IRIDIUM COMMUNICATIONS INC.

TABLE OF CONTENTS



Item No.		Page

Part I. Financial Information

	Financial Statements:

	Condensed Consolidated Balance Sheets	3

	Condensed Consolidated Statements of Operations and Comprehensive ~~Income (Loss)~~Loss	4

	Condensed Consolidated Statements of ~~Cash Flows~~Changes in Stockholders’ Equity	5

	~~Notes to~~ Condensed Consolidated ~~Financial~~ Statements of Cash Flows	6

	Notes to Condensed Consolidated Financial Statements	8

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2019

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	3331

ITEM 4.	Controls and Procedures	3331

Part II. Other Information

ITEM 1.	Legal Proceedings	3432

ITEM 1A.	Risk Factors	3432

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3732

ITEM 3.	Defaults Upon Senior Securities	3732

ITEM 4.	Mine Safety Disclosures	3732

ITEM 5.	Other Information	3732

ITEM 6.	Exhibits	3833

	Signatures	3934

PART I.

Iridium Communications Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)


	September 30, 2018			December 31, 2017			September 30, 2019			December 31, 2018
	(Unaudited)						(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	381,454		$	285,873		$	171,629		$	273,352
Marketable securities	—			11,753
Accounts receivable, net	73,531			68,031			70,060			71,210
Inventory	22,214			20,068			38,571			27,538
Prepaid expenses and other current assets	20,214			25,347			13,662			18,284
Total current assets	497,413			411,072			293,922			390,384
Property and equipment, net	3,356,948			3,210,162			3,238,981			3,370,855
Restricted cash and cash equivalents	190,912			102,384			195,125			191,935
Intangible assets, net	48,896			50,019			47,345			48,540
Other assets	12,516			8,414			51,637			12,557
Total assets	$	4,106,685		$	3,782,051		$	3,827,010		$	4,014,271
Liabilities and stockholders' equity
Current liabilities:
Short-term credit facility	$	180,000		$	85,500		$	216,000		$	126,000
Accounts payable	12,855			43,100			13,691			12,869
Accrued expenses and other current liabilities	47,866			32,215			35,003			56,990
Interest payable	63,235			15,021			17,454			29,431
Deferred revenue	21,195			38,390			40,920			37,429
Total current liabilities	325,151			214,226			323,068			262,719
Long-term credit facility, net	1,505,948			1,618,055			1,279,025			1,478,739
Long-term senior unsecured notes, net	350,531			—			352,473			350,998
Deferred income tax liabilities, net	259,248			246,170			222,863			241,422
Deferred revenue, net of current portion	61,892			47,612			61,730			74,656
Other long-term liabilities	4,134			59,519			28,593			4,160
Total liabilities	2,506,904			2,185,582			2,267,752			2,412,694

Commitments and contingencies

Stockholders' equity:
Series A preferred stock, $0.0001 par value, 1,000 shares authorized and issued; zero and 1,000 shares outstanding at September 30, 2018 and December 31, 2017	—			—
Series B preferred stock, $0.0001 par value, 500 shares authorized and issued; 497 and 500 shares outstanding at September 30, 2018 and December 31, 2017	—			—
Common stock, $0.001 par value, 300,000 shares authorized, 111,321 and 98,203 shares issued and outstanding at September 30, 2018 and December 31, 2017	111			98
Series B preferred stock, $0.0001 par value, 500 shares authorized and issued; zero and 497 shares outstanding at September 30, 2019 and December 31, 2018, respectively							—			—
Common stock, $0.001 par value, 300,000 shares authorized; 131,093 and 112,200 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively							131			112
Additional paid-in capital	1,098,137			1,081,373			1,126,796			1,108,550
Retained earnings	509,294			518,794			439,826			501,712
Accumulated other comprehensive loss, net of tax	(7,761		)	(3,796		)	(7,495		)	(8,797		)
Total stockholders' equity	1,599,781			1,596,469			1,559,258			1,601,577
Total liabilities and stockholders' equity	$	4,106,685		$	3,782,051		$	3,827,010		$	4,014,271

See notes to unaudited condensed consolidated financial statements.

Iridium Communications Inc.

Condensed Consolidated Statements of Operations and Comprehensive ~~Income (Loss)~~Loss

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017			2019			2018			2019			2018
Revenue:
Services	$	105,741		$	89,902		$	299,449		$	258,298		$	115,853		$	105,741		$	333,601		$	299,449
Subscriber equipment	26,130			21,784			77,777			57,742			21,375			26,130			65,803			77,777
Engineering and support services	4,893			4,861			13,617			16,537			7,557			4,893			22,166			13,617
Total revenue	136,764			116,547			390,843			332,577			144,785			136,764			421,570			390,843

Operating expenses:
Cost of services (exclusive of depreciation
and amortization)	22,226			20,883			63,822			59,209
Cost of services (exclusive of depreciation and amortization)													23,581			22,226			71,709			63,822
Cost of subscriber equipment	14,074			12,186			44,907			33,158			12,862			14,074			38,663			44,907
Research and development	5,058			3,981			15,207			10,222			2,822			5,058			10,718			15,207
Selling, general and administrative	27,255			18,471			74,016			58,099			22,934			27,255			67,744			74,016
Depreciation and amortization	62,140			22,944			151,096			56,652			74,575			62,140			222,617			151,096
Total operating expenses	130,753			78,465			349,048			217,340			136,774			130,753			411,451			349,048
Gain on Boeing transaction	—			—			—			14,189
Operating income	6,011			38,082			41,795			129,426			8,011			6,011			10,119			41,795

Other income (expense), net:
Interest income (expense), net	(20,145		)	1,246			(37,295		)	2,911
Other expense, net	(379		)	(20		)	(277		)	(163		)
Total other income (expense), net	(20,524		)	1,226			(37,572		)	2,748
Other expense, net:
Interest expense, net													(30,493		)	(20,145		)	(85,283		)	(37,295		)
Other income (expense), net													26			(379		)	(926		)	(277		)
Total other expense, net													(30,467		)	(20,524		)	(86,209		)	(37,572		)
Income (loss) before income taxes	(14,513		)	39,308			4,223			132,174			(22,456		)	(14,513		)	(76,090		)	4,223
Income tax benefit (expense)	1,657			(10,055		)	(10,025		)	(40,195		)	4,444			1,657			21,948			(10,025		)
Net income (loss)	(12,856		)	29,253			(5,802		)	91,979
Net loss													(18,012		)	(12,856		)	(54,142		)	(5,802		)
Series A preferred stock dividends, declared and paid excluding cumulative dividends	—			—			1,750			1,750			—			—			—			1,750
Series B preferred stock dividends, declared and paid excluding cumulative dividends	—			—			2,109			2,109			—			—			4,194			2,109
Series A preferred stock dividends, undeclared	—			1,750			—			3,500
Series B preferred stock dividends, undeclared	2,084			2,109			4,193			4,218			—			2,084			—			4,193
Net income (loss) attributable to common stockholders	$	(14,940	)	$	25,394		$	(13,854	)	$	80,402
Weighted average shares outstanding - basic	111,592			98,290			107,840			97,716
Weighted average shares outstanding - diluted	111,592			127,188			107,840			126,839
Net income (loss) attributable to common stockholders per share - basic	$	(0.13	)	$	0.26		$	(0.13	)	$	0.82
Net income (loss) attributable to common stockholders per share - diluted	$	(0.13	)	$	0.23		$	(0.13	)	$	0.72
Comprehensive income (loss):
Net income (loss)	$	(12,856	)	$	29,253		$	(5,802	)	$	91,979
Net loss attributable to common stockholders													$	(18,012	)	$	(14,940	)	$	(58,336	)	$	(13,854	)
Weighted average shares outstanding - basic and diluted													131,688			111,592			122,816			107,840
Net loss attributable to common stockholders per share - basic and diluted													$	(0.14	)	$	(0.13	)	$	(0.47	)	$	(0.13	)
Comprehensive loss:
Net loss													$	(18,012	)	$	(12,856	)	$	(54,142	)	$	(5,802	)
Foreign currency translation adjustments, net of tax	(1,070		)	1,059			(3,981		)	1,858			(864		)	(1,070		)	1,302			(3,981		)
Unrealized gain (loss) on marketable securities, net of tax	(26		)	8			16			1			—			(26		)	—			16
Comprehensive income (loss)	$	(13,952	)	$	30,320		$	(9,767	)	$	93,838
Comprehensive loss													$	(18,876	)	$	(13,952	)	$	(52,840	)	$	(9,767	)

See notes to unaudited condensed consolidated financial statements.

Iridium Communications Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(In thousands, except per share amounts)

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Total stockholders' equity, beginning balances	$	1,572,951		$	1,606,713		$	1,601,577		$	1,596,469

Common stock:
Beginning balances	131			111			112			98
Stock options exercised and awards vested	—			—			2			2
Preferred stock converted to common	—			—			17			11
Ending balances	131			111			131			111

Additional paid-in capital:
Beginning balances	1,121,613			1,091,116			1,108,550			1,081,373
Stock-based compensation	4,423			4,301			12,559			12,573
Stock options exercised and awards vested	1,155			2,863			9,941			5,857
Stock withheld to cover employee taxes	(395		)	(143		)	(4,237		)	(1,655		)
Preferred stock converted to common	—			—			(17		)	(11		)
Ending balances	1,126,796			1,098,137			1,126,796			1,098,137

Retained earnings:
Beginning balances	457,838			522,150			501,712			518,794
Net loss	(18,012		)	(12,856		)	(54,142		)	(5,802		)
Dividends on Series A preferred stock	—			—			—			(6,999		)
Dividends on Series B preferred stock	—			—			(7,744		)	(8,437		)
Changes from adoption of ASC 606, net of tax	—			—			—			11,738
Ending balances	439,826			509,294			439,826			509,294

Accumulated other comprehensive loss, net of tax:
Beginning balances	(6,631		)	(6,664		)	(8,797		)	(3,796		)
Cumulative translation adjustments, net of tax	(864		)	(1,071		)	1,302			(3,981		)
Unrealized gain (loss) on marketable securities, net of tax	—			(26		)	—			16
Ending balances	(7,495		)	(7,761		)	(7,495		)	(7,761		)

Total stockholders' equity, ending balances	$	1,559,258		$	1,599,781		$	1,559,258		$	1,599,781

Dividends declared per share
Series A preferred stock	$	—		$	—		$	—		$	7.00
Series B preferred stock	$	—		$	—		$	16.88		$	16.88

See notes to unaudited condensed consolidated financial statements.

Iridium Communications Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2019			2018
Cash flows from operating activities:
Net loss							$	(54,142	)	$	(5,802	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Deferred income taxes							(18,543		)	9,557
Depreciation and amortization							222,617			151,096
Loss on extinguishment of debt and Thales Alenia Space bills of exchange							—			3,981
Stock-based compensation (net of amounts capitalized)							11,524			11,358
Amortization of deferred financing fees							15,485			6,067
All other items, net							394			(100		)
Changes in operating assets and liabilities:
Accounts receivable							1,051			(9,177		)
Inventory							(11,038		)	(2,284		)
Prepaid expenses and other current assets							4,886			3,824
Other assets							293			(1,578		)
Accounts payable							2,998			10
Accrued expenses and other current liabilities							(20,927		)	44,515
Deferred revenue							(9,769		)	13,492
Other long-term liabilities							(2,378		)	579
Net cash provided by operating activities	$	225,538		$	203,218		142,451			225,538

Cash flows from investing activities:
Capital expenditures	(294,729		)	(290,712		)	(102,756		)	(294,729		)
Purchase of other investments							(10,000		)	—
Purchases of marketable securities	(235,528		)	(4,991		)	—			(235,528		)
Sales and maturities of marketable securities	248,006			23,903			—			248,006
Net cash used in investing activities	(282,251		)	(271,800		)	(112,756		)	(282,251		)

Cash flows from financing activities:
Borrowings under the Credit Facility	—			22,207
Payments on the Credit Facility	(26,131		)	—			(126,000		)	(26,131		)
Borrowings under the senior unsecured notes	360,000			—			—			360,000
Extinguishment of the Thales bills of exchange	(59,936		)	—
Extinguishment of the Thales Alenia Space bills of exchange							—			(59,936		)
Payment of deferred financing fees	(21,064		)	(3,412		)	—			(21,064		)
Proceeds from exercise of stock options	5,860			3,128			9,943			5,860
Tax payment upon settlement of stock awards	(1,655		)	(1,805		)	(4,237		)	(1,655		)
Payment of Series A preferred stock dividends	(7,000		)	(1,750		)	—			(7,000		)
Payment of Series B preferred stock dividends	(8,427		)	(2,109		)	(8,387		)	(8,427		)
Net cash provided by financing activities	241,647			16,259
Net cash (used in) provided by financing activities							(128,681		)	241,647

Effect of exchange rate changes on cash and cash equivalents	(825		)	139			453			(825		)

Net increase in cash and cash equivalents	184,109			(52,184		)
Net (decrease) increase in cash and cash equivalents							(98,533		)	184,109
Cash, cash equivalents, and restricted cash, beginning of period	388,257			484,306			465,287			388,257
Cash, cash equivalents, and restricted cash, end of period	$	572,366		$	432,122		$	366,754		$	572,366

Supplemental cash flow information:
Interest paid	$	37,345		$	42,458
Income taxes paid, net	$	772		$	1,664

Supplemental disclosure of non-cash investing activities:
Property and equipment received but not yet paid for	$	10,522		$	80,138
Interest capitalized but not yet paid	$	28,861		$	36,157
Capitalized amortization of deferred financing costs	$	14,052		$	18,992
Capitalized stock-based compensation	$	1,204		$	2,227
Cost basis investment for settlement of accounts receivable	$	3,300		$	—

See notes to unaudited condensed consolidated financial statements.



	Nine Months Ended September 30,
	2019		2018
Supplemental cash flow information:
Interest paid	$	101,061	$	37,345
Income taxes paid, net	$	999	$	772

Supplemental disclosure of non-cash investing and financing activities:
Property and equipment received but not paid	$	1,307	$	10,522
Interest capitalized but not paid	$	2,526	$	28,861
Capitalized amortization of deferred financing costs	$	2,276	$	14,052
Capitalized stock-based compensation	$	1,034	$	1,204
Cost basis investment for settlement of accounts receivable	$	—	$	3,300

See notes to unaudited condensed consolidated financial statements.

Iridium Communications Inc.

Notes to Condensed Consolidated Financial Statements

1. Basis of Presentation and Principles of Consolidation

Iridium Communications Inc. (the “Company”) has prepared its condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The accompanying condensed consolidated financial statements include the accounts of (i) the Company, (ii) its wholly owned subsidiaries, and (iii) all less than wholly owned subsidiaries that the Company controls. All material intercompany transactions and balances have been eliminated.

In the opinion of management, the condensed consolidated financial statements reflect all normal recurring adjustments that the Company considers necessary for the fair presentation of its results of operations and cash flows for the interim periods covered, and of the financial position of the Company at the date of the interim condensed consolidated balance sheet. The operating results for interim periods are not necessarily indicative of the operating results for the entire year. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to instructions, rules and regulations prescribed by the U.S. Securities and Exchange Commission (“SEC”). These condensed consolidated financial statements should be read in conjunction with the audited ~~condensed~~ consolidated financial statements and notes thereto contained in the Company's Annual Report on Form ~~10-K~~10‑K for the year ended December 31, ~~2017,~~2018, as filed with the SEC on February ~~22, 2018.~~28, 2019.

2. Significant Accounting Policies

Adopted Accounting Pronouncements

Effective January 1, ~~2018,~~2019, the Company adopted Accounting Standards Update ~~("ASU"~~(“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), that supersedes nearly all existing revenue recognition guidance under generally accepted accounting principles in the United States (“U.S. GAAP”). See Note 9 for more detail on the Company's accounting policy with respect to revenue recognition.

For the year ended December 31, 2017, the Company early adopted ASU No. 2016-15, Statement of Cash Flows (Topic 320): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 reduces the existing diversity in practice in financial reporting across all industries by clarifying certain existing principles, including providing additional guidance on how and what an entity should consider in determining the classification of certain cash flows. The adoption of ASU 2016-15 did not have a material effect on the Company’s consolidated financial statements.

~~Accounting Pronouncements Not Yet Adopted~~

~~In February 2016, the Financial Accounting Standards Board ("FASB") issued 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 current accounting. See discussion below under the caption “Leases” in this Note 2 and in Note 5 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.

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. The Company intends to apply the new guidance on the effective date of January 1, ~~2019. Reporting organizations are required to use~~2020. Adoption of ASU 2016-13 will not have a ~~modified retrospective approach for leases that exist or are entered into after~~material impact on the beginning of the earliest comparative period in the financial statements. The Company established a project team in order to analyze the effect of the standard on its leases by reviewing its current accounting policies to identify potential differences which would result from applying the requirements of the new standard to its leases. The Company currently anticipates utilizing the practical expedient to address all current operating leases for which it is the lessor. The Company is currently evaluating the effect ASU 2016-02 may have on its future condensedCompany's consolidated financial statements and related disclosures. ~~A lease liability and related right-of-use asset will be recognized for operating lease arrangements where the Company is the lessee.~~

Fair Value Measurements

The Company evaluates assets and liabilities subject to fair value measurements on a recurring and non-recurring basis to determine the appropriate level to classify them for each reporting period. This determination requires significant judgments to be made by management of the Company. The instruments identified as subject to fair value measurements on a recurring basis are cash and cash equivalents, ~~marketable securities,~~ prepaid expenses and other current assets, accounts receivable, accounts payable and accrued expenses and other current liabilities. Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of observability of inputs used in measuring fair value.

The fair value hierarchy consists of the following tiers:

Level 1, defined as observable inputs such as quoted prices in active markets for identical assets or liabilities;

Level 2, defined as observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The carrying values of short-term financial instruments (primarily cash and cash equivalents, prepaid expenses and other current assets, accounts receivable, accounts payable, and accrued expenses and other current liabilities) approximate their fair values because of their short-term nature. The fair value of the Company’s investments in money market funds approximates its carrying value; such instruments are classified as Level 12 and are included in cash and cash equivalents on the accompanying condensed consolidated balance sheets.

The fair value of the Company’s investments in commercial paper and short-term U.S. agency securities with original maturities of less than ninety days approximates their carrying value; such instruments are classified as Level 2 and are included in cash and cash equivalents on the accompanying condensed consolidated balance sheets. The fair value of the Company’s investments in fixed-income debt securities and commercial paper with original maturities of greater than ninety days are obtained using similar investments traded on active securities exchanges and are classified as Level 2. For fixed income securities that do not have quoted prices in active markets,

Leases

Upon transition under ASU 2016-02, the Company ~~uses third-party vendors~~elected the suite of practical expedients as a package applied to ~~price~~all of its ~~debt securities resulting in~~leases, including (i) not reassessing whether any expired or existing contracts are or contain leases, (ii) not reassessing the lease classification ~~as Level 2. All fixed-income securities~~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. Leases are included ~~in marketable securities~~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 ~~accompanying~~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. 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.

3. Cash and Cash Equivalents and Restricted Cash and ~~Marketable Securities~~Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of ninety days or less to be cash equivalents. These investments, along with cash deposited in institutional money market funds ~~commercial paper,~~and regular interest bearing and non-interest bearing depository accounts, are classified as cash and cash equivalents in the accompanying condensed consolidated balance sheets.

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



	September 30, 2019		December 31, 2018		Recurring Fair Value Measurement
	(in thousands)
Cash and cash equivalents:
Cash	$	14,775	$	20,879
Money market funds	156,854		252,473		Level 2
Total cash and cash equivalents	$	171,629	$	273,352

September 30, 2018 December 31, 2017
Recurring Fair
Value Measurement
(in thousands)
Cash and cash equivalents:

Cash $ 16,562
$ 24,092

Money market funds 364,892
251,950
Level 2
Commercial paper —
9,831
Level 2
Total cash and cash equivalents $ 381,454
$ 285,873

Restricted Cash and Cash Equivalents

The Company is required to maintain a minimum cash reserve within a debt service reserve account ~~("DSRA"~~(“DSRA”) for debt service related to its ~~$1.8 billion~~ credit facility with Bpifrance Assurance Export S.A.S. (“BPIAE”) (as amended to date, the “Credit Facility”) (see Note 5)6). As of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the Company’s restricted cash and cash equivalents balances, which ~~includes~~included a minimum cash reserve for debt service ~~related to the Credit Facility~~ and the interest earned on these amounts, ~~was $190.8~~were $195.1 million and ~~$102.3~~$191.9 million, respectively.

~~Marketable Securities~~

Marketable securities consisted of fixed-income debt securities and commercial paper with an original maturity in excess of ninety days. These investments were classified as available-for-sale and are included in marketable securities within current assets in the accompanying condensed consolidated balance sheet. All investments are carried at fair value. Unrealized gains and losses, net of taxes, are reported as a component of other comprehensive income or loss. The specific identification method is used to determine the cost basis of the marketable securities sold.

As of September 30, 2018, the Company did not hold any investment positions in marketable securities. As of December 31, 2017, the Company held $11.8 million in marketable securities, consisting of fixed-income debt securities and U.S. treasuries. Marketable securities due to mature within one year had a fair value of $11.5 million, and marketable securities due to mature between one and three years had a fair value of $0.3 million. During the nine months ended September 30, 2018, and during the twelve months ended December 31, 2017, there were no material realized gains or losses.

4. Commitments and Contingencies

Commitments

Thales Alenia Space

In June 2010, the Company executed a primarily fixed-price full scale development contract ~~("FSD"~~(“FSD”) with Thales Alenia Space ~~France ("Thales")~~ for the design and build of its ~~Iridium~~^® ~~NEXT satellites.~~new, next-generation satellite constellation. The total price under the FSD iswas $2.3 ~~billion, and~~billion. Final payments under this contract were made during the ~~Company expects payment obligations under the FSD to continue through the first~~second quarter of 2019. ~~As of September 30, 2018, the Company had made aggregate payments of $2.2 billion to Thales, of which $1.5 billion were financed from borrowings under the Credit Facility, and~~These costs were capitalized as construction in progress within property and equipment, net in the accompanying condensed consolidated balance sheets. Approximately $1.5 billion in aggregate payments made to Thales Alenia Space were financed from borrowings under the Credit Facility.

~~On March 9, 2018,~~SpaceX

To complete the upgraded constellation, the Company ~~and Thales entered~~launched a total of 75 satellites into Amendment 32 to the FSD, pursuant to which the Company and Thales unwound the changes made in Amendment 29, which allowed for the deferral of certain milestone payments totaling $100.0 million through the issuance of bills of exchange. Amendment 32 became effective on March 21, 2018 upon the receipt of proceeds from a senior unsecured notes offering (see Note 5). The Company utilized a portion of the proceeds from the senior unsecured notes to prepay in full the $59.9 million of amounts duelow earth orbit using eight Falcon 9 rockets under outstanding bills of exchange and will not utilize any new bills of exchange to defer future milestones under the FSD. In connection with the prepayment of the Thales bills of exchange, for the nine months ended September 30, 2018, the Company recorded a $4.0 million loss on extinguishment of debt, included within interest expense, representing premiums paid and the write-off of unamortized debt issuance costs. The Company had no loss on extinguishment of debt recorded for the three and nine months ended September 30, 2017.

~~SpaceX~~

~~In March 2010, the Company entered into an agreement~~two contracts with Space Exploration Technologies Corp. (“SpaceX”) ~~to secure SpaceX as the primary launch services provider for Iridium NEXT (as amended to date, the “SpaceX Agreement”). The~~with a total price ~~under the SpaceX Agreement for seven launches and a reflight option in the event~~ of ~~a launch failure is $448.1~~$510.8 million. The SpaceX Falcon 9 rocket is configured to carry ten Iridium NEXT satellites to orbit for each of these seven launches. In November 2016, the Company entered into an agreement for an eighth launch with SpaceX to launch five additional satellites and share the launch with GFZ German Research Centre for Geosciences (“GFZ”). This launch took place in May 2018. The total price under the SpaceX Agreement for the eighth launch was $61.9 million. GFZ paid Iridium $29.8 million to include in the launch NASA’s two Gravity Recovery and Climate Experiment Follow-On satellites. As of September 30, 2018, the Company had made aggregateFinal payments ~~of $498.9 million~~ to SpaceX ~~which~~for these launches were made during the second quarter of 2019. These costs were capitalized as construction in progress within property and equipment, net in the accompanying condensed consolidated balance sheets. The Company ~~expects payments to SpaceX to continue through the first quarter of 2019.~~shared one launch with GFZ German Research Centre for Geosciences for which it received $29.8 million from them as a result.

~~Iridium NEXT Launch and~~ In-Orbit Insurance

~~As further discussed below, the~~The Company was required, pursuant to its Credit Facility, to obtain insurance covering the launch and first 12 months of operation of ~~the Iridium NEXT satellites.~~its upgraded constellation. The launch and in-orbit insurance the Company ~~has~~ obtained contains elements, consistent with the terms of the Credit Facility, of self-insurance and deductibles, providing reimbursement only after a specified number of satellite failures. In addition, all satellites other than those launched on the final launch of the Iridium NEXT program in January of 2019 have been in orbit for more than 12 months and are no longer covered by this insurance. As a result, a failure of one or more of the ~~Iridium NEXT~~Company's new satellites, or the occurrence of equipment failures and other related problems, could constitute an uninsured loss or require the payment of additional premiums and could harm the Company’s financial condition. Furthermore, launch and in-orbit insurance does not cover lost revenue. The total premium for the Company’s ~~current~~ launch and in-orbit insurance ~~is $121.0 million. As~~was $120.7 million, which was paid in full as of ~~September 30, 2018, the Company had made aggregate~~December 31, 2018. A portion of these insurance premium payments ~~of $107.6 million.~~was capitalized as construction in progress within property and equipment, net in the accompanying condensed consolidated balance sheets.

Contingencies

From time to time, in the normal course of business, the Company is party to various pending claims and lawsuits. The Company is not aware of any such actions that it would expect to have a material adverse impact on its business, financial results or financial condition.

5. Leases

The Company has operating leases for land, office space, satellite network operations center (“SNOC”) facilities, system gateway facilities, a warehouse and a distribution center. 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’s weighted-average remaining lease term relating to its operating leases is 7.0 years, with a weighted-average discount rate of 6.7%.

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



		9/30/2019
Leases	Classification	(in thousands)
Operating lease assets
Noncurrent	Other assets	$	27,332
Total lease assets		27,332

Operating lease liabilities
Current	Accrued expenses and other current liabilities	3,282
Noncurrent	Other long-term liabilities	27,081
Total lease liabilities		$	30,363

The Company incurred lease expense of $1.3 million for each of the three months ended September 30, 2019 and 2018. During the nine months ended September 30, 2019 and 2018, the Company incurred lease expense of $3.7 million and $3.6 million, respectively.

At September 30, 2019, future payment obligations with respect to the Company's operating leases in which it is the lessee existing at September 30, 2019, exclusive of $3.7 million paid during the nine months ended September 30, 2019, by year and in the aggregate, are as follows:



Year Ending December 31,	Amount
	(in thousands)
2019	$	1,275
2020	5,176
2021	5,308
2022	4,833
2023	4,794
Thereafter	17,725
Total lease payments	$	39,111

Lessor Arrangements

Operating leases in which the Company is a lessor consist primarily of hosting agreements with Aireon LLC(see Note 11)and Harris Corporation for space on the Company’s upgraded satellites. 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 $5.4 million and $4.3 million during the three months ended September 30, 2019 and 2018, respectively, and $16.2 million and $12.3 million during the nine months ended September 30, 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 Harris have made payments for their hosting agreements and will continue to do so. At September 30, 2019, future income with respect to the Company's operating leases in which it is the lessor existing at September 30, 2019, exclusive of the $16.2 million recognized during the nine months ended September 30, 2019, by year and in the aggregate, is as follows:



Year Ending December 31,	Amount
	(in thousands)
2019	5,361
2020	21,445
2021	21,445
2022	21,445
2023	21,445
Thereafter	141,797
Total lease income	$	232,938

6. Debt

Credit Facility

In October 2010, the Company entered into its $1.8 billion ~~credit facility~~Credit Facility with a syndicate of bank lenders, which was amended and restated on March 9, 2018, ~~(as~~and further amended ~~to date, the “Credit Facility”).~~on December 21, 2018. As of September 30, ~~2018,~~2019, the Company reported ~~an aggregate~~a total of ~~$1,773.9~~$1,558.8 million in borrowings, including ~~$88.0~~$63.8 million of deferred financing costs, for a net balance of ~~$1,685.9~~$1,495.0 million in borrowings from the Credit Facility in the accompanying condensed consolidated balance sheet. ~~Ninety-five~~NaN percent of the Company's obligations under the Credit Facility are insured by ~~Bpifrance Assurance Export S.A.S. ("BPIAE"). Future~~BPIAE. Scheduled semi-annual principal repayments ~~with respect~~began on April 3, 2018 and are scheduled to ~~the Credit Facility balance existing at~~be paid each March 30 and September ~~30, 2018 by year and in the aggregate, are as follows:~~

Amount
(In thousands)
2018
54,000
2019
126,000
2020
216,000
2021
306,000
2022
306,000
Thereafter
765,869
Total credit facility commitments $ 1,773,869
Unamortized deferred financing costs
87,921
Short-term credit facility
180,000
Long-term credit facility, net $ 1,505,948

~~Under the terms of the Credit Facility, as of September 30, 2018, the Company~~30. Interest is ~~required to maintain a minimum cash reserve within the DSRA of $189.0 million, which is classified as restricted cash and cash equivalents~~paid on the ~~accompanying condensed consolidated balance sheet. The Credit Facility is scheduled to mature in September 2024, subject to acceleration~~same date as ~~described below.~~the principal repayments.

As amended and restated, the Credit Facility (i) allowed the Company to issue $360.0 million in senior unsecured notes (the ~~"Notes"~~“Notes”) ~~and (i)~~, (ii) delayed a portion of the principal repayments scheduled under the Credit Facility for 2018, 2019 and 2020 into 2023 and 2024 pursuant to an amended repayment installment schedule, ~~(ii) after funding of the DSRA back to $189.0 million, allowed~~(iii) allows the Company access to up to $87.0 million from the DSRA in the future if its projected cash level falls below $75.0 million, and ~~(iii)~~(iv) adjusted the Company’s financial covenants, including eliminating covenants that required the Company to receive cash flows from hosted payloads and adding a covenant that requires the Company to receive $200.0 million in hosting fees from Aireon, ~~LLC,~~ the Company's primary hosted payload customer, by December 2023. In the event that (a) the Company's cash balance exceeds $140.0 million after September 30, 2019 (subject to specified exceptions) or (b) the Company receives hosting fees from Aireon, the Company would be required pursuant to the Credit Facility to use 50% of such excess cash and up to $200.0 million of hosting fees to partially prepay the Credit Facility. ~~In July 2018, pursuant~~Pursuant to this provision, as of September 30, 2019, the Company ~~prepaid~~used the ~~Credit Facility~~$43.1 million in ~~the amount of $8.1 million of~~ hosting fees received from ~~Aireon.~~Aireon in 2018 to partially prepay the Credit Facility. In addition, if any of the Company's senior unsecured notes remain outstanding on October 15, 2022, which is six months prior to the scheduled maturity thereof, the maturity of all amounts remaining outstanding under the Credit Facility would be accelerated from September 30, 2024 to October 15, 2022. ~~Fees~~Lender fees incurred related to the amended and restated Credit Facility were ~~$10.4~~$10.3 million, which were capitalized as deferred financing costs and are being amortized over the remaining term.

~~Interest costs incurred under~~Under the terms of the Credit Facility, ~~were $31.5 million and $85.2 million for the three and nine months ended~~as of September 30, ~~2018, respectively,~~2019, the Company was required to maintain a minimum cash reserve within the DSRA of $189.0 million, which is classified as restricted cash and $21.9 million and $64.7 million for the three and nine months ended September 30, 2017, respectively. Interest costs include original issue discount amortization of $6.3 million and $19.2 million, for the three and nine months ended September 30, 2018, respectively, and $8.3 million and $18.9 million for the three and nine months ended September 30, 2017, respectively. The amount of interest capitalized under the Credit Facility was $13.6 million and $62.6 million for the three and nine months ended September 30, 2018, respectively, and $30.4 million and $83.9 million for the three and nine months ended September 30, 2017, respectively. Scheduled semi-annual principal repayments began on April 3, 2018. During the repayment period, interest will be paidcash equivalents on the ~~same date as the principal repayments. The increase in interest expense in 2018 reflects the decrease in the credit facility interest being capitalized as the average~~accompanying condensed consolidated balance ~~of satellites in construction has decreased due to additional satellites being placed in service.~~sheet. The Company was in compliance with all covenants related to the Credit Facility ~~covenants~~ as of September 30, ~~2018.~~2019. The Credit Facility is scheduled to mature in September 2024, subject to acceleration as described above.

On October 21, 2019, the Company announced the pricing of a $1,450.0 million term loan B and an accompanying $100.0 million revolving loan. As previously announced, the Company intends to use the proceeds of the term loan B facility and cash in its DSRA to repay in full all of the indebtedness outstanding under the Credit Facility, as well as related expenses. The term loan B facility will be issued at a price equal to 99.5% of its face value and will bear interest at an annual rate of LIBOR plus 3.75%, with a 1.0% LIBOR floor and will have a seven-year maturity. The revolver will bear interest at the same rate (but with a 0.0% LIBOR floor) if and as drawn and will have a five-year maturity. The term loan B and revolving facilities are expected to close on November 4, 2019, subject to customary closing conditions.

Senior Unsecured Notes

On March 21, 2018, the Company issued 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, beginning on October 15, 2018, and principal is repaid in full

upon maturity. The proceeds of the Notes were used to prepay ~~the~~ outstanding ~~Thales~~ bills of exchange owed to Thales Alenia Space, including premiums paid, in the amount of approximately $59.9 million issued pursuant to the FSD, replenish the DSRA under the Credit Facility to $189.0 million, and ~~will be used~~ to pay approximately $44.4 million in Thales Alenia Space milestones previously expected to be satisfied by the issuance of bills of exchange. The proceeds of the Notes also provided the Company with sufficient cash to meet its liquidity needs, including principal and interest payments under the Credit Facility. As of September 30, ~~2018,~~2019, the Company reported ~~an aggregate~~a total of $360.0 million in borrowings under the Notes, including ~~$9.5~~$7.5 million of deferred financing costs, for a net balance of ~~$350.5~~$352.5 million in borrowings in the accompanying condensed consolidated balance sheet. ~~The amount~~As of ~~interest capitalized under~~September 30, 2019, based upon recent trading prices (Level 2 - market approach), the fair value of the Notes was ~~$1.2 million and $2.4 million during the three and nine months ended September 30, 2018, respectively. No interest was capitalized under the Notes during the nine months ended September 30, 2017.~~$390.2 million. The Notes contain covenant requirements that apply to certain permitted financing actions ~~and~~but are no more restrictive than the covenants in the Credit Facility. The Company was in compliance with all covenant requirements ofrelated to the Notes as of September 30, ~~2018.~~2019.

~~The Company believes its liquidity sources will provide sufficient funds for it to meet its liquidity requirements for at least~~Total Debt

During the ~~next 12 months.~~three months ended September 30, 2019 and 2018, total interest incurred on the debt described above was $35.7 million and $38.5 million, respectively, and $107.2 million and $105.3 million during the nine months ended September 30, 2019 and 2018, respectively. Interest incurred includes amortization of deferred financing fees of $5.7 million and $6.8 million during the three months ended September 30, 2019 and 2018, respectively, and $17.9 million and $20.1 million during the nine months ended September 30, 2019 and 2018, respectively. Interest capitalized during the three months ended September 30, 2019 and 2018 was $2.3 million and $14.9 million, respectively, and $13.5 million and $64.4 million during the nine months ended September 30, 2019 and 2018, respectively. Capitalized interest on the Credit Facility is dependent upon the average balance of satellites in construction which decreased as satellites were placed in service.

~~6. 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. 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 Iridium NEXT Support Service Agreement and entered into a new Development Services Agreement (“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.

7. Stock-Based Compensation

In May ~~2017,~~2019, the Company’s stockholders approved the amendment and restatement of the Company's 2015 Equity Incentive Plan (as so amended and restated, the “Amended 2015 Plan”), primarily to increase the number of shares available under the plan. The Company registered with the SEC an additional ~~5,199,239~~2,542,664 shares of common stock made available for issuance pursuant to the Amended 2015 Plan, bringing the total to ~~28,402,248~~30,944,912 shares registered. ~~Through~~As of September 30, ~~2018,~~2019, the remaining aggregate number of shares of the Company's common stock available for future grants under the Amended 2015 plan was ~~13,271,104.~~13,682,323. The Amended 2015 Plan provides for the grant of stock-based awards, including nonqualified stock options, incentive stock options, restricted stock, restricted stock units ~~("RSUs"~~(“RSUs”), stock appreciation rights and other equity securities ~~as incentives and rewards for employees,~~to consultants and non-employee directors of the Company and its affiliated entities. The number of shares of common stock available for issuance under the Amended 2015 Plan is reduced by (i) ~~one~~1 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 known 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.

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~~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 did not grant any stock options during the three-month periods ended September 30, 2019 and 2018. During the nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, the Company granted approximately ~~284,000~~139,000 and ~~110,000~~284,000 stock options, respectively, to its employees, with an estimated aggregate grant date fair value of ~~$1.6~~$1.3 million and ~~$0.5~~$1.6 million, respectively.

Restricted Stock Units

The RSUs granted to employees for service generally vest over ~~a four-year period,~~four years, with 25% vesting on the first anniversary of the grant date and the remainder vesting ratably on a quarterly basis thereafter, subject to continued employment. The RSUs granted to non-employee directors generally vest in full on the first anniversary of the grant date. Some RSUs granted to employees for performance vest upon the completion of defined performance goals, subject to continued employment. The Company’s RSUs are generally classified as equity awards because the RSUs will be paid in the Company's common stock upon vesting. The related compensation expense is recognized over the service period and is based on the grant date fair value

of the Company's common stock and the number of shares expected to vest. The fair value of the awards is not remeasured at the end of each reporting period. The awards do not carry voting rights until they are vested and released in accordance with the terms of the award.

Service-Based RSUs

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 ~~110,000~~76,000 and ~~96,000~~110,000 service-based RSUs were granted to ~~its~~the Company's directors as a result of these payments and elections during the ~~nine months ended September 30,~~first quarter of 2019 and 2018, ~~and 2017,~~ respectively, with an estimated grant date fair value of ~~$1.3~~$1.4 million and ~~$1.0~~$1.3 million, respectively.

During the nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, the Company granted approximately ~~900,000~~651,000 and ~~964,000~~900,000 service-based RSUs, respectively, to its employees, with an estimated aggregate grant date fair value of ~~$10.7~~$15.0 million and ~~$8.5~~$10.7 million, respectively.

~~In June~~During the nine months ended September 30, 2019 and 2018, ~~and June 2017,~~ the Company granted approximately ~~13,000~~11,000 and ~~8,000~~13,000 service-based RSUs ~~respectively,~~ to non-employee ~~consultants. The~~consultants, respectively. These RSUs are generally subject to service-based vesting. The RSUs will vest 50% ~~in June~~on the first anniversary of the ~~year after the~~ grant date, and the remaining 50% will vest quarterly ~~thereafter.~~thereafter through the second anniversary of the grant date. The estimated aggregate grant date fair value of the RSUs granted to non-employee consultants during the nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 was $0.2 million ~~and $0.1 million, respectively.~~for each period.

Performance-Based RSUs

In March ~~2018~~2019 and ~~2017,~~2018, the Company granted approximately 125,000 and 474,000 ~~and 1,190,000~~annual incentive, performance-based RSUs, respectively, to the Company’s executives and employees (the “Bonus RSUs”), with an estimated grant date fair value of ~~$5.6~~$2.9 million and ~~$10.5~~$5.6 million, respectively. Vesting of the Bonus RSUs is and was dependent upon the Company’s achievement of ~~defined~~pre-established performance goals over ~~a one-year period~~one year (fiscal year 2019 for the 2019 Bonus RSUs and fiscal year 2018 for the 2018 Bonus ~~RSUs~~RSUs), and ~~fiscal year 2017 for the 2017 Bonus RSUs).~~individual performance. The Company records stock-based compensation expense related to performance-based RSUs when it is considered probable that the performance conditions will be met. Management believes it is probable that substantially all of the ~~2018~~2019 Bonus RSUs will vest. The level of achievement, if any, of performance goals will be determined by the compensation committee of the Company’s board of directors and, if such goals are achieved, the ~~2018~~2019 Bonus RSUs will vest, subject to continued employment, in March ~~2019. A portion~~2020. Substantially all of the ~~2017~~2018 Bonus RSUs vested in March ~~2018~~2019 upon the determination of the level of achievement of the performance goals.

Additionally, ~~during~~in March 2019 and 2018, ~~and 2017,~~ the Company ~~awarded~~granted approximately 96,000 and 134,000 ~~and 173,000~~long-term, performance-based RSUs, respectively, to the Company’s executives (the “Executive RSUs”). The estimated aggregate grant date fair value of the Executive RSUs was $2.2 million for the 2019 grants and $1.6 million for the 2018 ~~grants and $1.5 million for the 2017~~ grants. Vesting of the Executive RSUs is ~~and was~~ dependent upon the Company’s achievement of ~~defined~~specified performance goals over ~~a two-year period~~two years (fiscal years 2019 and 2020 for the Executive RSUs granted in 2019 and fiscal years 2018 and 2019 for the Executive RSUs granted in ~~2018~~2018) and ~~fiscal years 2017 and 2018 for the Executive RSUs granted in 2017).~~further subject to additional time-based vesting. 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 RSUs granted 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.

8. Equity Transactions

Preferred Stock

The Company is authorized to issue 2.0 million shares of preferred stock with a par value of $0.0001 per share. As described below, the Company issued 1.0 million shares of preferred stock in the fourth quarter of 2012 and 0.5 million shares of preferred stock in the second quarter of 2014. The remaining 0.5 million authorized shares of preferred stock remain undesignated and unissued as of September 30, ~~2018.~~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~~“Series A Preferred ~~Stock"~~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~~2018, resulting in a dividend payment of ~~zero and~~ $7.0 million to the holders of the Series A Preferred Stock during the three and nine months ended September 30, 2018, respectively. The Company paid cash dividends of zero and $1.8 million to holders of the Series A Preferred Stock during the three and nine months ended September 30, 2017, respectively.million.

Series B Cumulative Perpetual Convertible Preferred Stock

In May 2014, the Company issued ~~500,000~~0.5 million shares of its 6.75% Series B Cumulative Perpetual Convertible Preferred Stock (the ~~"Series~~“Series B Preferred ~~Stock"~~Stock”) in an underwritten public ~~offering~~offering. During the three months ended June 30, 2019, the Company's daily volume-weighted average stock price remained at ~~a price to the public of $250 per share. The purchase price received by the Company, equal to $242.50~~or above $11.21 per share ~~reflected an underwriting discount~~for a period of ~~$7.50 per share. The Company received proceeds~~20 out of ~~$120.8 million from~~30 trading days, allowing for the ~~sale~~conversion of the Series B Preferred Stock ~~net~~at the election of the ~~$3.8 million underwriter discount and $0.4 million~~Company. On May 15, 2019, the Company converted all outstanding shares of ~~offering costs.~~

~~As of September 30, 2018, there were 497,000 shares of~~its Series B Preferred Stock outstanding. Holders of Series B Preferred Stock are entitled to receive cumulative cash dividends at a rate of 6.75% per annum of the $250 liquidation preference per share (equivalent to an annual rate of $16.875 per share). Dividends are payable quarterly in arrears on each March 15, June 15, September 15 and December 15. The Series B Preferred Stock does not have a stated maturity date and is not subject to any sinking fund or mandatory redemption provisions. The Series B Preferred Stock ranks senior to the Company’s common stock with respect to dividend rights and rights upon the Company’s voluntary or involuntary liquidation, dissolution or winding-up. Holders of Series B Preferred Stock generally have no voting rights except for limited voting rights if the Company fails to pay dividends for six or more quarterly periods (whether or not consecutive) and in other specified circumstances. Holders of Series B Preferred Stock may convert some or all of their outstanding Series B Preferred Stock at an initial conversion rate of 33.456into shares of common stock, ~~per $250 liquidation preference, which is equivalent to an initial conversion price~~resulting in the issuance of ~~approximately $7.47 per share~~16,627,632 shares of common ~~stock (subject to adjustment in certain events).~~

~~In connection with~~stock. To convert the ~~conversion of the Series A Preferred Stock described above,~~stock, the Company declared and paid all current and cumulative dividends to holders of record of Series B Preferred Stock as of ~~March~~May 8, 2018. The Company paid cash dividends of zero and $8.4 million to holders of the Series B Preferred Stock during the three and nine months ended September 30, 2018, respectively. In compliance with the Credit Facility, subsequent to the $8.4 million2019, resulting in a dividend payment ~~the Company began the planned suspension~~ of dividends to holders of the Series B Preferred Stock for five quarters, beginning with the dividend payment that otherwise would have required payment on June 15, 2018. The Company paid cash dividends of zero and $2.1 million to holders of the Series B Preferred Stock during the three and nine months ended September 30, 2017, respectively.$8.4 million.

On or after May 15, 2019, the Company may, at its option, convert some or all of the Series B Preferred Stock into the number of shares of common stock that are issuable at the then-applicable conversion rate, subject to specified conditions, including (i) a daily volume-weighted average stock price of at least $11.21 per share over a period of 20 trading days in a 30-day period and (ii) the payment of cumulative dividends. In the event of certain specified fundamental changes, holders of the Series B Preferred Stock will have the right to convert some or all of their shares of Series B Preferred Stock into the greater of (i) a number of shares of the Company’s common stock as subject to adjustment plus the make-whole premium, if any, and (ii) a number of shares of the Company’s common stock equal to the lesser of (a) the liquidation preference divided by the market value of the Company’s common stock on the effective date of such fundamental change and (b) 81.9672 (subject to adjustment). In certain circumstances, the Company may elect to cash settle any conversions in connection with a fundamental change. Any suspended dividends are required to be paid prior to conversion by the Company.

9. Revenue

Effective January 1, 2018, the Company adopted ASU No. 2014-09. 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.

~~Contracts with multiple performance obligations.~~ At times, the Company sells services and equipment through arrangements that bundle equipment, airtime and other services. For these revenue arrangements when the Company sells services and equipment in bundled arrangements and determines that it has separate distinct performance obligations, the Company allocates the bundled contract price among the various performance obligations based on each deliverable’s stand-alone selling price. If the stand-alone selling price is not directly observable, the Company estimates the amount to be allocated for each performance

obligation based on observable market transactions or the residual approach. When the Company determines the performance obligations are not distinct, the Company recognizes revenue on a combined basis as the last obligation is satisfied. To the extent the Company's contracts include variable consideration, the transaction price includes both fixed and variable consideration. The variable consideration contained within the Company's contracts with customers may include discounts, credits and other similar items. 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. Variable consideration estimates are updated at the end of each quarter.

~~Service revenue sold on a stand-alone basis.~~ Service revenue is generated from the Company’s service providers through usage of its satellite system and through fixed monthly access fees per user charged to service providers. Revenue for usage is recognized when usage occurs. Revenue for fixed-per-user access fees is recognized over the usage period in which the services are provided to the end user. The Company sells prepaid services in the form of e-vouchers and prepaid cards. A liability is established equal to the cash paid upon purchase for the e-voucher or prepaid card. Under the new standard, the Company (i) recognizes revenue from the prepaid services upon the use of the e-voucher or prepaid card by the customer and (ii) estimates the expected revenue that will expire unused on an ongoing basis and recognizes this revenue in a manner consistent with the usage period. The Company does not offer refunds for unused prepaid services.

~~Services sold to the U.S. government.~~ The Company provides airtime and airtime support to U.S. government and other authorized customers pursuant to the Enhanced Mobile Satellite Services (“EMSS”) contract managed by the Defense Information Systems Agency (“DISA”). Effective October 22, 2013, the Company executed a five-year EMSS contract, managed by DISA. Under the terms of this agreement, authorized customers continue to utilize airtime services, provided through the U.S. Department of Defense’s (“DoD”) dedicated gateway. These services include unlimited global secure and unsecure voice, low and high-speed data, paging, broadcast and Distributed Tactical Communications Services (“DTCS”) services for an unlimited number of DoD and other federal subscribers. The fixed-price rate for the remaining contract year, which ran through October 21, 2018, is $88 million per year. The EMSS contract was extended for an additional six months at the same rate and now expires in April 2019. Under this contract, revenue is based on the annual fee for the fixed-price contract with unlimited subscribers, and is recognized on a straight-line basis over each contractual year. The U.S. government purchases its subscriber equipment from third-party distributors and not directly from the Company.

The following table summarizes the Company’s services revenue:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
	(in thousands)
Commercial voice and data services	$	52,852	$	51,468	$	151,859	$	143,909
Commercial IoT data services	25,346		22,632		71,739		63,250
Hosted payload and other data services	12,037		9,641		37,871		26,290
Government services⁽¹⁾	25,618		22,000		72,132		66,000
Total services	$	115,853	$	105,741	$	333,601	$	299,449

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
(in thousands)
Commercial voice and data services $ 51,468
$ 46,485
$ 143,909
$ 132,333
Commercial IoT data services 22,632
19,181
63,250
54,616
Hosted payload and other data services 9,641
2,236
26,290
5,349
Government services 22,000
22,000
66,000
66,000
Total services $ 105,741
$ 89,902
$ 299,449
$ 258,298

⁽¹⁾

On September 13, 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. The EMSS Contract was effective as of September 15, 2019. 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.

~~Subscriber equipment sold on a stand-alone basis.~~ The Company recognizes subscriber equipment sales and the related costs at a point in time when title to the equipment (and the risks and rewards of ownership) passes to the customer, typically upon shipment. Customers do not have rights of return without prior consent from the Company.

~~Government engineering and support services.~~ The Company provides maintenance services to the U.S. government’s dedicated gateway. This revenue is recognized ratably over the periods in which the services are provided; the related costs are expensed as incurred.

~~Other government and commercial engineering and support services.~~ The Company also provides engineering services to assist customers in developing new technologies for use on the Company’s satellite system. The revenue associated with fixed fee contracts is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying its performance obligations. The Company does not include purchases of goods from a third party in its evaluation of costs incurred. Incurred cost represents 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. The Company considers fixed fees under cost-plus-fixed-fee contracts to be earned in proportion to the allowable costs incurred in performance of the contract.

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



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
	(in thousands)
Commercial	$	795	$	347	$	1,851	$	542
Government	6,762		4,546		20,315		13,075
Total	$	7,557	$	4,893	$	22,166	$	13,617

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
(in thousands)
Commercial $ 347
$ 784
$ 542
$ 1,991
Government 4,546
4,077
13,075
14,546
Total $ 4,893
$ 4,861
$ 13,617
$ 16,537

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. 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). Billing may occur subsequent to revenue recognition, resulting in accounts receivable (contract assets). 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 ~~$11.2~~$9.1 million and ~~$9.5~~$3.7 million ~~for~~during the three months ended September 30, 2019 and 2018, and ~~2017, respectively, and $36.0~~$34.4 million and ~~$25.5~~$14.8 million ~~for~~during the nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, respectively. The Company has also recorded costs of obtaining contracts expected to be recovered in prepaid expenses and other current 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 contract assets not separately disclosed are as follows:



	September 30, 2019		December 31, 2018
	(in thousands)
Contract Assets:
Commissions	$	1,006	$	1,010
Other contract costs	$	3,322	$	3,631

September 30, 2018 December 31, 2017
(in thousands)
Contract Assets:

Commissions $ 1,019
$ 1,555
Other Contract Costs $ 3,701
$ 3,753

The primary impact of adopting ~~ASU 2014-09 relates~~the new revenue recognition standard as of January 1, 2018 related to the Company’s prepaid service ~~revenue and associated breakage.~~revenue. Under the new standard, 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. Upon adoption, the contract liability ~~- deferred~~(deferred revenue associated with prepaid service ~~revenue,~~revenue) was reduced by approximately $15.7 million as a result of the change to include ~~a breakage~~an estimate ~~over the usage period.~~

~~Adopting the new standard had an immaterial impact~~of revenue to be recognized based on the ~~Company’s financial statements. The impact~~historical pattern of ~~the implementation~~usage of ~~the new revenue standard~~prepaid data services on the Company's ~~condensed consolidated balance sheets, as compared to accounting under prior revenue guidance (Accounting Standards Codification ("ASC") Topic 605), was as follows:~~hosted payloads.

September 30, 2018
As reported Adjustment As adjusted
(in thousands)
Prepaid expenses and other current assets $ 20,214
$ 477
$ 20,691

Deferred revenue 21,195
19,654
40,849
Deferred revenue, net of current portion 61,892
(2,782 ) 59,110
Other long-term liabilities 4,134
(3,960 ) 174

Retained earnings 509,294
(12,436 ) 496,858

~~The impact of the implementation of the new standard on the Company's condensed consolidated statements of operations and comprehensive income (loss) was as follows:~~

Three months ended September 30, 2018 Nine months ended September 30, 2018
As reported Adjustment As adjusted As reported Adjustment As adjusted
(in thousands)
Service revenue $ 105,741
(5 ) 105,736
$ 299,449
(1,187 ) 298,262

Cost of services 22,226
(30 ) 22,196
63,822
(94 ) 63,728

Income (loss) before income taxes (14,513 ) 25
(14,488 ) 4,223
(1,094 ) 3,129
Income tax benefit (expense) 1,657
108
1,765
(10,025 ) 396
(9,629 )
Net loss $ (12,856 ) 133
(12,723 ) $ (5,802 ) (698 ) (6,500 )

10. ~~Income Taxes~~

The Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 ("SAB 118") to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Cuts and Jobs Act of 2017 (“Tax Act”). 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 for the remeasurement of its deferred tax assets/liabilities for an estimated net tax benefit of $150.9 million, as well as an estimated one time taxable income amount of $2.3 million for the deemed repatriation of certain foreign subsidiary untaxed earnings with an estimated deferred tax asset of $0.8 million associated with foreign taxes paid on those earnings. During the current period, the Company has updated its provisional estimates for these items. The Company currently estimates a net tax benefit of $150.4 million related to the remeasurement of its December 31, 2017 deferred tax assets and liabilities. It also currently estimates additional taxable income of $3.2 million reflected in its 2017 tax return for the deemed repatriation of certain foreign subsidiary earnings not previously subject to U.S. tax and a deferred tax asset of $0.8 million for the related foreign taxes paid on those earnings. The adjustments to the provisional amounts do not have a material impact on the Company's financial statements.

As the Company continues to collect and prepare the necessary data, and interprets the remaining provisions of the Tax Act and any additional guidance issued by the U.S. Treasury Department, the Internal Revenue Service, and other standard-setting bodies of the Tax Act, it may make additional adjustments to its provisional estimates. Any such adjustments may materially impact the Company's provision for income taxes and effective tax rate in the period in which the adjustments are made. The accounting for the tax effects of the Tax Act will be completed during 2018 within the one-year measurement period prescribed in SAB 118.

In April 2018, Maryland enacted the single sales factor method for apportioning income to the state to be phased in over five years commencing in 2018. This change results in higher future Maryland taxes for the Company, increasing its year-to-date income tax provision by $8.5 million for the impact on its existing deferred tax assets and liabilities. If the Company's current estimates change in future periods, the impact on the deferred tax assets and liabilities may change correspondingly.

~~11.~~ Net ~~Income (Loss)~~Loss Per Share

The Company calculates basic net ~~income (loss)~~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~~In periods of net income, diluted net income per share takes into account the effect of potential dilutive common shares when the effect is dilutive. ~~The effect of potential~~Potentially dilutive common shares ~~including~~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 effect of potential dilutive common shares from the conversion of outstanding convertible preferred securities is computed using the as-if converted method at the stated conversion rate. As noted above, the Series A Preferred Stock was converted into shares of common stock on March 20, 2018. The RSUs granted to members of the Company’s board of directors contain non-forfeitable rights to dividends and therefore are considered to be participating securities in periods of net income. As a result, the calculation of basic and diluted net income per share excludes net income attributable to the unvested RSUs granted to the Company’s board of directors from the numerator and excludes the impact of the unvested RSUs granted to the Company’s board of directors from the denominator.

The computations of basic and diluted net ~~income (loss)~~loss per share for the three months ended September 30, 2019 and 2018 are as follows:



	Three Months Ended September 30,
	2019			2018
	(in thousands, except per share data)
Numerator:
Net loss attributable to common stockholders - basic and diluted	$	(18,012	)	$	(14,940	)

Denominator:
Weighted average outstanding common shares - basic and diluted	131,688			111,592

Net loss per share attributable to common stockholders - basic and diluted	$	(0.14	)	$	(0.13	)

Three Months Ended September 30,
2018 2017
(in thousands, except per share data)
Numerator:

Net income (loss) attributable to common stockholders $ (14,940 ) $ 25,394
Net (income) loss allocated to participating securities 15
(25 )
Numerator for basic net income (loss) per share (14,925 ) 25,369
Dividends on Series A Preferred Stock, excluding cumulative dividends —
1,750
Dividends on Series B Preferred Stock, excluding cumulative dividends —
2,109
Numerator for diluted net income (loss) per share $ (14,925 ) $ 29,228

Denominator:
Denominator for basic net income (loss) per share - weighted
   average outstanding common shares
111,592
98,290
Dilutive effect of stock options —
1,515
Dilutive effect of contingently issuable shares —
54
Dilutive effect of Series A Preferred Stock —
10,602
Dilutive effect of Series B Preferred Stock —
16,727
Denominator for diluted net income (loss) per share 111,592
127,188
Net income (loss) per share attributable to common
   stockholders - basic
$ (0.13 ) $ 0.26
Net income (loss) per share attributable to common
   stockholders - diluted
$ (0.13 ) $ 0.23

Due to the Company’s net loss position for the three months ended September 30, 2019 and 2018, all potential common stock equivalents were anti-dilutive and therefore excluded from the calculation of diluted net loss per share. For the three months ended September 30, ~~2018, options to purchase 0.1 million shares of common stock were not included in the computation of diluted net loss per share, as the effect would be anti-dilutive, and 0.8~~2019, 0.4 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. For the three months ended September 30, 2017, 1.7~~satisfied, and options to purchase 0.2 million ~~unvested non-performance-based RSUs~~shares of common stock were not included in the computation of diluted net ~~income~~loss per share, as the effect would be ~~anti-dilutive, and 0.1~~anti-dilutive.

For the three months ended September 30, 2018, 0.8 million unvested performance-based RSUs were not included in the computation of basic and diluted net income per share, as certain performance criteria had not been ~~satisfied.~~satisfied, and options to purchase 0.1 million shares of common stock were not included in the computation of diluted net income per share, as the effect

would be anti-dilutive. For the three months ended September 30, 2018, 16.7 million as-if converted shares of the Series B Preferred Stock were not included in the computation of diluted net income per share, as the effect would be anti-dilutive. For the three months ended September 30, 2018, $2.1 million ~~in cumulative~~ unpaid dividends to holders of the Series B Preferred Stock were not declared or accrued as a result of all cash dividends being suspended, but such amounts were deducted to arrive at net loss attributable to common stockholders. ~~For~~

The computations of basic and diluted net loss per share for the ~~three~~nine months ended September 30, ~~2017, $1.8 million~~2019 and ~~$2.1 million in cumulative unpaid dividends~~2018 are as follows:



	Nine Months Ended September 30,
	2019			2018
	(in thousands, except per share data)
Numerator:
Net loss attributable to common stockholders - basic and diluted	$	(58,336	)	$	(13,854	)

Denominator:
Weighted average outstanding common shares - basic and diluted	122,816			107,840

Net loss per share attributable to common stockholders - basic and diluted	$	(0.47	)	$	(0.13	)

Due 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~~Company’s net ~~income attributable to common stockholders. For~~loss for the ~~three~~nine months ended September 30, ~~2018, 16.7 million as-if converted shares of~~2019, all potential common stock equivalents were anti-dilutive and therefore excluded from the ~~Series B Preferred Stock were not included in the computation~~calculation of diluted net loss per ~~share, as the effect would be anti-dilutive.~~

Nine Months Ended September 30,
2018 2017
(in thousands, except per share data)
Numerator:

Net income (loss) attributable to common stockholders $ (13,854 ) $ 80,402
Net (income) loss allocated to participating securities 14
(79 )
Numerator for basic net income (loss) per share (13,840 ) 80,323
Dividends on Series A Preferred Stock, excluding cumulative dividends —
5,250
Dividends on Series B Preferred Stock, excluding cumulative dividends —
6,327
Numerator for diluted net income (loss) per share $ (13,840 ) $ 91,900

Denominator:
Denominator for basic net income (loss) per share - weighted
   average outstanding common shares
107,840
97,716
Dilutive effect of stock options —
1,407
Dilutive effect of contingently issuable shares —
387
Dilutive effect of Series A Preferred Stock —
10,602
Dilutive effect of Series B Preferred Stock —
16,727
Denominator for diluted net income (loss) per share 107,840
126,839
Net income (loss) per share attributable to common
   stockholders - basic
$ (0.13 ) $ 0.82
Net income (loss) per share attributable to common
   stockholders - diluted
$ (0.13 ) $ 0.72

share. For the nine months ended September 30, ~~2018, options to purchase 0.3 million shares of common stock were not included in the computation of diluted net loss per share, as the effect would be anti-dilutive, and 0.7~~2019, 0.4 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. For the nine months ended September 30, 2017, 1.6 million unvested non-performance-based RSUs~~satisfied, and options to purchase ~~0.1~~0.2 million shares of common stock were not included in the computation of diluted net ~~income~~loss per share, as the effect would be ~~anti-dilutive, and 0.4~~anti-dilutive.

For the nine months ended September 30, 2018, 0.7 million unvested performance-based RSUs were not included in the computation of basic and diluted net income per share, as certain performance criteria had not been ~~satisfied.~~

satisfied, and options to purchase 0.3 million shares of common stock were not included in the computation of diluted net income per share, as the effect would be anti-dilutive. For the nine months ended September 30, 2018, 3.0 million and 16.7 million as-if converted shares of the Series A Preferred Stock and Series B Preferred Stock, respectively, were not included in the computation of diluted net income per share, as the effect would be anti-dilutive. For the nine months ended September 30, 2018, $4.2 million ~~in cumulative~~ unpaid dividends to holders of the Series B Preferred Stock were not declared or accrued as a result of all cash dividends being suspended, but such amounts were deducted to arrive at net loss attributable to common stockholders. For the nine months ended September 30, 2017, $3.5 million and $4.2 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. For the nine months ended September 30, 2018, 3.0 million as-if converted shares of the Series A Preferred Stock and 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.

~~12.~~11. Related Party Transactions

Aireon LLC and Aireon Holdings LLC

The ~~Iridium NEXT~~Company's satellite constellation hosts the Aireon^SMsystem, which ~~will provide~~provides a global air traffic surveillance service through a series of automatic dependent surveillance-broadcast ~~("ADS-B"~~(“ADS-B”) ~~receivers on the Iridium NEXT satellites. Iridium~~receivers. The Company formed Aireon ~~LLC ("Aireon")~~ in 2011, with subsequent investments from the air navigation service providers ~~("ANSPs"~~(“ANSPs”) of Canada, Italy, Denmark, Ireland and the United Kingdom, to develop and market this service. Aireon has contracted to pay ~~Iridium~~the Company a fee to host the ADS-B receivers on ~~Iridium NEXT,~~its constellation, as well as ~~data service~~ fees for power and data services in connection with the delivery of the air traffic surveillance ~~data over the Iridium NEXT system.~~data. Pursuant to agreements with Aireon, Aireon will pay ~~Iridium~~the Company fees of $200.0 million to host the ADS-B receivers, ~~on Iridium NEXT and~~of which $43.1 million had been paid as of September 30, 2019. During October 2019, the Company received an additional $11.0 million from Aireon related to hosting fees. Aireon also pays power fees of approximately $2.8 million per year (the ~~"Hosting Agreement"~~“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 ~~over the Iridium NEXT system~~ (the ~~"Data~~“Data Services ~~Agreement"~~Agreement”). The Aireon ADS-B receivers ~~on the Iridium NEXT satellites are~~were activated on an individual basis as the ~~Iridium NEXT~~ satellite ~~begins~~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 three and nine months ended September 30, 2019, the Company recorded $4.0 million and $11.9 million related to this agreement, respectively. During the three and nine months ended September 30, 2018, the Company recorded $3.3 million and $10.2 million related to this agreement, 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 September 30, ~~2018,~~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 (the "Aireon LLC Agreement").~~

Under the Company's Hosting Agreement, the $200.0 million due is interest-bearing for amounts not paid on time. The Company had previously determined there was not sufficient support that Aireon will be able to make the payments due under the Hosting Agreement. As of September 30, 2018, the Company had received $8.1 million under the Hosting Agreement.

In July 2018, the Company and Aireon amended certain terms of the Hosting Agreement. As amended, the Company is scheduled to receive an additional payment of $6.4 million in December 2018 and semi-annual payments of $8.0 million beginning in June of 2019 until the hosting fees are paid in full, without any contingency relating to Aireon's ability to raise debt. Aireon continues to be obligated to pay the Company in full the remaining portion of the $200.0 million in hosting fees when they are able to raise debt to do so. As a result of the amendment and an updated financial collectability assessment, as of September 30, 2018, the Company recognized $10.2 million of revenue related to total cumulative hosting services rendered to date.

Under the Data Services Agreement, Aireon pays the Company monthly data service payments on a per satellite ~~basis beginning on each satellite's in-service date.~~basis. The Company recorded data service revenue from Aireon of $3.2 million and $2.6 million for the three months ended September 30, 2019 and 2018, respectively, and $9.4 million and $6.2 million ~~for~~during the ~~three and~~ nine months ended September 30, 2019 and 2018, respectively. ~~Revenues recorded for the three and nine months ended September 30, 2017 were immaterial.~~

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 also subleases office space to Aireon.~~ Aireon receivables due to the Company under all agreements totaled ~~$3.3~~$1.3 million and ~~$0.6~~$1.0 million at September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively.



ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion along with our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2017,~~2018, filed on February ~~22, 2018~~28, 2019 with the Securities and Exchange Commission, or the SEC, as well as our condensed consolidated financial statements included in this Form 10-Q.

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Such forward-looking statements include those that express plans, anticipation, intent, contingencies, goals, targets or future development or otherwise are not statements of historical fact. Without limiting the foregoing, the words “believe,” “anticipate,” “plan,” “expect,” “intend” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on our current expectations and projections about future events, and they are subject to risks and uncertainties, known and unknown, that could cause actual results and developments to differ materially from those expressed or implied in such statements. The important factors described under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2017~~2018 filed on February ~~22, 2018, and in this Quarterly Report,~~28, 2019 could cause actual results to differ materially from those indicated by forward-looking statements made herein. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Overview of Our Business

We are engaged primarily in providing mobile voice and data communications services using a constellation of orbiting satellites. We are the only commercial provider of communications services offering true global coverage, connecting people, organizations and assets to and from anywhere, in real time. Our unique L-band satellite network provides reliable communications services to regions of the world where terrestrial wireless or wireline networks do not exist or are limited, including remote land areas, open ocean, airways, the polar regions and regions where the telecommunications infrastructure has been affected by political conflicts or natural disasters.

We provide voice and data communications services to businesses, the U.S. and foreign governments, non-governmental organizations and consumers via our satellite network, which has an architecture of 66 operational satellites with in-orbit spares and related ground infrastructure. We utilize an interlinked mesh architecture to route traffic across our satellite constellation using radio frequency crosslinks between satellites. This unique architecture minimizes the need for local ground facilities to support the constellation, which facilitates the global reach of our services and allows us to offer services in countries and regions where we have no physical presence.

We sell our products and services to commercial end-users through a wholesale distribution network, encompassing approximately ~~160~~100 service providers, approximately ~~230~~250 value-added resellers, or VARs, and approximately 90 value-added manufacturers, or VAMs, which create and sell technology that uses the Iridium^® network either directly to the end user or indirectly through other service providers, VARs or dealers. These distributors often integrate our products and services with other complementary hardware and software and have developed a broad suite of applications using our products and services to target specific lines of business. ~~We expect that demand for our services will increase as more applications are developed and deployed that utilize our technology.~~

At September 30, ~~2018,~~2019, we had approximately ~~1,092,000~~1,269,000 billable subscribers worldwide, representing an increase of ~~15%~~16% from approximately ~~949,000~~1,092,000 billable subscribers at September 30, ~~2017.~~2018. We have a diverse customer base, with end users in the following lines of business: ~~land-based handset;~~land mobile, maritime, aviation, Internet of Things, or ~~IoT; maritime; aviation;~~IoT, hosted payloads and other data services and the U.S. government.

We recognize revenue from both the provision of services and the sale of ~~equipment and the provision of services.~~equipment. Over the past several years, ~~an increasing proportion of our revenue has been derived from~~ service revenue, including revenue from hosting and data services, has represented an increasing proportion of our revenue, and we expect that trend to continue.

We ~~are in~~recently completed the ~~process of replacing our first generation constellation with our~~ Iridium NEXT ~~satellite constellation,~~program, which ~~we expect to complete in 2018, and which will use the same interlinked mesh architecture as~~replaced our first-generation constellation of satellites with upgraded satellites that support new services and higher data speeds for new products, at a cost of approximately $3 billion. We deployed a total of 75 new satellites on eight Falcon 9 rockets launched by SpaceX, with 66 operational satellites, as well as in-orbit and ground ~~spares. As~~spares, maintaining the same interlinked mesh architecture of ~~September 30, 2018, of the 65 Iridium NEXT satellites we have launched to date, 60 have been placed into service, one is drifting to an adjacent plane and four are in-orbit spares.~~

~~We have contracted with Thales Alenia Space France, or Thales, to construct the Iridium NEXT satellites, which are compatible with~~ our first-generation constellation.

Our new constellation and current end-user equipment, so that as we launch Iridium NEXT satellites, we have replaced the first-generation satellites in our constellation without affecting the service to our end users. We have launched 65 satellites on six dedicated Falcon 9 rockets and one shared Falcon 9 rocket launched by Space Exploration Technologies Corporation, or SpaceX, and we expect to launch the final 10 satellites on a dedicated Falcon 9 rocket in December. We estimate the costs associated with the design, build and launch of Iridium NEXT and related ground infrastructure upgrades through 2018 to be approximately $3 billion. Our funding plan for these costs includes the substantial majority of the funds

drawn under our $1.8 billion credit facility, or the Credit Facility, which was fully drawn as of February 2017, together with cash on hand and internally generated cash flows, including contracted cash flows from hosted payloads.

~~The Iridium NEXT constellation will~~ also ~~host~~hosts the Aireon^SM system, ~~to provide~~which provides a global air traffic surveillance service through a series of automatic dependent surveillance-broadcast, or ADS-B, receivers on the ~~Iridium NEXT~~upgraded satellites. We formed Aireon LLC in 2011, with subsequent investments from the air navigation service providers, or ANSPs, of Canada, Italy, Denmark, Ireland and the United Kingdom, to develop and market this service. Aireon has contracted to provide the service to our co-investors in Aireon and other ANSPs. Aireon is also ~~plans~~offering to ~~offer~~provide the service to other customers worldwide, including the U.S. Federal

Aviation Administration, or FAA. Last year, the FAA announced that it will run operational trials of the Aireon service beginning in 2020. Aireon has contracted to pay us ~~a fee~~fees to host the ADS-B receivers on ~~Iridium NEXT, and~~our constellation. As of September 30, 2019, Aireon has made ~~an initial $8.1~~payments of $43.1 million ~~payment~~ for a portion of its hosting ~~fee~~fees. During October 2019, we received an additional $11.0 million from Aireon related to ~~us.~~hosting fees. Aireon also pays us ~~data service~~ fees for power and data services in connection with the delivery of the air traffic surveillance data over the ~~Iridium NEXT system~~upgraded constellation on a per satellite basis, which will increase ~~with the number of Iridium NEXT satellites placed into service.~~in rate once Aireon meets a customer milestone, which we expect to occur later this year. In addition, we have entered into an agreement with Harris Corporation, the manufacturer of the Aireon hosted payload, pursuant to which Harris pays us fees for the remaining hosted payload capacity ~~which~~ it has sold to its customers; Harris also pays us data service fees on behalf of these customers.

Recent Developments

U.S. Government Contracts

~~Iridium NEXT~~

~~As described above,~~On September 13, 2019, we 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, which was effective as of September ~~30, 2018,~~15, 2019, we ~~had completed seven out~~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 ~~eight scheduled~~U.S. Department of Defense, or DoD, and other federal government subscribers. We may provide other services, such as Iridium ~~NEXT launches. Our insurance program includes our ground spares and a prepaid relaunch right with SpaceX~~Certus^®, to ~~self-insure a portion of our launch and in-orbit risks, as permitted~~the U.S. government under ~~the Credit Facility.~~separate arrangements for an additional fee. While we ~~believe this has enabled us~~sell airtime directly to ~~obtain insurance~~the U.S. government for resale to end users, our hardware products are sold to U.S. government customers through our network of distributors, which typically integrate them with other products and technologies. In addition, we intend to invest approximately $10-$12 million over the next three years in support of the U.S. government to implement enhanced services at ~~a substantially lower cost than would have been possible without the spares and relaunch right, if~~its dedicated gateway, which we ~~use our spares to replace lost satellites, we could decide to purchase~~will account for as additional ~~satellites to maintain a backup supply of spares. The~~ cost of ~~such additional spares~~services. Pursuant to federal acquisition regulations, the U.S. government may terminate the EMSS Contract, in whole or in part, at any time. The fixed-price rate in each of the seven contract years is ~~not included in the $3 billion estimated cost~~as follows:



Contract Year	Fixed Price Rate
	(in millions)
Year 1: 2019/2020	$	100.0
Year 2: 2020/2021	103.0
Year 3: 2021/2022	106.0
Year 4: 2022/2023	106.0
Year 5: 2023/2024	106.0
Year 6: 2024/2025	107.0
Year 7: 2025/2026	110.5
Total Contract Value	$	738.5

We provide maintenance services for the ~~design, build~~DoD's dedicated gateway pursuant to our Gateway Maintenance and ~~launch~~Support Services contract, or the GMSS Contract, which was most recently entered into in March 2019 and is also managed by the AFSPC. This agreement provided for an initial six-month base term which expired on September 30, 2019. The DoD exercised the first of ~~Iridium NEXT and related infrastructure upgrades through 2018.~~

four available one-year options which extends the GMSS Contract service term to September 30, 2020. If the U.S. government elects to exercise all of the remaining one-year options, the total value of the GMSS Contract to us will be approximately $54.1 million. Pursuant to federal acquisition regulations, the U.S. government may terminate the GMSS Contract, in whole or in part, at any time.

Material Trends and Uncertainties

Our industry and customer base ~~has~~have historically grown as a result of:

demand for remote and reliable mobile communications services;

~~increased demand for communications~~a growing number of new products and services ~~by disaster~~ and ~~relief agencies~~related applications;

development and ~~emergency first responders;~~implementation of our hosted payloads;

a broad wholesale distribution network with access to diverse and geographically dispersed niche markets;

~~a growing number of new products~~increased demand for communications services by disaster and ~~services~~relief agencies, and ~~related applications;~~emergency first responders;

improved data transmission speeds for mobile satellite service offerings;

regulatory mandates requiring the use of mobile satellite services;

a general reduction in prices of mobile satellite services and subscriber equipment; and

geographic market expansion through the ability to offer our services in additional countries.

Nonetheless, we face a number of challenges and uncertainties in operating our business, including:

our ability to ~~complete the deployment of Iridium NEXT;~~


•	~~our ability to develop and launch new and innovative products and services for Iridium NEXT, including Iridium Certus~~^SM;

~~Aireon LLC’s ability to successfully deploy and market its space-based ADS-B, global aviation monitoring service, which is carried as a hosted payload on the Iridium NEXT system;~~

~~Aireon’s ability to pay in full its hosting fees to us;~~

~~our ability to~~ maintain the health, capacity, control and level of service of our ~~remaining first-generation~~ satellites, ~~through the completion of Iridium NEXT;~~including our hosted payloads;

our ability to develop and launch new and innovative products and services;

our ability to generate sufficient internal cash flows to support our ongoing business and to satisfy our debt service obligations;

changes in general economic, business and industry conditions, including the effects of currency exchange rates;

our reliance on a single primary commercial gateway and a primary satellite network operations center;

competition from other mobile satellite service providers and, to a lesser extent, from the expansion of terrestrial-based cellular phone systems and related pricing pressures;


•	~~market acceptance of our products, including Iridium Certus~~^SM; market acceptance of our products;

regulatory requirements in existing and new geographic markets;

rapid and significant technological changes in the telecommunications industry;

reliance on our wholesale distribution network to market and sell our products, services and applications effectively;

reliance on single-source suppliers for the manufacture of most of our subscriber equipment and for some of the components required in the manufacture of our end-user subscriber equipment and our ability to purchase parts that are periodically subject to shortages resulting from surges in demand, natural disasters or other events; and

reliance on a few significant customers, particularly agencies of the U.S. government, for a substantial portion of our revenue, as a result of which the loss or decline in business with any of these customers may negatively impact our revenue and collectability of related accounts receivable.

Comparison of Our Results of Operations for the Three Months Ended September 30, ~~2018~~2019 and ~~2017~~2018


	Three Months Ended September 30,																	Three Months Ended September 30,										Change
	2018			% of Total Revenue			2017			% of Total Revenue			Change					2019			% of Total Revenue		2018			% of Total Revenue		Dollars			Percent
($ in thousands)				% of Total Revenue		Dollars				% of Total Revenue		Percent						2019			% of Total Revenue		2018			% of Total Revenue		Dollars			Percent
Revenue:	2018						2017
Services	$	105,741		77	%		$	89,902		77	%		$	15,839		18	%	$	115,853		80	%	$	105,741		77	%	$	10,112		10	%
Subscriber equipment	26,130			19	%		21,784			19	%		4,346			20	%	21,375			15	%	26,130			19	%	(4,755		)	(18	)%
Engineering and support services	4,893			4	%		4,861			4	%		32			1	%	7,557			5	%	4,893			4	%	2,664			54	%
Total revenue	136,764			100	%		116,547			100	%		20,217			17	%	144,785			100	%	136,764			100	%	8,021			6	%

Operating expenses:
Cost of services (exclusive of depreciation
and amortization)	22,226			16	%		20,883			18	%		1,343			6	%	23,581			16	%	22,226			16	%	1,355			6	%
Cost of subscriber equipment	14,074			10	%		12,186			10	%		1,888			15	%	12,862			9	%	14,074			10	%	(1,212		)	(9	)%
Research and development	5,058			4	%		3,981			3	%		1,077			27	%	2,822			2	%	5,058			4	%	(2,236		)	(44	)%
Selling, general and administrative	27,255			20	%		18,471			16	%		8,784			48	%	22,934			16	%	27,255			20	%	(4,321		)	(16	)%
Depreciation and amortization	62,140			45	%		22,944			20	%		39,196			171	%	74,575			52	%	62,140			46	%	12,435			20	%
Total operating expenses	130,753			95	%		78,465			67	%		52,288			67	%	136,774			95	%	130,753			96	%	6,021			5	%
Operating income	6,011			5	%		38,082			33	%		(32,071		)	(84	)%	8,011			5	%	6,011			4	%	2,000			33	%

Other income (expense):
Interest income (expense), net	(20,145		)	(15	)%		1,246			1	%		(21,391		)	(1,717	)%
Other expense, net	(379		)	—	%		(20		)	—	%		(359		)	1,795	%
Total other income (expense), net	(20,524		)	(15	)%		1,226			1	%		(21,750		)	(1,774	)%
Income (loss) before income taxes	(14,513		)	(10	)%		39,308			34	%		(53,821		)	(137	)%
Income tax benefit (expense)	1,657			1	%		(10,055		)	(9	)%		11,712			(116	)%
Net income (loss)	$	(12,856	)	(8	)%		$	29,253		25	%		$	(42,109	)	(144	)%
Other expense:
Interest expense, net																		(30,493		)	(21	)%	(20,145		)	(15	)%	(10,348		)	51	%
Other income (expense), net																		26			—	%	(379		)	—	%	405			(107	)%
Total other expense, net																		(30,467		)	(21	)%	(20,524		)	(15	)%	(9,943		)	48	%
Loss before income taxes																		(22,456		)	(16	)%	(14,513		)	(11	)%	(7,943		)	55	%
Income tax benefit																		4,444			3	%	1,657			2	%	2,787			168	%
Net loss																		$	(18,012	)	(12	)%	$	(12,856	)	(9	)%	$	(5,156	)	40	%

Revenue

Commercial Service Revenue


	Three Months Ended September 30,																Three Months Ended September 30,
	2018					2017					Change						2019					2018					Change
	Revenue		Billable Subscribers ⁽¹⁾	ARPU ⁽²⁾		Revenue		Billable Subscribers ⁽¹⁾	ARPU ⁽²⁾		Revenue		Billable Subscribers		ARPU		Revenue		Billable Subscribers ⁽¹⁾	ARPU ⁽²⁾		Revenue		Billable Subscribers ⁽¹⁾	ARPU ⁽²⁾		Revenue		Billable Subscribers	ARPU
	(Revenue in millions and subscribers in thousands)																(Revenue in millions and subscribers in thousands)
Commercial voice and data	$	51.5	367	$	47	$	46.5	368	$	43	$	5.0	(1	)	$	4	$	52.9	371	$	48	$	51.5	367	$	47	$	1.4	4	$	1
Commercial IoT data	22.6		612	13		19.2		486	13		3.4		126		—		25.3		767	11.36		22.6		612	12.71		2.7		155	(1.35		)
Hosted payload and other data services	9.6		N/A			2.2		N/A			7.4		N/A				12.0		N/A			9.6		N/A			2.4		N/A
Total Commercial	$	83.7	979			$	67.9	854			$	15.8	125				$	90.2	1,138			$	83.7	979			$	6.5	159


⁽¹⁾	Billable subscriber numbers shown are at the end of the respective period.

⁽²⁾

Average monthly revenue per unit, or ARPU, is calculated by dividing revenue in the respective period by the average of the number of billable subscribers at the beginning of the period and the number of billable subscribers at the end of the period and then dividing the result by the number of months in the period. Billable subscriber and ARPU data is not applicable for hosted payload and other data service revenue items.

For the three months ended September 30, 2018, commercial voice and data revenue increased by $5.0 million, or 11%, from the prior year period principally due to an increase in average revenue per unit resulting from certain price increases in access fees and growth in Iridium OpenPort^® ~~subscribers.~~

For the three months ended September 30, ~~2018,~~2019, total commercial service revenue increased $6.5 million, or 8%, as a result of strengthening across all commercial service lines compared to the prior year period. Commercial IoT data revenue increased ~~by $3.4~~$2.7 million, or ~~18%~~12%, from the prior year ~~period primarily~~period. This increase was principally due to a ~~26%~~25% increase in commercial IoT data billable ~~subscribers.~~

subscribers, primarily from continued strength in consumer personal communications devices. These products comprised an increased proportion of total subscribers, contributing to a decline in related ARPU. Hosted payload and other data ~~service~~ revenue increased ~~by $7.4~~$2.4 million ~~or 336%,~~ from the prior year period, which was primarily ~~due to revenue recognition from hosting services related to Aireon, increased data services~~ due to an increase in the number of Iridium NEXT satellites in ~~service~~service. Commercial voice and data revenue increased ~~satellite timing and location services.~~$1.4 million, or 3%, from the prior year period, principally due to increased broadband subscribers.

We anticipatecontinued growth in billable commercial subscribers ~~for~~through the remainder of ~~2018.~~2019.

Government Service Revenue

Three Months Ended September 30,
2018 2017 Change
Revenue
Billable
Subscribers ⁽¹⁾
Revenue
Billable
Subscribers ⁽¹⁾
Revenue
Billable
Subscribers
(Revenue in millions and subscribers in thousands)
Government service revenue $ 22.0
113
$ 22.0
95
$ —
18



	Three Months Ended September 30,
	2019			2018			Change
	Revenue		Billable Subscribers ⁽¹⁾	Revenue		Billable Subscribers ⁽¹⁾	Revenue		Billable Subscribers
	(Revenue in millions and subscribers in thousands)
Government service revenue	$	25.6	131	$	22.0	113	$	3.6	18


⁽¹⁾	Billable subscriber numbers shown are at the end of the respective period.

We provide ~~Iridium~~ airtime and airtime support to U.S. government and other authorized customers pursuant to ~~a five-year~~our EMSS ~~contract executed in October 2013 and managed by DISA.~~Contract. Under the terms of this agreement, authorized customers utilize certain Iridium airtime services provided through the ~~U.S. Department of Defense’s, or~~ DoD’s dedicated gateway. These services include unlimited global secure and unsecure voice, low and high-speed data, paging, broadcast, and Distributed Tactical Communications System, or DTCS, services for an unlimited number of DoD and other federal subscribers. The ~~service~~ fee ~~under the EMSS contract is fixed at $88 million per year for the remainder of the term, and~~ is not based on subscribers or usage, allowing an unlimited number of users access to ~~such existing~~the services. ~~The~~In September 2019, we entered into a new seven-year EMSS ~~contract was extended~~Contract for ~~an additional six months at~~$738.5 million. Immediately prior to the ~~same rate and now expires in April 2019. We have begun discussions with~~EMSS Contract, we were providing airtime service to the U.S. government ~~on a new~~under month-to-month extension contracts at varying rates upon the expiration of our previous EMSS contract ~~which we expect to enter into in~~on April 21, 2019. For the three months ended September 30, 2019, government service revenue increased $3.6 million as a result of the month-to-month extension contracts exercised by the U.S. government while the EMSS Contract was being negotiated and the higher monthly rate once the EMSS Contract was executed and became effective on September 15, 2019.

Subscriber Equipment Revenue

Subscriber equipment revenue ~~increased~~decreased by ~~$4.3~~$4.8 million, or ~~20%~~18%, for the three months ended September 30, ~~2018~~2019 compared to the prior year ~~period. This increase was~~period, primarily due to ~~an increase~~a decrease in volume of handset sales and L-band transceiver unit sales, partially offset by an increase in the volume of Short Burst Data devices and ~~handset sales.~~

~~We expect our full year subscriber equipment revenue for~~Iridium Certus devices. Handset sales in 2018 ~~to exceed the prior year.~~

were abnormally strong.

Engineering and Support Service Revenue


	Three Months Ended September 30,							Three Months Ended September 30,
	2018		2017		Change			2019		2018		Change
	(Revenue in millions)							(Revenue in millions)
Commercial	0.3		0.8		$	(0.5	)	$	0.8	$	0.3	$	0.5
Government	4.6		4.1		0.5			6.8		4.6		2.2
Total	$	4.9	$	4.9	$	—		$	7.6	$	4.9	$	2.7



ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

~~The fixed price under the FSD with Thales is denominated in U.S. dollars. As a result, we do not bear any foreign currency exchange risk under the FSD.~~

We have ~~borrowed~~outstanding an aggregate ~~$1.8 billion~~of $1,558.8 million under the Credit Facility as of September 30, ~~2018.~~2019. A portion of the draws we made under the Credit Facility bear interest at a floating rate equal to the London Interbank Offered Rate, or LIBOR, plus 1.95% and will, accordingly, subject us to interest rate fluctuations in future periods. ~~Based on the average outstanding borrowings under the Credit Facility for the three and nine months ended September 30, 2018, a~~A one-half percentage point increase or decrease in the LIBOR would not have had a material impact on our interest cost for the ~~period.~~three or nine months ended September 30, 2019.

The interest rate under the Notes is fixed, and as a result we are not exposed to fluctuations in interest rates with respect to our obligations under the Notes.

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, ~~marketable securities,~~ accounts receivable and accounts payable. At times we maintain cash and cash equivalent deposit balances in excess of Federal Deposit Insurance Corporation ~~limits, and we may have marketable securities balances in excess of Securities Investment Protection Corporation~~ limits. However, we maintain our cash and cash equivalents ~~and marketable securities~~ with financial institutions with high credit ratings. The majority of our cash is invested into funds that invest in or are collateralized by U.S. government-backed securities. WeFrom time to time, we may invest in marketable securities consisting of U.S. treasury notes, fixed income debt instruments and commercial paper debt instruments with fixed interest rates and maturity dates within one year of original purchase. Due to the credit quality and nature of these debt instruments, we do not believe there has been a significant change in our market risk exposure since December 31, ~~2017.~~2018. Accounts receivable are due from both domestic and international customers. We perform credit evaluations of our customers’ financial condition and record reserves to provide for estimated credit losses. Accounts payable are owed to both domestic and international vendors.



ITEM 4.	CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer, who is our principal executive officer, and our chief financial officer, who is our principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of the end of the period covered by this report. In evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. In addition, the design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a control system, misstatements due to error or fraud may occur and not be detected.

Based on this evaluation, our chief executive officer and our chief financial officer concluded that our disclosure controls and procedures were effective, as of the end of the period covered by this report, to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.

Changes in Internal Control Over Financial Reporting

During the quarter ended September 30, ~~2018,~~2019, there were no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II.

OTHER INFORMATION


ITEM 1.	LEGAL PROCEEDINGS.

None.


ITEM 1A.	RISK FACTORS.

Our business is subject to risks and events that, if they occur, could adversely affect our financial condition and results of operations and the trading price of our securities. In addition to the other information set forth in this quarterly report on Form 10-Q, you should carefully consider the factors described in “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2017,~~2018, filed with the Securities and Exchange Commission on February ~~22, 2018, as supplemented by~~28, 2019.

There have been no material changes from the ~~following updated~~ risk ~~factors.~~

~~We have a considerable amount of debt which may limit our ability to fulfill our obligations and/or to obtain additional financing.~~

As of September 30, 2018, we had $2,133.9 million of consolidated gross indebtedness on an actual basis, consisting of $1,773.9 million of indebtedness outstanding under the Credit Facility and $360.0 million of indebtedness outstanding under the Notes.

~~Our capital structure can have several important consequences, including, but not limited to, the following:~~

If future cash flows are insufficient, we may not be able to make principal or interest payments on our debt obligations, which could result in the occurrence of an event of default under one or more of those debt instruments.

~~Our leverage level could increase our vulnerability to adverse economic and industry conditions.~~

Our indebtedness could require us to dedicate a substantial portion of our cash flow from operations to payments on our debt (including scheduled principal repayments on the outstanding borrowings under the Credit Facility), thereby reducing the availability of our cash flow for operations and other purposes.

~~Our leverage level could make it more difficult for us to satisfy our obligations to our lenders, resulting in possible defaults on and acceleration of such indebtedness.~~

Our leverage level could place us at a competitive disadvantage compared to any competitors that have less debt or comparable debt at more favorable interest rates and that, as a result, may be better positioned to withstand economic downturns.

~~We may need to increase our indebtedness in order to make our capital expenditures and other expenses or investments planned by us.~~

~~Our consolidated indebtedness has the general effect of reducing our flexibility to react to changing business and economic conditions insofar as they affect our financial condition~~. The interest rates at which we might secure additional financings may be higher than our currently outstanding debt instruments or higher than forecasted at any point in time, which could adversely affect our business, financial condition, results of operations and cash flows.

Market conditions could affect our access to capital markets, restrict our ability to secure financing to make the capital expenditures and investments and pay other expenses planned by us which could adversely affect our business, financial condition, cash flows and results of operations.

~~Further, despite our substantial levels of indebtedness, we and our subsidiaries may have the ability to incur substantially more indebtedness, which could further intensify the risks described above.~~

~~If we do not generate sufficient cash flows, we may be unable to service all of our indebtedness.~~

To service our indebtedness, we will require a significant amount of cash. Our ability to generate cash, make scheduled payments or to refinance our debt obligations depends on our successful financial and operating performance, which may be affected by a range of economic, competitive and business factors ~~many of which are outside of our control and some of which are~~ described in the ~~“Risk Factors” sections of our Form 10-K and this Quarterly Report.~~annual report.

If our cash flow and capital resources are insufficient to fund our debt service obligations or to repay the Credit Facility when it matures or the Notes when they mature, we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets or operations, reducing or delaying capital investments, or seeking to raise additional capital. We may not be able to refinance our debt, or any refinancing of our debt could be at higher interest rates and may require us to comply with more restrictive covenants that could further restrict our business operations. Our ability to implement successfully any such alternative financing plans will depend on a range of factors, including general economic conditions, the level of activity in mergers and acquisitions and capital markets generally, and the terms of our various debt instruments then in effect.

The indenture governing the Notes and the Credit Facility contain cross-default or cross-acceleration provisions that may cause all of the debt issued under those instruments to become immediately due and payable because of a default under an unrelated debt instrument.

Our failure to comply with the obligations contained in the indenture governing the Notes, the Credit Facility or other instruments governing our indebtedness could result in an event of default under the applicable instrument, which could result in the related debt and the debt issued under other instruments (together with accrued and unpaid interest and other fees) becoming immediately due and payable. In such event, we would need to raise funds from alternative sources, which funds may not be available to us on favorable terms, on a timely basis or at all. Alternatively, such a default could require us to sell our assets and otherwise curtail our operations in order to pay our creditors. These alternative measures could have a material adverse effect on our business, financial position, results of operations and/or cash flows, which could cause us to become bankrupt or insolvent or otherwise impair our ability to make payments in respect of our indebtedness.

~~Certain provisions in the Credit Facility and in the indenture governing the Notes limit our financial and operating flexibility.~~

~~The Credit Facility and the indenture governing the Notes contain numerous financial and operating covenants that place significant restrictions on, among other things, our ability to:~~

~~make capital expenditures;~~

~~carry out mergers and acquisitions;~~

~~dispose of, or grant liens on, our assets;~~

~~enter into transactions with our affiliates;~~

~~pay dividends or make distributions to our stockholders;~~

~~incur indebtedness;~~

~~prepay indebtedness; and~~

~~make loans, guarantees or indemnities.~~

Our Credit Facility also requires us to meet certain financial ratios, such as maintaining a debt-to-equity ratio and debt service coverage ratio, and specifies minimum available cash balances, maximum levels of annual capital expenditures, and maximum leverage levels. Our ability to comply with these and other requirements and restrictions may be affected by changes in economic or business conditions, results of operations or other events beyond our control. A failure to comply with the obligations contained in any of the instruments governing our consolidated indebtedness could impair our ability to make payments owed and result in acceleration of related debt and the acceleration of debt under other instruments evidencing indebtedness that may contain cross‑acceleration or cross‑default provisions.

The Credit Facility also prohibits us from paying dividends to holders of our Series B Preferred Stock for a period of five quarters and at any point beyond that, if we are unable to certify that we anticipate being able to comply with the financial covenants of the Credit Facility for the next twelve months each time we declare a dividend. If we are unable to make that certification, we will not be able to pay the dividends on our outstanding preferred stock. As required by our amended Credit Facility, we announced a five-quarter deferral of dividends on the Series B Preferred Stock beginning with the dividends due June 15, 2018. If we do not pay dividends on our preferred stock for six quarterly periods (whether or not consecutive), the holders of the Series B Preferred Stock will have the power to elect two members of our board of directors. The interests of the holders of our preferred stock may differ from those of our other stockholders. In addition, any dividend we fail to pay will

accrue, and the holders of our Series B Preferred Stock will be entitled to a preferential distribution of the original purchase price per share plus all accrued and unpaid dividends before any distribution may be made to holders of our common stock in connection with any liquidation event. Complying with these restrictions may make it more difficult for us to successfully execute our business plan and compete against companies who are not subject to such restrictions.

~~Adverse changes in our credit ratings or withdrawal of the ratings assigned to our debt securities by rating agencies may negatively affect us.~~

Our ability to access capital markets is important to our ability to operate our business. Increased scrutiny of the satellite industry and the impact of regulation, as well as changes in our financial performance and unfavorable conditions in the capital markets could result in credit agencies reexamining our credit ratings. A downgrade in our credit ratings could restrict or discontinue our ability to access capital markets at attractive rates and increase our borrowing costs. Furthermore, any rating assigned could be lowered or withdrawn entirely by a rating agency if, in that rating agency’s judgment, future circumstances relating to the basis of the rating, such as adverse changes, so warrant. Any future lowering of our ratings likely would make it more difficult or more expensive for us to obtain additional debt financing.

~~We may be unable to offer one or more services in important regions of the world due to regulatory requirements, which could limit our growth.~~

While our constellation is capable of providing service globally, our ability to sell one or more types of service in some regions may be limited by local regulations. Some countries have specific regulatory requirements such as local domestic ownership requirements or requirements for physical gateways within their jurisdiction to connect traffic coming to and from their territory. In some countries, we may not be able to find an acceptable local partner or reach an agreement to develop additional gateways, or the cost of developing and deploying such gateways may be prohibitive, which could impair our ability to expand our product and service offerings in such areas and undermine our value for potential users who require service in these areas. Also, other countries where we already provide service may impose similar requirements in the future, which could restrict our ability to continue to sell service in those countries. The inability to offer to sell our products and services in all major international markets could impair our international growth. In addition, the construction of such gateways in foreign countries may trigger and require us to comply with various U.S. regulatory requirements that could conflict with or contravene the laws or regulations of the local jurisdiction. Any of these developments could limit, delay or otherwise interfere with our ability to construct gateways or other infrastructure or network solutions around the world.

~~Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations.~~

Our ability to utilize U.S. net operating loss carryforwards and other tax attributes may be limited if we experience an “ownership change” under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, which generally occurs if one or more stockholders or groups of stockholders who own at least 5% of our common stock increase their ownership in the aggregate by more than 50% over their lowest ownership percentage within a rolling period that begins on the later of three years prior to the testing date and the date of the last ownership change. Similar rules may apply under state tax laws. If an “ownership change” were to occur, Section 382 of the Code would impose an annual limit on the amount of pre-ownership change net operating loss carryforwards and other tax attributes we could use to reduce our taxable income. It is possible that such an ownership change could materially reduce our ability to use our net operating loss carryforwards or other tax attributes to offset taxable income, which could impact our profitability.

~~Changes in tax laws could increase our worldwide tax rate and materially affect our financial position and results of operations.~~

The Tax Act resulted in significant changes to the Code, including, among other things, significantly reducing the statutory corporate U.S. federal income tax rate, imposing limitations on the ability to deduct interest expense and net operating losses and making changes to the way a U.S. multinational company’s foreign operations are taxed, including a one-time mandatory tax on deferred foreign earnings and the imposition of the “base erosion anti-abuse tax.” The Securities and Exchange Commission issued Staff Accounting Bulletin No. 118, or SAB 118, to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. SAB 118 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, we made reasonable estimates of the anticipated effects of the Tax Act and recorded provisional amounts in our financial statements as of and for the year ended December 31, 2017. As we collect and prepare the necessary data, and interpret the Tax Act and any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, we may make adjustments to the provisional amounts. No material adjustments have been made for the three or nine months ended September 30, 2018. These adjustments, if any, may materially impact our provision for income taxes and effective tax rate in the period in which the adjustments are made. While not complete as of September 30, 2018, the accounting

~~for the tax effects of the Tax Act is expected to be completed in 2018 within the one-year measurement period prescribed in SAB 118.~~

In addition, many U.S. states and foreign countries have adopted or proposed changes to current tax laws. Further, organizations such as the Organization for Economic Cooperation and Development have published action plans that, if adopted by countries where we do business, could increase our tax obligations in these countries. Due to our U.S. and international business activities, certain of these enacted and proposed changes to the taxation of our activities could increase our worldwide effective tax rate, which in turn could harm our financial position and results of operations.


ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.


ITEM 3.	DEFAULTS UPON SENIOR SECURITIES.

None.


ITEM 4.	MINE SAFETY DISCLOSURES.

Not applicable.


ITEM 5.	OTHER INFORMATION.

None.


ITEM 6.	EXHIBITS.

The following list of exhibits includes exhibits submitted with this Form 10-Q as filed with the Securities and Exchange Commission.



Exhibit		Description

~~10.1~~10.1†		~~Amendment No. 8 to the~~ Contract for ~~Launch~~Enhanced Satellite Services ~~No. IS-10-008~~ between Iridium ~~Satellite~~ LLC and Air Force Space ~~Exploration Technologies Corp., dated as of~~Command, effective September ~~6, 2018.~~15, 2019.
31.1		Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as adopted pursuant to section 302 of The Sarbanes-Oxley Act of 2002.
31.2		Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as adopted pursuant to section 302 of The Sarbanes-Oxley Act of 2002.
32.1**		Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Rules 13a-14(b) and 15d-14(b) promulgated under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to section 906 of The Sarbanes-Oxley Act of 2002.
101		The following financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2018,~~2019, filed with the Securities and Exchange Commission on October ~~25, 2018,~~29, 2019, formatted in ~~XBRL (eXtensible~~iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at September 30, ~~2018~~2019 and December 31, ~~2017;~~2018; (ii) Condensed Consolidated Statements of Operations and Comprehensive ~~Income~~Loss for the three and nine months ended September 30, ~~2018~~2019 and ~~2017;~~2018; (iii) Condensed Consolidated Statements of Changes in Stockholders' Equity for the three and nine months ended September 30, 2019 and 2018; (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2018~~2019 and ~~2017;~~2018; and (iv) Notes to Condensed Consolidated Financial Statements.



*†	Certain portions of this exhibit, indicated by asterisks, have been omitted pursuant to Item 601(b)(10) of Regulation S-K because they are not material and would likely cause competitive harm to the registrant if publicly disclosed.

*	These certifications are being furnished solely to accompany this quarterly report pursuant to 18 U.S.C. Section 1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	IRIDIUM COMMUNICATIONS INC.

	By:	/s/ Thomas J. Fitzpatrick
		Thomas J. Fitzpatrick
		Chief Financial Officer (as duly authorized officer and as principal financial officer of the registrant)

Date: October ~~25, 2018~~29, 2019

3934



~~DELAWARE~~DE		26-1344998
(State of incorporation)		(I.R.S. Employer Identification No.)

1750 Tysons Boulevard, Suite 1400
McLean, ~~Virginia~~	VA	22102
(Address of principal executive offices)		(Zip code)



Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.001 par value	IRDM	The Nasdaq Stock Market LLC
		(Nasdaq Global Select Market)



Large ~~accelerated filer~~Accelerated Filer	x		Accelerated ~~filer~~Filer	¨
~~Non-accelerated filer~~Non-Accelerated Filer	¨	~~(Do not check if a smaller reporting company)~~	Smaller ~~reporting company~~Reporting Company	¨
~~Emerging growth company~~	¨				Emerging Growth Company	¨



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	September 30, 2018
	As reported		Adjustment			As adjusted
	(in thousands)
Prepaid expenses and other current assets	$	20,214	$	477		$	20,691

Deferred revenue	21,195		19,654			40,849
Deferred revenue, net of current portion	61,892		(2,782		)	59,110
Other long-term liabilities	4,134		(3,960		)	174

Retained earnings	509,294		(12,436		)	496,858



	Three months ended September 30, 2018							Nine months ended September 30, 2018
	As reported			Adjustment		As adjusted		As reported			Adjustment		As adjusted
	(in thousands)
Service revenue	$	105,741		(5	)	105,736		$	299,449		(1,187	)	298,262

Cost of services	22,226			(30	)	22,196		63,822			(94	)	63,728

Income (loss) before income taxes	(14,513		)	25		(14,488	)	4,223			(1,094	)	3,129
Income tax benefit (expense)	1,657			108		1,765		(10,025		)	396		(9,629	)
Net loss	$	(12,856	)	133		(12,723	)	$	(5,802	)	(698	)	(6,500	)