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Loral Space and Communications Inc. Reports Operating Results (10-Q)

November 14, 2012 | About:
10qk

10qk

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Loral Space and Communications Inc. (LORL) filed Quarterly Report for the period ended 2012-09-30.

Loral Space & Communications, Inc. has a market cap of $2.46 billion; its shares were traded at around $80.46 with and P/S ratio of 2.2.

Highlight of Business Operations:

Telesats operating results are subject to fluctuations as a result of exchange rate variations. Approximately 48% of Telesats revenues received in Canada for the three and nine months ended September 30, 2012, a substantial portion 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, 2012 would have increased or decreased Telesats net income for the nine months ended September 30, 2012 by approximately $144 million.

Telesat revenue increased by $16 million for the three months ended September 30, 2012 as compared to the three months ended September 30, 2011 due primarily to revenue on the Nimiq 6 satellite which entered into commercial service in June 2012, increased enterprise services revenues due to growth in international activities and inauguration of commercial services on ViaSat-1 in December 2011, partially offset by a scheduled rate reduction on a long term broadcast services contract and the impact of the change in the U.S. dollar/Canadian dollar exchange rate on Canadian dollar denominated revenues. Telesat revenue excluding foreign exchange impact would have increased by approximately $18 million for the three months ended September 30, 2012 as compared with the three months ended September 30, 2011.

Despite an increase in revenue, SS/L operating income decreased $14 million for the three months ended September 30, 2012 compared with the three months ended September 30, 2011. The decrease was primarily due to unanticipated events including $3 million of penalties and increased manufacturing costs on a single program and $8 million for solar array anomaly investigation and rework, including a charge to reduce orbital receivables. Other changes in operating income included a $1 million decrease for legal fees related to patent infringement litigation, a $17 million decrease from lower margins attributable to lower average size and profitability of satellites under construction during 2012 compared to 2011 and a $15 million increase from volume-related improvement in fringe and overhead rates.

Telesats operating income decreased by $44 million for the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011 primarily due to the special payments to executives and certain employees of Telesat in connection with the cash distribution to shareholders in 2012 and the revenue decrease described above, partially offset by the impact of the change in the U.S. dollar/Canadian dollar exchange rate on Canadian dollar denominated expenses. Telesats operating income excluding foreign exchange impact would have decreased by approximately $45 million for the nine months ended September 30, 2012 as compared with the nine months ended September 30, 2011.

Despite an increase in revenue, SS/L operating income decreased $57 million for the nine months ended September 30, 2012 compared with the nine months ended September 30, 2011. The decrease was primarily due to unanticipated events including $18 million of penalties and increased manufacturing costs on a single program and $22 million for solar array anomaly investigation, rework, and penalties, including a charge to reduce orbital receivables. Other changes in operating income included a $9 million decrease related to a loss provision for a program booked in the first quarter of 2012, a $3 million decrease for legal fees related to patent infringement litigation, a $15 million decrease from lower margins attributable to lower average size and profitability of satellites under construction during 2012 compared to 2011 and a $10 million increase from volume-related improvement in fringe and overhead rates.

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