NEW YORK - February 14, 2002 - Loral Space & Communications (NYSE:LOR) today reported its financial results for the three months and year ended December 31, 2001, and provided guidance for 2002 performance.

Against the backdrop of a tough industry and global economic environment, Loral performed well:

• For the year, Loral EBITDA rose 71 percent and Loral Skynet EBITDA was up 35 percent.
• Per share performance improved over 2000 and exceeded company and analyst expectations. Fourth quarter loss was $0.13 per share; full year loss was $0.86 per share.
• Cash and available credit at December 31, 2001, reached $229 million, significantly better than forecast.

"2001 was marked by significant positive achievements at Loral," stated Bernard L. Schwartz, chairman and chief executive officer. "We met our financial and operating targets. The fixed satellite services segment posted solid gains in both revenue and EBITDA. A number of important long-term contracts were signed with customers. Our three Telstar satellites under construction for Skynet will join the fleet within 15 months, adding important new income-producing resources, at high incremental margins, to our growing fleet. Backlog of $1.4 billion on the existing Skynet fleet provides real visibility into future revenue growth. The FSS segment and Skynet in particular are very well-positioned for future growth.

"Our satellite manufacturing unit captured a nearly 25 percent share of worldwide bookings for commercial satellite construction, and continued to bring costs and headcount down to bolster its bottom line. Backlog there remained strong at $1.6 billion.

"Addressing liquidity, Loral took three major financing steps in 2001: a debt exchange, bank credit maturity extensions and a preferred stock exchange, all of which combined to put the company on firm financial footing."

Financial Results for the Periods Ended December 31, 2001

The fourth quarter and full-year results for 2001 included two unusual, non-operating items:

• A gain of $22 million or $0.07 per share on Loral CyberStar's debt exchange, and
• A charge of $12 million or $0.04 per share for future payments to the U.S. government to settle a case relating to the company's involvement in a review of a Chinese rocket launch failure in 1996.

For the fourth quarter, reported EBITDA rose to $53 million compared to a loss of $4 million last year; for the year, EBITDA rose 71 percent to $223 million from $130 million last year. The improvement was driven by a strong performance at Loral Skynet.

Loral's reported revenues were $273 million for the quarter and $1.1 billion for the year, compared to $289 million and $1.2 billion for the same periods of 2000, with the decline in satellite manufacturing revenue offsetting a $64 million, or 20 percent, revenue gain for the year at Skynet.

Operating profit for 2001 was $6 million, excluding the charge for the settlement on the China matter, versus an operating loss of $86 million last year.

Loral's net loss for the fourth quarter was $42 million or $0.13 per share, a sharp improvement over $1.2 billion or $3.99 per share posted last year when Loral wrote off nearly all of its investments in Globalstar, amounting to $1.1 billion or $3.68 per share. Net loss for 2001 was $277 million or $0.86 per share, compared to last year's net loss of $1.5 billion or $5.20 per share.

2001 full-year results also included a second quarter non-operating charge of $29 million or $0.09 per share for non-cash dividend charges related to the preferred stock exchange.

Year-end Cash Position

The company's cash and available credit on December 31, 2001, was $229 million, after capital spending of approximately $238 million primarily for the continued construction of three satellites for Loral Skynet, interest and preferred dividend payments of $195 million and debt repayment of $86 million. Our better than anticipated cash position was accomplished without affecting satellite construction and launch plans.

The debt-for-debt exchange reduced Loral's principal amount of debt by $228 million. The treatment under generally accepted accounting principles delays recognition of this debt reduction over several years. Accordingly, Loral's total balance sheet debt was $2.4 billion at December 31, 2001, while the principal amount of the debt was $2.1 billion.

Bookings and Backlog

Loral's total bookings in the fourth quarter were $528 million, compared to $651 million a year ago. After de-bookings of $208 million, mostly attributable to a single FSS customer, net bookings for the quarter were $320 million.

For the full year, total bookings were $1.3 billion and de-bookings totaled $641 million, resulting in net bookings of $649 million versus net bookings last year of nearly $2 billion. The year-to-year bookings decline and increase in de-bookings reflects the global economic downturn as well as customers' financing issues and the postponement or rescheduling of certain projects, most of them related to the delivery of broadband data services. De-bookings had no substantial impact on revenue or earnings this year; their impact will be spread over a number of years, during which anticipated re-bookings of the freed-up capacity will further mitigate any impact.

FSS segment bookings in 2000 were unusually high because of the then-recent addition of four satellites to Skynet's fleet.

SS/L booked a total of five new satellite contracts in 2001, a nearly 25 percent global market share. Its bookings were $405 million during the fourth quarter compared to last year's fourth quarter bookings of $460 million, and $795 million for the year, down from $1.4 billion in 2000. During the quarter SS/L converted authorizations to proceed (ATPs) into firm contracts for the construction of SpainSat, XTAR-EUR and MBSAT.

Loral continues to have a healthy backlog in its core businesses. The company ended 2001 with a net funded backlog of $2.7 billion compared to $3.2 billion a year ago. At year-end, Loral Skynet's backlog totaled $1.4 billion, nearly four times annual revenue. SS/L's backlog at year-end was $1.6 billion, down slightly from a year earlier. The data business ended the year with a backlog of $98 million, down from the year-end 2000 level, but equivalent to about one year's revenue.

Business Unit Year in Review

Loral Skynet is the company's largest cash generator and, as expected, it delivered excellent results in 2001. Compared to 2000, Skynet's annual revenue rose 20 percent to $389 million, EBITDA increased 35 percent to $276 million, and the EBITDA margin increased 8 percentage points to 71 percent.

The FSS segment as a whole also turned in a good year-over-year performance, with some softness at Satmex more than offset by Skynet's gains. FSS 2001 revenue totaled $531 million, up 15 percent, and EBITDA was $347 million, up 23 percent over last year. The FSS EBITDA margin for the year was 65 percent, up from 61 percent in 2000. For the fourth quarter, FSS revenues were up modestly versus last year and EBITDA increased 7 percent. The EBITDA margin for the quarter improved from 61 to 65 percent.

Loral Global Alliance fleet utilization (excluding Europe*Star) was 71 percent in the fourth quarter. Overall, regional market conditions remained consistent with the previous quarter: Ku-band experienced steady demand in Europe, North America and trans-Atlantic markets, and in parts of Asia. Oversupply continues to weaken Ku-band demand in Latin America, and in several C-band markets.

Overall, Loral's average transponder pricing remained stable during the fourth quarter at about $1.6 million per transponder. There was some erosion in Western Hemisphere C-band rates but because of its desirable orbital locations, Loral's Ku-band rates have been constant.

Skynet has three satellites in late stages of construction: Telstar 13, a "condo" satellite shared with Echostar and scheduled to launch and enter service in the fourth quarter of 2002; Estrela do Sul, expected to launch at the end of this year or early 2003; and Telstar 8, scheduled for launch in the first quarter of 2003. All three are large, high-powered satellites based on SS/L's 1300 satellite bus. These satellites will expand Skynet's geographic reach to Brazil and Latin America, increase its on-orbit back-up capacity, and provide Ka-band capacity for two-way data transmission, all important enhancements for the Loral Global Alliance.

Satellite Manufacturing and Technology

Financial performance in the satellite manufacturing industry suffered in 2001 for numerous reasons. There is more capacity in the industry than needed at a time when, because of economic conditions, customers' capital investment programs have been stretched over longer time-frames and demand for new satellites and satellite systems has slowed. In addition, the introduction of new technologies required by customer applications has increased development costs. To counter these factors, SS/L has increased productivity, reducing its workforce by 11 percent over the last three quarters. The company also is streamlining certain internal processes and has instituted tighter controls to ensure that subcontracted components are received on time and meet all customer requirements, in turn bringing stability and predictability to Loral's manufacturing performance. The benefits of these and other changes are expected to positively effect SS/L's financial performance over the course of 2002.

SS/L booked orders for five new satellites, nearly 25% of all contracts awarded worldwide in 2001 for large commercial geostationary satellites. SS/L is building DirecTV-7S, a spot beam satellite capable of operating in either of two orbital positions, which provides the direct-to-home operator with unique flexibility. XTAR-EUR and Spainsat, two X-band defense communications satellites, will provide services for government and military agencies in the US, Spain and other allied countries. Loral is leading the way in exploiting this attractive new commercial opportunity to serve government organizations. SS/L also booked Apstar V for Hong Kong-based APT Satellite, and MBSAT for Japan's Mobile Broadcasting Company.

SS/L's revenue was $219 million in the fourth quarter and $815 million for the year, a decline in each case of about $80 million from earlier expectations. Absent the $12 million charge for the settlement relating to the China matter, SS/L's EBITDA would have been a loss of $1 million for the quarter and a profit of $36 million for the year.

In 2001, SS/L began delivering the Intelsat IX series of satellites with the successful launches of Intelsat 901 and 902. The remaining five Intelsat spacecraft are scheduled for launch in 2002 and early 2003, with Intelsat 904 in the final stages of launch preparation at Arianespace's Kourou, French Guiana, spaceport for a scheduled launch on an Ariane-4 rocket this month. In 2002, SS/L expects to launch eight or nine of the 22 satellites that are currently under construction at the company's Palo Alto, California facilities. The $1.6 billion backlog softens the impact of the economic slowdown.

Data Services

Results for the data services segment were in line with expectations. Fourth quarter EBITDA, projected to be breakeven, was $4 million. For the year, the EBITDA loss was $13 million, a significant improvement over the 2000 EBITDA loss of $52 million which included $22 million in broadband investment costs. Revenue for the year totaled $98 million, a decline from $130 million in 2000.

During 2001, CyberStar continued the rollout of its ClearStream suite of IP-based services, including the introduction of ClearStream OverNet, Webcast and Live providing enhanced video and streaming media applications to the desktop. CyberStar also continued its heritage VSAT and Internet connectivity businesses.

Financing Activities in 2001

Loral completed three successful financing initiatives in 2001 to strengthen its liquidity and increase its financial flexibility. A preferred stock exchange in April resulted in savings of about $277 million in mandatory redemptions in 2006 and 2007, and eliminated $17 million in annual dividend payments. In a debt-for-debt exchange offer in December, Loral reduced its principal amount of debt by $228 million when Loral CyberStar issued $613 million in new 10 percent senior notes in exchange for $841 million principal amount of higher-rate senior notes. This exchange will reduce Loral's annual cash interest payments by $39 million. Finally, Loral amended both of its major bank credit facilities in December, extending the maturities to early 2005 for $1.1 billion in credit.

Outlook for 2002

The satellite industry is expected to face continued challenges this year as economic uncertainties, pricing pressures in both the manufacturing and services sectors, new technology introductions and industry consolidation activities continue.

Loral Skynet, with three satellites under construction, is poised for growth when those satellites enter revenue service in 2003. Skynet is expected to achieve single-digit growth in revenue and EBITDA in 2002.

Space Systems/Loral has eight or nine satellites scheduled to be shipped this year. Revenue in 2002 is expected to increase 15 to 20 percent over 2001. SS/L's EBITDA margin should also improve in 2002. Expectations for new satellite orders worldwide in 2002 are conservative, driven both by softness in many satellite services markets as operators review their capacity needs and by consolidation in the FSS sector.

Overall, Loral expects 2002 as-reported revenues to increase approximately 20 percent and EBITDA to rise approximately 15 percent.

Because of the requirements of generally accepted accounting principles, interest paid on the new Loral CyberStar notes will not be accounted for as an expense; instead, the book value of the notes will be reduced as interest is paid on them. As a result, cash interest for 2002 will be about $150 million, depending on interest rates, while interest expense will be about $70 million lower.

Along with most public companies, Loral is evaluating its recorded goodwill balance of $892 million in connection with new accounting requirements beginning in 2002. As a result of this evaluation, Loral will record a non-cash charge in the first quarter to write off a portion or all of its goodwill. In addition, under the new accounting rules, annual amortization of goodwill amounting to approximately $27 million will no longer be required.

Capital spending in 2002 is budgeted at $160 million, which includes the near completion of three satellites and ground-based spending of $50 million.

At the bottom line, Loral expects a net loss per common share of $0.40 to $0.50 in 2002, before the goodwill write-off - a substantial improvement over 2001 results.

Loral Space & Communications is a high technology company that concentrates primarily on satellite manufacturing and satellite-based services.

This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In addition, from time to time, Loral Space & Communications Ltd. or its representatives have made or may make forward-looking statements, orally or in writing. Such forward-looking statements may be included in, but are not limited to, various filings made by the company with the Securities and Exchange Commission, press releases or oral statements made with the approval of an authorized executive officer of the company. Actual results could differ materially from those projected or suggested in any forward-looking statements as a result of a wide variety of factors and conditions. These factors and conditions have been described in the section of the company's annual report on Form 10-K for the fiscal year ended December 31, 2000, entitled "Certain Factors That May Affect Future Results," and the company's other filings with the Securities and Exchange Commission. With regard to forward-looking statements concerning Loral CyberStar, Inc. and its business, financial condition, results of operations and prospects, the factors and conditions which could materially affect these statements are described in the section of Loral CyberStar's annual report on Form 10-K for the fiscal year ended December 31, 2000, entitled "Certain Factors That May Affect Future Results." The reader is specifically referred to these documents regarding the factors and conditions that may affect future results.