Delaware (State or other jurisdiction of incorporation or organization) | 26-1344998 (I.R.S. Employer Identification No.) |
Title of Each Class | Name of Each Exchange on Which Registered | |
Common Stock, $0.001 par value | NASDAQ Global Select Market | |
6.75% Series B Cumulative Perpetual Convertible Preferred Stock, $0.0001 par value | NASDAQ Global Select Market |
Large accelerated filer | ý | Accelerated filer | ☐ |
Non-accelerated filer | ☐ (Do not check if a smaller reporting company) | Smaller Reporting Company | ☐ |
Emerging Growth Company | ☐ |
PART I | ||
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PART II | ||
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PART III | ||
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PART IV | ||
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• | mobile satellite services, which provide customers with voice and data connectivity to mobile and fixed devices using ground facilities and networks of geostationary, or GEO, satellites, which are located approximately 22,300 miles above the equator, medium earth orbit satellites, which orbit between approximately 6,400 and 10,000 miles above the earth’s surface, or low earth orbit, or LEO, satellites, such as those in our constellation, which orbit between approximately 300 and 1,000 miles above the earth’s surface; |
• | fixed satellite services, which use GEO satellites to provide customers with broadband communications links between fixed points on the earth’s surface; and |
• | terrestrial services, which use a network of land-based equipment, including switching centers and radio base stations, to provide wireless or wireline connectivity and are complementary to satellite services. |
• | Iridium NEXT. We expect to complete our Iridium NEXT constellation replacement in 2018. Iridium NEXT enables new products and services, including our planned global broadband offering, Iridium CertusSM, supports more bandwidth and higher speeds for new products, provides service continuity and backwards compatibility to our first-generation constellation, and supports Aireon’s aircraft tracking service, as well as other hosted payload missions. |
• | Attractive and growing markets. We believe that the mobile satellite services industry will continue to experience growth driven by the increasing awareness of the need for reliable mobile voice and data communications services, the lack of coverage by terrestrial wireless systems of most of the earth’s surface, and the continued development of innovative, lower cost technology, applications integrating mobile satellite products and services and the continued development of the IoT. Only satellite providers can offer global coverage, and the satellite industry is characterized by significant financial, technological and regulatory barriers to entry. |
• | True global coverage. Our network provides true global coverage, which none of our competitors, whether LEO or GEO, can offer. Our network design of 66 operational satellites relies on an interlinked mesh architecture to transmit signals from satellite to satellite, which reduces the need for multiple local ground stations around the world and facilitates the global reach of our services. GEO satellites orbit above the earth’s equator, limiting their visibility to far northern or southern latitudes and polar regions. LEO satellites from operators like Globalstar and ORBCOMM use an architecture commonly referred to as “bent pipe,” which requires voice and data transmissions to be immediately routed to ground stations in the same region and can only provide real-time service when they are within view of a ground station, limiting coverage to areas near where they have been able to license and locate ground infrastructure. The LEO design of our satellite constellation produces minimal transmission delays compared to GEO systems due to the shorter distance our signals have to travel. Additionally, LEO systems typically have smaller antenna requirements and are less prone to signal blockage caused by terrain and other environmental factors than GEO satellite networks. As a result, we believe that we are well-positioned to capitalize on the growth in our industry from end users who require reliable, easy-to-use communications services in all locations. |
• | Wholesale distribution network. The specialized needs of our global end users span many markets, including emergency services, maritime, aviation, government, utilities, oil and gas, mining, recreation, forestry, heavy equipment, construction and transportation. We sell our products and services to commercial end users primarily through a wholesale distribution network of service providers, VARs and VAMs, which often specialize in a particular line of business. Our distributors use our products and services to develop innovative and integrated communications solutions for their target markets, often combining our products with other technologies, such as GPS and terrestrial wireless technology. In addition to promoting innovation, our wholesale distribution model allows us to capitalize on the research and development expenditures of our distribution partners, while lowering overall customer acquisition costs and mitigating some risks, such as consumer relationship risks. By supporting these distributors as they develop new products, services and applications, we believe we create additional demand for our products and services and expand our target markets at a lower cost than would a more direct marketing model. We believe our distribution network can continue to grow with us and increase our market penetration. |
• | Strategic relationship with the U.S. government. The U.S. government is our largest single customer, and we have had a relationship with the DoD since our inception. We believe the DoD views our IoT devices, encrypted handset, DTCS and other products as mission-critical services and equipment. The DoD continues to make significant investments in a dedicated gateway on a U.S. government site to provide operational security and allow DoD handset and IoT users to communicate securely with other U.S. government communications equipment. This gateway is only compatible with our satellite network. In October 2013, we entered into a five-year, fixed-price contract with the U.S. government to provide satellite airtime services for an unlimited number of DoD and other federal government subscribers, with a total contract value of $400 million. We have seen significant annual increases in the number of federal government subscribers during the term of this agreement. As a result, the average cost per user under this agreement has fallen, increasing the value of Iridium services to U.S. government customers. |
• | Complete the deployment of the Iridium NEXT constellation. We have completed four of eight scheduled launches to deploy our next-generation satellite constellation, Iridium NEXT, which is replacing our first-generation constellation with a more powerful satellite network while maintaining backward compatibility with our first-generation system and end-user devices. A fifth launch is scheduled for March 2018. Iridium NEXT maintains our first-generation system’s key attributes, including the capability to upload new software, while providing new and enhanced capabilities, such as higher data speeds and increased capacity. We believe Iridium NEXT will expand our target markets by enabling us to develop and offer a broader range of products and services, including a wider array of cost-effective and competitive broadband and IoT data services through Iridium Certus technology. |
• | Leverage our largely fixed-cost infrastructure by growing our service revenue. Our business model is characterized by high capital costs, primarily incurred every 10 to 15 years, in connection with designing, building and launching new generations of our satellite constellation, but the incremental cost of providing service to additional end users is relatively low. We believe that service revenue will be our largest source of future growth and profits, and we intend to focus on growing both our commercial and government service revenue in order to leverage our largely fixed-cost infrastructure. In particular, we believe that competitive broadband data services through Iridium Certus and IoT services, where we are engaging large, global enterprises as long-term customers for telematics solutions, represent our greatest opportunities for service revenue growth. |
• | Accelerate the development of personal communications capabilities. Part of our strategy for the development of personal mobile satellite communications is to allow users to connect to our network in more ways, including from devices such as smartphones, tablets and laptops through our Iridium GO!® device; by making our technology more accessible and cost-effective for our distribution partners to integrate by licensing our core technologies; by adding new functionality, such as push-to-talk, or PTT, capability, allowing multiple users to participate in talk groups worldwide; by providing rugged, dependable devices and services; and by developing new services, such as Iridium Certus, that will take advantage of the improved capabilities of the Iridium NEXT constellation. |
• | Continue to expand our distribution network. We believe our wholesale distribution network lowers our costs and risks, and we plan to continue to selectively expand our network of service providers, VAMs and VARs and to expand our sales and distribution efforts geographically. We expect that our current and future value-added partners will continue to develop customized products, services and applications targeted to the land mobile, IoT, maritime, aviation and government markets. We believe these markets represent an attractive opportunity for continued subscriber growth. |
• | Continued growth in services provided to the DoD. In October 2013, we executed a five-year Enhanced Mobile Satellite Services, or EMSS, contract with the Defense Information Systems Agency, or DISA. Under the terms of this agreement, we provide Iridium airtime and airtime support to U.S. government and other authorized customers, including voice, low- and high-speed data, paging, broadcast, and distributed tactical communication services. The service fee under the EMSS contract is $88 million per year for the remaining term, and we have begun discussions with the U.S. government on a new EMSS contract, which we expect to enter into later in 2018 or in early 2019. In addition, other services we are developing, such as Iridium Certus and Satellite Time and Location service, provide us with opportunities to offer new products and services to the DoD for an additional fee. |
• | Continue to develop Aireon. Aireon, which we formed in 2011, is our primary hosted payload customer. Aireon received subsequent investments from four ANSPs, NAV CANADA, Enav (Italy), Naviair (Denmark) and the Irish Aviation Authority. Aireon has developed an ADS-B receiver which is hosted on Iridium NEXT and gathers ADS-B position information from aircraft to provide a global air traffic surveillance service. Aireon has contracted to offer its service to our co-investors in Aireon, as well as NATS and other ANSPs, and plans to offer it to other customers worldwide, including the FAA. Aireon has contracted to pay us a fee to host the ADS-B receivers on Iridium NEXT and pays us data service fees for the delivery of the air traffic surveillance data over the Iridium NEXT system. We will also continue to hold an equity stake in Aireon. |
• | Voice and data: Multinational corporations in various sectors use our services for business telephony, e-mail and data transfer services, location-based services, and to provide telephony services for employees in areas inadequately served by terrestrial networks. Oil and gas and mining companies, for example, provide their personnel with our equipment solutions while surveying new drilling and mining opportunities and while conducting routine operations in remote areas that are not served by terrestrial wireless communications networks. In addition, a number of recreational, scientific and other outdoor segments rely on our mobile handheld satellite phones and services for use when beyond terrestrial wireless coverage. In addition, Iridium PTT offers military, first responder, oil and gas, civil government and other users the ability to hold group calls using the Iridium Extreme® PTT handset. Our VAMs and VARs can also develop their own land mobile, fixed, aviation or maritime Iridium PTT devices using the Iridium 9523 PTT core transceiver. |
• | Mobile and remote office connectivity: A variety of enterprises use our services to make and receive voice calls and to establish data, e-mail, internet and corporate network connections. |
• | Public safety and disaster relief: Relief agencies, such as FEMA, and other agencies, such as the Department of Homeland Security, use our products and services in their emergency response plans, particularly in the aftermath of natural disasters such as Hurricane Harvey, Hurricane Irma, Hurricane Maria and the Mexican earthquake and in places like Puerto Rico after the 2017 hurricanes. These agencies generate significant demand for both our voice and data products, especially in advance of the hurricane season in North America. |
• | Public telephone infrastructure: Telecommunications service providers use our services to satisfy regulatory mandates and government expectations regarding the availability of communications services for rural populations currently not served by terrestrial infrastructure. Telstra Corporation, for example, uses our services to provide communications services in some of Australia’s most remote locations. |
• | Heavy equipment monitoring: Large, global heavy equipment original equipment manufacturers, such as Caterpillar Inc., Komatsu Limited, Hitachi Construction Machinery Co. Ltd., CNH Global N.V. and AGCO Corporation, use our global IoT services to monitor their off-road heavy equipment in markets such as construction, mining, agriculture and forestry. |
• | Fleet management: Our global coverage permits our products and services to be used to monitor the location of vehicle fleets, hours of service and engine telemetry data, as well as to conduct two-way communications with drivers around the world. Fleet management companies, such as Trimble Transportation & Logistics, Mix Telematics and Zatix, use our service to provide distance drivers with reliable communication to their dispatchers and their destinations to coordinate changing business needs, and our satellite network provides continuous communications coverage while they are in transit. We expect that the need for more efficient, cost-effective and safer fleet operations, as well as the imposition of regulatory mandates related to driver safety, such as drive-time monitoring, will increase demand for our services in this area. |
• | Fixed-asset monitoring: Multinational corporations, such as oil-field service companies like Schlumberger Limited and ConocoPhillips Company, use our services to run applications that allow remote monitoring and operation of equipment and facilities around the globe, such as oil pipelines and offshore drilling platforms. |
• | Asset tracking: Leveraging IoT applications developed by several of our distributors, companies use our services and related devices to track assets, including personnel, for logistics, theft-prevention and safety purposes. Companies and organizations that have fleets of vehicles use IoT solutions from Iridium distributors to improve the efficiency of their operations. For example, customers use inthinc's waySmart IoT solution to reduce accidents and increase vehicle uptime, and the Department of Homeland Security Office of Enforcement and Removal uses Fleet Management Solutions’ IoT solution to transmit position, direction, speed and other data for management of its vehicle fleet. |
• | Resource management: Our global coverage and data throughput capabilities support natural resource management applications, such as fisheries management systems. CLS and FW Telematics, two of our VARs, have developed applications for the fishing industry that enable regulatory compliance of fishing practices in a number of countries around the world. |
• | Scientific data monitoring: The global coverage of our network supports many scientific data collection applications such as the Argo float program of the National Oceanographic and Atmospheric Administration, or NOAA, and the Global Ocean Observation project Challenger, operated by Rutgers University. These programs rely on our IoT services to collect scientific data from buoys and ocean gliders located throughout the world’s oceans for monitoring and analysis. We believe the increased need for monitoring climate and environmental data associated with global climate change and human impact on the planet will increase demand for these services. |
• | Personal Tracking Devices and Location-Based Services: Several of our VAMs and VARs, such as Garmin, NAL Research and Track24, have introduced small, portable personal tracking devices that will provide personal tracking and data communications services to consumers and commercial end users. In addition, Iridium GO! and the Iridium Extreme handsets offer personal tracking and location-based services. These devices use IoT data services to send location information and other data to web-based portals for tracking of and messaging with users. |
• | Business critical data applications: Ship operators use our services to exchange e-mail and data files and to receive other information such as meteorological reports, emergency bulletins, cargo and voyage data and electronic chart updates. We believe Iridium Pilot provides attractively priced options for shipping operators and fishing fleets seeking increased functionality, as well as for yachts, work boats and other vessels for which traditional marine satellite systems have typically been costly and underperforming. |
• | Voice services: Maritime global voice services are used for both vessel operations and communications for crew welfare. Merchant shipping companies use prepaid phone cards for crew use at preferential around-the-clock flat rates. |
• | Vessel management and asset tracking: Shipping operators, such as China Ocean Shipping Company (COSCO) and Zodiac Shipping Ltd., use our services to manage operations on ships and to transmit data, such as course, speed and fuel stock. Our services are commonly integrated with GPS to provide a real-time position reporting capability. Many fishing vessels are required by law to carry terminals using approved mobile satellite services for tracking purposes as well as to monitor catches and to ensure compliance with geographic fishing restrictions. European Union regulations, for example, require EU-registered fishing vessels of over 15 meters to carry terminals for the purpose of positional reporting of those vessels. Furthermore, new security regulations in some jurisdictions are expected to require tracking of merchant vessels in territorial waters, which would provide an additional growth opportunity for us. |
• | Safety and Security applications: Ships in distress, including as a result of potential piracy, hijack or terrorist activity, rely on mobile satellite voice and data services. The Ship Security and Alert Systems and Long Range Identification Tracking regulations were adopted by the International Maritime Organization, or IMO, to enhance maritime security in response to the threat from terrorism and piracy. Most deep-sea passenger and cargo ships must be fitted with a device that can send an alert message containing the ship’s ID and position whenever the ship is under threat or has been compromised. In addition, the IMO and a NATO advisory group have recommended the installation of a safe room equipped with a standalone secure communication link the crew can use from inside the room to communicate with rescuing forces. Our distribution partners have developed several product solutions using our network to meet these requirements for merchant and fishing vessels. |
• | Aviation operational communications: Aircraft crew and ground operations use our services for air-to-ground telephony and data communications. This includes the automatic reporting of an aircraft’s position and mission-critical condition data to the ground and controller-pilot data link communication for clearance and information services. We provide critical communications applications for numerous airlines and air transport customers including Hawaiian Airlines, United Airlines, UPS, Cathay Pacific Airways and El Al Airlines. These operators rely on our services because other forms of communication may be unaffordable or unreliable in areas such as the polar regions. Rockwell Collins and SITA, SC, the two leading providers of voice and data link communications services and applications to the commercial airline industry, integrate our products and services into their offerings. |
• | Aviation passenger communications: Corporate and private fleet aircraft passengers use our services for air-to-ground telephony and data communications. Operators are currently using our services to enable passengers to e-mail using their own Wi-Fi-enabled mobile devices, including smartphones, without causing interference with aircraft operation. We believe our distributors’ small, lightweight, cost-effective solutions offer an attractive option for aircraft operators, particularly small fleet operators. With the introduction of Iridium Certus, we expect that users in the corporate aviation market, and original equipment manufacturers (OEMs) for business jets, will increase adoption of Iridium for in-flight, passenger data communications. We believe this presents a significant opportunity to increase market penetration and revenues in this market. |
• | Rotary and general aviation applications: We are also a major supplier for rotary aviation applications to end users in a number of markets, including medevac, law enforcement, oil and gas, and corporate work fleets. Companies such as Air Logistics, EagleMed and Air Evac Lifeteam rely on applications from our distributors for traditional voice communications, fleet tracking and management, and real-time flight diagnostics. VARs and VAMs such as Flightcell International Ltd., Garmin International, Inc., Honeywell International, Inc., SkyTrac and Spider Tracks Limited incorporate Iridium products and services into applications for this market. |
• | Air traffic control communications and safety applications: The International Civil Aviation Organization, or ICAO, has approved standards and recommended practices allowing us to provide Aeronautical Mobile Satellite (Route) Services to commercial aircraft on long-haul routes. This allows member states to evaluate and approve our services for safety communications on flights in oceanic and remote airspace. The FAA has approved Iridium for use in the Future Air Navigation Services (FANS) and Automatic Dependent Surveillance – Contract (ADS-C) datalink communications with air traffic control. We are currently conducting an operational evaluation of our voice communications services for air traffic control communications in coordination with the Performance Based Aviation Rules Making Committee (PARC). Aircraft crew and air traffic controllers will be able to use our services for data and voice communications between the aircraft flight deck and ground-based air traffic control facilities. We are the only satellite provider capable of offering such critical flight safety applications around the entire globe, including the polar regions. We believe this particular sector of the market will present us with significant growth opportunities, as our services and applications can serve as a cost-effective alternative to systems currently in operation. |
• | personnel tracking devices; |
• | asset tracking devices for equipment, vehicles and aircraft; |
• | beyond-line-of-sight aircraft communications applications; |
• | submarine communications applications; |
• | specialized communications solutions for high-value individuals; and |
• | specialized, secure, mobile communications and data devices for the military and intelligence community, such as secure satellite handsets with U.S. National Security Agency Type I encryption capability. |
Year Ended December 31, | ||||||||
2017 | 2016 | 2015 | ||||||
United States | 51 | % | 52 | % | 50 | % | ||
Canada | 10 | % | 10 | % | 10 | % | ||
United Kingdom | 10 | % | 11 | % | 11 | % | ||
Other Countries (1) | 29 | % | 27 | % | 29 | % |
(1) | No single country in this group represented more than 10% of our revenue for any of the periods indicated. |
Year Ended December 31, | ||||||||
2017 | 2016 | 2015 | ||||||
Commercial voice traffic (minutes) | 88 | % | 88 | % | 88 | % | ||
Commercial data traffic (kilobytes) | 75 | % | 72 | % | 67 | % |
• | our ability to maintain the health, capacity and control of our first-generation satellites through the deployment of Iridium NEXT; |
• | our ability to operate a hybrid constellation and to successfully replace individual first-generation satellites with their Iridium NEXT replacements; |
• | our ability to complete the Iridium NEXT constellation and related products and services, and, once fully deployed, our ability to maintain the health, capacity and control of the new satellite constellation; |
• | the level of market acceptance and demand for our products and services; |
• | our ability to introduce innovative new products and services that satisfy market demand, including new product and service offerings on Iridium NEXT; |
• | our ability to expand our business using our existing spectrum resources both in the United States and internationally; |
• | our ability to sell our products and services in additional countries; |
• | our ability to maintain our relationship with U.S. government customers, particularly the DoD; |
• | the ability of our distributors to market and distribute our products, services and applications effectively and their continued development of innovative and improved solutions and applications for our products and services; |
• | the effectiveness of our competitors in developing and offering similar services and products; |
• | our ability to de-orbit our first-generation satellites; and |
• | our ability to maintain competitive prices for our products and services and to control our costs. |
• | non-compliance with the covenants under the Credit Facility, including financial covenants and covenants relating to hosted payloads; |
• | cross-default with other indebtedness; |
• | insolvency of any obligor under the Credit Facility; |
• | revocation of the BPIAE insurance policy; |
• | failure to maintain our first-generation satellites or complete Iridium NEXT by a specified date; and |
• | a determination by the lenders that we have experienced a material adverse change in our business. |
• | make capital expenditures; |
• | carry out mergers and acquisitions; |
• | dispose of, or grant liens on, our assets; |
• | enter into transactions with our affiliates; |
• | pay dividends or make distributions to our stockholders; |
• | incur indebtedness; |
• | prepay indebtedness; and |
• | make loans, guarantees or indemnities. |
• | lower than anticipated internally generated cash flows, including from Aireon and other hosted payloads; |
• | inadequate liquidity; |
• | operating and other requirements imposed by the lenders under the Credit Facility; |
• | Thales’s ability to manufacture the Iridium NEXT satellites on time and on budget, including issues that might be found late in the process, for example during systems-level testing; |
• | interference between any hosted payload and our network; |
• | complex integration of our ground segment with the Iridium NEXT satellites and the transition from our first-generation satellites; |
• | denial or delays in receipt of regulatory approvals or non-compliance with conditions imposed by regulatory authorities; |
• | the breakdown or failure of equipment or systems; |
• | non-performance by third-party contractors, including the prime system contractor; |
• | the inability to license necessary technology on commercially reasonable terms or at all; |
• | use of the SpaceX launch vehicle, which has a limited operating history, or the failure of SpaceX to sustain its business; |
• | launch delays or failures or in-orbit satellite failures once launched or the decision to manufacture additional replacement satellites for future launches; |
• | labor disputes or disruptions in labor productivity or the unavailability of skilled labor; |
• | increases in the costs of materials; |
• | changes in project scope; |
• | additional requirements imposed by changes in laws; or |
• | severe weather or catastrophic events, such as fires, earthquakes or storms. |
• | subject us to significant liabilities to third parties, including treble damages; |
• | require disputed rights to be licensed from a third party for royalties that may be substantial; |
• | require us to cease using technology that is important to our business; or |
• | prohibit us from selling some or all of our products or offering some or all of our services. |
• | difficulties in penetrating new markets due to established and entrenched competitors; |
• | difficulties in developing products and services that are tailored to the needs of local customers; |
• | lack of local acceptance or knowledge of our products and services; |
• | lack of recognition of our products and services; |
• | unavailability of, or difficulties in establishing, relationships with distributors; |
• | significant investments, including the development and deployment of dedicated gateways, as some countries require physical gateways within their jurisdiction to connect the traffic coming to and from their territory; |
• | instability of international economies and governments; |
• | changes in laws and policies affecting trade and investment in other jurisdictions, including the United Kingdom’s proposed exit from the European Union; |
• | exposure to varying legal standards, including intellectual property protection in other jurisdictions; |
• | difficulties in obtaining required regulatory authorizations; |
• | difficulties in enforcing legal rights in other jurisdictions; |
• | local domestic ownership requirements; |
• | requirements that operational activities be performed in-country; |
• | changing and conflicting national and local regulatory requirements; |
• | foreign currency exchange rates and exchange controls; and |
• | ongoing compliance with the U.S. Foreign Corrupt Practices Act, U.S. export controls, anti-money laundering and trade sanction laws, and similar anti-corruption and international trade laws in other countries. |
• | failure in the performance of our first-generation or future satellites; |
• | further delays in the launch of Iridium NEXT; |
• | failure of Aireon to successfully develop and market its service; |
• | failure to comply with the terms of the Credit Facility; |
• | actual or anticipated variations in our operating results, including termination or expiration of one or more of our key contracts, or a change in sales levels under one or more of our key contracts; |
• | sales of a large number of shares of our common stock or the perception that such sales may occur; |
• | the dilutive effect of outstanding stock options and other equity awards; |
• | changes in financial estimates by industry analysts, or our failure to meet or exceed any such estimates, or changes in the recommendations of any industry analysts that elect to follow our common stock or the common stock of our competitors; |
• | impairment of intangible assets; |
• | actual or anticipated changes in economic, political or market conditions, such as recessions or international currency fluctuations; |
• | actual or anticipated changes in the regulatory environment affecting our industry; |
• | changes in the market valuations of our competitors; |
• | low trading volume; and |
• | announcements by our competitors regarding significant new products or services or significant acquisitions, strategic partnerships, divestitures, joint ventures or other strategic initiatives. |
Location | Country | Approximate Square Feet | Facilities | Owned/Leased | ||||
McLean, Virginia | USA | 30,600 | Corporate Headquarters | Leased | ||||
Chandler, Arizona | USA | 197,000 | Technical Support Center, Distribution Center, Warehouse and Satellite Teleport Network Facility | Leased | ||||
Leesburg, Virginia | USA | 40,000 | Satellite Network Operations Center | Owned | ||||
Lansdowne, Virginia | USA | 1,884 | Satellite Network Operations Center - Annex | Leased | ||||
Tempe, Arizona | USA | 31,000 | System Gateway and Satellite Teleport Network Facility | Owned Building on Leased Land | ||||
Tempe, Arizona | USA | 25,000 | Operations and Finance Office Space | Leased | ||||
Fairbanks, Alaska | USA | 4,000 | Satellite Teleport Network Facility | Owned | ||||
Svalbard | Norway | 1,800 | Satellite Teleport Network Facility | Owned Building on Leased Land | ||||
Yellowknife, Northwest Territories | Canada | 1,800 | Satellite Teleport Network Facility | Owned Building on Leased Land | ||||
Iqaluit, Nunavut | Canada | 1,800 | Satellite Teleport Network Facility | Owned Building on Leased Land | ||||
Izhevsk, Udmurtia | Russia | 8,785 | System Gateway and Satellite Teleport Network Facility | Leased | ||||
Moscow | Russia | 2,158 | Sales and Administration Offices | Leased |
Common Stock | |||||||
High | Low | ||||||
Quarter Ended March 31, 2016 | $ | 8.53 | $ | 6.14 | |||
Quarter Ended June 30, 2016 | $ | 8.88 | $ | 7.15 | |||
Quarter Ended September 30, 2016 | $ | 9.37 | $ | 6.80 | |||
Quarter Ended December 31, 2016 | $ | 11.15 | $ | 7.50 | |||
Quarter Ended March 31, 2017 | $ | 11.54 | $ | 7.80 | |||
Quarter Ended June 30, 2017 | $ | 11.58 | $ | 9.40 | |||
Quarter Ended September 30, 2017 | $ | 11.50 | $ | 9.68 | |||
Quarter Ended December 31, 2017 | $ | 12.90 | $ | 9.95 |
12/31/2012 | 12/31/2013 | 12/31/2014 | 12/31/2015 | 12/31/2016 | 12/31/2017 | ||||||||||||||||||
Iridium Communications Inc. | $ | 100.00 | $ | 93.01 | $ | 145.09 | $ | 125.15 | $ | 142.86 | $ | 175.60 | |||||||||||
S&P 500 Index | $ | 100.00 | $ | 129.60 | $ | 144.36 | $ | 143.31 | $ | 156.98 | $ | 187.47 | |||||||||||
Dow Jones Industrial Average Index | $ | 100.00 | $ | 126.50 | $ | 136.01 | $ | 132.97 | $ | 150.81 | $ | 188.64 | |||||||||||
NASDAQ Telecommunications Index | $ | 100.00 | $ | 124.02 | $ | 135.07 | $ | 124.94 | $ | 143.52 | $ | 168.54 |
For the Year Ended December 31, | ||||||||||||||||||||
Statement of Operations Data | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||
Revenue: | ||||||||||||||||||||
Services | $ | 349,735 | $ | 334,822 | $ | 317,022 | $ | 309,424 | $ | 292,092 | ||||||||||
Subscriber equipment | 77,119 | 74,211 | 73,615 | 78,152 | 73,303 | |||||||||||||||
Engineering and support services | 21,192 | 24,607 | 20,741 | 20,981 | 17,254 | |||||||||||||||
Total revenue | $ | 448,046 | $ | 433,640 | $ | 411,378 | $ | 408,557 | $ | 382,649 | ||||||||||
Total operating expenses (1) | $ | 346,759 | $ | 257,269 | $ | 337,575 | $ | 285,646 | $ | 272,755 | ||||||||||
Operating income (3) | $ | 115,476 | $ | 176,371 | $ | 73,803 | $ | 122,911 | $ | 109,894 | ||||||||||
Net income (4) | $ | 233,856 | $ | 111,032 | $ | 7,123 | $ | 74,989 | $ | 62,517 | ||||||||||
Comprehensive income | $ | 235,506 | $ | 114,649 | $ | 980 | $ | 72,758 | $ | 62,185 | ||||||||||
Weighted average shares outstanding - basic | 97,934 | 95,967 | 95,097 | 88,080 | 76,909 | |||||||||||||||
Weighted average shares outstanding - diluted | 128,130 | 124,875 | 95,097 | 109,400 | 87,511 | |||||||||||||||
Net income (loss) per share - basic | $ | 2.23 | $ | 1.00 | $ | (0.09 | ) | $ | 0.71 | $ | 0.72 | |||||||||
Net income (loss) per share - diluted | $ | 1.82 | $ | 0.89 | $ | (0.09 | ) | $ | 0.69 | $ | 0.71 |
As of December 31, | ||||||||||||||||||||
Balance Sheet Data | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
(In thousands) | ||||||||||||||||||||
Total current assets | $ | 411,072 | $ | 516,770 | $ | 481,718 | $ | 573,113 | $ | 369,558 | ||||||||||
Total assets (1) (2) (4) | $ | 3,782,051 | $ | 3,499,625 | $ | 3,071,174 | $ | 2,773,237 | $ | 2,179,760 | ||||||||||
Total long-term liabilities (2) (4) | $ | 1,971,356 | $ | 2,072,673 | $ | 1,740,839 | $ | 1,439,023 | $ | 1,138,766 | ||||||||||
Total stockholders' equity | $ | 1,596,469 | $ | 1,343,758 | $ | 1,228,721 | $ | 1,231,864 | $ | 939,495 |
(1) | Includes accelerated depreciation of $36.8 million in the fourth quarter of 2017 associated with the write-off of the full amount previously paid to Kosmotras and a goodwill impairment charge of $87.0 million in the fourth quarter of 2015, both of which decreased operating income and total assets by those amounts. |
(2) | As a result of implementing Accounting Standards Update No. 2015-03, Interest—Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs, deferred financing costs were reclassified from total assets to total long-term liabilities to present short-term and long-term debt, net, for all years presented. |
(3) | Includes the impact of $14.2 million related to the gain on the transaction with Boeing, effective January 3, 2017. |
(4) | Includes the impact of provisional estimates related to deferred tax assets and liabilities resulting from the Tax Cuts and Jobs Act implemented in December 2017. |
For the Year Ended December 31, | ||||||||||||||||||||
Other Cash Flow Data | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
(In thousands) | ||||||||||||||||||||
Cash provided by (used in): | ||||||||||||||||||||
Operating activities | $ | 259,621 | $ | 225,199 | $ | 217,479 | $ | 214,872 | $ | 183,048 | ||||||||||
Investing activities | $ | (372,680 | ) | $ | (242,360 | ) | $ | (439,374 | ) | $ | (626,254 | ) | $ | (485,836 | ) | |||||
Financing activities | $ | 16,866 | $ | 202,151 | $ | 197,066 | $ | 438,844 | $ | 234,712 |
• | Tranche A – $1,537,500,000 at a fixed rate of 4.96%; and |
• | Tranche B – $262,500,000 at a floating rate equal to LIBOR, plus 1.95%. |
• | an available cash balance of at least $25 million; |
• | a debt-to-equity ratio, which is calculated as the ratio of total net debt to the aggregate of total net debt and total stockholders’ equity, of no more than 0.7 to 1, measured each June 30 and December 31; |
• | specified maximum levels of annual capital expenditures (excluding expenditures on the construction of Iridium NEXT satellites) through the year ending December 31, 2024; |
• | specified minimum levels of consolidated operational earnings before interest, taxes, depreciation and amortization, or operational EBITDA, for the 12-month periods ending each June 30 and December 31 through December 31, 2017; |
• | specified minimum cumulative cash flow requirements from customers who have hosted payloads on our satellites measured each December 31 and June 30 from June 30, 2017 through December 31, 2019; |
• | a debt service coverage ratio, measured during the repayment period, of not less than 1 to 1.5; |
• | specified maximum leverage levels during the repayment period that decline from a ratio of 7.53 to 1 for the twelve months ending June 30, 2018 to a ratio of 2.36 to 1 for the twelve months ending December 31, 2024; and |
• | a requirement that we receive at least $50,000,000 in hosting fees from Aireon by September 30, 2018. |
• | demand for remote and reliable mobile communications services; |
• | increased demand for communications services by disaster and relief agencies, and emergency first responders; |
• | a broad wholesale distribution network with access to diverse and geographically dispersed niche markets; |
• | a growing number of new products and services and related applications; |
• | improved data transmission speeds for mobile satellite service offerings; |
• | regulatory mandates requiring the use of mobile satellite services; |
• | a general reduction in prices of mobile satellite services and subscriber equipment; and |
• | geographic market expansion through the ability to offer our services in additional countries. |
• | our ability to complete the deployment of Iridium NEXT; |
• | our ability to develop and launch new and innovative products and services for Iridium NEXT; |
• | our ability to generate sufficient internal cash flows, including cash flows from hosted payloads, to fund a portion of the remaining costs associated with Iridium NEXT and to support our ongoing business; |
• | our ability to raise additional capital when needed, including through a planned issuance of debt securities; |
• | Aireon LLC’s ability to successfully deploy and market its space-based ADS-B, global aviation monitoring service to be carried as a hosted payload on the Iridium NEXT system; |
• | Aireon’s ability to raise sufficient funds to pay hosting fees to us; |
• | our ability to maintain the health, capacity, control and level of service of our first-generation satellites through the completion of Iridium NEXT; |
• | changes in general economic, business and industry conditions, including the effects of currency exchange rates; |
• | our reliance on a single primary commercial gateway and a primary satellite network operations center; |
• | competition from other mobile satellite service providers and, to a lesser extent, from the expansion of terrestrial-based cellular phone systems and related pricing pressures; |
• | market acceptance of our products; |
• | regulatory requirements in existing and new geographic markets; |
• | rapid and significant technological changes in the telecommunications industry; |
• | reliance on our wholesale distribution network to market and sell our products, services and applications effectively; |
• | reliance on single-source suppliers for the manufacture of most of our subscriber equipment and for some of the components required in the manufacture of our end-user subscriber equipment and our ability to purchase |
• | reliance on a few significant customers, particularly agencies of the U.S. government, for a substantial portion of our revenue, as a result of which the loss or decline in business with any of these customers may negatively impact our revenue and collectability of related accounts receivable. |
Year Ended December 31, | ||||||||||||||||||||
% of Total Revenue | % of Total Revenue | Change | ||||||||||||||||||
($ In thousands) | 2017 | 2016 | Dollars | Percent | ||||||||||||||||
Revenue: | ||||||||||||||||||||
Service revenue | ||||||||||||||||||||
Commercial | $ | 261,735 | 58 | % | $ | 246,822 | 57 | % | $ | 14,913 | 6 | % | ||||||||
Government | 88,000 | 20 | % | 88,000 | 20 | % | — | 0 | % | |||||||||||
Total service revenue | 349,735 | 78 | % | 334,822 | 77 | % | 14,913 | 4 | % | |||||||||||
Subscriber equipment | 77,119 | 17 | % | 74,211 | 17 | % | 2,908 | 4 | % | |||||||||||
Engineering and support services | 21,192 | 5 | % | 24,607 | 6 | % | (3,415 | ) | (14 | )% | ||||||||||
Total revenue | 448,046 | 100 | % | 433,640 | 100 | % | 14,406 | 3 | % | |||||||||||
Operating expenses: | ||||||||||||||||||||
Cost of services (exclusive of depreciation | ||||||||||||||||||||
and amortization) | 80,396 | 18 | % | 64,958 | 15 | % | 15,438 | 24 | % | |||||||||||
Cost of subscriber equipment | 44,445 | 10 | % | 44,286 | 10 | % | 159 | 0 | % | |||||||||||
Research and development | 15,247 | 3 | % | 16,079 | 4 | % | (832 | ) | (5 | )% | ||||||||||
Selling, general and administrative | 84,405 | 19 | % | 82,552 | 19 | % | 1,853 | 2 | % | |||||||||||
Depreciation and amortization | 122,266 | 27 | % | 49,394 | 11 | % | 72,872 | 148 | % | |||||||||||
Total operating expenses | 346,759 | 77 | % | 257,269 | 59 | % | 89,490 | 35 | % | |||||||||||
Gain on Boeing transaction | 14,189 | 3 | % | — | — | % | 14,189 | 100 | % | |||||||||||
Operating income | 115,476 | 26 | % | 176,371 | 41 | % | (60,895 | ) | (35 | )% | ||||||||||
Other income (expense): | ||||||||||||||||||||
Interest income, net | 4,328 | 1 | % | 2,934 | 1 | % | 1,394 | 48 | % | |||||||||||
Undrawn credit facility fees | (25 | ) | 0 | % | (1,346 | ) | 0 | % | 1,321 | (98 | )% | |||||||||
Other income (expense), net | (207 | ) | 0 | % | 206 | (1 | )% | (413 | ) | (200 | )% | |||||||||
Total other income (expense) | 4,096 | 1 | % | 1,794 | 0 | % | 2,302 | 128 | % | |||||||||||
Income before income taxes | 119,572 | 27 | % | 178,165 | 41 | % | (58,593 | ) | (33 | )% | ||||||||||
Income tax benefit (expense) | 114,284 | 25 | % | (67,133 | ) | (15 | )% | 181,417 | (270 | )% | ||||||||||
Net income | $ | 233,856 | 52 | % | $ | 111,032 | 26 | % | $ | 122,824 | 111 | % |
Year Ended December 31, | ||||||||||||||||||||||||||||||||
2017 | 2016 | Change | ||||||||||||||||||||||||||||||
Revenue | Billable Subscribers (1) | ARPU (2) | Revenue | Billable Subscribers (1) | ARPU (2) | Revenue | Billable Subscribers | ARPU | ||||||||||||||||||||||||
(Revenue in millions and subscribers in thousands) | ||||||||||||||||||||||||||||||||
Commercial voice and data | $ | 177.7 | 359 | $ | 42 | $ | 177.7 | 353 | $ | 42 | $ | — | 6 | $ | — | |||||||||||||||||
Commercial IoT data | 74.1 | 510 | 13 | 65.5 | 413 | 14 | 8.6 | 97 | (1.0 | ) | ||||||||||||||||||||||
Hosted payload and other data services (3) | 9.9 | N/A | 3.6 | N/A | 6.3 | N/A | ||||||||||||||||||||||||||
Total Commercial | $ | 261.7 | 869 | $ | 246.8 | 766 | $ | 14.9 | 103 |
(1) | Billable subscriber numbers are shown as of the end of the respective period. |
(2) | Average monthly revenue per unit, or ARPU, is calculated by dividing revenue in the respective period by the average of the number of billable subscribers at the beginning of the period and the number of billable subscribers at the end of the period and then dividing the result by the number of months in the period. |
(3) | Billable subscriber and ARPU data is not applicable for hosted payload and other data service revenue items. |
Year Ended December 31, | ||||||||||||||||||||
2017 | 2016 | Change | ||||||||||||||||||
Revenue | Billable Subscribers (1) | Revenue | Billable Subscribers (1) | Revenue | Billable Subscribers | |||||||||||||||
(Revenue in millions and subscribers in thousands) | ||||||||||||||||||||
Government service revenue | $ | 88 | 100 | $ | 88 | 84 | $ | — | 16 |
(1) | Billable subscriber numbers shown are at the end of the respective period. |
Year Ended December 31, | |||||||||||
2017 | 2016 | Change | |||||||||
(In millions) | |||||||||||
Commercial | $ | 3.1 | $ | 2.2 | $ | 0.9 | |||||
Government | 18.1 | 22.4 | (4.3 | ) | |||||||
Total | $ | 21.2 | $ | 24.6 | $ | (3.4 | ) |
Year Ended December 31, | Change | |||||||||||||||||||
($ In thousands) | 2016 | % of Total Revenue | 2015 | % of Total Revenue | Dollars | Percent | ||||||||||||||
Revenue: | ||||||||||||||||||||
Service revenue | ||||||||||||||||||||
Commercial | $ | 246,822 | 57 | % | $ | 241,925 | 59 | % | $ | 4,897 | 2 | % | ||||||||
Government | 88,000 | 20 | % | 75,097 | 18 | % | 12,903 | 17 | % | |||||||||||
Total service revenue | 334,822 | 77 | % | 317,022 | 77 | % | 17,800 | 6 | % | |||||||||||
Subscriber equipment | 74,211 | 17 | % | 73,615 | 18 | % | 596 | 1 | % | |||||||||||
Engineering and support services | 24,607 | 6 | % | 20,741 | 5 | % | 3,866 | 19 | % | |||||||||||
Total revenue | 433,640 | 100 | % | 411,378 | 100 | % | 22,262 | 5 | % | |||||||||||
Operating expenses: | ||||||||||||||||||||
Cost of services (exclusive of depreciation and amortization) | 64,958 | 15 | % | 60,306 | 15 | % | 4,652 | 8 | % | |||||||||||
Cost of subscriber equipment | 44,286 | 10 | % | 40,807 | 10 | % | 3,479 | 9 | % | |||||||||||
Research and development | 16,079 | 4 | % | 16,144 | 4 | % | (65 | ) | 0 | % | ||||||||||
Selling, general and administrative | 82,552 | 19 | % | 81,445 | 20 | % | 1,107 | 1 | % | |||||||||||
Depreciation and amortization | 49,394 | 11 | % | 51,834 | 13 | % | (2,440 | ) | (5 | )% | ||||||||||
Impairment of goodwill | — | 0 | % | 87,039 | 21 | % | (87,039 | ) | (100 | )% | ||||||||||
Total operating expenses | 257,269 | 59 | % | 337,575 | 82 | % | (80,306 | ) | (24 | )% | ||||||||||
Operating income | 176,371 | 41 | % | 73,803 | 18 | % | 102,568 | 139 | % | |||||||||||
Other income (expense): | ||||||||||||||||||||
Interest income, net | 2,934 | 1 | % | 3,069 | 1 | % | (135 | ) | (4 | )% | ||||||||||
Undrawn credit facility fees | (1,346 | ) | 0 | % | (3,289 | ) | (1 | )% | 1,943 | (59 | )% | |||||||||
Other expense, net | 206 | (1 | )% | (468 | ) | (1 | )% | 674 | (144 | )% | ||||||||||
Total other expense | 1,794 | 0 | % | (688 | ) | (1 | )% | 2,482 | (361 | )% | ||||||||||
Income before income taxes | 178,165 | 41 | % | 73,115 | 17 | % | 105,050 | 144 | % | |||||||||||
Income tax expense | (67,133 | ) | (15 | )% | (65,992 | ) | (16 | )% | $ | (1,141 | ) | 2 | % | |||||||
Net income | $ | 111,032 | 26 | % | $ | 7,123 | 1 | % | $ | 103,909 | 1,459 | % |
Year Ended December 31, | |||||||||||||||||||||||||||||
2016 | 2015 | Change | |||||||||||||||||||||||||||
Revenue | Billable Subscribers (1) | ARPU(2) | Revenue | Billable Subscribers (1) | ARPU(2) | Revenue | Billable Subscribers | ARPU | |||||||||||||||||||||
(Revenue in millions and subscribers in thousands) | |||||||||||||||||||||||||||||
Commercial voice and data | $ | 177.7 | 353 | $ | 42 | $ | 178.4 | 351 | $ | 42 | $ | (0.7 | ) | 2 | $ | — | |||||||||||||
Commercial IoT data | 65.5 | 413 | $ | 14 | 61.3 | 359 | $ | 15 | 4.2 | 54 | $ | (1 | ) | ||||||||||||||||
Hosted payload and other data services (3) | $ | 3.6 | N/A | $ | 2.2 | N/A | $ | 1.4 | N/A | ||||||||||||||||||||
Total Commercial | $ | 246.8 | 766 | $ | 241.9 | 710 | $ | 4.9 | 56 |
(1) | Billable subscriber numbers shown are at the end of the respective period. |
(2) | Average monthly revenue per unit, or ARPU, is calculated by dividing revenue in the respective period by the average of the number of billable subscribers at the beginning of the period and the number of billable subscribers at the end of the period and then dividing the result by the number of months in the period. |
(3) | Billable subscriber and ARPU data is not applicable for hosted payload and other data service revenue items. |
Year Ended December 31, | |||||||||||||||||
2016 | 2015 | Change | |||||||||||||||
Revenue | Billable Subscribers (1) | Revenue | Billable Subscribers (1) | Revenue | Billable Subscribers | ||||||||||||
(Revenue in millions and subscribers in thousands) | |||||||||||||||||
Government service revenue | $ | 88.0 | 84 | $ | 75.1 | 72 | $ | 12.9 | 12 |
(1) | Billable subscriber numbers shown are at the end of the respective period. |
Year Ended December 31, | |||||||||||
2016 | 2015 | Change | |||||||||
(In millions) | |||||||||||
Commercial | $ | 2.2 | $ | 2.0 | $ | 0.2 | |||||
Government | 22.4 | 18.7 | 3.7 | ||||||||
Total | $ | 24.6 | $ | 20.7 | $ | 3.9 |
• | an available cash balance of at least $25 million; |
• | a debt-to-equity ratio, which is calculated as the ratio of total net debt to the aggregate of total net debt and total stockholders’ equity, of no more than 0.7 to 1, measured each June 30 and December 31; |
• | specified maximum levels of annual capital expenditures (excluding expenditures on the construction of Iridium NEXT satellites) through the year ending December 31, 2024; |
• | specified minimum levels of consolidated operational earnings before interest, taxes, depreciation and amortization, or operational EBITDA, each June 30 and December 31 through December 31, 2017; |
• | specified minimum cumulative cash flow requirements from customers who have hosted payloads on our satellites, measured each December 31 and June 30, from June 30, 2017 through December 31, 2019; |
• | a debt service coverage ratio, measured during the repayment period, of not less than 1 to 1.5; |
• | specified maximum leverage levels during the repayment period that decline from a ratio of 7.53 to 1 for the twelve months ending June 30, 2018 to a ratio of 2.36 to 1 for the twelve months ending December 31, 2024; and |
• | a requirement that we receive at least $50,000,000 in hosting fees from Aireon by September 30, 2018. |
Statement of Cash Flows | 2017 | 2016 | Change | |||||||||
Net cash provided by operating activities | $ | 259.6 | $ | 225.2 | $ | 34.4 | ||||||
Net cash used in investing activities | $ | (372.7 | ) | $ | (242.4 | ) | $ | (130.3 | ) | |||
Net cash provided by financing activities | $ | 16.9 | $ | 224.2 | $ | (207.3 | ) |
Statement of Cash Flows | 2016 | 2015 | Change | |||||||||
Net cash provided by operating activities | $ | 225.2 | $ | 217.5 | $ | 7.7 | ||||||
Net cash used in investing activities | $ | (242.4 | ) | $ | (439.4 | ) | $ | 197.0 | ||||
Net cash provided by financing activities | $ | 224.2 | $ | 202.1 | $ | 22.1 |
Contractual Obligations | Less than 1 year | 1-3 Years | 3-5 years | More than 5 years | Total | |||||||||||||||
Payment obligations: | ||||||||||||||||||||
Thales (1) | $ | 216.8 | $ | 100.0 | $ | — | $ | — | $ | 316.8 | ||||||||||
Interest on Thales bills of exchange (1) | — | 3.6 | — | — | 3.6 | |||||||||||||||
SpaceX (2) | 46.9 | 10.2 | — | — | 57.1 | |||||||||||||||
Launch and in-orbit insurers (3) | 43.2 | — | — | — | 43.2 | |||||||||||||||
Boeing (4) | 6.0 | 12.0 | 6.0 | — | 24.0 | |||||||||||||||
Debt obligations: (5) | ||||||||||||||||||||
Principal | 85.5 | 490.5 | 612.0 | 612.0 | 1,800.0 | |||||||||||||||
Contractual interest | 79.6 | 154.4 | 98.6 | 37.5 | 370.1 | |||||||||||||||
Debt service reserve account | — | 87.0 | — | — | 87.0 | |||||||||||||||
Operating lease obligations (6) | 3.7 | 7.5 | 7.2 | 8.8 | 27.2 | |||||||||||||||
Uncertain tax positions (7) | — | — | — | — | 1.0 | |||||||||||||||
Unconditional purchase obligations (8) | 17.0 | 3.4 | 1.0 | — | 21.4 | |||||||||||||||
Total | $ | 498.7 | $ | 868.6 | $ | 724.8 | $ | 658.3 | $ | 2,751.4 |
(1) | Thales obligations consist of commitments under the FSD for the design and manufacture of satellites for Iridium NEXT. The Credit Facility was fully drawn in February 2017, and, as a result, we pay 100% of each invoice received from Thales from cash and marketable securities on hand or the issuance of up to $45.4 million in remaining bills of exchange due in March 2019. As of December 31, 2017, we had made aggregate payments of $1.9 billion to Thales. The timing of a portion of the contractual obligation payments to Thales shown in the table above is based on current expectations regarding the Thales manufacturing schedule and SpaceX’s targeted launch schedule. |
(2) | SpaceX obligations consist of remaining payments to secure SpaceX as the primary launch services provider for Iridium NEXT. The total price for seven launches and a reflight option in the event of launch failure is $453.1 million. In November 2016, we entered into an agreement for an eighth launch with SpaceX to launch five spare satellites and share the services with GFZ. The total price under the SpaceX agreement for the eighth launch is $67.9 million. As of December 31, 2017, we had made aggregate payments of $463.9 million to SpaceX. The timing of a portion of the contractual obligation payments to SpaceX shown in the table above is based on SpaceX’s targeted launch schedule. |
(3) | The total premium is $121.0 million, and as of December 31, 2017, we had made aggregate payments of $77.8 million. The timing of the majority of the contractual obligation payments are based on SpaceX’s targeted launch schedule to complete the Iridium NEXT constellation in 2018. |
(4) | Represents a five-year take-or-pay commitment under the Development Services Agreement entered into in November 2016. |
(5) | Debt obligations include repayment of the Credit Facility as of December 31, 2017. We have included interest payments to be made on our fixed and variable rate tranches of the Credit Facility. Interest payments for variable rate debt have been estimated based on the six-month LIBOR forward contracts. We have included the increase to the DSRA of $87 million, as required under the terms of the Credit Facility, from $102.0 million, as of December 31, 2017, to $189.0 million in 2019. The DSRA is classified as restricted cash on the consolidated balance sheet. The repayment schedule excludes $120.0 million that we expect to receive upon the Aireon redemption of our equity interest in Aireon and Aireon dividends, when and if declared. Upon receipt of these amounts, they will be used to prepay the Credit Facility, which may result in an earlier repayment. |
(6) | Operating lease obligations do not include payments to landlords covering real estate taxes, common area maintenance and other charges, as such fees are not determinable based upon the provisions of our lease agreements. |
(7) | As of December 31, 2017, we estimated our uncertain tax positions to be $1.0 million, including penalties and interest. However, we are unable to reasonably estimate the period of the possible future payments for the remaining balance, and therefore the remaining balance has not been reflected in a specified period. |
(8) | Unconditional purchase obligations include our agreement with a supplier for the manufacturing of our devices and various commitments with other vendors that are enforceable, legally binding and have specified terms, including fixed or minimum quantities, minimum or variable price provisions, and a fixed timeline. Unconditional purchase obligations do not include agreements that are cancelable by us without penalty. As of December 31, 2017, contractually obligated purchase commitments for manufacturing supplies increased $5.8 million from the prior year ended December 31, 2016. |
Page | |
Iridium Communications Inc.: | |
December 31, 2017 | December 31, 2016 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 285,873 | $ | 371,167 | |||
Marketable securities | 11,753 | 39,328 | |||||
Accounts receivable, net | 68,031 | 57,373 | |||||
Inventory | 20,068 | 18,204 | |||||
Prepaid expenses and other current assets | 25,347 | 30,698 | |||||
Total current assets | 411,072 | 516,770 | |||||
Property and equipment, net | 3,210,162 | 2,813,084 | |||||
Restricted cash | 102,384 | 113,139 | |||||
Other assets | 8,414 | 10,836 | |||||
Intangible assets, net | 50,019 | 45,796 | |||||
Total assets | $ | 3,782,051 | $ | 3,499,625 | |||
Liabilities and stockholders' equity | |||||||
Current liabilities: | |||||||
Short-term credit facility | $ | 85,500 | $ | — | |||
Accounts payable | 43,100 | 11,131 | |||||
Accrued expenses and other current liabilities | 32,215 | 23,840 | |||||
Interest payable | 15,021 | 14,136 | |||||
Deferred revenue | 38,390 | 34,087 | |||||
Total current liabilities | 214,226 | 83,194 | |||||
Accrued satellite operations and maintenance expense, net | |||||||
of current portion | — | 13,138 | |||||
Long-term credit facility, net | 1,618,055 | 1,657,145 | |||||
Deferred income tax liabilities, net | 246,170 | 361,656 | |||||
Deferred revenue, net of current portion | 47,612 | 36,417 | |||||
Other long-term liabilities | 59,519 | 4,317 | |||||
Total liabilities | 2,185,582 | 2,155,867 | |||||
Commitments and contingencies | |||||||
Stockholders' equity: | |||||||
Series A preferred stock, $0.0001 par value, 1,000 shares authorized, | |||||||
issued and outstanding | — | — | |||||
Series B preferred stock, $0.0001 par value, 500 shares | |||||||
authorized, issued and outstanding | — | — | |||||
Common stock, $0.001 par value, 300,000 shares authorized, 98,203 and 95,879 | |||||||
shares issued and outstanding | 98 | 96 | |||||
Additional paid-in capital | 1,081,373 | 1,060,311 | |||||
Retained earnings | 518,794 | 288,797 | |||||
Accumulated other comprehensive loss, net of tax | (3,796 | ) | (5,446 | ) | |||
Total stockholders' equity | 1,596,469 | 1,343,758 | |||||
Total liabilities and stockholders' equity | $ | 3,782,051 | $ | 3,499,625 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Revenue: | |||||||||||
Services | $ | 349,735 | $ | 334,822 | $ | 317,022 | |||||
Subscriber equipment | 77,119 | 74,211 | 73,615 | ||||||||
Engineering and support services | 21,192 | 24,607 | 20,741 | ||||||||
Total revenue | 448,046 | 433,640 | 411,378 | ||||||||
Operating expenses: | |||||||||||
Cost of services (exclusive of depreciation and amortization) | 80,396 | 64,958 | 60,306 | ||||||||
Cost of subscriber equipment | 44,445 | 44,286 | 40,807 | ||||||||
Research and development | 15,247 | 16,079 | 16,144 | ||||||||
Selling, general and administrative | 84,405 | 82,552 | 81,445 | ||||||||
Depreciation and amortization | 122,266 | 49,394 | 51,834 | ||||||||
Impairment of goodwill | — | — | 87,039 | ||||||||
Total operating expenses | 346,759 | 257,269 | 337,575 | ||||||||
Gain on Boeing transaction | 14,189 | — | — | ||||||||
Operating income | 115,476 | 176,371 | 73,803 | ||||||||
Other income (expense): | |||||||||||
Interest income, net | 4,328 | 2,934 | 3,069 | ||||||||
Undrawn credit facility fees | (25 | ) | (1,346 | ) | (3,289 | ) | |||||
Other income (expense), net | (207 | ) | 206 | (468 | ) | ||||||
Total other income (expense) | 4,096 | 1,794 | (688 | ) | |||||||
Income before income taxes | 119,572 | 178,165 | 73,115 | ||||||||
Income tax benefit (expense) | 114,284 | (67,133 | ) | (65,992 | ) | ||||||
Net income | 233,856 | 111,032 | 7,123 | ||||||||
Series A preferred stock dividends, declared and paid | 1,750 | 7,000 | 7,000 | ||||||||
Series B preferred stock dividends, declared and paid | 2,109 | 8,436 | 8,436 | ||||||||
Series A preferred stock dividends, undeclared | 5,250 | — | — | ||||||||
Series B preferred stock dividends, undeclared | 6,327 | — | — | ||||||||
Net income (loss) attributable to common stockholders | $ | 218,420 | $ | 95,596 | $ | (8,313 | ) | ||||
Weighted average shares outstanding - basic | 97,934 | 95,967 | 95,097 | ||||||||
Weighted average shares outstanding - diluted | 128,130 | 124,875 | 95,097 | ||||||||
Net income (loss) attributable to common stockholders per share - basic | $ | 2.23 | $ | 1.00 | $ | (0.09 | ) | ||||
Net income (loss) attributable to common stockholders per share - diluted | $ | 1.82 | $ | 0.89 | $ | (0.09 | ) | ||||
Comprehensive income: | |||||||||||
Net income | $ | 233,856 | $ | 111,032 | $ | 7,123 | |||||
Foreign currency translation adjustments | 1,664 | 3,487 | (5,777 | ) | |||||||
Unrealized gain (loss) on marketable securities, net of tax | (14 | ) | 130 | (366 | ) | ||||||
Comprehensive income | $ | 235,506 | $ | 114,649 | $ | 980 |
Series A Convertible | Series B Convertible | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total Stockholders' Equity | |||||||||||||||||||||||||||||||
Preferred Stock | Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||
Balance at December 31, 2014 | 1,000 | $ | — | 500 | $ | — | 93,905 | $ | 94 | $ | 1,033,176 | $ | (2,920 | ) | $ | 201,514 | $ | 1,231,864 | ||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | 9,649 | — | — | 9,649 | ||||||||||||||||||||||||||
Stock options exercised and awards vested | — | — | — | — | 1,221 | 1 | 2,154 | — | — | 2,155 | ||||||||||||||||||||||||||
Stock withheld to cover employee taxes | — | — | — | — | — | — | (886 | ) | — | — | (886 | ) | ||||||||||||||||||||||||
Excess tax benefit from exercise of stock-based compensation | — | — | — | — | — | — | 395 | — | — | 395 | ||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | 7,123 | 7,123 | ||||||||||||||||||||||||||
Dividends on Series A preferred stock | — | — | — | — | — | — | — | — | (7,000 | ) | (7,000 | ) | ||||||||||||||||||||||||
Dividends on Series B preferred stock | — | — | — | — | — | — | — | — | (8,436 | ) | (8,436 | ) | ||||||||||||||||||||||||
Cumulative translation adjustments, net of tax | — | — | — | — | — | — | — | (5,777 | ) | — | (5,777 | ) | ||||||||||||||||||||||||
Unrealized gain on marketable securities, net of tax | — | — | — | — | — | — | — | (366 | ) | — | (366 | ) | ||||||||||||||||||||||||
Balance at December 31, 2015 | 1,000 | — | 500 | — | 95,126 | 95 | 1,044,488 | (9,063 | ) | 193,201 | 1,228,721 | |||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | 15,973 | — | — | 15,973 | ||||||||||||||||||||||||||
Stock options exercised and awards vested | — | — | — | — | 753 | 1 | 548 | — | — | 549 | ||||||||||||||||||||||||||
Stock withheld to cover employee taxes | — | — | — | — | — | — | (627 | ) | — | — | (627 | ) | ||||||||||||||||||||||||
Excess tax benefit from exercise of stock-based compensation | — | — | — | — | — | — | (71 | ) | — | — | (71 | ) | ||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | 111,032 | 111,032 | ||||||||||||||||||||||||||
Dividends on Series A preferred stock | — | — | — | — | — | — | — | — | (7,000 | ) | (7,000 | ) | ||||||||||||||||||||||||
Dividends on Series B preferred stock | — | — | — | — | — | — | — | — | (8,436 | ) | (8,436 | ) | ||||||||||||||||||||||||
Cumulative translation adjustments, net of tax | — | — | — | — | — | — | — | 3,487 | — | 3,487 | ||||||||||||||||||||||||||
Unrealized loss on marketable securities, net of tax | — | — | — | — | — | — | — | 130 | — | 130 | ||||||||||||||||||||||||||
Balance at December 31, 2016 | 1,000 | — | 500 | — | 95,879 | 96 | 1,060,311 | (5,446 | ) | 288,797 | 1,343,758 | |||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | 18,694 | — | — | 18,694 | ||||||||||||||||||||||||||
Stock options exercised and awards vested | — | — | — | — | 2,537 | 2 | 4,233 | — | — | 4,235 | ||||||||||||||||||||||||||
Stock withheld to cover employee taxes | — | — | — | — | (213 | ) | — | (1,865 | ) | — | — | (1,865 | ) | |||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | 233,856 | 233,856 | ||||||||||||||||||||||||||
Dividends on Series A preferred stock | — | — | — | — | — | — | — | — | (1,750 | ) | (1,750 | ) | ||||||||||||||||||||||||
Dividends on Series B preferred stock | — | — | — | — | — | — | — | — | (2,109 | ) | (2,109 | ) | ||||||||||||||||||||||||
Cumulative translation adjustments, net of tax | — | — | — | — | — | — | — | 1,664 | — | 1,664 | ||||||||||||||||||||||||||
Unrealized loss on marketable securities, net of tax | — | — | — | — | — | — | — | (14 | ) | — | (14 | ) | ||||||||||||||||||||||||
Balance at December 31, 2017 | 1,000 | $ | — | 500 | $ | — | 98,203 | $ | 98 | $ | 1,081,373 | $ | (3,796 | ) | $ | 518,794 | $ | 1,596,469 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 233,856 | $ | 111,032 | $ | 7,123 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Deferred income taxes | (115,812 | ) | 63,808 | 63,376 | |||||||
Depreciation and amortization | 122,266 | 49,394 | 51,834 | ||||||||
Impairment of goodwill | — | — | 87,039 | ||||||||
Stock-based compensation (net of amounts capitalized) | 15,958 | 13,708 | 8,603 | ||||||||
Excess tax benefit from stock-based compensation | — | — | (806 | ) | |||||||
Gain from contract liability write-off | (14,189 | ) | — | — | |||||||
Provision for doubtful accounts | (277 | ) | 703 | 252 | |||||||
Provision for obsolete inventory | 361 | 1,053 | 723 | ||||||||
Amortization of premiums on marketable securities | 124 | 888 | 2,030 | ||||||||
Non-cash foreign currency losses, net | (163 | ) | 166 | 196 | |||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | (10,343 | ) | (6,037 | ) | (1,843 | ) | |||||
Inventory | (1,946 | ) | 9,029 | (169 | ) | ||||||
Prepaid expenses and other current assets | 2,875 | (16,613 | ) | (3,788 | ) | ||||||
Other assets | 2,823 | (2,128 | ) | (1,253 | ) | ||||||
Accounts payable | 896 | 3,209 | 3,110 | ||||||||
Accrued expenses and other current liabilities | 8,166 | (6,416 | ) | (7,815 | ) | ||||||
Deferred revenue | 15,129 | 4,115 | 9,038 | ||||||||
Accrued satellite and network operation expense, net of current portion | — | (1,045 | ) | (869 | ) | ||||||
Other long-term liabilities | (103 | ) | 333 | 698 | |||||||
Net cash provided by operating activities | 259,621 | 225,199 | 217,479 | ||||||||
Cash flows from investing activities: | |||||||||||
Capital expenditures | (400,107 | ) | (405,687 | ) | (494,810 | ) | |||||
Purchases of marketable securities | (7,013 | ) | (19,865 | ) | (204,672 | ) | |||||
Sales and maturities of marketable securities | 34,440 | 183,192 | 260,108 | ||||||||
Net cash used in investing activities | (372,680 | ) | (242,360 | ) | (439,374 | ) | |||||
Cash flows from financing activities: | |||||||||||
Borrowings under the Credit Facility | 22,207 | 251,498 | 230,421 | ||||||||
Payment of deferred financing fees | (3,852 | ) | (11,806 | ) | (14,984 | ) | |||||
Proceeds from exercise of stock options | 4,235 | 549 | 2,154 | ||||||||
Tax payment upon settlement of stock awards | (1,865 | ) | (627 | ) | (886 | ) | |||||
Excess tax benefits from stock-based compensation | — | — | 806 | ||||||||
Payment of Series A preferred stock dividends | (1,750 | ) | (7,000 | ) | (7,000 | ) | |||||
Payment of Series B preferred stock dividends | (2,109 | ) | (8,436 | ) | (8,436 | ) | |||||
Net cash provided by financing activities | 16,866 | 224,178 | 202,075 | ||||||||
Effect of exchange rate changes on cash and cash equivalents | 144 | 512 | (755 | ) | |||||||
Net increase (decrease) in cash and cash equivalents | (96,049 | ) | 207,529 | (20,575 | ) | ||||||
Cash, cash equivalents, and restricted cash, beginning of period | 484,306 | 276,777 | 297,352 | ||||||||
Cash, cash equivalents, and restricted cash, end of period | $ | 388,257 | $ | 484,306 | $ | 276,777 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Supplemental cash flow information: | |||||||||||
Interest paid | $ | 85,261 | $ | 22,910 | $ | 18,878 | |||||
Income taxes paid, net | $ | 1,660 | $ | 1,391 | $ | 3,429 | |||||
Supplemental disclosure of non-cash investing activities: | |||||||||||
Property and equipment received but not paid for yet | $ | 90,748 | $ | 2,753 | $ | 26,770 | |||||
Interest capitalized but not paid | $ | 15,021 | $ | 14,136 | $ | 12,232 | |||||
Capitalized amortization of deferred financing costs | $ | 27,304 | $ | 28,688 | $ | 18,372 | |||||
Capitalized paid-in-kind interest | $ | — | $ | 52,873 | $ | 43,073 | |||||
Capitalized stock-based compensation | $ | 2,736 | $ | 2,265 | $ | 1,046 |
• | The Company made an accounting policy election to continue estimating the number of awards that are expected to be forfeited, consistent with the Company’s prior practice. |
• | The Company excluded the excess tax benefits and deficiencies component from the treasury stock method in the diluted earnings per share calculation. The change had an immaterial impact on the Company’s reported diluted earnings per share. |
• | The Company recorded current excess tax benefits and tax deficiencies as income tax benefit (expense) in the consolidated statements of operations and comprehensive income. The change resulted in an excess tax expense of $0.2 million for the three months ended December 31, 2017 and excess tax benefit of $1.1 million recorded in the provision for income taxes for the year ended December 31, 2017. |
• | The Company will present excess tax benefits as an operating activity on the condensed consolidated statement of cash flows rather than as a financing activity. Prior periods have not been adjusted. |
Year Ended December 31, | ||||||||
2017 | 2016 | |||||||
Cash and cash equivalents | $ | 285,873 | $ | 371,167 | ||||
Restricted cash | 102,384 | 113,139 | ||||||
Cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows | $ | 388,257 | $ | 484,306 |
• | Level 1, defined as observable inputs such as quoted prices in active markets for identical assets or liabilities; |
• | Level 2, defined as observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and |
• | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. |
Year Ended December 31, | |||||||
2017 | 2016 | ||||||
(In thousands) | |||||||
Property and equipment, net | $ | 2,458 | $ | 1,906 | |||
Inventory | 280 | 359 | |||||
Cost of subscriber equipment | 30 | 56 | |||||
Cost of services (exclusive of depreciation and amortization) | 4,366 | 1,655 | |||||
Research and development | 349 | 457 | |||||
Selling, general and administrative | 11,211 | 11,540 | |||||
Total stock-based compensation | $ | 18,694 | $ | 15,973 |
First-generation satellites | 15-21 years |
Next-generation satellites | 12.5 years |
Ground system | 5-7 years |
Equipment | 3-5 years |
Internally developed software and purchased software | 3-7 years |
Building | 39 years |
Building improvements | 5-39 years |
Leasehold improvements | shorter of useful life or remaining lease term |
Intellectual property | 20 years |
Assembled workforce | 7 years |
Patents | 14 - 20 years |
Year Ended December 31, | |||||||||
2017 | 2016 | Recurring Fair Value Measurement | |||||||
(In thousands) | |||||||||
Cash and cash equivalents: | |||||||||
Cash | $ | 24,092 | $ | 102,194 | |||||
Money market funds | 251,950 | 266,478 | Level 1 | ||||||
Commercial paper | 9,831 | 2,495 | Level 2 | ||||||
Total cash and cash equivalents | $ | 285,873 | $ | 371,167 |
December 31, 2017 | |||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | Recurring Fair Value Measurement | |||||||||||||
(In thousands) | |||||||||||||||||
Fixed-income debt securities | $ | 9,520 | $ | 2 | $ | (15 | ) | $ | 9,507 | Level 2 | |||||||
U.S. Treasury notes | 2,249 | — | (3 | ) | 2,246 | Level 2 | |||||||||||
Total marketable securities | $ | 11,769 | $ | 2 | $ | (18 | ) | $ | 11,753 |
December 31, 2016 | |||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | Recurring Fair Value Measurement | |||||||||||||
(In thousands) | |||||||||||||||||
Fixed-income debt securities | $ | 30,037 | $ | 14 | $ | (11 | ) | $ | 30,040 | Level 2 | |||||||
U.S. Treasury notes | 9,283 | 7 | (2 | ) | 9,288 | Level 2 | |||||||||||
Total marketable securities | $ | 39,320 | $ | 21 | $ | (13 | ) | $ | 39,328 |
December 31, 2017 | December 31, 2016 | ||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||
(In thousands) | (In thousands) | ||||||||||||||
Mature within one year | $ | 11,519 | $ | 11,504 | $ | 32,776 | $ | 32,788 | |||||||
Mature after one year and within three years | 250 | 249 | 6,544 | 6,540 | |||||||||||
Total | $ | 11,769 | $ | 11,753 | $ | 39,320 | $ | 39,328 |
Year ending December 31, | Amount | |||
(In thousands) | ||||
2018 | $ | 85,500 | ||
2019 | 202,500 | |||
2020 | 288,000 | |||
2021 | 306,000 | |||
2022 | 306,000 | |||
Thereafter | 612,000 | |||
Total debt commitments | $ | 1,800,000 | ||
Original issuance discount | 96,445 | |||
Total short-term debt | 85,500 | |||
Total long-term debt, net | $ | 1,618,055 |
• | an available cash balance of at least $25 million; |
• | a debt-to-equity ratio, which is calculated as the ratio of total net debt to the aggregate of total net debt and total stockholders’ equity, of no more than 0.7 to 1, measured each June 30 and December 31; |
• | specified maximum levels of annual capital expenditures (excluding expenditures on the construction of Iridium NEXT satellites) through the year ending December 31, 2024; |
• | specified minimum levels of consolidated operational earnings before interest, taxes, depreciation and amortization, or operational EBITDA, for the 12-month periods ending each December 31 and June 30 through December 31, 2017; |
• | specified minimum cumulative cash flow requirements from customers who have hosted payloads on the Company’s satellites, measured each December 31 and June 30, from June 30, 2017 through December 31, 2019; |
• | a debt service coverage ratio, measured during the repayment period, of not less than 1 to 1.5; and |
• | specified maximum leverage levels during the repayment period that decline from a ratio of 7.53 to 1 for the twelve months ending June 30, 2018 to a ratio of 2.36 to 1 for the twelve months ending December 31, 2024; and |
• | a requirement that we receive at least $50,000,000 in hosting fees from Aireon by September 30, 2018. |
December 31, | |||||||
2017 | 2016 | ||||||
(In thousands) | |||||||
Satellite system | $ | 1,199,794 | $ | 314,228 | |||
Ground system | 67,576 | 63,519 | |||||
Equipment | 35,616 | 34,139 | |||||
Internally developed software and purchased software | 191,089 | 127,498 | |||||
Building and leasehold improvements | 32,130 | 32,099 | |||||
1,526,205 | 571,483 | ||||||
Less: accumulated depreciation | (432,833 | ) | (422,098 | ) | |||
1,093,372 | 149,385 | ||||||
Land | 8,037 | 8,037 | |||||
Construction in process: | |||||||
Iridium NEXT systems under construction | 2,088,380 | 2,639,824 | |||||
Other construction in process | 20,373 | 15,838 | |||||
Total property and equipment, net of accumulated depreciation | $ | 3,210,162 | $ | 2,813,084 |
December 31, | |||||||
2017 | 2016 | ||||||
(In thousands) | |||||||
Internally developed software | $ | 14,782 | $ | 14,218 | |||
Equipment | 4,241 | 1,546 | |||||
Ground system | 1,350 | 74 | |||||
Total other construction in process | $ | 20,373 | $ | 15,838 |
December 31, 2017 | |||||||||||||
Useful Life (years) | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | ||||||||||
(In thousands) | |||||||||||||
Indefinite life intangible assets: | |||||||||||||
Trade names | Indefinite | $ | 21,195 | $ | — | $ | 21,195 | ||||||
Spectrum and licenses | Indefinite | 14,030 | — | 14,030 | |||||||||
Total | 35,225 | — | 35,225 | ||||||||||
Definite life intangible assets: | |||||||||||||
Intellectual property | 20 years | 16,439 | (6,651 | ) | 9,788 | ||||||||
Assembled workforce | 7 years | 5,678 | (812 | ) | 4,866 | ||||||||
Patents | 14 - 20 | 146 | (6 | ) | 140 | ||||||||
Total | 22,263 | (7,469 | ) | 14,794 | |||||||||
Total intangible assets | $ | 57,488 | $ | (7,469 | ) | $ | 50,019 |
December 31, 2016 | |||||||||||||
Useful Life (years) | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | ||||||||||
(In thousands) | |||||||||||||
Indefinite life intangible assets: | |||||||||||||
Trade names | Indefinite | $ | 21,195 | $ | — | $ | 21,195 | ||||||
Spectrum and licenses | Indefinite | 14,030 | — | 14,030 | |||||||||
Total | 35,225 | — | 35,225 | ||||||||||
Definite life intangible assets: | |||||||||||||
Intellectual property | 20 years | 16,439 | (5,868 | ) | 10,571 | ||||||||
Total | 16,439 | (5,868 | ) | 10,571 | |||||||||
Total intangible assets | $ | 51,664 | $ | (5,868 | ) | $ | 45,796 |
Year ending December 31, | Amount | |||
(In thousands) | ||||
2018 | $ | 1,604 | ||
2019 | 1,604 | |||
2020 | 1,604 | |||
2021 | 1,604 | |||
Thereafter | 8,378 | |||
Total estimated future amortization expense | $ | 14,794 |
Year ending December 31, | Operating Leases | |||
(In thousands) | ||||
2018 | $ | 3,741 | ||
2019 | 3,692 | |||
2020 | 3,734 | |||
2021 | 3,827 | |||
2022 | 3,402 | |||
Thereafter | 8,849 | |||
Total | $ | 27,245 |
• | Volatility - The expected volatility of the options granted was estimated based upon historical volatility of our share price through daily observations of our trading history. |
• | Expected life of options - The expected life of options granted to employees was determined from the simplified method. |
• | Risk-free interest rate - The yield on zero-coupon U.S. Treasury strips was used to extrapolate a forward-yield curve. This “term structure” of future interest rates was then input into a numeric model to provide the equivalent risk-free rate to be used in the Black-Scholes-Merton model based on the expected term of the underlying grants. |
• | Dividend yield - The Black-Scholes-Merton valuation model requires an expected dividend yield as an input. The Company does not anticipate paying dividends during the expected term of the grants; therefore, the dividend rate is assumed to be zero. |
Year Ended December 31, | |||||
2017 | 2016 | 2015 | |||
Expected volatility | 40% - 41% | 40% - 42% | 39% - 42% | ||
Expected term (years) | 6.25 | 6.25 | 6.25 | ||
Expected dividends | —% | —% | —% | ||
Risk free interest rate | 1.86% - 2.14% | 1.15% - 2.45% | 1.50% - 2.35% |
Shares | Weighted- Average Exercise Price Per Share | Weighted- Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | |||||||||
(In thousands, except years and per share data) | ||||||||||||
Options outstanding at January 1, 2015 | 6,671 | $ | 7.68 | |||||||||
Granted | 885 | 9.25 | ||||||||||
Cancelled or expired | (92 | ) | 8.66 | |||||||||
Exercised | (287 | ) | 7.87 | |||||||||
Forfeited | (57 | ) | 7.81 | |||||||||
Options outstanding at December 31, 2015 | 7,120 | 7.86 | 6.33 | $ | 3,937 | |||||||
Granted | 249 | 8.13 | ||||||||||
Cancelled or expired | (39 | ) | 8.92 | |||||||||
Exercised | (73 | ) | 7.33 | |||||||||
Forfeited | (55 | ) | 7.62 | |||||||||
Options outstanding at December 31, 2016 | 7,202 | 7.87 | 5.45 | $ | 12,473 | |||||||
Granted | 209 | 10.50 | ||||||||||
Cancelled or expired | (2 | ) | 7.24 | |||||||||
Exercised | (534 | ) | 7.93 | |||||||||
Forfeited | (19 | ) | 9.13 | |||||||||
Options outstanding at December 31, 2017 | 6,856 | $ | 7.94 | 4.63 | $ | 26,459 | ||||||
Options exercisable at December 31, 2017 | 6,212 | $ | 7.81 | 4.27 | $ | 24,760 | ||||||
Options exercisable and expected to vest at December 31, 2017 | 6,842 | $ | 7.94 | 4.63 | $ | 26,425 |
RSUs | Weighted- Average Grant Date Fair Value Per RSU | |||||
(In thousands) | ||||||
Outstanding at January 1, 2015 | 2,282 | $ | 6.80 | |||
Granted | 834 | 9.42 | ||||
Forfeited | (193 | ) | 7.18 | |||
Released | (979 | ) | 7.06 | |||
Outstanding at December 31, 2015 | 1,944 | 7.76 | ||||
Granted | 2,297 | 7.09 | ||||
Forfeited | (152 | ) | 7.44 | |||
Released | (766 | ) | 7.36 | |||
Outstanding at December 31, 2016 | 3,323 | 7.40 | ||||
Granted | 2,431 | 8.89 | ||||
Forfeited | (203 | ) | 8.42 | |||
Released | (2,003 | ) | 7.16 | |||
Outstanding at December 31, 2017 | 3,548 | 8.50 | ||||
Vested and unreleased at December 31, 2017 (1) | 521 |
(1) | These RSUs were granted to the Company's board of directors as a part of their compensation for board and committee service and had vested but had not yet been issued and released. |
December 31, | |||||||
2017 | 2016 | ||||||
(In thousands) | |||||||
United States | $ | 165,337 | $ | 124,483 | |||
Satellites in orbit | 926,090 | 13,405 | |||||
Iridium NEXT systems under construction | 2,088,380 | 2,639,824 | |||||
All others (1) | 30,355 | 35,372 | |||||
Total | $ | 3,210,162 | $ | 2,813,084 |
(1) | No single country in this group represented more than 10% of property and equipment, net. |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(In thousands) | |||||||||||
United States | $ | 229,741 | $ | 226,190 | $ | 204,777 | |||||
Canada | 44,107 | 42,373 | 42,063 | ||||||||
United Kingdom | 46,245 | 47,135 | 44,012 | ||||||||
Other countries (1) | 127,953 | 117,942 | 120,526 | ||||||||
Total | $ | 448,046 | $ | 433,640 | $ | 411,378 |
(1) | No single country in this group represented more than 10% of revenue. |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(In thousands) | |||||||||||
U.S. income | $ | 120,281 | $ | 176,448 | $ | 75,431 | |||||
Foreign income (loss) | (709 | ) | 1,717 | (2,316 | ) | ||||||
Total income before income taxes | $ | 119,572 | $ | 178,165 | $ | 73,115 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(In thousands) | |||||||||||
Current taxes: | |||||||||||
Federal tax expense | $ | 13 | $ | 1,206 | $ | 1,700 | |||||
State tax expense | 422 | 978 | 266 | ||||||||
Foreign tax expense | 863 | 1,141 | 650 | ||||||||
Total current tax expense | 1,298 | 3,325 | 2,616 | ||||||||
Deferred taxes: | |||||||||||
Federal tax expense (benefit) | (110,811 | ) | 60,295 | 54,906 | |||||||
State tax expense (benefit) | (4,851 | ) | 3,454 | 8,803 | |||||||
Foreign tax expense (benefit) | 80 | 59 | (333 | ) | |||||||
Total deferred tax expense (benefit) | (115,582 | ) | 63,808 | 63,376 | |||||||
Total income tax expense (benefit) | $ | (114,284 | ) | $ | 67,133 | $ | 65,992 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(In thousands) | |||||||||||
Expected tax expense at U.S. federal statutory tax rate | $ | 41,850 | $ | 62,309 | $ | 25,590 | |||||
State taxes, net of federal benefit | 5,133 | 9,757 | 11,663 | ||||||||
State tax valuation allowance | 582 | (2,710 | ) | (2,763 | ) | ||||||
Deferred impact of Arizona tax law changes and elections | (10,217 | ) | (2,962 | ) | 99 | ||||||
Tax Act - deferred tax effects | (150,903 | ) | — | — | |||||||
Impairment of goodwill | — | — | 30,464 | ||||||||
Other nondeductible expenses | (841 | ) | 596 | 557 | |||||||
Tax credits | (528 | ) | (442 | ) | (97 | ) | |||||
Foreign taxes and other items | 640 | 585 | 479 | ||||||||
Total income tax expense (benefit) | $ | (114,284 | ) | $ | 67,133 | $ | 65,992 |
As of December 31, | |||||||
2017 | 2016 | ||||||
(In thousands) | |||||||
Deferred tax assets | |||||||
Long-term contracts | $ | 61,358 | $ | 74,720 | |||
Federal, state and foreign net operating loss carryforwards and tax credits | 107,566 | 60,667 | |||||
Other | 22,680 | 34,330 | |||||
Total deferred tax assets | 191,604 | 169,717 | |||||
Valuation allowance | (3,815 | ) | (2,825 | ) | |||
Net deferred tax assets | 187,789 | 166,892 | |||||
Deferred tax liabilities | |||||||
Fixed assets, intangibles and research and development expenditures | (403,545 | ) | (513,905 | ) | |||
Investment in joint venture | (27,796 | ) | (14,643 | ) | |||
Other | (2,276 | ) | — | ||||
Total deferred tax liabilities | (433,617 | ) | (528,548 | ) | |||
Net deferred income tax liabilities | $ | (245,828 | ) | $ | (361,656 | ) |
2017 | 2016 | ||||||
(In thousands) | |||||||
Balance at January 1, | $ | 920 | $ | 916 | |||
Change attributable to tax positions taken in a prior period | 146 | 25 | |||||
Change attributable to final assessment | (27 | ) | — | ||||
Change attributable to tax positions taken in the current period | 10 | 8 | |||||
Decrease attributable to lapse of statute of limitations | (3 | ) | (29 | ) | |||
Balance at December 31, | $ | 1,046 | $ | 920 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(In thousands, except per share data) | |||||||||||
Numerator: | |||||||||||
Net income (loss) attributable to common stockholders (numerator for basic net income per share) | $ | 218,420 | $ | 95,596 | $ | (8,313 | ) | ||||
Net (income) loss allocated to participating securities | (215 | ) | (123 | ) | 3 | ||||||
Numerator for basic net income (loss) per share | 218,205 | 95,473 | (8,310 | ) | |||||||
Dividends on Series A preferred stock, declared and undeclared | 7,000 | 7,000 | — | ||||||||
Dividends on Series B preferred stock, declared and undeclared | 8,436 | 8,436 | — | ||||||||
Numerator for diluted net income (loss) per share | $ | 233,641 | $ | 110,909 | $ | (8,310 | ) | ||||
Denominator: Denominator for basic net income (loss) per share - weighted average outstanding common shares | 97,934 | 95,967 | 95,097 | ||||||||
Dilutive effect of stock options | 1,558 | 250 | — | ||||||||
Dilutive effect of Performance RSUs | 1,308 | 1,328 | — | ||||||||
Dilutive effect of Series A preferred stock | 10,602 | 10,602 | — | ||||||||
Dilutive effect of Series B preferred stock | 16,728 | 16,728 | — | ||||||||
Denominator for diluted net income (loss) per share | 128,130 | 124,875 | 95,097 | ||||||||
Net income (loss) per share attributable to common stockholders - basic | $ | 2.23 | $ | 1.00 | $ | (0.09 | ) | ||||
Net income (loss) per share attributable to common stockholders - diluted | $ | 1.82 | $ | 0.89 | $ | (0.09 | ) |
Quarter Ended | |||||||||||||||
March 31, 2017 | June 30, 2017 | September 30, 2017 | December 31, 2017 | ||||||||||||
(In thousands, except per share data) | |||||||||||||||
Revenue | $ | 104,426 | $ | 111,604 | $ | 116,547 | $ | 115,469 | |||||||
Operating income (loss) (1) | $ | 55,602 | $ | 35,742 | $ | 38,082 | $ | (13,950 | ) | ||||||
Net income (2) | $ | 37,948 | $ | 24,778 | $ | 29,253 | $ | 141,877 | |||||||
Net income per common share - basic | $ | 0.35 | $ | 0.21 | $ | 0.26 | $ | 1.40 | |||||||
Net income per common share -diluted | $ | 0.30 | $ | 0.20 | $ | 0.23 | $ | 1.10 |
(1) | Includes accelerated depreciation of $36.8 million in the fourth quarter of 2017 associated with the write-off of the full amount previously paid to Kosmotras which decreased operating income. Also includes the impact of $14.2 million related to the gain on the transaction with Boeing, effective January 3, 2017. |
(2) | Includes the impact of provisional estimates related to deferred tax assets and liabilities resulting from the Tax Act implemented in December 2017. |
Quarter Ended | |||||||||||||||
March 31, 2016 | June 30, 2016 | September 30, 2016 | December 31, 2016 | ||||||||||||
(In thousands, except per share data) | |||||||||||||||
Revenue | $ | 104,202 | $ | 109,195 | $ | 112,794 | $ | 107,449 | |||||||
Operating income | $ | 43,278 | $ | 41,729 | $ | 49,768 | $ | 41,596 | |||||||
Net income | $ | 28,520 | $ | 26,854 | $ | 31,555 | $ | 24,103 | |||||||
Net income per common share - basic | $ | 0.26 | $ | 0.24 | $ | 0.29 | $ | 0.21 | |||||||
Net income per common share -diluted | $ | 0.23 | $ | 0.22 | $ | 0.26 | $ | 0.19 |
• | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of our company; |
• | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of our company; and |
• | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our company’s assets that could have a material effect on the financial statements. |
Iridium Communications Inc.: | |
Exhibit No. | Document | |
3.1 | ||
3.2 | ||
3.3 | ||
3.4 | ||
3.5 | ||
4.1 | ||
10.1† |
Exhibit No. | Document | |
10.2 | ||
10.3 | ||
10.4 | ||
10.5† | ||
10.6 | ||
10.7† | ||
10.8† | ||
10.9 | ||
10.10 | ||
10.11 | ||
10.12† | ||
10.13† | ||
10.14 | ||
10.15 | ||
10.16 |
Exhibit No. | Document | |
10.17† | ||
10.18 | ||
10.19† | ||
10.20† | ||
10.21† | ||
10.22† | ||
10.23† | ||
10.24† | ||
10.25† | ||
10.26† | ||
10.27† | ||
10.28† | ||
10.29† | ||
10.30† | ||
10.31† |
Exhibit No. | Document | |
10.32† | ||
10.33† | ||
10.34† | ||
10.35† | ||
10.36† | ||
10.37† | ||
10.38† | ||
10.39† | ||
10.40† | ||
10.41† | ||
10.42† | ||
10.43† | ||
10.44† | ||
10.45† | ||
10.46† |
Exhibit No. | Document | |
10.47† | ||
10.48†† | ||
10.49†† | ||
10.50† | ||
10.51† | ||
10.52† | ||
10.53† | ||
10.54 | ||
10.55† | ||
10.56† | ||
10.57†† | ||
10.58† | ||
10.59 | ||
10.60† | ||
10.61 | ||
10.62 | ||
10.63 | ||
10.64† | ||
10.65† | ||
10.66 |
Exhibit No. | Document | |
10.67† | ||
10.68* | ||
10.69* | ||
10.70* | ||
10.71* | ||
10.72* | ||
10.73* | ||
10.74* | ||
10.75* | ||
10.76 | ||
10.77* | ||
10.78* | ||
10.79* | ||
10.80* | ||
10.81* | ||
10.82* | ||
10.83* | ||
10.84* | ||
10.85* | ||
10.86* |
Exhibit No. | Document | |
10.87* | ||
10.88* | ||
10.89* | ||
10.90* | ||
10.91* | ||
10.92* | ||
10.93* | ||
10.94* | ||
10.95* | ||
10.96* | ||
10.97* | ||
10.98* | ||
21.1 | ||
23.1 | ||
31.1 | ||
31.2 | ||
32.1 | ||
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase | |
101.LAB | XBRL Taxonomy Extension Label Linkbase | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
† | Confidential treatment has been granted for certain portions omitted from this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Confidential portions of this exhibit have been separately filed with the Securities and Exchange Commission. |
†† | Confidential treatment has been requested for certain portions omitted from this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Confidential portions of this exhibit have been separately filed with the Securities and Exchange Commission. |
* | Denotes compensatory plan, contract or arrangement. |
IRIDIUM COMMUNICATIONS INC. | ||
Date: February 22, 2018 | By: | /s/ Thomas J. Fitzpatrick |
Thomas J. Fitzpatrick | ||
Chief Financial Officer |
Name | Title | Date | ||
/s/ Matthew J. Desch | Chief Executive Officer and Director | February 22, 2018 | ||
Matthew J. Desch | (Principal Executive Officer) | |||
/s/ Thomas J. Fitzpatrick | Chief Financial Officer, Chief Administrative Officer and Director | February 22, 2018 | ||
Thomas J. Fitzpatrick | (Principal Financial Officer) | |||
/s/ Timothy P. Kapalka | Vice President and Corporate Controller, Iridium Satellite LLC | February 22, 2018 | ||
Timothy P. Kapalka | (Principal Accounting Officer) | |||
/s/Robert H. Niehaus | Director and Chairman of the Board | February 22, 2018 | ||
Robert H. Niehaus | ||||
/s/ Thomas C. Canfield | Director | February 22, 2018 | ||
Thomas C. Canfield | ||||
/s/ Jane L. Harman | Director | February 22, 2018 | ||
Jane L. Harman | ||||
/s/ Alvin B. Krongard | Director | February 22, 2018 | ||
Alvin B. Krongard | ||||
/s/ Eric T. Olson | Director | February 22, 2018 | ||
Eric T. Olson | ||||
/s/ Steven B. Pfeiffer | Director | February 22, 2018 | ||
Steven B. Pfeiffer | ||||
/s/ Parker W. Rush | Director | February 22, 2018 | ||
Parker W. Rush | ||||
/s/ Henrik O. Schliemann | Director | February 22, 2018 | ||
Henrik O. Schliemann | ||||
/s/ S. Scott Smith | Director | February 22, 2018 | ||
S. Scott Smith | ||||
/s/ Barry J. West | Director | February 22, 2018 | ||
Barry J. West |
(a) | Launches 2 through 7 |
(i) | Quantity of Satellites - Ten (10) |
(ii) | Launch Services Provider - SpaceX |
(iii) | Launch Vehicle - Falcon 9, and |
(iv) | Launch Site - Vandenberg Air Force Base, California |
(b) | Rideshare Launch |
(i) | Quantity of Satellites - Five (5) Satellites |
(ii) | Launch Services Provider - SpaceX |
(iii) | Launch Vehicle - Falcon 9, and |
(iv) | Launch Site - Vandenberg Air Force Base, California |
DRAWER (TIREUR) _____________________ [Signature of the representative of Thalès Alenia Space France] THALÈS ALENIA SPACE FRANCE As Drawer (Tireur) By [name of the representative of Thalès Alenia Space France | ACCEPTED BY IRIDIUM SATELLITE LLC _____________________ [Signature of the representative of Iridium Satellite LLC] IRIDIUM SATELLITE LLC By [name of the representative of Iridium Satellite LLC] |
From: | Iridium Satellite LLC and [Société Générale] (the BPIAE Agent) |
To: | [THALÈS ALENIA SPACE FRANCE] as transferee and [[***]] as transferor. |
________________________ | ________________________ | |
Iridium Satellite LLC | Société Générale | |
The Drawee | The BPIAE Agent |
IRIDIUM SATELLITE LLC | SPACE EXPLORATION TECHNOLOGIES CORP. | |||
Signature: | /s/ S. Scott Smith | Signature: | /s/ Gwynne Shotwell | |
Name: | S. Scott Smith | Name: | Gwynne Shotwell | |
Title: | Chief Operating Officer | Title: | President |
• | Annual Board Retainer: $160,000 will be payable for each calendar year to each Non-Employee Director as follows: |
• | $50,000 in the form of cash (the “Annual Cash Retainer”), unless the Non-Employee Director makes a timely election to receive all or a portion of the Annual Cash Retainer in the form of restricted stock units (“RSUs”) (subject to the limitations described below); and |
• | $110,000 in the form of RSUs (the “Annual Stock Retainer”). |
• | Annual Committee Chair Retainers: The following amounts will be payable for each calendar year to each chairperson of the following committees of the Board (each, a “Committee”) in the form of cash, unless the Non-Employee Director makes a timely election to receive all or a portion of the Annual Committee Chair Retainer in the form of RSUs (subject to the limitations described below): |
• | Audit – $40,000; |
• | Compensation – $15,000; and |
• | Nominating and Corporate Governance – $7,500. |
• | Annual Chairman of the Board Retainer: $50,000 will be payable for each calendar year to the chairman of the Board in the form of cash, unless the Non-Employee Director makes a timely election to receive all or a portion of the Annual Chairman of the Board Retainer in the form of RSUs (subject to the limitations described below). |
• | Annual Government Advisory Committee Retainer: $15,000 will be payable for each calendar year in the form of RSUs to each Non-Employee Director serving on the Company’s Government Advisory Committee during a calendar year (subject to the limitations described below). Non-Employee Directors serving on the Government Advisory Committee may not make an election to receive the Annual Government Advisory Committee Retainer in any other form. |
• | Partial Year of Service: Notwithstanding the foregoing or anything in this Program to the contrary, if a Non-Employee Director’s service as a Non-Employee Director (for purposes of any Annual Cash Retainer or Annual Stock Retainer) or as a chairperson of a Committee (for purposes of any Annual Committee Chair Retainer) or as a chairman of the Board (for purposes of any Annual Chairman of the Board Retainer) or as a member of the Government Advisory Committee (for purposes of the Annual Government Advisory Committee Retainer) commences or terminates after the beginning of a calendar year, then the Non-Employee Director will only be eligible to receive 25% of the full amount of the applicable retainer (each as set forth above), in the applicable form, for each partial or full calendar quarter of such service completed during such calendar year. Notwithstanding the foregoing, upon termination of service as a Director any portion of any retainer paid in the form of RSUs will be forfeited to the extent not vested on the date of or as a result of such termination in accordance with the terms of this Program. |
• | Current Non-Employee Directors: |
• | Cash: The portion (if any) of each Annual Cash Retainer, Annual Committee Chair Retainer and Annual Chairman of the Board Retainer that is to be paid in the form of cash will be determined based on such election. Such portion will be paid in the form of cash in arrears in equal installments over the applicable number of calendar quarters during such calendar year, with payment occurring on or as soon as practicable after the last day of the applicable calendar quarter and in all cases not later than March 15 of the calendar year following the calendar year in which it was earned. |
• | Stock: The portion (if any) of each Annual Cash Retainer, Annual Committee Chair Retainer and Annual Chairman of the Board Retainer that is to be granted in the form of RSUs will be determined based on such election. Such portion will be granted in the form of RSUs on the third business day in January of such calendar year. Any such award will vest in full on the first anniversary of the date of grant of the award, provided that the Non-Employee Director is in service as a Director on such vesting date. |
• | New Non-Employee Directors: |
• | Cash: 25% of the full amount of an Annual Cash Retainer (and Annual Committee Chair Retainer and Annual Chairman of the Board Retainer, if applicable), as set forth under “Annual Compensation” above, will be paid in the form of cash for (i) the calendar quarter in which the Non-Employee Director’s service as a Non-Employee Director, chairperson of a Committee or chairman of the Board, as applicable, commences and, (ii) if later, for the calendar quarter in which such election is made, with payment occurring on or as soon as practicable after the last day of the applicable calendar quarter and in all cases not later than March 15 of the calendar year following the calendar year in which it was earned. |
• | Stock: With respect to any calendar quarter during such calendar year that begins after the date of such election, the portion (if any) of an Annual Cash Retainer, Annual Committee Chair Retainer or Annual Chairman of the Board Retainer that is to be granted in the form of RSUs will be determined based on such election. Such portion will be granted in the form of RSUs on the first business day of the first calendar quarter that begins after the date of such election. Any such award will vest in full on the first anniversary of the date of grant of the award, provided that the Non-Employee Director is in service as a Director on such vesting date. |
• | Once an election is submitted for a calendar year, it will be irrevocable with respect to such calendar year. |
• | A Non-Employee Director must submit a new election for each calendar year. |
• | Elections must be allocated in multiples as follows: |
• | Allocation of the Annual Committee Chair Retainer and/or Annual Chairman of the Board Retainer must be made among cash and RSUs in multiples of 25%. |
• | Current Non-Employee Directors Serving on Government Advisory Committee: If a Non-Employee Director’s service on the Government Advisory Committee commences prior to the beginning of a calendar year, then the Non-Employee Director’s Annual Government Advisory Committee Retainer paid in the form of RSUs will be granted on the third business day in January of such calendar year and will vest on the first anniversary of the date of grant, provided that the Non-Employee Director is in service as a Director on such vesting date. |
• | Non-Employee Directors Commencing Service on Government Advisory Committee: If a Non-Employee Director commences service on the Government Advisory Committee on or after the beginning of a calendar year, then the Non-Employee Director’s Annual Government Advisory Committee Retainer paid in the form of RSUs, as set forth under “Annual Compensation” above, will be pro-rated based on the number of calendar quarters during the year during which the Non-Employee Director will serve on the Committee and will be granted on the first business day of the first calendar quarter that begins after the date the Non-Employee Director commences service on the Government Advisory Committee provided, however, that if such service commences during the final calendar quarter of such calendar year, such award will be granted on the last business day of such calendar year. The RSUs will vest in full on the first anniversary of the date of grant, provided that the Non-Employee Director is in service as a Director on such vesting date. |
• | Any RSUs described in this Program will be granted under the Equity Incentive Plan and will be subject to the terms and conditions of (i) this Program, (ii) the Equity Incentive Plan and (iii) the forms of RSU grant notice and agreement approved by the Board for the grant of such awards to Non-Employee Directors. |
• | Unless a number of units is otherwise set forth in this Program, the actual number of units subject to any RSUs granted pursuant to this Program will be determined by dividing the dollar amount allocated to such award by the Fair Market Value of a share of the Company’s common stock on the day on which the RSU is granted. |
• | Any vested RSUs granted pursuant to this Program will be settled in shares of the Company’s common stock on the earlier of (i) six months and one day after a Non-Employee Director’s “separation from service” (as such term is defined in Treasury Regulations Section 1.409A-1(h) without regard to any alternative definition thereunder) as a Director (a “Separation from Service”) for any reason or (ii) a Change in Control that also constitutes a “change in control event” (as determined under Treasury Regulations Section 1.409A-3(i)(5)) (a “Change in Control”). |
• | With respect to any outstanding RSUs granted pursuant to this Program, if a Non-Employee Director’s service as a Director is terminated: |
• | due to the Non-Employee Director’s death or Disability, any unvested portion of any such award will become fully vested upon such termination; or |
• | due to any reason other than death or Disability or Cause, any unvested portion of any such award will be forfeited to the Company. |
IRIDIUM Compensation Program for Non-Employee Directors 2018 Election Form | |||||||
Name (Last, First, Middle Initial) | Social Security Number | Date of Birth | |||||
Address | City | State | Zip Code | ||||
Date of Election to Board of Directors | Date of Participation in Program | Primary Phone Number | |||||
By signing below, I certify that I have read and understand the terms of the Iridium Communications Inc. Compensation Program for Non-Employee Directors (the “Program”) and voluntarily elect the compensation allocations listed below. By signing below, I also understand that (i) to be valid, my election must be received by Iridium by no later than December 31, 2017, (ii) my election may not be revoked or changed once made, (iii) if I do not make a timely election, I will be paid my Annual Board Retainer $50,000 in cash and $110,000 in restricted stock units and 100% of any other retainer I am eligible to receive in cash and (iv) any compensation I elect to receive as restricted stock units (if vested) will not be paid out to me until six months and one day after my separation from service (as defined under Treasury Regulations Section 1.409A-1(h)) as a director (or, if earlier, on a Change in Control (as defined in the Iridium Communications Inc. Amended and Restated 2015 Equity Incentive Plan) that also constitutes a “change in control event” (as determined under Treasury Regulations Section 1.409A-3(i)(5)). | |||||||
2018 Compensation Allocation — Annual Board Retainer The Annual Board Retainer ($160,000) consists of (i) an Annual Cash Retainer ($50,000) and (ii) an Annual Stock Retainer ($110,000). The election for the Annual Cash Retainer may be allocated among cash and restricted stock. Note: This election will apply only to the Annual Cash Retainer. An election may not be made with respect to the Annual Stock Retainer. The Annual Stock Retainer will be paid 100% in restricted stock units. | |||||||
I hereby elect the following allocation for my 2018 Annual Cash Retainer: | |||||||
Annual Cash Retainer ($50,000): Cash $___ Restricted Stock Units $___ Total $50,000 | |||||||
2018 Compensation Allocation — Annual Committee Chair or Chairman of Board Retainer The election for the Annual Committee Chair Retainer and/or Annual Chairman of the Board Retainer may be allocated among cash and restricted stock units in multiples of 25%. Note: This election will apply to any Annual Committee Chair Retainer and/or Annual Chairman of the Board Retainer that is or may become payable for 2018. An election may not be made with respect to the Annual Government Advisory Committee Retainer, if applicable. | |||||||
I hereby elect the following allocation for my 2018 Annual Committee Chair Retainer and/or Annual Chairman of the Board (if any): | |||||||
Annual Committee Chair Retainer: Cash ___% Restricted Stock Units ___% Total Percentage = 100% | Annual Chairman of the Board Retainer: Cash ___% Restricted Stock Units ___% Total Percentage = 100% | ||||||
SIGNATURE Director Date |
Subsidiary | Jurisdiction of Organization | |
Iridium Blocker-B Inc. | Delaware | |
Syncom-Iridium Holdings Corp. | Delaware | |
Iridium Holdings LLC | Delaware | |
Iridium Satellite LLC | Delaware | |
Iridium Constellation LLC | Delaware | |
Iridium Carrier Holdings LLC | Delaware | |
Iridium Carrier Services LLC | Delaware | |
Iridium Government Services LLC | Delaware | |
OOO Iridium Services | Russia | |
OOO Iridium Communications | Russia | |
Iridium Norway A/S | Norway |
1. | I have reviewed this annual report on Form 10-K of Iridium 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 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. |
Date: February 22, 2018 | /s/ Matthew J. Desch |
Matthew J. Desch | |
Chief Executive Officer (principal executive officer) |
1. | I have reviewed this annual report on Form 10-K of Iridium 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 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. |
Date: February 22, 2018 | /s/ Thomas J. Fitzpatrick |
Thomas J. Fitzpatrick | |
Chief Financial Officer (principal financial officer) |
1. | The Company’s Quarterly Report on Form 10-K for the fiscal year ended December 31, 2017, to which this Certification is attached as Exhibit 32.1 (the “Form 10-K”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Form 10-K fairly presents, in all material respects, the financial condition of the Company at the end of the period covered by the Form 10-K and results of operations of the Company for the periods covered in the financial statements in the Form 10-K. |
/s/ Matthew J. Desch | /s/ Thomas J. Fitzpatrick | |
Matthew J. Desch | Thomas J. Fitzpatrick | |
Chief Executive Officer | Chief Financial Officer |
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Document And Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Feb. 15, 2018 |
Jun. 30, 2017 |
|
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Year Focus | 2017 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | IRDM | ||
Entity Registrant Name | Iridium Communications Inc. | ||
Entity Central Index Key | 0001418819 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 98,211,433 | ||
Entity Public Float | $ 930,600,000 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Preferred stock, par value (in dollars per share) | $ 0.0001 | |
Preferred stock, shares authorized | 2,000,000 | |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 98,203,000 | 95,879,000 |
Common stock, shares outstanding | 98,203,000 | 95,879,000 |
Series A Preferred Stock | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 1,000,000 | 1,000,000 |
Preferred stock, shares outstanding | 1,000,000 | 1,000,000 |
Series B Preferred Stock | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 500,000 | 500,000 |
Preferred stock, shares issued | 500,000 | 500,000 |
Preferred stock, shares outstanding | 499,955 | 500,000 |
Organization and Business |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business | Organization and Business Iridium Communications Inc. (the “Company”), a Delaware corporation, offers voice and data communications services and products to businesses, U.S. and international government agencies and other customers on a global basis. The Company is a provider of mobile voice and data communications services via a constellation of low earth orbiting satellites. The Company holds various licenses and authorizations from the U.S. Federal Communications Commission (the “FCC”) and from foreign regulatory bodies that permit the Company to conduct its business, including the operation of its satellite constellation. |
Significant Accounting Policies and Basis of Presentation |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies and Basis of Presentation | Significant Accounting Policies and Basis of Presentation Principles of Consolidation and Basis of Presentation The Company has prepared the consolidated financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The accompanying consolidated financial statements include the accounts of (i) the Company, (ii) its wholly owned subsidiaries, and (iii) all less than wholly owned subsidiaries that the Company controls. All intercompany transactions and balances have been eliminated. Use of Estimates 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 disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ materially from those estimates. Adopted Accounting Pronouncements In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-09, Compensation – Stock Compensation, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). ASU 2016-09 addresses multiple changes that are primarily focused on income taxes and the presentation of taxes related to stock compensation, but also provides an option for two methods to account for forfeitures. The requirements resulting from the adoption of ASU 2016-09 were accounted for on a prospective basis as of January 1, 2017, as required.
There were no additional impacts on the Company’s financial statements resulting from the adoption of ASU 2016-09 that required a retrospective or modified retrospective approach. In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU 2015-11 requires that inventory within the scope of the guidance be measured at the lower of cost and net realizable value. The Company applied the new guidance prospectively effective January 1, 2017, as required. Inventory measured using last-in, first-out and retail inventory method are excluded from this new guidance. When evidence exists that the net realizable value of inventory is less than its cost, the Company will recognize the difference as a loss in earnings in the period the measurement occurs. This ASU replaces the concept of market with the single measurement of net realizable value and is intended to create efficiencies for preparers and more closely aligns U.S. GAAP with International Financial Reporting Standards. The adoption had an immaterial impact on the Company’s condensed consolidated balance sheet, condensed consolidated statement of operations and comprehensive income, and condensed consolidated statement of cash flows as of and for the year ended, December 31, 2017. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). ASU 2016-18 requires that restricted cash be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the statements of cash flows. The Company early adopted the new guidance during the fourth quarter of 2017, as permitted, and the new guidance was applied using a retrospective transition method for all periods presented. The adoption of ASU 2016-18 did not have a material impact on the Company's consolidated statements of cash flows. The following table provides a reconciliation of cash and cash equivalents, and restricted cash reported within the consolidated balance sheets at December 31, 2017 and 2016, that sum to the total of such amounts in the consolidated statements of cash flows:
Recent Accounting Developments Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 requires lessees to record most leases on their balance sheets but recognize expenses on their income statements in a manner similar to current accounting. The Company intends to apply the new guidance effective January 1, 2019, as required. Reporting organizations are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company is currently evaluating the effect ASU 2016-02 may have on its condensed consolidated financial statements and related disclosures, but a lease liability and related right-of-use asset will be recognized for operating lease arrangements where the Company is the lessee. In May 2014, the FASB and the International Accounting Standards Board jointly issued a comprehensive new revenue recognition standard, ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), that will supersede nearly all existing revenue recognition guidance under U.S. GAAP. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has issued several amendments to the standard including clarification on accounting for licenses of intellectual property, identifying performance obligations, and most recently, technical corrections on the interpretation of the new guidance. In July 2015, the FASB voted to defer the effective date of ASU 2014-09 for public entities to be effective for annual and interim periods beginning after December 15, 2017. ASU 2014-09 becomes effective for the Company in the first quarter of fiscal 2018, and the Company anticipates adopting the standard using the modified retrospective method with a cumulative effect adjustment recorded to opening retained earnings as of the initial adoption date (January 1, 2018). This method requires application of the new guidance at the beginning of the earliest comparative period presented for revenue agreements that are not substantially complete as of the date of adoption. All new revenue agreements executed after the adoption date are accounted for prospectively under the new standard. The Company established a project team in order to analyze the effect of the standard on its contracts by reviewing its current accounting policies and practices to identify potential differences which would result from applying the requirements of the new standard to its revenue contracts. The Company aggregated its contracts into homogeneous revenue streams and assessed all potential effects of the standard. The Company has substantially completed its evaluation of the potential changes from adopting the new standard on its future financial reporting and disclosures. Adopting the new standard is expected to have an immaterial impact on the Company’s total net sales and operating income. The primary impact of adopting ASU 2014-09 relates to the Company’s prepaid service revenue and associated breakage, which is currently recognized as revenue at the date the right to access the prepaid service has expired. Under the new standard, the Company will estimate the expected revenue that will expire unused on an ongoing basis and recognize this revenue over the usage period. Upon adoption, the Company expects the deferred revenue associated with prepaid service revenue to be reduced by approximately $15.6 million for this breakage estimate. Revenue on the majority of the Company’s contracts will continue to be recognized consistent with the Company’s current revenue recognition model, exclusive of the aforementioned prepaid revenue. The Company also does not expect the standard to have a material impact on its consolidated balance sheet. Fair Value Measurements The Company evaluates assets and liabilities subject to fair value measurements on a recurring and non-recurring basis to determine the appropriate level to classify them for each reporting period. This determination requires significant judgments to be made by management of the Company. The instruments identified as subject to fair value measurements on a recurring basis are cash and cash equivalents, marketable securities, prepaid expenses and other current assets, accounts receivable, accounts payable and accrued expenses and other current liabilities. Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of observability of inputs used in measuring fair value. The fair value hierarchy consists of the following tiers:
The carrying values of short-term financial instruments (primarily cash and cash equivalents, prepaid expenses and other current assets, accounts receivable, accounts payable, and accrued expenses and other current liabilities) approximate their fair values because of their short-term nature. The fair value of the Company’s investments in money market funds approximates its carrying value; such instruments are classified as Level 1 and are included in cash and cash equivalents on the accompanying consolidated balance sheets. The fair value of the Company’s investments in commercial paper and short-term U.S. agency securities with original maturities of less than ninety days approximates their carrying value; such instruments are classified as Level 2 and are included in cash and cash equivalents on the accompanying consolidated balance sheets. The fair value of the Company’s investments in fixed-income debt securities and commercial paper with original maturities of greater than ninety days are obtained using similar investments traded on active securities exchanges and are classified as Level 2. For fixed income securities that do not have quoted prices in active markets, the Company uses third-party vendors to price its debt securities resulting in classification as Level 2. All fixed-income securities are included in marketable securities on the accompanying consolidated balance sheets. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, and receivables. The majority of cash is swept nightly into a money market fund invested in U.S. treasuries, Agency Mortgage Backed Securities and/or U.S. Government guaranteed debt. While the Company maintains its cash and cash equivalents with financial institutions with high credit ratings, it often maintains those deposits in federally insured financial institutions in excess of federally insured limits. The Company’s marketable securities are highly-rated corporate and foreign fixed-income debt securities and commercial paper with an original maturity in excess of ninety days. The Company performs credit evaluations of its customers’ financial condition and records reserves to provide for estimated credit losses. Accounts receivable are due from both domestic and international customers. Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments with original maturities of ninety days or less to be cash equivalents. These investments, along with cash deposited in institutional money market funds, regular interest bearing depository accounts and non-interest bearing depository accounts, are classified as cash and cash equivalents on the accompanying consolidated balance sheets. The Company is required to maintain a minimum cash reserve for debt service related to its $1.8 billion credit facility (as amended to date, the “Credit Facility”). Marketable Securities Marketable securities consist of fixed-income debt securities and commercial paper with an original maturity in excess of ninety days. These investments are classified as available-for-sale and are included in marketable securities within current assets on the accompanying consolidated balance sheets. All investments are carried at fair value. Unrealized gains and losses, net of taxes, are reported as a component of other comprehensive income or loss. The specific identification method is used to determine the cost basis of the marketable securities sold. There were no material realized gains or losses on the sale of marketable securities for the years ended December 31, 2017 and 2016. The Company regularly monitors and evaluates the fair value of its investments to identify other-than-temporary declines in value. The Company determined that any decline in fair value of these investments is temporary as the Company does not intend to sell these securities and it is not likely that the Company will be required to sell the securities before the recovery of their amortized cost basis. Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and are subject to late fee penalties. Management develops its estimate of an allowance for uncollectible receivables based on the Company’s experience with specific customers, aging of outstanding invoices, its understanding of customers’ current economic circumstances and its own judgment as to the likelihood that the Company will ultimately receive payment. The Company writes off its accounts receivable when balances ultimately are deemed uncollectible. The allowance for doubtful accounts was not material as of December 31, 2017 and 2016. Foreign Currencies The functional currency of the Company’s foreign consolidated subsidiaries is the local currency. Assets and liabilities of its foreign subsidiaries are translated to U.S. dollars based on exchange rates at the end of the reporting period. Income and expense items are translated at the weighted-average exchange rates prevailing during the reporting period. Translation adjustments are accumulated in a separate component of stockholders’ equity. Transaction gains or losses are classified as other income (expense), net in the accompanying consolidated statements of operations and comprehensive income. Deferred Financing Costs Direct and incremental costs incurred in connection with securing debt financing are deferred and are amortized as additional interest expense using the effective interest method over the term of the related debt. As of December 31, 2017 and 2016, the Company had deferred approximately $97.2 million and $120.6 million, respectively, of direct and incremental financing costs, net of amortization, associated with securing debt financing for Iridium NEXT, the Company’s next-generation satellite constellation. Capitalized Interest Interest costs associated with financing the Company’s assets during the construction period of Iridium NEXT have been capitalized. Capitalized interest costs for the years ended December 31, 2017, 2016 and 2015 were $114.4 million, $106.4 million and $83.1 million, respectively, which include amortization of deferred financing costs as discussed above. Inventory Inventory consists primarily of finished goods, although the Company at times also maintains an inventory of raw materials from third-party manufacturers. The Company outsources manufacturing of subscriber equipment to a third-party manufacturer and purchases accessories from third-party suppliers. The Company’s cost of inventory includes an allocation of overhead, including payroll and payroll-related costs of employees directly involved in bringing inventory to its existing condition, and freight. Inventories are valued using the average cost method and are carried at the lower of cost or net realizable value. Accordingly, the Company recorded expenses of $0.4 million, $1.1 million and $0.7 million, for the years ended December 31, 2017, 2016 and 2015, respectively, included within the cost of subscriber equipment for excess and obsolete inventory. The expenses for the years ended December 31, 2017 and 2016 were primarily related to certain handset parts and accessories, and the expenses for the year ended December 31, 2015 were primarily related to Iridium Pilot equipment. The Company has a manufacturing agreement with Benchmark Electronics Inc. (“Benchmark”) to manufacture subscriber equipment. Pursuant to the agreement, the Company may be required to purchase excess materials if the materials are not used in production within the periods specified in the agreement. Benchmark will then repurchase such materials from the Company at the same price paid by the Company, as required for the production of the subscriber equipment. Stock-Based Compensation The Company accounts for stock-based compensation at fair value. The fair value of stock options is determined at the grant date using the Black-Scholes option pricing model. The fair value of restricted stock units (“RSUs”) is equal to the closing price of the underlying common stock on the grant date. The fair value of an award that is ultimately expected to vest is recognized on a straight-line basis over the requisite service or performance period and is classified in the consolidated statements of operations and comprehensive income in a manner consistent with the classification of the recipient’s compensation. The expected vesting of the Company’s performance-based RSUs is based upon the probability that the Company achieves the defined performance goals. The level of achievement of performance goals, if any, is determined by the compensation committee. Stock-based awards to non-employee consultants are expensed at their fair value as services are provided according to the terms of their agreements and are classified in selling, general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income. Classification of stock-based compensation was presented below:
Property and Equipment Property and equipment is carried at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the following estimated useful lives:
The estimated useful lives of the Company’s first-generation satellites reflect the period of expected use for each satellite. Satellites are depreciated on a straight-line basis through the date they will be replaced by next-generation satellites. The Company began deployment of its next-generation satellite constellation (“Iridium NEXT”) in January 2017, and, based on the current launch schedule, the Company expects the final launch to occur in 2018. The Company’s next-generation satellites will be depreciated on a straight-line basis over the estimated useful life, which is currently estimated to be 12.5 years. The Company calculates depreciation expense using the straight-line method and evaluates the appropriateness of the useful life used in this calculation on a quarterly basis or as events occur that require additional assessment. Repairs and maintenance costs are expensed as incurred. Long-Lived Assets The Company assesses its long-lived assets for impairment when indicators of impairment exist. Recoverability of assets is measured by comparing the carrying amounts of the assets to the future undiscounted cash flows expected to be generated by the assets. Any impairment loss would be measured as the excess of the assets’ carrying amount over their fair value. In June 2011, the Company entered into an agreement with International Space Company Kosmotras, or Kosmotras, as a supplemental launch services provider for Iridium NEXT. The total cost under the Kosmotras agreement is $51.8 million. Kosmotras to date has been unable to obtain the permits or authorizations to launch the Company's satellites on a Dnepr rocket as planned, and Kosmotras has proposed no satisfactory alternative launch plan. Because the Company now believes the construction-in-progress associated with the Kosmotras launch services will no longer be used or further developed, the Company wrote-off the full amount previously paid to Kosmotras, by recording accelerated depreciation expense of $36.8 million, in the fourth quarter of 2017. Goodwill and Other Intangible Assets Goodwill Goodwill is the excess of the acquisition cost of businesses over the fair value of the identifiable net assets acquired. Impairment testing for goodwill is performed during the fourth quarter of each annual period or more frequently if indicators of potential impairment exist. Goodwill impairment is determined using a two-step process. The first step involves a comparison of the estimated fair value of a reporting unit to its carrying amount, including goodwill. If the estimated fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired and the second step of the impairment test is not necessary. If the carrying amount of a reporting unit exceeds its estimated fair value, then the second step of the goodwill impairment test must be performed. To measure the amount of impairment loss, if any, the implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. Specifically, the estimated fair value of the reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the price paid to acquire the reporting unit. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The Company operates in a single reporting unit, and the possibility of impairment is assessed by comparing the carrying amount of the reporting unit to its estimated fair value. The most recent annual assessment of goodwill and indefinite-lived assets was performed on October 1, 2015 (the “2015 Analysis”), and the Company determined that the current value of the reporting unit exceeded its fair value. As a result, the Company recorded a non-cash goodwill impairment charge of $87.0 million during the fourth quarter of 2015. The Company had no goodwill as of December 31, 2017 and 2016. Intangible Assets Subject to Amortization The Company’s intangible assets with finite lives, are amortized over their useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If any indicators were present, the Company would test for recoverability by comparing the carrying amount of the asset to the net undiscounted cash flows expected to be generated from the asset. If those net undiscounted cash flows do not exceed the carrying amount (i.e., the asset is not recoverable), the Company would perform the next step, which is to determine the fair value of the asset and record an impairment loss, if any. The Company evaluates the useful lives for these intangible assets each reporting period to determine whether events and circumstances warrant a revision in their remaining useful lives. Amortization is calculated using the straight-line method over the following estimated useful lives:
Revenue Recognition The Company derives its revenue primarily as a wholesaler of satellite communications products and services. The primary types of revenue include (i) service revenue (access and usage-based airtime fees), (ii) subscriber equipment revenue, and (iii) revenue generated by providing engineering and support services to commercial and government customers. Wholesaler of satellite communications products and services Pursuant to wholesale agreements, the Company sells its products and services to service providers who, in turn, sell the products and services to other distributors or directly to the end users. The Company recognizes revenue when services are performed or delivery has occurred, evidence of an arrangement exists, the fee is fixed or determinable, and collection is reasonably assured, as follows: Contracts with multiple elements At times, the Company sells services and equipment through multi-element arrangements that bundle equipment, airtime and other services. For multi-element revenue arrangements when the Company sells services and equipment in bundled arrangements and determines that it has separate units of accounting, the Company allocates the bundled contract price among the various contract deliverables based on each deliverable’s relative selling price. The selling price used for each deliverable is based on vendor-specific objective evidence when available, third-party evidence when vendor-specific objective evidence is not available, or the estimated selling price when neither vendor-specific evidence nor third party evidence is available. The Company determines vendor-specific objective evidence of selling price by assessing sales prices of subscriber equipment, airtime and other services when they are sold to customers on a stand-alone basis. The Company’s determination of best estimate of selling price is consistent with its determination of vendor-specific objective evidence of selling price, and the Company assesses qualitative and quantitative market factors and entity-specific factors when estimating the selling price. When the Company determines the elements are not separate units of accounting, the Company recognizes revenue on a combined basis as the last element is delivered. Service revenue sold on a stand-alone basis Service revenue is generated from the Company’s service providers through usage of its satellite system and through fixed monthly access fees per user charged to service providers. Revenue for usage is recognized when usage occurs. Revenue for fixed-per-user access fees is recognized ratably over the period in which the services are provided to the end user. The Company sells prepaid services in the form of e-vouchers and prepaid cards. A liability is established equal to the cash paid upon purchase for the e-voucher or prepaid card. The Company recognizes revenue from the prepaid services upon the use of the e-voucher or prepaid card by the customer or upon the expiration of the right to access the prepaid service. While the terms of prepaid e-vouchers can be extended by the purchase of additional e-vouchers, prepaid e-vouchers may not be extended beyond three or four years, dependent on the initial expiry period when purchased. The Company does not offer refunds for unused prepaid services. Subscriber equipment sold on a stand-alone basis The Company recognizes subscriber equipment sales and the related costs when title to the equipment (and the risks and rewards of ownership) passes to the customer, typically upon shipment. Services sold to the U.S. government The Company provides airtime and airtime support to U.S. government and other authorized customers pursuant to the Enhanced Mobile Satellite Services (“EMSS”) contract managed by the Defense Information Systems Agency (“DISA”). Effective October 22, 2013, the Company executed a new five-year EMSS contract, managed by DISA. Under the terms of this new agreement, authorized customers continue to utilize airtime services, provided through the U.S. Department of Defense’s (“DoD”) dedicated gateway. These services include unlimited global secure and unsecure voice, low and high-speed data, paging, broadcast and Distributed Tactical Communications Services (“DTCS”) services for an unlimited number of DoD and other federal subscribers. The fixed-price rate for the remaining contract year, which runs through October 21, 2018, is $88 million per year. Under this contract, revenue is based on the annual fee for the fixed-price contract with unlimited subscribers, and is recognized on a straight-line basis over each contractual year. The U.S. government purchases its subscriber equipment from third-party distributors and not directly from the Company. Government engineering and support services The Company provides maintenance services to the U.S. government’s dedicated gateway. This revenue is recognized ratably over the periods in which the services are provided; the related costs are expensed as incurred. Other government and commercial engineering and support services The Company also provides engineering services to assist customers in developing new technologies for use on the Company’s satellite system. The revenue associated with these services is recorded when the services are rendered, typically on a proportional performance method of accounting based on the Company’s estimate of total costs expected to complete the contract, and the related costs are expensed as incurred. Revenue on cost-plus-fixed-fee contracts is recognized to the extent of estimated costs incurred plus the applicable fees earned. The Company considers fixed fees under cost-plus-fixed-fee contracts to be earned in proportion to the allowable costs incurred in performance of the contract. Research and Development Research and development costs are charged to expense in the period in which they are incurred. Advertising Costs Costs associated with advertising and promotions are expensed as incurred. Advertising expenses were $0.3 million, $0.5 million and $0.5 million for the years ended December 31, 2017, 2016 and 2015, respectively. Income Taxes The Company accounts for income taxes using the asset and liability approach, which requires the recognition of tax benefits or expenses for temporary differences between the financial reporting and tax bases of assets and liabilities. A valuation allowance is established when necessary to reduce deferred tax assets to the amounts expected to be realized. The Company also recognizes a tax benefit from uncertain tax positions only if it is “more likely than not” that the position is sustainable based on its technical merits. The Company’s policy is to recognize interest and penalties on uncertain tax positions as a component of income tax expense. Net Income (Loss) Per Share The Company calculates basic net income (loss) per share by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share takes into account the effect of potential dilutive common shares when the effect is dilutive. The effect of potential dilutive common shares, including common stock issuable upon exercise of outstanding stock options, is computed using the treasury stock method. The effect of potential dilutive common shares from the conversion of the outstanding convertible preferred securities is computed using the as-if converted method at the stated conversion rate. The Company’s unvested restricted stock units ("RSUs") awarded to the board of directors contain non-forfeitable rights to dividends and therefore are considered to be participating securities in periods of net income. The calculation of basic and diluted net income (loss) per share excludes net income attributable to these unvested RSUs from the numerator and excludes the impact of these unvested RSUs from the denominator. |
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Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents and Marketable Securities | 3. Cash and Cash Equivalents and Marketable Securities Cash and Cash Equivalents The following table summarizes the Company’s cash and cash equivalents:
Restricted Cash The Company is required to maintain a minimum cash reserve for debt service related to its $1.8 billion loan facility (as amended to date, the “Credit Facility”) (see Note 5 for additional information). As of December 31, 2017 and 2016, the Company’s restricted cash balance, which includes a minimum cash reserve for debt service related to the Credit Facility and the interest earned on these amounts, was $102.4 million and $113.1 million, respectively. Marketable Securities The following tables summarize the Company’s marketable securities:
The following table presents the contractual maturities of the fixed income debt securities, commercial paper and U.S. Treasury notes:
The decrease in marketable securities from December 31, 2016 to December 31, 2017 is due to the Company selling some of its investments during 2017 and utilizing the proceeds to support the construction of Iridium NEXT. |
Equity Transactions |
12 Months Ended |
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Dec. 31, 2017 | |
Stockholders' Equity Note [Abstract] | |
Equity Transactions | Equity Transactions Preferred Stock The Company is authorized to issue 2.0 million shares of preferred stock with a par value of $0.0001 per share. As described below, the Company issued 1.0 million shares of preferred stock in the fourth quarter of 2012 and 0.5 million shares of preferred stock in the second quarter of 2014. The remaining 0.5 million authorized shares of preferred stock were undesignated and unissued as of December 31, 2017. Series A Cumulative Perpetual Convertible Preferred Stock In the fourth quarter of 2012, the Company issued 1.0 million shares of its 7.00% Series A Cumulative Perpetual Convertible Preferred Stock in a private offering. The Company received proceeds of $96.5 million from the sale of the Series A Preferred Stock, net of the aggregate $3.5 million in initial purchaser discount and offering costs. The net proceeds of this offering were used to partially fund the construction and deployment of Iridium NEXT and for other general corporate purposes. Holders of Series A Preferred Stock are entitled to receive cumulative cash dividends at a rate of 7.00% per annum of the $100 liquidation preference per share (equivalent to an annual rate of $7.00 per share). Dividends are payable quarterly in arrears on each March 15, June 15, September 15 and December 15. The Series A Preferred Stock does not have a stated maturity date and is not subject to any sinking fund or mandatory redemption provisions. The Series A Preferred Stock ranks senior to the Company’s common stock and on parity with the Company’s 6.75% Series B Cumulative Perpetual Convertible Preferred Stock with respect to dividend rights and rights upon the Company’s liquidation, dissolution or winding-up. Holders of Series A Preferred Stock generally have no voting rights except for limited voting rights if the Company fails to pay dividends for six or more quarterly periods (whether or not consecutive) and in other specified circumstances. Holders of Series A Preferred Stock may convert some or all of their outstanding Series A Preferred Stock at an initial conversion rate of 10.6022 shares of common stock per $100 liquidation preference, which is equivalent to an initial conversion price of approximately $9.43 per share of common stock (subject to adjustment in certain events). The Credit Facility prohibits the Company from paying dividends to holders of the Company's preferred stock, including the Company's Series A Preferred Stock, if the Company is unable to certify that it anticipates being able to comply with the financial covenants of the Credit Facility for the next twelve months each time the Company declares a dividend. During the second quarter of 2017, the Company began a five-quarter deferral of dividends on the Series A Preferred Stock. Cash dividends of $1.8 million were declared and paid to holders of the Series A Preferred Stock during the first quarter of 2017. No other dividends were declared, paid or accrued. During the year ended December 31, 2016, the Company paid cash dividends of $7.0 million to holders of the Series A Preferred Stock. If the Company does not pay dividends on its preferred stock for six quarterly periods (whether or not consecutive), the holders of the Series A Preferred Stock and Series B Preferred Stock collectively will have the power to elect two members of the Company's board of directors. The interests of the holders of the Company's preferred stock may differ from those of its other stockholders. In addition, any dividend the Company fails to pay will accrue, and the holders of the Company's Series A Preferred Stock and Series B Preferred Stock will be entitled to a preferential distribution of the original purchase price per share plus all accrued and unpaid dividends before any distribution may be made to holders of the Company's common stock in connection with any liquidation event. As of October 3, 2017, the Company may, at its option, convert some or all of the Series A Preferred Stock into the number of shares of common stock that are issuable at the then-applicable conversion rate, subject to specified conditions, including a daily volume-weighted average stock price of at least $12.26 per share over a period of 20 trading days in a 30-day period and payment of the accrued dividends. The holders of Series A Preferred Stock had a special right to convert some or all of the Series A Preferred Stock into shares of common stock, which expired on October 3, 2017. Any suspended dividends are required to be paid prior to conversion by the Company. Series B Cumulative Perpetual Convertible Preferred Stock In May 2014, the Company issued 500,000 shares of its Series B Preferred Stock in an underwritten public offering at a price to the public of $250 per share. The purchase price received by the Company, equal to $242.50 per share, reflected an underwriting discount of $7.50 per share. The Company received proceeds of $120.8 million from the sale of the Series B Preferred Stock, net of the $3.8 million underwriting discount and $0.4 million of offering costs. Holders of Series B Preferred Stock are entitled to receive cumulative cash dividends at a rate of 6.75% per annum of the $250 liquidation preference per share (equivalent to an annual rate of $16.875 per share). Dividends are payable quarterly in arrears on each March 15, June 15, September 15 and December 15. The Series B Preferred Stock does not have a stated maturity date and is not subject to any sinking fund or mandatory redemption provisions. The Series B Preferred Stock ranks senior to the Company’s common stock and pari passu with respect to the Company’s Series A Preferred Stock with respect to dividend rights and rights upon the Company’s voluntary or involuntary liquidation, dissolution or winding-up. Holders of Series B Preferred Stock generally have no voting rights except for limited voting rights if the Company fails to pay dividends for six or more quarterly periods (whether or not consecutive) and in other specified circumstances. Holders of Series B Preferred Stock may convert some or all of their outstanding Series B Preferred Stock at an initial conversion rate of 33.456 shares of common stock per $250 liquidation preference, which is equivalent to an initial conversion price of approximately $7.47 per share of common stock (subject to adjustment in certain events). The Credit Facility prohibits the Company from paying dividends to holders of the Company's preferred stock, including the Company's Series B Preferred Stock, if the Company is unable to certify that it anticipates being able to comply with the financial covenants of the Credit Facility for the next twelve months each time the Company declares a dividend. During the second quarter of 2017, the Company began a five-quarter deferral of dividends on the Series B Preferred Stock. Cash dividends of $2.1 million were declared and paid to holders of the Series B Preferred Stock during the first quarter of 2017. No other dividends were declared, paid or accrued. During the year ended December 31, 2016, the Company paid cash dividends of $8.4 million to holders of the Series B Preferred Stock. If the Company does not pay dividends on its preferred stock for six quarterly periods (whether or not consecutive), the holders of the Series A Preferred Stock and Series B Preferred Stock collectively will have the power to elect two members of the Company's board of directors. The interests of the holders of the Company's preferred stock may differ from those of its other stockholders. In addition, any dividend the Company fails to pay will accrue, and the holders of the Company's Series A Preferred Stock and Series B Preferred Stock will be entitled to a preferential distribution of the original purchase price per share plus all accrued and unpaid dividends before any distribution may be made to holders of the Company's common stock in connection with any liquidation event. On or after May 15, 2019, the Company may, at its option, convert some or all of the Series B Preferred Stock into the number of shares of common stock that are issuable at the then-applicable conversion rate, subject to specified conditions. In the event of certain specified fundamental changes, holders of the Series B Preferred Stock will have the right to convert some or all of their shares of Series B Preferred Stock into the greater of (i) a number of shares of the Company’s common stock as subject to adjustment plus the make-whole premium, if any, and (ii) a number of shares of the Company’s common stock equal to the lesser of (a) the liquidation preference divided by the market value of the Company’s common stock on the effective date of such fundamental change and (b) 81.9672 (subject to adjustment). In certain circumstances, the Company may elect to cash settle any conversions in connection with a fundamental change. Any suspended dividends are required to be paid prior to conversion by the Company. |
Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Credit Facility In October 2010, the Company entered into a $1.8 billion credit facility with a syndicate of bank lenders, which was amended and restated in July 2017 by a supplemental agreement. Ninety-five percent of the Company's obligations under the Credit Facility are insured by Bpifrance Assurance Export S.A.S. ("BPIAE"). Under the terms of the Credit Facility, the Company was required to maintain a minimum cash reserve for debt service ("DSRA") of $102.0 million as of December 31, 2017, which increases to $189.0 million in 2019, and is classified as restricted cash on the accompanying consolidated balance sheet. The Credit Facility will mature in 2024. As amended to date, the Credit Facility delays, until March 2019, $54.0 million in contributions that the Company was previously scheduled to make during 2017 to the DSRA, and the Company was refunded $33.0 million of the contributions to the DSRA that the Company has made to date. In addition, in the event that the Company's projected Available Cash (as defined in the Credit Facility) falls below $35.0 million on a three-month forward-looking basis between now and March 2019, the Company will receive a refund of an additional $11.0 million in contributions made to date. The Credit Facility also requires that the Company establish a new restricted account to receive hosting fees from Aireon. The first $50.0 million in hosting fees from Aireon would be kept in the restricted account and the Company could access these funds in the event that the Company falls below the same $35.0 million three-month forward-looking Available Cash threshold through March 2019 described above. Hosting fees from Aireon in excess of $50.0 million would be distributed pro rata to replenish the DSRA and to secure the payment of the bills of exchange to Thales. The amendments to the Credit Facility do not require the Company to raise additional equity but requires that the Company suspend the payment of dividends on the Company's 7% Series A Cumulative Perpetual Convertible Preferred Stock and the Company's 6.75% Series B Cumulative Perpetual Convertible Preferred Stock for five quarters. As previously announced, in anticipation of this requirement, the Company began this suspension with the dividend payments payable on June 15, 2017. The Credit Facility also includes revised financial covenant levels to reflect changing business conditions. Prior to the Credit Facility being fully drawn, the Company paid interest on the outstanding principal balance under the Credit Facility on a semi-annual basis in April and October through a combination of a cash payment and a deemed additional loan. The Credit Facility was fully drawn in February 2017, and as of April 2017, interest was being paid in cash. Scheduled semi-annual principal repayments will begin on April 3, 2018. During this repayment period, interest will be paid on the same date as the principal repayments. For the years ended December 31, 2017, 2016 and 2015, the Company incurred total interest of $86.7 million, $77.7 million and $64.6 million, respectively. All interest costs incurred related to the Credit Facility have been capitalized during the construction period of the Iridium NEXT assets. During the years ended December 31, 2016 and 2015, interest was payable via deemed loans of $44.4 million and $44.9 million, respectively, with the remainder payable in cash on the scheduled semi-annual payment dates. No deemed loans were utilized for interest incurred during the year ended December 31, 2017. Interest payable as of December 31, 2017 and 2016 was $15.0 million and $14.1 million, respectively. In connection with each draw it made under the Credit Facility, the Company also borrowed an amount equal to 6.49% of such draw to cover the premium for the BPIAE insurance policy. The Company also paid a commitment fee of 0.80% per year, in semi-annual installments, on any undrawn portion of the Credit Facility through February 2017, when the Credit Facility was fully drawn. Through February 2017, funds drawn under the Credit Facility were used to pay for (i) 85% of the costs under a fixed price full scale development ("FSD") contract with Thales Alenia Space France ("Thales") for the design and manufacture of satellites for Iridium NEXT, (ii) the premium for the BPI policy, and (iii) the payment of a portion of interest during a part of the construction and launch phase of Iridium NEXT. As of December 31, 2017, the Company had borrowed a total of $1.8 billion under the Credit Facility. The repayment schedule below excludes $120.0 million that the Company expects to receive upon the Aireon redemption of Iridium's equity interest in Aireon and Aireon dividends, when and if declared. Upon receipt of these amounts, they will be used to prepay the Credit Facility which may result in an earlier repayment. Future principal repayments with respect to the Credit Facility balance existing at December 31, 2017 by year and in the aggregate, are as follows:
The effective interest rate on outstanding principal of the Credit Facility during the years ended December 31, 2017, 2016 and 2015 were 6.64%, 6.65% and 6.57%, respectively. Obligations under the Credit Facility are secured on a senior basis by a lien on substantially all of the Company’s assets. In addition to the minimum DSRA levels, financial covenants under the Credit Facility include:
The Company’s available cash balance, as defined by the Credit Facility, was $291.9 million as of December 31, 2017. The Company’s debt-to-equity ratio was 0.5 to 1 as of December 31, 2017. The Company was in compliance with the operational EBITDA covenant, the annual capital expenditure covenant and the cumulative cash flow requirements from customers who have hosted payloads covenant, which were the only other applicable covenants, as of December 31, 2017. The covenants regarding capital expenditures, operational EBITDA and hosted payload cash flows are calculated in connection with a measurement, which the Company refers to as available cure amount, that is derived using a complex calculation based on overall cash flows, as adjusted by numerous measures specified in the Credit Facility. In a period in which the Company’s capital expenditures exceed, or the Company’s operational EBITDA or hosted payload cash flows falls short of, the amount specified in the respective covenant, the Company would be permitted to allocate available cure amount, if any, to prevent a breach of the applicable covenant. As of December 31, 2017, the Company had an amount of $8.1 million in available cure, although it was not necessary to apply any available cure amount to maintain compliance with the covenants. The available cure amount has fluctuated significantly from one measurement period to the next, and the Company expects that it will continue to do so. The covenants also place limitations on the Company’s ability and that of its subsidiaries to carry out mergers and acquisitions, dispose of assets, grant security interests, declare, make or pay dividends, enter into transactions with affiliates, incur additional indebtedness, or make loans, guarantees or indemnities. If the Company is not in compliance with the financial covenants under the Credit Facility, after any opportunity to cure such non-compliance, or the Company otherwise experiences an event of default under the Credit Facility, the lenders may require repayment in full of all principal and interest outstanding under the Credit Facility. It is unlikely the Company would have adequate funds to repay such amounts prior to the scheduled maturity of the Credit Facility. If the Company fails to repay such amounts, the lenders may foreclose on the assets the Company has pledged under the Credit Facility, which include substantially all of its assets and those of its domestic subsidiaries. Pursuant to the Company’s hosting agreement with Aireon LLC, Aireon is obligated to pay the Company $200 million for the placement of the Aireon payload on each of the Iridium NEXT satellites. The Company expects those hosted payload payments to continue to be delayed. Aireon is working to secure additional contracts with air navigation service providers, or ANSPs, including the FAA, for the sale of Aireon’s space-based automatic dependent surveillance-broadcast, or ADS-B, services. Aireon is currently seeking to raise the capital it will need to fund its continued operations and its hosted payload payments to the Company. Aireon’s ability to fund its hosted payload payments to the Company in the previously anticipated timeframe has been adversely affected by delays in its completion of sales to these ANSPs. The Company continues to expect partial payments of Aireon’s hosting fee upon successful completion of its financing, and further payments based on success-based milestones. However, the expected timing of these payments does not support the Company’s ability to make principal and interest payments under its Credit Facility due in late 2018 and early 2019, as well as payment of deferred payments to Thales and deferred contributions to the DSRA, both due March 31, 2019. Further, if Aireon is unable to complete its financing and make a partial hosting payment to the Company in the timeframe it currently expects, the Company may be unable to make its principal and interest payments under its Credit Facility due in late 2018. To provide for these obligations and further solidify the Company’s liquidity position, the Company has been actively discussing alternative funding options with its Credit Facility lenders and believes it has reached an agreement in principle with its Credit Facility lenders pursuant to which the Company would be required to raise additional capital in the form of debt securities by July 2018. The proceeds of these debt securities would be used to fund the deferred payments to Thales and replenish the DSRA under the Credit Facility, as well as to provide the Company with sufficient cash to meet its needs, including principal and interest payments under its Credit Facility. In addition, the Credit Facility lenders would agree to delay a portion of the principal repayments under the Credit Facility, allow the Company to access up to $87 million from the DSRA in the future if the Company’s projected cash level falls below $75 million, and adjust the Company's financial covenants, including eliminating further covenants that require it to receive cash flows from hosted payloads. Under this anticipated agreement, the Company would be required to use hosting fee payments received from Aireon to prepay the Credit Facility. The Company’s ability to successfully execute these plans may be adversely affected by a number of factors, including global economic conditions, the state of the capital markets when the Company is ready to issue the debt, and the inability to issue debt securities on terms acceptable to the Company or at all. Any inability to successfully execute these plans may in turn materially affect the Company's liquidity, and its ability to complete the Iridium NEXT system and to pursue additional growth opportunities may be impaired. The Company’s liquidity and the ability to fund its liquidity requirements also depend on the Company’s future financial performance, which is subject to general economic, financial, regulatory and other factors that are beyond the Company’s control. The Company believes its liquidity sources will provide sufficient funds for it to meet its liquidity requirements for at least the next 12 months, provided the Company executes the proposed adjustments to its funding plan or receives a substantial portion of the hosting fees due to the Company from Aireon. |
Boeing Operations and Maintenance (O&M) Agreements |
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Dec. 31, 2017 | |
Boeing Operations And Maintenance Agreements [Abstract] | |
Boeing Operations and Maintenance (O&M) Agreements | Boeing Operations and Maintenance (O&M) Agreements On July 21, 2010, the Company and Boeing entered into an operations and maintenance agreement ("the O&M Agreement"), pursuant to which Boeing agreed to provide continuing steady-state operations and maintenance services with respect to the satellite network operations center, telemetry, tracking and control stations and the first-generation satellites (including engineering, systems analysis, and operations and maintenance services). Also on July 21, 2010, the Company and Boeing entered into an agreement pursuant to which Boeing would operate and maintain Iridium NEXT (the “Iridium NEXT Support Services Agreement”). On January 1, 2015, Boeing supported a hybrid operations mode involving network elements from both the first-generation satellites and the Iridium NEXT system. Boeing provided those services on a time-and-materials fee basis. Obligations to Boeing represented the not to exceed (“NTE”) price for services under the Iridium NEXT Support Services Agreement. On November 28, 2016, the Company entered into an Insourcing Agreement with Boeing for the Company to hire, effective January 3, 2017, the majority of the Boeing employees and third-party contractors who were responsible for the operations and maintenance of the Company’s satellite constellation and ground infrastructure. Pursuant to the Insourcing Agreement, the Company was obligated to pay Boeing $5.5 million, half of which was paid during each of the years ended December 31, 2016 and 2017. Concurrent with the hiring of the assembled workforce on January 3, 2017, the Company and Boeing terminated both the O&M Agreement and the Iridium NEXT Support Service Agreement and entered into a new Development Services Agreement ("DSA") with a $6.0 million annual take-or-pay commitment through 2021. As a result of the termination of certain Boeing agreements under the Insourcing Agreement, Boeing no longer has a unilateral right to commence the de-orbit of the Company’s first-generation satellites. The assembled workforce was recorded as a finite-lived intangible asset in the first quarter of 2017 and will be amortized over an estimated useful life of 7 years. Additionally, by terminating the O&M Agreement, the Company recognized a $14.2 million gain from the derecognition of a purchase accounting liability created from GHL’s acquisition of Iridium in 2009 related to the fair value of the contractual arrangement with Boeing as of that date and the remainder of a credit from Boeing in the July 2010 Boeing O&M contract negotiations. The Company incurred expenses of $30.5 million, $29.0 million and $30.7 million relating to satellite operations and maintenance costs, which include internal costs and amounts paid to Boeing, for the years ended December 31, 2017, 2016 and 2015, respectively, included in cost of services (exclusive of depreciation and amortization) in the consolidated statements of operations and comprehensive income. |
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Property and Equipment | Property and Equipment Property and equipment consisted of the following:
Other construction in process consisted of the following:
Depreciation expense for the years ended December 31, 2017, 2016 and 2015 was $120.7 million, $48.6 million and $51.0 million, respectively. The increase in depreciation from 2016 to 2017 partially results from the write-off of $36.8 million previously paid to Kosmotras, and the addition of new assets, including Iridium NEXT satellites placed into service during 2017. See Note 9 for further details on Kosmotras. |
Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | Intangible Assets The Company had identifiable intangible assets as follows:
Amortization expense was $1.6 million, $0.8 million and $0.8 million for the years ended December 31, 2017, 2016 and 2015, respectively. See Note 6 for further details on the Boeing assembled workforce, added in 2017. Future amortization expense with respect to intangible assets existing at December 31, 2017, by year and in the aggregate, is as follows:
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Commitments and Contingencies |
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Thales In June 2010, the Company executed a primarily fixed-price FSD with Thales for the design and build of satellites for Iridium NEXT. The total price under the FSD is $2.3 billion, and the Company expects payment obligations under the FSD to extend through 2018. As of December 31, 2017, the Company had made aggregate payments of $1.9 billion to Thales, of which $1.5 billion were financed from borrowings under the Credit Facility and were capitalized as construction in progress within property and equipment, net in the accompanying consolidated balance sheet. The Credit Facility was fully drawn in February 2017. With the exception of the invoices to be paid with the bills of exchange described below, the Company expects to pay 100% of each invoice received from Thales from cash and marketable securities on hand. On July 26, 2017, the Company entered into Amendments 28 and 29 to its FSD contract. Amendment 28 revised the liquidated damages and other cost provisions regarding delays to the Iridium NEXT program. Under Amendment 28, the Company agreed with Thales that liquidated damages for Thales production delays to date would be $30.0 million, with this amount to be used only to offset costs otherwise payable by the Company to Thales under the FSD with respect to past and future delays to the launch schedule from causes other than Thales, at agreed upon rates. Any portion of the $30.0 million remaining at the completion of the launch campaign will be forgiven. Liquidated damages owed to the Company from any future delays caused by Thales will remain payable in cash. Similarly, costs payable by the Company to Thales for non-Thales delays exceeding the $30.0 million will be payable in cash. Unless there are substantial future delays to the Iridium NEXT program, the Company expects this arrangement will result in no cash payments due to delays by either party. Amendment 29 provides for the deferral of approximately $100.0 million in milestone payments by the Company under the FSD for milestones that the Company expects to be completed in 2017 and 2018. Under Amendment 29, the Company makes these milestone payments using bills of exchange due in March 2019, with interest at a specified base rate (LIBOR or SWAP, depending on the term of the bill of exchange) plus 1.4%, with the bills of exchange guaranteed by BPIAE. As of December 31, 2017, the milestone payments related to the Thales bills of exchange totaled an aggregate amount of $55.6 million, including $0.7 million of deferred financing costs. The net balance of $54.9 million was recorded as long-term debt within other long-term liabilities in the accompanying condensed consolidated balance sheet as of December 31, 2017. Amendment 29 also requires that the Company pay Thales for the BPIAE premium on the guarantee in the amount of $1.0 million in cash at signing (which was recorded as original issue discount) plus 1.62%. SpaceX In March 2010, the Company entered into an agreement with Space Exploration Technologies Corp. (“SpaceX”) to secure SpaceX as the primary launch services provider for Iridium NEXT (as amended to date, the “SpaceX Agreement”). The total price under the SpaceX Agreement for 7 launches and a reflight option in the event of launch failure is $453.1 million. The SpaceX Falcon 9 rocket is configured to carry ten Iridium NEXT satellites to orbit for each of the initial seven launches. In November 2016, the Company entered into an agreement for an eighth launch with SpaceX to launch five spare satellites and share the launch services with GFZ German Research Centre for Geosciences (“GFZ”). The total price under the SpaceX Agreement for the eighth launch is $67.9 million. GFZ will pay Iridium $31.8 million to share the launch services to launch NASA’s two Gravity Recovery and Climate Experiment Follow-On satellites. As of December 31, 2017, the Company made aggregate payments of $463.9 million to SpaceX, which were capitalized as construction in progress within property and equipment, net in the accompanying consolidated balance sheet. Additionally, the Company received $28.6 million from GFZ as of December 31, 2017. Kosmotras In June 2011, the Company entered into an agreement with Kosmotras as a supplemental launch services provider for Iridium NEXT. The total cost under the Kosmotras agreement is $51.8 million. Kosmotras to date has been unable to obtain the permits or authorizations to launch the Company's satellites on a Dnepr rocket as planned, and Kosmotras has proposed no satisfactory alternative launch plan. Because the Company now believes the construction-in-progress associated with the Kosmotras launch services will no longer be used or further developed, the Company wrote-off the full amount previously paid to Kosmotras, by recording accelerated depreciation expense of $36.8 million, in the fourth quarter of 2017. Iridium NEXT Launch and In-Orbit Insurance The Credit Facility requires the Company to obtain insurance covering the launch and first 12 months of operation of the Iridium NEXT satellites. The launch and in-orbit insurance the Company has obtained contains elements, consistent with the terms of the Credit Facility, of self-insurance and deductibles, providing reimbursement only after a specified number of satellite failures. As a result, a failure of one or more of the Company’s satellites, or the occurrence of equipment failures and other related problems, could constitute an uninsured loss or require the payment of additional premiums and could harm the Company’s financial condition. Furthermore, launch and in-orbit insurance does not cover lost revenue. The total premium is $121.0 million and as of December 31, 2017, the Company had made aggregate premium payments of $77.8 million. Unconditional Purchase Obligations The Company has a manufacturing agreement with Benchmark. Pursuant to the agreement, the Company may be required to purchase certain materials if the materials are not used in production within the periods specified in the agreement. Benchmark will then repurchase such materials from the Company at the same price paid by the Company, as required for the production of the devices. As of December 31, 2017 and 2016, the Company had $4.0 million and $0.5 million, respectively, of such materials, and the amounts were included in inventory on the accompanying consolidated balance sheets. As of December 31, 2017, the aggregate unconditional purchase obligations were $45.4 million, which includes the Company’s commitments with Boeing and Benchmark. The Boeing obligations (see Note 6) represent the new take-or-pay commitment with the execution of the DSA, which was met as of December 31, 2017 and final payment for the acquisition of the assembled workforce. The Company's obligation to Benchmark for the year ending December 31, 2018 is $9.2 million. In-Orbit Insurance Due to various contractual requirements, the Company is required to maintain a third-party liability in-orbit insurance policy on its first-generation satellites with a de-orbiting endorsement to cover potential claims relating to operating or de-orbiting the satellite constellation or individual satellites. The policy covers the Company, Boeing as former operator, Motorola Solutions (the original system architect and prior owner), contractors and subcontractors of the insured, the U.S. government and certain other sovereign nations. The current policy has a renewable one-year term, which is scheduled to expire on December 8, 2018. The policy coverage is separated into Sections A, B, and C. Section A coverage is currently in effect and covers product liability over Motorola’s position as manufacturer of the first-generation satellites. Liability limits for claims under Section A are $1.0 billion per occurrence and in the aggregate. There is no deductible for claims. Section B coverage is currently in effect and covers risks in connection with in-orbit satellites and for the de-orbit of individual satellites. Liability limits for claims under Section B are $500 million per occurrence and in the aggregate for space vehicle liability and $500 million and $1.0 billion per occurrence and in the aggregate, respectively, with respect to de-orbiting. The balance of the unamortized premium payment for Sections A and B coverage as of December 31, 2017 is included in prepaid expenses and other current assets in the accompanying consolidated balance sheet. The deductible for claims under Section B is $250,000 per occurrence. Section C coverage is effective once requested by the Company (the “Attachment Date”) and covers risks in connection with a mass decommissioning of the first-generation satellites. Liability limits for claims under Section C are $500 million and $1.0 billion per occurrence and in the aggregate, respectively. The term of the coverage under Section C is 12 months from the Attachment Date. The premium for Section C coverage is $2.5 million and is payable on or before the Attachment Date. As of December 31, 2017, the Company had not requested Section C coverage since no mass decommissioning activities are currently anticipated. The deductible for claims under Section C is $250,000 per occurrence. Operating Leases The Company leases land, office space, and office and computer equipment under noncancelable operating lease agreements. Most of the leases contain renewal options of 1 to 10 years. The Company’s obligations under the current terms of these leases extend through 2026. Additionally, several of the Company’s leases contain clauses for rent escalation including, but not limited to, a pro-rata share of increased operating and real estate tax expenses. Rent expense is recognized on a straight-line basis over the lease term. The Company leases facilities located in Chandler, Arizona; Tempe, Arizona; McLean, Virginia; Lansdowne, Virginia; Canada; Russia; and Norway. Future minimum lease payments, by year and in the aggregate, under noncancelable operating leases at December 31, 2017, are as follows:
Rent expense for the years ended December 31, 2017, 2016 and 2015 was $3.2 million, $3.1 million and $3.4 million, respectively. Contingencies From time to time, in the normal course of business, the Company is party to various pending legal claims and lawsuits. The Company is not aware of any actions that it expects to have a material adverse impact on its business, financial results or financial condition. |
Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation In May 2017, the Company’s stockholders approved the amendment and restatement of the Company's 2015 Equity Incentive Plan (as so amended and restated, the “Amended 2015 Plan”), primarily to increase the number of shares available under the plan. As such, the Company registered an additional 5,199,239 shares of common stock made available for issuance pursuant to the Amended 2015 Plan, bringing the total to 28,402,248 shares. Through December 31, 2017, the remaining aggregate number of shares of our common stock available for future grants under the Amended 2015 Plan was 15,012,331. The Amended 2015 Plan provides for the grant of stock-based awards, including nonqualified stock options, incentive stock options, restricted stock awards and other equity securities, as incentives and rewards for employees, consultants and non-employee directors of the Company and its affiliated entities. The Amended 2015 Plan allows us to utilize a broad array of equity incentives and performance cash incentives in order to secure and retain the services of our employees, directors and consultants, and to provide long-term incentives that align the interests of our employees, directors and consultants with the interests of our stockholders. Stock Option Awards The stock option awards granted to employees generally (i) have a term of ten years, (ii) vest over a four-year period with 25% vesting after the first year of service and the remainder vesting ratably on a quarterly basis thereafter, (iii) are contingent upon employment on the vesting date, and (iv) have an exercise price equal to the fair value of the underlying shares at the date of grant. The stock option awards granted to the Company’s board of directors generally (i) represent a portion of their annual compensation, (ii) have a term of ten years, (iii) vest over the calendar year with 25% vesting on the last day of each calendar quarter, (iv) are contingent upon continued service on the vesting date, and (v) have an exercise price equal to the fair value of the underlying shares at the date of grant. Fair Value Determination We have used the Black-Scholes-Merton option pricing model to determine fair value of our awards on the date of grant. We will reconsider the use of the Black-Scholes-Merton model if additional information becomes available in the future that indicates another model would be more appropriate or if grants issued in future periods have characteristics that cannot be reasonably estimated under this model. The following weighted-average assumptions were used for option grants during the years ended December 31, 2017, 2016 and 2015:
In 2017 and 2016, the Company granted stock options to newly hired and promoted employees only. In 2015, in addition to stock options granted to newly hired and promoted employees, non-employee consultants were granted stock options and certain members of the Company’s board of directors elected to receive a portion of their annual compensation in the form of stock options. During 2017, 2016 and 2015, the Company granted approximately 209,000, 249,000 and 744,000 stock options, respectively, to its employees, with an estimated aggregate grant date fair value of $0.9 million, $0.9 million and $2.9 million, respectively. During 2015, the Company granted approximately 111,000 and 30,000 stock options to its non-employee directors and consultants, respectively, with an estimated aggregate grant-date fair value of $0.4 million and $0.2 million, respectively. The following table summarizes weighted-average assumptions used in our calculations of fair value:
A summary of the activity of the Company’s stock options is as follows:
The Company recognized $1.8 million, $2.5 million and $3.4 million of stock-based compensation expense related to stock options in the years ended December 31, 2017, 2016 and 2015, respectively. The weighted-average grant date fair value of options granted during the years ended December 31, 2017, 2016 and 2015 was $4.51, $3.47 and $3.95 per share, respectively. The total fair value of the shares vested during the years ended December 31, 2017, 2016 and 2015 was $2.0 million, $2.9 million and $3.6 million, respectively. As of December 31, 2017, the total unrecognized cost related to non-vested options was approximately $2.2 million. This cost is expected to be recognized over a weighted-average period of 2.1 years. Restricted Stock Units The RSUs granted to employees for service vest over a four-year period, with 25% vesting on the first anniversary of the grant date and the remainder vesting ratably on a quarterly basis thereafter. The RSUs granted to non-employee directors generally vest in full on the first anniversary of the grant date. The RSUs granted to non-employee consultants generally vest 50% on the first anniversary of the grant date and ratably on a quarterly basis through the second anniversary of the grant date. Performance-based RSUs vest upon the completion of defined performance goals, subject to continued employment. The Company’s RSUs are generally classified as equity awards because the RSUs will be paid in the Company's common stock upon vesting. The related compensation expense is recognized over the service period and is based on the grant date fair value of the Company's common stock and the number of shares expected to vest. The awards are not remeasured at the end of each reporting period. The awards do not carry voting rights until they are vested and released in accordance with the specified vesting terms of each award as stated in the grant notifications for each RSU. Service-Based Awards During the years ended December 31, 2017, 2016 and 2015, the Company granted approximately 964,000, 573,000 and 596,000 service-based RSUs, respectively, to its employees, with an estimated grant date fair value of $8.5 million, $4.0 million and $5.6 million, respectively. Certain members of the Company’s board of directors elect to receive a portion of their annual compensation in the form of RSUs. An aggregate amount of approximately 96,000, 126,000 and 15,000 service-based RSUs were granted to its directors as a result of these elections during the years ended December 31, 2017, 2016 and 2015, respectively, with an estimated grant date fair value of $1.0 million, $1.0 million and $0.1 million, respectively. In June 2017 and June 2016, the Company granted approximately 8,000 and 35,000 RSUs to non-employee consultants with an estimated grant date fair value of $0.1 million and $0.3 million, respectively. Performance-Based Awards In March 2017 and March 2016, the Company awarded approximately 1,190,000 and 1,335,000 performance-based RSUs, respectively, to the Company’s executives and employees (the “Bonus RSUs”), with an estimated grant date fair value of $10.5 million and $9.4 million, respectively. Vesting of the March 2017 and March 2016 Bonus RSUs is and was dependent upon the Company’s achievement of defined performance goals over the respective fiscal year. The Company records stock-based compensation expense related to performance-based RSUs when it is considered probable that the performance conditions will be met. Management believes it is probable that certain of the March 2017 Bonus RSUs will vest. The level of achievement, if any, of performance goals will be determined by the compensation committee of the Company’s board of directors and, if such goals are achieved, the March 2017 Bonus RSUs will vest, subject to continued employment, in March 2018. A portion of the March 2016 Bonus RSUs vested in March 2017 upon the determination of the level of achievement of the performance goals. Additionally, during 2017, 2016 and 2015, the Company awarded approximately 173,000, 119,000 and 161,000 performance-based RSUs, respectively, to the Company’s executives (the “Performance RSUs”). The estimated aggregate grant date fair values of the Performance RSUs granted in 2017, 2016 and 2015 was $1.5 million, $0.8 million and $1.5 million, respectively. Vesting of each Performance RSU award is and was dependent upon the Company’s achievement of defined performance goals over a two-year period. Management believes it is probable that the Performance RSUs will vest at least in part. The vesting of Performance RSUs will ultimately range from 0% to 150% of the number of shares underlying the Performance RSU grant based on the level of achievement of the performance goals. If the Company achieves the performance goals, 50% of the Performance RSUs will vest on the second anniversary of the grant date and the remaining 50% will vest on the third anniversary of the grant date, in each case, subject to the executives continued service as of the vesting date. Approximately 54,000 of the March 2015 Performance RSUs vested and were released in March 2017 at an estimated aggregate fair value of $0.5 million, and the remaining 54,000 will vest in March 2018. Award Summary A summary of the Company’s activity for outstanding RSUs is as follows:
As of December 31, 2017, the total unrecognized cost related to non-vested RSUs was approximately $8.3 million. This cost is expected to be recognized over a weighted-average period of 1.25 years. The Company recognized $17.0 million, $13.5 million and $6.3 million of stock-based compensation expense related to RSUs in the years ended December 31, 2017, 2016 and 2015, respectively. |
Segments, Significant Customers, Supplier and Service Providers and Geographic Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments, significant customers, supplier and service providers and geographic information | Segments, Significant Customers, Supplier and Service Providers and Geographic Information The Company operates in one business segment, providing global satellite communications services and products. The Company derived approximately 24%, 25% and 23% of the Company’s total revenue in the years ended December 31, 2017, 2016 and 2015, respectively, from prime contracts or subcontracts with agencies of the U.S. government. For the years ended December 31, 2017, 2016 and 2015, no single commercial customer accounted for more than 10% of the Company’s total revenue. Approximately 35% and 32% of the Company’s accounts receivable balance at December 31, 2017 and 2016, respectively, was due from prime contracts or subcontracts with agencies of the U.S. government. As of December 31, 2017 and 2016, no single commercial customer accounted for more than 10% of the Company’s total accounts receivable balance. The Company contracts for the manufacture of its subscriber equipment primarily from one manufacturer and utilizes other sole source suppliers for certain component parts of its devices. Should events or circumstances prevent the manufacturer or the suppliers from producing the equipment or component parts, the Company’s business could be adversely affected until the Company is able to move production to other facilities of the manufacturer or secure a replacement manufacturer or an alternative supplier for such component parts. Net property and equipment by geographic area was as follows:
Revenue by geographic area was as follows:
Revenue is attributed to geographic area based on the billing address of the distributor. Service location and the billing address are often not the same. The Company’s distributors sell services directly or indirectly to end users, who may be located or use the Company’s products and services elsewhere. The Company cannot provide the geographical distribution of end users because it does not contract directly with them. The Company is exposed to foreign currency exchange fluctuations as foreign currency exchange rate movements create a degree of risk by affecting the U.S. dollar value of sales made and costs incurred in foreign currencies. |
Employee Benefit Plan |
12 Months Ended |
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Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plan | Employee Benefit Plan The Company sponsors a defined-contribution 401(k) retirement plan (the “Plan”) that covers all employees. Employees are eligible to participate in the Plan on the first day of the month following the date of hire, and participants are 100% vested from the date of eligibility. The Company matches employees’ contributions equal to 100% of the salary deferral contributions up to 5% of the employees’ eligible compensation each pay period. Company-matching contributions to the Plan were $2.5 million, $1.3 million and $1.5 million for the years ended December 31, 2017, 2016 and 2015, respectively. The Company pays all administrative fees related to the Plan. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes U.S. and foreign components of income before income taxes are presented below:
The components of the Company’s income tax provision were as follows:
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. The Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 ("SAB 118") to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. SAB 118 is effective for reporting periods that include December 22, 2017. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, the Company made reasonable estimates of the effects and recorded provisional amounts in its financial statements as of December 31, 2017. As the Company collects and prepares the necessary data, and interprets the Tax Act and any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, it may make adjustments to the provisional amounts. Those adjustments may materially impact the Company's provision for income taxes and effective tax rate in the period in which the adjustments are made. The accounting for the tax effects of the Tax Act will be completed in 2018. The Company has recorded a net tax benefit of $154.5 million in the fourth quarter of 2017, which includes its provisional estimate of the impact of the Tax Act on its financial statements. Further detail on specific provisions are included below. Remeasurement of deferred tax assets/liabilities: In the fourth quarter of 2017, the Company recorded a provisional net deferred tax benefit of $150.9 million related to the remeasurement of certain deferred tax assets and liabilities as of December 31, 2017. The Company remeasured those deferred tax assets and liabilities at 21%, because this is the rate at which it expects these items to reverse. Although the tax rate reduction is known, the Company has not collected the necessary data to complete its analysis of the effect of the Tax Act on the underlying deferred taxes, and, as such, the amounts recorded as of December 31, 2017 are provisional. Deemed Repatriation of Certain Foreign Subsidiary Earnings: The Tax Act requires the Company to increase its U.S. taxable income for the mandatory deemed repatriation on accumulated foreign subsidiary earnings not previously subject to U.S. income tax at a rate of 15.5% to the extent of foreign cash and certain other net current assets and 8% on the remaining untaxed earnings. The Company recorded a provisional amount for this one-time taxable income amount of $2.3 million, with a provisional estimated deferred tax asset associated with foreign taxes paid on those earnings of $0.8 million. The Company has recorded provisional amounts based on estimates of the effects of the Tax Act, since a more detailed analysis of historical foreign earnings as well as potential correlative adjustments is required. In 2011 and 2012, Arizona enacted tax law changes resulting in a benefit to the Company’s net deferred tax expense. Due to the size and nature of the Company’s operations in Arizona, such changes have a significant impact on the tax provision in a given period. As a result of these law changes, the Company’s deferred tax expense was reduced by approximately $10.2 million and $3.0 million for the years ended December 31, 2017 and 2016, respectively, and increased by approximately $0.1 million for the year ended December 31, 2015. A reconciliation of the U.S. federal statutory income tax expense to the Company’s effective income tax provision is as follows:
The components of deferred tax assets and liabilities are as follows:
Pursuant to ASC 740, the Company nets deferred tax assets and liabilities within the same jurisdiction. As of December 31, 2017, the Company had a net deferred tax asset of $0.3 million that is included in other assets on the balance sheet and a net deferred tax liability of $246.2 million. The Company recognizes valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. In assessing the likelihood of realization, management considers: (i) future reversals of existing taxable temporary differences; (ii) future taxable income exclusive of reversing temporary differences and carryforwards; (iii) taxable income in prior carryback year(s) if carryback is permitted under applicable tax law; and (iv) tax planning strategies. The Company had deferred tax assets related to cumulative U.S. federal net operating loss carryforwards of approximately $80.5 million, and $42.9 million as of December 31, 2017 and 2016, respectively. These net operating loss carryforwards, if unutilized, will expire in various amounts from 2031 through 2037. The Company believes that the U.S. federal net operating losses will be utilized before the expiration dates and, as such, no valuation allowance has been established for these deferred tax assets. The Company had deferred tax assets related to the state net operating loss carryforwards of approximately $10.9 million and $4.1 million as of December 31, 2017 and 2016, respectively, that expire from 2025 through 2037. The Company does not expect to fully utilize all of its state net operating losses within the respective carryforward periods and as such reflects a partial valuation allowance of $0.7 million as of December 31, 2017 against these deferred tax assets on its consolidated balance sheet. The Company had deferred tax assets related to the foreign net operating loss carryforwards of approximately $1.3 million and $1.2 million as of December 31, 2017 and 2016, respectively, that begin to expire in 2022. The Company does not expect to fully utilize all of its foreign net operating losses within the respective carryforward periods and as such reflects a partial valuation allowance against these deferred tax assets on its consolidated balance sheet. The timing and manner in which the Company will utilize the net operating loss carryforwards in any year, or in total, may be limited in the future as a result of alternative minimum taxes, changes in the Company’s ownership and any limitations imposed by the jurisdictions in which the Company operates. The Company has approximately $6.1 million and $5.0 million of deferred tax assets related to research and development tax credits as of December 31, 2017 and 2016, respectively, that expire in various amounts from 2027 through 2037. The Company has approximately $4.7 million and $3.5 million of deferred tax assets related to foreign tax credits as of December 31, 2017 and 2016, respectively, that expire in various amounts from 2020 through 2027. The Company has $3.8 million and $3.4 million of deferred tax assets related to Alternative Minimum Tax credits as of December 31, 2017 and 2016, respectively which do not expire. Under the Tax Act, the Alternative Minimum Tax credits will convert to refunds if not used as a credit. The Company believes that the research and development credits will be fully utilized within the carryforward period. However, the Company does not expect to utilize all of its foreign tax credits within the respective carryforward periods. As such, the Company has a partial valuation allowance of $1.1 million as of December 31, 2017, which is unchanged from December 31, 2016. The Company has provided for U.S. income taxes on all undistributed earnings of its significant foreign subsidiaries since the Company does not indefinitely reinvest these undistributed earnings. The Company measures deferred tax assets and liabilities using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company recognizes the effect on deferred tax assets and liabilities of a change in tax rates in income in the period that includes the enactment date. Uncertain Income Tax Positions The Company is subject to income taxes in the U.S. and various state and foreign jurisdictions. Significant judgment is required in evaluating tax positions and determining the provision for income taxes. The Company establishes liabilities for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes may be due. These liabilities are established when the Company believes that certain positions might be challenged despite its belief that its tax return positions are fully supportable. The Company adjusts these liabilities in light of changing facts and circumstances, such as the outcome of a tax audit. The provision for income taxes includes the impact of changes to these liabilities. The amount of unrecognized tax benefits was $1.0 million and $0.9 million at December 31, 2017 and 2016, respectively. Any changes in the next twelve months are not anticipated to have significant impact on the results of operations, financial position or cash flows of the Company. All of the Company’s uncertain tax positions, if recognized, would affect its income tax expense. The Company has elected an accounting policy to classify interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of December 31, 2017 and 2016, potential interest and penalties on unrecognized tax benefits were not significant. The Company is subject to tax audits in all jurisdictions for which it files tax returns. Tax audits by their very nature are often complex and can require several years to complete. Currently, there are no U.S. federal, state or foreign jurisdiction tax audits pending. The Company’s corporate U.S. federal and state tax returns from 2010 to 2016 remain subject to examination by tax authorities and the Company’s foreign tax returns from 2009 to 2016 remain subject to examination by tax authorities. The following is a tabular reconciliation of the total amounts of unrecognized tax benefits which includes related interest and penalties:
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Net Income (Loss) Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income (Loss) Per Share | Net Income (Loss) Per Share The Company calculates basic net income (loss) per share by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share takes into account the effect of potential dilutive common shares when the effect is dilutive. The effect of potential dilutive common shares, including common stock issuable upon exercise of outstanding stock options, is computed using the treasury stock method. The effect of potential dilutive common shares from the conversion of outstanding convertible preferred securities is computed using the as-if converted method at the stated conversion rate. The RSUs granted to members of the Company’s board of directors contain non-forfeitable rights to dividends and therefore are considered to be participating securities in periods of net income. As a result, the calculation of basic and diluted net income (loss) per share excludes net income (loss) attributable to the unvested RSUs granted to the Company’s board of directors from the numerator and excludes the impact of the unvested RSUs granted to the Company’s board of directors from the denominator. The computations of basic and diluted net income (loss) per share are set forth below:
For the year ended December 31, 2017, $5.3 million and $6.3 million in cumulative unpaid dividends to holders of the Series A Preferred Stock and Series B Preferred Stock, respectively, were not declared as a result of all cash dividends being suspended in connection with the amendments to the Credit Facility described in Note 5, but such amounts were deducted to arrive at net income attributable to common stockholders. For the year ended December 31, 2017, 2.1 million unvested service-based RSUs were excluded from the computation of basic net income per share and not included in the computation of diluted net income per share, as the effect would be anti-dilutive, and 0.2 million unvested performance-based RSUs were not included in the computation of basic and diluted net income per share, as certain performance criteria have not been satisfied. For the year ended December 31, 2016, options to purchase 3.2 million shares of common stock were not included in the computation of diluted net income per share, as the effect would be anti-dilutive, and 1.4 million unvested service-based RSUs were excluded from the computation of basic net income per share and not included in the computation of diluted net income per share, as the effect would be anti-dilutive. For the year ended December 31, 2015, 1.3 million unvested service-based RSUs were not included in the computation of basic net loss per share. Due to the Company’s net loss for the year ended December 31, 2015, all potential common stock equivalents were anti-dilutive. |
Selected Quarterly Information (Unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Quarterly Information (Unaudited) | Selected Quarterly Information (Unaudited) The following represents the Company’s unaudited quarterly results:
The sum of the per share amounts does not equal the annual amounts due to changes in the weighted-average number of common shares outstanding during the year. |
Significant Accounting Policies and Basis of Presentation (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The Company has prepared the consolidated financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The accompanying consolidated financial statements include the accounts of (i) the Company, (ii) its wholly owned subsidiaries, and (iii) all less than wholly owned subsidiaries that the Company controls. All intercompany transactions and balances have been eliminated. |
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Use of Estimates | Use of Estimates 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 disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ materially from those estimates. |
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Adopted Accounting Pronouncements | Adopted Accounting Pronouncements In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-09, Compensation – Stock Compensation, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). ASU 2016-09 addresses multiple changes that are primarily focused on income taxes and the presentation of taxes related to stock compensation, but also provides an option for two methods to account for forfeitures. The requirements resulting from the adoption of ASU 2016-09 were accounted for on a prospective basis as of January 1, 2017, as required.
There were no additional impacts on the Company’s financial statements resulting from the adoption of ASU 2016-09 that required a retrospective or modified retrospective approach. In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU 2015-11 requires that inventory within the scope of the guidance be measured at the lower of cost and net realizable value. The Company applied the new guidance prospectively effective January 1, 2017, as required. Inventory measured using last-in, first-out and retail inventory method are excluded from this new guidance. When evidence exists that the net realizable value of inventory is less than its cost, the Company will recognize the difference as a loss in earnings in the period the measurement occurs. This ASU replaces the concept of market with the single measurement of net realizable value and is intended to create efficiencies for preparers and more closely aligns U.S. GAAP with International Financial Reporting Standards. The adoption had an immaterial impact on the Company’s condensed consolidated balance sheet, condensed consolidated statement of operations and comprehensive income, and condensed consolidated statement of cash flows as of and for the year ended, December 31, 2017. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). ASU 2016-18 requires that restricted cash be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the statements of cash flows. The Company early adopted the new guidance during the fourth quarter of 2017, as permitted, and the new guidance was applied using a retrospective transition method for all periods presented. |
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Recent Accounting Developments Not Yet Adopted | Recent Accounting Developments Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 requires lessees to record most leases on their balance sheets but recognize expenses on their income statements in a manner similar to current accounting. The Company intends to apply the new guidance effective January 1, 2019, as required. Reporting organizations are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company is currently evaluating the effect ASU 2016-02 may have on its condensed consolidated financial statements and related disclosures, but a lease liability and related right-of-use asset will be recognized for operating lease arrangements where the Company is the lessee. In May 2014, the FASB and the International Accounting Standards Board jointly issued a comprehensive new revenue recognition standard, ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), that will supersede nearly all existing revenue recognition guidance under U.S. GAAP. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has issued several amendments to the standard including clarification on accounting for licenses of intellectual property, identifying performance obligations, and most recently, technical corrections on the interpretation of the new guidance. In July 2015, the FASB voted to defer the effective date of ASU 2014-09 for public entities to be effective for annual and interim periods beginning after December 15, 2017. ASU 2014-09 becomes effective for the Company in the first quarter of fiscal 2018, and the Company anticipates adopting the standard using the modified retrospective method with a cumulative effect adjustment recorded to opening retained earnings as of the initial adoption date (January 1, 2018). This method requires application of the new guidance at the beginning of the earliest comparative period presented for revenue agreements that are not substantially complete as of the date of adoption. All new revenue agreements executed after the adoption date are accounted for prospectively under the new standard. The Company established a project team in order to analyze the effect of the standard on its contracts by reviewing its current accounting policies and practices to identify potential differences which would result from applying the requirements of the new standard to its revenue contracts. The Company aggregated its contracts into homogeneous revenue streams and assessed all potential effects of the standard. The Company has substantially completed its evaluation of the potential changes from adopting the new standard on its future financial reporting and disclosures. Adopting the new standard is expected to have an immaterial impact on the Company’s total net sales and operating income. The primary impact of adopting ASU 2014-09 relates to the Company’s prepaid service revenue and associated breakage, which is currently recognized as revenue at the date the right to access the prepaid service has expired. Under the new standard, the Company will estimate the expected revenue that will expire unused on an ongoing basis and recognize this revenue over the usage period. Upon adoption, the Company expects the deferred revenue associated with prepaid service revenue to be reduced by approximately $15.6 million for this breakage estimate. Revenue on the majority of the Company’s contracts will continue to be recognized consistent with the Company’s current revenue recognition model, exclusive of the aforementioned prepaid revenue. The Company also does not expect the standard to have a material impact on its consolidated balance sheet. |
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Fair Value Measurements | Fair Value Measurements The Company evaluates assets and liabilities subject to fair value measurements on a recurring and non-recurring basis to determine the appropriate level to classify them for each reporting period. This determination requires significant judgments to be made by management of the Company. The instruments identified as subject to fair value measurements on a recurring basis are cash and cash equivalents, marketable securities, prepaid expenses and other current assets, accounts receivable, accounts payable and accrued expenses and other current liabilities. Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of observability of inputs used in measuring fair value. The fair value hierarchy consists of the following tiers:
The carrying values of short-term financial instruments (primarily cash and cash equivalents, prepaid expenses and other current assets, accounts receivable, accounts payable, and accrued expenses and other current liabilities) approximate their fair values because of their short-term nature. The fair value of the Company’s investments in money market funds approximates its carrying value; such instruments are classified as Level 1 and are included in cash and cash equivalents on the accompanying consolidated balance sheets. The fair value of the Company’s investments in commercial paper and short-term U.S. agency securities with original maturities of less than ninety days approximates their carrying value; such instruments are classified as Level 2 and are included in cash and cash equivalents on the accompanying consolidated balance sheets. The fair value of the Company’s investments in fixed-income debt securities and commercial paper with original maturities of greater than ninety days are obtained using similar investments traded on active securities exchanges and are classified as Level 2. For fixed income securities that do not have quoted prices in active markets, the Company uses third-party vendors to price its debt securities resulting in classification as Level 2. All fixed-income securities are included in marketable securities on the accompanying consolidated balance sheets. |
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Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, and receivables. The majority of cash is swept nightly into a money market fund invested in U.S. treasuries, Agency Mortgage Backed Securities and/or U.S. Government guaranteed debt. While the Company maintains its cash and cash equivalents with financial institutions with high credit ratings, it often maintains those deposits in federally insured financial institutions in excess of federally insured limits. The Company’s marketable securities are highly-rated corporate and foreign fixed-income debt securities and commercial paper with an original maturity in excess of ninety days. The Company performs credit evaluations of its customers’ financial condition and records reserves to provide for estimated credit losses. Accounts receivable are due from both domestic and international customers. |
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Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments with original maturities of ninety days or less to be cash equivalents. These investments, along with cash deposited in institutional money market funds, regular interest bearing depository accounts and non-interest bearing depository accounts, are classified as cash and cash equivalents on the accompanying consolidated balance sheets. |
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Marketable Securities | Marketable Securities Marketable securities consist of fixed-income debt securities and commercial paper with an original maturity in excess of ninety days. These investments are classified as available-for-sale and are included in marketable securities within current assets on the accompanying consolidated balance sheets. All investments are carried at fair value. Unrealized gains and losses, net of taxes, are reported as a component of other comprehensive income or loss. The specific identification method is used to determine the cost basis of the marketable securities sold. There were no material realized gains or losses on the sale of marketable securities for the years ended December 31, 2017 and 2016. The Company regularly monitors and evaluates the fair value of its investments to identify other-than-temporary declines in value. The Company determined that any decline in fair value of these investments is temporary as the Company does not intend to sell these securities and it is not likely that the Company will be required to sell the securities before the recovery of their amortized cost basis. |
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Accounts Receivable | Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and are subject to late fee penalties. Management develops its estimate of an allowance for uncollectible receivables based on the Company’s experience with specific customers, aging of outstanding invoices, its understanding of customers’ current economic circumstances and its own judgment as to the likelihood that the Company will ultimately receive payment. The Company writes off its accounts receivable when balances ultimately are deemed uncollectible. |
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Foreign Currencies | Foreign Currencies The functional currency of the Company’s foreign consolidated subsidiaries is the local currency. Assets and liabilities of its foreign subsidiaries are translated to U.S. dollars based on exchange rates at the end of the reporting period. Income and expense items are translated at the weighted-average exchange rates prevailing during the reporting period. Translation adjustments are accumulated in a separate component of stockholders’ equity. Transaction gains or losses are classified as other income (expense), net in the accompanying consolidated statements of operations and comprehensive income. |
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Deferred Financing Costs | Deferred Financing Costs Direct and incremental costs incurred in connection with securing debt financing are deferred and are amortized as additional interest expense using the effective interest method over the term of the related debt. |
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Capitalized Interest | Capitalized Interest Interest costs associated with financing the Company’s assets during the construction period of Iridium NEXT have been capitalized. |
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Inventory | Inventory Inventory consists primarily of finished goods, although the Company at times also maintains an inventory of raw materials from third-party manufacturers. The Company outsources manufacturing of subscriber equipment to a third-party manufacturer and purchases accessories from third-party suppliers. The Company’s cost of inventory includes an allocation of overhead, including payroll and payroll-related costs of employees directly involved in bringing inventory to its existing condition, and freight. Inventories are valued using the average cost method and are carried at the lower of cost or net realizable value. Accordingly, the Company recorded expenses of $0.4 million, $1.1 million and $0.7 million, for the years ended December 31, 2017, 2016 and 2015, respectively, included within the cost of subscriber equipment for excess and obsolete inventory. The expenses for the years ended December 31, 2017 and 2016 were primarily related to certain handset parts and accessories, and the expenses for the year ended December 31, 2015 were primarily related to Iridium Pilot equipment. The Company has a manufacturing agreement with Benchmark Electronics Inc. (“Benchmark”) to manufacture subscriber equipment. Pursuant to the agreement, the Company may be required to purchase excess materials if the materials are not used in production within the periods specified in the agreement. Benchmark will then repurchase such materials from the Company at the same price paid by the Company, as required for the production of the subscriber equipment. |
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Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation at fair value. The fair value of stock options is determined at the grant date using the Black-Scholes option pricing model. The fair value of restricted stock units (“RSUs”) is equal to the closing price of the underlying common stock on the grant date. The fair value of an award that is ultimately expected to vest is recognized on a straight-line basis over the requisite service or performance period and is classified in the consolidated statements of operations and comprehensive income in a manner consistent with the classification of the recipient’s compensation. The expected vesting of the Company’s performance-based RSUs is based upon the probability that the Company achieves the defined performance goals. The level of achievement of performance goals, if any, is determined by the compensation committee. Stock-based awards to non-employee consultants are expensed at their fair value as services are provided according to the terms of their agreements and are classified in selling, general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income. |
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Property and Equipment | The estimated useful lives of the Company’s first-generation satellites reflect the period of expected use for each satellite. Satellites are depreciated on a straight-line basis through the date they will be replaced by next-generation satellites. The Company began deployment of its next-generation satellite constellation (“Iridium NEXT”) in January 2017, and, based on the current launch schedule, the Company expects the final launch to occur in 2018. The Company’s next-generation satellites will be depreciated on a straight-line basis over the estimated useful life, which is currently estimated to be 12.5 years. The Company calculates depreciation expense using the straight-line method and evaluates the appropriateness of the useful life used in this calculation on a quarterly basis or as events occur that require additional assessment. Repairs and maintenance costs are expensed as incurred. Property and Equipment Property and equipment is carried at cost less accumulated depreciation. |
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Long-Lived Assets | Long-Lived Assets The Company assesses its long-lived assets for impairment when indicators of impairment exist. Recoverability of assets is measured by comparing the carrying amounts of the assets to the future undiscounted cash flows expected to be generated by the assets. Any impairment loss would be measured as the excess of the assets’ carrying amount over their fair value. |
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Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill Goodwill is the excess of the acquisition cost of businesses over the fair value of the identifiable net assets acquired. Impairment testing for goodwill is performed during the fourth quarter of each annual period or more frequently if indicators of potential impairment exist. Goodwill impairment is determined using a two-step process. The first step involves a comparison of the estimated fair value of a reporting unit to its carrying amount, including goodwill. If the estimated fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired and the second step of the impairment test is not necessary. If the carrying amount of a reporting unit exceeds its estimated fair value, then the second step of the goodwill impairment test must be performed. To measure the amount of impairment loss, if any, the implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. Specifically, the estimated fair value of the reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the price paid to acquire the reporting unit. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The Company operates in a single reporting unit, and the possibility of impairment is assessed by comparing the carrying amount of the reporting unit to its estimated fair value. The most recent annual assessment of goodwill and indefinite-lived assets was performed on October 1, 2015 (the “2015 Analysis”), and the Company determined that the current value of the reporting unit exceeded its fair value. As a result, the Company recorded a non-cash goodwill impairment charge of $87.0 million during the fourth quarter of 2015. The Company had no goodwill as of December 31, 2017 and 2016. Intangible Assets Subject to Amortization The Company’s intangible assets with finite lives, are amortized over their useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If any indicators were present, the Company would test for recoverability by comparing the carrying amount of the asset to the net undiscounted cash flows expected to be generated from the asset. If those net undiscounted cash flows do not exceed the carrying amount (i.e., the asset is not recoverable), the Company would perform the next step, which is to determine the fair value of the asset and record an impairment loss, if any. The Company evaluates the useful lives for these intangible assets each reporting period to determine whether events and circumstances warrant a revision in their remaining useful lives. |
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Revenue Recognition | Revenue Recognition The Company derives its revenue primarily as a wholesaler of satellite communications products and services. The primary types of revenue include (i) service revenue (access and usage-based airtime fees), (ii) subscriber equipment revenue, and (iii) revenue generated by providing engineering and support services to commercial and government customers. Wholesaler of satellite communications products and services Pursuant to wholesale agreements, the Company sells its products and services to service providers who, in turn, sell the products and services to other distributors or directly to the end users. The Company recognizes revenue when services are performed or delivery has occurred, evidence of an arrangement exists, the fee is fixed or determinable, and collection is reasonably assured, as follows: Contracts with multiple elements At times, the Company sells services and equipment through multi-element arrangements that bundle equipment, airtime and other services. For multi-element revenue arrangements when the Company sells services and equipment in bundled arrangements and determines that it has separate units of accounting, the Company allocates the bundled contract price among the various contract deliverables based on each deliverable’s relative selling price. The selling price used for each deliverable is based on vendor-specific objective evidence when available, third-party evidence when vendor-specific objective evidence is not available, or the estimated selling price when neither vendor-specific evidence nor third party evidence is available. The Company determines vendor-specific objective evidence of selling price by assessing sales prices of subscriber equipment, airtime and other services when they are sold to customers on a stand-alone basis. The Company’s determination of best estimate of selling price is consistent with its determination of vendor-specific objective evidence of selling price, and the Company assesses qualitative and quantitative market factors and entity-specific factors when estimating the selling price. When the Company determines the elements are not separate units of accounting, the Company recognizes revenue on a combined basis as the last element is delivered. Service revenue sold on a stand-alone basis Service revenue is generated from the Company’s service providers through usage of its satellite system and through fixed monthly access fees per user charged to service providers. Revenue for usage is recognized when usage occurs. Revenue for fixed-per-user access fees is recognized ratably over the period in which the services are provided to the end user. The Company sells prepaid services in the form of e-vouchers and prepaid cards. A liability is established equal to the cash paid upon purchase for the e-voucher or prepaid card. The Company recognizes revenue from the prepaid services upon the use of the e-voucher or prepaid card by the customer or upon the expiration of the right to access the prepaid service. While the terms of prepaid e-vouchers can be extended by the purchase of additional e-vouchers, prepaid e-vouchers may not be extended beyond three or four years, dependent on the initial expiry period when purchased. The Company does not offer refunds for unused prepaid services. Subscriber equipment sold on a stand-alone basis The Company recognizes subscriber equipment sales and the related costs when title to the equipment (and the risks and rewards of ownership) passes to the customer, typically upon shipment. Services sold to the U.S. government The Company provides airtime and airtime support to U.S. government and other authorized customers pursuant to the Enhanced Mobile Satellite Services (“EMSS”) contract managed by the Defense Information Systems Agency (“DISA”). Effective October 22, 2013, the Company executed a new five-year EMSS contract, managed by DISA. Under the terms of this new agreement, authorized customers continue to utilize airtime services, provided through the U.S. Department of Defense’s (“DoD”) dedicated gateway. These services include unlimited global secure and unsecure voice, low and high-speed data, paging, broadcast and Distributed Tactical Communications Services (“DTCS”) services for an unlimited number of DoD and other federal subscribers. The fixed-price rate for the remaining contract year, which runs through October 21, 2018, is $88 million per year. Under this contract, revenue is based on the annual fee for the fixed-price contract with unlimited subscribers, and is recognized on a straight-line basis over each contractual year. The U.S. government purchases its subscriber equipment from third-party distributors and not directly from the Company. Government engineering and support services The Company provides maintenance services to the U.S. government’s dedicated gateway. This revenue is recognized ratably over the periods in which the services are provided; the related costs are expensed as incurred. Other government and commercial engineering and support services The Company also provides engineering services to assist customers in developing new technologies for use on the Company’s satellite system. The revenue associated with these services is recorded when the services are rendered, typically on a proportional performance method of accounting based on the Company’s estimate of total costs expected to complete the contract, and the related costs are expensed as incurred. Revenue on cost-plus-fixed-fee contracts is recognized to the extent of estimated costs incurred plus the applicable fees earned. The Company considers fixed fees under cost-plus-fixed-fee contracts to be earned in proportion to the allowable costs incurred in performance of the contract. |
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Research and Development | Research and Development Research and development costs are charged to expense in the period in which they are incurred. |
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Advertising Costs | Advertising Costs Costs associated with advertising and promotions are expensed as incurred. |
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Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability approach, which requires the recognition of tax benefits or expenses for temporary differences between the financial reporting and tax bases of assets and liabilities. A valuation allowance is established when necessary to reduce deferred tax assets to the amounts expected to be realized. The Company also recognizes a tax benefit from uncertain tax positions only if it is “more likely than not” that the position is sustainable based on its technical merits. The Company’s policy is to recognize interest and penalties on uncertain tax positions as a component of income tax expense. |
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Net Income (Loss) Per Share | Net Income (Loss) Per Share The Company calculates basic net income (loss) per share by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share takes into account the effect of potential dilutive common shares when the effect is dilutive. The effect of potential dilutive common shares, including common stock issuable upon exercise of outstanding stock options, is computed using the treasury stock method. The effect of potential dilutive common shares from the conversion of the outstanding convertible preferred securities is computed using the as-if converted method at the stated conversion rate. The Company’s unvested restricted stock units ("RSUs") awarded to the board of directors contain non-forfeitable rights to dividends and therefore are considered to be participating securities in periods of net income. The calculation of basic and diluted net income (loss) per share excludes net income attributable to these unvested RSUs from the numerator and excludes the impact of these unvested RSUs from the denominator. |
Significant Accounting Policies and Basis of Presentation (Tables) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Cash, Cash Equivalents, and Restricted Cash | The following table provides a reconciliation of cash and cash equivalents, and restricted cash reported within the consolidated balance sheets at December 31, 2017 and 2016, that sum to the total of such amounts in the consolidated statements of cash flows:
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Reconciliation of Cash, Cash Equivalents, and Restricted Cash | The following table provides a reconciliation of cash and cash equivalents, and restricted cash reported within the consolidated balance sheets at December 31, 2017 and 2016, that sum to the total of such amounts in the consolidated statements of cash flows:
The following table summarizes the Company’s cash and cash equivalents:
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Schedule of Stock-Based Compensation | Classification of stock-based compensation was presented below:
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Property and Equipment Estimated Useful Lives | Property and equipment is carried at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the following estimated useful lives:
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Finite-Lived Intangible Assets Useful Lives | Amortization is calculated using the straight-line method over the following estimated useful lives:
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Cash and Cash Equivalents and Marketable Securities (Tables) |
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Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Company's Cash and Cash Equivalents | The following table provides a reconciliation of cash and cash equivalents, and restricted cash reported within the consolidated balance sheets at December 31, 2017 and 2016, that sum to the total of such amounts in the consolidated statements of cash flows:
The following table summarizes the Company’s cash and cash equivalents:
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Summary of Company's Marketable Securities | The following tables summarize the Company’s marketable securities:
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Summary of Contractual Maturities of Company's Marketable Securities | The following table presents the contractual maturities of the fixed income debt securities, commercial paper and U.S. Treasury notes:
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Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of future payments of credit facility | Future principal repayments with respect to the Credit Facility balance existing at December 31, 2017 by year and in the aggregate, are as follows:
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Property and Equipment (Tables) |
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Property and Equipment | Property and equipment consisted of the following:
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Other construction in process | Other construction in process consisted of the following:
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Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of identifiable intangible assets | The Company had identifiable intangible assets as follows:
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of finite-lived intangible assets, future amortization expense | Future amortization expense with respect to intangible assets existing at December 31, 2017, by year and in the aggregate, is as follows:
|
Commitments and Contingencies (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of future minimum rental payments for operating leases | Future minimum lease payments, by year and in the aggregate, under noncancelable operating leases at December 31, 2017, are as follows:
|
Stock-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of share-based payment award, stock options, valuation assumptions | The following table summarizes weighted-average assumptions used in our calculations of fair value:
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Schedule of Share-based compensation, stock options, activity | A summary of the activity of the Company’s stock options is as follows:
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Schedule of share-based compensation, restricted stock units award activity | A summary of the Company’s activity for outstanding RSUs is as follows:
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Segments, Significant Customers, Supplier and Service Providers and Geographic Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long lived assets by geographical areas | Net property and equipment by geographic area was as follows:
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Revenue from external customers by geographic areas | Revenue by geographic area was as follows:
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of income before income tax, domestic and foreign | U.S. and foreign components of income before income taxes are presented below:
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Schedule of components of income tax expense (benefit) | The components of the Company’s income tax provision were as follows:
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Schedule of effective income tax rate reconciliation | A reconciliation of the U.S. federal statutory income tax expense to the Company’s effective income tax provision is as follows:
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Schedule of deferred tax assets and liabilities | The components of deferred tax assets and liabilities are as follows:
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Summary of income tax contingencies | The following is a tabular reconciliation of the total amounts of unrecognized tax benefits which includes related interest and penalties:
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Net Income (Loss) Per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computations of basic and diluted net income per share | The computations of basic and diluted net income (loss) per share are set forth below:
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Selected Quarterly Information (Unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of quarterly financial information (unaudited) | The following represents the Company’s unaudited quarterly results:
|
Significant Accounting Policies and Basis of Presentation - Schedule of Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|---|---|
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 285,873 | $ 371,167 | ||
Restricted cash | 102,384 | 113,139 | ||
Cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows | $ 388,257 | $ 484,306 | $ 276,777 | $ 297,352 |
Significant Accounting Policies and Basis of Presentation - Classification of Stock-based Compensation (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Accounting Policies [Abstract] | ||
Property and equipment, net | $ 2,458 | $ 1,906 |
Inventory | 280 | 359 |
Cost of subscriber equipment | 30 | 56 |
Cost of services (exclusive of depreciation and amortization) | 4,366 | 1,655 |
Research and development | 349 | 457 |
Selling, general and administrative | 11,211 | 11,540 |
Total stock-based compensation | $ 18,694 | $ 15,973 |
Significant Accounting Policies and Basis of Presentation - Finite Lived Intangible Assets Useful Lives (Details) |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Intellectual property | |
Finite-Lived Intangible Assets [Line Items] | |
Definite-lived intangible asset | 20 years |
Assembled workforce | |
Finite-Lived Intangible Assets [Line Items] | |
Definite-lived intangible asset | 7 years |
Minimum | Patents | |
Finite-Lived Intangible Assets [Line Items] | |
Definite-lived intangible asset | 14 years |
Maximum | Patents | |
Finite-Lived Intangible Assets [Line Items] | |
Definite-lived intangible asset | 20 years |
- Cash and Cash Equivalents (Details) - USD ($) |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Cash and Cash Equivalents [Line Items] | ||
Cash | $ 24,092,000 | $ 102,194,000 |
Total cash and cash equivalents | 285,873,000 | 371,167,000 |
Line of credit facility, maximum borrowing capacity | 1,800,000,000 | |
Restricted cash | 102,384,000 | 113,139,000 |
Fair Value, Inputs, Level 1 | ||
Cash and Cash Equivalents [Line Items] | ||
Money market funds | 251,950,000 | 266,478,000 |
Fair Value, Inputs, Level 2 | ||
Cash and Cash Equivalents [Line Items] | ||
Commercial paper | $ 9,831,000 | $ 2,495,000 |
Cash and Cash Equivalents and Marketable Securities - Marketable Securities (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Cash and Cash Equivalents [Line Items] | ||
Amortized Cost | $ 11,769 | $ 39,320 |
Gross Unrealized Gains | 2 | 21 |
Gross Unrealized Losses | (18) | (13) |
Marketable securities | 11,753 | 39,328 |
Fair Value, Inputs, Level 2 | U.S. Treasury Notes | ||
Cash and Cash Equivalents [Line Items] | ||
Amortized Cost | 2,249 | 9,283 |
Gross Unrealized Gains | 0 | 7 |
Gross Unrealized Losses | (3) | (2) |
Marketable securities | 2,246 | 9,288 |
Fair Value, Inputs, Level 2 | Fixed Income Debt Securities | ||
Cash and Cash Equivalents [Line Items] | ||
Amortized Cost | 9,520 | 30,037 |
Gross Unrealized Gains | 2 | 14 |
Gross Unrealized Losses | (15) | (11) |
Marketable securities | $ 9,507 | $ 30,040 |
Cash and Cash Equivalents and Marketable Securities - Contractual Maturities of the Fixed Income Debt Securities, Commercial Paper (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Marketable securities: | ||
Mature within one year - Amortized Cost | $ 11,519 | $ 32,776 |
Mature after one year and within three years - Amortized Cost | 250 | 6,544 |
Amortized Cost | 11,769 | 39,320 |
Mature within one year - Fair Value | 11,504 | 32,788 |
Mature after one year and within three years - Fair Value | 249 | 6,540 |
Total - Fair Value | $ 11,753 | $ 39,328 |
Debt Future Payments (Details) $ in Thousands |
Dec. 31, 2017
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
2018 | $ 85,500 |
2019 | 202,500 |
2020 | 288,000 |
2021 | 306,000 |
2022 | 306,000 |
Thereafter | 612,000 |
Total | 1,800,000 |
Original issuance discount | 96,445 |
Total short-term debt | 85,500 |
Original issuance discount | $ 1,618,055 |
Boeing Operations and Maintenance (O&M) Agreements Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | ||||
---|---|---|---|---|---|
Jan. 03, 2017 |
Nov. 28, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Boeing Operations And Maintenance Agreements [Line Items] | |||||
Satellite operations and maintenance costs | $ 30,500 | $ 29,000 | $ 30,700 | ||
Gain from derecognition of purchase accounting liability | $ 14,189 | $ 0 | $ 0 | ||
Assembled Workforce | |||||
Boeing Operations And Maintenance Agreements [Line Items] | |||||
Definite-lived intangible asset | 7 years | ||||
Insourcing agreement | Boeing | |||||
Boeing Operations And Maintenance Agreements [Line Items] | |||||
Obligation costs associated with hiring of employees | $ 5,500 | ||||
Development services agreement | Boeing | |||||
Boeing Operations And Maintenance Agreements [Line Items] | |||||
Annual commitment amount | $ 6,000 |
Property and Equipment - Summary of Property, Plant, and Equipment (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Satellite system | $ 1,199,794 | $ 314,228 |
Ground system | 67,576 | 63,519 |
Equipment | 35,616 | 34,139 |
Internally developed software and purchased software | 191,089 | 127,498 |
Building and leasehold improvements | 32,130 | 32,099 |
Property and equipment gross excluding construction in process and land | 1,526,205 | 571,483 |
Less: accumulated depreciation | (432,833) | (422,098) |
Property and equipment net excluding construction in process and land | 1,093,372 | 149,385 |
Land | 8,037 | 8,037 |
Construction in process: | ||
Iridium NEXT systems under construction | 2,088,380 | 2,639,824 |
Total other construction in process | 20,373 | 15,838 |
Total property and equipment, net of accumulated depreciation | $ 3,210,162 | $ 2,813,084 |
Property and Equipment - Construction in Process (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Internally developed software | $ 14,782 | $ 14,218 |
Equipment | 4,241 | 1,546 |
Ground system | 1,350 | 74 |
Total other construction in process | $ 20,373 | $ 15,838 |
Property and Equipment - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Property, Plant and Equipment [Line Items] | ||||
Depreciation | $ 120.7 | $ 48.6 | $ 51.0 | |
Kosmotras | ||||
Property, Plant and Equipment [Line Items] | ||||
Depreciation | $ 36.8 |
Intangible Assets - Narrative (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization of intangible assets | $ 1.6 | $ 0.8 | $ 0.8 |
Intangible Assets - Future Amortization Expense (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2018 | $ 1,604 | |
2019 | 1,604 | |
2020 | 1,604 | |
2021 | 1,604 | |
Thereafter | 8,378 | |
Net Carrying Value | $ 14,794 | $ 10,571 |
Commitments and Contingencies - Future Minimum Lease Payments (Details) $ in Thousands |
Dec. 31, 2017
USD ($)
|
---|---|
Year ending December 31, | |
2018 | $ 3,741 |
2019 | 3,692 |
2020 | 3,734 |
2021 | 3,827 |
2022 | 3,402 |
Thereafter | 8,849 |
Total | $ 27,245 |
Stock-Based Compensation Fair Value Of Options Granted (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility (minimum) | 40.00% | 40.00% | 39.00% |
Expected volatility (maximum) | 41.00% | 42.00% | 42.00% |
Expected term (years) | 6 years 3 months | 6 years 3 months | 6 years 3 months |
Expected dividends | 0.00% | 0.00% | 0.00% |
Risk free interest rate (minimum) | 1.86% | 1.15% | 1.50% |
Risk free interest rate (maximum) | 2.14% | 2.45% | 2.35% |
Stock-Based Compensation Outstanding RSUs (Details) - Outstanding Restricted Stock Units - $ / shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
RSUs | |||
Outstanding - restricted stock units | 3,323 | 1,944 | 2,282 |
Granted - restricted stock units | 2,431 | 2,297 | 834 |
Forfeited - restricted stock units | (203) | (152) | (193) |
Released - restricted stock units | (2,003) | (766) | (979) |
Outstanding - restricted stock units | 3,548 | 3,323 | 1,944 |
Vested - restricted stock units | 521 | ||
Weighted-Average Exercise Price | |||
Outstanding - weighted average grant date fair value per RSU | $ 7.40 | $ 7.76 | $ 6.80 |
Granted - weighted average grant date fair value per RSU | 8.89 | 7.09 | 9.42 |
Forfeited - weighted average grant date fair value per RSU | 8.42 | 7.44 | 7.18 |
Released - weighted average grant date fair value per RSU | 7.16 | 7.36 | 7.06 |
Outstanding - weighted average grant date fair value per RSU | $ 8.50 | $ 7.40 | $ 7.76 |
Segments, Significant Customers, Supplier and Service Providers and Geographic Information Narrative (Details) - Prime contracts with U.S. government |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Sales revenue, net | |||
Segment Reporting Information [Line Items] | |||
Concentration risk, percentage | 24.00% | 25.00% | 23.00% |
Accounts receivable | |||
Segment Reporting Information [Line Items] | |||
Concentration risk, percentage | 35.00% | 32.00% |
Segments, Significant Customers, Supplier and Service Providers and Geographic Information Net Property and Equipment (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | $ 3,210,162 | $ 2,813,084 |
United states | ||
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | 165,337 | 124,483 |
Satellites in orbit | ||
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | 926,090 | 13,405 |
Iridium NEXT systems under construction | ||
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | 2,088,380 | 2,639,824 |
All others | ||
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | $ 30,355 | $ 35,372 |
Segments, Significant Customers, Supplier and Service Providers and Geographic Information Revenue By Geographic (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Segment Reporting Information [Line Items] | |||||||||||
Total revenue | $ 115,469 | $ 116,547 | $ 111,604 | $ 104,426 | $ 107,449 | $ 112,794 | $ 109,195 | $ 104,202 | $ 448,046 | $ 433,640 | $ 411,378 |
United States | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total revenue | 229,741 | 226,190 | 204,777 | ||||||||
Canada | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total revenue | 44,107 | 42,373 | 42,063 | ||||||||
United Kingdom | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total revenue | 46,245 | 47,135 | 44,012 | ||||||||
Other countries | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total revenue | $ 127,953 | $ 117,942 | $ 120,526 |
Employee Benefit Plan Narrative (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Retirement Benefits [Abstract] | |||
Defined-contribution plan matching employees’ contributions vested percentage | 100.00% | ||
Maximum employee contribution percentage | 100.00% | ||
Maximum deferral contribution percentage | 5.00% | ||
Defined-contribution plan employer-matching contributions amount | $ 2.5 | $ 1.3 | $ 1.5 |
Income Taxes - U.S and Foreign Components Of Income Before Income Taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Tax Disclosure [Abstract] | |||
U.S. income | $ 120,281 | $ 176,448 | $ 75,431 |
Foreign income (loss) | (709) | 1,717 | (2,316) |
Total income before income taxes | $ 119,572 | $ 178,165 | $ 73,115 |
Income Taxes - Components of Company's Income Tax Provision (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Current taxes: | |||
Federal tax expense | $ 13 | $ 1,206 | $ 1,700 |
State tax expense | 422 | 978 | 266 |
Foreign tax expense | 863 | 1,141 | 650 |
Total current tax expense | 1,298 | 3,325 | 2,616 |
Deferred taxes: | |||
Federal tax expense (benefit) | (110,811) | 60,295 | 54,906 |
State tax expense (benefit) | (4,851) | 3,454 | 8,803 |
Foreign tax expense (benefit) | 80 | 59 | (333) |
Total deferred tax expense (benefit) | (115,582) | 63,808 | 63,376 |
Total income tax expense (benefit) | $ (114,284) | $ 67,133 | $ 65,992 |
Income Taxes - Effective Income Tax Rate Reconciliation (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Tax Disclosure [Abstract] | |||
Expected tax expense at U.S. federal statutory tax rate | $ 41,850 | $ 62,309 | $ 25,590 |
State taxes, net of federal benefit | 5,133 | 9,757 | 11,663 |
State tax valuation allowance | 582 | (2,710) | (2,763) |
Deferred impact of Arizona tax law changes and elections | (10,217) | (2,962) | 99 |
Tax Act - deferred tax effects | (150,903) | 0 | 0 |
Impairment of goodwill | 0 | 0 | 30,464 |
Other nondeductible expenses | (841) | 596 | 557 |
Tax credits | (528) | (442) | (97) |
Foreign taxes and other items | 640 | 585 | 479 |
Total income tax expense (benefit) | $ (114,284) | $ 67,133 | $ 65,992 |
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Deferred tax assets | ||
Long-term contracts | $ 61,358 | $ 74,720 |
Federal, state and foreign net operating loss carryforwards and tax credits | 107,566 | 60,667 |
Other | 22,680 | 34,330 |
Total deferred tax assets | 191,604 | 169,717 |
Valuation allowance | (3,815) | (2,825) |
Net deferred tax assets | 187,789 | 166,892 |
Deferred tax liabilities | ||
Fixed assets, intangibles and research and development expenditures | (403,545) | (513,905) |
Investment in joint venture | (27,796) | (14,643) |
Other | (2,276) | 0 |
Total deferred tax liabilities | (433,617) | (528,548) |
Net deferred income tax liabilities | $ (245,828) | $ (361,656) |
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Balance at January 1, | $ 920 | $ 916 |
Change attributable to tax positions taken in a prior period | 146 | 25 |
Change attributable to final assessment | (27) | 0 |
Change attributable to tax positions taken in the current period | 10 | 8 |
Decrease attributable to lapse of statute of limitations | (3) | (29) |
Balance at December 31, | $ 1,046 | $ 920 |
Schedule of Quarterly Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Property, Plant and Equipment [Line Items] | |||||||||||
Revenue | $ 115,469 | $ 116,547 | $ 111,604 | $ 104,426 | $ 107,449 | $ 112,794 | $ 109,195 | $ 104,202 | $ 448,046 | $ 433,640 | $ 411,378 |
Operating income (loss) | (13,950) | 38,082 | 35,742 | 55,602 | 41,596 | 49,768 | 41,729 | 43,278 | 115,476 | 176,371 | 73,803 |
Net income (loss) | $ 141,877 | $ 29,253 | $ 24,778 | $ 37,948 | $ 24,103 | $ 31,555 | $ 26,854 | $ 28,520 | $ 233,856 | $ 111,032 | $ 7,123 |
Net income (loss) attributable to common stockholders per share - basic | $ 1.40 | $ 0.26 | $ 0.21 | $ 0.35 | $ 0.21 | $ 0.29 | $ 0.24 | $ 0.26 | $ 2.23 | $ 1.00 | $ (0.09) |
Net income (loss) attributable to common stockholders per share - diluted | $ 1.10 | $ 0.23 | $ 0.20 | $ 0.30 | $ 0.19 | $ 0.26 | $ 0.22 | $ 0.23 | $ 1.82 | $ 0.89 | $ (0.09) |
Depreciation | $ 120,700 | $ 48,600 | $ 51,000 | ||||||||
Kosmotras | |||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||
Depreciation | $ 36,800 | ||||||||||
O&M agreement | |||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||
Gain from derecognition of purchase accounting liability | $ 14,200 |
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