UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-Q
  QUARTERLY REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE
 SECURITIES EXCHANGE ACT OF
    1934
  For the quarterly period ended March 31, 2008
   Commission file number 1-14180
  Loral Space &
    Communications Inc.
  600 Third Avenue
 New York, New York 10016
 Telephone:
    (212) 697-1105
  Jurisdiction of incorporation: Delaware
  IRS identification number:
    87-0748324
  þ o
  12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   þ o
  Rule 12b-2 o þ




---



##### 



PART 1.
    FINANCIAL INFORMATION
  Item 1.
    Financial
    Statements  LORAL
    SPACE & COMMUNICATIONS INC.
  CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands, except share data)
 (Unaudited)
  March 31,


December 31,2008


2007ASSETSCurrent assets:Cash and cash equivalents

$
203,656


$
314,694Contracts-in-process


151,606



109,376Inventories


102,793



96,968Restricted cash


12,945



12,816Other current assets


47,905



36,034Total current assets


518,905



569,888Property, plant and equipment, net


156,540



147,828Long-term receivables


131,900



132,400Investments in affiliates


500,619



566,196Goodwill


227,058



227,058Intangible assets, net


40,035



42,854Other assets


15,165



16,715Total assets

$
1,590,222


$
1,702,939LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
75,995


$
69,205Accrued employment costs


33,696



42,890Customer advances and billings in excess of costs and profits


232,840



251,954Income taxes payable


2,227



31,239Accrued interest and preferred dividends


5,071



4,979Other current liabilities


52,127



39,512Total current liabilities


401,956



439,779Pension and other post retirement liabilities


154,665



152,341Long-term liabilities


130,943



137,261Total liabilities


687,564



729,381Commitments and contingencies 
    Shareholders equity:Series A-1
    Cumulative 7.5% convertible preferred stock, $0.01 par
    value; 2,200,000 shares authorized, 144,509 and
    141,953 shares issued and outstanding


42,644



41,873Series B-1
    Cumulative 7.5% convertible preferred stock, $0.01 par
    value; 2,000,000 shares authorized, 917,815 and
    900,821 shares issued and outstanding


270,901



265,777Common stock, $.01 par value; 40,000,000 shares
    authorized, 20,287,649 and 20,292,746 shares issued and
    outstanding


203



203Paid-in capital


665,369



663,127Accumulated deficit


(111,144
)


(33,939
)Accumulated other comprehensive income


34,685



36,517Total shareholders equity


902,658



973,558Total liabilities and shareholders equity

$
1,590,222


$
1,702,939    1




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share amounts)
 (Unaudited)
  Three MonthsEnded March 31,2008


2007Revenues from satellite manufacturing

$
218,537


$
187,677Revenues from satellite services






32,855Total revenues


218,537



220,532Cost of satellite manufacturing


207,012



174,101Cost of satellite services






24,967Selling, general and administrative expenses


22,335



33,262Operating loss


(10,810
)


(11,798
)Interest and investment income


6,330



6,554Interest expense


(351
)


(2,813
)Gain on foreign exchange contracts






3,964Other (expense) income


(73
)


82Loss before income taxes, equity in net losses of affiliates and
    minority interest


(4,904
)


(4,011
)Income tax provision


(1,776
)


(3,401
)Loss before equity in net losses of affiliates and minority
    interest


(6,680
)


(7,412
)Equity in net losses of affiliates


(64,537
)


(2,425
)Minority interest






(6,986
)Net loss


(71,217
)


(16,823
)Preferred dividends


(5,988
)


(2,063
)Beneficial conversion feature related to the issuance of Loral
    Series A-1
    Preferred Stock






(24,476
)Net loss applicable to common shareholders

$
(77,205
)

$
(43,362
)Basic and diluted loss per share

$
(3.83
)

$
(2.16
)Basic and diluted weighted average common shares outstanding


20,156



20,041    2




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
  Three Months Ended March 31,2008


2007Operating activities:Net loss

$
(71,217
)

$
(16,823
)Non-cash operating items


71,190



25,660Changes in operating assets and liabilities:Accounts receivable, net






63,926Contracts-in-process


(57,136
)


(89,159
)Inventories


(5,825
)


(11,233
)Long-term receivables


17,889



(106
)Other current assets and other assets


(4,999
)


3,807Accounts payable


1,616



656Accrued expenses and other current liabilities


(7,934
)


(31,117
)Customer advances


(18,910
)


4,894Income taxes payable


(29,012
)


(983
)Pension and other postretirement liabilities


2,324



2,669Long-term liabilities


(1,663
)


621Net cash used in operating activities


(103,677
)


(47,188
)Investing activities:Capital expenditures


(8,317
)


(20,447
)(Increase) decrease in restricted cash in escrow


884



(2,796
)Proceeds from the sale of short-term investments and
    available-for-sale securities


72



107,670Purchase of short-term investments






(117,622
)Net cash used in investing activities


(7,361
)


(33,195
)Financing activities:Proceeds from the sale of preferred stock






293,250Proceeds from the exercise of stock options






1,653Preferred stock issuance costs






(8,948
)Cash dividends paid on preferred stock of subsidiary






(1,769
)Net cash provided by financing activities






284,186Net (decrease) increase in cash and cash equivalents


(111,038
)


203,803Cash and cash equivalents  beginning of period


314,694



186,542Cash and cash equivalents  end of period

$
203,656


$
390,345    3




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS
  1.
    Organization
    and Principal Business        Satellite Manufacturing:
  Satellite Services:
  1 3
  and/or
  2.
    Basis of
    Presentation   4




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Form 10-K
  No. 90-7, Financial Reporting of Entities in Reorganization Under the
    Bankruptcy Code (SOP 90-7), Business Combinations
    Cash
    and Cash Equivalents, Restricted Cash and Available For Sale
    Securities
    Concentration
    of Credit Risk
  contracts-in-process,
  Inventories
  contracts-in-process, first-in-first-out
 5




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fair
    Value Measurements
  Fair Value Measurements 157-2, Effective Date of FASB Statement No. 157
  Accounting for Certain Investments in
    Debt and Equity Securities
  The Fair Value Option
    for Financial Assets and Financial Liabilities
  Goodwill
  Goodwill and Other Intangible Assets
  Minority
    Interest
   6




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Income
    Taxes
  paid-in-capital.
        Pensions
    and Other Employee Benefits
    Pension Benefits


Other BenefitsThree Months


Three MonthsEnded March 31,


Ended March 31,2008


2007


2008


2007Service cost

$
2,039


$
2,412


$
335


$
360Interest cost


5,787



5,432



1,164



1,250Expected return on plan assets


(6,157
)


(5,837
)


(20
)


(10
)Amortization of prior service credits and net actuarial gain or
    loss


(707
)


(700
)


(122
)


(75
)$
962


$
1,307


$
1,357


$
1,525  7




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Additional
    Cash Flow Information
    Three MonthsEnded March 31,2008


2007Non-cash operating items:Equity in net losses of affiliates

$
64,537


$
2,526Minority interest






6,986Deferred taxes


200



1,834Depreciation and amortization


8,182



19,118Stock based compensation


2,381



559Recoveries of bad debts on billed receivables






(139
)Provisions for inventory obsolescence






380Warranty expense accruals


(479
)


(722
)Amortization of prior service credits and net actuarial gain


(829
)


(775
)Gain on disposition of available-for-sale securities


(72
)


Withholding tax impact of cashless stock option exercises






(143
)Unrealized gain (loss) on foreign exchange contracts and non
    cash net interest


28



(3,964
)Amortization of fair value adjustments related to orbital
    incentives


(2,758
)


Net non-cash operating items

$
71,190


$
25,660Non-cash financing activities:Issuance of preferred stock by subsidiary as payment for dividend

$



$
11,087Issuance of Loral Series-1 Preferred Stock as payment for
    dividend

$
5,894


$
Accrued dividends on
    Series A-1
    and
    Series B-1
    preferred stock

$
5,988


$
2,063Non-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

$
5,600


$
Supplemental information:Interest paid

$
471


$
10,011Taxes paid, net of refunds

$
29,045


$
1,365   New
    Accounting Pronouncements
  SFAS 141R
  Business Combinations
 8




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    FSP FASB
    142-3
  FAS 142-3, Determination of the Useful Life of Intangible Assets FAS 142-3). FAS 142-3 FAS 142-3 FAS 142-3 FAS 142-3
  SFAS 160
  Non-controlling Interests in Consolidated Financial
    Statements  an amendment of ARB No. 51
  SFAS 161
  Disclosures About Derivative Instruments and Hedging
    Activities  an amendment of FASB Statement
    No. 133 Accounting for Derivative Instruments
    and Hedging Activities Disclosure
    about Fair Value of Financial Instruments
  3.
    Comprehensive
    Loss    Three MonthsEnded March 31,2008


2007Net loss

$
(71,217
)

$
(16,823
)Proportionate share of Telesat Holdco other comprehensive income


(1,040
)


Cumulative translation adjustment


(498
)


30Amortization of prior service credits and net actuarial gains,
    net of taxes


(494
)


(469
)Unrealized gain (loss) on available-for-sale securities arising
    during the period, net of taxes


242



(2,341
)Reclassification adjustment for gains included in net income


(42
)


Comprehensive loss

$
(73,049
)

$
(19,603
)  9




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  4.
    Contracts-in-Process  March 31,


December 31,2008


2007(In thousands)Amounts billed

$
71,632


$
60,548Unbilled receivables


79,974



48,828$
151,606


$
109,376   contracts-in-process
  5.
    Financial
    Instruments and Foreign Currency  Foreign
    Currency
      Foreign Currency


U.S.$Future revenues  Japanese Yen

¥
20


$
0.2Future expenditures  Japanese Yen

¥
3,932


$
39.6Contracts-in-process,
    unbilled receivables  Japanese Yen

¥
20


$
0.2Future expenditures  EUROs


3.7


$
5.9   Derivatives
       10




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    6.
    Property,
    Plant and Equipment  March 31,


December 31,2008


2007(In thousands)Land and land improvements

$
26,799


$
26,799Buildings


49,947



49,917Leasehold improvements


8,688



8,691Equipment, furniture and fixtures


96,824



94,844Satellite capacity under construction (see Note 14)


1,076



Other construction in progress


29,386



18,552212,720



198,803Accumulated depreciation and amortization


(56,180
)


(50,975
)$
156,540


$
147,828     7.
    Investments
    in Affiliates    March 31,


December 31,2008


2007Telesat Holdings Inc

$
418,237


$
479,579XTAR, LLC


82,382



86,617$
500,619


$
566,196   Reporting Comprehensive
    Income,
 11




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Three MonthsEnded March 31,2008


2007Telesat Holdings Inc.

$
(60,302
)

$
XTAR


(4,235
)


(2,526
)Globalstar service provider partnerships






101$
(64,537
)

$
(2,425
)     Three MonthsEnded March 31,2008


2007Revenues

$
19,349


$
390Elimination of Lorals proportionate share of profits
    relating to affiliate transactions


(1,189
)


(11
)Profits relating to affiliate transactions not eliminated


669



9   Telesat
    Canada
  1 3 2 3
  true-up
 12




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Three Months EndedMarch 31, 2008Revenues

$
166.5Operating expenses


(125.6
)Operating income


40.9Interest expense


(62.2
)Other expense


(88.3
)Income tax benefit


17.0Net loss


(92.6
)     March 31,


December 31,2008


2007Current assets

$
143.1


$
143.7Total assets


5,402.2



5,610.0Current liabilities


215.0



229.5Total liabilities


4,099.0



4,156.7Redeemable preferred stock


137.6



143.1Shareholders equity


1,165.6



1,310.2     1 3
    XTAR
    o
 13




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  o XTAR-LANT,
    XTAR-LANT XTAR-LANT
    paid-in-kind
 14




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Three MonthsEnded March 31,2008


2007Revenues

$
4.7


$
4.7Operating loss


(6.3
)


(3.6
)Net loss


(7.6
)


(4.2
)     March 31,


December 31,2008


2007Current assets

$
9.1


$
8.9Total assets


122.7



124.9Current liabilities


34.2



29.6Long-term liabilities


35.6



64.4Shareholders equity


52.9



60.5   Other
      8.
    Intangible
    Assets    Weighted AverageRemaining


March 31, 2008


December 31, 2007Amortization Period


Gross


Accumulated


Gross


Accumulated(Years)


Amount


Amortization


Amount


AmortizationInternally developed software and technology


3


$
59.0


$
(27.0
)

$
59.0


$
(24.3
)Trade names


17



9.2



(1.2
)


9.2



(1.0
)$
68.2


$
(28.2
)

$
68.2


$
(25.3
)  15




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2008

$
11.32009


11.32010


9.22011


2.92012


2.3   contracts-in-process,
  9.
    Debt  Loral
    Skynet Notes
        SS/L
    Letter of Credit Facility
    10.
    Shareholders
    Equity  Preferred
    Stock
  Series A-1 Series A-1 Series B-1 Series B-1 Series A-1
 16




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Series A-1 Class B-1 Series B-1 Class B-1 Series B-1 Class B-1 Series B-1 Class B-1
  Series A-1
  Series A-1 and/or
  30-day Class B-1 Class B-2
   17




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Series A-1 Series B-1 Class B-1 Class B-2 Class B-2 Series A-1 Series A-2 Series A-2 Series B-1 Series B-2 Series B-2
  Series A-1 Series A-2 Series B-1 Series B-2
  Series A-2 Series B-2 Series A-2 Series B-2
  Series A-1 Series B-1
  Series A-1 Series B-1 Class B-1
 18




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Class B-1 class B-1 Series A-1 Series B-1 class B-1 Series B-1 class B-1
      Loral
    Skynet Series A Preferred Stock
        Stock
    Incentive Plan
   19




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    11.
    Commitments
    and Contingencies  Financial
    Matters
      Balance of deferred amounts at January 1, 2008

$
35.0Warranty costs incurred including payments


(0.2
)Accruals relating to pre-existing contracts (including changes
    in estimates)


0.5Balance of deferred amounts at March 31, 2008

$
35.3     start-up
   20




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Transactions with Affiliates
     Telesat Canada
  Satellite
    Matters
       21




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Transactions with Affiliates
     Telesat Canada
  Regulatory
    Matters
    Legal
    Proceedings
  New York
    Shareholder Litigation
    Form 8-K Babus
 22




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Babus
  Delaware
    Shareholder Litigation
  In re: Loral Space and
    Communications Inc. Consolidated Litigation
         23




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      In re: Loral Space and Communications Inc. Consolidated
    Litigation
    Skynet
    Noteholders Litigation
     24




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      In re: Loral Space and Communications
    Inc. Consolidated Litigation
    Informal
    SEC Inquiry
    Rainbow
    DBS Litigation
   25




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Indemnification
    Claims of Directors and Officers of Old Loral
  In re: Loral Space ERISA Litigation In re: Loral Space & Communications Ltd. Securities
    Litigation
  Class Action
    Securities Litigations
  Rule 10b-5
 26




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Beleson
  Rule 10b-5 Beleson
  Class Action
    ERISA Litigation
  In re:
    Loral Space ERISA Litigation
 27




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    In re: Loral Space ERISA
    Litigation
  In re: Loral Space
    ERISA Litigation In re: Loral
    Space ERISA Litigation
  In re: Loral Space ERISA Litigation
  Globalstar
    Related Class Action Securities Litigations
  In re: Globalstar
    Securities Litigation Rule 10b-5
 28




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    In re:
    Loral Space & Communications Ltd. Securities
    Litigation Rule 10b-5
  In re: Loral
    Space & Communications Ltd. Securities Litigation
 29




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  In re: Loral
    Space & Communications Ltd. Securities Litigation
  Reorganization
    Matters
      Other and
    Routine Litigation
   30




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  12.
    Income
    (Loss) Per Share    Three MonthsEnded March 31,2008


2007Numerator for basic and diluted loss per share:Loss applicable to common shareholders

$
(77,205
)

$
(43,362
)Denominator:Basic and diluted weighted average common shares outstanding


20,156



20,041Basic and diluted loss per share

$
(3.83
)

$
(2.16
)   Series A-1 Series B-1
  13.
    Segments  Disclosures about
    Segments of an Enterprise and Related Information
       31




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Three
    Months Ended March 31, 2008
  Satellite


SatelliteManufacturing


Services(1)


Corporate(2)


TotalRevenues and Adjusted EBITDA:Revenues

$
199.3



166.5






$
365.8Intersegment
    revenues(3)


20.5











20.5Operating segment revenues

$
219.8



166.5







386.3Intercompany
    eliminations(4)














(1.3
)Affiliate
    eliminations(1)














(166.5
)Revenues as reported













$
218.5Segment Adjusted EBITDA before eliminations

$
4.7


$
99.4


$
(4.7
)

$
99.4Intercompany
    eliminations(4)














(0.2
)Affiliate
    eliminations(1)














(99.4
)Adjusted EBITDA














(0.2
)Depreciation and amortization














(10.6
)Operating loss














(10.8
)Interest and investment income














6.3Interest expense














(0.3
)Other expense














(0.1
)Income tax provision














(1.8
)Equity in net losses of affiliates





$
(60.3
)

$
(4.2
)


(64.5
)Loss from continuing operations













$
(71.2
)Other Data:Segment total assets

$
887.5


$
5,402.2


$
702.7


$
6,992.4Affiliate
    eliminations(1)






(5,402.2
)






(5,402.2
)Total assets as
    reported(5)

$
887.5


$



$
702.7


$
1,590.2  32




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Three
    Months Ended March 31, 2007
  Satellite


SatelliteManufacturing


Services


Corporate(2)


TotalRevenues and Adjusted EBITDA:Revenues

$
187.6


$
32.9






$
220.5Intersegment revenues


12.7



0.7







13.4Operating segment revenues

$
200.3


$
33.6







233.9Eliminations(4)














(13.4
)Operating revenues as reported













$
220.5Segment Adjusted EBITDA before eliminations

$
7.4


$
11.9


$
(8.7
)

$
10.6Eliminations(4)














(2.7
)Adjusted EBITDA














7.9Depreciation and
    amortization(5)

$
(6.1
)

$
(13.1
)

$
(0.5
)


(19.7
)Operating loss














(11.8
)Interest and investment income














6.5Interest expense














(2.8
)Gain on foreign exchange contracts














4.0Other income














0.1Income tax provision














(3.4
)Equity in net losses of affiliates














(2.4
)Minority Interest














(7.0
)Net loss













$
(16.8
)Other Data:Total
    assets(5)

$
948.0


$
747.0


$
297.2


$
1,992.2     (1)
    
    Satellite Services for 2008 represents Telesat Canada for the
    three months ended March 31, 2008. Affiliate eliminations
    represent the elimination of amounts attributable to Telesat
    Canada whose results are reported in our condensed consolidated
    statement of operations as equity in net losses of affiliates
    and in our condensed consolidated balance sheet as investment in
    affiliates.(2)
    
    Represents corporate expenses incurred in support of our
    operations. Corporate, for 2008, also includes our equity
    investment in XTAR.(3)
    
    In 2008, intersegment revenues includes $19.3 million of
    revenue from affiliates.(4)
    
    Represents the elimination of intercompany sales and
    intercompany Adjusted EBITDA, primarily for satellites under
    construction by SS/L for Satellite Services.(5)
    
    Amounts are presented after the elimination of intercompany
    profit. Total assets as of March 31, 2008 includes
    $227.1 million of goodwill for Satellite Manufacturing. In
    addition, total assets as reported excludes $2.4 billion of
    satellite services goodwill related to Telesat Canada as of
    March 31, 2008. 33




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   14.
    Related
    Party Transactions  Transactions
    with Affiliates
  Telesat
    Canada
             34




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Ku-band
  XTAR
    MHR
   35




---



##### 



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Three MonthsEnded March 31,2008


2007Loral Skynet Preferred StockDividends paid in cash

$



$
0.7Dividends paid in the form of additional shares Number of shares






21,140 Amount

$



$
4.2Loral Skynet NotesInterest payments on Loral Skynet Notes





$
3.9Loral Series-1 Preferred StockDividends paid in cash

$



$
Dividends paid in the form of additional shares Number of shares


19,550



 Amount

$
5.9


$
   Other
    Relationships
   36




---



##### 



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  The following discussion and analysis should be read in
    conjunction with our unaudited condensed consolidated financial
    statements (the financial statements) included in
    Item 1 and our latest Annual Report on
    Form 10-K
    filed with the Securities and Exchange Commission.
      1 3
  and/or
  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 Canada, 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
   37




---



##### 



Satellite
    Manufacturing
            Satellite
    Services
  1 3
 38




---



##### 



Future
    Outlook
  Long-term
  1 3
   39




---



##### 



Ka-band
  Consolidated
    Operating Results
  Form 10-K
 40




---



##### 



Changes in Critical Accounting Policies
  Consolidated Operating Results 
        Disclosures about
    Segments of an Enterprise and Related Information.
    Revenues:
  Three MonthsEnded March 31,2008


2007(In millions)Satellite Manufacturing

$
219.8


$
200.3Satellite Services


166.5



33.6Segment revenues


386.3



233.9Eliminations(1)


(1.3
)


(13.4
)Affiliate
    eliminations(2)


(166.5
)


Revenues as
    reported(3)

$
218.5


$
220.5  41




---



##### 



Adjusted
    EBITDA:
  Three MonthsEndedMarch 31,2008


2007(In millions)Satellite Manufacturing

$
4.7


$
7.4Satellite Services


99.4



11.9Corporate
    expenses(4)


(4.7
)


(8.7
)Segment Adjusted EBITDA before eliminations


99.4



10.6Eliminations(1)


(0.2
)


(2.7
)Affiliate
    eliminations(2)


(99.4
)


Adjusted EBITDA

$
(0.2
)

$
7.9     Reconciliation
    of Adjusted EBITDA to Net Loss:
  Three MonthsEnded March 31,2008


2007(In millions)Adjusted EBITDA

$
(0.2
)

$
7.9Depreciation and amortization


(10.6
)


(19.7
)Operating loss


(10.8
)


(11.8
)Interest and investment income


6.3



6.5Interest expense


(0.3
)


(2.8
)Gain on foreign exchange contracts






4.0Other income (expense)


(0.1
)


0.1Income tax provision


(1.8
)


(3.4
)Equity in net loss of affiliates


(64.5
)


(2.4
)Minority interest






(7.0
)Net loss

$
(71.2
)

$
(16.8
)     (1)
    
    Represents the elimination of intercompany sales and
    intercompany Adjusted EBITDA 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
    Canada whose results are reported in our consolidated statements
    of operations as equity in net losses of affiliates. 42




---



##### 



(3)
    
    Includes revenues from affiliates of $19.3 and $0.4 million
    for the three months ended March 31, 2008 and 2007,
    respectively.(4)
    
    Represents corporate expenses incurred in support of our
    operations.  Three
    Months Ended March 31, 2008 Compared With Three Months
    Ended March 31, 2007
    Revenues
    from Satellite Manufacturing
  Three MonthsEnded March 31,


% Increase/2008


2007


(Decrease)(In millions)Revenues from Satellite Manufacturing

$
220


$
200



10
%Eliminations


(1
)


(13
)Revenues from Satellite Manufacturing as reported

$
219


$
187



16
%     Revenues
    from Satellite Services
  Three MonthsEnded March 31,2008


2007(In millions)Revenues from Satellite Services

$



$
34Eliminations






(1
)Revenues from Satellite Services as reported

$



$
33    43




---



##### 



Cost
    of Satellite Manufacturing
  Three MonthsEnded March 31,


% Increase/2008


2007


(Decrease)(In millions)Cost of Satellite Manufacturing includes:Cost of Satellite Manufacturing before the following specific
    identified charges

$
198


$
169



18
%Accrued warranty obligations






(1
)Depreciation and amortization


9



6



42
%Total cost of Satellite Manufacturing as reported

$
207


$
174



19
%Cost of Satellite Manufacturing as a % of Satellite
    Manufacturing revenues as reported


95
%


93
%     Cost
    of Satellite Services
  Three MonthsEnded March 31,2008


2007(In millions)Cost of Satellite Services includes:Cost of Satellite Services before depreciation and amortization

$



$
12Depreciation and amortization






13Total cost of Satellite Services as reported

$



$
25Cost of Satellite Services as a % of Satellite Services revenues
    as reported






76
%     Selling,
    General and Administrative Expenses
  Three MonthsEnded March 31,


% Increase/2008


2007


(Decrease)(In millions)Selling, general and administrative expenses

$
22


$
33



(33
)%% of revenues as reported


10
%


15
%    44




---



##### 



Interest
    and Investment Income
  Three MonthsEnded March 31,2008


2007(In millions)Interest and Investment Income

$
6


$
7     Interest
    Expense
  Three MonthsEnded March 31,2008


2007(In millions)Interest cost before capitalized interest

$



$
5Capitalized interest






(2
)Interest expense

$



$
3     Gain
    on Foreign Exchange Contracts
    Other
    Income (Expense)
    Income
    Tax Provision
  paid-in-capital.
   45




---



##### 



Equity
    in Net Losses of Affiliates
  Three MonthsEnded March 31,2008


2007(In millions)Telesat

$
(60.3
)

$
XTAR


(4.2
)


(2.5
)Other






0.1$
(64.5
)

$
(2.4
)   1 3
    Three MonthsEnded March 31, 2008Statement of Operations Data:Revenues

$
166.5Operating expenses


(125.6
)Operating income


40.9Interest expense


(62.2
)Other expense


(88.3
)Income tax benefit


17.0Net loss


(92.6
)   March 31,


December 31,2008


2007Balance Sheet Data:Current assets

$
143.1


$
143.7Total assets


5,402.2



5,610.0Current liabilities


215.0



229.5Total liabilities


4,099.0



4,156.7Redeemable preferred stock


137.6



143.1Shareholders equity


1,165.6



1,310.2      46




---



##### 



Minority
    Interest
    Backlog
    March 31,


December 31,2008


2007Satellite Manufacturing

$
1,235


$
1,025Satellite Services


5,100



5,251Total backlog before eliminations


6,335



6,276Satellite Manufacturing eliminations


(35
)


Eliminations


(5,100
)


(5,251
)Total backlog

$
1,200


$
1,025   Liquidity
    and Capital Resources
     47




---



##### 



48




---



##### 



FM-6
  Telesat
    Canada
  Cash and
    Available Credit
      Liquidity
      Debt
   49




---



##### 



Senior
    Secured Credit Facilities
    1 4
  Revolving
    Facility
    Canadian
    Term Loan Facility
    U.S.
    Term Loan Facility
    1 2
    Senior
    Bridge Loan
   50




---



##### 



Senior
    Subordinated Bridge Loan
    Interest
    Expense
    Derivatives
     51




---



##### 



Contractual
    Obligations
  Form 10-K
  Net
    Cash Used In Operating Activities
  contracts-in-process
  contracts-in-process
  Net
    Cash Used in Investing Activities
     52




---



##### 



Net
    Cash Provided by Financing Activities
    Affiliate
    Matters
    Commitments
    and Contingencies
    Other
    Matters
  Accounting
    Pronouncements
  SFAS 141R
  Business Combinations
  FSP FASB
    142-3
  FAS 142-3, Determination of the Useful Life of Intangible Assets FAS 142-3). FAS 142-3 Goodwill and Other Intangible Assets FAS 142-3 FAS 142-3 FAS 142-3
  SFAS 160
  Non-controlling Interests in Consolidated Financial
    Statements  an amendment of ARB No. 51
  SFAS 161
  Disclosures About Derivative Instruments and Hedging
    Activities  an amendment of FASB Statement
    No. 133 Accounting for Derivative Instruments
    and Hedging Activities Disclosure
    about Fair Value of Financial
 53




---



##### 



Instruments
  Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk  Foreign
    Currency
      Foreign Currency


U.S.$Future revenues  Japanese Yen

¥
20


$
0.2Future expenditures  Japanese Yen

¥
3,932


$
39.6Contracts-in-process,
    unbilled receivables  Japanese Yen

¥
20


$
0.2Future expenditures  EUROs


3.7


$
5.9   Interest
      Item 4.
    Disclosure
    Controls and Procedures  Disclosure controls and procedures. Rules 13a-15(e) 15d-15(e) Form 10-K Internal
    Control  Integrated Framework
  Form 10-K
  Form 10-Q
 54




---



##### 



Changes in internal control over financial
    reporting.
  and/or
  PART II.
    OTHER INFORMATION
  Item 1.
    Legal
    Proceedings  Form 10-Q
  Item 1A.
    Risk
    Factors  Form 10-K Form 10-K, and/or
  Item 6.
    Exhibits           55




---



##### 



SIGNATURES
      Loral Space &
    Communications Inc.
  Harvey
    B. Rein
  Harvey B. Rein
 Senior Vice President and
 Chief Financial Officer
 (Principal Financial Officer)
 and Registrants Authorized Officer
   56




---



##### 



EXHIBIT INDEX
  Exhibit No.



DescriptionExhibit 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.Exhibit 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.Exhibit 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.Exhibit 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.  57