NEW YORK - May 3, 2002 - Loral Space & Communications (NYSE:LOR) today reported its financial results for the three months ended March 31, 2002.

Highlights

• EBITDA as reported rose to $62 million, up 6 percent compared to first quarter last year.
• Cash and available credit at March 31, 2002 improved to $237 million.
• Per share loss of $.09 (before goodwill write-off resulting from the adoption of SFAS 142) improved 64 percent versus a year ago and 31 percent versus last quarter, exceeding consensus expectations.
• In connection with the adoption of SFAS 142, Loral wrote off all of its goodwill, resulting in an after-tax non-cash charge of $847 million and reducing amortization by $7 million for this quarter.
• A privately negotiated preferred stock exchange was completed after the end of the quarter, reducing the principal amount of the mandatory preferred stock obligation by $109 million and eliminating $33 million in future dividend payments.

"Loral has maintained the course we established last year and it's paying off," said Bernard L. Schwartz, chairman and chief executive officer of Loral. "Our core businesses, which are long-term value drivers, are performing well. And we continue to enhance our financial flexibility through scheduled debt repayments and transactions like the recent preferred stock exchange. Our primary objective is to further drive our revenues and profits by placing in service the three satellites now under construction, which will expand Skynet's transponder capacity by 143 36MHz equivalents, or 45 percent, in the next 12 months. Further, Skynet is introducing new value-added services and expanding into new market segments. Our manufacturing business has geared its operations to the current industry environment and is positioned to satisfy our customers' increased demand when the economy picks up.

"Our expectations and guidance for the full year remain on track," Mr. Schwartz noted.

Financial Results for the Period Ended March 31, 2002

Reported EBITDA rose six percent to $62 million in the first quarter, driven by good operating performance.

Pretax income for the quarter was $2 million versus a pretax loss of $38 million in the same period last year.

Loral's net loss applicable to common shareholders was $32 million, or $.09 per common share (before the $847 million non-cash goodwill charge), both measures substantially improved compared to last year. After the charge, the loss per share was $2.61.

Loral's reported revenue rose 18 percent to $308 million, an increase over last year's first quarter due almost entirely to a 21 percent increase in revenue at SS/L.

Net interest expense decreased to $13 million for the quarter compared to last year's $42 million primarily as a result of the Loral Orion debt exchange along with lower debt balances and interest rates. The implementation of the new accounting pronouncement regarding goodwill was the primary reason for a decline in the quarter's depreciation and amortization to $47 million, from $54 million in 2001's first quarter.

The company's cash and available credit on March 31, 2002 was $237 million, compared to $229 million in the prior quarter. EBITDA and working capital changes offset $51 million in capital spending and $29 million in cash interest and dividend payments.

Bookings and Backlog

Bookings at both of Loral's core businesses continue to reflect the effects of the economic slowdown and a postponement of broadband application introductions and new programs. Net bookings were $31 million, a decline from a year ago of $178 million, $103 million of which resulted from a customer's direct procurement of launch services which led to the cancellation of a previously booked launch at SS/L.

Skynet gross bookings declined by $14 million from last year's first quarter to $134 million as some customers remained cautious about initiating new projects, particularly in the broadband data market. Skynet de-bookings of $18 million for the quarter are down significantly from each of last year's quarters, indicating that the FSS de-booking trend is subsiding.

SS/L's factory remains full, with 20 satellites in various stages of construction. As previously noted, Loral expects 2002 to be challenging for new manufacturing orders but the company's strong backlog continues to serve as a shock absorber during market demand swings.

Loral had a healthy net funded backlog at the end of the first quarter of $2.5 billion, down from $2.7 billion at year-end 2001.

Business Unit Review

Fixed Satellite Services (FSS)

Loral Skynet continues to perform well in a challenging environment. In the first quarter, Skynet's revenue was $94 million and EBITDA was $66 million, essentially flat compared to last year's first quarter results. Skynet achieved a 70 percent EBITDA margin for the period, up slightly from a year earlier.

For the FSS segment as a whole, revenue fell seven percent and EBITDA eight percent, as declines at Satmex more than offset the performance at Skynet and Europe*Star.

Capacity utilization for the Skynet fleet was 68 percent at the end of the quarter, up one percentage point from the end of last quarter.

Regional market conditions are in line with recent quarters, with steady Ku demand in Europe, North America and trans-Atlantic markets, and in parts of Asia. There is moderate oversupply in several C-band markets and for Ku-band capacity in some Latin American markets.

Loral's average revenue per transponder held steady at an annual rate of about $1.6 million, due primarily to Loral's long-term leases and generally consistent market conditions.

Skynet's three new satellites continue on schedule for launch later this year and early 2003. Telstar 13, Estrela do Sul and Telstar 8 are large, high-powered satellites based on SS/L's 1300 satellite bus that, rather than serving as replacement capacity, will add to existing capacity in high-demand markets in North America and will expand Skynet's geographic reach into Brazil and other Latin American markets. After the launch of these three satellites, Skynet will have 10 satellites in its fleet, up from just one in early 1997. The compounded rate of growth for Skynet's EBITDA from 1997 to 2001 was 51 percent, a growth record unsurpassed in the FSS industry.

Beyond the increased capacity delivered by the new Skynet satellites, the launch of Satmex 6 in early 2003 will expand the Loral Global Alliance fleet to 14 satellites.

Building on the success of its leasing business, Skynet recently introduced two new value-added product offerings. Skynet Network Services offers access services and transmission platforms that make it easier for customers to add satellite capability to their terrestrial networks. Skynet Professional Services manages customers' satellite-based requirements, including tracking, telemetry and control (TT&C), design and integration of control facilities and customized transport solutions. Just after the quarter, Skynet announced a new professional services contract that will provide digital satellite newsgathering and a centralcasting application for Hearst-Argyle Television.

Despite the current softness in the telecommunications market, the fundamentals of the FSS industry remain strong. When economic and industry momentum accelerates, Loral Skynet will be well-positioned to participate.

Satellite Manufacturing and Technology

SS/L's first quarter revenues rose 21 percent to $243 million compared to a year earlier. EBITDA of $11 million for the manufacturing unit was down year-over-year but improved on a consecutive quarter basis, an indication of early progress in Loral's plan to return SS/L to higher EBITDA margins.

In the first quarter, SS/L continued its delivery of the Intelsat IX series of satellites with the successful launches of Intelsat 903 and 904. The next in the series - Intelsat 905 - is currently undergoing preparations for launch on an Ariane-4 rocket from Arianespace's Kourou, French Guiana, spaceport within a few weeks.

Intelsat has successfully launched 25 SS/L-built satellites since 1980, all of which exceeded, or have met thus far, anticipated on-orbit performance. With the delivery of the remaining three spacecraft in the Intelsat IX series, SS/L will have built nearly half of Intelsat's historical fleet, and significantly more than any other manufacturer.

In addition to launching the two Intelsat satellites in the first quarter, SS/L expects to deliver an additional seven satellites by the end of the year.

The SS/L-built DIRECTV-5 satellite is scheduled for launch on May 6, aboard a Proton rocket from the Baikonur Cosmodrome in Kazakhstan. DIRECTV-5 will be the second Loral-built satellite in the DTH provider's fleet, joining DIRECTV-6 already in orbit. SS/L is building a third satellite for this customer, DIRECTV-7S, a spot beam satellite scheduled for completion in 2003.

As expected, booking activity in the satellite manufacturing industry is slower than normal, with no awards for new satellite construction made thus far this year. Loral expects bookings to improve along with the economy and as pent-up demand for replacement satellites builds.

In a very challenging data industry environment, as noted above, Loral's data services segment achieved break-even EBITDA in the first quarter as planned, on revenues of $20 million, versus an EBITDA loss of $10 million on revenues of $29 million in the first quarter of 2001.

During the quarter, Loral CyberStar reached an agreement with Net4India to become a value-added reseller of CyberStar's WorldCast Fast Internet service, a service that will allow Net4India to deliver unparalleled, high-speed Internet access and other Web-based solutions to corporate local area networks (LANs) throughout India.

After the close of the quarter, Loral completed a privately negotiated preferred stock exchange that eliminated $109 million in mandatory redemptions in 2006 and 2007, and eliminated $33 million in future dividend payments. 15.1 million shares of common stock were issued in the transaction.

This most recent exchange builds on the important financial accomplishments of 2001: in total Loral has reduced its principal obligations (debt and redeemable preferred stock) by $615 million and lowered annual cash interest and dividend payments by $51 million.

Outlook

Supported by Skynet's steady performance and by SS/L's progress in improving its margin, Loral continues to expect a full-year loss of $0.40 to $0.50 per share in 2002, excluding the goodwill write-off.

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, 2001, 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 Orion, 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 Orion's annual report on Form 10-K for the fiscal year ended December 31, 2001, 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.