10-Q 1 maxr-20220331x10q.htm 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2022

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

83-2809420

(State or jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

1300 W. 120th Avenue, Westminster, Colorado

80234

(Address of principal executive offices)

(Zip Code)

303-684-7660

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock par value of $0.0001 per share

MAXR

New York Stock Exchange

Toronto Stock Exchange

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 of 1934 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 Exchange Act).  Yes  No 

As of May 2, 2022, there were 73,711,203 shares of the registrant’s common stock, at $0.0001 par value, outstanding.

Maxar Technologies Inc.

Quarterly Report on Form 10-Q

For the period ended March 31, 2022

HIDDEN ROW

Item Number

Table of Contents

PART I

1.

Financial Statements

3

Unaudited Condensed Consolidated Statements of Operations

3

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)

4

Unaudited Condensed Consolidated Balance Sheets

5

Unaudited Condensed Consolidated Statements of Cash Flows

6

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity

7

Notes to the Unaudited Condensed Consolidated Financial Statements

8

2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

3.

Quantitative and Qualitative Disclosures about Market Risk

35

4.

Controls and Procedures

35

PART II

1.

Legal Proceedings

35

1A.

Risk Factors

35

2.

Unregistered Sales of Equity Securities and Use of Proceeds

61

3.

Defaults Upon Senior Securities

61

4.

Mine Safety Disclosures

61

5.

Other Information

61

6.

Exhibits

61

Signatures

64

2

PART I. FINANCIAL INFORMATION

MAXAR TECHNOLOGIES INC.

Unaudited Condensed Consolidated Statements of Operations

(In millions, except per share amounts)

Three Months Ended

March 31, 

    

2022

    

2021

Revenues:

Product

$

154

$

142

Service

251

250

Total revenues

405

392

Costs and expenses:

Product costs, excluding depreciation and amortization

127

148

Service costs, excluding depreciation and amortization

93

93

Selling, general and administrative

104

84

Depreciation and amortization

 

68

 

74

Operating income (loss)

 

13

 

(7)

Interest expense, net

 

23

 

78

Other income, net

(3)

(1)

Loss before taxes

 

(7)

 

(84)

Income tax (benefit) expense

 

 

Net loss

$

(7)

$

(84)

Net loss per common share:

Basic

$

(0.10)

$

(1.30)

Diluted

$

(0.10)

$

(1.30)

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

3

MAXAR TECHNOLOGIES INC.

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)

(In millions)

Three Months Ended

March 31, 

    

2022

    

2021

Net loss

$

(7)

$

(84)

Other comprehensive income (loss), net of tax:

Unrealized gain on interest rate swaps

 

11

6

Foreign currency translation adjustments

 

(1)

Gain on pension and other postretirement benefit plans

1

Other comprehensive income, net of tax

 

11

6

Comprehensive income (loss), net of tax

$

4

$

(78)

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

4

MAXAR TECHNOLOGIES INC.

Unaudited Condensed Consolidated Balance Sheets

(In millions)

    

March 31, 

    

December 31, 

2022

2021

Assets

Current assets:

Cash and cash equivalents

 

$

22

$

47

Trade and other receivables, net

 

 

333

 

355

Inventory, net

 

 

36

 

39

Advances to suppliers

25

31

Prepaid assets

31

35

Other current assets

22

22

Total current assets

 

 

469

 

529

Non-current assets:

 

 

 

  

Orbital receivables, net

 

 

362

368

Property, plant and equipment, net

 

 

968

940

Intangible assets, net

 

 

761

787

Non-current operating lease assets

138

145

Goodwill

 

 

1,627

1,627

Other non-current assets

115

102

Total assets

 

$

4,440

$

4,498

Liabilities and stockholders’ equity

 

 

Current liabilities:

 

 

Accounts payable

 

$

81

$

75

Accrued liabilities

62

43

Accrued compensation and benefits

 

 

71

 

111

Contract liabilities

 

 

250

 

289

Current portion of long-term debt

 

 

29

 

24

Current operating lease liabilities

40

42

Other current liabilities

37

38

Total current liabilities

 

570

 

622

Non-current liabilities:

 

 

Pension and other postretirement benefits

 

 

131

134

Operating lease liabilities

133

138

Long-term debt

 

 

2,060

2,062

Other non-current liabilities

71

79

Total liabilities

 

 

2,965

 

3,035

Commitments and contingencies

Stockholders’ equity:

 

 

Common stock ($0.0001 par value, 240 million common shares authorized; 73.4 million and 72.7 million issued and outstanding at March 31, 2022 and December 31, 2021, respectively)

 

 

Additional paid-in capital

 

 

2,243

2,235

Accumulated deficit

 

 

(727)

(720)

Accumulated other comprehensive loss

 

 

(42)

(53)

Total Maxar stockholders' equity

1,474

1,462

Noncontrolling interest

1

1

Total stockholders' equity

 

 

1,475

 

1,463

Total liabilities and stockholders' equity

 

$

4,440

$

4,498

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

5

MAXAR TECHNOLOGIES INC.

Unaudited Condensed Consolidated Statements of Cash Flows

(In millions)

Three Months Ended

March 31, 

    

2022

    

2021

Cash flows (used in) provided by:

Operating activities:

 

Net loss

$

(7)

$

(84)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization

 

68

 

74

Stock-based compensation expense

 

15

 

11

Amortization of debt issuance costs and other non-cash interest expense

3

4

Loss from early extinguishment of debt

41

Cumulative adjustment to SXM-7 revenue

25

Other

5

4

Changes in operating assets and liabilities:

Trade and other receivables, net

29

3

Accounts payable and liabilities

(25)

(49)

Contract liabilities

(39)

6

Other

(1)

(8)

Cash provided by operating activities

 

48

27

Investing activities:

Purchase of property, plant and equipment and development or purchase of software

 

(64)

 

(50)

Acquisition of investment

(2)

Cash used in investing activities

 

(66)

 

(50)

Financing activities:

Net proceeds of revolving credit facility

25

Repurchase of 2023 Notes, including premium

(384)

Net proceeds from issuance of common stock

380

Settlement of securitization liability

(4)

(3)

Repayments of long-term debt

(1)

(2)

Other

(2)

1

Cash (used in) provided by financing activities

(7)

17

Decrease in cash, cash equivalents, and restricted cash

(25)

(6)

Effect of foreign exchange on cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash, beginning of year

48

32

Cash, cash equivalents, and restricted cash, end of period

$

23

$

26

Reconciliation of cash flow information:

Cash and cash equivalents

$

22

$

22

Restricted cash included in prepaid and other current assets

1

4

Total cash, cash equivalents, and restricted cash

$

23

$

26

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

6

MAXAR TECHNOLOGIES INC.

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity

(In millions, except per share amounts)

Three months ended March 31, 2022:

Accumulated

other

Total

Common Stock

Additional

Accumulated

comprehensive

Noncontrolling

stockholders’

    

Shares

    

Amount

    

paid-in capital

    

Deficit

    

income (loss)

    

interest

    

equity

Balance as of December 31, 2021

72.7

$

$

2,235

$

(720)

$

(53)

$

1

$

1,463

Common stock issued under employee stock purchase plan

0.1

2

2

Equity classified stock-based compensation expense

0.6

6

6

Dividends ($0.01 per common share)

Comprehensive income (loss)

(7)

11

4

Balance as of March 31, 2022

73.4

$

$

2,243

$

(727)

$

(42)

$

1

$

1,475

Three months ended March 31, 2021:

Accumulated

other

Total

Common Stock

Additional

Accumulated

comprehensive

Noncontrolling

stockholders’

Shares

    

Amount

    

paid-in capital

    

Deficit

    

income (loss)

    

interest

    

equity

Balance as of December 31, 2020

61.2

$

$

1,818

$

(763)

$

(120)

$

1

$

936

Common stock issuance, net of transaction fees

10.0

380

380

Common stock issued under employee stock purchase plan

0.1

2

2

Equity classified stock-based compensation expense

0.4

7

7

Dividends ($0.01 per common share)

Comprehensive income (loss)

(84)

6

(78)

Balance as of March 31, 2021

71.7

$

$

2,207

$

(847)

$

(114)

$

1

$

1,247

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

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MAXAR TECHNOLOGIES INC.

Notes to the Unaudited Condensed 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 provider of comprehensive space solutions and secure, precise, geospatial intelligence. Maxar helps government and commercial customers monitor, understand and navigate our 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 deploy solutions and deliver insights with speed, scale and cost effectiveness. Maxar’s stock trades on the New York Stock Exchange and Toronto Stock Exchange under the symbol “MAXR.”

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The Unaudited Condensed Consolidated Financial Statements include the accounts of Maxar Technologies Inc., and all consolidated subsidiary entities. The Company’s Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”), and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). All intercompany balances and transactions are eliminated on consolidation.

The Company’s Unaudited Condensed Consolidated Financial Statements are presented in U.S. dollars and have been prepared on a historical cost basis, except for certain financial assets and liabilities including derivative financial instruments which are stated at fair value.

The Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s annual audited consolidated financial statements and notes thereto included in the Company’s most recent Annual Report on Form 10-K filed with the SEC. Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation. In management’s opinion, all adjustments of a normal recurring nature that are necessary for a fair statement of the accompanying Unaudited Condensed Consolidated Financial Statements have been included. 

Use of estimates, assumptions and judgments

The preparation of the Unaudited Condensed Consolidated Financial Statements in accordance with U.S. GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the reporting date, as well as the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared using the most current and best available information; however, actual results could differ materially from those estimates.

Recent Accounting Guidance Not Yet Adopted

Reference Rate Reform

In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which together with subsequent amendments, is intended to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the market transition from the London Interbank Offered Rate and other interbank offered rates to alternative reference rates. This guidance was effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. The Company expects that it will elect to apply some of the expedients and

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MAXAR TECHNOLOGIES INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

(Tabular amounts in millions, unless otherwise noted)

exceptions in ASU 2020-04. The Company has completed its preliminary analysis and does not expect that the adoption of ASU 2020-04 and subsequent amendments will have a material impact on the Company's financial statements.

3.

TRADE AND OTHER RECEIVABLES, NET

March 31,

December 31, 

    

2022

    

2021

Billed

$

163

$

162

Unbilled

 

123

 

143

Total trade receivables

286

305

Orbital receivables, current portion

45

49

Other

3

2

Allowance for doubtful accounts

(1)

(1)

Trade and other receivables, net

$

333

$

355

The Company had orbital receivables from 13 customers for which the largest customer’s value represented 30% of the stated current and non-current balance sheet values as of both March 31, 2022 and December 31, 2021.

During the first quarter of 2021, the Company reduced its outstanding receivables related to the SXM-7 satellite for the final milestone and expected orbital payments by $15 million and $14 million, respectively. See Note 10 for additional details regarding the adjustment to revenue.

There have been no changes in the allowance for expected credit losses related to non-current orbital receivables for the three months ended March 31, 2022.

Securitization liabilities as of March 31, 2022 and December 31, 2021, are as follows:

March 31, 

December 31, 

    

2022

    

2021

Current portion

$

16

$

16

Non-current portion

 

28

 

32

Total securitization liabilities

$

44

$

48

4.

INVENTORY, NET

March 31, 

December 31, 

    

2022

    

2021

Raw materials

$

28

$

34

Work in process

9

6

Total

$

37

$

40

Inventory reserve

(1)

(1)

Inventory, net

$

36

$

39

5.PROPERTY, PLANT AND EQUIPMENT, NET

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MAXAR TECHNOLOGIES INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

(Tabular amounts in millions, unless otherwise noted)

March 31, 

December 31, 

    

2022

    

2021

Satellites

$

397

$

397

Equipment

220

221

Computer hardware

98

95

Leasehold improvements

83

83

Furniture and fixtures

16

16

Construction in process1

711

668

Property, plant and equipment, at cost

1,525

1,480

Accumulated depreciation

 

(557)

(540)

Property, plant and equipment, net

$

968

$

940

1Construction in process is primarily related to the construction of the Company’s WorldView-Legion satellites.

Depreciation expense for property, plant and equipment was $19 million and $23 million for the three months ended March 31, 2022 and 2021, respectively.

6.

INTANGIBLE ASSETS

March 31, 2022

December 31, 2021

    

Gross
carrying
value

    

Accumulated
amortization

    

Net
carrying
value

    

Gross
carrying
value

    

Accumulated
amortization

    

Net
carrying
value

Customer relationships

$

615

$

(201)

$

414

$

615

$

(190)

$

425

Software

402

(161)

241

379

(152)

227

Technologies

367

(295)

72

367

(278)

89

Backlog

 

107

 

(96)

 

11

 

107

 

(89)

 

18

Image library

80

(74)

6

80

(71)

9

Trade names and other

37

(20)

17

37

(18)

19

Intangible assets

$

1,608

$

(847)

$

761

$

1,585

$

(798)

$

787

Amortization expense related to intangible assets was $49 million and $51 million for the three months ended March 31, 2022 and 2021, respectively.

7.

LONG-TERM DEBT AND INTEREST EXPENSE, NET

March 31, 

December 31, 

    

2022

    

2021

Syndicated Credit Facility:

 

Term Loan B

$

1,444

$

1,444

2023 Notes

500

500

2027 Notes

150

150

Deferred financing

24

26

Obligations under finance leases and other

 

7

 

5

Debt discount and issuance costs

 

(36)

 

(39)

Total long-term debt

 

2,089

 

2,086

Current portion of long-term debt

 

(29)

 

(24)

Non-current portion of long-term debt

$

2,060

$

2,062

Syndicated Credit Facility

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MAXAR TECHNOLOGIES INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

(Tabular amounts in millions, unless otherwise noted)

As of March 31, 2022, the Company’s senior secured syndicated credit facility (“Syndicated Credit Facility”) is composed of: (i) a senior secured first lien revolving credit facility in an aggregate capacity of up to $500 million maturing in December 2023 (“Revolving Credit Facility”) and (ii) a senior secured first lien term B facility in an original aggregate principal amount of $2.0 billion maturing in October 2024 (“Term Loan B”).

The maximum consolidated debt leverage ratios permitted under the Syndicated Credit Facility are 7.25x at the end of each fiscal quarter until the quarter ending September 30, 2022, 6.25x at the end of each fiscal quarter thereafter until the fiscal quarter ending March 31, 2023, and 5.50x 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). As of March 31, 2022 and December 31, 2021, the Company was in compliance with its debt covenants.

The Revolving Credit Facility includes an aggregate $200 million sub limit under which letters of credit can be issued. The Company had $28 million of issued and undrawn letters of credit outstanding under the Revolving Credit Facility as of March 31, 2022 and December 31, 2021.

Senior Secured Notes due 2023

On December 2, 2019, the Company issued $1.0 billion in aggregate principal amount of 9.75% Senior Secured Notes due 2023 (“2023 Notes”). The 2023 Notes were offered and sold to qualified institutional buyers in the U.S. pursuant to Rule 144A and outside the U.S. pursuant to Regulation S under the Securities Act of 1933, as amended. The 2023 Notes were issued at a price of 98% and are recorded as long-term debt in the 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 commenced in June 2020. The 2023 Notes will mature on December 31, 2023, unless earlier redeemed or repurchased. The 2023 Notes are guaranteed on a senior secured basis by each of the Company’s existing and future subsidiaries that guarantee the Syndicated Credit Facility.

On June 25, 2020, the Company repurchased $150 million aggregate principal amount of its 2023 Notes using proceeds from the sale of its former Canadian subsidiary. The 2023 Notes were repurchased (“2023 Notes Repurchase”) at a price of approximately 112.45% of the principal amount repurchased.

On March 26, 2021, the Company redeemed $350 million aggregate principal amount of its 2023 Notes using a portion of the net proceeds from an underwritten offering of 10 million shares of its common stock (“Offering”). The Company paid premiums of approximately $34 million related to the early redemption. This resulted in a loss on debt extinguishment of $41 million that was recorded in the first quarter of 2021, which is included as part of Interest expense, net within the Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2021. See Note 9 for additional details on the Offering.

Senior Secured Notes due 2027

On June 25, 2020, the Company issued $150 million in aggregate principal amount of 7.54% Senior Secured Notes due 2027 (“2027 Notes”). The 2027 Notes were offered and sold to qualified institutional buyers in the U.S. pursuant to Rule 144A and outside the U.S. pursuant to Regulation S under the Securities Act of 1933, as amended. The 2027 Notes were issued at a price of 98.25% and are recorded as long-term debt in the consolidated financial statements. The 2027 Notes bear interest at the rate of 7.54% per year, payable semi-annually in cash in arrears, for which interest payments commenced December 2020. The 2027 Notes will mature on December 31, 2027, unless earlier redeemed or repurchased. The 2027 Notes are guaranteed on a senior secured basis by each of the Company’s existing and future subsidiaries that guarantee the Syndicated Credit Facility and the 2023 Notes.

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MAXAR TECHNOLOGIES INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

(Tabular amounts in millions, unless otherwise noted)

The Company accounted for the issuance of the 2027 Notes and the 2023 Notes Repurchase as debt modifications. As a result, the 12.45% premium paid on the repurchase of the $150 million aggregate principal amount of 2023 Notes is accounted for as an incremental discount that is amortized over the life of the 2027 Notes. Separately, the previously incurred unamortized debt discount and debt issuance costs are amortized over the remaining life of the outstanding 2023 Notes.

Interest expense, net on long-term debt and other obligations is as follows:

Three Months Ended March 31, 

    

2022

    

2021

Interest on long-term debt

$

33

$

44

Interest on orbital securitization liability

1

1

Loss on debt extinguishment

41

Imputed interest and other

1

Capitalized interest

(11)

(9)

Interest expense, net

$

23

$

78

8.

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 Accounting Standards Codification 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

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MAXAR TECHNOLOGIES INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

(Tabular amounts in millions, unless otherwise noted)

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 as of March 31, 2022

    

Level 1

    

Level 2

    

Level 3

    

Total

Assets

 

 

 

 

Orbital receivables 1

$

$

469

$

$

469

Interest rate swaps

10

10

$

$

479

$

$

479

Liabilities

Interest rate swaps

$

$

1

$

$

1

Long-term debt 2

2,114

2,114

$

$

2,115

$

$

2,115

Recurring Fair Value Measurements as of December 31, 2021

    

Level 1

    

Level 2

    

Level 3

    

Total

Assets

 

Orbital receivables 1

$

$

481

$

$

481

Interest rate swaps

3

3

$

$

484

$

$

484

Liabilities

Interest rate swaps

$

$

4

$

$

4

Long-term debt 2

2,132

2,132

$

$

2,136

$

$

2,136

1

The carrying value of orbital receivables was $407 million and $417 million as of March 31, 2022 and December 31, 2021, respectively.

2

Long-term debt excludes finance leases, borrowings under the Revolving Credit Facility, deferred financing and other and is carried at amortized cost. The outstanding carrying value was $2,058 million and $2,055 million as of March 31, 2022 and December 31, 2021, respectively. The carrying value of borrowings under the Revolving Credit Facility approximates their fair value.

As of March 31, 2022, an aggregate of $1.0 billion of the Company’s variable rate long-term debt is fixed at an average rate of 1.43% (excluding the margin specified in the Syndicated Credit Facility) pursuant to the Company’s outstanding interest rate swaps. On April 29, 2022, $500 million of the Company’s interest rate swaps matured.

The Company determines fair value of its derivative financial instruments and orbital receivables based on internal valuation models, such as a discounted cash flow analysis, using management estimates and observable market-based inputs, as applicable. Management estimates include assumptions concerning the amount and timing of estimated future cash flows and application of appropriate discount rates. Observable market-based inputs are sourced from third parties and include interest rates and yield curves, currency spot and forward rates and credit spreads, as applicable.

The Company determines fair value of long-term debt that is actively traded in the secondary market using external pricing data, including any available quoted market prices and other observable inputs from available market information. For debt that is not actively traded in the secondary market, the fair value is based on the Company’s indicative borrowing cost derived from dealer quotes or discounted cash flows.

Cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities are all short-term in nature; therefore, the carrying value of these items approximates their fair value.

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MAXAR TECHNOLOGIES INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

(Tabular amounts in millions, unless otherwise noted)

There were no transfers into or out of each of the levels of the fair value hierarchy during the periods ended March 31, 2022 and December 31, 2021.

9.

STOCKHOLDERS’ EQUITY

Changes in the components of Accumulated other comprehensive income (loss) are as follows:

Foreign Currency Translation Adjustments

Unrealized (Loss) Gain on Interest Rate Swaps

Loss on Pension and Other Postretirement Plans

Total Accumulated Other Comprehensive (Loss) Income

Balance as of December 31, 2021

    

$

(1)

    

$

(1)

    

$

(51)

    

$

(53)

Other comprehensive income

11

11

Tax benefit (expense)

Balance as of March 31, 2022

$

(1)

$

10

$

(51)

$

(42)

On March 22, 2021, the Company completed the Offering of 10 million shares of common stock at a public offering price of $40 per share. The Company received proceeds of $380 million, net of $20 million of transaction fees.

10.

REVENUES

As of March 31, 2022, the Company had $1.6 billion of remaining performance obligations, which represents the transaction price of firm orders less inception-to-date revenues recognized. Remaining performance obligations generally exclude unexercised contract options and indefinite delivery/indefinite quantity contracts. The Company expects to recognize revenues relating to existing performance obligations of approximately $1.0 billion, $0.4 billion and $0.2 billion for the remaining nine months ending December 31, 2022, the year ending December 31, 2023 and thereafter, respectively.

Contract liabilities by segment are as follows:

As of March 31, 2022

    

Earth
Intelligence

    

Space
Infrastructure

    

Total

Contract liabilities

$

36

$

214

$

250

As of December 31, 2021

    

Earth
Intelligence

    

Space
Infrastructure

    

Total

Contract liabilities

$

32

$

257

$

289

Contract liabilities decreased to $250 million as of March 31, 2022 from $289 million as of December 31, 2021. The decrease in contract liabilities is primarily due to revenues recognized based upon the satisfaction of performance obligations within the Space Infrastructure segment. The Company had an immaterial balance of non-current contract liabilities as of March 31, 2022 and December 31, 2021. Non-current contract liabilities are included in Other non-current liabilities on the Unaudited Condensed Consolidated Balance Sheets.

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MAXAR TECHNOLOGIES INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

(Tabular amounts in millions, unless otherwise noted)

The Company’s primary sources of revenues are as follows:

Three Months Ended March 31, 2022

    

Earth
Intelligence

    

Space
Infrastructure

    

Eliminations

    

Total

Product revenues

$

$

154

$

$

154

Service revenues

 

251

 

 

 

251

Intersegment

 

23

 

(23)

 

$

251

$

177

$

(23)

$

405

Three Months Ended March 31, 2021

    

Earth
Intelligence

    

Space
Infrastructure

    

Eliminations

    

Total

Product revenues

$

$

142

$

$

142

Service revenues

 

250

 

 

 

250

Intersegment

13

(13)

$

250

$

155

$

(13)

$

392

Certain of the Company’s contracts with customers in the Space Infrastructure segment include a significant financing component since payments are received from the customer more than one year after delivery of the promised goods or services. The Company recognized orbital interest revenue of $6 million for the three months ended March 31, 2022, compared to $7 million for the three months ended March 31, 2021, related to these contracts, which is included in product revenues in the Unaudited Condensed Consolidated Statements of Operations.

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"). Revenue recognition is also contingent on estimated contractual consideration. 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 costs associated with the design, manufacture and delivery of products and services are used in determining the EAC. Changes to an EAC or estimated contractual consideration are recorded as a cumulative adjustment to revenue.

The Company recognized a cumulative adjustment to revenue of $25 million for the three months ended March 31, 2021 related to the Sirius XM contract with Sirius XM Holdings Inc. (“Sirius XM”). This adjustment resulted primarily from adjusting the EAC transaction price for the amount of the final milestone and expected orbital payments from Sirius XM due to the non-performance of the SXM-7 satellite and other adjustments. See Note 3 for additional details regarding the adjustment to trade and other receivables.

The Company has certain programs in the Space Infrastructure segment which contain significant development efforts that have experienced delays and cost growth primarily due to the complexity of the programs resulting in an overall loss position. The Company recorded $9 million in EAC adjustments on loss contracts during the three months ended March 31, 2022 compared to $10 million for the three months ended March 31, 2021.

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MAXAR TECHNOLOGIES INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

(Tabular amounts in millions, unless otherwise noted)

Revenues based on the geographic location of customers are as follows: