##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, 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, 2010
 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
 Yes þ No o
 Yes o 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 þ No o
 Yes o No þ




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##### 



LORAL SPACE & COMMUNICATIONS INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q
For the quarterly period ended March 31, 2010
 Page No.PART I  FINANCIAL INFORMATIONItem 1: Financial Statements (Unaudited)Condensed Consolidated Balance Sheets as of March 31, 2010 and December 31, 2009
    
    
    3Condensed Consolidated Statements of Operations for the three months ended March 31, 2010
and March 31, 2009
    
    
    4Condensed Consolidated Statements of Equity for the three months ended March 31, 2010 and
the year ended December 31, 2009
    
    
    5Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2010
and March 31, 2009
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2:Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    33Item 3:Quantitative and Qualitative Disclosures About Market Risk
    
    
    50Item 4:Disclosure Controls and Procedures
    
    
    51PART II  OTHER INFORMATIONItem 1:Legal Proceedings
    
    
    52Item 1A:Risk Factors
    
    
    52Item 6:Exhibits
    
    
    52Signatures
    
    
    53Exhibit 10.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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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 31,2010
    
    
    2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    142,228
    
    
    $
    168,205Contracts-in-process
    
    
    203,931
    
    
    
    190,809Inventories
    
    
    82,144
    
    
    
    83,671Other current assets
    
    
    26,986
    
    
    
    24,343Total current assets
    
    
    455,289
    
    
    
    467,028Property, plant and equipment, net
    
    
    211,821
    
    
    
    207,996Long-term receivables
    
    
    264,289
    
    
    
    248,097Investments in affiliates
    
    
    326,296
    
    
    
    282,033Intangible assets, net
    
    
    17,481
    
    
    
    20,300Other assets
    
    
    25,638
    
    
    
    27,998Total assets
    
    $
    1,300,814
    
    
    $
    1,253,452LIABILITIES AND EQUITYCurrent liabilities:Accounts payable
    
    $
    95,744
    
    
    $
    86,809Accrued employment costs
    
    
    39,487
    
    
    
    44,341Customer advances and billings in excess of costs and profits
    
    
    291,290
    
    
    
    291,021Other current liabilities
    
    
    29,891
    
    
    
    19,147Total current liabilities
    
    
    456,412
    
    
    
    441,318Pension and other post retirement liabilities
    
    
    225,797
    
    
    
    226,190Long-term liabilities
    
    
    154,735
    
    
    
    153,953Total liabilities
    
    
    836,944
    
    
    
    821,461Commitments 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, 20,387,987 and 20,390,752 shares issued and
outstanding
    
    
    204
    
    
    
    204Non-voting common stock, $.01 par value; 20,000,000
shares authorized, 9,505,673 shares issued and
outstanding
    
    
    95
    
    
    
    95Paid-in capital
    
    
    1,014,848
    
    
    
    1,013,790Accumulated deficit
    
    
    (489,847
    )
    
    
    (519,220
    )Accumulated other comprehensive loss
    
    
    (61,430
    )
    
    
    (62,878
    )Total equity
    
    
    463,870
    
    
    
    431,991Total liabilities and equity
    
    $
    1,300,814
    
    
    $
    1,253,452
   3




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LORAL SPACE & COMMUNICATIONS INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share amounts)
 (Unaudited)
 Three MonthsEnded March 31,2010
    
    
    2009Revenues
    
    $
    228,914
    
    
    $
    212,491Cost of revenues
    
    
    210,425
    
    
    
    197,201Selling, general and administrative expenses
    
    
    20,399
    
    
    
    20,770Directors indemnification expense
    
    
    14,357
    
    
    
    Operating loss
    
    
    (16,267
    )
    
    
    (5,480
    )Interest and investment income
    
    
    3,279
    
    
    
    1,653Interest expense
    
    
    (623
    )
    
    
    (1,266
    )Other expense
    
    
    (93
    )
    
    
    (87
    )Loss before income taxes and equity in net income (losses) of affiliates
    
    
    (13,704
    )
    
    
    (5,180
    )Income tax (provision) benefit
    
    
    (1,515
    )
    
    
    20Loss before equity in net income (losses) of affiliates
    
    
    (15,219
    )
    
    
    (5,160
    )Equity in net income (losses) of affiliates
    
    
    44,592
    
    
    
    (5,668
    )Net income (loss)
    
    $
    29,373
    
    
    $
    (10,828
    )Basic and diluted income (loss) per share:Basic income (loss) per share
    
    $
    0.98
    
    
    $
    (0.36
    )Diluted income (loss) per share
    
    $
    0.97
    
    
    $
    (0.36
    )Weighted average shares outstanding:Basic
    
    
    29,862
    
    
    
    29,702Diluted
    
    
    30,388
    
    
    
    29,702
   4




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LORAL SPACE & COMMUNICATIONS INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
 (In thousands)
 (Unaudited)
 Common Stock
    
    
    
    
    
    
    
    
    
    
    AccumulatedVoting
    
    
    Non-Voting
    
    
    
    
    
    
    
    
    
    
    OtherShares
    
    
    
    
    
    
    Shares
    
    
    
    
    
    
    Paid-In
    
    
    Accumulated
    
    
    Comprehensive
    
    
    TotalIssued
    
    
    Amount
    
    
    Issued
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Loss
    
    
    EquityBalance, January 1, 2009
    
    
    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
    )
    
    
    431,991Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,373Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,448Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,821Exercise of stock options
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36
    
    
    
    
    
    
    
    
    
    
    
    36Shares surrendered to fund withholding taxes
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (205
    )
    
    
    
    
    
    
    
    
    
    
    (205
    )Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,227
    
    
    
    
    
    
    
    
    
    
    
    1,227Balance, March 31, 2010
    
    
    20,388
    
    
    $
    204
    
    
    
    9,506
    
    
    $
    95
    
    
    $
    1,014,848
    
    
    $
    (489,847
    )
    
    $
    (61,430
    )
    
    $
    463,870
   5




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LORAL SPACE & COMMUNICATIONS INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
 Three MonthsEnded March 31,2010
    
    
    2009Operating activities:Net income (loss)
    
    $
    29,373
    
    
    $
    (10,828
    )Adjustments to reconcile net income (loss) to net cash (used
in) provided by operating activities:Non-cash operating items (Note 3)
    
    
    (36,474
    )
    
    
    16,877Changes in operating assets and liabilities:Contracts-in-process
    
    
    (7,805
    )
    
    
    28,332Inventories
    
    
    1,527
    
    
    
    771Long-term receivables
    
    
    (1,450
    )
    
    
    (1,354
    )Other current assets and other assets
    
    
    26
    
    
    
    1,250Accounts payable
    
    
    9,035
    
    
    
    (22,090
    )Accrued expenses and other current liabilities
    
    
    7,170
    
    
    
    (19,636
    )Customer advances
    
    
    (18,577
    )
    
    
    54,974Income taxes payable
    
    
    468
    
    
    
    13,967Pension and other postretirement liabilities
    
    
    (393
    )
    
    
    (420
    )Long-term liabilities
    
    
    1,229
    
    
    
    1,257Net cash (used in) provided by operating activities
    
    
    (15,871
    )
    
    
    63,100Investing activities:Capital expenditures
    
    
    (9,936
    )
    
    
    (12,212
    )Decrease in restricted cash in escrow
    
    
    
    
    
    
    5Investments in and advances to affiliates
    
    
    
    
    
    
    (4,480
    )Net cash used in investing activities
    
    
    (9,936
    )
    
    
    (16,687
    )Financing activities:Proceeds from the exercise of stock options
    
    
    35
    
    
    
    Common stock repurchased to fund withholding taxes
    
    
    (205
    )
    
    
    Repayment of borrowings under SS/L revolving credit facility
    
    
    
    
    
    
    (55,000
    )Net cash used in financing activities
    
    
    (170
    )
    
    
    (55,000
    )Decrease in cash and cash equivalents
    
    
    (25,977
    )
    
    
    (8,587
    )Cash and cash equivalents  beginning of period
    
    
    168,205
    
    
    
    117,548Cash and cash equivalents  end of period
    
    $
    142,228
    
    
    $
    108,961
   6




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LORAL SPACE & COMMUNICATIONS INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 1. Organization and Principal Business
   Satellite Manufacturing
  Satellite Services
     2. Basis of Presentation
    7




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LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Use of Estimates in Preparation of Financial Statements
   Concentration of Credit Risk
  Fair Value Measurements
  Level 1:
 Level 2:
  8




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LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Level 3:
 Assets and Liabilities Measured at Fair Value on Recurring Basis
  Level 1
    
    
    Level 2
    
    
    Level 3(In thousands)Assets:Marketable securities
    
    $
    1,338
    
    
    $
    
    
    
    $
    Derivatives, net
    
    $
    
    
    
    $
    6,044
    
    
    $
    Non-qualified pension plan assets
    
    $
    2,897
    
    
    $
    
    
    
    $
    74
  Assets and Liabilities Measured at Fair Value on a Non-recurring Basis
  Recent Accounting Pronouncements
 Improvements to Financial Reporting by Enterprises Involved
with Variable Interest Entities, Consolidations Amendments to FASB Interpretation No. 46(R),
 Revenue Recognition (Topic 605) 
Multiple-Deliverable Revenue Arrangements Multiple-Element
Arrangements
  9




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LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  3. Additional Cash Flow Information
  Three MonthsEnded March 31,2010
    
    
    2009Non-cash operating items:Equity in net (income) losses of affiliates
    
    $
    (44,592
    )
    
    $
    5,668Deferred taxes
    
    
    229
    
    
    
    (656
    )Depreciation and amortization
    
    
    8,739
    
    
    
    9,309Stock based compensation
    
    
    1,682
    
    
    
    1,641Warranty expense (reversals) accruals
    
    
    (634
    )
    
    
    291Amortization of prior service credits and net actuarial gains
    
    
    (35
    )
    
    
    93Unrealized (gain) loss on non-qualified pension plan assets
    
    
    (111
    )
    
    
    166Non-cash net interest income
    
    
    (753
    )
    
    
    (436
    )(Gain) loss on foreign currency transactions and contracts
    
    
    (215
    )
    
    
    948Amortization of fair value adjustments related to orbital incentives
    
    
    (784
    )
    
    
    (147
    )Net non-cash operating items
    
    $
    (36,474
    )
    
    $
    16,877Non-cash investing activities:Capital expenditures incurred not yet paid
    
    $
    2,992
    
    
    $
    3,195Supplemental information:Interest paid
    
    $
    580
    
    
    $
    1,210Tax (refunds) payments, net
    
    $
    (1,521
    )
    
    $
    (14,995
    )
  4. Comprehensive Income (Loss)
  Three MonthsEnded March 31,2010
    
    
    2009Net income (loss)
    
    $
    29,373
    
    
    $
    (10,828
    )Amortization of prior service credits and net actuarial gains
    
    
    (35
    )
    
    
    93Proportionate share of Telesat Holdco other comprehensive loss
    
    
    (328
    )
    
    
    Unrealized gain on foreign currency hedges:Unrealized gain on foreign currency hedges
    
    
    2,360
    
    
    
    6,934Less: reclassification adjustment for gains included in net income
    
    
    (1,031
    )
    
    
    (3,006
    )Net unrealized gain
    
    
    1,329
    
    
    
    3,928Unrealized gain on securities:Unrealized gain on available-for-sale securities
    
    
    482
    
    
    
    148Comprehensive income (loss)
    
    $
    30,821
    
    
    $
    (6,659
    )
  10




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LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 5. Contracts-in-Process and Inventories
  March 31,
    
    
    December 31,2010
    
    
    2009Contracts-in-Process:Amounts billed (net of allowance for doubtful accounts of $3,682)
    
    $
    137,056
    
    
    $
    124,034Unbilled receivables
    
    
    66,875
    
    
    
    66,775$
    203,931
    
    
    $
    190,809Inventories:Inventories-gross
    
    $
    117,111
    
    
    $
    119,528Allowance for obsolescence
    
    
    (27,407
    )
    
    
    (28,297
    )89,704
    
    
    
    91,231Inventories included in other assets
    
    
    (7,560
    )
    
    
    (7,560
    )$
    82,144
    
    
    $
    83,671
  6. Financial Instruments, Derivatives and Hedging Transactions
 Financial Instruments
  Foreign Currency
   ForeignCurrency
    
    
    U.S.$(In thousands)Future revenues  Japanese Yen
    
    ¥
    819,527
    
    
    $
    8,841Future expenditures  Japanese Yen
    
    ¥
    4,328,252
    
    
    $
    46,692Contracts-in-process, unbilled receivables  Japanese Yen
    
    ¥
    172,312
    
    
    $
    1,859Future revenue  EUROs
    
    
    2,920
    
    
    $
    3,929Future expenditures  EUROs
    
    
    2,466
    
    
    $
    3,318
  11




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LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Derivatives and Hedging Transactions
    ash Flow Hedges
    To SellHedge
    
    
    AtEuro
    
    
    Contract
    
    
    MarketMaturity
    
    Amount
    
    
    Rate
    
    
    Rate(In thousands)2010
    
    
    13,701
    
    
    $
    20,473
    
    
    $
    18,4392011
    
    
    23,493
    
    
    
    35,664
    
    
    
    31,654
    37,194
    
    
    $
    56,137
    
    
    $
    50,093
  12




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LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Balance Sheet Classification
  Fair Value of  Derivative AssetsBalance Sheet Location
    
    March 31, 2010
    
    
    December 31, 2009Derivatives designated as
hedging instrumentsForeign exchange contracts
    
    Other current assets
    
    $
    5,617
    
    
    $
    1,860Foreign exchange contracts
    
    Other assets
    
    
    
    
    
    
    1,8465,617
    
    
    
    3,706Derivatives not designated
as hedging instrumentsForeign exchange contracts
    
    Other current assets
    
    
    427
    
    
    
    Foreign exchange contracts
    
    Other assets
    
    
    
    
    
    
    167Total Derivatives
    
    
    
    $
    6,044
    
    
    $
    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
    
    
    AmountForeign exchange contracts
    
    $
    1,964
    
    
    Revenue
    
    $
    1,031
    
    
    Revenue
    
    $
    (305
    )Foreign exchange contracts
    
    $
    396
    
    
    
    
    
    
    
    
    
    
    Interest income
    
    
    $
    (11
    )
 GainRecognized in IncomeCash Flow Derivatives Not Designated as
    
    on DerivativeHedging Instruments
    
    Location
    
    
    AmountForeign exchange contracts
    
    Revenue
    
    $
    260
  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
    
    
    AmountForeign exchange contracts
    
    $
    6,610
    
    
    Revenue
    
    $
    3,005
    
    
    Revenue
    
    $
    (853
    )Foreign exchange contracts
    
    $
    323
    
    
    
    
    
    
    
    
    
    
    Interest income
    
    
    $
    (102
    )
 GainRecognized in IncomeCash Flow Derivatives Not Designated as
    
    on DerivativeHedging Instruments
    
    Location
    
    
    AmountForeign exchange contracts
    
    Revenue
    
    $
    123
  13




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LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  7. Property, Plant and Equipment
 March 31,
    
    
    December 31,2010
    
    
    2009(In thousands)Land and land improvements
    
    $
    26,852
    
    
    $
    26,852Buildings
    
    
    68,843
    
    
    
    68,698Leasehold improvements
    
    
    11,209
    
    
    
    11,133Equipment, furniture and fixtures
    
    
    160,875
    
    
    
    156,669Satellite capacity under construction (see Note 17)
    
    
    29,331
    
    
    
    27,412Other construction in progress
    
    
    20,736
    
    
    
    17,243317,846
    
    
    
    308,007Accumulated depreciation and amortization
    
    
    (106,025
    )
    
    
    (100,011
    )$
    211,821
    
    
    $
    207,996
  8. Investments in Affiliates
  March 31,
    
    
    December 31,2010
    
    
    2009(In thousands)Telesat Holdings Inc.
    
    $
    254,836
    
    
    $
    208,101XTAR, LLC
    
    
    69,876
    
    
    
    72,284Other
    
    
    1,584
    
    
    
    1,648$
    326,296
    
    
    $
    282,033
  Three MonthsEnded March 31,2010
    
    
    2009(In thousands)Telesat Holdings Inc.
    
    $
    47,063
    
    
    $
    (2,291
    )XTAR, LLC
    
    
    (2,407
    )
    
    
    (3,377
    )Other
    
    
    (64
    )
    
    
    $
    44,592
    
    
    $
    (5,668
    )
  Three MonthsEnded March 31,2010
    
    
    2009(In thousands)Revenues
    
    $
    22,182
    
    
    $
    24,248Elimination of Lorals proportionate share of profits
relating to affiliate transactions
    
    
    (1,363
    )
    
    
    (2,298
    )Profits relating to affiliate transactions not eliminated
    
    
    768
    
    
    
    1,295
  14




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LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    Telesat
   Three MonthsEnded March 31,2010
    
    
    2009(In thousands)Revenues
    
    $
    191,519
    
    
    $
    165,247Operating expenses
    
    
    (48,713
    )
    
    
    (50,334
    )Depreciation, amortization and stock-based compensation
    
    
    (61,308
    )
    
    
    (50,518
    )Operating income
    
    
    81,498
    
    
    
    64,395Interest expense
    
    
    (59,936
    )
    
    
    (54,136
    )Other income (expense)
    
    
    65,667
    
    
    
    (34,454
    )Income tax provision
    
    
    (10,308
    )
    
    
    (7,023
    )Net income (loss)
    
    
    76,921
    
    
    
    (31,218
    )
  March 31,
    
    
    December 31,2010
    
    
    2009(In thousands)Current assets
    
    $
    320,529
    
    
    $
    251,573Total assets
    
    
    5,221,410
    
    
    
    4,994,684Current liabilities
    
    
    241,805
    
    
    
    195,890Long-term debt, including current portion
    
    
    2,952,612
    
    
    
    2,953,281Total liabilities
    
    
    4,156,853
    
    
    
    4,041,932Redeemable preferred stock
    
    
    139,304
    
    
    
    134,291Shareholders equity
    
    
    925,253
    
    
    
    818,461
   15




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LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 XTAR
  o o
      16




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LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Three MonthsEnded March 31,2010
    
    
    2009(In thousands)Revenues
    
    $
    7,941
    
    
    $
    6,361Operating expenses
    
    
    (8,518
    )
    
    
    (8,461
    )Depreciation and amortization
    
    
    (2,405
    )
    
    
    (2,405
    )Operating loss
    
    
    (2,982
    )
    
    
    (4,505
    )Net loss
    
    
    (4,286
    )
    
    
    (6,016
    )
  March 31,
    
    
    December 31,2010
    
    
    2009(In thousands)Current assets
    
    $
    6,703
    
    
    $
    10,372Total assets
    
    
    101,009
    
    
    
    107,084Current liabilities
    
    
    43,185
    
    
    
    45,672Total liabilities
    
    
    66,093
    
    
    
    67,882Members equity
    
    
    34,916
    
    
    
    39,202
 Other
  9. Intangible Assets and Amortization of Fair Value Adjustments
  Weighted AverageRemaining
    
    
    March 31, 2010
    
    
    December 31, 2009Amortization Period
    
    
    Gross
    
    
    Accumulated
    
    
    Gross
    
    
    Accumulated(Years)
    
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    Amortization(In thousands)
    
    
    (In thousands)Internally
developed software
and technology
    
    
    2
    
    
    $
    59,027
    
    
    $
    (48,676
    )
    
    $
    59,027
    
    
    $
    (45,972
    )Trade names
    
    
    16
    
    
    
    9,200
    
    
    
    (2,070
    )
    
    
    9,200
    
    
    
    (1,955
    )$
    68,227
    
    
    $
    (50,746
    )
    
    $
    68,227
    
    
    $
    (47,927
    )
  2010
    
    $
    9,1902011
    
    
    2,9312012
    
    
    2,3142013
    
    
    4602014
    
    
    460
  17




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LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  March 31,
    
    
    December 31,2010
    
    
    2009(In thousands)Gross fair value adjustments
    
    $
    (36,896
    )
    
    $
    (36,896
    )Accumulated amortization
    
    
    17,321
    
    
    
    16,446$
    (19,575
    )
    
    $
    (20,450
    )
  10. Debt
   March 31,
    
    
    December 31,2010
    
    
    2009Letters of credit outstanding
    
    $
    4,911
    
    
    $
    4,921Borrowings
    
    
    
    
    
    
    
 Three MonthsEnded March 31,2010
    
    
    2009Interest expense (including commitment and letter of credit fees)
    
    $
    198
    
    
    $
    525Amortization of issuance costs
    
    $
    219
    
    
    $
    219
 11. Income Taxes
      18




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LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    12. Stock-Based Compensation
        19




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LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    13. Pensions and Other Employee Benefit Plans
  Pension Benefits
    
    
    Other BenefitsThree Months
    
    
    Three MonthsEnded March 31,
    
    
    Ended March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009(In thousands)
    
    
    (In thousands)Service cost
    
    $
    2,596
    
    
    $
    2,261
    
    
    $
    234
    
    
    $
    264Interest cost
    
    
    6,117
    
    
    
    5,996
    
    
    
    981
    
    
    
    1,050Expected return on plan assets
    
    
    (5,157
    )
    
    
    (4,273
    )
    
    
    (8
    )
    
    
    (13
    )Amortization of prior service
credits and net actuarial
loss or (gain)
    
    
    131
    
    
    
    226
    
    
    
    (166
    )
    
    
    (133
    )Net periodic cost
    
    $
    3,687
    
    
    $
    4,210
    
    
    $
    1,041
    
    
    $
    1,168
 14. Commitments and Contingencies
 Financial Matters
  Balance of deferred amounts at January 1, 2010
    
    $
    37,167Warranty costs incurred including payments
    
    
    (356
    )Accruals relating to pre-existing contracts (including changes in estimates)
    
    
    (277
    )Balance of deferred amounts at March 31, 2010
    
    $
    36,534
  20




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




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LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Satellite Matters
       22




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LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Transactions with Affiliates  Telesat
 Regulatory Matters
  Legal Proceedings
 Insurance Coverage Litigation
 In re: Loral
Space and Communications Inc. Consolidated Litigation Babus
  In re: Loral Space and Communications
Inc. Consolidated Litigation Babus
  23




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Reorganization Matters
  Indemnification Claims of Directors and Officers of Old Loral. Old Loral Class Action Securities Litigations
  24




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LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONDENSED 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.
  25




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LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Other and Routine Litigation
  15. Earnings (Loss) Per Share
  Three MonthsEnded March 31,2010
    
    
    2009(In thousands)Common and potential common shares:Weighted average common shares outstanding
    
    
    29,862
    
    
    
    29,702Stock options
    
    
    249
    
    
    
    Unvested restricted stock units
    
    
    189
    
    
    
    Unvested restricted stock
    
    
    9
    
    
    
    Unvested SARS
    
    
    79
    
    
    
    Common and potential common shares
    
    
    30,388
    
    
    
    29,702
  March 31,2010
    
    
    2009Stock options outstanding
    
    
    125,000
    
    
    
    2,034,202Shares of non-vested restricted stock
    
    
    
    
    
    
    84,352Non-vested restricted stock units
    
    
    8,250
    
    
    
    110,000
 16. Segments
    26




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LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    27




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LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Three MonthsEnded March 31,2010
    
    
    2009(In thousands)RevenuesSatellite manufacturing:External revenues
    
    $
    206,739
    
    
    $
    188,250Intersegment revenues(1)
    
    
    24,115
    
    
    
    28,197Satellite manufacturing revenues
    
    
    230,854
    
    
    
    216,447Satellite services revenues(2)
    
    
    191,519
    
    
    
    165,247Operating segment revenues before eliminations
    
    
    422,373
    
    
    
    381,694Intercompany eliminations(3)
    
    
    (1,940
    )
    
    
    (3,956
    )Affiliate eliminations(2)
    
    
    (191,519
    )
    
    
    (165,247
    )Total revenues as reported
    
    $
    228,914
    
    
    $
    212,491Segment Adjusted EBITDA(4)Satellite manufacturing
    
    $
    12,730
    
    
    $
    10,437Satellite services(2)
    
    
    142,833
    
    
    
    114,913Corporate(5)
    
    
    (3,901
    )
    
    
    (4,466
    )Adjusted EBITDA before eliminations
    
    
    151,662
    
    
    
    120,884Intercompany eliminations(3)
    
    
    (318
    )
    
    
    (501
    )Affiliate eliminations(2)
    
    
    (142,833
    )
    
    
    (114,913
    )Adjusted EBITDA
    
    
    8,511
    
    
    
    5,470Depreciation, Amortization and Stock-Based Compensation(4)Satellite manufacturing
    
    $
    (9,504
    )
    
    $
    (9,930
    )Satellite services(2)
    
    
    (61,308
    )
    
    
    (50,518
    )Corporate
    
    
    (917
    )
    
    
    (1,020
    )Segment depreciation before affiliate eliminations
    
    
    (71,729
    )
    
    
    (61,468
    )Affiliate eliminations(2)
    
    
    61,308
    
    
    
    50,518Depreciation, amortization and stock-based compensation as reported
    
    
    (10,421
    )
    
    
    (10,950
    )Directors indemnification expense(6)
    
    
    (14,357
    )
    
    
    Operating loss as reported
    
    $
    (16,267
    )
    
    $
    (5,480
    )
 March 31,
    
    
    December 31,2010
    
    
    2009(In thousands)Total AssetsSatellite manufacturing
    
    $
    868,022
    
    
    $
    863,866Satellite services (includes goodwill of $2.4 billion and $2.3 billion)(2)
    
    
    5,476,246
    
    
    
    5,202,785Corporate(4)
    
    
    177,956
    
    
    
    181,485Total Assets before affiliate eliminations
    
    
    6,522,224
    
    
    
    6,248,136Affiliate eliminations(2)
    
    
    (5,221,410
    )
    
    
    (4,994,684
    )Total assets as reported(7)
    
    $
    1,300,814
    
    
    $
    1,253,452
  28




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##### Table of Contents



LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (1)
    
    Intersegment revenues for satellite manufacturing includes affiliate revenue of
$22.2 million and $24.2 million for the three months ended March 31, 2010 and 2009,
respectively.(2)
    
    Satellite services represents Telesat. Affiliate eliminations represent the
elimination of amounts attributable to Telesat whose results are reported under the equity
method of accounting in our condensed consolidated statements of operations (see Note 8).(3)
    
    Represents the elimination of intercompany sales and intercompany Adjusted EBITDA
for satellites under construction by SS/L for Loral.(4)
    
    Compensation expense related
to SS/L Phantom SARs paid in cash or expected to be
paid in cash is included in Adjusted EBITDA. Compensation expense related to SS/L Phantom SARs
paid in Loral common stock or expected to be paid in Loral common stock is included in
depreciation, amortization and stock-based compensation.(5)
    
    Represents corporate expenses incurred in support of our operations and includes our
equity investments in XTAR and Globalstar service providers.(6)
    
    Represents the indemnification of legal expenses incurred by MHR affiliated
directors in defense of claims asserted against them in their capacity as directors of Loral.(7)
    
    Amounts are presented after the elimination of intercompany profit. 17. Related Party Transactions
 Transactions with Affiliates
 Telesat
     29




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LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Three MonthsEnded March 31,2010
    
    
    2009(In thousands)Revenues from Telesat satellite construction contracts
    
    $
    22,169
    
    
    $
    24,248Milestone payments received from Telesat
    
    
    19,269
    
    
    
    14,724
      30




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LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
        31




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LORAL SPACE & COMMUNICATIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 XTAR
  MHR Fund Management LLC
      32




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##### Table of Contents



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.
 INDEX
 Topic
    
    LocationOverview
    
    Page 34Future Outlook
    
    Page 35Consolidated Operating Results
    
    Page 37Liquidity and Capital Resources:Loral
    
    Page 43Telesat
    
    Page 46Contractual Obligations
    
    Page 48Statement of Cash Flows
    
    Page 49Affiliate Matters
    
    Page 49Commitments and Contingencies
    
    Page 49Other Matters
    
    Page 49
  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.
  33




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##### Table of Contents



Overview
 Businesses
  Satellite Manufacturing
      Satellite Services
     34




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Future Outlook
 Satellite Manufacturing
    Satellite Services
      35




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General
     36




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##### Table of Contents



Consolidated Operating Results
 Critical Accounting Matters
 Changes in Critical Accounting Policies
 Consolidated Operating Results 
      37




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##### Table of Contents



Revenues:
 Three MonthsEnded March 31,2010
    
    
    2009(In millions)Satellite Manufacturing
    
    $
    230.8
    
    
    $
    216.4Satellite Services
    
    
    191.5
    
    
    
    165.2Segment revenues
    
    
    422.3
    
    
    
    381.6Eliminations(1)
    
    
    (1.9
    )
    
    
    (3.9
    )Affiliate eliminations(2)
    
    
    (191.5
    )
    
    
    (165.2
    )Revenues as reported(3)
    
    $
    228.9
    
    
    $
    212.5
    Adjusted EBITDA:
 Three MonthsEnded March 31,2010
    
    
    2009(In millions)Satellite Manufacturing
    
    $
    12.7
    
    
    $
    10.4Satellite Services
    
    
    142.8
    
    
    
    114.9Corporate expenses
    
    
    (3.9
    )
    
    
    (4.4
    )Segment Adjusted EBITDA before eliminations
    
    
    151.6
    
    
    
    120.9Eliminations(1)
    
    
    (0.3
    )
    
    
    (0.5
    )Affiliate eliminations(2)
    
    
    (142.8
    )
    
    
    (114.9
    )Adjusted EBITDA
    
    $
    8.5
    
    
    $
    5.5
    38




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Reconciliation of Adjusted EBITDA to Net Income (Loss):
 Three MonthsEnded March 31,2010
    
    
    2009(In millions)Adjusted EBITDA
    
    $
    8.5
    
    
    $
    5.5Depreciation, amortization and stock-based compensation
    
    
    (10.4
    )
    
    
    (11.0
    )Directors indemnification expense(4)
    
    
    (14.4
    )
    
    
    Operating loss
    
    
    (16.3
    )
    
    
    (5.5
    )Interest and investment income
    
    
    3.3
    
    
    
    1.7Interest expense
    
    
    (0.6
    )
    
    
    (1.2
    )Other expense
    
    
    (0.1
    )
    
    
    (0.1
    )Income tax provision
    
    
    (1.5
    )
    
    
    Equity in net income (losses) of affiliates
    
    
    44.6
    
    
    
    (5.7
    )Net income (loss)
    
    $
    29.4
    
    
    $
    (10.8
    )
 (1)
    
    Represents the elimination of intercompany sales and intercompany Adjusted EBITDA
for satellites under construction by SS/L for Loral.(2)
    
    Represents the elimination of amounts attributed to Telesat whose results are
reported under the equity method of accounting in our consolidated statements of operations
(see Note 8 to the financial statements).(3)
    
    Includes revenues from affiliates of $22.2 million and $24.2 million for the three
months ended March 31, 2010 and 2009, respectively.(4)
    
    Represents the indemnification of legal expenses incurred by MHR affiliated
directors in defense of claims asserted against them in their capacity as directors of Loral. Three Months Ended March 31, 2010 Compared With Three Months Ended March 31, 2009
  Revenues from Satellite Manufacturing
 Three MonthsEnded March 31,
    
    
    % Increase/2010
    
    
    2009
    
    
    (Decrease)(In millions)Revenues from Satellite Manufacturing
    
    $
    231
    
    
    $
    216
    
    
    
    7
    %Eliminations
    
    
    (2
    )
    
    
    (4
    )
    
    
    (50
    )%Revenues from Satellite Manufacturing as reported
    
    $
    229
    
    
    $
    212
    
    
    
    8
    %
  39




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##### Table of Contents



Cost of Satellite Manufacturing
 Three MonthsEnded March 31,
    
    
    % Increase/2010
    
    
    2009
    
    
    (Decrease)(In millions)Cost of Satellite Manufacturing
    
    $
    210
    
    
    $
    197
    
    
    
    7
    %Cost of Satellite Manufacturing as
a % of Satellite Manufacturing
revenues as reported
    
    
    92
    %
    
    
    93
    %
  Selling, General and Administrative Expenses
 Three MonthsEnded March 31,
    
    
    % Increase/2010
    
    
    2009
    
    
    (Decrease)(In millions)Selling, general and administrative expenses
    
    $
    20
    
    
    $
    21
    
    
    
    (5
    )%% of revenues as reported
    
    
    9
    %
    
    
    10
    %
  Directors Indemnification Expense
  Interest and Investment Income
 Three MonthsEnded March 31,2010
    
    
    2009(In millions)Interest and investment income
    
    $
    3
    
    
    $
    2
  Interest Expense
 Three MonthsEnded March 31,2010
    
    
    2009(In millions)Interest expense
    
    $
    1
    
    
    $
    1
  40




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Other Expense
  Income Tax Provision
   Equity in Net Income (Losses) of Affiliates
  Three MonthsEnded March 31,2010
    
    
    2009(In millions)Telesat
    
    $
    47.1
    
    
    $
    (2.3
    )XTAR
    
    
    (2.4
    )
    
    
    (3.4
    )Other
    
    
    (0.1
    )
    
    
    $
    44.6
    
    
    $
    (5.7
    )
    41




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Three Months
    
    
    Three MonthsEnded March 31,
    
    
    Ended March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009(In Canadian dollars)
    
    
    (In U.S. dollars)Statement of Operations Data:Revenues
    
    
    199.2
    
    
    
    205.5
    
    
    
    191.5
    
    
    
    165.2Operating expenses
    
    
    (50.6
    )
    
    
    (62.6
    )
    
    
    (48.7
    )
    
    
    (50.3
    )Depreciation, amortization and
stock-based compensation
    
    
    (63.8
    )
    
    
    (62.8
    )
    
    
    (61.3
    )
    
    
    (50.5
    )Operating income
    
    
    84.8
    
    
    
    80.1
    
    
    
    81.5
    
    
    
    64.4Interest expense
    
    
    (62.3
    )
    
    
    (67.3
    )
    
    
    (59.9
    )
    
    
    (54.1
    )Other income (expense)
    
    
    68.2
    
    
    
    (42.9
    )
    
    
    65.6
    
    
    
    (34.5
    )Income tax provision
    
    
    (10.7
    )
    
    
    (8.7
    )
    
    
    (10.3
    )
    
    
    (7.0
    )Net income (loss)
    
    
    80.0
    
    
    
    (38.8
    )
    
    
    76.9
    
    
    
    (31.2
    )Average exchange rate for
translating Canadian dollars
to U.S. dollars
    
    
    
    
    
    
    
    
    
    
    1.0403
    
    
    
    1.2441
 March 31,
    
    
    December 31,
    
    
    March 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009(In Canadian dollars)
    
    
    (In U.S. dollars)Balance Sheet Data:Current assets
    
    
    325.4
    
    
    
    265.0
    
    
    
    320.5
    
    
    
    251.6Total assets
    
    
    5,301.3
    
    
    
    5,260.4
    
    
    
    5,221.4
    
    
    
    4,994.7Current liabilities
    
    
    245.5
    
    
    
    206.3
    
    
    
    241.8
    
    
    
    195.9Long-term debt, including
current portion
    
    
    2,997.8
    
    
    
    3,110.4
    
    
    
    2,952.6
    
    
    
    2,953.3Total liabilities
    
    
    4,220.4
    
    
    
    4,257.0
    
    
    
    4,156.8
    
    
    
    4,041.9Redeemable preferred stock
    
    
    141.4
    
    
    
    141.4
    
    
    
    139.3
    
    
    
    134.3Shareholders equity
    
    
    939.5
    
    
    
    862.0
    
    
    
    925.3
    
    
    
    818.5Period end exchange rate
for tanslating Canadian
dollars to U.S. dollars
    
    
    
    
    
    
    
    
    
    
    1.0153
    
    
    
    1.0532
       42




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##### Table of Contents



Backlog
  March 31,
    
    
    December 31,2010
    
    
    2009Satellite Manufacturing
    
    $
    1,420
    
    
    $
    1,632Satellite Services
    
    
    5,673
    
    
    
    5,230Total backlog before eliminations
    
    
    7,093
    
    
    
    6,862Satellite Manufacturing eliminations
    
    
    (7
    )
    
    
    (9
    )Satellite Services eliminations
    
    
    (5,673
    )
    
    
    (5,230
    )Total backlog
    
    $
    1,413
    
    
    $
    1,623
  
 Liquidity and Capital Resources
 
 Loral
  Cash and Available Credit
    43




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##### Table of Contents



Cash Management
  Liquidity
        44




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##### Table of Contents



45




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##### Table of Contents



Telesat
 Cash and Available Credit
   Liquidity
    46




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##### Table of Contents



Debt
  March 31,
    
    
    December 31,Maturity
    
    Currency
    
    2010
    
    
    2009(In CAD millions)Senior Secured Credit Facilities:Revolving facility
    
    October 31, 2012
    
    CAD or USD equivalent
    
    
    
    
    
    
    Canadian term loan facility
    
    October 31, 2012
    
    CAD
    
    
    183
    
    
    
    185U.S. term loan facility
    
    October 31, 2014
    
    USD
    
    
    1,709
    
    
    
    1,777U.S. term loan II facility
    
    October 31, 2014
    
    USD
    
    
    147
    
    
    
    152Senior notes
    
    November 1, 2015
    
    USD
    
    
    677
    
    
    
    703Senior subordinated notes
    
    November 1, 2017
    
    USD
    
    
    211
    
    
    
    220CAD
    
    
    2,927
    
    
    
    3,037Current portion
    
    
    
    CAD
    
    
    (25
    )
    
    
    (23
    )Long term portion
    
    
    
    CAD
    
    
    2,902
    
    
    
    3,014
  1 4
    47




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##### Table of Contents



Interest Expense
  Derivatives
    Interest Rate Risk
  Capital Expenditures
  
 Contractual Obligations
   48




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##### Table of Contents



Statement of Cash Flows
 Net Cash (Used In) Provided by Operating Activities
     Net Cash Used in Investing Activities
   Net Cash Used in Financing Activities
  
 Affiliate Matters
  
 Commitments and Contingencies
  
 Other Matters
 Recent Accounting Pronouncements
   49




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##### Table of Contents



Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
 Foreign Currency
 Loral
   ForeignCurrency
    
    
    U.S.$(In millions)Future revenues  Japanese Yen
    
    ¥
    819.5
    
    
    $
    8.8Future expenditures  Japanese Yen
    
    ¥
    4,328.3
    
    
    $
    46.7Contracts-in-process, unbilled receivables  Japanese Yen
    
    ¥
    172.3
    
    
    $
    1.9Future revenue  EUROs
    
    
    2.9
    
    
    $
    3.9Future expenditures  EUROs
    
    
    2.5
    
    
    $
    3.3
   To SellAt
    
    
    AtEuro
    
    
    Contract
    
    
    MarketMaturity
    
    Amount
    
    
    Rate
    
    
    Rate(In millions)2010
    
    
    13.7
    
    
    $
    20.5
    
    
    $
    18.42011
    
    
    23.5
    
    
    
    35.6
    
    
    
    31.7
    37.2
    
    
    $
    56.1
    
    
    $
    50.1
   Telesat
   50




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##### Table of Contents



Managements Discussion and Analysis of Financial Condition and Results of Operations  Liquidity and Capital Resources  Telesat  Derivatives
 Interest
 Loral
  Telesat
  Other
  
 Item 4.
    
    Disclosure Controls and Procedures
 Disclosure Controls and Procedures.
 Internal control over financial reporting.
  51




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##### Table of Contents



PART II.
OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
  
 Item 1A.
    
    Risk Factors
  
 Item 6.
    
    Exhibits
  Exhibit 10.1 
    
    Letter Agreement dated April 30, 2010 relating to indemnification among the Special
Committee of the Board of Directors of Loral Space & Communications Inc. and Mark Rachesky,
Hal Goldstein, Sai Devahaktuni, MHR Fund Management LLC and certain entities affiliated with
MHR Fund Management LLC.Exhibit 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.
  52




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##### Table of Contents



SIGNATURES
  RegistrantLoral Space & Communications Inc./s/ Harvey B. ReinHarvey B. ReinSenior Vice President and
Chief Financial Officer
(Principal Financial Officer)
and
Registrants Authorized Officer   53




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##### Table of Contents



EXHIBIT INDEX
 Exhibit 10.1 
    
    Letter Agreement dated April 30, 2010 relating to indemnification among the Special
Committee of the Board of Directors of Loral Space & Communications Inc. and Mark Rachesky,
Hal Goldstein, Sai Devahaktuni, MHR Fund Management LLC and certain entities affiliated with
MHR Fund Management LLC.Exhibit 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.
  54