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Item 8. Financial Statements and Supplementary Data

2023-02-16 compared with 2022-02-17 · 232 added, 182 removed, 840 unchanged (33% of the section changed)

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Iridium Communications Inc.:

Report of KPMG LLP, Independent Registered Public Accounting Firm (PCAOB ID:

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm (PCAOB ID:

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Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors

Iridium Communications Inc.:

Opinion on the Consolidated Financial Statements

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

and subsidiaries (the Company) as of December 31, 2022, the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year then ended, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 16, 2023 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Changes in estimated useful lives of upgraded satellites

As discussed in Note 2 to the consolidated financial statements, the Company’s upgraded satellites are depreciated using the straight-line method over their respective estimated useful lives, which are currently estimated to be 12.5 years.

The Company applied judgment in determining the useful lives based on factors such as engineering data relating to the operation and performance of its satellite network, the Company’s long-term strategy for using the assets, and the manufacturer’s estimated design life for the assets.

As discussed in Note 4, as of December 31, 2022, the Company had recorded $2,112.5 million in total depreciable property and equipment, net of accumulated depreciation, which included its upgraded satellites.

We identified the evaluation of the determination of changes in estimated useful lives of upgraded satellites as a critical audit matter.

A high degree of subjective auditor judgment was required to evaluate the Company’s estimated useful lives of the upgraded satellites.

Specifically, assessing the factors used to determine the estimated useful lives required subjective auditor judgment.

Changes to the estimated useful lives of upgraded satellites could have a significant impact on the timing of recognition of depreciation expense and hosted payload revenue.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of an internal control related to the Company’s process to determine changes in the estimated useful lives of its upgraded satellites.

We evaluated the factors the Company used to determine the estimated useful lives of the upgraded satellites by:

• comparing the Company's useful life estimates to the manufacturer's estimated design life, and the lives of its first-generation satellite constellation

• reading publicly available information on the estimated useful lives of similar assets

• inquiring of operations and engineering management personnel regarding satellite operation and performance

• evaluating the effect of changes, if any, in the Company's long-term strategy for use of the assets on the useful life estimates.

Accounting for investment in Aireon

As discussed in Note 14 to the consolidated financial statements, in June 2022, the Company entered into a subscription agreement with Aireon and invested $50 million in exchange for an approximate 6% preferred interest.

The Company's investment in Aireon is accounted for as an equity method investment.

As of December 31, 2022, the Company's fully diluted ownership stake in Aireon Holdings, a related party, was approximately 39.5%, and is subject to redemption provisions contained in the Aireon Holdings LLC Agreement.

As of December 31, 2022, the carrying value of the Company's investment in Aireon was $48.8 million.

We identified the evaluation of the accounting for the investment in Aireon as an equity method investment as a critical audit matter.

A high degree of complex auditor judgment was required to evaluate the unique terms and conditions of the investment, specifically those related to the subscription agreement and acquired preferred interest.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of an internal control related to the Company’s process to determine the accounting for investments, including the investment in Aireon.

We evaluated the investment structure and terms and conditions of the agreement, including those related to the preferred interest, by obtaining and inspecting the executed subscription agreement and other related documents.

We assessed the significant terms and conditions of the investment and evaluated the Company’s application of relevant accounting literature in its determination of whether the investment in Aireon was an equity method investment.

We have served as the Company’s auditor since 2022.

McLean, Virginia

February 16, 2023

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

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Opinion on the Financial Statements

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

(the Company) as of December 31, 2021 and 2020, 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, 2021 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, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S.

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

(the Company) as of December 31, 2021, the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2021 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, 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 17, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

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/s/ Ernst & Young LLP

We have served as Company's auditor since 2001.

We served as the Company’s auditor from 2001 to 2022.

Tysons, Virginia

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Cash and cash equivalents $ 168,770 $ 320,913

Marketable securities — 7,548

Accounts receivable, net 82,273 63,410

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Property and equipment, net 2,433,305 2,662,336

Equity method investments 49,853 —

Other assets 122,072 50,050

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Additional paid-in capital 1,124,610 1,154,058

Retained earnings 140,810 275,915

Accumulated other comprehensive loss, net of tax ( 7,052 ) ( 17,180 )

Retained earnings (accumulated deficit) ( 47,744 ) 140,810

Accumulated other comprehensive income (loss), net of tax 51,563 ( 7,052 )

Total stockholders’ equity

1,128,555 1,287,947

Total liabilities and stockholders’ equity

$ 2,954,011 $ 3,180,795

See notes to consolidated financial statements

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Loss on extinguishment of debt ( 1,187 ) ( 879 ) ( 30,209 )

Loss on equity method investments ( 1,496 ) — —

Other income (expense), net 107 ( 417 ) 33

Total other expense ( 67,665 ) ( 75,202 ) ( 124,447 )

Loss before income taxes ( 28,888 ) ( 88,964 ) ( 218,119 )

Income tax benefit 19,569 32,910 56,120

Net loss ( 9,319 ) ( 56,054 ) ( 161,999 )

Series B preferred stock dividends, declared and paid excluding cumulative dividends — — 4,194

Net loss attributable to common stockholders $ ( 9,319 ) $ ( 56,054 ) $ ( 166,193 )

Weighted average shares outstanding - basic and diluted 133,530 133,491 125,167

Net loss attributable to common stockholders per share - basic and diluted $ ( 0.07 ) $ ( 0.42 ) $ ( 1.33 )

Income (loss) before income taxes 9,014 ( 28,888 ) ( 88,964 )

Income tax benefit (expense) ( 292 ) 19,569 32,910

Net income (loss) 8,722 ( 9,319 ) ( 56,054 )

Weighted average shares outstanding - basic 128,255 133,530 133,491

Weighted average shares outstanding - diluted 130,134 133,530 133,491

Net income (loss) attributable to common stockholders per share - basic and diluted $ 0.07 $ ( 0.07 ) $ ( 0.42 )

Comprehensive income (loss):

Net loss $ ( 9,319 ) $ ( 56,054 ) $ ( 161,999 )

Net income (loss) $ 8,722 $ ( 9,319 ) $ ( 56,054 )

Foreign currency translation adjustments ( 53 ) ( 280 ) ( 3,277 )

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(In thousands)

Convertible Additional Paid-In Capital Accumulated

Additional Paid-In Capital Accumulated

Other Comprehensive Income (Loss) Retained

Earnings Total Stockholders' Equity

Preferred Stock Common Stock

Shares Amount Shares Amount

Earnings (Accumulated Deficit) Total Stockholders’ Equity

Shares Amount

Balance at December 31, 2019 131,632 $ 132 $ 1,134,048 $ ( 6,867 ) $ 331,969 $ 1,459,282

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

Dividends on Series B preferred stock — — — — — — ( 7,744 ) ( 7,744 )

Cumulative translation adjustments — — — ( 3,277 ) — ( 3,277 )

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

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

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

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Stock withheld to cover employee taxes ( 144 ) — ( 5,918 ) — — ( 5,918 )

Repurchases and retirements of common stock ( 4,339 ) ( 4 ) ( 37,652 ) — ( 125,786 ) ( 163,442 )

Net loss — — — — ( 9,319 ) ( 9,319 )

Cumulative translation adjustments — — — ( 280 ) — ( 280 )

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

Unrealized gain on cash flow hedges, net of tax — — — 10,408 — 10,408

Balance at December 31, 2021 131,342 131 1,154,058 ( 7,052 ) 140,810 1,287,947

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Repurchases and retirements of common stock ( 6,794 ) ( 7 ) ( 59,776 ) — ( 197,276 ) ( 257,059 )

Net loss — — — — — — ( 9,319 ) ( 9,319 )

Net income — — — — 8,722 8,722

Dividends declared — — ( 16,616 ) — — ( 16,616 )

Cumulative translation adjustments — — — ( 53 ) — ( 53 )

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Cash flows from operating activities:

Net loss $ ( 9,319 ) $ ( 56,054 ) $ ( 161,999 )

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

Net income (loss) $ 8,722 $ ( 9,319 ) $ ( 56,054 )

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

Deferred income taxes ( 1,189 ) ( 21,314 ) ( 33,684 )

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Capital expenditures ( 71,267 ) ( 42,147 ) ( 38,689 )

Investment in Aireon (see Note 14 )

( 50,000 ) — ( 152 )

Purchases of other investments — ( 1,635 ) —

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Cash flows from financing activities:

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

Borrowings under the Term Loan — 179,285 202,000

Payments on the Term Loan ( 116,500 ) ( 195,785 ) ( 12,375 )

Repayments on the Notes, including extinguishment costs — ( 383,451 ) —

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

Repurchases of common stock ( 257,059 ) ( 163,442 ) —

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Proceeds from exercise of stock options 3,872 7,443 12,715

Tax payment upon settlement of stock awards ( 5,918 ) ( 4,513 ) ( 4,596 )

Payment of Series B preferred stock dividends — — ( 8,387 )

Tax payments upon settlement of stock awards ( 5,293 ) ( 5,918 ) ( 4,513 )

Net cash used in financing activities ( 374,980 ) ( 182,469 ) ( 188,186 )

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Capitalized stock-based compensation $ 4,635 $ 2,834 $ 1,608

Dividends accrued on common stock $ 16,616 $ — $ —

See notes to consolidated financial statements

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Adopted and Recently Issued Accounting Pronouncements

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

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (“ASU 2019-12”).

This guidance amends certain aspects of the accounting for income taxes.

The Company's adoption of ASU 2019-12 on January 1, 2021 had no impact on its consolidated financial statements and related disclosures.

In March 2020, the FASB issued ASU No.

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

The guidance provides optional expedients and exceptions for contracts, hedging relationships, and other transactions that reference London Inter-bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued.

The guidance provided optional expedients and exceptions for contracts, hedging relationships, and other transactions that referenced the London Inter-bank Offered Rate (“LIBOR”), which was to be discontinued.

ASU 2020-04 was further amended in January 2021 when the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848):

Scope (“ASU 2021-01”), which clarified the applicability of certain provisions.

Both ASU 2020-04 and ASU 2021-01 are currently effective prospectively for all entities through December 31, 2022 when the reference rate replacement activity is expected to have been completed.

The guidance in ASU 2020-04 and ASU 2021-01 is optional and may be elected over time as reference rate reform activities occur.

As of December 31, 2021 , the Company elected to apply the optional expedient for hedge accounting specifically to the interest rate cap agreement (the "Cap") which was executed in July 2021.

This allowed the Company to assume that the index upon which future interest payments on the hedged portion of the Term Loan (see Note 8 ) will be based matches the index on the Cap.

Adoption of this

practical expedient had no impact on the Company's consolidated financial statements upon adoption.

The Company has not yet adopted any other expedients and will continue to evaluate the impact this standard may have on its consolidated financial statements.

Both ASU 2020-04 and ASU 2021-01 were effective prospectively through December 31, 2022.

The guidance in ASU 2020-04 and ASU 2021-01 was optional and could be elected over time as reference rate reform activities occurred.

During the year ended December 31, 2022, the Company adopted the amendments required in these ASUs by modifying agreements referencing LIBOR;

the initial adoption of these amendments did not have a significant impact on its consolidated financial statements.

During the year ended December 31, 2021, the Company applied the optional expedient for hedge accounting specifically to the interest rate cap agreement (the “Cap” (see Note 8 )) which was executed in July 2021.

This allowed the Company to assume that the index upon which future interest payments on the hedged portion of the Term Loan will be based matches the index on the Cap.

Adoption of this practical expedient had no impact on the Company’s consolidated financial statements upon adoption.

Fair Value Measurements

The Company evaluates assets and liabilities subject to fair value measurements on a recurring and non-recurring basis to determine the appropriate level to classify them for each reporting period.

This determination requires significant judgments to be made by management of the Company.

Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date.

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

The fair values of the Company’s Level 2 estimates are based upon certain market assumptions and information available to the Company.

In determining fair value, the Company uses a market approach utilizing valuation models that incorporate observable inputs such as interest rates, bond yields and quoted prices for similar assets.

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

In determining fair value of Level 2 assets, the Company uses a market approach utilizing valuation models that incorporate observable inputs such as interest rates, bond yields and quoted prices for similar assets.

For new leases, the Company determines 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 consolidated balance sheets.

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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.

Investments where we have the ability to exercise significant influence, but we do not control, are accounted for under the equity method of accounting and are included in Other assets on our consolidated balance sheets.

Significant influence typically exists if we have a 20% to 50% ownership interest in the investee.

Under this method of accounting, our share of the net earnings (losses) of the investee is included in loss on equity method investments on our consolidated statement of income.

Investments where we have less than 20% ownership interest in the investee and lack the ability to exercise significant influence are accounted for under ASC 321-10-35, Investments - Equity Securities.

Under this topic, our investment equals our cost, less impairment, if any.

For investments without a readily determinable fair value, we perform a qualitative assessment to determine if any impairment indicator is present.

If an indicator is present, we estimate the fair value to determine if the fair value was less than its carrying value.

If the fair value is less than its carrying value or if there is an observable price change through a similar security from the same issuer, we would record an impairment.

Accounts Receivable

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Capitalized Interest

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

During the development and construction periods of a project, such as the financing of the Company’s current 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.

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

The Company outsources manufacturing of subscriber equipment to a third-party manufacturer and purchases accessories from third-party suppliers.

The Company’s cost of inventory includes an allocation of overhead, including payroll and payroll-related costs of employees directly involved in bringing inventory to its existing condition, and freight.

The Company’s cost of inventory includes an allocation of overhead,

including payroll and payroll-related costs of employees directly involved in bringing inventory to its existing condition, and freight.

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

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The Company’s inventory balance consisted of the following:

Year Ended December 31,

(In thousands)

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Total $ 39,776 $ 29,044

The Company’s raw materials balance includes $9.0 million and $5.8 million at December 31, 2022 and December 31, 2021, respectively, of inventory held on consignment at third-party manufacturers.

Stock-Based Compensation

The Company accounts for stock-based compensation at fair value.

The Company accounts for stock-based compensation at estimated fair value.

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

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Classification of stock-based compensation by line item on the balance sheet and statement of operations is presented below:

Year Ended December 31,

As of and For Year Ended December 31,

(In thousands)

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Patents 14 - 20 years

The Company’s intangible assets with indefinite lives are not amortized but are tested for impairment annually, or more frequently if events or changes in circumstances indicate the asset may be impaired.

The Company’s trade names, spectrum and licenses are expected to generate cash flows indefinitely.

Revenue Recognition

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Service revenue is generated from the Company’s service providers through usage of its satellite system and through fixed monthly access fees per user charged to service providers.

Revenue for usage is recognized when usage occurs and billed in arrears with payments generally submitted within 30 days.

Revenue for usage is recognized when usage occurs and is billed in arrears with payments generally submitted within 30 days.

Revenue for fixed-per-user access fees is billed monthly in advance and generally recognized over the month, or related usage period, in which the services are provided to the end user.

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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.

Under the terms of this agreement,

authorized customers continue to utilize airtime services, provided through the U.S.

government’s dedicated gateway.

These services include unlimited global standard and secure voice, low and high-speed data, paging, broadcast and Distributed Tactical Communications Services (“DTCS”) services for an unlimited number of Department of Defense (“DoD”) and other federal subscribers.

Under this contract, revenue is based on the annual fee for the fixed-price contract with unlimited

subscribers and is recognized on a straight-line basis over each contractual year, with equal payments submitted monthly.

Under this contract, revenue is based on the annual fee for the fixed-price contract with unlimited subscribers and is recognized on a straight-line basis over each contractual year, with equal payments submitted monthly.

government purchases its subscriber equipment from third-party distributors and not directly from the Company.

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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.

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.

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 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 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 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

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

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

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Money market funds 152,523 292,417 Level 2

Fixed income debt securities — 2,005 Level 2

Total cash and cash equivalents $ 168,770 $ 320,913

Marketable Securities

As of December 31, 2021, the Company did not hold any investment positions in 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 were classified as Level 2 investments in the fair value hierarchy.

The following table presents the contractual maturities of the Company's fixed income debt securities:

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

Property and Equipment

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Amortization expense was $ 1.6 million, $ 1.6 million and $ 1.5 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Future amortization expense with respect to intangible assets existing at December 31, 2021, by year and in the aggregate, was as follows:

Future amortization expense with respect to intangible assets existing at December 31, 2022, by year and in the aggregate, is as follows:

Year ending December 31, Amount

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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, 2021, by year and in the aggregate, were as follows:

Future payment obligations with respect to the Company’s operating leases in which it was the lessee at December 31, 2022, by year and in the aggregate, are as follows:

Year Ending December 31, Amount

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(“L3Harris”) for space on the Company’s satellites.

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

Lease income related to these agreements was $ 21.4 million, $ 21.4 million and $ 21.6 million for the years ended December 31, 2021, 2020 and 2019, respectively.

These agreements provide for a fee that will be recognized over the life of the satellites, currently estimated to be approximately 12.5 years from their in-service date.

Lease income related to these agreements was $ 21.4 million for each of the years ended December 31, 2022, 2021 and 2020.

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

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

Future income with respect to the Company’s operating leases in which it was the lessor at December 31, 2022, by year and in the aggregate, is as follows:

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2023 $ 21,445

2024 $ 21,445

2025 $ 21,445

2026 $ 21,445

2027 $ 21,445

Thereafter $ 56,017

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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 “Original Term Loan”) and an accompanying $ 100.0 million revolving loan (the “Revolving Facility”).

The Original Term Loan was issued at a price equal to 99.5 % of its face value, with a maturity date in November 2026.

On February 7, 2020, the Company closed on an additional $ 200.0 million under its Credit Agreement for a total borrowing of $ 1,650.0 million (as expanded, the “Term Loan”).

The additional amount is fungible with the Original Term Loan, having the same maturity date, interest rate and other terms, but was issued at a 1.0 % premium to face value.

The Term Loan initially bore interest at an annual rate of LIBOR plus 3.75 %, with a 1.0 % LIBOR floor.

The Term Loan was repriced in January 2021 for an annual interest rate of LIBOR plus 2.75 %, with a 1.0 % LIBOR floor.

The Term Loan was repriced again in July 2021 for a new annual interest rate of LIBOR plus 2.50 %, with a 0.75 % LIBOR floor.

The maturity date remains unchanged in November 2026.

The interest rate on the Revolving Facility remained unchanged at LIBOR plus 3.75 % with no LIBOR floor, and a maturity date in November 2024.

In November 2019 and February 2020, pursuant to a loan agreement (as amended to date, the “Credit Agreement”), the Company entered into a term loan totaling $ 1,650.0 million in aggregate principal amount with various lenders administered by Deutsche Bank AG (the “Term Loan”) and an accompanying $ 100.0 million revolving loan (the “Revolving Facility”).

The Term Loan was repriced twice in 2021.

In December 2022, the Company amended the Term Loan to replace the original LIBOR base rate with the Secured Overnight Financing Rate (“SOFR”).

The Term Loan now bears interest at an annual rate of adjusted SOFR (SOFR plus 0.10%) plus 2.50 %, with a 0.75 % adjusted SOFR floor.

The Company typically selects a one-month interest period, with the result that interest is calculated using one-month SOFR.

All other terms of the Term Loan remain the same, including maturity in November 2026.

The interest rate on the Revolving Facility was also modified to use adjusted SOFR as the base rate beginning December 30, 2022.

All other material terms remain unchanged.

The Revolving Facility now bears interest at an annual rate of adjusted SOFR plus 3.75 %, but without an adjusted SOFR floor, and a maturity date in November 2024.

Principal payments, which are payable quarterly and began on June 30, 2020, equal $ 16.5 million per annum (one percent of the full principal amount of the Term Loan), with the remaining principal due upon maturity.

In July 2021, the Company paid $ 4.1 million of original issuance costs to reprice the Term Loan.

Lenders making up approximately $ 65.2 million of the Term Loan did not participate in the repricing.

Those portions of the Term Loan were replaced by new or existing lenders.

In the fourth quarter of 2022, the Company elected to prepay $ 100.0 million of principal on the Term Loan.

This resulted in a $ 1.2 million loss on extinguishment of debt during the year ended December 31, 2022, as the Company wrote off the unamortized debt issuance costs related to this prepayment.

In the third quarter of 2021, the Company repriced the Term Loan.

This resulted in a $ 0.9 million loss on extinguishment of debt during the year ended December 31, 2021, as the Company wrote off the unamortized debt issuance costs related to the lenders who were fully repaid in an exchange of principal.

In February 2020, the Company used the proceeds of the additional $ 200.0 million borrowed under the Term Loan, together with cash on hand, to prepay and retire all of the indebtedness outstanding under then outstanding senior unsecured promissory notes (the “Notes”), including premiums for early prepayment.

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 a result of the prepayment, the Company also wrote off the remaining unamortized debt issuance costs, which resulted in a $ 30.2 million loss on extinguishment of debt during the year ended December 31, 2020.

In February 2020, the Company used the proceeds of the Term Loan, together with cash on hand, to prepay and retire all of the indebtedness outstanding under then outstanding senior unsecured promissory notes, including premiums for early prepayment.

This resulted in a $ 30.2 million loss on extinguishment of debt during the year ended December 31, 2020, as the Company wrote off the remaining unamortized debt issuance costs.

As of December 31, 2022 and 2021, the Company reported an aggregate of $ 1,504.6 million and $ 1,621.1 million in borrowings under the Term Loan, respectively.

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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.

The Credit Agreement provides for specified exceptions, including baskets measured as a percentage of

trailing twelve months of earnings before interest, taxes, depreciation and amortization (“EBITDA”) and unlimited exceptions based on achievement and maintenance of specified leverage ratios, for, among other things, incurring indebtedness and liens and making investments, restricted payments for dividends and share repurchases, and payments of subordinated indebtedness.

The Credit Agreement 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), which is phased out based on achievement and maintenance of specified leverage ratios.

The Credit Agreement provides for specified exceptions, including baskets measured as a percentage of trailing twelve months of earnings before interest, taxes, depreciation and amortization (“EBITDA”) and unlimited exceptions based on achievement and maintenance of specified leverage ratios, for, among other things, incurring indebtedness and liens and making investments, restricted payments for dividends and share repurchases, and payments of subordinated indebtedness.

leverage ratios.

As of December 31, 2022, the Company was below the specified leverage ratio and a mandatory prepayment sweep was therefore not required.

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Total interest incurred includes amortization of deferred financing fees and capitalized interest.

To reprice the Term Loan in January 2021 and July 2021, the Company incurred third-party financing costs of $ 3.6 million and $ 1.3 million, respectively.

These costs were expensed and are included within interest expense on the consolidated statements of operations and comprehensive income (loss) for the year ended December 31, 2021.

All third-party financing costs incurred during the years ended December 31, 2020 and 2019 were also expensed and are included within interest expense on the consolidated statements of operations and comprehensive income (loss).

All third-party financing costs incurred during the years ended December 31, 2021 and 2020 were expensed and are included within interest expense on the consolidated statements of operations and comprehensive income (loss).

The following table presents the interest and amortization of deferred financing fees related to the Term Loan:

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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 and interest rate cap contracts which result in recognizing a fixed interest rate for a portion of the Term Loan.

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

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Historically, the Company has not incurred, and does not expect to incur in the future, any losses as a result of counterparty default.

Hedge effectiveness of interest rate swap and cap contracts is based on a long-haul hypothetical derivative methodology and includes all changes in value.

Hedge effectiveness of the current interest rate cap contract is based on a long-haul hypothetical derivative methodology and includes all changes in value.

The Company formally assesses, both at the hedge’s inception and on an ongoing quarterly basis, whether the designated derivative instruments are highly effective in offsetting changes in the cash flows of the hedged items.

When the hedging instrument is sold, expires, is terminated, is exercised, no longer qualifies for hedge accounting, is de-designated, or is no longer probable, hedge accounting is discontinued prospectively.

Interest Rate Cap

In July 2021, the Company entered into the Cap, which had an effective date of December 2021 upon the expiration of the Company’s long-term interest rate swap (the “Swap”).

The Cap manages the Company’s exposure to interest rate movements on a portion of the Term Loan through the maturity of the Term Loan in November 2026.

In December 2022, the Company modified the Cap to replace the LIBOR base rate with SOFR, consistent with the amendment to the Term Loan.

With the replacement of LIBOR to SOFR, the Company receives a credit risk adjustment from the counterparty of 0.064 %.

The adjusted Cap now provides the Company the right to receive payment from the counterparty if one-month SOFR exceeds 1.436 % ( 1.5 % less 0.064 %).

Prior to the amendment, the Company received payment under the terms of the Cap if one-month LIBOR exceeded 1.5 %.

Since December 2021, the Company pays a fixed monthly premium based on an annual rate of 0.31 % for the Cap.

The Cap carried a notional amount of $ 1.0 billion as of December 31, 2022 and 2021.

The Cap is designed to mirror the terms of the Term Loan and to offset the cash flows being hedged.

The Company designated the Cap as a cash flow hedge of the variability of the base rate interest payments on the Term Loan.

The effective portion of the Cap’s change in fair value will be recorded in accumulated other comprehensive income (loss).

Any ineffective portion of the Cap’s change in fair value will be recorded in current earnings as interest expense.

Interest Rate Swaps

On November 27, 2019, the Company executed a long-term interest rate swap (“Swap”) through November 2021 to mitigate variability in forecasted interest payments on a portion of the Company’s borrowings under its Term Loan.

The Company entered into the Swap in November 2019, which had a term through November 2021 and was intended to mitigate variability in forecasted interest payments on a portion of the Term Loan.

On the last business day of each month, the Company received variable interest payments based on one-month LIBOR from the counterparty.

The Company paid a fixed rate of 1.565 % per annum on the Swap until its expiration in November 2021.

The Company also entered into an interest rate swaption agreement (“Swaption”), for which the Company paid a fixed annual rate of 0.50 %.

The Company paid a fixed rate of 1.565 % per annum on the notional amount of $ 1.0 billion on the Swap until its expiration in November 2021.

The Company also entered into an interest rate swaption agreement (“Swaption”), for which the Company paid a fixed annual rate of 0.50 % of the notional amount.

At inception, the Swap and Swaption (collectively, the “swap contracts”) were designated as cash flow hedges for hedge accounting.

The unrealized changes in market value were recorded in accumulated other comprehensive income (loss) and any remaining balance will be reclassified into earnings during the period in which the hedged transaction affects earnings.

The unrealized changes in market value were recorded in accumulated other comprehensive income (loss) and any remaining balance was reclassified into earnings during the period in which the hedged transaction affected earnings.

Due to the changes made to the Term Loan as a result of the July 2021 repricing, at that time the Company elected to de-designate the Swap as a cash flow hedge.

Accordingly, as the related interest payments were still probable, the accumulated balance within other comprehensive income (loss) as of the de-designation date was amortized into earnings through the November 2021 expiration date.

As of December 31, 2020, the Swap carried a notional amount of $ 1.0 billion and had a current liability balance of $ 5.2 million in other current liabilities related to the fair value of the Swap.

The Swaption carried a notional amount of $ 1.0 billion as of December 31, 2020.

At December 31, 2020, the premium liability was netted with the Swaption, for a fair value of $ 4.4 million which was recorded in other current liabilities.

The Company sold the Swaption in May 2021 for $ 0.7 million.

The Company continued to pay the fixed annual rate for the Swaption through the term of the Swaption, which expired in November 2021.

Interest Rate Cap

On July 21, 2021, the Company entered into the Cap that began in December 2021 upon the expiration of the Swap.

The Cap manages the Company's exposure to interest rate movements on a portion of the Term Loan from the Cap's inception through the maturity of the Term Loan in November 2026.

The Cap provides the Company with the right to receive payment if one-month LIBOR exceeds 1.5 %.

Beginning in December 2021, the Company began to pay a fixed monthly premium based on an annual rate of 0.31 % for the Cap.

The Cap carried a notional amount of $ 1.0 billion as of December 31, 2021.

The Cap is designed to mirror the terms of the Term Loan and to offset the cash flows being hedged.

The Company designated the Cap as a cash flow hedge of the variability of the LIBOR-based interest payments on the Term Loan.

The effective portion of the Cap's change in fair value will be recorded in accumulated other comprehensive income (loss).

Any ineffective portion of the Cap's change in fair value will be recorded in current earnings as interest expense.

Fair Value of Derivative Instruments

As of December 31, 2022, the Company had an asset balance of $ 81.3 million recorded in other assets for the fair value of the Cap.

During the years ended December 31, 2021, 2020, and 2019 the Company collectively incurred $ 8.5 million, $ 9.1 million, and $ 0.3 million, respectively, in net interest expense for the swap contracts and the Cap.

During the years ended December 31, 2022, 2021, and 2020 the Company collectively incurred $ 3.3 million, $ 8.5 million, and $ 9.1 million, respectively, in net interest expense for the Cap and swap contracts.

Gains and losses resulting from fair value adjustments to the Cap are recorded within accumulated other comprehensive income (loss) within the Company’s consolidated balance sheet and reclassified to interest expense on the dates that interest payments become due.

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The number of shares of common stock available for issuance under the Amended 2015 Plan is reduced by (i) one share for each share of common stock issued pursuant to an appreciation award, such as a stock option or stock appreciation right with an exercise or strike price of at least 100 % of the fair market value of the underlying common stock on the date of grant, and (ii) 1.8 shares for each share of common stock issued pursuant to any stock award that is not an appreciation award, also referred to as a “full value award.” The Amended 2015 Plan allows the Company to utilize a broad array of equity incentives and performance cash incentives in order to secure and retain the services of its employees, directors and consultants, and to provide long-term incentives that align the interests of its employees, directors and consultants with the interests of the Company’s stockholders.

The Company accounts for stock-based compensation at fair value.

The Company accounts for stock-based compensation at estimated fair value.

Stock Options

The stock option awards granted to employees generally (i) have a term of ten years , (ii) vest over four years 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 market value of the underlying shares at the date of grant.

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 Company used 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, if any, 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:

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therefore, the dividend rate is assumed to be zero.

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

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

The Company did not grant any stock options during the years ended December 31, 2021 and 2020.

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

Year Ended December 31,

Expected volatility 40.78 %

Expected term (years) 6.11

Expected dividends — %

Risk free interest rate 2.59 %

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

The Company last granted stock options in 2019.

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

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Options outstanding at December 31, 2019 4,153 $ 8.78

Granted 139 21.12

Cancelled or expired ( 5 ) 20.17

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The Company recognized $ 0.5 million, $ 0.8 million and $ 1.0 million of stock-based compensation expense related to stock options in the years ended December 31, 2022, 2021 and 2020, respectively.

The weighted-average grant date fair value of options granted during the year ended December 31, 2019 was $ 9.18 .

The total fair value of the shares vested during the years ended December 31, 2022, 2021 and 2020 was $ 0.6 million, $ 2.3 million and $ 1.4 million, respectively.

As of December 31, 2021, the total unrecognized cost related to non-vested options was approximately $ 0.6 million.

As of December 31, 2022, the total unrecognized cost related to non-vested options was less than $ 0.1 million.

This cost is expected to be recognized over a weighted-average period of 0.2 years.

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The fair value of RSUs is determined at the grant date based on the closing price of the Company’s common stock on the date of grant.

The related compensation expense is recognized over the service period and is based on the grant date fair value of the Company’s common stock and the number of shares expected to vest.

The related compensation expense is recognized over the service period, or shorter periods based on the retirement eligibility of certain grantees, and is based on the grant date fair value of the Company’s common stock and the number of shares expected to vest.

The fair value of the awards is not remeasured at the end of each reporting period.

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In March 2022, 2021 and 2020, the Company awarded approximately 248,000 , 228,000 and 115,000 performance-based RSUs, respectively, to the Company’s executives and employees (the “Bonus RSUs”), with an estimated grant date fair value of $ 9.7 million, $ 9.5 million and $ 3.1 million, respectively.

Vesting of the Bonus RSUs is and was dependent upon the Company’s

achievement of defined performance goals over the respective fiscal year.

The Company records stock-based compensation expense related to performance-based RSUs when it is considered probable that the performance conditions will be met.

Vesting of the Bonus RSUs is and was dependent upon the Company’s achievement of defined performance goals for the respective fiscal year in which the Bonus RSUs were granted.

records stock-based compensation expense related to performance-based RSUs when it is considered probable that the performance conditions will be met.

Management believes it is probable that substantially all of the 2022 Bonus RSUs will vest.

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The estimated aggregate grant date fair value of the Executive RSUs for the 2022, 2021 and 2020 grants was $ 6.5 million, $ 4.6 million and $ 3.9 million, respectively.

Vesting of the Executive RSUs is and was dependent upon the Company’s achievement of defined performance goals over a two-year period.

Vesting of the Executive RSUs is and was dependent upon the Company’s achievement of defined performance goals over a two-year period (the year of grant and the following year).

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

If the Company achieves the performance goals, 50 % of the number of Executive RSUs earned based on performance 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 March 2021, 2020 and 2019, the Company awarded additional shares underlying performance-based RSUs to the Company’s executives for over-achievement of performance targets related to the Executive RSUs originally awarded in 2019, 2018 and 2017 in the amounts of 3,000 , 20,000 and 11,000 shares, respectively.

In 2022, the Company’s compensation committee adjusted the Executive RSUs granted in 2022 to exclude contributions from its Russian subsidiaries, due to the uncertainties surrounding its Russian operations as a result of Russia's invasion of Ukraine and related sanctions.

The Company's compensation committee also approved the removal of a performance condition.

At the time of each modification, the Company determined achievement of the performance conditions of the Executive RSUs probable.

As such, the modifications did not result in incremental compensation expense.

If the Company achieves the performance goals for the Executive RSUs at the end of the two-year performance period, 50 % of the number of Executive RSUs earned based on performance will then vest on the second anniversary of the grant date, and the remaining 50 % will then 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 March 2022, the Company cancelled shares underlying performance-based RSUs to the Company’s executives for under-achievement of performance targets related to the Executive RSUs originally awarded in 2020 in the amount of 50,000 shares.

In March 2021 and 2020, the Company awarded additional shares underlying performance-based RSUs to the Company’s executives for over-achievement of performance targets related to the Executive RSUs originally awarded in 2019 and 2018 in the amounts of 3,000 and 20,000 , respectively.

Equity Transactions

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The remaining 0.5 million authorized shares of preferred stock remain undesignated and unissued as of December 31, 2022 and 2021.

As of December 31, 2021 and 2020, there were no outstanding shares of preferred stock, as all preferred stock was converted into common stock in prior periods according to its terms.

As of December 31, 2022 and 2021, there were no outstanding shares of preferred stock, as all previously designated and issued preferred stock was converted into common stock in prior periods.

Stockholders are entitled to receive, when and if declared by the Company’s Board of Directors from time to time, such dividends and other distributions in cash, stock or property from the Company’s assets or funds legally and contractually available for such purposes.

In December 2022, the Company’s Board of Directors approved a dividend of $0.13 per share, payable on March 30, 2023 to stockholders of record as of March 15, 2023.

As such, the Company accrued a liability of $16.6 million related to the unpaid dividend as of December 31, 2022.

This was the first declared dividend on the common stock of the Company.

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.

In March 2022, the Company expanded the repurchase program to include up to an additional $ 300.0 million of its common stock through December 31, 2023.

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

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When treasury shares are retired, the Company’s policy is to allocate the excess of the repurchase price over the par value of shares acquired first, to additional paid-in capital, and then to retained earnings.

The portion to be allocated to additional paid-in capital is calculated by applying a percentage, determined by dividing the number of shares to be retired by the number of shares outstanding, to the balance of additional paid-in capital as of the date of retirement.

The Company repurchased and subsequently retired 4.3 million shares of its common stock during the year ended December 31, 2021, for a total purchase price of $ 163.4 million.

The portion to be allocated to additional paid-in

capital is calculated by applying a percentage, determined by dividing the number of shares to be retired by the number of shares outstanding, to the balance of additional paid-in capital as of the date of retirement.

The Company repurchased and subsequently retired 6.8 million and 4.3 million shares of its common stock during the years ended December 31, 2022 and 2021, respectively, for a total purchase price of $ 257.0 million and $ 163.4 million, respectively.

As of December 31, 2022, $ 179.6 million remained available and authorized for repurchase under this program.

As the share repurchases were authorized in 2021, no shares were permitted to be repurchased during the year ended December 31, 2020.

As the share repurchases were authorized in 2021, no shares were repurchased during the year ended December 31, 2020.

The following table summarizes the Company’s services revenue:

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Other contract costs $ 2,255 $ 2,558

Unbilled receivables $ 10,752 $ 9,132

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

and foreign components of income (loss) before income taxes are presented below:

Year Ended December 31,

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(In thousands)

loss $ ( 31,352 ) $ ( 89,251 ) $ ( 218,391 )

income (loss) $ 9,013 $ ( 31,352 ) $ ( 89,251 )

Foreign income 1 2,464 287

Total loss before income taxes $ ( 28,888 ) $ ( 88,964 ) $ ( 218,119 )

Total income (loss) before income taxes $ 9,014 $ ( 28,888 ) $ ( 88,964 )

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

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Federal tax benefit ( 3,354 ) ( 14,109 ) ( 27,701 )

State tax benefit ( 6,686 ) ( 5,869 ) ( 1,850 )

Foreign tax benefit ( 519 ) ( 109 ) ( 1,302 )

State tax expense (benefit) 1,794 ( 6,686 ) ( 5,869 )

Foreign tax expense (benefit) 371 ( 519 ) ( 109 )

Total deferred tax benefit ( 1,189 ) ( 21,314 ) ( 33,679 )

Total income tax benefit $ ( 19,569 ) $ ( 32,910 ) $ ( 56,120 )

Total income tax expense (benefit) $ 292 $ ( 19,569 ) $ ( 32,910 )

A reconciliation of the U.S.

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Other adjustments 200 251 ( 386 )

Total income tax benefit $ ( 19,569 ) $ ( 32,910 ) $ ( 56,120 )

Total income tax expense (benefit) $ 292 $ ( 19,569 ) $ ( 32,910 )

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

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federal net operating loss carryforwards and interest expense carryforwards of approximately $ 296.4 million and $ 330.2 million as of December 31, 2022 and 2021, respectively.

federal net operating loss carryforwards for periods prior to 2018, if unutilized, will expire in various amounts from 2031 through 2037.

The 2017 U.S.

federal net operating loss carryforward, if unutilized, will expire in 2037.

The Company believes that the 2017 U.S.

federal net operating losses will be utilized before the expiration dates and, as such, no valuation allowance has been established for these deferred tax assets.

federal net operating losses will be utilized before the expiration date and, as such, no valuation allowance has been established for this deferred tax asset.

federal net operating loss carryforwards for 2018 and thereafter and interest expense carryforwards do not expire.

The Company had deferred tax assets related to the state net operating loss carryforwards of approximately $ 61.3 million and $ 69.7 million as of December 31, 2021 and 2020, respectively, that expire from 2025 through 2043.

The Company had deferred tax assets related to the state net operating loss carryforwards of approximately $ 60.0 million and $ 61.3 million as of December 31, 2022 and 2021, respectively, some of which expire as early as 2025.

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 $ 33.3 million and $ 32.6 million as of December 31, 2022 and 2021, 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 $ 0.6 million and $ 0.7 million, as of December 31, 2021 and 2020, respectively, that begin to expire in 2026.

The Company had deferred tax assets related to the foreign net operating loss carryforwards of approximately $ 0.7 million and $ 0.6 million, as of December 31, 2022 and 2021, respectively, that do not expire.

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

As such, the Company had recorded a partial valuation allowance of $ 0.5 million as of December 31, 2021 , which is unchanged from December 31, 2020, against these deferred tax assets on its consolidated balance sheets.

As such, the Company had recorded a partial valuation allowance of $ 0.4 million and $ 0.5 million as of December 31, 2022 and 2021, 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.

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

There were no unrecognized tax benefits as of December 31, 2021 , and the amount of unrecognized tax benefits was $ 0.5 million as of December 31, 2020.

There were no unrecognized tax benefits as of December 31, 2022 and 2021.

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.

All of the Company’s uncertain tax positions, if recognized, would affect its income tax expense.

The Company has elected an accounting policy to classify interest and penalties related to unrecognized tax benefits as a component of income tax expense.

As of December 31, 2021 , there were no interest and penalties on unrecognized tax benefits, and as of December 31, 2020, potential interest and penalties on unrecognized tax benefits were not significant.

As of December 31, 2022 and 2021, there were no interest and penalties on unrecognized tax benefits.

The Company is subject to tax audits in all jurisdictions for which it files tax returns.

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Balance at December 31, $ — $ —

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.

Net Income (Loss) Per Share

The Company calculates basic net income (loss) per common share by dividing net income (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.

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(In thousands, except per share data)

Net loss attributable to common stockholders - basic and diluted $ ( 9,319 ) $ ( 56,054 ) $ ( 166,193 )

Weighted average common shares - basic and diluted

133,530 133,491 125,167

Net loss attributable to common stockholders per share - basic and diluted $ ( 0.07 ) $ ( 0.42 ) $ ( 1.33 )

Net income (loss) attributable to common stockholders - basic and diluted $ 8,722 $ ( 9,319 ) $ ( 56,054 )

Weighted average common shares - basic 128,255 133,530 133,491

Weighted average common shares - diluted 130,134 133,530 133,491

Net income (loss) attributable to common stockholders per share - basic and diluted $ 0.07 $ ( 0.07 ) $ ( 0.42 )

For the year ended December 31, 2022 , 0.2 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.

Due to the Company’s net loss position for the years ended December 31, 2021 and 2020 all potential common stock equivalents were anti-dilutive and therefore excluded from the calculation of diluted net loss per share.

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The Company formed Aireon in 2011, with subsequent investments from the air navigation service providers (“ANSPs”) of Canada, Italy, Denmark, Ireland and the United Kingdom, to develop and market this service.

The Company and the other Aireon investors hold their interests in Aireon through an amended and restated LLC agreement (the “Amended and Restated Limited Liability Company Agreement”).

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

At each of December 31, 2021 and 2020, the Company's fully diluted ownership stake in Aireon Holdings LLC was approximately 35.7 %, subject to certain redemption provisions contained in the Amended and Restated Limited Liability Company Agreement.

The Company's investment in Aireon is accounted for as an equity method investment, with a carrying value of zero.

The Company and the other Aireon investors hold their interests in Aireon Holdings LLC (“Aireon Holdings”) through an amended and restated LLC agreement (the “Aireon Holdings LLC Agreement”).

Aireon Holdings holds 100% of the membership interests in Aireon LLC (“Aireon”), which is the operating entity.

In June 2022, the Company entered into a subscription agreement with Aireon Holdings and invested $ 50.0 million in exchange for an approximate 6 % preferred membership interest.

The Company’s investment in Aireon Holdings is accounted for as an equity method investment.

The carrying value of the Company’s investment in Aireon Holdings was $ 48.8 million as of December 31, 2022.

The original investments by the Company were previously written down to a carrying value of zero.

At December 31, 2022 and 2021, the Company’s fully diluted ownership stake in Aireon Holdings was approximately 39.5 % and 35.7 %, respectively, and is subject to redemption provisions contained in the Aireon Holdings LLC Agreement.

Aireon has contracted to pay the Company a fee to host the ADS-B receivers on its constellation, as well as fees for power and data services in connection with the delivery of the air traffic surveillance data.

Pursuant to an agreement with Aireon (the “Hosting Agreement”), Aireon will pay the Company fees of $ 200.0 million to host the ADS-B receivers, of which $ 62.5 million had been paid as of December 31, 2021, as well as power fees of up to approximately $ 3.7 million per year.

Pursuant to an agreement with Aireon (the “Hosting Agreement”), Aireon will pay the Company fees of $ 200.0 million to host the ADS-B receivers, of which $ 78.5 million had been paid as of December 31, 2022.

These fees will be recognized over the life of the satellites, or approximately $16.0 million per year.

Additionally, Aireon pays power fees of up to approximately $ 3.7 million per year.

Aireon also pays data services fees of approximately $ 19.8 million per year for the delivery of the air traffic surveillance data under a data transmission services agreement.

Pursuant to ASU 2016-02, the Company considers the Hosting Agreement an operating lease.

The Company recognized $ 16.1 million, $ 16.1 million and $ 16.0 million of hosting fee revenue under the Hosting Agreement for the years ended December 31, 2021, 2020 and 2019, respectively.

The Company recognized $ 16.1 million of hosting fee revenue under the Hosting Agreement for each of the years ended December 31, 2022, 2021 and 2020.

There were no receivables due under the Hosting Agreement as of December 31, 2022 and 2021.

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

Aireon receivables due to the Company under these two agreements totaled $ 2.2 million and $ 2.3 million at December 31, 2021 and 2020, respectively.

The Company and the other Aireon investors have agreed to participate pro rata, based on their fully diluted ownership stakes, in funding an investor bridge loan to Aireon.

Aireon receivables due to the Company under these two agreements totaled $ 2.2 million at each of the years ended December 31, 2022 and 2021.

The Company and the other Aireon investors have agreed to participate pro rata, based on their respective fully diluted ownership stakes, in funding an investor bridge loan to Aireon.

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

33 unchanged sentences

The Company matches employees’ contributions equal to 100 % of the salary deferral contributions up to 5 % of the employees’ eligible compensation each pay period.

Company matching contributions to the Plan were $ 3.5 million, $ 3.1 million, and $ 3.1 million for the years ended December 31, 2021, 2020 and 2019, respectively.

The Company’s matching contributions to the Plan were $ 3.5 million, $ 3.5 million and $ 3.1 million for the years ended December 31, 2022, 2021 and 2020, respectively.

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