Contracts-in-Process and Long-Term Receivables

9 Months Ended

Sep. 30, 2011

Contracts-in-Process and Long-Term Receivables [Abstract]

Contracts-in-Process and Long-Term Receivables

5. Contracts-in-Process and Long-Term Receivables

Contracts-in-Process

Contracts-in-Process are comprised of the following (in thousands):

	September 30,		December 31,
	2011		2010
Contracts-in-Process:
Amounts billed	$	178,364	$	125,593
Unbilled receivables		55,042		61,303
	$	233,406	$	186,896

As of September 30, 2011 and December 31, 2010, billed receivables were reduced by an allowance for doubtful accounts of $0.2 million.

Unbilled amounts include recoverable costs and accrued profit on progress completed, which have not been billed. Such amounts are billed in accordance with the contract terms, typically upon shipment of the product, achievement of contractual milestones, or completion of the contract and, at such time, are reclassified to billed receivables. Fresh-start fair value adjustments relating to contracts-in-process are amortized on a percentage of completion basis as performance under the related contract is completed (see Note 10).

Long-Term Receivables

Billed receivables relating to long-term contracts are expected to be collected within one year. We classify deferred billings and the orbital receivable component of unbilled receivables expected to be collected beyond one year as long-term. Fresh-start fair value adjustments relating to long-term receivables are amortized using the effective interest method over the life of the related orbital stream (see Note 10).

Receivable balances related to satellite orbital incentive payments, deferred billings and the Telesat consulting services fee (see Note 18) as of September 30, 2011 and December 31, 2010 are presented below (in thousands):

	September 30,			December 31,
	2011			2010
Orbital receivables	$	340,044		$	312,412
Deferred receivables		1,973			2,893
Telesat consulting services receivables		19,113			17,556
		361,130			332,861
Less, current portion included in contracts-in-process		(14,720	)		(13,435	)
Long-term receivables	$	346,410		$	319,426

During the nine months ended September 30, 2011, we recorded a charge to write-off orbital receivables of $8.5 million related to a solar array anomaly on the Telstar 14R/Estrela do Sul 2 satellite, which was launched in May 2011.

Financing Receivables

The following summarizes the age of financing receivables that have a contractual maturity of over one year as of September 30, 2011 (in thousands):

							Financing
							Receivables						More
							Subject To				90 Days or		Than 90
	Total		Unlaunched		Launched		Aging		Current		Less		Days
Satellite Manufacturing:
Orbital Receivables
Long term orbitals	$	325,324	$	149,807	$	175,517	$	175,517	$	175,517	$	—	$	—
Short term unbilled		9,361				9,361		9,361		9,361		—		—
Short term billed		5,359		—		5,359		5,359		2,978		—		2,381
		340,044		149,807		190,237		190,237		187,856		—		2,381
Deferred Receivables		1,973		—		—		1,973		1,973		—		—
Consulting Services:
Receivables from Telesat		19,113		—		—		19,113		19,113		—		—
		361,130		149,807		190,237		211,323		208,942		—		2,381
Contracts-in-Process:
Unbilled receivables		45,681		45,681		—		—		—		—		—
Total	$	406,811	$	195,488	$	190,237	$	211,323	$	208,942	$	—	$	2,381

The following summarizes the age of financing receivables that have a contractual maturity of over one year as of December 31, 2010 (in thousands):

							Financing
							Receivables						More
							Subject To				90 Days or		Than 90
	Total		Unlaunched		Launched		Aging		Current		Less		Days
Satellite Manufacturing:
Orbital Receivables
Long term orbitals	$	298,977	$	133,688	$	165,289	$	165,289	$	165,289	$	—	$	—
Short term unbilled		11,009		—		11,009		11,009		11,009		—		—
Short term billed		2,426		—		2,426		2,426		659		—		1,767
		312,412		133,688		178,724		178,724		176,957		—		1,767
Deferred Receivables		2,893		—		—		2,893		2,893		—		—
Consulting Services:
Receivables from Telesat		17,556		—		—		17,556		17,556		—		—
		332,861		133,688		178,724		199,173		197,406		—		1,767
Contracts-in-Process:
Unbilled receivables		50,294		50,294		—		—		—		—		—
Total	$	383,155	$	183,982	$	178,724	$	199,173	$	197,406	$	—	$	1,767

Billed receivables of $173.0 million and $123.2 million as of September 30, 2011 and December 31, 2010, respectively (not including billed orbital receivables of $5.4 million and $2.4 million as of September 30, 2011 and December 31, 2010, respectively) have been excluded from the tables above as they have contractual maturities of less than one year.

Long term unbilled receivables include satellite orbital incentives related to satellites under construction of $149.8 million and $133.7 million as of September 30, 2011 and December 31, 2010, respectively. These receivables are not included in financing receivables subject to aging in the table above since the timing of their collection is not determinable until the applicable satellite is launched. Contracts-in-process include $45.7 million and $50.3 million as of September 30, 2011 and December 31, 2010, respectively, of unbilled receivables that represent accumulated incurred costs and earned profits net of losses on contracts in process that have been recorded as sales but have not yet been billed to customers. These receivables are not included in financing receivables subject to aging in the table above since the timing of their collection is not determinable until the contractual obligation to bill the customer is fulfilled.

We assign internal credit ratings for all our customers with financing receivables. The credit worthiness of each customer is based upon public information and/or information obtained directly from our customers. We utilize credit ratings where available from the major credit rating agencies in our analysis. We have therefore assigned our rating categories to be comparable to those used by the major credit rating agencies. Credit risk profile of financing receivables by internally assigned ratings, consisted of the following (in thousands):

	September 30,		December 31,
Rating Categories	2011		2010
A/BBB	$	21,903	$	37,303
BB/B		236,813		225,533
B/CCC		92,197		80,222
Customers in bankruptcy		39,527		39,376
Other		16,371		721
Total financing receivables	$	406,811	$	383,155