Satelites Mexicanos Sa De CV 6-K Current report (foreign)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of May 2013.

Commission File No. 333-8880

Satélites Mexicanos, S.A. de C.V.

(Exact name of Registrant as specified in its charter)

Mexican Satellites, a Mexican Company of Variable Capital

(Translation of the Registrant’s name into English)

United Mexican States

(Jurisdiction of incorporation)

Avenida Paseo de la Reforma 222 Pisos 20 y 21, Colonia Juárez, 06600 México, D.F., México

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F

Form 20-Fx                    Form 40-F¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b)(1):

Yes¨                    Nox

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b)(7):

Yes¨                    Nox

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also hereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes¨                    Nox

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):

QUARTERLY REPORT ON FORM 6-K

INDEX TO UNAUDITED FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

		Page
Item 1.	Basis of presentation of quarterly information		2
Item 2.	Unaudited Consolidated Financial Statements:
	Consolidated Balance Sheets as of March 31, 2013 (unaudited) and December 31, 2012		3
	Unaudited Consolidated Statements of Operations for the three months ended March 31, 2013 and 2012		4
	Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2013 and 2012		5
	Notes to the Unaudited Consolidated Financial Statements		6
Item 3.	Management’s Discussion and Analysis of Financial Condition and Results of Operations:		27
	Results of Operations for the three months ended March 31, 2013 and 2012		27

PART II – OTHER INFORMATION

Item 1.	Legal Matters	30
Item 2.	Other Matters	30
Item 3.	Exhibits	32
Item 4.	Signatures	33

SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

Item 1. Basis of Presentation of Quarterly Periods Information

On May 5, 2011, Satélites Mexicanos, S.A. de C.V. (“Satmex”), entered into an Indenture with Wilmington Trust, National Association, as successor by merger to Wilmington Trust FSB, as trustee, (the “Indenture”) pursuant to which we issued $325.0 million aggregate principal amount of 9.5% Senior Secured Notes due 2017 (the “ Notes”). On March 30, 2012, Satmex issued $35.0 million aggregate principal amount of additional 9.5% Senior Secured Notes (“SSN”) due in 2017, to be issued in a private placement under rule 144A and Regulation S of the U.S. Securities Act of 1933, as amended, with rights to either offer to exchange the additional SSN for substantially similar notes that are registered under the U.S. Securities Act of 1933, as amended, or register the resale of the additional SSN. The additional SSN were priced at 102.00% and will bear interest at an annual fixed rate of 9.5%. The additional SSN offering closed on April 9, 2012. Section 4.03 of the Indenture requires Satmex to furnish to the holders of the Notes and the trustee (or file with the SEC for public availability) reports on Form 6-K after the occurrence of an event required to be reported on Form 8-K if Satmex was required to file such reports. As such, Satmex is furnishing this Form 6-K to disclose material non-public information regarding a completed quarter pursuant to Item 2.02 of Form 8-K.

The presentation in this Form 6-K gives effect to the issuance of the Notes pursuant to the Indenture and the related transactions including, but not limited to, our voluntary filing for protection under Chapter 11 of the U.S. Bankruptcy Code on April 6, 2011 and the confirmation of our plan of reorganization on May 11, 2011, which plan became effective on May 26, 2011 (the “Transactions”). See Notes 14 of the Notes to the Unaudited Consolidated Financial Statements herein for a description of the Transactions.

The accompanying quarterly consolidated financial statements have not been audited, but are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). They do not include all of the information and footnotes required by U.S. GAAP for a complete set of unaudited consolidated 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 (the “Codification”).

This periodic report on Form 6-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, from time to time, we or our representatives have made or may make forward-looking statements, orally or in writing. They can be identified by the use of forward-looking words such as “believe”, “expect”, “plan”, “may”, “should”, or “anticipate” or their negatives or other variations of these words or other comparable words, or by discussion of strategy that involves risks and uncertainties. These forward-looking statements may be included in, but are not limited to, various filings made by us with the Securities and Exchange Commission (the “Commission”), press releases or oral statements made by or with the approval of one of our authorized executive officers. Forward-looking statements are only predictions. Actual events or results could differ materially from those projected or suggested in any forward-looking statement as a result of a wide variety of factors and conditions. Accordingly, readers are cautioned not to place undue reliance on these forward-looking statements. In any event the accompanying statements are applicable only as of the date of this Form 6-K and we undertake no obligation to update or revise any of them.

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

PART 1 – FINANCIAL INFORMATION

Consolidated Balance Sheets

(In thousands of U. S. dollars)

	March 31, 2013		December 31, 2012
	(unaudited)		(audited)
Assets
Current assets:
Cash and cash equivalents	$	61,822	$	74,652
Restricted cash		—		4,900
Accounts receivable, net		20,299		13,521
Inventories, net of allowance for obsolescence		510		413
Prepaid insurance and other assets		8,885		8,725
Deferred tax assets		1,764		3,059
Total current assets		93,280		105,270
Satellites and equipment, net		570,439		552,562
Concessions, net		42,390		42,837
Intangible assets		27,194		32,923
Deferred financing cost		10,556		11,390
Guarantee deposits and other assets		1,365		1,032
Total	$	745,224	$	746,014
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	42,351	$	44,886
Deferred revenue		3,571		3,605
Income tax payable		7		13
Total current liabilities		45,929		48,504
Debt obligations		360,000		360,000
Deferred revenue		22,115		22,982
Guarantee deposits and accrued expenses		4,119		3,375
Labor obligations		1,109		1,060
Long-term deferred tax liabilities		4,970		8,483
Total liabilities		438,242		444,404
Contingencies and commitments (Note 13)
Shareholders’ equity:
Paid-in capital		275,662		275,662
Common stock, class I, no par value, 50,000 shares authorized, issued and outstanding		—		—
Common stock, class II, no par value, 129,950,000 shares authorized, issued and outstanding		—		—
Retained earnings		27,783		22,334
Total Satélites Mexicanos, S. A. de C. V. shareholders’ equity		303,445		297,996
Noncontrolling interest		3,537		3,614
Total shareholders’ equity		306,982		301,610
Total	$	745,224	$	746,014

See accompanying notes to these consolidated financial statements.

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

Unaudited Consolidated Statements of Operations

(In thousands of U. S. dollars)

	Three months ended March 31,
	2013			2012
Revenues:
Satellite services	$	27,496		$	25,827
Broadband satellite services		2,040			2,320
Programming distribution services		3,185			3,690
Total revenues		32,721			31,837
Costs and expenses
Satellite services(1)		2,206			2,114
Broadband satellite services(1)		388			421
Programming distribution services(1)		1,893			1,848
Selling and administrative expenses(1)		5,257			4,660
Depreciation and amortization		11,179			17,258
Total costs and expenses		20,923			26,301
Operating income		11,798			5,536
Other (expenses) income:
Interest expense		(8,951	)		(2,498	)
Interest income		127			107
Net foreign exchange gain (loss) – net		396			573
Income before income tax		3,370			3,718
Income tax (benefit) expense		(2,002	)		3,882
Net income (loss)		5,372			(164	)
Less: Net income attributable to noncontrolling interest		(77	)		112
Net income (loss) attributable to Satélites Mexicanos, S. A. de C. V.	$	5,449		$	(276	)

⁽¹⁾  Exclusive of depreciation and amortization shown separately below.

See accompanying notes to these unaudited consolidated financial statements.

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows

(In thousands of U. S. dollars)

	Three months ended March 31,
	2013			2012
Cash flows from operating activities:
Net income (loss)	$	5,372		$	(164	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net periodic pension cost		49			45
Depreciation and amortization		11,179			17,258
Deferred income taxes		(2,214	)		3,799
Deferred revenue		(901	)		(340	)
Amortization of deferred financing costs		834			774
Changes in operating assets and liabilities: (Increase) decrease in:
Accounts receivable		(6,778	)		(4,587	)
Inventories		(97	)		96
Prepaid insurance		(160	)		585
Guarantee deposits and other assets		(333	)		(61	)
Accounts payable, accrued expenses and income tax		2,950			8,308
Guarantee deposits and accrued expenses		744			(157	)
Net cash provided by operating activities		10,645			25,556
Cash flows from investing activities:
Restricted cash—satellite Satmex 8		4,900			—
Construction in progress – net satellites (including capitalized interest)		(27,709	)		(26,963	)
Acquisition of equipment		(666	)		(217	)
Net cash used in investing activities		(23,475	)		(27,180	)
Cash and cash equivalents:
Net decrease for the period		(12,830	)		(1,624	)
Beginning of year		74,652			79,251
End of period	$	61,822		$	77,627
Supplemental disclosures of cash flow information:
Cash paid during the period:
Capitalized interest:	$	862		$	6,417
Income taxes paid:	$	264		$	332
Non-cash investing activities:
Capital expenditures incurred not yet paid:	$	17,493		$	3,856

See accompanying notes to these unaudited consolidated financial statements

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

Notes to the Unaudited Consolidated Financial Statements

(In thousands of U.S. dollars, unless otherwise stated)

1. Nature of business and significant events

Satélites Mexicanos, S. A. de C. V. and subsidiaries (“Satmex” and together with its subsidiaries, the “Company”) is a provider of fixed satellite services (“FSS”) in the Americas. As of March 31, 2013, Satmex’s fleet was comprised of three satellites, Satmex 6, Satmex 5, and Solidaridad 2 in contiguous orbital slots that enable its customers to serve its entire coverage footprint utilizing a single satellite connection. The satellites are operated and monitored from two satellite control centers, located in Iztapalapa, Mexico, and Hermosillo, Mexico. In March 2008, Solidaridad 2 was placed in inclined orbit; currently it only provides L-band service to the Mexican government.

In addition to the core FSS business, which is reported as “Satellite services” segment, Satmex also provides the programming distribution services segment to offer TV programs in Spanish for Hispanic communities living in the United States of America (“USA”). The Company also provides broadband satellite transmission capacity services for various applications, such as internet access via satellite, telecommunication transmission and broadcasting.

Up to March 31, 2013, Satmex provided its commercial services through Satmex 6 and Satmex 5, which have a total of 108 C- and Ku-band 36 MHz transponder equivalents. Satmex’s business provides communication services to a diverse range of customers, including telecommunications companies, private and state-owned broadcasting networks, direct-to-home satellite television operators, and public and private telecommunications networks operated by financial, educational and media companies as well as governmental entities.

On April 26, 2013, after the successful completion of the In-Orbit Test, Satmex got the full control of the Satmex 8 satellite. The migration of customers from Satmex 5 to Satmex 8 was performed and concluded successfully on April 29, 2013. As of the date of presentation of this 6K form, all customers previously on Satmex 5 are now operating in the Satmex 8 satellite. Additionally, we began the transfer of Satmex 5 to 114.9W orbital slot for operations in inclined orbit.

On March 11, 2013, the Mexican President submitted a telecommunications reform bill whose purpose is to encourage economic competition and speed up the technological development of the sector. The current Foreign Investment Law establishes that radio broadcast and other radio and television services are reserved exclusively for Mexicans or Mexican companies with a foreigner exclusion clause. By the same token, in the case of concessionaire companies, as established in articles 11 and 12 of the Federal Telecommunications Law, the foreign investment may be up to 49%. Accordingly, the reform bill establishes that it is essential to promote investment structures in the radiobroadcast and telecommunications sectors, to make them more efficient.

For this reason, transitory article fifth establishes that once the constitutional reform goes into effect, federal laws will be modified and direct foreign investment of up to 100% will be allowed in telecommunications and satellite communications. However the final reform and the time that will be approved is not certain. Other potential effects of the reform are still unknown. Consequently, at the date of this financial information the Company’s management has not concluded the impact on the consolidated financial statements.

Satmex 8

On April 1, 2010, we initiated a program for the design and construction of a new satellite, named Satmex 8, by executing the Satmex 8 ATP with Space Systems/Loral, LLC (f/k/a Space Systems/Loral, Inc.) (“SSL”). Construction of the Satmex 8 satellite was completed during the second half of 2012. Satmex 8 is a 64 C- and Ku-band transponder satellite which has replaced Satmex 5. The Satmex 8 program cost was estimated at approximately $321.0 million, including construction, launch and insurance (which does not include capitalized interest). As of March 31, 2013, we had spent approximately $358.6 million in connection with the Satmex 8 program which includes $44.4 million of capitalized interest.

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

The design life of Satmex 8 is 15 years. The satellite is based on the SSL LS-1300 platform, a space-proven platform for a wide range of satellite services and an industry leader in power, performance and reliability. The 1300 series was first introduced in the mid-1980s and has been in constant evolutionary development to deliver increasingly higher power, greater flexibility and longer mission life. The LS-1300 platform has been used in over 60 satellites currently in orbit or under construction. Satmex 8 has been designed to provide comparable power levels and coverage over the Americas to those of our existing satellites, Satmex 6 and Satmex 5.

On May 7, 2010, we entered into the Satmex 8 Satellite Agreement with SSL retroactive to the Satmex 8 ATP execution date (i.e., April 1, 2010) for the design, construction and delivery of Satmex 8 to the launch site by July 1, 2012. The Satmex 8 satellite was delivered to the launch site at Baikonur, Kazakhstan on November 28, 2012.

On December 23, 2010, we entered into a launch services agreement with International Launch Services, Inc. (“ILS”) for the launch of Satmex 8, which required that we paid in full for these services prior to launch date. Both parties had the right to adjust the launch date subject to certain payments.

Satmex 8 satellite was successfully launched on March 27, 2013, Baikonur, Kazakhstan time (March 26, 2013 UTC). The satellite was carried into orbit on an ILS Proton Launch Vehicle. After launch, the satellite successfully performed post-launch maneuvers and deployed its solar arrays on schedule and began firing its main thruster in order to start maneuvering into geosynchronous orbit.

On April 26, 2013, after the successful completion of the In-Orbit Test, Satmex got the full control of the Satmex 8 satellite. The migration of customers from Satmex 5 to Satmex 8 was performed and concluded successfully on April 29, 2013. As of the date of presentation of this 6K form, all customers previously on Satmex 5 are now operating in the Satmex 8 satellite.

Satmex 7

On March 13, 2012, Satmex and Asia Broadcast Satellite Holdings Ltd (“ABS”) entered into a master procurement agreement with Boeing Satellite Systems International, Inc. (“Boeing”) (the “Master Procurement Agreement”), which establishes the framework for the joint administration by Satmex and ABS for the purchase of four C- and Ku-band satellites to be developed and manufactured by Boeing (the “Program”). In the event ABS fails to perform its obligations under its own satellite procurement agreement, Boeing will be entitled to increase the price of each satellite of Satmex up to maximum of $10.5 million. Also, on this date, Satmex entered into a construction agreement (the “Satmex Procurement Agreement”) with Boeing, for the design, construction and delivery of the satellite Satmex 7, which will be based on Boeing’s 702 SP platforms, for a 34-month construction schedule. The Satmex Procurement Agreement also provides for a right to purchase an additional satellite based on Boeing’s 702 SP platforms.

Satmex also entered into a bilateral agreement with ABS on March 13, 2012 (the “Bilateral Agreement”), whereby Satmex and ABS agreed to share launch services, allocate common Program costs and cross- indemnify each other for any actions or changes to the Program made by Satmex or ABS that adversely affect the costs, timing, delivery or launch of the other party’s satellite or satellites.

Finally, Satmex entered into a launch services agreement (the “Launch Services Agreement”) with Space Exploration Technologies, Corp. (“SpaceX”) to launch satellite Satmex 7. The launch services agreement provides for a scheduled launch period for Satmex 7 between December 2014 and February 2015 and with operations expected to commence in October 2015.

Satellite Satmex 7 will replace satellite Solidaridad 2. The design, construction, launch and insurance costs of Satmex 7 are expected to be approximately $165.0 million. At March 31, 2013, the amount incurred has been $59,367, which includes $2,037 of capitalized interest.

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2. Basis of presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

a. Consolidation of financial statements—The consolidated financial statements include the financial statements of Satmex and those of its subsidiaries. The financial statements of the subsidiaries are consolidated from their respective dates of acquisition or incorporation. All intercompany transactions and balances have been eliminated in consolidation.

The activities of the entities in the consolidated group are described below:

Company	Ownership percentage			Activity
Enlaces Integra, S. de R.L. de C.V. (“Enlaces”)		75.00	%	Acquired on November 30, 2006. Offers private networks for voice, video and data as well as other value-added satellite services in Mexico.
Alterna’TV International Corporation (“Alterna’TV Int.”)		100.00	%	Incorporated on May 21, 2009. Engaged in programming distribution services, primarily in the United States of America.
Alterna’TV Corporation (“Alterna’TV Corp.”)		100.00	%	Incorporated on December 19, 2008, to be a vehicle to contract the procurement of the Satmex 7 satellite.
SMVS Administración, S. de R. L. de C. V., SMVS Servicios Técnicos, S. de R. L. de C. V. and HPS Corporativo S. de R. L. de C. V. (“Service Companies”)		100.00	%	Provide administrative and operating services exclusively to Satmex and Enlaces.
Satmex U.S.A., LLC (“Satmex USA”)		100.00	%	Incorporated on August 4, 2011. This entity holds the 0.03% interests related to the Service Companies.
Satmex Do Brasil		100.00	%	This entity has not initiated operations.

b. Foreign currency transactions-For U.S. GAAP reporting purposes, the Company maintains separate accounting records in its functional currency, the U.S. dollar. Transactions denominated in Mexican pesos and other foreign currencies are recorded at the rate of exchange in effect at the date of the transactions. Monetary assets and liabilities denominated in Mexican pesos and other foreign currencies are converted into the Company’s functional currency at the rate of exchange in effect at the balance sheet date (Mexican pesos per one U.S. dollar as of March 31, 2013 and December 31, 2012, were $12.3841 and 13.0101, respectively), with the resulting effect included in other (expense) income within results of operations.

As of April 29, 2013, the ownership percentage of Satmex in Enlaces is 99.99%.

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3. Significant accounting policies

A summary of the significant accounting policies used in the preparation of the accompanying consolidated financial statements follows:

a. Cash and cash equivalents—This line item consists mainly of bank deposits in checking accounts and readily available daily investments of cash surpluses. Cash equivalents are composed of highly liquid investments with original maturities of three months or less. This line item is stated at nominal value plus accrued yields, which are recognized in results as they accrue.

b. Restricted cash—On July 3, 2012, Satmex and ILS entered into an Escrow Agreement, in which Satmex deposited with the Escrow Agent $4,900 representing 5% of the launch service price. The Escrow Agent shall hold the escrow deposit in an interest bearing account. On the Satmex 8 launch date March 27, 2013, Baikonur, Kazakhstan time (March 26, 2013 UTC), the Escrow Agent released the escrow deposit plus accumulated interest from the escrow account upon receipt of the irrevocable escrow instructions jointly provided by Satmex and ILS.

c. Concentrations of credit risk—Financial assets, which potentially subject the Company to concentrations of credit risk, consist principally of cash and cash equivalents and accounts receivable.

Cash and cash equivalents are maintained with high-credit quality financial institutions.

Accounts receivable are comprised of several companies in the private domestic sector and certain foreign companies. Management considers that its credit evaluation, approval and monitoring processes combined with advance billing arrangements and guarantee deposits from customers mitigate potential credit risks with regard to its current customer base.

d. Inventories—Inventories consist mainly of antennas and are stated at the lower of cost or market value. Cost is determined using the average cost method.

e. Prepaid insurance—The insurance premium paid to renew in-orbit coverage of is recorded as a prepaid insurance and amortized over the related insurance policy period.

f. Satellites and equipment—As of May 26, 2011, Satmex adopted push-down accounting, under which its satellites and equipment were recorded at fair values based upon the appraised values of such assets. Satmex determined the fair value of the satellites and equipment using the cost approach. The cost approach, often referred to as current replacement cost, estimates fair value based on the amount that currently would be required to replace the service capacity of an asset. Assets acquired after the adoption of push-down accounting are recorded at acquisition cost.

Costs incurred in connection with the construction and successful deployment of the satellites and related equipment are capitalized. Such costs consist primarily of the costs of satellite construction and launch, including launch insurance and insurance during the period of in-orbit testing, the value of performance incentives incurred to the satellite manufacturers, costs directly associated with the monitoring and support of satellite construction, and interest costs incurred during the period of satellite construction.

Satellite construction and launch services are generally procured under long-term contracts that provide for payments over the contract periods. Satellite construction and launch services costs are capitalized to reflect progress toward completion. Capitalizing these costs typically coincides with contract milestone payment schedules.

Depreciation is calculated using the straight-line method for satellites, related equipment and other owned assets over the estimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the improvements.

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The estimated useful and economic lives of the satellites are as follows:

	Original useful life (Years)		Remaining economic life at March 31, 2013 (Years)
Satellites in-orbit - are as follows:
Satmex 8		15		22.60	(2)
Satmex 6		15		10.14
Satmex 5		15		0.51
Solidaridad 2		14.5		—

Depreciation of satellites commences on the date on which the satellite is placed in orbit. Satmex 6 was launched on May 27, 2006 and commenced operations in July 2006. Satmex 5 was launched on December 5, 1998 and commenced operations in January 1999. Solidaridad 2 and Satmex 5 concluded their depreciation period based upon its estimated useful life during 2009 and 2012, respectively.

The estimated useful lives of equipment are as follows:

	Original useful life (Years)
Equipment:
Satellite equipment	15
Furniture and fixtures	10
Leasehold improvements	5
Teleport, equipment and antennas	10

g. Concessions -As of May 26, 2011, Satmex adopted push-down accounting, under which its concessions were recorded at fair values based upon the appraised values of such assets. Satmex determined the fair value of the orbital concessions and the public telecommunications network concession using market approach and income approach methods, respectively. Orbital concessions are amortized over 40 years using the straight-line method; their remaining useful life as of the Acquisition Date was 26 years. The public telecommunications network concession is amortized over 30 years using the straight-line method; its remaining useful life as of the Acquisition Date was 19 years.

h. Valuation of satellites and long-lived assets - The carrying value of the satellites, amortizable intangible assets and other long-lived assets is reviewed for impairment wherever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If the expected undiscounted future cash flows are less than the carrying value of the long-lived assets, an impairment charge is recorded based on such asset’s estimated fair value. Changes in estimates of future cash flows could result in a write-down of the asset in a future period.

Estimated future cash flows from the Company’s satellites could be impacted by changes in estimates of its ability to operate the satellite at expected levels, changes in the manner in which the satellite is to be used and the loss of one or several significant customer contracts on the satellite.

⁽²⁾  Remaining economic life as of April 26, 2013.

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i. Deferred financing costs- Deferred financing costs related to the issuance of Senior Secured Notes were capitalized and reported as an asset. These costs are amortized to interest expense using the effective rate interest method.

j. Other intangible assets- Intangible assets arising from push-down accounting are initially recorded at fair value using the income approach method. Intangible assets identified as part of the push-down of acquisition accounting consisted primarily of contract backlog and customer relationships. The Company reviews intangible assets for impairment whenever facts and circumstances indicate that the carrying amounts may not be recoverable. An intangible asset with a determinable useful life is considered to have been impaired when its carrying amount exceeds its fair value; however, an impairment loss shall only be recognized when the estimated future undiscounted cash flows expected to result from the use and eventual disposition of the asset are less than the carrying value of the asset. The Company measures an impairment loss as the difference between the carrying value of the asset and its fair value.

The costs of intangible assets with finite and determinable useful lives are amortized to reflect the pattern of consumption, over the estimated useful lives of the assets, as follows:

	Original useful life (Years)
Contract backlog		10
Customer relationships		4

k. Labor obligations - In accordance with Mexican Labor Law, Satmex provides seniority premiums benefits to its employees under certain circumstances. These benefits consist of a one-time payment equivalent to 12 days wages for each year of service (at the employee’s most recent salary, but not to exceed twice the legal minimum wage), payable to all employees with 15 or more years of service, as well as to certain employees terminated involuntarily prior to the vesting of their seniority premium benefit. Satmex also provides statutorily mandated severance benefits to its employees terminated under certain circumstances. Such benefits consist of a one-time payment of three months wages plus 20 days wages for each year of service payable upon involuntary termination without just cause. Costs associated with these benefits are provided for based on actuarial computations using the projected unit credit method. Other disclosures required by U.S. GAAP are not material.

l. Fair value of financial instruments and fair value measurements—An entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Accounting guidance establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Inputs used to measure fair value may fall into one of three levels:

Level 1 - applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 - applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3 - applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash, restricted cash, accounts receivable, debt, accounts payable and accrued expenses. The Company believes that the recorded values of cash, restricted cash, accounts receivable, accounts payable and accrued expenses approximate their current fair values because of their nature and respective maturity dates or durations.

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

m. Provisions -Are recognized for current obligations that result of a past event, are probable to result in the use of economic resources and can be reasonably estimated.

n. Income taxes - Current income taxes, calculated as the higher of the regular Mexican income tax (“ISR”) or the Business Flat Tax (“IETU”), are recorded in the results of the year in which they are incurred. Satmex accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

To determine tax bases of assets and liabilities, the Company evaluates whether it expects to be principally subject to ISR or IETU in the future and uses such tax base accordingly. If the Company is unable to conclude that it will be principally subject to either tax regime, a hybrid calculation is utilized. Based on the Company’s projections, it determined that in certain fiscal years it will pay ISR, while in others, it will pay IETU. Accordingly, the Company scheduled the reversal of the temporary differences for both ISR and IETU purposes, determined by year whether the applicable temporary differences should be those under ISR or those under IETU, and applied the corresponding rates.

Satmex recognizes net deferred tax assets to the extent that management believes these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.

o. Statutory employee profit sharing -Statutory employee profit sharing (“PTU”) is recorded in the results of the year in which it is incurred and presented within operating expenses in the accompanying consolidated statements of operations. Deferred PTU liabilities are derived from temporary differences that result from comparing the accounting and PTU values of assets and liabilities.

p. Revenue recognition -Fixed satellite service revenues are recognized as the satellite capacity is provided according to service lease agreements. Satellite transmission capacity is sold through permanent and temporary contracts, which stipulate the agreed capacity. Lease agreements are accounted for either as operating or sales-type leases.

Operating lease revenues are recognized on a straight-line basis over the lease term. Revenues for temporary services are recognized as services are performed.

Revenues from end-of-life leases for transponders are usually collected in advance. The Company does not provide insurance and/or guarantees of any kind for the related transponders to these customers. Total revenues and related costs are accounted as sales-type leases and recognized in income when the risk and rewards of the transponders are transferred to the customer in accordance with the agreements.

The public and private network signal and value-added services (“Broadband satellite services”) are recognized when services are rendered. The sale of antennas and installation services are recognized in the period in which risk and rewards are transferred to the customers, which generally coincides with the completion of the installation of the antennas and acceptance by the customer.

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

To calculate the monthly revenue attributable to purchasers of programming distribution services, the Company estimates, on a monthly basis, the number of subscribers per purchaser according to the contractual value of each subscriber. Approximately 45 to 60 days after the end of each month, the Company receives a definitive report from each purchaser and reconciles the definitive revenue with the estimated amount, issuing an invoice to such purchaser based on the definitive report. Variations between the estimated and actual revenue amounts are not material.

q. Deferred revenue- Satmex is required to provide the Mexican federal government, at no charge, approximately 362.88 MHz of its available transponder capacity for the duration of the orbital concessions (“State Reserve”). As of May 26, 2011, as a result of the adoption of push-down accounting, this obligation was recorded at its fair value, using the income approach method, and recognized as deferred revenue with a corresponding increase in the value of the related assets. Deferred revenue is amortized to fixed satellite services revenue based on the expected consumption pattern.

r. Use of estimates - The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the amounts of revenues and expenses reported during the periods reported. Such estimates include the allowance for doubtful accounts, the revenue recognition of programming distribution services, the valuation of long-lived assets, the valuation allowance on deferred income tax assets, the scheduling of reversal of the temporary differences under different tax regimes, the estimated useful lives of each satellite and estimates of fair values. Although management believes the estimates and assumptions used in the preparation of these consolidated financial statements were appropriate in the circumstances, actual results could differ from those estimates and assumptions.

s. Recently issued accounting pending adoption

In December 2011, the FASB issued ASU No. 2011-11,Balance Sheet: Disclosures about Offsetting Assets and Liabilities. This ASU requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of International Financial Reporting Standards (“IFRS”). The amended guidance is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The Company will adopt this ASU in 2013.

In July 2012, the FASB issued ASU 2012-02,Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. This update amends ASU 2011-08,Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30,Intangibles—Goodwill and Other—General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 is not expected to have a material impact on the Company’s financial position or results of operations.

In October 2012, the FASB issued ASU 2012-04,Technical Corrections and Improvements in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on the Company’s financial position or results of operations.

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

In February 2013, the FASB issued ASU 2013-02,Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The amendments in this Update supersede and replace the presentation requirements for reclassifications out of accumulated other comprehensive income in ASUs 2011-05 (issued in June 2011) and 2011-12 (issued in December 2011) for all public and private organizations. The amendments do not change the current requirements for reporting net income or other comprehensive income in financial statements.

However, the amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. The amended guidance is effective prospectively for reporting periods beginning after December 15, 2013. Early adoption is permitted. The Company will adopt this ASU in 2013, but does not anticipate that it will have a material effect on its financial position or results of operations.

4. Cash and cash equivalents

	March 31, 2013		December 31, 2012
Cash	$	2,269	$	6,912
Cash equivalents(1)		59,553		67,740
	$	61,822	$	74,652

(1) The Company’s cash equivalents consist mainly of treasury bills with original maturities less than 20 days.

5. Accounts receivable

	March 31, 2013			December 31, 2012
Customers	$	19,675		$	12,787
Allowance for doubtful accounts		(1,738	)		(1,202	)
		17,937			11,585
Recoverable income taxes		314			140
Recoverable value-added tax and tax withholdings		1,620			1,146
Other		428			650
	$	20,299		$	13,521

The principal customers of the Company are as follows:

• For fixed satellite services:

• Broadcasting: Grupo Televisa and Productora y Comercializadora de Televisión, S.A. de C.V.

• Telecommunications: América Movil Perú, S.A.C., Teléfonos de México, S.A.B. de C.V. (“Telmex”) and Telefónica del Perú, S.A.A.

• Data transmission and internet: Hughes Network Systems and Hunter Communications, Inc.

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

• For programming distribution services: Comcast Cable Communications, LLC and Direct TV Inc.

• For broadband satellite services: Grupo Wal-Mart de México and Grupo Oxxo.

Revenues from Fixed satellite services, Programming distribution services and Broadband satellite services were obtained from:

	Three months ended March 31, 2013		Year ended December 31, 2012
	%		%
Hughes Networks Systems		10		11
América Móvil Perú, S.A.C.		10		9
Telmex		5		5
Other foreign customers		46		43
Other domestic customers		29		32

6. Satellites and equipment

	March 31, 2013			December 31, 2012
Satellites in-orbit	$	196,425		$	196,425
Satellite equipment, teleport and antennas		8,420			8,061
Furniture and fixtures		4,322			4,107
Leasehold improvements		937			922
		210,104			209,515
Accumulated depreciation and amortization		(58,428	)		(53,418	)
		151,676			156,097
Construction in-progress for Satmex 8		358,583			358,289
Construction in-progress for Satmex 7		55,106			32,750
F4 satellite project advance payment		3,764			3,764
Other construction in-progress		1,310			1,662
	$	570,439		$	552,562

For the period from January 1 to March 31, 2013 and 2012, depreciation and amortization expense related to satellites and equipment was $5,003 and $9,089, respectively.

For the period from January 1 to March 31, 2013 and 2012, we capitalized interest costs of $862 for satellite Satmex 7 and $6,416 for satellite Satmex 8, respectively.

7. Concessions

	March 31, 2013			December 31, 2012
Orbital concessions	$	41,740		$	41,740
Public telecommunications network		3,932			3,932
		45,672			45,672
Accumulated amortization		(3,282	)		(2,835	)
	$	42,390		$	42,837

For the period from January 1 to March 31, 2013 and 2012, amortization of concessions was $447, respectively.

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

a. Orbital Concessions and Facilities

In October 1997, the Mexican federal government granted to Satmex the rights to three concessions (the “Concessions”) for an initial 20-year term to operate in the orbital slots 113.0° W.L., 116.8° W.L., and 114.9° W.L. In May 2011, extension of the Orbital Concessions was granted by the Mexican federal government for an additional term until 2037, without payment of any additional consideration. Satmex has the right to an additional 20-year extension, at a certain cost to Satmex, to be determined by the Mexican government, as long as Satmex meets certain conditions, as discussed below.

In order to extend the orbital concession term, Satmex must comply with all obligations established by the concession documents, solicit extension of the concession before the beginning of the fifth term of the concession, must obtain approval from the Mexican Secretary of Communication and Transportation (“SCT”) of the technical and operating characteristics of any new satellites, and must guarantee the occupation and use of the orbital slots during the concession’s original and extended terms.

In accordance with theLey Federal de Telecomunicaciones(Federal Law of Telecommunications or “LFT”), concessionaries are required to maintain the satellite control centers within Mexican territory.

The satellites are controlled and operated through two control centers, one of them is located in the east side of Mexico City, and the other one is located in Hermosillo, Sonora. The land and related facilities of the first control center and the land of the second control center are the property of the Mexican federal government.

Use of the land and facilities where the control centers are located that are property of the Mexican federal government was granted to the Company through a concession for a 40-year term, for which the Company pays a fee, which is adjusted every five years by theSecretaría de la Función Pública (The Ministry of Public Administration) (see Note 13h).

b. Concessions for the Use and Exploitation of a Telecommunications Public Network

On January 20, 2000, the Mexican federal government granted to Enlaces a “Concession to Operate, Install, Exploit and Use a Public Telecommunications Network within Mexican Territory” at no charge, in order to provide services for private and public networks, and to provide value-added services. The concession term is for 30 years, with the possibility for an extension under certain conditions.

On November 9, 2000, Enlaces obtained from the SCT a registration of value-added services certificate, which allows it to offer internet access services, electronic data transfer and multimedia services (content delivery to private television channels).

The terms of both concessions are subject to certain legal provisions regarding assignment or transfer of rights. According to Mexican Law, Satmex is not allowed to transfer the concessions to any foreign country or state. If the Mexican federal government expropriates them, the companies are entitled to liquidation or resignation of their rights. As of March 31, 2013, the Company has complied with the obligations established in the concession titles.

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

8. Intangible assets

Intangible assets, which were recognized in connection with the adoption of push-down accounting, are as follows:

	Weighted average remaining amortization period (years)		March 31. 2013				December 31, 2012
			Gross amount		Accumulated amortization		Gross amount		Accumulated amortization
Contract backlog(1)		8	$	86,835	$	60,528	$	86,835	$	54,911
Customer relationships(1)		2		1,333		446		1,333		334
			$	88,168	$	60,974	$	88,168	$	55,245

⁽¹⁾  Using the income approach to determine fair values as of May 26, 2011, as a result of the adoption of push-down accounting.

For the period from January 1 to March 31, 2013 and 2012, amortization expense for these intangible assets was $5,729 and $7,721, respectively. Future annual amortization expense for intangible assets is estimated to be as follows:

2013 nine months	$	17,186
2014		5,600
2015		2,658
2016		898
2017		346
Thereafter		506
	$	27,194

9. Debt obligations

The balance of the Senior Secured Notes as of March 31, 2013 and December 31, 2012 is $360,000

The principal characteristics of the Senior Secured Notes, including the Tack-on, are as follows:

• Maturity is on May 15, 2017.

• Fixed annual interest of 9.5%, payable semi-annually in arrears on May 15 and November 15 of each year.

• Fully and unconditionally guaranteed, jointly and severally, on a first priority senior secured basis by all of the existing U.S. subsidiaries and all future material subsidiaries of Satmex, subject to certain exceptions (see Note 14).

• Optional redemption at any time prior to May 15, 2014, pursuant to which Satmex may redeem up to 35% of the aggregate principal amount of the Notes, plus accrued and unpaid interest.

• In the event of a change of control, the holders have the right to require Satmex to repurchase the Senior Secured Notes at 101% of their issue price, plus accrued and unpaid interest.

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

The indenture related to the Senior Secured Notes issued by Satmex establishes certain covenants. Principal covenants are as follows:

• The Company should pay the notes on the dates and in the manner provided by the indenture.

• The Company should maintain an office or agency where the notes may be surrendered for registration.

• The Company should furnish to the holders of the notes and the Trustee all annual reports on Form 20-F, within 180 days after the end of the financial year.

• The Company and each guarantor should deliver to each of the Trustee and the Collateral Trustee and officers’ certificate stating that such officers have reviewed the activities of the companies during the preceding fiscal year and has kept, observed, performed and fulfilled its obligations under this Indenture and the Security Documents.

• The Company should not permit any of its restricted subsidiaries to declare or pay any dividends, purchase or redeem any equity interest of the Company or make any restricted investment as defined in the indenture.

• The Company should not incur any additional indebtedness or issue preferred stock unless permitted by the indenture.

• The Company should not permit any of its restricted subsidiaries to consummate any asset disposition, unless permitted by the indenture.

As of March 31, 2013, Satmex has complied with these obligations.

10. Labor obligations

Other disclosures required by US GAAP are not considered material.

11. Shareholders’ equity

a. As of March 31, 2013 and December 31, 2012, the authorized, issued and outstanding common stock was as follows.

	Variable Capital Class II				Rights %
Fixed Class I Series A	Series A	Series B	Series N	Total	Voting	Economic
50,000	6,580,000	—	—	6,630,000	51.000	5.10000
—	—	6,363,339	116,877,651	123,240,990	48.950	94.80076
—	—	1,113	20,448	21,561	0.008	0.01659
—	—	4,081	74,963	79,044	0.031	0.06080
—	—	1,467	26,938	28,405	0.011	0.02185
50,000	6,580,000	6,370,000	117,000,000	130,000,000	100.000	100.00000

Satmex is authorized to issue three types of shares: Series A shares, Series B shares, and Series N shares.

All Series A shares of Satmex are owned by Holdsat Mexico. The Series A shares entitle holders to 51.0% of Satmex’s voting rights and 5.1% of its economic rights of all shares. The Series A shares may be owned only by Mexican individuals, Mexican entities that are owned only by Mexican individuals or entities or Mexican entities in which 51.0% of the capital is owned by Mexican individuals or entities.

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

Series B shares entitle holders to 49.0% of Satmex’s voting rights and 4.9% of the economic rights. The Series B shares may be owned by any person including foreign investors. Over 99% of the Series B shares are owned by Investment Holdings BV. Less than 1% of the Series B Shares are owned by certain holders of the Second Priority Old Notes who were not eligible to invest in Satmex through Investment Holding BV. Less than 0.03% of Series B shares are deposited in Satmex’s treasury for those non-qualified holders of the Second Priority Old Notes who failed to respond to the solicitation under the Plan.

Series N shares entitle holders to 90.0% of the economic rights and limited voting rights. The holders of Series N shares may vote only on the following matters: (i) extension of Satmex’s corporate existence; (ii) dissolution; (iii) change of corporate purpose; (iv) change of nationality; (v) transformation of Satmex from one type of entity to another; and (vi) merger of Satmex with and into another entity. The Series N shares may be owned by any person, including foreign investors.

Under Mexican law, foreign investment in Satmex’s capital, represented by full voting rights shares, may not exceed 49.0%. The Series N shares, however, are not taken into account in determining the level of foreign investment. Over 99% of the Series N shares are owned by Investment Holdings BV. Less than 1% of the Series N shares are owned by certain holders of the Second Priority Old Notes who were not eligible to invest in Satmex through Investment Holding BV. Less than 0.03% of Series N shares are deposited in Satmex’s treasury for those non-qualified holders of the Second Priority Old Notes who failed to respond to the solicitation under the Plan.

b. Pursuant to a unanimous resolutions adopted by the shareholders at a meeting held on May 26, 2011, the following resolutions were authorized:

• The outstanding shares formerly held by the NAFIN Trust and the Deutsche Trust, representing the total common stock of the Company as of May 26, 2011, were exchanged through a reverse stock split with a ratio of 10 to 1, resulting in 4,687,500 shares. The stock split has been reflected retrospectively in the accompanying consolidated financial statements.

• Variable common stock was increased by the issuance of 5,713,333 common, nominative, Class II, Series “A” shares, without par value, through cash contributions of $7,680 in exchange of 5.1% of the economic interest in the Company.

• Variable common stock was increased by the issuance of 104,459,367 Class II ordinary shares, without par value, of which (i) 5,620,000 are Series “B” shares and (ii) 98,839,367 are Series “N” shares, through cash contributions of $82,320 in exchange for 83.254% of the economic interests in the Company.

• Pursuant to the Plan, effective on May 26, 2011, 100% of the Second Priority Old Notes were cancelled and converted into the right to receive equity interest, directly or indirectly, in the aggregate of 7.146% of the capital stock of the Company. The capitalization of the Conversion Rights and the cancellation of the Second Priority Old Notes were made at the face amount of the Second Priority Old Notes of $206,890, as follows:

• Variable common stock was increased by the issuance of 9,289,800 Series “N” Class II, shares, without par value, for the capitalization of the Conversion Rights and the cancellation of the Second Priority Old Notes, through the capitalization of liabilities for $70,457.

• A paid-in capital premium was recognized of $136,433 for the shares subscription in consideration of the Conversion Rights and the cancellation of the Second Priority Old Notes; the amount of such premium was capitalized pro rata between the shareholders of the Company in the proportion of their participation percentage in the capital stock of the Company without issuance of new shares.

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

• A put premium was capitalized in the amount of $7,855, in exchange of 4.5% of the economic interests in the Company. The amount of shares issued in exchange for the capitalization of the put premium was 5,850,000 Series “N” Class II, shares, without par value.

c. As of March 31, 2012 the common stock of Satmex amounted to $275,662.

d. Shareholders’ equity, except restated tax contributed capital and tax-retained earnings, will be subject to income tax at the rate in effect upon distribution of such equity. Any tax paid on this distribution may be credited against annual and estimated income taxes of the year in which the tax on dividends is paid and the following two fiscal years.

e. As of December 31, 2012, the balance of the tax contributed capital account is $2,219,573.

12. Income taxes

a. As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact management’s view with regards to future realization of deferred tax assets. The Company assesses the recoverability of its tax loss carryforwards and other deferred tax assets and based upon this analysis and records a valuation allowance to the extent recoverability does not satisfy the “more likely than not” recognition criteria. The Company continues to maintain the valuation allowance until sufficient positive evidence exists to support full or partial reversal. As of March 31, 2013 and December 31, 2012, Satmex had a valuation allowance totaling $45.0 million and $50.1 million against deferred tax assets and tax loss carryforwards due to the limited carryforward periods.

In determining the appropriate valuation allowance, management considers the fact that the Company’s deferred taxes are prepared on the hybrid method, given that in certain years it projects payment of ISR while in others, it projects payment of IETU. Accordingly, due to the use of this method, certain tax loss carryforwards and credits on IETU losses may be excluded from or included in the deferred tax computation during those years in which the Company expects to pay IETU or ISR, respectively; the related allowance on deferred tax assets is also excluded from or included in the deferred tax computation.

As of December 31, 2012, Satmex has tax loss carryforwards and credits on IETU losses, which are available to offset future taxable income, as follows:

	Amounts(1)
Expiration Date	Tax loss Carryforwards		Credits on IETU losses
2013	$	82,827	$	—
2014		30,517		—
2016		227,784		—
2017		24,655		—
2018		79,453		—
2021		8,272		17,623
2022		—		1,261
	$	453,508	$	18,884

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

⁽¹⁾  The amounts presented above have been adjusted for Mexican inflation as permitted by Mexican tax law.

In 2012 and 2010, the Company used $72.6 million and $50.9 million of tax loss carryforwards, respectively. In 2011 and 2010, $69.0 million and $56.7 million of tax loss carryforwards expired, respectively.

b. Statutory income tax rates - Mexican companies are subject to a dual tax system comprised of ISR and IETU. Mexican entities pay the greater of the corporate flat tax or regular income tax and therefore determine their deferred income taxes based on the tax regime expected to be paid to in the future.

The ISR rate in 2012 and 2011 was 30%. In accordance with the Mexican Federal Income Tax Law for 2013, which was enacted in 2012, the ISR rate applicable to companies will be 30% in 2013 and will decrease to 29% in 2014 and 28% in 2015 and thereafter.

IETU - Revenues, as well as deductions and certain tax credits, are determined based on cash flows of each fiscal year. Beginning in 2010, the IETU rate is 17.5%.

Current income taxes are the greater of ISR and IETU.

c. Uncertain tax positions- The Company has not taken any uncertain tax positions for which it believes it is more likely than not, based on technical merits, that it will not receive benefits taken for its tax positions. The tax years that remain subject to examination by the tax authorities include 2008 – 2012.

13. Contingencies and commitments

Insurance matters

a. We obtained in-orbit insurance for Satmex 8 for $360.0 million. We may, 24 months after Satmex 8 is operational, reduce the amount of insurance to the depreciated carrying value of Satmex.

b. On December 5, 2012, Satmex renewed the in-orbit insurance policy for satellite Satmex 6, which expires on December 5, 2013, and provides coverage for $288.0 million. Satmex has the right to decrease the amount of insurance upon written notice to insurers prior to the effective date of the decreased amount of insurance. The insurance companies have the right to review the terms and conditions of the insurance policy, including the right to terminate the insurance coverage. Any uninsured loss of satellite Satmex 6 would have a material adverse effect on Satmex’s results of operations and financial position.

c. Satmex did not renew the in-orbit insurance policy for satellite Satmex 5 primarily because the satellites geostationary life will end in September 2013, and the condition of the satellite does not comply with the industry standards required by the terms and conditions of the insurance policy. Any uninsured loss of satellite Satmex 5 would have a material adverse effect on Satmex’s results of operations and financial condition.

d. The in-orbit insurance for satellite Solidaridad 2 was not renewed primarily because the satellite’s geostationary life ended in 2009. Any uninsured loss of satellite Solidaridad 2 would not have a material adverse effect on Satmex’s results of operations and financial condition.

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

Legal matters

e. As of the date of this 6K form, we have an ongoing dispute that is pending with Hunter Communications, Inc.

Commitments

f. Satmex entered into a contract with Space Systems/Loral, Inc. (“SS/L”) and granted to SS/L a usufruct right (a Mexican law concept that grants another person the right to use and benefit from another person’s property) over certain transponders on the satellite Satmex 5 and satellite Satmex 6 satellites, until the end of the life of such satellites. SS/L was not required to post a bond related to the usufruct arrangement. In the event that Satmex or a new shareholder decides not to continue with the usufruct arrangement, SS/L has the right to receive the higher of a percentage of the net sale value of Satmex 6 and Satmex 5 or an amount equal to the market value related to the transponders granted under the usufruct arrangement.

g. State Reserve - Under the orbital concessions granted by the Mexican federal government, Satmex must provide, at no charge, satellite capacity of approximately 362.88 MHz to the Mexican federal government in C- and Ku- bands.

h. On October 15, 1997, the Mexican government granted a property concession that relates to Satmex’s use of the land and buildings on which its satellite control centers are located and allows Satmex to base its ground station equipment within telecommunication facilities that belong to the Mexican government. Under such concession, Satmex is obligated to pay an annual fee, equivalent to 7.5% of the total value of the land, which is determined by appraisal experts assigned by the Mexican federal government.

For the three months ended March 31, 2013 and 2012, the fees paid for the use of these control centers were $136 and $126 respectively.

i. Satmex leases two floors in the building where its headquarters are located. The corresponding lease agreement establishes a mandatory period of five years and three months as of July 2008 and ending in September 2013. For the three months ended March 31, 2013 and 2012, rent expense was $132 and $129, respectively. The minimum future payments for the period ended September 30, 2013 is $264.

j. Future minimum revenues (“Contract Backlog”) due from customers under non-cancelable operating lease contracts, which include a penalty clause against customers in case of early termination, for transponder capacity on satellites in-orbit as of March 31, 2013, are as follows:

Years	Amounts
2013 nine months	$	78,025
2014		58,327
2015		34,694
2016		16,401
2017		11,830
Thereafter		51,481
	$	250,758

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

Other matters

k. The teleport of Enlaces is housed at the primary control center of Satmex, which form part of a building complex that also houses equipment owned and used by the Mexican federal government’s teleport and mobile satellite services systems. On May 14, 2010, the SCT issued an amendment to the property concession granted on October 15, 1997, under which the Company may, with prior authorization from the SCT, lease or give under a commodatum (i.e., a rent-free lease) agreement, segments of the primary and alternate control centers to third parties as long as such segments are used for activities related to the subject matter of the property concession. This amendment allows the Company, among other things, to provide control and satellite operation services to other operators, with the prior authorization of the SCT; the Company filed an authorization request for Enlaces’ teleport to be housed at Satmex’s primary control center on May 17, 2010. Such authorization is pending as of the date of the accompanying consolidated financial statements. The teleport’s relocation would have an estimated cost of $6.8 million and would take approximately nine months.

l. On April 29, 2013, the General Partners’ Meeting of Enlaces Integra adopted by unanimous resolutions a decrease in the equity capital (represented by series “C” of the variable portion of the equity capital); in an amount that did not exceed $4.5 million, which was paid at this date; consequently Satmex has a 100% of the ownership percentage of Enlaces.

14. Supplemental Guarantor Unaudited Condensed Consolidating Financial Statements

On May 5, 2011 Satmex offered $325.0 million in aggregate principal amount of Senior Secured Notes. Satmex exchanged the Senior Secured Notes for $325.0 million of registered 9.5% Senior Secured Notes due 2017 (the “Notes”).

On April 9, 2012, Satmex offered an additional $35.0 million aggregate principal amount of Senior Secured Notes as a tack-on to the Senior Secured Notes (the “Tack-on Notes”) due in 2017, issued in a private placement under Rule 144A and Regulation S of the U.S. Securities Act of 1933, as amended. The Tack-on Notes were exchanged for registered notes on September 28, 2012. The additional Tack-on Notes were priced at 102.00% and will bear interest at an annual fixed rate of 9.50%.

Both the Exchange Notes and the Tack-on Notes are guaranteed by all of Satmex’s U.S. domiciled subsidiaries existing on the issue date (which as of the date of the accompanying consolidated financial statements includes Alterna’TV Corp. and Alterna’TV Int. (the “Guarantors”). Future guarantor subsidiaries are contemplated in the indentures. The guarantees are full and unconditional and are joint and several obligations of the guarantors and are secured by first priority liens on the collateral securing the notes, subject to certain permitted liens. Accordingly, supplemental guarantor condensed consolidating financial statements are included hereon.

Satmex’s investments in subsidiaries in the accompanying guarantor information are accounted for under the equity method, representing acquisition cost adjusted for Satmex’s share of the subsidiary’s cumulative results of operations, capital contributions, distributions and other equity changes. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions.

The following tables have been prepared in accordance with Regulation S-X Rule 3-10,Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered, in order to present the (i) condensed consolidating balance sheets as of March 31, 2013, (ii) condensed consolidating statements of operations and condensed statements of cash flows for the three months ended March 31, 2013, of Satmex, which is the issuer of the Senior Secured Notes and the Tack-on Notes, and of, the Guarantors (which are combined for this purpose), the Non-Guarantors, and the elimination entries necessary to consolidate the issuer with the Guarantor and Non-Guarantor subsidiaries.

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

Unaudited Condensed Consolidating Balance Sheet

As of March 31, 2013

(In thousands of U. S. dollars)

	Satmex Issuer		Guarantor Subsidiaries			Non Guarantor Subsidiaries		Eliminations upon consolidation			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	46,479	$	662		$	14,681	$	—		$	61,822
Accounts receivable, net		15,525		3,358			5,582		(4,166	)		20,299
Inventories, net of allowance for obsolescence		—		—			510		—			510
Prepaid insurance and other assets		8,461		100			324		—			8,885
Deferred tax assets		941		—			823		—			1,764
Total current assets		71,406		4,120			21,920		(4,166	)		93,280
Satellites and equipment, net		568,330		87			2,022		—			570,439
Concessions, net		38,844		—			3,546		—			42,390
Due from related parties		4,003		—			1,003		(5,006	)		—
Intangible assets and other assets		25,464		2,191			904		—			28,559
Investment in subsidiaries		19,107		—			—		(19,107	)		—
Deferred financing cost		10,556		—			—		—			10,556
Deferred income taxes		—		906			—		(906	)		—
Total	$	737,710	$	7,304		$	29,395	$	(29,185	)	$	745,224
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	39,065	$	3,235		$	4,217	$	(4,166	)	$	42,351
Deferred revenue		3,571		—			—		—			3,571
Income tax payable		—		7			—		—			7
Total current liabilities		42,636		3,242			4,217		(4,166	)		45,929
Debt obligations		360,000		—			—		—			360,000
Other long-term liabilities		27,237		4,003			1,109		(5,006	)		27,343
Long-term deferred tax liabilities		4,392		—			1,484		(906	)		4,970
Total liabilities		434,265		7,245			6,810		(10,078	)		438,242
Shareholders’ equity:
Paid-in capital		275,662		(1,173	)		21,481		(20,308	)		275,662
Retained earnings		27,783		1,232			1,104		(2,336	)		27,783
Noncontrolling interest		—		—			—		3,537			3,537
Total shareholders’ equity		303,445		59			22,585		(19,107	)		306,982
Total	$	737,710	$	7,304		$	29,395	$	(29,185	)	$	745,224

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

Condensed Consolidating Statements of Income

For the three months ended March 31, 2013

(In thousands of U. S. dollars)

	Satmex Issuer			Guarantor Subsidiaries			Non - Guarantor Subsidiaries			Eliminations upon consolidation			Consolidated
Revenues:
Satellite services	$	28,985		$	—		$	—		$	(1,489	)	$	27,496
Broadband satellite services		—			—			2,049			(9	)		2,040
Programming distribution services		—			3,185			—			—			3,185
Services companies		—			—			3,459			(3,459	)		—
		28,985			3,185			5,508			(4,957	)		32,721
Cost of satellite services		2,212			—			1,067			(1,073	)		2,206
Cost of broadband satellite services		—			—			1,430			(1,042	)		388
Cost of programming distribution services		—			2,340			—			(447	)		1,893
Selling and administrative expenses		3,904			376			3,372			(2,395	)		5,257
Depreciation and amortization		10,674			199			306			—			11,179
		16,790			2,915			6,175			(4,957	)		20,923
Operating income (loss)		12,195			270			(667	)		—			11,798
Interest (expense) income, net and other		(8,971	)		(75	)		685			(67	)		(8,428	)
Income before income tax		3,224			195			18			(67	)		3,370
Income tax (benefit) expense		(2,225	)		94			129			—			(2,002	)
Net income (loss)		5,449			101			(111	)		(67	)		5,372
Less: Net income attributable to noncontrolling interest		—			—			—			(77	)		(77	)
Net income (loss) attributable to Satélites Mexicanos, S. A. de C. V.	$	5,449		$	101		$	(111	)	$	10		$	5,449

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

Condensed Consolidating Statements of Cash Flows

For the three months ended March 31, 2013

(In thousands of U.S. dollars)

	Satmex Issuer			Guarantor Subsidiaries			Non - Guarantor Subsidiaries			Eliminations upon consolidation		Consolidated
Cash flows from operating activities	$	11,033		$	(247	)	$	(141	)	$	—	$	10,645
Cash flows from investing activities:
Restricted cash-Satmex 8		4,900			—			—			—		4,900
Construction in progress—satellites (including capitalized interest)		(27,709	)		—			—			—		(27,709	)
Acquisition of equipment		(618	)		(12	)		(36	)		—		(666	)
Net cash used in investing activities		(23,427	)		(12	)		(36	)		—		(23,475	)
Cash and cash equivalents:
Net decrease for the period		(12,394	)		(259	)		(177	)		—		(12,830	)
Beginning of year		58,873			921			14,858			—		74,652
End of period	$	46,479		$	662		$	14,681		$	—	$	61,822

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

Item 3.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands of U.S. dollars)

Results of operations for the three months ended March 31, 2013 compared to March 31, 2012.

Revenue

Revenue for the three months ended March 31, 2013 was $32.7 million, compared to $31.8 million for the same period in 2012. The net increase was due to an increase in fixed satellite services of $1.7 million, decrease of $0.5 million in programming distribution services, and, partially offset by a decrease of $0.3 million in broadband satellite services provided by Enlaces.

	For the three months ended March 31,
	2013		2012		Difference
Satellite services	$	27,496	$	25,827	$	1,669
Broadband satellite services		2,040		2,320		(280	)
Programming distribution services		3,185		3,690		(505	)
Total revenue	$	32,721	$	31,837	$	884
(In thousands of U.S. dollars)

The net increase of $1.7 million in Satellite services to was due to an increase of $0.8 million in new contracts, an increase of $0.8 million of net capacity contracted by existing customers and an increase of $0.6 million in the state reserve amortization due to the change in its fair value of the state reserve given the push-down of acquisition accounting, net an increase of $0.5 million in expired contracts.

The decrease of $0.3 million in broadband satellite services was due to the decrease of broadband satellite transmission capacity, additionally lower revenues from cancellation services of several national customers (Axtel, Link Grupo Satelital, Monte de Mexico, etc).

The decrease of $0.5 million in programming distribution services was due to a net decrease from existing customers.

Operating Costs and Expenses

Operating costs and expenses decreased $5.4 million to $20.9 million for the three months ended March 31, 2013 (64% of revenues), from operating cost and expenses $26.3 million for the same period in 2012 (83% of revenues). The table below sets forth the components of our operating expenses:

	For the three months ended March 31,
	2013		2012		Difference
Operating costs	$	4,487	$	4,383	$	104
Selling and administrative expenses		5,257		4,660		597
Depreciation and amortization		11,179		17,258		(6,079	)
Total operating expenses	$	20,923	$	26,301	$	(5,378	)
(In thousands of U.S. dollars)

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

Operating Costs

Operating costs for the three months ended March 31, 2013 increased $0.1 million to $4.5 million (14% of revenues) compared to $4.4 million for the same period in 2012 (14% of revenues). The table below sets forth the components of our operating costs:

	For the three months ended March 31,				��
	2013		2012			Difference
Satellite services	$	2,206	$	2,114		$	92
Broadband satellite services		388		421			(33	)
Programming distribution services		1,893		1,848			45
Total operating costs	$	4,487	$	4,383		$	104
(In thousands of U.S. dollars)

Satellite services costs decreased due mainly a reduction $0.2 million in satellite insurance and partially offset by a net increase of $0.3 million for personnel cost, and other cost.

Broadband satellite services cost decreased due to a decrease of antennas cost, installation and maintenance.

Programming distribution services cost increased due to mainly for use and transmission voley-ball and basketball league at Puerto Rico.

Selling and Administrative Expenses

Selling and administrative expenses, which consist primarily of salaries and other employee compensation, professional fees, allowance for doubtful accounts and other expenses increased $0.6 million, for a total of $5.3 million for the three months ended March 31, 2013 (16% of revenues), as compared to $4.7 million for the same period in 2012 (15% of revenues).

The increase in selling and administrative expenses can be attributable to the following:

• An increase in personnel costs, performance bonuses and sales bonuses of $0.7 million, due to an increase in salaries, wage taxes and other benefits, and due to the personnel restructuring in Enlaces during 2012.

• An increase of $0.4 million in allowance for doubtful accounts in Enlaces, related to contracts regarding services to the Wal-Mart Centroamerica project in Q1 2013, additionally no provision for doubtful accounts for Enlaces in Q1 2012.

• A decrease in legal and professional fees of $0.2 million.

• A net decrease of $0.3 million in other expenses which includes, commercial agent fee, non deductible advertising, and other expenses.

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

Depreciation and Amortization

Depreciation and amortization expense decreased $6.1 million, for a total of $11.2 million for the three months ended March 31, 2013 (34% of revenues) compared to $17.3 million in the same period in 2012 (54% of revenues). The table below sets forth the components of our depreciation and amortization expense:

	For the three months ended March 31
	2013		2012		Difference
Contract backlog	$	5,616	$	7,709	$	(2,093	)
Satmex 6		4,330		4,330		—
Satmex 5		—		4,085		(4,085	)
Concessions		447		447		—
Equipment for satellite, furniture and equipment and other		786		687		99
Total depreciation and amortization	$	11,179	$	17,258	$	(6,079	)
(In thousands of U.S. dollars)

The decrease in amortization of backlog in 2013 is due to the maturity dates of contracts. Backlog is depreciated based on the life of the respective contracts rather than based on a straight-line method. Accordingly, depending on the number of contracts in existence in each year, amortization of backlog will vary from year to year. The decrease in the current year represents a lower amount of contracts in 2013, as well as an increase in the fair value of the intangible, based on the effects of push-down accounting applied in May 2011. The satellite Satmex 5 was totally depreciated in September 2012.

Operating Income

For the three months end March 31, 2013 and 2012, the operating income was $11.8 million and $5.5 million, respectively, due to the reasons mentioned above.

Interest Expense

Total interest expense for the three months ended in March 31, 2013 was $9.0 million, compared to $2.5 million in the same period in 2012. The table below set forth the components of our interest expense:

	For the three months ended March 31,
	2013			2012			Difference
Notes interest	$	8,990		$	8,117		$	873
Capitalized interest in Satmex 8		—			(6,416	)		6,416
Capitalized interest in Satmex 7		(862	)		—			(862	)
Amortization of deferred financing costs		800			774			26
Other commissions		23			23			—
Total interest expense, net	$	8,951		$	2,498		$	6,453
(in thousands of U.S.dollars)

The net increase of $6.5 million was mainly due to the ability of Satmex to capitalize in 2012 $6.4 million of interest and $0.9 million of interest cost incurred in 2013, as a result of the construction of Satmex 8 and Satmex 7, respectively.

Net Foreign Exchange Gain (Loss)

We recorded a foreign exchange gain for the three months ended March 31, 2013 and 2012 of $0.4 million, and $0.6 million, respectively. Foreign exchange gains and losses are calculated based on outstanding balances of Mexican peso-dominated assets and liabilities relative to the prevailing U.S. dollar/Mexican peso exchange rate.

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

Income Tax

Satmex applied different income tax rates according to the estimated date of reversal of each of the temporary items due to rate differences for each year as a result of the Mexican laws enacted on December 17, 2012. Satmex and its subsidiaries pay both (i) the business flat tax known asImpuesto Empresarial a Tasa Única, or IETU, since 2008 and (ii) the income tax known asImpuesto sobre la Renta or ISR. Our future projections indicate that we will continue to pay both taxes during the life of the Concessions. Accordingly, deferred taxes are calculated based on a hybrid approach, which considers a mix of both tax regimens. For the three months ended March 31, 2013, we recorded deferred income tax benefit of $2.0 million on an income before income taxes of $3.4 million, while for the same period of 2012 we recorded a deferred income tax expense of $3.9 million on an income before income taxes of $3.7 million, yielded a negative “effective” income tax rate, principally arising from the fact that interest expense, depreciation and amortization are not deductible for IETU purposes, which results in taxable income for those entities that pay IETU.

Based on tax projections, Satmex determined that in certain fiscal years it will pay ISR, while in others, it will pay IETU. Accordingly, Satmex scheduled the reversal of the temporary differences for both ISR and IETU purposes, determined by year, and applied the respective rates to temporary differences.

Satmex recognized a benefit in 2013 mainly related to its ability to capitalize additional tax loss carryforwards in 2013 based on the hybrid method of calculating its income taxes, as a result of its future income tax projections. In determining the appropriate valuation allowance, management considers the fact that the Company’s deferred taxes are prepared on the hybrid method, given that in certain years it projects payment of ISR while in others, it projects payment of IETU. Accordingly, due to the use of this method, certain tax loss carryforwards and credits on IETU losses may be excluded from or included in the deferred tax computation during those years in which the Company expects to pay IETU or ISR, respectively; the related allowance on deferred tax assets is also excluded from or included in the deferred tax computation.

Net Income Attributable to Satmex

As a result of the aforementioned factors, the net income attributable to Satmex for the three months ended March 31, 2013 was $5.4 million, as compared to loss of $0.3 million for the same period in 2012.

PART II — OTHER INFORMATION

Item 1. Legal Matters

None.

Item 2. Other Matters

Liquidity and Capital Resources

Satmex’s cash balance as of March 31, 2013 was $61.8 million compared to $74.6 million on December 31, 2012, and a decrease of $12.8 million. At March 31, 2013, Satmex had total debt of $360.0 million. This amount represents the Notes issued on May 5, 2011 and April 9, 2012.

We generally rely on cash generated from our operations, capital increases and long-term debt to fund our working capital needs, capital expenditures, interest payments and debt repayments. As a consequence of our operating activities, cash flow from operations improved from 2008 through December 31, 2012. As of March 31, 2013, we had cash and cash equivalents of approximately $61.8 million. However, our business is very capital intensive. We may continue to face liquidity constraints as our capital expenditures increase in connection with the construction, launch and insurance of new satellites and the expansion and upgrade of our satellite network.

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

Substantially all of our capital expenditures are denominated in U.S. dollars. Capital expenditure satellite includes capitalized interest costs. Also we invested, in electronic, data and processing equipment, infrastructure and vehicles. The table below sets forth our capital expenditures for the periods indicated:

	Three months ended March 31,		Year ended December 31,
	2013		2012		2011		2010
Acquisition of property, furniture and equipment	$	0.7	$	2.0	$	2.2	$	4.6
Construction of Satmex 7(1)		9.6		28.5		—		—
Construction of Satmex 8(2)		18.1		82.4		192.9		63.1
F4 satellite program		—		3.8		—		—
	$	28.4	$	116.7	$	195.1	$	67.7
		(in millions of U.S. dollars)

	Three months ended March 31, 2013
			Year ended December 31,
			2012		2011		2010
Includes capitalized interest:
(1)Construction of Satmex 7	$	0.9	$	1.1	$	—	$	—
(2)Construction of Satmex 8		—		32.7		11.7		2.6
	$	0.9	$	33.8	$	11.7	$	2.6
		(in millions of U.S. dollars)

We anticipate funding any future capital expenditures, including the construction, launch and insurance of Satmex 7, from proceeds raised through the offering of the Notes and from cash from operations. There can be no assurance that we will have sufficient financial resources to fund such expenditures.

Sources and Uses of Cash

The following table sets forth our major sources and (uses) of cash for each period as set forth below:

				Year Ended December 31,
	Three months ended March 31, 2013 Successor			Year Ended December 31, 2012 Successor			May 26 – December 31, 2011 Successor			January 1, - May 25, 2011 Predecessor			Year Ended December 31, 2010 Predecessor
Net cash provided by operating activities	$	10.6		$	82.5		$	32.4		$	8.1		$	41.0
Net cash used in investing activities	$	(23.5	)	$	(121.6	)	$	(152.2	)	$	(42.9	)	$	(67.7	)
Net cash provided by financing activities	$	—		$	34.5		$	(148.2	)	$	306.7			—
					(In millions of U.S. dollars)

Operating Activities

Our operations for the three months ended March 31, 2013 generated $10.6 million in positive cash flow. This is principally given that our net income is comprised of certain significant non-cash expenses, including $11.2 million of depreciation and amortization, net of a deferred IETU/ISR benefit of $2.2 million as a result of additional tax loss carryforwards recognized in 2013 as a result of tax projections that will permit the Company to recover the benefit of such losses in the future.

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

Our operations for the year ended December 31, 2012 generated $82.5 million in positive cash flow. This is principally given that our net income is comprised of certain significant non-cash expenses, including $65.0 million of depreciation and amortization, net of a deferred IETU/ISR benefit of $14.8 million as a result of additional tax loss carryforwards recognized in 2012 as a result of tax projections that will permit the Company to recover the benefit of such losses in the future.

Notwithstanding our net loss, our operations for the period from January 1, 2011 to May 25, 2011 generated $8.1 million in positive cash flow while our operations for the period from May 26, 2011 to December 31, 2011 generated $32.4 million in positive cash flow. This is due to the fact that our net loss is comprised of certain significant non-cash expenses, principally $17.0 million and $46.5 million of depreciation and amortization for the periods from January 1, 2011 to May 25, 2011 and May 26, 2011 to December 31, 2011, respectively.

Our operations for 2010 generated $41.0 million in positive cash flow despite our net loss which was principally due to significant non-cash expenses, including $43.4 million of depreciation and amortization and $15.5 million of accrued and capitalized paid-in-kind interest. Changes in operating assets and liabilities during 2010 negatively affected our cash flow by $2.2 million principally as a result of slower collections of accounts receivable when compared to our revenue growth in 2010, as well as an IETU tax credit in excess of $3.2 million as a result of capital expenditures for Satmex 8 which has not yet been realized in cash.

Investing Activities

Our net cash used in investing activities for the three months ended March 31, 2013 primarily resulted from the payments associated with the construction of Satmex 8 and Satmex 7 and our investment in infrastructure, electronic, data and processing equipment.

Our net cash used in investing activities for December 31, 2012 primarily resulted from the payments associated with the construction of Satmex 8, Satmex 7 and F4 satellite program and our investment in infrastructure, vehicles and electronic, data and processing equipment.

Our net cash used in investing activities for the period from January 1, 2011 to May 25, 2011 and from May 26, 2011 to December 2011, primarily resulted from the payments associated with the construction of Satmex 8 and our investment in infrastructure, vehicles and electronic, data and processing equipment. Our net cash used in investing activities for the years ended 2010 resulted from payment associated with the execution of an ATP for the future construction of Satmex 8 and our investment in infrastructure, vehicles and electronic, data and processing equipment.

Financing Activities

Our net cash provided by financing activities for the year ended December 31, 2012 was $34.5 million and reflects the issuance of senior secured notes in the amount of $35.0 million, net of payment of deferred financing costs of $1.2 million.

Our net cash provided by financing activities for the period from January 1, 2011 to May 25, 2011 consisted of this issuance of the Notes for $325.0 million net of the payment of debt issuance cost of $18.2 million. Our net cash used in financing activities for the period from May 26, 2011 to December 31, 2011 consisted principally of the repayment of the First Priority Old Notes of $238.2 million, partially offset by the proceeds received from the issuance of the equity of $90.0 million.

We did not experience cash inflow or outflow from financing activities during the three months ended March 31, 2013.

Item 3. Exhibits

None.

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SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES

Item 4.

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.

		Satélites Mexicanos, S. A. de C. V.                     (Registrant)
Date: May 15, 2013	By:	/s/ Juan Antonio García Gayou Facha
		(Signature)
		Juan Antonio García Gayou Facha Chief Financial Officer

* * * * * *

33