2019 Annual Report
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maxar.com
A message from Maxar CEO, Dan Jablonsky
Looking back, 2019 was an eventful year for Maxar. As of this writing, the geopolitical, health, and
Looking back, 2019 was an eventful year for Maxar. As of this writing, the geopolitical, health, and
operational environment in 2020 could prove to be challenging. I’d like to provide a recap of last year,
discuss how we’re thinking about our longer-term focus and strategic efforts, and end with observations
about current events and COVID-19.
FOR A BETTER WORLD
In 2019, Maxar led the way in Earth Intelligence
providing valuable data and insights that
government and commercial customers need to
make informed decisions in an increasingly
complex geopolitical environment. In Space
Infrastructure, we continued to provide efficient
and innovative ways for our customers to support communication and exploration across our planet and
beyond, including a return to the moon. Our commitment to customers and their critical missions
remained unwavering throughout the year, and we look forward to both serving and growing with them
in the years to come. Our team members are passionate about the work we do, and believe strongly our
Earth Intelligence and Space Infrastructure capabilities have the power to change the world.
THE PROMISE OF SPACE IS TO ENSURE EVERYONE ON THE
PLANET HAS ACCESS TO THE TECHNOLOGY AND
INFORMATION THAT MAKES THE WORLD A BETTER PLACE.
PERFORMANCE AND KEY HIGHLIGHTS
In 2019, we persevered through the loss of our WorldView-4 satellite and the lingering effects of a
decline in commercial satellite orders in 2017 and 2018. That said, we generated $1.7B in revenue and
$416M in Adjusted EBITDA from continuing operations. We also worked tirelessly on the five key
priorities we discussed throughout the year:
Reducing debt and leverage: We announced actions during 2019 to reduce debt by roughly $1B,
including the sale/leaseback of facilities in Palo Alto and the divestiture of the MDA business. We also
refinanced nearer-term maturities through a $1B bond offering. Combined, these moves better align
future debt maturities with the positive cash flow streams we expect after the launch of the WorldView
Legion constellation and place us on sound financial footing moving into 2020.
Re-engineering the Space Infrastructure business: In addition to reducing our cost structure and re-
engineering the business for increased flexibility going forward, we
won two geosynchronous communications satellite (GEO comsat)
awards. Importantly, we garnered key, new wins with NASA in
support of the agency’s missions to return to the moon and monitor
the environment on Earth. We are now keenly focused on
diversifying into the civil government and military/classified
programs, particularly in the United States, to reduce our historic
dependence on the commercial market. We expect this
diversification to result in less cyclicality and improved financial
performance in the future. There is still much work to be done, but we are off to a good start.
Positioning MDA for long-term growth: We won several awards during 2019 that better positioned this
business for growth over the next several years, including:
(cid:120)
Initial design phase work on both the Canadian Surface Combatant program and Canadarm3
(cid:120) Manufacturing work to provide flight-ready repeaters to be launched on the U.S. Air Force’s GPS
IIIF satellites
(cid:120) Design work with the Canadian Space Agency for a wildfire monitoring satellite
(cid:120) Manufacturing work with Airbus for advanced navigation antennas
Please note that we entered into a definitive agreement to sell our MDA business. As a result, this
business is now classified as discontinued operations in our consolidated financial statements.
TRANSFER AGENT
Computershare Trust Company, N.A.
462 South 4th Street, Suite 1600
Louisville, KY 40202
Investor Relations Contact
Jason Gursky, VP Investor Relations
303-684-7660
investor@maxar.com
Positioning Imagery and Services for long-term growth: We consolidated our Imagery and Services
businesses into a reporting segment called Earth Intelligence (EI)1. Despite the loss of WorldView-4, this
area of the business performed well during the year. We booked several notable awards, including:
(cid:120) A four-year contract with the U.S. government for access to
our Global Enhanced Geospatial Delivery (Global-EGD)
platform
(cid:120) A GEOINT cloud architecture contract with the U.S. Air Force
(cid:120) A study contract with the National Reconnaissance Office that
will enable the U.S. government to gain a greater
understanding of Maxar’s current and future commercial
imagery capabilities
(cid:120) A contract with the U.S. Army through a joint venture company called Vricon to support a One
World Terrain capability
We also entered into new contracts with several sovereign countries for our data and platform offerings
and continued to expand subscriptions to our SecureWatch data access platform. We signed new
contracts with NGOs, such as Vulcan that will use our imagery in part to help reduce illegal fishing
worldwide, and renewal contracts with commercial customers such as HERE and Esri. Finally, we signed
a contract with Toyota Research Institute - Advanced Development Inc. and NTT Data Corporation to
develop a proof of concept to build automated high-definition (HD) maps for autonomous vehicles using
high-resolution satellite imagery. These business development successes better position Earth
Intelligence for the future and they will be enhanced in the years to come by additional imagery capacity
from our WorldView Legion constellation.
Reducing cost structure and deploying new operating model: We made progress in reshaping and
restructuring the business and saw good traction with the deployment of a new operating model. Our
product teams worked together across the company, and our global field operations team began
building and executing on a robust, centralized pipeline. We also saw good market reaction as we rolled
out our positioning of the one Maxar brand, and our finance and operations teams worked on
consolidation and streamlining efforts. These initiatives are saving money, accelerating our time to
market with new products and services, and enhancing collaboration across the organization.
Key Financial Metrics ($ in millions)
Revenue
Adjusted EBITDA
Net Income (loss)3
Operating Cash Flow4
Backlog
2019
$1,666
$416
$109
$317
$1,631
2018
$1,804
$383
($1,250)
$139
$2,084
20172
$1,257
$85
$60
$105
1 The Earth Intelligence segment includes the financial results of the legacy Imagery and Services segments,
excluding the legacy Canadian radar imagery business.
2 2017 backlog is not presented in the Annual Report on Form 10-K for the year ended December 31, 2019
3 Includes the results from continuing and discontinued operations
4 Includes the results from continuing and discontinued operations
WWHAT WE DO
MAXAR IS A TRUSTED PARTNER
AND INNOVATOR IN
EARTH INTELLIGENCE AND
SPACE INFRASTRUCTURE.
INVESTING IN INNOVATION
Innovation has always been the lifeblood of Maxar and that will be as
true in the future as it is today. In 2019 we continued to make
strategic investments across the company.
WE MAKE GLOBAL CHANGE
VISIBLE, INFORMATION
ACTIONABLE AND SPACE
ACCESSIBLE.
We devoted significant resources to WorldView Legion, which will be
a six-satellite constellation we expect will extend our lead by
providing additional high-resolution, accurate, and timely imagery
capacity to our government and commercial customers worldwide.
WorldView Legion will deliver continuity for our existing customers
and dramatically expand our revisit
over high-interest areas to better
inform critical, time-sensitive
decisions. This program should be particularly valuable to those
customers affected by the loss of WorldView-4 and to those looking for
greater access to the best-quality datasets available commercially.
WE PUT THE MISSION F IRST
This means that everything we do is
to satisfy the goals, ambitions and
dreams of our customers.
TTHE VALUES THAT DRIVE US
We continue to invest in our data access platforms and products as
well as our artificial intelligence/machine learning (AI/ML) capabilities.
The confluence of high-performance computing and machine learning
algorithms has greatly enhanced the quality and quantity of insight
that can be extracted from our high-resolution datasets, automatically
and at scale. Our investments in these areas provide greater value to
our customers and better position Maxar for sustained growth.
We also continue to invest in space capabilities including power,
propulsion and robotics technologies, which we believe will be key
enablers for both space exploration to any destination and for space
resiliency in the national security context. This is particularly important
as we look to further diversify this business into the civil and
military/classified programs.
LOOKING AHEAD
Our strategy is focused on businesses we know and on growing
markets where we believe we can be #1 or #2. This means Earth
Intelligence, where we are already the market leader, and Space
Infrastructure, where we have rich heritage and an established
reputation for quality, timeliness and cost—all key attributes our
government and commercial customers look for in a partner.
WE STAY CURIOUS
We never stop working to discover
the answers to the questions of
tomorrow and to solve the most
difficult problems.
WE DO IT RIGHT
This means we operate with high
integrity. No shortcuts. We honor
our commitments to our
customers, our partners and our
employees.
WE WORK BETTER TOGET HER
We are an organization that values
collaboration and diversity to
create a better future.
WE ACT LIKE OWNERS
We know that results matter and
we continually find new ways to
grow, improve, and deliver
sustainable value.
YOU MATTER
Our strength is our people. Each of
you makes a unique contribution to
our collective mission. We
recognize and appreciate your
commitment—every day bringing
your best to work, living our
values, and fulfilling our purpose.
In Earth Intelligence, we look to leverage investments in capacity, AI/ML and platform-based products to
expand our relationship with the U.S. government, add even more international and defense customers,
and expand our commercial customer base. Demand signals are robust given new and innovative ways
customers use geospatial data and the insights that can be derived from it, and we believe the quality
and breadth of our offerings position us to grow in the years to come.
In Space Infrastructure, we continue to serve our legacy commercial customers and are leveraging
investments in power, propulsion, robotics, communications and modular spacecraft architectures to
grow our U.S. and international civil exposure and deepen our penetration of U.S. military/classified
programs. We believe these investments will be critical in helping these customers operate in an
increasingly contested space environment and in achieving successful space exploration missions.
Government space budgets are robust and growing, and we believe our diversification efforts will
provide more predictable financial outcomes for our stockholders.
COMMITMENT TO VALUE CREATION
We also remain focused on our balance sheet and committed to maintaining financial flexibility to
address the growth opportunities we see in front of us. We took several actions in 2019 to reduce debt
and leverage, and we have aligned on what we believe creates value in a business:
(cid:120) Our goal is to increase the “per share value” of our stock, not to merely grow revenue or size of
the company
(cid:120) We take a straightforward approach to how we measure our performance with a focus on cash
flow, growth and shareholder returns
(cid:120) We believe in the careful deployment of corporate resources, and have an intense focus on
capital allocation, designed to maximize stockholder returns
(cid:120) We will divest non-core businesses and assets to deploy capital in the most productive manner
for stockholders
(cid:120) We believe the right capital structure will enhance our ability to grow, provide resiliency for risks
in our business and improve our valuation, and we are working aggressively to further reduce
leverage
OUR BROADER PURPOSE
We care deeply about our place in the world, and the impact we have on a variety of stakeholders. We
outlined our view of corporate social responsibility in our Impact Report. If you haven’t had a chance to
review it, I encourage you to visit https://explore.maxar.com/Impact-Report. The report includes a wide
range of stories and data highlighting what motivates so many of our team members at Maxar — the
positive impact we have each day across the world through our work.
RECENT EVENTS AND COVID-19
Like so many other businesses, we are in the midst of navigating and mitigating short- and long-term
impacts of the COVID-19 global pandemic. Fortunately, we have a resilient and flexible workforce, and
we continue to deliver critical products and services that are essential to our customers’ continuity and
operations. We recently began phasing in the next stage of our COVID-19 response plan, escalating
efforts to protect the health and safety of team members, families, customers and communities. Our
response plan includes a combination of work from home (WFH) and limited personnel working on-site
for essential operations.
Our WFH posture across Maxar allows team members whose roles can be performed remotely to do so,
and also recognizes the increased impact on families from school and community closures. Mission-
critical roles that must be conducted from a Maxar location are an exception to the WFH protocol. This
approach protects our ongoing business operations and supports our efforts to continue to meet critical
customer commitments.
We continue to assess the impacts of COVID-19 on employees, customers, suppliers and the productivity
of the work being done—all of which to some extent will affect future revenue, earnings and cash flow.
IN CLOSING
A final few words: Our successes are not possible without the strong commitment and performance of
Maxar’s team members, and I want to thank all of them for their energy and efforts in 2019, their
responses to ongoing developments, and their passion as we continue to drive our vision and strategy
forward. As a team, we feel optimistic about our ability to execute on our strategy and to take the
company to greater heights on behalf of our stockholders, customers and other stakeholders.
Dan Jablonsky
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2019
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-38228
Maxar Technologies Inc.
Delaware
(State or Incorporation)
83-2809420
(IRS Employer Identification Number)
1300 W. 120th Avenue, Westminster, Colorado
(Address of principal executive offices)
80234
(Zip Code)
303-684-7660
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock par value of $0.0001 per share
Trading Symbols
MAXR
Preferred Stock Purchase Right
—
Name of Each Exchange on Which Registered
New York Stock Exchange
Toronto Stock Exchange
—
Securities registered pursuant to section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes No
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange
Act from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and emerging growth company in Rule 12b-2 of the
Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company ☐ Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
At June 28, 2019, the aggregate market value of the registrant’s common stock, no par value, held by non-affiliates of the registrant was approximately $466
million (based upon the closing sale price of the common stock on June 28, 2019 on The New York Stock Exchange).
As of January 31, 2020, there were 60,059,676 shares of the registrant’s common stock, at $0.0001 par value, outstanding, and zero shares of the registrant’s
Series A Junior Participating Preferred Stock, at par value $0.01 per share, outstanding.
Portions of the registrant’s definitive proxy statement relating to its 2020 annual meeting of stockholders are incorporated by reference into Part III of this Annual
Report on Form 10-K where indicated. The 2020 proxy statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the
fiscal year to which this report relates.
DOCUMENTS INCORPORATED BY REFERENCE
(This page has been left blank intentionally.)
Maxar Technologies Inc.
Annual Report on Form 10-K
For the Fiscal Year Ended December 31, 2019
Table of Contents
PART I
Business
Risk Factors
Properties
Legal Proceedings
Mine Safety Disclosures
PART II
Market for Registrant’s Common Equity, Related Stockholders’ Matters, and Issuer Purchases of
Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
3
15
37
37
38
38
39
39
63
65
126
126
127
PART III
127
Directors, Executive Officers, and Corporate Governance
Executive Compensation
127
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 127
128
Certain Relationships and Related Transactions, and Director Independence
128
Principal Accountant Fees and Services
Exhibits and Financial Statement Schedules
Form 10-K Summary
PART IV
Signatures
128
140
141
Item
Number
1.
1A.
2.
3.
4.
5.
6.
7.
7A.
8.
9.
9A.
9B.
10.
11.
12.
13.
14.
15.
16.
1
Cautionary Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K contains “forward-looking statements” as defined in Section 27A of the United States
Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended
(the “Exchange Act”). Forward-looking statements usually relate to future events and anticipated revenues, earnings,
cash flows or other aspects of our operations or operating results. Forward-looking statements are often identified by the
words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” “may,” “estimate,”
“outlook” and similar expressions, including the negative thereof. The absence of these words, however, does not mean
that the statements are not forward-looking. These forward-looking statements are based on our current expectations,
beliefs and assumptions concerning future developments and business conditions and their potential effect on us. While
management believes that these forward-looking statements are reasonable as and when made, there can be no assurance
that future developments affecting us will be those that we anticipate.
All of our forward-looking statements involve risks and uncertainties (some of which are significant or beyond our
control) and assumptions that could cause actual results to differ materially from our historical experience and our
present expectations or projections. Known material factors that could cause actual results to differ materially from those
contemplated in the forward-looking statements include those set forth in Part I, Item 1A, “Risk Factors” and elsewhere
in this Annual Report on Form 10-K. We caution you not to place undue reliance on any forward-looking statements,
which speak only as of the date hereof. We undertake no obligation to publicly update or revise any of our forward-
looking statements after the date they are made, whether as a result of new information, future events or otherwise,
except to the extent required by law.
*****
Unless stated otherwise or the context otherwise requires, references to the terms “Company,” “Maxar,” “we,” “us,” and
“our” to refer collectively to Maxar Technologies Inc. and its consolidated subsidiaries. Financial information and results
of operations presented in this Annual Report on Form 10-K for the periods prior to January 1, 2019 relate to Maxar
Technologies Ltd., our predecessor, and relate to Maxar Technologies Inc. after January 1, 2019.
2
ITEM 1. BUSINESS
We are a leading provider of solutions in Earth intelligence and space infrastructure. We help government and
commercial customers monitor, understand and navigate the changing planet; deliver global broadband communications
infrastructure; and explore and advance the use of space. Our approach combines decades of deep mission understanding
and a proven commercial and defense foundation to deliver our services with speed, scale and cost effectiveness. Our
stock trades on the New York Stock Exchange and Toronto Stock Exchange under the symbol “MAXR”.
On January 1, 2019, we completed a reorganization of our corporate structure pursuant to which we directly acquired all
of the issued and outstanding shares of Maxar Technologies Ltd. (“Maxar Canada”), and we replaced Maxar Canada as
the publicly-held parent company of the Maxar group (“U.S. Domestication”). Prior to U.S. Domestication, Maxar
Canada reported to securities regulators in both Canada and the U.S., financial statements prepared in accordance with
International Financial Reporting Standards as issued by the International Accounting Standards Board. Upon
completion of the U.S. Domestication, and including the report herein, we have prepared our financial statements in
accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”). The U.S. Domestication marked a
major milestone in Maxar Canada’s long-term objectives to gain a stronger presence in the U.S. market (the “U.S.
Access Plan”), enhance Maxar Canada’s ability to provide and support classified applications for U.S. government
agencies, and fulfill a commitment made in connection with the acquisition of DigitalGlobe, Inc. (“DigitalGlobe”) on
October 5, 2017 (“DigitalGlobe Transaction”).
The DigitalGlobe Transaction created a company that we believe is uniquely positioned to capture growth in the U.S.
and global Earth observation and geospatial services markets given its ability to provide complete, end-to-end space
systems, Earth imagery and geospatial solutions. The DigitalGlobe Transaction leveraged a full range of space-related
capabilities, including communications and Earth observation satellites and robotics, integrated electro-optical imagery,
and advanced data analytics. As a result of the combination, we are able to deliver cloud-based information services that
allow commercial and government customers worldwide to better understand activity across the changing planet.
In the fourth quarter of 2019, we entered into a definitive agreement to sell MDA, our Canadian subsidiary, to a
consortium of private investors led by Northern Private Capital, for C$1 billion subject to customary adjustments and
regulatory approvals (“MDA Transaction”). We expect to use the net proceeds to repay debt and improve our capital
structure to prioritize investments for growth in our core areas of Earth Intelligence and Space Infrastructure. The MDA
Transaction includes all of MDA’s business, encompassing ground stations, radar satellite products, robotics, defense
and satellite components, representing approximately 1,900 employees. As a result of this announcement, this business,
whose results were previously the MDA segment (described below), was classified as discontinued operations in the
Consolidated Financial Statements for all periods presented in this Annual Report on Form 10-K. Refer to Part II, Item
7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on
Form 10-K for further discussion on this transaction, as well as Note 17 - Segment Information and Note 4–
Discontinued Operations in Part II, Item 8 “Financial Statements and Supplementary Data” for additional information
regarding the Company’s segments and discontinued operations. Except as otherwise noted, the description of our
business and financial information reflects our continuing operations. See Note 4, “Discontinued Operations” in Part II,
Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion on
key leadership changes.
The MDA Transaction further executed on our near-term priority of reducing debt. We also believe the transaction will
place us in a better position to take advantage of substantial growth opportunities across Earth Intelligence and Space
Infrastructure categories.
Segments
On January 13, 2019, Mr. Daniel Jablonsky was appointed as the President and Chief Executive Officer of Maxar. Refer
to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this
Annual Report on Form 10-K for further discussion on key leadership changes.
3
In connection with Mr. Jablonsky’s appointment in January 2019 and President and Chief Executive Officer of Maxar,
our Chief Operating Decision Maker (“CODM”) also changed. During 2019, Mr. Jablonsky rolled out a transformative
plan to integrate, stabilize, and position Maxar for future growth. As part of this plan, we streamlined our operating
structure to reflect a more efficient model and integrated our existing business units so that they are more aligned and
collaborative. This resulted in a change in the evaluation of our business by our CODM, which was completed in the
fourth quarter of 2019. The changes to our segments align our business units to our future growth strategy. The CODM
reviews revenue and Adjusted EBITDA based on three reportable segments: Earth Intelligence, Space Infrastructure and
MDA. In connection with the MDA Transaction discussed above, the MDA segment was classified as discontinued
operations as of the year ended December 31, 2019. Comparative historical segmented information has been restated.
Refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in
this Annual Report on Form 10-K for detailed disclosure of revenues and Adjusted EBITDA by segment.
We serve our customers and organize our businesses through the following three reportable segments:
• Earth Intelligence—a global leader in high-resolution Earth imagery and radar data sourced from our own
advanced satellite constellation and third-party providers to our government and commercial customers, as
well as a provider of advanced geospatial information, applications, and analytic services to national
security and commercial customers.
• Space Infrastructure—a supplier of space-based and ground-based infrastructure, robotics, components
and information solutions to government agencies, and satellite operators.
• MDA—a supplier of advanced surveillance and intelligence solutions, defense and maritime systems, radar
geospatial imagery, space robotics, satellite antennas, and communication subsystems.
The following is a description of our business segments. As part of the description, we include a discussion on some of
the segment’s notable announcements and achievements in 2019.
Earth Intelligence
We are a global leader in high resolution space-based optical and radar imagery products and analytics. We launched the
world’s first high resolution commercial imaging satellite in 1999 and currently operate a four-satellite imaging
constellation, providing us with a 110 petabyte historical ImageLibrary of the highest-resolution, commercially available
imagery. Our imagery solutions provide customers with timely, accurate and mission-critical information about our
changing planet and support a wide variety of government and commercial applications, including mission planning,
mapping and analysis, environmental monitoring, disaster management, crop management, oil and gas exploration and
infrastructure management. Our principal customers in the Earth Intelligence segment are U.S. and other international
government agencies (primarily defense and intelligence agencies), as well as a wide variety of commercial customers in
multiple markets. We are a market leader in the commercial satellite Earth observation industry.
We also provide geospatial services that combine imagery, analytic expertise and innovative technology to deliver
intelligence solutions to customers. Our cleared developers, analysts, and data scientists provide analytic solutions that
accurately document change and enable geospatial modeling and analysis that help predict where events will occur. Our
primary customer of geospatial services is the U.S. government, but we also support intelligence requirements for other
U.S. allied governments, global development organizations and commercial customers. The Earth Intelligence segment
includes the financial results of the legacy imagery and services segments, excluding the legacy Canadian radar imagery
business which is part of the MDA segment.
Customers can purchase specific images from our imagery archives or place custom orders to task our satellites for a
specific area of interest. We process our imagery to varying levels according to our customers’ specifications and deliver
4
our products using the distribution method that best suits our customers’ needs. We offer a number of imagery products,
including:
• Orthorectified imagery—includes radiometric, geometric and topographic correction. Topographic
correction accounts for terrain and projects images onto the Earth as they would be seen by the human eye.
• Mosaic products—powered by our proprietary image processing techniques, our mosaic products deliver
high-quality imagery through thousands of combined images that maximizes contrast, sharpness, and
clarity. We also sell mosaic products that deliver regular updates of images of 6,000 major metropolitan
areas.
• Elevation products—elevation and terrain information is foundational to mapping and understanding the
surface of our planet. We offer stereo imagery, which is when the satellite sensor acquires multiple images
of the same location taken from different angles, allowing our customers to create three-dimensional
visualization and digital elevation models.
•
Information products—new vector information products are derived from our imagery archive using
machine learning without additional processing.
• SecureWatch—a subscription offering that provides customers online access to an extensive imagery and
geospatial intelligence platform and addresses a broad spectrum of uses.
We also provide certain customers the ability to directly task and receive imagery from our satellites within local and
regional geographic boundaries of interest through our Direct Access Program (“DAP”). We sell these customers ground
system infrastructure, enabling them to download and process imagery directly from our satellites and access to our
satellite and maintenance services. The DAP is designed to meet the enhanced information and operational security
needs of a select number of international defense and intelligence customers and certain commercial customers. Our
Rapid Access Program offers customers access to our satellite constellation, while we own and manage the ground
infrastructure.
We provide advanced geospatial information, applications, and analytic services to national security and commercial
customers through our imagery and other sources of geospatial data such as low-resolution satellite imagery, weather
and oceanographic data, elevation, and social media. We deploy these services through various platforms, including
Amazon Web Services and NVIDIA. Our 65 active patents and SBIR Phase III data rights support the unique technology
we provide to our customers.
As of December 31, 2019, we operated a constellation of four in-orbit and fully-commissioned satellites: GeoEye-1,
WorldView-1, WorldView-2, and WorldView-3. Our annual collection capacity is approximately 1.4 billion square
kilometers, and we have collected approximately 110 petabytes of imagery over our history (referred to as our
“ImageLibrary”), which is available for use.
5
The following table summarizes the primary characteristics of the in-orbit and fully-commissioned satellites in our
constellation as of December 31, 2019:
Satellite
Launch Date
Expected End
of Depreciable
Life
WorldView-3 August 2014
Q1 2026
WorldView-2
WorldView-1
GeoEye-1
October
2009
September
2007
September
2008
Q4 2022
Q4 2021
Q3 2021
Best Ground Resolution
31-centimeters black and white, or color 1.24-meter
multi-spectral
46-centimeters black and white, or color 1.84-meter
multi-spectral
50-centimeters black and white
41-centimeters black and white, or color 1.64-meter
multi-spectral
Orbital Altitude
(kilometers)
617
770
496
681
Our satellites have advanced technical capabilities, such as size of collection area, collection speed, revisit time,
resolution, accuracy and spectral diversity.
In December 2018, our WorldView-4 satellite experienced a failure in its control moment gyros, preventing the satellite
from collecting imagery. We received insurance proceeds of $183 million related to our loss of WorldView-4 during the
second quarter of 2019. Refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” within this Annual Report on Form 10-K for additional discussion of the WorldView-4 loss.
We procure insurance to protect us from the risks associated with our satellite operations, including the partial or total
impairment of the functional capacity of the satellite. We insure satellites in our constellation to the extent that insurance
is available at acceptable premiums. As of December 31, 2019, we maintained the following insurance coverage on our
in-orbit and fully-commissioned satellite constellation:
Satellite
WorldView-3
WorldView-2
WorldView-1
GeoEye-1
Policy Period
10/2019-10/2020
10/2019-10/2020
10/2019-10/2020
10/2019-10/2020
$
Coverage
(in millions)
255
220
220
38
During 2019, the Earth Intelligence segment announced an agreement with Vulcan for the use of our SecureWatch
subscription products to develop solutions to Vulcan’s impact projects addressing illegal fishing. During the second
quarter, we signed a one-year study contract with the U.S. National Reconnaissance Office (“NRO”) that will enable the
United States government to gain a greater understanding of Maxar’s current and future commercial imagery
capabilities. We were also awarded HERE Technologies’ 2019 Americas Region Most Innovative Supplier Award. In
the third quarter, we were awarded a four-year contract with the U.S. National Geospatial-Intelligence Agency (“NGA”)
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for our Global Enhanced Geospatial Delivery service, which allows us to continue providing more than a quarter million
U.S. government users with access to this program. Lastly, in the fourth quarter, we were selected by the U.S. Air Force
to develop Red Wing, an automated cloud-based geospatial intelligence analysis architecture for the Air Force Research
Laboratory.
Our major existing and potential competitors for our Earth Intelligence business include commercial satellite imagery
companies, state-owned imagery providers, aerial imagery companies, free sources of imagery, unmanned aerial
vehicles, and companies that provide geospatial analytic information and services to the U.S. government, including
defense prime contractors.
We compete on the basis of the technical capabilities of our satellites, such as size of collection area, collection speed,
revisit time, resolution, accuracy and spectral diversity; satellite availability for tasked orders; the size,
comprehensiveness and relevance of our ImageLibrary; distribution platform and tools that enable customers to easily
access and integrate imagery; value-added services, including advanced imagery production and analysis; timeliness and
ready availability of imagery products and services that can be deployed quickly and cost-effectively; and price.
Space Infrastructure
We are a leading provider of Space Infrastructure. We design, build, integrate and test solutions for space-based
communications satellites, on-orbit servicing, robotic assembly, and space exploration. We address a broad spectrum of
needs for our customers, including mission systems engineering, product design, spacecraft manufacturing, assembly
integration and testing. We provide advanced, reliable, and affordable spacecraft that enable our commercial customers
to deliver valuable global services, and we are successfully partnering with the U.S. government in new space
opportunities. The Space Infrastructure segment includes the financial results of our legacy Space Solutions business
(previously referred to as Space Systems/Loral LLC or SSL) which was included within our legacy Space Systems
segment.
We have built and launched more than 280 spacecraft with a combined approximate 2,600 years of on-orbit service. We
have more than 30 years of experience in space robotics, having developed all five robotic arms on the Mars landers and
rovers.
Our products include:
• Communications and imaging satellites and payloads;
• Space platforms for power, propulsion, and communication;
• Satellite ground systems and support services;
• Space-based and airborne remote sensory solutions;
• Space robotics; and
• Defense systems.
We have 92 satellites currently on orbit with 99.9998% availability.
The Space Infrastructure manufacturing capability of satellite vehicles (commonly referred to as a “satellite bus” or a
“bus”) consists of the heritage 1300 bus (which spans a broad capability ranging from 1300 to over 6500 kg) and the
smaller Legion-class bus 9which spans a range from 500 to 1300 kg). Our Legion-class bus involves a new modular
architecture with mission-specific subsystems selectable from our wide range of heritage and newly developed products.
The 1300 bus has three decades of on-orbit heritage and is highly versatile, serving a wide range of missions, orbits and
customers. The 1300 bus is the world’s most popular Geosynchronous Equatorial Orbit (“GEO”) satellite, designed to
accommodate evolutionary technology advances. It was one of the first spacecraft platforms to provide solar electric
propulsion, or SEP, and has been used to demonstrate next-generation technologies including Q/V-band, photonics and a
payload orbital delivery system, or PODS, that brings small free-flying spacecraft to GEO. The largest application class
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for which the 1300 bus has historically been utilized is commercial geostationary communication satellites and recently
as a host for NASA payloads, such as TEMPO (defined below). Our 1300 bus is in use today for a broad range of
television distribution services from smaller regional television satellites to the high-capacity, high-power satellites used
by direct-to-home television distributors. A more recently emerging and growing application for commercial
geostationary communication satellites is the delivery of data-centric applications (such as consumer broadband,
in-flight communication, maritime and 4G/5G cellular backhaul) via high-capacity spot beam satellites commonly
referred to as “high throughput satellites” (or “HTS”). Space Infrastructure introduced the first HTS satellite in 2005,
which used the 1300 bus.
To address the rising demand for smaller satellites and multiple-satellite low Earth orbit (“LEO”) and medium Earth
orbit (“MEO”) constellations used for imaging, sensing and communication applications, we are developing our
Legion-class bus, which will first be used for the next-generation WorldView Legion (“WV-Legion”) constellation for
our Earth Intelligence business. We believe the Legion bus will be effective for government and commercial applications
that require a multiple-satellite constellation of identical satellites produced in a cost-efficient manner.
Other satellite manufacturers have developed or are developing digital payloads which increase flexibility for
geostationary satellites in circumstances where demand is not predictable. In circumstances when our customers have
expressed interest in this technology, we have teamed with providers of this technology to enhance our offering. Space
Infrastructure also builds advanced robotic and servicing systems for military and infrastructure applications. Our
robotics technologies have been used on the Mars landers and rovers. We work with NASA on projects such as Restore-
L, a robotic spacecraft equipped with the technologies, tools, and techniques needed to extend satellites’ lifespans, which
include refueling and relocating an existing U.S. government satellite. As noted above, our robotic technologies also
include developing all five robotic arms on the surface of Mars. Additionally, we are currently developing in-orbit
assembly robotic technologies via the Space Infrastructure Dexterous Robot (“SPIDER”) (formerly Dragonfly) program
with NASA. To achieve further cost-effective scalability across a spectrum of mission applications, we are further
developing our Legion-class modular architecture. We believe this architecture provides cost-effective customization
using standard subsystems.
During 2019, the Space Infrastructure segment was selected by NASA for the Power Propulsion Element of the Lunar
Gateway program, utilizing the 1300-class bus. In January 2020, we announced that we were selected by NASA to build
and fly SPIDER. We also announced plans to work with the West Virginia Robotic Technology Center in its proposal to
perform independent verification of operations and deploy SPIDER, an autonomous robotic in-space assembly system.
We will fly the first SPIDER system on NASA’s Restore-L spacecraft which will demonstrate technologies for refueling
a satellite in LEO and assembling a large Ka/V band antenna. We are currently building the spacecraft bus for Restore-L,
which is based on the 1300-class platform, as well as the two robotic arms that perform the refueling part of the mission.
Additionally, we began production on a Legion class geostationary communications satellite with a digital processor for
Ovzon, a company that provides mobile broadband connectivity in underserved regions. We were also selected by
NASA to integrate and fly their Tropospheric Emissions Monitoring of Pollution (“TEMPO”) instrument on a
commercial GEO satellite. In the fourth quarter, we delivered the robotic Sample Handling Assembly for NASA’s Mars
2020 rover. Lastly, we successfully launched PSN VI with two co-passenger payloads, EUTELSAT 7 and Intelsat 39
during the year.
Our principal customers in the Space Infrastructure segment are commercial satellite operators and government agencies
worldwide.
Our primary competitors for satellite manufacturing contracts are: The Boeing Company, Lockheed Martin Corporation,
and Northrop Grumman Corporation in the United States; Thales S.A. and Airbus Defence and Space, a subsidiary of the
Airbus Group, in Europe; and Mitsubishi Electric Corporation in Japan. We sell in a highly competitive market. In
addition, many of our competitors are larger and have greater resources. We may also face competition in the future
from emerging low-cost competitors in India, Russia and China.
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MDA
We are a leading provider of Space Infrastructure in Canada. We develop and deliver advanced surveillance and
intelligence solutions, defense and maritime systems, radar geospatial imagery, space robotics, satellite antennas, and
communication subsystems. The MDA segment includes the financial results of the MDA and legacy radar imagery
business. As discussed above, in connection with the MDA Transaction, the financial results from this segment were
classified as discontinued operations for all periods presented in this Annual Report on Form 10-K.
We have a long history in space robotics, having developed the Canadarms for NASA’s Space Shuttle program, and
Canadarm2, which is currently in service on the International Space Station.
Our products include:
• Communications and imaging satellite payloads;
• Satellite ground systems and support services;
• Space-based and airborne remote sensory solutions;
• Space robotics;
• Radar satellite solutions based on three generations of proven radar satellite systems for Canada;
• Market-leading satellite merchant antenna design and manufacturing; and
• Defense systems.
MDA has long been the leader in the Canadian space business. Our MDA business develops and delivers advanced
surveillance and intelligence solutions, defense and maritime systems, radar geospatial imagery, space robotics, satellite
antennas, and communication subsystems.
As the operator for the RADARSAT-2 satellite, we are one of the largest radar information providers worldwide. We
also provide geospatial information and monitoring services derived from radar imagery and other sources to customers
in defense, weather, transportation, energy and mining sectors.
During 2019, the MDA segment signed a contract with Lockheed Martin for the Canadian Surface Combatant program
to provide the electronic warfare suite. During the second quarter, we successfully launched the RADARSAT
constellation mission (“RCM”) satellites. During the third quarter, we were awarded two contracts from the Canadian
Space Agency for work on Phase A of the robotic interfaces for Canadarm3 on the NASA-led Gateway. Additionally,
we were selected to design and manufacture advanced space-based L-band navigation antennas as part of a hosted
payload on the MEASAT-3d satellite, which is currently being built by Airbus. These navigation antennas will be
integrated on a hosted payload for South Korean KTSAT that will support the Korea Augmentation Satellite System
(“KASS”).
Our principal customers in the MDA segment are the Canadian government and other government and commercial
customers worldwide. The competitors in the MDA segment are similar to those in our Earth Intelligence and Space
Infrastructure segments.
Industry Overview
Large and Growing Addressable Market
We believe that there is potential for growth among three key components of our addressable market: the U.S.
government, other governments, and commercial customers. For both the U.S. and other governments, drivers of growth
include persistent global security threats, resilient defense budgets, continued demand for high-quality imagery and
value-added services and a focus on space as an investment. We believe that the U.S. government is interested in
expanding the use of commercial alternatives to owned assets and that other governments present an opportunity for
growth. We seek to align our products and services with the U.S. Department of Defense (“DoD”)’s National Defense
Strategy needs, as well as growing international defense and intelligence demand. For civil customers, in particular
NASA, growth is being driven by rising budgets to support space exploration programs such as Artemis and Earth
science projects. For commercial customers, drivers of growth include strong demand for imagery due to new uses cases
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enabled by artificial intelligence and machine learning, space-based remote sensing, GEO replacement demand, and
LEO communications programs.
Diverse Solutions for Diverse End-Markets
While traditionally spending in space has been dominated by military defense programs and the communications
industry, the proliferation of technology and cheaper access to space has led to a diversification in end-market users.
Machine learning, artificial intelligence (“AI”) and “big data” have given rise to multiple use cases across industries,
such as oil & gas, agriculture, transportation, insurance, finance and non-governmental organizations. Concurrently,
geopolitical competition in space as a contested domain is leading to further investment by global militaries. We have
evolved with this changing environment to serve a multitude of customers.
Markets in Which We Operate
Our Earth Intelligence, Space Infrastructure, and MDA Segments operate in both the Earth Observation and Satellite
Manufacturing markets.
Earth Observation Market
The Earth Observation, or EO, market includes the collection and processing of optical and non-optical imagery data of
the Earth from space. Specifically, the market is segmented into Data, Value-Added Services (“VAS”), Information
Products and Big Data Analytics. The Data segment consists of raw imagery transmitted from the satellite to the ground
station and products, such as stereo imaging and basic corrections (radiometric and geometric). VAS includes processing
applications that transform raw data into information. Information Products integrates other datasets into the imagery
through layering or data fusion (such as traffic information and street names). Finally, Big Data Analytics includes
several of the attributes of Information Products and extracts statistical information not apparent in the base data by
analyzing a given area over a period while monitoring changes in environments.
The EO market serves customers in a variety of sectors, including defense & intelligence, energy & natural resources,
industrials, managed living resources (such as agriculture and forestry), public authorities, services (such as finance,
insurance, news and media), and weather. Providers generally compete on resolution, revisit frequency, delivery (cloud
versus traditional) and pricing.
Northern Sky Research forecasts the EO market is entering a period of strong growth, largely driven by increased
demand for Information Products and Big Data Analytics with continued strength in the North American market and
government & military end-markets. Northern Sky Research projects that the EO market will grow from $3.3 billion in
total revenue in 2018 to $7.2 billion in total revenue in 2028, an expected 8% compound annual growth rate (“CAGR”).
Additionally, with the advancement of AI solutions to power EO data analysis, Euroconsult believes there is potential
for the VAS portion of the EO market to grow to $12.1 billion by 2026. It is increasingly likely that value in the EO
market will be driven by AI-enabled data analytics.
Satellite Manufacturing Market
The satellite industry has undergone a significant change with the proliferation of LEO satellites. LEO satellites are
cheaper to launch, have higher revisit rates and have less latency in their communications, but are also unable to carry
heavier and more capable sensor suites. Also, as space becomes increasingly contested, a shift is expected towards LEO
constellations to enhance survivability of the constellation network. On the other hand, GEO satellites cover more area
from a higher vantage point and carry more advanced sensor or communication suites. Due to their greater distance from
earth, however, there is increased latency. MEO satellites attempt to blend the benefits of both LEO and GEO satellites.
In addition to altitude class, satellites are classified by functions, such as communications or earth observation.
According to Euroconsult, satellite manufacturing for vehicles over 50kg is expected to experience a three-fold increase
in the number of satellites over the period of 2017 - 2026 compared to the previous decade. This represents a market of
$304.0 billion for manufacturing and launch services. While most launches will be LEO, Euroconsult anticipates 350
10
GEO satellites, including 140 commercial satellites, will be manufactured and launched over the same period. This
represents a market of $103.0 billion for manufacturing and launch services over the period of 2018-2027.
LEO proliferation is expected to greatly increase access to space, thus enabling new commercial customers across
diversified industries including oil & gas, insurance, agriculture, and asset management firms, as well as nonprofit
organizations, to benefit from satellite imagery.
Government Investment in Space Programs
With more than half of our revenues coming from U.S. government customers, we expect that our Space Infrastructure
and Earth Intelligence segments will benefit from growing defense and Space Infrastructure budgets. The proliferation of
space-based intelligence, surveillance and reconnaissance and communications is expected to drive increased
government investments in the sector through the mid-2020’s.
Global
Euroconsult projects that world governments are in the early stages of a 10-year growth cycle for space programs, with
spending increasing from $70.9 billion in 2018 to $84.6 billion in 2025, or an expected 3% CAGR.
United States
In the United States, there is a concerted effort by the government to accelerate space investment. According to the
Congressional Research Service, the President’s Fiscal Year 2020 budget request of $14.1 billion for the National
Security Space (“NSS”) budget represents a 14% increase in funding over the Fiscal Year 2019 enacted figure of
$12.3 billion. The NSS, the newest of 12 Major Force Programs in the DoD, was created in 2016. Additionally, the DoD
has been undergoing a space enterprise reorganization. On December 20, 2019, with the enactment of the Fiscal Year
2020 National Defense Authorization Act, the U.S. Space Force (“USSF”) was established. The mission of the USSF is
to organize, train, and equip space forces in order to protect the U.S. and allied interests in space and to provide space
capabilities to the joint force.
The NSS budget generally excludes funding for the NRO and NGA. Specific funding levels for these organizations,
which are long-term historical customers, are generally classified. However, per the Senate Select Committee on
Intelligence, the aggregate funding requests for the National Intelligence Program (“NIP”) were $57.7 billion in 2017,
$59.9 billion in 2018 and $62.8 billion in 2019. The NRO and NGA are included in the NIP.
Furthermore, the President’s Fiscal Year 2020 NASA budget further highlights an effort by the government to invest in
space exploration and development. The budget provides $21 billion, including $10.7 billion to continue building the
key components of the Exploration campaign that will send astronauts to the Moon and beyond, including the Lunar
Gateway.
Growth Strategy
Our vision is to hold market leading positions in each of the markets we serve. We aim to achieve this by applying
innovative technologies and capabilities that provide value to our customers across their entire value chain, including
components, subsystems, systems, data and services. Specific elements of our strategy across our two segments include:
Earth Intelligence
Driving revenue growth through improvements in our products—we seek to improve our Earth intelligence products
with WV-Legion by productizing technologies and derivative content developed in support of individual customer
contracts, such as using more artificial intelligence and machine learning to extract features, detect objects, and detect
change in our satellite imagery and complementary content. WV-Legion will be a fleet of six high performing satellites
for which our Space Infrastructure segment is acting as prime contractor. With a planned launch in 2021, we expect that
WV-Legion, in addition to our current constellation, will revisit rapidly changing areas more than 15 times per day, an
11
increase from four times per day currently, which more than triples both our capacity to collect 30 cm imagery and our
overall capacity in high-demand areas. The revisit rate and increase in capacity enables a clearer understanding of
on-ground conditions, allowing for more real-time, actionable analysis to deliver insights on rapidly changing
environments and populations, while providing for more frequent monitoring for defense and intelligence applications,
enhanced emergency responsiveness and maritime surveillance, among other applications. WV-Legion is planned to be
compatible with our global infrastructure and access programs. We believe we provide imagery with five times the
information content (tied to resolution) of our nearest competitor and over ten times the information content and better
than two times the accuracy of the nearest smallsat competitor. We believe we will be able to provide even greater
quality imagery and with higher revisit rates upon deployment of our WV-Legion constellation. We have developed
technology used to enhance the quality and usability of imagery (e.g. eliminate atmospheric distortions, increase
positional accuracy, improved interpretability, etc.), create information derivatives (e.g. road vectors, material types,
land classification, etc.), fuse multiple types of content (internet of things, optical imagery, synthetic aperture radar
imagery, vectors, social media, etc.), detect change, determine meaningful correlations between events and information
in content analyzed, determine and model patterns of life, and other geospatial processing technologies. We believe that
creating standard products using this technology will grow our product-based revenue with customers in the technology,
defense and intelligence, civil government, and global development organization sectors.
Expanding our relationship with the U.S. government—the U.S. government is the largest customer of our Earth
Intelligence segment through the EnhancedView Follow-On (the “EnhancedView Contract”) and Global-EGD
programs, and various classified and unclassified contract vehicles. Demand for geospatial intelligence and services
continues to grow given the geopolitical environment and the confluence of high-performance computing and machine
learning algorithms that allow for insight to be extracted from ever greater levels of data being produced by EO sensors
and national and commercial satellite assets. The U.S. government has expressed interest in increasingly relying on
commercial partners to provide geospatial data given cost affordability and advances in technology that provide high
quality imagery. We seek to grow our business with the U.S. government by leveraging the investments we have made
across our capability set, including in machine learning and AI, and our strong record of historic performance.
Growing our installed base and penetration of international defense and intelligence customers—we currently
provide service to U.S.-allied nations through our SecureWatch, Rapid Access, and Direct Access products. These
customers use our imagery in their civil and intelligence related missions. Our imagery and services are either
complimentary to national assets owned by these countries, or in some cases defer the need for a country to own and
operate national assets. We believe there are many prospective customers that have both the mission need and budget for
our services which we seek to add to our installed base. We also seek to further penetrate existing customers through the
provision of additional data and services. Lastly, we believe there are opportunities to provide our services to U.S.-allied
nations who might seek a compliment to national capabilities in geospatial analytics. Our strategy focuses on those
countries that currently have deep and long-standing relationships with our Earth Intelligence segment and other close
U.S. allies.
Growing with and expanding our installed base among commercial customers—we have over 400 commercial
customers that use our data in their products and applications across a variety of industries including technology,
telecom, transportation, mining, and oil and gas. The confluence of high-performance computing and machine learning
algorithms are allowing for insights to be extracted from ever greater levels of data, which in turn is driving innovation
across our customer base. We expect this trend to continue, and we seek to grow with our existing customers as well as
to grow our installed base by leveraging our market leading imagery capabilities. Furthermore, we believe our
capabilities in machine learning, AI, and products that allow greater insights to be more easily extracted from large
amounts of geospatial data will position us to sell additional solutions to our commercial customers.
Providing products based on machine learning and artificial intelligence—we are developing our capabilities in
machine learning and AI to extract greater insight from the geospatial data available to us and our customers. We are
also working on the productization of our capability set across geospatial analytics and services to facilitate the
penetration of international government and commercial markets.
Delivering 3D products to global defense, intelligence and commercial customers – through Vricon, Inc., our joint
venture with Saab AB, we are expanding the market demand for global scale 3D products. 3D products allow decision
12
makers to understand their operational environment in 3D – developing new insights that enable them to make better,
faster decisions. We see a growing opportunity to sell 3D data and software products to the military and intelligence
community to support virtual training environments and provide better information to the warfighter. U.S. Defense and
Intelligence is seeking solutions to support intelligence fusion, maneuver, and other mission requirements. We also see
tremendous opportunity with our commercial customers as they look for more accurate geodata to improve their
products. The current investment in 5G networks and Internet of Things provides a unique opportunity to deliver
network operators a better data solution to improve their future networks. Additional use cases continue to grow as 3D
products and precision data sets become better understood.
Space Infrastructure
Driving revenue through improvement in our products—we are developing differentiated capabilities that are designed
for future space exploration, including propulsion, power, and robotics. We believe these elements will be critical to
helping our customers operate in an increasingly contested space environment and in achieving successful space
exploration missions. We are also developing our satellite architectures and manufacturing capabilities to assure that we
can successfully fulfill both government and commercial customer requirements on future programs. We are also
developing relationships across the supply chain to assure that we can seamlessly provide a broad-breadth of mission
sets to our customers.
Growing our U.S. and international civil exposure—we have a long history with civil space programs dating back to
the Apollo missions. Current NASA programs include the Power Propulsion Element for the Lunar Gateway, Restore-L,
Psyche TEMPO and SPIDER. We have also provided every robotic arm on NASA’s Mars rovers. We seek to leverage
our investments and expertise in propulsion, power, and robotics, as well as our strong legacy of performance, when
pursuing further civil work in the U.S. and abroad.
Deepening our penetration of U.S. national programs—to date, we have won several classified and unclassified study
contracts with U.S. defense and intelligence customers. We seek to further penetrate these markets by utilizing our
flexible satellite architectures, design and engineering capabilities, and commercial business practices—all of which we
believe can create compelling value propositions.
Providing flexible platforms to our commercial customers—we currently provide components, sub-systems, and
system architectures to our customers for communications and EO satellites in LEO, MEO and GEO orbits. In
communications, we offer flexible platforms across various architecture platforms and mission payloads from standard
analog to high through-put. In EO, we also offer flexible solutions across various architecture platforms and mission
payloads, including electro-optic. Our goal is to be positioned well to compete for future single satellite or full
constellation build orders from our customers, across a wide range of the architectures, payloads, or Earth orbit chosen to
fulfill mission requirements.
Environmental Regulations
Our operations are regulated under various federal, state, local and international laws governing the environment,
including laws governing the discharge of pollutants into the soil, air and water, the management and disposal of
hazardous substances and wastes, and the cleanup of contaminated sites. We have infrastructure in place to ensure that
our operations are in compliance with all applicable environmental regulations. We do not believe that the costs of
compliance with these laws and regulations will have a material adverse effect on our capital expenditures, operating
results or competitive position. The imposition of more stringent standards or requirements under environmental laws or
regulations or a determination that we are responsible for the release of hazardous substances at our sites could result in
expenditures in excess of amounts currently estimated to be required for such matters. We have been designated, along
with numerous other companies, as a potentially responsible party for the clean-up of several hazardous waste sites.
Based on available information, we do not believe that any costs incurred in connection with such sites will have a
material adverse effect on our financial condition, results of operations, capital expenditures or competitive position.
There can be no assurance that additional environmental matters will not arise in the future, or that costs will not be
incurred with respect to sites at which no problem is currently known.
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U.S. Government Contracts
All of our reportable segments have contracts with various governmental entities, which are concentrated in a small
number of primary contracts. The U.S. government may terminate or suspend our contracts, including the
EnhancedView Contract with the U.S. government in our Earth Intelligence segment, at any time with or without cause.
Additionally, any changes in the size, scope or term of the EnhancedView Contract could impact our satellite
replenishment strategy and our ability to repay or refinance our long-term debt. Although our U.S. government contracts
generally involve fixed annual minimum commitments, such commitments, along with all other contracts with the U.S.
government, are subject to annual Congressional appropriations and the federal budget process, and as a result, the U.S.
government may not continue to fund these contracts at current or anticipated levels.
Intellectual Property
We own a substantial intellectual property portfolio that includes many U.S. and foreign patents, as well as many U.S.
and international trademarks, service marks, domain names and copyrights. We actively pursue internal development of
intellectual property. In addition to our patent portfolio, we own other intellectual property such as unpatented trade
secrets, know-how, data, and software. Additionally, we rely on licenses of certain intellectual property to conduct our
business operations, including certain proprietary rights to and from third parties. While our intellectual property rights
in the aggregate are important to our operations, we do not believe that any particular trade secret, patent, trademark,
copyright, license or other intellectual property right is of such importance that its loss, expiration or termination would
have a material effect on our business.
Foreign and Domestic Operations
In the year ended December 31, 2019, approximately 25% of our revenue was derived from non-U.S. sales, and we
intend to continue to pursue international contracts. International operations are subject to certain risks, such as: changes
in domestic and foreign governmental regulations and licensing requirements; deterioration of relations between the U.S.
and a particular foreign country; increases in tariffs and taxes and other trade barriers; foreign currency fluctuations;
changes in political and economic stability; effects of austerity programs or similar significant budget reduction
programs; potential preferences by prospective customers to purchase from local (non-U.S.) sources; and difficulties in
obtaining or enforcing judgments in foreign jurisdictions.
In addition, our international contracts may include industrial cooperation agreements requiring specific in-country
purchases, investments, manufacturing agreements or other financial obligations, known as offset obligations, and
provide for penalties in the event we fail to meet such requirements.
Raw Materials
Our businesses are generally engaged in limited manufacturing activities and have minimal exposure to fluctuations in
the supply of raw materials. For those businesses that manufacture and sell products and systems, most of the value that
we provide is labor oriented, such as design, engineering, assembly and test activities. In manufacturing our products, we
use our own production capabilities as well as a diverse base of third-party suppliers and subcontractors. Certain aspects
of our manufacturing activities require relatively scarce raw materials; occasionally, we have experienced difficulty in
our ability to procure raw materials, components, sub-assemblies and other supplies required in our manufacturing
processes.
Research and Development
We have a history of investing in development of technological advancements in our field of aerospace. We have both
internally and externally funded research and development projects. Our current and future business is dependent on
developing new enhancements and technology that go into our existing and future products and services. Our annual
research and development expenses from continuing operations were $10 million, $88 million, and $62 million for the
year ended December 31, 2019, 2018 and 2017, respectively. We intend to continue our focus on research and
development and product and service enhancements as a key strategy for innovation and growth. One of our current
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areas of focus is our development of the WV-Legion program, a capital project, and other new offerings within our Earth
Intelligence segment, including 3D technology through our Vricon joint venture. Our efforts will continue to be directed
into fields that we believe offer the greatest opportunities for long-term growth and profitability.
Backlog
A summary of our backlog is set forth in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition
and Results of Operations – Backlog” of this Annual Report on Form 10-K.
Business Seasonality
We have not historically experienced seasonality in our operations.
Financial and Other Business Information
See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this
Annual Report on Form 10-K for financial information, including revenues and earnings from operations, for each of our
reportable segments.
Employees
As of December 31, 2019, we had approximately 5,800 employees operating in the United States, Canada, and
internationally. Upon the closing of the MDA Transaction we will have approximately 3,900 employees.
Available Information
Our website can be accessed at http://www.maxar.com. The website contains information about us and our operations.
Through a link on the Investor Relations section of our website, copies of our filings with the U.S. Securities and
Exchange Commission (“SEC”), including any Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K, Proxy Statements and Forms 3, 4 and 5 filed on behalf of directors and executive officers,
and amendments to each of those reports and statements can be viewed and downloaded free of charge as soon as
reasonably practicable after the reports have been filed or furnished with the SEC. The information on our website is not
incorporated by reference and is not a part of this Annual Report on Form 10-K. Additionally, our reports, proxy and
information statements, and other information filed with the SEC are available on the SEC’s website at
http://www.sec.gov or at the SEC Public Reference Room in Washington, D.C. Information regarding the Public
Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. Our reports, proxy and information
statements, and other information filed can also be found under our SEDAR profile at www.sedar.com.
ITEM 1A. RISK FACTORS
We operate in a changing global environment that involves numerous known and unknown risks and uncertainties that
could materially adversely affect our business, financial condition and results of operations. The occurrence of any of the
following risks could materially and adversely affect our business, financial condition, prospects, results of operations
and cash flows. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial
may also materially adversely affect our business, prospects, financial condition, results of operations and cash flows.
Risks Related to Our Business
The future revenue and operating results of the Space Infrastructure segment are dependent on our ability to
generate a sustainable order rate for the satellite and space manufacturing operations and develop new technologies
to meet the needs of our customers or potential new customers.
The Space Infrastructure segment’s financial performance is dependent on its ability to generate a sustainable order rate
for its satellite and space manufacturing operations. This can be challenging and may fluctuate on an annual basis as the
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number of satellite construction contracts awarded varies and in 2018 there was a substantial step down in the total
number and dollar value of geostationary communication satellite contracts awarded compared to such historical
averages prior to 2015. Many satellite operators in the communications industry have continued to defer new satellite
construction awards to evaluate geostationary and other competing satellite system architectures and other market
factors. If we are unable to win new awards or execute existing contracts as expected, our business, results of operations
and financial position could be further adversely affected.
The cyclical nature of the commercial satellite market could negatively impact our ability to accurately forecast
customer demand. The markets that we serve may not grow in the future and we may not be able to maintain adequate
gross margins or profits in these markets. Specifically, sales of the 1300 bus have historically been important to our
results and there is no assurance that this market will continue to grow or demand levels will increase, nor is there
assurance that the market for the Legion-class bus will offset any decreases in the market for the 1300 bus or provide
future growth. Our growth is dependent on the growth in the sales of services provided by our customers, our customers’
ability to anticipate market trends, and our ability to anticipate changes in the businesses of our customers and to
successfully identify and enter new markets. If we fail to anticipate such changes in demand, our business, results of
operations and financial position could be adversely affected.
As part of our U.S. Domestication we believe that we will continue to be capitalize on projected benefits within the
Space Infrastructure segment. These benefits include anticipated growth within our U.S. government customer base as
well as diversifying into national and civil missions. The failure to do so may have a material adverse effect on our
business, results of operations and financial condition.
The satellite manufacturing industry is characterized by development of technologies to meet changing customer
demand for complex and reliable services. Our systems embody complex technology and may not always be compatible
with current and evolving technical standards and systems developed by others. Failure or delays to meet or comply with
the requisite and evolving industry or user standards could have a material adverse effect on our business, results of
operations and financial condition.
We may be unable to successfully complete the sale of MDA.
On December 29, 2019, we entered into a Stock Purchase Agreement (“MDA Agreement”) with Neptune Acquisition
Inc., a corporation existing under the laws of the Province of British Columbia and an affiliate of Northern Private
Capital Ltd (“MDA Purchaser”) that provides for, among other things, the MDA Purchaser to purchase the MDA
business, our Canadian subsidiary, from us for an aggregate purchase price of approximately C$1.0 billion. As the
purchase price is in CAD this exposes us to foreign currency fluctuation risk. In connection with the MDA Agreement,
on February 11, 2020, we entered into deal-contingent foreign currency hedge arrangements, with no cash cost, to hedge
50% of the Canadian dollar denominated sales price at a spot rate of $1.338362 to C$1.00, if the closing date occurs on
or before June 29, 2020.
The closing of the MDA Transaction is also conditioned on customary closing conditions and on specified regulatory
approvals, including review by the Committee on Foreign Investment in the United States, Hart-Scott-Rodino review by
the U.S. Department of Justice and the U.S. Federal Trade Commission, and Canadian government reviews under the
Radiocommunication Act and the Competition Act. The closing of the MDA Transaction is not subject to a financing
condition.
The MDA Agreement contains specified termination rights for each of Maxar and the MDA Purchaser, including,
among others, if the consummation of the MDA Transaction has not occurred by June 29, 2020, subject to extension to
September 29, 2020 for the purpose of obtaining regulatory approvals in the U.S. and Canada and appealing any
injunctions preventing the consummation of the Transaction. Additionally, Maxar may terminate the MDA Agreement if
all of the conditions to closing of the MDA Transaction (other than those conditions that by their terms are to be satisfied
at closing) have been satisfied or waived, Maxar has confirmed in writing to the MDA Purchaser that Sellers stand
ready, willing and able to consummate the MDA Transaction and the MDA Purchaser fails to consummate the
Transaction within two business days of receipt of such notice from Maxar. If we are unable to complete the MDA
Transaction, there is no guarantee we will find a suitable buyer.
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The sale may also result in disruption to other parts of our business, including through the diversion of resources and
management attention from our ongoing business and other strategic matters, or through the disruption of relationships
with our employees and key vendors. Further, in connection with the disposition, we plan to enter into a Transition
Services Agreement pursuant to which the MDA Purchaser will receive certain services (the “Services”). The Services
will be provided at a cost for a period of up to 12 months from the closing date of the MDA Transaction, with an option
to extend for six months for certain services. As a result of the MDA Transaction, we will also undertake certain
indemnities and other obligations that may result in additional expenses for us.
A delay or failure to sell MDA to the MDA Purchaser or any other potential buyer could have a material adverse effect
on our business, financial position or results of operations.
Our business with various governmental entities is subject to the policies, priorities, regulations, mandates, and
funding levels of such governmental entities and may be negatively or positively impacted by any change thereto.
Changes in government policies, priorities, regulations, use of commercial data providers to meet U.S. government
imagery needs, government agency mandates, funding levels through agency budget reductions, the imposition of
budgetary constraints or a decline in government support or deferment of funding for programs in which we or our
customers participate could result in contract terminations, delays in contract awards, reduction in contract scope,
performance penalties or breaches of our contracts, the failure to exercise contract options, the cancellation of planned
procurements and fewer new business opportunities, all of which could negatively impact our business, financial
condition, results of operations and cash flows.
We are subject to the procurement policies and procedures set forth in the Federal Acquisition Regulation (“FAR”). FAR
governs all aspects of government contracting, including contractor qualifications and acquisition procedures. The FAR
provisions in U.S. government contracts must be complied with in order for the contract to be awarded and provides for
audits and reviews of contract procurement, performance and administration. Failure to comply with the provisions of
FAR could result in contract termination.
In addition, contracts with any government, including the U.S. or Canadian government, may be terminated or
suspended by the government at any time and could result in significant liability obligations for us. We seek to have in
place as standard provisions, termination for convenience language which reimburses us for reasonable costs incurred,
subcontractor and employee termination and wind-down costs plus a reasonable amount of profit thereon. However,
reparations for termination may fall short of the financial benefit associated with full completion and operation of a
contract. In addition, we may not be able to procure new contracts to offset the revenue or backlog lost as a result of any
termination of government contracts. The loss of one or more large contracts could have a material adverse impact on
our business, financial condition, results of operations and cash flows.
New satellites are subject to construction and launch delays, launch failures, damage or destruction during launch,
the occurrence of which can materially and adversely affect our operations.
Delays in the construction of future satellites and the procurement of requisite components and launch vehicles, limited
availability of appropriate launch windows, possible delays in obtaining regulatory approvals, satellite damage or
destruction during launch, launch failures, or incorrect orbital placement could have a material adverse effect on our
business, financial condition and results of operations. The loss of, or damage to, a satellite due to a launch failure could
result in significant delays in anticipated revenue to be generated by that satellite. Any significant delay in the
commencement of service of a satellite would delay or potentially permanently reduce the revenue anticipated to be
generated by that satellite. In addition, if the loss of a satellite were to occur, we may not be able to accommodate
affected customers with our other satellites or data from another source until a replacement satellite is available, and we
may not have on hand, or be able to obtain in a timely manner, the necessary funds to cover the cost of any necessary
satellite replacement. Any launch delay, launch failure, underperformance, delay or perceived delay could have a
material adverse effect on our results of operations, business prospects and financial condition.
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If our satellites fail to operate as intended, it could have a material adverse effect on our business, financial condition
and results of operations.
The manufacturing, testing, launching and operation of satellites involves complex processes and technology. Our
satellites employ advanced technologies and sensors that are exposed to severe environmental stresses in space that have
and could affect the performance of our satellite. Hardware component problems in space could lead to deterioration in
performance or loss of functionality of a satellite. In addition, human operators may execute improper implementation
commands that may negatively impact a satellite’s performance. Exposure of our satellites to an unanticipated
catastrophic event, such as a meteor shower or a collision with space debris, could reduce the performance of, or
completely destroy, the affected satellite. In December 2018, our WorldView-4 satellite experienced a failure in its
control moment gyros, preventing the satellite from collecting imagery.
We cannot provide assurances that our satellites will continue to operate successfully in space throughout their expected
operational lives. Even if a satellite is operated properly, technical flaws in that satellite’s sensors or other technical
deficiencies or anomalies could significantly hinder its performance, which could materially affect our ability to collect
imagery and market our products and services successfully. While some anomalies are covered by insurance policies,
others are not or may not be covered, or may be subject to large deductibles.
If we suffer a partial or total loss of a deployed satellite, we would need a significant amount of time and would incur
substantial expense to replace that satellite. We may experience other problems with our satellites that may reduce their
performance. During any period of time in which a satellite is not fully operational, we may lose most or all of the
revenue that otherwise would have been derived from that satellite. Our inability to repair or replace a defective satellite
or correct any other technical problem in a timely manner could result in a significant loss of revenue. If a satellite
experiences a significant anomaly such that it becomes impaired or is no longer functional, it would significantly impact
our business, prospects and profitability. Additionally, our review of satellite lives could extend or shorten the
depreciable lives of our satellites, which would have an impact on the depreciation we recognize.
Loss of, or damage to, a satellite and the failure to obtain data or alternate sources of data for our products may have
an adverse impact on our results of operations and financial condition.
In the Earth Intelligence segment, we rely on data collected from a number of sources including data obtained from
satellites. We may become unable or limited in our ability to collect such data. For example, satellites can temporarily go
out of service and be recovered, or cease to function for reasons beyond our control, including the quality of design and
construction, the supply of fuel, the expected gradual environmental degradation of solar panels, the durability of various
satellite components and the orbits and space environments in which the satellites are placed and operated. Electrostatic
storms or collisions with other objects could also damage the satellites. Additionally, in certain instances, governments
may discontinue for periods of time the access to or operation of a satellite for any particular area on the Earth and for
various reasons may not permit transmission of certain data, whether from a satellite owned by the government or not.
We cannot offer assurances that each of our satellites will remain in operation. Our satellites have certain redundant
systems which can fail partially or in their entirety and accordingly satellites may operate for extended periods without
all redundant systems in operation, but with single points of failure. The failure of satellite components could cause
damage to or loss of the use of a satellite before the end of its expected operational life. Certain of our satellites are
nearing the end of their expected operational lives and we expect the performance of each satellite to decline gradually
near the end of its expected operational life. We can offer no assurance that our satellites will maintain their prescribed
orbits or remain operational and we may not have replacement satellites that are immediately available.
Interruption or failure of our infrastructure could hurt our ability to effectively perform our daily operations and
provide and produce our products and services, which could damage our reputation and harm our operating results.
We are vulnerable to natural disasters and significant disruptions including tsunamis, floods, earthquakes, fires, water
shortages, other extreme weather conditions, epidemics or pandemics, acts of terrorism, power shortages and blackouts,
and telecommunications failures. In the event of such a natural disaster or other disruption, we could experience:
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disruptions to our operations or the operations of suppliers, subcontractors, distributors or customers; destruction of
facilities; and/ or loss of life.
The availability of many of our products and services depends on the continuing operation of our satellite operations
infrastructure, satellite manufacturing operations, information technology and communications systems. Any downtime,
damage to or failure of our systems could result in interruptions in our service, which could reduce our revenue and
profits. Our systems are vulnerable to damage or interruption from floods, fires, power loss, telecommunications
failures, computer viruses, computer denial of service attacks or other attempts to harm our systems. We do not currently
maintain a back-up production facility from which we can continue to collect, process and deliver imagery in the event
of the loss of our primary facility. In the event we are unable to collect, process and deliver imagery from our facility,
our daily operations and operating results would be materially and adversely affected. In addition, our ground terminal
centers are vulnerable to damage or interruption from human error, intentional bad acts, earthquakes, hurricanes, floods,
fires, war, terrorist attacks, power losses, hardware failures, systems failures, telecommunications failures and similar
events. Our satellite manufacturing operations are located in California in proximity to the San Andreas fault line, one of
the longest and most heavily populated earthquake-prone rifts in the world. We do not maintain back-up manufacturing
facilities or operations.
The occurrence of any of the foregoing could result in lengthy interruptions in our services and/or damage our
reputation, which could have a material adverse effect on our financial condition and results of operations.
Any significant disruption in or unauthorized access to our computer systems or those of third parties that we utilize
in our operations, including those relating to cybersecurity or arising from cyber-attacks, could result in a loss or
degradation of service, unauthorized disclosure of data, or theft or tampering of intellectual property, any of which
could materially adversely impact our business.
Our operations, products, solutions, analysis, and intellectual property are inherently at risk of disruption, loss,
inappropriate access, or tampering by both insider threats and external bad actors. In particular, our operations face
various cyber and other security threats, including attempts to gain unauthorized access to sensitive information,
intellectual property, mission operations, and networks. Our systems (internal, customer, and partner systems) and assets
may also be subject to damage or interruption from natural and other disaster events like, earthquakes, adverse weather
conditions, terrorist attacks, power loss, and telecommunications failures. In addition, insider threats, threats to the safety
of our directors, and employees, threats to the security of our facilities, infrastructure and supply chain and threats from
terrorist acts or other acts of aggression could have a material adverse impact on our business.
Our products, solutions, and analysis that we develop and or delivery to our customers are also at risk of disruption, loss,
or tampering. The integrity of the data (e.g., pixels), information and analysis in our products and services is at risk to be
manipulated either before or after delivery to a customer.
Our customers and partners (including our supply chain and joint ventures) face similar threats. Customer or partner
proprietary, classified, or sensitive information stored on our networks is at risk. Assets and intellectual property and
products in customer or partner environments are also inherently at risk. We also have risk where we have access to
customer and partner networks and face risks of breach, disruption or loss as well. Our supply chain for products and
services also is becoming more diverse and therefore the risk is growing.
While we have implemented certain systems and processes to help thwart bad actors and protect our data and our
systems and assets, the techniques used to gain unauthorized access are constantly evolving, and we may be unable to
anticipate or prevent all unauthorized access, disruption, loss, or harm. Because of our highly desired intellectual
property and our support of the U.S. government and other governments, we (and/or partners we use) may be a
particularly attractive target for such attacks by hostile foreign governments. From time to time, we have experienced
attacks on our systems from bad actors that, to date, have not had a material adverse effect on our business. We cannot
offer assurances, however, that future attacks will not materially adversely affect our business.
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A security event or other significant disruption of our systems, assets, products or solutions could:
•
•
disrupt the proper functioning of our networks, applications, and systems and therefore our operations and/or
those of certain of our customers, or partners;
result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of, our or our
customers’ proprietary, confidential, sensitive or otherwise valuable information, including trade secrets, which
others could use to compete against us or for disruptive, destructive or otherwise harmful purposes and
outcomes;
destroy or degrade assets including space, ground, and intellectual property assets;
•
• manipulate or tamper with our products, solutions, analysis, or other systems delivered to our customers or
•
•
partners;
compromise other sensitive government functions; and
damage our reputation with our customers (particularly agencies of various governments) and the public
generally.
A security event that involves classified or other sensitive government information or certain controlled technical
information, could subject us to civil or criminal penalties and could result in loss of our secure facility clearance and
other accreditations, loss of our government contracts, loss of access to classified information, loss of export privileges
or debarment as a government contractor. The risk that these types of events could seriously harm our business is likely
to increase as we expand the number of web-based products and services we offer as well as increase the number of
countries within which we do business.
We are a party to legal proceedings, investigations and other claims or disputes, which are costly to defend and, if
determined adversely to us, could require us to pay fines or damages, undertake remedial measures or prevent us
from taking certain actions, any of which could adversely affect our business.
We are, and in the future may be, a party to legal proceedings, investigations and other claims or disputes, which may
relate to subjects including commercial transactions, intellectual property, securities, employee relations, or compliance
with applicable laws and regulations.
For instance, we are currently defending against a claim in arbitration that we improperly terminated a contract with a
Ukrainian customer in response to the force majeure event caused by the annexation of Crimea, and seeking recovery
from us in the amount of approximately $227 million. This matter was heard by the arbitration panel in December 2019,
and we are awaiting a decision. In addition, in January 2019, a Maxar stockholder filed a putative class action lawsuit in
the Federal District Court of Colorado, naming Maxar and members of management as defendants alleging, among other
things, that our public disclosures were false or misleading in violation of the Securities and Exchange Act of 1934 and
seeking monetary damages. An amended consolidated complaint was filed in that case in October 2019. Also, in January
2019, a Maxar stockholder resident in Canada issued a putative class action lawsuit in the Ontario Superior Court of
Justice against Maxar and members of management claiming misrepresentations in Maxar’s public disclosures and
seeking monetary damages under Canadian securities laws. In November 2019, a second putative class action lawsuit
was issued by the same Maxar stockholder resident in Canada, adding a second representative plaintiff and three
additional defendants, including the Company’s auditor KPMG LLP. The second claim expands the proposed class
period and the breadth of the allegations against the Company. In February 2020, the January 2019 claim was
discontinued. In October 2019, a Maxar stockholder filed a putative class action lawsuit in California state court, naming
Maxar and certain members of management and the board of directors as defendants. The lawsuit is based upon many of
the same underlying factual allegations as the federal putative class action, but asserts claims under the Securities Act of
1933. In November 2019, a purported derivative complaint was filed against the board of directors in the District of
Delaware, also based on the same factual allegations as the federal putative class action.
These legal proceedings could result in substantial costs and diversion of management’s attention and resources and
could harm our stock price, business, prospects, results of operations and financial condition. These and other legal
proceedings and investigations are inherently uncertain and we cannot predict their duration, scope, outcome or
consequences. There can be no assurance that these or any such matters that have been or may in the future be brought
against us will be resolved favorably. In connection with any government investigations, in the event the government
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takes action against us or the parties resolve or settle the matter, we may be required to pay substantial fines or civil and
criminal penalties and/or be subject to equitable remedies, including disgorgement or injunctive relief. Other legal or
regulatory proceedings, including lawsuits filed by private litigants, may also follow as a consequence. These matters are
likely to be expensive and time-consuming to defend, settle and/or resolve, and may require us to implement certain
remedial measures that could prove costly or disruptive to our business and operations. They may also cause damage to
our business reputation. The unfavorable resolution of one or more of these matters could have a material adverse effect
on our business, results of operations, financial condition or cash flows.
Future acquisitions or divestitures could result in adverse impacts on our operations.
In order to grow our business, we may seek to acquire additional assets or companies. There can be no assurance that we
will be able to identify, acquire, obtain the required regulatory approvals, or profitably manage additional businesses or
successfully integrate any acquired businesses, products or technologies without substantial expenses, delays or other
operational, regulatory, or financial problems. In addition, any acquired businesses, products or technologies may not
achieve anticipated revenues and income growth. Further, acquisitions may involve a number of additional risks,
including diversion of management’s attention, failure to retain key personnel, or failure to attract the necessary talent to
manage organizational growth. We may become responsible for unexpected liabilities that were not discovered or
disclosed in the course of due diligence in connection with historical acquisitions and any future acquisitions. If we do
not realize the expected benefits or synergies of an acquisition, there could be a material adverse effect on our business,
results of operations and financial condition.
We may also seek to divest portions of our businesses which may no longer be aligned with our strategic initiatives and
long-term objectives. Various factors could materially affect our ability to successfully do so, including the availability
of buyers willing to purchase the assets on terms acceptable to us, difficulties in the separation of operations, the
diversion of management's attention from other business concerns, the disruption of our business, the potential loss of
key employees and the retention of uncertain contingent liabilities related to the divested business. We cannot assure that
we will be successful in managing these or any other significant risks that we encounter in divesting a business or
product line, and any divestiture we undertake could materially and adversely affect our business, financial condition,
results of operations and cash flows.
Our business with various governmental entities is concentrated in a small number of primary contracts. The loss or
reduction in scope of any one of our primary contracts would materially reduce our revenue.
Our business with various governmental entities is concentrated in a small number of primary contracts. We recognize
significant revenue from U.S. government agencies and a significant amount of our U.S. government revenue is
generated from a single contract, the EnhancedView Contract. The EnhancedView Contract is a service level agreement
to provide image-tasking capacity on our satellites, and other imagery-derived products and services to the U.S.
government. Our ability to service other customers could be negatively impacted if we are unable to maintain our current
collection capacity. In addition, any inability on our part to meet the performance requirements of the EnhancedView
Contract could result in a performance penalty or breach of that contract. A breach of our contract with government
customers or reduction in service to our other customers could have a material adverse effect on our business, financial
condition and results of operations. The U.S. government may also terminate or suspend our contracts, including the
EnhancedView Contract, at any time with or without cause. Additionally, any changes in the size, scope or term of the
EnhancedView Contract could impact our satellite replenishment strategy and our ability to repay or refinance our long-
term debt. Although our contracts generally involve fixed annual minimum commitments, such commitments, along
with all other contracts with the U.S. government, are subject to annual Congressional appropriations and the federal
budget process, and as a result, the U.S. government may not continue to fund these contracts at current or anticipated
levels. Similarly, our contracts in Canada and other jurisdictions are also subject to government procurement policies
and procedures.
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Disruptions in U.S. government operations and funding could have a material adverse effect on our revenues,
earnings and cash flows and otherwise adversely affect our financial condition.
Any disruptions in federal government operations could have a material adverse effect on our revenues, earnings and
cash flows. A prolonged failure to maintain significant U.S. government operations, particularly those pertaining to our
business, could have a material adverse effect on our revenues, earnings and cash flows. Continued uncertainty related to
recent and future U.S. federal government shutdowns, the U.S. budget and/or failure of the U.S. government to enact
annual appropriations could have a material adverse effect on our revenues, earnings and cash flows. Additionally,
disruptions in federal government operations may negatively impact regulatory approvals and guidance that are
important to our operations.
Changes in U.S. government policy regarding use of commercial data or Space Infrastructure providers, or material
delay or cancellation of certain U.S. government programs, may have a material adverse effect on our revenue and
our ability to achieve our growth objectives.
Current U.S. government policy encourages the U.S. government’s use of commercial data and Space Infrastructure
providers to support U.S. national security objectives. Under the EnhancedView Contract, our contractual counterparty
acquires imagery and imagery-derived products on behalf of our customers within the U.S. government. We are
considered by the U.S. government to be a commercial data provider. U.S. government policy is subject to change and
any change in policy away from supporting the use of commercial data and Space Infrastructure providers to meet U.S.
government imagery and Space Infrastructure needs, or any material delay or cancellation of planned U.S. government
programs, including the EnhancedView Contract, could materially adversely affect our revenue and our ability to
achieve our growth objectives.
We face competition that may cause us to have to either reduce our prices for imagery and related products and
services or to lose market share.
Our products and services compete with satellite and aerial imagery and related products and services offered by a range
of private and government providers. Our current or future competitors may have superior technologies or greater
financial, personnel and other resources than we have. The value of our imagery may also be diluted by Earth imagery
that is available free of charge.
The U.S. government and foreign governments may develop, construct, launch and operate their own imagery satellites,
which could reduce their need to rely on us and other commercial suppliers. In addition, such governments could sell or
provide free of charge Earth imagery from their satellites and thereby compete with our imagery products and services.
Also, governments may at times make our imagery freely available for humanitarian purposes, which could impair our
revenue growth with non-governmental organizations. These governments could also subsidize the development, launch
and operation of imagery satellites by our current or future competitors.
Our competitors or potential competitors could, in the future, offer satellite-based imagery or other products and services
with more attractive features than our products and services. The emergence of new remote imaging technologies or the
continued growth of low-cost imaging satellites, could negatively affect our marketing efforts. More importantly, if
competitors develop and launch satellites or other imagery-content sources with more advanced capabilities and
technologies than ours, or offer products and services at lower prices than ours, our business and results of operations
could be harmed. Due to competitive pricing pressures, such as new product introductions by us or our competitors or
other factors, the selling price of our products and services may further decrease. If we are unable to offset decreases in
our average selling prices by increasing our sales volumes or by adjusting our product mix, our revenue and operating
margins may decline and our financial position may be harmed.
We operate in highly competitive industries and in various jurisdictions across the world which may cause us to have
to reduce our prices.
We operate in highly competitive industries and many of our competitors are larger and have substantially greater
resources than we have. Our primary competitors for satellite manufacturing contracts include the Boeing Company,
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Lockheed Martin Corporation, Northrop Grumman Corporation in the United States, and Thales S.A. and Airbus
Defence and Space, a subsidiary of the Airbus Group, in Europe. We may also face competition in the future from
emerging low-cost competitors in India, Russia and China. Competition in our Imaging and Services business is highly
diverse, and while our competitors offer different products, there is often competition for contracts that are part of
governmental budgets. Our major existing and potential competitors for our Imagery business include commercial
satellite imagery companies, state-owned imagery providers, aerial imagery companies, free sources of imagery, and
unmanned aerial vehicles. Our Services segment faces competition from companies that provide geospatial analytic
information and services to the U.S. government, including defense prime contractors such as L3Harris and Booz Allen
Hamilton.
In addition, some of our foreign competitors currently benefit from, and others may benefit in the future from, protective
measures by their home countries where governments are providing financial support, including significant investments
in the development of new technologies. Government support of this nature greatly reduces the commercial risks
associated with satellite development activities for these competitors. This market environment may result in increased
pressures on our pricing and other competitive factors.
We may be required to recognize impairment charges.
Long-lived assets, including goodwill and intangible assets, are tested annually for impairment in the fourth quarter or
whenever there is an indication that an asset may be impaired. In the past, we have recognized significant impairment
losses related to goodwill, intangible assets, property, plant and equipment, inventory and orbital receivables.
Disruptions to our business, unexpected significant declines in our operating results, adverse technological events or
changes in the regulatory markets in which we operate, and significant declines in our stock price have resulted and may
result in further impairment charges to our tangible and intangible assets. Any future impairment charges could
substantially affect our reported results.
Uncertain global macro-economic and political conditions could materially adversely affect our results of operations
and financial condition.
Our results of operations are materially affected by economic and political conditions in the United States, Canada and
internationally, including inflation, deflation, interest rates, availability of capital, energy and commodity prices, trade
laws, and the effects of governmental initiatives to manage economic conditions. Current or potential customers may
delay or decrease spending on our products and services as their business and/or budgets are impacted by economic
conditions. The inability of current and potential customers to pay us for our products and services may adversely affect
our earnings and cash flows.
Our business involves significant risks and uncertainties that may not be covered by insurance.
A significant portion of our business relates to designing, developing and manufacturing advanced space technology
products and systems. New technologies may be untested or unproven. Failure of some of these products and services
could result in extensive property damage. Accordingly, we may incur liabilities that are unique to our products and
services.
We endeavor to obtain insurance coverage from established insurance carriers to cover these risks and liabilities.
However, the amount of insurance coverage that we maintain may not be adequate to cover all claims or liabilities.
Existing coverage may be canceled while we remain exposed to the risk and it is not possible to obtain insurance to
protect against all operational risks, natural hazards and liabilities.
We have historically insured satellites in our constellation to the extent that insurance was available on acceptable
premiums and other terms. The insurance proceeds received in connection with a partial or total loss of the functional
capacity of any of our satellites would not be sufficient to cover the replacement cost, if we choose to do so, of an
equivalent high-resolution satellite. In addition, this insurance will not protect us against all losses to our satellites due to
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specified exclusions, deductibles and material change limitations and it may be difficult to insure against certain risks,
including a partial deterioration in satellite performance and satellite re-entry.
The price and availability of insurance fluctuate significantly. Although we have historically been able to obtain
insurance coverage for in-orbit satellites, we cannot guarantee that we will be able to do so in the future. We intend to
maintain insurance for our operating satellites, but any determination we make as to whether to obtain insurance
coverage will depend on a variety of factors, including the availability of insurance in the market, the cost of available
insurance and the redundancy of our operating satellites. Insurance market conditions or factors outside our control at the
time we are in the market for the required insurance, such as failure of a satellite using similar components, could cause
premiums to be significantly higher than current estimates and could reduce amounts of available coverage. The cost of
our insurance has been increasing and may continue to increase. Higher premiums on insurance policies will reduce our
operating income by the amount of such increased premiums. If the terms of in-orbit insurance policies become less
favorable than those currently available, there may be limits on the amount of coverage that we can obtain or we may not
be able to obtain insurance at all.
In addition, even though we carry business interruption insurance policies, any business interruption losses could exceed
the coverage available or be excluded from our insurance policies. Any disruption of our ability to operate our business
could result in a material decrease in our revenues or significant additional costs to replace, repair or insure our assets,
which could have a material adverse impact on our financial condition and results of operations.
We often rely on a single vendor or a limited number of vendors to provide certain key products or services and the
inability of these key vendors to meet our needs could have a material adverse effect on our business.
Historically, we have contracted with a single vendor or a limited number of vendors to provide certain key products or
services, such as construction of satellites and launch vehicles, and management of certain remote ground terminals and
direct access facilities. In addition, our manufacturing operations depend on specific technologies and companies for
which there may be a limited number of vendors. If these vendors are unable to meet our needs because they fail to
perform adequately, are unable to match new technological requirements or problems, or are unable to dedicate
engineering and other resources necessary to provide the services contracted for, our business, financial position and
results of operations may be adversely affected. While alternative sources for these products, services and technologies
may exist, we may not be able to develop these alternative sources quickly and cost-effectively, which could materially
impair our ability to operate our business. Furthermore, these vendors may request changes in pricing, payment terms or
other contractual obligations, which could cause us to make substantial additional investments.
Disruptions in the supply of key raw materials or components and difficulties in the supplier qualification process, as
well as increases in prices of raw materials, could adversely impact us.
Many raw materials, major components and product equipment items, particularly in our Space Infrastructure segment,
are procured or subcontracted on a single or sole-source basis. Although we maintain a qualification and performance
surveillance process and we believe that sources of supply for raw materials and components are generally adequate, it is
difficult to predict what effects shortages or price increases may have in the future. Our ability to manage inventory and
meet delivery requirements may be constrained by our suppliers’ inability to scale production and adjust delivery of
long-lead time products during times of volatile demand. Our inability to fill our supply needs would jeopardize our
ability to fulfill obligations under commercial and government contracts, which could, in turn, result in reduced sales and
profits, contract penalties or terminations, and damage to customer relationships and could have a material adverse effect
on our operating results, financial condition, or cash flows.
Key raw materials used in our operations include metals such as aluminum and titanium, which are usually procured by
our suppliers who manufacture parts in accordance with our drawings. We also purchase materials such as chemicals;
composites; electronic, electro-mechanical and mechanical components; subassemblies; and subsystems that are
integrated with the manufactured parts for final assembly into finished products and systems. We are impacted by
increases in the prices of raw materials used in production on fixed-price business.
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We monitor sources of supply to attempt to assure that adequate raw materials and other supplies needed in
manufacturing processes are available.
Although we have not experienced significant difficulty in our ability to procure raw materials, components, sub-
assemblies and other supplies required in our manufacturing processes, prolonged disruptions in the supply of any of our
key raw materials or components, difficulty completing qualification of new sources of supply, implementing use of
replacement materials, components or new sources of supply, or a continuing increase in the prices of raw materials,
energy or components could have a material adverse effect on our operating results, financial condition, or cash flows.
We are dependent on resellers of our products and services for a portion of our revenue. If these resellers fail to
market or sell our products and services successfully, our business could be harmed.
The Earth Intelligence segment has historically generated a portion of its revenue from foreign and domestic resellers. In
the Earth Intelligence segment, we rely on foreign resellers and partners to market and sell the majority of our products
and services in the international market. Our foreign resellers and partners may not have the skill or experience to
develop regional commercial markets for our products and services, or may have competing interests that negatively
affect their sales of our products and services. If we fail to enter into reseller agreements on a timely basis or if our
resellers and partners fail to market and sell our products and services successfully, these failures could negatively
impact our business, financial condition and results of operations.
We may not be successful in developing new technology and the technology we are successful in developing may not
meet the needs of our customers or potential new customers.
The markets in which we operate are characterized by changing technology and evolving industry standards.
Despite years of experience in meeting customer systems requirements with the latest in technological solutions, we may
not be successful in identifying, developing and marketing products or systems that respond to rapid technological
change, evolving technical standards and systems developed by others. Our competitors may develop technology that
better meets the needs of our customers. If we do not continue to develop, manufacture and market innovative
technologies or applications that meet customers’ requirements, sales may suffer and our business may not continue to
grow in line with historical rates or at all. If we are unable to achieve sustained growth, we may be unable to execute our
business strategy, expand our business or fund other liquidity needs and our business prospects, financial condition and
results of operations could be materially and adversely affected.
Our technology may violate the proprietary rights of third parties and our intellectual property may be
misappropriated or infringed upon by third parties, each of which could have a negative impact on our operations.
If any of our technology violates proprietary rights, including copyrights and patents, third parties may assert
infringement claims against us. Certain software modules and other intellectual property used by us or in our satellites,
systems and products make use of or incorporate licensed software components and other licensed technology. These
components are developed by third parties over whom we have no control. Any claims brought against us may result in
limitations on our ability to use the intellectual property subject to these claims. We may be required to redesign our
satellites, systems or products or to obtain licenses from third parties to continue offering our satellites, systems or
products without substantially re-engineering such products or systems.
Our intellectual property rights may be invalidated, circumvented, challenged, infringed or required to be licensed to
others. An infringement or misappropriation could harm any competitive advantage we currently derive or may derive
from our proprietary rights.
To protect our proprietary rights, we rely on a combination of patent protections, copyrights, trade secrets, trademark
laws, confidentiality agreements with employees and third parties, and protective contractual provisions such as those
contained in license agreements with consultants, subcontractors, vendors and customers. Although we apply rigorous
standards, documents and processes to protect our intellectual property, there is no absolute assurance that the steps
taken to protect our technology will prevent misappropriation or infringement. Litigation may be necessary to enforce or
protect our intellectual property rights, our trade secrets or determine the validity and scope of the proprietary rights of
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others. Such litigation may be time-consuming and expensive to prosecute or defend and could result in the diversion of
our time and resources. In addition, competitors may design around our technology or develop competing technologies.
The market may not accept our imagery products and services. Our historic growth rates should not be relied upon as
an indicator of future growth.
We cannot accurately predict whether our products and services will achieve significant market acceptance or whether
there will be a market for our products and services on terms we find acceptable. Market acceptance of our commercial
high-resolution Earth imagery and related products and services depends on a number of factors, including the quality,
scope, timeliness, sophistication, price and the availability of substitute products and services. Lack of significant market
acceptance of our offerings, or other products and services that utilize our imagery, delays in acceptance, failure of
certain markets to develop or our need to make significant investments to achieve acceptance by the market would
negatively affect our business, financial condition and results of operations. We may not continue to grow in line with
historical rates or at all. If we are unable to achieve sustained growth, we may be unable to execute our business strategy,
expand our business or fund other liquidity needs and our business prospects, financial condition and results of
operations could be materially and adversely affected.
We are dependent on our ability to attract, train and retain employees. Our inability to do so, or the loss of key
personnel, would cause serious harm to our business.
Our success is largely dependent on the abilities and experience of our executive officers and other key personnel to
oversee all aspects of our operations and to deliver on our corporate strategies. Competition for highly skilled
management, technical, research and development and other personnel is intense in our industry. In order to maintain our
ability to compete, we must continuously retain the services of a core group of specialists in a wide variety of
disciplines. To the extent that the demand for qualified personnel exceeds supply, we could experience higher labor,
recruiting or training costs in order to attract and retain such employees, or could experience difficulties in performing
under contracts if our need for such employees is unmet. We may not be able to retain our current executive officers or
key personnel or attract and retain additional executive officers or key personnel as needed to deliver on our corporate
strategy. Furthermore, the recent volatility in our stock price may undermine the use of our equity as a retention tool and
may make it more difficult to retain key personnel.
Our revenue, results of operations and reputation may be negatively impacted if our products contain defects or fail
to operate in the expected manner.
We sell complex and technologically advanced systems, including satellites, products, hardware and software.
Sophisticated software, including software developed by us, may contain defects that can unexpectedly interfere with the
software’s intended operation. Defects may also occur in components and products that we manufacture or purchase
from third parties. Most of the satellites and systems we have developed must function under demanding and
unpredictable operating conditions and in harsh and potentially destructive environments. In addition, we may agree to
the in-orbit delivery of a satellite, adding further risks to our ability to perform under a contract. Failure to achieve
successful in-orbit delivery could result in significant penalties and other obligations on us. We employ sophisticated
design and testing processes and practices, which include a range of stringent factory and on-site acceptance tests with
criteria and requirements that are jointly developed with customers. Our systems may not be successfully implemented,
pass required acceptance criteria, or operate or give the desired output, or we may not be able to detect and fix all defects
in the satellites, products, hardware and software we sell or resolve any delays or availability issues in the launch
services we procure. Failure to do so could result in lost revenue and damage to our reputation and may adversely affect
our ability to win new contract awards.
Some of our and our suppliers’ workforces are represented by labor unions, which may lead to work stoppages.
Some of the employees of our MDA business in Canada are represented by labor unions. We may experience work
stoppages organized by labor unions, which could adversely affect our business. We cannot predict how stable our
relationships with labor unions will be or whether we will be able to meet the labor unions’ requirements without
impacting our financial condition. The labor unions may also limit our flexibility in dealing with our workforce. Labor
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union actions at suppliers can also affect us. Work stoppages and instability in our relationships with labor unions could
delay the production and/or development of our products, which could strain relationships with customers and cause a
loss of revenues which would adversely affect our operations.
Changes in our accounting estimates and assumptions could negatively affect our financial position and results of
operations.
We prepare our consolidated financial statements in accordance with U.S. GAAP. These accounting principles require us
to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of our financial statements. We are also required to make certain judgments
that affect the reported amounts of revenues and expenses during each reporting period. We periodically evaluate our
estimates and assumptions including, but not limited to, those relating to revenue recognition, including our long-term
contracts accounted for utilizing the cost-to-cost method, restructuring costs, recoverability of assets including customer
receivables, valuation of goodwill and intangibles, contingencies, stock-based compensation and income taxes. We base
our estimates on historical experience and various assumptions that we believe to be reasonable based on specific
circumstances. These assumptions and estimates involve the exercise of judgment and discretion, which may evolve over
time in light of operational experience, regulatory direction, developments in accounting principles and other factors.
Actual results could differ from these estimates as a result of changes in circumstances, assumptions, policies or
developments in the business, which could materially affect our consolidated financial statements.
Pension and other postretirement benefit obligations may materially impact our earnings, stockholders’ equity and
cash flows from operations, and could have significant adverse impacts in future periods.
We maintain defined benefit pension and other postretirement benefits plans for some of our employees. Potential
pension contributions include discretionary contributions to improve the plans’ funded status. The extent of future
contributions depends heavily on market factors such as the discount rate and the actual return on plan assets. We
estimate future contributions to these plans using assumptions with respect to these and other items. Changes to those
assumptions could have a significant effect on future contributions, annual pension and other postretirement costs, the
value of plan assets and our benefit obligations.
Significant changes in actual return on pension assets, discount rates, and other factors could adversely affect our results
of operations and require cash pension contributions in future periods. Changes in discount rates and actual asset returns
different than our expected asset returns can result in significant non-cash actuarial gains or losses which we record in
the fourth quarter of each fiscal year and, if applicable, in any quarter in which an interim re-measurement is triggered.
With regard to cash pension contributions, funding requirements for our pension plans are largely dependent upon
interest rates, actual investment returns on pension assets and the impact of legislative or regulatory changes related to
pension funding obligations.
We also provide other postretirement benefits to certain of our employees, consisting principally of health care, dental
and life insurance for eligible retirees and qualifying dependents. Our estimates of future costs associated with these
benefits are also subject to assumptions, including estimates of the level of medical cost increases and discount rates.
For a discussion regarding how our financial statements can be affected by pension and other postretirement plan
accounting policies, see Part II, Item 7, “Management's Discussion and Analysis—Critical Accounting Policies and
Estimates” in this Annual Report on Form 10-K.
Fluctuations in foreign exchange rates could have a negative impact on our business.
Our revenues, expenses, assets and liabilities denominated in currencies other than the U.S. dollar are translated into
U.S. dollars for the purposes of compiling our consolidated financial statements. We use hedging strategies to manage
and minimize the impact of exchange rate fluctuations on our cash flow and economic profits, including our foreign
exchange exposure related to the sale of MDA. There are complexities inherent in determining whether and when
foreign exchange exposures will materialize, in particular given the possibility of unpredictable revenue variations
arising from schedule delays and contract postponements. Furthermore, we could be exposed to the risk of non-
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performance of our hedging counterparties. We may also have difficulty in fully implementing our hedging strategy
depending on the willingness of hedging counterparties to extend credit. Accordingly, no assurances may be given that
our exchange rate hedging strategy will protect us from significant changes or fluctuations in revenues and expenses
denominated in non-Canadian or U.S. dollars.
Our restructuring activities and cost saving initiatives may not achieve the results we anticipate.
We have undertaken cost reduction initiatives and organizational restructurings to improve operating efficiencies,
optimize our asset base and generate cost savings. For example, we have recently undertaken restructuring plans
intended to reduce headcount and implement other efficiency initiatives. We cannot be certain that we will be able to
complete these initiatives as planned or without business interruption, that these initiatives will not generate additional
costs, such as severance or other charges, or that the estimated operating efficiencies or cost savings from such activities
will be fully realized or maintained over time.
Risks Related to Our Indebtedness and Our Common Stock
Our business is capital intensive, and we may not be able to raise adequate capital to finance our business strategies,
including funding future satellites, or we may be able to do so only on terms that significantly restrict our ability to
operate our business.
The implementation of our business strategies, such as expanding our satellite constellation and our products and
services offerings, requires a substantial outlay of capital. As we pursue our business strategies and seek to respond to
opportunities and trends in our industry, our actual capital expenditures may differ from our expected capital
expenditures, and there can be no assurance that we will be able to satisfy our capital requirements in the future. We are
highly leveraged, but we currently expect that our ongoing liquidity requirements for sustaining our operations will be
satisfied by cash on hand and cash generated from our existing and future operations supplemented, where necessary, by
available credit. However, we cannot provide assurances that our businesses will generate sufficient cash flow from
operations in the future or that additional capital will be available in amounts sufficient to enable us to execute our
business strategies. Our ability to increase our debt financing and/or renew existing credit facilities may be limited by
our existing financial and non-financial covenants, credit objectives, or the conditions of the debt capital market
generally. Furthermore, our current financing arrangements contain certain restrictive financial and non-financial
covenants (e.g., the achievement or maintenance of stated financial ratios) that may impact our access to those facilities
and significantly limit future operating and financial flexibility.
Our ability to obtain additional debt or equity financing or government grants to finance operating working capital
requirements and growth initiatives may be limited or difficult to obtain, which could adversely affect our operations
and financial condition.
We need capital to finance operating working capital requirements and growth initiatives and to pay our outstanding debt
obligations as they become due for payment. If the cash generated from our businesses, together with the credit available
under existing bank facilities, is not sufficient to fund future capital requirements, we will require additional debt or
equity financing. Our ability to access capital markets on terms that are acceptable to us will be dependent on prevailing
market conditions, as well as our future financial condition. Further, our ability to increase our debt financing and/or
renew existing facilities may be limited by our existing leverage, financial and non-financial covenants, credit
objectives, and debt capital market conditions.
We have in the past, and may continue in the future to, receive government grants for research and development
activities and other business initiatives. Any agreement or grant of this nature with government may be accompanied by
contractual obligations applicable to us, which may result in the grant money becoming repayable if certain requirements
are not met. A failure to meet contractual obligations under such agreements and grants and a consequent requirement to
repay money received could negatively impact our results of operations and financial condition.
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Our substantial indebtedness and other contractual obligations could adversely affect our financial condition, our
ability to raise additional capital to fund our operations, our ability to operate our business, our ability to react to
changes in the economy or our industry and our ability to pay our debts and could divert our cash flow from
operations for debt payments.
We have a significant amount of indebtedness and leverage. Our level of indebtedness increases the possibility that we
may be unable to generate cash sufficient to pay the principal of, interest on, or other amounts due with respect to our
indebtedness. Our long-term debt under our senior secured syndicated credit facility (“Syndicated Credit Facility”) bears
interest at floating rates related to U.S. LIBOR (for U.S. dollar borrowings) and CDOR or Canadian Bankers’
Acceptances (for Canadian dollar borrowings), plus a margin. As a result, our interest payment obligations on such
indebtedness will increase if such interest rates increase. Our leverage and debt service obligations could adversely
impact our business, including by:
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impairing our ability to meet one or more of the financial ratios contained in our credit facilities or to generate
cash sufficient to pay interest or principal, including periodic principal payments;
increasing our vulnerability to general adverse economic and industry conditions;
limiting our ability to obtain additional debt or equity financing on favorable terms, if at all;
requiring the dedication of a portion of our cash flow from operations to service our debt, thereby reducing the
amount of our cash flow available for other purposes, including capital expenditures, dividends to stockholders
or to pursue future business opportunities;
requiring us to sell debt or equity securities or to sell some of our core assets, possibly on unfavorable terms, to
meet payment obligations;
limiting our flexibility in planning for, or reacting to, changes in our business and the industries in which we
compete; and
placing us at a possible competitive disadvantage with less leveraged competitors and competitors that may
have better access to capital resources.
Any of the forgoing factors could have negative consequences on our financial condition and results of operation.
Changes affecting the availability of the London Interbank Offered Rate (“LIBOR”) may have consequences for us
that cannot yet reasonably be predicted.
We have outstanding debt with variable interest rates based on LIBOR. In July 2017, the United Kingdom’s Financial
Conduct Authority announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021.
It is unclear if at that time whether or not LIBOR will cease to exist or if new methods of calculating LIBOR will be
established such that it continues to exist after 2021. Recent proposals for LIBOR reforms may result in the
establishment of new methods of calculating LIBOR or the establishment of one or more alternative benchmark rates.
In the United States, the Alternative Reference Rate Committee ("ARRC"), a group of diverse private-market
participants assembled by the Federal Reserve Board and the Federal Reserve Bank of New York, was tasked with
identifying alternative reference interest rates to replace LIBOR. The Secured Overnight Finance Rate ("SOFR") has
emerged as the ARRC's preferred alternative rate for LIBOR. SOFR is a broad measure of the cost of borrowing cash
overnight collateralized by Treasury securities in the repurchase agreement market. At this time, it is not possible to
predict how markets will respond to SOFR.
The uncertainty regarding the future of LIBOR, as well as the transition from LIBOR to another benchmark rate or rates
could have adverse impacts on our outstanding debt that currently uses LIBOR as a benchmark rate, and ultimately,
adversely affect our financial condition and results of operations.
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Our current financing arrangements contain certain restrictive covenants that impact our future operating and
financial flexibility.
Our current financing arrangements contain certain restrictive covenants that may impact our future operating and
financial flexibility. Our debt funding is provided under our financing agreements, which contains a series of positive
and negative covenants with which we must comply, including financial and non-financial covenants. If we fail to
comply with any covenants and are unable to obtain a waiver or other cure thereof, the lenders under the Syndicated
Credit Facility or under the 2023 bond issuance may be able to take certain actions with respect to the amounts owing
under such agreements, including early payment thereof. Any such actions could have a material adverse effect on our
financial condition. These covenants could also have the effect of limiting our flexibility in planning for or reacting to
changes in our business and the markets in which we compete.
Our actual operating results may differ significantly from our guidance.
From time to time, we release guidance regarding our future performance that represents our management’s estimates as
of the date of release. This guidance, which consists of forward-looking statements, is prepared by our management and
is qualified by, and subject to, the assumptions and the other information contained or referred to in the release. Our
guidance is not prepared with a view toward compliance with published guidelines of the American Institute of Certified
Public Accountants, and neither any independent registered public accounting firm nor any other independent expert or
outside party compiles, examines or reviews the guidance and, accordingly, no such person expresses any opinion or any
other form of assurance with respect thereto.
Guidance is based upon a number of assumptions and estimates that, while presented with numerical specificity, is
inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are
beyond our control and are based upon specific assumptions with respect to future business decisions, some of which
will change. We generally state possible outcomes as high and low ranges which are intended to provide a sensitivity
analysis as variables are changed but are not intended to represent that actual results could not fall outside of these
ranges. The principal reason that we release this data is to provide a basis for our management to discuss our business
outlook with analysts and investors. We do not accept any responsibility for any projections or reports published by any
such persons.
Guidance is necessarily speculative in nature, and it can be expected that some or all of the assumptions of the guidance
furnished by us will not materialize or will vary significantly from actual results, particularly any guidance relating to the
results of operations of acquired businesses or companies as our management will be less familiar with their business,
procedures and operations. Accordingly, our guidance is only an estimate of what management believes is realizable as
of the date of release. Actual results will vary from the guidance and the variations may be material. Investors should
also recognize that the reliability of any forecasted financial data will diminish the farther in the future that the data are
forecast. In light of the foregoing, investors are urged to put the guidance in context and not to place undue reliance on it.
Any failure to successfully implement our operating strategy or the occurrence of any of the events or circumstances set
forth in our Annual Report on Form 10-K for the year ended December 31, 2019 could result in the actual operating
results being different than the guidance, and such differences may be adverse and material.
We could be adversely impacted by actions of activist stockholders, and such activism could impact the value of our
securities.
We value constructive input from our stockholders and the investment community. However, there is no assurance that
the actions taken by our Board of Directors and management in seeking to maintain constructive engagement with our
stockholders will be successful. Certain of our stockholders have expressed views with respect to the operation of our
business, our business strategy, corporate governance considerations or other matters. Responding to actions by activist
stockholders can be costly and time-consuming, disrupting our operations and diverting the attention of management and
our employees. The perceived uncertainties as to our future direction due to activist actions could affect the market price
of our stock, result in the loss of potential business opportunities and make it more difficult to attract and retain qualified
personnel, board members and business partners.
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The price of our common stock has been volatile and may fluctuate substantially.
Our common stock is listed on the NYSE and the TSX and the price for our common stock has historically been volatile.
The market price of our common stock may continue to be highly volatile and may fluctuate substantially due to the
following factors (in addition to the other risk factors described in this section):
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general economic conditions;
fluctuations in our operating results;
variance in our financial performance from the expectations of equity and/or debt research analysts;
techniques employed by short sellers to drive down the market price of our common stock;
conditions and trends in the markets we serve;
additions of or changes to key employees;
changes in market valuations or earnings of our competitors;
trading volumes of our common stock;
future sales of our equity securities and/or future issuances of indebtedness;
changes in the estimation of the future sizes and growth rates of our markets; and
legislation or regulatory policies, practices or actions.
In addition, the stock markets in general have experienced extreme price and volume fluctuations that have at times been
unrelated or disproportionate to the operating performance of the particular companies affected. These market and
industry factors may materially harm the market price of our common stock irrespective of our operating performance.
The market price of our common stock recently experienced a significant decline from which it has not fully recovered.
A significant or prolonged decrease in our market capitalization, including a decline in stock price, or a negative long-
term performance outlook, could result in an impairment of our assets which results when the carrying value of our
assets exceed their fair value.
In the past several years, our securities have been the subject of short selling. Reports and information have been
published about us that we believe are mischaracterized or incorrect, and which have in the past been followed by a
decline in our stock price. If there are short seller allegations in the future, we may have to expend a significant amount
of resources to investigate such allegations and/or defend ourselves.
In addition, in the first quarter of 2019, we became subject to certain securities class action litigation as a result of
volatility in the price of our common stock, which could result in substantial costs and diversion of management’s
attention and resources and could harm our stock price, business, prospects, results of operations and financial condition.
See Part II, Item 1, “Legal Proceedings” in this Annual Report on Form 10-K for additional information.
If securities or industry analysts discontinue publishing research or reports about our business, or publish negative
reports about our business, our stock price and trading volume could decline.
The trading market for our common stock depends in part on the research and reports that securities or industry analysts
publish about us, our business, our market and our competitors. We do not have any control over these analysts. If one or
more of the analysts who cover us downgrade our stock or change their opinion of our stock, our stock price would
likely decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us,
we could lose visibility in the financial markets, which could cause our stock price or trading volume to decline.
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Our amended and restated certificate of incorporation and our amended and restated bylaws may impede or
discourage a takeover, changes in management or changes in the Board of Directors, which could reduce the market
price of our common stock.
Certain provisions in our amended and restated certificate of incorporation and our amended and restated bylaws may
delay or prevent a third-party from acquiring control of us, even if a change in control would be beneficial to our
existing stockholders. These provisions include:
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no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect
director candidates;
the exclusive right of the Board of Directors to elect a director to fill a vacancy created by the expansion of the
Board of Directors or the resignation, death or removal of a director, which prevents stockholders from being
able to fill vacancies on the Board of Directors;
the ability of the Board of Directors to issue shares of preferred stock and to determine the price and other terms
of those shares, including preferences and voting rights, without stockholder approval, which could be used to
significantly dilute the ownership of a hostile acquirer;
a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual
or special meeting of stockholders;
the requirement that a special meeting of stockholders may be called only by the chairman of the Board of
Directors or two or more stockholders who hold, in the aggregate, at least ten percent (10%) of the voting
power of our outstanding shares, which may delay the ability of our stockholders to force consideration of a
proposal or to take action, including the removal of directors; and
advance notice procedures that stockholders must comply with in order to nominate candidates to the Board of
Directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a
potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or
otherwise attempting to obtain control of our business.
These provisions could impede a merger, takeover or other business combination involving us or discourage a potential
acquirer from making a tender offer for our common stock, which, under certain circumstances, could reduce the market
price of our common stock. In addition, our amended and restated certificate of incorporation requires, to the fullest
extent permitted by law, that derivative actions brought in our name, actions against our directors, officers and
employees for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the
State of Delaware.
There can be no assurance that we will continue to pay dividends on our common stock.
Our Board of Directors significantly reduced our dividends in the first quarter of 2019. Although our Board of Directors
has historically declared a quarterly cash dividend which we have paid, the payment of future dividends is subject to a
number of risks and uncertainties, and we may not pay quarterly dividends in the same amounts or at all in the future.
The declaration, amount and timing of cash dividends are subject to capital availability and determinations by our Board
of Directors that such dividends are in the best interest of our stockholders and are in compliance with all respective laws
and applicable agreements. Our ability to pay dividends will depend upon, among other factors, our cash balances and
potential future capital requirements for strategic transactions, including acquisitions, debt service requirements, results
of operations, financial condition and other factors that our Board of Directors may deem relevant. The elimination of
our dividend payments and/or our dividend program could have a negative effect on our stock price.
Risks Related to Legal and Regulatory Matters
Our operations in the U.S. government market are subject to significant regulatory risk.
Our operations in the U.S. government market are subject to significant government regulation. The costs associated
with execution of our U.S. Access Plan are significant. A failure by us to maintain the relevant clearances and approvals
could limit our ability to operate in the U.S. market. Further, there can be no assurance that we will continue to be
awarded contracts by the U.S. government. In addition, a failure by us to keep current and compliant with relevant U.S.
32
regulations could result in fines, penalties, repayments, or suspension or debarment from U.S. government contracting or
subcontracting for a period of time and could have an adverse effect on our standing and eligibility for future U.S.
government contracts.
Failure to comply with the requirements of the National Industrial Security Program Operating Manual could result
in interruption, delay or suspension of our ability to provide our products and services, and could result in loss of
current and future business with the U.S. government.
We and our subsidiaries are parties to certain contracts with various departments and agencies of the U.S. government,
including the U.S. Department of Defense, which require that certain of our legal entities be issued facility security
clearances under the National Industrial Security Program. The National Industrial Security Program requires that a
corporation maintaining a facility security clearance be effectively insulated from foreign ownership, control or
influence (“FOCI”). Prior to the U.S. Domestication, we were incorporated under the laws of Canada, and had entered
into a Security Control Agreement, dated January 26, 2017, by and among us, our wholly owned subsidiary, Maxar
Technologies Holdings Inc. (“Maxar Holdings”) and the U.S. Department of Defense (“SCA”), as a suitable FOCI
mitigation arrangement under the National Industrial Security Program Operating Manual. Upon U.S. Domestication, the
SCA was dissolved and we entered into a Board Resolution to mitigate remaining FOCI risks as seen by the U.S.
Government. Failure to maintain an agreement with the U.S. Department of Defense regarding the appropriate FOCI
mitigation arrangement could result in invalidation or termination of the facility security clearances, which in turn would
mean that our U.S. subsidiaries would not be able to enter into future contracts with the U.S. government requiring
facility security clearances, and may result in the loss of the ability of those subsidiaries to complete existing contracts
with the U.S. government.
Our business is subject to various regulatory risks that could adversely affect our operations.
The environment in which we operate is highly regulated due to the sensitive nature of our complex and technologically
advanced systems, including satellites, products, hardware and software, in addition to those regulations broadly
applicable to publicly listed corporations. There are numerous regulatory risks that could adversely affect operations,
including but not limited to:
•
•
Changes in laws and regulations. It is possible that the laws and regulations governing our business and
operations will change in the future. A substantial portion of our revenue is generated from customers outside
of Canada and the U.S. There may be a material adverse effect on our financial condition and results of
operations if we are required to alter our business to comply with changes in both domestic and foreign
regulations, telecommunications standards, tariffs or taxes and other trade barriers that reduce or restrict our
ability to sell our products and services on a global basis, or by political and economic instability in the
countries in which we conduct business. Any failure to comply with such regulatory requirements could also
subject us to various penalties or sanctions.
Export Restrictions. Certain of our businesses and satellites, systems, products, services or technologies we
have developed require the implementation or acquisition of products or technologies from third parties,
including those in other jurisdictions. In addition, certain of our satellites, systems, products or technologies
may be required to be forwarded or exported to other jurisdictions. In certain cases, if the use of the
technologies can be viewed by the jurisdiction in which that supplier or subcontractor resides as being subject
to export constraints or restrictions relating to national security, we may not be able to obtain the technologies
and products that we require from subcontractors who would otherwise be our preferred choice or may not be
able to obtain the export permits necessary to transfer or export our technology. To the extent that we are able,
we obtain pre-authorization for re-export prior to signing contracts which oblige us to export subject
technologies, including specific foreign government approval as needed. In the event of export restrictions, we
may have the ability through contract force majeure provisions to be excused from our obligations.
Notwithstanding these provisions, the inability to obtain export approvals, export restrictions or changes during
contract execution or non-compliance by our customers could have an adverse effect on our revenues and
margins.
33
•
•
•
U.S. Government Approval Requirements. For certain aspects of our business operations, we are required to
obtain U.S. government licenses and approvals and to enter into agreements with various government bodies in
order to export satellites and related equipment, to disclose technical data or provide defense services to foreign
persons. The delayed receipt of or the failure to obtain the necessary U.S. government licenses, approvals and
agreements may prohibit entry into or interrupt the completion of contracts which could lead to a customer’s
termination of a contract for default, monetary penalties and/or the loss of incentive payments.
Competitive Impact of U.S. Regulations on Satellite Sales. Some of our customers and potential customers,
along with insurance underwriters and brokers, have asserted that U.S. export control laws and regulations
governing disclosures to foreign persons excessively restrict their access to information about the satellite
during construction and on-orbit. Office of Foreign Assets Control (“OFAC”) sanctions and requirements may
also limit certain business opportunities or delay or restrict our ability to contract with potential foreign
customers or operators. To the extent that our non-U.S. competitors are not subject to OFAC or similar export
control or economic sanctions laws and regulations, they may enjoy a competitive advantage with foreign
customers, and it could become increasingly difficult for the U.S. satellite manufacturing industry, including us,
to recapture this lost market share. Customers concerned over the possibility that the U.S. government may
deny the export license necessary for us to deliver their purchased satellite to them, or the restrictions or delays
imposed by the U.S. government licensing requirements, even where an export license is granted, may elect to
choose a satellite that is purportedly free of International Traffic in Arms Regulations (“ITAR”) offered by one
of our European competitors. We are further disadvantaged by the fact that a purportedly “ITAR-free” satellite
may be launched less expensively in China on the Chinese Long March rocket, a launch vehicle that, because of
ITAR restrictions, is not available to us.
Anti-Corruption Laws. As part of the regulatory and legal environments in which we operate, we are subject to
global anti-corruption laws that prohibit improper payments directly or indirectly to government officials,
authorities or persons defined in those anti-corruption laws in order to obtain or retain business or other
improper advantages in the conduct of business. Our policies mandate compliance with anti-corruption laws.
Failure by our employees, agents, subcontractors, suppliers and/or partners to comply with anti-corruption laws
could impact us in various ways that include, but are not limited to, criminal, civil and administrative fines
and/or legal sanctions and the inability to bid for or enter into contracts with certain entities, all of which could
have a significant adverse effect on our reputation, operations and financial results.
Changes in tax law, in our tax rates or in exposure to additional income tax liabilities or assessments may materially
and adversely affect our financial condition, results of operations, and cash flows.
Changes in law and policy relating to taxes may materially and adversely affect our financial condition, results of
operations, and cash flows. For example, the U.S. enacted the Tax Cuts and Jobs Act of 2017 (“2017 Tax Act”), which
has significantly changed the U.S. federal income taxation of U.S. corporations, including by reducing the U.S. corporate
income tax rate, limiting interest deductions and certain deductions for executive compensation, permitting immediate
expensing of certain capital expenditures, adopting elements of a territorial tax system, revising the rules governing net
operating losses, and introducing new anti-base erosion and global intangible low-taxed income inclusion provisions.
Many of these changes were effective immediately, without any transition periods or grandfathering for existing
transactions. The 2017 Tax Act remains unclear in many respects and could be subject to potential amendments and
technical corrections, as well as interpretations and implementing regulations by the Treasury and United States Internal
Revenue Service (“IRS”), any of which could lessen or increase certain adverse impacts of the 2017 Tax Act. In
addition, it is unclear how these U.S. federal income tax changes will affect state and local taxation, which often uses
federal taxable income as a starting point for computing state and local tax liabilities. We could be subject to tax audits,
challenges to our tax positions or adverse changes or interpretations of tax laws. Adverse positions taken by tax
authorities and tax audits could impact our operating results.
Based on our current evaluation of the 2017 Tax Act, the limitation on interest deductions, the base erosion and anti-
abuse tax (“BEAT”) and global intangible low-taxed income inclusion (“GILTI”) provisions may negatively impact our
cash flows going forward. Further, there may be other material adverse effects resulting from the 2017 Tax Act that we
have not yet identified. While some of the changes made by the 2017 Tax Act may adversely affect us in one or more
34
reporting periods and prospectively, other changes may be beneficial on a going forward basis. We continue to work
with our tax advisors to determine the full impact that the 2017 Tax Act as a whole will have on us.
Our ability to use our U.S. federal and state net operating loss carryforwards and certain other tax attributes may be
limited.
As of December 31, 2019, we had approximately $870 million and $795 million of federal and state net operating loss
(“NOL”) carryforwards and $82 million tax credit carryforwards related to research and development expenditures
(“R&D tax credits”) and foreign taxes (“FTC”) paid.
Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (“Code”), if a corporation undergoes an
“ownership change,” the corporation’s ability to use its pre-change U.S. federal NOL carryforwards and other tax
attributes (such as research tax credits) to offset its post-change income and taxes may be limited. In general, an
“ownership change” occurs if there is a greater than 50 percentage point change (by value) in a corporation’s equity
ownership by certain stockholders over a rolling three-year period. Similar provisions of state tax law may also apply to
limit our use of accumulated state tax attributes. While we do not believe that we have experienced ownership changes
in the past that would materially limit our ability to utilize our NOL carryforwards, the Section 382 rules are complex
and there is no assurance our view is correct. Moreover, as a result of the shift in ownership of our stock that occurred in
connection with the acquisition of DigitalGlobe in October 2017, we could experience an ownership change in the near
future if there are certain significant purchases of our stock or other events outside of our control. In the event that we
experience ownership changes in the future, our ability to use pre-change NOL carryforwards and other tax attributes to
offset post-change taxable income will be subject to limitations. As a result, we may be unable to use a material portion
of our NOL carryforwards and other tax attributes, which could adversely affect our future cash flows.
Additionally, the 2017 Tax Act changed the rules governing the use of U.S. federal NOLs, including by imposing a
reduction to the maximum deduction allowed for NOLs generated in tax years beginning after December 31, 2017. In
addition, NOL carryforwards arising in tax years ending after December 31, 2017 can be carried forward indefinitely,
but carryback is generally prohibited. Such limitations may significantly impact our ability to use NOL carryforwards
generated after December 31, 2017, as well as the timing of any such use, and could adversely affect our future cash
flows.
On May 12, 2019, our Board of Directors approved a Tax Benefit Preservation Plan (“Tax Plan”) in an effort to help
preserve the value of certain deferred tax benefits including those generated by NOLs and certain other tax attributes,
and which our Stockholders approved on October 31, 2019. The Tax Plan will expire on October 5, 2020. The Tax Plan
could make it more difficult for a third party to acquire, or could discourage a third party from acquiring, a large block of
our common stock. A third party that acquires 4.9% or more of our common stock could suffer substantial dilution of its
ownership interest under the terms of the Tax Plan through the issuance of common stock to all stockholders other than
the acquiring person.
Although the Tax Plan is intended to reduce the likelihood of an ownership change that could adversely affect us, there
is no assurance that the Tax Plan will prevent acquisitions of our common stock that could result in such an ownership
change.
On September 9, 2019 Treasury and the IRS issued proposed regulations regarding the items of income and deduction
which are included in the calculation of built-in gains and losses under section 382. The proposed regulations were
subject to a 60-day comment period and are proposed to be effective for ownership changes occurring after the effective
date of temporary or final regulations. In response to concerns expressed in comment letters, in January 2020 the IRS
35
withdrew a portion of the proposed regulations to provide transition relief for eligible taxpayers. Temporary or final
regulations have not yet been issued by Treasury and the IRS.
We have incurred and will continue to incur increased costs and demands in order to comply with laws and
regulations applicable to public companies.
We became a “domestic issuer” for SEC reporting purposes in January 2019. The obligations of being a public company
in the U.S. require significant expenditures and will place significant demands on our management and other personnel,
including costs resulting from public company reporting obligations under the U.S. Securities Exchange Act of 1934, as
amended, and the rules and regulations regarding corporate governance practices, including those under the Sarbanes-
Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the listing requirements of
the NYSE and the TSX. These rules require that we maintain effective disclosure and financial controls and procedures,
internal control over financial reporting and changes in corporate governance practices, among many other complex
rules that are often difficult to monitor and maintain compliance with. Our management and other personnel will
continue to devote a substantial amount of time to ensure compliance with all of these requirements and to keep pace
with new regulations, otherwise we may fall out of compliance and risk becoming subject to reputational damage,
litigation or being delisted, among other potential problems.
Our operations are subject to governmental law and regulations relating to environmental matters, which may expose
us to significant costs and liabilities that could negatively impact our financial condition.
We are subject to various federal, state, provincial and local environmental laws and regulations relating to the operation
of our businesses, including those governing pollution, the handling, storage, disposal and transportation of hazardous
substances, and the ownership and operation of real property. We have been designated, along with numerous other
companies, as a potentially responsible party for the cleanup of hazardous waste on certain sites in California where we
operate and there can be no assurance that the previous owners of those properties strictly complied with such
environmental laws and regulations. Such laws and regulations may result in significant liabilities and costs to us due to
the actions or inactions of the previous owners. In addition, new laws and regulations, more stringent enforcement of
existing laws and regulations or the discovery of previously unknown contamination could result in additional costs.
Our international business exposes us to risks relating to regulation, currency fluctuations, and political or economic
instability in foreign markets, which could adversely affect our revenue, earnings, cash flows and our financial
condition.
A significant portion of our revenue is derived from non-U.S. or Canadian sales, and we intend to continue to pursue
international contracts. International operations are subject to certain risks, such as: changes in domestic and foreign
governmental regulations and licensing requirements; deterioration of relations between the U.S. and/or Canada and a
particular foreign country; increases in tariffs and taxes and other trade barriers; foreign currency fluctuations; changes
in political and economic stability; effects of austerity programs or similar significant budget reduction programs;
potential preferences by prospective customers to purchase from local (non-U.S. or Canadian) sources; and difficulties in
obtaining or enforcing judgments in foreign jurisdictions.
In addition, our international contracts may include industrial cooperation agreements requiring specific in-country
purchases, investments, manufacturing agreements or other financial obligations, known as offset obligations, and
provide for penalties if we fail to meet such requirements. The impact of these factors is difficult to predict, but one or
more of them could adversely affect our financial position, results of operations, or cash flows.
Exposure to United Kingdom political developments, including the effect of its withdrawal from the European Union,
could be costly and difficult to comply with and could harm our business.
In June 2016, a referendum was passed in the United Kingdom to leave the European Union, commonly referred to as
“Brexit.” This decision created an uncertain political and economic environment in the United Kingdom and other
European Union countries, and the formal process for leaving the European Union has taken years to complete. The
United Kingdom formally left the European Union on January 31, 2020, and is now in a transition period through
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December 31, 2020. Our U.K. operations service customers in the U.K. as well as in other countries in the EU, and these
operations could be disrupted by Brexit. Although the United Kingdom will remain in the European Union single market
and customs union during the transition period, the long-term nature of the United Kingdom’s relationship with the
European Union is unclear and there is considerable uncertainty as to when any agreement will be reached and
implemented. The political and economic instability created by Brexit has caused and may continue to cause significant
volatility in global financial markets and uncertainty regarding the regulation of data protection in the United Kingdom.
In particular, although the United Kingdom enacted a Data Protection Act in May 2018 that is consistent with the EU
General Data Protection Regulation, uncertainty remains regarding how data transfers to and from the United Kingdom
will be regulated. Brexit could also have the effect of disrupting the free movement of goods, services, capital, and
people between the United Kingdom, the European Union, and elsewhere.
ITEM 2. PROPERTIES
Our corporate headquarters are located at a leased facility in Westminster, Colorado. As of December 31, 2019, we had
approximately two million square feet of total leased floor space at multiple locations in the United States, Europe, the
Middle East, and Asia, used for manufacturing, warehousing, research and testing, administrative and various other uses.
As of December 31, 2019, we had major operations in the following locations:
Space Infrastructure
Our Space Infrastructure segment primarily operates out of multiple locations in California. We lease approximately one
million square feet of manufacturing and office space.
Earth Intelligence
Our Earth Intelligence segment primarily operates out of our Colorado, Virginia, Maryland, Michigan, Florida and
Missouri locations with small sales offices located internationally. We lease approximately one million square feet of
office and operations space.
We maintain our properties in good operating condition and believe that the productive capacity of our properties is
adequate to meet our current requirements and those for the foreseeable future. See Note 10, Leases, in the Notes to
Consolidated Financial Statements contained in this Annual Report on Form 10-K for additional information regarding
our lease commitments.
ITEM 3. LEGAL PROCEEDINGS
In 2010, we entered into an agreement with a Ukrainian customer to provide a communication satellite system. In 2014,
following the annexation of Crimea by the Russian Federation, we declared force majeure with respect to the program.
The Ukrainian customer accepted that an event of force majeure had occurred. Following various unsuccessful efforts to
arrive at a new contractual framework to take account of the changed circumstances (including the force majeure and
various financial issues), the contract with the Ukrainian customer was terminated by us. We completed work on the
spacecraft, which is in storage. In July 2018, the Ukrainian customer issued a statement of claim in the arbitration it had
commenced against us, challenging our right to terminate for force majeure, purporting to terminate the contract for
default by us (a position since withdrawn), and seeking recovery from us in the amount of approximately $227 million.
The matter was heard by the arbitration panel in December 2019, and post-hearing briefs were submitted in January
2020. We presented a vigorous defense to the petitioner’s claims. We expect the arbitration panel to issue its ruling
sometime this year. We have accrued an amount that we believe is within the range of probable outcomes for resolving
this matter. However, the outcome of any arbitration is difficult to predict, and in the event that the arbitration results in
a finding against us in excess of the amount reserved, we could incur additional amounts and our results of operations
and financial condition could be adversely affected.
On January 14, 2019, a Maxar stockholder filed a putative class action lawsuit captioned Oregon Laborers Employers
Pension Trust Fund, et al. v. Maxar Technologies Inc., No. 1:19-cv-00124-WJM-SKC in the District Court of Colorado
37
(the “Colorado Action”), naming Maxar and members of management as defendants alleging, among other things, that
the Company’s public disclosures were deficient in violation of the federal securities laws and seeking monetary
damages. On August 7, 2019, the Court appointed a lead plaintiff and lead counsel. On October 7, 2019, the lead
plaintiff filed a consolidated amended complaint alleging violations of Sections 10(b) and 20(a) of the Securities and
Exchange Act of 1934 against the Company and members of management in connection with the Company’s public
disclosures between March 26, 2018 and January 6, 2019. The consolidated complaint alleges that the Company’s
statements regarding the AMOS-8 contract, accounting for its GEO communications assets, and WorldView-4 were
allegedly false and/or misleading during the class period. On December 6, 2019, defendants moved to dismiss the
Colorado Action, which motion is currently pending. Also in January 2019, a Maxar stockholder resident in Canada
issued a putative class action lawsuit captioned Charles O’Brien v. Maxar Technologies Inc., No. CV-19-00613564-
00CP in the Ontario Superior Court of Justice against Maxar and members of management claiming misrepresentations
in Maxar’s public disclosures and seeking monetary damages. This action was later discontinued. On November 15,
2019, Mr. O’Brien and another Maxar stockholder resident in Canada issued a new putative class action lawsuit
captioned Charles O’Brien v. Maxar Technologies Inc., No. CV-19-00631107-00CP, naming Maxar and certain
members of management and the board of directors as defendants as well as Maxar’s auditor, KPMG LLP. On February
7, 2020, the January 2019 claim was discontinued. The Statement of Claim alleges that the Company’s statements
regarding the AMOS-8 contract, accounting for its GEO communications assets, and WorldView-4 were false and/or
misleading during the class period, and claims damages of $700 million. The Company believes that these cases are
without merit and intends to vigorously defend against them.
On October 21, 2019, a Maxar stockholder filed a putative class action lawsuit captioned McCurdy v. Maxar
Technologies Inc., et al. No. T19-074 in the Superior Court of the State of California, County of Santa Clara (the
“California Action”), naming Maxar, and certain members of management and the board of directors as defendants. The
lawsuit alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 in connection with the
Company’s June 2, 2017 Registration Statement and prospectus filed in anticipation of its October 17, 2017 merger with
DigitalGlobe. The lawsuit is based upon many of the same underlying factual allegations as the Colorado Action.
Specifically, the lawsuit alleges the Company’s statements regarding its accounting methods and risk factors, including
those related to the GEO communications business, were false and/or misleading when made. The Company believes
that this lawsuit is without merit and intends to vigorously defend against it.
On November 14, 2019, a complaint was filed in a derivative action against Maxar and certain current and former
members of management and the board of directors in federal court in the District of Delaware, captioned as Dorling,
Derivatively on Behalf of Nominal Defendant Maxar Technologies Inc. v. Lance et al., No. 19-cv-02134-UNA. The
complaint concerns the same factual allegations asserted in the Colorado Action. On February 7, 2020, the court granted
the parties’ stipulated motion to stay this case.
We are a party to various other legal proceedings and claims that arise in the ordinary course of business as either a
plaintiff or defendant. As a matter of course, we are prepared both to litigate these matters to judgment, as well as to
evaluate and consider all reasonable settlement opportunities. We have established accrued liabilities for these matters
where losses are deemed probable and reasonably estimable. The outcome of any of these other proceedings, either
individually or in the aggregate, is not expected to have a material adverse effect on our financial position, results of
operations or liquidity.
ITEM 4. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS,
AND ISSUER PURCHASES OF EQUITY SECURITIES
Maxar trades on the NYSE and TSX under the ticker “MAXR”. As of February 24, 2020, there were approximately 29
stockholders of record of our common stock. This stockholder figure does not include a substantially greater number of
"street name" holders or beneficial holders of our common stock whose shares are held of record by banks, brokers, and
other financial institutions.
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Dividends
We declared and paid dividends of $0.04 and $1.14 per share of common stock during 2019 and 2018, respectively.
Issuer Purchases of Equity Securities
None.
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data is qualified by reference to and should be read in conjunction with the
Consolidated Financial Statements, including the notes thereto in Part II, Item 8, “Financial Statements and
Supplementary Data” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results
of Operations” of this Annual Report on Form 10-K.
2019
Year ended December 31,
2017
2018
2016
2015
($ millions, except per share amounts)
Total revenues from continuing operations
$ 1,666 $ 1,804 $ 1,257 $ 1,148 $ 1,259
Income (loss) from continuing operations
Income (loss) from discontinued operations, net of tax
$
83 $ (873) $ (56) $
26
(377)
116
Net income (loss)
$ 109 $ (1,250) $
60 $
7 $
61
68 $
43
60
103
Basic net income (loss) per common share:
Income (loss) from continuing operations
Income (loss) from discontinued operations, net of tax
Basic net income (loss) per common share
$ 1.39 $ (15.03) $ (1.36) $ 0.19 $ 1.18
1.65
$ 1.83 $ (21.52) $ 1.46 $ 1.87 $ 2.83
(6.49)
2.82
0.44
1.68
Total assets
Long-term obligations
Cash dividends declared per common share
$ 5,157 $ 5,058 $ 6,411 $ 1,508 $ 1,569
—
$ 2,945 $ 3,043 $ 2,956 $
$ 0.04 $ 1.14 $ 1.14 $ 1.12 $ 1.17
— $
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
We are a leading provider of solutions in Earth Intelligence and Space Infrastructure. We help government and
commercial customers to monitor, understand and navigate the changing planet; deliver global broadband
communications; and explore and advance the use of space. Our approach combines decades of deep mission
understanding and a proven commercial and defense foundation to deliver our services with speed, scale and cost
effectiveness.
Our businesses are organized and managed in three reportable segments: Earth Intelligence, Space Infrastructure and
MDA, as described below under “Segment Results.”
RECENT DEVELOPMENTS
Definitive Agreement to Sell MDA
On December 29, 2019, we entered into a Stock Purchase Agreement (“MDA Agreement”), with Neptune Acquisition
Inc., a corporation existing under the laws of the Province of British Columbia and an affiliate of Northern Private
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Capital Ltd. (“MDA Purchaser”) that provides for, among other things, the MDA Purchaser to purchase MDA, our
Canadian subsidiary, from us for an aggregate purchase price of approximately C$1.0 billion (“MDA Transaction”). The
MDA Transaction is subject to customary purchase price adjustments for working capital, cash and debt, and as
otherwise described below. Pursuant to the MDA Agreement, the MDA Purchaser will acquire all of the outstanding
shares in the entities that operate our MDA business.
The closing of the MDA Transaction is conditioned on customary closing conditions and on specified regulatory
approvals, including review by the Committee on Foreign Investment in the United States, Hart-Scott-Rodino review by
the U.S. Department of Justice and the U.S. Federal Trade Commission, and Canadian government reviews under the
Radiocommunication Act and the Competition Act. The closing of the MDA Transaction is not subject to a financing
condition and is expected to close in the Spring or early Summer of 2020.
The MDA Agreement contains specified termination rights for us and the MDA Purchaser, including, among others, if
the consummation of the MDA Transaction has not occurred by June 29, 2020, subject to extension to September 29,
2020 for the purpose of obtaining regulatory approvals in the U.S. and Canada and appealing any injunctions preventing
the consummation of the MDA Transaction.
The MDA Agreement contains a negative purchase price adjustment of up to C$65 million for a complete loss or failure
of RADARSAT-2, such that it cannot be used for its intended commercial purposes.
The MDA Agreement provides that the MDA Purchaser will be required to pay us a reverse termination fee of C$55
million under specified circumstances, including, among others, where the MDA Agreement is terminated because (i)
the MDA Purchaser has materially breached its representations and warranties or the MDA Purchaser fails to perform its
covenants in all material respects, subject to a cure period, or (ii) all of the conditions to closing of the MDA Transaction
(other than those conditions that by their terms are to be satisfied at closing) have been satisfied or waived, we have
confirmed in writing to the MDA Purchaser that we stand ready, willing and able to consummate the MDA Transaction
and the MDA Purchaser fails to consummate the closing (including for a failure of the MDA Purchaser’s debt financing)
within two business days of receipt of the notice from us.
Senior Secured 2023 Notes
In December 2019, we issued $1.0 billion in principal amount of 9.75% Senior Secured Notes due 2023 (“2023 Notes”)
in a private placement to institutional buyers. The 2023 Notes were issued at a price of 98%. The 2023 Notes bear
interest at the rate of 9.75% per year, payable semi-annually in cash in arrears, which interest payments will commence
in June 2020. The 2023 Notes are guaranteed on a senior secured basis by each of our existing and future subsidiaries
that guarantee the Syndicated Credit Facility.
The proceeds from the 2023 Notes and the sale of our owned properties in Palo Alto, California were used to repay the
outstanding borrowings under our existing senior secured first lien term A facility (“Term Loan A”) and the majority of
the outstanding borrowings on the Revolving Credit Facility.
Concurrent Amendment to Revolving Credit Facility
On November 4, 2019, we further amended our Original Syndicated Credit Facility (the “Third Amending Agreement”),
certain portions of which became effective immediately and certain portions of which became effective in December
2019 upon the issuance of the 2023 Notes (“Effective Date”). The Third Amending Agreement, during the Covenant
Relief Period, (i) modified the priority of the application of certain voluntary prepayments resulting from certain asset
sales (but which did not affect the prepayments owed to the Term Loan B), and (ii) restricted use of proceeds of future
borrowings. In addition, the Third Amending Agreement increased the maximum consolidated debt leverage ratios
permitted under the Original Syndicated Credit Facility to 7.25x at the end of the fiscal quarter ended December 31,
2019, 7.50x at the end of the fiscal quarter ending March 31, 2020, 7.75x at the end of each fiscal quarter thereafter until
the fiscal quarter ending September 30, 2021, 7.50x at the end of each fiscal quarter thereafter until the quarter ending
September 30, 2022, 6.50x at the end of each fiscal quarter thereafter until the fiscal quarter ending March 31, 2023, and
5.75x for each fiscal quarter thereafter (subject to a 0.25x reduction in each maximum level upon a disposition of a
40
business line for greater than $500 million). The Third Amending Agreement also extended the maturity of the
Revolving Credit Facility by two years to December 2023, updated the Interest Coverage Ratio to be less than 2.0x at the
end of each fiscal quarter, restricted investment capacity in certain permitted investments, restricted future increases in
quarterly dividend payment levels and modified certain margin and standby fee terms. In addition, we canceled the
operating credit facility and reduced committed borrowing capacity under the Revolving Credit Facility from $1.25
billion to $500 million.
Sale Leaseback Agreements
On December 10, 2019, we completed the sale and subsequent leaseback of our owned properties in Palo Alto,
California for proceeds of $291 million. We recognized a gain on the sale of the properties of $136 million, which was
adjusted for off-market leaseback terms and is included in Gain on sale of assets in the Consolidated Statements of
Operations. We recorded operating lease assets and liabilities of $63 million, representing the fair value of the minimum
lease payments associated with the agreements to lease assets back over a period of two to ten years; and recognized a
deferred financing liability of $33 million for the above-market rent stipulated in the lease agreements which included in
Long-term debt on the Consolidated Balance Sheet.
Tax Benefit Preservation Plan
On May 12, 2019, our Board of Directors approved a Tax Benefit Preservation Plan (“Tax Plan”), which our
Stockholders subsequently approved on October 31, 2019, with the intent to preserve the value of certain deferred tax
benefits (“Tax Benefits”) including those generated by net operating losses. The Tax Plan is intended to act as a
deterrent to any person or entity acquiring shares of the Company equal to or exceeding 4.9%. For each common stock
outstanding as of May 28, 2019, a dividend of one preferred stock purchase right (“The Rights”) is granted. The Tax
Plan gives current stockholders the right to purchase one one-hundredth of a 32 share of Series A Junior Participating
Preferred Stock at a set price of $30.92 which, upon exercise, provides for one additional share of common stock at a
50% discount on the exercise date with no cash settlement options. The Rights under the Tax Plan will expire on October
5, 2020. The Tax Plan reduces the likelihood that changes in our investor base have the unintended effect of limiting the
use of our Tax Benefits. There is no impact to the financial statements as a result of the Tax Plan.
Security Control Agreement and Facility Clearance and the U.S. Domestication
On January 26, 2017, we, together with our U.S.-based subsidiary, Maxar Holdings, and the U.S. Department of Defense
entered into a Security Control Agreement (“SCA”) and began operating under the agreement. On February 2, 2018, the
Defense Security Service granted facility clearance for our satellite manufacturing facility in Palo Alto, California.
On January 1, 2019, we completed our previously announced U.S. Domestication. The U.S. Domestication marked a
major milestone in our long-term U.S. Access Plan, enhanced our ability to provide and support classified applications
for U.S. government agencies and fulfilled a commitment made in acquiring DigitalGlobe. On January 8, 2020, the SCA
was terminated by the U.S. Department of Defense, who determined that the SCA was no longer necessary as a result of
the U.S. Domestication. The SCA was replaced by a simple Board Resolution that will continue to govern our foreign
ownership and controlling interests.
Key Leadership Changes
On January 14, 2019, we announced the appointment of Daniel Jablonsky as President and Chief Executive Officer of
Maxar. Mr. Jablonsky, who most recently served as President of DigitalGlobe, a wholly owned subsidiary of Maxar, also
joined the Maxar Board of Directors. He succeeds Howard Lance, who resigned from his roles as President and Chief
Executive Officer and as a Director of Maxar.
In December 2018, we announced that our Board of Directors elected retired U.S. Air Force Gen. Howell M. Estes III as
Chairman of the Board of Directors, effective January 1, 2019, coincident with the U.S. Domestication. Gen. Estes, who
has served as a director of our Board of Directors since the acquisition of DigitalGlobe, succeeds Robert L. Phillips, who
will continue to serve as a director.
41
In July 2018, we announced the appointment of Biggs Porter as Executive Vice President and Chief Financial Officer of
Maxar, effective August 15, 2018. Anil Wirasekara, who previously served as Chief Financial Officer from 1994 to
October 2017, assumed the duties of Interim Chief Financial Officer after William McCombe stepped down as Chief
Financial Officer in February 2018.
WorldView-4 Satellite
During December 2018, our WorldView-4 satellite experienced a failure in its control moment gyros, preventing the
satellite from collecting imagery. As a result, during December 2018, we recorded an impairment loss of $162 million
for the remaining book value of the satellite, related assets and future premium payments. On May 3, 2019, we
announced that our insurance carriers accepted our $183 million claim for loss arising from the WorldView-4 satellite on
orbit failure and agreed to pay us the full amount. As of December 31, 2019, we have collected the full insurance
proceeds.
Acquisition of DigitalGlobe
On October 5, 2017, we completed the DigitalGlobe Transaction and renamed the combined company Maxar
Technologies Ltd. The transaction created a global leader in Earth imaging and geospatial solutions by combining
DigitalGlobe’s over 15-year lead in technology and ImageLibrary development, as well as its high-resolution Earth
imaging capabilities, with our existing position as a world leader in commercial communications satellites.
We believe we are uniquely positioned to grow in the U.S. and global Earth observation and geospatial services markets
through our end-to-end space systems, Earth imagery and geospatial solutions. As a result of the DigitalGlobe
Transaction, we increased our scale and we believe, credibility with U.S. government agencies and international
government customers. The DigitalGlobe Transaction also added more predictable geospatial data and services revenue
while diversifying our product and service offering. With a larger set of customers and end markets, we are better able to
increase share in existing markets and grow in adjacent markets.
Our vision is to be the world’s leader in the new space economy. We aim to achieve this by integrating innovative
technologies, unique capabilities and end-to-end offerings across our businesses to help our customers address their most
complex mission-critical challenges with confidence.
Segment Results
In January 2019, with the appointment of Mr. Jablonsky as our President and Chief Executive Officer, our CODM
changed. During the fourth quarter of 2019, following a number of changes, the CODM changed the way in which he
assesses performance and allocates resources. As a result, we have revised our reportable segments to reflect how the
CODM currently reviews financial information and makes operating decisions. Our CODM measures performance of
our reportable segments based on revenue and Adjusted EBITDA. Our operating and reportable segments are: Earth
Intelligence, Space Infrastructure and MDA. With our announcement of the MDA Transaction on December 30, 2019,
the MDA segment has been classified within Income (loss) from discontinued operations, net of tax in the Consolidated
Statements of Operations. All prior-period amounts have been adjusted to reflect the reportable segment change.
Earth Intelligence
In the Earth Intelligence segment, we are a global leader in high resolution space-based optical and radar imagery
products and analytics. We launched the world’s first high resolution commercial imaging satellite in 1999 and currently
operate a four-satellite imaging constellation, providing us with a 110 petabyte historical ImageLibrary of the
highest-resolution, commercially available imagery. Our imagery solutions provide customers with timely, accurate and
mission-critical information about our changing planet and support a wide variety of government and commercial
applications, including mission planning, mapping and analysis, environmental monitoring, disaster management, crop
management, oil and gas exploration and infrastructure management. Our principal customers in the Earth Intelligence
segment are U.S. and other international government agencies (primarily defense and intelligence agencies), as well as a
42
wide variety of commercial customers in multiple markets. We are a market leader in the commercial satellite Earth
observation industry.
We also provide geospatial services that combine imagery, analytic expertise and innovative technology to deliver
intelligence solutions to customers. Our cleared developers, analysts, and data scientists provide analytic solutions that
accurately document change and enable geospatial modeling and analysis that help predict where events will occur. Our
primary customer of geospatial services is the U.S. government, but we also support intelligence requirements for other
U.S. allied governments, global development organizations and commercial customers.
The Earth Intelligence segment includes the financial results of the legacy Imagery and Services segments, excluding the
legacy Canadian radar imagery business.
Space Infrastructure
In the Space Infrastructure segment, we are a leading provider of Space Infrastructure. We design, build, integrate and
test solutions for space-based communications satellites, on-orbit servicing, robotic assembly and space exploration. We
address a broad spectrum of needs for our customers, including mission systems engineering, product design, spacecraft
manufacturing, assembly integration and testing. We provide advanced, reliable, and affordable spacecraft that enable
our commercial customers to deliver valuable global services, and we are successfully partnering with the U.S.
government in new space opportunities. Our principal customers in the Space Infrastructure segment are commercial
satellite operators and government agencies worldwide.
The Space Infrastructure segment includes the financial results of our legacy Space Solutions business (previously
referred to as Space Systems/Loral LLC or SSL) which was previously included within our legacy Space Systems
segment.
MDA
In the MDA segment, we are a leading provider of Space Infrastructure in Canada. We develop and deliver advanced
surveillance and intelligence solutions, defense and maritime systems, radar geospatial imagery, space robotics, satellite
antennas and communication subsystems. The MDA segment includes the financial results of the MDA and legacy radar
imagery business. We have a long history in space robotics, having developed the Canadarms for NASA’s Space Shuttle
program and Canadarm2, which is currently in service on the International Space Station. Our principal customers in the
MDA segment are the Canadian government and other government and commercial customers worldwide. As discussed
above, in connection with the MDA Transaction, the financial results from this segment were classified as discontinued
operations for all periods presented in this Annual Report on Form 10-K.
43
RESULTS OF OPERATIONS
The following table provides selected annual financial information for the years ended December 31, 2019, 2018 and
2017.
Year ended December 31,
2018
2019
2017
$ Change % Change
$ Change
% Change
2018 to 2019
2017 to 2018
($ millions)
Revenues:
Product
Service
Total revenues
Costs and expenses:
Product costs, excluding depreciation
and amortization
Service costs, excluding depreciation
and amortization
Selling, general and administrative
Depreciation and amortization
Impairment losses
Satellite insurance recovery
Gain on sale of assets
Operating income (loss)
Interest expense, net
Other (income) expense, net
Income (loss) before taxes
Income tax expense (benefit)
Equity in (income) loss from joint
ventures, net of tax
Income (loss) from continuing
operations
Income (loss) from discontinued
operations, net of tax
Net income (loss)
* Not meaningful.
Product and service revenue
($ millions)
Product revenues
Service revenues
Total revenues
$ 560 $
1,106
697 $ 877 $ (137)
(1)
380
$ 1,666 $ 1,804 $ 1,257 $ (138)
1,107
(20)% $
—
(8)% $
(180)
727
547
(21)%
191
44 %
$ 593 $
775 $ 764 $ (182)
(23)% $
11
1 %
160
337
152
—
—
—
313
446
439
586
—
(33)
382
325
376
14
(183)
(136)
69
(121)
(63)
(572)
(183)
(103)
$ 295 $ (722) $ (156) $ 1,017
19
219
(1)
(2)
77 $ (923) $ (223) $ 1,000
53
5
200
1
97
(30)
(168)
(48)
$
22
(27)
(14)
(98)
*
*
(141)% $
10
(200)
(108)% $
(110)
153
109
287
586
—
(33)
(566)
103
31
(700)
120
(11)
(2)
1
(9)
*
(3)
83
(873)
(56)
956
(110)
(817)
26
(377)
$ 109 $ (1,250) $
116
403
60 $ 1,359
(107)
(493)
(109)% $ (1,310)
96
32
189
*
*
*
* %
106
(103)
* %
(71)
*
*
*
* %
Year ended December 31,
2018
2019
2017
$ Change
% Change
$ Change
% Change
2018 to 2019
2017 to 2018
697 $
$ 560 $
1,106
877 $ (137)
(1)
380
$ 1,666 $ 1,804 $ 1,257 $ (138)
1,107
(20) % $ (180)
—
727
(8) % $ 547
(21)%
191
44 %
Total revenues decreased to $1,666 million from $1,804 million, or by $138 million, for the year ended December 31,
2019 compared to the same period in 2018. The decrease was primarily driven by a decrease in revenue in our Space
Infrastructure segment partially offset by an increase in revenue in our Earth Intelligence segment. Further discussion of
the drivers behind the decrease in revenues within the “Results by Segment” section below.
Total revenues increased to $1,804 million from $1,257 million, or by $547 million for the year ended December 31,
2018 as compared to the same period in 2017. The increase in revenues was primarily driven by the inclusion of a full
year of revenue related to the DigitalGlobe Transaction as compared with only approximately one quarter of revenues in
2017. The increase in revenue from the Earth Intelligence segment was partially offset by a decrease in revenue in the
44
Space Infrastructure segment. Further discussion of the drivers behind the decrease in revenues within the Space
Infrastructure segment is included within the “Results by Segment” section below.
See Note 17, “Segment Information” to the Consolidated Financial Statements in Part II, Item 8, “Financial Statements
and Supplementary Data” for product and service revenues by segment.
Product and service costs
($ millions)
Product costs, excluding depreciation and
amortization
Service costs, excluding depreciation and
amortization
Total costs
Year ended December 31,
2018
2017
2019
$ Change
% Change
$ Change
% Change
2018 to 2019
2017 to 2018
$ 593 $
775 $ 764 $ (182)
(23) % $
11
1 %
382
69
$ 975 $ 1,088 $ 924 $ (113)
160
313
22
153
(10) % $ 164
96
18 %
Total cost of product and services decreased to $975 million from $1,088 million, or by $113 million, for the year ended
December 31, 2019 compared to 2018. The decrease is primarily driven by lower costs within the Space Infrastructure
segment driven by lower volume which was partially offset by an increase in costs in our Earth Intelligence segment
which was primarily driven by an increase in the labor associated with providing geospatial services.
Total cost of product and services increased to $1,088 million from $924 million, or by $164 million, for the year ended
December 31, 2018 compared to 2017. The increase is primarily related to the inclusion of a full year of costs related to
the DigitalGlobe Transaction compared to only approximately one quarter in 2017.
Selling, general and administrative
Year ended December 31, $ Change
2018 2017
2019
2018 to 2019
% Change
$ Change
% Change
2017 to 2018
($ millions)
Selling, general and administrative
$ 325 $ 446
$ 337 $ (121)
(27)% $ 109
32 %
Selling, general and administrative expense decreased to $325 million from $446 million, or by $121 million, for the
year ended December 31, 2019 compared to 2018. The decrease was primarily driven by a decrease in research and
development spend of $78 million, a $19 million decrease in integration expense related to the DigitalGlobe Transaction
and a decrease in labor related expenses due to a reduction of headcount from actions taken during the first quarter of
2019.
Selling, general and administrative expense increased to $446 million from $337 million, or by $109 million for the year
ended December 31, 2018 compared to 2017. The increase was primarily driven by inclusion of a full year of costs
related to the DigitalGlobe Transaction compared to only approximately one quarter in 2017.
Depreciation and amortization
Year ended December 31, $ Change
2019 2018 2017
2018 to 2019
% Change
$ Change
% Change
2017 to 2018
($ millions)
Property, plant and equipment
Intangible assets
Depreciation and amortization expense
$ 107 $ 150 $ 55 $ (43)
269 289
(20)
$ 376 $ 439 $ 152 $ (63)
97
95
(29)% $
(7)
192
(14)% $ 287
173 %
198
189 %
45
Depreciation and amortization expense decreased to $376 million from $439 million, or by $63 million, for the year
ended December 31, 2019 compared to the same period in 2018. The decrease was primarily driven by a decrease in
depreciation and amortization expense following asset impairments in the second half of 2018.
Depreciation and amortization expense increased to $439 million from $152 million, or by $287 million, for the year
ended December 31, 2018 compared to 2017. The increase is primarily due to the inclusion of a full year of depreciation
and amortization expense related to the acquisition of DigitalGlobe as compared to approximately one quarter of
depreciation and amortization expense in 2017.
Impairment losses
($ millions)
Impairment losses
* Not meaningful.
Year ended December 31,
2017
2018
2019
$ Change
% Change
$ Change
% Change
2018 to 2019
2017 to 2018
$ 14
$ 586
$ — $ (572)
(98)% $ 586
* %
During the year ended December 31, 2019, we recognized impairment losses of $14 million primarily related to orbital
receivables within the Space Infrastructure segment due to a decrease in customer credit ratings.
During the year ended December 31, 2018, we recognized $586 million of impairment losses. We recorded a non-cash
goodwill impairment loss of $159 million related to our Earth Intelligence and Space Infrastructure segments which was
a result of the sustained decline in our stock price and the further decline in the geostationary satellite manufacturing
business (“GeoComm”) in our Space Infrastructure segment. We also recognized impairment losses of $122 million
related to intangible assets and $121 million related to property, plant and equipment within the Space Infrastructure
segment. Additionally, we recorded a $22 million impairment related to orbital receivables within the Space
Infrastructure segment primarily due to a decrease in customer credit rating. In December 2018, we lost the imaging
capability of our WorldView-4 satellite, resulting in a loss of $162 million on the satellite, related assets, and future
premium payments.
Satellite insurance recovery
During the year ended December 31, 2019, we received insurance recoveries of $183 million related to the loss of
imaging capability of our WorldView-4 satellite in December 2018.
Gain on sale of assets
($ millions)
Gain on sale of assets
* Not meaningful.
Year ended December 31,
2017
2019
2018
$ Change
% Change
$ Change
% Change
2018 to 2019
2017 to 2018
$ (136) $ (33)
$ — $ (103)
* % $ (33)
* %
During the year ended December 31, 2019 we recorded a gain of $136 million related to the sale and subsequent
leaseback of our owned properties in Palo Alto, California.
During the year ended December 31, 2018, we recorded a gain of $33 million related to the sale of one of our buildings
in Palo Alto, California.
46
Interest expense, net
($ millions)
Interest expense:
Interest on long-term debt
Loss on debt extinguishment
Interest expense on advance payments from
customers 1
Interest on orbital securitization liability
Interest expense on dissenting stockholder
liability
Imputed interest and other
Capitalized interest
Interest expense, net
* Not meaningful.
Year ended December 31, $ Change
2019 2018 2017
2018 to 2019
% Change
$ Change % Change
2017 to 2018
$ 194 $ 171 $ 57 $
22
—
23
15
7
26
7
8
8
—
—
(19)
3
—
(7)
—
1
—
$ 219 $ 200 $ 97 $
23
22
(11)
—
(3)
—
(12)
19
13 % $ 114
(23)
*
200 %
(100)
(42)
—
18
(1)
*
(13)
(100)
*
171
3
(1)
(7)
10 % $ 103
*
(100)
*
106 %
1 Under DigitalGlobe’s predecessor contract to the EnhancedView Contract, DigitalGlobe had received advanced
payments from the U.S. government during the construction phase of the WorldView-1 satellite, which was more
than one year before capacity was made available to them. The effect of imputing interest on these advanced
payments is to increase contract liabilities with an offsetting charge to interest expense. As capacity is provided to the
customer, revenue is recognized and the contract liabilities balance decreases. The contract liability balance
associated with the EnhancedView Contract is expected to be recognized as revenue through August 31, 2020.
Interest expense, net increased to $219 million from $200 million, or by $19 million, for the year ended December 31,
2019 compared to 2018. The increase is primarily due to a $23 million increase in interest on long-term debt and a $22
million loss on debt extinguishment. These increases were partially offset by an increase in capitalized interest of $12
million primarily related to the building of our WV-Legion constellation and a $11 million decrease in interest on
advance payments from customers.
Interest expense, net increased to $200 million from $97 million, or by $103 million, for the year ended December 31,
2018 compared to 2017. The increase is driven by higher levels of long-term debt primarily related to the DigitalGlobe
Transaction, and an increase of $18 million in interest expense on advance payments from customers. The increase was
partially offset by a loss on debt extinguishment in the prior year period of $23 million.
Other (income) expense, net
($ millions)
Other (income) expense, net
Year ended December 31, $ Change
2019 2018 2017
2018 to 2019
% Change
$ Change
% Change
2017 to 2018
$ (1) $ 1 $ (30) $
(2)
(200)% $
31
(103)%
Other (income) expense, net remained relatively unchanged year over year as it increased to income of $1 million for the
year ended December 31, 2019 compared to a net loss of $1 million for the year ended December 31, 2018.
Other expense (income), net changed to an expense of $1 million compared to income of $30 million for the year ended
December 31, 2018 compared to the same period in 2017. This is primarily due to the $26 million gain on settlement in
2017 related to the 2017 amendment of one of our other postretirement benefit plans in the Space Infrastructure segment
which did not reoccur in 2018.
47
Income tax benefit
Year ended December 31, $ Change
2019 2018 2017
2018 to 2019
% Change
$ Change
% Change
2017 to 2018
($ millions)
Income tax expense (benefit)
$ 5 $ (48) $ (168) $
53
(110)% $ 120
(71)%
Income tax expense (benefit) increased to an expense of $5 million from a benefit of $48 million, or by $53 million, for
the year ended December 31, 2019 compared to 2018, primarily due to the recognition of a 2018 tax benefit associated
with interest expense in continuing operations and the applicability of the base erosion and anti-abuse tax (“BEAT”) to
certain payments made in 2019.
Income tax benefit decreased to a benefit of $48 million from a benefit of $168 million, or by $120 million, for the year
ended December 31, 2018 compared to 2017 primarily due to a reduction in our valuation allowance in the year ended
December 31, 2017 attributable to the acquisition of DigitalGlobe, offset partially by the additional tax benefit relating to
increased interest expense.
Our effective tax rate for 2019 differed from 2018 primarily due to the recognition of the Canadian tax benefit associated
with deductible interest expense and the applicability of BEAT to certain payments made in 2019.
Our effective tax rate for 2018 differed from 2017 primarily due to the change in the valuation allowance as a result of
the acquisition of DigitalGlobe in 2017, offset partially by the additional tax benefit relating to increased interest
expense following the acquisition of DigitalGlobe.
Equity in (income) loss from joint ventures, net of tax
Year ended December 31,
2017
2018
2019
$ Change
% Change
$ Change
% Change
2018 to 2019
2017 to 2018
($ millions)
Equity in (income) loss from joint ventures,
net of tax
* Not meaningful.
$ (11) $
(2)
$
1 $
(9)
* % $
(3)
* %
Equity in income from joint ventures, net of tax increased to $11 million from $2 million, or by $9 million, for the year
ended December 31, 2019 compared to the same period in 2018. The increase, which was substantially all in the fourth
quarter of 2019, is primarily related to growth in our Vricon joint venture of which we own approximately 50%.
Equity in loss (income) from joint ventures, net of tax increased to income of $2 million compared to a loss of $1
million, or by $3 million, for the year ended December 31, 2018 compared to the same period in 2017. The increase is
primarily related to the impact of a full year of Vricon’s results in 2018 as opposed to approximately one quarter of
results in 2017.
Income (loss) from discontinued operations, net of tax
Year ended December 31,
2017
2018
2019
$ Change
% Change
$ Change
% Change
2018 to 2019
2017 to 2018
($ millions)
Income (loss) from discontinued operations,
net of tax
* Not meaningful.
$
26 $
(377) $ 116 $ 403
(107)% $ (493)
* %
Income from discontinued operations, net of tax increased to $26 million in net income from a net loss of $377 million,
or by $403 million, for the year ended December 31, 2019 compared to the same period in 2018. This increase was
primarily driven by the decrease in impairment losses recorded in 2019 of $12 million compared to a goodwill
impairment of $477 million in 2018. The 2019 results were impacted by a decrease in revenue of $53 million which was
48
partially offset by a decrease in costs. The 2019 results were also impacted by a liability for contingencies of $32
million.
Income from discontinued operations, net of tax decreased to a loss of $377 million from net income of $116 million, or
by $493 million, for the year ended December 31, 2018 compared to the same period in 2017. This decrease was
primarily driven by a goodwill impairment of $477 million which was partially offset by a decrease in costs.
RESULTS BY SEGMENT
We analyze financial performance by segments, which group related activities within our business. We report our
financial performance based on three reportable segments: Earth Intelligence, Space Infrastructure and MDA. As of
December 31, 2019, the MDA segment was classified as discontinued operations and is not included in the table or
discussion below. Intrasegment transactions have been eliminated from the segmented financial information discussed
below.
Year ended December 31,
$ Change
% Change
$ Change
% Change
2019
2018
2017
2018 to 2019
2017 to 2018
($ millions)
Revenues:
Earth Intelligence
Space Infrastructure
Intersegment eliminations
Total revenue
$ 1,085 $ 1,059
823
(78)
706
(125)
(47)
$ 1,666 $ 1,804 $ 1,257 $ (138)
(6)
331 $
932
26
(117)
2 % $ 728
(109)
(14)
(72)
60
(8) % $ 547
* %
(12)
*
44 %
Adjusted EBITDA:
Earth Intelligence
Space Infrastructure
Intersegment eliminations
Corporate and other expenses
$
Total Adjusted EBITDA
$
* Not meaningful.
548 $ 516 $ 152 $
(59)
(17)
—
(29)
(8)
(86)
85 $
416 $ 383 $
(75)
(9)
(49)
32
58
(20)
(37)
33
6 % $ 364
(16)
(77)
(9)
*
(41)
76
9 % $ 298
* %
27
*
*
* %
Adjusted EBITDA disclosures throughout this section, “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” are non-GAAP measures. See “Non-GAAP Financial Measures” below for further
discussion of Adjusted EBITDA disclosures.
Earth Intelligence
The following table provides selected financial information for the Earth Intelligence segment.
Year ended December 31,
2018
2017
2019
$ Change
% Change
$ Change
% Change
2018 to 2019
2017 to 2018
($ millions)
Total revenues
Adjusted EBITDA
Adjusted EBITDA margin percentage
* Not meaningful.
$ 1,085 $ 1,059
$ 331
$
26
2 % $ 728
$ 548 $ 516
$ 152
$
48.7 % 45.9 %
50.5 %
32
6 % $ 364
* %
* %
Revenues from the Earth Intelligence segment increased to $1,085 million from $1,059 million, or by $26 million, for
the year ended December 31, 2019 compared to the same period in 2018. The increase was primarily driven by new
contract awards and expansion of programs with the U.S. government of $63 million, offset by a net decrease of $36
million in revenues from our direct access program primarily due to the loss of WorldView-4 revenues.
49
Revenues from the Earth Intelligence segment increased to $1,059 million from $331 million, or by $728 million, for the
year ended December 31, 2018 compared to the same period in 2017. The increase was primarily driven by the inclusion
of DigitalGlobe’s results for a full year compared to only one quarter of results in 2017.
Adjusted EBITDA from the Earth Intelligence segment increased to $548 million from $516 million, or by $32 million,
for the year ended December 31, 2019 compared to the same period in 2018. The increase is primarily related to a
decrease in selling, general and administrative costs of $28 million partially related to headcount reductions taken in the
first half of the year and a shift of certain functions to corporate, and an increase in equity in income from our Vricon
joint venture of $9 million. These increases were partially offset by a net decrease in margins from our revenue
contracts, which were primarily driven by the loss of WorldView-4 revenues, which had higher margins.
Adjusted EBITDA from the Earth Intelligence segment increased to $516 million from $152 million, or by $364 million,
for the year ended December 31, 2018 compared to the same period in 2017. The increase was primarily driven by the
inclusion of DigitalGlobe’s results for a full year compared to only one quarter of results in 2017.
Space Infrastructure
The following table provides selected financial information for the Space Infrastructure segment.
Year ended December 31,
2018
2017
2019
$ Change
% Change
$ Change
% Change
2018 to 2019
2017 to 2018
($ millions)
Total revenues
Adjusted EBITDA
Adjusted EBITDA margin percentage
$ 706
$ 823
$ 932
$ (117)
(14)% $ (109)
(12)%
$ (17)
$
(2.4)% (9.1)% (6.3)%
$ (75)
$ (59)
58
(77)% $ (16)
27 %
Changes in revenues from year to year are influenced by the size, timing and number of satellite contracts awarded in the
current and preceding years and the length of the construction period for satellite contracts awarded. Revenues on
satellite contracts are recognized using the cost-to-cost method to determine the percentage of completion over the
construction period, which typically ranges between 20 to 36 months and up to 48 months in special situations. Adjusted
EBITDA margins can vary from quarter to quarter due to the mix of our revenues and changes in our estimated costs to
complete as our risks are retired and as our estimated costs to complete are increased or decreased based on contract
performance.
Revenues from the Space Infrastructure segment decreased to $706 million from $823 million, or by $117 million, for
the year ended December 31, 2019 compared to the same period in 2018. Revenues decreased primarily as a result of the
impact of reduced volume in our GeoComm business and an increase in estimated costs to complete programs. The
reduced volume was a result of new business not fully replacing existing backlog contracts that were completed during
the period.
Revenues from the Space Infrastructure segment decreased to $823 million from $932 million, or by $109 million, for
the year ended December 31, 2018 compared to the same period in 2017. Revenues decreased primarily as a result of the
impact of reduced volume in our GeoComm business, an increase in estimated costs to complete programs and $28
million of liquidated damages which were recorded during 2018.
Adjusted EBITDA from the Space Infrastructure segment was a loss of $17 million compared to a loss of $75 million, or
an increase of $58 million, for the year ended December 31, 2019 compared to the same period in 2018. The increase is
primarily related to reduced research and development spend of $72 million and headcount reductions from restructuring
initiatives resulting in lower costs and the impact of no new liquidated damages being incurred compared to $28 million
of liquidated damages in 2018. These increases were partially offset by decreases from the effects of lower revenues and
higher estimated costs to complete on certain projects along with losses incurred on developmental builds.
50
Adjusted EBITDA from the Space Infrastructure segment was a loss of $75 million compared to a loss of $59 million, or
a change of $16 million, for the year ended December 31, 2018 compared to the same period in 2017. The decrease from
2017 to 2018 is primarily related to an increase in estimated costs to complete programs as a result of supplier
performance issues and delays experienced during the second half of 2018, as well as unanticipated impacts of lower
volume, which resulted in lower productivity and overhead absorption. In addition, we incurred $28 million of liquidated
damages in 2018, compared to a recovery of liquidated damages during 2017 and research and development expenses
were $13 million higher in 2018 compared to the same period in 2017. In 2017, Adjusted EBITDA included a credit of
$26 million relating to the curtailment of a postretirement benefit plan which did not reoccur in 2018.
Corporate and other expenses
Corporate and other expenses include items such as corporate office costs, regulatory costs, executive and director
compensation, foreign exchange gains and losses, retention costs, and fees for legal and consulting services.
Corporate and other expenses increased to $86 million from $49 million, or by $37 million, for the year ended December
31, 2019 compared to the same period in 2018. The increase was primarily driven by an increase in retention costs
related to the Space Infrastructure segment of $24 million and an increase as a result of a shift of certain functions to
corporate and other increases in selling, general and administrative expense of approximately $12 million.
Corporate and other expenses increased to $49 million from $8 million, or by $41 million for the year ended December
31, 2018 compared to the same period in 2017. The increase in corporate expenses was primarily driven by additional
headcount as a result of the DigitalGlobe Transaction, and the expansion and ramp up of corporate functions to support
our increased scale.
Intersegment eliminations
Intersegment eliminations are related to projects between our segments, primarily WV-Legion. Intersegment
eliminations have increased for the years ended December 31, 2019 and 2018 compared to the same period of 2018 and
2017, respectively, primarily related to an increase in satellite construction activity.
BACKLOG
Our backlog by segment from continuing operations is as follows:
($ millions)
Earth Intelligence
Space Infrastructure
Total backlog
Unfunded contract options
Total
December 31,
2019
December 31,
2018
$
$
$
926 $
705
1,631 $
1,382
3,013
$
1,433
651
2,084
1,213
3,297
Order backlog, representing the estimated dollar value of firm funded contracts for which work has not been performed
(also known as the remaining performance obligations on a contract), decreased to $1.6 billion from $2.1 billion, or by
approximately $500 million, for the year ended December 31, 2019 compared to the same period in 2018. Order backlog
generally does not include unexercised contract options and potential orders under indefinite delivery/indefinite quantity
contracts. Approximately 61% of the total $1.6 billion backlog as of December 31, 2019 is expected to be converted into
revenue in 2020.
Backlog in the Space Infrastructure segment is primarily comprised of multi-year awards, such as satellite builds.
Fluctuations in the backlog are driven primarily by the timing of large program wins. Most of the Earth Intelligence
segment contracts are annual contracts, which renew at various times throughout the year. As a result, the timing of
when contracts are awarded and when option years are exercised may cause backlog to fluctuate significantly from
51
period to period. The decrease in backlog within the Earth Intelligence segment is primarily driven by the timing of the
exercise of the EnhancedView Contract option year and a decrease due to the termination of a contract related to the loss
of WorldView-4. These decreases were partially offset by increases in geospatial services.
Unfunded contract options represent estimated amounts of revenue to be earned in the future from negotiated contracts
with unexercised contract options and indefinite delivery/indefinite quantity contracts. Unfunded contract options as of
December 31, 2019 were primarily comprised of the option years in the EnhancedView Contract (September 1, 2020
through August 31, 2023). We believe it is the U.S. government’s intention to exercise all option years, subject only to
annual congressional appropriation of funding and the federal budget process. As each option year is exercised, it will be
added to backlog.
Although backlog reflects business that is considered to be firm, terminations, amendments or cancellations may occur,
which could result in a reduction in our total backlog.
LIQUIDITY & CAPITAL RESOURCES
Our sources of liquidity include cash provided by operations, collection or securitization of orbital receivables, access to
existing credit facilities and, when available and efficient, to the capital markets. We generally maintain limited cash on
hand and use available cash to pay down borrowings on our Syndicated Credit Facility. Our primary short-term cash
requirements are to fund working capital, including requirements on long-term construction contracts (including our
geostationary satellite contracts), fixed overhead costs, and to fund increased capital expenditures, including the
construction of our WV-Legion constellation. Working capital requirements can vary significantly from period to period,
particularly as a result of the timing of receipts and disbursements related to long-term construction contracts. Our
medium-term to long-term cash requirements are to service and repay debt and to invest, including in facilities,
equipment, technologies, and research and development for growth initiatives. These capital investments include
investments to replace the capability or capacity of satellites which have or will go out of service in the future. Over the
near-term to medium-term, it is also possible that our customers may fully or partially fund the construction of additional
Legion satellites. We also have call options to purchase the remaining ownership interest in Vricon Inc., a joint venture
accounted for under the equity method. The call options are exercisable beginning in the first quarter of either 2020 or
2021 which, if exercised, would require the use of capital. The call option is $150 million to $200 million, including
assumed liabilities, but may vary based on future results. Cash is also used to pay dividends and finance other long-term
strategic business initiatives. Our first maturity of long-term debt is in the fourth quarter of 2023.
Our ability to fund these needs will depend, in part, on our ability to generate cash in the future, which depends on our
future financial results. Our future results are subject to general economic, financial, competitive, legislative and
regulatory factors that may be outside of our control. Our future access to, and the availability of credit on acceptable
terms and conditions is impacted by many factors, including capital market liquidity and overall economic conditions.
We intend to use the net cash proceeds from the MDA Transaction to pay down the Company’s long-term debt. The net
cash proceeds will be determined under the Company’s Original Syndicated Credit Facility, the 2023 Notes and the
MDA Agreement. These proceeds include the netting of certain fees and liabilities, which include the indemnification of
the MDA Purchaser for certain liabilities including a dispute with the Ukrainian customer.
We believe that our cash from operating activities generated from continuing operations during the year, together with
available borrowings under our Revolving Credit Facility, will be adequate for the next twelve months to meet our
anticipated uses of cash flow, including working capital, capital expenditure, debt service costs, dividend, and other
commitments. While we intend to reduce debt over time using cash provided by operations and net proceeds from the
MDA Transaction, we may also seek to meet long-term debt obligations, if necessary, by obtaining capital from a variety
of additional sources or by refinancing existing obligations. These sources include public or private capital markets,
bank financings, proceeds from dispositions or other third-party sources. Following the sale of MDA, we will continue
to evaluate if there are additional assets to be monetized.
52
Summary of cash flows
($ millions)
Cash provided by operating activities - continuing operations
Cash provided by operating activities - discontinued operations
Cash provided by operating activities
Cash used in investing activities - continuing operations
Cash used in investing activities - discontinued operations
Cash used in investing activities
Cash (used in) provided by financing activities - continuing operations
Cash used in provided by financing activities - discontinued operations
Cash (used in) provided by financing activities
Effect of foreign exchange on cash, cash equivalents and restricted cash
Cash, cash equivalents, and restricted cash, beginning of year
Cash, cash equivalents, and restricted cash, end of year
Operating activities
Year ended December 31,
2018
2017
2019
$
$
258 $
59
317
(6)
(7)
(13)
(208)
(30)
(238)
—
43
109 $
114 $
25
139
(129)
(21)
(150)
15
(2)
13
(1)
42
43 $
56
49
105
(2,332)
(9)
(2,341)
2,257
(22)
2,235
4
39
42
Cash provided by operating activities related to continuing operations increased to $258 million from $114 million, or by
$144 million, in the year ended December 31, 2019 from the corresponding period in 2018. The increase was primarily
due to net income in 2019, compared to a net loss in 2018, adjusted for non-cash items and insurance proceeds of $183
million related to the loss of the WorldView-4 satellite. The insurance proceeds are included in operating cash flows as
they are considered business interruption recovery and represent our satellite’s loss of capacity to produce imagery for
sale to our customers.
Cash provided by operating activities related to discontinued operations increased to $59 million from $25 million, or by
$34 million, in the year ended December 31, 2019 from the corresponding period in 2018. The increase was primarily
due to favorable changes in working capital in 2019 compared to 2018 and net income in 2019, compared to a loss in
2018, adjusted for non-cash items.
Cash provided by operating activities related to continuing operations increased to $114 million from $56 million, or by
$58 million, in the year ended December 31, 2018 from the corresponding period in 2017. The increase was primarily
due to the inclusion of DigitalGlobe’s operating results, partially offset by a decrease in contract liabilities due to
revenue recognized.
Cash provided by operating activities related to discontinued operations decreased to $25 million from $49 million, or by
$24 million, in the year ended December 31, 2018 from the corresponding period in 2017. The decrease was primarily
driven by net losses of $377 million during the period ended December 31, 2018, which included $477 million of
impairment losses.
Cash flows from operating activities can vary significantly from period to period as a result of our working capital
requirements, given our portfolio of large construction programs and the timing of milestone receipts and payments with
customers and suppliers in the ordinary course of business. Investment in working capital is also necessary to build our
business and manage lead times in construction activities. We expect working capital account balances to continue to
vary from period to period. We efficiently fund our working capital requirements with the Revolving Credit Facility (as
defined below).
53
Investing activities
Cash used in investing activities related to continuing operations decreased to $6 million from $129 million, or by $123
million, in the year ended December 31, 2019 from the corresponding period in 2018. The primary investing activities
included expenditures on property, plant and equipment of $257 million and $150 million, for the years ended December
31, 2019 and 2018, respectively, and investments in software of $57 million and $56 million, for the years ended
December 31, 2019 and 2018, respectively. Property, plant and equipment expenditures in 2019 and 2018 primarily
related to the build of our Legion satellite constellation. In 2019, these expenditures were partially offset by net proceeds
of $280 million from the sale and subsequent leaseback of our properties in Palo Alto, California. In 2018, expenditures
were partially offset by net proceeds of $68 million from the sale of one of our buildings in Palo Alto, California. Cash
used in investing activities in 2019 was also partially offset by a return of capital from discontinued operations of $28
million.
Cash used in investing activities related to discontinued operations decreased to $7 million from $21 million, or by $14
million, in the year ended December 31, 2019 from the corresponding period in 2018. The decrease was primarily due to
a decrease in cash investments in property, plant and equipment, intangible assets and the acquisition of Neptec Design
Group Ltd. (“Neptec”) in 2018.
Cash used in investing activities from continuing operations decreased to $129 million from $2,332 million, or by
$2,203 million, for the year ended December 31, 2018 from the corresponding period in 2017. Property, plant and
equipment expenditures in 2018 of $206 million were primarily related to the build of our Legion satellite constellation
and were partially offset by net proceeds of $68 million from the sale of one of our buildings in Palo Alto, California.
The primary investing activity in 2017 was the acquisition of DigitalGlobe.
Cash used in investing activities related to discontinued operations increased to $21 million from $9 million, or by $12
million, in the year ended December 31, 2018 from the corresponding period in 2017. The primary investing activity in
2018 was the acquisition of Neptec for $6 million. Expenditures for property, plant and equipment were approximately
$6 million in each of the years ended December 31, 2018 and 2017. Purchases of intangible assets were $6 million and
$7 million, for the years ended December 31, 2018 and 2017, respectively.
Financing activities
Cash used in financing activities from continuing operations in 2019 increased to $208 million versus cash provided by
financing activities of $15 million in 2018, or by $223 million. During the year ended December 31, 2019, cash used in
financing activities from continuing operations included net proceeds from bank borrowings of $980 million offset by
debt repayments of $1,115 million, debt issuance costs and fees paid to creditors of $24 million, repurchases of orbital
receivables of $24 million and settlement of securitization liability of $20 million. During the year ended December 31,
2018, cash provided by financing activities from continuing operations included proceeds from bank borrowings of $104
million, proceeds from securitization of orbital receivables of $18 million and was offset by debt repayments of $27
million, settlement of securitization liability of $15 million and dividend payments of $65 million.
Cash used in financing activities related to discontinued operations increased to $30 million from $2 million, or by $28
million, in the year ended December 31, 2019 from the corresponding period in 2018. The increase was primarily due to
a return of capital from discontinued operations to continuing operations of $28 million in 2019.
Cash provided by financing activities from continuing operations decreased to $15 million from $2,257 million, or by
$2,242 million, in the year ended December 31, 2018 from the corresponding period in 2017. During the year ended
December 31, 2018, cash provided by financing activities from continuing operations included net proceeds from bank
borrowings of $104 million, proceeds from securitization of orbital receivables of $18 million, debt repayment of $27
million, settlement of securitization liability of $15 million, and dividend payments of $65 million. During the year
ended December 31, 2017, cash provided by financing activities included proceeds from the Syndicated Credit Facility
(as defined below) of $3,160 million, debt repayment of $779 million, payment of debt issuance costs of $63 million,
settlement of securitization liability of $15 million and dividend payments of $47 million.
54
Cash used in financing activities related to discontinued operations decreased to $2 million from $22 million, or by $20
million, in the year ended December 31, 2018 from the corresponding period in 2017. The decrease was primarily due to
$19 million in overdraft during the year ended December 31, 2017.
Long-term debt
The following table summarizes our long-term debt:
($ millions)
Syndicated Credit Facility:
Revolving credit facility
Term Loan A
Term Loan B
2023 Notes
Deferred financing
Debt discount and issuance costs
Obligations under finance leases and other
Total long-term debt
Syndicated Credit Facility
December 31,
2019
December 31,
2018
$
$
— $
—
1,960
1,000
33
(54)
6
2,945 $
595
500
1,980
—
—
(41)
9
3,043
As of December 31, 2019, the senior secured syndicated credit facility (the “Original Syndicated Credit Facility”, as
amended prior to December 31, 2019, including as described below, the “Syndicated Credit Facility”) is composed of:
(i) a senior secured first lien revolving credit facility maturing in December 2023 (the “Revolving Credit Facility”) and
(ii) a senior secured first lien term B facility maturing in October 2024 (the “Term Loan B”).
Borrowings under the Revolving Credit Facility bear interest at a rate equal to, at our option, either (i) U.S. dollar
LIBOR, plus a margin of 120 – 425 basis points per annum, based on our total leverage ratio or (ii) adjusted base rate,
plus a margin of 20-325 basis points per annum, based on the Company’s total leverage ratio. The Term Loan B bears
interest at our option, either (i) U.S. dollar LIBOR plus 275 basis points per annum, or (ii) adjusted base rate, plus a
margin of 175 basis points per annum. In April 2018, we entered into interest rate swaps at a notional value of $1.0
billion maturing in April 2021 or April 2022. As of December 31, 2019, we had hedged approximately 51% of our
floating rate exposure on our outstanding debt at an average base rate of 2.56% (excluding the margin specified in the
Syndicated Credit Facility).
The Revolving Credit Facility is payable at maturity. The Term Loan B will amortize in equal quarterly installments in
aggregate annual amounts equal to 1% of the original principal amount of the Term Loan B, with the final balance
payable at maturity. The Revolving Credit Facility and the Term Loan B may be repaid by us, in whole or in part,
together with accrued interest, without premium or penalty.
The Syndicated Credit Facility is guaranteed by us and certain of our designated subsidiaries (the “Subsidiary
Guarantors”). The security for the Syndicated Credit Facility, subject to customary exceptions, includes substantially all
our tangible and intangible assets and our Subsidiary Guarantors. We are required to make mandatory prepayments of
the outstanding principal and accrued interest of the Syndicated Credit Facility (i) upon the occurrence of certain events
and (ii) to the extent of a specified percentage of annual excess cash flow that is not reinvested or used for other
specified purposes. The Syndicated Credit Facility is subject to customary affirmative and negative covenants, default
provisions, representations and warranties and other terms and conditions. As of December 31, 2019 and 2018, we were
in compliance with our debt covenants.
The Revolving Credit Facility includes an aggregate $200 million sub limit under which letters of credit can be issued.
As of December 31, 2019 and December 31, 2018, we had $18 million of issued and undrawn letters of credit
outstanding under the Revolving Credit Facility.
55
Senior Secured Notes due 2023
In December 2019, we issued $1.0 billion in principal amount of 9.75% Senior Secured Notes due 2023 (“2023 Notes”)
in a private placement to institutional buyers. The 2023 Notes were issued at a price of 98% and are recorded as long-
term debt in our consolidated financial statements. The 2023 Notes bear interest at the rate of 9.75% per year, payable
semi-annually in cash in arrears, which interest payments will commence in June 2020.
The 2023 Notes are guaranteed (“Guarantees”) on a senior secured basis by each of our existing and future subsidiaries
that guarantees the Syndicated Credit Facility (“Guarantors”). The 2023 Notes are secured, equally and ratably with the
Syndicated Credit Facility and any future first lien debt, by liens on the same assets that secure the Revolving Credit
Facility and the Term Loan B.
The 2023 Notes and the Guarantees are our general senior secured obligations and rank equally in right of payment with
all of our and the Guarantors’ existing and future unsubordinated debt (including the Syndicated Credit Facility). The
2023 Notes and the Guarantees are effectively senior to all of our and the Guarantors’ existing and future unsecured debt
as well as to all of any permitted junior lien debt that may be incurred in the future, in each case to the extent of the value
of the assets securing the 2023 Notes and the Guarantees. The 2023 Notes and the Guarantees are effectively
subordinated to any obligations that are secured by liens on assets that do not constitute a part of the collateral securing
the 2023 Notes or the Guarantees, are structurally subordinated to all existing and future liabilities (including trade
payables) of our subsidiaries that do not guarantee the 2023 Notes, and are senior in right of payment to all of our and
the Guarantors’ existing and future subordinated indebtedness.
The indenture governing the 2023 Notes limits, among other things, our and our restricted subsidiaries’ ability to: incur,
assume or guarantee additional debt; issue redeemable stock and preferred stock; pay dividends, make distributions or
redeem or repurchase capital stock; prepay, redeem or repurchase subordinated debt; make loans and investments; grant
or incur liens; restrict dividends, loans or asset transfers from restricted subsidiaries; sell or otherwise dispose of assets;
enter into transactions with affiliates; reduce our satellite insurance; and consolidate or merge with, or sell substantially
all of our assets to, another person. The 2023 Notes are also subject to compliance with a financial maintenance covenant
in respect of our Consolidated Total Debt Ratio which is 7.25x at the end of the fiscal quarter ended December 31, 2019,
7.50x at the end of the fiscal quarter ending March 31, 2020, 7.75x at the end of each fiscal quarter thereafter until the
fiscal quarter ending September 30, 2021, 7.50x at the end of each fiscal quarter thereafter until the quarter ending
September 30, 2022, 6.50x at the end of each fiscal quarter thereafter until the fiscal quarter ending March 31, 2023, and
5.75x for each fiscal quarter thereafter (subject to a 0.25x reduction in each maximum level upon a disposition of a
business line for greater than $500 million).
The 2023 Notes may be redeemed, in whole or in part, at any time during the 12 months beginning on December 15,
2021 at a redemption price of 107.313%, during the 12 months beginning on December 15, 2022 at a redemption price
of 103.656%, and at any time on or after December 15, 2023 at a redemption price of 100%, in each case plus accrued
and unpaid interest, if any, thereon to the redemption date. We may also redeem the 2023 Notes, in whole or in part, at
our option at any time prior to December 15, 2021 at a price equal to 100% of the principal amount of such 2023 Notes
plus a “make-whole” premium, together with accrued but unpaid interest, if any, to, but excluding, the date of
redemption. In addition, we may redeem up to 40% of the aggregate principal amount of the 2023 Notes at any time
before December 15, 2021 with the net cash proceeds from certain equity offerings at a specified redemption price, plus
accrued and unpaid interest, if any, to, but excluding, the date of redemption.
In the event a change of control occurs (as defined in the indenture governing the 2023 Notes), each holder will have the
right to require us to repurchase all or any part of such holder’s 2023 Notes at a purchase price in cash equal to 101% of
the aggregate principal amount of the 2023 Notes repurchased, plus accrued and unpaid interest, if any, to the date of
purchase (subject to the right of holders of record on the relevant record date to receive interest due on the relevant
interest payment date).
56
Leaseback Deferred Financing
In December 2019, we completed the sale and subsequent leaseback of our owned properties in Palo Alto, California for
proceeds of $291 million. We determined that the leaseback terms were off-market. In accordance with ASC 842 –
Leases, we accounted for the excess of the leaseback payments over the present value of market rental payments as
additional financing, separate from the lease liability. This resulted in recognition of deferred financing liability of $33
million which is repayable over the 10-year leaseback term.
Securitization liability
We have in place a revolving securitization facility agreement with an international financial institution. Under the terms
of the Syndicated Credit Facility, we may offer to sell eligible orbital receivables from time to time with terms of seven
years or less, discounted to face value using prevailing market rates. During the year ended December 31, 2019, we did
not sell any eligible receivables and repurchased $24 million of specifically identified orbital receivables. The orbital
receivables were repurchased as a result of our customer transferring the obligation to another entity which did not meet
the credit criteria of our lenders. During the year ended December 31, 2018, the Company sold orbital receivables for net
proceeds of $18 million and did not repurchase any receivables. These sold orbital receivables were purchased in
tranches that span multiple years and include longer-term maturities.
The orbital receivables that were securitized remain on our balance sheet as the accounting criteria for surrendering
control of the orbital receivables were not met. The net proceeds received have been recognized as a securitization
liability that has been 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 customers and
passed on to the purchaser of the tranche. We continue to recognize orbital interest revenue on the orbital receivables
that are subject to the securitization transactions and recognize interest expense to accrete the securitization liability.
Cash requirements related to interest costs, income taxes, and pensions and other postretirement obligations
Refer to Consolidated Statements of Cash Flows in Part II, Item 8, “Financial Statements and Supplementary Data” for
cash payments for interest costs and income taxes, and Part II, Item 7A, “Quantitative and Qualitative Disclosure about
Market Risk” for discussion of potential impacts of fluctuations in interest rates.
Funding of pension plans
Funding requirements under applicable laws and regulations are a major consideration in making contributions to our
U.S. pension plan. Failure to satisfy the minimum funding thresholds with respect to appropriate laws and regulations
could result in restrictions on our ability to amend the plans or make benefit payments. With respect to our U.S. qualified
pension plan, we intend to contribute annually not less than the required minimum funding thresholds. The total
estimated contributions expected to be paid to the plan for the year ended December 31, 2020 is $20 million.
57
CONTRACTUAL OBLIGATIONS, COMMITMENTS AND CONTINGENCIES
We enter into contractual obligations in the normal course of business. The following table provides a summary of our
payment obligations for continuing operations in each of the next five years and thereafter specifically related to long-
term debt, operating leases and other obligations.
Payments due by period
3-5
1-3
years
Less than
1 year years
More than
5 years
Total
($ millions)
Syndicated credit facility
2023 Notes
Operating leases
Purchase obligations
Securitization liability (excluding interest)
Finance leases
Deferred financing and other long-term obligations1
Total
1 Deferred financing relates to the sale leaseback.
$ 1,960 $
1,000
281
591
87
4
38
—
70
128
20 $ 40 $ 1,900 $
—
42
447
16
2
8
1,000
52
16
30
—
4
34
2
11
$ 3,961 $ 535 $ 285 $ 3,002 $
—
—
117
—
7
—
15
139
We have significant purchase obligations for goods and services, under agreements with defined terms as to quantity,
price and timing of delivery. Most of these conditional purchase obligations are for purchase or construction of property,
plant and equipment or intangible assets, operational commitments related to remote ground terminals, or with
subcontractors on long-term construction contracts that we have with customers.
As of December 31, 2019 and 2018, our banks issued letters of credit for $23 million and $52 million, respectively, in
the normal course of business.
We are party to various legal proceedings and claims that arise in the ordinary course of business as either a plaintiff or
defendant. We analyze all legal proceedings and the allegations therein. The outcome of any of these proceedings, either
individually or in the aggregate, is not expected to have a material adverse effect on our financial position, results of
operations or liquidity. Refer to Part I, Item 3, “Legal Proceedings” of this Annual Report on Form 10-K for further
discussion of legal proceedings.
For further information on our contractual obligations, contingencies and commitments, see Note 23, “Commitments and
contingencies” to the Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary
Data”.
OFF-BALANCE SHEET ARRANGEMENTS
As of December 31, 2019, we had foreign exchange sales contracts of $9 million and letters of credit guaranteed by
export credit agencies and the Senior Credit Facility, while indemnified by us. Such arrangements are not expected to
have a material effect on our liquidity or capital resources, financial position or results of operations.
We use derivative financial instruments to manage existing foreign currency exposures. We consider the management of
financial risks to be an important part of our overall corporate risk management policy. Foreign exchange forward
contracts are used to hedge our exposure to currency risk on sales, purchases, cash, net investments and loans
denominated in a currency other than the functional currency of our domestic and foreign operations.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our Consolidated
Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial
58
statements requires management to make judgments, assumptions and estimates that affect the amounts reported in the
consolidated financial statements and accompanying notes. For a summary of our significant accounting policies, see
Note 2, “Summary of significant accounting policies” to the Consolidated Financial Statements in Part II, Item 8,
“Financial Statements and Supplementary Data”.
We consider the following accounting policies to be critical to an understanding of our financial condition and results of
operations because these policies require the most difficult, subjective or complex judgments on the part of management
in their application. Actual results could differ from our estimates and assumptions, and any such differences could be
material to our consolidated financial statements.
Revenue recognition
The recognition and measurement of revenue requires the use of judgments and estimates. Specifically, judgment is used
in interpreting complex arrangements with nonstandard terms and conditions and determining when all criteria for
revenue recognition have been met.
Space Infrastructure
Revenue in the Space Infrastructure segment is primarily generated from long-term construction contracts. Due to the
long-term nature of these contracts, we generally recognize revenue over time using the cost-to-cost method to measure
progress. Under the cost-to-cost method, revenue is recognized based on the proportion of total costs incurred to
estimated total costs-at-completion ("EAC"). An EAC includes all direct costs and indirect costs directly attributable to a
program or allocable based on our program cost pooling arrangements. Estimates regarding the Company’s cost
associated with the design, manufacture and delivery of products and services are used in determining the EAC. Changes
to an EAC are recorded as a cumulative adjustment to revenue.
Our cost estimation process is based on the professional knowledge of our engineering, program management and
financial professionals and draws on their significant experience and judgment. We prepare EAC’s for our contracts and
calculate estimated revenues and costs over the life of our contracts. Since our contracts typically span a period of
several years, estimation of revenue, cost, and progress toward completion requires the use of judgment. Judgements and
estimates are re-assessed at least quarterly with most estimates being updated on a monthly basis. Adjustments in
estimates could have a material impact on revenue recognition based on the significance of the adjustments. Factors
considered in these estimates include our historical performance, the availability, productivity and cost of labor, the
nature and complexity of work to be performed, availability and cost of materials, components and subcontracts, the risk
and impact of delayed performance and the level of indirect cost allocations.
Earth Intelligence
Revenue in the Earth Intelligence segment is generated from imagery and geospatial intelligence service contracts.
Revenue from imagery service contracts 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. Revenue from our geospatial intelligence service contracts is
recognized from the rendering of services that compensate us at a cost-plus-fixed-fee, firm fixed price, or on a time and
materials basis.
Some of our contracts contain multiple performance obligations, which requires us to estimate the standalone selling
price of each performance obligation in order to allocate consideration transferred from the customer. We have not
historically been able to use third-party evidence for determining standalone selling price due to the unique nature of our
products and services and lack of visibility into competitor pricing. Standalone selling prices are determined based on
management estimates that involve significant judgment. Multiple factors are considered based on the nature of the
deliverables included within the contract, which include market conditions, competitive landscape, geographic or
regional specific factors, internal costs, profit margin objectives and pricing practices used by us.
59
Pension benefits
The determination of projected benefit obligations and the fair value of plan assets for our pension and pension expense
requires the use of estimates and actuarial assumptions. We perform an annual review of our estimates and actuarial
assumptions in consultation with our actuaries and investment advisors. We believe that the accounting estimates related
to our pension plans are critical accounting estimates because they are highly susceptible to change from period to period
based on the performance of plan assets, actuarial valuations and market conditions. The selection of assumptions is
based on historical trends and known economic and market conditions at the time of valuation, as well as independent
studies of trends performed by our actuaries. However, actual results may differ substantially from the estimates that
were based on the critical assumptions.
The principal estimates and assumptions used in the measurement and recording of our pension benefit plans that have a
significant effect on our Consolidated Financial Statements are the discount rate and expected return on plan assets.
Discount rates for the U.S. Space Infrastructure pension plans are calculated by actuaries using the Standard FTSE
Pension Discount Curve. A singular discount rate is then determined, such that the resulting liability from discounting
using the curve matches the liability resulting from discounting the same cash flows using the aforementioned singular
discount rate.
The expected return on plan assets is based on our best estimate and input from plan investment advisors and actuaries.
The rate is representative of a long-term expected return based on asset mix returns utilizing a 30-year annualized
geometric return of net fees.
For further information regarding our pension benefit plans see Note 2, “Summary of significant accounting policies”
and Note 19, “Employee benefit plans” to the Consolidated Financial Statements in Part II, Item 8, “Financial
Statements and Supplementary Data”.
Goodwill
We assess goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level
below an operating segment. Goodwill is tested annually for impairment as of October 1, or more frequently if events or
circumstances indicate the carrying value may be impaired. We identify potential impairment by comparing the fair
value of each of our reporting units with its carrying amount, including goodwill. If the carrying amount of a reporting
unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.
Based on the results of our quantitative assessment performed as of October 1, 2019, the estimated fair value of the
MDA reporting unit was significantly in excess of its carrying value. This analysis was updated upon announcement of
the MDA Transaction for the year ended December 31, 2019. The Company concluded that there were no impairment
indicators related to goodwill at either of the dates the impairment analyses were performed.
The estimated fair value of the Earth Intelligence reporting unit slightly exceeded its carrying value. We performed a
sensitivity analysis over key valuation assumptions. Due to the level of fair value exceeding carrying value and the
results of the sensitivity analysis, we may need to record an impairment charge in the future if the operating results of
Earth Intelligence are significantly lower than our strategic growth plan assumptions.
The Space Infrastructure reporting unit does not have any goodwill. Its estimated fair value was only used in evaluating
the aggregate fair value of all reporting units to market data.
When evaluating goodwill for impairment, we typically estimate the fair value of each reporting unit using an income
approach. To assess the reasonableness of our results, we reconcile the sum of the estimated fair values of the reporting
units, including our Corporate balance sheet, to the Company’s market capitalization and market value of invested
capital as of the date of our annual impairment test. 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 projections for future cash flows are generated using our strategic growth plan and include
60
assumptions about future revenue growth, operating margins, capital expenditures, income tax rates, and working capital
requirements. The terminal growth rate is used to calculate the value of cash flows beyond the last projected period in
our discounted cash flow analysis and reflects our best estimates for stable, perpetual growth of our reporting units. The
discount rate is an estimate of the overall after-tax rate of return required by a market participant whose weighted
average cost of capital includes both debt and equity, including a risk premium. The risk premium is a subjective
adjustment that, by its very nature does not include market related data, but instead examines the prospects of the
reporting unit relative to the broader industry to determine if there are specific factors, which may make it more “risky”
relative to the industry.
The discounted cash flow approach requires management to make certain assumptions based upon information available
at the time the valuations are performed. Actual results could differ from these assumptions. Management believes the
assumptions used are reflective of what a market participant would have used in calculating fair value considering
current economic conditions.
Additional risks for goodwill across all reporting units include, but are not limited to, the risks discussed in Item 1A,
“Risk Factors” contained within this Annual Report on Form 10-K, and:
•
•
•
•
•
a decline in our stock price and resulting market capitalization, if we determine the decline is sustained and is
indicative of a reduction in the fair value below the carrying value of our reporting units;
our failure to reach our internal forecasts could impact our ability to achieve our forecasted levels of cash flows
and reduce the estimated discounted value of our reporting units;
adverse technological events that could impact our performance;
volatility in equity and debt markets resulting in higher discount rates; and
significant adverse changes in the regulatory environment or markets in which we operate.
It is not possible at this time to determine if an impairment charge would result from these factors. We will continue to
monitor our goodwill for potential impairment indicators in future periods.
Impairment of Long-Lived Assets
We review the carrying amount of long-lived tangible and intangible assets to be held and used in the business for
impairment at least annually or whenever events or circumstances warrant such a review. Indicators of impairment
include, but are not limited to: a significant change in the extent or manner in which an asset (or asset group) is used; a
significant adverse change in the operations of our satellites; a change in government spending or customer demand that
could affect the value of the asset group; a significant decline in the observable market value of an asset group; or a
significant adverse change in legal factors or in the business climate that could affect the value of the asset group.
There were no impairments of long-lived assets during the year ended December 31, 2019.
Income Taxes
We are subject to income taxes in the United States, Canada, and other foreign jurisdictions. We compute the 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 our Consolidated Balance
Sheets. Significant judgments are required in order to determine the realizability of tax assets. In assessing the need for a
valuation allowance, we evaluate 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
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 50
61
percent likely to be realized upon ultimate settlement. We believe that the reserves for unrecognized tax benefits are
adequate to cover all open tax years based on our assessment. If the expected outcome of the matter changes, we will
adjust income tax expense accordingly in the period in which the expected outcome has changed. We classify interest
and penalties related to income taxes as income tax expense.
We earn investment and other tax credits with respect to research and development expenses. The benefit of these tax
credits is recorded as a reduction of income tax expense.
On December 22, 2017, the 2017 Tax Act was enacted into law, which significantly changed U.S. tax law. The 2017 Tax
Act, among other things, lowered the U.S. statutory federal tax rate from 35% to 21%, modified existing interest
limitation regulations and created new provisions for the base erosion and anti-abuse tax and global intangible low-taxed
income inclusion that taxes certain payments between U.S. corporations and their foreign subsidiaries. During 2019,
additional proposed and final regulations were released to clarify the provisions modified or created within the 2017 Tax
Act. The effects of the final regulations and any proposed regulations that are anticipated to be enacted substantially in
similar form were included in our annual results.
RECENT ACCOUNTING PRONOUNCEMENTS
See Note 3, “New standards and interpretations not yet adopted” to the Consolidated Financial Statements in Part II,
Item 8, “Financial Statements and Supplementary Data” for a discussion of recent accounting pronouncements.
NON-GAAP FINANCIAL MEASURES
In addition to results reported in accordance with U.S. GAAP, we use certain non-GAAP financial measures as
supplemental indicators of our financial and operating performance. These non-GAAP financial measures include
EBITDA and Adjusted EBITDA.
We define EBITDA as earnings before interest, taxes, depreciation and amortization, and Adjusted EBITDA as EBITDA
adjusted for certain items affecting comparability as specified in the calculation. Certain items affecting comparability
include restructuring, impairments, satellite insurance recovery, gain on sale of assets, CEO severance and transaction
and integration related expense. Transaction and integration related expense includes costs associated with de-leveraging
activities, acquisitions and dispositions and the integration of acquisitions. Management believes that exclusion of these
items assists in providing a more complete understanding of our underlying results and trends, and management uses
these measures along with the corresponding U.S. GAAP financial measures to manage our business, evaluate our
performance compared to prior periods and the marketplace, and to establish operational goals. Adjusted EBITDA is a
measure being used as a key element of our incentive compensation plan. The Syndicated Credit Facility also uses
Adjusted EBITDA in the determination of our debt leverage covenant ratio. The definition of Adjusted EBITDA in the
Syndicated Credit Facility includes a more comprehensive set of adjustments.
We believe that these non-GAAP measures, when read in conjunction with our U.S. GAAP results, provide useful
information to investors by facilitating the comparability of our ongoing operating results over the periods presented, the
ability to identify trends in our underlying business, and the comparison of our operating results against analyst financial
models and operating results of other public companies.
62
The table below reconciles our net (loss) income to EBITDA and Adjusted EBITDA for the years ended December 31,
2019, 2018 and 2017:
($ millions)
Net income (loss)
Income tax expense (benefit)
Interest expense, net
Interest income
Depreciation and amortization
EBITDA
(Income) loss from discontinued operations, net of tax
Restructuring
Transaction and integration related expense
Impairment losses, including inventory
Satellite insurance recovery
Gain on sale of assets
CEO severance
Adjusted EBITDA
Adjusted EBITDA:
Earth Intelligence
Space Infrastructure
Intersegment eliminations
Corporate and other expenses
Adjusted EBITDA
Year ended December 31,
2018
2017
2019
$
$
$
$
109 $
5
219
(2)
376
707 $
(26)
18
16
17
(183)
(136)
3
416
$
$
$
(1,250)
(48)
200
—
439
(659)
377
13
33
652
—
(33)
—
383 $
548
(17)
(29)
(86)
416
$
516
(75)
(9)
(49)
383 $
60
(168)
97
—
152
141
(116)
—
60
—
—
—
—
85
152
(59)
—
(8)
85
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
We are exposed to interest rate risk on our variable-rate borrowings under our Syndicated Credit Facility, which is
comprised of the Revolving Credit Facility and Term Loan B. The Company uses interest rate swap agreements to
manage interest rate risk associated with cash outflows from long-term debt.
As of December 31, 2019, there was $1.96 billion outstanding under our Syndicated Credit Facility. Term Loan B bears
interest equal to, at our option, either (i) U.S. dollar LIBOR plus 275 basis points per annum, or (ii) adjusted base rate,
plus a margin of 175 basis points per annum. In April 2018, we entered into interest rate swap agreements in order to fix
the base interest rate to be paid over an aggregate amount of $1 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 Revolving Credit Facility bears interest at a rate equal to, at the Company’s option, either (i) U.S. dollar LIBOR,
plus a margin of 120 - 425 basis points per annum, based on the Company’s total leverage ratio, or (ii) adjusted base
rate, plus a margin of 20-325 basis points per annum, based on the Company’s total leverage ratio.
As of December 31, 2019, based upon the amounts outstanding under the Syndicated Credit Facility, net of the interest
rate swaps and assuming the amounts were outstanding for a full calendar year, a 50 basis point increase in interest rates
would increase interest expense under the Syndicated Credit Facility approximately $5 million. We may decide in future
periods to engage in hedging transactions to further mitigate the interest rate risk under our Syndicated Credit Facility.
63
Foreign Currency Risk
Although the majority of our transactions are denominated in U.S. dollars, some of our transactions are denominated in
foreign currencies. Certain contractual relationships with customers and vendors mitigate risks from currency exchange
rate changes that arise from normal purchasing and normal sales activities. Our revenue and purchase contracts are
primarily denominated in U.S. dollars. However, fluctuations in the value of foreign currencies may make payments in
U.S. dollars, as provided for under our existing contracts, more difficult for foreign customers. In addition, fluctuations
in foreign currencies could introduce volatility into our financial statements for contracts denominated in a foreign
currency.
64
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Reports of Independent Registered Public Accounting Firms
Consolidated Statements of Operations
Consolidated Statement of Comprehensive (Loss) Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statements of Change in Stockholders’ Equity
Notes to Consolidated Financial Statements
Page
66
71
72
73
74
75
76
65
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors
Maxar Technologies Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Maxar Technologies Inc. and subsidiaries
(the Company) as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive
income (loss), cash flows, and changes in stockholders’ equity for each of the years in the two-year period ended
December 31, 2019, and the related notes (collectively, the consolidated financial statements). In our opinion, the
consolidated financial statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the two-year
period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission, and our report dated March 2, 2020 expressed an unqualified opinion on the effectiveness of
the Company’s internal control over financial reporting.
Change in Accounting Principle
As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for
leases as of January 1, 2019 due to the adoption of Accounting Standards Update No. 2016-02, Leases (Topic 842)
(“ASU 2016-02”) which together with subsequent amendments is included in ASC 842 – Leases.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated
financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate
to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way
our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical
audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which
they relate.
66
Evaluation of estimate of total contract costs to be incurred for fixed-price long-term contract revenue
As discussed in Notes 2 and 16 to the consolidated financial statements, the Company recognizes revenue over time
using the cost-to-cost method to measure progress. Under the cost-to-cost method, revenue is recognized based on
the proportion of total costs incurred to estimated total costs-at-completion (EAC). An EAC includes all direct costs,
such as materials, labor, subcontract costs, overhead, and a ratable portion of general and administrative costs.
Changes to an EAC are recorded as a cumulative adjustment to revenue. Each EAC requires the Company to make
estimates regarding the revenue and cost associated with the design, manufacture, and delivery of its products and
services.
We identified the evaluation of the estimate of total contract costs to be incurred for fixed-price, long-term contracts
as a critical audit matter due to the complex nature of the Company’s products sold under such contracts. In
particular, evaluating the Company’s judgments regarding the amount of time to complete the contracts, including
the assessment of the nature and complexity of the work to be performed, involved a high degree of subjective
auditor judgment.
The primary procedures we performed to address this critical audit matter included the following. We tested certain
internal controls over the Company’s process to develop estimates of total contract costs to be incurred. This
included controls related to the development of the estimated amount of time to complete the contracts, including
the assessment of the nature and complexity of the work to be performed. For selected contracts, we compared the
Company’s original or prior period estimate of total contract costs to be incurred to changes to total contract costs to
be incurred in the current year to assess the Company’s ability to accurately estimate costs. We interviewed
operational personnel of the Company to evaluate progress to date, the estimate of remaining costs to be incurred,
and factors impacting the amount of time and cost to complete the selected contracts, including the assessment of
the nature and complexity of the work to be performed.
Evaluation of the goodwill impairment analysis for the Earth Intelligence and Space Infrastructure reporting units
As discussed in Notes 2, 4, and 9 to the consolidated financial statements, the goodwill balance as of December 31,
2019, was $1,765 million. The Company performs goodwill impairment testing on an annual basis and whenever
events or changes in circumstances indicate that the carrying value of a reporting unit may be less than its fair value.
We identified the evaluation of the carrying value of goodwill for the Earth Intelligence and Space Infrastructure
reporting units as a critical audit matter. There was a high degree of subjectivity and auditor judgment required to
evaluate the Company’s impairment test, which was performed using a discounted cash flow model and included
assumptions related to forecasted revenue growth rates, estimated costs, and discount rates. Minor changes to these
key assumptions could have a significant effect on the assessment of the carrying value of the goodwill.
The primary procedures we performed to address this critical audit matter included the following. We tested certain
internal controls over the Company’s goodwill impairment assessment process, including controls over the
development of key assumptions of forecasted revenue growth rates, estimated costs, and discount rates. To evaluate
the Company’s ability to forecast revenues and costs, we compared the Company’s historical forecasts to actual
results. We also evaluated the Company’s forecasted revenues and costs by comparing the forecasts to the
underlying business strategies and growth plans. In addition, we involved valuation professionals with specialized
skills and knowledge, who assisted in evaluating each of the discount rates used, by comparing them against ranges
that were independently developed using publicly available market data for comparable entities.
/s/ KPMG LLP
We have served as the Company’s auditor since 2018.
Denver, Colorado
March 2, 2020
67
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors
Maxar Technologies Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Maxar Technologies Inc. and subsidiaries’ (the Company) internal control over financial reporting as of
December 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2019 and 2018, the related
consolidated statements of operations, comprehensive income (loss), cash flows, and changes in stockholders’ equity for
each of the years in the two-year period ended December 31, 2019, and the related notes (collectively, the consolidated
financial statements), and our report dated March 2, 2020 expressed an unqualified opinion on those consolidated
financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Report on Internal Control Over Financial Reporting in Item 9A. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also
included performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
68
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ KPMG LLP
Denver, Colorado
March 2, 2020
69
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of Maxar Technologies Inc.
Opinion on the Consolidated Financial Statements
We have audited the consolidated statements of operations, comprehensive income (loss), cash flows, and changes in
stockholders’ equity of Maxar Technologies Inc. and subsidiaries (the Company) for the year ended December 31, 2017
and the related notes (collectively referred to as the consolidated financial statements).
In our opinion, the consolidated financial statements present fairly, in all material respects, the results of the Company’s
operations and its cash flows for the year ended December 31, 2017, in conformity with U.S. generally accepted
accounting principles.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm
registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements. We believe that our audit provides a reasonable basis for our opinion
/s/ KPMG LLP
We served as the Company's auditor from 2002 to 2018.
Vancouver, Canada
March 1, 2019, except for note 4, as to which the date is March 2, 2020
70
MAXAR TECHNOLOGIES INC.
Consolidated Statements of Operations
(In millions, except per share amounts)
Revenues:
Product
Service
Total revenues
Costs and expenses:
Product costs, excluding depreciation and amortization
Service costs, excluding depreciation and amortization
Selling, general and administrative
Depreciation and amortization
Impairment losses
Satellite insurance recovery
Gain on sale of assets
Operating income (loss)
Interest expense, net
Other (income) expense, net
Income (loss) before taxes
Income tax expense (benefit)
Equity in (income) loss from joint ventures, net of tax
Income (loss) from continuing operations
Income (loss) from discontinued operations, net of tax
Net income (loss)
Basic income (loss) per common share:
Income (loss) from continuing operations
Income (loss) from discontinued operations, net of tax
Basic income (loss) per common share
Diluted income (loss) per common share:
Income (loss) from continuing operations
Income (loss) from discontinued operations, net of tax
Diluted income (loss) per common share
Year Ended
December 31,
2018
2019
560 $
1,106
1,666 $
697
1,107
1,804
593 $
382
325
376
14
(183)
(136)
295
219
(1)
77
5
(11)
83
26
775
313
446
439
586
—
(33)
(722)
200
1
(923)
(48)
(2)
(873)
(377)
109 $ (1,250)
$
$
$
$
$
$
1.39 $ (15.03)
0.44
(6.49)
1.83 $ (21.52)
$
$
1.38 $ (15.03)
0.43
(6.49)
1.81 $ (21.52)
2017
877
380
1,257
764
160
337
152
—
—
—
(156)
97
(30)
(223)
(168)
1
(56)
116
60
(1.36)
2.82
1.46
(1.36)
2.82
1.46
$
$
$
$
$
$
$
$
See accompanying notes to consolidated financial statements.
71
MAXAR TECHNOLOGIES INC.
Consolidated Statements of Comprehensive Income (Loss)
(In millions)
Net income (loss)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment 1
Unrealized loss on derivatives
Loss on pension and other postretirement benefit plans
Other comprehensive loss, net of tax
Comprehensive income (loss), net of tax
2019
$
109
Year Ended
December 31,
2018
$ (1,250)
2017
$
60
15
(12)
(26)
(23)
86 $ (1,281) $
(19)
(7)
(5)
(31)
7
(3)
(14)
(10)
50
$
1 Included within Foreign currency translation adjustments is a net gain on hedge of net investment in foreign operations
of $5 million for the year ended December 31, 2019 and a net loss on hedge of net investment in foreign operations of
$23 million and $0 million 2018 and 2017, respectively.
See accompanying notes to consolidated financial statements.
72
MAXAR TECHNOLOGIES INC.
Consolidated Balance Sheets
(In millions)
Assets
Current assets:
Cash and cash equivalents
Trade and other receivables, net
Inventory
Advances to suppliers
Prepaid and other current assets
Current assets held for sale
Total current assets
Non-current assets:
Orbital receivables
Property, plant and equipment, net
Intangible assets, net
Non-current operating lease assets
Goodwill
Other non-current assets
Non-current assets held for sale
Total assets
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
Accrued liabilities
Accrued compensation and benefits
Contract liabilities
Current portion of long-term debt
Current operating lease liabilities
Other current liabilities
Current liabilities held for sale
Total current liabilities
Non-current liabilities:
Pension and other postretirement benefits
Contract liabilities
Operating lease liabilities
Long-term debt
Other non-current liabilities
Non-current liabilities held for sale
Total liabilities
Commitments and contingencies
Stockholders’ equity:
December 31, December 31,
2019
2018
$
$
$
$
$
$
59
357
20
42
32
751
1,261
382
758
991
176
1,455
134
—
5,157
153
130
93
271
30
40
49
230
996
197
4
173
2,915
110
—
4,395
19
350
29
42
35
203
678
407
725
1,204
—
1,455
107
482
5,058
149
124
80
332
16
—
27
154
882
178
60
—
3,027
186
58
4,391
Common stock ($0.0001 par value, 240 million common shares authorized and 59.9 million
outstanding at December 31, 2019; nil par value, unlimited authorized common shares and
59.4 million outstanding at December 31, 2018)
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive income
Total Maxar stockholders' equity
Noncontrolling interest
Total stockholders' equity
Total liabilities and stockholders' equity
—
1,784
(1,082)
59
761
1
762
5,157
$
1,713
59
(1,188)
82
666
1
667
5,058
$
See accompanying notes to consolidated financial statements.
73
MAXAR TECHNOLOGIES INC.
Consolidated Statements of Cash Flows
(In millions)
Cash flows provided by (used in):
Operating activities:
Net income (loss)
Net (income) loss from discontinued operations
Net income (loss) from continuing operations
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Impairment losses including inventory
Depreciation and amortization
Amortization of debt issuance costs and other noncash interest expense
Stock-based compensation expense
Loss from early extinguishment of debt
Gain on sale of assets
Deferred income tax expense (benefit)
Equity in (income) loss from joint ventures, net of tax
Other
Changes in operating assets and liabilities:
Trade and other receivables
Accounts payables and accrued liabilities
Contract liabilities
Other
Cash provided by operating activities - continuing operations
Cash provided by operating activities - discontinued operations
Cash provided by operating activities
Investing activities:
Purchase of property, plant and equipment and development or purchase of software
Sale of assets
Cash collected on note receivable
Cash paid for acquisition, net of tax
Disposal of subsidiary and short-term investments
Return of capital from discontinued operations
Cash used in investing activities - continuing operations
Cash used in investing activities - discontinued operations
Cash used in investing activities
Financing activities:
Net (payment) proceeds of revolving credit facility
Net proceeds from issuance of 2023 Notes and other long-term debt
Repayments of long-term debt
Payment of debt issuance costs
Refinancing fees paid to creditors
Repurchase of orbital receivables
Settlement of securitization liability
Proceeds from securitization of orbital receivables
Payment of dividends
Other
Cash (used in) provided by financing activities - continuing operations
Cash used in financing activities - discontinued operations
Cash (used in) provided by financing activities
Increase in cash, cash equivalents, and restricted cash
Effect of foreign exchange on cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash, beginning of year
Cash, cash equivalents, and restricted cash, end of year
Reconciliation of cash flow information:
Cash and cash equivalents
Restricted cash included in prepaid and other current assets
Restricted cash included in other non-current assets
Total cash, cash equivalents, and restricted cash
Year Ended December 31,
2018
2019
2017
$
$
$
$
109
(26)
83
17
376
11
20
22
(136)
—
(11)
7
(20)
7
(117)
(1)
258
59
317
(314)
280
—
—
—
28
(6)
(7)
(13)
(595)
980
(520)
(4)
(20)
(24)
(20)
—
(2)
(3)
(208)
(30)
(238)
66
—
43
109
105
1
3
109
$
$
(1,250)
377
(873)
651
439
9
20
—
(33)
(48)
(2)
28
(19)
113
(158)
(13)
114
25
139
(206)
68
5
—
4
—
(129)
(21)
(150)
—
104
(24)
(3)
—
—
(15)
18
(65)
—
15
(2)
13
2
(1)
42
43
35
7
1
43
$
$
$
$
$
$
60
(116)
(56)
—
152
3
23
23
—
(169)
1
(5)
56
(7)
(15)
50
56
49
105
(59)
—
—
(2,273)
—
—
(2,332)
(9)
(2,341)
3,160
—
(779)
—
(63)
—
(15)
—
(47)
1
2,257
(22)
2,235
(1)
4
39
42
19
6
17
42
See accompanying notes to consolidated financial statements.
74
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S
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
(Tabular amounts in millions of dollars, unless otherwise noted)
1. GENERAL BUSINESS DESCRIPTION
Maxar Technologies Inc. (the “Company” or “Maxar”) is a leading provider of solutions in Earth intelligence and space
infrastructure. Maxar helps government and commercial customers to monitor, understand and navigate the changing
planet; deliver global broadband communications; and explore and advance the use of space. The Company’s approach
combines decades of deep mission understanding and a proven commercial and defense foundation to deliver services
with speed, scale and cost effectiveness. The Company works to help customers globally harness the potential of space.
Maxar’s stock trades on the New York Stock Exchange and Toronto Stock Exchange under the symbol “MAXR”.
On January 1, 2019, the Company completed a reorganization of its corporate structure pursuant to which the Company
directly acquired all of the issued and outstanding shares of Maxar Technologies Ltd. (“Maxar Canada”), and the
Company replaced Maxar Canada as the publicly-held parent company of the Maxar group (“U.S. Domestication”).
Prior to U.S. Domestication, Maxar Canada reported to securities regulators in both Canada and the U.S., financial
statements prepared in accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board. 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”).
Definitive Agreement to Sell MDA
On December 30, 2019, the Company announced that Maxar Technologies Holdings Inc., a Delaware corporation and
wholly-owned subsidiary of Maxar (“Maxar Holdings” and, together with the Company, the “Sellers”), and Neptune
Acquisition Inc., a corporation existing under the laws of the Province of British Columbia and an affiliate of Northern
Private Capital Ltd. (“MDA Purchaser”) entered into a Stock Purchase Agreement, dated as of December 29, 2019 (the
“MDA Agreement”), that provides for, among other things, the MDA Purchaser to purchase MDA, the Company’s
Canadian subsidiary, from the Sellers for an aggregate purchase price of approximately C$1.0 billion (the “MDA
Transaction”). The MDA business encompasses ground stations, radar satellite products, robotics, defense and satellite
components. Pursuant to the Agreement, the MDA Purchaser will acquire all of the outstanding shares in the entities that
operate Maxar’s MDA business. This expected divestiture represents a strategic shift in the Company’s business and, in
accordance with U.S. GAAP, qualifies as a discontinued operation. As a result, the operating results and cash flows
related to the MDA business have been reflected as discontinued operations in the Consolidated Statements of
Operations and the Consolidated Statements of Cash Flows. The assets and liabilities that are to be sold have met the
requirements to be classified within the Consolidated Balance Sheets under a held for sale designation. See Note 4 for
details. As a result of classifying the MDA reporting segment as discontinued operations, the Company is now
comprised of two reportable segments: Earth Intelligence and Space Infrastructure.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The Consolidated Financial Statements include the accounts of Maxar Technologies Inc., and all consolidated subsidiary
entities. The Company’s Consolidated Financial Statements have been prepared in accordance with U.S. GAAP and the
rules and regulations of the U.S. Securities and Exchange Commission. All intercompany balances and transactions are
eliminated on consolidation.
The Company's Consolidated Financial Statements are presented in U.S. dollars and have been prepared on a historical
cost basis, except for certain financial assets and liabilities including derivative financial instruments which are stated at
fair value. References to “C$” refer to Canadian currency.
Unless otherwise indicated, amounts provided in the Notes pertain to continuing operations (See Note 4 for information
on discontinued operations).
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MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
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.
Leases
The Company has both operating and finance leases. The majority of the Company’s leases are operating leases related
to buildings. The Company’s finance leases are primarily related to furniture and equipment.
The Company determines if a contract is or contains a lease at inception based on whether it conveys the right to control
the use of an identified asset. The Company recognizes lease liabilities and right-of-use assets based on the present value
of the future minimum lease payments over the lease term at commencement date. Right-of-use assets are adjusted for
any prepayments, lease incentives received, and initial direct costs incurred. If the rate implicit in the lease is not readily
determinable, the Company’s incremental borrowing rate with a similar term to the lease term is used to determine the
present value of future payments and appropriate lease classification. The lease term includes renewal options that are
reasonably certain to be exercised. For adoption, the Company elected to consider the remaining lease term and
payments as of the adoption date. The Company elected the practical expedient not to separate lease and non-lease
components. The Company also elected to include in minimum lease payments any executory costs that are part of the
fixed lease payment.
Some of the Company’s building lease agreements contain incentives for leasehold improvements. If the leasehold
improvement has been determined to be owned by the lessee, the Company generally records a deferred rent liability and
amortizes the deferred rent over the term of the lease as a reduction to rent expense. The Company uses the date of initial
possession as the commencement date, which is generally when the Company has been given rights to access the space.
Leases with an initial term of 12 months or less are not recorded on the Company’s Consolidated Balance Sheets and are
recognized as lease expense on a straight-line basis in the Consolidated Statements of Operations. Certain leasing
arrangements require variable payments, such as insurance and tax payments. Variable lease payments that do not
depend on an index or rate are excluded from lease payments in the measurement of the right-of-use asset and lease
liability and are recognized as expense in the period in which the payment occurs.
The Company does not have any material restrictions or covenants in our lease agreements, sale leaseback transactions
or residual value guarantees. The Company recognizes fixed lease expense for operating leases on a straight-line basis
over the lease term. The Company recognizes amortization expense on finance lease right-of-use assets and interest
expense on finance lease liabilities over the lease term.
Business combinations and divestitures
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.
The Company reports the results of operations of a business as discontinued operations if a disposal represents a
strategic shift that has (or will have) a major effect on the Company’s operations and financial results when the business
is classified as held for sale. The results of discontinued operations are reported in Income (loss) from discontinued
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MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
operations, net of tax in the Consolidated Statements of Operations for current and prior periods, including any gain or
loss recognized on closing or adjustment of the carrying amount to fair value less cost to sell. Assets and liabilities of a
discontinued operation are reported separately in the Consolidated Balance Sheets as held for sale and classified as either
current or non-current in the prior periods. If it is probable that the sale will occur and proceeds will be collected within
one year of meeting the held for sale criteria both assets and liabilities classified as held for sale are reported in the
current period Consolidated Balance Sheet as current.
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 (loss) within the Stockholders’ equity section of the Consolidated Balance Sheets. 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
systematic basis consistent with the transfer of goods or services to the customer to which the capitalized costs relate. As
of December 31, 2019 and December 31, 2018, current costs to obtain or fulfill a contract were $6 million and $3
million, respectively, and are included in Prepaid and other current assets within the Consolidated Balance Sheets. As of
December 31, 2019 and December 31, 2018, non-current costs to obtain or fulfill a contract were $37 million and $30
million, respectively, and are included in Other non-current assets within the Consolidated Balance Sheets.
Space Infrastructure
Revenue in the Space Infrastructure segment is primarily generated from long-term construction contracts. Due to the
long-term nature of these contracts, the Company generally recognizes revenue over time using the cost-to-cost method
to measure progress. Under the cost-to-cost method, revenue is recognized based on the proportion of total costs incurred
to estimated total costs-at-completion ("EAC"). An EAC includes all direct costs and indirect costs directly attributable
to a program or allocable based on program cost pooling arrangements. Estimates regarding the Company’s cost
associated with the design, manufacture and delivery of products and services are used in determining the EAC. Changes
to an EAC are recorded as a cumulative adjustment to revenue. During the year ended December 31, 2019, the Company
incurred an estimated program loss of $49 million on a commercial satellite contract within the Space Infrastructure
segment due to a change in the estimated cost to complete the contract. The scope of this contract included significant
development effort which is nearing completion.
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
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MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
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 adjustments to the amount receivable of the discount during the in-orbit period
are recorded as orbital income. As of December 31, 2019 and 2018, long-term orbital receivables were $382 million and
$407 million, respectively and are included in Non-current assets on the Consolidated Balance Sheets. 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.
Earth Intelligence
Revenue in the Earth Intelligence segment is generated from imagery and geospatial intelligence service contracts.
Revenue from imagery service contracts 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 added 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 do not give rise to additional performance obligations. As each option year is exercised, the
consideration payable by the U.S. government will be recognized as revenue as capacity is provided over that option
year.
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 considered a
single performance obligation as 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.
Revenue from geospatial intelligence service contracts is recognized from 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
79
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
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. As the customer typically 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 liabilities
Contract liabilities primarily consist of advance payments from customers 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 income (loss) by the sum of the weighted average number of
common shares outstanding during the period.
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 shares. The Company calculates the effects of all potentially
dilutive shares using the treasury stock method unless they are anti-dilutive.
Research and development
Research and development costs are expensed in the period incurred. For the years ended December 31, 2019, 2018 and
2017, the Company expensed research and development costs of $10 million, $88 million, and $62 million, respectively
in Selling, general and administrative within the Consolidated Statements of Operations.
Interest expense
Interest expense is comprised of borrowing cost on debt, interest expense on advance payments from customers and
other liabilities, interest expense on the orbital securitization liability, losses incurred on the extinguishment of debt, and
interest expense on dissenting stockholders liability. Interest expense is recognized within Interest expense, net in the
Consolidated Statements of Operations.
Debt issuance costs related to the Company’s revolving line of credit are recorded in Prepaid and other current assets and
in Other non-current assets in the Consolidated Balance Sheets. Debt issuance costs and debt discount related to the
Company’s term loan and senior secured notes are recorded as a direct deduction from the carrying amount of the related
debt.
Derivative financial instruments and hedging activities
Derivative financial instruments used by the Company consist of foreign currency forward contracts and interest rate
swap agreements. The Company uses foreign currency forward contracts 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. The Company uses interest rate swap agreements to manage
interest rate risk associated with cash outflows from long-term debt. 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
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MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
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 as a foreign exchange gain or loss in Other (income) expense, net
within the Consolidated Statements of Operations.
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 on foreign exchange forward contracts related to its manufacturing and
service programs, however the Company will continue to hedge its exposure for economic purposes.
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.
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 non-current
assets in the Consolidated Balance Sheets.
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 Company bills customers as
work progresses in accordance with agreed-upon contractual terms, either at periodic intervals, upon achievement of
contractual milestones or upon deliveries. The carrying amount 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 in the Consolidated Balance Sheets.
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MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
The Company has investments in joint ventures where it does not have a controlling financial interest but has the ability
to exercise significant influence. These investments are accounted for under the equity method and are included within
Other non-current assets in the Consolidated Balance Sheets. The Company’s share of the joint venture’s net income or
loss is included within Equity in (income) loss from joint ventures, net of tax in the Consolidated Statements of
Operations.
The Company’s most significant joint venture is Vricon Inc. (“Vricon”), a joint venture with Saab AB, specializing in
the production of 3D models using high resolution imagery. The Company has an ownership interest of approximately
50% in Vricon. The following tables present summarized financial information for Vricon as of December 31, 2019 and
2018, and for the years ended December 31, 2019, 2018 and 2017.
Summarized Consolidated Balance Sheets
Current assets
Non-current assets
Total assets
Total liabilities 1
December 31,
2019
December 31,
2018
$
$
$
49 $
5
54 $
10 $
12
6
18
5
1 For the years ended December 31, 2019 and 2018, liabilities were classified as current.
Summarized Consolidated Statements of Operations
Revenues
Gross profit
Income from operations
Net income
Inventory
2019
Year Ended
December 31,
2018
$
$
$
$
54 $
51 $
32 $
24 $
21
19
2
1
$
$
$
$
2017
14
14
1
1
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 is measured at cost less accumulated depreciation. Cost for satellite assets includes
amounts related to design, construction, launch and commissioning. Cost for ground system assets include 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.
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MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
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:
Land improvements
Buildings
Leasehold improvements
Equipment
Satellites 1
Furniture and fixtures
Computer hardware
Estimated useful life
20 years
7 - 45 years
lesser of useful life or term of lease
2 - 40 years
11.5 - 14 years
2 - 10 years
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 and experience with satellite parts,
vendors and similar 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:
Customer relationships
Backlog
Technologies
Software
Image library
Trade names and other
Non-compete agreements
Impairment
Estimated useful life
9 - 21 years
3 - 5 years
5 - 13 years
3 - 10 years
5 years
5 - 20 years
2 years
Intangible assets and property, plant and equipment and other long-lived assets
Intangible assets, property, plant and equipment and other long-lived assets are tested for impairment at least annually on
October 1, or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
Intangible assets and property, plant and equipment and other long-lived assets 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
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MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
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.
In December 2018, the Company experienced a loss of the Worldview-4 satellite and in 2019, the Company received
insurance recoveries of $183 million. The insurance proceeds are included in operating cash flows as they are considered
business interruption insurance and represent the Company’s satellite’s loss of capacity to produce imagery for sale to
the Company’s customers.
Orbital Receivables
The Company considers an orbital receivable to be impaired when, based upon current information and events, it
believes it is probable the carrying valuing of the amounts to be collected exceed the fair value of the receivables. Orbital
receivables are reviewed for impairment at least annually during the fourth quarter or whenever changes in
circumstances indicate that the Company will not collect all amounts due according to the contractual terms of the
satellite construction agreement. Orbital impairments are typically included in Impairment losses within the
Consolidated Statements of Operations.
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 an income 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 unit exceeds
its fair value. The Company evaluates the aggregate fair value of its reporting units against market data to support its fair
value estimates.
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 EAC 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.
Warranty and after-sale service costs are recognized within Product and Service costs, excluding depreciation and
amortization in the Consolidated Statement of Operations.
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. Restructuring costs are
recognized within Selling, general and administrative expense and within Product costs and Service costs, excluding
depreciation and amortization in the Consolidated Statements of Operations.
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MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
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 its
Space Infrastructure business. The Space Infrastructure pension plan benefits were frozen on December 31, 2013.
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 actuarial cost method. The projected benefit obligation is the sum of
the actuarial present value of all pension benefits attributed to benefit service completed to the determination date.
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 prior periods, discounting that
amount and deducting the fair value of associated plan assets.
The Company elected to use the net asset value (“NAV”) practical expedient to measure the fair value of the plan’s
commingled fund investments. The practical expedient is applied retrospectively for all periods presented. These
commingled fund investments for which the fair value is measured using the NAV practical expedient are excluded from
the fair value hierarchy.
The Company recognizes the amortization of prior service costs as a component of Selling, general and administrative.
All other costs are recognized outside of operating income within Other (income) expense, net. The Company recognizes
administrative expenses related to frozen plans outside of Operating income (expense) within Other (income) expense,
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.
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 reserved shares. Stock-based compensation plans are measured at fair value using either the
Black-Scholes option pricing model or Monte Carlo simulation 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 models including the
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MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
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 within Selling, general and administrative expense in the Consolidated Statements of Operations.
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 the United States, Canada, 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 in 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 50
percent likely to be realized upon ultimate settlement. The Company believes that the reserves for unrecognized tax
benefits 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.
Reclassifications
Certain amounts in prior years have been reclassified to conform to the 2019 presentation.
Recently Adopted Accounting Pronouncements
Leases
In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842)
(“ASU 2016-02”) which together with subsequent amendments is included in ASC 842 – Leases. This new standard
required that all leases with an initial term greater than one year be recorded on the balance sheet as right-of-use assets
and lease liabilities. Additional qualitative and quantitative disclosures are also required. The Company adopted the lease
standard on January 1, 2019, using the modified retrospective transition approach on the effective date. The Company
elected the package of practical expedients, which allows the Company not to reassess whether any expired or existing
86
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
contracts as of the adoption date are or contain a lease, lease classification for any expired or existing leases as of the
adoption date and initial direct costs for any existing leases as of the adoption date. The Company did not elect the
hindsight practical expedient when determining lease term and assessing impairment of right-of-use assets. Upon
adoption, the Company recognized operating lease right-of-use assets and lease liabilities of $133 million and $176
million, respectively in its Consolidated Balance Sheets. There were no material impacts to the Consolidated Statements
of Operations or Consolidated Statements of Cash Flows.
Taxes
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 adopted the
update on January 1, 2019. There was no material impact to the Consolidated Financial Statements.
3. NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED
Financial Instruments
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”) which together with subsequent amendments is included in ASC 326
– Financial Instruments – Credit Losses. ASC 326, as amended, significantly changes the impairment model for most
financial assets and certain other instruments. ASC 326, as amended, 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. These updates are 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. The Company will adopt this standard and related
amendments effective January 1, 2020. The Company has performed an evaluation of its in-scope receivables, which
consist primarily of trade receivables and orbital receivables. Based on this analysis the Company does not expect the
adoption to have a material impact on its Consolidated Financial Statements.
Simplifying the Accounting for Income Taxes
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income
Taxes (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the
general principles in Topic 740. ASU 2019-12 also simplifies aspects of accounting for franchise taxes and clarifies the
accounting for transactions that result in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for annual and
interim financial statement periods beginning after December 15, 2020, with early adoption permitted. The Company is
currently assessing the effect that this guidance may have on its Consolidated Financial Statements.
4. DISCONTINUED OPERATIONS
On December 29, 2019, the Company entered into the MDA Transaction with the MDA Purchaser to sell all issued and
outstanding shares of MDA, the Company’s Canadian subsidiary, for an aggregate purchase price of approximately C$1
billion, subject to customary purchase price adjustments set forth in the MDA Agreement as well as a negative purchase
price adjustment of up to C$65 million for a complete loss or failure of RADARSAT-2, such that it cannot be used for
the intended commercial purposes of the Company.
The closing of the MDA Transaction is conditioned on customary closing conditions and on specified regulatory
approvals. The MDA Agreement contains specific termination rights for the Company and the MDA Purchaser,
including, among others, if the consummation of the MDA Transaction has not occurred by June 29, 2020, subject to
87
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
extension to September 29, 2020 for the purpose of obtaining regulatory approvals in the U.S. and Canada and appealing
any injunctions preventing consummation. The MDA Agreement also provides that the MDA Purchaser will be required
to pay the Company a reverse termination fee of C$55 million under specified circumstances, including, among others,
where the Agreement is terminated because (i) MDA Purchaser has materially breached its representations and
warranties or the MDA Purchaser fails to perform its covenants in all material respects, subject to a cure period, or (ii)
all of the conditions to closing of the MDA Transaction (other than those conditions that by their terms are to be satisfied
at closing) have been satisfied or waived, the Company has confirmed in writing to the MDA Purchaser that the
Company stands ready, willing and able to consummate the MDA Transaction and the MDA Purchaser fails to
consummate the closing (including for a failure of the MDA Purchaser’s debt financing) within two business days of
receipt of the notice from the Company.
The Company intends to use the net cash proceeds from the MDA Transaction, as determined by the Company’s
Original Syndicated Credit Facility, the 2023 Notes and the MDA Agreement, to pay down long-term debt. The net cash
proceeds include the netting of certain fees and liabilities which include the indemnification of the MDA Purchaser for
certain liabilities including a dispute with the Ukrainian customer. See Note 23 for details. As of December 31, 2019, the
Company had recorded a liability for the matters which it expects to withhold proceeds from the sale in the amount of
$60 million which is reflected in Accrued liabilities within the Consolidated Balance Sheet. The Company does not
expect any material tax consequences in connection with the MDA Transaction.
In addition to the MDA Transaction, upon closing, the Company and the MDA Purchaser will enter into a Transition
Services Agreement pursuant to which the MDA Purchaser will receive certain services (the “Services”). The Services
will be provided at a cost for a period of up to 12 months from the closing date of the MDA Transaction, with an option
to extend up to six months for certain services.
The Company determined that as of December 29, 2019, the MDA business meets the criteria to be classified as held for
sale. The MDA business was a separate reportable segment prior to the announcement of the MDA Transaction and
constitutes all the Company’s Canadian operations. As the MDA Transaction represents a strategic shift that has a major
effect on the Company’s operations it meets the criteria to be reported as a discontinued operation in accordance with
ASC 205-20 – Discontinued Operations. The assets and liabilities of MDA are classified as held for sale in the
Consolidated Balance Sheets with results classified as discontinued operations in the Consolidated Statements of
Operations and the Consolidated Statements of Cash Flows for all periods presented.
88
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
Income (loss) from discontinued operations, net of tax in the Consolidated Statements of Operations consist of the
following:
Revenues:
Product
Service
Total revenues
Costs and expenses:
Product costs, excluding depreciation and amortization
Service costs, excluding depreciation and amortization
Selling, general and administrative
Depreciation and amortization
Impairment losses
Operating income (loss)
Interest expense, net
Other expense (income), net
Income (loss) before taxes
Income tax (benefit) expense
$
$
$
Income (loss) from discontinued operations, net of tax
$
Year Ended
December 31,
2018
2019
2017
206 $
161
367 $
149 $
84
88
11
12
23
1
3
19
(7)
26
$
238
182
420
149
114
59
10
477
(389)
1
—
(390)
(13)
(377)
$
$
$
$
275
150
425
158
86
54
10
—
117
1
(6)
122
6
116
The Company performed its annual goodwill impairment analysis as of October 1, 2019. This analysis was updated upon
announcement of the MDA Transaction for the year ended December 31, 2019. The Company concluded that there were
no impairment indicators related to goodwill at either of the dates the impairment analyses were performed. For the year
ended December 31, 2018, as a result of triggering events identified, which included a sustained decline in the
Company’s stock price, the Company recorded a $477 million non-cash goodwill impairment charge.
MDA holds an investment in a privately held company in which it does not have significant influence and the fair value
of which cannot be reliably measured through external indicators. The investment is evaluated quarterly for impairment.
In 2019, the Company noted an observable price change related to its investment and, as a result, recorded an
impairment loss of $12 million. There were no investment impairment losses recognized for the years ended December
31, 2018 or 2017.
89
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
The carrying amounts of the major classes of assets and liabilities, which are classified as held for sale in the
Consolidated Balance Sheets, are as follows:
Assets
Cash and cash equivalents
Trade and other receivables, net
Deferred tax assets
Property, plant and equipment
Intangible assets
Goodwill
Other assets 1
Current assets held for sale
Deferred tax assets
Property, plant and equipment
Intangible assets
Goodwill
Other non-current assets
Non-current assets held for sale
Liabilities
Accounts payable
Accrued liabilities
Accrued compensation and benefits
Contract liabilities
Pension and other postretirement benefit liabilities
Other liabilities 2
Current liabilities held for sale
Pension and other postretirement benefit liabilities
Other non-current liabilities
Non-current liabilities held for sale
December 31,
2019
December 31,
2018
$
$
$
$
$
$
$
45 $
168
117
29
27
310
55
751 $
—
—
—
—
—
— $
88 $
18
21
29
21
53
230 $
— $
—
— $
16
156
—
—
—
—
31
203
104
28
28
296
26
482
68
21
20
24
—
21
154
18
40
58
1 Other assets include income tax receivables, operating lease assets, prepaid and other current assets.
2 Other liabilities include operating and finance lease liabilities, current income taxes payable and other current liabilities.
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. 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 discontinued operations within
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. Direct transaction costs of the Neptec acquisition
were not material and were expensed as incurred.
5. BUSINESS COMBINATIONS
On October 5, 2017, the Company completed the acquisition of DigitalGlobe, Inc. (“DigitalGlobe”) for a combination of
equity and cash consideration totaling $2,328 million (the “DigitalGlobe Transaction”). 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.
90
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
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.
91
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
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.
Cash paid
Shares issued
Merger consideration to be settled
Liability to dissenting stockholders
Issuance of replacement equity-settled awards
Purchase consideration
Assets
Cash and cash equivalents
Trade and other receivables, net
Property, plant and equipment, net
Intangible assets, net
Other assets
Liabilities
Accounts payable
Other current liabilities
Pension and other postretirement benefit liabilities
Long-term debt
Other non-current liabilities
Fair value of net identifiable assets acquired
Goodwill
October 5, 2017
1,131
$
1,063
3
115
16
2,328
$
$
$
$
$
171
142
696
1,440
106
2,555
83
4
29
1,276
504
1,896
659
1,669
The following table summarizes the intangible assets acquired from the DigitalGlobe Transaction by class and useful
life:
Finite-lived intangible assets:
Customer relationships
Backlog
Technologies
Software
Image library
Trade names and trademarks
Other
Total intangible assets
Carrying
value
Weighted
average useful
life
$
$
608
331
318
46
80
37
20
1,440
14 years
4 years
5 years
3 years
5 years
10 years
2 years
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.
92
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
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.
6. TRADE AND OTHER RECEIVABLES
U.S. government receivables:
Billed
Unbilled
Other governments and commercial receivables:
Billed
Unbilled
Total trade receivables
Orbital receivables, current portion
Other
Allowance for doubtful accounts
Trade and other receivables, net
December 31,
2019
December 31,
2018
$
88 $
46
134
123
54
177
311
43
4
(1)
$
357 $
96
60
156
99
59
158
314
34
3
(1)
350
Orbital receivables are recognized as revenue when measuring progress under the cost-to-cost method during the
construction period and were discounted to present value using discount rates ranging from 6% - 10% for the years
ended December 31, 2019 and 2018. The Company has orbital receivables from 14 customers and the largest customer
represents 27% of the orbital receivables. During the years ended December 31, 2019 and December 31, 2018, the
Company recognized orbital impairments of $14 million and $22 million, respectively, primarily due to a decrease in
customer credit ratings.
The expected timing of total contractual cash flows, including principal and interest payments for orbital receivables is
as follows:
Contractual cash flows from satellites
$
65 $
2020
2021
2022 2023 2024 Thereafter Total
370 $ 723
69 $ 73 $ 74 $ 72 $
During the year ended December 31, 2019, the Company did not sell any eligible orbital receivables and repurchased
$24 million of specifically identified orbital receivables. The orbital receivables were repurchased as a result of its
customer transferring the obligation to another entity which did not meet the credit criteria of its lenders. During the year
ended December 31, 2018, the Company sold orbital receivables for net proceeds of $18 million and did not repurchase
any receivables. These sold 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 liability. The amount of securitization liabilities was $65 million
and $109 million at December 31, 2019 and 2018, respectively, of which $17 million and $15 million, respectively, was
included in Other current liabilities on the Consolidated Balance Sheets. Non-current securitization liabilities of $48
93
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
million and $94 million are included in Other non-current liabilities on the Consolidated Balance Sheets at December 31,
2019 and 2018, respectively.
7. INVENTORY
Raw materials
Work in process
Inventory
8. PROPERTY, PLANT AND EQUIPMENT, NET
Satellites
Equipment
Leasehold improvements
Computer hardware
Land and land improvements
Buildings
Furniture and fixtures
Construction in process
Property, plant and equipment, at cost
Accumulated depreciation
Property, plant and equipment, net
December 31,
2019
December 31,
2018
$
$
13
7
20
$
$
20
9
29
December 31,
2019
December 31,
2018
$
$
397
196
75
67
—
—
15
388
1,138
(380)
758
$
$
397
199
75
62
85
41
15
147
1,021
(296)
725
Depreciation expense for property, plant and equipment was $107 million, $150 million and $55 million for the years
ended December 31, 2019, 2018 and 2017, respectively.
Sale leaseback
On December 10, 2019, the Company completed the sale and subsequent leaseback of Company owned properties in
Palo Alto, California for net proceeds of $280 million. The Company recognized a gain on the sale of the properties of
$136 million, which was adjusted for off-market leaseback terms, and is included in Gain on sale of assets in the
Company’s Consolidated Statement of Operations.
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 sale resulted in a gain of $33 million from the sale, which is included in Gain on sale of
assets in the Company’s Consolidated Statements of Operations.
94
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
9. INTANGIBLE ASSETS AND GOODWILL
December 31, 2019
December 31, 2018
Customer relationships
Backlog
Technologies
Software
Image library
Trade names and other
Non-compete agreements
Intangible assets
Accumulated
amortization
Net
carrying
value
Gross
carrying
value
Accumulated
amortization
Gross
carrying
value
$ 615 $
330
320
213
80
37
—
$ 1,595 $
(102) $ 513 $ 615 $
(217)
(144)
(83)
(48)
(10)
—
113
176
130
32
27
—
(604) $ 991 $ 1,564 $
330
323
159
80
37
20
Net
carrying
value
557
210
240
109
48
32
8
(360) $ 1,204
(58) $
(120)
(83)
(50)
(32)
(5)
(12)
Amortization expense related to intangible assets was $269 million, $289 million and $97 million for the years ended
December 31, 2019, 2018 and 2017, respectively. The decrease in expense for the year ended December 31, 2019
compared to 2018 was primarily due to impairments of intangible assets in the second half of 2018. The increase in
expense for the year ended December 31, 2018 compared to 2017 was primarily due to the inclusion of a full year of
amortization expense related to the additions of intangible assets from the acquisition of DigitalGlobe, as compared to
approximately one quarter of amortization expense in 2017.
The estimated annual amortization expense related to finite-lived intangible assets as of December 31, 2019, is as
follows:
Year Ended December 31,
2021
2022
2023
2024
181 $ 140 $
56 $
49 $
2025 and
thereafter
319
Earth
Intelligence
Space
Infrastructure
Total
$
1,600 $
—
1,600
(142)
(3)
1,597
(142)
1,455
1,597
(142)
1,455 $
$
17 $
—
17
(17)
—
1,617
—
1,617
(159)
(3)
17
(17)
—
1,614
(159)
1,455
17
(17)
— $
1,614
(159)
1,455
Amortization expense
2020
$ 246 $
Goodwill balances for each reporting segment are as follows:
Balance as of December 31, 2017
Goodwill
Accumulated impairment losses
Impairment losses
Disposal of immaterial subsidiary
Balance as of December 31, 2018
Goodwill
Accumulated impairment losses
Balance as of December 31, 2019
Goodwill
Accumulated impairment losses
95
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
10. LEASES
The Company’s leases have remaining lease terms up to 15 years, some of which include options to extend the lease
anywhere from one to ten years.
Sale Leaseback
On December 10, 2019, the Company completed the sale and subsequent leaseback of Company owned properties in
Palo Alto, California. The Company determined the leaseback of both properties to be operating leases, as the criteria to
be classified as financing leases were not met. The Company recorded operating lease assets and liabilities of $63
million, representing the fair value of the minimum lease payments associated with the agreements to lease the assets
back over a period of two to ten years.
The Company recorded the current portions of the operating lease liabilities and the financial liability in Current lease
liabilities and Other current liabilities, respectively, in the Consolidated Balance Sheet. The non-current portions of the
operating lease assets, the operating lease liabilities and the financial liability have been recorded in Non-current
operating lease assets, Non-current operating lease liabilities and Other non-current liabilities, respectively, in the
Consolidated Balance Sheet. Interest expense on the financial liability has been recorded in Interest expense, net in the
Consolidated Statement of Operations.
Finance lease cost, variable lease cost, and short-term lease cost are not material. The components of operating lease
expense are as follows:
Operating lease expense
1 Excluding depreciation and amortization
Classification
Year ended
December 31,
2019
Selling, general, and administrative expense,
Product costs, and Service costs1
$
27
Operating lease rent expense for the years ended December 31, 2018 and 2017, was $26 million and $31 million,
respectively.
Supplemental lease balance sheet information consists of the following:
Assets:
Operating
Finance
Total lease assets
Liabilities:
Current
Operating
Finance
Non-current
Operating
Finance
Total lease liabilities
Classification
December 31,
2019
Non-current operating lease assets
Property, plant, and equipment, net
Current operating lease liabilities
Current portion long-term debt
Operating lease liabilities
Long-term debt
$
$
$
$
176
5
181
40
2
173
1
216
96
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
Supplemental lease cash flow information is as follows:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
Gain on sale leaseback
Right-of-use assets obtained in exchange for lease obligations:
Operating leases
Other supplemental lease information consists of the following:
Weighted average remaining lease term
Operating leases
Finance leases
Weighted average discount rate
Operating leases
Finance leases
Maturities of lease liabilities are as follows:
Year ended
December 31,
2019
$
30
(136)
72
December 31,
2019
9 years
3 years
6.4%
3.5%
Operating leases
Finance leases
2020 2021
$ 42 $ 40 $
2022
2023
2024
Thereafter
30 $
1
27 $
—
25 $
—
Total
minimum
Less:
lease
imputed
payments
interest
117 $ (68) $ 213
3
(1)
—
2
1
97
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
11. WARRANTY AND RESTRUCTURING COSTS
In response to changes in the geostationary communications satellite market, in 2018 the Company enacted a
restructuring plan to reduce headcount at its Palo Alto manufacturing facility and to implement enterprise improvement
initiatives aimed at reducing overhead costs, reducing general and administrative costs, increasing supply chain value
and increasing efficiency of production processes.
In February 2019, the Company announced another restructuring plan to implement cost-saving measures, including a
reduction in the Company’s workforce. The reduction in the Company’s workforce was substantially completed in the
first half of 2019, with cash payments occurring throughout 2019.
Changes to warranty and restructuring liabilities during the years ended December 31, 2019 and 2018, are as follows:
Warranty and
Balance as of December 31, 2017
Obligations incurred
Payments/uses
Balance as of December 31, 2018
Obligations incurred
Payments/uses
Balance as of December 31, 2019
12. LONG-TERM DEBT AND INTEREST EXPENSE
Syndicated Credit facility:
Revolving credit facility
Term Loan A
Term Loan B
2023 Notes
Deferred financing
Debt discount and issuance costs
Obligations under finance leases and other
Total long-term debt
Current portion of long-term debt
Non-current portion of long-term debt
Syndicated Credit Facility
$
$
$
after-sale service Restructuring
1
13
(11)
3
18
(19)
2
39
5
(4)
40
$
3
(2)
41 $
$
December 31,
2019
December 31,
2018
$
$
— $
—
1,960
1,000
33
(54)
6
2,945
(30)
2,915 $
595
500
1,980
—
—
(41)
9
3,043
(16)
3,027
As of December 31, 2019, the Company’s senior secured syndicated credit facility (the “Original Syndicated Credit
Facility”, as amended prior to December 31, 2019, including as described below, the “Syndicated Credit Facility”) is
composed of: (i) a senior secured first lien revolving credit facility maturing in December 2023 (the “Revolving Credit
Facility”) and (ii) a senior secured first lien term B facility maturing in October 2024 (the “Term Loan B”).
In October 2017, in connection with the acquisition of DigitalGlobe, the Company entered into the Original Syndicated
Credit Facility in the aggregate principal amount of $3.75 billion, which was comprised of: (i) a four-year senior secured
first lien revolving credit facility, (ii) a four-year senior secured first lien operating facility, (iii) a senior secured first lien
term A facility (“Term Loan A”) and (iv) the Term Loan B. The net proceeds of the Original Syndicated Credit Facility
98
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
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 included as part of Interest
expense, net within the Consolidated Statements of Operations. The loss was comprised of a make-whole premium to
terminate the previous 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 previous term notes.
In December 2018, the Company amended the Original Syndicated Credit Facility (the “Second Amending
Agreement”). The Second Amending Agreement provided that, so long as certain conditions were satisfied (the period
during which such conditions are satisfied, the “Covenant Relief Period”) the maximum consolidated debt leverage
ratios permitted under the Original Syndicated Credit Facility were increased and the interest rate incurred by the
Company thereunder at certain consolidated debt leverage ratios were increased. The Second Amending Agreement also
adjusted the definition of EBITDA for the purpose of calculating the financial ratios under U.S. GAAP. In addition to
the above, during the Covenant Relief Period, the Second Amending Agreement restricted the use of certain asset sale
proceeds, limited the type of new debt issuances and limited certain restricted payments and permitted acquisitions under
the Syndicated Credit Facility.
In November 2019, the Company further amended the Original Syndicated Credit Facility (the “Third Amending
Agreement”), certain portions of which became effective immediately and certain portions of which became effective in
December 2019 upon the issuance of the 2023 Notes. The Third Amending Agreement, during the Covenant Relief
Period, (i) modified the priority of the application of certain voluntary prepayments resulting from certain asset sales
(but which did not affect the prepayments owed to the Term Loan B), and (ii) restricted use of proceeds of future
borrowings. In addition, the Third Amending Agreement increased the maximum consolidated debt leverage ratios
permitted under the Original Syndicated Credit Facility to 7.25x at the end of the fiscal quarter ended December 31,
2019, 7.50x at the end of the fiscal quarter ending March 31, 2020, 7.75x at the end of each fiscal quarter thereafter until
the fiscal quarter ending September 30, 2021, 7.50x at the end of each fiscal quarter thereafter until the quarter ending
September 30, 2022, 6.50x at the end of each fiscal quarter thereafter until the fiscal quarter ending March 31, 2023, and
5.75x for each fiscal quarter thereafter (subject to a 0.25x reduction in each maximum level upon a disposition of a
business line for greater than $500 million). The Third Amending Agreement also extended the maturity of the
Revolving Credit Facility by two years to December 2023, updated the Interest Coverage Ratio to be less than 2.0x at the
end of each fiscal quarter, restricted investment capacity in certain permitted investments, restricted future increases in
quarterly dividend payment levels and modified certain margin and standby fee terms. In addition, the Company
canceled the operating credit facility and reduced committed borrowing capacity under the Revolving Credit Facility
from $1.25 billion to $500 million. As of December 31, 2019 and 2018, the Company was in compliance with its debt
covenants.
The Syndicated Credit Facility is guaranteed by the Company and certain designated subsidiaries (the “Subsidiary
Guarantors”) of the Company. The security for the Syndicated Credit Facility, subject to customary exceptions, includes
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 of the Syndicated Credit
Facility (i) upon the occurrence of certain events and (ii) to the extent of a specified percentage of annual excess cash
flow that is not reinvested or used for other specified purposes. The Syndicated Credit Facility is subject to customary
affirmative and negative covenants, default provisions, representations and warranties and other terms and conditions.
Term Loan A
The Company used the proceeds from the 2023 Notes and the previously announced closing of its Palo Alto real estate
sale leaseback transaction to repay the Original Syndicated Credit Facility borrowings under Term Loan A that were
outstanding as of September 30, 2019. This resulted in a loss on debt extinguishment of $22 million for the year ended
December 31, 2019, which is included as part of Interest expense, net within the Consolidated Statements of Operations.
99
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
Term Loan B
The Term Loan B bears interest at the Company’s option, either (i) U.S. dollar LIBOR plus 275 basis points per annum
or (ii) adjusted base rate, plus a margin of 175 basis points per annum. The Company must make equal quarterly
installment payments in aggregate annual amounts equal to 1% of the original principal amount of the Term Loan B,
with the final balance payable at maturity on October 5, 2024. The Term Loan B may be repaid by the Company, in
whole or in part, together with accrued interest, without premium or penalty.
Revolving Credit Facility
The Revolving Credit Facility includes an aggregate $200 million sub limit under which letters of credit can be issued.
As of December 31, 2019 and December 31, 2018, the Company had $18 million of issued and undrawn letters of credit
outstanding under the Revolving Credit Facility.
Borrowings under the Revolving Credit Facility bear interest at a rate equal to, at the Company’s option, either (i) U.S.
dollar LIBOR, plus a margin of 120 - 425 basis points per annum, based on the Company’s total leverage ratio, or (ii)
adjusted base rate, plus a margin of 20-325 basis points per annum, based on the Company’s total leverage ratio. The
Revolving Credit Facility is payable at maturity on December 10, 2023. The Revolving Credit Facility may be repaid by
the Company, in whole or in part, together with accrued interest, without premium or penalty.
Senior Secured Notes due 2023
In December 2019, the Company issued $1.0 billion in principal amount of 9.75% Senior Secured Notes due 2023
(“2023 Notes”) in a private placement to institutional buyers. The 2023 Notes were issued at a price of 98% and bear
interest at the rate of 9.75% per year, payable semi-annually in cash in arrears, which interest payments will commence
in June 2020. The 2023 Notes are guaranteed on a senior secured basis by each of our existing and future subsidiaries
that guarantee the Syndicated Credit Facility.
Leaseback Deferred Financing
In December 2019, the Company completed the sale and subsequent leaseback of company owned properties in Palo
Alto, California for proceeds of $291 million. The Company determined that the leaseback terms were off-market. In
accordance with ASC 842 – Leases, the Company accounted for the excess of the leaseback payments over the present
value of market rental payments as additional financing, separate from the lease liability. This resulted in recognition of
a deferred financing liability of $33 million, which is repayable over the 10 year leaseback term. This liability was
calculated using a weighted average discount rate of 4.62%. The deferred financing liability is recorded as part of
Current portion of long-term debt and Long-term debt within the Consolidated Balance Sheets. Refer to Note 8 and 10
for additional information.
100
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
Interest expense, net on long-term debt and other obligations are as follows:
Interest on long-term debt
Interest expense on advance payments from customers
Interest on orbital securitization liability
Imputed interest and other
Capitalized interest
Loss on debt extinguishment
Interest expense on dissenting stockholder liability
Interest expense, net
$
$
Year Ended December 31,
2019
2018
2017
$
194
15
7
—
(19)
22
—
219
$
171
26
7
—
(7)
—
3
200
$
$
57
8
8
1
—
23
—
97
Scheduled minimum debt repayments are as follows for the year ending December 31, 2019 are as follows:
Syndicated credit facility
2023 Notes
Deferred financing
Finance leases
Debt discount and issuance costs
2020
$
2021
2022
2023
2024
Thereafter Total
20 $ 1,880 $
20 $ 20 $ 20 $
—
6
2
(11)
17 $ 15 $
—
6
1
(12)
—
2
—
(13)
1,000
2
—
(13)
—
2
—
(5)
$
9 $ 1,009 $ 1,877 $
— $ 1,960
1,000
—
33
15
3
—
(54)
15 $ 2,942
13. FINANCIAL INSTRUMENTS AND FAIR VALUE DISCLOSURES
Factors used in determining the fair value of financial assets and liabilities are summarized into three categories in
accordance with ASC 820 - Fair Value Measurements:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical,
unrestricted assets or liabilities
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices)
Level 3: Inputs for the asset or liability that are based on unobservable inputs
The following tables present assets and liabilities that are measured at fair value on a recurring basis (at least annually)
by level within the fair value hierarchy. A financial asset or liability’s classification within the hierarchy is determined
based on the lowest level input that is significant to the fair value measurement.
Recurring Fair Value Measurements of as of December 31, 2019
Level 1
Level 3
Level 2
Total
Assets
Short-term investments
Orbital receivables 1
Liabilities
Interest rate swaps
Long-term debt 2
1 $
—
1 $
— $
—
— $
— $
425
425 $
18 $
3,004
3,022 $
— $
—
— $
— $
—
— $
1
425
426
18
3,004
3,022
$
$
$
$
101
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
Recurring Fair Value Measurements of as of December 31, 2018
Level 1
Level 3
Level 2
Total
Assets
Long-term investments
Orbital receivables 1
Liabilities
Interest rate swaps
Long-term debt 2
$
$
$
$
1 $
—
1 $
— $
—
— $
— $
441
441 $
4 $
2,925
2,929 $
— $
—
— $
— $
—
— $
1
441
442
4
2,925
2,929
1 The carrying value of Orbital receivables was $425 million and $441 million at December 31, 2019 and 2018,
respectively.
2 Long-term debt excludes finance leases, deferred financing and other and is carried at amortized cost. The
outstanding carrying value was $2,906 million and $3,034 million at December 31, 2019 and 2018, respectively.
The Company determines the fair value of its orbital receivables using a discounted cash flow model, based on stated
interest rates and observable market yield curves associated with the instruments.
The Company determines fair value of its derivative financial instruments based on internal valuation models, such as
discounted cash flow analysis, using management estimates and observable market-based inputs, as applicable.
Management estimates include assumptions concerning the amount and timing of estimated future cash flows and
application of appropriate discount rates. Observable market-based inputs are sourced from third parties and include
interest rates and yield curves, currency spot and forward rates and credit spreads, as applicable. The fair value of
derivative financial instruments are included as components of Other current liabilities and Other non-current liabilities
in the Consolidated Balance Sheets. The fair value of foreign exchange forward contracts at December 31, 2019 and
2018 were not material.
The Company determines fair value of its long-term debt using market interest rates for debt with terms and maturities
similar to the Company's existing debt arrangements.
Cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities are all short-term in nature and
the carrying value of these items approximates their fair value.
There were no transfers into or out of each of the levels of the fair value hierarchy during the year ended December 31,
2019 or December 31, 2018.
14. 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 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 certain sales and purchase contracts. The Company enters
into foreign exchange forward contracts to hedge the exposure arising from expected foreign currency denominated cash
flows on these sales and purchase contracts. As of January 1, 2019, the Company discontinued hedge accounting related
102
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
to these sales and purchase contracts. The Company continues to hedge foreign exchange exposure on sales and
purchase contracts for economic purposes.
Derivatives designated as hedging instruments
Interest rate swaps
Derivatives not designated as hedging instruments
Foreign exchange forward contracts
Sales contracts settled in U.S. dollars
Euro
Derivatives designated as hedging instruments
Interest rate swaps
Foreign exchange forward contracts
Purchase contracts settled in U.S. dollars
Euro
Japanese Yen
Sales contracts settled in U.S. dollars
Euro
Japanese Yen
As of December 31, 2019
Notional amount
Maximum Contract term
1,000
2.3 years
10
0.1 years
As of December 31, 2018
Notional amount
Maximum Contract term
1,000
3.3 years
9
177
20
177
0.3 years
0.2 years
0.5 years
0.2 years
The effective portion of losses included in Other comprehensive income (loss), net of tax related to the Company’s
interest rate swaps was $18 million, $4 million and $0 million for the years ended December 31, 2019, 2018 and 2017,
respectively. The gain/loss from foreign exchange forward contracts was not material for the years ended December 31,
2019, 2018 and 2017, respectively.
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
At December 31, 2018, the Company had designated $271 million of its 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 were recognized in Other comprehensive income (loss), net of tax to the extent that the hedges were
effective and are recognized in the Consolidated Statements of Operations to the extent that the hedges were ineffective.
The fair value of the designated portion of Term Loan B was $256 million as of December 31, 2018. 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 was no longer necessary from the domestication date onwards.
103
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
15. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Changes in the components of Accumulated other comprehensive income (loss) are as follows:
Foreign Currency
Translation
Adjustments1
Unrecognized
(Loss) Gain on
Derivatives2
Loss on Pension
and Other
Postretirement
Plans
Total Accumulated
Other
Comprehensive
Income (Loss)
Balance as of December 31, 2016
$
Other comprehensive income (loss)
Tax benefit (expense)
Balance as of December 31, 2017
Other comprehensive loss
Tax benefit (expense)
Balance as of December 31, 2018
$
Other comprehensive (loss) income
Tax benefit (expense)
Balance as of December 31, 2019
$
123
7
—
130
(19)
—
111 $
14
1
126 $
10
(3)
—
7
(10)
3
— $
(12)
—
(12) $
(10)
(8)
(6)
(24)
(4)
(1)
(29) $
(26)
—
(55) $
123
(4)
(6)
113
(33)
2
82
(24)
1
59
1 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 net investment hedge was no longer necessary from the
domestication date onwards. As of December 31, 2018, there was a $51 million net loss on hedge investments in
foreign operations which is included in Foreign Currency Translation Adjustments.
2 As of January 1, 2019, the Company discontinued hedge accounting related to the Company’s foreign exchange
contracts. The Company still applies hedge accounting to the interest rate swaps related to long-term debt. As of
December 31, 2019, the balance consisted of unrecognized loss on the Company’s interest rate swaps.
16. REVENUE
On December 31, 2019, the Company had $1.6 billion of remaining performance obligations, which represents the
transaction price of firm orders less inception to date revenue recognized. Remaining performance obligations generally
exclude unexercised contract options and indefinite delivery/indefinite quantity contracts. The Company expects to
recognize revenue relating to existing performance obligations of approximately $1.0 billion, $0.4 billion, and $0.2
billion in the fiscal years 2020, 2021 and thereafter, respectively.
Contract liabilities by segment are as follows:
As of December 31, 2019
Contract liabilities
As of December 31, 2018
Contract liabilities
Earth
Intelligence1
Space
Infrastructure
Total
$
130 $
145 $
275
Earth
Intelligence1
Space
Infrastructure
Total
$
243 $
149 $
392
1 The contract liability balance associated with the Company’s EnhancedView Contract was $78 million and $184
million as of December 31, 2019 and 2018, respectively. During the year ended December 31, 2019, imputed interest
on advanced payments increased the contract liability balance by $15 million, and $120 million in revenue was
104
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
recognized, decreasing the contract liability balance. The contract liability balance associated with the Company’s
EnhancedView Contract is expected to be recognized as revenue through August 31, 2020.
The decrease in total contract liabilities was primarily due to revenue recognized.
The Company’s primary sources of revenue are as follows:
Year Ended December 31, 2019
Product revenues
Service revenues
Intersegment
Year Ended December 31, 2018
Product revenues
Service revenues
Intersegment
Year Ended December 31, 2017
Product revenues
Service revenues
Intersegment
Earth
Intelligence
Space
Infrastructure Eliminations
Total
$
$
— $
1,085
—
1,085 $
560 $
21
125
706 $
— $
—
(125)
(125) $
560
1,106
—
1,666
Earth
Intelligence
Space
Infrastructure Eliminations
Total
$
$
— $
1,058
1
1,059 $
697 $
49
77
823 $
— $
—
(78)
(78) $
697
1,107
—
1,804
Earth
Intelligence
Space
Infrastructure Eliminations
Total
$
$
— $
331
—
331 $
877 $
49
6
932 $
— $
—
(6)
(6) $
877
380
—
1,257
Certain of the Company’s contracts with customers in the Space Infrastructure segment include a significant financing
component as payments are received from the customer more than one year after delivery of the promised goods or
services. The Company recognized orbital interest revenue related to these contracts of $31 million, $32 million and $35
million for the years ended December 31, 2019, 2018 and 2017, respectively, which is included in product revenues.
The approximate revenue based on geographic location of customers is as follows:
United States
Asia
South America
Europe
Middle East
Australia
Canada
Other
Total revenues
2017
698
228
16
127
41
22
123
2
1,257
Year Ended December 31,
2018
2019
1,240 $ 1,238 $
$
161
97
69
57
22
10
10
213
133
54
90
17
49
10
$
1,666 $ 1,804 $
105
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
Revenues from significant customers is as follows:
Year Ended December 31,
2018
2019
2017
U.S. Federal Government and agencies
Commercial and other
$
940 $
726
816 $
988
276
981
The majority of revenue from the U.S. Federal Government and agencies is derived from the Earth Intelligence segment.
17. SEGMENT INFORMATION
During the fourth quarter of 2019, following a number of changes, the chief operating decision maker (“CODM”)
changed the way in which he assesses performance and allocates resources. As a result, the Company has revised its
reportable segments to reflect how the CODM currently reviews financial information and makes operating decisions.
The Company’s operating and reportable segments are: Earth Intelligence, Space Infrastructure and MDA. With the
Company’s announcement of the MDA Transaction on December 30, 2019 the MDA segment has been classified within
Income (loss) from discontinued operations, net of tax in the Consolidated Statements of Operations. All prior-period
amounts have been adjusted to reflect the reportable segment change.
The Earth Intelligence reportable segment is a supplier of high resolution space-based optical and radar imagery
products and analytics. The Space Infrastructure reportable segment is a provider of Space Infrastructure that designs,
builds, integrates and tests solutions for space-based communication satellites, on-orbit servicing, robotic assembly and
space exploration.
The Company’s CODM measures the performance of each segment based on revenue and Adjusted EBITDA. Adjusted
EBITDA is defined as earnings before interest, tax, depreciation and amortization (“EBITDA”) adjusted for certain
items affecting comparability as specified in the calculation. Certain items affecting comparability include restructuring,
impairments, satellite insurance recovery, gain on sale of assets, CEO severance and transaction and integration related
expense. Transaction and integration related expense includes costs associated with de-leveraging activities, acquisitions
and dispositions and the integration of acquisitions. Other unallocated expenses include retention costs and foreign
exchange gains and losses which are not included in segment Adjusted EBITDA. The reconciling item “corporate and
other expenses” includes items such as corporate office costs, regulatory costs, executive and director compensation,
foreign exchange gains and losses, and fees for audit, legal and consulting services.
Intersegment sales are generally recorded at cost-plus a specified margin, which may differ from what the segment may
be able to obtain on sales to external customers.
106
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
The following table summarizes the operating performance of the Company’s segments:
Revenues:
Earth Intelligence
Space Infrastructure
Intersegment eliminations
Total revenues
Adjusted EBITDA:
Earth Intelligence
Space Infrastructure
Intersegment eliminations
Corporate and other expenses
Restructuring
Transaction and integration related expense
Impairment losses, including inventory
Satellite insurance recovery
Gain on sale of assets
CEO severance
Depreciation and amortization
Interest expense, net
Interest income 1
Equity in (income) loss from joint ventures, net of tax
Income (loss) from continuing operations before taxes
Year Ended December 31,
2018
2017
2019
$
$
1,085 $
706
(125)
1,666 $
1,059
823
(78)
1,804
$
$
331
932
(6)
1,257
$
$
548 $
(17)
(29)
(86)
(18)
(16)
(17)
183
136
(3)
(376)
(219)
2
(11)
77 $
$
516
(75)
(9)
(49)
(13)
(33)
(652)
—
33
—
(439)
(200)
—
(2)
(923) $
152
(59)
—
(8)
—
(60)
—
—
—
—
(152)
(97)
—
1
(223)
1
Included in Other (income) expense, net on the Consolidated Statements of Operations.
The Company’s capital expenditures are as follows:
Year Ended December 31, 2019
Property, plant and equipment
Intangible assets
Year Ended December 31, 2018
Property, plant and equipment
Intangible assets
Year Ended December 31, 2017
Property, plant and equipment
Intangible assets
Total
257
57
314
Total
150
56
206
Total
43
16
59
Earth
Intelligence
Space
Infrastructure
Corporate and
eliminations
$
$
237 $
56
293 $
16 $
3
19 $
4 $
(2)
2 $
Earth
Intelligence
Space
Infrastructure
Corporate and
eliminations
$
$
158 $
55
213 $
22 $
1
23 $
(30) $
—
(30) $
Earth
Intelligence
Space
Infrastructure
Corporate and
eliminations
$
$
16 $
12
28 $
37 $
4
41 $
(10) $
—
(10) $
107
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
Substantially all of the Company’s long-lived tangible assets were in the United States as of December 31, 2019 and 2018,
respectively.
18. IMPAIRMENT LOSSES
Property, plant and equipment impairment
For the year ended December 31, 2018, the Company recognized impairment losses of $271 million on its property,
plant and equipment. In December 2018, WorldView-4 experienced a failure in its control moment gyros, preventing the
satellite from collecting imagery. As a result, the Company recognized an impairment loss of $150 million for the
remaining book value of the satellite in the Earth Intelligence segment. In 2018, due to degradation of the GeoComm
business, the Company recognized impairment losses of $121 million related to obsolescence and reduced future use of
equipment and buildings. The 2018 impairment loss in the Space Infrastructure 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).
There were no impairment losses for the years ended December 31, 2019 and 2017.
Goodwill impairment
For the year ended December 31, 2018, the Company recorded a non-cash goodwill impairment loss of $142 million and
$17 million related to its previously reported Imagery and SSL GeoComm reporting units, respectively. In conjunction
with the Company’s revision of its reportable segments in the fourth quarter of 2019, these reporting units were revised
and renamed to the Earth Intelligence and Space Infrastructure reporting units, respectively. Subsequent to October 1,
2018 and before the Company 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, 2018. These triggering
events required an additional goodwill impairment test, which was completed as of December 31, 2018. 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.
There were no impairment losses for the years ended December 31, 2019 and 2017.
Intangible asset impairment
For the year ended December 31, 2018, the Company recognized impairment losses of $124 million. 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 former Space Systems segment. Due to the decline in the GeoComm market, and the
uncertainty surrounding the future of the Company’s GeoComm business, a $122 million 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. The Company also recognized an additional $2 million of impairment losses related to
software intangible assets associated with the WorldView-4 satellite.
There were no impairment losses for the years ended December 31, 2019 and 2017.
108
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
Inventory impairment
For the years ended December 31, 2019, 2018 and 2017, the Company recorded inventory impairment losses of $3
million, $66 million and $0 million, respectively, which is included in Product costs, excluding depreciation and
amortization on the Consolidated Statement of Operations.
In the third quarter of 2018, the Company re-evaluated 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 reassessment of future usage of the on-hand inventory was inventory impairment of $66
million for the year ended December 31, 2018.
Other impairment
For the years ended December 31, 2019 and 2018, the Company recorded impairment losses of $14 million and $22
million, respectively, related to orbital receivables within the Space Infrastructure segment primarily due to a decrease in
customer credit ratings. There were no impairment losses for the year ended December 31, 2017.
For the year ended December 31, 2018, the Company recorded impairment losses of $10 million related to future
premium payments and other assets related to the WorldView-4 satellite.
19. EMPLOYEE BENEFIT PLANS
Defined contribution plans
The Company maintains a defined contribution plan for some of its employees in the U.S., whereby the Company pays
contributions based on a percentage of the employees’ annual salary. For the years ended December 31, 2019, 2018 and
2017, the Company recorded expense of $12 million, $12 million and $11 million, respectively, related to the plan.
Pension and other postretirement benefit plans
The Company maintains a defined benefit pension plan covering a portion of its employees in within the SSL business.
The Space Infrastructure pension and other postretirement plan benefits were frozen on December 31, 2013. The defined
benefit plan provides pension benefits based on various factors including prior earnings and length of service. The
defined benefit plan is funded and the Company’s funding requirements are based on the plans’ actuarial measurement
framework as established by the plan agreements or applicable laws. The funded plans’ assets are legally separated from
the Company and are held by an independent trustee. The trustee is responsible for ensuring that the funds are protected
as per applicable laws.
The Company also provides for other postretirement benefits, comprised of life insurance covering a portion of its
employees within the SSL business. The cost of these benefits is primarily funded out of operating income.
109
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
The table below summarizes changes in the benefit obligation, the fair value of plan assets and funded status for the
Company’s pension and other postretirement benefit plans, as well as the aggregate balance sheet impact.
Pension
2019
2018
Other Postretirement
2019
2018
Change in benefit obligation:
Benefit obligation at beginning of year
Service cost
Interest cost
Actuarial losses (gains)
Benefits paid
Benefit obligation at end of year
Change in fair value of plan assets:
Fair value of plan assets at beginning of year
Actuarial return (loss) on plan assets
Employer contributions
Benefits paid
Expenses paid
Fair value of plan assets at end of year
Unfunded status at end of year
$
$
$
$
519 $
2
21
71
(30)
583 $
568 $
2
19
(37)
(33)
519 $
352 $
70
12
(28)
(2)
404
(179) $
391 $
(19)
13
(31)
(2)
352
(167) $
13 $
—
1
—
—
14 $
— $
—
—
—
—
—
(14) $
Assets and (liabilities) recognized in the Consolidated Balance Sheets:
Accrued compensation and benefits
Pension and other postretirement benefits
$
$
(1) $
(178)
(179) $
(1) $
(166)
(167) $
(1) $
(13)
(14) $
16
—
1
(2)
(2)
13
—
—
2
(2)
—
—
(13)
(1)
(12)
(13)
The $64 million increase in the pension benefit obligation from 2018 to 2019 was primarily due to the decrease in the
discount rate. The $52 million increase in the fair value of plan assets from 2018 to 2019 was primarily due to increased
return on assets.
The accumulated benefit obligation for the defined pension benefit plans was $583 million and $519 million at
December 31, 2019 and 2018, respectively.
Amounts recognized in accumulated other comprehensive income consist of the following:
Net (loss) gain
Pension
2019
2018
Other Postretirement
2019
2018
$
(70) $
(45) $
10 $
12
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:
Discount rate
Pension
Other Postretirement
2019
3.0 %
2018
4.1 %
2019
3.0 %
2018
4.1 %
110
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
The following table summarizes the components of net periodic benefit cost for the Company’s pension and other
postretirement benefit plans for the years ended December 31:
Interest cost
Expected return on plan assets
Amortization of prior service credit
Amortization of net gain
Curtailment gain 1
Expenses paid
$
Net periodic benefit cost
$
2019
Pension
2018
2017
Other Postretirement
2018
2019
2017
21 $
(24)
—
—
—
2
(1) $
19 $
(27)
—
—
—
2
(6) $
21 $
(24)
—
—
—
2
(1) $
1 $
—
—
(1)
—
—
— $
1 $
—
—
(1)
—
—
— $
2
—
(2)
(1)
(26)
—
(27)
1 The Company amended its postretirement plan in by eliminating employer paid subsidies toward retiree medical
benefits.
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
2019
2018
2017
2019
Other Postretirement
2018
2017
Net loss (gain)
Amortization of prior service credit
Amortization of net gain
Curtailment loss
$
Total recognized in other comprehensive loss (income) $
Total recognized in net periodic benefit cost (credit)
and other comprehensive loss (income)
$
25 $
—
—
—
25 $
9 $
—
—
—
9 $
5 $
—
—
—
5 $
— $
—
1
—
1 $
(2) $
—
1
—
(1) $
(1)
2
1
1
3
24 $
3 $
4 $
1 $
(1) $
(24)
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:
Discount rate
Expected long-term return on plan assets
2019
4.1 %
7.0 %
Pension
2018
3.4 %
7.0 %
2017
3.9 %
7.0 %
Other Postretirement
2018
3.4 %
N/A
2019
4.1 %
N/A
2017
3.9 %
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.
Plan Assets. The Company’s Pension Committee (the “Committee”) has the responsibility to formulate the investment
policies and strategies for the plan assets. The Committee structures 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 Committee has 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.
111
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
The Committee has established a target allocation that the plan assets may be invested in for each major asset category
and has established guidelines regarding diversification within asset categories to limit risk and exposure to a single or
limited number of securities. The investment manager is required to rebalance the portfolio within two percentage points
for any individual asset or combination of assets defined within policy targets. Asset allocation targets are re-balanced
quarterly and re-assessed annually for the upcoming year. The investments of the plan 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 a summary of target asset allocations for each major category of the plan assets as well as
the actual asset allocations at December 31, 2019:
Asset Allocation
Cash and cash equivalents
U.S. equity securities
Global equity securities
Fixed income
Other
Target
Actual
0 %
26 %
36 %
34 %
4 %
1 %
26 %
35 %
34 %
4 %
100 %
Cash and cash equivalents consist of cash and short-term investments. U.S. and global equity securities, fixed income
and other investment assets are primarily commingled fund investments. The pension plans’ commingled fund
investments are managed by several fund managers and are valued at the net asset value per share for each fund.
Although the majority of the underlying assets in the funds consist of actively traded equity securities and bonds, the unit
of account is considered to be at the fund level. These funds are traded daily and settled the following day at the net asset
value per share.
The Committee regularly monitors the investment of plan assets to ensure that the actual asset allocation remains in
proximity to the target. The Committee also regularly measures and monitors 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, 2019
December 31, 2018
Asset Category
Cash and cash equivalents
Global equity securities
Commingled Funds 1
Total assets at fair value
5 $ — $ — $
—
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
2
5 $
$
1
1
349
398
1 $ 352
1 $ 404 $
2 $ — $ — $
—
2 $ — $
5 $ — $
—
—
$
1
1
1
Investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical
expedient are not required to be classified in the fair value hierarchy table. The total fair value of these amounts are
presented in this table to permit reconciliation of the fair value hierarchy to the amounts presented for total defined
benefit pension plan assets
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, 2019, all legal funding requirements had been met. The Company expects to contribute approximately $20
million to its pension plan, and approximately $1 million to its other postretirement benefit plans for the year ending
December 31, 2019.
112
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
Estimated Future Benefit Payments. The following table presents expected pension and other postretirement benefit
payments which reflect expected future service, as appropriate.
2020
2021
2022
2023
2024
Pension
Other Postretirement
$
$
31 $
1
32 $
31 $
1
32 $
31 $
1
32 $
32 $
1
33 $
20. STOCK-BASED COMPENSATION PLANS
2025 through 2029
159
5
164
32 $
1
33 $
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. As of December 31, 2019, no further awards shall be granted under
the Omnibus Plan.
2019 Incentive Award Plan – The Company adopted the 2019 Incentive Award Plan (“2019 Plan”) in March 2019 and
the stockholders approved the 2019 Plan in May 2019. The 2019 Plan provides for grants to eligible employees, officers,
consultants, directors or advisors of the Company and its subsidiaries of stock options, SARs, restricted stock award,
RSUs, deferred stock award, and performance stock units in order to provide a long-term incentive compensation to such
persons. 2,525,000 shares were reserved for issuance under the 2019 Plan. Any shares subject to a prior plan that are
forfeited, cancelled, or expired shall be available for future grants under the 2019 Plan. Only awards settled in equity
count against the share reserve.
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 cash 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.
Legacy 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
113
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
31, 2019, 2018 and 2017, 22,541, 41,288 and 38,169, common shares were issued, respectively, at an average price of
C$6.20, C$42.20, C$59.55 under the legacy employee stock purchase plan.
Maxar Technologies Inc. Employee Stock Purchase Plan – On March 27, 2019, the Company implemented an employee
stock purchase plan. Under this plan, the Company may issue 5,000,000 common shares to certain eligible employees.
Under the terms of the plan, employees can purchase shares of the Company at 85% of the market value of the shares on
the lower closing price of either the first or last day of the purchase period. Employees can allocate a maximum of 10%
of their salary to the plan to a maximum of $25,000 per annum. During the year ended December 31, 2019, 89,398
common shares were issued at an average price of $6.09 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, 2019. 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, 2019 is presented
below:
SARs outstanding at December 31, 2018
Exercised
Cancelled or expired
SARs outstanding at December 31, 2019
SARs vested and expected to vest at December 31, 2019
SARs exercisable at December 31, 2019
Number of
Awards
774,430 $
—
(195,110)
579,320
579,320
566,340 $
Weighted
Average
Exercise
Price
63.86
—
63.30
63.12
63.12
63.46
Weighted
Average
Remaining
Contractual
Term (in
years)
Aggregate
Intrinsic
Value
1.56 $
1.56 $
1.43 $
—
—
—
The weighted average grant-date estimated fair value of SARs accounted for as liability classified awards granted during
the year ended December 31, 2017 was C$68.84. No SARs accounted for as liability classified awards were granted
during 2019 and 2018. The total intrinsic value of SARs exercised during the years ended December 31, 2018 and 2017
was $0 and $1 million, respectively. No SARs were exercised during the year ended December 31, 2019.
As of December 31, 2019, total unrecognized compensation expense related to nonvested SARs accounted for as
liability classified awards was not significant.
114
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
SARs Accounted for as Equity Classified Awards
A summary of the SARs accounted for as equity classified awards for the year ended December 31, 2019 is presented
below:
Weighted
Average
Remaining
Contractual
Term (in
years)
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
Number of
Awards
SARs outstanding at December 31, 2018
Granted
Exercised
Cancelled or expired
SARs outstanding at December 31, 2019
SARs vested and expected to vest at December 31, 2019
SARs exercisable at December 31, 2019
1,219,028 $ 51.05
—
—
—
—
50.66
(293,437)
51.18
925,591
51.18
925,591
588,076 $ 50.75
6.71 $
6.71 $
6.57 $
—
—
—
The weighted average grant-date estimated fair value of SARs accounted for as equity classified awards granted during
the years ended December 31, 2018 and 2017 was C$10.37 and C$75.09, respectively. No SARs accounted for as equity
classified awards were granted during 2019. The total intrinsic value of SARs exercised during the years ended
December 31, 2018 and 2017 was $0 million, respectively. No SARs were exercised during the year ended December
31, 2019.
As of December 31, 2019, total unrecognized compensation expense related to nonvested SARs accounted for as equity
classified awards was not significant.
Restricted Share Units
The Company issues RSUs to certain employees under the Omnibus Plan and 2019 Plan. The RSUs vest over a period of
three years, in the amount of one-third each year, and are settled either in cash or equity-settled on the vesting date.
RSUs Accounted for as Liability Classified Awards
A summary of the RSUs accounted for as liability classified awards for the year ended December 31, 2019 is presented
below:
Nonvested RSUs at December 31, 2018
Granted
Vested
Cancelled or expired
Nonvested RSUs at December 31, 2019
1 RSUs under the 2019 Plan
Number of
Awards 1
Weighted Average
Grant Date
Fair Value 1
- $
1,054,658
—
(108,377)
946,281 $
-
6.93
-
6.92
6.93
As of December 31, 2019, total unrecognized compensation expense related to nonvested RSUs was $8 million and is
expected to be recognized over a weighted average remaining period of 1.4 years.
115
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
RSUs Accounted for as Equity Classified Awards
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 the 2019, Omnibus Plan and the DigitalGlobe
Equity Plan as of December 31, 2019 and changes during the year then ended is presented below:
Number of
Awards 1
Weighted Average
Grant Date
Fair Value 1
Number of
Awards 2
Weighted Average
Grant Date
Fair Value 2
Number of
Awards 3
Weighted Average
Grant Date
Fair Value 3
Nonvested RSUs at
December 31, 2018
Granted
Vested
Cancelled or expired
Nonvested RSUs at
December 31, 2019
-
$
1,086,004
(16,934)
(82,335)
-
419,512
$
7.90
77,259
6.59 (150,337)
8.03 (98,936)
51.99
273,861
4.75
$
—
52.88 (117,346)
(55,844)
52.74
54.57
—
54.57
54.57
986,735
$
7.91
247,498
$
36.42
100,671
$
54.57
1 RSUs under the 2019 Plan
2 RSUs under the Omnibus Plan
3 RSUs under the DigitalGlobe Equity Plan
During the years ended December 31, 2019, 2018, and 2017, the total fair value of RSUs that vested was $14 million,
$19 million and $5 million, respectively.
As of December 31, 2019, total unrecognized compensation expense related to nonvested RSUs was $7 million and is
expected to be recognized over a weighted average remaining period of 1.2 years.
Performance Share Units
The Company issues PSUs to certain employees under the Omnibus Plan and 2019 Plan. The PSUs vest over a period of
three years from the beginning date of a pre-determined performance period to the extent the Company has met its
adjusted cash leverage (ACL) performance criteria during the performance period. Each unit has the ability to earn up to
two common shares and the total number of shares earned is based upon both the ACL and total shareholder return
(TSR), which compares the Company's relative TSR performance against the total shareholder return of the Russel 2000
index over the term of the award. Performance related to both the ACL and TSR can be 0-200%. The total payout is the
average of the ACL and TSR and the maximum payout percentage for all PSUs granted by the Company is 200%. The
payout for performance up to 100% will be in equity and any performance greater than 100% will be paid out in cash.
A summary of the PSU awards for the year ended December 31, 2019 is presented below:
Nonvested PSUs at December 31, 2018
Granted
Vested
Cancelled or expired
Nonvested PSUs at December 31, 2019
116
Number of
Awards
Weighted Average
Grant Date
Fair Value
— $
1,060,253
—
(96,851)
963,402 $
—
6.81
—
6.62
6.83
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
As of December 31, 2019, total unrecognized compensation expense related to nonvested PSUs was $7 million and is
expected to be recognized over a weighted average remaining period of 1.5 years.
Deferred Share Units
A summary of the DSU awards for the year ended December 31, 2019 is presented below:
DSUs outstanding at December 31, 2018
Issued
Redeemed
DSUs outstanding at December 31, 2019
Number of
Awards
107,603 C$
—
(41,993)
65,610 C$
Weighted
Average
Issuance Price
51.52
—
49.96
52.76
During the years ended December 31, 2019 and 2017, 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:
Classification
Year ended December 31,
2018
2017
2019
Stock-based compensation
expense
Selling, general, and administrative
expense, Product costs, and Service costs
$
20
$
20 $
48
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,
2019
2018
2017
1.7 - 1.9 % 1.7 - 1.9 % 1.7 - 1.9 %
1.8 %
0.5 %
1.8 %
0.2 - 4.6
57 - 130 %
0.3 - 5.4
1.0 - 6.5
14 - 23 %
14 - 25 %
Risk-free interest rate
Dividend yield
Expected lives (in years)
Volatility
117
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
Valuation of Equity Classified SARs and DSUs
The fair value of equity classified SARs 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:
Risk-free interest rate
Dividend yield
Expected lives (in years)
Volatility
1 No equity classified SARs and DSUs were granted in 2019.
Valuation of PSUs and RSUs
Year Ended December 31,
2018
2019 1
2017
1.9 - 2.3 % 0.6 - 1.9 %
2.2 - 9.1 % 1.5 - 2.2 %
3.0 - 7.0
0.4 - 7.0
22 - 41 %
17 - 25 %
The fair value of PSUs not subject to a market condition and equity classified RSUs is determined based on the closing
price of the Company’s common stock on the grant date.
PSUs that are subject to the market condition are valued using a Monte Carlo simulation model, which requires certain
assumptions, including the risk-free interest rate, expected volatility, and the expected term of the award. The risk-free
interest rate used in the Monte Carlo simulation model is based on zero-coupon yields implied by U.S. Treasury issues
with remaining terms similar to the performance period on the PSUs. The performance period of the PSUs represents the
period of time between the PSU grant date and the end of the performance period. Expected volatility is based on
historical data of the Company and peer companies over the most recent time period equal to the performance period.
For PSU grants during the years ended December 31, 2019 the assumptions used in the Monte Carlo simulation are as
follows:
Risk-free interest rate
Dividend yield
Expected lives (in years)
Volatility
Year Ended December 31,
2019
2.2 - 2.3 %
0.5 - 0.9 %
2.9 - 3.0
63 - 67 %
The risk-free interest rate for 2019 is based on the U.S. Treasury yield with the remaining term equal to the expected life
assumed at the date of the grant and the risk-free interest rate for 2018 and 2017 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.
118
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
21. INCOME TAXES
The amounts disclosed within the income tax footnote represent those attributable to continuing operations.
The components of income (loss) before income taxes were:
U.S.
Non-U.S.
Income (loss) before taxes
Income tax expense (benefit) is comprised of the following:
Year Ended December 31,
2018
2017
2019
$
$
77 $
—
77 $
(806) $
(117)
(923) $
(181)
(42)
(223)
Year Ended December 31,
2018
2017
2019
Current tax expense
U.S.
Non-U.S.
Deferred tax benefit
U.S.
Non-U.S.
$
5 $
—
5
—
—
—
5 $
— $
—
—
(2)
(46)
(48)
(48) $
1
—
1
(145)
(24)
(169)
(168)
Income tax expense (benefit)
$
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 for the year ended December 31, 2019 is the U.S.
federal income tax rate. A reconciliation of the U.S. federal tax rate to our effective income tax rate is as follows:
Year Ended December 31,
2018
2017
2019
U.S. statutory income tax rate
Expected income tax expense (benefit) at statutory rate
Impact of Tax Cuts and Jobs Act of 2017
Change in statutory tax rates
Non-deductible expenses
Tax on international operations
Change in valuation allowance
Base Erosion and Anti-Abuse Tax
Outside basis difference in assets held for sale
Tax credits
Non-deductible goodwill impairment
Other
Income tax expense (benefit)
Effective income tax rate
$
$
$
21 %
16
—
—
15
(1)
(108)
5
78
(1)
—
1
5
$
6 %
21 %
$
(194)
—
—
6
(45)
96
—
—
(9)
98
—
(48)
$
5 %
35 %
(78)
26
(1)
9
(24)
(93)
—
—
(8)
—
1
(168)
75 %
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
119
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
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:
Tax benefit of losses carried forward
Research and development tax credits
Construction contract liabilities
Property and equipment
Trade and other payables
Employee benefits
Unrealized foreign exchange gains and losses
Other
Deferred tax assets
Valuation allowance
Deferred tax assets, net of valuation allowance
Property and equipment
Goodwill and intangibles
Outside basis difference in assets held for sale
Other
Deferred tax liabilities
Deferred tax assets and (liabilities), net
Year Ended December 31,
2018
2017
2019
$
219 $
222 $
82
89
—
41
41
6
18
496
(231)
265
(47)
(124)
(78)
(10)
(259)
91
77
15
38
49
6
21
519
(304)
215
—
(213)
—
(2)
(215)
$
6 $
— $
198
72
67
3
25
53
5
8
431
(134)
297
—
(301)
—
—
(301)
(4)
The Company assesses the deferred tax assets for recoverability and based upon all available evidence establishes a
valuation allowance to reduce the deferred tax assets to the amount that is more-likely-than-not realizable. The valuation
allowance decreased $73 million from December 31, 2018 to December 31, 2019. This decrease was the result of a
change in the Company’s assertion regarding the permanent reinvestment of its investment in MDA as well as the
impact of current year operations. This decrease was offset by an adjustment to prior year deferred taxes, primarily
related to goodwill, for which no income tax expense was recorded.
During 2019, in connection with the MDA Transaction, the Company has re-evaluated its prior permanent reinvestment
assertion and concluded that it can no longer assert that the basis difference related to its investment is permanently
reinvested. Accordingly, the Company has established a deferred tax liability of approximately $78 million on the
taxable temporary difference associated with its investment. The establishment of the deferred tax liability resulted in a
corresponding release of valuation allowance, as mentioned above.
Net operating losses carried forward as of December 31, 2019 were $1,665 million. Of these, $870 million relate to
federal losses, set to expire between 2024 and 2039 and $795 million relate to state losses set to expire between 2022
and 2038. Of the federal losses, $264 million have no expiry and are subject to an annual limitation of 80% of taxable
income. The U.S. Domestication does not impact the availability of the losses carried forward to future years.
The Company also has U.S. federal and state tax credits carried forward of $74 million and $2 million as of December
31, 2019, relating to research and development expenditures set to expire between 2024 and 2039 and California
120
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
research credits with no expiry. Additionally, the Company has U.S. foreign tax credits carried forward of $6 million set
to expire between 2020 and 2026.
The following table summarizes the changes in unrecognized tax benefits:
Balance, beginning of year
Gross increases related to prior period tax positions
Gross increases related to current period tax positions
Balance, end of year
Year Ended December 31,
2018
2019
2017
$
$
— $
6
1
7 $
— $
—
—
— $
—
—
—
—
As of December 31, 2019, there were $7 million of unrecognized tax benefits that, if recognized, would be offset by
changes in the deferred tax assets. It is not anticipated that a reduction of unrecognized tax benefits will occur within the
next twelve months.
The Company and its subsidiaries file income tax returns in the United States, and various foreign jurisdictions. With
some exceptions, the Company remains subject to income tax examination in the United States for years after 2004.
The Company records interest and penalties accrued or recovered in relation to unrecognized tax benefits in income tax
expense. The Company has not recognized any interest and penalties in the three year comparative period due to
available attributes.
22. EARNINGS PER SHARE
The following table includes the calculation of basic and diluted EPS:
Year Ended December 31,
2018
2019
2017
Income (loss) from continuing operations
Income (loss) from discontinued operations, net of tax
Net income (loss)
$
$
83 $
26
(873)
(377)
109 $ (1,250)
$
$
Weighted average number of common shares outstanding-basic
Weighted dilutive effect of equity awards
Weighted average number of common shares outstanding-diluted
59.6
0.6
60.2
58.1
—
58.1
(56)
116
60
41.2
—
41.2
Basic net income (loss) per common share:
Income (loss) from continuing operations
Income (loss) from discontinued operations, net of tax
Basic net income (loss) per common share
Diluted net income (loss) per common share:
Income (loss) from continuing operations
Income (loss) from discontinued operations, net of tax
Diluted net income (loss) per common share
$
$
1.39 $ (15.03) $
0.44
1.83 $ (21.52) $
(6.49)
(1.36)
2.82
1.46
$
$
1.38 $ (15.03) $
0.43
1.81 $ (21.52) $
(6.49)
(1.36)
2.82
1.46
121
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
For the years ended December 31, 2019, 2018 and 2017 approximately 2 million, 3 million and 4 million awards,
respectively, were excluded from the diluted weighted average number of ordinary common shares outstanding
calculation because their effect would have been anti-dilutive.
23. COMMITMENTS AND CONTINGENCIES
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. With respect to the Company’s securitized liability for the orbital receivables, upon
the occurrence of an event of default under the securitization facility agreement or upon the occurrence of limited events,
the Company may be required to repurchase on demand any affected receivables at their then net present value. As
discussed in Note 6, the Company repurchased $24 million of specifically identified orbital receivables during the year
ended December 31, 2019. The orbital receivables were repurchased as a result of our customer transferring the
obligation to another entity which did not meet the credit criteria of our lenders
The Company may incur liquidated damages on programs as a result of delays due to slippage, or for programs which
fail to meet all milestone requirements as outlined within the contractual arrangements with customers. Losses on
programs related to liquidated damages result in a reduction of revenue. Changes in estimates related to contracts
accounted for using the cost-to-cost method of accounting are recognized in the period in which such changes are made
for the inception-to-date effect of the changes. Unrecoverable costs on contracts that are expected to be incurred in future
periods are recorded in program cost in the current period.
The Company enters into agreements in the ordinary course of business with resellers and others. Most of these
agreements require the Company to indemnify the other party against third-party claims alleging that one of its products
infringes or misappropriates a patent, copyright, trademark, trade secret or other intellectual property right. Certain of
these agreements require the Company to indemnify the other party against claims relating to property damage, personal
injury or acts or omissions by the Company, its employees, agents or representatives.
From time to time, the Company has made guarantees regarding the performance of its systems to its customers. Some
of these agreements do not limit the maximum potential future payments the Company could be obligated to make. The
Company evaluates and estimates potential losses from such indemnification based on the likelihood that the future
event will occur. The Company has not incurred any material costs as a result of such obligations and has not accrued
any liabilities related to such indemnification and guarantees in the 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.
122
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
Legal Proceedings
In 2010, the Company entered into an agreement with a Ukrainian customer to provide a communication satellite
system. In 2014, following the annexation of Crimea by the Russian Federation, the Company declared force majeure
with respect to the program. The Ukrainian customer accepted that an event of force majeure had occurred. Following
various unsuccessful efforts to arrive at a new contractual framework to take account of the changed circumstances
(including the force majeure and various financial issues), the contract with the Ukrainian customer was terminated by
Maxar. Maxar completed work on the spacecraft, which is in storage. In July 2018, the Ukrainian customer issued a
statement of claim in the arbitration it had commenced against Maxar, challenging the Company’s right to terminate for
force majeure, purporting to terminate the contract for default by Maxar (a position since withdrawn), and seeking
recovery from Maxar in the amount of approximately $227 million. The matter was heard by the arbitration panel in
December 2019, and post-hearing briefs were submitted in January 2020. The Company presented a vigorous defense to
the petitioner’s claims. The Company expects the arbitration panel to issue its ruling sometime this year. The Company
has accrued an amount that it believes is within the range of probable outcomes for resolving this matter. However, the
outcome of any arbitration is difficult to predict, and in the event that the arbitration results in a finding against the
Company in excess of the amount reserved, the Company could incur additional amounts and its results of operations
and financial condition could be adversely affected.
On January 14, 2019, a Maxar stockholder filed a putative class action lawsuit captioned Oregon Laborers Employers
Pension Trust Fund, et al. v. Maxar Technologies Inc., No. 1:19-cv-00124-WJM-SKC in the District Court of Colorado
(the “Colorado Action”), naming Maxar and members of management as defendants alleging, among other things, that
the Company’s public disclosures were deficient in violation of the federal securities laws and seeking monetary
damages. On August 7, 2019, the Court appointed a lead plaintiff and lead counsel. On October 7, 2019, the lead
plaintiff filed a consolidated amended complaint alleging violations of Sections 10(b) and 20(a) of the Securities and
Exchange Act of 1934 against the Company and members of management in connection with the Company’s public
disclosures between March 26, 2018 and January 6, 2019. The consolidated complaint alleges that the Company’s
statements regarding the AMOS-8 contract, accounting for its GEO communications assets, and WorldView-4 were
allegedly false and/or misleading during the class period. On December 6, 2019, defendants moved to dismiss the
Colorado Action, which motion is currently pending. Also in January 2019, a Maxar stockholder resident in Canada
issued a putative class action lawsuit captioned Charles O’Brien v. Maxar Technologies Inc., No. CV-19-00613564-
00CP in the Ontario Superior Court of Justice against Maxar and members of management claiming misrepresentations
in Maxar’s public disclosures and seeking monetary damages. On November 15, 2019, Mr. O’Brien and another Maxar
stockholder resident in Canada issued a new putative class action lawsuit captioned Charles O’Brien v. Maxar
Technologies Inc., No. CV-19-00631107-00CP, naming Maxar and certain members of management and the board of
directors as defendants as well as Maxar’s auditor, KPMG LLP. On February 7, 2020, the January 2019 claim was
discontinued. The Statement of Claim alleges that the Company’s statements regarding the AMOS-8 contract,
accounting for its GEO communications assets, and WorldView-4 were false and/or misleading during the class period,
and claims damages of $700 million. The Company believes that these cases are without merit and intends to vigorously
defend against them.
On October 21, 2019, a Maxar stockholder filed a putative class action lawsuit captioned McCurdy v. Maxar
Technologies Inc., et al. No. T19-074 in the Superior Court of the State of California, County of Santa Clara, naming
Maxar, and certain members of management and the board of directors as defendants. The lawsuit alleges violations of
Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 in connection with the Company’s June 2, 2017 Registration
Statement and prospectus filed in anticipation of its October 17, 2017 merger with DigitalGlobe. The lawsuit is based
upon many of the same underlying factual allegations as the Colorado Action. Specifically, the lawsuit alleges the
Company’s statements regarding its accounting methods and risk factors, including those related to the GEO
communications business, were false and/or misleading when made. The Company believes that this lawsuit is without
merit and intends to vigorously defend against it.
On November 14, 2019, a complaint was filed in a derivative action against Maxar and certain current and former
members of management and the board of directors in federal court in the District of Delaware, captioned as Dorling,
123
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
Derivatively on Behalf of Nominal Defendant Maxar Technologies Inc. v. Lance et al., No. 19-cv-02134-UNA. The
complaint concerns the same factual allegations as asserted in the Colorado Action. On February 7, 2020, the court
granted the parties’ stipulated motion to stay this case.
The Company believes that this lawsuit is without merit and intends to vigorously defend against it. The Company is a
party to various other legal proceedings and claims that arise in the ordinary course of business as either a plaintiff or
defendant. As a matter of course, the Company is prepared both to litigate these matters to judgment, as well as to
evaluate and consider all reasonable settlement opportunities. The Company has established accrued liabilities for these
matters where losses are deemed probable and reasonably estimable. The outcome of any of these other proceedings,
either individually or in the aggregate, is not expected to have a material adverse effect on the Company’s financial
position, results of operations or liquidity.
24. SUPPLEMENTAL CASH FLOW
Selected cash payments and non-cash activities are as follows:
Supplemental cash flow information:
Cash paid for interest
Supplemental non-cash investing and financing activities:
Accrued capital expenditures
Acquisition
Year ended December 31,
2018
2019
2017
$
(193) $
(152) $
(41)
$
19 $
—
19 $
—
15
1,197
124
MAXAR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements Continued
(Tabular amounts in millions of dollars, unless otherwise noted)
25. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Selected financial data (unaudited) for the periods presented is as follows:
Total revenues
(Loss) Income from continuing
operations
Income (loss) from discontinued
operations, net of tax
Net income (loss)
Q1
$ 431 $ 412 $ 413 $ 410 $ 466 $ 487 $ 433 $
Q1
Q2
Q4
Q2
Q4
418
2019
Q3
2018
Q3
$
(68) $ 139 $
(41) $
53 $
(27) $
(52) $ (309) $
(485)
11
(57) $ 148 $
9
16
(25) $
(10)
43 $
41
14 $
15
(37) $ (286) $
23
(456)
(941)
$
Basic net income (loss) per common
share:
(Loss) Income from continuing
operations
Income (loss) from discontinued
operations, net of tax
Basic net (loss) income per common
share
$ (1.14)
2.33
(0.69)
0.89
(0.48)
(0.91)
(5.22)
(8.18)
0.18
0.15
0.27
(0.17)
0.73
0.26
0.39
(7.69)
$ (0.96) $ 2.48 $ (0.42) $ 0.72 $ 0.25 $ (0.65) $ (4.83) $ (15.87)
Diluted net income (loss) per
common share:
(Loss) Income from continuing
operations
Income (loss) from discontinued
operations, net of tax
Diluted net (loss) income per
common share
26. SUBSEQUENT EVENTS
Deal Contingent Hedge
$ (1.14)
2.32
(0.69)
0.87
(0.48)
(0.91)
(5.22)
(8.18)
0.18
0.15
0.27
(0.17)
0.73
0.26
0.39
(7.69)
$ (0.96) $ 2.47 $ (0.42) $ 0.70 $ 0.25 $ (0.65) $ (4.83) $ (15.87)
On February 11, 2020, in connection with the MDA Agreement, the Company entered into deal-contingent foreign
currency hedge arrangements, with no cash cost, to hedge 50% of the Canadian dollar denominated sales price at a spot
rate of $1.338362 to C$1.00, if the closing date occurs on or before June 29, 2020. Fees associated with these
arrangements are contingent and payable upon closing of the acquisition and will vary based on the closing date.
125
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We performed an evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2019.
The evaluation was performed with the participation of senior management of each business segment and key corporate
functions, under the supervision of the Chief Executive Officer (CEO) and Chief Financial Officer (CFO). Based on this
evaluation, the CEO and CFO concluded that our disclosure controls and procedures were effective as of December 31,
2019.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined
in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with United States generally accepted accounting principles.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief
Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based
on the criteria set by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal
Control—Integrated Framework (2013). Based on this assessment, management concluded that our internal control over
financial reporting was effective as of December 31, 2019.
Our independent registered public accounting firm has issued a report on the effectiveness of our internal control over
financial reporting, included in this Annual Report on Form 10-K.
Changes in Internal Control over Financial Reporting
In our Annual Report for the year ended December 31, 2018, we identified and disclosed material weaknesses in internal
control over financial reporting related to “Insufficient Complement of Personnel” and “Insufficient Identification and
Assessment of Changes.” As a consequence of the underlying root causes related to personnel and risk assessment, the
Company did not have effective control activities related to the design, operation, and documentation of process-level
controls over: (i) the cost-to-cost method used to determine the percentage-of-completion method affecting revenue and
cost of sales (ii) the measurement and disclosures of current and deferred income taxes and related valuation allowance
and (iii) commitments and contingencies disclosure.
To remediate the identified material weaknesses, management has taken the necessary steps to redesign the respective
control framework, including implementation of enhanced control procedures. Prior to the issuance of this Annual
Report on Form 10-K, we successfully completed the testing of these enhanced controls and concluded that the material
weaknesses have been remediated as of December 31, 2019.
On December 29, 2019, we entered into a definitive agreement to sell MDA and it was determined that the MDA
business met the criteria to be classified as held for sale. Management has designed and implemented control procedures,
which were assessed as of December 31, 2019 during the annual operation of these controls.
There were no other changes that occurred during the quarter ended December 31, 2019, that have materially affected, or
are reasonably likely to materially affect, our internal control over financial reporting.
126
Limitations on the Effectiveness of Controls
Because of the inherent limitations in a cost-effective control system, any control system, no matter how well designed
and operated, can provide only reasonable, not absolute, assurance that it will prevent or detect all misstatements, due to
error or fraud, from occurring in the consolidated financial statements. Additionally, management is required to use
judgment in evaluating controls and procedures.
ITEM 9B. OTHER INFORMATION
None.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
DIRECTORS
Information about our Directors will be included in the Proxy Statement for the 2020 Annual Meeting of Stockholders
and is incorporated herein by reference.
EXECUTIVE OFFICERS
The Executive Officer information will be included in the Proxy Statement for the 2020 Annual Meeting of Shareholders
and is incorporated herein by reference.
AUDIT COMMITTEE FINANCIAL EXPERT
The information as to the Audit Committee and the Audit Committee Financial Expert will be included in the Proxy
Statement for the 2020 Annual Meeting of Shareholders and is incorporated herein by reference.
CODE OF ETHICS
Information about our Code of Ethics will be included in the Proxy Statement for the 2020 Annual Meeting of
Shareholders and is incorporated herein by reference.
OTHER DISCLOSURES
Other disclosures required by this Item will be included in the Proxy Statement for the 2020 Annual Meeting of
Shareholders and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information concerning Executive Compensation will be included in the Proxy Statement for the 2020 Annual Meeting
of Shareholders and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information as to Securities Authorized for Issuance Under Equity Compensation Plans and Security Ownership of
Certain Beneficial Owners and Management will be included in the Proxy Statement for the 2020 Annual Meeting of
Shareholders and is incorporated herein by reference.
127
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information as to Certain Relationships and Related Transactions and Director Independence will be included in the
Proxy Statement for the 2020 Annual Meeting of Shareholders and is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information as to Principal Accountant Fees and Services and Audit Committee Pre-Approval will be included in
the Proxy Statement for the 2020 Annual Meeting of Shareholders and is incorporated herein by reference.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Documents filed as part of this Annual Report on Form 10-K:
1) All financial statements:
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2019, 2018
and 2017
Consolidated Balance Sheets as of December 31, 2019 and 2018
Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017
Consolidated Statements of Changes in Stockholders Equity for the years ended December 31, 2019, 2018
and 2017
Page
66
71
72
73
74
75
2) Financial statement schedules:
Financial statement schedules are omitted because they are not applicable or the required information is
shown in our consolidated financial statements or the notes thereto.
3) Exhibits:
Exhibit No Exhibit Description
Form SEC File No. Exhibit Filing Date Herewith
Incorporated by Reference
Filed
2.1
3.1
3.2
3.3
Stock Purchase Agreement by and Among
Maxar Technologies Inc., Maxar Technologies
Holdings Inc. and Neptune Acquisition Inc.,
dated as of December 29, 2019
Amended and Restated Certificate of
Incorporation of Maxar Technologies Inc., as
filed with the Secretary of the State of
Delaware.
8-K 001-38228
2.1
12/30/2019
8-K 001-38228
3.1
1/2/19
Amended and Restated Bylaws of Maxar
Technologies Inc.
8-K 001-38228
3.2
1/2/19
Certificate of Designations of Series A Junior
Participating Preferred Stock.
8-K 001-38228
3.1
5/13/19
128
Exhibit No Exhibit Description
4(vi)1
Description of Securities Registered Pursuant to
Section 12 of the Exchange Act
Incorporated by Reference
Filed
Form SEC File No. Exhibit Filing Date Herewith
X
X
X
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
6-K 001-38228
10.1
10/16/17
10-K 001-38228
4.2
3/1/19
6-K 001-38228
99.2
12/21/18
8-K
001-38228
4.2
12/11/19
Restated Credit Agreement by and among
Maxar Technologies Ltd., Royal Bank of
Canada and the Lenders named therein, dated
as of October 5, 2017.
First Amending Agreement dated as of
December 21, 2018 to the Restated Credit
Agreement dated as of October 5, 2017.
Second Amending Agreement dated as of
December 21, 2018 to the Restated Credit
Agreement dated as of October 5, 2017.
Third Amending Agreement dated as of
November 4, 2019 to the Restated Credit
Agreement dated as of October 5, 2017.
Fourth Amending Agreement dated as of
December 11, 2019 to the Restated Credit
Agreement dated as of October 5, 2017.
Fifth Amending Agreement dated as of
December 18, 2019 to the Restated Credit
Agreement dated as of October 5, 2017.
Indenture, dated as of December 2, 2019.
8-K 001-38228
4.1
12/02/19
Supplemental Indenture, dated as of December
11, 2019.
8-K
001-38228
4.1
12/11/19
Tax Benefit Preservation Plan, dated as of May
13, 2019.
8-K
001-38228
4.1
05/13/19
10.1.1#
10.1.2#
EnhancedView Imagery Acquisition Contract
#HM021010C0002, dated August 6, 2010, by
and between DigitalGlobe, Inc. and National
Geospatial-Intelligence Agency.
Amendment to EnhancedView Imagery
Acquisition Contract #HM021010C0002, by
and between DigitalGlobe, Inc. and National
Geospatial-Intelligence Agency, dated July 25,
2011.
10-
Q/A
10-
Q/A
001-34299
10.1
5/24/11
001-34299
10.1
2/24/12
129
Exhibit No Exhibit Description
Form SEC File No. Exhibit Filing Date Herewith
Incorporated by Reference
Filed
10.1.3#
10.1.4#
10.1.5#
10.1.6#
10.1.7#
10.1.8#
10.1.9#
Amendment to EnhancedView Imagery
Acquisition Contract #HM021010C0002, by
and between DigitalGlobe, Inc. and National
Geospatial-Intelligence Agency, dated October
31, 2011.
Amendment to EnhancedView Imagery
Acquisition Contract #HM021010C0002, by
and between DigitalGlobe, Inc. and National
Geospatial-Intelligence Agency, dated February
15, 2012.
Modification P00024 to Contract
#HM021010C0002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency, dated as of July 24, 2012.
Modification P00032 to Contract
#HM021010C0002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency, dated as of December 26,
2012.
Modifications Nos. P00033 and P00034 to
Contract #HM021010C0002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification Nos. P00035-38 to Contract
#HM021010C002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
EnhancedView Imagery Acquisition Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency, dated September 1, 2013
and Modification P00001
10-K
001-34299
10.4
2/29/12
10-Q
001-34299
10.46
5/1/12
10-Q
001-34299
10.52
10/31/12
10-K
001-34299
10.53
2/26/13
10-Q
001-34299
10.56
5/7/13
10-Q
001-34299
10.60
8/6/13
10-Q
001-34299
10.2
10/31/13
10.1.10#
10.1.11#
Modification P00002 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00003 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
10-K
001-34299
10.1.10
2/26/14
10-K
001-34299
10.1.11
2/26/14
130
Exhibit No Exhibit Description
Form SEC File No. Exhibit Filing Date Herewith
Incorporated by Reference
Filed
10.1.12#
10.1.13#
10.1.14#
10.1.15#
10.1.16#
10.1.17#
10.1.18#
10.1.19#
10.1.20#
10.1.21#
Modification P00004 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00005 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00006 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P0007 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00008 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00009 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00010 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00011 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00012 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00013 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
10-Q
001-34299
10.1
5/1/14
10-Q
001-34299
10.2
5/1/14
10-Q
001-34299
10.3
5/1/14
001-34299
10-Q
10.4
5/1/14
10-Q
001-34299
10.1
7/31/14
10-Q
001-34299
10.2
7/31/14
10-Q
001-34299
10.3
7/31/14
10-Q
001-34299
10.4
7/31/14
10-Q
001-34299
10.1
10/30/14
10-K
001-34299
10.1.21
2/26/15
131
Exhibit No Exhibit Description
Form SEC File No. Exhibit Filing Date Herewith
Incorporated by Reference
Filed
10.1.22#
10.1.23#
10.1.24#
10.1.25#
10.1.26#
10.1.27#
10.1.28#
10.1.29#
10.1.30#
10.1.31#
Modification P00014 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00015 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00016 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00017 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00018 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00019 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00020 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00021 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00022 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00023 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
10-K
001-34299
10.1.22
2/26/15
10-K
001-34299
10.1.23
2/26/15
10-K
001-34299
10.1.24
2/26/15
10-Q
001-34299
10.1
4/30/15
10-Q
001-34299
10.2
4/30/15
10-Q
001-34299
10.3
4/30/15
10-Q
001-34299
10.1
10/29/15
10-K
001-34299
10.1.29
2/25/16
10-K
001-34299
10.1.30
2/25/16
10-K
001-34299
10.1.31
2/25/16
132
Exhibit No Exhibit Description
Form SEC File No. Exhibit Filing Date Herewith
Incorporated by Reference
Filed
10.1.32#
10.1.33#
10.1.34#
10.1.35#
10.1.36#
10.1.37#
10.1.38#
10.1.39#
10.1.40#
10.1.41#
Modification P00024 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00025 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00026 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00027 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00029 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00030 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00031 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00032 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00033 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00034 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
10-K
001-34299
10.1.32
2/25/16
10-Q
001-34299
10.1
4/27/16
10-Q
001-34299
10.2
4/27/16
10-Q
001-34299
10.3
4/27/16
10-Q
001-34299
10.4
4/27/16
10-Q
001-34299
10.1
7/28/16
10-Q
001-34299
10.1
10/25/16
10-Q
001-34299
10.2
10/25/16
10-Q
001-34299
10.3
10/25/16
10-Q
001-34299
10.4
10/25/16
133
Exhibit No Exhibit Description
Form SEC File No. Exhibit Filing Date Herewith
Incorporated by Reference
Filed
10.1.42#
10.1.43#
10.1.44#
10.1.45#
10.1.46#
10.1.47#
10.1.48#
10.1.49#
10.1.50#
10.1.51#
Modification P00035 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00036 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00028 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00037 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00038 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00039 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00040 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00041 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00042 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00043 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
10-K
001-34299
10.1.43
2/27/17
10-K
001-34299
10.1.44
2/27/17
10-K
001-34299
10.1.42
2/27/17
10-Q
001-34299
10.1
5/2/17
10-Q
001-34299
10.2
5/2/17
10-Q
001-34299
10.3
5/2/17
10-Q
001-34299
10.4
5/2/17
10-Q
001-34299
10.1
7/26/17
10-Q
001-34299
10.2
7/26/17
10-Q
001-34299
10.3
7/26/17
134
Exhibit No Exhibit Description
Form SEC File No. Exhibit Filing Date Herewith
Incorporated by Reference
Filed
10.1.52#
10.1.53#
10.1.54#
10.1.55#
10.1.56#
10.1.57#
10.1.58#
10.1.59#
10.1.60#
10.1.61#
Modification P00044 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00045 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00046 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00047 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00048 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00049 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00050 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00051 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00052 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00053 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
10-Q
001-34299
10.4
7/26/17
10-Q
001-34299
10.5
7/26/17
10-K
001-38228
10.1.54
3/1/19
10-K
001-38228
10.1.55
3/1/19
10-K
001-38228
10.1.56
3/1/19
10-K
001-38228
10.1.57
3/1/19
10-K
001-38228
10.1.58
3/1/19
10-K
001-38228
10.1.59
3/1/19
10-K
001-38228
10.1.60
3/1/19
10-K
001-38228
10.1.61
3/1/19
135
Exhibit No Exhibit Description
Form SEC File No. Exhibit Filing Date Herewith
Incorporated by Reference
Filed
10.1.62#
10.1.63#
10.1.64#
10.1.65#
10.1.66#
10.1.67#
10.1.68#
10.1.69#
10.1.70#
10.1.71#
Modification P00054 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00055 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00056 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00057 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00058 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00059 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00060 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00061 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00062 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
Modification P00063 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
10-K
001-38228
10.1.62
3/1/19
10-K
001-38228
10.1.63
3/1/19
10-K
001-38228
10.1.64
3/1/19
10-K
001-38228
10.1.65
3/1/19
10-K
001-38228
10.1.66
3/1/19
10-K
001-38228
10.1.67
3/1/19
10-K
001-38228
10.1.68
3/1/19
10-K
001-38228
10.1.69
3/1/19
10-Q
001.38228
10.1
5/9/19
10-Q
001-38228
10.1
8/6/19
136
Exhibit No Exhibit Description
Form SEC File No. Exhibit Filing Date Herewith
Incorporated by Reference
Filed
10.1.72#
Modification P00064 to Contract
#HM021010CN002, by and between
DigitalGlobe, Inc. and National Geospatial-
Intelligence Agency.
10-Q
001-38228
10.1
11/4/19
10.2*
Form of Indemnification Agreement.
8-K 001-38228
10.12 1/2/19
10.3.1*
Biggs Porter Employee Term Sheet.
10-K 001-38228
10.3.1 3/1/19
10.3.2*
Daniel Jablonsky Employee Agreement.
10-K 001.38228
10.3.2 3/1/19
10.4*
Maxar Technologies Ltd. Omnibus Equity
Incentive Plan.
S-8
333-220853
4.3
10/6/17
10.4.1*
Amendment to the Maxar Technologies Ltd.
Omnibus Equity Incentive Plan.
S-8
001-38228
4.3
5/15/18
10.4.2*
Amendment to the Maxar Technologies Ltd.
Omnibus Equity Incentive Plan.
S-8
333-219296
333-220853
333-224934
4.13
1/2/19
10.4.3*
10.4.4*
10.4.5*
10.4.6*
10.5*
10.5.1*
10.5.2*
10.5.3*
10.6*
10.6.1*
Form of LTIP Award Omnibus Equity
Incentive Plan (U.S. Employees).
Form of LTIP Award Omnibus Equity
Incentive Plan (Canadian Employees).
10-K
001-38228
10.4.3
3/1/19
10-K
001-38228
10.4.4
3/1/19
Form of RSU Award Omnibus Equity Incentive
Plan (U.S. Employees).
10-K
001-38228
10.4.5
3/1/19
Form of RSU Award Omnibus Equity Incentive
Plan (Canadian Employees).
10-K
001-38228
10.4.6
3/1/19
Maxar Technologies Ltd. Employee Stock
Option Plan.
Form of Restricted Share Unit Award
Agreement Employee Stock Option Plan.
Form of Restricted Share Unit Award
Agreement.
S-8
333-220853
4.2
10/6/17
S-8
333-220853
4.5
10/6/17
S-8
333-220853
4.6
10/6/17
Amendment to Restricted Share Unit Award
Agreement.
S-8
333-220853
4.7
10/6/17
MacDonald, Dettwiler and Associates Ltd.
2014 Long-Term Incentive Plan.
S-8
333-219296
4.6
7/14/17
Amendment to MacDonald, Dettwiler and
Associates Ltd. 2014 Long-Term Incentive
Plan.
S-8
333-219296
333-220853
333-224934
4.10
1/2/19
137
Exhibit No Exhibit Description
Form SEC File No. Exhibit Filing Date Herewith
Incorporated by Reference
Filed
10.6.2*
10.6.3*
10.7*
10.7.1*
10.7.2*
10.7.3*
10.8*
10.8.1*
10.8.2*
10.8.3*
10.9*
10.9.1*
10.10*
10.11*
Form Award Agreement – 2014 Long-Term
Incentive Plan (Canadian Employees).
Form Award Agreement – 2014 Long-Term
Incentive Plan (U.S. Employees).
MacDonald, Dettwiler and Associates Ltd.
2015 Long-Term Incentive Plan
S-8
333-219296
4.10
7/14/17
S-8
333-219296
4.11
7/14/17
S-8
333-219296
4.7
7/14/17
Amendment to MacDonald, Dettwiler and
Associates Ltd. 2015 Long-Term Incentive
Plan.
S-8
333-219296
333-220853
333-224934
4.11
1/2/19
Form Award Agreement – 2015 Long-Term
Incentive Plan (Canadian Employees).
Form Award Agreement – 2015 Long-Term
Incentive Plan (U.S. Employees).
MacDonald, Dettwiler and Associates Ltd.
2016 Long-Term Incentive Plan.
S-8
333-219296
4.12
7/14/17
S-8
333-219296
4.13
7/14/17
S-8
333-219296
4.8
7/14/17
Amendment to MacDonald, Dettwiler and
Associates Ltd. 2016 Long-Term Incentive
Plan.
S-8
333-219296
333-220853
333-224934
4.12
1/2/19
Form Award Agreement – 2016 Long-Term
Incentive Plan (Canadian Employees).
Form Award Agreement – 2016 Long-Term
Incentive Plan (U.S. Employees).
S-8
333-219296
4.14
7/14/17
S-8
333-219296
4.15
7/14/17
MacDonald, Dettwiler and Associates Ltd.
2017 Long-Term Incentive Plan.
Amendment to MacDonald, Dettwiler and
Associates Ltd. 2017 Long-Term Incentive
Plan.
S-8
S-8
333-220853
4.4
10/6/17
333-219296
333-220853
333-224934
4.14
1/2/19
Form of Restricted Share Unit Award
Agreement for Non-U.S. Grantees.
10-Q
001-34299
10.5
5/2/17
Maxar Technologies Inc. 2019 Incentive Award
Plan.
S-8
333-231296
4.3
5/8/19
10.11.1*
Form of PSU Award Grant Notice – 2019 Plan. 10-Q 001-38228
10.4
5/9/19
10.11.2*
Form of RSU Award Grant Notice – 2019 Plan. 10-Q 001-38228
10.5
5/9/19
138
Exhibit No Exhibit Description
Form SEC File No. Exhibit Filing Date Herewith
10.11.3*
Form of Stock Option Grant Notice – 2019
Plan.
10-Q
001-38228
10.6
5/9/19
Incorporated by Reference
Filed
10.11.4*
Form of RSU Award Grant Notice – 1 year
vesting – 2019 Plan.
10-Q
001-38228
10.7
5/9/19
10.11.5*
Form of Cash-Settled RSU Award Grant
Notice.
10-Q
001-38228
10.8
5/9/19
10.11.6*
Form of Cash Incentive Award Grant Notice.
10-Q 001-38228
10.9
5/9/19
10.12*
Maxar Technologies Inc. Employee Stock
Purchase Plan
S-8
333-231296
4.4
5/8/19
10.13#
Limited Recourse Receivables Purchase
Agreement dated September 16, 2016 among
Space Systems/Loral, LLC, MacDonald,
Dettwiler and Associates Ltd., and ING Bank
N.V.
F-
4/A
001-38228
10.4
6/2/17
10.14
Security Control Agreement.
F-4
001-38228
10.3
4/27/17
21.1
Subsidiaries of the Registrant.
X
23.1
23.2
31.1
31.2
32.1
32.2
Consent of KPMG LLP, Independent
Registered Public Accounting Firm.
Consent of KPMG LLP, Chartered Professional
Accountants, Independent Registered Public
Accounting Firm.
Certification of the Company’s Chief Executive
Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification of the Company’s Chief Financial
Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification of the Company’s Chief Executive
Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
Certification of the Company’s Chief Financial
Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
139
X
X
X
X
X
X
Exhibit No Exhibit Description
Form SEC File No. Exhibit Filing Date Herewith
Incorporated by Reference
Filed
101+
The following materials for the Maxar
Technologies Inc. Annual Report on Form 10-
K for the year ended December 31, 2019,
Commission File No. 001-38228, formatted in
Inline eXtensible Business Reporting Language
(iXBRL):
(i.) Audited Consolidated Statements of
Operations
(ii.) Audited Consolidated Balance Sheets
(iii.) Audited Consolidated Statements of Cash
Flows
(iv.) Audited Consolidated Statements of
Stockholders’ Equity and Statement of
Comprehensive
Income (Loss)
(v.) Related notes, tagged or blocks of text
104
Cover Page Interactive Data File (the cover
page XBRL tags are embedded in the Inline
XBRL document)
X
# Certain portions of this exhibit have been omitted by redacting a portion of the text. This exhibit has been filed
separately with the U.S. Securities and Exchange Commission pursuant to a request for confidential treatment.
* Management contract or compensatory plan arrangement.
+ XBRL (eXtensible Business Reporting Language) Information is furnished and not filed or a part of a registration
statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed
for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability
under these sections.
ITEM 16. FORM 10-K SUMMARY
None.
140
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
March 2, 2020
Maxar Technologies Inc.
By: /s/ Biggs C. Porter
Biggs C. Porter
By: /s/ Carolyn K. Pittman
Carolyn K. Pittman
Executive Vice President and Chief Financial Officer
(Principal Financial Officer and Duly Authorized Officer)
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer and Duly Authorized
Officer)
141
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following
persons in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Daniel L. Jablonsky
Daniel L. Jablonsky
President and Chief Executive Officer
(Principal Executive Officer),
Director
/s/ Biggs C. Porter
Biggs C. Porter
/s/ Carolyn K. Pittman
Carolyn K. Pittman
/s/ General Howell M. Estes III
General Howell M. Estes III
/s/ Roxanne Decyk
Roxanne Decyk
/s/ Nick S. Cyprus
Nick S. Cyprus
/s/ Joanne O. Isham
Joanne O. Isham
/s/ General C. Robert Kehler
General C. Robert Kehler
/s/ Dr. L. Roger Mason, Jr.
Dr. L. Roger Mason, Jr.
/s/ Robert L. Phillips
Robert L. Phillips
/s/ Eric J. Zahler
Eric J. Zahler
/s/ Eddy Zervigon
Eddy Zervigon
Executive Vice President and Chief Financial
Officer
(Principal Financial Officer, and Duly Authorized
Officer)
Senior Vice President and Chief Accounting
Officer
(Principal Accounting Officer and Duly
Authorized Officer)
Director
Director
Director
Director
Director
Director
Director
Director
Director
142
March 2, 2020
March 2, 2020
March 2, 2020
March 2, 2020
March 2, 2020
March 2, 2020
March 2, 2020
March 2, 2020
March 2, 2020
March 2, 2020
March 2, 2020
March 2, 2020
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 31.1
I, Daniel Jablonsky, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Maxar Technologies Inc. for the year ended December 31,
2019 (the “registrant”),
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or
persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize
and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
By /s/ Daniel Jablonsky
Daniel Jablonsky
President and Chief Executive Officer
(Principal Executive Officer)
Date: March 2, 2020
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 31.2
I, Biggs Porter, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Maxar Technologies Inc. for the year ended December 31,
2019 (the “registrant”),
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or
persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize
and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
By /s/ Biggs Porter
Biggs Porter
Chief Financial Officer
(Principal Financial Officer)
Date: March 2, 2020
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.1
In connection with the Annual Report of Maxar Technologies Inc. (the “Company”) on Form 10-K for the year ended
December 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel
Jablonsky, President and Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. ss. 1350, as
adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and
result of operations of the Company.
By /s/ Daniel Jablonsky
Daniel Jablonsky
President and Chief Executive Officer
(Principal Executive Officer)
Date: March 2, 2020
This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange
Commission and is not to be incorporated by reference into any filing of Maxar Technologies Inc. under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of
the Report), irrespective of any general incorporation language contained in such filing.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.2
In connection with the Annual Report of Maxar Technologies Inc. (the “Company”) on Form 10-K for the year ended
December 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Biggs
Porter, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to
ss. 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and
result of operations of the Company.
By /s/ Biggs Porter
Biggs Porter
Chief Financial Officer
(Principal Financial Officer)
Date: March 2, 2020
This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange
Commission and is not to be incorporated by reference into any filing of Maxar Technologies Inc. under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of
the Report), irrespective of any general incorporation language contained in such filing.
STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in the cumulative total shareholder return on our Common
Stock during the period October 5, 2017 to December 31, 2019, with the cumulative total return on the NYSE
Composite and with a selected peer group consisting of us and other companies we deem to be comparable. The
2019 peer group consists of the following publicly traded and government contracting companies: Aerojet
Rocketdyne Holdings Inc., Booz Allen Hamilton Holding Corp., CACI International Inc., CAE Inc., Cubic
Corporation, Curtiss-Wright Corporation, Flir Systems, Inc., Fortinet, Inc., Kratos Defense & Security Solutions,
Inc., L3Harris Technologies, Inc. and its predecessor entities, Leidos Holdings, Inc., ManTech International
Corporation, Mercury Systems, Inc., Moog Inc., OSI Systems, Inc., Science Applications International Corporation,
Teledyne Technologies Incorporated, Trimble Inc., and Viasat, Inc. This graph assumes: (i) the investment of $100
on October 5, 2017 in our common stock, the NYSE Composite Index and the peer group identified above; and (ii)
that dividends are reinvested.
COMPARISON OF 27 MONTH CUMULATIVE TOTAL RETURN*
Among Maxar Technologies Inc., the NYSE Composite Index,
2018 Peer Group and 2019 Peer Group
$180
$160
$140
$120
$100
$80
$60
$40
$20
$0
10/5/17
12/17
3/18
6/18
9/18
12/18
3/19
6/19
9/19
12/19
Maxar Technologies Inc.
NYSE Composite
2018 Peer Group
2019 Peer Group
*$100 invested on 10/5/17 in stock or index, including reinvestment of dividends. Fiscal year ending December 31.
The information under “Stock Performance Graph” does not constitute soliciting material and is not deemed filed
with the U.S. Securities and Exchange Commission and is not to be incorporated by reference in any of our filings
under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made
before or after the date of this Annual Report on Form 10-K and irrespective of any general incorporation language
in those filings.
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A message from Maxar CEO, Dan Jablonsky
Looking back, 2019 was an eventful year for Maxar. As of this writing, the geopolitical, health, and
Looking back, 2019 was an eventful year for Maxar. As of this writing, the geopolitical, health, and
operational environment in 2020 could prove to be challenging. I’d like to provide a recap of last year,
discuss how we’re thinking about our longer-term focus and strategic efforts, and end with observations
about current events and COVID-19.
FOR A BETTER WORLD
In 2019, Maxar led the way in Earth Intelligence
providing valuable data and insights that
government and commercial customers need to
make informed decisions in an increasingly
complex geopolitical environment. In Space
Infrastructure, we continued to provide efficient
and innovative ways for our customers to support communication and exploration across our planet and
beyond, including a return to the moon. Our commitment to customers and their critical missions
remained unwavering throughout the year, and we look forward to both serving and growing with them
in the years to come. Our team members are passionate about the work we do, and believe strongly our
Earth Intelligence and Space Infrastructure capabilities have the power to change the world.
THE PROMISE OF SPACE IS TO ENSURE EVERYONE ON THE
PLANET HAS ACCESS TO THE TECHNOLOGY AND
INFORMATION THAT MAKES THE WORLD A BETTER PLACE.
PERFORMANCE AND KEY HIGHLIGHTS
In 2019, we persevered through the loss of our WorldView-4 satellite and the lingering effects of a
decline in commercial satellite orders in 2017 and 2018. That said, we generated $1.7B in revenue and
$416M in Adjusted EBITDA from continuing operations. We also worked tirelessly on the five key
priorities we discussed throughout the year:
Reducing debt and leverage: We announced actions during 2019 to reduce debt by roughly $1B,
including the sale/leaseback of facilities in Palo Alto and the divestiture of the MDA business. We also
refinanced nearer-term maturities through a $1B bond offering. Combined, these moves better align
future debt maturities with the positive cash flow streams we expect after the launch of the WorldView
Legion constellation and place us on sound financial footing moving into 2020.
Re-engineering the Space Infrastructure business: In addition to reducing our cost structure and re-
engineering the business for increased flexibility going forward, we
won two geosynchronous communications satellite (GEO comsat)
awards. Importantly, we garnered key, new wins with NASA in
support of the agency’s missions to return to the moon and monitor
the environment on Earth. We are now keenly focused on
diversifying into the civil government and military/classified
programs, particularly in the United States, to reduce our historic
dependence on the commercial market. We expect this
diversification to result in less cyclicality and improved financial
performance in the future. There is still much work to be done, but we are off to a good start.
Positioning MDA for long-term growth: We won several awards during 2019 that better positioned this
business for growth over the next several years, including:
(cid:120)
Initial design phase work on both the Canadian Surface Combatant program and Canadarm3
(cid:120) Manufacturing work to provide flight-ready repeaters to be launched on the U.S. Air Force’s GPS
IIIF satellites
(cid:120) Design work with the Canadian Space Agency for a wildfire monitoring satellite
(cid:120) Manufacturing work with Airbus for advanced navigation antennas
Please note that we entered into a definitive agreement to sell our MDA business. As a result, this
business is now classified as discontinued operations in our consolidated financial statements.
TRANSFER AGENT
Computershare Trust Company, N.A.
462 South 4th Street, Suite 1600
Louisville, KY 40202
Investor Relations Contact
Jason Gursky, VP Investor Relations
303-684-7660
investor@maxar.com
2019 Annual Report
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