.

During the pendency of the Chapter 11 Cases, as discussed above in —Recent Developments, Voluntary Reorganization under Chapter 11, the Debtors do not anticipate making interest payments due under their respective unsecured debt instruments. In past years, our cash flows from operations and cash on hand have been sufficient to fund interest obligations ($1.1 billion and $634.7 million for the years ended December 31, 2019 and 2020, respectively), and significant capital expenditures ($229.8 million and $606.8 million for the years ended December 31, 2019 and 2020, respectively). However, as discussed above in —Recent Developments, Voluntary Reorganization under Chapter 11, our ability to fund operating expenses is now, to some extent, subject to obtaining certain approvals from the Bankruptcy Court in connection with our Chapter 11 proceedings.

A significant factor driving the Company’s decision to file for Chapter 11 protection was the Company’s desire to participate in the FCC’s process for accelerated clearing of the C-band spectrum, for which we need to incur significant upfront expenses for clearing activities well in advance of receiving reimbursement payments. On August 14, 2020, the Company filed its C-band spectrum transition plan with the FCC.

In addition to the significant capital expenditures we expect to make in 2021 and beyond, we expect total clearing costs will be approximately $1.3 billion over the next three years. Our primary source of liquidity is and will continue to be cash generated from operations, as well as existing cash. We currently expect to use cash on hand and cash flows from operations to fund our most significant cash outlays, including debt service requirements and capital expenditures, in the next twelve months and beyond. We also expect to receive reimbursement payments for certain upfront C-band spectrum clearing expenses incurred, and under the FCC Final Order, the Company is eligible to receive Acceleration Payments of approximately $1.2 billion and $3.7 billion based on the milestone clearing certification dates of December 5, 2021 and December 5, 2023, respectively, with the respective payments expected to be received in the first half of each successive year, subject to the satisfaction of certain deadlines and other conditions set forth therein.

Cash Flow Items

Our cash flows consisted of the following for the periods shown (in thousands):

	Three Months EndedMarch 31, 2020		Three Months EndedMarch 31, 2021
	Six Months EndedJune 30, 2020		Six Months EndedJune 30, 2021
Net cash provided by operating activities	$	1454,~~277~~494	$	1238,~~407~~360
Net cash used in investing activities	(32197,~~827~~385)		(~~245~~455,~~681~~913)
Net cash used in financing activities	(9,685)		(4,987)
Net cash provided by (used in) financing activities	426,744		(9,774)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(23,~~007~~732)		(21,~~111~~294)
Net change in cash, cash equivalents and restricted cash	$	~~(30~~280,~~242)~~121	$	(~~240~~428,~~372~~621)

Net Cash Provided by Operating Activities

Net cash provided by operating activities decreased by $116.91 million to $1238.4 million for the ~~three~~six months ended ~~March~~June 3130, 2021, as compared to the ~~three~~six months ended ~~March~~June 3130, 2020. The decrease was due to a $928.7 million decrease ~~from changes~~ in ~~operating~~net ~~assets~~loss and ~~liabilities~~changes in non-cash items, partially offset by a $712.86 million ~~decrease~~increase infrom ~~net loss and~~ changes in ~~non-cash~~operating ~~items~~assets and liabilities. The ~~decrease~~increase from changes in operating assets and liabilities was primarily due to lower ~~inflows~~outflows related to ~~prepaid~~the amount and ~~other~~timing ~~assets,~~of asaccounts ~~well~~receivable, ~~higher~~prepaid ~~outflows~~expenses, ~~for~~and contract ~~liabilities~~and other assets, partially offset by higher ~~inflows~~outflows ~~from~~related ~~receivables.~~to interest payments and contract liabilities.

Net Cash Used in Investing Activities

Net cash used in investing activities increased by $~~212~~258.95 million to $~~245~~455.79 million for the ~~three~~six months ended ~~March~~June 3130, 2021, as compared to the ~~three~~six months ended ~~March~~June 3130, 2020, primarily due to increased capital expenditures, partially offset by $15.0 million of proceeds from the sale of an investment.

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Net Cash Provided by (Used in) Financing Activities

Net cash ~~used~~provided inby financing activities decreased by $4436.75 million to cash used of $59.08 million for the ~~three~~six months ended ~~March~~June 3130, 2021, as compared to the ~~three~~six months ended ~~March~~June 3130, 2020, primarily due to net proceeds of $447.8 million resulting from our DIP financings completed during the six months ended June 30, 2020, partially offset by lower principal payments on deferred performance incentives.

Restricted Cash

As of ~~March~~June 3130, 2021, $3227.51 million of cash was legally restricted, being held as a compensating balance for certain outstanding letters of credit.

Debt

The filing of the Chapter 11 Cases constituted an event of default that accelerated substantially all of our obligations under the documents governing the prepetition existing indebtedness of Intelsat S.A., Intelsat Luxembourg, Intelsat Connect and Intelsat Jackson. Any efforts to enforce payment obligations related to the acceleration of our debt have been automatically stayed as a result of the filing of the Chapter 11 Cases, and the creditors’ rights of enforcement are subject to the applicable provisions of the Bankruptcy Code. While the Chapter 11 Cases are pending, the Debtors do not anticipate making interest payments due under their respective unsecured debt instruments; however, the Debtors expect to make monthly interest payments on their senior secured debt instruments pursuant to the adequate protection requirements under the DIP Order.

Intelsat Jackson Superpriority Secured Debtor-in-Possession Term Loan Facility

On June 17, 2020 (the “Closing Date”), the DIP Debtors and DIP Lenders entered into the DIP Credit Agreement, a non-amortizing multiple draw superpriority secured debtor-in-possession term loan facility, in an aggregate principal amount of $1.0 billion, on the terms and conditions set forth therein (see—Recent Developments—Voluntary Reorganization under Chapter 11 above).

Intelsat Jackson borrowed $500.0 million of term loans under the DIP Facility on the Closing Date. Under the DIP Facility, Intelsat Jackson may, at its sole discretion, make incremental draws of the lesser of $250.0 million and the remaining available commitments of the DIP Lenders. Intelsat Jackson made two additional draws of $250.0 million each on November 27, 2020 and December 14, 2020, bringing the total aggregate principal amount outstanding under the DIP Facility to $1.0 billion as of both December 31, 2020 and ~~March~~June 3130, 2021. Drawn amounts under the DIP Facility bear interest at either (i) 4.5% per annum plus a base rate of the highest of (a) the Federal Funds Effective Rate plus ½ of 1.0%, (b) the Prime Rate as in effect on such day and (c) the London Inter-Bank Offered Rate (“LIBOR Rate”) for a one-month interest period on such day (or if such day is not a business day, the immediately preceding business day) plus 1.0%, or (ii) 5.5% plus the LIBOR Rate. For purposes of the DIP Facility, the LIBOR Rate has an effective floor rate of 1.0%. Undrawn amounts under the DIP Facility shall be subject to a ticking fee of 3.6% of the amount of commitments of the DIP Lenders from the entry of the DIP Order until such commitments terminate, which ticking fee shall be payable on the last day of each fiscal quarter prior to the date such commitments terminate and on the date of such termination. If an event of default under the DIP Facility occurs, the overdue amounts under the DIP Facility would bear interest at an additional 2.0% per annum above the interest rate otherwise applicable.

The proceeds of the DIP Facility may be used, among other things, to pay for (i) working capital needs of the DIP Debtors in the ordinary course of business, (ii) potential C-band relocation costs, (iii) investment and other general corporate purposes, and (iv) the costs and expenses of administering the Chapter 11 Cases. The maturity date of the DIP Facility, as amended by DIP Amendment No. 3 discussed below, is July 13, ~~2021~~2022, subject to certain extensions pursuant to the terms of the DIP Credit Agreement.

The DIP Credit Agreement also includes certain customary representations and warranties, affirmative covenants and events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, certain events under the Employee Retirement Income Security Act of 1974, as amended, and change of control. Certain bankruptcy-related events are also events of default, including, but not limited to, the dismissal by the Bankruptcy Court of any of the Chapter 11 Cases, the conversion of any of the Chapter 11 Cases to a case under Chapter 7 of the Bankruptcy Code and certain other events related to the impairment of the DIP Lenders’ rights or liens granted under the DIP Credit Agreement.

On August 24, 2020, the DIP Debtors and DIP Lenders entered into DIP Amendment No. 1 to the DIP Credit Agreement, and on November 25, 2020, the DIP Debtors and DIP Lenders entered into DIP Amendment No. 2 to the DIP Credit Agreement, each in connection with the Gogo Transaction (see Item 1, Note 2—Chapter 11 Proceedings, Ability to Continue as a Going Concern and Other Related Matters for additional information). 46

On 41August 24, 2020, the DIP Debtors and DIP Lenders entered into DIP Amendment No. 1 to the DIP Credit Agreement, and on November 25, 2020, entered into DIP Amendment No. 2, each in connection with the Gogo Transaction (see Item 1, Note 2—Chapter 11 Proceedings, Ability to Continue as a Going Concern and Other Related Matters for additional information).

~~The~~On ~~foregoing~~July ~~descriptions~~13, of2021, the DIP ~~Credit~~Debtors ~~Agreement,~~and DIP ~~Amendment~~Lenders ~~No.~~entered 1into ~~and~~ DIP Amendment No. 23 dowhereby, ~~not~~among ~~purport~~other things, the parties agreed to becertain ~~complete~~technical ~~and~~modifications ~~are~~to ~~qualified~~the inDIP ~~their~~Credit ~~entirety~~Agreement bythat ~~reference~~provided tofor the ~~full~~extension ~~text~~ of the ~~DIP~~initial ~~Credit~~scheduled ~~Agreement~~maturity date of July 13, ~~DIP~~2021, ~~Amendment~~and Nothe Debtors agreed to waive certain conditions under the PSA. 1In ~~and~~connection with DIP Amendment No. 23, asthe ~~applicable~~DIP Debtors elected to extend the initial scheduled maturity date for one year to July 13, 2022 and paid 1.0% of the aggregate principal amount in extension fees.

The foregoing descriptions of the DIP Credit Agreement, DIP Amendment No. 1, DIP Amendment No. 2 and DIP Amendment No. 3 do not purport to be complete and are qualified in their entirety by reference to the full text of the DIP Credit Agreement, DIP Amendment No. 1, DIP Amendment No. 2 and DIP Amendment No. 3, as applicable.

Contracted Backlog

We benefit from strong visibility of our future revenues. Our contracted backlog is our expected future revenue under existing customer contracts and includes both cancelable and non-cancelable contracts. As of ~~March~~June 3130, 2021, our contracted backlog was approximately $56.90 billion. The amount included in backlog represents the full service charge for the duration of the contract and does not include termination fees. The amount of the termination fees is generally calculated as a percentage of the remaining backlog associated with the contract. In certain cases of breach for non-payment or customer bankruptcy, we may not be able to recover the full value of certain contracts or termination fees. Our contracted backlog includes 100% of the backlog of our consolidated ownership interests, which is consistent with the accounting for our ownership interests in these entities. We believe this backlog and the resulting predictable cash flows in the FSS sector make our results less volatile than that of typical companies outside our industry.

Capital Expenditures

Our capital expenditures depend on our business strategies and reflect our commercial responses to opportunities and trends in our industry. Our actual capital expenditures may differ from our expected capital expenditures if, among other things, we enter into any currently unplanned strategic transactions. Levels of capital spending from one year to the next are also influenced by the nature of the satellite life cycle and by the capital-intensive nature of the satellite industry. For example, we incur significant capital expenditures during the years in which satellites are under construction. We typically procure a new satellite within a timeframe that would allow the satellite to be deployed at least one year prior to the end of the service life of the satellite to be replaced. As a result, we frequently experience significant variances in our capital expenditures from year to year. Further, following the Company’s filing of its C-band spectrum transition plan with the FCC on August 14, 2020, we expect total clearing costs will be approximately $1.3 billion over the next three years, of which approximately $~~800~~900.0 million is expected to be incurred in 2021. Payments for satellites and other property and equipment during the ~~three~~six months ended ~~March~~June 3130, 2021 were $~~244~~469.60 million. However, subject to the satisfaction of certain deadlines and other conditions set forth in the FCC Final Order, the Company is eligible to receive Acceleration Payments in an aggregate total amount of approximately $4.9 billion over the next 2 years.

We intend to fund our capital expenditure requirements from cash on hand and cash provided from operating activities; however, our ability to fund capital expenditures in the ordinary course is, to some extent, subject to obtaining certain approvals from the Bankruptcy Court in connection with our Chapter 11 proceedings.

Off-Balance Sheet Arrangements

We have revenue sharing agreements with JSAT International, Inc. (“JSAT”) related to services sold on the Horizons 1, Horizons 2 and Horizons 3 satellites. We are responsible for billing and collection for such services and we remit 50% of the revenue, less applicable fees and commissions, to JSAT. Refer to Item 1, Note 10—Investments for disclosures relating to the revenue sharing agreements with JSAT.

Contractual Obligations

Other than as disclosed elsewhere in this report with respect to the filing of the Chapter 11 Cases and the acceleration of substantially all of our debt as a result, there have been no material changes outside the ordinary course of business to the information provided with respect to our contractual obligations as disclosed in our 2020 Annual Report.

Critical Accounting Policies and Estimates

The Company’s significant accounting policies are described in Note 1—Background and Summary of Significant Accounting Policies in our 2020 Annual Report. The Company’s critical accounting estimates are described in Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2020 Annual Report and are further described below.

Bankruptcy Accounting

Our condensed consolidated financial statements included herein have been prepared as if we are a going concern and reflect the application of ASC 852, Reorganizations (“ASC 852”). ASC 852 requires the financial statements, for periods subsequent to the commencement of the Chapter 11 proceedings, to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, we classify liabilities and obligations whose treatment and satisfaction are dependent on the outcome of the reorganization under the Chapter 11 proceedings as liabilities subject to compromise on our condensed consolidated balance sheets. In addition, we classify all income, expenses, gains or losses that are incurred or realized as a result of the Chapter 11 proceedings as reorganization items in our condensed consolidated statements of operations (see Item 1, Note 2—Chapter 11 Proceedings, Ability to Continue as a Going Concern and Other Related Matters).

Recently Issued Accounting Pronouncements

For disclosures related to recently issued accounting pronouncements, see Item 1, Note 1—General—Recently Issued Accounting Pronouncements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to the Company’s disclosures about market risk made in Part II—Item 7A—Quantitative and Qualitative Disclosures about Market Risk of the Company’s 2020 Annual Report.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We have carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the quarter ended ~~March~~June 3130, 2021. Based upon that evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of ~~March~~June 3130, 2021.

Changes in Internal Control over Financial Reporting

Except as described below, there were no other changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(f) of the Exchange Act during the quarter ended ~~March~~June 3130, 2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

On December 1, 2020, we completed our acquisition of ~~Gogo~~Intelsat CA. As part of our ongoing integration of the ~~Gogo~~Intelsat CA business, we are currently integrating policies, processes, people, technology and operations for the combined Company. Management will continue to evaluate the Company's internal control over financial reporting as it continues to integrate the ~~Gogo~~Intelsat CA business.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Chapter 11 Cases

On May 13, 2020, the Debtors filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in Bankruptcy Court. The information contained in Item 1, Note 2—Chapter 11 Proceedings, Ability to Continue as a Going Concern and Other Related Matters—Voluntary Reorganization under Chapter 11 is incorporated herein by reference. As a result of such bankruptcy filings, substantially all legal proceedings pending against the Debtors have been stayed. These matters will be subject to resolution in accordance with the Bankruptcy Code and applicable orders of the Bankruptcy Court.

As part of the Chapter 11 Cases, parties believing that they have claims or causes of action against the Debtors could file proofs of claim evidencing such claims. Pursuant to an order entered by the Bankruptcy Court, all proofs of claim were to be filed with the Bankruptcy Court by September 9, 2020, except for claims by governmental units. Claims by governmental units were to be filed with the Bankruptcy Court by November 16, 2020. The filed claims have been or are being reconciled to amounts recorded in liabilities subject to compromise in our condensed consolidated balance sheet. The Debtors may ask the Bankruptcy Court to disallow claims that the Debtors believe are duplicative, have been later amended or superseded, are without merit, are overstated or should be disallowed for other reasons. In addition, as a result of this process, the Debtors may identify additional liabilities that will need to be recorded or reclassified to liabilities subject to compromise. In light of the substantial number of claims filed, and expected to be filed, the claims resolution process may take considerable time to complete and likely will continue after the Debtors emerge from bankruptcy.

SES Claim

On July 14, 2020, SES Americom, Inc. (“SES”) filed a proof of claim in the Bankruptcy Court in the amount of $1.8 billion against each of the Debtors. SES asserts that the Debtors owe money (or will owe money) to SES pursuant to certain contractual and fiduciary obligations made in the context of the consortium agreement between Debtor Intelsat US LLC, SES, and other satellite operators (the “Consortium Agreement”). SES claims that it is entitled to 50% of the combined payments that may eventually be payable to the Debtors and SES pursuant to the FCC Final Order, which provides for Acceleration Payments subject to the satisfaction of certain deadlines and other conditions set forth therein. SES’s proof of claim alleges that the Debtors breached the Consortium Agreement by taking the position that the Debtors are not required to split Acceleration Payments with SES and the other members of the consortium. The proof of claim also alleges breach of fiduciary duties and unjust enrichment and seeks monetary and punitive damages. We dispute the allegations in the proof of claim and on October 19, 2020, filed an objection to the claim, which we intend to litigate vigorously. A trial on the SES claim is scheduled to commence on ~~June~~September 2820, 2021 in the Bankruptcy Court. To the extent that any portion of SES’s claim is allowed, we have asked the Bankruptcy Court to “equitably subordinate” such claim based on SES’s conduct in matters related to the Consortium Agreement. While the ultimate resolution of the claim is not currently predictable, if there is an adverse ruling, the ruling could constitute a material adverse outcome on our future consolidated financial condition.

Other Litigation Matters

In the absence of the automatic stay in our Chapter 11 cases, we are subject to litigation in the ordinary course of business, but management does not believe that the resolution of any of those pending proceedings would have a material adverse effect on our financial position or results of operations.

Item 1A. Risk Factors

There have been no material changes or additions to the risk factors previously disclosed in Part I—Item 1A—Risk Factors of our 2020 Annual Report.

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Item 6. Exhibits

Exhibit No.						Document Description
10.1						~~Plan~~Amendment ~~Support~~No. ~~Agreement~~3 and Waiver, dated as of ~~February~~July 1113, 2021, byto ~~and~~Superpriority ~~between~~Secured ~~Intelsat~~Debtor-in-Possession ~~S.A.~~Credit ~~and~~Agreement, ~~certain~~dated as of ~~its~~June ~~subsidiaries (collectively~~17, ~~the “Debtors”)~~2020, by and ~~certain~~among ofIntelsat ~~the~~Jackson ~~Debtors’~~Holdings ~~prepetition~~S.A., ~~secured~~as ~~and~~Borrower, ~~unsecured~~the ~~creditors~~Guarantor ~~(incorporated~~parties bythereto, ~~reference~~Credit toSuisse ~~Exhibit~~AG, ~~10.1~~as ofAdministrative ~~Intelsat~~Agent ~~S.A.’s~~and ~~Current~~Collateral ~~Report~~Agent onand ~~Form~~the ~~8-K,~~Lender ~~File~~parties Nothereto. ~~001-35878, filed on February 12, 2021).~~*
31.1						Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.*
31.2						Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer.*
32.1						Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101						The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~March~~June 3130, 2021, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Loss, (iv) Consolidated Statements of Changes in Shareholders' Deficit, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements.*
104						Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.


*			Filed herewith.

The certifications attached as Exhibits 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the SEC and are not to be incorporated by reference into any filing of Intelsat S.A. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	INTELSAT S.A.
Date: May 5, 2021	By	/s/ STEPHEN SPENGLER
Date: August 3, 2021	By	/s/ STEPHEN SPENGLER
		Stephen Spengler
		Chief Executive Officer
Date: May 5, 2021	By	/s/ DAVID TOLLEY
Date: August 3, 2021	By	/s/ DAVID TOLLEY
		David Tolley
		Chief Financial Officer

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