Satellite Network and Other Equipment, Net

6 Months Ended

Jun. 30, 2021

Property Plant And Equipment [Abstract]

Satellite Network and Other Equipment, Net

5. Satellite Network and Other Equipment, Net

Satellite network and other equipment, net consisted of the following:

	June 30,			December 31,
	2021			2020
Land	$	381		$	381
Satellite network		187,877			200,279
Capitalized software		101,793			96,261
Computer hardware		7,697			7,351
Other		21,104			17,816
Assets under construction		16,024			12,745
		334,876			334,833
Less: accumulated depreciation and amortization		(218,622	)		(207,296	)
	$	116,254		$	127,537

During the quarters ended June 30, 2021 and 2020, the Company capitalized internal costs attributable to the design, development and enhancement of the Company’s products and services that have not yet been placed into service and internal-use software in the amounts of $3,722 and $4,371, respectively. During the six months ended June 30, 2021 and 2020, the Company capitalized internal costs attributable to the design, development and enhancement of the Company’s products and services that have not yet been placed into service and internal-use software in the amounts of $7,142 and $7,857, respectively.

Depreciation and amortization expense for the quarters ended June 30, 2021 and 2020 was $8,673 and $9,225, respectively, including amortization of internal-use software of $913 and $726, respectively. Depreciation and amortization expense for the six months ended June 30, 2021 and 2020 was $17,737 and $19,405, respectively, including amortization of internal-use software of $1,867 and $1,465, respectively.

For the quarters ended June 30, 2021 and 2020, $3,895 and $4,188 of depreciation and amortization expense, respectively, relate to cost of services and $373 and $521, respectively, relate to cost of product sales, as these assets support the Company’s revenue generating activities. For the six months ended June 30, 2021 and 2020, $8,282 and $8,467 of depreciation and amortization expense, respectively, relate to cost of services and $724 and $1,030, respectively, relate to cost of product sales, as these assets support the Company’s revenue generating activities.

As of June 30, 2021 and December 31, 2020, assets under construction primarily consisted of costs associated with acquiring, developing, enhancing and testing software and hardware for internal and external use that have not yet been placed into service.

In October 2018, the Company briefly lost communication with one OG2 satellite. This satellite remained under the Company’s operational control while its engineering team was developing new software in an attempt to regain this satellite’s messaging and/or AIS capability. In November 2020, the Company again lost communication with this OG2 satellite and while the Company briefly regained communication with it in February 2021, the Company has not reestablished communication with this OG2 satellite since February 2021.

On April 27, 2021, the Company’s Audit Committee of the Board of Directors concluded, based on management’s recommendation and the information provided by the investigative team, that a non-cash impairment charge of $6,656 should be recorded as a recognized subsequent event in accordance with FASB ASC Topic 855 “Subsequent Events” to write off the net book value of this OG2 satellite in the quarter ended March 31, 2021 and decreased satellite network and other equipment by $13,187 and associated accumulated depreciation by $6,531 to remove the asset as of March 31, 2021. The impairment charge is reflected in the accompanying condensed consolidated financial statements. No amount of the impairment charge represents a cash expenditure.

ORBCOMM Inc. 10-Q