LORAL THIRD QUARTER NET INCOME INCREASES 25% TO $71 MILLION; EARNINGS PER SHARE UP 22% TO 83 CENTS.

NEW YORK--(BUSINESS WIRE)--January 17, 1995--Loral Corporation (NYSE:LOR) today reported that its net income for the third quarter ended December 31, 1994, rose 25 percent to $71.0 million, compared with $56.9 million in the same period last year. Earnings per share for the quarter increased 22 percent to 83 cents, compared with 68 cents in the third quarter last year.

Sales for the quarter were $1.33 billion, compared with $902 million in the third quarter last year. Bookings were $1.43 billion, compared with $875 million in the same period a year ago. Backlog at December 31, 1994, was $6.37 billion, compared with $3.44 billion at December 31, 1993.

Results for the current period include Loral Federal Systems, which was acquired January 1, 1994.

Free cash flow after capital expenditures and before dividends was $171 million for the third quarter of fiscal 1995 and $446 million for the nine months. The company's significant cash generation was not at the expense of investment in the future. IR&D and capital expenditures for the nine months ended December 31, 1994, were $164 million and $78 million, respectively, compared with $104 million and $53 million for the prior-year nine months, respectively. Shareholders' equity at the end of the period was $1.58 billion and cash totaled $198 million. Debt net of cash, as of December 31, 1994, was $1.22 billion, and was reduced by $146 million in the third quarter and $336 million during the first nine months of fiscal 1995. Net income for the nine months ended December 31, 1994, increased 33 percent to $192.2 million, or $2.26 per share, compared with $144.0 million, or $1.72 per share, for the comparable period last year. Excluding a one-time non-recurring gain in the second quarter of fiscal 1995, net income rose 29 percent.

Sales for the nine months ended December 31, 1994, were $4.03 billion, compared with $2.59 billion in the first nine months of fiscal 1994. Bookings were $3.84 billion, compared with $2.15 billion for the prior year's first nine months.

Bernard L. Schwartz, chairman of the board and chief executive officer of Loral, said, "Third quarter results were better than expected and reflect improvement in margins and continued excellent program management. The increase in earnings for the quarter was achieved even after a $2.4 million after-tax expense from our investment in the Globalstar satellite-based telecommunications system.

"Bookings for the quarter increased 11 percent from the same period last year after factoring in Federal Systems for the prior- year period. Bookings for the nine-month period, similarly adjusted, were ahead by 13 percent.

"Free cash flow of $171 million for the quarter was particularly strong and exceeded our plans. For the nine months, cash flow hit a record $446 million. Our ratio of net debt to equity continues to decline rapidly, reaching .78-to-1 at December 31, 1994, compared with 1.13-to-1 at March 31, 1994.

"Our earnings expectation for the full year remains strong and will meet our predictions that net income will rise by more than 20% over last year," said Mr. Schwartz.

Loral received a significant industrial contract from Ford Motor Company following the close of the quarter, which applies the company's capabilities in systems integration and technical services to commercial markets. Called the Computer Hardware and Maintenance Program (CHAMP), the three-year contract with three one-year options calls for Loral to maintain and support throughout North America all of Ford's minicomputer, microcomputer, CAD/CAM/CAE and plant floor systems, including related peripherals.

Another important development in the quarter was the booking of an initial $95 million of a $515 million contract from the U.S. Army for the engineering and manufacturing development (EMD) of Loral's Patriot Advanced Capability (PAC-3) missile, a program whose long-term potential is in excess of $2 billion. Formerly called the Extended-Range Interceptor (ERINT), Loral's PAC-3 missile is being developed for use in the Army's Patriot air- defense weapon system.

Also in tactical weapons, Loral booked $87 million for its Army Tactical Missile System (ATACMS), including a contract to produce 148 ATACMS missiles for the U.S. Army Missile Command. And the company's Predator Short-Range Assault Weapon, which is being developed under an $80 million EMD contract for the U.S. Marine Corps, was extended to the U.S. Army Missile Command under a demonstration contract for a Multi-Purpose Individual Munition version of Predator. In addition, Loral booked more than $100 million in follow-on orders for other tactical weapons and guidance programs, including the seeker for the Theater High Altitude Area Defense (THAAD) system, the seeker for the Army's Javelin antitank weapon, the Vertical Launch Antisubmarine Rocket (VLA) for the U.S. Navy, and integration activities on the Multiple Launch Rocket System (MLRS).

In command, control, communications and intelligence (C3I), Loral booked about $320 million for the quarter, including initial funding under a $158 million award from the U.S. Air Force for operations, maintenance, integration and technical support at the National Test Facility (NTF) at Falcon Air Force Base in Colorado Springs, Colo. Under the contract, Loral will operate, maintain and upgrade simulation and test, data processing and communications systems at the NTF, and will provide support services.

The combined satellite control programs for the Air Force, including Command and Data Processing and the Network Support Program/Consolidated Space Test Center Support Program (NSP/CSP), added more than $100 million to the company's follow-on bookings in C3I for the third quarter. Also for the Air Force, Loral was awarded a contract to provide operations and maintenance for base communications at three U.S. Air Force military installations in Frankfurt, Germany.

In training and simulation, the company booked about $260 million during the quarter, including follow-on work for the Special Operations Forces Air Crew Training System (SOF ATS) for the U.S. Air Force, the Close Combat Tactical Trainer (CCTT) networked simulators for the U.S. Army and the Tethered Aerostat Radar System (TARS).

Loral's electronic combat programs for British and U.S. helicopters and Special Operations Forces (SOF) transports added more than $120 million in follow-on third quarter bookings. These programs include the EH-101 "Merlin" antisubmarine warfare (ASW) helicopter for the British Royal Navy, the U.S. Navy's Light Airborne Multi-Purpose System (LAMPS) MK III ASW helicopter and the SOF "Combat Talon II" aircraft.

Among the more than $265 million booked in systems integration during Loral's third quarter was a contract worth $21 million for 125 Remote Computer Reader (RCR) systems for the U.S. Postal Service. The company also booked about $80 million in follow-on orders for its Document Processing System, which will assist the Internal Revenue Service in improving its processing of millions of tax returns annually, and more than $100 million for the Advanced Automation System (AAS), which will modernize the air traffic control centers for the Federal Aviation Administration.

Space Systems/Loral (SS/L), whose results are not consolidated with those of Loral, reported third quarter sales of $147 million, bookings of $94 million and ending backlog of $754 million. For the nine months ended December 31, 1994, SS/L had sales of $451 million and bookings of $444 million.

SS/L's GOES-8 satellite, the nation's first in a series of advanced weather satellites, became operational in the fall of 1994 and is performing well in space, according to officials at the U.S. Commerce Department's National Oceanic and Atmospheric Administration and NASA.

SS/L's satellites recently marked 500 years of on-orbit service in space, reaffirming the company's leadership in advanced spacecraft design, manufacturing and delivery. The 500-year milestone of reliability and longevity, achieved during the third quarter, represents the combined success of 71 communications and weather satellites built by SS/L during the past three decades. Of the 71 satellites placed in orbit, 57 have already exceeded their projected mission lifetimes.

During the quarter, Globalstar L.P., for which Loral is the managing general partner, took an additional step in its financing activities with the formation of Globalstar Telecommunications Limited, which filed a registration statement with the Securities and Exchange Commission for a worldwide public offering of 12 million shares of common stock. The SEC filing covers the registration of shares of common stock to be offered in the United States, Europe and Asia.

Loral Corporation, headquartered in New York City, is a high- technology company that primarily concentrates in defense electronics, communications, space and systems integration.

               LORAL CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF INCOME
             (In millions, except per share amounts)
                           (Unaudited)

                           Three Months Ended    Nine Months Ended
                                 December 31,          December 31,
                               1994       1993       1994       1993

Sales                         $1,334.9   $  902.0   $4,025.0   $2,588.1

Costs and Expenses             1,190.0      804.0    3,643.4    2,341.6

Operating Income                 144.9       98.0      381.6      246.5

Interest Expense, Net             25.1        7.6       62.5       21.4

Income Before Income Taxes
 and Equity in Net Income
 (Loss) of Affiliates            119.8       90.4      319.1      225.1

Income Taxes                      45.6       34.4      121.3       83.1

Income Before Equity in Net
 Income (Loss) of Affiliates      74.2       56.0      197.8      142.0

Equity in Net Income
 (Loss) of Affiliates            (3.2)        0.9      (5.6)        2.0

Net Income                       $71.0      $56.9     $192.2     $144.0

Earnings Per Share (Primary)     $0.83      $0.68      $2.26      $1.72

Weighted Average Number of
 Common Shares Outstanding
 (Primary)                        85.5       83.9       85.1       83.6

LORAL CORPORATION AND SUBSIDIARIES

SELECTED FINANCIAL DATA

(In millions)

(Unaudited)

Three Months Ended Nine Months Ended

December 31, December 31,

1994 1993 1994 1993 Free Cash Flow (After Capital Expenditures, Before Dividends) $ 170.8 $ 61.2 $ 445.8 $ 231.9

Bookings $1,430.7 $ 874.9 $3,844.7 $2,148.5

Backlog at December 31, $6,367.4 $3,441.6

Cash and Cash Equivalents $ 198.4 $203.2

Total Debt $1,421.7 $ 430.7

Reduction in Net Debt $ 145.9 $ 49.7 $ 336.2 $ 189.7

Shareholders' Equity $1,576.5 $1,307.9

Space Systems/Loral:

Sales $ 146.6 $ 164.6 $ 450.8 $ 424.4

Bookings $ 94.4 $ 42.8 $ 444.4 $ 591.2

Backlog at December 31, $ 754.5 $ 866.2





CONTACT: Loral Corporation

Gerard F. Corbett, 212/697-1105