##### Table of Contents



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, 2009
  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
  Regulation S-T o o
  Rule 12b-2
  Large accelerated filer
    o

Accelerated filer
    þ

Non-accelerated filer
    o

Smaller reporting company
    o(Do not check if a smaller reporting company)   þ o
  Rule 12b-2 o þ




---



##### 



LORAL
    SPACE AND COMMUNICATIONS INC.
  INDEX TO
    QUARTERLY REPORT ON
    FORM 10-Q
 For the
    quarterly period ended March 31, 2009
   
 Page No.PART I  FINANCIAL
    INFORMATIONItem 1:


Financial Statements (Unaudited)Condensed Consolidated Balance Sheets as of
    March 31, 2009 and December 31, 2008


2Condensed Consolidated Statements of Operations
    for the three months ended March 31, 2009 and
    March 31, 2008


3Condensed Consolidated Statements of Shareholders Equity
    for the three months ended March 31, 2009 and
    March 31, 2008


4Condensed Consolidated Statements of Cash Flows
    for the three months ended March 31, 2009 and
    March 31, 2008


5Notes to Condensed Consolidated Financial
    Statements


6Item 2:


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


38Item 3:


Quantitative and Qualitative Disclosure About
    Market Risk


54Item 4:


Disclosure Controls and Procedures


55PART II  OTHER
    INFORMATIONItem 1:


Legal Proceedings


55Item 1A:


Risk Factors


56Item 6:


Exhibits


56Signatures


57EX-10.3EX-31.1EX-31.2EX-32.1EX-32.2   1




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##### Table of Contents



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 31,2009


2008ASSETSCurrent assets:Cash and cash equivalents

$
108,961


$
117,548Contracts-in-process


170,825



213,651Inventories


108,984



109,755Other current assets


40,741



54,286Total current assets


429,511



495,240Property, plant and equipment, net


196,127



188,270Long-term receivables


201,573



184,701Investments in affiliates


73,773



72,642Intangible assets, net


28,758



31,578Other assets


23,999



23,436Total assets

$
953,741


$
995,867LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
70,451


$
91,052Accrued employment costs


34,646



41,819Customer advances and billings in excess of costs and profits


242,500



184,592Other current liabilities


17,908



31,911Total current liabilities


365,505



349,374Borrowings under revolving credit facility






55,000Pension and other post retirement liabilities


230,240



230,660Long-term liabilities


153,419



151,176Total liabilities


749,164



786,210Commitments and contingenciesShareholders equity:Preferred stock, $0.01 par value, 10,000,000 shares
    authorized, no shares issued and outstanding






Common stock:Voting common stock, $.01 par value; 30,494,327 shares
    authorized, 20,281,579 and 20,286,992 shares issued and
    outstanding


203



203Non-voting common stock, $.01 par value;
    9,505,673 shares authorized, issued and outstanding


95



95Paid-in capital


1,008,590



1,007,011Accumulated deficit


(761,750
)


(750,922
)Accumulated other comprehensive loss


(42,561
)


(46,730
)Total shareholders equity


204,577



209,657Total liabilities and shareholders equity

$
953,741


$
995,867    2




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (In thousands, except per share amounts)
    (Unaudited)
  Three MonthsEnded March 31,2009


2008Revenues

$
212,491


$
218,537Cost of sales


197,201



207,012Selling, general and administrative expenses


20,770



22,335Operating loss


(5,480
)


(10,810
)Interest and investment income


1,653



6,330Interest expense


(1,266
)


(351
)Other expense


(87
)


(73
)Loss before income taxes and equity in net losses of affiliates


(5,180
)


(4,904
)Income tax benefit (provision)


20



(1,776
)Loss before equity in net losses of affiliates


(5,160
)


(6,680
)Equity in net losses of affiliates


(5,668
)


(64,537
)Net loss


(10,828
)


(71,217
)Preferred dividends






(5,988
)Net loss applicable to common shareholders

$
(10,828
)

$
(77,205
)Basic and diluted loss per share

$
(0.36
)

$
(3.83
)Basic and diluted weighted average common shares outstanding


29,702



20,156    3




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  CONDENSED
    CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 (In
    thousands)
  Series A-1


Series B-1




















AccumulatedConvertible


Convertible


Common Stock








OtherPreferred Stock


Preferred Stock


Voting


Non-Voting








Comprehensive


TotalShares





Shares





Shares





Shares





Paid-In


Accumulated


Income


ShareholdersIssued


Amount


Issued


Amount


Issued


Amount


Issued


Amount


Capital


Deficit


(Loss)


EquityBalance, December 31, 2007


142


$
41,873



901


$
265,777



20,293


$
203










$
663,127


$
(33,939
)

$
36,517


$
973,558Net loss






































(71,217
)Other comprehensive loss










































(1,832
)Comprehensive loss














































(73,049
)Issuance of Series-1 preferred stock as payment for dividend


3



771



17



5,124































5,895Restricted shares surrendered to fund withholding taxes


















(5
)














(139
)










(139
)Stock based compensation


































2,381











2,381Preferred stock dividends






































(5,988
)






(5,988
)Balance, March 31, 2008


145


$
42,644



918


$
270,901



20,288


$
203






$



$
665,369


$
(111,144
)

$
34,685


$
902,658Balance, December 31, 2008





$







$




20,287


$
203



9,506


$
95


$
1,007,011


$
(750,922
)

$
(46,730
)

$
209,657Net loss






































(10,828
)Other comprehensive loss










































4,169Comprehensive loss














































(6,659
)Restricted shares surrendered to fund withholding taxes


















(5
)














(62
)










(62
)Stock based compensation


































1,641











1,641Balance, March 31, 2009





$







$




20,282


$
203



9,506


$
95


$
1,008,590


$
(761,750
)

$
(42,561
)

$
204,577    4




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In thousands)
    (Unaudited)
  Three Months EndedMarch 31,2009


2008Operating activities:Net loss

$
(10,828
)

$
(71,217
)Adjustments to reconcile net loss to net cash provided by (used
    in) operating activities:Non-cash operating items (see Note 3)


16,877



71,190Changes in operating assets and liabilities:Contracts-in-process


28,332



(57,136
)Inventories


771



(5,825
)Long-term receivables


(1,354
)


17,889Other current assets and other assets


1,250



(4,999
)Accounts payable


(22,090
)


1,616Accrued expenses and other current liabilities


(19,636
)


(7,934
)Customer advances


54,974



(18,910
)Income taxes payable


13,967



(29,012
)Pension and other postretirement liabilities


(420
)


2,324Long-term liabilities


1,257



(1,663
)Net cash provided by (used in) operating activities


63,100



(103,677
)Investing activities:Capital expenditures


(12,212
)


(8,317
)Decrease in restricted cash in escrow


5



884Proceeds from the sale of short-term investments and
    available-for-sale securities






72Investment in affiliates


(4,480
)


Net cash used in investing activities


(16,687
)


(7,361
)Financing activities:Repayment of borrowings under SS/L revolving credit facility


(55,000
)


Net cash used in financing activities


(55,000
)


Net decrease in cash and cash equivalents


(8,587
)


(111,038
)Cash and cash equivalents  beginning of period


117,548



314,694Cash and cash equivalents  end of period

$
108,961


$
203,656    5




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.



NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  1.
    Organization
    and Principal Business        Satellite Manufacturing:
  Satellite Services:
    1 3
  2.
    Basis of
    Presentation    Form 10-K
 6




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  No. 90-7, Financial Reporting of Entities in Reorganization Under the
    Bankruptcy Code (SOP 90-7), Business Combinations
    Use of
    Estimates in Preparation of Financial Statements
      Concentration
    of Credit Risk
  contracts-in-process
  Fair
    Value Measurements
  Fair Value Measurements
 7




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Level 1:
  Level 2:
  Level 3:
    Assets
    and liabilities measured at Fair Value on Recurring
    Basis
    Level 1


Level 2


Level 3(In thousands)Assets:Marketable securities

$
344


$



$
Derivatives, net

$



$
16,831


$
     Assets
    and Liabilities Measured at Fair Value on a Nonrecurring
    Basis
    The
    Equity Method of Accounting for Investments in Common Stock
  Recent
    Accounting Pronouncements
  SFAS 141(R)
  Business Combinations
 8




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    FSP
    FAS 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 Disclosure about Fair
    Value of Financial Instruments
  FSP
    FAS 132(R)-1
  Employers Disclosure about Postretirement Benefit Plan
    Assets Employers
    Disclosure about Postretirement Benefits
  EITF
    08-6
  No. 08-6, Equity Method Investment Accounting
    Considerations (EITF 08-6) EITF 08-6
 9




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    FSP
    FAS 107-1
    and APB
    28-1
  FAS 107-1 28-1, Interim Disclosures about Fair Value of Financial
    Instruments Disclosures about Fair Value of Financial Instruments Form 10-Q
  3.
    Additional
    Cash Flow Information    Three MonthsEnded March 31,2009


2008(In thousands)Non-cash operating items:Equity in net losses of affiliates

$
5,668


$
64,537Deferred taxes


(656
)


200Depreciation and amortization


9,309



8,182Stock based compensation


1,641



2,381Warranty expense accruals (accrual reversals)


291



(479
)Amortization of prior service credits and net actuarial gain


93



(829
)Gain on disposition of available-for-sale securities






(72
)Unrealized loss on non-qualified pension plan assets


166



Non-cash net interest (income) expense


(436
)


28Loss on foreign currency transactions and contracts


948



Amortization of fair value adjustments related to orbital
    incentives


(147
)


(2,758
)Net non-cash operating items

$
16,877


$
71,190Non-cash financing activities:Issuance of Loral Series-1 Preferred Stock as payment for
    dividend

$



$
5,894Accrued dividends on Loral Series-1 Preferred Stock

$



$
5,988Non-cash investing activities:Available for sale securities received in connection with the
    sale of Globalstar do Brazil

$



$
6,000Capital expenditures incurred not yet paid

$
3,195


$
5,600Supplemental information:Interest paid

$
1,210


$
471Tax (refunds) payments, net

$
(14,995
)

$
29,045  10




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  4.
    Comprehensive
    Loss    Three MonthsEnded March 31,2009


2008Net loss

$
(10,828
)

$
(71,217
)Proportionate share of Telesat Holdco other comprehensive loss






(1,040
)Cumulative translation adjustment






(498
)Unrealized gain on foreign currency hedge


6,934



Unrealized gain on available-for-sale securities arising during
    the period, net of taxes of $135 in 2008


148



242Amortization of prior service credits and net actuarial gains,
    net of taxes of $336 in 2008


93



(494
)Reclassification adjustment for gains included in net income


(3,006
)


(42
)Comprehensive loss

$
(6,659
)

$
(73,049
)   5.
    Contracts-in-Process
    and Inventories  Contracts-in-process
  March 31,


December 31,2009


2008Contracts-in-Process:Amounts billed (net of allowance for doubtful accounts of $923)

$
104,647


$
122,455Unbilled receivables


66,178



91,196$
170,825


$
213,651Inventories:Inventories-gross

$
136,112


$
136,955Allowance for obsolescence


(27,128
)


(27,200
)$
108,984


$
109,755   contracts-in-process
  6.
    Financial
    Instruments, Derivatives and Hedging Transactions  Financial
    Instruments
   11




---



##### Table of Contents



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


U.S.$(In thousands)Future revenues  Japanese Yen

¥
83,873



$862Future expenditures  Japanese Yen

¥
3,500,337



$35,987Contracts-in-process,
    unbilled receivables  Japanese Yen

¥
10,734



$110Future expenditures  EUROs


6,270



$8,281   Derivatives
    and Hedging Transactions
  Accounting for
    Derivative Instruments and Hedging Activities
      Cash Flow
    Hedges
     12




---



##### Table of Contents



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


AtEuro


Contract


MarketMaturity

Amount


Rate


Rate(In thousands)2009


42,940


$
66,371


$
56,8652010


19,210



29,389



25,6122011


23,493



35,663



31,473
85,643


$
131,423


$
113,950   To BuyAt


AtEuro


Contract


MarketMaturity

Amount


Rate


Rate(In thousands)2009


3,673


$
4,208


$
4,850   Balance
    Sheet Classification
    Asset Derivatives


Liability DerivativesBalance Sheet Location

Fair Value


Balance Sheet Location

Fair Value(In thousands)




(In thousands)Derivatives designated as hedging instruments under
    SFAS 133Foreign exchange contracts

Other current assets

$
11,226




$
Foreign exchange contracts

Other assets


5,899





$
17,125




$
Derivatives not designated as hedging instruments under
    SFAS 133Foreign exchange contracts

Other assets

$
348


Other current liabilities

$
642Total Derivatives



$
17,473




$
642  13




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Cash Flow
    Hedge Gains (Losses) Recognition
    Amount of GainRecognized





Loss on Derivativein OCI on

Gain Reclassified from Accumulated

Ineffectiveness andDerivatives in SFAS 133 Cash Flow

Derivative

OCI into Income (Effective Portion)

amounts excluded from Effectiveness TestingHedging Relationships

(Effective Portion)

Location

Amount

Location

Amount(In thousands)



(In thousands)



(In thousands)Foreign exchange contracts

$
6,610


Revenue

$
3,005


Revenue

$
(853
)Foreign exchange contracts

$
323








Interest income

$
(102
)   GainRecognized in IncomeCash Flow Derivatives Not Designated as Hedging

on DerivativeInstruments under SFAS 133

Location

Amount(In thousands)Foreign exchange contracts

Revenue

$
123     7.
    Property,
    Plant and Equipment  March 31,


December 31,2009


2008(In thousands)Land and land improvements

$
26,852


$
26,913Buildings


66,591



59,038Leasehold improvements


11,073



10,870Equipment, furniture and fixtures


137,983



133,916Satellite capacity under construction (see Note 17)


14,814



10,478Other construction in progress


19,458



21,863276,771



263,078Accumulated depreciation and amortization


(80,644
)


(74,808
)$
196,127


$
188,270     8.
    Investments
    in Affiliates    March 31,


December 31,2009


2008(In thousands)Telesat Holdings Inc.

$



$
XTAR, LLC


71,650



70,547Other


2,123



2,095$
73,773


$
72,642  14




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Three MonthsEnded March 31,2009


2008(In thousands)Telesat Holdings Inc.

$
(2,291
)

$
(60,302
)XTAR


(3,377
)


(4,235
)$
(5,668
)

$
(64,537
)     Three MonthsEnded March 31,2009


2008(In thousands)Revenues

$
24,248


$
19,349Elimination of Lorals proportionate share of profits
    relating to affiliate transactions


(2,298
)


(1,189
)Profits relating to affiliate transactions not eliminated


1,295



669   1 3
     15




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Telesat
      Three MonthsEnded March 31,2009


2008(In thousands)Revenues

$
165,247


$
166,504Operating expenses


(50,334
)


(67,117
)Depreciation, amortization and stock-based compensation


(50,518
)


(58,464
)Operating income


64,395



40,923Interest expense


(54,136
)


(62,203
)Other expense, net


(34,454
)


(88,311
)Income tax (provision) benefit


(7,023
)


17,018Net loss


(31,218
)


(92,573
)     March 31,


December 31,2009


2008(In thousands)Current assets

$
171,097


$
179,769Total assets


4,200,504



4,273,162Current liabilities


202,073



171,423Long-term debt, including current portion


2,880,132



2,901,620Total liabilities


3,735,547



3,760,164Redeemable preferred stock


112,232



116,044Shareholders equity


352,725



396,954     XTAR
    o o XTAR-LANT,
   16




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  XTAR-LANT XTAR-LANT XTAR-LANT
  paid-in-kind
        Three MonthsEnded March 31,2009


2008(In thousands)Revenues

$
6,361


$
4,728Operating expenses


(8,461
)


(8,584
)Depreciation and amortization


(2,405
)


(2,435
)Operating loss


(4,505
)


(6,291
)Net loss


(6,016
)


(7,555
)  17




---



##### Table of Contents



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


December 31,2009


2008(In thousands)Current assets

$
8,816


$
9,107Total assets


112,740



115,437Current liabilities


45,667



41,314Total liabilities


77,218



79,386Shareholders equity


35,522



36,051   Other
      9.
    Intangible
    Assets and Amortization of Fair Value Adjustments    Weighted AverageRemaining


March 31, 2009


December 31, 2008Amortization Period


Gross


Accumulated


Gross


Accumulated(Years)


Amount


Amortization


Amount


Amortization(In thousands)


(In thousands)Internally developed software and technology


2


$
59,027


$
(37,859
)

$
59,027


$
(35,154
)Trade names


17



9,200



(1,610
)


9,200



(1,495
)$
68,227


$
(39,469
)

$
68,227


$
(36,649
)  18




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2009

$
11,2762010


9,1922011


2,9312012


2,3152013


460   contracts-in-process,
  March 31,


December 31,2009


2008(In thousands)Gross fair value adjustments

$
36,896


$
36,896Accumulated amortization


(18,585
)


(19,084
)$
18,311


$
17,812     10.
    Debt  SS/L
    Credit Agreement
      March 31,


December 31,2009


2008Letters of credit outstanding

$
4,927


$
4,927Borrowings





$
55,000Interest rate on revolver borrowings






4.2575
%   Three MonthsEnded March 31,2009


2008Interest expense

$
525



Amortization of issuance costs

$
219



   11.
    Income
    Taxes  SOP 90-7,
 19




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  paid-in-capital.
        12.
    Shareholders
    Equity  Common
    Stock
  In re: Loral
    Space and Communications Consolidated Litigation
     20




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Preferred
    Stock
  Series A-1 Series A-1 Series B-1 Series B-1 Series A-1
    Series A-1
  Series A-1 Series B-1
    Stock
    Plans
       21




---



##### Table of Contents



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 31,2009


2008


2009


2008(In thousands)


(In thousands)Service cost

$
2,261


$
2,039


$
264


$
335Interest cost


5,996



5,787



1,050



1,164Expected return on plan assets


(4,273
)


(6,157
)


(13
)


(20
)Amortization of prior service credits and net actuarial gain or
    loss


226



(707
)


(133
)


(122
)$
4,210


$
962


$
1,168


$
1,357   14.
    Commitments
    and Contingencies  Financial
    Matters
      Balance of deferred amounts at January 1, 2009

$
36,255Warranty costs incurred including payments


323Accruals relating to pre-existing contracts (including changes
    in estimates)


164Balance of deferred amounts at March 31, 2009

$
36,742  22




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    start-up
    5 8
 23




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Transactions with Affiliates
     Telesat
  Satellite
    Matters
     24




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    and/or
      Transactions with Affiliates
     Telesat
  Regulatory
    Matters
    Legal
    Proceedings
  Delaware
    Shareholder Litigation
  In re: Loral Space and Communications
    Inc. Consolidated Litigation
 25




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    New York
    Shareholder Litigation
  Babus v. Targoff, et al.
  Insurance
    Coverage Litigation
      In re: Loral Space and Communications Inc.
    Consolidated Litigation Babus
   26




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Informal
    SEC Inquiry
    Reorganization
    Matters
  No. 03-41710 03-41709 03-41728
  Appeals of Confirmation Order.
  Disputed Claims.
 27




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Indemnification Claims of Directors and Officers of Old
    Loral. Class Action
    Securities Litigations Class Action ERISA
    Litigation Globalstar Related Class Action
    Securities Litigations In re: Loral
    Space ERISA Litigation In re: Loral Space &
    Communications Ltd. Securities Litigation
  Class Action
    Securities Litigations
  Beleson. Rule 10b-5 Beleson
 28




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Reorganization Matters 
    Indemnification Claims.
  Christ. Rule 10b-5 Reorganization
    Matters  Indemnification Claims.
  Class Action
    ERISA Litigation
  In re: Loral Space ERISA Litigation. In re: Loral Space ERISA
    Litigation
  Insurance Coverage Litigation. In re: Loral Space ERISA Litigation
 29




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    In re: Loral Space ERISA Litigation In re: Loral Space ERISA Litigation
  Globalstar
    Related Class Action Securities Litigations
  In re: Loral Space & Communications Ltd. Securities
    Litigation. In re: Loral Space &
    Communications Ltd. Securities Litigation Rule 10b-5
  Insurance Coverage Litigation. In re: Loral Space & Communications Ltd. Securities
    Litigation In re:
    Loral Space ERISA Litigation In re: Loral Space & Communications Ltd.
    Securities Litigation Reorganization Matters
     Indemnification Claims.
 30




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Other and
    Routine Litigation
    15.
    Earnings
    (Loss) Per Share    Three MonthsEnded March 31,2009


2008Stock options outstanding


2,034,202



2,040,452Shares of non-vested restricted stock


84,352



130,740Non-vested restricted stock units


110,000



   16.
    Segments  Disclosures about
    Segments of an Enterprise and Related Information
       31




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Three MonthsEnded March 31,2009


2008(In thousands)RevenuesSatellite manufacturing:External revenues

$
188,250


$
199,288Intersegment
    revenues(1)


28,197



20,499Satellite manufacturing revenues


216,447



219,787Satellite
    services(2):External revenues


165,247



166,504Intersegment revenues






Satellite services revenues


165,247



166,504Operating segment revenues before eliminations


381,694



386,291Intercompany
    eliminations(3)


(3,956
)


(1,250
)Affiliate
    eliminations(2)


(165,247
)


(166,504
)Total revenues as reported

$
212,491


$
218,537Segment Adjusted EBITDASatellite manufacturing

$
10,437


$
4,677Satellite services


114,913



99,387Corporate(4)


(4,466
)


(4,744
)Adjusted EBITDA before eliminations


120,884



99,320Intercompany
    eliminations(3)


(501
)


(180
)Affiliate
    eliminations(2)


(114,913
)


(99,387
)Adjusted EBITDA

$
5,470


$
(247
)Depreciation, Amortization and Stock-Based CompensationSatellite manufacturing

$
(9,930
)

$
(8,659
)Satellite services


(50,518
)


(58,464
)Corporate


(1,020
)


(1,904
)Segment depreciation before affiliate eliminations


(61,468
)


(69,027
)Affiliate
    eliminations(2)


50,518



58,464Depreciation, amortization and stock-based compensation as
    reported

$
(10,950
)

$
(10,563
)Operating loss as reported

$
(5,480
)

$
(10,810
)   32




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##### Table of Contents



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


December 31,2009


2008(In thousands)Total AssetsSatellite manufacturing

$
776,600


$
799,476Satellite services (includes goodwill of $1.9 billion and
    $2.5 billion)


4,200,504



4,273,162Corporate


177,141



196,391Total Assets before affiliate eliminations


5,154,245



5,269,029Affiliate
    eliminations(2)


(4,200,504
)


(4,273,162
)Total assets as
    reported(5)

$
953,741


$
995,867     (1)

    
    Intersegment revenues for satellite manufacturing includes
    affiliate revenue of $24.2 million and $19.3 million
    for the three months ending March 31, 2009 and 2008,
    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 statement of operations (see
    Note 8).(3)

    
    Represents the elimination of intercompany sales and
    intercompany Adjusted EBITDA, primarily for satellites under
    construction by SS/L for Loral.(4)

    
    Represents corporate expenses incurred in support of our
    operations.(5)

    
    Amounts are presented after the elimination of intercompany
    profit.  17.
    Related
    Party Transactions  Transactions
    with Affiliates
  Telesat
     33




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Three MonthsEnded March 31,2009


2008(In thousands)Revenues from Telesat satellite construction contracts

$
24,248


$
19,349Milestone payments received from Telesat


14,724



21,487        34




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##### Table of Contents



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




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    MHR
    Fund Management LLC
      Three MonthsEnded March 31,2008Dividends paid in the form of additional shares: Number of shares


19,550 Amount

$
5,895    36




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  SS/L
    Other
    Relationships
   37




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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

Pages 39  40Future Outlook

Pages 40  41Consolidated Operating Results

Pages 41  47Liquidity and Capital Resources:Loral

Pages 47  48Space Systems/Loral

Pages 48  50Telesat

Pages 50  52Contractual Obligations

Page  52  53Statement of Cash Flows

Pages 53Affiliate Matters

Page  53Commitments and Contingencies

Page  53Other Matters

Page  53   satellite-based
    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.
 38




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##### Table of Contents



Overview
  Businesses
    Satellite
    Manufacturing
            Satellite
    Services
     39




---



##### Table of Contents



Future
    Outlook
      1 3
       40




---



##### Table of Contents



Ka-band
  Consolidated
    Operating Results
  Critical Accounting Matters Form 10-K
  Changes in Critical Accounting Policies
  Consolidated Operating Results 
     41




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##### Table of Contents



Disclosures about
    Segments of an Enterprise and Related Information.
    Revenues:
  Three MonthsEnded March 31,2009


2008(In millions)Satellite Manufacturing

$
216


$
220Satellite Services


165



166Segment revenues


381



386Eliminations(1)


(4
)


(1
)Affiliate
    eliminations(2)


(165
)


(166
)Revenues as
    reported(3)

$
212


$
219    42




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##### Table of Contents



Adjusted
    EBITDA:
  Three MonthsEnded March 31,2009


2008(In millions)Satellite Manufacturing

$
10.4


$
4.7Satellite Services


114.9



99.4Corporate
    expenses(4)


(4.4
)


(4.7
)Segment Adjusted EBITDA before eliminations


120.9



99.4Eliminations(1)


(0.5
)


(0.2
)Affiliate
    eliminations(2)


(114.9
)


(99.4
)Adjusted EBITDA

$
5.5


$
(0.2
)     Reconciliation
    of Adjusted EBITDA to Net Loss:
  Three MonthsEnded March 31,2009


2008(In millions)Adjusted EBITDA

$
5.5


$
(0.2
)Depreciation and amortization


(11.0
)


(10.6
)Operating loss


(5.5
)


(10.8
)Interest and investment income


1.7



6.3Interest expense


(1.2
)


(0.3
)Other expense


(0.1
)


(0.1
)Income tax provision






(1.8
)Equity in net losses of affiliates


(5.7
)


(64.5
)Net loss

$
(10.8
)

$
(71.2
)     (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 $24.2 million and
    $19.3 million for the three months ended March 31,
    2009 and 2008, respectively.(4)

    
    Represents corporate expenses incurred in support of our
    operations. 43




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##### Table of Contents



Three
    Months Ended March 31, 2009 Compared With Three Months
    Ended March 31, 2008
    Revenues
    from Satellite Manufacturing
  Three MonthsEnded March 31,


% Increase/2009


2008


(Decrease)(In millions)Revenues from Satellite Manufacturing

$
216


$
220



(2
)%Eliminations


(4
)


(1
)Revenues from Satellite Manufacturing as reported

$
212


$
219



(3
)%     Cost
    of Satellite Manufacturing
  Three MonthsEnded March 31,


% Increase/2009


2008


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

$
187


$
198



(6
)%Depreciation and amortization


10



9



15
%Total cost of Satellite Manufacturing as reported

$
197


$
207



(5
)%Cost of Satellite Manufacturing as a % of Satellite
    Manufacturing revenues as reported


93
%


95
%     Selling,
    General and Administrative Expenses
  Three MonthsEnded March 31,


% Increase/2009


2008


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

$
21


$
22



(7
)%% of revenues as reported


10
%


10
%  44




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##### Table of Contents



Interest
    and Investment Income
  Three MonthsEndedMarch 31,2009


2008(In millions)Interest and investment income

$
2


$
6     Interest
    Expense
  Three MonthsEndedMarch 31,2009


2008(In millions)Interest expense

$
1


$
     Other
    Expense
    Income
    Tax Provision
  SOP 90-7, paid-in-capital.
   45




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##### Table of Contents



Equity
    in Net Losses of Affiliates
    Three MonthsEndedMarch 31,2009


2008(In millions)Telesat

$
(2.3
)

$
(60.3
)XTAR


(3.4
)


(4.2
)$
(5.7
)

$
(64.5
)       Three MonthsEnded March 31,2009


2008(In millions)Statement of Operations Data:Revenues

$
165.2


$
166.5Operating expenses


(50.3
)


(67.1
)Depreciation, amortization and stock-based compensation


(50.5
)


(58.5
)Operating income


64.4



40.9Interest expense


(54.1
)


(62.2
)Other expense


(34.5
)


(88.3
)Income tax (provision) benefit


(7.0
)


17.0Net loss


(31.2
)


(92.6
)    46




---



##### Table of Contents



December 31, 2008


1.225March 31, 2009


1.260April 30, 2009


1.194       Backlog
    March 31,


December 31,2009


2008Satellite Manufacturing

$
1,223


$
1,381Satellite Services


4,245



4,207Total backlog before eliminations


5,468



5,588Satellite Manufacturing eliminations


(21
)


(25
)Satellite services eliminations


(4,245
)


(4,207
)Total backlog

$
1,202


$
1,356   Liquidity
    and Capital Resources
  Loral
  SS/L,
 47




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##### Table of Contents



Cash and
    Available Credit
    Liquidity
        Space
    Systems/Loral
  Cash
    Available
    Credit and Liquidity
   48




---



##### Table of Contents



SS/L
               49




---



##### Table of Contents



SS/Ls
    Telesat
  Cash and
    Available Credit
      Liquidity
   50




---



##### Table of Contents



Debt
    March 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


192



195U.S. term loan facility

October 31, 2014

USD


2,145



2,087U.S. term loan II facility

October 31, 2014

USD


184



179Senior notes

November 1, 2015

USD


844



819Senior subordinated notes

November 1, 2017

USD


264



256CAD


3,629



3,536Current portion



CAD


(23
)


(23
)Long term portion



CAD


3,606



3,513     1 4
   51




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##### Table of Contents



Interest
    Expense
    Derivatives
        Interest
    rate risk
    Capital
    Expenditures
    Contractual
    Obligations
  Form 10-K
 52




---



##### Table of Contents



Statement
    of Cash Flows
  Net
    Cash Provided by (Used In) Operating Activities
  contracts-in-process
  contracts-in-process
  Net
    Cash Used in Investing Activities
      Net
    Cash Used in Financing Activities
    Affiliate
    Matters
    Commitments
    and Contingencies
    Other
    Matters
  Recent
    Accounting Pronouncements
   53




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##### Table of Contents



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


U.S.$(In thousands)Future revenues  Japanese Yen

¥
83.9


$
0.9Future expenditures  Japanese Yen

¥
3,500.3


$
36.0Contracts-in-process,
    unbilled receivables  Japanese Yen

¥
10.7


$
0.1Future expenditures  EUROs


6.3


$
8.3   Derivatives
      To SellAt


AtEuro


Contract


MarketMaturity

Amount


Rate


Rate(In millions)2009


42.9


$
66.4


$
56.92010


19.2



29.4



25.62011


23.5



35.6



31.5
85.6


$
131.4


$
114.0   To BuyAt


AtEuro


Contract


MarketMaturity

Amount


Rate


Rate(In millions)2009


3.7


$
4.2


$
4.9      54




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##### Table of Contents



Telesat
    Managements Discussion and Analysis of Financial
    Condition and Results of Operations  Liquidity and Capital Resources  Telesat Derivatives
  Interest
      Managements Discussion and Analysis of Financial
    Condition and Results of Operations  Liquidity and Capital Resources  Telesat
     Derivatives
  Item 4.
    Disclosure
    Controls and Procedures  Disclosure controls and
    procedures. Rules 13a-15(e) 15d-15(e)
  Internal control over financial
    reporting. Rules 13a-15(f) 15-d-15(f))
 PART II.
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings  Form 10-Q
 55




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##### Table of Contents



Item 1A.
    Risk
    Factors  Form 10-K Form 10-K, and/or
  Item 6.
    Exhibits    Form 8-K
  Form 8-K
           56




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##### Table of Contents



SIGNATURES      Loral Space &
    Communications Inc.
  /s/  Harvey
    B. Rein   Senior Vice President and
 Chief Financial Officer
 (Principal Financial Officer)
 and Registrants Authorized Officer
   57




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##### Table of Contents



EXHIBIT INDEX
  Exhibit 10
.1



Restricted Stock Agreement dated March 5, 2009 between
    Loral Space &Communications Inc. and Michael B.
    Targoff (incorporated by reference from the Companys
    current report on
    Form 8-K
    filed on March 10, 2009).Exhibit 10
.2



Restricted Stock Agreement dated March 5, 2009 between
    Loral Space &Communications Inc. and C. Patrick DeWitt
    (incorporated by reference from the Companys current
    report on
    Form 8-K
    filed on March 10, 2009).Exhibit 10
.3



Loral Space & Communications Inc. 2005 Stock Incentive Plan
    (Amended and restated as of April 3, 2009) (Management
    compensation plan).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.  58