Intelsat, Ltd. (Exact Name of Registrant As Specified in Its Charter)
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Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2005 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 000-50262 Intelsat, Ltd. (Exact Name of Registrant as Specified in Its Charter) Bermuda 98-0346003 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) Wellesley House North, 2nd Floor 90 Pitts Bay Road Pembroke, Bermuda HM 08 (Address of principal executive offices) (Zip Code) (441) 294-1650 Registrant’s telephone number, including area code Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes ☐ No ☒ As of August 9, 2005, 12,000 ordinary shares, par value $1.00 per share, were outstanding. Table of Contents TABLE OF CONTENTS Page PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements: Condensed Consolidated Balance Sheets as of December 31, 2004 and as of June 30, 2005 (Unaudited) 3 Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 2004, and June 30, 2005 4 Unaudited Condensed Consolidated Statements of Operations for the Six Months Ended June 30, 2004 and for the period January 1 to January 31, 2005 (predecessor entity) and for the period February 1 to June 30, 2005 (successor entity). 5 Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2004, the period January 1 to January 31, 2005 (predecessor entity) and the period February 1 to June 30, 2005 (successor entity) 6 Notes to Condensed Consolidated Financial Statements (Unaudited) 7 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 22 Item 3. Quantitative and Qualitative Disclosure About Market Risk 34 Item 4. Controls and Procedures 34 PART II. OTHER INFORMATION Item 1. Legal Proceedings 36 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 36 Item 3. Defaults Upon Senior Securities 36 Item 4. Submission of Matters to a Vote of Security Holders 36 Item 5. Other Information 36 Item 6. Exhibits 37 Table of Contents INTRODUCTION References in this quarterly report to “Intelsat”, the “Company,” “we”, “us” and “our” refer to Intelsat, Ltd. and, unless the context requires otherwise, to its subsidiaries. Intelsat, Ltd. is a limited liability company incorporated under the laws of Bermuda. On January 28, 2005, we were acquired by Intelsat Holdings, Ltd. (“Intelsat Holdings”), a Bermuda company formed at the direction of funds advised by or associated with Apax Partners Worldwide LLP and Apax Partners, Inc., Apollo Management V, L.P., MDCPIV Global Investments, LLP and Permira Advisers LLC through an amalgamation transaction. References to our business and operations following this amalgamation refer to the business and operations of the company continuing from this amalgamation. Our principal executive offices are located at Wellesley House North, 2nd Floor, 90 Pitts Bay Road, Pembroke HM 08, Bermuda. Our telephone number is (441) 294-1650. FINANCIAL AND OTHER INFORMATION Unless otherwise indicated, all references to “dollars” and “$” in this quarterly report are to, and all monetary amounts in this quarterly report are presented in, U.S. dollars. Unless otherwise indicated, the financial information contained in this quarterly report has been prepared in accordance with accounting principles generally accepted in the United States. Certain monetary amounts, percentages and other figures included in this quarterly report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them. In this quarterly report, we refer to and rely on publicly available information regarding our industry and our competitors. Although we believe the information is reliable, we cannot guarantee the accuracy and completeness of the information and have not independently verified it. FORWARD-LOOKING STATEMENTS Some of the statements in this quarterly report constitute forward-looking statements that do not directly or exclusively relate to historical facts. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements as long as they are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from the expectations expressed or implied in the forward-looking statements. When used in this quarterly report, the words “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential” and “continue,” and the negative of these terms, and other similar expressions are intended to identify forward-looking statements. Examples of these forward-looking statements include, but are not limited to, statements regarding the following: the trends that we believe will impact our revenue and operating expenses in the future; the length of time it will take for the failure review board established to investigate the cause of the total loss of our IS-804 satellite to reach its conclusion; our current expectation that the IA-7 anomaly and the total loss of the IS-804 satellite will not result in the acceleration of capital expenditures; our plans for satellite launches in the near to mid term; our expected capital expenditures in 2005 and during the next several years; the impact on our financial position or results of operations of pending legal proceedings; the impact of the acquisition of us by Intelsat Holdings, including the incurrence by Intelsat Subsidiary Holding Company, Ltd., which we refer to as “Intelsat Subsidiary Holding,” and related guaranty executed by Intelsat (Bermuda), Ltd., which we refer to as “Intelsat Bermuda,” of substantial debt and interest expense in connection with the acquisition and in connection with a subsequent repurchase of certain preferred stock of Intelsat Holdings. The forward-looking statements made in this quarterly report reflect our intentions, plans, expectations, assumptions and beliefs about future events. These forward-looking statements are not guarantees of future performance or results and are subject to risks, uncertainties and other factors, many of which are outside of our control. These factors could cause actual results or developments to differ materially from the expectations expressed or implied in the forward-looking statements and include known and unknown risks. Known risks include, among others, the risks discussed in Item 3D — “Risk Factors,” in our Annual Report on Form 20-F for the fiscal year ended December 31, 2004, the political, economic and legal conditions in the markets we are targeting for communications services or in which we operate and other risks and uncertainties inherent in the telecommunications business in general and the satellite communications business in particular. Table of Contents Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee our future results, level of activity, performance or achievements. Because actual results could differ materially from our intentions, plans, expectations, assumptions and beliefs about the future, you are urged not to rely on forward-looking statements in this quarterly report and to view all forward-looking statements made in this quarterly report with caution. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Other factors that may cause results or developments to differ materially from the forward-looking statements made in this quarterly report include, but are not limited to: • the quality and price of comparable communications services offered or to be offered by other satellite operators; and • the perceptions of our business, operations and financial condition and the industry in which we operate by the financial community and ratings agencies. 2 Table of Contents PART I. FINANCIAL INFORMATION Item 1. Financial Statements INTELSAT, LTD. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) Predecessor Entity Successor Entity As of December 31, As of June 30, 2004 2005 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 141,320 $ 360,174 Receivables, net of allowance of $35,343 and $26,514, respectively 228,294 226,004 Insurance receivable 58,320 — Deferred income taxes 12,854 10,656 Total current assets 440,788 596,834 Satellites and other property and equipment, net 3,637,357 3,558,990 Amortizable intangible assets, net 104,612 522,313 Non-amortizable intangible assets