Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Jan. 31, 2019 | Jun. 29, 2018 | |
Document and Entity Information | |||
Entity Registrant Name | Maxar Technologies Inc. | ||
Entity Central Index Key | 1,121,142 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 2,962,274,048 | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 59,404,307 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues: | |||
Revenues | $ 2,141 | $ 1,631 | $ 1,558 |
Costs and expenses: | |||
Selling, general and administrative | 507 | 387 | 223 |
Depreciation and amortization | 449 | 161 | 72 |
Impairment losses, net | 1,030 | ||
Operating (loss) income | (1,125) | (44) | 107 |
Interest expense, net | 202 | 99 | 33 |
Other expense (income), net | 1 | (39) | 7 |
(Loss) income before taxes | (1,328) | (104) | 67 |
Income tax benefit | (62) | (162) | (1) |
Equity in income from joint ventures, net of tax | (2) | ||
Net (loss) income | $ (1,264) | $ 58 | $ 68 |
(Loss) earnings per common share: | |||
Basic (In dollars per share) | $ (21.76) | $ 1.41 | $ 1.87 |
Diluted (In dollars per share) | $ (21.76) | $ 1.40 | $ 1.86 |
Product | |||
Revenues: | |||
Revenues | $ 851 | $ 1,119 | $ 1,286 |
Costs and expenses: | |||
Product costs, excluding depreciation and amortization | 872 | 986 | 1,064 |
Service | |||
Revenues: | |||
Revenues | 1,290 | 512 | 272 |
Costs and expenses: | |||
Service costs, excluding depreciation and amortization | $ 408 | $ 141 | $ 92 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Consolidated Statements of Comprehensive (Loss) Income | |||
Net (loss) income | $ (1,264) | $ 58 | $ 68 |
Other comprehensive loss, net of tax: | |||
Foreign currency translation adjustment | 4 | 7 | (2) |
Net (loss) gain on hedge of net investment in foreign operations | (23) | 5 | |
Unrealized loss on derivatives designated as cash flow hedges | (7) | (3) | (8) |
Change in pension and other postretirement benefit plans | (5) | (14) | (8) |
Other comprehensive loss, net of tax | (31) | (10) | (13) |
Comprehensive (loss) income, net of tax | $ (1,295) | $ 48 | $ 55 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 35 | $ 19 |
Trade and other receivables, net | 464 | 476 |
Inventory, net | 31 | 102 |
Advances to suppliers | 42 | 82 |
Income taxes receivable | 14 | 19 |
Prepaid and other current assets | 51 | 61 |
Total current assets | 637 | 759 |
Non-current assets: | ||
Orbital receivables | 407 | 424 |
Deferred tax assets | 103 | 63 |
Property, plant and equipment, net | 747 | 1,008 |
Intangible assets, net | 1,232 | 1,618 |
Goodwill | 1,751 | 2,374 |
Other assets | 124 | 131 |
Total assets | 5,001 | 6,377 |
Current liabilities: | ||
Accounts payable | 248 | 222 |
Accrued liabilities | 77 | 21 |
Accrued compensation and benefits | 100 | 120 |
Contract liabilities | 361 | 404 |
Current portion of long-term debt | 17 | 18 |
Other current liabilities | 46 | 46 |
Total current liabilities | 849 | 831 |
Non-current liabilities: | ||
Pension and other postretirement benefits | 196 | 218 |
Contract liabilities | 60 | 196 |
Long-term debt | 3,030 | 2,943 |
Other non-current liabilities | 222 | 356 |
Total liabilities | 4,357 | 4,544 |
Commitments and contingencies (Note 21) | ||
Stockholders’ equity: | ||
Common stock ($0.0001 par value, unlimited common shares authorized; 59.4 million and 56.2 million common shares issued and outstanding, respectively) | 1,713 | 1,550 |
Additional paid-in capital | 59 | 51 |
(Accumulated deficit) retained earnings | (1,211) | 118 |
Accumulated other comprehensive income | 82 | 113 |
Total Maxar stockholders' equity | 643 | 1,832 |
Noncontrolling interest | 1 | 1 |
Total stockholder's equity | 644 | 1,833 |
Total liabilities and shareholders' equity | $ 5,001 | $ 6,377 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Consolidated Balance Sheets | ||
Common stock, no par value | $ 0 | $ 0 |
Common stock, shares issued | 59.4 | 56.2 |
Common stock, shares outstanding | 59.4 | 56.2 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows provided by (used in) Operating activities: | |||
Net (loss) income | $ (1,264) | $ 58 | $ 68 |
Adjustments to reconcile to net (loss) income to net cash provided by operating activities: | |||
Impairment losses including inventory | 1,096 | ||
Depreciation of property, plant and equipment | 157 | 61 | 34 |
Amortization of intangible assets | 292 | 100 | 38 |
Stock-based compensation expense | 20 | 33 | 15 |
Amortization of debt issuance costs and other noncash interest expense | 9 | 3 | 1 |
Loss from early extinguishment of debt | 23 | 2 | |
Foreign exchange loss (gain) | 3 | (12) | 7 |
Deferred income tax (benefit) expense | (64) | (176) | (28) |
Other | 17 | 1 | |
Changes in operating assets and liabilities: | |||
Trade and other receivables | 8 | 19 | 96 |
Income taxes receivable | (1) | 8 | 19 |
Accounts payables | (9) | 5 | 18 |
Accrued compensation and benefits | (13) | (35) | 1 |
Contract liabilities | (177) | (40) | (148) |
Other | 65 | 57 | (67) |
Cash provided by operating activities | 139 | 105 | 54 |
Investing activities: | |||
Purchase of property, plant and equipment | (156) | (49) | (40) |
Purchase/development of intangible assets | (62) | (23) | (16) |
Sale of property, plant and equipment | 68 | ||
Acquisitions, net of cash acquired | (6) | (2,273) | |
Cash collected on note receivable | 5 | 4 | |
Purchase of short term investments | (3) | ||
Disposal of subsidiary | 4 | ||
Cash used in investing activities | (150) | (2,341) | (56) |
Financing activities: | |||
Proceeds from the Syndicated Credit Facility and other long-term debt | 104 | 3,160 | |
Repayments of long term debt | (27) | (782) | (115) |
Payment of debt issuance costs | (3) | (63) | |
Proceeds from securitization of orbital receivables | 18 | 123 | |
Settlement of securitization liability | (15) | (15) | (2) |
Payment of dividends | (65) | (47) | (41) |
Change in overdraft balance | (18) | 18 | |
Other financing activities | 1 | 3 | |
Cash (used in) provided by financing activities | 13 | 2,235 | (14) |
(Decrease) increase in cash, cash equivalents, and restricted cash | 2 | (1) | (16) |
Effect of foreign exchange on cash, cash equivalents, and restricted cash | (1) | 4 | (1) |
Cash, cash equivalents, and restricted cash, beginning of year | 42 | 39 | 56 |
Cash, cash equivalents, and restricted cash, end of year | $ 43 | $ 42 | $ 39 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Reconciliation of cashflow information: | |||
Cash and cash equivalents | $ 35 | $ 19 | $ 14 |
Restricted cash included in prepaid and other current assets | 7 | 6 | 9 |
Restricted cash included in other assets | 1 | 17 | 16 |
Total cash, cash equivalents, and restricted cash | $ 43 | $ 42 | $ 39 |
Consolidated Statements of Chan
Consolidated Statements of Change in Shareholders’ Equity - USD ($) $ in Millions | Common StockDigitalGlobe | Common StockNeptec | Common Stock | Additional paid in capital | Retained earnings (Accumulated deficit) | Accumulated other comprehensive income (loss) | Noncontrolling interest | DigitalGlobe | Neptec | Total |
Balance at the beginning of period at Dec. 31, 2015 | $ 455 | $ 31 | $ 144 | $ 169 | $ 1 | $ 800 | ||||
Balance at the beginning of period (in shares) at Dec. 31, 2015 | 36,227,952 | |||||||||
Increase (Decrease) in Shareholders’ Equity | ||||||||||
Cumulative-effect of IFRS to U.S. GAAP conversion | (64) | (33) | (97) | |||||||
Common shares issued under employee share purchase plan | $ 4 | 4 | ||||||||
Common shares issued under employee share purchase plan (in shares) | 66,466 | |||||||||
Common shares issued upon vesting or exercise of stock-based compensation awards | $ 7 | (7) | ||||||||
Common shares issued upon vesting or exercise of stock-based compensation awards (shares) | 83,860 | |||||||||
Equity-classified stock-based compensation expense | 7 | 7 | ||||||||
Dividends ($1.12, $1.13, and $1.15 per common share for 2016, 2017 and 2018, respectively | (41) | (41) | ||||||||
Comprehensive income (loss) | 68 | (13) | 55 | |||||||
Balance at the end of period at Dec. 31, 2016 | $ 466 | 31 | 107 | 123 | 1 | 728 | ||||
Balance at the end of period (in shares) at Dec. 31, 2016 | 36,378,278 | |||||||||
Increase (Decrease) in Shareholders’ Equity | ||||||||||
Common shares issued as part of acquisition | $ 1,071 | $ 1,071 | ||||||||
Common shares issued as part of acquisition (in shares) | 19,644,240 | |||||||||
Common shares issued under employee share purchase plan | $ 5 | 5 | ||||||||
Common shares issued under employee share purchase plan (in shares) | 83,453 | |||||||||
Common shares issued upon vesting or exercise of stock-based compensation awards | $ 8 | (8) | ||||||||
Common shares issued upon vesting or exercise of stock-based compensation awards (shares) | 105,595 | |||||||||
Issuance of replacement equity-classified awards pursuant to acquisition | 16 | 16 | ||||||||
Equity-classified stock-based compensation expense | 12 | 12 | ||||||||
Dividends ($1.12, $1.13, and $1.15 per common share for 2016, 2017 and 2018, respectively | (47) | (47) | ||||||||
Comprehensive income (loss) | 58 | (10) | 48 | |||||||
Balance at the end of period at Dec. 31, 2017 | $ 1,550 | 51 | 118 | 113 | 1 | $ 1,833 | ||||
Balance at the end of period (in shares) at Dec. 31, 2017 | 56,211,566 | 56,200,000 | ||||||||
Increase (Decrease) in Shareholders’ Equity | ||||||||||
Common shares issued as part of dissenting shareholders | $ 111 | $ 111 | ||||||||
Common shares issued as part of dissenting shareholders (in shares) | 2,234,652 | |||||||||
Common shares issued as part of acquisition | $ 25 | $ 25 | ||||||||
Common shares issued as part of acquisition (in shares) | 488,097 | |||||||||
Common shares issued under employee share purchase plan | $ 3 | 3 | ||||||||
Common shares issued under employee share purchase plan (in shares) | 102,076 | |||||||||
Common shares issued upon vesting or exercise of stock-based compensation awards | $ 24 | (24) | ||||||||
Common shares issued upon vesting or exercise of stock-based compensation awards (shares) | 344,255 | |||||||||
Reclassification of liability classified stock-based compensation awards to equity-settled | 1 | 1 | ||||||||
Equity-classified stock-based compensation expense | 31 | 31 | ||||||||
Dividends ($1.12, $1.13, and $1.15 per common share for 2016, 2017 and 2018, respectively | (65) | (65) | ||||||||
Comprehensive income (loss) | (1,264) | (31) | (1,295) | |||||||
Balance at the end of period at Dec. 31, 2018 | $ 1,713 | $ 59 | $ (1,211) | $ 82 | $ 1 | $ 644 | ||||
Balance at the end of period (in shares) at Dec. 31, 2018 | 59,380,646 | 59,400,000 |
Consolidated Statements of Ch_2
Consolidated Statements of Change in Shareholders’ Equity (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Consolidated Statements of Change in Shareholders’ Equity | |||
Dividend per share (in dollars per share) | $ 1.14 | $ 1.14 | $ 1.12 |
General business description
General business description | 12 Months Ended |
Dec. 31, 2018 | |
General business description | |
General business description | 1. GENERAL BUSINESS DESCRIPTION Maxar Technologies Inc. (the “Company” or “Maxar”) is a global leader of advanced space technology solutions and is at the nexus of the new space economy, developing and sustaining the infrastructure and delivering the information, services, and systems that unlock the promise of space for commercial and government markets. As a trusted partner, the Company provides vertically integrated capabilities and expertise including satellites, Earth imagery, robotics, geospatial data and analytics to help customers anticipate and address their most complex mission-critical challenges with confidence. Maxar trades on the New York Stock Exchange and Toronto Stock Exchange under the ticker MAXR. Maxar’s businesses are organized and managed in three reportable segments: Space Systems, Imagery and Services. The Company has, since its inception until September 30, 2018, reported to securities regulators in both Canada and the U.S., financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. On January 1, 2019, the Company completed the change of jurisdiction of organization from the Province of British Columbia in Canada to the State of Delaware in the United States (“U.S. Domestication”). Upon completion of the U.S. Domestication, and including the report herein, the Company has prepared its financial statements in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) effective with the preparation of these financial statements as of and for the year ended December 31, 2018. See Note 4 for additional details. |
Significant accounting policies
Significant accounting policies | 12 Months Ended |
Dec. 31, 2018 | |
Significant accounting policies | |
Significant accounting policies | 2 . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of preparation The Consolidated Financial Statements include the accounts of Maxar Technologies Inc., and all consolidated subsidiary entities. The Company’s Consolidated Financial Statements have been prepared in accordance with U.S. GAAP, and the rules and regulations of the U.S. Securities and Exchange Commission, or SEC . All intercompany balances and transactions are eliminated on consolidation. The Company’s Consolidated Financial Statements are presented in U.S. dollars and have been prepared on a historical cost basis, except for certain financial assets and liabilities including derivative financial instruments which are stated at fair value. Use of estimates, assumptions and judgments The preparation of the Consolidated Financial Statements in accordance with U.S. GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the reporting date, as well as the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared using the most current and best available information; however, actual results could differ materially from those estimates. Business combinations Business combinations are accounted for using the acquisition method. The consideration for an acquisition is measured at the fair values of the assets transferred, the liabilities assumed and the equity interests issued at the acquisition date. The excess of the consideration over the fair value of the identifiable net assets acquired is recorded as goodwill. Transaction costs that are incurred in connection with a business combination, other than costs associated with the issuance of debt or equity securities, are expensed as incurred. Foreign currency Assets and liabilities of non-U.S. subsidiaries that operate in local currencies are translated to U.S. dollars at exchange rates in effect at the balance sheet date, with the resulting translation adjustments, net of tax, recorded in Accumulated other comprehensive income within the Stockholders’ equity section of the Consolidated Balance Sheet. Income and expense accounts are translated at average monthly exchange rates during the year. Revenue recognition Revenue is recognized in accordance with the five step model set forth by ASC 606, which involves identification of the contract(s), identification of performance obligations in the contract, determination of the transaction price, allocation of the transaction price to the previously identified performance obligations, and recognition of revenue as the performance obligations are satisfied. Revenue is measured at the fair value of consideration received or receivable, net of discounts and after eliminating intercompany sales. When consideration received from customers includes advance payments that contain a financing element, the Company imputes interest on such advance payments and recognizes such amounts as a component of revenue. Contract costs generally include direct costs such as materials, labor, and subcontract costs. Costs are expensed as incurred except for incremental costs incurred to obtain or fulfill a contract, which are capitalized and amortized on a straight-line basis over the expected period of performance. Space Systems segment Revenues in the Space Systems segment is primarily generated from long-term construction contracts. Due to the long-term nature of these contracts, revenue is generally recognized over time utilizing a cost-to-cost approach, which requires the Company to make estimates regarding the revenue and cost associated with the design, manufacture and delivery of its products and services. The Company’s long-term construction contracts generally consist of a single performance obligation due to the integrated nature of the goods or services in contracts. Revenue from construction contracts includes initial contract amounts, variations in contract work, claims, incentive payments, shipping and handling costs and the fair value of customer furnished materials. Satellite construction contracts may include performance incentives whereby payment for a portion of the purchase price is contingent upon in-orbit performance of the satellite. These performance incentives are structured in two forms. As a warranty payback, the customer pays the entire amount of the performance incentive during the period of the satellite construction and such incentives are subject to refund if satellite performance does not achieve certain predefined operating specifications. As an orbital receivable, the customer makes payment of performance incentives over the in-orbit life of the satellite. Performance incentives, whether warranty payback or orbital receivables, are included in revenue during the construction period based on amounts expected to be received. Orbital receivables are recorded at their fair value as of the launch date and the adjustments to the amount receivable of the discount during the in-orbit period are recorded as orbital income. In addition to the in-orbit performance incentives, satellite construction contracts may include liquidated damages clauses. Liquidated damages can be incurred on programs as a result of delays due to slippage or for programs which fail to meet all milestone requirements as outlined within the contractual arrangements with customers. Losses related to liquidated damages result in a reduction of revenue recognition. Construction contracts have termination and default clauses. If a contract is terminated for convenience by a customer or due to a customer’s default, the Company is typically entitled to costs incurred plus a reasonable profit. Imagery segment Revenue in the Imagery segment is generated from service contracts in which revenue is recognized based on satellite capacity made available to the customer in a particular period, when imagery is delivered to the customer, or ratably over the subscription period. Many of our imagery service contracts relate to the transfer of a series of distinct goods or services over time for which management has determined are a single performance obligation. EnhancedView Follow-On Contract – The EnhancedView Follow-On contract (the “EnhancedView Contract”) includes one performance obligation to deliver a certain amount of capacity to the U.S. government over the 10-year contractual term ending on August 31, 2020. While other promised goods or services exist in the EnhancedView Contract, none are considered distinct and, thus, do not represent separate performance obligations. Revenue is recognized as capacity is provided to the customer. As a consistent amount of capacity is being made available, revenue is recognized on a ratable basis. In 2018, the Company signed an agreement that adds three option years to the EnhancedView Contract extending the term to August 21, 2023. The Company determined that these option years do not provide a material right to the customer, and therefore are not included in remaining performance obligations. As the option years are exercised, the consideration payable by the U.S. government will be added to the Company’s remaining performance obligations. Direct Access Program – Direct Access Program arrangements generally include construction of the direct access facility, access to the satellites to task and download imagery, and facility maintenance services. The facility is generally delivered at the beginning of the contractual period of performance with access and maintenance services delivered over the duration of the contractual term. Under ASC 606, the Company has determined that two performance obligations exist; the access and the facility promised goods/services are included together as a combined performance obligation with maintenance services representing a standalone performance obligation. The access and the facility are a single performance obligation because the customer cannot benefit from the facility on its own or with other readily available resources. The transaction price allocated to the combined performance obligation is recognized as access minutes are consumed during the contractual period. The remaining transaction price allocated to the maintenance services is recognized ratably over the maintenance period. Other Imagery Arrangements – Revenue is recognized for imagery licenses when the imagery is delivered to the customer. Revenues related to online imagery subscriptions are generally recognized ratably over the subscription period. Other imagery arrangements transfer a series of distinct goods or services over time for which management has determined are a single performance obligation, or include multiple performance obligations. Services segment Revenue in the Services segment is primarily generated from contracts for the rendering of services that compensate the Company at a cost-plus-fixed-fee, firm fixed price, or on a time and materials basis. Revenue is typically recognized for these contracts over time based on the stage of services completed to date as a percentage of total services to be performed, or on the basis of time plus reimbursable costs incurred during the period. Cost-plus-fixed-fee contracts – The majority of this segment’s revenues is generated from contracts with the U.S. government, the predominance of which are structured as cost-plus-fixed-fee arrangements. A cost plus contract is primarily made up of three components: direct costs (labor costs, subcontractor labor, travel and/or other direct costs), indirect costs (fringe benefit costs, overhead and general and administrative costs) and an agreed upon fee. The fee for this type of contract is established at the onset of contract as negotiated with the customer. Pricing for the cost portion of the contract is established on the basis of, among other things, actual labor rates, projected average rates, and General Services Administration’s schedule pricing. Time and materials – Contracts structured as time and materials are billed to the customer as labor hours are incurred at contractually agreed upon rates, with such rates agreed upon by the Company and the Customer and inclusive of margin to the Company. Firm fixed price – Contracts structured as firm fixed price bill the customer a fixed fee for a specified service with such amount typically billed as milestones are met by the Company. Regardless of the contract structure noted above, revenue is recognized over time. Given the fact that in almost all cases, the customer controls the related work-in-progress, an input measure is the most appropriate basis with which to measure progress. Finally, as cost of labor is the predominant measure by which these contracts are structured, the Company recognizes revenue using a cost-incurred approach. Contract balances Contract liabilities primarily consist of advance payments, billings in excess of costs incurred and deferred revenue. Changes in contract liabilities are primarily due to the timing difference between the Company’s performance of services and payments from customers. To determine revenue recognized from contract liabilities during the reporting periods, the Company allocates revenue to individual contract liability balances and applies revenue recognized during the reporting periods first to the beginning balances of contract liabilities until the revenue exceeds the balances. Earnings per share Earnings per common share is computed by dividing net (loss) income by the sum of the weighted average number of common shares outstanding during the period plus outstanding deferred share units awards (see Note 18) but excluding issued, but unvested, restricted shares. Diluted income per common share is computed by adjusting the basic income per common share calculation, as described above, for the effects of all potentially dilutive share appreciation rights and restricted stock units (see Note 18). The company calculates the effects of all potentially dilutive share appreciation rights using the treasury stock method unless they are anti-dilutive. Share appreciation rights are dilutive only when the average market value of the Company’s shares during the period are greater than the exercise price of the share appreciation rights. Research and development Research and development costs are expensed in the period incurred. For the years ended December 31, 2018, 2017 and 2016, the Company expensed research and development costs of $93 million, $71 million, and $69 million, respectively in Selling, general and administrative. Interest expense Interest expense is comprised of borrowing cost on debt, interest expense on the orbital securitization liability, interest expense on dissenting stockholders liability, imputed interest on advance payments and other liabilities, and the cost of forward points from foreign exchange forward contracts. All interest costs are recognized in income using the effective interest method. Debt issuance costs are amortized and recognized as interest expense on a straight-line basis over the expected term of the related debt, which approximates the effective interest rate method. Debt issuance costs related to the Company’s revolving line of credit are recorded in Prepaid and other current assets and in Other assets in the Consolidated Balance Sheets. Debt issuance costs related to the Company’s term loans are recorded as a direct deduction from the carrying amount of the related debt. Derivative financial instruments and hedging activities The Company uses derivative financial instruments to manage foreign exchange risk associated with the cash flows from long-term construction contracts where some portion of the cash flows are denominated in foreign currencies as part of the normal course of business. Derivative financial instruments are measured at fair value. When derivative financial instruments are designated in a qualifying hedging relationship and hedge accounting is applied, the effectiveness of the hedges is measured at the end of each reporting period and the effective portion of changes in fair value are deferred in accumulated other comprehensive income. Amounts deferred in accumulated other comprehensive income are reclassified to income when the hedged transaction has occurred. The ineffective portion of the change in the fair value of the derivative is recorded in income in each period. Cash transactions related to the Company’s derivative contracts accounted for as hedges are classified in the same category as the item being hedged in the Consolidated Statements of Cash Flows. For foreign exchange contracts not in a qualifying hedging relationship, changes in fair value are recognized immediately in income as a foreign exchange gain or loss. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised or no longer qualifies for hedge accounting. At that time, if the forecasted transaction within a cash flow hedge remains probable, any cumulative gain or loss on the hedging instrument recognized in Other comprehensive income (loss) is retained in equity until the forecasted transaction occurs. If the forecasted transaction is no longer expected to occur, the net cumulative gain or loss previously recognized in other comprehensive income is transferred to income. As of January 1, 2019, the Company has discontinued hedge accounting. The Company will continue to hedge our foreign exchange exposure for economic purposes. The Company has embedded foreign currency derivatives in certain customer and supplier contracts. These derivatives are accounted for as separate instruments and are measured at fair value at each reporting date. Changes in fair value are recognized in income as foreign exchange gains or losses. The Company does not offset the fair value amounts recognized with derivative instruments against the change in fair value of assets, liabilities or firm commitments executed with the same counterparty under a master netting agreement. The gross amount of derivative financial assets related to foreign exchange forward contracts within the Consolidated Balance Sheets as of December 31, 2018 and 2017 were $5 million and $13 million, respectively. The gross amount of derivative financial liabilities related to foreign exchange forward contracts within the Consolidated Balance Sheets as of December 31, 2018 and 2017 were $8 million and $9 million, respectively. The amounts subject to master netting agreements but not offset for December 31, 2018 and 2017 were $3 million and $7 million, respectively. Derivative financial assets are included within Prepaid and other assets and Other assets in the Consolidated Balance Sheets and derivative financial liabilities are included with Other current liabilities and Other non-current liabilities. Cash, cash equivalents and restricted cash Cash and cash equivalents is comprised of cash on hand, cash balances with banks and similar institutions and term deposits redeemable within three months or less from date of acquisition with banks and similar institutions. Restricted cash is excluded from cash and cash equivalents and is included in Prepaid and other current assets or Other assets within Non-current assets. Restricted cash is held primarily to secure outstanding letters of credit. Trade and other receivables Trade and other receivables include amounts billed to customers, unbilled receivables in which the Company’s right to consideration is unconditional and current portion of orbital receivables (see Note 6). The carrying amounts of current trade receivables is stated at cost, net of allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments, which results in bad debt expense. The Company periodically determines the adequacy of this allowance by evaluating the comprehensive risk profiles of all individual customer receivable balances including, but not limited to, the customer’s financial condition, credit agency reports, financial statements, credit limit and overall current economic conditions. Investments Short-term investments consist of mutual funds and financial instruments purchased with a term to maturity at inception between three months and one year. Short-term investments are measured at fair value through net income. Short-term investments are included within prepaid and other current assets. Long-term investments consist primary of the Company’s investment in a privately held company, OneWeb, in which the Company does not have significant influence and the fair value of which cannot be reliably measured. The Company determined that at December 31, 2018, adjusted cost net of impairments is a reasonable approximation of fair value. The Company evaluates the OneWeb investment quarterly for impairment. As of December 31, 2018, there were no impairments. Long-term investments are included within other assets. Joint Ventures consist of investments where the Company has an ownership interest over which the Company has the ability to exercise significant influence. These investments are accounted for under the equity method whereby the Company recognizes its proportionate share of the affiliates’ net income or loss and does not consolidate the affiliates’ individual assets and liabilities. These investments are included within other assets. Inventor y Inventories are measured at the lower of cost or net realizable value and consist primarily of parts and sub-assemblies used in the manufacturing of satellites. The cost of inventories is determined on a first-in-first-out basis or weighted average cost basis, depending on the nature of the inventory. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expense. Inventory is impaired when it is probable inventory values exceed their net realizable value. Property, plant and equipment Property, plant and equipment are measured at cost less accumulated depreciation. Cost for satellite assets includes amounts related to design, construction, launch and commissioning. Cost for ground system assets includes amounts related to construction and testing. Interest expense is capitalized on certain qualifying assets that take a substantial period of time to prepare for their intended use. When the costs of certain components of an item of property, plant and equipment are significant in relation to the total cost of the item and the components have different useful lives, they are accounted for and depreciated separately. Property, plant and equipment under construction are measured at cost less any impairment losses. Depreciation expense is recognized in income on a straight-line basis over the estimated useful life of the related asset to its residual value. Expected useful lives are reviewed at least annually. Land is not depreciated. The estimated useful lives are as follows: Estimated useful life Land improvements 20 years Buildings 7 - 45 years Leasehold improvements lesser of useful life or term of lease Equipment 2 - 40 years Satellites 1 2 - 10 years Furniture and fixtures 2 - 10 years Computer hardware 2 - 13 years 1 The estimated useful life over which the Company depreciates its satellites is determined once a satellite has been placed into orbit. The initial determination of a satellites useful life involves an analysis that considers design life, random part failure probabilities, expected component degradation and cycle life, predicted fuel consumption, experience with satellite parts, vendors and similar assets. The useful lives of the satellites were reassessed as part of the DigitalGlobe Transaction and are based on the remaining useful lives from the date of the acquisition. Leased assets Leased assets for which the Company assumes substantially all the risks and rewards of ownership are classified as capital leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. The asset is depreciated over the shorter of the lease term or its estimated useful life. All other leases are considered operating leases and the payments, including lease incentives, are recognized in income on a straight-line basis over the term of the lease. Intangible assets Intangible assets consist of customer relationships, backlog, acquired technologies and software, image library, trade names, licenses, and non-compete agreements. Intangible assets are generally amortized on a straight-line basis over their estimated useful lives and are recorded at fair value at the time of acquisition, or in the case of internally developed software, at cost. Image library intangibles assets are amortized using the double declining balance method. Intangible assets are currently amortized over the following estimated useful lives: Estimated useful life Customer relationships 9 - 21 years Backlog 3 - 5 years Technologies 5 - 13 years Software 3 - 10 years Image library 5 years Trade names and other 5 - 20 years Non-compete agreements 2 years Impairment Intangible assets and property, plant and equipment Intangible assets and property, plant and equipment are reviewed for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognized when the undiscounted cash flows expected to be generated by an asset (or group of assets) are less than the asset’s carrying value. Any required impairment loss is measured as the amount by which the asset’s carrying value exceeds its fair value, and recorded as a reduction in the carrying value of the related asset . If a satellite were to fail during launch or while in-orbit, the resulting loss would be charged to expense in the period it is determined the satellite is not recoverable. The amount of loss would be reduced to the extent of insurance proceeds received. The timing of the loss and the insurance recovery will likely differ, as an insurance recovery generally cannot be recognized until final settlement with the insurance company is reached. Goodwill Goodwill is tested for impairment at least annually on October 1, or whenever events or changes in circumstances indicate that its carrying amount may be less than its recoverable amount. Goodwill is tested for impairment at the reporting unit level. Management typically uses a discounted cash flow approach to estimate the fair value of a reporting unit. Management uses judgment to estimate the inputs to these assessments including cash flow projections, discount rates and tax rates, and any changes to these inputs could have a material impact on the impairment calculation. An impairment loss is recognized to the extent that the carrying value of a reporting exceeds its fair value. Warranty and after-sale service costs A liability for warranty and after-sale service costs is recognized when the underlying product or service is sold. Warranty and after-sale service provisions are based on management’s best estimate of the expected obligation using historical warranty data and experience. Warranty and after-sale service liabilities related to products and services delivered under construction contracts are included in the estimated total costs to complete when utilizing the cost-to-cost method to determine the percentage of completion for revenue recognition. Warranty and after-sale service liabilities are presented in Other current liabilities and Other non-current liabilities on the Consolidated Balance Sheets. Restructuring costs A liability for restructuring costs is recognized when the Company has approved a detailed and formal restructuring plan, and the restructuring either has commenced or has been announced publicly. Restructuring liabilities are presented in Other current liabilities and Other non-current liabilities on the Consolidated Balance Sheets. Employee benefits Defined benefit pension and other postretirement benefit plans The Company maintains defined benefit pension and other postretirement benefit plans for certain employees within the SSL and MDA businesses. SSL pension plan benefits were frozen on January 1, 2014. MDA pension plans are still active. SSL and MDA both maintain certain other postretirement benefits. The Company recognizes the funded status of each pension and other postretirement benefit plan in the Consolidated Balance sheets. The calculation of pension and other postretirement benefit obligations is performed annually by qualified actuaries using the projected unit credit method, which takes into account the expected salary increases as the basis for future benefit increases for the plans. Pension and other postretirement plan liabilities are revalued annually, or when an event occurs that requires remeasurement, based on updated assumptions and information about the individuals covered by the plan. The Company’s net obligation in respect of the pension and other postretirement benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets. The Company recognizes service costs and administrative expenses for the majority of its defined benefit and other postretirement plans as a component of product cost, service cost or selling, general and administrative. All other costs are recognized outside of operating income within other expense (income), net. The Company recognizes administrative expenses related to frozen plans outside of operating income within other expense (income), net. When the benefits of a plan are changed or when a plan is curtailed, the resulting change in the net benefit liability that relates to past service or the gain or loss on curtailment is recognized immediately in accumulated other comprehensive income. The Company recognizes gains or losses on the settlement of a defined benefit plan when settlement occurs. Under some of the Company’s Canadian defined benefit pension plans, the actuarial present value of benefits to which an employee is entitled if the employee terminates immediately may exceed the actuarial present value of benefits to which the employee is entitled at the expected date of separation based on service to date. In this situation, the Company has elected to calculate the actuarial present value of the vested benefits to which the employee is currently entitled but based on the employee's expected date of separation or retirement. For the Company’s pension and other postretirement benefit plans, accumulated actuarial gains and losses in excess of a 10 percent corridor and the prior service cost are amortized on a straight-line basis from the date recognized over the average remaining service period of active participants or over the average life expectancy for plans with significant inactive participants. Defined contribution plans The Company also maintains defined contribution plans for some of its employees whereby the Company pays contributions based on a percentage of the employees’ annual salary. Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in operating income as the services are provided. Stock-based compensation plans The Company maintains a number of stock-based compensation plans for certain employees and directors that may be settled with cash and/or equity. For certain stock-based compensation plans, the Company has the ability to mandate equity settlement by issuing shares from treasury. Stock-based compensation plans are measured at fair value using the Black-Scholes option pricing model and the fair value is expensed on a graded vesting schedule over the vesting period. Management uses judgment to determine the inputs to the Black-Scholes option pricing model including the expected plan lives, underlying stock price volatility and forfeiture rates. Volatility is estimated by considering the Company’s historic stock price volatility over similar periods to the expected life of the awards under consideration. Changes in these assumptions will impact the calculation of fair value and the amount of compensation expense recognized in income. The fair value of liability classified awards is recognized as a liability within accrued compensation and benefits and Pension and other postretirement benefit liabilities in the Consolidated Balance Sheets. The liability is re-measured and charged to income at each reporting date until the award is settled. The fair value of equity-settled plans is recognized in additional paid-in capital in the Consolidated Balance Sheets. Equity-settled plans are measured based on the grant date fair value of the award including the impact of estimated forfeitures and are not re-measured. Income taxes The Company is subject to income taxes in Canada, the United States, Luxembourg, and other foreign jurisdictions. The Company computes its provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are determined based on the temporary differences between the financial reporting and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured at the currently enacted tax rates that are expected to apply in years in which they are expected to be paid for or realized. All deferred income taxes are classified as non-current on the Company's Consolidated Balance Sheets. Significant judgments are required in order to determine the realizability of deferred tax assets. In assessing the need for a valuation allowance, the Company's management evaluates all significant available positive and negative evidence, including historical operating results, estimates of future sources of taxable income, carry-forward periods available, the existence of prudent and feasible tax planning strategies, and other relevant factors. The recognition of uncertain tax positions is evaluated based on whether it is considered more likely than not that the position taken, or expected to be taken, on a tax return will be sustained upon examination through litigation or appeal. For those positions that meet the recognition criteria, they are measured as the largest amount that is more than fifty percent likely to be realized upon ultimate settlement. The Company believes that the uncertain tax positions r |
New standards and interpretatio
New standards and interpretations not yet adopted | 12 Months Ended |
Dec. 31, 2018 | |
New standards and interpretations not yet adopted | |
New standards and interpretations not yet adopted | 3. NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-03”) which together with subsequent amendments is included in ASC 842 – Leases . This new standard requires that all leases with an initial term greater than one year be recorded on the balance sheet as a right-of-use asset and lease liability. Additional qualitative and quantitative disclosures are also required. This update is effective in fiscal years, including interim periods, beginning after December 15, 2018. The Company will adopt ASU 2016-02 using the modified retrospective approach with a cumulative-effect adjustment to the opening period of retained earnings on January 1, 2019. Upon adoption, the Company will recognize and measure leases without revising comparative period information or disclosure. The Company has made significant progress in executing against its implementation plan. The Company is electing the package of practical expedients, which, among other things, allows for a carry forward of our prior lease classifications under ASC 840. The Company is not electing the hindsight practical expedient. The Company is in the process of finalizing the impact that this standard update will have on its Consolidated Financial Statements, but anticipates a material impact on its assets and liabilities due to the addition of right-of-use assets and lease liabilities to the Consolidated Balance Sheets. The Company does not expect a material impact on the Consolidated Statements of Operations. ASU 2016-02 also requires expanded disclosure regarding the amounts, timing and uncertainties of cash flows related to a company’s lease portfolio. The Company is evaluating these disclosure requirements and are incorporating the collection of relevant data into our processes in preparation for disclosure in 2019. In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220) . The guidance in ASU 2018-02 allows an entity to elect to reclassify the stranded tax effects related to the Tax Cuts and Jobs Act of 2017 ("2017 Tax Act") from accumulated other comprehensive income into retained earnings. ASU 2018-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact the adoption of this guidance may have on the Company’s Consolidated Financial Statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 significantly changes the impairment model for most financial assets and certain other instruments. ASU 2016-13 will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on loans and other financial instruments. This update is effective for annual and interim financial statement periods beginning after December 15, 2019, with early adoption permitted for financial statement periods beginning after December 15, 2018. In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses . This ASU does not change the core principle of the guidance in ASU 2016-13, instead these amendments are intended to clarify and improve operability of certain topics included within the credit losses standard. This ASU will have the same effective date and transition requirements as ASU 2016-13. The Company is currently evaluating the impact the adoption of this guidance may have on the Company’s Consolidated Financial Statements. |
Conversion from IFRS to U.S. GA
Conversion from IFRS to U.S. GAAP | 12 Months Ended |
Dec. 31, 2018 | |
Conversion from IFRS to U.S. GAAP | |
Conversion from IFRS to U.S. GAAP | 4 . CONVERSION FROM IFRS TO U.S. GAAP As part of the U.S. Domestication, the Company has retrospectively converted its Consolidated Financial Statements from IFRS to U.S. GAAP. Refer to Note 1 for additional details. The significant differences between IFRS and U.S. GAAP as they relate to these financial statements are as follows: (a) Under IFRS, in accordance with International Accounting Standard (“IAS”) 38 – Intangible Assets , development costs were capitalized and recorded as an intangible asset if technical feasibility had been established and it was considered probable that the Company would generate future economic benefits from the asset created on completion of development. Most of these projects had not been placed into service as of December 31, 2018. Under U.S. GAAP, in accordance with Accounting Standards Codification (“ASC”) 730 – Research and Development , all development costs are expensed as incurred. During the year ended December 31, 2018, the Company recorded impairment losses under IFRS on intangible assets related to development. Under U.S. GAAP, these costs would have been expensed as incurred. (b) Under IFRS, the Company recorded investment tax credits in accordance with IAS 20 – Accounting for Government Grants and Disclosure of Government Assistance , and recognized investment tax credits as a reduction in direct costs, selling, general and administration, as applicable. Under U.S. GAAP, the Company determined that investment tax credits are within the scope of ASC 740 – Income Taxes (“ASC 740”), and as such are recognized as a reduction of income tax expense. (c) Under IFRS, in accordance with IAS 12 – Income Taxes (“IAS 12”), the Company had classified all investment tax credit balances as current tax assets. Under ASC 740, investment tax credits accounted for under the flow-through method result in either a reduction to income taxes payable in the year in which the credit arises, or as an increase in a deferred tax asset if the credit is carried forward to future years, subject to assessing the realization of such credits. The Company has determined that these credits will be realized and therefore the benefits related to the investment tax credits have been carried forward to future years and recognized as deferred tax assets. (d) Under IFRS, in accordance with IAS 12, deferred tax assets and liabilities were offset on a legal entity by entity basis. Under U.S. GAAP, in accordance with ASC 740, for each tax-paying component of an entity within a particular jurisdiction, all deferred tax assets and liabilities shall be offset and presented as a single amount within a particular tax jurisdiction rather than on a legal entity by entity basis. Therefore, certain non-current deferred tax assets and liabilities will be offset and presented on a net basis on the balance sheet. (e) Under IFRS, in accordance with IAS 12, tax exposure items are defined as current tax to the extent it affects the calculation of income in respect of both current and prior periods. Under U.S. GAAP, in accordance with ASC 740, uncertain tax positions are classified as a current liability to the extent payment is expected within one year, an offset to deferred tax assets to the extent the related tax attributes are available to offset the liability and a non-current liability where payment is expected beyond one year. (f) Under IFRS, in accordance with IAS 12, interest and penalties on amounts related to investment tax credits were classified as finance expense. Under U.S. GAAP, in accordance with ASC 740, interest and penalties on the liability for unrecognized tax benefits can be classified as either a component of income tax expense or interest expense. The Company has elected to classify the income or expense in respect of certain interest and penalties as an increase to income tax expense or benefit as these amounts relate to the Company’s tax positions. This includes interest and penalties associated with investment tax credits. (g) Under IFRS, in accordance with IAS 19 – Employee Benefits , the Company had recognized re-measurement gains and losses, including actuarial gains and losses, immediately in other comprehensive income. Under U.S. GAAP, ASC 715 – Compensation – Retirement Benefits , actuarial gains and losses are recognized immediately in other comprehensive income and subsequently reversed and recognized in net income in future reporting periods using the corridor approach. Also under IFRS, net interest expense (income) on the net defined benefit liability (asset) was recognized as a component of interest expense using the discount rate for the underfunded pension obligations. Under U.S .GAAP, net interest expense (income) on the net defined benefit liability (asset) is recognized as a component of other defined benefit costs calculated as the net of interest from the discount rate on pension plan obligations less the expected long-term rate of return on plan assets rates on pension plan assets. (h) Under IFRS, in accordance with IAS 12, the income tax effect of actuarial gains and losses on defined benefit pension plans and other retirement benefit plans were included in other comprehensive income. Under U.S. GAAP, in accordance with ASC 740, the income tax effect of actuarial gains and loss on defined benefit pension plans and other retirement benefit plans are included in income tax expense. (i) Certain of the Company’s capitalized projects, such as satellites under construction, include the development of internal use software. Under IFRS, in accordance with IAS 38 – Intangible Assets , the Company capitalized certain overhead costs related to internally developed software as they were determined to be directly attributable to preparing the asset for use. Under U.S. GAAP, ASC 350-40 – Internal Use Software , overhead costs are required to be expensed as incurred, regardless of whether they are directly attributable to preparing the asset for use. (j) Deferred Income Tax Valuation Allowance – recognition in Income and Other Comprehensive Income Under IFRS, in accordance with IAS 12, the subsequent recognition of deferred tax assets are generally recorded in income or in other comprehensive income based on the source of the underlying items that originally gave rise to the deferred tax asset. Under U.S. GAAP, in accordance with ASC 740, the release of valuation allowances on deferred tax assets are generally recorded in income from continuing operations, subject to specific rules on the allocation of income tax expense between income from continuing operations and other comprehensive income, which may differ from IFRS. The significant differences in the Consolidated Statements of Operations were as follows: Year ended December 31, Note 2018 2017 2016 Net (loss) income - IFRS $ (1,381) $ 100 $ 106 Product and service costs 1 (a), (b), (g), (i) (88) (105) (71) Depreciation and amortization (a) 4 6 5 Interest expense, net (a), (f), (g) (4) 6 7 Other expense (income), net (g) 7 25 (4) Income tax benefit (b), (f), (h), (j) 28 26 25 Impairment losses, net (a) 170 — — Net (loss) income - U.S. GAAP $ (1,264) $ 58 $ 68 1 Excludes depreciation and amortization The significant differences in the Consolidated Balance Sheets were as follows: December 31, 2018 2017 IFRS Adjustments U.S. GAAP IFRS Adjustments U.S. GAAP Assets: Income taxes receivable 1 $ 64 $ (50) $ 14 $ 72 $ (53) $ 19 Deferred tax assets 52 51 103 108 (45) 63 Property, plant and equipment, net 2 754 (7) 747 1,055 (47) 1,008 Intangible assets, net 2 1,304 (72) 1,232 1,753 (135) 1,618 Other assets 2,905 — 2,905 3,669 — 3,669 Total assets $ 5,079 $ (78) $ 5,001 $ 6,657 $ (280) $ 6,377 Liabilities: Income taxes payable 1 $ 15 $ (11) $ 4 $ 49 $ (46) $ 3 Deferred tax liabilities 15 (9) 6 104 (99) 5 Other liabilities 4,326 21 4,347 4,489 47 4,536 Total liabilities $ 4,356 $ 1 $ 4,357 $ 4,642 $ (98) $ 4,544 (Accumulated deficit) retained earnings $ (1,184) $ (27) $ (1,211) $ 262 $ (144) $ 118 Accumulated other comprehensive income 134 (52) 82 151 (38) 113 Other equity 1,773 — 1,773 1,602 — 1,602 Total stockholders' equity 723 (79) 644 2,015 (182) 1,833 Total liabilities and stockholders' equity $ 5,079 $ (78) $ 5,001 $ 6,657 $ (280) $ 6,377 1 As a result of the conversion to U.S. GAAP, tax reclassifications of $11 million and $5 million were recorded as of December 31, 2018 and 2017, respectively. 2 In 2017, the Company reclassified $47 million of construction in process, within property, plant and equipment, to intangibles to conform to the current year presentation. |
Business combinations
Business combinations | 12 Months Ended |
Dec. 31, 2018 | |
Business combinations | |
Business combinations | 5. BUSINESS COMBINATIONS On July 16, 2018, the Company acquired Neptec Design Group Ltd. (“Neptec”), a leading electro-optical and electro-mechanical systems and high-performance intelligent Light Detection and Ranging company for $ 30 million, net of cash acquired, comprised of approximately $6 million in cash and the balance in common shares of Maxar. With Neptec, the Company will deliver end-to-end robotic systems and an expanded set of solutions in order to capture growth and accelerate advancement into new and expanding space segments. As a result of the transaction, the Company recognized $21 million of goodwill (not deductible for tax purposes), $11 million of intangible assets, and $2 million of net liabilities. Neptec’s operating results are included in the Company’s consolidated financial statements beginning from the date of acquisition and had an immaterial effect on the Company’s consolidated financial results for the year ended December 31, 2018, 2018. Direct transaction costs of the Neptec acquisition were not material and were expensed as incurred. On October 5, 2017, the Company completed the DigitalGlobe Transaction for a combination of equity and cash consideration totaling $2,328 million. Headquartered in Westminster, Colorado, DigitalGlobe is a global leading provider of high-resolution Earth imagery, data and analysis. Under the terms of the merger agreement with DigitalGlobe, each DigitalGlobe common share was exchanged for $17.50 in cash and 0.3132 common shares of the Company. The fair value of the common shares issued as consideration was based on the closing price of a Maxar share on the Toronto Stock Exchange on October 4, 2017 of $54.57 per share). Share issuance costs of $3 million which were directly attributable to the issue of the shares have been netted against equity. In order to finance the acquisition, the Company entered into a $3.8 billion senior secured syndicated credit facility (the “Syndicated Credit Facility”). On October 5, 2017, the Company made an initial draw under the Syndicated Credit Facility of $3.1 billion, net of debt issuance costs of $63 million, and used this amount, along with DigitalGlobe cash on hand, to acquire DigitalGlobe’s equity and pay out DigitalGlobe’s equity award holders ($1.2 billion), to refinance DigitalGlobe’s debt ($1.3 billion), to refinance the Company’s debt ($742 million) and to pay transaction fees and expenses of both the Company and DigitalGlobe, fund working capital, and for general corporate purposes. As part of the merger agreement, DigitalGlobe’s stock-based awards were converted into the right to receive a combination of cash and common shares of the Company, except for the stock component of certain unvested time-based awards that were replaced by equivalent stock-based awards of the Company. The fair value of the replacement awards attributable to the pre-acquisition and post-acquisition service periods were $16 million and $14 million, respectively. The pre-acquisition amount has been included as part of the purchase consideration and the post-acquisition amount will be expensed over the remaining vesting period of the replacement awards. In addition, certain unvested performance-based DigitalGlobe stock-based awards and the cash component of the unvested time-based awards became fully vested and were paid the merger consideration on the closing of the transaction. Since this accelerated vesting was triggered by the actions of the Company, the component of the fair value of the consideration attributable to the accelerated stock-based awards relating to post acquisition services of $33 million has been recognized in the Company’s Consolidated Statements of Operations. The component relating to pre-acquisition services has been included as part of the purchase consideration. The merger consideration paid out on the closing of the transaction excluded amounts due to 80,000 dissenting DigitalGlobe preferred stockholders and 352,225 dissenting common stockholders. On June 15, 2018, the Company entered into an agreement to settle all pending litigation with the preferred stockholders (the “Settlement Agreement”). Under the Settlement Agreement, the preferred stockholders received (i) 2,206,464 common shares of Maxar and (ii) a payment in cash for the interest that has accrued on the merger consideration from the closing of the DigitalGlobe Transaction. In January 2019, the Company settled with the remaining dissenting common stockholders. In the period from October 5, 2017 to December 31, 2017, DigitalGlobe contributed revenue of $222 million and income before taxes of $8 million to the Company’s consolidated results of operations. Assuming an acquisition date of January 1, 2017, the Company’s unaudited pro-forma revenue for the year ended December 31, 2017 was $2.3 billion. The following table summarizes the fair value of the consideration transferred and the estimated fair values of the major classes of assets acquired and liabilities assumed at the acquisition date. The fair value of satellite assets and intangible assets acquired has been determined using valuation techniques that require estimation of replacement costs, future net cash flows and discount rates. October 5, 2017 Cash paid $ 1,131 Shares issued 1,063 Merger consideration to be settled 3 Liability to dissenting stockholders 115 Issuance of replacement equity-settled awards 16 Purchase consideration $ 2,328 Assets Cash and cash equivalents $ 171 Trade and other receivables, net 142 Property, plant and equipment, net 696 Intangible assets, net 1,440 Other assets 106 $ 2,555 Liabilities Accounts payable 83 Other current liabilities 4 Pension and other postretirement benefit liabilities 29 Long-term debt 1,276 Other non-current liabilities 504 $ 1,896 Fair value of net identifiable assets acquired 659 Goodwill $ 1,669 The following table summarizes the intangible assets acquired from the DigitalGlobe Transaction by class and useful life: Carrying value Weighted average useful life Finite-lived intangible assets: Customer relationships $ 608 14 years Backlog 331 4 years Technologies 318 5 years Software 46 3 years Image library 80 5 years Trade names and trademarks 37 10 years Other 20 2 years Total intangible assets $ 1,440 The goodwill is attributable mainly to the human capital of DigitalGlobe’s workforce, market presence and the synergies expected to be achieved from integrating DigitalGlobe with the Company’s existing capabilities. No goodwill is deductible for income tax purposes. During the year ended December 31, 2017, the Company incurred costs of $60 million for investment banking fees, legal, tax, consulting and other acquisition and integration costs related to the DigitalGlobe Transaction. These costs have been recognized in Selling, general, and administrative expense in the Company’s Consolidated Statements of Operations and in operating cash flows in the Consolidated Statements of Cash Flows. |
Trade and other receivables
Trade and other receivables | 12 Months Ended |
Dec. 31, 2018 | |
Trade and other receivables | |
Trade and other receivables | 6. TRADE AND OTHER RECEIVABLES Trade and other receivables, net consisted of the following: Year ended December 31, 2018 2017 U.S. government receivables: Billed $ 96 $ 63 Unbilled 60 34 156 97 Other governments and commercial receivables: Billed 146 213 Unbilled 112 125 258 338 Total trade receivables 414 435 Orbital receivables, current portion 34 30 Other 17 21 Allowance for doubtful accounts (1) (10) Total trade and other receivables, net $ 464 $ 476 Orbital receivables relate to performance incentives due under certain satellite construction contracts that are paid over the in-orbit life of the satellite. As of December 31, 2018 and 2017, long-term orbital receivables were $407 million and $424 million, respectively and are included in Non-current assets on the Consolidated Balance Sheets. Orbital receivables are recognized as revenue when measuring progress under the cost-to-cost method during the construction period and are discounted to present value using discount rates ranging from 6% - 10% for the years ended December 31, 2018 and 2017. During the year ended December 31, 2018, the Company recognized a $22 million impairment to the Company’s Space Systems segment’s long-term orbital receivables, which is included in Impairment losses, net in the Company’s Consolidated Statements of Operations. The expected timing of total contractual cash flows, including principal and interest payments for orbital receivables is as follows: 2019 2020 2021 2022 2023 Thereafter Total Contractual cash flows from satellites $ 50 $ 67 $ 68 $ 72 $ 72 $ 413 $ 742 During 2018 the Company sold orbital receivables for net proceeds of $18 million. These orbital receivables were purchased in tranches that span multiple years and include longer-term maturities. The orbital receivables that were securitized remain recognized on the consolidated balance sheets as the Company did not meet the accounting criteria for surrendering control of the receivables. The net proceeds received have been recognized as a securitization liability and are subsequently measured at amortized cost using the effective interest rate method. The securitized orbital receivables and the securitization liabilities are being drawn down as payments are received from the customers and passed on to the purchaser of the tranche. The Company continues to recognize orbital interest revenue on the orbital receivables that are subject to the securitization transactions and recognizes interest expense to accrete the securitization . The amount of securitization liabilities was $109 million and $106 million at December 31, 2018 and 2017, respectively, of which $15 million and $16 million, respectively, was included in Other current liabilities on the Consolidated Balance Sheets. |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2018 | |
Inventory | |
Inventory | 7. INVENTORY The significant decrease in the Company’s SSL geostationary communication satellite (“GeoComm”) business forecast and declining macroeconomic environment in which the GeoComm business operates caused a significant decrease in the forecasted usage of inventory held by the Company. The Company was previously holding inventory on hand in anticipation of awards to be won during the second half of 2018 and for the AMOS 8 program. The impacts from the loss of AMOS 8 and inability to obtain the forecasted awards culminated during the third and fourth quarters of 2018. These factors compelled the Company to re-evaluate the carrying value of its inventory that was previously pegged to forecasted usage. All GeoComm inventory subject to future use based on forecasts was assessed for possible obsolescence. The result of the re-assessment of future usage of the on-hand inventory was inventory impairment of $66 million which is included in Product costs, excluding depreciation and amortization in the Consolidated Statements of Operations for the year ended December 31, 2018. Inventory, net consisted of the following: Year ended December 31, 2018 2017 Raw materials $ 21 $ 99 Work in process 10 14 Total 31 113 Inventory reserve — (11) Total inventory, net $ 31 $ 102 |
Property, plant and equipment
Property, plant and equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property, plant and equipment | |
Property, plant and equipment | 8. PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consisted of the following: Year ended December 31, 2018 2017 Satellites $ 397 $ 541 Equipment 229 268 Leasehold improvements 97 80 Computer hardware 92 88 Land and Land improvements 88 108 Buildings 46 91 Furniture and fixtures 19 11 Construction in process 142 72 Property, plant and equipment, at cost 1,110 1,259 Accumulated depreciation (363) (251) Property, plant and equipment, net $ 747 $ 1,008 Depreciation expense for property, plant and equipment was $157 million and $61 million for the year ended December 31, 2018 and 2017, respectively. Impairment The Company recognized impairment loss of $271 million on its property, plant and equipment for the year ended December 31, 2018 (nil in 2017 and 2016). The impairment loss on property, plant and equipment was due to the loss of the WorldView-4 satellite in the Imagery segment, and obsolescence and reduced future use of equipment and buildings in the Space Systems segment. During December 2018, WorldView-4 experienced a failure in its control moment gyros, preventing the satellite from collecting imagery. As a result, the Company recorded impairment losses of $150 million for the remaining book value of the satellite, $5 million related to deferred contract cost assets, $3 million for future insurance premiums due, and $2 million related to prepaid insurance. Impairment loss in the Space Systems segment was based on fair value less cost of disposal for those assets in an orderly liquidation. Fair value was based on observable inputs where possible (Level 2), in which market data could be applied. However, due to the specialized nature of the majority of these assets, inputs for the valuation were unobservable (Level 3). Sale of Building During the fourth quarter of 2018, the Company completed the sale of one of its buildings in Palo Alto, California for net proceeds of $68 million. The building and surrounding parcel of land were a part of the SSL campus. The sale resulted in a gain of $33 million from the sale, which is included in Impairment losses, net in the Company’s Consolidated Statements of Operations. |
Intangible assets and goodwill
Intangible assets and goodwill | 12 Months Ended |
Dec. 31, 2018 | |
Intangible assets and goodwill | |
Intangible assets and goodwill | 9. INTANGIBLE ASSETS AND GOODWILL Intangible assets are as follows: December 31, 2018 December 31, 2017 Gross carrying value Accumulated amortization Net carrying value Gross carrying value Accumulated amortization Net carrying value Customer relationships $ 619 $ (58) $ 561 $ 622 $ (16) $ 606 Backlog 332 (120) 212 331 (23) 308 Technologies 330 (86) 244 477 (107) 370 Software 198 (71) 127 245 (88) 157 Image library 80 (32) 48 80 (8) 72 Trade names and other 41 (9) 32 114 (27) 87 Non-compete agreements 21 (13) 8 20 (2) 18 Total intangible assets $ 1,621 $ (389) $ 1,232 $ 1,889 $ (271) $ 1,618 The Company identified triggering events for impairment during the second half of 2018 related to intangible assets of its GeoComm business, a reporting unit in the Space Systems segment. At the beginning of the year, the Company forecasted it would be awarded three to four contracts for GeoComm satellites, or approximately thirty percent of the overall 2018 industry awards. During the second half of the year, it became clear that industry and macroeconomic factors had declined substantially from earlier forecasts. Due to the decline in the GeoComm market, and the uncertainty surrounding the future of the Company’s GeoComm business, an impairment loss was recognized, primarily due to future cash flows associated with the intangible assets not being sufficient to cover the total book value of those assets. For the year ended December 31, 2018, the Company recognized impairment losses of $53 million, $47 million, $20 million and $2 million related to the technology, trade name, software, and customer relationship intangible assets of the GeoComm business, respectively. The Company also recognized an additional $2 million of impairment losses related to software intangible assets associated with the WorldView-4 satellite. Amortization expense related to intangible assets was $292 million, and $100 million for the years ended December 31, 2018 and 2017 respectfully. The increase is primarily due to the inclusion of a full year of expense related to the acquisition of DigitalGlobe. The estimated annual amortization expense related to finite-lived intangible assets as of December 31, 2018, is as follows: Year ended December 31, 2019 2020 2021 2022 2023 2024 and thereafter Amortization expense $ 276 $ 240 $ 168 $ 129 $ 56 $ 363 Goodwill as of December 31, 2018 is as follows: Space Systems Imagery Services Total Balance as of December 31, 2016 $ 625 $ 27 $ 47 $ 699 Acquisitions 143 1,400 126 1,669 Foreign currency translation 6 — — 6 Balance as of December 31, 2017 774 1,427 173 2,374 Impairment losses (494) (142) — (636) Goodwill on acquisition of Neptec 22 — — 22 Disposal of immaterial subsidiary — — (3) (3) Foreign currency translation (6) — — (6) Balance as of December 31, 2018 $ 296 $ 1,285 $ 170 $ 1,751 Goodwill impairment Subsequent to October 1, and before the Company had completed its annual goodwill impairment test, the Company experienced triggering events suggesting that the fair value of the Company had decreased substantially since October 1. These triggering events required an additional goodwill impairment test, which was completed as of December 31. The triggering events included a sustained decline in the Company’s stock price, further declines in the SSL GeoComm business, and the loss of the WorldView-4 satellite. The Company’s reporting units as of December 31, 2018 were comprised of: Imagery, Services, MDA, SSL GeoComm, and the remainder of SSL (“SSL Other”). MDA, SSL GeoComm and SSL Other are reporting units in the Space Systems segment. The Company estimated the fair value of each reporting unit using an income approach. The income approach utilizes a discounted cash flow approach, which requires the use of significant judgments and estimates, including future cash flows, terminal growth rates, and discount rates. The Company evaluated the aggregate fair value of its reporting units against market data to support its fair value estimates. The Company determined that goodwill was impaired as of December 31, 2018 for its MDA, Imagery and SSL Other reporting units and recorded non-cash impairment charges of $477 million, $142 million and $17 million, respectively. |
Warranty costs
Warranty costs | 12 Months Ended |
Dec. 31, 2018 | |
Warranty costs | |
Warranty costs | 10. WARRANTY COSTS The Company’s liabilities for warranty and after-sale service are included as a component of Other current liabilities and Other non-current liabilities in the Consolidated Balance Sheets. Changes to these liabilities during fiscal 2018 and 2017, were as follows: Warranty and after-sale services Balance as of December 31, 2016 $ 34 Obligations incurred 7 Payments/uses (2) Others, net — Balance as of December 31, 2017 $ 39 Obligations incurred 5 Payments/uses (4) Others, net — Balance as of December 31, 2018 $ 40 |
Long-term debt and interest exp
Long-term debt and interest expense | 12 Months Ended |
Dec. 31, 2018 | |
Long-term debt and interest expense | |
Long-term debt and interest expense | 11. LONG-TERM DEBT AND INTEREST EXPENSE Year ended December 31, 2018 2017 Syndicated credit facility: Revolving loan payable $ 595 $ 454 Operating loan payable in Canadian dollars (December 31, 2018 - C$0 million; December 31, 2017 - C$51 million) — 40 Term Loan A 500 500 Term Loan B 1,980 2,000 Debt issuance costs (41) (52) Obligations under capital leases 13 19 Total long-term debt 3,047 2,961 Current portion (17) (18) Non-current portion $ 3,030 $ 2,943 In October 2017, in connection with the acquisition of DigitalGlobe, the Company entered into the senior secured syndicated credit facility (the “Syndicated Credit Facility”). The Syndicated Credit Facility is comprised of: (i) a four-year senior secured first lien revolving credit facility and a four-year senior secured first lien operating facility (collectively, the “Revolving Credit Facility”), ( ii) a senior secured first lien term A facility (“Term Loan A”) and ( iii) a seven-year senior secured first lien term B facility (“Term Loan B”) in an aggregate principal amount of $3.75 billion. The net proceeds of the Syndicated Credit Facility were used, along with cash on hand, to consummate the acquisition of DigitalGlobe, to refinance all amounts outstanding under the Company’s existing Syndicated Credit Facility and senior term loans, to repay DigitalGlobe’s outstanding indebtedness, to pay transaction fees and expenses, to fund working capital and for general corporate purposes. The Company incurred a loss from early extinguishment of debt of $23 million. The loss was comprised of a make-whole premium to terminate the 2024 Term Notes of $20 million and a write-off of the unamortized balance of capitalized debt issuance costs of $3 million relating to both the Syndicated Credit Facility and the 2024 Term Notes. Loans under the Revolving Credit Facility are available in U.S. dollars and, in respect of the operating facility, at the option of the Company, in Canadian dollars. Term Loan A and Term Loan B are repayable in U.S. dollars. Borrowings under the Revolving Credit Facility and Term Loan A bear interest at a rate equal to U.S. LIBOR (for U.S. dollar borrowings) and CDOR or Canadian Bankers’ Acceptances (for Canadian dollar borrowings), plus a margin of 120 to 350 basis points per annum, based on the Company’s total leverage ratio. Term Loan B bears interest at U.S. LIBOR plus 275 basis points per annum. The Revolving Credit Facility and one half of Term Loan A are payable at maturity on October 5, 2021. The other half of Term Loan A matures on October 5, 2020. The Company must make equal quarterly installment payments in aggregate annual amounts equal to 1% of the original principal amount of Term Loan B, with the final balance payable at maturity on October 5, 2024. The Revolving Credit Facility, Term Loan A, and Term Loan B may be repaid by the Company, in whole or in part, together with accrued interest, without premium or penalty. The Syndicated Credit Facility is guaranteed by the Company and certain designated subsidiaries of the Company. The security for the Syndicated Credit Facility, subject to customary exceptions, will include substantially all the tangible and intangible assets of the Company and its subsidiary guarantors. The Company is required to make mandatory prepayments of the outstanding principal and accrued interest upon the occurrence of certain events and to the extent of a specified percentage of annual excess cash flow that is not reinvested or used for other specified purposes. On December 21, 2018, the Company amended its $3.75 billion Syndicated Credit Facility (the “Amended Agreement”). The Amended Agreement revised the financial covenants to increase the maximum consolidated debt leverage ratios permitted under the Syndicated Credit Facility for a period of time selected by Maxar (the “Covenant Relief Period”) and increased the interest rate incurred by Maxar thereunder at certain consolidated debt leverage ratios. The Amended Agreement increased the maximum consolidated debt leverage ratio to 5.5x through the quarter ended December 31, 2018, 6.0x through the quarter ended September 30, 2020, and 5.5x thereafter. The interest coverage ratio remained the same at a minimum of 2.5x through the quarter ending June 30, 2019 and 2.75x thereafter. The Amended Agreement also adjusted the definition of EBITDA for the purpose of calculating the financial ratios under U.S. GAAP. In addition to increased flexibility on the financial covenant, during the Covenant Relief Period, the Amended Agreement restricts the use of certain asset sale proceeds, limits the type of new debt issuances, certain restricted payments and permitted acquisitions under the Syndicated Credit Facility. The Revolving Credit Facility includes an aggregate $200 million sub limit under which letters of credit can be issued. As of Decembe r 31, 2018 and 2017, the Company also had $18 million and $26 million, respectively, of issued and undrawn letters of credit outstanding under the Revolving Credit Facility. Interest expense on long-term debt and other obligations are as follows: Year ended December 31, 2018 2017 2016 Interest on long-term debt $ 171 $ $ Interest expense on advance payments from customers 26 — Interest on orbital securitization liability 7 Imputed interest and other 2 3 Capitalization of borrowing costs (7) — — Loss on debt extinguishment — 2 Interest expense on dissenting stockholder liability 3 — — Total interest expense $ 202 $ 99 $ Annual contractual principal repayments on long-term debt, net of amortization of debt issuance costs, as of December 31, 2018 are as follows: 2019 2020 2021 2022 2023 Thereafter Total Syndicated credit facility $ 11 $ 262 $ 858 $ 14 $ 14 $ 1,875 $ 3,034 Capital leases 7 4 2 — — — 13 Total $ 18 $ 266 $ 860 $ 14 $ 14 $ 1,875 $ 3,047 |
Financial instruments and fair
Financial instruments and fair value disclosures | 12 Months Ended |
Dec. 31, 2018 | |
Financial instruments and fair value disclosures | |
Financial instruments and fair value disclosures | 12. FINANCIAL INSTRUMENTS AND FAIR VALUE DISCLOSURES Fair value is determined based on the assumptions that market participants would use in pricing the asset or liability. The Company utilizes the following fair value hierarchy in determining fair value: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs) The following tables present assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. These fair values are included as components of Other current liabilities, Other non-current liabilities, Prepaid and other current assets, and Other assets in the Consolidated Balance Sheets. Recurring Fair Value Measurements of as of December 31, 2018 Level 1 Level 2 Level 3 Total Assets Short-term investments $ 3 $ — $ — $ 3 Derivative financial instruments Foreign exchange forward contracts & embedded derivatives — 5 — 5 $ 3 $ 5 $ — $ 8 Liabilities Derivative financial instruments Foreign exchange forward contracts & embedded derivatives — 8 — 8 Interest rate swaps — 4 — 4 $ — $ 12 $ — $ 12 Recurring Fair Value Measurements of as of December 31, 2017 Level 1 Level 2 Level 3 Total Assets Short-term investments $ 1 $ — $ — $ 1 Derivative financial instruments Foreign exchange forward contracts & embedded derivatives — 13 — 13 $ 1 $ 13 $ — $ 14 Liabilities Derivative financial instruments Foreign exchange forward contracts & embedded derivatives $ — $ 9 $ — $ 9 $ — $ 9 $ — $ 9 The Company determines fair value of its derivative financial instruments based on internal valuation models, such as discounted cash flow analysis, using management estimates and observable market-based inputs, as applicable. Management estimates include assumptions concerning the amount and timing of estimated future cash flows and application of appropriate discount rates. Observable market-based inputs are sourced from third parties and include interest rates and yield curves, currency spot and forward rates, and credit spreads, as applicable. Cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities are all short-term in nature; therefore, the carrying value of these items approximates their fair value. The following tables provide additional fair value information related to the Company’s financial instruments: As of December 31, 2018 Carrying value Fair value Fair value hierarchy Long-term debt, excluding capital leases $ 3,034 $ 2,925 Level 2 Orbital receivables $ 441 $ 441 Level 2 As of December 31, 2017 Carrying value Fair value Fair value hierarchy Long-term debt, excluding capital leases $ 2,943 $ 3,176 Level 2 Orbital receivables $ 454 $ 507 Level 2 There were no transfers into or out of each of the levels of the fair value hierarchy during the year ended December 31, 2017 and December 31, 2016. |
Derivatives and Hedging
Derivatives and Hedging | 12 Months Ended |
Dec. 31, 2018 | |
Derivatives and Hedging | |
Derivatives and Hedging | 13. DERIVATIVES AND HEDGING Cash Flow Hedges The Company is exposed to fluctuations in interest rates under the Syndicated Credit Facility. On April 5, 2018, the Company entered in to several interest rate swap agreements in order to fix the base interest rate to be paid over an aggregate amount of $1.0 billion of the Company’s variable rate long-term debt, at an average rate of 2.56% (excluding the margin specified in the Syndicated Credit Facility). The Company is also exposed to foreign exchange risks on sales contracts, purchase contracts, debt denominated in foreign currencies, and net investments in foreign operations. The Company enters into foreign exchange forward contracts to hedge the significant majority of the exposure arising from expected foreign currency denominated cash flows. As of December 31, 2018 Derivative instrument Notional amount Maximum Contract term Interest rate swaps 1,000 3.3 years Foreign exchange forward contracts — — Purchase contracts settled in Canadian dollars: U.S. dollar 70 1.8 years Euro 10 2.3 years GBP 3 0.5 years Sales contracts settled in Canadian dollars: Euro 194 3.8 years Japanese Yen 35 2.6 years GBP 1 0.6 years Purchase contracts settled in U.S. dollars: Euro 10 0.3 years Japanese Yen 177 0.2 years Sales contracts settled in Canadian dollars: Euro 0.5 years Japanese Yen 0.2 years As of December 31, 2017 Derivative instrument Notional amount Maximum Contract term Interest rate swaps — — Foreign exchange forward contracts — — Purchase contracts settled in Canadian dollars: U.S. dollar 165 2.8 years Euro 16 2.7 years GBP 2 1.0 years Sales contracts settled in Canadian dollars: Euro 312 3.0 years Japanese Yen 26 3.1 years GBP 2 1.0 years Purchase contracts settled in U.S. dollars: Euro 32 1.3 years Japanese Yen 2,231 1.2 years Sales contracts settled in Canadian dollars: Euro 58 1.3 years Japanese Yen 1,116 1.2 years The effect of derivative instruments on earnings and other comprehensive income are as follows: For the year ended December 31, 2018 Effective portion of gains and losses included in other comprehensive income Effective portion of gains and losses reclassified to earnings Gains and loss included in earnings 1 Cash flow hedges: Foreign exchange forward contracts $ (6) $ — $ (2) Interest rate swaps (4) — — Embedded derivatives — — — Derivatives not qualified for hedging accounting: Foreign exchange forward contracts — — — Interest rate swaps — — — Embedded derivatives — — 1 For the year ended December 31, 2017 Effective portion of gains and losses included in other comprehensive income Effective portion of gains and losses reclassified to earnings Gains and loss included in earnings 1 Cash flow hedges: Foreign exchange forward contracts $ (3) $ — $ (1) Interest rate swaps — — — Embedded derivatives — — — Derivatives not qualified for hedging accounting: Foreign exchange forward contracts — — 5 Interest rate swaps — — — Embedded derivatives — — (2) For the year ended December 31, 2016 Effective portion of gains and losses included in other comprehensive income Effective portion of gains and losses reclassified to earnings Gains and loss included in earnings 1 Cash flow hedges: Foreign exchange forward contracts $ (8) $ (1) $ (5) Interest rate swaps — — — Embedded derivatives — — — Derivatives not qualified for hedging accounting: Foreign exchange forward contracts — — 1 Interest rate swaps — — — Embedded derivatives — — (3) 1 Includes gains and losses related to the ineffective portion of the Company’s cash flow hedges, and derivatives not qualified for hedge accounting. In implementing all its derivative financial instruments, the Company deals with counterparties and is therefore exposed to credit related losses in the event of non-performance by these counterparties. However, the Company deals with counterparties that are major financial institutions, and does not expect any of the counterparties to fail to meet their obligations. Net Investment Hedge As of December 31, 2018 and 2017, the Company had designated $271 million of its $2.0 billion Term Loan B as a hedge of its investment in certain U.S. subsidiaries. Foreign exchange gains and losses arising from the translation of the designated portion of the Term Loan B are recognized in other comprehensive income to the extent that the hedges are effective and are recognized in the Consolidated Statements of Operations to the extent that the hedges are ineffective. The fair value of the designated portion of Term Loan B was $256 million and $298 million as of December 31, 2018 and 2017, respectively. As a result of the Company’s U.S. Domestication on January 1, 2019, and the associated change from a Canadian parent company to a U.S. parent company, the Company’s Syndicated Credit Facility is now in a USD functional currency entity. Due to this change, the net investment hedge is no longer necessary from the domestication date onwards. |
Accumulated other comprehensive
Accumulated other comprehensive income (loss) | 12 Months Ended |
Dec. 31, 2018 | |
Accumulated other comprehensive income (loss) | |
Accumulated other comprehensive income (loss) | 14. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Changes in the components of Accumulated other comprehensive income (loss) are as follows: Foreign Net (Loss) Income Unrecognized Total Currency on Hedge (Loss) Gain on Accumulated Other Translation Investments in Derivative Pension Comprehensive Adjustments Foreign Operations Instruments Adjustments Income (Loss) Balance as of December 31, 2015 $ 154 $ (33) $ 18 $ 30 $ 169 Cumulative-effect of IFRS to U.S. GAAP conversion (1) — — (32) (33) Other comprehensive (loss) income (2) 5 (9) (9) (15) Tax benefit — — 1 1 2 Balance as of December 31, 2016 151 (28) 10 (10) 123 Other comprehensive (loss) income 7 — (3) (8) (4) Tax expense — — — (6) (6) Balance as of December 31, 2017 158 (28) 7 (24) 113 Other comprehensive (loss) income 4 (23) (10) (4) (33) Tax benefit (expense) — — 3 (1) 2 Balance as of December 31, 2018 $ 162 $ (51) $ — $ (29) $ 82 |
Revenue
Revenue | 12 Months Ended |
Dec. 31, 2018 | |
Revenue | |
Revenue | 15. REVENUE On December 31, 2018, the Company had $2.4 billion of remaining performance obligations, which represents the transaction price of firm orders less inception to date sales recognized. Remaining performance obligations exclude unexercised contract options and indefinite delivery/indefinite quantity contracts. The Company expects to recognize sales relating to existing performance obligations of approximately $1.3 billion, $0.4 billion, and $0.7 billion in the fiscal years 2019, 2020 and thereafter, respectfully. Contract liabilities by segment are as follows: Space As of December 31, 2018 Systems Imagery 1 Services Total Contract liabilities $ 172 $ 247 $ 2 $ 421 Space As of December 31, 2017 Systems Imagery 1 Services Total Contract liabilities $ 266 $ 330 $ 4 $ 600 1 The contract liability balance associated with the Company’s EnhancedView Contract was $184 million and $278 million as of December 31, 2018 and 2017, respectively. During the year ended December 31, 2018, imputed interest on advanced payments increased the contract liability balance by $26 million, and $120 million in revenue was recognized, decreasing the contract liability balance. The contract liability balance associated with the Company’s EnhancedView Contract is expected to be recognized as revenue through August 31, 2020. There were no deferred contract costs on the Consolidated Balance Sheets associated with this contract as of December 31, 2018 or December 31, 2017. The decrease in total contract liabilities was primarily due to revenue recognized. The Company’s primary sources of revenue are as follows: Year ended December 31, 2018 Space Systems Imagery Services Eliminations Total Product revenues $ 851 $ — $ — $ — $ 851 Service revenues 191 841 258 — 1,290 Intersegment eliminations 87 4 8 (99) — $ 1,129 $ 845 $ 266 $ (99) $ 2,141 Year ended December 31, 2017 Space Systems Imagery Services Eliminations Total Product revenues $ 1,119 $ — $ — $ — $ 1,119 Service revenues 141 228 143 — 512 Intersegment eliminations 10 2 1 (13) — $ 1,270 $ 230 $ 144 $ (13) $ 1,631 Year ended December 31, 2016 Space Systems Imagery Services Eliminations Total Product revenues $ 1,285 $ — $ — $ — $ 1,285 Service revenues 132 41 100 — 273 Intersegment eliminations 4 1 — (5) — $ 1,421 $ 42 $ 100 $ (5) $ 1,558 Certain of the Company’s contracts with customers in the Space Systems segment include a significant financing component since payments are received from the customer more than one year after delivery of the promised goods or services. The Company recognized orbital interest revenue of $32 million, $35 million and $31 million for the year ended December 31, 2018, 2017 and 2016, respectively related to these contracts, which is included in revenue from construction contracts. The approximate revenue based on geographic location of customers is as follows: Year ended December 31, 2018 2017 2016 United States $ 1,371 $ 744 $ 447 Canada 152 330 424 Asia 334 295 312 Europe 118 207 285 Australia 18 29 30 South America 134 17 58 Other 14 9 2 $ 2,141 $ 1,631 $ 1,558 Revenue from significant customers is as follows: Year ended December 31, 2018 2017 2016 Government: U.S. Federal Government and agencies $ 890 $ 294 $ 98 Canadian Federal Government and agencies 96 194 212 Commercial and other 1,155 1,143 1,248 Total revenue $ 2,141 $ 1,631 $ 1,558 |
Segment information
Segment information | 12 Months Ended |
Dec. 31, 2018 | |
Segment information | |
Segment information | 16. SEGMENT INFORMATION The Company’s business is organized into market sectors based on its products and services and has three reportable segments: (i) Space Systems; (ii) Imagery; and (iii) Services. The Company organizes its reportable segments based on the nature of the products and services offered. The Space Systems reportable segment supplies space-based and ground-based infrastructure and information solutions including communication and imaging satellites, satellite payloads and antenna subsystems, space-based and airborne surveillance solutions, robotic systems and associated ground infrastructure and support services. The Imagery segment is a supplier of high resolution Earth imagery and radar data sourced from the Company owned satellite constellations and third-party providers. The Services segment combines imagery, analytic expertise and innovative technology to deliver integrated intelligence solutions to customers. Transactions between segments are generally negotiated and accounted for under terms and conditions similar to other government and commercial contracts. The reconciling item “corporate expense” includes the portion of corporate costs not considered allocable to the segments, such as legal, management and administration, and other corporate unallocable costs. The Company’s Chief Operating Decision Maker (“CODM”) measures the performance of each segment based on revenue and adjusted EBITDA. Adjusted EBITDA is defined as EBITDA adjusted for certain items affecting comparability as specified in the calculation. The following table summarizes the operating performance of the Company’s segments: Year ended December 31, 2018 2017 2016 Revenues: Space Systems $ 1,129 $ 1,270 $ 1,421 Imagery 845 230 42 Services 266 144 100 Intersegment eliminations (99) (13) (5) Total Revenue $ 2,141 $ 1,631 $ 1,558 Adjusted EBITDA: Space Systems $ 5 $ 151 $ 160 Imagery 518 143 23 Services 25 23 19 Intersegment eliminations (22) (1) — Depreciation and amortization (449) (161) (72) Corporate expense (54) (65) (26) Restructuring (18) (36) (4) Acquisition and integration related expense (34) (60) — Impairment losses, including inventory (1,096) — — Interest expense, net (202) (99) (33) Interest Income 1 1 1 — Equity (income) loss from joint ventures, net of tax (2) — — Net (loss) earnings before income taxes $ (1,328) $ (104) $ 67 1 Included in Other expense (income), net on the Consolidated Statements of Operations. The Company’s capital expenditures are as follows: Space Corporate and Year ended December 31, 2018 Systems Imagery Services eliminations Total Capital expenditures: Property, plant and equipment $ 28 $ 156 $ 2 $ (30) $ 156 Intangible assets 6 55 1 — 62 $ 34 $ 211 $ 3 $ (30) $ 218 Space Corporate and Year ended December 31, 2017 Systems Imagery Services eliminations Total Capital expenditures: Property, plant and equipment $ 43 $ 14 $ 2 $ (10) $ 49 Intangible assets 11 12 — — 23 $ 54 $ 26 $ 2 $ (10) $ 72 Space Corporate and Year ended December 31, 2016 Systems Imagery Services eliminations Total Capital expenditures: Property, plant and equipment $ 38 $ — $ 1 $ 1 $ 40 Intangible assets 14 — 1 1 16 $ 52 $ — $ 2 $ 2 $ 56 Substantially all of the Company’s long-lived tangible assets were in the United States as of December 31, 2018 and 2017, respectively. |
Employee benefit plans
Employee benefit plans | 12 Months Ended |
Dec. 31, 2018 | |
Employee benefit plans | |
Employee benefit plans | 17. EMPLOYEE BENEFIT PLANS Defined contribution plans The Company maintains defined contribution plans for some of its employees in the U.S and Canada, whereby the Company pays contributions based on a percentage of the employees’ annual salary. For the years ended December 31, 2018, 2017 and 2016, the Company recorded expense of $17 million, $15 million and $14 million, respectively, related to these plans. Pension and other postretirement benefit plans The Company maintains various defined benefit pension plans covering a portion of its employees in the U.S. and Canada. The defined benefit plans provide pension benefits based on various factors including earnings and length of service. The defined benefit plans are funded and the Company’s funding requirements are based on each of the plans’ actuarial measurement framework as established by the plan agreements or applicable laws. Employees are required to contribute to some of the funded plans. The funded plans’ assets are legally separated from the Company and are held by independent trustees. The trustees are responsible for ensuring that the funds are protected as per applicable laws. The Company also provides for other postretirement benefits, comprised of extended health benefits, dental care and life insurance covering a portion of its employees in the U.S. and Canada. The cost of these benefits is funded primarily out of general revenues. The table below summarizes changes in the benefit obligations, the fair value of plan assets and funded status for all of the Company’s pension and other postretirement benefit plans, as well as the aggregate balance sheets impact. Pension Other Postretirement 2018 2017 2018 2017 Change in benefit obligation: Benefit obligation at beginning of year $ 654 $ 614 $ 39 $ 64 Valuation effect at beginning of year — — — (2) Service cost 6 5 — — Interest cost 22 24 2 2 Actuarial (gains) losses (43) 38 (4) 1 Prior service credit — — — (1) Benefits paid (37) (32) (2) (2) Curtailments 1 — — — (24) Foreign exchange (7) 5 (3) 1 Benefit obligation at end of year $ 595 $ 654 $ 32 $ 39 Change in fair value of plan assets: Fair value of plan assets at beginning of year $ 478 $ 437 $ — $ — Actual (loss) return on plan assets (20) 59 — — Employer contributions 16 9 3 2 Benefits paid (35) (30) (3) (2) Expenses paid (3) (3) — — Foreign exchange (7) 6 — — Fair value of plan assets at end of year 429 478 — — Unfunded status at end of year $ (166) $ (176) $ (32) $ (39) Assets and (liabilities) recognized in the Consolidated Balance Sheets: Other assets $ 4 $ 4 $ — $ — Accrued compensation and benefits — — (1) (2) Pension and other postretirement benefits (170) (180) (31) (37) $ (166) $ (176) $ (32) $ (39) 1 The Company amended a postretirement plan at one of its operating divisions by eliminating employer paid subsidies toward retiree medical benefits as of December 31, 2017. The Company recognized a gain on settlement of $24 million during fiscal 2017, with an offsetting reduction to the benefit obligation. The $59 million decrease in the pension benefit obligation from 2017 to 2018 was primarily due to the increase in the discount rate. The $49 million decrease in the fair value of plan assets from 2017 to 2018 was primarily due to benefit payments and negative return on assets. The following table summarizes the net actuarial (loss) gain and prior service credits for the year ended December 31, in accumulated other comprehensive loss (income), before related tax effects, for all of the Company’s pension and other postretirement benefit plans: Pension Other Postretirement 2018 2017 2016 2018 2017 2016 Net actuarial (loss) gain $ (63) $ (54) $ (89) $ 17 $ 12 $ 3 Prior service credit — — — 1 1 3 Total recognized in accumulated other comprehensive loss (income) $ (63) $ (54) $ (89) $ 18 $ 13 $ 6 The aggregate accumulated benefit obligation (“ABO”) for the Company’s pension plans was $593 million at December 31, 2018 and $652 million at December 31, 2017. The following table presents information only for the pension plans with an ABO in excess of the fair value of plan assets at December 31: Pension 2018 2017 Accumulated benefit obligation $ 536 $ 587 Fair value of plan assets $ 367 $ 407 The following table presents information for the Company’s pension plans with a projected benefit obligation in excess of plan assets at December 31: Pension 2018 2017 Projected benefit obligation $ 553 $ 605 Fair value of plan assets $ 383 $ 425 The ABO for the Company’s other postretirement benefit plans with an accumulated postretirement benefit obligation in excess of the fair value of plan assets was $32 million and $39 million at December 31, 2018 and 2017, respectively. The following table summarizes the weighted average assumptions used to determine the benefit obligations for the Company’s pension and other postretirement plans at December 31: Pension Other Postretirement 2018 2017 2018 2017 Discount rate 4.1 % 3.4 % 3.8 % 3.4 % Rate of future compensation increase 3.5 % 3.5 % 3.6 % 3.6 % The following table summarizes the components of net periodic benefit (credits) costs for the Company’s pension and other postretirement benefit plans for the years ended December 31: Pension Other Postretirement 2018 2017 2016 2018 2017 2016 Service cost $ 4 $ 3 $ 2 $ — $ — $ 1 Interest cost 22 24 26 2 2 2 Expected return on plan assets (32) (29) (31) — — — Amortization of prior service credit — — — — (2) (2) Amortization of net loss (gain) 1 1 2 (1) — — Curtailment gain — — — — (26) — Settlement loss recognized — — 3 — — — Expenses paid 2 3 4 — — — Net periodic benefit (credit) cost $ (3) $ 2 $ 6 $ 1 $ (26) $ 1 The following table summarizes the components recognized in other comprehensive loss (income) for the Company’s pension and other postretirement benefit plans for the years ended December 31: Pension Other Postretirement 2018 2017 2016 2018 2017 2016 Net loss (gain) $ 10 $ 8 $ 11 $ (6) $ — $ (4) Prior service credit — — — — (1) — Amortization of prior service (cost) credit — — — — 2 — Amortization of net (loss) gain (1) (1) (4) 1 1 — Curtailment loss — — — — 1 2 Total recognized in other comprehensive loss (income) $ 9 $ 7 $ 7 $ (5) $ 3 $ (2) Total recognized in net periodic benefit (credit) cost and other comprehensive loss (income) $ 6 $ 9 $ 13 $ (4) $ (23) $ (1) The following table summarizes the weighted average assumptions used to determine the net periodic benefit (credit) cost for the Company’s pension and other postretirement benefit plans for the years ended December 31: Pension Other Postretirement 2018 2017 2016 2018 2017 2016 Discount rate 3.4 % 3.9 % 4.3 % 3.4 % 3.8 % 4.1 % Rate of future compensation increase 3.5 % 3.5 % 3.5 % 3.6 % 3.6 % 3.5 % Expected long-term return on plan assets 6.9 % 6.8 % 6.8 % N/A N/A N/A The expected long-term return on plan assets assumption represents the average rate that the Company expects to earn over the long-term on the assets of the Company’s benefit plans, including those from dividends, interest income and capital appreciation. The Company utilizes a third-party consultant to assist in the development of the expected long-term return on plan assets, which is based on expectations regarding future long-term rates of return for the plans investment portfolio, with consideration given to the allocation of investments by asset class and historical rates of return for each individual asset class. The annual increase in the cost of benefits (health care cost trend rate) for the Company’s other postretirement benefit plans is assumed to be an average of 6.5% in 2019 and is assumed to decline to a rate of 4.5% in 2026 and thereafter. Health care cost trend assumptions are based primarily on industry and plan experience expectations as well as current market conditions. Assumed health care cost trend rates can have a significant effect on amounts reported for postretirement medical benefit plans. Plan Assets. The Company’s Pension Committees (“Committees”) have the responsibility to formulate the investment policies and strategies for the plan assets. The Committees structure the investment of plan assets to maximize the plans long-term rate of return for an acceptable level of risk and limit the volatility of investment returns. In the pursuit of these goals, the Committees have formulated the following investment policies and objectives: (1) preserve the plan assets; (2) maintain sufficient liquidity to fund benefit payments and pay plan expenses; and (3) achieve a minimum total rate of return equal to the established benchmarks for each asset category. The Committees have established the allowable range that the plan assets may be invested in for each major asset category. In addition, the Committees have established guidelines regarding diversification within asset categories to limit risk and exposure to a single or limited number of securities. The investments of the plans include a diversified portfolio of both equity and fixed income investments. Equity investments are further diversified across U.S. and international stocks, small to large capitalization stocks, and growth and value stocks. Fixed income assets are diversified across U.S. and international issuers, corporate and governmental issuers, and credit quality. The following table presents the allowable range for each major category of the plan assets at December 31, 2018 as well as the Company’s pension plan and other postretirement benefit plan weighted average asset allocations at December 31, 2018: Asset Allocation Asset Allocation Range 2018 Cash and cash equivalents 0 - 16 % 1 % U.S. equity securities 15 - 50 % 29 % International equity securities 9 - 33 % 31 % Fixed income 30 - 52 % 37 % Other 0 - 14 % 2 % 100 % Cash and cash equivalents consist of cash amounts in both U.S. and Canadian dollars and short-term investments. U.S. and international securities consist primarily of investments in common stock of U.S. and Canadian companies. The fair value of equity securities is based on quoted market prices available in active markets at the close of trading. Fixed income securities consist primarily of U.S. and Canadian corporate and government fixed-income securities. The fair values for of these investments are based on yields currently available on comparable bonds of issuers with similar credit ratings, quoted prices of similar bonds in an active market. The Committees regularly monitor the investment of the plan assets to ensure that the actual investment allocation remains within the established range. The Committees also regularly measure and monitor investment risk through ongoing performance reporting and investment manager reviews. The following table presents the fair value of the Company’s pension plan assets by asset category segregated by level within the fair value hierarchy, as described below: December 31, 2018 December 31, 2017 Asset Category Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 5 $ 5 $ — $ — $ 6 $ 6 $ — $ — U.S. equity securities 126 11 115 — 147 14 133 — International equity securities 133 19 113 1 150 20 129 1 Fixed income 158 — 158 — 167 — 167 — Other 7 — 7 — 8 — 8 — Total assets at fair value $ 429 $ 35 $ 393 $ 1 $ 478 $ 40 $ 437 $ 1 Contributions. The funding policy for the Company’s pension and postretirement benefit plans is to contribute at least the minimum required by applicable laws and regulations or to directly make benefit payments where appropriate. At December 31, 2018, all legal funding requirements had been met. The Company expects to contribute approximately $14 million to its pension plans, and approximately $2 million to its other postretirement benefit plans for the year ending December 31, 2019. Estimated Future Benefit Payments. The following table presents expected pension and other postretirement benefit payments which reflect expected future service, as appropriate. Pension Other Postretirement 2019 $ 34 $ 2 2020 34 2 2021 34 2 2022 35 2 2023 35 2 Years 2024 - 2028 182 10 |
Share-based payment plans
Share-based payment plans | 12 Months Ended |
Dec. 31, 2018 | |
Share-based payment plans | |
Share-based payment plans | 18. STOCK-BASED COMPENSATION PLANS The Company’s stock-based compensation plans were established to attract and retain key personnel by providing them the opportunity to acquire an equity interest in the Company or other incentive compensation measured by reference to the value of shares or other performance objectives, and align the interests of key personnel with those of stockholders. Long-Term Incentive Plans – The Company’s long-term incentive plans (“LTIP Plans”) include long-term incentive plans initiated before 2017 (“Pre-2017 Plans”) and the 2017 Long-Term Incentive Plan (‘‘2017 Plan’’) pursuant to which shares may be issued by the Company from treasury. Under the LTIP Plans, awards of stock appreciation rights (“SARs”) may be granted to employees of the Company and its subsidiaries; however, no LTIP award may be issued to any director of a subsidiary of the Company who is not an employee. An aggregate of 6,820,000 LTIP awards were authorized under the Pre-2017 Plans and an aggregate of 1,900,000 LTIP awards were authorized under the 2017 Plan. No further awards shall be granted under the LTIP Plans. Omnibus Equity Incentive Plan – The Company adopted the Omnibus Equity Incentive Plan (“Omnibus Plan”) in February 2017 and the stockholders approved the Omnibus Plan in July 2017. The Omnibus Plan provides for grants to eligible employees, officers, consultants or advisors of the Company and its subsidiaries of stock options, long-term incentive units, restricted stock units (‘‘RSUs”), SARs and performance stock units in order to provide a long-term incentive compensation to such persons. No awards will be made under the Omnibus Plan to non-employee directors. 1,100,000 shares were reserved for issuance under the Omnibus Plan. The Omnibus Plan has a term of ten years and shares may be issued by the Company from treasury. Deferred Stock Unit Plan – The Company established a Deferred Share Unit (“DSU”) Plan (“DSU Plan”) whereby the Company’s independent directors receive some or all of their annual retainers in DSUs. DSUs are granted at a price equal to the closing price of the common shares on the day before the date of grant. The DSUs are settled in equity at retirement at the closing price of the common shares of the Company on the retirement date of the director. Under the DSU plan, 100,000 DSUs were reserved for issuance. Employee Stock Purchase Plan – On October 1, 2001, the Company implemented an employee stock purchase plan. Under this plan, the Company may issue 1,500,000 common shares to certain eligible employees. The maximum number of common shares that may be issued under the plan in any one year is 300,000. Under the terms of the plan, employees can purchase shares of the Company at 85% of the market value of the shares. Employees can allocate a maximum of 10% of their salary to the plan to a maximum of C$20,000 per annum. During the years ended December 31, 2018, 2017 and 2016, 102,076, 83,453 and 66,466 common shares were issued, respectively, at an average price of C$47.77, C$59.58, C$70.56 under the employee stock purchase plan. DigitalGlobe Equity Plan – The Employee Stock Option Plan (‘‘DigitalGlobe Equity Plan’’) was assumed as a result of the DigitalGlobe Transaction, effective as of October 5, 2017. As of December 31, 2017, no further awards shall be granted under the DigitalGlobe Equity Plan. Stock Appreciation Rights The Company awards SARs to certain employees under its 2017 Plan and Omnibus Plan. Certain awards issued under the Pre-2017 Plans, the 2017 Plan and Omnibus Plan remain outstanding as of December 31, 2018. The SARs issued under the Pre-2017 Plans vest over a period of three years, in the amount of one-third each year, and expire five years from their grant date. The SARs issued under the 2017 Plan and Omnibus Plan vest over a period of four years, in the amount of one-quarter each year, and expire ten years from their grant date. SARs Accounted for as Liability Classified Awards A summary of the SARs accounted for as liability classified awards for the year ended December 31, 2018 is presented below: Number of Awards Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value SARs outstanding at December 31, 2017 2,638,857 C$ Exercised (23,604) Cancelled or expired (1,283,592) SARs outstanding at December 31, 2018 1,331,661 C$ — SARs vested and expected to vest at December 31, 2018 1,319,781 C$ — SARs exercisable at December 31, 2018 1,071,358 C$ C$ — The weighted average grant-date estimated fair value of SARs accounted for as liability classified awards granted during the years ended December 31, 2017 and 2016 was C$65.38 and C$78.75, respectively. No SARs accounted for as liability classified awards were granted during 2018. The total intrinsic value of SARs exercised during the years ended December 31, 2018, 2017 and 2016 was $1 million, $6 million and $8 million, respectively. The SARs that vested during the years ended December 31, 2018, 2017 and 2016 had a total estimated fair value of $3 million, $4 million and $2 million, respectively. As of December 31, 2018, total unrecognized compensation expense related to nonvested SARs accounted for as liability classified awards was not significant . SARs Accounted for as Equity Classified Awards A summary of the SARs accounted for as equity classified awards for the year ended December 31, 2018 is presented below: Number of Awards Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value SARs outstanding at December 31, 2017 3,338,148 C$ Granted 10,307 Exercised (19,837) Cancelled or expired (689,150) SARs outstanding at December 31, 2018 2,639,468 C$ — SARs vested and expected to vest at December 31, 2018 2,543,453 C$ — SARs exercisable at December 31, 2018 1,715,148 C$ C$ — The weighted average grant-date estimated fair value of SARs accounted for as equity classified awards granted during the years ended December 31, 2018, 2017 and 2016 was C$10.37, C$75.04 and C$67.75, respectively. The total intrinsic value of SARs exercised during the years ended December 31, 2018, 2017 and 2016 was immaterial. The SARs, accounted for as equity-settled awards, that vested during the years ended December 31, 2018, 2017 and 2016 had a total estimated fair value of $6 million, $8 million and $8 million, respectively. As of December 31, 2018, total unrecognized compensation expense related to nonvested SARs accounted for as equity classified was $4 million and is expected to be recognized over a weighted average remaining period of 1.7 years. Restricted Share Units In 2017, the Company issued RSUs to certain employees under the Omnibus Plan. The RSUs vest over a period of three years, in the amount of one-third each year, and are equity-settled on the vesting date. As part of the acquisition of DigitalGlobe, the Company provided replacement RSUs for a certain portion of the unvested RSU’s previously granted to DigitalGlobe employees. The replacement RSUs will continue to vest over the next three years, based on the terms of the original plan. A summary of the status of the Company’s nonvested RSU awards under both the Omnibus and the DigitalGlobe Equity Plans as of December 31, 2018 and changes during the year then ended is presented below: Weighted Average Weighted Average Number of Grant Date Number of Grant Date Awards 1 Fair Value 1 Awards 2 Fair Value 2 Nonvested RSUs at December 31, 2017 590,663 C$ 470,101 $ Granted 161,748 — — Vested (174,825) (168,432) Cancelled or expired (73,174) (27,808) Nonvested RSUs at December 31, 2018 504,412 C$ 273,861 $ 1 RSUs under the Omnibus plan 2 RSUs under the DigitalGlobe Equity Plan During the years ended December 31, 2018 and 2017, the total fair value of RSUs that vested was $13 million and $6 million, respectively. No RSUS vested during fiscal 2016. As of December 31, 2018, total unrecognized compensation expense related to nonvested RSUs was $18 million and is expected to be recognized over a weighted average remaining period of 1.4 years. Deferred Share Units A summary of the DSU awards for the year ended December 31, 2018 is presented below: Number of Awards Weighted Average Issuance Price DSUs outstanding at December 31, 2017 79,460 C$ Issued 28,143 DSUs outstanding at December 31, 2018 107,603 C$ During the years ended December 31, 2017 and 2016, the total intrinsic value of redeemed DSUs was not material. No DSUs were redeemed during the year ended December 31, 2018. Expense related to DSUs is recognized fully as stock-based compensation expense at the time they are issued. Stock-Based Compensation Expense The following table presents stock-based compensation expense (benefit) from continuing operations included in the Company’s Consolidated Statements of Operation: Year ended December 31, 2018 2017 2016 Product costs, excluding depreciation and amortization $ (1) $ 6 $ (1) Service costs, excluding depreciation and amortization 2 2 (1) Selling, general and administrative 19 50 17 Stock-based compensation expense before taxes 20 58 15 Income taxes — — — Stock-based compensation expense, net of tax $ 20 $ 58 $ 15 Valuation of Stock-Based Compensation Awards Valuation of Liability Classified SARs The fair value of the SARs were estimated at each reporting period using the Black-Scholes option pricing model with the following weighted average assumptions: Year ended December 31, 2018 2016 Risk-free interest rate 1.7 - 1.9 % 1.7 - 1.9 % 0.7 - 1.4 % Dividend yield % % % Expected lives (in years) 0.3 - 5.4 1.0 - 6.5 1.0 - 7.0 Volatility 14 - 23 % 14 - 25 % 20 - 26 % Valuation of Equity Classified SARs, RSUs and DSUs The fair value of equity classified SARs, RSUs and DSUs were estimated on the date of the grant or the date of accounting reclassification using the Black-Scholes option pricing model with the following weighted average assumptions: Year ended December 31, 2018 2016 Risk-free interest rate 1.9 - 2.3 % 0.6 - 1.9 % 0.6 - 1.3 % Dividend yield 2.2 - 9.1 % 1.5 - 2.2 % 1.5 - 2.2 % Expected lives (in years) 3.0 - 7.0 0.4 - 7.0 0.4 - 7.0 Volatility 22 - 41 % 17 - 25 % 17 - 25 % The risk-free interest rate is based upon Canadian bond rates with the remaining term equal to the expected life assumed at the date of grant. The dividend yield is based on the expected annual dividend yield at date of grant. The expected lives are based on the Company’s actual historical exercise experience. Volatility is calculated using a rate based upon the historical volatility of the Company’s common stock. Forfeitures are estimated at the time of grant based upon historical information. Forfeitures will be revised, if necessary, in subsequent periods if actual forfeitures differ from estimates. |
Income taxes
Income taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income taxes | |
Income taxes | 19. INCOME TAXES The components of income before income taxes were: Year ended December 31, 2018 2017 2016 Canadian $ (97) $ 25 $ 60 Non-Canadian (1,231) (129) 7 (Loss) income before taxes $ (1,328) $ (104) $ 67 Income tax expense (benefit) is comprised of the following: Year ended December 31, 2018 2017 2016 Current tax (benefit) expense: Canadian $ (5) $ 1 $ 2 Non-Canadian — 1 — Total $ (5) $ 2 $ 2 Deferred tax benefit: Canadian (54) (22) (3) Non-Canadian (3) (142) — Total (57) (164) (3) Income tax benefit $ (62) $ (162) $ (1) For the year ended December 31, 2018, the applicable statutory tax rate was the Canadian statutory income tax rate. Following the U.S. Domestication, the applicable statutory tax rate will be the U.S. federal income tax rate. A reconciliation of the Canadian statutory income tax rate to our effective income tax rate is as follows: Year ended December 31, 2018 2017 2016 Statutory Federal and Provincial tax rate in Canada 27 % 26 % 26 % Expected income tax expense (benefit) at statutory rate $ (358) $ (27) $ 17 Impact of Tax Cuts and Jobs Act of 2017 — 26 — Change in statutory tax rates 23 (1) — Non-deductible expenses 1 10 2 Foreign exchange differences (44) (1) 1 Change in valuation allowance 207 (123) 13 Changes in uncertain tax positions (20) (14) (4) Foreign earnings subject to different tax rates (27) (13) (10) Research and development tax credits (18) (19) (20) Non-deductible goodwill impairment 172 — — Other 2 — — Income tax $ (62) $ (162) $ (1) Effective income tax rate 4.7 % 155.8 % (1.5) % The Tax Cuts and Jobs Act ("2017 Tax Act") was enacted on December 22, 2017. The 2017 Tax Act includes a broad range of tax reform proposals affecting businesses, including a reduction in the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018, a one-time mandatory deemed repatriation tax on earnings of certain foreign subsidiaries that were previously tax deferred, limitations on interest expense deductions, a new base erosion focused minimum tax applicable to certain payments to foreign related parties, and the creation of new taxes on earnings of non-U.S. subsidiaries. In the fourth quarter of 2017, the Company made a reasonable estimate of the impact of the 2017 Tax Act on the existing deferred tax balances and the one-time mandatory deemed repatriation tax. The re-measurement of the deferred tax assets and liabilities, net of valuation allowance, and the estimate of the one-time mandatory deemed repatriation tax was not material. Significant components of deferred tax assets and liabilities are as follows: Year ended December 31, 2018 2017 2016 Tax benefit of losses carried forward $ 323 $ 247 $ 94 Research and development tax credits 175 121 45 Construction contract assets and liabilities 79 71 3 Property and equipment 15 5 — Goodwill and intangibles 1 — 1 Trade and other payables 39 27 22 Employee benefits 55 58 85 Unrealized foreign exchange gains and losses 39 10 12 Other 2 — 1 Sub-total 728 539 263 Less: Valuation allowance (366) (157) (200) Deferred tax assets, net of valuation allowance $ 362 $ 382 $ 63 Construction contract assets and liabilities (6) (3) (3) Property and equipment (3) (1) (12) Goodwill and intangibles (253) (303) — Research and development tax credits — — (6) Unrealized foreign exchange gains and losses — (11) (8) Debt issuance costs (3) (3) — Other — (3) — Total net deferred tax liabilities (265) (324) (29) Deferred tax assets, net $ 97 $ 58 $ 34 The deferred tax assets are reduced by a valuation allowance if, upon available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company relies on existing deferred tax liabilities and forecasted taxable income in each applicable taxable jurisdiction in determining whether to reduce net deferred tax assets by a valuation allowance. The 2017 Tax Act one-time repatriation tax liability effectively taxed the undistributed earnings previously deferred from U.S. income taxes. We have not provided for foreign withholding tax on the undistributed earnings from our non-U.S. subsidiaries because such earnings are considered to be indefinitely reinvested. If such earnings were to be distributed, any foreign withholding tax would not be significant. Net operating losses carried forward as of December 31, 2018 were $1,083 million. Of these, $191 million and $731 million relate to Canadian and foreign losses, respectively, set to expire between 2026 and 2038, $158 million relate to U.S. losses which have no expiry and are subject to an annual limitation of 80% of taxable income, and $3 million related to other foreign losses which have no future expiry. The U.S. Domestication does not impact the availability of the Canadian and foreign losses carried forward to future years. Net capital losses carried forward as of December 31, 2018 were $10 6 million related to Canada. The benefit of these losses has not been recognized, as the Company is not likely to generate sufficient capital gains to utilize the losses. The net capital losses in Canada have no expiry. The Company also has tax credits carried forward of $214 million at December 31, 2018, related to research and development expenditures. Of these tax credits, $137 million relate to Canadian operations, set to expire between 2019 and 2023, and $77 million relate to U.S. operations set to expire between 2019 and 2038. As of December 31, 2018, 2017 and 2016, there were $94 million, $ 132 million on and $133 million of unrecognized tax benefits that, if recognized, would be recognized as a component of income tax expense (benefit). The following table summarizes the changes in unrecognized tax benefits: Year ended December 31, 2018 2017 2016 Balance, beginning of year $ 132 $ 133 $ 119 Gross increases related to prior period tax positions 9 5 7 Gross increases related to current period tax positions 13 6 10 Decrease related to resolution of audits with tax authorities (28) — — Expiration of the statute of limitations (22) (21) (6) Foreign currency translation (10) 9 3 Balance, end of year $ 94 $ 132 $ 133 The Company and its subsidiaries file income tax returns in Canada, the United States, and various foreign jurisdictions. With some exceptions, the Company remains subject to income tax examination in Canada for years after 2012, and in the United States for years after 1999. The Canada Revenue Agency (“CRA”) commenced its examination of the 2014 income tax returns in February 2017, which is anticipated to be completed by the end of 2019. The CRA is also examining research and development expenditures claimed in years from 2009 to 2016. There are no significant audits underway in any of the foreign jurisdictions. While it is difficult to predict the outcome or timing of a particular tax matter, the Company believes it has adequately provided reserves for reasonably foreseeable outcomes related to these matters. It is reasonably possible that a reduction of up to $8 million of unrecognized tax benefit and related interest and penalties will occur within the next twelve months because of the expiration of certain statutes of limitation. The Company records interest and penalties accrued or recovered in relation to unrecognized tax benefits in income tax expense. During the years ended December 31, 2018, 2017 and 2016, the Company recognized increases/(decreases) in interest and penalties of ($7) million, $4 million and $1 million, respectively. The amount of interest and penalties recognized in the Consolidated Balance Sheet was $7 million, $15 million, and $11 million at December 31, 2018, 2017 and 2016, respectively. |
Earnings per common share
Earnings per common share | 12 Months Ended |
Dec. 31, 2018 | |
Earnings per common share | |
Earnings per common share | 20. EARNINGS PER SHARE The following table includes the calculation of basic and diluted EPS: Year ended December 31, 2018 2017 2016 Net (loss) income $ (1,264) $ 58 $ 68 Weighted average number of common shares outstanding - basic 58.1 41.2 36.4 Weighted dilutive effect of equity awards — 0.1 0.1 Weighted average number of common shares outstanding - diluted 58.1 41.3 36.5 Earnings per common share: Basic $ (21.76) $ 1.41 $ 1.87 Dilutive $ (21.76) $ 1.40 $ 1.86 For each of the years ended December 31, 2017 and 2016, approximately 4 million awards were excluded from the diluted weighted average number of ordinary common shares outstanding calculation because their effect would have been anti-dilutive. |
Contingencies and commitments
Contingencies and commitments | 12 Months Ended |
Dec. 31, 2018 | |
Contingencies and commitments | |
Contingencies and commitments | 21. COMMITMENTS AND CONTINGENCIES Lease Obligations As of December 31, 2018, the Company is committed under legally enforceable agreements for purchase and rental payments for amounts as follows: 2019 2020 2021 2022 2023 Thereafter Total Operating lease obligations $ $ $ $ $ $ $ 208 Capital lease commitments — — — 13 For the years ended December 31, 2018, 2017 and 2016, the Company has recorded total lease expenses of $36 million, $37 million and $33 million, respectively. Capital leases are a component of property, plant and equipment in the Company’s Consolidated Balance Sheets for the periods ended December 31, 2018 and 2017. The capital lease net balance was $10 million and $12 million for the years ended December 31, 2018 and 2017, respectively. Contingencies in the Normal Course of Business As discussed in Note 6, satellite construction contracts may include performance incentives whereby payment for a portion of the purchase price of the satellite is contingent upon in-orbit performance of the satellite. The Company’s ultimate receipt of orbital performance incentives is subject to the continued performance of its satellites generally over the contractually stipulated life of the satellites. A complete or partial loss of a satellite’s functionality can result in loss of orbital receivable payments or repayment of amounts received by the Company under a warranty payback arrangement. The Company generally receives the present value of the orbital receivables if there is a launch failure or a failure caused by a customer error, but will forfeit some or all of the orbital receivables if the loss is caused by satellite failure or as a result of Company error. The Company recognizes orbital performance incentives in the financial statements based on the amounts that are expected to be received and believes that it will not incur a material loss relating to the incentives recognized. The Company may incur liquidated damages on programs as a result of delays due to slippage, or for programs which fail to meet all milestone requirements as outlined within the contractual arrangements with customers. Losses on programs related to liquidated damages result in a reduction of revenue recognition. The Company enters into agreements in the ordinary course of business with resellers and others. Most of these agreements require the Company to indemnify the other party against third-party claims alleging that one of its products infringes or misappropriates a patent, copyright, trademark, trade secret or other intellectual property right. Certain of these agreements require the Company to indemnify the other party against claims relating to property damage, personal injury or acts or omissions by the Company, its employees, agents or representatives. From time to time, the Company has made guarantees regarding the performance of its systems to its customers. Some of these agreements do not limit the maximum potential future payments the Company could be obligated to make. The Company evaluates and estimates potential losses from such indemnification based on the likelihood that the future event will occur. To date, the Company has not incurred any material costs as a result of such obligations and has not accrued any liabilities related to such indemnification and guarantees in the Consolidated Financial Statements. The Company has entered into industrial cooperation agreements, sometimes referred to as offset agreements, as a condition to entering into contracts for its products and services from certain customers in foreign countries. These agreements are designed to return economic value to the foreign country and may be satisfied through activities that do not require a direct cash payment, including transferring technology, providing manufacturing, training and other consulting support to in-country projects. These agreements may provide for penalties in the event the Company fails to perform in accordance with offset requirements. The Company has historically not been required to pay any such penalties. Legal Proceedings The Company is a party to various other legal proceedings and claims that arise in the ordinary course of business as either a plaintiff or defendant. The Company analyzes all legal proceedings and the allegations therein. The outcome of any of these other proceedings, either individually or in the aggregate, is not expected to have a material adverse effect on the Company’s financial position, results of operations or liquidity. |
Supplemental cash flow
Supplemental cash flow | 12 Months Ended |
Dec. 31, 2018 | |
Supplemental cash flow | |
Supplemental cash flow | 22. SUPPLEMENTAL CASH FLOW Selected cash payments and non-cash activities were as follows: Year ended December 31, 2018 2017 2016 Supplemental cash flow information: Cash paid for interest $ (152) $ (41) $ (30) Income tax refunds (payments) 1 1 (7) Supplemental non-cash investing and financing activities: Accrued capital expenditures $ 22 $ 18 $ 2 Acquisitions 24 1,197 — |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2018 | |
Selected Quarterly Financial Data (Unaudited) | |
Selected Quarterly Financial Data (Unaudited) | 23. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) Selected financial data (unaudited) for the periods presented was as follows: 2018 2017 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Total revenues $ 557 $ 579 $ 509 $ 496 $ 374 $ 375 $ 337 $ 545 Net (loss) income - IFRS 31 (18) (433) (961) 4 19 13 64 Net (loss) income - U.S. GAAP Adjustments (16) (22) 144 11 (15) (7) (11) (9) Net (loss) income $ 15 $ (40) $ (289) $ (950) $ (11) $ 12 $ 2 $ 55 Earnings per share, basic $ 0.27 $ (0.70) $ (4.90) $ (16.10) $ (0.31) $ 0.33 $ 0.05 $ 1.00 Earnings per share, diluted $ 0.26 $ (0.70) $ (4.90) $ (16.10) $ (0.31) $ 0.32 $ 0.05 $ 0.98 |
Subsequent events
Subsequent events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent events | |
Subsequent events | 24. SUBSEQUENT EVENTS On January 1, 2019 the Company completed the previously announced U.S. Domestication which marks a major milestone in the Company’s long-term U.S. Access Plan, enhances the Company’s ability to provide and support classified applications for U.S. Government agencies and fulfills a commitment made in acquiring DigitalGlobe, which was approved by the Company’s stockholders at that time. On February 27, 2019, the Company announced a restructuring plan to implement cost-saving measures, including a reduction in the Company’s workforce. As a part of these efforts, the Company will reduce its overall workforce headcount by approximately 250 employees. This reduction in the Company’s workforce is expected to be substantially completed in the first quarter of 2019. The Company estimates that it will incur approximately $15 to $22 million of one-time pre-tax charges related to the restructuring. |
Significant accounting polici_2
Significant accounting policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Significant accounting policies | |
Basis of preparation | Basis of preparation The Consolidated Financial Statements include the accounts of Maxar Technologies Inc., and all consolidated subsidiary entities. The Company’s Consolidated Financial Statements have been prepared in accordance with U.S. GAAP, and the rules and regulations of the U.S. Securities and Exchange Commission, or SEC . All intercompany balances and transactions are eliminated on consolidation. The Company’s Consolidated Financial Statements are presented in U.S. dollars and have been prepared on a historical cost basis, except for certain financial assets and liabilities including derivative financial instruments which are stated at fair value. |
Use of estimates, assumptions and judgments | Use of estimates, assumptions and judgments The preparation of the Consolidated Financial Statements in accordance with U.S. GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the reporting date, as well as the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared using the most current and best available information; however, actual results could differ materially from those estimates. |
Business combinations | Business combinations Business combinations are accounted for using the acquisition method. The consideration for an acquisition is measured at the fair values of the assets transferred, the liabilities assumed and the equity interests issued at the acquisition date. The excess of the consideration over the fair value of the identifiable net assets acquired is recorded as goodwill. Transaction costs that are incurred in connection with a business combination, other than costs associated with the issuance of debt or equity securities, are expensed as incurred. |
Foreign currency | Foreign currency Assets and liabilities of non-U.S. subsidiaries that operate in local currencies are translated to U.S. dollars at exchange rates in effect at the balance sheet date, with the resulting translation adjustments, net of tax, recorded in Accumulated other comprehensive income within the Stockholders’ equity section of the Consolidated Balance Sheet. Income and expense accounts are translated at average monthly exchange rates during the year. |
Revenue recognition | Revenue recognition Revenue is recognized in accordance with the five step model set forth by ASC 606, which involves identification of the contract(s), identification of performance obligations in the contract, determination of the transaction price, allocation of the transaction price to the previously identified performance obligations, and recognition of revenue as the performance obligations are satisfied. Revenue is measured at the fair value of consideration received or receivable, net of discounts and after eliminating intercompany sales. When consideration received from customers includes advance payments that contain a financing element, the Company imputes interest on such advance payments and recognizes such amounts as a component of revenue. Contract costs generally include direct costs such as materials, labor, and subcontract costs. Costs are expensed as incurred except for incremental costs incurred to obtain or fulfill a contract, which are capitalized and amortized on a straight-line basis over the expected period of performance. Space Systems segment Revenues in the Space Systems segment is primarily generated from long-term construction contracts. Due to the long-term nature of these contracts, revenue is generally recognized over time utilizing a cost-to-cost approach, which requires the Company to make estimates regarding the revenue and cost associated with the design, manufacture and delivery of its products and services. The Company’s long-term construction contracts generally consist of a single performance obligation due to the integrated nature of the goods or services in contracts. Revenue from construction contracts includes initial contract amounts, variations in contract work, claims, incentive payments, shipping and handling costs and the fair value of customer furnished materials. Satellite construction contracts may include performance incentives whereby payment for a portion of the purchase price is contingent upon in-orbit performance of the satellite. These performance incentives are structured in two forms. As a warranty payback, the customer pays the entire amount of the performance incentive during the period of the satellite construction and such incentives are subject to refund if satellite performance does not achieve certain predefined operating specifications. As an orbital receivable, the customer makes payment of performance incentives over the in-orbit life of the satellite. Performance incentives, whether warranty payback or orbital receivables, are included in revenue during the construction period based on amounts expected to be received. Orbital receivables are recorded at their fair value as of the launch date and the adjustments to the amount receivable of the discount during the in-orbit period are recorded as orbital income. In addition to the in-orbit performance incentives, satellite construction contracts may include liquidated damages clauses. Liquidated damages can be incurred on programs as a result of delays due to slippage or for programs which fail to meet all milestone requirements as outlined within the contractual arrangements with customers. Losses related to liquidated damages result in a reduction of revenue recognition. Construction contracts have termination and default clauses. If a contract is terminated for convenience by a customer or due to a customer’s default, the Company is typically entitled to costs incurred plus a reasonable profit. Imagery segment Revenue in the Imagery segment is generated from service contracts in which revenue is recognized based on satellite capacity made available to the customer in a particular period, when imagery is delivered to the customer, or ratably over the subscription period. Many of our imagery service contracts relate to the transfer of a series of distinct goods or services over time for which management has determined are a single performance obligation. EnhancedView Follow-On Contract – The EnhancedView Follow-On contract (the “EnhancedView Contract”) includes one performance obligation to deliver a certain amount of capacity to the U.S. government over the 10-year contractual term ending on August 31, 2020. While other promised goods or services exist in the EnhancedView Contract, none are considered distinct and, thus, do not represent separate performance obligations. Revenue is recognized as capacity is provided to the customer. As a consistent amount of capacity is being made available, revenue is recognized on a ratable basis. In 2018, the Company signed an agreement that adds three option years to the EnhancedView Contract extending the term to August 21, 2023. The Company determined that these option years do not provide a material right to the customer, and therefore are not included in remaining performance obligations. As the option years are exercised, the consideration payable by the U.S. government will be added to the Company’s remaining performance obligations. Direct Access Program – Direct Access Program arrangements generally include construction of the direct access facility, access to the satellites to task and download imagery, and facility maintenance services. The facility is generally delivered at the beginning of the contractual period of performance with access and maintenance services delivered over the duration of the contractual term. Under ASC 606, the Company has determined that two performance obligations exist; the access and the facility promised goods/services are included together as a combined performance obligation with maintenance services representing a standalone performance obligation. The access and the facility are a single performance obligation because the customer cannot benefit from the facility on its own or with other readily available resources. The transaction price allocated to the combined performance obligation is recognized as access minutes are consumed during the contractual period. The remaining transaction price allocated to the maintenance services is recognized ratably over the maintenance period. Other Imagery Arrangements – Revenue is recognized for imagery licenses when the imagery is delivered to the customer. Revenues related to online imagery subscriptions are generally recognized ratably over the subscription period. Other imagery arrangements transfer a series of distinct goods or services over time for which management has determined are a single performance obligation, or include multiple performance obligations. Services segment Revenue in the Services segment is primarily generated from contracts for the rendering of services that compensate the Company at a cost-plus-fixed-fee, firm fixed price, or on a time and materials basis. Revenue is typically recognized for these contracts over time based on the stage of services completed to date as a percentage of total services to be performed, or on the basis of time plus reimbursable costs incurred during the period. Cost-plus-fixed-fee contracts – The majority of this segment’s revenues is generated from contracts with the U.S. government, the predominance of which are structured as cost-plus-fixed-fee arrangements. A cost plus contract is primarily made up of three components: direct costs (labor costs, subcontractor labor, travel and/or other direct costs), indirect costs (fringe benefit costs, overhead and general and administrative costs) and an agreed upon fee. The fee for this type of contract is established at the onset of contract as negotiated with the customer. Pricing for the cost portion of the contract is established on the basis of, among other things, actual labor rates, projected average rates, and General Services Administration’s schedule pricing. Time and materials – Contracts structured as time and materials are billed to the customer as labor hours are incurred at contractually agreed upon rates, with such rates agreed upon by the Company and the Customer and inclusive of margin to the Company. Firm fixed price – Contracts structured as firm fixed price bill the customer a fixed fee for a specified service with such amount typically billed as milestones are met by the Company. Regardless of the contract structure noted above, revenue is recognized over time. Given the fact that in almost all cases, the customer controls the related work-in-progress, an input measure is the most appropriate basis with which to measure progress. Finally, as cost of labor is the predominant measure by which these contracts are structured, the Company recognizes revenue using a cost-incurred approach. Contract balances Contract liabilities primarily consist of advance payments, billings in excess of costs incurred and deferred revenue. Changes in contract liabilities are primarily due to the timing difference between the Company’s performance of services and payments from customers. To determine revenue recognized from contract liabilities during the reporting periods, the Company allocates revenue to individual contract liability balances and applies revenue recognized during the reporting periods first to the beginning balances of contract liabilities until the revenue exceeds the balances. |
Earnings per share | Earnings per share Earnings per common share is computed by dividing net (loss) income by the sum of the weighted average number of common shares outstanding during the period plus outstanding deferred share units awards (see Note 18) but excluding issued, but unvested, restricted shares. Diluted income per common share is computed by adjusting the basic income per common share calculation, as described above, for the effects of all potentially dilutive share appreciation rights and restricted stock units (see Note 18). The company calculates the effects of all potentially dilutive share appreciation rights using the treasury stock method unless they are anti-dilutive. Share appreciation rights are dilutive only when the average market value of the Company’s shares during the period are greater than the exercise price of the share appreciation rights. |
Research and development | Research and development Research and development costs are expensed in the period incurred. For the years ended December 31, 2018, 2017 and 2016, the Company expensed research and development costs of $93 million, $71 million, and $69 million, respectively in Selling, general and administrative. |
Interest Expense | Interest expense Interest expense is comprised of borrowing cost on debt, interest expense on the orbital securitization liability, interest expense on dissenting stockholders liability, imputed interest on advance payments and other liabilities, and the cost of forward points from foreign exchange forward contracts. All interest costs are recognized in income using the effective interest method. Debt issuance costs are amortized and recognized as interest expense on a straight-line basis over the expected term of the related debt, which approximates the effective interest rate method. Debt issuance costs related to the Company’s revolving line of credit are recorded in Prepaid and other current assets and in Other assets in the Consolidated Balance Sheets. Debt issuance costs related to the Company’s term loans are recorded as a direct deduction from the carrying amount of the related debt. |
Derivative financial instruments and hedging activities | Derivative financial instruments and hedging activities The Company uses derivative financial instruments to manage foreign exchange risk associated with the cash flows from long-term construction contracts where some portion of the cash flows are denominated in foreign currencies as part of the normal course of business. Derivative financial instruments are measured at fair value. When derivative financial instruments are designated in a qualifying hedging relationship and hedge accounting is applied, the effectiveness of the hedges is measured at the end of each reporting period and the effective portion of changes in fair value are deferred in accumulated other comprehensive income. Amounts deferred in accumulated other comprehensive income are reclassified to income when the hedged transaction has occurred. The ineffective portion of the change in the fair value of the derivative is recorded in income in each period. Cash transactions related to the Company’s derivative contracts accounted for as hedges are classified in the same category as the item being hedged in the Consolidated Statements of Cash Flows. For foreign exchange contracts not in a qualifying hedging relationship, changes in fair value are recognized immediately in income as a foreign exchange gain or loss. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised or no longer qualifies for hedge accounting. At that time, if the forecasted transaction within a cash flow hedge remains probable, any cumulative gain or loss on the hedging instrument recognized in Other comprehensive income (loss) is retained in equity until the forecasted transaction occurs. If the forecasted transaction is no longer expected to occur, the net cumulative gain or loss previously recognized in other comprehensive income is transferred to income. As of January 1, 2019, the Company has discontinued hedge accounting. The Company will continue to hedge our foreign exchange exposure for economic purposes. The Company has embedded foreign currency derivatives in certain customer and supplier contracts. These derivatives are accounted for as separate instruments and are measured at fair value at each reporting date. Changes in fair value are recognized in income as foreign exchange gains or losses. The Company does not offset the fair value amounts recognized with derivative instruments against the change in fair value of assets, liabilities or firm commitments executed with the same counterparty under a master netting agreement. The gross amount of derivative financial assets related to foreign exchange forward contracts within the Consolidated Balance Sheets as of December 31, 2018 and 2017 were $5 million and $13 million, respectively. The gross amount of derivative financial liabilities related to foreign exchange forward contracts within the Consolidated Balance Sheets as of December 31, 2018 and 2017 were $8 million and $9 million, respectively. The amounts subject to master netting agreements but not offset for December 31, 2018 and 2017 were $3 million and $7 million, respectively. Derivative financial assets are included within Prepaid and other assets and Other assets in the Consolidated Balance Sheets and derivative financial liabilities are included with Other current liabilities and Other non-current liabilities. |
Cash, Cash equivalents and Restricted Cash | Cash, cash equivalents and restricted cash Cash and cash equivalents is comprised of cash on hand, cash balances with banks and similar institutions and term deposits redeemable within three months or less from date of acquisition with banks and similar institutions. Restricted cash is excluded from cash and cash equivalents and is included in Prepaid and other current assets or Other assets within Non-current assets. Restricted cash is held primarily to secure outstanding letters of credit. |
Trade and other receivables | Trade and other receivables Trade and other receivables include amounts billed to customers, unbilled receivables in which the Company’s right to consideration is unconditional and current portion of orbital receivables (see Note 6). The carrying amounts of current trade receivables is stated at cost, net of allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments, which results in bad debt expense. The Company periodically determines the adequacy of this allowance by evaluating the comprehensive risk profiles of all individual customer receivable balances including, but not limited to, the customer’s financial condition, credit agency reports, financial statements, credit limit and overall current economic conditions. |
Investments | Investments Short-term investments consist of mutual funds and financial instruments purchased with a term to maturity at inception between three months and one year. Short-term investments are measured at fair value through net income. Short-term investments are included within prepaid and other current assets. Long-term investments consist primary of the Company’s investment in a privately held company, OneWeb, in which the Company does not have significant influence and the fair value of which cannot be reliably measured. The Company determined that at December 31, 2018, adjusted cost net of impairments is a reasonable approximation of fair value. The Company evaluates the OneWeb investment quarterly for impairment. As of December 31, 2018, there were no impairments. Long-term investments are included within other assets. Joint Ventures consist of investments where the Company has an ownership interest over which the Company has the ability to exercise significant influence. These investments are accounted for under the equity method whereby the Company recognizes its proportionate share of the affiliates’ net income or loss and does not consolidate the affiliates’ individual assets and liabilities. These investments are included within other assets. |
Inventory | Inventor y Inventories are measured at the lower of cost or net realizable value and consist primarily of parts and sub-assemblies used in the manufacturing of satellites. The cost of inventories is determined on a first-in-first-out basis or weighted average cost basis, depending on the nature of the inventory. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expense. Inventory is impaired when it is probable inventory values exceed their net realizable value. |
Property, plant and equipment | Property, plant and equipment Property, plant and equipment are measured at cost less accumulated depreciation. Cost for satellite assets includes amounts related to design, construction, launch and commissioning. Cost for ground system assets includes amounts related to construction and testing. Interest expense is capitalized on certain qualifying assets that take a substantial period of time to prepare for their intended use. When the costs of certain components of an item of property, plant and equipment are significant in relation to the total cost of the item and the components have different useful lives, they are accounted for and depreciated separately. Property, plant and equipment under construction are measured at cost less any impairment losses. Depreciation expense is recognized in income on a straight-line basis over the estimated useful life of the related asset to its residual value. Expected useful lives are reviewed at least annually. Land is not depreciated. The estimated useful lives are as follows: Estimated useful life Land improvements 20 years Buildings 7 - 45 years Leasehold improvements lesser of useful life or term of lease Equipment 2 - 40 years Satellites 1 2 - 10 years Furniture and fixtures 2 - 10 years Computer hardware 2 - 13 years 1 The estimated useful life over which the Company depreciates its satellites is determined once a satellite has been placed into orbit. The initial determination of a satellites useful life involves an analysis that considers design life, random part failure probabilities, expected component degradation and cycle life, predicted fuel consumption, experience with satellite parts, vendors and similar assets. The useful lives of the satellites were reassessed as part of the DigitalGlobe Transaction and are based on the remaining useful lives from the date of the acquisition. |
Leased assets | Leased assets Leased assets for which the Company assumes substantially all the risks and rewards of ownership are classified as capital leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. The asset is depreciated over the shorter of the lease term or its estimated useful life. All other leases are considered operating leases and the payments, including lease incentives, are recognized in income on a straight-line basis over the term of the lease. |
Intangible assets | Intangible assets Intangible assets consist of customer relationships, backlog, acquired technologies and software, image library, trade names, licenses, and non-compete agreements. Intangible assets are generally amortized on a straight-line basis over their estimated useful lives and are recorded at fair value at the time of acquisition, or in the case of internally developed software, at cost. Image library intangibles assets are amortized using the double declining balance method. Intangible assets are currently amortized over the following estimated useful lives: Estimated useful life Customer relationships 9 - 21 years Backlog 3 - 5 years Technologies 5 - 13 years Software 3 - 10 years Image library 5 years Trade names and other 5 - 20 years Non-compete agreements 2 years |
Impairment | Impairment Intangible assets and property, plant and equipment Intangible assets and property, plant and equipment are reviewed for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognized when the undiscounted cash flows expected to be generated by an asset (or group of assets) are less than the asset’s carrying value. Any required impairment loss is measured as the amount by which the asset’s carrying value exceeds its fair value, and recorded as a reduction in the carrying value of the related asset . If a satellite were to fail during launch or while in-orbit, the resulting loss would be charged to expense in the period it is determined the satellite is not recoverable. The amount of loss would be reduced to the extent of insurance proceeds received. The timing of the loss and the insurance recovery will likely differ, as an insurance recovery generally cannot be recognized until final settlement with the insurance company is reached. Goodwill Goodwill is tested for impairment at least annually on October 1, or whenever events or changes in circumstances indicate that its carrying amount may be less than its recoverable amount. Goodwill is tested for impairment at the reporting unit level. Management typically uses a discounted cash flow approach to estimate the fair value of a reporting unit. Management uses judgment to estimate the inputs to these assessments including cash flow projections, discount rates and tax rates, and any changes to these inputs could have a material impact on the impairment calculation. An impairment loss is recognized to the extent that the carrying value of a reporting exceeds its fair value. |
Warranty and after-sale service costs | Warranty and after-sale service costs A liability for warranty and after-sale service costs is recognized when the underlying product or service is sold. Warranty and after-sale service provisions are based on management’s best estimate of the expected obligation using historical warranty data and experience. Warranty and after-sale service liabilities related to products and services delivered under construction contracts are included in the estimated total costs to complete when utilizing the cost-to-cost method to determine the percentage of completion for revenue recognition. Warranty and after-sale service liabilities are presented in Other current liabilities and Other non-current liabilities on the Consolidated Balance Sheets. |
Restructuring costs | Restructuring costs A liability for restructuring costs is recognized when the Company has approved a detailed and formal restructuring plan, and the restructuring either has commenced or has been announced publicly. Restructuring liabilities are presented in Other current liabilities and Other non-current liabilities on the Consolidated Balance Sheets. |
Employee benefits | Employee benefits Defined benefit pension and other postretirement benefit plans The Company maintains defined benefit pension and other postretirement benefit plans for certain employees within the SSL and MDA businesses. SSL pension plan benefits were frozen on January 1, 2014. MDA pension plans are still active. SSL and MDA both maintain certain other postretirement benefits. The Company recognizes the funded status of each pension and other postretirement benefit plan in the Consolidated Balance sheets. The calculation of pension and other postretirement benefit obligations is performed annually by qualified actuaries using the projected unit credit method, which takes into account the expected salary increases as the basis for future benefit increases for the plans. Pension and other postretirement plan liabilities are revalued annually, or when an event occurs that requires remeasurement, based on updated assumptions and information about the individuals covered by the plan. The Company’s net obligation in respect of the pension and other postretirement benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets. The Company recognizes service costs and administrative expenses for the majority of its defined benefit and other postretirement plans as a component of product cost, service cost or selling, general and administrative. All other costs are recognized outside of operating income within other expense (income), net. The Company recognizes administrative expenses related to frozen plans outside of operating income within other expense (income), net. When the benefits of a plan are changed or when a plan is curtailed, the resulting change in the net benefit liability that relates to past service or the gain or loss on curtailment is recognized immediately in accumulated other comprehensive income. The Company recognizes gains or losses on the settlement of a defined benefit plan when settlement occurs. Under some of the Company’s Canadian defined benefit pension plans, the actuarial present value of benefits to which an employee is entitled if the employee terminates immediately may exceed the actuarial present value of benefits to which the employee is entitled at the expected date of separation based on service to date. In this situation, the Company has elected to calculate the actuarial present value of the vested benefits to which the employee is currently entitled but based on the employee's expected date of separation or retirement. For the Company’s pension and other postretirement benefit plans, accumulated actuarial gains and losses in excess of a 10 percent corridor and the prior service cost are amortized on a straight-line basis from the date recognized over the average remaining service period of active participants or over the average life expectancy for plans with significant inactive participants. Defined contribution plans The Company also maintains defined contribution plans for some of its employees whereby the Company pays contributions based on a percentage of the employees’ annual salary. Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in operating income as the services are provided. |
Share-based compensation plans | Stock-based compensation plans The Company maintains a number of stock-based compensation plans for certain employees and directors that may be settled with cash and/or equity. For certain stock-based compensation plans, the Company has the ability to mandate equity settlement by issuing shares from treasury. Stock-based compensation plans are measured at fair value using the Black-Scholes option pricing model and the fair value is expensed on a graded vesting schedule over the vesting period. Management uses judgment to determine the inputs to the Black-Scholes option pricing model including the expected plan lives, underlying stock price volatility and forfeiture rates. Volatility is estimated by considering the Company’s historic stock price volatility over similar periods to the expected life of the awards under consideration. Changes in these assumptions will impact the calculation of fair value and the amount of compensation expense recognized in income. The fair value of liability classified awards is recognized as a liability within accrued compensation and benefits and Pension and other postretirement benefit liabilities in the Consolidated Balance Sheets. The liability is re-measured and charged to income at each reporting date until the award is settled. The fair value of equity-settled plans is recognized in additional paid-in capital in the Consolidated Balance Sheets. Equity-settled plans are measured based on the grant date fair value of the award including the impact of estimated forfeitures and are not re-measured. |
Income taxes | Income taxes The Company is subject to income taxes in Canada, the United States, Luxembourg, and other foreign jurisdictions. The Company computes its provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are determined based on the temporary differences between the financial reporting and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured at the currently enacted tax rates that are expected to apply in years in which they are expected to be paid for or realized. All deferred income taxes are classified as non-current on the Company's Consolidated Balance Sheets. Significant judgments are required in order to determine the realizability of deferred tax assets. In assessing the need for a valuation allowance, the Company's management evaluates all significant available positive and negative evidence, including historical operating results, estimates of future sources of taxable income, carry-forward periods available, the existence of prudent and feasible tax planning strategies, and other relevant factors. The recognition of uncertain tax positions is evaluated based on whether it is considered more likely than not that the position taken, or expected to be taken, on a tax return will be sustained upon examination through litigation or appeal. For those positions that meet the recognition criteria, they are measured as the largest amount that is more than fifty percent likely to be realized upon ultimate settlement. The Company believes that the uncertain tax positions recognized are adequate to cover all open tax years based on its assessment. If the expected outcome of the matter changes, the Company will adjust income tax expense accordingly in the period in which the expected outcome has changed. The Company classifies interest and penalties related to income taxes as income tax expense. The Company earns investment and other tax credits with respect to its research and development expenses. The benefit of these tax credits is recorded as a reduction of income tax expense. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncement s Employee benefits In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ ASU”) 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans . This update modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The ASU is effective for fiscal years, ending after December 15, 2020 and requires a retrospective adoption to all periods presented. The Company early adopted this ASU on December 31, 2018 and has updated the employee benefits disclosure accordingly, see Note 17 for details. Goodwill In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350) : Simplifying the Test for Goodwill Impairment . This update eliminates Step 2 from the goodwill impairment test by requiring an entity to recognize a goodwill impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value. This guidance is effective for interim and annual goodwill impairment tests in fiscal years beginning after December 15, 2019, and early adoption is permitted. This guidance must be applied on a prospective basis. The Company early adopted this update in the fourth quarter of 2018, and prospectively applied the guidance as required. |
Significant accounting polici_3
Significant accounting policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Significant accounting policies | |
Schedule of estimated useful lives of property, plant and equipment | Estimated useful life Land improvements 20 years Buildings 7 - 45 years Leasehold improvements lesser of useful life or term of lease Equipment 2 - 40 years Satellites 1 2 - 10 years Furniture and fixtures 2 - 10 years Computer hardware 2 - 13 years 1 The estimated useful life over which the Company depreciates its satellites is determined once a satellite has been placed into orbit. The initial determination of a satellites useful life involves an analysis that considers design life, random part failure probabilities, expected component degradation and cycle life, predicted fuel consumption, experience with satellite parts, vendors and similar assets. The useful lives of the satellites were reassessed as part of the DigitalGlobe Transaction and are based on the remaining useful lives from the date of the acquisition. |
Schedule of estimated useful lives of intangible assets with finite lives | Estimated useful life Customer relationships 9 - 21 years Backlog 3 - 5 years Technologies 5 - 13 years Software 3 - 10 years Image library 5 years Trade names and other 5 - 20 years Non-compete agreements 2 years |
Conversion from IFRS to U.S. _2
Conversion from IFRS to U.S. GAAP (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Conversion from IFRS to U.S. GAAP | |
Schedule of significant differences in the consolidated statements of operations | Year ended December 31, Note 2018 2017 2016 Net (loss) income - IFRS $ (1,381) $ 100 $ 106 Product and service costs 1 (a), (b), (g), (i) (88) (105) (71) Depreciation and amortization (a) 4 6 5 Interest expense, net (a), (f), (g) (4) 6 7 Other expense (income), net (g) 7 25 (4) Income tax benefit (b), (f), (h), (j) 28 26 25 Impairment losses, net (a) 170 — — Net (loss) income - U.S. GAAP $ (1,264) $ 58 $ 68 1 Excludes depreciation and amortization |
Schedule of significant differences in the consolidated balance | December 31, 2018 2017 IFRS Adjustments U.S. GAAP IFRS Adjustments U.S. GAAP Assets: Income taxes receivable 1 $ 64 $ (50) $ 14 $ 72 $ (53) $ 19 Deferred tax assets 52 51 103 108 (45) 63 Property, plant and equipment, net 2 754 (7) 747 1,055 (47) 1,008 Intangible assets, net 2 1,304 (72) 1,232 1,753 (135) 1,618 Other assets 2,905 — 2,905 3,669 — 3,669 Total assets $ 5,079 $ (78) $ 5,001 $ 6,657 $ (280) $ 6,377 Liabilities: Income taxes payable 1 $ 15 $ (11) $ 4 $ 49 $ (46) $ 3 Deferred tax liabilities 15 (9) 6 104 (99) 5 Other liabilities 4,326 21 4,347 4,489 47 4,536 Total liabilities $ 4,356 $ 1 $ 4,357 $ 4,642 $ (98) $ 4,544 (Accumulated deficit) retained earnings $ (1,184) $ (27) $ (1,211) $ 262 $ (144) $ 118 Accumulated other comprehensive income 134 (52) 82 151 (38) 113 Other equity 1,773 — 1,773 1,602 — 1,602 Total stockholders' equity 723 (79) 644 2,015 (182) 1,833 Total liabilities and stockholders' equity $ 5,079 $ (78) $ 5,001 $ 6,657 $ (280) $ 6,377 1 As a result of the conversion to U.S. GAAP, tax reclassifications of $11 million and $5 million were recorded as of December 31, 2018 and 2017, respectively. 2 In 2017, the Company reclassified $47 million of construction in process, within property, plant and equipment, to intangibles to conform to the current year presentation. |
Business combinations (Tables)
Business combinations (Tables) - DigitalGlobe | 12 Months Ended |
Dec. 31, 2018 | |
Business combination | |
Schedule of fair value of the consideration transferred and the preliminary estimated fair values of the major classes of assets acquired and liabilities assumed | October 5, 2017 Cash paid $ 1,131 Shares issued 1,063 Merger consideration to be settled 3 Liability to dissenting stockholders 115 Issuance of replacement equity-settled awards 16 Purchase consideration $ 2,328 Assets Cash and cash equivalents $ 171 Trade and other receivables, net 142 Property, plant and equipment, net 696 Intangible assets, net 1,440 Other assets 106 $ 2,555 Liabilities Accounts payable 83 Other current liabilities 4 Pension and other postretirement benefit liabilities 29 Long-term debt 1,276 Other non-current liabilities 504 $ 1,896 Fair value of net identifiable assets acquired 659 Goodwill $ 1,669 |
Summary of intangible assets acquired | Carrying value Weighted average useful life Finite-lived intangible assets: Customer relationships $ 608 14 years Backlog 331 4 years Technologies 318 5 years Software 46 3 years Image library 80 5 years Trade names and trademarks 37 10 years Other 20 2 years Total intangible assets $ 1,440 |
Trade and other receivables (Ta
Trade and other receivables (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Trade and other receivables | |
Schedule of trade and other receivables, net | Year ended December 31, 2018 2017 U.S. government receivables: Billed $ 96 $ 63 Unbilled 60 34 156 97 Other governments and commercial receivables: Billed 146 213 Unbilled 112 125 258 338 Total trade receivables 414 435 Orbital receivables, current portion 34 30 Other 17 21 Allowance for doubtful accounts (1) (10) Total trade and other receivables, net $ 464 $ 476 |
Schedule of total contractual cash flows for all launched and unlaunched satellites including principal and interest payments | 2019 2020 2021 2022 2023 Thereafter Total Contractual cash flows from satellites $ 50 $ 67 $ 68 $ 72 $ 72 $ 413 $ 742 |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Inventory | |
Schedule of inventory, net | Year ended December 31, 2018 2017 Raw materials $ 21 $ 99 Work in process 10 14 Total 31 113 Inventory reserve — (11) Total inventory, net $ 31 $ 102 |
Property, plant and equipment (
Property, plant and equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, plant and equipment | |
Schedule of property, plant and equipment | Property, plant and equipment, net consisted of the following: Year ended December 31, 2018 2017 Satellites $ 397 $ 541 Equipment 229 268 Leasehold improvements 97 80 Computer hardware 92 88 Land and Land improvements 88 108 Buildings 46 91 Furniture and fixtures 19 11 Construction in process 142 72 Property, plant and equipment, at cost 1,110 1,259 Accumulated depreciation (363) (251) Property, plant and equipment, net $ 747 $ 1,008 |
Intangible assets and goodwill
Intangible assets and goodwill (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Intangible assets and goodwill | |
Schedule of intangible assets | December 31, 2018 December 31, 2017 Gross carrying value Accumulated amortization Net carrying value Gross carrying value Accumulated amortization Net carrying value Customer relationships $ 619 $ (58) $ 561 $ 622 $ (16) $ 606 Backlog 332 (120) 212 331 (23) 308 Technologies 330 (86) 244 477 (107) 370 Software 198 (71) 127 245 (88) 157 Image library 80 (32) 48 80 (8) 72 Trade names and other 41 (9) 32 114 (27) 87 Non-compete agreements 21 (13) 8 20 (2) 18 Total intangible assets $ 1,621 $ (389) $ 1,232 $ 1,889 $ (271) $ 1,618 |
Schedule of estimated annual amortization expense related to finite-lived intangible assets | Year ended December 31, 2019 2020 2021 2022 2023 2024 and thereafter Amortization expense $ 276 $ 240 $ 168 $ 129 $ 56 $ 363 |
Schedule of goodwill | Space Systems Imagery Services Total Balance as of December 31, 2016 $ 625 $ 27 $ 47 $ 699 Acquisitions 143 1,400 126 1,669 Foreign currency translation 6 — — 6 Balance as of December 31, 2017 774 1,427 173 2,374 Impairment losses (494) (142) — (636) Goodwill on acquisition of Neptec 22 — — 22 Disposal of immaterial subsidiary — — (3) (3) Foreign currency translation (6) — — (6) Balance as of December 31, 2018 $ 296 $ 1,285 $ 170 $ 1,751 |
Warranty costs (Tables)
Warranty costs (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Warranty costs | |
Schedule of changes in liability for warranty costs included as a component of Other current liabilities and Other long-term liabilities | Warranty and after-sale services Balance as of December 31, 2016 $ 34 Obligations incurred 7 Payments/uses (2) Others, net — Balance as of December 31, 2017 $ 39 Obligations incurred 5 Payments/uses (4) Others, net — Balance as of December 31, 2018 $ 40 |
Long term debt and interest exp
Long term debt and interest expense (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Long-term debt and interest expense | |
Summary of long term debt | Year ended December 31, 2018 2017 Syndicated credit facility: Revolving loan payable $ 595 $ 454 Operating loan payable in Canadian dollars (December 31, 2018 - C$0 million; December 31, 2017 - C$51 million) — 40 Term Loan A 500 500 Term Loan B 1,980 2,000 Debt issuance costs (41) (52) Obligations under capital leases 13 19 Total long-term debt 3,047 2,961 Current portion (17) (18) Non-current portion $ 3,030 $ 2,943 |
Schedule of interest expense on long term debts and other obligations | Year ended December 31, 2018 2017 2016 Interest on long-term debt $ 171 $ $ Interest expense on advance payments from customers 26 — Interest on orbital securitization liability 7 Imputed interest and other 2 3 Capitalization of borrowing costs (7) — — Loss on debt extinguishment — 2 Interest expense on dissenting stockholder liability 3 — — Total interest expense $ 202 $ 99 $ |
Summary of annual contractual principal repayments on long-term debt, net of financing fees | 2019 2020 2021 2022 2023 Thereafter Total Syndicated credit facility $ 11 $ 262 $ 858 $ 14 $ 14 $ 1,875 $ 3,034 Capital leases 7 4 2 — — — 13 Total $ 18 $ 266 $ 860 $ 14 $ 14 $ 1,875 $ 3,047 |
Financial instruments and fai_2
Financial instruments and fair value disclosures (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Financial instruments and fair value disclosures | |
Summary of financial instruments measured at fair value in the accompanying consolidated balance sheets | Recurring Fair Value Measurements of as of December 31, 2018 Level 1 Level 2 Level 3 Total Assets Short-term investments $ 3 $ — $ — $ 3 Derivative financial instruments Foreign exchange forward contracts & embedded derivatives — 5 — 5 $ 3 $ 5 $ — $ 8 Liabilities Derivative financial instruments Foreign exchange forward contracts & embedded derivatives — 8 — 8 Interest rate swaps — 4 — 4 $ — $ 12 $ — $ 12 Recurring Fair Value Measurements of as of December 31, 2017 Level 1 Level 2 Level 3 Total Assets Short-term investments $ 1 $ — $ — $ 1 Derivative financial instruments Foreign exchange forward contracts & embedded derivatives — 13 — 13 $ 1 $ 13 $ — $ 14 Liabilities Derivative financial instruments Foreign exchange forward contracts & embedded derivatives $ — $ 9 $ — $ 9 $ — $ 9 $ — $ 9 |
Summary of financial instruments recorded at carrying value in the accompanying consolidated balance sheets | As of December 31, 2018 Carrying value Fair value Fair value hierarchy Long-term debt, excluding capital leases $ 3,034 $ 2,925 Level 2 Orbital receivables $ 441 $ 441 Level 2 As of December 31, 2017 Carrying value Fair value Fair value hierarchy Long-term debt, excluding capital leases $ 2,943 $ 3,176 Level 2 Orbital receivables $ 454 $ 507 Level 2 |
Derivatives and Hedging (Tables
Derivatives and Hedging (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Derivatives and Hedging | |
Schedule of foreign exchange forward contracts to hedge exposure arising from expected foreign currency denominated cash flows | As of December 31, 2018 Derivative instrument Notional amount Maximum Contract term Interest rate swaps 1,000 3.3 years Foreign exchange forward contracts — — Purchase contracts settled in Canadian dollars: U.S. dollar 70 1.8 years Euro 10 2.3 years GBP 3 0.5 years Sales contracts settled in Canadian dollars: Euro 194 3.8 years Japanese Yen 35 2.6 years GBP 1 0.6 years Purchase contracts settled in U.S. dollars: Euro 10 0.3 years Japanese Yen 177 0.2 years Sales contracts settled in Canadian dollars: Euro 0.5 years Japanese Yen 0.2 years As of December 31, 2017 Derivative instrument Notional amount Maximum Contract term Interest rate swaps — — Foreign exchange forward contracts — — Purchase contracts settled in Canadian dollars: U.S. dollar 165 2.8 years Euro 16 2.7 years GBP 2 1.0 years Sales contracts settled in Canadian dollars: Euro 312 3.0 years Japanese Yen 26 3.1 years GBP 2 1.0 years Purchase contracts settled in U.S. dollars: Euro 32 1.3 years Japanese Yen 2,231 1.2 years Sales contracts settled in Canadian dollars: Euro 58 1.3 years Japanese Yen 1,116 1.2 years |
Schedule of derivative instruments on earnings and other comprehensive income | For the year ended December 31, 2018 Effective portion of gains and losses included in other comprehensive income Effective portion of gains and losses reclassified to earnings Gains and loss included in earnings 1 Cash flow hedges: Foreign exchange forward contracts $ (6) $ — $ (2) Interest rate swaps (4) — — Embedded derivatives — — — Derivatives not qualified for hedging accounting: Foreign exchange forward contracts — — — Interest rate swaps — — — Embedded derivatives — — 1 For the year ended December 31, 2017 Effective portion of gains and losses included in other comprehensive income Effective portion of gains and losses reclassified to earnings Gains and loss included in earnings 1 Cash flow hedges: Foreign exchange forward contracts $ (3) $ — $ (1) Interest rate swaps — — — Embedded derivatives — — — Derivatives not qualified for hedging accounting: Foreign exchange forward contracts — — 5 Interest rate swaps — — — Embedded derivatives — — (2) For the year ended December 31, 2016 Effective portion of gains and losses included in other comprehensive income Effective portion of gains and losses reclassified to earnings Gains and loss included in earnings 1 Cash flow hedges: Foreign exchange forward contracts $ (8) $ (1) $ (5) Interest rate swaps — — — Embedded derivatives — — — Derivatives not qualified for hedging accounting: Foreign exchange forward contracts — — 1 Interest rate swaps — — — Embedded derivatives — — (3) 1 Includes gains and losses related to the ineffective portion of the Company’s cash flow hedges, and derivatives not qualified for hedge accounting |
Accumulated other comprehensi_2
Accumulated other comprehensive income (loss) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accumulated other comprehensive income (loss) | |
Schedule of changes in the components of accumulated other comprehensive income (loss) | Foreign Net (Loss) Income Unrecognized Total Currency on Hedge (Loss) Gain on Accumulated Other Translation Investments in Derivative Pension Comprehensive Adjustments Foreign Operations Instruments Adjustments Income (Loss) Balance as of December 31, 2015 $ 154 $ (33) $ 18 $ 30 $ 169 Cumulative-effect of IFRS to U.S. GAAP conversion (1) — — (32) (33) Other comprehensive (loss) income (2) 5 (9) (9) (15) Tax benefit — — 1 1 2 Balance as of December 31, 2016 151 (28) 10 (10) 123 Other comprehensive (loss) income 7 — (3) (8) (4) Tax expense — — — (6) (6) Balance as of December 31, 2017 158 (28) 7 (24) 113 Other comprehensive (loss) income 4 (23) (10) (4) (33) Tax benefit (expense) — — 3 (1) 2 Balance as of December 31, 2018 $ 162 $ (51) $ — $ (29) $ 82 |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Revenue | |
Summary of contract assets and contract liabilities by segment | Space As of December 31, 2018 Systems Imagery 1 Services Total Contract liabilities $ 172 $ 247 $ 2 $ 421 Space As of December 31, 2017 Systems Imagery 1 Services Total Contract liabilities $ 266 $ 330 $ 4 $ 600 1 The contract liability balance associated with the Company’s EnhancedView Contract was $184 million and $278 million as of December 31, 2018 and 2017, respectively. During the year ended December 31, 2018, imputed interest on advanced payments increased the contract liability balance by $26 million, and $120 million in revenue was recognized, decreasing the contract liability balance. The contract liability balance associated with the Company’s EnhancedView Contract is expected to be recognized as revenue through August 31, 2020. There were no deferred contract costs on the Consolidated Balance Sheets associated with this contract as of December 31, 2018 or December 31, 2017. |
Summary of revenue by primary sources | Year ended December 31, 2018 Space Systems Imagery Services Eliminations Total Product revenues $ 851 $ — $ — $ — $ 851 Service revenues 191 841 258 — 1,290 Intersegment eliminations 87 4 8 (99) — $ 1,129 $ 845 $ 266 $ (99) $ 2,141 Year ended December 31, 2017 Space Systems Imagery Services Eliminations Total Product revenues $ 1,119 $ — $ — $ — $ 1,119 Service revenues 141 228 143 — 512 Intersegment eliminations 10 2 1 (13) — $ 1,270 $ 230 $ 144 $ (13) $ 1,631 Year ended December 31, 2016 Space Systems Imagery Services Eliminations Total Product revenues $ 1,285 $ — $ — $ — $ 1,285 Service revenues 132 41 100 — 273 Intersegment eliminations 4 1 — (5) — $ 1,421 $ 42 $ 100 $ (5) $ 1,558 |
Summary of revenue by geographic location | Year ended December 31, 2018 2017 2016 United States $ 1,371 $ 744 $ 447 Canada 152 330 424 Asia 334 295 312 Europe 118 207 285 Australia 18 29 30 South America 134 17 58 Other 14 9 2 $ 2,141 $ 1,631 $ 1,558 |
Schedule of revenue from significant customers | Year ended December 31, 2018 2017 2016 Government: U.S. Federal Government and agencies $ 890 $ 294 $ 98 Canadian Federal Government and agencies 96 194 212 Commercial and other 1,155 1,143 1,248 Total revenue $ 2,141 $ 1,631 $ 1,558 |
Segment information (Tables)
Segment information (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment information | |
Summary of operating performance of the reporting segments | Year ended December 31, 2018 2017 2016 Revenues: Space Systems $ 1,129 $ 1,270 $ 1,421 Imagery 845 230 42 Services 266 144 100 Intersegment eliminations (99) (13) (5) Total Revenue $ 2,141 $ 1,631 $ 1,558 Adjusted EBITDA: Space Systems $ 5 $ 151 $ 160 Imagery 518 143 23 Services 25 23 19 Intersegment eliminations (22) (1) — Depreciation and amortization (449) (161) (72) Corporate expense (54) (65) (26) Restructuring (18) (36) (4) Acquisition and integration related expense (34) (60) — Impairment losses, including inventory (1,096) — — Interest expense, net (202) (99) (33) Interest Income 1 1 1 — Equity (income) loss from joint ventures, net of tax (2) — — Net (loss) earnings before income taxes $ (1,328) $ (104) $ 67 1 Included in Other expense (income), net on the Consolidated Statements of Operations. |
Schedule of capital expenditures by segment | Space Corporate and Year ended December 31, 2018 Systems Imagery Services eliminations Total Capital expenditures: Property, plant and equipment $ 28 $ 156 $ 2 $ (30) $ 156 Intangible assets 6 55 1 — 62 $ 34 $ 211 $ 3 $ (30) $ 218 Space Corporate and Year ended December 31, 2017 Systems Imagery Services eliminations Total Capital expenditures: Property, plant and equipment $ 43 $ 14 $ 2 $ (10) $ 49 Intangible assets 11 12 — — 23 $ 54 $ 26 $ 2 $ (10) $ 72 Space Corporate and Year ended December 31, 2016 Systems Imagery Services eliminations Total Capital expenditures: Property, plant and equipment $ 38 $ — $ 1 $ 1 $ 40 Intangible assets 14 — 1 1 16 $ 52 $ — $ 2 $ 2 $ 56 |
Employee benefit plans (Tables)
Employee benefit plans (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Employee benefit plans | |
Summary of changes in the benefit obligations, the plan assets and funded status | Pension Other Postretirement 2018 2017 2018 2017 Change in benefit obligation: Benefit obligation at beginning of year $ 654 $ 614 $ 39 $ 64 Valuation effect at beginning of year — — — (2) Service cost 6 5 — — Interest cost 22 24 2 2 Actuarial (gains) losses (43) 38 (4) 1 Prior service credit — — — (1) Benefits paid (37) (32) (2) (2) Curtailments 1 — — — (24) Foreign exchange (7) 5 (3) 1 Benefit obligation at end of year $ 595 $ 654 $ 32 $ 39 Change in fair value of plan assets: Fair value of plan assets at beginning of year $ 478 $ 437 $ — $ — Actual (loss) return on plan assets (20) 59 — — Employer contributions 16 9 3 2 Benefits paid (35) (30) (3) (2) Expenses paid (3) (3) — — Foreign exchange (7) 6 — — Fair value of plan assets at end of year 429 478 — — Unfunded status at end of year $ (166) $ (176) $ (32) $ (39) Assets and (liabilities) recognized in the Consolidated Balance Sheets: Other assets $ 4 $ 4 $ — $ — Accrued compensation and benefits — — (1) (2) Pension and other postretirement benefits (170) (180) (31) (37) $ (166) $ (176) $ (32) $ (39) 1 The Company amended a postretirement plan at one of its operating divisions by eliminating employer paid subsidies toward retiree medical benefits as of December 31, 2017. The Company recognized a gain on settlement of $24 million during fiscal 2017, with an offsetting reduction to the benefit obligation. |
Summary of net actuarial (loss) gain and prior service credit balance accumulated other comprehensive loss account, before related tax effects | Pension Other Postretirement 2018 2017 2016 2018 2017 2016 Net actuarial (loss) gain $ (63) $ (54) $ (89) $ 17 $ 12 $ 3 Prior service credit — — — 1 1 3 Total recognized in accumulated other comprehensive loss (income) $ (63) $ (54) $ (89) $ 18 $ 13 $ 6 |
Schedule of aggregate accumulated benefit obligation | Pension 2018 2017 Accumulated benefit obligation $ 536 $ 587 Fair value of plan assets $ 367 $ 407 |
Schedule of projected benefit obligation in excess of plan assets | Pension 2018 2017 Projected benefit obligation $ 553 $ 605 Fair value of plan assets $ 383 $ 425 |
Schedule of weighted average assumptions used to determine the benefit obligations | Pension Other Postretirement 2018 2017 2018 2017 Discount rate 4.1 % 3.4 % 3.8 % 3.4 % Rate of future compensation increase 3.5 % 3.5 % 3.6 % 3.6 % |
Summary of the components of net periodic benefit cost | Pension Other Postretirement 2018 2017 2016 2018 2017 2016 Service cost $ 4 $ 3 $ 2 $ — $ — $ 1 Interest cost 22 24 26 2 2 2 Expected return on plan assets (32) (29) (31) — — — Amortization of prior service credit — — — — (2) (2) Amortization of net loss (gain) 1 1 2 (1) — — Curtailment gain — — — — (26) — Settlement loss recognized — — 3 — — — Expenses paid 2 3 4 — — — Net periodic benefit (credit) cost $ (3) $ 2 $ 6 $ 1 $ (26) $ 1 |
Summary of other changes in plan assets and benefit obligations recognized in other comprehensive income | Pension Other Postretirement 2018 2017 2016 2018 2017 2016 Net loss (gain) $ 10 $ 8 $ 11 $ (6) $ — $ (4) Prior service credit — — — — (1) — Amortization of prior service (cost) credit — — — — 2 — Amortization of net (loss) gain (1) (1) (4) 1 1 — Curtailment loss — — — — 1 2 Total recognized in other comprehensive loss (income) $ 9 $ 7 $ 7 $ (5) $ 3 $ (2) Total recognized in net periodic benefit (credit) cost and other comprehensive loss (income) $ 6 $ 9 $ 13 $ (4) $ (23) $ (1) |
Schedule of weighted average assumptions used to determine the net periodic benefit cost | Pension Other Postretirement 2018 2017 2016 2018 2017 2016 Discount rate 3.4 % 3.9 % 4.3 % 3.4 % 3.8 % 4.1 % Rate of future compensation increase 3.5 % 3.5 % 3.5 % 3.6 % 3.6 % 3.5 % Expected long-term return on plan assets 6.9 % 6.8 % 6.8 % N/A N/A N/A |
Schedule of pension plan asset allocation | Asset Allocation Asset Allocation Range 2018 Cash and cash equivalents 0 - 16 % 1 % U.S. equity securities 15 - 50 % 29 % International equity securities 9 - 33 % 31 % Fixed income 30 - 52 % 37 % Other 0 - 14 % 2 % 100 % |
Schedule of fair value of pension plan assets by asset category segregated by level within the fair value hierarchy | December 31, 2018 December 31, 2017 Asset Category Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 5 $ 5 $ — $ — $ 6 $ 6 $ — $ — U.S. equity securities 126 11 115 — 147 14 133 — International equity securities 133 19 113 1 150 20 129 1 Fixed income 158 — 158 — 167 — 167 — Other 7 — 7 — 8 — 8 — Total assets at fair value $ 429 $ 35 $ 393 $ 1 $ 478 $ 40 $ 437 $ 1 |
Schedule of expected benefit payments to be paid | Pension Other Postretirement 2019 $ 34 $ 2 2020 34 2 2021 34 2 2022 35 2 2023 35 2 Years 2024 - 2028 182 10 |
Share-based payment plans (Tabl
Share-based payment plans (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Share-based payment plans | |
Summary of share-based compensation expense (benefit) | Year ended December 31, 2018 2017 2016 Product costs, excluding depreciation and amortization $ (1) $ 6 $ (1) Service costs, excluding depreciation and amortization 2 2 (1) Selling, general and administrative 19 50 17 Stock-based compensation expense before taxes 20 58 15 Income taxes — — — Stock-based compensation expense, net of tax $ 20 $ 58 $ 15 |
Liability classified awards | |
Share-based payment plans | |
Summary of share based payment activity | Number of Awards Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value SARs outstanding at December 31, 2017 2,638,857 C$ Exercised (23,604) Cancelled or expired (1,283,592) SARs outstanding at December 31, 2018 1,331,661 C$ — SARs vested and expected to vest at December 31, 2018 1,319,781 C$ — SARs exercisable at December 31, 2018 1,071,358 C$ C$ — |
Summary of valuation share based compensation awards | Year ended December 31, 2018 2016 Risk-free interest rate 1.7 - 1.9 % 1.7 - 1.9 % 0.7 - 1.4 % Dividend yield % % % Expected lives (in years) 0.3 - 5.4 1.0 - 6.5 1.0 - 7.0 Volatility 14 - 23 % 14 - 25 % 20 - 26 % |
SARs accounted for as equity-settled awards | |
Share-based payment plans | |
Summary of share based payment activity | Number of Awards Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value SARs outstanding at December 31, 2017 3,338,148 C$ Granted 10,307 Exercised (19,837) Cancelled or expired (689,150) SARs outstanding at December 31, 2018 2,639,468 C$ — SARs vested and expected to vest at December 31, 2018 2,543,453 C$ — SARs exercisable at December 31, 2018 1,715,148 C$ C$ — |
Restricted Share Units | Omnibus and DigitalGlobe Equity Incentive Plan | |
Share-based payment plans | |
Summary of share based payment activity | Weighted Average Weighted Average Number of Grant Date Number of Grant Date Awards 1 Fair Value 1 Awards 2 Fair Value 2 Nonvested RSUs at December 31, 2017 590,663 C$ 470,101 $ Granted 161,748 — — Vested (174,825) (168,432) Cancelled or expired (73,174) (27,808) Nonvested RSUs at December 31, 2018 504,412 C$ 273,861 $ 1 RSUs under the Omnibus plan 2 RSUs under the DigitalGlobe Equity Plan |
Deferred Share Units (DSU) | |
Share-based payment plans | |
Summary of share based payment activity | Number of Awards Weighted Average Issuance Price DSUs outstanding at December 31, 2017 79,460 C$ Issued 28,143 DSUs outstanding at December 31, 2018 107,603 C$ |
Equity-settled SARs, RSUs and DSUs | |
Share-based payment plans | |
Summary of valuation share based compensation awards | Year ended December 31, 2018 2016 Risk-free interest rate 1.9 - 2.3 % 0.6 - 1.9 % 0.6 - 1.3 % Dividend yield 2.2 - 9.1 % 1.5 - 2.2 % 1.5 - 2.2 % Expected lives (in years) 3.0 - 7.0 0.4 - 7.0 0.4 - 7.0 Volatility 22 - 41 % 17 - 25 % 17 - 25 % |
Income taxes (Tables)
Income taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income taxes | |
Schedule of components of earnings before income taxes | Year ended December 31, 2018 2017 2016 Canadian $ (97) $ 25 $ 60 Non-Canadian (1,231) (129) 7 (Loss) income before taxes $ (1,328) $ (104) $ 67 |
Schedule of Income tax expense / (benefit) | Year ended December 31, 2018 2017 2016 Current tax (benefit) expense: Canadian $ (5) $ 1 $ 2 Non-Canadian — 1 — Total $ (5) $ 2 $ 2 Deferred tax benefit: Canadian (54) (22) (3) Non-Canadian (3) (142) — Total (57) (164) (3) Income tax benefit $ (62) $ (162) $ (1) |
Schedule of reconciliation of the US statutory income tax rate to our effective income tax rate | Year ended December 31, 2018 2017 2016 Statutory Federal and Provincial tax rate in Canada 27 % 26 % 26 % Expected income tax expense (benefit) at statutory rate $ (358) $ (27) $ 17 Impact of Tax Cuts and Jobs Act of 2017 — 26 — Change in statutory tax rates 23 (1) — Non-deductible expenses 1 10 2 Foreign exchange differences (44) (1) 1 Change in valuation allowance 207 (123) 13 Changes in uncertain tax positions (20) (14) (4) Foreign earnings subject to different tax rates (27) (13) (10) Research and development tax credits (18) (19) (20) Non-deductible goodwill impairment 172 — — Other 2 — — Income tax $ (62) $ (162) $ (1) Effective income tax rate 4.7 % 155.8 % (1.5) % |
Schedule of significant components of deferred tax assets and liabilities | Year ended December 31, 2018 2017 2016 Tax benefit of losses carried forward $ 323 $ 247 $ 94 Research and development tax credits 175 121 45 Construction contract assets and liabilities 79 71 3 Property and equipment 15 5 — Goodwill and intangibles 1 — 1 Trade and other payables 39 27 22 Employee benefits 55 58 85 Unrealized foreign exchange gains and losses 39 10 12 Other 2 — 1 Sub-total 728 539 263 Less: Valuation allowance (366) (157) (200) Deferred tax assets, net of valuation allowance $ 362 $ 382 $ 63 Construction contract assets and liabilities (6) (3) (3) Property and equipment (3) (1) (12) Goodwill and intangibles (253) (303) — Research and development tax credits — — (6) Unrealized foreign exchange gains and losses — (11) (8) Debt issuance costs (3) (3) — Other — (3) — Total net deferred tax liabilities (265) (324) (29) Deferred tax assets, net $ 97 $ 58 $ 34 |
Schedule of changes in unrecognized tax benefits | Year ended December 31, 2018 2017 2016 Balance, beginning of year $ 132 $ 133 $ 119 Gross increases related to prior period tax positions 9 5 7 Gross increases related to current period tax positions 13 6 10 Decrease related to resolution of audits with tax authorities (28) — — Expiration of the statute of limitations (22) (21) (6) Foreign currency translation (10) 9 3 Balance, end of year $ 94 $ 132 $ 133 |
Earnings per common share (Tabl
Earnings per common share (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Earnings per common share | |
Summary of calculation of basic and diluted EPS | Year ended December 31, 2018 2017 2016 Net (loss) income $ (1,264) $ 58 $ 68 Weighted average number of common shares outstanding - basic 58.1 41.2 36.4 Weighted dilutive effect of equity awards — 0.1 0.1 Weighted average number of common shares outstanding - diluted 58.1 41.3 36.5 Earnings per common share: Basic $ (21.76) $ 1.41 $ 1.87 Dilutive $ (21.76) $ 1.40 $ 1.86 |
Contingencies and commitments (
Contingencies and commitments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Contingencies and commitments | |
Schedule of purchase obligations and operating leases | 2019 2020 2021 2022 2023 Thereafter Total Operating lease obligations $ $ $ $ $ $ $ 208 Capital lease commitments — — — 13 |
Supplemental cash flow - (Table
Supplemental cash flow - (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Supplemental cash flow | |
Schedule of supplemental cash flow | Year ended December 31, 2018 2017 2016 Supplemental cash flow information: Cash paid for interest $ (152) $ (41) $ (30) Income tax refunds (payments) 1 1 (7) Supplemental non-cash investing and financing activities: Accrued capital expenditures $ 22 $ 18 $ 2 Acquisitions 24 1,197 — |
Selected Quarterly Financial _2
Selected Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Selected Quarterly Financial Data (Unaudited) | |
Schedule of selected quarterly financial data (unaudited) | 2018 2017 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Total revenues $ 557 $ 579 $ 509 $ 496 $ 374 $ 375 $ 337 $ 545 Net (loss) income - IFRS 31 (18) (433) (961) 4 19 13 64 Net (loss) income - U.S. GAAP Adjustments (16) (22) 144 11 (15) (7) (11) (9) Net (loss) income $ 15 $ (40) $ (289) $ (950) $ (11) $ 12 $ 2 $ 55 Earnings per share, basic $ 0.27 $ (0.70) $ (4.90) $ (16.10) $ (0.31) $ 0.33 $ 0.05 $ 1.00 Earnings per share, diluted $ 0.26 $ (0.70) $ (4.90) $ (16.10) $ (0.31) $ 0.32 $ 0.05 $ 0.98 |
General business description (D
General business description (Details) - segment | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
General business description | |||
Number of reportable segments | 3 | 3 | 3 |
Significant accounting polici_4
Significant accounting policies - Narratives (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Investments | |||
Impairment of investments | $ 0 | ||
Foreign exchange forward contracts | |||
Derivative financial instruments and hedging activities | |||
Assets | 5,000,000 | $ 13,000,000 | |
Liabilities | 8,000,000 | 9,000,000 | |
Derivative asset, subject to master netting | 3,000,000 | 7,000,000 | |
Selling, general and administrative | |||
Research and development | |||
Research and development costs | 93,000,000 | $ 71,000,000 | $ 69,000,000 |
Imagery | EnhancedView contract | |||
Revenue recognition | |||
Number of performance obligations | $ 1 | ||
Contractual term | 10 years | ||
Period of option | 3 years | ||
Imagery | Direct Access Program | |||
Revenue recognition | |||
Number of performance obligations | $ 2 |
Significant accounting polici_5
Significant accounting policies - Property, plant and equipment (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Land improvements | |
Significant accounting policies | |
Estimated useful life | 20 years |
Buildings | Minimum | |
Significant accounting policies | |
Estimated useful life | 7 years |
Buildings | Maximum | |
Significant accounting policies | |
Estimated useful life | 45 years |
Equipment | Minimum | |
Significant accounting policies | |
Estimated useful life | 2 years |
Equipment | Maximum | |
Significant accounting policies | |
Estimated useful life | 40 years |
Satellites | Minimum | |
Significant accounting policies | |
Estimated useful life | 2 years |
Satellites | Maximum | |
Significant accounting policies | |
Estimated useful life | 10 years |
Furniture and fixtures | Minimum | |
Significant accounting policies | |
Estimated useful life | 2 years |
Furniture and fixtures | Maximum | |
Significant accounting policies | |
Estimated useful life | 10 years |
Computer hardware | Minimum | |
Significant accounting policies | |
Estimated useful life | 2 years |
Computer hardware | Maximum | |
Significant accounting policies | |
Estimated useful life | 13 years |
Significant accounting polici_6
Significant accounting policies - Intangible assets and goodwill (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Customer relationships | Minimum | |
Significant accounting policies | |
Estimated useful life | 9 years |
Customer relationships | Maximum | |
Significant accounting policies | |
Estimated useful life | 21 years |
Backlog | Minimum | |
Significant accounting policies | |
Estimated useful life | 3 years |
Backlog | Maximum | |
Significant accounting policies | |
Estimated useful life | 5 years |
Technologies | Minimum | |
Significant accounting policies | |
Estimated useful life | 5 years |
Technologies | Maximum | |
Significant accounting policies | |
Estimated useful life | 13 years |
Software | Minimum | |
Significant accounting policies | |
Estimated useful life | 3 years |
Software | Maximum | |
Significant accounting policies | |
Estimated useful life | 10 years |
Image library | |
Significant accounting policies | |
Estimated useful life | 5 years |
Trade name and other | Minimum | |
Significant accounting policies | |
Estimated useful life | 5 years |
Trade name and other | Maximum | |
Significant accounting policies | |
Estimated useful life | 20 years |
Non-compete agreements | |
Significant accounting policies | |
Estimated useful life | 2 years |
Conversion from IFRS to U.S. _3
Conversion from IFRS to U.S. GAAP - Consolidated Statements of Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Conversion from IFRS to U.S. GAAP | |||||||||||
Depreciation and amortization | $ 449 | $ 161 | $ 72 | ||||||||
Other expense (income), net | 1 | (39) | 7 | ||||||||
Income tax expense | (62) | (162) | (1) | ||||||||
Impairment losses, net | 1,030 | ||||||||||
Net (loss) income | $ (950) | $ (289) | $ (40) | $ 15 | $ 55 | $ 2 | $ 12 | $ (11) | (1,264) | 58 | 68 |
IFRS | |||||||||||
Conversion from IFRS to U.S. GAAP | |||||||||||
Net (loss) income | (961) | (433) | (18) | 31 | 64 | 13 | 19 | 4 | (1,381) | 100 | 106 |
Adjustment | |||||||||||
Conversion from IFRS to U.S. GAAP | |||||||||||
Product and service costs | (88) | (105) | (71) | ||||||||
Depreciation and amortization | 4 | 6 | 5 | ||||||||
Interest expense, net | (4) | 6 | 7 | ||||||||
Other expense (income), net | 7 | 25 | (4) | ||||||||
Income tax expense | 28 | $ 26 | $ 25 | ||||||||
Impairment losses, net | $ 170 | ||||||||||
Net (loss) income | $ 11 | $ 144 | $ (22) | $ (16) | $ (9) | $ (11) | $ (7) | $ (15) |
Conversion from IFRS to U.S. _4
Conversion from IFRS to U.S. GAAP - Consolidated Balance Sheets (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Assets: | ||||
Income taxes receivable | $ 14 | $ 19 | ||
Deferred tax assets | 103 | 63 | ||
Property, plant and equipment | 747 | 1,008 | ||
Intangible assets, net | 1,232 | 1,618 | ||
Other assets | 2,905 | 3,669 | ||
Total assets | 5,001 | 6,377 | ||
Liabilities: | ||||
Income taxes payable | 4 | 3 | ||
Deferred tax liabilities | 6 | 5 | ||
Other liabilities | 4,347 | 4,536 | ||
Total liabilities | 4,357 | 4,544 | ||
(Accumulated deficit) retained earnings | (1,211) | 118 | ||
Accumulated other comprehensive income | 82 | 113 | ||
Other equity | 1,773 | 1,602 | ||
Total stockholder's equity | 644 | 1,833 | $ 728 | $ 800 |
Total liabilities and shareholders' equity | 5,001 | 6,377 | ||
Reclassification to income taxes receivable from income taxes payable | 11 | 5 | ||
Reclassification from income taxes payable to income taxes receivable | 11 | 5 | ||
IFRS | ||||
Assets: | ||||
Income taxes receivable | 64 | 72 | ||
Deferred tax assets | 52 | 108 | ||
Property, plant and equipment | 754 | 1,055 | ||
Intangible assets, net | 1,304 | 1,753 | ||
Other assets | 2,905 | 3,669 | ||
Total assets | 5,079 | 6,657 | ||
Liabilities: | ||||
Income taxes payable | 15 | 49 | ||
Deferred tax liabilities | 15 | 104 | ||
Other liabilities | 4,326 | 4,489 | ||
Total liabilities | 4,356 | 4,642 | ||
(Accumulated deficit) retained earnings | (1,184) | 262 | ||
Accumulated other comprehensive income | 134 | 151 | ||
Other equity | 1,773 | 1,602 | ||
Total stockholder's equity | 723 | 2,015 | ||
Total liabilities and shareholders' equity | 5,079 | 6,657 | ||
Adjustment | ||||
Assets: | ||||
Income taxes receivable | (50) | (53) | ||
Deferred tax assets | 51 | (45) | ||
Property, plant and equipment | (7) | (47) | ||
Intangible assets, net | (72) | (135) | ||
Total assets | (78) | (280) | ||
Liabilities: | ||||
Income taxes payable | (11) | (46) | ||
Deferred tax liabilities | (9) | (99) | ||
Other liabilities | 21 | 47 | ||
Total liabilities | 1 | (98) | ||
(Accumulated deficit) retained earnings | (27) | (144) | ||
Accumulated other comprehensive income | (52) | (38) | ||
Total stockholder's equity | (79) | (182) | ||
Total liabilities and shareholders' equity | $ (78) | (280) | ||
Adjustment | Construction in process | ||||
Assets: | ||||
Property, plant and equipment | (47) | |||
Adjustment | Software | ||||
Assets: | ||||
Property, plant and equipment | $ 47 |
Business combinations - Neptec
Business combinations - Neptec (Details) - USD ($) $ in Millions | Jul. 16, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Business combination | ||||
Acquisition cost, net of cash acquired | $ 6 | $ 2,273 | ||
Goodwill | $ 1,751 | $ 2,374 | $ 699 | |
Neptec | ||||
Business combination | ||||
Acquisition cost, net of cash acquired | $ 30 | |||
Cash paid for acquisition | 6 | |||
Goodwill | 21 | |||
Intangible assets | 11 | |||
Net liabilities | $ 2 |
Business combinations - Digital
Business combinations - DigitalGlobe (Details) $ / shares in Units, $ in Millions | Jun. 15, 2018shares | Oct. 05, 2017USD ($)$ / sharesshares | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 21, 2018USD ($) | Oct. 04, 2017$ / shares |
Business combination | ||||||||||||||||
Initial draw of debt | $ 104 | $ 3,160 | ||||||||||||||
Debt issuance costs | 3 | 63 | ||||||||||||||
Accelerated share-based awards relating to post-acquisition services | 33 | |||||||||||||||
Revenues | $ 496 | $ 509 | $ 579 | $ 557 | $ 545 | $ 337 | $ 375 | $ 374 | 2,141 | 1,631 | $ 1,558 | |||||
Income before income taxes | (1,328) | (104) | 67 | |||||||||||||
Liabilities | ||||||||||||||||
Goodwill | $ 1,751 | $ 2,374 | $ 2,374 | 1,751 | 2,374 | $ 699 | ||||||||||
Acquisition related costs | $ 34 | 60 | ||||||||||||||
Syndicated Credit Facility | ||||||||||||||||
Business combination | ||||||||||||||||
Aggregate principal amount | $ 3,750 | |||||||||||||||
DigitalGlobe | ||||||||||||||||
Business combination | ||||||||||||||||
Common share exchanged for cash | $ / shares | $ 17.50 | |||||||||||||||
Common share exchange ratio (in shares) | shares | 0.3132 | |||||||||||||||
Closing price of share (in dollars per share) | $ / shares | $ 54.57 | |||||||||||||||
Share issuance costs | $ 3 | |||||||||||||||
Fair value of replacement awards attributable to pre-acquisition | 16 | |||||||||||||||
Fair value of replacement awards attributable to post-acquisition | $ 14 | |||||||||||||||
Number of shares owned by dissenting shareholders | shares | 80,000 | |||||||||||||||
Number of dissenting common shareholders | 352,225 | |||||||||||||||
Shares issued in acquisition | shares | 2,206,464 | |||||||||||||||
Revenues | 222 | |||||||||||||||
Income before income taxes | $ 8 | |||||||||||||||
Proforma information | ||||||||||||||||
Revenue | 2,300 | |||||||||||||||
Summary of fair value of consideration and preliminary estimated fair value of assets acquired and liabilities assumed | ||||||||||||||||
Cash paid | $ 1,131 | |||||||||||||||
Shares issued | 1,063 | |||||||||||||||
Merger consideration to be settled | 3 | |||||||||||||||
Liability to dissenting shareholders | 115 | |||||||||||||||
Issuance of replacement equity-settled awards | 16 | |||||||||||||||
Purchase consideration | 2,328 | |||||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | 171 | |||||||||||||||
Trade and other receivables | 142 | |||||||||||||||
Property, plant and equipment | 696 | |||||||||||||||
Intangible assets, net | 1,440 | |||||||||||||||
Other assets | 106 | |||||||||||||||
Total Assets | 2,555 | |||||||||||||||
Liabilities | ||||||||||||||||
Accounts payable | 83 | |||||||||||||||
Other current liabilities | 4 | |||||||||||||||
Pension and other postretirement benefit liabilities | 29 | |||||||||||||||
Long-term debt | 1,276 | |||||||||||||||
Other liabilities | 504 | |||||||||||||||
Total Liabilities | 1,896 | |||||||||||||||
Business CombFair value of net identifiable assets acquiredination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net, Total | 659 | |||||||||||||||
Goodwill | 1,669 | |||||||||||||||
Acquisition related costs | $ 60 | |||||||||||||||
Goodwill is deductible for income tax purposes | 0 | |||||||||||||||
DigitalGlobe | Syndicated Credit Facility | ||||||||||||||||
Business combination | ||||||||||||||||
Aggregate principal amount | 3,800 | |||||||||||||||
Initial draw of debt | 3,100 | |||||||||||||||
Debt issuance costs | 63 | |||||||||||||||
Equity award-holders pay-out | 1,200 | |||||||||||||||
Refinance debt of acquiree | 1.3 | |||||||||||||||
Refinance debt | $ 742 |
Business combination - Intangib
Business combination - Intangible assets of DigitalGlobe (Details) - DigitalGlobe $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Intangible assets | |
Carrying Value | $ 1,440 |
Customer relationships | |
Intangible assets | |
Carrying Value | $ 608 |
Weighted average useful life (in years) | 14 years |
Backlog | |
Intangible assets | |
Carrying Value | $ 331 |
Weighted average useful life (in years) | 4 years |
Technologies | |
Intangible assets | |
Carrying Value | $ 318 |
Weighted average useful life (in years) | 5 years |
Software | |
Intangible assets | |
Carrying Value | $ 46 |
Weighted average useful life (in years) | 3 years |
Image library | |
Intangible assets | |
Carrying Value | $ 80 |
Weighted average useful life (in years) | 5 years |
Trade names and trademarks | |
Intangible assets | |
Carrying Value | $ 37 |
Weighted average useful life (in years) | 10 years |
Other | |
Intangible assets | |
Carrying Value | $ 20 |
Weighted average useful life (in years) | 2 years |
Trade and other receivables (De
Trade and other receivables (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Trade and other receivables | ||
Total trade receivables | $ 414 | $ 435 |
Orbital receivables, current portion | 34 | 30 |
Other | 17 | 21 |
Allowance for doubtful accounts | (1) | (10) |
Total trade and other receivable | 464 | 476 |
U.S government receivables | ||
Trade and other receivables | ||
Billed | 96 | 63 |
Unbilled | 60 | 34 |
Total trade receivables | 156 | 97 |
Other governments and commercial receivables | ||
Trade and other receivables | ||
Billed | 146 | 213 |
Unbilled | 112 | 125 |
Total trade receivables | $ 258 | $ 338 |
Trade and other receivables - E
Trade and other receivables - Expected timing of billing and collection of orbital receivables (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Trade and other receivables | ||
Orbital receivables | $ 407 | $ 424 |
Minimum | ||
Trade and other receivables | ||
Discount rate for recognition of revenue on percentage completion basis | 6.00% | |
Maximum | ||
Trade and other receivables | ||
Discount rate for recognition of revenue on percentage completion basis | 10.00% | |
Space Systems | ||
Trade and other receivables | ||
Impairment to long-term orbital receivables | $ 22 |
Trade and other receivables -_2
Trade and other receivables - Expected timing of total contractual cash flows (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Contract receivable | ||
2,019 | $ 50 | |
2,020 | 67 | |
2,021 | 68 | |
2,022 | 72 | |
2,023 | 72 | |
Thereafter | 413 | |
Contract receivable | 742 | |
Orbital receivables | ||
Proceeds from sale of orbital receivables | 18 | |
Securitization liabilities | 109 | $ 106 |
Other current liabilities | ||
Orbital receivables | ||
Securitization liabilities | $ 15 | $ 16 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Inventory | ||
Raw materials | $ 21 | $ 99 |
Work in process | 10 | 14 |
Total | 31 | 113 |
Inventory reserve | (11) | |
Total inventory, net | 31 | $ 102 |
Inventoried costs | ||
Incremental inventory obsolescence reserve | $ 66 |
Property, plant and equipment_2
Property, plant and equipment (Details) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2018USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Property, plant and equipment | ||||
Property, plant and equipment, at cost | $ 1,110 | $ 1,110 | $ 1,259 | |
Accumulated depreciation | (363) | (363) | (251) | |
Property, plant and equipment, net | 747 | 747 | 1,008 | |
Depreciation | 157 | 61 | ||
Impairment loss of property, plant and equipment | 271 | 0 | $ 0 | |
Deferred contract cost assets | 5 | 5 | ||
Impairment expense | 150 | |||
Prepaid Insurance | $ 2 | 2 | ||
Future insurance premiums due | 3 | |||
Number of buildings | 1 | |||
Building Sale | $ 68 | |||
Gain (Loss) on sale of properties | 33 | |||
Satellites | ||||
Property, plant and equipment | ||||
Property, plant and equipment, at cost | 397 | 397 | 541 | |
Equipment | ||||
Property, plant and equipment | ||||
Property, plant and equipment, at cost | 229 | 229 | 268 | |
Leasehold improvements | ||||
Property, plant and equipment | ||||
Property, plant and equipment, at cost | 97 | 97 | 80 | |
Computer hardware | ||||
Property, plant and equipment | ||||
Property, plant and equipment, at cost | 92 | 92 | 88 | |
Land and Land improvements | ||||
Property, plant and equipment | ||||
Property, plant and equipment, at cost | 88 | 88 | 108 | |
Buildings | ||||
Property, plant and equipment | ||||
Property, plant and equipment, at cost | 46 | 46 | 91 | |
Furniture and fixtures | ||||
Property, plant and equipment | ||||
Property, plant and equipment, at cost | 19 | 19 | 11 | |
Construction in process | ||||
Property, plant and equipment | ||||
Property, plant and equipment, at cost | $ 142 | $ 142 | $ 72 |
Intangible assets and goodwil_2
Intangible assets and goodwill (Details) $ in Millions | Jan. 01, 2018contract | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Finite-lived intangible assets: | ||||
Gross carrying value | $ 1,621 | $ 1,889 | ||
Accumulated amortization | (389) | (271) | ||
Net carrying value | 1,232 | 1,618 | ||
Amortization of intangible assets | 292 | 100 | $ 38 | |
Trade names and trademarks | ||||
Finite-lived intangible assets: | ||||
Gross carrying value | 41 | 114 | ||
Accumulated amortization | (9) | (27) | ||
Net carrying value | 32 | 87 | ||
Space Systems | GeoComn business | ||||
Finite-lived intangible assets: | ||||
Percent of industry contracts awarded | 30.00% | |||
Space Systems | GeoComn business | Minimum | ||||
Finite-lived intangible assets: | ||||
Number of contracts forecasted to be awarded | contract | 3 | |||
Space Systems | GeoComn business | Maximum | ||||
Finite-lived intangible assets: | ||||
Number of contracts forecasted to be awarded | contract | 4 | |||
Customer relationships | ||||
Finite-lived intangible assets: | ||||
Gross carrying value | 619 | 622 | ||
Accumulated amortization | (58) | (16) | ||
Net carrying value | 561 | 606 | ||
Customer relationships | Space Systems | GeoComn business | ||||
Finite-lived intangible assets: | ||||
Impairment losses | 2 | |||
Backlog | ||||
Finite-lived intangible assets: | ||||
Gross carrying value | 332 | 331 | ||
Accumulated amortization | (120) | (23) | ||
Net carrying value | 212 | 308 | ||
Technologies | ||||
Finite-lived intangible assets: | ||||
Gross carrying value | 330 | 477 | ||
Accumulated amortization | (86) | (107) | ||
Net carrying value | 244 | 370 | ||
Technologies | Space Systems | GeoComn business | ||||
Finite-lived intangible assets: | ||||
Impairment losses | 53 | |||
Software | ||||
Finite-lived intangible assets: | ||||
Gross carrying value | 198 | 245 | ||
Accumulated amortization | (71) | (88) | ||
Net carrying value | 127 | 157 | ||
Software | Worldview-4 satellite | ||||
Finite-lived intangible assets: | ||||
Impairment losses | 2 | |||
Software | Space Systems | GeoComn business | ||||
Finite-lived intangible assets: | ||||
Impairment losses | 20 | |||
Image library | ||||
Finite-lived intangible assets: | ||||
Gross carrying value | 80 | 80 | ||
Accumulated amortization | (32) | (8) | ||
Net carrying value | 48 | 72 | ||
Non-compete agreements | ||||
Finite-lived intangible assets: | ||||
Gross carrying value | 21 | 20 | ||
Accumulated amortization | (13) | (2) | ||
Net carrying value | 8 | $ 18 | ||
Trade names | Space Systems | GeoComn business | ||||
Finite-lived intangible assets: | ||||
Impairment losses | $ 47 |
Intangible assets and goodwil_3
Intangible assets and goodwill - Estimated annual amortization expense (Details) $ in Millions | Dec. 31, 2018USD ($) |
Amortization expense | |
2,019 | $ 276 |
2,020 | 240 |
2,021 | 168 |
2,022 | 129 |
2,023 | 56 |
2024 and thereafter | $ 363 |
Intangible assets and goodwil_4
Intangible assets and goodwill - Goodwill (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Goodwill | ||
Balance at beginning of period | $ 2,374 | $ 699 |
Impairment losses | (636) | |
Acquisitions | 1,669 | |
Disposal of immaterial subsidiary | (3) | |
Foreign currency translation | 6 | 6 |
Balance at end of period | 1,751 | 2,374 |
Neptec | ||
Goodwill | ||
Acquisitions | 22 | |
Space Systems | ||
Goodwill | ||
Balance at beginning of period | 774 | 625 |
Impairment losses | (494) | |
Acquisitions | 143 | |
Foreign currency translation | 6 | 6 |
Balance at end of period | 296 | 774 |
Space Systems | MDA reporting unit | ||
Goodwill | ||
Impairment losses | (477) | |
Space Systems | SSL, Other reporting units | ||
Goodwill | ||
Impairment losses | (17) | |
Space Systems | Neptec | ||
Goodwill | ||
Acquisitions | 22 | |
Imagery | ||
Goodwill | ||
Balance at beginning of period | 1,427 | 27 |
Impairment losses | (142) | |
Acquisitions | 1,400 | |
Balance at end of period | 1,285 | 1,427 |
Services | ||
Goodwill | ||
Balance at beginning of period | 173 | 47 |
Acquisitions | 126 | |
Disposal of immaterial subsidiary | (3) | |
Balance at end of period | $ 170 | $ 173 |
Warranty costs (Details)
Warranty costs (Details) - Other current liabilities and Other long-term liabilities - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Changes in liability for warranty | ||
Balance at beginning of period | $ 39 | $ 34 |
Obligations incurred | 5 | 7 |
Payments/uses | (4) | (2) |
Balance at end of period | $ 40 | $ 39 |
Long term debt and interest e_2
Long term debt and interest expense (Details) $ in Millions, $ in Millions | Dec. 31, 2018CAD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017CAD ($) | Dec. 31, 2017USD ($) |
Long-term debt and interest expenses | ||||
Debt issuance costs | $ (41) | $ (52) | ||
Obligations under finance leases | 13 | 19 | ||
Total long-term debt | 3,047 | 2,961 | ||
Current portion | (17) | (18) | ||
Total | 3,030 | 2,943 | ||
Revolving loan payable | ||||
Long-term debt and interest expenses | ||||
Long-term debt | 595 | 454 | ||
Operating loan payable | ||||
Long-term debt and interest expenses | ||||
Long-term debt | $ 0 | $ 51 | 40 | |
Term Loan A | ||||
Long-term debt and interest expenses | ||||
Long-term debt | 500 | 500 | ||
Term Loan B | ||||
Long-term debt and interest expenses | ||||
Long-term debt | $ 1,980 | $ 2,000 |
Long term debt and interest e_3
Long term debt and interest expense - Syndicated Credit Facility (Details) $ in Millions | Dec. 21, 2018USD ($) | Oct. 31, 2017USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Oct. 05, 2017USD ($) |
Long-term debt and interest expenses | ||||||
Loss from early extinguishment of debt | $ (23) | $ (2) | ||||
Amortization of capitalized financing fees | $ 9 | 3 | $ 1 | |||
Syndicated Credit Facility | ||||||
Long-term debt and interest expenses | ||||||
Aggregate principal amount | $ 3,750 | |||||
Syndicated Credit Facility | Quarter ended December 31, 2018 | ||||||
Long-term debt and interest expenses | ||||||
Maximum consolidated leverage ratio | 5.5 | |||||
Syndicated Credit Facility | Quarter ended September 30, 2020 | ||||||
Long-term debt and interest expenses | ||||||
Maximum consolidated leverage ratio | 6 | |||||
Syndicated Credit Facility | After September 30, 2020 | ||||||
Long-term debt and interest expenses | ||||||
Maximum consolidated leverage ratio | 5.5 | |||||
Syndicated Credit Facility | Quarter ended June 30, 2019 | ||||||
Long-term debt and interest expenses | ||||||
Minimum interest coverage ratio | 2.50% | |||||
Syndicated Credit Facility | After June 30, 2019 | ||||||
Long-term debt and interest expenses | ||||||
Minimum interest coverage ratio | 2.75% | |||||
Letter of credit | ||||||
Long-term debt and interest expenses | ||||||
Maximum borrowing capacity | 200 | |||||
Letter of credit outstanding | $ 18 | $ 26 | ||||
Term Loan A | U.S. Libor and CDOR or Canadian Bankers’ Acceptances | Minimum | ||||||
Long-term debt and interest expenses | ||||||
Spread on variable rate | 120.00% | |||||
Term Loan A | U.S. Libor and CDOR or Canadian Bankers’ Acceptances | Maximum | ||||||
Long-term debt and interest expenses | ||||||
Spread on variable rate | 350.00% | |||||
Term Loan B | ||||||
Long-term debt and interest expenses | ||||||
Installment payments as a percentage of original principal amount | 1.00% | |||||
Term Loan B | U.S. Libor | ||||||
Long-term debt and interest expenses | ||||||
Spread on variable rate | 275.00% | |||||
DigitalGlobe | Syndicated Credit Facility | ||||||
Long-term debt and interest expenses | ||||||
Aggregate principal amount | $ 3,800 | |||||
Loss from early extinguishment of debt | $ 23 | |||||
DigitalGlobe | Senior secured first lien revolving credit facility | ||||||
Long-term debt and interest expenses | ||||||
Term of debt | 4 years | |||||
DigitalGlobe | Senior Secured First Lien Operating Facility | ||||||
Long-term debt and interest expenses | ||||||
Term of debt | 4 years | |||||
DigitalGlobe | Term Loan B | ||||||
Long-term debt and interest expenses | ||||||
Term of debt | 7 years | |||||
Aggregate principal amount | $ 3,750 | |||||
DigitalGlobe | Term Notes 2024 | ||||||
Long-term debt and interest expenses | ||||||
Make-whole premium for termination | 20 | |||||
DigitalGlobe | Syndicated Credit Facility and 2024 Term Notes | ||||||
Long-term debt and interest expenses | ||||||
Amortization of capitalized financing fees | $ 3 |
Long term debt and interest e_4
Long term debt and interest expense - Interest expense on long term debts and other obligations (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Interest expenses | |||
Interest on long-term debt | $ 171 | $ 57 | $ 26 |
Interest expense on advance payments from customers | 26 | 8 | |
Interest on orbital securitization liability | 7 | 8 | 2 |
Imputed interest and other | 2 | 3 | 3 |
Capitalization of borrowing costs | (7) | ||
Loss on debt extinguishment | 23 | 2 | |
Interest expense on dissenting stockholder liability | 3 | ||
Total interest expense | $ 202 | $ 99 | $ 33 |
Long term debt and interest e_5
Long term debt and interest expense - Annual contractual principal repayments (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Syndicated Credit facility | ||
2,019 | $ 11 | |
2,020 | 262 | |
2,021 | 858 | |
2,022 | 14 | |
2,023 | 14 | |
Thereafter | 1,875 | |
Syndicated credit facility, Total | 3,034 | |
Capital lease commitments | ||
2,019 | 7 | |
2,020 | 4 | |
2,021 | 2 | |
Capital leases, Total | 13 | $ 19 |
Total | ||
2,019 | 18 | |
2,020 | 266 | |
2,021 | 860 | |
2,022 | 14 | |
2,023 | 14 | |
Thereafter | 1,875 | |
Total long-term debt | $ 3,047 | $ 2,961 |
Financial instruments and fai_3
Financial instruments and fair value disclosures - Financial instruments measured at fair value (Details) - Recurring - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Assets | ||
Short-term investments | $ 3 | $ 1 |
Assets fair value | 8 | 14 |
Liabilities | ||
Liabilities fair value | 12 | 9 |
Foreign exchange forward contracts & embedded derivatives | ||
Assets | ||
Derivative financial instruments | 5 | 13 |
Liabilities | ||
Derivative financial instruments | 8 | 9 |
Interest rate swaps | ||
Liabilities | ||
Derivative financial instruments | 4 | |
Level 1 | ||
Assets | ||
Short-term investments | 3 | 1 |
Assets fair value | 3 | 1 |
Level 2 | ||
Assets | ||
Assets fair value | 5 | 13 |
Liabilities | ||
Liabilities fair value | 12 | 9 |
Level 2 | Foreign exchange forward contracts & embedded derivatives | ||
Assets | ||
Derivative financial instruments | 5 | 13 |
Liabilities | ||
Derivative financial instruments | 8 | $ 9 |
Level 2 | Interest rate swaps | ||
Liabilities | ||
Derivative financial instruments | $ 4 |
Financial instruments and fai_4
Financial instruments and fair value disclosures - Financial instruments recorded at carrying value (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2018 | |
Financial instruments and fair value disclosures | |||
Fair value assets level 1 to level 2 transfers | $ 0 | $ 0 | |
Fair value assets level 2 to level 1 transfers | 0 | 0 | |
Fair value assets transfers into level 3 | 0 | 0 | |
Fair value assets transfers out of level 3 | 0 | 0 | |
Fair value liabilities level 1 to level 2 transfers | 0 | 0 | |
Fair value liabilities level 2 to level 1 transfers | 0 | 0 | |
Fair value liabilities transfers into level 3 | 0 | 0 | |
Fair value liabilities transfers out of level 3 | 0 | $ 0 | |
Level 2 | Carrying value | |||
Financial instruments and fair value disclosures | |||
Long-term debt, excluding capital leases | 2,943 | $ 3,034 | |
Orbital receivable | 454 | 441 | |
Level 2 | Fair value | |||
Financial instruments and fair value disclosures | |||
Long-term debt, excluding capital leases | 3,176 | 2,925 | |
Orbital receivable | $ 507 | $ 441 |
Derivatives and Hedging - Cash
Derivatives and Hedging - Cash flow hedges (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Apr. 05, 2018 | |
Derivatives and Hedging | |||
Long-term debt at variable rate | $ 1,000 | ||
Average interest rate | 2.56% | ||
Interest rate swaps | |||
Derivatives and Hedging | |||
Notional amount | $ 1,000 | ||
Interest rate swaps | Maximum | |||
Derivatives and Hedging | |||
Contract term | 3 years 3 months 18 days | ||
Purchase contracts settled in Canadian dollars | U.S. dollar | |||
Derivatives and Hedging | |||
Notional amount | $ 70 | $ 165 | |
Purchase contracts settled in Canadian dollars | U.S. dollar | Maximum | |||
Derivatives and Hedging | |||
Contract term | 1 year 9 months 18 days | 2 years 9 months 18 days | |
Purchase contracts settled in Canadian dollars | EURO | |||
Derivatives and Hedging | |||
Notional amount | $ 10 | $ 16 | |
Purchase contracts settled in Canadian dollars | EURO | Maximum | |||
Derivatives and Hedging | |||
Contract term | 2 years 3 months 18 days | 2 years 8 months 12 days | |
Purchase contracts settled in Canadian dollars | GBP | |||
Derivatives and Hedging | |||
Notional amount | $ 3 | $ 2 | |
Purchase contracts settled in Canadian dollars | GBP | Maximum | |||
Derivatives and Hedging | |||
Contract term | 6 months | 1 year | |
Sales contracts settled in Canadian dollars | EURO | |||
Derivatives and Hedging | |||
Notional amount | $ 194 | $ 312 | |
Sales contracts settled in Canadian dollars | EURO | Maximum | |||
Derivatives and Hedging | |||
Contract term | 3 years 9 months 18 days | 3 years | |
Sales contracts settled in Canadian dollars | GBP | |||
Derivatives and Hedging | |||
Notional amount | $ 1 | $ 2 | |
Sales contracts settled in Canadian dollars | GBP | Maximum | |||
Derivatives and Hedging | |||
Contract term | 7 months 6 days | 1 year | |
Sales contracts settled in Canadian dollars | Japanese Yen | |||
Derivatives and Hedging | |||
Notional amount | $ 35 | $ 26 | |
Sales contracts settled in Canadian dollars | Japanese Yen | Maximum | |||
Derivatives and Hedging | |||
Contract term | 2 years 7 months 6 days | 3 years 1 month 6 days | |
Purchase contracts settled in US dollars | EURO | |||
Derivatives and Hedging | |||
Notional amount | $ 10 | $ 32 | |
Purchase contracts settled in US dollars | EURO | Maximum | |||
Derivatives and Hedging | |||
Contract term | 3 months 18 days | 1 year 3 months 18 days | |
Purchase contracts settled in US dollars | Japanese Yen | |||
Derivatives and Hedging | |||
Notional amount | $ 177 | $ 2,231 | |
Purchase contracts settled in US dollars | Japanese Yen | Maximum | |||
Derivatives and Hedging | |||
Contract term | 2 months 12 days | 1 year 2 months 12 days | |
Sales contracts settled in United States dollars | EURO | |||
Derivatives and Hedging | |||
Notional amount | $ 20 | $ 58 | |
Sales contracts settled in United States dollars | EURO | Maximum | |||
Derivatives and Hedging | |||
Contract term | 6 months | 1 year 3 months 18 days | |
Sales contracts settled in United States dollars | Japanese Yen | |||
Derivatives and Hedging | |||
Notional amount | $ 177 | $ 1,116 | |
Sales contracts settled in United States dollars | Japanese Yen | Maximum | |||
Derivatives and Hedging | |||
Contract term | 2 months 12 days | 1 year 2 months 12 days |
Derivatives and Hedging - Fair
Derivatives and Hedging - Fair values of derivative instruments (Details) - Foreign exchange forward contracts - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Derivative instruments | ||
Assets | $ 5 | $ 13 |
Liabilities | $ 8 | $ 9 |
Derivatives and Hedging - Earni
Derivatives and Hedging - Earnings and other comprehensive income (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flow hedges | Foreign exchange forward contracts | |||
Derivative instruments | |||
Effective portion of gains and losses included in other comprehensive income | $ (6) | $ (3) | $ (8) |
Effective portion of gains and losses reclassified to earnings | (1) | ||
Gains and loss included in earnings | (2) | (1) | (5) |
Cash flow hedges | Interest rate swaps | |||
Derivative instruments | |||
Effective portion of gains and losses included in other comprehensive income | (4) | ||
Derivatives not qualified for hedge accounting | Foreign exchange forward contracts | |||
Derivative instruments | |||
Gains and loss included in earnings | 5 | 1 | |
Derivatives not qualified for hedge accounting | Embedded derivatives | |||
Derivative instruments | |||
Gains and loss included in earnings | $ 1 | $ (2) | $ (3) |
Derivatives and Hedging - Net i
Derivatives and Hedging - Net investment hedge (Details) - Term Loan B - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Derivatives and Hedging | ||
Long-term debt | $ 1,980 | $ 2,000 |
Net investment hedge | ||
Derivatives and Hedging | ||
Long-term debt | 271 | 271 |
Long-term debt, excluding capital leases | $ 256 | $ 298 |
Accumulated other comprehensi_3
Accumulated other comprehensive income (loss) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Accumulated Other Comprehensive Income (Loss) | |||
Balance at the beginning of period | $ 1,832 | ||
Cumulative-effect of IFRS to U.S. GAAP conversion | $ (97) | ||
Balance at the end of period | 643 | $ 1,832 | |
Accumulated other comprehensive income (loss) | |||
Accumulated Other Comprehensive Income (Loss) | |||
Balance at the beginning of period | 113 | 123 | 169 |
Cumulative-effect of IFRS to U.S. GAAP conversion | (33) | ||
Other comprehensive (loss) income | (33) | (4) | (15) |
Tax expense (recovery) | 2 | (6) | 2 |
Balance at the end of period | 82 | 113 | 123 |
Foreign Currency Translation Adjustments | |||
Accumulated Other Comprehensive Income (Loss) | |||
Balance at the beginning of period | 158 | 151 | 154 |
Cumulative-effect of IFRS to U.S. GAAP conversion | (1) | ||
Other comprehensive (loss) income | 4 | 7 | (2) |
Balance at the end of period | 162 | 158 | 151 |
Net (Loss) Income Hedge Investments in Foreign Operations | |||
Accumulated Other Comprehensive Income (Loss) | |||
Balance at the beginning of period | (28) | (28) | (33) |
Other comprehensive (loss) income | (23) | 5 | |
Balance at the end of period | (51) | (28) | (28) |
Unrecognized (Loss) Gain on Derivative Instruments | |||
Accumulated Other Comprehensive Income (Loss) | |||
Balance at the beginning of period | 7 | 10 | 18 |
Other comprehensive (loss) income | (10) | (3) | (9) |
Tax expense (recovery) | 3 | 1 | |
Balance at the end of period | 7 | 10 | |
Pension Liability Adjustments | |||
Accumulated Other Comprehensive Income (Loss) | |||
Balance at the beginning of period | (24) | (10) | 30 |
Cumulative-effect of IFRS to U.S. GAAP conversion | (32) | ||
Other comprehensive (loss) income | (4) | (8) | (9) |
Tax expense (recovery) | (1) | (6) | 1 |
Balance at the end of period | $ (29) | $ (24) | $ (10) |
Revenue - Remaining performance
Revenue - Remaining performance obligations (Details) $ in Billions | Dec. 31, 2018USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-12-31 | |
Revenue | |
Remaining performance obligation | $ 2.4 |
Expected timing of satisfaction | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01 | |
Revenue | |
Remaining performance obligation | $ 1.3 |
Expected timing of satisfaction | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue | |
Remaining performance obligation | $ 0.4 |
Expected timing of satisfaction | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue | |
Remaining performance obligation | $ 0.7 |
Expected timing of satisfaction |
Revenue - Contract assets and l
Revenue - Contract assets and liabilities (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Contract assets and contract liabilities | ||
Contract Liabilities | $ 421 | $ 600 |
Space Systems | ||
Contract assets and contract liabilities | ||
Contract Liabilities | 172 | 266 |
Imagery | ||
Contract assets and contract liabilities | ||
Contract Liabilities | 247 | 330 |
Imagery | EnhancedView contract | ||
Contract assets and contract liabilities | ||
Contract Liabilities | 184 | 278 |
Increase in contract liability due to imputed interest on advance payments | 26 | |
Revenue recognized | 120 | |
Deferred contract costs | 0 | 0 |
Services | ||
Contract assets and contract liabilities | ||
Contract Liabilities | $ 2 | $ 4 |
Revenue - Disaggregation of rev
Revenue - Disaggregation of revenue by source (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenue | |||||||||||
Revenues | $ 496 | $ 509 | $ 579 | $ 557 | $ 545 | $ 337 | $ 375 | $ 374 | $ 2,141 | $ 1,631 | $ 1,558 |
Product | |||||||||||
Revenue | |||||||||||
Revenues | 851 | 1,119 | 1,286 | ||||||||
Service | |||||||||||
Revenue | |||||||||||
Revenues | 1,290 | 512 | 272 | ||||||||
Space Systems | |||||||||||
Revenue | |||||||||||
Orbital interest revenue | 32 | 35 | 31 | ||||||||
Operating Segments | Product | |||||||||||
Revenue | |||||||||||
Revenues | 851 | 1,119 | 1,285 | ||||||||
Operating Segments | Service | |||||||||||
Revenue | |||||||||||
Revenues | 1,290 | 512 | 273 | ||||||||
Operating Segments | Space Systems | |||||||||||
Revenue | |||||||||||
Revenues | 1,129 | 1,270 | 1,421 | ||||||||
Operating Segments | Space Systems | Product | |||||||||||
Revenue | |||||||||||
Revenues | 851 | 1,119 | 1,285 | ||||||||
Operating Segments | Space Systems | Service | |||||||||||
Revenue | |||||||||||
Revenues | 191 | 141 | 132 | ||||||||
Operating Segments | Imagery | |||||||||||
Revenue | |||||||||||
Revenues | 845 | 230 | 42 | ||||||||
Operating Segments | Imagery | Service | |||||||||||
Revenue | |||||||||||
Revenues | 841 | 228 | 41 | ||||||||
Operating Segments | Services | |||||||||||
Revenue | |||||||||||
Revenues | 266 | 144 | 100 | ||||||||
Operating Segments | Services | Service | |||||||||||
Revenue | |||||||||||
Revenues | 258 | 143 | 100 | ||||||||
Intersegment eliminations | |||||||||||
Revenue | |||||||||||
Revenues | (99) | (13) | (5) | ||||||||
Intersegment eliminations | Space Systems | |||||||||||
Revenue | |||||||||||
Revenues | 87 | 10 | 4 | ||||||||
Intersegment eliminations | Imagery | |||||||||||
Revenue | |||||||||||
Revenues | 4 | 2 | $ 1 | ||||||||
Intersegment eliminations | Services | |||||||||||
Revenue | |||||||||||
Revenues | $ 8 | $ 1 |
Revenue - Disaggregation of r_2
Revenue - Disaggregation of revenue on geographic location of customers (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenue | |||||||||||
Revenues | $ 496 | $ 509 | $ 579 | $ 557 | $ 545 | $ 337 | $ 375 | $ 374 | $ 2,141 | $ 1,631 | $ 1,558 |
U.S. | |||||||||||
Revenue | |||||||||||
Revenues | 1,371 | 744 | 447 | ||||||||
Asia | |||||||||||
Revenue | |||||||||||
Revenues | 152 | 330 | 424 | ||||||||
Canada | |||||||||||
Revenue | |||||||||||
Revenues | 334 | 295 | 312 | ||||||||
Europe | |||||||||||
Revenue | |||||||||||
Revenues | 118 | 207 | 285 | ||||||||
Australia | |||||||||||
Revenue | |||||||||||
Revenues | 18 | 29 | 30 | ||||||||
South America | |||||||||||
Revenue | |||||||||||
Revenues | 134 | 17 | 58 | ||||||||
Other | |||||||||||
Revenue | |||||||||||
Revenues | $ 14 | $ 9 | $ 2 |
Revenue - Disaggregation of r_3
Revenue - Disaggregation of revenue from significant customers (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenue | |||||||||||
Revenues | $ 496 | $ 509 | $ 579 | $ 557 | $ 545 | $ 337 | $ 375 | $ 374 | $ 2,141 | $ 1,631 | $ 1,558 |
U.S. Federal Government and agencies | |||||||||||
Revenue | |||||||||||
Revenues | 890 | 294 | 98 | ||||||||
Canadian Federal Government and agencies | |||||||||||
Revenue | |||||||||||
Revenues | 96 | 194 | 212 | ||||||||
Commercial and other | |||||||||||
Revenue | |||||||||||
Revenues | $ 1,155 | $ 1,143 | $ 1,248 |
Segment information - Operating
Segment information - Operating performance (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2018USD ($)segment | Dec. 31, 2017USD ($)segment | Dec. 31, 2016USD ($)segment | |
Segment information | |||||||||||
Number of reportable segments | segment | 3 | 3 | 3 | ||||||||
Total revenues | $ 496 | $ 509 | $ 579 | $ 557 | $ 545 | $ 337 | $ 375 | $ 374 | $ 2,141 | $ 1,631 | $ 1,558 |
Depreciation and amortization | (449) | (161) | (72) | ||||||||
Corporate expenses | (54) | (65) | (26) | ||||||||
Restructuring Charges | 18 | 36 | 4 | ||||||||
Acquisition and integration related expense | (34) | (60) | |||||||||
Impairment losses, including inventory | 1,096 | ||||||||||
Interest expense, net | (202) | (99) | (33) | ||||||||
Interest income | 1 | 1 | |||||||||
Equity (income) loss from joint ventures, net of tax | (2) | ||||||||||
(Loss) income before taxes | (1,328) | (104) | 67 | ||||||||
Operating Segments | Space Systems | |||||||||||
Segment information | |||||||||||
Total revenues | 1,129 | 1,270 | 1,421 | ||||||||
Adjusted EBITDA | 5 | 151 | 160 | ||||||||
Operating Segments | Imagery | |||||||||||
Segment information | |||||||||||
Total revenues | 845 | 230 | 42 | ||||||||
Adjusted EBITDA | 518 | 143 | 23 | ||||||||
Operating Segments | Services | |||||||||||
Segment information | |||||||||||
Total revenues | 266 | 144 | 100 | ||||||||
Adjusted EBITDA | 25 | 23 | 19 | ||||||||
Intersegment eliminations | |||||||||||
Segment information | |||||||||||
Total revenues | (99) | (13) | (5) | ||||||||
Adjusted EBITDA | (22) | (1) | |||||||||
Intersegment eliminations | Space Systems | |||||||||||
Segment information | |||||||||||
Total revenues | 87 | 10 | 4 | ||||||||
Intersegment eliminations | Imagery | |||||||||||
Segment information | |||||||||||
Total revenues | 4 | 2 | $ 1 | ||||||||
Intersegment eliminations | Services | |||||||||||
Segment information | |||||||||||
Total revenues | $ 8 | $ 1 |
Segment information - Capital e
Segment information - Capital expenditures (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Segment information | |||
Capital expenditures, property, plant and equipment | $ 156 | $ 49 | $ 40 |
Capital expenditures, intangible assets | 62 | 23 | 16 |
Capital expenditures | 218 | 72 | 56 |
Operating Segments | Space Systems | |||
Segment information | |||
Capital expenditures, property, plant and equipment | 28 | 43 | 38 |
Capital expenditures, intangible assets | 6 | 11 | 14 |
Capital expenditures | 34 | 54 | 52 |
Operating Segments | Imagery | |||
Segment information | |||
Capital expenditures, property, plant and equipment | 156 | 14 | |
Capital expenditures, intangible assets | 55 | 12 | |
Capital expenditures | 211 | 26 | |
Operating Segments | Services | |||
Segment information | |||
Capital expenditures, property, plant and equipment | 2 | 2 | 1 |
Capital expenditures, intangible assets | 1 | 1 | |
Capital expenditures | 3 | 2 | 2 |
Intersegment eliminations | |||
Segment information | |||
Capital expenditures, property, plant and equipment | (30) | (10) | 1 |
Capital expenditures, intangible assets | 1 | ||
Capital expenditures | $ (30) | $ (10) | $ 2 |
Employee benefit plans - Change
Employee benefit plans - Changes in benefit obligations, plan assets and funded status (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Assets and (liabilities) recognized in the Consolidated Balance Sheets: | |||
Pension and other postretirement benefits | $ (196) | $ (218) | |
Decrease in pension benefit obligation | 59 | ||
Decrease in fair value of plan assets | 49 | ||
Pensions Plans | |||
Change in benefit obligation | |||
Benefit obligation at beginning of year | 654 | 614 | |
Service cost | 6 | 5 | |
Interest cost | 22 | 24 | $ 26 |
Actuarial (gains) losses | (43) | 38 | |
Benefits paid | (37) | (32) | |
Foreign exchange | (7) | 5 | |
Benefit obligation at end of year | 595 | 654 | 614 |
Change in plan assets | |||
Fair value of plan assets at beginning of year | 478 | 437 | |
Actual return on plan assets | (20) | 59 | |
Actuarial gains (losses) on plan assets | (32) | (29) | (31) |
Employer contributions | 16 | 9 | |
Benefits paid | (35) | (30) | |
Expenses paid | (2) | (3) | (4) |
Expenses paid | (3) | (3) | |
Foreign exchange | (7) | 6 | |
Fair value of plan assets at end of year | 429 | 478 | 437 |
Funded status at end of year | (166) | (176) | |
Assets and (liabilities) recognized in the Consolidated Balance Sheets: | |||
Other assets | 4 | 4 | |
Pension and other postretirement benefits | (170) | (180) | |
Total | (166) | (176) | |
Postretirement Benefit Plans | |||
Change in benefit obligation | |||
Benefit obligation at beginning of year | 39 | 64 | |
Valuation effect at beginning of year | (2) | ||
Interest cost | 2 | 2 | 2 |
Actuarial (gains) losses | (4) | 1 | |
Prior service credit | (1) | ||
Benefits paid | (2) | (2) | |
Curtailments (1) | (24) | ||
Foreign exchange | (3) | 1 | |
Benefit obligation at end of year | 32 | 39 | $ 64 |
Change in plan assets | |||
Employer contributions | 3 | 2 | |
Benefits paid | (3) | (2) | |
Funded status at end of year | (32) | (39) | |
Assets and (liabilities) recognized in the Consolidated Balance Sheets: | |||
Accrued compensation and benefits | (1) | (2) | |
Pension and other postretirement benefits | (31) | (37) | |
Total | $ (32) | $ (39) |
Employee benefit plans - Net lo
Employee benefit plans - Net loss and prior service credit balances (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Pensions Plans | |||
Employee benefit plans | |||
Net actuarial (loss) gain | $ (63) | $ (54) | $ (89) |
Total recognized in accumulated other comprehensive loss (income) | (63) | (54) | (89) |
Postretirement Benefit Plans | |||
Employee benefit plans | |||
Net actuarial (loss) gain | 17 | 12 | 3 |
Net prior service credit | 1 | 1 | 3 |
Total recognized in accumulated other comprehensive loss (income) | $ 18 | $ 13 | $ 6 |
Employee benefit plans - Accumu
Employee benefit plans - Accumulated benefit obligation (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Pensions Plans | ||
Employee benefit plans | ||
Accumulated benefit obligation | $ 536 | $ 587 |
Fair value of plan assets | 367 | 407 |
Postretirement Benefit Plans | ||
Employee benefit plans | ||
Accumulated benefit obligation | $ 32 | $ 39 |
Employee benefit plans - Projec
Employee benefit plans - Projected benefit obligation (Details) - Pensions Plans - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Employee benefit plans | ||
Projected benefit obligation | $ 553 | $ 605 |
Fair value of plan assets | $ 383 | $ 425 |
Employee benefit plans - Weight
Employee benefit plans - Weighted average assumptions to determine benefit obligations (Details) | Dec. 31, 2018 | Dec. 31, 2017 |
Pensions Plans | ||
Employee benefit plans | ||
Discount rate | 4.10% | 3.40% |
Rate of future compensation increase | 3.50% | 3.50% |
Postretirement Benefit Plans | ||
Employee benefit plans | ||
Discount rate | 3.80% | 3.40% |
Rate of future compensation increase | 3.60% | 3.60% |
Employee benefit plans - Compon
Employee benefit plans - Components of net periodic benefit cost (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Pensions Plans | |||
Employee benefit plans | |||
Service cost | $ 4 | $ 3 | $ 2 |
Interest cost | 22 | 24 | 26 |
Actual return on plan assets | (32) | (29) | (31) |
Amortization of net loss (gain) | 1 | 1 | 2 |
Settlement loss recognized | 3 | ||
Expenses paid | 2 | 3 | 4 |
Net periodic benefit cost | (3) | 2 | 6 |
Postretirement Benefit Plans | |||
Employee benefit plans | |||
Service cost | 1 | ||
Interest cost | 2 | 2 | 2 |
Amortization of prior service credit | (2) | (2) | |
Amortization of net loss (gain) | (1) | ||
Curtailment gain | (26) | ||
Settlement loss recognized | (24) | ||
Net periodic benefit cost | $ 1 | $ (26) | $ 1 |
Employee benefit plans - Summar
Employee benefit plans - Summarizes the other changes in plan assets and benefit obligations (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Pensions Plans | |||
Employee benefit plans | |||
Net loss (gain) | $ 10 | $ 8 | $ 11 |
Amortization of net (loss) gain | (1) | (1) | (4) |
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, before Tax, Total | 9 | 7 | 7 |
Defined Benefit Plan, Amount Recognized in Net Periodic Benefit Cost (Credit) and Other Comprehensive (Income) Loss, before Tax | 6 | 9 | 13 |
Postretirement Benefit Plans | |||
Employee benefit plans | |||
Net loss (gain) | (6) | (4) | |
Prior service credit | (1) | ||
Amortization of prior service (cost) credit | 2 | ||
Amortization of net (loss) gain | 1 | 1 | |
Curtailment loss | 1 | 2 | |
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, before Tax, Total | (5) | 3 | (2) |
Defined Benefit Plan, Amount Recognized in Net Periodic Benefit Cost (Credit) and Other Comprehensive (Income) Loss, before Tax | $ (4) | $ (23) | $ (1) |
Employee benefit plans - Weig_2
Employee benefit plans - Weighted average assumptions used to determine net periodic benefit cost (Details) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Pensions Plans | |||
Employee benefit plans | |||
Discount rate | 3.40% | 3.90% | 4.30% |
Rate of future compensation increase | 3.50% | 3.50% | 3.50% |
Expected long-term return on plan assets | 6.90% | 6.80% | 6.80% |
Postretirement Benefit Plans | |||
Employee benefit plans | |||
Discount rate | 3.40% | 3.80% | 4.10% |
Rate of future compensation increase | 3.60% | 3.60% | 3.50% |
Employee benefit plans - Plan a
Employee benefit plans - Plan asset allocation (Details) | Dec. 31, 2018 |
Employee benefit plans | |
Weighted average asset allocations (as a percent) | 100.00% |
Cash and cash equivalent | |
Employee benefit plans | |
Weighted average asset allocations (as a percent) | 1.00% |
Cash and cash equivalent | Minimum | |
Employee benefit plans | |
Weighted average asset allocations (as a percent) | 0.00% |
Cash and cash equivalent | Maximum | |
Employee benefit plans | |
Weighted average asset allocations (as a percent) | 16.00% |
U.S. equity securities | |
Employee benefit plans | |
Weighted average asset allocations (as a percent) | 29.00% |
U.S. equity securities | Minimum | |
Employee benefit plans | |
Weighted average asset allocations (as a percent) | 15.00% |
U.S. equity securities | Maximum | |
Employee benefit plans | |
Weighted average asset allocations (as a percent) | 50.00% |
International equity securities | |
Employee benefit plans | |
Weighted average asset allocations (as a percent) | 31.00% |
International equity securities | Minimum | |
Employee benefit plans | |
Weighted average asset allocations (as a percent) | 9.00% |
International equity securities | Maximum | |
Employee benefit plans | |
Weighted average asset allocations (as a percent) | 33.00% |
Fixed income | |
Employee benefit plans | |
Weighted average asset allocations (as a percent) | 37.00% |
Fixed income | Minimum | |
Employee benefit plans | |
Weighted average asset allocations (as a percent) | 30.00% |
Fixed income | Maximum | |
Employee benefit plans | |
Weighted average asset allocations (as a percent) | 52.00% |
Other | |
Employee benefit plans | |
Weighted average asset allocations (as a percent) | 2.00% |
Other | Minimum | |
Employee benefit plans | |
Weighted average asset allocations (as a percent) | 0.00% |
Other | Maximum | |
Employee benefit plans | |
Weighted average asset allocations (as a percent) | 14.00% |
Employee benefit plans - Plan_2
Employee benefit plans - Plan assets by asset category segregated by level (Details) - Pensions Plans - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Employee benefit plans | |||
Total assets at fair value | $ 429 | $ 478 | $ 437 |
Level 1 | |||
Employee benefit plans | |||
Total assets at fair value | 35 | 40 | |
Level 2 | |||
Employee benefit plans | |||
Total assets at fair value | 393 | 437 | |
Level 3 | |||
Employee benefit plans | |||
Total assets at fair value | 1 | 1 | |
Cash and cash equivalent | |||
Employee benefit plans | |||
Total assets at fair value | 5 | 6 | |
Cash and cash equivalent | Level 1 | |||
Employee benefit plans | |||
Total assets at fair value | 5 | 6 | |
U.S. equity securities | |||
Employee benefit plans | |||
Total assets at fair value | 126 | 147 | |
U.S. equity securities | Level 1 | |||
Employee benefit plans | |||
Total assets at fair value | 11 | 14 | |
U.S. equity securities | Level 2 | |||
Employee benefit plans | |||
Total assets at fair value | 115 | 133 | |
International equity securities | |||
Employee benefit plans | |||
Total assets at fair value | 133 | 150 | |
International equity securities | Level 1 | |||
Employee benefit plans | |||
Total assets at fair value | 19 | 20 | |
International equity securities | Level 2 | |||
Employee benefit plans | |||
Total assets at fair value | 113 | 129 | |
International equity securities | Level 3 | |||
Employee benefit plans | |||
Total assets at fair value | 1 | 1 | |
Fixed income | |||
Employee benefit plans | |||
Total assets at fair value | 158 | 167 | |
Fixed income | Level 2 | |||
Employee benefit plans | |||
Total assets at fair value | 158 | 167 | |
Other | |||
Employee benefit plans | |||
Total assets at fair value | 7 | 8 | |
Other | Level 2 | |||
Employee benefit plans | |||
Total assets at fair value | $ 7 | $ 8 |
Employee benefit plans - Estima
Employee benefit plans - Estimated Future Benefit Payments (Details) $ in Millions | Dec. 31, 2018USD ($) |
Pensions Plans | |
Estimated Future Benefit Payments | |
2,019 | $ 34 |
2,020 | 34 |
2,021 | 34 |
2,022 | 35 |
2,023 | 35 |
Years 2024 - 2028 | 182 |
Postretirement Benefit Plans | |
Estimated Future Benefit Payments | |
2,019 | 2 |
2,020 | 2 |
2,021 | 2 |
2,022 | 2 |
2,023 | 2 |
Years 2024 - 2028 | $ 10 |
Employee benefit plans - Narrat
Employee benefit plans - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Employee benefit plans | |||
Expense recorded | $ 17,000,000 | $ 15,000,000 | $ 14,000,000 |
Pensions Plans | |||
Employee benefit plans | |||
Gain on settlement | $ (3,000,000) | ||
Aggregate accumulated benefit obligation | 593,000,000 | 652,000,000 | |
Accumulated benefit obligation | 536,000,000 | 587,000,000 | |
Expected future contribution by the employer | 14,000,000 | ||
Postretirement Benefit Plans | |||
Employee benefit plans | |||
Gain on settlement | 24,000,000 | ||
Accumulated benefit obligation | $ 32,000,000 | $ 39,000,000 | |
Assumed health care cost trend rate | 6.50% | ||
Decrease in health care cost trend rate | $ 4.5 | ||
Expected future contribution by the employer | $ 2,000,000 |
Share-based payment plans (Deta
Share-based payment plans (Details) - CAD ($) | Oct. 01, 2001 | Jul. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Share Appreciation Rights | Non-employee Director | |||||
Share-based payment plans | |||||
Granted (in shares) | 0 | ||||
LTIP Plans | Share Appreciation Rights | |||||
Share-based payment plans | |||||
Granted (in shares) | 0 | ||||
Pre 2017 LTIP | Share Appreciation Rights | |||||
Share-based payment plans | |||||
Shares authorized | 6,820,000 | ||||
Vesting period | 3 years | ||||
Vesting percentage | 33.33% | ||||
Term of award | 5 years | ||||
2017 LTIP | Share Appreciation Rights | |||||
Share-based payment plans | |||||
Shares authorized | 1,900,000 | ||||
Vesting period | 4 years | ||||
Vesting percentage | 25.00% | ||||
Term of award | 10 years | ||||
Omnibus Plan | |||||
Share-based payment plans | |||||
Shares reserved for issuance | 1,100,000 | ||||
Term of award | 10 years | ||||
Omnibus Plan | Non-employee Director | |||||
Share-based payment plans | |||||
Granted (in shares) | 0 | ||||
Omnibus Plan | Share Appreciation Rights | |||||
Share-based payment plans | |||||
Vesting period | 4 years | ||||
Vesting percentage | 25.00% | ||||
Term of award | 10 years | ||||
Omnibus Plan | Restricted Share Units | |||||
Share-based payment plans | |||||
Granted (in shares) | 161,748 | ||||
Granted (per share) | $ 52.03 | ||||
Vesting period | 3 years | ||||
Vesting percentage | 33.33% | ||||
Deferred Share Unit Plan | |||||
Share-based payment plans | |||||
Shares reserved for issuance | 100,000 | ||||
Employee Share Purchase Plan | |||||
Share-based payment plans | |||||
Granted (in shares) | 102,076 | 83,453 | 66,466 | ||
Shares authorized | 1,500,000 | ||||
Maximum shares that can be issued in one year under the plan | 300,000 | ||||
Percentage of market value of shares that employees can purchase | 85.00% | ||||
Maximum employee contribution of base salary | 10.00% | ||||
Maximum employee contribution of base salary per annum | $ 20,000 | ||||
Granted (per share) | $ 47.77 | $ 59.58 | $ 70.56 | ||
DigitalGlobe Equity Plan | Restricted Share Units | |||||
Share-based payment plans | |||||
Granted (in shares) | 0 |
Share-based payment plans - Sha
Share-based payment plans - Share Appreciation Rights (Details) $ / shares in Units, $ in Millions | 12 Months Ended | ||||||
Dec. 31, 2018$ / shares | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2017$ / shares | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016$ / shares | Dec. 31, 2016USD ($)shares | Dec. 31, 2018USD ($) | |
Omnibus and DigitalGlobe Equity Incentive Plan | |||||||
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract] | |||||||
Weighted average remaining period (in years) | 1 year 4 months 24 days | ||||||
Liability classified awards | |||||||
Number of Awards | |||||||
Outstanding at the beginning of the period (in shares) | 2,638,857 | ||||||
Granted (in shares) | 0 | ||||||
Exercised (in shares) | (23,604) | ||||||
Cancelled or expired (in shares) | (1,283,592) | ||||||
Outstanding at the end of the period (in shares) | 1,331,661 | 2,638,857 | |||||
Vested and expected to vest at the end of the period | 1,319,781 | ||||||
Exercisable at the end of the period | 1,071,358 | ||||||
Weighted Average Exercise Price | |||||||
Outstanding at the beginning of the period (per share) | $ / shares | $ 81.56 | ||||||
Exercised (per share) | $ / shares | 57.99 | ||||||
Cancelled or expired (per share) | $ / shares | 82.67 | ||||||
Outstanding at the end of the period (per share) | $ / shares | 84.32 | $ 81.56 | |||||
Vested and expected to vest at the end of the period | $ / shares | 84.43 | ||||||
Exercisable at the end of the period | $ / shares | 86.01 | ||||||
Contractual Term (in years) | |||||||
Outstanding at the end of the period | 2 years 8 months 12 days | ||||||
Vested and expected to vest at the end of the period | 2 years 8 months 12 days | ||||||
Exercisable at the end of the period | 2 years 3 months 18 days | ||||||
Aggregate Intrinsic Value | |||||||
Total intrinsic value of exercised shares | $ | $ 1 | $ 6 | $ 8 | ||||
Total intrinsic value of vested shares | $ | $ 3 | $ 4 | 2 | ||||
Weighted Average Grand Date Fair Value | |||||||
Granted (per share) | $ / shares | 65.38 | $ 78.75 | |||||
SARs accounted for as equity-settled awards | |||||||
Number of Awards | |||||||
Outstanding at the beginning of the period (in shares) | 3,338,148 | ||||||
Granted (in shares) | 10,307 | ||||||
Exercised (in shares) | (19,837) | ||||||
Cancelled or expired (in shares) | (689,150) | ||||||
Outstanding at the end of the period (in shares) | 2,639,468 | 3,338,148 | |||||
Vested and expected to vest at the end of the period | 2,543,453 | ||||||
Exercisable at the end of the period | 1,715,148 | ||||||
Weighted Average Exercise Price | |||||||
Outstanding at the beginning of the period (per share) | $ / shares | 78.61 | ||||||
Granted (per share) | $ / shares | 49.71 | ||||||
Exercised (per share) | $ / shares | 66.72 | ||||||
Cancelled or expired (per share) | $ / shares | 80.65 | ||||||
Outstanding at the end of the period (per share) | $ / shares | 76.49 | 78.61 | |||||
Vested and expected to vest at the end of the period | $ / shares | 76.71 | ||||||
Exercisable at the end of the period | $ / shares | 79.98 | ||||||
Contractual Term (in years) | |||||||
Outstanding at the end of the period | 5 years 4 months 24 days | ||||||
Vested and expected to vest at the end of the period | 5 years 3 months 18 days | ||||||
Exercisable at the end of the period | 3 years 10 months 24 days | ||||||
Aggregate Intrinsic Value | |||||||
Total intrinsic value of vested shares | $ | $ 6 | $ 8 | $ 8 | ||||
Weighted Average Grand Date Fair Value | |||||||
Granted (per share) | $ / shares | 10.37 | 75.04 | $ 67.75 | ||||
SARs accounted for as equity-settled non vested awards | |||||||
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract] | |||||||
Total unrecognized compensation expense | $ | $ 4 | ||||||
Weighted average remaining period (in years) | 1 year 8 months 12 days | ||||||
Restricted Share Units | Omnibus and DigitalGlobe Equity Incentive Plan | |||||||
Number of Awards | |||||||
Vested (in shares) | 0 | ||||||
Weighted Average Grand Date Fair Value | |||||||
Total fair value of vested awards | $ | $ 13 | $ 6 | |||||
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract] | |||||||
Total unrecognized compensation expense | $ | $ 18 | ||||||
Restricted Share Units | Omnibus Plan | |||||||
Number of Awards | |||||||
Outstanding at the beginning of the period (in shares) | 590,663 | ||||||
Granted (in shares) | 161,748 | ||||||
Vested (in shares) | (174,825) | ||||||
Cancelled or expired (in shares) | (73,174) | ||||||
Outstanding at the end of the period (in shares) | 504,412 | 590,663 | |||||
Weighted Average Exercise Price | |||||||
Cancelled or expired (per share) | $ / shares | 79.35 | ||||||
Weighted Average Grand Date Fair Value | |||||||
Outstanding at the beginning of the period (per share) | $ / shares | 79.68 | ||||||
Granted (per share) | $ / shares | 52.03 | ||||||
Vested (per share) | $ / shares | 79.24 | ||||||
Outstanding at the end of the period (per share) | $ / shares | $ 70.80 | $ 79.68 | |||||
Restricted Share Units | DigitalGlobe Equity Plan | |||||||
Number of Awards | |||||||
Outstanding at the beginning of the period (in shares) | 470,101 | ||||||
Granted (in shares) | 0 | ||||||
Vested (in shares) | (168,432) | ||||||
Cancelled or expired (in shares) | (27,808) | ||||||
Outstanding at the end of the period (in shares) | 273,861 | 470,101 | |||||
Weighted Average Grand Date Fair Value | |||||||
Outstanding at the beginning of the period (per share) | $ / shares | $ 54.57 | ||||||
Vested (per share) | $ / shares | 54.52 | ||||||
Cancelled or expired (per share) | $ / shares | 54.57 | ||||||
Outstanding at the end of the period (per share) | $ / shares | $ 54.57 | $ 54.57 |
Share-based payment plans - Def
Share-based payment plans - Deferred Share Units (Details) - Deferred Share Units (DSU) | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Number of Awards | |
Outstanding at the beginning of the period (in shares) | 79,460 |
Issued (in shares) | 28,143 |
Outstanding at the end of the period (in shares) | 107,603 |
Weighted Average Issuance Price | |
Outstanding at the beginning of the period (per share) | $ / shares | $ 50.13 |
Issued (per share) | $ / shares | 55.43 |
Outstanding at the end of the period (per share) | $ / shares | $ 51.52 |
Redeemed (in shares) | 0 |
Share-based payment plans - S_2
Share-based payment plans - Share-based compensation expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based payment plans | |||
Share-based compensation expense before taxes | $ 20 | $ 58 | $ 15 |
Share-based compensation expense, net of tax | 20 | 58 | 15 |
Product costs, excluding depreciation and amortization | |||
Share-based payment plans | |||
Share-based compensation expense before taxes | (1) | 6 | (1) |
Service costs, excluding depreciation and amortization | |||
Share-based payment plans | |||
Share-based compensation expense before taxes | 2 | 2 | (1) |
Selling, general and administrative | |||
Share-based payment plans | |||
Share-based compensation expense before taxes | $ 19 | $ 50 | $ 17 |
Share-based payment plans - Val
Share-based payment plans - Valuation of Share-Based Compensation Awards (Details) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Liability classified awards | |||
Valuation of Share-Based Compensation Awards | |||
Risk-free interest rate, minimum | 1.70% | 1.70% | 0.70% |
Risk-free interest rate, maximum | 1.90% | 1.90% | 1.40% |
Dividend yield | 1.80% | 1.80% | 2.20% |
Expected lives (in years) | 5 years 4 months 24 days | ||
Volatility, minimum | 14.00% | 14.00% | 20.00% |
Volatility, maximum | 23.00% | 25.00% | 26.00% |
Liability classified awards | Minimum | |||
Valuation of Share-Based Compensation Awards | |||
Expected lives (in years) | 3 months 18 days | 1 year | 1 year |
Liability classified awards | Maximum | |||
Valuation of Share-Based Compensation Awards | |||
Expected lives (in years) | 6 years 6 months | 7 years | |
Equity-settled SARs, RSUs and DSUs | |||
Valuation of Share-Based Compensation Awards | |||
Risk-free interest rate, minimum | 1.90% | 0.60% | 0.60% |
Risk-free interest rate, maximum | 2.30% | 1.90% | 1.30% |
Volatility, minimum | 22.00% | 17.00% | 17.00% |
Volatility, maximum | 41.00% | 25.00% | 25.00% |
Equity-settled SARs, RSUs and DSUs | Minimum | |||
Valuation of Share-Based Compensation Awards | |||
Dividend yield | 2.20% | 1.50% | 1.50% |
Expected lives (in years) | 3 years | 4 months 24 days | 4 months 24 days |
Equity-settled SARs, RSUs and DSUs | Maximum | |||
Valuation of Share-Based Compensation Awards | |||
Dividend yield | 9.10% | 2.20% | 2.20% |
Expected lives (in years) | 7 years | 7 years | 7 years |
Income taxes (Details)
Income taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income taxes | |||
Canadian | $ (97) | $ 25 | $ 60 |
Non-Canadian | (1,231) | (129) | 7 |
(Loss) income before taxes | (1,328) | (104) | 67 |
Current tax (benefit) expense: | |||
Canadian | (5) | 1 | 2 |
Non-Canadian | 1 | ||
Total | (5) | 2 | 2 |
Deferred tax benefit: | |||
Canadian | (54) | (22) | (3) |
Non-Canadian | (3) | (142) | |
Total | (57) | (164) | (3) |
Income tax benefit | $ (62) | $ (162) | $ (1) |
Income taxes - Reconciliation o
Income taxes - Reconciliation of the US statutory income tax rate (Details) - USD ($) $ in Millions | Jan. 01, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Income taxes | ||||
Statutory Federal and Provincial tax rate in Canada | 27.00% | 26.00% | 26.00% | |
Expected income tax expense (benefit) at statutory rate | $ (358) | $ (27) | $ 17 | |
Impact of US Tax Cuts and Jobs Act of 2017 | 26 | |||
Change in statutory tax rates | 23 | (1) | ||
Non-deductible expenses | 1 | 10 | 2 | |
Foreign exchange differences | (44) | (1) | 1 | |
Change in valuation allowance | 207 | (123) | 13 | |
Changes in uncertain tax position | (20) | (14) | (4) | |
Foreign earnings subject to different tax rates | (27) | (13) | (10) | |
Research and development tax credits | (18) | (19) | (20) | |
Non-deductible goodwill impairment | 172 | |||
Other | 2 | |||
Income tax benefit | $ (62) | $ (162) | $ (1) | |
Effective income tax rate | 4.70% | 155.80% | (1.50%) | |
US federal corporate tax rate | 21.00% | 35.00% |
Income taxes - Components of de
Income taxes - Components of deferred tax assets and liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Components of deferred tax assets and liabilities: | |||
Tax benefit of losses carried forward | $ 323 | $ 247 | $ 94 |
Research and development tax credits | 175 | 121 | 45 |
Construction contract assets and liabilities | 79 | 71 | 3 |
Property and equipment | 15 | 5 | |
Goodwill and intangibles | 1 | 1 | |
Trade and other payables | 39 | 27 | 22 |
Employee benefits | 55 | 58 | 85 |
Unrealized foreign exchange gains and losses | 39 | 10 | 12 |
Other | 2 | 1 | |
Subtotal | 728 | 539 | 263 |
Less: Valuation allowance | (366) | (157) | (200) |
Deferred tax assets, net of valuation allowance | 362 | 382 | 63 |
Construction contract assets and liabilities | (6) | (3) | (3) |
Property and equipment | (3) | (1) | (12) |
Goodwill and intangibles | (253) | (303) | |
Research and development tax credits | (6) | ||
Unrealized foreign exchange gains and losses | (11) | (8) | |
Debt issuance costs | (3) | (3) | |
Other | (3) | ||
Total deferred tax liabilities | (265) | (324) | (29) |
Net deferred tax assets (liabilities) | $ 97 | $ 58 | $ 34 |
Income taxes - Tax credit carry
Income taxes - Tax credit carryforward (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income taxes | ||||
Net operating losses carried forward subject to expiration | $ 1,083 | |||
Tax credits carried forward research and development | 214 | |||
Unrecognized Tax Benefits | 94 | $ 132 | $ 133 | $ 119 |
Interest and penalties accrued | 7 | 15 | 11 | |
increases/(decreases) in interest and penalties | (7) | $ 4 | $ 1 | |
Federal | ||||
Income taxes | ||||
Net operating losses carried forward subject to expiration | 191 | |||
Operating losses carried forward | 106 | |||
Tax credits carried forward research and development | 137 | |||
Foreign | ||||
Income taxes | ||||
Net operating losses carried forward subject to expiration | 731 | |||
U.S. | ||||
Income taxes | ||||
Net operating losses carried forward not subject to expiration | $ 158 | |||
Net operating loss carryforward annual limitation as a percent of taxable income | 80.00% | |||
Tax credits carried forward research and development | $ 77 | |||
Other Foreign | ||||
Income taxes | ||||
Net operating losses carried forward not subject to expiration | $ 3 |
Income taxes - Changes in unrec
Income taxes - Changes in unrecognized tax benefits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Changes in unrecognized tax benefits | |||
Balance, beginning of the year | $ 132 | $ 133 | $ 119 |
Gross increases related to current period tax positions | 9 | 5 | 7 |
Gross increases related to prior period tax positions | 13 | 6 | 10 |
Decrease related to resolution of audits with tax authorities | (28) | ||
Expiration of the statute of limitations | (22) | (21) | (6) |
Foreign currency translation | (10) | ||
Foreign currency translation | 9 | 3 | |
Balance, end of year | $ 94 | $ 132 | $ 133 |
Earnings per common share (Deta
Earnings per common share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings per common share | |||||||||||
Net (loss) income | $ (950) | $ (289) | $ (40) | $ 15 | $ 55 | $ 2 | $ 12 | $ (11) | $ (1,264) | $ 58 | $ 68 |
Weighted average number of common shares outstanding - basic (in shares) | 58.1 | 41.2 | 36.4 | ||||||||
Weighted dilutive effect of equity awards | 0.1 | 0.1 | |||||||||
Weighted Average Number of Shares Outstanding, Diluted, Total | 58.1 | 41.3 | 36.5 | ||||||||
(Loss) earnings per common share: | |||||||||||
Basic (In dollars per share) | $ (16.10) | $ (4.90) | $ (0.70) | $ 0.27 | $ 1 | $ 0.05 | $ 0.33 | $ (0.31) | $ (21.76) | $ 1.41 | $ 1.87 |
Diluted (In dollars per share) | $ (16.10) | $ (4.90) | $ (0.70) | $ 0.26 | $ 0.98 | $ 0.05 | $ 0.32 | $ (0.31) | $ (21.76) | $ 1.40 | $ 1.86 |
Earnings per common share - Ant
Earnings per common share - Anti-dilutive securities (Details) - shares shares in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings per common share | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 4 | 4 |
Contingencies and commitments_2
Contingencies and commitments (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operating leases and other obligations | |||
2,019 | $ 25 | ||
2,020 | 22 | ||
2,021 | 22 | ||
2,022 | 20 | ||
2,023 | 20 | ||
Thereafter | 99 | ||
Total operating leases | 208 | ||
Capital lease commitments | |||
2,019 | 7 | ||
2,020 | 4 | ||
2,021 | 2 | ||
Total capital leases | 13 | ||
Total lease expenses | 36 | $ 37 | $ 33 |
Capital lease obligations net | $ 10 | $ 12 |
Supplemental cash flow - (Detai
Supplemental cash flow - (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Supplemental disclosures of cash flow information | |||
Cash paid for interest | $ (152) | $ (41) | $ (30) |
Income taxes refunds (payments) | 1 | 1 | (7) |
Supplemental disclosures of non-cash investing and financing activities: | |||
Accrued capital expenditures | 22 | 18 | $ 2 |
Acquisitions | $ 24 | $ 1,197 |
Selected Quarterly Financial _3
Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Total revenues | $ 496 | $ 509 | $ 579 | $ 557 | $ 545 | $ 337 | $ 375 | $ 374 | $ 2,141 | $ 1,631 | $ 1,558 |
Net (loss) income | $ (950) | $ (289) | $ (40) | $ 15 | $ 55 | $ 2 | $ 12 | $ (11) | $ (1,264) | $ 58 | $ 68 |
Earnings per share, basic | $ (16.10) | $ (4.90) | $ (0.70) | $ 0.27 | $ 1 | $ 0.05 | $ 0.33 | $ (0.31) | $ (21.76) | $ 1.41 | $ 1.87 |
Earnings Per Share, Diluted | $ (16.10) | $ (4.90) | $ (0.70) | $ 0.26 | $ 0.98 | $ 0.05 | $ 0.32 | $ (0.31) | $ (21.76) | $ 1.40 | $ 1.86 |
IFRS | |||||||||||
Net (loss) income | $ (961) | $ (433) | $ (18) | $ 31 | $ 64 | $ 13 | $ 19 | $ 4 | $ (1,381) | $ 100 | $ 106 |
Adjustment | |||||||||||
Net (loss) income | $ 11 | $ 144 | $ (22) | $ (16) | $ (9) | $ (11) | $ (7) | $ (15) |
Subsequent events (Details)
Subsequent events (Details) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2019USD ($)employee | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Subsequent events | ||||
Restructuring charges | $ 18 | $ 36 | $ 4 | |
Subsequent event | Forecast | Workforce reduction | ||||
Subsequent events | ||||
Number of employees | employee | 250 | |||
Subsequent event | Forecast | Workforce reduction | Minimum | ||||
Subsequent events | ||||
Restructuring charges | $ 15 | |||
Subsequent event | Forecast | Workforce reduction | Maximum | ||||
Subsequent events | ||||
Restructuring charges | $ 22 |