SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON D.C. 20549

                                    FORM 10-Q
(MARK ONE)
 --
/x/   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
--
                         SECURITIES EXCHANGE ACT OF 1934

      For the quarterly period ended     June 30, 1997
                                         -------------

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

           For the transition period from_____________ to ___________

                           Commission File No. 0-26712
                                               -------

                     PanAmSat International Systems, Inc. *
                          PanAmSat Capital Corporation
     ---------------------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

               Delaware                       06-1407851
               Delaware                       06-1371155
     ---------------------------------------------------------------------
     (State or other Jurisdiction of       (I.R.S.  Employer
      Incorporation or Organization)       Identification No.)

                    One Pickwick Plaza, Greenwich, CT. 06830
     ---------------------------------------------------------------------
                    (Address of Principal Executive Offices)

        Registrant's telephone number, including area code: 203-622-6664

                              PanAmSat Corporation
     ---------------------------------------------------------------------
                     (Former Name, Former Address and Former
                    Fiscal Year if Changed Since Last Report)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days.

                                          YES  x   NO
                                             ----    ----

As of June 30, 1997, an aggregate of 38,309,154  shares of the Company's  Common
Stock,  21,231,415  shares of the Company's  Class A Common Stock and 40,459,431
shares of the Company's Class B Common Stock were outstanding.


      *           PanAmSat  International Systems, Inc. ("Old PanAmSat" or the
                  "Company") which was known as "PanAmSat Corporation" until May
                  16,  1997,  became  a  wholly  owned  subsidiary  of  PanAmSat
                  Corporation ("New  PanAmSat")(Commission File No. 0-22531; IRS
                  Employer  Identification  No.  95-4607698) as a consequence of
                  the  combination of Old PanAmSat and the commercial  satellite
                  business of Hughes Communications, Inc. ("HCI"), as more fully
                  described herein.


<PAGE>





                      PanAmSat International Systems, Inc.
                       For the Quarter Ended June 30, 1997
                      ------------------------------------
                         PART I - FINANCIAL INFORMATION



ITEM 1 - Financial Statements

Balance Sheets, June 30, 1997 (unaudited) and December 31, 1996.

Statements  of  Operations  for the Six  Months  Ended  June  30,  1997 and 1996
(unaudited).

Statements  of  Operations  for the Three  Months  Ended June 30,  1997 and 1996
(unaudited).

Statements  of Cash  Flows  for the Six  Months  Ended  June  30,  1997 and 1996
(unaudited).


Notes to Financial Statements.

ITEM     2 -  Management's  Discussion  and Analysis of Financial  Condition and
         Results of Operations.



                           PART II - OTHER INFORMATION


ITEM 6 - Exhibits and Reports on Form 8-K

Signature



Cautionary Statement For Purposes Of The "Safe Harbor"
Provisions Of The Private Securities Litigation Reform Act of 1995


This  Quarterly  Report  contains  historical  information  and  forward-looking
statements.  The Private  Securities  Litigation  Reform Act of 1995  provides a
"safe  harbor" for certain  forward-looking  statements.  When used in this Form
10-Q and the documents  incorporated by reference herein,  the words "estimate,"
"project,"  "anticipate,"  "expect,"  "believe"  and other  expressions  used to
indicate future events are intended to identify forward-looking statements. Such
statements are subject to risks and uncertainties that could cause the Company's
actual  results in future  periods to be  materially  different  from any future
performance  suggested  herein.  Further,  the  Company  operates in an industry
sector where securities values may be volatile and may be influenced by economic
and  other  factors  beyond  the  Company's  control.  In  the  context  of  the
forward-looking  information  provided  in this  Quarterly  Report  and in other
reports, please refer to the discussions of risk factors detailed in, as well as
the other  information  contained  in,  the  Company's  other  filings  with the
Securities and Exchange Commission.


<PAGE>
                      PanAmSat International Systems, Inc.
                                 BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                      June 30,          December 31,
                                                                        1997                1996
                                                                    (Unaudited)
                                                                  -------------        -------------
<S>                                                             <C>                  <C>

ASSETS
CURRENT ASSETS:
 Cash and cash equivalents                                      $   286,752,727         $  1,453,055
 Accounts receivable, less allowance
  for doubtful accounts of $200,000                                  10,962,565           10,235,520
 Prepaid expenses and other current asse                             15,654,835            8,228,455
                                                                ---------------      ---------------
TOTAL CURRENT ASSETS                                                313,370,127           19,917,030

SATELLITES AND OTHER PROPERTY AND
 EQUIPMENT, AT COST                                                 872,673,532          864,683,595
Less:  Accumulated Depreciation and
 Amortization                                                      (169,748,366)        (138,091,220)
                                                                ---------------      ---------------
                                                                    702,925,166          726,592,375

MARKETABLE SECURITIES                                               330,000,000          379,178,538

SATELLITE SYSTEMS UNDER DEVELOPMENT                                 583,612,534          479,748,974

DEBT ISSUANCE COSTS (Net of amortization                              8,473,954            9,454,276

OTHER ASSETS                                                          1,005,382              472,166
                                                                ---------------      ---------------
TOTAL ASSETS                                                    $ 1,939,387,163      $ 1,615,363,359
                                                                ---------------      ---------------
                                                                ---------------      ---------------
</TABLE>



                  The Accompanying notes are an integral part
                         of these financial statements
<PAGE>

                      PanAmSat International Systems, Inc.
                          BALANCE SHEETS - (continued)

<TABLE>
<CAPTION>


                                                                      June 30,          December 31,
                                                                        1997                1996
                                                                    (Unaudited)
                                                                ---------------      ---------------
<S>                                                             <C>                  <C>

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
 Current portion of long-term debt                              $     4,341,944      $     4,166,778
 Accounts payable                                                       121,102            2,318,877
 Accrued interest                                                     7,109,375            7,109,375
 Accrued liabilities and taxes                                      108,211,943            6,656,741
 Deferred revenue                                                     7,889,552            8,423,704
                                                                ---------------      ---------------
TOTAL CURRENT LIABILITIES                                           127,673,916           28,675,475

LONG-TERM DEBT                                                      645,808,409          626,009,539

DEFERRED INCOME TAXES                                                84,265,494           61,631,004

DEFERRED REVENUE                                                     70,625,808           71,920,802

OTHER LIABILITIES                                                       636,087              687,934
                                                                ---------------      ---------------
        TOTAL LIABILITIES                                           929,009,714          788,924,754
                                                                ---------------      ---------------

COMMITMENTS AND CONTINGENCIES

PREFERRED STOCK, 12-3/4% Mandatorily
 Exchangeable Senior Redeemable Preferred
 Stock, $0.01 par value, 20,000,000 shares
 authorized, 352,740 shares issued and
 outstanding 9,389 shares for accrued dividend                      351,732,130          329,070,909
                                                                ---------------      ---------------

STOCKHOLDERS' EQUITY:
 Class A Common Stock, $0.01 par value
  100,000,000 shares authorized, 21,231,415
  shares issued and outstanding                                         212,314              404,594
 Class B Common Stock, $.01 par value, 100,000,000
  shares authorized, 40,459,431 shares issued
  and outstanding                                                       404,594              404,594
 Common Stock, $0.01 par value, 400,000,000
  shares authorized, 38,309,154 shares issued
  and outstanding                                                       383,092              190,891
 Additional paid-in-capital                                         490,586,935          477,505,039
 Retained earnings                                                  167,058,384           18,862,578
                                                                ---------------      ---------------
Total Stockholders' Equity                                          658,645,319          497,367,696
                                                                ---------------      ---------------
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                     $ 1,939,387,163      $ 1,615,363,359
                                                                ---------------      ---------------
                                                                ---------------      ---------------
</TABLE>

                  The accompanying notes are an integral part
                         of these financial statements

<PAGE>
                      PanAmSat International Systems, Inc.
                      STATEMENTS OF OPERATIONS (UNAUDITED)
                For the Six Months Ended June 30, 1997 and 1996
<TABLE>
<CAPTION>

                                                                      June 30,          June 30,
                                                                        1997              1996
                                                                ---------------      ---------------
<S>                                                             <C>                  <C>

REVENUES:
  Unaffiliated parties                                          $   144,450,643      $   106,510,394
  Related parties                                                    20,053,148            4,196,772
                                                                ---------------      ---------------
                                                                    164,503,791          110,707,166
OPERATING EXPENSES:
  Direct expenses-service agreements                                 14,556,564            3,724,571
  Sales and marketing                                                 5,948,166            7,233,472
  Engineering and technical services                                  9,122,794            7,772,119
  General and administrative                                         22,356,857           12,046,740
  Depreciation and amortization                                      32,482,619           29,091,687
  Reorganization costs                                               15,634,251                  -
                                                                ---------------      ---------------
                                                                    100,101,251           59,868,589
                                                                ---------------      ---------------

  INCOME FROM OPERATIONS                                             64,402,540           50,838,577

INTEREST INCOME                                                     (11,640,959)         (12,269,345)
INTEREST EXPENSE                                                      4,372,296           14,883,918
OTHER INCOME                                                       (225,000,000)                 -
                                                                ---------------      ---------------
  INCOME BEFORE INCOME TAXES                                        296,671,203           48,224,004

INCOME TAXES                                                        125,814,176           19,386,000
                                                                ---------------      ---------------
  NET INCOME                                                    $   170,857,027      $    28,838,004
                                                                ---------------      ---------------
  PREFERRED STOCK DIVIDEND                                           22,661,221           20,019,500
                                                                ---------------      ---------------
  NET INCOME TO COMMON SHARES                                   $   148,195,806      $     8,818,504
                                                                ---------------      ---------------
                                                                ---------------      ---------------
  EARNINGS PER COMMON SHARE                                                          $          0.09
                                                                                     ---------------
                                                                                     ---------------
  WEIGHTED AVERAGE COMMON SHARES
  OUTSTANDING                                                                            100,359,533
                                                                                     ---------------
                                                                                     ---------------

</TABLE>

                  The accompanying notes are an integral part
                         of these financial statements

<PAGE>
                      PanAmSat International Systems, Inc.
                      STATEMENTS OF OPERATIONS (UNAUDITED)
               For the Three Months Ended June 30, 1997 and 1996
<TABLE>
<CAPTION>

                                                                      June 30,          June 30,
                                                                        1997              1996
                                                                ---------------      ---------------
<S>                                                             <C>                  <C>

REVENUES:
  Unaffiliated parties                                          $    72,334,618      $    57,762,893
  Related parties                                                    16,912,756            2,521,148
                                                                ---------------      ---------------
                                                                     89,247,374           60,284,041
OPERATING EXPENSES:
  Direct expenses-service agreements                                 10,809,061            2,313,109
  Sales and marketing                                                 2,854,096            4,208,541
  Engineering and technical services                                  4,606,566            4,300,648
  General and administrative                                         14,751,931            6,109,648
  Depreciation and amortization                                      16,274,773           15,841,368
  Reorganization costs                                               14,958,859                  -
                                                                ---------------      ---------------
                                                                     64,255,286           32,773,314
                                                                ---------------      ---------------

  INCOME FROM OPERATIONS                                             24,992,088           27,510,727

INTEREST INCOME                                                      (6,364,782)          (5,709,489)
INTEREST EXPENSE                                                      1,485,870            7,813,399
OTHER INCOME                                                       (225,000,000)                 -
                                                                ---------------      ---------------
  INCOME BEFORE INCOME TAXES                                        254,871,000           25,406,817

INCOME TAXES                                                        108,611,347           10,211,000
                                                                ---------------      ---------------
  NET INCOME                                                    $   146,259,653      $    15,195,817
                                                                ---------------      ---------------
  PREFERRED STOCK DIVIDEND                                           11,532,319           10,191,631
                                                                ---------------      ---------------
  NET INCOME TO COMMON SHARES                                   $   134,727,334      $     5,004,186
                                                                ---------------      ---------------
                                                                ---------------      ---------------
  EARNINGS PER COMMON SHARE                                                          $          0.05
                                                                                     ---------------
                                                                                     ---------------
  WEIGHTED AVERAGE COMMON SHARES
  OUTSTANDING                                                                            100,462,257
                                                                                     ---------------
                                                                                     ---------------

</TABLE>

                  The accompanying notes are an integral part
                         of these financial statements

<PAGE>

                      PanAmSat International Systems, Inc.
                      STATEMENTS OF CASH FLOWS (UNAUDITED)
                 For the Six Months Ended June 30, 1997 and 1996
<TABLE>
<CAPTION>

                                                                      June 30,          June 30,
                                                                        1997              1996
                                                                ---------------      ---------------
<S>                                                             <C>                  <C>

CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
 Net income                                                     $   170,857,027      $    28,838,004
 Adjustments to reconcile net income to
  net cash provided by operating activities:
  Depreciation and amortization                                      32,482,619           29,091,687
  Deferred income taxes                                              22,634,490           12,232,000
  Accretion of interest on senior
   subordinated discount notes                                       21,902,052           19,614,741
  Accretion of interest on marketable securities                       (812,887)          (1,363,871)
  Interest expense capitalized                                      (29,411,832)         (16,727,322)
  Compensation expense on exercise of employee
   stock options                                                     13,081,818                  -
  Changes in assets and liabilities:
   Increase in accounts receivable                                     (727,045)          (3,221,182)
   Increase in prepaid expenses and other current
    assets                                                           (7,426,380)         (12,220,258)
   Increase (decrease) in accounts payable                           (2,197,775)             291,248
   Increase in accrued liabilities
     and taxes                                                      105,897,144           (4,055,547)
   Increase (decrease) in deferred revenue                           (1,829,146)          29,900,420
   Decrease in other liabilities                                        (51,847)             (90,000)
                                                                ---------------      ---------------
    NET CASH PROVIDED BY OPERATING ACTIVITIES                       324,398,238           82,289,920
                                                                ---------------      ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Expenditures for property and equipment                             (7,835,087)          (8,123,439)
 Expenditures for satellite systems under
  development                                                       (74,451,728)        (161,180,546)
 Proceeds from maturity of marketable securities                     49,991,425           82,952,835
 Increase in other assets                                              (533,216)             (377,004)
                                                                ---------------      ---------------
  NET CASH USED IN INVESTING ACTIVITIES                             (32,828,606)         (86,728,154)
                                                                ---------------      ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Repayments of long-term debt                                        (6,269,960)          (1,723,387)
                                                                ---------------      ---------------
  NET CASH USED IN FINANCING ACTIVITIES                              (6,269,960)          (1,723,387)
                                                                ---------------      ---------------
  NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS              285,299,672           (6,161,621)

 CASH AND EQUIVALENTS, beginning of period                            1,453,055           13,562,113
                                                                ---------------      ---------------
 CASH AND EQUIVALENTS, end of period                            $   286,752,727      $     7,400,492
                                                                ---------------      ---------------
                                                                ---------------      ---------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
 Cash received for interest                                     $    13,663,965      $    10,905,475
                                                                ---------------      ---------------
                                                                ---------------      ---------------
 Cash paid for interest                                         $    11,882,076      $    11,996,785
                                                                ---------------      ---------------
                                                                ---------------      ---------------
 Cash paid for taxes                                            $     4,317,800      $     8,459,139
                                                                ---------------      ---------------
                                                                ---------------      ---------------

</TABLE>

                  The accompanying notes are an integral part
                         of these financial statements

<PAGE>
                                                                      FORM 10-Q

                      PanAmSat International Systems, Inc.

                          NOTES TO FINANCIAL STATEMENTS


       (1) General.

              The  interim  unaudited  Financial  Statements  should  be read in
              conjunction  with the audited  Financial  Statements and the notes
              thereto  for the year ended  December  31,  1996  included  in the
              Company's Annual Report on Form 10-K, as filed with the Securities
              and Exchange  Commission  (Commission  File Number  33-63284) (the
              "Annual Form 10-K").  The balance  sheet as of June 30, 1997,  and
              the related  statements of  operations  and cash flows for the six
              months  ended  June 30,  1997 and 1996 have been  prepared  by the
              Company  and are  unaudited.  In the  opinion of  management,  all
              adjustments  which are of a normal  recurring  nature necessary to
              present fairly the financial  position,  results of operations and
              cash  flows as of and for the three and six  month  periods  ended
              June 30,  1997 and 1996 have been made.  The  accounting  policies
              followed  during the interim  periods  reported are in  conformity
              with generally accepted  accounting  principles and are consistent
              with  those  applied  for  annual  periods  and  described  in the
              Company's  Annual Form 10-K. The results of operations for the six
              month  periods  ended June 30,  1997 and 1996 are not  necessarily
              indicative of the operating results for the full year.

       (2) Changes in Control of Registrant.

              On May 16, 1997,  HCI and the Company  combined  their  commercial
              satellite   operations  pursuant  to  an  Agreement  and  Plan  of
              Reorganization,  dated as of September  20, 1996, as amended as of
              April 4, 1997 (the  "Reorganization  Agreement"),  between HCI and
              certain of its  subsidiaries  and the Company (the "Merger").  The
              Merger  was  consummated  through  the  merger  of a wholly  owned
              subsidiary  of  a  newly  formed  holding  company  (such  holding
              company,  "New  PanAmSat"),  with  and  into  the  Company  and  a
              contribution of the commercial  satellite services business of HCI
              (the "Galaxy Business") to New PanAmSat,  with the result that the
              Company  became a wholly owned  subsidiary of New PanAmSat and New
              PanAmSat  became the owner and  operator  of the Galaxy  Business.
              Following   the  Merger,   the   Company   was  renamed   PanAmSat
              International  Systems, Inc. and New PanAmSat was renamed PanAmSat
              Corporation.


<PAGE>
                                                                      FORM 10-Q

                      PanAmSat International Systems, Inc.

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


       (3) Satellite Capacity for DTH Services.

              In November 1995,  the Company  announced that it would serve as a
              satellite service provider for a Latin America DTH service ("Latin
              America  DTH") to be  offered  by the  Globo  Participacoes,  Ltd.
              ("Globo"),  Televisa,  The News Corporation Limited ("News Corp.")
              and Tele-Communications  International,  Inc. ("TCI"). On February
              29,  1996,  the Company  signed a binding  letter  agreement  with
              Globo,  Televisa and News Corp.  (the "1996 Letter  Agreement") to
              provide  service to a series of joint ventures (the "Latin America
              JVs") to be  formed.  Under  the  1996  Letter  Agreement,  Globo,
              Televisa and News Corp. agreed to proportionally  guaranty 100% of
              PanAmSat's  fees for  transponder  services  provided to the Latin
              America JVs. On June 26, 1996, a full-scale agreement was executed
              for  service  in  Brazil  on  twelve   transponders  (the  "Brazil
              Agreement"). The 1996 Letter Agreement remains in force. Globo and
              News Corp have  proportionately  guaranteed the obligations  under
              the Brazil Agreement.

              Concurrent  with the  Merger  (see Note 2), the  Company  sold the
              equity  interest in certain  joint  ventures to be formed to offer
              DTH services in Latin America and the Iberian  Peninsula for $ 225
              million.  This  resulted  in a gain  of $ 225  million  which  was
              recorded as other income in the financial statements.


       (4) Subsequent Events.

              On August 8, 1997,  the Company  successfully  launched  its PAS-6
              Atlantic  Ocean  Region   satellite,   the  first   communications
              satellite ever  dedicated for  direct-to-home  ("DTH")  television
              services in Latin America.  The entire PAS-6  payload,  36 Ku-band
              transponders, is fully sold to Sky Latin America, one of the Latin
              America  JVs,  which will use the  satellite  to beam  hundreds of
              television  channels  to its  DTH  service  subscribers  in  Latin
              America.  PAS-6 is expected to reach its final orbital location at
              43 degrees West  Longitude  and  commence  service in October 1997
              after successful completion of its in-orbit testing. Additionally,
              the  Company  intends  to launch  another  Atlantic  Ocean  Region
              satellite, PAS-5, in late August 1997.

              As a result of Old PanAmSat's  financial  performance as disclosed
              herein  and in its  Quarterly  Report on Form 10-Q for the  period
              ended June 30, 1997,  taken  together  with all of Old  PanAmSat's
              prior filings with the  Securities  and Exchange  Commission,  Old
              PanAmSat is required  to  exchange  its 12 3/4% Senior  Redeemable
              Preferred Stock (the "Preferred Stock") to Exchange  Debentures in
              accordance  with the  procedures  described in the  Certificate of
              Designation for the Preferred Stock.

<PAGE>
                                                                      FORM 10-Q


                      PanAmSat International Systems, Inc.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


              Overview.  The Company's first  satellite,  PAS-1, was launched in
              1988 for service over the Atlantic Ocean Region and is the leading
              satellite for television  and cable  programming  distribution  in
              Latin America. The Company's second satellite, PAS-2, was launched
              in July 1994 for service  over the Pacific  Ocean  Region and is a
              leading satellite for distribution in the Asia-Pacific region. The
              Company's  PAS-4 satellite was launched in August 1995 for service
              over the Indian Ocean Region and commenced service on September 5,
              1995. PAS-4 is the leading  satellite for program  distribution in
              South  Asia  and  Africa.   The  Company's   PAS-3   satellite  (a
              replacement  for a satellite  lost as a result of a launch failure
              in December  1994) was launched on January 12, 1996 and  commenced
              service on February 19, 1996 over the Atlantic Ocean Region.

              During the construction period of each of its new satellites,  and
              thereafter,  the Company may incur increased  operating  expenses,
              including  expenditures  for sales and  marketing in excess of the
              levels historically incurred,  increased engineering and technical
              expenses,   as  well  as  increased  general  and   administrative
              expenses, which increased expenses may not be offset by additional
              revenues until the new satellites  are  successfully  launched and
              commence service.  Also,  commencing at the in-service date of any
              successfully launched satellite, all satellite construction costs,
              launch,  launch  insurance,  capitalized  interest and development
              costs for such satellite  will be  depreciated on a  straight-line
              basis over the estimated  useful life of the  satellite.  Further,
              after the in-service date of any successfully  launched  satellite
              (or  upon a launch  failure),  the  Company  will be  required  to
              expense,  and no  longer  will  be able  to  capitalize,  interest
              allocable to such satellite's construction, launch and development
              costs.

              Revenues.  Total revenues for the three months ended June 30, 1997
              were  $89.2  million,  an  increase  of  $28.9  million  or 48% as
              compared to the comparable  period in 1996. Total revenues for the
              six months ended June 30, 1997 were $164.5 million, an increase of
              $53.8 million or 49% as compared to the comparable period in 1996.

              Broadcasting  services revenue for the three months ended June 30,
              1997 was $77.9 million,  an increase of $28.0 million, or 56% over
              the same period in 1996. Broadcasting services revenue for the six
              months ended June 30, 1997 was $142.6

<PAGE>
                                                                      FORM 10-Q

                      PanAmSat International Systems, Inc.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS



              million, an increase of $53.0 million, or 59% over the same period
              in 1996. The growth in  broadcasting  services  revenue during the
              three and six month periods was due primarily to the  commencement
              of new video service ad-hoc and special events traffic and revenue
              during the first and second quarters of 1997.

              Business  communications services revenue was $10.7 million in the
              three months ended June 30, 1997,  increasing  $0.7 million or 7%,
              over  the  comparable  period  in  1996.  Business  communications
              services  revenue was $20.7  million in the six months  ended June
              30,  1997,  increasing  $0.4  million or 2%,  over the  comparable
              period  in 1996.  The  increase  during  the  three  and six month
              periods was primarily due to the completion during 1997 of several
              short-term business communications service agreements.

              Long-distance  telephony  services  revenue  increased  from  $0.4
              million for the three  months  ended June 30, 1996 to $0.6 million
              for the three  months  ended June 30,  1997,  an  increase of $0.2
              million or 50%. Long-distance telephony services revenue increased
              from $0.8  million for the six months  ended June 30, 1996 to $1.2
              million  for the six months  ended June 30,  1997,  an increase of
              $0.4 million or 50%.

              Direct  Expenses.  Direct  expenses were $10.8 million,  or 12% of
              total  revenues,  in the three  months  ended  June 30,  1997,  an
              increase  of $8.5  million or 370%,  from the same  period in 1996
              when direct  expenses were 4% of total  revenues.  Direct expenses
              were $14.6  million,  or 9% of total  revenues,  in the six months
              ended June 30, 1997,  an increase of $10.9  million or 295%,  from
              the same  period in 1996  when  direct  expenses  were 3% of total
              revenues.  The increase in direct  expenses over the three and six
              month periods was primarily  attributable to costs associated with
              the increased ad-hoc and special events revenue  recognized during
              the quarters.

              Sales and Marketing  Expenses.  Sales and marketing  expenses were
              $2.9 million,  or 3% of total revenues,  in the three months ended
              June 30, 1997,  compared to $4.2 million, or 7% of total revenues,
              in the three  months  ended  June 30,  1996.  Sales and  marketing
              expenses were $5.9 million,  or 4% of total  revenues,  in the six
              months ended June 30,  1997,  compared to $7.2  million,  or 7% of
              total  revenues,  in the six  months  ended  June  30,  1996.  The
              decrease in sales and  marketing  expenses  over the three and six
              month periods was primarily  attributable to the Company's reduced
              marketing  activity on the PAS Global  System in  anticipation  of
              future satellite launches.

<PAGE>
                                                                      FORM 10-Q

                      PanAmSat International Systems, Inc.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (Continued)


              Engineering  and  Technical  Expenses.  Engineering  and technical
              expenses  were $4.6  million in the three month  period ended June
              30, 1997, or 5% of total revenues, compared to $4.3 million, or 7%
              of total revenues,  for the comparable period in 1996. Engineering
              and  technical  expenses were $9.1 million in the six month period
              ended June 30,  1997,  or 6% of total  revenues,  compared to $7.8
              million,  or 7% of total  revenues,  for the comparable  period in
              1996. The dollar  increase in engineering  and technical  expenses
              during  the three  and six  month  periods  was  primarily  due to
              increased costs  associated with its new teleport  facilities,  as
              well as the  additional  telemetry,  tracking  and  control  costs
              associated with PAS-3.

              General and  Administrative  Expenses.  General and administrative
              expenses  were $14.7  million,  or 16% of total  revenues,  in the
              three months  ended June 30, 1997,  an increase of $8.6 million or
              141%,  as compared to the same  period in 1996,  when  general and
              administrative  expenses  were  $6.1  million,  or  10%  of  total
              revenues.  General and administrative expenses were $22.4 million,
              or 14% of total  revenues,  in the six months ended June 30, 1997,
              an  increase  of $10.3  million or 85%,  as  compared  to the same
              period in 1996,  when  general and  administrative  expenses  were
              $12.1 million,  or 11% of total  revenues.  The dollar increase in
              general and administrative expenses during the three and six month
              periods was primarily  attributable  to in-orbit  insurance  costs
              associated with PAS-3 and additional  personnel  costs  associated
              with the Company's expansion.

              Depreciation and  Amortization.  Depreciation and amortization was
              $16.3 million in the three months ended June 30, 1997, as compared
              to $15.8  million  in the three  months  ended June 30,  1996,  an
              increase of $0.5 million or 3%.  Depreciation and amortization was
              $32.5  million in the six months ended June 30, 1997,  as compared
              to  $29.1  million  in the six  months  ended  June 30,  1996,  an
              increase of $3.4 million or 12%. The dollar  increase in the three
              and six month periods was primarily due to increased  depreciation
              expense associated with PAS-3, and additional depreciation expense
              related to communication equipment at the Company's new teleports.

              Interest.  Interest  income,  primarily  earned from highly liquid
              investment funds, was $6.4 million for the three months ended June
              30, 1997  compared to $5.7  million for the  comparable  period in
              1996,  an  increase  of $0.7  million.  Interest  income was $11.7
              million for the six months  ended June 30, 1997  compared to $12.3
              million  for the  comparable  period in 1996,  an decrease of $0.6
              million. The increase

<PAGE>
                                                                      FORM 10-Q

                      PanAmSat International Systems, Inc.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (Continued)



              in interest  income  during the three month period was primarily a
              result of the maturity of marketable  securities  during 1996, the
              proceeds of which were used to finance  construction  in progress.
              Interest expense, net of capitalized interest, decreased from $7.8
              million in the quarter  ended June 30, 1996 to $1.5 million in the
              same  quarter  in  1997.  Interest  expense,  net  of  capitalized
              interest,  decreased  from $14.9  million in the six months  ended
              June 30,  1996 to $4.4  million  in the same  period in 1997.  The
              decrease  in  interest  expense  during  the  three  and six month
              periods was  primarily  the result of an increase in the amount of
              interest eligible for capitalization on construction in progress.

              Other Income.  The Company had Other Income of $225.0  million for
              the three and six months ended June 30, 1997.  The Other Income is
              a result of the  repurchase by Televisa of the Company's  interest
              in the Latin American DTH joint venture.

              Income  Taxes.  The Company had an income tax  provision of $108.6
              million  for the three  months  ended June 30, 1997 as compared to
              $10.2 million for the  comparable  period in 1996. The Company had
              an income tax provision of $125.8 million for the six months ended
              June 30, 1997 compared to $19.4 million for the comparable  period
              in 1996.  The  increase in income  taxes  during the three and six
              month  periods  was due to the  increase in income  before  income
              taxes.

              Preferred  Stock   Dividend.   The  Company  had  Preferred  Stock
              dividends  of $11.5  million for the three  months  ended June 30,
              1997 as compared to $10.2  million  for the  comparable  period in
              1996. The Company had Preferred  Stock  dividends of $22.7 million
              for the six months ended June 30, 1997  compared to $20.0  million
              for the comparable  period in 1996. The Preferred  Stock dividends
              in 1996 are a result of the  issuance of the  Company's  Preferred
              Stock on April 21, 1995.

              EBITDA.  EBITDA was $41.3  million in the three  months ended June
              30,  1997,  a decrease of $2.1 million or 5%, as compared to $43.4
              million  for the  comparable  period  in 1996.  EBITDA  was  $96.9
              million in the six months  ended June 30,  1997,  an  increase  of
              $17.0  million  or 21%,  as  compared  to  $79.9  million  for the
              comparable period in 1996. EBITDA was 59% of total revenues in the
              first six months of 1997 as compared to 72% of total  revenues for
              the same period in the prior fiscal year.  The dollar  increase in
              EBITDA  for the six  month  period  ended  June  30,  1997 was due
              primarily to the increase in total revenues.

<PAGE>
                                                                      FORM 10-Q

                      PanAmSat International Systems, Inc.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (Continued)


              Liquidity and Capital Resources.  Since inception, the Company and
              its  predecessors   have  financed  their  operations   through  a
              combination of debt and equity financing,  vendor financing,  bank
              financing,  equipment  leases  and cash flow from  operations.  On
              August 5, 1993 the Company  completed the sale of the $175 million
              aggregate  principal amount of the Senior Secured Notes and $460.2
              million   aggregate   principal   amount  of  the  Discount  Notes
              (collectively,   the   "Notes")   and  received  net  proceeds  of
              approximately  $425.5  million.  The original PAS-3  satellite was
              destroyed during a launch failure on December 1, 1994. The Company
              collected in 1995 the  insurance  proceeds in the amount of $214.0
              million for the original PAS-3  satellite.  On April 21, 1995, the
              Company  completed  the sale of  275,000  shares of the  Preferred
              Stock  in  a  public   offering   and  received  net  proceeds  of
              approximately  $261.8  million.  On September 27, 1995, the public
              offering of  18,920,000  shares of the Common Stock was  completed
              and the  Company  received  net  proceeds  of  approximately  $229
              million.

              The total cost for the construction and launch of PAS-5 and PAS-6,
              including   launch   insurance,   certain   components  for  spare
              satellites,  ground  facilities and related  development  expenses
              (but excluding  capitalized  interest  expense) is estimated to be
              approximately  $473  million.  The Company  expects to fund $296.3
              million of such costs with the net proceeds of the offering of the
              Preferred Stock and $70.0 million of vendor financing. The balance
              of such  costs  and any  additional  costs  due to cost  overruns,
              delays or other unanticipated expenses is anticipated to be funded
              from vendor financing and future cash flow from operations.

              The total cost for the construction and launch of PAS-7 and PAS-8,
              including  launch   insurance,   ground   facilities  and  related
              development expenses (but excluding  capitalized interest expense)
              is  estimated  to be  approximately  $420.0  million.  The Company
              expects to fund $224.6 million of such costs with the net proceeds
              to it from the offering of the Common  Stock.  The balance of such
              costs and any  additional  costs due to cost  overruns,  delays or
              other unanticipated  expenses is expected to be funded from vendor
              financing and future cash flow from operations.

              The  Company  believes  that  the  net  proceeds  to it  from  the
              offerings of Preferred Stock and Common Stock,  vendor  financing,
              future  cash flow from  operations  (assuming  PAS-5 and PAS-6 are
              successfully   launched  and  commence  service  on  the  schedule
              currently  contemplated)  and cash on hand will be  sufficient  to
              fund  the  Company's  operations,  its  remaining  costs  for  the
              construction and launch of PAS-5, PAS-6, PAS-7

<PAGE>
                                                                      FORM 10-Q

                      PanAmSat International Systems, Inc.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (Continued)


              and PAS-8, as well as to pursue  international  opportunities  for
              DTH services which may be identified by the Company in the future.
              Any  additional  costs  due to  cost  overruns,  delays  or  other
              unanticipated  expenses are expected to be funded from  additional
              vendor financing and future cash flow from operations.

              Cash flows  provided by operating  activities  increased to $324.4
              million in the six months ended June 30, 1997,  from $82.3 million
              in the six months  ended June 30, 1996.  The 1997  increase is due
              primarily to the significant growth in revenues for the six months
              ended  June 30,  1997 and the  effect  of  non-cash  charges.  The
              Company has and will continue to have significant non-cash charges
              including  depreciation  of  satellites  and other  equipment  and
              amortization of original issue discount on its Senior Subordinated
              Discount  Notes,  as well as  significant  cash  payments that are
              capitalized  rather  than  being  currently  expensed,   including
              capitalized interest.

              Net cash used in investing  activities  decreased to $32.8 million
              in the six months  ended June 30,  1997 from $86.7  million in the
              six months ended June 30, 1996. This decrease  primarily  reflects
              $74.5  million  of  expenditures   for  satellite   systems  under
              development  partially  funded by $50.0  million of proceeds  from
              maturity of marketable securities. This compares to $161.2 million
              in expenditures for satellite systems under development during the
              first six  months of 1996  partially  funded by $83.0  million  of
              proceeds from maturity of marketable securities.

              Net cash used in financing activities increased to $6.3 million in
              the six months  ended June 30,  1997 from $1.7  million in the six
              months ended June 30, 1996.

<PAGE>
                                                                      FORM 10-Q

                           PART II - OTHER INFORMATION



ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

   (a)   EXHIBITS

27                Financial Data Schedule

   (b)   REPORTS ON FORM 8-K

                  During the quarter ended June 30, 1997, PanAmSat International
                  Systems,  Inc.  filed a Form  8-K on May 30,  1997  and a Form
                  8-K/A on June 25, 1997.

<PAGE>
                                                                      FORM 10-Q


                                    SIGNATURE



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


                                           PanAmSat International Systems, Inc.



         Date:  August 14, 1997                       /s/ Kenneth N. Heintz
                                                      ---------------------
                                                      Kenneth N. Heintz
                                                      Chief Financial Officer
                                                      and a Duly Authorized
                                                      Officer of the Company