UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

 (Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020September 30, 2021
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 001-35878

i-20210930_g1.jpg
INTELSAT S.A.
(Exact name of registrant as specified in its charter)
_____________________________________
Grand Duchy of Luxembourg98-1009418
(State or Other Jurisdiction of Incorporation or Organization)(I.R.S. Employer Identification No.)
4, rue Albert BorschetteL-1246Luxembourg+35227 841600
(Address of principal executive offices, including zip code)(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Common Shares, nominal value $0.01 per share
INTEQ1
OTC Pink Marketplace1

Securities Exchange Act of 1934: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒   No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒☐Accelerated filer☐
Non-accelerated filer☐☒Smaller reporting company☐
Emerging growth company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ☐    No  ☒
As of June 2, 2020, 142,137,854October 29, 2021, 142,184,518 common shares of the registrant were outstanding, with a nominal value of $0.01 per share.

1 On May 20, 2020, the New York Stock Exchange (“NYSE”) filed a Form 25 with the U.S. Securities and Exchange Commission to delist the common shares, $0.01 par value, of Intelsat S.A. (the “Registrant”) from the NYSE. The delisting became effective 10 days after the Form 25 was filed. The deregistration of the common shares under Section 12(b) of the Act will become effective 90 days after the filing date of the Form 25, at which point the common shares will be deemed registered under Section 12(g) of the Act. The Registrant’s common shares began trading on the OTC Pink Marketplace on May 19, 2020 under the symbol “INTEQ.”

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TABLE OF CONTENTS
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INTRODUCTION
In this Quarterly Report on Form 10-Q, or Quarterly Report, unless otherwise indicated or the context otherwise requires, (1) the terms “we,” “us,” “our,” “the Company” and “Intelsat” refer to Intelsat S.A., and its subsidiaries on a consolidated basis, (2) the term “Intelsat Holdings” refers to our indirect wholly-owned subsidiary, Intelsat Holdings S.A., (3) the term “Intelsat Investments” refers to Intelsat Investments S.A., Intelsat Holdings’ direct wholly-owned subsidiary, (4) the term “Intelsat Luxembourg” refers to Intelsat (Luxembourg) S.A., Intelsat Investments’ direct wholly-owned subsidiary, (5) the term "Intelsat Envision" refers to Intelsat Envision Holdings LLC, Intelsat Luxembourg's direct wholly-owned subsidiary, (6) the terms “Intelsat Connect” and “ICF” refer to Intelsat Connect Finance S.A., Intelsat Envision’s direct wholly-owned subsidiary, and (7) the term “Intelsat Jackson” refers to Intelsat Jackson Holdings S.A., Intelsat Connect’s direct wholly-owned subsidiary. In this Quarterly Report, unless the context otherwise requires, all references to transponder capacity or demand refer to transponder capacity or demand in the C-band and Ku-band frequencies only.
The Company is relying on the U.S. Securities and Exchange Commission’s (the “SEC”) March 25, 2020 Order pursuant to Section 36 of the Exchange Act (Release No. 34-88465) (the “Order”) in delaying the filing of this Quarterly Report for the three months ended March 31, 2020, due to circumstances related to the novel coronavirus (“COVID-19”) pandemic. In particular, COVID-19 has caused limited access to the Company’s facilities and disrupted its normal interactions with its accounting personnel, legal advisors, auditors and others involved in the preparation of this Quarterly Report. The filing of this Quarterly Report on the date hereof will be considered a timely filing under the Order.
FINANCIAL AND OTHER INFORMATION
Unless otherwise indicated, all references to “dollars” and “$” in this Quarterly Report are to, and all monetary amounts in this Quarterly Report are presented in, U.S. dollars. Unless otherwise indicated, the financial information contained in this Quarterly Report has been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”).
Certain monetary amounts, percentages and other figures included in this Quarterly Report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them.
In this Quarterly Report, we refer to and rely on publicly available information regarding our industry and our competitors. Although we believe the information is reliable, we cannot guarantee the accuracy and completeness of the information and have not independently verified it.
FORWARD-LOOKING STATEMENTS
Some of the statements in this Quarterly Report and oral statements made from time to time by our representatives constitute forward-looking statements that do not directly or exclusively relate to historical facts. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements as long as they are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from the expectations expressed or implied in the forward-looking statements.
When used in this Quarterly Report, the words “may,” “will,” “ might,” “should,” “expect,” “plan,” “anticipate,” “project,” “believe,” “estimate,” “predict,” “intend,” “potential,” “outlook” and “continue,” and the negative of these terms, and other similar expressions are intended to identify forward-looking statements and information. Examples of these forward-looking statements include, but are not limited to, statements regarding the following: our belief that the growing worldwide demand for reliable broadband connectivity everywhere at all times, together with our leadership position in our attractive sector, global scale, efficient operating and financial profile, diversified customer sets and sizeable contracted backlog, provide us with a platform for long-term success; our ability to obtain Bankruptcy Court (as defined below) approval with respect to motions or other requests made to the Bankruptcy Court; our ability to confirm and consummate a plan of reorganization;reorganization in the Chapter 11 Cases (as defined below); the effects of the Chapter 11 Cases (as defined below) on our liquidity or results of operations or business prospects; the effects ofother risks related to the Chapter 11 Cases on our business and the interests of various constituents; the length of time that we will operate under Chapter 11 protection; risks associated with third-party motions in the Chapter 11 Cases;as described further below; our belief that the new and differentiated capacity of our next generation Intelsat Epicsoftware-defined satellites (“SDS”) will provide differentiated inventory to help offset recent trends of pricing pressure, new capacity from other satellite operators, and improved access to fiber links in our network services business; our outlook that the increased volume of services provided by our Intelsat Epic fleethigh-throughput satellites (“HTS”) and SDS over time is expected to stabilize the level of business activity in the network services sector; our expectation that over time incremental demand for capacity to support the new 4K format, also known as ultra-high definition, could offset some of the reductions in demand related to use of new compression technologies in our media business; our expectation that our new services and technologies will open new sectors that are much larger and faster growing than those we support today; our belief that selectively investing,supporting our video neighborhoods, employing a
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disciplined yield management approach across our business units, developing and emphasizing the development ofmaintaining strong customer relationships and distribution channels for our four primary customer sets, and successfully executing on our business plan to deliver strong operational results will drive stability in our core business; our expectation that developing and scaling our differentiated managed service offerings in targeted growth verticals and leveraging the global footprint, higher performance and better economics of our Intelsat Epic fleet,HTS and SDS platforms, in addition to the flexibility of our innovative terrestrial network, will drive revenue growth; our belief that completing targeted investments and partnerships in differentiated space and ground infrastructure will provide a seamless interface with the broader telecommunications ecosystem; our ability to incorporateoutlook that seeking partnerships and investments for vertical expansion in the growing mobility sector, for example, through our Gogo Transaction (as defined below), and in adjacent space-based businesses, will position us for long-term growth; our belief that investing in and deploying innovative new technologies into our network that couldand platforms will change the types of applications we can serve and increase our share of the global demand for broadband connectivity; our projection that our government business will benefit over time from our agile satellite fleet serving the increasing demands for mobility services from the
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U.S. government for aeronautical and ground mobile requirements; our intention to maximize the value of our spectrum rights; our expectations as to our ability to comply with the final U.S. Federal Communications Commission (“FCC”) order regarding clearing C-band spectrum in North America, including the availability of adequate resources and funds required to comply and the receipt of accelerated clearing payments set forth in the FCC order; our belief that developing differentiated managed services and investing in related software- and standards-based technology will allow us to unlock opportunities that are essential to providing global broadband connectivity; the trends that we believe will impact our revenue and operating expenses in the future; our assessments regarding how long satellites that have experienced anomalies in the past should be able to provide service on their transponders; our belief as to the likelihood of the cause of the failure of Intelsat 29e in 2019 occurring on our other satellites; our assessment of the risks of future anomalies occurring on our satellites; our plans for satellite launches in the near-term; our expected capital expenditures in 20202021 and during the next several years; our belief that the diversity of our revenue allows us to benefit from changing market conditions and lowers our risk from revenue fluctuations in our service applications and geographic regions; our belief that the scale of our fleet can reduce the financial impact of any satellite anomalies or launch failures and protect against service interruptions; and the impact on our financial position or results of operations of pending legal proceedings.
Forward-looking statements reflect our intentions, plans, expectations, anticipations, projections, estimations, predictions, outlook, assumptions and beliefs about future events. These forward-looking statements speak only as of their dates and are not guarantees of future performance or results and are subject to risks, uncertainties and other factors, many of which are outside of our control. These factors could cause actual results or developments to differ materially from the expectations expressed or implied in the forward-looking statements and include known and unknown risks. Known risks include, among others, the risks discussed in Part I—Item 1A—Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019,2020 (the “2020 Annual Report”), the political, economic, regulatory and legal conditions in the markets we are targeting for communications services or in which we operate and other risks and uncertainties inherent in the telecommunications business in general and the satellite communications business in particular.
Other factors that may cause results or developments to differ materially from historical results or developments or the forward-looking statements made in this Quarterly Report include, but are not limited to: 
•risks associated with operating our in-orbit satellites;
•satellite launch failures, satellite launch and construction delays and in-orbit failures or reduced satellite performance;
•potential changes in the number of companies offering commercial satellite launch services and the number of commercial satellite launch opportunities available in any given time period that could impact our ability to timely schedule future launches and the prices we pay for such launches;
•our ability to obtain new satellite insurance policies with financially viable insurance carriers on commercially reasonable terms or at all, as well as the ability of our insurance carriers to fulfill their obligations;
•possible future losses on satellites that are not adequately covered by insurance;
•U.S. and other government regulation;
•changes in our contracted backlog or expected contracted backlog for future services;services, including any supply chain disruptions;
•pricing pressure and overcapacity in the markets in which we compete;
•our ability to access capital markets for debt or equity;
•the competitive environment in which we operate;
•customer defaults on their obligations to us;
•our international operations and other uncertainties associated with doing business internationally;
•the impact of the COVID-19novel coronavirus (“COVID-19”) pandemic on our business, the economic environment and our expected financial results;
•our expectations as to the benefits and impact on our future financial performance associated with the Company’s purchase of the equity of Gogo Inc.’s (NASDAQ: GOGO) (“Gogo”) commercial aviation business (the “Gogo Transaction”);
•our ability to successfully integrate Gogo’s commercial aviation business;
•litigation; and
•other risks discussed in our 2020 Annual Report or this Quarterly Report.
Further, many of the risks and uncertainties that we face are currently amplified by, and will continue to be amplified by, the risks and uncertainties regarding the Company and certain of its subsidiaries’ voluntary commencement of cases under Chapter 11 (the “Chapter 11 Cases”) under title 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Eastern District of Virginia (the “Bankruptcy Court”);, including but not limited to:
•our ability to improve our liquidity and long-term capital structure and to address our debt service obligations through the restructuring;
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•our ability to obtain timely approval by the Bankruptcy Court with respect to the motions that we have filed or will file in the Chapter 11 Cases, including those related to our debtor-in-possession (“DIP”) financing;
•objections to the Company’s restructuring process or other pleadings filed that could protract the Chapter 11 Cases or interfere with the Company’s ability to consummate the restructuring;
•our ability to retain the exclusive right to propose a Chapter 11 plan of reorganization and our ability to achieve confirmation of such plan;
•our ability to develop, obtain support for, confirm and consummate a Chapter 11 plan of reorganization, including the proposed plan of reorganization the Company filed in the Bankruptcy Court on August 24, 2021, as may be modified or amended;
•the length of time that the Company will operate under Chapter 11 protection and the continued availability of operating capital during the pendency of the Chapter 11 Cases;
•our substantial level of indebtedness and related debt service obligations and restrictions, including those expected to be imposed by covenants in any exit financing, that may limit our operational and financial flexibility;
•the conditions to which our debtor-in-possessionDIP financing is subject to and the risk that these conditions may not be satisfied for various reasons, including for reasons outside of our control;
•litigation;our ability to develop and execute our business plan during the pendency of the Chapter 11 Cases;
•increased administrative and legal costs related to the Chapter 11 process;
•potential delays in the Chapter 11 process due to the effects of the COVID-19 pandemic; and
•our ability to continue as a going concern and our ability to maintain relationships with regulators, suppliers, customers and employees, including the pending retirement and transition period of our current Chief Executive Officer, and other risks discussed in our Annual Report or this Quarterly Report.third parties as a result of such going concern, during the restructuring and the pendency of the Chapter 11 Cases.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee our future results, level of activity, performance or achievements. Because actual results could differ materially from our intentions, plans, expectations, anticipations, projections, estimations, predictions, outlook, assumptions and beliefs about the future, you are urged not to rely on forward-looking statements in this Quarterly Report and to view all forward-looking statements made in this Quarterly
4

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.

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PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements
INTELSAT S.A. (DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
December 31, 2019March 31, 2020
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents$810,626  $782,522  
Restricted cash20,238  18,100  
Receivables, net of allowances of $40,028 in 2019 and $51,061 in 2020255,722  234,517  
Contract assets47,721  37,363  
Prepaid expenses and other current assets39,230  46,723  
Total current assets1,173,537  1,119,225  
Satellites and other property and equipment, net4,702,063  4,616,207  
Goodwill2,620,627  2,620,627  
Non-amortizable intangible assets2,452,900  2,440,700  
Amortizable intangible assets, net276,752  268,976  
Contract assets, net of current portion74,109  63,716  
Other assets504,394  566,223  
Total assets$11,804,382  $11,695,674  
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued liabilities$88,107  $160,577  
Taxes payable6,402  10,996  
Employee related liabilities44,648  27,905  
Accrued interest payable308,657  307,899  
Current portion of long-term debt—  14,476,612  
Contract liabilities137,706  139,257  
Deferred satellite performance incentives42,835  43,387  
Other current liabilities62,446  66,308  
Total current liabilities690,801  15,232,941  
Long-term debt14,465,483  —  
Contract liabilities, net of current portion1,113,450  1,105,051  
Deferred satellite performance incentives, net of current portion175,837  167,479  
Deferred income taxes55,171  59,937  
Accrued retirement benefits, net of current portion125,511  121,611  
Other long-term liabilities166,977  216,884  
Shareholders’ deficit:
Common shares; nominal value $0.01 per share1,411  1,421  
Paid-in capital2,565,696  2,566,667  
Accumulated deficit(7,503,830) (7,723,517) 
Accumulated other comprehensive loss(63,135) (62,487) 
Total Intelsat S.A. shareholders’ deficit(4,999,858) (5,217,916) 
Noncontrolling interest11,010  9,687  
Total liabilities and shareholders’ deficit$11,804,382  $11,695,674  
December 31, 2020September 30, 2021
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents$1,060,917 $636,510 
Restricted cash21,130 27,675 
Receivables, net of allowances of $40,785 in 2020 and $32,949 in 2021254,273 217,235 
Receivables relating to C-band405,171 1,035,578 
Contract assets, net of allowances39,774 42,447 
Inventory147,094 125,288 
Prepaid expenses and other current assets136,611 140,330 
Total current assets2,064,970 2,225,063 
Satellites and other property and equipment, net4,757,877 4,981,394 
Goodwill2,698,247 2,689,482 
Non-amortizable intangible assets2,295,000 2,295,000 
Amortizable intangible assets, net290,569 262,355 
Contract assets, net of current portion and allowances86,017 71,914 
Other assets605,001 727,862 
Total assets$12,797,681 $13,253,070 
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued liabilities$252,998 $279,122 
Taxes payable7,493 6,486 
Employee-related liabilities43,404 43,382 
Accrued interest payable17,747 19,094 
Current maturities of long-term debt5,903,724 6,162,315 
Contract liabilities157,320 858,941 
Deferred satellite performance incentives47,377 54,512 
Other current liabilities73,479 105,416 
Total current liabilities6,503,542 7,529,268 
Contract liabilities, net of current portion1,447,891 1,309,270 
Deferred satellite performance incentives, net of current portion138,116 121,439 
Deferred income taxes61,345 77,485 
Accrued retirement benefits, net of current portion129,837 113,452 
Other long-term liabilities262,900 315,939 
Liabilities subject to compromise10,168,518 10,169,243 
Shareholders’ deficit:
Common shares, nominal value $0.01 per share1,421 1,422 
Paid-in capital2,573,840 2,577,607 
Accumulated deficit(8,416,410)(8,889,282)
Accumulated other comprehensive loss(80,322)(77,261)
Total Intelsat S.A. shareholders’ deficit(5,921,471)(6,387,514)
Noncontrolling interest7,003 4,488 
Total liabilities and shareholders’ deficit$12,797,681 $13,253,070 
See accompanying notes to unaudited condensed consolidated financial statements.
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INTELSAT S.A. (DEBTOR-IN-POSSESSION)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended
March 31, 2019		Three Months Ended
March 31, 2020
Revenue$528,449  $458,820  
Operating expenses:
Direct costs of revenue (excluding depreciation and amortization)105,405  105,085  
Selling, general and administrative51,658  80,967  
Depreciation and amortization171,094  163,048  
Impairment of non-amortizable intangible assets—  12,200  
Total operating expenses328,157  361,300  
Income from operations200,292  97,520  
Interest expense, net316,602  318,329  
Other income, net1,413  2,735  
Loss before income taxes(114,897) (218,074) 
Provision for income taxes5,145  141  
Net loss(120,042) (218,215) 
Net income attributable to noncontrolling interest(580) (556) 
Net loss attributable to Intelsat S.A.$(120,622) $(218,771) 
Net loss per common share attributable to Intelsat S.A.:
Basic$(0.87) $(1.55) 
Diluted$(0.87) $(1.55) 
Three Months Ended
September 30, 2020		Three Months Ended
September 30, 2021		Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2021
Revenue$489,449 $526,095 $1,430,303 $1,536,720 
Operating expenses:
Direct costs of revenue (excluding depreciation and amortization)119,969 177,176 331,191 505,798 
Selling, general and administrative69,215 96,796 214,586 299,499 
Depreciation and amortization162,573 162,017 488,235 495,517 
Impairment of non-amortizable intangible and other assets— — 46,243 — 
Other operating expense—C-band298 17,867 580 140,861 
Total operating expenses352,055 453,856 1,080,835 1,441,675 
Income from operations137,394 72,239 349,468 95,045 
Interest expense, net(138,075)(126,600)(678,937)(388,836)
Other income, net3,067 10,196 8,564 40,133 
Reorganization items(36,367)(98,316)(335,059)(203,719)
Loss before income taxes(33,981)(142,481)(655,964)(457,377)
Income tax benefit (expense)18,650 (2,605)17,691 (13,716)
Net loss(15,331)(145,086)(638,273)(471,093)
Net income attributable to noncontrolling interest(600)(604)(1,784)(1,779)
Net loss attributable to Intelsat S.A.$(15,931)$(145,690)$(640,057)$(472,872)
Net loss per common share attributable to Intelsat S.A.:
Basic$(0.11)$(1.02)$(4.51)$(3.33)
Diluted$(0.11)$(1.02)$(4.51)$(3.33)
See accompanying notes to unaudited condensed consolidated financial statements.
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INTELSAT S.A. (DEBTOR-IN-POSSESSION)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
Three Months Ended
March 31, 2019		Three Months Ended
March 31, 2020
Net loss$(120,042) $(218,215) 
Other comprehensive income (loss), net of tax:
Defined benefit retirement plans:
Reclassification adjustment for amortization of unrecognized prior service credits, net of tax included in other income, net(626) (626) 
Reclassification adjustment for amortization of unrecognized actuarial loss, net of tax included in other income, net736  1,274  
Adoption of ASU 2018-02 (see Note 13—Income Taxes)(16,191) —  
Other comprehensive income (loss)(16,081) 648  
Comprehensive loss(136,123) (217,567) 
Comprehensive income attributable to noncontrolling interest(580) (556) 
Comprehensive loss attributable to Intelsat S.A.$(136,703) $(218,123) 
Three Months Ended
September 30, 2020		Three Months Ended
September 30, 2021		Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2021
Net loss$(15,331)$(145,086)$(638,273)$(471,093)
Other comprehensive income (loss), net of tax:
Defined benefit retirement plans:
Reclassification adjustment for amortization of unrecognized prior service credits, net of tax included in other income, net(626)(626)(1,878)(1,878)
Reclassification adjustment for amortization of unrecognized actuarial loss, net of tax included in other income, net1,274 1,672 3,822 4,939 
Other comprehensive income648 1,046 1,944 3,061 
Comprehensive loss(14,683)(144,040)(636,329)(468,032)
Comprehensive income attributable to noncontrolling interest(600)(604)(1,784)(1,779)
Comprehensive loss attributable to Intelsat S.A.$(15,283)$(144,644)$(638,113)$(469,811)
See accompanying notes to unaudited condensed consolidated financial statements.
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INTELSAT S.A. (DEBTOR-IN-POSSESSION)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
(in thousands, except where otherwise noted)
Common Shares
Number of Shares
(in millions)		AmountPaid-in
Capital		Accumulated
Deficit		Accumulated Other Comprehensive LossTotal Intelsat S.A. Shareholders’ DeficitNoncontrolling
Interest
Balance at December 31, 2019141.1 $1,411 $2,565,696 $(7,503,830)$(63,135)$(4,999,858)$11,010 
Net income (loss)— — — (218,771)— (218,771)556 
Dividends paid to noncontrolling interests— — — — — — (1,879)
Share-based compensation1.0 10 971 — — 981 — 
Postretirement/pension liability adjustment, net of tax— — — — 648 648 — 
Adoption of ASU 2016-13
— — — (916)— (916)— 
Balance at March 31, 2020142.1 $1,421 $2,566,667 $(7,723,517)$(62,487)$(5,217,916)$9,687 
Net income (loss)— — — (405,355)— (405,355)628 
Share-based compensation— — 2,737 — — 2,737 — 
Postretirement/pension liability adjustment, net of tax— — — — 648 648 — 
Balance at June 30, 2020142.1 $1,421 $2,569,404 $(8,128,872)$(61,839)$(5,619,886)$10,315 
Net income (loss)— — — (15,931)— (15,931)600 
Dividends paid to noncontrolling interests— — — — — — (3,080)
Share-based compensation— — 2,920 — — 2,920 — 
Postretirement/pension liability adjustment, net of tax— — — — 648 648 — 
Balance at September 30, 2020142.1 $1,421 $2,572,324 $(8,144,803)$(61,191)$(5,632,249)$7,835 
See accompanying notes to unaudited condensed consolidated financial statements.








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INTELSAT S.A. (DEBTOR-IN-POSSESSION)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
(in thousands, except where otherwise noted)

Common
Shares
(in millions)		AmountPaid-in
Capital		Accumulated
Deficit		Accumulated Other Comprehensive LossTotal Intelsat S.A. Shareholders’ DeficitNoncontrolling
Interest
Balance at December 31, 2018138.0  $1,380  $2,551,471  $(6,606,426) $(43,430) $(4,097,005) $14,396  
Net income (loss)—  —  —  (120,622) —  (120,622) 580  
Dividends paid to noncontrolling interests—  —  —  —  —  —  (1,925) 
Share-based compensation2.6  26  2,913  —  —  2,939  —  
Postretirement/pension liability adjustment, net of tax—  —  —  —  110  110  —  
Adoption of ASU 2018-02 (see Note 12—Income Taxes)—  —  —  16,191  (16,191) —  —  
Balance at March 31, 2019140.6  $1,406  $2,554,384  $(6,710,857) $(59,511) $(4,214,578) $13,051  

Common
Shares
(in millions)		AmountPaid-in
Capital		Accumulated
Deficit		Accumulated Other Comprehensive LossTotal Intelsat S.A. Shareholders’ DeficitNoncontrolling
Interest
Balance at December 31, 2019141.1  $1,411  $2,565,696  $(7,503,830) $(63,135) $(4,999,858) $11,010  
Net income (loss)—  —  —  (218,771) —  (218,771) 556  
Dividends paid to noncontrolling interests—  —  —  —  —  —  (1,879) 
Share-based compensation1.0  10  971  —  —  981  —  
Postretirement/pension liability adjustment, net of tax—  —  —  —  648  648  —  
Adoption of ASU 2016-13 (see Note 1—General)—  —  —  (916) —  (916) —  
Balance at March 31, 2020142.1  $1,421  $2,566,667  $(7,723,517) $(62,487) $(5,217,916) $9,687  
See accompanying notes to unaudited condensed consolidated financial statements.


9

INTELSAT S.A.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended
March 31, 2019		Three Months Ended
March 31, 2020
Cash flows from operating activities:
Net loss$(120,042) $(218,215) 
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization171,094  163,048  
Provision for doubtful accounts411  19,944  
Foreign currency transaction loss1,030  6,380  
Loss on disposal of assets40  —  
Impairment of non-amortizable intangible assets—  12,200  
Share-based compensation2,707  3,706  
Deferred income taxes2,029  2,181  
Amortization of discount, premium, issuance costs and related costs10,049  11,196  
Amortization of actuarial loss and prior service credits for retirement benefits112  659  
Unrealized losses on derivative financial instruments9,526  335  
Unrealized (gains) losses on investments and loans held-for-investment(595) 8  
Sales-type lease6,913  —  
Other non-cash items(108) —  
Changes in operating assets and liabilities:
Receivables29,396  (939) 
Prepaid expenses, contract and other assets(22,826) 19,510  
Accounts payable and accrued liabilities2,106  14,743  
Accrued interest payable33,007  (757) 
Deferred revenue and contract liabilities(8,300) (6,916) 
Accrued retirement benefits(3,115) (3,900) 
Other long-term liabilities3,900  (8,906) 
Net cash provided by operating activities117,334  14,277  
Cash flows from investing activities:
Payments for satellites and other property and equipment (including capitalized interest)(93,297) (38,026) 
Origination of loans held-for-investment(10,000) (1,150) 
Proceeds from loans held-for-investment—  724  
Capital contribution to unconsolidated affiliate (including capitalized interest)(338) —  
Other proceeds from satellites—  5,625  
Net cash used in investing activities(103,635) (32,827) 
Cash flows from financing activities:
Principal payments on deferred satellite performance incentives(7,259) (7,806) 
Dividends paid to noncontrolling interest(1,925) (1,879) 
Proceeds from exercise of employee stock options232  —  
Other financing activities297  —  
Net cash used in financing activities(8,655) (9,685) 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(443) (2,007) 
Net change in cash, cash equivalents and restricted cash4,601  (30,242) 
Cash, cash equivalents, and restricted cash, beginning of period507,157  830,864  
Cash, cash equivalents, and restricted cash, end of period$511,758  $800,622  
Supplemental cash flow information:
Interest paid, net of amounts capitalized$238,407  $282,895  
Income taxes paid, net of refunds1,936  964  
Supplemental disclosure of non-cash investing activities:
Accrued capital expenditures$8,595  $48,255  
Common Shares
Number of Shares
(in millions)		AmountPaid-in
Capital		Accumulated
Deficit		Accumulated Other Comprehensive LossTotal Intelsat S.A. Shareholders’ DeficitNoncontrolling
Interest
Balance at December 31, 2020142.1 $1,421 $2,573,840 $(8,416,410)$(80,322)$(5,921,471)$7,003 
Net income (loss)— — — (174,876)— (174,876)570 
Dividends paid to noncontrolling interests— — — — — — (1,417)
Share-based compensation0.1 1 723 — — 724 — 
Postretirement/pension liability adjustment, net of tax— — — — 969 969 — 
Balance at March 31, 2021142.2 $1,422 $2,574,563 $(8,591,286)$(79,353)$(6,094,654)$6,156 
Net income (loss)— — — (152,306)— (152,306)604 
Dividends paid to noncontrolling interests— — — — — — (1,436)
Share-based compensation— — 1,581 — — 1,581 — 
Postretirement/pension liability adjustment, net of tax— — — — 1,046 1,046 — 
Balance at June 30, 2021142.2 $1,422 $2,576,144 $(8,743,592)$(78,307)$(6,244,333)$5,324 
Net income (loss)— — — (145,690)— (145,690)604 
Dividends paid to noncontrolling interests— — — — — — (1,440)
Share-based compensation— — 1,463 — — 1,463 — 
Postretirement/pension liability adjustment, net of tax— — — — 1,046 1,046 — 
Balance at September 30, 2021142.2 $1,422 $2,577,607 $(8,889,282)$(77,261)$(6,387,514)$4,488 
See accompanying notes to unaudited condensed consolidated financial statements.
10


INTELSAT S.A. (DEBTOR-IN-POSSESSION)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2021
Cash flows from operating activities:
Net loss$(638,273)$(471,093)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization488,235 495,517 
Provision for expected credit losses36,360 21,729 
Foreign currency transaction losses7,330 2,639 
Loss on disposal of assets— 43 
Impairment of non-amortizable intangible and other assets46,243 — 
Share-based compensation9,399 19,377 
Deferred income taxes4,720 5,404 
Amortization of discount, premium, issuance costs and related costs19,689 7,559 
Non-cash reorganization items196,974 — 
Debtor-in-possession financing fees52,182 46,944 
Amortization of actuarial loss and prior service credits for retirement benefits1,976 3,189 
Unrealized losses on derivative financial instruments372 — 
Unrealized (gains) losses on investments and loans held-for-investment721 (25,226)
Amortization of supplemental type certificate costs— 8,549 
Other non-cash items— (133)
Changes in operating assets and liabilities:
Receivables2,769 22,554 
Prepaid expenses, contract and other assets(67,253)17,557 
Accounts payable and accrued liabilities60,624 3,603 
Accrued interest payable48,713 1,347 
Contract liabilities(62,737)(67,054)
Accrued retirement benefits(12,253)(16,385)
Other long-term liabilities(1,062)(25,944)
Net cash provided by operating activities194,729 50,176 
Cash flows from investing activities:
Capital expenditures (including capitalized interest)(419,952)(667,885)
Acquisition of loans held-for-investment(2,300)— 
Proceeds from sale of investment— 15,000 
Loan amendment fees received— 1,800 
Proceeds from principal payments on loans held-for-investment973 208 
Capital contribution to unconsolidated affiliate (including capitalized interest)(2,692)— 
Acquisition of intangible assets— (3,315)
Other proceeds from satellites5,625 — 
Net cash used in investing activities(418,346)(654,192)
Cash flows from financing activities:
Proceeds from debtor-in-possession financing500,000 1,250,000 
Repayments of debtor-in-possession financing— (1,000,000)
Debtor-in-possession financing fees(52,182)(46,944)
Principal payments on deferred satellite performance incentives(25,428)(14,859)
Dividends paid to noncontrolling interest(4,959)(4,293)
Net cash provided by financing activities417,431 183,904 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(4,328)(3,250)
Net change in cash, cash equivalents and restricted cash189,486 (423,362)
Cash, cash equivalents, and restricted cash, beginning of period830,864 1,087,547 
Cash, cash equivalents, and restricted cash, end of period$1,020,350 $664,185 
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Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2021
Supplemental cash flow information:
Cash paid for reorganization items included in cash flows from operating activities$53,983 $152,675 
Interest paid, net of amounts capitalized532,234 307,901 
Income taxes paid, net of refunds4,717 2,664 
Supplemental disclosure of non-cash investing activities:
Accrued capital expenditures$51,221 $67,944 
Conversion of loans held-for-investment to equity securities4,802 — 
Capitalization of deferred satellite performance incentives— 5,318 
Conversion of payment-in-kind interest on loans held-for-investment— 1,762 
Purchase price adjustment— 7,843 
See accompanying notes to unaudited condensed consolidated financial statements.
12


INTELSAT S.A. (DEBTOR-IN-POSSESSION)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2020September 30, 2021
Note 1 1—General
Basis of Presentation
The accompanying condensed consolidated financial statements of Intelsat S.A. and its subsidiaries (“Intelsat S.A.,” “we,” “us,” “our” or the “Company”) have not been audited, but are prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. References to U.S. GAAP issued by the Financial Accounting Standards Board (“FASB”) in these footnotes are to the FASB Accounting Standards Codification (“ASC”). The unaudited condensed consolidated financial statements include all adjustments (consisting only of normal and recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of these financial statements. The results of operations for the periods presented are not necessarily indicative of operating results for the full year or for any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019,2020 (the “2020 Annual Report”), on file with the U.S. Securities and Exchange Commission ("SEC"(“SEC”).
Use of Estimates
The preparation of these condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of these condensed consolidated financial statements, the reported amounts of revenues and expenses during the reporting periods, and the disclosures of contingent liabilities. Accordingly, ultimate results could differ from those estimates.
C-band Spectrum Clearing
On March 3, 2020, the U.S. Federal Communications Commission (“FCC”) issued its final order in the C-band proceeding (the “FCC Final Order”), which, among other things, provides for monetary incentives for fixed satellite services (“FSS”) providers to clear a portion of the C-band spectrum on an accelerated basis (the “Acceleration Payments”). On August 14, 2020, Intelsat License LLC (“Intelsat License”) filed its C-band spectrum transition plan with the FCC, with ongoing updates as requested by the FCC. The most recent amended transition plan was filed on September 30, 2021.
Under the FCC Final Order, Intelsat License is eligible to receive Acceleration Payments of approximately $1.2 billion and $3.7 billion based on the milestone clearing certification dates of December 5, 2021 and December 5, 2023, with the respective payments expected to be received in the first half of each successive year, respectively, subject to the satisfaction of certain deadlines and other conditions. In addition, under the FCC Final Order, we are also entitled to receive reimbursement payments for certain C-band spectrum clearing expenses incurred, subject to the satisfaction of certain conditions set forth in the FCC Final Order. As of December 31, 2020 and September 30, 2021, we incurred $405.2 million and $1.0 billion, respectively, related to expected reimbursable costs associated with the FCC Final Order, which are included within the receivables relating to C-band line item on our condensed consolidated balance sheets. Fulfillment costs incurred as a result of the FCC Final Order, which include costs to pay personnel or third parties to assist with customer reconfiguration and relocation, installation of filters, and program management costs, are expensed as incurred and are included within other operating expense—C-band on our condensed consolidated statements of operations. On October 4, 2021, as subsequently amended on October 15, 2021, Intelsat License filed its Phase I Certification of Accelerated Relocation, indicating completion of required clearing activities to satisfy the December 5, 2021 deadline and requesting FCC validation to receive the $1.2 billion Acceleration Payment.
Impact of COVID-19 on the Company
As a result of the novel coronavirus (“COVID-19”) pandemic in 2020 and continuing into 2021, in an effort to safeguard public health, governments around the world, including United States (“U.S.”) federal, state and local governments, implemented a number of orders and restrictions on travel and businesses, among other things. Some of these measures remain in effect and have negatively impacted the U.S. and other economies around the world in the short-term, while the long-term economic impact of COVID-19 remains unknown.
The COVID-19 pandemic has had an adverse impact on our business, results of operations and financial condition, a trend we expect to continue. Among the impacts of the COVID-19 pandemic were a reduction of revenue and a decreased likelihood of
13


collection from certain mobility customers and our Intelsat CA (as defined below) business. We continue to closely monitor the ongoing impact on our employees, customers, business and results of operations.
Bankruptcy Accounting
Our consolidated financial statements included herein have been prepared as if we are a going concern and reflect the application of ASC 852, Reorganizations (“ASC 852”). ASC 852 requires the financial statements, for periods subsequent to the commencement of our Chapter 11 proceedings, to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, we classify liabilities and obligations whose treatment and satisfaction are dependent on the outcome of the reorganization under the Chapter 11 proceedings as liabilities subject to compromise on our condensed consolidated balance sheets. In addition, we classify all income, expenses, gains or losses that are incurred or realized as a result of the Chapter 11 proceedings as reorganization items in our condensed consolidated statements of operations. See Note 2—Chapter 11 Proceedings, Ability to Continue as a Going Concern and Other Related Matters.
Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents consist of cash on hand and highly liquid investments with original maturities of three months or less, which are generally time deposits with banks and money market funds. The carrying amount of these investments approximates fair value. Restricted cash represents legally restricted amounts being held as a compensating balance for certain outstanding letters of credit.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within our condensed consolidated balance sheets to the total sum of these amounts reported in our condensed consolidated statements of cash flows (in thousands):
As of
December 31, 2020		As of
September 30, 2021
Cash and cash equivalents$1,060,917 $636,510 
Restricted cash21,130 27,675 
Restricted cash included in other assets5,500 — 
Cash, cash equivalents and restricted cash$1,087,547 $664,185 
Receivables and Allowance for Credit Losses
We provide satellite services and extend credit to numerous customers in the satellite communication, telecommunications and video markets, as well as the airline industry. We monitor our exposure to credit losses and maintain allowances for credit losses and anticipated losses. The Company’s methodology to measure the provision for credit losses considers all relevant information, including but not limited to, information about historical collectability, current conditions and reasonable and supportable forecasts of future economic conditions. We believe we have adequate customer collateral and reserves to cover our exposure.
The following table provides a roll-forward of the allowance for credit losses reported within our condensed consolidated balance sheets (in thousands):
DescriptionThree Months Ended September 30, 2020Three Months Ended September 30, 2021
Accounts ReceivableContract AssetsAccounts ReceivableContract Assets
Balance at July 1$27,578 $1,638 $29,202 $4,346 
Charged to costs and expenses6,743 75 6,484 (617)
Deductions(1)
(4,483)— (2,737)— 
Balance at September 30$29,838 $1,713 $32,949 $3,729 
DescriptionNine Months Ended September 30, 2020Nine Months Ended September 30, 2021
Accounts ReceivableContract AssetsAccounts ReceivableContract Assets
Balance at January 1$40,028 $— $40,785 $3,889 
Cumulative-effect adjustment of ASU 2016-13 adoption— 916 — — 
Charged to costs and expenses35,563 797 21,889 (160)
Deductions(1)
(45,753)— (29,725)— 
Balance at September 30$29,838 $1,713 $32,949 $3,729 
(1)Uncollectible accounts written off, net of recoveries.
14


Recently Adopted Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting For Income Taxes (“ASU 2019-12”). The standard removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation and calculating income taxes in interim periods. It also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. ASU 2019-12 was adopted in the first quarter of 2021. The adoption of ASU 2019-12 did not have a material effect on our condensed consolidated financial statements and associated disclosures.
Recently Issued Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). The standard simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts regarding an entity’s own equity. ASU 2020-06 is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. ASU 2020-06 will be effective for the Company for interim and annual periods in fiscal years beginning after December 15, 2021. We are in the process of evaluating the impact that ASU 2020-06 will have on our condensed consolidated financial statements and associated disclosures.
In October 2021, the FASB issued ASU 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). The standard improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to (1) recognition of an acquired contract liability and (2) payment terms and their effect on subsequent revenue recognized by the acquirer. ASU 2021-08 will be effective for the Company for interim and annual periods in fiscal years beginning after December 15, 2022. We are in the process of evaluating the impact that ASU 2021-08 will have on our condensed consolidated financial statements and associated disclosures.
Note 2—Chapter 11 Proceedings, Ability to Continue as a Going Concern and Other Related Matters
Voluntary Reorganization under Chapter 11
On May 13, 2020, Intelsat S.A. and certain of its subsidiaries (each, a “Debtor” and collectively, the “Debtors”) commenced voluntary cases (the “Chapter 11 Cases”) under title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Eastern District of Virginia (the “Bankruptcy Court”). Primary factors causing us to file for Chapter 11 protection included the Company’s intention to participate in the accelerated clearing process of C-band spectrum set forth in the FCC Final Order, requiring the Company to incur significant costs related to clearing activities well in advance of receiving reimbursement for such costs and the need for additional financing to fund the C-band clearing process, service our current debt obligations, and meet our operating requirements, as well as the economic slowdown impacting the Company and several of its end markets due to the COVID-19 pandemic.
The Chapter 11 process can be unpredictable and involves significant risks and uncertainties. Pursuant to various orders from the Bankruptcy Court, the Debtors have received approval from the Bankruptcy Court to generally maintain their ordinary operations and uphold certain commitments to their stakeholders, including employees, customers, and vendors, during the restructuring process, subject to the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code. Our ability to fund operating expenses may be subject to obtaining further approvals from the Bankruptcy Court in connection with the Chapter 11 Cases.
On June 9, 2020, Intelsat Jackson received approval from the Bankruptcy Court to enter into a multiple draw superpriority senior secured debtor-in-possession term loan facility (as amended, the “Original DIP Facility”) in an aggregate principal amount of $1.0 billion on the terms and conditions as set forth in the DIP credit agreement (as amended, the “Original DIP Credit Agreement”), and on June 17, 2020, Intelsat Jackson and certain of its subsidiaries as guarantors (together with Intelsat Jackson, the “DIP Debtors”) entered into the final Original DIP Credit Agreement. On September 14, 2021, the DIP Debtors received approval from the Bankruptcy Court (the “DIP Order”) to enter into a multiple draw superpriority senior secured debtor-in-possession term loan facility (the “New DIP Facility”) in an aggregate principal amount of $1.5 billion on the terms and conditions as set forth in the credit agreement for the New DIP Facility (the “New DIP Credit Agreement”), and on September 14, 2021, Intelsat Jackson and certain of the DIP Debtors entered into the final New DIP Credit Agreement. The New DIP Facility provided $1.25 billion in new money at closing for Intelsat Jackson to, among other things, refinance the Original DIP Facility and, provides the ability for Intelsat Jackson, at its sole discretion, to make an incremental $250.0 million draw. For additional information regarding our credit facilities, see Note 11—Debt.
On July 11, 2020, the Debtors filed with the Bankruptcy Court schedules and statements setting forth, among other things, the assets and liabilities of each of the Debtors, subject to the assumptions filed in connection therewith. These schedules and statements may be subject to further amendment or modification after filing.
15


On February 11, 2021, the Debtors entered into a plan support agreement with certain of the Debtors’ prepetition secured and unsecured creditors. After entry into such plan support agreement, the Debtors continued to engage with their stakeholders and on August 24, 2021, entered into an amended plan support agreement (together with all exhibits and schedules thereto, the “PSA”) with certain of the Debtors’ prepetition secured and unsecured creditors (the “Consenting Creditors” and together with the Debtors, the “PSA Parties”). The PSA contains certain covenants on the part of the PSA Parties, including but not limited to the Consenting Creditors voting in favor of the Amended Joint Chapter 11 Plan of Reorganization of Intelsat S.A. and Its Debtor Affiliates (as amended, the “Plan”), and provides that the Debtors shall achieve certain milestones (unless extended or waived in writing). In connection with the PSA, on August 24, 2021, the Debtors filed the Plan and the Amended Disclosure Statement for the Amended Joint Chapter 11 Plan of Reorganization of Intelsat S.A. and Its Debtor Affiliates (as amended, the “Disclosure Statement”), which describes a variety of topics related to the Chapter 11 Cases, including (i) events leading to the Chapter 11 Cases; (ii) significant events that took place during the Chapter 11 Cases; (iii) certain terms of the Plan; and (iv) certain anticipated risk factors associated with, and anticipated consequences of the Plan. On September 7, 2021, the Bankruptcy Court entered an order approving the Disclosure Statement. A hearing on confirmation of the Plan has been set by the Bankruptcy Court to begin on December 2, 2021.
The filing of the Chapter 11 Cases constituted an event of default that accelerated substantially all of our obligations under the documents governing the prepetition existing indebtedness of Intelsat S.A., Intelsat Luxembourg, Intelsat Connect and Intelsat Jackson. For additional discussion regarding the impact of the Chapter 11 Cases on our debt obligations, see Note 11—Debt.
While the Chapter 11 Cases are pending, the Debtors do not anticipate making interest payments due under their respective unsecured debt instruments; however, the Debtors expect to make monthly interest payments on their senior secured debt instruments pursuant to the adequate protection requirements under the DIP Order. The contractual interest expense pursuant to our unsecured debt instruments that was not recognized in our condensed consolidated statements of operations was $196.4 million and $192.3 million for the three months ended September 30, 2020 and 2021, respectively, and $298.9 million and $576.8 million for the nine months ended September 30, 2020 and 2021, respectively.
Delisting and Deregistration of Intelsat S.A. Common Shares
On May 20, 2020, the New York Stock Exchange (“NYSE”) filed a Form 25 with the SEC to delist the Company’s common shares, $0.01 par value from the NYSE. The delisting became effective 10 days after the Form 25 was filed. The deregistration of the common shares under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) became effective 90 days after the filing date of the Form 25. As of September 30, 2021, the common shares remain registered under Section 12(g) and Section 15(d) of the Exchange Act. However, the Company filed a Form 15 to terminate the registration of its common shares under Section 12(g) of the Exchange Act on September 3, 2021. We expect the termination of the registration of the common shares under Section 12(g) to become effective 90 days after the filing date of the Form 15. The Company’s common shares began trading on the OTC Pink Marketplace on May 19, 2020 under the symbol “INTEQ.”
Liabilities Subject to Compromise
Prepetition unsecured liabilities of the Debtors subject to compromise under the Chapter 11 proceedings have been distinguished from secured liabilities that are not expected to be compromised and post-petition liabilities in our condensed consolidated balance sheets. Liabilities subject to compromise have been recorded at the amounts expected to be allowed by the Bankruptcy Court. The ultimate settlement amounts of these liabilities remain at the discretion of the Bankruptcy Court and may vary from the expected allowed amounts.
Liabilities subject to compromise consisted of the following (in thousands):
As of
December 31, 2020		As of
September 30, 2021
Accounts payable$9,545 $10,671 
Debt subject to comprise9,782,161 9,782,161 
Accrued interest on debt subject to compromise341,676 341,676 
Other long-term liabilities subject to compromise35,136 34,735 
Total liabilities subject to compromise$10,168,518 $10,169,243 
Reorganization Items
The expenses, gains and losses directly and incrementally resulting from the Chapter 11 Cases are separately reported as reorganization items in our condensed consolidated statement of operations.
16


Reorganization items consisted of the following (in thousands):
Three Months Ended
September 30, 2020		Three Months Ended
September 30, 2021		Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2021
Adjustment of debt discount, premium and issuance costs$— $— $196,974 $— 
Debtor-in-possession financing fees— 46,944 52,182 46,944 
Professional fees36,262 50,825 85,233 156,199 
Other reorganization costs105 547 670 576 
Total reorganization items$36,367 $98,316 $335,059 $203,719 
Going Concern
Our condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the normal course of business. In connection with the preparation of our condensed consolidated financial statements, we conducted an evaluation as to whether there were conditions and events, considered in the aggregate, that raised substantial doubt as to the Company’s ability to continue as a going concern. As reflected in our condensed consolidated financial statements, the Company had cash and cash equivalents of $782.5$636.5 million and an accumulated deficit of $7.7$8.9 billion as of March 31, 2020.September 30, 2021. The Company also generated income from operations of $97.5$95.0 million and a net loss of $218.2$471.1 million for the threenine months ended March 31, 2020.September 30, 2021.
On May 13, 2020,In light of the Company and certain of its subsidiaries (each, a “Debtor”) commenced voluntary cases (the “Chapter 11 Cases”) underCompany’s Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Eastern District of Virginia (the “Bankruptcy Court”). Primary factors causing us to file for Chapter 11 protection included the Company’s intention to participate in the accelerated clearing process of C-band spectrum set forth in the U.S. Federal Communications Commission’s (“FCC”) final order on the topic, requiring the Company to incur significant costs now related to clearing activities well in advance of receiving reimbursement for such costs, as well as the economic slowdown impacting the Company and several of its end markets due to the novel coronavirus (“COVID-19”) pandemic.
Prior to the commencement of the Chapter 11 Cases, the Company entered into a commitment letter (the “Commitment Letter”) with certain parties (the “Commitment Parties”), pursuant to which, and subject to the satisfaction of certain customary conditions, including the approval of the Bankruptcy Court, the Commitment Parties have agreed to backstop a non-amortizing multiple draw super-priority senior secured debtor-in-possession term loan facility (the “DIP Facility”), in an aggregate principal amount of $1.0 billion.
Ourproceedings, our ability to continue as a going concern is contingent upon, among other things, our ability to, subject to the Bankruptcy Court’s approval, implement a business plan of reorganization, emerge from the Chapter 11 proceedings and generate sufficient liquidity following the reorganization to meet our contractual obligations and operating needs. As a result of risks and uncertainties related to, among other things, (i) the Company’s ability to obtain requisite support for the business plan of reorganization from various stakeholders, and (ii) the disruptive effects of the Chapter 11 proceedings on our business making it potentially more difficult to maintain business, financing and operational relationships, substantial doubt exists regarding our ability to continue as a going concern. For a more detailed discussion about our voluntary reorganization under the Bankruptcy Code, see Note 15—Subsequent Events.
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The filing of the Chapter 11 Cases constituted an event of default that accelerated substantially all of our obligations under the documents governing the pre-petitionprepetition existing indebtedness of Intelsat S.A., Intelsat Luxembourg, Intelsat Connect Finance and Intelsat Jackson. As such, we have reclassified all such debt obligations, other than debt subject to compromise, to current portionmaturities of long-term debt on our condensed consolidated balance sheetsheets as of MarchDecember 31, 2020.2020 and September 30, 2021. For additional discussion regarding the impact of the Chapter 11 Cases on our debt obligations, see Note 10—11—Debt.
Our condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
Impact
Note 3—Acquisition of COVID-19 on our CompanyGogo’s Commercial Aviation Business
AsOn August 31, 2020, following approval from the Bankruptcy Court, Intelsat Jackson and Gogo Inc. (NASDAQ: GOGO), a resultDelaware corporation (“Gogo”), entered into a purchase and sale agreement (the “Purchase and Sale Agreement”) with respect to Gogo’s commercial aviation business, consisting of all of the COVID-19 pandemic,equity interests of Gogo LLC and Gogo International Holdings LLC (collectively known as “Intelsat CA”), for $400.0 million in cash, subject to customary adjustments. On December 1, 2020, Intelsat Jackson completed the first quarter of 2020, in an effortacquisition pursuant to safeguard public health, governments around the world, including United States (“U.S.”) federal, stateterms and local governments, implemented a number of orders and restrictions on travel and businesses, among other things. Some of these measures remain in effect and have negatively impacted the U.S. and other economies around the world in the short-term, while the long-term economic impact of COVID-19 remains unknown.
The COVID-19 pandemic has had an adverse impact on our business, operating results and financial condition, a trend we expect to continue. Among the impactsconditions of the COVID-19 pandemic werePurchase and Sale Agreement (the “Gogo Transaction”). Upon completion of the acquisition, the entities comprising the Intelsat CA business became indirect wholly-owned subsidiaries of Intelsat S.A.
Intelsat CA is one of the largest global providers of in-flight broadband connectivity. The acquisition of Intelsat CA brings together two complementary enterprises – one of the world’s largest satellite operators with a reductionleading provider of revenuecommercial in-flight broadband and a decreased likelihoodentertainment services, to deliver innovation and long-term value to commercial airlines.
The Company accounted for the business combination in accordance with ASC 805, Business Combinations. The Company recorded the acquisition using the acquisition method of collectionaccounting and recognized assets and liabilities at their fair value as of the date of acquisition. The Company based the preliminary allocation of the purchase price on estimates and assumptions known at the date of acquisition that are subject to change within the purchase price allocation period, which is generally one year from certain mobility customers. We continue to closely monitor the ongoing impact on our employees, customers, business and results of operations.acquisition date.
Cash and Cash Equivalents and Restricted Cash
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Cash and cash equivalents consist of cash on hand and highly liquid investments with original maturities of three months or less, which are generally time deposits with banks and money market funds. The carrying amount of these investments approximates fair value. Restricted cash represents legally restricted amounts being held as a compensating balance for certain outstanding letters of credit.
The following table providessummarizes the preliminary allocation of the purchase consideration to tangible and intangible assets acquired and liabilities assumed on the acquisition date, based on estimated fair values both as disclosed in the Company’s 2020 Annual Report and as adjusted for measurement period adjustments identified during the nine months ended September 30, 2021 (in thousands):
Purchase Price Allocation
As of
December, 1, 2020 (preliminary)		Measurement Period AdjustmentsAs of
September 30, 2021
(as adjusted)
Assets acquired
Cash and cash equivalents$9,867 $— $9,867 
Receivables, net of allowances52,849 138 52,987 
Inventory144,014 (5,619)138,395 
Prepaid expenses and other current assets36,140 — 36,140 
Property and equipment41,328 5,063 46,391 
Amortizable intangible assets
Software45,464 — 45,464 
Trade name1,000 — 1,000 
Goodwill77,620 (8,765)68,855 
Other assets
Supplemental type certificates24,253 48 24,301 
Line fit certificates21,776 — 21,776 
Other assets100,566 — 100,566 
Total assets acquired554,877 (9,135)545,742 
Liabilities assumed
Current liabilities
Accounts payable and accrued liabilities(63,300)779 (62,521)
Contract liabilities(13,527)513 (13,014)
Other current liabilities(25,472)— (25,472)
Noncurrent liabilities(43,522)— (43,522)
Total liabilities assumed(145,821)1,292 (144,529)
Total purchase consideration$409,056 $(7,843)$401,213 
The fair value estimates of the net assets acquired are based upon calculations and valuations, and estimates and assumptions regarding certain tangible and identifiable intangible assets acquired and liabilities assumed. The excess of the total consideration over the tangible assets, identifiable intangible assets, and assumed liabilities is recorded as goodwill. Goodwill represents expected synergies in mobility services and connectivity, $42.3 million of which is deductible for tax purposes.
The measurement period adjustments decreased the provisionally recognized goodwill by $8.8 million and have been recognized prospectively, which primarily relate to the resolution of certain purchase price adjustments, a reconciliation$5.6 million adjustment in the provisional value of cash, cash equivalentsinventory and restricted cash reported withina $5.1 million adjustment in the provisional value of property and equipment as a result of additional information obtained during the nine months ended September 30, 2021. These adjustments did not have a material impact on our condensed consolidated balance sheets, statements of operations or cash flows in any periods previously reported.
The following table presents the unaudited pro forma revenue and net loss of the Company, inclusive of Intelsat CA, as if the acquisition had occurred on January 1, 2020, for the three and nine months ended September 30, 2020 (in thousands):
Pro Forma
Three Months Ended September 30, 2020Nine Months Ended September 30, 2020
Revenue$525,965 $1,606,186 
Net loss(87,165)(858,459)
The unaudited pro forma combined financial information is disclosed for illustrative purposes only, and does not purport to represent what the total sumresults of these amounts reportedoperations would actually have been if the business combination occurred as of the dates indicated or what the results would be for any future periods.
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Acquisition-related costs amounted to $6.2 million and $6.3 million for the three and nine months ended September 30, 2020, respectively, and $0.5 million and $5.5 million for the three and nine months endedSeptember 30, 2021, respectively, which were included within selling, general and administrative expenses in our condensed consolidated statements of cash flows (in thousands):
As of
December 31, 2019		As of
March 31,2020
Cash and cash equivalents$810,626  $782,522  
Restricted cash20,238  18,100  
Cash, cash equivalents and restricted cash$830,864  $800,622  
Recently Adopted Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which changes how companies measure and recognize credit impairment for any financial assets. The standard requires companies to immediately recognize an estimate of credit losses expected to occur over the remaining life of the financial assets that are within the scope of the standard. We adopted ASU 2016-13 and its amendments in the first quarter of 2020, on a modified retrospective basis. The adoption of ASU 2016-13 and its amendments increased our reserve for credit losses by $0.9 million as of January 1, 2020.
In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which is intended to simplify the subsequent measurement of goodwill. The amendments in ASU 2017-04 modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. An entity will no longer determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities, as if that reporting unit had been acquired in a business combination. We adopted ASU 2017-04 in the first quarter of 2020, on a prospective basis. As a result, we will measure impairment using the difference between the carrying amount and the fair value of the reporting unit, if required. For the three months ended March 31, 2020, we conducted a goodwill impairment analysis and determined the fair value of our reporting unit to be greater than its carrying value, resulting in 0 impairment of goodwill. See Note 9—Goodwill and Other Intangible Assets for further information.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820)—Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), as part of its disclosure framework project to improve the effectiveness of disclosures in the notes to financial statements. Changes in unrealized gains and losses, the range and weighted
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average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty were applied prospectively for only the most recent interim period presented. All other amendments were applied retrospectively for all periods presented. ASU 2018-13 and its amendments were adopted by the Company in the first quarter of 2020.
Recently Issued Accounting Pronouncements
In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20)—Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans (“ASU 2018-14”), as part of its disclosure framework project to improve the effectiveness of disclosures in the notes to financial statements. ASU 2018-14 modifies and clarifies disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The amendments remove certain disclosure requirements and require additional disclosures. ASU 2018-14 will be effective for the Company for annual periods in fiscal years ending after December 15, 2020, on a retrospective basis to all periods presented. We are in the process of evaluating the impact that ASU 2018-14 will have on our condensed consolidated financial statements and associated disclosures.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting For Income Taxes (“ASU 2019-12”). The standard removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation and calculating income taxes in interim periods. It also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. ASU 2019-12 will be effective for the Company for annual periods in fiscal years ending after December 15, 2020. We are in the process of evaluating the impact that ASU 2019-12 will have on our condensed consolidated financial statements and associated disclosures.operations.
Note 2 4—Share Capital
Under our Articles of Incorporation, we have an authorized share capital of $10.0 million, represented by 1.0 billion shares of any class with a nominal value of $0.01 per share. At March 31, 2020,September 30, 2021, there were approximately 142.1142.2 million common shares issued and outstanding.
Note 3 5—Revenue
(a) Revenue RecognitionContract Liabilities
We earn revenue primarily by providing servicesAs of December 31, 2020 and September 30, 2021, we had contract liabilities of $405.2 million and $1.0 billion, respectively, related to our customers using our satellite transponder capacity. Our customers generally obtain satellite capacity from us by placing an order pursuant to onereimbursable costs associated with the FCC Final Order. As of several master customer service agreements. On-network services are comprised primarilyDecember 31, 2020, these amounts were included within contract liabilities, net of services deliveredcurrent portion, and as of September 30, 2021, $702.0 million of these amounts were included within contract liabilities and $333.6 million of these amounts were included within contract liabilities, net of current portion, on our owned network infrastructure, as well as commitments for third-party capacity, generally long-term in nature, that we integrate and market as part of our owned infrastructure. In the case of third-party services in support of government applications, the commitments for third-party capacity are shorter and matched to the government contracting period, and thus remain classified as off-network services. Off-network services can include transponder services and other satellite-based transmission services, such as mobile satellite services (“MSS”), which are sourced from other operators, often in frequencies not available on our network. Under the category Off-Network and Other Revenues, we also include revenues from consulting and other services.
For each service type, the price per unit in our contracts is generally fixed for each defined time period. While the number of units or price per unit in our multi-year contracts may be different by year or another time period, the number of units and price per unit are fixed for each defined time period and the total contract price is fixed. To determine the proper revenue recognition method for contracts, we evaluate whether two or more services should be combined and accounted for as a single performance obligation. Our specific revenue recognition policies are as follows:
Satellite Utilization Charges
The Company’s contracts for satellite utilization services often contain multiple service orders for the provision of capacity on or over different beams, satellites, frequencies, geographies or time periods. Under each separate service order, the Company’s satellite services, comprised of transponder services, managed services, channel services, and occasional use managed services, are delivered in a series of time periods that are distinct from each other and have the same pattern of transfer to the customer. In each period, the Company’s obligation is to make those services available to the customer. Throughout each service period, the Company provides services that are able to be used continuously, and the customer simultaneously receives and consumes the benefits provided by the Company. We believe that, given that our services are stand-ready obligations that are available continuously, the passage of time most faithfully reflects our satisfaction of the performance obligation. We also have certain obligations, including providing spare or substitute capacity if available, in the event of satellite service failure under certain long-term agreements. While we are generally not
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obligated to refund satellite utilization payments previously made, credits may be granted for sustained service outages in certain limited circumstances.
Similar to satellite utilization charges, we have determined that the customer simultaneously receives and consumes benefits provided by the Company for satellite related consulting and technical services, tracking, telemetry and commanding services (“TT&C”) and in-orbit backup services, as detailed below. Therefore, similar to satellite utilization charges, we believe that the passage of time most faithfully reflects our satisfaction of the performance obligation for these services:
Satellite-Related Consulting and Technical Services
We recognize revenue from the provision of consulting services as those services are performed. We recognize revenue for consulting services with specific performance obligations, such as transfer orbit support services or training programs over the service period.
TT&C
We earn TT&C services revenue from providing operational services to other satellite owners and from certain customers on our satellites. TT&C agreements entered into in connection with our satellite utilization contracts are typically for the period of the related service agreement. We recognize this revenue over the term of the service agreement.
In-Orbit Backup Services
We provide back-up transponder capacity that is held on reserve for certain customers on agreed-upon terms. We recognize revenues for in-orbit backup services over the term of the related agreement.
Revenue Share Arrangements
We recognize revenues under revenue share agreements for satellite-related services either on a gross or net basis in accordance with principal versus agent considerations.
We occasionally sell products or services individually or in some combination to our customers. When products or services are sold together, we allocate revenue for each performance obligation based on each obligation’s relative selling price. In these arrangements, revenue for products is recognized when the transfer of control passes to the customer, while service revenue is recognized over the service term.
Contract Assets
Contract assets include unbilled amounts typically resulting from sales under our long-term contracts when the total contract value is recognized on a straight-line basis and the revenue recognized exceeds the amount billed to the customer.
Contract Liabilities
Contract liabilities consist of advance payments and collections in excess of revenue recognized and deferred revenue. Our contracts at times contain prepayment terms that range from one month to one year in advance of providing the service. As a practical expedient, we do not need to adjust the promised amount of consideration for the effects of a significant financing component if we expect, at contract inception, that the period of time between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. For a small subset of contracts with advance payments that contain prepayment terms greater than one year and up to fifteen years, we assess whether a significant financing component exists by considering the difference between the amount of promised consideration and the cash selling price of the promised services. The prepayment amount is generally based on a standard methodology that discounts the total of the standard monthly charges over the service term to determine the prepayment amount, resulting in a difference between the amount of promised consideration and the cash selling price of the promised services. The Company considers the timing difference between payment and the promised transfer of services, combined with the Company’s incremental borrowing rates, to determine whether a significant financing component exists. When a significant financing component exists, the amount of revenue recognized exceeds the amount of cash received from the customer. After receiving cash from the customer but prior to the Company providing services, the Company records additional contract liabilities as well as offsetting interest expense to reflect the upfront financing the Company is effectively receiving from the customer. Once the Company begins providing services, additional interest expense is recorded each period using the effective interest method, as well as corresponding additional revenue, which is recognized ratably over the service period.condensed consolidated balance sheets.
For the three months ended March 31, 2019September 30, 2020 and 2020,2021, we recognized revenue of $90.3$47.8 million and $86.1$51.5 million, respectively, and for the nine months ended September 30, 2020 and 2021, we recognized revenue of $185.5 million and $191.8 million, respectively, that were included in the contract liability balances as of January 1, 20192020 and 2020, respectively. In addition, the total amount of
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consideration included in contract assets as of January 1, 2019 and 2020 that became unconditional for the three months ended March 31, 2019 and 2020 was $6.2 million and $12.8 million,2021, respectively.
(b) Assets Recognized from the Costs to Obtain a Customer Contract
We recognize an assetFor the three months ended September 30, 2020 and 2021, we capitalized $1.5 million and $3.2 million for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We have determined that our sales incentive program meets the requirements to be capitalized due to the incremental nature of the costs and the expectation that the Company will recover such costs. The assets recognized from the costs to obtain a customer contract, arerespectively, and amortized over a period that is consistent with the transfer to the customer of the services to which the asset relates. We capitalized $1.9$1.1 million and $1.1$1.2 million, respectively. For the nine months ended September 30, 2020 and 2021, we capitalized $3.9 million and $9.5 million for our sales incentive programcosts to obtain a customer contract, respectively, and amortized $1.8$3.9 million and $1.6$3.6 million, for the three months ended March 31, 2019 and 2020, respectively. As of December 31, 20192020 and March 31, 2020,September 30, 2021, capitalized costs relating to our sales incentive program were $9.4obtain a customer contract amounted to $10.4 million and $8.9$16.3 million, respectively, whichand were included within other assets in our condensed consolidated balance sheets.
Contract Modifications
Contracts are often modified to account for changes in contract specifications or requirements. We consider contract modifications to exist when the modification either creates new rights or obligations or changes the existing enforceable rights and obligations of either party. Most of our contract modifications are for goods and services that are distinct from the existing contract, as they consist of additional months of service priced at the Company’s standalone selling prices of the additional services and are therefore treated as separate contracts. For contract modifications that do not result in additional distinct goods or services, the effect of a contract modification on the transaction price and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue.
Significant Judgments
We occasionally enter into certain contracts in which the customer makes payments in advance of services to be delivered, which may be years in the future. The reasons for the prepayments in these contracts vary, but generally can be either for the customer’s benefit or for the Company’s benefit (such as the ability to use the cash received from the customer to pay for the construction of a satellite asset). The determination of whether contracts with a prepayment provision contain a significant financing component requires judgment. The Company makes this determination based on various factors, including the differences between the amount of promised consideration and cash selling prices, the length of time between payment and the transfer of services and prevailing interest rates in the market.
While most satellite utilization contracts contain multiple performance obligations for each transponder service on different satellites, the service period for the different satellite utilization performance obligations is generally the same time period. In the event that the time period for multiple performance obligations is not the same, we allocate the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling price of the promised good or service underlying such performance obligation. Judgment is required to determine the standalone selling price for each distinct performance obligation. In order to estimate standalone selling prices, we use an adjusted market assessment approach which involves an evaluation of the market and an estimate of the price that our customers are willing to pay, or an expected cost plus a margin approach.
When more than one party is involved in providing goods or services to a customer, we generally recognize the transaction on a gross basis due to the level of control that we have prior to the transfer of the good or service. These arrangements include instances where we procure equipment from vendors and sell to third-party customers, when we enter into revenue sharing arrangements with other parties and when we purchase capacity for voice, data and video services provided by third-party commercial satellite operators for which the desired frequency type or geographic coverage is not available on our network. Our third-party capacity arrangements (off-network) are more significant and, in determining whether we are the principal or the agent in these arrangements, we consider whether or not we control the service before it is transferred to the customer. In this determination, we consider the definition of control as set forth in ASC 606, Revenue from Contracts with Customers (“ASC 606”), in ASC 606-10-25-25. When we purchase satellite transponder capacity from a third party, we have the ability to direct the use of and obtain substantially all of the remaining benefits from the purchased capacity. We obtain the right to the service to be performed by the third party, which gives the Company the ability to direct that party to provide the service to the customer on the Company’s behalf. No other third party can direct the use of or obtain any benefits from the capacity.
We also considered the factors in ASC 606-10-55-39 in the Company’s determination of control. In the vast majority of cases, when we resell capacity to third party customers, we are primarily responsible for the fulfillment of the services and acceptability of the service. Additionally, the Company has full discretion in establishing the pricing for transponder services with the customer and assumes the credit risk associated with capacity purchased from the third party. In the event the service is not acceptable to the customer, we are required to identify an alternative solution. Based on these considerations, we have concluded that we are the
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principal in the transaction for these arrangements. When these factors are not met, the Company recognizes revenue for third-party capacity arrangements on a net basis.
Judgment is required in determining whether we are the principal or the agent in transactions involving third parties.
(c) Remaining Performance Obligations
Our remaining performance obligation is our expected future revenue under our existing customer contracts and includes both cancelable and non-cancelable contracts. Our remaining performance obligation was approximately $6.5$5.6 billion as of March 31, 2020, approximately 89% of which related to contracts that were non-cancelable and approximately 11% of which related to contracts that were cancelable subject to substantial termination fees. We assess the contract term of our cancelable contracts as the full stated term of the contract assuming each contract is not canceled since the termination penalty upon cancellation is substantive.September 30, 2021. As of March 31, 2020,September 30, 2021, the weighted average remaining customer contract life was approximately 4.23.9 years. Approximately 35%30%, 24%29%, and 41% of our total remaining performance obligation as of March 31, 2020September 30, 2021 is expected to be recognized as revenue during 20202021 and 2021, 2022, and 2023 and 2024, and 2025 and thereafter, respectively. The amount included in the remaining performance obligation represents the full-service charge for the duration of the contract and does not include termination fees. The amount of the termination fees, which is not included in the remaining performance obligation amount, is generally calculated as a percentage of the remaining performance obligation associated with the contract. In certain cases of breach for non-payment or customer financial distress or bankruptcy, we may not be able to recover the full value of certain contracts or termination fees. Our remaining performance obligation includes 100% of the remaining performance obligation of our consolidated ownership interests, which is consistent with the accounting for our ownership interest in these entities.
(b)(d) Business and Geographic Segment Information
We operate in a single industry segment in which we provide satellite and other communications services to our communications customers around the world. Our revenues are disaggregated by billing region, service type and customer set. Revenue by region is based on the locations of customers to which services are billed. Our satellites are in geosynchronous orbit, and consequently are not attributable to any geographic location. Of our remaining assets, substantially all are located in the U.S. Intelsat CA revenues are allocated to the geographic location where the airline customer is domiciled.
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The following table disaggregates revenue by billing region (in thousands, except percentages):
Three Months Ended
September 30, 2020		Three Months Ended
September 30, 2021		Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2021
North America$266,516 54 %$298,750 57 %$758,999 53 %$871,104 57 %
Europe54,082 11 %60,585 12 %160,866 11 %169,050 11 %
Latin America and Caribbean52,474 11 %50,429 10 %157,956 11 %149,088 10 %
Africa and Middle East60,349 12 %57,502 11 %181,151 13 %170,973 11 %
Asia-Pacific56,028 11 %58,829 11 %171,331 12 %176,505 11 %
Total$489,449 $526,095 $1,430,303 $1,536,720 
Three Months Ended
March 31, 2019		Three Months Ended
March 31, 2020
North America$268,370  51 %$235,005  51 %
Europe61,276  12 %53,938  12 %
Latin America and Caribbean65,477  12 %51,475  11 %
Africa and Middle East62,420  12 %61,902  13 %
Asia-Pacific70,906  13 %56,500  12 %
Total$528,449  $458,820  
The following table disaggregates revenue by type of service (in thousands, except percentages):
Three Months Ended
September 30, 2020		Three Months Ended
September 30, 2021		Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2021
On-Network Revenues
Transponder services$353,758 72 %$320,260 61 %$1,028,692 72 %$969,423 63 %
Managed services69,438 14 %71,856 14 %226,749 16 %211,710 14 %
Channel280 — %186 — %1,096 — %567 — %
Total on-network revenues423,476 87 %392,302 75 %1,256,537 88 %1,181,700 77 %
Off-Network and Other Revenues
Transponder, MSS and other off-network services54,478 11 %40,090 8 %141,783 10 %122,393 8 %
Satellite-related services11,495 2 %11,090 2 %31,983 2 %29,582 2 %
Total off-network and other revenues65,973 13 %51,180 10 %173,766 12 %151,975 10 %
In-flight Services Revenues
Services— 67,482 13 %— 169,489 11 %
Equipment— 15,131 3 %— 33,556 2 %
Total in-flight services revenue— 82,613 16 %— 203,045 13 %
Total$489,449 $526,095 $1,430,303 $1,536,720 
Three Months Ended
March 31, 2019		Three Months Ended
March 31, 2020
On-Network Revenues
Transponder services$377,284  71 %$331,334  72 %
Managed services93,201  18 %72,261  16 %
Channel691  — %426  — %
Total on-network revenues471,176  89 %404,021  88 %
Off-Network and Other Revenues
Transponder, MSS and other off-network services49,858  9 %43,688  10 %
Satellite-related services7,415  1 %11,111  2 %
Total off-network and other revenues57,273  11 %54,799  12 %
Total$528,449  $458,820  
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ByThe following table disaggregates revenue by type of customer application our revenues from network services, media, government and satellite-related services were $204.3 million, $226.0 million, $93.2 million and $4.9 million, respectively, for the three months ended March 31, 2019, as compared to $149.4 million, $205.8 million, $95.7 million and $7.9 million, respectively, for the three months ended March 31, 2020.(in thousands, except percentages):
Three Months Ended
September 30, 2020		Three Months Ended
September 30, 2021		Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2021
Network services$169,594 35 %$241,737 46 %$495,671 35 %$676,740 44 %
Media203,552 42 %181,069 34 %611,946 43 %550,175 36 %
Government107,981 22 %95,008 18 %299,840 21 %288,764 19 %
Satellite-related services8,322 2 %8,281 2 %22,846 2 %21,041 1 %
Total$489,449 $526,095 $1,430,303 $1,536,720 
Our largest customer accounted for approximately 14% and 15%10% of our revenue during the three months ended March 31, 2019September 30, 2020 and 2021, respectively, and 14% and 11% during the nine months ended September 30, 2020 and 2021, respectively. Our ten largest customers accounted for approximately 41%43% and 42%35% of our revenue during the three months ended March 31, 2019September 30, 2020 and 2021, respectively, and 41% and 36% during the nine months ended September 30, 2020 and 2021, respectively.
Note 4 6—Net Loss per Share
Basic net loss per common share attributable to Intelsat S.A. (“EPS”) is computed by dividing net loss attributable to Intelsat S.A.’s common shareholders by the weighted average number of common shares outstanding during the periods. Diluted EPS assumes the issuance of common shares pursuant to share-based compensation plans and conversion of the Intelsat S.A. 4.5% Convertible Senior Notes due 2025 (the "2025“2025 Convertible Notes"Notes”), unless the effect of such issuances would be anti-dilutiveanti-dilutive.
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.

The following table sets forth the computation of basic and diluted EPS (in thousands, except per share data or where otherwise noted):
 Three Months Ended
March 31, 2019		Three Months Ended
March 31, 2020
Numerator:
Net loss attributable to Intelsat S.A.$(120,622) $(218,771) 
Denominator:
Basic weighted average shares outstanding (in millions)138.9  141.5  
Diluted weighted average shares outstanding (in millions):138.9  141.5  
Basic EPS$(0.87) $(1.55) 
Diluted EPS$(0.87) $(1.55) 
In June 2018, Intelsat S.A. completed an offering of $402.5 million aggregate principal amount of its 2025 Convertible Notes. We do not expect to settle the principal amount of the 2025 Convertible Notes in cash, and we therefore use the if-converted method for calculating any potential dilutive effect of the conversion on diluted EPS, if applicable. The 2025 Convertible Notes are eligible for conversion depending upon the trading price of our common shares and under other conditions set forth in the indenture governing the 2025 Convertible Notes (the "2025 Indenture") until December 15, 2024, and thereafter without regard to any conditions. See Note 10—Debt for additional information on the conversion conditions.
 Three Months Ended
September 30, 2020		Three Months Ended
September 30, 2021		Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2021
Numerator:
Net loss attributable to Intelsat S.A.$(15,931)$(145,690)$(640,057)$(472,872)
Denominator:
Basic weighted average shares outstanding (in millions)142.1 142.2 141.9 142.2 
Diluted weighted average shares outstanding (in millions)142.1 142.2 141.9 142.2 
Basic EPS$(0.11)$(1.02)$(4.51)$(3.33)
Diluted EPS$(0.11)$(1.02)$(4.51)$(3.33)
Due to a net loss for each of the three and nine months ended March 31, 2019September 30, 2020 and 2020,2021, there were 0no dilutive securities, and therefore, basic and diluted EPS were the same. The weighted average number of common shares that could potentially dilute basic EPS in the future was 27.322.3 million and 22.722.8 million for the three months ended March 31, 2019September 30, 2020 and 2021, respectively, and 22.3 million and 22.6 million for the nine months ended September 30, 2020 and 2021, respectively, primarily consisting of the 2025 Convertible Notes.
Note 5 Fair Value Measurements
ASC 820, Fair Value Measurements and Disclosure ("ASC 820") defines fair value, establishes a market-based framework or hierarchy for measuring fair value and provides for certain required disclosures about fair value measurements. The guidance is applicable whenever another accounting pronouncement requires or permits assets and liabilities to be measured at fair value but does not require any new fair value measurements.
The fair value hierarchy prioritizes the inputs used in valuation techniques into three levels as follows:
•Level 1—unadjusted quoted prices for identical assets or liabilities in active markets;
•Level 2—quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted market prices that are observable or that can be corroborated by observable market data by correlation; and
•Level 3—unobservable inputs based upon the reporting entity’s internally developed assumptions which market participants would use in pricing the asset or liability.
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Recurring Fair Value Measurements
The tables below present assets measured and recorded at fair value in our condensed consolidated balance sheets on a recurring basis and their corresponding level within the fair value hierarchy (in thousands). No transfers between Level 1, Level 2 and Level 3 fair value measurements occurred for the three months ended March 31, 2020.
 Fair Value Measurements as of December 31, 2019
DescriptionAs of December 31, 2019Level 1Level 2Level 3
Assets
Marketable securities(1)
$5,145  $5,145  $—  $—  
Undesignated interest rate cap contracts(2)
372  —  372  —  
Common stock warrant(3)
3,239  —  —  3,239  
Total assets$8,756  $5,145  $372  $3,239  
  Fair Value Measurements as of March 31, 2020
DescriptionAs of March 31, 2020Level 1Level 2Level 3
Assets
Marketable securities(1)
$4,194  $4,194  $—  $—  
Undesignated interest rate cap contracts(2)
37  —  37  —  
Common stock warrant(3)
3,239  —  —  3,239  
Total assets$7,470  $4,194  $37  $3,239  
(1)The valuation measurement inputs of these marketable securities represent unadjusted quoted prices in active markets and, accordingly, we have classified such investments within Level 1 of the fair value hierarchy. The cost basis of our marketable securities was $4.3 million and $4.2 million as of December 31, 2019 and March 31, 2020, respectively. We sold marketable securities with a cost basis of $0.3 million and $0.2 million resulting in a nominal loss and nominal gain during the three months ended March 31, 2019 and 2020, respectively. These amounts are included in other income (expense), net in our condensed consolidated statements of operations.
(2)The valuation of our interest rate derivative instruments reflects the fair value of premiums paid, taking into account observable inputs including current interest rates, the market expectation for future interest rate volatility and current creditworthiness of the counterparties. As a result, we have determined that the valuation in its entirety is classified as Level 2 within the fair value hierarchy.
(3)We valued the common stock warrant using a valuation technique that reflects the risk-free interest rate, time to maturity and volatility of comparable companies. We identified the inputs used to calculate the fair value as Level 3 inputs and concluded that the valuation in its entirety is classified as Level 3 within the fair value hierarchy.
The following table presents a reconciliation of the preferred and common stock warrants which are measured and recorded at fair value on a recurring basis using Level 3 inputs (in thousands):
Three Months Ended March 31, 2019Three Months Ended March 31, 2020
Balance as of beginning of period$4,100  $3,239  
Unrealized loss included in other income (expense), net(908) —  
Balance as of end of period$3,192  $3,239  
Nonrecurring Fair Value Measurements
The carrying values of certain assets may be adjusted to fair value in subsequent periods on a nonrecurring basis if an event occurs or circumstances change that indicate that the asset is impaired or, for investments in equity securities without readily determinable fair values, observable transactions for identical or similar investments of the same issuer support a change in the investment fair value. During the first quarter of 2020, as a result of our interim impairment assessments, we recognized an impairment of non-amortizable intangible assets of $12.2 million. This fair value measurement is classified as Level 3 within the fair value hierarchy due to the use of significant unobservable inputs. See Note 9—Goodwill and Other Intangible Assets for additional information.
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Other Fair Value Disclosures
See Note 8—Investments and Note 10—Debt for fair value disclosures related to our loan receivables and debt, respectively. The carrying amounts of the Company's other financial instruments are reasonable estimates of their related fair values due to their short-term nature.
Note 6 7—Retirement Plans and Other Retiree Benefits
(a) Pension and Other Postretirement Benefits
We maintain a noncontributory defined benefit retirement plan covering substantially all of our employees hired prior to July 19, 2001. The cost of providing benefits to eligible participants under the defined benefit retirement plan is calculated using the plan’s benefit formulas, which take into account the participants’ remuneration, dates of hire, years of eligible service and certain actuarial assumptions. In addition, as part of the overall medical plan, we provide postretirement medical benefits to certain current and future retirees who meet the criteria under the medical plan for postretirement benefit eligibility. In 2015, we amended the defined benefit retirement plan to end the accrual of additional benefits for the remaining active participants. We have received authorization from the Bankruptcy Court to continue making contributions in the ordinary course during our Chapter 11 Cases.
The defined benefit retirement plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended.amended (“ERISA”). We expect that our future contributions to the defined benefit retirement plan will be based on the minimum funding requirements of the Internal Revenue Code and on the plan’s funded status. Any significant decline in the fair value of our defined benefit retirement plan assets or other adverse changes to the significant assumptions used to determine the plan’s funded status would negatively impact its funded status and could result in increased funding in future years. The impact on the funded status is determined based upon market conditions in effect when we completed our annual valuation. For the three months ended March 31, 2020, we made cash contributions to the defined benefit retirement plan of $0.9 million. We anticipate that our remaining contributions to the defined benefit retirement plan in 2020 will be approximately $3.1 million. We fund the postretirement medical benefits throughout the year based on benefits paid. We anticipate that our contributions to fund postretirement medical benefits in 2020 will be approximately $2.9 million.
Included in accumulated other comprehensive loss at March 31, 2020September 30, 2021 was $95.7$110.7 million ($64.379.1 million, net of tax) that has not yet been recognized in net periodic benefit cost.
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The tables below show the components of net periodic benefit cost (income) for the three and nine months ended March 31, 2019September 30, 2020 and 20202021 (in thousands). These amounts are recognized in other income (expense), net in the condensed consolidated statements of operations.
Pension Benefits
Three Months Ended
September 30, 2020		Three Months Ended
September 30, 2021		Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2021
Interest cost$2,962 $2,030 $8,888 $6,091 
Expected return on plan assets(5,810)(5,592)(17,431)(16,775)
Amortization of unrecognized net loss1,600 2,046 4,799 6,136 
Net periodic benefit income$(1,248)$(1,516)$(3,744)$(4,548)
Pension Benefits
Three Months Ended
March 31, 2019		Three Months Ended
March 31, 2020
Interest cost$3,848  $2,962  
Expected return on plan assets(5,873) (5,810) 
Amortization of unrecognized net loss1,055  1,600  
Net periodic benefit cost$(970) $(1,248) 

Other Postretirement BenefitsOther Postretirement Benefits
Three Months Ended
March 31, 2019		Three Months Ended
March 31, 2020		Three Months Ended
September 30, 2020		Three Months Ended
September 30, 2021		Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2021
Interest costInterest cost$383  $266  Interest cost$266 $149 $798 $447 
Amortization of unrecognized prior service creditsAmortization of unrecognized prior service credits(636) (636) Amortization of unrecognized prior service credits(636)(636)(1,908)(1,909)
Amortization of unrecognized net gainAmortization of unrecognized net gain(307) (305) Amortization of unrecognized net gain(305)(347)(915)(1,039)
Net periodic benefit cost$(560) $(675) 
Net periodic benefit incomeNet periodic benefit income$(675)$(834)$(2,025)$(2,501)
(b) Other Retirement Plans
We maintain a defined contribution retirement plan qualified under the provisions of Section 401(k) of the Internal Revenue Code for our employees in the United States. We have received authorization from the Bankruptcy Court to continue making our contributions in the ordinary course during the Chapter 11 Cases. We recognized compensation expense for this plan of $2.1$2.2 million and $2.3$3.3 million for the three months ended March 31, 2019September 30, 2020 and 2021, respectively, and $6.7 million and $10.1 million for the nine months ended September 30, 2020 and 2021, respectively. We also maintain other defined contribution retirement plans in several non-U.S. jurisdictions, but such plans are not material to our financial position or results of operations.
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Note 7 8—Satellites and Other Property and Equipment
(a) Satellites and Other Property and Equipment, net
Satellites and other property and equipment, net were comprised of the following (in thousands):
As of
December 31, 2019		As of
March 31,2020
Satellites and launch vehicles$10,407,690  $10,386,205  
Information systems and ground segment968,482  982,751  
Buildings and other280,109  281,506  
Total cost11,656,281  11,650,462  
Less: accumulated depreciation(6,954,218) (7,034,255) 
Total$4,702,063  $4,616,207  
As of
December 31, 2020		As of
September 30, 2021
Satellites and launch vehicles$10,500,021 $11,090,649 
Information systems and ground segment1,062,216 1,155,922 
Buildings and other322,093 320,534 
Total cost11,884,330 12,567,105 
Less: accumulated depreciation(7,126,453)(7,585,711)
Total$4,757,877 $4,981,394 
Satellites and other property and equipment are stated at historical cost, except for satellites that have been impaired. Satellites and other property and equipment acquired as part of an acquisition are stated based on their fair value at the date of acquisition.
During the first quarter of 2020, the price of our common shares and trading values of our debt securities experienced sustained reductions. We also witnessed certain declines in financial performance as compared to previously prepared internal budget and forecast projections. Among the impacts of the COVID-19 pandemic were a reduction of revenue and a decreased likelihood of collection from certain mobility customers. Based on our examination of these and other qualitative factors, we concluded that further testing of satellites and other property and equipment was required.
The Company evaluated the assets for potential impairment using internal projections of undiscounted cash flows expected to result from the use and eventual disposal of the assets. If the carrying amount of the assets exceeds the undiscounted cash flows expected to result from its use, an impairment expense is recognized for the amount by which the carrying amount of the asset group exceeds its fair value. The impairment expense cannot exceed the carrying amount of the long-lived assets (unless the carrying amount is not being reduced below fair value for any individual long-lived asset that is determinable without undue cost and effort).
In estimating the undiscounted cash flows, we primarily used our internally prepared budgets and forecast information. The key assumptions included in our model were projected growth rates, cost of capital, effective tax rates, and industry and economic trends. A change in estimated future cash flows or other assumptions could change our estimated fair values and result in future impairments. The conclusion of our analysis was that the undiscounted cash flows of the asset group were greater than its carrying value, resulting in 0 impairment.
Satellites and other property and equipment, net included construction-in-progress of $191.5 million and $252.3 millionaccumulated depreciation as of December 31, 20192020 and March 31, 2020,September 30, 2021, included construction-in-progress of $768.6 million and $1.2 billion, respectively. These amounts relate primarily to satellites under construction and related launch services. As of September 30, 2021, we incurred C-band clearing related costs and expenses of $1.1 billion, of which $972.2 million was capitalized. Of this capitalized amount, $887.6 million and $84.6 million were capitalized as satellites and other property and equipment, net of accumulated depreciation, and other current assets, respectively, in the condensed consolidated balance sheets. An estimated $904.8 million of the capitalized costs is expected to be reimbursable under the FCC Final Order.
Interest costs of $8.3$10.5 million and $4.0$23.4 million were capitalized for the three months ended March 31, 2019September 30, 2020 and 2021, respectively, and $20.7 million and $58.6 million were capitalized for the nine months ended September 30, 2020 and 2021, respectively. Additionally, depreciation expense was $162.5$154.4 million and $154.4$151.3 million for the three months ended March 31, 2019September 30,
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2020 and 2021, respectively, and $463.3 million and $462.8 million for the nine months ended September 30, 2020 and 2021, respectively.
We have entered into launch contracts for the launch of both specified and unspecified future satellites. Each of these launch contracts may be terminated at our option, subject to payment of a termination fee that increases as the applicable launch date approaches. In addition, in the event of a failure of any launch, we may exercise our right to obtain a replacement launch within a specified period following our request for re-launch.
(b) Satellite Launches
Intelsat 39 was successfully launched on August 6, 2019. Intelsat 39 replaced Intelsat 902 at the 62ºE location and delivers connectivity services in both the C- and Ku-bands to mobile network operators, enterprises and government customers, as well as aeronautical and maritime mobility service providers operating in the Europe, Africa, Middle East and Asia-Pacific regions. Intelsat 39 entered into service in October 2019.
(c) Significant Anomalies
In April 2019, the Intelsat 29e satellite (in service since 2016) experienced an anomaly that resulted in a total loss of the satellite. In accordance with our existing satellite anomaly contingency plans, we restored service for most Intelsat 29e customers on other satellites in our network, as well as on third-party satellites. We recorded a non-cash impairment charge of $381.6 million in the second quarter of 2019, of which $377.9 million related to the write off of the carrying value of the satellite and associated deferred performance incentive obligations and $3.7 million related to prepaid regulatory fees.
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A Failure Review Board comprised of the satellite’s manufacturer, Boeing Satellite Systems, Inc., the Company and external independent experts was convened to complete a comprehensive analysis of the cause of the anomaly. The board concluded that the anomaly was either caused by a harness flaw in conjunction with an electrostatic discharge event related to solar weather activity, or the impact of a micrometeoroid.
Note 8 9—Investments
We have an ownership interest in 2 entities that meet the criteria of a variable interest entity (“VIE”): Horizons Satellite Holdings LLC (“Horizons Holdings”) and Horizons-3 Satellite LLC (“Horizons 3”), which are discussed in further detail below, including our analyses of the primary beneficiary determination as required under ASC 810, Consolidation (“ASC 810”). We also own noncontrolling investments in equity securities and loan receivables as discussed further below.
(a) Horizons Holdings
Horizons Holdings is a joint venture with JSAT International, Inc. (“JSAT”) that consists of 2 investments: Horizons-1 Satellite LLC and Horizons-2 Satellite LLC. Horizons Holdings borrowed from JSAT a portion of the funds necessary to finance the construction of the Horizons 2 satellite pursuant to a loan agreement. The borrowing was subsequently repaid. We provide certain services to the joint venture and in return utilize capacity from the joint venture.
We have determined that this joint venture meets the criteria of a VIE under ASC 810, and we have concluded that we are the primary beneficiary because decisions relating to any future relocation of the Horizons 2 satellite, the most significant asset of the joint venture, are effectively controlled by us. In accordance with ASC 810, as the primary beneficiary, we consolidate Horizons Holdings within our condensed consolidated financial statements. Total assets of Horizons Holdings were $22.2$14.2 million and $19.5$9.1 million as of December 31, 20192020 and March 31, 2020,September 30, 2021, respectively. Total liabilities were nominal as of both December 31, 20192020 and March 31, 2020.September 30, 2021.
We have a revenue sharing agreement with JSAT related to services sold on the Horizons 1 and Horizons 2 satellites. We are responsible for billing and collection for such services, and we remit 50% of the revenue, less applicable fees and commissions, to JSAT. Amounts payable to JSAT related to the revenue sharing agreement, net of applicable fees and commissions, from the Horizons 1 and Horizons 2 satellites were $1.6$1.8 million and $3.0$2.8 million as of December 31, 20192020 and March 31, 2020,September 30, 2021, respectively.
(b) Horizons-3 Satellite LLC
On November 4, 2015, we entered into an additional joint venture agreement with JSAT. The joint venture, Horizons 3, was formed for the purpose of developing, launching, managing, operating and owning a high-performance satellite located at the 169ºE orbital location.
Horizons 3, which is 50% owned by each of Intelsat and JSAT, was set up with joint sharing of management authority and equal rights to profits and revenues from the joint venture. Similar to Horizons Holdings, we have a revenue sharing agreement with JSAT related to services sold on the Horizons 3e satellite. In addition, we are responsible for billing and collection for such services, and we remit 50% of the revenue, less applicable fees and commissions, to JSAT. Amounts payable to JSAT related to the revenue sharing agreement, net of applicable fees and commissions, from the Horizons 3e satellite were $3.3$5.0 million and $4.2$8.8 million as of December 31, 20192020 and March 31, 2020,September 30, 2021, respectively.
We have determined that this joint venture meets the criteria of a VIE under ASC 810; however, we have concluded that we are not the primary beneficiary and therefore do not consolidate Horizons 3. The assessment considered both quantitative and qualitative factors, including an analysis of voting power and other means of control of the joint venture, as well as each owner’s exposure to risk of loss or gain. Because we and JSAT equally share control over the operations of the joint venture and also equally share exposure to risk of losses or gains, we concluded that we are not the primary beneficiary of Horizons 3. Our investment, included within other assets in our condensed consolidated balance sheets, is accounted for using the equity method of accounting. The investment balance, which is equivalent to our maximum exposure to loss, was $110.2$103.8 million and $101.1$103.7 million as of December 31, 20192020 and March 31, 2020,September 30, 2021, respectively. The investment balance exceeded our equity in the net assets of Horizons 3 by $11.6$10.9 million and $11.4$10.3 million as of December 31, 20192020 and March 31, 2020,September 30, 2021, respectively. This basis difference represents the capitalized interest that we incurred in relation to financing our investment, and we recognize it as a reduction of our equity in earnings of Horizons 3 on a straight-line basis over the life of the satellite. We recognized a nominal amount of equity in earningslosses of Horizons 3 in other income, (expense), net for each of the three and nine months ended March 31, 2019September 30, 2020 and 2020.2021.
In connection with our investment in Horizons 3, we entered into a capital contribution and subscription agreement, which requires us to fund our 50% share of the amounts due thereunder in order to maintain our respective 50% interest in the joint venture. Pursuant to this agreement, we made contributions of $5.0$2.7 million for the year ended December 31, 2019,2020, with 0no comparable amounts forduring the three
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nine months ended March 31, 2020.September 30, 2021. We received distributions of $5.0$9.0 million for the year ended December 31, 2019 and $9.0 million2020, with no comparable amounts for the threenine months end March 31, 2020.ended September 30, 2021. The Company utilizes the cumulative earnings approach to determine whether distributions
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received from equity method investees are returns on investment or returns of investment. In addition, our indirect subsidiary that holds our investment in Horizons 3 has entered into a security and pledge agreement with Horizons 3, pursuant to which it has granted a security interest in its membership interest in Horizons 3. Further, our indirect subsidiary has granted a security interest to Horizons 3 in its customer capacity contracts and its ownership interest in its wholly-owned subsidiary that holds the FCC license required for the joint venture’s operations.
The Horizons 3e satellite entered into service in January 2019. The Company purchases satellite capacity and related services from the Horizons 3 joint venture, and then sells that capacity to its customers. We incurred direct costs of revenue related to these purchases of $3.6$4.9 million and $5.0$4.5 million forduring the three months ended March 31, 2019September 30, 2020 and 2021, respectively, and $14.9 million and $13.4 million during the nine months ended September 30, 2020 and 2021, respectively. The Company also sells managed ground network services to the Horizons 3 joint venture and provides program management services for a fee. We recorded an offset to direct costs of revenue of $0.3 million and $1.8 million related to the provision of these services forof $1.7 million during each of the three months ended March 31, 2019September 30, 2020 and 2021, and $5.2 million during each of the nine months ended September 30, 2020 respectively.and 2021. On the condensed consolidated balance sheets as of December 31, 2019 and March 31, 2020, $0.5September 30, 2021, $0.9 million due from Horizons 3 was included in receivables with no comparable amount as of December 31, 2020, and $1.7 million and $3.3$1.5 million due to Horizons 3 was included in accounts payable and accrued liabilities respectively.as of both December 31, 2020 and September 30, 2021.
(c) Investments in Equity Securities
The Company holds noncontrolling equity investments in 74 separate privately held companies, including investments in equity securities without readily determinable fair values and common stock warrants.
In accordance with ASC 321, Investments—Equity Securities, we use the measurement alternative to measure the fair value of our investments in equity securities without readily determinable fair values. Accordingly, these investments are measured at cost, less any impairment, and are adjusted for changes in fair value resulting from observable transactions for identical or similar investments of the same issuer. We recognized an increase in fair value relating to investments of $7.3 million and $15.0 million for the three and nine months ended September 30, 2021, respectively, with no comparable amounts for the three and nine months ended September 30, 2020, which are recognized in other income, net in our condensed consolidated statements of operations. Additionally, during the second quarter of 2021, we sold all of our interest in one of our investments for $15.0 million, resulting in a gain of $5.3 million, which was recognized in other income, net in our condensed consolidated statements of operations. These investments arewere recorded in other assets in our condensed consolidated balance sheets and had a total carrying value of $27.2$31.9 million and $45.9 million as of December 31, 20192020 and March 31, 2020,September 30, 2021, respectively.
We measure our stock warrants at fair value (see Note 5—Fair Value Measurements and Note 11—Derivative Instruments and Hedging Activitiesrecognized an increase in fair value of stock warrants of $5.5 million for additional information). Thethe six months ended June 30, 2021. These warrants arewere recorded in other assets in our condensed consolidated balance sheets and had a cumulative fair value of $3.2 million and $8.8 million as of December 31, 20192020 and March 31, 2020,June 30, 2021, respectively. During the three months ended September 30, 2021, these warrants were converted into common shares of a newly merged public company. As a result of the conversion, we recognized a gain of $7.3 million, as well as an additional gain of $1.8 million related to an amendment fee for a loan receivable, both of which are included in other income, net in our condensed consolidated statements of operations for the three and nine months ended September 30, 2021. There were no comparable amounts for the three and nine months ended September 30, 2020. As of September 30, 2021, these common shares had a fair value of $16.0 million, which is included in other assets in our condensed consolidated balance sheets.
(d) Loan Receivables
The Company has loan receivables from 53 privately held companies that it is holding for long-term investment. These loan receivables are reported at amortized cost, net of the allowance for credit losses. Amortized cost is the outstanding principal, adjusted for unamortized discounts and deferred transaction costs. The Company recognizes interest income on loan receivables using the effective-interest method applied on a loan-by-loan basis. Direct costs associated with originating loans are offset against any related fees received and the balance, along with any premium or discount, is deferred and amortized as an adjustment to interest income over the term of the related loan receivable using the effective interest method.
Loan receivables arewere recorded in other assets in our condensed consolidated balance sheets at an amortized cost basis net of allowance for credit losses, of $70.4$71.2 million and $72.6$74.0 million as of December 31, 20192020 and March 31, 2020,September 30, 2021, respectively. These amounts were net of an allowance for credit losses of $4.6 million, unamortized discount of $3.0 million and $2.4 million, and unamortized deferred transaction costs of $1.0 million and $0.8 million as of the respective periods. As of December 31, 20192020 and March 31, 2020, respectively, $1.5September 30, 2021, $1.9 million and $1.0$3.1 million, respectively, of accrued interest related to our loan receivables was recorded in prepaid expenses and other current assets in our condensed consolidated balance sheets. We recognized interest income related to our loan receivables of $0.9$1.0 million and $1.1 million for the three months ended March 31,September 30, 2020 with 0 comparative amountsand 2021, respectively, and $2.9 million and $3.1 million for the threenine months ended March 31, 2019.September 30, 2020 and 2021, respectively.
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A loan is determined to be impaired and placed on non-accrual status when, in management’s judgment based on current information and events, it is probable that the Company will be unable to collect all amounts due under the contractual terms of the applicable loan agreement. We did 0t recognize any allowance forrecognized impairment losses of $0.6 million related to loan receivables during the three and nine months ended March 31, 2019September 30, 2020, with no comparable amounts for the three and 2020.nine months ended September 30, 2021.
The fair value of loan receivables is evaluated on a loan-by-loan basis, and is determined based on assessments of discounted cash flows that are considered probable of collection. We consider these inputs to be Level 3 within the fair value hierarchy under ASC 820. The cumulative fair value of our loan receivables as of December 31, 20192020 and March 31, 2020September 30, 2021 was $69.3$72.9 million and $72.8$77.4 million, respectively.
Note 9 10—Goodwill and Other Intangible Assets
We account for goodwill and other non-amortizable intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other, and have deemed these assets to have indefinite lives. Therefore, these assets are not amortized but are tested on an annual
22

basis for impairment during the fourth quarter, or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable.
During the first quarter of 2020, the price of our common shares and trading values of our debt securities experienced sustained reductions. We also witnessed certain declines in financial performance as compared to previously prepared internal budget and forecast projections. Among the impacts of the COVID-19 pandemic were a reduction of revenue and a decreased likelihood of collection from certain mobility customers. Based on our examination of these and other qualitative factors, we concluded that further testing of goodwill and other non-amortizable and amortizable intangible assets was required.
Determining the fair value of a reporting unit and other intangible assets often involves the use of estimates and assumptions that require significant judgment, and that could have a substantial impact on whether or not an impairment charge is recognized and the magnitude of any such charge. Estimates of fair value are primarily determined using discounted cash flows and market transactions. These estimates involve making significant estimates and assumptions, including projected future cash flows (including timing), discount rates reflecting the risks inherent in future cash flows, perpetual growth rates, and the determination of appropriate market comparisons.
(a) Goodwill
ForAs a result of the analysis Gogo Transaction, we provisionally recognized goodwill of goodwill, we applied ASU 2017-04,$77.6 million as of December 1, 2020, which is further described inwas subsequently decreased by $8.8 million as a result of measurement period adjustments during the nine months ended September 30, 2021. See Note 1—General. If the carrying amount3—Acquisition of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. After recognizing the impairment loss, the loss establishes a new corresponding basis in the goodwill. Subsequent reversals of goodwill impairment losses are not permitted under applicable accounting standards.Gogo’s Commercial Aviation Business for additional discussion.
Intelsat has only 1 reporting unit for purposes of the analysis of goodwill, and accordingly, the analysis is undertaken at the enterprise level. We determined the estimated fair value of our reporting unit using a discounted cash flow analysis, along with independent source data related to comparative market multiples and, when available, recent transactions, each of which is considered a Level 3 input within the fair value hierarchy under ASC 820. The discounted cash flows were derived from a five-year projection of cash flows plus a residual value, with the resulting projected cash flows discounted at an appropriate weighted average cost of capital.
In estimating the undiscounted cash flows, we primarily used our internally prepared budgets and forecast information. The key assumptions included in our model were projected growth rates, cost of capital, effective tax rates, and industry and economic trends, along with the C-band accelerated clearing incentive payments expected to be received subject to the achievement of certain milestones and the discount rate applied to those cash flows. A change in estimated future cash flows or other assumptions could change our estimated fair values and result in future impairments. The conclusion of our analysis was that the fair value of our reporting unit was greater than its carrying value, resulting in 0 impairment of goodwill.
The carrying amounts of goodwill consisted of the following (in thousands):
As of
December 31, 2019		As of
March 31,2020
Goodwill$6,780,827  $6,780,827  
Accumulated impairment losses(4,160,200) (4,160,200) 
Net carrying amount$2,620,627  $2,620,627  

As of
December 31, 2020		As of
September 30, 2021
Goodwill$6,858,447 $6,849,682 
Accumulated impairment losses(4,160,200)(4,160,200)
Net carrying amount$2,698,247 $2,689,482 
(b) Orbital Locations, Trade Name and Other Intangible Assets
Orbital Locations. Intelsat is authorized by governments to operate satellites at certain orbital locations—i.e., longitudinal coordinates along the Clarke Belt. The Clarke Belt is the part of space approximately 35,800 kilometers above the plane of the equator where geostationary orbit may be achieved. Various governments acquire rights to these orbital locations through filings made with the International Telecommunication Union, a sub-organization of the United Nations. We will continue to have rights to operate satellites at our orbital locations so long as we maintain our authorizations to do so.
Our rights to operate at orbital locations can be usedLocations and sold individually; however, since satellites and customers can be and are moved from one orbital location to another, our rights are used in conjunction with each other as a network that can be adapted to meet the changing needs of our customers and market demands. Due to the interchangeable nature of orbital locations, the aggregate value of all of the orbital locations is used to measure the extent of impairment, if any.
We determined the estimated fair value of our rights to operate at orbital locations by using the build-up method to determine cash flows for the income approach, with the resulting projected cash flows discounted at an appropriate weighted average cost of capital. Under the build-up approach, the amount a reasonable investor would be willing to pay for the right to operate a satellite business using orbital locations is calculated by first estimating the cash flows that typical market participants might assume could be available from the right to operate satellites using the subject location in a similar market. It is assumed that rather than acquiring such
23

a business as a going concern, the buyer would hypothetically start with the right to operate satellites at orbital locations and build a new business with similar attributes from the beginning. Thus, the buyer is assumed to incur the start-up costs and losses typically associated with the going concern value and pay for all other tangible and intangible assets.
The key assumptions used in estimating the fair values of our rights to operate at our orbital locations included the following: (i) market penetration leading to revenue growth, (ii) profit margin, (iii) duration and profile of the build-up period, (iv) estimated start-up costs and losses incurred during the build-up period and (v) weighted average cost of capital.
We completed our analysis of the estimated fair value of our rights to operate at certain orbital locations in connection with the analysis of goodwill described above and concluded that the fair value was greater than the carrying value, resulting in no impairment.
Trade Name. We have implementedDuring the relief from royalty method to determine the estimated fair valuefirst quarter of the Intelsat trade name. The relief from royalty analysis is comprised of two major steps: (i) a determination of the hypothetical royalty rate, and (ii) the subsequent application of the royalty rate to projected revenue. In determining the hypothetical royalty rate utilized in the relief from royalty approach,2020, we considered comparable license agreements, an excess earnings analysis to determine aggregate intangible asset earnings, and other qualitative factors, each of which is considered a Level 3 input within the fair value hierarchy under ASC 820.
The key assumptions used in our model to estimate the fair value of the Intelsat trade name included forecasted revenues, the royalty rate, the tax rate and the discount rate. We completed our analysis of the estimated fair value of the Intelsat trade name in connection with the analysis of goodwill described above and it resulted inrecognized an impairment of our trade name intangible asset of $12.2 million, which is included within impairment of non-amortizable intangible assets in the condensed consolidated statements of operations.
The carrying amounts of acquired intangible assets not subject to amortization consisted of the following (in thousands):
As of
December 31, 2019		As of
March 31,2020
Orbital locations$2,387,700  $2,387,700  
Trade name65,200  53,000  
Total non-amortizable intangible assets$2,452,900  $2,440,700  

As of
December 31, 2020		As of
September 30, 2021
Orbital locations$2,250,000 $2,250,000 
Trade name45,000 45,000 
Total non-amortizable intangible assets$2,295,000 $2,295,000 
Other Intangible AssetsAssets. . The Company evaluated acquired intangible assets subject to amortization for potential impairment using internal projections of undiscounted cash flows expected to result from the use and eventual disposal of the assets. The key assumptions included in our model were projected growth rates, cost of capital, effective tax rates, and industry and economic trends. A change in estimated future cash flows or other assumptions could change our estimated fair values and result in future impairments. The conclusion of our analysis was that the undiscounted cash flows of the asset group were greater than its carrying value, resulting in 0 impairment.
The carrying amounts and accumulated amortization of acquired intangible assets subject to amortization consisted of the following (in thousands):
 As of December 31, 2019As of March 31, 2020
 Gross Carrying
Amount		Accumulated
Amortization		Net Carrying
Amount		Gross Carrying
Amount		Accumulated
Amortization		Net Carrying
Amount
Backlog and other$743,760  $(713,205) $30,555  $743,760  $(715,568) $28,192  
Customer relationships534,030  (287,833) 246,197  534,030  (293,246) 240,784  
Total$1,277,790  $(1,001,038) $276,752  $1,277,790  $(1,008,814) $268,976  
 As of December 31, 2020As of September 30, 2021
 Gross Carrying
Amount		Accumulated
Amortization		Net Carrying
Amount		Gross Carrying
Amount		Accumulated
Amortization		Net Carrying
Amount
Backlog and other$744,760 $(722,697)$22,063 $744,760 $(729,782)$14,978 
Customer relationships534,030 (309,486)224,544 534,030 (324,835)209,195 
Software45,808 (1,846)43,962 49,122 (10,940)38,182 
Total$1,324,598 $(1,034,029)$290,569 $1,327,912 $(1,065,557)$262,355 
Intangible assets are amortized based on the expected pattern of consumption. Amortization expense was $8.6$7.8 million and $7.8$10.3 million for the three months ended March 31, 2019September 30, 2020 and 2021, respectively, and $23.3 million and $31.5 million for the nine months ended September 30, 2020 and 2021, respectively.
Note 10 11—Debt
As discussed in Note 2—Chapter 11 Proceedings, Ability to Continue as a Going Concern and Other Related Matters, the filing of the Chapter 11 Cases constituted an event of default that accelerated substantially all of our obligations under the documents governing the prepetition existing indebtedness of Intelsat S.A., Intelsat Luxembourg, Intelsat Connect and Intelsat Jackson. As such, we have reclassified all such debt obligations, other than debt subject to compromise, to current maturities of long-term debt on our condensed consolidated balance sheet as of September 30, 2021. Any efforts to enforce payment obligations related to the acceleration
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of our debt have been automatically stayed as a result of the filing of the Chapter 11 Cases, and the creditors’ rights of enforcement are subject to the applicable provisions of the Bankruptcy Code. While the Chapter 11 Cases are pending, the Debtors do not anticipate making interest payments due under their respective unsecured debt instruments; however, the Debtors expect to make monthly interest payments on their senior secured debt instruments pursuant to the adequate protection requirements under the DIP Order.
The carrying values and fair values of our notes payable and debt were as follows (in thousands):
 As of December 31, 2019As of March 31, 2020
 Carrying ValueFair ValueCarrying ValueFair Value
Intelsat S.A.:
4.5% Convertible Senior Notes due June 2025$402,500  $265,231  $402,500  $82,513  
Unamortized prepaid debt issuance costs and discount on 4.5% Convertible Senior Notes(133,310) —  (129,037) —  
 As of December 31, 2020As of September 30, 2021
 Carrying ValueFair ValueCarrying ValueFair Value
Intelsat S.A.:
4.5% Convertible Senior Notes due June 2025 (1)
$402,500 $130,813 $402,500 $56,350 
Unamortized prepaid debt issuance costs and discount on 4.5% Convertible Senior Notes— — — — 
Total Intelsat S.A. obligations402,500 130,813 402,500 56,350 
Intelsat Luxembourg:
7.75% Senior Notes due June 2021 (1)
421,219 14,743 421,219 2,106 
Unamortized prepaid debt issuance costs on 7.75% Senior Notes— — — — 
8.125% Senior Notes due June 2023 (1)
1,000,000 130,000 1,000,000 95,000 
Unamortized prepaid debt issuance costs on 8.125% Senior Notes— — — — 
12.5% Senior Notes due November 2024 (1)
403,350 42,352 403,350 30,251 
Unamortized prepaid debt issuance costs and discount on 12.5% Senior Notes— — — — 
Total Intelsat Luxembourg obligations1,824,569 187,095 1,824,569 127,357 
Intelsat Connect Finance:
9.5% Senior Notes due February 2023 (1)
1,250,000 334,375 1,250,000 312,500 
Unamortized prepaid debt issuance costs and discount on 9.5% Senior Notes— —— — 
Total Intelsat Connect Finance obligations1,250,000 334,375 1,250,000 312,500 
Intelsat Jackson:
9.5% Senior Secured Notes due September 2022490,000 543,900 490,000 578,813 
Unamortized prepaid debt issuance costs and discount on 9.5% Senior Secured Notes(7,495)—(4,450)— 
8% Senior Secured Notes due February 20241,349,678 1,373,297 1,349,678 1,385,107 
Unamortized prepaid debt issuance costs and premium on 8% Senior Secured Notes(3,072)—(2,403)— 
5.5% Senior Notes due August 2023 (1)
1,985,000 1,349,800 1,985,000 1,091,750 
Unamortized prepaid debt issuance costs on 5.5% Senior Notes— —— — 
9.75% Senior Notes due July 2025 (1)
1,885,000 1,347,775 1,885,000 1,050,888 
Unamortized prepaid debt issuance costs on 9.75% Senior Notes— —— — 
8.5% Senior Notes due October 2024 (1)
2,950,000 2,079,750 2,950,000 1,666,750 
Unamortized prepaid debt issuance costs and premium on 8.5% Senior Notes— —— — 
Senior Secured Credit Facilities due November 20232,000,000 2,025,000 2,000,000 2,022,140 
Unamortized prepaid debt issuance costs and discount on Senior Secured Credit Facilities(16,955)—(12,869)— 
Senior Secured Credit Facilities due January 2024395,000 400,925 395,000 400,680 
Unamortized prepaid debt issuance costs and discount on Senior Secured Credit Facilities(1,238)—(952)— 
6.625% Senior Secured Credit Facilities due January 2024700,000 714,000 700,000 709,918 
Unamortized prepaid debt issuance costs and discount on Senior Secured Credit Facilities(2,194)—(1,689)— 
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 As of December 31, 2019As of March 31, 2020
 Carrying ValueFair ValueCarrying ValueFair Value
Total Intelsat S.A. obligations269,190  265,231  273,463  82,513  
Intelsat Luxembourg:
7.75% Senior Notes due June 2021421,219  336,975  421,219  202,185  
Unamortized prepaid debt issuance costs on 7.75% Senior Notes(1,257) —  (1,045) —  
8.125% Senior Notes due June 20231,000,000  590,000  1,000,000  190,000  
Unamortized prepaid debt issuance costs on 8.125% Senior Notes(5,838) —  (5,465) —  
12.5% Senior Notes due November 2024403,350  277,152  403,350  118,605  
Unamortized prepaid debt issuance costs and discount on 12.5% Senior Notes(184,344) —  (180,047) —  
Total Intelsat Luxembourg obligations1,633,130  1,204,127  1,638,012  510,790  
Intelsat Connect Finance:
9.5% Senior Notes due February 20231,250,000  865,625  1,250,000  431,250  
Unamortized prepaid debt issuance costs and discount on 9.5% Senior Notes(27,741) —  (25,833) —  
Total Intelsat Connect Finance obligations1,222,259  865,625  1,224,167  431,250  
Intelsat Jackson:
9.5% Senior Secured Notes due September 2022490,000  562,275  490,000  534,100  
Unamortized prepaid debt issuance costs and discount on 9.5% Senior Secured Notes(11,204) —  (10,312) —  
8% Senior Secured Notes due February 20241,349,678  1,380,046  1,349,678  1,282,194  
Unamortized prepaid debt issuance costs and premium on 8% Senior Secured Notes(3,903) —  (3,702) —  
5.5% Senior Notes due August 20231,985,000  1,687,250  1,985,000  1,161,225  
Unamortized prepaid debt issuance costs on 5.5% Senior Notes(8,723) —  (8,170) —  
9.75% Senior Notes due July 20251,885,000  1,729,488  1,885,000  1,178,125  
Unamortized prepaid debt issuance costs on 9.75% Senior Notes(20,487) —  (19,786) —  
8.5% Senior Notes due October 20242,950,000  2,669,750  2,950,000  1,740,500  
Unamortized prepaid debt issuance costs and premium on 8.5% Senior Notes(12,916) —  (12,365) —  
Senior Secured Credit Facilities due November 20232,000,000  1,985,000  2,000,000  1,840,000  
Unamortized prepaid debt issuance costs and discount on Senior Secured Credit Facilities(22,149) —  (20,887) —  
Senior Secured Credit Facilities due January 2024395,000  398,950  395,000  361,425  
Unamortized prepaid debt issuance costs and discount on Senior Secured Credit Facilities(1,600) —  (1,512) —  
6.625% Senior Secured Credit Facilities due January 2024700,000  712,250  700,000  644,000  
Unamortized prepaid debt issuance costs and discount on Senior Secured Credit Facilities(2,832) —  (2,677) —  
Total Intelsat Jackson obligations11,670,864  11,125,009  11,675,267  8,741,569  
Eliminations:
8.125% Senior Notes of Intelsat Luxembourg due June 2023 owned by Intelsat Jackson(111,663) (65,881) (111,663) (21,216) 
Unamortized prepaid debt issuance costs on 8.125% Senior Notes652  —  610  —  
12.5% Senior Notes of Intelsat Luxembourg due November 2024 owned by Intelsat Connect Finance, Intelsat Jackson and Intelsat Envision(403,245) (277,080) (403,245) (118,574) 
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As of December 31, 2019As of March 31, 2020 As of December 31, 2020As of September 30, 2021
Carrying ValueFair ValueCarrying ValueFair Value Carrying ValueFair ValueCarrying ValueFair Value
Superpriority Senior Secured DIP Credit Facilities due July 2021Superpriority Senior Secured DIP Credit Facilities due July 20211,000,000 1,011,250 — — 
Superpriority Senior Secured DIP Credit Facilities due July 2022Superpriority Senior Secured DIP Credit Facilities due July 2022— — 1,250,000 1,257,288 
Total Intelsat Jackson obligationsTotal Intelsat Jackson obligations12,723,724 10,845,697 12,982,315 10,163,334 
Eliminations:Eliminations:
8.125% Senior Notes of Intelsat Luxembourg due June 2023 owned by Intelsat Jackson (1)
8.125% Senior Notes of Intelsat Luxembourg due June 2023 owned by Intelsat Jackson (1)
(111,663)(14,517)(111,663)(10,608)
Unamortized prepaid debt issuance costs on 8.125% Senior NotesUnamortized prepaid debt issuance costs on 8.125% Senior Notes— —— — 
12.5% Senior Notes of Intelsat Luxembourg due November 2024 owned by Intelsat Connect Finance, Intelsat Jackson and Intelsat Envision (1)
12.5% Senior Notes of Intelsat Luxembourg due November 2024 owned by Intelsat Connect Finance, Intelsat Jackson and Intelsat Envision (1)
(403,245)(42,341)(403,245)(30,243)
Unamortized prepaid debt issuance costs and discount on 12.5% Senior NotesUnamortized prepaid debt issuance costs and discount on 12.5% Senior Notes184,296  —  180,001  —  Unamortized prepaid debt issuance costs and discount on 12.5% Senior Notes— — — — 
Total eliminations:Total eliminations:(329,960) (342,961) (334,297) (139,790) Total eliminations:(514,908)(56,858)(514,908)(40,851)
Total Intelsat S.A. debtTotal Intelsat S.A. debt$14,465,483  $13,117,031  $14,476,612  $9,626,332  Total Intelsat S.A. debt15,685,885 11,441,122 15,944,476 10,618,690 
Less: current maturities of long-term debtLess: current maturities of long-term debt5,903,724 6,068,372 6,162,315 6,353,946 
Less: debt included in liabilities subject to compromiseLess: debt included in liabilities subject to compromise9,782,161 5,372,750 9,782,161 4,264,744 
Total Intelsat S.A. long-term debtTotal Intelsat S.A. long-term debt— — — — 
(1)In connection with the Chapter 11 Cases, these balances have been reclassified as liabilities subject to compromise in our condensed consolidated balance sheet as of September 30, 2021. As of April 15, 2020, the Company ceased making principal and interest payments, and as of May 13, 2020 ceased accruing interest expense in relation to this long-term debt that was reclassified as liabilities subject to compromise.
The fair value for publicly traded instruments is determined using quoted market prices, and the fair value for non-publicly traded instruments is based upon composite pricing from a variety of sources, including market leading data providers, market makers and leading brokerage firms. Substantially all of the inputs used to determine the fair value of our debt are classified as Level 1 inputs within the fair value hierarchy underfrom ASC 820, except for our senior secured credit facilities and our 2025 Convertible Notes, the inputs for which are classified as Level 2.2, and Intelsat Luxembourg’s 8.125% Senior Notes due 2023 and 12.5% Senior Notes due 2024, the inputs for which are classified as Level 3. While the Company’s Chapter 11 proceedings remain ongoing, trading and fair value pricing may be more volatile and limited.
Intelsat S.A. 2025 Convertible NotesJackson Superpriority Senior Secured Debtor-in-Possession Term Loan Facility
InOn June 2018, we completed9, 2020, Intelsat Jackson received approval from the Bankruptcy Court to enter into the Original DIP Facility in an offering of 15,498,652 Intelsat S.A. common shares, nominal value $0.01 per share (the “Common Shares Offering”), at a public offering price of $14.84 per common share, and we completed an offering of $402.5 million aggregate principal amount of $1.0 billion on the 2025 Convertible Notes. These notes are guaranteed by a direct subsidiary of Intelsat Luxembourg, Intelsat Envision. The net proceeds from the Common Shares Offeringterms and 2025 Convertible Notes offering were used to repurchase approximately $600 million aggregate principal amount of Intelsat Luxembourg’s 7.75% Senior Notes due 2021 (the “2021 Luxembourg Notes”) in privately negotiated transactions with individual holders in June 2018. In connection with the repurchase of the 2021 Luxembourg Notes, we recognized a net gain on early extinguishment of debt of $22.1 million consisting of the difference between the carrying value of debt repurchased and the total cash amount paid (including related fees and expenses), together with a write-off of unamortized debt issuance costs. We used the remaining net proceeds of the Common Shares Offering and 2025 Convertible Notes offering for further repurchases of 2021 Luxembourg Notes and for other general corporate purposes, including repurchases of other tranches of debt of Intelsat S.A.’s subsidiaries.
The 2025 Convertible Notes mature on June 15, 2025 unless earlier repurchased, converted or redeemed,conditions as set forth in the 2025 Indenture. Holders may electOriginal DIP Credit Agreement and on June 17, 2020, the DIP Debtors entered into the Original DIP Credit Agreement. On September 14, 2021, the DIP Debtors received approval from the Bankruptcy Court for the DIP Order to convert their notes depending uponenter into the trading price of our common shares and under other conditions set forthNew DIP Facility in the 2025 Indenture until December 15, 2024, and thereafter without regard to any conditions. The initial conversion rate is 55.0085 common shares per $1,000an aggregate principal amount of notes, which is equivalent to an initial conversion price of approximately $18.18 per common share, subject to customary adjustments,$1.5 billion on the terms and will be increased upon the occurrence of specified events set forth in the 2025 Indenture. We may redeem the 2025 Convertible Notes at our option, on or after June 15, 2022, and prior to the forty-second scheduled trading day preceding the maturity date, in whole or in part, depending upon the trading price of our common sharesconditions as set forth in the optional redemption provisions in the 2025 Indenture or in the event of certain developments affecting taxation with respect to the 2025 Convertible Notes. Based on the closing price of our common shares of $1.53 on March 31, 2020, the if-converted value of the 2025 Convertible Notes did not exceed the aggregate principal amount.
In accounting for the transaction, the 2025 Convertible Notes were separated into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that does not have an associated convertible feature. The carrying amount of the equity component is $149.4 million, which is also recognized as a discount on the 2025 Convertible Notes and represents the value assigned to the conversion option which was determined by deducting the fair value of the liability component from the par value of the 2025 Convertible Notes. The $149.4 million equity component was included in additional paid-in capital on our condensed consolidated balance sheets as of both December 31, 2019 and March 31, 2020, and will not be remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount was recorded as a discount on the 2025 Convertible Notes and will be amortized to interest expense over the contractual term of the 2025 Convertible Notes at an effective interest rate of 13.0%.
We incurred debt issuance costs of $12.7 million related to the 2025 Convertible Notes, which were allocated to the liability and equity components based on their relative values. Issuance costs attributable to the liability component were $7.3 million and will be amortized to interest expense using the effective interest method over the contractual term of the 2025 Convertible Notes. Issuance costs attributable to the equity component were netted against the equity component in additional paid-in capital.
Interest expense related to the 2025 Convertible Notes was as follows (in thousands):
Three Months Ended March 31, 2019Three Months Ended March 31, 2020
Coupon interest$4,528  $4,528  
Amortization of discount and prepaid debt issuance costs3,754  4,273  
Total interest expense$8,282  $8,801  
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Intelsat Jackson Senior SecuredNew DIP Credit Agreement, and the Companyon September 14, 2021, Intelsat Jackson and Certain of its Subsidiaries' Indentures
The commencement of the Chapter 11 Cases constituted an immediate event of default under Intelsat Jackson’s secured credit agreement, dated as of January 12, 2011 (as amended, the “Intelsat Jackson Secured Credit Agreement”), as well as under the indentures governing certain of the CompanyDIP Debtors entered into the New DIP Credit Agreement. The New DIP Facility provided $1.25 billion in new money at closing for Intelsat Jackson to, among other things, refinance the Original DIP Facility and, provides the ability for Intelsat Jackson, at its subsidiaries’ senior secured notessole discretion, to make an incremental $250.0 million draw on the terms and senior notes, resultingconditions set forth therein. See Note 2—Chapter 11 Proceedings, Ability to Continue as a Going Concern and Other Related Matters.
Drawn amounts under the New DIP Facility bear interest at either (i) 3.75% per annum plus a base rate of the highest of (a) the Federal Funds Effective Rate plus ½ of 1.0%, (b) the Prime Rate as in effect on such day and (c) the LIBOR Rate for a one-month Interest Period on such day (or if such day is not a Business Day (as defined in the automatic and immediate accelerationNew DIP Credit Agreement), the immediately preceding Business Day), plus 1.0%, or (ii) 4.75% plus the LIBOR Rate. Undrawn amounts under the New DIP Facility shall be subject to a ticking fee of substantially all3.6% of our outstanding debt. Any efforts to enforce payment obligations relatedthe amount of commitments of the DIP Lenders from the entry of the DIP Order until such commitments have terminated, which ticking fee shall be payable on the last day of each fiscal quarter prior to the acceleration of our debtdate such commitments have been automatically stayed as a result of the filing of the Chapter 11 Cases,terminated and the creditors’ rights of enforcement are subject to the applicable provisions of the Bankruptcy Code.
In addition, on April 27, 2020, our London Inter-Bank Offered Rate loans under the Intelsat Jackson Secured Credit Agreement were converted to Alternate Base Rate (“ABR”) loans. We expect to pay interest on the floating rate term loans underdate of such termination. During the Intelsat Jackson Secured Credit Agreement at the rate applicable to ABR loans.
Debtor-in-Possession Financing Commitment
Prior to the commencement of the Chapter 11 Cases, Intelsat Jackson entered into a Commitment Letter with certain Commitment Parties regarding a DIP Facility. See Note 15—Subsequent Events.

Note 11 Derivative Instruments and Hedging Activities
Interest Rate Cap Contracts
As of December 31, 2019 and March 31, 2020, we held interest rate cap contracts with an aggregate notional value of $2.4 billion that mature in February 2021. These interest rate cap contracts, which were entered into in 2017 and amended in 2018, are designed to mitigate our risk of interest rate increases on the floating rate portion of our senior secured credit facilities (see Note 10—Debt). The contracts have not been designated for hedge accounting treatment in accordance with ASC 815, Derivatives and Hedging (“ASC 815”), and the changes in fair value of these instruments, net of payments received, are recognized in the condensed consolidated statements of operations during the period of change. We received $3.6 million in settlement payments related to the interest rate cap contracts for the three months ended March 31, 2019 with 0 comparable amounts for the three months ended March 31, 2020.
Preferred Stock Warrant and Common Stock Warrant
During 2017, we were issued a warrant to purchase preferred shares of one of our investments. We concluded that the warrant is a free-standing derivative in accordance with ASC 815. As of December 31, 2019 and March 31, 2020, the fair value of the preferred stock warrant was 0. During 2019, we were issued a warrant to purchase common sharescontinuance of a separate investment. We concluded that the warrant is a free-standing derivative in accordance with ASC 815.
The following table sets forth the fair valuepayment event of our derivatives by category (in thousands):
Derivatives not designated as hedging
instruments		ClassificationAs of
December 31, 2019		As of
March 31,2020
Common stock warrantOther assets$3,239  $3,239  
Interest rate cap contractsOther assets372  37  
Total derivatives$3,611  $3,276  
The following table sets forth the effect of the derivative instruments in our condensed consolidated statements of operations (in thousands):
Derivatives not designated as hedging
instruments		ClassificationThree Months Ended
March 31, 2019		Three Months Ended
March 31, 2020
Interest rate cap contractsLoss included in interest expense, net$(8,618) $(335) 
Preferred stock warrantLoss included in other income, net(908) —  
Total loss on derivative financial instruments$(9,526) $(335) 
Note 12 Income Taxes
In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220)—Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”), which allows for andefault,
27


optional reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting fromoverdue amounts under the U.S. Tax Cuts and Jobs Act (the "Act"), which was signed into law on December 22, 2017. Consequently,New DIP Facility will bear interest at an additional 2.0% per annum above the amendments eliminatedinterest rate otherwise applicable.
The use of proceeds under the stranded tax effects resulting fromNew DIP Facility include: (i) the Act for those entities that electpayment of working capital of the optional reclassification. ASU 2018-02 is effective for all entities for interim and annual periods beginning after December 15, 2018. We adopted ASU 2018-02DIP Debtors in the first quarterordinary course of 2019, which resulted in a reclassificationbusiness, (ii) C-band relocation costs, (iii) investment and other general corporate purposes, (iv) the payment of stranded tax effectsthe costs and expenses of $16.2 million from accumulated other comprehensive lossadministering the Chapter 11 Cases, (v) the adequate protection payments and (vi) the repayment of obligations under the Original DIP Credit Agreement. The maturity date of the New DIP Facility is July 13, 2022, subject to accumulated deficit.the DIP Debtors’ ability to extend for regulatory purposes.
The ActNew DIP Credit Agreement includes a numbercustomary negative covenants for debtor-in-possession loan agreements of provisions,this type, including covenants limiting the loweringCompany’s and its subsidiaries’ ability to, among other things, incur additional indebtedness, create liens on assets, make investments, loans or advances, engage in mergers, consolidations, sales of assets and acquisitions, pay dividends and distributions and make payments in respect of junior or prepetition indebtedness, in each case subject to customary exceptions for debtor-in-possession loan agreements of this type.
The New DIP Credit Agreement also includes certain customary representations and warranties, affirmative covenants and events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, certain events under ERISA and change of control. Certain bankruptcy-related events are also events of default, including, but not limited to, the dismissal by the Bankruptcy Court of any of the U.S. corporate tax rate from 35 percent to 21 percent, effective January 1, 2018. The Act limits our U.S. interest expense deductions to approximately 30 percentChapter 11 Cases, the conversion of EBITDA through December 31, 2021 and approximately 30 percent of earnings before net interest and taxes thereafter. The Act also introduced a new minimum tax, the Base Erosion Anti-Abuse Tax (“BEAT”). We are treating the BEAT as a period cost.
Effective January 1, 2019, the Luxembourg corporate tax rate decreased from 26.01% to 24.94%. This resulted in a decrease in deferred tax assets and corresponding valuation allowance.
The Company recognized the income tax effectsany of the ActChapter 11 Cases to a case under Chapter 7 of the Bankruptcy Code and certain other events related to the impairment of the DIP Lenders’ rights or liens granted under the New DIP Credit Agreement.
The foregoing descriptions of the Original DIP Credit Agreement and the New DIP Credit Agreement do not purport to be complete and are qualified in its 2017 financial statements in accordance with Staff Accounting Bulletin No. 118, which provides SEC staff guidance fortheir entirety by reference to the applicationfull text of ASC 740, the Original DIP Credit Agreement and the New DIP Credit Agreement, as applicable.
Note 12—Income Taxes, in the reporting period in which the Act was signed into law.
The Company measures deferred tax assets and liabilities using enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid. Accordingly, the Company’s U.S. deferred tax assets and liabilities were remeasured to reflect the reduction in the U.S. corporate income tax rate from 35 percent to 21 percent, resulting in a $28.0 million decrease in net deferred tax liabilities as of December 31, 2017.
On July 2, 2018, we implemented a series of internal transactions and related steps that reorganized the ownership of certain assets among our subsidiaries (the “2018 Internal Reorganization”). The 2018 Internal Reorganization resulted in the majority of our operations being owned by a U.S.-based partnership, with certain of our wholly-owned Luxembourg and U.S. subsidiaries as partners.
In response to the COVID-19 pandemic, on March 18, 2020, the Families First Coronavirus Response Act (the “FFCR Act”) was enacted, and on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted. The FFCR Act and the CARES Act contain numerous income tax provisions, such as increasing the 30 percent adjusted taxable income threshold to 50 percent for taxable years beginning in 2019 and 2020 for purposes of determining allowable business interest expense deductions.In addition, the The CARES Act repeals the 80 percent limitation for taxable years beginning before January 1, 2021 (enacted by the Act)U.S. Tax Cut and Jobs Act (the “Act”)), and it further specifies that net operating losses arising in a taxable year beginning after December 31, 2017, and before January 1, 2021, are allowed as a carryback to each of the five taxable years preceding the taxable year of such losses. Modifications to the tax rules for the carryback of net operating losses and business interest limitations resulted in a federal tax refund of approximately $8.1$11.4 million and $26.9 million for the three and nine months ended March 31, 2020.September 30, 2020, respectively. In addition, the CARES Act includes refundable payroll tax credits and deferral of employment side social security payments. As of September 30, 2021, Intelsat’s payroll deferral amount was approximately $6.8 million.
The majority of our operations are located in taxable jurisdictions, including Luxembourg, the U.S. and the United Kingdom (“UK”). Due to our cumulative losses in recent years, and the inherent uncertainty associated with the realization of taxable income in the foreseeable future, we recorded a full valuation allowance against the cumulative net operating losses generated in Luxembourg. The difference between tax expense (benefit) reported in the condensed consolidated statements of operations and tax computed at statutory rates is attributable to the valuation allowance on losses generated in Luxembourg, the provision for foreign taxes, which were principally in the U.S. as a result of the final BEAT regulations and the UK, as well as withholding taxes on revenue earned in some of the foreign markets in which we operate, offset by the tax benefit resultingbenefits recorded in 2020 from the impacts of the CARES Act.Act and a tax reserve established on certain tax benefits taken on the Base Erosion and Anti-Abuse Tax (“BEAT”).
As of both December 31, 20192020 and March 31, 2020,September 30, 2021, our gross unrecognized tax benefits were $25.0$51.4 million and $55.7 million, respectively (including interest and penalties), of which $21.5$47.6 million and $51.7 million, respectively, if recognized, would affect our effective tax rate. As of December 31, 20192020 and March 31, 2020,September 30, 2021, we had recorded reserves for interest and penalties in the amountamounts of $0.6$0.8 million and less than $0.1$1.1 million, respectively. We continue to recognize interest and, to the extent applicable, penalties with respect to the unrecognized tax benefits as income tax expense. Since December 31, 2019,2020, the change in the balance of unrecognized tax benefits has consisted of an increase of $0.1$5.6 million related to current tax positions, and a nominal decreasean increase of $0.2 million related to prior tax positions.positions, and a decrease of $1.5 million related to the expiration of a statute of limitations on the assessment of certain taxes.
We operate in various taxable jurisdictions throughout the world, and our tax returns are subject to audit and review from time to time. We consider Luxembourg, the U.S., the UK and Brazil to be our significant tax jurisdictions. Our Luxembourg, U.S., UK and Brazilian subsidiaries in these jurisdictions are subject to income tax examination for periods after December 31, 2014. Within the next twelve months, we2015. We believe that there are no jurisdictions in
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which the outcome of unresolved tax issues or claims is likely to be material to our results of operations, financial position or cash flows.
During 2019,flows within the Company made payments to the government of India in the amount of $7.0 million with respect to ongoing administrative proceedings. We believe it is more likely than not that the positions which we have presented in these matters will result in a favorable outcome for the Company. As a result, the payments have been recorded in taxes receivable.next twelve months.
Effective January 31, 2020, the UK formally exited the European Union ("EU"(“EU”). As a result of the withdrawal, existing tax reliefs and exemptions on intra-European transactions will likely cease to apply to transactions between UK entities and EU entities. In
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addition, transactions with non-EU countries, such as the U.S., may also be affected. As of March 31, 2020,September 30, 2021, all relevant tax laws and treaties remained unchanged and the tax consequences were unknown. Therefore, we have not recognized any impacts of the withdrawal in the income tax provision as of March 31, 2020.September 30, 2021. We will recognize any impacts to the tax provision when changes in tax laws or treaties between the UK and the EU or individual EU member states are enacted.
On December 2, 2019, the U.S. Department of Treasury and the U.S. Internal Revenue Service released final regulations with respect to the BEAT as enacted by the 2017 Tax Reform Act. These regulations represent the final version of proposed regulations which were released in December 2018. The BEAT is a minimum tax established by the Act, which was signed into law in December 2017, that subjects certain payments made by U.S. corporations or subsidiaries to foreign related parties to a secondary federal income tax regime in the U.S. The final regulations clarify which taxpayers are subject to the BEAT and how the BEAT rules apply to certain payments and transactions. We have adopted the final BEAT regulations as of the release date. These regulations are effective for the Company as of its tax year ended December 31, 2018. A second set of final regulations was issued on September 1, 2020, addressing among other topics, the application of the BEAT to partnerships and the application of the effectively connected income exception to depreciable or amortizable property contributed to a U.S. partnership by a foreign partner. Similar to the first set of final regulations issued in December 2019, the second set of final regulations are effective for the Company as of its tax year ended December 31, 2018. The Company includedrecognized the impact of BEAT tax expense forimpact associated with the second set of final regulations related to both the 2018its tax year ended December 31, 2020 and 2019 tax yearsnine months ended September 30, 2021 in the fourth quarteramounts of 2019.$8.8 million and $5.4 million, respectively.
Note 13 13—Commitments and Contingencies
On May 13, 2020, Intelsat S.A. and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. As a result of such bankruptcy filings, substantially all proceedings pending against the Debtors have been stayed and prepetition liabilities are subject to compromise. See Note 2—Chapter 11 Proceedings, Ability to Continue as a Going Concern and Other Related Matters.
SES Claim
On July 14, 2020, SES Americom, Inc. (“SES”) filed a proof of claim in the Bankruptcy Court in the amount of $1.8 billion against each of the Debtors. SES asserts that the Debtors owe money (or will owe money) to SES pursuant to certain contractual and fiduciary obligations made in the context of the consortium agreement entered into in September of 2018 among Debtor Intelsat US LLC, SES, and other satellite operators (the “Consortium Agreement”). SES claims that it is entitled to 50% of the combined payments that may eventually be payable to the Debtors and SES pursuant to the FCC Final Order, which provides for Acceleration Payments subject to the satisfaction of certain deadlines and other conditions set forth therein. SES’s proof of claim alleges that the Debtors breached the Consortium Agreement by taking the position that the Debtors are not required to split Acceleration Payments with SES and the other members of the consortium. The proof of claim also alleges breach of fiduciary duties and unjust enrichment and seeks monetary and punitive damages. We dispute the allegations in the proof of claim and on October 19, 2020, filed an objection to the claim, which we intend to litigate vigorously. The Bankruptcy Court has scheduled the trial on the SES claim to commence in January 2022. To the extent that any portion of SES’s claim is allowed, we have asked the Bankruptcy Court to “equitably subordinate” such claim based on SES’s conduct in matters related to the Consortium Agreement. While the ultimate resolution of the claim is not currently predictable, if there is an adverse ruling, the ruling could constitute a material adverse outcome on our future consolidated financial condition.
Other Litigation Matters
In the absence of the automatic stay due to the Chapter 11 Cases, we are subject to litigation in the ordinary course of business. Management does not believe that the resolution of any of those pending proceedings would have a material adverse effect on our financial position or results of operations.
On May 13, 2020, the Company and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in Bankruptcy Court. As a result of such bankruptcy filings, substantially all proceedings pending against the Debtors have been stayed.
Note 14 14—Related Party Transactions
(a) Shareholders’ Agreements
Certain shareholders of Intelsat Global S.A. entered into a shareholders’ agreements on February 4, 2008. The shareholders’ agreements were assigned to Intelsat S.A. by amendments effective as of March 30, 2012 in connection with our initial public offering (the "IPO") in April 2013, and then terminatedagreement in December 2018, and replaced by a new agreement. The new shareholders agreementwhich provides, among other things, specific rights to and limitations upon the holders of Intelsat S.A.’s share capital with respect to shares held by such holders.
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(b) Governance Agreement
Prior toIn December 2018, the consummation of the IPO, weCompany entered into a governance agreement with ourits shareholder affiliated with BC Partners (the “BC Shareholder”), our shareholder affiliated with Silver Lake (the “Silver Lake Shareholder”) and David McGlade, our Non-Executive Chairman. ThisSerafina S.A. The agreement was terminated in December 2018 and replaced with a new agreement between the BC Shareholder and the Company, containingcontains provisions relating to the composition of ourthe Company’s board of directors and certain other matters.
(c) Indemnification Agreements
We have entered into agreements with our executive officers and directors to provide contractual indemnification in addition to the indemnification provided for in our articles of incorporation.
(d) Horizons Holdings
We have a 50% ownership interest in Horizons Holdings as a result of a joint venture with JSAT (see Note 8(a)9(a)—Investments—Horizons Holdings).
(e) Horizons-3 Satellite LLC
We have a 50% ownership interest in Horizons 3 as a result of a joint venture with JSAT (see Note 8(b)9(b)—Investments—Horizons-3 Satellite LLC).
Note 15 Subsequent Events15—Condensed Combined Debtors' Financial Information
Voluntary ReorganizationThe following presents our Debtors' condensed combined balance sheets as of December 31, 2020 and September 30, 2021, statements of operations for the three and nine months ended September 30, 2020 and 2021, and statements of cash flows for the nine months ended September 30, 2020 and 2021. Consolidating adjustments include eliminations of the following:
•investments in subsidiaries;
•intercompany accounts;
•intercompany sales and expenses; and
•intercompany equity balances.
Intercompany balances with non-Debtor affiliates have not been eliminated. On the Debtors’ condensed combined balance sheets, these primarily consist of net intercompany trade receivables generated under Chapter 11
our Master Intercompany Service Agreement (“MISA”), funding for the operations of non-Debtor affiliates and funding for the acquisition of Intelsat CA. On May 13,the Debtors’ condensed combined statements of operations, total reported revenue includes intercompany revenue of $106.0 million and $69.7 million for the three months ended September 30, 2020 and 2021, respectively, and $228.6 million and $208.1 million for the nine months ended September 30, 2020 and 2021, respectively, primarily consisting of satellite capacity charges. Cost from affiliates primarily relates to sales and technical support services provided to Debtors (as defined in Note 1—General above) voluntarily commenced the Chapter 11 Casesas specified under the Bankruptcy CodeMISA. Investments in non-Debtor affiliates are presented under the equity method of accounting in the Bankruptcy Court. Primary factors causing the filing for Chapter 11 protection included the Company’s intention to participate in the accelerated clearing process of C-band spectrumcondensed combined financial statements set forth in the FCC’s final order on the topic, requiringbelow.

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the Company to incur significant costs now related to clearing activities well DEBTORS' CONDENSED COMBINED BALANCE SHEET
(in advance of receiving reimbursement for such costs, as well as the economic slowdown impacting the Company and several of its end markets due to COVID-19. On May 26, 2020, the Company filed a written commitment with the FCC to accelerate clearing of the C-band spectrum in the U.S.thousands, except per share amounts)
December 31, 2020September 30, 2021
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents$879,191 $418,715 
Restricted cash20,817 27,308 
Receivables, net of allowances of $34,391 in 2020 and $26,127 in 2021156,402 116,994 
Receivables relating to C-band405,171 1,035,578 
Contract assets, net of allowances15,474 14,244 
Inventory1,347 929 
Prepaid expenses and other current assets100,021 108,400 
Intercompany receivables678,188 914,875 
Total current assets2,256,611 2,637,043 
Satellites and other property and equipment, net4,656,678 4,890,864 
Goodwill2,624,452 2,624,452 
Non-amortizable intangible assets2,295,000 2,295,000 
Amortizable intangible assets, net245,649 224,173 
Contract assets, net of current portion and allowances26,642 21,600 
Investment in affiliates150,029 (12,342)
Other assets357,897 489,954 
Total assets$12,612,958 $13,170,744 
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued liabilities$222,876 $364,253 
Taxes payable6,743 6,925 
Employee-related liabilities36,563 33,974 
Accrued interest payable17,747 19,094 
Current maturities of long-term debt5,903,724 6,162,315 
Contract liabilities146,762 845,055 
Deferred satellite performance incentives47,377 54,512 
Other current liabilities43,885 75,683 
Total current liabilities6,425,677 7,561,811 
Contract liabilities, net of current portion1,422,893 1,270,745 
Deferred satellite performance incentives, net of current portion138,116 121,439 
Deferred income taxes61,069 74,701 
Accrued retirement benefits, net of current portion129,837 113,452 
Other long-term liabilities188,394 246,867 
Liabilities subject to compromise10,168,518 10,169,243 
Shareholders’ deficit:
Common shares, nominal value $0.01 per share1,421 1,422 
Paid-in capital2,573,840 2,577,607 
Accumulated deficit(8,416,410)(8,889,282)
Accumulated other comprehensive loss(80,397)(77,261)
Total shareholders’ deficit(5,921,546)(6,387,514)
Total liabilities and shareholders’ deficit$12,612,958 $13,170,744 
The Chapter 11 process can be unpredictable and involves significant risks and uncertainties. The Debtors have received initial approval from the Bankruptcy Court to maintain business-as-usual operations and uphold their respective commitments to their stakeholders, including employees, customers, and vendors, during the restructuring process, subject to the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code.
While the Chapter 11 Cases are pending, the Debtors do not anticipate making interest payments due under their respective unsecured debt instruments; however, the Debtors expect to pay all interest payments in full as they come due under their respective senior secured debt instruments. During the year ended December 31, 2019, the total aggregate amount of interest paid pursuant to our unsecured debt instruments was $768.2 million, and for the three months ended March 31, 2020 was $146.5 million. The total aggregate amount of interest payments due under our unsecured debt instruments for the remainder of 2020 which we do not expect to pay is $638.9 million.
In addition, prior to the commencement of the Chapter 11 Cases, the Company entered into the Commitment Letter with the Commitment Parties, pursuant to which, and subject to the satisfaction of certain customary conditions, including the approval of the Bankruptcy Court, the Commitment Parties have agreed to backstop the DIP Facility, in an aggregate principal amount of $1.0 billion.
Notice of Delisting
On May 20, 2020, the New York Stock Exchange (“NYSE”) filed a Form 25 with the SEC to delist the Company’s common shares, $0.01 par value from the NYSE. The delisting became effective 10 days after the Form 25 was filed. The deregistration of the common shares under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) will become effective 90 days after the filing date of the Form 25, at which point the common shares will be deemed registered under Section 12(g) of the Exchange Act. The Company’s common shares began trading on the OTC Pink Marketplace on May 19, 2020 under the symbol “INTEQ.”
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DEBTORS' UNAUDITED CONDENSED COMBINED STATEMENTS OF OPERATIONS
(in thousands)
Three Months Ended
September 30, 2020		Three Months Ended
September 30, 2021		Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2021
Revenue$473,556 $404,727 $1,314,307 $1,215,558 
Operating expenses:
Direct costs of revenue (excluding depreciation and amortization)68,891 66,106 199,958 195,254 
Selling, general and administrative57,659 56,964 181,931 175,722 
Cost from affiliates9,785 11,766 32,047 35,575 
Depreciation and amortization157,442 150,683 472,610 459,743 
Impairment of non-amortizable intangible and other assets— — 46,243 — 
Other operating expense—C-band298 17,867 580 140,861 
Total operating expenses294,075 303,386 933,369 1,007,155 
Income from operations179,481 101,341 380,938 208,403 
Interest expense, net(137,444)(119,049)(677,124)(367,477)
Equity in loss of affiliates(40,791)(34,280)(41,260)(128,793)
Other income, net2,973 11,594 15,007 39,224 
Reorganization items(36,367)(98,316)(335,059)(203,719)
Loss before income taxes(32,148)(138,710)(657,498)(452,362)
Income tax benefit (expense)16,217 (6,980)17,441 (20,510)
Net loss$(15,931)$(145,690)$(640,057)$(472,872)

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DEBTORS' UNAUDITED CONDENSED COMBINED STATEMENT OF CASH FLOWS
(in thousands)
Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2021
Cash flows from operating activities:
Net loss$(640,057)$(472,872)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization472,610 459,743 
Provision for expected credit losses34,465 17,224 
Foreign currency transaction (gains) losses(801)863 
Loss on disposal of assets— 43 
Impairment of non-amortizable intangible and other assets46,243 — 
Share-based compensation9,031 3,586 
Deferred income taxes5,470 11,102 
Amortization of discount, premium, issuance costs and related costs19,689 7,559 
Non-cash reorganization items196,974 — 
Debtor-in-possession financing fees52,182 46,944 
Amortization of actuarial loss and prior service credits for retirement benefits1,976 3,189 
Unrealized losses on derivative financial instruments372 — 
Unrealized losses (gains) on investments and loans held-for-investment721 (46,661)
Equity in (income) losses of affiliates41,260 128,793 
Other non-cash items(7)(517)
Changes in operating assets and liabilities:
Receivables12,841 21,697 
Intercompany receivables(105,048)(155,277)
Prepaid expenses, contract and other assets(81,814)6,124 
Accounts payable and accrued liabilities69,812 116,437 
Accrued interest payable48,713 1,347 
Contract liabilities(66,304)(84,422)
Accrued retirement benefits(12,253)(16,385)
Other long-term liabilities2,801 (20,132)
Net cash provided by (used in) operating activities108,876 28,385 
Cash flows from investing activities:
Capital expenditures (including capitalized interest)(414,610)(661,091)
Acquisition of loan to affiliate— (60,000)
Dividends from affiliates28,960 34,276 
Proceeds from sale of investment— 15,000 
Loan amendment fees received— 1,800 
Proceeds from principal payments on loans held-for-investment973 208 
Capital contribution to affiliates(9,005)— 
Other proceeds from satellites5,625 — 
Net cash used in investing activities(388,057)(669,807)
Cash flows from financing activities:
Proceeds from debtor-in-possession financing500,000 1,250,000 
Repayments of debtor-in-possession financing— (1,000,000)
Debtor-in-possession financing fees(52,182)(46,944)
Principal payments on deferred satellite performance incentives(25,428)(14,859)
Net cash provided by (used in) financing activities422,390 188,197 
Effect of exchange rate changes on cash, cash equivalents and restricted cash754 (760)
Net change in cash, cash equivalents and restricted cash143,963 (453,985)
Cash, cash equivalents, and restricted cash, beginning of period755,313 900,008 
Cash, cash equivalents, and restricted cash, end of period$899,276 $446,023 
Reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated Debtors' balance sheet to the total sum of these same amounts shown on the condensed consolidated Debtors' statement of cash flows:
Cash and cash equivalents$880,185 $418,715 
Restricted cash19,091 27,308 
Total cash, cash equivalents and restricted cash reported in the condensed consolidated Debtors' statement of cash flows$899,276 $446,023 
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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and their notes included in Item 1—Financial Statements in this Quarterly Report. SeeReport, and with our audited consolidated financial statements and their notes included in our Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Annual Report”). In addition, see “Forward-Looking Statements” and Item 1A—Risk Factors, for a discussion of factors that could cause our future financial condition and results of operations to be materially different from those discussed below.
The Company is relying on the U.S. Securities and Exchange Commission’s (the “SEC”) March 25, 2020 Order pursuant to Section 36 of the Exchange Act (Release No. 34-88465) (the “Order”) in delaying the filing of this Quarterly Report for the three months ended March 31, 2020, due to circumstances related to the novel coronavirus (“COVID-19”) pandemic. In particular, COVID-19 has caused limited access to the Company’s facilities and disrupted its normal interactions with its accounting personnel, legal advisors, auditors and others involved in the preparation of this Quarterly Report. The filing of this Quarterly Report on the date hereof will be considered a timely filing under the Order.
Overview
We operate one of the world’s largest satellite services businesses, providing a critical layer in the global communications infrastructure.
We provide diversified communications services to the world’s leading media companies, fixed and wireless telecommunications operators, data networking service providers for enterprise and mobile applications in the air and on the seas, multinational corporations and internet service providers.Internet Service Providers. We are also the leading provider of commercial satellite capacity to the United States (“U.S.”) government and other select military organizations and their contractors.
Our customers use our global network for a broad range of applications, from global distribution of content for media companies to providing the transmission layer for commercial aeronautical consumer broadband connectivity, to enabling essential network backbones for telecommunications providers in high-growth emerging regions.
Our network solutions are a critical component of our customers’ infrastructures and business models. Generally, our customers need the specialized connectivity that satellites provide so long as they are in business or pursuing their mission. In recent years, mobility services providers have contracted for services on our fleet that support broadband connections for passengers on commercial flights and cruise ships, connectivity that in some cases is only available through our network. In addition, our satellite neighborhoods provide our media customers with efficient and reliable broadcast distribution that maximizes audience reach, a technical and economic benefit that is difficult for terrestrial services to match. In developing regions, our satellite solutions often provide higher reliability than is available from local terrestrial telecommunications services and allow our customers to reach geographies that they would otherwise be unable to serve.
Through our acquisition of Gogo Inc.’s (“Gogo”) commercial aviation business (“Intelsat CA”), we became the global leader in providing in-flight connectivity (“IFC”) and wireless in-flight entertainment (“IFE”) solutions to the commercial aviation industry. Services provided by our Intelsat CA business include passenger connectivity, which allows passengers to connect to the Internet from their personal Wi-Fi-enabled devices; passenger entertainment, which offers passengers the opportunity to enjoy a broad selection of IFE options on their laptops and personal Wi-Fi enabled devices; and Connected Aircraft Services (“CAS”), which offer airlines connectivity for various operations and currently include, among others, real-time credit card transaction processing, electronic flight bags and real-time weather information.
Recent Developments
Voluntary Reorganization under Chapter 11
On May 13, 2020, the CompanyIntelsat S.A. and certain of its subsidiaries (each, a “Debtor” and collectively, the “Debtors”) commenced voluntary cases (the “Chapter 11 Cases”) under Chaptertitle 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Eastern District of Virginia (the “Bankruptcy Court”). Primary factors causing us to file for Chapter 11 protection included the Company’s intention to participate in the accelerated clearing process of C-band spectrum set forth in the U.S. Federal Communications Commission’s (“FCC”) March 3, 2020 final order on the topic,(the “FCC Final Order”), requiring the Company to incur significant costs now related to clearing activities well in advance of receiving reimbursement for such costs and the need for additional financing to fund the C-band clearing process, service our current debt obligations, and meet our operating requirements, as well as the economic slowdown impacting the Company and several of its end markets due to COVID-19. On May 26, 2020, the Company filednovel coronavirus (“COVID-19”) pandemic.
The FCC Final Order provides for monetary enticements for fixed satellite services (“FSS”) providers to clear a written commitment with the FCC to accelerate clearingportion of the C-band spectrum on an accelerated basis (the “Acceleration Payments”). Under the FCC Final Order, Intelsat License LLC (“Intelsat License”) is eligible to receive Acceleration Payments of approximately $1.2 billion and $3.7 billion based on the milestone clearing certification dates of December 5, 2021 and December 5, 2023, with the respective payments expected to be received in the U.S.first half of each successive year, respectively, subject to the satisfaction of certain deadlines and other conditions set forth therein. On August 14, 2020, Intelsat License filed its C-band spectrum transition plan with the FCC, with ongoing updates as requested by the FCC. The most recent amended transition plan was filed on September 30, 2021. On October 4, 2021, as subsequently amended on October 15, 2021, Intelsat License filed its Phase I Certification of Accelerated Relocation, indicating completion of required clearing activities to satisfy the December 5, 2021 deadline and requesting FCC validation to receive the $1.2 billion Acceleration Payment.
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The Chapter 11 process can be unpredictable and involves significant risks and uncertainties. As a result of these risks and uncertainties, the amount and composition of the Company’s assets, liabilities, officers and/or directors could be significantly different following the outcome of the Chapter 11 cases,Cases, and the description of the Company’s operations, properties and liquidity and capital resources included in this Quarterly Report may not accurately reflect its operations, properties and liquidity and capital resources following the Chapter 11 process. For additional information regarding such risks, see Part II—Item 1A—Risk Factors.
ThePursuant to various orders from the Bankruptcy Court, the Debtors have received initial approval from the Bankruptcy Court to generally maintain business-as-usualtheir ordinary course operations and uphold their respectivecertain commitments to their stakeholders, including employees, customers, and vendors during the restructuring process, subject to the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code. While the Chapter 11 Cases are pending, the Debtors do not anticipate making interest payments due under their respective unsecured debt instruments; however, the Debtors expect to pay allmake interest payments in full as they come due underon a monthly basis to holders of their respective senior secured debt instruments. During the year ended December 31, 2019, the total aggregate amount ofThe contractual interest paidexpense pursuant to our unsecured debt instruments that was $768.2not recognized in our condensed consolidated statements of operations was $196.4 million and $192.3 million for the three months ended March 31,September 30, 2020 was $146.5 million. The total aggregate amount
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of interest payments due under our unsecured debt instrumentsand 2021, respectively, and $298.9 million and $576.8 million for the remainder ofnine months ended September 30, 2020 which we do not expect to pay is $638.9 million.and 2021, respectively.
In addition, prior to the commencementThe filing of the Chapter 11 Cases constituted an event of default that accelerated substantially all of our obligations under the Company entered into a commitment letter (the “Commitment Letter”) with certain parties (the “Commitment Parties”)documents governing the prepetition existing indebtedness of Intelsat S.A., pursuant to which,Intelsat Luxembourg, Intelsat Connect and subject toIntelsat Jackson. For additional discussion regarding the satisfactionimpact of certain customary conditions, including the Chapter 11 Cases on our debt obligations, see Item 1, Note 11—Debt.
On June 9, 2020, Intelsat Jackson received approval offrom the Bankruptcy Court the Commitment Parties have agreed to backstopenter into a non-amortizing multiple draw super-prioritysuperpriority senior secured debtor-in-possession term loan facility (as amended, the “Original DIP Facility”) in an aggregate principal amount of $1.0 billion on the terms and conditions as set forth in the DIP credit agreement (as amended, the “Original DIP Credit Agreement”), and on June 17, 2020, Intelsat Jackson and certain of its subsidiaries as guarantors (together with Intelsat Jackson, the “DIP Debtors”) entered into the final Original DIP Credit Agreement. On September 14, 2021, the DIP Debtors received approval from the Bankruptcy Court (the “DIP Order”) to enter into a multiple draw superpriority senior secured debtor-in-possession term loan facility (the “DIP“New DIP Facility”), in an aggregate principal amount of $1.0 billion.$1.5 billion on the terms and conditions as set forth in the credit agreement for the New DIP Facility (the “New DIP Credit Agreement”), and on September 14, 2021, Intelsat Jackson and certain of the DIP Debtors entered into the final New DIP Credit Agreement. The New DIP Facility provided $1.25 billion in new money at closing for Intelsat Jackson to, among other things, refinance the Original DIP Facility and, provides the ability for Intelsat Jackson, at its sole discretion, to make an incremental $250.0 million draw. For additional discussioninformation regarding risksour credit facilities, see Liquidity and Capital Resources—Debt below.
On July 11, 2020, the Debtors filed with the Bankruptcy Court schedules and statements setting forth, among other things, the assets and liabilities of each of the Debtors, subject to the assumptions filed in connection therewith. These schedules and statements may be subject to further amendment or modification after filing.
On February 11, 2021, the Debtors entered into a plan support agreement with certain of the Debtors’ prepetition secured and unsecured creditors. After entry into such plan support agreement, the Debtors continued to engage with their stakeholders and on August 24, 2021, entered into an amended plan support agreement (together with all exhibits and schedules thereto, the “PSA”) with certain of the Debtors’ prepetition secured and unsecured creditors (the “Consenting Creditors” and together with the Debtors, the “PSA Parties”). The PSA contains certain covenants on the part of the PSA Parties, including but not limited to the Consenting Creditors voting in favor of the Amended Joint Chapter 11 Plan of Reorganization of Intelsat S.A. and Its Debtor Affiliates (as amended, the “Plan”), and provides that the Debtors shall achieve certain milestones (unless extended or waived in writing). In connection with the PSA, on August 24, 2021, the Debtors filed the Plan and the Amended Disclosure Statement for the Amended Joint Chapter 11 Plan of Reorganization of Intelsat S.A. and Its Debtor Affiliates (as amended the “Disclosure Statement”), which describes a variety of topics related to the DIP Facility, see Part II—Item 1A—Risk Factors.Chapter 11 Cases, including (i) events leading to the Chapter 11 Cases; (ii) significant events that took place during the Chapter 11 Cases; (iii) certain terms of the Plan; and (iv) certain anticipated risk factors associated with, and anticipated consequences of the Plan. On September 7, 2021, the Bankruptcy Court entered an order approving the Disclosure Statement. A hearing on confirmation of the Plan has been set by the Bankruptcy Court to begin on December 2, 2021.
Update on the EffectsImpact of COVID-19 on the Company
The COVID-19 pandemic has had an adverse impact on our business, operating results of operations and financial condition, a trend we expect to continue. Among the impacts of the COVID-19 pandemic were a reduction of revenue and a decreased likelihood of collection from certain mobility customers.customers and our Intelsat CA business. We continue to closely monitor the ongoing impact on our employees, customers, business and results of operations. For additional information regarding the risks associated with COVID-19, see Part II—Item 1A—Risk Factors.
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Gogo Transaction
On August 31, 2020, following approval from the Bankruptcy Court, Intelsat Jackson and Gogo entered into a purchase and sale agreement (the “Purchase and Sale Agreement”) with respect to Gogo’s commercial aviation business for $400.0 million in cash, subject to customary adjustments (the “Purchase Price”). The transaction further propels the Company’s efforts in the growing commercial IFC market, pairing our high-capacity global satellite and ground network with Gogo’s installed base of more than 3,000 commercial aircraft to redefine the connectivity experience.
A. Results of Operations
Three Months Ended March 31, 2019September 30, 2020 and 20202021
The following table sets forth our comparative statements of operations for the periods shown with the increase (decrease) and percentage changes, except those deemed not meaningful (“NM”), between the periods presented (in thousands, except percentages):
Three Months Ended
March 31, 2019		Three Months Ended
March 31, 2020		Increase
(Decrease)		Percentage
Change
Revenue$528,449  $458,820  $(69,629) (13)%
Operating expenses:
Direct costs of revenue (excluding depreciation and amortization)105,405  105,085  (320) —%
Selling, general and administrative51,658  80,967  29,309  57%
Depreciation and amortization171,094  163,048  (8,046) (5)%
Impairment of non-amortizable intangible assets—  12,200  12,200  NM
Total operating expenses328,157  361,300  33,143  10%
Income from operations200,292  97,520  (102,772) (51)%
Interest expense, net316,602  318,329  1,727  1%
Other income, net1,413  2,735  1,322  94
Loss before income taxes(114,897) (218,074) 103,177  (90)%
Provision for income taxes5,145  141  (5,004) (97)%
Net loss(120,042) (218,215) 98,173  (82)%
Net income attributable to noncontrolling interest(580) (556) 24  (4)%
Net loss attributable to Intelsat S.A.$(120,622) $(218,771) $98,149  (81)%

Three Months Ended
September 30, 2020		Three Months Ended
September 30, 2021		Dollar
Change		Percentage
Change
Revenue$489,449 $526,095 $36,646 7%
Operating expenses:
Direct costs of revenue (excluding depreciation and amortization)119,969 177,176 57,207 48%
Selling, general and administrative69,215 96,796 27,581 40%
Depreciation and amortization162,573 162,017 (556)less than 1%
Other operating expense—C-band298 17,867 17,569 NM
Total operating expenses352,055 453,856 101,801 29%
Income from operations137,394 72,239 (65,155)(47%)
Interest expense, net(138,075)(126,600)11,475 (8%)
Other income, net3,067 10,196 7,129 NM
Reorganization items(36,367)(98,316)(61,949)NM
Loss before income taxes(33,981)(142,481)(108,500)NM
Income tax benefit (expense)18,650 (2,605)(21,255)NM
Net loss(15,331)(145,086)(129,755)NM
Net income attributable to noncontrolling interest(600)(604)(4)1%
Net loss attributable to Intelsat S.A.$(15,931)$(145,690)$(129,759)NM
Revenue
We earn revenue primarily by providing services over satellite transponder capacity to our customers using our satellite transponder capacity.customers. Our customers generally obtain satellite capacity from us by placing an order pursuant to one of several master customer service agreements. On-networkThe master customer agreements and related service orders under which we sell services specify, among other things, the amount of satellite capacity to be provided, whether service will be non-preemptible or preemptible and the service term. Most services are comprised primarily of services delivered on our owned network infrastructure, as well as commitments for third-party capacity, generally long-termfull time in nature, with service terms ranging from one year to as long as 16 years. Occasional use services used for video applications can be for much shorter periods, including increments of one hour. Our master customer service agreements offer different service types, including transponder services, managed services, and channel, which are all services that are provided on, or used to provide access to, our global network. We refer to these services as on-network services. Our customer agreements also cover services that we procure from third parties and resell, which we integrate and market as part of our owned infrastructure. In the case of third-party services in support of government applications, the commitments for third-party capacity are shorter and matchedrefer to the government contracting period, and thus remain classified as off-network services. Off-networkThese services can include transponder services and other satellite-based transmission services such as mobile satellite services (“MSS”), which are sourced from other operators, often in frequencies not available on our network. Under the category Off-Network and Other Revenues, we also include revenues from consultingnetwork, and other operational fees related to satellite operations provided on behalf of third-party satellites.
Our Intelsat CA business generates two types of revenue: service revenue and equipment revenue. Service revenue is primarily derived from connectivity services and, to a lesser extent, from entertainment services, CAS and maintenance services. Connectivity is provided to our customers using both air-to-ground (“ATG”) and satellite technologies. Service revenue is earned by services paid for by passengers, airlines and third parties. Equipment revenue primarily consists of the sale of ATG and satellite connectivity equipment and the sale of entertainment equipment. Equipment revenue also includes revenue generated by our installation of connectivity or entertainment equipment on commercial aircraft.
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The following table sets forth our comparative revenue by service type, with Off-Network and Other Revenues shown separately from On-Network Revenues, for the periods below (in thousands, except percentages):
 Three Months Ended March 31, 2019Three Months Ended March 31, 2020Increase
(Decrease)		Percentage
Change
On-Network Revenues
Transponder services$377,284  $331,334  $(45,950) (12)%
Managed services93,201  72,261  (20,940) (22)
Channel691  426  (265) (38)
Total on-network revenues471,176  404,021  (67,155) (14)
Off-Network and Other Revenues
Transponder, MSS and other off-network services49,858  43,688  (6,170) (12)
Satellite-related services7,415  11,111  3,696  50
Total off-network and other revenues57,273  54,799  (2,474) (4)
Total$528,449  $458,820  $(69,629) (13)%
 Three Months Ended
September 30, 2020		Three Months Ended
September 30, 2021		Increase
(Decrease)		Percentage
Change
On-Network Revenues
Transponder services$353,758 $320,260 $(33,498)(9%)
Managed services69,438 71,856 2,418 3%
Channel280 186 (94)(34%)
Total on-network revenues423,476 392,302 (31,174)(7%)
Off-Network and Other Revenues
Transponder, MSS and other off-network services54,478 40,090 (14,388)(26%)
Satellite-related services11,495 11,090 (405)(4%)
Total off-network and other revenues65,973 51,180 (14,793)(22%)
In-flight Services Revenues
Services— 67,482 67,482 NM
Equipment— 15,131 15,131 NM
Total in-flight services revenue— 82,613 82,613 NM
Total$489,449 $526,095 $36,646 7%
Total revenue for the three months ended March 31, 2020 decreasedSeptember 30, 2021 increased by $69.6$36.6 million, or 13%7%, as compared to the three months ended March 31, 2019.September 30, 2020. By service type, our revenues increased or decreased due to the following:
On-Network Revenues:
•Transponder services—an aggregate decrease of $46.0$33.5 million, primarily due to a $32.1$20.8 million net decrease in revenuerevenues from media customers and a $12.3 million net decrease in revenues from network services customers, a $12.3 millioncustomers. The decrease in revenue from media customers was primarily driven by non-renewals, renewals at lower prices, service contractions, service transfers to managed services and service terminations relating to distribution and direct-to-home (“DTH”) solution application customers. These decreased revenues were partially offset by new business from a contribution solution application customer and a $1.5 million decreaseservice transfer to transponder services from managed services for a DTH solution application customer. The decline in revenue from government customers. The declinerevenues from network services customers was primarily due to non-renewals, renewals at lower pricing or lower capacity, service contractions for enterprise and wireless infrastructure applications, the termination of a network services contract, and approximately $5.0 million in lost revenue resulting from the loss of Intelsat 29e, a portion of which services were restored with off-network services. These declines were partially offset by increased revenues from customers for telecommunications infrastructure in the Asia-Pacific region. The decline from media customers was primarily due to non-renewals, renewals at lower pricing or lower capacitydecreases, and service contractions for distribution services in the Latin America, North America and Africa regions.contractions.
•Managed services—an aggregate decrease of $20.9 million, primarily due to a $12.1 million decrease in revenue from network services customers, a $7.5 million decrease in revenue from media customers, and a $1.3 million decrease in revenue from government customers. The decrease from network services customers was mainly driven by declines for mobility broadband solutions and trunking applications, primarily due to the termination of a network services contract, and approximately $4.3 million in lost revenue resulting from the loss of Intelsat 29e, a portion of which services were restored with off-network services. These declines were partially offset by increased revenues from maritime mobility services. The decrease in revenue from media customers was mainly related to termination of a managed video service contract and a decrease in occasional use services.
Off-NetworkOff-network and Other Revenues:
•Transponder, MSS, and other off-network services—services —an aggregate decrease of $6.2$14.4 million primarily dueattributable to $14.3a $13.4 million of revenuedecrease in revenues from government customers. The decrease in revenues from government customers was primarily driven by equipment revenues recognized in the firstthird quarter of 2019 from a network services customer accounted for as a sales-type lease under ASC 842, Leases ("ASC 842"),2020, with no comparable amountcorresponding revenues in 2020,the third quarter of 2021, non-renewals, and a decline in usage-based mobile satellite services (“MSS”), partially offset by an increase of $4.6 million in revenue from network services customers largely due to the restoration of certain Intelsat 29e services tonew off-network capacity and a $4.6 million increase in revenue from government customers.managed services.
In-flight Services Revenues:
•Satellite-related services—Services and equipment—an aggregate increase of $3.7$82.6 million reflecting increased revenues from professional services supporting third-party satellites.attributable to our Intelsat CA business.
Operating Expenses
Direct Costs of Revenue (Excluding Depreciation and Amortization)
Direct costs of revenue decreasedincreased by $0.3$57.2 million, or 48%, to $105.1$177.2 million for the three months ended March 31, 2020,September 30, 2021, as compared to the three months ended March 31, 2019.September 30, 2020. The decreaseincrease was primarily due to nominal fluctuations$73.6 million in earth station,costs attributable to our Intelsat CA business, partially offset by a $13.0 million decrease in equipment costs largely related to government customers incurred in 2020 with no similar activity in 2021, and a $3.6 million decrease in staff-related and operational expenses.
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Selling, General and Administrative
Selling, general and administrative expenses increased by $29.3$27.6 million, or 57%40%, to $81.0$96.8 million for the three months ended March 31, 2020,September 30, 2021, as compared to the three months ended March 31, 2019.September 30, 2020. The increase was primarily due to $28.6 million in costs attributable to our Intelsat CA business and a $19.5$4.4 million increase in bad debt expense, largely relating tostaff-related expenses, partially offset by a certain customer that filed for Chapter 11 bankruptcy protection, and a $4.7$6.5 million increasedecrease in professional fees. The remaining increase was driven by increases in other miscellaneous operating costs.
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Depreciation and Amortization
Depreciation and amortization expense decreased by $8.0$0.6 million, or 5%less than 1%, to $163.0$162.0 million for the three months ended March 31, 2020,September 30, 2021, as compared to the three months ended March 31, 2019.September 30, 2020. Significant items impacting depreciation and amortization included:
•a decreasean increase of $9.2$6.5 million in depreciation and amortization expense dueattributable to the write-off ofour Intelsat 29e;CA business; and
•a decrease of $4.7 million in depreciation expense due to the timing of a satellite becoming fully depreciated; partially offset by
•an increase of $4.7$3.3 million in depreciation expense resulting from the impact of a satellite placed ininto service; andpartially offset by
•an increasea decrease of $1.2$8.3 million in depreciation expense due to the impacttiming of certain ground segment assets placed in service.satellites becoming fully depreciated.
ImpairmentOther Operating Expense—C-band
Other operating expense—C-band consists of Non-Amortizable Intangible Assets
reimbursable and non-reimbursable costs associated with our C-band spectrum relocation efforts. We recognized an impairment chargeincurred $0.3 million and $17.9 million of $12.2 millionreimbursable and non-reimbursable C-band clearing related expenses for the three months ended March 31,September 30, 2020 relating to the Intelsat trade name intangible asset. No comparable amounts were recognized for the three months ended March 31, 2019. See Item 1, Note 9—Goodwill and Other Intangible Assets for further discussion.2021, respectively.
Interest Expense, Net
Interest expense, net consists of gross interest expense incurred together with gains and losses on interest rate cap contracts (which reflect the changechanges in their fair value)values), offset by interest income earned and interest capitalized related to assets under construction. As of MarchDecember 31, 2020, we held interest rate cap contracts with an aggregate notional amount of $2.4 billion that matured in February 2021. These interest rate cap contracts were held to mitigate the risk of interest rate increases on the floating-rate term loans under our senior secured credit facilities. The contracts havewere not been designated as hedges for accounting purposes.
Interest expense, net increaseddecreased by $1.7$11.5 million, or 1%8%, to $318.3$126.6 million for the three months ended March 31, 2020,September 30, 2021, as compared to the three months ended March 31, 2019. The increase in interest expense, net was principallySeptember 30, 2020, primarily due to the following:
•an increasea decrease of $7.3 million primarily resulting from our incremental debt raise in 2019; and
•an increase of $4.6$12.9 million due to lowerhigher capitalized interest primarily resulting from decreasedincreased levels of satellites and related assets under construction; partially offset by
•a decreasean increase of $8.3$4.8 million corresponding to a larger decrease in fair value of the interest rate cap contracts during the three months ended March 31, 2019 as compared to the three months ended March 31, 2020.expense primarily recognized on our senior secured credit facilities.
The non-cash portion of total interest expense, net was $39.6$26.1 million for the three months ended March 31, 2020,September 30, 2021, primarily consisting of interest expense related to the significant financing component identified in customer contracts and amortization and accretion of discounts and premiums, amortization of deferred financing fees and the loss resulting from the decrease in fair value of the interest rate cap contracts we hold.premiums.
Other Income, Net
Other income, net was $2.7$10.2 million for the three months ended March 31, 2020,September 30, 2021, as compared to $1.4$3.1 million for the three months ended March 31, 2019.September 30, 2020. The net increase in other income netwas primarily driven by a $7.3 million gain from the conversion of stock warrants into common shares of a newly merged public company and $1.8 million in fees received related to an amendment fee for a loan receivable, both of which occurred during the three months ended September 30, 2021, with no similar activity for the three months ended March 31, 2020 primarily resulted from a $6.0 millionSeptember 30, 2020. Offsetting this gain, on sale of assets, partially offset by increasedwe incurred higher foreign currency losses in 2021 as compared to 2020, with a net negative impact of $4.3 million largely related to our business conducted in Brazilian reais.
Provision for Income Taxes
Income tax expense decreased by $5.0 million, or 97%, to $0.1$2.4 million for the three months ended March 31, 2020,September 30, 2021 as compared to the three months ended March 31, 2019.September 30, 2020.
Reorganization Items
Reorganization items reflect direct costs incurred in connection with our Chapter 11 restructuring activities. We recorded reorganization items of $36.4 million and $98.3 million for the three months ended September 30, 2020 and 2021, respectively. Reorganization items for the three months ended September 30, 2020 primarily consisted of professional fees. Reorganization items for the three months ended September 30, 2021 primarily consisted of professional fees, financing fees related to the Original DIP Facility and New DIP Facility and the write-off of debt discount related to the New DIP Facility.
Income Tax Expense
Income tax benefit decreased by $21.3 million to income tax expense of $2.6 million for the three months ended September 30, 2021, as compared to the three months ended September 30, 2020. The decrease was principally attributable to higher income from our U.S. subsidiaries for the impactthree months ended September 30, 2021, benefits recorded in 2020 from impacts of the Coronavirus Aid, Relief, and Economic Security Act enacted(the “CARES Act”), and a tax reserve established on March 27, 2020, with regards to the relaxed limitationscertain tax benefits taken on the deductibility of interest and the use of net operating losses arising in taxable years beginning after December 31, 2017.Base Erosion Anti-Abuse Tax (“BEAT”).
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Cash paid for income taxes, net of refunds, totaled $1.9$2.1 million and $1.0$0.1 million for the three months ended March 31, 2019September 30, 2020 and 2020,2021, respectively.
Net Loss Attributable to Intelsat S.A.
Net loss attributable to Intelsat S.A. was $218.8$145.7 million for the three months ended March 31, 2020,September 30, 2021, as compared to net loss attributable to Intelsat S.A. of $120.6$15.9 million for the three months ended March 31, 2019.September 30, 2020. The change reflects the various items discussed above.
Nine Months Ended September 30, 2020 and 2021
The following table sets forth our comparative statements of operations for the periods shown with the increase (decrease) and percentage changes, except those deemed not meaningful (“NM”), between the periods presented (in thousands, except percentages):
Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2021		Dollar
Change		Percentage
Change
Revenue$1,430,303 $1,536,720 $106,417 7%
Operating expenses:
Direct costs of revenue (excluding depreciation and amortization)331,191 505,798 174,607 53%
Selling, general and administrative214,586 299,499 84,913 40%
Depreciation and amortization488,235 495,517 7,282 1%
Impairment of non-amortizable intangible and other assets46,243 — (46,243)NM
Other operating expense—C-band580 140,861 140,281 NM
Total operating expenses1,080,835 1,441,675 360,840 33%
Income from operations349,468 95,045 (254,423)(73%)
Interest expense, net(678,937)(388,836)290,101 (43%)
Other income, net8,564 40,133 31,569 NM
Reorganization items(335,059)(203,719)131,340 (39%)
Loss before income taxes(655,964)(457,377)198,587 (30%)
Income tax benefit (expense)17,691 (13,716)(31,407)NM
Net loss(638,273)(471,093)167,180 (26%)
Net income attributable to noncontrolling interest(1,784)(1,779)5 —%
Net loss attributable to Intelsat S.A.$(640,057)$(472,872)$167,185 (26%)

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Revenue
The following table sets forth our comparative revenue by service type, with Off-Network and Other Revenues shown separately from On-Network Revenues, for the periods shown (in thousands, except percentages):
Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2021		Increase
(Decrease)		Percentage
Change
On-Network Revenues
Transponder services$1,028,692 $969,423 $(59,269)(6%)
Managed services226,749 211,710 (15,039)(7%)
Channel1,096 567 (529)(48%)
Total on-network revenues1,256,537 1,181,700 (74,837)(6%)
Off-Network and Other Revenues
Transponder, MSS and other off-network services141,783 122,393 (19,390)(14%)
Satellite-related services31,983 29,582 (2,401)(8%)
Total off-network and other revenues173,766 151,975 (21,791)(13%)
In-flight Services Revenues
Services— 169,489 169,489 NM
Equipment— 33,556 33,556 NM
Total in-flight services revenue— 203,045 203,045 NM
Total$1,430,303 $1,536,720 $106,417 7%
Total revenue for the nine months ended September 30, 2021 increased by $106.4 million, or 7%, as compared to the nine months ended September 30, 2020. By service type, our revenues increased or decreased due to the following:
On-Network Revenues:
•Transponder services—an aggregate decrease of $59.3 million, primarily due to a $58.9 million net decrease in revenues from media customers and a $2.6 million net decrease in revenues from network services customers. The decrease in revenues from media customers was primarily due to non-renewals, renewals at lower prices, service contractions and service terminations relating to distribution and DTH solution application customers, partially offset by new business from contribution and DTH solution application customers and a transfer from managed services to transponder services for a DTH solution application customer. The decrease in revenue from network services customers was primarily due to non-renewals, pricing decreases, service contractions and a service contract termination. These decreased revenues were partially offset by a renegotiated contract with a maritime mobility customer for a different service mix of revenues previously classified as managed services, new business, pricing increases, and capacity upgrades for cellular backhaul solution application customers.
•Managed services—an aggregate decrease of $15.0 million, primarily due to a $15.9 million decrease in revenues from network services customers, partially offset by a $4.0 million increase in revenues from government customers. The decline in revenues from network services customers was primarily driven by a renegotiated contract with a maritime mobility customer for a different service mix of revenues previously classified as managed services, non-renewals, and a service transfer from managed services to transponder services for a cellular backhaul customer, partially offset by increased revenues from new flex maritime services. The increase in revenues from government customers was primarily attributable to new flex services and the entry into service of Galaxy 30, partially offset by non-renewals and service contractions.
Off-network and Other Revenues:
•Transponder, MSS, and other off-network services —an aggregate decrease of $19.4 million primarily attributable to a $16.8 million decrease in revenues from government customers. The decrease in revenues from government customers was primarily driven by equipment revenues recognized in 2020 with no corresponding revenues in 2021, non-renewals, pricing decreases, and service contractions, partially offset by new off-network managed services and pricing increases from recompeted services.
In-flight Services Revenues:
•Services and equipment—an aggregate increase of $203.0 million attributable to our Intelsat CA business.
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Operating Expenses
Direct Costs of Revenue (Excluding Depreciation and Amortization)
Direct costs of revenue increased by $174.6 million, or 53%, to $505.8 million for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020. The increase was primarily due to $196.0 million in costs attributable to our Intelsat CA business, partially offset by a $9.5 million decrease in equipment costs largely related to government customers incurred in 2020 with no similar activity in 2021, and a $5.4 million decrease in staff-related expenses.
Selling, General and Administrative
Selling, general and administrative expenses increased by $84.9 million, or 40%, to $299.5 million for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020. The increase was primarily due to the following:
•$88.0 million in costs attributable to our Intelsat CA business; and
•an $11.2 million increase in staff-related expenses largely relating to our employee retention incentive plans; partially offset by
•a $16.3 million decrease in bad debt expense largely relating to a certain customer that filed for Chapter 11 bankruptcy protection in 2020.
Depreciation and Amortization
Depreciation and amortization expense increased by $7.3 million, or 1%, to $495.5 million for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020. Significant items impacting depreciation and amortization included:
•an increase of $20.6 million in depreciation and amortization expense attributable to our Intelsat CA business; and
•an increase of $7.4 million in depreciation expense resulting from the impact of a satellite placed into service; partially offset by
•a decrease of $19.2 million in depreciation expense due to the timing of certain satellites becoming fully depreciated.
Impairment of Non-Amortizable Intangible and Other Assets
We recognized impairment charges of $34.0 million and $12.2 million for the nine months ended September 30, 2020 relating to certain satellite and launch vehicle deposits and the Intelsat trade name intangible asset, respectively. No comparable amounts were recognized for the nine months ended September 30, 2021. See Item 1, Note 8—Satellites and Other Property and Equipment and Item 1, Note 10—Goodwill and Other Intangible Assets for further discussion.
Other Operating Expense—C-band
Other operating expense—C-band consists of reimbursable and non-reimbursable costs associated with our C-band spectrum relocation efforts. We incurred $0.6 million and $140.9 million of reimbursable and non-reimbursable C-band clearing related expenses for the nine months ended September 30, 2020 and 2021, respectively.
Interest Expense, Net
Interest expense, net decreased by $290.1 million, or 43%, to $388.8 million for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020, primarily due to the following:
•a decrease of $243.0 million in interest expense primarily resulting from Chapter 11 restructuring activities, partially offset by an increase in interest expense recognized on our senior secured credit facilities; and
•a decrease of $38.0 million due to a higher capitalized interest primarily resulting from increased levels of satellites and related assets under construction.
The non-cash portion of total interest expense, net was $79.5 million for the nine months ended September 30, 2021, primarily consisting of interest expense related to the significant financing component identified in customer contracts and amortization and accretion of discounts and premiums.
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Other Income, Net
Other income, net was $40.1 million for the nine months ended September 30, 2021, as compared to $8.6 million for the nine months ended September 30, 2020. The net increase in other income was primarily driven by a $12.8 million gain from the change in value of stock warrants we held and subsequent conversion of the stock warrants into common shares of a newly merged public company, a $7.7 million gain due to a change in value of an investment in a third party, a $5.3 million gain on the sale of one of our investments, and $1.8 million in fees received related to an amendment fee for a loan receivable, all of which occurred during the nine months ended September 30, 2021, with no similar activity for the nine months ended September 30, 2020. In addition, we incurred lower foreign currency losses in 2021 as compared to 2020, with a net positive impact of $3.7 million for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020.
Reorganization Items
Reorganization items reflect direct costs incurred in connection with our Chapter 11 restructuring activities. We recorded reorganization items of $335.1 million and $203.7 million for the nine months ended September 30, 2020 and 2021, respectively. Reorganization items for the nine months ended September 30, 2020 primarily consisted of $197.0 million related to the write-off of debt discount, premium and issuance costs, $85.2 million in professional fees and $52.2 million of financing fees related to the Original DIP Facility. Reorganization items for the nine months ended September 30, 2021 primarily consisted of professional fees, financing fees related to the Original DIP Facility and New DIP Facility and the write-off of debt discount related to the New DIP Facility.
Income Tax Expense
Income tax benefit decreased by $31.4 million to income tax expense of $13.7 million for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020. The decrease was principally attributable to higher income from our U.S. subsidiaries for the nine months ended September 30, 2021, benefits recorded in 2020 from impacts of the CARES Act, and a tax reserve established on certain tax benefits taken on the BEAT, partially offset by a tax benefit resulting from changes in the UK deferred tax rate.
Cash paid for income taxes, net of refunds, totaled $4.7 million and $2.7 million for the nine months ended September 30, 2020 and 2021, respectively.
Net Loss Attributable to Intelsat S.A.
Net loss attributable to Intelsat S.A. was $472.9 million for the nine months ended September 30, 2021, as compared to net loss attributable to Intelsat S.A. of $640.1 million for the nine months ended September 30, 2020. The change reflects the various items discussed above.
EBITDA
EBITDA consists of earnings before net interest, loss (gain) on early extinguishment of debt, taxes and depreciation and amortization. Given our high level of leverage, refinancing activities are a frequent part of our efforts to manage our costs of borrowing. Accordingly, we consider loss (gain) on early extinguishment of debt an element of interest expense. EBITDA is a measure commonly used in the fixed satellite services ("FSS")FSS sector, and we present EBITDA to enhance the understanding of our operating performance. We use EBITDA as one criterion for evaluating our performance relative to that of our peers. We believe that EBITDA is an operating performance measure, and not a liquidity measure, that provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles and ages of related assets among otherwise comparable companies. However, EBITDA is not a measure of financial performance under U.S. GAAP, and our EBITDA may not be comparable to similarly titled measures of other companies. EBITDA should not be considered as an alternative to operating income (loss) or net income (loss) determined in accordance with U.S. GAAP, as an indicator of our operating performance, or as an alternative to cash flows from operating activities determined in accordance with U.S. GAAP, as an indicator of cash flows, or as a measure of liquidity.
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A reconciliation of net loss to EBITDA for the periods shown is as follows (in thousands):
Three Months Ended
March 31, 2019		Three Months Ended
March 31, 2020
Net loss$(120,042) $(218,215) 
Add:
Interest expense, net316,602  318,329  
Provision for income taxes5,145  141  
Depreciation and amortization171,094  163,048  
EBITDA$372,799  $263,303  
Three Months Ended
September 30, 2020		Three Months Ended
September 30, 2021		Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2021
Net loss$(15,331)$(145,086)$(638,273)$(471,093)
Add (Subtract):
Interest expense, net138,075 126,600 678,937 388,836 
Income tax expense (benefit)(18,650)2,605 (17,691)13,716 
Depreciation and amortization162,573 162,017 488,235 495,517 
EBITDA$266,667 $146,136 $511,208 $426,976 
Adjusted EBITDA
In addition to EBITDA, we calculate a measure called Adjusted EBITDA to assess the operating performance of Intelsat S.A. Adjusted EBITDA consists of EBITDA of Intelsat S.A. as adjusted to exclude or include certain unusual items, certain other operating expense items and certain other adjustments as described in the table and related footnotes below. Our management believes that the presentation of Adjusted EBITDA provides useful information to investors, lenders and financial analysts regarding our financial condition and results of operations because it permits clearer comparability of our operating performance between periods. By excluding the potential volatility related to the timing and extent of non-operating activities, such as impairments of asset value and other non-recurring items, our management believes that Adjusted EBITDA provides a useful means of evaluating the success of our operating activities. We also use Adjusted EBITDA, together with other appropriate metrics, to set goals for and measure the operating performance of our business, and it is one of the principal measures we use to evaluate our management’s performance in determining compensation under our incentive compensation plans. Adjusted EBITDA measures have been used historically by investors, lenders and financial analysts to estimate the value of a company, to make informed investment decisions and to evaluate performance. Our management believes that the inclusion of Adjusted EBITDA facilitates comparison of our results with those of companies having different capital structures.
Adjusted EBITDA is not a measure of financial performance under U.S. GAAP and may not be comparable to similarly titled measures of other companies. Adjusted EBITDA should not be considered as an alternative to operating income (loss) or net income (loss) determined in accordance with U.S. GAAP, as an indicator of our operating performance, as an alternative to cash flows from operating activities determined in accordance with U.S. GAAP, as an indicator of cash flows, or as a measure of liquidity.
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A reconciliation of net loss to EBITDA and EBITDA to Adjusted EBITDA is as follows (in thousands):
Three Months Ended
March 31, 2019		Three Months Ended
March 31, 2020
Net loss$(120,042) $(218,215) 
Add:
Interest expense, net316,602  318,329  
Provision for income taxes5,145  141  
Depreciation and amortization171,094  163,048  
EBITDA372,799  263,303  
Add:
Compensation and benefits(1)
2,707  3,706  
Non-recurring and other non-cash items(2)
4,774  10,899  
Impairment of non-amortizable intangible assets(3)
—  12,200  
Proportionate share from unconsolidated joint venture(4):
Interest expense, net—  1,080  
Depreciation and amortization—  2,815  
Adjusted EBITDA(5)(6)
$380,280  $294,003  
Three Months Ended
September 30, 2020		Three Months Ended
September 30, 2021		Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2021
Net loss$(15,331)$(145,086)$(638,273)$(471,093)
Add (Subtract):
Interest expense, net138,075 126,600 678,937 388,836 
Income tax expense (benefit)(18,650)2,605 (17,691)13,716 
Depreciation and amortization162,573 162,017 488,235 495,517 
EBITDA266,667 146,136 511,208 426,976 
Add:
Compensation and benefits(1)
15,484 21,369 39,338 63,605 
Non-recurring and non-cash items(2)
10,510 14,048 25,837 137,876 
Impairment of non-amortizable intangible and other assets(3)
— — 46,243 — 
Reorganization items(4)
36,367 98,316 335,059 203,719 
Proportionate share from unconsolidated joint venture(5):
Interest expense, net1,074 594 3,199 1,836 
Depreciation and amortization2,815 2,815 8,444 8,444 
Adjusted EBITDA(6)(7)
$332,917 $283,278 $969,328 $842,456 
(1)Reflects non-cash expenses incurred relating to our equity compensation plans.plans and expenses incurred relating to our employee retention incentive plans in connection with our Chapter 11 proceedings.
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(2)Reflects certain non-recurring expenses, gains and losses and non-cash items, including the following: costs associated with our C-band spectrum relocation efforts; professional fees related to our liability business strategy and tax management initiatives; costs associated with our C-band spectrum proposal;merger and acquisition costs; certain research and development costs; amortization of supplemental type certificates; severance, retention and relocation payments; changes in fair value and gains on sales of certain investments; certain foreign exchange gains and losses; and other various non-recurring expenses. For the three months ended March 31, 2019, these costs were partially offset by non-cash income related to the recognition of deferred revenue on a straight-line basis for certain prepaid capacity service contracts.
(3)Reflects a non-cash impairment charge recorded in connection with the write-off of certain satellite and launch vehicle deposits and a trade name impairment.impairment (see Item 1, Note 10—Goodwill and Other Intangible Assets) for the nine months ended September 30, 2020.
(4)Reflects direct costs incurred in connection with our Chapter 11 restructuring activities. See Item 1, Note 9—Goodwill2—Chapter 11 Proceedings, Ability to Continue as a Going Concern and Other Intangible Assets.Related Matters.
(4)(5)Reflects adjustments related to our interest in Horizons-3 Satellite LLC ("(“Horizons 3"3”). See Item 1, Note 8(b)9(b)—Investments—Horizons-3 Satellite LLC.
(5)(6)ForAdjusted EBITDA included $26.2 million and $26.7 million for the three months ended March 31, 2019September 30, 2020 and 2020, Adjusted EBITDA included $25.12021, respectively, and $78.7 million and $26.1$79.8 million for the nine months ended September 30, 2020 and 2021, respectively, of revenue relating to the significant financing component identified in customer contracts in accordance with the adoption of ASC 606. These impacts are not permitted to be reflected in the applicable consolidated and Adjusted EBITDA definitions under our debt agreements.606, Revenue from Contracts with Customers.
(6)(7)For the three months ended March 31, 2019 and 2020, Intelsat S.A. Adjusted EBITDA reflected ($3.5 million)$4.4 million and $4.7$4.8 million for the three months ended September 30, 2020 and 2021, respectively, and $14.3 million and $13.5 million for the nine months ended September 30, 2020 and 2021, respectively, of Adjusted EBITDA attributable to Intelsat Horizons-3 LLC, its subsidiaries and its proportionate share of Horizons 3. These entities are considered to be unrestricted subsidiaries under the definitions set forth in our applicable debt agreements.
B. Liquidity and Capital Resources
Overview
We are a highly leveraged company and our contractual obligations, commitments and debt service requirements over the next several years are significant. At March 31, 2020,September 30, 2021, the aggregate principal amount of our debt outstanding not held by affiliates was $14.7$15.9 billion. Our interest expense, net for the three and nine months ended March 31, 2020September 30, 2021 was $318.3$126.6 million and $388.8 million, respectively, which included $39.6$26.1 million and $79.5 million of non-cash interest expense.expense, respectively. At March 31, 2020,September 30, 2021, cash, cash equivalents and restricted cash were approximately $800.6$664.2 million. In past years, our cash flows from operations and cash on hand have been sufficient to fund interest obligations ($1.1 billion in each of the years ended December 31, 2018 and 2019).
The commencement of the Chapter 11 Cases accelerated substantially all of our outstanding debt. Any efforts to enforce payment obligations related to the acceleration of our debt have been automatically stayed as a result of the filing of the Chapter 11 Cases, and the creditors’ rights of enforcement are subject to the applicable provisions of the Bankruptcy Code.
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During the pendency of the Chapter 11 Cases, as discussed above in —Recent Developments, Voluntary Reorganization under Chapter 11, we expect cashthe Debtors do not anticipate making interest payments on our interest obligations to be lower than in prior years.due under their respective unsecured debt instruments. In past years, our cash flows from operations and cash on hand have been sufficient to fund significant capital expendituresinterest obligations ($255.7 million1.1 billion and $229.8$634.7 million for the years ended December 31, 20182019 and 2020, respectively), and significant capital expenditures ($229.8 million and $606.8 million for the years ended December 31, 2019 and 2020, respectively). However, as discussed above in —Recent Developments, Voluntary Reorganization under Chapter 11, our ability to fund operating expenses in the ordinary course is now, to some extent, subject to obtaining certain approvals from the Bankruptcy Court in connection with our Chapter 11 proceedings.
A significant factor driving the Company’s decision to file for Chapter 11 protection was the Company’s desire to participate in the FCC’s process for accelerated clearing of the C-band spectrum, for which we need to incur significant upfront expenses for clearing activities well in advance of receiving reimbursement payments. On May 26,August 14, 2020, the CompanyIntelsat License filed a written commitmentits C-band spectrum transition plan with the FCC, to accelerate clearing ofwith ongoing updates as requested by the C-band spectrum in the U.S. FCC. The most recent amended transition plan was filed on September 30, 2021.
In addition to the significant capital expenditures we expect to make in 20202021 and beyond, we expect total clearing costs will be approximately $1.6$1.3 billion over the next two to three years. Our primary source of liquidity is and will continue to be cash generated from operations, as well as existing cash. Also, as noted above in —Recent Developments, Voluntary Reorganization under Chapter 11, we have secured a commitment for a DIP Facility in an aggregate principal amount of $1.0 billion, subject to the satisfaction of certain customary conditions, including approval of the Bankruptcy Court. We currently expect to use cash on hand, cash flows from operations and borrowings under ourthe New DIP Facility to fund our most significant cash outlays, including debt service requirements and capital expenditures, in the next twelve months and beyond. We also expect to receive reimbursement payments for certain upfront C-band spectrum clearing expenses incurred, as discussed above. For additional discussion regarding risks relatedand under the FCC Final Order, the Company is eligible to receive Acceleration Payments of approximately $1.2 billion and $3.7 billion based on the milestone clearing certification dates of December 5, 2021 and December 5, 2023, respectively, with the respective payments expected to be received in the first half of each successive year, subject to the Chapter 11 processsatisfaction of certain deadlines and DIP Facility, see Part II—Item 1A—Risk Factors.other conditions set forth therein. On October 4, 2021, as subsequently amended on October 15, 2021, Intelsat License filed its Phase I
44


Certification of Accelerated Relocation, indicating completion of required clearing activities to satisfy the December 5, 2021 deadline and requesting FCC validation to receive the $1.2 billion Acceleration Payment.
Cash Flow Items
Our cash flows consisted of the following for the periods shown (in thousands):
Three Months Ended
March 31, 2019		Three Months Ended
March 31, 2020
Net cash provided by operating activities$117,334  $14,277  
Net cash used in investing activities(103,635) (32,827) 
Net cash used in financing activities(8,655) (9,685) 
Net change in cash, cash equivalents and restricted cash4,601  (30,242) 
Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2021
Net cash provided by operating activities$194,729 $50,176 
Net cash used in investing activities(418,346)(654,192)
Net cash provided by financing activities417,431 183,904 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(4,328)(3,250)
Net change in cash, cash equivalents and restricted cash$189,486 $(423,362)
Net Cash Provided by Operating Activities
Net cash provided by operating activities decreased by $103.1$144.6 million to $14.3$50.2 million for the threenine months ended March 31, 2020,September 30, 2021, as compared to the threenine months ended March 31, 2019.September 30, 2020. The decrease was primarily due to a $81.7$111.5 million increasedecrease in net loss and changes in non-cash items, andas well as a $21.3$33.1 million decrease from changes in operating assets and liabilities. The decrease from changes in operating assets and liabilities was primarily due to lower inflows from customer receivables and higher outflows related to the timing ofaccounts payable and accrued liabilities, interest payments and other long-term liabilities, partially offset by higher inflows inlower outflows related to the amount and timing of accounts receivable, prepaid expenses, and contract and other assets.
Net Cash Used in Investing Activities
Net cash used in investing activities decreasedincreased by $70.8$235.8 million to $32.8$654.2 million for the threenine months ended March 31, 2020,September 30, 2021, as compared to the threenine months ended March 31, 2019. The decrease wasSeptember 30, 2020, primarily due to lowerincreased capital expenditures, and originationpartially offset by $15.0 million of loans held-for-investment, as well as higher other proceeds from satellites.the sale of an investment.
Net Cash Used inProvided by Financing Activities
Net cash used inprovided by financing activities increaseddecreased by $1.0$233.5 million to $9.7$183.9 million for the threenine months ended March 31, 2020,September 30, 2021, as compared to the threenine months ended March 31, 2019. The increase wasSeptember 30, 2020, primarily due to higher paymentsdecreased net proceeds of $244.8 million resulting from our financing activities related to satelliteour senior secured credit facilities completed during the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020, partially offset by lower principal payments on deferred performance incentives.
Restricted Cash
As of March 31, 2020, $18.1September 30, 2021, $27.7 million of cash was legally restricted, being held as a compensating balance for certain outstanding letters of credit.
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Debt
Intelsat Jackson Senior Secured Credit Agreement and the Company and Certain of its Subsidiaries' Indentures
The commencementfiling of the Chapter 11 Cases constituted an immediate event of default under Intelsat Jackson’s secured credit agreement, dated as of January 12, 2011 (as amended, the “Intelsat Jackson Secured Credit Agreement”), as well as under the indentures governing certain of the Company and its subsidiaries’ senior secured notes and senior notes, resulting in the automatic and immediate acceleration ofthat accelerated substantially all of our outstanding debt.obligations under the documents governing the prepetition existing indebtedness of Intelsat S.A., Intelsat Luxembourg, Intelsat Connect and Intelsat Jackson. Any efforts to enforce payment obligations related to the acceleration of our debt have been automatically stayed as a result of the filing of the Chapter 11 Cases, and the creditors’ rights of enforcement are subject to the applicable provisions of the Bankruptcy Code. For additional discussion regarding our debt, see Part II—Item 3—Defaults upon Senior Securities.
In addition, on April 27, 2020, our London Inter-Bank Offered Rate (“LIBOR”) loans under the Intelsat Jackson Secured Credit Agreement were converted to Alternate Base Rate (“ABR”) loans. We expect to pay interest on the floating rate term loans under the Intelsat Jackson Secured Credit Agreement at the rate applicable to ABR loans.
Debtor-in-Possession Financing Commitment
Prior to the commencement ofWhile the Chapter 11 Cases are pending, the Debtors do not anticipate making interest payments due under their respective unsecured debt instruments; however, the Debtors expect to make monthly interest payments on their senior secured debt instruments pursuant to the adequate protection requirements under the DIP Order.
Intelsat Jackson entered into a Commitment Letter with the Commitment Parties, pursuant to which, and subject to the satisfaction of certain customary conditions, including theSuperpriority Senior Secured Debtor-in-Possession Term Loan Facility
On June 9, 2020, Intelsat Jackson received approval offrom the Bankruptcy Court to enter into the Commitment Parties have agreed to backstop theOriginal DIP Facility in an aggregate principal amount of $1.0 billion. Forbillion on the terms and conditions as set forth in the Original DIP Credit Agreement, and on June 17, 2020, the DIP Debtors entered into the Original DIP Credit Agreement. On September 14, 2021, the DIP Debtors received approval from the Bankruptcy Court for the DIP Order to enter into the New DIP Facility in an aggregate principal amount of $1.5
45


billion on the terms and conditions as set forth in the New DIP Credit Agreement, and on September 14, 2021, Intelsat Jackson and certain of the DIP Debtors entered into the New DIP Credit Agreement. The New DIP Facility provided $1.25 billion in new money at closing for Intelsat Jackson to, among other things, refinance the Original DIP Facility and, provides the ability for Intelsat Jackson, at its sole discretion, to make an incremental $250.0 million draw. See also—Recent Developments—Voluntary Reorganization under Chapter 11 above.
Drawn amounts under the New DIP Facility bear interest at either (1) 3.75% per annum plus a base rate of the highest of (a) the Federal Funds Effective Rate plus ½ of 1.0%, (b) the Prime Rate as in effect on such day and (c) the LIBOR Rate for a one-month Interest Period on such day (or if such day is not a Business Day (as defined in the New DIP Credit Agreement), the immediately preceding Business Day, plus 1.00%, or (2) 4.75% plus the LIBOR Rate. Undrawn amounts under the New DIP Facility shall be subject to a ticking fee of 3.6% of the amount of commitments of the DIP Lenders from the entry of the DIP Order until such commitments have terminated, which ticking fee shall be payable on the last day of each fiscal quarter prior to the date such commitments have been terminated and on the date of such termination. During the continuance of a payment event of default, overdue amounts under the New DIP Facility will bear interest at an additional discussion regarding risks2.0% per annum above the interest rate otherwise applicable.
The use of proceeds under the New DIP Facility include: (i) the payment of working capital of the DIP Debtors in the ordinary course of business, (ii) C-band relocation costs, (iii) investment and other general corporate purposes, (iv) the payment of the costs and expenses of administering the Chapter 11 Cases, (v) the adequate protection payments and (vi) the repayment of obligations under the Original DIP Credit Agreement. The maturity date of the New DIP Facility is July 13, 2022, subject to the DIP Debtors’ ability to extend for regulatory purposes.
The New DIP Credit Agreement includes customary negative covenants for debtor-in-possession loan agreements of this type, including covenants limiting the Company’s and its subsidiaries’ ability to, among other things, incur additional indebtedness, create liens on assets, make investments, loans or advances, engage in mergers, consolidations, sales of assets and acquisitions, pay dividends and distributions and make payments in respect of junior or prepetition indebtedness, in each case subject to customary exceptions for debtor-in-possession loan agreements of this type.
The New DIP Credit Agreement also includes certain customary representations and warranties, affirmative covenants and events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, certain events under the Employee Retirement Income Security Act of 1974, as amended, and change of control. Certain bankruptcy-related events are also events of default, including, but not limited to, the dismissal by the Bankruptcy Court of any of the Chapter 11 Cases, the conversion of any of the Chapter 11 Cases to a case under Chapter 7 of the Bankruptcy Code and certain other events related to the impairment of the DIP Facility, please see Part II—Item 1A—Risk Factors.Lenders’ rights or liens granted under the New DIP Credit Agreement.
The foregoing descriptions of the Original DIP Credit Agreement and the New DIP Credit Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Original DIP Credit Agreement and New DIP Credit Agreement, as applicable.
Contracted Backlog
We have historically had, and currently have, a substantial contracted backlog, which provides some assurance regardingbenefit from strong visibility of our future revenue expectations. Contractedrevenues. Our contracted backlog is our expected future revenue under existing customer contracts and includes both cancelable and non-cancelable contracts. Approximately 88%As of September 30, 2021, our total contracted backlog aswas approximately $5.7 billion. The amount included in backlog represents the full service charge for the duration of March 31, 2020 related to contracts that were non-cancelablethe contract and approximately 11% related to contracts that were cancelable subject to substantialdoes not include termination fees. The amount of the termination fees is generally calculated as a percentage of the remaining backlog associated with the contract. In certain cases of breach for non-payment or customer bankruptcy, we may not be able to recover the full value of certain contracts or termination fees. Our contracted backlog asincludes 100% of March 31, 2020 was approximately $6.6 billion.the backlog of our consolidated ownership interests, which is consistent with the accounting for our ownership interests in these entities. We believe this backlog and associated revenues result in morethe resulting predictable cash flows in the FSS sector as compared tomake our results less volatile than that of typical companies outside our industry.
Capital Expenditures
Our capital expenditures depend on our business strategies and reflect our commercial responses to opportunities and trends in our industry. Our actual capital expenditures may differ from our expected capital expenditures if, among other things, we enter into any currently unplanned strategic transactions. Levels of capital spending from one year to the next are also influenced by the nature of the satellite life cycle and by the capital-intensive nature of the satellite industry. For example, we incur significant capital expenditures during the years in which satellites are under construction. We typically procure a new satellite within a timeframe that would allow the satellite to be deployed at least one year prior to the end of the service life of the satellite to be replaced. As a result, we frequently experience significant variances in our capital expenditures from year to year. Further, following the Company’s announcement on May 26, 2020 to opt into the FCC’s process for accelerated clearingIntelsat License’s filing of theits C-band spectrum transition plan with the FCC on August 14, 2020, with ongoing updates as requested by the FCC, we expect total clearing costs will be approximately $1.3 billion over the next three years, of which approximately $800.0 million is expected to incur significant upfront expenses for clearing activities wellbe incurred in advance of receiving reimbursement payments.2021. Payments for satellites and other property and equipment forduring the threenine months ended March 31, 2020September
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30, 2021 were $38.0$667.9 million. However, subject to the satisfaction of certain deadlines and other conditions set forth in the FCC Final Order, the Company is eligible to receive Acceleration Payments in an aggregate total amount of approximately $4.9 billion over the next 2 years.
We intend to fund our capital expenditure requirements from cash on hand and cash provided from operating activities and the DIP Facility;activities; however, our ability to fund capital expenditures in the ordinary course is, to some extent, subject to obtaining certain approvals from the Bankruptcy Court in connection with our Chapter 11 proceedings.
Off-Balance Sheet Arrangements
We have revenue sharing agreements with JSAT International, Inc. (“JSAT”) related to services sold on the Horizons 1, Horizons 2 and Horizons 3 satellites. We are responsible for billing and collection for such services and we remit 50% of the revenue, less applicable fees and commissions, to JSAT. Refer to Item 1, Note 8—9—Investments for disclosures relating to the revenue sharing agreements with JSAT.
Contractual Obligations
Other than as disclosed elsewhere in this report with respect to the filing of the Chapter 11 Cases and the acceleration of substantially all of our debt as a result, there have been no material changes outside the ordinary course of business to the information provided with respect to our contractual obligations as disclosed in our 2020 Annual Report on Form 10-K for the year ended December 31, 2019.Report.
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Critical Accounting Policies and Estimates
The preparation of these condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of these condensed consolidated financial statements, the reported amounts of revenues and expenses during the reporting periods, and the disclosures of contingent liabilities.
The Company’s significant accounting policies are described in Note 1—Background and Summary of Significant Accounting Policies in our 2020 Annual Report on Form 10-K for the year ended December 31, 2019.Report. The Company’s critical accounting estimates are described in Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2020 Annual Report on Form 10-K for the year ended December 31, 2019 and are further described below.
Asset Impairment AssessmentsBankruptcy Accounting
We account for goodwillOur condensed consolidated financial statements included herein have been prepared as if we are a going concern and other non-amortizable intangible assets in accordance withreflect the application of ASC 350,852, Intangibles—Goodwill and Other, and have deemed these assets to have indefinite lives. Therefore, these assets are not amortized but are tested on an annual basis for impairment during the fourth quarter, or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. We review our long-lived and amortizable intangible assets to assess whether an impairment has occurred in accordance with the guidance provided under ASC 360—Property, Plant and Equipment, whenever events or changes in circumstances indicate, in our judgment, that the carrying amount of an asset may not be recoverable.
During the first quarter of 2020, the price of our common shares and trading values of our debt securities experienced sustained reductions. We also witnessed certain declines in financial performance as compared to previously prepared internal budget and forecast projections. Among the impacts of the COVID-19 pandemic were a reduction of revenue and a decreased likelihood of collection from certain mobility customers. Based on our examination of these and other qualitative factors, we concluded that further testing of goodwill and other non-amortizable assets as well as long-lived and amortizable intangible assets was required.
Goodwill. For the analysis of goodwill, we applied ASU 2017-04, which is further described in Note 1—General. Intelsat has only one reporting unit for purposes of the analysis of goodwill, and accordingly, the analysis is undertaken at the enterprise level. We determined the estimated fair value of our reporting unit using a discounted cash flow analysis, along with independent source data related to comparative market multiples and, when available, recent transactions, each of which is considered a Level 3 input within the fair value hierarchy under ASC 820, Fair Value Measurements and DisclosureReorganizations (“ASC 820”852”). The discounted cash flows were derived from a five-year projection of cash flows plus a residual value, withASC 852 requires the resulting projected cash flows discounted at an appropriate weighted average cost of capital.
In estimating the undiscounted cash flows, we primarily used our internally prepared budgets and forecast information. The key assumptions included in our model were projected growth rates, cost of capital, effective tax rates, and industry and economic trends, along with the C-band accelerated clearing incentive payments expected to be received subjectfinancial statements, for periods subsequent to the achievementcommencement of certain milestonesthe Chapter 11 proceedings, to distinguish transactions and the discount rate applied to those cash flows. A change in estimated future cash flows or other assumptions could change our estimated fair values and result in future impairments. The conclusion of our analysis wasevents that the fair value of our reporting unit was greater than its carrying value, resulting in no impairment of goodwill.
Orbital Locations. We determined the estimated fair value of our rights to operate at orbital locations by using the build-up method to determine cash flows for the income approach, with the resulting projected cash flows discounted at an appropriate weighted average cost of capital. Under the build-up approach, the amount a reasonable investor would be willing to pay for the right to operate a satellite business using orbital locations is calculated by first estimating the cash flows that typical market participants might assume could be available from the right to operate satellites using the subject location in a similar market. It is assumed that rather than acquiring such a business as a going concern, the buyer would hypothetically start with the right to operate satellites at orbital locations and build a new business with similar attributes from the beginning. Thus, the buyer is assumed to incur the start-up costs and losses typicallyare directly associated with the going concern value and pay for all other tangible and intangible assets.
The key assumptions used in estimatingreorganization from the fair values of our rights to operate at our orbital locations included the following: (i) market penetration leading to revenue growth, (ii) profit margin, (iii) duration and profileongoing operations of the build-up period, (iv) estimated start-up costsbusiness. Accordingly, we classify liabilities and losses incurred duringobligations whose treatment and satisfaction are dependent on the build-up period and (v) weighted average cost of capital.
We completed our analysisoutcome of the estimated fair value ofreorganization under the Chapter 11 proceedings as liabilities subject to compromise on our rights to operate at certain orbital locations in connection with the analysis of goodwill described above and concludedcondensed consolidated balance sheets. In addition, we classify all income, expenses, gains or losses that the fair value was greater than the carrying value, resulting in no impairment.
Trade Name. We have implemented the relief from royalty method to determine the estimated fair valueare incurred or realized as a result of the Intelsat trade name. The relief from royalty analysis is comprised of two major steps: (i) a determination of the hypothetical royalty rate, and (ii) the subsequent application of the royalty rate to projected revenue. In determining the hypothetical royalty rate utilizedChapter 11 proceedings as reorganization items in the relief from royalty approach, we considered comparable license agreements, an excess earnings analysis to determine aggregate intangible asset earnings, and other qualitative factors, each of which is considered a Level 3 input within the fair value hierarchy under ASC 820.
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The key assumptions used in our model to estimate the fair value of the Intelsat trade name included forecasted revenues, the royalty rate, the tax rate and the discount rate. We completed our analysis of the estimated fair value of the Intelsat trade name in connection with the analysis of goodwill described above and it resulted in an impairment of our trade name intangible asset of $12.2 million, which is included within impairment of non-amortizable intangible assets in the condensed consolidated statements of operations.
operations (see Item 1, Note 2Long-Lived—Chapter 11 Proceedings, Ability to Continue as a Going Concern and Amortizable Intangible Assets. The Company evaluated the assets for potential impairment using internal projections of undiscounted cash flows expected to result from the use and eventual disposal of the assets. The key assumptions included in our model were projected growth rates, cost of capital, effective tax rates, and industry and economic trends. A change in estimated future cash flows or other assumptions could change our estimated undiscounted cash flows and result in future impairments. The conclusion of our analysis was that the undiscounted cash flows of the asset group was greater than its carrying value, resulting in no impairment.Other Related Matters).
Recently Issued Accounting Pronouncements
For disclosures related to recently issued accounting pronouncements, see Item 1, Note 1—General—Recently Issued Accounting Pronouncements.

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Item 3.    Quantitative and Qualitative Disclosures About Market Risk
We are primarily exposed to the market risk associated with unfavorable movements in interest rates and foreign currencies. The risk inherent in our market risk sensitive instruments and positions is the potential loss arising from adverse changes in those factors. We do not purchase or hold any derivative financial instruments for speculative purposes.
Interest Rate Risk
The satellite communications industry is a capital intensive, technology driven business. We are subject to interest rate risk primarily associated with our borrowings. Interest rate risk is the risk that changes in interest rates could adversely affect earnings and cash flows. Specific risks include the risk of increasing interest rates on short-term debt, for planned new fixed-rate long-term financings, for planned refinancings using long-term fixed-rate debt, and for existing variable-rate debt. The Company utilizes derivative instruments from time to time in order to reduce its exposure to the risk of interest-rate volatility.
Approximately 84% of our debt, or $12.3 billion principal amount, was fixed-rate debt as of both December 31, 2019 and March 31, 2020. While our fixed-rate debt does not expose us to earnings risk when market interest rates change, such debt is subject to changes in fair value (see Note 10—Debt for fair value disclosures for our debt). Our sensitivity analyses indicate that based on the level of fixed-rate debt outstanding as of March 31, 2020, a 100 basis point decrease in market rates would result in an increase in fair value of this fixed-rate debt of approximately $222.1 million. A 100 basis point increase in market rates would result in a decrease in fair value of this fixed-rate debt of approximately $213.9 million.
While our variable-rate debt may impact earnings and cash flows as interest rates change, it is not subject to changes in fair values. As of March 31, 2020, we held interest rate cap contracts indexed to 1-month LIBOR with a strike rate of 1.89% and an aggregate notional amount of $2.4 billion that mature in February 2021. These interest rate cap contracts have not been designated for hedge accounting treatment in accordance with ASC 815, Derivatives and Hedging, and the changes in fair value of these instruments are recognized in earnings during the period of change.
Foreign Currency Risk
We do not currently use material foreign currency derivatives to hedge our foreign currency exposures. There have been no material changes to our foreign currency exposures as discussedthe Company’s disclosures about market risk made in ourPart II—Item 7A—Quantitative and Qualitative Disclosures about Market Risk of the Company’s 2020 Annual Report on Form 10-K for the year ended December 31, 2019.Report.
Item 4.    Controls and Procedures
Disclosure Controls and Procedures
We have carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act)Act of 1934, as amended (the “Exchange Act”)), as of the quarter ended March 31, 2020.September 30, 2021. Based upon that evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of March 31, 2020.
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September 30, 2021.
Changes in Internal Control over Financial Reporting
ThereExcept as described below, there were no other changes in our internal control over financial reporting foridentified in management’s evaluation pursuant to Rules 13a-15(f) of the Exchange Act during the quarter ended March 31, 2020September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
On December 1, 2020, we completed our acquisition of Intelsat CA. As part of our ongoing integration of the Intelsat CA business, we are currently integrating policies, processes, people, technology and operations for the combined Company. Management will continue to evaluate the Company's internal control over financial reporting as it continues to integrate the Intelsat CA business.

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PART II. OTHER INFORMATION 
Item 1.    Legal Proceedings
We are subject to litigation in the ordinary course of business, but management does not believe that the resolution of any pending proceedings would have a material adverse effect on our financial position or results of operations.Chapter 11 Cases
On May 13, 2020, the Debtors filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in Bankruptcy Court. The information contained in Item 1, Note 1—General—2—Chapter 11 Proceedings, Ability to Continue as a Going Concern and Other Related Matters of the notes to the condensed consolidated financial statements—Voluntary Reorganization under Chapter 11 is incorporated herein by reference. As a result of such bankruptcy filings, substantially all legal proceedings pending against the Debtors have been stayed. These matters will be subject to resolution in accordance with the Bankruptcy Code and applicable orders of the Bankruptcy Court.
As part of the Chapter 11 Cases, parties believing that they have claims or causes of action against the Debtors could file proofs of claim evidencing such claims. Pursuant to an order entered by the Bankruptcy Court, all proofs of claim were to be filed with the Bankruptcy Court by September 9, 2020, except for claims by governmental units. Claims by governmental units were to be filed with the Bankruptcy Court by November 16, 2020. The filed claims have been or are being reconciled to amounts recorded in liabilities subject to compromise in our condensed consolidated balance sheets. The Debtors continue to reconcile the claims register. The Debtors have asked the Bankruptcy Court to disallow certain claims that the Debtors believe are duplicative, have been later amended or superseded, are without merit, are overstated or should be disallowed for other reasons. In addition, as a result of this process, the Debtors may identify additional liabilities that will need to be recorded or reclassified to liabilities subject to compromise. In light of the substantial number of claims filed, and expected to be filed, the claims resolution process may take considerable time to complete and likely will continue after the Debtors emerge from the Chapter 11 proceedings.
SES Claim
On July 14, 2020, SES Americom, Inc. (“SES”) filed a proof of claim in the Bankruptcy Court in the amount of $1.8 billion against each of the Debtors. SES asserts that the Debtors owe money (or will owe money) to SES pursuant to certain contractual and fiduciary obligations made in the context of the consortium agreement entered into in September of 2018 among Debtor Intelsat US LLC, SES, and other satellite operators (the “Consortium Agreement”). SES claims that it is entitled to 50% of the combined payments that may eventually be payable to the Debtors and SES pursuant to the FCC Final Order, which provides for Acceleration Payments subject to the satisfaction of certain deadlines and other conditions set forth therein. SES’s proof of claim alleges that the Debtors breached the Consortium Agreement by taking the position that the Debtors are not required to split Acceleration Payments with SES and the other members of the consortium. The proof of claim also alleges breach of fiduciary duties and unjust enrichment and seeks monetary and punitive damages. We dispute the allegations in the proof of claim and on October 19, 2020, filed an objection to the claim, which we intend to litigate vigorously. The Bankruptcy Court has scheduled the trial on the SES claim to commence in January 2022. To the extent that any portion of SES’s claim is allowed, we have asked the Bankruptcy Court to “equitably subordinate” such claim based on SES’s conduct in matters related to the Consortium Agreement. While the ultimate resolution of the claim is not currently predictable, if there is an adverse ruling, the ruling could constitute a material adverse outcome on our future consolidated financial condition.
Other Litigation Matters
In the absence of the automatic stay in our Chapter 11 Cases, we are subject to litigation in the ordinary course of business, but management does not believe that the resolution of any of those pending proceedings would have a material adverse effect on our financial position or results of operations.
Item 1A.    Risk Factors    
Except as set forth below, thereThere have been no material changes or additions to the risk factors previously disclosed in Part I—Item 1A—Risk Factors of our 2020 Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which was filed with the SEC on February 20, 2020.
The COVID-19 pandemic has had a material impact on the U.S. and global economies and has adversely affected, and will continue to adversely affect, our employees, suppliers, customers and end consumers, which has had an adverse impact, and will continue to have an adverse impact, on our business, financial condition and results of operations.
The World Health Organization has declared the outbreak of the novel coronavirus COVID-19 a pandemic and public health emergency of international concern. In March 2020, the President of the United States declared a State of National Emergency due to the COVID-19 pandemic. Other countries affected by the outbreak took similar measures. In addition, many jurisdictions have limited, and are considering to further limit, social mobility and gathering. As the COVID-19 pandemic develops, governments (at national, state and local levels), corporations and other authorities may continue to implement restrictions or policies that could adversely impact consumer spending, global capital markets, and the global economy, all of which could have a materially adverse impact on our business, financial condition and results of operations.
A prolonged pandemic and/or economic downturn in the United States or the other markets in which we operate or in which we compete could result in:
•significant reductions in demand for our services due to the impact of the pandemic and resulting economic downturn affecting our customers;
•significant changes in the political conditions in our markets, including quarantines, governmental or regulatory actions, closures or other restrictions that limit or close our facilities, restrict our employees’ ability to travel or perform necessary business functions, or otherwise prevent our third-party partners, suppliers, or customers from sufficiently staffing operations, including operations necessary for delivering our services, may adversely impact our results; and
•continued disruptions in the U.S. capital markets.
The ultimate extent of the COVID-19 outbreak and its impact on our business, results of operations and financial condition is highly uncertain and cannot be predicted. In addition, the continuation or resurgence of the COVID-19 pandemic could exacerbate the other risks identified in Part I—Item 1A—Risk Factors of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
Risks Associated with Chapter 11 Proceedings
We are subject to the risks and uncertainties associated with Chapter 11 proceedings.
For the duration of our Chapter 11 proceedings, our operations and our ability to develop and execute our business plan, as well as our continuation as a going concern, are subject to the risks and uncertainties associated with bankruptcy. These risks include the following:
•our ability to develop, confirm and consummate a Chapter 11 plan or alternative restructuring transaction;
•our ability to obtain court approval with respect to motions filed in Chapter 11 proceedings from time to time;
•our ability to operate within the restrictions and the liquidity limitations of the DIP Facility and any related orders entered by the Bankruptcy Court in connection with the Chapter 11 Cases;
•our ability to obtain sufficient financing to allow us to emerge from bankruptcy and execute our business plan of reorganization post-emergence;Report.
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•our ability to maintain our relationships with our suppliers, service providers, customers, employees and other third parties;
•our ability to maintain contracts that are critical to our operations;
•our ability to execute our business plan, including the accelerated clearing process of C-band spectrum;
•our ability to attract, motivate and retain key employees;
•the high costs of bankruptcy and related fees;
•the ability of third parties to seek and obtain court approval to terminate contracts and other agreements with us;
•the ability of third parties to seek and obtain court approval to terminate or shorten the exclusivity period for us to propose and confirm a Chapter 11 plan, to appoint a Chapter 11 trustee, or to convert the Chapter 11 proceedings to a Chapter 7 proceeding;
•the actions and decisions of our creditors and other third parties who have interests in our Chapter 11 proceedings that may be inconsistent with our plans; and
•uncertainties and continuing risks associated with our ability to achieve our stated goals and continue as a going concern.
Delays in our Chapter 11 Cases increase the risks of us being unable to reorganize our business and emerge from bankruptcy and increase our costs associated with the bankruptcy process.
These risks and uncertainties could affect our business and operations in various ways. For example, negative events associated with our Chapter 11 proceedings could adversely affect our relationships with our suppliers, service providers, customers, employees, and other third parties, which in turn could adversely affect our operations and financial condition. Also, we need the prior approval of the Bankruptcy Court for transactions outside the ordinary course of business, which may limit our ability to respond timely to certain events or take advantage of certain opportunities. Because of the risks and uncertainties associated with our Chapter 11 proceedings, we cannot accurately predict or quantify the ultimate impact of events that will occur during our Chapter 11 proceedings that may be inconsistent with our plans.
Operating under Bankruptcy Court protection for a long period of time may harm our business.
Our future results are dependent upon the successful confirmation and implementation of a plan of reorganization. A long period of operations under Bankruptcy Court protection could have a material adverse effect on our business, financial condition, results of operations and liquidity. So long as the Chapter 11 proceedings continue, our senior management will be required to spend a significant amount of time and effort dealing with the reorganization instead of focusing exclusively on our business operations. A prolonged period of operating under Bankruptcy Court protection also may make it more difficult to retain management and other key personnel necessary to the success and growth of our business.
Additionally, so long as the Chapter 11 proceedings continue, we will be required to incur significant costs for professional fees and other expenses associated with the administration of the Chapter 11 proceedings. We have secured a commitment for DIP Facility in an aggregate principal amount of $1.0 billion, which is subject to approval by the Bankruptcy Court. If we are unable to obtain such court approval, or alternative financing on favorable terms or at all, our chances of successfully reorganizing our business may be seriously jeopardized, and, as a result, any securities in us could become further devalued or become worthless.
Furthermore, we cannot predict the ultimate amount of all settlement terms for the liabilities that will be subject to a plan of reorganization. Even once a plan of reorganization is approved and implemented, our operating results may be adversely affected by the possible reluctance of prospective lenders and other counterparties to do business with a company that recently emerged from Chapter 11 proceedings.
The Chapter 11 Cases limit the flexibility of our management team in running our business.
While we operate our businesses as debtor-in-possession under supervision by the Bankruptcy Court, we are required to obtain the approval of the Bankruptcy Court and, in some cases, certain lenders prior to engaging in activities or transactions outside the ordinary course of business. Bankruptcy Court approval of non-ordinary course activities entails preparation and filing of appropriate motions with the Bankruptcy Court, negotiation with the creditors’ committee and other parties-in-interest and one or more hearings. The creditors’ committees and other parties-in interest may be heard at any Bankruptcy Court hearing and may raise objections with respect to these motions. This process may delay major transactions and limit our ability to respond quickly to opportunities and events in the marketplace. Furthermore, in the event the Bankruptcy Court does not approve a proposed activity or transaction, we would be prevented from engaging in activities and transactions that we believe are beneficial to us.
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We may not be able to obtain confirmation of a Chapter 11 plan of reorganization.
To emerge successfully from Bankruptcy Court protection as a viable entity, we must meet certain statutory requirements with respect to adequacy of disclosure with respect to the plan of reorganization, solicit and obtain the requisite acceptances of such a plan and fulfill other statutory conditions for confirmation of such a plan, which have not occurred to date. The confirmation process is subject to numerous, unanticipated potential delays, including a delay in the Bankruptcy Court’s commencement of the confirmation hearing regarding our plan of reorganization.
We may not receive the requisite acceptances of constituencies in the Chapter 11 proceedings to confirm our plan. Even if the requisite acceptances of our plan are received, the Bankruptcy Court may not confirm such a plan. The precise requirements and evidentiary showing for confirming a plan, notwithstanding its rejection by one or more impaired classes of claims or equity interests, depends upon a number of factors including, without limitation, the status and seniority of the claims or equity interests in the rejecting class (i.e., secured claims or unsecured claims or subordinated or senior claims). If a Chapter 11 plan of reorganization is not confirmed by the Bankruptcy Court, it is unclear whether we would be able to reorganize our business and what, if anything, holders of claims against us would ultimately receive with respect to their claims.
There can be no assurance as to whether we will successfully reorganize and emerge from the Chapter 11 proceedings or, if we do successfully reorganize, as to when we would emerge from the Chapter 11 proceedings. If we are unable to successfully reorganize, we may not be able to continue our operations.
Our long-term liquidity requirements and the adequacy of our capital resources are difficult to predict at this time.
We face uncertainty regarding the adequacy of our liquidity and capital resources. In addition to the cash requirements necessary to fund ongoing operations, we have incurred significant professional fees and other costs in connection with preparation for the Chapter 11 proceedings and expect that we will continue to incur significant professional fees and costs throughout our Chapter 11 proceedings. In addition, we must comply with the covenants of our DIP Facility and other agreements associated therewith, if approved by the Bankruptcy Court, in order to continue to access our borrowings thereunder. We cannot assure you that cash on hand, cash flow from operations and the DIP Facility will be sufficient to continue to fund our operations and allow us to satisfy our obligations related to the Chapter 11 proceedings until we are able to emerge from the Chapter 11 proceedings.
Our liquidity, including our ability to meet our ongoing operational obligations, is dependent upon, among other things: (i) our ability to comply with the terms and conditions of our DIP Facility and associated agreements, (ii) our ability to comply with the terms and conditions of any cash collateral order that may be entered by the Bankruptcy Court in connection with the Chapter 11 proceedings, (iii) our ability to maintain adequate cash on hand, (iv) our ability to generate cash flow from operations, (v) our ability to develop, confirm and consummate a Chapter 11 plan or other alternative restructuring transaction, and (vi) the cost, duration and outcome of the Chapter 11 proceedings.
As a result of the Chapter 11 proceedings, our financial results may be volatile and may not reflect historical trends.
During the Chapter 11 proceedings, we expect our financial results to continue to be volatile as restructuring activities and expenses, contract terminations and rejections, and claims assessments significantly impact our condensed consolidated financial statements. As a result, our historical financial performance is likely not indicative of our financial performance after the date of the bankruptcy filing. In addition, if we emerge from Chapter 11, the amounts reported in subsequent condensed consolidated financial statements may materially change relative to historical consolidated financial statements, including as a result of revisions to our operating plans pursuant to a plan of reorganization. We also may be required to adopt fresh start accounting, in which case our assets and liabilities will be recorded at fair value as of the fresh start reporting date, which may differ materially from the recorded values of assets and liabilities on our consolidated balance sheets. Our financial results after the application of fresh start accounting also may be different from historical trends.
We may be subject to claims that will not be discharged in the Chapter 11 proceedings, which could have a material adverse effect on our financial condition and results of operations.
The Bankruptcy Code provides that the confirmation of a plan of reorganization discharges a debtor from substantially all debts arising prior to confirmation. With few exceptions, all claims that arose prior to May 13, 2020, or before confirmation of the plan of reorganization (i) would be subject to compromise and/or treatment under the plan of reorganization and/or (ii) would be discharged in accordance with the terms of the plan of reorganization. Any claims not ultimately discharged through the plan of reorganization could be asserted against the reorganized entities and may have an adverse effect on our financial condition and results of operations on a post-reorganization basis.
The Debtors may be unable to comply with restrictions imposed by the agreements governing the DIP Facility and the Debtors’ other financing arrangements.
The agreements governing the DIP Facility, if approved by the Bankruptcy Court, impose a number of obligations and restrictions on the Debtors. The Debtors’ ability to borrow under the DIP Facility is subject to the satisfaction of certain customary
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conditions precedent set forth therein. Covenants of the DIP Facility would include general affirmative covenants, as well as negative covenants such as prohibiting us from incurring or permitting debt, investments, liens or dispositions unless specifically permitted. Failure to comply with these covenants would result in an event of default under the DIP Facility and permit the lenders thereunder to exercise remedies under the loan documentation for the DIP Facility. The Debtors’ ability to comply with these provisions may be affected by events beyond their control and their failure to comply, or obtain a waiver in the event the Debtors cannot comply with a covenant, could result in an event of default under the agreements governing the DIP Facility and the Debtors’ other financing arrangements.
We may experience increased levels of employee attrition as a result of the Chapter 11 proceedings.
As a result of the Chapter 11 proceedings, we may experience increased levels of employee attrition, and our employees likely will face considerable distraction and uncertainty. A loss of key personnel or material erosion of employee morale could adversely affect our business and results of operations. Our ability to engage, motivate and retain key employees or take other measures intended to motivate and incentivize key employees to remain with us through the pendency of the Chapter 11 proceedings may be limited by restrictions on implementation of incentive programs under the Bankruptcy Code. The loss of services of members of our senior management team could impair our ability to execute our strategy and implement operational initiatives, which would be likely to have a material adverse effect on our business, financial condition and results of operations.
In certain instances, a Chapter 11 case may be converted to a case under Chapter 7 of the Bankruptcy Code.
There can be no assurance as to whether we will successfully reorganize and emerge from the Chapter 11 proceedings or, if we do successfully reorganize, as to when we would emerge from the Chapter 11 proceedings. If the Bankruptcy Court finds that it would be in the best interest of creditors and/or the Debtors, the Bankruptcy Court may convert our Chapter 11 bankruptcy cases to cases under Chapter 7 of the Bankruptcy Code. In such event, a Chapter 7 trustee would be appointed or elected to liquidate the Debtors’ assets for distribution in accordance with the priorities established by the Bankruptcy Code. The Debtors believe that liquidation under Chapter 7 would result in significantly smaller distributions being made to the Debtors’ creditors than those provided for in a Chapter 11 plan or reorganization because of (i) the likelihood that the assets would have to be sold or otherwise disposed of in a disorderly fashion over a short period of time rather than reorganizing or selling in a controlled manner the Debtors’ businesses as a going concern, (ii) additional administrative expenses involved in the appointment of a Chapter 7 trustee, and (iii) additional expenses and claims, some of which would be entitled to priority, that would be generated during the liquidation and from the rejection of leases and other executory contracts in connection with a cessation of operations.
Trading in our common shares during the pendency of the Chapter 11 proceedings is highly speculative and poses substantial risks.
All of our indebtedness is senior to the Company’s existing common shares in our capital structure. As we have a substantial amount of indebtedness, any trading in our common shares during the pendency of the Chapter 11 Cases is highly speculative and poses substantial risks to purchasers of our common shares.
Item 3. Defaults upon Senior Securities
The filing of the Chapter 11 Cases described in this Quarterly Report constituted an event of default that accelerated certain of the Debtors’ obligations under the following debt instruments (the “Debt Instruments”), as of such filing on May 13, 2020:
•$3.1 billion in aggregate principal amount of first lien term loans, consisting of (i) a $2.0 billion floating rate first lien term loan; (ii) a $395.0 million floating rate first lien term loan; and (iii) a $700.0 million fixed rate first lien term loan, pursuant to the Intelsat Jackson Secured Credit Agreement;
• $490.0 million in aggregate principal amount of the 9.50% Senior Secured Notes due 2022 issued pursuant to the Indenture, dated as of June 30, 2016, by and among Intelsat Jackson, the guarantors party thereto and Wilmington Trust, National Association (“Wilmington Trust”), as trustee;
• $1.3 billion in aggregate principal amount of the 8.00% Senior Secured Notes due 2024 issued pursuant to the Indenture, dated as of March 29, 2016, by and among Intelsat Jackson, the guarantors party thereto and Wilmington Trust, as trustee;
• $2.0 billion in aggregate principal amount of the 5.50% Senior Notes due 2023 issued pursuant to the Indenture, dated as of June 5, 2013, by and among Intelsat Jackson, the guarantors party thereto and U.S. Bank National Association, a national banking association (“U.S. Bank”), as trustee and successor to Wells Fargo Bank, National Association (“Wells Fargo”);
•$3.0 billion in aggregate principal amount of the 8.50% Senior Notes due 2024 issued pursuant to the Indenture, dated as of September 19, 2018, by and among Intelsat Jackson, the guarantors party thereto and U.S. Bank, as trustee;
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• $1.9 billion in aggregate principal amount of the 9.75% Senior Notes due 2025 issued pursuant to the Indenture, dated as of July 5, 2017, by and among Intelsat Jackson, the guarantors party thereto and U.S. Bank, as trustee;
• $1.3 billion in aggregate principal amount of the 9.50% Senior Notes due 2023 issued pursuant to the Indenture, dated as of August 16, 2018, by and among ICF, the guarantors party thereto and Wilmington Savings Fund Society, FSB, as trustee and successor to U.S. Bank;
• $421.2 million in aggregate principal amount of the 7.75% Senior Notes due 2021 issued pursuant to the Indenture, dated as of April 5, 2013, by and among Intelsat Luxembourg, the guarantors party thereto and Delaware Trust Company, as trustee and successor to U.S. Bank (as successor to Wells Fargo);
• $1.0 billion in aggregate principal amount of the 8.125% Senior Notes due 2023 issued pursuant to the Indenture, dated as of April 5, 2013, by and among Intelsat Luxembourg, the guarantors party thereto and Delaware Trust Company, as trustee and successor to U.S. Bank;
• $403.4 million in aggregate principal amount of 12.50% Senior Notes due 2024 issued pursuant to the Indenture, dated as of January 6, 2017, by and among Intelsat Luxembourg, the guarantors party thereto and Delaware Trust Company, as trustee and successor to U.S. Bank; and
• $402.5 million in aggregate principal amount of 4.50% Convertible Senior Notes due 2025 pursuant to the Indenture, dated as of June 18, 2018, by and among Intelsat S.A., Intelsat Envision, as guarantor, and BOKF, National Association, as trustee and successor to U.S. Bank.
The Debt Instruments provide that, as a result of the Chapter 11 Cases, the principal, accrued and unpaid interest and certain other amounts due thereunder shall be immediately due and payable. Any judicial or administrative actions against the Company and efforts by creditors to collect on or otherwise exercise rights or remedies with respect to such payment obligations under the Debt Instruments are automatically stayed as a result of the Chapter 11 Cases, and the creditors’ rights of enforcement in respect of the Debt Instruments are subject to the applicable provisions of the Bankruptcy Code.
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Item 6.    Exhibits
Exhibit
No.		Document Description
4.1
4.2
4.3
4.4
4.5
10.1
10.2
10.3
10.4
10.510.2
10.3
31.1
31.2
32.1
32.2
101The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020,September 30, 2021, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Loss, (iv) Consolidated Statements of Changes in Shareholders' Deficit, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements.*
104Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.

*Filed herewith.
†Management contract or compensatory plan or arrangement.

The certifications attached as Exhibits 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the SEC and are not to be incorporated by reference into any filing of Intelsat S.A. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
INTELSAT S.A.
Date: JuneNovember 4, 20202021By/s/ STEPHEN SPENGLER
Stephen Spengler
Chief Executive Officer
Date: JuneNovember 4, 20202021By/s/ DAVID TOLLEY
David Tolley
Executive Vice President and Chief Financial Officer

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