Explaining losses to the board considering current economic conditions

They should already know about current and near-term losses. If not, you either don't do many board meetings and/or they don't pay much attention! That said, I find boards hate to hear the "it's the economy" excuse. That works better for shortfalls of top line growth, but even in slow or no growth environments, the one thing the company can control is the expense line(s). If I'm in a position of explaining losses, it should be based on a bridge. The bridge starts with "here is where we thought we were going to be". You explain the investments you made and the bets you placed at the beginning of the year, and you walk them through where your assumptions were wrong and the effects of each missed assumption drive your bridge from beginning to end.

If you "did it right", you explained this plan at the end of last year to your board (aka the budget process for 2011) and they blessed your budget. So they should already have some familiarity with your plan of record, and they should have great visibility into your first 3 Q's of results this year (depending on your fiscal calendar). So none of this should come as a surprise.

I would be most prepared to revisit the assumptions, where those went wrong, and why you continued making the bets rather than turning the ship due to results you were seeing. It's also good to come in to the board meeting having a)previewed this with the board members one at a time, offline, and b)having created your good alternate plan. As to point "b", that's things like, "we're shutting the production line down and laying off the shift. This will result in $X savings after severance" etc.. Whatever your plan is, have it in place, have that previewed to the board, so that the board meeting itself is spent on discussing the merits/demerits of your plan and the board can come to a concensus. In other words, get way in front of this thing. You can either be on the train, or under it.