Note 8. Satellite Network and Other Equipment

Satellite network and other equipment consisted of the following:


	Useful life (years)		December 31,
	Useful life (years)		2013			2012
Land			$	381		$	381
Satellite network		1-10		29,362			24,976
Capitalized software		3-7		4,563			3,009
Computer hardware		3		2,419			1,852
Other		2-7		2,125			1,703
Assets under construction				118,806			89,658

				157,656			121,579
Less: accumulated depreciation and amortization				(24,628	)		(20,371	)

			$	133,028		$	101,208

During the years ended December 31, 2013 and 2012, the Company capitalized costs attributable to the design and development of internal-use software in the amount of $1,754 and $857, respectively. Depreciation and amortization expense for the years ended December 31, 2013, 2012 and 2011 was $4,616, $3,800 and $3,406, respectively. This includes amortization of internal-use software of $611, $388 and $347 for the years ended December 31, 2013, 2012 and 2011, respectively.

During the three months ended June 30, 2013, the Company lost communications with one of its plane C satellites. The Company does not expect the loss of this satellite to materially affect its business. The satellite was fully depreciated.

On October 7, 2012, the first prototype of the next-generation satellites was launched on the Cargo Re-Supply Services mission aboard the SpaceX Falcon 9 launch vehicle from Cape Canaveral, FL. The prototype satellite flying as a secondary payload on this mission was separated from the Falcon 9 launch vehicle. However, due to an anomaly on one of the Falcon 9’s first stage engines, the rocket did not comply with a pre-planned International Space Station safety gate to allow it to execute the second burn. For this reason, the next-generation prototype was deployed into a lower orbit as the result of a pre-imposed safety check required by NASA. As a result of the lower than intended orbit, the prototype satellite de-orbited on October 10, 2012 despite all available efforts to raise the orbit using the satellite’s on-board propulsion system. As a result, the Company recognized during the fourth quarter of 2012 an impairment charge–satellite network of $9,793.

During the fourth quarter of 2012, the Company received $10,000 from its insurer in connection with the settlement of an insurance claim arising from the loss of the prototype satellite, which represented the full amount recoverable under the insurance policy. As a result, the Company recorded an insurance recovery-satellite network of $10,000 in its consolidated statements of operations.

In October 2012, one of the Company’s first-generation satellites experienced an anomaly that resulted in loss of contact with that satellite. The most likely cause of this anomaly was a component failure that impacted the satellites ability to transmit a communication signal to the gateway earth stations. The Company does not expect the absence of this satellite to materially affect its business. The satellite was fully depreciated.

For the year ended December 31, 2012, the Company adjusted satellite network and accumulated depreciation and amortization by $14,550 due to fully depreciated satellites that are no longer placed in service.