Contracts-in-Process and Long-Term Receivables

6 Months Ended

Jun. 30, 2012

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

Contracts-In-Process and Long-Term Receivables

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

Contracts-in-Process

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

	June 30, 2012			December 31, 2011
Contracts-in-Process:
Amounts billed	$	172,054		$	107,920
Unbilled receivables		51,520			51,341
		223,574			159,261
Billed and unbilled receivables classified as assets held for sale		(223,574	)		—
Contracts-in-process, as reported	$	—		$	159,261

As of June 30, 2012 and December 31, 2011, billed receivables were reduced by an allowance for doubtful accounts of $0.2 million. The allowance as of June 30, 2012 was included in assets held for sale.

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.

Long-Term Receivables

Billed receivables relating to long-term contracts are expected to be collected within one year. As of December 31, 2011, we classified 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 11).

Receivable balances related to satellite orbital incentive payments, deferred billings and the Telesat consulting services fee (see Note 20) as of June 30, 2012 and December 31, 2011 are presented below (in thousands):

	June 30, 2012			December 31, 2011
Orbital receivables	$	364,669		$	354,852
Deferred receivables		4,690			1,973
Telesat consulting services receivable		22,311			20,700
		391,670			377,525
Less: current portion included in contracts-in-process		(17,124	)		(14,837	)
Long-term receivables		374,546			362,688
Long-term receivables classified as assets held for sale		(352,235	)		—
Long-term receivables, as reported	$	22,311		$	362,688

Long-term receivables as reported of $22.3 million as of June 30, 2012 represents fees from Telesat for consulting services.

Financing Receivables

The following summarizes the age of financing receivables that have a contractual maturity of over one year as of June 30, 2012 (in thousands):

	Total			Unlaunched			Launched			Financing Receivables Subject To Aging			Current			90 Days  or Less		More Than 90 Days
Satellite Manufacturing:
Orbital Receivables
Long term orbitals	$	347,545		$	153,603		$	193,942		$	193,942		$	193,942		$	—	$	—
Short term unbilled		12,477			—			12,477			12,477			12,477			—		—
Short term billed		4,647			—			4,647			4,647			4,647			—		—
		364,669			153,603			211,066			211,066			211,066			—		—
Deferred Receivables		4,690			—			—			4,690			4,690			—		—
Consulting Services:
Receivables from Telesat		22,311			—			—			22,311			22,311			—		—
		391,670			153,603			211,066			238,067			238,067			—		—
Contracts-in-Process:
Unbilled receivables		39,043			39,043			—			—			—			—		—
Total financing receivables		430,713			192,646			211,066			238,067			238,067			—		—
Financing receivables classified as assets held for sale		(408,402	)		(192,646	)		(211,066	)		(215,756	)		(215,756	)		—		—
Financing receivables, as reported	$	22,311		$	—		$	—		$	22,311		$	22,311		$	—	$	—

The following summarizes the age of financing receivables that have a contractual maturity of over one year as of December 31, 2011 (in thousands):

	Total		Unlaunched		Launched		Financing Receivables Subject To Aging		Current		90 Days  or Less		More Than 90 Days
Satellite Manufacturing:
Orbital Receivables
Long term orbitals	$	340,015	$	141,518	$	198,497	$	198,497	$	198,497	$	—	$	—
Short term unbilled		11,370		—		11,370		11,370		11,370		—		—
Short term billed		3,467		—		3,467		3,467		1,084		—		2,383
		354,852		141,518		213,334		213,334		210,951		—		2,383
Deferred Receivables		1,973		—		—		1,973		1,973		—		—
Consulting Services:
Telesat receivables		20,700		—		—		20,700		20,700		—		—
		377,525		141,518		213,334		236,007		233,624		—		2,383
Contracts-in-Process:
Unbilled receivables		39,971		39,971		—		—		—		—		—
Total financing receivables	$	417,496	$	181,489	$	213,334	$	236,007	$	233,624	$	—	$	2,383

Billed receivables of $167.4 million and $104.5 million as of June 30, 2012 and December 31, 2011, respectively (not including billed orbital receivables of $4.6 million and $3.5 million as of June 30, 2012 and December 31, 2011, 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 $153.6 million and $141.5 million as of June 30, 2012 and December 31, 2011, 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 $39.0 million and $40.0 million as of June 30, 2012 and December 31, 2011, 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. All unbilled receivables as of June 30, 2012 are included in assets held for sale in our condensed consolidated balance sheet.

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 by internally assigned ratings, consisted of the following (in thousands):

Rating Categories	June 30, 2012			December 31, 2011
A/BBB	$	41,766		$	41,607
BB/B		285,163			246,373
B/CCC		105,161			94,156
Customers in bankruptcy		—			39,307
Other		(1,377	)		(3,947	)
Total financing receivables	$	430,713			417,496

As of June 30, 2012, all financing receivables, except for $22.3 million included in rating category BB/B consisting of the receivable from Telesat for consulting services, were included in assets held for sale.