##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number 1-14180
 LORAL SPACE & COMMUNICATIONS INC.
 (Exact name of registrant specified in the charter)
 Jurisdiction of incorporation: Delaware
 IRS identification number: 87-0748324
 600 Third Avenue
New York, New York 10016
(Address of principal executive offices)
Telephone: (212) 697-1105
 (Registrants telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
    
    Name of each exchange on which registeredCommon stock, $.01 par value
    
    NASDAQ
 Securities registered pursuant to Section 12(g) of the Act:
 Indicate by check mark if the registrant is well-known seasoned issuer, as defined in Rule 405
of the Securities Act. Yes o No þ
 Indicate by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes o No þ
 Yes þ No o
 Yes
o No o
 Yes þ No o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 Yes o No þ
   Yes þ No o
  Part and Item Number ofDocument
    
    Form 10-K into which incorporatedLoral Notice of Annual Meeting of Stockholders and Proxy Statement for the
Annual Meeting of Stockholders to be
held May 18, 2010
    
    Part II, Item 5(d)Part III, Items 11 through 14




---



##### 



LORAL SPACE AND COMMUNICATIONS INC.
INDEX TO ANNUAL REPORT ON FORM 10-K
For the Year Ended December 31, 2009
 PART IItem 1: Business
    
    
    1Item 1A: Risk Factors
    
    
    13Item 1B: Unresolved Staff Comments
    
    
    25Item 2: Properties
    
    
    25Item 3: Legal Proceedings
    
    
    26Item 4: Removed and Reserved
    
    
    26PART IIItem 5: Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    26Item 6: Selected Financial Data
    
    
    28Item 7: Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    32Item 7A: Quantitative and Qualitative Disclosures about Market Risk
    
    
    57Item 8: Financial Statements and Supplementary Data
    
    
    58Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    58Item 9A: Controls and Procedures
    
    
    58Item 9B: Other Information
    
    
    61PART IIIItem 10: Directors and Executive Officers of the Registrant
    
    
    61Item 11: Executive Compensation
    
    
    61Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    61Item 13: Certain Relationships and Related Transactions
    
    
    62Item 14: Principal Accountant Fees and Services
    
    
    62PART IVItem 15: Exhibits and Financial Statement Schedules
    
    
    62Signatures
    
    
    67Exhibit 10.23Exhibit 10.31Exhibit 21.1Exhibit 23.1Exhibit 23.2Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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##### Table of Contents



PART I
 
 Item 1. Business
 THE COMPANY
 Overview
   Satellite Manufacturing:
  Satellite Services:
  Segment Overview
 Satellite Manufacturing
    1




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##### Table of Contents



Market and Competition
  Satellite Manufacturing Performance
 Year ended December 31,2009
    
    
    2008
    
    
    2007(In millions)Total segment revenues
    
    $
    1,008
    
    
    $
    881
    
    
    $
    814Eliminations
    
    
    (15
    )
    
    
    (12
    )
    
    
    (53
    )Revenues from satellite manufacturing as reported
    
    $
    993
    
    
    $
    869
    
    
    $
    761Segment Adjusted EBITDA before eliminations(1)
    
    $
    91
    
    
    $
    45
    
    
    $
    35
 (1)
    
    See Consolidated Operating Results in Managements Discussion and Analysis of
Financial Condition and Results of Operations for significant items that affect comparability
between the periods presented (see Note 15 to the Loral consolidated financial statements for the
definition of Adjusted EBITDA).  Satellite Services
   Broadcast:
 DTH.
  2




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##### Table of Contents



Video Distribution.
 Occasional Use Services.
 Enterprise Services:
 Data networks in North America and the related ground segment and maintenance services
supporting these networks.
 International Enterprise Networks.
 Ka-band Internet Services.
 Telecommunication Carrier Services.
 Government Services.
 Consulting & Other:
    3




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##### Table of Contents



Market and Competition
  Fixed Satellite Operators
   Regional and domestic providers:
 
    
    in Europe, Middle East, Africa: Eutelsat, SES Astra, Arabsat, Nilesat, HellaSat and
Turksat;
 
    
    in Asia: AsiaSat, Measat, Thaicom, APT, PT Telkom, and Optus; and
 
    
    in Latin America: Satmex, Star One, Arsat and HispaSat.
   Terrestrial Service Providers
  Consulting Services
   4




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##### Table of Contents



Satellite Fleet & Ground Resources
    :
 ExpectedOrbital Location
    
    
    
    Manufacturers
    
    End-of-Regions
    
    Launch
    
    End-of-Service-
    
    Orbital
    
    Transponders(1)Covered
    
    Date
    
    Life
    
    Maneuver Life(1)
    
    C-band(2)

    
    Ku-band(2)

    
    Ka-band

    
    L-band(3)

    
    ModelNimiq 1
    
    91.1°WL Canada,
    
    May 1999
    
    2011
    
    2024
    
    
    
    
    
    32@24MHz
    
    
    
    
    
    
    
    
    
    A2100 AXContinental United
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Lockheed Martin)StatesNimiq 2(4)
    
    91.1°WL Canada,
    
    December 2002
    
    2015
    
    2021
    
    
    
    
    
    11@24MHz
    
    
    
    
    
    
    
    
    
    A2100 AXContinental United
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Lockheed Martin)StatesNimiq 4
    
    82° WL Canada
    
    September 2008
    
    2023
    
    2027
    
    
    
    
    
    32@24 MHz
    
    8@54 MHz
    
    
    
    
    
    E3000 (EADS Astrium)Nimiq 5
    
    72.7° WL Canada, Continental United
States
    
    September 2009
    
    2024
    
    2035
    
    
    
    
    
    32@24MHz
    
    
    
    
    
    
    
    
    
    SS/L 1300Anik F1(5)
    
    107.3°WL  South America
    
    November 2000
    
    2016
    
    2016
    
    12@36MHz
    
    16@27MHz
    
    
    
    
    
    
    
    
    
    BSS702 (Boeing)Anik F2
    
    111.1° WL Canada,
    
    July 2004
    
    2019
    
    2027
    
    24@36MHz
    
    32@27MHz
    
    31@56/112 MHz
    
    
    
    
    
    BSS702Continental United
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6@500MHz
    
    
    
    
    
    (Boeing)States
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1@56/112MHzAnik F1R(3)
    
    107.3° WL North America
    
    September 2005
    
    2020
    
    2023
    
    24@36MHz
    
    32@27MHz
    
    
    
    
    
    2@20MHz
    
    E3000 (EADS Astrium)Anik F3
    
    118.7°WL Canada,
    
    April 2007
    
    2022
    
    2026
    
    24@36MHz
    
    32@27MHz
    
    2@75MHz
    
    
    
    
    
    E3000 (EADS Astrium)Continental United
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (500MHz)StatesTelstar 11N
    
    37.55° WL North and
Central America,Europe, Africa and the
maritime Atlantic
Ocean region
    
    February 2009
    
    2024
    
    2026
    
    
    
    
    
    39@27/54MHz
    
    
    
    
    
    
    
    
    
    SS/L 1300Telstar 12(6)
    
    15°WL Eastern United
    
    October 1999
    
    2012
    
    2016
    
    
    
    
    
    37@54MHz
    
    
    
    
    
    
    
    
    
    SS/L 1300States, SE Canada,Europe, Russia, MiddleEast, South Africa,portions of South andCentral AmericaTelstar
    
    63°WL Brazil And
    
    January 2004
    
    2019
    
    2011
    
    
    
    
    
    9@72MHz
    
    
    
    
    
    
    
    
    
    SS/L 130014/Estrela
    
    portions of Latin
    
    
    
    
    
    
    
    
    
    
    
    9@36MHzdo Sul
    
    America, North
    
    
    
    
    
    
    
    
    
    
    
    2@28MHzAmerica, Atlantic
    
    
    
    
    
    
    
    
    
    
    
    1@56MHzOceanTelstar 18(7)
    
    138° EL India, South
    
    June 2004
    
    2017
    
    2018
    
    17@36MHz
    
    6@54MHz
    
    
    
    
    
    
    
    
    
    SS/L 1300East Asia, China,
    
    
    
    
    
    
    
    1@54MHz
    
    1@40MHzAustralia And Hawaii
 (1)
    
    Telesats current estimate of when each satellite will be decommissioned, taking account of anomalies and
malfunctions the satellites have experienced to date and other factors such as remaining fuel levels,
consumption rates and other available engineering data. These estimates are subject to change and it is
possible that the actual orbital maneuver life of any of these satellites will be shorter than Telesat
currently anticipates. Further, it is anticipated that the payload capacity of each satellite may be reduced prior
to the estimated end of commercial service life. For example, Telesat currently anticipates that it will need
to commence the turndown of transponders on Anik F1 in 2011, as a result of further degradation in available
power.(2)
    
    Includes the DBS Ku-Band, extended C-band and extended Ku-band in certain cases.(3)
    
    Telesat does not provide service in the L-band. The L-band payload is licensed to Telesats customer by the FCC.  5




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(4)
    
    It is expected that the available capacity in Nimiq 2 will be reduced over time as a result of power system
limitations due to malfunctions affecting available power. The number of Ku-band transponders stated above
refers to the number of active saturated Ku-band transponders as of December 31, 2009.(5)
    
    Anik F1s commercial service life is constrained by power availability.(6)
    
    Telstar 12 has 38 54 MHz transponders. Four of these transponders are leased to Eutelsat to settle coordination
issues and Telesat leases back three of these transponders.(7)
    
    Includes 16.6 MHz of C-band capacity provided to the Government of Tonga in lieu of a cash payment for the use
of the orbital location. The satellite carries additional transponders (the APT transponders), not shown on
the table, as to which APT has a prepaid lease through the end of life of the satellite in consideration for
APTs funding a portion of the satellites cost. This transaction was accounted for as a sales-type lease,
because substantially all of the benefits and risks incident to the ownership of the leased transponders were
transferred to APT. Telesat has agreed with APT among other things that if Telesat is able to obtain the
necessary approvals and licenses from the U.S. government under U.S. export laws, it would transfer title to
the APT transponders on Telstar 18 to APT, as well as a corresponding interest in the elements on the satellite
that are common to or shared by the APT transponders and the Telesat transponders. As required under its
agreement with APT, Telesat acquired two transponders from APT for an additional payment in August 2009.  
    
    Satmex 5:  Three-36MHz Ku-band transponders;
 
    
    Satmex 6:  Two-36MHz C-band transponders; Two-36MHz Ku-band transponders; and
 
    
    Agila 2 (Mabuhay):  Two-36MHz C-band transponders and five and one half 36 MHz Ku-band
transponders
  Telstar 14R
    
    Nimiq 6Orbital Location
    
    63oWL
    
    TBDRegions Covered
    
    South America,
    
    Canada,Continental US,
    
    Continental USAndean Region,North and Mid-Atlantic Ocean RegionPlanned In-Service Date
    
    Second half of 2011
    
    Mid-2012Manufacturers End-of- Service-Life
    
    2026
    
    2027Customer Committed Capacity
    
    
    
    100%Transponders:Ku-band
    
    58 @36 MHz
    
    32 @ 24 MHzModel
    
    SSL 1300
    
    SSL 1300
 Satellite Services Performance
  1 3
  6




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Year ended December 31,2009
    
    
    2008
    
    
    2007(1)(In millions)Revenue:Total segment revenues
    
    $
    692
    
    
    $
    685
    
    
    $
    241Eliminations
    
    
    
    
    
    
    
    
    
    
    (2
    )Affiliate eliminations(2)
    
    
    (692
    )
    
    
    (685
    )
    
    
    (118
    )Revenues from satellite services as reported
    
    $
    
    
    
    $
    
    
    
    $
    121Adjusted EBITDA:Total segment Adjusted EBITDA
    
    $
    488
    
    
    $
    436
    
    
    $
    118Eliminations
    
    
    
    
    
    
    
    
    
    
    (2
    )Affiliate eliminations(2)
    
    
    (488
    )
    
    
    (427
    )
    
    
    (65
    )Adjusted EBITDA from satellite services after eliminations(3)
    
    $
    
    
    
    $
    9
    
    
    $
    51
 (1)
    
    Satellite Services segments performance for 2007 includes Loral Skynet through
October 30, 2007 and Telesat for the period from October 31, 2007 to December 31,
2007.(2)
    
    Affiliate eliminations represent the elimination of amounts attributable to Telesat.(3)
    
    See Consolidated Operating Results in Managements Discussion and Analysis of
Financial Condition and Results of Operations for significant items that affect
comparability between the periods presented (see Note 15 to the consolidated
financial statements for the definition of Adjusted EBITDA).    TelesatFor the Period fromJanuary 1,2007 toOctober 30,2007Total operating revenues
    
    CAD 457.8Adjusted EBITDA
    
    CAD 263.2
  7




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Other
 o o
 o
 REGULATION
 Satellite Manufacturing
 Export Regulation and Economic Sanctions Compliance
     8




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Satellite Services
 Telecommunications Regulation
  Canadian Regulatory Environment
       9




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United States Regulatory Environment
        10




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Regulation Outside Canada and the United States
     International Regulatory Environment  International Telecommunication Union
      11




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PATENTS AND PROPRIETARY RIGHTS
 Satellite Manufacturing
  Satellite Services
   RESEARCH AND DEVELOPMENT
 Satellite Manufacturing
  Satellite Services
   12




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FOREIGN OPERATIONS
  Satellite Manufacturing
  Satellite Services
  EMPLOYEES
   OTHER
  AVAILABLE INFORMATION
  
 Item 1A. Risk Factors
 I.  Financial and Telesat Investment Risk Factors
 Our revenues and profitability may be adversely affected by the sustained global financial
downturn, and negative global economic conditions may have a material adverse effect on our
customers and suppliers.
   13




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We have had a history of losses.
  The SS/L credit agreement is subject to financial and other covenants that must be met for SS/L to
utilize the revolving facility.
  We are projecting negative cash flow for 2010, and there can be no assurance that we will have
sufficient funds to meet our cash requirements in the future.
  Loral Space & Communications Inc., the parent company, is a holding company with no current
operations; we are dependent on cash flow from our operating subsidiaries and affiliates to meet
our financial obligations.
 1 3
   14




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While we own 64% of Telesat on an economic basis, we own only 331/3% of its voting stock and
therefore do not have the right to elect or appoint a majority of its Board of Directors.
 1 3 2 3 2 3
 Our equity investment in Telesat may be at risk because of Telesats leverage.
      15




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Certain asset sales by Telesat may trigger material adverse tax consequences for us.
  The Telesat information in this report is based solely on information provided to us by Telesat.
  Telesats financial results and our U.S. dollar reporting of Telesats financial results will be
affected by volatility in the Canadian/U.S. dollar exchange rate.
   Our potential indebtedness makes us vulnerable to adverse developments.
  XTAR has not generated sufficient revenues to meet all of its contractual obligations, which are
substantial.
   16




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Significant changes in discount rates, actual investment return on pension assets and other factors
could affect our statement of operations, equity and pension contributions in future periods.
   II.  Segment Risk Factors
 
    
    Risk Factors Associated With Satellite Manufacturing
 The satellite manufacturing market is highly competitive and fixed costs are high.
    17




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SS/Ls contracts are subject to adjustments, cost overruns and termination.
      Certain of SS/Ls customers are highly leveraged and may not fulfill their contractual payment
obligations to SS/L.
   18




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SS/L may forfeit payments from customers as a result of satellite failures or losses after launch
or may be liable for penalty payments under certain circumstances, and these losses may be
uninsured.
    Some satellites built by SS/L, including one satellite operated by Telesat, have experienced minor
losses of power from their solar arrays.
  Some satellites built by SS/L have the same design as another SS/L-built satellite that has
experienced a partial failure.
   19




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We are subject to export control and economic sanctions laws, which may result in delays, lost
business and additional costs.
   The recent trend toward industry consolidation in the satellite services industry may adversely
affect us; we do not control satellite procurement decisions at Telesat.
   The availability of facility space and qualified personnel may affect SS/Ls ability to perform its
contracts in a timely and efficient manner.
  Our ability to obtain certain satellite contract awards depends, in part, on our ability to provide
the customer with financing.
   20




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SS/L relies on certain key suppliers whose failure or delayed performance would adversely affect
us.
  We face risks in conducting business internationally.
  We rely on patents, trade secrets and know-how; infringement by SS/L of third party patents would
increase our costs, and third parties may challenge our patents.
  
    
    Risk Factors Associated With Satellite Services
 A substantial amount of Telesat revenues are derived from only a few of its customers. A loss of
one or more of these major customers, or a material adverse change in any such customers business
or financial condition, could materially reduce Telesat future revenues and contracted backlog.
    21




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Launch delays or failures may result in delays in operations.
    After launch, satellites remain vulnerable to in-orbit failures which may result in reduced
revenues and profits and other financial consequences.
   It may be difficult to obtain full insurance coverage for satellites that have, or are part of a
family of satellites that has, experienced problems in the past; moreover, not all
satellite-related losses will be covered by insurance.
    22




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Telesat competes for market share, customers and orbital slots.
   Changes in the Canadian competitive environment could adversely affect Telesat.
   Telesat operates in a highly regulated industry and government regulations may adversely affect its
business.
      23




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##### Table of Contents



Telesats ability to replace one of its satellites is subject to additional risk and cannot be
assured.
  III. Other Risks
 Third parties have significant rights with respect to our affiliates.
 1 3
 We rely on key personnel.
  MHR may be viewed as our controlling stockholder and may have conflicts of interest with us in the
future.
  The future use of tax attributes is limited.
   24




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There is a thin trading market for our common stock.
  The market for our stock could be adversely affected by future issuance of significant amounts of
our common stock.
   Litigation and Disputes
 We are involved in a number of ongoing lawsuits.
  
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
 Corporate
  Satellite Manufacturing
   25




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##### Table of Contents



Satellite Services
    
 Item 3. Legal Proceedings
  
 Item 4. (Removed and Reserved)
 
 PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
 (a)  Market Price and Dividend Information
    26




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High
    
    
    LowYear ended December 31, 2009Quarter ended December 31, 2009
    
    $
    34.89
    
    
    $
    24.74Quarter ended September 30, 2009
    
    
    29.06
    
    
    
    19.27Quarter ended June 30, 2009
    
    
    34.83
    
    
    
    19.75Quarter ended March 31, 2009
    
    
    22.90
    
    
    
    8.90Year ended December 31, 2008Quarter ended December 31, 2008
    
    $
    15.86
    
    
    $
    6.04Quarter ended September 30, 2008
    
    
    18.81
    
    
    
    13.29Quarter ended June 30, 2008
    
    
    25.42
    
    
    
    15.02Quarter ended March 31, 2008
    
    
    34.20
    
    
    
    21.78
  (b)  Approximate Number of Holders of Common Stock
  (c)  Dividends
  (d)  Securities Authorized for Issuance under Equity Compensation Plans
   27




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(e)  Comparison of Cumulative Total Returns
  
 
 Item 6. Selected Financial Data
     28




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29




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LORAL SPACE & COMMUNICATIONS INC.
(In thousands, except per share data)
 Successor Registrant
    
    
    Predecessor RegistrantFor the Period
    
    
    For the PeriodOctober 2,
    
    
    January 1,2005 to
    
    
    2005 toYear Ended December 31,
    
    
    December 31,
    
    
    October 1,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2005Statement of operations data:Revenues:Satellite Manufacturing
    
    $
    993,400
    
    
    $
    869,398
    
    
    $
    761,363
    
    
    $
    636,632
    
    
    $
    161,069
    
    
    $
    318,587Satellite Services
    
    
    
    
    
    
    
    
    
    
    121,091
    
    
    
    160,701
    
    
    
    36,096
    
    
    
    110,596Total Revenues
    
    
    993,400
    
    
    
    869,398
    
    
    
    882,454
    
    
    
    797,333
    
    
    
    197,165
    
    
    
    429,183Operating income (loss) from
continuing
operations(1)
    
    
    20,211
    
    
    
    (193,977
    )
    
    
    45,256
    
    
    
    29,818
    
    
    
    (4,945
    )
    
    
    (67,095
    )Gain on discharge of
pre-petition obligations and
fresh-start
adjustments(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,101,453Income (loss) from continuing
operations before income taxes
and equity in net income
(losses) of
affiliates(3)(4)
    
    
    26,975
    
    
    
    (151,523
    )
    
    
    157,786
    
    
    
    30,117
    
    
    
    (5,395
    )
    
    
    1,022,651Income tax (provision) benefit
    
    
    (5,571
    )
    
    
    (45,744
    )
    
    
    (83,457
    )
    
    
    (20,880
    )
    
    
    (1,752
    )
    
    
    10,901Income (loss) from continuing
operations before equity in net
income (losses) of affiliates
    
    
    21,404
    
    
    
    (197,267
    )
    
    
    74,329
    
    
    
    9,237
    
    
    
    (7,147
    )
    
    
    1,033,552Equity in net income (losses)
of affiliates(5)
    
    
    210,298
    
    
    
    (495,649
    )
    
    
    (21,430
    )
    
    
    (7,163
    )
    
    
    (5,447
    )
    
    
    (2,796
    )Income (loss) from continuing
operations
    
    
    231,702
    
    
    
    (692,916
    )
    
    
    52,899
    
    
    
    2,074
    
    
    
    (12,594
    )
    
    
    1,030,756Gain on sale of discontinued
operations, net of
taxes(6)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,967Net income (loss)
    
    
    231,702
    
    
    
    (692,916
    )
    
    
    52,899
    
    
    
    2,074
    
    
    
    (12,594
    )
    
    
    1,044,723Net (income) loss attributable
to noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    (23,240
    )
    
    
    (24,794
    )
    
    
    (2,667
    )
    
    
    126Net income (loss) attributable
to Loral Space & Communications
Inc.
    
    
    231,702
    
    
    
    (692,916
    )
    
    
    29,659
    
    
    
    (22,720
    )
    
    
    (15,261
    )
    
    
    1,044,849Preferred dividends
    
    
    
    
    
    
    (24,067
    )
    
    
    (19,379
    )
    
    
    
    
    
    
    
    
    
    
    Beneficial conversion feature
related to the issuance of
Loral Series A-1 Preferred
Stock(7)
    
    
    
    
    
    
    
    
    
    
    (25,685
    )
    
    
    
    
    
    
    
    
    
    
    Net income (loss) applicable to
Loral Space & Communications
Inc. common shareholders
    
    
    231,702
    
    
    
    (716,983
    )
    
    
    (15,405
    )
    
    
    (22,720
    )
    
    
    (15,261
    )
    
    
    1,044,849Basic earnings (loss) per share:Continuing operations
    
    $
    7.79
    
    
    $
    (35.13
    )
    
    $
    (0.77
    )
    
    $
    (1.14
    )
    
    $
    (0.76
    )
    
    $
    23.37Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.32Earnings (loss) per share
    
    $
    7.79
    
    
    $
    (35.13
    )
    
    $
    (0.77
    )
    
    $
    (1.14
    )
    
    $
    (0.76
    )
    
    $
    23.69Diluted earnings (loss) per
share:Continuing operations
    
    $
    7.73
    
    
    $
    (35.13
    )
    
    $
    (0.77
    )
    
    $
    (1.14
    )
    
    $
    (0.76
    )
    
    $
    23.37Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.32Earnings (loss) per share
    
    $
    7.73
    
    
    $
    (35.13
    )
    
    $
    (0.77
    )
    
    $
    (1.14
    )
    
    $
    (0.76
    )
    
    $
    23.69Cash flow data:Provided by (used in)
operating activities
    
    
    154,562
    
    
    
    (202,210
    )
    
    
    27,123
    
    
    
    88,002
    
    
    
    (38,531
    )
    
    
    (143,827
    )(Used in) provided by
investing
activities(8)
    
    
    (48,750
    )
    
    
    (47,308
    )
    
    
    61,519
    
    
    
    (175,978
    )
    
    
    (5,089
    )
    
    
    194,707(Used in) provided by
financing activities
    
    
    (55,155
    )
    
    
    52,372
    
    
    
    39,510
    
    
    
    (1,278
    )
    
    
    120,763
    
    
    
    
  30




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##### Table of Contents



Successor RegistrantDecember 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Balance sheet data:Cash and cash equivalents
    
    $
    168,205
    
    
    $
    117,548
    
    
    $
    314,694
    
    
    $
    186,542
    
    
    $
    275,796Short-term investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    106,588
    
    
    
    Total assets
    
    
    1,253,452
    
    
    
    995,867
    
    
    
    1,702,939
    
    
    
    1,729,911
    
    
    
    1,678,977Debt, including current portion
    
    
    
    
    
    
    55,000
    
    
    
    
    
    
    
    128,084
    
    
    
    128,191Non-current liabilities
    
    
    380,143
    
    
    
    381,836
    
    
    
    289,602
    
    
    
    321,015
    
    
    
    403,374EquityLoral Space & Communications Inc. shareholders equity
    
    $
    431,991
    
    
    $
    209,657
    
    
    $
    973,558
    
    
    $
    647,002
    
    
    $
    627,164Noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    214,256
    
    
    
    200,000Total equity
    
    $
    431,991
    
    
    $
    209,657
    
    
    $
    973,558
    
    
    $
    861,258
    
    
    $
    827,164
 (1)
    
    During 2008, we recorded a goodwill impairment charge of
$187.9 million. In connection with the Telesat
transaction, which closed on October 31, 2007, we
recognized a gain of $104.9 million in 2007 on the
contribution of substantially all of the assets and
related liabilities of Loral Skynet to Telesat. See Note 6
to the Loral consolidated financial statements.(2)
    
    In connection with our emergence from Chapter 11 and our
adoption of fresh-start accounting on October 1, 2005, we
recognized a gain on discharge of pre-petition obligations
and fresh-start adjustments of $1.101 billion, related
interest expense of $13.2 million related to the holders
of claims to be paid in cash and a tax benefit of
$15.4 million, each of which is reflected separately in
our statement of operations.(3)
    
    In connection with the Telesat transaction during 2007, we
recognized a gain on foreign exchange contracts of
$89.4 million (see Note 13 to the Loral consolidated
financial statements).(4)
    
    During 2008, we recorded income of $58.3 million related
to a gain on litigation recovery from Rainbow DBS and a
loss of $19.5 million related to the award of attorneys
fees and expenses to the plaintiffs for shareholder
litigation concluded during 2008.(5)
    
    Beginning October 31, 2007, our principal affiliate is
Telesat. Loral also has investments in XTAR and joint
ventures providing Globalstar service, which are accounted
for under the equity method. On December 21, 2007 Loral
agreed to sell its interest in Globalstar do Brasil S.A.
which resulted in Loral recording a charge of
$11.3 million in 2007 (see Note 6 to the Loral
consolidated financial statements).(6)
    
    During the period January 1, 2005 to October 1, 2005, we
recorded a gain from the sale on March 17, 2004 of our
North American satellites and related assets.(7)
    
    As of December 23, 2008, in accordance with a court
ordered restated certificate of incorporation, the
previously issued Loral Series-1 Preferred stock was
cancelled. As the fair value of Lorals common stock from
January 1 to December 23, 2008 was less than the
conversion price ($30.1504), we did not record any
beneficial conversion feature during 2008 (see Note 10 to
the Loral consolidated financial statements).(8)
    
    Cash flow (used in) provided by investing activities
includes cash flow provided by (used in) investing
activities of discontinued operations for the period
January 1, 2005 to October 1, 2005.  31




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##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion and analysis should be read in conjunction with our consolidated
financial statements (the financial statements) included in Item 15 of this Annual Report on
Form 10-K
  1 3
  Disclosure Regarding Forward-Looking Statements
 Except for the historical information contained in the following discussion and analysis, the
matters discussed below are not historical facts, but are forward-looking statements as that term
is defined in the Private Securities Litigation Reform Act of 1995. In addition, we or our
representatives have made and may continue to make forward-looking statements, orally or in
writing, in other contexts. These forward-looking statements can be identified by the use of words
such as believes, expects, plans, may, will, would, could, should, anticipates,
estimates, project, intend, or outlook or other variations of these words. These
statements, including without limitation those relating to Telesat, are not guarantees of future
performance and involve risks and uncertainties that are difficult to predict or quantify. Actual
events or results may differ materially as a result of a wide variety of factors and conditions,
many of which are beyond our control. For a detailed discussion of these and other factors and
conditions, please refer to the Commitments and Contingencies section below and to our other
periodic reports filed with the Securities and Exchange Commission (SEC). We operate in an
industry sector in which the value of securities may be volatile and may be influenced by economic
and other factors beyond our control. We undertake no obligation to update any forward-looking
statements.
 Overview
 Businesses
  Satellite Manufacturing
    32




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##### Table of Contents



Satellite Services
     Future Outlook
 Satellite Manufacturing
   33




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##### Table of Contents



Satellite Services
 1 3
         34




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##### Table of Contents



General
    Consolidated Operating Results
       35




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##### Table of Contents



Revenues:
 Year Ended December 31,2009
    
    
    2008
    
    
    2007(In millions)Satellite Manufacturing
    
    $
    1,008.7
    
    
    $
    881.4
    
    
    $
    814.3Satellite Services
    
    
    691.6
    
    
    
    685.2
    
    
    
    241.2Segment revenues
    
    
    1,700.3
    
    
    
    1,566.6
    
    
    
    1,055.5Eliminations(1)
    
    
    (15.3
    )
    
    
    (12.0
    )
    
    
    (55.2
    )Affiliate eliminations(2)
    
    
    (691.6
    )
    
    
    (685.2
    )
    
    
    (117.8
    )Revenues as reported(3)
    
    $
    993.4
    
    
    $
    869.4
    
    
    $
    882.5
    Adjusted EBITDA:
 Year Ended December 31,2009
    
    
    2008
    
    
    2007(In millions)Satellite Manufacturing
    
    $
    90.6
    
    
    $
    45.1
    
    
    $
    34.5Satellite Services
    
    
    488.1
    
    
    
    436.5
    
    
    
    118.4Corporate expenses
    
    
    (21.4
    )
    
    
    (14.9
    )
    
    
    (37.9
    )Segment Adjusted EBITDA before eliminations
    
    
    557.3
    
    
    
    466.7
    
    
    
    115.0Eliminations(1)
    
    
    (1.7
    )
    
    
    (1.6
    )
    
    
    (6.1
    )Affiliate eliminations(2)
    
    
    (488.1
    )
    
    
    (427.2
    )
    
    
    (65.3
    )Adjusted EBITDA
    
    $
    67.5
    
    
    $
    37.9
    
    
    $
    43.6
  36




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##### Table of Contents



Reconciliation of Adjusted EBITDA to Net Income (Loss):
 Year Ended December 31,2009
    
    
    2008
    
    
    2007(In millions)Adjusted EBITDA
    
    $
    67.5
    
    
    $
    37.9
    
    
    $
    43.6Depreciation, amortization and stock-based compensation(4)
    
    
    (47.3
    )
    
    
    (44.0
    )
    
    
    (103.3
    )Impairment of goodwill(5)
    
    
    
    
    
    
    (187.9
    )
    
    
    Gain on contribution of Loral Skynet(6)
    
    
    
    
    
    
    
    
    
    
    104.9Operating income (loss)
    
    
    20.2
    
    
    
    (194.0
    )
    
    
    45.2Interest and investment income
    
    
    8.3
    
    
    
    11.9
    
    
    
    39.3Interest expense(7)
    
    
    (1.4
    )
    
    
    (2.3
    )
    
    
    (2.3
    )Gain on foreign exchange contracts
    
    
    
    
    
    
    
    
    
    
    89.4Gain on litigation, net
    
    
    
    
    
    
    38.8
    
    
    
    Impairment of available for sale securities
    
    
    
    
    
    
    (5.8
    )
    
    
    Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    (16.2
    )Other (expense) income
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    2.4Income tax provision
    
    
    (5.6
    )
    
    
    (45.7
    )
    
    
    (83.5
    )Equity in net income (losses) of affiliates
    
    
    210.3
    
    
    
    (495.7
    )
    
    
    (21.4
    )Net income (loss)
    
    $
    231.7
    
    
    $
    (692.9
    )
    
    $
    52.9
 (1)
    
    Represents the elimination of intercompany sales and
intercompany Adjusted EBITDA, primarily for satellites
under construction by SS/L for Loral and its wholly owned
subsidiaries and for Satellite Services leasing
transponder capacity to SS/L.(2)
    
    Represents the elimination of amounts attributed to
Telesat whose results are reported in our consolidated
statements of operations as equity in net income (losses)
of affiliates.  37




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##### Table of Contents



(3)
    
    Includes revenues from affiliates of $92.1 million,
$84.0 million and $22.0 million for the years ended
December 31, 2009, 2008 and 2007, respectively.(4)
    
    Includes non-cash stock-based compensation of $7.5
million, $7.6 million and $26.3 million for the years
ended December 31, 2009, 2008 and 2007, respectively (see
Note 10 to the financial statements).(5)
    
    During the fourth quarter of 2008, we determined that the
implied fair value of SS/L goodwill had dropped below its
carrying value, and we recorded this impairment charge.(6)
    
    In connection with the Telesat transaction, which closed
on October 31, 2007, we recognized a gain on the
contribution of substantially all of the assets and
related liabilities of Loral Skynet to Telesat (see Note 6
to the financial statements).(7)
    
    Interest expense for the year ended December 31, 2007
includes a reduction of $9 million resulting from the
reduction of warranty liability. 2009 Compared with 2008 and 2008 Compared with 2007
  Revenue from Satellite Manufacturing
 % Increase(Decrease)Year Ended
    
    
    2009
    
    
    2008December 31,
    
    
    vs.
    
    
    vs.2009
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007(In millions)Revenue from Satellite Manufacturing
    
    $
    1,008
    
    
    $
    881
    
    
    $
    814
    
    
    
    14
    %
    
    
    8
    %Eliminations
    
    
    (15
    )
    
    
    (12
    )
    
    
    (53
    )
    
    
    25
    %
    
    
    (77
    )%Revenue from Satellite Manufacturing as reported
    
    $
    993
    
    
    $
    869
    
    
    $
    761
    
    
    
    14
    %
    
    
    14
    %
   Revenue from Satellite Services
 Year Ended December 31,2009
    
    
    2008
    
    
    2007(In millions)Revenue from Satellite Services
    
    $
    
    
    
    $
    
    
    
    $
    123Eliminations
    
    
    
    
    
    
    
    
    
    
    (2
    )Revenue from Satellite Services as reported
    
    $
    
    
    
    $
    
    
    
    $
    121
  38




---



##### Table of Contents



Cost of Satellite Manufacturing
 % Increase(Decrease)2009
    
    
    2008Year Ended December 31,
    
    
    vs.
    
    
    vs.2009
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007(In millions)Cost of Satellite Manufacturing includes:Cost of Satellite Manufacturing before specific identified charges
    
    $
    836
    
    
    $
    749
    
    
    $
    653
    
    
    
    12
    %
    
    
    15
    %Depreciation, amortization and stock-based compensation
    
    
    44
    
    
    
    39
    
    
    
    36
    
    
    
    13
    %
    
    
    8
    %Cost of Satellite Manufacturing
    
    $
    880
    
    
    $
    788
    
    
    $
    689
    
    
    
    12
    %
    
    
    14
    %Cost of Satellite Manufacturing as a % of Satellite Manufacturing
revenues as reported
    
    
    89
    %
    
    
    91
    %
    
    
    91
    %
   Cost of Satellite Services
 Year EndedDecember 31,2009
    
    
    2008
    
    
    2007(In millions)Cost of Satellite Services includes:Cost of Satellite Services before specific identified charges
    
    $
    
    
    
    $
    
    
    
    $
    42Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    44Cost of Satellite Services
    
    $
    
    
    
    $
    
    
    
    $
    86Cost of Satellite Services as a% of Satellite Services revenues as reported
    
    
    
    
    
    
    
    
    
    
    71
    %
   39




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##### Table of Contents



Selling, General and Administrative Expenses
 % Increase(Decrease)2009
    
    
    2008Year Ended December 31,
    
    
    vs.
    
    
    vs.2009
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007(In millions)Selling, general and administrative expenses includes:Selling, general and administrative expenses before specific charges
    
    $
    85
    
    
    $
    87
    
    
    $
    133
    
    
    
    (2
    %)
    
    
    (35
    )%Litigation costs
    
    
    3
    
    
    
    5
    
    
    
    11
    
    
    
    (40
    %)
    
    
    (58
    )%Stock based compensation
    
    
    5
    
    
    
    5
    
    
    
    23
    
    
    
    
    
    
    
    (77
    )%Selling, general and administrative expenses as reported
    
    
    93
    
    
    $
    97
    
    
    $
    167
    
    
    
    (4
    %)
    
    
    (42
    )%% of revenues as reported
    
    
    9
    %
    
    
    11
    %
    
    
    19
    %
   Gain on Recovery from Customer Bankruptcy
  Impairment of Goodwill
   40




---



##### Table of Contents



Gain on Contribution of Loral Skynet to Telesat
  Consideration received for the contribution of Loral Skynet to Telesat Holdco:Cash and marketable securities
    
    $
    61.5Fair value of equity in Telesat Holdco
    
    
    670.5Total consideration
    
    
    732.0Book value of contributed net assets of Loral Skynet
    
    
    440.5Consideration in excess of book value
    
    $
    291.5Gain recognized
    
    $
    104.9
  Interest and Investment Income
 Year EndedDecember 31,2009
    
    
    2008
    
    
    2007(In millions)Interest and investment income
    
    $
    8
    
    
    $
    12
    
    
    $
    39
   Interest Expense
 Year EndedDecember 31,2009
    
    
    2008
    
    
    2007(In millions)Interest cost before capitalized interest
    
    $
    1
    
    
    $
    3
    
    
    $
    12Capitalized interest
    
    
    
    
    
    
    (1
    )
    
    
    (10
    )Interest expense
    
    $
    1
    
    
    $
    2
    
    
    $
    2
   41




---



##### Table of Contents



Gain on Foreign Exchange Contracts
  Gain on Litigation, Net
  Impairment of Available for Sale Securities
  Loss on Extinguishment of Debt
  Other (Expense) Income
  Income Tax Provision
    42




---



##### Table of Contents



Taxation
 Equity in Net Income (Losses) of Affiliates
 Year EndedDecember 31,2009
    
    
    2008
    
    
    2007(In millions)Telesat
    
    $
    213.2
    
    
    $
    (479.6
    )
    
    $
    (1.8
    )XTAR
    
    
    (2.7
    )
    
    
    (16.1
    )
    
    
    (10.6
    )Other
    
    
    (0.2
    )
    
    
    
    
    
    
    (9.0
    )$
    210.3
    
    
    $
    (495.7
    )
    
    $
    (21.4
    )
   43




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##### Table of Contents



For the period
    
    
    
    
    
    
    
    
    
    
    For the periodOctober 31,
    
    
    
    
    
    
    
    
    
    
    October 31,2007
    
    
    
    
    
    
    
    
    
    
    2007Year Ended December 31
    
    
    to December 31,
    
    
    Year Ended December 31
    
    
    to December 31,2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007(In Canadian dollars)
    
    
    (In U.S. dollars)Statement of Operations Data:Revenues
    
    
    788.7
    
    
    
    731.1
    
    
    
    114.5
    
    
    
    691.6
    
    
    
    685.2
    
    
    
    117.8Operating expenses
    
    
    (232.0
    )
    
    
    (275.3
    )
    
    
    (51.0
    )
    
    
    (203.4
    )
    
    
    (258.0
    )
    
    
    (52.5
    )Impairment of long-lived and intangible
assets
    
    
    
    
    
    
    (485.4
    )
    
    
    
    
    
    
    
    
    
    
    (454.9
    )
    
    
    Depreciation, amortization and
stock-based compensation
    
    
    (262.5
    )
    
    
    (241.1
    )
    
    
    (40.0
    )
    
    
    (230.2
    )
    
    
    (226.0
    )
    
    
    (41.2
    )Gain on disposition of long-lived assets
    
    
    33.4
    
    
    
    
    
    
    
    
    
    
    
    29.3
    
    
    
    
    
    
    
    Operating income
    
    
    327.6
    
    
    
    (270.7
    )
    
    
    23.4
    
    
    
    287.3
    
    
    
    (253.7
    )
    
    
    24.1Interest expense
    
    
    (260.0
    )
    
    
    (246.5
    )
    
    
    (40.2
    )
    
    
    (228.0
    )
    
    
    (231.1
    )
    
    
    (41.3
    )Other income (expense)
    
    
    330.1
    
    
    
    (430.1
    )
    
    
    (44.3
    )
    
    
    289.5
    
    
    
    (403.1
    )
    
    
    (45.6
    )Income tax (provision) benefit
    
    
    (2.5
    )
    
    
    149.2
    
    
    
    59.8
    
    
    
    (2.2
    )
    
    
    139.9
    
    
    
    61.5Net income (loss)
    
    
    395.2
    
    
    
    (798.1
    )
    
    
    (1.3
    )
    
    
    346.6
    
    
    
    (748.0
    )
    
    
    (1.3
    )Average exchange rate for translating
Canadian dollars to U.S. dollars
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.1405
    
    
    
    1.0670
    
    
    
    0.9720
 As of December 31,
    
    
    As of December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008(In Canadian dollars)
    
    
    (In U.S. dollars)Balance Sheet Data:Current assets
    
    
    265.0
    
    
    
    219.1
    
    
    
    251.6
    
    
    
    179.8Total assets
    
    
    5,260.4
    
    
    
    5,208.1
    
    
    
    4,994.7
    
    
    
    4,273.2Current liabilities
    
    
    206.3
    
    
    
    208.9
    
    
    
    195.9
    
    
    
    171.4Long-term debt, including current portion
    
    
    3,110.4
    
    
    
    3,536.5
    
    
    
    2,953.3
    
    
    
    2,901.6Total liabilities
    
    
    4,257.0
    
    
    
    4,582.9
    
    
    
    4,041.9
    
    
    
    3,760.2Redeemable preferred stock
    
    
    141.4
    
    
    
    141.4
    
    
    
    134.3
    
    
    
    116.0Shareholders equity
    
    
    862.0
    
    
    
    483.8
    
    
    
    818.5
    
    
    
    397.0Period end exchange rate for tanslating
Canadian dollars to U.S. dollars
    
    
    
    
    
    
    
    
    
    
    1.0532
    
    
    
    1.2188
   44




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##### Table of Contents



Backlog
  2009
    
    
    2008Satellite Manufacturing
    
    $
    1,632
    
    
    $
    1,381Satellite Services
    
    
    5,230
    
    
    
    4,207Total backlog before eliminations
    
    
    6,862
    
    
    
    5,588Satellite Manufacturing eliminations
    
    
    (9
    )
    
    
    (25
    )Satellite Services eliminations
    
    
    (5,230
    )
    
    
    (4,207
    )Total backlog
    
    $
    1,623
    
    
    $
    1,356
    Critical Accounting Matters
  Revenue Recognition
   45




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##### Table of Contents



Billed Receivables and Long-Term Receivables
  Inventories
  Fair Value Measurements
  Level 1:
 Level 2:
 Level 3:
  Assets
 and Liabilities Measured at Fair Value on a   Recurring Basis
  Level 1
    
    
    Level 2
    
    
    Level 3(In thousands)Assets:Marketable securities
    
    $
    856
    
    
    $
    
    
    
    $
    Derivatives, net
    
    $
    
    
    
    $
    3,873
    
    
    $
    Non-qualified pension plan assets
    
    $
    2,791
    
    
    $
    
    
    
    $
    81
   46




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##### Table of Contents



Assets and Liabilities Measured at Fair Value on a Non-recurring Basis
  Taxation
      Pension and other employee benefits
   47




---



##### Table of Contents



Stock-Based Compensation
    Goodwill and Other Intangible Assets
   48




---



##### Table of Contents



Contingencies
  Accounting Standards Issued and Not Yet Implemented
  Liquidity and Capital Resources
  Cash and Available Credit
    49




---



##### Table of Contents



Cash Management
   Liquidity
      50




---



##### Table of Contents



51




---



##### Table of Contents



Telesat
 Cash and Available Credit
   Liquidity
    52




---



##### Table of Contents



Debt
  December 31,
    
    
    December 31,Maturity

    
    Currency

    
    2009
    
    
    2008(In CAD millions)Senior Secured Credit Facilities:Revolving facility
    
    October 31, 2012
    
    CAD or USD equivalent
    
    
    
    
    
    
    Canadian term loan facility
    
    October 31, 2012
    
    CAD
    
    
    185
    
    
    
    195U.S. term loan facility
    
    October 31, 2014
    
    USD
    
    
    1,777
    
    
    
    2,087U.S. term loan II facility
    
    October 31, 2014
    
    USD
    
    
    152
    
    
    
    179Senior notes
    
    November 1, 2015
    
    USD
    
    
    703
    
    
    
    819Senior subordinated notes
    
    November 1, 2017
    
    USD
    
    
    220
    
    
    
    256CAD
    
    
    3,037
    
    
    
    3,536Current portion
    
    
    
    CAD
    
    
    (23
    )
    
    
    (23
    )Long term portion
    
    
    
    CAD
    
    
    3,014
    
    
    
    3,513
      53




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##### Table of Contents



Interest Expense
  Derivatives
    Interest rate risk
  Capital Expenditures
  XTAR
   54




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##### Table of Contents



Contractual Obligations and Other Commercial Commitments
  Contractual Obligations:
 Payments Due by PeriodLess than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    5 YearsOperating leases(1)
    
    $
    42,202
    
    
    $
    10,737
    
    
    $
    14,167
    
    
    $
    7,282
    
    
    $
    10,016Unconditional purchase obligations(2)
    
    
    468,514
    
    
    
    305,623
    
    
    
    162,891
    
    
    
    
    
    
    
    Other long-term obligations(3)
    
    
    44,259
    
    
    
    23,116
    
    
    
    18,076
    
    
    
    494
    
    
    
    2,573Revolving credit agreement(4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total contractual cash obligations(5)
    
    $
    554,975
    
    
    $
    339,476
    
    
    $
    195,134
    
    
    $
    7,776
    
    
    $
    12,589
 Other Commercial Commitments:
 Total
    
    
    Amount of Commitment Expiration Per PeriodAmounts
    
    
    Less than
    
    
    
    
    
    
    
    
    
    
    More thanCommitted
    
    
    1 Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    5 YearsStand by letter of credit
    
    $
    4,291
    
    
    $
    4,291
    
    
    $
    
    
    
    $
    
    
    
    $
    
 (1)
    
    Represents future minimum payments under operating leases with initial or remaining terms of one year or more.(2)
    
    SS/L has entered into various purchase commitments with suppliers due to the long lead times required to
produce purchased parts.(3)
    
    Represents our commitment in connection with an agreement entered into between Loral and ViaSat for the
purchase by Loral of a portion of the ViaSat-1 satellite which is being constructed by SS/L for ViaSat as
well as commitments for related gateway infrastructure and equipment (see Note 16 to the financial
statements).(4)
    
    On October 16, 2008, SS/L entered into a Credit Agreement with several banks and other financial
institutions. The Credit Agreement provides for a $100 million senior secured revolving credit facility. The
Revolving Facility includes a $50 million letter of credit sublimit. The Credit Agreement is for a term of
three years, maturing on October 16, 2011 (see Note 8 to the financial statements). No amounts were
outstanding under the Credit Agreement at December 31, 2009.(5)
    
    Does not include our liabilities for uncertain tax positions of $111.3 million. Because the timing of future
cash outflows associated with our liabilities for uncertain tax positions is highly uncertain, we are unable
to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities
(see Note 9 to the financial statements). Does not include obligations for pensions and other postretirement
benefits, for which we expect to make employer contributions of $28.9 million in 2010. We also expect to make
significant employer contributions to our plans in future years. Net Cash
Provided by  (Used in)   Operating Activities
     55




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##### Table of Contents



Net Cash (Used in) Provided By Investing Activities
    Net Cash (Used in) Provided by Financing Activities
    Other
  Affiliate Matters
   56




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##### Table of Contents



Year Ended December 31,2009
    
    
    2008
    
    
    2007(In millions)Revenues
    
    $
    92.1
    
    
    $
    84.0
    
    
    $
    22.0Elimination of Lorals proportionate share of (profits) losses relating to affiliate transactions
    
    
    (10.1
    )
    
    
    (5.0
    )
    
    
    1.9Profits (losses) relating to affiliate transactions not eliminated
    
    
    5.7
    
    
    
    2.8
    
    
    
    (1.1
    )
 Commitments and Contingencies
  
 Item 7A. Quantitative and Qualitative Disclosures about Market Risk
 Foreign Currency
 Loral
   Foreign Currency
    
    
    U.S.$(In millions)Future revenues  Japanese Yen
    
    ¥
    35.1
    
    
    $
    0.4Future expenditures  Japanese Yen
    
    ¥
    4,613.7
    
    
    $
    50.0Contracts-in-process, unbilled receivables  Japanese Yen
    
    ¥
    75.4
    
    
    $
    0.8Future revenues  EUROs
    
    
    4.4
    
    
    $
    6.3Future expenditures  EUROs
    
    
    2.4
    
    
    $
    3.4
 Derivatives
   To SellAt
    
    
    AtEuro
    
    
    Contract
    
    
    MarketAmount
    
    
    Rate
    
    
    RateMaturity
    
    (In millions)2010
    
    
    19.2
    
    
    $
    29.4
    
    
    $
    27.52011
    
    
    23.5
    
    
    
    35.7
    
    
    
    33.7
    42.7
    
    
    $
    65.1
    
    
    $
    61.2
  57




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##### Table of Contents



Telesat
  Interest
   
 Item 8. Financial Statements and Supplementary Data
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   58




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##### Table of Contents



Managements Report on Internal Control Over Financial Reporting
 Internal Control  Integrated
Framework
  Changes in Internal Controls Over Financial Reporting
  Inherent Limitations on Effectiveness of Controls
   59




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal Control  Integrated Framework
    Internal
Control  Integrated Framework
  DELOITTE & TOUCHE LLP
 
  60




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##### Table of Contents



Item 9B. Other Information
  
 PART III
 
 Item 10. Directors and Executive Officers of the Registrant
 Executive Officers of the Registrant
  Name
    
    Age
    
    PositionMichael B. Targoff
    
    
    65
    
    
    Chief Executive Officer since March 1, 2006, President since January
2008 and Vice Chairman of the Board of Directors since November 2005.
Prior to that, founder of Michael B. Targoff & Co.Avi Katz
    
    
    51
    
    
    Senior Vice President, General Counsel and Secretary since January
2008. Vice President, General Counsel and Secretary from November 2005
to January 2008. Vice President, General Counsel and Secretary of Old
Loral from November 1999 to November 2005.Richard P. Mastoloni
    
    
    45
    
    
    Senior Vice President of Finance and Treasurer since January 2008.
Vice President and Treasurer from November 2005 to January 2008. Vice
President and Treasurer of Old Loral from February 2002 to November
2005. Vice President of Old Loral from September 2001 to February
2002.Harvey B. Rein
    
    
    56
    
    
    Senior Vice President and Chief Financial Officer since January 2008.
Vice President and Controller from November 2005 to January 2008. Vice
President and Controller of Old Loral from April 1996 to November
2005.John Capogrossi
    
    
    56
    
    
    Vice President and Controller since January 2008. Executive Director,
Financial Planning and Analysis, from October 2006 to January 2008.
Assistant Controller from November 2005 to October 2006. Assistant
Controller of Old Loral from January 2001 to November 2005.
   
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
   61




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##### Table of Contents



Item 13. Certain Relationships and Related Transactions
  
 Item 14. Principal Accountant Fees and Services
  
 PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
  Index to Financial Statements and Financial Statement Schedule
    
    
    F-1Loral Space & Communications Inc. and Subsidiaries:Report of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets as of December 31, 2009 and 2008
    
    
    F-3Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007
    
    
    F-4Consolidated Statements of Equity for the years ended December 31, 2009, 2008 and 2007
    
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7(a) 2. Financial Statement ScheduleSchedule II
    
    
    F-61Separate Financial Statements of Subsidiaries not consolidated Pursuant to Rule 3-09 of Regulation S-XTelesat Holdings Inc. and Subsidiaries:Report of Independent Registered Chartered Accountants
    
    
    F-62Consolidated Statements of Earnings (Loss) for the years ended December 31, 2009, 2008 and 2007
    
    
    F-63Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2009, 2008 2007
    
    
    F-64Consolidated Statements of
Shareholders Equity for the year ended December 31, 2009 with comparative
figures for the periods ended December 31, 2008, December 31, 2007, October 30, 2007
    
    
    F-65Consolidated Balance Sheets as of December 31, 2009 and 2008
    
    
    F-66Consolidated Statements of Cash Flow for the years ended December 31, 2009, 2008 and 2007
    
    
    F-67Notes to the 2009 Consolidated Financial Statements
    
    
    F-68
  62




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##### Table of Contents



INDEX TO EXHIBITS
 ExhibitNumber
    
    Description2.1
    
    
    Debtors Fourth Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code dated June 3,
2005(1)2.2
    
    
    Modification to Debtors Fourth Amended Plan of Reorganization Under Chapter 11 of the Bankruptcy Code
dated August 1, 2005(2)2.3
    
    
    Letter Agreement among Loral Space & Communications Inc., Loral Skynet Corporation, Public Sector Pension
Investment Board, 4363205 Canada Inc. and 4363213 Canada Inc. dated December 14, 2006(5)2.4
    
    
    Share Purchase Agreement among 4363213 Canada Inc., BCE Inc. and Telesat dated December 16, 2006(5)2.5
    
    
    Letter Agreement among Loral Space & Communications Inc., Public Sector Pension Investment Board and BCE
Inc. dated December 16, 2006(5)2.6
    
    
    Asset Transfer Agreement, dated as of August 7, 2007, by and among 4363205 Canada Inc., Loral Skynet
Corporation and Loral Space & Communications Inc.(7)2.7
    
    
    Amendment No. 1 to Asset Transfer Agreement, dated as of September 24, 2007, by and among 4363205 Canada
Inc., Loral Skynet Corporation and Loral Space & Communications Inc.(8)2.8
    
    
    Asset Purchase Agreement, dated as of August 7, 2007, by and among Loral Skynet Corporation, Skynet
Satellite Corporation and Loral Space & Communications Inc.(7)3.1
    
    
    Restated Certificate of Incorporation of Loral Space & Communications Inc. dated May 19, 2009(19)3.2
    
    
    Amended and Restated Bylaws of Loral Space & Communications Inc. dated December 23, 2008(15)3.3
    
    
    Amendment No. 1 to Bylaws of Loral Space & Communications dated January 12, 2010(23)10.1
    
    
    Credit Agreement, dated as of October 16, 2008, among Space Systems/Loral, Inc., as Borrower, the several
lenders from time to time party thereto, Bank of America, N.A., as Documentation Agent, ING Bank, N.V., as
Syndication Agent, and JPMorgan Chase Bank, N.A., as Administrative Agent(14)10.2
    
    
    Parent Guarantee Agreement, dated as of October 22, 2008, by Loral Space & Communications Inc. in favor of
JPMorgan Chase Bank, N.A., as Administrative Agent.(14)10.3
    
    
    Ancillary Agreement, dated as of August 7, 2007, by and among Loral Space & Communications Inc., Loral
Skynet Corporation, Public Sector Pension Investment Board, 4363205 Canada Inc. and 4363230 Canada Inc.(7)10.4
    
    
    Adjustment Agreement, dated as of October 29, 2007, between Telesat Interco Inc. (formerly 4363213 Canada
Inc.), BCE Inc. and Telesat(9)10.5
    
    
    Omnibus Agreement, dated as of October 30, 2007, by and among Loral Space & Communications Inc., Loral
Skynet Corporation, Public Sector Pension Investment Board, Red Isle Private Investments Inc. and Telesat
Holdings Inc. (formerly 4363205 Canada Inc.)(9)10.6
    
    
    Shareholders Agreement, dated as of October 31, 2007, between Public Sector Pension Investment Board, Red
Isle Private Investments Inc., Loral Space & Communications Inc., Loral Space & Communications Holdings
Corporation, Loral Holdings Corporation, Loral Skynet Corporation, John P. Cashman, Colin D. Watson,
Telesat Holdings Inc. (formerly 4363205 Canada Inc.), Telesat Interco Inc. (formerly 4363213 Canada Inc.),
Telesat and MHR Fund Management LLC(9)10.7
    
    
    Consulting Services Agreement, dated as of October 31, 2007, by and between Loral Space & Communications
Inc. and Telesat(9)10.8
    
    
    Indemnity Agreement, dated as of October 31, 2007, by and among Loral Space & Communications Inc., Telesat,
Telesat Holdings Inc., Telesat Interco Inc. and Henry Gerard (Hank) Intven(9)10.9
    
    
    Acknowledgement and Indemnity Agreement, dated as of October 31, 2007, between Loral Space & Communications
Inc., Telesat, Telesat Holdings Inc. (formerly 4363205 Canada Inc.), Telesat Interco Inc. (formerly 4363213
Canada Inc.) and McCarthy Tétrault LLP(9)10.10
    
    
    Amended and Restated Registration Rights Agreement dated December 23, 2008 by and among Loral Space &
Communications Inc. and the Persons Listed on the Signature Pages Thereof(15)
  63




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##### Table of Contents



ExhibitNumber
    
    Description10.11
    
    
    Letter Agreement, dated as of June 30, 2009, by and among Loral Space & Communications Inc, MHR Capital
Partners Master Account LP, MHR Capital Partners (100) LP, MHR Institutional Partners LP, MHRA LP, MHRM LP,
MHR Institutional Partners II LP, MHR Institutional Partners IIA LP and MHR Institutional Partners III
LP.(20)10.12
    
    
    Partnership Interest Purchase Agreement dated December 21, 2007 by and among GSSI, LLC, Globalstar, Inc.,
Loral/DASA Globalstar, LP, Globalstar do Brasil, SA., Loral/DASA do Brasil Holdings Ltda., Loral Holdings
LLC, Global DASA LLC, LGP (Bermuda) Ltd., Mercedes-Benz do Brasil Ltda. (f/k/a DaimlerChrysler do Brasil
Ltda.) and Loral Space & Communications Inc.(10)10.13
    
    
    Beam Sharing Agreement, dated as of January 11, 2008, by and between Loral Space & Communications Inc. and
ViaSat Inc.(11)10.14
    
    
    Satellite Capacity and Gateway Service Agreement dated as of December 31, 2009 between Loral Space &
Communications Inc. and Barrett Xplore Inc.(22)10.15
    
    
    Employment Agreement between Loral Space & Communications Inc. and Michael B. Targoff dated as of March 28,
2006 and amended and restated as of December 17, 2008(17) 10.16
    
    
    Form of Officers and Directors Indemnification Agreement between Loral Space & Communications Inc. and
Loral Executives(3) 10.17
    
    
    Officers and Directors Indemnification Agreement between Space Systems/Loral, Inc. and C. Patrick DeWitt
dated November 21, 2005(3) 10.18
    
    
    Loral Space Management Incentive Bonus Program (Adopted as of December 17, 2008)(15) 10.19
    
    
    Loral Space & Communications Inc. 2005 Stock Incentive Plan (Amended and Restated as of April 3, 2009)(18) 10.20
    
    
    Form of Amended and Restated Non-Qualified Stock Option Agreement under Loral Space & Communications Inc.
2005 Stock Incentive Plan for Senior Management dated as of December 21, 2005 and amended and restated as
of November 10, 2008(17) 10.21
    
    
    Non-Qualified Stock Option Agreement under Loral Space & Communications Inc. 2005 Stock Incentive Plan
between Loral Space & Communications Inc. and Michael B. Targoff dated March 28, 2006(4) 10.22
    
    
    Restricted Stock Unit Agreement dated March 5, 2009 between Loral Space & Communications Inc. and Michael
B. Targoff(16) 10.23
    
    
    Restricted Stock Unit Agreement dated March 5, 2010 between Loral Space & Communications Inc. and Michael
B. Targoff 10.24
    
    
    Restricted Stock Unit Agreement dated March 5, 2009 between Loral Space & Communications Inc. and
C. Patrick DeWitt(16) 10.25
    
    
    Option Agreement dated October 27, 2009, between Loral Space & Communications Inc. and Michael B.
Targoff(21) .10.26
    
    
    Form of Restricted Stock Unit Agreement dated October 27, 2009 between Loral Space & Communications Inc.
and Loral executives(21) 10.27
    
    
    Form of Phantom Stock Appreciation Rights Agreement relating to Space Systems/Loral, Inc. dated October 27,
2009 between Loral Space & Communications Inc. and Loral and SS/L executives(21) 10.28
    
    
    Form of Director 2006 Restricted Stock Agreement(6) 10.29
    
    
    Form of Director 2007 Restricted Stock Agreement(6) 10.30
    
    
    Form of Director 2008 Restricted Stock Agreement(17) 10.31
    
    
    Form of Director 2009 Restricted Stock Unit Agreement 10.32
    
    
    Form of Employee Restricted Stock Agreement(6) 10.33
    
    
    Amended and Restated Space Systems/Loral, Inc. Supplemental Executive Retirement Plan (Amended and Restated
as of December 17, 2008)(15) 10.34
    
    
    Loral Savings Supplemental Executive Retirement Plan (Amended and Restated as of December 17, 2008)(15) 
  64




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##### Table of Contents



ExhibitNumber
    
    Description10.35
    
    
    Loral Space & Communications Inc. Severance Policy for Corporate Officers (Amended and Restated as of
December 17, 2008)(15) 14.1
    
    
    Code of Conduct, Revised as of June 11, 2008(13)21.1
    
    
    List of Subsidiaries of the Registrant23.1
    
    
    Consent of Deloitte & Touche LLP23.2
    
    
    Consent of Deloitte & Touche LLP31.1
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 302 of the
Sarbanes-Oxley Act of 200231.2
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 302 of the
Sarbanes-Oxley Act of 200232.1
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the
Sarbanes-Oxley Act of 200232.2
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the
Sarbanes-Oxley Act of 20029.1
    
    
    Credit Agreement, dated as of October 31, 2007, among Telesat Interco Inc. (formerly 4363213 Canada Inc.),
Telesat Holdings Inc. (formerly 4363205 Canada Inc.), 4363230 Canada Inc., Telesat LLC, certain
subsidiaries of Telesat Holdings Inc., as guarantors, the lenders party thereto from time to time, Morgan
Stanley Senior Funding, Inc., as administrative agent, and Morgan Stanley & Co. Incorporated, as collateral
agent for the lenders, UBS Securities LLC, as syndication agent, JPMorgan Chase Bank, N.A., The Bank of
Nova Scotia, as issuing bank, and Citibank, N.A., Canadian Branch or any of its lending affiliates, as
co-documentation agents, and Morgan Stanley & Co. Incorporated, UBS Securities LLC and J.P. Morgan
Securities Inc., as joint lead arrangers and joint book running managers(9)99.2
    
    
    Articles of Incorporation of Telesat Holdings Inc. (formerly 4363205 Canada Inc.)(9)99.3
    
    
    By-Law No. 1 of Telesat Holdings Inc. (formerly 4363205 Canada Inc.)(9)99.4
    
    
    Letter Agreement dated March 28, 2008 among Loral Space & Communications Inc., Loral Skynet Corporation,
Public Sector Pension Investment Board, Red Isle Private Investment Inc. and Telesat Holdings Inc.(12)
 (1)
    
    Incorporated by reference from the Companys Current Report on Form 8-K filed on June 8, 2005.(2)
    
    Incorporated by reference from the Companys Current Report on Form 8-K filed on August 5, 2005.(3)
    
    Incorporated by reference from the Companys Current Report on Form 8-K filed on November 23, 2005.(4)
    
    Incorporated by reference from the Companys Annual Report on Form 10-K for the fiscal year ended
December 31, 2005 filed on March 28, 2006.(5)
    
    Incorporated by reference from the Companys Current Report on Form 8-K filed on December 21, 2006.(6)
    
    Incorporated by reference from the Companys Current Report on Form 8-K filed on May 29, 2007.(7)
    
    Incorporated by reference from the Companys Current Report on Form 8-K filed on August 9, 2007.(8)
    
    Incorporated by reference from the Companys Current Report on Form 8-K filed on September 27, 2007.(9)
    
    Incorporated by reference from the Companys Current Report on Form 8-K filed on November 2, 2007.(10)
    
    Incorporated by reference from the Companys Current Report on Form 8-K filed December 21, 2007.  65




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##### Table of Contents



(11)
    
    Incorporated by reference from the Companys Current Report on Form 8-K filed on January 16, 2008.(12)
    
    Incorporated by reference from the Companys Current Report on Form 8-K filed on March 31, 2008.(13)
    
    Incorporated by reference from the Companys Current Quarterly Report on Form 10-Q filed on June 16, 2008.(14)
    
    Incorporated by reference from the Companys Current Report on Form 8-K filed on October 22, 2008.(15)
    
    Incorporated by reference from the Companys Current Report on Form 8-K filed on December 23, 2008.(16)
    
    Incorporated by reference from the Companys Current Report on Form 8-K filed on March 10, 2009.(17)
    
    Incorporated by reference from the Companys Annual Report on Form 10-K for the fiscal year ended December
31, 2008 filed on March 16, 2009.(18)
    
    Incorporated by reference from the Companys Current Quarterly Report on Form 10-Q filed on May 11, 2009.(19)
    
    Incorporated by reference from the Companys Current Report on Form 8-K filed on May 20, 2009.(20)
    
    Incorporated by reference from the Companys Current Report on Form 8-K filed on June 30, 2009.(21)
    
    Incorporated by reference from the Companys Current Quarterly Report on Form 10-Q filed on November 9, 2009.(22)
    
    Incorporated by reference from the Companys Current Report on Form 8-K filed on January 7, 2010.(23)
    
    Incorporated by reference from the Companys Current Report on Form 8-K filed on January 15, 2010.
    
    Filed herewith.
    
    Management compensation plan.  66




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##### Table of Contents



SIGNATURES
  LORAL SPACE & COMMUNICATIONS INC.By:
    /s/  MICHAEL B. TARGOFFMichael B. TargoffVice Chairman of the Board,
Chief Executive Officer and President
Dated: March 15, 2010  Signatures
    
    Title
    
    Date/s/   MICHAEL B. TARGOFF

Michael B. Targoff
    
    Vice Chairman of the Board, Chief
Executive Officer and President
    
    March 15, 2010/s/   MARK H. RACHESKY, M.D.

Mark H. Rachesky, M.D.
    
    Director, Non-Executive Chairman of the
Board
    
    March 12, 2010/s/ SAI S. DEVABHAKTUNI

Sai S. Devabhaktuni
    
    Director
    
    March 12, 2010/s/   HAL GOLDSTEIN

Hal Goldstein
    
    Director
    
    March 12, 2010/s/ JOHN D. HARKEY, JR.

John D. Harkey, Jr.
    
    Director
    
    March 12, 2010/s/   ARTHUR L. SIMON

Arthur L. Simon
    
    Director
    
    March 12, 2010/s/   JOHN P. STENBIT

John P. Stenbit
    
    Director
    
    March 12, 2010/s/   HARVEY B. REIN

Harvey B. Rein
    
    Senior Vice President and CFO

(Principal Financial Officer)
    
    March 15, 2010/s/   JOHN CAPOGROSSI

John Capogrossi
    
    Vice President and Controller

(Principal Accounting Officer)
    
    March 15, 2010
  67




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##### Table of Contents



INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
 Loral Space & Communications Inc. and SubsidiariesReport of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets as of December 31, 2009 and 2008
    
    
    F-3Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007
    
    
    F-4Consolidated Statements of Equity for the years ended December 31, 2009, 2008 and 2007
    
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7Schedule II
    
    
    F-61Separate Financial Statements of Subsidiaries not consolidated Pursuant to Rule 3-09 of Regulation S-XTelesat Holdings Inc. and Subsidiaries:Report of Independent Registered Chartered Accountants
    
    
    F-62Consolidated Statements of Earnings (Loss) for the years ended December 31, 2009, 2008 and 2007
    
    
    F-63Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2009, 2008 and 2007
    
    
    F-64Consolidated Statements of Shareholders Equity for the year ended December 31, 2009 with comparative
figures for the periods ended December 31, 2008, December 31, 2007, October 30, 2007
    
    
    F-65Consolidated Balance Sheets as of December 31, 2009 and 2008
    
    
    F-66Consolidated Statements of Cash Flow for the years ended December 31, 2009, 2008 and 2007
    
    
    F-67Notes to the 2009 Consolidated Financial Statements
    
    
    F-68
  F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Internal Control  Integrated Framework
 DELOITTE & TOUCHE LLP
 
  F-2




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
 
 CONSOLIDATED BALANCE SHEETS
 (In thousands, except share data)
 December 31,2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    168,205
    
    
    $
    117,548Contracts-in-process
    
    
    190,809
    
    
    
    213,651Inventories
    
    
    83,671
    
    
    
    109,755Other current assets
    
    
    24,343
    
    
    
    54,286Total current assets
    
    
    467,028
    
    
    
    495,240Property, plant and equipment, net
    
    
    207,996
    
    
    
    188,270Long-term receivables
    
    
    248,097
    
    
    
    184,701Investments in affiliates
    
    
    282,033
    
    
    
    72,642Intangible assets, net
    
    
    20,300
    
    
    
    31,578Other assets
    
    
    27,998
    
    
    
    23,436Total assets
    
    $
    1,253,452
    
    
    $
    995,867LIABILITIES AND EQUITYCurrent liabilities:Accounts payable
    
    $
    86,809
    
    
    $
    91,052Accrued employment costs
    
    
    44,341
    
    
    
    41,819Customer advances and billings in excess of costs and profits
    
    
    291,021
    
    
    
    184,592Income taxes payable
    
    
    1,539
    
    
    
    233Other current liabilities
    
    
    17,608
    
    
    
    31,678Total current liabilities
    
    
    441,318
    
    
    
    349,374Borrowings under revolving credit facility
    
    
    
    
    
    
    55,000Pension and other postretirement liabilities
    
    
    226,190
    
    
    
    230,660Long-term liabilities
    
    
    153,953
    
    
    
    151,176Total liabilities
    
    
    821,461
    
    
    
    786,210Commitments and contingenciesEquity:Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued and outstanding
    
    
    
    
    
    
    Common Stock:Voting common stock, $.01 par value; 50,000,000 shares authorized, 20,390,752 and 20,286,992
shares issued and outstanding
    
    
    204
    
    
    
    203Non-voting common stock, $0.1 par value; 20,000,000 shares authorized, 9,505,673 issued and
outstanding
    
    
    95
    
    
    
    95Paid-in capital
    
    
    1,013,790
    
    
    
    1,007,011Accumulated deficit
    
    
    (519,220
    )
    
    
    (750,922
    )Accumulated other comprehensive loss
    
    
    (62,878
    )
    
    
    (46,730
    )Total equity
    
    
    431,991
    
    
    
    209,657Total liabilities and equity
    
    $
    1,253,452
    
    
    $
    995,867
   F-3




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share amounts)
 Year Ended December 31,2009
    
    
    2008
    
    
    2007Revenue from satellite manufacturing
    
    $
    993,400
    
    
    $
    869,398
    
    
    $
    761,363Revenue from satellite services
    
    
    
    
    
    
    
    
    
    
    121,091Total revenues
    
    
    993,400
    
    
    
    869,398
    
    
    
    882,454Cost of satellite manufacturing
    
    
    880,486
    
    
    
    787,758
    
    
    
    688,991Cost of satellite services
    
    
    
    
    
    
    
    
    
    
    86,213Selling, general and administrative expenses
    
    
    92,703
    
    
    
    97,015
    
    
    
    166,936Gain on recovery from customer bankruptcy
    
    
    
    
    
    
    (9,338
    )
    
    
    Impairment of goodwill
    
    
    
    
    
    
    187,940
    
    
    
    Gain on contribution of Loral Skynet
    
    
    
    
    
    
    
    
    
    
    (104,942
    )Operating income (loss)
    
    
    20,211
    
    
    
    (193,977
    )
    
    
    45,256Interest and investment income
    
    
    8,307
    
    
    
    11,857
    
    
    
    39,279Interest expense
    
    
    (1,422
    )
    
    
    (2,268
    )
    
    
    (2,312
    )Gain on foreign exchange contracts
    
    
    
    
    
    
    
    
    
    
    89,364Gain on litigation, net
    
    
    
    
    
    
    38,823
    
    
    
    Impairment of available for sale securities
    
    
    
    
    
    
    (5,823
    )
    
    
    Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    (16,155
    )Other (expense) income
    
    
    (121
    )
    
    
    (135
    )
    
    
    2,354Income (loss) before income taxes and equity in net income (losses) of affiliates
    
    
    26,975
    
    
    
    (151,523
    )
    
    
    157,786Income tax provision
    
    
    (5,571
    )
    
    
    (45,744
    )
    
    
    (83,457
    )Income (loss) before equity in net income (losses) of affiliates
    
    
    21,404
    
    
    
    (197,267
    )
    
    
    74,329Equity in net income (losses) of affiliates
    
    
    210,298
    
    
    
    (495,649
    )
    
    
    (21,430
    )Net income (loss)
    
    
    231,702
    
    
    
    (692,916
    )
    
    
    52,899Net income attributable to noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    (23,240
    )Net income (loss) attributable to Loral Space & Communications Inc.
    
    
    231,702
    
    
    
    (692,916
    )
    
    
    29,659Preferred dividends
    
    
    
    
    
    
    (24,067
    )
    
    
    (19,379
    )Beneficial conversion feature related to the issuance of Loral Series A-1 Preferred Stock
    
    
    
    
    
    
    
    
    
    
    (25,685
    )Net income (loss) applicable to Loral Space & Communications Inc. common shareholders
    
    $
    231,702
    
    
    $
    (716,983
    )
    
    $
    (15,405
    )Basic and diluted income (loss) per share:Basic income (loss) per share
    
    $
    7.79
    
    
    $
    (35.13
    )
    
    $
    (0.77
    )Diluted income (loss) per share
    
    $
    7.73
    
    
    $
    (35.13
    )
    
    $
    (0.77
    )Weighted average shares outstanding:Basic
    
    
    29,761
    
    
    
    20,407
    
    
    
    20,087Diluted
    
    
    29,981
    
    
    
    20,407
    
    
    
    20,087
   F-4




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
 
 CONSOLIDATED STATEMENTS OF EQUITY
 (In thousands)
 Series A-1
    
    
    Series B-1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AccumulatedConvertible
    
    
    Convertible
    
    
    Common Stock
    
    
    
    
    
    
    
    
    
    
    OtherPreferred Stock
    
    
    Preferred Stock
    
    
    Voting
    
    
    Non-Voting
    
    
    
    
    
    
    Accumulated
    
    
    ComprehensiveShares
    
    
    
    
    
    
    Shares
    
    
    
    
    
    
    Shares
    
    
    
    
    
    
    Shares
    
    
    
    
    
    
    Paid-In
    
    
    Earnings
    
    
    Income
    
    
    Noncontrolling
    
    
    TotalIssued
    
    
    Amount
    
    
    Issued
    
    
    Amount
    
    
    Issued
    
    
    Amount
    
    
    Issued
    
    
    Amount
    
    
    Capital
    
    
    (Deficit)
    
    
    (loss)
    
    
    Interest
    
    
    EquityBalance, January 1, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,000
    
    
    $
    200
    
    
    
    
    
    
    
    
    
    
    $
    644,708
    
    
    $
    (37,981
    )
    
    $
    40,075
    
    
    $
    214,256
    
    
    $
    861,258Uncertain tax positions, cumulative effect upon adoption
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,238
    )
    
    
    
    
    
    
    
    
    
    
    (6,238
    )Net income attributable to Loral Space & Communications Inc.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,659Other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,558
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,101Issuance of Series -1 preferred stock
    
    
    137
    
    
    $
    40,237
    
    
    
    859
    
    
    $
    253,013
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,864
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    284,386Issuance of Series -1 preferred stock as payment for dividend
    
    
    5
    
    
    
    1,636
    
    
    
    42
    
    
    
    12,764
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,400Issuance of Loral Skynet preferred stock as payment for dividend to non controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,343
    
    
    
    23,343Redemption of Loral Skynet preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (237,599
    )
    
    
    (237,599
    )Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    108
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1,920
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,921Shares surrendered to fund withholding taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (982
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (982
    )Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    205
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    26,345
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,347Preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,379
    )
    
    
    
    
    
    
    
    
    
    
    (19,379
    )Balance, December 31, 2007
    
    
    142
    
    
    
    41,873
    
    
    
    901
    
    
    
    265,777
    
    
    
    20,293
    
    
    
    203
    
    
    
    
    
    
    
    
    
    
    
    663,127
    
    
    
    (33,939
    )
    
    
    36,517
    
    
    
    
    
    
    
    973,558Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (692,916
    )Other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (83,247
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (776,163
    )Issuance of Series -1 preferred stock as payment for dividend
    
    
    3
    
    
    
    822
    
    
    
    78
    
    
    
    23,427
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,249Shares surrendered to fund withholding taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (338
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (338
    )Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,621
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,621Series-1 preferred dividends
    
    
    
    
    
    
    618
    
    
    
    
    
    
    
    4,179
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,797Cancellation and conversion of Series-1 preferred stock to non-voting common stock
    
    
    (145
    )
    
    
    (43,313
    )
    
    
    (979
    )
    
    
    (293,383
    )
    
    
    
    
    
    
    
    
    
    
    9,506
    
    
    $
    95
    
    
    
    336,601Preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,067
    )
    
    
    
    
    
    
    
    
    
    
    (24,067
    )Balance, December 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,287
    
    
    
    203
    
    
    
    9,506
    
    
    
    95
    
    
    
    1,007,011
    
    
    
    (750,922
    )
    
    
    (46,730
    )
    
    
    
    
    
    
    209,657Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    231,702Other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,148
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    215,554Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1,403
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,404Shares surrendered to fund withholding taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,559
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,559
    )Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73
    
    
    
    0
    
    
    
    
    
    
    
    
    
    
    
    6,935
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,935Balance, December 31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,391
    
    
    $
    204
    
    
    
    9,506
    
    
    $
    95
    
    
    $
    1,013,790
    
    
    $
    (519,220
    )
    
    $
    (62,878
    )
    
    
    
    
    
    $
    431,991
   F-5




---



##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 Year Ended December 31,2009
    
    
    2008
    
    
    2007Operating activities:Net income (loss)
    
    $
    231,702
    
    
    $
    (692,916
    )
    
    $
    52,899Adjustments to reconcile net income (loss) to net cash provided by (used in) operating
activities:Non-cash items
    
    
    (164,785
    )
    
    
    762,210
    
    
    
    (59,211
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    
    
    
    
    
    
    
    
    64,828Contracts-in-process
    
    
    (7,913
    )
    
    
    (216,354
    )
    
    
    (60,880
    )Inventories
    
    
    17,482
    
    
    
    (12,787
    )
    
    
    (15,872
    )Long-term receivables
    
    
    (5,565
    )
    
    
    13,947
    
    
    
    (266
    )Other current assets and other assets
    
    
    2,806
    
    
    
    3,393
    
    
    
    6,369Accounts payable
    
    
    (5,628
    )
    
    
    23,681
    
    
    
    6,041Accrued expenses and other current liabilities
    
    
    (9,611
    )
    
    
    (22,455
    )
    
    
    15,866Customer advances
    
    
    80,350
    
    
    
    (19,710
    )
    
    
    (17,751
    )Income taxes payable
    
    
    21,426
    
    
    
    (55,034
    )
    
    
    28,719Pension and other postretirement liabilities
    
    
    (4,158
    )
    
    
    (19,010
    )
    
    
    8,663Long-term liabilities
    
    
    (1,544
    )
    
    
    32,825
    
    
    
    (2,282
    )Net cash provided by (used in) operating activities
    
    
    154,562
    
    
    
    (202,210
    )
    
    
    27,123Investing activities:Capital expenditures
    
    
    (43,557
    )
    
    
    (64,559
    )
    
    
    (95,761
    )Decrease (increase) in restricted cash in escrow
    
    
    10
    
    
    
    18,637
    
    
    
    (19,709
    )Proceeds received for the contribution of Loral Skynet net of cash contributed
    
    
    
    
    
    
    
    
    
    
    57,591Distribution from an equity investment
    
    
    277
    
    
    
    
    
    
    
    2,955Proceeds from the sale of short-term investments and available-for-sale securities
    
    
    
    
    
    
    162
    
    
    
    468,571Purchase of short-term investments
    
    
    
    
    
    
    (500
    )
    
    
    (350,895
    )Investments in and advances to affiliates
    
    
    (5,480
    )
    
    
    (1,048
    )
    
    
    (1,233
    )Net cash (used in) provided by investing activities
    
    
    (48,750
    )
    
    
    (47,308
    )
    
    
    61,519Financing activities:(Repayments) borrowings under SS/L revolving credit facility
    
    
    (55,000
    )
    
    
    55,000
    
    
    
    Debt issuance costs
    
    
    
    
    
    
    (2,628
    )
    
    
    Proceeds from term loan (Loral Skynet Notes refinancing facility)
    
    
    
    
    
    
    
    
    
    
    141,050Repayment of Loral Skynet Notes
    
    
    
    
    
    
    
    
    
    
    (126,000
    )10% redemption fee on extinguishment of Loral Skynet Notes
    
    
    
    
    
    
    
    
    
    
    (12,600
    )Preferred stock issuance costs
    
    
    
    
    
    
    
    
    
    
    (8,864
    )Proceeds from the sale of Series-1 preferred stock
    
    
    
    
    
    
    
    
    
    
    293,250Redemption of Loral Skynet Preferred Stock
    
    
    
    
    
    
    
    
    
    
    (237,599
    )Proceeds from the exercise of stock options
    
    
    1,404
    
    
    
    
    
    
    
    2,097Cash dividends paid on Loral Skynet Preferred Stock
    
    
    
    
    
    
    
    
    
    
    (11,824
    )Other
    
    
    (1,559
    )
    
    
    
    
    
    
    Net cash (used in) provided by financing activities
    
    
    (55,155
    )
    
    
    52,372
    
    
    
    39,510Increase (decrease) in cash and cash equivalents
    
    
    50,657
    
    
    
    (197,146
    )
    
    
    128,152Cash and cash equivalents  beginning of year
    
    
    117,548
    
    
    
    314,694
    
    
    
    186,542Cash and cash equivalents  end of year
    
    $
    168,205
    
    
    $
    117,548
    
    
    $
    314,694
   F-6




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Organization and Principal Business
   Satellite Manufacturing:
  Satellite Services:
   1 3
     F-7




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2. Basis of Presentation
    Use of Estimates in Preparation of Financial Statements
   Cash and Cash Equivalents, Restricted Cash and Available for Sale Securities
  Concentration of Credit Risk
   F-8




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Inventories
  Fair Value Measurements
  Level 1:
 Level 2:
 Level 3:
 Assets
and Liabilities Measured at Fair Value on a Recurring Basis
  Level 1
    
    
    Level 2
    
    
    Level 3(In thousands)Assets:Marketable securities
    
    $
    856
    
    
    $
    
    
    
    $
    Derivatives, net
    
    $
    
    
    
    $
    3,873
    
    
    $
    Non-qualified pension plan assets
    
    $
    2,791
    
    
    $
    
    
    
    $
    81
  Assets and Liabilities Measured at Fair Value on a Non-recurring Basis
   F-9




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Property, Plant and Equipment
  YearsLand improvements
    
    20Buildings and building improvements
    
    10 to 45Leasehold improvements
    
    2 to 17Equipment, furniture and fixtures
    
    5 to 10
  Intangible Assets
  Valuation of Long-Lived Assets
  Contingencies
  Revenue Recognition
 Satellite Manufacturing
   F-10




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    Loral Skynet
    Research and Development
  Derivative Instruments
   F-11




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Noncontrolling Interest
   Stock-Based Compensation
    Deferred Compensation
   F-12




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Income Taxes
     F-13




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Additional Cash Flow Information
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Non-cash operating items:Gain on contribution of Loral Skynet
    
    $
    
    
    
    $
    
    
    
    $
    (104,942
    )Equity in net (income) losses of affiliates
    
    
    (210,298
    )
    
    
    495,649
    
    
    
    21,430Deferred taxes
    
    
    (192
    )
    
    
    29,385
    
    
    
    32,205Depreciation and amortization
    
    
    39,796
    
    
    
    36,367
    
    
    
    76,910Stock based compensation
    
    
    7,514
    
    
    
    7,621
    
    
    
    26,347Provisions for inventory obsolescence
    
    
    1,042
    
    
    
    
    
    
    
    543Warranty expense accruals (reversals)
    
    
    (65
    )
    
    
    431
    
    
    
    (18,879
    )Provisions for (recoveries of) bad debts on billed receivables
    
    
    2,759
    
    
    
    700
    
    
    
    (1,917
    )Adjustment to revenue straightlining assessment
    
    
    
    
    
    
    
    
    
    
    (204
    )Write-off of construction in process
    
    
    
    
    
    
    
    
    
    
    2,164Loss on disposition of fixed assets
    
    
    
    
    
    
    63
    
    
    
    Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    16,155Impairment of goodwill
    
    
    
    
    
    
    187,940Impairment of available for sale securities
    
    
    
    
    
    
    5,823
    
    
    
    Curtailment gain
    
    
    
    
    
    
    
    
    
    
    (1,686
    )Amortization of prior service credit and actuarial gains
    
    
    412
    
    
    
    (3,200
    )
    
    
    (3,285
    )Gain on disposition of an orbital slot
    
    
    
    
    
    
    
    
    
    
    (3,600
    )Amortization of fair value adjustments related to orbital incentives
    
    
    (664
    )
    
    
    (3,088
    )
    
    
    Gain on disposition of available for sale securities
    
    
    
    
    
    
    (162
    )
    
    
    (11,088
    )Unrealized (gain) loss on non-qualified pension plan assets
    
    
    (831
    )
    
    
    1,391
    
    
    
    Non-cash net interest
    
    
    (1,582
    )
    
    
    (149
    )
    
    
    (Gain)/loss on foreign currency transactions and contracts
    
    
    (2,676
    )
    
    
    3,439
    
    
    
    (89,364
    )Net non-cash operating items
    
    $
    (164,785
    )
    
    $
    762,210
    
    
    $
    (59,211
    )Non-cash investing activities:Available for sale securities received in connection with the sale
of Globalstar do Brazil
    
    $
    
    
    
    $
    6,000
    
    
    $
    Capital expenditures incurred not yet paid
    
    $
    3,091
    
    
    $
    1,706
    
    
    $
    Investment in affiliate not yet paid
    
    $
    
    
    
    $
    1,048
    
    
    $
    Non-cash financing activities:Issuance of restricted stock
    
    $
    1,591
    
    
    $
    
    
    
    $
    Issuance of preferred stock by subsidiary as payment for dividend
    
    $
    
    
    
    $
    
    
    
    $
    23,343Issuance of Loral Series-1 Preferred Stock as payment for dividend
    
    $
    
    
    
    $
    24,248
    
    
    $
    14,400Accrued dividends on Loral Series-1 Preferred Stock
    
    $
    
    
    
    $
    4,797
    
    
    $
    4,979Issuance of non-voting common stock and cancellation of Loral
Series-1 Preferred Stock
    
    $
    
    
    
    $
    336,696
    
    
    $
    Supplemental information:Interest paid
    
    $
    2,164
    
    
    $
    2,380
    
    
    $
    24,891Tax (refunds) payments
    
    $
    (17,972
    )
    
    $
    29,835
    
    
    $
    5,292Cash paid for reorganization items:Professional fees
    
    
    
    
    
    
    
    
    
    $
    (160
    )
  F-14




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Recent Accounting Pronouncements
 Business Combinations
 General Intangibles Other than Goodwill
 Consolidation
 Derivatives and Hedging Financial Instruments
 Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities, Consolidations Amendments to FASB Interpretation No. 46(R),
 Compensation  Retirement Benefits .
 Investments  Equity Method and Joint
Ventures .
 Fair Value Measurements and Disclosures
(Topic 820)  Measuring Liabilities at Fair Value, Fair Value
Measurements and Disclosures  Overall.
  F-15




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Investments in
Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) Fair Value Measurements and Disclosures
 Overall
 Revenue Recognition (Topic 605) 
Multiple-Deliverable Revenue Arrangements, Multiple-Element
Arrangements
 3. Accumulated Other Comprehensive Loss
  ProportionateShare of  Telesat
    
    
    AccumulatedForeign Currency
    
    
    
    
    
    
    Unrealized Gains
    
    
    
    
    
    
    Other
    
    
    OtherTranslation
    
    
    
    
    
    
    (Losses) on
    
    
    Postretirement
    
    
    Comprehensive
    
    
    ComprehensiveAdjustments
    
    
    Derivatives
    
    
    Investments
    
    
    Benefits
    
    
    Income (Loss)
    
    
    Income (Loss)Balance at January 01, 2008
    
    $
    498
    
    
    $
    
    
    
    $
    442
    
    
    $
    35,577
    
    
    $
    
    
    
    $
    36,517Period Change
    
    
    (498
    )
    
    
    18,182
    
    
    
    (325
    )
    
    
    (100,606
    )
    
    
    
    
    
    
    (83,247
    )Balance at December 31, 2008
    
    
    
    
    
    
    18,182
    
    
    
    117
    
    
    
    (65,029
    )
    
    
    
    
    
    
    (46,730
    )Period Change
    
    
    
    
    
    
    (11,900
    )
    
    
    658
    
    
    
    233
    
    
    
    (5,139
    )
    
    
    (16,148
    )Balance at December 31, 2009
    
    $
    
    
    
    $
    6,282
    
    
    $
    775
    
    
    $
    (64,796
    )
    
    $
    (5,139
    )
    
    $
    (62,878
    )
  F-16




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Foreign currency translation adjustments:Cumulative translation
    
    $
    
    
    
    $
    (498
    )
    
    $
    211Derivatives:Unrealized (loss) gain on foreign currency hedges, net of tax benefit of $1,132 in 2008
    
    
    (94
    )
    
    
    20,965
    
    
    
    Less: reclassification adjustment for gains included in net income, net of tax
provision of $1,132 in 2008
    
    
    (11,806
    )
    
    
    (2,783
    )
    
    
    Unrealized gain (loss) on derivatives, net
    
    
    (11,900
    )
    
    
    18,182
    
    
    
    Unrealized gain on investments:Unrealized gain (loss) on available-for-sale securities, net of tax benefit of $2,339
and $1,976 for 2008 and 2007, respectively
    
    
    658
    
    
    
    (3,685
    )
    
    
    (2,850
    )Less: reclassification adjustment for losses included in net income, net of tax
provision of $2,338 in 2008 and tax benefit of $4,542 in 2007
    
    
    
    
    
    
    3,360
    
    
    
    (6,546
    )Unrealized gain (loss) on investments, net
    
    
    658
    
    
    
    (325
    )
    
    
    (9,396
    )Postretirement benefits:Net actuarial (losses) gains, net of tax provision of $37 and $6,532 for 2008 and 2007,
respectively
    
    
    (179
    )
    
    
    (97,360
    )
    
    
    10,121Amortization of actuarial gains and prior service credits
    
    
    412
    
    
    
    (3,246
    )
    
    
    (2,000
    )Less: reclassification due to contribution of Loral Skynet, net of tax benefit of $3,015
    
    
    
    
    
    
    
    
    
    
    (2,494
    )Postretirement benefits
    
    
    233
    
    
    
    (100,606
    )
    
    
    5,627Proportionate share of Telesat other comprehensive income:Proportionate share of Telesat Holdco other comprehensive income
    
    
    (5,139
    )
    
    
    (4,065
    )
    
    
    Less: reclassification of our proportionate share of Telesat Holdco other comprehensive
income
    
    
    
    
    
    
    4,065
    
    
    
    Unrealized gain (loss) of our proportionate share of Telesat Holdco other comprehensive
income, net
    
    
    (5,139
    )
    
    
    
    
    
    
    Other comprehensive loss
    
    $
    (16,148
    )
    
    $
    (83,247
    )
    
    $
    (3,558
    )
 4. Contracts-in-Process and Long-Term Receivables
 Contracts-in-Process
  December 31,2009
    
    
    2008U.S. government contracts:Amounts billed
    
    $
    520
    
    
    $
    2,218Unbilled receivables
    
    
    1,566
    
    
    
    2,4482,086
    
    
    
    4,666Commercial contracts:Amounts billed
    
    
    123,514
    
    
    
    120,237Unbilled receivables
    
    
    65,209
    
    
    
    88,748188,723
    
    
    
    208,985$
    190,809
    
    
    $
    213,651
   F-17




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Long-Term Receivables
   Long-TermReceivables2010
    
    $
    6,6542011
    
    
    7,2022012
    
    
    14,5452013
    
    
    28,6162014
    
    
    15,417Thereafter
    
    
    182,317254,751Less, current portion included in contracts-in-process
    
    
    (6,654
    )Long-term receivables
    
    $
    248,097
 5. Property, Plant and Equipment
  December 31,2009
    
    
    2008Land and land improvements
    
    $
    26,852
    
    
    $
    26,913Buildings
    
    
    68,698
    
    
    
    59,038Leasehold improvements
    
    
    11,133
    
    
    
    10,870Equipment, furniture and fixtures
    
    
    156,669
    
    
    
    133,916Satellite capacity under construction (see Note 16)
    
    
    27,412
    
    
    
    10,478Other construction in progress
    
    
    17,243
    
    
    
    21,863308,007
    
    
    
    263,078Accumulated depreciation and amortization
    
    
    (100,011
    )
    
    
    (74,808
    )$
    207,996
    
    
    $
    188,270
   F-18




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 6. Investments in Affiliates
  December 31,2009
    
    
    2008Telesat Holdings Inc.
    
    $
    208,101
    
    
    $
    XTAR, LLC
    
    
    72,284
    
    
    
    70,547Other
    
    
    1,648
    
    
    
    2,095$
    282,033
    
    
    $
    72,642
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Telesat Holdings Inc.
    
    $
    213,241
    
    
    $
    (479,579
    )
    
    $
    (1,792
    )XTAR, LLC
    
    
    (2,743
    )
    
    
    (16,070
    )
    
    
    (10,585
    )Other
    
    
    (200
    )
    
    
    
    
    
    
    (9,053
    )$
    210,298
    
    
    $
    (495,649
    )
    
    $
    (21,430
    )
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Revenues
    
    $
    92,144
    
    
    $
    83,974
    
    
    $
    21,968Elimination of Lorals proportionate share of (profits) losses
relating to affiliate transactions
    
    
    (10,071
    )
    
    
    (4,969
    )
    
    
    1,935Profits (losses) relating to affiliate transactions not eliminated
    
    
    5,671
    
    
    
    2,808
    
    
    
    (1,082
    )
 Telesat
 1 3 2 3
 Contribution of Loral Skynet
    F-19




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Current assets
    
    $
    25,360Property, plant and equipment, net
    
    
    443,776Foreign currency contracts
    
    
    83,614Goodwill
    
    
    42,246Intangible assets, net
    
    
    50,404Other assets
    
    
    3,183Total assets
    
    $
    648,583Current liabilities
    
    $
    181,045Long-term liabilities
    
    
    27,000Total liabilities
    
    $
    208,045
  Consideration received for the contribution of Loral Skynet to Telesat Holdco:Cash and marketable securities
    
    $
    61,480Fair value of equity in Telesat Holdco
    
    
    670,562Total consideration
    
    
    732,042Book value of contributed net assets of Loral Skynet
    
    
    440,538Consideration in excess of book value
    
    $
    291,504Gain recognized
    
    $
    104,942
   F-20




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  For the PeriodOctober 31,2007Year Ended December 31,
    
    
    to December 31,2009
    
    
    2008
    
    
    2007Statement of Operations Data:Revenues
    
    $
    691,566
    
    
    $
    685,187
    
    
    $
    117,767Operating expenses
    
    
    (203,417
    )
    
    
    (258,010
    )
    
    
    (52,484
    )Gain on disposition of long-lived assets
    
    
    29,311
    
    
    
    
    
    
    
    Impairment of long-lived and intangible assets
    
    
    
    
    
    
    (454,896
    )
    
    
    Depreciation, amortization and stock-based compensation
    
    
    (230,176
    )
    
    
    (225,949
    )
    
    
    (41,200
    )Operating income (loss)
    
    
    287,284
    
    
    
    (253,668
    )
    
    
    24,083Interest expense
    
    
    (227,986
    )
    
    
    (231,062
    )
    
    
    (41,375
    )Other income (expense)
    
    
    289,442
    
    
    
    (403,102
    )
    
    
    (45,550
    )Income tax (expense) benefit
    
    
    (2,185
    )
    
    
    139,872
    
    
    
    61,520Net income (loss)
    
    
    346,555
    
    
    
    (747,960
    )
    
    
    (1,322
    )
 Year Ended December 31,2009
    
    
    2008Balance Sheet Data:Current assets
    
    $
    251,573
    
    
    $
    179,769Total assets
    
    
    4,994,684
    
    
    
    4,273,162Current liabilities
    
    
    195,890
    
    
    
    171,423Long-term debt, including current portion
    
    
    2,953,281
    
    
    
    2,901,620Total liabilities
    
    
    4,041,932
    
    
    
    3,760,164Redeemable preferred stock
    
    
    134,291
    
    
    
    116,044Shareholders equity
    
    
    818,461
    
    
    
    396,954
  1 3
    F-21




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 XTAR
        F-22




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Year Ended December 31,2009
    
    
    2008
    
    
    2007Revenues
    
    $
    32,038
    
    
    $
    20,405
    
    
    $
    19,339Operating expenses
    
    
    (34,594
    )
    
    
    (34,500
    )
    
    
    (24,015
    )Depreciation and amortization
    
    
    (9,618
    )
    
    
    (9,650
    )
    
    
    (9,747
    )Operating loss
    
    
    (12,174
    )
    
    
    (23,751
    )
    
    
    (14,423
    )Gain on settlement of Arianespace incentive cap
    
    
    11,668
    
    
    
    
    
    
    
    Net loss
    
    
    (4,849
    )
    
    
    (28,597
    )
    
    
    (18,421
    )
 December 31,2009
    
    
    2008Balance Sheet Data:Current assets
    
    $
    10,372
    
    
    $
    9,107Total assets
    
    
    107,084
    
    
    
    115,437Current liabilities
    
    
    45,672
    
    
    
    41,314Total liabilities
    
    
    67,882
    
    
    
    79,386Members equity
    
    
    39,202
    
    
    
    36,051
 Other
    7. Goodwill and Intangible Assets
 Goodwill
   F-23




---



##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  2009
    
    
    2008Balance as of January 1,Goodwill
    
    $
    187,940
    
    
    $
    227,058Accumulated impairment losses
    
    
    (187,940
    )
    
    
    
    
    
    
    227,058Reversal of uncertain tax positions due to expiration of statute of limitations
    
    
    
    
    
    
    (531
    )Reversal of valuation allowance on deferred tax assets
    
    
    
    
    
    
    (38,587
    )Impairment loss
    
    
    
    
    
    
    (187,940
    )Balance as of December 31,Goodwill
    
    
    187,940
    
    
    
    187,940Accumulated impairment losses
    
    
    (187,940
    )
    
    
    (187,940
    )$
    
    
    
    $
    
 Intangible Assets
  Weighted AverageRemainingAmortization
    
    December 31, 2009
    
    
    December 31, 2008Period
    
    Gross
    
    
    Accumulated
    
    
    Gross
    
    
    Accumulated(Years)
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationInternally developed software and technology
    
    2
    
    $
    59,027
    
    
    $
    (45,972
    )
    
    $
    59,027
    
    
    $
    (35,154
    )Trade names
    
    16
    
    
    9,200
    
    
    
    (1,955
    )
    
    
    9,200
    
    
    
    (1,495
    )Total
    
    
    
    $
    68,227
    
    
    $
    (47,927
    )
    
    $
    68,227
    
    
    $
    (36,649
    )
  2010
    
    $
    9,1902011
    
    
    2,9312012
    
    
    2,3142013
    
    
    4602014
    
    
    460
  F-24




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  December 31,2009
    
    
    2008Gross fair value adjustments
    
    $
    (36,896
    )
    
    $
    (36,896
    )Accumulated amortization
    
    
    16,446
    
    
    
    19,084$
    (20,450
    )
    
    $
    (17,812
    )
  8. Debt Obligations
 SS/L Credit Agreement
   December 31,2009
    
    
    2008Letters of credit outstanding
    
    $
    4,921
    
    
    $
    4,927Borrowings
    
    
    
    
    
    
    55,000Interest rate on revolver borrowings
    
    
    
    
    
    
    4.2575
    %
 Year Ended December 31,2009
    
    
    2008Interest expense (including commitment and letter of credit fees)
    
    $
    1,168
    
    
    $
    323Amortization of issuance costs
    
    
    878
    
    
    
    183
  2 3
   F-25




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  
    
    SS/L must not permit its consolidated leverage ratio as of (i) the last day of any
period of four consecutive fiscal quarters or (ii) the date of incurrence of certain
indebtedness to exceed 3.50 to 1.00 from October 16, 2008 to September 29, 2009, 3.25 to
1.00 from September 30, 2009 through December 30, 2009 and 3.00 to 1.00 from December 31,
2009 and thereafter until the Maturity Date.
 
    
    SS/L must maintain a minimum consolidated interest coverage ratio of at least 3.50 to
1.00 as of the last day of any fiscal quarter for the period of four consecutive fiscal
quarters ending on such day.
   Loan Payable Valley National Bank
    Loral Skynet Notes
     F-26




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 9. Income Taxes
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Current:U.S. Federal
    
    $
    2,597
    
    
    $
    (21,213
    )
    
    $
    31,142State and local
    
    
    3,166
    
    
    
    37,572
    
    
    
    19,712Foreign
    
    
    
    
    
    
    
    
    
    
    398Total current
    
    
    5,763
    
    
    
    16,359
    
    
    
    51,252Deferred:U.S. Federal
    
    
    (669
    )
    
    
    29,574
    
    
    
    45,173State and local
    
    
    477
    
    
    
    (189
    )
    
    
    (12,968
    )Total deferred
    
    
    (192
    )
    
    
    29,385
    
    
    
    32,205Total income tax provision
    
    $
    5,571
    
    
    $
    45,744
    
    
    $
    83,457
   Year Ended December 31,2009
    
    
    2008
    
    
    2007Unrecognized tax benefits
    
    $
    (2,817
    )
    
    $
    25,962
    
    
    $
    12,652Interest expense
    
    
    4,426
    
    
    
    6,169
    
    
    
    4,186Interest income
    
    
    
    
    
    
    
    
    
    
    (41
    )Penalties
    
    
    701
    
    
    
    9,427
    
    
    
    303Total
    
    $
    2,310
    
    
    $
    41,558
    
    
    $
    17,100
    F-27




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Year Ended December 31,2009
    
    
    2008
    
    
    2007Tax provision( benefit) at U.S. Statutory Rate of 35%
    
    $
    9,441
    
    
    $
    (53,033
    )
    
    $
    55,225Permanent adjustments which change statutory amounts:State and local income taxes, net of federal income tax
    
    
    16,703
    
    
    
    1,496
    
    
    
    (5,101
    )Equity in net income (losses) of affiliates
    
    
    73,604
    
    
    
    (173,477
    )
    
    
    (7,162
    )Impairment of goodwill
    
    
    
    
    
    
    65,779
    
    
    
    Losses in litigation
    
    
    526
    
    
    
    6,815
    
    
    
    Tax gain on transfer of Loral Skynet assets to Telesat
    
    
    
    
    
    
    
    
    
    
    16,419Provision for unrecognized tax benefits
    
    
    1,356
    
    
    
    (5,811
    )
    
    
    8,370Nondeductible expenses
    
    
    2,076
    
    
    
    1,501
    
    
    
    2,682Change in valuation allowance
    
    
    (96,617
    )
    
    
    202,510
    
    
    
    16,287Other, net
    
    
    (1,518
    )
    
    
    (36
    )
    
    
    (3,263
    )Total income tax provision
    
    $
    5,571
    
    
    $
    45,744
    
    
    $
    83,457
      F-28




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Balance at January 1
    
    $
    108,592
    
    
    $
    59,903
    
    
    $
    42,484Increases related to prior year tax positions
    
    
    8,855
    
    
    
    5,312
    
    
    
    157Decreases related to prior year tax positions
    
    
    (1,969
    )
    
    
    (1,225
    )
    
    
    (342
    )Decrease as a result of statute expirations
    
    
    (3,178
    )
    
    
    (1,832
    )
    
    
    Decrease as a result of tax settlements
    
    
    (4,887
    )
    
    
    
    
    
    
    (1,508
    )Increases related to current year tax positions
    
    
    12,711
    
    
    
    46,434
    
    
    
    21,707Decrease for indemnified liabilities
transferred to Telesat and recorded in other
long term liabilities
    
    
    
    
    
    
    
    
    
    
    (2,595
    )Balance at December 31
    
    $
    120,124
    
    
    $
    108,592
    
    
    $
    59,903
         F-29




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
        F-30




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  December 31,2009
    
    
    2008Deferred tax assets:Postretirement benefits other than pensions
    
    $
    28,912
    
    
    $
    28,321Inventoried costs
    
    
    17,932
    
    
    
    19,456Net operating loss and tax credit carryforwards
    
    
    180,874
    
    
    
    199,460Compensation and benefits
    
    
    29,339
    
    
    
    20,663Deferred research & development costs
    
    
    10,646
    
    
    
    14,126Income recognition on long-term contracts
    
    
    21,475
    
    
    
    13,382Investments in and advances to affiliates
    
    
    67,883
    
    
    
    138,524Other, net
    
    
    5,378
    
    
    
    7,370Federal benefit of uncertain tax positions
    
    
    22,488
    
    
    
    21,431Pension costs
    
    
    67,421
    
    
    
    69,772Total deferred tax assets before valuation allowance
    
    
    452,348
    
    
    
    532,505Less valuation allowance
    
    
    (414,038
    )
    
    
    (487,762
    )Net deferred tax asset
    
    
    38,310
    
    
    
    44,743Deferred tax liabilities:Property, plant and equipment
    
    
    (16,819
    )
    
    
    (18,637
    )Intangible assets
    
    
    (8,776
    )
    
    
    (13,582
    )Total deferred tax liability
    
    
    (25,595
    )
    
    
    (32,219
    )Net deferred tax asset
    
    $
    12,715
    
    
    $
    12,524
  10. Equity
 Common Stock
  In re: Loral Space and Communications
Consolidated Litigation
    F-31




---



##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Preferred Stock
        Loral Skynet Series A Preferred Stock
   F-32




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Cash
    
    
    PIK Dividends
    
    
    TotalPayment Date
    
    Dividend Period

    
    Dividends
    
    
    Shares
    
    
    Amount
    
    
    DividendsNovember 5, 2007
    
    7/14/07 to 11/05/07
    
    $
    8,790
    
    
    
    
    
    
    $
    
    
    
    $
    8,790July 13, 2007
    
    1/14/07 to 7/13/07
    
    
    1,260
    
    
    
    61,282
    
    
    
    12,260
    
    
    
    13,520January 12, 2007
    
    7/14/06 to 1/13/07
    
    
    1,770
    
    
    
    55,434
    
    
    
    11,090
    
    
    
    12,860
  Stock Plans
     F-33




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Year EndedDecember 31,2009
    
    
    2007Risk  free interest rate
    
    
    2.72
    %
    
    
    4.5
    %Expected life (years)
    
    
    4.67
    
    
    
    2.80Estimated volatility
    
    
    64.77
    %
    
    
    32.8
    %Expected dividends
    
    None
    
    
    NoneWeighted average grant date fair value
    
    $
    11.39
    
    
    $
    23.46
  WeightedWeighted
    
    
    Average
    
    
    AggregateAverage
    
    
    Remaining
    
    
    IntrinsicExercise
    
    
    Contractual
    
    
    ValueShares
    
    
    Price
    
    
    Term
    
    
    (In thousands)Outstanding at January 1, 2009
    
    
    2,034,202
    
    
    $
    27.81
    
    
    3.2 years
    
    
    Granted
    
    
    125,000
    
    
    $
    35.00Exercised
    
    
    (363,125
    )
    
    $
    28.37Forfeited
    
    
    (10,000
    )
    
    $
    28.44Outstanding at December 31, 2009
    
    
    1,786,077
    
    
    $
    28.20
    
    
    2.3 years
    
    $
    6,523Vested and expected to vest at December 31, 2009
    
    
    1,786,077
    
    
    $
    28.20
    
    
    2.3 years
    
    $
    6,523Exercisable at December 31, 2009
    
    
    1,692,327
    
    
    $
    27.82
    
    
    2.1 years
    
    $
    6,523
  Weighted AverageGrant- DateShares
    
    
    Fair ValueNon-vested restricted stock at January 1, 2009
    
    
    95,705
    
    
    $
    42.43Granted
    
    
    8,000
    
    
    $
    33.58Vested
    
    
    (55,492
    )
    
    $
    43.01Forfeited
    
    
    (2,687
    )
    
    $
    46.65Non-vested restricted stock at December 31, 2009
    
    
    45,526
    
    
    $
    39.91
    F-34




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Year Ended December 31,2009Risk  free interest rate
    
    
    1.581
    %Estimated volatility
    
    
    59.83
    %Expected dividends
    
    NoneWeighted average grant date fair value
    
    $
    8.51
    WeightedAverageGrant- DateShares
    
    
    Fair ValueNon-vested RSUs at January 1, 2009
    
    
    Granted
    
    
    223,250
    
    
    $
    11.03Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Non-vested RSUs at December 31, 2009
    
    
    223,250
    
    
    $
    11.03
     F-35




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  WeightedAverageGrant- DateShares
    
    
    Fair ValueNon-vested SS/L Phantom SARs at January 1, 2009
    
    
    Granted
    
    
    540,000
    
    
    $
    6.53Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Non-vested SS/L Phantom SARs at December 31, 2009
    
    
    540,000
    
    
    $
    6.53
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Total intrinsic value of options exercised
    
    $
    1,578
    
    
    $
    
    
    
    $
    2,930Total fair value of restricted stock vested
    
    
    1,395
    
    
    
    1,131
    
    
    
    3,016Total fair value of stock awards vested
    
    
    1,591
    
    
    
    
    
    
    
    
   11. Earnings (Loss) Per Share
  Year Ended December 31,2009
    
    
    2008
    
    
    2007(In thousands)Common and potential common shares:Weighted average common shares outstanding
    
    
    29,761
    
    
    
    20,407
    
    
    
    20,087Stock options
    
    
    48
    
    
    
    
    
    
    
    Unvested restricted stock units
    
    
    115
    
    
    
    
    
    
    
    Unvested restricted stock
    
    
    4
    
    
    
    
    
    
    
    Unvested SARS
    
    
    53
    
    
    
    
    
    
    
    Common and potential common shares
    
    
    29,981
    
    
    
    20,407
    
    
    
    20,087
  F-36




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Year Ended December 31,2009
    
    
    2008
    
    
    2007(In thousands)Stock options outstanding
    
    
    125
    
    
    
    2,034
    
    
    
    2,052Shares of non-vested restricted stock
    
    
    30
    
    
    
    96
    
    
    
    142Non-vested restricted stock units
    
    
    8
    
    
    
    
    
    
    
    
 12. Pensions and Other Employee Benefits
 Pensions
  Other Benefits
  Curtailment
   F-37




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Funded Status
  Pension Benefits
    
    
    Other BenefitsYear Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008(In thousands)
    
    
    (In thousands)Reconciliation of benefit obligationObligation at beginning of period
    
    $
    380,919
    
    
    $
    367,870
    
    
    $
    66,587
    
    
    $
    73,788Service cost
    
    
    9,436
    
    
    
    9,214
    
    
    
    863
    
    
    
    1,056Interest cost
    
    
    24,447
    
    
    
    23,367
    
    
    
    3,965
    
    
    
    4,108Participant contributions
    
    
    1,455
    
    
    
    1,385
    
    
    
    1,863
    
    
    
    1,792Actuarial loss (gain)
    
    
    27,366
    
    
    
    2,146
    
    
    
    (1,764
    )
    
    
    (9,393
    )Benefit payments
    
    
    (23,547
    )
    
    
    (22,630
    )
    
    
    (4,122
    )
    
    
    (4,764
    )Curtailment gain
    
    
    
    
    
    
    (433
    )
    
    
    
    
    
    
    Obligation at December 31,
    
    
    420,076
    
    
    
    380,919
    
    
    
    67,392
    
    
    
    66,587Reconciliation of fair value of plan assetsFair value of plan assets at beginning of period
    
    
    211,982
    
    
    
    284,283
    
    
    
    742
    
    
    
    955Actual return on plan assets
    
    
    42,643
    
    
    
    (80,059
    )
    
    
    5
    
    
    
    27Employer contributions
    
    
    22,526
    
    
    
    27,904
    
    
    
    2,019
    
    
    
    2,732Participant contributions
    
    
    1,455
    
    
    
    1,385
    
    
    
    1,863
    
    
    
    1,792Benefit payments
    
    
    (22,440
    )
    
    
    (21,531
    )
    
    
    (4,122
    )
    
    
    (4,764
    )Fair value of plan assets at December 31,
    
    
    256,166
    
    
    
    211,982
    
    
    
    507
    
    
    
    742Funded status at end of period
    
    $
    (163,910
    )
    
    $
    (168,937
    )
    
    $
    (66,885
    )
    
    $
    (65,845
    )
   Pension Benefits
    
    
    Other BenefitsDecember 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Actuarial (loss) gain
    
    $
    (78,028
    )
    
    $
    (80,213
    )
    
    $
    8,464
    
    
    $
    7,216Amendments-prior service credit
    
    
    25,392
    
    
    
    28,111
    
    
    
    2,485
    
    
    
    2,966$
    (52,636
    )
    
    $
    (52,102
    )
    
    $
    10,949
    
    
    $
    10,182
  Pension Benefits
    
    
    Other BenefitsActuarial (loss) gain during the period
    
    $
    (1,898
    )
    
    $
    1,719Amortization of actuarial loss (gain)
    
    
    4,083
    
    
    
    (471
    )Amortization of prior service credit
    
    
    (2,719
    )
    
    
    (481
    )Total recognized in other comprehensive income
    
    $
    (534
    )
    
    $
    767
  F-38




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Pension Benefits
    
    
    Other BenefitsDecember 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Current Liabilities
    
    $
    1,236
    
    
    $
    1,070
    
    
    $
    3,369
    
    
    $
    3,051Long-Term Liabilities
    
    
    162,674
    
    
    
    167,867
    
    
    
    63,516
    
    
    
    62,794$
    163,910
    
    
    $
    168,937
    
    
    $
    66,885
    
    
    $
    65,845
     Pension Benefits
    
    
    Other BenefitsFor the Year Ended December 31,
    
    
    For the Year Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007Service cost
    
    $
    9,436
    
    
    $
    9,214
    
    
    $
    10,145
    
    
    $
    863
    
    
    $
    1,056
    
    
    $
    1,607Interest cost
    
    
    24,447
    
    
    
    23,367
    
    
    
    22,455
    
    
    
    3,965
    
    
    
    4,108
    
    
    
    4,995Expected return on plan assets
    
    
    (17,176
    )
    
    
    (24,469
    )
    
    
    (23,768
    )
    
    
    (50
    )
    
    
    (72
    )
    
    
    (36
    )Amortization of prior service credit
    
    
    (2,719
    )
    
    
    (2,718
    )
    
    
    (2,784
    )
    
    
    (481
    )
    
    
    (480
    )
    
    
    (553
    )Amortization of net actuarial loss (gain)
    
    
    4,083
    
    
    
    (18
    )
    
    
    (59
    )
    
    
    (471
    )
    
    
    (30
    )
    
    
    111Curtailment gain
    
    
    
    
    
    
    (433
    )
    
    
    (2,345
    )
    
    
    
    
    
    
    
    
    
    
    (1,862
    )Net periodic cost
    
    $
    18,071
    
    
    $
    4,943
    
    
    $
    3,644
    
    
    $
    3,826
    
    
    $
    4,582
    
    
    $
    4,262
 Assumptions
  For the Year Ended December 31,2009
    
    
    2008
    
    
    2007Discount rate
    
    
    6.50
    %
    
    
    6.50
    %
    
    
    6.00%/6.50
    %Expected return on plan assets
    
    
    8.00
    %
    
    
    8.50
    %
    
    
    8.50
    %Rate of compensation increase
    
    
    4.25
    %
    
    
    4.25
    %
    
    
    4.25
    %
  December 31,2009
    
    
    2008
    
    
    2007Discount rate
    
    
    6.00
    %
    
    
    6.50
    %
    
    
    6.50
    %Rate of compensation increase
    
    
    4.25
    %
    
    
    4.25
    %
    
    
    4.25
    %
  F-39




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   1% Increase
    
    
    1% DecreaseEffect on total of service and interest cost components of net periodic
postretirement health care benefit cost
    
    $
    313
    
    
    $
    (260
    )Effect on the health care component of the accumulated postretirement benefit obligation
    
    $
    4,759
    
    
    $
    (3,826
    )
 Plan Assets
      Actual AllocationDecember 31,
    
    
    Target Allocation2009
    
    
    2008
    
    
    Target
    
    
    Target RangeEquities
    
    
    59
    %
    
    
    51
    %
    
    
    60
    %
    
    
    50-65
    %Fixed Income
    
    
    41
    %
    
    
    49
    %
    
    
    40
    %
    
    
    35-50
    %100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
  F-40




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Target AllocationTarget
    
    
    Target RangeU.S. Large Cap Equities
    
    
    35
    %
    
    
    30-40
    %U.S. Small Cap Equities
    
    
    5
    %
    
    
    3-7
    %Non-U.S. Equities
    
    
    15
    %
    
    
    10-20
    %Alternative Equity Investments
    
    
    5
    %
    
    
    0-15
    %Total Equities
    
    
    60
    %
    
    
    50-65
    %Fixed Income
    
    
    35
    %
    
    
    30-40
    %Alternative Fixed Income Investments
    
    
    5
    %
    
    
    0-15
    %Total Fixed Income
    
    
    40
    %
    
    
    35-50
    %Total Target Allocation
    
    
    100
    %
    
    
    100
    %
   F-41




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Fair Value Measurements
   Fair Value Measurementsat December 31, 2009Quoted PricesIn Active Markets
    
    
    Significant
    
    
    SignificantFor Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    InputsTotal
    
    
    Percentage
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3(In thousands)Asset CategoryCashEquity securities:U.S. large-cap(1)
    
    $
    79,854
    
    
    
    31
    %
    
    
    
    
    
    $
    79,854U.S. small-cap(2)
    
    
    13,087
    
    
    
    5
    %
    
    
    
    
    
    
    13,087Non-U.S.(3)
    
    
    45,957
    
    
    
    18
    %
    
    
    
    
    
    
    45,957Alternative investments:Equity long/short fund(4)
    
    
    5,468
    
    
    
    2
    %
    
    
    
    
    
    
    
    
    
    $
    5,468Private equity fund(5)
    
    
    6,245
    
    
    
    3
    %
    
    
    
    
    
    
    
    
    
    
    6,245150,611
    
    
    
    59
    %
    
    
    
    
    
    
    138,898
    
    
    
    11,713Fixed income securities:Commingled funds(6)
    
    
    98,998
    
    
    
    39
    %
    
    
    
    
    
    
    98,998Alternative investments:Distressed opportunity limited
partnership(7)
    
    
    3,204
    
    
    
    1
    %
    
    
    
    
    
    
    
    
    
    
    3,204Diversified alternatives fund(8)
    
    
    3,135
    
    
    
    1
    %
    
    
    
    
    
    
    
    
    
    
    3,135Other limited partnerships(9)
    
    
    218
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    218105,555
    
    
    
    41
    %
    
    
    
    
    
    
    98,998
    
    
    
    6,557$
    256,166
    
    
    
    100
    %
    
    
    
    
    
    $
    237,896
    
    
    $
    18,270
 (1)
    
    Investments in common stocks that rank among the largest 1,000 companies in the U.S. stock market.(2)
    
    Investments in common stocks that rank among the small capitalization stocks in the U.S. stock market.  F-42




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (3)
    
    Investments in common stocks of companies from developed and emerging countries around the world.(4)
    
    Investments primarily in long and short positions in equity securities of U.S. and non-U.S.
companies. This fund has semi-annual tender offer redemption periods on June 30 and December 31.(5)
    
    Fund invests in portfolios of secondary interest in established venture capital, buyout, mezzanine
and special situation funds on a global basis. The Company committed to invest up to $10 million in
this fund. $6.95 million has been invested through December 31, 2009. Fund is valued on a quarterly
lag with adjustment for subsequent cash activity.(6)
    
    Investments in bonds representing many sectors of the broad bond market with both short-term and
intermediate-term maturities.(7)
    
    Investments mainly in discounted debt securities, bank loans, trade claims and other debt and equity
securities of financially troubled companies. This partnership has a one year lock-up period with
semi-annual withdrawal rights on June 30 and December 31 thereafter. Our initial investment was made
August 3, 2009.(8)
    
    Fund is a fund of hedge funds. Fund is closed and currently unwinding its holdings. The remaining
portfolio is illiquid and could take four or five years, possibly more to liquidate. Fund is valued
on a one month lag with adjustment for subsequent cash activity.(9)
    
    Company invested in other partnerships that have reached their end of life and have closed and are
unwinding their holdings. Mainly partnerships that provided mezzanine financing.   Fair Value Measurements Using SignificantUnobservable Inputs (Level 3)Private
    
    
    Equity
    
    
    Distressed
    
    
    Diversified
    
    
    OtherEquity
    
    
    Long/Short
    
    
    Opportunity
    
    
    Alternatives
    
    
    LimitedFund
    
    
    Fund
    
    
    Ltd. Partnership
    
    
    Fund
    
    
    Partnership
    
    
    Total(In thousands)Beginning balance at January 1, 2009
    
    $
    6,645
    
    
    $
    
    
    
    $
    
    
    
    $
    8,735
    
    
    $
    402
    
    
    $
    15,782Unrealized gain/(loss)
    
    
    (1,050
    )
    
    
    468
    
    
    
    204
    
    
    
    (525
    )
    
    
    192
    
    
    
    (711
    )Realized gain/(loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,095
    )
    
    
    (344
    )
    
    
    (1,439
    )Purchases
    
    
    650
    
    
    
    5,000
    
    
    
    3,000
    
    
    
    
    
    
    
    
    
    
    
    8,650Sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,980
    )
    
    
    (32
    )
    
    
    (4,012
    )Ending balance at December 31, 2009
    
    $
    6,245
    
    
    $
    5,468
    
    
    $
    3,204
    
    
    $
    3,135
    
    
    $
    218
    
    
    $
    18,270
  F-43




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     Benefit Payments
  Other BenefitsGross
    
    
    MedicarePension
    
    
    Benefit
    
    
    SubsidyBenefits
    
    
    Payments
    
    
    Receipts2010
    
    $
    25,798
    
    
    $
    4,295
    
    
    $
    3042011
    
    
    26,605
    
    
    
    4,671
    
    
    
    3372012
    
    
    26,765
    
    
    
    4,901
    
    
    
    3722013
    
    
    27,102
    
    
    
    5,067
    
    
    
    4052014
    
    
    27,857
    
    
    
    5,240
    
    
    
    4422015 to 2019
    
    
    150,512
    
    
    
    28,241
    
    
    
    2,736
 Employee Savings (401k) Plan
 2 3
 13. Financial Instruments, Derivative Instruments and Hedging
 Financial Instruments
   F-44




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Foreign Currency
   Foreign Currency
    
    
    U.S.$(In thousands)Future revenues  Japanese Yen
    
    ¥
    35,062
    
    
    $
    380Future expenditures  Japanese Yen
    
    ¥
    4,613,707
    
    
    $
    50,018Contracts-in-process, unbilled receivables  Japanese Yen
    
    ¥
    75,430
    
    
    $
    818Future revenues  EUROs
    
    
    4,420
    
    
    $
    6,335Future expenditures  EUROs
    
    
    2,370
    
    
    $
    3,397
 Derivatives and Hedging Transactions
    Cash Flow Hedges
    F-45




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  To SellAt
    
    
    AtEuro
    
    
    Contract
    
    
    MarketMaturity
    
    Amount
    
    
    Rate
    
    
    Rate(In thousands)2010
    
    
    19,210
    
    
    $
    29,389
    
    
    $
    27,5292011
    
    
    23,493
    
    
    
    35,663
    
    
    
    33,650
    42,703
    
    
    $
    65,052
    
    
    $
    61,179
 Balance Sheet Classification
  Asset DerivativesBalance Sheet Location
    
    
    Fair Value(In thousands)Derivatives designated as hedging instrumentsForeign exchange contracts
    
    Other current assets
    
    $
    1,860Foreign exchange contracts
    
    Other assets
    
    
    1,8463,706Derivatives not designated as hedging instrumentsForeign exchange contracts
    
    Other assets
    
    
    167Total Derivatives
    
    
    
    
    
    $
    3,873
 Cash Flow Hedge Gains (Losses) Recognition
  Amount of Gain(Loss)
    
    
    Gain Reclassified from
    
    
    Loss on DerivativeRecognized
    
    
    Accumulated
    
    
    Ineffectiveness andin OCI on
    
    
    OCI into Income
    
    
    amounts excluded fromDerivatives in Cash Flow
    
    Derivative
    
    
    (Effective Portion)
    
    
    Effectiveness TestingHedging Relationships
    
    (Effective Portion)
    
    
    Location
    
    
    Amount
    
    
    Location
    
    
    Amount(In thousands)
    
    
    
    
    
    (In thousands)
    
    
    
    
    
    (In thousands)Foreign exchange contracts
    
    $
    (274
    )
    
    Revenue
    
    $
    11,806
    
    
    Revenue
    
    $
    (1,085
    )Foreign exchange contracts
    
    $
    180
    
    
    
    
    
    
    
    
    
    
    Interest income
    
    $
    (72
    )
 GainRecognized in IncomeCash Flow Derivatives Not Designated as
    
    on DerivativeHedging Instruments
    
    Location
    
    
    Amount(In thousands)Foreign exchange contracts
    
    Revenue
    
    $
    335
  Other Foreign Currency Contracts
 
  F-46




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     14. Commitments and Contingencies
 Financial Matters
   2009
    
    
    2008
    
    
    2007Balance of deferred amounts at January 1
    
    $
    36,255
    
    
    $
    35,026
    
    
    $
    53,872Warranty costs incurred including payments
    
    
    (1,239
    )
    
    
    (956
    )
    
    
    (10,790
    )Accruals relating to pre-existing contracts (including changes in estimates)
    
    
    2,151
    
    
    
    2,185
    
    
    
    (8,056
    )Balance of deferred amounts at December 31
    
    $
    37,167
    
    
    $
    36,255
    
    
    $
    35,026
   F-47




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
      Transactions with Affiliates  Telesat
 Satellite Matters
   F-48




---



##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
      Transactions with Affiliates  Telesat
  F-49




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Regulatory Matters
  Lease Arrangements
  Gross
    
    
    SubleaseRent
    
    
    Income
    
    
    Net RentYear ended December 31, 2009
    
    $
    16,337
    
    
    $
    
    
    
    $
    16,337Year ended December 31, 2008
    
    $
    12,154
    
    
    $
    (6
    )
    
    $
    12,148Year ended December 31, 2007
    
    $
    26,302
    
    
    $
    (76
    )
    
    $
    26,226
  2010
    
    $
    10,7372011
    
    
    8,3562012
    
    
    5,8112013
    
    
    3,7742014
    
    
    3,508Thereafter
    
    
    10,016$
    42,202
 Legal Proceedings
 Insurance Coverage Litigation
 In re: Loral
Space and Communications Inc. Consolidated Litigation Babus
   F-50




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 In re: Loral Space and Communications
Inc. Consolidated Litigation Babus
   Reorganization Matters
  Indemnification Claims of Directors and Officers of Old Loral. Old Loral Class Action Securities Litigations
  F-51




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Old Loral Class Action Securities Litigations
 Beleson. Beleson Christ Christ Reorganization Matters  Indemnification Claims of
Directors and Officers of Old Loral.
 Christ. Beleson Beleson Christ Christ Beleson Beleson Beleson Beleson Reorganization Matters 
Indemnification Claims of Directors and Officers of Old Loral.
 Other and Routine Litigation
   F-52




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 15. Segments
       F-53




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Segment Information
(In thousands)
 Year Ended December 31,2009
    
    
    2008
    
    
    2007(In thousands)RevenuesSatellite manufacturing:External revenues
    
    $
    901,283
    
    
    $
    785,534
    
    
    $
    739,815Intersegment revenues(1)
    
    
    107,401
    
    
    
    95,913
    
    
    
    74,500Satellite manufacturing revenues
    
    
    1,008,684
    
    
    
    881,447
    
    
    
    814,315Satellite services revenues(2)
    
    
    691,566
    
    
    
    685,187
    
    
    
    241,156Segment revenues before eliminations
    
    
    1,700,250
    
    
    
    1,566,634
    
    
    
    1,055,471Intercompany eliminations(3)
    
    
    (15,284
    )
    
    
    (12,049
    )
    
    
    (55,250
    )Affiliate eliminations(4)
    
    
    (691,566
    )
    
    
    (685,187
    )
    
    
    (117,767
    )Total revenues as reported
    
    $
    993,400
    
    
    $
    869,398
    
    
    $
    882,454Segment Adjusted EBITDASatellite manufacturing
    
    $
    90,565
    
    
    $
    45,055
    
    
    $
    34,479Satellite services(2)
    
    
    488,149
    
    
    
    436,514
    
    
    
    118,385Corporate(5)
    
    
    (21,371
    )
    
    
    (14,875
    )
    
    
    (37,935
    )Adjusted EBITDA before eliminations
    
    
    557,343
    
    
    
    466,694
    
    
    
    114,929Intercompany eliminations(3)
    
    
    (1,673
    )
    
    
    (1,569
    )
    
    
    (6,075
    )Affiliate eliminations(4)
    
    
    (488,149
    )
    
    
    (427,176
    )
    
    
    (65,283
    )Adjusted EBITDA
    
    
    67,521
    
    
    
    37,949
    
    
    
    43,571Reconciliation to Operating IncomeDepreciation, Amortization and Stock-Based CompensationSatellite manufacturing
    
    
    (44,203
    )
    
    
    (38,646
    )
    
    
    (36,282
    )Satellite services(2)
    
    
    (230,176
    )
    
    
    (220,843
    )
    
    
    (85,905
    )Corporate
    
    
    (3,107
    )
    
    
    (5,342
    )
    
    
    (22,270
    )Segment depreciation before affiliate eliminations
    
    
    (277,486
    )
    
    
    (264,831
    )
    
    
    (144,457
    )Affiliate eliminations(4)
    
    
    230,176
    
    
    
    220,843
    
    
    
    41,200Depreciation, amortization and stock-based compensation as reported
    
    
    (47,310
    )
    
    
    (43,986
    )
    
    
    (103,257
    )Satellite manufacturing  impairment of goodwill
    
    
    
    
    
    
    (187,940
    )
    
    
    Satellite services  gain on contribution of Loral Skynet
    
    
    
    
    
    
    
    
    
    
    104,942Operating income (loss) as reported
    
    $
    20,211
    
    
    $
    (193,977
    )
    
    $
    45,256Capital ExpendituresSatellite manufacturing
    
    $
    26,426
    
    
    $
    53,883
    
    
    $
    37,477Satellite services(2)
    
    
    231,654
    
    
    
    255,506
    
    
    
    88,647Corporate
    
    
    17,131
    
    
    
    10,676
    
    
    
    37Segment capital expenditures before eliminations(6)
    
    
    275,211
    
    
    
    320,065
    
    
    
    126,161Affiliate eliminations(4)
    
    
    (231,654
    )
    
    
    (255,506
    )
    
    
    (30,400
    )Capital expenditures as reported
    
    $
    43,557
    
    
    $
    64,559
    
    
    $
    95,761
 As of December 31,2009
    
    
    2008(In thousands)Total Assets(6)Satellite manufacturing(7)
    
    $
    863,866
    
    
    $
    799,476Satellite services(8)
    
    
    5,202,785
    
    
    
    4,273,162Corporate
    
    
    181,485
    
    
    
    196,391Total Assets before affiliate eliminations
    
    
    6,248,136
    
    
    
    5,269,029Affiliate eliminations(4)
    
    
    (4,994,684
    )
    
    
    (4,273,162
    )Total assets as reported
    
    $
    1,253,452
    
    
    $
    995,867
  F-54




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (1)
    
    Intersegment revenues include $92 million, $84 million and $22
million for the years ended December 31, 2009, 2008 and 2007,
respectively, of revenue from affiliates.(2)
    
    Satellite Services for 2009 and 2008 represents Telesat. Satellite
Services for 2007 includes Loral Skynet for the period January 1,
2007 to October 30, 2007 and Telesat for the period October 31,
2007 to December 31, 2007. Satellite services Adjusted EBITDA also
includes approximately $9 million for the year ended December 31,
2008, related to the distribution from a bankruptcy claim against
a former customer of Loral Skynet.(3)
    
    Represents the elimination of intercompany sales and intercompany
Adjusted EBITDA, primarily for satellites under construction by
SS/L for Loral and its wholly owned subsidiaries and for satellite
services leasing transponder capacity to SS/L.(4)
    
    Affiliate eliminations represent the elimination of amounts
attributable to Telesat whose results are reported under the
equity method of accounting in our consolidated statements of
operations (see Note 6).(5)
    
    Includes corporate expenses incurred in support of our operations
and includes our equity investments in XTAR and Globalstar service
providers.(6)
    
    Amounts are presented after the elimination of intercompany profit.(7)
    
    During 2008, we determined that the implied fair value of SS/L
goodwill had decreased below its carrying value, and we recorded
an impairment charge for the entire goodwill balance of $187.9
million to reflect this impairment.(8)
    
    Includes $2.3 billion and $2.0 billion satellite services goodwill
related to Telesat as of December 31, 2009 and 2008, respectively. Revenue by Customer Location
  For the Year Ended December 31,2009
    
    
    2008
    
    
    2007United States
    
    $
    534,294
    
    
    $
    612,282
    
    
    $
    702,605United Kingdom
    
    
    101,499
    
    
    
    68,956
    
    
    
    45,596Canada
    
    
    92,094
    
    
    
    83,767
    
    
    
    43,552Spain
    
    
    85,499
    
    
    
    25,506
    
    
    
    385Luxembourg
    
    
    61,673
    
    
    
    11,398
    
    
    
    The Netherlands
    
    
    59,509
    
    
    
    50,110
    
    
    
    6,849Peoples Republic of China (including Hong Kong)
    
    
    54,677
    
    
    
    13,236
    
    
    
    47,591Other
    
    
    4,155
    
    
    
    4,143
    
    
    
    35,876$
    993,400
    
    
    $
    869,398
    
    
    $
    882,454
   F-55




---



##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 16. Related Party Transactions
 Transactions with Affiliates
 Telesat
      For Year Ended December 31,2009
    
    
    2008
    
    
    2007(In thousands)Revenues from Telesat satellite construction contracts
    
    $
    92,095
    
    
    $
    83,767
    
    
    $
    21,548Milestone payments received from Telesat
    
    
    89,419
    
    
    
    79,107
    
    
    
    20,064
    F-56




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
          F-57




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 XTAR
  Other Equity Investments
  MHR Fund Management LLC
   For Year Ended December 31,2008
    
    
    2007Loral Series-1 Preferred StockDividends paid in the form of additional shares Number of shares
    
    
    80,423
    
    
    
    47,762 Amount
    
    $
    24,248
    
    
    $
    14,400Loral Skynet Preferred StockDividends paid in cash
    
    $
    
    
    
    $
    4,513Dividends paid in the form of additional shares Number of shares
    
    
    
    
    
    
    44,539 Amount
    
    $
    
    
    
    $
    8,908Loral Skynet NotesInterest payments paid in cash
    
    $
    
    
    
    $
    8,967Redemption premium paid in cash
    
    $
    
    
    
    $
    5,624
  F-58




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     Other Relationships
   17. Selected Quarterly Financial Information (unaudited, in thousands, except per share amounts)
 Quarter EndedYear ended December 31, 2009
    
    March 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,Revenues
    
    $
    212,491
    
    
    $
    271,447
    
    
    $
    249,237
    
    
    $
    260,225Operating income (loss)
    
    
    (5,480
    )
    
    
    (7,695
    )
    
    
    14,849
    
    
    
    18,537Income (loss) before income taxes and equity in net
income (losses) of affiliates
    
    
    (5,180
    )
    
    
    (4,563
    )
    
    
    16,012
    
    
    
    20,706Equity in net income (losses) of affiliates
    
    
    (5,668
    )
    
    
    85,276
    
    
    
    93,071
    
    
    
    37,619Net income (loss)
    
    
    (10,828
    )
    
    
    74,295
    
    
    
    108,424
    
    
    
    59,811Basic and diluted income (loss) per share(1):Basic income (loss) per share
    
    
    (0.36
    )
    
    
    2.50
    
    
    
    3.64
    
    
    
    2.01Diluted income (loss) per share
    
    
    (0.36
    )
    
    
    2.48
    
    
    
    3.61
    
    
    
    1.97
  F-59




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Quarter EndedYear ended December 31, 2008
    
    March 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,Revenues
    
    $
    218,537
    
    
    $
    208,061
    
    
    $
    212,519
    
    
    $
    230,281Operating income (loss)
    
    
    (10,810
    )
    
    
    4,536
    
    
    
    (5,795
    )
    
    
    (181,908
    )(2)Income (loss) before income taxes and equity in net
income (losses) of affiliates
    
    
    (4,904
    )
    
    
    60,755
    
    
    
    (5,433
    )
    
    
    (201,941
    )Equity in net income (losses) of affiliates
    
    
    (64,537
    )
    
    
    2,838
    
    
    
    (39,353
    )
    
    
    (394,597
    )(3)Net income (loss)
    
    
    (71,217
    )
    
    
    51,950
    
    
    
    (44,225
    )
    
    
    (629,424
    )Basic and diluted income (loss) per share(1):Basic income (loss) per share
    
    
    (3.83
    )
    
    
    2.27
    
    
    
    (2.50
    )
    
    
    (31.13
    )Diluted income (loss) per share
    
    
    (3.83
    )
    
    
    2.16
    
    
    
    (2.50
    )
    
    
    (31.13
    )
 (1)
    
    The quarterly earnings per share information is computed separately for each period. Therefore, the sum of such
quarterly per share amounts may differ from the total for the year.(2)
    
    Includes goodwill impairment charge of $188 million.(3)
    
    Includes our share of
Telesats non-cash foreign exchange losses, net of non-cash
gains on financial instruments, of $295 million and Telesats charges for
impairment of long-lived and intangible assets of $455 million.  F-60




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##### Table of Contents



SCHEDULE II
 LORAL SPACE & COMMUNICATIONS INC.
VALUATION AND QUALIFYING ACCOUNTS
For the Year Ended December 31, 2009, 2008 and 2007
(In thousands)
 AdditionsBalance at
    
    
    Charged to
    
    
    Charged to
    
    
    Deductions
    
    
    Balance atBeginning
    
    
    Costs and
    
    
    Other
    
    
    From
    
    
    End ofDescription
    
    of Period
    
    
    Expenses
    
    
    Accounts(1)
    
    
    Reserves(2)
    
    
    PeriodYear ended 2007Allowance for billed receivables
    
    $
    1,624
    
    
    $
    (397
    )
    
    $
    20
    
    
    $
    (1,024
    )
    
    $
    223Inventory allowance
    
    $
    29,598
    
    
    $
    (543
    )
    
    $
    
    
    
    $
    (609
    )
    
    $
    28,446Deferred tax valuation allowance
    
    $
    304,884
    
    
    $
    16,287
    
    
    $
    (34,749
    )
    
    $
    (45,194
    )
    
    $
    241,228Year ended 2008Allowance for billed receivables
    
    $
    223
    
    
    $
    700
    
    
    $
    
    
    
    $
    
    
    
    $
    923Inventory allowance
    
    $
    28,446
    
    
    $
    
    
    
    $
    
    
    
    $
    (1,246
    )
    
    $
    27,200Deferred tax valuation allowance
    
    $
    241,228
    
    
    $
    202,510
    
    
    $
    82,611
    
    
    $
    (38,587
    )
    
    $
    487,762Year ended 2009Allowance for billed receivables
    
    $
    923
    
    
    $
    2,759
    
    
    $
    
    
    
    $
    
    
    
    $
    3,682Inventory allowance
    
    $
    27,200
    
    
    $
    1,042
    
    
    $
    55
    
    
    $
    
    
    
    $
    28,297Deferred tax valuation allowance
    
    $
    487,762
    
    
    $
    (96,617
    )
    
    $
    22,893
    
    
    $
    
    
    
    $
    414,038
 (1)
    
    The allowance for long-term receivables is recorded as a
reduction to revenues. Changes in the deferred tax
valuation allowance which have been charged to other
accounts have been recorded in accumulated other
comprehensive income (loss), goodwill and other deferred tax
assets.(2)
    
    Deductions from reserves reflect write-offs of
uncollectible billed receivables, disposals of inventory
and reversal of excess deferred tax valuation allowance
recorded as a reduction to goodwill.  F-61




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##### Table of Contents



Report of Independent Registered Chartered Accountants
       
  F-62




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##### Table of Contents



Telesat Holdings Inc.
 
 Consolidated Statements of Earnings (Loss)
for the years ended December 31, 2009, 2008 and 2007
 PredecessorSuccessor Entity
    
    
    
    EntityFor the Period
    
    
    
    For the PeriodYear Ended
    
    
    Year Ended
    
    
    October 31 to
    
    
    
    January 1 toDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    
    October 30,(in thousands of Canadian dollars)
    
    Notes
    
    2009
    
    
    2008
    
    
    2007
    
    
    
    2007Operating revenuesService revenues
    
    
    
    
    767,138
    
    
    
    680,791
    
    
    
    103,509
    
    
    
    
    384,428Equipment sales revenues
    
    
    
    
    20,060
    
    
    
    30,584
    
    
    
    7,907
    
    
    
    
    40,760Sales-type lease revenues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,599Total operating revenues
    
    (4)
    
    
    787,198
    
    
    
    711,375
    
    
    
    111,416
    
    
    
    
    457,787Amortization
    
    
    
    
    256,867
    
    
    
    235,640
    
    
    
    40,046
    
    
    
    
    105,788Operations and administration
    
    
    
    
    219,690
    
    
    
    247,550
    
    
    
    43,276
    
    
    
    
    144,307Cost of equipment sales
    
    
    
    
    16,380
    
    
    
    24,368
    
    
    
    6,485
    
    
    
    
    34,723Cost of sales-type lease
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,519Impairment loss on long-lived assets
    
    (10)
    
    
    
    
    
    
    2,373
    
    
    
    
    
    
    
    
    2,116Impairment loss on intangible assets
    
    (11)
    
    
    
    
    
    
    483,000
    
    
    
    
    
    
    
    
    Total operating expenses
    
    
    
    
    492,937
    
    
    
    992,931
    
    
    
    89,807
    
    
    
    
    302,453Earnings (loss) from operations
    
    
    
    
    294,261
    
    
    
    (281,556
    )
    
    
    21,609
    
    
    
    
    155,334Interest expense
    
    (5)
    
    
    (273,568
    )
    
    
    (257,641
    )
    
    
    (43,861
    )
    
    
    
    (8,548
    )(Loss) gain on financial instruments
    
    
    
    
    (134,402
    )
    
    
    251,686
    
    
    
    75,098
    
    
    
    
    (6,653
    )Gain (loss) on foreign exchange
    
    
    
    
    500,862
    
    
    
    (698,056
    )
    
    
    (118,034
    )
    
    
    
    (935
    )Other income (expense)
    
    (6)
    
    
    31,859
    
    
    
    (1,713
    )
    
    
    (1,033
    )
    
    
    
    (379
    )Earnings (loss) before income taxes
    
    
    
    
    419,012
    
    
    
    (987,280
    )
    
    
    (66,221
    )
    
    
    
    138,819Income tax (expense) recovery
    
    (7)
    
    
    (4,949
    )
    
    
    164,879
    
    
    
    62,170
    
    
    
    
    (57,077
    )Net earnings (loss)
    
    
    
    
    414,063
    
    
    
    (822,401
    )
    
    
    (4,051
    )
    
    
    
    81,742Net earnings (loss) applicable to
common shares
    
    
    
    
    414,063
    
    
    
    (822,401
    )
    
    
    (4,051
    )
    
    
    
    81,742
  F-63




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##### Table of Contents



Telesat Holdings Inc.
 
 Consolidated Statements of Comprehensive Income (Loss)
for the years ended December 31, 2009, 2008, and 2007
 PredecessorSuccessor Entity
    
    
    
    EntityFor the Period
    
    
    
    For the PeriodYear Ended
    
    
    Year Ended
    
    
    October 31 to
    
    
    
    January 1 toDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    
    October 30,(in thousands of Canadian dollars)
    
    2009
    
    
    2008
    
    
    2007
    
    
    
    2007Net earnings (loss)
    
    
    414,063
    
    
    
    (822,401
    )
    
    
    (4,051
    )
    
    
    
    81,742Other comprehensive income (loss):Unrealized foreign currency translation gains (losses) of self sustaining foreign operations, net of related taxes
(2009  $346, 2008  ($2,090),
2007  two months  $66, 
2007  ten months  ($827))
    
    
    320
    
    
    
    (7,143
    )
    
    
    (599
    )
    
    
    
    1,715Loss on derivatives designated as cash flow hedges, net of related taxes
(2007  ten months  $9,242)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,819
    )Gain on derivatives designated as cash flow hedges in prior periods transferred to net income in the current
period, net of related taxes (2007  ten months  ($2,605))
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,585Comprehensive income (loss)
    
    
    414,383
    
    
    
    (829,544
    )
    
    
    (4,650
    )
    
    
    
    69,223
  F-64




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##### Table of Contents



Telesat Holdings Inc.
 
 Consolidated Statements of Shareholders Equity
for the year ended December 31, 2009 with Comparative Figures for the periods ended
December 31, 2008, December 31, 2007, October 30, 2007
 Accumulateddeficit andAccumulated
    
    
    Accumulatedother
    
    
    other
    
    
    
    
    
    
    TotalCommon
    
    
    Preferred
    
    
    Accumulated
    
    
    comprehensive
    
    
    comprehensive
    
    
    Contributed
    
    
    shareholders(in thousands of Canadian dollars) (unaudited)
    
    Notes
    
    shares
    
    
    Shares
    
    
    deficit
    
    
    loss
    
    
    loss
    
    
    surplus
    
    
    equityPredecessor entityBalance at January 1, 2007
    
    
    
    
    341,116
    
    
    
    
    
    
    
    386,398
    
    
    
    (2,283
    )
    
    
    384,115
    
    
    
    184,416
    
    
    
    909,647Adjustment for changes in accounting policies
    
    
    
    
    
    
    
    
    
    
    
    
    (401
    )
    
    
    1,239
    
    
    
    838
    
    
    
    
    
    
    
    838Stock compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    617
    
    
    
    617Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    81,742
    
    
    
    
    
    
    
    81,742
    
    
    
    
    
    
    
    81,742Reorganization
    
    (1)
    
    
    
    
    
    
    
    
    
    
    (579,807
    )
    
    
    
    
    
    
    (579,807
    )
    
    
    (185,033
    )
    
    
    (764,840
    )Unrealized foreign currency translation gains on translation of self sustaining foreign operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,715
    
    
    
    1,715
    
    
    
    
    
    
    
    1,715Gains and losses on derivatives designated as cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,819
    )
    
    
    (19,819
    )
    
    
    
    
    
    
    (19,819
    )Gains and losses on derivatives designated as cash flow hedges in prior periods transferred to net
income in the current period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,585
    
    
    
    5,585
    
    
    
    
    
    
    
    5,585Balance at October 30, 2007 (prior to acquisition transactions)
    
    
    
    
    341,116
    
    
    
    
    
    
    
    (112,068
    )
    
    
    (13,563
    )
    
    
    (125,631
    )
    
    
    
    
    
    
    215,485Telesat Holdings Inc. Acquisition Transactions and adjustments
    
    
    
    
    (341,116
    )
    
    
    
    
    
    
    112,068
    
    
    
    13,563
    
    
    
    125,631
    
    
    
    
    
    
    
    (215,485
    )Successor entityBalance at October 31, 2007Common shares issued as part of the sale transaction
    
    (3)
    
    
    756,414
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    756,414Preferred shares issued as part of the sale transaction
    
    (3)
    
    
    
    
    
    
    541,764
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    541,764Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    (4,051
    )
    
    
    
    
    
    
    (4,051
    )
    
    
    
    
    
    
    (4,051
    )Unrealized foreign currency translation losses on translation of self sustaining foreign operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (599
    )
    
    
    (599
    )
    
    
    
    
    
    
    (599
    )Balance at December 31, 2007
    
    
    
    
    756,414
    
    
    
    541,764
    
    
    
    (4,051
    )
    
    
    (599
    )
    
    
    (4,650
    )
    
    
    
    
    
    
    1,293,528Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    (822,401
    )
    
    
    
    
    
    
    (822,401
    )
    
    
    
    
    
    
    (822,401
    )Unrealized foreign currency translation losses on translation of self sustaining foreign operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,143
    )
    
    
    (7,143
    )
    
    
    
    
    
    
    (7,143
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,448
    
    
    
    5,448Balance at December 31, 2008
    
    
    
    
    756,414
    
    
    
    541,764
    
    
    
    (826,452
    )
    
    
    (7,742
    )
    
    
    (834,194
    )
    
    
    5,448
    
    
    
    469,432Stock based compensation
    
    (19)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,649
    
    
    
    5,649Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    414,063
    
    
    
    
    
    
    
    414,063
    
    
    
    
    
    
    
    414,063Unrealized foreign currency translation gains on translation of self-sustaining foreign operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    320
    
    
    
    320
    
    
    
    
    
    
    
    320Balance at December 31, 2009
    
    
    
    
    756,414
    
    
    
    541,764
    
    
    
    (412,389
    )
    
    
    (7,422
    )
    
    
    (419,811
    )
    
    
    11,097
    
    
    
    889,464
  F-65




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##### Table of Contents



Telesat Holdings Inc.
 
 Consolidated Balance Sheets
as at December 31, 2009 and 2008
 (in thousands of Canadian dollars)
    
    Notes
    
    2009
    
    
    2008AssetsCurrent assetsCash and cash equivalents
    
    
    
    
    154,189
    
    
    
    98,539Accounts receivable
    
    (8)
    
    
    70,203
    
    
    
    61,933Current future tax asset
    
    (7)
    
    
    2,184
    
    
    
    2,581Other current assets
    
    (9)
    
    
    29,018
    
    
    
    49,187Total current assets
    
    
    
    
    255,594
    
    
    
    212,240Satellites, property and other equipment, net
    
    (4), (10)
    
    
    1,926,190
    
    
    
    1,883,576Other long-term assets
    
    (9)
    
    
    41,010
    
    
    
    42,303Intangible assets, net
    
    (11)
    
    
    510,675
    
    
    
    582,035Goodwill
    
    (11)
    
    
    2,446,603
    
    
    
    2,446,603Total assets
    
    
    
    
    5,180,072
    
    
    
    5,166,757LiabilitiesCurrent liabilitiesAccounts payable and accrued liabilities
    
    
    
    
    43,413
    
    
    
    44,455Other current liabilities
    
    (12)
    
    
    127,704
    
    
    
    142,432Debt due within one year
    
    (13)
    
    
    23,602
    
    
    
    23,272Total current liabilities
    
    
    
    
    194,719
    
    
    
    210,159Debt financing
    
    (13)
    
    
    3,013,738
    
    
    
    3,513,223Future tax liability
    
    (7)
    
    
    269,193
    
    
    
    266,372Other long-term liabilities
    
    (12)
    
    
    671,523
    
    
    
    566,136Senior preferred shares
    
    (14)
    
    
    141,435
    
    
    
    141,435Total liabilities
    
    
    
    
    4,290,608
    
    
    
    4,697,325Shareholders equityCommon shares (74,252,460 common shares
issued and outstanding)
    
    (15)
    
    
    756,414
    
    
    
    756,414Preferred shares
    
    (15)
    
    
    541,764
    
    
    
    541,7641,298,178
    
    
    
    1,298,178Accumulated deficit
    
    
    
    
    (412,389
    )
    
    
    (826,452
    )Accumulated other comprehensive loss
    
    
    
    
    (7,422
    )
    
    
    (7,742
    )(419,811
    )
    
    
    (834,194
    )Contributed surplus
    
    (19)
    
    
    11,097
    
    
    
    5,448Total shareholders equity
    
    
    
    
    889,464
    
    
    
    469,432Total liabilities and shareholders equity
    
    
    
    
    5,180,072
    
    
    
    5,166,757
  F-66




---



##### Table of Contents



Telesat Holdings Inc.
 
 Consolidated Statements of Cash Flow
for the years ended December 31, 2009, 2008, and 2007
 PredecessorSuccessor Entity
    
    
    
    EntityFor the Period
    
    
    
    For the PeriodYear Ended
    
    
    Year Ended
    
    
    October 31 to
    
    
    
    January 1 toDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    
    October 30,(in thousands of Canadian dollars)
    
    Notes
    
    2009
    
    
    2008
    
    
    2007
    
    
    
    2007Cash flows from operating activitiesNet (loss) earnings
    
    
    
    
    414,063
    
    
    
    (822,401
    )
    
    
    (4,051
    )
    
    
    
    81,742Adjustments to reconcile net earnings (loss) to cash flows from
operating activities:Gross profit on sales-type lease
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,881
    )Amortization
    
    
    
    
    256,867
    
    
    
    235,640
    
    
    
    40,046
    
    
    
    
    105,788Future income taxes
    
    
    
    
    4,598
    
    
    
    (175,951
    )
    
    
    (60,653
    )
    
    
    
    24,292Unrealized foreign exchange (gain) loss
    
    
    
    
    (524,132
    )
    
    
    695,445
    
    
    
    105,820
    
    
    
    
    (10,396
    )Unrealized loss (gain) on derivatives
    
    
    
    
    134,402
    
    
    
    (247,931
    )
    
    
    (62,754
    )
    
    
    
    8,907Dividends on senior preferred shares
    
    (5)
    
    
    13,540
    
    
    
    9,855
    
    
    
    1,695
    
    
    
    
    Stock-based compensation expense
    
    (19)
    
    
    5,649
    
    
    
    5,448
    
    
    
    
    
    
    
    
    (Gain) loss on disposal of assets
    
    (6)
    
    
    (33,430
    )
    
    
    252
    
    
    
    27
    
    
    
    
    (108
    )Impairment losses
    
    (10), (11)
    
    
    
    
    
    
    485,373
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    (46,015
    )
    
    
    (44,119
    )
    
    
    (344
    )
    
    
    
    3,318Customer prepayments on future satellite services
    
    
    
    
    82,966
    
    
    
    88,587
    
    
    
    
    
    
    
    
    17,721Customer refunds
    
    
    
    
    (17,566
    )
    
    
    
    
    
    
    
    
    
    
    
    Operating assets and liabilities
    
    (16)
    
    
    7,203
    
    
    
    48,859
    
    
    
    205,490
    
    
    
    
    27,244298,145
    
    
    
    279,057
    
    
    
    225,276
    
    
    
    
    252,627Cash flows used in investing activitiesSatellite programs
    
    
    
    
    (258,083
    )
    
    
    (263,763
    )
    
    
    (15,496
    )
    
    
    
    (183,494
    )Property additions
    
    
    
    
    (6,118
    )
    
    
    (8,862
    )
    
    
    (14,019
    )
    
    
    
    (5,830
    )Maturity of short-term investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,312Business acquisitions
    
    (3)
    
    
    
    
    
    
    
    
    
    
    (3,229,194
    )
    
    
    
    (180
    )Proceeds on disposals of assets
    
    
    
    
    71,400
    
    
    
    5,120
    
    
    
    25
    
    
    
    
    159Insurance proceeds
    
    
    
    
    
    
    
    
    4,006
    
    
    
    
    
    
    
    
    (192,801
    )
    
    
    (263,499
    )
    
    
    (3,258,684
    )
    
    
    
    (187,033
    )Cash flows from financing activitiesDebt financing and bank loans
    
    
    
    
    23,880
    
    
    
    186,687
    
    
    
    2,767,716
    
    
    
    
    73,000Repayment of bank loans and debt financing
    
    
    
    
    (53,855
    )
    
    
    (91,560
    )
    
    
    (44,899
    )
    
    
    
    (84,090
    )Capitalized debt issuance costs
    
    
    
    
    
    
    
    
    (19,131
    )
    
    
    (83,585
    )
    
    
    
    Note repayment
    
    
    
    
    
    
    
    
    
    
    
    
    (129,334
    )
    
    
    
    Success fee payments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,000
    )Common shares issued
    
    
    
    
    
    
    
    
    
    
    
    
    311,124
    
    
    
    
    Preferred shares issued
    
    
    
    
    
    
    
    
    
    
    
    
    258,833
    
    
    
    
    Capital lease payments
    
    
    
    
    (14,620
    )
    
    
    (30,954
    )
    
    
    (1,306
    )
    
    
    
    (7,713
    )Satellite performance incentive payments
    
    
    
    
    (5,418
    )
    
    
    (3,524
    )
    
    
    (4,196
    )
    
    
    
    (2,022
    )(50,013
    )
    
    
    41,518
    
    
    
    3,074,353
    
    
    
    
    (44,825
    )Effect of changes in exchange rates on cash and cash equivalents
    
    
    
    
    319
    
    
    
    (740
    )
    
    
    1,258
    
    
    
    
    (1,676
    )Increase in cash and cash equivalents
    
    
    
    
    55,650
    
    
    
    56,336
    
    
    
    42,203
    
    
    
    
    19,093Cash and cash equivalents, beginning of period
    
    
    
    
    98,539
    
    
    
    42,203
    
    
    
    
    
    
    
    
    38,661Cash and cash equivalents, end of period
    
    (16)
    
    
    154,189
    
    
    
    98,539
    
    
    
    42,203
    
    
    
    
    57,754Supplemental disclosure of cash flow informationInterest paid
    
    
    
    
    287,733
    
    
    
    286,784
    
    
    
    18,339
    
    
    
    
    18,139Income taxes paid
    
    
    
    
    6,499
    
    
    
    8,866
    
    
    
    343
    
    
    
    
    21,347294,232
    
    
    
    295,650
    
    
    
    18,682
    
    
    
    
    39,486
  F-67




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 1. BACKGROUND OF THE COMPANY AND BASIS OF PRESENTATION
     Regulation
   F-68




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 1. BACKGROUND OF THE COMPANY AND BASIS OF PRESENTATION  (continued)
   2. SIGNIFICANT ACCOUNTING POLICIES
  Use of Estimates
  Revenue Recognition
     F-69




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 2. SIGNIFICANT ACCOUNTING POLICIES  (continued)
 Cash and Cash Equivalents
  Inventories
  Satellites, Property and Other Equipment
    YearsSatellites
    
    
    6 to 15Transponders under capital lease
    
    
    6 to 14Earth stations
    
    
    5 to 30Office buildings and other
    
    
    3 to 30
      F-70




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 2. SIGNIFICANT ACCOUNTING POLICIES  (continued)
 Impairment of Long-Lived Assets
  Translation of Foreign Currencies
    Financing costs
  Financial Instruments
     F-71




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 2. SIGNIFICANT ACCOUNTING POLICIES  (continued)
     Goodwill and Other Intangible Assets
   YearsRevenue backlog
    
    
    4 to 17Customer relationships
    
    
    11 to 21Favourable leases
    
    
    4 to 5Concession right
    
    
    15Transponder rights
    
    
    3 to 14Patents
    
    
    18
  Deferred Revenues
   F-72




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 2. SIGNIFICANT ACCOUNTING POLICIES  (continued)
 Deferred Satellites Performance Incentive Payments
  Employee Benefit Plans
    Stock-Based Compensation Plans
  Income Taxes
  
    
    the temporary differences between the carrying amounts of assets and
liabilities for accounting purposes and the amounts used for tax
purposes
  F-73




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 2. SIGNIFICANT ACCOUNTING POLICIES  (continued)
 
    
    the benefit of unutilized tax losses that will more likely than not be
realized and carried forward to future years to reduce income taxes.
  Recent Accounting Pronouncements
 Changes in Accounting Policies
     Future Accounting Policies
    F-74




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 2. SIGNIFICANT ACCOUNTING POLICIES  (continued)
  3. BUSINESS ACQUISITIONS
 Fifth Dimension Television Acquisition
  Telesat Canada Acquisition
   TotalCash paid (net of cash acquired)
    
    
    3,229,194Shares issued
    
    
    869,656Transaction costs
    
    
    32,692Purchase price
    
    
    4,131,542
   F-75




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 4. SEGMENTED INFORMATION
   
    
    Broadcast distribution or collection of video and audio signals in
the North American and International markets which include television
transmit and receive services, occasional use, bundled Digital Video
Compression and radio services.
    
    Enterprise provision of satellite capacity and ground network
services for voice, data, and image transmission and internet access
around the world.
    
    Consulting and other all consulting services related to space and
earth segments, government studies, satellite control services and
R&D.
  PredecessorSuccessor Entity
    
    
    
    EntityFor the Period
    
    
    
    For the PeriodYear Ended
    
    
    Year Ended
    
    
    October 31 to
    
    
    
    January 1 toDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    
    October 30,Revenues
    
    2009
    
    
    2008
    
    
    2007
    
    
    
    2007Broadcast
    
    
    406,712
    
    
    
    345,382
    
    
    
    52,771
    
    
    
    
    254,276Enterprise
    
    
    349,530
    
    
    
    333,834
    
    
    
    53,758
    
    
    
    
    178,888Consulting and other
    
    
    30,956
    
    
    
    32,159
    
    
    
    4,887
    
    
    
    
    24,623Total operating revenues
    
    
    787,198
    
    
    
    711,375
    
    
    
    111,416
    
    
    
    
    457,787
 Geographic Information
  PredecessorSuccessor Entity
    
    
    
    EntityFor the Period
    
    
    
    For the PeriodYear Ended
    
    
    Year Ended
    
    
    October 31 to
    
    
    
    January 1 toDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    
    October 30,Revenues
    
    2009
    
    
    2008
    
    
    2007
    
    
    
    2007Canada
    
    
    397,225
    
    
    
    357,937
    
    
    
    60,085
    
    
    
    
    315,200United States
    
    
    254,685
    
    
    
    240,505
    
    
    
    34,352
    
    
    
    
    115,993Europe, Middle East &
Africa
    
    
    66,028
    
    
    
    47,014
    
    
    
    6,403
    
    
    
    
    6,549Asia, Australia
    
    
    23,976
    
    
    
    33,768
    
    
    
    5,940
    
    
    
    
    5,550Latin America & Caribbean
    
    
    45,284
    
    
    
    32,151
    
    
    
    4,636
    
    
    
    
    14,495Total operating revenues
    
    
    787,198
    
    
    
    711,375
    
    
    
    111,416
    
    
    
    
    457,787
  F-76




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##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 4. SEGMENTED INFORMATION  (continued)
  December 31,
    
    
    December 31,Satellites, property and other equipment
    
    2009
    
    
    2008Canada
    
    
    1,448,111
    
    
    
    1,431,145United States
    
    
    469,508
    
    
    
    441,809all others
    
    
    8,571
    
    
    
    10,622Total satellites, property and other equipment
    
    
    1,926,190
    
    
    
    1,883,576
  Major Customers
  5. INTEREST EXPENSE
 PredecessorSuccessor Entity
    
    
    
    EntityFor the Period
    
    
    
    For the PeriodYear Ended
    
    
    Year Ended
    
    
    October 31 to
    
    
    
    January 1 toDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    
    October 30,2009
    
    
    2008
    
    
    2007
    
    
    
    2007Debt service costs
    
    
    279,432
    
    
    
    286,794
    
    
    
    47,535
    
    
    
    
    18,060Dividends on senior
preferred shares
    
    
    13,540
    
    
    
    9,855
    
    
    
    1,695
    
    
    
    
    Capitalized interest
    
    
    (19,404
    )
    
    
    (39,008
    )
    
    
    (5,369
    )
    
    
    
    (9,512
    )273,568
    
    
    
    257,641
    
    
    
    43,861
    
    
    
    
    8,548
 6. OTHER INCOME (EXPENSE)
 PredecessorSuccessor Entity
    
    
    
    EntityFor the Period
    
    
    
    For the PeriodYear Ended
    
    
    Year Ended
    
    
    October 31 to
    
    
    
    January 1 toDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    
    October 30,2009
    
    
    2008
    
    
    2007
    
    
    
    2007Interest income
    
    
    636
    
    
    
    1,888
    
    
    
    301
    
    
    
    
    3,130Interest on
performance
incentive payments
    
    
    (4,642
    )
    
    
    (4,057
    )
    
    
    (499
    )
    
    
    
    (4,078
    )Other (a)
    
    
    35,865
    
    
    
    456
    
    
    
    (835
    )
    
    
    
    56931,859
    
    
    
    (1,713
    )
    
    
    (1,033
    )
    
    
    
    (379
    )
 (a)
    
    On July 9, 2009, the Company terminated its leasehold interest in
the Telstar 10 satellite and transferred certain related customer
contracts. The satellite and related revenue backlog and customer
relationships were transferred for total consideration of $80
million, of which $8 million are deferred payments recorded in
Accounts receivable, with a resulting gain of $34.6 million
included in Other. In light of the complexities of the regulatory environment associated with the satellite, and
the upcoming requirement to replace Telstar 10, the Company decided to
terminate its leasehold interest.  F-77




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 6. OTHER INCOME (EXPENSE)  (continued)
    7. INCOME TAXES
 PredecessorSuccessor Entity
    
    
    
    EntityFor the Period
    
    
    
    For the PeriodYear Ended
    
    
    Year Ended
    
    
    October 31 to
    
    
    
    January 1 toDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    
    October 30,2009
    
    
    2008
    
    
    2007
    
    
    
    2007Income tax expense (recovery)Future
    
    
    4,598
    
    
    
    (175,951
    )
    
    
    (60,653
    )
    
    
    
    24,292Current
    
    
    351
    
    
    
    11,072
    
    
    
    (1,517
    )
    
    
    
    32,7854,949
    
    
    
    (164,879
    )
    
    
    (62,170
    )
    
    
    
    57,077A reconciliation of the statutory income tax rate, which is a composite of
federal and provincial rates, to the effective income tax rate is as follows:PredecessorSuccessor Entity
    
    
    
    EntityFor the Period
    
    
    
    For the PeriodYear Ended
    
    
    Year Ended
    
    
    October 31 to
    
    
    
    January 1 toDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    
    October 30,2009
    
    
    2008
    
    
    2007
    
    
    
    2007Statutory income tax rate
    
    
    32.3
    %
    
    
    33.0
    %
    
    
    35.3
    %
    
    
    
    35.3
    %Permanent differences
    
    
    (9.6
    %)
    
    
    (5.9
    %)
    
    
    (22.1
    %)
    
    
    
    (15.4
    %)Adjustment for tax rate changes
    
    
    (9.7
    %)
    
    
    (2.5
    %)
    
    
    109.1
    %
    
    
    
    (2.4
    %)Impact of acquisition (see note 3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.8
    %Valuation allowance
    
    
    (13.4
    %)
    
    
    (6.8
    %)
    
    
    (38.3
    %)
    
    
    
    6.5
    %Future taxes related to other
comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.8
    %Charges reflected in equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.6
    %Other
    
    
    1.6
    %
    
    
    (1.1
    %)
    
    
    9.9
    %
    
    
    
    2.9
    %Effective income tax rate
    
    
    1.2
    %
    
    
    16.7
    %
    
    
    93.9
    %
    
    
    
    41.1
    %
  F-78




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##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 7. INCOME TAXES  (continued)
  December 31,
    
    
    December 31,2009
    
    
    2008Future tax assetsCapital assets
    
    
    924
    
    
    
    8,904Intangible assets
    
    
    6,180
    
    
    
    9,482Unrealized foreign exchange loss
    
    
    31,867
    
    
    
    98,087Investments
    
    
    541
    
    
    
    9,355Loss carry forwards
    
    
    98,024
    
    
    
    112,386Other
    
    
    8,437
    
    
    
    5,415Less: valuation allowance
    
    
    (45,040
    )
    
    
    (101,175
    )Total future tax assets
    
    
    100,933
    
    
    
    142,454
 December 31,
    
    
    December 31,2009
    
    
    2008Future tax liabilitiesCapital assets
    
    
    (215,162
    )
    
    
    (208,115
    )Intangibles
    
    
    (124,955
    )
    
    
    (147,916
    )Derivative liabilities
    
    
    (21,958
    )
    
    
    (47,327
    )Other
    
    
    (5,867
    )
    
    
    (2,887
    )Total future tax liabilities
    
    
    (367,942
    )
    
    
    (406,245
    )Net future income tax liability
    
    
    (267,009
    )
    
    
    (263,791
    )Net future income tax liability is comprised of:Net future income tax asset  current portion
    
    
    2,184
    
    
    
    2,581Net future income tax liability  long-term
portion
    
    
    (269,193
    )
    
    
    (266,372
    )Net future income tax liability
    
    
    (267,009
    )
    
    
    (263,791
    )
 Losses
  Non-Capital
    
    
    CapitalLosses
    
    
    Losses2027
    
    
    27,027
    
    
    
    2028
    
    
    309,337
    
    
    
    2029
    
    
    13,272
    
    
    
    Indefinite
    
    
    
    
    
    
    40,077
   F-79




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##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 8. ACCOUNTS AND NOTES RECEIVABLE
 December 31,
    
    
    December 31,2009
    
    
    2008Trade receivables  net of allowance for doubtful accounts
    
    
    74,018
    
    
    
    63,723Less: long-term portion of trade receivables
    
    
    (3,815
    )
    
    
    (1,790
    )70,203
    
    
    
    61,933
   9. OTHER ASSETS
 December 31, 2009
    
    
    December 31, 2008Current 
portion
    
    
    Long term 
portion
    
    
    Current 
portion
    
    
    Long term 
portionNet investment in leases (a)
    
    
    
    
    
    
    
    
    
    
    2,217
    
    
    
    30Income taxes recoverable
    
    
    3,487
    
    
    
    
    
    
    
    3,943
    
    
    
    Accrued pension benefit (note 20)
    
    
    
    
    
    
    14,199
    
    
    
    
    
    
    
    13,610Prepaid expenses and deposits (b)
    
    
    17,548
    
    
    
    14,423
    
    
    
    16,006
    
    
    
    6,755Deferred charges (c)
    
    
    2,108
    
    
    
    5,244
    
    
    
    10,709
    
    
    
    6,224Derivative assets (note 18)
    
    
    
    
    
    
    
    
    
    
    10,805
    
    
    
    8,797Inventories (d)
    
    
    5,214
    
    
    
    
    
    
    
    4,723
    
    
    
    Other assets (e)
    
    
    661
    
    
    
    7,144
    
    
    
    784
    
    
    
    6,88729,018
    
    
    
    41,010
    
    
    
    49,187
    
    
    
    42,303
 (a)
    
    The net investment under sales type leases expired in 2009
(2008  $2.2 million).(b)
    
    Prepaid expense and deposits includes mainly prepaid insurance for
in-orbit satellites, deposits related to foreign taxes, prepaid
interest on long term debt, security deposits, and other prepaid
expenses.(c)
    
    Deferred charges at December 31, 2009 include the deferred financing
charges related to the Canadian term loan facility (note 13) and
deferred leasing costs. At December 31, 2008, deferred charges also
included costs incurred in relation to deferred revenue.(d)
    
    Inventories are valued at lower of cost and net realizable value and
consist of $2.9 million (2008  $3.8 million) of finished goods and
$2.3 million (2008  $0.9 million) of work in process. Cost for
substantially all network equipment inventories is determined on an
average cost basis. Cost for work in process and certain one-of-a-kind
finished goods is determined using specific identification. All of the
inventories have been pledged as security pursuant to the terms of the
credit facilities.  F-80




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##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 9. OTHER ASSETS  (continued)
 (e)
    
    Other assets, both short and long term components, include the following:
 December 31, 2009
    
    
    December 31, 2008Current
    
    
    Long term
    
    
    Current
    
    
    Long termportion
    
    
    portion
    
    
    portion
    
    
    portionTax indemnification
receivable from Loral (note
21)
    
    
    
    
    
    
    2,461
    
    
    
    
    
    
    
    2,862Investments
    
    
    
    
    
    
    475
    
    
    
    
    
    
    
    637Long term trade receivables
    
    
    
    
    
    
    3,815
    
    
    
    
    
    
    
    1,790Investment tax credit benefit
    
    
    661
    
    
    
    
    
    
    
    441
    
    
    
    Other
    
    
    
    
    
    
    393
    
    
    
    343
    
    
    
    1,598661
    
    
    
    7,144
    
    
    
    784
    
    
    
    6,887
  10. SATELLITES, PROPERTY AND OTHER EQUIPMENT
 Accumulated
    
    
    Net BookCost
    
    
    Amortization
    
    
    ValueDecember 31, 2009Satellites
    
    
    2,018,871
    
    
    
    (323,734
    )
    
    
    1,695,137Earth stations
    
    
    149,085
    
    
    
    (30,083
    )
    
    
    119,002Transponders under capital lease
    
    
    28,048
    
    
    
    (8,550
    )
    
    
    19,498Office buildings and other
    
    
    31,735
    
    
    
    (11,548
    )
    
    
    20,187Construction in progress
    
    
    72,366
    
    
    
    
    
    
    
    72,3662,300,105
    
    
    
    (373,915
    )
    
    
    1,926,190December 31, 2008Satellites
    
    
    1,544,396
    
    
    
    (177,768
    )
    
    
    1,366,628Earth stations
    
    
    139,227
    
    
    
    (19,012
    )
    
    
    120,215Transponders under capital lease
    
    
    34,189
    
    
    
    (4,943
    )
    
    
    29,246Office buildings and other
    
    
    36,248
    
    
    
    (8,555
    )
    
    
    27,693Construction in progress
    
    
    339,794
    
    
    
    
    
    
    
    339,7942,093,854
    
    
    
    (210,278
    )
    
    
    1,883,576
   F-81




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##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 10. SATELLITES, PROPERTY AND OTHER EQUIPMENT  (continued)
    11. GOODWILL AND INTANGIBLE ASSETS
  Accumulated
    
    
    Net Book2009
    
    Cost
    
    
    Amortization
    
    
    ValueFinite life intangible assets:Revenue backlog
    
    
    268,123
    
    
    
    (77,210
    )
    
    
    190,913Customer relationships
    
    
    197,920
    
    
    
    (33,140
    )
    
    
    164,780Favourable leases
    
    
    2,990
    
    
    
    (1,774
    )
    
    
    1,216Concession right
    
    
    1,404
    
    
    
    (94
    )
    
    
    1,310Transponder rights
    
    
    29,550
    
    
    
    (7,493
    )
    
    
    22,057Patents
    
    
    59
    
    
    
    (7
    )
    
    
    52500,046
    
    
    
    (119,718
    )
    
    
    380,328Indefinite life intangible assets:Orbital slots
    
    
    113,347
    
    
    
    
    
    
    
    113,347Trade name
    
    
    17,000
    
    
    
    
    
    
    
    17,000Total intangible assets
    
    
    630,393
    
    
    
    (119,718
    )
    
    
    510,675Goodwill
    
    
    2,446,603
    
    
    
    
    
    
    
    2,446,603Goodwill and intangible assets
    
    
    3,076,996
    
    
    
    (119,718
    )
    
    
    2,957,278
  F-82




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##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 11. GOODWILL AND INTANGIBLE ASSETS  (continued)
 Accumulated
    
    
    Net Book2008
    
    Cost
    
    
    Amortization
    
    
    ValueFinite life intangible assets:Revenue backlog
    
    
    274,487
    
    
    
    (44,988
    )
    
    
    229,499Customer relationships
    
    
    207,704
    
    
    
    (14,500
    )
    
    
    193,204Favourable leases
    
    
    4,816
    
    
    
    (1,987
    )
    
    
    2,829Concession right
    
    
    1,230
    
    
    
    
    
    
    
    1,230Transponder rights
    
    
    28,497
    
    
    
    (3,626
    )
    
    
    24,871Patents
    
    
    59
    
    
    
    (4
    )
    
    
    55516,793
    
    
    
    (65,105
    )
    
    
    451,688Indefinite life intangible assets:Orbital slots
    
    
    113,347
    
    
    
    
    
    
    
    113,347Trade name
    
    
    17,000
    
    
    
    
    
    
    
    17,000Total intangible assets
    
    
    647,140
    
    
    
    (65,105
    )
    
    
    582,035Goodwill
    
    
    2,446,603
    
    
    
    
    
    
    
    2,446,603Goodwill and intangible assets
    
    
    3,093,743
    
    
    
    (65,105
    )
    
    
    3,028,638
    12. OTHER LIABILITIES
 December 31,
    
    
    December 31,2009
    
    
    2008Short term other liabilities
    
    
    127,704
    
    
    
    142,432Long term other liabilities
    
    
    671,523
    
    
    
    566,136799,227
    
    
    
    708,568
  F-83




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##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 12. OTHER LIABILITIES   (continued)
  2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    Thereafter
    
    
    TotalDeferred
revenues and deposits
    
    
    73,150
    
    
    
    36,096
    
    
    
    36,215
    
    
    
    34,466
    
    
    
    32,913
    
    
    
    184,950
    
    
    
    397,790Derivative
liabilities (note 18)
    
    
    6,456
    
    
    
    39,102
    
    
    
    
    
    
    
    
    
    
    
    139,728
    
    
    
    
    
    
    
    185,286Capital lease
liabilities
(a)
    
    
    3,520
    
    
    
    3,838
    
    
    
    4,212
    
    
    
    4,610
    
    
    
    4,373
    
    
    
    787
    
    
    
    21,340Deferred satellites
performance incentive
payments
    
    
    11,030
    
    
    
    4,713
    
    
    
    4,087
    
    
    
    4,338
    
    
    
    4,682
    
    
    
    46,958
    
    
    
    75,808Interest payable
    
    
    25,212
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,212Dividends payable on
senior preferred
shares (note 14)
    
    
    
    
    
    
    25,090
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,090Pension and other
post retirement
liabilities (note 20)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,827
    
    
    
    23,827Other liabilities
(b)
    
    
    8,336
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,538
    
    
    
    44,874127,704
    
    
    
    108,839
    
    
    
    44,514
    
    
    
    43,414
    
    
    
    181,696
    
    
    
    293,060
    
    
    
    799,227
 (a)
    
    At December 31, 2009, interest payable related to the capital lease
liabilities totaled $5.3 million (December 31, 2008  $9.0 million).(b)
    
    Other liabilities at December 31, 2009 included: promissory note
payable to Loral (note 22) of $12.2 million (2008  $7.4 million),
tax indemnifications payable to Loral (note 21) of $7.3 million (2008
  $8.5 million), unfavorable customer revenue backlog of $7.1
million (2008  unfavorable leases of $1.9 million, and unfavorable
customer revenue backlog of $12.8 million), potential income tax
liabilities of $7.1 million (2008  $2.6 million), income taxes
payable of $0.1 million (2008  $0.8 million), and other liabilities
of $11.1 million (2008  $14.5 million). Due to the uncertainty in
settlement dates inherent in the long term portion of the other
liabilities, they are presented as maturing after 2014. 13. DEBT FINANCING
 December 31,
    
    
    December 31,2009
    
    
    2008Senior secured credit facilities (a):Revolving facility
    
    
    
    
    
    
    The Canadian term loan facility
    
    
    185,000
    
    
    
    195,000The U.S. term loan facility
    
    
    1,777,138
    
    
    
    2,087,010The U.S. term loan II facility
    
    
    152,494
    
    
    
    179,207Senior notes (b)
    
    
    702,909
    
    
    
    818,620Senior subordinated notes (c)
    
    
    219,799
    
    
    
    256,400Other debt financing
    
    
    
    
    
    
    2583,037,340
    
    
    
    3,536,495Current portion
    
    
    (23,602
    )
    
    
    (23,272
    )Long-term portion
    
    
    3,013,738
    
    
    
    3,513,223
  (a)
    
    The senior secured credit facilities are secured by substantially all
of Telesats assets. Under the terms of these facilities, Telesat is
required to comply with certain covenants including financial
reporting, maintenance of certain financial covenant ratios for
leverage and interest coverage, a requirement to maintain minimum
levels of satellite insurance, restrictions on capital expenditures, a
restriction on fundamental business changes or the creation of
subsidiaries, restrictions on investments, restrictions on dividend payments, restrictions on the incurrence of additional debt,
restrictions on asset dispositions, and restrictions on transactions with
affiliates. The financial covenant ratios include total debt to EBITDA for
covenant purposes (earnings before interest, taxes, depreciation, amortization
and other charges) and EBITDA for covenant purposes to interest expense. Both
financial covenant ratios become tighter over the term of the credit facility.
At December 31, 2009 Telesat was in compliance with all of the required
covenants.  F-84




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##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 13. DEBT FINANCING   (continued)
 Telesat was required to hedge, at fixed rates, prior to February, 2008, 50% of its
floating interest rate debt for a three year period ending October 31, 2010. The Company
has complied with this obligation. These derivative instruments have not been designated
as hedging instruments for accounting purposes.Each tranche of the credit facility is subject to mandatory principal repayment
requirements, which, in the initial years, are generally an annual amount representing
1% of the initial aggregate principal amount, payable quarterly. The senior secured
credit facility has several tranches which are described below:(i)    A revolving Canadian dollar denominated credit facility (the
revolving facility) of up to the Canadian dollar equivalent of $153
million is available to Telesat. This revolving facility matures on
October 31, 2012 and is available to be drawn at any time. The drawn
loans will bear interest at the prime rate or LIBOR or Bankers
Acceptance plus an applicable margin of 150 to 250 basis points per
annum. Undrawn amounts under the facility are subject to a commitment
fee. As of December 31, 2009, other than approximately $0.3 million in
drawings related to letters of credit, there were no borrowings under
this facility.(ii)   The Canadian term loan facility is a $200 million loan facility
denominated in Canadian dollars, bears interest at a floating rate of
the Bankers Acceptance rate plus an applicable margin of 275 basis
points per annum, and has a maturity of October 31, 2012. The
required repayments on the Canadian term loan facility, in millions,
are as follows: AnnualRepayments2010
    
    
    152011
    
    
    902012
    
    
    80Total repayments
    
    
    185
  (iii)  The U.S. term loan is a $1,755 million facility denominated in US
dollars bears interest at LIBOR plus an applicable margin of 300
basis points per annum, and has a maturity of October 31, 2014. The
average interest rate was 3.80% for the year ended December 31, 2009
(2008  6.35%). A total of US $1,720 million ($1,811 million CAD)
was drawn at December 31, 2009 (December 31, 2008  US $1,737
million, $2,128 million CAD). Principal repayments of $4.4 million
US Dollars are made on a quarterly basis, with a lump sum repayment
of the remaining balance payable on the maturity date.(iv)   The U.S. term loan II is a $150 million delayed draw facility
denominated in US dollars bears interest at LIBOR plus an applicable
margin of 300 basis points per annum, and has a maturity of October
31, 2014. The average interest rate was 3.80% for the year ended
December 31, 2009 (2008  6.17%). The U.S. term loan II facility was
available to be drawn for 12 months after the closing of the Telesat
Canada acquisition to fund capital expenditures. The undrawn amount
of the U.S. term loan II was subject to a commitment fee. This
facility had US $148 million ($156 million CAD) outstanding at
December 31, 2009, which represents the full amounts available, with
principal repayments of $0.4 million US Dollars being made on a
quarterly basis, with a lump sum repayment of the remaining balance
payable on the maturity date.  F-85




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##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 13. DEBT FINANCING   (continued)
 (b)
    
    The Senior notes, in the amount of US $693 million ($730 million CAD),
bear interest at an annual rate of 11.0% and are due November 1, 2015.
The Senior notes include covenants or terms that restrict Telesats
ability to, among other things, (i) incur additional indebtedness,
(ii) incur liens, (iii) pay dividends or make certain other restricted
payments, investments or acquisitions, (iv) enter into certain
transactions with affiliates, (v) modify or cancel the Companys
satellite insurance, (vi) effect mergers with another entity, and
(vii) redeem the Senior notes prior to May 1, 2012, in each case
subject to exceptions provided in the Senior notes indenture.(c)
    
    The Senior subordinated notes, in the amount of US $217 million ($229
million CAD), bear interest at a rate of 12.5% and are due November 1,
2017. The Senior subordinated notes include covenants or terms that
restrict Telesats ability to, among other things, (i) incur
additional indebtedness, (ii) incur liens, (iii) pay dividends or make
certain other restricted payments, investments or acquisitions, (iv)
enter into certain transactions with affiliates, (v) modify or cancel
the Companys satellite insurance, (vi) effect mergers with another
entity, and (vii) redeem the Senior subordinated notes prior to May 1,
2013, in each case subject to exceptions provided in the Senior
subordinated notes indenture.  2010
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    Thereafter
    
    
    Total35.1
    
    
    110.1
    
    
    
    100.0
    
    
    
    20.1
    
    
    
    1,886.7
    
    
    
    958.4
    
    
    
    3,110.4
 14. SENIOR PREFERRED SHARES
    F-86




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##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 14. SENIOR PREFERRED SHARES   (continued)
  15. CAPITAL STOCK
  Common Shares
   Voting Participating Preferred Shares
  
    
    The holders of Voting Participating Preferred Shares are not entitled
to vote at meetings of the shareholders of the Company on resolutions
electing directors.
 
    
    For all other meetings of the shareholders of the Company, the holders
of Voting Participating Preferred Shares are entitled to a variable
number of votes per Voting Participating Preferred Share based on the
number of Voting Participating Preferred Shares, Non-Voting
Participating Preferred Shares and Redeemable Non-Voting Participating
Preferred Shares outstanding on the record date of the given meeting
of the shareholders of the Company.
 
    
    The Voting Participating Preferred Shares are convertible, at any
time, at the holders option into Common Shares or Non-Voting
Participating Preferred Shares on a one-for-one basis as long as the
result of such conversion does not cause the Company to cease to be a
qualified corporation within the meaning of the Canadian
Telecommunication Common Carrier Ownership and Control Regulations
pursuant to the Telecommunications Act (Canada).
   F-87




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##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 15. CAPITAL STOCK   (continued)
 Non-Voting Participating Preferred Shares
  
    
    The holders of Non-Voting Participating Preferred Shares are not
entitled to vote on any matter at meetings of the shareholders of the
Company, except in respect of a class vote applicable only to the
Non-Voting Participating Preferred Shares.
 
    
    The Non-Voting Participating Preferred Shares are convertible, at any
time, at the holders option into Common Shares or Voting
Participating Preferred Shares on a one-for-one basis as long as the
result of such conversion does not cause the Company to cease to be a
qualified corporation within the meaning of the Canadian
Telecommunication Common Carrier Ownership and Control Regulations
pursuant to the Telecommunications Act (Canada).
  Director Voting Preferred Shares
  
    
    The holders of Director Voting Preferred Shares are entitled to
receive notice of and to attend all meetings of the shareholders of
the Company at which directors of the Company are to be elected. The
holders of the Director Voting Preferred Shares are not entitled to
attend meetings of the shareholders of the Company and have no right
to vote on any matter other than the election of directors of the
Company.
    
    The holders of Director Voting Preferred Shares are entitled to
receive annual non-cumulative dividends of $10 per share if declared
by the Board of Directors of the Company, in priority to the payment
of dividends on the Common Shares, Voting Participating Preferred
Shares, Non-Voting Participating Preferred Shares, Redeemable Common
Shares, and Redeemable Non-Voting Participating Preferred Shares, but
after payment of any accrued dividends on the Senior Preferred Shares.
    
    In the event of liquidation, wind-up or dissolution, the holders of
Director Voting Preferred Shares are entitled to receive $10 per share
in priority to the payment of dividends on the Common Shares, Voting
Participating Preferred Shares, Non-Voting Participating Preferred
Shares, Redeemable Common Shares, and Redeemable Non-Voting
Participating Preferred Shares, but after payment of any accrued
dividends on the Senior Preferred Shares.
    
    The Director Voting Preferred Shares are redeemable at the option of
the Company, at any time, at a redemption price of $10 per share.
   F-88




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##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 16. CASH FLOW INFORMATION
 December 31,
    
    
    December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2007Cash and cash equivalents is comprised of:Cash
    
    
    89,679
    
    
    
    26,584
    
    
    
    32,737Short term investments, original maturity 90
days or less
    
    
    64,510
    
    
    
    71,955
    
    
    
    9,466154,189
    
    
    
    98,539
    
    
    
    42,203Changes in operating assets and liabilities
are comprised of:Receivables
    
    
    (2,021
    )
    
    
    (3,303
    )
    
    
    (4,718
    )Other assets
    
    
    15,693
    
    
    
    (34,885
    )
    
    
    132,768Accounts payable and accrued liabilities
    
    
    7,270
    
    
    
    (12,947
    )
    
    
    72,380Income taxes payable
    
    
    (2,906
    )
    
    
    960
    
    
    
    (749
    )Other liabilities
    
    
    (10,833
    )
    
    
    99,034
    
    
    
    5,8097,203
    
    
    
    48,859
    
    
    
    205,490Non-cash investing and financing activities
are comprised of:Purchase of satellites, property and other
equipment
    
    
    5,026
    
    
    
    3,595
    
    
    
    4,767Purchase of concession right
    
    
    
    
    
    
    1,230
    
    
    
    Shares issued in exchange of assets
contributed
    
    
    
    
    
    
    
    
    
    
    869,656
 17. CAPITAL DISCLOSURES
   December 31,
    
    
    December 31,2009
    
    
    2008Shareholders
equity, excluding
accumulated other
comprehensive loss
    
    
    896,886
    
    
    
    477,174Debt financing
    
    
    3,037,340
    
    
    
    3,536,495Cash and cash equivalents
    
    
    154,189
    
    
    
    98,539
    F-89




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##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 17. CAPITAL DISCLOSURES   (continued)
   18. FINANCIAL INSTRUMENTS
 Fair Value
   December 31,
    
    
    December 31,2009
    
    
    2008Short term derivative assets
    
    
    
    
    
    
    10,805Long term derivative assets
    
    
    
    
    
    
    8,797Short term derivative liabilities
    
    
    (6,456
    )
    
    
    Long term derivative liabilities
    
    
    (178,830
    )
    
    
    (82,255
    )(185,286
    )
    
    
    (62,653
    )Fair value methodology:Net position determined using actively quoted prices
(level 1)
    
    
    
    
    
    
    Net position determined using observable data or market
corroboration (level 2)
    
    
    185,286
    
    
    
    62,653Net position determined using extrapolated data (level 3)
    
    
    
    
    
    
    (185,286
    )
    
    
    (62,653
    )
   F-90




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##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 18. FINANCIAL INSTRUMENTS   (continued)
      Carrying ValueLoans &December 31, 2009
    
    HFT
    
    
    AFS
    
    
    Receivables
    
    
    Total
    
    
    Fair ValueFinancial assetsCash and cash
equivalents
    
    
    154,189
    
    
    
    
    
    
    
    
    
    
    
    154,189
    
    
    
    154,189Accounts and notes
receivable
    
    
    
    
    
    
    
    
    
    
    70,203
    
    
    
    70,203
    
    
    
    70,203Other assets
    
    
    6,970
    
    
    
    474
    
    
    
    5,351
    
    
    
    12,795
    
    
    
    12,795161,159
    
    
    
    474
    
    
    
    75,554
    
    
    
    237,187
    
    
    
    237,187
 Carrying ValueDecember 31, 2009
    
    HFT
    
    
    Other
    
    
    Total
    
    
    Fair ValueFinancial liabilitiesAccounts payable and
accrued liabilities
    
    
    
    
    
    
    43,413
    
    
    
    43,413
    
    
    
    43,413Debt
    
    
    
    
    
    
    3,037,340
    
    
    
    3,037,340
    
    
    
    3,104,151Derivative financial
instruments
    
    
    185,286
    
    
    
    
    
    
    
    185,286
    
    
    
    185,286Other liabilities
    
    
    
    
    
    
    291,412
    
    
    
    291,412
    
    
    
    322,187185,286
    
    
    
    3,372,165
    
    
    
    3,557,451
    
    
    
    3,655,037
  F-91




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 18. FINANCIAL INSTRUMENTS   (continued)
 Carrying ValueLoans &December 31, 2008
    
    HFT
    
    
    AFS
    
    
    Receivables
    
    
    Total
    
    
    Fair ValueFinancial assetsCash and cash equivalents
    
    
    98,539
    
    
    
    
    
    
    
    
    
    
    
    98,539
    
    
    
    98,539Accounts and notes receivable
    
    
    
    
    
    
    
    
    
    
    61,933
    
    
    
    61,933
    
    
    
    61,933Derivative financial instruments
    
    
    19,602
    
    
    
    
    
    
    
    
    
    
    
    19,602
    
    
    
    19,602Other assets
    
    
    14,936
    
    
    
    637
    
    
    
    2,202
    
    
    
    17,775
    
    
    
    17,775133,077
    
    
    
    637
    
    
    
    64,135
    
    
    
    197,849
    
    
    
    197,849
 Carrying ValueDecember 31, 2008
    
    HFT
    
    
    Other
    
    
    Total
    
    
    Fair ValueFinancial liabilitiesAccounts payable and
accrued liabilities
    
    
    
    
    
    
    44,455
    
    
    
    44,455
    
    
    
    44,455Debt
    
    
    
    
    
    
    3,536,237
    
    
    
    3,536,237
    
    
    
    2,371,014Derivative financial
instruments
    
    
    82,255
    
    
    
    
    
    
    
    82,255
    
    
    
    82,255Other liabilities
    
    
    
    
    
    
    291,770
    
    
    
    291,770
    
    
    
    195,37182,255
    
    
    
    3,872,462
    
    
    
    3,954,717
    
    
    
    2,693,095
 (1)
    
    Included in cash and cash equivalents are $62.9 million (2008  $72.0
million) in short term investments classified as level 2 in the fair
value hierarchy.  Measurement of Risks
 Credit Risk
    F-92




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 18. FINANCIAL INSTRUMENTS   (continued)
  Allowance for Doubtful Accounts
    
    2009
    
    
    2008Balance at January 1
    
    
    5.4
    
    
    
    4.3Provision for receivables impairment
    
    
    4.1
    
    
    
    1.6Receivables written off during the period as uncollectible
    
    
    (0.8
    )
    
    
    (0.5
    )Balance at December 31
    
    
    8.7
    
    
    
    5.4
 Foreign Exchange Risk
       F-93




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 18. FINANCIAL INSTRUMENTS   (continued)
 Interest Rate Risk
    Liquidity Risk
  In millions of
    
    Carrying
    
    
    Contractual
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AfterCanadian Dollars
    
    Amount
    
    
    Cash Flows
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    2014Accounts
payable and accrued
liabilities
    
    
    43,413
    
    
    
    43,413
    
    
    
    43,413
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Customer and other
deposits
    
    
    5,297
    
    
    
    5,297
    
    
    
    3,040
    
    
    
    2,257
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other liabilities
    
    
    144,680
    
    
    
    144,680
    
    
    
    42,601
    
    
    
    42,013
    
    
    
    4,088
    
    
    
    4,338
    
    
    
    4,682
    
    
    
    46,958Derivative
financial
instruments
    
    
    185,286
    
    
    
    185,286
    
    
    
    6,456
    
    
    
    39,102
    
    
    
    
    
    
    
    
    
    
    
    139,728
    
    
    
    Long term debt
    
    
    3,037,340
    
    
    
    3,110,396
    
    
    
    35,063
    
    
    
    110,065
    
    
    
    100,063
    
    
    
    20,064
    
    
    
    1,886,729
    
    
    
    958,4123,416,016
    
    
    
    3,489,072
    
    
    
    130,573
    
    
    
    193,437
    
    
    
    104,151
    
    
    
    24,402
    
    
    
    2,031,139
    
    
    
    1,005,370
 19. STOCK-BASED COMPENSATION PLANS
 BCE stock options
  Telesat Holdings Stock Options
    F-94




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 19. STOCK-BASED COMPENSATION PLANS   (continued)
  Time Vesting Option Plan
    
    
    Performance Vesting Option PlanWeighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageNumber
    
    
    Exercise
    
    
    Number
    
    
    Exerciseof Options
    
    
    Price ($)
    
    
    of Options
    
    
    Price ($)Outstanding, January 1, 2009
    
    
    6,846,035
    
    
    
    11.07
    
    
    
    894,441
    
    
    
    11.07Granted
    
    
    608,283
    
    
    
    11.07
    
    
    
    743,457
    
    
    
    11.07Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    (150,613
    )
    
    
    11.07
    
    
    
    (184,084
    )
    
    
    11.07Expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding December 31, 2009
    
    
    7,303,705
    
    
    
    11.07
    
    
    
    1,453,814
    
    
    
    11.07Options exercisable at December
31, 2009
    
    
    2,740,969
    
    
    
    
    
    
    
    162,091
 Options OutstandingWeighted-Average
    
    
    OptionsRemaining
    
    
    ExercisableAt December 31, 2008
    
    Number
    
    
    Life
    
    
    NumberExercise price $11.07
    
    
    7,740,476
    
    
    9 years
    
    
    1,538,623
  December 31,
    
    
    December 31,2009
    
    
    2008Compensation cost
(credited to contributed
surplus)
    
    
    5,649
    
    
    
    5,448Number of stock options granted
    
    
    1,351,740
    
    
    
    7,740,476Weighted-average fair value
per option granted ($)
    
    
    4.76
    
    
    
    8.52Weighted average assumptions:Dividend yield
    
    
    
    %
    
    
    
    %Expected volatility
    
    
    30.0
    %
    
    
    31.5
    %Risk-free interest rate
    
    
    2.98
    %
    
    
    3.78
    %Expected life (years)
    
    
    10
    
    
    
    10
  F-95




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 20. EMPLOYEE BENEFIT PLANS
 Telesat Canada
  Skynet Satellite Corporation
   Telesat Canada
    
    
    SkynetPension
    
    
    Other
    
    
    Other
    
    
    TotalPension and other benefits
    
    December 31, 2009Change in benefit
obligationsBenefit obligation, January
1, 2009
    
    
    126,754
    
    
    
    12,527
    
    
    
    8,725
    
    
    
    148,006Current service cost
    
    
    1,963
    
    
    
    260
    
    
    
    
    
    
    
    2,223Interest cost
    
    
    9,470
    
    
    
    936
    
    
    
    508
    
    
    
    10,914Actuarial (gains) losses
    
    
    23,975
    
    
    
    2,167
    
    
    
    (1,759
    )
    
    
    24,383Benefit payments
    
    
    (11,899
    )
    
    
    (633
    )
    
    
    (320
    )
    
    
    (12,852
    )Employee contributions
    
    
    1,714
    
    
    
    
    
    
    
    21
    
    
    
    1,735Benefit obligation, December
31, 2009
    
    
    151,977
    
    
    
    15,257
    
    
    
    7,175
    
    
    
    174,409
 Telesat Canada
    
    
    SkynetPension
    
    
    Other
    
    
    Other
    
    
    TotalPension and other benefits
    
    December 31, 2009Change in fair value of
plan assetsFair value of plan assets,
January 1, 2009
    
    
    138,293
    
    
    
    
    
    
    
    
    
    
    
    138,293Return on plan assets
    
    
    20,692
    
    
    
    
    
    
    
    
    
    
    
    20,692Benefit payments
    
    
    (11,899
    )
    
    
    (633
    )
    
    
    (320
    )
    
    
    (12,852
    )Employee contributions
    
    
    1,714
    
    
    
    
    
    
    
    21
    
    
    
    1,735Employer contributions
    
    
    1,946
    
    
    
    633
    
    
    
    299
    
    
    
    2,878Fair value of plan assets,
December 31, 2009
    
    
    150,746
    
    
    
    
    
    
    
    
    
    
    
    150,746Funded statusPlan surplus (deficit)
    
    
    (1,231
    )
    
    
    (15,257
    )
    
    
    (7,176
    )
    
    
    (23,664
    )Unamortized net actuarial
(gain) loss
    
    
    15,430
    
    
    
    (1,394
    )
    
    
    
    
    
    
    14,036Accrued benefit asset
(liability)
    
    
    14,199
    
    
    
    (16,651
    )
    
    
    (7,176
    )
    
    
    (9,628
    )
  F-96




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 20. EMPLOYEE BENEFIT PLANS   (continued)
 Telesat Canada
    
    
    SkynetPension
    
    
    Other
    
    
    Other
    
    
    TotalPension and other benefits
    
    December 31, 2008Change in benefit
obligationsBenefit obligation, January
1, 2008
    
    
    163,546
    
    
    
    16,224
    
    
    
    8,089
    
    
    
    187,859Current service cost
    
    
    3,926
    
    
    
    433
    
    
    
    
    
    
    
    4,359Interest cost
    
    
    9,271
    
    
    
    862
    
    
    
    883
    
    
    
    11,016Actuarial (gains) losses
    
    
    (40,426
    )
    
    
    (4,396
    )
    
    
    (129
    )
    
    
    (44,951
    )Benefit payments
    
    
    (10,884
    )
    
    
    (596
    )
    
    
    (155
    )
    
    
    (11,635
    )Employee contributions
    
    
    1,321
    
    
    
    
    
    
    
    37
    
    
    
    1,358Benefit obligation, December
31, 2008
    
    
    126,754
    
    
    
    12,527
    
    
    
    8,725
    
    
    
    148,006
 Telesat Canada
    
    
    SkynetPension
    
    
    Other
    
    
    Other
    
    
    TotalPension and other benefits
    
    December 31, 2008Change in fair value of
plan assetsFair value of plan assets,
January 1, 2008
    
    
    173,457
    
    
    
    
    
    
    
    
    
    
    
    173,457Return on plan assets
    
    
    (29,811
    )
    
    
    
    
    
    
    
    
    
    
    (29,811
    )Benefit payments
    
    
    (10,884
    )
    
    
    (596
    )
    
    
    (155
    )
    
    
    (11,635
    )Employee contributions
    
    
    1,321
    
    
    
    
    
    
    
    37
    
    
    
    1,358Employer contributions
    
    
    4,210
    
    
    
    596
    
    
    
    118
    
    
    
    4,924Fair value of plan assets,
December 31, 2008
    
    
    138,293
    
    
    
    
    
    
    
    
    
    
    
    138,293Funded statusPlan surplus (deficit)
    
    
    11,539
    
    
    
    (12,527
    )
    
    
    (8,725
    )
    
    
    (9,713
    )Unamortized net actuarial
(gain) loss
    
    
    2,071
    
    
    
    (3,705
    )
    
    
    
    
    
    
    (1,634
    )Accrued benefit asset
(liability)
    
    
    13,610
    
    
    
    (16,232
    )
    
    
    (8,725
    )
    
    
    (11,347
    )
  December 31,
    
    
    December 31,2009
    
    
    2008Equity securities
    
    
    60
    %
    
    
    59
    %Fixed income instruments
    
    
    37
    %
    
    
    39
    %Short-term investments
    
    
    3
    %

    
    
    2
    %Total
    
    
    100
    %
    
    
    100
    %
   F-97




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 20. EMPLOYEE BENEFIT PLANS   (continued)
  Telesat Canada
    
    
    Skynet
    
    
    Telesat Canada
    
    
    SkynetPension
    
    
    Other
    
    
    Other
    
    
    Pension
    
    
    Other
    
    
    OtherDecember 31, 2009
    
    
    December 31, 2008Accrued benefit obligationDiscount rate
    
    
    7.5
    %
    
    
    7.5
    %
    
    
    6.0
    %
    
    
    7.5
    %
    
    
    7.5
    %
    
    
    6.5
    %Rate of compensation increase
    
    
    3.5
    %
    
    
    3.5
    %
    
    
    
    
    
    
    3.5
    %
    
    
    3.5
    %
    
    
    4.3
    %Benefit costs for the periods endedDiscount rate
    
    
    6.4
    %
    
    
    6.4
    %
    
    
    6.0
    %
    
    
    5.5
    %
    
    
    5.5
    %
    
    
    6.5
    %Expected long-term rate of return on plan assets
    
    
    7.5
    %
    
    
    
    
    
    
    
    
    
    
    7.5
    %
    
    
    
    
    
    
    Rate of compensation increase
    
    
    3.5
    %
    
    
    3.5
    %
    
    
    
    
    
    
    3.5
    %
    
    
    3.5
    %
    
    
    4.3
    %
   Successor EntityTelesat Canada
    
    
    Skynet
    
    
    
    
    
    Telesat Canada
    
    
    SkynetPension
    
    
    Other
    
    
    Other
    
    
    Total
    
    
    Pension
    
    
    Other
    
    
    Other
    
    
    TotalYear Ended
    
    
    Year EndedDecember 31, 2009
    
    
    December 31, 2008Current service cost
    
    
    1,963
    
    
    
    260
    
    
    
    
    
    
    
    2,223
    
    
    
    3,926
    
    
    
    433
    
    
    
    
    
    
    
    4,359Interest cost
    
    
    9,470
    
    
    
    935
    
    
    
    508
    
    
    
    10,913
    
    
    
    9,271
    
    
    
    862
    
    
    
    883
    
    
    
    11,016Expected return on plan assets
    
    
    (10,011
    )
    
    
    
    
    
    
    
    
    
    
    (10,011
    )
    
    
    (12,686
    )
    
    
    
    
    
    
    
    
    
    
    (12,686
    )Amortization
    
    
    (65
    )
    
    
    (144
    )
    
    
    
    
    
    
    (209
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net benefit expense
    
    
    1,357
    
    
    
    1,051
    
    
    
    508
    
    
    
    2,916
    
    
    
    511
    
    
    
    1,295
    
    
    
    883
    
    
    
    2,689
  F-98




---



##### Table of Contents



Telesat Holdings Inc.   Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 20. EMPLOYEE BENEFIT PLANS   (continued)
 Successor Entity
    
    
    Predecessor EntityTelesat Canada
    
    
    Skynet
    
    
    
    
    
    
    Telesat CanadaFor the Period October 31 to
    
    
    For the Period January 1 toDecember 31, 2007
    
    
    October 30, 2007Pension
    
    
    Other
    
    
    Other
    
    
    Total
    
    
    Pension
    
    
    Other
    
    
    TotalCurrent service cost
    
    
    774
    
    
    
    79
    
    
    
    
    
    
    
    853
    
    
    
    3,612
    
    
    
    396
    
    
    
    4,008Interest cost
    
    
    1,513
    
    
    
    146
    
    
    
    
    
    
    
    1,659
    
    
    
    7,149
    
    
    
    681
    
    
    
    7,830Expected return on plan assets
    
    
    (2,206
    )
    
    
    
    
    
    
    
    
    
    
    (2,206
    )
    
    
    (10,610
    )
    
    
    
    
    
    
    (10,610
    )Amortization of past service cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of net actuarial loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34
    
    
    
    
    
    
    
    34Amortization of transitional (asset) obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,288
    )
    
    
    515
    
    
    
    (773
    )Additional expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    169
    
    
    
    
    
    
    
    169Net benefit expense (income)
    
    
    81
    
    
    
    225
    
    
    
    
    
    
    
    306
    
    
    
    (934
    )
    
    
    1,592
    
    
    
    658
 Sensitivity of assumptions
  Aggregate ofBenefit
    
    
    service andobligation
    
    
    interest costAs reported
    
    
    22,433
    
    
    
    1,703Impact of increase of 1% point
    
    
    1,938
    
    
    
    166Impact of decrease of 1% point
    
    
    (1,700
    )
    
    
    (140
    )
  21. COMMITMENTS AND CONTINGENT LIABILITIES
  Off balance sheet commitments
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    Thereafter
    
    
    TotalOperating leases
    
    
    27,100
    
    
    
    22,875
    
    
    
    17,962
    
    
    
    16,493
    
    
    
    14,910
    
    
    
    46,564
    
    
    
    145,904Purchase commitments  Satellite programs
    
    
    157,925
    
    
    
    107,233
    
    
    
    15,412
    
    
    
    386
    
    
    
    416
    
    
    
    7,930
    
    
    
    289,302Purchase commitments  Earth programs
    
    
    2,385
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,385Purchase commitments  Other programs
    
    
    3,686
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,686Total off balance sheet commitments
    
    
    191,096
    
    
    
    130,108
    
    
    
    33,374
    
    
    
    16,879
    
    
    
    15,326
    
    
    
    54,494
    
    
    
    441,277
  F-99




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##### Table of Contents



Telesat Holdings Inc.   Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 21. COMMITMENTS AND CONTINGENT LIABILITIES   (continued)
         F-100




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##### Table of Contents



Telesat Holdings Inc.   Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 21. COMMITMENTS AND CONTINGENT LIABILITIES   (continued)
    F-101




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##### Table of Contents



Telesat Holdings Inc.   Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 22. RELATED PARTY TRANSACTIONS
   PredecessorSuccessor Entity
    
    
    
    EntityFor the Period
    
    
    
    For the PeriodYear Ended
    
    
    Year Ended
    
    
    October 31 to
    
    
    
    January 1 toDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    
    October 30,2009
    
    
    2008
    
    
    2007
    
    
    
    2007Service revenues
    
    
    6,360
    
    
    
    3,560
    
    
    
    440
    
    
    
    
    139,706Operations and administration expenses
    
    
    8,480
    
    
    
    6,295
    
    
    
    825
    
    
    
    
    5,340Capital expenditures  satellites
    
    
    97,815
    
    
    
    83,203
    
    
    
    12,318
    
    
    
    
    
  December 31,
    
    
    December 31,2009
    
    
    2008Receivables at end of period
    
    
    3,480
    
    
    
    3,200Payables at end of period
    
    
    8,567
    
    
    
    13,770Long term liabilities
    
    
    8,068
    
    
    
    Note and interest payable at end of period
    
    
    12,210
    
    
    
    7,380
 23. COMPARATIVE FIGURES
  24. RECONCILIATION OF CANADIAN GAAP TO UNITED STATES GAAP
   F-102




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##### Table of Contents



Telesat Holdings Inc.   Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 24. RECONCILIATION OF CANADIAN GAAP TO UNITED STATES GAAP   (continued)
 Reconciliation of Net (Loss) Earnings
 PredecessorSuccessor Entity
    
    
    
    EntityFor the Period
    
    
    
    For the PeriodYear Ended
    
    
    Year Ended
    
    
    October 31 to
    
    
    
    January 1 toDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    
    October 30,2009
    
    
    2008
    
    
    2007
    
    
    
    2007Canadian GAAP  Net earnings (loss)
    
    
    414,063
    
    
    
    (822,401
    )
    
    
    (4,051
    )
    
    
    
    81,742(Losses) gains on embedded derivatives (a)
    
    
    (35,480
    )
    
    
    20,118
    
    
    
    774
    
    
    
    
    (5,051
    )Losses on derivatives designated as cash flow hedges under Canadian GAAP (a)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,361
    )Sales type lease  operating lease for U.S. GAAP (b)
    
    
    1,514
    
    
    
    18,808
    
    
    
    2,748
    
    
    
    
    (23,617
    )Capital lease  operating lease for U.S. GAAP (b)
    
    
    (1,567
    )
    
    
    (7,584
    )
    
    
    (78
    )
    
    
    
    9,436Lease amendments (c)
    
    
    719
    
    
    
    (1,233
    )
    
    
    
    
    
    
    
    Dividends on senior preferred shares (d)
    
    
    13,540
    
    
    
    9,855
    
    
    
    1,695
    
    
    
    
    Tax effect of above adjustments (e)
    
    
    10,510
    
    
    
    (8,761
    )
    
    
    275
    
    
    
    
    9,606Uncertainty in income taxes (f)
    
    
    (8,053
    )
    
    
    (6,875
    )
    
    
    (2,648
    )
    
    
    
    3,234U.S. GAAP  Net earnings (loss)
    
    
    395,246
    
    
    
    (798,073
    )
    
    
    (1,285
    )
    
    
    
    64,989Other comprehensive (loss) earnings items:Change in currency translation adjustment
    
    
    214
    
    
    
    (7,143
    )
    
    
    (599
    )
    
    
    
    1,715Loss on derivatives designated as cash flow hedges (a)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,168
    )Net actuarial plans cost (g)Net actuarial losses
    
    
    (9,373
    )
    
    
    (1,169
    )
    
    
    
    
    
    
    
    (314
    )Net transitional assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (525
    )U.S. GAAP  Comprehensive earnings (loss)
    
    
    386,087
    
    
    
    (806,385
    )
    
    
    (1,884
    )
    
    
    
    58,697
 Accumulated Other Comprehensive Loss
 PredecessorSuccessor Entity
    
    
    
    EntityFor the Period
    
    
    
    For the PeriodYear Ended
    
    
    Year Ended
    
    
    October 31 to
    
    
    
    January 1 toDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    
    October 30,2009
    
    
    2008
    
    
    2007
    
    
    
    2007Cumulative translation adjustment, net of tax
    
    
    (7,528
    )
    
    
    (7,742
    )
    
    
    (599
    )
    
    
    
    (568
    )Loss on derivatives designated as cash flow hedges (a)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,168
    )Net benefit plans cost (g)Net actuarial losses
    
    
    (10,541
    )
    
    
    (1,169
    )
    
    
    
    
    
    
    
    (7,448
    )Net transitional assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,980Accumulated other comprehensive loss
    
    
    (18,069
    )
    
    
    (8,911
    )
    
    
    (599
    )
    
    
    
    (11,204
    )
  F-103




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##### Table of Contents



Telesat Holdings Inc.   Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 24. RECONCILIATION OF CANADIAN GAAP TO UNITED STATES GAAP   (continued)
 Reconciliation of Total Shareholders Equity
 December 31,
    
    
    December 31,2009
    
    
    2008Canadian GAAP
    
    
    889,464
    
    
    
    469,432AdjustmentsGains on embedded derivatives (a)
    
    
    (14,588
    )
    
    
    20,892Net actuarial losses (g)
    
    
    (10,541
    )
    
    
    (1,169
    )Sales type lease  operating lease for U.S. GAAP (b)
    
    
    23,070
    
    
    
    21,556Capital lease  operating lease for U.S. GAAP (b)
    
    
    (9,229
    )
    
    
    (7,662
    )Lease amendment (c)
    
    
    (619
    )
    
    
    (1,233
    )Tax effect of above adjustments (e)
    
    
    2,024
    
    
    
    (8,486
    )Uncertainty in income taxes (f)
    
    
    (17,576
    )
    
    
    (9,523
    )U.S. GAAP
    
    
    862,005
    
    
    
    483,807
  (a)
    
    Derivatives and embedded derivatives
       F-104




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##### Table of Contents



Telesat Holdings Inc.   Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 24. RECONCILIATION OF CANADIAN GAAP TO UNITED STATES GAAP   (continued)
 (b)
    
    Sales-type and capital leasesUnder U.S. GAAP, if the beginning of a lease term falls within the last 25% of a
leased assets total estimated economic life; then it can only be classified as a
capital lease if the lease transfers ownership at the end of the lease term or there
is a bargain purchase option. This exception does not exist under Canadian GAAP,
therefore certain leases are reported as a capital lease and sales-type lease
respectively under Canadian GAAP, and as operating leases for U.S. GAAP as the limited
capital lease criteria were not met.(c)
    
    Lease amendmentsUnder Canadian GAAP, when amendments to the provisions of a capital lease agreement
result in a change in lease classification from a capital lease to an operating lease,
the gain or loss that results from removing the capital lease from the balance sheet
is immediately recognized in the statement of earnings. Under U.S. GAAP, if removing
the capital lease from the balance sheet results in a gain or loss it is recognized
over the remaining term of the lease. Therefore, an adjustment has been made to defer
the gain that has been recognized under Canadian GAAP.(d)
    
    Senior preferred sharesIn accordance with U.S. GAAP, the senior preferred shares are classified outside of
permanent equity as they are redeemable at the option of the holder. These senior
preferred shares are classified as liabilities under Canadian GAAP. This results in a
U.S. GAAP reconciling item to reflect the different classification. As a result of
this change in classification, the amounts are treated as dividends for U.S. GAAP and
interest expense for Canadian GAAP.(e)
    
    Income taxesThe income tax adjustment reflects the impact the U.S. GAAP adjustments described
above have on income taxes. Included in the figures presented in the table above is
the effect of tax rate changes applied to the accumulated gains and losses on embedded
derivatives and to certain lease transactions classified as operating leases as
discussed above. The impact on the statement of operations of the tax rate changes for
the year ended December 31, 2009 was a recovery of $1.8 million (2008  expense of
$0.6 million; the two month period ended December 31, 2007  recovery of $1.3 million;
the ten month period ended October 30, 2007  recovery of $0.2 million).(f)
    
    Uncertainty in income taxesEffective January 1, 2007 the Company adopted the recognition requirements of the
Financial Accounting Standards Board (FASB) issued Interpretation No. 48 (FIN 48),
Accounting for Uncertainty in Income Taxes, an interpretation of FAS 109. FIN 48,
which has been primarily codified into FASB Accounting Standards Codification (ASC)
Topic 740, Income Taxes, provides specific guidance on the recognition,
de-recognition and measurement of income tax positions in financial statements,
including the accrual of related interest and penalties recorded in interest expense.
An income tax position is recognized when it is more likely than not that it will be
sustained upon examination based on its technical merits, and is measured as the
largest amount that is greater than 50% likely of being realized upon ultimate
settlement. Under Canadian GAAP, significant differences may arise as Telesat
recognizes and measures income tax positions, based on the best estimate of the amount
that is more likely than not of being realized.
  F-105




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##### Table of Contents



Telesat Holdings Inc.   Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 24. RECONCILIATION OF CANADIAN GAAP TO UNITED STATES GAAP   (continued)
 (g)
    
    Net benefit plans costEffective December 31, 2006, the Company adopted the recognition requirements of
Statement of Financial Accounting Standards (SFAS) No. 158, Employers Accounting for
Defined Benefit Pension and Other Post Retirement Plans, on a prospective basis. SFAS
No. 158 has been primarily codified into ASC 715, Compensation.This standard requires that the Company recognize the funded status of benefit plans
on the balance sheet as well as recognize as a component of other comprehensive
income, net of tax, the actuarial losses and transitional asset and obligation.
Amounts recognized in accumulated other comprehensive income are adjusted as they are
subsequently recognized as components of net periodic benefit cost.At December 31, 2009, the balance sheet was adjusted such that actuarial losses and
the transitional asset and obligation that have not yet been included in net benefit
plans cost at December 31, 2009 were recognized as components of accumulated other
comprehensive loss, net of tax. The adjustment at December 31, 2009 resulted in an
increase of $9.4 million in accumulated other comprehensive loss, net of tax of $3.0
million (December 31, 2008  an increase of $1.2 million in accumulated other
comprehensive loss, net of tax of $0.4 million).
 Transaction costs on long-term debt
  Reporting disposal gains or losses of long-lived assets
  Statement of cash flows
  Recent Accounting Pronouncements
 The
FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting
Principles Generally Accepted Accounting
Standards The Hierarchy of Generally Accepted Accounting
Principles
  F-106




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##### Table of Contents



Telesat Holdings Inc.   Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 24. RECONCILIATION OF CANADIAN GAAP TO UNITED STATES GAAP   (continued)
 Business Combinations Business Combinations,
 Non-controlling Interests in Consolidated
Financial Statements  an amendment of ARB No. 51 Consolidation
 Disclosures about Derivative Instruments and
Hedging Activities Derivatives and Hedging
 Determination of the Useful Life of
Intangible Assets Goodwill and Other Intangible Assets Intangibles  Goodwill and Other,
 Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination That Arise from Contingencies Business Combinations Business Combinations
 Subsequent Events Subsequent Events
  F-107




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##### Table of Contents



Telesat Holdings Inc.   Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 24. RECONCILIATION OF CANADIAN GAAP TO UNITED STATES GAAP   (continued)
 Accounting for Transfers of Financial
Assets  an amendment of FASB Statement No. 140 Transfers and Servicing
 25. CONDENSED CONSOLIDATING FINANCIAL INFORMATION
     F-108




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##### Table of Contents



Telesat Holdings Inc.   Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 25. CONDENSED CONSOLIDATING FINANCIAL INFORMATION   (continued)
 Condensed Consolidating Balance Sheet
As of December 31, 2009
 Non-Telesat
    
    
    Telesat
    
    
    Telesat
    
    
    Guarantor
    
    
    GuarantorHoldings
    
    
    LLC
    
    
    Canada
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedAssetsCurrent assetsCash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    137,623
    
    
    
    14,232
    
    
    
    2,334
    
    
    
    
    
    
    
    154,189Accounts receivable
    
    
    
    
    
    
    
    
    
    
    51,447
    
    
    
    15,591
    
    
    
    3,165
    
    
    
    
    
    
    
    70,203Current future tax asset
    
    
    
    
    
    
    
    
    
    
    1,703
    
    
    
    350
    
    
    
    131
    
    
    
    
    
    
    
    2,184Intercompany receivable
    
    
    
    
    
    
    
    
    
    
    249,103
    
    
    
    150,490
    
    
    
    120,038
    
    
    
    (519,631
    )
    
    
    Other current assets
    
    
    
    
    
    
    
    
    
    
    13,758
    
    
    
    8,234
    
    
    
    7.026
    
    
    
    
    
    
    
    29,018Total current assets
    
    
    
    
    
    
    
    
    
    
    453,634
    
    
    
    188,897
    
    
    
    132,694
    
    
    
    (519,631
    )
    
    
    255,594Satellites, property, and other equipment, net
    
    
    
    
    
    
    
    
    
    
    1,446,613
    
    
    
    457,595
    
    
    
    21,982
    
    
    
    
    
    
    
    1,926,190Other long-term assets
    
    
    
    
    
    
    
    
    
    
    34,101
    
    
    
    6,249
    
    
    
    660
    
    
    
    
    
    
    
    41,010Intangible assets, net
    
    
    
    
    
    
    
    
    
    
    492,435
    
    
    
    17,854
    
    
    
    386
    
    
    
    
    
    
    
    510,675Investment in affiliates
    
    
    1,055,989
    
    
    
    
    
    
    
    1,339,308
    
    
    
    1,477,582
    
    
    
    261
    
    
    
    (3,873,140
    )
    
    
    Goodwill
    
    
    
    
    
    
    
    
    
    
    2,005,842
    
    
    
    343,876
    
    
    
    96.885
    
    
    
    
    
    
    
    2,446,603Total assets
    
    
    1,055,989
    
    
    
    
    
    
    
    5,771,933
    
    
    
    2,492,053
    
    
    
    252,868
    
    
    
    (4,392,771
    )
    
    
    5,180,072LiabilitiesCurrent liabilitiesAccounts payable and accrued liabilities
    
    
    
    
    
    
    
    
    
    
    32,059
    
    
    
    6,798
    
    
    
    4,556
    
    
    
    
    
    
    
    43,413Other current liabilities
    
    
    
    
    
    
    
    
    
    
    121,140
    
    
    
    2,397
    
    
    
    4,167
    
    
    
    
    
    
    
    127,704Intercompany payable
    
    
    
    
    
    
    
    
    
    
    108,139
    
    
    
    411,285
    
    
    
    
    
    
    
    (519,424
    )
    
    
    Debt due within one year
    
    
    
    
    
    
    
    
    
    
    23,601
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    23,602Total current liabilities
    
    
    
    
    
    
    
    
    
    
    284,939
    
    
    
    420,481
    
    
    
    8,723
    
    
    
    (519,424
    )
    
    
    194,719Debt financing
    
    
    
    
    
    
    
    
    
    
    3,013,738
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,013,738Future tax liability
    
    
    
    
    
    
    
    
    
    
    262,913
    
    
    
    86
    
    
    
    6,194
    
    
    
    
    
    
    
    269,193Other long-term liabilities
    
    
    25,090
    
    
    
    
    
    
    
    611,776
    
    
    
    16,370
    
    
    
    18,495
    
    
    
    (208
    )
    
    
    671,523Senior preferred shares
    
    
    141,435
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    141,435Total liabilities
    
    
    166,525
    
    
    
    
    
    
    
    4,173,366
    
    
    
    436,937
    
    
    
    33,412
    
    
    
    (519,632
    )
    
    
    4,290,608Shareholders equityCommon shares
    
    
    756,414
    
    
    
    
    
    
    
    2,320,730
    
    
    
    1,896,596
    
    
    
    104,434
    
    
    
    (4,321,760
    )
    
    
    756,414Preferred shares
    
    
    541,764
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    541,764Accumulated deficit
    
    
    (412,389
    )
    
    
    
    
    
    
    (794,300
    )
    
    
    230,623
    
    
    
    111,380
    
    
    
    452,297
    
    
    
    (412,389
    )Accumulated other comprehensive loss
    
    
    (7,422
    )
    
    
    
    
    
    
    63
    
    
    
    (11,028
    )
    
    
    3,544
    
    
    
    7,421
    
    
    
    (7,422
    )Contributed surplus
    
    
    11,097
    
    
    
    
    
    
    
    72,074
    
    
    
    (61,075
    )
    
    
    98
    
    
    
    (11,097
    )
    
    
    11,097Total shareholders equity
    
    
    889,464
    
    
    
    
    
    
    
    1,598,567
    
    
    
    2,055,116
    
    
    
    219,456
    
    
    
    (3,873,139
    )
    
    
    889,464Total liabilities and shareholders equity
    
    
    1,055,989
    
    
    
    
    
    
    
    5,771,933
    
    
    
    2,492,053
    
    
    
    252,868
    
    
    
    (4,392,771
    )
    
    
    5,180,072Reconciliation to US GAAP of total shareholders equity is as follows:Canadian GAAP
    
    
    889,464
    
    
    
    
    
    
    
    1,598,567
    
    
    
    2,055,116
    
    
    
    219,456
    
    
    
    (3,873,139
    )
    
    
    889,464Income (loss) from equity investments
    
    
    (27,459
    )
    
    
    
    
    
    
    (372
    )
    
    
    (372
    )
    
    
    
    
    
    
    28,203
    
    
    
    Gains (losses) on embedded derivatives
    
    
    
    
    
    
    
    
    
    
    (14,588
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,588
    )Net actuarial losses
    
    
    
    
    
    
    
    
    
    
    (10,541
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,541
    )Sales type lease  operating lease for U.S. GAAP
    
    
    
    
    
    
    
    
    
    
    23,070
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,070Capital lease  operating lease for U.S. GAAP
    
    
    
    
    
    
    
    
    
    
    (9,229
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,229
    )Lease amendments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (619
    )
    
    
    
    
    
    
    (619
    )Tax effect of above adjustments
    
    
    
    
    
    
    
    
    
    
    1,777
    
    
    
    
    
    
    
    247
    
    
    
    
    
    
    
    2,024Uncertainty in income taxes
    
    
    
    
    
    
    
    
    
    
    (17,576
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,576
    )US GAAP
    
    
    862,005
    
    
    
    
    
    
    
    1,571,108
    
    
    
    2,054,744
    
    
    
    219,084
    
    
    
    (3,844,936
    )
    
    
    862,005
  F-109




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 25. CONDENSED CONSOLIDATING FINANCIAL INFORMATION   (continued)
 Condensed Consolidating Statement of Earnings (Loss)
For the Year Ended December 31, 2009
 Non-Telesat
    
    
    Telesat
    
    
    Telesat
    
    
    Guarantor
    
    
    GuarantorHoldings
    
    
    LLC
    
    
    Canada
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedOperating revenuesService revenues
    
    
    
    
    
    
    
    
    
    
    704,397
    
    
    
    78,559
    
    
    
    46,216
    
    
    
    (62,034
    )
    
    
    767,138Equipment sales revenues
    
    
    
    
    
    
    
    
    
    
    6,696
    
    
    
    13,570
    
    
    
    
    
    
    
    (206
    )
    
    
    20,060Operating revenues
    
    
    
    
    
    
    
    
    
    
    711,093
    
    
    
    92,129
    
    
    
    46,216
    
    
    
    (62,240
    )
    
    
    787,198Amortization
    
    
    
    
    
    
    
    
    
    
    198,676
    
    
    
    47,055
    
    
    
    11,136
    
    
    
    
    
    
    
    256,867Operations and
administration
    
    
    
    
    
    
    
    
    
    
    176,085
    
    
    
    80,554
    
    
    
    28,004
    
    
    
    (64,953
    )
    
    
    219,690Cost of equipment sales
    
    
    
    
    
    
    
    
    
    
    5,828
    
    
    
    10,552
    
    
    
    
    
    
    
    
    
    
    
    16,380Total operating expenses
    
    
    
    
    
    
    
    
    
    
    380,589
    
    
    
    138,161
    
    
    
    39,140
    
    
    
    (64,953
    )
    
    
    492,937Earnings from operations
    
    
    
    
    
    
    
    
    
    
    330,504
    
    
    
    (46,032
    )
    
    
    7,076
    
    
    
    2,713
    
    
    
    294,261Income (loss) from
equity investments
    
    
    427,603
    
    
    
    
    
    
    
    (3,153
    )
    
    
    (5,047
    )
    
    
    
    
    
    
    (419,403
    )
    
    
    Interest expense
    
    
    (13,540
    )
    
    
    
    
    
    
    (256,458
    )
    
    
    (1,318
    )
    
    
    (2,252
    )
    
    
    
    
    
    
    (273,568
    )(Loss) gain on
financial instruments
    
    
    
    
    
    
    
    
    
    
    (134,402
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (134,402
    )Gain (loss) on foreign
exchange
    
    
    
    
    
    
    
    
    
    
    488,003
    
    
    
    29,869
    
    
    
    (17,010
    )
    
    
    
    
    
    
    500,862Other (expense) income
    
    
    
    
    
    
    
    
    
    
    8,192
    
    
    
    1,321
    
    
    
    25,059
    
    
    
    (2,713
    )
    
    
    31,859(Loss) earnings before
income taxes
    
    
    414,063
    
    
    
    
    
    
    
    432,686
    
    
    
    (21,207
    )
    
    
    12,873
    
    
    
    (419,403
    )
    
    
    419,012Income tax (expense)
recovery
    
    
    
    
    
    
    
    
    
    
    (5,083
    )
    
    
    (1,458
    )
    
    
    1,592
    
    
    
    
    
    
    
    (4,949
    )Net (loss) earnings
    
    
    414,063
    
    
    
    
    
    
    
    427,603
    
    
    
    (22,665
    )
    
    
    14,465
    
    
    
    (419,403
    )
    
    
    414,063Reconciliation to US
GAAP is as follows:Income (loss) from
equity investments
    
    
    (32,357
    )
    
    
    
    
    
    
    475
    
    
    
    475
    
    
    
    
    
    
    
    31,407
    
    
    
    Gains (losses) on
embedded derivatives
    
    
    
    
    
    
    
    
    
    
    (35,480
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35,480
    )Sales type
lease  operating lease
for U.S. GAAP
    
    
    
    
    
    
    
    
    
    
    1,514
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,514Capital
lease  operating lease
for U.S. GAAP
    
    
    
    
    
    
    
    
    
    
    (1,567
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,567
    )Lease amendments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    719
    
    
    
    
    
    
    
    719Dividends on senior
preferred shares
    
    
    13,540
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,540Tax effect of above
adjustments
    
    
    
    
    
    
    
    
    
    
    10,754
    
    
    
    
    
    
    
    (244
    )
    
    
    
    
    
    
    10,510Uncertainty in income
taxes
    
    
    
    
    
    
    
    
    
    
    (8,053
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,053
    )US GAAP net (loss)
earnings
    
    
    395,246
    
    
    
    
    
    
    
    395,246
    
    
    
    (22,190
    )
    
    
    14,940
    
    
    
    (387,996
    )
    
    
    395,246
  F-110




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 25. CONDENSED CONSOLIDATING FINANCIAL INFORMATION   (continued)
 Condensed Consolidated Statement of Cash Flows
For the Year Ended December 31, 2009
 Non-Telesat
    
    
    Telesat
    
    
    Telesat
    
    
    Guarantor
    
    
    GuarantorHoldings
    
    
    LLC
    
    
    Canada
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedCash flows from
operating
activitiesNet earnings (loss)
    
    
    414,063
    
    
    
    
    
    
    
    427,603
    
    
    
    (22,665
    )
    
    
    14,465
    
    
    
    (419,403
    )
    
    
    414,063Adjustments to
reconcile net
earnings (loss) to
cash flows from
operating
activities:Amortization
    
    
    
    
    
    
    
    
    
    
    198,676
    
    
    
    47,055
    
    
    
    11,136
    
    
    
    
    
    
    
    256,867Future income taxes
    
    
    
    
    
    
    
    
    
    
    6,245
    
    
    
    271
    
    
    
    (1,918
    )
    
    
    
    
    
    
    4,598Unrealized foreign
exchange loss
    
    
    
    
    
    
    
    
    
    
    (509,995
    )
    
    
    (12,769
    )
    
    
    (1,368
    )
    
    
    
    
    
    
    (524,132
    )Unrealized gain on
derivatives
    
    
    
    
    
    
    
    
    
    
    134,402
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    134,402Dividends on
preferred shares
    
    
    13,540
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,540Stock-based
compensation
expense
    
    
    
    
    
    
    
    
    
    
    4,696
    
    
    
    854
    
    
    
    99
    
    
    
    
    
    
    
    5,649Loss (income) from
equity investments
    
    
    (427,603
    )
    
    
    
    
    
    
    3,153
    
    
    
    5,047
    
    
    
    
    
    
    
    419,403
    
    
    
    (Gain) Loss on
disposal of assets
    
    
    
    
    
    
    
    
    
    
    (8,013
    )
    
    
    590
    
    
    
    (26,007
    )
    
    
    
    
    
    
    (33,430
    )Other
    
    
    
    
    
    
    
    
    
    
    (48,972
    )
    
    
    3,267
    
    
    
    (310
    )
    
    
    
    
    
    
    (46,015
    )Customer
prepayments on
future satellite
services
    
    
    
    
    
    
    
    
    
    
    82,066
    
    
    
    900
    
    
    
    
    
    
    
    
    
    
    
    82,966Customer refunds
    
    
    
    
    
    
    
    
    
    
    (17,459
    )
    
    
    (107
    )
    
    
    
    
    
    
    
    
    
    
    (17,566
    )Operating assets
and liabilities
    
    
    
    
    
    
    
    
    
    
    22,272
    
    
    
    (21,884
    )
    
    
    6,815
    
    
    
    
    
    
    
    7,203
    
    
    
    
    
    
    
    294,674
    
    
    
    559
    
    
    
    2,912
    
    
    
    
    
    
    
    298,145Cash flows from
investing
activitiesSatellite programs
    
    
    
    
    
    
    
    
    
    
    (258,083
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (258,083
    )Property additions
    
    
    
    
    
    
    
    
    
    
    (5,130
    )
    
    
    (722
    )
    
    
    (266
    )
    
    
    
    
    
    
    (6,118
    )Business
acquisitions
    
    
    
    
    
    
    
    
    
    
    (1,128
    )
    
    
    1,128
    
    
    
    
    
    
    
    
    
    
    
    Proceeds on
disposal of assets
    
    
    
    
    
    
    
    
    
    
    70,942
    
    
    
    458
    
    
    
    
    
    
    
    
    
    
    
    71,400
    
    
    
    
    
    
    
    (193,399
    )
    
    
    864
    
    
    
    (266
    )
    
    
    
    
    
    
    (192,801
    )Cash flows from
financing
activitiesDebt financing and
bank loans
    
    
    
    
    
    
    
    
    
    
    23,880
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,880Repayment of bank
loans and debt
financing
    
    
    
    
    
    
    
    
    
    
    (53,844
    )
    
    
    (11
    )
    
    
    
    
    
    
    
    
    
    
    (53,855
    )Capitalized debt
issuance costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Capital lease
payments
    
    
    
    
    
    
    
    
    
    
    (11,359
    )
    
    
    
    
    
    
    (3,261
    )
    
    
    
    
    
    
    (14,620
    )Satellite
performance
incentive payments
    
    
    
    
    
    
    
    
    
    
    (5,418
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,418
    )
    
    
    
    
    
    
    
    (46,741
    )
    
    
    (11
    )
    
    
    (3,261
    )
    
    
    
    
    
    
    (50,013
    )Effect of changes
in exchange rates
on cash and cash
equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    764
    
    
    
    (445
    )
    
    
    
    
    
    
    319Increase (decrease)
in cash and cash
equivalents
    
    
    
    
    
    
    
    
    
    
    54,534
    
    
    
    2,176
    
    
    
    (1,060
    )
    
    
    
    
    
    
    55,650Cash and cash
equivalents,
beginning of period
    
    
    
    
    
    
    
    
    
    
    83,089
    
    
    
    12,056
    
    
    
    3,394
    
    
    
    
    
    
    
    98,539Cash and cash
equivalents, end of
period
    
    
    
    
    
    
    
    
    
    
    137,623
    
    
    
    14,232
    
    
    
    2,334
    
    
    
    
    
    
    
    154,189
  F-111




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 25. CONDENSED CONSOLIDATING FINANCIAL INFORMATION   (continued)
  December 31, 2009
 Telesat Canada
 CanadianGAAP
    
    
    Adjustments
    
    
    US GAAPCurrent assets
    
    
    453,634
    
    
    
    9,363
    
    
    
    462,997Other assets
    
    
    34,101
    
    
    
    83,658
    
    
    
    117,759Goodwill
    
    
    2,005,842
    
    
    
    (12,692
    )
    
    
    1,993,150Current liabilities
    
    
    284,939
    
    
    
    11,462
    
    
    
    296,401Debt financing
    
    
    3,013,738
    
    
    
    61,593
    
    
    
    3,075,331Future tax liability
    
    
    262,913
    
    
    
    1,060
    
    
    
    263,973Other long-term liabilities
    
    
    611,776
    
    
    
    32,807
    
    
    
    644,583Accumulated deficit
    
    
    (794,300
    )
    
    
    (16,052
    )
    
    
    (810,352
    )Accumulated other
comprehensive income
(loss)
    
    
    63
    
    
    
    (10,541
    )
    
    
    (10,478
    )
 Non-guarantor subsidiaries
 CanadianGAAP
    
    
    Adjustments
    
    
    US GAAPCurrent liabilities
    
    
    8,723
    
    
    
    130
    
    
    
    8,853Future tax liability
    
    
    6,194
    
    
    
    247
    
    
    
    6,441Other long-term liabilities
    
    
    18,495
    
    
    
    489
    
    
    
    18,984Accumulated earnings
    
    
    111,380
    
    
    
    (760
    )
    
    
    110,620Accumulated other
comprehensive income
    
    
    3,544
    
    
    
    (106
    )
    
    
    3,438
  F-112




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 25. CONDENSED CONSOLIDATING FINANCIAL INFORMATION   (continued)
 Condensed Consolidating Balance Sheet
As at December 31, 2008
 Non-Telesat
    
    
    Telesat
    
    
    Telesat
    
    
    Guarantor
    
    
    guarantorHoldings
    
    
    LLC
    
    
    Canada
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedAssetsCurrent assetsCash and cash
equivalents
    
    
    
    
    
    
    
    
    
    
    83,089
    
    
    
    12,056
    
    
    
    3,393
    
    
    
    1
    
    
    
    98,539Accounts receivable
    
    
    
    
    
    
    
    
    
    
    39,153
    
    
    
    19,680
    
    
    
    3,100
    
    
    
    
    
    
    
    61,933Current future tax
asset
    
    
    
    
    
    
    
    
    
    
    928
    
    
    
    596
    
    
    
    1,057
    
    
    
    
    
    
    
    2,581Intercompany
receivable
    
    
    
    
    
    
    
    
    
    
    605,331
    
    
    
    59,234
    
    
    
    103,133
    
    
    
    (767,698
    )
    
    
    Other current assets
    
    
    
    
    
    
    
    
    
    
    31,283
    
    
    
    9,202
    
    
    
    8,983
    
    
    
    (281
    )
    
    
    49,187Total current assets
    
    
    
    
    
    
    
    
    
    
    759,784
    
    
    
    100,768
    
    
    
    119,666
    
    
    
    (767,978
    )
    
    
    212,240Satellites,
property, and other
equipment, net
    
    
    
    
    
    
    
    
    
    
    1,437,490
    
    
    
    374,436
    
    
    
    71,650
    
    
    
    
    
    
    
    1,883,576Other long-term
assets
    
    
    
    
    
    
    
    
    
    
    39,176
    
    
    
    2,325
    
    
    
    755
    
    
    
    47
    
    
    
    42,303Intangible assets,
net
    
    
    
    
    
    
    
    
    
    
    562,434
    
    
    
    18,967
    
    
    
    635
    
    
    
    (1
    )
    
    
    582,035Investment in
affiliates
    
    
    622,417
    
    
    
    
    
    
    
    1,668,986
    
    
    
    1,476,399
    
    
    
    261
    
    
    
    (3,768,063
    )
    
    
    Goodwill
    
    
    
    
    
    
    
    
    
    
    2,005,842
    
    
    
    343,876
    
    
    
    96,885
    
    
    
    
    
    
    
    2,446,603Total assets
    
    
    622,417
    
    
    
    
    
    
    
    6,473,712
    
    
    
    2,316,771
    
    
    
    289,852
    
    
    
    (4,535,995
    )
    
    
    5,166,757LiabilitiesCurrent liabilitiesAccounts payable
and accrued
liabilities
    
    
    
    
    
    
    
    
    
    
    24,661
    
    
    
    15,940
    
    
    
    3,840
    
    
    
    14
    
    
    
    44,455Other current
liabilities
    
    
    
    
    
    
    
    
    
    
    123,740
    
    
    
    14,766
    
    
    
    4,163
    
    
    
    (237
    )
    
    
    142,432Intercompany payable
    
    
    
    
    
    
    
    
    
    
    518,247
    
    
    
    211,174
    
    
    
    38,317
    
    
    
    (767,738
    )
    
    
    Debt due within one
year
    
    
    
    
    
    
    
    
    
    
    23,260
    
    
    
    11
    
    
    
    
    
    
    
    1
    
    
    
    23,272Total current
liabilities
    
    
    
    
    
    
    
    
    
    
    689,908
    
    
    
    241,891
    
    
    
    46,320
    
    
    
    (767,960
    )
    
    
    210,159Debt financing
    
    
    
    
    
    
    
    
    
    
    3,513,223
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,513,223Future tax liability
    
    
    
    
    
    
    
    
    
    
    255,893
    
    
    
    267
    
    
    
    10,212
    
    
    
    
    
    
    
    266,372Other long-term
liabilities
    
    
    11,550
    
    
    
    
    
    
    
    505,328
    
    
    
    24,099
    
    
    
    25,159
    
    
    
    
    
    
    
    566,136Senior preferred
shares
    
    
    141,435
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    141,435Total liabilities
    
    
    152,985
    
    
    
    
    
    
    
    4,964,352
    
    
    
    266,257
    
    
    
    81,691
    
    
    
    (767,960
    )
    
    
    4,697,325Shareholders equityCommon shares
    
    
    756,414
    
    
    
    
    
    
    
    2,320,730
    
    
    
    1,823,370
    
    
    
    104,434
    
    
    
    (4,248,534
    )
    
    
    756,414Preferred shares
    
    
    541,764
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    541,764Accumulated deficit
    
    
    (826,452
    )
    
    
    
    
    
    
    (816,679
    )
    
    
    241,559
    
    
    
    96,915
    
    
    
    478,205
    
    
    
    (826,452
    )Accumulated other
comprehensive loss
    
    
    (7,742
    )
    
    
    
    
    
    
    63
    
    
    
    (14,617
    )
    
    
    6,812
    
    
    
    7,742
    
    
    
    (7,742
    )Contributed surplus
    
    
    5,448
    
    
    
    
    
    
    
    5,246
    
    
    
    202
    
    
    
    
    
    
    
    (5,448
    )
    
    
    5,448Total shareholders
equity
    
    
    469,432
    
    
    
    
    
    
    
    1,509,360
    
    
    
    2,050,514
    
    
    
    208,161
    
    
    
    (3,768,035
    )
    
    
    469,432Total liabilities
and shareholders
equity
    
    
    622,417
    
    
    
    
    
    
    
    6,473,712
    
    
    
    2,316,771
    
    
    
    289,852
    
    
    
    (4,535,995
    )
    
    
    5,166,757
  F-113




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 25. CONDENSED CONSOLIDATING FINANCIAL INFORMATION   (continued)
 Non-Telesat
    
    
    Telesat
    
    
    Telesat
    
    
    Guarantor
    
    
    guarantorHoldings
    
    
    LLC
    
    
    Canada
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedReconciliation to
US GAAP of total
shareholders equity is
as follows:Canadian GAAP
    
    
    469,432
    
    
    
    
    
    
    
    1,509,360
    
    
    
    2,050,514
    
    
    
    208,161
    
    
    
    (3,768,035
    )
    
    
    469,432Underlying differences
in the income (loss)
from equity investments
    
    
    14,375
    
    
    
    
    
    
    
    (742
    )
    
    
    
    
    
    
    
    
    
    
    (13,633
    )
    
    
    Gains (losses) on
embedded derivatives
    
    
    
    
    
    
    
    
    
    
    20,892
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,892Net actuarial losses
    
    
    
    
    
    
    
    
    
    
    (1,169
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,169
    )Sales-type
lease  operating lease
for U.S. GAAP
    
    
    
    
    
    
    
    
    
    
    21,556
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,556Capital
lease  operating lease
for U.S. GAAP
    
    
    
    
    
    
    
    
    
    
    (7,662
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,662
    )Lease amendments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,233
    )
    
    
    
    
    
    
    (1,233
    )Tax effect of above
adjustments
    
    
    
    
    
    
    
    
    
    
    (8,977
    )
    
    
    
    
    
    
    491
    
    
    
    
    
    
    
    (8,486
    )Uncertainty in income
taxes
    
    
    
    
    
    
    
    
    
    
    (9,523
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,523
    )US GAAP
    
    
    483,807
    
    
    
    
    
    
    
    1,523,735
    
    
    
    2,050,514
    
    
    
    207,419
    
    
    
    (3,781,668
    )
    
    
    483,807
  F-114




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 25. CONDENSED CONSOLIDATING FINANCIAL INFORMATION   (continued)
 Condensed Consolidating Statement of Earnings (Loss)
For the Year Ended December 31, 2008
 Non-Telesat
    
    
    Telesat
    
    
    Telesat
    
    
    Guarantor
    
    
    guarantorHoldings
    
    
    LLC
    
    
    Canada
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedOperating revenuesService revenues
    
    
    
    
    
    
    
    
    
    
    613,419
    
    
    
    98,342
    
    
    
    26,700
    
    
    
    (57,670
    )
    
    
    680,791Equipment sales revenues
    
    
    
    
    
    
    
    
    
    
    12,459
    
    
    
    18,296
    
    
    
    
    
    
    
    (171
    )
    
    
    30,584Operating revenues
    
    
    
    
    
    
    
    
    
    
    625,878
    
    
    
    116,638
    
    
    
    26,700
    
    
    
    (57,841
    )
    
    
    711,375Amortization
    
    
    
    
    
    
    
    
    
    
    179,100
    
    
    
    36,218
    
    
    
    20,322
    
    
    
    
    
    
    
    235,640Operations and
administration
    
    
    
    
    
    
    
    
    
    
    197,506
    
    
    
    99,267
    
    
    
    8,438
    
    
    
    (57,661
    )
    
    
    247,550Cost of equipment sales
    
    
    
    
    
    
    
    
    
    
    9,944
    
    
    
    14,500
    
    
    
    104
    
    
    
    (180
    )
    
    
    24,368Impairment loss on
long-lived assets
    
    
    
    
    
    
    
    
    
    
    2,373
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,373Impairment loss on
intangible assets
    
    
    
    
    
    
    
    
    
    
    465,900
    
    
    
    17,100
    
    
    
    
    
    
    
    
    
    
    
    483,000Total operating expenses
    
    
    
    
    
    
    
    
    
    
    854,823
    
    
    
    167,085
    
    
    
    28,864
    
    
    
    (57,841
    )
    
    
    992,931Earnings from operations
    
    
    
    
    
    
    
    
    
    
    (228,945
    )
    
    
    (50,447
    )
    
    
    (2,164
    )
    
    
    
    
    
    
    (281,556
    )Income (loss) from
equity investments
    
    
    (812,546
    )
    
    
    
    
    
    
    (60,468
    )
    
    
    (5,130
    )
    
    
    
    
    
    
    878,144
    
    
    
    Interest expense
    
    
    (9,855
    )
    
    
    
    
    
    
    (245,683
    )
    
    
    25
    
    
    
    (2,128
    )
    
    
    
    
    
    
    (257,641
    )(Loss) gain on
financial instruments
    
    
    
    
    
    
    
    
    
    
    251,686
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    251,686Gain (loss) on foreign
exchange
    
    
    
    
    
    
    
    
    
    
    (693,723
    )
    
    
    (17,103
    )
    
    
    12,770
    
    
    
    
    
    
    
    (698,056
    )Other (expense) income
    
    
    
    
    
    
    
    
    
    
    (3,867
    )
    
    
    913
    
    
    
    1,242
    
    
    
    (1
    )
    
    
    (1,713
    )(Loss) earnings before
income taxes
    
    
    (822,401
    )
    
    
    
    
    
    
    (981,000
    )
    
    
    (71,742
    )
    
    
    9,720
    
    
    
    878,143
    
    
    
    (987,280
    )Income tax recovery
(expense)
    
    
    
    
    
    
    
    
    
    
    168,454
    
    
    
    (2,730
    )
    
    
    (846
    )
    
    
    1
    
    
    
    164,879Net (loss) earnings
    
    
    (822,401
    )
    
    
    
    
    
    
    (812,546
    )
    
    
    (74,472
    )
    
    
    8,874
    
    
    
    878,144
    
    
    
    (822,401
    )Reconciliation to US
GAAP is as follows:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income (loss) from
equity investments
    
    
    14,473
    
    
    
    
    
    
    
    (742
    )
    
    
    
    
    
    
    
    
    
    
    (13,731
    )
    
    
    Gains (losses) on
embedded derivatives
    
    
    
    
    
    
    
    
    
    
    20,118
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,118Sales-type
lease  operating lease
for U.S. GAAP
    
    
    
    
    
    
    
    
    
    
    18,808
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,808Capital
lease  operating lease
for U.S. GAAP
    
    
    
    
    
    
    
    
    
    
    (7,584
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,584
    )Lease amendments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,233
    )
    
    
    
    
    
    
    (1,233
    )Dividends on senior
preferred shares
    
    
    9,855
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,855Tax effect of above
adjustments
    
    
    
    
    
    
    
    
    
    
    (9,252
    )
    
    
    
    
    
    
    491
    
    
    
    
    
    
    
    (8,761
    )Uncertainty in income
taxes
    
    
    
    
    
    
    
    
    
    
    (6,875
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,875
    )US GAAP net (loss)
earnings
    
    
    (798,073
    )
    
    
    
    
    
    
    (798,073
    )
    
    
    (74,472
    )
    
    
    8,132
    
    
    
    864,413
    
    
    
    (798,073
    )
  F-115




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 25. CONDENSED CONSOLIDATING FINANCIAL INFORMATION   (continued)
 Condensed Consolidating Statement of Cash Flows
For the Year Ended December 31, 2008
 Non-Telesat
    
    
    Telesat
    
    
    Telesat
    
    
    Guarantor
    
    
    guarantorHoldings
    
    
    LLC
    
    
    Canada
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedCash flows
from operating
activitiesNet earnings (loss)
    
    
    (822,401
    )
    
    
    
    
    
    
    (812,546
    )
    
    
    (74,472
    )
    
    
    8,874
    
    
    
    878,144
    
    
    
    (822,401
    )Adjustments to
reconcile net
earnings (loss) to
cash flows from
operating
activities:Amortization
    
    
    
    
    
    
    
    
    
    
    179,100
    
    
    
    36,218
    
    
    
    20,322
    
    
    
    
    
    
    
    235,640Future income taxes
    
    
    
    
    
    
    
    
    
    
    (175,744
    )
    
    
    84
    
    
    
    (291
    )
    
    
    
    
    
    
    (175,951
    )Unrealized foreign
exchange loss
    
    
    
    
    
    
    
    
    
    
    698,675
    
    
    
    6,172
    
    
    
    (9,402
    )
    
    
    
    
    
    
    695,445Unrealized gain on
derivatives
    
    
    
    
    
    
    
    
    
    
    (247,931
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (247,931
    )Dividends on
preferred shares
    
    
    9,855
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,855Stock-based
compensation
expense
    
    
    
    
    
    
    
    
    
    
    5,246
    
    
    
    202
    
    
    
    
    
    
    
    
    
    
    
    5,448(Gain) Loss on
disposal of assets
    
    
    
    
    
    
    
    
    
    
    827
    
    
    
    (575
    )
    
    
    
    
    
    
    
    
    
    
    252Impairment losses
    
    
    
    
    
    
    
    
    
    
    468,273
    
    
    
    17,100
    
    
    
    
    
    
    
    
    
    
    
    485,373Loss (income) from
equity investments
    
    
    812,546
    
    
    
    
    
    
    
    60,468
    
    
    
    5,130
    
    
    
    
    
    
    
    (878,144
    )
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    (41,489
    )
    
    
    (745
    )
    
    
    (842
    )
    
    
    (1,043
    )
    
    
    (44,119
    )Customer
prepayments on
future satellite
services
    
    
    
    
    
    
    
    
    
    
    88,473
    
    
    
    114
    
    
    
    
    
    
    
    
    
    
    
    88,587Operating assets
and liabilities
    
    
    
    
    
    
    
    
    
    
    (42,880
    )
    
    
    107,584
    
    
    
    (16,889
    )
    
    
    1,044
    
    
    
    48,859
    
    
    
    
    
    
    
    180,472
    
    
    
    96,812
    
    
    
    1,772
    
    
    
    1
    
    
    
    279,057
  F-116




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 25. CONDENSED CONSOLIDATING FINANCIAL INFORMATION   (continued)
 Non-Telesat
    
    
    Telesat
    
    
    Telesat
    
    
    Guarantor
    
    
    guarantorHoldings
    
    
    LLC
    
    
    Canada
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedCash flows
from investing
activitiesSatellite programs
    
    
    
    
    
    
    
    
    
    
    (194,542
    )
    
    
    (69,221
    )
    
    
    
    
    
    
    
    
    
    
    (263,763
    )Property additions
    
    
    
    
    
    
    
    
    
    
    (6,505
    )
    
    
    (2,304
    )
    
    
    (53
    )
    
    
    
    
    
    
    (8,862
    )Business
acquisitions
    
    
    
    
    
    
    
    
    
    
    7,477
    
    
    
    
    
    
    
    
    
    
    
    (7,477
    )
    
    
    Proceeds on
disposal of assets
    
    
    
    
    
    
    
    
    
    
    566
    
    
    
    4,554
    
    
    
    
    
    
    
    
    
    
    
    5,120Insurance proceeds
    
    
    
    
    
    
    
    
    
    
    4,006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,006
    
    
    
    
    
    
    
    (188,998
    )
    
    
    (66,971
    )
    
    
    (53
    )
    
    
    (7,477
    )
    
    
    (263,499
    )Cash flows from
financing
activitiesDebt financing and
bank loans
    
    
    
    
    
    
    
    
    
    
    186,687
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    186,687Repayment of bank
loans and debt
financing
    
    
    
    
    
    
    
    
    
    
    (91,528
    )
    
    
    (32
    )
    
    
    
    
    
    
    
    
    
    
    (91,560
    )Capitalized debt
issuance costs
    
    
    
    
    
    
    
    
    
    
    (19,131
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,131
    )Capital lease
payments
    
    
    
    
    
    
    
    
    
    
    (8,197
    )
    
    
    (19,816
    )
    
    
    (2,941
    )
    
    
    
    
    
    
    (30,954
    )Satellite
performance
incentive payments
    
    
    
    
    
    
    
    
    
    
    (3,524
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,524
    )Preferred dividends
paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,477
    )
    
    
    
    
    
    
    7,477
    
    
    
    
    
    
    
    
    
    
    
    64,307
    
    
    
    (27,325
    )
    
    
    (2,941
    )
    
    
    7,477
    
    
    
    41,518Effect of changes
in exchange rates
on cash and cash
equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,660
    )
    
    
    920
    
    
    
    
    
    
    
    (740
    )Increase (decrease)
in cash and cash
equivalents
    
    
    
    
    
    
    
    
    
    
    55,781
    
    
    
    856
    
    
    
    (302
    )
    
    
    1
    
    
    
    56,336Cash and cash
equivalents,
beginning of period
    
    
    
    
    
    
    
    
    
    
    27,308
    
    
    
    11,200
    
    
    
    3,695
    
    
    
    
    
    
    
    42,203Cash and cash
equivalents, end of
period
    
    
    
    
    
    
    
    
    
    
    83,089
    
    
    
    12,056
    
    
    
    3,393
    
    
    
    1
    
    
    
    98,539
  F-117




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 25. CONDENSED CONSOLIDATING FINANCIAL INFORMATION   (continued)
  December 31, 2008Telesat CanadaCanadian GAAP
    
    
    Adjustments
    
    
    US GAAPCurrent assets
    
    
    759,784
    
    
    
    6,864
    
    
    
    766,648Other long-term assets
    
    
    39,176
    
    
    
    130,775
    
    
    
    169,951Goodwill
    
    
    2,005,842
    
    
    
    (12,692
    )
    
    
    1,993,150Current liabilities
    
    
    689,908
    
    
    
    8,880
    
    
    
    698,788Debt financing
    
    
    3,513,223
    
    
    
    73,259
    
    
    
    3,586,482Future tax liability
    
    
    255,893
    
    
    
    15,339
    
    
    
    271,232Other long-term liabilities
    
    
    505,328
    
    
    
    12,354
    
    
    
    517,682Accumulated deficit
    
    
    (816,679
    )
    
    
    16,284
    
    
    
    (800,395
    )Accumulated other
comprehensive income
(loss)
    
    
    63
    
    
    
    (1,169
    )
    
    
    (1,106
    )
 Non-guarantorSubsidiariesCanadianGAAP
    
    
    Adjustments
    
    
    US GAAPCurrent liabilities
    
    
    46,320
    
    
    
    205
    
    
    
    46,525Future tax liability
    
    
    10,212
    
    
    
    (491
    )
    
    
    9,721Other long-term liabilities
    
    
    25,159
    
    
    
    1,027
    
    
    
    26,186Accumulated earnings
    
    
    96,915
    
    
    
    (741
    )
    
    
    96,174
  F-118




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 25. CONDENSED CONSOLIDATING FINANCIAL INFORMATION   (continued)
 Condensed Consolidating Statement of Earnings (Loss)
For the Period October 31, 2007 to December 31, 2007
 Non-Telesat
    
    
    Telesat
    
    
    Telesat
    
    
    Guarantor
    
    
    guarantorHoldings
    
    
    LLC
    
    
    Canada
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedOperating revenuesService revenues
    
    
    
    
    
    
    
    
    
    
    92,882
    
    
    
    13,395
    
    
    
    3,396
    
    
    
    (6,164
    )
    
    
    103,509Equipment sales revenues
    
    
    
    
    
    
    
    
    
    
    544
    
    
    
    7,416
    
    
    
    
    
    
    
    (53
    )
    
    
    7,907Operating revenues
    
    
    
    
    
    
    
    
    
    
    93,426
    
    
    
    20,811
    
    
    
    3,396
    
    
    
    (6,217
    )
    
    
    111,416Amortization
    
    
    
    
    
    
    
    
    
    
    28,986
    
    
    
    6,909
    
    
    
    4,152
    
    
    
    (1
    )
    
    
    40,046Operations and
administration
    
    
    
    
    
    
    
    
    
    
    31,247
    
    
    
    19,968
    
    
    
    (1,776
    )
    
    
    (6,163
    )
    
    
    43,276Cost of equipment sales
    
    
    
    
    
    
    
    
    
    
    548
    
    
    
    5,922
    
    
    
    68
    
    
    
    (53
    )
    
    
    6,485Total operating expenses
    
    
    
    
    
    
    
    
    
    
    60,781
    
    
    
    32,799
    
    
    
    2,444
    
    
    
    (6,217
    )
    
    
    89,807Earnings from operations
    
    
    
    
    
    
    
    
    
    
    32,645
    
    
    
    (11,988
    )
    
    
    952
    
    
    
    
    
    
    
    21,609Income (loss) from
equity investments
    
    
    (2,356
    )
    
    
    
    
    
    
    (11,271
    )
    
    
    (751
    )
    
    
    
    
    
    
    14,378
    
    
    
    Interest expense
    
    
    (1,695
    )
    
    
    
    
    
    
    (41,542
    )
    
    
    (9
    )
    
    
    (615
    )
    
    
    
    
    
    
    (43,861
    )(Loss) gain on
financial instruments
    
    
    
    
    
    
    
    
    
    
    75,098
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,098Gain (loss) on foreign
exchange
    
    
    
    
    
    
    
    
    
    
    (118,222
    )
    
    
    (708
    )
    
    
    896
    
    
    
    
    
    
    
    (118,034
    )Other (expense) income
    
    
    
    
    
    
    
    
    
    
    (1,114
    )
    
    
    13
    
    
    
    68
    
    
    
    
    
    
    
    (1,033
    )(Loss) earnings before
income taxes
    
    
    (4,051
    )
    
    
    
    
    
    
    (64,406
    )
    
    
    (13,443
    )
    
    
    1,301
    
    
    
    14,378
    
    
    
    (66,221
    )Income tax
recovery/(expense)
    
    
    
    
    
    
    
    
    
    
    62,050
    
    
    
    286
    
    
    
    (166
    )
    
    
    
    
    
    
    62,170Net (loss) earnings
    
    
    (4,051
    )
    
    
    
    
    
    
    (2,356
    )
    
    
    (13,157
    )
    
    
    1,135
    
    
    
    14,378
    
    
    
    (4,051
    )Reconciliation to US
GAAP is as follows:Income (loss) from
equity investments
    
    
    1,071
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,071
    )
    
    
    Gains (losses) on
embedded derivatives
    
    
    
    
    
    
    
    
    
    
    774
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    774Sales-type
lease  operating lease
for U.S. GAAP
    
    
    
    
    
    
    
    
    
    
    2,748
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,748Capital
lease  operating lease
for U.S. GAAP
    
    
    
    
    
    
    
    
    
    
    (78
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (78
    )Dividends on senior
preferred shares
    
    
    1,695
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,695Tax effect of above
adjustments
    
    
    
    
    
    
    
    
    
    
    275
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    275Uncertainty in income
taxes
    
    
    
    
    
    
    
    
    
    
    (2,648
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,648
    )US GAAP net (loss)
earnings
    
    
    (1,285
    )
    
    
    
    
    
    
    (1,285
    )
    
    
    (13,157
    )
    
    
    1,135
    
    
    
    13,307
    
    
    
    (1,285
    )
  F-119




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 25. CONDENSED CONSOLIDATING FINANCIAL INFORMATION   (continued)
 Condensed Consolidating Statement of Earnings (Loss)
For the Period January 1, 2007 to October 30, 2007
 Non-Telesat
    
    
    Guarantor
    
    
    guarantorCanada
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedOperating revenuesService revenues
    
    
    344,191
    
    
    
    29,211
    
    
    
    20,870
    
    
    
    (9,844
    )
    
    
    384,428Equipment sales revenues
    
    
    20,015
    
    
    
    23,600
    
    
    
    
    
    
    
    (2,855
    )
    
    
    40,760Sales-type lease revenues
    
    
    32,089
    
    
    
    510
    
    
    
    
    
    
    
    
    
    
    
    32,599Operating revenues
    
    
    396,295
    
    
    
    53,321
    
    
    
    20,870
    
    
    
    (12,699
    )
    
    
    457,787Amortization
    
    
    97,630
    
    
    
    1,967
    
    
    
    6,204
    
    
    
    (13
    )
    
    
    105,788Operations and
administration
    
    
    113,716
    
    
    
    26,862
    
    
    
    13,563
    
    
    
    (9,834
    )
    
    
    144,307Cost of equipment sales
    
    
    18,190
    
    
    
    19,385
    
    
    
    
    
    
    
    (2,852
    )
    
    
    34,723Cost of sales-type lease
    
    
    14,953
    
    
    
    566
    
    
    
    
    
    
    
    
    
    
    
    15,519Impairment loss on
long-lived assets
    
    
    2,116
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,116Total operating expenses
    
    
    246,605
    
    
    
    48,780
    
    
    
    19,767
    
    
    
    (12,699
    )
    
    
    302,453Earnings from operations
    
    
    149,690
    
    
    
    4,541
    
    
    
    1,103
    
    
    
    
    
    
    
    155,334Income (loss) from
equity investments
    
    
    13,241
    
    
    
    
    
    
    
    
    
    
    
    (13,241
    )
    
    
    Interest expense
    
    
    (4,679
    )
    
    
    
    
    
    
    (3,869
    )
    
    
    
    
    
    
    (8,548
    )(Loss) gain on financial
instruments
    
    
    (6,653
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,653
    )Gain (loss) on foreign
exchange
    
    
    (1,190
    )
    
    
    (738
    )
    
    
    993
    
    
    
    
    
    
    
    (935
    )Other (expense) income
    
    
    (13,645
    )
    
    
    13,111
    
    
    
    155
    
    
    
    
    
    
    
    (379
    )(Loss) earnings before
income taxes
    
    
    136,764
    
    
    
    16,914
    
    
    
    (1,618
    )
    
    
    (13,241
    )
    
    
    138,819Income tax recovery
(expense)
    
    
    (55,022
    )
    
    
    (3,089
    )
    
    
    1,034
    
    
    
    
    
    
    
    (57,077
    )Net (loss) earnings
    
    
    81,742
    
    
    
    13,825
    
    
    
    (584
    )
    
    
    (13,241
    )
    
    
    81,742Reconciliation to US
GAAP is as follows:Gains (losses) on
embedded derivatives
    
    
    (5,051
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,051
    )Losses on derivatives
designated as cash flow
hedges under Canadian
GAAP
    
    
    (10,361
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,361
    )Sales-type
lease  operating lease
for U.S. GAAP
    
    
    (23,617
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,617
    )Capital
lease  operating lease
for U.S. GAAP
    
    
    9,436
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,436Tax effect of above
adjustments
    
    
    9,606
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,606Uncertainty in income
taxes
    
    
    3,234
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,234US GAAP net (loss)
earnings
    
    
    64,989
    
    
    
    13,825
    
    
    
    (584
    )
    
    
    (13,241
    )
    
    
    64,989
  F-120




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 25. CONDENSED CONSOLIDATING FINANCIAL INFORMATION   (continued)
 Condensed Consolidating Statement of Cash Flows
For the Period October 31, 2007 to December 31, 2007
 Non-Telesat
    
    
    Telesat
    
    
    Telesat
    
    
    Guarantor
    
    
    guarantorHoldings
    
    
    LLC
    
    
    Canada
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedCash flows
from operating
activitiesNet earnings (loss)
    
    
    (4,051
    )
    
    
    
    
    
    
    (2,356
    )
    
    
    (13,157
    )
    
    
    1,135
    
    
    
    14,378
    
    
    
    (4,051
    )Adjustments to
reconcile net
earnings (loss) to
cash flows from
operating
activities:Amortization
    
    
    
    
    
    
    
    
    
    
    28,986
    
    
    
    6,909
    
    
    
    4,152
    
    
    
    (1
    )
    
    
    40,046Future income taxes
    
    
    
    
    
    
    
    
    
    
    (60,761
    )
    
    
    110
    
    
    
    (3
    )
    
    
    1
    
    
    
    (60,653
    )Unrealized foreign
exchange loss
    
    
    
    
    
    
    
    
    
    
    105,819
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    105,820Unrealized loss
(gain) on
derivatives
    
    
    
    
    
    
    
    
    
    
    (62,754
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (62,754
    )Dividends on
preferred shares
    
    
    1,695
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,695(Gain) Loss on
disposal of assets
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    27Loss (income) from
equity investments
    
    
    2,356
    
    
    
    
    
    
    
    11,271
    
    
    
    751
    
    
    
    
    
    
    
    (14,378
    )
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    (1,727
    )
    
    
    (366
    )
    
    
    
    
    
    
    1,749
    
    
    
    (344
    )Operating assets
and liabilities
    
    
    
    
    
    
    
    
    
    
    198,192
    
    
    
    14,502
    
    
    
    (5,837
    )
    
    
    (1,367
    )
    
    
    205,490
    
    
    
    
    
    
    
    216,678
    
    
    
    8,768
    
    
    
    (553
    )
    
    
    383
    
    
    
    225,276Cash flows from
investing
activitiesSatellite programs
    
    
    
    
    
    
    
    
    
    
    (15,496
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,496
    )Property additions
    
    
    
    
    
    
    
    
    
    
    (7,600
    )
    
    
    (6,392
    )
    
    
    (26
    )
    
    
    (1
    )
    
    
    (14,019
    )Business
acquisitions
    
    
    (569,957
    )
    
    
    
    
    
    
    (2,671,335
    )
    
    
    7,713
    
    
    
    4,370
    
    
    
    15
    
    
    
    (3,229,194
    )Proceeds on
disposal of assets
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    25(569,957
    )
    
    
    
    
    
    
    (2,694,430
    )
    
    
    1,345
    
    
    
    4,344
    
    
    
    14
    
    
    
    (3,258,684
    )
  F-121




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 25. CONDENSED CONSOLIDATING FINANCIAL INFORMATION   (continued)
 Non-Telesat
    
    
    Telesat
    
    
    Telesat
    
    
    Guarantor
    
    
    guarantorHoldings
    
    
    LLC
    
    
    Canada
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedCash flows
from financing
activitiesDebt financing and
bank loans
    
    
    
    
    
    
    
    
    
    
    2,767,716
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,767,716Repayment of bank
loans and debt
financing
    
    
    
    
    
    
    
    
    
    
    (44,887
    )
    
    
    (12
    )
    
    
    
    
    
    
    
    
    
    
    (44,899
    )Capitalized debt
issuance costs
    
    
    
    
    
    
    
    
    
    
    (83,585
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (83,585
    )Note repayment
    
    
    
    
    
    
    
    
    
    
    (129,334
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (129,334
    )Common shares issued
    
    
    311,124
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    311,124Preferred shares
issued
(repurchased)
    
    
    258,833
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    258,833Capital lease
payments
    
    
    
    
    
    
    
    
    
    
    (654
    )
    
    
    (14
    )
    
    
    (639
    )
    
    
    1
    
    
    
    (1,306
    )Satellite
performance
incentive payments
    
    
    
    
    
    
    
    
    
    
    (4,196
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,196
    )569,957
    
    
    
    
    
    
    
    2,505,060
    
    
    
    (26
    )
    
    
    (639
    )
    
    
    1
    
    
    
    3,074,353Effect of changes
in exchange rates
on cash and cash
equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,113
    
    
    
    543
    
    
    
    (398
    )
    
    
    1,258Increase (decrease)
in cash and cash
equivalents
    
    
    
    
    
    
    
    
    
    
    27,308
    
    
    
    11,200
    
    
    
    3,695
    
    
    
    
    
    
    
    42,203Cash and cash
equivalents,
beginning of period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash and cash
equivalents, end of
period
    
    
    
    
    
    
    
    
    
    
    27,308
    
    
    
    11,200
    
    
    
    3,695
    
    
    
    
    
    
    
    42,203
  F-122




---



##### Table of Contents



Telesat Holdings Inc.
 Notes to the 2009 Consolidated Financial Statements
(all amounts in thousands of Canadian dollars, except for per share
amounts and where otherwise noted)
 25. CONDENSED CONSOLIDATING FINANCIAL INFORMATION   (continued)
 Condensed Consolidating Statement of Cash Flows
For the Period January 1, 2007 to October 30, 2007
 Non-Telesat
    
    
    Guarantor
    
    
    guarantorCanada
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedCash flows from
operating activitiesNet earnings (loss)
    
    
    81,742
    
    
    
    13,825
    
    
    
    (584
    )
    
    
    (13,241
    )
    
    
    81,742Adjustments to
reconcile net
earnings (loss) to
cash flows from
operating
activities:Gross profit on
sales-type lease
    
    
    (5,936
    )
    
    
    55
    
    
    
    
    
    
    
    
    
    
    
    (5,881
    )Amortization
    
    
    97,630
    
    
    
    1,967
    
    
    
    6,204
    
    
    
    (13
    )
    
    
    105,788Future income taxes
    
    
    25,549
    
    
    
    (224
    )
    
    
    (1,033
    )
    
    
    
    
    
    
    24,292Unrealized foreign
exchange (gain) loss
    
    
    (10,396
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,396
    )Unrealized loss
(gain) on
derivatives
    
    
    8,907
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,907(Gain) Loss on
disposal of assets
    
    
    (153
    )
    
    
    45
    
    
    
    
    
    
    
    
    
    
    
    (108
    )Loss (income) from
equity investments
    
    
    (13,241
    )
    
    
    
    
    
    
    
    
    
    
    13,241
    
    
    
    Other
    
    
    15,186
    
    
    
    (11,868
    )
    
    
    
    
    
    
    
    
    
    
    3,318Customer prepayments
on future satellite
services
    
    
    17,721
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,721Operating assets and
liabilities
    
    
    25,890
    
    
    
    (925
    )
    
    
    2,279
    
    
    
    
    
    
    
    27,244242,899
    
    
    
    2,875
    
    
    
    6,866
    
    
    
    (13
    )
    
    
    252,627Cash flows from
investing activitiesSatellite programs
    
    
    (183,494
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (183,494
    )Property additions
    
    
    (5,026
    )
    
    
    (743
    )
    
    
    (68
    )
    
    
    7
    
    
    
    (5,830
    )Maturity of
short-term
investments
    
    
    251
    
    
    
    2,061
    
    
    
    
    
    
    
    
    
    
    
    2,312Business acquisitions
    
    
    11,243
    
    
    
    (9,180
    )
    
    
    (2,243
    )
    
    
    
    
    
    
    (180
    )Proceeds on disposal
of assets
    
    
    153
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    159(176,873
    )
    
    
    (7,862
    )
    
    
    (2,311
    )
    
    
    13
    
    
    
    (187,033
    )Cash flows from
financing activitiesDebt financing and
bank loans
    
    
    73,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73,000Repayment of bank
loans and debt
financing
    
    
    (84,041
    )
    
    
    (49
    )
    
    
    
    
    
    
    
    
    
    
    (84,090
    )Success fee payments
    
    
    (23,620
    )
    
    
    (380
    )
    
    
    
    
    
    
    
    
    
    
    (24,000
    )Capital lease
payments
    
    
    (4,275
    )
    
    
    
    
    
    
    (3,438
    )
    
    
    
    
    
    
    (7,713
    )Satellite
performance
incentive payments
    
    
    (2,022
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,022
    )(40,958
    )
    
    
    (429
    )
    
    
    (3,438
    )
    
    
    
    
    
    
    (44,825
    )Effect of changes in
exchange rates on
cash and cash
equivalents
    
    
    
    
    
    
    147
    
    
    
    (1,823
    )
    
    
    
    
    
    
    (1,676
    )Increase (decrease)
in cash and cash
equivalents
    
    
    25,068
    
    
    
    (5,269
    )
    
    
    (706
    )
    
    
    
    
    
    
    19,093Cash and cash
equivalents,
beginning of period
    
    
    24,544
    
    
    
    9,004
    
    
    
    5,113
    
    
    
    
    
    
    
    38,661Cash and cash
equivalents, end of
period
    
    
    49,612
    
    
    
    3,735
    
    
    
    4,407
    
    
    
    
    
    
    
    57,754
  F-123