Better Value for a Better Tomorrow Whowe Are

SKY Perfect JSAT Holdings Inc. Annual Report 2013 SKY Perfect JSAT Holdings Inc. Annual Report 2013 For the year ended March 31, 2013

Better Value for a Better Tomorrow Whowe are

Multichannel Pay TV Business

Broadcasting

Please refer to the glossary at the end.

Forward-Looking Statements Statements about the SKY Perfect JSAT Group’s forecasts, strategies, management policies and objectives contained in this report that are not based on historical facts constitute forward-looking statements. These statements are strictly based on management’s assumptions, plans, expectations and judgments in light of information currently available. These forward-looking statements, facts and assumptions are subject to a variety of risks and uncertainties. Therefore, actual results may differ materially from forecasts. Space and Satellite Business

Communications

Annual Report 2013 WhoMultichannel wePay are TV Business

Japan’s Largest Multichannel Pay TV Platform

We provide a wide variety of content ranging from sports, movies, and music to TV dramas and anime transmitted via satellites and optical ﬁ ber networks. Dedicated SKY PerfecTV! tuners built into digital TVs in Japan enable quick and easy access to our entertainment broadcasts. As a pioneering developer of numerous digital channels in Japan, we continue to create value by providing a better, more enriching TV viewing experience.

Broadcasting Space & Satellite Business

Asia’s No.1 and Japan’s Only Satellite Operator

We own and operate 16 satellites, making us the largest satellite communications company in Asia. Our business centers on providing satellite communication services for corporations and government agencies in Japan, while also actively developing our global operations including satellite connection sales in Asia and joint venture businesses in North America and Russia through our partnership with Intelsat. Aware of the strong public interest nature of satellite communication services, we continue to enhance value by providing safety and security for society. Communications

01 01 Market & Position

Multichannel Pay TV Business

Largest subscriber base in the Japanese pay TV market The Japanese multichannel pay TV market is slowly but steadily growing as a strong offering of a wide variety of specialty channel needs is appealing to diverse viewer interests and preferences. SKY PerfecTV! boasts the largest subscriber base in the expanding pay TV market. Penetration Rate of Multichanel Pay TV Major Pay TV Services in Japan (As of March 31, 2013) Multichannel Pay TV Market in Japan 3.8 million (%) 100 J:COM TV (Unit: Thousands of subscribers) subscribers 90 15,000 Type DTH DTH Cable TV IPTV CATV IPTVs 80 (and FTTH) (and FTTH) (FTTH)

12,000 1,090 980 1.96 1.76 3.11 695 900 Subscribers n/a 462 60 millions millions millions 3,814 3,829 50 (HD:1.03millions) 9,000 3,666 3,688 3,725 channels 270ch * 50ch 40 70ch (HD:120) 75ch (Basic) 24* 68.7% 6,000 STB Not 20 required Required Required Required 7,142 7,243 7,429 7,940 7,950 3,000 0 VOD SKY PerfecTV! J:COM Video JAPAN UK USA Service On-Demand On-Demand Service 0 * Multichannel pay TV subscribers for Japan as above refers to the sum total of 2009 2010 2011 2012 2013 multichannel cable TV subscribers, SKY PerfecTV! subscribers, IPTV subscribers Years ended as of March 31 (except for NHK BS subscribers). * Applicable to “OTOKU PLAN,” which includes terrestrial and BS broadcasting. Fiscal 2012 Sources: Materials from the Ministry of Internal Affairs and Communications,HOSO JOURNAL, See a November 2011 report from Goldman Sachs on household penetration rates for pay TV in the UK and US. Revenues Total and our own research. ¥159,610 million

*The percentages are calculated on Space & Satellite Business the basis of the figures of sales to external customers (excluding internal transactions) The No. 1 satellite operator in Asia, No. 5 in the world Our 16 satellites make us the largest satellite operator in Asia and fifth in the world.

Satellite Operators Ranking*1 in the Global Satellite Market 31.3% 16 satellites Demand Forecast in Global Satellite Market (2012–2019E) ■ Satellite Transponders Demand Forecast in the world: Ku/C-band in TPEs* Luxembourg Luxembourg France Canada Western Europe Russia CIS North America 2,610 2,410 1,663 846 *3 675 to 664 393 to 647 905 to 866 Fiscal 2012 603 Revenues*2 CAGR:(0.2)% Eastern Europe CAGR:7.4% CAGR:(0.6)% (US$ in millions) 5th 334 to 420 CAGR:3.3% Satellites in orbit 54 53 31 14 16 South East Asia ME & North Africa 419 to 618 545 to 585 CAGR:5.7% Sub Saharan Africa Australia & Pacific Latin America *1 Companies listed here are fixed satellite services (FSS) operators (exluding MSS operators) CAGR:1.0% *2 The above revenues are in millions of U.S. dollars for the year ended Dec.31, 2012, exluding SKY Perfect 696 to 857 225 to 250 838 to 1,176 JSAT. Figure for the company is only for the year ended Mar 31, 2013. CAGR:3.0% *3 The revenue figure for SKY Perfect JSAT represents sales of its Space and Satellite Business only. CAGR:1.5% CAGR:5.0% The translations of yen amounts into U.S. dollar amounts are for the convenience of readers outside Japan and have been made at the rate of JPY93.99 to $1, the approximate rate of exchange at March 31, 2013. * Equivalent to 36MHz Transponder Sources: Euroconsult – Satellite Communications and Broadcasting Market Source: Spacenews dated July 8th, 2013 * : Service areas of SKY Perfect JSAT Corporation. Survey by way of Goldman Sachs’s discussion materials

02 SKY Perfect JSAT Holdings Inc. A Market with substantially more room to grow The Japanese Pay TV market still has substantial room to grow as the household penetration rate for multichannel pay TV broadcasts is still lower in Japan than in Europe and the United States.

Penetration Rate of Multichanel Pay TV Major Pay TV Services in Japan (As of March 31, 2013) Multichannel Pay TV Market in Japan 3.8 million (%) 100 J:COM TV (Unit: Thousands of subscribers) subscribers 90 15,000 Type DTH DTH Cable TV IPTV CATV IPTVs 80 (and FTTH) (and FTTH) (FTTH)

*The percentages are calculated on the basis of the figures of sales to external customers (excluding internal transactions) Global market growth led by Asia and Oceania Satellite communications business is expected to continue growing, with Asia at the forefront of the growth. We will expand operations by leveraging our strong position as the largest satellite operator in Asia and enter into collaborations and partnerships with other operators to promote our global development. Satellite Operators Ranking*1 in the Global Satellite Market 31.3% 16 satellites Demand Forecast in Global Satellite Market (2012–2019E) ■ Satellite Transponders Demand Forecast in the world: Ku/C-band in TPEs* Luxembourg Luxembourg France Canada Western Europe Russia CIS North America 2,610 2,410 1,663 846 *3 675 to 664 393 to 647 905 to 866 Fiscal 2012 603 Revenues*2 CAGR:(0.2)% Eastern Europe CAGR:7.4% CAGR:(0.6)% (US$ in millions) 5th 334 to 420 CAGR:3.3% Satellites in orbit 54 53 31 14 16 South East Asia ME & North Africa 419 to 618 545 to 585 CAGR:5.7% Sub Saharan Africa Australia & Pacific Latin America CAGR:1.0% 696 to 857 225 to 250 838 to 1,176 CAGR:3.0% CAGR:1.5% CAGR:5.0%

* Equivalent to 36MHz Transponder Sources: Euroconsult – Satellite Communications and Broadcasting Market * : Service areas of SKY Perfect JSAT Corporation. Survey by way of Goldman Sachs’s discussion materials

Annual Report 2013 03 Business Model & Strengths

Multichannel Pay TV Business

SKY PerfecTV! is a multichannel pay TV platform linking broadcasters and subscribers and with comprehensive operations in the multichannel pay TV business, from TV channel broadcasting to customer management and sales promotion operations.

Business Framework

Broadcasters/Program Providers Subscribers

Program/ Program/ Platform Service Packages Packages

Offering various content from • Transmission/delivery of programs Programs/packages that fit their entertainment such as music, movies, • Management of subscribers lifestyle and tastes. sports and documentaries to • Provision of program information information, shopping and education • Promotions to attract subscribers

Service Portfolio SKY PerfecTV! offers three service menus based on reception environment and channel lineups and differentiates its products from cable TV and other providers by specially priced basic subscription packages as well as subscription contracts for as few as a single channel.

Number of Subscribers*1 (Thousands) 1,963 1,762 104

Channels (HD) 70 (35) 270 (120) 250 (88)

STB Not Required Required Required

*1. The number of Subscribers is as of March 31, 2013.

SKY PerfecTV!’s Subscribers Trends (Subscribers) 4,000,000

3,000,000 HDTV (H.264) 2,000,000 SDTV (MPEG-2)

1,000,000

0 Apr/2002 March/2013

04 SKY Perfect JSAT Holdings Inc. SKY PerfecTV! available to Unparalleled number of HD channels virtually every household All Japanese digital TVs have built-in tuners, enabling any viewer to The SKY PerfecTV! Premium Service offers some 120 high-definition easily receive SKY PerfecTV! broadcasts via a satellite antenna. This channels that meet the highest image quality expectations of viewers is a formidable advantage over cable TV and other operators where in a wide range of genres from sports, including 900 Japanese reception requires purchase or rental of an external set-top box. professional soccer league games each year, to movies, music, and foreign TV dramas. Cumulative subscriber growth* for the basic SKY PerfecTV! service for TVs with a built-in tuner (*this figure does not include SKY PerfecTV! premium service subscribers) Number of HD Channels (Subscribers) (ch) 2,000,000 150 CAGR: 28.6% (2008.4-2012.3) 121ch 1,500,000 100 88ch 72ch 1,000,000

50 500,000

15ch

0 0 Apr. 2008 Mar. 2012 Aug. 08 Oct. 09 Feb. 11 Sep. 12

Viewership boosted by seniors Content catering to myriad devices

In Japan, free-to-air TV programming largely focus on creating Users of our SKY PerfecTV! On-Demand (video-on-demand) service programs for the trend-setting younger viewers but Japan’s aging are steadily growing as we develop content, led by live broadcasts of demographic is boosting our subscriber numbers as active seniors are J-League games (professional Japanese soccer) in particular, and other attracted to our diversity of specialty channels providing entertaining sports, catering to myriad devices such as smart phones and tablets. viewing in their various areas of interest.

Forecasted Population Composition for Japan 2020 100 Male Female 90 80 70 60 50 40 30 20 10 0 1,200 800 400 0 0 400 800 1,200 (Thousands) National Institute of Population and Social Security Research Source:“Estimated future population of Japan” (Estimated in January 2012)

Annual Report 2013 05 Business Model & Strengths

Space & Satellite Business

Our satellite communication system employs Business Framework the optimal method for communicating large Data, Video, Audio volumes of real time data to a multitude of reception sites, uplinking data from the ground to communications satellites in geostationary orbit 36,000 kilometers above the equator then Signals downlinking to reception sites back on earth. The satellite communication services we provide to corporations and government agencies take full advantage of the benefits of our satellite systems, including the wide coverage, multi-destination Satellite Control Center Corporate Customers/ distribution, and disaster resistance. (SKY Perfect JSAT) Government Agencies

In-orbit resources Main Control Center Yokohama Satellite Control Center (YSCC) JCSAT-110R 110˚E

N-SAT-110 110˚E Sub Control Center Sub Control Center Sub Control Center

Superbird-A3 JCSAT-1B 93˚E 150˚E

JCSAT-85 JCSAT-2A Superbird Platform East Superbird Platform West Gunma Satellite Control 85˚E 154˚E (SPE) (SPW) Station (GSCS) JCSAT-4A Superbird-B2 82˚E 162˚E

Horizons-2 Superbird-C2 85˚E 144˚E

JCSAT-4B N-STARc 124˚E 136˚E JCSAT-RA JCSAT-3A JCSAT-5A Horizons-1 in-orbit back up 128˚E 132˚E 127˚W

Our Satellite Fleet

Used primarily for Multichannel Pay TV Business Used primarily for Space & Satellite Business

N-SAT-110 JCSAT-110R JCSAT-4A JCSAT-4B JCSAT-RA JCSAT-3A JCSAT-1B JCSAT-2A JCSAT-5A JCSAT-85 Horizons-1 Horizons-2 Superbird-B2 Superbird-A3 Superbird-C2 N-STAR c

Orbital position 110ºE 110ºE 82ºE 124°E (In-orbit back-up) 128ºE 150ºE (inclined) 154ºE 132ºE 85ºE 127ºW 85ºE 162ºE 93ºE (inclined) 144ºE 136ºE Launch date (Japan time) Oct. 7, 2000 Aug. 7, 2011 Feb. 16, 1999 May 16, 2012 Aug. 22, 2009 Aug. 12, 2006 Dec. 3, 1997 Mar. 29, 2002 Apr. 13, 2006 Dec. 1, 2009 Oct. 1, 2003 Dec. 22, 2007 Feb. 18, 2000 Jul. 28, 1997 Aug. 15, 2008 Jul. 6, 2002 Launch vehicle Ariane 4 Ariane 5 Atlas 2AS Ariane 5 Ariane 5 Ariane 5 Ariane 4 Ariane 4 Zenit-3SL Zenit-3SLB Zenit-3SL Ariane 5 Ariane 4 Atlas 2AS Ariane 5 Ariane 5 Satellite bus A2100AX A2100A Boeing 601 A2100AX A2100AX A2100AX Boeing 601 Boeing 601 A2100AX STAR-2 Boeing 601HP STAR-2 Boeing 601HP Boeing 601 DS2000 STAR-2 Design life 15 years 15 years 14.5 years 15 years 15 years 15 years 12 years 11 years 12 years 15 years 15 years 15 years Over 13 years Over 10 years 15 years 10 years Ku band Ku band Ku band Ku band Ku band S band Frequency band Ku band Ku band Ku band Ku band Ku band C band Ku band Ku band Ku band Ku band Ku band C band C band C band Ka band C band S band Ku: 54MHz × 8 Ku: 27MHz × 18 Ku: 27MHz × 18 Ku: 57MHz × 16 Ku: 36MHz × 23 Ku: 54MHz × 4 Transponders Ku: 27MHz × 32 Ku: 27MHz × 16 36MHz × 12 Ku: 36MHz × 4 Ku: 36MHz × 16 Ku: 27MHz × 20 S: 2.6/2.5GHz Ku: 36MHz × 24 Ku: 36MHz × 12 Ku: 27MHz × 32 36MHz × 12 36MHz × 12 C: 36MHz × 11 Ku: 36MHz × 24 Ka: 100MHz × 5 36MHz × 4 (Bandwidth × number) 36MHz × 12 36MHz × 16 C: 36MHz × 20 72MHz × 1 72MHz × 4 36MHz × 8 C: 6/4GHz C: 36MHz × 12 C: 36MHz × 12 54MHz × 5 200MHz × 1 27MHz × 16 S: 1 beam

06 SKY Perfect JSAT Holdings Inc. “Satellite communications strength” confirmed after the Great East Japan Earthquake Small and lightweight portable equipment allows satellite connections in any location, including mountainous areas outside terrestrial network ranges and when terrestrial lines are damaged by an earthquake or other causes. Satellite communications were used in place of landline and mobile phones for rescue and relief activities after the 2011 Great East Japan Earthquake. Satellite communications were also key to Internet connections for government agencies and evacuation centers and as a backhaul connection for mobile phones. Satellite communications are now revaluated as effective back up communications in a time of disasters.

Establishing the foundation for full-fledged expansion in Asia Satellite communication demand is increasing in Asia and Oceania, which encompasses innumerable islands and is seeing increasing mining activity for natural resources. We are fortifying our operating foundation for full-fledged expansion in the Asian region, including the May 2012 successful launch of the JCSAT-4B satellite equipped with a Southeast Asian beam and the opening of a representative office in Jakarta, Indonesia.

JCSAT-4B Coverage Area of JCSAT-4B

As of July 31, 2013 Used primarily for Multichannel Pay TV Business Used primarily for Space & Satellite Business

N-SAT-110 JCSAT-110R JCSAT-4A JCSAT-4B JCSAT-RA JCSAT-3A JCSAT-1B JCSAT-2A JCSAT-5A JCSAT-85 Horizons-1 Horizons-2 Superbird-B2 Superbird-A3 Superbird-C2 N-STAR c

Annual Report 2013 07 History

Since the deregulation of Japan’s telecommunications sector in 1985, SKY Perfect Communications Inc., and JSAT Corporation have been consistent leaders in multichannel pay TV broadcasting and satellite communications, respectively. In April 2007, SKY Perfect JSAT Holdings was established as a holding company of those two companies through a joint stock transfer. Another satellite company, Space Communications Corporation, joined SKY Perfect Communications

Broadcasting: Milestones 1997 1998 1986 The Ministry of Posts and Five commercial broadcasters, 2000 NHK commenced trial Telecommunications (now the plus WOWOW INC. and STAR BS digital broadcasts began BS broadcasts (December) Ministry of Internal Affairs and CHANNEL, INC., received approval (December) Communications) decided to to deliver BS digital broadcasts 1990 digitalize BS broadcasts from 2000 under contract (October) WOWOW INC. began Japan’s first private-sector satellite DirecTV started broadcasts in Japan Terrestrial digital broadcasts began broadcast service (November) using Superbird-C (February) on a trial basis (December)

Multichannel Pay TV Business

1994 March 2000 DMC Planning Inc. Announcement of intention to established cooperate in migration of (In 1995, name changed DIRECTV Japan subscribers to to Japan Digital SKY PerfecTV! Broadcast Service after the termination of DIRECTV Co., Ltd.) 1998 Japan’s services Merged and renamed its service SKY PerfecTV! June 2000 1996 Company name changed to Japan Sky SKY Perfect Communications Inc. Broadcasting Co., Ltd. (JSkyB) established 2002 SKY PerfecTV! 2 1996 (former SKY PerfecTV! e2) started PerfecTV! started 1985 1990 1995 2000

1985 Satellite Japan March 2000 Corporation established JSAT acquired NTT Communications 1993 Corporation’s ownership interest in Name changed to N-STAR a and N-STAR b 1985 Japan Satellite Systems Japan Communications Inc. upon the merger April 2000 Satellite Company, Inc. Company name changed to JSAT established Corporation

1985 Space Communications Corporation established

Space & Satellite Business

Telecommunication: Milestones 1991 1995 The Internet services commercially NTT launched N-STAR a, the first of 1985 started in the United States its own satellites (August) Nippon Telegraph and Telephone Corporation (NTT) formed through the privatization 1989 1993 of Nippon Denshin Denwa Japan Communications Satellite Company, “The Informative Superhighway” Kosha (April) Inc. launched “JCSAT-1,” the first commercial concept was declared in the communications satellite in Japan, at the 150 United States degrees east longitude (March)

08 SKY Perfect JSAT Holdings Inc. and JSAT in a three-way merger in October 2008, marking a new start for the SKY Perfect JSAT Group, with SKY Perfect JSAT Corporation representing the business core. Going forward, the Group will continue adding enrichment, joy, and peace of mind to people’s lives, driven by its inherent pioneering spirit.

2002 2009 2011 Full-scale “Plat One” CS broadcasts began Satellite broadcasts separated into two parts— End of terrestrial analog and BS using 110-degree orbital slot (March) “Special Satellite Broadcasting” (integration analog broadcasts Start of Special of BS and 110˚E CS broadcasts) and “General Satellite Broadcasting (October) Broadcasting”—in advance of the next-stage launch 2006 of BS digital broadcasting (February) “One-Seg” terrestrial digital broadcasts began (April) Nine companies received approval as “Special Satellite Broadcasting” contracted providers (June)

2004 April 2, 2007 Merged the 110-degree CS SKY Perfect Communications Inc. broadcasting business and JSAT Corporation announced with Plat One Corp., Ltd. integration of their businesses as wholly owned subsidiaries of the holding company formed by joint stock transfer Establishment of SKY Perfect JSAT Corporation and listed on the 1st section of Tokyo Stock Exchange May 16, 2012 Announced on May 2012 the successful launch of the JCSAT-4B* communication satellite, which can cover a broad area ranging from the Middle and Near East to Southwest Asia, Southeast Asia and Oceania. 2004 2008 * JCSAT-13 was renamed JCSAT-4B as a replacement SKY PerfecTV! SKY PerfecTV! satellite of JCSAT-4A. HIKARI started HD started 2005 2007 2012

March 31, 2008 Making Space Communications Corporation a subsidiary

June 27, 2008 The group holding company SKY Perfect JSAT Corporation changed its name to SKY Perfect JSAT Holdings Inc.

October 1, 2008 SKY Perfect Communications Inc., JSAT Corporation, and Space Communications Corporation merged and began operation as a new company, SKY Perfect JSAT Corporation

2007 Multifunctional cellular phone (smart phone), “iPhone” started sale

2005 2008 Intelsat, Ltd. announced acquisition of the U.S. JAXA successfully launched WINDS, the wideband company PanAmSat Corporation to become the world’s internetworking engineering and demonstration largest satellite operator (August) satellite, or “Kizuna”

Annual Report 2013 09 Contents

02 16 Who we are 16 Special Feature 1: 02 Market & Position President Interview 04 Business Model & Strengths 25 Special Feature 2: 04 Multichannel Pay TV Business Toward Realizing Ultra High 06 Space and Satellite Business Definition Television 08 History

12 How we’re doing 28 12 Consolidated Financial Highlights 14 To Our Shareholders and Investors 28 Review of Operations 28 Multichannel Pay TV Business 30 Space and Satellite Business

32 Corporate Governance 38 Corporate Social Responsibility 40 Financial Section 70 Corporate Data Satellite Basics/Glossary

10 SKY Perfect JSAT Holdings Inc. Annual Report2013 How we’re doing 11

Corporate Data Financial Section Corporate Social Corporate Governance Review of Operations Special Feature To Our Shareholders Consolidated Financial Satellite Basics/Glossary Responsibility and Investors Highlights Consolidated Financial Highlights SKY Perfect JSAT Holdings Inc. and Consolidated Subsidiaries Years ended March 31

Thousands of U.S. Millions of yen, except Per Share Data and Selected Financial Indicators dollars, except per share data (Note 1)

For the Year: 2009 2010 2011 2012 2013 2013 Revenues ¥ 145,412 ¥ 141,069 ¥ 141,850 ¥ 155,242 ¥ 159,610 $ 1,698,156 Cost of Services 87,181 86,151 86,028 99,062 106,168 1,129,568 Selling, General and Administrative Expenses 41,342 39,825 42,319 38,694 37,289 396,728 Operating Income 16,889 15,093 13,503 17,486 16,153 171,860 Income before Income Taxes and Minority Interests 4,438 16,446 9,862 15,897 15,644 166,440 Net Income 4,047 14,223 4,421 8,569 9,683 103,017 Comprehensive Income — — 3,658 9,065 11,358 120,845 EBITDA (Note 2) 29,654 41,702 35,257 42,006 42,448 451,627 Depreciation and Amotization 22,037 23,807 24,039 24,892 26,995 287,207 Capital Expenditures 35,220 29,710 18,757 13,972 13,851 147,371

Net Cash Provided by Operating Activities 31,431 39,340 38,957 39,977 38,372 408,257 Net Cash Provided by (Used in) Investing Activities (27,778) (23,887) (28,595) 1,995 (11,119) (118,302) Free Cash Flow (Note 3) 3,653 15,453 10,362 41,972 27,253 289,955 Net Cash (Used in) Provided by Financing Activities (7,766) 10,836 (17,302) (34,993) (19,402) (206,424)

At Year-End: Cash and Cash Equivalents ¥ 40,420 ¥ 66,727 ¥ 59,500 ¥ 66,405 ¥ 74,473 $ 792,348 Total Assets 309,812 335,164 322,079 300,133 290,487 3,090,613 Interest-Bearing Debt 92,534 107,511 91,693 62,506 49,398 525,569 Total Equity 173,502 183,338 180,065 185,052 192,693 2,050,148

Per Share Data (Yen and U.S. dollars) Net Income ¥ 1,190.35 ¥ 4,226.16 ¥ 1,313.76 ¥ 2,546.26 ¥ 2,877.00 $ 30.61 Total Equity 50,341.69 53,560.19 53,452.19 54,952.96 57,133.12 607.86 Cash Dividends 1,200.00 1,200.00 1,200.00 1,200.00 1,200.00 12.77

Selected Financial Indicators (%) Operating Margin 11.6 10.7 9.5 11.3 10.1 EBITDA Margin 20.4 29.6 24.9 27.1 25.8 Equity Ratio (Note 4) 54.7 53.8 55.9 61.6 66.2 ROE (Note 5) 2.4 8.1 2.5 4.6 5.0 Dividend Payout Ratio 100.8 28.4 91.3 47.1 41.7

Notes: 1. U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥93.99 to $1, the approximate rate of exchange at March 31, 2013. 2. EBITDA is calculated as Net Income + Tax Expense + Depreciation Expense + Interest Expense. 3. Free Cash Flow is calculated as Net Cash Provided by Operating Activities + Net Cash Provided by (Used in) Investing Activities. 4. In calculating Equity Ratio, equity excludes minority interests and stock acquisition rights. 5. In calculating ROE, equity excludes minority interests and stock acquisition rights.

12 SKY Perfect JSAT Holdings Inc. Annual Report2013 (Millions ofyen) Revenues (%) ROE (Millions ofyen) Free CashFlow (Millions ofyen) EBITDA, EBITDAMargin 100,000 150,000 200,000 50,000 10,000 20,000 30,000 40,000 50,000 10,000 20,000 30,000 40,000 50,000 EBITDA Margin EBITDA 10 0 0 0 2 4 6 8 0 145,412 0921 012012 2011 2010 2009 29,654 0921 012012 2011 2010 2009 0921 012012 2011 2010 2009 0921 012012 2011 2010 2009 3,653 2.4 20.4 141,069 41,702 15,453 8.1 29.6 141,850 35,257 10,362 2.5 24.9 155,242 42,006 41,972 4.6 27.1 159,610 2013 27,253 42,448 2013 2013 2013 5.0 25.8 (%) 0 10 20 30 40 50 (Millions ofyen) Cash andEquivalents (Millions ofyen) Depreciation andAmotization (Millions ofyen) Operating Income,Margin (%) Dividend PayoutRatio 100,000 10,000 20,000 30,000 10,000 15,000 20,000 20,000 40,000 60,000 80,000 5,000 Operating Margin Operating Income 120 40 80 0 0 0 0 16,889 0921 012012 2011 2010 2009 0921 012012 2011 2010 2009 0921 012012 2011 2010 2009 0921 012012 2011 2010 2009 22,037 40,420 100.8 11.6 15,093 23,807 66,727 28.4 10.7 13,503 24,039 59,500 91.3 9.5 17,486 24,892 66,405 47.1 11.3 16,153 74,473 2013 2013 2013 2013 26,995 41.7 10.1 (%) 0 5 10 15 20 (Millions ofyen) Capital Expenditures (Millions ofyen) Net Income (Millions ofyen) Total Equity,EquityRatio 100,000 150,000 200,000 250,000 10,000 20,000 30,000 40,000 10,000 15,000 20,000 50,000 5,000 Equity Ratio Total Equity 0 0 0 173,502 0921 012012 2011 2010 2009 0921 012012 2011 2010 2009 0921 012012 2011 2010 2009 35,220 4,047 54.7 183,338 14,223 29,710 53.8 180,065 18,757 4,421 55.9 185,052 13,972 8,569 61.6 192,693 13,851 2013 2013 2013 9,683 66.2 13 40 60 80 100 (%) 0 20

Shinji Takada Representative Director/President

Higher Revenue and Lower Earnings in the Focusing on Growth in Both Revenue and year ended March 2013 Earnings in the year ending March 2014 Business results for FY2012 (period ended March 2013) FY2013 (period ending March 2014) is an important year show that satellite usage, which had increased rapidly fol- in which we will prepare for the winding up the standard- lowing the Great East Japan Earthquake in the previous definition broadcasts (MPEG-2 format) in SKY PerfecTV! Pre- fiscal year, returned to normal levels, resulting in a decrease mium Service at the end of May 2014, so as to substantially in operating revenue in the Space & Satellite Business. complete the shift of subscribers to high-definition (H.264 Meanwhile, in the Multichannel Pay TV Business, the steady format) contracts. We will also proceed with reorganizing shift of SKY PerfecTV! Premium Service subscribers to high- our cost structure in working towards turning a profit in the definition contracts led to a 2.8% increase over the previous Multichannel Pay TV Business. fiscal year to ¥159.6 billion. In the Space & Satellite Business, we will continue to As for earnings, in addition to decreasing revenue in the develop demand for our services addressing business con- Space & Satellite Business, other factors such as rising ex- tinuity plans (BCPs) adopted by companies and government penses associated with the shift to high-definition contracts agencies, and also steadily proceed with preparing for and in the Multichannel Pay TV Business saw operating income operating the X-band satellite communication functions for decline 7.6% from the previous fiscal year to ¥16.2 billion. the Ministry of Defense, which we successfully tendered for last year. At the same time, we will look to expand the scope of global and space businesses. Based on these initiatives,

14 SKY Perfect JSAT Holdings Inc. Annual Report2013 the shifttohigh-definitionbroadcasting, andthatareduc- eventually therewillbenomore expensesassociatedwith proceed with our current policies. Also, considering that tively. Thesefiguresarefullyachievableifwesteadfastly operating income of over ¥200 billionand¥20billion, respec- plan areconsolidatedoperatingrevenueand The numericaltargetsinourFY2015medium-termbusiness Targets Meeting theMedium-Term BusinessPlan as toworkonoverseasdevelopmentofcontent. next-generation high-definitionbroadcast technology, aswell that isalsocalledas“UltraHD”broadcasting,whicha lenge ofenabling a rapid realizationof 4K/8K broadcasting year endingMarch2014. we willaimforgrowthinbothrevenueandearningsthe Meeting theMedium-Term BusinessPlan Steadily CementingourFootingTowards (Millions ofyen) Revenues 100,000 150,000 200,000 50,000 Our medium-termbusinessvisionistotakeonthechal- 0 141,850 2011

(Years endedMarch31) 155,242 2012 159,610 2013 (Millions ofyen) Operating Income 10,000 15,000 20,000 5,000 0 012012 2011 13,503 (Years endedMarch31) 17,486 2013 16,153

forward to the next level of earnings. forward tothenextlevelofearnings. consolidating broadcastingcenters,wewillfocusonmoving tion incostscanberealizedthroughmeasuressuchas continued supportofallshareholdersgoingforward. stock spliteffectiveasofOctober1,2013.We askforthe year-end dividendof¥6,reflectingthescheduled1-for-100 continue topayaninterimdividendof¥600pershareand a the abilitytomaintainsteadydividendpayments,wewill future growthinvestmentsandtakingintoconsideration ers. Whileensuringtherearesufficientinternalfundsfor return ofprofitsinourpolicyonprofitallocationtostockhold- (Millions ofyen) Net Income 10,000 5,000 We have emphasized the long-term and comprehensive We haveemphasizedthelong-termandcomprehensive 0 012012 2011 4,421 (Years endedMarch31) 8,569 2013 9,683 Shinji Takada Representative Director/President 10,000 20,000 30,000 40,000 50,000 (Millions ofyen) EBITDA 0 012012 2011 35,257

(Years endedMarch31) 42,006

2013 42,448 15

Corporate Data Financial Section Corporate Social Corporate Governance Review of Operations Special Feature To Our Shareholders Consolidated Financial Satellite Basics/Glossary Responsibility and Investors Highlights Special Feature 1: President Interview Reaching the Medium-term Business Plan Targets and Vision for the Future

16 SKY Perfect JSAT Holdings Inc. Annual Report2013 Target ProfitforFY2015 of cancellations,i.e.the“churnrate.” standard imagequality. This,inturn,shouldreducethenumber level ofsubscriberswhomayhavebeenlesssatisfiedwith subscribers to HDTV contracts to increase the satisfaction the switchwithinpresentfiscalyear. We expectmigrating PerfecTV broadcasts toHDTV(H.264format)intheSKY pressi confidence thatwewillachievethetargetprofit. based onthecurrentbusinessenvironment,Ihaveincreased the outlookforattainingtargetsofmedium-termplan standing oftheissuesweneedtoovercome.Afterreviewing now haveaclearerviewofwhatliesaheadandgoodunder year 2011,therewerestillmanyuncertainelements,butwe When weformulatedthemedium-termbusinessplaninfiscal and possiblyrisingto¥25billion. We seeoperatingincomesurpassingthe¥20billion target profit targetforthemedium-termbusinessplan. the measuresweneedtotake.Ihavegreaterconfidencethatwillachieve business scenariotofiscalyear2015hasbecomecrystalclearandwenowknow income. Althoughourbusinessenvironmentisconstantlyfluctuating,the for fiscalyear2015of¥200billioninoperatingrevenueand¥20 The Company’s medium-term business plansetsconsolidatednumericaltargets Oprating Income Q First, letmeaddressconsolidatedrevenue.Themost 1 ng issue is the switch from SDTV (MPEG-2 format) :

! Premium Service. We plan to essentially complete moment aboutreachingthetargetsandwhatisyourbasisforbelievingso? With thegrowthpaceofoperatingincomeappearingtohaveslowed,howconfidentareyouatthis FY2012 16 - revenue tothe¥200billionlevel. more thanenoughmomentumtoraiseconsolidatedoperating fiscal year 2012 and ¥17.0 billion planned in fiscal year 2013, fiscal year2012and¥17.0billionplannedin2013, may appearquitehighifyoutrackfromthe¥16.2billionin operations. We thinkthesebusinessactivitieswill giveus to theMinistryofDefenseforitsdevelopingX-Bandsatellite nications satellites,oneeachinfiscalyears2015and2016, expand inJapanandoverseasplanstoselltwocommu- mium Service will also mark the end of the current ¥4 billion mium Servicewillalsomarktheendofcurrent¥4billion Let meexplain.TheendingofSDTVbroadcastsinthePre - operating incomeannuallyfromfiscalyear2015. consistentlygenerating¥8billionin sitioned tostart The loss-makingMultichannelPayTVBusinessispo - our consolidatedoperatingincome. but my feeling As for income, the ¥20 billion target for operating income As forincome,the¥20billiontargetoperatingincome In addition,theSpace&SatelliteBusinesscontinuesto FY2013 (E) 17 is that we could even add another ¥5 billion to is that we could even add another ¥5 billion to FY2015 (Plan) 20–25 (Years endedMarch31) (¥ billions) 17

Corporate Data Financial Section Corporate Social Corporate Governance Review of Operations Special Feature To Our Shareholders Consolidated Financial Satellite Basics/Glossary Responsibility and Investors Highlights annual cost burden associated with migrating subscribers subscriber acquisition costs while the structural reorganization to HDTV contracts. We also will be able to trim the number of the customer centers will lead to continuing cost reduc- of broadcast centers from three—two for SDTV service and tions, which will allow us to reshape the profit structure of one for HDTV service—to one. We expect this to reduce the Multichannel Pay TV Business. operation costs by ¥1.5 billion to ¥2 billion. Migrating sub- On top of this, I am confident that a stabilized Space & scribers to HDTV contracts will also increase the percentage Satellite Business and the beginning of expansion of growth of high-ARPU subscribers, which should also lead to an fields in Japan and overseas will make it possible to generate increase in revenue. consolidated operating income of at least ¥20 billion and up At the same time, increased direct marketing will reduce to ¥25 billion.

However, the target to raise SKY PerfecTV! total subscribers above 4 million was lowered to 3.8 Q2: million, which just maintains the status-quo subscriber base. Won’t this work against attaining the profit target?

The promotions to migrate subscribers to HDTV con- On Demand for multiple devices will be able to rise steadily. tracts triggered many contract cancellations, and we In conclusion, migrating subscribers to HDTV contracts have to be prepared for a certain number of cancellations will lead to a steady rise in subscriber profitability and, since when the SDTV service ends. However, the impact on most of the contract cancellations will be from subscribers earnings will be small because most of the cancellations with low ARPU, the impact on earnings will be relatively small. will be subscribers with low ARPU (average monthly Therefore, we do not expect cancellations to have a significant revenue per unit.) impact on earnings.

The net increase in subscribers to SKY PerfecTV! services at the end of fiscal year 2012 was just 15,000. The main reason for the slower growth was the higher than initially Outlook for Mid-term Subscription Plan anticipated number of cancellations related to the migration Track record until 2012 MPEG-2 ending in to HDTV contracts. However, note that this occurred even as May 2014 (Units: Thousand) the number of new subscribers with digital TVs with built-in 4,500 tuners grew for the basic SKY PerfecTV! service. 4,000 The annual churn rate rose from 17.9% in fiscal year 2011 3,500 (SD: MPEG-2) to 18.6% in fiscal year 2012, and we revised upward the 3,000 projected churn rate for fiscal year 2013 to an even higher 2,500 18.8%. In fiscal year 2014, we expect cancellations to rise 2,000 1,500 temporarily when the SDTV service ends in May of that year. 1,000 From that point, we thought it would be difficult to increase 500 total subscribers to the 4 million level, so we set a target of 0 retaining the current 3.8 million base in fiscal year 2015. On FY2011 FY2012 FY2013 FY2014 FY2015 the other hand, the number of active users of SKY PerfecTV!

18 SKY Perfect JSAT Holdings Inc. set-top boxestotheTVs. nel pay TV providers that require attaching separate external satisfaction ofoursubscribers. Internet-based interactionsisalsonecessaryforincreasingthe communicate withourcustomers,includingstrengthening the sametime,Ibelievethatcompletelyrethinkinghowwe anything, wemuststrengthenourcontentandproducts.At smoothly encourageviewerstoregisterfortheservice. and akeypointforusistocontinueimprovingourability opportunity tofullyexperienceourmultichannelbroadcasts, plan anotherforOctober. Thesecampaignsgiveviewersthe a year massive promotions of “10-dayfreebroadcasts”about twice Annual Report2013 Perfe been previouslycalled“SKYPerfecTV! subscriber basewillbetheSKYPerfecTV! orbital slot. As a result, the main driver for expanding the and communicationssatellite(CS)inthe110°eastlongitude 3-band digitaltunerspresetforthebroadcastingsatellite(BS) 2011 resultedinvirtuallyallhouseholdshavingdigitalTVswith In Japan,theendingofterrestrialanalogbroadcastsinJuly is alsoessential. content tuners. Strengtheningourproductsandservice eration ofdigitalTVsandtheadvantagebuilt-in We plantotakefulladvantageofthenationwideprolif- Q In addition, to quell the currently high churn rate, more than In addition,toquellthecurrentlyhighchurnrate,morethan We aimtomaximizethatadvantageandplan conduct TVs in virtually every home quickly and easily link to SKY TVs invirtuallyeveryhomequicklyandeasilylinktoSKY 3 cTV . We conductedonesuchpromotioninJune2013 and :

! , giving us a distinct advantage over other multichan ! What strategiesdoyouhavetoattractSKYPerfecTV e2.” service, which has service,whichhas - ests andrelativelylargeamountsofsparetimemoney. seniors, ademographiccharacterizedbywide-ranginginter important pointwillbetocultivateacustomerbaseofactive by terrestrialbroadcasts.InJapan’s agingsociety, Ibelievean lineup withawidevarietyofcontentthatcannotbecovered channels tomeetindividualviewerinterestsbyofferinga our strengthastheproviderofJapan’s largestnumberofHD dedicated tuner, we aim to increase subscribers by leveraging 100.0 (%) Attributes ofNewSubscribersSKYPerfecTV! 80.0 20.0 40.0 60.0 0.0 For our SKY p.MyJn u.Ag e.Ot o.Dc a.Fb Mar. Feb. Jan. Dec. Nov. Oct. Sep. Aug. Jul. Jun. May Apr. Thesamplesizeis350. The resultofourmonthlytelephonesurveynewsubscribers. Note: 20s 30s 40s 50s 60s subscribersinthefuture? 10s PerfecTV! 2012 active seniors. from age40andaboveto tend tobeinthedemographic Many ofthenewsubscribers Premium Service, which requires a 2013 19 -

Corporate Data Financial Section Corporate Social Corporate Governance Review of Operations Special Feature To Our Shareholders Consolidated Financial Satellite Basics/Glossary Responsibility and Investors Highlights Considering that the Multichannel Pay TV Business is currently running at an operating loss, where Q4: do you envision each segment’s earnings in fiscal year 2015, the final year of the medium-term business plan?

The Multichannel Pay TV Business is converting to a no longer have revenue from satellite connections for SDTV stable earnings structure and the Space & Satellite Busi- broadcasts. However, its global business will enter a stage ness is entering a new stage as it comes into its own as that will bring out the true strength of satellite communica- it makes up for the decrease transponder revenues from tions, particularly from the aggressive business expansion in SDTV broadcasts in the Premium Service. Asian countries where demand for satellite communications is strong. Segment profit forecast for the Space & Satellite Without question, our earning structure is slightly lopsided at Business in fiscal year 2013 is currently just under ¥19 billion, present with the Multichannel Pay TV Business continuing and we aim to offset the decline in broadcast transponder to post losses while the Space & Satellite Business steadily revenue to hold segment profit roughly the same or slightly generates profits. However, although our fiscal year 2013 higher than the current level. earnings forecast for the Multichannel Pay TV Business is still a ¥900 million segment loss, this includes forward investment to expand new business domains for the medium and long term. Fundamentally, the business is moving toward profitability, and we are also seeking to reduce costs in all areas. In addition, in fiscal year 2015, the costs incurred from the migration to HDTV will fall out and the substantial reduction effect on operating costs from the consolidation of broadcast centers will start providing a full contribution. This will im- mediately and assuredly establish a stable earnings base of

¥7 billion or over. Consolidating the three Broadcasting Centers into SKY PerfecTV! At the same time, the Space & Satellite Business will Tokyo Media Center

You mentioned the theme of aggressively expanding the business domain of the Multichannel Pay TV Q5: Business. What are your long-term growth strategies and vision of the future beyond fiscal year 2015?

We will expand the domain of the Multichannel Pay TV Busi- On Demand. SKY PerfecTV! On Demand is popular as a multi- ness following three new lines. device VOD service, particularly among sports fans for the ability to watch live broadcasts of various sports, such as all Develop new customers by pursuing the “Buy Once J-League soccer games, anytime and anywhere. Watch Anywhere” strategy by fortifying multi-device Initially, when we launched the service, our main goal was applications to increase the convenience for our existing subscribers, but we found that a steadily growing number of viewers who First, as we continue launching internet-based video delivery had not been SKY PerfecTV! subscribers because they were services, we will expand the services and build the customer unable to put up antennas and younger viewers who preferred base for the video on demand (VOD) service, SKY PerfecTV! to watch video on their mobile handsets and tablet terminals

20 SKY Perfect JSAT Holdings Inc. Annual Report2013 broadcast inIndonesia,whichisthesatellitemarket nel arealreadyunderwayonIndovision,thelargestsatellite Japan-developed content.Trial broadcastsoftheJapanchan- framework forthecontinualandeffectivebroadcastingof Japan contentbusiness.We havethereforebeen buildinga does notnecessarilyleadtothedevelopmentofafull-fledged separately sellingindividualprogramming,butwebelievethis for Asiancountries. this direction,wearepreparingtolaunch“Japanchannels” developing contentforoverseasmarkets,particularlyAsia.In pay TVbroadcastplatform,Iwanttoapplyourknow-how nel pay TV business that operates Japan’s largest multichannel Second, as the company that launched Japan’s first multichan forAsia particularly Early overseas launches of full-fledged “Japan channels,” just registeredmembers. of whichwewouldlike300,000tobeactiveusersratherthan continue to800,000membersattheendoffiscalyear2015, members at the end of fiscal year 2013. We expect growth to the number to more than double and go beyond 300,000 after wehavefilledoutthelineupofchannels,expect PerfecTV! rather thanonTVsarenowregisteringassubscribers. Business Scale Developing “JAPANContent”BusinessinAsia Until now, Japanese broadcast companies have been There werenearly126,000registeredmembersforSKY Cooperating withcontentproviders the localsituation Accumulating know-how,assessing revenue streams Collecting content,securing On Demand at the end of fiscal year 2012, and the end of fiscal year 2012, and launchpermanentbroadcastingservice * After alimitedtrialperiod, weexpectto (Indovision@Indonesia) Launch ofchannelswithcontentmadeinJapan and Myanmar including Thailand,Malaysia,Vietnam, Expand ourbusinessesinAsiancountries -

attracting touriststoJapan. projects, suchasexpandingsalesofJapaneseproductsand in platformstoplayanimportantroleevennewrelated We alsowouldliketousetheexpertisewehave cultivated we expandthecontentbusinessasanationwideproject. we arereceivingfinancialsupportfromthegovernmentas one oftheJapanesegovernment’s growthstrategies,and company inMyanmar. Group, whichusesoursatellites,andasatellitebroadcast negotiations to provide programs in Indonesia to the LIPPO where weseethegreatestgrowthpotential.We are alsoin SKY PerfecTV! The dev elopment of content for overseas markets is OnDemand(J-LeaguesoccerLIVE) with contentmadeinJapan Deploying multiplechannels Time 21

Corporate Data Financial Section Corporate Social Corporate Governance Review of Operations Special Feature To Our Shareholders Consolidated Financial Satellite Basics/Glossary Responsibility and Investors Highlights Early realization of next-generation high definition broad- needed for these broadcasts. casts (ultra HD) As the first company to offer and promote the expansion of multichannel pay TV broadcasts in Japan, I believe it is Third is the early realization of ultra HD (4K) broadcasts, which our responsibility to take the lead with this cutting-edge Feature 2 in this report introduces in depth. Countries around broadcast video technology. Although there are still many the world are looking into introducing 4K broadcasts, the lead- technical issues that must be worked out, I would like to ing edge broadcast video technology, and satellites are the aim to start trial 4K broadcasts in 2014. most reasonable method for transmitting large volume of data

Q6: What is the growth strategy for the Space & Satellite Business?

We continue to focus efforts on generating domestic for earthquakes and internal crisis management communica- demand in disaster planning, crisis management, and tion networks. Our satellite communication networks are other fields. also being used for data collection in fields related to nuclear emergency preparedness as local governments are setting The Space & Satellite Business will see a decline in revenue up an increasing number of monitoring posts to measure from broadcast companies when the Multichannel Pay TV radiation levels from nuclear power plants. Business ends SDTV broadcasts at the end of May in 2014. Disaster prevention is not the only area where we are While taking steps to offset this revenue-reducing factor, seeing demand growth. Demand is also steadily increasing in Japan we will continue to respond to the opportunity for for satellite-based mobile communication services for ships business expansion presented by increased awareness of and airplanes. Despite such an extensive terrestrial broadband disaster prevention at companies and government agencies environment, satellite communications that fill the remain- under what is being called crisis management measures, ing void of broadband infrastructure for ships and airplanes specifically disaster preparedness and business continuity remains a growth market. Internet connection services using plans (BCPs), by strengthening our business and focusing our satellite connections for commercial ships and airplanes effort on generating demand in order to continue growing are already beginning to grow and, although the domestic further in the future. satellite communications market has been thought to be a One of our focuses is the public sector, where, for ex- mature market, we are looking to further develop demand in ample, the Ministry of Land, Infrastructure and Transport has this field in the future. upgraded facilities relating to satellite communications at its Kasumigaseki head office and aims to widen this renewal Overseas markets will be a growth pillar. We are actively drive to its branch offices across Japan. Another focus is exploring partnerships and M&A with global operators. media organizations, where growth in sales of lightweight, compact, portable devices that can easily transmit IP video We will also continue to constantly strengthen and promote data. Moreover, a railway company uses our satellite commu- our global businesses geared toward the Asia market, which nications service for transmissions of early detection systems still has significant room for growth in the long term. Asia with

22 SKY Perfect JSAT Holdings Inc. Annual Report2013 provide servicestoAsia. and SuperbirdA3from158°E to93°Eenablingthemalso tioned theJapan-orientedJCSAT-4A from124°Eto82° global beams to provide overseas services, and we reposi - in Asia.Ourfleetof16satellitesincluded10equippedwith satellite fleet with the to meetthebriskdemandinAsiamarket. we plantoequipwithlargecapacityofCBandtransponders second halfof2015tosucceedthecurrentJCSA JCSAT-14 (JCSAT-2B) satellitethatweplantolaunchinthe for mobilephonesisalsoincreasing. demand ofsatelliteconnectionsamongbasestationnetworks as asatellitebroadcastnetworklastyear. InIndonesia,the business inAsia. satellite equippedwithaSoutheastAsianbeamtofortifyour Asia afterHongKong,andinMay2012launchedtheJCSAT-4B in Jakarta representative office, making it our second office with remarkableeconomicgrowth.Lastyear, weopenedthe region withsubstantiallatentneedfor satellite networks and for thefuturesatellitecommunicationscompaniesasa its manyislandsisanextremelyattractivemarketnowand Space &SatellitebusinessactivitiesfocusedinFY2013 and airplanes services forships communication satellite-based mobile Increasing ordersof (BC business continuityplans disaster preparednessand Strengthening ourbusinessserving In addition, we have changed the orbital slot of two of our In addition,wehavechangedtheorbitalslotoftwoour Pre-marketing activitiesarealreadyunderwayforthe In Indonesia,theLIPPOgroupbeganusingJCSAT-4B P ) aim of continuing to fortify our business aim ofcontinuing to fortify ourbusiness T-2A andthat

overseas operations. to M&Aopportunitiesaswecontinueactivelydevelopour other globalsatelliteoperatorsbutwewillalsoremainopen will not only consider partnerships and collaborations with by furtherdevelopingourownstrengths.Inthefuture,we tively strengthenourglobaldevelopmentcenteredonAsia

longitude. 82 degreeseast east longitudeto Move from124degrees JCSAT-4A our satellitebusinessinAsia Moving existingsatellitestostrengthen Through these and ot business and cultivating business andcultivating developing from government agencies and from governmentagenciesand our global satellite our globalsatellite Steadily increasing orders Steadily increasingorders X-band satellite X-band satellite her strategies we will seek toac new markets Increasing salesin longitude. 93 degreeseast east longitudeto Move from158degrees Superbird-A3 operations

23 -

Corporate Data Financial Section Corporate Social Corporate Governance Review of Operations Special Feature To Our Shareholders Consolidated Financial Satellite Basics/Glossary Responsibility and Investors Highlights With free cash flow rising, what is your Q7: view on the level of shareholder return and the financial strategy?

We will build up retained earnings to fund investments for future growth and after we achieve the medium-term a project to develop and operate the next-generation X-Band business plan targets, we will reassess the level of share- satellite system with the Ministry of Defense. We will also holder return and our dividend policy. need to launch new successor satellites, conduct promotions and enhance content aimed at SKY PerfecTV! subscribers, The Company’s free cash flow has been steadily rising in commence 4K broadcasting, and expand our global business. the past few years while our capital investment has been Therefore, at this time, we plan to build up internal reserves in decreasing. Meanwhile, we have also been actively paying preparation for this future growth investment. down our debts, and as a result, our cash and cash equivalents However, in fiscal year 2015, the final year of the medium- at the end of this fiscal year were higher than our interest- term business plan when we plan to attain operating income in bearing debts, making us effectively a “net-cash” company. the range of ¥20 billion to ¥25 billion, we will accordingly look into The equity ratio is now at 66.2% after rising by more than 10 revising the level of shareholder return and our dividend policy. percentage points from fiscal year 2010 to 2012. However, we are entering a period where we will need to increase investments to realize our growth strategies, including Epilogue plans to launch satellites in December 2015 and January 2017, Better Value for a Better Tomorrow

We feature the theme “Better Value for a Better Tomorrow” Equity Ratio in this Annual Report 2013. This is because I believe it is (%) necessary to restructure the value of both our Multichannel 80 66.2 Pay TV Business and the Space & Satellite Business in the 55.9 61.6 60 rapidly changing environment. When I was employed at a terrestrial broadcasting com- 40 pany, I often thought “I want to provide more and more stimu-

20 lation and excitement to make people truly feel the power and awesomeness of television.” That feeling is also contained in 0 2011 2012 2013 the “Moving hearts, To the Future” brand message that we (Years ended March 31) created when we unified SKY PerfecTV! service brands. Likewise, in the Space & Satellite Business, I want to Capital Expenditures construct a solid business structure that will enable us to (Millions of yen) 50,000 reach further and further across the global market. I also feel 40,000 that the satellite communications business is particularly well 40,000 suited to an economy of scale. I believe we will need to invest 30,000 a considerable amount to advance in these areas. 18,757 20,000 Based on this perspective, I intend to raise the value of the 13,972 13,851

10,000 SKY PerfecTV! broadcasting and JSAT satellite businesses and contribute to the creation of a more affluent future while leading 0 2011 2012 2013 2014 (plan) management as we steer the company to continuing growth. (Years ended March 31)

24 SKY Perfect JSAT Holdings Inc. Annual Report2013 definition (ultraHD) technology. is leadingtheinitiative foranationwideproject,earlyadoption ofultrahigh As Japan’s pioneeringmultichannel payTVbroadcaster, JSAT SKYPerfect Experience Viewing A New T S of Presence with aHighlyRealisticSense oward pe c ial Feature 2. R ealizing U ltra Hig h

D e f inition T elevision

Corporate Data Financial Section Corporate Social Corporate Governance Review of Operations Special Feature To Our Shareholders Consolidated Financial Satellite Basics/Glossary Responsibility and Investors Highlights Europe and the United States have also indicated they are Next-generation H.265 Video Compression preparing to begin 4K broadcasts around 2014. Technology

The operating environment for communications and broad- SKY Perfect JSAT to Start 4K Trial Satellite casting services has changed substantially with technological Broadcasts in 2014 advances such as the phenomenal rise in the transmission capacity of satellites, optical fiber and other wired and wire- For Japan to keep pace with developments and remain at less media. These technical advances are making it easier the forefront in adopting the new technology, it is neces- to provide increasingly sophisticated individual services as sary to progress toward early practical application of 4K well as to offer greater convenience to viewers by combining by showing viewers ultra HD (4K) receivers and broadcast communications and broadcasting services. services in 2014, according to a study group with members In January 2013, the International Telecommunica- from academia, related industries, and government orga- tion Union (ITU) approved H.265 as the new global video nized by the Ministry of Internal Affairs and Communica- compression standard. Also called High Efficiency Video tions (the study group on upgrading broadcasting services). Coding (HEVC), H.265 succeeds the current H.264 and Participants recognize satellites are the most practical offers double the compression capability. In the wake of method for providing nationwide broadcasts of such huge ITU’s approval, and soon after digital TVs, which come with volumes of video and data and are also the most logical in HD receivers in Japan, spread to nearly all the country’s terms of cost and efficiency. All eyes are on SKY Perfect households, moves to pave the way for ultra HD (4K/8K) JSAT to take the lead in ultra HD broadcasting in Japan. broadcasts picked up speed. Broadcasters in South Korea In May 2013, SKY Perfect JSAT joined with NHK (Japan started testing terrestrial 4K broadcasts in October 2012 Broadcasting Corporation), device manufacturers, telecom- and are working to realize full broadcasts beginning with munications companies, terrestrial broadcasters, and others major sporting events from 2014. Satellite broadcasters in to establish a nationwide project called “Next Generation

The New, High Resolution, Large Screen Viewing Timeline for Rapid Ultra HD Development and Experience of Ultra HD Popularization (based on MIAC Investigative Commission on Advances HD Broadcast Resolutions in Broadcast Services materials)

Dates (Sporting Event) Satellite Broadcast Possibilities Approx. 2 million pixels 2014 • Use the 124°/128°communications satellites (CS) 2K Current HD FIFA World Cup • 4K: Aim to set up in home or retail site viewing loca- 1,920 X 1,080 (Soccer), Brazil tions using set-top boxes (STBs) and other receivers = 2,073,600 for viewers interested in experiencing 4K.

• Use the 124°/128° CS and possibly the left hand 4 times (2K>4K) 2016 circular polarized wave of the 110° CS for use. Summer • 8K: Aim to set up in home or retail site viewing lo- Approx. 8 million pixels cations using STBs and other devices for viewers Olympics, interested in experiencing 8K. 4K 3,840 X 2,160 Brazil = 8,294,400 • 4K: Aim to offer viewing conditions enabling more viewers to access a wider range of 4K broadcast channels using STBs or other devices in their homes.

16 times (2K>8K) • Use the 124°/128° CS and possibly the left hand circular polarized wave and the right hand circular Approx. 33 million pixels 2020 polarized wave of the 110° broadcast satellite (BS). Olympics, 8K 7,680 X 4,320 • 4K/8K: Aim to offer viewing conditions enabling location to be = 33,177,600 more viewers to access a wider range of 4K and announced 8K broadcast channels 4K/8K-accessible TVs in their homes.

26 SKY Perfect JSAT Holdings Inc. Annual Report2013 Reysol soccermatchinMarch2013 Live 4KbroadcastoftheFCTokyo vs. Kashiwa other completelynewwaysofenjoyingtheTVexperience. depth andconfirmingtheappealof4K-resolutionvideo. giving viewersahighlyrealisticsenseofpresenceand the crowd,andtruebeautyofsurroundingscenery, with stunningclaritytheagilityofathletes,facesin in October 2012 andMarch 2013.Thebroadcasts showed live gamesofJapan’s professionalsoccerleague(J-League) trial transmissionsof4Kvideofeedswiththebroadcast SKY PerfectJSAT conductedJapan’s first satellite-based at the124°/128°eastlongitudeorbitalslots. to commence4Ktestbroadcastsin2014usingitssatellites development andpopularizationofultraHDisplanning ing members,SKYPerfectJSAT isactivelypromotingthe realization ofultraHDbroadcasting.Asonethefound- for broadcasters,receiverdevicemakers,andothersthe with theaimofsettingdownaroadmaptargetsanddates Broadcasting PromotionForum”,alsoknownas“NexTV-F,” to provide highly sophisticatedservicesthrough HD goesbeyondtrue-to-lifeimagesandincludesthepotential clearer and8Kvideois16timesclearer. Thepromiseofultra 4K Video Trial Transmissions ConfirmAppealof Compared with current HD video, 4K video is four times Compared withcurrentHDvideo,4Kvideoisfourtimes TVs and TVs and the startoffull-fledgedproliferation4Kbroadcasts. year theFIFA World Cup(soccer)istobeheldinBrazil,as adoption ofanewtechnology. We thereforesee2014,the viewers newbroadcastservicesandstimulatedemandfor and Olympicsareextremelyeffectiveopportunitiestoshow casts, major sports event like the FIFA World Cup (soccer) As experiencedwithJapan’s shifttoterrestrialdigitalbroad- standard asanationwideproject. other companiesthefull-fledgedadoptionofultraHD this senseofcommitment,weseektorealizetogetherwith realizing thenext-generationofbroadcastservices.With and internationalcompetitivenessbytakingtheleadin to demonstrateJapan’s highleveloftechnicalexpertise pay TV broadcasts, now is in a position ofresponsibility company thatlaunchedandledJapan’s firstmultichannel casts. SKYPerfectJSAT, which startedastheventure worldwide ineageranticipationofthestart4Kbroad- and salesof4K-relatedequipmentaregainingmomentum to make a splash by announcing *based onmaterialsof SHARPinthe“CEATEC2011”heldSeptember Realistic Sense ofPresence A NewViewing ExperiencewithaHighlyRealistic Note: High Resolution in Time fortheWorld CupandOlympics Electronics MakersareAnnouncing4KTVs Electronics makers around the world are already jostling Electronics makersaroundtheworldarealreadyjostling

02ryutsu12_03000063.html http://www.soumu.go.jp/main_sosiki/kenkyu/bcservice/ Affairs andCommunicationsothermaterials: This textreferencesthefollowingminutesofMinistryInternal SDTV 32 inch Full HD 46 inch SDTV 46 inch Screen Size SDTV 60 inch Full HD 60 inch 60 inch4K A NewViewingExperience plans to release 4K TVs, plans to release 4K TVs, Full HD 80 inch Presence Sense of 27

We are working to expand total subscriptions by increasing subscriptions for “SKY PerfecTV!”, a service easily available through digital TV sets, and also essentially winding up the transition of subscribers to “SKY PerfectTV! Premium Service” from SDTV to HDTV, which has the largest number of high-definition TV channels in Japan. Akira Tanaka Director, in charge of Multichannel Pay TV Business

Review of Fiscal 2012 Revenues Operating Loss In fiscal 2012 ended on March 2013, we unified our three (Millions of yen) (Millions of yen) 150,000 0 service brands with different transmission routes and clarified 120,000 120,000 114,416 the service system. Moreover, to increase the number of 108,503 subscribers in the medium to long term, we implemented 90,000 -819 -1,000 intensive measures as follows. We integrated customer -900 60,000 centers, websites, and members’ magazines. We are also making the most of the current viewership environment 30,000 -1,637 where most Japanese households own digital television with 0 -2,000 2012 2013 2014 2012 2013 2014 a built-in tuner capable of receiving SKY PerfecTV! as a result (Forecast) (Forecast) of completion of the transition to digital terrestrial broadcasts. (Years ended March 31) Meanwhile, we decided to terminate the standard- definition (SDTV/ MPEG-2 format) service of SKY PerfecTV! Outlook for Fiscal 2013 Premium Service on May 31, 2014 (excluding some chan- In fiscal 2013, ending March 2014, from a customer’s per- nels), and accelerated the transition of subscribers to the spective, we will return to our basic focus on providing high-definition (HDTV/ H.264 format) service. attractive and interesting programs, and enhancing our In fiscal 2012, the Multichannel Pay TV Business recorded lineup of channels. On top of this, we will do our utmost to a 5.4% year-on-year rise in revenues to ¥114.416 billion due to achieve our plan for an annual net increase in subscriptions growth in subscription fee revenue resulting from an increase by expanding the number of new subscriptions for SKY Per- in subscriptions for the HDTV service in SKY PerfecTV! Pre- fecTV!, curbing subscription cancellations, and essentially mium service. On the income side, the Multichannel Pay TV completing the transition of subscribers from the SDTV to Business incurred an operating loss of ¥819 million (compared the HDTV service. with an operating loss of ¥1,637 million in the previous year) In fiscal 2013, we expect the Multichannel Pay TV Busi- as a result of increases in programming fees, BS-related costs, ness to register a 4.9% year-on-year increase in revenues and costs related to the transition of subscribers to the HDTV to ¥120 billion. Meanwhile, we expect our operating loss of service. As for subscriptions, the number of new subscrip- ¥900 million, reflecting strategic investments for expanding tions, at 622,249, declined from the previous year, when we the scope of business operations in the medium to long term, benefited significantly from a steep increase in sales of digital including overseas business expansion. However, we will TV sets and the launch of new BS channels, but it was still strive to make the Multichannel Pay TV Business profitable the second highest level ever. However, cancellations also on an operating basis by carrying out further cost structure increased and there was only a small net increase in subscrip- reforms, such as reducing the cost of winning new subscrib- tion of 15,206. ers and enhancing the efficiency of customer centers.

28 SKY Perfect JSAT Holdings Inc. * Sumofmonthlychurnrate. Annual Report2013 Subscription PlanforFY2013 Main Indicators for the Multichannel Pay TV Business Main IndicatorsfortheMultichannelPayTVBusiness 100,000 200,000 300,000 400,000 New Subscribers Annual ChurnRate(%)* Total Subscribers (three SKYPerfecTV! Net Increase 0 1Q/FY2011 * Thequarterlyaverageofmonthlychurnrate.Calculated forallofthethreeservices. Churn Rate 159,775 21,927 1.2 1.4 Churn rateaftertheexclusionofre-subscriptions Churn rate (15.9% aftertheexclusionofre-subscriptions) 148,468 SKY PerfecTV! Premium Service SKY PerfecTV! Premium ServiceHikari SKY PerfecTV! 27111,722 12,751 1.3 1.2 2Q * Annual churnrate:18.6% 192,502

services) 1.7 1.6 Q4Q 3Q 173,720 1.5 39,451 1.2

1Q/FY2012 172,712 24,696 1.5 1.3 159,342 FY2012 59414,623 15,924 1.4 1.2 3,829 2Q 18.6% 622 546 Re-registered subscribers Churn 61 15 15 191,216 1.7 1.5 Q4Q 3Q (Forecast) FY2013 FY2013 (Thousands) 187,684 3,865 48,668 1.6 1.2 18.8% 640 550 75 15 36 (%) 0.0 0.5 1.0 1.5 2.0 ARPU (Yen) ARPU (Yen) Average MonthlySubscriber’sPayment (Yen) Average MonthlySubscriber’sPayment (Millions ofyen) SAC total (Millions ofyen) SAC total (Yen) SAC perunit (Yen) SAC perunit (Yen) 1,000 1,000 2,000 2,000 4,000 4,000 1,000 1,000 2,000 2,000 3,000 3,000 10,000 10,000 20,000 20,000 30,000 30,000 40,000 40,000 7,000 7,000 4000 5000 4000 5000 1000 2000 1000 3000 2000 3000 6000 6000 0 0 0 0 0 0 0 0 * * * * 1Q/FY2011 1Q/FY2011 1Q/FY2011 1Q/FY2011

1Q/FY2011 1Q/FY2011 1Q/FY2011 1Q/FY2011 Total forallthreeservices. Total forallthreeservices. free ofcharge. Total forallthreeservices.TheSACunitpriceexcludesthecostsofcontentprovided Total forallthreeservices. (AverageMonthlyRevenueperUnit) (AverageMonthlyRevenueperUnit) 1,586 1,586 3,264 3,264 29,502 29,502 4,553 4,553 detsn xessPooinlepne Salesincentives Promotionalexpenses Advertising expenses Advertising expenses RevenuesfromSKYPerfect’sowncontent PPV subscriptionfee Basic fee PPV subscriptionfee Basic fee Campaign expenses Campaign expenses 135 135 37 37 6 6 6 360 362 363 366 6 6 6 360 362 363 366 75 161 61 59 57 75 161 61 59 57 9 ,7 ,9 1,109 1,099 1,073 991 9 ,7 ,9 1,109 1,099 1,073 991 135 135 98 078 80 88 89 98 078 80 88 89 6 6 6 360 362 363 366 6 6 6 360 362 363 366 759 57 759 57 ,1 ,0 2,593 2,603 2,617 ,1 ,0 2,593 2,603 2,617 * * ,3 ,8 ,5 1,049 1,049 1,258 1,258 1,086 1,086 1,031 1,031 789 657 487 789 1,587 657 487 1,587 3,240 3,240 1,659 1,659 29,393 29,393 4,765 4,765 * * 2Q 2Q 2Q 2Q 2Q 2Q 2Q 2Q

2 3 116 132 127 2 3 116 132 127 2 3 116 132 127 2 3 116 132 127 73 31 34 37 73 31 34 37 829 701 537 829 701 537 ,1 ,0 2,121 2,121 2,203 2,203 1,610 1,610 3,227 3,227 29,614 29,614 ,8 1,677 1,677 1,687 1,687 6,233 6,233 Q4Q 4Q 3Q 3Q Q4Q 4Q 3Q 3Q Q4Q 4Q 3Q 3Q Q4Q 4Q 3Q 3Q 61 61 1,019 563 502 1,019 563 502 686 686 etlfeMonthlysubscriptionfee Rental fee Revenues fromSKYPerfect’sowncontent Rental fee Others Promotional expenses Others 3,175 3,175 32,294 32,294 6,175 6,175 61 61 2,560 2,560 1,159 539 1,159 740 539 740 564 564 1Q/FY2012 1Q/FY2012 1Q/FY2012 1Q/FY2012 1Q/FY2012 1Q/FY2012 1Q/FY2012 1Q/FY2012 3,223 3,223 1,738 1,738

26,117 26,117

4,603 4,603 Monthly subscriptionfee * * 5 5 5 356 356 357 357 61 358 61 61 358 61 359 2,577 62 61 359 2,577 62 61 2,623 67 2,623 129 67 2,603 129 2,603 69 132 69 132 132 132 30 30 5 5 5 356 356 357 357 358 358 359 359 16 161 61 61 61 61 61 61 61 ,5 ,8 ,1 1,251 1,251 1,216 1,216 1,188 1,188 1,157 1,157 990 1,006 527 990 348 1,006 1,435 527 348 294 1,435 294 1,765 1,765 3,238 3,238

35,244 35,244

5,285 5,285 2Q 2Q 2Q 2Q 2Q 2Q 2Q 2Q 129 129 29 29 Free contentcosts Sales incentives Free contentcosts * * 857 827 407 474 857 827 407 2,046 474 672 2,046 672 1,808 1,808

28,319 28,319 3,194 3,194

5,042 5,042 Q4Q 4Q 3Q 3Q Q4Q 4Q 3Q 3Q Q4Q 4Q 3Q 3Q Q4Q 4Q 3Q 3Q 61 61 126 126 137 137 3 126 126 137 137 736 36 37 37 996 870 511 996 531 870 1,590 511 531 542 1,590 542 1,828 1,828 3,143 3,143

31,065 31,065

5,764 5,764 61 61 2,540 2,540 29 1,220 894 507 1,220 704 894 507 704 1,875 561 1,875 561

In Japan, we are focused on offering satellite solutions that meet the demand for large-scale disaster preparedness and business continuity plans (BCPs) of companies and government agencies, as well as the satellite-based mobile communications business. Overseas, we will further strengthen our global business operations, mainly in the rapidly growing Asian markets. Osamu Inoue Director, in charge of Space & Satellite Business

Review of Fiscal 2012 Revenues Operating Income In May of fiscal 2012, we successfully launched “JCSAT- (Millions of yen) (Millions of yen) 80,000 25,000 4B,” the successor to “JCSAT-4A”, which was positioned 19,812 18,600 57,708 56,646 56,800 20,000 at 124 degrees east longitude and started operating it in 60,000 17,599 July. As this new satellite is not only used for the SKY 15,000 40,000 PerfecTV! Premium service in Japan but also covers the 10,000

Middle and Near East, Southwest Asia, Southeast Asia 20,000 5,000 and Oceania, it has started providing its transponders for 0 0 Indonesia’s Lippo Group. 2012 2013 2014 2012 2013 2014 (Forecast) (Forecast) (Years ended March 31) In the mobile satellite communications business, our satellite Internet access service for vessels, “OceanBB,” was adopted for “NYK SATCOM Project,” which is NYK Line’s project to introduce a maritime broadband system. In addition, “eXConnect,” an in-flight Inernet access service provided by US-based Panasonic Avionics, started using our satellites in the Southwest Asia and the Indian Ocean regions. Japan Airlines Co.,Ltd. adopts the “eXConnect” service and started its in-flight Internet access service “JAL SKY WiFi.” We also launched a service using handheld satellite cell phones, “Isat- Phone Pro” in the Japanese market. Nipponmaru In the space business we were commissioned by the Japan Aerospace Exploration Agency (JAXA) to promote usage and operational services of Kizuna (WINDS), a satellite that enables ultra-high-speed Internet access, for social use and testing that JAXA is developing. Moreover, DSN, a special-purpose company newly established by the Group, signed a long-term contract concerning a project to develop and operate the next generation X-band satellite system with the Ministry of Defense under a PFI arrangement.* * PFI (Private Finance Initiative) : A way of building, managing and operating public facilities by utilizing private-sector funds, management and technical skills. Using OceanBB service

30 SKY Perfect JSAT Holdings Inc. Annual Report2013 this purpose,weenteredinto anagreementwithSpace efficacy ofdisaster-resistant satellite communications. For of companiesandgovernment agenciesbyleveragingthe satellite solutionsforthebusiness continuityplans(BCPs) mature, wecontinuetostrengthenmarketingeffortsoffering Although thedomesticsatellitecommunicationsmarketis Outlook forFiscal2013 depreciation expenses following the launch of a new satellite. 11.2% yearon year to ¥17.599 billion due to an increase in to ¥56.646billioninfiscal2012.Operatingincomedropped East rapidly inthepreviousyearduetoimpactofGreat the useofsatellitesreturnedtoanormallevelafterincreasing future growthoftheSpace&SatelliteBusiness.However, as As described above, we have steadily developed seeds for As describedabove,wehavesteadilydevelopedseedsfor Japan Earthquake, revenues declined 1.8% year on year Japan Earthquake, revenues declined 1.8% year on year Station Terrestrial Gateway Internet Network Enable Internetconnectionsinflight ©Japan AirlinesCo.,Ltd income of¥18.6billion,up5.7%. billion, up0.3%fromtheprevious year, andan operating Satellite Businessinfiscal2013 torecordrevenuesof¥56.8 and Oceania.Withtheseinitiatives,weexpecttheSpace& as strengthenglobalbusinessoperations,mainlyinAsia our satellite-basedmobilecommunicationsbusinessaswell X-band satellitesystemproject.Moreover, wewillexpand Oceania andthePacificislands. in Asia andto offer extensive coverage over Asia,Russia, the growingdemandfortelecommunicationinfrastructure will replaceJCSAT-2A. Thisnew satelliteisdesignedtofulfill scheduled tobelaunchedduringthe2ndhalfof2015and construction ofournewsatellite“JCSAT-14,” whichis Systems/Loral, aUS-basedsatellitemanufacturer, forthe We will also steadily proceed to the next-generation 31

The SKY Perfect JSAT Group strives to maintain transparent corporate governance systems that are able to meet the demands of a rapidly changing business environment. As a corporate entity that provides the highly public services of broadcasting and communications, we pursue rigorous corporate ethics based on legal compliance and ongoing reinforcement of our risk management system.

Shigeki Nishiyama Representative Director and Chairman in charge of internal control

With a strong sense of social responsibility as a public service including our clients and employees, a top priority of our busi- provider of broadcasting and communications, the SKY Per- ness management. On top of this, we pursue swift decision- fect JSAT Group contributes to creating an affluent society. making in a changing social and economic environment with The fundamental objective of corporate governance is to a strong recognition of the importance of corporate ethics maximize the Group’s corporate value in the capital market based on legal compliance, along with further enhancement as a responsible listed company. To achieve this objective, of sound business operations. we make establishing good relationships not only with our To our shareholders and investors, we ensure prompt shareholders and customers to whom the Group provides and accurate information disclosure, as well as increase our services, but also with the Group’s various stakeholders, management transparency by providing extensive information.

32 SKY Perfect JSAT Holdings Inc. Annual Report2013 SKY PerfectJSATHoldingsInc. Corporate GovernanceSystems duct riskmanagementinanappropriateandpromptmanner. important factsrelatedtoindividualgroupcompaniesandcon- and Group companies. The directors also share information on sions concerningimportantbusinessmattersfortheCompany principle, andonotheroccasionsasnecessary, tomakedeci- duties ofthedirectors,Board meets oncemonthlyin As thebasisofsystemtoensureefficientexecution four ofwhomareoutsidedirectors,asMarch31,2013. The Company’s BoardofDirectorsconsists11directors, Board ofDirectors 1.

Transparent CorporateGovernance Appropriate, Efficient,andHighly Finance &Accounting/GeneralAffairs/Legal/Information Systems Human Resource/CorporateCommunications&InvestorRelations/ Internal Audit/InternalControlPromotion/CorporatePlanning/ Divisions: Auditors) (2 OutsideCorporate 4 CorporateAuditors Board ofCorporateAuditors: Report Accounting Audit Report Auditors Appoints Audits General MeetingofShareholders (4 outsideDirectors) (2 RepresentativeDirectors) 11 Directors Board ofDirectors: Chairman President Appoints

base the companyclarifiestheirrolesinbusinessexecution corporate governancesystem. sion-making, aswellincreasestheeffectivenessof and enhancestherationalityappropriatenessofdeci- Board ofDirectorsmeetingswithavarietyviewpoints ence in corporate management, enriches discussions at directors, whopossessawealthofexpertiseandexperi- execution. Meanwhile,the appointment of fouroutside ensures theconductofappropriateandefficientbusiness leader ofeachdivision.Withthissystem,theCompany Along withdefiningclearlythedutiesofeachdirector, d on our regulations, as well as appoints aresponsible Consults Consults Committee Information Disclosure Management Committee Remuneration Committee Nomination and (As ofMarch31,2013) 33

Name Activities

Nakatani attended all of the 14 Board of Directors meetings held in the fiscal year under review. With Iwao Nakatani regard to the business deliberation and other matters, he provided advice as necessary based on his high level of expertise in the field of economics and business management.

Mori attended 11 of the 14 Board of Directors meetings held in the fiscal year under review. With regard to business deliberation and other matters, he provided advice as necessary based on the abundance of Masakatsu Mori experience and knowledge in the field of corporate management that he has acquired as a manager of a consulting firm.

Otsuka attended 12 of the 14 Board of Directors meetings held in the fiscal year under review. With regard Hiromasa Otsuka to business deliberation and other matters, he provided advice as necessary based on his abundance of experience and knowledge in the fields of broadcasting and communications.

Koide attended 13 of the 14 Board of Directors meetings held in the fiscal year under review. With regard Kanji Koide to business deliberation and other matters, he offered guidance as necessary based on his abundance of experience and knowledge in the field of communications.

Management Committee information that is intended for disclosure. The Committee is The Company has clarified the scope of decision-making au- chaired by the President, and includes the manager in charge of thority, including the President’s, based on the regulations on information disclosure and Board directors involved in informa- the authority of management. Along with this, the Company tion disclosure. Full-time auditors also attend the Committee’s has established a Management Committee as a consultative meetings as observers. The general manager of the Corporate body that helps the President make decisions on business Communications and Investor Relations Division serves as execution-related matters as necessary. The Committee secretary of the Information Disclosure Committee, which meets as necessary and members discuss important matters functions as the official entity for examining and confirming relating to the business of the Company and its subsidiaries. It the Timely Disclosure Rules of the Tokyo Stock Exchange. also performs a Group governance function through the shar- ing of information on the progress of the business operations 2. System Ensuring and Supervising Sound of subsidiaries. Moreover, SKY Perfect JSAT Corporation, a Business Management core business company of the Group, holds weekly executive Appointment of Independent Directors/Auditors meetings where important matters relating to the Company’s To protect general shareholders and enhance cooperate gov- business execution are discussed. ernance, the Tokyo Stock Exchange, on which the Company is listed, requires that all listed domestic companies appoint Other Committees at least one independent director/auditor. An independent The Company has a Nomination and Remuneration Commit- director/auditor is an outside director or auditor who is unlikely tee that acts as an advisory body to the Board of Directors. The to have any conflict of interest with general shareholders. Committee makes independent recommendations concerning In other words, an independent director/auditor is a person the nomination of officials and the setting of remuneration. who participates in management from a neutral and objec- In addition, the Company has an Information Disclosure tive standpoint and who does not have any interests in the Committee, which presents suggestions to the President Company or Group. concerning timely and accurate information disclosure. The In accordance with this requirement, the Company has Committee convenes weekly, as a general rule, to consider two independent directors and one independent auditor.

34 SKY Perfect JSAT Holdings Inc. Annual Report2013 external ComplianceHelpLine systemthatenablesthose of Directors,executives,andemployees. compliance educationandtrainingtomembersoftheBoard compliance programsfortheentirecompany, anditprovides of maintaining,managinganddeterminingthecontent necessary. TheCompliancePromotionOfficeisincharge reports the deliberation results to the Board of Directors as ing compliancetotheCommitteefordeliberation,aswell on including compliance program matters andfacts regard - of theCommittee.TheCommitteechairpersonsubmitsissues appoints a Chief Compliance Officer who acts as chairperson Secretariat, theCompliancePromotionOffice.TheCommittee Company has established a Compliance Committee and its articles ofincorporationandvariousinternalregulations,the and employeescomplywithrelevantlawsregulations, To ensurethatbusinessexecutionoftheCompany’s directors Compliance CommitteeandHelpLine 3. Major ActivitiesConductedbyOutsideAuditors opinions. They conduct investigations of departments and where theyengageinfrankandfreeexchangesofideas Board ofDirectorsandManagementCommitteemeetings, tors attend important decision-making meetings, including members, twoof whom areoutside auditors. Corporate audi- The Company’s BoardofCorporateAuditorsconsistsfour Board ofCorporateAuditors Shinji Takeda Toshiaki Katsushima Name

Status ofDevelopmentInternalControl Moreover, theCompany has putinto place an internal tion andothermattersbasedonhisabundanceofexperienceknowledgeinthefieldbroadcasting. held inthefiscalyearunderreview. Heprovidedadviceasnecessarywithregardtothebusinessdelibera- Takeda attended 12ofthe14Board Directors meetingsand10ofthe13Board Auditors meetings account basedonhisabundanceofexperienceandknowledgeinthefieldfinancialaccounting. deliberation andothermattersfromhisstandpointasacertifiedpublicaccountanttax ings heldinthefiscalyearunderreview. Heprovidedadviceasnecessarywithregardtothebusiness Katsushima attended13ofthe14BoardDirectorsmeetingsand12Auditorsmeet- Activities Activities and and and othermattersasnecessary. to theBoardofDirectorson statusofriskmanagement chaired bytheChiefRiskManagementOfficer. has established a Risk Management Committee, which is To ensurethe effectivenessoftheregulations,Company the Companyhasestablishedriskmanagementregulations. comprehensively andconductappropriateriskmanagement, To recognizeandevaluaterisksrelatedtobusinessexecution Risk ManagementCommittee concerns withinternalHelpLinestaff. Board ofDirectorstoreportthemimmediatelyordiscusstheir or practicesbyemployees,executivesmembersofthe who suspecttheyhavediscoveredillegalbusinessactivities of internalcontrols. sion, providesadvice,andexchangesopinionsonthestatus and theboardreceivesreportsfromInternalAuditDivi- receives audit reports from account auditors as necessary, performance ofdirectors.TheBoardCorporateAuditors subsidiaries based on annual plans, and audit thebusiness individ ing theoverallriskmanagementsystemthroughstudyof the sametime,Committeeisresponsibleforstrengthen - evaluates risks,andexaminesriskpreventionmeasures.At The Committee determines risk management policies, The Committeedeterminesriskmanagementpolicies, ual events. The Chief Risk Management Officer reports ual events. TheChief Risk Management Officer reports 35

Corporate Data Financial Section Corporate Social Corporate Governance Review of Operations Special Feature To Our Shareholders Consolidated Financial Satellite Basics/Glossary Responsibility and Investors Highlights 4. Remuneration System Designed to salary, directors also receive remuneration based on their Raise Corporate Value achievement of management indices established at the be- The Company has adopted a performance-linked cash remu- ginning of the fiscal year as an incentive to improve corporate neration system. Under this system, in addition to a basic performance.

Remuneration of Directors and Auditors in the Year under Review Total Remuneration (¥ millions) Position Number of Eligible Recipients Basic Performance-linked

Directors (Excluding Outside Directors) 64 23 6

Auditors (Excluding Outside Auditors) 42 — 2

Outside Directors/Auditors 32 — 5

5. Information Security Basic Policy fied ones, unauthorized access, loss, destruction, falsifi- (SKY Perfect JSAT Group) cation, leakage, etc. and shall appropriately implement The SKY Perfect JSAT Group recognizes that the sound corrective and preventive measures. The SKY Perfect protection of information assets is indispensable. Along with JSAT Group shall appropriately supervise subcontractors appropriately managing the business process and bolstering who treat information asset by standards which the Group physical and technical security, all of the officers and em- established. ployees of the Group and related parties shall act with a high awareness of information security and shall enact as follows 4 The SKY Perfect JSAT Group shall conduct internal audit basic policies relating to the protection of information security. regarding information security management on a regular basis, check whether employees abide by related laws, 1 The SKY Perfect JSAT Group shall follow with laws, or- rules (such as guidelines), contracts, and related regula- dinances and rules (such as guidelines), contracts, and tions, etc., correct them, and improve the effectiveness related regulations, etc. and promote proper use and and reliability of our system through preventive and cor- management relating to the information asset. rective measures, etc.

2 Each company of the SKY Perfect JSAT Group shall appoint 5 The SKY Perfect JSAT Group shall keep improving our a person to be in charge of the management of informa- information security management system, while consider- tion security and information security management ing the changes in the external environment, including committee, and educate the officers and employees information technology and social trend, and the internal of the Group and related staff, including outsources, environment, including organizational reform. so as to protect information security thoroughly. 6 If any employee violates related laws, rules (such as guide- 3 With respect to managing information asset, each com- lines), contracts, and related regulations, etc., the SKY pany of the SKY Perfect JSAT Group shall take reasonable Perfect JSAT Group shall cope with it by penalizing said measures to prevent use for purposes other than speci- employee in accordance with our employment regulations.

36 SKY Perfect JSAT Holdings Inc. Annual Report2013 (As ofJune21,2013) Corporate Board Masayuki Hirata(Outside) Tadashi Saito(Outside) Kazunobu Iijima Masakatsu Mori(Outside)* Iwao Nakatani(Outside)* Board Directors(Non-Standing) Chief GroupComplianceOfficer Chief InformationManagementOfficer Chief RiskManagementOfficer In chargeofEngineering In chargeofFinanceandAdministration In chargeofCorporatePlanning&Strategy Masao Nito Board Directors D ire In chargeofInternalControl Shigeki Nishiyama Representative Director, Chairman c A tors and uditors Noriaki Sakamoto(Outside) Ryoji Hirabayashi Corporate Auditors In chargeofSpace&SatelliteBusiness Osamu Inoue Representative Director, President Shinji Takada Shinji Takeda (Outside) Toshiaki Katsushima(Outside)* Corporate Auditors(Non-Standing) In chargeofMultichannelPayTVBusiness Akira Tanaka * Independentdirector/auditor 37

As we regard it as part of the SKY Perfect JSAT Group’s social responsibility to provide educational support for children, on whose shoulders the future rests, and foster human resources involved in the utilization and development of the space, we engage in a variety of corporate social responsibility (CSR) activities. For example, the Group’s satellite control centers and broadcasting centers welcome field trips by elementary and junior high school students. We also support an educational program in which junior and senior high school students conduct business studies to explore the workings of society (Quest Education Program). Through these activities, we raise public awareness about the social roles of satellite communications and satellite broadcasting.

Production and Distribution of an Educational Comic Book Titled “Secrets of Multichannel Satellite Broadcasting and Satellite Communications”

The SKY Perfect JSAT Group has produced with Gakken Publishing Co., Ltd. an educational comic book titled “Secrets of Multichannel Satellite Broadcasting and Satellite Communications” for free distribution to around 22,300 public elementary schools and about 3,200 public libraries across Japan. By making use of the comic book style, with which children are familiar, we hope that they can understand the mechanism of multichannel satellite broadcasting and satellite communications, and we seek to inform them, in a natural way, of the fact that satellites are making significant contributions to our daily lives.

An elementary school student reading “Secrets of Multichannel Satellite Broadcasting and Satellite Communications”

38 SKY Perfect JSAT Holdings Inc. Annual Report2013 Quest Education Program2013 lected from32schoolsthroughadvancescreening,madetheir Education ProgramheldinFebruary2013,seventeams,se - participation.” AtthenationwidecontestunderQuest about “working”andenhancestheirawareness“social junior and senior high school students across Japan learn We aresponsoringtheQuestEducationProgram, whichhelps Junior highschoolstudentsvisitingourbroadcastingcenter school students tooursatellitecontrolcentersandbroad- next-generation by welcoming elementary and junior high We are contributing to human resource development for the Sponsorship oftheQuestEducationProgram Welcoming ElementaryandJuniorHighSchoolStudentstoourCompanyFacilities The juniorhighschool teamthatwonthe“SKYPerfect JSAT Prize.” Elementary schoolstudentsvisitingoursatellitecontrolcenter to dealwiththelandmineproblem.” office and made their presentation titled “the use of satellites the missiongivenbySKYPerfectJSAT Group)visitedour Perfect JSAT Prize”(thefirstplaceamongtheparticipantsin presentations. Thejuniorhighschoolteamthatwonthe“SKY and theeditingofprogramsarebeingconducted. workplaces atwhichthecontrolandoperationofsatellites casting centerswheretheycanfeeltheatmosphereofour 39

Corporate Data Financial Section Corporate Social Corporate Governance Review of Operations Special Feature To Our Shareholders Consolidated Financial Satellite Basics/Glossary Responsibility and Investors Highlights Financial Section Consolidated Financial Highlights SKY Perfect JSAT Holdings Inc. and Consolidated Subsidiaries For the years ended as of March 31, 2009, 2010, 2011, 2012 and 2013

Thousands of U.S. Millions of yen, except Per Share Data and Selected Financial Indicators dollars, except per share data (Note 1)

Net Cash Provided by Operating Activities 31,431 39,340 38,957 39,977 38,372 408,257 Net Cash (Used in) Provided by Investing Activities (27,778) (23,887) (28,595) 1,995 (11,119) (118,302) Free Cash Flow (Note 3) 3,653 15,453 10,362 41,972 27,253 289,955 Net Cash (Used in) Provided by Financing Activities (7,766) 10,836 (17,302) (34,993) (19,402) (206,424)

Notes: 1. U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥93.99 to $1, the approximate rate of exchange at March 31, 2013. 2. EBITDA is calculated as Net Income + Tax Expense + Depreciation Expense + Interest Expense. 3. Free Cash Flow is calculated as Net Cash Provided by Operating Activities + Net Cash Used in Investing Activities. 4. In calculating Equity Ratio, equity excludes minority interests and stock acquisition rights. 5. In calculating ROE, equity excludes minority interests and stock acquisition rights.

40 SKY Perfect JSAT Holdings Inc. 100,000 150,000 200,000 Annual Report2013 (Years endedMarch31) (Millions ofyen) Revenues Space &SatelliteBusiness,andstrengtheningglobalbusiness. and launchingamobilesatellitecommunicationsserviceinthe continuity plans(BCPs)ofcompaniesandgovernmentagencies Multichannel Pay TV Business, providing solutions for business the decisiontoterminatestandard-definitionservicein tion ofsubscriberstohigh-definitionservicecontractsfollowing through theunificationofservicebrandsandacceleratingtransi- to long-term growth strategies, such as promoting marketing reform Under thesecircumstances,theGroupsteadilyimplementedmedium Overview Performance space policy. mainly intheAsianregion,andgovernment’s promotionofthe corporations, thegrowthindemandforsatellitecommunications continuity plans(BCPs)amonggovernmententitiesandprivate the utilizationofsatellitecommunicationstoestablishbusiness see newdevelopments,includingtheincreasingmovetowards mobile phonecarriers. of on-demandservicesprovidedbyexistingpayTVoperatorsand further inthemultichannelpayTVindustrybecauseofarrival high-definition TVchannelshasincreased, competition while digitaltelevisionhasspreadnationwideandthenumberof year andhopesforadditionalmonetaryeasingbytheBankofJapan. against thebackdropofyen’s rapiddepreciationsincelatelast recovery again,asevidencedbyariseinstockpricesthatcomes economies. However, the economy is starting to show signs of sluggish productionandexportsduetotheslowdownofoverseas the economyoccasionallyshowedsignsofweaknessbecause including demandrelatedtopost-earthquakereconstruction.Still, recovered atamoderatepaceduetorobustdomesticdemand, In thefiscalyearendedMarch31,2013,Japaneseeconomy Operating Environment Management’s DiscussionandAnalysis Financial Section 50,000 In thefiscalyearunderreview, revenuesintheSpace&Satel- In thesatellitecommunicationsindustry, wearestartingto As fortheoperatingenvironmentSKYPerfectJSAT Group, 0 145,412 0921 012012 2011 2010 2009 141,069 141,850 155,242 159,610 2013 (Millions ofyen) Administrative Expenses Selling, Generaland 10,000 20,000 30,000 40,000 50,000 0 41,342 0921 012012 2011 2010 2009 39,825 42,319 is intensifying is intensifying 38,694 2013 37,289

(Millions ofyen) Operating Income and a rise cost ofthecommunicationssatellitewelaunchedinMay2012 Space &SatelliteBusiness,wefacedanincreaseinthedepreciation lite million, andincometaxpayable,down¥1,998million. down ¥13,108 million, subscription fees received, down ¥2,976 ¥1,440 million.Themajordeclinerswereinterest-bearingdebt, end, to¥97,793million.Theprincipalincreasewaspayables,up Total liabilitiesdecreased¥17,288millionfrom thepreviousyear- Total Liabilities and otheraccountsreceivable,down¥3,020million. declining factorswerepropertyandequipmentdown¥12,329million, was cash and cash equivalents, which grew ¥8,068 million. Principal down ¥9,646millionfromayearearlier. Themainincreasingfactor At March31,2013,theGrouphadtotalassetsof¥290,487million, Total Assets Financial Position caused byareductioninthestatutorytaxrate. increased duetotheadjustmentofyear-end deferredtaxassets income taxesfromthepreviousyearwhendeferred year, to¥9,683millionowinga¥1,374declineintotal year, to¥15,644million.Netincomegrew¥1,113millionyearon minority interests decreasedby ¥254 million from the previous year, to¥16,153million,andincomebeforetaxes operating incomedecreasedby¥1,333millionfromtheprevious service contractsintheMultichannelPayTVBusiness.Asaresult, increased by¥4,367millionyearonto¥159,610million. in subscriptionfeerevenue,theGroup’s consolidatedrevenues in revenuestheMultichannelPayTVBusinessduetogrowth Great EastJapanEarthquake.However, asaresultofanincrease returned toanormallevelafterincreasingsteeplyfollowingthe 10,000 15,000 20,000 5,000 Business declined, as demand for satellite communications On the profit side, in addition to a decrease in revenues in the On theprofitside,inadditiontoadecreaserevenues 0 0921 012012 2011 2010 2009 16,889 in the cost of transition of subscribers to high-definition in the cost of transition of subscribers to high-definition 15,093 13,503 17,486 2013 16,153 (Millions ofyen) Net Income 10,000 15,000 5,000 0 0921 012012 2011 2010 2009 4,047 14,223 4,421 8,569 2013 9,683 41

Corporate Data Financial Section Corporate Social Corporate Governance Review of Operations Special Feature To Our Shareholders Consolidated Financial Satellite Basics/Glossary Responsibility and Investors Highlights Total Equity Finance Total equity, including minority interests, was ¥192,693 million at In the fiscal year under review, the Group did not raise new funds. March 31, 2013, up ¥7,641 million from a year earlier. The primary It should be noted that in order to raise funds concerning the increase was due to net income, which was ¥9,683 million. The development and operation of the relay function of X-band satellite major decrease was retained earnings, down ¥4,039 million due communications and other activities, the Group has concluded a to payment of cash dividends. The equity ratio was 66.2 %, up 4.6 commitment line agreement (limited loan agreement) for a total percentage points from March 31, 2012. of ¥77,500 million with certain financial institutions.

Liquidity and Capital Resources Performance Forecasts Cash Flows For the fiscal year ending March 31, 2014, the Group aims to increase For the year, net cash provided by operating activities amounted to the total number of new subscribers to all SKY PerfecTV! services ¥38,372 million (compared with ¥39,977 million in the preceding from the previous year’s level to 640,000. However, assuming year). Major contributing factors included income before income that the number of subscribers’ cancellation will increase in the taxes and minority interests of ¥15,644 million, depreciation and fiscal year ending March 31, 2014, due to the termination of the amortization of ¥26,116 million, and amortization of goodwill of standard-definition service based on the MPEG-2 format on May ¥878 million. 31, 2014, the Group forecasts a net increase of 36,000 subscribers Net cash used in investing activities totaled ¥11,119 million during the year. (compared with net cash provided by investing activities of (thousand) ¥1,995 million in the previous year). Major factors included Fiscal Year 2012 2013 (target)* Growth Rate purchases of property and equipment and intangible fixed New Subscribers (Total) 622 640 2.85% assets of ¥13,584 million. SKY PerfecTV! (Basic) 546 550 0.7% Net cash used in financing activities was ¥19,402million (down from ¥34,993 million in the previous year). Major factors included Premium Service 61 75 23.8% dividends paid of ¥4,035 million and repayments of long-term debt Premium Service HIKARI 15 15 — of ¥13,591 million. Net Increase 15 36 136.7% As a result, cash and cash equivalents amounted to ¥74,473 million at March 31, 2013, up ¥8,068 million from a year earlier. Cumulative Subscribers 3,829 3,865 0.94% * As of March 31, 2014 Capital Expenditure In the year under review, the Group made capital expenditures We have made the following consolidated forecasts for the year totaling ¥13,851 million. The spending was allocated mainly to ending March 31, 2014: revenues of ¥164,000 million (up 2.8% upgrading broadcasting facilities at the SKY PerfecTV! Tokyo Media year on year), operating income of ¥17,000 million (up 5.2%), and Center (Multichannel Pay TV Business) and procurement of a com- net income of ¥10,000 million (up 3.3%), forecasting increases in munications satellite intended to ensure the stability, reliability and both revenue and income. efficiency of the operation of satellites in the Space & Satellite Note: The above forecasts for the year ending March 31, 2014 and other forward- Business. looking predictions are based on judgments of Group management using information available at the present time. Actual results may differ from such forecasts due to various unforeseen circumstances.

Total Assets Total Equity Equity Ratio

(Millions of yen) (Millions of yen) (%) 400,000 200,000 192,693 80 185,052 183,338 180,065 335,164 173,502 66.2 322,079 309,812 300,133 290,487 300,000 150,000 60 61.6 54.7 53.8 55.9 200,000 100,000 40

100,000 50,000 20

0 0 0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013

(Years ended March 31)

42 SKY Perfect JSAT Holdings Inc. Annual Report2013 Effective date: Record date: [Outline oftheChange] under review. plans topayoutthesamelevelofdividendasinfiscalyear of cashdividends. any substantialchangeintheinvestmentunitnortreatment change from oneshare Company’s sharestradedontheTokyo StockExchangewillalso October 1,2013. for-1 sharesplitandadopttheshare-trading-unit system, effective meeting heldonMay8,2013,theCompanywillcarryouta100- In accordancewithadecisionmadeattheBoardofDirectors Share SplitandAdoptionofShare-Trading-Unit System ¥1,200 pershare. registry asofMarch31,2013,maintaininganannualdividend of ¥600persharetoshareholdersrecordedintheshareholder May 8,2013,theBoardofDirectorsdeclaredayear-end dividend provided inArticle459(1)oftheCompaniesAct.Atitsmeetingon that theBoardofDirectorsdeterminesdividendsfromsurplus,as and payoutratio. extensive considerationofourfinancialposition,levelearnings, plans. Ourpolicyistodeterminecashdividendamountsfollowing sufficient earningstofundouraggressivebusinessdevelopment ment priority. Ouraimistopaystabledividendswhileretaining hensive approachtoshareholderreturnasanimportantmanage- The SKYPerfect JSAT Group maintains along-termand compre- Dividend PolicyandReturntoShareholders operating receivables, are subject to credit risk on the client side. operating receivables, aresubjecttocreditriskon theclientside. Notes andaccounts receivable, whichconstitutetheGroup’s Management System Financial Products,Associated RisksandRisk Financial Risks 31, 2013 ended March the fiscalyear 31, 2014 ending March the fiscalyear For the fiscal year ending March In linewiththischange,theminimumtradingunitof Furthermore, our

October 1,2013 September 30,2013 1 share 100 shares* system) the share-trading-unit and theintroductionof (* afterthesharesplit system share-trading-unit Adoption ofthe Articles of Incorporation include the provision Articles of Incorporation include the provision to 100shares.However, therewillnotbe forecast) ¥600 (year-end dividend ¥6 ×100shares(1unit) (interim dividendforecast) ¥600 ×1share=¥600 (year-end dividend) ¥600 ×1share=¥600 (interim dividend) ¥600 ×1share=¥600 change. There willnotbeanysubstantial shareholders The amountofdividendspaidto 31, 2014, the Company also borrowsfrombanksandissuescorporatebondsinorderto Group’s operatingpayables,areduewithinoneyear. TheGroup securities are with whichtheGrouphasbusinessrelationships.Althoughsuch retained earnings,andofsharesinclientothercorporations mainly intheformofbondsfortemporarymanagement our operations. is thereanyguaranteethatwewill notberequiredtohaltpartof the Groupwillnotbeadverselyaffected bytheseregulations,nor that theseregulationswillcontinue intheircurrentformatorthat any hindrancefromlegalregulations. However, thereis no guarantee our operation.TheGroupcurrently carriesoutitsbusinesswithout communications satellitescouldhaveapotentiallynegativeeffecton and overseasmarkets.Anychangestolegalrequirementsregarding the launch,operation,andcommercialuseofsatellitesindomestic The Group’s business involvesdomesticsatellitebroadcastingand •Legal restrictions 1. GeneralRisks fiscal yearunderreview. the followingarebasedonGroup’s judgmentattheendof and/or financialposition.Forward-lookingstatementscontained in potential risksthatcouldaffectitsfuturebusinessperformance Below isasummaryofthemainfactorsdeemedbyGroupas Business Risks with financialinstitutionshighcreditratings. To alleviatecreditrisk,theGroupentersderivative contractsonly based oninternalregulationsthatdeterminetransactionauthority. as ahedgeagainstinterestrateriskaffectingitsborrowings. ment. TheGroupalsoentersintointerestrateswaptransactions purchase broadcastingrightsandcommunicationssatelliteequip- a hedgeagainstcurrencyfluctuationriskaffectingfundsraisedto derivatives, theGroupentersintoforwardexchangecontractsas including bypreparingmonthlyfinancingplans.Withrespectto risk. Each (interest rateswap)contractsforeachloanasahedgemechanism. long-term borrowings.To thisend,theGroupenters intoderivative est rateriskoninterestpayablebyfixingtheratesofsomeits interest ratefluctuations.TheGroupendeavorstomitigateinter Borrowings withvariableinterestratesaresubjecttotheriskof raise funds for operating transactions and capital expenditures. Board ofDirectors. of bond issuers (client corporations) and submits reports to the Group regularly monitors market pricesandthefinancial situations monitoring ofthecredit status ofmajorsubscribersis also inplace. ment criteriaestablishedbytheGroup.Asystemallowingregular balance ofreceivableseachclient,pursuanttothecreditmanage- Management ofsuchriskisbasedonrelevanttimeperiodsandthe Practically all notes and accounts payable, which constitute the Practically allnotesandaccountspayable,whichconstitutethe Marketable andinvestmentsecuritiesheldbytheGroupare The execution and management of derivative transactions is The executionandmanagementofderivativetransactionsis Operating payablesandborrowingsarealsosubjecttoliquidity Group company manages such risk in various ways, subject to the risk of market price fluctuations, the subject to the risk of market price fluctuations, the 43 -

Corporate Data Financial Section Corporate Social Corporate Governance Review of Operations Special Feature To Our Shareholders Consolidated Financial Satellite Basics/Glossary Responsibility and Investors Highlights •Security of subscriber information functions of other satellites. Therefore, during the period from when The Group pays the highest attention to the protection of client the backup satellite begins to replace the functions of the failed information, including subscriber information. However, in cases satellite through to the launch of a successor, there is no backup where subscriber information leaks from the Group or business satellite available to fill the breach in the event that another satellite partners after illegal access by third parties or other factors, the encounters difficulties. loss of confidence and/or the burden of unexpected costs might affect our business results. •Procurement of communications satellites In order to continuously maintain and expand satellite services, the • Risks related to serious damage to facilities caused by a Group must efficiently procure and launch satellites. large scale natural disaster There are considerable risks inherent in the manufacture and The Group has three uplink facilities in the Tokyo metropolitan launch of satellites. These risks include manufacturing delay, launch area that function as broadcast facilities for multichannel pay TV failure, breakdown, interference, or other damage that hinders broadcasts transmitted via communications satellites. They are the appropriate operation for commercial purposes, and inaccurate playout facilities centered on the Aomi Broadcasting Center, the orbital positioning. Meguro Media Center, and the platform facilities centered on the It takes approximately two to three years from placing an order SKY PerfecTV! Tokyo Media Center. Therefore, because the Group with a manufacturer through to the satellite’s launch and the com- does not have full backup facilities for these broadcasting facilities, mencement of operation. The Group’s policy is to place an order the advent of an unforeseen large-scale disaster that destroys or for the manufacture of a successor at least two years before the causes similar damage to the Group’s buildings or uplink facilities expected end of a satellite’s life. There are satellite operators that could adversely impact the Group’s business results. The Group place orders for successors even earlier as a provision for launch also has facilities that control communications satellites and facilities failure or some other delay. However, because the Group has its own that serve as hubs for satellite communications services. They are backup satellites it normally does not adopt this kind of precautionary the Yokohama Satellite Control Center, Ibaraki Network Control measure. Therefore, should there be a delay in the commencement Center, Yamaguchi Network Control Center, and Gunma Satellite of operation of a satellite due to some reason or other, and if a backup Control Station. Although the operations of these satellite control satellite is unable to completely backup the functions of the satellite, centers are set up so that services will not be seriously affected the Group’s operations could be adversely affected due to the loss should one center cease to operate, it is possible that the other of its competitive and/or strategic advantage stemming from the centers may not be able to perform certain satellite communications loss in profit, defamation, or the loss of potential customers. services. Therefore, a disaster could adversely impact the Group’s The Group outsources the manufacture and launch of satel- business results. lites. Because globally there is a limited number of companies that manufacture and launch satellites, there are instances where the 2. Risks Related to Satellite Infrastructure Group is unable to place a manufacturing order so that the satellite •Operational failure of satellites will be ready by the required future date, or the launch of a satellite The Group’s communications satellites are used for a comparatively is not possible on the scheduled date. Also, if the manufacture and/ long period of between 10 and 20 years, and it is not possible or launch of the scheduled satellite is delayed due to a technical to undertake repairs while satellites are operated in their orbital problem or some other problem on the part of the manufacturer or slots. Therefore, a manufacturing defect, defective part, magnetic launch service provider, it is extremely difficult to subcontract the storm caused by solar activity, a collision with a meteorite, exces- manufacture and/or launch to another manufacturer or launch service sive fuel consumption, control or operational problems, or some provider due to technological constraints and the considerable impact other reasons might stop a satellite from functioning or impede its on scheduling and economic impact such an event would have. performance, in which case there are a limited number of options When the Group procures satellites, although normally there available to the Group to secure the safe operation of the satellite is a maximum price, it concludes contracts on the condition it will for its scheduled period of use. Should this sort of situation arise, receive partial compensation from the manufacturer if there is a delay the Group’s business results could be adversely affected. in the delivery schedule, and also on the condition that it receives The Group has one satellite in orbit in the 110 degrees East guarantees concerning defects in design, materials, workmanship longitude slot exclusively for emergency backup, and also maintains etc. to within an allowable limit. The Group’s contracts with launch one other backup satellite in another orbital slot. However, in some service provider contracted to launch its satellites do not hold launch cases these backup satellites are unable to replace the full capacity service provider liable for a launch delay attributable to the launch of a failed satellite. In the event of failure, it takes more than a week service provider. to reposition the backup satellite in the orbital slot of the failed There are times when the Group bears unscheduled expenses satellite. Also, the consumption of fuel during relocation shortens that arise from a design-related reason or some other reason during the service life of the backup satellite. Furthermore, should the a satellite’s manufacturing period. normal backup satellite be in operation, it is not able to replace the

44 SKY Perfect JSAT Holdings Inc. Annual Report2013 of thefollowing: The Group’s insurance policiesdonotcoverlosscausedbyany it wantswhenthepolicycomesupforrenewaleachyear. Group maynotalwaysbeabletorenewitspolicywiththeconditions to theaforementionedvolatilityofspaceinsurancemarket, of asatellite.In-orbitinsuranceisusuallyrenewedannually, butdue cidental orconsequentialloss)causedbythetotaltechnicalfailure to business (includes decline in market share, profit loss, and ac this insurancedoesnotcovertheGroup’ and doesnotcoverthecostofareplacementsatellite.Furthermore, insurance. Thisin-orbitinsuranceisbasedonasatellite’s bookvalue it launches.Thisinsurancetakeseffectupontheexpiryoflaunch with theconditionsitwantsforfuturesatellitelaunchesaswell. the Groupmaynotalwaysbeabletoreceivelaunchinsurancecover space insurancemarketfromwhichtheGroupprocuresinsurance, not covered. It should be noted that because of the volatility of the provided bylaunchserviceprovider, allofthe Group’s lossesare are notcoveredbylaunchinsurancepaymentsortheguarantees However, becauselossofearningsandotherincidentallosses service providertolaunchthereplacementsatellitefreeofcharge. satellite iscompletelydestroyedsomecontractsrequirethelaunch refund proportionatetotheextentofdamage,whileif pr a fault with thelaunchrocket,somecontracts with launchservice satellite andlaunchexpenses. insurance doesnotcoverthefullcostoforderingareplacement the extentorcauseofdamage,forsome other reason, the other repaircosts.However, therearecaseswhereonaccountof launch insurancecoversthecostofareplacementsatelliteand the initialorbitalphase.Ifallorpartofasatelliteisdamaged,this from thelaunchtimeandalsoincludescompensationcovering of operationinitsorbitalslot. one covering the launch period and the other covering the period The Grouppurchasestwotypesofinsurancepoliciesforitssatellites: •Insurance coveringcommunicationssatellites ovider require that the launch service provider pays a partial * * * * * * * * The Grouppurchasesin-orbitinsuranceforallofthesatellites If asatelliteisdamagedoritsperformanceimpaireddueto Launch insuranceisnormallyeffectiveforaperiodofoneyear

hr-at liability Third-party Loss ofincome insured oritssubcontractors Deliberate orplannednon-performanceofobligationsbythe Radio frequencydamage(excludesphysicaldamage) naturally occurinouterspace Nuclear reactionandradioactivepollutionotherthosewhich confiscation Government that targetacommunicationssatellite Nuclear weapons, laser weapons, or directed-energy War, insurgency, oractsofterror s third-party liability or damage s third-partyliabilityordamage beams beams -

•Broadcaster decline, whichcouldadverselyimpacttheGroup’s businessresults. their subscriptions,thecumulativenumberofsubscriberswould cooperation withotherpayTVoperatorsandBSConditionalAccess adversely impacttheGroup’s businessresults. the Group’s commissionincomewoulddecrease,whichcould or thenumberofsubscribersdecreasesduetoraisingfees, if theloweringoffeescannotbeoffsetbyanincreaseinsubscribers, business performancecouldbeadverselyaffected. out salescampaignsandofferingincentivestoagents,theGroup’s developing contents, strengthening promotional activities, carrying does not increase asprojected despite marketing activities such as the Group’s projections in the future. If the number of subscriptions guarantee thatthenumberofsubscriptionswillincreaseinlinewith at 3,829 Group’s profitgrowth.Thenumberofsubscriptionsintotalstood The acquisitionandretentionofsubscribersisamajorfactorinthe •Subscriber acquisitionandretention 3. the Group’s businessresults. consolidation ofabroadcastingcompany, couldadverselyimpact or adecreaseinthenumberofchannelsduetoabolition or adeclineinprogrammingqualitycausedbyfinancialdifficulties, financial conditions.Therefore,thecessationofbroadcastservices ing companies,includingsomethatareexperiencingchallenging The Groupprovidesbroadcastservicesforaround100- all available measures, including legal actions such as lawsuits. all availablemeasures,includinglegalactionssuchaslawsuits. Systems Co.,Ltd.,whichownstherighttoB-CAScard,bytaking have beencontinuouslypostedonInternetbulletinboards. of alterationsthatcouldenableillegalviewingpayTVprograms ferent payTVoperators,methodsofalteringthecardandpractices Regarding theB-CAScard,whichcanbeusedindividuallybydif - •Risks RelatedtoSecurityofICCards Group’s businessresults. deterioration in contract conditions, could adversely impact the the failureofnegotiationsconcerningcontractconditions,ora valid foreitherone-year, three-year, orfive-year periods.Therefore, but alsoadverselyaffecttheGroup’s businessperformance. on thesounddiffusionofmultichannelpayTVservicesasawhole

Platform Service Risks RelatedtoMultichannelPayTVBroadcasting Should alarger-than-expected numberof subscriberscancel The Group willstrictlydeal with cases of illegal viewingin Such practicescouldnotonlyhavesignificantadverseeffects The Group’s consignment agreements with Broadcasters holdtheright todetermineviewing fees.Therefore, thousand as of March 31, 2013. However, there is no -related risks broadcasters are broadcasters are 45

Corporate Data Financial Section Corporate Social Corporate Governance Review of Operations Special Feature To Our Shareholders Consolidated Financial Satellite Basics/Glossary Responsibility and Investors Highlights Financial Section Consolidated Balance Sheets SKY Perfect JSAT Holdings Inc. and Consolidated Subsidiaries March 31, 2012 and 2013

Thousands of Millions of yen U.S. dollars (Note 1) 2012 2013 2013 ASSETS Current Assets: Cash and cash equivalents (Note 14) ¥ 66,405 ¥ 74,473 $ 792,348 Short-term investments (Notes 3 and 14) 80 — — Receivables (Note 14): Trade 17,548 19,718 209,793 Affiliated companies 354 95 1,008 Other 3,597 578 6,144 Allowance for doubtful receivables (532) (715) (7,612) Inventories: Broadcasting rights 4,454 3,483 37,052 Other 855 834 8,877 Deferred tax assets (Note 9) 1,675 1,354 14,408 Short-term loans (Note 14) 1,898 2,115 22,498 Other 3,272 2,497 26,577 Total current assets 99,606 104,432 1,111,093

Property and Equipment: Buildings and structures 22,013 21,873 232,716 Machinery, equipment and vehicles 52,958 58,104 618,190 Telecommunications satellites 225,555 250,285 2,662,893 Land 3,041 3,041 32,357 Lease assets 6,177 4,009 42,649 Construction in progress 21,365 670 7,126 Other 12,841 11,473 122,065 Total property and equipment 343,950 349,455 3,717,996 Accumulated depreciation (189,862) (207,696) (2,209,765) Net property and equipment 154,088 141,759 1,508,231

Investments and Other Assets: Software 4,645 4,369 46,482 Goodwill 8,849 7,970 84,800 Investment securities (Notes 3 and 14) 12,717 12,434 132,292 Investment in and advances to affiliated companies (Note 14) 10,288 9,315 99,106 Deferred tax assets (Note 9) 7,232 7,609 80,959 Other 2,813 2,651 28,208 Allowance for doubtful accounts (105) (52) (558) Total investments and other assets 46,439 44,296 471,289 Total ¥ 300,133 ¥ 290,487 $ 3,090,613 See notes to consolidated financial statements.

46 SKY Perfect JSAT Holdings Inc. Annual Report2013 Current portionoflong-termdebt(Notes4and14) Current Liabilities: LIABILITIES ANDEQUITY Total Total equity Minority interests Total Foreigncurrencytranslationadjustments Deferredgainonderivativesunderhedgeaccounting Unrealizedgain(loss)onavailable-for-sale securities Accumulated othercomprehensiveincome Treasury stock—atcost,80,518sharesin2012and2013 Retained earnings Stock acquisitionrights Capital surplus Issued,3,446,037sharesin2012and2013 Authorized,14,500,000shares; Common stock Equity (Notes7,8and20): Commitments andContingentLiabilities(Notes1015): Total long-termliabilities Other Asset retirementobligations(Note6) Deferred taxliabilities(Note9) Liabilities forretirementbenefits(Note5) Long-term debt(Notes4and14) Long-Term Liabilities: Total currentliabilities Other Asset retirementobligations(Note6) Accrued bonus Subscription feesreceived(Note14) Income taxespayable(Note14) Affiliatedcompanies Trade Payables (Note14): ¥ ¥ 300,133 185,052 184,967 158,194 13,540 22,238 10,000 59,696 48,966 55,385 13,210 14,621 (1,619) (3,884) 4,272 2,214 3,538 8,576 4,449 2012 109 706 289 516 184 (93) 85 22 Millions ofyen ¥ ¥ 9,8 $3,090,613 $ 290,487 192,693 192,282 158,194 27,882 10,000 46,464 37,142 51,330 10,234 130,398 $ 16,018 12,256 (1,137) (3,884) 2,709 1,985 3,736 9,366 2,451 2013 411 368 859 892 300 478 227 — Thousands of U.S. dollars 2,050,148 2,045,777 1,683,092 (Note1) 296,648 106,394 494,346 395,171 546,119 108,883 170,417 (12,081) (41,323) 28,810 21,121 39,749 99,648 26,079 4,371 3,911 9,136 9,495 3,194 5,084 2,416 2013 — 47

Corporate Data Financial Section Corporate Social Corporate Governance Review of Operations Special Feature To Our Shareholders Consolidated Financial Satellite Basics/Glossary Responsibility and Investors Highlights Financial Section Consolidated Statements of Income SKY Perfect JSAT Holdings Inc. and Consolidated Subsidiaries For the years ended March 31, 2012 and 2013

Thousands of Millions of yen U.S. dollars (Note 1) 2012 2013 2013 Revenues (Note 19) ¥ 155,242 ¥ 159,610 $ 1,698,156 Operating Expenses: Cost of services (Notes 11 and 19) 99,062 106,168 1,129,568 Selling, general and administrative expenses (Notes 12 and 19) 38,694 37,289 396,728 Operating Income (Note 19) 17,486 16,153 171,860

Other Income (Expenses): Interest and dividend income 507 445 4,737 Interest expense (Note 4) (1,192) (671) (7,134) Foreign currency transaction gain (loss)—net (46) 72 770 Equity in net losses of affiliated companies (78) (8) (87) Commission fee — (385) (4,096) Gain on sales of investment securities (Note 3) 20 — — Gain on reversal of stock acquisition rights 40 22 235 Gain on redemption of securities — 52 548 Impairment loss (Note 13) (493) (124) (1,317) Loss on disposals of property and equipment (34) — — Loss on sales of investment securities (248) — — Write-down of investment securities (Note 3) (123) — — Other—net 58 88 924 Other Expenses—Net (1,589) (509) (5,420)

Income before Income Taxes and Minority Interests 15,897 15,644 166,440

Income Taxes (Note 9): Current 6,814 6,387 67,958 Deferred 538 (408) (4,346) Total Income Taxes 7,352 5,979 63,612

Net Income before Minority Interests 8,545 9,665 102,828

Minority Interests in Net Loss (24) (18) (189) Net Income (Note 17) ¥ 8,569 ¥ 9,683 $ 103,017

U.S. dollars Yen (Note 1) 2012 2013 2013 Per Share of Common Stock (Notes 2.t and 17): Net Income Basic ¥ 2,546.26 ¥ 2,877.00 $ 30.61 Diluted — — — Cash dividends applicable to the year 1,200.00 1,200.00 12.77 See notes to consolidated financial statements.

48 SKY Perfect JSAT Holdings Inc. Annual Report2013 See notestoconsolidatedfinancialstatements. For theyearsendedMarch31,2012and2013 SKY PerfectJSAT HoldingsInc.andConsolidatedSubsidiaries Consolidated StatementsofComprehensiveIncome Financial Section Net incomebeforeminorityinterests Shareofothercomprehensiveincomeinaffiliatedcompanies Foreigncurrencytranslationadjustments Deferredgainonderivativesunderhedgeaccounting Unrealizedgainonavailable-for-sale securities Other comprehensiveincome(Note16): Minorityinterests Ownersoftheparent Total comprehensiveincomeattributableto: Comprehensive income Total othercomprehensiveincome accountedforusingtheequitymethod ¥ ¥ 9,089 8,545 9,065 2012 (204) 449 272 520 (24) 3 Millions ofyen ¥ ¥ 11,376 11,358 9,665 1,693 2013 483 233 947 (18) 30 102,828 $ 121,034 $ Thousands of U.S. dollars (Note 1) 120,845 10,083 18,017 5,143 2,474 2013 (189) 317 49

Corporate Data Financial Section Corporate Social Corporate Governance Review of Operations Special Feature To Our Shareholders Consolidated Financial Satellite Basics/Glossary Responsibility and Investors Highlights Financial Section Consolidated Statements of Changes in Equity SKY Perfect JSAT Holdings Inc. and Consolidated Subsidiaries For the years ended March 31, 2012 and 2013

Millions of yen Accumulated other comprehensive Outstanding income number of Stock Deferred Common Capital Retained Treasury Unrealized Foreign Minority shares of acquisition gain (loss) on Total Total equity stock surplus earnings stock gain (loss) on currency interests common rights derivatives available-for-sale translation stock under hedge securities adjustments accounting Balance at April 1, 2011 3,365,519 ¥ 10,000 ¥158,194 ¥ 62 ¥ 17,707 ¥ (3,884) ¥ (363) ¥ (344) ¥ (1,416) ¥ 179,956 ¥ 109 ¥ 180,065 Net income 8,569 8,569 8,569 Cash dividends (4,038) (4,038) (4,038) Net change in the year (40) 270 453 (203) 480 (24) 456 Balance at April 1, 2012 3,365,519 ¥ 10,000 ¥158,194 ¥ 22 ¥ 22,238 ¥ (3,884) ¥ (93) ¥ 109 ¥ (1,619) ¥ 184,967 ¥ 85 ¥ 185,052 Net income 9,683 9,683 9,683 Cash dividends (4,039) (4,039) (4,039) Net change in the year (22) 952 259 482 1,671 326 1,997 Balance at March 31, 2013 3,365,519 ¥ 10,000 ¥158,194 ¥ — ¥ 27,882 ¥ (3,884) ¥ 859 ¥ 368 ¥ (1,137) ¥ 192,282 ¥ 411 ¥ 192,693

Thousands of U.S. dollars (Note 1) Accumulated other comprehensive Outstanding income number of Stock Deferred Common Capital Retained Treasury Unrealized Foreign Minority shares of acquisition gain (loss) on Total Total equity stock surplus earnings stock gain (loss) on currency interests common rights derivatives available-for-sale translation stock under hedge securities adjustments accounting Balance at April 1, 2012 3,365,519 $106,394 $1,683,092 $ 235 $ 236,599 $ (41,323) $ (984) $ 1,158 $ (17,224) $ 1,967,947 $ 903 $ 1,968,850 Net income 103,017 103,017 103,017 Cash dividends (42,968) (42,968) (42,968) Net change in the year (235) 10,120 2,753 5,143 17,781 3,468 21,249 Balance at March 31, 2013 3,365,519 $106,394 $1,683,092 $ — $ 296,648 $ (41,323) $ 9,136 $ 3,911 $ (12,081) $ 2,045,777 $ 4,371 $ 2,050,148 See notes to consolidated financial statements.

50 SKY Perfect JSAT Holdings Inc. Annual Report2013 For theyearsendedMarch31,2012and2013 SKY PerfectJSAT HoldingsInc.andConsolidatedSubsidiaries Consolidated StatementsofCashFlows Financial Section See notestoconsolidatedfinancialstatements. Proceeds frompaid-incapitalminorityshareholders Repayments oflong-termdebt Proceeds fromlong-termdebt Repayments offinanceleaseobligations Financing Activities: Netcash(usedin)providedbyinvestingactivities Other—net Payments foradditionalacquisitionofsharesaffiliates Proceeds fromcollectionoflong-termloans Proceeds fromsalesandredemptionofinvestmentsecurities Purchases ofinvestmentsecurities Purchases ofintangiblefixedassets Proceeds fromsalesofpropertyandequipment Purchases ofpropertyandequipment Proceeds fromsalesandredemptionofshort-terminvestments Purchases ofshort-terminvestments Investing Activities: Netcashprovidedbyoperatingactivities Incometaxespaid Interestpaid Interestanddividendsreceived Subtotal Other—net Increase(decrease)indeferredrevenues Decreaseinsubscriptionfeesreceived Increaseinpayables—tradeandaffiliatedcompanies Decrease(increase)inotherreceivables Decrease(increase)inbroadcastingrights Increaseinreceivables—tradeandaffiliatedcompanies Write-downofinvestmentsecurities Lossondisposalsofpropertyandequipment Lossonsalesofinvestmentsecurities Equityinnetlossesofaffiliatedcompanies Interestexpense Cash andcashequivalents,end ofyear Interestanddividendincome Cash andcashequivalents,beginning ofyear Netcashusedinfinancing activities Amortizationofgoodwill Net increaseincashand equivalents Dividends paidtominorityshareholders Income beforeincometaxesandminorityinterests Operating Activities: Impairmentloss Dividends paid Foreign currencytranslationadjustments oncashandequivalents Depreciationandamortization(Note19) Adjustments for: ¥ ¥ (33,374) (11,018) (34,993) 22,787 39,977 45,847 59,500 15,897 66,405 24,892 (2,085) (2,853) (1,850) (6,347) (5,131) (1,244) (1,527) (4,034) 4,500 1,995 1,948 2,229 3,237 1,192 6,905 2012 (974) (152) (634) (537) (507) 265 505 123 228 888 493 (28) (87) (74) 65 34 78 — — Millions ofyen ¥ ¥ (13,591) (11,119) (11,646) (19,402) 38,372 47,048 66,405 26,116 564 166,440 $ 15,644 443 792,348 $ 74,473 (2,120) (1,938) (8,408) (2,976) (1,840) (4,035) 1,949 1,568 2,810 1,436 3,007 8,068 2013 (244) (974) (694) (445) 350 426 643 972 671 878 124 217 68 98 — — — — — (6) 0 8 Thousands of U.S. dollars (Note 1) (144,599) (118,302) (123,908) (206,424) 408,257 500,565 706,506 277,864 (22,553) (10,367) (20,623) (89,459) (31,662) (19,573) (42,929) 20,738 16,679 29,903 15,277 31,993 10,337 85,842 (2,585) (7,379) (4,737) 3,724 1,040 4,530 6,842 7,134 9,343 1,317 2,311 2013 725 (67) 87 — — — — — (1) 51

Corporate Data Financial Section Corporate Social Corporate Governance Review of Operations Special Feature To Our Shareholders Consolidated Financial Satellite Basics/Glossary Responsibility and Investors Highlights Financial Section Notes to Consolidated Financial Statements SKY Perfect JSAT Holdings Inc. and Consolidated Subsidiaries

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL from the acquisition of JSAT Corporation (JSAT) and Space Com- STATEMENTS munications Corporation (SCC) is amortized over 15 years. The accompanying consolidated financial statements have been All significant intercompany balances and transactions have been prepared in accordance with the provisions set forth in the Japanese eliminated in consolidation. All material unrealized profit included Financial Instruments and Exchange Act and its related accounting in assets resulting from transactions within the Companies are regulations and in accordance with accounting principles generally eliminated. accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements of accounting b. Unification of Accounting Policies Applied to Foreign principles generally accepted in the United States of America and Subsidiaries for the Consolidated Financial Statements International Financial Reporting Standards. In May 2006, the Accounting Standards Board of Japan (the “ASBJ”) In preparing these consolidated financial statements, certain issued ASBJ Practical Issues Task Force (PITF) No. 18, “Practical reclassifications and rearrangements have been made to the consoli- Solution on Unificationof Accounting Policies Applied to Foreign dated financial statements issued domestically in order to present Subsidiaries for the Consolidated Financial Statements.” PITF No. them in a form that is more familiar to readers outside Japan. 18 prescribes that the accounting policies and procedures applied In addition, certain reclassifications have been made in the 2012 to a parent company and its subsidiaries for similar transactions and consolidated financial statements to conform to the classifications events under similar circumstances should in principle be unified for used in 2013. the preparation of the consolidated financial statements. However The consolidated financial statements are statedin yen, the financial statements prepared by foreign subsidiaries in accordance currency of the country in which SKY Perfect JSAT Holdings Inc. with either International Financial Reporting Standards or the gener- (the “Company”) is incorporated and operates. The translations of ally accepted accounting principles in the United States of America yen amounts into U.S. dollar amounts are included solely for the tentatively may be used for the consolidation process, except for convenience of readers outside Japan and have been made at the the following items which should be adjusted in the consolidation rate of ¥93.99 to $1, the approximate rate of exchange at March 31, process so that net income is accounted for in accordance with 2013. Such translations should not be construed as representations Japanese GAAP unless they are not material: 1) amortization of that the yen amounts could be converted into U.S. dollars at that goodwill; 2) scheduled amortization of actuarial gain or loss of pen- or any other rate. sions that has been directly recorded in the equity; 3) expensing capitalized development costs of research and development (R&D); 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 4) cancellation of the fair value model accounting for property, plant a. Consolidation and equipment and investment properties and incorporation of the The consolidated financial statements as of March 31, 2013, include cost model accounting; and 5) exclusion of minority interests from the accounts of the Company and its significant subsidiaries (together, net income, if contained in net income. the “Companies”). Consolidation of the remaining subsidiaries would not have a material effect on the accompanying consolidated c. Unification of Accounting Policies Applied to Foreign financial statements. Associated Companies for the Equity Method The numbers of consolidated subsidiaries and affiliated com- In March 2008, the ASBJ issued ASBJ Statement No.16, “Account- panies in which investments are accounted for under the equity ing Standard for Equity Method of Accounting for Investments”. method, at March 31, 2012 and 2013, are summarized below. The new standard requires adjustments to be made to conform the associate’s accounting policies for similar transactions and 2012 2013 events under similar circumstances to those of the parent company Consolidated subsidiaries 9 10 when the associate’s financial statements are used in applying the Affiliated companies: equity method unless it is impracticable to determine adjustments. Unconsolidated subsidiaries 4 4 In addition, financial statements prepared by foreign associated Associated companies 8 7 companies in accordance with either International Financial Reporting Under the control or influence concept, those companies in Standards or the generally accepted accounting principles in the which the Company, directly or indirectly, is able to exercise control United States of America tentatively may be used in applying the over operations are consolidated, and those companies over which equity method if the following items are adjusted so that net income the Companies have the ability to exercise significant influence are is accounted for in accordance with Japanese GAAP unless they are accounted for under the equity method. not material: 1) amortization of goodwill; 2) scheduled amortization Investments in unconsolidated subsidiaries and associated of actuarial gain or loss of pensions that has been directly recorded companies are accounted for under the equity method. in the equity; 3) expensing capitalized development costs of R&D; Goodwill, which represents the excess of the cost of an acquisi- 4) cancellation of the fair value model accounting for property, plant, tion over the fair value of the net assets of the acquired subsidiaries and equipment and investment properties and incorporation of the and associated companies at the date of acquisition, is amortized on cost model accounting; and 5) exclusion of minority interests from a straight-line basis over its estimated useful life. Goodwill incurred net income, if contained in net income.

52 SKY Perfect JSAT Holdings Inc. securities intheconsolidatedbalance sheets. Securities areincludedinshort-terminvestmentsandinvestment Standard for Business Combinations.” for businesscombinations,ASBJStatementNo.21,“Accounting In December2008,theASBJissuedarevisedaccountingstandard Annual Report2013 intent andabilitytoholdmaturity, are statedatamortizedcost. ment’s intent. debt securitiesoravailable-for g. fiscal yearisimmaterial. method tothefirst-in,first-outmethod. changed its Effective fromthefiscalyearendedMarch31,2013,Company (Change invaluationmethodofmerchandise) selling value. the first-in,first-outmethodformerchandiseandstorage,or net by the specificidentificationmethodforbroadcastingrights,and capitalized andthenamortizedbasedonthenumberofshowings. purchase rightsrelatingtobroadcastingofprograms,whichare Inventories consistprimarilyofbroadcastingrights.TheCompanies f. Inventories due withinthreemonthsofthedateacquisition. mutual funds investing in changes invalue. convertible intocashandthatareexposedtoinsignificantriskof Cash equivalents are short-term investments that arereadily e. CashEquivalents or afterApril1,2011. standard wasapplicabletobusinesscombinationsundertakenon the proceduresusedinpurchasepriceallocation.Therevised all oftheliabilitiesassumedhavebeenidentifiedafterareview after reassessingandconfirmingthatalloftheassetsacquired purchase gaininprofitorlossimmediatelyontheacquisitiondate Under therevisedstandard,acquirerrecognizesbargain be systematically amortized over a period not exceeding 20 years. standard provided for a bargain purchase gain (negative goodwill) to are capitalizedasanintangibleasset.(3)Thepreviousaccounting development costs(IPR&D)acquiredinthebusinesscombination as incurred.Undertherevisedstandard,in-processresearchand counting standard required R&D costs to be charged to income method ofaccountingisnolongerallowed.(2)Thepreviousac- only by the purchase method. As a result, the pooling of interests revised standard requires accounting for business combinations under the revised accounting standard are as follows: (1) The d.

Securities Business Combinations Marketable available-for-sale securitiesarestatedatfairvalue Held-t Securities are classified astrading securities, held-to-maturity The impactonincomeandlossfortheconsolidatedcurrent Inventories arestatedatthelowerofcost,determinedby Cash equivalentsincludetimedeposits,commercialpaper, and o-maturity debt securities, for which there is the positive valuation method for merchandise from moving-average valuation method for merchandise from moving-average bonds, all of which mature or become bonds, all of which mature or become -sale securitiesdependingonmanage - Major accounting changes Major accounting changes The allowancefordoubtfulreceivablesisstatedinamountscon h. AllowanceforDoubtfulReceivables by achargetoincome. declines infairvalue,securitiesarereducedtonetrealizablevalue determined bythemoving-averagemethod.Forother-than-temporary principally asfollows: assets. Theestimatedusefullivesforpropertyandequipmentare by thestraight-linemethodoverestimatedusefullivesof Property andequipmentarestatedatcost.Depreciationiscomputed andEquipment i. Property outstanding. experience andevaluationofpotentiallossesinthereceivables sidered to be appropriate based on the Companies’ past credit loss determined basedonthemoving-averagemethod. in aseparatecomponentofequity. Thecostofsecuritiessoldis with unrealizedgainsandlosses,netofapplicabletaxes,reported on theprojected retirement benefitobligationrequired atthebalance The tory multi-employerpensionplan covering all oftheiremployees. j. contribution amounts. Board Members. ees o severance indemnityplanscoveringsubstantiallyalloftheiremploy - The subsidiariesoftheCompanyhaveunfundeddefinedbenefit l. tion oftheassetornetsellingpriceatdisposition. discounted cash flows from the continued use and eventual disposi- asset exceedsitsrecoverableamount,whichisthehigherof be measured as the amount by which the carrying amount of the disposition oftheassetorgroup.Theimpairmentlosswould cash flows expected to result from the continued use and eventual asset orgroupexceedsthesumofundiscountedfuture impairment losswouldberecognizedifthecarryingamountofan ing amountofanassetorgroupmaynotberecoverable.An whenever eventsorchangesincircumstanceindicatethecarry- The Comp k. (mainly 5years). amortized onastraight-linemethodoveritsestimatedusefullife Software isstatedatcostlessaccumulatedamortizationand Other Telecommunications satellites Machinery, equipmentandvehicles Buildings andstructures

Retirement andPensionPlans Impairment forLong-LivedAssets Software costs of the multi-employer plan are accrued based on the Nonmarketable available-for-sale securities arestatedatcost The Companies record the liabilities for retirement benefits based The Companies recordthe liabilities forretirement benefits based Certain subsidiariesoftheCompany alsoparticipateinacontribu- ther than directors, executive officers and Audit & Supervisory anies review their long-lived assets for impairment 11–15 years 2–20 years 2–15 years 3–50 years 53 -

Corporate Data Financial Section Corporate Social Corporate Governance Review of Operations Special Feature To Our Shareholders Consolidated Financial Satellite Basics/Glossary Responsibility and Investors Highlights sheet date to provide for future payments. Unrecognized actuarial o. Leases differences are amortized on a straight-line method over the aver- In March 2007, the ASBJ issued ASBJ Statement No. 13, “Account- age remaining service years of the employees or a shorter period ing Standard for Lease Transactions,” which revised the previous (10–19 years), starting from the year following the year in which the accounting standard for lease transactions. The revised accounting differences occur. Unrecognized prior service cost is amortized on a standard for lease transactions was effective for fiscal years begin- straight-line method over the average remaining service years of the ning on or after April 1, 2008. employees (12, 17 years), starting from the year in which it occurs. Under the previous accounting standard, finance leases that The annual provision for retirement benefits for directors, execu- were deemed to transfer ownership of the leased property to tive officers and Audit & Supervisory Board Members are calculated the lessee were capitalized. However, other finance leases were as a liability at the amount that would be required if they retired at permitted to be accounted for as operating lease transactions if each balance sheet date. certain “as if capitalized” information was disclosed in the note to the lessee’s financial statements. The revised accounting standard m. Asset Retirement Obligations requires that all finance lease transactions should be capitalized In March 2008, the ASBJ published ASBJ Statement No. 18, “Account- by recognizing lease assets and lease obligations in the balance ing Standard for Asset Retirement Obligations” and ASBJ Guidance sheet. In addition, the revised accounting standard permits leases No. 21, “Guidance on Accounting Standard for Asset Retirement that existed at the transition date and do not transfer ownership Obligations.” Under this accounting standard, an asset retirement of the leased property to the lessee to continue to be accounted obligation is defined as a legal obligation imposed either by law or for as operating lease transactions. contract that results from the acquisition, construction, development The Companies applied the revised accounting standard effec- and the normal operation of a tangible fixed asset and is associated tive April 1, 2008. In addition, the Companies continue to account with the retirement of such tangible fixed asset. The asset retirement for leases that existed at the transition date and do not transfer obligation is recognized as the sum of the discounted cash flows ownership of the leased property to the lessee as operating lease required for the future asset retirement and is recorded in the period in transactions. All other leases are accounted for as operating leases. which the obligation is incurred if a reasonable estimate can be made. If a reasonable estimate of the asset retirement obligation cannot p. Income Taxes be made in the period the asset retirement obligation is incurred, The provision for income taxes is computed based on the pretax the liability should be recognized when a reasonable estimate of income included in the consolidated statements of income. The asset retirement obligation can be made. Upon initial recognition asset-and-liability approach is used to recognize deferred tax assets of a liability for an asset retirement obligation, an asset retirement and liabilities for the expected future tax consequences of temporary cost is capitalized by increasing the carrying amount of the related differences between the carrying amounts and the tax bases of fixed asset by the amount of the liability. The asset retirement cost assets and liabilities. Deferred taxes are measured by applying is subsequently allocated to expense through depreciation over the currently enacted tax laws to the temporary differences. remaining useful life of the asset. Over time, the liability is accreted The Companies file a tax return under the consolidated corporate to its present value each period. Any subsequent revisions to the tax system, which allows companies to base tax payments on the timing or the amount of the original estimate of undiscounted cash combined profits or losses of the parent company and its wholly flows are reflected as an adjustment to the carrying amount of the owned domestic subsidiaries. liability and the capitalized amount of the related asset retirement cost. q. Foreign Currency Transactions n. Stock Options All monetary receivables and payables denominated in foreign In December 2005, the ASBJ issued ASBJ Statement No. 8, “Ac- currencies are translated into yen at the exchange rates at the counting Standard for Stock Options,” and related guidance. The consolidated balance sheet date. The foreign exchange gains and new standard and guidance are applicable to stock options newly losses from transactions are recognized in the consolidated state- granted on and after May 1, 2006. This standard requires companies ments of income to the extent that they are not hedged by forward to measure the cost of employee stock options based on the fair exchange contracts. value at the date of grant and recognize compensation expense over the vesting period as consideration for receiving goods or r. Foreign Currency Financial Statements services. The standard also requires companies to account for stock The balance sheet accounts of the consolidated foreign subsidiaries options granted to non-employees based on the fair value of either are translated into yen at the current exchange rate as of the balance the stock option or the goods or services received. In the balance sheet date except for equity, which is translated at the historical sheet, the stock option is presented as a stock acquisition right as a rate. Differences arising from such translation are shown as “For- separate component of equity until exercised. The standard covers eign currency translation adjustments” under accumulated other equity-settled, share-based payment transactions, but does not comprehensive income in a separate component of equity. Revenue cover cash-settled, share-based payment transactions. In addition, and expense accounts of the consolidated foreign subsidiaries are the standard allows unlisted companies to measure options at their translated into yen at the average exchange rate. intrinsic value if they cannot reliably estimate fair value.

54 SKY Perfect JSAT Holdings Inc. (4) (3) counting St In December2009,theASBJissuedStatementNo.24,“Ac- of commonsharesoutstandingfortheperiod. available tocommonshareholdersbytheweighted-averagenumber Basic netincomepershareiscomputedbydividing The Companies use derivative financial instruments tomanagetheir Annual Report2013 (1) under thisstandardandguidanceareasfollows: Accounting ChangesandErrorCorrections.”treatments and ASBJGuidanceNo.24,“GuidanceonAccountingStandardfor u. the year. the respectiveyearsincludingdividendstobepaidafterendof solidated statementsofincomerefertothedividendsapplicable t. are translatedattheforwardexchangecontractrates. of thehedgedtransactions. items, gainsorlossesonderivativesaredeferreduntilmaturity fectiveness betweenthehedginginstrumentsandhedged qualify forhedgeaccountingbecauseofhighcorrelationandef- b) forderivativesusedhedgingpurposes,ifsuch tions arerecogniz measured atfairvalue,andgainsorlossesonderivativetransac- a) allderivativesarerecognizedaseitherassetsorliabilitiesand are classifiedandaccountedforasfollows: for tradingorspeculativepurposes. currency exchange risk. TheCompanies donotenterintoderivatives forward contractsareutilizedbytheCompaniestoreduceforeign exposures tofluctuationsinforeignexchange.Foreignexchange s. (2)

those statementsarerestated. When anerrorinprior-period financialstatementsisdiscovered, Corrections ofPrior-Period Errors period ofthechangeandfuture periods. is accountedforprospectivelyif thechangeaffectsboth period ofthechangeifaffectsthatonly, and A changeinanaccountingestimateisaccountedforthe Changes inAccountingEstimates the newpresentation. period financialstatementsarereclassifiedinaccordancewith When thepresentationoffinancialstatementsischanged,prior- Changes inPresentation sitional provisions,inwhichcasetheentityshallcomplywith unless therevisedaccountingstandardincludesspecifictran accounting standard,thenewpolicyisappliedretrospectively When anewaccountingpolicyisappliedwiththerevisionofan Changes inAccountingPolicies Accounting ChangesandErrorCorrections Per ShareInformation Derivative FinancialInstruments the specifictransitionalprovisions. Cash dividendspersharepresentedintheaccompanyingcon- Certain liabilitieshedgedbyforeignexchangeforwardcontracts Derivative financialinstrumentsandforeigncurrencytransactions andard for Accounting Changes and Error Corrections,” ed in the consolidated statements of income and ed in the consolidated statements of income and -

count On May17,2012,theASBJissuedStatementNo.26,“Ac- Accounting StandardforRetirementBenefits v. 1, 2013,andfor(c)aboveareeffective forthebeginningofannual effective fortheendofannualperiods beginningonorafterApril This accountingstandardandthe guidancefor(a)and(b)aboveare (c) (b) (a) Major changesareasfollows: through 2009. guidances, andfollowedbypartialamendmentsfromtimeto with effective date of April 1, 2000, and the other related practical that hadbeenissuedbytheBusinessAccountingCouncilin1998 which replacedtheAccountingStandardforRetirementBenefits 25, “GuidanceonAccountingStandardfor Retirement Benefits,” of annual periods beginning on or after April 1, 2015, subject to of annualperiods beginningonorafterApril1, 2015,subjectto periods beginningonorafterApril 1,2014,orforthebeginning

profi losses andpastservicecoststhatareyettoberecognizedin “deficit orsurplus”),adjustedbysuchunrecognizedamounts, tween retirementbenefitobligationsandplanassets(hereinafter, are notrecognizedinthebalancesheet,anddifferencebe- past servicecoststhatareyettoberecognizedinprofitorloss Under thecurrentrequirements,actuarialgainsandlosses Treatment inthebalancesheet New AccountingPronouncements future salaryincreases. to periodsandrelatingthediscountrateexpected ments relatingtothemethodofattributingexpectedbenefit The revisedaccountingstandardalsomadecertainamend- future salaryincreases benefit toperiodsandrelatingthediscountrateexpected Amendments relating tothemethod ofattributing expected current periodshallbetreatedasreclassificationadjustments. income in prior periods and then recognized in profit or loss in the past servicecoststhatwererecognizedinothercomprehensive in othercomprehensiveincome,actuarialgainsandlosses have notyetbeenrecognizedinprofitorlossshallbeincluded losses andpastservicecoststhataroseinthecurrentperiod working livesoftheemployees.However, actuarialgainsand a ce loss. Thoseamountswouldberecognizedinprofitorlossover nize actuarialgainsandlossespastservicecostsinprofitor The revisedaccountingstandarddoesnotchangehowtorecog- comprehensive income Treatment inthestatementofincomeand statementof retirement benefits). liability (liabilityforretirementbenefits)orasset(asset and anyresultingdeficitorsurplusshallberecognizedas a other comprehensiveincome),afteradjustingfortaxeffects, is recognizedasaliabilityorasset. ing Standard for Retirement Benefits” and ASBJ Guidance No. Under the revised accounting standard, actuarial gains and Under therevisedaccountingstandard,actuarialgainsand rtain period no longer than the expected average remaining t or loss shall be recognized within equity (accumulated 55

Corporate Data Financial Section Corporate Social Corporate Governance Review of Operations Special Feature To Our Shareholders Consolidated Financial Satellite Basics/Glossary Responsibility and Investors Highlights certain disclosure in March 2015, both with earlier application being Thousands of U.S. dollars permitted from the beginning of annual periods beginning on or 2013 after April 1, 2013. However, no retrospective application of this Cost Unrealized Unrealized accounting standard to consolidated financial statements in prior gain loss Fair value periods is required. Securities classified as: The Company expects to apply the revised accounting standard Available-for-sale for (a) and (b) above from the end of the annual period beginning Equity securities $ 17,243 $ 2,840 $ 321 $ 19,762 on April 1, 2013, and for (c) above from the beginning of the annual Debt securities 54,910 5,309 1,344 58,875 period beginning on April 1, 2014, and is in the process of measuring Other 4,306 94 59 4,341 the effects of applying the revised accounting standard in future Held-to-maturity applicable periods. Debt securities $ 10,639 $ — $ 472 $ 10,167 Proceeds from sales of available-for-sale securities for the year 3. SHORT-TERM INVESTMENTS AND INVESTMENT ended March 31, 2012, were ¥224 million. SECURITIES Gross realized gains and losses on these sales, computed on Short-term investments and investment securities as of March 31, the moving-average cost basis, were ¥20 million and ¥248 million, 2012 and 2013, consisted of the following: respectively. Thousands of Millions of yen The information of available-for-sale securities which were sold U.S. dollars during the year ended March 31, 2013, was as follows: 2012 2013 2013 Short-term investments: Debt securities ¥ 80 ¥ — $ — Millions of yen Other — — — 2013 Realized Realized Total ¥ 80 ¥ — $ — Proceeds Investment securities: gain loss Equity securities ¥ 4,933 ¥ 5,378 $ 57,215 Available-for-sale: Debt securities 6,781 6,534 69,514 Equity securities ¥ 35 ¥ 0 ¥ 0 Other 1,003 522 5,563 Other 1,940 15 — Total ¥ 12,717 ¥ 12,434 $ 132,292 Total ¥ 1,975 ¥ 15 ¥ 0

The costs and aggregate fair values of certain short-term investments and investment securities at March 31, 2012 and 2013, were Thousands of U.S. dollars as follows: 2013 Realized Realized Proceeds Millions of yen gain loss 2012 Available-for-sale: Unrealized Unrealized Equity securities $ 371 $ 1 $ 4 Cost gain loss Fair value Other 20,642 158 — Securities classified as: Total $ 21,013 $ 159 $ 4 Available-for-sale Equity securities ¥ 1,621 ¥ 0 ¥ 229 ¥ 1,392 Debt securities 6,207 122 468 5,861 Write-down of available-for-sale securities for the year ended Other 413 — 49 364 March 31, 2012, was ¥123 million. Held-to-maturity The carrying values of debt securities and other investments by Debt securities ¥ 1,000 ¥ — ¥ 117 ¥ 883 contractual maturities for securities classified as available-for-sale and held-to-maturity at March 31, 2013, were as follows: Millions of yen 2013 Millions of Thousands of Unrealized Unrealized yen U.S. dollars Cost gain loss Fair value 2013 2013 Securities classified as: Available-for-sale Due within one year or less ¥ — $ — Equity securities ¥ 1,621 ¥ 266 ¥ 30 ¥ 1,857 Due after one year through five years — — Debt securities 5,161 499 126 5,534 Due after five years through ten years 1,092 11,613 Other 405 9 6 408 Due after ten years 5,534 58,878 Held-to-maturity Total ¥ 6,626 $ 70,491 Debt securities ¥ 1,000 ¥ — ¥ 44 ¥ 956

56 SKY Perfect JSAT Holdings Inc. as follows: The statusoftheselinescreditatMarch31,2012and2013,is to achievemoreefficientandflexiblefinancingofworkingcapital. lines ofcreditagreementswithcertainfinancialinstitutionsinorder Annual Report2013 Long-term debtatMarch31,2012and2013,wasasfollows: 4. LONG-TERMDEBT were asfollows:

Thereafter 2018 2017 2016 2015 Less currentportion Lines ofcredit 2014 Year endingMarch31: Long-term debt: Credit utilized Available credit Total Banks andinsurance Government-owned banks, Unsecured 1.23%yen Long-term debt,less Total 2.00% atMarch31,2013 31, 2012,and0.56%– 0.56%–2.00% atMarch annual interestratesof serially through2018, companies, maturing 31, 2013 0.54%–1.40% atMarch at March31,2012,and rates of0.55%–1.40% 2018, annualinterest maturing seriallythrough bonds, due2014 Certain domestic subsidiaries of the Company has concluded Certain domesticsubsidiariesoftheCompanyhasconcluded The annua current portion l maturities of long-term debt at March 31, 2013, ¥ ¥

48,966 13,540 62,506 34,294 20,000 ¥ ¥ 8,212

2012 15,589 15,589 Millions ofyen Millions ofyen 2012 — ¥ ¥

37,142 12,256 49,398 22,488 20,000 Millions of ¥ ¥ ¥ ¥ 6,910 032013 2013

49,398 27,536 12,256 15,589 15,589 yen 2,002 5,202 2,402 032013 2013 2013 — — Thousands of

U.S. dollars $ 212,789 $

Thousands of Thousands of $ $ $ $ U.S. dollars U.S. dollars

525,569 292,969 130,398 395,171 130,398 525,569 239,262 165,858 165,858 21,300 55,346 25,556 73,518 2013 — — these linesofcreditatMarch31,2012and2013,isasfollows: about thesatellitecommunicationbusinessofXband.Thestatus credit agreementswithcertainfinancialinstitutionsinordertofinance 2012 and2013,consistedofthefollowing: Minister ofHealth,LaborandWelfare. obligation ofthesubstitutionalportiononApril1,2013,from sidiaries participated,receivedapprovaloftransferpastbenefit periodic retirementbenefitcosts. are recognizedaspaidandaccountedforacomponentofnet employer. Therefore, the contributions to the multi-employer plan account orrestrictedtoprovidebenefitsonlyemployeesofthat assets contributedbyanemployerarenotsegregatedinaseparate ance Law, thelengthofparticipationandotherfactors.However, standard remunerationscheduleundertheWelfare PensionInsur a The benefitsforthemulti-employerpensionplanarebasedon tributory multi-employer pension plan covering retirement ageorearlierterminationofemployment. of service and other factors, upon mandatory retirement at normal tion atretirementorearlierterminationofemployment,thelength to lump-sumseveranceindemnitiesbasedonthelevelofcompensa- supervisory boardmembers,areentitled,undermostcircumstances, & employees, otherthandirectors,executiveofficersandaudit severance indemn The subsidiariesoftheCompanyhaveunfundeddefinedbenefit

5. Unrecognized actuarial(gain)loss Fair valueofplanassets

Lines ofcredit Unrecognized priorservicecost Projected benefitobligation Credit utilized Available credit

SEVERANCE INDEMNITIES EMPLOYEES’ BENEFITPLANSANDDIRECTORS’ Net liabilities The domestic subsidiary of the Company has concluded lines of The domesticsubsidiaryoftheCompanyhasconcludedlines The liability for employees’ retirement benefits at March 31, The liabilityforemployees’retirementbenefitsat March 31, The Welfare PensionFund,inwhichcertainconsolidatedsub- Certain subsidiariesoftheCompanyalsoparticipateinanoncon- ity plans under which substantially all oftheir

¥ ¥ Millions ofyen 2012

3,532 3,234 ¥ — ¥ — 2012 Millions ofyen 217 — 81 —

¥ ¥

all of their employees. all of their employees. ¥ ¥

77,500 77,500

3,730 3,705 2013 (171) 2013 196 — —

Thousands of Thousands of $ $ $ $ U.S. dollars U.S. dollars

824,556 824,556 39,683 39,420 (1,820) 2,083 2013 2013 — 57 — -

Corporate Data Financial Section Corporate Social Corporate Governance Review of Operations Special Feature To Our Shareholders Consolidated Financial Satellite Basics/Glossary Responsibility and Investors Highlights The components of net periodic retirement benefit costs for The changes in asset retirement obligations for the years ended the years ended March 31, 2012 and 2013, were as follows: March 31, 2012 and 2013, were as follows:

Thousands of Thousands Millions of yen U.S. dollars Millions of yen of U.S. dollars 2012 2013 2013 2012 2013 2013 Service cost ¥ 375 ¥ 377 $ 4,016 Balance at beginning of year ¥ 2,447 ¥ 2,503 $ 26,625 Interest cost 55 57 606 Additional provisions associated Recognized actuarial gain (3) (2) (25) with the acquisition of property Amortization of prior and equipment 55 32 344 service cost (28) (26) (278) Reconciliation associated with Contribution to multi-employer passage of time 44 42 442 defined benefit plan 212 130 1,386 Reduction associated with Net periodic retirement settlement of asset benefit costs ¥ 611 ¥ 536 $ 5,705 retirement obligations (29) (243) (2,583) Other (14) (49) (512) Assumptions primarily used for the years ended March 31, Balance at end of year ¥ 2,503 ¥ 2,285 $ 24,316 2012 and 2013, were as follows:

2012 2013 7. EQUITY Discount rate 1.7%–1.9% 1.0%–1.4% Japanese companies are subject to the Companies Act of Japan (the Recognition period of actuarial gain 10–19 10–19 “Companies Act”). The significant provisions in the Companies Act years years that affect financial and accounting matters are summarized below: Amortization period of prior service cost 12, 17 12, 17 years years a. Dividends The subsidiaries of the Company also have directors’ unfunded Under the Companies Act, companies can pay dividends at any severance indemnity plans. Benefits under the directors’ plans time during the fiscal year in addition to the year-end dividend are based on the level of compensation at retirement, length upon resolution at the shareholders’ meeting. For companies that of service and other factors. Liabilities for severance payments meet certain criteria such as (1) having a Board of Directors, (2) under the directors’ plans at March 31, 2012 and 2013, amounting having independent auditors, (3) having an Audit & Supervisory to ¥6 million and ¥6 million ($66 thousand), respectively, were Board, and (4) the term of service of the directors is prescribed stated on the vested benefit obligation basis, which represents as one year rather than two years as a normal term by its Articles the amount that would be required to be paid if all directors of Incorporation, the Board of Directors may declare dividends and executive officers terminated their appointments as of the (except for dividends-in-kind) at any time during the fiscal year if balance sheet date. the company has prescribed so in its Articles of Incorporation. The Company meets all the above criteria. 6. ASSET RETIREMENT OBLIGATIONS The Companies Act permits companies to distribute dividends-in- Asset retirement obligations are mainly recognized on restitution kind (noncash assets) to shareholders subject to a certain limitation obligations associated with real estate rental agreements and and additional requirements. leasehold establishment contracts. Semiannual interim dividends may also be paid once a year upon The amount of asset retirement obligations is computed using resolution by the Board of Directors if the Articles of Incorporation discount rates of 0.4% to 2.4% and estimated useful lives of 3 to of the Company so stipulate. The Companies Act provides certain 50 years after acquisition. limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after dividends must be maintained at no less than ¥3 million.

b. Increases/Decreases and Transfer of Common Stock, Reserve and Surplus The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon the payment of such dividends until the total aggregate amount of the legal reserve and additional paid-in capital equals 25% of

58 SKY Perfect JSAT Holdings Inc. The Companies Actalso provides for Annual Report2013 previ determined byaspecificformula. the amountavailablefordistributiontoshareholders,whichis of Directors.Theamounttreasurystockpurchasedcannotexceed stock anddisposeofsuchtreasurybyresolutiontheBoard c. certain conditionsuponresolutionoftheshareholders. and retainedearningscanbetransferredamongtheaccountsunder stock, thelegalreserve,additionalpaid-incapital,othercapitalsurplus without limitation.TheCompaniesActalsoprovidesthatcommon of additionalpaid-incapitalandthelegalreservemaybereversed the commonstock.UnderCompaniesAct,totalamount

Fair valuepriceatgrantdate Average stockpriceatexercise Exercise price March 31,2013—outstanding Canceled Exercised Vested March 31,2012—outstanding Vested For theyearendedMarch31,2013 For theyearendedMarch31,2012 March 31,2011—outstanding Vested Vested Exercised Canceled March 31,2012—outstanding

option Stock

5th Treasury StockandTreasury StockAcquisitionRights The stockoptionactivityisasfollows: Under theCompaniesAct,stockacquisitionrights,whichwere ously presented as aliability, are now presented as a separate 6 executiveofficersofsubsidiaries 4 directorsofsubsidiaries 2 directors Person granted companies to purchase treasury companies to purchase treasury Number ofoptions granted (shares) ,8 October1,2006 1,180 (shares) 4th ,2 ,8 ,0 4,520 1,200 1,180 2,522 ,2 ,0 4,520 1,200 — 2,522 aeo rn xriepieExerciseperiod Exerciseprice Date ofgrant upon thestocktransfer: granted inexchangeforstockoptionsofSKYPerfectandJSAT Company. stock optionsgrantedbybothcompaniesweresucceededthe subsidiaries throughastocktransferamongtheshareholders, on April2,2007,thatownsSKYPerfectandJSAT aswhollyowned Because theCompanywasestablishedasajointholdingcompany 8. STOCKOPTIONS equity ordeducteddirectlyfromstockacquisitionrights. stock acquisitionrightsarepresentedasaseparatecomponentof both treasurystockacquisitionrightsandstock.Such component ofequity. — — — — — — — — ,8 — — 1,180 — The following is the detail of stock options of the Company The followingisthedetailofstockoptionsCompany The Companies Act also provides that (shares) (shares) $747.48 ¥70,256 5th 5th 1,180 1,180 — — — — — — (shares) 8th ($747.48) ¥70,256 (shares) 9th From October1,2008

to September30,2012 companies can purchase companies can purchase 59

Corporate Data Financial Section Corporate Social Corporate Governance Review of Operations Special Feature To Our Shareholders Consolidated Financial Satellite Basics/Glossary Responsibility and Investors Highlights 9. INCOME TAXES 10. LEASES The Companies are subject to a number of different income taxes a. Finance Lease which, in the aggregate, indicate a normal effective statutory tax Pro forma information of leased property whose lease rate of approximately 40.7% for the year ended March 31, 2012, inception was before March 31, 2008 and 38.0% for the year ended March 31, 2013. ASBJ Statement No. 13, “Accounting Standard for Lease Transac- The tax effects of significant temporary differences and tax loss tions,” requires that all finance lease transactions should be capital- carryforwards that resulted in deferred tax assets and liabilities at ized to recognize lease assets and lease obligations in the balance March 31, 2012 and 2013, were as follows: sheet. However, ASBJ Statement No. 13 permits leases that do not transfer ownership of the leased property to the lessee and Thousands of whose lease inception was before March 31, 2008, to be accounted Millions of yen U.S. dollars for as operating lease transactions if certain “as if capitalized” 2012 2013 2013 information is disclosed in the note to the financial statements. The Deferred tax assets: Company applied ASBJ Statement No. 13 effective April 1, 2008, and accounted for such leases as operating lease transactions. Depreciation ¥ 5,551 ¥ 6,269 $ 66,700 Operating loss carryforwards 2,372 2,891 30,763 As lessee: Liabilities for retirement Pro forma information of leased property whose lease inception benefits 1,166 1,357 14,433 was before March 31, 2008, such as acquisition cost, accumulated Asset retirement obligations 908 829 8,823 depreciation, accumulated impairment loss, obligations under finance Write-down of investment leases, depreciation expense, interest expense and other informa- securities 773 539 5,736 tion of finance leases that do not transfer ownership of the leased Other 2,650 1,809 19,245 property to the lessee on an “as if capitalized” basis was as follows: Less valuation allowance (3,952) (3,939) (41,910) Total 9,468 9,755 103,790 Millions of yen Deferred tax liabilities: 2012 Depreciation in foreign Machinery Tools and subsidiaries (722) (893) (9,498) and equipment Software Total equipment Asset retirement obligations (439) (383) (4,074) Acquisition cost ¥ 2,414 ¥ 190 ¥ 53 ¥ 2,657 Deferred gain on derivatives under hedge accounting (68) (213) (2,268) Accumulated depreciation 1,571 175 45 1,791 Net leased property ¥ 843 ¥ 15 ¥ 8 ¥ 866 Other (38) (195) (2,078) Total (1,267) (1,684) (17,918) Net deferred tax assets ¥ 8,201 ¥ 8,071 $ 85,872 Millions of yen 2013 A reconciliation between the normal effective statutory tax rates Machinery and the actual effective tax rates reflected in the accompanying Tools and and equipment Software Total consolidated statements of income for the years ended March 31, equipment 2012 and 2013, is as follows: Acquisition cost ¥ 1,901 ¥ — ¥ 29 ¥ 1,930 Accumulated depreciation 1,269 — 27 1,296 2012 2013 Net leased property ¥ 632 ¥ — ¥ 2 ¥ 634 Normal effective statutory tax rate 40.7% 38.0% Expenses not deductible for taxation 0.8 0.7 Revenues not taxable (12.9) (12.3) Thousands of U.S. dollars Change in valuation allowance (3.7) (3.0) 2013 Consolidation adjustment for dividend Machinery Tools and income 12.8 12.3 and equipment Software Total Amortization of goodwill 2.2 2.1 equipment Equity in net losses of affiliated Acquisition cost $ 20,218 $ — $ 314 $ 20,532 companies 0.2 0.0 Accumulated depreciation 13,495 — 288 13,783 Adjustment of the year-end deferred Net leased property $ 6,723 $ — $ 26 $ 6,749 tax assets caused by reduction in statutory tax rate 6.0 — Other 0.1 0.4 Actual effective tax rate 46.2% 38.2%

60 SKY Perfect JSAT Holdings Inc. leases atMarch31,2012and2013,wereasfollows: The minimum rental commitments under noncancelable b. OperatingLease respectively amounted to¥217millionand ¥229 million($2,439thousand), to costofservicesfortheyears ended March31,2012and2013, Write-downs ofinventoriesandother assets,whichwerecharged 11. COSTOFSERVICES transfer ownershipoftheleasedpropertytolesseeareasfollows: Maturities ofleasereceivablesforfinanceleasesthatdeemto As lessor: respectively. are computedbythestraight-linemethodandinterestmethod, reflected intheaccompanyingconsolidatedstatementsofincome, under financeleases: Annual Report2013 Due afteroneyear Due afteroneyear Due withinoneyear Due withinoneyear Lease payments Interest expense Depreciation expense Total Due afteroneyear Due withinoneyear Total Total Total Deprec Depreciation expense,interestexpenseandotherinformation Obligations underfinanceleases: iation expense and interest expense, which are not . .

¥ ¥

10,737 ¥ ¥ 9,227 1,510 ¥ ¥ ¥ ¥ ¥ 2012 2012 2012 2012 Millions ofyen Millions ofyen Millions ofyen Millions ofyen

618 618 549 531 496 906 653 253 35 —

¥ ¥

10,119 8,650 1,469 ¥ ¥ ¥ ¥ ¥ 032013 2013 2013 2013 2013 2013 ¥ — ¥ —

286 276 252 675 431 244 24 —

Thousands of Thousands of Thousands of Thousands of $ $ U.S. dollars U.S. dollars U.S. dollars U.S. dollars

operating operating 107,658 $ $ $ $ $ 92,024 15,634

2,934 2,682 7,182 4,581 2,601 3,038 2013 2013 $ — $ — 252 — for theyearsendedMarch31,2012and2013,wereasfollows: The majorcomponentsofselling,generalandadministrativeexpenses 12. SELLING,GENERALANDADMINISTRATIVE EXPENSES accounts, areless thanoneyear. invested for the purpose of temporary cash to customer credit risk. Receivables suchastradenotesandaccountsareexposed The a. PolicyforFinancialInstruments 14. FINANCIALINSTRUMENTS for softwareand¥3million($31thousand)theotherassets. since nofuturecashinflowsareexpected. down totherecoverableamount.Theamountwasnil financial positionoftheissuing entities (customersandsuppliers). the Companyisperiodicallyprovided areportonthefairvalueand to theriskofmarketpricefluctuations. TheBoardofDirectors instruments of customers and suppliers oftheCompany, are exposed of majorcustomersbasedontheircreditcontrolrules. balances bycustomersandperiodically evaluate thecredit standing b. manage exposuretofinancialrisksasdescribedinNote15. assets. Derivatives are used, not for speculative purposes, but to Temporary cashsurpluses,ifany, areinvestedinlow-riskfinancial at thatunit,thecarryingamountofrelevantassetswaswritten the Space&SatelliteBusiness.Duetoacontinuousoperatingloss ment lossof¥124million($1,317thousand)asotherexpensefor March 31,2013.Asaresult,theCompaniesrecognizedanimpair The Companiesrevieweditslong-livedassetsforimpairmentasof 13. IMPAIRMENT LOSS Salaries andwages Research and

Other Provision fordoubtful Subcontracting fees Sales incentives Sales promotion Advertising expenses Provision forliabilities Provision foraccrued development expenses expenses for retirementbenefits bonuses Total receivables

and RiskManagementforFinancialInstruments Nature, ExtentofRisksArisingfromFinancialInstruments Companies are financed by bank loans and issuance of bonds. Payment terms of payables, such as trade notes and trade Payment termsofpayables,such astradenotesand Marketable andinvestmentsecurities,mainlybondsecurities The impairmentlossconsisted of¥121million($1,287thousand) The Companies manage due dates and The Companies manage due dates and

¥ ¥

38,694 6,134 3,508 4,704 8,080 4,551 9,813 Millions ofyen 2012 258 323 901 422

¥ ¥

37,289 10,336 surplus and equity surplus andequity 5,791 2,594 5,305 7,480 4,510 032013 2013 251 292 219 511

Thousands of U.S. dollars $ $

396,728 109,950 61,617 27,601 56,442 79,585 47,989 2,326 5,438 2,673 3,107 61 -

Corporate Data Financial Section Corporate Social Corporate Governance Review of Operations Special Feature To Our Shareholders Consolidated Financial Satellite Basics/Glossary Responsibility and Investors Highlights Bank loans and bonds provide financing related to operations (5) Payables, income taxes payable and subscription fees and capital expenditures. received Although trade accounts and loans are exposed to the risk of The carrying values which will be settled within a short period liquidity, the Companies manage by preparing monthly statements of approximate fair values. cash receipts and disbursements and by entering into commitment line agreements. (6) Current portion of long-term debt and long-term loans Derivatives include forward foreign currency contracts, which The carrying values of the current portion of long-term debt and are used to manage exposure to market risks from changes in long-term loans with floating interest rates approximate fair values foreign currency exchange rates related to financing for purchase because the interest rates of the debt are variable and reflect market of broadcasting rights, capital expenditures of telecommunications interest rates for a short period, and the credit standing of the satellites and foreign currency-based operating receivables that the Company does not vary greatly. Company expects to occur as a result of forecasted transaction. The fair values of the current portion of long-term debt and Please see Note 15 for more details about derivatives. long-term loans with fixed interest rates are measured at the pres- The Company executes and manages derivative transactions in ent value of both interest and principal by each period of the debt, accordance with the internal policies that regulate the authorization discounted at the Company’s assumed corporate borrowing rate. and guidelines as follows. The Company enters into derivative transactions only with financial institutions with high credit standing (7) Bonds to reduce credit risks. The fair values of bonds are measured at the present value, which is the amount of both interest and principal to be paid, discounted c. Fair Values of Financial Instruments at the rate considering the period to maturity and credit risk. Fair values of financial instruments are based on quoted prices in active markets. If a quoted price is not available, other rational (8) Derivatives valuation techniques are used instead. The results of valuations The information of the fair value for derivatives is included in Note 15. may differ based upon assumptions used because rational valuation techniques include variable factors. The nominal amounts disclosed in Fair value of financial instruments: Note 15 do not reflect market risks regarding derivative transactions. Millions of yen 2012 (1) Cash and cash equivalents Carrying Unrealized Fair value The carrying values of cash and cash equivalents approximate fair amount gain/loss value because of their short maturities. Cash and cash equivalents ¥ 66,405 ¥ 66,405 ¥ — Short-term investments 80 80 — (2) Receivables Receivables 21,499 The carrying values of receivables which are collectible within a Allowance for doubtful receivables (532) short period approximate fair values. The fair values of receivables Net 20,967 21,053 86 Short-term loans 1,898 1,898 — with long-term collection periods are measured at the amount to Investment securities: be received discounted at a rate considering the period to maturity Held-to-maturity securities 1,000 883 (117) and credit risk. Available-for-sale securities 7,538 7,538 — Investment in and advances (3) Short-term investments and investment securities to affiliated companies: The fair values of short-term investments and investment securities Advances 3,796 3,796 — are measured at the quoted market price of the stock exchange Total 101,684 101,653 (31) for equity instruments, and at the quoted price obtained from the Current portion of long-term debt 13,540 13,544 4 financial institution for certain debt instruments. The information of Payables 14,805 14,805 — the fair value for short-term investments and investment securities Income taxes payable 4,449 4,449 — by classification is included in Note 3. Subscription fees received 13,210 13,210 — Long-term debt: Bonds 20,000 20,223 223 (4) Short-term loans and advances to affiliated companies Long-term loans 28,966 29,072 106 The carrying values of short-term loans and advances to affiliated Total 94,970 95,303 333 companies approximate fair values because the interest rates of Derivatives ¥ 176 ¥ 176 ¥ — the loans are variable and reflect market interest rates for a short period, unless the credit standings of borrowers vary greatly.

62 SKY Perfect JSAT Holdings Inc. Annual Report2013 Derivatives Total Cash andcashequivalents Cash andcashequivalents

Long-term debt: Subscription feesreceived Income taxespayable Payables Current portionoflong-termdebt Total Investment inandadvances Investment securities: Short-term loans Allowance fordoubtfulreceivables Receivables Short-term investments Payables Current portionoflong-termdebt Total Investment securities: Short-term loans Allowance fordoubtfulreceivables Receivables Short-term investments Derivatives Total Long-term debt: Subscription feesreceived Income taxespayable

Investment inandadvances Long-term loans to affiliatedcompanies: securities Available-for-sale securities Held-to-maturity edt-auiy securities Held-to-maturity Bonds Net Bonds Net Long-term loans vial-o-ae securities Available-for-sale to affiliatedcompanies: Advances Advances

$ $ ¥ ¥

Carrying Carrying 1,140,290 amount amount

107,177 78,328 74,473 17,142 20,000 10,234 16,245 12,256 19,676 20,391 833,364 182,382 212,789 108,883 172,833 130,398 209,333 216,945 792,348 22,498 26,079 22,493 10,639 82,979 2,451 2,114 7,799 1,000 2,115 (7,612) 5,895 (715) 554 Thousands ofU.S.dollars — —

Millions ofyen $ $ Fair value Fair value ¥ ¥

1,140,847

107,229 2013 2013 78,520 74,473 17,166 20,133 10,234 16,245 12,291 19,772 210,362 792,348 835,406 182,640 214,203 108,883 172,833 130,768 22,498 26,079 22,493 10,167 82,979 2,451 2,114 7,799 2,115 5,895 554 956 — —

Unrealized Unrealized gain/loss gain/loss $ $ ¥ ¥

2,042 1,414 1,029

(472) 192 133 258 370 557 (44) 24 35 52 96 — — — — — — — — — — — — — — — — — — tractual maturities: 2012 and2013,wereasfollows: which the fair Investment securities: Short-term loans Receivables

Short-term investments Total toaffiliatedcompanies: Investment inandadvances Equity securities Other Cash andcashequivalents Cash andcashequivalents Total toaffiliatedcompanies: Investment inandadvances Investment securities: Short-term loans Receivables Short-term investments Total Advances Available-for-sale securities Held-to-maturity securities Advances Available-for-sale securities Held-to-maturity securities Maturity analysisforfinancialassetsandsecuritieswithcon Available-for-sale securities and held-to-maturitysecurities for value was not readily determinable at March 31,

$ $ Due inone Due inone ¥ ¥

1,003,277

94,298 17,716 74,467 or less or less 188,492 792,287 year year 2,115 22,498

¥ ¥ — — — — — — — —

10,671 10,032

Thousands ofU.S.dollars 2012 Millions ofyen five years five years Due after Due after ¥ ¥ one year one year 639 through through $ $

2,114 1,697

3,811 18,043 40,536 22,493 Millions ofyen Carrying amount

— — — — — — — — — — 2013 2013 ¥ ¥

10,836 10,721

through ten through ten five years five years Due after Due after ¥ ¥ 032013 2013 $ $

years years

1,000

115 2,070 10,410 22,023 10,639 978 974 92 — — — — — — — —

Thousands of $ $ U.S. dollars

115,287 114,066 ¥ ¥ Due after Due after ten years ten years $ $

5,534

5,534 1,221 58,878 58,878 — — — — — — 63 — — — — — — -

Corporate Data Financial Section Corporate Social Corporate Governance Review of Operations Special Feature To Our Shareholders Consolidated Financial Satellite Basics/Glossary Responsibility and Investors Highlights 15. DERIVATIVE INSTRUMENTS Derivative transactions to which hedge accounting is applied Certain consolidated subsidiaries of the Company use derivative at March 31, 2012 and 2013, were as follows: financial instruments, which include foreign exchange forward contracts. Foreign exchange forward contracts are used for the Millions of yen purpose of reducing the risk arising from changes in anticipated cash 2012 flows of forecasted transactions associated with certain payments Contract for overseas broadcasting rights, telecommunications satellites amount Hedged item Contract Fair value and foreign currency-based operating receivables that it expects amount due after to occur as a result of forecasted transaction. one year Foreign exchange forward contracts are subject to market risk. Foreign currency forward contracts Because the counterparties to those derivatives are limited Buying U.S. dollars to major international financial institutions, the Companies do not Fair value and Forecasted foreign anticipate any losses arising from credit risk. deferral currency transactions ¥ 1,702 ¥ 964 ¥ 88 Derivative transactions are executed and controlled by the Forecasted foreign Designation Finance and Accounting Division of those certain subsidiaries in currency transactions ¥ 1,671 ¥ — ¥ 91 accordance with the internal policies that regulate the authorization and guideline, and the transaction status and performance are Millions of yen periodically reported to the Board of Directors of those subsidiaries. 2013 The notional amounts of derivatives that are shown in the above table do not represent the amounts exchanged by the parties and Contract Contract amount do not measure the Company’s exposure to credit or market risks. Hedged item amount due after Fair value Derivative transactions to which hedge accounting is not applied one year at March 31, 2012 and 2013, were as follows: Foreign currency forward contracts Millions of yen Buying U.S. dollars 2012 Fair value and Forecasted foreign deferral currency transactions ¥ 3,275 ¥ 1,413 ¥ 561 Contract Selling U.S. dollars Contract amount Unrealized amount due after Fair value gain/loss Forecasted foreign one year currency transactions ¥ 75 ¥ — ¥ (6) Foreign currency forward contracts Thousands of U.S. dollars Buying U.S. dollars ¥ 18 ¥ 9 ¥ (4) ¥ (4) 2013 Contract Millions of yen Contract amount Hedged item amount due after Fair value 2013 one year Contract Foreign currency Contract amount Unrealized forward contracts amount due after Fair value gain/loss one year Buying U.S. dollars Fair value and Forecasted foreign Foreign currency deferral currency transactions $ 34,839 $ 15,031 $ 5,963 forward contracts Selling U.S. dollars Buying U.S. dollars ¥ 9 ¥ — ¥ (1) ¥ (1) Fair value and Forecasted foreign deferral currency transactions $ 799 $ — $ (61) Thousands of U.S. dollars 2013 Contract Contract amount Unrealized amount due after Fair value gain/loss one year Foreign currency forward contracts Buying U.S. dollars $ 94 $ — $ (8) $ (8)

64 SKY Perfect JSAT Holdings Inc. and 2013,wasasfollows: income pershare(“EPS”)fortheyearsendedMarch31,2012 Reconciliation ofthedifferencesbetweenbasicanddilutednet 17. NETINCOMEPERSHARE Annual Report2013 consists ofthefollowing: Other comprehensive income for the year ended March 31, 2013 16. COMPREHENSIVEINCOME Other comprehensiveincome:

Basic EPS For theyearended

Total othercomprehensiveincome

March 31,2012 Share ofothercomprehensive Deferred gain(loss)onderivatives Unrealized gain(loss)onavailable- Foreign currencytranslation Net incomeavailableto Amounts transferredtotheinitial Amounts transferredtotheinitial adjustments Amount beforeincometaxeffect Amount beforeincometaxeffect Reclassification adjustmentsto Gains arisingduringtheyear method accounted forusingtheequity income inaffiliatedcompanies Reclassification adjustmentsto Gains arisingduringtheyear under hedgeaccounting Reclassification adjustmentsto Gains arisingduringtheyear for-sale securities Total Total Income taxeffect Total Income taxeffect common shareholders carrying amountsofhedgeditems carrying amountsofhedgeditems profit orloss profit orloss profit andloss Net income ,6 ,6,1 ¥2,546 3,365,519 ¥ 8,569 Millions ofyen

Weighted- average shares

¥ ¥ 2012

(204) (299) Millions ofyen 301 748 683 360 520 449 272 (88) 65 59 — — (1) 3 4

1,308 1,693 1,256 032013 2013 EPS (143) (309) Yen 483 430 233 376 947 (52) (54) 27 30 — — 3

Thousands of $ $ U.S. dollars

13,909 10,083 13,361 18,017 (3,278) (1,517) 5,143 4,570 2,474 3,991 (548) (579) 284 317 33 — — how resourcesareallocatedamong the Companies.TheCompany Company’s managementisbeingperformedinorder todecide rate financialinformationisavailable andregularevaluationbythe The Companiesreportablesegments arethoseforwhichsepa- 1. resources tooperatingsegments. operating segment performance and deciding how to allocate reported onthesamebasisasisusedinternallyforevaluating performance. Generally, segmentinformationisrequiredtobe maker indecidinghowtoallocateresourcesandassessing information isevaluatedregularlybythechiefoperatingdecision about whichseparatefinancialinformationisavailableandsuch specified criteria. Operating segments are components of an entity ing segmentsoraggregationsofoperatingthatmeet about itsreportablesegments.Reportablesegmentsareoperat - an entityisrequiredtoreportfinancialanddescriptiveinformation on AccountingStandardforSegmentInformationDisclosures,” Information Disclosures”andASBJGuidanceNo.20,“Guidance Under ASBJStatementNo.17,“AccountingStandardforSegment 19. SEGMENTINFORMATION which is a core operating consolidated subsidiary of the Companies which isacoreoperating consolidatedsubsidiary of theCompanies has established service divisions at SKY Perfect JSAT Corporation, Other currentassets Long-term loans years endedMarch31,2012and2013,wereasfollows: Transactions oftheCompanieswithaffiliated companies forthe 18. RELATED PARTY DISCLOSURES anti-dilutive. companies atMarch31,2012and2013,wereasfollows: Short-term loans Interest income Collection ofloans Basic EPS For theyearended

March 31,2013 Net incomeavailableto Description ofreportablesegments common shareholders Diluted net income per share is not disclosed because it is Diluted netincomepershareisnotdisclosedbecauseit The balances due to or from the Companies with affiliated The balancesduetoorfromtheCompanieswithaffiliated Net income ,8 ,6,1 ,7 $30.61 ¥2,877 3,365,519 ¥ 9,683 Millions ofyen

¥ 1,948 ¥ ¥ Weighted-

average 3,796 1,899 shares 2012 2012 Millions ofyen Millions ofyen 20 71

,4 $20,734 ¥ 1,949 ¥ ¥

2,114 2,114 032013 2013 2013 2013 Yen 18 0642 60 EPS

Thousands of Thousands of U.S. dollars U.S. dollars $ $ U.S. dollars

22,493 22,493 187 65

Corporate Data Financial Section Corporate Social Corporate Governance Review of Operations Special Feature To Our Shareholders Consolidated Financial Satellite Basics/Glossary Responsibility and Investors Highlights and such service divisions design the strategies about their services (4) A reconciliation of increase in property and equipment and intangible and deploy operating activities. The Company consists of service assets in an amount of ¥285 million is increase in property and equipment and intangible assets not allocated to each reportable segment. segments based on the operating divisions of SKY Perfect JSAT Note 2. Segment profit (loss) is reconciled withoperating income in the con- Corporation, which are Multichannel Pay TV Business and Space solidated statements of income. & Satellite Business as the reportable segments. The Multichan- nel Pay TV Business offers platform services such as customer Millions of yen management activities to the broadcasting businesses and delivers 2013 Multichannel Space & broadcasting services via communication satellite and fiber optic Reconciliations Consolidated network. Space & Satellite Business offers communication satellite Pay TV Satellite Business Business (Note 1) (Note 2) circuits (transponders) to the broadcasting businesses and satellite Sales to external communication services, such as data communication and mobile customers ¥ 109,722 ¥ 49,888 ¥ — ¥ 159,610 communication, to the government, public entities and corporations. Intersegment sales or transfers 4,694 6,758 (11,452) — 2. Methods of measurement for the amounts of sales, Total 114,416 56,646 (11,452) 159,610 profit (loss), assets, liabilities and other items for each Segment profit (loss) ¥ (819) ¥ 17,599 ¥ (627) ¥ 16,153 reportable segment Segment assets 54,900 150,387 85,200 290,487 The accounting policies of each reportable segment are con- Other: sistent to those disclosed in Note 2, “Summary of Significant Depreciation 8,047 17,614 455 26,116 Accounting Policies.” Amortization of Intersegment sales or transfers are determined based on goodwill — 878 — 878 market prices. Investment in affiliated companies accounted for using 3. Information about sales, profit (loss), assets, liabilities the equity method 3,051 4,150 — 7,201 and other items is as follows: Increase in property Millions of yen and equipment and intangible assets 7,353 6,429 69 13,851 2012 Multichannel Space & Reconciliations Consolidated Pay TV Satellite Thousands of U.S. dollars (Note 1) (Note 2) Business Business 2013 Sales to external ¥ 103,802 ¥ 51,440 ¥ — ¥ 155,242 Multichannel Space & customers Pay TV Busi- Satellite Reconciliations Consolidated Intersegment sales or ness Business (Note 1) (Note 2) transfers 4,701 6,268 (10,969) — Sales to external Total 108,503 57,708 (10,969) 155,242 customers $ 1,167,374 $ 530,782 $ — $ 1,698,156 Segment profit (loss) ¥ (1,637) ¥ 19,812 ¥ (689) ¥ 17,486 Intersegment sales or Segment assets 58,978 163,871 77,284 300,133 transfers 49,947 71,898 (121,845) — Other: Total 1,217,321 602,680 (121,845) 1,698,156 Depreciation 7,716 16,670 506 24,892 Segment profit (loss) $ (8,714) $ 187,240 $ (6,666) $ 171,860 Segment assets 584,108 1,600,030 906,475 3,090,613 Amortization of 0 888 — 888 goodwill Other: Investment in Depreciation 85,616 187,412 4,836 277,864 affiliated companies accounted for using Amortization of the equity method 3,036 3,456 — 6,492 goodwill — 9,343 — 9,343 Increase in property Investment in and equipment and affiliated companies intangible assets 6,244 7,443 285 13,972 accounted for using the equity method 32,459 44,154 — 76,613 Note 1. Reconciliations are as follows: Increase in property (1) A reconciliation of segment profit or loss in an amount of ¥(689) million and equipment and is ¥111 million of intersegment sales and ¥(800) million of corporate intangible assets 78,243 68,396 732 147,371 expenses not allocated to each reportable segment. Corporate expenses mainly consist of general and administrative expenses which are not Note 1. Reconciliations are as follows: attributable to any segment. (1) A reconciliation of segment profit or loss in an amount of ¥ (627) million (2) A reconciliation of segment assets in an amount of ¥77,284 million is ($(6,666) thousand) is ¥139 million ($1,479 thousand) of intersegment ¥(1,451) million of intersegment sales and ¥78,735 million of corporate sales and ¥(766) million ($(8,145) thousand) of corporate expenses not assets not allocated to each reportable segment. Corporate assets allocated to each reportable segment. Corporate expenses mainly consist mainly consist of cash and cash equivalents and securities and assets of general and administrative expenses which are not attributable to related to administrative divisions. any segment. (3) A reconciliation of depreciation in an amount of ¥506 million is depreciation of corporate assets not allocated to each reportable segment.

66 SKY Perfect JSAT Holdings Inc. Annual Report2013 able segmentatMarch31,2012and2013,isasfollows: Information aboutimpairmentlossesonlong-livedassetsbyreport - by reportablesegment: Information aboutimpairmentlossesonlong-livedassets those oftheCompaniesforperiodpresentedherein. any oneofexternalcustomersdonotrepresentmorethan10% required todisclosemajorcustomerinformationbecausesales Under Japaneseaccountingregulations,theCompaniesarenot 3. Informationaboutmajorcustomers period presentedherein. represented more than 90% of those of the Companies for the and equipment because property and equipment located in Japan required todisclosegeographicalsegmentinformationaboutproperty Under Japaneseaccountingregulations,theCompaniesarenot (2) Propertyandequipment 90% ofthosetheCompaniesforperiodpresentedherein. because salestoexternalcustomersinJapanrepresentedmorethan required todisclosegeographicalsegmentinformationaboutsales Under Japaneseaccountingregulations,theCompaniesarenot (1) Sales 2. Informationaboutgeographicalareas about sales,profit(loss),assets,liabilitiesandotheritems”. information isdisclosedintheaforementionedtableof“Information Information aboutproductsandservicesisomitted,sincethesame 1. Informationaboutproductsandservices Related information: Note Impairment losses (4) (3) (2) 2.

solidated statementsofincome. reportable segment. to administrativedivisions. consist ofcashandequivalentssecuritiesassetsrelated not allocatedtoeachreportablesegment.Corporateassetsmainly sales and¥86,018million($915,185thousand)ofcorporateassets Segment profit (loss) is reconciled with segment. reportable property andequipmentintangibleassetsnotallocatedtoeach assets inanamountof¥69million($732thousand)isincrease A reconciliationofincreaseinpropertyandequipmentintangible thousand) is depreciation of corporate A reconciliationofdepreciationinanamount¥455million($4,836 ($906 A reconciliation of segment assets in an amount of ¥85,200 million ,475 thousand) is ¥(818) million ($(8,710) thousand) of intersegment Multichannel Business Pay TV 9 ¥493 ¥— ¥493 ¥ — Business Space & Satellite Millions ofyen 2012 assets not allocated to each operating income in the con- eoclain Consolidated Reconciliations Not applicable (negative goodwill)byreportablesegment: Information aboutrecognizedbargainpurchasegain 31, 2012and2013,isasfollows: Information about amortization of goodwill and goodwill at March Information aboutamortizationofgoodwillandgoodwill: Goodwill at Goodwill at Goodwill at Amortization of Amortization of Impairment losses Amortization of Impairment losses March 31,2013 March 31,2013 ac 1 02—889—8,849 — 8,849 — March 31,2012 goodwill goodwill goodwill Multichannel Multichannel Multichannel Multichannel Multichannel Business Business Business Business Business Pay TV Pay TV Pay TV Pay TV Pay TV ,1 $1,317 $— $1,317 ¥124 $ — ¥— ¥124 ¥ — 933$—$9,343 $— $9,343 $ — 88¥—¥878 ¥— ¥878 ¥ — 8 ¥888 ¥— ¥888 ¥ 0 480—84,800 — 84,800 — ,7 7,970 — 7,970 — Thousands ofU.S.dollars Thousands ofU.S.dollars Business Business Business Business Business Space & Space & Space & Space & Space & Satellite Satellite Satellite Satellite Satellite Millions ofyen Millions ofyen Millions ofyen 2013 2013 2012 2013 2013 eoclain Consolidated Reconciliations Consolidated Reconciliations eoclain Consolidated Reconciliations eoclain Consolidated Reconciliations eoclain Consolidated Reconciliations 67

Corporate Data Financial Section Corporate Social Corporate Governance Review of Operations Special Feature To Our Shareholders Consolidated Financial Satellite Basics/Glossary Responsibility and Investors Highlights 20. SUBSEQUENT EVENTS 2. Schedule for establishment of the new system 1. Appropriations of Retained Earnings Effective date Tuesday, October 1, 2013 The following appropriation of retained earnings at March 31, 2013, Note: Effective September 26, 2013, the share-trading unit for the Company’s was approved at the Board of Directors’ meeting held on May 8, 2013: shares shall be changed to 100 shares on the securities exchange.

Millions of Thousands of (4) Others yen U.S. dollars Per share information based on the assumption that this stock split Year-end cash dividend, ¥600 ($6.38) had been implemented at the beginning of the previous period is per share ¥ 2,019 $ 21,484 presented as follows for the previous consolidated fiscal year and 2. Share Split and Adoption of Share-Trading-Unit System the consolidated fiscal year under review. The Company resolved at the meeting of the Board of Directors held on May 8, 2013, concerning share split and adoption of share- Yen trading-unit system. The details are as follows. 2012 2013 (1) Purpose of Share split Total net assets per share ¥ 549.53 ¥ 571.33 Adoption of Share-Trading-Unit System, and Partial Changes to Net income per share ¥ 25.46 ¥ 28.77 Articles of Incorporation taking into consideration the intent of the “Action plan for Consolidating trading Units” that was announced by all domestic stock exchanges of Japan in November 2007, the Company will conduct a 1:100 share split and adopt a share-trading- unit system to contribute towards improving the convenience and liquidity of the securities markets that the Company’s stock is listed. The number of investment units will not actually change following the implementation of the share split and the adoption of the share-trading-unit system.

(2) Share Split 1. Method of share split The share split shall have a record date of Monday, September 30, 2013, and shall involve the splitting of common shares held by shareholders whose names appear or are recorded in the latest Registry of Shareholders on the record date at a ratio of 1:100. 2. Number of increase in shares by share split Number of increase in shares by share split shall be 99 times the final total number of issued shares on Monday, September 30, 2013. The numbers of shares presented below are based on the total number of issued shares on June 21, 2013. 1) Total number of issued shares before share split 3,446,037 shares 2) Number of increase in shares by share split 341,157,663 shares 3) Total number of issued shares after share split 344,603,700 shares 4) Total number of authorized shares after share split 1,450,000,000 shares 3. Schedule of share split 1) Public notice date of the record date Friday, September 13, 2013 2) Record date Monday, September 30, 2013 3) Effective date Tuesday, October 1, 2013

(3) Adoption of Share-Trading-Unit System 1. Number of shares in newly established share-trading unit The adoption of the share-trading-unit system shall take effect on the effective date stated in “(2) Share Split” above, and the number of shares to constitute a share-trading unit shall be 100 shares.

68 SKY Perfect JSAT Holdings Inc. Annual Report2013 Independent Auditors’Statements Financial Section 69

Investor Information (As of March 31, 2013)

Corporate Name: SKY Perfect JSAT Holdings Inc. Headquarters: 14-14, Akasaka 1-chome, Minato-ku, Tokyo 107-0052, Japan Telephone: +81-3-5571-1500 URL: www.skyperfectjsat.co.jp/en Established: April 2, 2007 Number of Employees (Consolidated): 811 (859*) *Average number of part-time employees in fiscal year ended March 31, 2013 Capital: ¥10 billion Stock Listing: First Section, Tokyo Stock Exchange (Code 9412) Number of Shares Issued: 3,446,037 Total Number of Shareholders: 37,953 Fiscal Year-End: March 31 Annual General Meeting of Shareholders: June Payment of Dividends (Dividend Record Date): March 31 (and September 30 for interim dividends) Transfer Agent of Common Stock: Mizuho Trust & Banking Co., Ltd.

Major Shareholders

Number of Shareholding shares held ratio (%) Mizuho Trust & Banking Co., Ltd. (Pension trust account for ITOCHU Corporation) 346,572 10.3 Fuji Media Holdings, Inc. 283,058 8.4 Sony Corporation 283,058 8.4 NTT Communications Corporation 260,570 7.7 Sumitomo Corporation 222,584 6.6 Nippon Television Network Corporation 208,914 6.2 Tokyo Broadcasting System Holdings, Inc. 184,340 5.5 ITOCHU Corporation 136,058 4.0 Japan Trustee Services Bank, Ltd. (Pension trust account for Mitsui & Co., Ltd.) 134,052 4.0 The Master Trust Bank of Japan, Ltd. 84,121 2.5

*As of March 31, 2013, the Company owns 80,518 shares of treasury stock. In calculating shareholding ratio, the treasury stock is excluded.

Breakdown of Shareholders

Breakdown by Number of Breakdown by Number of % of Total % of Total Number of Shareholders Shareholders Number of Shares Shares Government and Government and 0 0.00 0 0.00 Local Public Authorities Local Public Authorities Financial Institutions 42 0.11 Financial Institutions 819,078 23.76 Securities Firms 30 0.07 Securities Firms 28,741 0.83 Other Japanese Corporations 393 1.03 Other Japanese Corporations 1,729,132 50.17 Foreigners 287 0.75 Foreigners 467,173 13.55 Individuals and Others 37,200 98.01 Individuals and Others 321,395 9.32 Treasury Stock 1 0.00 Treasury Stock 80,518 2.33

70 SKY Perfect JSAT Holdings Inc. SKY Perfect JSAT Holdings Inc. Annual Report 2013 Highlights Group Companies Consolidated Financial

Corporate Name: SKY Perfect JSAT Corporation Corporate Name: SKY Perfect Entertainment Corporation Capital: ¥50,083 million Capital: ¥10 million Principal Activities: Provision of satellite communications and multichannel Principal Activities: Licensed broadcaster pay TV platform services providing multichannel high-

definition pay TV services via and Investors Ownership: 100.0%

CS110-degree platform Our Shareholders To Ownership: 100.0%

Corporate Name: SKY Perfect Customer- relations Corporation Corporate Name: OptiCast Inc. Capital: ¥100 million Capital: ¥100 million Principal Activities: Provision of subscriber management services for Principal Activities: Provision of content distribu- Special Feature multichannel broadcasting tion through optical fiber Ownership: 100.0% networks Ownership: 100.0%

Corporate Name: SKY Perfect Broadcasting Corporation Corporate Name: JSAT International Inc. Capital: ¥2,500 million Capital: US$25 million Principal Activities: Provision of broadcasting Principal Activities: U.S. subsidiary working with Review of Operations programs joint venture partner, Intelsat, Ownership: 100.0% to market capacity on satellites in North America www.skyperfectjsat.co.jp Ownership: 100.0% Corporate Name: Satellite Network, Inc. Capital: ¥1,600 million Corporate Name: JSAT MOBILE Principal Activities: Telecommunications carrier Communications Inc. Corporate Governance and a systems integrator for Capital: ¥200 million (Capital appro- satellite communications priation: ¥175 million) and broadcasting services Principal Activities: A provider of mobile satellite Ownership: 92.0% communications (Inmarsat) services Ownership: 53.3% Responsibility Corporate Social

Multichannel Pay TV Business

SKY Perfect Customer-relations Corporation SKY Perfect Broadcasting Corporation

SKY Perfect Entertainment Corporation OptiCast Inc. Financial Section

SKY Perfect JSAT Corporation Satellite Network, Inc. SKY Perfect JSAT Holdings Inc.

JSAT MOBILE Communications Inc.

JSAT International Inc.

Space & Satellite Business Corporate Data Satellite Basics/Glossary

Annual Report 2013 71 Satellite Basics glossary

BS C-band/Ku-band Communication satellite’s main components Broadcasting satellite that provides BS digital broadcast- C band refers to the 3.43-7.075GHz range of frequen- ing services in Japan. cies. Downward transmissions from communications satellites to the earth are typically in the 3.4-4.2 GHz Solar Array Panel frequency band, whereas transmissions in the opposite The solar array panel uses solar power to CS generate electricity. Communications satellite is an artificial satellite direction use the 5.8-6.7 GHz band. equipped with transponders originally designed for com- The Ku band is the 10.6-15.7 GHz frequency range. munications services. CS has also been used for broad- In this band, signals from communications satellites to the earth are transmitted at 12.25-12.75GHz, and down- Thruster casting services since 1992 in Japan. SKY PerfecTV!’s ward transmissions use the 14-14.5 GHz range. Thrusters keep the satellite positioned at services currently use three communications satellites: Deployable Mirrored Antenna the correct orbit. JCSAT-3A (128 degrees east longitude), JCSAT-4B (124 This antenna receives and transmits degrees east longitude) and JCSAT-110R (110 degrees X-band signals. The antenna is called “deployable” because the antenna opens to east longitude) and BS. X band is the frequency band from 7.075 to 8.5 GHz pri- receive commands from earth after marily used by military communications, weather, and the satellite is launched into space and FSS (Fixed Satellite Services) earth observation satellites. reaches the proper orbital slot. Heat Dissipation Panel The official classification (used mainly in North America) Satellites easily accumulate for geostationary communications satellites that provide Ultra-HD (4K/8K) Telemetry Command Omni Antenna heat, and this panel dissipates broadcasting service to TV stations, communications Ultra HD is ultra high definition imaging and display This antenna receives and transmits signal while the heat via embedded heat and data communications for companies and govern- technology. The K stands for Kilo, which means thou- a satellite is being launched into orbit before the conducting pipes to maintain nment agencies. sand. Compared to full HD, which has a pixel count of a constant temperature inside deployable antennas can be opened. 1920 x 1080 pixels, 4K HD has approximately four times the satellite. MSS (Mobile satellite services) and 8K approximately 16 times the number of pixels. Communications satellites are generally about as big as a railroad car but MSS refers to networks of communications satellites can be various sizes depending on the type of satellite. intended for use with mobile and portable wireless tele- SDTV phones. There are three major types: AMSS (aeronau- Standard-definition television. tical MSS), LMSS (land MSS), and MMSS (maritime MSS.) HDTV High-definition television. Do rain and wind affect communication satellite’s signals? Uplink/Downlink An uplink is a transmission from ground transmission ARPU Not all frequencies sent by communications satellites are affected Diagnostic X-ray facilities to communications satellites. A downlink is a by rain. Radio wave frequencies that are affected and not affected Ultraviolet Average Monthly Revenue per Unit and actually recog- transmission from communications satellites to ground nized “revenues” of our group in the average spending by rain can be divided. The most common frequency ranges for Visible light Frequency list transmission facilities. per subscriber for monthly subscription fee, etc. satellite communications in Japan are the Ku band and C band. Infrared light Ka 17.3–31 Ku 10.6–15.7 C band frequencies have been widely used since satellite com- H.264 (H.264/MPEG-4 AVC) Average Monthly Subscriber’s Payment

High-frequency X 7.075–8.5 GHz munications began because they are not affected by heavy rain, but C 3.4–7.075 H.264 is an video data compression coding method Average spending per subscriber for monthly subscrip- low frequencies require large antennas for reception. The Ku band S 1.71–2.7 endorsed by the International Telecommunication Union Television L 1.215–1.71 tion fee, etc. Conventional “Gross ARPU.” frequencies enable small antennas to receive large amounts of data (ITU) in May 2003 that is able to provide the same image (GHz) quality as the existing MPEG-2 with only about half of making it suitable for SKY PerfecTV! broadcasts and communica- SAC the data volume. H.264 is used to distribute large data tions in Japan. The advantage of reception by small antennas is FM radio Subscriber Acquisition Cost. MHz volume, high quality video such as for high-definition TV. somewhat compromised by the fact that the signals are weakened DTH when they bump against water particles in the atmosphere, such MPEG-2 (Moving Picture Experts Group phase 2) DTH is, direct to the home, the direct transmission of as during heavy rain, which can affect reception. MPEG-2 is a video data compression method and is one content to households via satellite or other means. Wind has no affect on signals from communication satellites. Marine Communication of the MPEG standards used for DVD video and stan- KHz dard digital televisions. FTTH Low-frequency FTTH is a network in which an optical fiber runs from the telephone exchange directly to the home. Satellite Basics glossary

definition pay TV services via and Investors Ownership: 100.0%

CS110-degree platform Our Shareholders To Ownership: 100.0%

Multichannel Pay TV Business

SKY Perfect Customer-relations Corporation SKY Perfect Broadcasting Corporation

SKY Perfect Entertainment Corporation OptiCast Inc. Financial Section

SKY Perfect JSAT Corporation Satellite Network, Inc. SKY Perfect JSAT Holdings Inc.

JSAT MOBILE Communications Inc.

JSAT International Inc.

Space & Satellite Business Corporate Data Satellite Basics/Glossary

Annual Report 2013 71