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Satellite Network and Other Equipment, Net
12 Months Ended
Dec. 31, 2019
Property Plant And Equipment [Abstract]  
Satellite Network and Other Equipment, Net

Note 6.    Satellite Network and Other Equipment, Net

Satellite network and other equipment, net consisted of the following:

 

 

 

December 31,

 

 

 

2019

 

 

2018

 

Land

 

$

381

 

 

$

381

 

Satellite network

 

 

198,746

 

 

 

195,886

 

Capitalized software

 

 

83,320

 

 

 

67,509

 

Computer hardware

 

 

6,528

 

 

 

5,850

 

Other

 

 

7,787

 

 

 

5,610

 

Assets under construction

 

 

13,832

 

 

 

12,489

 

 

 

 

310,594

 

 

 

287,725

 

Less: accumulated depreciation and amortization

 

 

(165,041

)

 

 

(127,655

)

 

 

$

145,553

 

 

$

160,070

 

 

During the years ended December 31, 2019, 2018 and 2017, the Company capitalized internal costs attributable to the design, development and enhancement of the Company’s products and services that have not yet been placed into service and internal-use software in the amounts of $13,945, $12,817 and $12,776, respectively.

Depreciation and amortization expense for the years ended December 31, 2019, 2018 and 2017 was $37,717, $36,609 and $33,889, respectively, including amortization of internal-use software of $3,117, $3,433 and $6,186 for the years ended December 31, 2019, 2018 and 2017, respectively.

For the years ended December 31, 2019, 2018 and 2017, 45%, 47% and 61% of depreciation and amortization expense, respectively, relate to cost of services and 7%, 9% and 8%, respectively, relate to cost of product sales, as these assets support the Company’s revenue generating activities.

As of December 31, 2019 and 2018, assets under construction primarily consisted of costs associated with acquiring, developing, enhancing and testing software and hardware for internal and external use that have not yet been placed into service.

One OG2 satellite that was launched in December 2015 experienced a solar array anomaly in July 2016 that resulted in the satellite entering a safe mode and being taken out of commercial service. This satellite had previously been intermittently providing AIS service and regularly communicating with the ground infrastructure. In April 2017, communication was lost with this OG2 satellite. The Company’s satellite engineering team developed and uploaded new software designed to prevent a similar solar array anomaly from occurring on other OG2 satellites. 

In June 2017, there was a loss of communication with the prototype OG2 satellite that was launched in December 2015, and in July 2017 there was a loss of communication with an OG2 satellite that was launched in July 2014. The Company recorded a non-cash impairment charge of $31,224 in the quarter ended September 30, 2017 to write-off the net book value of the three OG2 satellites. In addition, the Company decreased satellite network and other equipment by $39,576 and the associated accumulated depreciation by $8,352 to remove the assets as of September 30, 2017.

In October 2018, the Company experienced a communication issue with an additional OG2 satellite. The Company remains in operational control of this satellite and is developing new software in an attempt to restore AIS and/or messaging services.