Aug 9, 2010

Loral Space & Communications Inc. announced its financial results for the three and six months ended June 30, 2010.

Revenues and Adjusted EBITDA1 for all segments for the quarter were $481 million and $187 million, respectively, representing an increase of $33 million and $62 million, respectively, over segment revenues and Adjusted EBITDA for the second quarter of 2009. Combined segment revenues and Adjusted EBITDA for the first six months of the year were $903 million and $339 million, respectively, representing an increase of $73 million and $93 million, respectively, compared to the first six months of 2009. All of Telesat's revenue and Adjusted EBITDA are included in these segment results2. Loral's income statement, however, reflects its 64 percent economic interest in Telesat under the equity method of accounting.

Loral's revenues and Adjusted EBITDA for the quarter after eliminations were $280 million and $34 million, respectively, up $9 million and $29 million, respectively, compared to the second quarter of 2009. Revenues and Adjusted EBITDA for the first six months of 2010 after eliminations were $509 million and $43 million, respectively, up $25 million and $32 million, respectively, from revenues and Adjusted EBITDA after eliminations for the first six months of 2009. The eliminations include all of Telesat's results, as well as the impact of Loral's portion of the ViaSat-1 construction contract on SS/L's results.

Driven by changes in foreign exchange rates at Telesat, Loral reported a net loss of $20 million compared to net income of $74 million for the second quarter of 2009. For the first six months of 2010 net income was $10 million compared to $63 million for the first six months of 2009. Diluted loss per share for the second quarter of 2010 was $0.66 compared to diluted income per share of $2.48 in the second quarter of 2009. For the first six months of 2010 diluted income per share was $0.32 compared to $2.13 for the first six months of 2009. The company's available cash was relatively unchanged, with $141.7 million in available cash at the end of June 2010, compared to $142.2 million at the end of March 2010.

"Both Telesat and SS/L continue to strengthen their operations and improve their results," said Michael Targoff, chief executive officer of Loral Space & Communications. "Our focus on our core strengths should continue to deliver the performance that we have expected for ongoing shareholder value creation."

Business Unit Review

Satellite Manufacturing

In the second quarter of 2010, SS/L reported revenue before eliminations of $281 million compared to $276 million in the second quarter of 2009. Revenue before eliminations for the first six months of 2010 was $512 million compared to $492 million for the first six months of 2009. Adjusted EBITDA for the quarter and the first six months of 2010 was significantly higher than in 2009 as a result of improved factory performance and the effects of the increased volume, derived from continued strong bookings, on factory overhead absorption.

Adjusted EBITDA for the second quarter of 2010 was $37 million, up $25 million over the Adjusted EBITDA for the second quarter of 2009, and Adjusted EBITDA for the first six months of 2010 was $50 million, up $27 million over the Adjusted EBITDA for the first six months of 2009.

SS/L contracted to build four satellites in the second quarter of 2010 and has been awarded a fifth contract subsequent to the end of the quarter. The company also completed a satellite for DISH Network during the quarter, which was delivered ahead of schedule so that DISH could take advantage of an early launch availability. The satellite was successfully launched on July 10 and has performed all of its maneuvers according to plan.

Satellite Services

Reflecting growth driven largely by an expanded fleet, and positively impacted by the weakening U.S. dollar, Telesat revenue for the quarter was $200 million and Adjusted EBITDA was $153 million. This compares favorably to revenue and Adjusted EBITDA for the second quarter of 2009 of $172 million and $119 million, respectively, and to revenue and Adjusted EBITDA for the first quarter of 2010 of $192 million and $143 million, respectively. Telesat revenue and Adjusted EBITDA for the first six months of 2010 was $391 million and $296 million, respectively, which compares to revenue and Adjusted EBITDA of $337 million and $234 million, respectively, in the first six months of 2009.

Without the effect of changes in U.S. dollar / Canadian dollar exchange rate, Telesat revenue and Adjusted EBITDA would have increased by approximately $14 million and $24 million, respectively, for the three months ended June 30, 2010 compared with the three months ended June 30, 2009, $7 million and $9 million, respectively, for the three months ended June 30, 2010 compared with the three months ended March 31, 2010 and $23 million and $40 million, respectively, for the six months ended June 30, 2010 compared with the six months ended June 30, 2009.

The performance benefit of Telstar 11N and Nimiq 5, the two satellites put into service during 2009, more than offset the loss of revenue from the sale of Telstar 10 in July 2009. Aided by continuing expense reduction, Adjusted EBITDA margin improved to 77 percent for the current quarter compared to 69 percent for the second quarter of 2009.

Telesat's results include a net foreign exchange loss of $93 million for the three months ended June 30, 2010 related primarily to Telesat's U.S. dollar denominated debt, as a result of the strengthening of the U.S dollar against the Canadian dollar from March 31, 2010 to June 30, 2010.

Telesat backlog continues to be robust at $5.4 billion on June 30, 2010. As of June 30, 2010, Telesat's liquidity also continues to be very strong. It had $184 million of cash and short-term investments and no borrowings against its revolving credit facility.

During the quarter Telesat contracted with SS/L for Anik G1, which is already partially leased to Shaw Direct and is scheduled for launch in the second half of 2012. The satellite will also provide capacity for growth in government services and provides replacement and expansion capacity in South America.