10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June  30, 2019

Commission file number 1-14180

Loral Space & Communications Inc.

600 Fifth Avenue

New York, New York 10020

Telephone: (212) 697-1105

Jurisdiction of incorporation: Delaware

IRS identification number: 87-0748324

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer         ☐	Accelerated filer	☑
Non-accelerated filer           ☐	Smaller reporting company	☑
	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2 of the Act) Yes ☐ No ☑

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Voting Common Stock	LORL	Nasdaq Global Select Market

As of August 5, 2019, 21,427,078 shares of the registrant’s voting common stock and 9,505,673 shares of the registrant’s non-voting common stock were outstanding.

LORAL SPACE & COMMUNICATIONS INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

For the quarterly period ended June  30, 2019

	Page No.
PART I — FINANCIAL INFORMATION
Item 1 Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of June  30, 2019 and December 31, 2018	3
Condensed Consolidated Statements of Operations and Comprehensive Income for the three and six months ended June  30, 2019 and June  30, 2018	4
Condensed Consolidated Statements of Shareholders’ Equity for the three and six months ended June  30, 2019 and 2018	5
Condensed Consolidated Statements of Cash Flows for the six months ended June  30, 2019 and June 30, 2018	6
Notes to Condensed Consolidated Financial Statements	7
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 4 Disclosure Controls and Procedures	37
PART II — OTHER INFORMATION
Item 1 Legal Proceedings	38
Item 1A Risk Factors	38
Item 6 Exhibits	38
Signatures	39

2

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

LORAL SPACE & COMMUNICATIONS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

	June 30,		December 31,
	2019		2018
ASSETS
Current assets:
Cash and cash equivalents	$	257,686	$	256,947
Income tax refund receivable		905		3,903
Other current assets		1,913		3,232
Total current assets		260,504		264,082
Right-of-use asset		661		—
Income tax refund receivable, non-current		774		774
Investments in affiliates		94,406		24,574
Deferred tax assets		37,109		40,520
Other assets		343		350
Total assets	$	393,797	$	330,300
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accrued employment costs	$	1,664	$	2,573
Other current liabilities		1,605		1,495
Total current liabilities		3,269		4,068
Pension and other postretirement liabilities		15,052		15,167
Other liabilities		14,219		13,499
Total liabilities		32,540		32,734
Commitments and contingencies
Shareholders' Equity:
Preferred stock, $0.01 par value; 10,000,000 shares authorized, no shares		—		—
issued and outstanding
Common Stock:
Voting common stock, $0.01 par value; 50,000,000 shares authorized,
21,581,572 issued		216		216
Non-voting common stock, $0.01 par value; 20,000,000 shares authorized
9,505,673 issued and outstanding		95		95
Paid-in capital		1,019,988		1,019,988
Treasury stock (at cost), 154,494 shares of voting common stock		(9,592)		(9,592)
Accumulated deficit		(618,778)		(695,521)
Accumulated other comprehensive loss		(30,672)		(17,620)
Total shareholders' equity		361,257		297,566
Total liabilities and shareholders' equity	$	393,797	$	330,300

See notes to condensed consolidated financial statements

3

LORAL SPACE & COMMUNICATIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
General and administrative expenses	$	(1,697)	$	(1,758)	$	(3,500)	$	(3,394)
Operating loss		(1,697)		(1,758)		(3,500)		(3,394)
Interest and investment income		1,566		1,189		3,168		2,077
Interest expense		(5)		(6)		(10)		(11)
Other expense		(755)		(554)		(1,971)		(1,188)
Loss from continuing operations before income taxes
and equity in net income (loss) of affiliates		(891)		(1,129)		(2,313)		(2,516)
Income tax (provision) benefit		(2,160)		5,068		(4,226)		5,655
(Loss) income from continuing operations before
equity in net income (loss) of affiliates		(3,051)		3,939		(6,539)		3,139
Equity in net income (loss) of affiliates		41,278		(3,455)		83,282		1,639
Income from continuing operations		38,227		484		76,743		4,778
Loss from discontinued operations, net of tax		—		(37)		—		(37)
Net income		38,227		447		76,743		4,741
Other comprehensive (loss) income, net of tax		(6,646)		628		(13,052)		7,772
Comprehensive income	$	31,581	$	1,075	$	63,691	$	12,513
Net income per share:
Basic
Income from continuing operations	$	1.24	$	0.02	$	2.48	$	0.15
Loss from discontinued operations, net of tax		—		—		—		—
Net income	$	1.24	$	0.02	$	2.48	$	0.15
Diluted
Income from continuing operations	$	1.23	$	0.02	$	2.46	$	0.15
Loss from discontinued operations, net of tax		—		—		—		—
Net income	$	1.23	$	0.02	$	2.46	$	0.15
Weighted average common shares outstanding:
Basic		30,933		30,933		30,933		30,933
Diluted		31,008		31,008		31,008		31,008

See notes to condensed consolidated financial statements

4

LORAL SPACE & COMMUNICATIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands)

(Unaudited)

	Common Stock								Treasury Stock					Accumulated
	Voting			Non-Voting					Voting					Other
	Shares			Shares			Paid-In					Accumulated		Comprehensive		Shareholders'
	Issued	Amount		Issued	Amount		Capital		Shares	Amount		Deficit		Loss		Equity
Balance, January 1, 2018	21,582	$	216	9,506	$	95	$	1,019,988	154	$	(9,592)	$	(682,831)	$	(37,278)	$	290,598
Net income													4,294
Other comprehensive income															7,144
Comprehensive income																	11,438
Cumulative effect adjustment attributable to
investment in Telesat													(22,107)				(22,107)
Balance, March 31, 2018	21,582		216	9,506		95		1,019,988	154		(9,592)		(700,644)		(30,134)		279,929
Net income													447
Other comprehensive income															628
Comprehensive income																	1,075
Balance, June 30, 2018	21,582		216	9,506		95		1,019,988	154		(9,592)		(700,197)		(29,506)		281,004
Net income													4,873
Other comprehensive income															16,059
Comprehensive income																	20,932
Tax cuts and Jobs Act,
reclassification tax effect													4,173		(4,173)		—
Cumulative effect adjustment attributable to
investment in Telesat													(4,370)				(4,370)
Balance, December 31, 2018	21,582		216	9,506		95		1,019,988	154		(9,592)		(695,521)		(17,620)		297,566
Net income													38,516
Other comprehensive loss															(6,406)
Comprehensive income																	32,110
Balance, March 31, 2019	21,582		216	9,506		95		1,019,988	154		(9,592)		(657,005)		(24,026)		329,676
Net income													38,227
Other comprehensive loss															(6,646)
Comprehensive income																	31,581
Balance, June 30, 2019	21,582	$	216	9,506	$	95	$	1,019,988	154	$	(9,592)	$	(618,778)	$	(30,672)	$	361,257

See notes to condensed consolidated financial statements

5

LORAL SPACE & COMMUNICATIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended
	June 30,
	2019		2018
Operating activities:
Net income	$	76,743	$	4,741
Loss from discontinued operations, net of tax		—		37
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Non-cash operating items (Note 2)		(79,449)		(8,139)
Changes in operating assets and liabilities:
Other current assets		(419)		(453)
Accrued employment costs and other current liabilities		(1,476)		(170)
Income tax refund receivable		2,998		278
Pension and other postretirement liabilities		(115)		(2,381)
Other liabilities		720		1,132
Net cash used in operating activities - continuing operations		(998)		(4,955)
Net cash provided by (used in) operating activities – discontinued operations		1,737		(47)
Net cash provided by (used in) operating activities		739		(5,002)
Cash, cash equivalents and restricted cash (Note 2) — period increase (decrease)		739		(5,002)
Cash, cash equivalents and restricted cash (Note 2) — beginning of year		257,251		255,443
Cash, cash equivalents and restricted cash — end of period	$	257,990	$	250,441

See notes to condensed consolidated financial statements

6

LORAL SPACE & COMMUNICATIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Principal Business

Loral Space & Communications Inc., together with its subsidiaries (“Loral,” the “Company,” “we,” “our” and “us”) is a leading satellite communications company engaged, through our ownership interests in affiliates, in satellite-based communications services.

Description of Business

Loral has one operating segment consisting of satellite-based communications services. Loral participates in satellite services operations primarily through its ownership interest in Telesat Canada (“Telesat”), a leading global satellite operator. Loral holds a 62.7% economic interest and a 32.6% voting interest in Telesat. We use the equity method of accounting for our ownership interest in Telesat (see Note 5).

Telesat owns and leases a satellite fleet that operates in geostationary earth orbit approximately 22,000 miles above the equator. In this orbit, satellites remain in a fixed position relative to points on the earth’s surface and provide reliable, high-bandwidth services anywhere in their coverage areas, serving as the backbone for many forms of telecommunications. Telesat is also developing a global constellation of low earth orbit (“LEO”) satellites. LEO satellites operate in a circular orbit around the earth with an altitude typically between 500 and 870 miles. Unlike geostationary orbit satellites that operate in a fixed orbital location above the equator, LEO satellites travel around the earth at high velocities requiring antennas on the ground to track their movement. LEO satellite systems have the potential to offer a number of advantages over geostationary orbit satellites to meet growing requirements for broadband services, both consumer and commercial, by providing increased data speeds and capacity, global coverage, and latency on par with, or potentially better than, terrestrial services.

2. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules of the Securities and Exchange Commission (“SEC”) and, in our opinion, include all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of results of operations, financial position and cash flows as of the balance sheet dates presented and for the periods presented. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to SEC rules. We believe that the disclosures made are adequate to keep the information presented from being misleading. The results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the results to be expected for the full year.

The December 31, 2018 balance sheet has been derived from the audited consolidated financial statements at that date. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our latest Annual Report on Form 10-K filed with the SEC.

Investments in Affiliates

Our ownership interest in Telesat is accounted for using the equity method of accounting. Income and losses of Telesat are recorded based on our economic interest. The contribution of Loral Skynet, a wholly owned subsidiary of Loral prior to its contribution to Telesat in 2007, was recorded by Loral at the historical book value of our retained interest combined with the gain recognized on the contribution. However, the contribution was recorded by Telesat at fair value. Accordingly, the amortization of Telesat fair value adjustments applicable to the Loral Skynet assets and liabilities acquired by Telesat in 2007 is proportionately eliminated in determining our share of the net income of Telesat. Our equity in net income or loss of Telesat also reflects amortization of profits eliminated, to the extent of our economic interest in Telesat, on satellites we constructed for Telesat while we owned Space Systems/Loral, LLC (formerly known as Space Systems/Loral, Inc.) (“SSL”) and on Loral’s sale to Telesat in April 2011 of its portion of the payload on the ViaSat-1 satellite and related assets. Non-refundable cash distributions received from Telesat in excess of our initial investment and our share of cumulative equity in comprehensive income of Telesat, net of cash distributions received in prior periods, are recorded as equity in net income of Telesat (“Excess Cash Distribution”) since we have no obligation to provide future financial support to Telesat. After receiving an Excess Cash Distribution, we do not

7

LORAL SPACE & COMMUNICATIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

record additional equity in net income of Telesat until our share of Telesat’s future net income exceeds the Excess Cash Distribution. Equity in losses of affiliates is not recognized after the carrying value of an investment, including advances and loans, has been reduced to zero, unless guarantees or other funding obligations exist. We had no guarantees or other funding obligations for our equity method investments as of June 30, 2019 and December 31, 2018. We use the nature of distribution approach to classify distributions from equity method investments on the statements of cash flows. The Company monitors its equity method investments for factors indicating other-than-temporary impairment. An impairment loss is recognized when there has been a loss in value of the affiliate that is other‑than-temporary.

Use of Estimates in Preparation of Financial Statements

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amount of income (loss) reported for the period. Actual results could materially differ from estimates.

Significant estimates also included the allowances for doubtful accounts, income taxes, including the valuation of deferred tax assets, the fair value of liabilities indemnified, the dilutive effect of Telesat stock options (see Note 10) and our pension liabilities.

Cash, Cash Equivalents and Restricted Cash

As of June 30, 2019, the Company had $257.7 million of cash and cash equivalents. Cash and cash equivalents include liquid investments, primarily money market funds, with maturities of less than 90 days at the time of purchase. Management determines the appropriate classification of its investments at the time of purchase and at each balance sheet date.

As of June 30, 2019 and December 31, 2018, other assets included restricted cash of $0.3 million which represents the amount pledged as collateral to the issuer of a standby letter of credit (the “LC”). The LC, which expires in August 2020, has been provided as a guaranty to the lessor of our corporate offices.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated statements of cash flows (in thousands):

	June 30,		June 30,
	2019		2018
Cash and cash equivalents	$	257,686	$	250,137
Restricted cash included in other assets		304		304
Cash, cash equivalents and restricted cash shown in the statement of cash flows	$	257,990	$	250,441

Concentration of Credit Risk

Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents and receivables. Our cash and cash equivalents are maintained with high-credit-quality financial institutions. As of June 30, 2019 and December 31, 2018, our cash and cash equivalents were invested primarily in several liquid Prime and Government AAA money market funds. Such funds are not insured by the Federal Deposit Insurance Corporation. The dispersion across funds reduces the exposure of a default at any one fund.  As a result, management believes that its potential credit risks are minimal.

8

LORAL SPACE & COMMUNICATIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Fair Value Measurements

U.S. GAAP defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants. U.S. GAAP also establishes a fair value hierarchy that gives the highest priority to observable inputs and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy are described below:

Level 1: Inputs represent a fair value that is derived from unadjusted quoted prices for identical assets or liabilities traded in active markets at the measurement date.

Level 2: Inputs represent a fair value that is derived from quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities, and pricing inputs, other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3: Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

Assets and Liabilities Measured at Fair Value

The following table presents our assets and liabilities measured at fair value on a recurring and non-recurring basis (in thousands):

	June 30, 2019						December 31, 2018
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents:
Money market funds	$	255,722	$	—	$	—	$	254,552	$	—	$	—
Other current assets:
Indemnification - Sale of SSL		—		—		672		—		—		2,410
Liabilities
Other liabilities:
Indemnification - Globalstar do Brasil S.A.	$	—	$	—	$	167	$	—	$	—	$	184

The carrying amount of money market funds approximates fair value as of each reporting date because of the short maturity of those instruments.

The Company did not have any non-financial assets or non-financial liabilities that were recognized or disclosed at fair value as of June 30, 2019 and December 31, 2018.

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis

We review the carrying values of our equity method investments when events and circumstances warrant and consider all available evidence in evaluating when declines in fair value are other-than-temporary. The fair values of our investments are determined based on valuation techniques using the best information available and may include quoted market prices, market comparables and discounted cash flow projections. An impairment charge is recorded when the carrying amount of the investment exceeds its current fair value and is determined to be other-than-temporary.

The asset resulting from the indemnification of SSL is for certain pre-closing taxes and reflects the excess of payments since inception over refunds and the estimated liability, which was originally determined using the fair value objective approach. The estimated liability for indemnifications relating to Globalstar do Brasil S.A. (“GdB”), originally determined using expected value analysis, is net of payments since inception.

9

LORAL SPACE & COMMUNICATIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Contingencies

Contingencies by their nature relate to uncertainties that require management to exercise judgment both in assessing the likelihood that a liability has been incurred as well as in estimating the amount of potential loss, if any. We accrue for costs relating to litigation, claims and other contingent matters when such liabilities become probable and reasonably estimable. Such estimates may be based on advice from third parties or on management’s judgment, as appropriate. Actual amounts paid may differ from amounts estimated, and such differences will be charged to operations in the period in which the final determination of the liability is made.

Income Taxes

Loral and its subsidiaries are subject to U.S. federal, state and local income taxation on their worldwide income and foreign taxation on certain income from sources outside the United States. Telesat is subject to tax in Canada and other jurisdictions, and Loral will provide in each period any additional U.S. current and deferred tax required on actual or deemed distributions from Telesat, including Global Intangible Low Taxed Income (“GILTI”). Deferred income taxes reflect the future tax effect of temporary differences between the carrying amount of assets and liabilities for financial and income tax reporting and are measured by applying anticipated statutory tax rates in effect for the year during which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent it is more likely than not that the deferred tax assets will not be realized.

The tax benefit of an uncertain tax position (“UTP”) taken or expected to be taken in income tax returns is recognized only if it is “more likely than not” to be sustained on examination by the taxing authorities, based on its technical merits as of the reporting date. The tax benefit recognized in the financial statements from such a position is measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. The Company recognizes interest and penalties related to income taxes in income tax expense on a quarterly basis.

The unrecognized tax benefit of a UTP is recognized in the period when the UTP is effectively settled. Previously recognized tax positions are derecognized in the first period in which it is no longer more likely than not that the tax position would be sustained upon examination.

Earnings per Share

Basic earnings per share are computed based upon the weighted average number of shares of voting and non-voting common stock outstanding during each period. Shares of non-voting common stock are in all respects identical to and treated equally with shares of voting common stock except for the absence of voting rights (other than as provided in Loral’s Amended and Restated Certificate of Incorporation which was ratified by Loral’s stockholders on May 19, 2009). Diluted earnings per share are based on the weighted average number of shares of voting and non-voting common stock outstanding during each period, adjusted for the effect of unconverted restricted stock units. For diluted earnings per share, earnings are adjusted for the dilutive effect of Telesat stock options.

Recent Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. ASU No. 2018-13 eliminates, amends, and adds disclosure requirements to improve the effectiveness of fair value measurement disclosures. The new guidance is effective for the Company on January 1, 2020, with earlier application permitted in any interim or annual period. Companies may also choose to early adopt the eliminated and amended disclosures and wait to adopt the new disclosures until the effective date of the new guidance. While certain amendments are to be applied prospectively, all other amendments are to be applied retrospectively to all periods presented. The Company is currently evaluating the impact of the new guidance on its condensed consolidated financial statements.

10

LORAL SPACE & COMMUNICATIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

In February 2016, the FASB amended the Accounting Standards Codification (“ASC”) by creating ASC Topic 842, Leases (“ASC 842”). ASC Topic 842 requires a lessee to record a right-of-use asset and a lease liability for all leases with a lease term greater than 12 months. The main difference between previous U.S. GAAP and ASC Topic 842 is the recognition under ASC 842 of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. The new guidance was effective for the Company on January 1, 2019. We adopted ASC 842 in the first quarter of 2019 utilizing the modified retrospective method with a practical expedient through a cumulative-effect adjustment at the beginning of the first quarter of 2019. As a result, on January 1, 2019, we recognized a right-of-use asset and lease liability for an operating lease of approximately $0.3 million on our condensed consolidated balance sheet.

Additional Cash Flow Information

The following represents non-cash activities and supplemental information to the condensed consolidated statements of cash flows (in thousands):

	Six Months Ended
	June 30,
	2019		2018
Non-cash operating items:
Equity in net income of affiliates	$	(83,282)	$	(1,639)
Deferred taxes		3,308		(7,043)
Depreciation and amortization		8		11
Right-of-use asset, net of lease liability		16		—
Amortization of prior service credit and actuarial loss		501		532
Net non-cash operating items	$	(79,449)	$	(8,139)
Supplemental information:
Interest paid	$	10	$	11
Income tax refunds	$	2,980	$	255
Income tax payments	$	163	$	138

0

3. Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss, net of tax, are as follows (in thousands):

			Proportionate
			Share of		Accumulated
			Telesat Other		Other
	Postretirement		Comprehensive		Comprehensive
	Benefits		Income (Loss)		Loss
Balance, January 1, 2018	$	(16,454)	$	(20,824)	$	(37,278)
Other comprehensive income before reclassification		953		22,033		22,986
Amounts reclassified from accumulated other comprehensive loss		845		—		845
Net current-period other comprehensive income		1,798		22,033		23,831
Tax Cuts and Jobs Act, reclassification of tax effect from
accumulated other comprehensive loss to accumulated deficit		—		(4,173)		(4,173)
Balance, December 31, 2018		(14,656)		(2,964)		(17,620)
Other comprehensive loss before reclassification		—		(13,447)		(13,447)
Amounts reclassified from accumulated other comprehensive loss		395		—		395
Net current-period other comprehensive loss		395		(13,447)		(13,052)
Balance, June 30, 2019	$	(14,261)	$	(16,411)	$	(30,672)

11

LORAL SPACE & COMMUNICATIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The components of other comprehensive income (loss) and related tax effects are as follows (in thousands):

	Three Months Ended June 30,
	2019							2018
	Before-Tax			Tax		Net-of-Tax		Before-Tax			Tax		Net-of-Tax
	Amount			Provision		Amount		Amount			Provision		Amount
Amortization of prior service credits
and net actuarial loss	$	271	(a)	$	(58)	$	213	$	263	(a)	$	(56)	$	207
Equity in Telesat other comprehensive
income		(6,861)			2		(6,859)		532			(111)		421
Other comprehensive (loss) income	$	(6,590)		$	(56)	$	(6,646)	$	795		$	(167)	$	628

	Six Months Ended June 30,
	2019							2018
	Before-Tax			Tax (Provision)		Net-of-Tax		Before-Tax			Tax		Net-of-Tax
	Amount			Benefit		Amount		Amount			Provision		Amount
Amortization of prior service credits
and net actuarial loss	$	501	(a)	$	(106)	$	395	$	532	(a)	$	(112)	$	420
Equity in Telesat other comprehensive
(loss) income		(13,450)			3		(13,447)		9,309			(1,957)		7,352
Other comprehensive (loss) income	$	(12,949)		$	(103)	$	(13,052)	$	9,841		$	(2,069)	$	7,772

(a)Reclassifications are included in other expense.

4. Other Current Assets

Other current assets consists of (in thousands):

	June 30,		December 31,
	2019		2018
Indemnification receivable from SSL for pre-closing taxes (see Note 13)	$	672	$	2,410
Due from affiliates		176		161
Prepaid expenses		557		151
Other		508		510
	$	1,913	$	3,232

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LORAL SPACE & COMMUNICATIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Investments in Affiliates

Investments in affiliates consist of (in thousands):

	June 30,		December 31,
	2019		2018
Telesat	$	94,406	$	24,574

Equity in net income (loss) of affiliates consists of (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Telesat	$	41,278	$	(3,455)	$	83,282	$	1,639

Telesat

As of June 30, 2019 and December 31, 2018, we held a 62.7% economic interest and a 32.6% voting interest in Telesat. We use the equity method of accounting for our majority economic interest in Telesat because we own 32.6% of the voting stock and do not exercise control by other means to satisfy the U.S. GAAP requirement for treatment as a consolidated subsidiary. We have also concluded that Telesat is not a variable interest entity for which we are the primary beneficiary. Loral’s equity in net income or loss of Telesat is based on our proportionate share of Telesat’s results in accordance with U.S. GAAP and in U.S. dollars. Our proportionate share of Telesat’s net income or loss is based on our economic interest as our holdings consist of common stock and non-voting participating preferred shares that have all the rights of common stock with respect to dividends, return of capital and surplus distributions, but have no voting rights.

In addition to recording our share of equity in net income of Telesat, we also recorded our share of equity in other comprehensive loss of Telesat of $13.5 million for the six months ended June 30, 2019.

On January 1, 2019, Telesat adopted ASC 842, Leases, for its U.S. GAAP reporting which we use to record our equity income in Telesat. Telesat adopted the new guidance using the modified retrospective approach with the cumulative effect of initially applying the standard being recorded on the balance sheet. As a result, on January 1, 2019, Telesat recognized a right-of-use asset of $19.6 million and lease liability of $20.0 million on its condensed consolidated balance sheet. Comparative summary financial information of Telesat presented below has not been restated and continues to be reported under the accounting standards in effect for those periods presented.

The ability of Telesat to pay dividends or certain other restricted payments in cash to Loral is governed by applicable covenants in Telesat’s debt and shareholder agreements. Telesat’s credit agreement governing its senior secured credit facilities limits, among other items, Telesat’s ability to incur debt and make dividend payments if the total leverage ratio (“Total Leverage Ratio”) is above 4.50:1.00, with certain exceptions. As of June 30, 2019, Telesat’s Total Leverage Ratio was 4.75:1.00. Telesat is, however, permitted to pay annual consulting fees of $5.0 million to Loral in cash (see Note 14).

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LORAL SPACE & COMMUNICATIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table presents summary financial data for Telesat in accordance with U.S. GAAP as of June 30, 2019 and December 31, 2018 and for the three and six months ended June 30, 2019 and 2018 (in thousands):

	June 30,		December 31,
	2019		2018
Balance Sheet Data:
Current assets	$	741,714	$	628,125
Total assets		4,068,167		3,942,847
Current liabilities		118,201		139,401
Long-term debt, including current portion		2,756,055		2,764,599
Total liabilities		3,464,565		3,474,504
Shareholders’ equity		603,602		468,343

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Statement of Operations Data:
Revenues	$	172,995	$	164,114	$	340,639	$	348,980
Operating expenses		(30,405)		(26,933)		(68,384)		(57,536)
Depreciation, amortization and stock-based compensation		(54,093)		(48,287)		(107,891)		(96,786)
Other operating expense		(10)		(15)		(65)		(13)
Operating income		88,487		88,879		164,299		194,645
Interest expense		(46,492)		(42,520)		(93,335)		(87,608)
Foreign exchange gain (loss)		45,946		(45,777)		98,415		(109,078)
(Loss) gain on financial instruments		(21,263)		(1,767)		(36,375)		30,616
Other income		4,272		2,973		8,106		4,591
Income tax provision		(6,481)		(7,815)		(11,036)		(31,585)
Net income (loss)	$	64,469	$	(6,027)	$	130,074	$	1,581

Other

We own 56% of XTAR, a joint venture between us and Hisdesat Servicios Estrategicos, S.A. (“Hisdesat”) of Spain. We account for our ownership interest in XTAR under the equity method of accounting because we do not control certain of its significant operating decisions. We have also concluded that XTAR is not a variable interest entity for which we are the primary beneficiary. As of June 30, 2019 and December 31, 2018, the carrying value of our investment in XTAR was zero.  Beginning January 1, 2016, we discontinued providing for our allocated share of XTAR’s net losses as our investment was reduced to zero and we have no commitment to provide further financial support to XTAR.

XTAR owns and operates an X-band satellite, XTAR-EUR, located at 29° E.L., which is designed to provide X-band communications services exclusively to United States, Spanish and allied government users throughout the satellite’s coverage area, including Europe, the Middle East and Asia. XTAR also leases 7.2 72MHz X-band transponders on the Spainsat satellite located at 30° W.L., owned by Hisdesat. These transponders, designated as XTAR-LANT, provide capacity to XTAR for additional X-band services and greater coverage and flexibility.

As of June 30, 2019 and December 31, 2018, the Company also held an indirect ownership interest in a foreign company that currently serves as the exclusive service provider for Globalstar service in Mexico. The Company accounts for this ownership interest using the equity method of accounting. As of June 30, 2019 and December 31, 2018, the carrying value of this investment was zero. Because Loral has written-off its investment in this company and has no future funding requirements relating to this investment, there is no requirement for us to provide for our allocated share of this company’s net losses.

14

LORAL SPACE & COMMUNICATIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Other Current Liabilities

Other current liabilities consists of (in thousands):

	June 30,		December 31,
	2019		2018
Operating lease liability, current	$	677	$	—
Due to affiliate		3		164
Accrued professional fees		805		1,206
Pension and other postretirement liabilities		69		69
Accrued liabilities		51		56
	$	1,605	$	1,495

7. Income Taxes

The following summarizes our income tax (provision) benefit (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Current income tax provision	$	(316)	$	(834)	$	(918)	$	(1,388)
Deferred income tax (provision) benefit		(1,844)		5,902		(3,308)		7,043
Income tax (provision) benefit	$	(2,160)	$	5,068	$	(4,226)	$	5,655

For the six month periods ended June 30, 2019 and 2018, our income tax (provision) benefit is computed by applying an expected effective annual tax rate against the pre-tax results for each period (after adjusting for certain tax items that are discrete to each period). For the three month periods ended June 30, 2019 and 2018, this amount is then reduced by the tax recorded for the three months ended March 31, 2019 and 2018. After utilization of our net operating loss carryforward and foreign tax credits, there was no federal income tax on GILTI from Telesat for the three and six month periods ended June 30, 2019 and 2018. The deferred income tax (provision) benefit for each period includes the impact of equity in net income (loss) of affiliates from our condensed consolidated statement of operations.

Subsequent to the sale of SSL to MDA Communications Holdings, Inc., a subsidiary of Maxar Technologies Ltd. (formerly known as MacDonald, Dettwiler and Associates Ltd.) (“MDA”) in 2012 (the “SSL Sale”), to the extent that profitability from operations is not sufficient to realize the benefit from our remaining net deferred tax assets, we would generate sufficient taxable income from the appreciated value of our Telesat investment in order to prevent federal net operating losses from expiring and realize the benefit of all remaining deferred tax assets.

The following summarizes amounts for UTPs included in our income tax (provision) benefit (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Current provision for UTPs	$	(277)	$	(747)	$	(737)	$	(1,227)
Deferred benefit for UTPs		60		157		153		258
Tax provision for UTPs	$	(217)	$	(590)	$	(584)	$	(969)

As of June 30, 2019, we had unrecognized tax benefits relating to UTPs of $43 million. The Company recognizes interest and penalties related to income taxes in income tax expense on a quarterly basis. As of June 30, 2019, we have accrued no penalties and approximately $1.2 million for the potential payment of tax-related interest.

15

LORAL SPACE & COMMUNICATIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

With few exceptions, the Company is no longer subject to U.S. federal, state or local income tax examinations by tax authorities for years prior to 2014. Earlier years related to certain foreign jurisdictions remain subject to examination. To the extent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses were generated and carried forward, and make adjustments up to the amount of the net operating loss carryforward. While we intend to contest any future tax assessments for uncertain tax positions, no assurance can be provided that we would ultimately prevail. Pursuant to the purchase agreement for the SSL Sale, we are obligated to indemnify SSL for certain taxes related to periods prior to the closing of the transaction.

The following summarizes the changes to our liabilities for UTPs included in other liabilities in the condensed consolidated balance sheet (in thousands):

	Six Months Ended
	June 30, 2019
Liabilities for UTPs:
Opening balance — January 1	$	13,315
Current provision for potential additional interest		737
Ending balance	$	14,052

As of June 30, 2019, if our positions are sustained by the taxing authorities, the Company’s income tax provision would be reduced by approximately $6.6 million. Other than as described above, there were no significant changes to our UTPs during the six months ended June 30, 2019 and 2018, and we do not anticipate any other significant changes to our unrecognized tax benefits during the next twelve months.

8. Other Liabilities

Other liabilities consists of (in thousands):

	June 30,		December 31,
	2019		2018
Indemnification liabilities - other (see Note 13)	$	167	$	184
Liabilities for uncertain tax positions		14,052		13,315
	$	14,219	$	13,499

9. Stock-Based Compensation

Stock Plans

The Loral amended and restated 2005 stock incentive plan (the “Stock Incentive Plan”) which allowed for the grant of several forms of stock-based compensation awards including stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonuses and other stock-based awards, had a ten-year term and has expired. The Company granted 75,262 restricted stock units under the Stock Incentive Plan that do not expire and remained unconverted as of June 30, 2019 and December 31, 2018.

16

LORAL SPACE & COMMUNICATIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

10. Earnings Per Share

Telesat has awarded employee stock options, which, if exercised, would result in dilution of Loral’s economic ownership interest in Telesat from 62.7% to approximately 62.3%.

The following table presents the dilutive impact of Telesat stock options on Loral’s reported income from continuing operations for the purpose of computing diluted earnings per share (in thousands):

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2019		2019		2018
Income from continuing operations — basic	$	38,227	$	76,743	$	4,778
Less: Adjustment for dilutive effect of Telesat stock options		(230)		(484)		(10)
Income from continuing operations — diluted	$	37,997	$	76,259	$	4,768

Telesat stock options are excluded from the calculation of diluted income per share for the three months ended June 30, 2018 as the effect would have been antidilutive.

Basic income per share is computed based upon the weighted average number of share of voting and non-voting common stock outstanding. The following is the computation of common shares outstanding for diluted earnings per share (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Weighted average common shares outstanding		30,933		30,933		30,933	30,933
Unconverted restricted stock units		75		75		75	75
Common shares outstanding for diluted earnings per share		31,008		31,008		31,008	31,008

11. Pensions and Other Employee Benefit Plans

The following tables provide the components of net periodic cost for our qualified retirement plan (the “Pension Benefits”) and health care and life insurance benefits for retired employees and dependents (the “Other Benefits”) for the three and six months ended June 30, 2019 and 2018(in thousands):

	Pension Benefits				Other  Benefits
	Three Months Ended				Three Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Service cost (1)	$	183	$	170	$	—	$	—
Interest cost (2)		499		463		5		4
Expected return on plan assets (2)		(609)		(657)		—		—
Amortization of net actuarial loss (2)		272		257		(1)		—
Amortization of prior service credits (2)		—		—		—		6
Net periodic cost	$	345	$	233	$	4	$	10

17

LORAL SPACE & COMMUNICATIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

	Pension Benefits				Other Benefits
	Six Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Service cost (1)	$	361	$	357	$	—	$	—
Interest cost (2)		1,009		927		10		8
Expected return on plan assets (2)		(1,216)		(1,314)		—		—
Amortization of net actuarial loss (2)		503		520		(2)		—
Amortization of prior service credits (2)		—		—		—		12
Net periodic cost	$	657	$	490	$	8	$	20

(1)Included in general and administrative expenses.

(2)Included in other expense.

12. Financial Instruments, Derivative Instruments and Hedging

Financial Instruments

The carrying amount of cash equivalents approximates fair value because of the short maturity of those instruments.

Foreign Currency

We are subject to the risks associated with fluctuations in foreign currency exchange rates. To limit this foreign exchange rate exposure, we attempt to denominate all contracts in U.S. dollars. Where appropriate, derivatives are used to minimize the risk of foreign exchange rate fluctuations to operating results and cash flows. We do not use derivative instruments for trading or speculative purposes.

Derivatives and Hedging Transactions

There were no derivative instruments as of June 30, 2019 and December 31, 2018.

13. Commitments and Contingencies

Financial Matters

In the fourth quarter of 2012, we sold our former subsidiary, SSL, to MDA pursuant to the purchase agreement for the SSL Sale. Under the terms of the purchase agreement, we are obligated to indemnify MDA and its affiliates from liabilities with respect to certain pre-closing taxes. Our consolidated balance sheets include an indemnification refund receivable of $0.7 million and $2.4 million as of June 30, 2019 and December 31, 2018, respectively.  Certain tax assessments against SSL for 2007 to 2010 have been settled, resulting in our having received during the second quarter of 2019 a  $1.7 million refund of prior indemnification payments. The remaining receivable as of June 30, 2019 represents payments to date over the estimated fair value of our remaining liability for our indemnification of SSL pre-closing taxes where the final amounts have not yet been determined. Where appropriate, we intend vigorously to contest the underlying tax assessments, but there can be no assurance that we will be successful. Although no assurance can be provided, we do not believe that these tax-related matters will have a material adverse effect on our financial position or results of operations.

18

LORAL SPACE & COMMUNICATIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

In connection with the sale in 2008 by Loral and certain of its subsidiaries and DASA Globalstar LLC to Globalstar Inc. of their respective interests in GdB, the Globalstar Brazilian service provider, Loral agreed to indemnify Globalstar Inc. and GdB for certain GdB pre-closing liabilities, primarily related to Brazilian taxes. Our condensed consolidated balance sheets include liabilities of $0.2 million as of June 30, 2019 and December 31, 2018 for indemnification liabilities relating to the sale of GdB.

See Note 14 — Related Party Transactions — Transactions with Affiliates — Telesat for commitments and contingencies relating to our agreement to indemnify Telesat for certain liabilities and our other arrangements with Telesat.

Lease Arrangements

We lease certain facilities and equipment under agreements expiring at various dates. We may renew, extend or modify a lease covering facilities as needed. We have no sublease income in any of the periods presented.

We changed our method of accounting for leases in the first quarter of 2019 due to the adoption of ASC 842. We adopted ASC 842 as of January 1, 2019 using the modified retrospective transition method and elected to apply the transition as of the beginning of the period of adoption. Accordingly, financial information as of and for the three and six months ended June 30, 2019 is presented under ASC 842, whereas the financial information for the three and six months ended June 30, 2018 and as of December 31, 2018 is presented under ASC 840, Leases.

Upon adoption of ASC 842, we recognized a right-of-use asset and lease liability of $0.3 million for an operating lease on our condensed consolidated balance sheet as of January 1, 2019. In March 2019, the operating lease was modified by extending the lease termination date from June 30, 2019 to June 30, 2020 and increasing the rent for the extension period. Lease costs expensed for the three and six months ended June 30, 2019 and 2018 were as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Rent Expense	$	171	$	159	$	334	$	318

Lease payments for the six months ended June 30, 2019 were $0.3 million. The remaining lease term as of June  30, 2019 is 12 months, and we used a discount rate of 7.5% to compute the lease liability.

The following is a reconciliation of the lease liability to future lease payments as of June  30, 2019 (in thousands):

	2019		2020		Total
Operating lease liability, current	$	332	$	345	$	677
Future interest		18		5		23
Future lease payments	$	350	$	350	$	700

Legal Proceedings

We are not currently subject to any legal proceedings that, if decided adversely, could have a material adverse effect on our financial position or results of operations. In the future, however, we may become subject to legal proceedings and claims, either asserted or unasserted, that may arise in the ordinary course of business or otherwise.

19

LORAL SPACE & COMMUNICATIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

14. Related Party Transactions

MHR Fund Management LLC

Mark H. Rachesky, President of MHR Fund Management LLC (“MHR”), and Janet T. Yeung, a principal and the General Counsel of MHR, are members of Loral’s board of directors.

Various funds affiliated with MHR and Dr. Rachesky held, as of June 30, 2019 and December 31, 2018, approximately 39.9% of the outstanding voting common stock and 58.4% of the combined outstanding voting and non-voting common stock of Loral.

Transactions with Affiliates

Telesat

As described in Note 5, we own 62.7% of Telesat and account for our ownership interest under the equity method of accounting.

In connection with the acquisition of our ownership interest in Telesat (which we refer to as the Telesat transaction), Loral and certain of its subsidiaries, our Canadian co-owner, Public Sector Pension Investment Board (“PSP”) and one of its subsidiaries, Telesat and MHR entered into a Shareholders Agreement (the “Shareholders Agreement”). The Shareholders Agreement provides for, among other things, the manner in which the affairs of Telesat and its subsidiaries will be conducted and the relationships among the parties thereto and future shareholders of Telesat. The Shareholders Agreement also contains an agreement by Loral not to engage in a competing satellite communications business and agreements by the parties to the Shareholders Agreement not to solicit employees of Telesat or any of its subsidiaries. Additionally, the Shareholders Agreement details the matters requiring the approval of the shareholders of Telesat (including veto rights for Loral over certain extraordinary actions) and provides for preemptive rights for certain shareholders upon the issuance of certain capital shares of Telesat. The Shareholders Agreement also (i) restricts the ability of holders of certain shares of Telesat to transfer such shares unless certain conditions are met or approval of the transfer is granted by the directors of Telesat, (ii) provides for a right of first offer to certain Telesat shareholders if a holder of equity shares of Telesat wishes to sell any such shares to a third party and (iii) provides for, in certain circumstances, tag-along rights in favor of shareholders that are not affiliated with Loral if Loral sells equity shares and drag-along rights in favor of Loral in case Loral or its affiliate enters into an agreement to sell all of its Telesat equity securities.

In addition, the Shareholders Agreement provides for either PSP or Loral to initiate the process of conducting an initial public offering of the equity shares of Telesat (a “Telesat IPO”). In connection with our exploration of strategic initiatives to alter the status quo in our ownership of Telesat, in July 2015, we exercised our right under the Shareholders Agreement to require Telesat to conduct a Telesat IPO. Specifically, we requested that Telesat issue not more than 25 million newly issued shares of Telesat voting common stock. We also requested the termination of the Shareholders Agreement and the elimination of certain provisions in Telesat’s Articles of Incorporation, both of which we believe are important for a successful public offering. If those provisions are eliminated, an impediment to the conversion of our non-voting Telesat shares to voting shares would be eliminated. Termination or modification of the Shareholders Agreement and conversion of our non-voting shares to voting shares would enable us, after a Telesat IPO and subject to the receipt of any necessary regulatory approvals, to obtain majority voting control of Telesat. To date, we and PSP have not reached agreement on governance matters following a Telesat IPO. In the event a strategic transaction to combine Loral and Telesat into one public company that we are pursuing is not likely to be achievable in a timely manner or on satisfactory terms, we may further pursue our right to a Telesat IPO. There can be no assurance as to whether, when or on what terms a Telesat IPO, termination or modification of the Shareholders Agreement or any requested changes to Telesat’s Articles of Incorporation may occur or that any particular economic, tax, structural or other objectives or benefits with respect to a Telesat IPO will be achieved. If a Telesat IPO is expected to proceed under unfavorable terms or at an unfavorable price, we may withdraw our demand for a Telesat IPO.

20

LORAL SPACE & COMMUNICATIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Depending upon the outcome of discussions with PSP relating to Telesat strategic matters, we may assert certain claims against PSP for actions we believe violated our rights relating to the affairs of Telesat under the Telesat Shareholders Agreement and otherwise. In response to our claims, PSP has informed us that it believes that it may have claims against us, although we are not aware of the legal or factual basis for any such claims. We and PSP have agreed that, pending the outcome of our discussions, it would be beneficial to delay the commencement of any action relating to either party’s claims and have entered into an agreement (the “Tolling Agreement”) which preserves the parties’ rights to assert against one another legal claims relating to Telesat. We also included Telesat as a party to the Tolling Agreement because, as a technical matter of Canadian law and for purposes of potentially seeking equitable relief, Telesat may be a necessary party. There can be no assurance that if the Tolling Agreement lapses that we and PSP will not pursue legal claims against one another relating to Telesat. If we pursue claims against PSP, there can be no assurance that our claims will be successful or that the relief we seek will be granted. If PSP pursues claims against us, there can be no assurance that PSP will not prevail on its claims.

Under the Shareholders Agreement, in the event that, except in certain limited circumstances, either (i) ownership or control, directly or indirectly, by Dr. Rachesky of Loral’s voting stock falls below certain levels other than in connection with certain specified circumstances, including an acquisition by a Strategic Competitor (as defined in the Shareholders Agreement) or (ii) there is a change in the composition of a majority of the members of the Loral Board of Directors over a consecutive two-year period without the approval of the incumbent directors, Loral will lose its veto rights relating to certain extraordinary actions by Telesat and its subsidiaries. In addition, after either of these events, PSP will have certain rights to enable it to exit from its investment in Telesat, including a right to cause Telesat to conduct an initial public offering in which PSP’s shares would be the first shares offered or, if no such offering has occurred within one year due to a lack of cooperation from Loral or Telesat, to cause the sale of Telesat and to drag along the other shareholders in such sale, subject to Loral’s right to call PSP’s shares at fair market value.

The Shareholders Agreement provides for a board of directors of Telesat consisting of 10 directors, three nominated by Loral, three nominated by PSP and four independent directors to be selected by a nominating committee comprised of one PSP nominee, one nominee of Loral and one of the independent directors then in office. Each party to the Shareholders Agreement is obligated to vote all of its Telesat shares for the election of the directors nominated by the nominating committee. Pursuant to action by the board of directors taken on October 31, 2007, Dr. Rachesky, who is non-executive Chairman of the Board of Directors of Loral, was appointed non-executive Chairman of the Board of Directors of Telesat. In addition, Michael B. Targoff, Loral’s Vice Chairman, serves on the board of directors of Telesat.

On October 31, 2007, Loral and Telesat entered into a consulting services agreement (the “Consulting Agreement”). Pursuant to the terms of the Consulting Agreement, Loral provides to Telesat certain non-exclusive consulting services in relation to the business of Loral Skynet which was transferred to Telesat as part of the Telesat transaction as well as with respect to certain aspects of the satellite communications business of Telesat. The Consulting Agreement has a term of seven-years with an automatic renewal for an additional seven-year term if Loral is not then in material default under the Shareholders Agreement. Upon expiration of the initial term on October 31, 2014, the Consulting Agreement was automatically renewed for the additional seven-year term. In exchange for Loral’s services under the Consulting Agreement, Telesat pays Loral an annual fee of $5.0 million, payable quarterly in arrears on the last day of March, June, September and December of each year during the term of the Consulting Agreement. Our general and administrative expenses are net of income related to the Consulting Agreement of $1.25 million for each of the three‑month periods ended June 30, 2019 and 2018 and $2.5 million for each of the six-month periods ended June 30, 2019 and 2018. For each of the six-month periods ended June 30, 2019 and 2018, Loral received payments in cash from Telesat, net of withholding taxes, of $2.4 million for consulting fees.

In connection with the acquisition of our ownership interest in Telesat in 2007, Loral retained the benefit of tax recoveries related to the transferred assets and indemnified Telesat (“Telesat Indemnification”) for certain liabilities, including Loral Skynet’s tax liabilities arising prior to January 1, 2007. The Telesat Indemnification includes certain tax disputes currently under review in various jurisdictions including Brazil. The Brazilian tax authorities challenged Loral Skynet’s historical characterization of its revenue generated in Brazil for the years 2003 to 2006. Telesat received and challenged, on Loral Skynet’s behalf, tax assessments from Brazil totaling approximately $0.9 million. The Company believes that Loral Skynet’s filing position will ultimately be sustained requiring no payment under the Telesat Indemnification. There can be no assurance that there will be no future claims under the Telesat Indemnification related to tax disputes.

21

LORAL SPACE & COMMUNICATIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Loral’s employees and retirees participate in certain welfare plans sponsored or managed by Telesat. Loral pays Telesat an annual administrative fee of $0.1 million and reimburses Telesat for the plan costs attributable to Loral participants.

Loral, along with Telesat, PSP and 4440480 Canada Inc., an indirect wholly-owned subsidiary of Loral (the “Special Purchaser”), entered into stock option grant agreements (the “Stock Option Grant Agreements”) and a restricted stock unit grant agreement (the “RSU Grant Agreement,” and, together with the Stock Option Grant Agreements, the “Grant Agreements”) with respect to shares in Telesat with certain executives of Telesat (each, a “Participant” and collectively, the “Participants”). Each of the Participants is or was, at the time, an executive of Telesat.

The Stock Option Grant Agreements document grants to the Participants of Telesat stock options (including tandem SAR rights) and provide for certain rights, obligations and restrictions related to such stock options, which include, among other things: (w) the possible obligation of the Special Purchaser to purchase the shares in the place of Telesat should Telesat be prohibited by applicable law or under the terms of any credit agreement applicable to Telesat from purchasing such shares, or otherwise default on such purchase obligation, pursuant to the terms of the Stock Option Grant Agreements; and (x) the obligation of the Special Purchaser to purchase shares upon exercise by Telesat of its call right under Telesat’s Management Stock Incentive Plan in the event of a Participant’s termination of employment; and, in the case of certain executives, (y) the right of each such Participant to require the Special Purchaser or Loral to purchase a portion of the shares in Telesat owned by him in the event of exercise after termination of employment to cover taxes that are greater than the minimum withholding amount; and (z) the right of each such Participant to require Telesat to cause the Special Purchaser or Loral to purchase a portion of the shares in Telesat owned by him, or that are issuable to him under Telesat's Management Stock Incentive Plan at the relevant time, in the event that more than 90% of Loral's common stock is acquired by an unaffiliated third party that does not also purchase all of PSP’s and its affiliates’ interest in Telesat.

The RSU Grant Agreement documents a grant to the Participant of restricted stock units with respect to shares in Telesat and provides for certain rights, obligations and restrictions related to such restricted stock units, which include, among other things:  (x) the possible obligation of the Special Purchaser to purchase the shares in the place of Telesat should Telesat be prohibited by applicable law or under the terms of any credit agreement applicable to Telesat from purchasing such shares, or otherwise default on such purchase obligation, pursuant to the terms of the RSU Grant Agreement; and (y) the obligation of the Special Purchaser to purchase shares upon exercise by Telesat of its call right under Telesat’s Management Stock Incentive Plan in the event of the termination of the Participant’s employment.

The Grant Agreements further provide that, in the event the Special Purchaser is required to purchase shares, such shares, together with the obligation to pay for such shares, shall be transferred to a subsidiary of the Special Purchaser, which subsidiary shall be wound up into Telesat, with Telesat agreeing to the acquisition of such subsidiary by Telesat from the Special Purchaser for nominal consideration and with the purchase price for the shares being paid by Telesat within ten (10) business days after completion of the winding-up of such subsidiary into Telesat.

Other

As described in Note 5, we own 56% of XTAR, a joint venture between Loral and Hisdesat and account for our investment in XTAR under the equity method of accounting. SSL constructed XTAR’s satellite, which was successfully launched in February 2005. XTAR and Loral have entered into a management agreement whereby Loral provides general and specific services of a technical, financial and administrative nature to XTAR. For the services provided by Loral, XTAR, until December 31, 2013, was charged a quarterly management fee equal to 3.7% of XTAR’s quarterly gross revenues. The amount due to Loral primarily due to the management agreement was $6.7 million as of June 30, 2019 and December 31, 2018. Beginning in 2008, Loral and XTAR agreed to defer amounts owed to Loral under this agreement, and XTAR has agreed that its excess cash balance (as defined), will be applied at least quarterly towards repayment of its payables owed to Loral, as well as to Hisdesat and Telesat. No cash was received under this agreement for the six months ended June 30, 2019 and 2018, and we had an allowance of $6.6 million against receivables from XTAR as of June 30, 2019 and December 31, 2018. Loral and Hisdesat have agreed to waive future management fees for an indefinite period starting January 1, 2014.

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LORAL SPACE & COMMUNICATIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Consulting Agreement

On December 14, 2012, Loral entered into a consulting agreement with Michael B. Targoff, Vice Chairman of the Company and former Chief Executive Officer and President. Pursuant to this agreement, Mr. Targoff is engaged as a part-time consultant to the Board to assist the Board with respect to the oversight of strategic matters relating to Telesat and XTAR. Under the agreement, Mr. Targoff receives consulting fees of $120,000 per month and reimburses the Company for certain expenses. For each of the three and six month periods ended June 30, 2019 and 2018, Mr. Targoff earned consulting fees of $360,000 and $720,000, respectively, and reimbursed Loral net expenses of $11,250 and $22,500, respectively.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements (the “financial statements”) included in Item 1 and our latest Annual Report on Form 10-K filed with the Securities and Exchange Commission.

INDEX

Topic	Location
Overview	Page 24
Consolidated Operating Results	Page 27
Liquidity and Capital Resources
Loral	Page 32
Telesat	Page 34
Statements of Cash` Flows	Page 36
Affiliate Matters	Page 36
Commitments and Contingencies	Page 36
Other Matters	Page 37

Loral Space & Communications Inc., a Delaware corporation, together with its subsidiaries (“Loral,” the “Company,” “we,” “our,” and “us”) is a leading satellite communications company engaged, through our ownership interests in affiliates, in satellite-based communications services.

Disclosure Regarding Forward-Looking Statements

Except for the historical information contained in the following discussion and analysis, the matters discussed below are not historical facts, but are “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. In addition, we or our representatives have made and may continue to make forward-looking statements, orally or in writing, in other contexts. These forward-looking statements can be identified by the use of words such as “believes,” “expects,” “plans,” “may,” “will,” “would,” “could,” “should,” “anticipates,” “estimates,” “project,” “intend” or “outlook” or other variations of these words. These statements, including without limitation, those relating to Telesat, are not guarantees of future performance and involve risks and uncertainties that are difficult to predict or quantify. Actual events or results may differ materially as a result of a wide variety of factors and conditions, many of which are beyond our control. For a detailed discussion of these and other factors and conditions, please refer to the Commitments and Contingencies section below and to our other periodic reports filed with the Securities and Exchange Commission (“SEC”). We operate in an industry sector in which the value of securities may be volatile and may be influenced by economic and other factors beyond our control. We undertake no obligation to update any forward-looking statements.

Overview

Business

Loral has one operating segment consisting of satellite-based communications services. Loral participates in satellite services operations primarily through its ownership interest in Telesat Canada (“Telesat”), a leading global satellite operator. Telesat provides its satellite and communication services from a fleet of satellites that occupy Canadian and other orbital locations. Loral holds a 62.7% economic interest and a 32.6% voting interest in Telesat as of June 30, 2019.

At June 30, 2019, Telesat, with approximately $2.7 billion of backlog, provided satellite services to customers from its fleet of 16 in-orbit geostationary satellites and the Canadian Ka-band payload on the ViaSat‑1 satellite. Telesat is also developing a global constellation of low earth orbit (“LEO”) satellites. In January 2018, Telesat launched a Ka-band satellite into low earth orbit as part of its plan to deploy a high capacity LEO constellation that is expected to deliver low latency, fiber-like broadband to commercial and government users worldwide.

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On July 24, 2019, Telesat announced that it had entered into a memorandum of understanding with the Government of Canada (the “GoC”) regarding a partnership that would ensure access to affordable high-speed internet connectivity across rural and remote areas of Canada through the development of the Telesat LEO constellation. The partnership is expected to generate CAD 1.2 billion in revenue for Telesat over 10 years, which includes a contribution of up to CAD 600 million from the GoC.

In May 2019, Telesat entered into an agreement with the GoC pursuant to which the GoC will contribute up to CAD 85 million through July 31, 2023 to support the development of the Telesat LEO constellation (the “Government Grant”). As of June 30, 2019, Telesat recorded CAD 3.9 million as a receivable relating to the agreement with CAD 3.8 million recorded as a reduction of Telesat’s operating expense in the second quarter of 2019. 

The satellite services business is capital intensive and the build-out of a satellite fleet requires substantial time and investment. Once the investment in a satellite is made, the incremental costs to maintain and operate the satellite are relatively low over the life of the satellite, with the exception of in-orbit insurance. Telesat has been able to generate significant revenue backlog by entering into long-term contracts with some of its customers, in some cases for all or substantially all of a satellite’s orbital maneuver life. Historically, this has resulted in revenue from the satellite services business being fairly predictable.

Telesat’s desirable spectrum rights, commitment to providing the highest level of customer service, deep technical expertise and culture of innovation have enabled it to successfully develop its business to date. Leveraging these strengths and building on its existing contractual revenue backlog, Telesat’s focus is on profitably growing its business by increasing the utilization of its in-orbit satellites and, in a disciplined manner, deploying expansion satellite capacity where strong market demand is anticipated. 

Telesat believes that it is well positioned to serve its customers and the markets in which it participates. Telesat actively pursues opportunities to develop new satellites, particularly in conjunction with current or prospective customers who will commit to long-term service agreements prior to the time the satellite construction contract is signed. However, while Telesat regularly pursues these opportunities, it does not procure additional or replacement satellites until it believes there is a demonstrated need and a sound business plan for such satellite capacity.

In 2019, Telesat remains focused on increasing utilization of its existing satellites, the development of its global LEO constellation and identifying and pursuing opportunities to invest in expansion of satellite capacity, all while maintaining operating discipline.

Telesat’s operating results are subject to fluctuations as a result of exchange rate variations. For the six months ended June 30, 2019,  approximately 51% of Telesat’s revenues, 40% of its operating expenses, 100% of its interest expense on debt and the majority of its 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 indebtedness and cash and short term investments. As of June 30, 2019, Telesat’s U.S. dollar denominated debt totaled $2.8 billion. As of June 30, 2019,  a five percent increase (decrease) in the Canadian dollar against the U.S. dollar on financial assets and liabilities would have increased (decreased) Telesat’s net income by approximately $114.9 million. This analysis assumes all other variables, in particular interest rates, remain constant.

General

Our principal asset is our majority economic ownership interest in Telesat. In an effort to maximize shareholder value, we have been exploring, and are in discussions with our Canadian co-owner in Telesat, Public Sector Pension Investment Board (“PSP”) regarding, potential strategic transactions to alter the status quo in our ownership of Telesat. Subject to market conditions and the cooperation of PSP, we continue to explore the combination of Loral and Telesat into one public company. Also, as described more fully below, we have exercised our right to require that Telesat initiate a public offering, and we may further pursue this right in the event that the combination transaction that we are pursuing is not likely to be achievable in a timely manner or on satisfactory terms. There can be no assurance as to whether or when we will be able to conclude any strategic transaction or that any strategic initiatives or transaction involving Telesat or Loral may occur, or that any particular economic, tax, structural or other objectives or benefits with respect to any initiative or transaction involving Telesat or Loral’s interest therein will be achieved.

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In the first quarter of 2017, we received $242.7 million in cash from Telesat, representing our share of an aggregate approximately $400 million distribution from Telesat to its shareholders and stock option holders. We intend to use the proceeds of such distribution, net of reasonable reserves for working capital and other liabilities, to make a distribution or return capital to our stockholders. There can be no assurance as to the amount and timing of any such distribution or return of capital, and such distribution or return of capital may be impacted by the outcome of our discussions regarding, and the structure of, the strategic combination transaction that we are pursuing.

As mentioned above, we have the right under the Telesat Shareholders Agreement to require Telesat to conduct an initial public offering of its equity shares, and, in July 2015, we exercised this right. Specifically, we requested that Telesat issue not more than 25 million newly issued shares of Telesat voting common stock. We also requested the termination of the Shareholders Agreement and the elimination of certain provisions in Telesat’s Articles of Incorporation, both of which we believe are important for a successful public offering. If those provisions are eliminated, an impediment to the conversion of our non-voting Telesat shares to voting shares would be eliminated. Termination or modification of the Shareholders Agreement and conversion of our non-voting shares to voting shares would enable us, after a Telesat IPO and subject to the receipt of any necessary regulatory approvals, to obtain majority voting control of Telesat. To date, we and PSP have not reached agreement on governance matters following a Telesat IPO. In the event a transaction to combine Loral and Telesat into one public company that we are pursuing is not likely to be achievable in a timely manner or on satisfactory terms, we may further pursue our right to a Telesat IPO. There can be no assurance as to whether, when or on what terms a Telesat IPO, termination or modification of the Shareholders Agreement or any requested changes to Telesat’s Articles of Incorporation may occur or that any particular economic, tax, structural or other objectives or benefits with respect to a Telesat IPO will be achieved. If a Telesat IPO is expected to proceed under unfavorable terms or at an unfavorable price, we may withdraw our demand for a Telesat IPO.

Depending upon the outcome of the strategic initiatives discussed above, we may assert certain claims against PSP for actions we believe violated our rights relating to the affairs of Telesat under the Telesat Shareholders Agreement and otherwise. In response to our claims, PSP has informed us that it believes that it may have claims against us, although we are not aware of the legal or factual basis for any such claims. We and PSP have agreed that, pending the outcome of our discussions relating to Telesat, it would be beneficial to delay the commencement of any action relating to either party’s claims and have entered into an agreement (the “Tolling Agreement”) which preserves the parties’ rights to assert against one another legal claims relating to Telesat. We also included Telesat as a party to the Tolling Agreement because, as a technical matter of Canadian law and for purposes of potentially seeking equitable relief, Telesat may be a necessary party. There can be no assurance that if the Tolling Agreement lapses that we and PSP will not pursue legal claims against one another relating to Telesat. If we pursue claims against PSP, there can be no assurance that our claims will be successful or that the relief we seek will be granted. If PSP pursues claims against us, there can be no assurance that PSP will not prevail on its claims.

Loral may, from time to time, explore and evaluate other possible strategic transactions and alliances which may include joint ventures and strategic relationships as well as business combinations or the acquisition or disposition of assets. In order to pursue certain of these opportunities, additional funds are likely to be required. There can be no assurance that we will enter into additional strategic transactions or alliances, nor do we know if we will be able to obtain the necessary financing for transactions that require additional funds on favorable terms, if at all.

 In connection with the acquisition of our ownership interest in Telesat in 2007, Loral has agreed that, subject to certain exceptions described in the Shareholders Agreement, for so long as Loral has an interest in Telesat, it will not compete in the business of leasing, selling or otherwise furnishing fixed satellite service, broadcast satellite service or audio and video broadcast direct-to-home service using transponder capacity in the C-band, Ku-band and Ka-band (including in each case extended band) frequencies and the business of providing end-to-end data solutions on networks comprised of earth terminals, space segment, and, where appropriate, networking hubs.

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 Consolidated Operating Results

See Critical Accounting Matters in our latest Annual Report on Form 10-K filed with the SEC and Note 2 to the financial statements.

Changes in Critical Accounting Policies — There have been no changes in our critical accounting policies during the six months ended June 30, 2019.

Three Months Ended June 30, 2019 Compared with Three Months Ended June 30, 2018

The following compares our consolidated results for the three months ended June 30, 2019 and 2018 as presented in our financial statements:

General and Administrative Expenses

	Three Months Ended
	June 30,
		2019		2018
	(In thousands)
General and administrative expenses	$	1,697	$	1,758

General and administrative expenses were comparable for the three months ended June 30, 2019 and 2018.

Interest and Investment Income

	Three Months Ended
	June 30,
		2019		2018
	(In thousands)
Interest and investment income	$	1,566	$	1,189

Interest and investment income increased by $0.4 million for the three months ended June 30, 2019 as compared to the three months ended June 30, 2018 due to higher interest rates earned on the cash balance during the second quarter of 2019 as compared to 2018.

Other Expense

	Three Months Ended
	June 30,
		2019		2018
	(In thousands)
Other expense	$	755	$	554

Other expense for the three months ended June 30, 2019 and 2018 was primarily related to strategic initiatives.

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Income Tax (Provision) Benefit

	Three Months Ended
	June 30,
		2019		2018
	(In thousands)
Income tax (provision) benefit	$	(2,160)	$	5,068

For the three month periods ended June 30, our income tax (provision) benefit is summarized as follows: (i) for 2019, we recorded a current and deferred tax provision of $0.3 million and $1.9 million, respectively, resulting in a total tax provision of $2.2 million and (ii) for 2018, we recorded a current tax provision of $0.8 million and a deferred tax benefit of $5.9 million, resulting in a net tax benefit of $5.1 million.

Our income tax (provision) benefit for each period is computed by applying an expected effective annual tax rate against the pre-tax results for the six month periods ended June 30, 2019 and 2018 (after adjusting for certain tax items that are discrete to each period). This amount is then reduced by the tax (provision) benefit recorded for the three month periods ended March 31, 2019 and 2018.  While the current income tax provision for each period includes our anticipated income tax liability related to Global Intangible Low Taxed Income (“GILTI”) from Telesat,  after utilization of our net operating loss carryforward and foreign tax credits, there was no federal income tax on GILTI from Telesat for the three month periods ended June 30, 2019 and 2018. The deferred income tax (provision) benefit for each period includes the impact of equity in net income (loss) of affiliates from our condensed consolidated statement of operations and the periodic effect of our accounting for GILTI.  

Subsequent to the sale of Space Systems/Loral, LLC (formerly known as Space Systems/Loral, Inc.) (“SSL”) to MDA Communications Holdings, Inc., a subsidiary of Maxar Technologies Ltd. (formerly known as MacDonald, Dettwiler and Associates Ltd.) (“MDA”) in 2012 (the “SSL Sale”), to the extent that profitability from operations is not sufficient to realize the benefit from our remaining net deferred tax assets, we would generate sufficient taxable income from the appreciated value of our Telesat investment in order to prevent federal net operating losses from expiring and realize the benefit of all remaining deferred tax assets.

Equity in Net Income (Loss) of Affiliates

	Three Months Ended
	June 30,
		2019		2018
	(In thousands)
Telesat	$	41,278	$	(3,455)

Loral’s equity in net income of Telesat is based on our proportionate share of Telesat’s results in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and in U.S. dollars. The amortization of Telesat fair value adjustments applicable to the Loral Skynet assets and liabilities acquired by Telesat in 2007 is proportionately eliminated in determining our share of the net income of Telesat. Our equity in net income of Telesat also reflects amortization of profits eliminated, to the extent of our economic interest in Telesat, on satellites we constructed for Telesat while we owned SSL and on Loral’s sale to Telesat in April 2011 of its portion of the payload on the ViaSat-1 satellite and related assets.

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Summary financial information for Telesat in accordance with U.S. GAAP and in Canadian dollars and U.S. dollars for the three months ended June 30, 2019 and 2018 follows (in thousands):

	Three Months Ended		Three Months Ended
	June 30,		June 30,
	2019	2018	2019	2018
	(In Canadian dollars)		(In U.S. dollars)
Statement of Operations Data:
Revenues	232,075	211,888	172,995	164,114
Operating expenses	(40,836)	(34,777)	(30,405)	(26,933)
Depreciation, amortization and stock-based compensation	(72,575)	(62,250)	(54,093)	(48,287)
Other operating expense	(14)	(20)	(10)	(15)
Operating income	118,650	114,841	88,487	88,879
Interest expense	(62,379)	(54,852)	(46,492)	(42,520)
Foreign exchange gain (loss)	61,681	(59,293)	45,946	(45,777)
Loss on financial instruments	(28,495)	(1,729)	(21,263)	(1,767)
Other income	5,730	3,810	4,272	2,973
Income tax provision	(8,686)	(10,331)	(6,481)	(7,815)
Net income (loss)	86,501	(7,554)	64,469	(6,027)
Average exchange rate for translating Canadian dollars to U.S. dollars ( 1 U.S. dollar equals)	1.3418	1.2895

Telesat’s revenue increased by $8.9 million for the three months ended June 30, 2019 as compared to the three months ended June 30, 2018 due primarily to higher revenue from the Telstar 18 VANTAGE and Telstar 19 VANTAGE satellites, which entered commercial service in October 2018 and August 2018, respectively, and an increase in short-term services provided to another satellite operator, partially offset by the impact of the change in the U.S. dollar/Canadian dollar exchange rate on Canadian dollar denominated revenue.The foreign exchange rate change decreased Telesat’s revenue by $3.3 million for the three months ended June 30, 2019 as compared to the three months ended June 30, 2018.

Telesat’s operating expenses increased by $3.5 million for the three months ended June 30, 2019 as compared to the three months ended June 30, 2018 primarily due to higher expenses related to development of Telesat’s planned LEO constellation, net of amounts to be reimbursed under the Government Grant, and higher cost of sales.  The foreign exchange rate change decreased Telesat’s operating expenses by $0.8 million for the three months ended June 30, 2019 as compared to the three months ended June 30, 2018.

Telesat’s depreciation, amortization and stock-based compensation increased by $5.8 million for the three months ended June 30, 2019 as compared to the three months ended June 30, 2018 primarily due to depreciation on the Telstar 18 VANTAGE and Telstar 19 VANTAGE satellites and higher stock-based compensation.

Six Months Ended June 30, 2019 Compared with Six Months Ended June 30, 2018

The following compares our consolidated results for the six months ended June 30, 2019 and 2018 as presented in our financial statements:

General and Administrative Expenses

	Six Months Ended
	June 30,
		2019		2018
	(In thousands)
General and administrative expenses	$	3,500	$	3,394

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General and administrative expenses increased by $0.1 million for the six months ended June 30, 2019 as compared to the six months ended June 30, 2018 primarily due to severance expense of $0.2 million during the six months ended June 30, 2019.

Interest and Investment Income

	Six Months Ended
	June 30,
		2019		2018
	(In thousands)
Interest and investment income	$	3,168	$	2,077

Interest and investment income increased by $1.1 million for the six months ended June 30, 2019 as compared to the six months ended June 30, 2018 primarily due to higher interest rates earned on the cash balance during the first six months of 2019 as compared to 2018.

Other Expense

	Six Months Ended
	June 30,
		2019		2018
	(In thousands)
Other expense	$	1,971	$	1,188

Other expense for the six months ended June 30, 2019 and 2018 was primarily related to strategic initiatives.

Income Tax (Provision) Benefit

	Six Months Ended
	June 30,
		2019		2018
	(In thousands)
Income tax (provision) benefit	$	(4,226)	$	5,655

For the six month periods ended June  30, our income tax (provision) benefit is summarized as follows: (i) for 2019, we recorded a current and deferred tax provision of $0.9 million and $3.3 million, respectively, resulting in a total tax provision of $4.2 million and (ii) for 2018, we recorded a current tax provision of $1.4 million and a deferred tax benefit of $7.0 million, resulting in a net tax benefit of $5.6 million.

Our income tax (provision) benefit for each period is computed by applying an expected effective annual tax rate against the pre-tax results for the six month periods ended June 30, 2019 and 2018 (after adjusting for certain tax items that are discrete to each period). While the current income tax provision for each period includes our anticipated income tax liability related to GILTI from Telesat, after utilization of our net operating loss carryforward and foreign tax credits, there was no federal income tax on GILTI from Telesat for the six month periods ended June 30, 2019 and 2018.  The deferred income tax (provision) benefit for each period includes the impact of equity in net income of affiliates from our condensed consolidated statement of operations and the periodic effect of our accounting for GILTI.  

Subsequent to the SSL Sale, to the extent that profitability from operations is not sufficient to realize the benefit from our remaining net deferred tax assets, we would generate sufficient taxable income from the appreciated value of our Telesat investment in order to prevent federal net operating losses from expiring and realize the benefit of all remaining deferred tax assets.

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Equity in Net Income of Affiliates

	Six Months Ended
	June 30,
		2019		2018
	(In thousands)
Telesat	$	83,282	$	1,639

The following is a reconciliation of the changes in our investment in Telesat for the six months ended June 30, 2019:

	Six Months Ended
	June 30, 2019
	(In thousands)
Balance, January 1, 2019			$	24,574
Components of equity in net income of Telesat:
Equity in net income of Telesat	$	81,517
Eliminations of affiliate transactions and related amortization		1,765		83,282
Proportionate share of Telesat other comprehensive loss				(13,450)
Balance, June 30, 2019			$	94,406

Summary financial information for Telesat in accordance with U.S. GAAP and in Canadian dollars and U.S. dollars as of June 30, 2019 and December 31, 2018 and for the six months ended June 30, 2019 and 2018 follows (in thousands):

	June 30,	December 31,	June 30,	December 31,
	2019	2018	2019	2018
	(In Canadian dollars)		(In U.S. dollars)
Balance Sheet Data:
Current assets	971,276	856,575	741,714	628,125
Total assets	5,327,267	5,376,860	4,068,167	3,942,847
Current liabilities	154,782	190,100	118,201	139,401
Long-term debt, including current portion	3,609,054	3,770,084	2,756,055	2,764,599
Total liabilities	4,536,852	4,738,181	3,464,565	3,474,504
Shareholders’ equity	790,415	638,679	603,602	468,343
Period end exchange rate for translating Canadian dollars to U.S. dollars (1 U.S. dollar equals)	1.3095	1.3637

	Six Months Ended		Six Months Ended
	June 30,		June 30,
	2019	2018	2019	2018
	(In Canadian dollars)		(In U.S. dollars)
Statement of Operations Data:
Revenues	455,165	444,242	340,639	348,980
Operating expenses	(91,376)	(73,241)	(68,384)	(57,536)
Depreciation, amortization and stock-based compensation	(144,166)	(123,206)	(107,891)	(96,786)
Other operating expense	(87)	(17)	(65)	(13)
Operating income	219,536	247,778	164,299	194,645
Interest expense	(124,715)	(111,522)	(93,335)	(87,608)
Foreign exchange gain (loss)	131,503	(138,854)	98,415	(109,078)
(Loss) gain on financial instruments	(48,605)	38,973	(36,375)	30,616
Other income	10,832	5,843	8,106	4,591
Income tax provision	(14,747)	(40,207)	(11,036)	(31,585)
Net income	173,804	2,011	130,074	1,581
Average exchange rate for translating Canadian dollars to U.S. dollars (1 U.S. dollar equals)	1.3365	1.2734

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On January 1, 2019, Telesat adopted Accounting Standards Codification (“ASC”) 842, Leases, for its U.S. GAAP reporting which we use to record our equity income in Telesat. Telesat adopted the new guidance using the modified retrospective approach with the cumulative effect of initially applying the standard being recorded on the balance sheet. As a result, on January 1, 2019, Telesat recognized a right-of-use asset of $19.6 million and lease liability of $20.0 million on its condensed consolidated balance sheet. Comparative summary financial information of Telesat presented above has not been restated and continues to be reported under the accounting standards in effect for those periods presented.

Telesat’s revenue decreased by $8.3 million for the six months ended June 30, 2019 as compared to the six months ended June 30, 2018 due primarily to the impact of the change in the U.S. dollar/Canadian dollar exchange rate on Canadian dollar denominated revenue, a decrease in short-term services provided to other satellite operators, the reduction of services and non-renewals for certain North American broadcast customers, lower equipment sales to enterprise customers, lower revenue from certain enterprise customers in the resource sector and the impact of the change in the U.S. dollar/Canadian dollar exchange rate on Canadian dollar denominated revenue. These decreases were partially offset by revenue from the Telstar 18 VANTAGE and Telstar 19 VANTAGE satellites.  The foreign exchange rate change decreased Telesat’s revenue by $8.3 million for the six months ended June 30, 2019 as compared to the six months ended June 30, 2018.

Telesat’s operating expenses increased by $10.9 million for the six months ended June 30, 2019 as compared to the six months ended June 30, 2018 primarily due to higher expenses related to development of Telesat’s planned LEO constellation, net of amounts to be reimbursed under the Government Grant. This increase was partially offset by the impact of the change in the U.S. dollar/Canadian exchange rate on Canadian dollar denominated expenses. The foreign exchange rate change decreased Telesat’s operating expenses by $2.0 million for the six months ended June 30, 2019 as compared to the six months ended June 30, 2018.  

Telesat’s depreciation, amortization and stock-based compensation increased by $11.1 million for the six months ended June 30, 2019 as compared to the six months ended June 30, 2018 primarily due to depreciation on the Telstar 18 VANTAGE and Telstar 19 VANTAGE satellites and higher stock-based compensation.

Backlog

Telesat’s backlog as of June 30, 2019 and December 31, 2018 was $2.7 billion.

Liquidity and Capital Resources

Loral

As described above, Loral’s principal asset is a 62.7% economic interest in Telesat. The operations of Telesat are not consolidated but are presented using the equity method of accounting. Loral has no debt. Telesat has third party debt with financial institutions. Cash is maintained at Loral and Telesat to support the operating needs of each respective entity. The ability of Telesat to pay dividends or certain other restricted payments as well as consulting fees in cash to Loral is governed by applicable covenants relating to its debt and its shareholder agreement.

Cash and Available Credit

At June 30, 2019, Loral had $257.7 million of cash and cash equivalents and no debt. The Company’s cash and cash equivalents as of June 30, 2019 increased by $0.7 million from December 31, 2018 due primarily to $3.2 million of interest and investment income, $3.0 million of income tax refunds and a $1.7 million recovery of our tax indemnification receivable from SSL, partially offset by corporate expenses of $5.1 million, adjusted for changes in working capital and net of consulting fees from Telesat, postretirement benefits funding of $0.3 million and payments of $1.8 million related to strategic initiatives. A discussion of cash changes by activity is set forth in the section “Net Cash Provided by (Used in) Operating Activities.”

32

Loral did not have a credit facility as of June 30, 2019 and December 31, 2018.

Cash Management

We have a cash management investment program that seeks a competitive return while maintaining a conservative risk profile. Our cash management investment policy establishes what we believe to be conservative guidelines relating to the investment of surplus cash. The policy allows us to invest in commercial paper, money market funds and other similar short‑term investments but does not permit us to engage in speculative or leveraged transactions, nor does it permit us to hold or issue financial instruments for trading purposes. The cash management investment policy was designed to preserve capital and safeguard principal, to meet all of our liquidity requirements and to provide a competitive rate of return for similar risk categories of investment. The policy addresses dealer qualifications, lists approved securities, establishes minimum acceptable credit ratings, sets concentration limits, defines a maturity structure, requires all firms to safe keep securities on our behalf, requires certain mandatory reporting activity and discusses review of the portfolio. We operate the cash management investment program under the guidelines of our investment policy and continuously monitor the investments to avoid risks.

We currently invest our cash in several liquid Prime and Government AAA money market funds. The dispersion across funds reduces the exposure of a default at one fund.

Liquidity

We believe that our cash and cash equivalents will be sufficient to fund projected expenditures for the next 12 months. We expect that our major cash outlays for the next 12 months will include general corporate expenses net of consulting fees from Telesat.

In the first quarter of 2017, we received $242.7 million in cash from Telesat, representing our share of an aggregate approximately $400 million distribution from Telesat to its shareholders and stock option holders. We intend to use the proceeds of such distribution, net of reasonable reserves for working capital and other liabilities, to make a distribution or return capital to our stockholders. There can be no assurance as to the amount and timing of any such distribution or return of capital, and such distribution or return of capital may be impacted by the outcome of our discussions regarding, and the structure of, the strategic combination transaction with respect to our interest in Telesat that we are pursuing.

Risks to Cash Flow

In the fourth quarter of 2012, we sold our former subsidiary, SSL, to MDA. We are obligated to indemnify MDA from liabilities with respect to certain pre-closing taxes the total amount of which has not yet been determined. Where appropriate, we intend vigorously to contest the underlying tax assessments, but there can be no assurance that we will be successful. Although no assurance can be provided, we do not believe that these tax-related matters will have a material adverse effect on our financial position or results of operations.

33

Telesat

Cash and Available Credit

As of June 30, 2019, Telesat had CAD 886.2 million of cash and short-term investments as well as approximately $200 million (or the Canadian dollar equivalent) of borrowing availability under its revolving credit facility.

Liquidity

A large portion of Telesat’s annual cash receipts are reasonably predictable because they are primarily derived from an existing backlog of long-term customer contracts and high contract renewal rates. Telesat believes its cash and short-term investments as of June 30, 2019, cash flows from operating activities, and drawings on the revolving credit facility under its senior secured credit facilities will be adequate to meet Telesat’s expected cash requirements for at least the next 12 months for activities in the normal course of business, including required interest and principal payments on debt.

The construction of any satellite replacement or expansion program, including the planned LEO constellation, will require significant capital expenditures. Cash required for any future satellite programs may be funded by Telesat from a range of sources including: cash and short-term investments; cash flows from operating activities; cash flows from customer prepayments; through borrowings on the revolving credit facility under Telesat’s senior secured credit facilities; vendor financing; equity investments; export credit agency financing; additional secured or unsecured financing; and from government sources. In addition, Telesat may sell certain satellite assets and, in accordance with the terms and conditions of its senior secured credit facilities, reinvest the proceeds in new satellite assets or pay down indebtedness under the senior secured credit facilities. Telesat’s ability to access these sources of funding, however, is not guaranteed, and therefore, Telesat may not be able to fully fund additional replacement or new satellite programs. Telesat may seek to complete the development of, fund, and operate its planned LEO constellation through a current or future unrestricted subsidiary.

Debt

Telesat’s debt as of June 30, 2019 and December 31, 2018 was as follows:

				June 30,		December 31,
	Maturity	Currency		2019		2018
				(In thousands)
Senior Secured Credit Facilities:
Revolving credit facility	November 2021	USD or CAD equivalent	$	—	$	—
Term Loan B - U.S. facility	November 2023	USD		2,314,331		2,326,049
8.875% Senior notes	November 2024	USD		500,000		500,000
				2,814,331		2,826,049
Less: Deferred financing costs, interest rate
floors and prepayment options				(89,992)		(95,076)
Total debt under international financial
reporting standards				2,724,339		2,730,973
U.S. GAAP adjustments				31,716		33,626
Total debt under U.S. GAAP				2,756,055		2,764,599
Current portion				(11,351)		(5,784)
Long-term portion			$	2,744,704	$	2,758,815

Senior Secured Credit Facilities

The obligations under Telesat’s credit agreement and the guarantees of those obligations are secured, subject to certain exceptions, by a first priority security interest in the assets of Telesat and certain of its subsidiaries (the “Guarantors”).

34

The credit agreement contains covenants that restrict the ability of Telesat and the Guarantors to take specified actions, including, among other things and subject to certain significant exceptions: creating liens, incurring indebtedness, making investments, engaging in mergers, selling property, paying dividends, entering into sale-leaseback transactions, creating subsidiaries, repaying subordinated debt or amending organizational documents. The credit agreement also requires Telesat and the Guarantors to comply with a maximum first lien leverage ratio and contains customary events of default and affirmative covenants, including an excess cash sweep, that may require Telesat to repay a portion of the outstanding principal under its senior secured credit facilities prior to the stated maturity.

Telesat’s senior secured credit facilities are comprised of the following facilities:

i— Revolving Credit Facility

Telesat’s revolving credit facility (“Revolving Facility”) is a $200 million loan facility available in either U.S. dollar or Canadian dollar equivalent, maturing on November 17, 2021. Loans under the Revolving Facility bear interest at a floating interest rate. For Canadian Prime Rate and Alternative Base Rate (“ABR”) loans, an applicable margin ranging from 1.5% to 2.00% is applied to the Prime Rate and ABR as these interest rates are defined in the senior credit facilities. For Bankers Acceptance (“BA”) Loans and Eurodollar Loans, an applicable margin ranging from 2.50% to 3.00% is applied to either the BA interest rate or LIBOR. The rates on the Revolving Facility vary depending upon the results of the first lien leverage ratio. Telesat’s Revolving Facility currently has an unused commitment fee of 40 basis points. As of June 30, 2019, other than approximately CAD 0.1 million in drawings related to letters of credit, there were no borrowings under this facility.

ii— Term Loan B — U.S. Facility

Telesat’s term loan B — U.S. facility (“U.S. TLB Facility”) is a $2.430 billion loan maturing on November 17, 2023. As of June 30, 2019,  $2.31 billion of this facility was outstanding, which represents the full amount available following mandatory repayments.

As of June 30, 2019, the terms of the outstanding borrowings under the U.S. TLB Facility bear interest at a floating rate of either: (i) LIBOR as periodically determined for interest rate periods selected by Telesat in accordance with the terms of the senior secured credit facilities, but not less than 0.75%, plus an initial applicable margin of 2.50%; or (ii) Alternative Base Rate as determined in accordance with the terms of the senior secured credit facilities plus an applicable margin of 1.50%.

On March 29, 2018, a voluntary payment of $50 million was made on the U.S. TLB Facility. On April 26, 2018, Telesat amended the senior secured credit facilities resulting in a reduction of the margin on the U.S. TLB Facility to 2.5% from 3.0% on the then outstanding $2.344 billion. The mandatory principal repayments on the U.S. TLB Facility which must be paid on the last day of each quarter are one quarter of 1.00% of the value of the loan as of April 26, 2018.

Senior Notes

Telesat’s senior notes of $500 million bear interest at an annual rate of 8.875% and are due November 17, 2024. They include covenants or terms that restrict Telesat’s ability to, among other things, incur additional indebtedness, incur liens, pay dividends or make certain other restricted payments, investments or acquisitions, enter into certain transactions with affiliates, modify or cancel Telesat’s satellite insurance, effect mergers with another entity, and redeem Telesat’s senior notes, without penalty, before November 15, 2022, in each case subject to exceptions provided in the senior notes indenture.

As of June 30, 2019 Telesat was in compliance with the financial covenants of its senior secured credit facilities and the indenture governing the senior notes.

Debt Service Cost

Telesat’s interest expense for the year ending December 31, 2019 is expected to be approximately CAD 203 million.

35

Derivatives

Telesat uses, from time to time, interest rate and currency derivatives to manage its exposure to changes in interest rates and foreign exchange rates.

As of June 30, 2019, Telesat had four outstanding interest rate swaps which hedge the interest rate risk on $1.8 billion of U.S. denominated Term Loan B borrowings. As of June 30, 2019, the fair value of the interest rate swaps was a net liability of $3.1 million. These contracts, which mature between September 2019 and September 2022, are at fixed interest rates ranging from 1.72% to 2.04%, excluding applicable margin.

Telesat also has foreign currency embedded derivatives in its purchase contracts with suppliers and sales contracts with customers as a result of some of these contracts being denominated in a currency other than the functional currency of the substantial parties to the respective contract. The fair value of these foreign currency embedded derivatives as of June 30, 2019 was $2.3 million.

Development Costs and Capital Expenditures

Telesat has entered into contracts for the development of its LEO system and capital expenditures. The outstanding commitments associated with these contracts were approximately CAD 46 million as of June 30, 2019. These expenditures may be funded from some or all of the following: cash and short-term investments, cash flow from operating activities, cash flow from customer prepayments or funds available under the Revolving Facility.

Statements of Cash Flows

Net Cash Provided by (Used in) Operating Activities

Net cash provided by operating activities was $0.7 million for the six months ended June 30, 2019.

Net cash used by operating activities from continuing operations was $1.0 million for the six months ended June 30, 2019, consisting primarily of a $2.7 million cash use attributable to net income adjusted for non-cash operating items, a $1.5 million decrease in accrued employment costs and other current liabilities and a $0.4 million increase in other current assets, partially offset by a $3.0 million decrease in income tax refund receivable, primarily due to the receipt of refunds, and a $0.7 million increase in other liabilities.

Net cash provided by operating activities from discontinued operations was $1.7 million for the six months ended June 30, 2019 attributable to a  tax indemnification recovery related to the SSL Sale.

Net cash used in operating activities by continuing operations was $5.0 million for the six months ended June 30, 2018, consisting primarily of a $3.4 million cash use attributable to income from continuing operations adjusted for non-cash operating items, a $2.4 million decrease in pension and post retirement liabilities primarily due to pension funding and a $0.5 million increase in other current assets, partially offset by a $1.1 million increase in other liabilities.

Affiliate Matters

Loral has made certain investments in joint ventures in the satellite services business that are accounted for under the equity method of accounting (see Note 5 to our financial statements for further information on affiliate matters).

Commitments and Contingencies

Our business and operations are subject to a number of significant risks, the most significant of which are summarized in Part II, Item 1A — Risk Factors and also in Note 13 to our condensed consolidated financial statements.

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Other Matters

Recent Accounting Pronouncements

There are no accounting pronouncements that have been issued but not yet adopted that we believe will have a significant impact on our financial statements.

Item 4. Disclosure Controls and Procedures

(a) Disclosure Controls and Procedures. Our president and our chief financial officer, after evaluating the effectiveness of our “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act of 1934, as amended (the “Exchange Act”)) as of June 30, 2019, have concluded that our disclosure controls and procedures were effective and designed to ensure that information relating to Loral and its consolidated subsidiaries required to be disclosed in our filings under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities Exchange Commission rules and forms.

(b) Internal control over financial reporting. There were no changes in our internal control over financial reporting (as defined in the Securities and Exchange Act of 1934 Rules 13a-15(f) and 15-d-15(f)) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

37

PART II.

OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently subject to any legal proceedings that, if decided adversely, could have a material adverse effect on our financial position or results of operations. In the future, however, we may become subject to legal proceedings and claims, either asserted or unasserted, that may arise in the ordinary course of business or otherwise.

Item 1A. Risk Factors

Our business and operations are subject to a significant number of risks. The most significant of these risks are summarized in, and the reader’s attention is directed to, the section of our Annual Report on Form 10-K for the year ended December 31, 2018 in “Item 1A. Risk Factors.” There are no material changes to those risk factors.

The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 6. Exhibits

The following exhibits are filed as part of this report:

Exhibit 31.1	—	Certification of President pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2	—	Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1	—	Certification of President pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2	—	Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002
Exhibit 101	—	Interactive Data Files
		(101.INS) XBRL Instance Document
		(101.SCH) XBRL Taxonomy Extension Schema Document
		(101.CAL) XBRL Taxonomy Extension Calculation Linkbase Document
		(101.DEF) XBRL Taxonomy Extension Definition Linkbase Document
		(101.LAB) XBRL Taxonomy Extension Label Linkbase Document
		(101.PRE) XBRL Taxonomy Extension Presentation Linkbase Document

38

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Registrant
	LORAL SPACE & COMMUNICATIONS INC.
	/S/ JOHN CAPOGROSSI
	John Capogrossi
	Vice President, Chief Financial Officer and Treasurer
	(Principal Financial Officer) and Registrant’s Authorized Officer
Date: August 6, 2019

39

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Avi Katz, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Loral Space & Communications Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/S/ AVI KATZ

Avi Katz

President, General Counsel & Secretary

August 6, 2019

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John Capogrossi, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Loral Space & Communications Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/S/ JOHN CAPOGROSSI

John Capogrossi

Vice President, Chief Financial Officer and Treasurer

August 6, 2019

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Loral Space & Communications Inc. (the “Company”) on Form 10-Q for the period ending June  30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Avi Katz, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/S/ AVI KATZ

Avi Katz

President, General Counsel & Secretary

August 6, 2019

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Loral Space & Communications Inc. (the “Company”) on Form 10-Q for the period ending June  30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John Capogrossi, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/S/ JOHN CAPOGROSSI

John Capogrossi

Vice President, Chief Financial Officer and Treasurer

August 6, 2019

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	Jun. 30, 2019	Aug. 05, 2019
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Document Fiscal Year Focus	2019
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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Current assets:
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Income taxes receivable	905	3,903
Other current assets	1,913	3,232
Total current assets	260,504	264,082
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Investments in affiliates	94,406	24,574
Deferred tax assets	37,109	40,520
Other assets	343	350
Total assets	393,797	330,300
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Accrued employment costs	1,664	2,573
Other current liabilities	1,605	1,495
Total current liabilities	3,269	4,068
Pension and other postretirement liabilities	15,052	15,167
Other liabilities	14,219	13,499
Total liabilities	32,540	32,734
Commitments and contingencies
Shareholders' Equity:
Preferred stock, 0.01 par value; 10,000,000 shares authorized, no shares issued and outstanding
Common Stock:
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Nonvoting Common Stock [Member]
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Condensed Consolidated Statements of Operations and Comprehensive Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
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Consolidated Statements of Operations [Abstract]
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Income (loss) before income taxes and equity in net income (loss) of affiliates	(891)	(1,129)	(2,313)	(2,516)
Income tax (provision) benefit	(2,160)	5,068	(4,226)	5,655
Income (loss) before equity in net income (loss) of affiliates	(3,051)	3,939	(6,539)	3,139
Equity in net income (loss) of affiliates	41,278	(3,455)	83,282	1,639
Income (loss) from continuing operations	38,227	484	76,743	4,778
Income (loss) from discontinued operations, net of tax		(37)		(37)
Net income (loss)	38,227	447	76,743	4,741
Other comprehensive (loss) income, net of tax	(6,646)	628	(13,052)	7,772
Comprehensive income (loss)	$ 31,581	$ 1,075	$ 63,691	$ 12,513
Basic
Income (loss) from continuing operations	$ 1.24	$ 0.02	$ 2.48	$ 0.15
Income (loss) from discontinued operations, net of tax
Net income (loss) per share	1.24	0.02	2.48	0.15
Diluted
Income (loss) from continuing operations	1.23	0.02	2.46	0.15
Income (loss) from discontinued operations, net of tax
Net income (loss) per share	$ 1.23	$ 0.02	$ 2.46	$ 0.15
Weighted average common shares outstanding:
Basic	30,933	30,933	30,933	30,933
Diluted	31,008	31,008	31,008	31,008

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Condensed Consolidated Statements of Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands	Voting Common Stock [Member] Common Stock [Member]	Nonvoting Common Stock [Member] Common Stock [Member]	Paid-In Capital [Member]	Treasury Stock [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Loss [Member]	Total
Balance at Dec. 31, 2017	$ 216	$ 95	$ 1,019,988	$ (9,592)	$ (682,831)	$ (37,278)	$ 290,598
Balance, shares at Dec. 31, 2017	21,582	9,506		154
Net income (loss)					4,294
Other comprehensive income (loss)						7,144
Comprehensive income (loss)							11,438
Cumulative effect adjustment attributable to investment in Telesat					(22,107)		(22,107)
Balance at Mar. 31, 2018	$ 216	$ 95	1,019,988	$ (9,592)	(700,644)	(30,134)	279,929
Balance, shares at Mar. 31, 2018	21,582	9,506		154
Balance at Dec. 31, 2017	$ 216	$ 95	1,019,988	$ (9,592)	(682,831)	(37,278)	290,598
Balance, shares at Dec. 31, 2017	21,582	9,506		154
Net income (loss)							4,741
Other comprehensive income (loss)							7,772
Comprehensive income (loss)							12,513
Balance at Jun. 30, 2018	$ 216	$ 95	1,019,988	$ (9,592)	(700,197)	(29,506)	281,004
Balance, shares at Jun. 30, 2018	21,582	9,506		154
Balance at Dec. 31, 2017	$ 216	$ 95	1,019,988	$ (9,592)	(682,831)	(37,278)	290,598
Balance, shares at Dec. 31, 2017	21,582	9,506		154
Other comprehensive income (loss)						23,831
Balance at Dec. 31, 2018	$ 216	$ 95	1,019,988	$ (9,592)	(695,521)	(17,620)	297,566
Balance, shares at Dec. 31, 2018	21,582	9,506		154
Balance at Mar. 31, 2018	$ 216	$ 95	1,019,988	$ (9,592)	(700,644)	(30,134)	279,929
Balance, shares at Mar. 31, 2018	21,582	9,506		154
Net income (loss)					447		447
Other comprehensive income (loss)						628	628
Comprehensive income (loss)							1,075
Balance at Jun. 30, 2018	$ 216	$ 95	1,019,988	$ (9,592)	(700,197)	(29,506)	281,004
Balance, shares at Jun. 30, 2018	21,582	9,506		154
Net income (loss)					4,873
Other comprehensive income (loss)						16,059
Comprehensive income (loss)							20,932
Tax Cuts and Jobs Act, reclassification tax effect					4,173	(4,173)
Cumulative effect adjustment attributable to investment in Telesat					(4,370)		(4,370)
Balance at Dec. 31, 2018	$ 216	$ 95	1,019,988	$ (9,592)	(695,521)	(17,620)	297,566
Balance, shares at Dec. 31, 2018	21,582	9,506		154
Net income (loss)					38,516
Other comprehensive income (loss)						(6,406)
Comprehensive income (loss)							32,110
Balance at Mar. 31, 2019	$ 216	$ 95	1,019,988	$ (9,592)	(657,005)	(24,026)	329,676
Balance, shares at Mar. 31, 2019	21,582	9,506		154
Balance at Dec. 31, 2018	$ 216	$ 95	1,019,988	$ (9,592)	(695,521)	(17,620)	297,566
Balance, shares at Dec. 31, 2018	21,582	9,506		154
Net income (loss)							76,743
Other comprehensive income (loss)						(13,052)	(13,052)
Comprehensive income (loss)							63,691
Balance at Jun. 30, 2019	$ 216	$ 95	1,019,988	$ (9,592)	(618,778)	(30,672)	361,257
Balance, shares at Jun. 30, 2019	21,582	9,506		154
Balance at Mar. 31, 2019	$ 216	$ 95	1,019,988	$ (9,592)	(657,005)	(24,026)	329,676
Balance, shares at Mar. 31, 2019	21,582	9,506		154
Net income (loss)					38,227		38,227
Other comprehensive income (loss)						(6,646)	(6,646)
Comprehensive income (loss)							31,581
Balance at Jun. 30, 2019	$ 216	$ 95	$ 1,019,988	$ (9,592)	$ (618,778)	$ (30,672)	$ 361,257
Balance, shares at Jun. 30, 2019	21,582	9,506		154

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Operating activities:
Net income (loss)	$ 76,743	$ 4,741
(Income) Loss from discontinued operations, net of tax		37
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Non-cash operating items (Note 2)	(79,449)	(8,139)
Changes in operating assets and liabilities:
Other current assets	(419)	(453)
Accrued employment costs and other current liabilities	(1,476)	(170)
Income tax refund receivable	2,998	278
Pension and other postretirement liabilities	(115)	(2,381)
Other liabilities	720	1,132
Net cash provided by (used in) operating activities – continuing operations	(998)	(4,955)
Net cash provided by (used in) operating activities – discontinued operations	1,737	(47)
Net cash provided by (used in) operating activities	739	(5,002)
Cash, cash equivalents and restricted cash (Note 2) - period increase (decrease)	739	(5,002)
Cash, cash equivalents and restricted cash (Note 2) - beginning of period	257,251	255,443
Cash, cash equivalents and restricted cash - end of period	$ 257,990	$ 250,441

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Organization and Principal Business

6 Months Ended

Jun. 30, 2019

Organization and Principal Business [Abstract]

Organization and Principal Business

1. Organization and Principal Business

Loral Space & Communications Inc., together with its subsidiaries (“Loral,” the “Company,” “we,” “our” and “us”) is a leading satellite communications company engaged, through our ownership interests in affiliates, in satellite-based communications services.

Description of Business

Loral has one operating segment consisting of satellite-based communications services. Loral participates in satellite services operations primarily through its ownership interest in Telesat Canada (“Telesat”), a leading global satellite operator. Loral holds a 62.7% economic interest and a 32.6% voting interest in Telesat. We use the equity method of accounting for our ownership interest in Telesat (see Note 5).

Telesat owns and leases a satellite fleet that operates in geostationary earth orbit approximately 22,000 miles above the equator. In this orbit, satellites remain in a fixed position relative to points on the earth’s surface and provide reliable, high-bandwidth services anywhere in their coverage areas, serving as the backbone for many forms of telecommunications. Telesat is also developing a global constellation of low earth orbit (“LEO”) satellites. LEO satellites operate in a circular orbit around the earth with an altitude typically between 500 and 870 miles. Unlike geostationary orbit satellites that operate in a fixed orbital location above the equator, LEO satellites travel around the earth at high velocities requiring antennas on the ground to track their movement. LEO satellite systems have the potential to offer a number of advantages over geostationary orbit satellites to meet growing requirements for broadband services, both consumer and commercial, by providing increased data speeds and capacity, global coverage, and latency on par with, or potentially better than, terrestrial services.

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Basis of Presentation

6 Months Ended

Jun. 30, 2019

Basis of Presentation [Abstract]

Basis of Presentation

2. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules of the Securities and Exchange Commission (“SEC”) and, in our opinion, include all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of results of operations, financial position and cash flows as of the balance sheet dates presented and for the periods presented. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to SEC rules. We believe that the disclosures made are adequate to keep the information presented from being misleading. The results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the results to be expected for the full year.

The December 31, 2018 balance sheet has been derived from the audited consolidated financial statements at that date. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our latest Annual Report on Form 10-K filed with the SEC.

Investments in Affiliates

Our ownership interest in Telesat is accounted for using the equity method of accounting. Income and losses of Telesat are recorded based on our economic interest. The contribution of Loral Skynet, a wholly owned subsidiary of Loral prior to its contribution to Telesat in 2007, was recorded by Loral at the historical book value of our retained interest combined with the gain recognized on the contribution. However, the contribution was recorded by Telesat at fair value. Accordingly, the amortization of Telesat fair value adjustments applicable to the Loral Skynet assets and liabilities acquired by Telesat in 2007 is proportionately eliminated in determining our share of the net income of Telesat. Our equity in net income or loss of Telesat also reflects amortization of profits eliminated, to the extent of our economic interest in Telesat, on satellites we constructed for Telesat while we owned Space Systems/Loral, LLC (formerly known as Space Systems/Loral, Inc.) (“SSL”) and on Loral’s sale to Telesat in April 2011 of its portion of the payload on the ViaSat-1 satellite and related assets. Non-refundable cash distributions received from Telesat in excess of our initial investment and our share of cumulative equity in comprehensive income of Telesat, net of cash distributions received in prior periods, are recorded as equity in net income of Telesat (“Excess Cash Distribution”) since we have no obligation to provide future financial support to Telesat. After receiving an Excess Cash Distribution, we do not record additional equity in net income of Telesat until our share of Telesat’s future net income exceeds the Excess Cash Distribution. Equity in losses of affiliates is not recognized after the carrying value of an investment, including advances and loans, has been reduced to zero, unless guarantees or other funding obligations exist. We had no guarantees or other funding obligations for our equity method investments as of June 30, 2019 and December 31, 2018. We use the nature of distribution approach to classify distributions from equity method investments on the statements of cash flows. The Company monitors its equity method investments for factors indicating other-than-temporary impairment. An impairment loss is recognized when there has been a loss in value of the affiliate that is other‑than-temporary.

Use of Estimates in Preparation of Financial Statements

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amount of income (loss) reported for the period. Actual results could materially differ from estimates.

Significant estimates also included the allowances for doubtful accounts, income taxes, including the valuation of deferred tax assets, the fair value of liabilities indemnified, the dilutive effect of Telesat stock options (see Note 10) and our pension liabilities.

Cash, Cash Equivalents and Restricted Cash

As of June 30, 2019, the Company had $257.7 million of cash and cash equivalents. Cash and cash equivalents include liquid investments, primarily money market funds, with maturities of less than 90 days at the time of purchase. Management determines the appropriate classification of its investments at the time of purchase and at each balance sheet date.

As of June 30, 2019 and December 31, 2018, other assets included restricted cash of $0.3 million which represents the amount pledged as collateral to the issuer of a standby letter of credit (the “LC”). The LC, which expires in August 2020, has been provided as a guaranty to the lessor of our corporate offices.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated statements of cash flows (in thousands):

	June 30,		June 30,
	2019		2018
Cash and cash equivalents	$	257,686	$	250,137
Restricted cash included in other assets		304		304
Cash, cash equivalents and restricted cash shown in the statement of cash flows	$	257,990	$	250,441

Concentration of Credit Risk

Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents and receivables. Our cash and cash equivalents are maintained with high-credit-quality financial institutions. As of June 30, 2019 and December 31, 2018, our cash and cash equivalents were invested primarily in several liquid Prime and Government AAA money market funds. Such funds are not insured by the Federal Deposit Insurance Corporation. The dispersion across funds reduces the exposure of a default at any one fund.  As a result, management believes that its potential credit risks are minimal.

Fair Value Measurements

U.S. GAAP defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants. U.S. GAAP also establishes a fair value hierarchy that gives the highest priority to observable inputs and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy are described below:

Level 1: Inputs represent a fair value that is derived from unadjusted quoted prices for identical assets or liabilities traded in active markets at the measurement date.

Level 2: Inputs represent a fair value that is derived from quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities, and pricing inputs, other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3: Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

Assets and Liabilities Measured at Fair Value

The following table presents our assets and liabilities measured at fair value on a recurring and non-recurring basis (in thousands):

	June 30, 2019						December 31, 2018
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents:
Money market funds	$	255,722	$	—	$	—	$	254,552	$	—	$	—
Other current assets:
Indemnification - Sale of SSL		—		—		672		—		—		2,410
Liabilities
Other liabilities:
Indemnification - Globalstar do Brasil S.A.	$	—	$	—	$	167	$	—	$	—	$	184

The carrying amount of money market funds approximates fair value as of each reporting date because of the short maturity of those instruments.

The Company did not have any non-financial assets or non-financial liabilities that were recognized or disclosed at fair value as of June 30, 2019 and December 31, 2018.

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis

We review the carrying values of our equity method investments when events and circumstances warrant and consider all available evidence in evaluating when declines in fair value are other-than-temporary. The fair values of our investments are determined based on valuation techniques using the best information available and may include quoted market prices, market comparables and discounted cash flow projections. An impairment charge is recorded when the carrying amount of the investment exceeds its current fair value and is determined to be other-than-temporary.

The asset resulting from the indemnification of SSL is for certain pre-closing taxes and reflects the excess of payments since inception over refunds and the estimated liability, which was originally determined using the fair value objective approach. The estimated liability for indemnifications relating to Globalstar do Brasil S.A. (“GdB”), originally determined using expected value analysis, is net of payments since inception.

Contingencies

Contingencies by their nature relate to uncertainties that require management to exercise judgment both in assessing the likelihood that a liability has been incurred as well as in estimating the amount of potential loss, if any. We accrue for costs relating to litigation, claims and other contingent matters when such liabilities become probable and reasonably estimable. Such estimates may be based on advice from third parties or on management’s judgment, as appropriate. Actual amounts paid may differ from amounts estimated, and such differences will be charged to operations in the period in which the final determination of the liability is made.

Income Taxes

Loral and its subsidiaries are subject to U.S. federal, state and local income taxation on their worldwide income and foreign taxation on certain income from sources outside the United States. Telesat is subject to tax in Canada and other jurisdictions, and Loral will provide in each period any additional U.S. current and deferred tax required on actual or deemed distributions from Telesat, including Global Intangible Low Taxed Income (“GILTI”). Deferred income taxes reflect the future tax effect of temporary differences between the carrying amount of assets and liabilities for financial and income tax reporting and are measured by applying anticipated statutory tax rates in effect for the year during which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent it is more likely than not that the deferred tax assets will not be realized.

The tax benefit of an uncertain tax position (“UTP”) taken or expected to be taken in income tax returns is recognized only if it is “more likely than not” to be sustained on examination by the taxing authorities, based on its technical merits as of the reporting date. The tax benefit recognized in the financial statements from such a position is measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. The Company recognizes interest and penalties related to income taxes in income tax expense on a quarterly basis.

The unrecognized tax benefit of a UTP is recognized in the period when the UTP is effectively settled. Previously recognized tax positions are derecognized in the first period in which it is no longer more likely than not that the tax position would be sustained upon examination.

Earnings per Share

Basic earnings per share are computed based upon the weighted average number of shares of voting and non-voting common stock outstanding during each period. Shares of non-voting common stock are in all respects identical to and treated equally with shares of voting common stock except for the absence of voting rights (other than as provided in Loral’s Amended and Restated Certificate of Incorporation which was ratified by Loral’s stockholders on May 19, 2009). Diluted earnings per share are based on the weighted average number of shares of voting and non-voting common stock outstanding during each period, adjusted for the effect of unconverted restricted stock units. For diluted earnings per share, earnings are adjusted for the dilutive effect of Telesat stock options.

Recent Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. ASU No. 2018-13 eliminates, amends, and adds disclosure requirements to improve the effectiveness of fair value measurement disclosures. The new guidance is effective for the Company on January 1, 2020, with earlier application permitted in any interim or annual period. Companies may also choose to early adopt the eliminated and amended disclosures and wait to adopt the new disclosures until the effective date of the new guidance. While certain amendments are to be applied prospectively, all other amendments are to be applied retrospectively to all periods presented. The Company is currently evaluating the impact of the new guidance on its condensed consolidated financial statements.

In February 2016, the FASB amended the Accounting Standards Codification (“ASC”) by creating ASC Topic 842, Leases (“ASC 842”). ASC Topic 842 requires a lessee to record a right-of-use asset and a lease liability for all leases with a lease term greater than 12 months. The main difference between previous U.S. GAAP and ASC Topic 842 is the recognition under ASC 842 of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. The new guidance was effective for the Company on January 1, 2019. We adopted ASC 842 in the first quarter of 2019 utilizing the modified retrospective method with a practical expedient through a cumulative-effect adjustment at the beginning of the first quarter of 2019. As a result, on January 1, 2019, we recognized a right-of-use asset and lease liability for an operating lease of approximately $0.3 million on our condensed consolidated balance sheet.

Additional Cash Flow Information

The following represents non-cash activities and supplemental information to the condensed consolidated statements of cash flows (in thousands):

	Six Months Ended
	June 30,
	2019		2018
Non-cash operating items:
Equity in net income of affiliates	$	(83,282)	$	(1,639)
Deferred taxes		3,308		(7,043)
Depreciation and amortization		8		11
Right-of-use asset, net of lease liability		16		—
Amortization of prior service credit and actuarial loss		501		532
Net non-cash operating items	$	(79,449)	$	(8,139)
Supplemental information:
Interest paid	$	10	$	11
Income tax refunds	$	2,980	$	255
Income tax payments	$	163	$	138

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Accumulated Other Comprehensive Loss

6 Months Ended

Jun. 30, 2019

Accumulated Other Comprehensive Loss [Abstract]

Accumulated Other Comprehensive Loss

3. Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss, net of tax, are as follows (in thousands):

			Proportionate
			Share of		Accumulated
			Telesat Other		Other
	Postretirement		Comprehensive		Comprehensive
	Benefits		Income (Loss)		Loss
Balance, January 1, 2018	$	(16,454)	$	(20,824)	$	(37,278)
Other comprehensive income before reclassification		953		22,033		22,986
Amounts reclassified from accumulated other comprehensive loss		845		—		845
Net current-period other comprehensive income		1,798		22,033		23,831
Tax Cuts and Jobs Act, reclassification of tax effect from
accumulated other comprehensive loss to accumulated deficit		—		(4,173)		(4,173)
Balance, December 31, 2018		(14,656)		(2,964)		(17,620)
Other comprehensive loss before reclassification		—		(13,447)		(13,447)
Amounts reclassified from accumulated other comprehensive loss		395		—		395
Net current-period other comprehensive loss		395		(13,447)		(13,052)
Balance, June 30, 2019	$	(14,261)	$	(16,411)	$	(30,672)

The components of other comprehensive income (loss) and related tax effects are as follows (in thousands):

	Three Months Ended June 30,
	2019							2018
	Before-Tax			Tax		Net-of-Tax		Before-Tax			Tax		Net-of-Tax
	Amount			Provision		Amount		Amount			Provision		Amount
Amortization of prior service credits
and net actuarial loss	$	271	(a)	$	(58)	$	213	$	263	(a)	$	(56)	$	207
Equity in Telesat other comprehensive
income		(6,861)			2		(6,859)		532			(111)		421
Other comprehensive (loss) income	$	(6,590)		$	(56)	$	(6,646)	$	795		$	(167)	$	628

	Six Months Ended June 30,
	2019							2018
	Before-Tax			Tax (Provision)		Net-of-Tax		Before-Tax			Tax		Net-of-Tax
	Amount			Benefit		Amount		Amount			Provision		Amount
Amortization of prior service credits
and net actuarial loss	$	501	(a)	$	(106)	$	395	$	532	(a)	$	(112)	$	420
Equity in Telesat other comprehensive
(loss) income		(13,450)			3		(13,447)		9,309			(1,957)		7,352
Other comprehensive (loss) income	$	(12,949)		$	(103)	$	(13,052)	$	9,841		$	(2,069)	$	7,772

(a)Reclassifications are included in other expense.

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Other Current Assets

6 Months Ended

Jun. 30, 2019

Other Current Assets [Abstract]

Other Current Assets

4. Other Current Assets

Other current assets consists of (in thousands):

	June 30,		December 31,
	2019		2018
Indemnification receivable from SSL for pre-closing taxes (see Note 13)	$	672	$	2,410
Due from affiliates		176		161
Prepaid expenses		557		151
Other		508		510
	$	1,913	$	3,232

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Investments in Affiliates

6 Months Ended

Jun. 30, 2019

Investments in Affiliates [Abstract]

Investments in Affiliates

5. Investments in Affiliates

Investments in affiliates consist of (in thousands):

	June 30,		December 31,
	2019		2018
Telesat	$	94,406	$	24,574

Equity in net income (loss) of affiliates consists of (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Telesat	$	41,278	$	(3,455)	$	83,282	$	1,639

Telesat

As of June 30, 2019 and December 31, 2018, we held a 62.7% economic interest and a 32.6% voting interest in Telesat. We use the equity method of accounting for our majority economic interest in Telesat because we own 32.6% of the voting stock and do not exercise control by other means to satisfy the U.S. GAAP requirement for treatment as a consolidated subsidiary. We have also concluded that Telesat is not a variable interest entity for which we are the primary beneficiary. Loral’s equity in net income or loss of Telesat is based on our proportionate share of Telesat’s results in accordance with U.S. GAAP and in U.S. dollars. Our proportionate share of Telesat’s net income or loss is based on our economic interest as our holdings consist of common stock and non-voting participating preferred shares that have all the rights of common stock with respect to dividends, return of capital and surplus distributions, but have no voting rights.

In addition to recording our share of equity in net income of Telesat, we also recorded our share of equity in other comprehensive loss of Telesat of $13.5 million for the six months ended June 30, 2019.

On January 1, 2019, Telesat adopted ASC 842, Leases, for its U.S. GAAP reporting which we use to record our equity income in Telesat. Telesat adopted the new guidance using the modified retrospective approach with the cumulative effect of initially applying the standard being recorded on the balance sheet. As a result, on January 1, 2019, Telesat recognized a right-of-use asset of $19.6 million and lease liability of $20.0 million on its condensed consolidated balance sheet. Comparative summary financial information of Telesat presented below has not been restated and continues to be reported under the accounting standards in effect for those periods presented.

The ability of Telesat to pay dividends or certain other restricted payments in cash to Loral is governed by applicable covenants in Telesat’s debt and shareholder agreements. Telesat’s credit agreement governing its senior secured credit facilities limits, among other items, Telesat’s ability to incur debt and make dividend payments if the total leverage ratio (“Total Leverage Ratio”) is above 4.50:1.00, with certain exceptions. As of June 30, 2019, Telesat’s Total Leverage Ratio was 4.75:1.00. Telesat is, however, permitted to pay annual consulting fees of $5.0 million to Loral in cash (see Note 14).

The following table presents summary financial data for Telesat in accordance with U.S. GAAP as of June 30, 2019 and December 31, 2018 and for the three and six months ended June 30, 2019 and 2018 (in thousands):

	June 30,		December 31,
	2019		2018
Balance Sheet Data:
Current assets	$	741,714	$	628,125
Total assets		4,068,167		3,942,847
Current liabilities		118,201		139,401
Long-term debt, including current portion		2,756,055		2,764,599
Total liabilities		3,464,565		3,474,504
Shareholders’ equity		603,602		468,343

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Statement of Operations Data:
Revenues	$	172,995	$	164,114	$	340,639	$	348,980
Operating expenses		(30,405)		(26,933)		(68,384)		(57,536)
Depreciation, amortization and stock-based compensation		(54,093)		(48,287)		(107,891)		(96,786)
Other operating expense		(10)		(15)		(65)		(13)
Operating income		88,487		88,879		164,299		194,645
Interest expense		(46,492)		(42,520)		(93,335)		(87,608)
Foreign exchange gain (loss)		45,946		(45,777)		98,415		(109,078)
(Loss) gain on financial instruments		(21,263)		(1,767)		(36,375)		30,616
Other income		4,272		2,973		8,106		4,591
Income tax provision		(6,481)		(7,815)		(11,036)		(31,585)
Net income (loss)	$	64,469	$	(6,027)	$	130,074	$	1,581

Other

We own 56% of XTAR, a joint venture between us and Hisdesat Servicios Estrategicos, S.A. (“Hisdesat”) of Spain. We account for our ownership interest in XTAR under the equity method of accounting because we do not control certain of its significant operating decisions. We have also concluded that XTAR is not a variable interest entity for which we are the primary beneficiary. As of June 30, 2019 and December 31, 2018, the carrying value of our investment in XTAR was zero.  Beginning January 1, 2016, we discontinued providing for our allocated share of XTAR’s net losses as our investment was reduced to zero and we have no commitment to provide further financial support to XTAR.

XTAR owns and operates an X-band satellite, XTAR-EUR, located at 29° E.L., which is designed to provide X-band communications services exclusively to United States, Spanish and allied government users throughout the satellite’s coverage area, including Europe, the Middle East and Asia. XTAR also leases 7.2 72MHz X-band transponders on the Spainsat satellite located at 30° W.L., owned by Hisdesat. These transponders, designated as XTAR-LANT, provide capacity to XTAR for additional X-band services and greater coverage and flexibility.

As of June 30, 2019 and December 31, 2018, the Company also held an indirect ownership interest in a foreign company that currently serves as the exclusive service provider for Globalstar service in Mexico. The Company accounts for this ownership interest using the equity method of accounting. As of June 30, 2019 and December 31, 2018, the carrying value of this investment was zero. Because Loral has written-off its investment in this company and has no future funding requirements relating to this investment, there is no requirement for us to provide for our allocated share of this company’s net losses.

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Other Current Liabilities

6 Months Ended

Jun. 30, 2019

Other Current Liabilities [Abstract]

Other Current Liabilities

6. Other Current Liabilities

Other current liabilities consists of (in thousands):

	June 30,		December 31,
	2019		2018
Operating lease liability, current	$	677	$	—
Due to affiliate		3		164
Accrued professional fees		805		1,206
Pension and other postretirement liabilities		69		69
Accrued liabilities		51		56
	$	1,605	$	1,495

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Income Taxes

6 Months Ended

Jun. 30, 2019

Income Taxes [Abstract]

Income Taxes

7. Income Taxes

The following summarizes our income tax (provision) benefit (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Current income tax provision	$	(316)	$	(834)	$	(918)	$	(1,388)
Deferred income tax (provision) benefit		(1,844)		5,902		(3,308)		7,043
Income tax (provision) benefit	$	(2,160)	$	5,068	$	(4,226)	$	5,655

For the six month periods ended June 30, 2019 and 2018, our income tax (provision) benefit is computed by applying an expected effective annual tax rate against the pre-tax results for each period (after adjusting for certain tax items that are discrete to each period). For the three month periods ended June 30, 2019 and 2018, this amount is then reduced by the tax recorded for the three months ended March 31, 2019 and 2018. After utilization of our net operating loss carryforward and foreign tax credits, there was no federal income tax on GILTI from Telesat for the three and six month periods ended June 30, 2019 and 2018. The deferred income tax (provision) benefit for each period includes the impact of equity in net income (loss) of affiliates from our condensed consolidated statement of operations.

Subsequent to the sale of SSL to MDA Communications Holdings, Inc., a subsidiary of Maxar Technologies Ltd. (formerly known as MacDonald, Dettwiler and Associates Ltd.) (“MDA”) in 2012 (the “SSL Sale”), to the extent that profitability from operations is not sufficient to realize the benefit from our remaining net deferred tax assets, we would generate sufficient taxable income from the appreciated value of our Telesat investment in order to prevent federal net operating losses from expiring and realize the benefit of all remaining deferred tax assets.

The following summarizes amounts for UTPs included in our income tax (provision) benefit (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Current provision for UTPs	$	(277)	$	(747)	$	(737)	$	(1,227)
Deferred benefit for UTPs		60		157		153		258
Tax provision for UTPs	$	(217)	$	(590)	$	(584)	$	(969)

As of June 30, 2019, we had unrecognized tax benefits relating to UTPs of $43 million. The Company recognizes interest and penalties related to income taxes in income tax expense on a quarterly basis. As of June 30, 2019, we have accrued no penalties and approximately $1.2 million for the potential payment of tax-related interest.

With few exceptions, the Company is no longer subject to U.S. federal, state or local income tax examinations by tax authorities for years prior to 2014. Earlier years related to certain foreign jurisdictions remain subject to examination. To the extent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses were generated and carried forward, and make adjustments up to the amount of the net operating loss carryforward. While we intend to contest any future tax assessments for uncertain tax positions, no assurance can be provided that we would ultimately prevail. Pursuant to the purchase agreement for the SSL Sale, we are obligated to indemnify SSL for certain taxes related to periods prior to the closing of the transaction.

The following summarizes the changes to our liabilities for UTPs included in other liabilities in the condensed consolidated balance sheet (in thousands):

	Six Months Ended
	June 30, 2019
Liabilities for UTPs:
Opening balance — January 1	$	13,315
Current provision for potential additional interest		737
Ending balance	$	14,052

As of June 30, 2019, if our positions are sustained by the taxing authorities, the Company’s income tax provision would be reduced by approximately $6.6 million. Other than as described above, there were no significant changes to our UTPs during the six months ended June 30, 2019 and 2018, and we do not anticipate any other significant changes to our unrecognized tax benefits during the next twelve months.

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Other Liabilities

6 Months Ended

Jun. 30, 2019

Other Liabilities [Abstract]

Other Liabilities

8. Other Liabilities

Other liabilities consists of (in thousands):

	June 30,		December 31,
	2019		2018
Indemnification liabilities - other (see Note 13)	$	167	$	184
Liabilities for uncertain tax positions		14,052		13,315
	$	14,219	$	13,499

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2019

Stock-Based Compensation [Abstract]

Stock-Based Compensation

9. Stock-Based Compensation

Stock Plans

The Loral amended and restated 2005 stock incentive plan (the “Stock Incentive Plan”) which allowed for the grant of several forms of stock-based compensation awards including stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonuses and other stock-based awards, had a ten-year term and has expired. The Company granted 75,262 restricted stock units under the Stock Incentive Plan that do not expire and remained unconverted as of June 30, 2019 and December 31, 2018.

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Earnings Per Share

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Earnings Per Share

10. Earnings Per Share

Telesat has awarded employee stock options, which, if exercised, would result in dilution of Loral’s economic ownership interest in Telesat from 62.7% to approximately 62.3%.

The following table presents the dilutive impact of Telesat stock options on Loral’s reported income from continuing operations for the purpose of computing diluted earnings per share (in thousands):

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2019		2019		2018
Income from continuing operations — basic	$	38,227	$	76,743	$	4,778
Less: Adjustment for dilutive effect of Telesat stock options		(230)		(484)		(10)
Income from continuing operations — diluted	$	37,997	$	76,259	$	4,768

Telesat stock options are excluded from the calculation of diluted income per share for the three months ended June 30, 2018 as the effect would have been antidilutive.

Basic income per share is computed based upon the weighted average number of share of voting and non-voting common stock outstanding. The following is the computation of common shares outstanding for diluted earnings per share (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Weighted average common shares outstanding		30,933		30,933		30,933	30,933
Unconverted restricted stock units		75		75		75	75
Common shares outstanding for diluted earnings per share		31,008		31,008		31,008	31,008

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Pensions and Other Employee Benefit Plans

6 Months Ended

Jun. 30, 2019

Pensions and Other Employee Benefit Plans [Abstract]

Pensions and Other Employee Benefit Plans

11. Pensions and Other Employee Benefit Plans

The following tables provide the components of net periodic cost for our qualified retirement plan (the “Pension Benefits”) and health care and life insurance benefits for retired employees and dependents (the “Other Benefits”) for the three and six months ended June 30, 2019 and 2018(in thousands):

	Pension Benefits				Other  Benefits
	Three Months Ended				Three Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Service cost (1)	$	183	$	170	$	—	$	—
Interest cost (2)		499		463		5		4
Expected return on plan assets (2)		(609)		(657)		—		—
Amortization of net actuarial loss (2)		272		257		(1)		—
Amortization of prior service credits (2)		—		—		—		6
Net periodic cost	$	345	$	233	$	4	$	10

	Pension Benefits				Other Benefits
	Six Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Service cost (1)	$	361	$	357	$	—	$	—
Interest cost (2)		1,009		927		10		8
Expected return on plan assets (2)		(1,216)		(1,314)		—		—
Amortization of net actuarial loss (2)		503		520		(2)		—
Amortization of prior service credits (2)		—		—		—		12
Net periodic cost	$	657	$	490	$	8	$	20

(1)Included in general and administrative expenses.

(2)Included in other expense.

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Financial Instruments, Derivative Instruments and Hedging

6 Months Ended

Jun. 30, 2019

Financial Instruments, Derivative Instruments and Hedging [Abstract]

Financial Instruments, Derivative Instruments and Hedging

12. Financial Instruments, Derivative Instruments and Hedging

Financial Instruments

The carrying amount of cash equivalents approximates fair value because of the short maturity of those instruments.

Foreign Currency

We are subject to the risks associated with fluctuations in foreign currency exchange rates. To limit this foreign exchange rate exposure, we attempt to denominate all contracts in U.S. dollars. Where appropriate, derivatives are used to minimize the risk of foreign exchange rate fluctuations to operating results and cash flows. We do not use derivative instruments for trading or speculative purposes.

Derivatives and Hedging Transactions

There were no derivative instruments as of June 30, 2019 and December 31, 2018.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies [Abstract]

Commitments and Contingencies

13. Commitments and Contingencies

Financial Matters

In the fourth quarter of 2012, we sold our former subsidiary, SSL, to MDA pursuant to the purchase agreement for the SSL Sale. Under the terms of the purchase agreement, we are obligated to indemnify MDA and its affiliates from liabilities with respect to certain pre-closing taxes. Our consolidated balance sheets include an indemnification refund receivable of $0.7 million and $2.4 million as of June 30, 2019 and December 31, 2018, respectively. Certain tax assessments against SSL for 2007 to 2010 have been settled, resulting in our having received during the second quarter of 2019 a $1.7 million refund of prior indemnification payments. The remaining receivable as of June 30, 2019 represents payments to date over the estimated fair value of our remaining liability for our indemnification of SSL pre-closing taxes where the final amounts have not yet been determined. Where appropriate, we intend vigorously to contest the underlying tax assessments, but there can be no assurance that we will be successful. Although no assurance can be provided, we do not believe that these tax-related matters will have a material adverse effect on our financial position or results of operations.

In connection with the sale in 2008 by Loral and certain of its subsidiaries and DASA Globalstar LLC to Globalstar Inc. of their respective interests in GdB, the Globalstar Brazilian service provider, Loral agreed to indemnify Globalstar Inc. and GdB for certain GdB pre-closing liabilities, primarily related to Brazilian taxes. Our condensed consolidated balance sheets include liabilities of $0.2 million as of June 30, 2019 and December 31, 2018 for indemnification liabilities relating to the sale of GdB.

See Note 14 — Related Party Transactions — Transactions with Affiliates — Telesat for commitments and contingencies relating to our agreement to indemnify Telesat for certain liabilities and our other arrangements with Telesat.

Lease Arrangements

We lease certain facilities and equipment under agreements expiring at various dates. We may renew, extend or modify a lease covering facilities as needed. We have no sublease income in any of the periods presented.

We changed our method of accounting for leases in the first quarter of 2019 due to the adoption of ASC 842. We adopted ASC 842 as of January 1, 2019 using the modified retrospective transition method and elected to apply the transition as of the beginning of the period of adoption. Accordingly, financial information as of and for the three and six months ended June 30, 2019 is presented under ASC 842, whereas the financial information for the three and six months ended June 30, 2018 and as of December 31, 2018 is presented under ASC 840, Leases.

Upon adoption of ASC 842, we recognized a right-of-use asset and lease liability of $0.3 million for an operating lease on our condensed consolidated balance sheet as of January 1, 2019. In March 2019, the operating lease was modified by extending the lease termination date from June 30, 2019 to June 30, 2020 and increasing the rent for the extension period. Lease costs expensed for the three and six months ended June 30, 2019 and 2018 were as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Rent Expense	$	171	$	159	$	334	$	318

Lease payments for the six months ended June 30, 2019 were $0.3 million. The remaining lease term as of June 30, 2019 is 12 months, and we used a discount rate of 7.5% to compute the lease liability.

The following is a reconciliation of the lease liability to future lease payments as of June 30, 2019 (in thousands):

	2019		2020		Total
Operating lease liability, current	$	332	$	345	$	677
Future interest		18		5		23
Future lease payments	$	350	$	350	$	700

Legal Proceedings

We are not currently subject to any legal proceedings that, if decided adversely, could have a material adverse effect on our financial position or results of operations. In the future, however, we may become subject to legal proceedings and claims, either asserted or unasserted, that may arise in the ordinary course of business or otherwise.

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Related Party Transactions

6 Months Ended

Jun. 30, 2019

Related Party Transactions [Abstract]

Related Party Transactions

14. Related Party Transactions

MHR Fund Management LLC

Mark H. Rachesky, President of MHR Fund Management LLC (“MHR”), and Janet T. Yeung, a principal and the General Counsel of MHR, are members of Loral’s board of directors.

Various funds affiliated with MHR and Dr. Rachesky held, as of June 30, 2019 and December 31, 2018, approximately 39.9% of the outstanding voting common stock and 58.4% of the combined outstanding voting and non-voting common stock of Loral.

Transactions with Affiliates

Telesat

As described in Note 5, we own 62.7% of Telesat and account for our ownership interest under the equity method of accounting.

In connection with the acquisition of our ownership interest in Telesat (which we refer to as the Telesat transaction), Loral and certain of its subsidiaries, our Canadian co-owner, Public Sector Pension Investment Board (“PSP”) and one of its subsidiaries, Telesat and MHR entered into a Shareholders Agreement (the “Shareholders Agreement”). The Shareholders Agreement provides for, among other things, the manner in which the affairs of Telesat and its subsidiaries will be conducted and the relationships among the parties thereto and future shareholders of Telesat. The Shareholders Agreement also contains an agreement by Loral not to engage in a competing satellite communications business and agreements by the parties to the Shareholders Agreement not to solicit employees of Telesat or any of its subsidiaries. Additionally, the Shareholders Agreement details the matters requiring the approval of the shareholders of Telesat (including veto rights for Loral over certain extraordinary actions) and provides for preemptive rights for certain shareholders upon the issuance of certain capital shares of Telesat. The Shareholders Agreement also (i) restricts the ability of holders of certain shares of Telesat to transfer such shares unless certain conditions are met or approval of the transfer is granted by the directors of Telesat, (ii) provides for a right of first offer to certain Telesat shareholders if a holder of equity shares of Telesat wishes to sell any such shares to a third party and (iii) provides for, in certain circumstances, tag-along rights in favor of shareholders that are not affiliated with Loral if Loral sells equity shares and drag-along rights in favor of Loral in case Loral or its affiliate enters into an agreement to sell all of its Telesat equity securities.

In addition, the Shareholders Agreement provides for either PSP or Loral to initiate the process of conducting an initial public offering of the equity shares of Telesat (a “Telesat IPO”). In connection with our exploration of strategic initiatives to alter the status quo in our ownership of Telesat, in July 2015, we exercised our right under the Shareholders Agreement to require Telesat to conduct a Telesat IPO. Specifically, we requested that Telesat issue not more than 25 million newly issued shares of Telesat voting common stock. We also requested the termination of the Shareholders Agreement and the elimination of certain provisions in Telesat’s Articles of Incorporation, both of which we believe are important for a successful public offering. If those provisions are eliminated, an impediment to the conversion of our non-voting Telesat shares to voting shares would be eliminated. Termination or modification of the Shareholders Agreement and conversion of our non-voting shares to voting shares would enable us, after a Telesat IPO and subject to the receipt of any necessary regulatory approvals, to obtain majority voting control of Telesat. To date, we and PSP have not reached agreement on governance matters following a Telesat IPO. In the event a strategic transaction to combine Loral and Telesat into one public company that we are pursuing is not likely to be achievable in a timely manner or on satisfactory terms, we may further pursue our right to a Telesat IPO. There can be no assurance as to whether, when or on what terms a Telesat IPO, termination or modification of the Shareholders Agreement or any requested changes to Telesat’s Articles of Incorporation may occur or that any particular economic, tax, structural or other objectives or benefits with respect to a Telesat IPO will be achieved. If a Telesat IPO is expected to proceed under unfavorable terms or at an unfavorable price, we may withdraw our demand for a Telesat IPO.

Depending upon the outcome of discussions with PSP relating to Telesat strategic matters, we may assert certain claims against PSP for actions we believe violated our rights relating to the affairs of Telesat under the Telesat Shareholders Agreement and otherwise. In response to our claims, PSP has informed us that it believes that it may have claims against us, although we are not aware of the legal or factual basis for any such claims. We and PSP have agreed that, pending the outcome of our discussions, it would be beneficial to delay the commencement of any action relating to either party’s claims and have entered into an agreement (the “Tolling Agreement”) which preserves the parties’ rights to assert against one another legal claims relating to Telesat. We also included Telesat as a party to the Tolling Agreement because, as a technical matter of Canadian law and for purposes of potentially seeking equitable relief, Telesat may be a necessary party. There can be no assurance that if the Tolling Agreement lapses that we and PSP will not pursue legal claims against one another relating to Telesat. If we pursue claims against PSP, there can be no assurance that our claims will be successful or that the relief we seek will be granted. If PSP pursues claims against us, there can be no assurance that PSP will not prevail on its claims.

Under the Shareholders Agreement, in the event that, except in certain limited circumstances, either (i) ownership or control, directly or indirectly, by Dr. Rachesky of Loral’s voting stock falls below certain levels other than in connection with certain specified circumstances, including an acquisition by a Strategic Competitor (as defined in the Shareholders Agreement) or (ii) there is a change in the composition of a majority of the members of the Loral Board of Directors over a consecutive two-year period without the approval of the incumbent directors, Loral will lose its veto rights relating to certain extraordinary actions by Telesat and its subsidiaries. In addition, after either of these events, PSP will have certain rights to enable it to exit from its investment in Telesat, including a right to cause Telesat to conduct an initial public offering in which PSP’s shares would be the first shares offered or, if no such offering has occurred within one year due to a lack of cooperation from Loral or Telesat, to cause the sale of Telesat and to drag along the other shareholders in such sale, subject to Loral’s right to call PSP’s shares at fair market value.

The Shareholders Agreement provides for a board of directors of Telesat consisting of 10 directors, three nominated by Loral, three nominated by PSP and four independent directors to be selected by a nominating committee comprised of one PSP nominee, one nominee of Loral and one of the independent directors then in office. Each party to the Shareholders Agreement is obligated to vote all of its Telesat shares for the election of the directors nominated by the nominating committee. Pursuant to action by the board of directors taken on October 31, 2007, Dr. Rachesky, who is non-executive Chairman of the Board of Directors of Loral, was appointed non-executive Chairman of the Board of Directors of Telesat. In addition, Michael B. Targoff, Loral’s Vice Chairman, serves on the board of directors of Telesat.

On October 31, 2007, Loral and Telesat entered into a consulting services agreement (the “Consulting Agreement”). Pursuant to the terms of the Consulting Agreement, Loral provides to Telesat certain non-exclusive consulting services in relation to the business of Loral Skynet which was transferred to Telesat as part of the Telesat transaction as well as with respect to certain aspects of the satellite communications business of Telesat. The Consulting Agreement has a term of seven-years with an automatic renewal for an additional seven-year term if Loral is not then in material default under the Shareholders Agreement. Upon expiration of the initial term on October 31, 2014, the Consulting Agreement was automatically renewed for the additional seven-year term. In exchange for Loral’s services under the Consulting Agreement, Telesat pays Loral an annual fee of $5.0 million, payable quarterly in arrears on the last day of March, June, September and December of each year during the term of the Consulting Agreement. Our general and administrative expenses are net of income related to the Consulting Agreement of $1.25 million for each of the three‑month periods ended June 30, 2019 and 2018 and $2.5 million for each of the six-month periods ended June 30, 2019 and 2018. For each of the six-month periods ended June 30, 2019 and 2018, Loral received payments in cash from Telesat, net of withholding taxes, of $2.4 million for consulting fees.

In connection with the acquisition of our ownership interest in Telesat in 2007, Loral retained the benefit of tax recoveries related to the transferred assets and indemnified Telesat (“Telesat Indemnification”) for certain liabilities, including Loral Skynet’s tax liabilities arising prior to January 1, 2007. The Telesat Indemnification includes certain tax disputes currently under review in various jurisdictions including Brazil. The Brazilian tax authorities challenged Loral Skynet’s historical characterization of its revenue generated in Brazil for the years 2003 to 2006. Telesat received and challenged, on Loral Skynet’s behalf, tax assessments from Brazil totaling approximately $0.9 million. The Company believes that Loral Skynet’s filing position will ultimately be sustained requiring no payment under the Telesat Indemnification. There can be no assurance that there will be no future claims under the Telesat Indemnification related to tax disputes.

Loral’s employees and retirees participate in certain welfare plans sponsored or managed by Telesat. Loral pays Telesat an annual administrative fee of $0.1 million and reimburses Telesat for the plan costs attributable to Loral participants.

Loral, along with Telesat, PSP and 4440480 Canada Inc., an indirect wholly-owned subsidiary of Loral (the “Special Purchaser”), entered into stock option grant agreements (the “Stock Option Grant Agreements”) and a restricted stock unit grant agreement (the “RSU Grant Agreement,” and, together with the Stock Option Grant Agreements, the “Grant Agreements”) with respect to shares in Telesat with certain executives of Telesat (each, a “Participant” and collectively, the “Participants”). Each of the Participants is or was, at the time, an executive of Telesat.

The Stock Option Grant Agreements document grants to the Participants of Telesat stock options (including tandem SAR rights) and provide for certain rights, obligations and restrictions related to such stock options, which include, among other things: (w) the possible obligation of the Special Purchaser to purchase the shares in the place of Telesat should Telesat be prohibited by applicable law or under the terms of any credit agreement applicable to Telesat from purchasing such shares, or otherwise default on such purchase obligation, pursuant to the terms of the Stock Option Grant Agreements; and (x) the obligation of the Special Purchaser to purchase shares upon exercise by Telesat of its call right under Telesat’s Management Stock Incentive Plan in the event of a Participant’s termination of employment; and, in the case of certain executives, (y) the right of each such Participant to require the Special Purchaser or Loral to purchase a portion of the shares in Telesat owned by him in the event of exercise after termination of employment to cover taxes that are greater than the minimum withholding amount; and (z) the right of each such Participant to require Telesat to cause the Special Purchaser or Loral to purchase a portion of the shares in Telesat owned by him, or that are issuable to him under Telesat's Management Stock Incentive Plan at the relevant time, in the event that more than 90% of Loral's common stock is acquired by an unaffiliated third party that does not also purchase all of PSP’s and its affiliates’ interest in Telesat.

The RSU Grant Agreement documents a grant to the Participant of restricted stock units with respect to shares in Telesat and provides for certain rights, obligations and restrictions related to such restricted stock units, which include, among other things:  (x) the possible obligation of the Special Purchaser to purchase the shares in the place of Telesat should Telesat be prohibited by applicable law or under the terms of any credit agreement applicable to Telesat from purchasing such shares, or otherwise default on such purchase obligation, pursuant to the terms of the RSU Grant Agreement; and (y) the obligation of the Special Purchaser to purchase shares upon exercise by Telesat of its call right under Telesat’s Management Stock Incentive Plan in the event of the termination of the Participant’s employment.

The Grant Agreements further provide that, in the event the Special Purchaser is required to purchase shares, such shares, together with the obligation to pay for such shares, shall be transferred to a subsidiary of the Special Purchaser, which subsidiary shall be wound up into Telesat, with Telesat agreeing to the acquisition of such subsidiary by Telesat from the Special Purchaser for nominal consideration and with the purchase price for the shares being paid by Telesat within ten (10) business days after completion of the winding-up of such subsidiary into Telesat.

Other

As described in Note 5, we own 56% of XTAR, a joint venture between Loral and Hisdesat and account for our investment in XTAR under the equity method of accounting. SSL constructed XTAR’s satellite, which was successfully launched in February 2005. XTAR and Loral have entered into a management agreement whereby Loral provides general and specific services of a technical, financial and administrative nature to XTAR. For the services provided by Loral, XTAR, until December 31, 2013, was charged a quarterly management fee equal to 3.7% of XTAR’s quarterly gross revenues. The amount due to Loral primarily due to the management agreement was $6.7 million as of June 30, 2019 and December 31, 2018. Beginning in 2008, Loral and XTAR agreed to defer amounts owed to Loral under this agreement, and XTAR has agreed that its excess cash balance (as defined), will be applied at least quarterly towards repayment of its payables owed to Loral, as well as to Hisdesat and Telesat. No cash was received under this agreement for the six months ended June 30, 2019 and 2018, and we had an allowance of $6.6 million against receivables from XTAR as of June 30, 2019 and December 31, 2018. Loral and Hisdesat have agreed to waive future management fees for an indefinite period starting January 1, 2014.

Consulting Agreement

On December 14, 2012, Loral entered into a consulting agreement with Michael B. Targoff, Vice Chairman of the Company and former Chief Executive Officer and President. Pursuant to this agreement, Mr. Targoff is engaged as a part-time consultant to the Board to assist the Board with respect to the oversight of strategic matters relating to Telesat and XTAR. Under the agreement, Mr. Targoff receives consulting fees of $120,000 per month and reimburses the Company for certain expenses. For each of the three and six month periods ended June 30, 2019 and 2018, Mr. Targoff earned consulting fees of $360,000 and $720,000, respectively, and reimbursed Loral net expenses of $11,250 and $22,500, respectively.

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Basis of Presentation (Policy)

6 Months Ended

Jun. 30, 2019

Basis of Presentation [Abstract]

Investments in Affiliates

Investments in Affiliates

Our ownership interest in Telesat is accounted for using the equity method of accounting. Income and losses of Telesat are recorded based on our economic interest. The contribution of Loral Skynet, a wholly owned subsidiary of Loral prior to its contribution to Telesat in 2007, was recorded by Loral at the historical book value of our retained interest combined with the gain recognized on the contribution. However, the contribution was recorded by Telesat at fair value. Accordingly, the amortization of Telesat fair value adjustments applicable to the Loral Skynet assets and liabilities acquired by Telesat in 2007 is proportionately eliminated in determining our share of the net income of Telesat. Our equity in net income or loss of Telesat also reflects amortization of profits eliminated, to the extent of our economic interest in Telesat, on satellites we constructed for Telesat while we owned Space Systems/Loral, LLC (formerly known as Space Systems/Loral, Inc.) (“SSL”) and on Loral’s sale to Telesat in April 2011 of its portion of the payload on the ViaSat-1 satellite and related assets. Non-refundable cash distributions received from Telesat in excess of our initial investment and our share of cumulative equity in comprehensive income of Telesat, net of cash distributions received in prior periods, are recorded as equity in net income of Telesat (“Excess Cash Distribution”) since we have no obligation to provide future financial support to Telesat. After receiving an Excess Cash Distribution, we do not record additional equity in net income of Telesat until our share of Telesat’s future net income exceeds the Excess Cash Distribution. Equity in losses of affiliates is not recognized after the carrying value of an investment, including advances and loans, has been reduced to zero, unless guarantees or other funding obligations exist. We had no guarantees or other funding obligations for our equity method investments as of June 30, 2019 and December 31, 2018. We use the nature of distribution approach to classify distributions from equity method investments on the statements of cash flows. The Company monitors its equity method investments for factors indicating other-than-temporary impairment. An impairment loss is recognized when there has been a loss in value of the affiliate that is other‑than-temporary.

Use of Estimates in Preparation of Financial Statements

Use of Estimates in Preparation of Financial Statements

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amount of income (loss) reported for the period. Actual results could materially differ from estimates.

Significant estimates also included the allowances for doubtful accounts, income taxes, including the valuation of deferred tax assets, the fair value of liabilities indemnified, the dilutive effect of Telesat stock options (see Note 10) and our pension liabilities.

Cash, Cash Equivalents and Restricted Cash

Cash, Cash Equivalents and Restricted Cash

As of June 30, 2019, the Company had $257.7 million of cash and cash equivalents. Cash and cash equivalents include liquid investments, primarily money market funds, with maturities of less than 90 days at the time of purchase. Management determines the appropriate classification of its investments at the time of purchase and at each balance sheet date.

As of June 30, 2019 and December 31, 2018, other assets included restricted cash of $0.3 million which represents the amount pledged as collateral to the issuer of a standby letter of credit (the “LC”). The LC, which expires in August 2020, has been provided as a guaranty to the lessor of our corporate offices.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated statements of cash flows (in thousands):

	June 30,		June 30,
	2019		2018
Cash and cash equivalents	$	257,686	$	250,137
Restricted cash included in other assets		304		304
Cash, cash equivalents and restricted cash shown in the statement of cash flows	$	257,990	$	250,441

Concentration of Credit Risk

Concentration of Credit Risk

Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents and receivables. Our cash and cash equivalents are maintained with high-credit-quality financial institutions. As of June 30, 2019 and December 31, 2018, our cash and cash equivalents were invested primarily in several liquid Prime and Government AAA money market funds. Such funds are not insured by the Federal Deposit Insurance Corporation. The dispersion across funds reduces the exposure of a default at any one fund.  As a result, management believes that its potential credit risks are minimal.

Fair Value Measurements

Fair Value Measurements

U.S. GAAP defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants. U.S. GAAP also establishes a fair value hierarchy that gives the highest priority to observable inputs and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy are described below:

Level 1: Inputs represent a fair value that is derived from unadjusted quoted prices for identical assets or liabilities traded in active markets at the measurement date.

Level 2: Inputs represent a fair value that is derived from quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities, and pricing inputs, other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3: Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

Assets and Liabilities Measured at Fair Value

The following table presents our assets and liabilities measured at fair value on a recurring and non-recurring basis (in thousands):

	June 30, 2019						December 31, 2018
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents:
Money market funds	$	255,722	$	—	$	—	$	254,552	$	—	$	—
Other current assets:
Indemnification - Sale of SSL		—		—		672		—		—		2,410
Liabilities
Other liabilities:
Indemnification - Globalstar do Brasil S.A.	$	—	$	—	$	167	$	—	$	—	$	184

The carrying amount of money market funds approximates fair value as of each reporting date because of the short maturity of those instruments.

The Company did not have any non-financial assets or non-financial liabilities that were recognized or disclosed at fair value as of June 30, 2019 and December 31, 2018.

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis

We review the carrying values of our equity method investments when events and circumstances warrant and consider all available evidence in evaluating when declines in fair value are other-than-temporary. The fair values of our investments are determined based on valuation techniques using the best information available and may include quoted market prices, market comparables and discounted cash flow projections. An impairment charge is recorded when the carrying amount of the investment exceeds its current fair value and is determined to be other-than-temporary.

The asset resulting from the indemnification of SSL is for certain pre-closing taxes and reflects the excess of payments since inception over refunds and the estimated liability, which was originally determined using the fair value objective approach. The estimated liability for indemnifications relating to Globalstar do Brasil S.A. (“GdB”), originally determined using expected value analysis, is net of payments since inception.

Contingencies

Contingencies

Contingencies by their nature relate to uncertainties that require management to exercise judgment both in assessing the likelihood that a liability has been incurred as well as in estimating the amount of potential loss, if any. We accrue for costs relating to litigation, claims and other contingent matters when such liabilities become probable and reasonably estimable. Such estimates may be based on advice from third parties or on management’s judgment, as appropriate. Actual amounts paid may differ from amounts estimated, and such differences will be charged to operations in the period in which the final determination of the liability is made.

Income Taxes

Income Taxes

Loral and its subsidiaries are subject to U.S. federal, state and local income taxation on their worldwide income and foreign taxation on certain income from sources outside the United States. Telesat is subject to tax in Canada and other jurisdictions, and Loral will provide in each period any additional U.S. current and deferred tax required on actual or deemed distributions from Telesat, including Global Intangible Low Taxed Income (“GILTI”). Deferred income taxes reflect the future tax effect of temporary differences between the carrying amount of assets and liabilities for financial and income tax reporting and are measured by applying anticipated statutory tax rates in effect for the year during which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent it is more likely than not that the deferred tax assets will not be realized.

The tax benefit of an uncertain tax position (“UTP”) taken or expected to be taken in income tax returns is recognized only if it is “more likely than not” to be sustained on examination by the taxing authorities, based on its technical merits as of the reporting date. The tax benefit recognized in the financial statements from such a position is measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. The Company recognizes interest and penalties related to income taxes in income tax expense on a quarterly basis.

The unrecognized tax benefit of a UTP is recognized in the period when the UTP is effectively settled. Previously recognized tax positions are derecognized in the first period in which it is no longer more likely than not that the tax position would be sustained upon examination.

Earnings Per Share

Earnings per Share

Basic earnings per share are computed based upon the weighted average number of shares of voting and non-voting common stock outstanding during each period. Shares of non-voting common stock are in all respects identical to and treated equally with shares of voting common stock except for the absence of voting rights (other than as provided in Loral’s Amended and Restated Certificate of Incorporation which was ratified by Loral’s stockholders on May 19, 2009). Diluted earnings per share are based on the weighted average number of shares of voting and non-voting common stock outstanding during each period, adjusted for the effect of unconverted restricted stock units. For diluted earnings per share, earnings are adjusted for the dilutive effect of Telesat stock options.

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Basis of Presentation (Tables)

6 Months Ended

Jun. 30, 2019

Basis of Presentation [Abstract]

Reconciliation of Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated statements of cash flows (in thousands):

	June 30,		June 30,
	2019		2018
Cash and cash equivalents	$	257,686	$	250,137
Restricted cash included in other assets		304		304
Cash, cash equivalents and restricted cash shown in the statement of cash flows	$	257,990	$	250,441

Assets and Liabilities Measured at Fair Value on Recurring and Non-Recurring basis

The following table presents our assets and liabilities measured at fair value on a recurring and non-recurring basis (in thousands):

	June 30, 2019						December 31, 2018
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents:
Money market funds	$	255,722	$	—	$	—	$	254,552	$	—	$	—
Other current assets:
Indemnification - Sale of SSL		—		—		672		—		—		2,410
Liabilities
Other liabilities:
Indemnification - Globalstar do Brasil S.A.	$	—	$	—	$	167	$	—	$	—	$	184

Additional Cash Flow Information

The following represents non-cash activities and supplemental information to the condensed consolidated statements of cash flows (in thousands):

	Six Months Ended
	June 30,
	2019		2018
Non-cash operating items:
Equity in net income of affiliates	$	(83,282)	$	(1,639)
Deferred taxes		3,308		(7,043)
Depreciation and amortization		8		11
Right-of-use asset, net of lease liability		16		—
Amortization of prior service credit and actuarial loss		501		532
Net non-cash operating items	$	(79,449)	$	(8,139)
Supplemental information:
Interest paid	$	10	$	11
Income tax refunds	$	2,980	$	255
Income tax payments	$	163	$	138

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Accumulated Other Comprehensive Loss (Tables)

6 Months Ended

Jun. 30, 2019

Accumulated Other Comprehensive Loss [Abstract]

Components of Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss, net of tax, are as follows (in thousands):

			Proportionate
			Share of		Accumulated
			Telesat Other		Other
	Postretirement		Comprehensive		Comprehensive
	Benefits		Income (Loss)		Loss
Balance, January 1, 2018	$	(16,454)	$	(20,824)	$	(37,278)
Other comprehensive income before reclassification		953		22,033		22,986
Amounts reclassified from accumulated other comprehensive loss		845		—		845
Net current-period other comprehensive income		1,798		22,033		23,831
Tax Cuts and Jobs Act, reclassification of tax effect from
accumulated other comprehensive loss to accumulated deficit		—		(4,173)		(4,173)
Balance, December 31, 2018		(14,656)		(2,964)		(17,620)
Other comprehensive loss before reclassification		—		(13,447)		(13,447)
Amounts reclassified from accumulated other comprehensive loss		395		—		395
Net current-period other comprehensive loss		395		(13,447)		(13,052)
Balance, June 30, 2019	$	(14,261)	$	(16,411)	$	(30,672)

Schedule of Other Comprehensive Income (Loss) and Related Income Tax Effects

The components of other comprehensive income (loss) and related tax effects are as follows (in thousands):

	Three Months Ended June 30,
	2019							2018
	Before-Tax			Tax		Net-of-Tax		Before-Tax			Tax		Net-of-Tax
	Amount			Provision		Amount		Amount			Provision		Amount
Amortization of prior service credits
and net actuarial loss	$	271	(a)	$	(58)	$	213	$	263	(a)	$	(56)	$	207
Equity in Telesat other comprehensive
income		(6,861)			2		(6,859)		532			(111)		421
Other comprehensive (loss) income	$	(6,590)		$	(56)	$	(6,646)	$	795		$	(167)	$	628

	Six Months Ended June 30,
	2019							2018
	Before-Tax			Tax (Provision)		Net-of-Tax		Before-Tax			Tax		Net-of-Tax
	Amount			Benefit		Amount		Amount			Provision		Amount
Amortization of prior service credits
and net actuarial loss	$	501	(a)	$	(106)	$	395	$	532	(a)	$	(112)	$	420
Equity in Telesat other comprehensive
(loss) income		(13,450)			3		(13,447)		9,309			(1,957)		7,352
Other comprehensive (loss) income	$	(12,949)		$	(103)	$	(13,052)	$	9,841		$	(2,069)	$	7,772

(a)Reclassifications are included in other expense.

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Other Current Assets (Tables)

6 Months Ended

Jun. 30, 2019

Other Current Assets [Abstract]

Schedule of Other Current Assets

Other current assets consists of (in thousands):

	June 30,		December 31,
	2019		2018
Indemnification receivable from SSL for pre-closing taxes (see Note 13)	$	672	$	2,410
Due from affiliates		176		161
Prepaid expenses		557		151
Other		508		510
	$	1,913	$	3,232

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Investments in Affiliates (Tables)

6 Months Ended

Jun. 30, 2019

Investments in and Advances to Affiliates [Line Items]

Investments in Affiliates

Investments in affiliates consist of (in thousands):

	June 30,		December 31,
	2019		2018
Telesat	$	94,406	$	24,574

Equity in Net (Loss) Income of Affiliates

Equity in net income (loss) of affiliates consists of (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Telesat	$	41,278	$	(3,455)	$	83,282	$	1,639

Telesat Canada [Member]

Investments in and Advances to Affiliates [Line Items]

Summary Financial Data, Equity Method Investment

The following table presents summary financial data for Telesat in accordance with U.S. GAAP as of June 30, 2019 and December 31, 2018 and for the three and six months ended June 30, 2019 and 2018 (in thousands):

	June 30,		December 31,
	2019		2018
Balance Sheet Data:
Current assets	$	741,714	$	628,125
Total assets		4,068,167		3,942,847
Current liabilities		118,201		139,401
Long-term debt, including current portion		2,756,055		2,764,599
Total liabilities		3,464,565		3,474,504
Shareholders’ equity		603,602		468,343

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Statement of Operations Data:
Revenues	$	172,995	$	164,114	$	340,639	$	348,980
Operating expenses		(30,405)		(26,933)		(68,384)		(57,536)
Depreciation, amortization and stock-based compensation		(54,093)		(48,287)		(107,891)		(96,786)
Other operating expense		(10)		(15)		(65)		(13)
Operating income		88,487		88,879		164,299		194,645
Interest expense		(46,492)		(42,520)		(93,335)		(87,608)
Foreign exchange gain (loss)		45,946		(45,777)		98,415		(109,078)
(Loss) gain on financial instruments		(21,263)		(1,767)		(36,375)		30,616
Other income		4,272		2,973		8,106		4,591
Income tax provision		(6,481)		(7,815)		(11,036)		(31,585)
Net income (loss)	$	64,469	$	(6,027)	$	130,074	$	1,581

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Other Current Liabilities (Tables)

6 Months Ended

Jun. 30, 2019

Other Current Liabilities [Abstract]

Schedule of Other Current Liabilities

Other current liabilities consists of (in thousands):

	June 30,		December 31,
	2019		2018
Operating lease liability, current	$	677	$	—
Due to affiliate		3		164
Accrued professional fees		805		1,206
Pension and other postretirement liabilities		69		69
Accrued liabilities		51		56
	$	1,605	$	1,495

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2019

Income Taxes [Abstract]

Summary of Income Tax Benefit (Provision)

The following summarizes our income tax (provision) benefit (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Current income tax provision	$	(316)	$	(834)	$	(918)	$	(1,388)
Deferred income tax (provision) benefit		(1,844)		5,902		(3,308)		7,043
Income tax (provision) benefit	$	(2,160)	$	5,068	$	(4,226)	$	5,655

Summary of Uncertain Tax Positions Included in Income Tax Provision

The following summarizes amounts for UTPs included in our income tax (provision) benefit (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Current provision for UTPs	$	(277)	$	(747)	$	(737)	$	(1,227)
Deferred benefit for UTPs		60		157		153		258
Tax provision for UTPs	$	(217)	$	(590)	$	(584)	$	(969)

Summary of Changes to Company's Liabilities For UTPs

The following summarizes the changes to our liabilities for UTPs included in other liabilities in the condensed consolidated balance sheet (in thousands):

	Six Months Ended
	June 30, 2019
Liabilities for UTPs:
Opening balance — January 1	$	13,315
Current provision for potential additional interest		737
Ending balance	$	14,052

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Other Liabilities (Tables)

6 Months Ended

Jun. 30, 2019

Other Liabilities [Abstract]

Schedule of Long Term Liabilities

Other liabilities consists of (in thousands):

	June 30,		December 31,
	2019		2018
Indemnification liabilities - other (see Note 13)	$	167	$	184
Liabilities for uncertain tax positions		14,052		13,315
	$	14,219	$	13,499

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Schedule of Dilutive Impact of Equity Method Investee Stock Options

The following table presents the dilutive impact of Telesat stock options on Loral’s reported income from continuing operations for the purpose of computing diluted earnings per share (in thousands):

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2019		2019		2018
Income from continuing operations — basic	$	38,227	$	76,743	$	4,778
Less: Adjustment for dilutive effect of Telesat stock options		(230)		(484)		(10)
Income from continuing operations — diluted	$	37,997	$	76,259	$	4,768

Schedule of Weighted Average Number of Shares for Calculating Diluted Earnings per Share

The following is the computation of common shares outstanding for diluted earnings per share (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Weighted average common shares outstanding		30,933		30,933		30,933	30,933
Unconverted restricted stock units		75		75		75	75
Common shares outstanding for diluted earnings per share		31,008		31,008		31,008	31,008

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Pensions and Other Employee Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2019

Pensions and Other Employee Benefit Plans [Abstract]

Components of Net Periodic Cost

The following tables provide the components of net periodic cost for our qualified retirement plan (the “Pension Benefits”) and health care and life insurance benefits for retired employees and dependents (the “Other Benefits”) for the three and six months ended June 30, 2019 and 2018(in thousands):

	Pension Benefits				Other  Benefits
	Three Months Ended				Three Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Service cost (1)	$	183	$	170	$	—	$	—
Interest cost (2)		499		463		5		4
Expected return on plan assets (2)		(609)		(657)		—		—
Amortization of net actuarial loss (2)		272		257		(1)		—
Amortization of prior service credits (2)		—		—		—		6
Net periodic cost	$	345	$	233	$	4	$	10

	Pension Benefits				Other Benefits
	Six Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Service cost (1)	$	361	$	357	$	—	$	—
Interest cost (2)		1,009		927		10		8
Expected return on plan assets (2)		(1,216)		(1,314)		—		—
Amortization of net actuarial loss (2)		503		520		(2)		—
Amortization of prior service credits (2)		—		—		—		12
Net periodic cost	$	657	$	490	$	8	$	20

(1)Included in general and administrative expenses.

(2)Included in other expense.

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies [Abstract]

Operating Leases Expense Net of Sublease Income

Lease costs expensed for the three and six months ended June 30, 2019 and 2018 were as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Rent Expense	$	171	$	159	$	334	$	318

Reconciliation of the Lease Liability to Future Lease Payments

The following is a reconciliation of the lease liability to future lease payments as of June 30, 2019 (in thousands):

	2019		2020		Total
Operating lease liability, current	$	332	$	345	$	677
Future interest		18		5		23
Future lease payments	$	350	$	350	$	700

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Organization and Principal Business (Narrative) (Details)	6 Months Ended
	Jun. 30, 2019 segment
Organization And Principal Business [Line Items]
Number of operating segment	1
Telesat Canada [Member]
Organization And Principal Business [Line Items]
Economic interest in affiliate	62.70%
Voting interest in affiliate	32.60%

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Basis of Presentation (Narrative) (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Jan. 01, 2019	Dec. 31, 2018	Jun. 30, 2018
Basis of Presentation [Line Items]
Cash and cash equivalents	$ 257,686		$ 256,947	$ 250,137
Restricted cash	304			$ 304
Investments in affiliates, guarantee or other funding obligations	0		$ 0
Operating lease liability		$ 300
Right-of-use asset	$ 661	300
Accounting Standards Update 2016-02 [Member] | Restatement Adjustment [Member]
Basis of Presentation [Line Items]
Operating lease liability		300
Right-of-use asset		$ 300

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Basis of Presentation (Reconciliation of Cash, Cash Equivalents and Restricted Cash) (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018	Dec. 31, 2017
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract]
Cash and cash equivalents	$ 257,686	$ 256,947	$ 250,137
Restricted cash included in other assets	304		304
Cash, cash equivalents and restricted cash shown in the statement of cash flows	$ 257,990	$ 257,251	$ 250,441	$ 255,443

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Basis of Presentation (Assets and Liabilities Measured at Fair Value) (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Assets, Fair Value
Indemnification - Sale of SSL	$ 672	$ 2,410
Money Market Funds [Member] | Level 1 [Member]
Assets, Fair Value
Cash equivalents	255,722	254,552
Money Market Funds [Member] | Level 2 [Member]
Assets, Fair Value
Cash equivalents
Sale of SSL, Nov. 02, 2012 [Member] | Level 2 [Member]
Assets, Fair Value
Indemnification - Sale of SSL
Sale of SSL, Nov. 02, 2012 [Member] | Level 3 [Member]
Assets, Fair Value
Indemnification - Sale of SSL	672	2,410
Globalstar do Brasil S.A. [Member] | Level 3 [Member]
Liabilities, Fair Value
Indemnification - Globalstar do Brasil S.A.	$ 167	$ 184

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Basis of Presentation (Additional Cash Flow Information) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Non-cash operating items:
Equity in net (income) loss of affiliates	$ (41,278)	$ 3,455	$ (83,282)	$ (1,639)
Deferred taxes			3,308	(7,043)
Depreciation and amortization			8	11
Right-of-use asset, net of lease liability			16
Amortization of prior service credit and actuarial (gain) loss			501	532
Net non-cash operating items			(79,449)	(8,139)
Supplemental information:
Interest paid			10	11
Income tax refunds			2,980	255
Income tax payments			$ 163	$ 138

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Accumulated Other Comprehensive Income (Loss) (Components of Accumulated Other Comprehensive Loss) (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended			12 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018	Dec. 31, 2018
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss), beginning balance		$ (17,620)			$ (17,620)
Other comprehensive income (loss), Net-of-tax Amount	$ (6,646)		$ 628		(13,052)		$ 7,772
Accumulated other comprehensive income (loss), ending balance	(30,672)				(30,672)	$ (17,620)		$ (17,620)
Postretirement Benefits [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss), beginning balance		(14,656)		$ (16,454)	(14,656)		(16,454)	(16,454)
Other comprehensive income (loss) before reclassification								953
Amounts reclassified from accumulated other comprehensive income (loss)					395			845
Other comprehensive income (loss), Net-of-tax Amount					395			1,798
Accumulated other comprehensive income (loss), ending balance	(14,261)				(14,261)	(14,656)		(14,656)
Proportionate Share of Telesat Other Comprehensive Loss [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss), beginning balance		(2,964)		(20,824)	(2,964)		(20,824)	(20,824)
Other comprehensive income (loss) before reclassification					(13,447)			22,033
Amounts reclassified from accumulated other comprehensive income (loss)
Other comprehensive income (loss), Net-of-tax Amount					(13,447)			22,033
Tax Cuts and Jobs Act, reclassification of tax effect from accumulated other comprehensive loss to accumulated deficit								(4,173)
Accumulated other comprehensive income (loss), ending balance	(16,411)				(16,411)	(2,964)		(2,964)
Accumulated Other Comprehensive Loss [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss), beginning balance		(17,620)		(37,278)	(17,620)		$ (37,278)	(37,278)
Other comprehensive income (loss) before reclassification					(13,447)			22,986
Amounts reclassified from accumulated other comprehensive income (loss)					395			845
Other comprehensive income (loss), Net-of-tax Amount	(6,646)	$ (6,406)	$ 628	$ 7,144	(13,052)	16,059		23,831
Tax Cuts and Jobs Act, reclassification of tax effect from accumulated other comprehensive loss to accumulated deficit								(4,173)
Accumulated other comprehensive income (loss), ending balance	$ (30,672)				$ (30,672)	$ (17,620)		$ (17,620)

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Accumulated Other Comprehensive Income (Loss) (Components of Other Comprehensive Income and Related Tax Effects) (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Accumulated Other Comprehensive Loss [Abstract]
Amortization of prior service credits and net actuarial loss, Before-Tax Amount	[1]	$ 271	$ 263	$ 501	$ 532
Proportionate share of Telesat Holdco other comprehensive income (loss), Before-Tax Amount		(6,861)	532	(13,450)	9,309
Other comprehensive income (loss), Before-Tax Amount		(6,590)	795	(12,949)	9,841
Amortization of prior service credits and net actuarial loss, Tax (Provision) Benefit		(58)	(56)	(106)	(112)
Proportionate share of Telesat Holdco other comprehensive income (loss), Tax (Provision) Benefit		2	(111)	3	(1,957)
Other comprehensive income, Tax (Provision) Benefit		(56)	(167)	(103)	(2,069)
Amortization of prior service credits and net actuarial gain (loss), Net-of-Tax Amount		213	207	395	420
Proportionate share of Telesat Holdco other comprehensive income (loss), Net-of-Tax Amount		(6,859)	421	(13,447)	7,352
Other comprehensive income (loss), Net-of-tax Amount		$ (6,646)	$ 628	$ (13,052)	$ 7,772

[1] Reclassifications are included in other expense.

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Other Current Assets (Schedule of Other Current Assets) (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Other Current Assets [Abstract]
Indemnification receivable from SSL for pre-closing taxes (see note 13)	$ 672	$ 2,410
Due from affiliates	176	161
Prepaid expenses	557	151
Other	508	510
Total other current assets	$ 1,913	$ 3,232

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Investments in Affiliates (Narrative) (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Jan. 01, 2019	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Investments in and Advances to Affiliates [Line Items]
Investments in affiliates		$ 94,406		$ 94,406		$ 24,574
Proportionate share of Telesat Holdco other comprehensive income (loss), Before-Tax Amount		$ (6,861)	$ 532	$ (13,450)	$ 9,309
Telesat Canada [Member]
Investments in and Advances to Affiliates [Line Items]
Economic interest in affiliate		62.70%		62.70%
Voting interest in affiliate		32.60%		32.60%
Investments in affiliates		$ 94,406		$ 94,406		24,574
Operating lease right of use asset	$ 19,600
Operating lease liability	$ 20,000
Proportionate share of Telesat Holdco other comprehensive income (loss), Before-Tax Amount				(13,500)
Consulting fees payable in cash				5,000
XTAR, LLC [Member]
Investments in and Advances to Affiliates [Line Items]
Investments in affiliates		$ 0		$ 0		0
Percentage of ownership interest		56.00%		56.00%
Globalstar do Brasil S.A. [Member]
Investments in and Advances to Affiliates [Line Items]
Investments in affiliates		$ 0		$ 0		$ 0
Equity Method Investment Senior Secured Credit Facility [Member] | Telesat Canada [Member]
Investments in and Advances to Affiliates [Line Items]
Minimum total leverage ratio		4.50		4.50
Minimum total leverage ratio to incur debt and make payments		4.75		4.75

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Investments in Affiliates (Investments in Affiliates) (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Schedule of Equity Method Investments [Line Items]
Investments in affiliates	$ 94,406	$ 24,574
Telesat Canada [Member]
Schedule of Equity Method Investments [Line Items]
Investments in affiliates	$ 94,406	$ 24,574

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Investments in Affiliates (Equity in Net Income (Losses) of Affiliates) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Schedule of Equity Method Investments [Line Items]
Equity in net income (loss) of affiliates	$ 41,278	$ (3,455)	$ 83,282	$ 1,639
Telesat Canada [Member]
Schedule of Equity Method Investments [Line Items]
Equity in net income (loss) of affiliates	$ 41,278	$ (3,455)	$ 83,282	$ 1,639

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Investments in Affiliates (Equity Method Investment, Summarized Financial Data) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Summary Financial Data:
Current assets	$ 741,714		$ 741,714		$ 628,125
Total assets	4,068,167		4,068,167		3,942,847
Current liabilities	118,201		118,201		139,401
Long-term debt, including current portion	2,756,055		2,756,055		2,764,599
Total liabilities	3,464,565		3,464,565		3,474,504
Shareholders' equity	603,602		603,602		$ 468,343
Revenues	172,995	$ 164,114	340,639	$ 348,980
Operating expenses	(30,405)	(26,933)	(68,384)	(57,536)
Depreciation, amortization and stock-based compensation	(54,093)	(48,287)	(107,891)	(96,786)
Other operating income (expense)	(10)	(15)	(65)	(13)
Operating income	88,487	88,879	164,299	194,645
Interest expense	(46,492)	(42,520)	(93,335)	(87,608)
Foreign exchange (loss) gain	45,946	(45,777)	98,415	(109,078)
Gain (loss) on financial instruments	(21,263)	(1,767)	(36,375)	30,616
Other income (expense)	4,272	2,973	8,106	4,591
Income tax provision	(6,481)	(7,815)	(11,036)	(31,585)
Net (loss) income	$ 64,469	$ (6,027)	$ 130,074	$ 1,581

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Other Current Liabilities (Schedule of Other Current Liabilities) (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Other Current Liabilities [Abstract]
Operating lease liability, current	$ 677
Operating Lease, Liability, Statement of Financial Position [Extensible List]	Liabilities Current
Due to affiliate	$ 3	$ 164
Accrued professional fees	805	1,206
Pension and other postretirement liabilities	69	69
Accrued liabilities	51	56
Other current liabilities, total	$ 1,605	$ 1,495

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Income Taxes (Narrative) (Details) $ in Thousands	Jun. 30, 2019 USD ($)
Income Taxes [Abstract]
Unrecognized tax benefits	$ 43,000
Accrued tax penalties	0
Unrecognized tax benefits, interest on income taxes accrued	1,200
Unrecognized tax benefits that would reduce the income tax provision	$ 6,600

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Income Taxes (Summary of Income Tax Benefit (Provision)) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Taxes [Abstract]
Current income tax provision	$ (316)	$ (834)	$ (918)	$ (1,388)
Deferred income tax (provision) benefit	(1,844)	5,902	(3,308)	7,043
Income tax benefit (provision)	$ (2,160)	$ 5,068	$ (4,226)	$ 5,655

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Income Taxes (Summary of Uncertain Tax Positions Included in Income Tax Provision) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Taxes [Abstract]
Current (provision) benefit for UTPs	$ (277)	$ (747)	$ (737)	$ (1,227)
Deferred benefit (provision) for UTPs	60	157	153	258
Tax (provision) benefit for UTPs	$ (217)	$ (590)	$ (584)	$ (969)

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Income Taxes (Summary of Changes to Company's Liabilities For UTPs) (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($)
Income Taxes [Abstract]
Opening balance - January 1	$ 13,315
Current provision for potential additional interest	737
Ending balance	$ 14,052

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Other Liabilities (Schedule of Long Term Liabilities) (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Other Liabilities [Abstract]
Indemnification liabilities (see Note 13)	$ 167	$ 184
Liabilities for uncertain tax positions	14,052	13,315
Long-term liabilities	$ 14,219	$ 13,499

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Stock-Based Compensation (Narrative) (Details)	6 Months Ended
	Jun. 30, 2019 shares
Stock-Based Compensation [Abstract]
Unconverted restricted stock units	75,262

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Earnings Per Share (Narrative) (Details) - Telesat Canada [Member]	6 Months Ended
	Jun. 30, 2019
Economic interest in affiliate	62.70%
Percentage of economic interest as result of dilution upon exercise of stock options	62.30%

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Earnings Per Share (Schedule of Dilutive Impact of Equity Method Investee Stock Options) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Earnings Per Share [Abstract]
Income from continuing operations — basic	$ 38,227	$ 484	$ 76,743	$ 4,778
Less: Adjustment for dilutive effect of Telesat stock options	(230)		(484)	(10)
Income from continuing operations — diluted	$ 37,997		$ 76,259	$ 4,768

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Earnings Per Share (Schedule of Weighted Average Number of Shares for Calculating Diluted Earnings Per Share) (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Earnings Per Share [Abstract]
Weighted average common shares outstanding	30,933	30,933	30,933	30,933
Unconverted restricted stock units	75	75	75	75
Common shares outstanding for diluted earnings per share	31,008	31,008	31,008	31,008

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Pensions and Other Employee Benefits Plans (Components of Net Periodic Cost) (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost	[1]	$ 183	$ 170	$ 361	$ 357
Interest cost	[2]	499	463	1,009	927
Expected return on plan assets	[2]	(609)	(657)	(1,216)	(1,314)
Amortization of net actuarial loss (gain)	[2]	272	257	503	520
Net periodic cost		345	233	657	490
Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Interest cost	[2]	5	4	10	8
Amortization of net actuarial loss (gain)	[2]	(1)		(2)
Amortization of prior service cost (credit)	[2]		6		12
Net periodic cost		$ 4	$ 10	$ 8	$ 20

[1] Included in general and administrative expenses.

[2] Included in other expense.

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Financial Instruments, Derivative Instruments and Hedging (Details) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Financial Instruments, Derivative Instruments and Hedging [Abstract]
Derivative instruments	$ 0	$ 0

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Commitments and Contingencies (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Jan. 01, 2019	Dec. 31, 2018
Contingencies And Commitments [Line Items]
Operating lease liability					$ 300
Right-of-use asset	$ 661		$ 661		$ 300
Sublease income	$ 0	$ 0	0	$ 0
Operating lease payments			$ 300
Operating lease, term of contract	12 months		12 months
Operating lease, discount rate	7.50%		7.50%
Sale of SSL, Nov. 02, 2012 [Member] | Pre Closing Taxes Indemnification [Member]
Contingencies And Commitments [Line Items]
Indemnification refund receivable	$ 700		$ 700			$ 2,400
Indemnification refund received	1,700
Globalstar do Brasil S.A. [Member]
Contingencies And Commitments [Line Items]
Loss contingency accrual	$ 200		$ 200			$ 200

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Commitments and Contingencies (Operating Leases Expense Net of Sublease Income) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Commitments and Contingencies [Abstract]
Rent expense	$ 171		$ 334
ASU 2016-02 Transition [Abstract]
Rent expense		$ 159		$ 318

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Commitments and Contingencies (Schedule of Future Minimum Payments) (Details) $ in Thousands	Jun. 30, 2019 USD ($)
Stock-Based Compensation [Abstract]
Operating lease liability, current, 2019	$ 332
Future interest, 2019	18
Future Lease payments, 2019	350
Operating lease liability, current, 2020	345
Future interest, 2020	5
Future Lease payments, 2020	350
Operating lease liability, current, Total	$ 677
Operating Lease, Liability, Statement of Financial Position [Extensible List]	Liabilities Current
Future interest, Total	$ 23
Future Lease payments, Total	$ 700

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Related Party Transactions (Narrative) (Details) - USD ($)	3 Months Ended			6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2013	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018	Dec. 31, 2009
Related Party Transaction [Line Items]
Amounts due under the transaction	$ 176,000			$ 176,000		$ 161,000
Transaction, Consulting Agreement [Member] | Director [Member]
Related Party Transaction [Line Items]
Related party transaction, date				Dec. 14, 2012
Transaction fee	360,000	$ 360,000		$ 720,000	$ 720,000
Transaction income during the period	$ 11,250	11,250		22,500	22,500
Monthly Fee [Member] | Transaction, Consulting Agreement [Member] | Director [Member]
Related Party Transaction [Line Items]
Transaction fee				$ 120,000
Telesat Canada [Member]
Related Party Transaction [Line Items]
Economic interest in affiliate	62.70%			62.70%
Common stock, percentage acquired by an unaffiliated third party				90.00%
Duration for shares to be paid, days				10 days
Telesat Canada [Member] | Transaction, Consulting Agreement [Member]
Related Party Transaction [Line Items]
Related party transaction, date				Oct. 31, 2007
Consulting agreement term				The Consulting Agreement has a term of seven-years with an automatic renewal for an additional seven-year term
Transaction income during the period	$ 1,250,000	$ 1,250,000		$ 2,500,000	2,500,000
Transaction payments received during the period				2,400,000	$ 2,400,000
Telesat Canada [Member] | Annual Fee [Member] | Transaction, Consulting Agreement [Member]
Related Party Transaction [Line Items]
Transaction fee				5,000,000
Telesat Canada [Member] | Annual Fee [Member] | Transaction Participation In Welfare Plans Administrative Fee [Member]
Related Party Transaction [Line Items]
Transaction fee				$ 100,000
Telesat Canada [Member] | Years 2003 to 2006 [Member] | Brazil [Member]
Related Party Transaction [Line Items]
Tax assessment imposed audit							$ 900,000
XTAR, LLC [Member]
Related Party Transaction [Line Items]
Percentage of ownership interest	56.00%			56.00%
XTAR, LLC [Member] | Transaction, Management Agreement [Member]
Related Party Transaction [Line Items]
Due from affiliates	$ 6,700,000			$ 6,700,000
Amount of doubtful accounts receivable	$ 6,600,000			$ 6,600,000		$ 6,600,000
Management fee charged as a percentage of revenue			3.70%
MHR Funds [Member]
Related Party Transaction [Line Items]
Percentage of outstanding voting common stock				39.90%		39.90%
Percentage of combined ownership of voting and non-voting common stock	58.40%			58.40%		58.40%