Loral Reports 2001 third quarter results

NEW YORK – November 7, 2001 – Loral Space & Communications (NYSE: LOR) today
reported its financial results for the third quarter and nine months ended
September 30, 2001.

Highlights

Third quarter EPS loss of $0.19 in line with expectations.
End-of-quarter liquidity position $246 million; operating cash flow exceeded
debt repayment, interest and preferred dividends.
Loral Skynet’s fixed satellite services business achieved strong revenue,
EBITDA and margin growth; utilization and revenue per transponder rise.
Full year Loral revenue guidance unchanged; EBITDA guidance adjusted
downward eight percent to $220 million to reflect start-up costs associated
with the introduction of several new technological developments in the
satellite manufacturing segment.
Loral CyberStar exchange offer announced after close of quarter.
Financial Results for the Periods Ended September 30, 2001

Loral’s reported EBITDA (earnings before interest, taxes, depreciation and
amortization) was $49 million in the third quarter and $170 million for the
nine months, up 17 percent and 27 percent, respectively, from the same
periods a year ago. These improvements were driven by ongoing strength and
increased margins at Loral Skynet, offset by a $19 million decline in SS/L’s
EBITDA contribution to $1.3 million. For the third quarter, Loral Skynet
achieved EBITDA of $71 million, an increase of 42 percent versus last year,
on revenues of $100 million, a 25 percent improvement. Loral Skynet’s EBITDA
margin improved to 71 percent from 63 percent last year.

Loral’s total reported revenue for the third quarter was $261 million
compared to $293 million in the year-ago quarter, due primarily to lower
revenue at satellite manufacturing.

Loral’s liquidity (cash and available bank credit) totaled $246 million at
the end of the third quarter. Liquidity was reduced by only $31 million from
$277 million at the end of the second quarter, even after capital spending
of $48 million, interest and preferred dividend payments of $62 million, and
debt repayments of $26 million. Loral’s year-end liquidity is expected to be
more than $120 million, exceeding prior guidance.

In October, Loral CyberStar announced it that will conduct a debt-for-debt
exchange offer. If the offer is fully subscribed, $927 million principal
amount of Loral CyberStar notes will be replaced with $675 million in notes,
plus 6.7 million Loral common stock warrants, the interest rate will drop,
and annual cash interest will drop by $43 million. The new notes will be
recourse to Loral, while the old notes are not.

Loral’s loss applicable to Globalstar activities was $4 million, down
sharply from $92 million in the year-ago quarter and from $10 million in
this year’s second quarter. Loral’s on-going Globalstar-related spending
includes its modest support of its investment in operations in four
countries.

Last year’s results for the third quarter and nine months include one-time
gains of $33 million from Loral’s share of a gain on an insurance recovery
at Satmex, and $18 million from gains on investments.

The net loss applicable to common shareholders for the quarter improved to
$0.19 per share, compared to a $0.33 per share loss in the third quarter of
last year. Per share calculations are based on 334 million weighted average
shares of common stock outstanding versus 297 million for the third quarter
of 2000; the increase is primarily attributable to the issuance of common
shares in exchange for preferred stock in the second quarter.

Bookings and Backlog

Overall, Loral had gross bookings of $207 million in the quarter, compared
to $503 million a year ago. Net bookings in this year’s third quarter were
$144 million, after de-bookings of $63 million. Loral believes that the
de-bookings that occurred in the first nine months as a result of the global
economic slowdown are to a large extent behind the company.

The FSS segment achieved gross bookings of $63 million versus a very robust
$717 million in bookings a year ago, when Skynet was leasing newly available
capacity on four satellites that had recently been added to the fleet.

Satellite manufacturing gross bookings of $172 million during the third
quarter were well ahead of last year’s third quarter bookings of $33
million. During the quarter SS/L booked one satellite contract, DIRECTV-7S,
and received authorizations to proceed (ATP) on three additional satellites
(SpainSat, XTAR EUR and MBSAT), which are expected to go to contract in the
near term.

Loral ended the quarter with a net funded backlog of $2.7 billion compared
to $2.9 billion a year ago. Backlog at Skynet was $1.6 billion, equivalent
to four times annual revenues, and total FSS segment backlog at the end of
the quarter was $2.0 billion.

Backlog for the satellite manufacturing segment was $1.4 billion, unchanged
from a year earlier. Including the full value of the three satellites for
which the company has ATPs, manufacturing backlog would be $1.7 billion.

Business Unit Review

Fixed Satellite Services (FSS)

Loral Skynet’s FSS business, the company’s primary growth driver and cash
generator, continues to execute on plan and has attractive growth prospects
despite the current economic outlook. The company’s satellites are of
mission-critical importance to its blue-chip broadcasting, data and telecom
customers. Average annual revenue per transponder has increased in each of
the last three years, and exceeded $1.6 million at the end of the third
quarter.

Skynet posted record revenue of $100 million, a 25 percent increase, and
record EBITDA of $71 million, an increase of 42 percent versus last year’s
third quarter. EBITDA margins at Skynet climbed to 71 percent from 63
percent last year.

Revenue for the FSS segment as a whole rose 17 percent for the quarter to
$135 million and 21 percent to $397 for the nine-month period. EBITDA gains
for the periods were even more substantial: up 26 percent to $87 million for
the third quarter and up 29 percent to $260 million for the nine months. The
FSS EBITDA margin climbed from 60 percent in the third quarter of 2000 to 64
percent this year.

Loral Global Alliance fleet utilization (excluding Europe*Star) was 73
percent, consistent with the prior quarter, and the segment’s backlog is
$2.0 billion.

Skynet’s average revenue per transponder is stable due primarily to the
long-term leases in its backlog, which cushion the impact of the current
global economic slowdown. Overall, market conditions have remained stable in
2001: Ku-band demand is steady in Europe, North America and trans-Atlantic
markets, and in Asia except where intra-regional pricing is softening.
Oversupply is producing some Ku-band softness in Latin America, and in
scattered C-band markets.

During the quarter, Loral announced a new FSS business initiative to market
satellite capacity to military and civilian agencies of the United States,
Spain and other friendly governments. The new business, XTAR, will primarily
use X-band radio frequencies. Its first satellite, XTAR EUR, currently under
construction at SS/L for delivery in 2003, will be the first commercial
satellite to take advantage of the U.S. and allied governments’ growing
requirement for advanced defense communications.

Also in the third quarter, Skynet announced a multi-year, multi-transponder
contract with Taiwan direct-to-home provider Eastern DTH. Eastern DTH will
expand its programming lineup on Loral’s Telstar 10, establishing the
satellite as a premier host of Chinese language programming in Asia.

Skynet also renewed its long running relationship with the National Football
League to distribute the NFL Sunday TicketT service to residential and
commercial C-band subscribers, and to DIRECTV for rebroadcast to
direct-to-home satellite viewers.

Satellite Manufacturing and Technology

Over the past three years, SS/L has developed a series of technical advances
in response to customers’ expressed desire for expanded capabilities. These
advances include the development of spot beam technology, Ka-band frequency
usage, increased power levels, lithium-ion batteries and advanced propulsion
systems. In addition, SS/L has introduced a new family of satellite buses,
designated the 1300E and comprising a number of models of varying size,
power and capabilities based on the heritage 1300 bus. These improvements
are part of the evolutionary technology developments typical to the
satellite manufacturing industry and are essential to the maintenance of the
company’s strong market share position. To counter the challenges that
typically accompany new product or technology introductions, SS/L has
reinforced its design and testing disciplines to provide maximum reliability
and to control added costs and potential delays.

The costs associated with the development and phasing-in of the new
technologies have been disproportionate during this period. It is
anticipated that most of them, reflected as expensed items over the last
year, will be behind the company by year end. In addition to managing these
costs, SS/L has undertaken several initiatives to improve its performance.
These improvements are expected to begin to have a positive effect on EBITDA
in 2002.

Satellite manufacturing segment revenue of $183 million represented a
decline from $228 million in the third quarter of 2000. Segment EBITDA
declined to $1 million from $20 million in the same period last year due to
start-up costs associated with the introduction of several new technological
developments.

During the quarter, SS/L booked DIRECTV-7S, a new high-power spot beam
satellite that will allow Hughes’ DIRECTV to serve additional markets with
local channels and expand into new services. DIRECTV-7S will be delivered in
the second half of 2003 and will be the third SS/L-built satellite in the
DIRECTV fleet following the launch of DIRECTV-5 later this year.

Also in the third quarter, SS/L received an ATP from Mobile Broadcasting
Corporation (MBC) of Japan to design and build MBSAT, a satellite that will
deliver digital multimedia information services such as CD-quality audio,
MPEG-4 video and data to mobile users throughout Japan. On-orbit delivery of
the spacecraft is scheduled for fourth quarter 2003 with service expected to
begin in early 2004.

Year to date, SS/L’s five satellite wins have increased its market share to
approximately 25-30 percent of total worldwide awards for commercial
geosynchronous satellites this year. The awards thus far represent an
excellent record in a difficult year. SS/L is currently participating in
several competitive bids and continues to target a total of six satellite
awards this year. SS/L offers an expanded product line that meets or exceeds
the demands of its customers and serves as a competitive differentiator.

SS/L successfully launched Intelsat 902 in August, and the satellite has
since begun service at its assigned orbital slot. The satellite is the
second of seven satellites to be manufactured by SS/L for the Intelsat IX
series. The remaining five spacecraft are scheduled for launch in 2002, with
Intelsat 903 and 904 in the final stages of testing and checkout for
shipment early next year. The customer for this series of high-powered
satellites has expressed high satisfaction with the design and performance
of these satellites.

PanAmSat’s SS/L-manufactured PAS-7 satellite recently experienced an
on-orbit reduction in the power produced by its solar arrays. As a result,
the satellite is now operating at approximately 75% of its power capacity.
Loral has completed its investigation into the cause of the anomaly, which
is unique to the PAS-7 satellite. PanAmSat reports that its customers on
PAS-7 are not affected by the power reduction. In connection with the
occurrence, PanAmSat has submitted a claim for $16 million, which SS/L
disputes.

DIRECTV-5, which had been held back from shipment while the PAS-7
investigation was conducted, has now been released for launch in December of
this year.

Data Services

Results for this segment were in line with expectations. EBITDA improved to
a loss of $3 million in the third quarter, versus a loss of $10 million a
year ago. The company believes it will achieve its objective of positive
EBITDA in the fourth quarter. Revenue for the quarter declined to $22
million from $29 million in the third quarter of last year.

Outlook for Year-end 2001

Loral Skynet and FSS performance are expected to remain steady in the fourth
quarter. Loral Skynet’s capacity utilization at year-end should reach 69
percent versus 67 percent at the end of last year. The utilization rate for
the entire FSS fleet (excluding Europe*Star) should remain essentially
unchanged at 74 percent.

For the year, Loral Skynet is expected to achieve record EBITDA of
approximately $275 million, and the FSS segment should reach EBITDA of
approximately $345 million.

SS/L revenues are expected to approximate $900 million for the year. EBITDA
performance in the fourth quarter will be consistent with the third quarter
but is expected to improve measurably next year.

As a result, overall Loral as-reported EBITDA for 2001 is expected to be
approximately $220 million, an increase of 69 percent compared to $130
million in 2000. Guidance for Loral’s reported revenue for the year remains
unchanged at about $1.1 billion. The company expects to end the year with
cash and available credit in excess of $120 million, an increase over prior
guidance, after repayment of $110 million of debt.

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.

Contact: Jeanette Clonan

Tony Doumlele

(212)697-1105