Loral Space &
Communications (NYSE: LOR) has revised some of its performance
expectations for 2002 and issued new guidance for the year.

The continuation of the general economic slowdown, particularly in
telecommunications, is affecting Loral’s performance this year.
Loral’s operations remain healthy and EBITDA positive. They continue
to generate substantial amounts of cash, but the growth expected this
year in the fixed satellite services segment has not yet materialized.
Consequently, the company is issuing new guidance for the year.

Current guidance for the full year is as follows:

  • Loral’s reported revenues for the year are expected to rise to
    approximately $1.2 billion, a 15 percent increase over last
    year; previous guidance called for a 20 percent increase.

  • Loral’s EBITDA is expected to decline approximately five
    percent from the $223 million reported last year; previous
    guidance called for a 15 percent increase.

  • Consistent with previous guidance, Loral continues to expect
    to end the year with $80-$90 million in cash and available
    credit, after capital spending of $160 million ($125 million
    for satellite construction, $35 million for ground systems),
    dividend and interest payments, and an investment of $30
    million in XTAR.

  • The net loss is expected to improve from $276 million last
    year to approximately $190 million this year before a
    previously reported first-quarter goodwill charge.

  • Net loss per share (excluding the goodwill write-off) is
    expected to be approximately $0.50 versus last year’s loss of
    $0.86. Without an $0.11 per share non-cash accounting charge
    related to the preferred exchanges in the second quarter, the
    expected loss would have been slightly better than previous
    guidance of $0.40-0.50 per share.

These estimates are better than, or equal to, last year’s results,
reflecting an improvement in operating performance at Loral’s
satellite manufacturing business. Skynet’s business, however, has been
negatively affected by the economic climate and the delay in demand
for new applications and services, especially broadband. This
industry-wide trend is evidenced, for example, by the postponement of
broadband projects due to lack of funding. In addition, recent events
like the early-June bankruptcy filing by one of Skynet’s customers, a
direct-to-consumer broadband company, have adversely affected Skynet’s
near-term growth. The company has assessed Skynet’s current book of
business and does not believe that its future growth will be affected
by similar defaults. Skynet is expected to maintain its share of the
market this year.

These factors translate for Skynet into an expected capacity
utilization rate of 60 percent at year-end 2002 versus 68 percent at
the end of last year. Lease rates for new capacity have declined
recently by about 10 percent. The effect on the year-end average
annual revenue per transponder, however, is a slight decline from $1.6
million to $1.5 million due to Skynet’s existing, contracted long-term
leases. The cost of insurance – both launch and on-orbit – rose
dramatically after the events of September 11 and has not returned to
traditional levels as expected, adding to satellite operators’ costs.
Following is 2002 Skynet guidance:

  • Skynet revenue is expected to decline to approximately $340
    million versus $389 million last year. The company had
    previously expected single-digit growth for this unit in 2002.

  • Skynet’s EBITDA is expected to decline approximately 15
    percent from $276 million last year. Its EBITDA margin is
    expected to be about 68 percent, down from 71 percent last
    year.

  • Skynet backlog at the end of the year is expected to be $1.3
    billion or nearly four times revenue, compared to $1.4 billion
    at the end of the prior year.

With regard to the satellite manufacturing business, 2002 guidance
for Space Systems/Loral is as follows:

  • SS/L revenue is expected to increase about 20 percent over
    last year’s revenue of $815 million, in line with previous
    guidance.

  • SS/L EBITDA is expected to exceed $40 million, an improvement
    of 67 percent over last year’s $24 million. SS/L has
    aggressively reduced costs to match the current business
    environment and is beginning to see benefits from improved
    production processes put in place last year. As a result, it
    expects that the year-end EBITDA margin will be an improvement
    over last year’s performance.

  • SS/L is scheduled to deliver four more geosynchronous
    satellites (for a total of eight, an SS/L record) by the end
    of the year.

  • Across the satellite manufacturing industry worldwide, only
    one order for the construction of a new commercial
    geosynchronous satellite has been placed in the last nine
    months. By contrast, 25 contracts were awarded in all of 2001.
    A recent increase in requests for proposals (RFPs) along with
    recent customer activity, reaffirm Loral’s confidence that
    orders for satellite construction will pick up in the second
    half and that SS/L will capture at least its market share.
    SS/L’s year-end backlog is expected to be approximately $800
    million.

Loral continues to progress but at a slower pace than expected.
The company is managing its operations to match current and expected
business conditions, protect its margins and preserve liquidity and
financial flexibility. The current economic environment, however,
would indicate a delay in Loral’s ability to achieve net profit in
late 2003 as previously forecast.

Loral will issue a release reporting its second quarter
performance at the end of July.

Loral Space & Communications is a high technology company that
concentrates primarily on satellite-based services and satellite
manufacturing, including broadcast transponder leasing and value added
services, domestic and international corporate data networks,
broadband data transmission and Internet services. For more
information, visit Loral’s Web site at www.loral.com.

A conference call, hosted by Bernard Schwartz, will be held today
at 10:00 A.M. EDT. The dial-in number is 1-913-981-5522. The call will
be web cast simultaneously and available for one week at
www.loral.com. A replay of the call is available from today at 2:00
P.M. through July 9 by dialing 1-719-457-0820, access code 746632.

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.