Loral Space & Communications (NYSE:LOR) today
reported its financial results for the three months ended March 31,


– EBITDA as reported rose to $62 million, up 6 percent compared to
first quarter last year.

– Cash and available credit at March 31, 2002 improved to $237

– Per share loss of $.09 (before goodwill write-off resulting from the
adoption of SFAS 142) improved 64 percent versus a year ago and 31
percent versus last quarter, exceeding consensus expectations.

– In connection with the adoption of SFAS 142, Loral wrote off all of
its goodwill, resulting in an after-tax non-cash charge of $847
million and reducing amortization by $7 million for this quarter.

– A privately negotiated preferred stock exchange was completed after
the end of the quarter, reducing the principal amount of the mandatory
preferred stock obligation by $109 million and eliminating $33 million
in future dividend payments.

"Loral has maintained the course we established last year and it’s
paying off," said Bernard L. Schwartz, chairman and chief executive
officer of Loral. "Our core businesses, which are long-term value
drivers, are performing well. And we continue to enhance our financial
flexibility through scheduled debt repayments and transactions like
the recent preferred stock exchange. Our primary objective is to
further drive our revenues and profits by placing in service the three
satellites now under construction, which will expand Skynet’s
transponder capacity by 143 36MHz equivalents, or 45 percent, in the
next 12 months. Further, Skynet is introducing new value-added
services and expanding into new market segments. Our manufacturing
business has geared its operations to the current industry environment
and is positioned to satisfy our customers’ increased demand when the
economy picks up.

"Our expectations and guidance for the full year remain on track," Mr.
Schwartz noted.

Financial Results for the Period Ended March 31, 2002

Reported EBITDA rose six percent to $62 million in the first quarter,
driven by good operating performance.

Pretax income for the quarter was $2 million versus a pretax loss of
$38 million in the same period last year.

Loral’s net loss applicable to common shareholders was $32 million, or
$.09 per common share (before the $847 million non-cash goodwill
charge), both measures substantially improved compared to last year.
After the charge, the loss per share was $2.61.

Loral’s reported revenue rose 18 percent to $308 million, an increase
over last year’s first quarter due almost entirely to a 21 percent
increase in revenue at SS/L.

Net interest expense decreased to $13 million for the quarter compared
to last year’s $42 million primarily as a result of the Loral Orion
debt exchange along with lower debt balances and interest rates. The
implementation of the new accounting pronouncement regarding goodwill
was the primary reason for a decline in the quarter’s depreciation and
amortization to $47 million, from $54 million in 2001’s first quarter.

The company’s cash and available credit on March 31, 2002 was $237
million, compared to $229 million in the prior quarter. EBITDA and
working capital changes offset $51 million in capital spending and $29
million in cash interest and dividend payments.

Bookings and Backlog

Bookings at both of Loral’s core businesses continue to reflect the
effects of the economic slowdown and a postponement of broadband
application introductions and new programs. Net bookings were $31
million, a decline from a year ago of $178 million, $103 million of
which resulted from a customer’s direct procurement of launch services
which led to the cancellation of a previously booked launch at SS/L.

Skynet gross bookings declined by $14 million from last year’s first
quarter to $134 million as some customers remained cautious about
initiating new projects, particularly in the broadband data market.
Skynet de-bookings of $18 million for the quarter are down
significantly from each of last year’s quarters, indicating that the
FSS de-booking trend is subsiding.

SS/L’s factory remains full, with 20 satellites in various stages of
construction. As previously noted, Loral expects 2002 to be
challenging for new manufacturing orders but the company’s strong
backlog continues to serve as a shock absorber during market demand

Loral had a healthy net funded backlog at the end of the first quarter
of $2.5 billion, down from $2.7 billion at year-end 2001.

Business Unit Review

Fixed Satellite Services (FSS)

Loral Skynet continues to perform well in a challenging environment.
In the first quarter, Skynet’s revenue was $94 million and EBITDA was
$66 million, essentially flat compared to last year’s first quarter
results. Skynet achieved a 70 percent EBITDA margin for the period, up
slightly from a year earlier.

For the FSS segment as a whole, revenue fell seven percent and EBITDA
eight percent, as declines at Satmex more than offset the performance
at Skynet and Europe*Star.

Capacity utilization for the Skynet fleet was 68 percent at the end of
the quarter, up one percentage point from the end of last quarter.

Regional market conditions are in line with recent quarters, with
steady Ku demand in Europe, North America and trans-Atlantic markets,
and in parts of Asia. There is moderate oversupply in several C-band
markets and for Ku-band capacity in some Latin American markets.

Loral’s average revenue per transponder held steady at an annual rate
of about $1.6 million, due primarily to Loral’s long-term leases and
generally consistent market conditions.

Skynet’s three new satellites continue on schedule for launch later
this year and early 2003. Telstar 13, Estrela do Sul and Telstar 8 are
large, high-powered satellites based on SS/L’s 1300 satellite bus
that, rather than serving as replacement capacity, will add to
existing capacity in high-demand markets in North America and will
expand Skynet’s geographic reach into Brazil and other Latin American
markets. After the launch of these three satellites, Skynet will have
10 satellites in its fleet, up from just one in early 1997. The
compounded rate of growth for Skynet’s EBITDA from 1997 to 2001 was 51
percent, a growth record unsurpassed in the FSS industry.

Beyond the increased capacity delivered by the new Skynet satellites,
the launch of Satmex 6 in early 2003 will expand the Loral Global
Alliance fleet to 14 satellites.

Building on the success of its leasing business, Skynet recently
introduced two new value-added product offerings. Skynet Network
Services offers access services and transmission platforms that make
it easier for customers to add satellite capability to their
terrestrial networks. Skynet Professional Services manages customers’
satellite-based requirements, including tracking, telemetry and
control (TT&C), design and integration of control facilities and
customized transport solutions. Just after the quarter, Skynet
announced a new professional services contract that will provide
digital satellite newsgathering and a centralcasting application for
Hearst-Argyle Television.

Despite the current softness in the telecommunications market, the
fundamentals of the FSS industry remain strong. When economic and
industry momentum accelerates, Loral Skynet will be well-positioned to

Satellite Manufacturing and Technology

SS/L’s first quarter revenues rose 21 percent to $243 million compared
to a year earlier. EBITDA of $11 million for the manufacturing unit
was down year-over-year but improved on a consecutive quarter basis,
an indication of early progress in Loral’s plan to return SS/L to
higher EBITDA margins.

In the first quarter, SS/L continued its delivery of the Intelsat IX
series of satellites with the successful launches of Intelsat 903 and
904. The next in the series – Intelsat 905 – is currently undergoing
preparations for launch on an Ariane-4 rocket from Arianespace’s
Kourou, French Guiana, spaceport within a few weeks.

Intelsat has successfully launched 25 SS/L-built satellites since
1980, all of which exceeded, or have met thus far, anticipated
on-orbit performance. With the delivery of the remaining three
spacecraft in the Intelsat IX series, SS/L will have built nearly half
of Intelsat’s historical fleet, and significantly more than any other

In addition to launching the two Intelsat satellites in the first
quarter, SS/L expects to deliver an additional seven satellites by the
end of the year.

The SS/L-built DIRECTV-5 satellite is scheduled for launch on May 6,
aboard a Proton rocket from the Baikonur Cosmodrome in Kazakhstan.
DIRECTV-5 will be the second Loral-built satellite in the DTH
provider’s fleet, joining DIRECTV-6 already in orbit. SS/L is
building a third satellite for this customer, DIRECTV-7S, a spot beam
satellite scheduled for completion in 2003.

As expected, booking activity in the satellite manufacturing industry
is slower than normal, with no awards for new satellite construction
made thus far this year. Loral expects bookings to improve along with
the economy and as pent-up demand for replacement satellites builds.

Data Services

In a very challenging data industry environment, as noted above,
Loral’s data services segment achieved break-even EBITDA in the first
quarter as planned, on revenues of $20 million, versus an EBITDA loss
of $10 million on revenues of $29 million in the first quarter of

During the quarter, Loral CyberStar reached an agreement with
Net4India to become a value-added reseller of CyberStar’s WorldCast
Fast Internet service, a service that will allow Net4India to deliver
unparalleled, high-speed Internet access and other Web-based solutions
to corporate local area networks (LANs) throughout India.

Financing and Other Actions

After the close of the quarter, Loral completed a privately negotiated
preferred stock exchange that eliminated $109 million in mandatory
redemptions in 2006 and 2007, and eliminated $33 million in future
dividend payments. 15.1 million shares of common stock were issued in
the transaction.

This most recent exchange builds on the important financial
accomplishments of 2001: in total Loral has reduced its principal
obligations (debt and redeemable preferred stock) by $615 million and
lowered annual cash interest and dividend payments by $51 million.


Supported by Skynet’s steady performance and by SS/L’s progress in
improving its margin, Loral continues to expect a full-year loss of
$0.40 to $0.50 per share in 2002, excluding the goodwill write-off.

Loral Space & Communications is a high technology company that
concentrates primarily on satellite manufacturing and satellite-based
services. For more information, visit Loral’s web site at

This document contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. In addition,
from time to time, Loral Space & Communications Ltd. or its
representatives have made or may make forward-looking statements,
orally or in writing. Such forward-looking statements may be included
in, but are not limited to, various filings made by the company with
the Securities and Exchange Commission, press releases or oral
statements made with the approval of an authorized executive officer
of the company. Actual results could differ materially from those
projected or suggested in any forward-looking statements as a result
of a wide variety of factors and conditions. These factors and
conditions have been described in the section of the company’s annual
report on Form 10-K for the fiscal year ended December 31, 2001,
entitled "Certain Factors That May Affect Future Results," and the
company’s other filings with the Securities and Exchange Commission.
With regard to forward-looking statements concerning Loral Orion, Inc.
and its business, financial condition, results of operations and
prospects, the factors and conditions which could materially affect
these statements are described in the section of Loral Orion’s annual
report on Form 10-K for the fiscal year ended December 31, 2001,
entitled "Certain Factors That May Affect Future Results." The reader
is specifically referred to these documents regarding the factors and
conditions that may affect future results.