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 September 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

                              
     ---------------------------------------------------------------------
                     (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 September  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.   PanAmSat   Capital   Corporation   is  a
                  wholly-owned subsidiary of the Company and a co-obligor on the
                  Company's  9  3/4%  Senior  Secured  Notes,   11  3/8%  Senior
                  Subordinated  Discount  Notes and 12 3/4% Senior  Subordinated
                  Notes.  References herein to the "Company" or  "Old  PanAmSat"
                  shall also apply to PanAmSat Corporation.
<PAGE>





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



ITEM 1 - Financial Statements

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

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

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

Statements  of Cash  Flows  for the Nine Months  Ended  September  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>

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

ASSETS
CURRENT ASSETS:
 Cash and cash equivalents                                      $   229,466,666         $  1,453,055
 Accounts receivable, less allowance
  for doubtful accounts of $200,000                                  11,459,827           10,235,520
 Prepaid expenses and other current assets                           12,457,139            8,228,455
                                                                ---------------      ---------------
TOTAL CURRENT ASSETS                                                253,383,632           19,917,030

SATELLITES AND OTHER PROPERTY AND
 EQUIPMENT, AT COST                                               1,104,168,122          864,683,595
Less:  Accumulated Depreciation and
 Amortization                                                      (186,300,959)        (138,091,220)
                                                                ---------------      ---------------
                                                                    917,867,163          726,592,375

MARKETABLE SECURITIES                                               242,544,676          379,178,538

SATELLITE SYSTEMS UNDER DEVELOPMENT                                 516,268,815          479,748,974

DEBT ISSUANCE COSTS (Net of amortization)                            18,053,684            9,454,276

OTHER ASSETS                                                         38,249,138              472,166
                                                                ---------------      ---------------
TOTAL ASSETS                                                    $ 1,986,367,108     $ 1,615,363,359
                                                                ---------------      ---------------
                                                                ---------------      ---------------
</TABLE>



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

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

<TABLE>
<CAPTION>


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

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
 Current portion of long-term debt                              $     4,487,371      $     4,166,778
 Accounts payable                                                       455,902            2,318,877
 Accrued interest                                                     2,844,676            7,109,375
 Accrued liabilities and taxes                                       61,314,801            6,656,741
 Deferred revenue                                                     7,165,307            8,423,704
                                                                ---------------      ---------------
TOTAL CURRENT LIABILITIES                                            76,268,057           28,675,475

LONG-TERM DEBT                                                    1,074,241,962          626,009,539

DEFERRED INCOME TAXES                                                96,913,671           61,631,004

DEFERRED REVENUE                                                     65,395,548           71,920,802

OTHER LIABILITIES                                                       552,934              687,934
                                                                ---------------      ---------------
        TOTAL LIABILITIES                                         1,313,372,172          788,924,754
                                                                ---------------      ---------------

COMMITMENTS AND CONTINGENCIES

PREFERRED STOCK, 12-3/4% Mandatorily
 Exchangeable Senior Redeemable Preferred
 Stock                                                                 -                 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                                                  181,408,001           18,862,578
                                                                ---------------      ---------------
Total Stockholders' Equity                                          672,994,936          497,367,696
                                                                ---------------      ---------------
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                     $ 1,986,367,108      $ 1,615,363,359
                                                                ---------------      ---------------
                                                                ---------------      ---------------
</TABLE>

                  The accompanying notes are an integral part
                   of these consolidated financial statements

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

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

REVENUES:
  Unaffiliated parties                                          $   218,485,405      $   170,920,581
  Related parties                                                    24,031,480            6,713,364
                                                                ---------------      ---------------
                                                                    242,516,885          177,633,945
OPERATING EXPENSES:
  Direct expenses-service agreements                                 20,524,287            6,831,774
  Sales and marketing                                                 9,892,577           10,318,748
  Engineering and technical services                                 13,842,527           12,334,312
  General and administrative                                         27,143,269           18,641,535
  Depreciation and amortization                                      49,536,659           45,224,473
  Compensatory Programs                                                   -                4,799,933
  Reorganization costs                                               17,258,784            2,528,177
                                                                ---------------      ---------------
                                                                    138,198,103          100,678,952
                                                                ---------------      ---------------

  INCOME FROM OPERATIONS                                            104,318,782           76,954,993

INTEREST INCOME                                                     (19,334,833)         (17,615,682)
INTEREST EXPENSE                                                      4,661,101           20,588,872
OTHER INCOME                                                       (225,000,000)                 -
                                                                ---------------      ---------------
  INCOME BEFORE INCOME TAXES                                        343,992,514           73,981,803

INCOME TAXES                                                        146,894,468           31,085,000
                                                                ---------------      ---------------
  NET INCOME                                                    $   197,098,046      $    42,896,803
                                                                ---------------      ---------------
  PREFERRED STOCK DIVIDEND                                           34,552,624           30,545,183
                                                                ---------------      ---------------
  NET INCOME TO COMMON SHARES                                   $   162,545,422      $    12,351,620
                                                                ---------------      ---------------
                                                                ---------------      ---------------
  EARNINGS PER COMMON SHARE                                                          $          0.12
                                                                                     ---------------
                                                                                     ---------------
  WEIGHTED AVERAGE COMMON SHARES
  OUTSTANDING                                                                            100,324,978
                                                                                     ---------------
                                                                                     ---------------

</TABLE>

                  The accompanying notes are an integral part
                   of these consolidated financial statements

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

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

REVENUES:
  Unaffiliated parties                                          $    74,034,762      $    64,410,187
  Related parties                                                     3,978,332            2,516,592
                                                                ---------------      ---------------
                                                                     78,013,094           66,926,779
OPERATING EXPENSES:
  Direct expenses-service agreements                                  5,967,723            3,107,203
  Sales and marketing                                                 3,944,411            3,085,276
  Engineering and technical services                                  4,719,733            4,562,193
  General and administrative                                          4,786,412            6,594,795
  Depreciation and amortization                                      17,054,040           16,132,786
  Compensatory Programs                                                  -                 4,799,933
  Reorganization costs                                                1,624,533            2,528,177
                                                                ---------------      ---------------
                                                                     38,096,852           40,810,363
                                                                ---------------      ---------------

  INCOME FROM OPERATIONS                                             39,916,242           26,116,416

INTEREST INCOME                                                      (7,693,874)          (5,346,337)
INTEREST EXPENSE                                                        288,805            5,704,954
                                                                ---------------      ---------------
  INCOME BEFORE INCOME TAXES                                         47,321,311           25,757,799

INCOME TAXES                                                         21,080,292           11,699,000
                                                                ---------------      ---------------
  NET INCOME                                                    $    26,241,019      $    14,058,799
                                                                ---------------      ---------------
  PREFERRED STOCK DIVIDEND                                           11,891,403           10,525,683
                                                                ---------------      ---------------
  NET INCOME TO COMMON SHARES                                   $    14,349,616      $     3,533,116
                                                                ---------------      ---------------
                                                                ---------------      ---------------
  EARNINGS PER COMMON SHARE                                                          $          0.04
                                                                                     ---------------
                                                                                     ---------------
  WEIGHTED AVERAGE COMMON SHARES
  OUTSTANDING                                                                            100,414,456
                                                                                     ---------------
                                                                                     ---------------

</TABLE>

                  The accompanying notes are an integral part
                   of these consolidated financial statements

<PAGE>

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

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

CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
 Net income                                                     $   197,098,046      $    42,896,803
 Adjustments to reconcile net income to
  net cash provided by operating activities:
  Depreciation and amortization                                      49,536,659           45,224,473
  Deferred income taxes                                              35,282,667           19,532,310
  Accretion of interest on senior
   subordinated discount notes                                       33,314,451           29,835,300
  Accretion of interest on marketable securities                     (5,407,387)          (2,623,629)
  Interest expense capitalized                                      (46,455,925)         (27,269,311)
  Compensation expense on exercise of employee
   stock options                                                     13,081,818                  -
  Changes in assets and liabilities:
   Increase in accounts receivable                                   (1,224,307)          (4,542,151)
   Increase in prepaid expenses and other current
    assets                                                           (4,228,684)          (8,122,890)
   Decrease in accounts payable                                      (1,862,975)             (53,532)
   Decrease in accrued interest                                      (4,264,699)          (4,265,625)
   Increase in accrued liabilities
     and taxes                                                       54,658,060            2,296,606
   Increase (decrease) in deferred revenue                           (7,783,651)          28,092,779
   Decrease in other liabilities                                       (135,000)            (135,000)
                                                                ---------------      ---------------
    NET CASH PROVIDED BY OPERATING ACTIVITIES                       311,609,073         120,866,133
                                                                ---------------      ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Expenditures for property and equipment                            (13,621,280)         (17,395,302)
 Expenditures for satellite systems under
  development                                                      (169,283,600)        (235,670,725)
 Proceeds from maturity of marketable securities                    142,041,249          125,296,869
 Increase in other assets                                           (37,776,973)            (671,143)
                                                                ---------------      ---------------
  NET CASH USED IN INVESTING ACTIVITIES                             (78,640,604)        (128,440,301)
                                                                ---------------      ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Repayments of long-term debt                                        (4,954,858)          (2,678,426)
 Proceeds from exercise of employee stock options                         -                   27,200
                                                                ---------------      ---------------
  NET CASH USED IN FINANCING ACTIVITIES                              (4,954,858)          (2,651,226)
                                                                ---------------      ---------------
  NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS              228,013,611          (10,225,394)

 CASH AND CASH EQUIVALENTS, beginning of period                       1,453,055           13,562,113
                                                                ---------------      ---------------
 CASH AND CASH EQUIVALENTS, end of period                       $   229,466,666      $     3,336,719
                                                                ---------------      ---------------
                                                                ---------------      ---------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
 Cash received for interest                                     $    16,760,367      $    14,992,053
                                                                ---------------      ---------------
                                                                ---------------      ---------------
 Cash paid for interest                                         $    22,067,274      $    22,288,506
                                                                ---------------      ---------------
                                                                ---------------      ---------------
 Cash paid for taxes                                            $    71,272,800      $    11,566,000
                                                                ---------------      ---------------
                                                                ---------------      ---------------

</TABLE>

                  The accompanying notes are an integral part
                   of these consolidated 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 September  30, 1997,
             and the related  statements  of  operations  and cash flows for the
             nine months ended September 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 nine  month  periods  ended
             September 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 nine month
             periods  ended  September  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 the Company'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) Conversion of 12 3/4% Preferred Stock. 

             On  August  14,  1997,  a  triggering   event  occurred  under  the
             Certificate  of  Designation  for the  Company's 12 3/4%  Preferred
             Stock as a result of the Company's  attainment of certain financial
             ratios for the quarter  ended June 30,  1997.  The  Certificate  of
             Designation  required  that  upon the  occurrence  of a  triggering
             event,  the Company would  promptly  exchange its 12 3/4% Preferred
             Stock for 12 3/4% Senior  Subordinated Notes. On September 30 1997,
             the  Company  exchanged  its 12 3/4%  Preferred  Stock into 12 3/4%
             Senior  Subordinated  Notes. In connection with the exchange,  each
             share of 12 3/4%  Preferred  Stock  was  exchanged  for  $1,000  of
             principal amount of 12 3/4% Senior Subordinated  Notes.  Fractional
             shares were paid in cash.  Dividends on shares of 12 3/4% Preferred
             Stock ceased to accrue on the exchange date, and interest on the 12
             3/4% Senior Subordinated Notes began to accrue at that time.  

       (5) PAS-6 Placed in Service.

             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
             reached its final orbital location at 43 degrees West Longitude and
             commenced service on September 19, 1997 after successful completion
             of its in-orbit testing.  See Note 6 below.

       (6) Subsequent Events.

             On August 27,  1997,  the Company  successfully  launched its PAS-5
             Atlantic  Ocean Region  Satellite.  Service of the PAS-5  Satellite
             commenced on October 12, 1997.

             An  anomaly  has  been  detected  in  PAS-6's  solar  arrays.   The
             satellite, which contains 36 Ku-band transponders,  has experienced
             several  circuit  failures in its solar  arrays and may  experience
             additional  failures  in the  future.  The  circuit  failures  will
             require  the  Company  to  forego  the  use  of  some  transponders
             initially and to turn off additional  transponders  in later years.
             The ability of transponders to provide  transmission  power for DTH
             signal reception using  60-centimeter  dishes is not affected. 

 <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.  The  Company's
             PAS-6  satellite  was  launched  on August  8,  1997 and  commenced
             service on September 19, 1997 over the Atlantic  Ocean Region.  The
             Company's   PAS-5  satellite  was  launched  August  27,  1997  and
             commenced  service  on October  12,  1997 over the  Atlantic  Ocean
             Region. See Note 6 to the Financial Statements above for more
             information regarding subsequent events affecting PAS-6.

             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  September 30,
             1997 were $78.0  million,  an increase  of $11.1  million or 17% as
             compared to the comparable  period in 1996.  Total revenues for the
             nine  months  ended  September  30, 1997 were  $242.5  million,  an
             increase  of $64.9  million or 37% as  compared  to the  comparable
             period in 1996.  The growth in revenue for the three and nine month
             periods is principally due to the increase in broadcasting services
             revenue.  Broadcasting  services revenue for the three months ended
             September 30, 1997 was $63.9 million,  an increase of $7.8 million,
             or 14% over the same period in 1996.  Broadcasting services revenue
             for the nine months ended September 30, 1997 was $206.5 million, an

<PAGE> 
                                                                       FORM 10-Q
                      

                      PanAmSat International Systems, Inc.

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



             increase of $60.8 million, or 42% over the same period in 1996. The
             growth in broadcasting  services  revenue during the three and nine
             month  periods was due primarily to the  commencement  of new video
             service, ad-hoc and special  events  traffic and revenue during the
             first, second and third quarters of 1997.

             Business  communications  services revenue was $13.6 million in the
             three months ended  September 30, 1997,  increasing $3.2 million or
             31%, over the comparable  period in 1996.  Business  communications
             services  revenue  was  $34.3  million  in the  nine  months  ended
             September  30,  1997,  increasing  $3.6  million  or 12%,  over the
             comparable  period in 1996. The increase  during the three and nine
             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  September  30,  1996 to $0.5
             million for the three months ended  September 30, 1997, an increase
             of $0.1 million or 25%.  Long-distance  telephony  services revenue
             increased from $1.2 million for the nine months ended September 30,
             1996 to $1.7 million for the nine months ended  September 30, 1997,
             an increase of $0.5 million or 42%.

             Direct Expenses.  Direct expenses were $6.0 million, or 8% of total
             revenues, in the three months ended September 30, 1997 ,an increase
             of $2.9  million or 94%,  from the same  period in 1996 when direct
             expenses  were 5% of total  revenues.  Direct  expenses  were $20.5
             million,  or 8%  of  total  revenues,  in  the  nine  months  ended
             September 30, 1997, an increase of $13.7 million or 201%,  from the
             same period in 1996 when direct expenses were 4% of total revenues.
             The  increase  in direct  expenses  over the  three and nine  month
             periods was primarily  attributable  to costs  associated  with the
             increased ad-hoc and special events revenue  recognized  during the
             periods.

             Sales and Marketing  Expenses.  Sales and  marketing  expenses were
             $3.9 million,  or 5% of total  revenues,  in the three months ended
             September  30,  1997,  compared  to $3.1  million,  or 5% of  total
             revenues,  in the three months ended September 30, 1996.  Sales and
             marketing expenses were $9.9 million,  or 4% of total revenues,  in
             the  nine  months  ended  September  30,  1997,  compared  to $10.3
             million,  or 6%  of  total  revenues,  in  the  nine  months  ended
             September 30, 1996.  The decrease in sales and  marketing  expenses
             for  the  nine  month  period  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  $4.7  million  in  the  three  month  period  ended
             September  30,  1997,  or 6% of total  revenues,  compared  to $4.6
             million,  or 7% of total  revenues,  for the  comparable  period in
             1996.  Engineering and technical expenses were $13.8 million in the
             nine  month  period  ended  September  30,  1997,  or 6%  of  total
             revenues,  compared to $12.3 million, or 7% of total revenues,  for
             the comparable  period in 1996. The dollar  increase in engineering
             and technical  expenses during the three and nine month periods was
             primarily  due to  increased  costs  associated  with new  teleport
             facilities, as well as additional telemetry, tracking and
             control costs associated with PAS-3.

             General and  Administrative  Expenses.  General and  administrative
             expenses were $4.8 million,  or 6% of total revenues,  in the three
             months ended September 30, 1997, a decrease of $1.8 million or 27%,
             as  compared  to  the  same  period  in  1996,   when  general  and
             administrative   expenses  were  $6.6  million,  or  10%  of  total
             revenues.  General and administrative  expenses were $27.1 million,
             or 11% of total  revenues,  in the nine months ended  September 30,
             1997,  an increase of $8.5  million or 45%, as compared to the same
             period in 1996, when general and administrative expenses were $18.6
             million,  or 10% of total revenues.  The dollar decrease in general
             and  administrative  expenses during the three month period was due
             primarily to the  inclusion of additional  consulting  and advisory
             fees during the same period in 1996. The dollar increase in general
             and  administrative  expenses  during  the nine  month  period  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
             $17.1  million in the three months  ended  September  30, 1997,  as
             compared to $16.1  million in the three months ended  September 30,
             1996,  an  increase  of  $1.0  million  or  6%.   Depreciation  and
             amortization  was $49.5 million in the nine months ended  September
             30,  1997,  as compared to $45.2  million in the nine months  ended
             September  30, 1996, an increase of $4.3 million or 10%. The dollar
             and  percentage  increase  in the three and nine 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 $7.7  million  for the three  months  ended
             September  30,  1997  compared to $5.3  million for the  comparable
             period in 1996,  an increase of $2.4 million.  Interest  income was
             $19.3 million for the nine months ended September 30, 1997 compared
             to $17.6 million for the comparable  period in 1996, an increase of
             $1.7  million.  The  increase in interest  income  during the three
             
<PAGE>
                                                                      FORM 10-Q

                      PanAmSat International Systems, Inc.

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


             and nine month  periods 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 $5.7 million in the quarter
             ended  September  30, 1996 to $0.3  million in the same  quarter in
             1997. Interest expense, net of capitalized interest, decreased from
             $20.6  million in the nine months ended  September 30, 1996 to $4.7
             million  in the same  period  in 1997.  The  decrease  in  interest
             expense  during the three and nine month  periods was primarily the
             result of an  increase  in the amount of  interest  capitalized  on
             construction in progress.

             Other  Income.  The Company had Other Income of $225.0  million for
             the nine months ended  September  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 $21.1
             million for the three months ended  September  30, 1997 as compared
             to $11.7 million for the comparable period in 1996. The Company had
             an income tax provision of $146.9 million for the nine months ended
             September  30, 1997  compared to $31.1  million for the  comparable
             period in 1996.  The  increase in income taxes during the three and
             nine month  periods was due to the increase in income before income
             taxes.

             Preferred Stock Dividend. The Company had Preferred Stock dividends
             of $11.9  million for the three months ended  September 30, 1997 as
             compared to $10.5 million for the  comparable  period in 1996.  The
             Company had Preferred Stock dividends of $34.6 million for the nine
             months ended  September  30, 1997 compared to $30.5 million for the
             comparable  period in 1996.  On September  30, 1997,  the Preferred
             Stock  was  converted  into  12  3/4%  Senior  Subordinated  Notes.
             Dividends on the Preferred  Stock ceased to accrue at such time and
             interest began to accrue and is payable  semi-annually each October
             15 and April on the 12 3/4% Senior Subordinated Notes.

             EBITDA.  EBITDA  was  $57.0  million  in  the  three  months  ended
             September  30,  1997,  an  increase  of $14.8  million  or 35%,  as
             compared to $42.2 million for the comparable period in 1996. EBITDA
             was $153.8 million in the nine months ended  September 30, 1997, an
             increase of $31.6 million or 26%, as compared to $122.2 million for
             the comparable  period in 1996. EBITDA was 63% of total revenues in
             the first nine months of 1997 as compared to 69% of total  revenues
             for the same period in the prior fiscal year.  The dollar  increase
             in EBITDA for the three and nine month periods ended  September 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-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 cash flow from operations.

             The Company believes that the net proceeds to it from the offerings
             of Preferred Stock and Common Stock,  vendor  financing,  cash flow
             from  operations  and cash on hand will be  sufficient  to fund the
             Company's operations,  its remaining costs for the construction and
             launch of PAS-7 and PAS-8, as well as to pursue international
<PAGE>
                                                                      FORM 10-Q

                      PanAmSat International Systems, Inc.

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


            
             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  cash flow from operations.
             
             Cash flows  provided by  operating  activities  increased to $311.6
             million in the nine months ended  September  30, 1997,  from $120.9
             million in the nine  months  ended  September  30,  1996.  The 1997
             increase is due primarily to the significant growth in revenues for
             the nine months ended September 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 $78.6  million
             in the nine months ended  September 30, 1997 from $128.4 million in
             the nine months ended September 30, 1996.  This decrease  primarily
             reflects $169.3 million of expenditures for satellite systems under
             development  partially  funded by $142.0  million of proceeds  from
             maturity of marketable securities.  This compares to $235.7 million
             in expenditures for satellite systems under development  during the
             first nine  months of 1996  partially  funded by $125.3  million of
             proceeds from maturity of marketable securities.

             Net cash used in financing  activities increased to $5.0 million in
             the nine months ended  September  30, 1997 from $2.7 million in the
             nine months ended September 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

                  None.  

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


                                           PanAmSat Capital Corporation



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