1006269--4/29/2008--LORAL_SPACE_&_COMMUNICATIONS

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{regulation, government, change}

{cost, operation, labor}

{interest, director, officer}

{capital, credit, financial}

{operation, international, foreign}

{customer, product, revenue}

{debt, indebtedness, cash}

{stock, price, operating}

{tax, income, asset}

{cost, contract, operation}

{control, financial, internal}

{personnel, key, retain}

{regulation, change, law}

{provision, law, control}

While we own 64% of Telesat Canada on an economic basis, we own only 33 1 / 3 % of its voting stock and therefore do not have the right to elect or appoint a majority of its Board of Directors. Our equity investment in Telesat Canada may be at risk because Telesat Canada is highly leveraged. There can be no assurance that Telesat Canada will be able to fully implement planned cost savings, which will adversely affect our investment. Certain asset sales by Telesat Canada may trigger material adverse tax consequences for us. The Telesat Canada information in this report is based solely on information provided to us by Telesat Canada. Our U.S. dollar reporting of Telesat Canada s financial results will be affected by volatility in the Canadian/U.S. dollar exchange rate. We may in the future incur significant additional indebtedness, thereby making us more vulnerable to adverse developments. XTAR has not generated sufficient revenues to meet all of its contractual obligations, which are substantial. 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 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 Telesat Canada, 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 control and economic sanctions laws, which may result in delays, lost business and additional costs. The recent trend toward industry consolidation in the satellite services industry may adversely affect us; we do not control satellite procurement decisions at Telesat Canada. The availability of qualified personnel and facility space may be limited; SS/L will incur significant costs to upgrade or expand its facility. SS/L is subject to credit risks with respect to certain of its customers. SS/L relies on certain key suppliers whose failure or delay in performance would adversely affect us. We face risks in conducting business internationally. Risk Factors Associated With Satellite Services Telesat Canada derives a substantial amount of its revenues from only a few of its customers. A loss of one or more of these major customers, or a material adverse change in any of such customer s business, could materially reduce its revenues and backlog. Launch delays or failures may result in delays in operations. After launch, 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 insurance. Telesat Canada competes for market share, customers and orbital slots. Changes in the Canadian competitive environment could adversely affect Telesat Canada. Telesat Canada operates in a highly regulated industry and government regulations may adversely affect its business. Telesat Canada s ability to replace two of its satellites is subject to additional risk and cannot be assured. We were late with the filing of our 2007 Form 10-K; our ability to file our future financial reports on a timely basis will depend on correcting our material weakness related to income tax accounting, as well as the timely delivery by Telesat Canada of its financial statements. We share control of our affiliates with third parties. We rely on key personnel. MHR may be viewed as our controlling stockholder 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.

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1006269--4/29/2008--LORAL_SPACE_&_COMMUNICATIONS_INC.