Our

In 2013, we commenced the provision of Iridium voice and data satellite communications services in Russia to commercial and government subscribers through a local subsidiary and its authorized Russian service providers. In addition to procuring and implementing local billing and operation support services infrastructure, we also secured a site and commenced construction on dedicated earth station facilities in Russia. We have also had discussions to build or reactivate additional gateways in other countries, such as China and India, that require gateways in their jurisdictions. These gateways would connect the commercial traffic coming to and from their territory to the constellation.

functions and route commercial services.

We have experienced twelve satellite losses since we reintroduced commercial satellite services in 2001 that have resulted in the complete loss of the affected satellites or the loss of the ability of the satellite to carry traffic on the network, most recently in August 2014. Eleven of these losses were from satellites that failed in orbit, and one satellite was lost as a result of a 2009 collision with a non-operational Russian satellite. To date, each time we have lost a satellite we have had an in-orbit spare available to replace it.

We also own spare parts for some of the equipment in our gateway and TPN facilities.

In 2010, we entered into an amended and restated long-term operations and maintenance agreement with Boeing, which we refer to as the O&M Agreement. Boeing operated and maintained our satellite constellation under this O&M Agreement through the end of 2014. Although the term of the O&M Agreement runs concurrently with the operational life of the current constellation, the O&M Agreement also provides for transition to a hybrid operations mode involving network elements from both the original Iridium system and the Iridium NEXT system. In 2014, we elected to make this transition to hybrid operations as of January 1, 2015, to be provided by Boeing under the terms of the Iridium NEXT support services agreement as further described below. Through 2014, the O&M Agreement represented a time-and-materials fee with an annual limit on amounts paid.

In 2010, we also entered into an Iridium NEXT support services agreement with Boeing pursuant to which Boeing provides personnel services in support of the development of Iridium NEXT and will operate and maintain Iridium NEXT, including a transitional period that began on January 1, 2015, during which Boeing supports a hybrid operations mode involving network elements from both the original Iridium system and the Iridium NEXT system. Boeing provides these services on a time-and-materials fee basis. The term of the agreement runs concurrently with the operational life of the Iridium NEXT constellation. We are entitled to terminate the agreement for convenience and without cause commencing in 2019.

Our satellites continue to perform well, but they have exceeded their original design lives, and we

payloads.

In June 2011,November 2016, we entered into an additional agreement with International Space Company Kosmotras, or Kosmotras, asSpaceX for an eighth Falcon 9 launch for a supplementalcontract price of $67.9 million. Although we are the customer of record with SpaceX, we have contracted separately with GFZ for $31.8 million to share the launch service provider for Iridium NEXT. The Kosmotras agreement originally provided forof NASA’s two Gravity Recovery and Climate Experiment Follow-On satellites on a specially designed dispenser on the purchase of up to six launches with options to purchase additional launches. Each launch can carry two satellites. In June 2013, we exercised an option for one launch to carry the first two Iridium NEXT satellites. If we do not exercise any additional options, the total cost under the contract including this single launch will be $51.8 million.Falcon 9 rocket. As of December 31, 2014,2017, we had made aggregate payments of $28.8$463.9 million to Kosmotras. The option to purchase two dedicated launches expired as of December 31, 2013. We have agreed with Kosmotras to extend the option to purchase the remaining three dedicated launches through a date to be determined.

Harris Agreement

In June 2012, Aireon entered into an agreement with Harris Corporation for the design, developmentSpaceX, and production of the Aireon payload for each of the planned Iridium NEXT satellites. The Harris agreement does not provide for any guarantee of payment by us or Iridium Satellite LLC, but we may make available up to $10received $28.6 million worth of airtime for Aireon to satisfy a portion of its payments under the Harris agreement in the event that Aireon cannot make such payments. We do not currently expect Aireon to require these airtime credits.

While we view our services as largely complementary to terrestrial wireline and wireless communications networks, we also compete with them indirectly. We provide service in areas that are inadequately covered by these ground systems. To the extent that terrestrial communications companies invest in underdeveloped areas, we will face increased competition in those areas. We believe that local telephone companies currently are reluctant to invest in new switches, landlines and cellular towers to expand their networks in rural and remote areas due to high costs and limited usage. Many of the underdeveloped areas are sparsely populated, making it difficult to generate the necessary returns on the capital expenditures required to build terrestrial wireless networks in those areas. We believe that our solutions offer a cost-effective and reliable alternative to terrestrial-based wireline and wireless systems in these remote regions.

19

Research and Development

Our research and development efforts have focused on the development, design and testing of new products and services, such as Iridium Edge, Iridium PTT, Iridium Burst, and Iridium Pilot Land Station each introduced in February 2014,and Iridium GO!, introduced in July 2014, and the planning and development of the Iridium NEXT constellation, ground infrastructure and chipsets.chipsets, as well as new products and services to be offered on Iridium NEXT, such as Iridium Certus. We also develop product and service enhancements and new applications for our existing products and services. Our research and development expenses were $17.6$15.2 million, $11.1$16.1 million and $15.5$16.1 million for the years ended December 31, 2014, 20132017, 2016 and 2012,2015, respectively.

Employees

As of December 31, 2014,2017, we had 233414 full-time employees and 6 part-time employees, none of whom isare subject to any collective bargaining agreement. We consider our employee relations to be good.

Intellectual Property

At December 31, 2014,2017, we held eight21 U.S. patents and one foreign patent. These patents cover several aspects of our satellite system, our global network, our communication services, and our devices.

In addition to our owned intellectual property, we also license critical system technology from Motorola Solutions, including software and systems to operate and maintain our network as well as technical information for the design and manufacture of our devices. This intellectual property is essential to our ability to continue to operate our constellation and sell our handsets.devices. We also have licensed technology from Motorola Solutions relating to the development and operation of Iridium NEXT and related ground infrastructure, products and services. We maintain our licenses with Motorola Solutions pursuant to several agreements, which can be terminated by Motorola Solutions upon the commencement by or against us of any bankruptcy proceeding or other specified liquidation proceedings or upon our material failure to perform or comply with any provision of the agreements. If Motorola Solutions were to terminate any such agreement, it may be difficult or, under certain circumstances, impossible to obtain the technology from alternative vendors. Motorola Solutions has assigned to a third party a portion of the patents that are covered by some of these licenses.

We license additional system technology from other third parties and expect to do so in the future both in connection with our currentfirst-generation network, products and services and with the development and operation of Iridium NEXT and related ground infrastructure, products and services. If any such third party were to terminate its agreement with us or cease to support and service this technology, or if we are unable to renew such licenses on commercially reasonable terms or at all, it may be difficult, more expensive or impossible to obtain those servicessubstitute technology from alternative vendors. Any substitute technology may also have lower quality or performance standards, which would adversely affect the quality of our products and services. For more information, see “Risk Factors—We are dependent on intellectual property licensed from third parties to operate our constellation and sell our devices and for the enhancement of our existing products and services.”

Available Information

Copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments, if any, to those reports filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge through our website at www.iridium.com and on the website of the Securities and Exchange Commission, or SEC, at www.sec.gov. A request for any of these reports may also be submitted to us by writing: Investor Relations, Iridium Communications Inc., 1750 Tysons Boulevard, Suite 1400, McLean, VA 22102, or by calling our Investor Relations line at 703-287-7570.

ITEM 1A.

Risk Factors

Item 1A. Risk Factors

Our business plan depends on increased demand for mobile satellite services, among other factors.

Our business plan is predicated on growth in demand for mobile satellite services. Demand for mobile satellite services may not grow, or may even contract, either generally or in particular geographic markets, for particular types of services or during particular time periods. A lack of demand could impair our ability to sell products and services, develop and successfully market new products and services and could exert downward pressure on prices. Any decline in prices would decrease our revenue and profitability and negatively affect our ability to generate cash for capital expenditures, investments and other working capital needs.

Our ability to successfully implement our business plan will also depend on a number of other factors, including:

·

our ability to maintain the health, capacity and control of our existing satellite constellation;

·

our ability to complete the design, build and launch of Iridium NEXT and related ground infrastructure, products and services, and, once launched, our ability to maintain the health, capacity and control of the new satellite constellation;

·

the level of market acceptance and demand for our products and services;

·

our ability to introduce innovative new products and services that satisfy market demand, including new service offerings on Iridium NEXT;

	·	our ability to expand our business using our existing spectrum resources both in the United States and internationally;
	·	our ability to sell our products and services in additional countries;

·

our ability to maintain our relationship with U.S. government customers, particularly the DoD;

·

the ability of our distributors to market and distribute our products, services and applications effectively and their continued development of innovative and improved solutions and applications for our products and services;

·

the effectiveness of our competitors in developing and offering similar services and products; and

·

our ability to maintain competitive prices for our products and services and to control our costs.

our ability to maintain the health, capacity and control of our first-generation satellites through the deployment of Iridium NEXT;

our ability to operate a hybrid constellation and to successfully replace individual first-generation satellites with their Iridium NEXT replacements;

our ability to complete the Iridium NEXT constellation and related products and services, and, once fully deployed, our ability to maintain the health, capacity and control of the new satellite constellation;

the level of market acceptance and demand for our products and services;

our ability to introduce innovative new products and services that satisfy market demand, including new product and service offerings on Iridium NEXT;

our ability to expand our business using our existing spectrum resources both in the United States and internationally;

our ability to sell our products and services in additional countries;

our ability to maintain our relationship with U.S. government customers, particularly the DoD;

the ability of our distributors to market and distribute our products, services and applications effectively and their continued development of innovative and improved solutions and applications for our products and services;

the effectiveness of our competitors in developing and offering similar services and products;

our ability to de-orbit our first-generation satellites; and

our ability to maintain competitive prices for our products and services and to control our costs.

Our business plan depends in large part on the success of our subsidiary, Aireon LLC, which is our primary hosted payload customer.

In June 2012, we announced our plans to host a payload being developed by our subsidiary, Aireon LLC as our primary hosted payload on Iridium NEXT. We currently expect to rely onuse the cash flows generated from this hosted-payload arrangement with Aireon to satisfy a portion of our capital requirements for the development and deployment of Iridium NEXT. Aireon’s payload will beis a satellite-based automatic dependent surveillance-broadcast, or ADS-B, system for global air traffic monitoring, and Aireon’s success will depend on its ability to successfully develop and manufacturedeploy this system. Deploying an ADS-B system on satellites is a new and unproven method for providing this service and will require significant technological development. Aireon will need to complete the development and manufacture of its ADS-B payloads in time to include them on our Iridium NEXT satellites, which we expect to begin launching in the second half of 2015.

service.

In addition, Aireon’s ability to make timely payment topay us of its hosting fees will depend on the development of the market for a space-based ADS-B service among air navigation service providers, or ANSPs, particularly the U.S. Federal Aviation Administration, or FAA. Aireon does not have a contract withto provide commercial, operational ADS-B services to the FAA, to provide ADS-B services, and there can be no assurance that it will be successful in securing such a contract. The FAA’s financial commitment to Aireonactivities to date hashave been limited to a $10 million contract for assistance in its analysis ofpreparing to use space-based ADS-B, and no funds have been allocated by the FAA for a larger Aireon commitment.commercial, operational commitment to Aireon. If Aireon is not successful in entering into a

contract with the FAA for the provision of operational ADS-B services to the FAA, it may not be able to make its hosting reimbursement payments to us when we currently anticipate or at all.

Aireon will itself require significant additional capital to complete the successful development, deployment and operation of its system. The Aireon LLC Agreement providesprovided for the purchase by NAV CANADA Satellite and three other ANSP investors of additional membership interests in multiple tranches through late 2017 for an aggregate investment of up to $270 million, all of which $195 million has been funded through January 2015. Each tranche, however,funded. Further, Aireon is subjectin the process of raising additional operating capital. If Aireon issues equity to the satisfaction of various operational, commercial, regulatory and financial conditions, some of which will be outraise such capital, we may experience dilution of our control,ownership interest in Aireon, and if Aireon raises debt, the investors have significant discretionterms of the debt may limit Aireon's ability to pay distributions in the determinationrespect of whether those conditions have been met.

equity, including to us.

The management of Aireon is not within our control given that we only have rights to appoint a minoritytwo of the 11 members of the Aireon board of directors, as well as significant veto rights and other protective provisions provided to NAV CANADA and the other investors. As a result, we may not be able to cause Aireon to take actions that we believe are necessary for its ultimate success.

If Aireon is unable to pay its hosting reimbursement costs, our ability to pursue our business plan would be compromised unless we were able to replace those amounts with revenue or capital from other sources. In addition, Aireon’s failure to pay our data fees and make the anticipated redemption of a portion of our equity interest would negatively affect our expected future results of operations.

We may need additional capital to design, buildcomplete Iridium NEXT, develop and launch Iridium NEXT and related ground infrastructure,new products and services, and to pursue additional growth opportunities. If we fail to maintain access to sufficient capital, our liquidity could be compromised and we will not be able to successfully implement our business plan.

Our business plan calls for the developmentcontinued deployment of Iridium NEXT, the development of new product and service offerings, upgrades to our current services, hardware and software upgrades to maintain our ground infrastructure and upgrades to our business systems. We estimate the costs associated with the design, build and launch of Iridium NEXT and related ground infrastructure upgrades through 20172018 to be approximately $3 billion. Our funding plan for these costs includes the substantial majority of the funds available under our $1.8 billion Credit Facility which was fully drawn as of February 2017, together with cash on hand, and internally generated cash flows, including potential cash flows from hosted payloads, and Iridium PRIME. Our ability to continue to make draws under the Credit Facility will depend upon our satisfaction of the borrowing conditions provided for in the Credit Facility at the time of the borrowing, some of which will be outside of our control. For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Credit Facility”.

a potential debt issuance.

There can also be no assurance that our internally generated cash flows will meet our current expectations, or that we will not encounter increased costs. For example, Aireon may be unable to pay its hosting reimbursement costs, and the market for Iridium PRIME may not develop as we expect.costs. If internally generated cash flows, including potential cash from Aireon, or Iridium PRIME, are less than we expect, we might need to finance the remaining cost of Iridium NEXT by raising additional debt or equity financing. In addition, we may need additional capital to design and launch new products and services on Iridium NEXT. Such additionalWe would have to seek the permission of the lenders under the Credit Facility in order to obtain many alternative sources of financing, may notincluding a potential debt issuance, and there can be availableno assurance that we would obtain such lenders' consent and, even if obtained, that we would have access to other sources of financing on favorableacceptable terms, or at all.

If we are unable to generate sufficient cash flows or to raise additional capital for one or more of these needs, our ability to maintain our network, design, build and launchcomplete Iridium NEXT, and related ground infrastructure, develop new products and services, and pursue additional growth opportunities will be impaired, which would significantly limit the development of our business and impair our ability to provide a commercially acceptable level of service. We may experienceexpect our overall liquidity levels in the coming years to be lower than our recent liquidity levels.levels, as we have fully drawn our Credit Facility and expect to begin principal repayments in early 2018. Inadequate liquidity could compromise our ability to pursue our business plans and growth opportunities, and make borrowings under the Credit Facility, delay the ultimatecontinued deployment of Iridium NEXT, or otherwise impair our business and financial position.

Ifposition, or we failmight need to satisfy the ongoing borrowing conditions of the Credit Facility, we may be unable to fund Iridium NEXT.

We plan to use borrowings under the Credit Facility to partially fund the construction of our Iridium NEXT satellites, including borrowing to capitalize interest otherwise due under the Credit Facility. Our ability to continue to draw funds under the Credit Facility over time will depend on the satisfaction of borrowing conditions at the time of each draw, including:

	·	compliance with the covenants under the Credit Facility, including financial covenants and covenants relating to hosted payloads and launch and in-orbit insurance;
	·	accuracy of the representations we make under the Credit Facility;
	·	compliance with the other terms of the Credit Facility, including the absence of events of default; and
	·	maintenance of the insurance policy with COFACE.

Some of these borrowing conditions may be outside of our controlliquidity needs by raising additional debt or otherwise difficult to satisfy. If we do not continue to satisfy those and other borrowing conditions under the Credit Facility and cannot obtain a waiver from the lenders, we would need to find other sources ofequity financing. We would have to seek the permission of the lenders under the Credit Facility in order to obtain many alternative sources of financing, and there can be no assurance that we would have access to other sources of financing on acceptable terms, or at all.

If we default under the Credit Facility, the lenders may require immediate repayment in full of amounts borrowed or foreclose on our assets.

The Credit Facility contains events of default, including:

non-compliance with the covenants under the Credit Facility, including financial covenants and covenants relating to hosted payloads and launch and in-orbit insurance;payloads;

cross-default with other indebtedness;

insolvency of any obligor under the Credit Facility;

revocation of the COFACEBPIAE insurance policy;

failure to maintain our current satellite constellationfirst-generation satellites or complete Iridium NEXT by a specified time;date; and

a determination by the lenders that we have experienced a material adverse change in our business.

Some of these events of default are outside of our control or otherwise difficult to satisfy. If we experience an event of default, the lenders may require repayment in full of all principal and interest outstanding under the Credit Facility. It is unlikely we would have adequate funds to repay such amounts prior to the scheduled maturity of the Credit Facility. If we fail to repay such amounts, the lenders may foreclose on the assets we have pledged under the Credit Facility, which includes substantially all of our assets and those of our domestic subsidiaries.

22

The Credit Facility restricts the manner in which we may operate our business, which may prevent us from successfully implementing our business plan.

The Credit Facility contains restrictions on the operation of our business, including limits on our ability to:

make capital expenditures;

carry out mergers and acquisitions;

dispose of, or grant liens on, our assets;

enter into transactions with our affiliates;

pay dividends or make distributions to our stockholders;

incur indebtedness;

prepay indebtedness; and

make loans, guarantees or indemnities.

The Credit Facility also prohibits us from paying dividends to holders of our preferred stock, including our Series A Preferred Stock and Series B Preferred Stock, if we are unable to certify that we anticipate being able to comply with the financial covenants of the Credit Facility for the next twelve months each time we declare a dividend.   If we are unable to make that certification, we will not be able to pay the dividends on our outstanding preferred stock. As required by our amended Credit Facility, during the three months ended June 30, 2017, we began a five-quarter deferral of dividends on both the Series A Preferred Stock and Series B Preferred Stock. If we do not pay dividends on our preferred stock for six quarterly periods (whether or not consecutive), the holders of the Series A Preferred Stock and Series B Preferred Stock collectively will have the power to elect two members of our board of directors. The interests of the holders of our preferred stock may differ from those of our other stockholders. In addition, any dividend we fail to pay will accrue, and the holders of our Series A Preferred Stock and Series B Preferred Stock will be entitled to a preferential distribution of the original purchase price per share plus all accrued and unpaid dividends before any distribution may be made to holders of our common stock in connection with any liquidation event.

Complying with these restrictions may cause us to take actions that are not favorable to holders of our common stock and may make it more difficult for us to successfully execute our business plan and compete against companies who are not subject to such restrictions.

If we are unable to effectively develop and deploy Iridium NEXT before our current satellite constellation ceasesfirst-generation satellites cease to provide a commercially acceptable level of service, our business will suffer.

We are currently developinglaunching Iridium NEXT, which we expect to commence launching in the second half of 2015.NEXT. While we expect our current satellite constellationfirst-generation satellites to provide a commercially acceptable level of service through the completion of the transition to Iridium NEXT, we cannot guarantee it will do so. If we are unable to effectively deploycomplete the deployment of Iridium NEXT for any reason, whether as a result of insufficient funds, manufacturing or launch delays, launch failures, in-orbit satellite failures, inability to achieve or maintain orbital placement, failure of the

satellites to perform as expected, interference between any hosted payload and our network, or delays in receiving regulatory approvals or otherwise, before our current constellation ceasesfirst-generation satellites cease to provide a commercially acceptable level of service, or if we experience backward compatibility problems with our new constellation, once deployed, we would likely lose customers and business opportunities to our competitors, resulting in a potentially material decline in revenue and profitability and the inability to service our debt.

Iridium NEXT may not be completed on time, and the costs associated with it may be greater than expected.

We estimate that the costs associated with the design, build and launch of Iridium NEXT and related ground infrastructure upgrades through 20172018 will be approximately $3 billion, although our actual costs could substantially exceed this estimate. We may not complete Iridium NEXT and related ground infrastructure on time, on budget or at all. We have delayed ourOur first launch, originally scheduled for the first quarter of 2015, to the second half of 2015was delayed until January 2017 because of delays in software development by our satellite manufacturer, the failure of one of our launch providers, Kosmotras, to obtain the permits or authorizations for launch, and delays by our other launch provider, SpaceX, and we may experience further delays. The design, manufacture and launch of satellite systems are highly complex and historically have been subject to delays and cost overruns. DevelopmentDeployment of Iridium NEXT may suffer from additional delays, interruptions or increased costs due to many factors, some of which may be beyond our control, including:

·

lower than anticipated internally generated cash flows, including from Aireon and other hosted payloads;

·

the failure to maintain our ability to make draws under the Credit Facility, including by reason of our failure to satisfy any ongoing financial or other condition to making draws;

·

operating and other requirements imposed by the lenders under the Credit Facility;

·

our and Thales’s ability to design and manufacture the Iridium NEXT satellites on time and on budget, including issues that might be found late in the process, for example during systems-level testing and final satellite qualification;

·

interference between any hosted payload and our network;

·

complex integration of our ground segment with the Iridium NEXT satellites and the transition from our current constellation;

·

denial or delays in receipt of regulatory approvals or non-compliance with conditions imposed by regulatory authorities;

·

the breakdown or failure of equipment or systems;

·

non-performance by third-party contractors, including the prime system contractor;

·

the inability to license necessary technology on commercially reasonable terms or at all;

·

use of the SpaceX launch vehicle, which has a limited operating history, or the failure of SpaceX to sustain its business;

·

launch delays or failures or in-orbit satellite failures once launched or the decision to manufacture additional replacement satellites for future launches;

·

labor disputes or disruptions in labor productivity or the unavailability of skilled labor;

·

increases in the costs of materials;

·

changes in project scope;

·

additional requirements imposed by changes in laws; or

·

severe weather or catastrophic events, such as fires, earthquakes or storms.

lower than anticipated internally generated cash flows, including from Aireon and other hosted payloads;

inadequate liquidity;

operating and other requirements imposed by the lenders under the Credit Facility;

Thales’s ability to manufacture the Iridium NEXT satellites on time and on budget, including issues that might be found late in the process, for example during systems-level testing;

interference between any hosted payload and our network;

complex integration of our ground segment with the Iridium NEXT satellites and the transition from our first-generation satellites;

denial or delays in receipt of regulatory approvals or non-compliance with conditions imposed by regulatory authorities;

the breakdown or failure of equipment or systems;

non-performance by third-party contractors, including the prime system contractor;

the inability to license necessary technology on commercially reasonable terms or at all;

use of the SpaceX launch vehicle, which has a limited operating history, or the failure of SpaceX to sustain its business;

launch delays or failures or in-orbit satellite failures once launched or the decision to manufacture additional replacement satellites for future launches;

labor disputes or disruptions in labor productivity or the unavailability of skilled labor;

increases in the costs of materials;

changes in project scope;

additional requirements imposed by changes in laws; or

severe weather or catastrophic events, such as fires, earthquakes or storms.

If the design, manufacture and deployment of Iridium NEXT costs more or takes longer than we anticipate, our ability to continue to develop Iridium NEXT and related ground infrastructure could be compromised.

Our Iridium NEXT launch strategy includes an initial launch using a Russian launch services provider, which could be jeopardized by instability in the region or diplomatic sanctions, and in turn could result in a delay to our initial launch and additional launch and insurance costs.

Our strategy to launch our 72 Iridium NEXT satellites includes a planned first launch in the second half of 2015 of two satellites on a Dnepr rocket under contract with International Space Company Kosmotras, or Kosmotras, a Russian launch services provider, with the remaining 70 satellites to be launched on seven Falcon 9 rockets under contract with Space Exploration Technologies Corporation, or SpaceX. Many of Kosmotras’ operations are in Ukraine, a country that has recently experienced significant political instability. If we cannot launch the first two satellites as planned, our first launch would likely be of ten satellites on the first of our SpaceX launches, which launch out of the United States and would be unaffected by the delay. The loss of the ability to launch two satellites and test them before launching the next ten satellites would increase our insurance costs, and any alternative launch strategy for the first two satellites would likely increase our launch costs.

Loss of any Iridium NEXT satellite during launch or delays in our launch schedule could delay or impair our ability to offer our services or increase our costs.

The launchfuture launches of our Iridium NEXT satellites will be subject to the inherent risk of launch failures, which could result in the loss or destruction of one or more satellites. We have entered into ourtwo launch services agreementagreements with SpaceX, pursuant to which SpaceX will provide launch services to us in connection with our deployment of Iridium NEXT. The SpaceX agreement contemplatesagreements contemplate seven launches of ten satellites, four of which have been completed, and one shared launch of five satellites, each on SpaceX’s Falcon 9 rocket, over a two-year period. SpaceX is a rapidly growing company in a technically complicated industry, and is working to meet an aggressive launch manifest.manifest and has experienced failures leading to launch delays in the past. In the event of a launch failure resulting in the destruction of our satellites, we may not be able to have enough replacement satellites manufactured in time to conduct all contracted launches. A failure by SpaceX to maintain its launch schedule could expose us to delay or the need to utilize an alternate launch services provider, which could substantially increase our launch costs. We have also entered into a

Our launch services agreement with Kosmotras pursuant to which Kosmotras will provide supplemental or alternative launch services for Iridium NEXT. We have exercised an option to have Kosmotras launchinsurance contains significant elements of self-insurance and some variability in premiums and only covers the first twotwelve months of operations of our Iridium NEXT satellites. The usesatellites, as a result of Kosmotras to replace one or more of the contemplated SpaceX launches would increase our launch costs.

We do not maintain in-orbit insurance covering our losses from satellite failures or other operational problems affecting our current constellation, andwhich we may not be ablesubject to obtain theincreased costs.

The launch and in-orbit insurance for Iridium NEXT required bywe have obtained contains, consistent with the Credit Facility.

We do not maintain in-orbit insurance covering losses that might arise as a result of a satellite failure or other operational problems affecting our constellation. The terms of the Credit Facility, however, require us to obtainelements of self-insurance and maintain such insurance for the Iridium NEXT satellites for a period of 12 months after launch, as well as launch insurance. The amount of coverage we are seeking to place is large, our coverage requirements are complex, and the market for launch and in-orbit insurance is limited. We have placed only a portion of coverage for the full launch program to date, and we are currently in discussions with prospective insurers and with our lenders regarding the structure of our planned coverage. If we are not able to obtain launch and in-orbit insurance on the terms required by the Credit Facility or at an acceptable price, we would be required to obtain a waiver under the Credit Facility. Our lenders may be unwilling to grant such a waiver, which would trigger an event of default under the Credit Facility, giving our lenders the right to accelerate repayment of all outstanding borrowings. Even if we obtain the required launch and in-orbit insurance, the coverage may not be sufficient to compensate us for satellite failures and other operational problems affecting our satellites, as it may either contain large deductible amounts or providedeductibles, providing reimbursement only after a specified number of satellite failures.  Further, some policies covering launches three through seven require the payment of additional premiums if there are losses on the first two launches. Further, our insurance only covers in-orbit failures of our satellites for a period of twelve months from the date of launch. As a result, a failure of one or more of our satellites, or the occurrence of equipment failures and other related problems, could constitute an uninsured loss or require the payment of additional premiums and could harm our financial condition. Furthermore, launch and in-orbit insurance does not cover lost revenue.  For more information on

Both our launchfirst-generation and in-orbit insurance plans, see “Our Network –our Iridium NEXT” above.

Our satellites have a limited life and may fail prematurely, which would cause our network to be compromised and materially and adversely affect our business, prospects and profitability.

Since we introduced commercial services in 2001, we have experienced twelve satellite losses, most recently in August 2014. Eleven of our

Our first-generation satellites have failed in orbit, which has resulted in either the complete loss of the affected satellites or the loss of the ability of the satellite to carry traffic on the network, and one satellite was lost as a result of a collision with a non-operational Russian satellite. Also, our satellites have already exceeded their original design lives. While actual useful life typically exceeds original design life, the useful lives of our satellites may be shorter than we expect, and additional satellites may fail or collide with space debris or other satellites in the future. Although to dateSimilarly, we have had anmay experience in-orbit spare available to replace each lost satellite, ifmalfunctions of Iridium NEXT satellites, which could adversely affect the reliability of their service or result in total failure of the satellite. If we experience a failure in an orbital plane other than a plane in which we have a spare, we do not expect to replace the failure until we have an Iridium NEXT satellite available to do so. As a result, while we expect our current constellation to provide a commercially acceptable level of service through the completion of the transition to Iridium NEXT, we cannot guarantee it will be able to do so.

In-orbit failure of a satellite may result from various causes, including component failure, loss of power or fuel, inability to control positioning of the satellite, solar or other astronomical events, including solar radiation and flares, and space debris. Other factors that could affect the useful lives of our satellites include the quality of construction, gradual degradation of solar panels and the durability of components. Radiation-induced failure of satellite components may result in damage to or loss of a satellite before the end of its expected life. As our constellation hasfirst-generation satellites have aged, some of our satellites have experienced individual component failures affecting their coverage or transmission capacity, and other satellites may experience such failures in the future, which could adversely affect the reliability of their service or result in total failure of the satellite. As a result, fewer than 66 of our current in-orbit satellites are fully functioning at any time. Although we do not incur any direct cash costs related to the failure of a satellite, if a satellite fails, we record an impairment charge in our statement of operations to reduce the remaining net book value of that satellite to zero, and any such impairment charges could significantly depress our net income for the period in which the failure occurs.

From time to time, we are advised by our customers and end users of temporary intermittent losses of signal cutting off calls in progress, preventing completions of calls when made or disrupting the transmission of data. If the magnitude or frequency of such problems increase and we are no longer able to provide a commercially acceptable level of service, our business and financial results and our reputation would be hurt and our ability to pursue our business plan would be compromised.

We may be required in the future to make further changes to our constellation to maintain or improve its performance. Any such changes may require prior Federal Communications Commission, or FCC approval, and the FCC may subject the approval to other conditions that could be unfavorable to our business. In addition, from time to time we may reposition our satellites within the constellation in order to optimize our service, which could result in degraded service during the repositioning period. Although we have some ability to remedy some types of problems affecting the performance of our satellites remotely from the ground, the physical repair of our satellites in space is not feasible.

We will have to de-orbit all of our first-generation satellites, and we may not be able to obtain or maintain adequate de-orbit insurance.

Our FCC license requires us to de-orbit a first-generation satellite following its replacement with an Iridium NEXT constellation satellite and to notify the FCC within 30 days following removal of a first-generation satellite from its operational orbit for purposes of de-orbit, subject to the license modification that we have been granted with respect to up to 18 first-generation satellites we may keep as spares.

Our current insurance policy covers amounts that we and other specified parties may become liable to pay for bodily injury and property damages to third parties related to a de-orbit of our first-generation satellites. Our current policy has a one-year term, which expires on December 8, 2018, and covers all remaining first-generation satellites. The price, terms and availability of insurance have fluctuated significantly since we began offering commercial satellite services. The cost of obtaining insurance can vary as a result of either satellite failures or general conditions in the insurance industry. Higher premiums on insurance policies would increase our cost. De-orbit liability insurance policies on satellites may not continue to be available on commercially reasonable terms or at all or in sufficient amount to cover the planned de-orbit, over time, of all satellites in our first-generation constellation. In addition to higher premiums, insurance policies may provide for higher deductibles, shorter coverage periods and additional policy exclusions. For example, our current de-orbit insurance covers only twelve months from attachment and therefore would not cover losses arising outside that timeframe. In addition, even if we continue to maintain a de-orbit liability insurance policy, the coverage may not protect us against all third-party losses, which could be material.  

Our agreements with U.S. government customers, particularly the DoD, which represent a significant portion of our revenue, expire in 2018 and are also subject to termination.

The U.S. government, through a dedicated gateway owned and operated by the DoD, has been and continues to be, directly and indirectly, our largest customer, representing 21% and 19%24% of our revenue for each of the years ended December 31, 20142017 and 2013, respectively.2016. We provide the majority of our services to the U.S. government pursuant to our Gateway Maintenance and Support Services, or GMSS, and EMSS contracts. We entered into these contracts in September 2013 and October 2013, respectively. The GMSS contract provides for a one-year base term and up to four additional one-year options exercisable at the election of the U.S. government, oneall of which hashave been exercised so far, and the EMSS contract provides for a five-year term. TheThese agreements expire in the second half of 2018, although based on federal acquisition regulations, the government has the ability to extend each agreement for an additional six months. We are currently negotiating renewals of these contracts, but we can provide no assurance that we will be able to do so on favorable terms, or at all. Further, the U.S. government may terminate these agreements, in whole or in part, at any time for its convenience. Our relationship with the U.S. government is also subject to the overall U.S. government budget and appropriation decisions and processes. U.S. government budget decisions, including with respect to defense spending, are based on changing government priorities and objectives, which are driven by numerous factors, including geopolitical events and macroeconomic conditions, and are beyond our control. If the U.S. government terminates or fails to renew either of the agreements, or decides not to exercise options under the GMSS agreement, we would lose a significant portion of our revenue.

We are dependent on intellectual property licensed from third parties to operate our constellation and sell our devices and for the enhancement of our existing products and services.

We license critical system technology, including software and systems, to operate and maintain our network as well as technical information for the design, manufacture and sale of our devices. This intellectual property is essential to our ability to continue to operate our constellation and sell our services handsets and data devices. In addition, we are dependent on third parties to develop enhancements to our current products and services even in circumstances where we own the intellectual property. If any third-party owner of such intellectual property were to terminate any license agreement with us or cease to support and service this technology or perform development on our behalf, or if we are unable to renew such licenses on commercially reasonable terms or at all, it may be difficult, more expensive or impossible to obtain such technology or services from alternative vendors. Any substitute technology may also be costly to develop and integrate, or could have lower quality or performance standards, which would adversely affect the quality of our products and services. In connection with the design, manufacture and operation of Iridium NEXT and related ground infrastructure and the development of new products and services to be offered on Iridium NEXT, we may be required to obtain additional intellectual property rights from third parties. We can offer no assurance that we will be able to obtain such intellectual property rights on commercially reasonable terms or at all. If we are unable to obtain such intellectual property rights on commercially reasonable terms, we may not be able to complete Iridium NEXT and related ground infrastructure on budget or at all or may not be able to develop new products and services to be offered on Iridium NEXT.

Our products could fail to perform or could perform at reduced levels of service because of technological malfunctions or deficiencies or events outside of our control, which would seriously harm our business and reputation.

Our products and services are subject to the risks inherent in a large-scale, complex telecommunications system employing advanced technology. Any disruption to our satellites, services, information systems or telecommunications infrastructure could result in the inability of our customers to receive our services for an indeterminate period of time. These customers include government agencies conducting mission-critical work throughout the world, as well as consumers and businesses located in remote areas of the world and operating under harsh environmental conditions where traditional telecommunications services may not be readily available. Any disruption to our services or extended periods of reduced levels of service could cause us to lose customers or revenue, result in delays or cancellations of future implementations of our products and services, result in failure to attract customers, or result in litigation, customer service or repair work that would involve substantial costs and distract management from operating our business. The failure of any of the diverse elements of our system, including our satellites, our commercial gateway, our satellite teleport network facilities or our satellite network operations center, to function as required could render our system unable to perform at the quality and capacity levels required for success. Any system failures, repeated product failures or shortened product life, or extended reduced levels of service could reduce our sales, increase costs, or result in warranty or liability claims or litigation, cause us to extend our warranty period, and seriously harm our business.

As

Our failure to effectively manage the expansion of our product portfolio expands, our failure to manage growth effectively could impede our ability to execute our business plan, and we may experience increased costs or disruption in our operations.

We are dependent on our ability to develop and market new products for substantial future revenue growth. We currently face a variety of challenges, including maintaining the infrastructure and systems necessary for us to manage the growth of our business. As our product portfolio continues to expand, the responsibilities of our management team and other company resources also grow. Consequently, we may further strain our management and other company resources with the increased complexities and administrative burdens associated with a larger, more complex product portfolio. For example, we have in the past experienced quality issues and incorrect market assessments in connection with the introduction of new products and services, and we may experience such issues in the future. Our failure to meet these challenges as a result of insufficient management or other resources could significantly impede our ability to execute our business plan, which relies in part on our ability to leverage our largely fixed-cost infrastructure. To properly manage our growth, we may need to hire and retain additional personnel, upgrade our existing operational management and financial and reporting systems, and improve our business processes and controls. Failure to effectively manage the expansion of our product portfolio in a cost-effective manner could result in declines in product and service quality and customer satisfaction, disruption of our operations, or increased costs, any of which would reduce our ability to expandincrease our margins as we expect.

26

profitability.

As we and our distributors expand our offerings to include more consumer-oriented devices, we are more likely to be subject to product liability claims, recalls or litigation, which could adversely affect our business and financial performance.

Through our network of distributors, we offer several products and services aimed at individual consumers, and we and our distributors continue to introduce additional products and services. These products and services, such as satellite handsets, personal locator devices and location-based services, may be used in isolated and dangerous locations, including emergency response situations, and users who suffer property damage, personal injury or death while using the product or service may seek to assert claims or bring lawsuits against us. Further, it is possible that our products would become the subject of consumer protection litigation, including class actions. We seek to limit our exposure to suchall of these claims through appropriate disclosures, indemnification provisions and disclaimers, but these steps may not be effective. We also maintain product liability insurance, but this insurance may not cover any particular claim or litigation, or the amount of insurance may be inadequate to cover the claims brought against us. Product liability insurance could become more expensive and difficult to maintain and might not be available on acceptable terms or at all. In addition, it is possible that our products would become the subject of a product recall as a result of a product defect. We do not maintain recall insurance, so any recall could have a significant effect on our financial results. In addition to the direct expenses of product liability claims, recalls and litigation, a claim, recall or litigation might cause us adverse publicity, which could harm our reputation and compromise our ability to sell our products in the future.

The collection, storage, transmission, use and disclosure of user data and personal information could give rise to liabilities or additional costs as a result of laws, governmental regulations, and evolving views of personal privacy rights.

rights and information security standards.

We transmit, process, and in some cases store, end user data, including personalpersonally identifiable information. In jurisdictions around the world, the transmission and storage of personalpersonally identifiable information is becoming increasingly subject to legislation and regulations intended to protect consumers’ privacy and security.the security of their personal information. The standards

for processing, storing and using personally identifiable information continue to evolve, and impose additional obligations and risk on our business, and have the potential to make some of our business processes less feasible. In addition, the interpretation of privacy and data protection laws and regulations regarding the collection, storage, transmission, use and disclosure of such information in some jurisdictions is unclear and evolving.remains unclear. These laws may be interpreted, applied and enforced in conflicting ways from country to country and in a manner that is not consistent with our current data protection practices. Complying with these varying international requirements could cause us to incur additional costs and change our business practices. Because our services are accessible in many foreign jurisdictions, some of these jurisdictions may claim that we are required to comply with their laws, even where we have no local entity, employees or infrastructure. We could face a variety of enforcement actions or government inquiries or be forced to incur significant expenses if we were required to modify our products, our services, or our existing security and privacy procedures in order to comply with new or expanded regulations.

In addition, if end users allege that their personal information is not collected, stored, transmitted, used or disclosed by us or our business partners appropriately or in accordance with our privacy policies or applicable laws, or that our failure to adequately secure their information compromised its security, we could have liability to them or to consumer protection agencies, including claims and litigation resulting from such allegations. Any failure on our part to protect end users’ privacy and data could result in a loss of user confidence, hurt our reputation and ultimately result in the loss of users.

Our satellites may collide with space debris or another spacecraft, which could adversely affect the performance of our constellation.

In February 2009, we lost an operational satellite as a result of a collision with a non-operational Russian satellite. Although we have some ability to actively maneuver our satellites to avoid potential collisions with space debris or other spacecraft, this ability is limited by, among other factors, uncertainties and inaccuracies in the projected orbit location of and predicted conjunctions with debris objects tracked and cataloged by the U.S. government. Additionally, some space debris is too small to be tracked and therefore its orbital location is completely unknown; nevertheless, this debris is still large enough to potentially cause severe damage or a failure of our satellites should a collision occur. If our constellation experiences additional satellite collisions with space debris or other spacecraft, our service could be impaired.

The space debris created by the February 2009 satellite collision may cause damage to other spacecraft positioned in a similar orbital altitude.

The 2009 collision of one of our satellites with a non-operational Russian satellite created a space debris field concentrated in the orbital altitude where the collision occurred, and thus increased the risk of space debris damaging or interfering with the operation of our satellites, which travel in this orbital altitude, as well as satellites owned by third parties, such as U.S. or foreign governments or agencies and other satellite operators. Although there are tools used by us and providers of tracking services, such as the U.S. Joint Space Operations Center, to detect, track and identify space debris, we or third parties may not be able to maneuver the satellites away from such debris in a timely manner. Any such collision could potentially expose us to significant losses and liability if we were found to be at fault.

If we experience operational disruptions with respect to our commercial gatewaygateways or operations center, we may not be able to provide service to our customers.

Our commercial satellite network traffic is supported by a gatewaygateways in Tempe, Arizona, and Izhevsk, Russia, for traffic within Russian boundaries, and we operate our satellite constellation from our satellite network operations center in Leesburg, Virginia. Currently, we do not have a backup facility for our primary gateway in Arizona, and bothour facilities are subject to the risk of significant malfunctions or catastrophic loss due to unanticipated events and would be difficult to replace or repair and could require substantial lead-time to do so. Material changes in the operation of these facilities may be subject to prior FCC approval, and the FCC might not give such approval or may subject the approval to other conditions that could be unfavorable to our business. Our gatewaygateways and operations center may also experience service shutdowns or periods of reduced service in the future as a result of equipment failure, delays in deliveries or regulatory issues. Any such failure would impede our ability to provide service to our customers.

We may be negatively affected by current global economic conditions.

Our operations and performance depend significantly on worldwide economic conditions. Uncertainty about current global economic conditions poses a risk as individual consumers, businesses and governments may postpone spending in response to tighter credit, negative financial news, declines in income or asset values or budgetary constraints. Reduced demand would cause a decline in our revenue and make it more difficult for us to operate profitably, potentially compromising our ability to pursue our business plan. While we expect the number of our subscribers and revenue to continue to grow, we expect the future growth rate will be slower than our historical growth and may not continue in every quarter of every year. We expect our future growth rate will be affected by the sluggish global economy, increased competition, maturation of the satellite communications industry and the difficulty in sustaining high growth rates as we increase in size. Any substantial appreciation of the U.S. dollar may also negatively affect our growth by increasing the cost of our products and services in foreign countries.

If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis could be impaired.

We are subject to the reporting requirements of the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations of the SEC and The NASDAQ Global Select Market. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal controls over financial reporting. We perform system and process evaluation and testing of our internal controls over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting in our Annual Reports on Form 10-K, as required by Section 404 of the Sarbanes-Oxley Act. If we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, or if we are unable to maintain proper and effective internal controls, we may not be able to produce timely and accurate financial statements, and we may conclude that our internal controls over financial reporting are not effective. If that were to happen, the market price of our stock could decline and we could be subject to sanctions or investigations by The NASDAQ Global Select Market, the SEC or other regulatory authorities.

Maintaining effective internal controls over financial reporting is necessary for us to produce reliable financial statements. In connection with the preparation of our quarterly report for the three months ended September 30, 2012, management discovered an error caused by a previously existing material weakness in internal controls over financial reporting relating to accounting for income taxes. This material weakness led to the need for the restatement of our financial statements for the years ended December 31, 2009, 2010 and 2011 and for the quarters ended December 31, 2009 through December 31, 2011. If we fail to maintain effective controls over financial reporting in the future, it could result in a material misstatement of our financial statements that would not be prevented or detected on a timely basis and which could cause investors and other users to lose confidence in our financial statements.

We could lose market share and revenue as a result of increasing competition from companies in the wireless communications industry, including cellular and other satellite operators, and from the extension of land-based communications services.

We face intense competition in all of our markets, which could result in a loss of customers and lower revenue and make it more difficult for us to enter new markets. We compete primarily on the basis of coverage, quality, portability, and pricing of services and products.

The provision of satellite-based services and products is subject to downward price pressure when capacity exceeds demand or as a result of aggressive discounting by some operators under financial pressure to expand their respective market share. In addition, we may face competition from new competitors, new technologies or new equipment.equipment, including proposed new LEO constellations. For example, we may face competition for our land-based services in the United States from incipient ancillary terrestrial component, or ATC, service providers who are designing a satellite operating business and a terrestrial component around their spectrum holdings. In addition, some of our competitors have announced plans for the launch of additional satellites. As a result of competition, we may not be able to successfully retain our existing customers and attract new customers.

In addition to our satellite-based competitors, terrestrial voice and data service providers, both wireline and wireless, could further expand into rural and remote areas and provide the same general types of services and products that we provide through our satellite-based system. Although satellite communications services and terrestrial communications services are not perfect substitutes, the two compete in some markets and for some services. Consumers generally perceive terrestrial wireless voice communication products and services as cheaper and more convenient than those that are satellite-based. Many of our terrestrial competitors have greater resources, wider name recognition and newer technologies than we do. In addition, industry consolidation could hurt us by increasing the scale or scope of our competitors, thereby making it more difficult for us to compete.

Some of the hardware and software we use in operating our gateway was designedgateways is significantly customized and manufactured over ten years ago,tailored to meet our requirements and portions are becoming morespecifications and could be difficult and expensive to service, upgrade or replace.

Some of the hardware and software we use in operating our gateway was designedgateways is significantly customized and manufactured over ten years ago,tailored to meet our requirements and portions are becoming obsolete. As they continue to age, they may become less reliablespecifications and willcould be more difficult and expensive to service, upgrade or replace. Although we maintain inventories of some spare parts, it nonetheless may be difficult, expensive or impossible to obtain all necessary replacement parts for the hardware. Ourhardware due to a limited number of those parts being manufactured to our requirements and specifications. In addition, our business plan contemplates updating or replacing some of the hardware and software in our network as technology advances, but the agecomplexity of our existing hardwarerequirements and softwarespecifications may present us with technical and operational challenges that complicate or otherwise make it expensive or infeasible to carry out our plannedsuch upgrades and replacements, and the expenditure of resources, both from a monetary and human capital perspective, may exceed our estimates.replacements. If we are not able to suitably service, upgrade andor replace our equipment, obsolescence of the technologies that we use could hurt our ability to provide our services and therefore to generate revenue.

revenue could be harmed.

Rapid and significant technological changes in the satellite communications industry may impair our competitive position and require us to make significant additional capital expenditures.

The satellite communications industry is subject to rapid advances and innovations in technology. We may face competition in the future from companies using new technologies and new satellite systems. New technology could render our system obsolete or less competitive by satisfying customer demand in more attractive ways or through the introduction of incompatible standards. Particular technological developments that could adversely affect us include the deployment by our competitors of new satellites with greater power, flexibility, efficiency or capabilities than our current constellationfirst-generation satellites or Iridium NEXT, as well as continuing improvements in terrestrial wireless technologies. For us to keep up with technological changes and remain competitive, we may need to make significant capital expenditures, including capital to design and launch new products and services on Iridium NEXT. Customer acceptance of the products and services that we offer will continually be affected by technology-based differences in our product and service offerings compared to those of our competitors. New technologies may also be protected by patents or other intellectual property laws and therefore may not be available to us. Any failure on our part to implement new technology within our system may compromise our ability to compete.

Use by our competitors of L-band spectrum for terrestrial services could interfere with our services.

In February 2003, the FCC adopted ATC rules that permit satellite service providers to establish terrestrial wireless networks in previously satellite-only bands, subject to certain requirements intended to ensure that terrestrial services remain ancillary to primary satellite operations. In November 2012, Globalstar, Inc. filed2011, Lightsquared (now known as Ligado Networks) was granted a petition for rulemaking, askingwaiver at the FCC to permit it

convert Ligado Network’s L-band satellite spectrum to provide terrestrial use including a 10 MHz band close to the spectrum that we use for all of our services.  That waiver was subsequently suspended in 2012 due to concerns about potential interference to GPS operations.  Ligado Networks sought another waiver in 2015 to modify the ATC of its L-band mobile satellite service network with a new proposal to address GPS industry concerns.  We oppose this waiver out of concern for the interference that Ligado Network’s proposed operations would cause to our operations in L-band spectrum and to eliminate the requirements for primary satellite operations, which we are opposing. L-band.

The implementation of ATC services by satellite service providers in the United States or other countries may result in increased competition for the right to use L-band spectrum in the 1.6 gigahertzGHz band, which we use to provide our services, and such competition may make it difficult for us to obtain or retain the spectrum resources we require for our existing and future services. In addition, the FCC’s decision to permit ATC services was based on assumptions relating to the level of interference that the provision of ATC services would likely cause to other satellite service providers that use the L-band spectrum. If the FCC’s assumptions prove inaccurate, or the level of ATC services provided exceeds those estimated by the FCC, such as the proposed use by Ligado Networks, ATC services could substantially interfere with our satellites and devices, which maywould adversely affect our services. Outside the United States, other countries have implemented, or are considering implementing, regulations to facilitate ATC-like services.

Our networks and those of our third-party service providers may be vulnerable to security risks.

We expect the secure transmission of confidential information over public networks to continue to be a critical element of our ability to compete for business, manage our risks, and protect our customers and our reputation. Our network and those of our third-party service providers and our customers may be vulnerable to unauthorized access, computer viruses and other security problems. Persons who circumvent security measures could wrongfully obtain or use information on the network or cause interruptions, delays or malfunctions in our operations, any of which could harm our reputation, cause demand for our products and services to fall, and compromise our ability to pursue our business plans. Recently, there have been reported a number of significant, widespread security breaches that have compromised network integrity for many companies and governmental agencies, in some cases reportedly originating from outside the United States. In addition, there are reportedly private products available in the market today which may attempt to unlawfully intercept communications made onusing our network. We may be required to expend significant resources to protect against the threat of security breaches or to remediate harm caused by a breach, including compliance with applicable data breach notification laws, and to alleviate problems, including reputational harm and litigation, caused by any breaches. In addition, our customer contracts may not adequately protect us against liability to third parties with whom our customers conduct business. Although we have implemented and intend to continue to implement industry-standard and other security measures, these measures may prove to be inadequate and result in incidents, including system failures and delays, that could lowerlimit network availability, which could harm our business and our reputation.

29

reputation and result in substantial liability.

We are dependent on third parties to market and sell our products and services.

We select third-party distributors and rely on third-party distributorsthem to market and sell our products and services to end users and to determine the prices end users pay.pay, in some cases on an exclusive basis. We also depend on our distributors to develop innovative and improved solutions and applications integrating our product and service offerings. As a result of these arrangements, we are dependent on the performance of our distributors to generate most of our revenue. Our distributors operate independently of us, and we have limited control over their operations, which exposes us to significant risks. Distributors may not commit the necessary resources to market and sell our products and services and may also market and sell competitive products and services. In addition, our distributors may not comply with the laws and regulatory requirements in their local jurisdictions, which could limit their ability to market or sell our products and services. If our distributors develop faulty or poorly performing products using our technology or services, we may be subject to claims, and our reputation could be harmed. If current or future distributors do not perform adequately, or if we are unable to locate competent distributors in particular countries and secure their services on favorable terms, we may be unable to increase or maintain our revenue in these markets or enter new markets, we may not realize our expected growth, and our brand image and reputation could be hurt.

In addition, we may lose distributors due to competition, consolidation, regulatory developments, business developments affecting our distributors or their customers, or for other reasons. In 2009, one of our largest competitors, Inmarsat, acquired our then largest distributor, Stratos Global Wireless, Inc., and in January 2014, Inmarsat acquired Globe Wireless, one of our service providers. Following each acquisition, Inmarsat essentially stopped promoting sales of our products and services, and they may further reduce their efforts in the future. Any future consolidation of our distributors would further increase our reliance on a few key distributors of our services and the amount of volume discounts that we may have to give those distributors. Our two largest distributors, Applied Satellite Technology LTD and Inmarsat,Network Innovation, represented a total of 15%12% of our revenue for the year ended December 31, 20142017, and our ten largest distributors represented, in the aggregate, 42%37% of our revenue for the year ended December 31, 2014.2017. The loss of any of these distributors, or a decrease in the level of effort

expended by any of them to promote our products and services, could reduce the distribution of our products and services as well as the development of new products and applications.

We rely on a limited number of key vendors for supply of equipment and services.

We currently rely on two single-source contracts forBenchmark Electronics Inc., or Benchmark, as the manufactureexclusive manufacturer of our current devices, including our mobile handsets, L-Band transceivers, SBD devices and short-burst data devices. We have notified one of these manufacturers of our intent to terminate our agreement with them, and as a result we expect to solely rely on Benchmark Electronics (Thailand) PCL, or Benchmark, starting in August 2015.Iridium Pilot terminals. Benchmark may choose to terminate its business relationship with us when its current contractual obligations are completed, or at such earlier time as contemplated byif we default under our current agreement. We also utilize sole source suppliers for some of the component parts of our devices. If Benchmark terminatesor any of our other suppliers were to terminate its relationship with us, we may not be able to find a replacement supplier in a timely manner, at an acceptable price or at all. We are highly dependent on these manufacturers’ performance as the sole suppliers of our devices. We also utilize sole source suppliers for some of the component parts of our devices.

These manufacturers

Our manufacturer and suppliers may become capacity-constrained as a result of a surge in demand, a natural disaster or other event, or one or more component suppliers may decide to cease production of various components of our products, resulting in a shortage or interruption in supplies or an inability to meet increased demand. Although we mightmay be able to replace sole source suppliers, there could be a substantial period of time in which our products would not be available; any new relationship may involve higher costs and delays in development and delivery, and we mightmay encounter technical challenges in successfully replicating the manufacturing processes. If our manufacturers or suppliers terminate their relationships with us, fail to provide equipment or services to us on a timely basis, or fail to meet our performance expectations, we mightmay be unable to provide products or services to our customers in a competitive manner, which could in turn negatively affect our financial results and our reputation.

In addition,November 2016, we depend onentered into a development services contract with Boeing, which will dedicate key Boeing personnel to provide operationscontinue the design and maintenancegrowth required for bringing new services with respectand capabilities to our satellite network, including engineering, systems analysis, integration and testing of new equipment and operations and maintenance services, from our technical support center in Chandler, Arizona and our satellite network operations center in Leesburg, Virginia.the Iridium NEXT network. Technological competence is critical to our business and depends, to a significant degree, on the work of technically skilled personnel, such as ourthese Boeing contractors. If Boeing’s performance falls below expected levels or if Boeing has difficulties retaining the personnel servicing our network development, the operationsdevelopment of our satellite networknew products and services on Iridium NEXT could be compromised. In addition, if Boeing terminates its agreement with us, we may not be able to find a replacement provider on favorable terms or at all, which could impair theour operations and performance of our network. Replacing Boeing as the operator of our current satellite system could also trigger de-orbit rights held by the U.S. government, which, if exercised, would eliminate our ability to offer satellite communications services altogether.

performance.

We have been and may in the future become subject to claims that our products violate the patent or intellectual property rights of others, which could be costly and disruptive to us.

We operate in an industry that is susceptible to significant intellectual property litigation. As a result, we or our products may become subject to intellectual property infringement claims or litigation. The defense of intellectual property suits is both costly and time-consuming, even if ultimately successful, and may divert management’s attention from other business concerns. An adverse determination in litigation to which we may become a party could, among other things:

subject us to significant liabilities to third parties, including treble damages;

require disputed rights to be licensed from a third party for royalties that may be substantial;

require us to cease using technology that is important to our business; or

prohibit us from selling some or all of our products or offering some or all of our services.

Conducting and expanding our operations outside the United States creates numerous risks, which may harm our operations and compromise our ability to expand our international operations.

We have significant operations outside the United States. We estimate that commercial data traffic originating outside the United States, excluding our Iridium OpenPort broadband data service or Iridium OpenPort^®, traffic, accounted for 69%75% and 67%72% of total commercial data traffic for the years ended December 31, 20142017 and 2013,2016, respectively, while commercial voice traffic originating outside the United States, excluding Iridium OpenPort traffic, accounted for 90%88% of total commercial voice traffic for each of the years ended December 31, 20142017 and 2013.2016. We cannot provide the precise geographical distribution of revenue from end users because we do not contract directly with them. Instead, we determine the country in which we earn our revenue based on where we invoice our distributors. These distributors sell services directly or indirectly to end users, who may be located or use our products and services elsewhere. We and our distributors are also seeking authorization to sell our services in additional countries.

Conducting operations outside the United States involves numerous risks and, while expanding our international operations would advance our growth, it would also increase our exposure to these risks. For example, in 2013 we commenced the provision of satellite communications services in Russia through a local subsidiary and its authorized Russian service providers and secured a site and commenced construction ofsubsequently constructed a dedicated gateway in Russia. The U.S. government has recently imposed economic and diplomatic sanctions on certain Russian corporations, banks, and citizens and might impose additional sanctions in the future. If such sanctions, or any Russian response to such sanctions, affects our operations in Russia, it could limit our growth in Russia or prevent us from continuing to operate there at all, which would reduce our revenues.

Other risks associated with the proposed expansion of our international operations include:

difficulties in penetrating new markets due to established and entrenched competitors;

difficulties in developing products and services that are tailored to the needs of local customers;

lack of local acceptance or knowledge of our products and services;

lack of recognition of our products and services;

unavailability of, or difficulties in establishing, relationships with distributors;

significant investments, including the development and deployment of dedicated gateways, as some countries require physical gateways within their jurisdiction to connect the traffic coming to and from their territory;

instability of international economies and governments;

changes in laws and policies affecting trade and investment in other jurisdictions;jurisdictions, including the United Kingdom’s proposed exit from the European Union;

exposure to varying legal standards, including intellectual property protection in other jurisdictions;

difficulties in obtaining required regulatory authorizations;

difficulties in enforcing legal rights in other jurisdictions;

local domestic ownership requirements;

requirements that operational activities be performed in-country;

changing and conflicting national and local regulatory requirements; and

foreign currency exchange rates and exchange controls.controls; and

ongoing compliance with the U.S. Foreign Corrupt Practices Act, U.S. export controls, anti-money laundering and trade sanction laws, and similar anti-corruption and international trade laws in other countries.

If any of these risks were to materialize, it could affect our ability to successfully compete and expand internationally.

Government organizations, foreign military and intelligence agencies, natural disaster aid associations, and event-driven response agencies use our commercial voice and data satellite communications services. Accordingly, we may experience reductions in usage due to changing global circumstances, including as a result of changes in the nature of the conflicts in Afghanistan and Iraq, or continued reductions in U.S. and foreign personnel in those countries.

circumstances.

The prices for our products and services are typically denominated in U.S. dollars. Any appreciation of the U.S. dollar against other currencies will increase the cost of our products and services to our international customers and, as a result, may reduce the competitiveness of our international offerings and make it more difficult for us to grow internationally. Conversely, in some locations, primarily Russia, we conduct business in the local currency, and a depreciation of the local currency against the U.S. dollar will reduce the U.S. dollar value of our revenues from those countries. In recent years, Russia has recently experienced significant currency depreciation against the U.S. dollar.

We are currently unable to offer service in important regions of the world due to regulatory requirements, which limits our growth.

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

The U.S. government and Motorola Solutions and Boeing may unilaterally require us to de-orbit our current constellationfirst-generation satellites upon the occurrence of specified events.

When Iridium Satellite purchased the assets of Iridium LLC, a non-affiliated debtor in possession, out of bankruptcy, Boeing, Motorola and the U.S. government required specified de-orbit rights as a way to control potential liability exposure arising from future operation of theour first-generation constellation. As a result, Iridium Satellite, Boeing, which then operated our constellation, Motorola and the U.S. government entered into an agreement giving the U.S. government the right, in its sole discretion, to require us to de-orbit our constellationfirst-generation satellites upon the occurrence of specified events, including any time on or after January 1, 2015 or if more than four of our first-generation satellites have insufficient fuel to execute a 12-month de-orbit, both of which have already occurred. In addition, the U.S. government has the right to require us to de-orbit any of our individual functioning first-generation satellites, including in-orbit spares, that have been in orbit for more than seven years, unless the U.S. government grants a postponement.years. All of our functioning first-generation satellites have been in orbit for more than seven years.

Motorola Solutions, as successor to Motorola and Boeing each also havehas the right to require us to de-orbit our constellationfirst-generation satellites pursuant to our agreements with themand upon the occurrence of specified events.

We cannot guarantee that the U.S. government or Motorola Solutions or Boeing will not unilaterally exercise their de-orbiting rights upon the occurrence of any of the specified events. If we were required to de-orbit our constellation,first-generation satellites prior to the deployment of an adequate number of Iridium NEXT satellites, we wouldmay be unable to continue to provide mobile satellite communications services.

a commercially acceptable level of service.

We may be unable to obtain and maintain contractually required liability insurance, and the insurance we obtain may not cover all liabilities to which we may become subject.

Under our agreement with Motorola, we are required to maintain an in-orbit liability insurance policy with a de-orbiting endorsement. The current policy, together with the de-orbiting endorsement, covers amounts that we and other specified parties may become liable to pay for bodily injury and property damages to third parties related to processing, maintaining and operating our satellite constellationfirst-generation satellites and, in the case of the de-orbiting endorsement, a mass de-orbit of our current satellite constellation.first-generation satellites. Our current policy has a one-year term, which expires on December 8, 2015,2018, and excludes coverage for all third-party damages relating to the 2009 collision of our satellite with a non-operational Russian satellite. The price, terms and availability of insurance have fluctuated significantly since we began offering commercial satellite services. The cost of obtaining insurance can vary as a result of either satellite failures or general conditions in the insurance industry. Higher premiums on insurance policies would increase our cost. In-orbit liability insurance policies on satellites may not continue to be available on commercially reasonable terms or at all. In addition to higher premiums, insurance policies may provide for higher deductibles, shorter coverage periods and additional policy exclusions. For example, our current de-orbit insurance covers only twelve months from attachment and therefore would not cover losses arising outside that timeframe. Our failure to renew our current in-orbit liability insurance policy or obtain a replacement policy would trigger de-orbit rights with respect to our first-generation satellites held by the U.S. government and Boeing described in the immediately preceding risk factor, which, if exercised prior to the deployment of an adequate number of Iridium NEXT satellites, would eliminateharm our ability to provide mobile satellite communications services.a commercially acceptable level of service. In addition, even if we continue to maintain an in-orbit liability insurance policy, the coverage may not protect us against all third-party losses, which could be material.

Our current in-orbit liability insurance policy contains, and we expect any future policies would likewise contain, specified exclusions and material change limitations customary in the industry. These exclusions may relate to, among other things, losses resulting from in-orbit collisions such as the one we experienced in 2009, acts of war, insurrection, terrorism or military action, government confiscation, strikes, riots, civil commotions, labor disturbances, sabotage, unauthorized use of the satellites, and nuclear or radioactive contamination, as well as claims directly or indirectly occasioned as a result of noise, pollution, electrical and electromagnetic interference, and interference with the use of property.

In addition to our in-orbit liability insurance policy, we are required to purchase product liability insurance to cover the potential liability of Motorola Solutions, as the successor to the manufacturer of the satellites in our current constellation.first-generation satellites. We may not in the future be able to renew this product liability coverage on reasonable terms and conditions, or at all. Our failure to maintain this insurance could increase our exposure to third-party damages that may be caused by any of our satellites. If we are unable to obtain such insurance on commercially reasonable terms and the U.S. government has not agreed to cover the amounts that would have otherwise been paid by such insurance, Motorola Solutions could invoke its de-orbit rights which, if exercised prior to the deployment of an adequate number of Iridium NEXT satellites, would eliminateharm our ability to provide mobile satellite communications services.

a commercially acceptable level of service.

Wireless devices’ radio frequency emissions are the subject of regulation and litigation concerning their environmental effects, which includes alleged health and safety risks. As a result, we may be subject to new regulations, demand for our services may decrease, and we could face liability based on alleged health risks.

There has been adverse publicity concerning alleged health risks associated with radio frequency transmissions from portable hand-held telephones that have transmitting antennas. Lawsuits have been filed against participants in the wireless industry alleging a number of adverse health consequences, including cancer, as a result of wireless phone usage. Other claims allege consumer harm from failures to disclose information about radio frequency emissions or aspects of the regulatory regimes governing those emissions. Although we have not been party to any such lawsuits, we may be exposed to such litigation in the future. While we comply with applicable standards for radio frequency emissions and power and do not believe that there is valid scientific evidence that use of our phonesdevices poses a health risk, courts or governmental agencies could determine otherwise. Any such finding could reduce our revenue and profitability and expose us and other wirelesscommunications service providers or device sellers to litigation, which, even if frivolous or unsuccessful, could be costly to defend.

If consumers’ health concerns over radio frequency emissions increase, they may be discouraged from using wireless handsets. Further, government authorities might increase regulation of wireless handsets as a result of these health concerns. Any actual or perceived risk from radio frequency emissions could reduce the number of our subscribers and demand for our products and services.

Our business is subject to extensive government regulation, which mandates how we may operate our business and may increase our cost of providing services and slow our expansion into new markets.

Our ownership and operation of a satellite communications system and the sale of products that operate on that system are subject to significant regulation in the United States, including by the FCC, the U.S. Department of Commerce and others, and in foreign jurisdictions by similar local authorities. The rules and regulations of these U.S. and foreign authorities may change, and such authorities may adopt regulations that limit or restrict our operations as presently conducted or currently contemplated. Such authorities may also make changes in the licenses of our competitors that affect our spectrum. Such changes may significantly affect our business. Further, because regulations in each country are different, we may not be aware if some of our distribution partners or persons with whom we or they do business do not hold the requisite licenses and approvals. Our failure to provide services in accordance with the terms of our licenses or our failure to operate our satellites or ground stations as required by our licenses and applicable laws and government regulations could result in the imposition of government sanctions on us, including the suspension or cancellation of our licenses. Our failure or delay in obtaining the approvals required to operate in other countries would limit or delay our ability to expand our operations into those countries. Our failure to obtain industry-standard certifications for our products could compromise our ability to generate revenue and conduct our business in other countries. Any imposition of sanctions, loss of license or failure to obtain the authorizations necessary to use our assigned radio frequency spectrum and to distribute our products in the United States or foreign jurisdictions could cause us to lose sales, hurt our reputation and impair our ability to pursue our business plan.

In addition, one of our subsidiaries, Iridium Carrier Services LLC, holds a common carrier radio license and is thus subject to regulation as a common carrier, including limitations and prior approval requirements with respect to direct or indirect foreign ownership. A change in the manner in which we provide service, or a failure to comply with any common carrier regulations that apply to us or to pay required fees, could result in sanctions including fines, loss of authorizations, or the denial of applications for new authorizations or the renewal of existing authorizations.

Security and emergency services regulations in the U.S. and other countries may affect our ability to operate our system and to expand into new markets.

Our operations are subject to regulations of the U.S. Department of Commerce’s Bureau of Industry and Security relating to the export of satellites and related technical data as well as our subscriber equipment, the U.S. Treasury Department’s Office of Foreign Assets Control relating to transactions involving entities sanctioned by the United States, and the U.S. State Department’s Office of Defense Trade Controls relating to satellite launch. We are also required to provide U.S. and some foreign government law enforcement and security agencies with call interception services and related government assistance, in respect of which we face legal obligations and restrictions in various jurisdictions. Given our global operations and unique network architecture, these requirements and restrictions are not always easy to comply with or harmonize. In addition, some countries require providers of telecommunications services to connect specified emergency numbers to local emergency services. We have discussed and continue to discuss with authorities in various countries the procedures used to satisfy our obligations, and have had to, and may in the future need to, obtain amendments or waivers to licenses or obligations in various countries. Countries are not obligated to grant requested amendments or waivers, and there can be no assurance that relevant authorities will not suspend or revoke our licenses or take other legal actions to attempt to enforce the requirements of their respective jurisdictions.

These U.S. and foreign obligations and regulations may limit or delay our ability to offer products and services in a particular country. As new laws and regulations are issued, we may be required to modify our business plans or operations. In addition, changing and conflicting national and local regulatory requirements may cause us to be in compliance with local requirements in one country, while not being in compliance with the laws and regulations of another. If we fail to comply with regulations in the United States or any other country, we could be subject to substantial fines or sanctions that could make it difficult or impossible for us to operate in the United States or such other country.

country, or we may need to make substantial additional expenditures to bring our systems, products and services into compliance with the requirements.

If the FCC revokes, modifies or fails to renew or amend our licenses, or fails to grant a new license or modification, our ability to operate will be harmed or eliminated.

We hold FCC licenses, specifically a license for our currentfirst-generation satellite constellation, a license for the Iridium NEXT constellation, licenses for our U.S. gateway and other ground facilities, and blanket earth station licenses for U.S. government customers and commercial subscribers, that are subject to revocation if we fail to satisfy specified conditions or to meet prescribed milestones.conditions. The FCC licenses are also subject to modification by the FCC. Our currentfirst-generation satellite constellation license from the FCC has been extended until JanuaryJuly 31, 2018.2019. Our Iridium NEXT license expires on February 23, 2032. Our U.S. gateway earth station and the U.S. government customer and commercial subscriber earth station licenses expire between September 2018 and the year 2026. There can be no assurance that the FCC will renew the FCC licenses we hold.hold or grant new ones or modifications. If the FCC revokes, modifies or fails to renew or amend the FCC licenses we hold, or fails to grant a new license or modification, or if we fail to satisfy any of the conditions of our respective FCC licenses, we may not be able to continue to provide mobile satellite communications services.

We could be subject to adverse determinations by taxing authorities or changes to tax laws.

We are subject to regular review and audit by both domestic and foreign tax authorities. As a result, we have received, and may in the future receive, assessments in multiple jurisdictions on various tax-related assertions, including transfer pricing adjustments or permanent establishment. Any adverse outcome of such a review or audit could have a negative effect on our operating results and financial condition. In addition, the determination of our provision for income taxes and other tax liabilities requires significant judgment, including transactions and calculations where the ultimate tax determination is uncertain. Although we believe our estimates are reasonable, the ultimate tax outcome may differ from the amounts recorded in our financial statements and may materially affect our financial results in the period or periods for which such determination is made. Furthermore, tax policies, laws or rates in various jurisdictions may be subject to significant change, which could materially and adversely affect our financial position and results of operations.

Pursuing strategic transactions may cause us to incur additional risks.

We may pursue acquisitions, joint ventures or other strategic transactions from time to time.time, such as the Boeing insourcing transaction. We may face costs and risks arising from any such transactions, including integrating a new business into our business or managing a joint venture. These risks may include adverse legal, organizational and financial consequences, loss of key customers and distributors and diversion of management’s time.

In addition, any major business combination or similar strategic transaction would require approval under the Credit Facility and may require significant external financing. Depending on market conditions, investor perceptions of our company and other factors, we might not be able to obtain approvals under the Credit Facility or financing on acceptable terms, in acceptable amounts or at appropriate times to implement any such transaction. Any such financing, if obtained, may further dilute existing stockholders.

Spectrum values historically have been volatile, which could cause the value of our business to fluctuate.

Our business plan is evolving, and it may in the future include forming strategic partnerships to maximize value for our spectrum, network assets and combined service offerings in the United States and internationally. Values that we may be able to realize from such partnerships will depend in part on the value placed on our spectrum authorizations. Valuations of spectrum in other frequency bands historically have been volatile, and we cannot predict at what amount a future partner may be willing to value our spectrum and other assets. In addition, to the extent that the FCC takes action that makes additional spectrum available or promotes the more flexible use or greater availability of existing satellite or terrestrial spectrum allocations, for example by means of spectrum leasing or new spectrum sales, the availability of such additional spectrum could reduce the value of our spectrum authorizations and, as a result, the value of our business.

We may be negatively affected by global economic conditions.

Our operations and performance depend significantly on worldwide economic conditions. Uncertainty about global economic conditions poses a risk as individual consumers, businesses and governments may postpone spending in response to tighter credit, negative financial news, declines in income or asset values, or budgetary constraints. Reduced demand would cause a decline in our revenue and make it more difficult for us to operate profitably, potentially compromising our ability to pursue our business plan. While we expect the number of our subscribers and revenue to continue to grow, we expect the future growth rate will be slower than our historical growth and may not continue in every quarter of every year. We expect our future growth rate will be affected by the condition of the global economy, increased competition, maturation of the satellite communications industry, and the difficulty in sustaining high growth rates as we increase in size. Any substantial appreciation of the U.S. dollar may also negatively affect our growth by increasing the cost of our products and services in foreign countries.

If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis could be impaired.

We are subject to the reporting requirements of the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and the rules and regulations of the SEC and The Nasdaq Global Select Market. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal controls over financial reporting. We perform system and process evaluation and testing of our internal controls over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting in our Annual Reports on Form 10-K, as required by Section 404 of the Sarbanes-Oxley Act. If we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, or if we are unable to maintain proper and effective internal controls, we may not be able to produce timely and accurate financial statements, and we may conclude that our internal controls over financial reporting are not effective. If that were to happen, the market price of our stock could decline, and we could be subject to sanctions or investigations by the Nasdaq Global Select Market, the SEC or other regulatory authorities.

Maintaining effective internal controls over financial reporting is necessary for us to produce reliable financial statements. If we fail to maintain such controls, it could result in a material misstatement of our financial statements that would not be prevented or detected on a timely basis and which could cause investors and other users to lose confidence in our financial statements.

Our ability to operate our company effectively could be impaired if we lose members of our senior management team or key technical personnel.

We depend on the continued service of key managerial and technical personnel and personnel with security clearances, as well as our ability to continue to attract and retain highly qualified personnel. We compete for such personnel with other companies, government entities, academic institutions and other organizations. The unexpected loss or interruption of the services of such personnel could compromise our ability to effectively manage our operations, execute our business plan and meet our strategic objectives.

The market price of our common stock may be volatile.

The trading price of our common stock may be subject to substantial fluctuations. Factors affecting the trading price of our common stock may include:

failure in the performance of our currentfirst-generation or future satellites or a delaysatellites;

further delays in the launch of Iridium NEXT;

failure of Aireon to successfully develop and market its service;

failure to comply with the terms of the Credit Facility;

failure to maintain our ability to make draws under the Credit Facility;

actual or anticipated variations in our operating results, including termination or expiration of one or more of our key contracts, or a change in sales levels under one or more of our key contracts;

sales of a large number of shares of our common stock or the perception that such sales may occur;

the dilutive effect of outstanding stock options;options and other equity awards;

changes in financial estimates by industry analysts, or our failure to meet or exceed any such estimates, or changes in the recommendations of any industry analysts that elect to follow our common stock or the common stock of our competitors;

impairment of intangible assets;

actual or anticipated changes in economic, political or market conditions, such as recessions or international currency fluctuations;

actual or anticipated changes in the regulatory environment affecting our industry;

changes in the market valuations of our competitors;

low trading volume; and

announcements by our competitors regarding significant new products or services or significant acquisitions, strategic partnerships, divestitures, joint ventures or other strategic initiatives.

The trading price of our common stock might also decline in reaction to events that affect other companies in our industry even if these events do not directly affect us. If our stock, the market for other stocks in our industry, or the stock market in general experiences a loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, financial condition or results of operations.

We do not expect to pay dividends on our common stock in the foreseeable future.

We do not currently pay cash dividends on our common stock and, because we currently intend to retain all cash we generate to fund the growth of our business and the Credit Facility restricts the payment of dividends, we do not expect to pay dividends on our common stock in the foreseeable future. 

Our common stock ranks junior to the Series A Preferred Stock and Series B Preferred Stock with respect to dividends and amounts payable in the event of our liquidation.

Our common stock ranks junior to the Series A Preferred Stock and Series B Preferred Stock with respect to the payment of dividends and amounts payable in the event of our liquidation, dissolution or winding-up. This means that, unless accumulated dividends have been paid or set aside for payment on all outstanding shares of Series A Preferred Stock and Series B Preferred Stock for all past completed dividend periods, no dividends may be declared or paid on our common stock. Likewise, in the event of our voluntary or involuntary liquidation, dissolution or winding-up, no distribution of our assets may be made to holders of our common stock until we have paid to holders of the Series A Preferred Stock and Series B Preferred Stock the applicable liquidation preference plus accrued and unpaid dividends.dividends, and we have currently suspended the payment of

dividends on our Series A Preferred Stock and Series B Preferred Stock in accordance with the terms of our amended and restated Credit Facility. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" for additional details. As a result, the value of your investment in our common stock may suffer in the event that sufficient funds are not available to first satisfy our obligations to the holders of our preferred stock in the event of our liquidation.

Item 1B.

Unresolved Staff Comments

Item 1B. Unresolved Staff Comments

None.

Item 2.

Properties

Item 2. Properties

We own or lease the facilities described in the following table:

Location		Country		Approximate Square Feet			Facilities		Owned/Leased
McLean, Virginia		USA			21,600	30,600		Corporate Headquarters		Leased
Chandler, Arizona		USA			197,000			Technical Support Center, Distribution Center, Warehouse and Satellite Teleport Network Facility		Leased
Leesburg, Virginia		USA			40,000			Satellite Network Operations Center		Owned
Lansdowne, Virginia		USA		1,884		Satellite Network Operations Center - Annex				Leased
Tempe, Arizona		USA			31,000			System Gateway and Satellite Teleport Network Facility		Owned Building on Leased Land
Tempe, Arizona		USA			25,000			Operations and Finance Office Space		Leased
Fairbanks, Alaska		USA			4,000			Satellite Teleport Network Facility		Owned
Svalbard		Norway			1,800			Satellite Teleport Network Facility		Owned Building on Leased Land
Yellowknife, Northwest Territories		Canada			1,800			Satellite Teleport Network Facility		Owned Building on Leased Land
Iqaluit, Nunavut		Canada			1,800			Satellite Teleport Network Facility		Owned Building on Leased Land
Izhevsk, Udmurtia		Russia			11,7368,785			Office SpaceSystem Gateway and Satellite Teleport Network Facility		Leased
Moscow		Russia		2,158		Sales and Administration Offices		Leased

Item 3.

Legal Proceedings

On October 7, 2014, Kappa Digital, LLC filed a complaint for patent infringement

Item 3. Legal Proceedings

Neither we nor any of our subsidiaries are currently subject to any material legal proceeding, nor, to our knowledge, is any material legal proceeding threatened against us in the United States District Court for the Eastern Districtor any of Texas - Marshall Division. In this action, Kappa Digital alleges that our products, services and/or systems infringe its U.S. Patent No. 6,349,135, entitled “Method And System For A Wireless Digital Message Service.” Kappa Digital is seeking a judgment that we have infringed on its patent and is seeking a permanent injunction enjoining us from further infringement, as well as damages, costs, expenses, interest and attorneys’ fees. On February 25, 2015, the parties filed a joint motion to dismiss the case without prejudice, which we expect to be granted. Kappa Digital would retain the right to file a new complaint with the same allegations.

subsidiaries.

Item 4.

Mine Safety Disclosures

Item 4. Mine Safety Disclosures

Not applicable.

36

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is currently listed on the NASDAQ Global Select Market under the symbol “IRDM.” The following table sets forth, for the quarters indicated, the quarterly intra-day high and low sales prices of our common stock as reported on the NASDAQ Global Select Market.

		Common Stock
		High				Low
Quarter Ended March 31, 2013		$	7.34			$	5.90
Quarter Ended June 30, 2013			7.85				5.98
Quarter Ended September 30, 2013			9.22				6.35
Quarter Ended December 31, 2013			6.91				5.37
Quarter Ended March 31, 2014			7.95				5.95
Quarter Ended June 30, 2014			8.49				6.12
Quarter Ended September 30, 2014			9.54				7.85
Quarter Ended December 31, 2014			10.50				8.15

	Common Stock
	High				Low
Quarter Ended March 31, 2016	$	8.53			$	6.14
Quarter Ended June 30, 2016	$	8.88			$	7.15
Quarter Ended September 30, 2016	$	9.37			$	6.80
Quarter Ended December 31, 2016	$	11.15			$	7.50
Quarter Ended March 31, 2017	$	11.54			$	7.80
Quarter Ended June 30, 2017	$	11.58			$	9.40
Quarter Ended September 30, 2017	$	11.50			$	9.68
Quarter Ended December 31, 2017	$	12.90			$	9.95

On February 23, 2015,16, 2018, the closing price of our common stock was $9.67.$12.55. As of February 23, 201519, 2018 there were 6587 holders of record of our common stock.

Dividend Policy

We have not paid any dividends on our common stock to date. The Credit Facility currently restricts us from declaring, making or paying dividends on our common stock, and we do not anticipate that we will declare any dividends on our common stock in the foreseeable future.

Stock Price Performance Graph

The graph below compares the cumulative total return of our common stock from December 31, 20092012 through December 31, 20142017 with the comparable cumulative return of three indices, the S&P 500 Index, the Dow Jones Industrial Average Index and the NASDAQ Telecommunications Index. The graph plots the growth in value of an initial investment of $100 in each of our common stock, the S&P 500 Index, the Dow Jones Industrial Average Index and the NASDAQ Telecommunications Index over the indicated time periods. The stock price performance shown on the graph is not necessarily indicative of future price performance.

		12/31/09				12/31/10				12/31/11				12/31/12				12/31/13				12/31/14
Iridium Communications Inc.		$	100.00			$	102.74			$	96.01			$	83.69			$	77.83			$	121.42
S&P 500 Index		$	100.00			$	112.78			$	112.78			$	127.90			$	165.76			$	184.64
Dow Jones Industrial Average Index		$	100.00			$	111.02			$	117.16			$	125.66			$	158.96			$	170.91
NASDAQ Telecommunications Index		$	100.00			$	103.92			$	90.81			$	92.63			$	114.88			$	125.11

The following stock price performance graph shall not be deemed to be "filed" for purposes of Section 18 of the Exchange Act, nor shall this information be incorporated by reference into any future filing under the Securities Act or the Exchange Act or any other document, except to the extent that we specifically incorporate it by reference into such filing or document.

	12/31/2012				12/31/2013				12/31/2014				12/31/2015				12/31/2016				12/31/2017
Iridium Communications Inc.	$	100.00			$	93.01			$	145.09			$	125.15			$	142.86			$	175.60
S&P 500 Index	$	100.00			$	129.60			$	144.36			$	143.31			$	156.98			$	187.47
Dow Jones Industrial Average Index	$	100.00			$	126.50			$	136.01			$	132.97			$	150.81			$	188.64
NASDAQ Telecommunications Index	$	100.00			$	124.02			$	135.07			$	124.94			$	143.52			$	168.54

Item 6. Selected Financial Data

Iridium Communications Inc.

The following selected historical financial data for the years ended December 31, 2017, 2016, 2015, 2014 2013, 2012, 2011 and 20102013 was derived from our audited financial statements. The selected financial data below should be read in conjunction with our financial statements and related notes, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Form 10-K. The selected financial data is historical data and is not necessarily indicative of our future results of operations.

		For the Year Ended December 31,
Statement of Operations Data		2014				2013				2012				2011				2010
		(In thousands, except per share amounts)
Revenue:
Services		$	309,424			$	292,092			$	273,491			$	262,322			$	236,351
Subscriber equipment			78,152				73,303				93,866				94,709				90,184
Engineering and support services			20,981				17,254				16,163				27,276				21,638
Total revenue		$	408,557			$	382,649			$	383,520			$	384,307			$	348,173
Total operating expenses		$	285,646			$	272,755			$	278,446			$	307,306			$	310,813
Operating income		$	122,911			$	109,894			$	105,074			$	77,001			$	37,360
Net income		$	74,989			$	62,517			$	64,631			$	41,035			$	19,941
Comprehensive income		$	72,758			$	62,185			$	64,499			$	40,720			$	20,009
Weighted average shares outstanding - basic			88,080				76,909				74,239				72,164				70,289
Weighted average shares outstanding - diluted			109,400				87,511				78,182				73,559				72,956
Net income per share - basic		$	0.71			$	0.72			$	0.85			$	0.57			$	0.28
Net income per share - diluted		$	0.69			$	0.71			$	0.83			$	0.56			$	0.27

		As of December 31,
Balance Sheet Data		2014				2013				2012				2011				2010
		(In thousands)
Total current assets		$	573,113			$	369,558			$	367,166			$	227,242			$	208,729
Total assets		$	2,909,681			$	2,309,796			$	1,916,341			$	1,374,186			$	1,047,449
Total long-term liabilities		$	1,575,467			$	1,268,802			$	951,131			$	576,278			$	258,692
Total stockholders' equity		$	1,231,864			$	939,495			$	876,558			$	702,018			$	654,916

		For the Year Ended December 31,
Other Data		2014				2013				2012				2011				2010
		(In thousands)
Cash provided by (used in):
Operating activities		$	214,872			$	183,048			$	174,023			$	183,461			$	151,438
Investing activities		$	(626,254	)		$	(485,836	)		$	(443,542	)		$	(359,337	)		$	(242,086	)
Financing activities		$	438,844			$	234,712			$	387,571			$	192,310			$	63,402

		For the Year Ended December 31,
Statement of Operations Data		2017				2016				2015				2014				2013
						(In thousands, except per share amounts)
Revenue:
Services		$	349,735			$	334,822			$	317,022			$	309,424			$	292,092
Subscriber equipment		77,119				74,211				73,615				78,152				73,303
Engineering and support services		21,192				24,607				20,741				20,981				17,254
Total revenue		$	448,046			$	433,640			$	411,378			$	408,557			$	382,649
Total operating expenses (1)		$	346,759			$	257,269			$	337,575			$	285,646			$	272,755
Operating income (3)		$	115,476			$	176,371			$	73,803			$	122,911			$	109,894
Net income (4)		$	233,856			$	111,032			$	7,123			$	74,989			$	62,517
Comprehensive income		$	235,506			$	114,649			$	980			$	72,758			$	62,185
Weighted average shares outstanding - basic		97,934				95,967				95,097				88,080				76,909
Weighted average shares outstanding - diluted		128,130				124,875				95,097				109,400				87,511
Net income (loss) per share - basic		$	2.23			$	1.00			$	(0.09	)		$	0.71			$	0.72
Net income (loss) per share - diluted		$	1.82			$	0.89			$	(0.09	)		$	0.69			$	0.71

		As of December 31,
Balance Sheet Data		2017				2016				2015				2014				2013
						(In thousands)
Total current assets		$	411,072			$	516,770			$	481,718			$	573,113			$	369,558
Total assets (1) (2) (4)		$	3,782,051			$	3,499,625			$	3,071,174			$	2,773,237			$	2,179,760
Total long-term liabilities (2) (4)		$	1,971,356			$	2,072,673			$	1,740,839			$	1,439,023			$	1,138,766
Total stockholders' equity		$	1,596,469			$	1,343,758			$	1,228,721			$	1,231,864			$	939,495

(1)	Includes accelerated depreciation of $36.8 million in the fourth quarter of 2017 associated with the write-off of the full amount previously paid to Kosmotras and a goodwill impairment charge of $87.0 million in the fourth quarter of 2015, both of which decreased operating income and total assets by those amounts.

(2)	As a result of implementing Accounting Standards Update No. 2015-03, Interest—Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs, deferred financing costs were reclassified from total assets to total long-term liabilities to present short-term and long-term debt, net, for all years presented.

(3)	Includes the impact of $14.2 million related to the gain on the transaction with Boeing, effective January 3, 2017.

(4)	Includes the impact of provisional estimates related to deferred tax assets and liabilities resulting from the Tax Cuts and Jobs Act implemented in December 2017.

		For the Year Ended December 31,
Other Cash Flow Data		2017				2016				2015				2014				2013
						(In thousands)
Cash provided by (used in):
Operating activities		$	259,621			$	225,199			$	217,479			$	214,872			$	183,048
Investing activities		$	(372,680	)		$	(242,360	)		$	(439,374	)		$	(626,254	)		$	(485,836	)
Financing activities		$	16,866			$	202,151			$	197,066			$	438,844			$	234,712

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Background

We were initially formed in 2007 as GHL Acquisition Corp., a special purpose acquisition company. In 2009, we acquired all the outstanding equity in Iridium Holdings LLC and changed our name to Iridium Communications Inc.

Overview of Our Business

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

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

We sell our products and services to commercial end users through a wholesale distribution network, encompassing more than 70approximately 140 service providers, more than 190approximately 220 value-added resellers, or VARs, and more than 40approximately 85 value-added manufacturers, or VAMs, who either sell directly to the end user or indirectly through other service providers, VARs or dealers. These distributors often integrate our products and services with other complementary hardware and software and have developed a broad suite of applications for our products and services targeting specific lines of business.

At December 31, 2014,2017, we had approximately 739,000969,000 billable subscribers worldwide, an increase of 75,000,119,000, or 11%14%, from approximately 664,000850,000 billable subscribers at December 31, 2013.2016. We have a diverse customer base, including end users in the following lines of business: land-based handset; machine-to-machine,land mobile; Internet of Things, or M2M;IoT; maritime; aviation; and government.

We recognize revenue from both the provision of services and the sale of equipment. Service revenue represented 76%78% and 77% of total revenue for the years ended December 31, 20142017 and 2013.2016, respectively. Voice and data and M2MIoT data service revenue have historically generated higher gross margins than subscriber equipment revenue.

We are currently devoting a substantial part of our resources to develop Iridium NEXT, our next-generation satellite constellation, along with the development of new product and service offerings, upgrades to our current services, and hardware and software upgrades to maintain our ground infrastructure and upgrades to our business systems.infrastructure. We estimate the aggregate costs associated with the design, build and launch of Iridium NEXT and related ground infrastructure upgrades through 20172018 to be approximately $3 billion. We expect to fund the costs of Iridium NEXT with the substantial majority of the funds from our $1.8 billion loan facility, or the Credit Facility, which was fully drawn in February 2017, as well as cash on hand and internally generated cash flows, including potential cash flows from hosted payloadspayloads. We may also raise additional funds through the incurrence of indebtedness, as discussed below.

While the contracted cash flows from our primary hosted payload customer, Aireon, are interest-bearing if not paid on time, we expect those hosted payload payments to continue to be delayed. Aireon is working to secure additional contracts with air navigation service providers, or ANSPs, including the FAA, for the sale of Aireon’s space-based automatic dependent surveillance-broadcast, or ADS-B, services. Aireon is currently seeking to raise the capital it will need to fund its continued operations and its hosted payload payments to us. Aireon’s ability to make its hosted payload payments to us in the previously anticipated timeframe has been adversely affected by delays in its completion of sales to these ANSPs.

We continue to expect partial payments of Aireon’s hosting fee upon successful completion of its financing, and further payments based on success-based milestones. However, the expected timing of these payments does not support our ability to make principal and interest payments under our Credit Facility due in late 2018 and early 2019, as well as payment of deferred payments to Thales Alenia Space France, or Thales and deferred contributions to the debt service reserve account, or DSRA, required by our Credit Facility, both due March 31, 2019. Further, if Aireon is unable to complete its financing and make a partial hosting fee payment to us in the timeframe we currently expect, we may be unable to make our principal and

interest payments under our Credit Facility in late 2018. To provide for these obligations and further solidify our liquidity position, we have been actively discussing alternative funding options with our Credit Facility lenders, and we believe we have reached an agreement in principle with our Credit Facility lenders pursuant to which we would be required to raise additional debt capital by July 2018. The proceeds of the debt issuance would be used to fund the deferred payments to Thales and replenish the DSRA under the Credit Facility, as well as to provide us with sufficient cash to meet our needs, including principal and interest payments under our Credit Facility. In addition, the Credit Facility lenders would agree to delay a portion of the principal repayments under the Credit Facility and allow us to access up to $87 million from the DSRA in the future if our cash levels fall below $75 million, and adjust our financial covenants, including eliminating further covenants that require us to receive cash flows from hosted payloads. Under this anticipated agreement, hosting fee payments received from Aireon would be required to be used to prepay the Credit Facility. Our ability to successfully execute these plans may be adversely affected by a number of factors, including global economic conditions, the state of the capital markets when we are ready to incur the debt, and the inability to issue debt on terms acceptable to us or at all. Any inability to successfully execute these plans may in turn materially affect our liquidity, and our ability to complete the Iridium PRIME.

NEXT system and to pursue additional growth opportunities may be impaired. Our liquidity and the ability to fund our liquidity requirements also depend on our future financial performance, which is subject to general economic, financial, regulatory and other factors that are beyond our control.

We believe that our liquidity sources will provide sufficient funds for us to meet our liquidity requirements for at least the next twelve months. For more information about12 months, provided we execute the proposed adjustments to our sourcesfunding plan described above or receive a substantial portion of funding, see “Credit Facility” and “Liquidity and Capital Resources.”

the hosting fees due to us from Aireon during this timeframe.

Full Scale Development and Launch Services Agreements

In June 2010, we executed a primarily fixed price full scale development contract, or FSD, with Thales Alenia Space France, or Thales for the design and manufacture of satellites for Iridium NEXT. The total price under the FSD will be approximately $2.3 billion, and we expect our payment obligations under the FSD to extend into the first quarter ofthrough 2018. As of December 31, 2014,2017, we had made total payments of $1,331.1 million$1.9 billion to Thales, of which $1,129.8$1.5 billion million were from borrowings under the Credit Facility, which are classified within property and equipment, net, in our consolidated balance sheet included in this report. We currently useused the Credit Facility to pay 85% of each invoice received from Thales under the FSD with the remaining 15% funded from cash on hand. Oncehand until the Credit Facility iswas fully drawn in February 2017. With the exception of the invoices to be paid with bills of exchange as described below, we expect to pay 100% of each invoice received from Thales from cash and marketable securities on hand as well as internally generated cash flows, including potentialflows.

On July 26, 2017, we entered into Amendments 28 and 29 to our FSD contract. Amendment 28 revised the liquidated damages and other cost provisions regarding delays to the Iridium NEXT program. Under Amendment 28, we agreed with Thales that liquidated damages for Thales production delays to date would be $30.0 million, with this amount to be used only to offset costs otherwise payable by us to Thales under the FSD with respect to past and future delays to the launch schedule from causes other than Thales, at agreed upon rates. Any portion of the $30.0 million remaining at the completion of the launch campaign will be forgiven.  Liquidated damages owed to us from any future delays caused by Thales would remain payable in cash. Similarly, costs payable by us to Thales for non-Thales delays exceeding the $30.0 million would be payable in cash. Unless there are substantial future delays to the Iridium NEXT program, we expect this arrangement will result in no cash flows from hosted payloadspayments due to delays by either party.

Amendment 29 provides for the deferral of approximately $100.0 million in milestone payments by us under the FSD for milestones completed in 2017 or that we expect to be completed in 2018. Under Amendment 29, we make these milestone payments using bills of exchange (similar to promissory notes) due in March 2019, with interest at a specified base rate (London Interbank Offer Rate, or LIBOR, or SWAP, depending on the term of the bill of exchange) plus 1.4%, with the bills of exchange guaranteed by Bpifrance Assurance Export S.A.S., or BPIAE. Amendment 29 also required that we pay Thales for the BPIAE premium on the guarantee in the amount of $1.0 million in cash at signing plus 1.62%, to be paid by bills of exchange on the same terms as stated above, on each bill of exchange to be issued. As of December 31, 2017, we have used bills of exchange to pay $55.6 million in milestone payments. If we issue debt securities as described above, we would use a portion of the proceeds to repay these bills of exchange in full and Iridium PRIME.

would no longer use bills of exchange to pay milestones under the FSD.

In March 2010, we entered into an agreement with Space Exploration Technologies Corp., or SpaceX, to secure SpaceX as the primary launch services provider for Iridium NEXT. The totalcontract price under the SpaceX agreement for seven launches is $453.1 million, which includes the exercise of our reflight option in the event of launch failure. The SpaceX Falcon 9 rocket is configured to carry ten Iridium NEXT satellites to orbit with each launch. In November 2016, we entered into an additional agreement with SpaceX for an eighth Falcon 9 launch for a contract price of $67.9 million. Although we are the customer of record with SpaceX, we have

contracted separately with GFZ German Research Centre for Geosciences, or GFZ, for $31.8 million to share the launch of NASA’s two Gravity Recovery and Climate Experiment Follow-On satellites on a specially designed dispenser on the Falcon 9 rocket. As of December 31, 2014,2017, we had made aggregate payments of $152.6$463.9 million to SpaceX, which were capitalized as construction in progress within property and equipment, net. In addition, we made a $3.0received $28.6 million refundable deposit to SpaceX in the first quarter of 2014 for the reservation of additional future launches, which amount is not included in the total contract price.

from GFZ.

In June 2011, we entered into an agreement with International Space Company Kosmotras, or Kosmotras, as a supplemental launch services provider for Iridium NEXT. The Kosmotras agreement originally provided for the purchase of up to six launches with options to purchase additional launches. Each launch can carry two satellites. In June 2013, we exercised an option for one launch to carry the first two Iridium NEXT satellites. If we do not exercise any additional options, the total cost under the Kosmotras agreement including this single launch will beis $51.8 million. As of December 31, 2014,Kosmotras to date has been unable to obtain the permits or authorizations to launch our satellites on a Dnepr rocket as planned, and Kosmotras has proposed no satisfactory alternative launch plan. Because we had made aggregate payments of $28.8 millionnow believe the construction-in-progress associated with the Kosmotras launch services will no longer be used or further developed, we wrote-off the full amount previously paid to Kosmotras, which were capitalized as constructionby recording accelerated depreciation expense of $36.8 million, in process within property and equipment, net. The option to purchase twothe fourth quarter of the dedicated launches expired as of December 31, 2013. We have agreed with Kosmotras to extend the option to purchase the remaining three dedicated launches through a date to be determined.

2017.

Credit Facility

On

In October 4, 2010, we entered into the Credit Facilitya credit facility with a syndicate of bank lenders.lenders, which we amended and restated in May 2014. We refer to this amended and restated credit facility, as further amended to date, as the Credit Facility. Ninety-five percent of our obligations under the Credit Facility are insured by Compagnie Française d’Assurance pour le Commerce Extérieur, or COFACE.BPIAE. The Credit Facility consists of two tranches, with draws and repayments applied pro rata in respect of each tranche:

Tranche A – $1,537,500,000 at a fixed rate of 4.96%; and

Tranche B – $262,500,000 at a floating rate equal to the London Interbank Offer Rate, or LIBOR, plus 1.95%.

In connection with each draw made under the Credit Facility, we borrowborrowed an additional amount equal to 6.49% of such draw to cover the premium for the COFACEBPIAE insurance. We also paypaid a commitment fee of 0.80% per year, in semi-annual installments, on any undrawn portion of the Credit Facility. The semi-annual commitment fee on the undrawn portion of the Credit Facility for the year ended December 31, 2014 was $5.8 million and is included in other income (expense) in our consolidated statement of operations. Funds drawn under the Credit Facility arewere used to pay 85% of each invoice issued by Thales under the FSD until the Credit Facility iswas fully drawn the premium for the COFACE insurance and the payment of a portion of interest during a portion of the construction and launch phase of Iridium NEXT.

in February 2017.

Scheduled semi-annual principal repayments will begin six monthsApril 3, 2018. The Credit Facility will mature seven years after the earlierstart of (i) the successful deployment of a specified number of Iridium NEXT satellites or (ii) September 30, 2017.principal repayment period. During this repayment period, we will pay interest on the same date as the principal repayments.repayments in cash. Prior to the repayment period, interest payments arewere due on a semi-annual basis in April and October. Interest incurred during the year ended December 31, 20142017 was $50.8 million. We capitalize$114.4 million, including amortization of deferred financing fees, all interest costs incurred related to the Credit Facility during the construction period of the assets; accordingly we capitalized $50.8 million related to interest incurred in 2014. We pay interest on each semi-annual due date through a combination of a cash payment and a deemed additional loan. The $50.8 million in interest incurred during the year ended December 31, 2014 consisted of $15.5 million payable in cash, of which $12.6 million was paid during the yearcapitalized and $2.9 million was accrued at year end, and $35.3 million payable by deemed loans, of which $28.6 million was paid during the year and $6.7$15.0 million was accrued at year end.  The Credit Facility will mature seven years after the start of the principal repayment period.

We may not prepay any borrowings prior to December 31, 2015. If, on that date, a specified number of Iridium NEXT satellites have been successfully launched and we have adequate time and resources to complete the Iridium NEXT constellation on schedule, we may prepay the borrowings without penalty. In addition, following

Following the completion of the Iridium NEXT constellation, we may prepay the borrowings without penalty.subject to the payment of interest makeup costs. We may not subsequently borrow any amounts that we repay. We must repay the loans in full upon a delisting of our common stock, a change in control of our company or our ceasing to own 100% of any of the other obligors, or the sale of all or substantially all of our assets. We must apply all or a portion of specified capital raise proceeds, insurance proceeds, condemnation proceeds and proceeds from the disposal of any interests in Aireon to the prepayment of the loans. The Credit Facility includes customary representations, events of default, covenants and conditions precedent to our drawing of funds.

As of December 31, 2014, we had borrowed a total of $1,291.4 million under the Credit Facility. The unused portion of the Credit Facility as of December 31, 2014 was $508.6 million.

Under the terms of the Credit Facility, we wereare required to maintain a DSRA, and the minimum cash reserve for debt service of $86.0amount required to be in the DSRA was $102.0 million as of December 31, 2014,2017, which is classified as restricted cash on our consolidated balance sheet. This minimum DSRA cash reserve requirement will increase over the term of the Credit Facility to $189.0 million atin 2019, subject to reduction as permitted by the beginning of the repayment period, which is expected to be in 2017. We expect to have utilized the full $1.8 billion from theanticipated agreement with our Credit Facility by early 2016.

Minimum debt service reserve levels are estimatedlenders as follows:

At December 31,		Amount
		(in millions)
2015		$	91
2016			113
2017			189

described above.

In addition to the minimum debt service reserve levels, financial covenants under the Credit Facility include:

an available cash balance of at least $25 million;

a debt-to-equity ratio, which is calculated as amendedthe ratio of total net debt to the aggregate of total net debt and restatedtotal stockholders’ equity, of no more than 0.7 to 1, measured each June 30 and December 31;

specified maximum levels of annual capital expenditures (excluding expenditures on the construction of Iridium NEXT satellites) through the year ending December 31, 2024;

specified minimum levels of consolidated operational earnings before interest, taxes, depreciation and amortization, or operational EBITDA, for the 12-month periods ending each June 30 and December 31 through December 31, 2017;

specified minimum cumulative cash flow requirements from customers who have hosted payloads on our satellites measured each December 31 and June 30 from June 30, 2017 through December 31, 2019;

a debt service coverage ratio, measured during the repayment period, of not less than 1 to 1.5;

specified maximum leverage levels during the repayment period that decline from a ratio of 7.53 to 1 for the twelve months ending June 30, 2018 to a ratio of 2.36 to 1 for the twelve months ending December 31, 2024; and

a requirement that we receive at least $50,000,000 in May 2014, include:

·

an available cash balance of at least $25 million;

·

a debt-to-equity ratio, which is calculated as the ratio of total net debt to the aggregate of total net debt and total stockholders’ equity, of no more than 0.7 to 1, measured each June 30 and December 31;

·

specified maximum levels of annual capital expenditures (excluding expenditures on the construction of Iridium NEXT satellites) through the year ending December 31, 2024;

·

specified minimum levels of consolidated operational earnings before interest, taxes, depreciation and amortization, or operational EBITDA, for the 12-month periods ending each December 31 and June 30 through December 31, 2017;

·

specified minimum cumulative cash flow requirements from customers who have hosted payloads on our satellites measured each December 31 and June 30 from June 30, 2016 through December 31, 2017;

·

a debt service coverage ratio, measured during the repayment period, of not less than 1 to 1.5; and

·

specified maximum leverage levels during the repayment period that decline from a ratio of 4.73 to 1 for the twelve months ending June 30, 2018 to a ratio of 2.36 to 1 for the twelve months ending December 31, 2024.

hosting fees from Aireon by September 30, 2018.

Our available cash balance, as defined by the Credit Facility, was $290.2$291.9 million as of December 31, 2014.2017. Our debt-to-equity ratio was 0.470.5 to 1 as of December 31, 2014.2017. We were also in compliance with the operational EBITDA covenant, and the annual capital expenditure covenant and the cumulative cash flow requirements from customers who have hosted payloads covenant, which were the only other applicable covenants, as of December 31, 2014.

2017.

The covenants regarding capital expenditures, operational EBITDA and hosted payload cash flows are calculated in connection with a measurement, which we refer to as available cure amount, that is derived using a complex calculation based on overall cash flows, as adjusted by numerous measures specified in the Credit Facility. In a period in which our capital expenditures exceed, or our operational EBITDA or hosted payload cash flows falls short of, the amount specified in the respective covenant, we would be permitted to allocate available cure amount, if any, to prevent a breach of the applicable covenant. As of December 31, 2014,2017, we had an amount of $8.1 million in available cure, although it was not necessary for us to apply any available cure amount of $7.5 million, though none was required to maintain compliance with the covenants. The available cure amount has fluctuated significantly from one measurement period to the next, and we expect that it will continue to do so.

The covenants also place limitations on our ability and that of our subsidiaries to carry out mergers and acquisitions, dispose of assets, grant security interests, declare, make or pay dividends, enter into transactions with affiliates, fund payments under the full scale development contract, or FSD, with Thales from our own resources, incur additional indebtedness, or make loans, guarantees or indemnities. If we are not in compliance with the financial covenants under the Credit Facility, after any opportunity to cure such non-compliance, or we otherwise experience an event of default under the Credit Facility, the lenders may require repayment in full of all principal and interest outstanding under the Credit Facility. It is unlikely we would have adequate funds to repay such amounts prior to the scheduled maturity of the Credit Facility. If we fail to repay such amounts, the lenders may foreclose on the assets we have pledged under the Credit Facility, which include substantially all of our assets and those of our domestic subsidiaries.

As discussed in "Overview of Our Business" above, we believe we have reached an agreement in principle with our Credit Facility Lenders to modify the Credit Facility as described therein.

Boeing Insourcing Agreement

From our inception until late 2016, Boeing operated and maintained our satellite constellation under an operations and maintenance agreement. Pursuant to this agreement, Boeing provided personnel services in support of the development of Iridium NEXT and agreed to operate and maintain Iridium NEXT, including a transitional period that began on January 1, 2015, during which Boeing supported a hybrid operations mode involving network elements from both the first-generation Iridium system and the Iridium NEXT system. Boeing provided these services on a time-and-materials fee basis.

In May 2014,November 2016, we restructured our relationship with Boeing.  We entered into an insourcing agreement, pursuant to which we hired, as of January 3, 2017, the majority of the Boeing team that performed the operations and maintenance on our system.  We now are able to directly manage our network and optimize operational expenses. As part of this arrangement, we agreed to pay Boeing a fee of $5.5 million, of which one-half was paid in December 2016 and the remainder was paid in December 2017. In addition, we entered into a supplemental agreement, orseparate development services contract with Boeing, which will dedicate key Boeing personnel to continue the Supplemental Agreement, with the lenders under the Credit Facility,design and additional support required for bringing new services and capabilities to amend and restate the Credit Facility. The Supplemental Agreement includes revised financial covenant levels. The Supplemental Agreement also delays, until 2017, a portion of the contributions that we had been scheduled to make during 2014, 2015 and 2016 to the debt service reserve account that we are required to maintain under the Credit Facility. The Credit Facility delays $22 million of our 2014 contributions, $22 million of our 2015 contributions and $32 million of our 2016 contributions, for a total of $76 million. As of March 31, 2014, prior to the execution of the Supplemental Agreement, the minimum required cash reserve balance was $94.5 million. As of June 30, 2014, after the execution of the Supplemental Agreement, the minimum required cash reserve balance was reduced to $83.5 million. As a result of this reduction, $11.0 million was released from restricted cash during the three months ended June 30, 2014. In accordance with the Supplemental Agreement, as of December 31, 2014, the minimum cash reserve for debt service was $86.0 million and was maintained and classified as restricted cash on our consolidated balance sheet.

The Supplemental Agreement required us to raise at least $217.5 million through the sale of equity securities by July 31, 2014, with net proceeds of at least $200.0 million, in order for the amendment to become effective. The Supplemental Agreement allowed us to raise up to $150.0 million of the total in convertible preferred equity, with the remainder to be raised through sales of our common equity. There were no other conditions to the effectiveness of the Supplemental Agreement. We satisfied the capital raise requirement on May 14, 2014 upon the closing of the sales of our common stock and our 6.75% Series B Cumulative Perpetual Convertible Preferred Stock, or Series B Preferred Stock, described below.

As of February 26, 2015, we have borrowed a total of $1,303.3 million under the Credit Facility.

41

Common Stock Offerings

In May 2014, we issued 7,692,308 shares of our common stock in a registered direct offering to certain investment funds affiliated with Baron Capital Group Inc., or Baron, at a price of $6.50 per share for aggregate gross proceeds of $50.0 million. We received proceeds of $49.9 million from the sale of the common stock to Baron, net of offering costs of $0.1 million.

Under the stock purchase agreement entered into with Baron, Baron was entitled to receive additional shares if, during the 90-day period following the date of the stock purchase agreement, we issued or sold securities below specified prices. As a result of our public offering of common stock and our public offering of Series B Preferred Stock, described below, we were obligated to deliver 504,413 additional shares of common stock to Baron. The additional shares were issued on August 6, 2014.

In May 2014, we issued an additional 8,483,608 shares of our common stock in an underwritten public offering, including 1,106,558 shares of common stock upon the underwriters’ election to exercise their overallotment option in full. We received proceeds of $49.0 million, which were net of an aggregate $2.6 million underwriting discount and $0.2 million of offering costs.

Series B Cumulative Perpetual Convertible Preferred Stock Offering

In May 2014, we issued 500,000 shares of our Series B Preferred Stock in an underwritten public offering at a price to the public of $250 per share. We received proceeds of $120.8 million from the sale of the Series B Preferred Stock, which were net of an aggregate $3.8 million underwriting discount and $0.4 million of offering costs.

Holders of Series B Preferred Stock are entitled to receive cumulative cash dividends when, as and if declared from, and including, the date of original issue at a rate of 6.75% per annum of the $250 liquidation preference per share (equivalent to an annual rate of $16.875 per share). Dividends on our Series B Preferred Stock are payable quarterly in arrears, beginning on September 15, 2014. The Series B Preferred Stock does not have a stated maturity date and is not subject to any sinking fund or mandatory redemption provisions. The Series B Preferred Stock ranks senior to our common stock and pari passu with respect to our Series A Preferred Stock with respect to dividend rights and rights upon our voluntary or involuntary liquidation, dissolution or winding-up. Holders of Series B Preferred Stock generally have no voting rights except for limited voting rights if we fail to pay dividends for six or more quarterly periods (whether or not consecutive) and in other specified circumstances.

Holders of Series B Preferred Stock may convert some or all of their outstanding Series B Preferred Stock initially at a conversion rate of 33.456 shares of common stock per $250 liquidation preference, which is equivalent to an initial conversion price of approximately $7.47 per share of common stock, subject to adjustment in certain events.

On or after May 15, 2019, we may, at our option, convert some or all of the Series B Preferred Stock into the number of shares of common stock that are issuable at the then-applicable conversion rate, subject to specified conditions. On or prior to May 15, 2019, in the event of certain specified fundamental changes, holders of the Series B Preferred Stock will have the right to convert some or all of their shares of Series B Preferred Stock into the greater of (i) a number of shares of our common stock as subject to adjustment plus the make-whole premium, if any, and (ii) a number of shares of our common stock equal to the lesser of (a) the liquidation preference divided by the market value of the our common stock on the effective date of such fundamental change and (b) 81.9672 (subject to adjustment). In certain circumstances, we may elect to cash settle any conversions in connection with a fundamental change.

We intend to use the proceeds from the common stock and Series B Preferred Stock offerings for general corporate purposes, which may include capital expenditures, such as costs for the development and deployment of the Iridium NEXT system, and may also include working capital and general and administrative expenses.

network.

Material Trends and Uncertainties

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

demand for remote and reliable mobile communications services;

increased demand for communications services by disaster and relief agencies, and emergency first responders;

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

a growing number of new products and services and related applications;

improved data transmission speeds for mobile satellite service offerings;

regulatory mandates requiring the use of mobile satellite services;

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

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

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

our ability to complete the deployment of Iridium NEXT;

our ability to develop Iridium NEXT and related ground infrastructure, and to developlaunch new and innovative products and services for Iridium NEXT;

our ability to access the Credit Facility to meet our future capital requirements for the design, build and launch of the Iridium NEXT satellites;

our ability to generate sufficient internal cash flows, including potential cash flows from hosted payloads, and Iridium PRIME, to fund a portion of the remaining costs associated with Iridium NEXT and to support our ongoing business;

our ability to raise additional capital when needed, including through a planned issuance of debt securities;

Aireon LLC’s ability to successfully developdeploy and market its space-based automatic dependent surveillance-broadcast, or ADS-B, global aviation monitoring service to be carried as a hosted payload on the Iridium NEXT system;

Aireon’s ability to raise sufficient funds to pay hosting fees to us;

our ability to maintain the health, capacity, control and level of service of our existing satellite networkfirst-generation satellites through the transition tocompletion of Iridium NEXT;

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

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

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

market acceptance of our products;

regulatory requirements in existing and new geographic markets;

rapid and significant technological changes in the telecommunications industry;

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

reliance on single-source suppliers for the manufacture of most of our subscriber equipment and for some of the components required in the manufacture of our end-user subscriber equipment and our ability to purchase

parts that are periodically subject to shortages resulting from surges in demand, natural disasters or other events; and

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

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. The preparation of these financial statements requires the use of estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, collectability of accounts receivable, useful lives of property and equipment, long-lived assets, goodwill and other intangible assets, inventory, internally developed software, deferred financing costs, asset retirement obligations, income taxes, stock-based compensation, warranty expenses, loss contingencies, and other estimates. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

The accounting policies we believe to be most critical to understanding our financial results and condition and that require complex and subjective management judgments are discussed below. Our accounting policies are more fully described in Note 2 in Item 8 “Financial Statements and Supplementary Data.” Please see the notes to our consolidated financial statements for a full discussion of these significant accounting policies.

Revenue Recognition

For revenue arrangements with multiple elements in which we determine, based on judgment, that the elements qualify as separate units of accounting, we allocate the guaranteed minimum arrangement price among the various contract elements based on each element’s relative selling price. The selling price used for each deliverable is based on vendor-specific objective evidence when available, third-party evidence when vendor-specific evidence is not available, or the estimatedour estimate of selling price when neither vendor-specific evidence nor third-party evidence is available. We determine vendor-specific objective evidence of selling price by assessing sales prices of subscriber equipment, airtime and other services when they are sold to customers on a stand-alone basis. Our determination of best estimate of selling price is consistent with our determination of vendor-specific objective evidence of selling price and we assess qualitative and quantitative market factors and entity-specific factors when estimating the selling price. We recognize revenue for each element based on the specific characteristics of that element.

We sell prepaid services in the form of e-vouchers and prepaid cards. A liability is established equal to the cash paid upon purchase for the e-voucher or prepaid card. We recognize revenue from the prepaid services upon the use of the e-voucher or prepaid card by the customer;customer or, if unused, upon the expiration of the right to access the prepaid service. In September 2012, we communicated a new expiration policy with respect to prepaid e-vouchers, effective December 2013. While the terms of prepaid e-vouchers can be extended by the purchase of additional e-vouchers, prepaid e-vouchers may not be extended beyond the new limits of three or four years, dependent on the initial expiry period when purchased. We do not offer refunds for unused prepaid services.

Revenue associated with some of our fixed-price engineering services arrangements is recognized when the services are rendered, typically on a partialproportional performance method of accounting based on our estimate of total costs expected to complete the contract, and the related costs are expensed as incurred. We recognize revenue on cost-plus-fixed-fee arrangements to the extent of actual costs incurred plus an estimate of the applicable fees earned, where such estimated fees are determined using a partial performance method calculation. If actual results are not consistent with our estimates or assumptions, we may be exposed to changes to earned and unearned revenue that could be material to our results of operations.

Stock-Based Compensation

We account for stock-based compensation, which consists of stock options and restricted stock units, based on the grant date estimated fair value. In the case of restricted stock units, grant date fair value is equal to the closing price of our common stock on the date of grant. The expected vesting of our performance-based RSUs is based upon the likelihoodprobability that we achieve the defined performance goals. The level of achievement of performance goals, if any, is determined by theour compensation committee. In the case of stock options, grant date fair value is calculated using the Black-Scholes option pricing model. We recognize stock-based compensation on a straight-line basis over the requisite service period. The Black-Scholes option pricing model requires us to make several assumptions, including expected volatility and expected term of the options. If any of the assumptions we use in the Black-Scholes option pricing model were to change significantly, stock-based compensation expense

may differ materially in the future from that recorded in the current period. In addition, we are required to estimate the expected forfeiture rate and only recognize expense for those awards expected to vest. We estimate the forfeiture rate based on historical experience. To the extent our actual forfeiture rate is different from our estimate, stock-based compensation expense is adjusted accordingly.

Warranty Expenses

We estimate a provision for product returns under our standard warranty policies when it is probable that a loss has been incurred. A warranty liability is maintained based on historical experience of warranty costs and expected occurrences of warranty claims on equipment. If actual results are not consistent with our estimates or assumptions, we may be exposed to changes to cost of subscriber equipment sales that could be material to our results of operations.

Income Taxes

We account for income taxes using the asset and liability approach. This approach requires that we recognize deferred tax assets and liabilities based on differences between the financial statement bases and tax bases of our assets and liabilities. Deferred tax assets and liabilities are recorded based upon enacted tax rates for the period in which the deferred tax items are expected to reverse. Changes in tax laws or tax rates in various jurisdictions are reflected in the period of change. Significant judgment is required in the calculation of our tax provision and the resulting tax liabilities as well as our ability to realize our deferred tax assets. Our estimates of future taxable income and any changes to such estimates can significantly impactaffect our tax provision in a given period. Significant judgment is required in determining our ability to realize our deferred tax assets related to federal, state and foreign tax attributes within their carryforward periods including estimating the amount and timing of the future reversal of deferred tax items in our projections of future taxable income. A valuation allowance is established to reduce deferred tax assets to the amounts we expect to realize in the future. We also recognize tax benefits related to uncertain tax positions only when we estimate that it is “more likely than not” that the position will be sustainable based on its technical merits. If actual results are not consistent with our estimates and assumptions, this may result in material changes to our income tax provision.

Long-Lived Assets

We assess

The Tax Cuts and Jobs Act, or the recoverability of long-lived assets when indicators of impairment exist. We assessTax Act, introduces significant changes to U.S. income tax law that have a meaningful impact on our provision for income taxes. Due to the possibility of impairment by comparing the carrying amountstiming of the assetsenactment and the complexity involved in applying the provisions of the Tax Act, we made reasonable estimates of the effects and recorded provisional amounts in our financial statements for the year ended December 31, 2017. Accounting for the income tax effects of the Tax Act requires significant judgments and estimates in the interpretation and calculations of the provisions of the Tax Act. The U.S. Treasury Department, the Internal Revenue Service (IRS), and other standard-setting bodies may issue guidance on how the provisions of the Tax Act will be applied or otherwise administered that is different from our interpretation. As we collect and prepare necessary data, and interpret the Tax Act and any additional guidance issued by the IRS or other standard-setting bodies, we may make adjustments to the estimated undiscounted future cash flows expected to be generated by those assets. If we determine that an asset is impaired, we estimateprovisional amounts, which could materially affect our financial statements in the impairment loss by determiningperiod in which the excess of the asset’s carrying amount over its estimated fair value. Estimated fair value is based on market prices, when available, or various other valuation techniques. These techniques often include estimates and assumptions with respect to future cash flows and incremental borrowing rates. If actual resultsadjustments are not consistent with our estimates and assumptions, we may be exposed to impairment losses that could be material to our results of operations.

44

made.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization. Property equipment and intangible assets with finite livesequipment are depreciated or amortized over their estimated useful lives. We apply judgment in determining the useful lives based on factors such as engineering data, our long-term strategy for using the assets, contractual terms related to the assets, laws and regulations that could impact the useful lives of the assets and other economic factors. In evaluating the useful lives of our satellites, we assess the current estimated operational life of the satellites, including the potential impact of environmental factors on the satellites, ongoing operational enhancements and software upgrades. Additionally, we review engineering data relating to the operation and performance of our satellite network.

We depreciate our satellites over the shorter of their potential operational life or the period of their expected use. The appropriateness of the useful lives is evaluated on a quarterly basis or as events occur that require additional assessment.assessment. Our currentfirst-generation satellites are depreciated on a straight-line basis through the earlier of their estimated remaining useful life or the date they are expected to be replaced by Iridium NEXT satellites, which defines the period of their expected use, because we expect this will occur before the end of their operational lives.

In September 2014, we updated our analysis of the current satellites’ remaining useful lives based on the refinement of the launch schedule and deployment plan for Iridium NEXT. As a result, the estimated useful lives of the satellites within the current constellation have been extended and are consistent with the expected deployment of Iridium NEXT.Based on the current launch schedule, we expect Iridium NEXT satellites to begin deployment inwhich have already been placed into service are depreciated using the second half of 2015, with the final launch expected to occur in 2017. If our actual operational results are not consistent with our estimates and assumptions, we may experience changes in depreciation and amortization expense that could be material to our results of operations. In the event there are changes to the launch schedule of Iridium NEXT satellites, the period of intended use for our current satellites could be impacted, also resulting in changes to depreciation and amortization expense that could be material to our results of operations.

straight-line method over their respective estimated useful lives.

Assets under construction primarily consist of costs incurred associated with the design, development and launch of the Iridium NEXT satellites, upgrades to our current infrastructure and ground systems and internal software development costs. Once these assets are placed in service, they will be depreciated using the straight-line method over their respective estimated useful lives. During the year ended December 31, 2017, we evaluated the useful lives of all assets under construction, noting that the Kosmotras launch services will no longer be used or further developed. As such, we wrote-off the full amount previously paid to Kosmotras, by recording accelerated depreciation of $36.8 million, in the fourth quarter of 2017, as noted above. No such charges were recorded for the years ended December 31, 2016 and 2015. We capitalize interest on the Credit Facility during the construction period of Iridium NEXT. Capitalized interest is added to the cost of our next-generation satellites.

Recoverability of Goodwill and Intangible Assets with Indefinite Lives

Goodwill

We assess the recoverability of goodwill on an annual basis or when indicators of impairment exist such as significant changes in the business climate of our industry, operating performance indicators or competition. Goodwill impairment is determined using a two-step process. The first step involves a comparison of the estimated fair value of a reporting unit to its carrying amount, including goodwill. If the estimated fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired and the second step of the impairment test is not necessary. If the carrying amount of a reporting unit exceeds its estimated fair value, then the second step of the goodwill impairment test must be performed. To measure the amount of impairment loss, if any, we determine the implied fair value of goodwill in the same manner as the amount of goodwill recognized in a business combination. Specifically, the estimated fair value of the reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the price paid to acquire the reporting unit. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.

We operate in a single reporting unit, and we assess the possibility of impairment by comparing the carrying amount of the reporting unit to its estimated fair value. Our most recent annual assessment of goodwill and indefinite-lived intangible assets, which we refer to as the 2014 Analysis, was performed on October 1, 2014. We determined the estimated fair value of our reporting unit based on a combination of a market approach using comparable public companies (guideline company method) and the income approach using discounted cash flows, consistent with the approach we utilized in our analysis performed in 2013. These valuation techniques involve the use of estimates and assumptions. We believe that the assumptions and estimates used to determine the estimated fair value of our reporting unit are reasonable. However, these estimates are inherently subjective and there are a number of factors, including factors outside of our control, that could cause actual results to differ from our estimates. Changes in estimates and assumptions could have a significant impact on whether or not an impairment charge is recognized and also the magnitude of any such charge. Any changes to our key assumptions about our businesses and our prospects, timing or amounts of projected cash flows, or changes in market conditions, could cause the fair value of our reporting unit to fall below its carrying value, resulting in a potential impairment charge.

The key assumptions used in the 2014 Analysis included: (i) cash flow projections through 2025, which include assumptions relative to forecasted service revenue, equipment revenue, engineering and support service revenue, hosted payload revenue, operating expenses and Iridium NEXT capital expenditures; (ii) a discount rate of 12.0% applied to the cash flow projections, which was based on the weighted average cost of capital adjusted for the risks associated with the business; (iii) selection of comparable companies used in the market approach; (iv) assumptions in weighting the results of the income approach and the market approach valuation techniques; and (v) expected distributions from Aireon. Based on the results of the first step of the 2014 Analysis, the estimated fair value of the reporting unit exceeded the carrying value. As such, the second step of the goodwill impairment test was not required and no impairment charge was recorded during the period. In future periods, if actual results are not consistent with our estimates and assumptions, we may be exposed to impairment losses that could be material to our results of operations.

Intangible Assets Not Subject to Amortization

A portion of our intangible assets consists of our spectrum licenses and trade names which are indefinite-lived intangible assets. We reevaluate the indefinite life determination for these assets periodically to determine whether events and circumstances continue to support an indefinite life.

We assess the recoverability of indefinite-lived assets on an annual basis or when indicators of impairment exist. We assessHistorically, we have assessed the possibility of impairment by comparing the carrying amount of the asset to its estimated fair value. If the estimated fair value of the indefinite-lived asset is less than the carrying amount, an impairment loss is recognized. We makemade assumptions and applyapplied judgment in estimating the fair value based on quoted market prices and various other valuation techniques, including replacement costs, discounted cash flows methods and other market multiple analyses. The various valuation techniques require significant assumptions about future cash flows, replacement cost, revenue growth, capital expenditures, working capital fluctuations, asset life and incremental borrowing rates. In our annual analysis performed in 2017, we chose the optional qualitative assessment to test indefinite-lived intangible assets for impairment. The qualitative assessment permits companies to assess whether it is more likely than not that an indefinite-lived intangible asset is impaired. If actual results area company concludes based on the qualitative assessment that it is not consistent with our estimates and assumptions, we may be exposedmore likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, it would not have to impairment losses that could be material to our results of operations.quantitatively determine the assets’ fair value. Based on the results of this analysis, it was not more likely than not that the 2014 Analysis, the fair value of the indefinite-livedintangible assets not subject to amortization were impaired. Therefore, a quantitative analysis was greater than their carrying value. As such,not necessary, and no impairment charge was recorded during the period.

Internally Developed Software

We capitalize the costs of acquiring, developing and testing software to meet our internal needs. Capitalization of costs associated with software obtained or developed for internal use commences when the preliminary project stage is complete and it is probable that the project will be completed and used to perform the function intended. Capitalized costs include external direct cost of materials and services consumed in developing or obtaining internal-use software as well as payroll and payroll-related costs for employees who are directly associated with, and devote time to, the internal-use software project. Capitalization of these costs ceases no later than the point in time at which the project is substantially complete and ready for its intended use. Internal use software costs are amortized once the software is placed in service using the straight-line method over periods ranging from three to seven years. Judgments and estimates are required in the calculation of capitalized development costs. We evaluate and estimate, based on engineering data, when the preliminary project stage is completed and the point when the project is substantially complete and ready for use.

Deferred Financing Costs

Direct and incremental costs incurred in connection with securing debt financing are deferred on our balance sheet and amortized as additional interest expense using the effective interest method over the term of the related debt. The effective interest rate calculation requires us to make assumptions and estimates in determining estimated periodic interest expense. The calculation includes assumptions and estimates with respect to future borrowing dates and amounts, repayment dates and amounts, and projected future LIBOR rates. If actual borrowing amounts and dates, repayment amounts and dates, and future LIBOR rates are not consistent with our estimates or assumptions, we may be exposed to changes that could be material toimpact our property and equipment, net balance (since we are capitalizing interest expense as part of the cost of Iridium NEXT), deferred financing costs balance, depreciation expense, interest expense, income from operations and net income.

46

Comparison of Our Results of Operations for the Year Ended December 31, 20142017 and the Year Ended December 31, 2013

		Year Ended December 31,
						% of Total								% of Total				Change
($ in thousands)		2014				Revenue				2013				Revenue				Dollars				Percent
Revenue:
Service revenue
Commercial		$	243,875				60	%		$	232,928				61	%		$	10,947				5	%
Government			65,549				16	%			59,164				15	%			6,385				11	%
Total service revenue			309,424				76	%			292,092				76	%			17,332				6	%
Subscriber equipment			78,152				19	%			73,303				19	%			4,849				7	%
Engineering and support services			20,981				5	%			17,254				5	%			3,727				22	%
Total revenue			408,557				100	%			382,649				100	%			25,908				7	%
Operating expenses:
Cost of services (exclusive of depreciation and amortization)			62,085				15	%			59,346				16	%			2,739				5	%
Cost of subscriber equipment			54,569				14	%			52,062				14	%			2,507				5	%
Research and development			17,587				4	%			11,149				3	%			6,438				58	%
Selling, general and administrative			78,636				19	%			75,218				19	%			3,418				5	%
Depreciation and amortization			72,769				18	%			74,980				19	%			(2,211	)			(3	)%
Total operating expenses			285,646				70	%			272,755				71	%			12,891				5	%
Operating income			122,911				30	%			109,894				29	%			13,017				12	%
Other income (expense):
Interest income, net			3,640				1	%			2,276				1	%			1,364				60	%
Undrawn credit facility fees			(5,825	)			(2	)%			(7,708	)			(2	)%			1,883				(24	)%
Other income (expense), net			(4,274	)			(1	)%			6,003				1	%			(10,277	)			(171	)%
Total other income (expense)			(6,459	)			(2	)%			571				0	%			(7,030	)			(1,231	)%
Income before income taxes			116,452				28	%			110,465				29	%			5,987				5	%
Provision for income taxes			(41,463	)			(10	)%			(47,948	)			(13	)%			6,485				(14	)%
Net income		$	74,989				18	%		$	62,517				16	%		$	12,472				20	%

Revenue

Total revenue increased to $408.6 million for the year ended December 31, 2014 compared to $382.6 million for the prior year. This increase in total revenue was primarily due to a $17.3 million increase in service revenue, driven by an 11% year-over-year increase in billable commercial subscribers and a $6.4 million increase in government service revenue. Also contributing to the increase was a $4.8 million increase in subscriber equipment revenue, primarily related to increased unit sales of L-Band transceivers, handsets, which include Iridium GO!, and short-burst data devices. In addition, engineering and support service revenue increased by $3.7 million primarily due to the increased scope of work on government-sponsored contracts.

47

2016

	Year Ended December 31,
					% of Total Revenue							% of Total Revenue			Change
($ In thousands)	2017							2016							Dollars				Percent
Revenue:
Service revenue
Commercial	$	261,735			58	%		$	246,822			57	%		$	14,913			6	%
Government	88,000				20	%		88,000				20	%		—				0	%
Total service revenue	349,735				78	%		334,822				77	%		14,913				4	%
Subscriber equipment	77,119				17	%		74,211				17	%		2,908				4	%
Engineering and support services	21,192				5	%		24,607				6	%		(3,415		)		(14	)%
Total revenue	448,046				100	%		433,640				100	%		14,406				3	%
Operating expenses:
Cost of services (exclusive of depreciation
and amortization)	80,396				18	%		64,958				15	%		15,438				24	%
Cost of subscriber equipment	44,445				10	%		44,286				10	%		159				0	%
Research and development	15,247				3	%		16,079				4	%		(832		)		(5	)%
Selling, general and administrative	84,405				19	%		82,552				19	%		1,853				2	%
Depreciation and amortization	122,266				27	%		49,394				11	%		72,872				148	%
Total operating expenses	346,759				77	%		257,269				59	%		89,490				35	%
Gain on Boeing transaction	14,189				3	%		—				—	%		14,189				100	%
Operating income	115,476				26	%		176,371				41	%		(60,895		)		(35	)%
Other income (expense):
Interest income, net	4,328				1	%		2,934				1	%		1,394				48	%
Undrawn credit facility fees	(25		)		0	%		(1,346		)		0	%		1,321				(98	)%
Other income (expense), net	(207		)		0	%		206				(1	)%		(413		)		(200	)%
Total other income (expense)	4,096				1	%		1,794				0	%		2,302				128	%
Income before income taxes	119,572				27	%		178,165				41	%		(58,593		)		(33	)%
Income tax benefit (expense)	114,284				25	%		(67,133		)		(15	)%		181,417				(270	)%
Net income	$	233,856			52	%		$	111,032			26	%		$	122,824			111	%

Commercial Service Revenue

		Year Ended
		December 31, 2014												December 31, 2013												Change
		(Revenue in millions and subscribers in thousands)
						Billable												Billable												Billable
		Revenue				Subscribers(1)				ARPU(2)				Revenue				Subscribers(1)				ARPU(2)				Revenue				Subscribers				ARPU
Commercial voice and data		$	185.5				354			$	45			$	184.0				340			$	46			$	1.5				14			$	(1	)
Commercial M2M data			58.4				325				16				48.9				273				16				9.5				52				-
Total Commercial		$	243.9				679							$	232.9				613							$	11.0				66

	Year Ended December 31,
	2017											2016											Change
	Revenue				Billable Subscribers (1)			ARPU (2)				Revenue				Billable Subscribers (1)			ARPU (2)				Revenue				Billable Subscribers			ARPU
	(Revenue in millions and subscribers in thousands)
Commercial voice and data	$	177.7			359			$	42			$	177.7			353			$	42			$	—			6			$	—
Commercial IoT data	74.1				510			13				65.5				413			14				8.6				97			(1.0		)
Hosted payload and other data services (3)	9.9				N/A							3.6				N/A							6.3				N/A
Total Commercial	$	261.7			869							$	246.8			766							$	14.9			103

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

(2)	Average monthly revenue per unit, or ARPU, is calculated by dividing revenue in the respective period by the average of the number of billable subscribers at the beginning of the period and the number of billable subscribers at the end of the period and then dividing the result by the number of months in the period.

(3)	Billable subscriber and ARPU data is not applicable for hosted payload and other data service revenue items.

For the year ended December 31, 2017, total commercial revenue increased $14.9 million, or 6%, primarily due to the increase in IoT of $8.6 million, or 13%, compared to the prior year. The increase in commercial voice and data revenue was principallyIoT is primarily due to the increased number of Iridium OpenPorta 23% increase in commercial IoT data billable subscribers, partially offset by decreasesa decline in voicethe related ARPU due to the growth in subscribers using lower data usage plans. Hosted payload and other data usage.

Commercial M2M dataservice revenue increased by $9.5$6.3 million, or 19%175%, for the year ended December 31, 2014 compared tofrom the prior year primarily due to a 19%the commencement of hosting and data services. We anticipate revenue from our hosting and data services to increase as more Iridium NEXT satellites are placed into service over the launch campaign, which is expected to be completed in commercial M2M billable subscribers.

2018. 

Government Service Revenue

Year Ended

December 31, 2014

December 31, 2013

Change

(Revenue in millions and subscribers in thousands)

Billable

Billable

Billable

Revenue

Subscribers(1)

Revenue

Subscribers(1)

Revenue

Subscribers

Government service revenue

$

65.6

60

$

59.2

51

$

6.4

9

	Year Ended December 31,
	2017							2016							Change
	Revenue				Billable Subscribers (1)			Revenue				Billable Subscribers (1)			Revenue				Billable Subscribers
	(Revenue in millions and subscribers in thousands)
Government service revenue	$	88			100			$	88			84			$	—			16

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

We provide Iridium airtime and airtime support to U.S. government and other authorized customers pursuant to a five-year Enhanced Mobile Satellite Services, or EMSS contract executed in October 2013 and managed by the Defense Information Systems Agency. The EMSS contract replaced our previous EMSS contract which we originally entered into in April 2008.DISA. Under the terms of this agreement, authorized customers utilize Iridiumairtime services provided through the U.S. Department of Defense’s, or DoD’s, dedicated gateway. These services include unlimited global secure and unsecure voice, low and high-speed data, paging, broadcast, and Distributed Tactical Communications System, or DTCS, services for an unlimited number of DoD and other federal subscribers. DTCSThe service fee under the EMSS contract is a service that provides beyond-line-of-sight, push-to-talk tactical radio servicefixed at $88 million per year for user-defined groups. The fixed-price rates in eachthe remainder of the five contract years, which run from October 22 through the following October 21, are $64 million and $72 million in years one and two, respectively, and $88 million in each of the years three through five.

Government service revenues for the year ended December 31, 2014 increased to $65.6 million from $59.2 million in the prior year as a result of the current EMSS contract. Under this contract, revenue is a fixed monthly amountterm, and is not based on subscribers or usage, allowing an unlimited number of users access to existing services. As we continue to innovate and better meet the needs of our customers, additional services not contemplated under the currentThe EMSS contract may be providedexpires in future periods atOctober 2018, although based on federal acquisition regulations, the government has the ability to unilaterally extend for an amount mutually agreed upon by both parties. Basedadditional six months. We have begun discussions with the U.S. government on the fixed-pricea new EMSS contract, which we expect government service revenue for 2015 to exceed 2014.

enter into later in 2018 or in 2019.

Subscriber Equipment Revenue

Subscriber equipment revenue increased by $4.8$2.9 million, or 7%4%, to $78.2$77.1 million for the year ended December 31, 20142017 compared to the prior year. This increase was primarily due to increases of $2.9 million and $0.8 million in subscriber equipment revenue related to L-Band transceivers and M2M devices, respectively. The increases in subscriber equipment revenue for L-Band transceivers and M2M devices were due to increased unit sales partially offset by targeted lower pricing on these products designed to promote the higher volumes we ultimately achieved. In addition, handset revenue increased $1.4 million primarily related to the launch of Iridium GO!, which contributed $4.0 million for the full year 2014.

handsets and L-band transceivers.

Engineering and Support Service Revenue

		Year Ended
		December 31, 2014				December 31, 2013				Change
		(In millions)
Government		$	18.9			$	15.5			$	3.4
Commercial			2.1				1.8				0.3
Total		$	21.0			$	17.3			$	3.7

	Year Ended December 31,
	2017				2016				Change
	(In millions)
Commercial	$	3.1			$	2.2			$	0.9
Government	18.1				22.4				(4.3		)
Total	$	21.2			$	24.6			$	(3.4	)

Engineering and support service revenue increaseddecreased by $3.7$3.4 million, or 22%14%, for the year ended December 31, 20142017 compared to the prior year primarily dueas a result of decreased revenue under a contract with the DoD to our entering into new government-sponsored contractsadapt the Iridium Extreme^®  handset for DoD applications, which was completed during the second half of 2013 related to gateway modernization efforts as we transition to Iridium NEXT capabilities. We anticipate an increase in the scope of work for government contracts in 2015 resulting in overall growth in engineering and support service revenue compared to 2014.

2017.

Operating Expenses

Cost of Services (exclusive of depreciation and amortization)

Cost of services (exclusive of depreciation and amortization) includes the cost of network engineering and operations staff, including contractors, software maintenance, product support services, and cost of services for government and commercial engineering and support service revenue.

Cost of services (exclusive of depreciation and amortization) increased by $2.7$15.4 million, or 5%24%, for the year ended December 31, 20142017 compared to the prior year, primarily dueas a result of insurance costs from Iridium NEXT satellites placed into service during 2017. We expect our insurance expenses to an increase as we place Iridium NEXT satellites into service throughout the launch campaign, which we expect to complete in costs related to government contracts and satellite operations, partially offset by decreased costs related to network maintenance and product support.

2018.

Cost of Subscriber Equipment

Cost of subscriber equipment includes the direct costs of equipment sold, which consist of manufacturing costs, allocation of overhead, and warranty costs.

Cost of subscriber equipment increased by $2.5$0.2 million, or 5%,which was substantially the same for the year ended December 31, 2014 compared to2017 as in the prior year primarily due to higher unit sales, corresponding to the increase in subscriber equipment revenue discussed above. In addition to increased unit sales, cost of subscriber equipment increased proportionally more than subscriber equipment revenue due to an increase in the average cost per unit of our handsets and Iridium Pilot units. Iridium Pilot costs increased $1.0 million compared to the prior year as we implemented product quality improvements. Partially offsetting these increases was a $5.3 million decline in the warranty provision and a $0.5 million decrease in expense for excess and obsolete inventory primarily related to the Iridium 9505 handset accessories. The warranty provision decrease was primarily related to fewer expected returns of the Iridium Pilot sold in 2014 and a decrease in the average repair costs compared to the prior year. The decrease in the warranty provision included a $1.8 million warranty initiative to replace older Iridium OpenPort units.

Research and Development

Research and development expenses increased by $6.4 million, or 58%, for the year ended December 31, 2014 compared to the prior year primarily due to Iridium NEXT projects including development costs associated with enabling faster data speeds on our network and subscriber equipment.

Selling, General and Administrative

Selling, general and administrative expenses include sales and marketing costs as well as legal, finance, information technology, facilities, billing and customer care expenses.

Selling, general and administrative expenses increased by $3.4$1.9 million, or 5%2%, for the year ended December 31, 20142017 compared to the prior year, primarily due to an increase in employee-related costs including stock-based compensation expense.

increased professional fees associated with government regulatory requirements and other services.

Depreciation and Amortization

Depreciation and amortization expense decreasedincreased by $2.2$72.9 million, or 3%148%, for the year ended December 31, 2014 compared to the prior year.

During the third quarter of 2014, we updated our analysis of the current satellites’ remaining useful lives. Based on the results of this analysis and the refinement of the Iridium NEXT launch schedule and deployment plan, the estimated useful lives of the satellites within our current constellation were extended and are consistent with the expected deployment of Iridium NEXT. This change in estimated useful life was effective in September 2014, resulting in a $3.8 million decrease in depreciation expense for the year ended December 31, 2014 when compared to the prior year. We will continue to evaluate the useful lives of our current satellites through the full deployment of Iridium NEXT as the satellites are placed into service. In addition, amortization expense decreased by $3.0 million for the year ended December 31, 2014 compared to the prior year due to the completion of amortization of certain definite-lived intangibles in 2014. These certain definite-lived intangibles include customer relationships, intellectual property and software which were assigned fair value as a result of our 2009 acquisition of Iridium Holdings LLC and were fully amortized over useful lives of five years.

The decreases described above were partially offset by increases in depreciation expense resulting from additions to property and equipment for ground infrastructure compatible with Iridium NEXT in addition to a $2.2 million impairment charge that we recorded during 2014 as a result of having lost communication with three of our in-orbit satellites. We believe the loss of these satellites will not have a material impact on the useful life of our current satellite constellation. We had in-orbit spare satellites available to replace the lost satellites. We did not lose any satellites in 2013.

Other Expense

Interest Income, Net

Interest income, net, increased by $1.4 million, or 60%, to $3.6 million for the year ended December 31, 20142017 compared to the prior year, primarily due to a $1.0the write-off of $36.8 million increase in financing fees recognized on customer receivables and a $0.4 million increase on interest earned, net of related expenses, on our investments in marketable securities.

Undrawn Credit Facility Fees

The commitment fee on the undrawn portion of the Credit Facility was $5.8 millionconstruction-in-progress associated with the Kosmotras launch services in 2017 and the addition of new assets, including Iridium NEXT satellites placed into service during 2017. Excluding the impact of Kosmotras, we expect our depreciation expense to increase as we place Iridium NEXT satellites into service throughout the launch campaign, which we expect to complete in 2018.

Gain on Boeing Transaction

On November 28, 2016, we entered into an Insourcing Agreement with Boeing for us to hire, effective as of January 3, 2017, the majority of Boeing employees and third party contractors who were responsible for the year ended December 31, 2014 comparedoperations and maintenance of our satellite constellation and ground infrastructure. As a result, we and Boeing terminated our previous Operations and Maintenance Agreement, or O&M Agreement, and our previous Iridium NEXT Support Service Agreement and entered into a new Development Services Agreement, or DSA, with a $6.0 million annual take-or-pay commitment through 2021.

We recognized a $14.2 million gain in the first quarter of 2017, consisting of (1) the derecognition of a purchase accounting liability of $11.0 million created when GHL Acquisition Corp. acquired Iridium in 2009 related to $7.7 million for the prior year. The decreasefair value of the commitment fee oncontractual arrangement with Boeing as of that date and (2) the undrawn portion directly relates to the increase in the amounts borrowed under the Credit Facility as we finance the development of Iridium NEXT. As we continue to draw additional amounts under the Credit Facility, the undrawn portion and related fees will decrease.

Other Income (Expense), net

Other income (expense), net was $4.3 million of other expense, net for the year ended December 31, 2014 compared to $6.0 million of other income, net for the prior year. This change primarily resulted from a favorable litigation result, which resulted in the 2013 recognitionremainder of a previously deferred $10credit, $3.2 million, hosted payload customer deposit. We did not recognize any incomeresulting from this litigation result or similar itemsan O&M Agreement amendment in 2014.

Provision for July 2010.

Income Taxes

Tax Benefit

For the year ended December 31, 2014,2017, our income tax provisionbenefit was $41.5$114.3 million compared to $47.9an income tax expense of $67.1 million for the prior year. Our effective tax rate was approximately 35.6%-95.6% for the year ended December 31, 20142017 compared to 43.4%37.7% for the prior year. The changedecrease in the income tax provision and effective tax rate was primarily related to the impact ofnet tax benefit on remeasuring our ending deferred tax balances at 21%, from 35%, for years beginning after December 31, 2017, to reflect the benefit of the Arizona tax law changes (bothnew tax rate and apportionment method) combined with a decrease in tax expense related tounder the valuation allowance on our Arizona net operating losses compared to the prior year.Tax Act. As our current estimates change in future periods, the impact on the deferred tax assets and liabilities may change correspondingly.

Net Income

Net income was $75.0$233.9 million for the year ended December 31, 2014,2017, an increase of $12.5$122.8 million or 20%, from the prior year. This increase in net income was primarily driven by a $17.3 million increase in service revenue due to increased billable commercial subscribers and the favorable impact of the current EMSS contract, a $3.8 million increase in engineering and support service revenue due to new government-sponsored contracts, a $2.2 million decrease in depreciation and amortization primarily due to the change in our current satellites’ estimated remaining useful lives, a $6.5 million decrease in our provision for income taxes and a $1.9 million decreaseincrease in commitment fees on the undrawn portion of the Credit Facility. These increases to net income were partiallyrevenue, offset by a $10.3 million increaseincreases in other expenses, net primarilydepreciation expense, including the accelerated depreciation related to the 2013 recognitionwrite-off of a previously deferred $10.0 million hosted payload customer deposit which did not recur in 2014, a $6.4 million increase in research and development costs primarily for Iridium NEXT development projects, and a $2.7 million increase in cost ofKosmotras launch services, related to the increase in scope of work for government-sponsored contracts.

50

as described above. 

Comparison of Our Results of Operations for the Year Ended December 31, 20132016 and Combined Results of Operations for the Year Ended December 31, 2012

		Year Ended December 31,
						% of Total								% of Total				Change
($ in thousands)		2013				Revenue				2012				Revenue				Dollars				Percent
Revenue:
Service revenue
Commercial		$	232,928				61	%		$	211,741				55	%		$	21,187				10	%
Government			59,164				15	%			61,750				16	%			(2,586	)			(4	)%
Total service revenue			292,092				76	%			273,491				71	%			18,601				7	%
Subscriber equipment			73,303				19	%			93,866				25	%			(20,563	)			(22	)%
Engineering and support services			17,254				5	%			16,163				4	%			1,091				7	%
Total revenue			382,649				100	%			383,520				100	%			(871	)			0	%
Operating expenses:
Cost of services (exclusive of depreciation and amortization)			59,346				16	%			60,937				16	%			(1,591	)			(3	)%
Cost of subscriber equipment			52,062				14	%			53,285				14	%			(1,223	)			(2	)%
Research and development			11,149				3	%			15,525				4	%			(4,376	)			(28	)%
Selling, general and administrative			75,218				19	%			67,589				18	%			7,629				11	%
Depreciation and amortization			74,980				19	%			81,110				21	%			(6,130	)			(8	)%
Total operating expenses			272,755				71	%			278,446				73	%			(5,691	)			(2	)%
Operating income			109,894				29	%			105,074				27	%			4,820				5	%
Other income (expense):
Interest income, net			2,276				1	%			1,072				0	%			1,204				112	%
Undrawn credit facility fees			(7,708	)			(2	)%			(10,232	)			(2	)%			2,524				(25	)%
Other expense, net			6,003				1	%			(896	)			0	%			6,899				(770	)%
Total other expense			571				0	%			(10,056	)			(2	)%			10,627				(106	)%
Income before income taxes			110,465				29	%			95,018				25	%			15,447				16	%
Provision for income taxes			(47,948	)			(13	)%			(30,387	)			(8	)%			(17,561	)			58	%
Net income		$	62,517				16	%		$	64,631				17	%		$	(2,114	)			(3	)%

Revenue

Total revenue remained relatively flat at $382.6 million for the year ended December 31, 2013 compared to $383.5 million for the prior year. This slight decrease in total revenue was primarily due to a large decrease in subscriber equipment sales. This decrease was largely offset by increases in commercial service revenue, due to an increase in access fee revenue resulting from targeted price increases, an increase in revenue from prepaid e-vouchers resulting from the change in our prepaid airtime policy effective in 2013 and an increase in billable subscribers.

2015

	Year Ended December 31,														Change
($ In thousands)	2016				% of Total Revenue			2015				% of Total Revenue			Dollars				Percent
Revenue:
Service revenue
Commercial	$	246,822			57	%		$	241,925			59	%		$	4,897			2	%
Government	88,000				20	%		75,097				18	%		12,903				17	%
Total service revenue	334,822				77	%		317,022				77	%		17,800				6	%
Subscriber equipment	74,211				17	%		73,615				18	%		596				1	%
Engineering and support services	24,607				6	%		20,741				5	%		3,866				19	%
Total revenue	433,640				100	%		411,378				100	%		22,262				5	%
Operating expenses:
Cost of services (exclusive of depreciation    and amortization)	64,958				15	%		60,306				15	%		4,652				8	%
Cost of subscriber equipment	44,286				10	%		40,807				10	%		3,479				9	%
Research and development	16,079				4	%		16,144				4	%		(65		)		0	%
Selling, general and administrative	82,552				19	%		81,445				20	%		1,107				1	%
Depreciation and amortization	49,394				11	%		51,834				13	%		(2,440		)		(5	)%
Impairment of goodwill	—				0	%		87,039				21	%		(87,039		)		(100	)%
Total operating expenses	257,269				59	%		337,575				82	%		(80,306		)		(24	)%
Operating income	176,371				41	%		73,803				18	%		102,568				139	%
Other income (expense):
Interest income, net	2,934				1	%		3,069				1	%		(135		)		(4	)%
Undrawn credit facility fees	(1,346		)		0	%		(3,289		)		(1	)%		1,943				(59	)%
Other expense, net	206				(1	)%		(468		)		(1	)%		674				(144	)%
Total other expense	1,794				0	%		(688		)		(1	)%		2,482				(361	)%
Income before income taxes	178,165				41	%		73,115				17	%		105,050				144	%
Income tax expense	(67,133		)		(15	)%		(65,992		)		(16	)%		$	(1,141	)		2	%
Net income	$	111,032			26	%		$	7,123			1	%		$	103,909			1,459	%

Commercial Service Revenue

		Year Ended
		December 31, 2013												December 31, 2012												Change
		(Revenue in millions and subscribers in thousands)
						Billable												Billable												Billable
		Revenue				Subscribers(1)				ARPU(2)				Revenue				Subscribers(1)				ARPU(2)				Revenue				Subscribers				ARPU
Commercial voice and data		$	184.0				340			$	46			$	170.9				332			$	45			$	13.1				8			$	1
Commercial M2M data			48.9				273				16				40.8				228				17				8.1				45				(1	)
Total Commercial		$	232.9				613							$	211.7				560							$	21.2				53

	Year Ended December 31,
	2016										2015										Change
	Revenue				Billable Subscribers (1)		ARPU(2)				Revenue				Billable Subscribers (1)		ARPU(2)				Revenue				Billable Subscribers		ARPU
	(Revenue in millions and subscribers in thousands)
Commercial voice and data	$	177.7			353		$	42			$	178.4			351		$	42			$	(0.7	)		2		$	—
Commercial IoT data	65.5				413		$	14			61.3				359		$	15			4.2				54		$	(1	)
Hosted payload and other data services (3)	$	3.6			N/A						$	2.2			N/A						$	1.4			N/A
Total Commercial	$	246.8			766						$	241.9			710						$	4.9			56

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

(2)	Average monthly revenue per unit, or ARPU, is calculated by dividing revenue in the respective period by the average of the number of billable subscribers at the beginning of the period and the number of billable subscribers at the end of the period and then dividing the result by the number of months in the period.

The

(3)	Billable subscriber and ARPU data is not applicable for hosted payload and other data service revenue items.

For the year ended December 31, 2016, total commercial revenue increased $4.9 million, or 2%, primarily due to the increase in commercial voice and data revenue was principally due to an increase in access fee revenue resulting from targeted price increases, an increase in revenue from prepaid e-vouchers resulting from the change in our prepaid airtime policy effective in 2013 and an increase in billable subscribers. These increases were partially offset by declines in telephony usage.

Commercial M2M data revenue growth was driven principally by an increase in the billable subscriber base. Commercial M2M data ARPU decreased by $1IoT of $4.2 million, or 7%, compared to the prior year due to the growthyear. The increase in subscribers using plans that generate lower revenue per user.

Government Service Revenue

		Year Ended
		December 31, 2013								December 31, 2012								Change
		(Revenue in millions and subscribers in thousands)
						Billable								Billable								Billable
		Revenue				Subscribers(1)				Revenue				Subscribers(1)				Revenue				Subscribers
Government service revenue		$	59.2				51			$	61.8				51			$	(2.6	)			-

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

Government service revenue decreased from $61.8 million to $59.2 million principally due to a $3.0 million decline in revenue during the first nine months of 2013. This $3.0 million decline wasIoT is primarily due to a reduction15% increase in commercial IoT billable subscribers, offset by slightly lower ARPU. Commercial voice and data remained relatively flat due to continued declines in telephony billable subscribers. airtime usage substantially offset by increases in Iridium OpenPort services and push-to-talk, or PTT, services.

Government Service Revenue

	Year Ended December 31,
	2016						2015						Change
	Revenue				Billable Subscribers (1)		Revenue				Billable Subscribers (1)		Revenue				Billable Subscribers
	(Revenue in millions and subscribers in thousands)
Government service revenue	$	88.0			84		$	75.1			72		$	12.9			12

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

Government service revenues for the fourth quarter of 2013year ended December 31, 2016 increased to $15.6$88 million from $15.2$75.1 million in the prior year period as a result of a scheduled price increase under the execution of the new EMSS contract. Under this contract, revenue is a fixed monthly amount and is no longer based on subscribers or ARPU.

Subscriber Equipment Revenue

Subscriber equipment revenue decreased 22%increased by $0.6 million, or 1%, to $73.3$74.2 million for the year ended December 31, 20132016 compared to $93.9 million for the year ended December 31, 2012. The decrease in subscriber equipment revenueprior year. This increase was primarily due to lower handset sales.

increased unit sales of Iridium Pilot^® terminals and IoT devices partially offset by fewer sales of handsets and L-Band transceivers.

Engineering and Support Service Revenue

		Year Ended
		December 31, 2013				December 31, 2012				Change
		(In millions)
Government		$	15.5			$	15.0			$	0.5
Commercial			1.8				1.2				0.6
Total		$	17.3			$	16.2			$	1.1

	Year Ended December 31,
	2016				2015				Change
	(In millions)
Commercial	$	2.2			$	2.0			$	0.2
Government	22.4				18.7				3.7
Total	$	24.6			$	20.7			$	3.9

Engineering and support service revenue increased by $1.1$3.9 million, or 7%19%, from the prior year primarily due to the execution of new government-sponsored contracts during the second half of 2013 related to gateway modernization efforts as we transition to Iridium NEXT capabilities.

Operating Expenses

Total operating expenses decreased by 2% to $272.8 million for the year ended December 31, 2013 from $278.5 million for2016 compared to the prior year. This decrease wasyear primarily dueas a result of a DoD contract entered into in late 2015 to decreased research and development expenses as well as decreased depreciation and amortization partially offset by increased selling, general and administrative expenses.

adapt the Iridium Extreme^® handset for DoD use.

Operating Expenses

Cost of Services (exclusive of depreciation and amortization)

Cost of services (exclusive of depreciation and amortization) decreasedincreased by 3% to $59.3$4.7 million, or 8%, for the year ended December 31, 2013 from $60.9 million for the year ended December 31, 2012 primarily due2016 compared to a decline in operations and maintenance costs related to our existing constellation as we continue to focus on Iridium NEXT development efforts.

Cost of Subscriber Equipment

Cost of subscriber equipment decreased by 2% to $52.1 million for the year ended December 31, 2013 from $53.3 million for the prior year primarily due to the decrease in unit sales, corresponding to the decline in subscriber equipment revenue discussed above. This decrease was partially offset by a $6.9 million increase in warranty expense recorded during 2013 related to higher warranty claims and other warranty-related initiatives for the Iridium Pilot terminals. In addition, during the year ended December 31, 2013, we recorded a $1.5 million expense for excess and obsolete inventory primarily related to Iridium 9505 handset accessories. No similar charge was incurred during 2012.

52

Research and Development

Research and development expenses decreased by 28% to $11.1 million for the year ended December 31, 2013 from $15.5 million for the prior year primarily due to decreases in research and development projects associated with Iridium NEXT.

Selling, General and Administrative

Selling, general and administrative expenses increased by 11% to $75.2 million for the year ended December 31, 2013 from $67.6 million for the prior year, primarily due to an increase in scope of work for government sponsored contracts, partially offset by lower costs incurred to manage the first-generation satellites.

Cost of Subscriber Equipment

Cost of subscriber equipment includes the direct costs of equipment sold, which consist of manufacturing costs, allocation of overhead, and warranty costs.

Cost of subscriber equipment increased by $3.5 million, or 9%, for the year ended December 31, 2016 compared to the prior year. The increase was primarily due to a decline in the warranty provision for our Iridium OpenPort terminal during the year ended December 31, 2015 that did not recur in the year ended December 31, 2016. The remaining cost increase is due to a higher volume of Iridium Pilot terminal sales and IoT device sales, partially offset by decreased sales of handsets and L-Band transceivers and by reduced costs on certain products due to manufacturing cost efficiencies.

Selling, General and Administrative

Selling, general and administrative expenses increased by $1.1 million, or 1%, for the year ended December 31, 2016 compared to the prior year primarily due to increases in employee-related costsexpenses and professional fees, partially offset by the reversal of $0.7 million of bad debt expense originally recorded in 2012.

lower supplier transition expenses and lower non-income taxes.

Depreciation and Amortization

Depreciation and amortization expensesexpense decreased by 8% to $75.0$2.4 million, or 5%, for the year ended December 31, 2013 from $81.1 million for the prior year. During the second quarter of 2012, we updated our analysis of the current satellite constellation’s health and the remaining useful life. Based on the results of this analysis, we estimated that our current constellation of satellites would be operational for longer than previously expected. As a result, the estimated useful life of the current constellation was extended and was consistent with the expected deployment of Iridium NEXT. This change in estimated useful life was only effective for three quarters in 2012 but was effective for all four quarters of 2013, which resulted in a decrease in depreciation expense for the year ended December 31, 2013 when2016 compared to the prior year. Additionally, the year-over-year decrease was due to a $2.0 million impairment charge within depreciation expense related to the impairment of an in-orbit satellite with which we lost communication during 2012. No such impairment occurred in 2013.

Other Expense

Interest Income, Net

Interest income, net, increased to $2.3 million for the year ended December 31, 2013 from $1.1 million for the prior year, primarily due to our investment of excess cash in marketable securities beginningcontinued changes in the firstestimated useful lives of the first-generation satellites, partially offset by the addition of new assets and the impairment charges that we recorded during the second quarter of 2013. Our marketable securities yielded higher interest income than2016 as a result of two satellites having ceased operations. We updated our operating cash accounts.

analysis of the first-generation satellites’ remaining useful lives throughout 2016. We will continue to evaluate the useful lives of our first-generation satellites through the full deployment of Iridium NEXT as the satellites are placed into service.

Other Expense

Undrawn Credit Facility Fees

The commitment fee on the undrawn portion of the Credit Facility was $7.7$1.3 million for the year ended December 31, 20132016 compared to $10.2$3.3 million for the prior year. The decrease of the commitment fee on the undrawn portion directly relates to the increase in the amounts borrowed under the Credit Facility as we continue to finance the development of Iridium NEXT.

Other Income (Expense), net

Other income (expense), net increased As we were fully drawn on the Credit Facility in February 2017, the undrawn portion and related fees decreased to $6.0 million of income for the year ended December 31, 2013 from $0.9 million of expense for the prior year. This increase was primarily due to a favorable litigation result, which resultedzero beginning in the recognitionsecond quarter of a previously deferred $10 million hosted payload customer deposit. This increase was partially offset by our share of the loss from our equity method investment in Aireon, which increased compared to the prior year. Following NAV CANADA’s purchase of Aireon preferred membership interests on November 19, 2012, Aireon is now accounted for as an equity method investment within our financial statements,2017 and our investment is included within other assets on the consolidated balance sheet. Prior to November 19, 2012, we consolidated Aireon’s results with our results as a wholly owned subsidiary.

Provision for continuing thereafter.

Income Taxes

Tax Expense

For the year ended December 31, 2013,2016, our income tax provisionexpense was $47.9$67.1 million compared to $30.4$66.0 million for the prior year. Our effective tax rate was approximately 43.4%37.7% for the year ended December 31, 20132016 compared to 32.0%90.3% for the prior year. The changedecrease in the income tax provision and effective tax rate was primarily related to the decreaseimpact of a one-time non-cash impairment of goodwill in the impact ofprior year as well as an increased benefit related to the benefitimpact of the Arizona tax law changes recognized(both tax rate and apportionment method) and state apportionment changes in 2012, an increase in the valuation allowance on our Arizona net operating losses, an increase in our overall state tax expense, and an increase in our income before income taxesother jurisdictions compared to the prior year. As our current estimates change in future periods, the impact on the deferred tax assets and liabilities may change correspondingly.

Net Income

Net income was $62.5$111.0 million for the year ended December 31, 2013, a decrease2016, an increase of 3%, or $2.1$103.9 million from the prior year. This declineincrease in net income was primarily driven by a $17.6an $87.0 million non-cash goodwill impairment charge taken in 2015 and the $22.3 million increase in the provision for income taxes. The change in the income tax provisiontotal revenue, which was primarily duerelated to the decrease in$12.9 million increase from the impact of the benefit of the Arizona tax law changes recognized in 2012, anEMSS contract. The increase in the valuation allowance on our Arizona net operating losses, an increase in our overall state tax expense and an increase in our income before tax compared to the prior year. Also contributing to the decline in net income was partially offset by a $7.6$5.0 million increase in selling general and administrative costs primarily for employee related costs and professional fees. These year-over-year decreases to net income were partially offset by the recognition of a previously deferred $10 million hosted payload customer deposit, a $6.1 million decrease in depreciation and amortization expense primarily resulting from the change in the estimated useful lives of our satellites, and a $4.4 million decrease in research and development due to decreases in research and development projects associated with Iridium NEXT.

53

services as described above.

Liquidity and Capital Resources

As of December 31, 2014,2017, our total cash and cash equivalents balance was $211.2$285.9 million, and our marketable securities balance was $261.1$11.8 million. Our principal sources of liquidity are cash, cash equivalents and marketable securities, and internally generated cash flows, and the Credit Facility.flows. Our principal liquidity requirements over the next twelve months are to meet capital expenditure needs, principally the design, build and launchcontinued deployment of Iridium NEXT, as well as for working capital, interest, DSRA contributions, principal payments on the Credit Facility, and dividends payable on our Series A Preferred Stock and Series B Preferred Stock.

As described in more detail below, we also anticipate incurring additional debt in order to raise additional capital for these purposes.

We estimate the aggregate costs associated with the design, build and launch of Iridium NEXT and related infrastructure upgrades through 20172018 to be approximately $3 billion. Our funding plan for these costs includes the substantial majority of the funds available under theour $1.8 billion Credit Facility which was fully drawn as of February 2017, together with cash and marketable securities on hand and internally generated cash flows, including potential cash flows from hosted payloads and Iridium PRIME. We currently use the Credit Facility to pay 85% of each invoice we receive from Thales Alenia Space France, or Thales, under their contract for the development and construction ofpayloads. Now that our Iridium NEXT satellites, with the remaining 15% funded from cash, cash equivalents and marketable securities on hand. We also utilize the Credit Facility to fund the COFACE insurance premiums and a portion of the interest under the Credit Facility. Once the Credit Facility is fully drawn, with the exception of the invoices to be paid with bills of exchange, we expect to pay 100% of each remaining invoice we receivereceived from Thales and all principal, interest onand DSRA contributions under the Credit Facility from cash, cash equivalents and marketable securities on hand, and internally generated cash flows, including potential cash flows from hosted payloads, and Iridium PRIME.

additional debt.

On July 26, 2017, we amended and restated the Credit Facility by a supplemental agreement. As described above, the amended Credit Facility delayed $54.0 million of our previously scheduled 2017 DSRA contributions and also provided a refund of $33.0 million in DSRA contributions we have made to date. The Credit Facility contains borrowing restrictions, including financial performance covenantsalso provides for a refund of an additional $11.0 million in DSRA contributions we have made to date in the event that our projected Available Cash (as defined in the Credit Facility) falls below $35.0 million on a three-month forward-looking basis through March 2019. The delay and covenants relatingrefunds are effective through the end of March 2019, at which time the DSRA must be fully funded to hosted payloads, and there can be no assurancethe previously agreed amount of $189.0 million. The Credit Facility also requires that we willestablish a new restricted account to receive payments of hosting fees from Aireon. Hosting fees of up to $50.0 million would be ablekept in the account and could be drawn by us based on the same $35.0 million three-month forward-looking Available Cash threshold described above. Aireon hosting fees in excess of the first $50.0 million would be distributed pro rata to continuereplenish the DSRA and to borrow funds undersecure the payment of the bills of exchange to Thales described below.

The amended and restated Credit Facility. There can also be no assuranceFacility does not include any requirements that our internally generated cash flows, including those from Iridium PRIME and hosted payloadswe raise additional equity but required that we suspend the payment of dividends on our Iridium NEXT satellites, will meet our current expectations. If we do not generate sufficient cash flows, or if the cost of implementing Iridium NEXT or the other elements of our business plan are higher than anticipated, we may need further external funding. Our ability to obtain additional funding may be adversely affected by a number of factors, including global economic conditions, and we cannot assure you that we will be able to obtain such funding on reasonable terms or at all. If we are not able to secure such funding in a timely manner, our ability to maintain our network, to design, build and launch Iridium NEXT and related ground infrastructure, products and services, and to pursue additional growth opportunities will be impaired, and we would likely need to delay some elements of our Iridium NEXT development. Our liquidity7% Series A Cumulative Perpetual Convertible Preferred Stock and our ability to fund our liquidity requirements are also dependent6.75% Series B Cumulative Perpetual Convertible Preferred Stock for five quarters. As previously announced, in anticipation of this

requirement, we began this suspension with the dividend payments payable on our future financial performance, which is subject to general economic, financial, regulatory and other factors that are beyond our control.

June 15, 2017. Holders of Series A Preferred Stock are entitled to receive cumulative cash dividends at an annual rate of $7.00 per share. Dividends are payable quarterly in arrears on each March 15, June 15, September 15 and December 15, beginning September 15, 2014. For each full quarter that the Series A Preferred Stock is outstanding, and assuming that no shares of Series A Preferred Stock have been converted into shares of our common stock, we would be required to pay cash dividends of $1.75 million. We expect that we will satisfy dividend requirements, if and when declared, from internally generated cash flows.

Holders of Series B Preferred Stock are entitled to receive cumulative cash dividends at an annual rate of $7.00 and $16.875 per share.share, respectively. Dividends are payable quarterly in arrears on each March 15, June 15, September 15 and December 15. For each full quarter that the Series A Preferred Stock or Series B Preferred Stock, as applicable, is outstanding, and assuming that no shares of Series B Preferred Stock have been converted into shares of our common stock, we would beare required to pay cash dividends of approximately $1.8 million and $2.1 million. Wemillion, respectively. If and when we resume payment of the dividends following the five-quarter suspension described above, we expect that we will satisfy dividend requirements, if and when declared, from internally generated cash flows.

Also on July 26, 2017, we entered into Amendment 29 to our FSD with Thales, which provides for the deferral of approximately $100.0 million in expected milestone payments by us in 2017 and 2018.  We pay these milestones using bills of exchange due in March 2019, with interest at a specified base rate (LIBOR or SWAP, depending on the term of the bill of exchange) plus 1.4%, with the bills of exchange guaranteed by BPIAE.  We must pay Thales for the BPIAE premium on the guarantee in the amount of $1.0 million in cash at signing plus 1.62%, to be paid by bills of exchange on the same terms as stated above, on each bill of exchange to be issued. To date we have paid $55.6 million in milestone payments by issuing bills of exchange. In connection with these arrangements, we also agreed with Thales as to the amount of liquidated damages Thales owes us for manufacturing delays to date and the additional costs we must pay Thales for launch delays. Unless there are substantial future delays to the Iridium NEXT program, we expect this arrangement to result in no cash payments due to delays by either party.  

While the contracted cash flows from our primary hosted payload customer, Aireon, are interest-bearing if not paid on time, we expect those hosted payload payments to continue to be delayed. Aireon is working to secure additional contracts with air navigation service providers, or ANSPs, including the FAA, for the sale of Aireon’s space-based automatic dependent surveillance-broadcast, or ADS-B, services. Aireon is currently seeking to raise the capital it will need to fund its continued operations and its hosted payload payments to us. Aireon’s ability to fund its hosted payload payments to us in the previously anticipated timeframe has been adversely affected by delays in its completion of sales to these ANSPs, which we believe in part results from delays in the development, construction and launch of the Iridium NEXT system.

We continue to expect partial payments of Aireon’s hosting fee upon successful completion of its financing, and further payments based on success-based milestones. However, the expected timing of these payments does not support our ability to make principal and interest payments under our Credit Facility due in early 2019, as well as payment of deferred payments to Thales and deferred contributions to the DSRA, both due March 31, 2019. Further, if Aireon is unable to complete its financing and make a partial hosting fee payment to us in the timeframe we currently expect, we may be unable to make our principal and interest payments under our Credit Facility in late 2018. To provide for these obligations and further solidify our liquidity position, we have been actively discussing alternative funding options with our Credit Facility Lenders, and we believe we have reached an agreement in principle with our Credit Facility Lenders pursuant to which we would be required to raise additional debt by July 2018. The proceeds of this additional debt would be used to fund the deferred payments to Thales and replenish the DSRA under the Credit Facility, as well as to provide us with sufficient cash to meet our needs, including principal and interest payments under our Credit Facility. In addition, the Credit Facility Lenders would agree to delay a portion of the principal repayments under the Credit Facility, allow us to access up to $87 million from the DSRA in the future if our projected cash level falls below $75 million, and adjust our financial covenants, including eliminating further covenants that require us to receive cash flows from hosted payloads. Under this anticipated agreement, we would be required to use hosting fee payments received from Aireon to prepay the Credit Facility. Our ability to successfully execute these plans may be adversely affected by a number of factors, including global economic conditions, the state of capital markets when we are ready to issue the debt, and the inability to incur debt on terms acceptable to us or at all. Any inability to successfully execute these plans may in turn materially affect our liquidity, and our ability to complete the Iridium NEXT system and to pursue additional growth opportunities may be impaired. Our liquidity and the ability to fund our liquidity requirements also depend on our future financial performance, which is subject to general economic, financial, regulatory and other factors that are beyond our control.

We believe our liquidity sources will provide sufficient funds for us to meet our liquidity requirements for at least the next 12 months, provided we execute the proposed adjustments to our funding plan or receive a substantial portion of the hosting fees due to us from Aireon.

As of December 31, 2014,2017, we had borrowed a totalreported $1,703.6 million in borrowings under the Credit Facility in our consolidated balance sheet, net of $1,291.4$96.4 million of deferred financing costs, for an aggregate balance of $1,800.0 million outstanding under the Credit Facility. The unused portion ofPursuant to the Credit Facility, aswe maintain the DSRA. As of December 31, 20142017, the DSRA balance was $508.6 million. Under the terms of the Credit Facility, a minimum cash reserve for debt service of $86.0$102.4 million, as of December 31, 2014 was maintained andwhich is classified as restricted cash. This minimum cash reservein our condensed consolidated balance sheet. The DSRA requirement willis scheduled to increase over the term of the Credit Facility to $189.0 million in 2017.2019. In addition to the minimum debt service levels, financial covenants under the Credit Facility, as amended to date, include:

an available cash balance of at least $25 million;

a debt-to-equity ratio, which is calculated as the ratio of total net debt to the aggregate of total net debt and restatedtotal stockholders’ equity, of no more than 0.7 to 1, measured each June 30 and December 31;

specified maximum levels of annual capital expenditures (excluding expenditures on the construction of Iridium NEXT satellites) through the year ending December 31, 2024;

specified minimum levels of consolidated operational earnings before interest, taxes, depreciation and amortization, or operational EBITDA, each June 30 and December 31 through December 31, 2017;

specified minimum cumulative cash flow requirements from customers who have hosted payloads on our satellites, measured each December 31 and June 30, from June 30, 2017 through December 31, 2019;

a debt service coverage ratio, measured during the repayment period, of not less than 1 to 1.5;

specified maximum leverage levels during the repayment period that decline from a ratio of 7.53 to 1 for the twelve months ending June 30, 2018 to a ratio of 2.36 to 1 for the twelve months ending December 31, 2024; and

a requirement that we receive at least $50,000,000 in May 2014, include:

·

an available cash balance of at least $25 million;

·

a debt-to-equity ratio, which is calculated as the ratio of total net debt to the aggregate of total net debt and total stockholders’ equity, of no more than 0.7 to 1, measured each June 30 and December 31;

·

specified maximum levels of annual capital expenditures (excluding expenditures on the construction of Iridium NEXT satellites) through the year ending December 31, 2024;

·

specified minimum levels of consolidated operational earnings before interest, taxes, depreciation and amortization, or operational EBITDA, for the 12-month periods ending each December 31 and June 30 through December 31, 2017;

·

specified minimum cumulative cash flow requirements from customers who have hosted payloads on our satellites, measured each December 31 and June 30, from June 30, 2016 through December 31, 2017;

·

a debt service coverage ratio, measured during the repayment period, of not less than 1 to 1.5; and

·

specified maximum leverage levels during the repayment period that decline from a ratio of 4.73 to 1 for the twelve months ending June 30, 2018 to a ratio of 2.36 to 1 for the twelve months ending December 31, 2024.

hosting fees from Aireon by September 30, 2018.

Our available cash balance, as defined by the Credit Facility, was $290.2$291.9 million as of December 31, 2014.2017. Our debt-to-equity ratio was 0.470.5 to 1 as of December 31, 2014.2017. We were also in compliance with the operational EBITDA covenantand hosted payload cash flow covenants and the annual capital expenditure covenant, which were the only other applicable covenants, as of December 31, 2014.

2017.

The covenants regarding capital expenditures, operational EBITDA and hosted payload cash flows are calculated in connection with a measurement, which we refer to as available cure amount, that is derived using a complex calculation based on overall cash flows, as adjusted by numerous measures specified in the Credit Facility. In a period in which our capital expenditures exceed, or our operational EBITDA or hosted payload cash flows falls short of, the amount specified in the respective covenant, we would be permitted to allocate available cure amount, if any, to prevent a breach of the applicable covenant. As of December 31, 2014,2017, we had an amount of $8.1 million in available cure, amount of $7.5 million, thoughalthough it was not requirednecessary for us to apply any available cure amount to maintain compliance with the covenants. The available cure amount has fluctuated significantly from one measurement period to the next, and we expect that it will continue to do so.

The covenants also place limitations on our ability and that of our subsidiaries to carry out mergers and acquisitions, dispose of assets, grant security interests, declare, make or pay dividends, enter into transactions with affiliates, fund payments under the full scale development contract, or FSD, with Thales from our own resources, incur additional indebtedness, or make loans, guarantees or indemnities. If we are not in compliance with the financial covenants under the Credit Facility, after any opportunity to cure such non-compliance, or we otherwise experience an event of default under the Credit Facility, the lenders may require repayment in full of all principal and interest outstanding under the Credit Facility. It is unlikely we would have adequate funds to repay such amounts prior to the scheduled maturity of the Credit Facility. If we fail to repay such amounts, the lenders may foreclose on the assets we have pledged under the Credit Facility, which include substantially all of our assets and those of our domestic subsidiaries.

We believe that our liquidity sources will provide sufficient funds for us to meet our liquidity requirements for at least the next 12 months

Cash and Indebtedness

At December 31, 2014,2017, our total cash and cash equivalents balance was $211.2$285.9 million and our total marketable securities balance was $261.1 million, and we$11.8 million. We also had an aggregate of $1,291.4$1,703.6 million of net external indebtedness related to borrowings under the Credit Facility.

Facility and $54.9 million of net debt related to our Thales bills of exchange.

Cash Flows - Comparison of the Year Ended December 31, 20142017 and the Year Ended December 31, 2013

2016

The following table shows our consolidated cash flows from operating, investing and financing activities for the years ended December 31 (in millions):

Statement of Cash Flows		2014				2013				Change
Net cash provided by operating activities		$	214.9			$	183.0			$	31.9
Net cash used in investing activities		$	(626.3	)		$	(485.8	)		$	(140.5	)
Net cash provided by financing activities		$	438.8			$	234.7			$	204.1

Statement of Cash Flows		2017				2016				Change
Net cash provided by operating activities		$	259.6			$	225.2			$	34.4
Net cash used in investing activities		$	(372.7	)		$	(242.4	)		$	(130.3	)
Net cash provided by financing activities		$	16.9			$	224.2			$	(207.3	)

Cash Flows from Operating Activities

Net cash provided by operating activities for the year ended December 31, 20142017 increased by $31.9$34.4 million from the prior year. This increase was primarily due to a $28.6$33.0 million increasedecrease in working capital related to timing of cash collections from customersflows provided by prepaid and other current assets, accrued expenses and deferred revenues. Working capital provided by operations is primarily duedriven by launch related activities, including utilization of prepaid expenses related to the increase in total revenue. Also contributinglaunch services and receipt of payments for milestones related to this increase was a $5.0 million increase in hosted payload customer deposits compared to the prior year.

payloads.

Cash Flows from Investing Activities

Net cash used in investing activities for the year ended December 31, 20142017 increased by $140.5$130.3 million primarily due to fewer available-for-sale securities held in the increasecurrent period, resulting in net purchases of marketable securitieslower proceeds from investment maturities, offset by $107.9a $5.6 million and a $37.5 million increasedecrease in capital expenditures. We expect capital expenditures related to continue to decline as we complete the construction and launch of the Iridium NEXT including payments related to the purchase of equipment and software for our satellite, network and gateway operations.

55

constellation in 2018.

Cash Flows from Financing Activities

Net cash provided by financing activities for the year ended December 31, 2014 increased2017 decreased by $204.1$207.3 million primarily due to the receipt of $120.8 million and $98.9 million of net proceeds from the issuance of our Series B Preferred Stock and common stock, respectively, during 2014; no similar proceeds were received in 2013. This increase was partially offset by a $35.2 million decrease in borrowings and related fees under theour Credit Facility forin 2017, as it was fully drawn in February 2017, offset by the year ended December 31, 2014 compareddecrease in payments of preferred stock dividends related to the prior year.

Effectfive-quarter deferral of exchange rate changes on cash and cash equivalents

The effect of exchange rate changes on cash and cash equivalents was a decrease of $2.6 million for the year ended December 31, 2014. The decreasepreferred dividends that began in the effect on cash held from exchange rate changes is primarily due to the strengtheningsecond quarter of the U.S. dollar against the Russian ruble throughout 2014.

2017.

Cash Flows - Comparison of the Year Ended December 31, 20132016 and the Year Ended December 31, 2012

2015

The following table shows our consolidated cash flows from operating, investing and financing activities for the years ended December 31 (in millions):

Statement of Cash Flows		2013				2012				Change
Net cash provided by operating activities		$	183.0			$	174.0			$	9.0
Net cash used in investing activities		$	(485.8	)		$	(443.5	)		$	(42.3	)
Net cash provided by financing activities		$	234.7			$	387.6			$	(152.9	)

Statement of Cash Flows		2016				2015				Change
Net cash provided by operating activities		$	225.2			$	217.5			$	7.7
Net cash used in investing activities		$	(242.4	)		$	(439.4	)		$	197.0
Net cash provided by financing activities		$	224.2			$	202.1			$	22.1

Cash Flows from Operating Activities

Net cash provided by operating activities for the year ended December 31, 20132016 increased by $9.0$7.7 million from the prior year. This increase was primarily due to improvements in net income, excluding the receipt of $7.0 million in hosted payload customer deposits during 20132015 non-cash goodwill impairment, and a $3.1 million income tax refund receiveddecrease in 2013.

certain product inventory during 2016 as a result of improved inventory management. These changes were offset by payments for the in-orbit portion of insurance to support the Iridium NEXT launch campaign.

Cash Flows from Investing Activities

Net cash used in investing activities for the year ended December 31, 2013 increased2016 decreased by $42.3$197.0 million primarily due to the increase in net purchasesales of marketable securities for $77.3of $107.9 million and our $5.0the $89.1 million investment in Aireon in 2013. These uses of cash were partially offset by a $38.1 million declinedecrease in capital expenditures related to the construction of Iridium NEXT, including payments related to the purchase of equipment and software for our satellite, network and gateway operations.

NEXT.

Cash Flows from Financing Activities

Net cash provided by financing activities for the year ended December 31, 2013 decreased2016 increased by $152.9$22.1 million primarily due to the receipt of $96.5$21.1 million of net proceeds from the issuance of our Series A Preferred Stock during 2012; no similar proceeds were receivedincrease in 2013. In addition, borrowings under the Credit Facilitycredit facility.

Effect of exchange rate changes on cash and cash equivalents

The effect of exchange rate changes on cash and cash equivalents was an increase in cash of $0.5 million for the year ended December 31, 2013 were $47.2 million less than borrowings for2016 compared to the prior year.

The exchange rate changes were primarily due to a modest strengthening of the Russian ruble against the U.S. dollar throughout 2016.

Contractual Obligations and Commitments

The following table summarizes our outstanding contractual obligations as of December 31, 20142017 (in millions):

		Less than												More than
Contractual Obligations		1 year				1-3 Years				3-5 years				5 years				Total
Payment obligations:
Thales (1)		$	554.2			$	302.7			$	64.7			$	-			$	921.6
SpaceX			150.0				150.5				-				-				300.5
Kosmotras (2)			23.0				-				-				-				23.0
Boeing (3)			33.3				-				-				-				33.3
Debt obligations (4)			10.9				12.9				290.6				987.9				1,302.3
Operating lease obligations (5)			3.1				5.7				6.0				6.8				21.6
Uncertain tax positions (6)			0.3				-				-				-				1.2
Unconditional purchase obligations (7)			19.0				0.1				-				-				19.1
Total		$	793.8			$	471.9			$	361.3			$	994.7			$	2,622.6

Contractual Obligations		Less than 1 year				1-3 Years				3-5 years				More than 5 years				Total
Payment obligations:
Thales (1)		$	216.8			$	100.0			$	—			$	—			$	316.8
Interest on Thales bills of exchange (1)		—				3.6				—				—				3.6
SpaceX (2)		46.9				10.2				—				—				57.1
Launch and in-orbit insurers (3)		43.2				—				—				—				43.2
Boeing (4)		6.0				12.0				6.0				—				24.0
Debt obligations: (5)
Principal		85.5				490.5				612.0				612.0				1,800.0
Contractual interest		79.6				154.4				98.6				37.5				370.1
Debt service reserve account		—				87.0				—				—				87.0
Operating lease obligations (6)		3.7				7.5				7.2				8.8				27.2
Uncertain tax positions (7)		—				—				—				—				1.0
Unconditional purchase obligations (8)		17.0				3.4				1.0				—				21.4
Total		$	498.7			$	868.6			$	724.8			$	658.3			$	2,751.4

(1)

Thales obligations consist of commitments under the FSD for the design and manufacture of satellites for Iridium NEXT. We currently use theThe Credit Facility to pay 85% of each invoice received from Thales under the FSD with the remaining 15% funded from cash on hand. Once the Credit Facility iswas fully drawn in February 2017, and, as a result, we expect to pay 100% of each invoice received from Thales from cash and marketable securities on hand as well as internally generated cash flow, including potential cash flows from hosted payloadsor the issuance of up to $45.4 million in remaining bills of exchange due in March 2019. As of December 31, 2017, we had made aggregate payments of $1.9 billion to Thales. The timing of a portion of the contractual obligation payments to Thales shown in the table above is based on current expectations regarding the Thales manufacturing schedule and Iridium PRIME.SpaceX’s targeted launch schedule.

(2)

KosmotrasSpaceX obligations consist of remaining payments to purchase onesecure SpaceX as the primary launch services provider for Iridium NEXT. The total price for seven launches and a reflight option in the event of launch failure is $453.1 million. In November 2016, we entered into an agreement for an eighth launch with SpaceX to launch five spare satellites and share the services with GFZ. The total price under the existing Kosmotras agreement. The KosmotrasSpaceX agreement as amended, provided for the purchase of up to six launches with options to purchase additional launches. Eacheighth launch can carry two satellites. In June 2013, we exercised an option for one launch to carry the first two Iridium NEXT satellites. If we do not exercise any additional options, the total cost under the contract including this single launch will be $51.8is $67.9 million. As of December 31, 2014,2017, we had made aggregate payments of $28.8$463.9 million to Kosmotras.SpaceX. The optiontiming of a portion of the contractual obligation payments to purchase two dedicated launches expiredSpaceX shown in the table above is based on SpaceX’s targeted launch schedule.

(3)	The total premium is $121.0 million, and as of December 31, 2013. We have agreed with Kosmotras2017, we had made aggregate payments of $77.8 million. The timing of the majority of the contractual obligation payments are based on SpaceX’s targeted launch schedule to extend the option to purchase the remaining three dedicated launches through a date to be determined.

(3)

In 2014, we elected to make a transition from the O&M Agreement tocomplete the Iridium NEXT Supportconstellation in 2018.

(4)

Represents a five-year take-or-pay commitment under the Development Services Agreement with Boeing. As of January 1, 2015, Boeing supports a hybrid operations mode involving network elements from both the original Iridium system and the Iridium NEXT system. The Boeing obligations represent the not to exceed, or NTE, price for operations and maintenance, or O&M, services for 2015 under our Iridium NEXT Support Services Agreement with Boeing. Boeing is the exclusive provider for the majority of O&M services through the end of the Iridium NEXT useful life, subject to our right to issue work to a third partyentered into in accordance with certain provisions in the agreement. Annually, we and Boeing will agree upon the NTE price for each year.November 2016.

(4)

(5)

Debt obligations include amounts drawn underrepayment of the Credit Facility as of December 31, 2014, which include $1,291.4 million2017. We have included interest payments to be made on our fixed and variable rate tranches of outstandingthe Credit Facility. Interest payments for variable rate debt obligations, $1.3 million of accrued commitment feeshave been estimated based on the undrawn portionsix-month LIBOR forward contracts. We have included the increase to the DSRA of $87 million, as required under the terms of the Credit Facility, and $9.6from $102.0 million, as of accrued interest through December 31, 2014. We have not included future debt obligations or future2017, to $189.0 million in 2019. The DSRA is classified as restricted cash on the consolidated balance sheet. The repayment schedule excludes $120.0 million that we expect to receive upon the Aireon redemption of our equity interest costs in the table because the timingAireon and Aireon dividends, when and if declared. Upon receipt of the payments is unknown and there is a variable component of the interest. We have also excluded futurethese amounts, for the commitment fee, which is 0.80% per year on any undrawn portion ofthey will be used to prepay the Credit Facility, as the timing of additional borrowings is unknown.which may result in an earlier repayment.

	(5)
(6)	Operating lease obligations do not include payments to landlords covering real estate taxes, common area maintenance and other charges, as such fees are not determinable based upon the provisions of our lease agreements.

(6)

(7)

As of December 31, 2014,2017, we estimated our uncertain tax positions to be $1.2$1.0 million, including penalties and interest. We estimate that $0.3 million of our uncertain tax position will expire or be realized within the next 12 months. However, we are unable to reasonably estimate the period of the possible future payments for the remaining balance, and therefore the remaining balance has not been reflected in a specified period.

(7)

(8)

Unconditional purchase obligations include our agreement with a supplier for the manufacturing of our devices and various commitments with other vendors that are enforceable, legally binding and have specified terms, including fixed or minimum quantities, minimum or variable price provisions, and a fixed timeline. Unconditional purchase obligations do not include agreements that are cancelable by us without penalty. As of December 31, 2017, contractually obligated purchase commitments for manufacturing supplies increased $5.8 million from the prior year ended December 31, 2016.

The contractual obligations table does not include future payments of dividends on the Series A Preferred Stock or Series B Preferred Stock. Holders of Series A Preferred Stock are entitled to receive cumulative cash dividends when, as and if declared from, and including, the date of original issue at a rate of 7.00% per annum of the $100 liquidation preference per share, which is equivalent to an annual rate of $7.00 per share. Holders of Series B Preferred Stock are entitled to receive cumulative cash dividends when, as and if declared from, and including, the date of original issue at a rate of 6.75% per annum of the $250 liquidation preference per share, which is equivalent to an annual rate of $16.875 per share. Dividends on both the Series A Preferred Stock and Series B Preferred Stock are payable quarterly in arrears, on March 15, June 15, September 15 and December 15 of each year.year, although we have temporarily suspended dividend payments as noted above. Neither the Series A Preferred Stock nor the Series B Preferred stock has a stated maturity date. Holders of Series A Preferred Stock and Series B Preferred Stock may convert some or all of their outstanding shares to common stock at the stated conversion rate. On or after October 3, 2017, weWe may at our option cause some or all of the shares of Series A Preferred Stock to be automatically converted into shares of common stock at the then prevailing conversion rate if specified conditions, principally, a daily volume-weighted average stock price of $12.26 over a period of 20 trading days in a 30-day period and payment of the accrued dividends, are satisfied. On or after May 15, 2019, we may, at our option, convert some or all of the Series B Preferred Stock into the number of shares of common stock that are issuable at the then-applicable conversion rate, subject to specified conditions. We cannot forecast the conversions, if any, of Series A Preferred Stock or Series B Preferred Stock to common stock and thus cannot forecast with certainty the amounts of future dividend payments on outstanding Series A Preferred Stock. As of December 31, 2014,2017, there were 1,000,000 shares of Series A Preferred Stock and 500,000499,955 shares of Series B Preferred Stock outstanding.

Off-Balance Sheet Arrangements

We do not currently have, nor have we had in the last three years, any relationships with unconsolidated entities or financial partnerships, such as entities referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Seasonality

Our results of operations have been subject to seasonal usage changes for commercial customers, and our results will be affected by similar seasonality going forward. March through October are typically the peak months for commercial voice services revenue and related subscriber equipment sales. U.S. government revenue and commercial M2MIoT revenue have been less subject to seasonal usage changes.

Recent Accounting Developments

In May 2014, the Financial Accounting Standards Board, or FASB, and the International Accounting Standards Board jointly issued a comprehensive new revenue recognition standard, Accounting Standards Update No. 2014-09,Revenue from Contracts with Customers,or ASU 2014-09, that will supersede nearly all existing revenue recognition guidance under U.S. GAAP. ASU 2014-09 requires a company to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for public entities for annual and interim periods beginning after December 15, 2016. Early adoption is not permitted. ASU 2014-09 becomes effective for us in the first quarter of fiscal 2017. We have not yet selected a transition method, and we are currently evaluating the effect, if any, that ASU 2014-09 will have on our consolidated financial statements and related disclosures.

In August 2014, the FASB issued Accounting Standards Update No. 2014-15,Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, orASU 2014-15, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year after the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. ASU 2014-15 applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. We are currently evaluating the effect, if any, that ASU 2014-15 will have on our consolidated financial statements and related disclosures.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Interest income earned on our cash, cash equivalent and marketable securities balances is subject to interest rate fluctuations. For the year ended December 31, 2014, a one-half percentage point increase or decrease in interest rates would not have had a material effect on our interest income.

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

We entered into the Credit Facility in October 2010 and have borrowed $1,291.4 millionan aggregate of $1.8 billion under the Credit Facility as of December 31, 2014.2017. A portion of the borrowingsdraws we made under the Credit Facility bearsbear interest at a floating rate equal to the London Interbank Offered Rate, or LIBOR, plus 1.95% and will, accordingly, subject us to interest rate fluctuations in future periods. Had the currently outstanding borrowings under the Credit Facility been outstanding throughout the year ended December 31, 2014,2017, a one-half percentage point increase or decrease in the LIBOR would not have changedhad a material impact on our interest cost by less than $0.1 million for the year.

period.

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, as well as accounts receivable. We maintain our cash and cash equivalents with financial institutions with high credit ratings and at times maintain the balance of our deposits in excess of federally insured limits. The majority of our cash is swept nightly into a money market fund invested in U.S. treasuries, Agency Mortgage Backed Securities and/or U.S. government guaranteed debt. Accounts receivable are due from both domestic and international customers. We perform credit evaluations of our customers’ financial condition and record reserves to provide for estimated credit losses. Accounts payable are owed to both domestic and international vendors.

We also currently hold marketable securities consisting of commercial paper and fixed-income debt securities. As of December 31, 2014,2017, a 100 basis point change in interest rates would not have had a material impact on the fair value of our marketable securities.

59

Item 8. Financial Statements and Supplementary Data

		Page
Iridium Communications Inc.:
Report of Ernst & Young LLP, Independent Registered Public Accounting Firm		61 70
Consolidated Balance Sheets		62 71
Consolidated Statements of Operations and Comprehensive Income		63 72
Consolidated Statements of Changes in Stockholders’ Equity		64 73
Consolidated Statements of Cash Flows		65 74
Notes to Consolidated Financial Statements		67 75

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

The

To the Stockholders and the Board of Directors and Stockholders of Iridium Communications Inc.

:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Iridium Communications Inc. (the Company) as of December 31, 20142017 and 2013,2016, and the related consolidated statements of operations and comprehensive income, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2014. 2017 and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 22, 2018 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on thesethe Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesmisstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements. An auditOur audits also includes assessingincluded evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Iridium Communications Inc. at December 31, 2014 and 2013, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Iridium Communications Inc.’s internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 26, 2015, expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

McLean,

We have served as Company's auditor since 2001.

Tysons, Virginia

February 26, 2015

22, 2018

Iridium Communications Inc.

Consolidated Balance Sheets

(In thousands, except per share data)

		December 31,				December 31,
		2014				2013
Assets
Current assets:
Cash and cash equivalents		$	211,249			$	186,342
Marketable securities			261,136				76,647
Accounts receivable, net			50,672				54,758
Inventory			28,433				29,532
Deferred income tax assets, net			11,009				9,076
Prepaid expenses and other current assets			10,614				13,203
Total current assets			573,113				369,558
Property and equipment, net			1,971,839				1,575,579
Restricted cash			86,104				81,223
Other assets			7,726				8,909
Intangible assets, net			47,416				57,452
Deferred financing costs			136,444				130,036
Goodwill			87,039				87,039
Total assets		$	2,909,681			$	2,309,796
Liabilities and stockholders' equity
Current liabilities:
Accounts payable		$	17,677			$	12,934
Accrued expenses and other current liabilities			38,419				39,209
Interest payable			9,589				7,989
Deferred revenue			36,665				41,367
Total current liabilities			102,350				101,499
Accrued satellite operations and maintenance  expense, net of current portion			15,051				16,389
Credit facility			1,291,401				1,039,203
Deferred income tax liabilities, net			245,042				202,825
Deferred revenue, net of current portion			20,689				7,000
Other long-term liabilities			3,284				3,385
Total liabilities			1,677,817				1,370,301
Commitments and contingencies
Stockholders' equity
Series A Preferred Stock, $0.0001 par value, 1,000 shares authorized, issued and outstanding			-				-
Series B Preferred Stock, $0.0001 par value, 500 and zero shares  authorized, issued and outstanding, respectively			-				-
Common stock, $0.001 par value, 300,000 shares authorized and 93,905 and 76,690 shares issued and outstanding, respectively			94				77
Additional paid-in capital			1,033,176				801,262
Retained earnings			201,514				138,845
Accumulated other comprehensive loss, net of tax			(2,920	)			(689	)
Total stockholders' equity			1,231,864				939,495
Total liabilities and stockholders' equity		$	2,909,681			$	2,309,796

	December 31, 2017				December 31, 2016
Assets
Current assets:
Cash and cash equivalents	$	285,873			$	371,167
Marketable securities	11,753				39,328
Accounts receivable, net	68,031				57,373
Inventory	20,068				18,204
Prepaid expenses and other current assets	25,347				30,698
Total current assets	411,072				516,770
Property and equipment, net	3,210,162				2,813,084
Restricted cash	102,384				113,139
Other assets	8,414				10,836
Intangible assets, net	50,019				45,796
Total assets	$	3,782,051			$	3,499,625
Liabilities and stockholders' equity
Current liabilities:
Short-term credit facility	$	85,500			$	—
Accounts payable	43,100				11,131
Accrued expenses and other current liabilities	32,215				23,840
Interest payable	15,021				14,136
Deferred revenue	38,390				34,087
Total current liabilities	214,226				83,194
Accrued satellite operations and maintenance expense, net
of current portion	—				13,138
Long-term credit facility, net	1,618,055				1,657,145
Deferred income tax liabilities, net	246,170				361,656
Deferred revenue, net of current portion	47,612				36,417
Other long-term liabilities	59,519				4,317
Total liabilities	2,185,582				2,155,867
Commitments and contingencies
Stockholders' equity:
Series A preferred stock, $0.0001 par value, 1,000 shares authorized,
issued and outstanding	—				—
Series B preferred stock, $0.0001 par value, 500 shares
authorized, issued and outstanding	—				—
Common stock, $0.001 par value, 300,000 shares authorized, 98,203 and 95,879
shares issued and outstanding	98				96
Additional paid-in capital	1,081,373				1,060,311
Retained earnings	518,794				288,797
Accumulated other comprehensive loss, net of tax	(3,796		)		(5,446		)
Total stockholders' equity	1,596,469				1,343,758
Total liabilities and stockholders' equity	$	3,782,051			$	3,499,625

See notes to consolidated financial statements

Iridium Communications Inc.

Consolidated Statements of Operations and Comprehensive Income 

(In thousands, except per share amounts)

		Year Ended				Year Ended				Year Ended
		December 31, 2014				December 31, 2013				December 31, 2012
Revenue:
Services		$	309,424			$	292,092			$	273,491
Subscriber equipment			78,152				73,303				93,866
Engineering and support services			20,981				17,254				16,163
Total revenue			408,557				382,649				383,520
Operating expenses:
Cost of services (exclusive of depreciation  and amortization)			62,085				59,346				60,937
Cost of subscriber equipment			54,569				52,062				53,285
Research and development			17,587				11,149				15,525
Selling, general and administrative			78,636				75,218				67,589
Depreciation and amortization			72,769				74,980				81,110
Total operating expenses			285,646				272,755				278,446
Operating income			122,911				109,894				105,074
Other income (expense):
Interest income, net			3,640				2,276				1,072
Undrawn credit facility fees			(5,825	)			(7,708	)			(10,232	)
Other income (expense), net			(4,274	)			6,003				(896	)
Total other income (expense)			(6,459	)			571				(10,056	)
Income before income taxes			116,452				110,465				95,018
Provision for income taxes			(41,463	)			(47,948	)			(30,387	)
Net income			74,989				62,517				64,631
Series A Preferred Stock dividends			7,000				7,000				1,692
Series B Preferred Stock dividends			5,320				-				-
Net income attributable to common stockholders		$	62,669			$	55,517			$	62,939
Weighted average shares outstanding - basic			88,080				76,909				74,239
Weighted average shares outstanding - diluted			109,400				87,511				78,182
Net income attributable to common stockholders per share - basic		$	0.71			$	0.72			$	0.85
Net income attributable to common stockholders per share - diluted		$	0.69			$	0.71			$	0.83
Comprehensive income:
Net income		$	74,989			$	62,517			$	64,631
Foreign currency translation adjustments, net of tax			(2,325	)			(322	)			(132	)
Unrealized gain (loss) on marketable securities, net of tax			94				(10	)			-
Comprehensive income		$	72,758			$	62,185			$	64,499

	Year Ended December 31,
	2017				2016				2015
Revenue:
Services	$	349,735			$	334,822			$	317,022
Subscriber equipment	77,119				74,211				73,615
Engineering and support services	21,192				24,607				20,741
Total revenue	448,046				433,640				411,378
Operating expenses:
Cost of services (exclusive of depreciation and amortization)	80,396				64,958				60,306
Cost of subscriber equipment	44,445				44,286				40,807
Research and development	15,247				16,079				16,144
Selling, general and administrative	84,405				82,552				81,445
Depreciation and amortization	122,266				49,394				51,834
Impairment of goodwill	—				—				87,039
Total operating expenses	346,759				257,269				337,575
Gain on Boeing transaction	14,189				—				—
Operating income	115,476				176,371				73,803
Other income (expense):
Interest income, net	4,328				2,934				3,069
Undrawn credit facility fees	(25		)		(1,346		)		(3,289		)
Other income (expense), net	(207		)		206				(468		)
Total other income (expense)	4,096				1,794				(688		)
Income before income taxes	119,572				178,165				73,115
Income tax benefit (expense)	114,284				(67,133		)		(65,992		)
Net income	233,856				111,032				7,123
Series A preferred stock dividends, declared and paid	1,750				7,000				7,000
Series B preferred stock dividends, declared and paid	2,109				8,436				8,436
Series A preferred stock dividends, undeclared	5,250				—				—
Series B preferred stock dividends, undeclared	6,327				—				—
Net income (loss) attributable to common stockholders	$	218,420			$	95,596			$	(8,313	)
Weighted average shares outstanding - basic	97,934				95,967				95,097
Weighted average shares outstanding - diluted	128,130				124,875				95,097
Net income (loss) attributable to common stockholders per share - basic	$	2.23			$	1.00			$	(0.09	)
Net income (loss) attributable to common stockholders per share - diluted	$	1.82			$	0.89			$	(0.09	)
Comprehensive income:
Net income	$	233,856			$	111,032			$	7,123
Foreign currency translation adjustments	1,664				3,487				(5,777		)
Unrealized gain (loss) on marketable securities, net of tax	(14		)		130				(366		)
Comprehensive income	$	235,506			$	114,649			$	980

See notes to consolidated financial statements

63

Iridium Communications Inc.

Consolidated Statements of Changes in Stockholders’ Equity

(In thousands)

		Series A								Series B																				Accumulated
		Convertible								Convertible																Additional				Other				Accumulated				Total
		Preferred Stock								Preferred Stock								Common Stock								Paid-In				Comprehensive				Retained				Stockholders'
		Shares				Amount				Shares				Amount				Shares				Amount				Capital				Income (Loss)				Earnings				Equity
Balance at December 31, 2011			-			$	-				-			$	-				73,205			$	73			$	681,781			$	(225	)		$	20,389			$	702,018
Stock-based compensation			-				-				-				-				-				-				8,150				-				-				8,150
Issuance of Series A Convertible Preferred Stock			1,000				-				-				-				-				-				96,499				-				-				96,499
Stock issued upon exercise of stock warrants			-				-				-				-				1,302				1				9,113				-				-				9,114
Stock issued upon exchange of warrants and related transaction costs			-				-				-				-				1,949				2				(2,075	)			-				-				(2,073	)
Stock issued in connection with employee stock plan			-				-				-				-				5				-				43				-				-				43
Net income			-				-				-				-				-				-				-				-				64,631				64,631
Dividends on Series A Preferred Stock			-				-				-				-				-				-				-				-				(1,692	)			(1,692	)
Cumulative translation adjustments			-				-				-				-				-				-				-				(132	)			-				(132	)
Balance at December 31, 2012			1,000				-				-				-				76,461				76				793,511				(357	)			83,328				876,558
Stock-based compensation			-				-				-				-				-				-				7,749				-				-				7,749
Stock issued upon exercise of stock warrants			-				-				-				-				1				-				4				-				-				4
Stock issued in connection with employee stock plan			-				-				-				-				228				1				24				-				-				25
Stock withheld to cover employee taxes			-				-				-				-				-				-				(26	)			-				-				(26	)
Net income			-				-				-				-				-				-				-				-				62,517				62,517
Dividends on Series A Preferred Stock			-				-				-				-				-				-				-				-				(7,000	)			(7,000	)
Cumulative translation adjustments			-				-				-				-				-				-				-				(322	)			-				(322	)
Unrealized loss on marketable securities, net of tax			-				-				-				-				-				-				-				(10	)			-				(10	)
Balance at December 31, 2013			1,000				-				-				-				76,690				77				801,262				(689	)			138,845				939,495
Stock-based compensation			-				-				-				-				-				-				10,860				-				-				10,860
Stock issued in connection with employee stock plan			-				-				-				-				535				1				1,507				-				-				1,508
Stock withheld to cover employee taxes			-				-				-				-				-				-				(87	)			-				-				(87	)
Issuance of Series B Preferred Stock, net of issuance costs			-				-				500				-				-				-				120,753				-				-				120,753
Issuance of common stock, net of issuance costs			-				-				-				-				16,680				16				98,881				-				-				98,897
Net income			-				-				-				-				-				-				-				-				74,989				74,989
Dividends on Series A Preferred Stock			-				-				-				-				-				-				-				-				(7,000	)			(7,000	)
Dividends on Series B Preferred Stock			-				-				-				-				-				-				-				-				(5,320	)			(5,320	)
Cumulative translation adjustments			-				-				-				-				-				-				-				(2,325	)			-				(2,325	)
Unrealized gain on marketable securities, net of tax			-				-				-				-				-				-				-				94				-				94
Balance at December 31, 2014			1,000			$	-				500			$	-				93,905			$	94			$	1,033,176			$	(2,920	)		$	201,514			$	1,231,864

	Series A Convertible							Series B Convertible														Additional Paid-In Capital				Accumulated Other Comprehensive Income (Loss)				Retained Earnings				Total Stockholders' Equity
	Preferred Stock							Preferred Stock							Common Stock
	Shares			Amount				Shares			Amount				Shares			Amount
Balance at December 31, 2014	1,000			$	—			500			$	—			93,905			$	94			$	1,033,176			$	(2,920	)		$	201,514			$	1,231,864
Stock-based compensation	—			—				—			—				—			—				9,649				—				—				9,649
Stock options exercised and awards vested	—			—				—			—				1,221			1				2,154				—				—				2,155
Stock withheld to cover employee taxes	—			—				—			—				—			—				(886		)		—				—				(886		)
Excess tax benefit from exercise of stock-based compensation	—			—				—			—				—			—				395				—				—				395
Net income	—			—				—			—				—			—				—				—				7,123				7,123
Dividends on Series A preferred stock	—			—				—			—				—			—				—				—				(7,000		)		(7,000		)
Dividends on Series B preferred stock	—			—				—			—				—			—				—				—				(8,436		)		(8,436		)
Cumulative translation adjustments, net of tax	—			—				—			—				—			—				—				(5,777		)		—				(5,777		)
Unrealized gain on marketable securities, net of tax	—			—				—			—				—			—				—				(366		)		—				(366		)
Balance at December 31, 2015	1,000			—				500			—				95,126			95				1,044,488				(9,063		)		193,201				1,228,721
Stock-based compensation	—			—				—			—				—			—				15,973				—				—				15,973
Stock options exercised and awards vested	—			—				—			—				753			1				548				—				—				549
Stock withheld to cover employee taxes	—			—				—			—				—			—				(627		)		—				—				(627		)
Excess tax benefit from exercise of stock-based compensation	—			—				—			—				—			—				(71		)		—				—				(71		)
Net income	—			—				—			—				—			—				—				—				111,032				111,032
Dividends on Series A preferred stock	—			—				—			—				—			—				—				—				(7,000		)		(7,000		)
Dividends on Series B preferred stock	—			—				—			—				—			—				—				—				(8,436		)		(8,436		)
Cumulative translation adjustments, net of tax	—			—				—			—				—			—				—				3,487				—				3,487
Unrealized loss on marketable securities, net of tax	—			—				—			—				—			—				—				130				—				130
Balance at December 31, 2016	1,000			—				500			—				95,879			96				1,060,311				(5,446		)		288,797				1,343,758
Stock-based compensation	—			—				—			—				—			—				18,694				—				—				18,694
Stock options exercised and awards vested	—			—				—			—				2,537			2				4,233				—				—				4,235
Stock withheld to cover employee taxes	—			—				—			—				(213	)		—				(1,865		)		—				—				(1,865		)
Net income	—			—				—			—				—			—				—				—				233,856				233,856
Dividends on Series A preferred stock	—			—				—			—				—			—				—				—				(1,750		)		(1,750		)
Dividends on Series B preferred stock	—			—				—			—				—			—				—				—				(2,109		)		(2,109		)
Cumulative translation adjustments, net of tax	—			—				—			—				—			—				—				1,664				—				1,664
Unrealized loss on marketable securities, net of tax	—			—				—			—				—			—				—				(14		)		—				(14		)
Balance at December 31, 2017	1,000			$	—			500			$	—			98,203			$	98			$	1,081,373			$	(3,796	)		$	518,794			$	1,596,469

See notes to consolidated financial statements

64

Iridium Communications Inc.

Consolidated Statements of Cash Flows

(In thousands)

		Year Ended				Year Ended				Year Ended
		December 31, 2014				December 31, 2013				December 31, 2012
Cash flows from operating activities:
Net income		$	74,989			$	62,517			$	64,631
Adjustments to reconcile net income to net cash provided by operating activities:
Non-cash items included in net income:
Deferred income taxes			40,226				47,095				29,549
Depreciation and amortization			72,769				74,980				81,110
Stock-based compensation			9,601				6,715				7,332
Provision for doubtful accounts			13				(525	)			722
Provision for obsolete inventory			931				1,479				-
Loss on equity method investment			4,130				3,332				826
Amortization of premiums on marketable securities			709				546				-
Non-cash foreign currency losses, net			962				-				-
Realized loss on sale of marketable securities			-				82				-
Changes in operating assets and liabilities:
Accounts receivable			3,855				1,901				561
Inventory			251				(4,633	)			(11,199	)
Prepaid expenses and other current assets			1,520				(7,684	)			(200	)
Income tax receivable			679				3,617				28
Other assets			(2,926	)			(4,328	)			364
Accounts payable			(2,636	)			(5,603	)			464
Accrued expenses and other current liabilities			634				9,694				(6,400	)
Deferred revenue			10,603				5,612				7,310
Accrued satellite and network operation expense, net of current portion			(1,338	)			(1,338	)			(1,338	)
Other long-term liabilities			(100	)			(10,411	)			263
Net cash provided by operating activities			214,872				183,048				174,023
Cash flows from investing activities:
Capital expenditures			(441,065	)			(403,547	)			(441,654	)
Purchases of marketable securities			(275,819	)			(126,408	)			-
Sales and maturities of marketable securities			90,630				49,119				-
Investment in equity method affiliate			-				(5,000	)			(1,888	)
Net cash used in investing activities			(626,254	)			(485,836	)			(443,542	)
Cash flows from financing activities:
Borrowings under the Credit Facility			252,198				287,416				334,654
Payment of deferred financing fees			(17,580	)			(18,716	)			(22,168	)
Restricted cash deposits			(15,889	)			(26,990	)			(27,079	)
Releases from restricted cash			11,009				-				-
Proceeds from exercise of warrants			-				3				9,114
Proceeds from exercise of stock options			1,508				25				43
Tax payment upon settlement of stock awards			(83	)			(26	)			-
Payment of warrant exchange transaction costs			-				-				(2,073	)
Proceeds from issuance of Series A Preferred Stock, net of issuance costs			-				-				96,499
Proceeds from issuance of Series B Preferred Stock, net of issuance costs			120,753				-				-
Proceeds from issuance of common stock, net  of issuance costs			98,897				-				-
Payment of Series A Preferred Stock dividends			(7,000	)			(7,000	)			(1,419	)
Payment of Series B Preferred Stock dividends			(4,969	)			-				-
Net cash provided by financing activities			438,844				234,712				387,571
Effect of exchange rate changes on cash and cash equivalents			(2,555	)			-				-
Net increase (decrease) in cash and cash equivalents			24,907				(68,076	)			118,052
Cash and cash equivalents, beginning of period			186,342				254,418				136,366
Cash and cash equivalents, end of period		$	211,249			$	186,342			$	254,418

	Year Ended December 31,
	2017				2016				2015
Cash flows from operating activities:
Net income	$	233,856			$	111,032			$	7,123
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes	(115,812		)		63,808				63,376
Depreciation and amortization	122,266				49,394				51,834
Impairment of goodwill	—				—				87,039
Stock-based compensation (net of amounts capitalized)	15,958				13,708				8,603
Excess tax benefit from stock-based compensation	—				—				(806		)
Gain from contract liability write-off	(14,189		)		—				—
Provision for doubtful accounts	(277		)		703				252
Provision for obsolete inventory	361				1,053				723
Amortization of premiums on marketable securities	124				888				2,030
Non-cash foreign currency losses, net	(163		)		166				196
Changes in operating assets and liabilities:
Accounts receivable	(10,343		)		(6,037		)		(1,843		)
Inventory	(1,946		)		9,029				(169		)
Prepaid expenses and other current assets	2,875				(16,613		)		(3,788		)
Other assets	2,823				(2,128		)		(1,253		)
Accounts payable	896				3,209				3,110
Accrued expenses and other current liabilities	8,166				(6,416		)		(7,815		)
Deferred revenue	15,129				4,115				9,038
Accrued satellite and network operation expense, net of current portion	—				(1,045		)		(869		)
Other long-term liabilities	(103		)		333				698
Net cash provided by operating activities	259,621				225,199				217,479
Cash flows from investing activities:
Capital expenditures	(400,107		)		(405,687		)		(494,810		)
Purchases of marketable securities	(7,013		)		(19,865		)		(204,672		)
Sales and maturities of marketable securities	34,440				183,192				260,108
Net cash used in investing activities	(372,680		)		(242,360		)		(439,374		)
Cash flows from financing activities:
Borrowings under the Credit Facility	22,207				251,498				230,421
Payment of deferred financing fees	(3,852		)		(11,806		)		(14,984		)
Proceeds from exercise of stock options	4,235				549				2,154
Tax payment upon settlement of stock awards	(1,865		)		(627		)		(886		)
Excess tax benefits from stock-based compensation	—				—				806
Payment of Series A preferred stock dividends	(1,750		)		(7,000		)		(7,000		)
Payment of Series B preferred stock dividends	(2,109		)		(8,436		)		(8,436		)
Net cash provided by financing activities	16,866				224,178				202,075
Effect of exchange rate changes on cash and cash equivalents	144				512				(755		)
Net increase (decrease) in cash and cash equivalents	(96,049		)		207,529				(20,575		)
Cash, cash equivalents, and restricted cash, beginning of period	484,306				276,777				297,352
Cash, cash equivalents, and restricted cash, end of period	$	388,257			$	484,306			$	276,777

See notes to consolidated financial statements

Iridium Communications Inc.

Consolidated Statements of Cash Flows, continued

(In thousands)

		Year Ended				Year Ended				Year Ended
		December 31, 2014				December 31, 2013				December 31, 2012
Supplemental cash flow information:
Interest paid		$	15,009			$	11,255			$	6,971
Income taxes paid (refunded), net		$	184			$	(2,920	)		$	348
Supplemental disclosure of non-cash investing activities:
Property and equipment received but not paid for yet		$	16,566			$	10,690			$	3,516
Interest capitalized but not paid		$	9,589			$	7,989			$	5,359
Capitalized paid-in-kind interest		$	34,147			$	25,715			$	16,059
Capitalized amortization of deferred financing costs		$	11,174			$	12,475			$	3,896
Capitalized stock-based compensation		$	1,259			$	1,034			$	819
Contribution of fixed assets to equity method investment		$	-			$	-			$	1,353
Supplemental disclosure of non-cash financing activities:
Dividends accrued on Series A Preferred Stock		$	292			$	292			$	273
Dividends accrued on Series B Preferred Stock		$	351			$	-			$	-

	Year Ended December 31,
	2017				2016				2015
Supplemental cash flow information:
Interest paid	$	85,261			$	22,910			$	18,878
Income taxes paid, net	$	1,660			$	1,391			$	3,429
Supplemental disclosure of non-cash investing activities:
Property and equipment received but not paid for yet	$	90,748			$	2,753			$	26,770
Interest capitalized but not paid	$	15,021			$	14,136			$	12,232
Capitalized amortization of deferred financing costs	$	27,304			$	28,688			$	18,372
Capitalized paid-in-kind interest	$	—			$	52,873			$	43,073
Capitalized stock-based compensation	$	2,736			$	2,265			$	1,046

See notes to consolidated financial statements

66

Iridium Communications Inc.

Notes to Consolidated Financial Statements

December 31, 2014

2017

1. Organization and Business

Iridium Communications Inc. (the “Company”), a Delaware corporation, offers voice and data communications services and products to businesses, U.S. and international government agencies and other customers on a global basis. The Company is a provider of mobile voice and data communications services via a constellation of low earth orbiting satellites. The Company holds various licenses and authorizations from the U.S. Federal Communications Commission (the “FCC”) and from foreign regulatory bodies that permit the Company to conduct its business, including the operation of its satellite constellation.

2. Significant Accounting Policies and Basis of Presentation

Principles of Consolidation and Basis of Presentation

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

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ materially from those estimates.

Adopted Accounting Pronouncements

In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-09, Compensation – Stock Compensation, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). ASU 2016-09 addresses multiple changes that are primarily focused on income taxes and the presentation of taxes related to stock compensation, but also provides an option for two methods to account for forfeitures. The requirements resulting from the adoption of ASU 2016-09 were accounted for on a prospective basis as of January 1, 2017, as required.

The Company made an accounting policy election to continue estimating the number of awards that are expected to be forfeited, consistent with the Company’s prior practice.

The Company excluded the excess tax benefits and deficiencies component from the treasury stock method in the diluted earnings per share calculation. The change had an immaterial impact on the Company’s reported diluted earnings per share.

The Company recorded current excess tax benefits and tax deficiencies as income tax benefit (expense) in the consolidated statements of operations and comprehensive income. The change resulted in an excess tax expense of $0.2 million for the three months ended December 31, 2017 and excess tax benefit of $1.1 million recorded in the provision for income taxes for the year ended December 31, 2017.

The Company will present excess tax benefits as an operating activity on the condensed consolidated statement of cash flows rather than as a financing activity. Prior periods have not been adjusted.

There were no additional impacts on the Company’s financial statements resulting from the adoption of ASU 2016-09 that required a retrospective or modified retrospective approach.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU 2015-11 requires that inventory within the scope of the guidance be measured at the lower of cost and net realizable value. The Company applied the new guidance prospectively effective January 1, 2017, as required. Inventory measured using last-in, first-out and retail inventory method are excluded from this new guidance. When evidence exists that the net realizable value of inventory is less than its cost, the Company will recognize the difference as a loss in earnings in the period the measurement occurs. This ASU replaces the concept of market with the single measurement of net realizable value and is intended to create efficiencies for preparers and more closely aligns U.S. GAAP with International Financial Reporting Standards. The adoption had an immaterial impact on the Company’s condensed consolidated balance sheet, condensed consolidated statement of

operations and comprehensive income, and condensed consolidated statement of cash flows as of and for the year ended, December 31, 2017.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). ASU 2016-18 requires that restricted cash be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the statements of cash flows. The Company early adopted the new guidance during the fourth quarter of 2017, as permitted, and the new guidance was applied using a retrospective transition method for all periods presented. The adoption of ASU 2016-18 did not have a material impact on the Company's consolidated statements of cash flows.

The following table provides a reconciliation of cash and cash equivalents, and restricted cash reported within the consolidated balance sheets at December 31, 2017 and 2016, that sum to the total of such amounts in the consolidated statements of cash flows:

		Year Ended December 31,
		2017				2016
Cash and cash equivalents		$	285,873			$	371,167
Restricted cash		102,384				113,139
Cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows		$	388,257			$	484,306

Recent Accounting Developments Not Yet Adopted

In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 requires lessees to record most leases on their balance sheets but recognize expenses on their income statements in a manner similar to current accounting. The Company intends to apply the new guidance effective January 1, 2019, as required. Reporting organizations are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company is currently evaluating the effect ASU 2016-02 may have on its condensed consolidated financial statements and related disclosures, but a lease liability and related right-of-use asset will be recognized for operating lease arrangements where the Company is the lessee. 

In May 2014, the FASB and the International Accounting Standards Board jointly issued a comprehensive new revenue recognition standard, ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), that will supersede nearly all existing revenue recognition guidance under U.S. GAAP. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has issued several amendments to the standard including clarification on accounting for licenses of intellectual property, identifying performance obligations, and most recently, technical corrections on the interpretation of the new guidance. In July 2015, the FASB voted to defer the effective date of ASU 2014-09 for public entities to be effective for annual and interim periods beginning after December 15, 2017. ASU 2014-09 becomes effective for the Company in the first quarter of fiscal 2018, and the Company anticipates adopting the standard using the modified retrospective method with a cumulative effect adjustment recorded to opening retained earnings as of the initial adoption date (January 1, 2018). This method requires application of the new guidance at the beginning of the earliest comparative period presented for revenue agreements that are not substantially complete as of the date of adoption. All new revenue agreements executed after the adoption date are accounted for prospectively under the new standard.

The Company established a project team in order to analyze the effect of the standard on its contracts by reviewing its current accounting policies and practices to identify potential differences which would result from applying the requirements of the new standard to its revenue contracts. The Company aggregated its contracts into homogeneous revenue streams and assessed all potential effects of the standard. The Company has substantially completed its evaluation of the potential changes from adopting the new standard on its future financial reporting and disclosures. Adopting the new standard is expected to have an immaterial impact on the Company’s total net sales and operating income. The primary impact of adopting ASU 2014-09 relates to the Company’s prepaid service revenue and associated breakage, which is currently recognized as revenue at the date the right to access the prepaid service has expired. Under the new standard, the Company will estimate the expected revenue that will expire unused on an ongoing basis and recognize this revenue over the usage period. Upon adoption, the Company expects the deferred revenue associated with prepaid service revenue to be reduced by approximately $15.6 million for this breakage estimate. Revenue on the majority of the Company’s contracts will continue to be recognized consistent with the

Company’s current revenue recognition model, exclusive of the aforementioned prepaid revenue. The Company also does not expect the standard to have a material impact on its consolidated balance sheet.

Fair Value Measurements

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

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

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

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

The carrying values of short-term financial instruments (primarily cash and cash equivalents, prepaid expenses and other current assets, accounts receivable, accounts payable, and accrued expenses and other current liabilities) approximate their fair values because of their short-term nature. The fair value of the Company’s investments in money market funds approximates its carrying value; such instruments are classified as Level 1 and are included in cash and cash equivalents on theaccompanying consolidated balance sheets. The fair value of the Company’s investments in commercial paper and short-term U.S. agency securities with original maturities of less than ninety days approximates their carrying value; such instruments are classified as Level 2 and are included in cash and cash equivalents on theaccompanying consolidated balance sheets.

The fair value of the Company’s investments in fixed-income debt securities and commercial paper with original maturities of greater than ninety days are obtained using similar investments traded on active securities exchanges and are classified as Level 2 and are included in marketable securities on the accompanying consolidated balance sheets.2. For fixed income securities that do not have quoted prices in active markets, the Company uses third-party vendors to price its debt securities resulting in classification as Level 2.

All fixed-income securities are included in marketable securities on the accompanying consolidated balance sheets.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, and receivables. The majority of cash is swept nightly into a money market fund invested in U.S. treasuries, Agency Mortgage Backed Securities and/or U.S. Government guaranteed debt. While the Company maintains its cash and cash equivalents with financial institutions with high credit ratings, it often maintains those deposits in federally insured financial institutions in excess of federally insured (FDIC) limits. The Company’s marketable securities are highly-rated corporate and foreign fixed-income debt securities and commercial paper with an original maturity in excess of ninety days. The Company performs credit evaluations of its customers’ financial condition and records reserves to provide for estimated credit losses. Accounts receivable are due from both domestic and international customers.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with original maturities of ninety days or less to be cash equivalents. These investments, along with cash deposited in institutional money market funds, regular interest bearing depository accounts and non-interest bearing depository accounts, are classified as cash and cash equivalents on the accompanying consolidated balance sheets. The Company is required to maintain a minimum cash reserve for debt service related to its $1.8 billion loancredit facility (the(as amended to date, the “Credit Facility”). As of December 31, 2014 and 2013, the Company’s restricted cash balance, which includes a minimum cash reserve for debt service related to the Credit Facility and the interest earned on these amounts, was $86.1 million and $81.2 million, respectively. For further discussion on the cash reserve for debt service related to the Credit Facility, see the Commitments and Contingenciesfootnote below.

Marketable Securities

Marketable securities consist of fixed-income debt securities and commercial paper with an original maturity in excess of ninety days. These investments are classified as available-for-sale and are included in marketable securities within current assets on the accompanying consolidated balance sheets. All investments are carried at fair value. Unrealized gains and losses, net of taxes, are reported as a component of other comprehensive income or loss. The specific identification method is used to determine the cost basis of the marketable securities sold. There were no material realized gains or losses on the sale of marketable securities for the years ended December 31, 20142017 and 2013.2016. The Company regularly monitors and evaluates the fair value of its investments to identify other-than-temporary declines in value. The Company determined that theany decline in fair value of these investments is temporary as the Company does not intend to sell these securities and it is not likely that the Company will be required to sell the securities before the recovery of their amortized cost basis.

Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount and are subject to late fee penalties. Management develops its estimate of an allowance for uncollectible receivables based on the Company’s experience with specific customers, aging of outstanding invoices, its understanding of customers’ current economic circumstances and its own judgment as to the likelihood that the Company will ultimately receive payment. The Company writes off its accounts receivable when balances ultimately are deemed uncollectible. The allowance for doubtful accounts was $0.9 million and $0.5 millionnot material as of December 31, 20142017 and 2013, respectively.

2016.

Foreign Currencies

The functional currency of the Company’s foreign consolidated subsidiaries is the local currency. Assets and liabilities of its foreign subsidiaries are translated to U.S. dollars based on exchange rates at the end of the reporting period. Income and expense items are translated at the weighted averageweighted-average exchange rates prevailing during the reporting period. Translation adjustments are accumulated in a separate component of stockholders’ equity. Transaction gains or losses are classified as other income (expense), net in the accompanying consolidated statements of operations and comprehensive income.

Internally Developed Software

The Company capitalizes the costs of acquiring, developing and testing software to meet its internal needs. Capitalization of costs associated with software obtained or developed for internal use commences when the preliminary project stage is complete and it is probable that the project will be completed and used to perform the function intended. Capitalized costs include only (i) external direct cost of materials and services consumed in developing or obtaining internal-use software and (ii) payroll and payroll-related costs for employees who are directly associated with, and devote time to, the internal-use software project. Capitalization of such costs ceases no later than the point at which the project is substantially complete and ready for its intended use. Internal use software costs are amortized once the software is placed in service using the straight-line method over periods ranging from three to seven years.

Deferred Financing Costs

Direct and incremental costs incurred in connection with securing debt financing are deferred and are amortized as additional interest expense using the effective interest method over the term of the related debt.

As of December 31, 20142017 and 2013,2016, the Company had deferred approximately $136.4$97.2 million and $130.0$120.6 million, respectively, of direct and incremental financing costs, net of amortization, associated with securing debt financing for Iridium NEXT, the Company’s next-generation satellite constellation.

Capitalized Interest

Interest costs associated with financing the Company’s assets during the construction period of Iridium NEXT have been capitalized. Capitalized interest costs for the years ended December 31, 2017, 2016 and interest expense2015 were $114.4 million, $106.4 million and $83.1 million, respectively, which include amortization of deferred financing costs as follows:

		Year Ended December 31,
		2014				2013				2012
						(In thousands)
Capitalized interest		$	62,019			$	52,136			$	29,305
Interest expense			954				583				114
Total interest		$	62,973			$	52,719			$	29,419

discussed above.

Inventory

Inventory consists primarily of finished goods, although the Company at times also maintains an inventory of raw materials from third-party manufacturers. The Company outsources manufacturing of subscriber equipment to a third-party manufacturersmanufacturer and purchases accessories from third-party suppliers. The Company’s cost of inventory includes an allocation of overhead, (includingincluding payroll and payroll-related costs of employees directly involved in bringing inventory to its existing condition, and freight).freight. Inventories are valued using the average cost method and are carried at the lower of cost or market.net realizable value. Accordingly, the Company recorded a $0.9expenses of $0.4 million, $1.1 million and $1.5$0.7 million, expensefor the years ended December 31, 2017, 2016 and 2015, respectively, included within the cost of subscriber equipment for excess and obsolete inventory primarily related to Iridium 9505 handset accessoriesinventory. The expenses for the years ended December 31, 20142017 and 2013, respectively. No similar charge was incurred during 2012.

2016 were primarily related to certain handset parts and accessories, and the expenses for the year ended December 31, 2015 were primarily related to Iridium Pilot equipment.

The Company has a manufacturing agreementsagreement with two suppliersBenchmark Electronics Inc. (“Benchmark”) to manufacture subscriber equipment, one of which contains minimum monthly purchase requirements. The Company’s purchases have exceeded the monthly minimum requirements since inception.equipment. Pursuant to anthe agreement, with the suppliers, the Company may be required to purchase excess materials if the materials are not used in production within the periods specified in the agreement. The suppliersBenchmark will then repurchase such materials from the Company at the same price paid by the Company, as required for the production of the subscriber equipment.

Stock-Based Compensation

The Company accounts for stock-based compensation at fair value. The fair value of stock options is determined at the grant date using the Black-Scholes option pricing model. The fair value of restricted stock units (“RSUs”) is equal to the closing price of the underlying common stock on the grant date. The fair value of an award that is ultimately expected to vest is recognized on a straight-line basis over the requisite service or performance period and is classified in the consolidated statements of operations and comprehensive income in a manner consistent with the classification of the recipient’s compensation. The expected vesting of the Company’s performance-based RSUs is based upon the likelihoodprobability that the Company achieves the defined performance goals. The level of achievement of performance goals, if any, is determined by the compensation committee. Stock-based awards to non-employee consultants are expensed at their fair value as services are provided according to the terms of their agreements and are classified in selling, general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income. Classification of stock-based compensation for the years ended December 31, 2014 and 2013 is as follows:

		2014				2013
		(In thousands)
Property and equipment, net		$	1,176			$	991
Inventory			83				43
Cost of subscriber equipment			152				32
Cost of services (exclusive of depreciation and amortization)			824				550
Research and development			312				132
Selling, general and administrative			8,313				6,001
Total stock-based compensation		$	10,860			$	7,749

was presented below:

	Year Ended December 31,
	2017				2016
	(In thousands)
Property and equipment, net	$	2,458			$	1,906
Inventory	280				359
Cost of subscriber equipment	30				56
Cost of services (exclusive of depreciation and amortization)	4,366				1,655
Research and development	349				457
Selling, general and administrative	11,211				11,540
Total stock-based compensation	$	18,694			$	15,973

Property and Equipment

Property and equipment is carried at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the following estimated useful lives:

Satellites
	15-18
First-generation satellites	15-21 years
Next-generation satellites	12.5 years
Ground system	5-7 years
Equipment	3-5 years
Internally developed software and purchased software	3-7 years
Building	39 years
Building improvements	5-39 years
Leasehold improvements	shorter of useful life or remaining lease term

The estimated useful lives of the Company’s current constellation offirst-generation satellites reflect the remaining period of expected use for each satellite. Satellites are depreciated on a straight-line basis through the date they will be replaced by next-generation satellites. The Company began deployment of its next-generation satellite constellation (“Iridium NEXT satellites. BasedNEXT”) in January 2017, and, based on the current launch schedule, the Company expects Iridium NEXT satellites to begin deployment in the second half of 2015, with the final launch expected to occur in 2017.

2018. The Company’s next-generation satellites will be depreciated on a straight-line basis over the estimated useful life, which is currently estimated to be 12.5 years.

The Company calculates depreciation expense using the straight-line method and evaluates the appropriateness of the useful life used in this calculation on a quarterly basis or as events occur that require additional assessment. During 2012, the Company updated its analysis of the current satellite constellation’s health and remaining useful life. Based on the results of this analysis, the Company estimated that its current constellation of satellites would be operational for longer than previously expected. As a result, the estimated useful life of the current constellation was extended and was consistent with the expected deployment of Iridium NEXT. In September 2014, the Company further updated its analysis of the current satellites’ remaining useful lives based on the refinement of the launch schedule and deployment plan for Iridium NEXT. As a result, the estimated useful lives of the satellites within the current constellation have been extended and are consistent with the expected deployment of Iridium NEXT. These changes in estimated useful life resulted in a decrease in depreciation expense compared to the prior year. The change in accounting estimate reduced depreciation expense in 2014 and 2012 by $3.8 million and $19.6 million, respectively. For the year ended December 31, 2014, the reduction in depreciation expense increased each of basic and diluted net income per share by $0.03 and $0.02, respectively. For the year ended December 31, 2012, the reduction in depreciation expense increased basic and diluted net income per share by $0.17 and $0.16, respectively.

Repairs and maintenance costs are expensed as incurred.

Long-Lived Assets

The Company assesses its long-lived assets for impairment when indicators of impairment exist. Recoverability of assets is measured by comparing the carrying amounts of the assets to the future undiscounted cash flows expected to be generated by the assets. Any impairment loss would be measured as the excess of the assets’ carrying amount over their fair value.

During the period covered by this report,

In June 2011, the Company lost communicationentered into an agreement with four of its in-orbitInternational Space Company Kosmotras, or Kosmotras, as a supplemental launch services provider for Iridium NEXT. The total cost under the Kosmotras agreement is $51.8 million. Kosmotras to date has been unable to obtain the permits or authorizations to launch the Company's satellites one in 2012on a Dnepr rocket as planned, and three in 2014. As a result, impairment charges of $2.0 million and $2.2 million were recorded withinKosmotras has proposed no satisfactory alternative launch plan. Because the Company now believes the construction-in-progress associated with the Kosmotras launch services will no longer be used or further developed, the Company wrote-off the full amount previously paid to Kosmotras, by recording accelerated depreciation expense during 2012 and 2014, respectively. The Company had in-orbit spare satellites available to replaceof $36.8 million, in the lost satellites. No similar satellite loss occurred during 2013. The Company does not believe the lossfourth quarter of these satellites is an indicator of impairment of the remaining individual satellites or the constellation as of December 31, 2014.

2017. 

Goodwill and Other Intangible Assets

Goodwill

Goodwill is the excess of the acquisition cost of businesses over the fair value of the identifiable net assets acquired. Impairment testing for goodwill is performed during the fourth quarter of each annual period or more frequently if indicators of potential impairment exist. Goodwill impairment is determined using a two-step process. The first step involves a comparison of the estimated fair value of a reporting unit to its carrying amount, including goodwill. If the estimated fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired and the second step of the impairment test is not necessary. If the carrying amount of a reporting unit exceeds its estimated fair value, then the second step of the goodwill impairment test must be performed. To measure the amount of impairment loss, if any, the implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. Specifically, the estimated fair value of the reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the price paid to acquire the reporting unit. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.

The Company operates in a single reporting unit, and the possibility of impairment is assessed by comparing the carrying amount of the reporting unit to its estimated fair value. The Company determines the estimated fair value of the reporting unit based on a combination of the market approach using comparable public companies (guideline company method) and the income approach using discounted cash flows. These valuation techniques involve the use of estimates and assumptions.

The most recent annual assessment of goodwill and indefinite-lived assets was performed on October 1, 20142015 (the “2014“2015 Analysis”). The key assumptions used in the 2014 Analysis included: (i) cash flow projections through 2025, which include assumptions relative to forecasted service revenue, equipment revenue, engineering and support service revenue, hosted payload revenue, operating expenses and Iridium NEXT capital expenditures; (ii) a discount rate of 12.0% applied to the cash flow projections, which was based on the weighted average cost of capital adjusted for the risks associated for the business; (iii) selection of comparable companies used in the market approach; (iv) assumptions in weighting the results of the income approach, and the market approach valuation techniques; and (v) expected distributions from Aireon. Based onCompany determined that the results of the first step of the 2014 Analysis, the estimated faircurrent value of the reporting unit exceeded the carryingits fair value. As such,a result, the second step of theCompany recorded a non-cash goodwill impairment test was not required and no impairment charge was recordedof $87.0 million during the period. In future periods, if actual results are not consistent with our estimates and assumptions, the Company may be exposed to impairment losses that could be material to our results of operations.

Intangible Assets Not Subject to Amortization

A portion of the Company’s intangible assets are spectrum, regulatory authorizations, and trade names, which are indefinite-lived intangible assets. The Company reevaluates the useful life determination for these assets each reporting period to determine whether events and circumstances continue to support an indefinite useful life. The Company tests its indefinite-lived intangible assets for potential impairment annually in the fourth quarter or more frequently if indicators of impairment exist. If the fair value2015. The Company had no goodwill as of the indefinite-lived asset is less than the carrying amount, an impairment loss is recognized. Based on the results of the 2014 Analysis, the fair value of the indefinite-lived intangible assets was greater than the carrying value. As such, no impairment charge was recorded during the period.

December 31, 2017 and 2016.

Intangible Assets Subject to Amortization

The Company’s intangible assets that do havewith finite lives, (customer relationships – government and commercial, core developed technology, intellectual property and software) are amortized over their useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If any indicators were present, the Company would test for recoverability by comparing the carrying amount of the asset to the net undiscounted cash flows expected to be generated from the asset. If those net undiscounted cash flows do not exceed the carrying amount (i.e., the asset is not recoverable), the Company would perform the next step, which is to determine the fair value of the asset and record an impairment loss, if any. The Company also reevaluatesevaluates the useful lives for these intangible assets each reporting period to determine whether events and circumstances warrant a revision in their remaining useful lives.

Asset Retirement Obligations

Liabilities arising from legal obligations associated with

Amortization is calculated using the retirement of long-lived assets are required to be measured at fair value and recorded as a liability. Upon initial recognition of a liability for retirement obligations, a company must record an asset, which is depreciatedstraight-line method over the life of the asset to be retired.

Under certain circumstances, each of the U.S. government, The Boeing Company (“Boeing”), and Motorola Solutions, Inc. (“Motorola Solutions”) has the right to require the de-orbit of the Company’s satellite constellation. One such right the U.S. government holds is to require the Company to de-orbit the satellite constellation if more than four satellites have insufficient fuel to execute a 12-month de-orbit, as is currently the case. In the event the Company was required to effect a mass de-orbit, pursuant to the amended and restated operations and maintenance agreement (the “O&M Agreement”) by and between the Company and Boeing, the Company would be required to pay Boeing $18.0 million, plus an amount equivalent to the premium for mass de-orbit insurance coverage ($2.5 million as of December 31, 2014). The Company has concluded that each of the foregoing de-orbit rights meets the definition of an asset retirement obligation. However, the Company currently does not believe the U.S. government, Boeing or Motorola Solutions will exercise their respective de-orbit rights. As a result, the Company believes the likelihood of any future cash outflows associated with the mass de-orbit obligation is remote and has recorded an asset retirement obligation with respect to the potential mass de-orbit of approximately $0.2 million at December 31, 2014, which is included in other long-term liabilities on the accompanying consolidated balance sheet.

There are other circumstances in which the Company could be required, either by the U.S. government or for technical reasons, to de-orbit an individual satellite; however, the Company believes that such costs would not be significant relative to the costs associated with the ordinary operations of the satellite constellation.

following estimated useful lives:

Intellectual property	20 years
Assembled workforce	7 years
Patents	14 - 20 years

Revenue Recognition

The Company derives its revenue primarily as a wholesaler of satellite communications products and services. The primary types of revenue include (i) service revenue (access and usage-based airtime fees), (ii) subscriber equipment revenue, and (iii) revenue generated by providing engineering and support services to commercial and government customers.

Wholesaler of satellite communications products and services

Pursuant to wholesale agreements, the Company sells its products and services to service providers who, in turn, sell the products and services to other distributors or directly to the end users. The Company recognizes revenue when services are performed or delivery has occurred, evidence of an arrangement exists, the fee is fixed or determinable, and collection is probable,reasonably assured, as follows:

Contracts with multiple elements

At times, the Company sells services and equipment through multi-element arrangements that bundle equipment, airtime and other services. For multi-element revenue arrangements when the Company sells services and equipment in bundled arrangements and determines that it has separate units of accounting, the Company allocates the bundled contract price among the various contract deliverables based on each deliverable’s relative selling price. The selling price used for each deliverable is based on vendor-specific objective evidence when available, third-party evidence when vendor-specific objective evidence is not available, or the estimated selling price when neither vendor-specific evidence nor third party evidence is available. The Company determines vendor-specific objective evidence of selling price by assessing sales prices of subscriber equipment, airtime and other services when they are sold to customers on a stand-alone basis. The Company’s determination of best estimate of selling price is consistent with its determination of vendor-specific objective evidence of selling price, and the Company assesses qualitative and quantitative market factors and entity-specific factors when estimating the selling price. When the Company determines the elements are not separate units of accounting, the Company recognizes revenue on a combined basis as the last element is delivered.

Service revenue sold on a stand-alone basis

Service revenue is generated from the Company’s service providers through usage of its satellite system and through fixed monthly access fees per user charged to service providers. Revenue for usage is recognized when usage occurs. Revenue for fixed-per-user access fees is recognized ratably over the period in which the services are provided to the end user. The Company sells prepaid services in the form of e-vouchers and prepaid cards. A liability is established equal to the cash paid upon purchase for the e-voucher or prepaid card. The Company recognizes revenue from the prepaid services upon the use of the e-voucher or prepaid card by the customer or upon the expiration of the right to access the prepaid service. In September 2012, the Company communicated a new expiration policy with respect to prepaid e-vouchers, effective December 2013. While the terms of prepaid e-vouchers can be extended by the purchase of additional e-vouchers, prepaid e-vouchers may not be extended beyond the new limits of three or four years, dependent on the initial expiry period when purchased. The Company does not offer refunds for unused prepaid services.

Subscriber equipment sold on a stand-alone basis

The Company recognizes subscriber equipment sales and the related costs when title to the equipment (and the risks and rewards of ownership) passes to the customer, typically upon shipment.

Services sold to the U.S. government

The Company provides airtime and airtime support to U.S. government and other authorized customers pursuant to the Enhanced Mobile Satellite Services (“EMSS”) contract managed by the Defense Information Systems Agency (“DISA”). The EMSS contract, entered into in April 2008, provided for a one-year base term and four additional one-year options which were exercised at the election of the U.S. government. Under the terms of this contract, the Company provided airtime to U.S. government subscribers through (i) fixed monthly fees on a per-user basis for unlimited voice services, (ii) fixed monthly fees per user for unlimited paging services, (iii) a tiered pricing plan (based on usage) per device for data services, (iv) fixed monthly fees on a per-user basis for unlimited beyond-line-of-sight push-to-talk voice services to user-defined groups (“Netted Iridium”), and (v) a monthly fee for active user-defined groups using Netted Iridium. Revenue related to these services was recognized ratably over the periods in which the services were provided, and the related costs were expensed as incurred.After the exercise of all available optional contract extensions, the EMSS contract as signed in April 2008 expired in October 2013.

Effective October 22, 2013, the Company executed a new five-year EMSS contract.contract, managed by DISA. Under the terms of this new agreement, authorized customers continue to utilize airtime services, provided through theU.S.the U.S. Department of Defense’s (“DoD”) dedicated gateway. These services include unlimited global secure and unsecure voice, low and high-speed data, paging, broadcast and Netted IridiumDistributed Tactical Communications Services (“DTCS”) services for an unlimited number of DoD and other federal subscribers. The fixed-price rates in each ofrate for the fiveremaining contract years,year, which run from October 22runs through the following October 21, of each year, are $64 million and $72 million in years one and two, respectively, and2018, is $88 million in each of the years three through five.per year. Under this contract, revenue is based on the annual fee for the fixed-price contract with unlimited subscribers, and is recognized on a straight-line basis over each contractual year.

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

Government engineering and support services

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

Other government and commercial engineering and support services

The Company also provides engineering services to assist customers in developing new technologies for use on the Company’s satellite system. The revenue associated with these services is recorded when the services are rendered, typically on a partialproportional performance method of accounting based on the Company’s estimate of total costs expected to complete the contract, and the related costs are expensed as incurred. Revenue on cost-plus-fixed-fee contracts is recognized to the extent of estimated costs incurred plus the applicable fees earned. The Company considers fixed fees under cost-plus-fixed-fee contracts to be earned in proportion to the allowable costs incurred in performance of the contract. The portion of revenue on research and development arrangements that is contingent upon the achievement of substantive milestone events is recognized in the period in which the milestone is achieved.

Warranty Expense

The Company provides the first end-user purchaser of its subscriber equipment a warranty for one to five years from the date of purchase by such first end-user, depending on the product. The Company maintains a warranty reserve based on historical experience of warranty costs and expected occurrences of warranty claims on equipment. Costs associated with warranties, including equipment replacements, repairs, freight, and program administration, are recorded as cost of subscriber equipment in the accompanying consolidated statements of operations and comprehensive income. The Company experienced a $5.3 million decrease in its warranty provision for the year ended December 31, 2014 compared to the prior year. This decrease is primarily the result of fewer expected returns for the Iridium Pilot^® sold in 2014 and decreased average repair costs, partially offset by $1.8 million in warranty-related initiatives for the Iridium OpenPort models sold in prior years.

Changes in the warranty reserve for the years ended December 31, 2014 and 2013 were as follows:

		2014				2013
		(In thousands)
Balance at beginning of the period		$	8,853			$	4,050
Provision			6,390				11,690
Utilization			(7,862	)			(6,887	)
Balance at end of the period		$	7,381			$	8,853

Research and Development

Research and development costs are charged to expense in the period in which they are incurred.

Advertising Costs

Costs associated with advertising and promotions are expensed as incurred. Advertising expenses were $0.3 million, $0.5 million and $0.5 million for the years ended 2014, 2013December 31, 2017, 2016 and 2012.

2015, respectively.

Income Taxes

The Company accounts for income taxes using the asset and liability approach, which requires the recognition of tax benefits or expenses for temporary differences between the financial reporting and tax bases of assets and liabilities. A valuation allowance is established when necessary to reduce deferred tax assets to the amounts expected to be realized. The Company also recognizes a tax benefit from uncertain tax positions only if it is “more likely than not” that the position is sustainable based on its technical merits. The Company’s policy is to recognize interest and penalties on uncertain tax positions as a component of income tax expense.

Net Income (Loss) Per Share

The Company calculates basic net income (loss) per share by dividing net income available(loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share takes into account the effect of potential dilutive common shares when the effect is dilutive. The effect of potential dilutive common shares, including common stock issuable upon exercise of outstanding stock options, and stock purchase warrants, is computed using the treasury stock method. The effect of potential dilutive common shares from the conversion of the outstanding convertible preferred securities is computed using the as-if converted method at the stated conversion rate. The Company’s unvested RSUsrestricted stock units ("RSUs") awarded to the board of directors contain non-forfeitable rights to dividends and therefore are considered to be participating securities in periods of net income. The calculation of basic and diluted net income (loss) per share excludes net income attributable to thethese unvested RSUs from the numerator and excludes the impact of these unvested RSUs from the denominator.

3. Cash and Cash Equivalents and Marketable Securities

Cash and Cash Equivalents

The following tablesummarizes the Company’s cash and cash equivalents asequivalents:

	Year Ended December 31,
	2017				2016				Recurring Fair Value Measurement
	(In thousands)
Cash and cash equivalents:
Cash	$	24,092			$	102,194
Money market funds	251,950				266,478				Level 1
Commercial paper	9,831				2,495				Level 2
Total cash and cash equivalents	$	285,873			$	371,167

Restricted Cash

The Company is required to maintain a minimum cash reserve for debt service related to its $1.8 billion loan facility (as amended to date, the “Credit Facility”) (see Note 5 for additional information). As of December 31, 20142017 and 2013:

										Recurring Fair
		2014				2013				Value Measurement
		(in thousands)
Cash and cash equivalents:
Cash		$	86,792			$	86,074
Money market funds			105,497				88,769			Level 1
Commercial paper			18,960				11,499			Level 2
Total Cash and cash equivalents		$	211,249			$	186,342

2016, the Company’s restricted cash balance, which includes a minimum cash reserve for debt service related to the Credit Facility and the interest earned on these amounts, was $102.4 million and $113.1 million, respectively.

Marketable Securities

The following table summarizestables summarize the Company’s marketable securities as of December 31, 2014 and 2013:

		As of December 31, 2014
		Amortized				Gross				Gross				Estimated				Recurring Fair
		Cost				Unrealized Gains				Unrealized Losses				Fair Value				Value Measurement
		(in thousands)
Fixed-income debt securities		$	168,960			$	397			$	(314	)		$	169,043			Level 2
Commercial paper			78,915				-				-				78,915			Level 2
U.S. Treasury Notes			13,127				53				(2	)			13,178			Level 2
Total Marketable Securities		$	261,002			$	450			$	(316	)		$	261,136

		As of December 31, 2013
		Amortized				Gross				Gross				Estimated				Recurring Fair
		Cost				Unrealized Gains				Unrealized Losses				Fair Value				Value Measurement
		(in thousands)
Fixed-income debt securities		$	57,048			$	45			$	(61	)		$	57,032			Level 2
Commercial paper			19,615				-				-				19,615			Level 2
Total Marketable Securities		$	76,663			$	45			$	(61	)		$	76,647

securities:

	December 31, 2017
	Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Estimated Fair Value				Recurring Fair Value Measurement
	(In thousands)
Fixed-income debt securities	$	9,520			$	2			$	(15	)		$	9,507			Level 2
U.S. Treasury notes	2,249				—				(3		)		2,246				Level 2
Total marketable securities	$	11,769			$	2			$	(18	)		$	11,753

	December 31, 2016
	Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Estimated Fair Value				Recurring Fair Value Measurement
	(In thousands)
Fixed-income debt securities	$	30,037			$	14			$	(11	)		$	30,040			Level 2
U.S. Treasury notes	9,283				7				(2		)		9,288				Level 2
Total marketable securities	$	39,320			$	21			$	(13	)		$	39,328

The following table presents the contractual maturities of the fixed income debt securities, commercial paper and U.S. treasury notes held as of December 31, 2014 and 2013:

		As of December 31, 2014								As of December 31, 2013
		Amortized				Fair				Amortized				Fair
		Cost				Value				Cost				Value
		(in thousands)
Mature within one year		$	177,011			$	177,145			$	25,527			$	25,527
Mature after one year and within three years			83,991				83,991				51,136				51,120
Total		$	261,002			$	261,136			$	76,663			$	76,647

Treasury notes:

	December 31, 2017								December 31, 2016
	Amortized Cost				Fair Value				Amortized Cost				Fair Value
	(In thousands)								(In thousands)
Mature within one year	$	11,519			$	11,504			$	32,776			$	32,788
Mature after one year and within three years	250				249				6,544				6,540
Total	$	11,769			$	11,753			$	39,320			$	39,328

The increasedecrease in marketable securities from December 31, 20132016 to December 31, 20142017 is due to the investmentCompany selling some of its investments during 2017 and utilizing the proceeds fromto support the saleconstruction of the Company’s common stock and 6.75% Series B Cumulative Perpetual Convertible Preferred Stock (the “Series B Preferred Stock”). For further discussion of the Company’s equity transactions, see the Equity Transactions and Instruments footnote below.

74

Iridium NEXT.

4. Equity Transactions and Instruments

$7.00 Warrants

In connection with the Company’s initial public offering in February 2008, the Company sold 40.0 million units at a price of $10.00 per unit. Each unit consisted of one share of common stock and one common stock purchase warrant (a “$7.00 Warrant”). Each $7.00 Warrant entitled the holder to purchase from the Company one share of common stock at a price of $7.00 per share. On February 14, 2013, the remaining 655,499 outstanding and unexercised $7.00 Warrants expired in accordance with their terms.

$11.50 Warrants

On September 29, 2009, in connection with the Company’s acquisition of Iridium Holdings LLC, holders of approximately 14.4 million $7.00 Warrants exchanged their existing warrants for new warrants to purchase the Company’s common stock at an exercise price of $11.50 per share (the “$11.50 Warrants”). Each $11.50 Warrant entitled the holder to purchase from the Company one share of common stock at a price of $11.50 per share. As of December 31, 2014, 277,021 of the $11.50 Warrants were outstanding. On February 14, 2015, the remaining 277,021 outstanding and unexercised $11.50 Warrants expired in accordance with their terms.

Preferred Stock

The Company is authorized to issue 2.0 million shares of preferred stock with a par value of $0.0001 per share. As described below, the Company issued 1.0 million shares of preferred stock in the fourth quarter of 2012 and 0.5 million shares of preferred stock in the second quarter of 2014. The remaining 0.5 million authorized shares of preferred stock remainwere undesignated and unissued as of December 31, 2014.

2017.

Series A Cumulative Perpetual Convertible Preferred Stock

In the fourth quarter of 2012, the Company issued 1.0 million shares of its 7.00% Series A Cumulative Perpetual Convertible Preferred Stock (the “Series A Preferred Stock”) in a private offering. The Company received proceeds of $96.5 million from the sale of the Series A Preferred Stock, net of the aggregate $3.5 million in initial purchaser discount and offering costs. The net proceeds of this offering are beingwere used to partially fund the construction and deployment of Iridium NEXT and for other general corporate purposes.

Holders of Series A Preferred Stock are entitled to receive cumulative cash dividends at a rate of 7.00% per annum of the $100 liquidation preference per share (equivalent to an annual rate of $7.00 per share). Dividends are payable quarterly in arrears on each March 15, June 15, September 15 and December 15. The Series A Preferred Stock does not have a stated maturity date and is not subject to any sinking fund or mandatory redemption provisions. The Series A Preferred Stock ranks senior to the Company’s common stock and on parity with the Company’s 6.75% Series B Cumulative Perpetual Convertible Preferred Stock with respect to dividend rights and rights upon the Company’s liquidation, dissolution or winding-up. Holders of Series A Preferred Stock generally have no voting rights except for limited voting rights if the Company fails to pay dividends for six or more quarterly periods (whether or not consecutive) and in other specified circumstances. Holders of Series A Preferred Stock may convert some or all of their outstanding Series A Preferred Stock at an initial conversion rate of 10.6022 shares of common stock per $100 liquidation preference, which is equivalent to an initial conversion price of approximately $9.43 per share of common stock (subject to adjustment in certain events).

In 2014 and 2013,

The Credit Facility prohibits the Company paid $7.0 million in cashfrom paying dividends to the holders of the Company's preferred stock, including the Company's Series A Preferred Stock, if the Company is unable to certify that it anticipates being able to comply with the financial covenants of the Credit Facility for the next twelve months each time the Company declares a dividend. During the second quarter of 2017, the Company began a five-quarter deferral of dividends on the Series A Preferred Stock. AsCash dividends of $1.8 million were declared and paid to holders of the Series A Preferred Stock during the first quarter of 2017. No other dividends were declared, paid or accrued. During the year ended December 31, 2014,2016, the Company has accrued $0.3 million inpaid cash dividends of $7.0 million to holders of the Series A Preferred Stock.

If the Company does not pay dividends on its preferred stock for six quarterly periods (whether or not consecutive), the holders of the Series A Preferred Stock which is included withinand Series B Preferred Stock collectively will have the power to elect two members of the Company's board of directors. The interests of the holders of the Company's preferred stock may differ from those of its other stockholders. In addition, any dividend the Company fails to pay will accrue, and the holders of the Company's Series A Preferred Stock and Series B Preferred Stock will be entitled to a preferential distribution of the original purchase price per share plus all accrued expenses and other current liabilities onunpaid dividends before any distribution may be made to holders of the accompanying consolidated balance sheet.

On or afterCompany's common stock in connection with any liquidation event.

As of October 3, 2017, the Company may, at its option, convert some or all of the Series A Preferred Stock into the number of shares of common stock that are issuable at the then-applicable conversion rate, subject to specified conditions. On or prior to October 3, 2017,conditions, including a daily volume-weighted average stock price of at least $12.26 per share over a period of 20 trading days in a 30-day period and payment of the accrued dividends. The holders of Series A Preferred Stock will havehad a special right to convert some or all of the Series A Preferred Stock into shares of common stock, inwhich expired on October 3, 2017. Any suspended dividends are required to be paid prior to conversion by the event of fundamental changes described in the Certificate of Designations for the Series A Preferred Stock, subject to specified conditions and limitations. In certain circumstances, the Company may also elect to settle conversions in cash as a result of these fundamental changes.

Company.

Series B Cumulative Perpetual Convertible Preferred Stock

In May 2014, the Company issued 500,000 shares of its Series B Preferred Stock in an underwritten public offering at a price to the public of $250 per share. The purchase price received by the Company, equal to $242.50 per share, reflected an

underwriting discount of $7.50 per share. The Company received proceeds of $120.8 million from the sale of the Series B Preferred Stock, net of the $3.8 million underwriting discount and $0.4 million of offering costs.

Holders of Series B Preferred Stock are entitled to receive cumulative cash dividends at a rate of 6.75% per annum of the $250 liquidation preference per share (equivalent to an annual rate of $16.875 per share). Dividends are payable quarterly in arrears on each March 15, June 15, September 15 and December 15, beginning September 15, 2014.15. The Series B Preferred Stock does not have a stated maturity date and is not subject to any sinking fund or mandatory redemption provisions. The Series B Preferred Stock ranks senior to the Company’s common stock and pari passu with respect to the Company’s Series A Preferred Stock with respect to dividend rights and rights upon the Company’s voluntary or involuntary liquidation, dissolution or winding-up. Holders of Series B Preferred Stock generally have no voting rights except for limited voting rights if the Company fails to pay dividends for six or more quarterly periods (whether or not consecutive) and in other specified circumstances. Holders of Series B Preferred Stock may convert some or all of their outstanding Series B Preferred Stock at an initial conversion rate of 33.456 shares of common stock per $250 liquidation preference, which is equivalent to an initial conversion price of approximately $7.47 per share of common stock (subject to adjustment in certain events).

During 2014,

The Credit Facility prohibits the Company paid cashfrom paying dividends of $5.0 million to the holders of the Company's preferred stock, including the Company's Series B Preferred Stock, if the Company is unable to certify that it anticipates being able to comply with the financial covenants of the Credit Facility for the next twelve months each time the Company declares a dividend. During the second quarter of 2017, the Company began a five-quarter deferral of dividends on the Series B Preferred Stock. AsCash dividends of December 31, 2014, the Company has accrued $0.4$2.1 million in cash dividends for thewere declared and paid to holders of the Series B Preferred Stock which is included withinduring the first quarter of 2017. No other dividends were declared, paid or accrued. During the year ended December 31, 2016, the Company paid cash dividends of $8.4 million to holders of the Series B Preferred Stock.

If the Company does not pay dividends on its preferred stock for six quarterly periods (whether or not consecutive), the holders of the Series A Preferred Stock and Series B Preferred Stock collectively will have the power to elect two members of the Company's board of directors. The interests of the holders of the Company's preferred stock may differ from those of its other stockholders. In addition, any dividend the Company fails to pay will accrue, and the holders of the Company's Series A Preferred Stock and Series B Preferred Stock will be entitled to a preferential distribution of the original purchase price per share plus all accrued expenses and other current liabilities onunpaid dividends before any distribution may be made to holders of the accompanying consolidated balance sheet.

Company's common stock in connection with any liquidation event.

On or after May 15, 2019, the Company may, at its option, convert some or all of the Series B Preferred Stock into the number of shares of common stock that are issuable at the then-applicable conversion rate, subject to specified conditions. On or prior to May 15, 2019, inIn the event of certain specified fundamental changes, holders of the Series B Preferred Stock will have the right to convert some or all of their shares of Series B Preferred Stock into the greater of (i) a number of shares of the Company’s common stock as subject to adjustment plus the make-whole premium, if any, and (ii) a number of shares of the Company’s common stock equal to the lesser of (a) the liquidation preference divided by the market value of the Company’s common stock on the effective date of such fundamental change and (b) 81.9672 (subject to adjustment). In certain circumstances, the Company may elect to cash settle any conversions in connection with a fundamental change.

Common Stock

Registered Direct Public Offering

In May 2014, Any suspended dividends are required to be paid prior to conversion by the Company issued 7,692,308 shares of its common stock in a registered direct public offering to certain investment funds affiliated with Baron Capital Group Inc. (“Baron”) at a price of $6.50 per share for aggregate gross proceeds of $50.0 million. The Company received proceeds of $49.9 million from the sale of the common stock to Baron, net of offering costs of $0.1 million.

Under the stock purchase agreement entered into with Baron, Baron was entitled to receive additional shares if, during the 90-day period following the date of the stock purchase agreement, the Company issued or sold securities below specified prices. As a result of the Company’s public offering of common stock, described below, and its public offering of Series B Preferred Stock, described above, the Company delivered 504,413 additional shares of common stock to Baron on August 6, 2014.

Underwritten Public Offering

Concurrently with its public offering of Series B Preferred Stock in May 2014, the Company issued 8,483,608 shares of its common stock in an underwritten public offering, including 1,106,558 shares upon the underwriters’ exercise of their overallotment option in full, at a price to the public of $6.10 per share. The Company received proceeds of $49.0 million, net of $2.6 million of underwriting discount and $0.2 million of offering costs.

The net proceeds of these common stock offerings and the Series B Preferred Stock offering are being used to partially fund the construction and deployment of Iridium NEXT and for other general corporate purposes.

Company.

5. Debt

Credit Facility

In October 2010, the Company entered into thea $1.8 billion Credit Facilitycredit facility with a syndicate of bank lenders, (the “Lenders”). The Credit Facilitywhich was subsequently amended and restated in August 2012. In May 2014, the Company entered intoJuly 2017 by a supplemental agreement (the “Supplemental Agreement”) with the Lenders under the Credit Facility to further amend and restate the Credit Facility.agreement. Ninety-five percent of the Company’sCompany's obligations under the Credit Facility are insured by Compagnie Française d’Assurance pour le Commerce Extérieur (“COFACE”Bpifrance Assurance Export S.A.S. ("BPIAE"),. Under the French export credit agency.terms of the Credit Facility, the Company was required to maintain a minimum cash reserve for debt service ("DSRA") of $102.0 million as of December 31, 2017, which increases to $189.0 million in 2019, and is classified as restricted cash on the accompanying consolidated balance sheet. The Credit Facility is comprisedwill mature in 2024.

As amended to date, the Credit Facility delays, until March 2019, $54.0 million in contributions that the Company was previously scheduled to make during 2017 to the DSRA, and the Company was refunded $33.0 million of two tranches, with drawsthe contributions to the DSRA that the Company has made to date. In addition, in the event that the Company's projected Available Cash (as defined in the Credit Facility) falls below $35.0 million on a three-month forward-looking basis between now and repayments appliedMarch 2019, the Company will receive a refund of an additional $11.0 million in contributions made to date. The Credit Facility also requires that the Company establish a new restricted account to receive hosting fees from Aireon. The first $50.0 million in hosting fees from Aireon would be kept in the restricted account and the Company could access these funds in the event that

the Company falls below the same $35.0 million three-month forward-looking Available Cash threshold through March 2019 described above. Hosting fees from Aireon in excess of $50.0 million would be distributed pro rata in respectto replenish the DSRA and to secure the payment of each tranche:

Tranche A – $1,537,500,000 at a fixed ratethe bills of 4.96%; andexchange to Thales.

Tranche B – $262,500,000 at a floating rate equal

The amendments to the London Interbank Offer Rate (“LIBOR”) plus 1.95%.Credit Facility do not require the Company to raise additional equity but requires that the Company suspend the payment of dividends on the Company's 7% Series A Cumulative Perpetual Convertible Preferred Stock and the Company's 6.75% Series B Cumulative Perpetual Convertible Preferred Stock for five quarters. As previously announced, in anticipation of this requirement, the Company began this suspension with the dividend payments payable on June 15, 2017. The Credit Facility also includes revised financial covenant levels to reflect changing business conditions.

Interest is payable

Prior to the Credit Facility being fully drawn, the Company paid interest on the outstanding principal balance under the Credit Facility on a semi-annual basis in April and October through a combination of each year. Prior to thea cash payment and a deemed additional loan. The Credit Facility was fully drawn in February 2017, and as of April 2017, interest was being paid in cash. Scheduled semi-annual principal repayments will begin on April 3, 2018. During this repayment period, described below, a portion of interest will be paid via a deemed loan and added toon the related tranchesame date as the principal and the remainder is payable in cash. The amount of interest paid via a deemed loan for each tranche is as follows:

Tranche A – fixed rate of 3.56%; and

Tranche B – LIBOR plus 0.55%.

repayments. For the years ended December 31, 2014, 20132017, 2016 and 2012,2015, the Company incurred total interest of $50.8$86.7 million, $39.6$77.7 million and $25.5$64.6 million, respectively. All interest costs incurred related to the Credit Facility have been capitalized during the construction period of the Iridium NEXT assets. During the years ended December 31, 2016 and 2015, interest was payable via deemed loans of $44.4 million and $44.9 million, respectively, of which $35.3 million, $27.5 million and $17.8 million, respectively, is payable via a deemed loan andwith the remainder is payable in cash on the scheduled semi-annual payment dates.

No deemed loans were utilized for interest incurred during the year ended December 31, 2017. Interest payable as of December 31, 2017 and 2016 was $15.0 million and $14.1 million, respectively.

In connection with each draw it makesmade under the Credit Facility, the Company also borrowsborrowed an amount equal to 6.49% of such draw to cover the premium for the COFACEBPIAE insurance policy. The Company also payspaid a commitment fee of 0.80% per year, in semi-annual installments, on any undrawn portion of the Credit Facility.

FundsFacility through February 2017, when the Credit Facility was fully drawn.

Through February 2017, funds drawn under the Credit Facility will bewere used to pay for (i) 85% of the costs under a fixed price full scale development ("FSD") contract (the “FSD”) with Thales Alenia Space France (“Thales”("Thales") for the design and manufacture of satellites for Iridium NEXT, until the Credit Facility is fully drawn (ii) the premium for the COFACEBPI policy, and (iii) the payment of a portion of interest during a part of the construction and launch phase of Iridium NEXT.

Scheduled semi-annual principal repayments will begin six months after the earlier of (i) the successful deployment of a specified number of Iridium NEXT satellites or (ii) September 30, 2017. During this repayment period, interest will be paid on the same date as the principal repayments. All interest costs incurred related to the Credit Facility have been capitalized during the construction period of the assets. The Company pays interest on each semi-annual due date through a combination of a cash payment and a deemed additional loan. The following table presents interest activity for the Credit Facility for the years ended December 31, 2014 and 2013 payable via cash or deemed loan:

		2014
		Cash				Deemed Loan				Total
		(in thousands)
Beginning interest payable		$	2,446			$	5,543			$	7,989
Interest incurred			15,499				35,257				50,756
Interest payments			(15,009	)			(34,147	)			(49,156	)
Ending interest payable		$	2,936			$	6,653			$	9,589

		2013
		Cash				Deemed Loan				Total
		(in thousands)
Beginning interest payable		$	1,630			$	3,735			$	5,365
Interest incurred			12,071				27,523				39,594
Interest payments			(11,255	)			(25,715	)			(36,970	)
Ending interest payable		$	2,446			$	5,543			$	7,989

As of December 31, 2014,2017, the Company had borrowed a total of $1,291.4 million$1.8 billion under the Credit Facility. The unused portionrepayment schedule below excludes $120.0 million that the Company expects to receive upon the Aireon redemption of Iridium's equity interest in Aireon and Aireon dividends, when and if declared. Upon receipt of these amounts, they will be used to prepay the Credit Facility which may result in an earlier repayment. Future principal repayments with respect to the Credit Facility balance existing at December 31, 2017 by year and in the aggregate, are as follows:

Year ending December 31,		Amount
		(In thousands)
2018		$	85,500
2019		202,500
2020		288,000
2021		306,000
2022		306,000
Thereafter		612,000
Total debt commitments		$	1,800,000
Original issuance discount		96,445
Total short-term debt		85,500
Total long-term debt, net		$	1,618,055

The effective interest rate on outstanding principal of the Credit Facility as of December 31, 2014 was $508.6 million. Under the terms of the Credit Facility, the Company is required to maintain a minimum cash reserve for debt service of $86.0 million as of December 31, 2014, which is classified as restricted cash on the accompanying consolidated balance sheet. The Company recognized the semi-annual commitment fee on the undrawn portion of the Credit Facility of $5.8 million, $7.7 million and $10.2 million forduring the years ended December 31, 2014, 20132017, 2016 and 2012,2015 were 6.64%, 6.65% and 6.57%, respectively.

The Credit Facility will mature seven years after the start of the repayment period. In addition, the Company is required to maintain minimum debt service reserve levels, which are estimated as follows:

At December 31,		Amount
		(in millions)
2015		$	91
2016			113
2017			189

These levels may be higher once the Company begins repayment under the Credit Facility.

Obligations under the Credit Facility are secured on a senior basis by a lien on substantially all of the Company’s assets. In addition to the minimum debt service reserveDSRA levels, financial covenants under the Credit Facility include:

·

an available cash balance of at least $25 million;

·

a debt-to-equity ratio, which is calculated as the ratio of total net debt to the aggregate of total net debt and total stockholders’ equity, of no more than 0.7 to 1, measured each June 30 and December 31;

·

specified maximum levels of annual capital expenditures (excluding expenditures on the construction of Iridium NEXT satellites) through the year ending December 31, 2024;

·

specified minimum levels of consolidated operational earnings before interest, taxes, depreciation and amortization, or operational EBITDA, for the 12-month periods ending each December 31 and June 30 through December 31, 2017;

·

specified minimum cumulative cash flow requirements from customers who have hosted payloads on our satellites, measured each December 31 and June 30, from June 30, 2016 through December 31, 2017;

·

a debt service coverage ratio, measured during the repayment period, of not less than 1 to 1.5; and

·

specified maximum leverage levels during the repayment period that decline from a ratio of 4.73 to 1 for the twelve months ending June 30, 2018 to a ratio of 2.36 to 1 for the twelve months ending December 31, 2024.

an available cash balance of at least $25 million;

a debt-to-equity ratio, which is calculated as the ratio of total net debt to the aggregate of total net debt and total stockholders’ equity, of no more than 0.7 to 1, measured each June 30 and December 31;

specified maximum levels of annual capital expenditures (excluding expenditures on the construction of Iridium NEXT satellites) through the year ending December 31, 2024;

specified minimum levels of consolidated operational earnings before interest, taxes, depreciation and amortization, or operational EBITDA, for the 12-month periods ending each December 31 and June 30 through December 31, 2017;

specified minimum cumulative cash flow requirements from customers who have hosted payloads on the Company’s satellites, measured each December 31 and June 30, from June 30, 2017 through December 31, 2019;

a debt service coverage ratio, measured during the repayment period, of not less than 1 to 1.5; and

specified maximum leverage levels during the repayment period that decline from a ratio of 7.53 to 1 for the twelve months ending June 30, 2018 to a ratio of 2.36 to 1 for the twelve months ending December 31, 2024; and

a requirement that we receive at least $50,000,000 in hosting fees from Aireon by September 30, 2018.

The Company’s available cash balance, as defined by the Credit Facility, was $290.2$291.9 million as of December 31, 2014.2017. The Company’s debt-to-equity ratio was 0.470.5 to 1 as of December 31, 2014.2017. The Company was in compliance with the operational EBITDA covenant, and the annual capital expenditure covenant and the cumulative cash flow requirements from customers who have hosted payloads covenant, which were the only other applicable covenants, as of December 31, 2014.

2017.

The covenants regarding capital expenditures, operational EBITDA and hosted payload cash flows are calculated in connection with a measurement, which the Company refers to as available cure amount, that is derived using a complex calculation based on overall cash flows, as adjusted by numerous measures specified in the Credit Facility. In a period in which the Company’s capital expenditures exceed, or the Company’s operational EBITDA or hosted payload cash flows falls short of, the amount specified in the respective covenant, the Company would be permitted to allocate available cure amount, if any, to prevent a breach of the applicable covenant. As of December 31, 2014,2017, the Company had an amount of $8.1 million in available cure, amount of $7.5 million, thoughalthough it was not requirednecessary to apply any available cure amount to maintain compliance with the covenants. The available cure amount has fluctuated significantly from one measurement period to the next, and the Company expects that it will continue to do so.

The covenants also place limitations on the Company’s ability and that of its subsidiaries to carry out mergers and acquisitions, dispose of assets, grant security interests, declare, make or pay dividends, enter into transactions with affiliates, fund payments under the FSD with Thales from its own resources, incur additional indebtedness, or make loans, guarantees or indemnities. If the Company is not in compliance with the financial covenants under the Credit Facility, after any opportunity to cure such non-compliance, or the Company otherwise experiences an event of default under the Credit Facility, the lenders may require repayment in full of all principal and interest outstanding under the Credit Facility. It is unlikely the Company would have adequate funds to repay such amounts prior to the scheduled maturity of the Credit Facility. If the Company fails to repay such amounts, the lenders may foreclose on the assets the Company has pledged under the Credit Facility, which include substantially all of its assets and those of its domestic subsidiaries.

Pursuant to the Company’s hosting agreement with Aireon LLC, Aireon is obligated to pay the Company $200 million for the placement of the Aireon payload on each of the Iridium NEXT satellites. The Supplemental Agreement includes revised financial covenant levels. Company expects those hosted payload payments to continue to be delayed. Aireon is working to secure additional contracts with air navigation service providers, or ANSPs, including the FAA, for the sale of Aireon’s space-based automatic dependent surveillance-broadcast, or ADS-B, services. Aireon is currently seeking to raise the capital it will need to fund its continued operations and its hosted payload payments to the Company. Aireon’s ability to fund its hosted payload payments to the Company in the previously anticipated timeframe has been adversely affected by delays in its completion of sales to these ANSPs.

The Supplemental Agreement also delays, until 2017,Company continues to expect partial payments of Aireon’s hosting fee upon successful completion of its financing, and further payments based on success-based milestones. However, the expected timing of these payments does not support the Company’s ability to make principal and interest payments under its Credit Facility due in late 2018 and early 2019, as well as payment of deferred payments to Thales and deferred contributions to the DSRA, both due March 31, 2019. Further, if Aireon is unable to complete its financing and make a partial hosting payment to the Company in the timeframe it currently expects, the Company may be unable to make its principal and interest payments under its Credit Facility due in late 2018. To provide for these obligations and further solidify the Company’s liquidity position, the Company has been actively discussing alternative funding options with its Credit Facility lenders and believes it has reached an agreement in principle with its Credit Facility lenders pursuant to which the Company would be required to raise additional capital in the form of debt securities by July 2018. The proceeds of these debt securities would be used to fund the deferred payments to Thales and replenish the DSRA under the Credit Facility, as well as to provide the Company with sufficient cash to meet its needs, including principal and interest payments under its Credit Facility. In addition, the Credit Facility lenders would agree to delay a portion of the contributions thatprincipal repayments under the Credit Facility, allow the Company had been scheduled to make during 2014, 2015access up to $87 million from the DSRA in the future if the Company’s projected cash level falls below $75 million, and 2016adjust the Company's financial covenants, including eliminating further covenants that require it to the debt service reserve account thatreceive cash flows from hosted payloads. Under this anticipated agreement, the Company iswould be required to maintain underuse hosting fee payments received from Aireon to prepay the Credit Facility. The Supplemental Agreement delays $22 millionCompany’s ability to successfully execute these plans may be adversely affected by a number of factors, including global economic conditions, the state of the Company’s 2014 contributions, $22 million ofcapital markets when the Company’s 2015 contributionsCompany is ready to issue the debt, and $32 million of the Company’s 2016 contributions, for a total of $76 million. As of March 31, 2014, priorinability to the execution of the Supplemental Agreement, the minimum required cash reserve balance was $94.5 million. As of June 30, 2014 after the execution of the Supplemental Agreement, the minimum required cash reserve balance was reduced to $83.5 million. As a result of this reduction, $11.0 million was released from restricted cashissue debt securities on terms acceptable to the Company duringor at all. Any inability to successfully execute these plans may in turn materially affect the three months ended June 30, 2014. In accordance withCompany's liquidity, and its ability to complete the Supplemental Agreement, as of December 31, 2014,Iridium NEXT system and to pursue additional growth opportunities may be impaired. The Company’s liquidity and the minimum cash reserve for debt service was $86.0 million and was maintained and classified as restricted cashability to fund its liquidity requirements also depend on the accompanying consolidated balance sheet.

Company’s future financial performance, which is subject to general economic, financial, regulatory and other factors that are beyond the Company’s control.

The Company believes thatits liquidity sources will provide sufficient funds for the Companyit to meet its liquidity requirements for at least the next twelve months.

78

12 months, provided the Company executes the proposed adjustments to its funding plan or receives a substantial portion of the hosting fees due to the Company from Aireon.

6. Boeing Operations and Maintenance (O&M) Agreements

On July 21, 2010, the Company and Boeing entered into an operations and maintenance agreement ("the O&M Agreement,Agreement"), pursuant to which Boeing agreed to provide transition services and continuing steady-state operations and maintenance services with respect to the satellite network operations center, telemetry, tracking and control stations and the on-orbitfirst-generation satellites (including engineering, systems analysis, and operations and maintenance services). Pursuant to the O&M Agreement, each of Boeing, Motorola Solutions and the U.S. government has the unilateral right to commence the de-orbit of the constellation upon the occurrence of certain enumerated events.

The O&M Agreement incorporates a de-orbit plan, which, if exercised, would cost approximately $18.0 million plus an amount equivalent to the premium of the mass de-orbit insurance coverage to be paid to Boeing in the event of a mass de-orbit of the satellite constellation. On

Also on July 21, 2010, the Company and Boeing entered into an agreement pursuant to which Boeing willwould operate and maintain Iridium NEXT (the “Iridium NEXT Support Services Agreement”). Boeing will provide these services on a time-and-materials fee basis. The term of the NEXT Support Services Agreement runs concurrently with the estimated useful life of the Iridium NEXT constellation. The Company is entitled to terminate the agreement for convenience and without cause commencing in 2019.

As ofOn January 1, 2015, Boeing supportssupported a hybrid operations mode involving network elements from both the original Iridium systemfirst-generation satellites and the Iridium NEXT system. Boeing provided those services on a time-and-materials fee basis. Obligations to Boeing representrepresented the not to exceed (the “NTE)(“NTE”) price for O&M services for 2015 under the Company’s Iridium NEXT Support Services Agreement.

On November 28, 2016, the Company entered into an Insourcing Agreement with Boeing. Boeing isfor the exclusive provider forCompany to hire, effective January 3, 2017, the majority of O&M services through the endBoeing employees and third-party contractors who were responsible for the operations and maintenance of the Iridium NEXT useful life, subjectCompany’s satellite constellation and ground infrastructure. Pursuant to the Company’s rightInsourcing Agreement, the Company was obligated to issue work to a third party in accordancepay Boeing $5.5 million, half of which was paid during each of the years ended December 31, 2016 and 2017. Concurrent with certain provisions in the agreement. Annually,hiring of the assembled workforce on January 3, 2017, the Company and Boeing terminated both the O&M Agreement and the Iridium NEXT Support Service Agreement and entered into a new Development Services Agreement ("DSA") with a $6.0 million annual take-or-pay commitment through 2021. As a result of the termination of certain Boeing agreements under the Insourcing Agreement, Boeing no longer has a unilateral right to commence the de-orbit of the Company’s first-generation satellites. The assembled workforce was recorded as a finite-lived intangible asset in the first quarter of 2017 and will agree uponbe amortized over an estimated useful life of 7 years. Additionally, by terminating the NTE price for each year.

O&M Agreement, the Company recognized a $14.2 million gain from the derecognition of a purchase accounting liability created from GHL’s acquisition of Iridium in 2009 related to the fair value of the contractual arrangement with Boeing as of that date and the remainder of a credit from Boeing in the July 2010 Boeing O&M contract negotiations.

The Company incurred expenses of $30.7$30.5 million, $30.1$29.0 million and $31.9$30.7 million relating to satellite operations and maintenance costs, which include internal costs and amounts paid to Boeing, for the years ended December 31, 2014, 20132017, 2016 and 2012,2015, respectively, included in cost of services (exclusive of depreciation and amortization) in the consolidated statements of operations and comprehensive income.

7. Property and Equipment

Property and equipment consisted of the following at December 31:

		2014				2013
		(In thousands)
Satellite system		$	323,607			$	337,677
Ground system			41,365				41,247
Equipment			26,961				25,019
Internally developed software and purchased software			95,406				68,141
Building and leasehold improvements			29,980				28,063
			517,319				500,147
Less: accumulated depreciation			(339,155	)			(296,716	)
			178,164				203,431
Land			8,037				8,037
Construction in process:
Iridium NEXT systems under construction			1,755,974				1,341,148
Other construction in process			29,664				22,963
Total property and equipment, net of accumulated depreciation		$	1,971,839			$	1,575,579

following:

	December 31,
	2017				2016
	(In thousands)
Satellite system	$	1,199,794			$	314,228
Ground system	67,576				63,519
Equipment	35,616				34,139
Internally developed software and purchased software	191,089				127,498
Building and leasehold improvements	32,130				32,099
	1,526,205				571,483
Less: accumulated depreciation	(432,833		)		(422,098		)
	1,093,372				149,385
Land	8,037				8,037
Construction in process:
Iridium NEXT systems under construction	2,088,380				2,639,824
Other construction in process	20,373				15,838
Total property and equipment, net of accumulated depreciation	$	3,210,162			$	2,813,084

Other construction in process consisted of the following at December 31:

		2014				2013
		(In thousands)
Internally developed software		$	20,779			$	17,582
Equipment			859				3,684
Ground system			7,862				1,177
Building and leasehold improvements			164				520
Total other construction in process		$	29,664			$	22,963

following:

	December 31,
	2017				2016
	(In thousands)
Internally developed software	$	14,782			$	14,218
Equipment	4,241				1,546
Ground system	1,350				74
Total other construction in process	$	20,373			$	15,838

Depreciation expense for the years ended December 31, 2014, 20132017, 2016 and 20122015 was $62.7$120.7 million, $62.0$48.6 million and $68.1$51.0 million, respectively.

79

The increase in depreciation from 2016 to 2017 partially results from the write-off of $36.8 million previously paid to Kosmotras, and the addition of new assets, including Iridium NEXT satellites placed into service during 2017. See Note 9 for further details on Kosmotras.

8. Intangible Assets

The Company hashad identifiable intangible assets as follows:

		December 31, 2014
		Useful				Gross				Accumulated				Net
		Lives				Carrying Value				Amortization				Carrying Value
	(In thousands)
Indefinite life intangible assets:
Trade names			Indefinite			$	21,195			$	-			$	21,195
Spectrum and licenses			Indefinite				14,030				-				14,030
Total							35,225				-				35,225
Definite life intangible assets:
Customer relationships - government			5 years				20,355				(20,355	)			-
Customer relationships - commercial			5 years				33,052				(33,052	)			-
Core developed technology			5 years				4,842				(4,842	)			-
Intellectual property			16.5 years(1)				16,439				(4,248	)			12,191
Software			5 years				2,025				(2,025	)			-
Total							76,713				(64,522	)			12,191
Total intangible assets						$	111,938			$	(64,522	)		$	47,416

		December 31, 2013
		Useful				Gross				Accumulated				Net
		Lives				Carrying Value				Amortization				Carrying Value
	(In thousands)
Indefinite life intangible assets:
Trade names			Indefinite			$	21,195			$	-			$	21,195
Spectrum and licenses			Indefinite				14,030				-				14,030
Total							35,225				-				35,225
Definite life intangible assets:
Customer relationships - government			5 years				20,355				(17,301	)			3,054
Customer relationships - commercial			5 years				33,052				(28,094	)			4,958
Core developed technology			5 years				4,842				(4,116	)			726
Intellectual property			16.5 years(1)				16,439				(3,253	)			13,186
Software			5 years				2,025				(1,722	)			303
Total							76,713				(54,486	)			22,227
Total intangible assets						$	111,938			$	(54,486	)		$	57,452

(1)

Intellectual property is amortized over the estimated useful life of the existing satellite systems and Iridium NEXT, which averages to 16.5 years.

The weighted average amortization period of intangible assets is 7.5 years.

	December 31, 2017
	Useful Life (years)		Gross Carrying Value				Accumulated Amortization				Net Carrying Value
	(In thousands)
Indefinite life intangible assets:
Trade names	Indefinite		$	21,195			$	—			$	21,195
Spectrum and licenses	Indefinite		14,030				—				14,030
Total			35,225				—				35,225
Definite life intangible assets:
Intellectual property	20 years		16,439				(6,651		)		9,788
Assembled workforce	7 years		5,678				(812		)		4,866
Patents	14 - 20		146				(6		)		140
Total			22,263				(7,469		)		14,794
Total intangible assets			$	57,488			$	(7,469	)		$	50,019

	December 31, 2016
	Useful Life (years)		Gross Carrying Value				Accumulated Amortization				Net Carrying Value
	(In thousands)
Indefinite life intangible assets:
Trade names	Indefinite		$	21,195			$	—			$	21,195
Spectrum and licenses	Indefinite		14,030				—				14,030
Total			35,225				—				35,225
Definite life intangible assets:
Intellectual property	20 years		16,439				(5,868		)		10,571
Total			16,439				(5,868		)		10,571
Total intangible assets			$	51,664			$	(5,868	)		$	45,796

Amortization expense was $10.0$1.6 million, for the year ended December 31, 2014$0.8 million and $13.0$0.8 million for each of the years ended December 31, 20132017, 2016 and 2012.

2015, respectively. See Note 6 for further details on the Boeing assembled workforce, added in 2017.

Future amortization expense with respect to intangible assets existing at December 31, 2014,2017, by year and in the aggregate, is as follows:

Year ending December 31,		Amount
		(In thousands)
2015		$	995
2016			995
2017			995
2018			995
2019			995
Thereafter			7,216
Total estimated future amortization expense		$	12,191

Year ending December 31,		Amount
		(In thousands)
2018		$	1,604
2019		1,604
2020		1,604
2021		1,604
Thereafter		8,378
Total estimated future amortization expense		$	14,794

9. Commitments and Contingencies

Thales

In June 2010, the Company executed a primarily fixed-price full-scale development contract (the “FSD”)FSD with Thales Alenia Space France (“Thales”) for the design and build of satellites for Iridium NEXT, the Company’s next-generation satellite constellation.NEXT. The total price under the FSD is $2.3 billion, and the Company expects payment obligations under the FSD to extend into the first quarter ofthrough 2018. As of December 31, 2014,2017, the Company had made aggregate payments of $1,331.1 million$1.9 billion to Thales, of which $1,129.8 million$1.5 billion were financed from borrowings under the Credit Facility and which were capitalized as construction in progress within property and equipment, net in the accompanying consolidated balance sheet. The Company’s obligations to Thales that are currently scheduled for the years ending December 31, 2015, 2016, 2017 and 2018, are in the amounts of $554.2 million, $136.0 million, $166.7 million and $64.7 million, respectively. The Company currently uses the Credit Facility was fully drawn in February 2017. With the exception of the invoices to pay 85% of each invoice received from Thales under the FSD,be paid with the remaining 15% funded from cash on hand. Once the Credit Facility is fully drawn,bills of exchange described below, the Company expects to pay 100% of each invoice received from Thales from cash and marketable securities on handhand.

On July 26, 2017, the Company entered into Amendments 28 and 29 to its FSD contract. Amendment 28 revised the liquidated damages and other cost provisions regarding delays to the Iridium NEXT program.  Under Amendment 28, the Company agreed with Thales that liquidated damages for Thales production delays to date would be $30.0 million, with this amount to be used only to offset costs otherwise payable by the Company to Thales under the FSD with respect to past and future delays to the launch schedule from causes other than Thales, at agreed upon rates. Any portion of the $30.0 million remaining at the completion of the launch campaign will be forgiven.  Liquidated damages owed to the Company from any future delays caused by Thales will remain payable in cash. Similarly, costs payable by the Company to Thales for non-Thales delays exceeding the $30.0 million will be payable in cash.  Unless there are substantial future delays to the Iridium NEXT program, the Company expects this arrangement will result in no cash payments due to delays by either party.

Amendment 29 provides for the deferral of approximately $100.0 million in milestone payments by the Company under the FSD for milestones that the Company expects to be completed in 2017 and 2018.  Under Amendment 29, the Company makes these milestone payments using bills of exchange due in March 2019, with interest at a specified base rate (LIBOR or SWAP, depending on the term of the bill of exchange) plus 1.4%, with the bills of exchange guaranteed by BPIAE. As of December 31, 2017, the milestone payments related to the Thales bills of exchange totaled an aggregate amount of $55.6 million, including $0.7 million of deferred financing costs. The net balance of $54.9 million was recorded as welllong-term debt within other long-term liabilities in the accompanying condensed consolidated balance sheet as internally generatedof December 31, 2017. Amendment 29 also requires that the Company pay Thales for the BPIAE premium on the guarantee in the amount of $1.0 million in cash flow, including potential cash flows from hosted payloads and Iridium PRIME.

at signing (which was recorded as original issue discount) plus 1.62%.

SpaceX

In March 2010, the Company entered into an agreement with Space Exploration Technologies Corp. (“SpaceX”) to secure SpaceX as the primary launch services provider for Iridium NEXT (as amended to date, the “SpaceX Agreement”). The total price under the SpaceX Agreement for seven7 launches and a reflight option in the event of launch failure is $453.1 million. The SpaceX Falcon 9 rocket is configured to carry ten Iridium NEXT satellites to orbit for each of the initial seven launches. In November 2016, the Company entered into an agreement for an eighth launch with SpaceX to launch five spare satellites and share the launch services with GFZ German Research Centre for Geosciences (“GFZ”). The total price under the SpaceX Agreement for the eighth launch is $67.9 million. GFZ will pay Iridium $31.8 million to share the launch services to launch NASA’s two Gravity Recovery and Climate Experiment Follow-On satellites.  As of December 31, 2014,2017, the Company had made aggregate payments of $152.6$463.9 million to SpaceX, which were capitalized as construction in progress within property and equipment, net in the accompanying consolidated balance sheet. In addition,Additionally, the Company made a $3.0received $28.6 million refundable deposit to SpaceX in the first quarterfrom GFZ as of 2014 for the reservation of additional future launches, which is not included in the total contract price. The Company's obligations to SpaceX under the SpaceX Amendment that are currently scheduled for the years ending December 31, 2015, 2016 and 2017 are in the amounts of $150.0 million, $126.0 million and $24.5 million, respectively.

2017.

Kosmotras

In June 2011, the Company entered into an agreement with International Space Company Kosmotras (“Kosmotras”) as a supplemental launch serviceservices provider for Iridium NEXT (the “Kosmotras Agreement”).NEXT. The Kosmotras Agreement originally provided for the purchase of up to six launches with options to purchase additional launches. Each launch can carry two satellites. In June 2013, the Company exercised an option for one launch to carry the first two Iridium NEXT satellites. If the Company does not exercise any additional options, the total cost under the contract including this single launch will beKosmotras agreement is $51.8 million. Kosmotras to date has been unable to obtain the permits or authorizations to launch the Company's satellites on a Dnepr rocket as planned, and Kosmotras has proposed no satisfactory alternative launch plan. Because the Company now believes the construction-in-progress associated with the Kosmotras launch services will no longer be used or further developed, the Company wrote-off the full amount previously paid to Kosmotras, by recording accelerated depreciation expense of $36.8 million, in the fourth quarter of 2017. 

Iridium NEXT Launch and In-Orbit Insurance

The Credit Facility requires the Company to obtain insurance covering the launch and first 12 months of operation of the Iridium NEXT satellites. The launch and in-orbit insurance the Company has obtained contains elements, consistent with the

terms of the Credit Facility, of self-insurance and deductibles, providing reimbursement only after a specified number of satellite failures. As a result, a failure of one or more of the Company’s satellites, or the occurrence of equipment failures and other related problems, could constitute an uninsured loss or require the payment of additional premiums and could harm the Company’s financial condition. Furthermore, launch and in-orbit insurance does not cover lost revenue.

The total premium is $121.0 million and as of December 31, 2014,2017, the Company had made aggregate premium payments of $28.8 million to Kosmotras, which were capitalized within property and equipment, net in the accompanying consolidated balance sheet. The option to purchase two dedicated launches expired as of December 31, 2013. The Company has agreed with Kosmotras to extend the option to purchase the remaining three dedicated launches through a date to be determined. The Company’s obligation to Kosmotras for the single launch purchased under the Kosmotras Agreement for the year ending December 31, 2015 is $23.0$77.8 million.

Supplier

Unconditional Purchase Commitments

Obligations

The Company has a manufacturing agreement with two suppliers to manufacture subscriber equipment, one of which contains minimum monthly purchase requirements. The Company’s purchases have exceeded the monthly minimum requirement since inception.Benchmark. Pursuant to the agreement, the Company may be required to purchase certain materials if the materials are not used in production within the periods specified in the agreement. The supplierBenchmark will then repurchase such materials from the Company at the same price paid by the Company, as required for the production of the devices. As of December 31, 20142017 and 2013,2016, the Company had $1.7$4.0 million and $2.4$0.5 million, respectively, of such materials, and the amounts were included in inventory on the accompanying consolidated balance sheets.

As of December 31, 2014,2017, the aggregate unconditional purchase obligations were $52.4$45.4 million, which includeincludes the Company’s commitments with Boeing.Boeing and Benchmark. The Boeing obligations (see Note 6) represent the not to exceed (NTE) price for operationsnew take-or-pay commitment with the execution of the DSA, which was met as of December 31, 2017 and maintenance (O&M) services for 2015 under the Company’s Iridium NEXT Support Services Agreement with Boeing. Boeing is the exclusive providerfinal payment for the majority of O&M services through the endacquisition of the Iridium NEXT useful life subjectassembled workforce. The Company's obligation to the Company’s right to issue work to a third party in accordance with certain provisions in the agreement. Annually, Boeing and the Company will agree upon the NTE price for that year.

Unconditional purchase obligations scheduledBenchmark for the yearsyear ending December 31, 2015 and 2016 are in the amounts of $52.3 million and $0.1 million, respectively.

2018 is $9.2 million.

In-Orbit Insurance

Due to various contractual requirements, the Company is required to maintain a third-party liability in-orbit insurance policy on its first-generation satellites with a de-orbiting endorsement to cover potential claims relating to operating or de-orbiting the satellite constellation.constellation or individual satellites. The policy covers the Company, Boeing as former operator, Motorola Solutions (the original system architect and prior owner), contractors and subcontractors of the insured, the U.S. government and certain other sovereign nations.

The current policy has a renewable one-year term, which is scheduled to expire on December 8, 2015.2018. The policy coverage is separated into Sections A, B, and C.

Section A coverage is currently in effect and covers product liability over Motorola’s position as manufacturer of the first-generation satellites. Liability limits for claims under Section A are $1.0 billion per occurrence and in the aggregate. There is no deductible for claims.

Section B coverage is currently in effect and covers risks in connection with in-orbit satellites and for the de-orbit of individual satellites. Liability limits for claims under Section B are $500 million per occurrence and in the aggregate for space vehicle liability and $500 million and $1.0 billion per occurrence and in the aggregate, respectively, with respect to de-orbiting. The balance of the unamortized premium payment for Sections A and B coverage as of December 31, 20142017 is included in prepaid expenses and other current assets in the accompanying consolidated balance sheet. The deductible for claims under Section B is $250,000 per occurrence.

Section C coverage is effective once requested by the Company (the “Attachment Date”) and covers risks in connection with a mass decommissioning of the satellite system.first-generation satellites. Liability limits for claims under Section C are $500 million and $1.0 billion per occurrence and in the aggregate, respectively. The term of the coverage under Section C is 12 months from the Attachment Date. The premium for Section C coverage is $2.5 million and is payable on or before the Attachment Date. As of December 31, 2014,2017, the Company had not requested Section C coverage since no mass decommissioning activities are currently anticipated. The deductible for claims under Section C is $250,000 per occurrence.

Operating Leases

The Company leases land, office space, and office and computer equipment under noncancelable operating lease agreements. Most of the leases contain renewal options of 1 to 10 years. The Company’s obligations under the current terms of these leases extend through 2024.

2026.

Additionally, several of the Company’s leases contain clauses for rent escalation including, but not limited to, a pro-rata share of increased operating and real estate tax expenses. Rent expense is recognized on a straight-line basis over the lease term. The Company leases facilities located in Chandler, Arizona; Tempe, Arizona; McLean, Virginia; Lansdowne, Virginia; Canada;

Russia; and Norway. Future minimum lease payments, by year and in the aggregate, under noncancelable operating leases at December 31, 2014,2017, are as follows:

		Operating
Year ending December 31,		Leases
		(In thousands)
2015		$	3,051
2016			2,782
2017			2,890
2018			2,972
2019			3,055
Thereafter			6,814
Total		$	21,564

Year ending December 31,		Operating Leases
		(In thousands)
2018		$	3,741
2019		3,692
2020		3,734
2021		3,827
2022		3,402
Thereafter		8,849
Total		$	27,245

Rent expense for the years ended December 31, 2014, 20132017, 2016 and 20122015 was $3.3 million, $3.2 million, $3.1 million and $3.2$3.4 million, respectively.

Contingencies

From time to time, in the normal course of business, the Company is party to various pending legal claims and lawsuits. On October 7, 2014, Kappa Digital, LLC filed a complaint for patent infringement against the Company in the United States District Court for the Eastern District of Texas - Marshall Division. In this action, Kappa Digital alleges that the Company’s products, services and/or systems infringe on Kappa’s U.S. Patent entitled “Method And System For A Wireless Digital Message Service.” Kappa Digital is seeking a judgment that the Company has infringed on its patent and is seeking a permanent injunction enjoining the Company from further infringement, as well as damages, costs, expenses, interest and attorneys’ fees. On February 25, 2015, the parties filed a joint motion to dismiss the case without prejudice, which the Company expects to be granted. Kappa Digital would retain the right to file a new complaint with the same allegations. Given the early stage of this matter, the Company cannot provide a reasonable estimate of the possibility of loss, or of any potential amount of loss, at this time.

The Company is not aware of any other actions that it would expectexpects to have a material adverse impact on its business, financial results or financial condition.

10. Stock-Based Compensation

During 2012,

In May 2017, the Company’s stockholders approved athe amendment and restatement of the Company's 2015 Equity Incentive Plan (as so amended and restated, the “Amended 2015 Plan”), primarily to increase the number of shares available under the plan. As such, the Company registered an additional 5,199,239 shares of common stock incentive plan (the “2012 Stock Incentive Plan”)made available for issuance pursuant to providethe Amended 2015 Plan, bringing the total to 28,402,248 shares. Through December 31, 2017, the remaining aggregate number of shares of our common stock available for future grants under the Amended 2015 Plan was 15,012,331. The Amended 2015 Plan provides for the grant of stock-based awards, including nonqualified stock options, incentive stock options, restricted stock awards and other equity securities, as incentives and rewards for employees, consultants and non-employee directors. Asdirectors of December 31, 2014, 13,416,019 sharesthe Company and its affiliated entities. The Amended 2015 Plan allows us to utilize a broad array of common stock were authorized for issuance as awards underequity incentives and performance cash incentives in order to secure and retain the 2012 Stock Incentive Plan.

services of our employees, directors and consultants, and to provide long-term incentives that align the interests of our employees, directors and consultants with the interests of our stockholders.

Stock Option Awards

The stock option awards granted to employees generally (i) have a term of ten years, (ii) vest over a four-year period with 25% vesting after the first year of service and the remainder vesting ratably on a quarterly basis thereafter, (iii) are contingent upon employment on the vesting date, and (iv) have an exercise price equal to the fair value of the underlying shares at the date of grant. The stock option awards granted to the Company’s board of directors generally (i) represent a portion of their annual compensation, (ii) have a term of ten years, (iii) vest over the calendar year with 25% vesting on the last day of each calendar quarter, (iv) are contingent upon continued service on the vesting date, and (v) have an exercise price equal to the fair value of the underlying shares at the date of grant. The

Fair Value Determination

We have used the Black-Scholes-Merton option pricing model to determine fair value of each option is estimatedour awards on the date of grant usinggrant. We will reconsider the Black-Scholesuse of the Black-Scholes-Merton model if additional information becomes available in the future that indicates another model would be more appropriate or if grants issued in future periods have characteristics that cannot be reasonably estimated under this model.

The following weighted-average assumptions were used for option pricing model. Expectedgrants during the years ended December 31, 2017, 2016 and 2015:

Volatility - The expected volatility forof the options granted was estimated based on the actualupon historical volatility of our share price through daily observations of our trading history.

Expected life of options - The expected life of options granted to employees was determined from the Company’s stock price.simplified method.

Risk-free interest rate - The yield on zero-coupon U.S. Treasury strips was used to extrapolate a forward-yield curve. This “term structure” of future interest rates was then input into a numeric model to provide the equivalent risk-free rate to be used in the Black-Scholes-Merton model based on the expected term of the award was calculated using the simplified methodunderlying grants.

Dividend yield - The Black-Scholes-Merton valuation model requires an expected dividend yield as the Company currently does not have sufficient experience of its own option exercise patterns.an input. The Company does not anticipate paying dividends during the expected term of the grants; therefore, the dividend rate wasis assumed to be zero. The risk-free interest rate assumed is based upon U.S. Treasury Bond interest rates with similar terms at similar dates. To

In 2017 and 2016, the extent the Company’s actual forfeiture rate is different from its estimate of forfeitures, the stock-based compensation may differCompany granted stock options to newly hired and promoted employees only. In 2015, in future periods.

Theaddition to stock options granted to newly hired and promoted employees, non-employee consultants are generally subject to service vesting and vest quarterly over a two-year service period. The fair value of the consultant options is the then-current fair value attributable to the vesting portions of the awards, calculated using the Black-Scholes option pricing model.

Assumptions used in determining the fair value of the Company’s options were as follows:

		Year Ended December 31,
		2014				2013				2012
Expected volatility			41% - 43%				41% - 42%				42% - 45%
Expected term (years)			5.25 - 10.00				3.00 - 6.25				5.50 - 6.25
Expected dividends			0%				0%				0%
Risk free interest rate			1.10% - 2.35%				0.58% - 1.93%				0.78% - 1.17%

During 2014, the Company granted approximately 987,000 and 45,000 stock options to its employees and non-employee consultants, respectively. The estimated aggregate grant-date fair values of the stock options granted to employees and non-employee consultants during 2014 was $3.0 million and $0.2 million, respectively.

In January 2014, certain members of the Company’s board of directors elected to receive a portion of their 2014 annual compensation in the form of stock options in an aggregate amount ofoptions.

During 2017, 2016 and 2015, the Company granted approximately 112,000 stock options. These options were granted in January 2014209,000, 249,000 and vested through the end of 2014, with 25% vesting on the last day of each calendar quarter. The estimated aggregate grant-date fair value of these options granted to directors in January 2014 was $0.3 million. In July 2014, a new member of the Company’s board of directors elected to receive a portion of his 2014 annual compensation in the form of744,000 stock options, inrespectively, to its employees, with an aggregate amount of approximately 20,000 stock options which vested through the end of 2014, with 33% vesting immediately upon grant and 33% and 34% vesting on September 30, 2014 and December 31, 2014, respectively. The estimated aggregate grant date fair value of these$0.9 million, $0.9 million and $2.9 million, respectively.

During 2015, the Company granted approximately 111,000 and 30,000 stock options grantedto its non-employee directors and consultants, respectively, with an estimated aggregate grant-date fair value of $0.4 million and $0.2 million, respectively.

The following table summarizes weighted-average assumptions used in July 2014 was $0.1 million.

our calculations of fair value:

	Year Ended December 31,
	2017		2016		2015
Expected volatility	40% - 41%		40% - 42%		39% - 42%
Expected term (years)	6.25		6.25		6.25
Expected dividends	—%		—%		—%
Risk free interest rate	1.86% - 2.14%		1.15% - 2.45%		1.50% - 2.35%

A summary of the activity of the Company’s stock options as of December 31, 2014 is as follows:

										Weighted-
						Weighted-				Average
						Average				Remaining				Aggregate
						Exercise Price				Contractual				Intrinsic
		Shares				Per Share				Term (Years)				Value
		(In thousands, except years and per share data)
Options outstanding at January 1, 2014			6,183			$	7.89
Granted			1,163			$	6.85
Cancelled or expired			(414	)		$	8.36
Exercised			(189	)		$	7.98
Forfeited			(72	)		$	7.11
Options outstanding at December 31, 2014			6,671			$	7.68				6.90			$	13,783
Options vested and exercisable at December 31, 2014			4,626			$	8.05				6.21			$	7,856
Options exercisable and expected to vest at December 31, 2014			6,634			$	7.69				6.84			$	13,674

	Shares			Weighted- Average Exercise Price Per Share				Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
	(In thousands, except years and per share data)
Options outstanding at January 1, 2015	6,671			$	7.68
Granted	885			9.25
Cancelled or expired	(92	)		8.66
Exercised	(287	)		7.87
Forfeited	(57	)		7.81
Options outstanding at December 31, 2015	7,120			7.86				6.33		$	3,937
Granted	249			8.13
Cancelled or expired	(39	)		8.92
Exercised	(73	)		7.33
Forfeited	(55	)		7.62
Options outstanding at December 31, 2016	7,202			7.87				5.45		$	12,473
Granted	209			10.50
Cancelled or expired	(2	)		7.24
Exercised	(534	)		7.93
Forfeited	(19	)		9.13
Options outstanding at December 31, 2017	6,856			$	7.94			4.63		$	26,459
Options exercisable at December 31, 2017	6,212			$	7.81			4.27		$	24,760
Options exercisable and expected to vest at December 31, 2017	6,842			$	7.94			4.63		$	26,425

The Company recognized $4.3$1.8 million, $6.0$2.5 million and $6.0$3.4 million of stock-based compensation expense related to stock options in the years ended December 31, 2014, 20132017, 2016 and 2012,2015, respectively.

The weighted-average grant-dategrant date fair value of options granted during the years ended December 31, 2014, 20132017, 2016 and 20122015 was $2.97, $2.60$4.51, $3.47 and $3.31$3.95 per share, respectively.

As of December 31, 2014, the total unrecognized cost related to non-vested options was approximately $5.1 million. This cost is expected to be recognized over a weighted average period of 2.4 years. The total fair value of the shares vested during the years ended December 31, 2014, 20132017, 2016 and 20122015 was $2.0 million, $2.9 million and $3.6 million, respectively.

As of December 31, 2017, the total unrecognized cost related to non-vested options was approximately $4.6 million, $6.3 million and $6.7 million, respectively.

84

$2.2 million. This cost is expected to be recognized over a weighted-average period of 2.1 years.

Restricted Stock Unit Awards

In 2014, the CompanyUnits

The RSUs granted approximately 786,000 service-based RSUs to its employees. Employee service-based RSUs generallyemployees for service vest over a four-year service period, with 25% vesting on the first anniversary of the grant date and the remainder vesting ratably on a quarterly basis thereafter. In addition,The RSUs granted to non-employee directors generally vest in full on the first anniversary of the grant date. The RSUs granted to non-employee consultants generally vest 50% on the first anniversary of the grant date and ratably on a quarterly basis through the second anniversary of the grant date. Performance-based RSUs vest upon the completion of defined performance goals, subject to continued employment. The Company’s RSUs are generally classified as equity awards because the RSUs will be paid in the Company's common stock upon vesting. The related compensation expense is recognized over the service period and is based on the grant date fair value of the Company's common stock and the number of shares expected to vest. The awards are not remeasured at the end of each reporting period. The awards do not carry voting rights until they are vested and released in accordance with the specified vesting terms of each award as stated in the grant notifications for each RSU.

Service-Based Awards

During the years ended December 31, 2017, 2016 and 2015, the Company granted performance-basedapproximately 964,000, 573,000 and 596,000 service-based RSUs, respectively, to its employees, with an estimated grant date fair value of $8.5 million, $4.0 million and $5.6 million, respectively.

Certain members of the Company’s board of directors elect to receive a portion of their annual compensation in 2014.the form of RSUs. An aggregate amount of approximately 96,000, 126,000 and 15,000 service-based RSUs were granted to its directors as a result of these elections during the years ended December 31, 2017, 2016 and 2015, respectively, with an estimated grant date fair value of $1.0 million, $1.0 million and $0.1 million, respectively.

In June 2017 and June 2016, the Company granted approximately 8,000 and 35,000 RSUs to non-employee consultants with an estimated grant date fair value of $0.1 million and $0.3 million, respectively.

Performance-Based Awards

In March 2017 and March 2016, the Company awarded approximately 1,190,000 and 1,335,000 performance-based RSUs, respectively, to the Company’s executives and employees (the “Bonus RSUs”), with an estimated grant date fair value of $10.5 million and $9.4 million, respectively. Vesting of the March 2017 and March 2016 Bonus RSUs is and was dependent upon the Company’s achievement of defined performance goals over the respective fiscal year. The Company records stock-based compensation expense related to performance-based RSUs when it is considered probable that the performance conditions will be met. InManagement believes it is probable that certain of the March 2014,2017 Bonus RSUs will vest. The level of achievement, if any, of performance goals will be determined by the compensation committee of the Company’s board of directors and, if such goals are achieved, the March 2017 Bonus RSUs will vest, subject to continued employment, in March 2018. A portion of the March 2016 Bonus RSUs vested in March 2017 upon the determination of the level of achievement of the performance goals.

Additionally, during 2017, 2016 and 2015, the Company awarded approximately 207,000173,000, 119,000 and 161,000 performance-based RSUs, respectively, to the Company’s executives (the “March 2014“Performance RSUs”). The estimated aggregate grant date fair values of the Performance RSUs granted in 2017, 2016 and 2015 was $1.5 million, $0.8 million and $1.5 million, respectively. Vesting of these March 2014 RSUseach Performance RSU award is and was dependent upon the Company’s achievement of defined performance goals over fiscal years 2014 and 2015.a two-year period. Management believes it is probable that the Performance RSUs will vest at least in part. The numbervesting of March 2014Performance RSUs that will ultimately vest may range from 0% to 150% of the originalnumber of shares underlying the Performance RSU grant based on the level of achievement of the performance goals. If the Company achieves the performance goals, 50% of the March 2014Performance RSUs will vest aton the endsecond anniversary of two yearsthe grant date and the remaining 50% will vest aton the endthird anniversary of the third year,grant date, in each case, subject to the executives continued service. In June 2014, the Company awarded approximately 323,000 performance-based RSUs to its executives and employees (the “June 2014 RSUs”). Vestingservice as of the June 2014 RSUs is dependent upon the Company’s achievement of defined performance goals for the 2014 fiscal year. The level of achievement, if any, of performance goals in connection with the June 2014 RSUs will be determined by the compensation committee. The Company expects this determination to occur in the first quarter of 2015. The estimated aggregate grant date fair valuesvesting date. Approximately 54,000 of the March 20142015 Performance RSUs vested and June 2014 RSUs granted during 2014 were $1.3 million and $2.6 million, respectively.

Certain members of the Company’s board of directors elected to receive a portion of their 2014 annual compensationreleased in the form of RSUs. During 2014, the Company granted approximately 108,000 RSUs to its directors as a result of these elections. These RSUs were granted in January 2014 and vested through the end of 2014, with 25% vesting on the last day of each calendar quarter. TheMarch 2017 at an estimated aggregate grant-date fair value of $0.5 million, and the RSUs granted to directors during 2013 was $0.7 million.

remaining 54,000 will vest in March 2018.

Award Summary

A summary of the Company’s activity for the year ended December 31, 2014 for outstanding RSUs is as follows:

						Weighted-
						Average
						Grant Date
						Fair Value
		RSUs				Per RSU
		(In thousands)
Outstanding at January 1, 2014			1,306			$	6.76
Granted			1,430			$	6.80
Forfeited			(78	)		$	5.87
Released			(376	)		$	6.72
Outstanding at December 31, 2014			2,282			$	6.80
Vested at December 31, 2014			398

A summary

	RSUs			Weighted- Average Grant Date Fair Value Per RSU
	(In thousands)
Outstanding at January 1, 2015	2,282			$	6.80
Granted	834			9.42
Forfeited	(193	)		7.18
Released	(979	)		7.06
Outstanding at December 31, 2015	1,944			7.76
Granted	2,297			7.09
Forfeited	(152	)		7.44
Released	(766	)		7.36
Outstanding at December 31, 2016	3,323			7.40
Granted	2,431			8.89
Forfeited	(203	)		8.42
Released	(2,003	)		7.16
Outstanding at December 31, 2017	3,548			8.50
Vested and unreleased at December 31, 2017 (1)	521

(1)	These RSUs were granted to the Company's board of directors as a part of their compensation for board and committee service and had vested but had not yet been issued and released.

As of the Company’s activity for the year ended December 31, 2014 for unvested2017, the total unrecognized cost related to non-vested RSUs was approximately $8.3 million. This cost is as follows:

						Weighted-
						Average
						Grant Date
						Fair Value
		RSUs				Per RSU
		(In thousands)
Non-vested at January 1, 2014			960			$	6.50
Granted			1,430			$	6.80
Vested			(428	)		$	6.51
Forfeited			(78	)		$	5.87
Non-vested at December 31, 2014			1,884			$	6.72

expected to be recognized over a weighted-average period of 1.25 years. The Company recognized $6.5$17.0 million, $1.7$13.5 million and $2.1$6.3 million of stock-based compensation expense related to RSUs in the years ended December 31, 2014, 20132017, 2016 and 2012,2015, respectively.

11. Segments, Significant Customers, Supplier and Service Providers and Geographic Information

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

The Company derived approximately 21%24%, 20%25% and 20%23% of the Company’s total revenue in the years ended December 31, 2014, 20132017, 2016 and 2012,2015, respectively, from prime contracts or subcontracts with agencies of the U.S. government. For the years ended December 31, 20142017, 2016 and 2013,2015, no single commercial customer accounted for more than 10% of the Company’s total revenue. For the year ended December 31, 2012, two large commercial customers each accounted for approximately 10%

Approximately 35% and 32% of the Company’s total revenue.

The Company derived approximately 30% and 34% of its accounts receivable balance at December 31, 20142017 and 2013,2016, respectively, was due from prime contracts or subcontracts with agencies of the U.S. government. As of December 31, 20142017 and 2013, one2016, no single commercial customer represented 12% and 14%, respectively, of the Company’s total accounts receivable balance. As of December 31, 2014, no other single customer accounted for more than 10% of the Company’s total accounts receivable balance. As of December 31, 2013, another customer accounted for 11% of the Company’s total accounts receivable balance.

The Company contracts for the manufacture of its subscriber equipment primarily from two manufacturersone manufacturer and utilizes other sole source suppliers for certain component parts of its devices. Should events or circumstances prevent the manufacturersmanufacturer or the suppliers from producing the equipment or component parts, the Company’s business could be adversely affected until the Company is able to move production to other facilities of the manufacturer or secure a replacement manufacturer or an alternative supplier for such component parts.

A significant portion of the Company’s satellite operations and maintenance service is provided by Boeing. Should events or circumstances prevent Boeing from providing these services, the Company’s business could be adversely affected until the Company is able to assume operations and maintenance responsibilities or secure a replacement service provider.

Net property and equipment by geographic area was as follows as of December 31:

		2014				2013
		(In thousands)
United States		$	137,185			$	118,011
Satellites in orbit			57,494				96,231
Iridium NEXT systems under construction			1,755,973				1,341,148
All others (1)			21,187				20,189
Total		$	1,971,839			$	1,575,579

follows:

	December 31,
	2017				2016
	(In thousands)
United States	$	165,337			$	124,483
Satellites in orbit	926,090				13,405
Iridium NEXT systems under construction	2,088,380				2,639,824
All others (1)	30,355				35,372
Total	$	3,210,162			$	2,813,084

(1)	No one othersingle country in this group represented more than 10% of property and equipment, net.

Revenue by geographic area was as follows for the years ended December 31:

		2014				2013				2012
						(In thousands)
United States		$	194,060			$	175,054			$	178,145
Canada			44,933				49,541				53,279
United Kingdom			47,093				37,421				42,706
Other countries (1)			122,471				120,633				109,390
Total		$	408,557			$	382,649			$	383,520

⁽¹⁾      No one other country represented more than 10% of revenue.

follows:

	Year Ended December 31,
	2017				2016				2015
					(In thousands)
United States	$	229,741			$	226,190			$	204,777
Canada	44,107				42,373				42,063
United Kingdom	46,245				47,135				44,012
Other countries (1)	127,953				117,942				120,526
Total	$	448,046			$	433,640			$	411,378

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

Revenue is attributed to geographic area based on the billing address of the distributor. Service location and the billing address are often not the same. The Company’s distributors sell services directly or indirectly to end users, who may be located or use the Company’s products and services elsewhere. The Company cannot provide the geographical distribution of end users because it does not contract directly with them. The Company is exposed to foreign currency exchange fluctuations asforeign currency exchange rate movements create a degree of risk by affecting the U.S. dollar value of sales made and costs incurred in foreign currencies.

currencies.

12. Employee Benefit Plan

The Company sponsors a defined-contribution 401(k) retirement plan (the “Plan”) that covers all employees. Employees are eligible to participate in the Plan on the first day of the month following the date of hire, and participants are 100% vested from the date of eligibility. The Company matches employees’ contributions equal to 100% of the salary deferral contributions up to 5% of the employees’ compensation.eligible compensation each pay period. Company-matching contributions to the Plan were $2.5 million, $1.3 million $1.2 million and $1.2$1.5 million for the years ended December 31, 2014, 20132017, 2016 and 2012,2015, respectively. The Company pays all administrative fees related to the Plan.

86

13. Income Taxes

U.S. and foreign components of income before income taxes are presented below:

		Year Ended December 31,
		2014				2013				2012
						(In thousands)
U.S. income		$	115,858			$	111,685			$	94,719
Foreign income (loss)			594				(1,220	)			299
Total income before income taxes		$	116,452			$	110,465			$	95,018

	Year Ended December 31,
	2017				2016				2015
					(In thousands)
U.S. income	$	120,281			$	176,448			$	75,431
Foreign income (loss)	(709		)		1,717				(2,316		)
Total income before income taxes	$	119,572			$	178,165			$	73,115

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

		Year Ended December 31,
		2014				2013				2012
						(In thousands)
Current taxes:
Federal provision (benefit)		$	50			$	(12	)		$	(47	)
State provision (benefit)			(90	)			7				96
Foreign provision			1,260				723				849
Total current tax provision			1,220				718				898
Deferred taxes:
Federal provision			40,155				39,041				30,014
State provision (benefit)			(77	)			8,240				(610	)
Foreign provision (benefit)			165				(51	)			85
Total deferred tax provision			40,243				47,230				29,489
Total income tax provision		$	41,463			$	47,948			$	30,387

	Year Ended December 31,
	2017				2016				2015
					(In thousands)
Current taxes:
Federal tax expense	$	13			$	1,206			$	1,700
State tax expense	422				978				266
Foreign tax expense	863				1,141				650
Total current tax expense	1,298				3,325				2,616
Deferred taxes:
Federal tax expense (benefit)	(110,811		)		60,295				54,906
State tax expense (benefit)	(4,851		)		3,454				8,803
Foreign tax expense (benefit)	80				59				(333		)
Total deferred tax expense (benefit)	(115,582		)		63,808				63,376
Total income tax expense (benefit)	$	(114,284	)		$	67,133			$	65,992

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017.

The Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 ("SAB 118") to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. SAB 118 is effective for reporting periods that include December 22, 2017. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, the Company made reasonable estimates of the effects and recorded provisional amounts in its financial statements as of December 31, 2017. As the Company collects and prepares the necessary data, and interprets the Tax Act and any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, it may make adjustments to the provisional amounts. Those adjustments may materially impact the Company's provision for income taxes and effective tax rate in the period in which the adjustments are made. The accounting for the tax effects of the Tax Act will be completed in 2018.

The Company has recorded a net tax benefit of $154.5 million in the fourth quarter of 2017, which includes its provisional estimate of the impact of the Tax Act on its financial statements. Further detail on specific provisions are included below.

Remeasurement of deferred tax assets/liabilities: In the fourth quarter of 2017, the Company recorded a provisional net deferred tax benefit of $150.9 million related to the remeasurement of certain deferred tax assets and liabilities as of December 31, 2017. The Company remeasured those deferred tax assets and liabilities at 21%, because this is the rate at which it expects these items to reverse. Although the tax rate reduction is known, the Company has not collected the necessary data to complete its analysis of the effect of the Tax Act on the underlying deferred taxes, and, as such, the amounts recorded as of December 31, 2017 are provisional.

Deemed Repatriation of Certain Foreign Subsidiary Earnings: The Tax Act requires the Company to increase its U.S. taxable income for the mandatory deemed repatriation on accumulated foreign subsidiary earnings not previously subject to U.S. income tax at a rate of 15.5% to the extent of foreign cash and certain other net current assets and 8% on the remaining untaxed earnings. The Company recorded a provisional amount for this one-time taxable income amount of $2.3 million, with a provisional estimated deferred tax asset associated with foreign taxes paid on those earnings of $0.8 million. The Company has recorded provisional amounts based on estimates of the effects of the Tax Act, since a more detailed analysis of historical foreign earnings as well as potential correlative adjustments is required.

In 2011 and 2012, Arizona enacted tax law changes resulting in a benefit to the Company’s net deferred tax expense. Due to the size and nature of the Company’s operations in Arizona, such changes have a significant impact on the tax provision in a given period. As a result of these law changes, the Company’s deferred tax expense was reduced by approximately $5.5$10.2 million $4.0 million and $9.5

$3.0 million for the years ended December 31, 2014, 20132017 and 2012, respectively.

2016, respectively, and increased by approximately $0.1 million for the year ended December 31, 2015.

A reconciliation of the U.S. federal statutory income tax expense to the Company’s effective income tax provision is as follows:

		Year Ended December 31,
		2014				2013				2012
						(In thousands)
U.S. federal statutory tax rate		$	40,766			$	38,668			$	33,256
State taxes, net of federal benefit			4,991				9,048				3,837
State tax valuation allowance			380				3,151				1,943
Arizona tax law change			(5,525	)			(3,975	)			(9,524	)
Other nondeductible expenses			903				1,185				414
Liability for uncertain tax positions			-				(146	)			(45	)
Tax credits and other adjustments			(994	)			(849	)			223
Foreign taxes and other items			942				866				283
Total income tax provision		$	41,463			$	47,948			$	30,387

	Year Ended December 31,
	2017				2016				2015
					(In thousands)
Expected tax expense at U.S. federal statutory tax rate	$	41,850			$	62,309			$	25,590
State taxes, net of federal benefit	5,133				9,757				11,663
State tax valuation allowance	582				(2,710		)		(2,763		)
Deferred impact of Arizona tax law changes and elections	(10,217		)		(2,962		)		99
Tax Act - deferred tax effects	(150,903		)		—				—
Impairment of goodwill	—				—				30,464
Other nondeductible expenses	(841		)		596				557
Tax credits	(528		)		(442		)		(97		)
Foreign taxes and other items	640				585				479
Total income tax expense (benefit)	$	(114,284	)		$	67,133			$	65,992

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

	As of December 31,
	2017				2016
	(In thousands)
Deferred tax assets
Long-term contracts	$	61,358			$	74,720
Federal, state and foreign net operating loss carryforwards and tax credits	107,566				60,667
Other	22,680				34,330
Total deferred tax assets	191,604				169,717
Valuation allowance	(3,815		)		(2,825		)
Net deferred tax assets	187,789				166,892
Deferred tax liabilities
Fixed assets, intangibles and research and development expenditures	(403,545		)		(513,905		)
Investment in joint venture	(27,796		)		(14,643		)
Other	(2,276		)		—
Total deferred tax liabilities	(433,617		)		(528,548		)
Net deferred income tax liabilities	$	(245,828	)		$	(361,656	)

Pursuant to ASC 740, the Company nets deferred tax assets and liabilities within the same jurisdiction. As of December 31, 20142017, the Company had a net deferred tax asset of $0.3 million that is included in other assets on the balance sheet and 2013 are as follows:

		As of December 31,
		2014				2013
		(In thousands)
Deferred tax assets
Long-term contracts		$	49,207			$	33,988
Deferred revenue			6,357				4,086
Federal, state and foreign net operating loss carryforwards and tax credits			133,021				133,190
Other			24,571				21,571
Total deferred tax assets			213,156				192,835
Valuation allowance			(6,806	)			(6,567	)
Net deferred tax assets		$	206,350			$	186,268
Deferred tax liabilities
Fixed assets and intangibles		$	(95,797	)		$	(58,220	)
Research and development expenditures			(335,833	)			(318,340	)
Other			(8,753	)			(3,457	)
Total deferred tax liabilities		$	(440,383	)		$	(380,017	)
Net deferred income tax liabilities		$	(234,033	)		$	(193,749	)

a net deferred tax liability of $246.2 million.

The Company recognizes valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. In assessing the likelihood of realization, management considers: (i) future reversals of existing taxable temporary differences; (ii) future taxable income exclusive of reversing temporary differences and carryforwards; (iii) taxable income in prior carryback year(s) if carryback is permitted under applicable tax law; and (iv) tax planning strategies.

As of December 31, 2014, the

The Company had deferred tax assets related to cumulative U.S. and statefederal net operating loss carryforwards of approximately $323.6 million.$80.5 million, and $42.9 million as of December 31, 2017 and 2016, respectively. These net operating loss carryforwards, if unutilized, will expire in various amounts from 20152031 through 2033.2037. The Company believes that the U.S. federal net operating losses will be utilized before the expiration dates and, as such, no valuation allowance has been established for these deferred

tax assets. The Company had deferred tax assets related to the state net operating loss carryforwards of approximately $10.9 million and $4.1 million as of December 31, 2017 and 2016, respectively, that expire from 2025 through 2037. The Company does not expect to fully utilize all of its state net operating losses within the respective carryforward periods. Asperiods and as such the Company has increased its state net operating lossreflects a partial valuation allowance by $0.4of $0.7 million for the year ended December 31, 2014. Asas of December 31, 2014, the2017 against these deferred tax assets on its consolidated balance sheet. The Company had deferred tax assets related to the foreign net operating loss carryforwards of approximately $0.1$1.3 million in various jurisdictionsand $1.2 million as of December 31, 2017 and 2016, respectively, that begin to expire in 2016.2022. The Company does not expect to fully utilize all of its foreign net operating losses within the respective carryforward periods and as such reflects a partial valuation allowance against these deferred tax assets on its consolidated balance sheet. The timing and manner in which the Company will utilize the net operating loss carryforwards in any year, or in total, may be limited in the future as a result of alternative minimum taxes, changes in the Company’s ownership and any limitations imposed by the jurisdictions in which the Company operates.

As of December 31, 2014, the

The Company hadhas approximately $4.4$6.1 million and $5.0 million of deferred tax assets related to research and development tax credits as of December 31, 2017 and 2016, respectively, that expire in various amounts from 20282027 through 2034, $2.32037. The Company has approximately $4.7 million and $3.5 million of deferred tax assets related to foreign tax credits whichas of December 31, 2017 and 2016, respectively, that expire in various amounts from 2020 through 2024,2027. The Company has $3.8 million and $1.3$3.4 million of deferred tax assets related to Alternative Minimum Tax credits as of December 31, 2017 and 2016, respectively which do not expire. Under the Tax Act, the Alternative Minimum Tax credits will convert to refunds if not used as a credit. The Company believes that the research and development credits will be fully utilized within the carryforward period. However, the Company does not expect to utilize all of its foreign tax credits within the respective carryforward periods. As such, the Company has a partial valuation allowance of $0.7$1.1 million for the year endedas of December 31, 2014.

2017, which is unchanged from December 31, 2016.

The Company has provided for U.S. income taxes on all undistributed earnings of its significant foreign subsidiaries since the Company does not indefinitely reinvest these undistributed earnings. The Company measures deferred tax assets and liabilities using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company recognizes the effect on deferred tax assets and liabilities of a change in tax rates in income in the period that includes the enactment date.

Uncertain Income Tax Positions

The Company is subject to income taxes in the U.S. and various state and foreign jurisdictions. Significant judgment is required in evaluating tax positions and determining the provision for income taxes. The Company establishes liabilities for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes may be due. These liabilities are established when the Company believes that certain positions might be challenged despite its belief that its tax return positions are fully supportable. The Company adjusts these liabilities in light of changing facts and circumstances, such as the outcome of a tax audit. The provision for income taxes includes the impact of changes to these liabilities.

The amount of uncertainunrecognized tax positions if recognized at December 31, 2014benefits was $1.2$1.0 million as compared to $1.3and $0.9 million at December 31, 2013. It is reasonably possible that $0.3 million of the unrecognized tax benefit reflected at December 31, 2014 may reverse2017 and 2016, respectively. Any changes in the next 12twelve months as the Company reassesses its filing positions in various foreign jurisdictions. Any changes are not anticipated to have significant impact on the results of operations, financial position or cash flows of the Company. All of the Company’s uncertain tax positions, if recognized, would affect its income tax expense.

The Company has elected an accounting policy to classify interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of December 31, 20142017 and 2013,2016, potential interest and penalties on unrecognized tax benefits were not significant.

The Company is subject to tax audits in all jurisdictions for which it files tax returns. Tax audits by their very nature are often complex and can require several years to complete. Currently, there are no U.S. federal, state or foreign jurisdiction tax audits pending. The Company’s corporate U.S. federal and state tax returns from 20092010 to 20132016 remain subject to examination by tax authorities and the Company’s foreign tax returns from 20072009 to 20132016 remain subject to examination by tax authorities.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits which includes related interest and penalties:

		2014				2013
		(In thousands)
Balance at January 1,		$	1,259			$	1,405
Change attributable to tax positions taken in a prior period			(51	)			54
Change attributable to  tax positions taken in the current period			8				7
Decrease attributable to lapse of statute of limitations			(66	)			(207	)
Balance at December 31,		$	1,150			$	1,259

	2017				2016
	(In thousands)
Balance at January 1,	$	920			$	916
Change attributable to tax positions taken in a prior period	146				25
Change attributable to final assessment	(27		)		—
Change attributable to  tax positions taken in the current period	10				8
Decrease attributable to lapse of statute of limitations	(3		)		(29		)
Balance at December 31,	$	1,046			$	920

14. Net Income (Loss) Per Share

The Company calculates basic net income (loss) per share by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share takes into account the effect of potential dilutive common shares when the effect is dilutive. The effect of potential dilutive common shares, including common stock issuable upon exercise of outstanding stock options, is computed using the treasury stock method. The effect of potential dilutive common shares from the conversion of outstanding convertible preferred securities is computed using the as-if converted method at the stated conversion rate. The RSUs granted to members of the Company’s board of directors contain non-forfeitable rights to dividends and therefore are considered to be participating securities in periods of net income. As a result, the calculation of basic and diluted net income (loss) per share excludes net income (loss) attributable to the unvested RSUs granted to the Company’s board of directors from the numerator and excludes the impact of the unvested RSUs granted to the Company’s board of directors from the denominator.

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

		Year Ended December 31,
		2014				2013				2012
		(In thousands, except per share data)
Numerator:
Net income attributable to common stockholders		$	62,669			$	55,517			$	62,939
Net income allocated to participating securities			(43	)			(46	)			(54	)
Numerator for basic net income per share			62,626				55,471				62,885
Dividends on Series A Preferred Stock			7,000				7,000				1,692
Dividends on Series B Preferred Stock			5,320				-				-
Numerator for diluted net income per share		$	74,946			$	62,471			$	64,577
Denominator:
Denominator for basic net income per share - weighted average outstanding common shares			88,080				76,909				74,239
Dilutive effect of warrants			-				-				1,272
Dilutive effect of stock options			85				-				6
Dilutive effect of contingently issuable shares			-				-				-
Dilutive effect of Series A Preferred Stock			10,602				10,602				2,665
Dilutive effect of Series B Preferred Stock			10,633				-				-
Denominator for diluted net income per share			109,400				87,511				78,182
Net income per share attributable to common stockholders - basic		$	0.71			$	0.72			$	0.85
Net income per share attributable to common stockholders - diluted		$	0.69			$	0.71			$	0.83

	Year Ended December 31,
	2017				2016				2015
	(In thousands, except per share data)
Numerator:
Net income (loss) attributable to common stockholders (numerator for basic net income per share)	$	218,420			$	95,596			$	(8,313	)
Net (income) loss allocated to participating securities	(215		)		(123		)		3
Numerator for basic net income (loss) per share	218,205				95,473				(8,310		)
Dividends on Series A preferred stock, declared and undeclared	7,000				7,000				—
Dividends on Series B preferred stock, declared and undeclared	8,436				8,436				—
Numerator for diluted net income (loss) per share	$	233,641			$	110,909			$	(8,310	)
Denominator: Denominator for basic net income (loss) per share - weighted   average outstanding common shares	97,934				95,967				95,097
Dilutive effect of stock options	1,558				250				—
Dilutive effect of Performance RSUs	1,308				1,328				—
Dilutive effect of Series A preferred stock	10,602				10,602				—
Dilutive effect of Series B preferred stock	16,728				16,728				—
Denominator for diluted net income (loss) per share	128,130				124,875				95,097
Net income (loss) per share attributable to common stockholders - basic	$	2.23			$	1.00			$	(0.09	)
Net income (loss) per share attributable to common stockholders - diluted	$	1.82			$	0.89			$	(0.09	)

For the year ended December 31, 2014, warrants2017, $5.3 million and $6.3 million in cumulative unpaid dividends to purchase 0.3holders of the Series A Preferred Stock and Series B Preferred Stock, respectively, were not declared as a result of all cash dividends being suspended in connection with the amendments to the Credit Facility described in Note 5, but such amounts were deducted to arrive at net income attributable to common stockholders. For the year ended December 31, 2017, 2.1 million sharesunvested service-based RSUs were excluded from the computation of common stockbasic net income per share and not included in the computation of diluted net income per share, as the effect would be anti-dilutive, and 0.2 million unvested performance-based RSUs were not included in the computation of basic and diluted net income per share, as certain performance criteria have not been satisfied.

For the year ended December 31, 2016, options to purchase 3.63.2 million shares of common stock were not included in the computation of diluted net income per share, as the effect would be anti-dilutive. Additionally, for the year ended December 31, 2014, 1.3anti-dilutive, and 1.4 million unvested service-based RSUs were excluded from the computation of basic and diluted net income per share. In January 2015, the Company granted approximately 0.2 million stock options and 0.1 million RSUs to employees and members of the Company’s board of directors. These grants could have dilutive effects on net income per share in future periods.

For the year ended December 31, 2013, warrants to purchase 0.4 million shares of common stock and options to purchase 5.2 million shares of common stock were not included in the computation of diluted net income per share, as the effect would be anti-dilutive. Additionally, for the year ended December 31, 2013, 0.9 million unvested RSUs were excluded from the computation of basic and diluted net income per share.

For the year ended December 31, 2012, warrants to purchase 0.32015, 1.3 million shares of common stock, options to purchase 4.3 million shares of common stockunvested service-based RSUs were not included in the computation of dilutedbasic net incomeloss per share asshare. Due to the effect would be anti-dilutive. Additionally,Company’s net loss for the year ended December 31, 2012, 0.5 million unvested RSUs2015, all potential common stock equivalents were excluded from the computation of basic and diluted net income per share.

anti-dilutive.

15. Selected Quarterly Information (Unaudited)

The following represents the Company’s unaudited quarterly results for the years ended December 31, 2014 and 2013:

		Quarter Ended
		March 31,				June 30,				September 30,				December 31,
		2014				2014				2014				2014
		(In thousands, except per share data)
Revenue		$	98,032			$	102,521			$	107,493			$	100,511
Operating income		$	28,344			$	29,713			$	33,013			$	31,841
Net income		$	16,543			$	15,019			$	20,388			$	23,039
Net income per common share - basic		$	0.19			$	0.14			$	0.18			$	0.20
Net income per common share -diluted		$	0.19			$	0.14			$	0.17			$	0.19

		Quarter Ended
		March 31,				June 30,				September 30,				December 31,
		2013				2013				2013				2013
		(In thousands, except per share data)
Revenue		$	89,189			$	94,684			$	100,569			$	98,207
Operating income		$	25,338			$	28,848			$	29,451			$	26,257
Net income		$	14,934			$	15,413			$	16,585			$	15,585
Net income per common share - basic		$	0.17			$	0.18			$	0.19			$	0.18
Net income per common share -diluted		$	0.17			$	0.18			$	0.19			$	0.18

results:

	Quarter Ended
	March 31, 2017				June 30, 2017				September 30, 2017				December 31, 2017
	(In thousands, except per share data)
Revenue	$	104,426			$	111,604			$	116,547			$	115,469
Operating income (loss) (1)	$	55,602			$	35,742			$	38,082			$	(13,950	)
Net income (2)	$	37,948			$	24,778			$	29,253			$	141,877
Net income per common share - basic	$	0.35			$	0.21			$	0.26			$	1.40
Net income per common share -diluted	$	0.30			$	0.20			$	0.23			$	1.10

(1)	Includes accelerated depreciation of $36.8 million in the fourth quarter of 2017 associated with the write-off of the full amount previously paid to Kosmotras which decreased operating income. Also includes the impact of $14.2 million related to the gain on the transaction with Boeing, effective January 3, 2017.

(2)	Includes the impact of provisional estimates related to deferred tax assets and liabilities resulting from the Tax Act implemented in December 2017.

	Quarter Ended
	March 31, 2016				June 30, 2016				September 30, 2016				December 31, 2016
	(In thousands, except per share data)
Revenue	$	104,202			$	109,195			$	112,794			$	107,449
Operating income	$	43,278			$	41,729			$	49,768			$	41,596
Net income	$	28,520			$	26,854			$	31,555			$	24,103
Net income per common share - basic	$	0.26			$	0.24			$	0.29			$	0.21
Net income per common share -diluted	$	0.23			$	0.22			$	0.26			$	0.19

The sum of the per share amounts does not equal the annual amounts due to changes in the weighted averageweighted-average number of common shares outstanding during the year.

90

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

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

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Such internal control includes those policies and procedures that:

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of our company;

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of our company; and

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2014.2017. In making this assessment, our management used the criteria set forth inInternal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework). Based on its assessment, our management has determined that, as of December 31, 2014,2017, our internal control over financial reporting was effective based on those criteria.

criteria

Our independent registered public accounting firm, Ernst & Young LLP, has audited our 20142017 financial statements. Ernst & Young LLP was given unrestricted access to all financial records and related data, including minutes of all meetings of stockholders, the Board of Directors and committees of the Board. Ernst & Young LLP has issued an unqualified report on our 20142017 financial statements as a result of the audit and also has issued an unqualified report on our internal controls over financial reporting which is attached hereto.

91

Changes in Internal Control Over Financial Reporting

During the quarter ended December 31, 2014,2017, there were no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

92

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

The Board of Directors and Stockholders of Iridium Communications Inc.

Opinion on Internal Control over Financial Reporting

We have audited Iridium Communications Inc.’s internal control over financial reporting as of December 31, 2014,2017, based on criteria established in Internal Control—IntegratedControl-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Iridium Communications Inc.’s (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on the COSO criteria.

We also have audited, in accordance with the standards of the of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Iridium Communications Inc. as of December 31, 2017 and 2016, the related consolidated statements of operations and comprehensive income, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2017 and the related notes and our report dated February 22, 2018 expressed an unqualified report thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definitions and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Iridium Communications Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Iridium Communications Inc. as of December 31, 2014 and 2013, and the related consolidated statements of operations and comprehensive income, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2014 and our report dated

/s/ Ernst & Young LLP

Tysons, Virginia

February 26, 2015 expressed an unqualified opinion thereon.

	/s/ Ernst & Young LLP
McLean, Virginia
February 26, 2015

22, 2018

Item 9B. Other Information

None.

PART III

We will file a definitive Proxy Statement for our 20152018 Annual Meeting of Stockholders (the “2015“2018 Proxy Statement”) with the SEC, pursuant to Regulation 14A, not later than 120 days after the end of our fiscal year. Accordingly, certain information required by Part III has been omitted as permitted by General Instruction G(3)G (3) to Form 10-K. Only those sections of the 20152018 Proxy Statement that specifically address the items set forth herein are incorporated by reference.

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this Item is incorporated by reference to the sections of our 20152018 Proxy Statement entitled “Board of Directors and Committees,” “Election of Directors,” “Management” and “Section 16(a) Beneficial Ownership Reporting Compliance.”

Item 11. Executive Compensation

The information required by this Item is incorporated by reference to the sections of our 20152018 Proxy Statement entitled “Compensation Discussion and Analysis,” “Executive Compensation” and “Director Compensation.”

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item is incorporated by reference to the sections of our 20152018 Proxy Statement entitled “Security Ownership of Certain Beneficial Owners and Management” and “Securities Authorized for Issuance under Equity Compensation Plans.”

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this Item is incorporated by reference to the sections of our 20152018 Proxy Statement entitled “Transactions with Related Parties” and “Director Independence.”

Item 14. Principal Accountant Fees and Services

The information required by this Item is incorporated by reference to the section of our 20152018 Proxy Statement entitled “Independent Registered Public Accounting Firm Fees.”

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) The following documents are filed as part of this Form 10-K:

(1) Financial Statements

Iridium Communications Inc.:
Report of Ernst & Young LLP, Independent Registered Public Accounting Firm	70
Consolidated Balance Sheets	71
Consolidated Statements of Operations and Comprehensive Income	72
Consolidated Statements of Changes in Stockholders’ Equity	73
Consolidated Statements of Cash Flows	74
Notes to Consolidated Financial Statements	75

(2) Financial Statement Schedules

The financial statement schedules are not included here because required information is included in the consolidated financial statements.

94

(3) Exhibits

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

(3) Exhibits

The exhibits that are filed or furnished with this report or that are incorporated by reference herein are set forth in the Exhibit Index on page 97, which is incorporated by reference herein.

95

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

IRIDIUM COMMUNICATIONS INC.

Date: February 26, 2015	By:	/s/  Thomas J. Fitzpatrick
Exhibit No.		Thomas J. Fitzpatrick
		Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Name		Title		Date
/S/    MatthewJ. Desch		Chief Executive Officer and Director		February 26, 2015
Matthew J. Desch		(Principal Executive Officer)
/s/  Thomas J. Fitzpatrick		Chief Financial Officer, Chief Administrative Officer and Director		February 26, 2015
Thomas J. Fitzpatrick		(Principal Financial Officer)
/s/  Richard P. Nyren		Vice President and Corporate Controller		February 26, 2015
Richard P. Nyren		(Principal Accounting Officer)
/s/    RobertH. Niehaus		Director and Chairman of the Board		February 26, 2015
Robert H. Niehaus
/s/    ThomasC. Canfield		Director		February 26, 2015
Thomas C. Canfield
/s/    PeterM. Dawkins		Director		February 26, 2015
Peter M. Dawkins
/s/    AlvinB. Krongard		Director		February 26, 2015
Alvin B. Krongard
/s/    Eric T. Olson		Director		February 26, 2015
Eric T. Olson
/s/    StevenB. Pfeiffer		Director		February 26, 2015
Steven B. Pfeiffer
/s/    ParkerW. Rush		Director		February 26, 2015
Parker W. Rush
/s/    S. ScottSmith		Director		February 26, 2015
S. Scott Smith
/s/    BarrY J.West		Director		February 26, 2015
Barry J. West

EXHIBIT INDEX

Exhibit No.		Document
3.1		Amended and Restated Certificate of Incorporation dated September 29, 2009, incorporated herein by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 29, 2009.
3.2		Certificate of Designations of Iridium Communications Inc. filed on October 3, 2012 with the Secretary of State of the State of Delaware designating the preferences, limitations, voting powers and relative rights of the 7% Series A Cumulative Perpetual Convertible Preferred Stock, incorporated herein by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on October 3, 2012.
3.3		Certificate of Designations of Iridium Communications Inc. filed on May 14, 2014 with the Secretary of State of the State of Delaware designating the preferences, limitations, voting powers and relative rights of the 6.75% Series B Cumulative Perpetual Convertible Preferred Stock, incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form 8-A filed with the SEC on May 14, 2014.
3.4		Certificate of Amendment to Amended and Restated Certificate of Incorporation dated May 12, 2015, incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on May 15, 2015.
3.5		Amended and Restated Bylaws, incorporated herein by reference to Exhibit 3.2 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 29, 2009.
		May 15, 2015.
4.1		Specimen Common Stock Certificate, incorporated herein by reference to Exhibit 4.2 of the Registrant’s Registration Statement on Form S-1 (Registration No. 333-147722) filed with the SEC on February 4, 2008.
4.2		Amended and Restated Warrant Agreement between the Registrant and American Stock Transfer & Trust Company, incorporated herein by reference to Exhibit 4.3 of the Registrant’s Current Report on Form 8-K filed on February 26, 2008.
4.3		Warrant Agreement for $11.50 Warrants between the Company and American Stock Transfer & Trust Company, incorporated herein by reference to Exhibit 4.4 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 29, 2009.
4.4		Specimen Warrant Certificate for $11.50 Warrants, incorporated herein by reference to Exhibit 4.5 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 29, 2009.
10.1†		Supplemental Agreement dated as of May 2, 2014July 26, 2017 between Iridium Satellite LLC and Société Générale, as COFACEBPIAE Agent, amending and restating the COFACESecond Amended and Restated BPIAE (formerly COFACE) Facility Agreement among Iridium Satellite LLC, the Registrant, Iridium Holdings LLC, SE Licensing LLC, Iridium Carrier Holdings LLC, Iridium Carrier Services LLC, Syncom-Iridium Holdings Corp., Iridium Constellation LLC and Iridium Government Services LLC; Deutsche Bank AG (Paris Branch), Banco Santander SA, Société Générale, Natixis, Mediobanca International (Luxembourg) S.A., BNP Paribas, Crédit Industriel et Commercial, Intesa Sanpaolo S.p.A. (Paris Branch) and Unicredit Bank Austria AG; Deutsche Bank Trust Company Americas as the security agent and U.S. collateral agent; and Société Générale as the COFACEBPIAE agent, dated as of October 4, 2010, as amended and restated on August 1, August 2012 and May 2, 2014, and as further amended on 26May 7, 2015, November 24, 2015, December 31, 2015, February 24, 2016, July 201318, 2016 and as amended on 30 October 2013,February 10, 2017, incorporated herein by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on July 31, 2014.October 26, 2017.

Exhibit No.		Document
10.2		Security Agreement, dated as of October 13, 2010, between the Registrant, Iridium Satellite LLC, Iridium Holdings LLC, Iridium Carrier Holdings LLC, Iridium Carrier Services LLC, SE Licensing LLC, Iridium Government Services LLC, Iridium Constellation LLC, Syncom-Iridium Holdings Corp. and Deutsche Bank Trust Company Americas, acting as Security Agent, incorporated by reference to Exhibit 10.2 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 7, 2011.
10.3		Pledge Agreement, dated as of October 13, 2010, between the Registrant, Syncom-Iridium Holdings Corp., Iridium Holdings LLC, Iridium Carrier Holdings LLC, Iridium Satellite LLC, Iridium Constellation LLC and Deutsche Bank Trust Company Americas, acting as Security Agent, incorporated by reference to Exhibit 10.3 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 7, 2011.
10.4		Stock Pledge Agreement, dated as of October 13,October13, 2010, between the Registrant and Deutsche Bank Trust Company Americas, acting as Security Agent, incorporated by reference to Exhibit 10.4 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 7, 2011.
10.5†		Second Amended and Restated Limited Liability Company Agreement of Aireon LLC, between Aireon LLC; Iridium Satellite LLC; NAV CANADA; NAV CANADA Satellite, Inc.; Enav S.p.A.; ENAV North Atlantic LLC; Naviair; Naviair Surveillance A/S; and Irish Aviation Authority Limited, dated as of February 14, 2014, incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 1, 2014.

Exhibit No.		Document
10.6		Subscription Amendment No. 1 to Second Amended and Restated Limited Liability Company Agreement for Preferred Interests betweenof Aireon LLC, and Enav S.p.A., dated as of December 20, 2013,January 14, 2015, incorporated by reference to Exhibit 10.910.1 to the Registrant’s AnnualQuarterly Report on Form 10-K10-Q filed with the SEC on March 4, 2014.April 30, 2015.
10.7†
10.7		Subscription Amendment No. 2 to Second Amended and Restated Limited Liability Company Agreement for Preferred Interests betweenof Aireon LLC, and Naviair, dated as of December 20, 2013,July 6, 2015, incorporated by reference to Exhibit 10.1010.1 to the Registrant’s AnnualQuarterly Report on Form 10-K10-Q filed with the SEC on March 4, 2014.October 29, 2015.
10.8†		Amendment No. 3 to Second Amended and Restated Limited Liability Company Agreement of Aireon LLC, dated as of March 17, 2016, incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on April 28, 2016.
10.810.9		Subscription Amendment No. 4, dated as of July 1, 2016, to the Second Amended and Restated Limited Liability Company Agreement for Preferred Interestsof Aireon LLC, between Aireon LLCLLC; Iridium Satellite LLC; NAV CANADA; NAV CANADA Satellite, Inc.; Enav S.p.A.; ENAV North Atlantic LLC; Naviair; Naviair Surveillance A/S; and Irish Aviation Authority Limited, dated as of December 20, 2013,February 14, 2014, incorporated herein by reference to Exhibit 10.1110.2 to the Registrant’s AnnualQuarterly Report on Form 10-K10-Q filed with the SEC on March 4, 2014.October 27, 2016.
10.10
10.9		Amendment No. 5, dated as of March 8, 2017, to the Second Amended and Restated SubscriptionLimited Liability Company Agreement for Preferred Interestsof Aireon LLC, between Aireon LLC andLLC; Iridium Satellite LLC; NAV CANADA; NAV CANADA Satellite, Inc.; Enav S.p.A.; ENAV North Atlantic LLC; Naviair; Naviair Surveillance A/S; Irish Aviation Authority Limited and IAA North Atlantic Inc., dated as of December 20, 2013,February 14, 2014, incorporated herein by reference to Exhibit 10.1210.2 to the Registrant’s AnnualQuarterly Report on Form 10-K10-Q filed with the SEC on March 4, 2014.April 27, 2017.
10.11		Amendment No. 6, dated as of June 23, 2017, to the Second Amended and Restated Limited Liability Company Agreement of Aireon LLC, between Aireon LLC; Iridium Satellite LLC; NAV CANADA; NAV CANADA Satellite, Inc.; Enav S.p.A.; ENAV North Atlantic LLC; Naviair; Naviair Surveillance A/S; Irish Aviation Authority Limited and IAA North Atlantic Inc., dated as of February 14, 2014, incorporated herein by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on July 27, 2017.
10.10†10.12†		Settlement Agreement between Iridium Holdings LLC, Iridium Satellite LLC, the Registrant and Motorola, Inc., dated as of September 30, 2010, incorporated by reference to Exhibit 10.5 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 7, 2011.
10.13†
10.11†		Security Agreement, dated as of September 30, 2010, between Iridium Satellite LLC and Deutsche Bank Trust Company Americas, acting as Collateral Agent, incorporated by reference to Exhibit C to Exhibit 10.5 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 7, 2011.
10.14
10.12		Guaranty, dated as of September 30, 2010, by Iridium Holdings LLC and the Registrant in favor of Motorola, Inc., incorporated by reference to Exhibit 10.8 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 7, 2011.
10.15
10.13		Amended and Restated Transition Services, Products and Asset Agreement, between Iridium Satellite LLC, Iridium Holdings LLC and Motorola, Inc., dated as of September 30, 2010, incorporated by reference to Exhibit 10.9 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 7, 2011.
10.16
10.14		Amendment No. 1 to Amended and Restated Transition Services, Products and Asset Agreement, between Iridium Satellite LLC, Iridium Holdings LLC and Motorola, Inc., dated as of December 30, 2010, incorporated by reference to Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 7, 2011.

Exhibit No.		Document
10.15†10.17†		System Intellectual Property Rights Amendment and Agreement, between Iridium Satellite LLC and Motorola, Inc., dated as of September 30, 2010, incorporated by reference to Exhibit 10.11 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 7, 2011.
10.18
10.16		Supplemental Subscriber Equipment Technology Amendment and Agreement, between Iridium Satellite LLC and Motorola, Inc., dated as of September 30, 2010, incorporated by reference to Exhibit 10.12 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 7, 2011.
10.19†
10.17†		Full Scale System Development Contract No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated June 1, 2010, incorporated by reference to Annex 1 to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q/A filed with the SEC on October 29, 2010.
10.20†
10.18†		Amendment No. 1 to the Full Scale System Development Contract No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated August 6, 2010, incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q/A filed with the SEC on January 14, 2011.
10.21†
10.19†		Amendment No. 2 to the Full Scale System Development Contract No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated September 30, 2010, incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 9, 2010.
10.22†
10.20†		Amendment No. 3 to the Full Scale System Development Contract No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated October 25, 2010, incorporated by reference to Exhibit 10.18 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 7, 2011.
10.23†
10.21†		Amendment No. 4 to the Full Scale System Development Contract No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated as of April 29, 2011, incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on August 8, 2011.
10.24†
10.22†		Amendment No. 5 to the Full Scale System Development Contract No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated September 12, 2011, incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 8, 2011.

Exhibit No.10.25†		Document
10.23†		Amendment No. 6 to the Full Scale System Development Contract No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated October 24, 2011, incorporated by reference to Exhibit 10.22 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 6, 2012.
10.26†
10.24†		Amendment No. 7 to the Full Scale System Development Contract No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated March 12, 2012, incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 3, 2012.
10.27†
10.25†		Amendment No. 8 to the Full Scale System Development Contract No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated March 13, 2012, incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 3, 2012.
10.28†
10.26†		Amendment No. 9 to the Full Scale System Development Contract No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated June 19, 2012, incorporated by reference to Exhibit 10.1 to the Registrant’s Annual Report on Form 10-Q filed with the SEC on August 2, 2012.
10.29†
10.27†		Amendment No. 10 to the Full Scale System Development Contract No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated June 19, 2012, incorporated by reference to Exhibit 10.2 to the Registrant’s Annual Report on Form 10-Q filed with the SEC on August 2, 2012.
10.30†
10.28†		Amendment No. 11 to the Full Scale System Development Contract No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated July 3, 2012, incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 2, 2012.
10.31†
10.29†		Amendment No. 12 to the Full Scale System Development Contract No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated July 6, 2012, incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 2, 2012.

Exhibit No.		Document
10.30†10.32†		Amendment No. 13 to the Full Scale System Development Contract No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated October 25, 2012, incorporated by reference to Exhibit 10.26 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 5, 2013.
10.33†
10.31†		Amendment No. 14 to the Full Scale System Development Contract No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated November 8, 2012, incorporated by reference to Exhibit 10.27 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 5, 2013.
10.34†
10.32†		Amendment No. 15 to the Full Scale System Development Contract No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated June 11, 2013, incorporated herein by reference to Exhibit 10.2 of the Registrant’s Quarterly Report Form 10-Q filed with the SEC on October 31, 2013.
10.35†
10.33†		Amendment No. 16 to the Full Scale System Development Contract No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated July 24, 2013, incorporated herein by reference to Exhibit 10.3 of the Registrant’s Quarterly Report Form 10-Q filed with the SEC on October 31, 2013.
10.36†
10.34†		Amendment No. 17 to the Full Scale System Development Contract No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated August 20, 2013, incorporated herein by reference to Exhibit 10.4 of the Registrant’s Quarterly Report Form 10-Q filed with the SEC on October 31, 2013.
10.37†
10.35†		Amendment No. 18 to the Full Scale System Development Contract No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated October 21, 2013, incorporated by reference to Exhibit 10.38 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 4, 2014.
10.38†
10.36†		Amendment No. 19 to the Full Scale System Development Contract No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated October 29, 2013, incorporated by reference to Exhibit 10.39 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 4, 2014.
10.39†
10.37†		Amendment No. 20 to the Full Scale System Development Contract No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated July 7, 2014, incorporated herein by reference to Exhibit 10.1 of the Registrant’s Quarterly Report Form 10-Q filed with the SEC on October 30, 2014.
10.40†
10.38†		Amendment No. 21 to the Full Scale System Development Contract No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated July 9, 2014, incorporated herein by reference to Exhibit 10.2 of the Registrant’s Quarterly Report Form 10-Q filed with the SEC on October 30, 2014.

Exhibit No.10.41†		Document
10.39†		Amendment No. 22 to the Full Scale System Development Contract No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated July 14, 2014, incorporated herein by reference to Exhibit 10.3 of the Registrant’s Quarterly Report Form 10-Q filed with the SEC on October 30, 2014.
10.42†		Amendment No. 23 to the Full Scale System Development Contract No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated January 30, 2015, incorporated herein by reference to Exhibit 10.2 of the Registrant’s Quarterly Report Form 10-Q filed with the SEC on April 30, 2015.
10.40†10.43†		Amendment No. 24 to the Full Scale System Development Contact No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated September 22, 2015, incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on October 29, 2015.
10.44†		Amendment No. 26 to the Full Scale System Development Contact No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated September 19, 2016, incorporated herein by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on October 27, 2016.
10.45†		Amendment No. 27 to the Full Scale System Development Contact No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated March 2, 2017, incorporated herein by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on April 27, 2017.
10.46†		Amendment No. 28 to the Full Scale System Development Contact No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated May 18, 2017, incorporated herein by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on October 26, 2017.

Exhibit No.		Document
10.47†		Amendment No. 29 to the Full Scale System Development Contact No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated July 26, 2017, incorporated herein by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on October 26, 2017.
10.48††		Amendment No. 30 to the Full Scale System Development Contact No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated October 26, 2017.
10.49††		Amendment No. 31 to the Full Scale System Development Contact No. IS-10-021 between Iridium Satellite LLC and Thales Alenia Space France for the Iridium NEXT System, dated October 30, 2017.
10.50†		Contract for Launch Services No. IS-10-008 between Iridium Satellite LLC and Space Exploration Technologies Corp., dated March 19, 2010, incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q/A filed with the SEC on March 29, 2011.
10.51†
10.41†		Amendment No. 1 to the Contract for Launch Services No. IS-10-008 between Iridium Satellite LLC and Space Exploration Technologies Corp., dated September 17, 2010, incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 9, 2010.
10.52†
10.42†		Amendment No. 2 to the Contract for Launch Services No. IS-10-008 between Iridium Satellite LLC and Space Exploration Technologies Corp., effective as of August 1, 2012, incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 2, 2012.
10.53†
10.43†		Amendment No. 3 to the Contract for Launch Services No. IS-10-008 between Iridium Satellite LLC and Space Exploration Technologies Corp., dated as of May 9, 2013, incorporated herein by reference to Exhibit 10.5 of the Registrant’s Quarterly Report Form 10-Q filed with the SEC on October 31, 2013.
10.54
10.44		Amendment No. 4 to the Contract for Launch Services No. IS-10-008 between Iridium Satellite LLC and Space Exploration Technologies Corp., dated as of January 27, 2014, incorporated herein by reference to Exhibit 10.2 of the Registrant’s Quarterly Report Form 10-Q filed with the SEC on May 1, 2014.
10.55†
10.45†		Amendment No. 5 to the Contract for Launch Services No. IS-10-008 between Iridium Satellite LLC and Space Exploration Technologies Corp., dated as of September 15, 2014, incorporated herein by reference to Exhibit 10.4 of the Registrant’s Quarterly Report Form 10-Q filed with the SEC on October 30, 2014.
10.56†
10.46†		Amendment No. 6 to the Contract for Launch Services No. IS-11-032IS-10-008 between Iridium Satellite LLC and International Space Company Kosmotras,Exploration Technologies Corp., dated as of June 14, 2011, incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on August 8, 2011.

10.47†		Amendment No. 1 to Contract for Launch Services No. IS-11-032 between Iridium Satellite LLC and International Space Company Kosmotras, dated as of September 25, 2012 and effective as of June 13, 2013,November 2, 2015, incorporated herein by reference to Exhibit 10.210.53 of the Registrant’s QuarterlyAnnual Report Form 10-Q10-K filed with the SEC on August 1, 2013.February 25, 2016.
10.57††
10.48†		Amendment No. 27 to the Contract for Launch Services No. IS-11-032IS-10-008 between Iridium Satellite LLC and International Space Company Kosmotras, dated as of April 15, 2013, incorporated herein by reference to Exhibit 10.3 of the Registrant’s Quarterly Report Form 10-Q filed with the SEC on August 1, 2013.
10.49†		Amendment No. 3 to Contract for Launch Services No. IS-11-032 between Iridium Satellite LLC and International Space Company Kosmotras, dated as of June 13, 2013, incorporated herein by reference to Exhibit 10.4 of the Registrant’s Quarterly Report Form 10-Q filed with the SEC on August 1, 2013.
10.50†		Amendment No. 4 to Contract for Launch Services No. IS-11-032 between Iridium Satellite LLC and International Space Company Kosmotras, dated as of April 21, 2014, incorporated herein by reference to Exhibit 10.2 of the Registrant’s Quarterly Report Form 10-Q filed with the SEC on July 31, 2014.
10.51†		Amendment No. 5 to Contract for Launch Services No. IS-11-032 between Iridium Satellite LLC and International Space Company Kosmotras, dated as of June 20, 2014, incorporated herein by reference to Exhibit 10.3 of the Registrant’s Quarterly Report Form 10-Q filed with the SEC on July 31, 2014.
10.52†		Products and Services Agreement No. AIR-12-001 between Aireon LLC and Harris Corporation Government Communications Systems Division, dated as of June 19, 2012, incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q/A filed with the SEC on September 12, 2012.
10.53†		Amendment No. 1 to the Products and Services Agreement No. AIR-12-001 between Aireon LLC and Harris Corporation Government Communications Systems Division, dated as of July 31, 2012, incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 2, 2012.

Exhibit No.		Document
10.54†		Amendment No. 2 to the Products and Services Agreement No. AIR-12-001 between Aireon LLC and Harris Corporation Government Communications Systems Division, dated as of September 4, 2012, incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 2, 2012.
10.55		Amendment No. 3 to the Products and Services Agreement No. AIR-12-001 between Aireon LLC and Harris Corporation Government Communications Systems Division, dated as of March 18, 2013, incorporated herein by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 10-Q filed with the SEC on May 2, 2013.

10.56††		Amendment No. 14 to the Products and Services Agreement No. AIR-12-001 between Aireon LLC and Harris Corporation Government Communications Systems Division,Exploration Technologies Corp., dated as of November 12, 2014.
10.57††		Amendment No. 15 to the Products and Services Agreement No. AIR-12-001 between Aireon LLC and Harris Corporation Government Communications Systems Division, dated as of December 18, 2014.
		2, 2015.
10.58†		Iridium NEXT Support Services Insourcing Agreement, No. IS-10-019, by and between Iridium Satellite LLC and The Boeing Company, for Support Services for Iridium NEXT, dated as of MayNovember 28, 2010,2016, incorporated herein by reference to Exhibit 10.910.66 to the Registrant’s QuarterlyRegistrant's Annual Report on Form 10-Q/A10-K filed with the SEC on March 29, 2011.February 23, 2017.
10.59
10.59††		Amendment No. 5 to Iridium NEXT Support Services Agreement No. IS-10-019, by and between Iridium Satellite LLC and The Boeing Company for Support Services for Iridium NEXT, effective as of January 1, 2015.
10.60		Indemnification Contract, dated December 5, 2000, among Iridium Satellite LLC, The Boeing Company, Motorola, Inc. and the United States, incorporated herein by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 29, 2009.
10.60†
10.61†		Terms and Conditions for De-Orbit Postponement Modification for Contract DCA100-01-C-3001, by and between Iridium Satellite LLC, The Boeing Company and the United States Government, dated September 7,September7, 2010, incorporated herein by reference to Exhibit 10.7 of the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 9, 2010.
10.61
10.62		Intellectual Property Rights Agreement, dated December 11, 2000, among Motorola Inc. and Iridium Satellite LLC, incorporated herein by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 29, 2009.
10.62
10.63		Subscriber Equipment Technology Agreement (Design), dated as of September 30, 2002, by and among Motorola Inc. and SE Licensing LLC, incorporated herein by reference to Exhibit 10.4 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 29, 2009.
10.63
10.64		Subscriber Equipment Technology Agreement (Manufacturing), dated as of September 30, 2002, by and among Motorola Inc. and SE Licensing LLC, incorporated herein by reference to Exhibit 10.5 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 29, 2009.
10.64†
10.65†		Amended and Restated Contract Boeing No. BSC-2000-001 between Iridium Constellation LLC and The Boeing Company for Transition, Operations and Maintenance, Engineering Services, and Re-Orbit of the Iridium Communications System, dated as of May 28, 2010, incorporated herein by reference to Exhibit 10.8 of the Registrant’s Quarterly Report on Form 10-Q/A filed with the SEC on March 29, 2011.
10.66†		Contract for Enhanced Mobile Satellite Services between Iridium Satellite LLC and the Defense Information Systems Agency, effective October 22, 2013, incorporated by reference to Exhibit 10.59 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 4, 2014.
10.65†		Amendment to Contract for Enhanced Mobile Satellite Services between Iridium Satellite LLC and the Defense Information Systems Agency, dated as of June 3, 2015, incorporated herein by reference to Exhibit 10.3 of the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on July 30, 2015.
10.6710.66		Form of Registration Rights Agreement, incorporated by reference to Annex D of the Registrant’s Proxy Statement filed with the SEC on August 28, 2009.

Exhibit No.		Document
10.68†10.67†		Amendment No. 1 to Registration Rights Agreement, dated as of March 29, 2011, by and among Iridium Communications Inc. and the parties listed on the signature pages thereto, incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K, filed with the SEC on March 30, 2011.
10.68*
10.69*		Amended and Restated Employment Agreement, dated as of March 30, 2011, by and between the Registrant and Matthew J. Desch, incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on April 5, 2011.
10.69*
10.70*		Employment Agreement, dated as of March 31, 2010, by and between the Registrant and Thomas J. Fitzpatrick, incorporated herein by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 10, 2010.

Exhibit No.10.70*		Document
10.71*		Amendment to Employment Agreement by and between the Registrant and Thomas J. Fitzpatrick, dated as of December 31, 2010, incorporated by reference to Exhibit 10.34 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 7, 2011.
10.71*
10.72*		Employment Agreement between the Registrant and S. Scott Smith, dated as of March 2010, incorporated by reference to Exhibit 10.39 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 6, 2012.
10.72*
10.73*		Amendment to Employment Agreement between the Registrant and S. Scott Smith, dated as of December 31, 2010, incorporated by reference to Exhibit 10.40 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 6, 2012.
10.73*
10.74*		Employment Agreement between the Registrant and Bryan J. Hartin, dated as of December 10, 2012, incorporated by reference to Exhibit 10.69 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 4, 2014.
10.74*
10.75*		Employment Agreement between the Registrant and Thomas D. Hickey, dated as of April 29, 2011, incorporated by reference to Exhibit 10.70 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 4, 2014.
10.75*
10.76*		2009 Iridium Communications Inc. Stock Incentive Plan, incorporated by reference to Annex E of the Registrant’s Proxy Statement filed with the SEC on August 28, 2009.
10.76
10.77		Form of Indemnity Agreement between the Registrant and each of its directors and officers, incorporated by reference to Exhibit 10.5 to the Registrant’s Form S-1/A filed with the SEC on February 4, 2008.
10.77*
10.78*		Form of Stock Option Award Agreement for use in connection with the 2009 Iridium Communications Inc. Stock Incentive Plan, incorporated by reference to Exhibit 10.42 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 7, 2011.
10.78*
10.79*		Form of Restricted Stock Unit Agreement for use in connection with the 2009 Iridium Communications Inc. Stock Incentive Plan, incorporated by reference to Exhibit 10.48 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 6, 2012.
10.79*
10.80*		Performance Share Program established under the Iridium Communications Inc. 20122015 Equity Incentive Plan, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 3, 2014.2016.
10.80*
10.81*		Form of Performance Share Award Grant Notice and Performance Share Award Agreement for use in connection with the Performance Share Program established under the Iridium Communications Inc. 20122015 Equity Incentive Plan, incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 3, 2014.2016.
10.81*
10.82*		Form of Stock Option Agreement for Non-Employee Directors for use in connection with the 2009 Iridium Communications Inc. Stock Incentive Plan, incorporated by reference to Exhibit 10.46 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 7, 2011.
10.82*
10.83*		Form of Restricted Stock Award Agreement for Non-Employee Directors for use in connection with the 2009 Iridium Communications Inc. Stock Incentive Plan, incorporated by reference to Exhibit 10.47 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 7, 2011.
10.83*
10.84*		Form of Restricted Stock Unit Agreement for Non-Employee Directors for use in connection with the 2009 Iridium Communications Inc. Stock Incentive Plan, incorporated by reference to Exhibit 10.48 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 7, 2011.
10.84*
10.85*		Iridium Communications Inc. 2012 Equity Incentive Plan, incorporated by reference to Appendix A to the Registrant’s Proxy Statement filed with the SEC on April 10, 2012.
10.85*
10.86*		Forms of Stock Option Grant Notice and Stock Option Agreement for use in connection with the Iridium Communications Inc. 2012 Equity Incentive Plan, incorporated by reference to Exhibit 99.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 23, 2012.
10.86*
10.87*		Forms of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement for use in connection with the Iridium Communications Inc. 2012 Equity Incentive Plan, incorporated by reference to Exhibit 99.3 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 23, 2012.

Exhibit No.		Document
10.87*		Non-Employee Director Compensation Plan dated December 7, 2017.
10.88*		Non-Employee Director Compensation Plan, incorporated herein by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on December 22, 2009.
10.89*		Iridium Communications Inc. 2014 Executive Performance Bonus Plan, incorporated herein by reference to Exhibit 10.3 of the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 1, 2014.
10.89*
10.90*		Performance Share Program established under the Iridium Communications Inc. 2012Amended and Restated 2015 Equity Incentive Plan, incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on March 3, 2014.May 16, 2017.
10.90*
10.91*		Form Forms of Performance Share AwardOption Grant Notice and Performance Share AwardOption Agreement for use in connection with the Performance Share Program established under the Iridium Communications Inc. 2012Amended and Restated 2015 Equity Incentive Plan, incorporated by reference to Exhibit 10.2 toof the Registrant’s Current Report on Form 8-K filed with the SEC on March 3, 2014.May 15, 2015.
10.91*		Forms of Restricted Stock Unit Award Grant Notice and Restricted Stock Unit Award Agreement for use in connection with the Iridium Communications Inc. Amended and Restated 2015 Equity Incentive Plan, incorporated by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K filed with the SEC on May 15, 2015.
10.92*		Forms of Non-Employee Director Option Grant Notice and Non-Employee Director Option Agreement for use in connection with the Iridium Communications Inc. Amended and Restated 2015 Equity Incentive Plan, incorporated by reference to Exhibit 10.4 of the Registrant’s Current Report on Form 8-K filed with the SEC on May 15, 2015.
10.93*		Forms of Non-Employee Director Restricted Stock Unit Award Grant Notice and Non-Employee Director Restricted Stock Unit Award Agreement for use in connection with the Iridium Communications Inc. 2015 Equity Incentive Plan, incorporated by reference to Exhibit 10.5 of the Registrant’s Current Report on Form 8-K filed with the SEC on May 15, 2015.
10.94*		UK Sub-Plan of the Iridium Communications Inc. 2015 Equity Incentive Plan, incorporated by reference to Exhibit 10.6 of the Registrant’s Current Report on Form 8-K filed with the SEC on May 15, 2015.
10.95*		Forms of UK Option Grant Notice and UK Option Agreement for use in connection with the Iridium Communications Inc. Amended and Restated 2015 Equity Incentive Plan, incorporated by reference to Exhibit 10.7 of the Registrant’s Current Report on Form 8-K filed with the SEC on May 15, 2015.
10.96*		Forms of UK Restricted Stock Unit Award Grant Notice and UK Restricted Stock Unit Award Agreement for use in connection with the Iridium Communications Inc. 2015 Equity Incentive Plan, incorporated by reference to Exhibit 10.8 of the Registrant’s Current Report on Form 8-K filed with the SEC on May 15, 2015.
10.97*		Forms of UK Non-Employee Director Option Grant Notice and UK Non-Employee Director Option Agreement for use in connection with the Iridium Communications Inc. Amended and Restated 2015 Equity Incentive Plan, incorporated by reference to Exhibit 10.9 of the Registrant’s Current Report on Form 8-K filed with the SEC on May 15, 2015.
10.98*		Forms of UK Non-Employee Director Restricted Stock Unit Award Grant Notice and UK Non-Employee Director Restricted Stock Unit Award Agreement for use in connection with the Iridium Communications Inc. Amended and Restated 2015 Equity Incentive Plan, incorporated by reference to Exhibit 10.10 of the Registrant’s Current Report on Form 8-K filed with the SEC on May 15, 2015.
21.1		List of Subsidiaries.
23.1		Consent of Ernst & Young LLP, independent registered public accounting firm.
31.1		Certification of Chief Executive Officer pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
31.2		Certification of Chief Financial Officer pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema
101.CAL		XBRL Taxonomy Extension Calculation Linkbase
101.DEF		XBRL Taxonomy Extension Definition Linkbase
101.LAB		XBRL Taxonomy Extension Label Linkbase
101.PRE		XBRL Taxonomy Extension Presentation Linkbase

†	Confidential treatment has been granted for certain portions omitted from this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Confidential portions of this exhibit have been separately filed with the Securities and Exchange Commission.

††	Confidential treatment has been requested for certain portions omitted from this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Confidential portions of this exhibit have been separately filed with the Securities and Exchange Commission.

*	Denotes compensatory plan, contract or arrangement.

Item 16.Form 10-K Summary

Not applicable.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

103
	IRIDIUM COMMUNICATIONS INC.
Date: February 22, 2018	By:	/s/  Thomas J. Fitzpatrick
		Thomas J. Fitzpatrick
		Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: 

Name		Title		Date
/s/ Matthew J. Desch		Chief Executive Officer and Director		February 22, 2018
Matthew J. Desch		(Principal Executive Officer)
/s/ Thomas J. Fitzpatrick		Chief Financial Officer, Chief Administrative Officer and Director		February 22, 2018
Thomas J. Fitzpatrick		(Principal Financial Officer)
/s/ Timothy P. Kapalka		Vice President and Corporate Controller, Iridium Satellite LLC		February 22, 2018
Timothy P. Kapalka		(Principal Accounting Officer)
/s/Robert H. Niehaus		Director and Chairman of the Board		February 22, 2018
Robert H. Niehaus
/s/ Thomas C. Canfield		Director		February 22, 2018
Thomas C. Canfield
/s/ Jane L. Harman		Director		February 22, 2018
Jane L. Harman
/s/ Alvin B. Krongard		Director		February 22, 2018
Alvin B. Krongard
/s/ Eric T. Olson		Director		February 22, 2018
Eric T. Olson
/s/ Steven B. Pfeiffer		Director		February 22, 2018
Steven B. Pfeiffer
/s/ Parker W. Rush		Director		February 22, 2018
Parker W. Rush
/s/ Henrik O. Schliemann		Director		February 22, 2018
Henrik O. Schliemann
/s/ S. Scott Smith		Director		February 22, 2018
S. Scott Smith
/s/ Barry J. West		Director		February 22, 2018
Barry J. West

117