1006269--3/28/2006--LORAL_SPACE_&_COMMUNICATIONS

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The Loral Skynet Notes are collateralized by substantially all of Loral Skynet s assets. We may in the future incur significant additional indebtedness, thereby making us more vulnerable to adverse developments. XTAR will have significant lease obligations, which may require us to make additional capital contributions to the venture. Replacing a satellite upon the end of its useful life will require us to make significant expenditures. Significant changes in discount rates, actual investment return on pension assets, and other factors could affect our statement of operations, equity, and pension contributions in future periods. Risk Factors Associated With Satellite Services Launch delays or failures have delayed some of our operations in the past and may do so again in the future. After launch, our satellites remain vulnerable to in-orbit failures which may result in reduced revenues and profits and other financial consequences. It may be difficult to obtain full insurance coverage for satellites that have, or are part of a family of satellites that has, experienced problems in the past; moreover, not all satellite-related losses will be covered by our insurance. Like other satellite operators, we are faced with increased launch and in-orbit insurance premiums. Our satellite services businesses compete for market share, customers and orbital slots, against competitors that are significantly larger than us. The content of third-party transmissions over our satellites may affect us. Our business is regulated, causing uncertainty and additional costs. The recent trend toward industry consolidation in the fixed satellite services industry may adversely affect us. Risk Factors Associated With Satellite Manufacturing The satellite manufacturing market is highly competitive and fixed costs are high. SS/L s contracts are subject to adjustments, cost overruns, risk of non-payment and termination. SS/L may forfeit payments from customers as a result of satellite failures or losses after launch, or may be liable for penalty payments under certain circumstances, and these losses may be uninsured. Some satellites built by SS/L, including three satellites operated by Loral Skynet or other affiliates, have experienced minor losses of power from their solar arrays. Some satellites built by SS/L have the same design as another SS/L-built satellite that has experienced a partial failure. We are subject to export controls, which may result in delays and additional costs. The recent trend toward industry consolidation in the fixed satellite services industry may adversely affect us. The availability of qualified personnel and facility space may be limited; SS/L will incur costs to upgrade or expand its facility and these costs may be substantial. Risk Associated With Conducting Business Internationally We face risks in conducting business internationally. We share control of our affiliates with third parties. We rely on key personnel. MHR is our controlling shareholder and may have conflicts of interest with us in the future. Compliance with the Sarbanes-Oxley Act increases our operating expenses. The future use of tax attributes is limited upon emergence from bankruptcy. There is a thin trading market for our common stock. The market for our stock could be adversely affected by future issuance of significant amounts of our common stock. We are involved in a number of ongoing lawsuits. An appeal has been filed seeking to overturn the settlement agreement we entered into with Globalstar, L.P.

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1006269--3/28/2006--LORAL_SPACE_&_COMMUNICATIONS_INC.