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Loral Space And Communications Inc. has a market cap of $1.17 billion; its shares were traded at around $56.79 with a P/E ratio of 9.4 and P/S ratio of 1.1. LORL is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC, George Soros of Soros Fund Management LLC.
Highlight of Business Operations:Telesat’s operating results are subject to fluctuations as a result of exchange rate variations to the extent that transactions are made in currencies other than Canadian dollars. Approximately 45% of Telesat’s revenues received in Canada for the three and nine months ended September 30, 2010, certain of its expenses and a substantial portion of its indebtedness and capital expenditures were denominated in U.S. dollars. The most significant impact of variations in the exchange rate is on the U.S. dollar denominated debt financing. A five percent change in the value of the Canadian dollar against the U.S. dollar at September 30, 2010 would have increased or decreased Telesat’s net income for the nine months ended September 30, 2010 by approximately $154 million. During the period from October 31, 2007 to September 30, 2010, Telesat’s U.S. term loan facility, senior notes and senior subordinated notes have increased by approximately $213 million due to the stronger U.S. dollar. During that same time period, however, the liability created by the fair value of the currency basis swap, which synthetically converts $1.054 billion of the U.S. term loan facility debt into CAD 1.224 billion of debt, decreased by approximately $157 million.
Revenues from Satellite Manufacturing before eliminations increased $71 million for the three months ended September 30, 2010 as compared to the three months ended September 30, 2009, due to $48 million of higher revenues generated by increased satellite contract awards, improved factory performance of $28 million and performance incentives earned in 2010 of $6 million, partially offset by revenue decreases of $11 million from prior year contract scope additions, which generated higher revenues in the third quarter of 2009. Eliminations for the three months ended September 30, 2010 and 2009 consist primarily of revenue applicable to Loral’s interest in a portion of the payload of the ViaSat-1 satellite which is being constructed by SS/L (see Note 17 to the financial statements).
Revenues from Satellite Manufacturing before eliminations increased $91 million for the nine months ended September 30, 2010 as compared to the nine months ended September 30, 2009, due to $45 million of higher revenues generated by increased satellite contract awards, improved factory performance of $49 million and a $20 million increase in performance incentives earned, net of penalties, partially offset by a revenue decrease of $23 million from prior year contract scope additions, which generated higher revenues in the first nine months of 2009. Eliminations for the nine months ended September 30, 2010 and 2009 consist primarily of revenue applicable to Loral’s interest in a portion of the payload of the ViaSat-1 satellite which is being constructed by SS/L (see Note 17 to the financial statements).
Satellite Manufacturing segment Adjusted EBITDA increased $24 million for the three months ended September 30, 2010 compared with the three months ended September 30, 2009. The increase consists of $28 million from improved factory performance, $11 million from the increased sales volume and $6 million from performance incentives earned in 2010, partially offset by $11 million of Adjusted EBITDA in the third quarter of 2009 which was generated by contract scope additions and an $11 million loss resulting from a contract award in the third quarter of 2010.
Satellite Manufacturing segment Adjusted EBITDA increased $51 million for the nine months ended September 30, 2010 compared with the nine months ended September 30, 2009. The increase consists of $49 million from improved factory performance, $25 million from performance incentives earned, net of penalties and $12 million from the increased sales volume, partially offset by $20 million of Adjusted EBITDA in the first nine months of 2009 which was generated by contract scope additions and an $11 million loss resulting from a contract award in the third quarter of 2010.
Corporate expenses decreased for the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009 primarily due to a $3 million reduction in deferred compensation expense because the maximum award under the deferred compensation plan was reached in 2009, a $1 million settlement under our directors and officers liability insurance related to a claim for which the insurers had previously denied coverage and a $1 million decrease in legal fees.
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