##### 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 September 30, 2008
  Commission file number 1-14180
  Loral Space &
    Communications Inc.
  600 Third Avenue
 New York, New York 10016
 Telephone:
    (212) 697-1105
  Jurisdiction of incorporation: Delaware
  IRS identification number:
    87-0748324
  þ o
  Rule 12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   þ o
  Rule 12b-2 o þ




---



TABLE OF CONTENTS  PART 1.Item 1. Financial StatementsCONDENSED CONSOLIDATED BALANCE SHEETSCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Disclosure Controls and ProceduresPART II. OTHER INFORMATIONItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 6. ExhibitsSIGNATURESEXHIBIT INDEXEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION    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)
  September 30,


December 31,2008


2007ASSETSCurrent assets:Cash and cash equivalents

$
99,811


$
314,694Contracts-in-process


203,161



109,376Inventories


105,277



96,968Restricted cash


18,777



12,816Other current assets


70,495



36,034Total current assets


497,521



569,888Property, plant and equipment, net


176,559



147,828Long-term receivables


163,279



132,400Investments in affiliates


463,728



566,196Goodwill


188,454



227,058Intangible assets, net


34,396



42,854Other assets


16,428



16,715Total assets

$
1,540,365


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

$
69,131


$
69,205Accrued employment costs


39,092



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


212,736



251,954Income taxes payable


1,696



31,239Accrued interest and preferred dividends


5,263



4,979Other current liabilities


47,809



39,512Total current liabilities


375,727



439,779Pension and other post retirement liabilities


131,083



152,341Long-term liabilities


114,902



137,261Total liabilities


621,712



729,381Commitments and contingenciesShareholders equity:Series A-1
    Cumulative 7.5% convertible preferred stock, $0.01 par
    value; 2,200,000 shares authorized, 144,630 and
    141,953 shares issued and outstanding


42,680



41,873Series B-1
    Cumulative 7.5% convertible preferred stock, $0.01 par
    value; 2,000,000 shares authorized, 957,898 and
    900,821 shares issued and outstanding


282,986



265,777Common stock, $.01 par value; 40,000,000 shares
    authorized, 20,292,363 and 20,292,746 shares issued and
    outstanding


203



203Paid-in capital


668,763



663,127Accumulated deficit


(115,732
)


(33,939
)Accumulated other comprehensive income


39,753



36,517Total shareholders equity


918,653



973,558Total liabilities and shareholders equity

$
1,540,365


$
1,702,939    1




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##### Table of Contents



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


Nine MonthsEnded September 30,


Ended September 30,2008


2007


2008


2007Revenues from satellite manufacturing

$
212,519


$
194,925


$
639,117


$
573,929Revenues from satellite services






40,715







108,244Total revenues


212,519



235,640



639,117



682,173Cost of satellite manufacturing


194,715



173,392



585,830



520,520Cost of satellite services






26,966







77,505Selling, general and administrative expenses


23,599



35,216



71,496



111,001Gain on recovery from customer bankruptcy










(6,140
)


Operating (loss) income


(5,795
)


66



(12,069
)


(26,853
)Interest and investment income


1,949



10,497



10,231



27,708Interest expense


(523
)


3,983



(1,179
)


(1,063
)Gain on foreign exchange contracts






56,673







122,145Gain on litigation recovery










58,295



Impairment of available for sale securities


(998
)






(4,498
)


Loss on extinguishment of debt






(16,155
)






(16,155
)Other (expense) income


(66
)


3,377



(362
)


3,638(Loss) income before income taxes, equity in net losses of
    affiliates and minority interest


(5,433
)


58,441



50,418



109,420Income tax benefit (provision)


561



(23,112
)


(12,858
)


(54,877
)(Loss) income before equity in net losses of affiliates and
    minority interest


(4,872
)


35,329



37,560



54,543Equity in net losses of affiliates


(39,353
)


(2,322
)


(101,052
)


(4,259
)Minority interest






(7,078
)






(20,551
)Net (loss) income


(44,225
)


25,929



(63,492
)


29,733Preferred dividends


(6,214
)


(5,770
)


(18,301
)


(13,502
)Beneficial conversion feature related to the issuance of Loral
    Series A-1
    Preferred Stock






(171
)






(25,575
)Net (loss) income applicable to common shareholders

$
(50,439
)

$
19,988


$
(81,793
)

$
(9,344
)Basic and diluted (loss) income per common share:Basic (loss) income per share

$
(2.50
)

$
0.99


$
(4.06
)

$
(0.47
)Diluted (loss) income per share

$
(2.50
)

$
0.96


$
(4.06
)

$
(0.47
)Weighted average shares outstanding:Basic


20,184



20,103



20,169



20,071Diluted


20,184



21,881



20,169



20,071    2




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
  Nine Months EndedSeptember 30,2008


2007Operating activities:Net (loss) income

$
(63,492
)

$
29,733Non-cash operating items


159,354



18,575Changes in operating assets and liabilities:Accounts receivable, net






65,340Contracts-in-process


(186,857
)


(64,507
)Inventories


(8,309
)


(4,556
)Long-term receivables


19,140



(318
)Other current assets and other assets


(14,665
)


(711
)Accounts payable


(979
)


7,997Accrued expenses and other current liabilities


(8,025
)


(24,402
)Customer advances


4,595



(49,174
)Income taxes payable


(45,791
)


2,763Pension and other postretirement liabilities


(21,258
)


7,843Long-term liabilities


(4,360
)


9,220Other






(83
)Net cash used in operating activities


(170,647
)


(2,280
)Investing activities:Capital expenditures


(44,459
)


(77,715
)(Increase) decrease in restricted cash


561



(165,012
)Distribution from equity investment






2,955Proceeds from the sale of short-term investments and
    available-for-sale securities


162



440,698Purchase of short-term investments


(500
)


(350,887
)Net cash used in investing activities


(44,236
)


(149,961
)Financing activities:Proceeds from term loan (Skynet Notes refinancing facility)






141,050Repayment of Skynet Notes






(126,000
)10% redemption fee on extinguishment of Loral Skynet Notes






(12,600
)Preferred stock issuance costs






(8,866
)Proceeds from the sale of preferred stock






293,250Proceeds from the exercise of stock options






1,776Cash dividends paid on preferred stock of subsidiary






(3,033
)Net cash provided by financing activities






285,577Net (decrease) increase in cash and cash equivalents


(214,883
)


133,336Cash and cash equivalents  beginning of period


314,694



186,542Cash and cash equivalents  end of period

$
99,811


$
319,878    3




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##### Table of Contents



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




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##### Table of Contents



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




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Inventories
  contracts-in-process, first-in-first-out
  Fair
    Value Measurements
  Fair Value Measurements 157-2, Effective Date of FASB Statement No. 157
      Level 1 Accounting for Certain Investments in
    Debt and Equity Securities
  Level 2
  The Fair Value Option
    for Financial Assets and Financial Liabilities
 6




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Goodwill
  Goodwill and Other
    Intangible Assets
  Minority
    Interest
    Income
    Taxes
  paid-in-capital.
     7




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            Pensions
    and Other Employee Benefits
    Pension Benefits


Other BenefitsThree Months


Three MonthsEnded September 30,


Ended September 30,2008


2007


2008


2007Service cost

$
2,039


$
2,412


$
335


$
360Interest cost


5,787



5,432



1,164



1,250Expected return on plan assets


(6,157
)


(5,837
)


(20
)


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


(707
)


(700
)


(122
)


(75
)$
962


$
1,307


$
1,357


$
1,525  8




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##### Table of Contents



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


Other BenefitsNine Months


Nine MonthsEnded September 30,


Ended September 30,2008


2007


2008


2007Service cost

$
6,117


$
7,236


$
1,005


$
1,080Interest cost


17,361



16,296



3,492



3,750Expected return on plan assets


(18,471
)


(17,511
)


(60
)


(30
)Amortization of prior service credits and net actuarial gain or
    loss


(2,121
)


(2,100
)


(366
)


(225
)$
2,886


$
3,921


$
4,071


$
4,575   Additional
    Cash Flow Information
    Nine MonthsEnded September 30,2008


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

$
101,052


$
4,259Minority interest






20,551Deferred taxes


22,032



46,463Depreciation and amortization


26,327



62,714Stock based compensation


5,925



13,802Recoveries of bad debts on billed receivables






(2,189
)Provisions for inventory obsolescence






380Warranty expense reversals


(414
)


(10,769
)Amortization of prior service credits and net actuarial gain


(2,487
)


(2,325
)Gain on disposition of available-for-sale securities


(162
)


(5,308
)Withholding tax impact of cashless stock option exercises






(955
)Net gain on the disposition of an orbital slot






(3,600
)Write-off of construction in progress






2,011Loss on extinguishment of debt






16,155Non-cash net interest


649



Loss (gain) on foreign currency transactions and contracts


3,973



(121,723
)Amortization of fair value adjustments related to orbital
    incentives


(2,953
)


Loss on disposition of fixed assets


63



Impairment of available for sale securities


4,498



Unrealized loss on non-qualified pension plan assets


851



Other






(891
)Net non-cash operating items

$
159,354


$
18,575 9




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Nine MonthsEnded September 30,2008


2007Non-cash investing activities:Available for sale securities received in connection with the
    sale of Globalstar do Brazil

$
6,000


$
Capital expenditures incurred not yet paid

$
1,810


$
982Non-cash financing activities:Issuance of preferred stock by subsidiary as payment for dividend

$



$
23,343Issuance of Loral Series-1 Preferred Stock as payment for
    dividend

$
18,016


$
8,490Accrued dividends on
    Series A-1
    and
    Series B-1
    preferred stock

$
5,263


$
5,013Accrued dividends on preferred stock of subsidiary

$



$
6,102Supplemental information:Interest paid

$
998


$
34,500Taxes paid, net of refunds

$
34,156


$
1,871   New
    Accounting Pronouncements
  SFAS 141(R)
  Business Combinations
  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
  FSP
    FAS 157-3
  FAS 157-3, Determining the Fair Value of a Financial Asset When the
    Market for that Asset is Not Active FAS 157-3). FAS 157-3 FAS 157-3
 10




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  FAS 157-3
  SFAS 160
  Non-controlling Interests in Consolidated Financial
    Statements  an amendment of ARB No. 51
  SFAS 161
  Disclosures About Derivative Instruments and Hedging
    Activities  an amendment of FASB Statement
    No. 133 Accounting for Derivative Instruments
    and Hedging Activities Disclosure
    about Fair Value of Financial Instruments
  SFAS 162
  The
    Hierarchy of Generally Accepted Accounting Principles
 11




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  3.
    Comprehensive
    (Loss) Income    Three Months


Nine MonthsEnded September 30,


Ended September 30,2008


2007


2008


2007Net (loss) income

$
(44,225
)

$
25,929


$
(63,492
)

$
29,733Proportionate share of Telesat Holdco other comprehensive income


(1,049
)






(1,416
)


Cumulative translation adjustment






176



(498
)


235Amortization of prior service credits and net actuarial gains,
    net of taxes


(494
)


(469
)


(1,482
)


(1,407
)Unrealized gain on foreign currency hedge, net of taxes


6,816







6,816



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


(609
)


444



(2,768
)


(3,515
)Reclassification adjustment for gains (losses) included in net
    income


585



(4,690
)


2,584



(3,215
)Comprehensive (loss) income

$
(38,976
)

$
21,390


$
(60,256
)

$
21,831   4.
    Contracts-in-Process  September 30,


December 31,2008


2007(In thousands)Amounts billed

$
105,437


$
60,548Unbilled receivables


97,724



48,828$
203,161


$
109,376   contracts-in-process
  5.
    Financial
    Instruments, Derivative Instruments and Hedging  Foreign
    Currency
   12




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##### Table of Contents



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


U.S.$Future revenues  Japanese Yen

¥
103


$
1.0Future expenditures  Japanese Yen

¥
3,157


$
29.8Contracts-in-process,
    unbilled receivables  Japanese Yen

¥
10


$
0.1Future expenditures  EUROs


3.7


$
5.4   Derivatives
              To SellAt


AtEuro


Contract


MarketMaturity

Amount


Rate


Rate2008


11,300


$
17,733


$
18,7452009


57,065



88,413



92,4522010


19,210



29,388



30,5102011


23,493



35,663



36,900
111,068


$
171,197


$
178,607    13




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            6.
    Property,
    Plant and Equipment  September 30,


December 31,2008


2007(In thousands)Land and land improvements

$
26,799


$
26,799Buildings


52,138



49,917Leasehold improvements


10,550



8,691Equipment, furniture and fixtures


123,608



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


6,438



Other construction in progress


25,446



18,552244,979



198,803Accumulated depreciation and amortization


(68,420
)


(50,975
)$
176,559


$
147,828  14




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    7.
    Investments
    in Affiliates    September 30,


December 31,2008


2007Telesat Holdings Inc

$
389,502


$
479,579XTAR, LLC


74,226



86,617$
463,728


$
566,196   Reporting Comprehensive
    Income
    Three Months


Nine MonthsEnded September 30,


Ended September 30,2008


2007


2008


2007Telesat Holdings Inc.

$
(35,318
)

$



$
(88,661
)

$
XTAR


(4,035
)


(2,322
)


(12,391
)


(7,214
)Globalstar service provider partnerships














2,955$
(39,353
)

$
(2,322
)

$
(101,052
)

$
(4,259
)     Three Months


Nine MonthsEnded September 30,


Ended September 30,2008


2007


2008


2007Revenues

$
20,856


$
8


$
69,290


$
416Elimination of Lorals proportionate share of profits
    relating to affiliate transactions


(1,050
)


(15
)


(4,864
)


(46
)Profits relating to affiliate transactions not eliminated


591



13



2,731



37   Telesat
    Canada
  1 3 2 3 2 3
   15




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  true-up
      Three Months Ended


Nine Months EndedSeptember 30, 2008


September 30, 2008Revenues

$
169.7


$
508.6Operating expenses


(116.6
)


(365.7
)Depreciation and amortization


(55.1
)


(170.3
)Operating income


53.1



142.9Interest expense


(58.9
)


(174.4
)Other expense, net


(52.3
)


(100.8
)Income tax benefit


4.6



1.3Net loss


(53.5
)


(131.0
)     September 30,


December 31,2008


2007Current assets

$
137.0


$
143.7Total assets


5,240.8



5,610.0Current liabilities


205.5



229.5Long-term debt, including current portion


2,895.5



2,828.0Total liabilities


4,025.6



4,156.7Redeemable preferred stock


132.9



143.1Shareholders equity


1,082.3



1,310.2     1 3
 16




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      XTAR
    o o XTAR-LANT,
    XTAR-LANT XTAR-LANT
   17




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  paid-in-kind
      Three Months


Nine MonthsEnded September 30,


Ended September 30,2008


2007


2008


2007Revenues

$
5.0


$
4.6


$
14.4


$
13.9Operating loss


(6.1
)


(3.6
)


(18.7
)


(11.0
)Depreciation and amortization


(2.4
)


(2.4
)


(7.2
)


(7.3
)Net loss


(7.2
)


(4.1
)


(22.2
)


(12.4
)     September 30,


December 31,2008


2007Current assets

$
5.4


$
8.9Total assets


114.2



124.9Current liabilities


35.2



29.6Total liabilities


72.6



64.4Members equity


41.6



60.5   Other
   18




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  available-for-sale other-than-temporary
    8.
    Intangible
    Assets  Intangible
    Assets
    Weighted AverageRemaining


September 30, 2008


December 31, 2007Amortization Period


Gross


Accumulated


Gross


Accumulated(Years)


Amount


Amortization


Amount


AmortizationInternally developed software and technology


3


$
59.0


$
(32.4
)

$
59.0


$
(24.3
)Trade names


17



9.2



(1.4
)


9.2



(1.0
)$
68.2


$
(33.8
)

$
68.2


$
(25.3
)     2008

$
11.32009


11.32010


9.22011


2.92012


2.3   contracts-in-process,
  9.
    Debt  Loral
    Skynet Notes
   19




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        SS/L
    Letter of Credit Facility
    SS/L
    Credit Agreement
    10.
    Shareholders
    Equity  Preferred
    Stock/Non-Voting Common Stock
  Series A-1 Series A-1 Series B-1 Series B-1 Series A-1
   20




---



##### Table of Contents



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




---



##### Table of Contents



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

$
35.0Warranty costs incurred including payments


(0.7
)Accruals relating to pre-existing contracts (including changes
    in estimates)


1.1Balance of deferred amounts at September 30, 2008

$
35.4  22




---



##### Table of Contents



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




---



##### Table of Contents



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




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Regulatory
    Matters
    Legal
    Proceedings
  New York
    Shareholder Litigation
    Babus Babus
  Babus
  Delaware
    Shareholder Litigation
  In re: Loral Space and
    Communications Inc. Consolidated Litigation
 25




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Shareholders Equity, Preferred Stock/Non-Voting Common
    Stock
     26




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      In re: Loral Space and Communications Inc.
    Consolidated Litigation
  Skynet
    Noteholders Litigation
           27




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Informal
    SEC Inquiry
    Rainbow
    DBS Litigation
  Reorganization Matters
  Indemnification
    Claims of Directors and Officers of Old Loral
  In re: Loral Space ERISA Litigation In re: Loral Space & Communications Ltd. Securities
    Litigation
 28




---



##### Table of Contents



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




---



##### 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 In re: Loral
    Space ERISA Litigation
  In re: Loral Space ERISA Litigation
 30




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Globalstar
    Related Class Action Securities Litigations
  In re: Globalstar
    Securities Litigation Rule 10b-5
   31




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  In re: Loral Space & Communications
    Ltd. Securities Litigation Rule 10b-5
  In re: Loral
    Space & Communications Ltd. Securities Litigation In
    re: Loral Space & Communications Ltd. Securities
    Litigation
  Reorganization
    Matters
     32




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Other and
    Routine Litigation
    12.
    (Loss)
    Income Per Share    Three Months


Nine MonthsEnded September 30,


Ended September 30,2008


2007


2008


2007Basic:Net (loss) income applicable to common shareholders

$
(50,439
)

$
19,988


$
(81,793
)

$
(9,344
)Weighted average common shares outstanding


20,184



20,103



20,169



20,071Basic (loss) income per share

$
(2.50
)

$
0.99


$
(4.06
)

$
(0.47
)   33




---



##### Table of Contents



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


Nine MonthsEnded September 30,


Ended September 30,2008


2007


2008


2007Diluted:Net (loss) income applicable to common shareholders

$
(50,439
)

$
19,988


$
(81,793
)

$
(9,344
)Plus:Dividends on Loral Series-1 Preferred Stock






800







Beneficial conversion feature related to dividends on Loral
    Series-1 Preferred Stock






171







Net (loss) income for diluted

$
(50,439
)

$
20,959


$
(81,793
)

$
(9,344
)Common and potential common shares:Weighted average common shares outstanding


20,184



20,103



20,169



20,071Assumed exercise of stock options






361







Assumed conversion of Loral Series-1 Preferred Stock






1,417







Common and potential common shares


20,184



21,881



20,169



20,071Diluted (loss) income per share

$
(2.50
)

$
0.96


$
(4.06
)

$
(0.47
)   Series A-1 Series B-1
  13.
    Segments  Disclosures about
    Segments of an Enterprise and Related Information
     34




---



##### Table of Contents



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




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Three
    Months Ended September 30, 2008
  Satellite


SatelliteManufacturing


Services(1)


Corporate(2)


TotalRevenues and Adjusted EBITDA:Revenues

$
191.7


$
169.7






$
361.4Intersegment
    revenues(3)


24.6











24.6Operating segment revenues

$
216.3


$
169.7







386.0Intercompany
    eliminations(4)














(3.8
)Affiliate
    eliminations(1)














(169.7
)Revenues as reported













$
212.5Segment Adjusted EBITDA before eliminations

$
9.6


$
108.2


$
(3.4
)

$
114.4Intercompany
    eliminations(4)














(0.3
)Affiliate
    eliminations(1)














(108.2
)Adjusted EBITDA














5.9Depreciation and amortization














(11.7
)Operating loss














(5.8
)Interest and investment income














1.9Interest expense














(0.5
)Impairment of available for sale securities














(1.0
)Other expense














(0.1
)Income tax benefit














0.6Equity in net losses of affiliates





$
(35.3
)

$
(4.0
)


(39.3
)Net loss













$
(44.2
)  36




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Nine
    Months Ended September 30, 2008
  Satellite


SatelliteManufacturing


Services(1)


Corporate(2)


TotalRevenues and Adjusted EBITDA:Revenues

$
569.8


$
508.6






$
1,078.4Intersegment
    revenues(3)


76.5











76.5Operating segment revenues

$
646.3


$
508.6







1,154.9Intercompany
    eliminations(4)














(7.2
)Affiliate
    eliminations(1)














(508.6
)Revenues as reported













$
639.1Segment Adjusted EBITDA before eliminations

$
24.5


$
319.4


$
(9.7
)

$
334.2Intercompany
    eliminations(4)














(0.8
)Affiliate
    eliminations(1)














(313.2
)Adjusted EBITDA














20.2Depreciation and amortization














(32.3
)Operating loss














(12.1
)Interest and investment income














10.2Interest expense














(1.2
)Gain on litigation recovery














58.3Impairment of available for sale securities














(4.5
)Other expense














(0.3
)Income tax provision














(12.9
)Equity in net losses of affiliates





$
(88.6
)

$
(12.4
)


(101.0
)Net loss













$
(63.5
)Other Data:Segment total assets

$
936.9


$
5,630.3


$
214.0


$
6,781.2Affiliate
    eliminations(1)






(5,240.8
)






(5,240.8
)Total assets as
    reported(7)

$
936.9


$
389.5


$
214.0


$
1,540.4  37




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##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Three
    Months Ended September 30, 2007
  Satellite


SatelliteManufacturing


Services


Corporate(2)


TotalRevenues and Adjusted EBITDA:Revenues

$
194.9


$
40.7






$
235.6Intersegment revenues


12.4



0.7







13.1Operating segment revenues

$
207.3


$
41.4







248.7Eliminations(4)














(13.1
)Operating revenues as reported













$
235.6Segment Adjusted EBITDA before eliminations

$
12.8


$
20.5


$
(6.7
)

$
26.6Eliminations(4)














(2.0
)Adjusted EBITDA














24.6Depreciation and
    amortization(5)

$
(9.8
)

$
(13.2
)

$
(1.5
)


(24.5
)Operating income














0.1Interest and investment income














10.5Interest
    expense(6)














4.0Unrealized gain on foreign exchange contracts














56.7Loss on extinguishment of debt














(16.2
)Other income














3.3Income tax provision














(23.1
)Equity in net losses of in affiliates














(2.3
)Minority Interest














(7.1
)Net income













$
25.9  38




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Nine
    Months Ended September 30, 2007
  Satellite


SatelliteManufacturing


Services


Corporate(2)


TotalRevenues and Adjusted EBITDA:Revenues

$
573.9


$
108.2






$
682.1Intersegment revenues


44.1



2.1







46.2Operating segment revenues

$
618.0


$
110.3







728.3Eliminations(4)














(46.1
)Operating revenues as reported













$
682.2Segment Adjusted EBITDA before eliminations

$
33.0


$
46.1


$
(23.8
)

$
55.3Eliminations(4)














(5.6
)Adjusted EBITDA














49.7Depreciation and
    amortization(5)

$
(26.0
)

$
(39.4
)

$
(11.1
)


(76.5
)Operating loss














(26.8
)Interest and investment income














27.7Interest
    expense(6)














(1.0
)Unrealized gain on foreign exchange contracts














122.1Loss on extinguishment of debt














(16.2
)Other income














3.6Income tax provision














(54.9
)Equity in net losses of affiliates














(4.3
)Minority Interest














(20.5
)Net income













$
29.7Other Data:Total
    assets(7)

$
923.0


$
824.1


$
299.7


$
2,046.8     (1)

    
    Satellite Services for 2008 represents Telesat Canada for the
    three and nine months ended September 30, 2008. Affiliate
    eliminations represent the elimination of amounts attributable
    to Telesat Canada whose results are reported in our condensed
    consolidated statement of operations as equity in net losses of
    affiliates and in our condensed consolidated balance sheet as
    investment in affiliates.(2)

    
    Represents corporate expenses incurred in support of our
    operations. Corporate, for 2008, also includes our equity
    investment in XTAR.(3)

    
    In 2008, intersegment revenues includes $20.9 million and
    $69.3 million for the three and nine months ended
    September 30, 2008, respectively, of revenue from
    affiliates.(4)

    
    Represents the elimination of intercompany sales and
    intercompany Adjusted EBITDA, primarily for satellites under
    construction by SS/L.(5)

    
    Includes non-cash stock based compensation of $1.9 million
    and $12.2 million for the three and nine months ended
    September 30, 2007, respectively, as a result of
    shareholder approval of the Stock Incentive Plan amendments on
    May 22, 2007.(6)

    
    Interest expense for the three and nine months ended
    September 30, 2007, includes a reduction of
    $5.5 million resulting from the reduction of warranty
    liability. 39




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (7)

    
    Amounts are presented after the elimination of intercompany
    profit. Total assets as of September 30, 2008 includes
    $188 million of goodwill for Satellite Manufacturing. In
    addition, total assets as reported excludes $2.3 billion of
    satellite services goodwill related to Telesat Canada as of
    September 30, 2008.  14.
    Related
    Party Transactions  Transactions
    with Affiliates
  Telesat
    Canada
             40




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Ku-band
    XTAR
    MHR
  Delaware Shareholder Litigation
 41




---



##### Table of Contents



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


Nine MonthsEnded September 30,


Ended September 30,2008


2007


2008


2007Loral Skynet Preferred StockDividends paid in cash

$



$
0.5


$



$
1.2Dividends paid in the form of additional shares Number of shares






23,399







44,539 Amount

$



$
4.7


$



$
8.9Loral Skynet NotesInterest payments on Loral Skynet Notes





$
5.0






$
9.0Redemption premium on Loral Skynet Notes





$
5.6






$
5.6Loral Series-1 Preferred StockDividends paid in the form of additional shares Number of shares


20,289



18,829



59,754



28,155 Amount

$
6.1


$
5.7


$
18.0


$
8.5     Other
    Relationships
    15.
    Subsequent
    Events  SS/L
    Credit Agreement
     42




---



##### Table of Contents



LORAL
    SPACE & COMMUNICATIONS INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          
    SS/L must not permit its consolidated leverage ratio as of
    (i) the last day of any period of four consecutive fiscal
    quarters or (ii) the date of incurrence of certain
    indebtedness to exceed 3.50 to 1.00 from October 16, 2008
    to September 29, 2009, 3.25 to 1.00 from September 30,
    2009 through December 30, 2009 and 3.00 to 1.00 from
    December 31, 2009 and thereafter until the Maturity Date.
    SS/L must maintain a minimum consolidated interest coverage
    ratio of at least 3.50 to 1.00 as of the last day of any fiscal
    quarter for the period of four consecutive fiscal quarters
    ending on such day.  SS/L
 43




---



##### 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.
      1 3
  and/or
  Disclosure
    Regarding Forward-Looking Statements
  Except for the historical information contained in the
    following discussion and analysis, the matters discussed below
    are not historical facts, but are forward-looking
    statements as that term is defined in the Private
    Securities Litigation Reform Act of 1995. In addition, we or our
    representatives have made and may continue to make
    forward-looking statements, orally or in writing, in other
    contexts. These forward-looking statements can be identified by
    the use of words such as believes,
    expects, plans, may,
    will, would, could,
    should, anticipates,
    estimates, project, intend,
    or outlook or other variations of these words. These
    statements, including without limitation, those relating to
    Telesat Canada, are not guarantees of future performance and
    involve risks and uncertainties that are difficult to predict or
    quantify. Actual events or results may differ materially as a
    result of a wide variety of factors and conditions, many of
    which are beyond our control. For a detailed discussion of these
    and other factors and conditions, please refer to the
    Commitments and Contingencies section below and to our other
    periodic reports filed with the Securities and Exchange
    Commission (SEC). We operate in an industry sector
    in which the value of securities may be volatile and may be
    influenced by economic and other factors beyond our control. We
    undertake no obligation to update any forward-looking
    statements.
  Overview
  Businesses
   44




---



##### Table of Contents



Satellite
    Manufacturing
            Satellite
    Services
  1 3
   45




---



##### Table of Contents



1 3
    Future
    Outlook
       46




---



##### Table of Contents



47




---



##### Table of Contents



Ka-band
  Consolidated
    Operating Results
  Form 10-K
  Changes in Critical Accounting Policies
  Consolidated Operating Results 
        Disclosures about
    Segments of an Enterprise and Related Information.
 48




---



##### Table of Contents



Revenues:
  Three Months


Nine MonthsEnded September 30,


Ended September 30,2008


2007


2008


2007(In millions)


(In millions)Satellite Manufacturing

$
216.3


$
207.3


$
646.3


$
618.0Satellite Services


169.7



41.4



508.6



110.3Segment revenues


386.0



248.7



1,154.9



728.3Eliminations(1)


(3.8
)


(13.1
)


(7.2
)


(46.1
)Affiliate
    eliminations(2)


(169.7
)






(508.6
)


Revenues as
    reported(3)

$
212.5


$
235.6


$
639.1


$
682.2       Adjusted
    EBITDA:
  Three Months


Nine MonthsEnded


EndedSeptember 30,


September 30,2008


2007


2008


2007(In millions)


(In millions)Satellite Manufacturing

$
9.6


$
12.8


$
24.5


$
33.0Satellite Services


108.2



20.5



319.4



46.1Corporate
    expenses(4)


(3.4
)


(6.7
)


(9.7
)


(23.8
)Segment Adjusted EBITDA before eliminations


114.4



26.6



334.2



55.3Eliminations(1)


(0.3
)


(2.0
)


(0.8
)


(5.6
)Affiliate
    eliminations(2)


(108.2
)






(313.2
)


Adjusted EBITDA

$
5.9


$
24.6


$
20.2


$
49.7    49




---



##### Table of Contents



Reconciliation
    of Adjusted EBITDA to Net Income (Loss):
  Three Months


Nine MonthsEnded September 30,


Ended September 30,2008


2007


2008


2007(In millions)


(In millions)Adjusted EBITDA

$
5.9


$
24.6


$
20.2


$
49.7Depreciation and
    amortization(5)


(11.7
)


(24.5
)


(32.3
)


(76.5
)Operating (loss) income


(5.8
)


0.1



(12.1
)


(26.8
)Interest and investment income


1.9



10.5



10.2



27.7Interest
    expense(6)


(0.5
)


4.0



(1.2
)


(1.0
)Gain on foreign exchange contracts






56.7







122.1Gain on litigation recovery










58.3



Impairment of available for sale securities


(1.0
)






(4.5
)


Loss on extinguishment of debt






(16.2
)






(16.2
)Other income (expense)


(0.1
)


3.3



(0.3
)


3.6Income tax benefit (provision)


0.6



(23.1
)


(12.9
)


(54.9
)Equity in net losses of affiliates


(39.3
)


(2.3
)


(101.0
)


(4.3
)Minority interest






(7.1
)






(20.5
)Net (loss) income

$
(44.2
)

$
25.9


$
(63.5
)

$
29.7     (1)

    
    Represents the elimination of intercompany sales and
    intercompany Adjusted EBITDA for satellites under construction
    by SS/L for Loral and its wholly owned subsidiaries and for
    Satellite Services leasing transponder capacity to SS/L.(2)

    
    Represents the elimination of amounts attributed to Telesat
    Canada whose results are reported in our consolidated statements
    of operations as equity in net losses of affiliates.(3)

    
    Includes revenues from affiliates of $20.9 million and nil
    for the three months ended September 30, 2008 and 2007,
    respectively, and $69.3 million and $0.4 million for
    the nine months ended September 30, 2008 and 2007,
    respectively.(4)

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

    
    Includes non-cash stock based compensation of $1.4 million
    and $4.9 million for the three and nine months ended
    September 30, 2008, respectively and $1.9 million and
    $12.2 million for the three and nine months ended 50




---



##### Table of Contents



September 30, 2007, respectively, as a result of
    shareholder approval of the Stock Incentive Plan amendments on
    May 22, 2007 (see Note 10 to the financial statements).(6)

    
    Interest expense for the three and nine months ended
    September 30, 2007, includes a reduction of
    $5.5 million resulting from the reduction of warranty
    liability.  Three
    Months Ended September 30, 2008 Compared With
    September 30, 2007
    Revenues
    from Satellite Manufacturing
  Three MonthsEnded September 30,


% Increase/2008


2007


(Decrease)(In millions)Revenues from Satellite Manufacturing

$
216


$
207



4
%Eliminations


(4
)


(12
)


(69
)%Revenues from Satellite Manufacturing as reported

$
212


$
195



9
%     Revenues
    from Satellite Services
  Three MonthsEnded September 30,2008


2007(In millions)Revenues from Satellite Services

$



$
41Eliminations






(1
)Revenues from Satellite Services as reported

$



$
40    51




---



##### Table of Contents



Cost
    of Satellite Manufacturing
  Three MonthsEnded September 30,


% Increase/2008


2007


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

$
184


$
163



12
%Depreciation and amortization


11



10



8
%Total cost of Satellite Manufacturing as reported

$
195


$
173



12
%Cost of Satellite Manufacturing as a % of Satellite
    Manufacturing revenues as reported


92
%


89
%     Cost
    of Satellite Services
  Three MonthsEnded September 30,2008


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

$



$
14Depreciation and amortization






13Total cost of Satellite Services as reported

$



$
27Cost of Satellite Services as a % of Satellite Services revenues
    as reported






66
%     Selling,
    General and Administrative Expenses
  Three MonthsEnded September 30,


% Increase/2008


2007


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

$
24


$
35



(33
)%% of revenues as reported


10
%


15
%    52




---



##### Table of Contents



Interest
    and Investment Income
  Three MonthsEnded September 30,2008


2007(In millions)Interest and Investment Income

$
2


$
11     Interest
    Expense
  Three MonthsEndedSeptember 30,2008


2007(In millions)Interest cost before capitalized interest

$
1


$
(1
)Capitalized interest






(3
)Interest expense

$
1


$
(4
)   SS/L
  Gain
    on Foreign Exchange Contracts
    Other
    Expense (Income)
    Impairment
    of Available for Sale Securities
  other-than-temporary
  Loss
    on Extinguishment of Debt
   53




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##### Table of Contents



Income
    Tax Provision
  paid-in-capital.
    Equity
    in Net Losses of Affiliates
  Three MonthsEnded September 30,2008

2007(In millions)Telesat

$
(35
)

$
XTAR


(4
)


(2
)$
(39
)

$
(2
)   1 3
    Three MonthsEnded September 30, 2008Statement of Operations Data:Revenues

$
169.7Operating expenses


(116.6
)Depreciation and amortization


(55.1
)Operating income


53.1Interest expense


(58.9
)Other expense, net


(52.3
)Income tax benefit


4.6Net loss


(53.5
)      54




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##### Table of Contents



Minority
    Interest
    Nine
    Months Ended September 30, 2008 Compared With
    September 30, 2007
  Revenues
    from Satellite Manufacturing
  Nine MonthsEnded September 30,


% Increase/2008


2007


(Decrease)(In millions)Revenues from Satellite Manufacturing

$
646


$
618



5
%Eliminations


(7
)


(44
)


(84
)%Revenues from Satellite Manufacturing as reported

$
639


$
574



11
%     Revenues
    from Satellite Services
  Nine MonthsEnded September 30,2008


2007(In millions)Revenues from Satellite Services

$



$
110Eliminations






(2
)Revenues from Satellite Services as reported

$



$
108    55




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##### Table of Contents



Cost
    of Satellite Manufacturing
  Nine MonthsEnded September 30,


% Increase/2008


2007


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

$
558


$
495



13
%Depreciation and amortization


28



26



8
%Total cost of Satellite Manufacturing as reported

$
586


$
521



13
%Cost of Satellite Manufacturing as a % of Satellite
    Manufacturing revenues as reported


92
%


91
%     Cost
    of Satellite Services
  Nine MonthsEndedSeptember 30,2008


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

$



$
38Depreciation and amortization






39Total cost of Satellite Services as reported

$



$
77Cost of Satellite Services as a % of Satellite Services revenues
    as reported






72
%     Selling,
    General and Administrative Expenses
  Nine MonthsEnded September 30,


% Increase/2008


2007


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

$
71


$
111



(36
)%% of revenues as reported


10
%


16
%    56




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##### Table of Contents



Gain
    on Recovery from Customer Bankruptcy
    Interest
    and Investment Income
  Nine MonthsEndedSeptember 30,2008

2007(In millions)Interest and investment income

$
10


$
28     Interest
    Expense
  Nine MonthsEndedSeptember 30,2008


2007(In millions)Interest cost before capitalized interest

$
1


$
10Capitalized interest






(9
)Interest expense

$
1


$
1     Gain
    on Foreign Exchange Contracts
    Gain
    on Litigation Recovery
   57




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##### Table of Contents



Impairment
    of Available for Sale Securities
    Other
    Income (Expense)
    Loss
    on Extinguishment of Debt
    Income
    Tax Provision
  paid-in-capital.
    Equity
    in Net Losses of Affiliates
  Nine MonthsEnded September 30,2008


2007(In millions)Telesat

$
(89
)

$
XTAR


(12
)


(7
)Other






3$
(101
)

$
(4
)    58




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##### Table of Contents



Nine MonthsEnded September 30, 2008Statement of Operations Data:Revenues

$
508.6Operating expenses


(365.7
)Depreciation and amortization


(170.3
)Operating income


142.9Interest expense


(174.4
)Other expense, net


(100.8
)Income tax benefit


1.3Net loss


(131.0
)   September 30,


December 31,2008


2007Balance Sheet Data:Current assets

$
137.0


$
143.7Total assets


5,240.8



5,610.0Current liabilities


205.5



229.5Long-term debt, including current portion


2,895.5



2,828.0Total liabilities


4,025.6



4,156.7Redeemable preferred stock


132.9



143.1Shareholders equity


1,082.3



1,310.2           Minority
    Interest
   59




---



##### Table of Contents



Backlog
    September 30,


December 31,2008


2007Satellite Manufacturing

$
1,416


$
1,025Satellite Services


4,800



5,251Total backlog before eliminations


6,216



6,276Satellite Manufacturing eliminations


(30
)


Eliminations


(4,800
)


(5,251
)Total backlog

$
1,386


$
1,025   Liquidity
    and Capital Resources
      SS/L,
   60




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##### Table of Contents



61




---



##### Table of Contents



Telesat
    Canada
  Cash and
    Available Credit
      Liquidity
      Debt
    Senior
    Secured Credit Facilities
     62




---



##### Table of Contents



Revolving
    Facility
    Canadian
    Term Loan Facility
    U.S. Term
    Loan Facility
        Senior
    Notes
    Senior
    Bridge Loan
   63




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##### Table of Contents



Senior
    Subordinated Notes
    Senior
    Subordinated Bridge Loan
    Interest
    Expense
    Derivatives
          Contractual
    Obligations
  Form 10-K
 64




---



##### Table of Contents



Net
    Cash Used in Operating Activities
  contracts-in-process
  contracts-in-process
  Net
    Cash Used in Investing Activities
      Net
    Cash Provided by Financing Activities
      Affiliate
    Matters
    Commitments
    and Contingencies
   65




---



##### Table of Contents



Other
    Matters
  Accounting
    Pronouncements
  SFAS 141(R)
  Business Combinations
  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
  FSP
    FAS 157-3
  FAS 157-3, Determining the Fair Value of a Financial Asset When the
    Market for that Asset is Not Active FAS 157-3). FAS 157-3 FAS 157-3 FAS 157-3
  SFAS 160
  Non-controlling Interests in Consolidated Financial
    Statements  an amendment of ARB No. 51
  SFAS 161
  Hedging Activities Disclosure about
    Fair Value of Financial Instruments
 66




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##### Table of Contents



SFAS 162
  The
    Hierarchy of Generally Accepted Accounting Principles
 
  Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk  Foreign
    Currency
      Foreign Currency


U.S.$Future revenues  Japanese Yen

¥
103


$
1.0Future expenditures  Japanese Yen

¥
3,157


$
29.8Contracts-in-process,
    unbilled receivables  Japanese Yen

¥
10


$
0.1Future expenditures  EUROs


3.7


$
5.4   Derivatives
           67




---



##### Table of Contents



To SellAt


AtEuro


Contract


MarketMaturity

Amount


Rate


Rate2008


11,300


$
17,733


$
18,7452009


57,065



88,413



92,4522010


19,210



29,388



30,5102011


23,493



35,663



36,900
111,068


$
171,197


$
178,607      
  Item 4.
    Disclosure
    Controls and Procedures  Disclosure controls and procedures. Rules 13a-15(e) 15d-15(e) Form 10-K Internal
    Control  Integrated Framework
  Form 10-K
  Form 10-Q
  Changes in internal control over financial
    reporting.
 68




---



##### Table of Contents



and/or
 
  PART II.
    OTHER INFORMATION
 
  Item 1.
    Legal
    Proceedings  Form 10-Q
 
  Item 1A.
    Risk
    Factors  Form 10-K Managements Discussion and Analysis of Financial
    Condition and Results of Operations Form 10-K, and/or
 
  Item 6.
    Exhibits           69




---



##### 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
   70




---



##### Table of Contents



EXHIBIT INDEX
  Exhibit No.



DescriptionExhibit 31
.1



Certification of Chief Executive Officer pursuant to
    18 U.S.C. § 1350, as adopted pursuant to § 302 of
    the Sarbanes-Oxley Act of 2002.Exhibit 31
.2



Certification of Chief Financial Officer pursuant to
    18 U.S.C. § 1350, as adopted pursuant to § 302 of
    the Sarbanes-Oxley Act of 2002.Exhibit 32
.1



Certification of Chief Executive Officer pursuant to
    18 U.S.C. § 1350, as adopted pursuant to § 906 of
    the Sarbanes-Oxley Act of 2002.Exhibit 32
.2



Certification of Chief Financial Officer pursuant to
    18 U.S.C. § 1350, as adopted pursuant to § 906 of
    the Sarbanes-Oxley Act of 2002.  71