Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 30, 2020 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2020 | |
Entity File Number | 001-38228 | |
Entity Registrant Name | Maxar Technologies Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 83-2809420 | |
Entity Address, Address Line One | 1300 W. 120th Avenue, | |
Entity Address, City or Town | Westminster | |
Entity Address, State or Province | CO | |
Entity Address, Postal Zip Code | 80234 | |
City Area Code | 303 | |
Local Phone Number | 684-7660 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001121142 | |
Amendment Flag | false | |
Common Stock | ||
Security 12b Title | Common stock par value of $0.0001 per share | |
Trading Symbol | MAXR | |
Security Exchange Name | NYSE | |
Entity Common Stock, Shares Outstanding | 60,456,495 | |
Series A Junior Participating Preferred Stock | ||
Security 12b Title | Preferred Stock Purchase Right | |
No Trading Symbol Flag | true | |
Entity Common Stock, Shares Outstanding | 0 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Statements of Operations - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues: | ||
Revenues | $ 381 | $ 431 |
Costs and expenses: | ||
Selling, general and administrative | 68 | 85 |
Depreciation and amortization | 90 | 95 |
Impairment loss | 14 | |
Operating income (loss) | (29) | (12) |
Interest expense, net | 49 | 49 |
Other (income) expense, net | (3) | 5 |
Loss before taxes | (75) | (66) |
Income tax expense | 2 | 1 |
Equity in loss from joint ventures, net of tax | 1 | 1 |
Net loss from continuing operations | (78) | (68) |
Income from discontinued operations, net of tax | 30 | 11 |
Net loss | $ (48) | $ (57) |
Basic income (loss) per common share: | ||
Basic loss from continuing operations (in dollars per share) | $ (1.30) | $ (1.14) |
Basic income from discontinued operations, net of tax (in dollars per share) | 0.50 | 0.18 |
Basic loss per common share (in dollars per share) | (0.80) | (0.96) |
Diluted income (loss) per common share: | ||
Diluted loss from continued operations (in dollars per share) | (1.30) | (1.14) |
Diluted income from discontinued operations, net of tax (in dollars per share) | 0.50 | 0.18 |
Diluted loss per common share (in dollars per share) | $ (0.80) | $ (0.96) |
Product | ||
Revenues: | ||
Revenues | $ 107 | $ 166 |
Costs and expenses: | ||
Product and service costs, excluding depreciation and amortization | 145 | 171 |
Service | ||
Revenues: | ||
Revenues | 274 | 265 |
Costs and expenses: | ||
Product and service costs, excluding depreciation and amortization | $ 93 | $ 92 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Statements of Comprehensive (Loss) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | ||
Unaudited Condensed Consolidated Statements of Comprehensive (Loss) | |||
Net loss | $ (48) | $ (57) | |
Other comprehensive (loss) income, net of tax: | |||
Foreign currency translation adjustment | [1] | (49) | (4) |
Unrealized loss on derivatives | (15) | (4) | |
Gain on pension and other postretirement benefit plans | 1 | 2 | |
Other comprehensive loss, net of tax | (63) | (6) | |
Comprehensive loss, net of tax | $ (111) | $ (63) | |
[1] | Included within Foreign currency translation adjustments is a net gain on hedge of net investment in foreign operations of $5 million for the three months ended March 31, 2019. |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statements of Comprehensive (Loss) (Parenthetical) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Unaudited Condensed Consolidated Statements of Comprehensive (Loss) | |
Net gain on hedge of net investment in foreign operations | $ 5 |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 12 | $ 59 |
Trade and other receivables, net | 305 | 357 |
Inventory | 25 | 20 |
Advances to suppliers | 34 | 42 |
Prepaid and other current assets | 40 | 32 |
Current assets held for sale | 627 | 751 |
Total current assets | 1,043 | 1,261 |
Non-current assets: | ||
Orbital receivables, net | 363 | 382 |
Property, plant and equipment, net | 782 | 758 |
Intangible assets, net | 943 | 991 |
Non-current operating lease assets | 176 | 176 |
Goodwill | 1,455 | 1,455 |
Other non-current assets | 127 | 134 |
Total assets | 4,889 | 5,157 |
Current liabilities: | ||
Accounts payable | 128 | 153 |
Accrued liabilities | 91 | 130 |
Accrued compensation and benefits | 74 | 93 |
Contract liabilities | 220 | 271 |
Current portion of long-term debt | 29 | 30 |
Current operating lease liabilities | 41 | 40 |
Other current liabilities | 70 | 49 |
Current liabilities held for sale | 175 | 230 |
Total current liabilities | 828 | 996 |
Non-current liabilities: | ||
Pension and other postretirement benefits | 193 | 197 |
Contract liabilities | 3 | 4 |
Operating lease liabilities | 172 | 173 |
Long-term debt | 2,926 | 2,915 |
Other non-current liabilities | 110 | 110 |
Total liabilities | 4,232 | 4,395 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock ($0.0001 par value, 240 million common shares authorized and 60.1 million outstanding at March 31, 2020; $0.0001 par value, 240 million common shares authorized and 59.9 million outstanding at December 31, 2019) | ||
Additional paid-in capital | 1,790 | 1,784 |
Accumulated deficit | (1,130) | (1,082) |
Accumulated other comprehensive (loss) income | (4) | 59 |
Total Maxar stockholders' equity | 656 | 761 |
Noncontrolling interest | 1 | 1 |
Total stockholders' equity | 657 | 762 |
Total liabilities and stockholders' equity | $ 4,889 | $ 5,157 |
Unaudited Condensed Consolida_5
Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Unaudited Condensed Consolidated Balance Sheets | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized shares | 240,000,000 | 240,000,000 |
Common stock, shares outstanding | 60,100,000 | 59,900,000 |
Unaudited Condensed Consolida_6
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows provided by (used in) Operating activities: | ||
Net loss | $ (48) | $ (57) |
Net income from discontinued operations | 30 | 11 |
Net loss from continuing operations | (78) | (68) |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||
Impairment losses including inventory | 14 | 3 |
Depreciation and amortization | 90 | 95 |
Amortization of debt issuance costs and other noncash interest expense | 4 | 2 |
Stock-based compensation expense | 3 | 1 |
Other | (1) | 8 |
Changes in operating assets and liabilities: | ||
Trade and other receivables | 42 | 17 |
Accounts payables and accrued liabilities | (47) | (85) |
Contract liabilities | (52) | (77) |
Other | 12 | 16 |
Cash used in operating activities - continuing operations | (13) | (88) |
Cash (used in) provided by operating activities - discontinued operations | (2) | 30 |
Cash used in operating activities | (15) | (58) |
Investing activities: | ||
Purchase of property, plant and equipment and development or purchase of software | (60) | (70) |
Return of capital from discontinued operations | 11 | |
Cash used in investing activities - continuing operations | (49) | (70) |
Cash used in investing activities - discontinued operations | (3) | (3) |
Cash used in investing activities | (52) | (73) |
Financing activities: | ||
Net proceeds of revolving credit facility | 15 | 139 |
Repayments of long-term debt | (5) | (4) |
Settlement of securitization liability | (4) | (4) |
Payment of dividends | (1) | (1) |
Payment of finance leases | (2) | (2) |
Other | 1 | |
Cash provided by financing activities - continuing operations | 4 | 128 |
Cash (used) provided by in financing activities - discontinued operations | (15) | 11 |
Cash (used in) provided by financing activities | (11) | 139 |
(Decrease) increase in cash, cash equivalents, and restricted cash | (78) | 8 |
Effect of foreign exchange on cash, cash equivalents, and restricted cash | 1 | |
Cash, cash equivalents, and restricted cash, beginning of year | 109 | 43 |
Cash, cash equivalents, and restricted cash, end of year | $ 31 | $ 52 |
Unaudited Condensed Consolida_7
Unaudited Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2020 | Mar. 31, 2019 |
Reconciliation of cash flow information: | ||
Cash and cash equivalents | $ 27 | $ 45 |
Restricted cash included in prepaid and other current assets | 1 | 6 |
Restricted cash included in other non-current assets | 3 | 1 |
Total cash, cash equivalents, and restricted cash | $ 31 | $ 52 |
Unaudited Condensed Consolida_8
Unaudited Condensed Consolidated Statements of Change in Stockholders' Equity - USD ($) shares in Millions, $ in Millions | Common Stock | Additional paid in capital | Retained earnings (Accumulated deficit) | Accumulated other comprehensive income (loss) | Noncontrolling interest | Total |
Balance at the beginning of period at Dec. 31, 2018 | $ 1,713 | $ 59 | $ (1,188) | $ 82 | $ 1 | $ 667 |
Balance at the beginning of period (in shares) at Dec. 31, 2018 | 59.4 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Reclassification of APIC due to U.S. Domestication | $ (1,713) | 1,713 | ||||
Common stock issued under employee stock purchase plan | 1 | 1 | ||||
Common stock issued under employee stock purchase plan (in shares) | 0.1 | |||||
Common stock issued upon vesting or exercise of stock-based compensation awards (shares) | 0.1 | |||||
Equity classified stock-based compensation expense | 1 | 1 | ||||
Dividends ($0.01 per common share) | (1) | (1) | ||||
Comprehensive loss | (57) | (6) | (63) | |||
Balance at the end of period at Mar. 31, 2019 | 1,774 | (1,246) | 76 | 1 | 605 | |
Balance at the end of period (in shares) at Mar. 31, 2019 | 59.6 | |||||
Balance at the beginning of period at Dec. 31, 2019 | 1,784 | (1,082) | 59 | 1 | $ 762 | |
Balance at the beginning of period (in shares) at Dec. 31, 2019 | 59.9 | 59.9 | ||||
Increase (Decrease) in Shareholders' Equity | ||||||
Common stock issued under employee stock purchase plan | 2 | $ 2 | ||||
Common stock issued under employee stock purchase plan (in shares) | 0.2 | |||||
Equity classified stock-based compensation expense | 4 | 4 | ||||
Comprehensive loss | (48) | (63) | (111) | |||
Balance at the end of period at Mar. 31, 2020 | $ 1,790 | $ (1,130) | $ (4) | $ 1 | $ 657 | |
Balance at the end of period (in shares) at Mar. 31, 2020 | 60.1 | 60.1 |
Unaudited Condensed Consolida_9
Unaudited Condensed Consolidated Statements of Change in Stockholders' Equity (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Unaudited Condensed Consolidated Statements of Change in Stockholders' Equity | ||
Dividends per share (in dollars per share) | $ 0.01 | $ 0.01 |
General business description
General business description | 3 Months Ended |
Mar. 31, 2020 | |
General business description | |
General business description | 1. GENERAL BUSINESS DESCRIPTION Maxar Technologies Inc. (the “Company” or “Maxar”) is a leading provider of solutions in Earth Intelligence and Space Infrastructure. Maxar helps government and commercial customers to monitor, understand and navigate the changing planet; deliver global broadband communications; and explore and advance the use of space. The Company’s approach combines decades of deep mission understanding and a proven commercial and defense foundation to deliver services with speed, scale and cost effectiveness. Maxar’s stock trades on the New York Stock Exchange and Toronto Stock Exchange under the symbol “MAXR”. |
Summary of significant accounti
Summary of significant accounting policies | 3 Months Ended |
Mar. 31, 2020 | |
Summary of significant accounting policies | |
Summary of significant accounting policies | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The Unaudited Condensed Consolidated Financial Statements include the accounts of Maxar Technologies Inc., and all of its consolidated subsidiaries. The Company’s Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. GAAP, and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). All intercompany balances and transactions are eliminated in consolidation. The Company’s Unaudited Condensed Consolidated Financial Statements are presented in U.S. dollars and have been prepared on a historical cost basis, except for certain financial assets and liabilities including derivative financial instruments which are stated at fair value. References to “C$” refer to Canadian currency. The Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s annual audited consolidated financial statements and notes thereto included in the Company’s most recent Annual Report on Form 10-K filed with the SEC. Unless otherwise indicated, amounts provided in the Notes to the Unaudited Condensed Consolidated Financial Statements pertain to continuing operations (See Note 3 for information on discontinued operations). Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation. In management’s opinion, all adjustments of a normal recurring nature that are necessary for a fair statement of the accompanying Unaudited Condensed Consolidated Financial Statements have been included. Use of estimates, assumptions and judgments The preparation of the Unaudited Condensed Consolidated Financial Statements in accordance with U.S. GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the reporting date, as well as the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared using the most current and best available information; however, actual results could differ materially from those estimates. Recently Adopted Accounting Pronouncements Financial Instruments In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Financial Instruments – Credit Losses annual and interim financial statement periods beginning after December 15, 2019, with early adoption permitted for financial statement periods beginning after December 15, 2018. The Company adopted this standard and related amendments effective January 1, 2020, using the modified retrospective approach. The adoption of this standard resulted in additional disclosures related to the Company's orbital receivables. Refer to Note 4 for details. There were no impacts to the Unaudited Condensed Consolidated Financial Statements Simplifying the Accounting for Income Taxes In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. ASU 2019-12 also simplifies aspects of accounting for franchise taxes and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for annual and interim financial statement periods beginning after December 15, 2020, with early adoption permitted. The Company early adopted this standard and related amendments effective January 1, 2020, in order to utilize the simplifying provision that removes the exception to the incremental approach for intraperiod tax allocation when a loss is incurred from continuing operations and income or a gain results from another item such as discontinued operations or other comprehensive income. The impact on the Unaudited Condensed Consolidated Financial Statements is to simplify the quarterly presentation related to the ordinary loss and the gain to be recorded in discontinued operations. There were no material impacts to the Unaudited Condensed Consolidated Financial Statements as a result of adoption. Recent Accounting Guidance Not Yet Adopted Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 In January 2020, the FASB issued ASU 2020-01, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (“ASU 2020-01”). ASU 2020-01 clarifies the accounting for certain equity securities upon application or discontinuation of the equity method of accounting and scope considerations for forward contracts and purchased options on certain securities. ASU 2020-01 is effective for annual and interim financial statement periods beginning after December 15, 2020, with early adoption permitted. The Company is currently assessing the effect that this guidance may have on the Company’s financial statements. Reference Rate Reform In March 2020, FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU is intended to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This guidance is effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. The Company expects that it will elect to apply some of the expedients and exceptions in ASU 2020-04. However, the Company is still evaluating the guidance and the impact that adoption of ASU 2020-04 will have on the Company's financial statements. |
Discontinued operations
Discontinued operations | 3 Months Ended |
Mar. 31, 2020 | |
Discontinued operations | |
Discontinued Operations | 3. DISCONTINUED OPERATIONS On December 30, 2019, the Company announced that Maxar Technologies Holdings Inc., a Delaware corporation and wholly-owned subsidiary of Maxar (“Maxar Holdings” and, together with the Company, the “Sellers”), and Neptune Acquisition Inc., a corporation existing under the laws of the Province of British Columbia and an affiliate of Northern Private Capital Ltd. (“MDA Purchaser”) entered into a Stock Purchase Agreement, dated as of December 29, 2019 (“MDA Agreement”), that provides for, among other things, the MDA Purchaser to purchase the MDA Business, the Company’s Canadian subsidiary, from the Sellers for an aggregate purchase price of C$1.0 billion (“MDA Transaction”). On April 8, 2020, the Company completed the sale of MDA. The Company will recognize a gain on the sale of MDA in the second quarter of 2020. Refer to Note 20 for details on the MDA Transaction. The Company intends to use the net cash proceeds from the MDA Transaction, as determined by the Company’s Original Syndicated Credit Facility, the 2023 Notes and the MDA Agreement, to pay down long-term debt. Refer to Note 20 for details on subsequent events. The net cash proceeds include the netting of certain fees and liabilities which include the indemnification of the MDA Purchaser for certain liabilities including a dispute with the Ukrainian customer. As of December 31, 2019, the Company had recorded a $60 million liability for the matters, for which the Company expected to withhold proceeds from the sale, reflected in Accrued liabilities within the Consolidated Balance Sheet. This dispute was settled in favor of the Company on March 31, 2020, which resulted in the Company being awarded costs and attorney fees in the amount of $2 million. The Company recognized a $39 million recovery of the previously recorded liability in relation to this dispute. As part of the dispute being settled there are certain other payments to third parties, including subcontractors, which will now be settled. As of March 31, 2020, $21 million remains accrued for on the Company’s Unaudited Condensed Consolidated Balance Sheet in relation to these payments. Refer to Note 18 for details. The Company does not expect any material current income tax consequences in connection with the MDA Transaction. In addition to the MDA Transaction, upon closing, the Company and the MDA Purchaser entered into a Transition Services Agreement pursuant to which the MDA Purchaser will receive certain services (“Services”). The Services will be provided through April 8, 2021, with an option to extend up to six months to October 2021 for certain services. Income from discontinued operations, net of tax in the Unaudited Condensed Consolidated Statements of Operations consist of the following: Three Months Ended March 31, 2020 2019 Revenues: Product $ 39 $ 53 Service 36 43 Total revenues $ 75 $ 96 Costs and expenses: Product costs, excluding depreciation and amortization $ 34 $ 41 Service costs, excluding depreciation and amortization 21 24 Selling, general and administrative 13 18 Depreciation and amortization 4 3 Impairment loss 12 — Operating (loss) income (9) 10 Interest expense, net 1 — Other (income) expense, net 1 (36) 1 Income before taxes 26 9 Income tax benefit (4) (2) Income from discontinued operations, net of tax $ 30 $ 11 1 Other (income) expense, net includes the $39 million recovery of the previously recorded liability in relation to the Company’s dispute with the Ukrainian Customer. MDA holds an investment in a privately held company in which it does not have significant influence and the fair value of which cannot be reliably measured through external indicators. The investment is evaluated quarterly for impairment. In the second quarter of 2019, the Company noted an observable price change related to its investment and, as a result, recorded an impairment loss of $12 million. In the first quarter of 2020, the privately held company filed for bankruptcy and as a result the remainder of the investment was written off, which resulted in an additional impairment loss of $12 million. There was no impairment during the three months ended March 31, 2019. The carrying amounts of the major classes of assets and liabilities, which are classified as held for sale in the Unaudited Condensed Consolidated Balance Sheets, are as follows: March 31, December 31, 2020 2019 Assets Cash and cash equivalents $ 15 $ 45 Trade and other receivables, net 125 168 Deferred tax assets 108 117 Property, plant and equipment 27 29 Intangible assets 21 27 Goodwill 287 310 Other assets 1 44 55 Current assets held for sale $ 627 $ 751 Liabilities Accounts payable $ 48 $ 88 Accrued liabilities 15 18 Accrued compensation and benefits 19 21 Contract liabilities 26 29 Pension and other postretirement benefit liabilities 20 21 Other liabilities 2 47 53 Current liabilities held for sale $ 175 $ 230 1 2 . |
Trade and other receivables, ne
Trade and other receivables, net | 3 Months Ended |
Mar. 31, 2020 | |
Trade and other receivables, net | |
Trade and other receivables, net | 4. TRADE AND OTHER RECEIVABLES, NET March 31, December 31, 2020 2019 Billed $ 184 $ 211 Unbilled 77 100 Total trade receivables 261 311 Orbital receivables, current portion 42 43 Other 3 4 Allowance for doubtful accounts (1) (1) Trade and other receivables, net $ 305 $ 357 Orbital receivables relate to performance incentives due under certain satellite construction contracts that are paid over the in-orbit life of the satellite. As of March 31, 2020 and December 31, 2019, non-current orbital receivables, net of allowances were $363 million and $382 million, respectively, and are included in Non-current assets on the Unaudited Condensed Consolidated Balance Sheets. Orbital receivables are recognized as an asset on the balance sheet in conjunction with revenue recognition under the cost-to-cost method of accounting during the satellite construction period and are stated at their carrying value less allowances for expected credit losses. The Company utilizes customer credit ratings, expected credit loss and other credit quality indicators to evaluate the collectability of orbital receivables on a quarterly basis. Assessments for impairments of the orbital receivables are completed utilizing a discounted cash flow analysis based on discount rates which reflect the credit risk of customers and are included as an addition to the orbital receivable allowance. Income is recognized on orbital receivable balances based upon contractual rates. As of March 31, 2020, the Company had orbital receivables from 14 customers for which the largest customer’s value represents $48 million, or 12% of the stated balance sheet value. During the three months ended March 31, 2020, the Company recognized an impairment of $14 million, primarily due to an increase in credit risk associated with the Company’s largest orbital customer as of March 31, 2020. There were no orbital impairments during the three months ended March 31, 2019. The changes in allowance for expected credit losses related to non-current orbital receivables for the three months ended March 31, 2020 consist of the following: Orbital Receivables Allowance Allowance as of January 1, 2020 $ (35) Additions (14) Allowance as of March 31, 2020 $ (49) The Company has sold certain orbital receivables that are accounted for as securitized borrowings in the Unaudited Condensed Consolidated Balance Sheets as the Company does not meet the accounting criteria for surrendering control of the receivables. The net proceeds received on the orbital receivables have been recognized as securitization liabilities and are subsequently measured at amortized cost using the effective interest rate method. The securitized orbital receivables and the securitization liabilities are being drawn down as payments are received from the customers and passed on to the purchaser. The Company continues to recognize orbital interest revenue on the orbital receivables that are subject to the securitization transactions and recognizes interest expense to accrete the securitization liability. The total amount of securitization liabilities at March 31, 2020 and December 31, 2019 was $63 million and $65 million, respectively, Current securitization liabilities of $17 million and $17 million, are included in Other current liabilities on the Unaudited Condensed Consolidated Balance Sheets at March 31, 2020 and December 31, 2019, respectively. Non-current securitization liabilities of $46 million and $48 million are included in Other non-current liabilities on the Unaudited Condensed Consolidated Balance Sheets at March 31, 2020 and December 31, 2019, respectively. |
Inventory
Inventory | 3 Months Ended |
Mar. 31, 2020 | |
Inventory | |
Inventory | 5. INVENTORY March 31, December 31, 2020 2019 Raw materials $ 19 $ 13 Work in process 6 7 Inventory $ 25 $ 20 |
Property, plant and equipment,
Property, plant and equipment, net | 3 Months Ended |
Mar. 31, 2020 | |
Property, plant and equipment, net | |
Property, plant and equipment, net | 6. PROPERTY, PLANT AND EQUIPMENT, NET March 31, December 31, 2020 2019 Satellites $ 397 $ 397 Equipment 197 196 Leasehold improvements 80 75 Computer hardware 72 67 Furniture and fixtures 15 15 Construction in process 424 388 Property, plant and equipment, at cost 1,185 1,138 Accumulated depreciation (403) (380) Property, plant and equipment, net $ 782 $ 758 Depreciation expense for property, plant and equipment was $24 million and $28 million for the three months ended March 31, 2020 and March 31, 2019, respectively. |
Intangible assets
Intangible assets | 3 Months Ended |
Mar. 31, 2020 | |
Intangible assets | |
Intangible assets | 7. INTANGIBLE ASSETS March 31, 2020 December 31, 2019 Gross carrying value Accumulated amortization Net carrying value Gross carrying value Accumulated amortization Net carrying value Customer relationships $ 615 $ (113) $ 502 $ 615 $ (102) $ 513 Backlog 330 (241) 89 330 (217) 113 Technologies 320 (161) 159 320 (144) 176 Software 230 (92) 138 213 (83) 130 Image library 80 (51) 29 80 (48) 32 Trade names and other 37 (11) 26 37 (10) 27 Intangible assets $ 1,612 $ (669) $ 943 $ 1,595 $ (604) $ 991 Amortization expense related to intangible assets was $66 million and $67 million for the three months ended March 31, 2020 and March 31, 2019, respectively. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2020 | |
Investments | |
Investments | 8. INVESTMENTS Short-term investments consist of mutual funds and financial instruments purchased with a term to maturity at inception between three months and one year. Short-term investments are measured at fair value through net income. Short-term investments are included within Prepaid and other current assets in the Unaudited Condensed Consolidated Balance Sheets. The Company has investments in joint ventures where it does not have a controlling financial interest but has the ability to exercise significant influence. These investments are accounted for under the equity method and are included within Other non-current assets in the Unaudited Condensed Consolidated Balance Sheets. The Company’s share of the joint venture’s net income or loss is included within Equity in (income) loss from joint ventures, net of tax in the Unaudited Condensed Consolidated Statements of Operations. The Company’s most significant joint venture is Vricon Inc. (“Vricon”), a joint venture with Saab AB, specializing in the production of 3D models using high resolution imagery. The Company has an ownership interest of approximately 50% in Vricon. Both Maxar and Saab AB act as resellers of Vricon’s products. In the year ended December 31, 2019, Vricon recorded revenues from Maxar and Saab AB of $3 million and $15 million, respectively. Of these sales, Maxar had completed all of its sales to the end customer as of December 31, 2019. As of March 31, 2020, Saab AB has $14 million remaining of the 2019 sales which have not been sold to the end customer. Vricon revenues from Maxar and Saab AB for the three months ended March 31, 2020, were insignificant. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2020 | |
Leases | |
Leases | 9. LEASES The Company has both operating and finance leases. The majority of the Company’s leases are operating leases related to buildings. The majority of the Company’s finance leases are related to furniture and equipment. The Company’s leases have remaining lease terms of up to 15 years, some which options one lease reasonably Finance lease cost, variable lease cost, and short-term lease cost are not material. The components of operating lease expense are as follows: Three months ended March 31, Classification 2020 2019 Operating lease expense Selling, general, and administrative expense, Product costs, and Service costs 1 $ 11 $ 6 1 Excluding depreciation and amortization Supplemental lease balance sheet information consists of the following: March 31, December 31, Classification 2020 2019 Assets: Operating Non-current operating lease assets $ 176 $ 176 Finance Property, plant, and equipment, net 5 5 Total lease assets $ 181 $ 181 Liabilities: Current Operating Current operating lease liabilities $ 41 $ 40 Finance Current portion long-term debt 2 2 Non-current Operating Operating lease liabilities 172 173 Finance Long-term debt 1 1 Total lease liabilities $ 216 $ 216 Supplemental lease cash flow information is as follows: Three months ended March 31, 2020 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 10 $ 7 Right-of-use assets obtained in exchange for lease obligations: Operating leases 12 — Other supplemental lease information consists of the following: March 31, December 31, 2020 2019 Weighted average remaining lease term (in years) Operating leases 8 9 Finance leases 3 3 Weighted average discount rate Operating leases 6.4% 6.4% Finance leases 3.5% 3.5% Maturities of lease liabilities are as follows: 2020 1 2021 2022 2023 2024 Thereafter Less: imputed interest Total minimum lease payments Operating leases $ 32 $ 42 $ 32 $ 29 $ 26 $ 118 $ (66) $ 213 Finance leases 2 1 1 — — — (1) 3 1 Exc udes the three months ended March 31, 2020. |
Long-term debt and interest exp
Long-term debt and interest expense, net | 3 Months Ended |
Mar. 31, 2020 | |
Long-term debt and interest expense, net | |
Long-term debt and interest expense, net | 10. LONG-TERM DEBT AND INTEREST EXPENSE , NET March 31, December 31, 2020 2019 Syndicated Credit facility: Revolving credit facility $ 15 $ — Term Loan B 1,955 1,960 2023 Notes 1,000 1,000 Deferred financing 32 33 Debt discount and issuance costs (52) (54) Obligations under finance leases and other 5 6 Total long-term debt 2,955 2,945 Current portion of long-term debt (29) (30) Non-current portion of long-term debt $ 2,926 $ 2,915 The Company’s senior secured syndicated credit facility (the “Syndicated Credit Facility”) is composed of: (i) a senior secured first lien revolving credit facility in an aggregate capacity of up to $500 million maturing in December 2023 (the “Revolving Credit Facility”) and (ii) a senior secured first lien term B facility in an original aggregate principal amount of $2.0 billion maturing in October 2024 (the “Term Loan B”). The Revolving Credit Facility includes an aggregate $200 million sub limit under which letters of credit can be issued. As of March 31, 2020 and December 31, 2019, the Company had $18 million of issued and undrawn letters of credit outstanding under the Revolving Credit Facility. Interest expense, net on long-term debt and other obligations are as follows: Three Months Ended March 31, 2020 2019 Interest on long-term debt $ 54 $ 45 Interest expense on advance payments from customers 2 5 Interest on orbital securitization liability 1 2 Capitalized interest (8) (3) Interest expense, net $ 49 $ 49 |
Financial instruments and fair
Financial instruments and fair value disclosures | 3 Months Ended |
Mar. 31, 2020 | |
Financial instruments and fair value disclosures | |
Financial instruments and fair value disclosures | 11. FINANCIAL INSTRUMENTS AND FAIR VALUE DISCLOSURES Factors used in determining the fair value of financial assets and liabilities are summarized into three categories in accordance with ASC 820 - Fair Value Measurements: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) Level 3: Inputs for the asset or liability that are based on unobservable inputs The following tables present assets and liabilities that are measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. Recurring Fair Value Measurements of as of March 31, 2020 Level 1 Level 2 Level 3 Total Assets Orbital receivables 1 $ — $ 405 $ — $ 405 Liabilities Interest rate swaps $ — $ 32 $ — $ 32 Long-term debt 2 — 2,234 — 2,234 $ — $ 2,266 $ — $ 2,266 Recurring Fair Value Measurements of as of December 31, 2019 Level 1 Level 2 Level 3 Total Assets Short-term investments $ 1 $ — $ — $ 1 Orbital receivables 1 — 425 — 425 $ 1 $ 425 $ — $ 426 Liabilities Interest rate swaps $ — $ 18 $ — $ 18 Long-term debt 2 — 3,004 — 3,004 $ — $ 3,022 $ — $ 3,022 1 The carrying value of Orbital receivables, net was $405 million and $425 million at March 31, 2020 and December 31, 2019, respectively. 2 Long-term debt excludes finance leases, deferred financing and other and is carried at amortized cost. The outstanding carrying value was $2,918 million and $2,906 million at March 31, 2020 and December 31, 2019, respectively. The Company determines the fair value of its orbital receivables using a discounted cash flow model, based on stated interest rates and observable market yield curves associated with the instruments. The Company determines fair value of its derivative financial instruments based on internal valuation models, such as discounted cash flow analysis, using management estimates and observable market-based inputs, as applicable. Management estimates include assumptions concerning the amount and timing of estimated future cash flows and application of appropriate discount rates. Observable market-based inputs are sourced from third parties and include interest rates and yield curves, currency spot and forward rates, and credit spreads, as applicable. The Company determines fair value of its long-term debt using market interest rates for debt with terms and maturities similar to the Company's existing debt arrangements. Cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities are all short-term in nature; therefore, the carrying value of these items approximates their fair value. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Stockholders' equity | |
Stockholders' Equity | 12. STOCKHOLDERS’ EQUITY As a result of the Company’s U.S. Domestication on January 1, 2019, a reclassification between Common Stock and Additional paid-in capital was necessary to reflect the Company’s new par value of $0.0001. The reclassification between Common Stock Tax Benefit Preservation Plan On May 12, 2019, the Company implemented a Tax Benefit Preservation Plan (“Tax Plan”), with the intent to preserve the value of certain deferred tax benefits (the “Tax Benefits”). The Tax Plan is intended to act as a deterrent to any person or entity acquiring shares of the Company equal to or exceeding 4.9%. For each common stock outstanding as of May 28, 2019, a dividend of one preferred stock purchase right is granted. The Tax Plan gives current shareholders the right to purchase one one-hundredth investor base have the unintended effect of limiting the use of the Company’s Tax Benefits. There is no impact to the financial statements as a result of the Tax Plan. The Tax Plan will expire on October 5, 2020. As of March 31, 2020 and December 31, 2019, the Company had 2,400,000 shares authorized and no shares outstanding of the Series A Preferred stock. Changes in the components of Accumulated other comprehensive income (loss) are as follows: Foreign Currency Translation Adjustments Unrecognized (Loss) Gain on Interest Rate Swaps Loss on Pension and Other Postretirement Plans Total Accumulated Other Comprehensive Income (Loss) Balance as of December 31, 2019 $ 126 $ (12) $ (55) $ 59 Other comprehensive (loss) income 1 (49) (15) 1 (63) Balance as of March 31, 2020 $ 77 $ (27) $ (54) $ (4) 1 There is insignificant tax expense related to Foreign currency translation and for Pensions and other postretirement plans for the three months ended March 31, 2020. |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2020 | |
Revenue | |
Revenue | 13. REVENUE On March 31, 2020, the Company had $1.7 billion of remaining performance obligations, which represents the transaction price of firm orders less inception to date revenues recognized. Remaining performance obligations generally exclude unexercised contract options and indefinite delivery/indefinite quantity contracts. The Company expects to recognize revenues relating to existing performance obligations of approximately $1.1 billion billion Contract liabilities by segment are as follows: As of March 31, 2020 Earth Intelligence 1 Space Infrastructure Total Contract liabilities $ 101 $ 122 $ 223 As of December 31, 2019 Earth Intelligence 1 Space Infrastructure Total Contract liabilities $ 130 $ 145 $ 275 1 The contract liability balance associated with the Company’s EnhancedView Contract was $49 million and $78 million as of March 31, 2020 and December 31, 2019, respectively. During the three months ended March 31, 2020, imputed interest on advanced payments increased the contract liability balance by $1 million, and $30 million in revenue was recognized, decreasing the contract liability balance. The contract liability balance associated with the Company’s EnhancedView Contract is expected to be recognized as revenue through August 31, 2020. The decrease in total contract liabilities was primarily due to revenues recognized based upon satisfaction of performance obligations. The Company’s primary sources of revenues are as follows: Three Months Ended March 31, 2020 Earth Intelligence Space Infrastructure Eliminations Total Product revenues $ — $ 107 $ — $ 107 Service revenues 271 3 — 274 Intersegment — 22 (22) — $ 271 $ 132 $ (22) $ 381 Three Months Ended March 31, 2019 Earth Intelligence Space Infrastructure Eliminations Total Product revenues $ — $ 166 $ — $ 166 Service revenues 254 11 — 265 Intersegment — 33 (33) — $ 254 $ 210 $ (33) $ 431 Certain of the Company’s contracts with customers in the Space Infrastructure segment include a significant financing component since payments are received from the customer more than one year after delivery of the promised goods or services. The Company recognized orbital interest revenue of $7 million for both the three months ended March 31, 2020 and 2019, respectively related to these contracts, which is included in product revenues. Revenue in the Space Infrastructure segment is primarily generated from long-term construction contracts. Due to the long-term nature of these contracts, the Company generally recognizes revenue over time using the cost-to-cost method of accounting to measure progress. Under the cost-to-cost method of accounting, revenue is recognized based on the proportion of total costs incurred to estimated total costs-at-completion ("EAC"). An EAC includes all direct costs and indirect costs directly attributable to a program or allocable based on program cost pooling arrangements. Estimates regarding the Company’s cost associated with the design, manufacture and delivery of products and services are used in determining the EAC. Changes to an EAC are recorded as a cumulative adjustment to revenue. For the three months ended March 31, 2020, the Company incurred COVID-19 related EAC growth of $18 million within the Space Infrastructure segment. The changes in the EACs are due to increases in estimated program costs associated with the COVID-19 operating posture and the estimated impact of certain items such as supplier delays and increased labor hours. These costs are considered incremental and separable from normal operations. The COVID-19 EAC growth assumes, among other things, that the current shelter in place order in California is substantially relaxed effective July 2020. During the three months ended March 31, 2020, the Company recorded an additional $19 million estimated loss on a commercial satellite program which includes significant development efforts further delayed by COVID-19. The COVID-19 impact on this program was $12 million which is included in our total COVID-19 impact discussed above. The revenues based on geographic location of customers are as follows: Three Months Ended March 31, 2020 2019 United States $ 302 $ 311 Asia 27 54 South America 9 39 Europe 18 7 Middle East 13 9 Other 12 11 Total revenues $ 381 $ 431 Revenues from significant customers are as follows: Three Months Ended March 31, 2020 Earth Intelligence Space Infrastructure Eliminations Total U.S. federal government and agencies $ 199 $ 65 $ — $ 264 Commercial and other 72 67 (22) 117 Total revenues $ 271 $ 132 $ (22) $ 381 Three Months Ended March 31, 2019 Earth Intelligence Space Infrastructure Eliminations Total U.S. federal government and agencies $ 190 $ 23 $ — $ 213 Commercial and other 64 187 (33) 218 Total revenues $ 254 $ 210 $ (33) $ 431 |
Segment information
Segment information | 3 Months Ended |
Mar. 31, 2020 | |
Segment information | |
Segment information | 14. SEGMENT INFORMATION The Company’s business is organized into three reportable segments based on the nature of the products and services offered: Earth Intelligence, Space Infrastructure and MDA. With the Company’s announcement of the MDA Transaction on December 30, 2019 and subsequent closing of the MDA Transaction on April 8, 2020 the MDA segment has been classified within income from discontinued operations, net of tax in the Unaudited Condensed Consolidated Statements of Operations. All prior-period amounts have been adjusted to reflect the reportable segment change. The Earth Intelligence reportable segment is a supplier of high-resolution space-based optical and radar imagery products and analytics. The Space Infrastructure reportable segment is a provider of Space Infrastructure that designs, builds, integrates and tests solutions for space-based communication satellites, on-orbit servicing, robotic assembly and space exploration. The Company’s CODM measures the performance of each segment based on revenue and Adjusted EBITDA. Adjusted EBITDA is defined as earnings before interest, tax, depreciation and amortization (“EBITDA”) adjusted for certain items affecting comparability as specified in the calculation. Certain items affecting comparability include restructuring, impairments, satellite insurance recovery, gain on sale of assets, CEO severance and transaction and integration related expense. Transaction and integration related expense includes costs associated with de-leveraging activities, acquisitions and dispositions and the integration of acquisitions. Other unallocated expenses include retention costs and foreign exchange gains and losses which are not included in segment Adjusted EBITDA. The reconciling item “corporate and other expenses” includes items such as corporate office costs, regulatory costs, executive and director compensation, foreign exchange gains and losses, and fees for audit, legal and consulting services. Intersegment sales are generally recorded at cost-plus a specified margin, which may differ from what the segment may be able to obtain on sales to external customers. The following table summarizes the operating performance of the Company’s segments: Three months ended March 31, 2020 2019 Revenues: Earth Intelligence $ 271 $ 254 Space Infrastructure 132 210 Intersegment eliminations (22) (33) Total revenues $ 381 $ 431 Adjusted EBITDA: Earth Intelligence $ 133 $ 125 Space Infrastructure (39) (2) Intersegment eliminations (7) (4) Corporate and other expenses (10) (20) Restructuring — (11) Transaction and integration related expense (1) (5) Impairment loss, including inventory (14) (3) CEO severance — (3) Depreciation and amortization (90) (95) Interest expense, net (49) (49) Interest income 1 1 — Equity in loss from joint ventures, net of tax 1 1 Loss from continuing operations before taxes $ (75) $ (66) 1 The Company’s capital expenditures are as follows: Three Months Ended March 31, 2020 Earth Intelligence Space Infrastructure Corporate and eliminations Total Capital expenditures: Property, plant and equipment $ 34 $ 3 $ 7 $ 44 Intangible assets 16 — — 16 $ 50 $ 3 $ 7 $ 60 Three Months Ended March 31, 2019 Earth Intelligence Space Infrastructure Corporate and eliminations Total Capital expenditures: Property, plant and equipment $ 50 $ 5 $ 1 $ 56 Intangible assets 13 — 1 14 $ 63 $ 5 $ 2 $ 70 Substantially all of the Company’s long-lived tangible assets were in the United States as of March 31, 2020 and December 31, 2019. |
Employee benefit plans
Employee benefit plans | 3 Months Ended |
Mar. 31, 2020 | |
Employee benefit plans | |
Employee benefit plans | 15. EMPLOYEE BENEFIT PLANS The following table summarizes the components of net periodic benefit cost for the Company’s pension plans: Three Months Ended March 31, Pension 2020 2019 Interest cost 4 5 Expected return on plan assets (6) (6) Expenses paid 1 1 Net periodic benefit cost $ (1) $ — Contributions The funding policy for the Company’s pension plans is to contribute at least the minimum required by applicable laws and regulations or to directly make benefit payments where appropriate. The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020 in the United States. Under the CARES Act, all single-employer funding obligations due during calendar year 2020 can be delayed until January 1, 2021, with accrued interest added to the delayed payments. The Company contributed $3 million to its pension plan in the first quarter and has the ability to defer the remaining $15 million in payments until January 1, 2021. |
Income taxes
Income taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income taxes | |
Income taxes | 16. INCOME TAXES For the three months ended March 31, 2020 and March 31, 2019, the effective tax rate on pre-tax continuing operations was (2.7)% expense and (1.5)% expense, respectively. The effective tax rates for the three months ended March 31, 2020 and March 31, 2019 differ from the statutory U.S. Federal income tax rate of 21.0% primarily due to the estimated Base Erosion and Anti-Abuse Tax (“BEAT”), state income taxes, estimated permanent differences and changes in valuation allowance. The Company does not anticipate a significant change to the Company’s gross unrecognized tax benefits within the next 12 months. The Company assesses the deferred tax assets for recoverability on a quarterly basis. Based upon all available positive and negative evidence, the Company has established a valuation allowance to reduce the net deferred tax asset to the amount that is more-likely-than-not realizable. The Company computes an estimated annual effective tax rate (“AETR”) each quarter based on the current and forecasted continuing operating results. The income tax expense or benefit associated with the interim period is computed using the most recent estimated AETR applied to the year-to-date ordinary income or loss, plus the tax effect of any significant or infrequently occurring items recorded during the interim period. The computation of the estimated AETR at each interim period requires certain estimates and significant judgements including, but not limited to, the expected operating income (loss) for the year, projections of the proportion of income earned and taxed in various jurisdictions, permanent differences and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is obtained, and additional information becomes known or as the tax environment changes. |
Earnings per share
Earnings per share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings per share | |
Earnings per share | 17. EARNINGS PER SHARE The following table includes the calculation of basic and diluted net income (loss) per common share: Three Months Ended March 31, 2020 2019 Loss from continuing operations $ (78) $ (68) Income from discontinued operations, net of tax 30 11 Net loss $ (48) $ (57) Weighted average number of common shares outstanding-basic 60.1 59.5 Weighted dilutive effect of equity awards — — Weighted average number of common shares outstanding-diluted 60.1 59.5 Basic net income (loss) per common share: Loss from continuing operations (1.30) (1.14) Income from discontinued operations, net of tax 0.50 0.18 Basic net loss per common share $ (0.80) $ (0.96) Diluted net income (loss) per common share: Loss from continuing operations (1.30) (1.14) Income from discontinued operations, net of tax 0.50 0.18 Diluted net loss per common share $ (0.80) $ (0.96) For the three months ended March 31, 2020 and 2019, approximately 4 million and 3 million awards, respectively, were excluded from the diluted weighted average number of ordinary common shares outstanding calculation because their effect would have been anti-dilutive. |
Commitments and contingencies
Commitments and contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and contingencies | |
Commitments and contingencies | 18. COMMITMENTS AND CONTINGENCIES Contingencies in the Normal Course of Business As discussed in Note 4, satellite construction contracts may include performance incentives whereby payment for a portion of the purchase price of the satellite is contingent upon in-orbit performance of the satellite. The Company’s ultimate receipt of orbital performance incentives is subject to the continued performance of its satellites generally over the contractually stipulated life of the satellites. A complete or partial loss of a satellite’s functionality can result in loss of orbital receivable payments or repayment of amounts received by the Company under a warranty payback arrangement. The Company generally receives the present value of the orbital receivables if there is a launch failure or a failure caused by a customer error but will forfeit some or all of the orbital receivables if the loss is caused by satellite failure or as a result of Company error. The Company recognizes orbital performance incentives in the financial statements based on the amounts that are expected to be received and believes that it will not incur a material loss relating to the incentives recognized. With respect to the Company’s securitized liability for the orbital receivables, upon the occurrence of an event of default under the securitization facility agreement or upon the occurrence of limited events, the Company may be required to repurchase on demand any affected receivables at their then net present value. The Company may incur liquidated damages on programs as a result of delays due to slippage, or for programs which fail to meet all milestone requirements as outlined within the contractual arrangements with customers. Losses on programs related to liquidated damages result in a reduction of revenue. Changes in estimates related to contracts accounted for using the cost-to-cost method of accounting are recognized in the period in which such changes are made for the inception-to-date effect of the changes. Unrecoverable costs on contracts that are expected to be incurred in future periods are recorded in program cost in the current period. The Company enters into agreements in the ordinary course of business with resellers and others. Most of these agreements require the Company to indemnify the other party against third-party claims alleging that one of its products infringes or misappropriates a patent, copyright, trademark, trade secret or other intellectual property right. Certain of these agreements require the Company to indemnify the other party against claims relating to property damage, personal injury or acts or omissions by the Company, its employees, agents or representatives. From time to time, the Company has made guarantees regarding the performance of its systems to its customers. Some of these agreements do not limit the maximum potential future payments the Company could be obligated to make. The Company evaluates and estimates potential losses from such indemnification based on the likelihood that the future event will occur. The Company has not incurred any material costs as a result of such obligations and has not accrued any liabilities related to such indemnification and guarantees in the Unaudited Condensed Consolidated Financial Statements. The Company has entered into industrial cooperation agreements, sometimes referred to as offset agreements, as a condition to entering into contracts for its products and services from certain customers in foreign countries. These agreements are designed to return economic value to the foreign country and may be satisfied through activities that do not require a direct cash payment, including transferring technology, providing manufacturing, training and other consulting support to in-country projects. These agreements may provide for penalties in the event the Company fails to perform in accordance with offset requirements. The Company has historically not been required to pay any such penalties. Risks and uncertainties related to COVID-19 The near and long-term impacts of the current pandemic on the cost and schedule of the numerous programs in our existing backlog and the timing of new awards remains uncertain. The Company is observing stress in its supplier base inside and outside the U.S. and will continue to monitor and assess the actual and potential COVID-19 impacts on employees, customers, suppliers and the productivity of the work being done, all of which to some extent will affect revenues, estimated costs to complete projects, earnings and cash flow. The Company’s current estimate at completion on the Company’s satellite manufacturing contracts assumes, among other things, that current shelter in place orders are substantially removed effective July 2020 COVID-19 represents a force majeure event and as such, we have notified certain customers that we will be exercising our contractual legal rights given the uncertain nature of the current pandemic and its near and long-term impacts on the cost and schedule of the numerous programs in our existing backlog. On March 27, 2020 the U.S. enacted the CARES Act. Under the CARES Act, the Company has the ability to defer the remaining 2020 payments of $15 million related to the single-employer funding obligation until January 1, 2021. Under the CARES Act, the Company has also elected to defer the employer portion of social security payments for the remainder of 2020 which is estimated at $18 million. These payments will be due in 2021 and 2022. Legal proceedings In 2010, the Company entered into an agreement with a Ukrainian customer to provide a communication satellite system. In 2014, following the annexation of Crimea by the Russian Federation, the Company declared force majeure with respect to the program. The Ukrainian customer accepted that an event of force majeure had occurred. Following various unsuccessful efforts to arrive at a new contractual framework to take account of the changed circumstances (including the force majeure and various financial issues), the contract with the Ukrainian customer was terminated by Maxar. Maxar completed work on the spacecraft, which is in storage. In July 2018, the Ukrainian customer issued a statement of claim in the arbitration it had commenced against Maxar, challenging the Company’s right to terminate for force majeure, purporting to terminate the contract for default by Maxar, and seeking recovery from Maxar in the amount of approximately $227 million. A hearing on the merits was conducted in December 2019 before an arbitral tribunal under the United Nations (UNICTRAL) Arbitration Rules. On March 31, 2020, the arbitral tribunal issued a final decision in favor of the Company, dismissing the customer’s claims in their entirety. In addition, the tribunal awarded the Company its costs and attorney’s fees. See Note 3 for further details. On January 14, 2019, a Maxar stockholder filed a putative class action lawsuit captioned Oregon Laborers Employers Pension Trust Fund, et al. v. Maxar Technologies Inc., No. 1:19-cv-00124-WJM-SKC in the District Court of Colorado (the “Colorado Action”), naming Maxar and members of management as defendants alleging, among other things, that the Company’s public disclosures were deficient in violation of the federal securities laws and seeking monetary damages. On August 7, 2019, the Court appointed a lead plaintiff and lead counsel. On October 7, 2019, the lead plaintiff filed a consolidated amended complaint alleging violations of Sections 10(b) and 20(a) of the Securities and Exchange Act of 1934 against the Company and members of management in connection with the Company’s public disclosures between March 26, 2018 and January 6, 2019. The consolidated complaint alleges that the Company’s statements regarding the AMOS-8 contract, accounting for its GEO communications assets, and WorldView-4 were allegedly false and/or misleading during the class period. On December 6, 2019, defendants moved to dismiss the Colorado Action, which motion is currently pending. Also, in January 2019, a Maxar stockholder resident in Canada issued a putative class action lawsuit captioned Charles O’Brien v. Maxar Technologies Inc., No. CV-19-00613564-00CP in the Ontario Superior Court of Justice against Maxar and members of management claiming misrepresentations in Maxar’s public disclosures and seeking monetary damages. On November 15, 2019, Mr. O’Brien and another Maxar stockholder resident in Canada issued a new putative class action lawsuit captioned Charles O’Brien v. Maxar Technologies Inc., No. CV-19-00631107-00CP, naming Maxar and certain members of management and the board of directors as defendants as well as Maxar’s auditor, KPMG LLP. On February 7, 2020, the January 2019 claim was discontinued. The Statement of Claim alleges that the Company’s statements regarding the AMOS-8 contract, accounting for its GEO communications assets, and WorldView-4 were false and/or misleading during the class period, and claims damages of $700 million. On April 24, 2020, the plaintiffs served their motion record for leave under the Securities Act (Ontario) and to certify the action as a class proceeding, which motion is currently pending. The Company believes that these cases are without merit and intends to vigorously defend against them. On October 21, 2019, a Maxar stockholder filed a putative class action lawsuit captioned McCurdy v. Maxar Technologies Inc., et al. No. T19-074 in the Superior Court of the State of California, County of Santa Clara, naming Maxar, and certain members of management and the board of directors as defendants. The lawsuit alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 in connection with the Company’s June 2, 2017 Registration Statement and prospectus filed in anticipation of its October 5, 2017 merger with DigitalGlobe. On April 30, 2020, the plaintiff filed an amended complaint alleging the same causes of action against the same set of defendants as set forth in his original complaint. The lawsuit is based upon many of the same underlying factual allegations as the Colorado Action. Specifically, the lawsuit alleges the Company’s statements regarding its accounting methods and risk factors, including those related to the GEO communications business, were false and/or misleading when made. The Company believes that this lawsuit is without merit and intends to vigorously defend against it. On November 14, 2019, a complaint was filed in a derivative action against Maxar and certain current and former members of management and the board of directors in federal court in the District of Delaware, captioned as Dorling, Derivatively on Behalf of Nominal Defendant Maxar Technologies Inc. v. Lance et al., No. 19-cv-02134-UNA. The complaint concerns the same factual allegations as asserted in the Colorado Action. On February 7, 2020, the court granted the parties’ stipulated motion to stay this case. The Company is a party to various other legal proceedings and claims that arise in the ordinary course of business as either a plaintiff or defendant. As a matter of course, the Company is prepared both to litigate these matters to judgment, as well as to evaluate and consider all reasonable settlement opportunities. The Company has established accrued liabilities for these matters where losses are deemed probable and reasonably estimable. The outcome of any of these other proceedings, either individually or in the aggregate, is not expected to have a material adverse effect on the Company’s financial position, results of operations or liquidity. |
Supplemental cash flow
Supplemental cash flow | 3 Months Ended |
Mar. 31, 2020 | |
Supplemental cash flow | |
Supplemental cash flow | 19. SUPPLEMENTAL CASH FLOW Selected cash payments and non-cash activities are as follows: Three Months Ended March 31, 2020 2019 Supplemental cash flow information: Cash paid for interest $ 51 $ 79 Supplemental non-cash investing and financing activities: Accrued capital expenditures 19 13 |
Subsequent events
Subsequent events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent events | |
Subsequent events | 20. SUBSEQUENT EVENTS Completion of the sale of MDA On April 8, 2020, the Company completed the previously announced sale by the Sellers, of the MDA Business pursuant to the MDA Agreement dated as of December 29, 2019 between the Sellers and MDA Purchaser, for an aggregate purchase price of approximately $729 million (C$1.0 billion) subject to customary purchase price adjustments set forth therein, including for working capital, cash and debt and as otherwise set forth in the MDA Agreement. On February 11, 2020, in connection with the MDA Agreement, the Company entered into deal-contingent foreign currency hedge arrangements, with no cash cost, to hedge 50% of the Canadian dollar denominated sales price at a spot rate of C $1.339181 to $1.00. As a result of the completion of the MDA sale on April 8, 2020, the deal-contingent foreign currency hedge arrangements became effective. Of the total purchase price received by the Company for the sale of the MDA Business, $373 million related to the deal-contingent foreign currency hedge arrangements. Pursuant to that certain Restated Credit Agreement, dated as of October 5, 2017 (as amended, supplemented or otherwise modified, the “Credit Agreement”), governing the Company’s Syndicated Credit Facility, and the indenture governing the 2023 Notes, net cash proceeds received by the Company, including those from the sale of the MDA Business, as defined in the Credit Agreement and the indenture governing the 2023 Notes, are to be used to repay outstanding debt. Pursuant to such definitions, the net cash proceeds of the sale of the MDA Business are $680 million. Under the terms of the indenture governing the 2023 Notes, the Company has up to 365 days to apply the proceeds in accordance with the “Asset Sales” covenant set forth therein, including but not limited, to repurchase, prepay or consummate an asset sale with respect to the 2023 Notes in each case, in the amounts required by the terms of the indenture governing the 2023 Notes. On April 16, 2020, the Company repaid $472 million of the Term Loan B and expects to use up to $208 million of the remaining net proceeds to make an offer to purchase or repay outstanding 2023 Notes. |
Summary of significant accoun_2
Summary of significant accounting policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Summary of significant accounting policies | |
Basis of preparation | Basis of presentation The Unaudited Condensed Consolidated Financial Statements include the accounts of Maxar Technologies Inc., and all of its consolidated subsidiaries. The Company’s Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. GAAP, and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). All intercompany balances and transactions are eliminated in consolidation. The Company’s Unaudited Condensed Consolidated Financial Statements are presented in U.S. dollars and have been prepared on a historical cost basis, except for certain financial assets and liabilities including derivative financial instruments which are stated at fair value. References to “C$” refer to Canadian currency. The Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s annual audited consolidated financial statements and notes thereto included in the Company’s most recent Annual Report on Form 10-K filed with the SEC. Unless otherwise indicated, amounts provided in the Notes to the Unaudited Condensed Consolidated Financial Statements pertain to continuing operations (See Note 3 for information on discontinued operations). Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation. In management’s opinion, all adjustments of a normal recurring nature that are necessary for a fair statement of the accompanying Unaudited Condensed Consolidated Financial Statements have been included. |
Use of estimates, assumptions and judgments | Use of estimates, assumptions and judgments The preparation of the Unaudited Condensed Consolidated Financial Statements in accordance with U.S. GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the reporting date, as well as the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared using the most current and best available information; however, actual results could differ materially from those estimates. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements Financial Instruments In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Financial Instruments – Credit Losses annual and interim financial statement periods beginning after December 15, 2019, with early adoption permitted for financial statement periods beginning after December 15, 2018. The Company adopted this standard and related amendments effective January 1, 2020, using the modified retrospective approach. The adoption of this standard resulted in additional disclosures related to the Company's orbital receivables. Refer to Note 4 for details. There were no impacts to the Unaudited Condensed Consolidated Financial Statements Simplifying the Accounting for Income Taxes In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. ASU 2019-12 also simplifies aspects of accounting for franchise taxes and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for annual and interim financial statement periods beginning after December 15, 2020, with early adoption permitted. The Company early adopted this standard and related amendments effective January 1, 2020, in order to utilize the simplifying provision that removes the exception to the incremental approach for intraperiod tax allocation when a loss is incurred from continuing operations and income or a gain results from another item such as discontinued operations or other comprehensive income. The impact on the Unaudited Condensed Consolidated Financial Statements is to simplify the quarterly presentation related to the ordinary loss and the gain to be recorded in discontinued operations. There were no material impacts to the Unaudited Condensed Consolidated Financial Statements as a result of adoption. |
Recent Accounting Guidance Not Yet Adopted | Recent Accounting Guidance Not Yet Adopted Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 In January 2020, the FASB issued ASU 2020-01, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (“ASU 2020-01”). ASU 2020-01 clarifies the accounting for certain equity securities upon application or discontinuation of the equity method of accounting and scope considerations for forward contracts and purchased options on certain securities. ASU 2020-01 is effective for annual and interim financial statement periods beginning after December 15, 2020, with early adoption permitted. The Company is currently assessing the effect that this guidance may have on the Company’s financial statements. Reference Rate Reform In March 2020, FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU is intended to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This guidance is effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. The Company expects that it will elect to apply some of the expedients and exceptions in ASU 2020-04. However, the Company is still evaluating the guidance and the impact that adoption of ASU 2020-04 will have on the Company's financial statements. |
Discontinued operations (Tables
Discontinued operations (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Discontinued operations | |
Schedule of results of discontinued operations and financial information of the discontinued operation that are included in the Unaudited Condensed Consolidated Statements of Operations and Unaudited Consolidated Balance Sheets | Income from discontinued operations, net of tax in the Unaudited Condensed Consolidated Statements of Operations consist of the following: Three Months Ended March 31, 2020 2019 Revenues: Product $ 39 $ 53 Service 36 43 Total revenues $ 75 $ 96 Costs and expenses: Product costs, excluding depreciation and amortization $ 34 $ 41 Service costs, excluding depreciation and amortization 21 24 Selling, general and administrative 13 18 Depreciation and amortization 4 3 Impairment loss 12 — Operating (loss) income (9) 10 Interest expense, net 1 — Other (income) expense, net 1 (36) 1 Income before taxes 26 9 Income tax benefit (4) (2) Income from discontinued operations, net of tax $ 30 $ 11 1 Other (income) expense, net includes the $39 million recovery of the previously recorded liability in relation to the Company’s dispute with the Ukrainian Customer. The carrying amounts of the major classes of assets and liabilities, which are classified as held for sale in the Unaudited Condensed Consolidated Balance Sheets, are as follows: March 31, December 31, 2020 2019 Assets Cash and cash equivalents $ 15 $ 45 Trade and other receivables, net 125 168 Deferred tax assets 108 117 Property, plant and equipment 27 29 Intangible assets 21 27 Goodwill 287 310 Other assets 1 44 55 Current assets held for sale $ 627 $ 751 Liabilities Accounts payable $ 48 $ 88 Accrued liabilities 15 18 Accrued compensation and benefits 19 21 Contract liabilities 26 29 Pension and other postretirement benefit liabilities 20 21 Other liabilities 2 47 53 Current liabilities held for sale $ 175 $ 230 1 2 . |
Trade and other receivables, _2
Trade and other receivables, net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Trade and other receivables, net | |
Schedule of trade and other receivables, net | March 31, December 31, 2020 2019 Billed $ 184 $ 211 Unbilled 77 100 Total trade receivables 261 311 Orbital receivables, current portion 42 43 Other 3 4 Allowance for doubtful accounts (1) (1) Trade and other receivables, net $ 305 $ 357 |
Schedule of changes in allowance for expected credit losses related to non-current orbital receivables | Orbital Receivables Allowance Allowance as of January 1, 2020 $ (35) Additions (14) Allowance as of March 31, 2020 $ (49) |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventory | |
Schedule of inventory | March 31, December 31, 2020 2019 Raw materials $ 19 $ 13 Work in process 6 7 Inventory $ 25 $ 20 |
Property, plant and equipment_2
Property, plant and equipment, net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Property, plant and equipment, net | |
Schedule of property, plant and equipment, net | March 31, December 31, 2020 2019 Satellites $ 397 $ 397 Equipment 197 196 Leasehold improvements 80 75 Computer hardware 72 67 Furniture and fixtures 15 15 Construction in process 424 388 Property, plant and equipment, at cost 1,185 1,138 Accumulated depreciation (403) (380) Property, plant and equipment, net $ 782 $ 758 |
Intangible assets (Tables)
Intangible assets (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Intangible assets | |
Schedule of intangible assets | March 31, 2020 December 31, 2019 Gross carrying value Accumulated amortization Net carrying value Gross carrying value Accumulated amortization Net carrying value Customer relationships $ 615 $ (113) $ 502 $ 615 $ (102) $ 513 Backlog 330 (241) 89 330 (217) 113 Technologies 320 (161) 159 320 (144) 176 Software 230 (92) 138 213 (83) 130 Image library 80 (51) 29 80 (48) 32 Trade names and other 37 (11) 26 37 (10) 27 Intangible assets $ 1,612 $ (669) $ 943 $ 1,595 $ (604) $ 991 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases | |
Schedule of components of lease expense | Three months ended March 31, Classification 2020 2019 Operating lease expense Selling, general, and administrative expense, Product costs, and Service costs 1 $ 11 $ 6 1 Excluding depreciation and amortization |
Supplemental lease balance sheet information | March 31, December 31, Classification 2020 2019 Assets: Operating Non-current operating lease assets $ 176 $ 176 Finance Property, plant, and equipment, net 5 5 Total lease assets $ 181 $ 181 Liabilities: Current Operating Current operating lease liabilities $ 41 $ 40 Finance Current portion long-term debt 2 2 Non-current Operating Operating lease liabilities 172 173 Finance Long-term debt 1 1 Total lease liabilities $ 216 $ 216 |
Schedule of supplemental lease cash flow information | Three months ended March 31, 2020 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 10 $ 7 Right-of-use assets obtained in exchange for lease obligations: Operating leases 12 — |
Schedule of other supplemental lease information | March 31, December 31, 2020 2019 Weighted average remaining lease term (in years) Operating leases 8 9 Finance leases 3 3 Weighted average discount rate Operating leases 6.4% 6.4% Finance leases 3.5% 3.5% |
Schedule of maturities of finance lease liabilities | 2020 1 2021 2022 2023 2024 Thereafter Less: imputed interest Total minimum lease payments Operating leases $ 32 $ 42 $ 32 $ 29 $ 26 $ 118 $ (66) $ 213 Finance leases 2 1 1 — — — (1) 3 1 Exc udes the three months ended March 31, 2020. |
Schedule of maturities of operating liabilities | 2020 1 2021 2022 2023 2024 Thereafter Less: imputed interest Total minimum lease payments Operating leases $ 32 $ 42 $ 32 $ 29 $ 26 $ 118 $ (66) $ 213 Finance leases 2 1 1 — — — (1) 3 1 Exc udes the three months ended March 31, 2020. |
Long-term debt and interest e_2
Long-term debt and interest expense, net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Long-term debt and interest expense, net | |
Summary of long term debt | March 31, December 31, 2020 2019 Syndicated Credit facility: Revolving credit facility $ 15 $ — Term Loan B 1,955 1,960 2023 Notes 1,000 1,000 Deferred financing 32 33 Debt discount and issuance costs (52) (54) Obligations under finance leases and other 5 6 Total long-term debt 2,955 2,945 Current portion of long-term debt (29) (30) Non-current portion of long-term debt $ 2,926 $ 2,915 |
Schedule of interest expense on long term debt and other obligations | Three Months Ended March 31, 2020 2019 Interest on long-term debt $ 54 $ 45 Interest expense on advance payments from customers 2 5 Interest on orbital securitization liability 1 2 Capitalized interest (8) (3) Interest expense, net $ 49 $ 49 |
Financial instruments and fai_2
Financial instruments and fair value disclosures (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Financial instruments and fair value disclosures | |
Summary of financial instruments measured at fair value in the accompanying consolidated balance sheets | Recurring Fair Value Measurements of as of March 31, 2020 Level 1 Level 2 Level 3 Total Assets Orbital receivables 1 $ — $ 405 $ — $ 405 Liabilities Interest rate swaps $ — $ 32 $ — $ 32 Long-term debt 2 — 2,234 — 2,234 $ — $ 2,266 $ — $ 2,266 Recurring Fair Value Measurements of as of December 31, 2019 Level 1 Level 2 Level 3 Total Assets Short-term investments $ 1 $ — $ — $ 1 Orbital receivables 1 — 425 — 425 $ 1 $ 425 $ — $ 426 Liabilities Interest rate swaps $ — $ 18 $ — $ 18 Long-term debt 2 — 3,004 — 3,004 $ — $ 3,022 $ — $ 3,022 1 The carrying value of Orbital receivables, net was $405 million and $425 million at March 31, 2020 and December 31, 2019, respectively. 2 Long-term debt excludes finance leases, deferred financing and other and is carried at amortized cost. The outstanding carrying value was $2,918 million and $2,906 million at March 31, 2020 and December 31, 2019, respectively. |
Stockholders' equity (Tables)
Stockholders' equity (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Stockholders' equity | |
Schedule of changes in the components of accumulated other comprehensive income (loss) | Foreign Currency Translation Adjustments Unrecognized (Loss) Gain on Interest Rate Swaps Loss on Pension and Other Postretirement Plans Total Accumulated Other Comprehensive Income (Loss) Balance as of December 31, 2019 $ 126 $ (12) $ (55) $ 59 Other comprehensive (loss) income 1 (49) (15) 1 (63) Balance as of March 31, 2020 $ 77 $ (27) $ (54) $ (4) |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue | |
Summary of contract assets and contract liabilities by segment | As of March 31, 2020 Earth Intelligence 1 Space Infrastructure Total Contract liabilities $ 101 $ 122 $ 223 As of December 31, 2019 Earth Intelligence 1 Space Infrastructure Total Contract liabilities $ 130 $ 145 $ 275 1 The contract liability balance associated with the Company’s EnhancedView Contract was $49 million and $78 million as of March 31, 2020 and December 31, 2019, respectively. During the three months ended March 31, 2020, imputed interest on advanced payments increased the contract liability balance by $1 million, and $30 million in revenue was recognized, decreasing the contract liability balance. The contract liability balance associated with the Company’s EnhancedView Contract is expected to be recognized as revenue through August 31, 2020. |
Summary of revenue by primary sources | Three Months Ended March 31, 2020 Earth Intelligence Space Infrastructure Eliminations Total Product revenues $ — $ 107 $ — $ 107 Service revenues 271 3 — 274 Intersegment — 22 (22) — $ 271 $ 132 $ (22) $ 381 Three Months Ended March 31, 2019 Earth Intelligence Space Infrastructure Eliminations Total Product revenues $ — $ 166 $ — $ 166 Service revenues 254 11 — 265 Intersegment — 33 (33) — $ 254 $ 210 $ (33) $ 431 |
Summary of revenue by geographic location | Three Months Ended March 31, 2020 2019 United States $ 302 $ 311 Asia 27 54 South America 9 39 Europe 18 7 Middle East 13 9 Other 12 11 Total revenues $ 381 $ 431 |
Schedule of revenue from significant customers | Three Months Ended March 31, 2020 Earth Intelligence Space Infrastructure Eliminations Total U.S. federal government and agencies $ 199 $ 65 $ — $ 264 Commercial and other 72 67 (22) 117 Total revenues $ 271 $ 132 $ (22) $ 381 Three Months Ended March 31, 2019 Earth Intelligence Space Infrastructure Eliminations Total U.S. federal government and agencies $ 190 $ 23 $ — $ 213 Commercial and other 64 187 (33) 218 Total revenues $ 254 $ 210 $ (33) $ 431 |
Segment information (Tables)
Segment information (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment information | |
Summary of operating performance of the reporting segments | Three months ended March 31, 2020 2019 Revenues: Earth Intelligence $ 271 $ 254 Space Infrastructure 132 210 Intersegment eliminations (22) (33) Total revenues $ 381 $ 431 Adjusted EBITDA: Earth Intelligence $ 133 $ 125 Space Infrastructure (39) (2) Intersegment eliminations (7) (4) Corporate and other expenses (10) (20) Restructuring — (11) Transaction and integration related expense (1) (5) Impairment loss, including inventory (14) (3) CEO severance — (3) Depreciation and amortization (90) (95) Interest expense, net (49) (49) Interest income 1 1 — Equity in loss from joint ventures, net of tax 1 1 Loss from continuing operations before taxes $ (75) $ (66) 1 |
Schedule of capital expenditures by segment | Three Months Ended March 31, 2020 Earth Intelligence Space Infrastructure Corporate and eliminations Total Capital expenditures: Property, plant and equipment $ 34 $ 3 $ 7 $ 44 Intangible assets 16 — — 16 $ 50 $ 3 $ 7 $ 60 Three Months Ended March 31, 2019 Earth Intelligence Space Infrastructure Corporate and eliminations Total Capital expenditures: Property, plant and equipment $ 50 $ 5 $ 1 $ 56 Intangible assets 13 — 1 14 $ 63 $ 5 $ 2 $ 70 |
Employee benefit plans (Tables)
Employee benefit plans (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Employee benefit plans | |
Summary of the components of net periodic benefit cost | Three Months Ended March 31, Pension 2020 2019 Interest cost 4 5 Expected return on plan assets (6) (6) Expenses paid 1 1 Net periodic benefit cost $ (1) $ — |
Earnings per share (Tables)
Earnings per share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings per share | |
Summary of calculation of basic and diluted EPS | Three Months Ended March 31, 2020 2019 Loss from continuing operations $ (78) $ (68) Income from discontinued operations, net of tax 30 11 Net loss $ (48) $ (57) Weighted average number of common shares outstanding-basic 60.1 59.5 Weighted dilutive effect of equity awards — — Weighted average number of common shares outstanding-diluted 60.1 59.5 Basic net income (loss) per common share: Loss from continuing operations (1.30) (1.14) Income from discontinued operations, net of tax 0.50 0.18 Basic net loss per common share $ (0.80) $ (0.96) Diluted net income (loss) per common share: Loss from continuing operations (1.30) (1.14) Income from discontinued operations, net of tax 0.50 0.18 Diluted net loss per common share $ (0.80) $ (0.96) |
Supplemental cash flow (Tables)
Supplemental cash flow (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Supplemental cash flow | |
Schedule of supplemental cash flow | Three Months Ended March 31, 2020 2019 Supplemental cash flow information: Cash paid for interest $ 51 $ 79 Supplemental non-cash investing and financing activities: Accrued capital expenditures 19 13 |
Discontinued operations - Narra
Discontinued operations - Narratives (Details) - Discontinued operations $ in Millions, $ in Billions | Dec. 29, 2019CAD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 29, 2019USD ($) |
Discontinued Operations | ||||
Costs and attorney fees awarded from other party | $ 2 | |||
Accrued Liabilities | ||||
Discontinued Operations | ||||
Reserves for legal proceedings liabilities | 21 | $ 60 | ||
Recovery of previously recorded liability from dispute | $ 39 | |||
MDA business | ||||
Discontinued Operations | ||||
Aggregate purchase price | $ 1 | $ 729 | ||
Transition Services extension period | 6 months |
Discontinued operations - Finan
Discontinued operations - Financial information Operations (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | |
Revenues: | |||
Total revenues | $ 75 | $ 96 | |
Costs and expenses: | |||
Selling, general and administrative | 13 | 18 | |
Depreciation and amortization | 4 | 3 | |
Impairment losses | 12 | $ 12 | 0 |
Operating income (loss) | (9) | 10 | |
Interest expense, net | 1 | ||
Other (income) expense, net | (36) | 1 | |
Loss before taxes | 26 | 9 | |
Income tax expense (benefit) | (4) | (2) | |
Income from discontinued operations, net of tax | 30 | 11 | |
Product | |||
Revenues: | |||
Total revenues | 39 | 53 | |
Costs and expenses: | |||
Costs, excluding depreciation and amortization | 34 | 41 | |
Service | |||
Revenues: | |||
Total revenues | 36 | 43 | |
Costs and expenses: | |||
Costs, excluding depreciation and amortization | $ 21 | $ 24 |
Discontinued operations - Fin_2
Discontinued operations - Financial Information Balance sheet (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Assets | ||
Cash and cash equivalents | $ 15 | $ 45 |
Trade and other receivables, net | 125 | 168 |
Deferred tax assets | 108 | 117 |
Property, plant and equipment | 27 | 29 |
Intangible assets | 21 | 27 |
Goodwill | 287 | 310 |
Other assets | 44 | 55 |
Current assets held for sale | 627 | 751 |
Liabilities | ||
Accounts payable | 48 | 88 |
Accrued liabilities | 15 | 18 |
Accrued compensation and benefits | 19 | 21 |
Contract liabilities | 26 | 29 |
Pension and other postretirement benefit liabilities | 20 | 21 |
Other liabilities | 47 | 53 |
Current liabilities held for sale | $ 175 | $ 230 |
Trade and other receivables, _3
Trade and other receivables, net (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Trade and other receivables, net | ||
Billed | $ 184 | $ 211 |
Unbilled | 77 | 100 |
Total trade receivables | 261 | 311 |
Orbital receivables, current portion | 42 | 43 |
Other | 3 | 4 |
Allowance for doubtful accounts | (1) | (1) |
Total trade and other receivables, net | $ 305 | $ 357 |
Trade and other receivables, _4
Trade and other receivables, net - Orbital receivables (Details) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020USD ($)customer | Dec. 31, 2019USD ($) | Mar. 31, 2019USD ($) | |
Trade and other receivables | |||
Orbital receivables, net | $ 363 | $ 382 | |
Impairment to long-term orbital receivables | 14 | $ 0 | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |||
Allowance at the beginning of the period | (35) | ||
Additions | (14) | ||
Allowance at the end of the period | (49) | ||
Largest Customer | |||
Trade and other receivables | |||
Orbital receivables, net | $ 48 | ||
Concentration risk, percentage | 12.00% | ||
Accounts Receivable | Credit Concentration Risk | |||
Trade and other receivables | |||
Number of customers | customer | 14 |
Trade and other receivables, _5
Trade and other receivables, net - Expected timing of total contractual cash flows (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Orbital receivables | ||
Securitization liabilities | $ 63 | $ 65 |
Other current liabilities | ||
Orbital receivables | ||
Securitization liabilities | 17 | 17 |
Other non-current liabilities | ||
Orbital receivables | ||
Securitization liabilities | $ 46 | $ 48 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Inventory | ||
Raw materials | $ 19 | $ 13 |
Work in process | 6 | 7 |
Total inventory | $ 25 | $ 20 |
Property, plant and equipment_3
Property, plant and equipment, net (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Property, plant and equipment | |||
Property, plant and equipment, at cost | $ 1,185 | $ 1,138 | |
Accumulated depreciation | (403) | (380) | |
Property, plant and equipment, net | 782 | 758 | |
Depreciation | 24 | $ 28 | |
Satellites | |||
Property, plant and equipment | |||
Property, plant and equipment, at cost | 397 | 397 | |
Equipment | |||
Property, plant and equipment | |||
Property, plant and equipment, at cost | 197 | 196 | |
Leasehold improvements | |||
Property, plant and equipment | |||
Property, plant and equipment, at cost | 80 | 75 | |
Computer hardware | |||
Property, plant and equipment | |||
Property, plant and equipment, at cost | 72 | 67 | |
Furniture and fixtures | |||
Property, plant and equipment | |||
Property, plant and equipment, at cost | 15 | 15 | |
Construction in process | |||
Property, plant and equipment | |||
Property, plant and equipment, at cost | $ 424 | $ 388 |
Intangible assets (Details)
Intangible assets (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Finite-lived intangible assets: | |||
Gross carrying value | $ 1,612 | $ 1,595 | |
Accumulated amortization | (669) | (604) | |
Net carrying value | 943 | 991 | |
Amortization of intangible assets | 66 | $ 67 | |
Trade names and other | |||
Finite-lived intangible assets: | |||
Gross carrying value | 37 | 37 | |
Accumulated amortization | (11) | (10) | |
Net carrying value | 26 | 27 | |
Customer relationships | |||
Finite-lived intangible assets: | |||
Gross carrying value | 615 | 615 | |
Accumulated amortization | (113) | (102) | |
Net carrying value | 502 | 513 | |
Backlog | |||
Finite-lived intangible assets: | |||
Gross carrying value | 330 | 330 | |
Accumulated amortization | (241) | (217) | |
Net carrying value | 89 | 113 | |
Technologies | |||
Finite-lived intangible assets: | |||
Gross carrying value | 320 | 320 | |
Accumulated amortization | (161) | (144) | |
Net carrying value | 159 | 176 | |
Software | |||
Finite-lived intangible assets: | |||
Gross carrying value | 230 | 213 | |
Accumulated amortization | (92) | (83) | |
Net carrying value | 138 | 130 | |
Image library | |||
Finite-lived intangible assets: | |||
Gross carrying value | 80 | 80 | |
Accumulated amortization | (51) | (48) | |
Net carrying value | $ 29 | $ 32 |
Investments (Details)
Investments (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Investments | |||
Revenues | $ 381 | $ 431 | |
Vricon | |||
Investments | |||
Ownership interest | 50.00% | ||
Vricon | Maxar | |||
Investments | |||
Revenues | $ 3 | ||
Vricon | Saab AB | |||
Investments | |||
Revenues | $ 15 | ||
Saab AB | |||
Investments | |||
Purchases not yet sold to end customer | $ 14 |
Leases (Details)
Leases (Details) | 3 Months Ended |
Mar. 31, 2020 | |
Leases | |
Option to extend - Operating | true |
Option to extend - Finance | true |
Minimum | |
Leases | |
Remaining lease term - Operating | 1 year |
Remaining lease term - Finance | 1 year |
Option to extend - Operating | 1 year |
Option to extend - Finance | 1 year |
Maximum | |
Leases | |
Remaining lease term - Operating | 15 years |
Remaining lease term - Finance | 15 years |
Option to extend - Operating | 10 years |
Option to extend - Finance | 10 years |
Leases - Components of lease ex
Leases - Components of lease expense (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Selling, general, and administrative expense, Product costs, and Service costs | ||
Leases | ||
Operating lease expense | $ 11 | $ 6 |
Leases - Supplemental lease bal
Leases - Supplemental lease balance sheet information (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Leases | ||
Non-current operating lease assets | $ 176 | $ 176 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Non-current operating lease assets | |
Finance | $ 5 | 5 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Property, Plant and Equipment, Net. | |
Total leased assets | $ 181 | 181 |
Current operating lease liabilities | $ 41 | 40 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Current operating lease liabilities | |
Operating lease liability, non current | $ 172 | 173 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Operating lease liability, non current | |
Finance lease liability, current | $ 2 | 2 |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other Liabilities, Current | |
Finance lease liability, non current | $ 1 | 1 |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other Liabilities, Noncurrent | |
Total leased Liabilities | $ 216 | $ 216 |
Leases - Supplemental lease cas
Leases - Supplemental lease cash flow information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 10 | $ 7 |
Right-of-use assets obtained in exchange for lease obligations: | ||
Operating leases | $ 12 |
Leases - Other Supplemental lea
Leases - Other Supplemental lease information (Details) | Mar. 31, 2020 | Dec. 31, 2019 |
Leases | ||
Operating leases - Weighted average remaining lease term | 8 years | 9 years |
Finance leases - Weighted average remaining lease term | 3 years | 3 years |
Operating leases - Weighted average discount rate | 6.40% | 6.40% |
Finance leases - Weighted average discount rate | 3.50% | 3.50% |
Leases - Maturities of lease li
Leases - Maturities of lease liabilities (Details) $ in Millions | Mar. 31, 2020USD ($) |
Operating leases | |
2020 | $ 32 |
2021 | 42 |
2022 | 32 |
2023 | 29 |
2024 | 26 |
Thereafter | 118 |
Less: imputed interest | (66) |
Total minimum lease payments | 213 |
Finance leases | |
2020 | 2 |
2021 | 1 |
2022 | 1 |
Less: imputed interest | (1) |
Total minimum lease payments | $ 3 |
Long-term debt and interest e_3
Long-term debt and interest expense, net (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Long-term debt and interest expenses | ||
Debt discount and issuance costs | $ (52) | $ (54) |
Obligations under finance leases and other | 5 | 6 |
Total long-term debt | 2,955 | 2,945 |
Current portion of long-term debt | (29) | (30) |
Non-current portion of long-term debt | 2,926 | 2,915 |
Revolving credit facility | ||
Long-term debt and interest expenses | ||
Long-term debt | 15 | |
Term Loan B | ||
Long-term debt and interest expenses | ||
Long-term debt | 1,955 | 1,960 |
2023 Notes | ||
Long-term debt and interest expenses | ||
Long-term debt | 1,000 | 1,000 |
Deferred financing | ||
Long-term debt and interest expenses | ||
Long-term debt | $ 32 | $ 33 |
Long-term debt and interest e_4
Long-term debt and interest expense, net - Syndicated credit facility (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Revolving Credit Facility | ||
Long-term debt and interest expenses | ||
Maximum borrowing capacity | $ 200 | |
Revolving Credit Facility | Maturing in December 2023 | ||
Long-term debt and interest expenses | ||
Aggregate principal amount | 500 | |
Letter of credit | ||
Long-term debt and interest expenses | ||
Letter of credit outstanding | 18 | $ 18 |
Term Loan B | Maturing in October 2024 | ||
Long-term debt and interest expenses | ||
Aggregate principal amount | $ 2,000 |
Long-term debt and interest e_5
Long-term debt and interest expense, net - Interest expense on long term debts and other obligations (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Interest expenses | ||
Interest on long-term debt | $ 54 | $ 45 |
Interest expense on advance payments from customers | 2 | 5 |
Interest on orbital securitization liability | 1 | 2 |
Capitalized interest | (8) | (3) |
Total interest expense | $ 49 | $ 49 |
Financial instruments and fai_3
Financial instruments and fair value disclosures - Financial instruments measured at fair value (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Assets | ||
Orbital receivables, net | $ 363 | $ 382 |
Recurring | ||
Assets | ||
Short-term investments | 1 | |
Orbital receivables, net | 405 | |
Notes receivable | 425 | |
Assets fair value | 426 | |
Liabilities | ||
Long-term debt | 2,234 | 3,004 |
Liabilities fair value | 2,266 | 3,022 |
Recurring | Interest rate swaps | ||
Liabilities | ||
Derivative financial instruments | 32 | 18 |
Recurring | Level 1 | ||
Assets | ||
Short-term investments | 1 | |
Assets fair value | 1 | |
Recurring | Level 2 | ||
Assets | ||
Orbital receivables, net | 405 | |
Notes receivable | 425 | |
Assets fair value | 425 | |
Liabilities | ||
Long-term debt | 2,234 | 3,004 |
Liabilities fair value | 2,266 | 3,022 |
Recurring | Level 2 | Interest rate swaps | ||
Liabilities | ||
Derivative financial instruments | $ 32 | $ 18 |
Financial instruments and fai_4
Financial instruments and fair value disclosures - Financial instruments recorded at carrying value (Details) - Carrying value - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Financial instruments and fair value disclosures | ||
Long-term debt excludes finance leases, deferred financing and other | $ 2,918 | $ 2,906 |
Orbital receivable | $ 405 | $ 425 |
Stockholders' equity (Details)
Stockholders' equity (Details) $ / shares in Units, $ in Millions | May 28, 2019item$ / shares | May 12, 2019 | Mar. 31, 2019USD ($) | Mar. 31, 2020$ / sharesshares | Dec. 31, 2019$ / sharesshares | Jan. 01, 2019$ / shares |
Stockholders' equity | ||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Series A Junior Participating Preferred Stock | ||||||
Stockholders' equity | ||||||
Preferred stock, authorized shares | shares | 2,400,000 | 2,400,000 | ||||
Preferred stock, shares outstanding | shares | 0 | 0 | ||||
Rights offering | ||||||
Stockholders' equity | ||||||
Percentage of shares acquired by entity under tax plan | 4.90% | |||||
Number of preferred stock purchase right granted as dividend | item | 1 | |||||
Number of additional shares of common stock upon exercise | item | 1 | |||||
Percentage of discount on additional shares of common stock upon exercise | 50.00% | |||||
Rights offering | Series A Junior Participating Preferred Stock | ||||||
Stockholders' equity | ||||||
Percentage of right to purchase shares of preferred stock | 0.01% | |||||
Share price | $ / shares | $ 30.92 | |||||
Common Stock | ||||||
Stockholders' equity | ||||||
Reclassification of APIC due to U.S. Domestication | $ | $ (1,713) | |||||
Additional paid in capital | ||||||
Stockholders' equity | ||||||
Reclassification of APIC due to U.S. Domestication | $ | $ 1,713 |
Stockholders' equity - Componen
Stockholders' equity - Components of accumulated other comprehensive income (loss) (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Accumulated Other Comprehensive Income (Loss) | |
Balance at the beginning of period | $ 761 |
Balance at the end of period | 656 |
Accumulated other comprehensive income (loss) | |
Accumulated Other Comprehensive Income (Loss) | |
Balance at the beginning of period | 59 |
Other comprehensive income (loss) | (63) |
Balance at the end of period | (4) |
Foreign Currency Translation Adjustments | |
Accumulated Other Comprehensive Income (Loss) | |
Balance at the beginning of period | 126 |
Other comprehensive income (loss) | (49) |
Balance at the end of period | 77 |
Unrecognized (Loss) Gain on Derivative Instruments | |
Accumulated Other Comprehensive Income (Loss) | |
Balance at the beginning of period | (12) |
Other comprehensive income (loss) | (15) |
Balance at the end of period | (27) |
Pension Adjustments | |
Accumulated Other Comprehensive Income (Loss) | |
Balance at the beginning of period | (55) |
Other comprehensive income (loss) | 1 |
Balance at the end of period | $ (54) |
Revenue - Remaining performance
Revenue - Remaining performance obligations (Details) $ in Billions | Mar. 31, 2020USD ($) |
Revenue | |
Remaining performance obligation | $ 1.7 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01 | |
Revenue | |
Expected timing of satisfaction | 9 months |
Remaining performance obligation | $ 1.1 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue | |
Expected timing of satisfaction | 1 year |
Remaining performance obligation | $ 0.4 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue | |
Expected timing of satisfaction | |
Remaining performance obligation | $ 0.2 |
Revenue - Contract assets and l
Revenue - Contract assets and liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Contract assets and contract liabilities | ||
Contract Liabilities | $ 223 | $ 275 |
Imagery | EnhancedView contract | ||
Contract assets and contract liabilities | ||
Contract Liabilities | 49 | 78 |
Increase in contract liability due to imputed interest on advance payments | 1 | |
Revenue recognized | 30 | |
Earth intelligence | ||
Contract assets and contract liabilities | ||
Contract Liabilities | 101 | 130 |
Space Infrastructure | ||
Contract assets and contract liabilities | ||
Contract Liabilities | $ 122 | $ 145 |
Revenue - Disaggregation of rev
Revenue - Disaggregation of revenue by source (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenue | ||
Revenues | $ 381 | $ 431 |
COVID-19 | Commercial Satellite Contract | ||
Revenue | ||
Estimated total cost of completion | 12 | |
Product | ||
Revenue | ||
Revenues | 107 | 166 |
Service | ||
Revenue | ||
Revenues | 274 | 265 |
Space Infrastructure | COVID-19 | ||
Revenue | ||
Estimated total cost of completion | 18 | |
Estimated Loss | 19 | |
Space Systems | ||
Revenue | ||
Orbital interest revenue | 7 | 7 |
Operating Segments | ||
Revenue | ||
Revenues | (22) | (33) |
Operating Segments | Earth intelligence | ||
Revenue | ||
Revenues | 271 | 254 |
Operating Segments | Earth intelligence | Service | ||
Revenue | ||
Revenues | 271 | 254 |
Operating Segments | Space Infrastructure | ||
Revenue | ||
Revenues | 132 | 210 |
Operating Segments | Space Infrastructure | Product | ||
Revenue | ||
Revenues | 107 | 166 |
Operating Segments | Space Infrastructure | Service | ||
Revenue | ||
Revenues | 3 | 11 |
Intersegment eliminations | ||
Revenue | ||
Revenues | (22) | (33) |
Intersegment eliminations | Space Infrastructure | ||
Revenue | ||
Revenues | $ 22 | $ 33 |
Revenue - Disaggregation of r_2
Revenue - Disaggregation of revenue on geographic location of customers (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenue | ||
Revenues | $ 381 | $ 431 |
U.S. | ||
Revenue | ||
Revenues | 302 | 311 |
Asia | ||
Revenue | ||
Revenues | 27 | 54 |
South America | ||
Revenue | ||
Revenues | 9 | 39 |
Europe | ||
Revenue | ||
Revenues | 18 | 7 |
Middle East | ||
Revenue | ||
Revenues | 13 | 9 |
Other | ||
Revenue | ||
Revenues | $ 12 | $ 11 |
Revenue - Disaggregation of r_3
Revenue - Disaggregation of revenue from significant customers (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenue | ||
Revenues | $ 381 | $ 431 |
U.S. Federal Government and agencies | ||
Revenue | ||
Revenues | 264 | 213 |
Commercial and other | ||
Revenue | ||
Revenues | 117 | 218 |
Operating Segments | ||
Revenue | ||
Revenues | (22) | (33) |
Operating Segments | Commercial and other | ||
Revenue | ||
Revenues | (22) | (33) |
Intersegment eliminations | ||
Revenue | ||
Revenues | (22) | (33) |
Earth intelligence | Operating Segments | ||
Revenue | ||
Revenues | 271 | 254 |
Earth intelligence | Operating Segments | U.S. Federal Government and agencies | ||
Revenue | ||
Revenues | 199 | 190 |
Earth intelligence | Operating Segments | Commercial and other | ||
Revenue | ||
Revenues | 72 | 64 |
Space Infrastructure | Operating Segments | ||
Revenue | ||
Revenues | 132 | 210 |
Space Infrastructure | Operating Segments | U.S. Federal Government and agencies | ||
Revenue | ||
Revenues | 65 | 23 |
Space Infrastructure | Operating Segments | Commercial and other | ||
Revenue | ||
Revenues | 67 | 187 |
Space Infrastructure | Intersegment eliminations | ||
Revenue | ||
Revenues | $ 22 | $ 33 |
Segment information - Operating
Segment information - Operating performance (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2020USD ($)segment | Mar. 31, 2019USD ($) | |
Segment information | ||
Number of reportable segments | segment | 3 | |
Total revenues | $ 381 | $ 431 |
Corporate and other expense | 10 | 20 |
Restructuring | 11 | |
Transaction and integration related expense | (1) | (5) |
Inventory impairment | (14) | (3) |
CEO severance | (3) | |
Depreciation and amortization | (90) | (95) |
Interest expense, net | (49) | (49) |
Interest income | 1 | |
Equity loss (income) from joint ventures, net of tax | 1 | 1 |
Loss before taxes | (75) | (66) |
Operating Segments | ||
Segment information | ||
Total revenues | (22) | (33) |
Operating Segments | Earth Intelligence | ||
Segment information | ||
Total revenues | 271 | 254 |
Adjusted EBITDA | 133 | 125 |
Operating Segments | Space Infrastructure | ||
Segment information | ||
Total revenues | 132 | 210 |
Adjusted EBITDA | (39) | (2) |
Intersegment eliminations | ||
Segment information | ||
Total revenues | (22) | (33) |
Adjusted EBITDA | $ (7) | $ (4) |
Segment information - Capital e
Segment information - Capital expenditures (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Segment information | ||
Capital expenditures, property, plant and equipment | $ 44 | $ 56 |
Capital expenditures, intangible assets | 16 | 14 |
Capital expenditures | 60 | 70 |
Intersegment eliminations | ||
Segment information | ||
Capital expenditures, property, plant and equipment | 7 | 1 |
Capital expenditures, intangible assets | 1 | |
Capital expenditures | 7 | 2 |
Earth Intelligence | Operating Segments | ||
Segment information | ||
Capital expenditures, property, plant and equipment | 34 | 50 |
Capital expenditures, intangible assets | 16 | 13 |
Capital expenditures | 50 | 63 |
Space Infrastructure | Operating Segments | ||
Segment information | ||
Capital expenditures, property, plant and equipment | 3 | 5 |
Capital expenditures | $ 3 | $ 5 |
Employee benefit plans - Compon
Employee benefit plans - Components of net periodic benefit cost (Details) - Pension - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Employee benefit plans | ||
Interest cost | $ 4 | $ 5 |
Expected return on plan assets | (6) | (6) |
Expenses paid | 1 | $ 1 |
Net periodic benefit cost | $ (1) |
Employee benefit plans - Narrat
Employee benefit plans - Narrative (Details) - Pension $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Employee benefit plans | |
Employer contributions | $ 3 |
Expected future contribution by the employer | $ 15 |
Income taxes - Income tax rate
Income taxes - Income tax rate (Details) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income taxes | ||
Effective income tax rate | (2.70%) | (1.50%) |
Statutory U.S. Federal income tax rate | 21.00% | 21.00% |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Earnings per share | ||
Loss from continuing operations | $ (78) | $ (68) |
Income from discontinued operations, net of tax | 30 | 11 |
Net loss | $ (48) | $ (57) |
Weighted average number of common shares outstanding - basic (in shares) | 60.1 | 59.5 |
Weighted average number of common shares outstanding-diluted | 60.1 | 59.5 |
Basic net income (loss) per common share: | ||
Loss from continuing operations (in dollars per share) | $ (1.30) | $ (1.14) |
Income from discontinued operations, net of tax (in dollars per share) | 0.50 | 0.18 |
Basic loss per common share (in dollars per share) | (0.80) | (0.96) |
Diluted net income (loss) per common share: | ||
Loss from continuing operations (in dollars per share) | (1.30) | (1.14) |
Income from discontinued operations, net of tax (in dollars per share) | 0.50 | 0.18 |
Diluted loss per common share (in dollars per share) | $ (0.80) | $ (0.96) |
Earnings per share - Anti-dilut
Earnings per share - Anti-dilutive securities (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Earnings per share | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 4 | 3 |
Commitments and contingencies (
Commitments and contingencies (Details) - USD ($) $ in Millions | Feb. 07, 2020 | Jul. 31, 2018 | Mar. 27, 2020 |
CARES Act | |||
Amount of single-employer funding obligation deferred to January 1, 2021 | $ 15 | ||
Amount of employer portion of social security payments deferred to 2021 and 2022 | $ 18 | ||
Pending Litigation | Ukranian customer | |||
Commitments and Contingencies | |||
Recovery amount sought | $ 227 | ||
Pending Litigation | Stockholder class action | |||
Commitments and Contingencies | |||
Recovery amount sought | $ 700 |
Supplemental cash flow - (Detai
Supplemental cash flow - (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Supplemental cash flow information: | ||
Cash paid for interest | $ 51 | $ 79 |
Supplemental non-cash investing and financing activities: | ||
Accrued capital expenditures | $ 19 | $ 13 |
Subsequent Events (Details)
Subsequent Events (Details) $ / shares in Units, $ in Millions, $ in Billions | Apr. 16, 2020USD ($) | Apr. 08, 2020USD ($) | Feb. 11, 2020$ / shares | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Dec. 29, 2019CAD ($) | Dec. 29, 2019USD ($) |
Subsequent events | |||||||
Repayments of long-term debt | $ 5 | $ 4 | |||||
Subsequent event | Term Loan B | |||||||
Subsequent events | |||||||
Repayments of long-term debt | $ 472 | ||||||
Subsequent event | 2023 Notes | |||||||
Subsequent events | |||||||
Repayments of long-term debt | $ 208 | ||||||
MDA business | Foreign exchange contract | |||||||
Subsequent events | |||||||
Derivative hedge percentage | 50 | ||||||
Spot rate | $ / shares | $ 1.339181 | ||||||
MDA business | Discontinued operations | |||||||
Subsequent events | |||||||
Aggregate purchase price | $ 1 | $ 729 | |||||
MDA business | Discontinued operations | Subsequent event | |||||||
Subsequent events | |||||||
Proceeds from sale of business | $ 680 | ||||||
Days to apply proceeds as per asset sales covenant | 365 days | ||||||
MDA business | Discontinued operations | Subsequent event | Foreign exchange contract | |||||||
Subsequent events | |||||||
Contingent consideration | $ 373 |