What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-02-11 compared with 2020-02-25 · 374 added, 333 removed, 682 unchanged (51% of the section changed)

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Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Income (Loss)

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Changes in Stockholders’ Equity

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We have audited the accompanying consolidated balance sheets of Iridium Communications Inc.

(the Company) as of December 31, 2019 and 2018, the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2019 and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2020 and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S.

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Useful life of upgraded satellites

Description of the Matter

At December 31, 2019, the Company had $3.2 billion in Property and Equipment related to its upgraded satellites.

Description of the Matter At December 31, 2020, the Company had $2.5 billion in Property and Equipment related to its upgraded satellites.

As discussed in Note 2 to the consolidated financial statements, the Company’s upgraded satellites are depreciated on a straight-line basis over their estimated useful life, which is currently estimated to be 12.5 years.

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The resulting estimated useful life has a significant effect on the timing of recognition of depreciation expense given the magnitude of the carrying amount of the upgraded satellites.

How We Addressed the Matter in Our Audit

We tested the design and operating effectiveness of controls over the Company's processes to determine the estimated useful life of its upgraded satellites, including controls over management's evaluation of the available information to determine the estimated useful life.

How We Addressed the Matter in Our Audit We tested the design and operating effectiveness of controls over the Company's processes to determine the estimated useful life of its upgraded satellites, including controls over management's evaluation of the available information to determine the estimated useful life.

To test the Company's estimated useful life of the upgraded satellites, our audit procedures included, among others, evaluating the application of available information to determine the estimated useful life of the upgraded satellites.

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(In thousands, except per share data)

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

Current assets:

Cash and cash equivalents $ 237,178 $ 223,561

Marketable securities 7,548 —

Accounts receivable, net 61,151 68,697

Inventory 32,480 39,938

Prepaid expenses and other current assets 9,464 10,739

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Property and equipment, net 2,917,076 3,180,799

Restricted cash and cash equivalents

Other assets 50,548 52,846

Intangible assets, net 45,504 46,977

Total assets $ 3,360,949 $ 3,623,557

Liabilities and stockholders' equity

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Stockholders' equity:

Series B preferred stock, $0.0001 par value, 500 shares authorized and issued;

zero and 497 shares outstanding at December 31, 2019 and 2018, respectively

Series A preferred stock, $0.0001 par value, 1,000 shares authorized and issued, zero outstanding — —

Series B preferred stock, $0.0001 par value, 500 shares authorized and issued, zero outstanding — —

Common stock, $0.001 par value, 300,000 shares authorized, 134,056 and 131,632

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Iridium Communications Inc.

Consolidated Statements of Operations and Comprehensive Income (Loss)

Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except per share amounts)

Year Ended December 31,

2020 2019 2018

Services $ 463,095 $ 447,158 $ 406,757

Subscriber equipment 86,119 82,856 97,848

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Total operating expenses 547,956 550,324 481,355

Gain on Boeing transaction

Operating income 35,483 10,120 41,653

Other income (expense):

Interest income (expense), net

Interest expense, net ( 94,271 ) ( 115,396 ) ( 55,149 )

Loss on extinguishment of debt ( 30,209 ) ( 111,710 ) ( 7,292 )

Other income (expense), net 33 ( 1,133 ) 139

Total other income (expense)

Income (loss) before income taxes

Total other expense ( 124,447 ) ( 228,239 ) ( 62,302 )

Loss before income taxes ( 88,964 ) ( 218,119 ) ( 20,649 )

Income tax benefit 32,910 56,120 7,265

Net income (loss)

Net loss ( 56,054 ) ( 161,999 ) ( 13,384 )

Series A preferred stock dividends, declared and paid excluding

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cumulative dividends — 4,194 2,109

Series A preferred stock dividends, undeclared

Series B preferred stock dividends, undeclared — — 6,290

Net income (loss) attributable to common stockholders

Weighted average shares outstanding - basic

Weighted average shares outstanding - diluted

Net income (loss) attributable to common stockholders per share - basic

Net income (loss) attributable to common stockholders per share - diluted

Comprehensive income (loss):

Net income (loss)

Net loss attributable to common stockholders $ ( 56,054 ) $ ( 166,193 ) $ ( 23,533 )

Weighted average shares outstanding - basic and diluted 133,491 125,167 108,975

Net loss attributable to common stockholders per share - basic and diluted $ ( 0.42 ) $ ( 1.33 ) $ ( 0.22 )

Comprehensive loss:

Net loss $ ( 56,054 ) $ ( 161,999 ) $ ( 13,384 )

Foreign currency translation adjustments, net of tax ( 3,272 ) 2,051 ( 5,017 )

Unrealized loss on cash flow hedges, net of tax (see Note 8 )

( 7,036 ) ( 121 ) —

Unrealized gain (loss) on marketable securities, net of tax ( 5 ) — 16

Comprehensive income (loss)

Comprehensive loss $ ( 66,367 ) $ ( 160,069 ) $ ( 18,385 )

See notes to consolidated financial statements

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(In thousands)

Additional Paid-In Capital

Other Comprehensive Income (Loss)

Total Stockholders' Equity

Preferred Stock

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, 2017 1,000 — 500 — 98,203 98 1,081,373 ( 3,796 ) 518,794 1,596,469

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Stock withheld to cover employee taxes — — — — ( 148 ) ( 1 ) ( 1,980 ) — — ( 1,981 )

Net loss — — — — — — — — ( 13,384 ) ( 13,384 )

Dividends on Series A preferred stock — — — — — — — — ( 7,000 ) ( 7,000 )

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Cumulative translation adjustments, net of tax — — — — — — — ( 5,017 ) — ( 5,017 )

Unrealized loss on marketable securities, net of tax

Changes from adoption of ASC 606, net of tax — — — — — — — — 11,729 11,729

Unrealized gain on marketable securities, net of tax — — — — — — — 16 — 16

Preferred stock converted to common ( 1,000 ) — ( 3 ) — 10,702 11 ( 11 ) — — —

Balance at December 31, 2018 — — 497 — 112,200 112 1,108,550 ( 8,797 ) 501,712 1,601,577

Stock-based compensation — — — — — — 16,641 — — 16,641

Stock options exercised and awards vested

Stock issued in connection with employee stock plan — — — — 3,003 3 13,468 — — 13,471

Stock withheld to cover employee taxes — — — — ( 199 ) — ( 4,594 ) — — ( 4,594 )

Dividends on Series A preferred stock

Net loss — — — — — — — — ( 161,999 ) ( 161,999 )

Dividends on Series B Preferred Stock — — — — — — — — ( 7,744 ) ( 7,744 )

Cumulative translation adjustments, net of tax — — — — — — — 2,051 — 2,051

Changes from adoption of ASC 606, net of tax

Unrealized gain on marketable securities, net of tax

Unrealized loss on cash flow hedges, net of tax — — — — — — — ( 121 ) — ( 121 )

Preferred stock converted to common — — ( 497 ) — 16,628 17 ( 17 ) — — —

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Stock withheld to cover employee taxes — — — — ( 164 ) — ( 4,513 ) — ( 4,513 )

Dividends on Series B Preferred Stock

Net loss — — — — — — — — ( 56,054 ) ( 56,054 )

Cumulative translation adjustments, net of tax — — — — — — — ( 3,272 ) — ( 3,272 )

Unrealized loss on marketable securities, net of tax — — — — — — — ( 5 ) — ( 5 )

Unrealized loss on cash flow hedges, net of tax — — — — — — — ( 7,036 ) — ( 7,036 )

Preferred stock converted to common

Balance at December 31, 2020 — $ — — $ — 134,056 $ 134 $ 1,160,570 $ ( 17,180 ) $ 275,915 $ 1,419,439

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Year Ended December 31,

2020 2019 2018

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net loss $ ( 56,054 ) $ ( 161,999 ) $ ( 13,384 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Deferred income taxes ( 33,684 ) ( 53,897 ) ( 8,334 )

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Stock-based compensation (net of amounts capitalized) 16,714 15,138 14,490

Gain from contract liability write-off

Amortization of deferred financing fees 3,658 18,904 10,145

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Accounts receivable 6,380 2,509 ( 12,783 )

Inventory 7,234 ( 12,951 ) ( 7,579 )

Prepaid expenses and other current assets 1,119 7,973 5,705

Other assets 3,241 3,097 ( 1,417 )

Accounts payable 7,410 ( 4,300 ) ( 732 )

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Capital expenditures ( 38,689 ) ( 117,819 ) ( 391,390 )

Purchase of other investments

Purchases of other investments ( 152 ) ( 10,000 ) —

Purchases of marketable securities ( 7,629 ) — ( 235,528 )

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Cash flows from financing activities:

Borrowings under the Credit Facility

Repayments on the Credit Facility, including extinguishment costs — ( 1,734,965 ) ( 80,359 )

Borrowings under the Term Loan B

Borrowings under the Term Loan 202,000 1,450,000 —

Payments on the Term Loan ( 12,375 ) — —

Borrowings under the senior unsecured notes — — 360,000

Repayments on the senior unsecured notes, including extinguishment costs ( 383,451 ) — —

Repayment of the Thales Alenia Space bills of exchange — — ( 59,936 )

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Year Ended December 31,

2020 2019 2018

Supplemental cash flow information:

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Capitalized stock-based compensation $ 1,608 $ 1,503 $ 2,237

Credit Facility repayment in exchange for the settlement of hosting ( Note 15 )

Credit Facility repayment in exchange for the settlement of hosting $ — $ — $ 35,000

Cost basis investment in exchange for the settlement of accounts receivable $ — $ — $ 3,300

Unrealized loss on cash flow hedge, net of tax $ ( 7,036 ) $ ( 118 ) $ —

See notes to consolidated financial statements

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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.

The Company’s operations are conducted through, and its operating assets are owned by, its principal operating subsidiary, Iridium Satellite LLC, Iridium Satellite’s immediate parent, Iridium Holdings LLC, and their subsidiaries.

As a result, there are no material differences between the information presented in these consolidated financial statements of the Company and the financial information of Iridium Holdings, Iridium Satellite and their subsidiaries, on a consolidated basis, other than as a result of (i) tax provision as result of Iridium Holdings, Iridium Satellite and their subsidiaries being classified as flow-through entities for U.S.

federal income tax purposes and (ii) senior unsecured notes (fully repaid February 15, 2020, see Note 7 ), related interest expense and loss on extinguishment of debt.

Significant Accounting Policies and Basis of Presentation

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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.

On an ongoing basis, the Company evaluates its estimates and assumptions, including those related to revenue recognition, the useful lives and recoverability of long-lived and intangible assets, income taxes, stock-based compensation, estimating the Company's incremental borrowing rate for its leases, and contingencies, among others.

The Company bases these estimates on historical and anticipated results, trends, and various other assumptions that it believes are reasonable, including assumptions as to future events.

These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenues and expenses.

Actual results could differ materially from those estimates.

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Effective January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) No.

2016-02, Leases (“ASU 2016-02”) using the required modified retrospective approach.

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 previous accounting.

See discussion below under the caption “Leases” in this Note 2 and in Note 6 for more detail on the Company's accounting policy with respect to lease accounting.

Effective January 1, 2019, the Company adopted ASU No.

2018-07, Compensation - Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”), which aligns accounting for share-based payments issued to nonemployees to that of employees under the existing guidance of Topic 718, with certain exceptions.

This update supersedes previous guidance for equity-based payments to nonemployees under Subtopic 505-50, Equity - Equity-Based Payments to Non-Employees.

The adoption of ASU 2018-07 did not have a material impact on the Company’s condensed consolidated financial statements.

In August 2017, the FASB issued ASU No.

2017-12, Derivatives and Hedging (Topic 815):

Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”).

This guidance amends the existing accounting standards for derivatives and hedging.

The amendment improves the financial reporting of hedging relationships to better represent the economic results of an entity’s risk management activities in its financial statements and made certain targeted improvements to simplify the application of the hedge accounting guidance in current U.S.

The amendments in this update also ease the administrative burden of hedge documentation requirements and assessing hedge effectiveness.

During the fourth quarter of 2019, the Company adopted ASU 2017-12.

As the Company did not have any hedging activities prior to adoption, adoption did not have an impact on the Company’s condensed consolidated financial statements.

The change in fair value of the Company’s new cash flow hedges, entered into in November 2019 (see Note 8 ), will be recorded in accumulated other comprehensive loss and subsequently reclassified into earnings when the hedged item impacts earnings.

Recent Accounting Developments Not Yet Adopted

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”).

This guidance is intended to introduce a revised approach to the recognition and measurement of credit losses, emphasizing an updated model based on expected losses rather than incurred losses.

Company intends to apply the new guidance on the effective date of January 1, 2020.

Adoption of ASU 2016-13 will not have a material impact on the Company's consolidated financial statements and related disclosures.

In December 2019, the FASB issued ASU No.

This guidance introduces a revised approach to the recognition and measurement of credit losses, emphasizing an updated model based on expected losses rather than incurred losses.

Adoption of ASU 2016-13 did not have a material impact on the Company’s consolidated financial statements and related disclosures and no cumulative adjustment was recorded.

Recent Accounting Developments Not Yet Adopted

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2019-12, Income Taxes (Topic 740):

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The Company intends to apply the new guidance effective January 1, 2021, as required.

The Company is currently evaluating the effect ASU 2019-12 may have on its consolidated financial statements and related disclosures.

The impact of the adoption of ASU 2019-12 on the Company's consolidated financial statements and related disclosures is not expected to be material.

In March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”).

This guidance provides optional expedients and exceptions

for applying U.S.

GAAP to contracts, hedging relationships, and other transactions that reference London Inter-bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued.

The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur.

The Company will continue to evaluate ASU 2020-04 and consider the possible adoption of expedients as well as the impacts they may have on its consolidated financial statements and related disclosures.

Fair Value Measurements

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The fair value estimates are based upon certain market assumptions and information available to the Company.

The carrying value of the following financial instruments approximated their fair values as of December 31, 2019 and 2018:

The carrying values of the following financial instruments approximated their fair values as of December 31, 2020 and 2019:

cash and cash equivalents, prepaid expenses and other current assets, accounts receivable, accounts payable, and accrued expenses and other current liabilities.

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The Company also classifies its derivative financial instruments as Level 2.

For new leases, the Company will determine if an arrangement is or contains a lease at inception.

Leases are included as right-of-use (“ROU”) assets within other assets and ROU liabilities within accrued expenses and other liabilities and within other long-term liabilities on the Company’s condensed consolidated balance sheets.

ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

Certain leases contain variable contractual obligations as a result of future base rate escalations which are estimated based on observed trends and included within the measurement of present value.

The Company’s leases do not provide an implicit rate.

The Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

The ROU asset also includes any lease payments made and excludes lease incentives.

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The Company has lease agreements with lease and non-lease components, which are generally accounted for separately.

For certain leases, such as teleport network (“TPN”) facilities, the Company elected the practical expedient to combine lease and non-lease components as a single lease component.

Taxes assessed on leases in which the Company is either a lessor or lessee are excluded from contract consideration and variable payments when measuring new lease contracts or remeasuring existing lease contracts.

Concentrations of Credit Risk

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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.

Marketable Securities

Marketable securities consist of fixed-income debt securities with an original maturity in excess of ninety days.

These investments are classified as available-for-sale and 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 realized gains or losses on the sale of marketable securities for the years ended December 31, 2020 and 2019.

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

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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 (loss).

Transaction gains or losses are classified as other income (expense), net in the accompanying consolidated statements of operations and comprehensive loss.

In instances where the financial statements of a foreign entity in a highly inflationary economy are material, they are remeasured as if the functional currency were the reporting currency.

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Capitalized Interest

Interest costs associated with financing the Company’s assets during the construction period of the upgraded satellite constellation have been capitalized.

During the development and construction periods of a project, including the financing of the Company's upgraded satellite constellation, the Company capitalizes interest.

Capitalization ceases when the asset is ready for its intended use or when these activities are substantially suspended.

If some portions of a project are substantially complete and ready for use and other portions have not yet reached that stage, the Company ceases capitalizing costs on the completed portion of the project but continues to capitalize for the incomplete portion of the project.

Inventory consists primarily of finished goods, although the Company at times also maintains an inventory of raw materials from third-party manufacturers.

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Inventories are valued using the average cost method and are carried at the lower of cost or net realizable value.

Accordingly, the Company recorded expense of $ 0.8 million , $ 0.3 million and $ 0.4 million for the years ended December 31, 2019 , 2018 and 2017 , respectively, which are included within the cost of subscriber equipment for excess and obsolete inventory.

The expenses for the years ended December 31, 2019 , 2018 and 2017 were primarily related to certain handset parts and accessories.

The expense for excess and obsolete inventory was not material as of December 31, 2020, 2019 and 2018.

The Company has a manufacturing agreement with Benchmark Electronics Inc.

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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 stock options is determined at the grant date using the Black-Scholes-Merton 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.

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Property and equipment, net $ 1,319 $ 1,187

Inventory 261 237

Prepaid and other current assets 28 79

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Depreciation is calculated using the straight-line method over the following estimated useful lives:

Ground system

Internally developed software and purchased software

Building improvements

Leasehold improvements

shorter of useful life or remaining lease term

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

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.

Upon transition under ASU 2016-02, the Company elected the suite of practical expedients as a package applied to all of its leases, including (i) not reassessing whether any expired or existing contracts are or contain leases, (ii) not reassessing the lease classification for any expired or existing leases, and (iii) not reassessing initial direct costs for any existing leases.

For new leases, the Company will determine if an arrangement is or contains a lease at inception.

ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

Certain leases contain variable contractual obligations as a result of future base rate escalations which are estimated based on observed trends and included within the measurement of present value.

The Company’s leases do not provide an implicit rate.

The Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

The ROU asset also includes any lease payments made and excludes lease incentives.

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The Company has lease agreements with lease and non-lease components, which are generally accounted for separately.

For certain leases, such as teleport network (“TPN”) facilities, the Company elected the practical expedient to combine lease and non-lease components as a single lease component.

Adoption of ASU 2016-02 on January 1, 2019 had an impact of approximately $ 27.1 million and $ 30.1 million on the Company's opening assets and liabilities, respectively.

Derivative Financial Instruments

The Company uses an interest rate swap agreement to manage its exposures to fluctuating interest rate risk on variable rate debt.

Derivatives are measured at fair value and are recorded on the balance sheet within other assets and other long-term liabilities.

The Company’s derivatives are designated as cash flow hedges, with the effective portion of the changes in fair value of the

derivatives recorded in accumulated other comprehensive loss within the Company’s consolidated balance sheets and subsequently recognized in earnings when the hedged items impact earnings.

Any ineffective portion of cash flow hedges would be recorded in current earnings.

Within the consolidated statement of operations and comprehensive income, the gains and losses related to cash flow hedges are recognized within interest income (expense), net, as this is the same financial statement line item used for any gains or losses associated with the hedged items.

Cash flows from hedging activities are included as operating activities within the Company’s consolidated statements of cash flows, which is the same category as the items being hedged.

See Note 8 for further information.

Long-Lived Assets

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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 (“Kosmotras”), as a supplemental launch services provider for the upgraded satellite constellation.

The original cost under the Kosmotras agreement was $ 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.

As the Company believed 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.

There were no similar write-offs during the years ended December 31, 2019 and 2018.

Intangible Assets

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Amortization is calculated using the straight-line method over the following estimated useful lives:

Intellectual property

Assembled workforce

14 - 20 years

Intellectual property 20 years

Assembled workforce 7 years

Patents 14 - 20 years

Revenue Recognition

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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 an arrangement

exists, services or equipment are transferred, the transaction price is determined, the arrangement has commercial substance, and collection of consideration is probable.

The Company recognizes revenue when an arrangement exists, services or equipment are transferred, the transaction price is determined, the arrangement has commercial substance, and collection of consideration is probable.

Contracts with multiple performance obligations

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When a contract includes variable consideration, the Company evaluates the estimate of the variable consideration to determine whether the estimate needs to be constrained;

therefore, the Company includes the variable consideration in the transaction price only to the extent that it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

therefore, the Company includes the variable consideration in the transaction price only to

the extent that it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

Variable consideration estimates are updated at the end of each quarter.

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A liability is established equal to the cash paid upon purchase for the e-voucher or prepaid card.

On January 1, 2018, upon the adoption of ASU 2014-09, the Company now recognizes revenue from (i) the prepaid services upon the use of the e-voucher or prepaid card by the customer and (ii) the estimated pattern of use.

Prior to January 1, 2018, revenue from unused prepaid services was recognized upon expiration of the prepaid card.

Beginning January 1, 2018, upon the adoption of ASU 2014-09, the Company recognizes revenue from (i) the prepaid services upon the use of the e-voucher or prepaid card by the customer and (ii) the estimated pattern of use.

The Company does not offer refunds for unused prepaid services.

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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 Air Force Space Command.

government and other authorized customers pursuant to the Enhanced Mobile Satellite Services (“EMSS”) contract managed by the U.S.

Under the terms of this agreement, authorized customers continue to utilize airtime services, provided through the U.S.

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The Company does not include purchases of goods from a third party in its evaluation of costs incurred.

Incurred costs represent work performed,

which corresponds with, and thereby best depicts, the transfer of control to the customer.

Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer.

Revenue on cost-plus-fixed-fee contracts is recognized to the extent of estimated costs incurred plus the applicable fees earned.

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The Company’s policy is to recognize interest and penalties on uncertain tax positions as a component of income tax expense.

Derivative Financial Instruments

The Company uses interest rate swap agreements to manage its exposures to fluctuating interest rate risk on variable rate debt.

Derivatives are measured at fair value and are recorded on the balance sheet within other assets and other long-term liabilities.

The Company’s derivatives are designated as cash flow hedges, with the effective portion of the changes in fair value of the derivatives recorded in accumulated other comprehensive loss within the Company’s consolidated balance sheets and subsequently recognized in earnings when the hedged items impact earnings.

Any ineffective portion of cash flow hedges would be recorded in current earnings.

Cash flows from hedging activities are included operating activities within the company’s consolidated statements of cash flows, which is the same category as the items being hedged.

See Note 8 for further information.

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.

Net Loss Per Share

The Company calculates basic net loss per share by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

Diluted net loss per share takes into account the effect of potentially dilutive common shares when the effect is dilutive.

The effect of potentially dilutive common shares, including common stock issuable upon exercise of outstanding stock options, is computed using the treasury stock method.

The effect of potentially dilutive common shares from the conversion of the outstanding convertible preferred securities was computed using the as-if converted method at the stated conversion rate.

The effect of potentially dilutive common shares from the conversion of outstanding convertible preferred securities was computed using the as-if converted method at the stated conversion rate.

The Company’s unvested 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.

Cash and Cash Equivalents and Restricted Cash

The calculation of basic and diluted net 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.

Cash and Cash Equivalents and Marketable Securities

Cash and Cash Equivalents

The following table summarizes the Company’s cash and cash equivalents:

Recurring Fair

December 31, Recurring Fair

Value Measurement

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Cash and cash equivalents:

Money market funds

Cash $ 27,168 $ 13,943

Money market funds 208,005 209,618 Level 2

Fixed income debt securities 2,005 — Level 2

Total cash and cash equivalents $ 237,178 $ 223,561

Restricted Cash and Cash Equivalents

The Company was required to maintain a minimum cash reserve within a debt service reserve account (“DSRA”) for debt service related to its $ 1.8 billion loan facility with Bpifrance Assurance Export S.A.A.

(“ BPIAE Facility ”) (see Note 7 ) which was extinguished in November 2019.

As of December 31, 2019 and 2018, the Company’s restricted cash and cash equivalents balances, which included the minimum cash reserve for debt service and the interest earned on those amounts, was zero and $ 191.9 million , respectively.

Marketable Securities

As of December 31, 2020, the Company's marketable securities consisted of only fixed-income securities.

The amortized cost of these securities amounted to $ 7.6 million and the estimated fair value amounted to $ 7.5 million as of December 31, 2020.

The gross unrealized gains and gross unrealized losses on these marketable securities were not material as of December 31, 2020.

All marketable securities are measured as Level 2 investments.

The following table presents the contractual maturities of the Company's fixed income debt securities, as of December 31, 2020:

December 31, 2020

Amortized Cost Fair Value

(In thousands)

Mature within one year $ 5,530 $ 5,525

Mature after one year and within three years 2,024 2,023

Total $ 7,554 $ 7,548

As of December 31, 2019, the Company did not hold any investment positions in marketable securities.

Property and Equipment

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Ground system 64,581 66,789

Equipment 44,871 45,406

Internally developed software and purchased software 251,320 241,793

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Total depreciable property and equipment

3,588,156 3,582,498

accumulated depreciation ( 959,606 ) ( 682,130 )

Total depreciable property and equipment, net of accumulated depreciation

Ground spares

2,628,550 2,900,368

Land 8,037 8,037

Construction-in-process:

Upgraded satellite systems under construction

Ground spares 225,254 225,254

Other construction-in-process 55,235 47,140

Total property and equipment, net of accumulated depreciation

$ 2,917,076 $ 3,180,799

Other construction-in-process consisted of the following:

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Internally developed software $ 44,444 $ 38,064

Equipment 10,388 8,983

Ground system 403 93

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Depreciation expense was $ 301.7 million, $ 296.1 million and $ 216.6 million for the years ended December 31, 2020, 2019 and 2018, respectively.

The increase in depreciation from 2018 to 2019 is primarily due to the increased number of upgraded satellites in service during the current period as the Company completed the replacement of its first-generation satellites in the first quarter of 2019.

The increase in depreciation from 2018 to 2019 was primarily due to the increased number of upgraded satellites in service as the Company completed the replacement of its first-generation satellites in the first quarter of 2019.

Intangible Assets

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December 31, 2020

Carrying Value

Carrying Value Accumulated

Amortization Net

Carrying Value

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Indefinite life intangible assets:

Spectrum and licenses

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

Assembled workforce

Intellectual property 20 years 16,439 ( 8,927 ) 7,512

Assembled workforce 7 years 5,678 ( 3,244 ) 2,434

Patents 14 - 20 years 396 ( 63 ) 333

Total 22,513 ( 12,234 ) 10,279

Total intangible assets $ 57,738 $ ( 12,234 ) $ 45,504

December 31, 2019

Carrying Value

Carrying Value Accumulated

Amortization Net

Carrying Value

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Indefinite life intangible assets:

Spectrum and licenses

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

Assembled workforce

Intellectual property 20 years 16,439 ( 8,217 ) 8,222

Assembled workforce 7 years 5,678 ( 2,433 ) 3,245

Patents 14 - 20 years 324 ( 39 ) 285

Total 22,441 ( 10,689 ) 11,752

Total intangible assets $ 57,666 $ ( 10,689 ) $ 46,977

Amortization expense was $ 1.6 million for each of the years ended December 31, 2019 , 2018 and 2017 .

See Note 9 for further details on the Boeing assembled workforce, added in 2017.

Amortization expense was $ 1.5 million, $ 1.6 million, and $ 1.6 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Future amortization expense with respect to intangible assets existing at December 31, 2020, by year and in the aggregate, was as follows:

Year ending December 31,

Year ending December 31, Amount

(In thousands)

Thereafter 4,161

Total estimated future amortization expense $ 10,279

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The Company also has operations and maintenance (“O&M”) agreements that include leases associated with two TPN facilities.

Some of Company's leases include options to extend the leases for up to 10 years and some include options to terminate the lease within 1 year .

The Company does not include term extension options as part of its present value calculation of lease liabilities unless those options have a high likelihood of being exercised.

The Company’s weighted-average remaining lease term relating to its operating leases is 7.5 years.

The weighted-average discount rate used to calculate the operating lease liability payment is 6.7 % .

Some of the Company's leases include options to extend the leases for up to 10 years and some include options to terminate the lease within 1 year.

The Company does not include term extension options as part of its present value calculation of lease liabilities unless it is reasonably certain to exercise those options.

As of December 31, 2020, the Company’s weighted-average remaining lease term relating to its operating leases was 6.7 years, and the weighted-average discount rate used to calculate the operating lease liability payment was 6.7 %.

The table below summarizes the Company’s lease-related assets and liabilities:

Classification

Leases Classification December 31, 2020 December 31, 2019

(in thousands)

Operating lease assets

Noncurrent Other assets $ 23,974 $ 27,007

Total lease assets $ 23,974 $ 27,007

Operating lease liabilities

Accrued expenses and other current liabilities

Other long-term liabilities

Current Accrued expenses and other current liabilities $ 3,838 $ 3,397

Noncurrent Other long-term liabilities 23,258 26,859

Total lease liabilities $ 27,096 $ 30,256

During the years ended December 31, 2020, 2019 and 2018, the Company incurred lease expense of $ 5.6 million, $ 5.1 million and $ 5.1 million, respectively.

A portion of rent expense during these comparable periods is derived from leases that are not included within the ROU asset and liability balances shown above as they have terms shorter than twelve months and are therefore excluded from balance sheet recognition under ASU 2016-02.

Future payment obligations with respect to the Company's operating leases in which it is the lessee existing at December 31, 2019, by year and in the aggregate, are as follows:

Year Ending December 31,

A portion of rent expense during these comparable periods was derived from leases that were not included within the ROU asset and liability balances shown above as they had terms shorter than twelve months and were therefore excluded from balance sheet recognition under ASU 2016-02.

Future payment obligations with respect to the Company's operating leases in which it was the lessee at December 31, 2020, by year and in the aggregate, were as follows:

Year Ending December 31, Amount

(in thousands)

Thereafter 8,209

Total lease payments $ 34,086

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These agreements provide for a fee that will be recognized over the life of the satellites, currently expected to be approximately 12.5 years.

Lease income related to these agreements was $ 21.6 million and $ 17.1 million during the years December 31, 2019 and 2018, respectively.

Lease income is recorded as hosted payload and other data service revenue within service revenue on the Company’s condensed consolidated statements of operations and comprehensive income (loss).

Lease income related to these agreements was $ 21.4 million, $ 21.6 million and $ 17.1 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Lease income is recorded as hosted payload and other data service revenue within service revenue on the Company’s condensed consolidated statements of operations and comprehensive loss.

Both Aireon and L3Harris have made payments for their hosting agreements and will continue to do so.

Future income with respect to the Company's operating leases in which it is the lessor existing at December 31, 2019, by year and in the aggregate, is as follows:

Year Ending December 31,

Future income with respect to the Company's operating leases in which it was the lessor at December 31, 2020, by year and in the aggregate, is as follows:

Year Ending December 31, Amount

(in thousands)

2021 $ 21,445

Thereafter 98,907

Total lease income $ 206,132

On November 4, 2019, pursuant to a new loan agreement (the “Credit Agreement”) the Company entered into a $ 1,450.0 million term loan with Deutsche Bank AG (the “ Term Loan ”) and an accompanying $ 100.0 million revolving loan (the “Revolving Facility”).

The Company used the proceeds of the Term Loan , along with its DSRA and cash on hand, to prepay all of the indebtedness outstanding under the BPIAE Facility , as well as related expenses.

The Term Loan was issued at a price equal to 99.5 % of its face value and bears interest at an annual rate of LIBOR plus 3.75 % , with a 1.0 % LIBOR floor and has a seven-year maturity.

Interest is paid monthly on the last business day of the month.

Principal is paid quarterly, beginning with the quarter ending June 30, 2020, at a rate of one percent per annum, with the remaining principal due upon maturity.

The Revolving Facility bears interest at the same rate (but without a LIBOR floor) if and as drawn, with no original issue discount, a commitment fee of 0.5 % per year on the undrawn amount, and a five-year maturity.

As of December 31, 2019, the Company reported an aggregate of $ 1,450.0 million in borrowings under the Term Loan , before $ 26.6 million of net unamortized deferred financing costs, for a net principal balance of $ 1,423.4 million in borrowings in the accompanying consolidated balance sheet.

As of December 31, 2019, based upon recent trading prices (Level 2 - market approach), the fair value of the Company's $ 1,450.0 million in borrowings under the Term Loan due in 2026 was $ 1,468.1 million .

The Credit Agreement restricts the Company's ability to incur liens, engage in mergers or asset sales, pay dividends, repay subordinated indebtedness, incur indebtedness, make investments and loans, and engage in other transactions as specified in the Credit Agreement, and also contains a mechanism to sweep a portion of the Company's excess cash flow (as defined in the

Credit Agreement.

The Credit Agreement provides for specified exceptions, baskets measured as a percentage of trailing twelve months of earnings before interest, taxes, depreciation and amortization (“EBITDA”), and unlimited exceptions in the case of incurring indebtedness and liens and making investments, dividend payments, and payments of subordinated indebtedness, as well as a phase-out of the excess cash flow sweep, based on achievement and maintenance of specified leverage ratios.

The Credit Agreement permits repayment, prepayment, and repricing transactions, subject to a 1 % penalty in the event the facility is prepaid or repriced within the first six months.

Term Loan and Revolving Facility

On November 4, 2019, pursuant to a loan agreement (as amended to date, the “Credit Agreement”) the Company entered into a $ 1,450.0 million term loan with Deutsche Bank AG (the “Term Loan”) and an accompanying $ 100.0 million revolving loan (the “Revolving Facility”).

The Company used the proceeds of the Term Loan, along with its debt service reserve account and cash on hand, to prepay all of the indebtedness outstanding under its $1.8 billion loan facility with Bpifrance Assurance Export S.A.A., as well as related expenses.

The Term Loan was issued at a price equal to 99.5 % of its face value and initially bore interest at an annual rate of LIBOR plus 3.75 %, with a 1.0 % LIBOR floor, with a maturity date in November 2026.

Subsequent to December 31, 2020, the Company repriced the Term Loan to reduce the interest rate (see Note 18 for more information).

Interest on the Term Loan is paid monthly on the last business day of the month.

Principal payments, which are payable quarterly and began on June 30, 2020, equal $16.5 million per annum (one percent of the full amount of the loan following the additional $200.0 million drawn on February 7, 2020, as noted below), with the remaining principal due upon maturity.

Borrowings under the Revolving Facility, if any, bear interest at LIBOR plus 3.75 % without a LIBOR floor, if and as drawn, with no original issue discount, a commitment fee of 0.5 % per year on the undrawn amount, and a maturity date in November 2024.

On February 7, 2020, the Company closed on an additional $ 200.0 million under its Term Loan.

On February 13, 2020, the Company used these proceeds, together with cash on hand, to prepay and retire all of the indebtedness outstanding under the senior unsecured notes (the “Notes”), including premiums for early prepayment.

The additional amount is fungible with the original $ 1,450.0 million, having the same maturity date, interest rate and other terms, but was issued at a 1.0 % premium to face value.

To prepay the Notes, the Company paid a call price equal to the present value at the redemption rate of (i) 105.125 % of the $ 360.0 million principal amount of the Notes plus (ii) all interest due through the first call date in April 2020, representing a total call premium of $ 23.5 million, plus all accrued and unpaid interest to the redemption date.

As of December 31, 2020 and 2019, the Company reported an aggregate of $ 1,637.6 million and $ 1,450.0 million in borrowings under the Term Loan, respectively.

These amounts are before $ 24.0 million and $ 26.6 million of net unamortized deferred financing costs as of December 31, 2020 and 2019, respectively.

The net principal balance in borrowings in the accompanying consolidated balance sheets as of December 31, 2020 and 2019 amounted to $ 1,613.6 million and $ 1,423.4 million, respectively.

As of December 31, 2020 and 2019, based upon over-the-counter bid levels (Level 2 - market approach), the fair value of the borrowings under the Term Loan due in 2026 was $ 1,647.9 million and $ 1,468.1 million, respectively.

The Company had not borrowed under the Revolving Facility as of December 31, 2020.

The Credit Agreement restricts the Company’s ability to incur liens, engage in mergers or asset sales, pay dividends, repay subordinated indebtedness, incur indebtedness, make investments and loans, and engage in other transactions as specified in the Credit Agreement, and also contains a mandatory prepayment sweep mechanism with respect to a portion of the Company’s excess cash flow (as defined in the Credit Agreement).

The Credit Agreement provides for specified exceptions, baskets measured as a percentage of trailing twelve months of earnings before interest, taxes, depreciation and amortization (“EBITDA”), and unlimited exceptions in the case of incurring indebtedness and liens and making investments, dividend payments, and payments of subordinated indebtedness, as well as a phase-out of the mandatory excess cash flow prepayments, based on achievement and maintenance of specified leverage ratios.

The Company’s mandatory excess cash flow prepayment, as specified in the Credit Agreement, was $ 12.6 million as of December 31, 2020.

This amount will be paid in 2021 and counts

towards the Company's required quarterly principal payments.

As such, it was classified under current short-term secured debt in the Company’s consolidated balance sheet as of December 31, 2020.

The Credit Agreement permits repayment, prepayment, and repricing transactions.

The Company was in compliance with all other covenants as of December 31, 2020.

The Credit Agreement contains no financial maintenance covenants with respect to the Term Loan.

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The effective interest rate on outstanding principal of the Term Loan was 5.7 % during the year ended December 31, 2020.

BPIAE Facility

In October 2010, the Company entered into its $ 1.8 billion BPIAE Facility with a syndicate of bank lenders, which was repaid in November 2019.

Upon entering the Term Loan Credit Agreement, the Company paid the gross outstanding principal balance on its BPIAE Facility in the amount of $ 1,547.9 million .

Overall, the Company incurred a loss on extinguishment of debt in the amount of approximately $ 111.7 million related to all early extinguishments of the BPIAE Facility in 2019, representing premiums paid, net of a refund received for insurance premiums previously paid to BPIAE, and the write-off of unamortized debt issuance costs.

Senior Unsecured Notes

On March 21, 2018, the Company issued senior unsecured notes (the “Notes”) which bear interest at 10.25 % per annum and mature on April 15, 2023.

Interest is payable semi-annually on April 15 and October 15 and principal is repaid in full upon maturity.

Interest payments began on October 15, 2018.

As of December 31, 2019, the Company reported an aggregate of $ 360.0 million in borrowings under the Notes, before $ 7.0 million of net unamortized deferred financing costs, for a net principal balance of $ 353.0 million in borrowings in the accompanying consolidated balance sheet.

As of December 31, 2019, based upon recent trading prices (Level 2 - market approach), the fair value of the Company's $ 360.0 million in borrowings under the Notes due in 2022 was $ 385.9 million .

The Notes contain covenant requirements that apply to certain permitted financing actions.

The Company was in compliance with all covenant requirements under the Notes as of December 31, 2019.

As of December 31, 2020, the Company had fully repaid and retired the total gross outstanding principal balance of the Notes, as discussed above.

Interest on Debt

Total interest incurred during the years ended December 31, 2020, 2019 and 2018 was $ 98.6 million, $ 140.1 million and $ 142.7 million, respectively.

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Interest capitalized during the years ended December 31, 2020 and 2019 was $ 3.2 million and $ 15.1 million, respectively.

During 2017, all interest was capitalized.

Interest accrued for the years ended December 31, 2020 and 2019 was $ 0.2 million and $ 7.8 million, respectively.

Future minimum principal repayments with respect to the Company's debt balances existing at December 31, 2019 by year and in the aggregate, are as follows:

Year ending December 31,

Future minimum principal repayments with respect to the Company's debt balances, including the mandatory excess cash flow prepayment, existing at December 31, 2020, by year and in the aggregate, are as follows:

Year ending December 31, Amount

(In thousands)

2021 $ 16,766

Thereafter 1,555,125

Total debt commitments $ 1,637,625

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Total long-term debt, net $ 1,596,893

The repayment schedule above excludes amounts that may be required to be prepaid pursuant to the excess cash flow sweep provision of the Credit Agreement, as those amounts are not determinable in advance.

The repayment schedule also excludes the impact of the early repayment of the Notes and the proceeds under the additional $ 200.0 million in Term Loans, which closed in February 2020, as discussed further in Note 19 .

The repayment schedule above excludes future amounts that may be required to be prepaid pursuant to the excess cash flow sweep provision of the Credit Agreement, as those amounts are not determinable in advance.

Derivative Financial Instruments

The Company is exposed to interest rate fluctuations related to its variable rate debt instruments.

The Company may reduce its exposure to fluctuations in the cash flows associated with changes in the variable interest rates by entering into offsetting positions through the use of interest rate swap contracts which result in recognizing a fixed interest rate for the portion of the Company’s variable rate debt to be hedged.

This will reduce the negative impact of increases in the variable rates over the term of the contracts.

The Company is exposed to interest rate fluctuations related to its Term Loan.

The Company has reduced its exposure to fluctuations in the cash flows associated with changes in the variable interest rate by entering into offsetting positions through the use of interest rate swap contracts which result in recognizing a fixed interest rate for the portion of the Term Loan.

This will reduce the negative impact of increases in the variable rate over the term of the interest rate swap contracts.

These financial instruments are not used for trading or other speculative purposes.

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The Company pays a fixed annual rate of 0.50 % for the Swaption and a fixed rate of 1.565 % on the Swap.

Both the Swap and the Swaption derivative instruments carry a notional amount of $ 1,000.0 million as of December 31, 2019.

Both the Swap and the Swaption derivative instruments carried a notional amount of $ 1,000.0 million as of December 31, 2020 and 2019.

The Company designated both the Swap and Swaption as qualifying hedging instruments and accounted for these derivatives as cash flow hedges.

At inception, the Swap and Swaption were designated as cash flow hedges for hedge accounting.

The unrealized changes in market value are recorded in accumulated other comprehensive income (loss) and reclassified into earnings during the period in which the hedged transaction affects earnings.

Over the next 12 months, the Company expects any gains or losses for cash flow hedges reclassified from accumulated other comprehensive income (loss) into earnings to have an immaterial impact on the Company’s condensed consolidated financial statements.

The unrealized changes in market value are recorded in accumulated other comprehensive loss and reclassified into earnings during the period in which the hedged transaction affects earnings.

Over the next 12 months, the Company expects any gains or losses for cash flow hedges reclassified from accumulated other comprehensive loss into earnings to have an immaterial impact on the Company’s condensed consolidated financial statements.

Fair Value of Derivative Instruments

As of December 31, 2019, the Company recorded a long-term asset of $ 0.8 million to recognize the fair value of the Swap, and a long-term liability of $ 0.9 million to recognize the fair value of the Swaption.

The company did not enter into any cash flow hedges in the prior periods.

The fair value of derivative assets was recorded in other long-term assets and the fair value of derivative liabilities was recorded in other long-term liabilities.

During the year ended December 31, 2019, the Company incurred $ 0.3 million in net interest expense for both the Swap and the Swaption.

Gains and losses resulting from fair value adjustments to the Swap and Swaption are recorded within accumulated other comprehensive loss within the Company's consolidated balance sheets and reclassified to interest expense on the dates that interest payments become due.

Cash flows related to the interest rate swaps are included in cash flows from operating activities on the consolidated statements of cash flows.

The amount of unrealized loss, net of tax, recognized in accumulated other comprehensive income (loss) in the consolidated balance sheets related to the Company’s derivative financial instruments was $ 0.1 million during the year ended December 31, 2019.

There were no gains or losses related to derivative financial instruments during the years ended December 31, 2018 and 2017.

Boeing Insourcing Agreement

On January 3, 2017, the Company hired the majority of the employees and third-party contractors who were responsible for the operations and maintenance of the Company’s satellite constellation and ground infrastructure pursuant to an Insourcing Agreement with The Boeing Company (“Boeing”).

The Company paid Boeing $ 5.5 million , of which $ 2.75 million was paid in each of December 2016 and December 2017.

As a result, the Company and Boeing terminated their previous Operations and Maintenance Agreement (“O&M Agreement”) and Support Service Agreement for the upgraded satellite constellation and entered into a new DSA with a $ 6.0 million minimum annual commitment through 2021.

Boeing no longer has a unilateral right to commence the de-orbit of the Company’s first-generation satellites.

The acquisition of this assembled workforce was recorded as a definite-lived intangible asset in January 2017 and is being amortized over an estimated useful life of seven years.

Additionally, by terminating the O&M Agreement, the Company recognized a $ 14.2 million gain in the first quarter of 2017, consisting of (i) the derecognition of a purchase accounting liability created when GHL Acquisition Corp.

acquired Iridium Holdings LLC in 2009 related to the fair value of the contractual arrangement with Boeing as of that date, and (ii) the remainder of a credit resulting from a July 2010 Boeing contract amendment.

As of December 31, 2020, the Company had a current liability balance of $ 5.2 million and $ 4.4 million, for the fair value of the Swap and Swaption, respectively, recorded in other current liabilities.

As of December 31, 2019, the Company had a long-term asset balance for the fair value of the Swap in the amount of $ 0.8 million, recorded in other long-term assets, and a long-term liability balance for the fair value of the Swaption in the amount of $ 0.9 million recorded in other long-term liabilities.

During the years ended December 31, 2020 and 2019, the Company collectively incurred $ 9.1 million and $ 0.3 million in net interest expense, respectively, for both the Swap and the Swaption.

The Company did not hold any cash flow hedges during 2018.

Gains and losses resulting from fair value adjustments to the Swap and Swaption are recorded within accumulated other comprehensive loss within the Company’s condensed consolidated balance sheets and reclassified to interest expense on the dates that interest payments become due.

Cash flows related to the Swap are included in cash flows from operating activities on the condensed consolidated statements of cash flows.

The amount of unrealized loss related to the Swap and Swaption that was recorded in accumulated other comprehensive loss in the condensed consolidated balance sheets was $ 7.0 million as of December 31, 2020, net of a $ 2.5 million tax impact, and $ 0.1 million as of December 31, 2019.

There were no gains or losses related to derivative financial instruments during the year ended December 31, 2018.

Stock-Based Compensation

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Stock Option Awards

The fair value of stock options is determined at the grant date using the Black-Scholes option pricing model.

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.

Fair Value Determination

We have used the Black-Scholes-Merton option pricing model to determine fair value of our stock option 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, 2019, 2018 and 2017:

The Company uses the Black-Scholes-Merton option pricing model to determine the fair value of its stock option awards on the date of grant.

The Company 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 Black-Scholes-Merton option pricing model incorporates the following assumptions:

• Volatility - The expected volatility of the options granted was estimated based upon historical volatility of the Company's share price of its common stock through daily observations of its trading history.

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therefore, the dividend rate is assumed to be zero.

The Company historically granted stock options to newly hired and promoted employees.

During 2019 , 2018 and 2017 , the Company granted approximately 139,000 , 364,000 and 209,000 stock options, respectively, with an estimated aggregate grant date fair value of $ 1.3 million , $ 2.4 million and $ 0.9 million , respectively.

The following table summarizes weighted-average assumptions used in the Company's calculations of fair value:

The Company has historically granted stock options to newly hired and promoted employees.

During 2019 and 2018, the Company granted approximately 139,000 and 364,000 stock options, respectively, with an estimated aggregate grant date fair value of $ 1.3 million and $ 2.4 million, respectively.

The Company did not grant any stock options during the year ended December 31, 2020.

The following table summarizes weighted-average assumptions used in the Company's calculations of fair value during the years ended December 31, 2019 and 2018:

Year Ended December 31,

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A summary of the activity of the Company’s stock options is as follows:

Shares Weighted-

Exercise Price

Per Share Weighted-

Term (Years) Aggregate

(In thousands, except years and per share data)

Options outstanding at December 31, 2017 6,856 $ 7.94

Granted 364 15.56

Cancelled or expired ( 1 ) 8.59

Exercised ( 1,477 ) 8.42 $ 16,614

Forfeited ( 39 ) 9.97

Options outstanding at December 31, 2018 5,703 $ 8.29 4.38 $ 57,956

Granted 139 21.12

Cancelled or expired ( 1 ) 11.80

Exercised ( 1,670 ) 8.11 $ 29,584

Forfeited ( 18 ) 11.74

Options outstanding at December 31, 2019 4,153 $ 8.78 4.03 $ 65,887

Cancelled or expired ( 5 ) 20.17

Exercised ( 1,581 ) 8.14 $ 33,836

Forfeited ( 13 ) 18.17

Options outstanding at December 31, 2020 2,554 $ 9.10 3.94 $ 77,182

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The weighted-average grant date fair value of options granted during the years ended December 31, 2019 and 2018 was $ 9.18 and $ 6.63 per share, respectively.

The total fair value of the shares vested during the years ended December 31, 2019 , 2018 and 2017 was $ 1.4 million , $ 1.4 million and $ 2.0 million , respectively.

The total fair value of the shares vested during the years ended December 31, 2020, 2019 and 2018 was $ 1.4 million for each period.

As of December 31, 2020, the total unrecognized cost related to non-vested options was approximately $ 1.5 million.

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The majority of the annual compensation the Company provides to members of its board of directors is paid in the form of RSUs.

In addition, certain members of the Company’s board of directors elect to receive the remainder of their annual compensation, or a portion thereof, in the form of RSUs.

An aggregate amount of approximately 76,000 , 110,000 and 96,000 service-based RSUs were granted to its directors as a result of these elections during the years ended December 31, 2019, 2018 and 2017, respectively, with an estimated grant date fair value of $ 1.4 million , $ 1.3 million and $ 1.0 million , respectively.

In addition, members of the Company’s board of directors can elect to receive the remainder of their annual compensation, or a portion thereof, in the form of RSUs.

An aggregate amount of approximately 58,000 , 76,000 and 110,000 service-based RSUs were granted to the Company's directors as a result of these elections during the years ended December 31, 2020, 2019 and 2018, respectively, with an estimated grant date fair value of $ 1.4 million, $ 1.4 million and $ 1.3 million, respectively.

During the years ended December 31, 2020, 2019 and 2018, the Company granted approximately 713,000 , 740,000 and 900,000 service-based RSUs, respectively, to its employees, with an estimated grant date fair value of $ 19.1 million, $ 16.9 million and $ 10.7 million, respectively.

During the years ended December 31, 2019, 2018 and 2017, the Company granted approximately 11,000 , 14,000 and 8,000 service-based RSUs, respectively, to non-employee consultants with an estimated grant date fair value of $ 0.2 million , $ 0.2 million and $ 0.1 million , respectively.

During the years ended December 31, 2020, 2019 and 2018, the Company granted approximately 10,000 , 11,000 and 14,000 service-based RSUs, respectively, to non-employee consultants, with an estimated grant date fair value of $ 0.2 million for each period.

Performance-Based Awards

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Vesting of the Executive RSUs 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 Executive RSUs will vest at least in part.

The vesting of Executive RSUs will ultimately range from 0 % to 150 % of the number of shares underlying the Executive RSU grant based on the level of achievement of the performance goals.

If the Company achieves the performance goals, 50 % of the Executive 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 executive's continued service as of the vesting date.

During 2019 and 2018, the Company awarded additional shares underlying performance-based RSUs to the Company's executives for over-achievement of performance goal targets related to the 2017 and 2016 Executive RSUs in the amounts of 11,000 shares and 1,000 shares, respectively.

During 2017, 53,000 shares of performance-based RSUs were forfeited as a result of under-achievement of performance goal targets related to the 2015 Executive RSUs.

During 2020, 2019 and 2018, the Company awarded additional shares underlying performance-based RSUs to the Company's executives for over-achievement of performance goal targets related to the Executive RSU grants originally awarded in 2018, 2017 and 2016 in the amounts of 20,000 shares, 11,000 shares and 1,000 shares, respectively.

Award Summary

A summary of the Company’s activity for outstanding RSUs is as follows:

RSUs Weighted-

(In thousands)

Outstanding at December 31, 2017 3,548 $ 8.50

Granted 1,632 11.87

Forfeited ( 163 ) 9.69

Released ( 1,940 ) 8.64

Outstanding at December 31, 2018 3,077 $ 10.13

Granted 1,058 22.50

Forfeited ( 102 ) 14.86

Released ( 1,331 ) 10.52

Outstanding at December 31, 2019 2,702 $ 14.62

Granted 1,061 26.73

Forfeited ( 92 ) 17.72

Released ( 1,007 ) 15.63

Outstanding at December 31, 2020 2,664 $ 18.96

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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, 2019 .

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 (the “Series A Preferred Stock”) in a private offering.

During the three months ended March 31, 2018, the Company's daily volume-weighted average stock price remained at or above $ 12.26 per share for a period of 20 out of 30 trading days, thereby allowing for the conversion of the Series A Preferred Stock at the election of the Company.

On March 20, 2018, the Company converted all outstanding shares of its Series A Preferred Stock into shares of common stock, resulting in the issuance of 10,599,974 shares of common stock.

The Company declared and paid all current and cumulative dividends to holders of record of Series A Preferred Stock as of March 8, 2018.

As such, the Company paid cash dividends of $ 7.0 million to the holders of the Series A Preferred Stock.

The Company paid cash dividends of $ 1.8 million to the holders of the Series A Preferred Stock during the year ended December 31, 2017.

The Company previously issued 1.5 million shares of preferred stock, and the remaining 0.5 million authorized shares of preferred stock were undesignated and unissued as of December 31, 2020 and 2019.

As of December 31, 2020 and 2019, there were no outstanding shares of preferred stock, as all preferred stock was converted in prior periods into common stock according to its terms.

Series B Cumulative Perpetual Convertible Preferred Stock

In May 2014, the Company issued 500,000 shares of its Series B Cumulative Perpetual Convertible Preferred Stock (the “Series B Preferred Stock”) in an underwritten public offering at a price to the public of $ 250 per share.

In May 2014, the Company issued 500,000 shares of its 6.75 % Series B Cumulative Perpetual Convertible Preferred Stock (the “Series B Preferred Stock”) in an underwritten public offering.

Holders of Series B Preferred Stock were 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 were payable quarterly in arrears on each March 15, June 15, September 15 and December 15.

During the three months ended June 30, 2019, the Company's daily volume-weighted average stock price remained at or above $ 11.21 per share for a period of 20 out of 30 trading days, allowing for the conversion of the Series B Preferred Stock at the election of the Company.

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To convert the stock, the Company declared and paid all current and cumulative dividends to holders of record of Series B Preferred Stock as of May 8, 2019, resulting in a dividend payment of $ 8.4 million.

Effective January 1, 2018, the Company adopted ASU No.

Under the new standard, the Company performs the following steps to determine the amount of revenue to be recognized:

(i) identification of the promised goods or services in the contract;

(ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract;

(iii) measurement of the transaction price, including the constraint on variable consideration;

(iv) allocation of the transaction price to the performance obligations;

and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.

In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

The Company adopted the standard using the modified retrospective method with a cumulative effect adjustment recorded to reduce opening retained earnings by $ 15.7 million .

This method required application of the new guidance at the beginning of the earliest comparative period presented for revenue agreements that were not substantially complete as of the date of adoption.

The Company does not disclose the value of unsatisfied performance obligations because the majority of its contracts have expected lengths of one year or less.

The Company did not retrospectively restate contracts with modifications prior to the earliest period presented, but instead reflected the aggregate effect of all modifications at transition.

The Company derives its revenue primarily as a 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 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.

See Note 2 for a description of the Company's accounting policies in connection with each of these types of arrangements.

As a result, the Company did not have any shares of Series B Preferred Stock outstanding as of December 31, 2020 and 2019.

Share Repurchase Program

In February 2021, the Company announced that its Board of Directors had authorized the repurchase of up to $ 300.0 million of its common stock through December 31, 2022.

This time frame can be extended or shortened by the Board of Directors.

Repurchases, if any, will be made from time-to-time on the open market at prevailing prices or in negotiated transactions off the market.

There were no repurchases of common stock during the year ended December 31, 2020.

The following table summarizes the Company’s services revenue:

Year Ended December 31,

2020 2019 2018

(in thousands)

Commercial voice and data services

Commercial IoT data services

Hosted payload and other data services

Total commercial

Commercial services:

Voice and data $ 168,668 $ 173,167 $ 168,107

IoT data 96,981 96,435 85,054

Broadband 35,959 30,455 25,069

Hosted payload and other data 60,600 49,969 40,527

Total commercial services 362,208 350,026 318,757

Government services 100,887 97,132 88,000

Total services $ 463,095 $ 447,158 $ 406,757

Effective September 15, 2019, the Company entered into a multi-year, fixed price contract with the U.S.

Air Force Space Command, or AFSPC, for Enhanced Mobile Satellite Services, or the EMSS Contract.

Under the EMSS Contract, the Company will provide satellite airtime services, including unlimited global standard and secure voice, paging, fax, Short Burst Data, Iridium Burst, RUDICS and Distributed Tactical Communications System, or DTCS, services for an unlimited number of U.S.

Department of Defense, or DoD, and other federal government subscribers.

This replaces the previous EMSS contract signed in 2013.

The following table summarizes the Company’s engineering and support services revenue:

Year Ended December 31,

2020 2019 2018

(in thousands)

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and deferred revenue (contract liabilities) on the condensed consolidated balance sheets.

Commercial $ 4,529 $ 2,852 $ 716

Government 29,696 27,578 17,687

Total $ 34,225 $ 30,430 $ 18,403

The Company bills amounts under its agreed-upon contractual terms at periodic intervals (for services), upon shipment (for equipment), or upon achievement of contractual milestones or as work progresses (for engineering and support services).

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The Company may also receive payments from customers before revenue is recognized, resulting in deferred revenue (contract liabilities).

The Company recognized revenue that was previously recorded as deferred revenue in the amounts of $ 43.0 million and $ 18.0 million for the years ended December 31, 2019 and 2018, respectively.

The Company recognized revenue that was previously recorded as deferred revenue in the amounts of $ 41.1 million, $ 43.0 million and $18.0 million for the years ended December 31, 2020 , 2019 and 2018, respectively.

The Company has also recorded costs of obtaining contracts expected to be recovered in prepaid expenses and other assets (contract assets or commissions), that are not separately disclosed on the condensed consolidated balance sheets.

The commissions are recognized over the estimated prepaid usage period.

The commissions are recognized over the estimated usage period.

The contract assets not separately disclosed are as follows:

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Contract Assets:

Commissions $ 993 $ 1,116

Other contract costs $ 2,860 $ 3,231

The primary impact of adopting ASU 2014-09 related to the Company’s prepaid service revenue and related amounts that expired unused.

The Company now estimates the expected revenue that will expire unused on an ongoing basis and recognizes this revenue in a manner consistent with the usage period.

and foreign components of income before income taxes are presented below:

Year Ended December 31,

2020 2019 2018

(In thousands)

income (loss)

Foreign income (loss)

Total income (loss) before income taxes

loss $ ( 89,251 ) $ ( 218,391 ) $ ( 22,147 )

Foreign income 287 272 1,498

Total loss before income taxes $ ( 88,964 ) $ ( 218,119 ) $ ( 20,649 )

The components of the Company’s income tax provision were as follows:

Year Ended December 31,

2020 2019 2018

(In thousands)

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Deferred taxes:

Federal tax expense (benefit)

Federal tax benefit ( 27,701 ) ( 50,690 ) ( 9,159 )

State tax expense (benefit) ( 5,869 ) ( 1,850 ) 904

Foreign tax expense (benefit)

Total deferred tax expense (benefit)

Total income tax expense (benefit)

Foreign tax benefit ( 109 ) ( 1,302 ) ( 99 )

Total deferred tax benefit ( 33,679 ) ( 53,842 ) ( 8,354 )

Total income tax benefit $ ( 32,910 ) $ ( 56,120 ) $ ( 7,265 )

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.

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.

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SAB 118 was 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 of the Tax Act and recorded provisional amounts in its December 31, 2017 financial statements including the remeasurement of its deferred tax assets/liabilities for an estimated net tax benefit of $ 150.9 million .

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 material effects of the Tax Act and recorded provisional amounts in its December 31, 2017 financial statements including the remeasurement of its deferred tax assets/liabilities for an estimated net tax benefit of $ 150.9 million.

In the fourth quarter of 2018, the Company completed its accounting for the income tax effects of the Tax Act.

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Year Ended December 31,

2020 2019 2018

(In thousands)

Expected tax expense (benefit) at U.S.

Expected tax benefit at U.S.

federal statutory tax rate $ ( 18,811 ) $ ( 45,790 ) $ ( 4,336 )

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Deferred impact of state tax law changes and elections ( 1,684 ) ( 2,414 ) ( 6,481 )

Tax Act - deferred tax effects

Equity-based compensation ( 8,451 ) ( 8,227 ) ( 3,807 )

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Other nondeductible items 206 873 298

Tax credits ( 1,048 ) ( 995 ) ( 2,872 )

Foreign taxes and other adjustments 80 ( 967 ) 1,075

Total income tax expense (benefit)

Total income tax benefit $ ( 32,910 ) $ ( 56,120 ) $ ( 7,265 )

The components of deferred tax assets and liabilities are as follows:

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Federal, state and foreign net operating losses, other carryforwards and tax credits

430,273 382,392

Other 22,493 24,137

Total deferred tax assets 517,504 475,717

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Investment in joint venture ( 52,203 ) ( 60,374 )

Other ( 6,283 ) ( 7,095 )

Total deferred tax liabilities ( 636,441 ) ( 633,366 )

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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 $ 54.5 million and $ 36.7 million as of December 31, 2019 and 2018, respectively, that expire from 2025 through 2039 .

The Company had deferred tax assets related to the state net operating loss carryforwards of approximately $ 69.7 million

and $ 54.5 million as of December 31, 2020 and 2019, respectively, that expire from 2025 through 2040.

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 $ 30.2 million and $ 27.7 million as of December 31, 2020 and 2019, respectively, 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 $ 0.9 million , for each of December 31, 2019 and 2018, that begin to expire in 2023.

The Company does not expect to fully utilize all of its foreign net operating losses within the carryforward periods and as such reflects a partial valuation allowance of $ 0.8 million for each of December 31, 2019 and 2018, 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 $ 0.7 million and $ 0.9 million, as of December 31, 2020 and 2019, respectively, that begin to expire in 2023.

The Company does not expect to fully utilize all of its foreign net operating losses within the carryforward periods.

As such had recorded a partial valuation allowance of $ 0.5 million and $ 0.8 million as of December 31, 2020 and 2019, respectively, against these deferred tax assets on its consolidated balance sheets.

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 changes in the Company’s ownership and any limitations imposed by the jurisdictions in which the Company operates.

The Company has approximately $ 9.5 million and $ 8.4 million of deferred tax assets related to research and development tax credits as of December 31, 2019 and 2018, respectively, that expire in various amounts from 2029 through 2039 .

The Company has approximately $ 5.2 million of deferred tax assets related to foreign tax credits for each of December 31, 2019 and 2018, that expire in various amounts from 2020 through 2029 .

The Company had approximately $ 10.0 million and $ 9.5 million of deferred tax assets related to research and development tax credits as of December 31, 2020 and 2019, respectively, that expire in various amounts from 2029 through 2040.

The Company had approximately $ 5.7 million and $ 5.2 million of deferred tax assets related to foreign tax credits as of December 31, 2020 and 2019, respectively, that expire in various amounts from 2020 through 2030.

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, 2019, which is unchanged from December 31, 2018.

As such, the Company had a partial valuation allowance of $ 1.1 million as of December 31, 2020 , which is unchanged from December 31, 2019.

The Company had $ 3.6 million of deferred tax assets related to Alternative Minimum Tax (“AMT”) credits as of December 31, 2018.

Pursuant to the Tax Act, the Company received a partial refund in 2019 and expects the remaining amount to be refunded by 2021.

The remaining balance of the AMT credit was reclassed from a deferred tax asset to a receivable.

Pursuant to the Tax Act, the Company received a refund of $ 1.8 million in 2019 and pursuant to the Coronavirus Aid, Relief, and Economic Security Act received the remaining $ 1.8 million in 2020.

The Company has provided for U.S.

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The provision for income taxes includes the impact of changes to these liabilities.

The amount of unrecognized tax benefits was $ 1.0 million and $ 1.1 million at December 31, 2019 and 2018, respectively.

The amount of unrecognized tax benefits was $ 0.5 million and $ 1.0 million as of December 31, 2020 and 2019, respectively.

Any changes in the next twelve months are not anticipated to have a significant impact on the results of operations, financial position or cash flows of the Company.

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Change attributable to final assessment — ( 176 )

Change attributable to tax positions taken in the current period

Decrease attributable to lapse of statute of limitations — ( 21 )

Balance at December 31, $ 537 $ 953

Net Income (Loss) Per Share

The computations of basic and diluted net income (loss) per share are set forth below:

Net Loss Per Share

The Company calculates basic net loss per common share by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

In periods of net income, diluted net income per share takes into account the effect of potentially dilutive common shares when the effect is dilutive.

Potentially dilutive common shares include (i) common stock issuable upon exercise of outstanding stock options and (ii) contingently issuable RSUs that are convertible into shares of common stock upon achievement of certain service and performance requirements.

The effect of potentially dilutive common shares is computed using the treasury stock method.

The computations of basic and diluted net loss per common share are set forth below:

Year Ended December 31,

2020 2019 2018

(In thousands, except per share data)

Net income (loss) attributable to common stockholders - basic and diluted

Dividends on Series A preferred stock, declared and undeclared

Dividends on Series B preferred stock, declared and undeclared

Numerator for diluted net income (loss) per share

Denominator for basic net income (loss) per share - weighted average outstanding common shares

Dilutive effect of stock options

Dilutive effect of Performance RSUs

Dilutive effect of Series A preferred stock

Dilutive effect of Series B preferred stock

Denominator for diluted net income (loss) per share

Net income (loss) per share attributable to common stockholders - basic

Net income (loss) per share attributable to common stockholders - diluted

Due to the Company’s net loss for the year ended December 31, 2019, all potential common stock equivalents were anti-dilutive and therefore excluded from the calculation of diluted net loss per share.

For the year ended December 31, 2019, 0.3 million unvested performance-based RSUs were not included in the computation of basic and diluted net loss per share as certain performance criteria had not been satisfied, and options to purchase 0.2 million shares of common stock were not included in the computation of diluted net loss per share, as the effect would be anti-dilutive.

Due to the Company’s net loss for the year ended December 31, 2018, all potential common stock equivalents were anti-dilutive.

For the year ended December 31, 2018, 0.3 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, and options to purchase 0.1 million shares of common stock were not included in the computation of basic and diluted net loss per share, as the effect would be anti-dilutive.

For the year ended December 31, 2018, 16.7 million as-if converted shares of the Series B Preferred Stock were not included in the computation of diluted net loss per share, as the effect would be anti-dilutive.

For the year ended December 31, 2018, $ 6.3 million in cumulative unpaid dividends to holders of the Series B Preferred Stock was not declared or accrued as a result of all cash dividends being suspended in connection with the amendments to the BPIAE Facility described in Note 7 , but such amounts were deducted to arrive at net loss 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, 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 or accrued as a result of all cash dividends being suspended, but such amounts were deducted to arrive at net income attributable to common stockholders.

Net loss attributable to common stockholders - basic and diluted $ ( 56,054 ) $ ( 166,193 ) $ ( 23,533 )

Weighted average common shares - basic and diluted

133,491 125,167 108,975

Net loss attributable to common stockholders per share - basic and diluted $ ( 0.42 ) $ ( 1.33 ) $ ( 0.22 )

Due to the Company’s net losses for the years ended December 31, 2020 , 2019 and 2018 all potential common stock equivalents were anti-dilutive and therefore excluded from the calculation of diluted net loss per share.

The incremental number of shares underlying stock options and RSUs outstanding with anti-dilutive effects were as follows:

Year Ended December 31,

2020 2019 2018

(In thousands)

Anti-dilutive contingent performance-based RSUs 311 285 328

Anti-dilutive stock options 95 198 87

Anti-dilutive preferred shares — 6,104 16,693

Related Party Transactions

4 unchanged sentences

Pursuant to agreements with Aireon, Aireon will pay the Company fees of $ 200.0 million to host the ADS-B receivers, of which $ 54.5 million had been paid as of December 31, 2020.

Aireon also pays power fees of up to approximately $ 3.7 million per year (the “Hosting Agreement”), as well as data services fees of up to approximately $ 19.8 million per year for the delivery of the air traffic surveillance data (the “Data Services Agreement”).

Aireon also pays power fees of up to approximately $ 3.7 million per year (the “Hosting Agreement”), as well as data services fees of approximately $ 19.8 million per year for the delivery of the air traffic surveillance data (the “Data Services Agreement”).

The Aireon ADS-B receivers were activated on an individual basis as the satellite on which the receiver is hosted began carrying traffic.

Pursuant to ASU 2016-02, the Company considers the agreement with Aireon related to the hosting as an operating lease.

The Company had previously determined there was not sufficient support that Aireon would be able to make the payments due under the Hosting Agreement.

Beginning in the second quarter of 2018, the Company began receiving payments due under the Hosting Agreement and recognizing the related revenue.

During the years ended December 31, 2019 and 2018, the Company recorded $ 16.0 million and $ 13.9 million related to this agreement, respectively.

The Company recognized $ 16.1 million, $ 16.0 million and $ 13.9 million of revenue from hosting fees during the years ended December 31, 2020, 2019 and 2018, respectively.

In December 2018, in connection with Aireon's entry into a debt facility, the Company and the other Aireon investors contributed their respective interests in Aireon into a new holding company, Aireon Holdings LLC, and entered into an Amended and Restated Aireon Holdings LLC Agreement.

Aireon Holdings LLC holds 100% of the membership interests in Aireon LLC, which remains the operating entity.

At December 31, 2019, the Company had a fully diluted ownership stake in Aireon Holdings LLC of approximately 35.7 % , subject to certain redemption provisions contained in the Amended and Restated Limited Liability Company Agreement.

At December 31, 2020 and 2019, the Company's fully diluted ownership stake in Aireon Holdings LLC of approximately 35.7 % remained unchanged, subject to certain redemption provisions contained in the Amended and Restated Limited Liability Company Agreement.

In addition, pursuant to a debt facility for Aireon LLC provided by the Company and the other Aireon investors, the Company will participate pro-rata, based on its fully diluted ownership stake, in an investor bridge loan.

As such, in December 2020, the Company invested $ 0.2 million in Aireon LLC.

The Company expects future funding by it and the other Aireon investors to be required in 2021 and 2022.

The Company’s maximum commitment under the investor bridge loan is $ 10.7 million.

Under the Data Services Agreement, Aireon pays the Company monthly data service payments on a per satellite basis.

The Company recorded data service revenue from Aireon of $ 12.6 million and $ 9.1 million for the years ended December 31, 2019 and 2018, respectively.

Under two services agreements, the Company also provides administrative services and support services, including services relating to Aireon's hosted payload operations center to Aireon, which are paid monthly.

The Company recorded data service revenue from Aireon of $ 23.9 million, $ 12.6 million and $ 9.1 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Under two services agreements, the Company also provides administrative services and support services, the fees for which are paid monthly.

Aireon receivables due to the Company under all agreements totaled $ 2.3 million and $ 1.4 million at December 31, 2020 and 2019, respectively.

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The Company operates in one business segment, providing global satellite communications services and products.

The Company derived approximately 22 % , 20 % and 24 % of the Company’s total revenue in the years ended December 31, 2019 , 2018 and 2017 , respectively, from prime contracts or subcontracts with agencies of the U.S.

The Company derived approximately 22 %, 22 % and 20 % of its total revenue in the years ended December 31, 2020, 2019 and 2018, respectively, from prime contracts or subcontracts with agencies of the U.S.

For the years ended December 31, 2020, 2019 and 2018, no single commercial customer accounted for more than 10 % of the Company’s total revenue.

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Satellites in orbit 2,487,220 2,744,356

Upgraded satellite systems under construction (United States)

All others 7,926 15,190

No single country in this group represented more than 10 % of property and equipment, net.

Total $ 2,917,076 $ 3,180,799

Revenue by geographic area was as follows:

Year Ended December 31,

2020 2019 2018

(In thousands)

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Other countries (1)

212,347 209,549 195,266

Total $ 583,439 $ 560,444 $ 523,008

(1) No single country in this group represented more than 10 % of revenue.

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Selected Quarterly Information (Unaudited)

The following represents the Company’s unaudited quarterly results:

The following represents the Company’s unaudited quarterly results of operations:

Quarter Ended

March 31, 2019

June 30, 2019

September 30, 2019

December 31, 2019

March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020

(In thousands, except per share data)

Operating income (loss)

Revenue $ 145,287 $ 140,173 $ 151,472 $ 146,507

Operating income $ 11,822 $ 5,828 $ 12,733 $ 5,100

Net loss $ ( 31,702 ) $ ( 12,422 ) $ ( 4,005 ) $ ( 7,925 )

Net loss per common share - basic and diluted $ ( 0.24 ) $ ( 0.09 ) $ ( 0.03 ) $ ( 0.06 )

Quarter Ended

March 31, 2018

June 30, 2018

September 30, 2018

December 31, 2018

March 31, 2019 June 30, 2019 September 30, 2019 December 31, 2019

(In thousands, except per share data)

Revenue $ 133,685 $ 143,100 $ 144,785 $ 138,874

Operating income (loss) $ ( 1,633 ) $ 3,741 $ 8,011 $ 1

Net income (loss)

Net income (loss) per common share - basic

Net income (loss) per common share - diluted

Net loss $ ( 18,024 ) $ ( 18,106 ) $ ( 18,012 ) $ ( 107,857 )

Net loss per common share - basic and diluted $ ( 0.18 ) $ ( 0.16 ) $ ( 0.14 ) $ ( 0.82 )

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.

Subsequent Events

On February 7, 2020, the Company closed on an additional $ 200.0 million under its Term Loan B.

On February 13, 2020, the Company used these proceeds, together with cash on hand, to prepay all of the indebtedness outstanding under the Notes, including premiums for early prepayment.

The additional amount is fungible with the original $ 1,450.0 million , having the same maturity date, interest rate and other terms, but were issued at a 1.0 % premium to face value.

To prepay the Notes, the Company paid a call price equal to the present value of (i) 105.125 % of the $ 360.0 million principal amount of the Notes plus (ii) all interest due through the first call date in April 2020, representing a total call premium of $ 23.5 million , plus all accrued and unpaid interest to the redemption date.

On January 20, 2021, the Company closed on a repricing of its $ 1,637.6 million in gross borrowings under its Term Loan, with Deutsche Bank AG, which resulted in a 1.0% reduction in the borrowing rate.

The Term Loan now bears interest at an annual rate of LIBOR plus 2.75 % with a 1.00 % LIBOR floor, having the same maturity date, and other terms of the Credit Agreement.

The interest rate on the Revolving Facility remained at LIBOR plus 3.75% with no LIBOR floor.

To reprice the Term Loan, the Company incurred financing costs of $ 3.4 million.

The Company is currently evaluating the accounting treatment of this transaction.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data