Iridium World Communications Ltd, et al. – ‘424B4’ on 1/25/99

As of:  Monday, 1/25/99   ·   Accession #:  950133-99-162   ·   File #s:  333-65559, -01

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Prospectus   —   Rule 424(b)(4)
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 1: 424B4       Prospectus                                           156    796K 

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                                                FILED PURSUANT TO RULE 424(b)(4)
                                                 REGISTRATION FILE NO. 333-65559

PROSPECTUS                                                                      

7,500,000 SHARES

[IRIDIUM LOGO]
IRIDIUM WORLD COMMUNICATIONS LTD. 
CLASS A COMMON STOCK

----------------------

The sole business of Iridium World Communications Ltd. is acting as a 
member of Iridium LLC. Accordingly, this prospectus focuses on the business of  
Iridium LLC.                                                                    

  Iridium World Communications Ltd. will receive the net proceeds from the
sale of the class A common stock and will invest those proceeds in Iridium LLC. 
The U.S. underwriters will offer 6,000,000 shares in the United States and      
Canada and the international managers will offer 1,500,000 shares outside the   
United States and Canada. The class A common stock is quoted on the Nasdaq      
National Market under the symbol IRIDF. The last reported sale price of the     
class A common stock on January 21, 1999 was $37 3/8 per share.                 

   SEE "RISK FACTORS" BEGINNING ON PAGE 15 TO READ ABOUT CERTAIN FACTORS YOU
SHOULD CONSIDER BEFORE BUYING SHARES OF CLASS A COMMON STOCK.                   

----------------------

                                                                [Download Table]

                                                              PER                
                                                             SHARE      TOTAL    
                                                             ------     -----    
                                                                                 
Public Offering Price....................................... $33.50  $251,250,000
Underwriting Discount....................................... $ 1.18    $8,850,000
Proceeds, before expenses, to Iridium World Communications                       
  Ltd....................................................... $32.32  $242,400,000

    The U.S. underwriters may also purchase up to an additional 900,000 shares
of class A common stock at the public offering price, less the underwriting     
discount, within 30 days from the date of this prospectus to cover              
over-allotments. The international managers may similarly purchase up to an     
aggregate of an additional 225,000 shares of class A common stock.              

 Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if the 
prospectus is truthful or complete. Any representation to the contrary is a     
criminal offense.                                                               

    The shares of class A common stock will be ready for delivery in New York,
New York on or about January 27, 1999.                                          

----------------------

MERRILL LYNCH & CO.                                                             

GOLDMAN, SACHS & CO.                                        

NATIONSBANC MONTGOMERY SECURITIES LLC   

SALOMON SMITH BARNEY

                        SOUNDVIEW TECHNOLOGY GROUP
----------------------

The date of this prospectus is January 21, 1999.

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[PHOTO-PICTURES OF KYOCERA AND MOTOROLA PHONES AND PAGERS]

A DIFFERENT KIND OF 

GLOBAL                                                                
REACH                                                           

The Iridium satellite telephone combines                              
unprecedented mobility with coverage that takes                       
you virtually anywhere around the globe.                              

THE IRIDIUM TELEPHONE                                                           
BY MOTOROLA                                                                     

The Iridium "multi-mode"phone by Motorola doubles as                  
a satellite or cellular phone. Iridium World Roaming                  
Service customers can move between local networks by                  
inserting different Cellular Cassettes(TM) - each one com-            
patible with a cellular protocol. Cellular Cassettes cur-             
rently cover GSM 900 and CDMA/AMPS/N-AMPS 800                         
standards. Outside cellular coverage, the Iridium phone               
connects Iridium World Satellite Service customers to                 
the Iridium satellite network.                                        

THE IRIDIUM TELEPHONES                                                          
BY KYOCERA                                                                      

The Kyocera Iridium "multi-mode" phone is expected to provide the     
 versatility of using either a cellular network or the Iridium satellite
network. Within cellular coverage areas, Iridium World Roaming Service
customers can use a Kyocera cellular (PDC, CDMA 800, GSM 900, or AMPS)
     phone. Outside cellular coverage, Iridium World Satellite Service customers
     are expected to be able to snap the Kyocera cellular phone into the Iridium
satellite attachment unit and be connected to the Iridium satellite   
 network. Iridium World Satellite Service customers also are expected to
have the option of a Kyocera satellite-only phone.                    

THE IRIDIUM PAGERS                                                              
BY MOTOROLA AND KYOCERA                                                         

Pairing an Iridium phone with the Iridium pager creates a             
flexible global communications package that picks up mes-             
sages worldwide. The Motorola and Kyocera pagers can                  
receive alphanumeric messages of up to 200 characters in              
any one of 19 languages, and numeric messages of up to 20             
digits virtually anywhere in the world.                               

THE IRIDIUM NAME AND LOGO ARE TRADEMARKS AND SERVICE MARKS OF IRIDIUM           

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TABLE OF CONTENTS 

                                                                [Download Table]

                                                              PAGE
                                                              ----
                                                                  
Ownership of Iridium LLC....................................    4 
Summary.....................................................    5 
Where You Can Find More Information.........................   14 
Risk Factors................................................   15 
Use of Proceeds.............................................   40 
Price Range of Common Stock and Dividend Policy.............   40 
Dilution....................................................   41 
Capitalization..............................................   44 
Selected Financial Data.....................................   46 
Management's Discussion and Analysis of Financial Condition       
  and Results of Operations.................................   48 
Business....................................................   57 
Iridium's Investors and Principal Service Territories.......   70 
Management of Iridium and IWCL..............................   75 
Certain Relationships and Related Transactions of Iridium...   81 
Certain Regulations that Affect Iridium.....................   82 
Description of Capital Stock................................   89 
Relationship Between IWCL and Iridium.......................   93 
Tax Considerations..........................................   96 
Shares Eligible for Future Sale.............................   99 
Underwriting................................................  103 
Validity of the Class A Common Stock........................  106 
Experts.....................................................  106 
Glossary....................................................  A-1 
Index to Financial Statements...............................  F-1 

------------------------

FORWARD LOOKING STATEMENTS

Iridium LLC is transitioning from a development stage company into an 
operating company. Accordingly, many statements contained in, or incorporated by
reference in, this prospectus are forward looking. Examples of such statements  
include Iridium LLC's expectations about (i) its operations, (ii) its revenues, 
(iii) its markets, (iv) the technical capabilities of the Iridium system, (v)   
its funding needs, (vi) its funding sources, (vii) its prospects, (viii)        
regulatory matters, (ix) the pricing of its services, (x) the availability and  
distribution of its phones and pagers, (xi) its competitors and their services  
and (xii) the actions of its equipment suppliers', gateway operators', service  
providers' and roaming partners. Forward looking statements are inherently      
predictive and speculative and we cannot assure you that any forward looking    
statements will prove to be correct. Actual results and developments are likely 
to be different, and may be materially different, from those expressed or       
implied by forward looking statements. In particular, forward looking statements
are based on a number of assumptions about future events, including the         
assumption that there will be a sufficient number of customers for, and usage   
of, the Iridium system to generate revenues in the amounts and at the times     
anticipated by Iridium. In reviewing the information contained in, or           
incorporated by reference in, this prospectus (including the forward looking    
statements) you should recognize that Iridium has no meaningful operating       
history and must generate substantial revenues to satisfy its funding           
requirements and, accordingly, there can be no assurance that Iridium will ever 
be profitable. See "Risk Factors" for a discussion of various factors which,    
among others, could result in the forward looking statements proving to be      
inaccurate.                                                                     
------------------------

  You should rely only on the information contained in, or incorporated by
reference in, this prospectus. We have not, and the U.S. underwriters and       
international managers have not, authorized any other person to provide you with
different information. If anyone provides you with different or inconsistent    
information, you should not rely on it. We are not, and the U.S. underwriters   
and international managers are not, making an offer to sell these securities in 
any jurisdiction where the offer or sale is not permitted.                      

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OWNERSHIP OF IRIDIUM LLC

The sole business of Iridium World Communications Ltd., or "IWCL", is 
acting as a member of Iridium LLC. Accordingly, this prospectus focuses on the  
business of Iridium LLC. References to "Iridium" include Iridium LLC and its    
direct and indirect subsidiaries unless the context otherwise requires. For a   
description of the relationship between IWCL and Iridium, see "Relationship     
Between IWCL and Iridium".                                                      

IWCL will receive the net proceeds from the sale of the class A common
stock and will use all of the net proceeds to purchase newly issued class 1     
membership interests in Iridium. Class 1 membership interests are analogous to  
common equity in Iridium with respect to voting and priority.                   

                                                                [Download Table]
                                                                                  
       IRIDIUM WORLD                            IRIDIUM'S                         
COMMUNICATIONS LTD. ("IWCL")             20 STRATEGIC INVESTORS                   

- issuer of the class A common stock  - primarily providers of wireless           
- has no business other than its        telecommunications services and           
  ownership and participation in the    equipment, satellite systems and satellite
  management of Iridium LLC             launch services                           

 IRIDIUM LLC ("Iridium")

-   issuer of class 1 interests   
-   owner of Iridium Operating LLC

IRIDIUM OPERATING LLC   

-   owner and operator of the Iridium System  

  At the completion of the U.S. and international offerings, collectively,
the "Offerings", IWCL will own approximately 13.2% of the outstanding class 1   
interests in Iridium (13.9% if the U.S. underwriters' and international         
managers' over-allotment options are exercised in full), with the remaining     
approximately 86.8% (86.1% if the U.S. underwriters' and international managers'
over-allotment options are exercised in full) owned by Iridium's 20 strategic   
investors. IWCL's percentage ownership interest in Iridium may be reduced as a  
result of outstanding rights of Iridium's strategic investors and others to     
purchase additional common equity interests in Iridium. See "Dilution".         

 IWCL is a Bermuda company, incorporated in 1996 under the Companies Act
1981 of Bermuda. Iridium is a Delaware limited liability company, formed in 1996
under the Delaware Limited Liability Company Act. IWCL's offices in Bermuda are 
located at Clarendon House, 2 Church Street, Hamilton, and IWCL's and Iridium's 
executive offices in the United States are located at 1575 Eye Street, N.W.,    
Washington, D.C. 20005.                                                         

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SUMMARY 

   The following information may not contain all the information that may be
important to you. Before making an investment decision, you should read this    
entire prospectus, as well as the documents incorporated by reference herein.   
Unless indicated otherwise, the information contained in this prospectus is     
presented as of December 15, 1998 and assumes that the U.S. underwriters' and   
international managers' over-allotment options are not exercised. All references
to "we" in this prospectus mean IWCL and Iridium unless the context otherwise   
requires. See the Glossary included as Annex A hereto for the definitions of    
certain terms used in this prospectus.                                          

IRIDIUM 

  Iridium is the first global wireless telecommunications company. Iridium
offers its customers the ability to make and receive phone calls and receive    
pages virtually anywhere in the world. Iridium accomplishes this by providing   
access to the Iridium satellite constellation as well as the world's cellular   
networks -- all with one phone, one phone number and one customer bill. Iridium 
believes it will be the only wireless telecommunications company in operation   
well into the year 2000 that will be able to offer this comprehensive global    
communications service.                                                         

Iridium commenced commercial phone service on November 1, 1998 and    
commercial paging service on November 15, 1998. Over the past 18 months, Iridium
has successfully launched, deployed and programmed over 75 satellites (including
orbiting spares). Iridium's satellites now orbit the Earth in a constellation   
that provides 24 hours per day satellite phone and paging service to virtually  
anywhere in the world.                                                          

SERVICE OFFERINGS                                                               

  Iridium's strategy is to be the total mobile communications solution for
its target markets by offering flexible service packages that allow customers to
conveniently select the most attractive telecommunications alternative anywhere 
in the world they travel. Iridium World Satellite Service is designed for       
customers who need to receive or make phone calls in areas not currently served 
by cellular service. Iridium World Roaming Service is designed for customers who
travel to areas where their "home" cellular service will not support roaming,   
including areas served by cellular networks that use electronic languages, or   
"protocols", that are not compatible with their home network's protocol. Iridium
World Page Service offers the ability to receive a message virtually anywhere in
the world. The Iridium World Calling Card provides customers with a cost-       
effective means of accessing land-line services while traveling. By packaging   
these services in various combinations, Iridium can meet the diverse needs of   
its customers whether they travel to remote parts of the globe or to areas      
served by cellular networks or both.                                            

Iridium World Satellite Service                                                 

 Iridium's satellites provide phone service to virtually anywhere on the
surface of the Earth where Iridium World Satellite Service is authorized.       
Iridium World Satellite Service is available in more than 125 countries and     
territories. Iridium's goal is for Iridium World Satellite Service to be        
available in virtually all countries and territories. As of December 31, 1998,  
Iridium had approximately 3,000 Iridium World Satellite Service customers.      

    Iridium World Satellite Service is a complement to, not a replacement for,
cellular service. The availability of cellular service is limited by the        
geographic coverage of cellular systems. Iridium World Satellite Service is not 
geographically constrained and, accordingly, extends mobile phone access to     
areas not covered by cellular service. With a dual mode satellite/cellular      
phone, or two separate phones, a customer can travel the globe and receive or   
make phone calls from virtually anywhere in the world, including remote and     
mid-ocean areas.                                                                

Iridium does not expect its customers to use Iridium World Satellite  
Service where cellular services are available, because Iridium satellite voice  
service is priced significantly higher than most cellular services and because  
Iridium satellite voice service does not work as well as cellular services      
within buildings and in urban areas where buildings are densely spaced. Although
Iridium customers should not expect satellite-based voice                       

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services to be reliable in these environments, cellular and land-line services  
are typically available in these areas, and Iridium provides its customers with 
the ability to access land-line service, cellular service and satellite service 
using the same phone number and customer bill.                                  

Iridium World Roaming Service                                                   

  Iridium World Roaming Service permits subscribers to roam among cellular
networks that have roaming agreements with Iridium. Iridium intends to create   
the broadest global cellular roaming service available. Iridium has entered into
roaming agreements with more than 160 roaming partners and has integrated more  
than 55 of those partners (including cellular networks in more than 30 countries
and territories) with the Iridium system. Iridium's business plan currently     
calls for roaming agreements covering cellular networks in more than 150        
countries and territories to be integrated with the Iridium system by 2002.     

In providing Iridium World Roaming Service, Iridium acts either as the
customer's "home" system or as an interface between the visited cellular network
and the customer's home network when the visited and home networks use differing
protocols (e.g., IS-41 in North America and GSM in Europe). Iridium World       
Roaming Service customers who travel between places that are served by different
wireless protocols can place calls and can be reached on one phone number by    
using either a multi-mode phone that is compatible with multiple protocols or a 
combination of cellular phones, one for each protocol.                          

Iridium World Page Service                                                      

   Iridium is the first company to offer global paging to a belt-worn pager.
Iridium offers global paging both as a stand-alone service and bundled with its 
voice service. The Iridium pager has significantly greater in-building          
penetration than Iridium's satellite-based voice services and can receive       
alphanumeric messages of up to 200 characters in any one of 19 languages and    
numeric messages of up to 20 digits. Iridium World Page Service customers can be
paged in over 200 countries and territories and onboard aircraft.               

Iridium World Calling Card                                                      

    The Iridium World Calling Card adds land-line access to Iridium's array of
service offerings that can be linked by a single customer bill. The calling card
also provides discount voice mail retrieval for Iridium World Satellite Service 
customers. Iridium believes its calling card rates are competitively priced with
other international calling card services. Iridium World Calling Card Service is
available in more than 55 countries and territories.                            

Iridium Aeronautical Service                                                    

Iridium intends to introduce satellite aeronautical phone service to  
private and commercial aircraft by the end of 1999. In addition, on December 22,
1998, Iridium agreed to acquire Claircom Communications Group, Inc., a wholly   
owned subsidiary of AT&T Wireless Services, Inc. and Rogers Cantel Inc., which  
currently provides inflight phone service (generally under the AT&T brand) on a 
total of approximately 1,750 commercial and executive aircraft. Upon completion 
of the acquisition, Iridium intends to brand this service with the Iridium name.
This proposed acquisition is subject to regulatory approval and other           
conditions.                                                                     

TARGET MARKETS                                                                  

     Iridium's service offerings are primarily designed for customers who travel
frequently and place significant value on continuous communications access.     
Iridium has conducted extensive market research and believes there is a         
significant market of companies and individuals who need mobile wireless        
services when they travel and are willing to pay for the flexibility and        
virtually global coverage of Iridium's services.                                

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   Iridium's marketing and distribution efforts are focused on five types of
customers and Iridium packages its services in different combinations to match  
the needs of each of these target markets:                                      

 -  GLOBAL TRAVELERS -- People who travel extensively outside their home
       country and cellular coverage area and want one flexible, comprehensive
  wireless service while traveling (candidates for all Iridium World
Services);                                                      

   -  INTERNATIONAL URBAN TRAVELERS -- People who frequently travel to areas
       served by cellular networks that use different protocols but who rarely
       travel outside cellular coverage (candidates for Iridium World Roaming,
Iridium World Page and Iridium World Calling Card Services);    

   -  INDUSTRIAL USERS -- International companies engaged in businesses such
      as oil and gas exploration, mining, shipping, power generation and the
   media, whose employees are stationed in, or travel to, remote areas
     outside cellular coverage (candidates for Iridium World Satellite and
Iridium World Page Services);                                   

-  PUBLIC SECTOR USERS -- Governments, multilateral development       
    institutions and disaster relief and humanitarian organizations that
 need reliable communications anytime and anywhere (candidates for
Iridium World Satellite and Iridium World Page Services); and   

-  IN-COUNTRY USERS -- People who live in or travel to countries with 
    incomplete or overburdened cellular coverage (candidates for Iridium
World Satellite and Iridium World Page Services).               

MARKETING, DISTRIBUTION AND PRICING                                             

    Iridium's marketing strategy is to be the premier brand in global wireless
communications services. Iridium believes that its principal target             
markets -- Global Travelers, International Urban Travelers and Industrial       
Users -- can be accessed through established marketing channels. Iridium        
believes focusing on these market segments gives it an advantage compared to    
mobile satellite systems targeting individuals in remote areas where marketing  
opportunities and distribution channels are limited. Iridium is striving to     
establish a global brand identity through a coordinated and comprehensive global
marketing strategy. Iridium coordinates with its gateway partners to determine  
the optimum allocation of marketing expenditures and engages in direct marketing
to certain markets, including the utility, oil and gas, mining and maritime     
industries.                                                                     

Iridium's distribution strategy reflects its role as a wholesaler of  
Iridium services. The retail distribution of Iridium services generally takes   
place through Iridium's gateway operators, and is primarily designed to utilize 
existing wireless retail distribution channels. Iridium's gateway operators     
distribute Iridium services through their own distribution channels or through, 
or in conjunction with, one or more existing wireless service providers         
(including Iridium World Roaming Service roaming partners). As of December 31,  
1998, Iridium and its gateway operators had agreements with more than 300 such  
service providers and had integrated more than 60 of those service providers.   
All Iridium service providers have primary responsibility for marketing Iridium 
services within their territories in accordance with marketing policies and     
programs established by Iridium and the gateway operators. In addition, Iridium 
service providers are responsible for billing and collection and share customer 
service responsibilities with Iridium. Iridium provides centralized customer    
service principally through its three global customer care centers, which       
operate 24 hours per day, seven days a week and support 13 languages.           

  Iridium's initial marketing efforts have yielded indications of interest
that Iridium believes are substantial and encouraging. However, Iridium phones  
and pagers are an essential component of Iridium's satellite services and,      
accordingly, Iridium can only add new Iridium World Satellite Service and       
Iridium World Page Service customers to the extent that phones and pagers are   
available for customer use. As of December 31, 1998, Motorola had produced      
approximately 35,000 phones and was producing phones at a rate of approximately 
1,000 per day. Late in 1998, Motorola began commercial shipments of cellular    
cassettes, which provide dual mode (satellite/cellular) capability for          
Motorola's phones. Commercial shipments of Kyocera phones are on hold because   
test results have not yet met Iridium's quality standards for commercial use.   
Iridium expects Kyocera phones will be approved for commercial shipment in the  
first quarter of 1999. An                                                       
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aggregate of approximately 3,500 Motorola and Kyocera pagers have been produced 
as of December 31, 1998, and aggregate production capacity was approximately    
8,000 pagers per month. In addition, once phones and pagers are produced, they  
must be distributed to service providers before a new customer can be added.    
Distribution of customer equipment to certain parts of the world can require    
substantial time. Iridium believes that one of its most significant challenges  
is ensuring that phones and pagers are produced in sufficient quantities and are
timely distributed to the various parts of the world necessary to satisfy the   
demand for Iridium's satellite-based services.                                  

   Iridium's wholesale pricing strategy for its voice services is similar to
the prevailing pricing structure for traditional cellular calls. Prices for     
cellular calls generally reflect two components -- a charge based on the        
land-line "dial-up" rate for a comparable call (primarily the long distance     
charges) and a mobility premium for the convenience of wireless service         
(including any roaming charges). Pricing for both Iridium World Satellite       
Service and Iridium World Roaming Service is based on this structure. For       
international Iridium World Satellite Service calls, which Iridium expects will 
constitute the majority of calls over the Iridium satellite system, the         
"dial-up" rate component is designed to approximate the rates for comparable    
land-line point-to-point international long distance calls.                     

  In addition to airtime charges based on the "dial-up" rate plus mobility
premium, Iridium subscribers generally pay a monthly fee in the same manner that
cellular customers pay monthly charges. Currently, Iridium paging subscribers   
pay a fixed monthly subscription fee for up to 200 pages. The monthly paging    
subscription fee is discounted for persons who are also subscribers to Iridium  
voice services.                                                                 

THE IRIDIUM SYSTEM                                                              

Iridium's ability to provide its services, either individually or in  
various packages, is derived from the unique capabilities of the Iridium system.
The Iridium system has four principal components:                               

     -  THE SPACE SEGMENT, which includes Iridium's 66 low earth orbit satellite
   constellation (plus orbiting spares) and the related ground control
facilities;                                                     

-  THE 12 GROUND STATIONS OR "GATEWAYS", which link the satellites to 
land-based communications systems;                              

  -  IRIDIUM PHONES, PAGERS AND SIM CARDS, which provide Iridium customers
        with mobile access to the space segment and land-based cellular systems;
and                                                             

-  IRIDIUM'S LAND-BASED INTERPROTOCOL ROAMING INFRASTRUCTURE, which   
  facilitates roaming among land-based cellular systems -- including
systems that use different protocols -- and the space segment.  

Motorola, Inc., a leading international provider of wireless systems, 
phones and pagers and other electronic equipment, designed, constructed and     
currently operates the Iridium system. Motorola is also the principal strategic 
investor in Iridium. Iridium's 19 other strategic investors include leading     
wireless telecommunications service providers from around the world.            

COMPETITIVE STRENGTHS                                                           

  Iridium intends to achieve its objective of being the one source for the
mobile communications needs of its target markets by capitalizing on the        
following competitive strengths:                                                

 -  FIRST-TO-MARKET ADVANTAGE. Iridium believes that it will be the only
        wireless communications system in operation well into the year 2000 that
 will be able to offer global satellite phone and paging services.
        Iridium intends to use this advantage to establish itself as the premier
mobile telecommunications provider for its target markets.      

-  GLOBAL COVERAGE. The reach of Iridium World Satellite Service and  
        Iridium World Page Service is not limited by the customer's proximity to
        a gateway. Customers generally have worldwide wireless coverage wherever
    Iridium's satellite services are authorized, including mid-ocean and
remote areas. Iridium believes this feature makes:              

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  -  Iridium World Satellite Service a more attractive complement to
       cellular services than many other satellite-based systems because
         Iridium's service can cover virtually every area of the world where
cellular service is unavailable.                          

     -  Iridium World Page Service more valuable to people who travel than
           today's land-based paging services which generally are geographically
limited.                                                  

     -  INTERPROTOCOL CELLULAR ROAMING. Iridium believes that the ability to add
        worldwide cellular roaming makes its satellite voice and paging services
    more attractive. Iridium is assembling the broadest cellular roaming
service available.                                              

   -  FLEXIBLE SERVICE PACKAGES WITH ONE PHONE NUMBER AND ONE CUSTOMER BILL.
       With one phone number and one customer bill, customers can conveniently
     select the most attractive telecommunications alternative anywhere in
        the world they travel. Iridium has a unique ability to provide customers
access to multiple satellite- and land-based telecommunications 
   services. Iridium is the only company that currently offers global,
        mobile satellite phone and paging services. It also is one of only a few
  companies that offers international cellular roaming. All of these
      services and the Iridium World Calling Card can be linked by one phone
number and one customer bill.                                   

  -  INTERSATELLITE LINKS. The Iridium system is configured to allow voice
      and paging traffic to be passed from satellite-to-satellite across the
  constellation. Iridium believes these intersatellite links provide
        several advantages over satellite systems where traffic is routed from a
      phone to a satellite and then immediately back to a ground station (or
       from a ground station to a satellite and then immediately to a phone or
pager). On comparable international long distance calls, Iridium
        generally expects to capture a greater portion of the total price of the
        call because the portion of the call carried by the Iridium system, from
       satellite-to-satellite, can be longer than the portion of the call that
     a competing system without satellite links would be able to carry. In
  addition, intersatellite links provide more flexibility in routing
  traffic across the system and support global operations with fewer
gateways.                                                       

-  IRIDIUM'S STRATEGIC INVESTORS. Iridium's strategic investors have  
 collectively invested, or committed to invest, approximately $3.7
        billion in Iridium, including equity, commitments to purchase additional
       equity, debt, guarantees and commitments to provide guarantees. Iridium
  believes its strategic investors that have experience in providing
   telecommunications services will use their regulatory and marketing
       experience, distribution channels and other telecommunications-oriented
resources to distribute Iridium's services.                     

 -  GLOBAL CUSTOMER CARE. Iridium has three global customer care centers
 that operate 24 hours per day, seven days per week and support 13
     languages. Iridium believes that customer retention depends upon high
   quality customer service, and that Iridium's commitment to customer
service will distinguish it from many of its competitors.       

     Iridium is transitioning from a development stage company into an operating
company and has significant indebtedness and no meaningful operating history    
and, accordingly, will face many challenges. Iridium's principal challenge will 
be generating sufficient revenues from operations to fund its operations and    
repay its indebtedness. See "Risk Factors" for a description of some of the     
factors that could adversely affect Iridium's ability to generate revenues from 
operations.                                                                     

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ESTIMATED FUNDING REQUIREMENTS -- SOURCES AND USES OF FUNDS BY IRIDIUM          

In the fourth quarter of 1998, Iridium began the transition from a    
development stage company into an operating company and, as a result, the       
characteristics of its funding requirements are changing. Through year end 1998,
Iridium's funding requirements principally were driven by the cost of the       
initial development and construction of the Iridium system. In contrast, Iridium
expects that its future funding requirements will be driven principally by the  
costs of operating and maintaining the Iridium system and providing Iridium     
services.                                                                       

Sources and Uses of Funds Through Year End 1998                                 

   The following table summarizes Iridium's funding requirements, sources of
funds and uses of funds from July 29, 1993 (the inception of Iridium's          
predecessor) through December 31, 1998. You should read the notes accompanying  
this table and the more detailed information in "Management's Discussion and    
Analysis of Financial Condition and Results of Operations".                     

(DOLLARS IN MILLIONS) 

                                                                [Download Table]
                                             
SOURCES OF FUNDS                             
Secured bank facility(1)............   $  500
Motorola guaranteed bank                     
  facilities(1).....................      625
Vendor financing (O&M                        
  contract)(2)......................       86
Senior notes due 2005(3)............    1,380
14 1/2% senior subordinated notes            
  due 2006..........................      239
Series A class 2 interests..........       31
Outstanding class 1 interests.......    1,951
                                       ------
                                       $4,812
Deduct: cash balance at year end             
  1998..............................       10
                                       ------
     Total net sources..............   $4,802
                                       ======
USES OF FUNDS                                
Space system contract...............   $3,380
Terrestrial network development              
  contract..........................      226
O&M contract(2).....................       86
Business support systems and related         
  expenditures......................      242
Net interest and financing costs....      345
Operating expenses and working               
  capital...........................      523
                                       ------
     Total uses.....................   $4,802
                                       ======

---------------                                                                 
(1) On December 23, 1998, Iridium closed on three new bank credit facilities    
   providing for up to approximately $1.55 billion of borrowings: (i) a senior
secured credit facility in the amount of $800 million (the "secured bank
   facility") and (ii) two facilities guaranteed by Motorola -- a $475 million
term credit facility and a $275 million revolving credit facility       
(collectively, the "Motorola guaranteed bank facilities"). Iridium used 
approximately $682 million of the funds available under these new bank  
  facilities to repay its outstanding bank debt, of which approximately $410
    million was due to mature on December 31, 1998. Borrowings under the secured
  bank facility and the $475 million term portion of the Motorola guaranteed
  bank facilities mature on December 29, 2000 and the $275 million revolving
  portion of the Motorola guaranteed bank facilities matures on December 31,
2001. The secured bank facility is secured by, among other things,      
 substantially all of Iridium's assets and contains covenants that require
Iridium, among other things, to achieve certain revenue and subscriber  
    levels. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources -- Sources of  
Funding". Pursuant to a memorandum of understanding with Motorola (the  
   "Motorola MOU"), and a related compensation agreement (the "Motorola ARG"),
  Iridium is required to compensate Motorola with equity and cash for, among
other things, providing guarantees of Iridium's borrowings under the    
Motorola guaranteed bank facilities.                                    

(2) Iridium has entered into an operations and maintenance contract with        
 Motorola (the "O&M contract"), for the day-to-day management of the space
segment and Iridium expects the O&M contract to be Iridium's single most
significant use of funds during its initial operational stage. The O&M  
   contract is a fixed price contract (subject to certain adjustments) for the
operation and maintenance of the Iridium system. Payments under the O&M 
contract are expected to aggregate approximately $2.88 billion over the 
 initial five year term of the contract ending in November 2003. Under the
Motorola MOU, Motorola                                                  

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has agreed to permit Iridium to defer its obligations to pay up to an   
  aggregate of $400 million of payments until December 29, 2000. Iridium has
    agreed with Motorola to use its best efforts to obtain, on or before October
1, 1999, a bank credit agreement (which Motorola has agreed to guarantee
  pursuant to the Motorola MOU) to finance the payment of all such deferrals
by October 1, 1999. Pursuant to the Motorola ARG, Iridium is required to
    compensate Motorola with equity and cash for, among other things, permitting
Iridium to defer payments under the O&M contract and any guarantee of   
    borrowings by Iridium to finance such payments. See "Management's Discussion
  and Analysis of Financial Condition and Results of Operations -- Liquidity
and Capital Resources -- Sources of Funding".                           

(3) Net proceeds received directly or indirectly by Iridium from the offerings  
    of four separate series of senior notes, all of which have substantially the
    same terms (except for their respective interest rates) and are collectively
    referred to as the "senior notes". The senior notes mature on July 15, 2005.

Estimated Sources and Uses of Funds For 1999                                    

Iridium believes that it currently has sufficient external funding    
available to meet its expected peak funding requirements. Iridium expects to    
have available for 1999 aggregate sources of external funding of approximately  
$1.336 billion, after giving effect to the Offerings. Iridium expects that its  
cash needs for 1999 will be approximately $1.653 billion. Iridium expects that  
if its revenues from operations exceed the difference between its actual cash   
needs and its actual available sources of external funding (an estimated        
difference of approximately $317 million), Iridium will reduce the commitments  
of the lenders under its bank credit agreements. To the extent that Iridium's   
revenues do not exceed this difference, Iridium will need to seek additional    
financing.                                                                      

The following table summarizes Iridium's estimates of its funding     
requirements, sources of funds and uses of funds for 1999. You should read the  
notes accompanying this table and the more detailed information in "Management's
Discussion and Analysis of Financial Condition and Results of Operations".      

(DOLLARS IN MILLIONS) 

                                                                [Download Table]
                                             
SOURCES OF FUNDS                             
Cash balance at year end 1998.......   $   10
Additional amounts available under           
  the secured bank facility(1)......      300
Additional amounts available under           
  the Motorola guaranteed bank               
  facilities(1).....................      120
Additional vendor financing amounts          
  (O&M contract) or the O&M bank             
  facility(2).......................      314
Additional Motorola guaranteed bank          
  facility(3).......................      350
Net proceeds from the                        
  Offerings(4)......................      242
                                       ------
                                       $1,336
Required revenues from operations or         
  funds from other sources(5).......      317
                                       ------
     Total estimated sources........   $1,653
                                       ======
USES OF FUNDS                                
Space system contract...............       55
Terrestrial network development              
  contract(6).......................      130
O&M contract(2).....................      537
Business support systems and related         
  expenditures......................      100
Net interest and financing                   
  costs(7)..........................      391
Acquisition of Claircom(8)..........       26
Operating expenses and working               
  capital...........................      414
                                       ------
     Total estimated uses...........   $1,653
                                       ======

---------------                                                                 
(1) See note (1) to the table under "-- Sources and Uses of Funds Through Year  
End 1998".                                                              

(2) See note (2) to the table under "-- Sources and Uses of Funds Through Year  
End 1998". Iridium expects to finance the payment of approximately $400 
   million of deferred payments under the O&M contract by obtaining a new bank
credit facility guaranteed by Motorola by October 1, 1999.              

(3) Pursuant to the Motorola MOU, Motorola has committed to guarantee an        
additional $350 million of borrowings under a bank credit agreement,    
provided that Iridium requests such guarantee by October 1,             

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   1999 and that Iridium has complied with the terms of its various agreements
 with Motorola. Pursuant to the Motorola ARG, Iridium would be required to
    compensate Motorola with equity for providing such guarantee. See "Dilution"
    and "Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Liquidity and Capital Resources -- Sources of Funding".

(4) Assumes the U.S. underwriters' and international managers' over-allotment   
options are not exercised.                                              

(5) The secured bank facility contains covenants that require Iridium, among    
    other things, to achieve certain revenue levels, including having cumulative
accrued revenues of at least $470 million at September 30, 1999. See    
   "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources -- Sources of Funding".   

(6) No payments are expected to be due under the terrestrial network development
contract after year end 1999.                                           

(7) Based on the assumed interest payment obligations, interest rates and       
  borrowing levels and Iridium's estimates of related costs. Actual interest
and financing costs will depend upon applicable interest rates and the  
amount and timing of actual borrowings.                                 

(8) On December 22, 1998, Iridium entered into a stock purchase agreement with  
  AT&T Wireless Services, Inc., ATG I, Inc. and Rogers Cantel Inc., pursuant
   to which Iridium agreed to purchase all of the outstanding capital stock of
  Claircom Communications Group, Inc., a provider of in-flight phone service
  for commercial and executive aircraft, for an estimated aggregate price of
    approximately $65 million, consisting of approximately $25.6 million in cash
   to be paid at closing and approximately $39.4 million of nine-year notes of
Claircom that will bear interest at a rate of 8% per year but will not  
  require payments during the first two years -- interest accrued during the
   initial two-year period will be added to the principal amount of the notes.
  The closing of this purchase is subject to regulatory approval and certain
other conditions.                                                       

Estimated Funding Requirements and Sources of Funding After Year End 1999       

Iridium expects that its funding requirements for the operation of the
Iridium system for the two to three year period following year end 1999 will be 
based upon uses similar in type to those expected for 1999: the costs of        
operating and maintaining the Iridium system, including the O&M contract, and   
providing Iridium's services; working capital; interest expense; and financing  
costs. Following 1999, Iridium generally expects to fund these cash needs       
through revenues from operations. In addition, before December 29, 2000, Iridium
will be required to repay at least approximately $1.27 billion in bank debt.    
Iridium expects that on or prior to December 29, 2000, it will raise additional 
financing and, if available, use revenues from operations to repay such bank    
debt.                                                                           

Iridium's Estimates Are Forward Looking                                         

    All of the statements regarding Iridium's funding requirements, sources of
funds and uses of funds for 1999 and thereafter are forward looking. Actual     
results are likely to differ, and may differ materially, from the estimates in  
such statements. These estimates are based on a number of assumptions, including
Iridium's expectations about its ability to generate revenues from operating,   
and should be viewed in light of, among other things, the following facts: (i)  
Iridium has no meaningful history of operations or revenues and there is no     
operational service that provides a direct comparison to Iridium's services;    
(ii) Iridium's estimates assume, among other things, that Iridium will          
transition smoothly from a development stage company into an operating company  
and that there will be a sufficient number of customers for, and usage of, the  
Iridium system to generate revenues in the amounts and at the times anticipated 
by Iridium; (iii) the availability of the additional sources of funding Iridium 
expects to be able to use is not completely within Iridium's control and is     
conditioned on Iridium satisfying certain conditions; and (iv) Iridium faces    
many challenges and risks. It is likely that there would be a material adverse  
effect on Iridium if Iridium's actual funding requirements (net of revenues from
operations) significantly exceed its current estimates. See "Risk Factors" for  
further discussion of some of the factors that could cause actual results to    
differ materially from those expressed or implied by the following discussion.  

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THE OFFERINGS 

                                                        [Enlarge/Download Table]
                                                                                                    
Class A common stock offered by IWCL:                                                               
     U.S. offering.............................. 6,000,000 shares                                   
     International offering..................... 1,500,000 shares                                   
          Total................................. 7,500,000 shares                                   
Class A common stock of IWCL to be outstanding                                                      
  immediately after the Offerings............... 19,680,648 shares (1)                              
Iridium class 1 interests to be outstanding                                                         
  immediately after the Offerings............... 148,920,453 interests (1)                          
Iridium class 1 interests to be owned by IWCL                                                       
  immediately after the Offerings............... 19,701,273 interests (1)                           
Use of Proceeds................................. The net proceeds of the Offerings, including the   
                                                 net proceeds from any exercise of the U.S.         
                                                 underwriters' and international managers' over-    
                                                 allotment options, will be used by IWCL to purchase
                                                 class 1 interests in Iridium. Iridium expects to   
                                                 use the proceeds from such sale of the class 1     
                                                 interests for general corporate purposes, including
                                                 payments under the O&M contract. See "Use of       
                                                 Proceeds"                                          
Risk Factors.................................... See "Risk Factors" beginning on page 15 for a      
                                                 discussion of certain factors that should be       
                                                 considered by prospective investors in the class A 
                                                 common stock                                       
Voting Rights................................... All voting rights with respect to the affairs of   
                                                 IWCL, except as otherwise required by law, are     
                                                 vested in the holders of the class A common stock  
NASDAQ National Market Symbol................... IRIDF                                              

---------------                                                                 
(1) Based on class A common stock and class 1 interests outstanding on December 
15, 1998 and assumes the U.S. underwriters' and international managers' 
   over-allotment options are not exercised. If the over-allotment options are
   exercised in full, there would be 20,805,648 shares of class A common stock
and 150,024,828 class 1 interests outstanding (of which IWCL would own  
20,805,648 class 1 interests). IWCL's holdings reflect 20,625 shares of 
    class B common stock outstanding and 20,625 class 1 interests purchased from
  Iridium in respect of such shares. This amount does not give effect to the
issuance of any class 1 interests pursuant to options, warrants or      
convertible interests or pursuant to the reserve capital call. See      
"Dilution" and "Shares Eligible for Future Sale".                       

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WHERE YOU CAN FIND MORE INFORMATION 

  We file annual, quarterly and special reports and other information with
the SEC. These SEC filings are available to the public over the Internet at the 
SEC's web site at http://www.sec.gov. You may also read and copy any document we
file at the SEC's public reference rooms in Washington, D.C., New York, New York
and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further        
information on the public reference rooms.                                      

 The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by     
referring you to those documents. The information incorporated by reference is  
an important part of this prospectus, and information that we file later with   
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings made by us with  
the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act 
of 1934 until we and our related companies sell all of the securities that we   
have registered.                                                                

-  Annual Report on Form 10-K for the year ended December 31, 1997;   

  -  Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998;                           

 -  Current Reports on Form 8-K, filed November 4, 1998 and December 30,
1998; and                                                       

-  Registration Statement on Form 8-A, filed June 2, 1997.            

You may request a copy of these filings at no cost by writing or      
telephoning us at the following:                                                

Iridium World Communications Ltd.                                     
1575 Eye Street, NW                                                   
Washington, D.C. 20005                                                
Attention: F. Thomas Tuttle, Assistant Secretary, IWCL                
(202) 408-3800                                                        

  You should rely only on the information contained in, or incorporated by
reference in, this prospectus. We have not, and the U.S. underwriters and       
international managers have not, authorized anyone else to provide you with     
different information. We are not, and the underwriters are not, making an offer
of these securities in any state where the offer is not permitted. You should   
not assume that the information incorporated in this prospectus is accurate as  
of any date other than the date on the front of those documents.                

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RISK FACTORS

  An investment in the class A common stock offered hereby involves a high
degree of risk. Because the sole assets of IWCL are its class 1 interests and   
rights to purchase class 1 interests and the sole business of IWCL is           
participating in the management of Iridium, you should carefully consider the   
following risks of Iridium's business and of the class A common stock, together 
with the other information in, or incorporated by reference in, this prospectus,
prior to investing in the class A common stock.                                 

                                                        [Enlarge/Download Table]
                                                                                                  
RISK OF ERROR IN FORWARD LOOKING    Iridium is transitioning from a development stage company     
STATEMENTS                          into an operating company and has no meaningful operating     
                                    history. Accordingly, many statements contained in, or        
  Many of the statements in this    incorporated by reference into, this prospectus are forward   
  prospectus are forward looking    looking. Examples of these forward looking statements         
  and actual results may be         include the statements concerning Iridium's expectations      
  materially different from those   about its:                                                    
  expressed or implied by these     - operations;                                                 
  statements.                       - revenues;                                                   
                                    - markets;                                                    
  In particular, you should         - technical capabilities;                                     
  recognize that statements about   - funding needs;                                              
  the following topics are forward  - funding sources;                                            
  looking:                          - prospects;                                                  
  - Iridium's estimate that it has  - regulatory activities (including its ability to obtain or   
    sufficient external funding       maintain the authority to operate its satellite services in 
    available to meet its expected    virtually any country in the world);                        
    peak funding requirements;      - pricing of its services;                                    
  - Iridium's estimates of the      - availability and distribution of phones and pagers;         
    amount of its funding needs;    - competitors and their services; and                         
  - Iridium's expectations about    - equipment suppliers', gateway operators', service           
    its ability to obtain             providers' and roaming partners' actions.                   
    additional financing;                                                                         
  - Iridium's expectations about    Forward looking statements are inherently predictive and      
    its ability to generate         speculative and we cannot assure you that our forward         
    revenues from commercial        looking statements will prove to be correct. Actual results   
    operations; and                 and developments are likely to be different, and may be       
  - Iridium's expectations about    materially different, from those expressed or implied by      
    how much revenue it will        these statements. You should carefully review the other risk  
    generate from commercial        factors set forth herein for a discussion of some of the      
    operations.                     factors which could result in any forward looking statement   
                                    proving to be inaccurate.                                     
  The forward looking statements                                                                  
  are based on a number of          In particular, you should recognize that forward looking      
  assumptions and one or more of    statements are based on a number of assumptions about future  
  these assumptions is likely to    events, many of which are beyond Iridium's control. For       
  be incorrect.                     example, many of the statements in this prospectus assume     
                                    that Iridium will transition smoothly from a development      
                                    stage company into an operating company and assume among      
                                    other things, that:                                           
                                    - there will be a sufficient number of customers for, and     
                                      usage of, the Iridium system to generate revenues in the    
                                      amounts and at the times anticipated by Iridium (this       
                                      assumption is reflected in many of the forward looking      
                                      statements included in, or incorporated by reference in,    
                                      this prospectus, including the statements in                
                                      "Summary -- Estimated Funding Requirements -- Sources and   
                                      Uses of Funds by Iridium");                                 
                                    - the Iridium system will provide service acceptable to the   
                                      market and will meet all systems specifications set forth in
                                      its development contracts and will have service             
                                      characteristics across Iridium's various service offerings  
                                      that are at least as favorable as those that Iridium        
                                      expects;                                                    

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                                                                [Download Table]
                                                              
- there will be no increased costs under the development and  
  maintenance contracts for the Iridium system;               
- Motorola and Kyocera will manufacture, and Iridium and its  
  service providers will distribute, a sufficient number of   
  portable, hand-held phones and pagers for use with the      
  Iridium system on a timely basis, and Iridium will not      
  incur any significant additional expenses as a result of    
  any need to place orders for, or subsidize the sale of,     
  any Iridium phones and pagers;                              
- there will continue to be a sufficient number of            
  operational gateways to maintain the service quality and    
  system capacity Iridium expects;                            
- Iridium's satellite navigation software, communications     
  software and its business support systems software will     
  continue to function as expected under the various service  
  demands the Iridium system actually experiences;            
- Iridium will contract with, and integrate into its various  
  operations, a sufficient group of roaming partners to ensure
  that Iridium World Roaming Service meets Iridium's market   
  coverage expectations;                                      
- Iridium will contract with a sufficient number of service   
  providers to ensure effective marketing and distribution of 
  its services;                                               
- the operation of the Iridium system will not be impaired    
  by the loss of satellites or the need to put replacement    
  satellites in orbit and Iridium will not be required to     
  bear the costs of satellite replacement;                    
- in the various jurisdictions in which Iridium operates or   
  expects to operate, there will be no material change in     
  legislation or regulations or the administration thereof    
  that will have an adverse effect on the business of         
  Iridium, including Iridium's expectation that it will be    
  able to provide its services on a virtually global basis;   
- there will be no material adverse changes in any of         
  Iridium's existing material contracts or the ability of     
  Iridium's various contractors to perform their obligations  
  (including Motorola's ability to perform under the O&M      
  contract); and                                              
- the capacity of the Iridium system, as affected by, among   
  other things, spectrum allocation and customer usage        
  patterns, will meet or exceed Iridium's expectations.       

One or more of these assumptions is likely to be incorrect    
and, accordingly, actual results and developments are likely  
to be different, and may be materially different from those   
expressed or implied by any forward looking statements.       

Iridium does not intend to publish updates or revisions of    
the forward looking statements, including the projected       
financial information, included in this prospectus or the     
materials incorporated by reference in this prospectus or of  
this discussion of some of the factors that could cause       
actual results to differ from those expressed or implied in   
the forward looking statements.                               

Documents incorporated by reference in this prospectus        
contain information, including forward looking information,   
as of various dates. You are cautioned that these statements  
have not been revised to reflect subsequent events or         
circumstances after the date on which they were made.         

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                                                        [Enlarge/Download Table]
                                                                                                
IRIDIUM IS TRANSITIONING FROM A     Iridium is transitioning from a development stage company   
DEVELOPMENT STAGE COMPANY INTO AN   into an operating company. It is extremely important to     
OPERATING COMPANY; IRIDIUM HAS NO   Iridium's success that it effects this transition smoothly. 
MEANINGFUL REVENUES OR HISTORY OF   This will require Iridium to complete successfully a number 
OPERATIONS; IRIDIUM'S FUTURE        of complex tasks for the operation of Iridium's system while
REVENUES MAY NOT COVER ITS          simultaneously attracting customers and ensuring that they  
EXPENSES                            are satisfied with Iridium Services. Iridium has no         
                                    meaningful history of operations on which investors can     
                                    evaluate its performance and has no significant revenues. In
                                    addition, many of the services Iridium offers are new and   
                                    there is no operational service that provides a direct      
                                    comparison. Further, Iridium has accumulated significant    
                                    losses in the development and construction of the Iridium   
                                    system and expects to continue to accumulate significant    
                                    losses until it has substantial revenues from operations.   

  Iridium is a start-up company     Iridium has incurred significant indebtedness to fund the   
  with substantial debt and no      development and construction of the Iridium system. Until   
  meaningful operating history or   Iridium has substantial revenues from operations, it will   
  significant revenues.             rely on additional indebtedness to pay its expenses and to  
                                    make payments on its indebtedness. We cannot give you any   
                                    assurance about:                                            
                                    - Whether or when Iridium will have sufficient customers or 
                                      revenues to satisfy its funding requirements or the       
                                      covenants in its bank facilities and debt securities.     
                                    - Whether Iridium will ever be profitable.                  

RISK OF HIGHLY LEVERAGED CAPITAL    Iridium is a highly leveraged company and it expects to     
STRUCTURE                           incur substantial additional indebtedness, including        
                                    indebtedness that is secured by its assets. Iridium         
  Iridium has borrowed ap-          currently is not generating any meaningful revenues to fund 
  proximately $2.8 billion as of    its operations or repay its indebtedness. The amount of debt
  December 31, 1998 and expects to  needed to finance the Iridium system could be increased by  
  borrow a substantial amount of    one or more factors outside Iridium's control, including:   
  additional funds. Iridium is not  - the inability to generate revenues in the amount and      
  currently generating any mean-      within the time frame Iridium expects;                    
  ingful revenues to fund its       - cost increases for the construction or operation of the   
  operations or repay its in-         Iridium system; and                                       
  debtedness.                       - increases in applicable interest rates.                   

                                    Iridium's current and future debt service requirements could
                                    have important consequences on its business, including:     
                                    - limiting Iridium's ability to obtain additional financing;
                                    - reducing the amount of funds available for operations     
                                      because a substantial portion of Iridium's cash flow from 
                                      operations will be dedicated to the payment of principal  
                                      and interest on its indebtedness; and                     
                                    - increasing Iridium's sensitivity to adverse economic      
                                      conditions.                                               

IRIDIUM MAY BE UNABLE TO SATISFY    In the secured bank facility, Iridium has covenanted, among 
OR MAY BE ADVERSELY CONSTRAINED BY  other things, that, as of a series of dates beginning with  
THE COVENANTS IN ITS BANK           March 31, 1999, it will satisfy certain minimum revenue and 
FACILITIES AND DEBT SECURITIES      subscriber levels, including the conditions that:           
                                    - at March 31, 1999 it have cumulative cash revenues of at  
                                      least $4 million, cumulative accrued revenues of at least 
                                      $30 million, at least 27,000 Iridium World Satellite      
                                      Service subscribers and at least 52,000 total subscribers;

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                                                        [Enlarge/Download Table]
                                                                                            
                                - at June 30, 1999 it have cumulative cash revenues of at   
                                  least $50 million, cumulative accrued revenues of at least
                                  $150 million, at least 88,000 Iridium World Satellite     
                                  Service subscribers and at least 213,000 total            
                                  subscribers; and                                          
                                - at September 30, 1999 it have cumulative cash revenues of 
                                  at least $220 million, cumulative accrued revenues of at  
                                  least $470 million, at least 173,000 Iridium World        
                                  Satellite Service subscribers and at least 454,000 total  
                                  subscribers.                                              

If Iridium is unable to sat-    Other financial covenants in the secured bank facility      
isfy the covenants in the       require Iridium to comply with certain financial ratios as  
secured bank facility, the      of various dates, including maximum debt to total invested  
lenders under the secured bank  capital, maximum secured debt to earnings, maximum debt to  
facility generally would have   earnings and minimum interest expense to earnings. For      
the right to declare a default  Iridium to satisfy these covenants it will have to make a   
and could pursue various        timely and successful transition into an operating company  
remedies, including enforcing   and generate substantial demand for its services. While     
their security interests in     Iridium believes it will be able to satisfy these and the   
substantially all of the as-    other operations-based and financial covenants it is subject
sets of Iridium Operating LLC   to, various factors, including those discussed in this Risk 
(which include the Iridium      Factor section, could prevent Iridium from satisfying these 
system and represent            covenants. If Iridium is unable to satisfy the covenants in 
substantially all of            the secured bank facility, the lenders under the secured    
Iridium's assets) and Irid-     bank facility generally would have the right to declare a   
ium's investment in Iridium     default and could pursue various remedies, including        
Operating LLC.                  enforcing their security interests in substantially all of  
                                the assets of Iridium Operating LLC (which include the      
                                Iridium system and represent substantially all of Iridium's 
                                assets) and Iridium's investment in Iridium Operating LLC.  

                                In addition, Iridium's management is not able to make       
                                decisions freely about certain business matters because the 
                                secured bank facility, the Motorola guaranteed bank         
                                facilities and the indentures relating to its senior notes  
                                include certain covenants that, among other things, restrict
                                the ability of Iridium and its subsidiaries to:             
                                - dispose of assets;                                        
                                - incur additional indebtedness;                            
                                - incur guarantee obligations;                              
                                - prepay other indebtedness or amend other debt instruments;
                                - pay dividends;                                            
                                - create liens on assets;                                   
                                - make investments, loans or advances;                      
                                - make acquisitions;                                        
                                - engage in mergers or consolidations;                      
                                - change the business conducted by Iridium;                 
                                - make certain asset or stock dispositions; and             
                                - enter into certain transactions with affiliates and       
                                  related persons.                                          

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IRIDIUM MAY HAVE SIGNIFICANT        Iridium estimates that its cash funding requirements for      
ADDITIONAL FUNDING NEEDS            1999 will be approximately $1.65 billion and that following   
                                    1999 Iridium generally will fund its cash needs for the       
  Iridium's actual funding needs    operation and maintenance of the Iridium system and the       
  may exceed its estimates,         provision of its services through revenues from operations.   
  perhaps substantially, for a                                                                    
  number of reasons, including if   These estimates are forward looking and Iridium's actual      
  Iridium is unable to generate     funding requirements are likely to differ, and may differ     
  revenues in the amount and        materially, from these estimates. Iridium's estimated         
  within the time frame it expects  funding requirements should be viewed in light of the         
  or if Iridium has unexpected      following facts:                                              
  cost increases.                   - Iridium has no meaningful history of operations or          
                                      revenues and there is no operational service that provides a
                                      direct comparison to Iridium;                               
                                    - Iridium's estimates assume, among other things, that        
                                      Iridium will transition smoothly from a development stage   
                                      company into an operating company and that there will be a  
                                      sufficient number of customers for, and usage of, the       
                                      Iridium system to generate revenues in the amounts and at   
                                      the times anticipated by Iridium;                           
                                    - The availability of the additional sources of funding       
                                      Iridium expects to be able to use is not completely within  
                                      Iridium's control and is conditioned on Iridium satisfying  
                                      certain conditions; and                                     
                                    - Iridium faces challenges and risks.                         

                                    Iridium's estimated funding requirements do not reflect any   
                                    contingency amounts and may increase, perhaps substantially,  
                                    in the event Iridium is unable to generate revenues in the    
                                    amount and within the time frame it expects or if Iridium     
                                    has unexpected cost increases. Many factors, including the    
                                    factors discussed in this section, could adversely affect     
                                    Iridium's ability to generate revenues and its costs of       
                                    operations.                                                   

                                    If Iridium's actual funding requirements significantly        
                                    exceed its current estimates, it is likely that Iridium       
                                    would have to arrange for additional financing and there can  
                                    be no assurance that Iridium would be able to obtain such     
                                    additional financing on satisfactory terms or at all.         

RISK OF LOW SERVICE DEMAND BECAUSE  The Iridium system is not intended to provide communication   
OF PRICING, SERVICE QUALITY,        services that compete with land-line telecommunications and   
EQUIPMENT CHARACTERISTICS,          land-based cellular services. Instead, the Iridium system is  
COMPETITION AND OTHER MARKET        designed to complement such services. Iridium World           
FACTORS                             Satellite Services is priced significantly higher than most   
                                    land-based phone services, and Iridium customers are not      
                                    expected to discontinue their use of land-based wireless      
                                    services.                                                     

  Many market factors, including    Iridium's estimates of its funding needs assume there will    
  pricing, could prevent Iridium    be substantial demand for Iridium services beginning in       
  from generating revenue in the    early 1999 and that Iridium will be able to charge a premium  
  amount and within the time frame  over the cost of a land-based call for its satellite          
  it expects.                       services because such services provide global mobility.       
                                    Iridium currently expects that its wholesale usage fees for   
                                    international Iridium World Satellite Services calls between  
                                    two countries will result in suggested retail prices that,    
                                    in aggregate, are approximately 25% to 30% above the retail   
                                    prices for land-based voice calling options that traveling    
                                    customers could use for a similar call between the same two   
                                    countries (e.g., international calling card and               
                                    international cellular roaming rates). If demand for Iridium  
                                    services is not significant or if the market will not         
                                    support such a global mobility premium, Iridium may be        
                                    unable to generate sufficient revenues. In addition to        
                                    pricing, a number of other market factors, including service  
                                    quality, equipment characteristics and competition, could     
                                    adversely affect demand for Iridium services.                 

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  The price of Iridium's phones     Motorola's multi-mode phone generally has an initial retail   
  and pagers may adversely affect   price of at least $3,000 and Motorola's alphanumeric pager    
  customer demand for Iridium's     generally has an initial retail price of at least $500.       
  services.                         Iridium expects the retail prices for Kyocera phones and      
                                    pagers to be similar to the retail prices for Motorola's      
                                    equipment. These prices substantially exceed current prices   
                                    for cellular phones and pagers and could adversely affect     
                                    the demand for Iridium's services because potential           
                                    customers may be unwilling to make such a significant         
                                    investment just to have access to a new service.              

 Iridium does not control its       Under Iridium's pricing strategy it sets wholesale prices     
 retail prices and, if they are     for its services and its service providers control the price  
 set too high, demand for           to the customer. Service providers may price Iridium          
 Iridium's services may be          services at a level that is too high, thereby reducing total  
 adversely affected. Prices in the  demand without an offsetting increase in per minute revenue   
 telecommunications industry have   to Iridium. Moreover, competition may force Iridium and its   
 been dropping, which may           service providers to reduce prices below those assumed in     
 adversely affect Iridium's         Iridium's revenue estimates. In addition, pricing for         
 ability to generate revenues.      telecommunication services, including long distance rates,    
                                    has trended downward in recent years. This downward trend     
                                    may make it difficult for Iridium to maintain or raise its    
                                    wholesale prices.                                             

                                    The Iridium system does not afford the same voice quality,    
                                    signal strength and degree of building penetration as mature  
                                    land-based cellular or paging systems. This difference in     
                                    service quality could adversely affect demand for Iridium     
                                    services.                                                     

  The larger sized Iridium phones   The Kyocera and Motorola phones are larger and heavier than   
  and pagers may adversely affect   today's pocket-sized cellular phones and have a               
  customer demand for Iridium       significantly longer and thicker antenna. Motorola's pager    
  services.                         is slightly larger than today's standard alphanumeric         
                                    belt-worn pagers. The larger size of Iridium's phones and     
                                    pagers may adversely affect customer demand for Iridium       
                                    services.                                                     

                                    In addition, competition, including competition from other    
                                    satellite systems and from the extension of land-based        
                                    telecommunications systems to areas that are currently not    
                                    serviced by landline or land-based wireless phone or paging   
                                    systems, could reduce demand that might otherwise exist for   
                                    Iridium's services.                                           

FACTORS AFFECTING CUSTOMER          Iridium's ability to generate sufficient operating revenues   
ACCEPTANCE OF SATELLITE-BASED       will depend upon customer satisfaction with Iridium           
SERVICE                             services. Iridium believes that customer satisfaction will    
                                    depend on a variety of factors, including:                    
  The use of satellites in the      - price of its services, phones and pagers;                   
  Iridium system expands cov-       - the technical capabilities of Iridium's equipment;          
  erage but satellite voice and     - the quality of the services Iridium offers, including       
  paging services have certain        voice quality, call completion rates and dropped call rates;
  service limitations that cus-       and                                                         
  tomers may not be willing to      - the extent, availability and price of alternative           
  accept.                             telecommunications services.                                

                                    Satellite-based communications over the Iridium system        
                                    experience degradation in service quality in certain places   
                                    and are completely unavailable in some places. In             
                                    particular:                                                   
                                    - Satellite-based services are adversely affected in places   
                                      where obstructions, such as buildings and other natural and 
                                      man-made obstacles, are positioned between a satellite and  
                                      the user.                                                   
                                    - These adverse effects on satellite calls increase as the    
                                      obstacles become larger and more densely spaced.            

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                                    - In densely packed urban areas or inside buildings with    
                                      steel construction and metal coated glass common in many  
                                      urban high rise buildings (including, in particular, in   
                                      most hotels and professional buildings), no meaningful    
                                      satellite voice service is available.                     
                                    - Use of an Iridium phone in a moving automobile for a      
                                      satellite call makes the effect of obstructions temporary 
                                      but more pronounced because the structure of automobiles  
                                      tends to obstruct the satellite signal.                   
                                    - The actual limitations on satellite-based services vary,  
                                      sometimes significantly, as conditions change and as the  
                                      satellites move in their orbits.                          

                                    The Iridium satellite paging service also experiences       
                                    degradation in certain places. These limitations on         
                                    satellite-based services are more significant than current  
                                    limitations on service experienced by customers of          
                                    land-based cellular systems and traditional paging systems. 

                                    For Iridium to succeed, its customers must accept:          
                                    - the service limitations described above;                  
                                    - higher prices for Iridium's satellite services than the   
                                      current prices for cellular and paging services; and      
                                    - heavier hand-held phones and larger pagers than those     
                                      currently used for most cellular and paging services.     

                                    Iridium's customers may not accept these limitations. These 
                                    limitations could result in significantly lower sales or    
                                    lower usage of Iridium's services than Iridium anticipates. 

                                    The Iridium system has not been designed to provide         
                                    high-speed data and facsimile transmission capability. As a 
                                    result, Iridium expects that the appeal of its facsimile and
                                    data services (which are not expected to be available until 
                                    mid-1999) will be limited.                                  

                                    Also, the Iridium system lacks the operational capacity to  
                                    provide service to a very large number of customers in      
                                    concentrated areas using the system simultaneously.         

POTENTIAL UNDERSUPPLY OF PHONES     Iridium phones and pagers are an essential part of the      
AND PAGERS; DISTRIBUTION CONCERNS   Iridium system. Motorola has started commercial production  
                                    of the phones and pagers and Motorola has delivered phones  
  Insufficient supply of Iridium    and pagers for commercial use. Kyocera has delivered phones 
  telephones and pagers could harm  for customer trials but performance quality issues have     
  Iridium.                          delayed commercial availability. Motorola's or Kyocera's    
                                    inability to manufacture enough phones and pagers to meet   
                                    demand could constrain Iridium's commercial operations and  
                                    adversely affect its generation of meaningful revenues. In  
                                    addition, if enough phones and pagers are not available to  
                                    supply those people who want to become Iridium customers,   
                                    those people could develop a negative impression of Iridium 
                                    and decide not to become Iridium customers.                 

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                                   There is currently a significant shortage of Iridium phones 
                                   and pagers. As of December 31, 1998 Motorola had produced   
                                   approximately 35,000 phones and was producing phones at a   
                                   rate of approximately 1,000 per day. Commercial shipments of
                                   Kyocera phones are on hold because test results have not yet
                                   met Iridium's quality standards for commercial use. While   
                                   Iridium expects that Kyocera phones will be approved for    
                                   commercial shipment in the first quarter of 1999, there can 
                                   be no assurance Kyocera will be able to meet Iridium's      
                                   quality standards within that time period. There can be no  
                                   assurance that the shortage of phones and pagers will not   
                                   have an adverse effect on Iridium or that sufficient        
                                   quantities of phones and pagers will be produced to meet    
                                   demand during Iridium's initial stages of commercial        
                                   service.                                                    

                                   Distribution Concerns. The initial global distribution of   
                                   phones and pagers is one of Iridium's most significant      
                                   challenges as it transitions from a development stage       
                                   company into an operating company. While Iridium's service  
                                   providers, who are responsible for direct sales to          
                                   customers, are disparately located across the globe, there  
                                   are only two supply sources of phones and pagers. Getting   
                                   phones and pagers from production locations to a large      
                                   number of service providers spread over the globe is a      
                                   significant challenge. Hurdles that must be overcome include
                                   customs and tax clearance in each of the countries to which 
                                   the phones and pagers are shipped and coordination with     
                                   numerous local and regional distribution channels. Iridium  
                                   must also train service providers in a number of countries  
                                   to identify potential Iridium customers, to accurately      
                                   inform such customers about Iridium's services, to market   
                                   Iridium phones and pagers and to distribute the equipment   
                                   once sold. There can be no assurance that Iridium and its   
                                   gateway operators and service providers will be able to     
                                   distribute phones and pagers to various parts of the world  
                                   on a timely basis. A failure to distribute phones and pagers
                                   on a global and timely basis would adversely affect Iridium.

RISKS RELATING TO LOW DEMAND FOR   There is a risk that sufficient demand for Iridium services 
PAGERS AND PHONES; POTENTIAL NEED  will not materialize in a timely manner unless Iridium and  
FOR SUBSIDIES                      its gateway operators or service providers subsidize the    
                                   cost of Iridium phones and pagers. Neither Iridium nor, to  
  Iridium may have to subsidize    Iridium's knowledge, its gateway owners and service         
  the price of phones and pagers   providers currently plan to provide any such subsidies. The 
  to stimulate demand for its      costs associated with those subsidies, including Iridium's  
  services.                        portion of those costs, could be significant. Iridium's     
                                   current projected funding needs do not reflect any costs    
                                   associated with subsidization.                              

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TECHNOLOGY IMPLEMENTATION RISKS       For the Iridium system to operate properly, Motorola and its 
                                      subcontractors must make a number of sophisticated and       
  Integrating the Iridium sys-        diverse technologies work together -- this is a complex task 
  tem's various technologies,         that has not been attempted before. This task is further     
  including software and com-         complicated by the following facts:                          
  munications hardware, was an        - the Iridium system is expected to operate 24 hours a day;  
  extremely complex task and          - most of the Iridium system's hardware is in space; and     
  future operations could reveal      - system-wide testing, maintenance and repair could          
  serious problems that cannot be       adversely affect Iridium's ability to provide the service  
  corrected without adversely           quality it anticipates.                                    
  affecting Iridium's services.                                                                    
                                      Iridium believes that the development and implementation of  
                                      the software for the Iridium system was one of the largest   
                                      and most complex software creation and integration tasks     
                                      ever undertaken in the telecommunications industry. The      
                                      Iridium system software, including the software that         
                                      controls the satellites and the on-the-ground business       
                                      support systems necessary for customer billing, has not been 
                                      subject to the demands of commercial operations at the       
                                      levels Iridium will need to be successful. This software     
                                      will have to be reprogrammed if errors are revealed.         

POTENTIAL FOR DELAYED OR IM-          The Iridium system is the first satellite-based global       
PAIRED OPERATIONS                     personal communications system. However, other companies are 
                                      attempting to develop satellite-based systems to compete     
  If Iridium's transition from a      with Iridium. A significant part of Iridium's strategy is to 
  development stage company into a    capitalize on its first-to-market advantage. If Iridium's    
  company with substantial            transition from a development stage company into an          
  commercial operations is delayed    operating company is delayed or its ability to provide the   
  or its ability to provide the       services it expects is impaired, there likely would be:      
  services it expects is impaired,    - harm to the competitive advantage Iridium expects to       
  its ability to generate revenues      achieve under its current strategy;                        
  and its competitive position could  - delay in Iridium's generation of revenue; and              
  be materially harmed.               - a significant effect on Iridium's ability to repay its     
                                        indebtedness.                                              

                                      A significant delay in Iridium's transition to a company     
                                      with substantial commercial operations or a significant      
                                      impairment of its ability to provide the services it expects 
                                      could occur if:                                              
                                      - significant errors in the design and implementation of the 
                                        Iridium system are discovered during commercial operations;
                                      - commercial operations reveal that significant improvements 
                                        in service quality are needed if Iridium services are to   
                                        generate the demand Iridium expects; or                    
                                      - a significant number of satellites fail to operate for any 
                                        reason. See "-- Risks Related to the Satellites", below.   

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LIMITED SATELLITE-BASED SERVICE    Iridium's ability to supply satellite-based service depends 
CAPACITY                           upon the capacity of the Iridium system. Various factors,   
                                   including customer usage patterns, have a significant effect
  If Iridium experiences unex-     on the Iridium system's capacity for a particular geographic
  pected customer usage patterns   area and on a system-wide basis. The most important factors 
  or its available spectrum is     include:                                                    
  fully utilized, the ability of   - customer usage patterns; and                              
  customers to place or receive    - the amount of spectrum (the frequencies at which Iridium  
  calls may be adversely affected.   is allowed to operate the Iridium system) available to the
                                     Iridium system.                                           

                                   Iridium could experience unexpected customer usage patterns 
                                   that could exceed the capacity of the Iridium system at one 
                                   or more gateways -- similar to an overload of regional      
                                   circuits on a land-based system. If Iridium faces           
                                   significant capacity issues, its ability to acquire         
                                   additional spectrum (which can be thought of as similar to  
                                   adding more "lines" to a land-based system) is subject to   
                                   significant regulatory hurdles. If adverse usage patterns   
                                   occur or other significant constraints are placed on the    
                                   Iridium system, customers may have difficulty in placing or 
                                   receiving calls on the system, which could materially and   
                                   adversely affect Iridium.                                   

RISKS RELATED TO THE SATELLITES    A significant portion of Iridium's tangible assets are its  
                                   low earth orbit satellites and the related land-based       
  The risk of satellite loss or    control facilities. Maintaining this equipment is a complex 
  damage is significant, and the   and costly undertaking which has not been attempted         
  effect of satellite losses or    previously on a commercial basis. In particular, the costs  
  damage could be substantial.     of satellite loss or failure are significant.               

                                   The loss or failure of one or more satellites, including    
                                   temporary losses, that for whatever reason are not promptly 
                                   corrected by fixing or replacing the problem satellite,     
                                   could cause:                                                
                                   - gaps in service availability;                             
                                   - significantly degraded service quality;                   
                                   - increased costs; and                                      
                                   - losses of revenue for the period that service is          
                                     interrupted or impaired.                                  

                                   Accordingly, the loss or failure of any satellite or        
                                   satellites could materially and adversely affect Iridium. A 
                                   satellite can be lost or fail for a variety of reasons,     
                                   including:                                                  
                                   - colliding with something, including space debris, another 
                                     man-made object or space phenomena such as comets or      
                                     meteors;                                                  
                                   - mechanical anomalies or malfunctions; and                 
                                   - failure of the rocket, by explosion or otherwise, that was
                                     to place the satellite in orbit.                          

                                   Space debris and other in-space risks. Iridium's satellites 
                                   operate in low earth orbit and, as a result, face a higher  
                                   risk of damage from space debris than satellites that       
                                   operate farther away from the earth. Because objects in low 
                                   earth orbit are moving at different speeds, the Iridium     
                                   satellites can be more readily hit by space debris -- which 
                                   can include sand, pebbles, dust and rocks shed by comets, as
                                   well as the remains of man-made objects floating in space.  
                                   Even a very small piece of space debris can cause           
                                   significant damage to a satellite.                          

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Mechanical Anomalies and Malfunctions. During the initial    
deployment of the Iridium system, Iridium experienced        
problems or "anomalies" with several of its satellites.      
Those anomalies, which in some cases included control        
problems and the satellite's failure to function as          
expected, caused those satellites to be excluded from        
Iridium's initial constellation. You should note that:       
- anomalies such as occurred with respect to those           
  satellites, or other anomalies with comparable effects,    
  could occur in the future;                                 
- such anomalies could have a significant adverse effect on  
  Iridium;                                                   
- from time to time certain events could occur that may      
  cause Iridium or Motorola to conclude that one or more     
  malfunctioning satellites should not be included in the    
  satellite constellation, and the unavailability of such    
  satellite could have an adverse effect on the operation of 
  the Iridium system; and                                    
- while Motorola has absorbed the direct financial           
  consequences of all satellite losses to date, there can be 
  no assurance Motorola will do so in the future.            

The O&M contract with Motorola provides for the operation    
and maintenance of Iridium's space assets (including the     
satellite constellation) for Iridium's first five years of   
operation. Iridium has the option to extend the O&M contract 
for an additional two years. Under the O&M contract,         
Motorola bears the risk of satellite malfunction, but        
Iridium bears the risk of damage to satellites by the acts   
of third parties, including the degradation or complete loss 
of any satellite due to contact with space debris.           

Launch-related risks. Motorola expects that it will need to  
launch additional satellites from time to time to maintain   
the Iridium system. Accordingly, a launch failure or         
failures could have a material adverse effect on Iridium.    
Satellites are launched on launch vehicles, or rockets.      
Launches of satellites can fail because:                     
- a rocket crashes, aborts or explodes (which recently       
  happened to one of Iridium's competitors); or              
- satellites are damaged as they are loaded into the rocket, 
  during the launch, or as they are deployed from the rocket.

In addition, launches can be delayed for many reasons,       
including poor weather conditions, other launch failures or  
government actions. Placing multiple satellites in each      
Iridium launch vehicle significantly increases the risk that 
a launch failure will have a material and adverse effect on  
Iridium.                                                     

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                                 Life Expectancy of the Satellites; Financial Effect of Loss 
                                 of Satellites. Iridium's business plan currently assumes    
                                 that each of the satellites will have an average useful life
                                 of at least five years from its initial date of commercial  
                                 service. Iridium's satellites may not, however, remain in   
                                 operation for an average of at least five years as Iridium  
                                 expects. If a significant number of satellites do not remain
                                 in operation for the full five years, Iridium's operations, 
                                 including its ability to provide service and generate       
                                 revenues, could be materially harmed and its costs of       
                                 operating will likely increase.                             

COMPETITION RISKS                Certain sectors of the telecommunications industry are      
                                 highly competitive in the United States and other countries.
  Iridium faces direct compe-    The uncertainties and risks created by this competition are 
  tition from a variety of op-   intensified by the continuous technological advances that   
  erating and planned satellite  characterize the industry, regulatory developments that     
  systems and land-based ser-    affect competition and alliances between industry           
  vices.                         participants.                                               

                                 Satellite Services Competitors. While Iridium is the only   
                                 company that currently serves the global satellite personal 
                                 communications market with hand-held phones and belt-worn   
                                 pagers, Iridium anticipates that more than one system may   
                                 serve this market in some fashion in the future. Iridium    
                                 believes that its most likely direct competition will come  
                                 from the planned ICO telecommunications service and from one
                                 or more of the other Federal Communications Commission      
                                 licensed MSS applicants:                                    
                                 - Loral/Qualcomm Partnership, L.P. (on behalf of            
                                   Globalstar);                                              
                                 - MCHI (on behalf of Ellipso); and                          
                                 - Constellation Communications Inc. (on behalf of           
                                   ECCO/Aries).                                              

                                 Iridium also expects to encounter competition from Inmarsat,
                                 which currently serves the global satellite communications  
                                 market as well as from regional mobile satellite systems,   
                                 three of which have been launched (Asia Pacific Mobile      
                                 Telecommunications Satellite, Afro-Asian Satellite and PT   
                                 Asia Cellular Satellite) and several of which are in the    
                                 planning stage.                                             

                                 Other Competitors. Iridium's World Roaming Service offering,
                                 which allows Iridium subscribers to roam onto a variety of  
                                 cellular networks, faces competition from existing and will 
                                 face additional competition from future land-based cellular 
                                 interprotocol roaming services, which provide roaming       
                                 services across similar cellular networks. GTE Mobilnet     
                                 ("GTE") and Deutsche Telekom Mobil ("DeTeMobil") of Germany 
                                 currently offer GlobalRoam, a two-way cellular roaming      
                                 service between certain North American cellular networks and
                                 cellular networks in certain European countries. AT&T       
                                 Wireless Service of the United States and Vodafone of the   
                                 United Kingdom offer CellCard, a service that is very       
                                 similar to GlobalRoam. Two other proposed mobile satellite  
                                 systems, ICO and Globalstar, and at least one regional      
                                 geostationary orbit satellite system, ACeS, have indicated  
                                 that they may also offer some form of dual-mode             
                                 satellite/cellular service, which may include interprotocol 
                                 roaming capabilities such as those expected to be offered by
                                 Iridium. In addition, a number of rental services, primarily
                                 in the United States, provide cellular phones to persons    
                                 traveling in countries with cellular standards that differ  
                                 from the traveler's home market.                            

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                                  Currently, the world's large cellular network owners and    
                                  operators are considering adopting a coordinated standard   
                                  for future cellular networks. If such a coordinated standard
                                  is agreed upon and new networks are built, Iridium's ability
                                  to provide interprotocol roaming would cease to be an       
                                  advantage. Iridium does not expect that such systems would  
                                  be available on a global basis until sometime after 2002.   

COMPETITION FOR SERVICE           In addition to competing for customers for its service,     
PROVIDERS AND SPECTRUM            Iridium also expects to compete with various other          
ALLOCATION                        communications services for local service providers. A      
                                  failure to effectively compete with these services could    
                                  materially and adversely affect Iridium's ability to        
                                  effectively market and distribute its services and          
                                  equipment.                                                  

  Iridium will face competition   Furthermore, ICO could have an advantage in obtaining       
  from other services for local   spectrum allocations and local operating approvals in a     
  service providers               number of countries because it is affiliated with Inmarsat, 
                                  an international satellite organization, and investors in   
                                  ICO and Inmarsat include many state-owned telecommunications
                                  companies, which may have influence with the regulatory     
                                  authorities in their countries.                             

RISKS ASSOCIATED WITH             The Iridium system's operation is subject to regulation by  
LICENSING                         the United States and other national administrations. This  
                                  regulation is pervasive and largely outside Iridium's       
  Iridium cannot currently offer  control. Iridium, Motorola and the various gateway owners   
  its services in every country.  have made substantial progress in receiving the             
                                  authorizations necessary to operate the Iridium system, but 
                                  a significant number of regulatory authorizations necessary 
                                  for Iridium to meet its service coverage objectives have not
                                  yet been obtained. In certain countries in which Iridium    
                                  expects its customers will want to use Iridium's services,  
                                  the authority to offer Iridium's services and operate       
                                  Iridium Satellite phones has not been received, and unless  
                                  Iridium receives such authorizations, service in those      
                                  countries will be limited or will not exist at all.         

  Iridium has covenanted in its   In the secured bank facility, Iridium has covenanted, among 
  secured bank facility that it   other things, that it will maintain, or cause to be         
  will maintain the authority to  maintained, the regulatory authority to offer Iridium World 
  offer Iridium World Satellite   Satellite Service in a minimum number of countries. While   
  Service in a minimum number of  Iridium believes it will be able to satisfy this covenant,  
  countries. Failure to satisfy   the regulation of satellite voice services generally is     
  this and other covenants would  outside Iridium's control. If Iridium is unable to satisfy  
  give the lenders under secured  this or certain other covenants in the secured bank         
  bank facility the right to      facility, the lenders under the secured bank facility       
  declare an event of default.    generally would have the right to declare a default and     
                                  could pursue various remedies, including enforcing their    
                                  security interests in substantially all of the assets of    
                                  Iridium Operating LLC (which include the Iridium system and 
                                  represent substantially all of Iridium's assets) and        
                                  Iridium's investment in Iridium Operating LLC.              

                                  You also should carefully consider the information discussed
                                  in "Certain Regulations that Affect Iridium".               

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RELIANCE ON MOTOROLA, GATEWAY      Operation of the Iridium system. Iridium relies extensively   
OWNERS AND OTHER THIRD PARTIES     on third parties to perform functions critical to its         
                                   operations. Iridium does not independently have, and does     
  Iridium relies extensively on    not intend to acquire, except by contracting with other       
  third parties to perform         parties, the ability to:                                      
  functions critical to its oper-  - develop or produce replacements for the components of the   
  ations.                            Iridium system;                                             
                                   - launch additional or replacement satellites; or             
                                   - operate and maintain the Iridium system.                    

                                   Currently, Iridium relies on Motorola to provide these        
                                   critical functions.                                           

                                   Gateway Operators. Iridium is dependent on the activities of  
                                   its gateway operators for its success. Iridium has obtained   
                                   commitments from its investors who are gateway operators      
                                   that they will continue to use their reasonable best efforts  
                                   to perform certain critical functions including:              
                                   - obtaining the necessary licenses, if any, from the          
                                     jurisdictions in their gateway territories;                 
                                   - operating their gateways;                                   
                                   - maintaining the connections between the Iridium system and  
                                     the PSTNs;                                                  
                                   - marketing Iridium Services;                                 
                                   - contracting with, or acting as, service providers; and      
                                   - managing relationships with Iridium's customers either      
                                     directly or through service providers.                      

                                   Distribution and Marketing of Iridium Services. Iridium's     
                                   success also depends upon the motivation and ability of its   
                                   service providers to generate current demand for Iridium      
                                   Services, phones and pagers. Service providers are            
                                   responsible for the sales of Iridium Services and of Iridium  
                                   subscriber equipment to the ultimate consumer. Service        
                                   providers are, or are selected by, Iridium's gateway          
                                   operators. Iridium's business plan assumes the service        
                                   providers will make substantial sales of Iridium phones,      
                                   pagers and services as Iridium transitions from a             
                                   development stage company into an operating company.          
                                   However, as a result of many factors, including the failure   
                                   of service providers to promote Iridium services              
                                   effectively, demand for Iridium services may not be           
                                   generated on a timely basis. See "-- Risk of Low Service      
                                   Demand Because of Pricing, Service Quality, Equipment         
                                   Characteristics, Competition and Other Market Factors" and    
                                   "-- Potential Undersupply of Phones and Pagers; Distribution  
                                   Concerns".                                                    

RISKS ASSOCIATED WITH PRINCIPAL    Iridium has three principal supply contracts (each with       
SUPPLY CONTRACTS                   Motorola):                                                    
                                   - the space system contract for the design, development,      
  Iridium's major contracts          construction and delivery in orbit of the space segment     
  relating to the Iridium system     which has an aggregate cost of approximately $3.435         
  are of limited duration, and       billion and is substantially complete;                      
  Motorola's liability under them  - the O&M contract, which runs for five years from November,  
  is significantly limited.          1998 (extendable, at Iridium's option, for an additional two
                                     years), covers the operation of the space segment of the    
                                     Iridium system, including monitoring, upgrading and         
                                     replacing the hardware and software necessary to maintain   
                                     specified performance levels, and has an aggregate cost     
                                     (subject to certain adjustments) of approximately $2.88     
                                     billion over the initial five year term; and                

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                                  - the terrestrial network development contract for the        
                                    design and development of the gateway hardware and software,
                                    which is expected to be complete by year end 1999 and has   
                                    an aggregate cost (subject to certain adjustments) of       
                                    approximately $356 million.                                 

                                  These contracts are of limited duration and Motorola's        
                                  liability under them is significantly limited. The contracts  
                                  provide that if Motorola has any liability to Iridium under   
                                  the space system contract, the O&M contract, the terrestrial  
                                  network development contract or any other contract between    
                                  Iridium and Motorola in connection with the Iridium system,   
                                  that liability may be limited to $100 million in the          
                                  aggregate in virtually all circumstances. In addition, under  
                                  the space system contract, Motorola is not required to        
                                  refund amounts Iridium previously paid to it. Subject to      
                                  certain exceptions, Iridium bears the risk, including         
                                  additional costs, if any, resulting from excusable delays     
                                  under the space system contract, as well as certain of the    
                                  risks of loss for satellites in orbit. The O&M contract and   
                                  the terrestrial network development contract have similar     
                                  provisions regarding excusable delays, waivers and            
                                  limitations on liability. See "Management's Discussion and    
                                  Analysis of Financial Condition and Results of Opera-         
                                  tions -- Liquidity and Capital Resources" for a description   
                                  of certain of Motorola's and Iridium's obligations under      
                                  these contracts.                                              

                                  The obligations Motorola is required to perform under these   
                                  contracts are highly specialized and, if Motorola becomes     
                                  unable to perform its obligations under these contracts, it   
                                  would be very difficult, if not impossible, for Iridium to    
                                  engage a replacement contractor in a timely manner or at      
                                  all. See "-- Reliance on Motorola, Gateway Owners and Other   
                                  Third Parties".                                               

CONFLICTS OF INTEREST WITH MO-    Motorola has and will have various conflicts of interest      
TOROLA                            with Iridium. Motorola is:                                    
                                  - the creator and developer of the concept of the Iridium     
  Because of Motorola's varying     system;                                                     
  roles with respect to Iridium,  - responsible for the design, construction, operation and     
  there are a number of             maintenance of the Iridium system;                          
  significant conflicts of in-    - a founding, and the largest single, investor in Iridium;    
  terest between Iridium and      - a gateway owner;                                            
  Motorola.                       - Iridium's largest class 1 interest holder (and potentially  
                                    the largest class A common stock holder in IWCL because     
                                    class 1 interests are exchangeable for class A common       
                                    stock);                                                     
                                  - a holder of warrants to acquire additional membership       
                                    interests in Iridium;                                       
                                  - the guarantor of some of Iridium's borrowings; and          
                                  - entitled to receive significant additional equity and cash  
                                    from Iridium for guaranteeing Iridium's borrowings and      
                                    permitting Iridium to defer payments under the O&M          
                                    contract.                                                   

                                  Motorola's Influence on Iridium. Motorola does not by itself  
                                  control the Iridium Board of Directors and it is not          
                                  permitted to participate in Iridium's decisions or other      
                                  actions concerning the space system contract, O&M contract    
                                  or the terrestrial network development contract. However,     
                                  Motorola could in certain situations exercise significant     
                                  influence over Iridium because:                               
                                  - Motorola currently has the right to appoint 6 of the 27     
                                    members of the Iridium Board of Directors and its           
                                    representation could increase if it provides further        
                                    financial support to Iridium; and                           

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                                    - Motorola could have control over Iridium similar to that    
                                      of a creditor through its position as a guarantor of some of
                                      Iridium's borrowings and as a creditor under various        
                                      material contracts.                                         

                                    In addition, under the Motorola MOU and the Motorola ARG,     
                                    Iridium has agreed with Motorola that, among other things,    
                                    it will:                                                      
                                    - compensate Motorola for providing guarantees, deferral      
                                      rights and other credit support (collectively, the "Motorola
                                      exposure", which generally includes the aggregate amount    
                                      guaranteed by or permitted to be deferred by Motorola);     
                                    - use its best efforts to reduce the Motorola exposure to no  
                                      more than $275 million by the earliest possible date,       
                                      including obtaining bank credit agreements not guaranteed   
                                      by Motorola and using revenues from operations, if          
                                      available, to reduce the available borrowings under the     
                                      guaranteed credit facilities;                               
                                    - not have outstanding in excess of (a) $1.7 billion of       
                                      indebtedness for borrowed money that is secured by the      
                                      assets of Iridium or (b) $1.62 billion of senior notes;     
                                    - not make certain acquisitions without Motorola's consent;   
                                      and                                                         
                                    - provide Motorola with the right (in addition to Motorola's  
                                      rights to representation based on its holdings of class 1   
                                      interests) to appoint one additional director to the Board  
                                      of Directors of Iridium any time the Motorola exposure      
                                      exceeds $275 million and the right to appoint a second      
                                      additional director to the Board of Directors of Iridium    
                                      any time the Motorola exposure exceeds $750 million.        

                                    Motorola's Contractual Relations with Iridium. Motorola and   
                                    Iridium entered into the space system contract, the O&M       
                                    contract and the terrestrial network development contract     
                                    after extensive negotiations. The predecessor of Iridium      
                                    under those contracts, however, was a wholly owned            
                                    subsidiary of Motorola at the time the space system contract  
                                    and O&M contract were negotiated and therefore these          
                                    negotiations were not conducted on an arm's-length basis.     
                                    Moreover, although these agreements provide for specific      
                                    prices, Motorola's obligations and liabilities are subject    
                                    to certain limitations which allocate various risks to        
                                    Iridium and may have the effect of increasing the price paid  
                                    by Iridium. Iridium's payment obligations under these         
                                    agreements have comprised, and are expected to continue to    
                                    comprise, most of Iridium's expenses.                         

CONFLICTS OF INTEREST WITH GATEWAY  The Iridium Board of Directors consists of representatives    
OWNERS                              of certain of the world's leading telecommunications          
                                    companies. Almost all of the members of the Iridium Board of  
  Iridium has certain conflicts of  Directors have been appointed by investors in Iridium who     
  interest with its gateway owners  also are gateway owners and service providers. Because        
  and service providers.            Iridium is a supplier to the gateways and the service         
                                    providers, the interests of Iridium are expected to conflict  
                                    in certain respects with the interests of its gateway owners  
                                    and the service providers. For example, this conflict of      
                                    interest is relevant when the wholesale prices that Iridium   
                                    will charge for satellite airtime and other Iridium Services  
                                    are set -- some gateway operators and service providers may   
                                    prefer prices that are higher or lower than the system        
                                    optional prices because their customers are less or more      
                                    price sensitive.                                              

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YEAR 2000 READINESS DISCLOSURE      Iridium has only recently begun addressing the Year 2000    
                                    issue. The "Year 2000 issue" refers to the fact that many   
  In a reasonably likely worst      computer software application and operations programs       
  case scenario, the failure to     (including embedded chips) written in the past may not      
  correct a material Year 2000      properly recognize dates ending in "00" as meaning 2000     
  problem could result in an        rather than 1900. This could result in the incorrect        
  interruption in, or a failure     performance of computer calculations and functionality      
  of, certain normal business       involving dates. Such miscalculations could adversely affect
  activities or operations in-      Iridium's installed computer systems, network elements,     
  cluding operations that are       software applications and other computer systems, network   
  essential to the provision of     elements, software applications and other business systems  
  Iridium's services. Iridium has   containing time sensitive programs. The Year 2000 issue may 
  established a program to assess   also affect the systems and applications of Iridium's       
  and mitigate those risks, but     roaming partners, service providers and other material      
  because Iridium has not yet       distributors.                                               
  completed the risk assessment                                                                 
  phase, it cannot provide          Iridium has established a Year 2000 Program to address      
  assurance that all actions        information-technology, or "IT", and non-IT problems that   
  necessary to correct a Year 2000  may exist within Iridium's business, including with         
  problem will be completed in a    Iridium's suppliers, roaming partners, service providers and
  timely manner.                    other material distributors. The Y2K program encompasses    
                                    Iridium's space and ground facilities, as well as the       
                                    relevant operations of Iridium's material suppliers and     
                                    distributors, and addresses both IT and non-IT systems.     

                                    Iridium is in the process of performing an initial inventory
                                    of all Iridium hardware, software and infrastructure, as    
                                    well as material vendors, to identify potential Year 2000   
                                    issues and to determine the action required, if any, to     
                                    correct the problem. Through the gateways, Iridium is       
                                    contacting its third party roaming partners and service     
                                    providers to determine the Year 2000 status of their        
                                    systems, as well as their plans to bring them into          
                                    compliance. Once Iridium identifies problem areas, it plans 
                                    to upgrade those systems under its direct control, and      
                                    verify, test and implement any modifications to them by the 
                                    third quarter of 1999. No current assessment of the         
                                    completion dates for material repairs, replacements and     
                                    renovations not under Iridium's direct control, and for     
                                    which third parties such as gateways, service providers and 
                                    roaming partners are responsible, is available.             

                                    In a reasonably likely worst case scenario, the failure to  
                                    correct a material Year 2000 problem could result in an     
                                    interruption in, or a failure of, certain normal business   
                                    activities or operations, including operations that are     
                                    essential to the provision of Iridium's services. Such      
                                    failures could materially and adversely affect Iridium's    
                                    results of operations, liquidity and financial condition.   
                                    Due to the general uncertainty inherent in the Year 2000    
                                    problem, resulting in major part from the present state of  
                                    Iridium's knowledge concerning the Year 2000 readiness of   
                                    third-parties such as its roaming partners and service      
                                    providers, Iridium is unable to determine at this time      
                                    whether the consequences of Year 2000 failures will have a  
                                    material impact on its results of operations, liquidity or  
                                    financial condition. Iridium believes that if the Y2K       
                                    Program is completed as scheduled, the potential of         
                                    significant interruptions of normal operations should be re-
                                    duced. However, Iridium cannot assure you that its systems  
                                    and the systems of those third parties on which its         
                                    operation relies will be compliant in a timely manner or    
                                    that there will not be a material disruption of Iridium's   
                                    business or a material adverse effect on Iridium's          
                                    liquidity, financial condition or results of operations     
                                    because of a Year 2000 problem.                             


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RISKS ASSOCIATED WITH INTER-          Iridium intends to make its services available in almost      
NATIONAL OPERATIONS AND DE-           every country. As a result, Iridium and its gateway           
VELOPING MARKETS                      operators and service providers are subject to risks related  
                                      to each country's domestic and international policies and     
  Certain risks related to the        risks related to economic conditions in many regions of the   
  domestic and international          world, such as:                                               
  policies and economies of the       - changes in domestic and foreign government regulations and  
  various countries in which Iridium    telecommunications standards;                               
  operates could adversely affect     - licensing requirements, tariffs or taxes and other trade    
  Iridium.                              barriers;                                                   
                                      - price, wage and exchange controls;                          
                                      - political, social and economic instability;                 
                                      - inflation; and                                              
                                      - interest rate and currency fluctuations.                    

                                      Iridium, its gateway operators or service providers could be  
                                      adversely affected on a country-specific, regional or         
                                      system-wide basis by these factors. See "-- Potential         
                                      Undersupply of Phones and Pagers; Distribution Concerns" and  
                                      "-- Reliance on Motorola, Gateway Owners and Other Third      
                                      Parties".                                                     

DEPENDENCE ON KEY MANAGEMENT AND      Iridium's success depends upon the efforts of its management  
QUALIFIED PERSONNEL                   team and its ability to attract and retain qualified          
                                      management and personnel. Iridium has no employment contract  
  Iridium relies on key em-           with any employee and is subject to the possibility of loss   
  ployees with whom it does not       of one or more key employees at any time. Iridium also        
  have employment agreements.         relies upon several employees of Motorola who play a key      
                                      role in the performance of Motorola's obligations under the   
                                      O&M contract. Iridium has no control over the relationship    
                                      between Motorola and its employees. The loss of one or more   
                                      of these key employees could adversely affect Iridium. In     
                                      addition, Iridium's success will be dependent in part upon    
                                      gateway operators having qualified personnel at the various   
                                      gateways to execute significant aspects of Iridium's          
                                      licensing, marketing and distribution efforts.                

RISKS ASSOCIATED WITH GROWTH          If significant and rapid growth in demand for Iridium World   
                                      Services is achieved it would require Iridium and its         
  Currently, the capacity of the      gateways to make additions to personnel and management        
  Iridium system cannot grow above    information systems to manage that growth while continuing    
  certain limits.                     to meet customer service expectations. In addition, because   
                                      Iridium's assigned spectrum (frequency band) and satellite    
                                      infrastructure characteristics set inherent capacity          
                                      limitations, growth above certain levels currently is not     
                                      possible.                                                     

RISKS OF THE CLASS A COMMON STOCK     Because IWCL's sole asset is its class 1 interests in         
DIVIDEND POLICY                       Iridium, it will receive cash only if Iridium pays dividends  
                                      or distributions on its class 1 interests. However, Iridium:  
  IWCL is unlikely to pay any         - has never made distributions on its class 1 interests;      
  dividends on the class A common     - does not anticipate paying any dividends or distributions   
  stock for the foreseeable             on its class 1 interests until Iridium has demonstrated a   
  future.                               positive operating cash flow for a significant period of    
                                        time; and                                                   
                                      - is effectively restricted under certain debt covenants      
                                        from paying any dividends on its class 1 interests and those
                                        covenants (or similar covenants) are likely to be in        
                                        effect long after the time Iridium would otherwise have     
                                        funds available for distribution to its members.            

                                      You should note that:                                         
                                      - IWCL has never declared or paid any dividends on its class  
                                        A common stock; and                                         


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                                    - IWCL will be unable to pay or declare any dividends on its  
                                      capital stock until it receives distributions on its class 1
                                      interests from Iridium, which is unlikely until long after  
                                      Iridium achieves a positive operating cash flow if at all.  

THE PRICE OF CLASS A COMMON STOCK   Sales of substantial amounts of class A common stock or       
MAY DECLINE DUE TO SHARES ELIGIBLE  class 1 interests, or the belief of market participants that  
FOR FUTURE SALE                     substantial sales could occur, may cause the price of class   
                                    A common stock to decline for a variety of reasons,           
  Future sales of class A common    including that those sales may, or may be expected to:        
  stock could adversely affect the  - increase the supply of shares in the marketplace when       
  market price of class A common      there is no offsetting increase in demand;                  
  stock. There are many circum-     - be perceived by the market as a signal that IWCL shares     
  stances under which sub-            were too highly priced; or                                  
  stantial sales of class A common  - reduce or "dilute" the indirect equity interest in Iridium  
  stock could occur.                  represented by each share of class A common stock.          

                                    In addition to the adverse effect a price decline could have  
                                    on holders of class A common stock, that decline would        
                                    likely impede the ability of IWCL to raise capital to fund    
                                    the construction and operation of the Iridium system through  
                                    the issuance of additional class A common stock or other      
                                    equity securities.                                            

                                    IWCL has issued class A common stock, warrants to purchase    
                                    class A common stock and class B common stock. With the       
                                    proceeds received by IWCL from the issuance of each share of  
                                    class A common stock and class B common stock, IWCL has       
                                    purchased one class 1 interest in Iridium, and with the       
                                    proceeds received by IWCL from the issuance of the warrants   
                                    to purchase class A common stock, IWCL has purchased a        
                                    warrant from Iridium that operates so that, when a class A    
                                    common stock warrant is exercised, IWCL uses the proceeds     
                                    received from its exercise to purchase one class 1 interest   
                                    in Iridium for each share of class A common stock issued      
                                    upon exercise of that class A common stock warrant. As of     
                                    December 15, 1998, warrants to purchase 1,461,200 shares of   
                                    class A common stock were outstanding.                        

                                    At December 15, 1998, assuming all class A common stock       
                                    warrants were exercised on that date, there would have been   
                                    13,641,848 shares of class A common stock and 20,625 shares   
                                    of class B common stock outstanding. IWCL is authorized to    
                                    issue up to 50,000,000 shares of class A common stock and     
                                    2,500,000 shares of class B common stock. These authorized    
                                    amounts could be increased under certain conditions.          

                                    Shares Eligible for Future Sale Upon Direction of Iridium.    
                                    IWCL has agreed with Iridium in a contract called the "share  
                                    issuance agreement" that, under certain conditions, Iridium   
                                    can direct IWCL to sell shares of class A common stock (or    
                                    other securities) and be required to use the proceeds to      
                                    purchase class 1 interests (or other securities) in Iridium.  

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Shares Eligible for Future Sale Upon Exchange of Class 1    
Interests in Iridium. IWCL has agreed with Iridium in a     
contract called the "interest exchange agreement" that,     
under certain conditions, it will exchange shares of class A
common stock for class 1 interests at the rate of one share 
of class A common stock for each class 1 interest (subject  
to anti-dilution adjustments) and will register those shares
of class A common stock for sale with the Securities and    
Exchange Commission. Holders of class 1 interests are not   
permitted to exchange their class 1 interests for shares of 
class A common stock prior to the day that is 90 days after 
the first fiscal quarter in which Iridium achieves positive 
earnings before interest, taxes, depreciation and           
amortization. In addition, no exchanges will be permitted   
unless they are approved by at least 66 2/3% of the Iridium 
Board of Directors. Based upon the number of class 1        
interests outstanding at December 15, 1998, a maximum of    
129,219,180 shares of class A common stock would be issuable
upon such exchange. If all class 1 interests which could be 
issuable in the future based upon warrants, options and     
convertible securities outstanding at December 15, 1998 and 
other outstanding commitments to members of Iridium         
including certain reserve commitments to purchase class 1   
interests by strategic investors in Iridium (excluding      
warrants Motorola is expected to earn under the Motorola ARG
after December 15, 1998) are considered, a maximum of       
173,304,941 shares of class A common stock would be issuable
upon such exchange. See "-- Risk that IWCL's Interest in    
Iridium Will Be Diluted and that the Corresponding Indirect 
Interest that Investors in Class A Common Stock Have in     
Iridium Will Be Diluted", "Dilution" and "Shares Eligible   
for Future Sale" for more information on the potential for  
exchange of class 1 interests for class A common stock.     

In addition, pursuant to the Motorola ARG, Motorola has     
earned, and is expected to earn, substantial compensation in
the form of warrants to purchase class 1 interests (or,     
under certain conditions, warrants to purchase class A      
common stock) for providing guarantees, deferral rights and 
other credit support to Iridium. Through December 15, 1998, 
under these arrangements, Motorola had earned warrants to   
purchase 7,741,346 class 1 interest at a price of           
approximately $0.00013 per interest and warrants to purchase
39,828 class 1 interests at a price of $20.90 per interest. 
Payments under the Motorola ARG are based on the amount and 
duration of Motorola exposure (which generally includes the 
aggregate amount guaranteed or permitted to be deferred).   
The amount of daily warrant compensation due under the      
Motorola ARG is significant and increases substantially     
after October 1, 1999 any time the Motorola exposure is     
greater than $275 million. While Iridium has agreed with    
Motorola that it will use its best efforts to reduce the    
Motorola exposure to $275 million or less as soon as        
possible, Iridium's ability to repay or replace borrowings  
guaranteed by Motorola or pay or finance (without a Motorola
guarantee) deferrals of amounts due to Motorola depends on a
variety of factors, including Iridium's ability to generate 
revenues and factors beyond Iridium's control such as the   
condition of the bank lending and securities markets. If    
Iridium reduces the Motorola exposure to $275 million for   
the period from October 1, 1999 through December 31, 2000   
($275 million of Motorola exposure for approximately 15     
months), Motorola would earn warrants to purchase           
approximately 84,000 class 1 interests (or shares of class A
common stock) at a price of $20.90 per interest (or share)  
plus                                                        

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cash interest. However, if Iridium draws all amounts        
available under the $750 million guaranteed credit          
facilities and defers the payment of an aggregate of $400   
million under the O&M contract and this Motorola exposure   
remains in place in full from October 1, 1999 through Decem-
ber 31, 2000 ($1.15 billion of Motorola exposure for        
approximately 15 months), Motorola would earn warrants to   
purchase approximately 12.9 million class 1 interests at a  
price of approximately $0.00013 per interest pursuant to the
Motorola ARG and a substantial additional amount of class 1 
interests would be available for exchange for shares of     
class A common stock.                                       

Shares Eligible for Future Sale Upon Conversion of Class B  
Common Stock. IWCL has authorized the issuance of up to     
2,500,000 shares of class B common stock at a price of      
$13.33 per share, and has issued 20,625 shares of class B   
common stock, in connection with Iridium's NOMAD program for
promoting the authorization and use of the Iridium system by
governments. Iridium expects that up to an aggregate of     
1,750,000 shares of class B common stock will be issued in  
connection with the NOMAD program. These shares of class B  
common stock are exchangeable for class A common stock on a 
share for share basis after the satisfaction of certain     
conditions, but in no event earlier than one year after they
have been fully paid for by their purchaser.                

Shares Eligible for Future Sale Upon Exercise of Options    
Granted Under the Iridium Option Plan. Under the option     
plan, employees and outside directors of Iridium may be     
granted stock options that are exercisable for shares of    
class A common stock. The exercise price of each option is  
the fair market value of a share of the class A common stock
on the date the option was granted. A committee of the      
Iridium Board of Directors administers the plan and may     
establish the terms of the option grants, including the     
number of shares for which an option may be exercised, the  
term of the option (up to ten years), the vesting schedule, 
and other terms and conditions. As of December 15, 1998,    
options to purchase 2,472,109 shares of class A common stock
were outstanding, of which options to purchase 817,909      
shares of class A common stock were exercisable. Currently, 
additional options to purchase a maximum of 3,071,043 shares
of class A common stock may be issued under the option plan.

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                                                        [Enlarge/Download Table]
                                                                                                 
RISK THAT IWCL'S INTEREST IN        IWCL will use the proceeds from the issuance of each share   
IRIDIUM WILL BE DILUTED AND THAT    of class A common stock in the Offerings to purchase one     
THE CORRESPONDING INDIRECT          class 1 interest in Iridium. IWCL will suffer immediate per  
INTEREST THAT INVESTORS IN CLASS A  interest dilution in respect of such interests in an amount  
COMMON STOCK HAVE IN IRIDIUM WILL   equal to the difference in the price paid per class 1        
BE DILUTED                          interest (the price you paid per share of class A common     
                                    stock less the underwriting discount) and Iridium's net      
  Investors in class A common       tangible book value per class 1 interest, after giving       
  stock will suffer immediate       effect to the Offerings.                                     
  dilution. In addition, a class A                                                               
  common stock investor's indirect  Iridium expects that its net tangible book value will        
  interest in Iridium will be       decrease substantially in the first quarter of 1999 as it    
  diluted by, among other things,   transitions from a development stage company into an         
  sales of new Iridium class 1      operating company because it will have substantial           
  membership interests at a price   depreciation without substantial offsetting revenues. In     
  below the price paid by the       addition, the interest in Iridium that IWCL purchases with   
  investor. Iridium has             the proceeds of its offering of class A common stock (and    
  substantial commitments to sell   the corresponding indirect interest in Iridium of investors  
  new class 1 membership interests  in the class A common stock) will be diluted whenever new    
  at prices that are substan-       class 1 interests are sold at a price that is below the      
  tially below the price of class   price paid by IWCL for the class 1 interests. See            
  A common stock.                   "Dilution".                                                  

                                    At December 15, 1998 there were outstanding:                 
                                    - warrants to purchase 4,997,281 class 1 interests at        
                                      approximately $0.00013 per class 1 interest issued in      
                                      connection with the issuance and sale of Iridium's 14 1/2% 
                                      senior subordinated notes due 2006;                        
                                    - 45,732 series A class 2 interests that convert into        
                                      846,498 class 1 interests without any additional cash      
                                      investment; and                                            
                                    - a currently exercisable warrant to purchase up to the      
                                      number of series M convertible class 2 interests that would
                                      be convertible into 2.5% of the number of outstanding      
                                      class 1 interests on the date of exercise, calculated on a 
                                      fully diluted basis, at the equivalent of approximately    
                                      $13.33 per underlying class 1 interest.                    

                                    In addition to the warrants described above, under the       
                                    Motorola ARG, Iridium has a continuing obligation to issue   
                                    warrants to Motorola for providing guarantees, deferral      
                                    rights and other credit support to Iridium. Payments under   
                                    the Motorola ARG are based on the amount and duration of     
                                    Motorola exposure (which generally includes the aggregate    
                                    amount guaranteed or permitted to be deferred). Through      
                                    December 15, 1998, under these arrangements, Motorola had    
                                    earned warrants to purchase 7,741,346 class 1 interests at a 
                                    purchase price of approximately $0.00013 per class 1         
                                    interest and warrants to purchase 39,828 class 1 interests   
                                    at a price of $20.90 per class 1 interest. Under certain     
                                    conditions, Motorola may earn warrants to purchase class A   
                                    common stock rather than warrants to purchase class 1        
                                    interests. It is likely that Motorola will earn substantial  
                                    additional warrants to purchase class 1 interests or class A 
                                    common stock in the future. See "-- The Price of Class A     
                                    Common Stock May Decline Due to Shares Eligible for Future   
                                    Sale" and "Dilution".                                        

                                    The Iridium Board of Directors also has authorized the       
                                    issuance of warrants to purchase up to 9,165,000 class 1     
                                    interests at a purchase price of approximately $0.00013 per  
                                    class 1 interest to gateway owners and to Motorola based on  
                                    satisfaction of certain performance criteria relating to the 
                                    construction and implementation of gateways and gateway      
                                    services. Iridium estimates that the gateways and Motorola   
                                    have earned the right to receive warrants to purchase an     
                                    aggregate of approximately 3,300,000 class 1 interests       
                                    pursuant to this authorization.                              

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                                    Up to 18,206,550 class 1 interests may be issued to existing
                                    investors in Iridium at a purchase price of approximately   
                                    $13.33 per class 1 interest pursuant to their various       
                                    reserve commitments to purchase additional class 1 interests
                                    under certain circumstances. These reserve commitments are  
                                    referred to collectively as the "reserve capital call".     

VOLATILITY                          The market price of the class A common stock has been       
                                    volatile. The trading prices for the securities of many     
  The trading price of the class A  development stage telecommunications companies like IWCL and
  common stock has been volatile    Iridium have experienced extreme price and volume           
  and may continue to be volatile   fluctuations, which have at times been unrelated to their   
  in the future.                    operating performance. Factors that could have a significant
                                    effect on the price of the class A common stock include:    
                                    - announcements of fluctuations in Iridium's or its         
                                      competitors' operating results;                           
                                    - variations in Iridium's prospects and operating results;  
                                    - delays in obtaining service providers or regulatory       
                                      approvals in particular countries;                        
                                    - satellite anomalies;                                      
                                    - general conditions in the telecommunications industry; and
                                    - market conditions for growth stocks, technology stocks or 
                                      telecommunications in general.                            

RISKS ASSOCIATED WITH INCOR-        IWCL is a Bermuda company. IWCL's Bermuda legal counsel has 
PORATION UNDER BERMUDA LAW          advised IWCL that uncertainty exists about whether Bermuda  
                                    courts will:                                                
  Bermuda law may not permit you    - enforce judgments obtained in other jurisdictions         
  to sue IWCL for certain             (including the United States) against IWCL or its officers
  securities law claims, and you      or directors under the securities laws of those           
  may not be able to enforce a        jurisdictions; or                                         
  U.S. court's judgment against     - entertain actions in Bermuda against IWCL or its officers 
  IWCL.                               or directors under the securities laws of other           
                                      jurisdictions.                                            

                                    There is no treaty in effect between the United States and  
                                    Bermuda providing for enforcement of U.S. judgments. In     
                                    addition, there are grounds upon which Bermuda courts may   
                                    refuse to enforce judgments of U.S. courts, and certain     
                                    remedies available under the U.S. federal securities laws   
                                    would not be allowed in Bermuda courts, as they may be      
                                    contrary to Bermuda's public policy.                        

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                                                        [Enlarge/Download Table]
                                                                                                 
RISK IWCL WILL LOSE MANAGEMENT      Under the LLC agreement, IWCL has certain special rights     
RIGHTS UPON A CHANGE IN CONTROL;    including:                                                   
IRIDIUM'S INFLUENCE OVER THE IWCL   - the right to designate two members of the Iridium Board of 
BOARD OF DIRECTORS                    Directors, one of whom will act as a Vice Chairman of      
                                      Iridium; and                                               
  IWCL could lose its special       - the right to block certain significant transactions        
  management rights in Iridium if     involving Iridium.                                         
  there is change in control of                                                                  
  IWCL.                             Iridium will have the right to terminate these special       
                                    rights following an IWCL "change in control", which includes 
                                    circumstances in which:                                      
                                    - an entity other than Iridium becomes the beneficial owner  
                                      of more than 30% of IWCL's outstanding common stock; or    
                                    - there is a change in a majority of the members of IWCL's   
                                      Board of Directors over a two year period that is not      
                                      approved by a vote of 66 2/3% of the members of the IWCL   
                                      Board then still in office who were directors at the       
                                      beginning of the two year period or whose election or      
                                      nomination for election was previously so approved.        

                                    As a result of these provisions, holders of class A common   
                                    stock may effectively be precluded from replacing a majority 
                                    of the IWCL Board, which initially consisted of directors    
                                    selected by Iridium.                                         

RISKS RELATED TO PASSIVE FOREIGN    Whether IWCL is or is not a passive foreign investment       
INVESTMENT COMPANY RULES            company, or a "PFIC", is relevant to you only if you hold a  
                                    share of class A common stock and you are:                   
  If IWCL is treated as a PFIC,     - a citizen or resident of the United States;                
  then any gain that you recognize  - a domestic corporation;                                    
  on the sale of your shares of     - an estate, the income of which is subject to United States 
  class A common stock and            federal income tax without regard to its source; or        
  distributions you receive in      - a trust, if a court within the United States is able to    
  respect of your shares of class     exercise primary supervision over the administration of the
  A common stock may be subject to    trust and one or more United States persons have the       
  greater tax liability.              authority to control all substantial decisions of the      
                                      trust.                                                     

                                    Generally, if IWCL were treated as a PFIC for any taxable    
                                    year during which you held a share of class A common stock,  
                                    the entire gain you recognize on a disposition of the share  
                                    would be allocated ratably to each day in your holding       
                                    period for the share. For example, if you acquired a share   
                                    of class A common stock on January 1, 1999 for $100 and sold 
                                    the share on December 31, 2000 for $200, $50 of the gain     
                                    would be allocated to 1999 and $50 of the gain would be      
                                    allocated to 2000. The amounts allocated to the taxable year 
                                    of disposition and to any year before IWCL became a PFIC     
                                    would be taxed as ordinary income. The amount allocated to   
                                    each other taxable year would be subject to tax at the       
                                    highest applicable ordinary income rate in effect for such   
                                    taxable year, and an interest charge would be imposed on the 
                                    amount allocated to such taxable year. Continuing with the   
                                    previous example, the $50 of gain allocated to 2000 would be 
                                    taxed as ordinary income, the $50 of gain allocated to 1999  
                                    would be taxed at the highest ordinary income tax rates      
                                    applicable in 1999, and interest would be charged on the tax 
                                    on the gain allocated to 1999. All the tax and interest      
                                    would be included in your U.S. federal income tax liability  
                                    for the taxable year in which the disposition took place.    
                                    Further, any distribution in respect of shares of class A    
                                    common stock in excess of 125% of the average of the annual  
                                    distributions on shares of class A common stock you received 
                                    during the shorter of the preceding three years or the       
                                    portion of your holding period before the relevant taxable   
                                    year would be subject to taxation as described above. For    
                                    example, if you purchased a share of class A                 

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common stock in 1999 and received distributions in respect  
of the share of $10 in 1999, and $15 in 2000, $2.50 of the  
distribution would be allocated, taxed and charged interest 
in the manner described above. You could avoid these        
consequences by electing to include on a current basis your 
share of IWCL's ordinary earnings and net capital gain for  
each taxable year, or by electing to mark to market your    
class A common stock at the end of each taxable year.       

Under the PFIC rules, IWCL will generally be a PFIC in any  
taxable year in which either at least 75% of its gross      
income is "passive income" or at least 50% of its assets are
"passive assets". "Passive income" is generally income      
derived from sources other than an active trade or business;
"passive assets" are assets that produce or are held for the
production of passive income. This discussion assumes that  
IWCL should, under current law, be treated for the purposes 
of determining IWCL's passive income and passive assets as  
owning its share of Iridium's gross assets and as earning   
directly its share of Iridium's gross income; IWCL would be 
a PFIC if it were not permitted to be treated in this       
manner. The determination of whether IWCL is a PFIC must be 
made annually based upon the composition of the income and  
assets of IWCL, Iridium and any corporation in which IWCL or
Iridium holds a 25%-or-more interest. IWCL does not         
currently believe that it is a PFIC nor does it currently   
anticipate becoming a PFIC; however, there can be no        
assurance that IWCL will not be considered a PFIC for any   
taxable year. Furthermore, if IWCL were determined to be a  
PFIC in 1998, IWCL would be considered a PFIC for 1997 as   
well.                                                       

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USE OF PROCEEDS 

 The net proceeds from the Offerings after the underwriting discount and
expenses are estimated to be approximately $242 million ($278 million if the    
U.S. underwriters' and international managers' over-allotment options are       
exercised in full). The net proceeds of the Offerings (before expenses) will be 
used by IWCL to purchase 7,500,000 class 1 interests (8,625,000 class 1         
interests, if the U.S. underwriters' and international managers' over-allotment 
options are exercised in full). Iridium expects to use the net proceeds from the
sale of class 1 interests to IWCL for general corporate purposes, including     
payments under the O&M contract. Pending such use, Iridium may temporarily      
reduce the amount outstanding under the $275 million revolving portion of the   
Motorola guaranteed bank facilities or invest such proceeds in short-term       
investment grade debt securities. See "Summary -- Estimated Funding             
Requirements -- Sources and Uses of Funds by Iridium". The expenses of the      
Offerings, estimated at $850,000, will be paid by Iridium.                      

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY 

PRICE RANGE OF THE CLASS A COMMON STOCK                                         

    The class A common stock is quoted on the Nasdaq National Market under the
symbol IRIDF. The following table sets forth the high and low sale prices of the
class A common stock for certain periods since its initial public offering on   
June 9, 1997.                                                                   

                                                                [Download Table]

                      QUARTERLY PERIOD                          HIGH       LOW  
                      ----------------                        --------   -------
                                                                                
1997                                                                            
  June 9 to June 30.........................................   $23.125   $18.000
  Third Quarter.............................................    45.000    17.000
  Fourth Quarter............................................    54.625    31.750
1998                                                                            
  First Quarter.............................................    68.250    30.500
  Second Quarter............................................    72.188    49.000
  Third Quarter.............................................    61.625    31.000
  Fourth Quarter............................................    49.875    26.750
1999                                                                            
  First Quarter (through January 21)........................    44.500    37.063

The last reported sale price of the class A common stock on the Nasdaq
National Market on January 21, 1999 was $37 3/8 per share.                      

DIVIDEND POLICY                                                                 

   IWCL has never declared or paid any dividends on its class A common stock
or class B common stock, and Iridium has never made distributions on its class 1
interests. IWCL and, except as described below, Iridium do not currently        
anticipate paying any such dividends or distributions until sometime            
significantly after Iridium's achievement of positive operating cash flow, if at
all. In addition, Iridium is effectively restricted under certain debt covenants
from paying any dividends on its class 1 interests and those covenants (or      
similar covenants) are likely to be in effect long after the time Iridium would 
otherwise have funds available for distribution to its members.                 

    IWCL's only assets are its class 1 interests and rights to acquire class 1
interests, and IWCL has no independent means of generating revenues. Iridium    
pays IWCL's operating expenses, which expenses have not been, and are not       
expected to be, material. To the extent permitted by applicable law and its     
agreements relating to indebtedness, Iridium intends to distribute to its class 
1 members, including IWCL, net cash, if any, received from its operations, less 
amounts required to repay outstanding indebtedness, satisfy other liabilities   
and fund capital expenditures and contingencies. Iridium's LLC agreement        
requires the Iridium Board of Directors, to the extent of legally available     
funds, to declare and pay a dividend sufficient to assure                       

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that each non-U.S. class 1 member receives an amount at least equal to the      
amount of such member's United States federal, state and local income tax       
liability resulting from allocations of Iridium's income to such member.        

  IWCL intends to promptly distribute as dividends to its shareholders the
distributions, if any, made to it by Iridium, less any amounts reasonably       
required to be retained for payment of taxes, for repayment of any liabilities  
and to fund any contingencies. Any dividend declared must be declared and paid  
equally on the outstanding shares of class A common stock and class B common    
stock. See "Description of Capital Stock -- Common Stock -- Dividend Rights".   

DILUTION

 When you purchase a share of class A common stock and IWCL uses the net
proceeds to make a corresponding purchase of a class 1 interest of Iridium, IWCL
will suffer immediate per interest "dilution" in respect of such interests in an
amount equal to the difference between the price paid per class 1 interest (the 
price you paid per share of class A common stock, less the underwriting         
discount) and Iridium's net tangible book value per class 1 interest, after     
giving effect to the Offerings.                                                 

     The following table illustrates the dilution in pro forma net tangible book
value on a per class 1 interest basis per share of class A common stock. The    
price per class 1 interest paid by IWCL equals the price of the class A common  
stock offered hereby less the underwriting discount per share. Net tangible book
value per class 1 interest is equal to Iridium's total tangible assets less     
total liabilities as of September 30, 1998, divided by the number of class 1    
interests outstanding at that date. Iridium expects that its net tangible book  
value will decrease substantially in 1999 as it transitions from a development  
stage company into an operating company because it will have substantial        
depreciation without substantial offsetting revenues.                           

                                                                [Download Table]
                                                                                
Purchase price per class 1 interest purchased by IWCL with                      
  the proceeds of the Offerings.............................              $32.32
Net tangible book value per class 1 interest at September                       
  30, 1998..................................................   $5.40            
Increase in net tangible book value per class 1 interest                        
  attributable to the use of the proceeds from the Offerings                    
  to purchase class 1 interests.............................   $1.35            
                                                               -----            
Pro forma net tangible book value per class 1 interest after                    
  the Offerings.............................................              $ 6.75
Pro forma dilution per class 1 interest to IWCL in                              
  connection with the Offerings.............................              $25.57

The following table presents information with respect to the potential
issuances of class 1 interests pursuant to warrants, convertible interests and  
purchase commitments outstanding on December 15, 1998,                          

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after giving effect to the Offerings and assuming the U.S. underwriters' and    
international managers' over-allotment options are not exercised.               

                                                        [Enlarge/Download Table]

                                                                                CASH CONSIDERATION
                                                             CLASS 1 INTERESTS   PAID OR PAYABLE  
                                                             -----------------  ------------------
                                                                                  (IN THOUSANDS)  
                                                                                                  
Outstanding Class 1 Interests at December 15, 1998:                                               
     Iridium's strategic investors..........................    129,219,180         $1,730,481    
     IWCL (1)...............................................     19,701,273            469,762    
                                                                -----------         ----------    
          Total outstanding.................................    148,920,453          2,200,243    
                                                                ===========         ==========    
Outstanding Warrants and Convertible Interests at December                                        
  15, 1998:                                                                                       
     Warrants issued under the Motorola ARG (2).............      7,781,174         $      833    
     Warrant to acquire series M class 2 interests (3)......      4,252,305             56,683    
     Series A class 2 interests (4).........................      1,159,978             31,550    
     Warrants issued with 14 1/2% senior subordinated notes                                       
       (5)..................................................      4,997,281                  1    
     Warrants issued under gateway incentive program (6)....      3,300,000                 --    
     Warrants issued with senior notes (7)..................      1,461,200             30,539    
     Management options (8).................................      2,472,109             45,967    
                                                                -----------         ----------    
          Total potential issuances.........................     25,424,047            165,573    
                                                                ===========         ==========    

---------------                                                                 
(1) Includes 19,680,648 class 1 interests purchased from Iridium in respect of  
    the 19,680,648 outstanding shares of class A common stock and 20,625 class 1
    interests purchased from Iridium in respect of the 20,625 outstanding shares
of class B common stock. In connection with Iridium's NOMAD program for 
 promoting the authorization and use of the Iridium system by governments,
   Iridium expects that up to 1,750,000 shares of class B common stock will be
issued at a price of approximately $13.33 per share. Subject to         
  anti-dilution adjustments, Iridium issues one class 1 interest to IWCL for
each share of class B common stock issued in connection with the NOMAD  
  program. These shares of class B common stock are exchangeable for class A
 common stock on a share for share basis after the satisfaction of certain
    conditions, but in no event earlier than one year after they have been fully
paid for by their purchaser.                                            

(2) Represents warrants earned by Motorola under the Motorola ARG to purchase   
(i) 7,741,346 class 1 interests at a price of approximately $0.00013 per
    interest and (ii) 39,828 class 1 interests at a price of $20.90 per interest
for providing guarantees of Iridium's bank credit facilities and other  
   credit support. Payments under the Motorola ARG are based on the amount and
    duration of Motorola exposure (which generally includes the aggregate amount
guaranteed or permitted to be deferred). It is likely that Motorola will
earn substantial additional warrants to purchase class 1 interests (or, 
   under certain conditions, warrants to purchase class A common stock) in the
   future. In addition, the amount of daily warrant compensation due under the
Motorola ARG increases substantially after October 1, 1999 any time the 
Motorola exposure is greater than $275 million. While Iridium has agreed
with Motorola that it will use its best efforts to reduce the Motorola  
  exposure to $275 million or less as soon as possible, Iridium's ability to
repay or replace borrowings guaranteed by Motorola or pay or finance    
   (without a Motorola guarantee) deferrals of amounts due to Motorola depends
 on a variety of factors, including Iridium's ability to generate revenues
and factors beyond Iridium's control such as the condition of the bank  
 lending and securities markets. See "Risk Factors -- The Price of Class A
Common Stock May Decline Due to Shares Eligible For Future Sale" and    
   "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources -- Sources of Funding".   

(3) Motorola holds a warrant to acquire series M class 2 interests in Iridium in
    an amount that would be convertible into 2.5% of the fully diluted number of
    class 1 interests outstanding at the time of exercise. The 4,252,305 class 1
   interests reflected in the above table assumes that all potential issuances
   of class 1 interests listed in the table have been made. The exercise price
  is $1,000 per series M class 2 interest. Each series M class 2 interest is
currently convertible into 75 class 1 interests.                        

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(4) Each series A class 2 interest is convertible into 18.51 class 1 interests. 
 Assumes that future dividends permitted to be paid in additional series A
 class 2 interests are paid in series A class 2 interests and not in cash.
   The cash consideration represents the cash payment for the series A class 2
interests (including the liquidation preference of the series A class 2 
interests issued in satisfaction of dividend obligations).              

(5) Represents warrants to purchase 4,997,281 class 1 interests (at an exercise 
  price of approximately $0.00013 per class 1 interest) issued in connection
 with the issuance and sale of Iridium's 14 1/2% senior subordinated notes
due 2006.                                                               

(6) Warrants to purchase up to 9,165,000 class 1 membership interests at a      
purchase price of approximately $0.00013 per class 1 membership interest
    have been authorized for issuance to gateway owners and to Motorola based on
 satisfaction of certain performance criteria relating to the construction
   and implementation of gateways and gateway services. Iridium estimates that
the gateways and Motorola have earned the right to receive warrants to  
   purchase an aggregate of approximately 3,300,000 class 1 interests pursuant
to this authorization.                                                  

(7) Represents outstanding warrants to purchase approximately 1,461,200 class 1 
    interests (at an exercise price of $20.90 per class 1 interest) held by IWCL
in connection with the offering of the 13% series A senior notes and    
  accompanying warrants to purchase 1,560,000 shares of class A common stock
(at an exercise price of $20.90 per share of class A common             
   stock -- warrants to purchase approximately 98,800 shares of class A common
stock (class 1 interests) have been exercised).                         

(8) Up to 5,625,000 class 1 interests may be issued in connection with Iridium's
option plan. At December 15, 1998, there were options to purchase       
    approximately 2,472,109 shares of class A common stock outstanding under the
   Iridium option plan with an average exercise price of approximately $18.594
   per share. Subject to anti-dilution adjustments, Iridium issues one class 1
  interest to IWCL for each share of class A common stock issued pursuant to
the Iridium option plan.                                                

In addition, Iridium may issue up to 18,206,550 class 1 interests at a
purchase price of approximately $13.33 per class 1 interest pursuant to the     
reserve capital call. The reserve capital call is the commitment by 17 of       
Iridium's strategic investors to purchase class 1 interests. The reserve capital
call currently is pledged as collateral to the lenders under the secured bank   
facility.                                                                       

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CAPITALIZATION

IRIDIUM                                                                         

The following table sets forth as of September 30, 1998: (i) the      
capitalization of Iridium, (ii) the pro forma capitalization of Iridium         
reflecting the December 23, 1998 establishment of the secured bank facility and 
the guaranteed bank facilities and the approximate amounts outstanding          
thereunder at December 31, 1998 (Iridium used approximately $682 million of the 
funds available thereunder to repay outstanding Iridium bank debt) and (iii) the
pro forma capitalization of Iridium, as adjusted to reflect the issuance and    
sale of 7,500,000 class 1 interests by Iridium to IWCL in exchange for the      
estimated net proceeds of the Offerings (less the expenses of the Offerings,    
estimated at $850,000). See "Use of Proceeds".                                  

                                                        [Enlarge/Download Table]

                                                                 SEPTEMBER 30, 1998            
                                                       --------------------------------------- 
                                                                                    PRO FORMA  
                                                         ACTUAL       PRO FORMA    AS ADJUSTED 
                                                       -----------   -----------   ----------- 
                                                               (DOLLARS IN THOUSANDS)          
                                                                                               
Secured credit facility (maturity 12/31/98)........... $   410,000   $        --   $        -- 
Guaranteed credit facility (maturity 6/30/99).........     271,500            --            -- 
Secured bank facility (maturity 12/29/00) (1).........          --       500,000       500,000 
Guaranteed bank facility ($475 million maturity                                                
  12/29/00; $275 million maturity 12/31/01) (2).......          --       625,000       625,000 
13% senior notes due 2005, series A (3)...............     277,796       277,796       277,796 
14% senior notes due 2005, series B (3)...............     479,112       479,112       479,112 
11 1/4% senior notes due 2005, series C...............     300,000       300,000       300,000 
10 7/8% senior notes due 2005, series D (3)...........     347,834       347,834       347,834 
14 1/2% senior subordinated notes due to Iridium's                                             
  members in 2006.....................................     310,149       310,149       310,149 
                                                       -----------   -----------   ----------- 
          Total debt.................................. $ 2,396,391   $ 2,839,891   $ 2,839,891 
Members' interests.................................... $ 2,076,241   $ 2,076,241   $ 2,317,791 
Deferred class 1 interest compensation................      (1,242)       (1,242)       (1,242)
Deficit accumulated during the development stage......  (1,240,115)   (1,240,115)   (1,240,115)
Adjustment for minimum pension liability..............        (643)         (643)         (643)
                                                       -----------   -----------   ----------- 
          Total members' equity.......................     834,241       834,241     1,075,791 
                                                       -----------   -----------   ----------- 
               Total capitalization................... $ 3,230,632   $ 3,674,132   $ 3,915,682 
                                                       ===========   ===========   =========== 

---------------                                                                 
(1) Iridium expects to borrow an additional $300 million, the remaining         
    available amount under the secured bank facility, prior to January 22, 1999.

(2) Does not reflect any temporary reduction in amounts outstanding under the   
  $275 million revolving portion of the guaranteed bank facilities. See "Use
of Proceeds".                                                           

(3) The series A notes, series B notes and series D notes were issued at a      
discount to their principal amount. The series A notes have a principal 
  amount of $300 million, the series B notes have a principal amount of $500
million and the series D notes have a principal amount of $350 million. 

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IWCL                                                                            

The following table sets forth as of September 30, 1998: (i) the      
capitalization of IWCL and (ii) the capitalization of IWCL as adjusted to       
reflect the issuance and sale by IWCL of 7,500,000 shares of class A common     
stock in the Offerings and the receipt of the estimated net proceeds therefrom. 

                                                        [Enlarge/Download Table]

                                                                SEPTEMBER 30, 1998   
                                                              -----------------------
                                                               ACTUAL     AS ADJUSTED
                                                              ---------   -----------
                                                              (DOLLARS IN THOUSANDS) 
                                                                                     
Stockholders' equity:                                                                
Class A common stock, par value $.01 per share, 50,000,000                           
  shares authorized; 12,175,690 and 19,675,690 shares issued                         
  and outstanding as adjusted...............................  $     122    $     197 
Class B common stock, par value $.01 per share, 2,500,000                            
  shares authorized; 20,625 and 20,625 shares issued and                             
  outstanding...............................................         --           -- 
Additional paid-in capital..................................    245,980      488,305 
Accumulated deficit.........................................    (88,808)     (88,808)
                                                              ---------    --------- 
          Total stockholders' equity........................    157,294      399,694 
                                                              ---------    --------- 
               Total capitalization.........................  $ 157,294    $ 399,694 
                                                              =========    ========= 

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SELECTED FINANCIAL DATA 

   The financial data in the following tables summarizes certain information
derived from Iridium's consolidated financial statements and IWCL's financial   
statements. KPMG LLP, independent certified public accountants, audited those   
financial statements except for the periods where the word "unaudited" appears  
above a column. In the opinion of management of Iridium, such unaudited         
condensed consolidated financial statements include all adjustments necessary   
for a fair presentation of the financial position and the results of operations 
as of and for such periods. You should read this data together with the         
financial statements and "Management's Discussion and Analysis of Financial     
Condition and Results of Operations", which are included in this prospectus as  
well as in the documents referred to under "Where You Can Find More             
Information". Iridium is transitioning from a development stage company into an 
operating company and, accordingly, you should not assume that Iridium's and    
IWCL's results of operations for the nine months ended September 30, 1998 are   
indicative of what their respective results will be for 1998 or any other       
subsequent period.                                                              

IRIDIUM                                                                         

                                                        [Enlarge/Download Table]

                            PERIOD PRIOR TO                                                                                    
                            INITIAL CAPITAL                                                                                    
                             CONTRIBUTION                                        PERIODS FOLLOWING INITIAL                     
                                DATE(1)                                          CAPITAL CONTRIBUTION DATE                     
                            ---------------                  ------------------------------------------------------------------
                                                                                                          NINE MONTHS ENDED    
                             JAN. 1, 1993    JULY 29, 1993             YEAR ENDED DEC. 31                   SEPTEMBER 30,      
                                  TO              TO         --------------------------------------   -------------------------
                             JULY 28, 1993   DEC. 31, 1993    1994      1995      1996       1997        1997          1998    
                            ---------------  -------------   -------   -------   -------   --------   -----------   -----------
                                                                                                      (UNAUDITED)   (UNAUDITED)
                                                 (DOLLARS IN THOUSANDS EXCEPT PER CLASS 1 INTEREST DATA)                       
                                                                                                                               
CONSOLIDATED STATEMENT OF                                                                                                      
  LOSS DATA:                                                                                                                   
  Revenues (2).............     $   --          $   --       $    --   $    --   $    --   $     --    $     --      $     --  
  Sales, general and                                                                                                           
    administrative.........      5,309           7,093        16,729    26,436    70,730    177,474     122,926       261,261  
  Depreciation and                                                                                                             
    amortization...........         --              48           832       751       674    119,124      46,539       378,276  
  Interest (income)                                                                                                            
    expense, net...........         --            (390)       (4,252)   (5,226)   (2,395)    (3,045)     (1,516)      173,185  
  Provision for income                                                                                                         
    taxes..................         --             173         1,525     1,684     4,589         --          --            --  
                                ------          ------       -------   -------   -------   --------    --------      --------  
  Net loss.................     $5,309          $6,924       $14,834   $23,645   $73,598   $293,553    $167,949      $812,722  
                                ======          ======       =======   =======   =======   ========    ========      ========  
  Net loss per class 1                                                                                                         
    interest...............     $   --          $  .43       $   .38   $   .27   $   .64   $   2.25    $   1.33      $   5.78  
                                ======          ======       =======   =======   =======   ========    ========      ========  

                                                        [Enlarge/Download Table]

                                                       DECEMBER 31,                             SEPTEMBER 30, 1998     
                                ----------------------------------------------------------  ---------------------------
                                                                                                           PRO FORMA   
                                  1993       1994        1995         1996         1997       ACTUAL     AS ADJUSTED(3)
                                --------   --------   ----------   ----------   ----------  ----------   --------------
                                                  (DOLLARS IN THOUSANDS)                            (UNAUDITED)        
                                                                                                                       
CONSOLIDATED BALANCE SHEET                                                                                             
  DATA:                                                                                                                
  Cash and cash equivalents.... $ 23,496   $202,391   $   51,332   $    1,889   $    9,040  $   65,207     $  750,257  
  Restricted cash..............       --         --           --           --      350,220          --             --  
  System under construction....  275,000    646,000    1,448,000    2,376,884    1,625,054     523,739        523,739  
  Property and equipment,                                                                                              
    net........................      320      1,522        1,264        2,065    1,526,326   2,865,070      2,865,070  
  Total assets.................  299,886    851,809    1,505,383    2,434,081    3,645,687   3,564,602      4,249,652  
  Long-term debt...............       --         --           --      735,904    1,537,590   1,714,891      2,839,891  
  Total members' equity........ $294,308   $795,813   $1,404,610   $1,572,029   $1,634,637  $  834,241     $1,075,791  

---------------                                                                 
(1) These amounts reflect certain costs incurred by Motorola prior to July 29,  
1993 that were reimbursed by Iridium.                                   

(2) Iridium was a development stage company for the periods presented and,      
accordingly, had no meaningful revenue for such periods.                

(3) Pro forma to reflect the December 23, 1998 establishment of the secured bank
facility and the guaranteed bank facilities and the approximate amounts 
  expected to be outstanding thereunder at December 31, 1998 and as adjusted
   for the issuance and sale of 7,500,000 class 1 interests by Iridium to IWCL
in exchange for the estimated net proceeds of the Offerings (less the   
expenses of the Offerings, estimated at $850,000).                      

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IWCL                                                                            

                                                        [Enlarge/Download Table]

                                                 PERIOD FROM                             NINE MONTHS ENDED  
                                              DECEMBER 12, 1996                            SEPTEMBER 30,    
                                                (INCEPTION) TO         YEAR ENDED       --------------------
                                              DECEMBER 31, 1996    DECEMBER 31, 1997      1997       1998   
                                              ------------------   ------------------   --------   ---------
                                               (DOLLARS IN THOUSANDS EXCEPT PER CLASS A COMMON STOCK DATA)  
                                                                                            (UNAUDITED)     
                                                                                                            
STATEMENT OF LOSS DATA:                                                                                     
  Equity in loss of Iridium.................       $    --              $18,834          $8,039     $69,974 
                                                   -------              -------          ------     ------- 
  Loss before income taxes..................            --               18,834           8,039      69,974 
  Income taxes..............................            --                   --              --          -- 
                                                   -------              -------          ------     ------- 
  Net loss..................................       $    --              $18,834          $8,039     $69,974 
                                                   =======              =======          ======     ======= 
  Net loss per class A common share -- basic                                                                
     and diluted............................       $    --              $  2.79          $ 1.62     $  5.81 
                                                   =======              =======          ======     ======= 

                                                        [Enlarge/Download Table]

                                                                            NINE MONTHS ENDED   
                                                                            SEPTEMBER 30, 1998  
                                                       DECEMBER 31,       ----------------------
                                                    -------------------                  AS     
                                                      1996       1997      ACTUAL    ADJUSTED(1)
                                                    --------   --------   --------   -----------
                                                               (DOLLARS IN THOUSANDS)           
                                                                               (UNAUDITED)      
                                                                                                
BALANCE SHEET DATA:                                                                             
  Cash............................................. $     --   $     --   $     --    $     --  
  Investment in Iridium............................       --    223,922    157,294     399,694  
                                                    --------   --------   --------    --------  
     Total assets.................................. $     --   $223,922   $157,294    $399,694  
                                                    ========   ========   ========    ========  
  Liabilities...................................... $     --   $     --   $     --    $     --  
                                                    --------   --------   --------    --------  
  Total stockholders' equity....................... $     --   $223,922   $157,294    $399,694  
                                                    ========   ========   ========    ========  

---------------                                                                 
(1) As adjusted to reflect the issuance and sale of 7,500,000 class 1 interests 
by Iridium to IWCL in exchange for the estimated net proceeds of the    
Offerings. See "Use of Proceeds".                                       

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
AND RESULTS OF OPERATIONS 

    The following discussion and analysis of Iridium's financial condition and
results of operations is based upon, and in certain respects updates, the       
discussion and analysis of financial condition and results of operations        
included in Iridium's quarterly report on Form 10-Q for the quarter ended       
September 30, 1998. The information under "-- Recent Developments" and its      
effect on Iridium's business and financial condition is based upon the more     
detailed information included in Iridium's current report on Form 8-K, filed    
December 30, 1998. The secured bank facility, the guaranteed bank facilities,   
the Motorola MOU, the Motorola ARG and the Claircom stock purchase agreement    
were filed as exhibits to the Form 8-K filed December 30, 1998 and you are urged
to read the exhibits for a complete understanding of those agreements. See      
"Where You Can Find More Information".                                          

RECENT DEVELOPMENTS                                                             

  Iridium commenced commercial satellite phone service on November 1, 1998
and commercial satellite paging service on November 15, 1998. Iridium is        
currently offering all four of its principal services: Iridium World Satellite  
Service, Iridium World Page Service, Iridium World Roaming Service and Iridium  
World Calling Card Service.                                                     

 On December 22, 1998, Iridium and Iridium Aero Acquisition Sub, Inc., a
Delaware corporation and a wholly-owned subsidiary of Iridium, entered into a   
stock purchase agreement pursuant to which Iridium Aero agreed to acquire all of
the outstanding capital stock of Claircom Communications Group, Inc., a Delaware
corporation and a provider of in-flight phone service for commercial and        
executive aircraft, from ATG I, Inc., a Delaware corporation and a wholly owned 
subsidiary of AT&T Wireless Services, Inc., and Rogers Cantel Inc. Iridium Aero 
agreed to acquire the Claircom shares for an estimated aggregate price of       
approximately $65 million, consisting of approximately $25.6 million in cash to 
be paid at closing and approximately $39.4 million of notes of Claircom which   
will be guaranteed by Iridium and issued to the sellers of the Claircom shares  
immediately prior to closing. The aggregate purchase price is subject to certain
adjustments, including working capital adjustments and adjustments for capital  
expenditures made for the benefit of Claircom prior to the closing. The Claircom
notes issued to the sellers will have a term of nine years and will pay interest
at a rate of 8% per annum, but will not require any payments for the first two  
years following their issuance -- interest accrued during the first two-year    
period will be added to the principal amount of the notes. The Claircom notes   
also will contain certain restrictive covenants, including restrictions on      
dividends, and will be secured by substantially all of the assets of Claircom   
and a pledge of the Claircom shares by Iridium Aero. The consummation of the    
acquisition of the Claircom shares is subject to certain significant conditions,
including regulatory approval.                                                  

  On December 23, 1998, Iridium closed on three new bank credit facilities
providing for an aggregate amount of up to approximately $1.55 billion of       
borrowings -- (i) the $800 million secured bank facility due December 29, 2000  
and (ii) the $750 million (collectively) Motorola guaranteed bank facilities    
(which includes a $475 million term credit facility due December 29, 2000 and a 
$275 million revolving credit facility due December 31, 2001). Iridium used (i) 
approximately $682 million of the funds available under these new bank          
facilities to repay its outstanding bank debt, of which $410 million was due to 
mature on December 31, 1998, and (ii) approximately $370 million of such funds  
to make payments under its various contracts with Motorola. The secured bank    
facility is secured by, among other things, substantially all of Iridium's      
assets. Borrowings under the Motorola guaranteed bank facilities are guaranteed 
by Motorola. Pursuant to the Motorola MOU and the Motorola ARG, Iridium is      
required to compensate Motorola with equity and cash for, among other things,   
providing guarantees of Iridium's borrowings under the Motorola guaranteed bank 
facilities.                                                                     

For the fourth quarter ending December 31, 1998, Iridium recorded     
(unaudited) a net loss of approximately $440 million, or a net loss of          
approximately $3.12 per class 1 interest, reflecting revenues from its limited  
commercial operations of approximately $186,000. Iridium recorded (unaudited) a 
net loss of                                                                     

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approximately $1,259 million, or a net loss of approximately $8.91 per class 1  
interest for the 12 months ended December 31, 1998.                             

LIQUIDITY AND CAPITAL RESOURCES                                                 

Funding Requirements                                                            

    General.  In the fourth quarter of 1998, Iridium began its transition from
a development stage company into an operating company and, as a result, the     
characteristics of its funding requirements are changing. Through year end 1998,
Iridium's funding requirements principally were driven by the cost of the       
initial development and construction of the Iridium system. In contrast, Iridium
expects that its future funding requirements will be driven principally by the  
costs of operating and maintaining the Iridium system and providing Iridium     
services.                                                                       

     Iridium System Construction and Operation.  With respect to the development
and construction of the Iridium system, Iridium and Motorola are parties to (i) 
the space system contract for the design, development, production and delivery  
in orbit of the space segment, (ii) the terrestrial network development contract
to design the gateway hardware and software, and (iii) the O&M contract to      
provide day-to-day management of the space segment after deployment and to      
monitor, upgrade and replace hardware and software of the space segment as      
necessary to maintain performance specifications. Substantially all of the      
initial capital raised by Iridium was used and will continue to be used to make 
payments to Motorola under the space system contract, the terrestrial network   
development contract and the O&M contract. The space system contract provides   
for a fixed price of $3.45 billion (subject to certain adjustments), scheduled  
to be paid by Iridium to Motorola over approximately a five-year period for     
completion of milestones under the contract.                                    

   As of December 31, 1998, Iridium had paid approximately $3.380 billion of
the approximately $3.435 billion aggregate estimated cost of the space system   
contract and expects that it will make the remaining $55 million payment in the 
first quarter of 1999. As of December 31, 1998, Iridium had paid approximately  
$226 million of the $356 million aggregate estimated cost of the terrestrial    
network development contract. Iridium expects to make the remaining $130 million
of payments expected to be due under the terrestrial network development        
contract prior to December 31, 1999.                                            

    Iridium expects the O&M contract to be the source of Iridium's single most
significant funding requirements during commercial operations. The O&M contract 
has a five-year term (ending in November, 2003) and is extendable, at Iridium's 
option, for an additional two years. Payments under the O&M contract are payable
quarterly and are expected to aggregate approximately $2.88 billion over the    
initial five-year term of the contract. If Iridium exercises its option to      
extend the O&M contract for an additional two years, the payments due for that  
two-year extension are expected to aggregate approximately $1.33 billion. In    
addition, Iridium is obligated to pay for certain spare satellites, if any, upon
the completion of the contract. The quarterly payments under the O&M contract   
increase each year, ranging from payments of $129.4 million in 1998 to $157.4   
million in 2003 and $171.4 million in 2005 (if extended).                       

 Iridium's expected future cash requirements by year under its principal
contracts through December 31, 2000 are approximately as follows (in millions): 

                                                                [Download Table]

                                                              1999   2000
                                                              ----   ----
                                                                         
Space system contract.......................................  $ 55     --
Terrestrial network development contract....................   130     --
O&M contract(1).............................................   537   $557

---------------                                                                 
(1) Does not reflect deferrals of payments due under the O&M contract. Under the
    Motorola MOU, Motorola has agreed to permit Iridium to defer its obligations
   to pay up to an aggregate of $400 million of payments due to Motorola under
  the O&M contract until December 29, 2000. As of December 31, 1998, Iridium
  had deferred payment of approximately $86 million of its obligations under
the O&M contract and it expects to defer an aggregate of $400 million of
such obligations prior to September 1, 1999.                            

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 As a result of technological developments, changes in Iridium's product
mix, and scheduling adjustments, including the implementation of Iridium World  
Roaming Services into Iridium's service offerings, there have been, and Iridium 
anticipates there may be, amendments and interpretations of the terrestrial     
network development contract and the O&M contract and other agreements and      
letters with Motorola which may increase the total costs of these contracts.    
While Iridium's estimate of the cost of anticipated amendments and              
interpretations is reflected in Iridium's estimates of its funding requirements,
there can be no assurance that future amendments or interpretations will not    
affect the price and terms of those agreements in a manner that is not reflected
in Iridium's funding estimates.                                                 

Claircom Acquisition.  The expected acquisition of Claircom has an    
estimated aggregate purchase price of approximately $65 million, consisting of  
approximately $25.6 million in cash to be paid at closing and approximately     
$39.4 million of notes of Claircom which will be guaranteed by Iridium and      
issued to the sellers of the Claircom shares immediately prior to closing.      

 Working Capital, Financing Costs and Software Development.  Iridium has
required, and will continue to require, funds for working capital, business     
software development, interest on borrowings, financing costs and operating     
expenses. Iridium estimates that through December 31, 1998 these costs          
aggregated approximately $1.11 billion from July 29, 1993, the inception of     
Iridium's predecessor. Iridium estimates that its costs in calendar year 1999   
for (i) operating expenses and working capital, (ii) interest expense and       
financing costs and (iii) business support systems and related expenditures will
aggregate approximately $905 million.                                           

Sources of Funding                                                              

General.  Through year end 1998, Iridium's funding requirements were  
principally driven by the cost of the initial development and construction of   
the Iridium system and Iridium expended approximately $4.8 billion over that    
period.                                                                         

   At the date hereof, after giving effect to receipt of the net proceeds of
the Offerings, Iridium estimates that it will have available for 1999 aggregate 
sources of external funding of approximately $1.336 billion. Iridium believes   
that it currently has sufficient external funding available to meet its expected
peak funding requirements. Iridium expects that its cash needs for 1999 will be 
approximately $1.653 billion. Iridium expects that if its 1999 revenues from    
operations exceed the difference between its actual 1999 cash needs and its     
actual 1999 available sources of external funding (an estimated difference of   
approximately $317 million, after giving effect to the Offerings), Iridium will 
reduce the commitments of the lenders under its bank credit agreements. To the  
extent that Iridium's revenues do not exceed this difference, Iridium will need 
to seek additional financing.                                                   

Following 1999, Iridium generally expects to fund the cash costs of   
operating and maintaining the Iridium system (including the O&M contract),      
providing Iridium's services, working capital, interest expense and financing   
costs through revenues from operations.                                         

   Equity Investments and Debt Securities.  As of December 31, 1998, Iridium
had received approximately $1.95 billion from the issuance of class 1 interests 
and approximately $31 million for the issuance of series A class 2 interests. As
of December 31, 1998, Iridium had received approximately $1.62 billion from the 
issuance of debt securities, including approximately $1.38 billion from the     
issuance of senior notes due 2005 and approximately $239 million from the       
issuance of senior subordinated notes due 2006.                                 

 Secured Bank Facility.  As of December 31, 1998, Iridium had drawn $500
million under the $800 million secured bank facility. Iridium expects to borrow 
an additional $300 million, the remaining available amount under the secured    
bank facility, prior to January 22, 1999. Borrowings under the secured bank     
facility mature on December 29, 2000. The parties to the secured bank facility  
are Iridium Operating LLC, a wholly owned subsidiary of Iridium that owns       
substantially all of Iridium's assets (including the Iridium system), Chase     
Securities Inc. and Barclays Bank PLC, as Global Arrangers, The Chase Manhattan 
Bank, as Administrative Agent, Barclays Bank PLC, as Documentation Agent,       
Merrill Lynch, Pierce, Fenner & Smith, Inc., as Syndication Agent, and a        
syndicate of lenders. Iridium Operating LLC's obligations under the secured bank
facility are secured by pledges of, and security interests in, substantially all
of Iridium                                                                      

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Operating LLC's assets, Iridium's equity interest in Iridium Operating LLC and  
the reserve capital call (the commitment of 17 of Iridium's strategic investors 
to purchase up to 18,206,550 class 1 interests at a price of $13.33 per class 1 
interest, representing an aggregate purchase price of up to approximately $243  
million).                                                                       

The secured bank facility contains various covenants. One group of    
covenants requires Iridium to satisfy certain minimum revenue and subscriber    
levels, including the conditions that (i) at March 31, 1999 it have cumulative  
cash revenues of at least $4 million, cumulative accrued revenues of at least   
$30 million, at least 27,000 Iridium World Satellite Service subscribers and at 
least 52,000 total subscribers, (ii) at June 30, 1999 it have cumulative cash   
revenues of at least $50 million, cumulative accrued revenues of at least $150  
million, at least 88,000 Iridium World Satellite Service subscribers and at     
least 213,000 total subscribers and (iii) at September 30, 1999 it have         
cumulative cash revenues of at least $220 million, cumulative accrued revenues  
of at least $470 million, at least 173,000 Iridium World Satellite Service      
subscribers and at least 454,000 total subscribers. Other covenants in the      
secured bank facility require Iridium to comply with certain financial ratios as
of various dates, including maximum debt to total invested capital, maximum     
secured debt to earnings, maximum debt to earnings and minimum interest expense 
to earnings. The secured bank facility also contains covenants related to, among
other things, the maintenance of insurance, the maintenance of regulatory       
authority to offer Iridium World Satellite Service in a minimum number of       
countries and the permitted uses of revenues from operations, borrowed funds and
proceeds from the issuance of securities. The secured bank facility also        
restricts Iridium's ability to incur additional indebtedness, make dividend and 
other payments and merge, consolidate or sell certain of its assets. In         
addition, the secured bank facility requires mandatory prepayments in the event 
that debt and equity issuances or cash flows exceed specified thresholds.       

  Guaranteed Bank Facilities.  The guaranteed bank facilities consist of a
$475 million term credit facility that matures on December 29, 2000 and a $275  
million revolving credit facility that matures on December 31, 2001, each with a
different, but partially overlapping, syndicate of lenders. As of December 31,  
1998, Iridium had drawn an aggregate of approximately $625 million under these  
facilities (approximately $470 million under the term facility and approximately
$155 million under the revolving facility). Pursuant to the terms of the        
guaranteed bank facilities, Iridium cannot have access to more than an aggregate
of approximately $745 million of borrowings in order to ensure that the Motorola
$750 million guarantee covers additional obligations of Iridium to the lenders  
under these facilities. The guaranteed bank facilities do not have covenants    
that directly address minimum revenues or subscriber levels. Borrowings under   
the guaranteed bank facilities are guaranteed by Motorola. Pursuant to the      
Motorola MOU and the Motorola ARG, Iridium is required to compensate Motorola   
with equity and cash interest for, among other things, guaranteeing borrowings  
under the guaranteed bank facilities.                                           

Motorola Vendor Financing and O&M Bank Facility Guarantee.  Under the 
Motorola MOU, Motorola has agreed to permit Iridium to defer its obligations to 
pay up to an aggregate of $400 million of payments due to Motorola under the O&M
contract until December 29, 2000. Iridium currently is deferring payment of its 
obligations under the O&M contract and expects to defer an aggregate of $400    
million of such obligations prior to September 1, 1999.                         

     Iridium has agreed under the Motorola MOU that it will use its best efforts
to obtain the Motorola guaranteed O&M bank facility to finance the payment of   
all such deferrals prior to October 1, 1999. Motorola has conditionally         
committed under the Motorola MOU to guarantee up to $400 million of borrowings  
under such Motorola guaranteed O&M bank facility. Iridium intends to, and       
expects that it will be able to, finance the payment of $400 million of deferred
amounts with the Motorola guaranteed O&M bank facility prior to October 1, 1999.
However, many factors, including changes in the bank lending market and         
Iridium's ability to generate revenues from commercial operations could         
adversely affect Iridium's ability to obtain the Motorola guaranteed O&M bank   
facility. In addition, Motorola's commitment to guarantee the Motorola          
guaranteed O&M bank facility is subject to certain conditions. Accordingly,     
there can be no assurance that Iridium will be able to obtain the Motorola      
guaranteed O&M bank facility or otherwise refinance its deferred obligations to 
Motorola under the O&M contract. Iridium is required to compensate Motorola     
pursuant to the Motorola ARG for Iridium's deferral of payments under the O&M   
contract and for Motorola's guarantee of the Motorola guaranteed O&M bank       
facility with cash and equity compensation, including warrants to purchase class
1 interests and warrants to purchase class A common stock.                      
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 Motorola MOU.  In connection with the establishment of the secured bank
facility and the guaranteed bank facilities, Motorola, Iridium and Iridium      
Operating LLC entered into the Motorola MOU, which amended and restated a       
previous memorandum of understanding. Under the MOU, Motorola has agreed to,    
among other things, (i) guarantee up to $750 million of obligations under the   
guaranteed bank facilities, (ii) consent to and agree to an amendment to the    
guaranteed bank facilities and the related guarantee agreement (or to enter into
a new bank credit facility and guarantee agreement on the same terms (other than
pricing)) that together provide for a $350 million increase in the Motorola     
guaranteed borrowings available thereunder, (iii) permit Iridium to defer its   
obligations to pay up to an aggregate of $400 million of payments under the O&M 
contract until December 29, 2000, (iv) guarantee up to $400 million of          
additional borrowings under a bank credit facility with terms (other than       
pricing) identical in all material respects to the guaranteed credit facilities 
on the condition that such additional guaranteed borrowings be used exclusively 
to make payments to Motorola for deferred obligations under the O&M contract (as
described in (iii) above), (v) subordinate certain of its claims vis-a-vis      
Iridium Operating LLC to the lenders under the secured bank facility and (vi)   
consent to an amendment to the $275 million revolving credit facility component 
of the guaranteed bank facilities that would extend the maturity of such        
facility to beyond the maturity of the senior notes (which are due July 15,     
2005). Iridium has agreed under the Motorola MOU that it will compensate        
Motorola for providing guarantees, deferral rights and other credit support     
(collectively, the "Motorola exposure", which generally includes the aggregate  
amount guaranteed, or permitted to be deferred, by Motorola) pursuant to the    
Motorola ARG.                                                                   

 Iridium also has agreed under the Motorola MOU that it (i) will use its
best efforts to reduce the Motorola exposure to no more than $275 million by the
earliest possible date, including obtaining bank credit agreements not          
guaranteed by Motorola, issuing debt and equity securities (under certain       
conditions) and using revenues from operations, if available, to reduce the     
available borrowings under credit facilities guaranteed by Motorola and to pay  
amounts deferred under contracts with Motorola, (ii) use their best efforts to  
obtain, on or before October 1, 1999, the Motorola guaranteed O&M bank facility 
to finance the payment of all deferred amounts under the O&M contract, (iii)    
will not have outstanding in excess of (a) $1.7 billion of indebtedness for     
borrowed money that is secured by the assets of Iridium or (b) $1.62 billion in 
aggregate principal amount of senior notes, (iv) will not make certain          
acquisitions without Motorola's consent and (v) will provide Motorola with the  
right (in addition to Motorola's rights to representation based on its holdings 
of class 1 interests) to appoint one additional director to the Board of        
Directors of Iridium any time the Motorola exposure exceeds $275 million and the
right to appoint a second additional director to the Board of Directors of      
Iridium any time the Motorola exposure exceeds $750 million. In addition, while 
Motorola has agreed to consent to (i) a $350 million increase in the amount of  
guaranteed borrowings available under the guaranteed bank facilities (or a new  
credit facility with terms (other than pricing) identical in all material       
respects) and (ii) to an extension of the maturity of the $275 million revolving
credit facility component of the guaranteed bank facilities, there can be no    
assurance that Iridium will satisfy the terms of the secured bank facility which
would terminate its conditional obligation to have Motorola guarantee borrowings
under the secured bank facility, that the lenders under the guaranteed credit   
facilities would agree to such amendments or that such a new credit facility    
would be available.                                                             

 Motorola's obligation to defer receipt of up to $400 million in payment
under the O&M contract is unconditional. All of Motorola's other obligations    
under the Motorola MOU, including, without limitation, its obligation to consent
to and agree to an amendment to the guaranteed bank facilities and the related  
guarantee agreement (or to enter into a new bank credit facility and guarantee  
agreement on the same material terms (other than principal)) that together      
provide for a $350 million increase in the Motorola guaranteed borrowings       
available thereunder, are conditioned on Iridium complying with the terms of the
Motorola MOU, Motorola ARG, the O&M contract and other agreements with Motorola,
including Iridium's payment obligations under each such agreement.              

 Motorola ARG.  In connection with the establishment of the secured bank
facility and the guaranteed bank facilities, Motorola, Iridium and Iridium      
Operating LLC also entered into the Motorola ARG, which amended and restated a  
previous agreement. Payments under the Motorola ARG are based on the amount and 
duration of Motorola exposure and are due and payable quarterly. Prior to       
October 1, 1999, Iridium is                                                     

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required to pay Motorola cash interest on the amount deferred at an annual      
interest rate of 12% for Motorola exposure relating to the deferred amounts     
under the O&M contract. For Motorola exposure relating to guarantees of         
borrowings under bank credit facilities that exists prior to October 1, 1999,   
Iridium is required to compensate Motorola with cash interest and equity        
(including warrants to purchase either class 1 interests or, under certain      
conditions, class A common stock). Prior to October 1, 1999, Motorola's         
compensation for Motorola exposure relating to the guaranteed bank facilities   
and the Motorola guaranteed O&M bank facility (if available) is based on the    
terms of the series A and series B senior notes. This "high yield based         
compensation" equals (i) interest on the Motorola exposure at an annual interest
rate equal to the amount, if any, by which the interest rate on the relevant    
bank facility is less than 13.625% (the weighted average interest rate on the   
series A and series B senior notes) plus (ii) the payment of warrants to        
purchase approximately 66.758 class 1 interests (or shares of class A common    
stock) per day per each $100 million of Motorola exposure at a purchase price of
$20.90 per interest (or share) (the average daily warrant compensation payable  
to holders of senior notes).                                                    

After October 1, 1999, Iridium is required to pay Motorola equity     
compensation (in the form of warrants to purchase class 1 interests at a        
purchase price of $0.00013 per interest) for all Motorola exposure unless the   
aggregate Motorola exposure is less than or equal to $275 million, in which case
Iridium may pay Motorola high yield based compensation. During this period,     
unless the Motorola exposure is less than $275 million, the amount of warrant   
compensation payable per dollar of Motorola exposure increases substantially as 
the Motorola exposure increases. In addition, Iridium is required to compensate 
Motorola with warrants to purchase class 1 interests at a price of $0.00013 per 
interest for any Motorola exposure resulting from Motorola making available any 
part of the additional $350 million in guaranteed borrowings discussed above    
regardless of when such Motorola exposure is incurred.                          

    As of December 15, 1998, for providing guarantees of Iridium's bank credit
facilities and other credit support Motorola had earned warrants to purchase (i)
7,741,346 class 1 interests at a price of $.00013 per interest and (ii) 39,828  
class 1 interests at a price of $20.90 per interest. The amount of equity       
compensation Motorola will earn in the future depends upon the amount of future 
Motorola exposure, is expected to be substantial and could increase             
significantly for a variety of reasons, including if Iridium is unable to reduce
the Motorola exposure to $275 million or less prior to October 1, 1999. While   
Iridium has agreed with Motorola that it will use its best efforts to reduce the
Motorola exposure to $275 million or less as soon as possible, Iridium's ability
to repay or replace borrowings guaranteed by Motorola or pay or finance (without
a Motorola guarantee) deferrals of amounts due to Motorola depends on a variety 
of factors, including Iridium's ability to generate revenues and factors beyond 
Iridium's control such as the condition of the bank lending and securities      
markets. If Iridium reduces the Motorola exposure to $275 million for the period
from October 1, 1999 through December 31, 2000 ($275 million of Motorola        
exposure for approximately 15 months), Motorola would earn warrants to purchase 
approximately 84,000 class 1 interests (or shares of class A common stock) at a 
purchase price of $20.90 per interest (or share) plus cash interest. However, if
Iridium draws all amounts available under the $750 million guaranteed credit    
facilities and defers the payment of an aggregate of $400 million under the O&M 
contract and this Motorola exposure remains in place in full from October 1,    
1999 through December 31, 2000 ($1.15 billion of Motorola exposure for 15       
months), Motorola would earn warrants to purchase approximately 12.9 million    
class 1 interests at a purchase price of approximately $0.00013 per interest    
pursuant to the Motorola ARG.                                                   

OPERATIONS                                                                      

  Iridium commenced commercial satellite phone service on November 1, 1998
and commercial satellite paging service on November 15, 1998. Prior to November 
1, 1998, Iridium's only source of income was interest income on the cash and    
investment balances from the proceeds of equity commitments in Iridium, which   
interest income amounted to approximately $21.2 million from July 29, 1993 to   
September 30, 1998. During the same period, Iridium recorded a net loss of      
approximately $1.253 billion.                                                   

     From September 30, 1997 to September 30, 1998, Iridium's aggregate net loss
increased substantially from $168 million to $813 million for the nine months   
ended September 30, 1997 and 1998, respectively. This was primarily the result  
of the following increases for the nine months ended September, 30 1998, as     
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compared to the corresponding period in 1997: $138 million for sales, general   
and administrative expenses due to increased activities associated with         
commercial activation, $331 million for depreciation expense due to the         
depreciation of a greater number of satellites and $176 million for increased   
interest expense. See "-- Capitalization of Costs", "-- Operating Expenses" and 
"-- Interest Expense".                                                          

CAPITALIZATION OF COSTS                                                         

All payments by Iridium under the space system contract have been     
capitalized. These capitalized costs are being depreciated over the five-year   
estimated life of the satellites. Depreciation expense is realized on a         
satellite-by-satellite basis, commencing with the delivery of each satellite to 
its mission orbit. Depreciation related to the ground control stations commences
with the placement in service of each such station. Losses from satellite       
failures for which Iridium has financial responsibility under its contractual   
arrangements with Motorola are recognized currently. Motorola bears the risk of 
loss for launch failures and satellite failures before a satellite is placed    
into service. Iridium has obtained a satellite insurance policy to cover certain
costs associated with the loss of a satellite. Capitalized amounts under the    
space system contract and the terrestrial network development contract          
aggregated approximately $3.45 billion through September 30, 1998. In addition, 
costs incurred in connection with the issuance by Iridium of class 1 interests  
are reflected as a reduction of Iridium's additional paid-in capital and        
Iridium's debt issuance costs are deferred and amortized over the term of the   
related indebtedness. Payment of these costs and charges has resulted in        
significant negative operating cash flow. Certain interest costs also will be   
capitalized through the date of commencement of commercial operations.          

   A portion of the payments made under the O&M contract will be capitalized
and depreciated. The amount so capitalized will be determined depending upon the
number of replacement satellites put into service. Any costs under the O&M      
contract not capitalized will be expensed as incurred.                          

OPERATING EXPENSES                                                              

For the period from July 29, 1993 through September 30, 1998, total   
operating expenses were approximately $1.06 billion. Iridium expects a          
substantial increase in future operating expenses relating to sales, marketing  
and other costs associated with commercialization.                              

INTEREST EXPENSE                                                                

 Iridium has financed, and expects to continue to finance, a significant
portion of its capital requirements through borrowings. As a result of these    
borrowings, Iridium has had, and expects it will have, significant interest     
costs. Interest costs were capitalized while the Iridium system was under       
construction and are now being depreciated. This resulted in all interest costs 
being capitalized during 1995, 1996 and 1997. For the nine months ended         
September 30, 1998, approximately $247.4 million of interest cost was incurred. 
Interest expensed for the nine months ended September 30, 1998 was approximately
$168.2 million with the remaining approximately $79.2 million of interest       
capitalized to the system under construction. Iridium anticipates that all      
interest cost incurred in 1999 will be expensed. Some portion of interest       
expense will not be paid in cash, including the interest expense related to     
Iridium's 14 1/2% senior subordinated notes through March 1, 2001. Such non-cash
interest will be accrued and such accrual will increase outstanding indebtedness
on Iridium's consolidated balance sheets.                                       

INCOME TAXES                                                                    

Iridium reports its income as a partnership for United States federal 
income tax purposes and accordingly, is not expected to be directly subject to  
U. S. federal income tax. Iridium may, however, be subject to tax in some state,
local or foreign jurisdictions on portions of its income. IWCL is directly      
subject to U.S. federal income tax on the portion of its income which is        
effectively connected with the U.S. business of Iridium. IWCL pays no income tax
under Bermuda law. See "Tax Considerations".                                    

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YEAR 2000 READINESS DISCLOSURE                                                  

    Iridium has established a Year 2000 Program, the "Y2K Program", to address
information-technology, or "IT", and non-IT problems that may exist within the  
Iridium system, including Iridium's suppliers, roaming partners, service        
providers and other material distributors.                                      

  Until recently, only two digits were used to represent the year in dates
recorded in computer systems. This practice did not anticipate the problem      
generated by the turn of the century, after which dates entered as "00" could be
understood by computers to mean 1900 instead of 2000. This and other date       
handling processes could result in the incorrect performance of computer        
calculations and functionality involving dates. Such miscalculations could      
adversely affect Iridium's installed computer systems, network elements,        
software applications and other business systems containing time sensitive      
programs. The Year 2000 issue may also affect the systems and applications of   
Iridium's roaming partners, service providers and other material distributors.  

Y2K Program                                                                     

 The Y2K Program encompasses the Iridium space and ground facilities, as
well as the relevant operations of Iridium's material suppliers and             
distributors, and addresses both IT and non-IT systems.                         

   The Y2K Program is divided into five major phases -- Awareness, Inventory
and Risk Assessment, Repair, Replacement and Renovation, Verification and       
Validation, and Implementation and Monitoring. The Awareness Phase is intended  
to ensure the establishment of the Y2K Program and the awareness of potential   
risks and Year 2000 issues. This phase, which involves communicating the status 
and progress of the Y2K Program within Iridium and to third parties, is an      
on-going activity and will continue as Iridium proceeds through the other       
phases.                                                                         

The Inventory and Risk Assessment Phase involves the performance of an
initial inventory of all Iridium hardware, software and infrastructure, as well 
as material vendors, to identify potential Year 2000 issues and to determine the
action required, if any, to mitigate the risk to Iridium. Through the gateways, 
Iridium is contacting its third party roaming partners and service providers to 
determine the Year 2000 status of their systems, as well as their plans to bring
them into compliance. That process is on-going. Material items are those        
believed by Iridium to have a significant impact on the business from a customer
service, financial or legal perspective. This phase is being performed by       
Iridium's internal Y2K team. Iridium anticipates that this phase will be        
substantially complete by the end of the first quarter of 1999.                 

     The Repair, Replacement and Renovation Phase is intended to ensure that the
appropriate items as identified in the final inventory and risk assessment are  
upgraded to meet Year 2000 compliance criteria. This may include software       
updates, hardware upgrades, development of new processes, new business          
practices, training programs, etc. While completion of the various elements of  
this phase is tied to corresponding elements within the assessment phase,       
Iridium anticipates that material repairs, replacements and renovations will be 
substantially complete by mid-1999 for systems under the direct control of      
Iridium. No current assessment of the completion dates for material repairs,    
replacements and renovations not under Iridium's direct control, and for which  
third parties such as gateways, service providers and roaming partners are      
responsible, will be available until completion of that portion of the Inventory
and Risk Assessment phase.                                                      

The Verification and Validation Phase ensures that critical business  
processes, systems and infrastructure are verified and tested to ensure Year    
2000 issues will not cause major disruption in the on-going operation of the    
Iridium business. Verification and testing of those systems under Iridium's     
direct control will be performed by Iridium's internal Y2K team with the support
of its technicians and certain of the principal suppliers of those systems. This
phase is ongoing, but Iridium expects all testing of those systems under its    
direct control to be substantially complete in the third quarter of 1999.       

Finally, during the Implementation and Monitoring Phase, the Year 2000
upgrades will be installed into Iridium's operating systems, as necessary. In   
addition, the monitoring activity will be employed in an effort to ensure that  
unforeseen Year 2000 critical items are appropriately prioritized for           
correction. While the                                                           

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implementation component of this phase is scheduled to be complete by the end of
the third quarter of 1999, Iridium's monitoring activities will be on-going.    

     State of Readiness. While there is general uncertainty inherent in the Year
2000 problem resulting in part from the uncertainty of the readiness of third   
party distributors and vendors, Iridium's progress towards completing risk      
assessment within the Iridium system is on schedule to be completed in the first
quarter 1999.                                                                   

  Although the remediation, testing and implementation phases have not yet
commenced, Iridium anticipates that these phases will proceed along the schedule
as contemplated by its Y2K Program.                                             

     Costs. The total cost associated with required modifications to become Year
2000 compliant is not expected to be material to Iridium's financial position or
results of operations. The current estimated total cost to Iridium of the Y2K   
Program is $2 million. However, the accuracy of this estimate cannot be verified
until completion of the Inventory and Risk Assessment Phase. Factors which may  
affect this $2 million estimate include unanticipated problems with Iridium's   
systems or any of its suppliers' or distribution partners' systems. Iridium     
estimates that the amount expended on the Y2K Program through December 31, 1998,
was approximately $304,000, all of which is expected to be expensed by Iridium, 
with $24,000 of this amount incurred in the first nine months of 1998. This     
estimate does not reflect all costs because, for example, the Iridium Business  
Support Systems were developed from the outset to address Year 2000 issues, and 
the cost of this capability was not separately identified by the supplier. Other
significant or critical non-Year 2000 information technology projects under     
Iridium's direct control have not been materially delayed or impacted by Year   
2000 initiatives.                                                               

     Risks. In a reasonably likely worst case scenario, the failure to correct a
material Year 2000 problem could result in an interruption in, or a failure of, 
certain normal business activities or operations, including operations that are 
essential to the provision of Iridium's services. Such failures could materially
and adversely affect Iridium's results of operations, liquidity and financial   
condition. Due to the general uncertainty inherent in the Year 2000 problem,    
resulting in major part from the present state of Iridium's knowledge concerning
the Year 2000 readiness of third-parties such as its roaming partners and       
service providers, Iridium is unable to determine at this time whether the      
consequences of Year 2000 failures will have a material impact on Iridium's     
results of operations, liquidity or financial condition. The Y2K Program is     
expected to significantly reduce Iridium's level of uncertainty about the Year  
2000 problem and, in particular, about the Year 2000 compliance and readiness of
its material partners. Iridium believes that, with the completion of the Y2K    
Program as scheduled, the potential of significant interruptions of normal      
operations should be reduced.                                                   

  Contingency Plans. After reviewing information gathered in the Inventory
and Risk Assessment Phase, and to prepare for the possibility that certain      
information systems or third party partners and vendors will not be Year 2000   
compliant, Iridium intends to develop contingency plans, as appropriate. These  
plans may include the establishment of teams to monitor and correct disruptions,
utilization of back-up processes including data back-up and storage, and the    
development of manual "work-around" solutions.                                  

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BUSINESS

  Iridium is the first global wireless telecommunications company. Iridium
offers its customers the ability to make and receive phone calls and receive    
pages virtually anywhere in the world. Iridium accomplishes this by providing   
access to the Iridium satellite constellation as well as the world's cellular   
networks -- all with one phone, one phone number and one customer bill. Iridium 
believes it will be the only wireless telecommunications company in operation   
well into the year 2000 that will be able to offer this comprehensive global    
communications service.                                                         

Iridium commenced commercial phone service on November 1, 1998 and    
commercial paging service on November 15, 1998. Over the past 18 months, Iridium
has successfully launched, deployed and programmed over 75 satellites (including
orbiting spares). Iridium's satellites now orbit the Earth in a constellation   
that provides 24 hours per day satellite phone and paging service to virtually  
anywhere in the world.                                                          

IRIDIUM SERVICES                                                                

General                                                                         

  Iridium's strategy is to be the total mobile communications solution for
its target markets by offering flexible service packages that allow customers to
conveniently select the most attractive telecommunications alternative anywhere 
in the world they travel. Iridium World Satellite Service is designed for       
customers who need to receive or make phone calls in areas not currently served 
by cellular service. Iridium World Roaming Service is designed for customers who
travel to areas where their "home" cellular service will not support roaming,   
including areas served by cellular networks that use electronic languages, or   
"protocols", that are not compatible with their home network's protocol. Iridium
World Page Service offers the ability to receive a message virtually anywhere in
the world, including on aircraft. The Iridium World Calling Card provides       
customers with a cost-effective means of accessing land-line services while     
traveling. By packaging these services in various combinations, Iridium can meet
the diverse needs of its customers whether they travel to remote parts of the   
globe or to areas served by cellular networks or both.                          

Iridium World Satellite Service                                                 

 Iridium's satellites provide phone service to virtually anywhere on the
surface of the Earth where Iridium World Satellite Service is authorized. The   
Iridium system is designed to provide a signal strength for voice communication 
that averages approximately 16dB with an unobstructed view of the satellite,    
which Iridium believes is a significantly higher signal strength than other     
proposed mobile satellite systems. Iridium believes its greater signal strength 
will enable it to better serve portable, hand-held phones than competing mobile 
satellite systems. In the future, Iridium expects to be able to offer a full    
array of calling features including call waiting, call hold, conference calling,
call forwarding and call barring. Iridium World Satellite Service is available  
in more than 125 countries and territories. Iridium's goal is for Iridium World 
Satellite Service to be available in virtually all countries and territories. As
of December 31, 1998, Iridium had approximately 3,000 IridiumWorld Satellite    
Service customers.                                                              

    Iridium World Satellite Service is a complement to, not a replacement for,
cellular service. The availability of cellular service is limited by the        
geographic coverage of cellular systems. Iridium World Satellite Service is not 
geographically constrained and, accordingly, extends mobile phone access to     
areas not covered by cellular service. With a dual mode satellite/cellular      
phone, or two separate phones, a customer can travel the globe and make or      
receive phone calls from virtually anywhere in the world, including remote and  
mid-ocean areas.                                                                

Iridium does not expect its customers to use Iridium World Satellite  
Service where cellular services are available, because Iridium satellite voice  
service is priced significantly higher than most cellular services and because  
Iridium satellite voice service does not work as well as cellular services      
within buildings and in urban areas where buildings are densely spaced. The     
quality of a satellite call depends to a large extent on the strength of the    
signal between the satellite and the phone. An obstruction between the satellite
and the phone reduces the signal strength and can result in poor call quality or
no service at all. See "Risk Factors -- Factors Affecting Customer Acceptance of
Satellite-Based Service" for a discussion of certain service limitations of     
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Iridium World Satellite Service. Although Iridium customers should not expect   
satellite-based voice services to be reliable in these environments, cellular   
and land-line services are typically available in these areas, and Iridium      
provides its customers with the ability to access land-line service, cellular   
service and satellite service using the same phone number and customer bill.    

Iridium World Roaming Service                                                   

  Iridium World Roaming Service permits subscribers to roam among cellular
networks that have roaming agreements with Iridium. Iridium intends to create   
the broadest global cellular roaming service available. Iridium has entered into
roaming agreements with more than 160 roaming partners and has integrated more  
than 55 of those partners (including cellular networks in more than 30 countries
and territories) with the Iridium system. Iridium's business plan currently     
calls for roaming agreements covering networks in more than 150 countries and   
territories to be integrated with the Iridium system by 2002.                   

In providing Iridium World Roaming Service, Iridium acts either as the
customer's "home" system or as an interface between the visited cellular network
and the customer's home network, even if the visited and home networks use      
differing protocols (e.g., IS-41 and GSM). Iridium World Roaming Service        
customers who travel between places that are served by different wireless       
protocols can place calls and can be reached on one phone number by using either
a multi-mode phone that is compatible with multiple protocols or with a         
combination of cellular phones, one for each protocol.                          

Iridium World Page Service                                                      

   Iridium is the first company to offer global paging to a belt-worn pager.
Iridium offers global paging both as a stand-alone service and bundled with its 
voice service. The Iridium pager has a signal strength of approximately 26dB    
(which provides significantly greater in-building penetration than              
satellite-based voice services) and can receive alphanumeric messages of up to  
200 characters in any one of 19 languages and numeric messages of up to 20      
digits. Iridium World Page Service customers can be paged in over 200 countries 
and territories and onboard aircraft.                                           

To use the Iridium satellites efficiently, pages are sent to specified
message delivery areas, or "MDAs", rather than over the entire constellation    
(and thus, the globe). The MDAs vary in size and shape and are designed to      
encompass common travel routes and areas, including the air corridors between   
New York and London and the eastern third of the United States. Iridium intends 
to vary the size of each MDA in light of demand, capacity and competition.      
Because the pager is a one-way device and cannot tell the network its location, 
customers are required to choose up to three MDAs for normal delivery of        
messages.                                                                       

     When traveling, Iridium World Satellite Service customers and Iridium World
Roaming Service customers who have Iridium as their "home" system have the      
benefit of "follow-me paging". With "follow-me paging", customers are generally 
able to register their location (at no charge) by briefly turning on their      
Iridium phone or cellular phone. The Iridium system then can identify the       
appropriate MDAs to send a page without further customer action. Customers who  
are not subscribers to Iridium World Satellite Service or are not "homed" on    
Iridium can update their MDAs via a touch-tone phone, operator assistance or the
Internet.                                                                       

Iridium World Calling Card                                                      

    The Iridium World Calling Card adds land-line access to Iridium's array of
service offerings that can be linked by a single customer bill. The calling card
also provides discount voice mail retrieval for Iridium World Satellite Service 
customers. Iridium believes its calling card rates are competitively priced with
other international calling card services. Iridium World Calling Card Service is
available in more than 55 countries and territories.                            

Iridium Aeronautical Service                                                    

Iridium intends to introduce satellite aeronautical phone service to  
private and commercial aircraft by the end of 1999. In addition, on December 22,
1998 Iridium agreed to acquire Claircom Communications Group,                   

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Inc., a wholly owned subsidiary of AT&T Wireless Services, Inc. and Rogers      
Cantel Inc., which currently provides inflight phone service (generally under   
the AT&T brand) on a total of approximately 1,750 commercial and executive      
aircraft. Upon completion of the acquisition, Iridium intends to brand this     
service with the Iridium name. This proposed acquisition is subject to          
regulatory approval and other conditions.                                       

TARGET MARKETS                                                                  

Global Travelers and International Urban Travelers                              

    The Global Travelers and International Urban Travelers market segments are
expected to represent a major market opportunity for Iridium. Currently, the    
ability of land-based wireless service subscribers to communicate outside their 
home territories or regions is limited by:                                      

    - the absence or unavailability of local cellular service in many regions,
particularly in lesser-developed regions of the world;            

- the absence of roaming agreements between the user's local cellular 
       provider and the wireless providers in the country or region in which the
user is traveling; and                                            

 - the inability of the user's "home" system to support roaming to other
   cellular systems that use a different wireless protocol than does the
user's "home" wireless system.                                    

 Iridium expects that its Iridium World Satellite Service, Iridium World
Roaming Service and Iridium World Page Service will appeal to Global Travelers, 
and that its Iridium World Roaming Service and Iridium World Page Service will  
appeal to International Urban Travelers who frequently travel to areas served by
cellular networks that use different protocols but who rarely travel outside    
cellular coverage, as logical extensions of their existing telecommunications   
services. In particular, Iridium believes that traveling professionals will use 
the unique capabilities of the Iridium system to remain in contact with their   
homes and offices.                                                              

Industrial Users                                                                

 Iridium believes that the Industrial Users market segment constitutes a
significant and immediate opportunity for Iridium. For companies that have      
multiple locations around the globe, or a requirement for remote communications,
the Iridium system provides a single communications solution. This market       
segment includes national and multinational companies that have executives who  
travel outside of their home cellular coverage area or who have a need for      
satellite services in the regular course of business. The segment also includes 
companies that are expected to demand satellite services at remote industrial   
sites and on land and water transportation vehicles, such as utilities, oil and 
mineral exploration, pipeline construction, engineering, fishing and forestry.  
Iridium World Satellite Service and Iridium World Page Service are expected to  
be used in this market segment for business communications and emergency backup 
communications.                                                                 

   Iridium is focusing its initial marketing and distribution efforts on the
Industrial Users market segment because it believes many companies in this      
segment have a significant current demand for mobile satellite communications   
and will be heavy users of Iridium's services.                                  

Public Sector Users                                                             

 Currently, governments are significant users of satellite services, and
Iridium anticipates that the coverage and ease of portability of Iridium World  
Satellite Service and Iridium World Page Service will make them attractive for a
variety of governmental applications. The government communications addressable 
market includes governmental departments and agencies and international         
organizations for civilian and military applications, including law enforcement,
official travel and disaster relief. In addition, governments require satellite 
services for operations in areas where inadequate land-based communication      
capability is common, such as for border patrols, customs operations,           
communication with ships at sea and embassy communications.                     

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  One of Iridium's 12 gateways is owned by the U.S. government and Iridium
expects that the U.S. government, including the U.S. military and agencies that 
operate internationally, will be significant users of Iridium's services.       

In-Country Users                                                                

The In-Country Users market segment is comprised of two subcategories:

 - users in areas where potential demand for cellular service exists but
 such services have yet to be deployed, or, if deployed, are of poor
quality, typically in rural areas of developed countries; and     

  - users in areas with inadequate or inconvenient access to any telephone
services, typically in developing countries.                      

     Iridium World Satellite Service can be viewed as a precursor to a permanent
wired or land-based wireless service in many of these areas and as a long-term  
telecommunications solution in those areas where no land-based system can be    
economically justified. In-Country Users are also expected to be candidates for 
Iridium World Page Service.                                                     

THE IRIDIUM SYSTEM AND HOW IRIDIUM'S SERVICES WORK                              

Iridium's ability to provide its services, either individually or in  
packages, is derived from the unique capabilities of the Iridium system.        
Development and deployment of the Iridium system, an 11-year project, was       
completed in November 1998. The Iridium system has four principal components:   

    - THE SPACE SEGMENT, which includes Iridium's 66 low earth orbit satellite
      constellation (plus orbiting spares) and the related control facilities;

- THE GROUND STATIONS, OR "GATEWAYS", which link the satellites to    
land-based communications systems;                                

    - IRIDIUM PHONES, PAGERS AND SIM CARDS, which provide mobile access to the
satellite constellation and land-based cellular systems; and      

   - IRIDIUM'S LAND-BASED WIRELESS ROAMING INFRASTRUCTURE, which facilitates
roaming among land-based cellular systems -- even systems that use
different protocols -- and the Iridium satellite system.          

Iridium's service offerings use the Iridium system in different ways. 

- IRIDIUM WORLD SATELLITE SERVICE -- An outgoing call travels from the
phone to an Iridium satellite. It is then passed from satellite to
   satellite across the constellation and down to a gateway. The gateway
   then transfers the call into the land-based public switched telephone
    network, or "PSTN", where it is delivered to its destination as a call
     originating from a land-based system would be. An incoming call travels
the same path in reverse.                                         

 - IRIDIUM WORLD PAGE SERVICE -- A page can be originated by calling the
customer's Iridium phone number (and finding them unavailable), by
   calling a paging access number or via the Internet from Iridium's web
       page: www.iridium.com. Once originated, an incoming page travels the same
  path to the pager as an incoming satellite phone call travels to the
phone.                                                            

    - IRIDIUM WORLD ROAMING SERVICE -- Iridium's roaming service is similar to
     traditional roaming, except Iridium supports roaming among systems that
       use different protocols, thereby allowing customers to use only one phone
number as they travel from system to system.                      

   There are several common questions about how Iridium can link its various
service offerings to provide flexible service packages:                         

  - HOW CAN A CUSTOMER USE THE SAME PHONE NUMBER WITH DIFFERENT PHONES AND
      DIFFERENT IRIDIUM SERVICES? -- THE IRIDIUM SIM CARD.  The Iridium phones
     and pagers use SIM cards, a technology common to European and other GSM
    cellular systems. Customer information is stored in a plastic SIM card
      that is inserted into the phone. A customer with an IS-41 cellular phone
in New York with a                                                

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       New York phone number, for example, can switch to a GSM cellular phone in
    London and be reached on the same New York phone number by inserting a
      SIM card into the GSM phone. Similarly, a customer can switch to Iridium
       World Satellite Service by inserting a SIM card into an Iridium satellite
     phone. The flexibility of SIM cards allows industrial and public sector
    users to share satellite and cellular phones among groups of employees
while each employee retains an individual phone number and billing
       account. In the near future, Iridium intends to introduce a SIM card that
    is also a calling card, thereby allowing customers to travel the globe
and have access to three modes of telecommunications -- satellite,
 cellular and land-line -- all with a single card and a single phone
number.                                                           

- HOW CAN A CUSTOMER USE THE SAME PHONE FOR DIFFERENT IRIDIUM         
     SERVICES? -- MULTI-MODE PHONES. Instead of using a SIM card and several
      phones, customers can purchase an Iridium multi-mode phone that provides
     access to Iridium's satellite system and to cellular systems, including
      systems that use different protocols. The Motorola multi-mode phone uses
  protocol cassettes called "TRCs" that permit a customer to carry one
     phone for differing cellular and satellite services. Cellular protocols
  can be switched by inserting the appropriate TRC into the phone. The
       Kyocera multi-mode phone, on the other hand, is configured as a satellite
  phone casing into which the customer inserts a cellular phone, using
different cellular phones for each protocol.                      

    - HOW DOES THE IRIDIUM SYSTEM KNOW WHERE TO SEND AN INCOMING PHONE CALL OR
  PAGE? -- CUSTOMER TRACKING.  The Iridium system tracks its satellite
  customers in the same way cellular systems track customers. When the
      phone is on it sends a signal to the satellite constellation (at no cost
   to the customer), which periodically updates the customer's position.

    - World Satellite Service -- Iridium's World Satellite Service works
      like today's cellular technology. The call is sent to the system's
last known location for the customer.                       

    - World Page Service -- Pages are sent to specified message delivery
        areas or "MDAs". The MDAs vary in size and shape and are designed to
         encompass common travel routes and areas, including the air corridors
   between New York and London and the eastern third of the United
         States. Customers can designate up to three MDAs which can be updated
        by turning on their Iridium satellite phone or cellular phone if the
     customer has Iridium as their "home" system (at no charge), via a
       touch tone phone, through operator assistance or over the Internet.

 - World Roaming Service -- Customers are tracked across different
cellular systems using Iridium's land-based wireless roaming
          infrastructure. Iridium either acts as the customer's "home" system or
       as an interface between the visited network and the customer's home
         network. Customers "homed" on Iridium are able to update their paging
MDAs by turning on their cellular phones.                   

  - HOW DOES THE CUSTOMER GET ONLY ONE BILL FOR IRIDIUM'S SERVICES? -- THE
 IRIDIUM BUSINESS SUPPORT SYSTEM.  Each call and page made using the
    Iridium system is recorded by Iridium's business support systems. This
       enables Iridium to share this information with its service providers on a
  customer-by-customer basis and, accordingly, all charges for Iridium
       services can be invoiced on a single bill. In addition, where the Iridium
       service provider is also the customer's "home" cellular service provider,
the charges for Iridium services and home cellular service can be 
invoiced on a single bill.                                        

MARKETING AND DISTRIBUTION                                                      

     Iridium's marketing strategy is to position Iridium as the premier brand in
global wireless communications services. Iridium believes that its principal    
target markets can be reached effectively through established marketing         
channels. Iridium believes focusing on these market segments gives it an        
advantage over mobile satellite systems that target individuals in remote areas 
where marketing opportunities and distribution channels are limited. Iridium is 
striving to establish a global identity through a comprehensive global marketing
strategy. Iridium coordinates with its gateway partners to determine the optimum
allocation of marketing expenditures and engages in direct marketing to certain 
markets, including the utility, oil and gas, mining and maritime industries.    

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Iridium's distribution strategy reflects its role as a wholesaler of  
Iridium services. The retail distribution of Iridium services generally takes   
place through Iridium's gateway operators, and is designed primarily to utilize 
existing wireless retail distribution channels. Iridium's gateway operators will
distribute Iridium services through their own distribution channels or through, 
or in conjunction with, one or more existing wireless service providers         
(including Iridium World Roaming Service roaming partners). As of December 31,  
1998, Iridium and its gateway operators had agreements with more than 300 such  
service providers and had integrated more than 60 of these service providers.   
All Iridium service providers have primary responsibility for marketing Iridium 
services within their territories in accordance with marketing policies and     
programs established by Iridium and the gateway operators. In addition, Iridium 
service providers are responsible for billing, collection and (with Iridium)    
share customer service responsibilities. Iridium provides centralized customer  
service principally through its three global customer care centers, which       
operate 24 hours per day, seven days a week and support 13 languages.           

  The initial global distribution of phones and pagers is one of Iridium's
most significant challenges as it transitions to an operating company. While the
service providers, who are responsible for direct sales to customers, are       
disparately located across the globe, there are limited supply sources of phones
and pagers. Getting phones and pagers from production locations to a large      
number of service providers located all over the globe is a significant         
challenge. Hurdles that must be overcome include customs and tax clearance in   
each of the countries to which the phones and pagers are shipped and            
coordination with numerous local and regional distribution channels. Iridium    
must also train service providers in a number of countries to identify potential
Iridium customers, to accurately inform such customers about Iridium's services,
to market Iridium phones and pagers, to distribute the equipment and to provide 
service support following sales.                                                

  Iridium's initial marketing efforts have yielded indications of interest
that Iridium believes are substantial and encouraging. However, Iridium phones  
and pagers are an essential component of Iridium's satellite services and,      
accordingly, Iridium can only add new Iridium World Satellite Service and       
Iridium World Page Service customers to the extent that phones and pagers are   
available for customer use. As of December 31, 1998, Motorola had produced      
approximately 35,000 phones and was producing phones at a rate of approximately 
1,000 per day. Late in 1998, Motorola began commercial shipments of cellular    
cassettes which provide dual mode (satellite/cellular) capability for Motorola's
phones. Commercial shipments of Kyocera phones are on hold because test results 
have not yet met Iridium's quality standards for commercial use. Iridium expects
Kyocera phones will be approved for commercial shipment in the first quarter of 
1999. An aggregate of approximately 3,500 Motorola and Kyocera pagers have been 
produced. In addition, once phones and pagers are produced, they must be        
distributed to service providers before a new customer can be added.            
Distribution of customer equipment to certain parts of the world can require    
substantial time. Iridium believes that one of its most significant challenges  
is ensuring that phones and pagers are produced in sufficient quantities and are
timely distributed to the various parts of the world necessary to satisfy the   
demand for Iridium's satellite-based services.                                  

PRICING                                                                         

   Iridium's wholesale pricing strategy for its voice services is similar to
the prevailing pricing structure for traditional cellular calls. Prices for     
cellular calls generally reflect two components -- a charge based on the        
land-line "dial-up" rate for a comparable call (primarily the long distance     
charges) and a mobility premium for the convenience of wireless service         
(including any roaming charges). Pricing for both Iridium World Satellite       
Service and Iridium World Roaming Service is based on this structure. For       
international Iridium World Satellite Service calls, which Iridium expects will 
constitute the majority of calls over the Iridium satellite system, the         
"dial-up" rate component is designed to approximate the rates for comparable    
land-line point-to-point international long distance calls.                     

     Iridium sets the wholesale prices for its services to allow for a suggested
retail price that approximates the "dial-up" rate plus the mobility premium.    
Iridium's wholesale price is designed to compensate Iridium, as the network     
provider, and the originating and terminating gateways, as well as to cover the 
charges for the landline portion of the call (i.e., for an outbound satellite   
call from the gateway to the person receiving the call). The charge for the     
landline portion of the call is often referred to as the "PSTN tail charge",    
where PSTN is an                                                                
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acronym for public switched telephone network. The home gateway marks up the    
wholesale price and the service provider establishes the final retail price.    
Iridium currently expects that its wholesale usage fees for international       
Iridium World Satellite Service calls between two countries will result in      
suggested retail prices that, in aggregate, are approximately 25% to 30% above  
the retail prices for land-based voice calling options that traveling customers 
could use for a similar call between the same two countries (e.g., international
calling card and international cellular roaming rates). Iridium expects such    
prices will be competitive with other global mobile satellite systems. In       
addition, from a regulatory approval perspective, in markets where the monopoly 
telecommunications provider and the licensing authority are the same entity, a  
pricing strategy that takes into account the "dial-up" alternatives allows      
Iridium to respond to concerns that Iridium will capture the local monopoly     
provider's long-distance revenues by undercutting land based "dial-up" rates.   

    For Iridium World Roaming Service pricing, the "dial-up" rate component is
primarily the long distance charge. The mobility premium compensates the parties
involved -- primarily the serving network for its airtime charges, the visited  
gateway for customer authentication and Iridium for its protocol translation    
services. The retail price includes the markup of the home gateway and service  
provider. Iridium believes that its Iridium World Roaming Service suggested     
retail prices are comparable to other cross-protocol roaming services.          

  In addition to airtime charges based on the "dial-up" rate plus mobility
premium, Iridium subscribers pay a monthly subscription fee in the same manner  
that cellular customers pay monthly charges. Iridium permits its service        
providers that are wireless network operators to offer Iridium's services as    
additional features to their existing wireless services, which permits their    
customers to remain customers of the wireless network and to roam onto the      
Iridium system, including Iridium World Satellite Service and Iridium World     
Roaming Service. Generally, these customers pay a feature charge to Iridium for 
the roaming privilege that is below the Iridium monthly subscription fee, but   
they pay an additional roaming premium for calls made over the Iridium system.  

    Currently, Iridium paging subscribers pay a fixed monthly subscription fee
for up to 200 pages. The monthly paging subscription fee is discounted for      
persons who are also subscribers to Iridium voice services.                     

COMPONENTS OF THE IRIDIUM SYSTEM                                                

  The Iridium system has four principal components: the space segment, the
gateways, the Iridium phones, pagers and SIMs and the Iridium land-based        
interprotocol roaming infrastructure. Iridium owns the space segment and the    
interprotocol roaming infrastructure, and the gateway owners own and operate    
their gateways.                                                                 

Iridium believes that the capabilities and interplay of these four    
components of the Iridium system allow Iridium to provide service features that 
Iridium's principal target markets will find desirable and that will            
differentiate Iridium from its competitors. The number and distribution of      
satellites in the Iridium constellation enables Iridium to provide satellite    
voice and paging services to virtually anywhere on the globe, including         
mid-ocean and remote areas. Iridium believes that its satellite signal strength 
allows it to provide better service to hand-held phones and a higher degree of  
in-building penetration for pagers than competing mobile satellite systems will 
be able to provide. In addition, Iridium believes that its satellite voice      
quality is acceptable to customers as a substitute for cellular service when    
they are outside cellular coverage.                                             

Space Segment                                                                   

The space segment, including the initial deployment of the satellite  
constellation and the build out of the ground control facilities, was completed 
in November 1998.                                                               

The satellite constellation of the space segment consists of a        
constellation of 66 low earth orbit satellites (plus orbiting spares) arranged  
in six orbital planes. The satellites fly at an altitude of approximately 780   
kilometers from the Earth and complete an orbit every 100 minutes. The          
satellites have three antennas and communicate with phones and pagers on the    
ground using main mission antennas, with gateways using gateway link antennas   
and with other Iridium satellites in space using cross-link antennas.           

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The main mission antennas communicate with phones and pagers through  
tightly focused antenna beams forming a continuous pattern on the Earth's       
surface. The main mission antenna subsystem of each satellite includes three    
phased array antennas, each containing an array of transmit/receive modules.    
Collectively, the 48 beams produced by a single satellite combine to cover a    
circular area of the Earth with a diameter of approximately 4,340 kilometers.   
The Iridium system architecture incorporates certain features, such as call     
hand-off, which allows the space segment communications link with phones to be  
transferred from satellite to satellite as the satellites move over the area    
where the customer is located.                                                  

The cross-link antennas permit satellites in the constellation to     
communicate with each other. Each Iridium satellite has four cross-link antennas
to allow it to communicate and route traffic to the two satellites that are in  
front and in back of it in the same orbital plane, as well as neighboring       
satellites in the orbital planes to its right and left. This intersatellite     
networking capability is a significant distinguishing feature of the Iridium    
system and provides a number of benefits. These intersatellite links, which     
enable the satellites to function as switches in the sky, allow the Iridium     
system to:                                                                      

   - capture a greater portion of revenues for long distance satellite calls
     than competitors that do not have intersatellite links -- on comparable
       international long distance calls, Iridium generally expects to capture a
       greater portion of the total price of the call because the portion of the
     call carried by the Iridium system, from satellite to satellite, can be
 longer than the portion of the call that a competing system without
intersatellite links would be able to carry;                      

   - select the optimal ground-to-satellite and satellite-to-ground path for
each call, thereby enhancing system reliability and capacity while
     reducing the costs associated with the use of land-based phone systems;

     - provide service to customers in all areas (including mid-ocean and remote
areas) regardless of their proximity to a gateway;                

   - provide full global service with a relatively small number of gateways,
      thereby lowering total ground segment build-out and operating costs; and

- provide enhanced ability to track the location of a voice customer, 
allowing Iridium to "follow" customers as they travel globally.   

 Operation of the satellites is monitored, managed and controlled by the
Satellite and Network Operations Center, or the "SNOC", located in Virginia. A  
back-up operations center is located in Italy, and additional control stations  
are located in northern Canada and Hawaii, with an additional transportable     
control system currently located in Iceland. These facilities manage the        
performance and status of each of the satellites. The SNOC also manages the     
network by developing and distributing routing tables for use by the satellites 
and gateways, directing traffic routing through the network and controlling the 
formation of coverage areas by the satellites' main mission antennas.           

    Maintenance of the Constellation.  Iridium has contracted with Motorola to
maintain the space segment pursuant to the O&M contract. This contract has a    
fixed price for five years and is extendable, at Iridium's option, for an       
additional two years. Motorola's maintenance obligations include the placement  
into orbit of satellites for the replacement of failed or degraded satellites.  

 Motorola has contracted with the China Great Wall Industry Corporation,
utilizing its Long March 2C/2D vehicle, and the Boeing Corporation, utilizing   
its Delta II launch vehicle, to perform the O&M contract maintenance launches.  
Motorola expects that a number of other launch systems currently available or   
under development also could be used to satisfy maintenance launch requirements.
See "Risk Factors -- Risks Related to the Satellites" for a discussion of       
various risks associated with the satellites and replacement launches required  
for constellation maintenance, and "Certain Regulations that Affect             
Iridium -- United States International Traffic in Arms Regulations; Export      
Administrations Act" for a discussion of regulations that control the export and
import of articles and services, including certain satellites.                  

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Gateways                                                                    

     Gateway earth stations provide call-processing services, such as subscriber
validation and the interconnection between the world's PSTNs and the Iridium    
system, by connecting calls made through the Iridium system to and from the     
local PSTN through an international switching center. Gateways communicate with 
the space segment via gateway link antennas on the satellites and ground-based  
antennas, or earth terminals, at each gateway facility. Each gateway also       
includes a subscriber database used in call-processing activities such as       
subscriber validation. Gateways generate call detail records that are used by   
the Iridium business support systems to generate billing and other information. 

Subscriber Equipment                                                            

  Motorola and Kyocera are the suppliers of Iridium phones and pagers. The
initial retail price for phones and pagers generally is at least $3,000 and     
$500, respectively. Iridium generally does not expect to act as a distributor of
subscriber equipment or derive any income from the sale of Iridium subscriber   
equipment.                                                                      

     The Iridium system phones are larger and heavier than today's pocket-sized,
hand-held cellular telephones and have longer and thicker antennas than         
hand-held cellular telephones. The Iridium pager is slightly larger than today's
standard alphanumeric belt-worn pagers. See "Risk Factors -- Risk of Low Service
Demand Because of Pricing, Service Quality, Equipment Characteristics,          
Competition and Other Market Factors".                                          

    The Iridium phones and pagers are the first commercially marketed personal
telecommunications equipment to carry a mark authorized by the International    
Telecommunications Union, or "ITU". Iridium believes this mark will facilitate  
the free flow of Iridium phones and pagers across international borders.        

Business Support Systems                                                        

 The Iridium business support systems provide the "back office" business
functions required by Iridium, its gateway operators, and its service providers,
including a clearinghouse operated by Iridium, to calculate the amounts owed to 
and from Iridium and each gateway operator and service provider. These business 
support functions also include customer service support and billing and         
collection. These functions are provided by means of computer and manual        
processes at each gateway and service provider location and at a central        
processing point. In addition, the gateways are required to enter into          
settlement agreements with service providers, on behalf of Iridium, in order to 
account for and settle calls made using Iridium World Roaming Service and the   
other non-satellite services offered by Iridium.                                

    The coordination of business support functions among Iridium, the gateways
and the service providers necessary to the provision of Iridium's various       
services is a large and complex undertaking which requires comprehensive data   
exchange capabilities and the negotiation and execution of hundreds of          
settlement agreements with gateway operators and service providers. See "Risk   
Factors -- Reliance on Motorola, Gateway Owners and Other Third Parties".       

Global Customer Care Centers                                                    

 Iridium believes that customers in its target markets place significant
value on their time and, accordingly, customer retention will depend upon high  
quality customer service. Iridium has three global customer care centers that   
operate 24 hours per day, seven days per week and support 13 languages. Iridium 
believes this commitment to customer service will distinguish it from many of   
its competitors. Iridium believes providing comprehensive customer care is      
particularly important as Iridium transitions from a development stage company  
into an operating company.                                                      

Land-Based Interprotocol Roaming Infrastructure                                 

The key to Iridium World Roaming Service is the ability of Iridium's  
wireless roaming infrastructure to support communications between networks that 
use incompatible protocols. Similar protocol networks can communicate easily    
with one another by sending signals between the networks in a standard language 
that is                                                                         
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understood by both networks. However, different protocol networks require a     
translator in order to communicate with each other. Iridium's Interprotocol     
Roaming Infrastructure provides this translation service.                       

     Currently, many wireless systems, including systems covering large portions
of South America, use a form of cellular technology, known as                   
"non-authenticating" IS-41, that does not permit sufficient anti-fraud security 
or certain international dialing. Iridium does not currently provide Iridium    
World Roaming Service with networks that use this type of technology and,       
accordingly, Iridium World Roaming Service does not currently extend to large   
portions of South America. However, Iridium has developed technology for, and is
seeking a patent that covers, a technical solution to this anti-fraud security  
problem, and expects to begin service in these markets by year end 1999.        

   In addition, Iridium World Roaming Service is expected to be available in
Japan by year end 1999.                                                         

COMPETITION                                                                     

   Certain sectors of the telecommunications industry are highly competitive
in the United States and other countries. The uncertainties and risks created by
this competition are intensified by the continuous technological advances that  
characterize the industry, regulatory developments that affect competition and  
alliances between industry participants. While Iridium is the only company that 
currently serves the global satellite personal communications market, it        
anticipates that more than one system may serve this market in some fashion in  
the future. Iridium believes that its most likely direct competition will come  
from the planned ICO telecommunications service and from one or more of the     
other Federal Communications Commission licensed MSS                            
applicants -- Loral/Qualcomm Partnership, L.P., on behalf of Globalstar; MCHI,  
on behalf of Ellipso; and Constellation Communications Inc., on behalf of       
ICHO/Aries.                                                                     

     Iridium believes that its ability to compete successfully in the market for
global satellite personal communications will depend primarily on its ability to
capitalize on being the first commercially operational company, the             
technological qualities of the Iridium system, including its global coverage,   
signal strength, dependability and capacity, and the market appeal of Iridium's 
service offerings, including Iridium World Roaming Service. Successful          
competition will also depend on the cost of service to subscribers and the      
success of the marketing, distribution and customer service efforts of gateway  
operators and service providers. See "Risk Factors -- Risk of Low Service Demand
Because of Pricing, Service Quality, Equipment Characteristics, Competition and 
Other Market Factors" and "Risk Factors -- Reliance on Motorola, Gateway Owners 
and Other Third Parties".                                                       

 Iridium believes that the features which distinguish the Iridium system
from its anticipated competitors include:                                       

     - HIGHER SIGNAL STRENGTH FOR IRIDIUM WORLD SATELLITE SERVICE, which Iridium
     believes will afford both better voice quality to handheld phones and a
higher degree of in-building penetration to belt-worn pagers;     

- INTERSATELLITE NETWORKING CAPABILITY, which permits virtually global
 coverage, reduces the number of gateways required to provide global
  coverage, enhances system reliability and capacity and reduces "tail
 charges" incurred for the land-line portion of telephone calls; and

   - THE ABILITY TO COMBINE VARIOUS SERVICES, which enables Iridium to offer
  virtually world-wide satellite, cellular and paging service with one
phone, one phone number and one customer bill.                    

Iridium believes that these distinguishing features will make its services      
better suited, compared with other potential mobile satellite system            
competitors, to meet the global coverage and service quality demands of its     
target markets.                                                                 

Mobile Satellite Systems                                                        

     Inmarsat currently operates a world-wide geostationary orbit system that is
capable of providing fixed and mobile voice and data to laptop-sized "Mini-M"   
terminals and car-mounted units.                                                

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   ICO, a public company affiliated with Inmarsat, has announced plans for a
12-satellite system. This system is expected to operate in the 2 GHz band. Many 
of the investors in Inmarsat, including numerous state-owned telecommunications 
companies, participate in the ownership of the new venture and ICO has announced
the receipt of significant equity commitments from these investors. Iridium     
believes that ICO will be the most direct competitor to Iridium in many of      
Iridium's target markets. However, ICO has announced that the full constellation
will not be operational before the year 2000, which Iridium believes will result
in a significant first-to-market advantage for Iridium.                         

 Globalstar, a 48-satellite low earth orbit system, has been proposed by
Loral/Qualcomm. It will offer both fixed and mobile satellite telecommunications
services, and will employ CDMA digital modulation technology. Globalstar has    
announced an expected commencement of service in 2000 and a principal target    
market that, like the regional geostationary orbit systems described below,     
covers persons who lack telephone service or are underserved or not served by   
existing or future cellular systems.                                            

     Ellipso, a 17-satellite system, has been proposed by MCHI and ECCO/Aries, a
54-satellite system, has been proposed by Constellation Communications Inc. Both
systems would offer mobile satellite service globally and would use CDMA digital
modulation technology. The licenses for each of the Ellipso and Constellation   
systems require that the system be fully operational by July 2003. MCHI has     
announced that it intends to begin operation of its system by 2000, while       
Constellation has stated that it plans to begin operations in 2001.             

Iridium also expects to encounter competition from regional mobile    
satellite systems, three of which have been launched and several of which are in
the planning stage. In April 1995, AMSC launched a geostationary orbit satellite
covering the continental United States, Alaska, Hawaii, Puerto Rico, the U.S.   
Virgin Islands and U.S. coastal waters to provide fixed and mobile voice and    
data services to mobile terminals and car-mounted units. TMI, a spinoff of      
Telsat Canada, launched a satellite, virtually identical to AMSC's, in 1996 to  
cover Canada and other parts of the Caribbean not served by AMSC and to provide 
the same type of service to similar terminals. AMSC and TMI subsequently agreed 
to transfer AMSC's traffic to TMI's satellite. In addition, AMSC announced plans
to lease its satellite to ACTel, which plans to reposition the satellite over   
Africa to offer services there.                                                 

  Mobilesat, launched in 1994, is a geostationary orbit satellite covering
Australia, New Zealand and parts of the Pacific Basin providing mobile and      
fixed, voice and data services to mobile terminals and car-mounted units. ACeS  
has proposed a one- or two-satellite geostationary orbit satellite system       
covering Asia, including Thailand, Indonesia and the Philippines, and offering  
mobile voice and data telecommunications to handheld units. APMT has proposed a 
two-satellite geostationary orbit satellite system covering India, China and    
certain Southeast Asian nations, offering mobile telecommunications to          
dual-mode, handheld terminals. Satphone and Thuraya are two consortia proposing 
geostationary orbit systems to serve the North Africa/ Middle East region with  
dual-mode hand-held phones. EAST is a hybrid system proposed by Matra-Marconi to
provide fixed services and mobile services to hand-held units, with a           
geostationary orbit satellite covering Europe, the Middle East and Africa.      
Afro-Asian Satellite Communications has proposed a two geostationary orbit      
satellite system covering 55 countries in the Middle East, the Asia Pacific     
region and eventually Africa, serving dual-mode, hand-held terminals.           
Elekon-Stir is a proposed Russian low earth orbit system consisting of seven    
satellites offering store and forward mobile data services and offering limited 
voice capabilities.                                                             

    Other regional systems that may be established could also provide services
that compete with Iridium World Satellite Service. The regional geostationary   
orbit systems do not provide full global coverage and, therefore, are expected  
to generally target persons not currently served by land-line or cellular       
telephone service. It is possible that one or more regional mobile satellite    
services could enter into agreements to provide intersystem roaming that could  
be global or nearly global in scope.                                            

Land-based Telecommunications Systems                                           

   Iridium World Satellite Service is a complement to, not a substitute for,
cellular service. Iridium does not intend for Iridium World Satellite Service to
compete with land-based cellular systems for the vast majority of mobile        
personal communications services, because, among other reasons, Iridium         
satellite voice services are                                                    
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priced significantly higher than most land-based cellular services, the Iridium 
system lacks the operational capacity to provide local service to large numbers 
of subscribers in concentrated areas and Iridium's satellite system does not    
afford the same voice quality, signal strength, or ability to penetrate various 
environments (such as buildings) as land-based cellular systems. Rather, Iridium
expects its subscribers to use Iridium World Satellite Service in areas or      
situations where local cellular systems operate on a protocol incompatible with 
that of users' home markets or where land-based service is unavailable,         
inconvenient, of poor quality or unreliable. Iridium expects that as land-based 
cellular systems expand their geographical penetration, particularly outside of 
major urban and suburban areas and improve the quality of coverage in           
already-served areas, potential customers for Iridium World Satellite Service   
and other satellite-based services will be lost. Moreover, the advent of near   
global land-based cellular roaming described below will represent a significant 
competitive threat to Iridium's satellite-based service and Iridium World       
Roaming Service, particularly with respect to traveling professionals who spend 
most of their time in regions that are well served by land-based wireless       
services.                                                                       

Land-based Cellular Interprotocol Roaming Service                               

    Iridium's World Roaming Service offering, which allows Iridium subscribers
to roam onto a variety of cellular networks, faces competition from existing and
will face additional competition from future land-based cellular interprotocol  
roaming services, which provide roaming services across similar cellular        
networks.                                                                       

  GTE Mobilnet ("GTE") and Deutsche Telekom Mobil ("DeTeMobil") of Germany
currently offer GlobalRoam, a two-way cellular roaming service between certain  
North American AMPS cellular networks and GSM cellular networks in certain      
European countries. AT&T Wireless Service of the United States and Vodafone of  
the United Kingdom offer CellCard, a service that is very similar to GlobalRoam 
and provides roaming services from certain North American AMPS networks to      
certain GSM networks in certain countries which have roaming agreements with    
Vodafone.                                                                       

 Two other proposed mobile satellite systems, ICO and Globalstar, and at
least one regional geostationary orbit satellite system, ACeS, have indicated   
that they may also offer some form of dual-mode satellite/cellular service,     
which may include interprotocol roaming capabilities such as those expected to  
be offered by Iridium.                                                          

   In addition, a number of rental services, primarily in the United States,
provide cellular phones to persons traveling in countries with cellular         
standards that differ from the traveler's home market. For example, Worldcell   
provides United States travelers GSM phones for travel to Europe, while Shared  
Technologies Cellular, in conjunction with United Airlines, provides AMPS phones
for visitors to the United States. These businesses often have rental locations 
at airports, hotels and auto rental locations and also deliver phones by mail   
service. These companies' services may compete with Iridium World Roaming       
Service and Iridium World Satellite Service.                                    

Currently, a number of the world's major cellular network owners and  
operators are considering adopting a coordinated standard for future cellular   
networks. If such a coordinated standard is agreed upon and new networks are    
built, Iridium's ability to provide interprotocol roaming would cease to be an  
advantage. Iridium does not expect that such systems would be available on a    
global basis until sometime after 2002.                                         

Paging                                                                          

    In addition to competing with paging services offered by proposed regional
mobile satellite systems in the future, Iridium World Page Service currently    
faces competition from regional and nationwide land-based paging services, and  
from SkyTel's service, which as of November 1998 provided paging services to    
over 20 countries around the world. SkyTel operates by forwarding paging        
messages via international circuits to a foreign paging network that            
subsequently transmits the message over its local network. Also, in 1995        
Inmarsat introduced an international satellite-based one-way messaging service. 
Iridium believes that the relatively higher link margins of the Iridium World   
Page Service will provide superior performance to any proposed satellite paging 
systems and that Iridium will be the only global paging service using a         
belt-worn pager before 2000.                                                    

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Competition Related to New Technologies and New Satellite Systems               

  Iridium may also face competition in the future from companies using new
technologies and new satellite systems which could render the Iridium system    
obsolete or less competitive. Such new technologies, even if not ultimately     
successful, could have a material and adverse effect on Iridium as a result of  
associated initial marketing efforts.                                           

RESEARCH AND DEVELOPMENT                                                        

    Iridium expects that its satellites will have an average useful life of at
least five years, and Iridium intends to replace its satellites as necessary    
pursuant to the O&M contract, which has a five year term and is extendable, at  
Iridium's option, for an additional two years. Iridium has engaged in           
preliminary discussions with Motorola regarding possible long-term enhancements 
to the Iridium system, including upgrades to new satellites placed in the       
current constellation and a possible second generation of Iridium satellites. In
September 1997 Iridium filed an application with the FCC for authorization to   
operate a satellite system in the 2GHz band, the band in which ICO plans to     
operate. Such actions are only preliminary steps in the research and development
process and Iridium has made no significant financial commitment to long-term   
enhancements.                                                                   

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IRIDIUM'S INVESTORS AND PRINCIPAL SERVICE TERRITORIES 

 Set forth below is a summary of the investors in Iridium, the number of
class 1 interest owned by each investor at December 15, 1998, the percentage    
ownership of outstanding class 1 interests held by each investor (i) at December
15, 1998 and (ii) as adjusted for the Offerings and, if applicable, the service 
territories of each investor:                                                   

                                                        [Enlarge/Download Table]

                                                    PERCENTAGE                                    
                               NUMBER OF           OWNERSHIP(2)                                   
                                CLASS 1        --------------------                               
                               INTERESTS                    AS         PRINCIPAL GATEWAY SERVICE  
          INVESTOR              OWNED(1)       ACTUAL   ADJUSTED(3)            TERRITORY          
          --------             ----------      ------   -----------  -----------------------------
                                                                                                  
IWCL.........................  12,201,273/(3)   8.62       13.22     Not Applicable               
                               19,701,273                                                         
AIG affiliated companies.....   4,193,490       2.97        2.81     Not Applicable               
Iridium Africa Corporation...   4,500,000       3.18        3.02     Africa (excluding Morocco and
                                                                     Egypt) and Turkey            
Iridium Andes -- Caribe......   4,906,425       3.47        3.29     South America and            
                                                                     Caribbean(4)                 
Iridium Brasil Ltda..........   2,824,755       2.00        1.89     South America and            
                                                                     Caribbean(4)                 
Iridium Canada, Inc..........   5,250,000(5)    3.71        3.53     North America(6)             
Iridium China (Hong Kong)                                                                         
  Ltd........................   5,250,000       3.71        3.53     China, Mongolia, Hong Kong   
Iridium India Telecom                                                and Macu                     
  Limited....................   5,250,000       3.71        3.53     Indian Subcontinent          
Iridium Italia S.p.A.........   5,550,000       3.93        3.72     Certain countries in Europe  
                                                                     including Belgium, Denmark,  
                                                                     France, Greece, Italy,       
                                                                     Luxembourg, the Netherlands  
                                                                     and Switzerland(4)           
Iridium Middle East                                                                               
Corporation..................   6,000,000       4.24        4.03     Middle East, Morocco, Egypt  
                                                                     and Central Asia             
Khrunichev State Research and                                                                     
  Production Center..........   6,133,125       4.34        4.12     Russia and eight other       
                                                                     republics of the Commonwealth
                                                                     of Independent States        
Motorola, Inc................  24,477,000(5)   17.31       16.44     North America(6), Mexico(7)  
                                                                     and Central America, South   
                                                                     American and Caribbean(4)    
Nippon Iridium (Bermuda)                                                                          
  Limited....................  15,750,000      11.14       10.58     Japan                        

Pacific Asia Communications                                                                       
  Ltd........................   5,250,000       3.71        3.53     Indonesia, Brunei, Papua New 
                                                                     Guinea, the Philippines and  
                                                                     Taiwan                       

SK Telecom...................   5,250,000(5)    3.71        3.53     North Korea and South Korea  
South Pacific Iridium                                                                             
  Holdings...................   3,306,510       2.34        2.22     Certain countries in the     
                                                                     South Pacific region         
                                                                     including Australia and New  
                                                                     Zealand                      
Sprint Iridium, Inc..........   5,250,000       3.71        3.53     North America(6)             
Thai Satellite                                                                                    
  Telecommunications Co.,                                                                         
  Ltd........................   5,250,000       3.71        3.53     Southeast Asia               

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                                                        [Enlarge/Download Table]

                                               PERCENTAGE                                    
                              NUMBER OF       OWNERSHIP(2)                                   
                               CLASS 1    --------------------                               
                              INTERESTS                AS         PRINCIPAL GATEWAY SERVICE  
          INVESTOR             OWNED(1)   ACTUAL   ADJUSTED(3)            TERRITORY          
          --------            ----------  ------   -----------  -----------------------------
                                                                                             
Vebacom Holdings, Inc........ 12,427,875   8.79        8.34     Certain countries in or near 
                                                                Europe including Austria,    
                                                                Bulgaria, the Czech Republic,
                                                                Finland, Germany, Hungary,   
                                                                Ireland, Israel, Norway,     
                                                                Poland, Portugal, Romania,   
                                                                Spain, Sweden, Slovakia,     
                                                                Ukraine and the United       
                                                                Kingdom                      
Lockheed Martin                1,500,000   1.06        1.01     Not Applicable               
  Corporation................                                                                
Raytheon Company.............    900,000   0.64         .60     Not Applicable               

---------------                                                                 
(1) Represents each investor's direct holdings of outstanding class 1 interests 
at December 15, 1998, does not include class 1 interests issuable upon  
exercise of outstanding options or warrants (including the LLC interest 
warrants) or the conversion of outstanding convertible securities (and  
 assumes the U.S. underwriters' and international managers' over-allotment
options are not exercised).                                             

(2) The percentages do not give effect to the class 1 interests that IWCL may   
    have acquired or will acquire as a result of the application of the proceeds
    from the sale of shares of IWCL's non-voting class B common stock, par value
  $.01 per share (the "class B common stock") pursuant to the NOMAD Program.
See "Relationship Between IWCL and Iridium".                            

(3) As adjusted to reflect the issuance and sale of 7,500,000 shares of class A 
    common stock in connection with the Offerings and the application of the net
proceeds therefrom to the purchase of approximately 7,500,000 class 1   
interests from Iridium.                                                 

(4) The South America and Caribbean gateway service territory is owned and      
operated by Iridium SudAmerica. Iridium SudAmerica is owned by Iridium  
Brasil, Iridium Andes-Caribe (and affiliated companies), Motorola       
International Development Corporation, a wholly owned subsidiary of     
Motorola, and Iridium Italia.                                           

(5) As of December 15, 1998, SK Telecom and Sprint Iridium, Inc. each owned     
  17,068 series A class 2 interests in addition to the class 1 interests set
    forth above. Similarly, Motorola, Inc. also owns 1 series B class 2 interest
and 75 series C class 2 interests. BCE Mobile Communications, Inc., an  
affiliate of Iridium Canada, Inc., owns 11,596 series class 2 interests.

(6) The North American gateway service territory, principally consisting of the 
  United States and Canada, is shared by Iridium Canada, Motorola and Sprint
Corporation.                                                            

(7) The Mexico gateway service territory is being served by the North America   
gateway equipment.                                                      

IRIDIUM'S INVESTORS                                                             

IWCL                                                                            

     IWCL was incorporated by Iridium as a Bermuda company on December 12, 1996.
IWCL was formed for the purpose of acting as a member of Iridium. IWCL will use 
the net proceeds of the Offerings to acquire class 1 interests in Iridium. Upon 
consummation of the Offerings and application of the proceeds therefrom to the  
purchase of class 1 interests, IWCL will own approximately 13.2% of the         
outstanding class 1 interests (approximately 13.9% if the U.S. underwriters' and
international managers' over-allotment options are exercised in full). The      
expenses of the Offerings, estimated at $850,000, will be paid by Iridium.      
IWCL's only assets are its interests in, and its rights to acquire interests in,
Iridium and its only activity is participating in the management of Iridium. See
"Relationship Between IWCL and Iridium".                                        

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Iridium's Strategic Investors                                                   

    Iridium's strategic investors include market leaders in providing wireless
telecommunications services, manufacturing telecommunications equipment and     
satellite systems and supplying satellite launch services. Iridium's strategic  
investors have collectively invested, or committed to invest, approximately $3.7
billion in Iridium, including equity, commitments to purchase additional equity,
debt, guarantees and commitments to provide guarantees. This amount does not    
include investments that Iridium's gateway owners have made to construct and    
operate their respective gateways or market and distribute Iridium's services.  

AIG AFFILIATED COMPANIES includes American International Underwriters 
Overseas, Ltd., a wholly-owned subsidiary of American International Group, Inc.,
or "AIG" and AIG Asian Infrastructure Fund LP. AIG is a leading U.S.-based      
international insurance organization and among the largest underwriters of      
commercial and industrial insurance in the United States. The AIG Asian         
Infrastructure Fund, which is sponsored AIG, makes equity and convertible debt  
investments in infrastructure and related industries throughout Asia.           

   IRIDIUM AFRICA CORPORATION was formed by Mawarid Overseas Company Limited
to invest in Iridium. Mawarid Overseas Company Limited is related to the Mawarid
Group, one of the largest industrial groups in Saudi Arabia, with operations in 
satellite broadcasting, financial services, trading, manufacturing,             
construction, telecommunications, and municipal and health care services.       
Iridium Africa Corporation coordinates the provision of Iridium's services in a 
gateway service territory consisting of over 50 countries located primarily in  
or near Africa (excluding Morocco and Egypt) and Turkey.                        

IRIDIUM CANADA, INC. is a corporation owned one-third by a Motorola   
subsidiary and one-third each by two subsidiaries of BCE, Inc. -- BCE Mobile    
Communications, Inc. and Bell Canada International, Inc. BCE, Inc. is Canada's  
largest telecommunications company. BCE Mobile provides a variety of wireless   
telecommunications services to the Canadian market, including cellular, paging, 
data and air-to-ground communications services. Iridium Canada, Inc., Motorola  
and Sprint Corporation share the North American gateway service territory,      
consisting of Canada, St. Pierre and Miquelon, Bermuda, Puerto Rico and the     
United States.                                                                  

IRIDIUM CHINA (HONG KONG) LTD. is a wholly owned subsidiary of China  
Aerospace, a major diversified industrial group based in China which is also the
parent company of China Great Wall Industries Corporation, the previous owner of
all Iridium China equity interests in Iridium. China Great Wall has been, and is
expected to be, a subcontractor to Motorola for the launch of Iridium satellites
on its Long March 2C rocket. Iridium China coordinates the provision of         
Iridium's services in a gateway service territory consisting of China, Mongolia,
Hong Kong and Macau.                                                            

IRIDIUM INDIA TELECOM LIMITED is a consortium of Indian financial     
institutions that invested in Iridium initially through Infrastructure Leasing &
Financial Services Limited ("IL&FS"). The consortium includes: The Industrial   
Development Bank of India, IL&FS, Exim Bank of India, State Bank of India, The  
Industrial Credit and Investment Corporation of India Limited, General Insurance
Corporation of India, Housing Development Finance Corporation Limited, IL&FS    
Venture Fund, Life Insurance Corporation of India, SCICI Ltd. and Unit Trust of 
India. A wholly owned subsidiary of Motorola is also a member of the consortium.
Iridium India Telecom Ltd. coordinates the provision of Iridium's services in a 
gateway service territory consisting of India, Bangladesh, Bhutan, Nepal, Sri   
Lanka and Maldives.                                                             

     IRIDIUM ITALIA S.P.A. is an affiliate of Telecom Italia. Telecom Italia, is
a principal provider of voice and data telecommunications services in Italy and 
is the world's fifth largest telecom operator by number of subscribers. Telecom 
Italia (together with its affiliated companies) has provided, and is expected to
provide, engineering support services to Motorola as part of the procurement and
operation of the Iridium system. Motorola has entered into several agreements   
with an affiliate of Telecom Italia, Telespazio, for work related to the backup 
system control facility, gateways and other portions of the Iridium system.     
Iridium Italia coordinates the provision of Iridium's services in a gateway     
service territory consisting of certain countries in Europe including Belgium,  
Denmark, France, Greece, Italy, Luxembourg, the Netherlands and Switzerland.    

IRIDIUM MIDDLE EAST CORPORATION is owned one-half by Mawarid Overseas 
Company Limited and one-half by Trinford Investments S.A. Trinford Investments  
is a company affiliated with the Saudi Binladin                                 
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Group. Binladin is also one of the largest diversified industrial groups in     
Saudi Arabia, with operations covering major construction projects, airport     
maintenance and operation, telecommunications and hotels. Both Mawarid and      
Binladin operate internationally. Iridium Middle East Corporation coordinates   
the provision of Iridium's services in a gateway service territory consisting of
over 20 countries located in the Middle East and Central Asia, as well as       
Morocco and Egypt.                                                              

  IRIDIUM SUDAMERICA CORPORATION is owned by Iridium Andes-Caribe, Iridium
Brasil Ltda., Iridium Italia and a wholly owned subsidiary of Motorola. Iridium 
Andes-Caribe is a consortium of private Venezuelan investors with experience in 
consumer foodstuffs, communications, construction, finance and retailing.       
Inepar, the majority owner of Iridium Brasil, is a diversified Brazilian        
corporation with operations in telecommunications, electrical current control   
equipment and services, mass transport, vehicle distribution and financial      
markets. Iridium SudAmerica coordinates the provision of Iridium's services in a
gateway service territory consisting of approximately 40 countries located      
primarily in South America and the Caribbean.                                   

KHRUNICHEV STATE RESEARCH AND PRODUCTION SPACE CENTER is a state-owned
aerospace engineering and manufacturing company in the Russian Federation.      
Khrunichev has been engaged in the manufacture of launch vehicles, orbital      
stations and other space equipment for more than 30 years. Khrunichev has       
contracted to provide launch services to Motorola with the Proton rocket as part
of the deployment of the space segment. Khrunichev coordinates the provision of 
Iridium's services in a gateway service territory consisting of Belarus,        
Estonia, Georgia, Kazakhstan, Latvia, Lithuania, Moldova, the Russian Federation
and Uzbekistan.                                                                 

MOTOROLA, INC. is one of the world's leading providers of wireless    
communications and electronic equipment, systems, components and services for   
worldwide markets. Motorola products include two-way radios, pagers, personal   
communications systems, cellular telephones and systems, discrete semiconductors
and integrated circuits, defense and aerospace electronics, automotive and      
industrial electronics, data communications, and information processing and     
handling equipment. Motorola is the primary contractor to Iridium and the       
Iridium gateway operators for the procurement of components of the Iridium      
system. Motorola also has: (i) a share of the North American gateway service    
territory along with Iridium Canada, Inc. and Sprint Corporation; (ii) the      
entire Mexican/Central American gateway service territory; (iii) an interest in 
Iridium SudAmerica, which coordinates the provision of Iridium's services in the
gateway service territory including South America and the Caribbean; and (iv) an
interest in Iridium India Telecom Limited, which coordinates the provision of   
Iridium's services in the gateway service territory for the Indian subcontinent.

 NIPPON IRIDIUM (BERMUDA) LIMITED is a wholly owned subsidiary of Nippon
Iridium Corporation which is a consortium company formed in Bermuda by DDI      
Corporation, a leading Japanese independent telecommunications company and a    
provider of cellular, PHS and long distance telephone service, and Kyocera      
Corporation, a supplier of ceramic integrated circuit packages, electronic      
components and electronic equipment. Investors in Nippon Iridium Corporation    
include Kansai Cellular Telephone Co., Ltd., Ushio Inc., SECOM Co., Ltd., Sony  
Corporation, Mitsui & Co., Ltd., Kyushu Cellular Telephone Co., Ltd., Chugoku   
Cellular Telephone Co., Ltd., Shikoku Cellular Telephone Co., Ltd., Tohoku      
Cellular Telephone Co., Ltd., Hokuriku Cellular Telephone Co., Ltd., Hokkaido   
Cellular Telephone Co., Ltd., The Sanwa Bank Limited, Daiwa Securities Co.,     
Ltd., The Industrial Bank of Japan, Limited, The Long-Term Credit Bank of Japan,
Ltd., and Mitsubishi Corporation. Nippon Iridium Corporation coordinates the    
provision of Iridium's services in the Japan gateway service territory.         

     PACIFIC ASIA COMMUNICATIONS LTD. "PACL" is a subsidiary of Pacific Electric
Wire & Cable Co., Ltd., "PEWC", a diversified international corporation with    
interests in telecommunications services, property development, banking and     
financial services and securities investment. PEWC is the largest producer of   
telecommunications and power cable in Taiwan. PACL coordinates the provision of 
Iridium's services in a gateway service territory consisting of Taiwan,         
Indonesia, Brunei, Papua New Guinea and the Philippines.                        

 SK TELECOM was formed by Korea Mobile Telecommunications Corporation to
provide cellular and paging services in the Republic of Korea. Management       
control of Korea Mobile Telecommunications Corporation is held by Sunkyong      
Business Group, a large Korean conglomerate. Korea Mobile Telecommuni-          

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cations Corporation coordinates the provision of Iridium's services in the      
gateway service territory consisting of North Korea and South Korea.            

   SOUTH PACIFIC IRIDIUM HOLDINGS LIMITED AND SOUTH PACIFIC IRIDIUM HOLDINGS
II LIMITED are each a subsidiary of P.T. Bakrie & Brothers ("Bakrie"), a major  
Indonesian conglomerate, with operations in plantations, rubber trading,        
infrastructure support and telecommunications. Through subsidiaries, including  
P.T. Bakrie Communications Corporation, Bakrie provides cellular services in    
Indonesia (Ratelindo), Australia (Link Communications) and fixed wire services  
in Vietnam and Uzbekistan. In connection with its investment in Iridium, South  
Pacific Iridium Holdings Limited obtained the right to provide Iridium's        
services in the South Pacific gateway service territory.                        

SPRINT IRIDIUM, INC. is an indirect wholly owned subsidiary of Sprint 
Corporation. Sprint Corporation is a diversified telecommunications company with
the only nationwide all-digital fiber-optic network in the United States. Its   
divisions provide global voice, data and video conferencing services and related
products. Sprint Corporation has a share of the North American gateway service  
territory along with Iridium Canada, Inc. and Motorola.                         

   THAI SATELLITE TELECOMMUNICATIONS CO., LTD. is a company formed by United
Communications Industry Co., Ltd. of Thailand ("UCOM") to invest in Iridium.    
UCOM is one of the largest cellular and paging operators in Thailand and is also
a reseller of communications equipment. Thai Satellite Telecommunications Co.,  
Ltd. coordinates the provision of Iridium's services in a gateway service       
territory consisting of Cambodia, Laos, Malaysia, Myanmar, Singapore, Thailand  
and Vietnam.                                                                    

     VEBACOM HOLDINGS, INC., a wholly owned subsidiary of o.tel.o communications
GmbH & Co., which is owned by VEBA AG, RWE AG and Lehman Brothers Bankhaus      
Aktiengesellschaft (as a fiduciary). VEBA AG, the indirect owner of o.tel.o     
communications GmbH & Co., together with its subsidiaries, is one of the largest
corporations in Germany. Its telecommunications branch offers a wide variety of 
telecommunications services including mobile communications, satellite          
communications services, network management, cable television and paging        
services. Iridium Communications Germany, a subsidiary of o.tel.o, coordinates  
the provision of Iridium's services in a gateway service territory consisting of
countries in or near Europe including Austria, Bulgaria, the Czech Republic,    
Finland, Germany, Hungary, Ireland, Israel, Norway, Poland, Portugal, Romania,  
Spain, Sweden, Slovakia, Ukraine and the United Kingdom.                        

    LOCKHEED MARTIN CORPORATION is a world leader in defense and space systems
technology, designing and producing military aircraft, missiles, electronic     
systems and satellites, as well as providing a wide range of government and     
commercial aeronautical, space, environmental and engineering services. Lockheed
Martin is a principal subcontractor to Motorola in the construction of Iridium  
satellites.                                                                     

     RAYTHEON COMPANY is engaged in the conception, development, manufacture and
sale of electronic systems, equipment and components for government and         
commercial use. Raytheon also has operations in aircraft products and energy and
environmental services. Raytheon is a principal subcontractor to Motorola in the
construction of the Iridium system and is primarily responsible for providing   
the main mission antennas for the satellites.                                   

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MANAGEMENT OF IRIDIUM AND IWCL

Set forth below is information concerning each Director and executive 
officer of Iridium and of IWCL, including each individual's principal occupation
and employment. The exclusive right to elect members of the IWCL Board is vested
with the holders of class A common stock. The next annual meeting of            
shareholders of IWCL is scheduled for May 18, 1999. There are no family         
relationships between any officers and Directors of Iridium or IWCL.            

The following table sets forth information concerning the executive   
officers and Directors of Iridium and, where indicated in parentheses, IWCL, as 
of December 15, 1998.                                                           

                                                        [Enlarge/Download Table]

                       NAME                         AGE                   POSITIONS                  
                       ----                         ---                   ---------                  
                                                                                                     
Robert W. Kinzie(1)................................ 65   Chairman (Director of IWCL)                 
Edward F. Staiano.................................. 62   Vice Chairman and Chief Executive Officer   
                                                         (Chairman of the Board and Chief Executive  
                                                         Officer of IWCL)                            
Mauro Sentinelli................................... 51   Executive Vice President -- Marketing and   
                                                         Distribution                                
Leo Mondale........................................ 39   Senior Vice President -- Strategic Planning 
                                                         and Business Development                    
O. Bruce Dale...................................... 56   Senior Vice President -- Network Operations 
Lauri J. Fitz-Pegado............................... 43   Vice President -- Global Gateway Relations  
Mark Gercenstein................................... 47   Vice President -- Business Operations       
Roy Grant.......................................... 41   Vice President -- Chief Financial Officer   
                                                         (Chief Financial Officer of IWCL)           
F. Thomas Tuttle................................... 56   Vice President, General Counsel and         
                                                         Secretary (Assistant Secretary of IWCL)     
Richard L. Lesher(2)(3)(4)(5)...................... 63   Vice Chairman and Independent Company       
                                                         Director (Independent Director of IWCL)     
Aburizal Bakrie(4)................................. 50   Director (designated by South Pacific       
                                                         Iridium Holdings, Inc.)                     
Hasan M. Binladin(4)............................... 50   Director (designated by Iridium Middle East)
Herbert Brenke(4).................................. 61   Director (designated by Vebacom Holdings,   
                                                         Inc.)                                       
Gordon J. Comerford(2)............................. 60   Director (designated by Motorola)           
Atilano de Oms Sobrinho(2)(4)...................... 54   Director (designated by Iridium SudAmerica) 
Robert A. Ferchat(4)............................... 64   Director (designated by Iridium Canada)     
Alberto Finol(1)(3)(4)............................. 62   Director (designated by Iridium SudAmerica) 
                                                         (Deputy Chairman and Director of IWCL)      
Edward Gams(1)..................................... 49   Director (designated by Motorola)           
Durrell Hillis..................................... 58   Director (designated by Motorola)           
Kazuo Inamori(4)................................... 66   Director (designated by Nippon Iridium)     
S. H. Khan(4)...................................... 60   Director (designated by Iridium India)      
Anatoly I. Kiselev(4).............................. 58   Director (designated by Khrunichev)         
John F. Mitchell(3)................................ 70   Director (designated by Motorola)           
Jung L. Mok(3)(4).................................. 49   Director (designated by SK Telecom)         
Giuseppe Morganti(1)(2)(4)......................... 66   Director (designated by Iridium Italia)     
J. Michael Norris.................................. 52   Director (designated by Motorola)           
Yusai Okuyama(2)(4)................................ 67   Director (designated by Nippon Iridium)     
John A. Richardson................................. 55   Director (designated by Iridium Africa)     
Theodore H. Schell(1)(4)........................... 54   Director (designated by Sprint)             

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                                                        [Enlarge/Download Table]

                       NAME                         AGE                   POSITIONS               
                       ----                         ---                   ---------               
                                                                                                  
William A. Schreyer(1)(4)(5)....................... 71   Independent Company Director (Independent
                                                         Director of IWCL)                        
Sribhumi Sukhanetr(1)(3)(4)........................ 66   Director (designated by Thai Satellite)  
Tao-Tsun Sun(2)(4)................................. 47   Director (designated by Pacific Iridium  
                                                         Telecommunications Corporation)          
Yoshiharu Yasuda(1)(3)(4).......................... 58   Director (designated by Nippon Iridium)  
                                                         (Director of IWCL)                       
Wang Mei Yue(3)(4)................................. 57   Director (designated by Iridium China)   
Peter Zaboji(1)(4)................................. 54   Director (designated by Vebacom Holdings,
                                                         Inc.)                                    
Wayne Morgan....................................... 54   (Secretary of IWCL)                      

---------------                                                                 
(1) Members of the Banking and Financing Committee of the Iridium Board of      
Directors                                                               

(2) Members of the Audit Committee of the Iridium Board of Directors            

(3) Members of the Compensation Committee of the Iridium Board of Directors     

(4) Members of the Related Party Contracts Committee of the Iridium Board of    
Directors                                                               

(5) Members of the Audit Committee of the IWCL Board of Directors               

    Pursuant to the LLC Agreement of Iridium and the Motorola MOU, on December
23, 1998 when Iridium closed on the guaranteed bank facilities, Motorola        
obtained the right to appoint an additional Director to the Iridium Board of    
Directors and an additional member of the Banking and Financing Committee of the
Iridium Board of Directors. As of December 31, 1998, Motorola had not made such 
appointment. See "Management's Discussion and Analysis of Financial Condition   
and Results of Operations" and "Certain Relationships and Related Transactions  
of Iridium".                                                                    

EXECUTIVE OFFICERS OF IRIDIUM AND IWCL                                          

Set forth below is information concerning each director and executive 
officer of Iridium and IWCL, including each individual's principal occupation   
and employment. Unless otherwise indicated, each executive officer holds office 
until a successor is duly elected and qualified.                                

   Unless otherwise noted, dates of service refer to positions with Iridium.

EDWARD F. STAIANO -- Vice Chairman and Chief Executive Officer since  
January 2, 1997 and Director since October 1994. Chairman of the Board of IWCL  
since May 1997 and Chief Executive Officer of IWCL since March 1997. Dr. Staiano
served Motorola as Executive Vice President, President and General Manager of   
the General Systems Sector (comprised of the cellular subscriber group, cellular
infrastructure group, network ventures division, personal communications and the
computer group) from 1989 to December 1996.                                     

    MAURO SENTINELLI -- Executive Vice President -- Marketing and Distribution
since August 1, 1997. Prior thereto, Mr. Sentinelli was Deputy Director General 
in charge of Strategic Planning, Strategic Marketing and International Affairs  
for Telecom Italia Mobile from 1995 to 1997 and Deputy Managing Director for    
1994 to 1995. He joined SIP, Telecom Italia's predecessor, in 1974, and held    
various positions in engineering, marketing and strategic planning. He became   
head of Business Development the Mobile Service Department in 1988 and launched 
Telecom Italia's cellular service.                                              

 LEO MONDALE -- Senior Vice President -- Strategic Planning and Business
Development since January 1995. From July 1993 until January 1995, Mr. Mondale  
served as Vice President, Government Affairs and Strategic Planning and from    
January 1991 to July 1993 as Vice President -- International Relations of       
Iridium. From July 1, 1990 to January 31, 1992, he was Director of International
Relations for the Satellite Communications unit of Motorola. Before joining     
Motorola, Mr. Mondale served as Vice President of the Fairchild Space & Defense 
Corporation, where he was responsible for the international and commercial      
activities of Fairchild Space from 1989 to 1990. Prior to joining Fairchild, Mr.
Mondale was Legal Counsel to the then Space Division of Matra, S.A. (now Matra- 
Marconi Space, N.V.), based in Paris, France, following several years of private
legal practice in Washington, D.C.                                              

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  O. BRUCE DALE -- Senior Vice President -- Network Operations since April
1995. Prior thereto, Mr. Dale served in a number of positions at Bell           
Communications Research ("Bellcore") including, General Manager, Service        
Assurance Systems and General Manager, Planning & Engineering System from March 
1993 to April 1995, Vice President, Customer Service Center from January 1992 to
March 1993, and Assistant Vice President, Provisioning Systems Laboratory from  
January 1990 to January 1992. From March 1982 to December 1989, Mr. Dale served 
as Director of Data Network Systems Development Laboratory for AT&T Bell        
Laboratories.                                                                   

  LAURI J. FITZ-PEGADO -- Vice President -- Global Gateway Relations since
May 1997. Prior thereto, Ms. Fitz-Pegado served at the U.S. Department of       
Commerce as the Director General and Assistant Secretary of the U.S. & Foreign  
Commercial Service (US&FCS) International Trade Administration from June 1994 to
June 1997 and as a Special Advisor to the Secretary of Commerce from June 1993  
to June 1994. From June 1982 to June 1993, Ms. Fitz-Pegado worked at Hill &     
Knowlton Public Affairs Worldwide, most recently as Managing Director and Senior
Vice President.                                                                 

MARK GERCENSTEIN -- Vice President -- Business Operations since August
1992. Prior thereto, Mr. Gercenstein was Director of Marketing of Motorola      
Satellite Communications from 1990 to 1992. Prior to assuming that position, Mr.
Gercenstein held various marketing and engineering assignments at Motorola      
Government Electronics Group from 1984 to 1990, Spar Aerospace from 1985 to 1987
and Bendix Aerospace from 1975 to 1982.                                         

     ROY GRANT -- Vice President -- Chief Financial Officer since April 30, 1997
and Vice President--Treasurer from November 1996 to July 1997. Chief Financial  
Officer of IWCL since April 1997. Prior thereto, Mr. Grant served from 1992 to  
1996 as Finance Director for Edison Mission Energy, the largest independent     
power developer in the United States. Mr. Grant also worked for Marriott        
Corporation from 1988 to 1992 in its corporate and project finance areas and at 
American Airlines from 1980 to 1988, most recently as its Managing              
Director -- Banking where he was responsible for all of the airline's banking   
relationships.                                                                  

WAYNE MORGAN -- Secretary of IWCL. Mr. Morgan has been employed as a  
corporate manger by Codan Services Ltd. in Bermuda since August 1996. Prior     
thereto, Mr. Morgan served Johnson & Higgins (Bermuda) Limited from 1980 to 1996
in a number of positions including Vice President and Manager of Support        
Services, Senior Vice President, Client Account Management and Senior Vice      
President, Principal Branch Manager. Prior to joining Johnson & Higgins, Mr.    
Morgan was the Deputy Accountant General for the Government of Bermuda from 1975
to 1980. Mr. Morgan has served as the Secretary of IWCL since December 1996.    

 F. THOMAS TUTTLE -- Vice President, General Counsel and Secretary since
April 1996. Mr. Tuttle had been employed by Iridium as Assistant Secretary since
January 1994 and as Deputy General Counsel since November 1993. Assistant       
Secretary of IWCL since December 1996. Prior thereto, Mr. Tuttle was in private 
law practice in Washington, D.C. from 1986 to 1994. Prior thereto, he served as 
Vice President, Regulatory and Industry Relations with Satellite Business       
Systems and held senior legal positions with COMSAT Corporation.                

DIRECTORS OF IRIDIUM AND IWCL                                                   

     Unless otherwise noted, dates of service refer to directorships of Iridium.

     ROBERT W. KINZIE -- Chairman of the Board since October 1991; member of the
Banking and Financing Committee. Chief Executive Officer from October 1991 to   
January 1, 1997. Director of IWCL since December 1996. Prior thereto, Mr. Kinzie
was the Director of Strategic Planning for Intelsat from 1987 to 1991. Prior to 
joining Intelsat, Mr. Kinzie worked from 1966 to 1987 in a number of positions  
with COMSAT Corporation including President, Communications Services Division   
and President of COMSAT General Corporation. Prior to joining COMSAT Corporation
in 1966, Mr. Kinzie was an economist with the Federal Communications Commission 
from 1962 to 1965.                                                              

  RICHARD L. LESHER -- Vice Chairman of the Board and Independent Director
since June 1997; member of the Audit Committee, the Compensation Committee and  
the Related Party Contract Committee. Director of                               
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IWCL since June 1996. Dr. Lesher was appointed Vice Chairman of the Board and   
Independent Company Director upon consummation of the initial public offering of
IWCL in June 1997. Dr. Lesher served as the President of the Chamber of Commerce
of the United States, the world's largest association of business organizations,
from 1975 to 1977, when he retired.                                             

  ABURIZAL BAKRIE -- Director since July 1997; member of the Related Party
Contracts Committee. Since 1992 Mr. Bakrie has been Chairman of the Bakrie Group
of Companies, a diversified corporation engaged in manufacturing, fabrication,  
telecommunications, mining, real estate, financial services, agri-business and  
trading activities. Mr. Bakrie is the President of ASEAN Chamber of Commerce and
Industry and President of the Indonesian Chamber of Commerce and Industry. Mr.  
Bakrie has served as a member of the People's Consultative Assembly of the      
Republic of Indonesia since 1987.                                               

 HASAN M. BINLADIN -- Director since January 1996; member of the Related
Party Contract Committee. During the past five years, Mr. Binladin has served as
Senior Vice President of the Saudi Binladin Group.                              

HERBERT BRENKE -- Director since September 1998; member of the Related
Party Contracts Committee. Mr. Brenke served as the Chairman of the Board of    
E-Plus Mobilefunk GmbH from 1993 to 1998 and as Chairman of the Executive Board 
of Thysen Rheinstahl Technik GmbH from 1982 to 1994.                            

GORDON J. COMERFORD -- Director since July 1993; Chairman of the Audit
Committee. Mr. Comerford is a member of the Board of Directors of Iridium       
SudAmerica Corporation and Iridium Canada, Inc. Mr. Comerford recently retired  
from Motorola, where he had served as a Senior Vice President since 1989. He    
joined Motorola's communications sector in 1974 as a Director of Business       
Management and became a Corporate Vice President in 1980.                       

  ATILANO DE OMS SOBRINHO -- Director since June 1996; member of the Audit
Committee and the Related Party Contracts Committee. Mr. Oms is Chairman of the 
Board, President and CEO of Inepar S.A., a diversified Brazilian corporation    
with operations in telecommunications, electrical current control equipment and 
services, mass transport, vehicle distribution and financial markets. Mr. Oms is
a member of the Board of Directors SudAmerica and Iridium Brasil. He also serves
on the Boards of the National Confederation of Industries (CNI), ABINEE-National
Association of Electro-Electronic Industries and the Federation of Industries of
Parana State.                                                                   

 ROBERT A. FERCHAT -- Director since January 1995; member of the Related
Party Contracts Committee. Mr. Ferchat has served as Chairman and Executive     
Officer since May 1995 and as Chairman, President and Chief Executive Officer   
from November 1994 to May 1995 at BCE Mobile Communications Inc. Prior thereto  
he served as Chairman, President and Chief Executive Officer of TMI             
Communications, a satellite communications company, from 1992 to 1994. He also  
served as President of Northern Telecom Canada Ltd. from 1985 to 1990. Mr.      
Ferchat has also served as a director at BCE Mobile Communications Inc. since   
1994.                                                                           

ALBERTO FINOL -- Director since July 1993; Chairman of the Banking and
Financing Committees; member of the Compensation Committee and the Related Party
Contracts Committee. Deputy Chairman and Director of IWCL since December 1996.  
Mr. Finol has been the President of Ilapeca, a Venezuelan holding company with  
interests in dairy products, supermarkets, pharmaceuticals and communications,  
since 1990 and has served as a Director since 1966. He is the Chairman of       
Iridium SudAmerica and the Chairman and a major shareholder of Iridium          
Andes-Caribe Ltd., one of the owners of Iridium SudAmerica. He has also served  
as the Director of Group Zuliano, a major Venezuelan petrochemical holding      
group. He represented his native region of Zulia on the Venezuelan Congress from
1969 to 1993.                                                                   

EDWARD GAMS -- Director since July 1993; member of the Banking and    
Financing Committee. Mr. Gams has served as Corporate Vice President and        
Director of Investor Relations of Motorola since 1996 and Vice President and    
Director of Investor Relations of Motorola since 1991. He was first employed by 
Motorola in 1979, and has held a variety of positions in operational and        
corporate finance, including service as Director of Corporate Financial Planning
from February 1991 to August 1991 and as manager of Corporate Financial Planning
from December 1989 to February 1991.                                            

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     DURRELL HILLIS -- Director since April 1998. Mr. Hillis is currently Senior
Vice President and General Manager of the Space Systems Technology Group        
Division of Motorola.                                                           

KAZUO INAMORI -- Director since July 1993; member of the Related Party
Contracts Committee. Dr. Inamori has been Chairman of the Board of DDI          
Corporation since 1984, of Kansai Cellular Telephone Co., Ltd. since 1988, of   
Taitoh Corporation since 1990, of Nippon Iridium Corporation since 1993, of DDI 
Tokyo Pocket Telephone Inc. since 1994, of DDI Kansai Pocket Telephone Co., Ltd.
since 1994, Kyocera Multimedia Corporation since 1995 and at Kyocera DDI        
Institute of Future Telecommunications Inc. since 1996. Dr. Inamori established 
Kyocera Corporation in 1959 and has been Chairman of the Board since 1986.      

S. H. KHAN -- Director since October 1994; member of the Related Party
Contracts Committee. Mr. Khan has served as Chairman and Managing Director of   
the Industrial Development Bank of India since December 1993. Prior thereto,    
from 1966, he served in various positions with the Industrial Development Bank  
of India, including Managing Director from February 1992 to December 1993 and   
Executive Director from 1986 to 1992. He also serves as Chairman of the Small   
Industries Development Bank of India, Credit Analysis & Research Ltd., National 
Securities Depository Ltd. and National Stock Exchange of India Ltd. He is also 
Director on the Boards of Export-Import Bank of India, IDBI Bank Ltd., Life     
Insurance Corporation of India, General Insurance Corporation of India, Discount
and Finance House of India Ltd., Deposit Insurance and Credit Guarantee         
Corporation and Securities Trading Corporation of India Ltd., India Growth Fund 
Inc., as a Trustee of Unit Trust of India ("UTI"), and as a member of the       
Advisory Board of UTI Mutual Fund and India Fund.                               

     ANATOLY I. KISELEV -- Director since July 1993; member of the Related Party
Contracts Committee. Mr. Kiselev has served as Director General of the facility 
that has produced the Salyut, Almaz and Mir space stations, the Proton rocket,  
and other spacecraft since 1993. Mr. Kiselev has been employed by Khrunichev,   
and its predecessor organizations since 1956, including as Khrunichev Enterprise
Director from 1975 to 1993.                                                     

    JOHN F. MITCHELL -- Director since July 1993; Chairman of the Compensation
Committee since July 1993. Mr. Mitchell has served as Vice Chairman of the Board
of Motorola since 1988 and served as Officer of the Board from 1988 to 1995. He 
was employed by Motorola from 1953 to 1995 and served as President from 1980 to 
1986 and as Chief Operating Officer from 1986 to 1988.                          

JUNG L. MOK -- Director since October 1994; member of the Compensation
Committee and the Related Party Contracts Committee. Mr. Mok has served as a    
director and as the Senior Executive Vice President of SK Telecom since 1994.   
Prior thereto, Mr. Mok served as Senior Managing Director and Chief Operating   
Officer of Taehan Telecom Limited from 1991 to 1994 and as Managing Director at 
USA, Inc. since 1989.                                                           

   GIUSEPPE MORGANTI -- Director since April 1996; member of the Banking and
Financing Committee, the Audit Committee and the Related Party Contracts        
Committee. Since August 1996, Ing. Morganti has served as Chief Executive       
Officer and Managing Director of Iridium Italia S.p.A. Ing. Morganti has been   
with STET (now Telecom Italia) since 1984 in various management positions within
the Planning and Strategic Control Department, most recently as the head of the 
Telecommunications Services Division.                                           

    J. MICHAEL NORRIS -- Director since July 1996; Mr. Norris is a Senior Vice
President of Motorola and has been with Motorola for 24 years. He is currently  
the Senior Vice President and General Manager of the Network Management Group,  
responsible for all Motorola cellular joint ventures and Iridium gateway        
operations worldwide. He also sits on the boards of Hutchinson Telephone Company
Ltd. (Hong Kong), World Telecom Holding Company, Ltd. (Thailand) and Pelephone  
(Israel).                                                                       

  YUSAI OKUYAMA -- Director since July 1996; member of the Audit Committee
and Related Party Contracts Committee. Mr. Okuyama has been President of DDI    
Corporation since 1993 and President of Nippon Iridium (Bermuda) Ltd. since     
1995. Mr. Okuyama has been Chairman of the Board at seven of the DDI Pocket     
Telephone Companies since 1994 and at five of the DDI Cellular Telephone        
companies since 1995. Mr. Okuyama retired from MPT in 1989 as a deputy secretary
of MPT and served at MPT related enterprises as President before joining DDI    
Corporation in 1993.                                                            

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  JOHN A. RICHARDSON -- Director since March 1998; Mr. Richardson has been
the Chief Executive Officer of Iridium Africa since January 1998. He previously 
was Chairman and CEO of Barclays -- BZW Asia and prior thereto was CEO of       
Hutchison Whampoa Ltd. from 1979 to 1984.                                       

   THEODORE H. SCHELL -- Director since July 1993; member of the Banking and
Financing Committee and member of the Related Party Contract Committee. Mr.     
Schell has served as Senior Vice President -- Strategic Planning and Corporate  
Development at Sprint since 1990. Prior thereto, he served as President and     
Chief Executive Officer of RealCom Communications Corporation, an IBM           
subsidiary.                                                                     

WILLIAM A. SCHREYER -- Independent Director; member of the Banking and
Financing Committee and the Related Party Contracts Committee. Mr. Schreyer was 
appointed Independent Director, upon consummation of the initial public offering
of IWCL in June 1997. Director of IWCL since June 1997. Mr. Schreyer is Chairman
Emeritus of Merrill Lynch & Co., Inc. and has served as Chairman of the Board   
from April 1985 through June 1993 and as Chief Executive Officer from July 1984 
through April 1992. Mr. Schreyer is currently a Director of Callaway Golf       
Company, Deere & Company, True North Communications Inc., Schering-Plough       
Corporation and Willis Corroon Group.                                           

   SRIBHUMI SUKHANETR -- Director since July 1993; member of the Banking and
Financing Committee, the Compensation Committee and the Related Party Contracts 
Committee. Since 1992, Mr. Sukhanetr has been the Chairman of United            
Communication Industry Co., Ltd. ("UCOM") and of Thai Satellite                 
Telecommunications Co., Ltd., a subsidiary of UCOM. Prior thereto, he served as 
advisor to the Prime Minister's Office in Thailand from February 1991 to        
September 1992 and as Permanent Secretary to the Ministry of Transport and      
Communications from 1988 to February 1991.                                      

    TAO-TSUN SUN -- Director since January 1994; member of the Audit Committee
and the Related Party Contracts Committee. Mr. Sun has been Executive Director  
and President of Pacific Electric Wire & Cable Co., Ltd., the Iridium of Pacific
Iridium Telecommunications Corporation since 1986. Since 1996, he has served as 
Executive Director of Taiwan Electric Wire & Cable Ind. Assoc. and of Chinese   
National Federation of Industries, and as Honorary Chairman of the Council for  
Industry and Commercial Development. He has also served as Chairman of Taiwan   
Aerospace Corporation since 1994, Executive Director of Walsin Lihwa Corp. and  
Executive Vice Chairman of Charoong Thai Wire & Cable Co., Ltd. since 1993 and  
Director of Pacific Construction Co., Ltd. since 1995.                          

    YOSHIHARU YASUDA -- Director since January 1996; member of the Banking and
Financing Committee, the Compensation Committee and the Related Party Contracts 
Committee. Director of IWCL since December 1996. Mr. Yasuda is currently Vice   
President of Nippon Iridium Corporation and has been a Director since June 1995.
Mr. Yasuda was Vice President of Nippon Iridium Corporation from June 1996      
through 1997. Mr. Yasuda was Director of DDI Corporation from 1992 to 1995.     
Prior to joining DDI Corporation, Mr. Yasuda was with the Sanwa Research        
Institute.                                                                      

 WANG MEI YUE -- Director since October 1995; member of the Compensation
Committee and the Related Party Contracts Committee. Dr. Wang has served as     
Chairman and President of Iridium China (Hong Kong) Ltd. since September 1995,  
as Chairman and President of China Aerospace International Holdings Ltd., Hong  
Kong since 1993 and as Chairman of China Southern Telecommunication Co., Ltd.   
since 1991. From 1988 to 1993 Dr. Wang served as Vice Chairman of the Board at  
Conic Investment Co. Ltd.                                                       

    PETER ZABOJI -- Director since May 1998; member of the Banking and Finance
Committee and the Related Party Contracts Committee. Prior thereto, Mr. Zaboji  
served in several positions for Siemans, from 1977 to 1990, as Managing Director
and Vice Chairman of GPT Communications Systems Ltd., from 1991 to 1993, and as 
Managing Partner of Scholler International Group, from 1994 to 1996. Mr. Zaboji 
is currently a Managing Director of o.tel.o Communications GmbH & Co.           

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS OF IRIDIUM 

CERTAIN MOTOROLA RELATED MATTERS                                                

   Motorola is one of the world's leading providers of electronic equipment,
systems, components and services. Its products include two-way radios, pagers,  
cellular telephones and systems, semiconductors, defense and aerospace          
electronics, automotive and industrial electronics and data communications and  
information processing equipment.                                               

Motorola created and developed the concept of the Iridium system and  
Iridium's initial technical and business plans. Motorola is a founding investor,
has been allocated gateway service territories, shares a gateway service        
territory and has additional interests in other entities which have been        
allocated gateway service territories. Motorola is Iridium's largest holder of  
class 1 interests. The directors and officers of Iridium include numerous       
current and former Motorola employees. Motorola is also Iridium's principal     
supplier through the space system contract, the O&M contract and the terrestrial
network development contract.                                                   

Motorola MOU and Motorola ARG                                                   

    Under the Motorola MOU, Motorola has agreed to provide various guarantees,
deferral rights and other credit support to Iridium and Iridium has agreed that 
it will compensate Motorola for Motorola exposure with cash interest and equity 
pursuant to the Motorola ARG. Iridium has also agreed under the Motorola MOU    
that it (i) will use its best efforts to reduce the Motorola exposure to no more
than $275 million by the earliest possible date, (ii) will not have more than   
certain amounts of indebtedness outstanding, (iii) will not make certain        
acquisitions without Motorola's consent and (iv) will provide Motorola with the 
right (in addition to Motorola's rights to representation based on its holdings 
of class 1 interests) to appoint one additional director to the Board of        
Directors of Iridium any time the Motorola exposure exceeds $275 million and the
right to appoint a second additional director to the Board of Directors of      
Iridium any time the Motorola exposure exceeds $750 million. See "Management's  
Discussion and Analysis of Financial Condition and Results of                   
Operations -- Liquidity and Capital Resources -- Sources of Funding".           

Motorola Conflicts of Interest                                                  

  Motorola has and may have various conflicts of interest with Iridium and
with other members of Iridium. See "Risk Factors -- Conflicts of Interest with  
Motorola". Motorola is the principal supplier to Iridium as well as the actual  
or prospective supplier and licensor to gateway owners and operators, service   
providers, subscriber equipment manufacturers and individual subscribers. See   
"Risk Factors -- Reliance on Motorola, Gateway Owners and Other Third Parties". 
Motorola has asserted and may assert positions on the space system contract, O&M
contract, the terrestrial network development contract, the Motorola MOU and the
Motorola ARG that are contrary to those asserted by Iridium. To help ameliorate 
these conflicts under the space system contract, the O&M contract and the       
terrestrial network development contract, Iridium maintains a Related Party     
Contracts Committee of the Iridium Board of Directors which consists of all     
Board members other than any Board members who are directors, officers,         
employees or persons nominated to serve on the Board of Directors by Motorola   
(so long as Motorola is a party to the space system contract, the O&M contract  
or the terrestrial network development contract), Lockheed Martin or Raytheon   
(so long as Lockheed Martin or Raytheon, as the case may be, are subcontractors 
to Motorola under the space system contract or the O&M contract). The Related   
Party Contracts Committee has authority to review and monitor the space system  
contract, the O&M contract and the terrestrial network development contract and,
as it deems appropriate, cause Iridium to enforce its rights thereunder and     
propose amendments and waivers to these contracts. Iridium's payment obligations
under these contracts have comprised, and are expected to compromise, most of   
Iridium's expenses.                                                             

    Motorola has been involved in the manufacture of components for satellites
for over thirty years. Motorola has informed Iridium that it has under          
consideration future space-based data and communications systems and ventures.  
Motorola has also informed Iridium that Motorola may decide to undertake further
development of one or more such systems or ventures but no decision has been    
made as to whether Iridium                                                      

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would be a participant in any such system or venture. It is possible that any   
such system could be competitive to some degree with the Iridium system.        
Motorola has agreed in the space system contract that, without Iridium's        
consent, it will not produce for itself or others a similar satellite-based     
space system or a global communication system for commercial use prior to the   
earlier of July 31, 2003 or the termination date of the space system contract.  
Motorola has applied to the Federal Communications Commission for licenses to   
construct, launch and operate satellite-based systems designed to provide       
fixed-broadband, fixed-data transmissions.                                      

OTHER MATTERS                                                                   

Iridium Services Deutschland, a wholly owned subsidiary of o.tel.o    
communications GmbH & Co., the parent of Vebacom Holdings, Inc., a holder of    
approximately 8.8% of the class 1 interests, was allocated a gateway service    
territory consisting of several countries in or near Europe. Nippon Iridium     
Corporation, an affiliate of Nippon Iridium (Bermuda) Corporation, a holder of  
approximately 11.2% of the class 1 interests, was allocated the Japan gateway   
service territory. Each of o.tel.o communications GmbH & Co. and Nippon Iridium 
Corporation have entered into a Gateway Authorization Agreement, pursuant to    
which they, or their affiliates, will operate their respective Gateway service  
territory and provide gateway services. In addition, o.tel.o communications GmbH
& Co. and Nippon Iridium Corporation will serve as service providers to their   
respective gateway territory and, as such, will be entitled to payments         
associated with sales of Iridium's services.                                    

  Certain of the directors of IWCL are, or have been within the past year,
executive officers of suppliers of Iridium. In addition, certain of the         
directors of Iridium are executive officers of gateway owners and service       
providers. See "Management of Iridium and IWCL" and "Risk Factors -- Conflicts  
of Interest with Gateway Owners".                                               

CERTAIN REGULATIONS THAT AFFECT IRIDIUM 

     Iridium's operations, including the operation of the Iridium system and the
distribution of Iridium's services, are subject to significant U.S. and non-U.S.
regulation. This regulation is pervasive and largely outside Iridium's control. 
The following is a summary of certain of the regulations that affect Iridium.   
You should also review the documents incorporated by reference in this          
prospectus for further discussion of regulations that affect Iridium. See "Where
You Can Find More Information".                                                 

TELECOMMUNICATIONS REGULATION AND SPECTRUM ALLOCATION: OVERVIEW                 

     The allocation and use of the radio frequency spectrum for the provision of
communications services are subject to regulation by international organizations
and many nations and other jurisdictions. The implementation and operation of   
the Iridium system, like those of all other satellite and wireless systems, are 
dependent upon obtaining licenses and other approvals.                          

   The international regulatory framework for spectrum allocation and use is
established by the International Telecommunication Union, or "ITU". The ITU,    
which is composed of representatives from most of the countries of the world,   
meets officially at conferences known as World Radio Conferences, or "WRCs", to 
decide the radio services that should be permitted to operate in various radio  
bands and the rules for operating in those bands.                               

The national administration of each country decides how the radio     
frequencies that the ITU has allocated to particular communications services    
should be allocated and assigned domestically to specific radio systems. In     
addition, the provision of communications services in most countries is subject 
to regulatory controls by the national governments of each country.             

   In the United States, the Federal Communications Commission, or "FCC", is
the regulatory agency responsible for allocating spectrum and for licensing and 
regulating communication systems, facilities, and services. The FCC regulates   
satellites in accordance with laws passed by the United States Congress,        

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particularly the Communications Act of 1934, as amended, or the "Communications 
Act", regulations adopted pursuant to those laws, and judicial opinions rendered
by U.S. courts.                                                                 

   The Iridium system links phones to Iridium satellites capable of using up
to 10.5 MHz of spectrum in L-band frequencies from 1616-1626.5 MHz on a         
bi-directional time division basis, Earth-to-space and space-to-Earth. The      
system also is capable of operating "feeder" links in the frequencies 19.4-19.6 
GHz and 29.1-29.3 GHz (connecting satellites to ground earth station gateway    
facilities) and intersatellite links in the frequencies 23.18-23.38 GHz (linking
the satellites in the constellation to each other).                             

The licensing requirements for the Iridium system include: (i) the FCC
license for the space segment; (ii) the licenses in each country where there is 
a gateway or control facility for the satellite constellation; and (iii) the    
licenses in each country for Iridium phones, Iridium's service and for the use  
of required frequencies. In addition, the Iridium system must be coordinated    
with other users of spectrum that have rights to use the same or adjacent       
frequencies to the frequencies assigned to the Iridium system. It is only       
necessary for one country to license the space segment, which includes          
authorizing the construction, launch, and operation of the satellites, including
the use of the intersatellite links and the operation of the primary satellite  
control center in that country.                                                 

    The gateways provide the feeder link between the satellite network and the
PSTNs around the world. A radio license to operate a gateway earth station in a 
significant portion of the 29.1-29.3 GHz (Uplink) and 19.4-19.6 GHz (Downlink)  
frequency bands has been issued by the appropriate governmental authority of    
each of the countries in which an Iridium gateway is located. Similar           
authorizations have been obtained in the United States and Canada to operate the
control facilities for the satellite constellation.                             

     Each country in which Iridium provides Iridium World Satellite Service must
authorize the use of the frequencies linking the phones to the satellites. At a 
minimum, the Iridium system needs exclusive use of the frequencies              
1621.35-1626.5 MHz for this purpose, with authority to operate bi-directionally 
within that band. In order to operate the Iridium phones and pagers in a        
country, a certificate of type approval must be obtained. The licensing         
procedures vary in different countries. Generally there are three aspects to the
required license(s): (i) authorization for the use of the frequencies requested;
(ii) authorization for the equipment to be marketed and used (including         
subscriber equipment that may circulate from country to country); and (iii)     
authorization for the service to be provided.                                   

LICENSING STATUS                                                                

General                                                                         

Iridium, Motorola, and Iridium's gateway owners have made substantial 
progress in taking the regulatory steps needed for Iridium to operate its       
services on the scope assumed in its business plan, but certain additional      
regulatory approvals within and outside the United States remain to be obtained.
Each gateway has been licensed by the jurisdiction in which it is located. The  
licenses that have been received by the gateways are subject to conditions that 
relate to the provision of technical information to regulatory authorities.     
While Iridium believes the conditions specified in the final gateway licenses   
that have been received can be satisfied, there can be no assurance that such   
conditions will be satisfied or that conditions to licenses received in the     
future will be satisfied.                                                       

     As of December 15, 1998, approximately 125 administrations had given all or
a substantial portion of the authorizations necessary to provide Iridium World  
Satellite Service in their territories. These countries and territories include,
inter alia: United States, Italy, Argentina, China, Thailand, Malaysia, Brazil, 
Japan, South Korea, Austria, Germany, Canada, Australia, Venezuela, Sweden,     
Iceland, Russia, Uruguay, New Zealand, Chile, the United Kingdom, India, Turkey,
France, Colombia, Saudi Arabia, Belarus, Kazakhstan and Suriname. Iridium is    
seeking licenses throughout the world.                                          

The licenses and authorizations that have been received generally are 
subject to conditions relating to, among other things, (i) confining operations 
to the scope of the license, (ii) complying with applicable electronic          
surveillance laws and (iii) the continued operation of the Iridium system. While
substantial progress has been made in obtaining authorization for Iridium's     
satellite-based services and Iridium expects                                    

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that it will receive authorizations in additional jurisdictions, there can be no
assurance that sufficient licenses for Iridium to obtain the coverage assumed in
its business plan will be obtained or maintained.                               

Spectrum Allocation                                                             

 At the 1992 WRC, the ITU allocated to the MSS service: (i) on a primary
basis, 16.5 MHz of spectrum in the 1610-1626.5 MHz band (Earth-to-space); and   
(ii) on a secondary basis, 12.7 MHz of spectrum in the 1613.8-1626.5 MHz band   
(space-to-Earth). The ITU had previously authorized the other frequency bands   
used in the Iridium system for the purpose for which Iridium intends to use     
them. At the 1995 WRC, the ITU defined the coordination procedure for systems   
operating in the bands proposed to be used by Iridium for its feeder links. The 
ITU's role in allocating frequencies necessary for the operation of the first   
generation Iridium system is essentially complete.                              

United States Licensing                                                         

The space segment of the Iridium system, including the use of the     
intersatellite frequency band (23.18 to 23.38 GHz), has been licensed by the FCC
in the United States. The license has a term of ten years and contains other    
conditions typical of satellite system licenses granted by the FCC. The license 
term began on or about May 5, 1997, the date the first satellite was in orbit   
and the first transmission occurred. Although the FCC has stated that it will   
renew the Iridium system authorization unless extraordinary circumstances       
prevent it from doing so, there can be no assurance that the Iridium system     
license will be renewed. The license is held by Space System License, Inc. a    
wholly owned subsidiary of Motorola, which is contractually bound to operate the
system for the exclusive benefit of Iridium. As a result, Motorola, rather than 
Iridium, has the responsibility to operate and maintain the Iridium system in   
accordance with the terms of the license. Any request to renew or modify the    
license must be filed and prosecuted by Motorola. If the O&M contract is        
terminated or not renewed, Motorola would have to assign the Iridium license to 
Iridium or a third party. Any such assignment would be subject to FCC approval. 

     Under both the ITU's rules and the terms of the Iridium system license, the
Iridium system must be coordinated with all other domestic and foreign users of 
the frequency bands assigned to the Iridium system. The United States has       
essentially completed the process of registering the Iridium space segment      
operations with the ITU. It has submitted the advance publication and           
coordination materials to the ITU and coordinated the use of the space segment  
with most of those administrations expressing concerns that the system might    
cause or receive interference to their systems. On this basis, the United States
has requested the ITU to notify the Iridium system in the ITU's Master Frequency
Register, which will give it a legal right to protection from interference from 
future systems. The request has been published and administrations that have    
previously engaged in coordination with the United States regarding the Iridium 
system may file comments on the claim that coordination is complete. Any        
comments will need to be resolved before the Iridium system will be listed in   
the Master Frequency Register. Iridium believes that coordination will be       
completed successfully between the Iridium system and all existing or planned   
systems that have been identified under the coordination process. Currently,    
there is no other action required from any other country to license the space   
segment.                                                                        

 Under the FCC's rules and the terms of the license, prior to commencing
operations Motorola must enter into coordination agreements with U.S. radio     
astronomy sites and complete consultations with the Inmarsat and Intelsat       
systems. Both of these have been accomplished. See "-- Consultations and        
Coordinations".                                                                 

    In the United States, frequencies have been assigned to the Iridium system
feeder links in the 29.1-29.25 and 19.4-19.6 GHz bands. The 29.1-29.25 GHz      
frequencies are shared with the local multipoint distribution service ("LMDS"), 
and the FCC has adopted restrictions on LMDS operations that are designed to    
protect MSS feeder links from interference. The 19.4-19.6 GHz frequencies are   
shared with terrestrial microwave stations and each gateway must be coordinated 
in advance with licensed microwave stations. The FCC has granted a license for  
the gateways located in Hawaii and Tempe, Arizona. Licenses have also been      
granted in the United States for the ground control facilities in Virginia,     
Arizona and Hawaii.                                                             

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     The United States license authorizing construction, launch and operation of
the space segment includes the use of 1621.35 to 1626.5 MHz radio frequency band
in the United States exclusively for the Iridium subscriber links. This         
frequency assignment may be increased if no more than one CDMA satellite system 
becomes operational in the adjacent frequency band. In addition, the FCC has    
issued a license permitting 200,000 Iridium mobile phones to be used in the     
United States.                                                                  

    In December 1996, Motorola submitted a request to the FCC to authorize the
Iridium System to provide Aeronautical MobileSatellite Route Service ("AMS(R)S")
in its authorized band. The Iridium System is the only mobile satellite system, 
licensed or in development, that can provide a communication capability that is 
virtually global, while using spectrum already allocated for AMS(R)S. Several   
parties filed comments with and have petitioned the FCC to deny Motorola's      
application to provide AMS(R)S service. Among other arguments, petitioners claim
that the AMS(R)S proposal is inconsistent with ITU and FCC rules and            
allocations. In addition to FCC approval, approval is needed from the FAA, which
must certify that the avionics satisfy other international certification        
requirements. There can be no assurance that the FCC application will be        
granted, or that the avionics certification requirements will be satisfied at   
all, or in a timely fashion. Assuming all necessary authorizations are obtained,
Iridium expects to provide both the FCC required "safety" communications        
capabilities to the flightdeck and passenger communications, including voice and
facsimile. An individual aircraft may be served by multiple satellite           
communications carriers. In addition, before Iridium terminals can be installed 
on aircraft for either flightdeck or passenger communications, the FCC will have
to type approve such equipment and may have to change its rules (Part 87) to    
accommodate such equipment in the frequencies used by the Iridium system. While 
Iridium expects its aircraft terminals will receive this approval and, if       
necessary, the rule change will be made, there can be no assurance that such    
approval or change will occur on a timely basis or at all.                      

Licensing Outside the United States                                             

In countries other than the United States, the significant regulatory 
matters include: (i) in each country in which a gateway or space segment control
terminal is located, maintaining authorization to operate those facilities,     
including necessary gateway feeder link spectrum assignment; (ii) in each       
country in which Iridium subscriber equipment operates, obtaining and           
maintaining the necessary authorization to use the necessary user link spectrum 
(the satellite to phone link); (iii) in each country in which Iridium subscriber
equipment operates, authority to market and operate that equipment must be      
maintained or obtained; and (iv) coordination of the use of the frequencies to  
be used by the Iridium system must be achieved. As discussed under "-- General",
applications for authorizations are in varying stages of processing in countries
other than the United States. Of the gateway and subscriber authorizations      
granted to date, many have conditions attached to them concerning their         
operation and there can be no assurance that these conditions will be satisfied.
If the initial spectrum assignments prove insufficient as demand for Iridium's  
services increases over time, there can be no assurance Iridium will be able to 
obtain additional spectrum from the FCC or other administrations.               

   In order to bring Iridium terminal equipment into a country, the terminal
equipment must have type approval certification. Iridium has obtained           
authorization from the ITU to place a specially designed mark on each of its    
phones and pagers. The Iridium phones and pagers are the first commercially     
marketed personal telecommunications equipment to carry this mark, which        
facilitates the free flow of equipment bearing the mark across international    
borders. To date, approximately 75 countries have either issued type approval   
certification for the Iridium terminal equipment or recognize type approval     
certification that has been issued by the ITU or some other national            
administration. Although Iridium fully expects to eventually receive type       
approval certification for Iridium phones, pagers and other subscriber equipment
in all markets, there can be no assurance as to when this process will be       
complete.                                                                       

In connection with Iridium's efforts to obtain worldwide regulatory   
approval for Iridium World Satellite Service, governmental, political and       
security concerns have arisen. One such concern resulted in the authorization of
Iridium World Satellite Service by many countries being contingent upon Iridium 
providing such countries with the ability to legally monitor calls made to or   
from their respective territories. Iridium believes that it has been able to    
satisfactorily address this concern for many of these countries. However, there 
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can be no assurance that these countries will find Iridium's efforts            
satisfactory over time or that the emergence of governmental or political       
concerns will not impair the ability to obtain or maintain licenses or offer    
Iridium World Satellite Service.                                                

CONSULTATIONS AND COORDINATIONS                                                 

    Intelsat and Inmarsat are international organizations that own and operate
satellite systems. International obligations undertaken by the nations which    
have signed the international agreements creating Intelsat and Inmarsat,        
including the United States, require the United States to consult with both     
Intelsat and Inmarsat prior to authorizing any international satellite system to
ensure that the system will not cause significant economic or technical harm to 
the Intelsat system or significant technical harm to the Inmarsat system. The   
consultations with Intelsat and Inmarsat have been successfully completed.      

Currently, the Russian global navigation satellite system, GLONASS,   
operates in a frequency band that partially overlaps the 1610-1626.5 MHz MSS    
band. When operating co-channel with GLONASS, MSS systems are required to       
coordinate their operations with the previously registered operations of        
GLONASS. In addition, even when not operating co-channel, they are required to  
protect GLONASS operations from harmful interference. Iridium believes that a   
bilateral coordination agreement between Russia and the United States is in     
negotiation, under which Russia would agree to move the GLONASS system's        
operations to frequencies below 1610 MHz sometime after January 1, 1999, and to 
frequencies below approximately 1605 MHz by the year 2005. The FCC has          
conditioned the Iridium blanket subscriber license upon compliance with a level 
of protection from interference to the GLONASS system. During the interim period
following the shift below 1610 MHz and prior to the shift below 1605 MHz,       
Iridium believes it will be able to satisfy any reasonable level of protection  
that is required although there can be no assurance as to what level of         
protection will be required. While that level of protection has not been        
determined, Motorola has committed to meeting a protection level of -70 dBW/MHz 
at 1605 MHz and below. Certain aeronautical interests, including the Federal    
Aviation Administration, the U.S. Department of Transportation, and the U.S. GPS
Industry Council have strongly encouraged the FCC to set technical standards    
that provide a more stringent protection level than -70 dBW/MHz. At this time,  
it is uncertain whether Motorola can meet a more stringent protection level.    
Iridium believes that it can meet the protection requested for GLONASS when     
GLONASS shifts down in frequency to below 1605 MHz by January 1, 2005. Other    
administrations will also need to coordinate with the Russian Federation        
concerning the level of protection that will be afforded to GLONASS in their    
territory. In Russia itself, additional restrictions may be imposed which may   
limit the amount of spectrum available to Iridium in Russia. There can be no    
assurance that sufficient spectrum will be available to meet subscriber demand  
in Russia or any other country that requires a higher level of protection for   
GLONASS than the United States. Moreover, there can be no assurance that CDMA   
systems will be able to meet the levels of protection required for GLONASS,     
either in the United States, Russia or elsewhere. If such systems do not meet   
the protection requirements, the FCC and/or other countries' regulatory         
authorities might consider requests to reassign the CDMA systems to higher      
frequencies within the 1610-1626.5 MHz allocation in order to protect GLONASS.  
This development might in turn reduce the amount of spectrum available to       
Iridium. See "-- Competition".                                                  

Under the FCC's rules, the Iridium system also must protect U.S. radio
astronomy sites during periods when they are observing in the 1610.6-1613.8 MHz 
band. Coordination agreements have been entered into with respect to all 15 U.S.
radio astronomy sites. There can be no assurance that the technical assumptions 
underlying the coordination agreements with the U.S. radio astronomy sites will 
not differ from the manner in which the Iridium system performs over time.      

   Other administrations also require that the Iridium system be coordinated
with radio astronomy sites that observe in the 1.6 GHz band. These are Canada,  
Australia, India and several EU member countries. Iridium and Motorola have     
reached preliminary agreements with radio astronomers in all these countries    
which have enabled the Iridium system to be licensed in these countries.        
However, additional negotiation with the radio astronomers are still necessary  
in a number of these countries. Although Iridium believes these negotiations    
will be successful, there can be no assurance that these negotiations will be   
concluded successfully. Failure to successfully conclude these negotiations     
could jeopardize the licenses which have been granted in these countries.       
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   In addition to potential interference between MSS systems and other users
of the 1.6 GHz band, there is a potential for intersystem interference among the
MSS systems themselves. Emissions standards have been developed in various      
international forums which would limit out-of-band emissions into the Iridium   
system to a level which Iridium believes would not cause harmful interference to
the operation of the Iridium system. These standards would apply to all CDMA MSS
systems, including any subsequent CDMA MSS systems which are authorized to use  
the 1610-1621.35 MHz band. There can be no assurance, however, that the         
standards adopted would not cause harmful interference to the operation of the  
Iridium system.                                                                 

  The Iridium system MSS downlinks operate on a secondary basis. Under the
rules of the ITU and the FCC, these secondary downlinks may not cause harmful   
interference to any primary spectrum user that is operating co-frequency and    
must accept any interference caused to them by such primary spectrum users. In  
light of the secondary nature of Iridium's MSS downlinks, the failure by an MSS 
operator to implement an acceptable CDMA emissions mask could significantly     
reduce the total capacity of the Iridium system. Furthermore, the downlinks of  
the Iridium system may need to accept interference from Inmarsat terminals,     
including Inmarsat aeronautical and land mobile terminals, when they are in the 
vicinity of an Iridium terminal.                                                

UNITED STATES ELECTRONIC SURVEILLANCE LAWS                                      

    The Communications Assistance for Law Enforcement Act of 1994, or "CALEA",
was enacted on October 25, 1994. CALEA requires that telecommunications carriers
deploy equipment, facilities and services that meet certain electronic          
surveillance requirements identified in the statute. Penalties of $10,000 a day 
for each wire tap order not fulfilled could be imposed under CALEA as well as an
order of compliance in the case of a failure to comply, and other unspecified   
penalties, including injunctions, might otherwise be imposed. The U.S.          
government has indicated that CALEA imposes requirements on the Iridium system  
similar to the requirements that the U.S. government has requested of the       
cellular industry. Because the U.S. government has not identified its capacity  
or capability requirements for satellite systems and because of legal challenges
filed by the government concerning the cellular industry's standard for CALEA   
wiretap capabilities, there is uncertainty as to the scope of the wiretap       
capabilities that may ultimately be required for the Iridium system. On         
September 11, 1998, the FCC extended the deadline for compliance with the CALEA 
capability requirements to June 30, 2000. See "-- Licensing Status -- Licensing 
Status Outside the United States" for a description of the surveillance         
requirements of countries outside the United States.                            

UNITED STATES INTERNATIONAL TRAFFIC IN ARMS REGULATIONS; EXPORT ADMINISTRATIONS 
ACT                                                                             

The United States International Traffic in Arms Regulations under the 
United States Arms Export Control Act authorize the President of the United     
States to control the export and import of articles and services that can be    
used in the production of arms. Among other things, these regulations limit the 
ability to export certain articles and related technical data to certain        
nations. The scope of these regulations is very broad and extends to certain    
spacecraft, including certain satellites. Certain information involved in the   
performance of Iridium's operations falls within the scope of these regulations.

   The Export Administrations Act and the regulations thereunder control the
export and re-export of United States-origin technology and commodities capable 
of both civilian and military applications (so-called "dual use" items). These  
regulations may prohibit or limit export and re-export of certain               
telecommunications equipment and related technology which are not affected by   
the International Traffic in Arms Regulations by requiring a license from the   
Department of Commerce before controlled items may be exported or re-exported to
certain destinations. The export or re-export of certain Iridium equipment,     
e.g., Iridium phones and pagers, earth stations and technical data, may be      
subject to these regulations, if such equipment is manufactured in the United   
States and then exported or re-exported. These regulations may also affect the  
export, from one country outside the United States to another, of United        
States-origin technical data or the direct products of such technical data.     

   Motorola has contracted with the China Great Wall Industries Corporation,
utilizing its Long March 2C/2D vehicle, and the Boeing Corporation, utilizing   
its Delta II launch vehicle, to perform maintenance                             

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launches pursuant to the O&M contract. Motorola expects that a number of other  
launch systems currently available or under development could be used to satisfy
any maintenance launch requirements. Motorola has obtained authorization from   
the Department of Commerce to export Iridium replacement satellites, including  
associated launch support equipment, for any maintenance launches needed through
the end of 1999 on the China Great Wall Long March 2C/2D launch vehicle. No     
license from the Department of Commerce is required for replacement launches on 
the Delta II launch vehicle.                                                    

COMPETITION                                                                     

     At the time that the FCC authorized the construction of the Iridium system,
it also authorized other competitive MSS systems to operate in the 1610-1626.5  
MHz band. This was the Globalstar system, proposed by Loral/Qualcomm            
Partnership, L.P., and the Odyssey system, proposed by TRW. Subsequently, TRW   
turned in its license. Globalstar, Odyssey and the Iridium system were the only 
Big LEO systems initially licensed by the FCC. While the Iridium system was     
granted exclusive use of the 1621.35-1626.5 MHz band in the United States,      
Globalstar was granted shared use of the bands 1610-1621.35 MHz and 2483.5-2500 
MHz.                                                                            

     At the same time the FCC authorized the Iridium and Globalstar systems, the
FCC afforded three other applicants (that had initially failed to establish     
their qualifications) additional time in which to demonstrate that they were    
financially qualified. These were MCHI, Constellation and AMSC. In September    
1996, AMSC chose not to proceed and the FCC dismissed its application.          

Following the submission of updated financial information by MCHI and 
Constellation to the FCC, by orders released July 1, 1997, the FCC's            
International Bureau granted licenses for the Ellipso system proposed by MCHI   
and the Aries system proposed by Constellation. These orders, which are subject 
to review by the full FCC, increase to four the number of U.S.-licensed global  
MSS systems (including the Iridium system) and may result in increased          
competition for the Iridium system.                                             

MCHI and Constellation previously had filed challenges to the FCC's   
determination that they were each not financially qualified with the United     
States Court of Appeals for the District of Columbia Circuit, which included an 
appeal from the FCC's decision to license the Iridium and Globalstar Systems.   
This court action has been placed in abeyance pending a final FCC decision on   
applications for review of the decision by the FCC's International Bureau to    
waive the financial qualification rules and grant licenses to MCHI and          
Constellation.                                                                  

    The licensing of the MCHI and Constellation Code Division Multiple Access,
or "CDMA", systems reduces the possibility that only one CDMA system will become
operational in the 1610-1621.35 MHz frequency band adjacent to the Iridium      
system's frequency assignment. This in turn reduces the likelihood that the FCC 
will increase the frequency assignment for the Iridium system. In addition,     
MCHI's and Constellation's licenses may cause the CDMA based global systems to  
have less capacity available for their use and thereby make it more difficult   
for them to accept the protection levels required for GLONASS, either in the    
United States, Russia or elsewhere. This could lead to requests to reassign the 
CDMA systems to higher frequencies within the 1610-1626.5 MHz allocation to     
protect GLONASS. This development might in turn reduce the amount of spectrum   
available to Iridium. Furthermore, the possibility that two more CDMA systems   
may become operational may increase the risk of harmful interference into the   
Iridium system's MSS downlinks.                                                 

    Competition with the Iridium system is also expected from ICO, the private
company affiliated with Inmarsat to provide a mobile satellite service using    
satellites to be positioned in medium earth orbit. ICO's system is expected to  
become a significant competitor of the Iridium system. ICO's proposed service   
will not operate in the same set of user link frequencies in which the Iridium  
and Globalstar systems are proposed to operate.                                 

INTERCONNECTION AND COUNTRY CODES                                               

For Iridium to provide outbound (i.e., initiated by an Iridium phone) 
satellite voice services on a global basis, each gateway needs to interconnect  
with international carriers who can link the gateway with the                   

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national and local public switched telephone networks, or "PSTNs", in each of   
the countries Iridium serves. Some gateways may be required to achieve carrier  
status in their countries of origin in order to enter into such agreements. As  
of December 15, 1998, not all interconnection agreements had been obtained. In  
the absence of an interconnection agreement, it may not be possible to complete 
calls between an Iridium handset and a wireline phone in a given country. There 
can be no assurances that the necessary interconnection agreement will be       
concluded in any given country.                                                 

     For Iridium to provide inbound (i.e., a call to an Iridium phone) satellite
voice services on a global basis, each gateway needs to interconnect with the   
PSTNs in the countries that are close to it (so that each country is            
interconnected with at least one gateway). In addition, since the Iridium system
will be treated like a "country" with a dedicated country code, each PSTN must  
route traffic based on that country code to the Iridium gateway. To route       
Iridium system traffic properly, the PSTN operators in each country must program
their international switches (and domestic ones, if necessary) to include the   
Iridium country code and signaling point codes.                                 

 In May 1996, Study Group 2 of the ITU Telecommunication Standardization
Bureau decided that the Iridium system, ICO, Globalstar and Odyssey should share
a country code and allocated code "881" for this purpose, with each eligible    
system to receive two values of the digit following the code 881. The Iridium   
system uses codes 8816 and 8817, which enables Iridium to identify approximately
200 million subscribers.                                                        

The four-digit country code must be used by domestic and international
carriers in each country to route calls to the Iridium system and to recognize  
those calls for billing purposes as calls to the Iridium network. Although the  
typical three-digit country code is supported by all carriers for the call      
routing and billing systems, it is expected that some carriers will have to     
modify their routing and billing systems, and in some cases, enhance their      
switch capacity, to be able to route and bill for calls destined for the four   
digit codes assigned to the Iridium system and other mobile satellite systems.  
It is possible that some carriers will not agree to make the necessary          
modifications, to make them in a timely fashion, or to make them without Iridium
and other mobile satellite system operators paying for some or all of the costs 
of such modifications. It is generally expected that resistance to making the   
modifications is most likely to occur in developing countries that employ less  
modern switching equipment.                                                     

DESCRIPTION OF CAPITAL STOCK

The following discussion is based upon the advice of Conyers Dill &   
Pearman, Bermuda counsel for IWCL.                                              

   IWCL was incorporated as an exempted company under the Companies Act 1981
of Bermuda, as amended from time to time (the "Bermuda Act"), and the rights of 
its shareholders, including those persons who will become shareholders of IWCL  
in connection with the Offerings, are governed by Bermuda law and IWCL's        
Memorandum of Association and Bye-Laws. The following is a summary of certain   
provisions of Bermuda law and IWCL's organizational documents. This summary is  
not a comprehensive description of such laws and documents and is qualified in  
its entirety by appropriate reference to Bermuda law and to the organizational  
documents of IWCL. Reference is made to IWCL's Memorandum of Association and    
Bye-Laws, copies of which have been filed as exhibits to our Annual Report on   
Form 10-K for the year ended December 31, 1997, and prospective investors are   
urged to read these exhibits for a complete understanding of the terms of the   
Memorandum of Association and Bye-Laws. See "Where You Can Find More            
Information".                                                                   

 The authorized capital of IWCL consists of 50,000,000 shares of class A
common stock and 2,500,000 shares of class B common stock. At December 15, 1998,
assuming all class A common stock warrants were exercised on that date, there   
would have been 13,641,848 shares of class A common stock and 20,625 shares of  
class B common stock outstanding. See "Shares Eligible for Future Sale". After  
giving pro forma effect to the Offerings, the number of shares of class A common
stock outstanding as of December 15, 1998 would have been 19,680,648 (20,805,648
shares if the U.S. underwriters' and international managers' over-allotment     
options are exercised in full).                                                 

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COMMON STOCK                                                                    

Voting Rights                                                                   

Under Bermuda law, questions brought before a general meeting of      
shareholders are decided by a majority vote of shareholders present at the      
meeting and entitled to vote (or by such majority as the Bermuda Act or the     
Bye-Laws of IWCL prescribe), each shareholder owning shares entitled to vote    
having one vote, irrespective of the number of shares held, unless a poll is    
requested. IWCL's Bye-Laws provide that, subject to the provisions of the       
Bermuda Act, any questions proposed for the consideration of the shareholders   
will be decided by a simple majority of the votes cast, with each shareholder   
that is entitled to vote and present, in person or by proxy, entitled to one    
vote. If a poll is requested, each shareholder that is entitled to vote and     
present in person or by proxy has one vote for each share of stock entitled to  
vote on such question. A poll may only be requested under IWCL's Bye-Laws by (i)
the chairman of the meeting, (ii) at least three shareholders present in person 
and entitled to vote or represented by proxy, (iii) any shareholder or          
shareholders, present in person or by proxy, holding between them not less that 
10% of the total voting rights of all shareholders having the right to vote at  
such meeting or (iv) a shareholder or shareholders present in person or by proxy
holding voting shares in IWCL on which an aggregate sum has been paid-up equal  
to not less than 10% of the total sum paid-up on all such voting shares. The    
holders of class A common stock are entitled to one vote per share. The holders 
of class B common stock have no voting rights, except as required by Bermuda law
in connection with matters involving a variation in terms of the class B common 
stock.                                                                          

Dividend Rights                                                                 

  Under Bermuda law, a company may pay such dividends as are declared from
time to time by its board of directors unless there are reasonable grounds for  
believing that the company is or would, after the payment, be unable to pay its 
liabilities as they become due or that the realizable value of its assets would 
thereby be less than the aggregate of its liabilities and issued share capital  
and share premium accounts. Each share of class A common stock and class B      
common stock is entitled to dividends if, as and when dividends are declared by 
the IWCL Board of Directors. Any dividend declared and payable in cash, capital 
stock or other property must be paid equally on a share-for-share basis on the  
class A common stock and the class B common stock, except as described below.   
Dividends and distributions payable in shares of class A common stock may only  
be paid on class A common stock, and dividends and distributions payable in     
shares of class B common stock may only be paid on class B common stock. If a   
dividend or distribution payable in shares of class A common stock is made on   
the class A common stock, a simultaneous and equivalent dividend or distribution
in shares of class B common stock must be made on the class B common stock. If a
dividend or distribution payable in shares of class B common stock is made on   
class B common stock, a simultaneous and equivalent dividend or distribution in 
shares of class A common stock must be made on the class A common stock.        

Conversion Rights                                                               

   The class A common stock is not convertible. Each share of class B common
stock is exchangeable into one share of class A common stock on the terms set by
the IWCL Board of Directors. The shares of class B common stock to be issued in 
connection with IWCL's NOMAD program are the only shares of class B common stock
authorized by the IWCL Board of Directors. The exchange rights set by the IWCL  
Board of Directors for such shares of class B common stock are described under  
"Shares Eligible for Future Sale".                                              

Preemptive Rights                                                               

Neither the holders of class A common stock nor the holders of class B
common stock have preemptive rights to purchase any shares of IWCL's capital    
stock.                                                                          

Transfer Restrictions                                                           

    Shares of class A common stock are not subject to restrictions on transfer
under IWCL's Memorandum of Association and Bye-Laws. Shares of class B common   
stock are subject to any transfer restrictions set by the IWCL Board of         
Directors. The shares of class B common stock issued in connection with IWCL's  
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NOMAD are subject to significant restrictions on transfer until at least one    
year after IWCL has received their full purchase price.                         

Rights in Liquidation                                                           

   Under Bermuda law, in the event of liquidation, dissolution or winding-up
of a company, after satisfaction in full of all claims of creditors and subject 
to the preferential rights accorded to any series of preferred stock, the       
proceeds of such liquidation, dissolution or winding-up are distributed pro rata
among the holders of common stock in accordance with IWCL's Bye-Laws. The       
holders of the class A common stock and the holders of the class B common stock 
are entitled to participate equally on a share-for-share basis in all           
distributions to holders of common stock in any liquidation, dissolution or     
winding-up of IWCL.                                                             

Meetings of Shareholders                                                        

  Under Bermuda law, a company is required to convene at least one general
shareholders' meeting per calendar year. Bermuda law provides that a special    
general meeting may be called by the board of directors of a company and must be
called upon the request of shareholders holding not less than 10% of the paid-up
capital of the company carrying the right to vote. Bermuda law also requires    
that shareholders be given at least five days' advance notice of a general      
meeting but the accidental omission of notice to any person does not invalidate 
the proceedings at a meeting. The Bye-Laws of IWCL provide that the President or
the Chairman or any two Directors or any Director and the Secretary may convene 
a special general meeting of IWCL whenever in their judgment such a meeting is  
necessary. Under the Bye-Laws of IWCL, at least ten days' notice of the annual  
general meeting and at least five days' notice of any special general meeting   
must be given to each shareholder entitled to vote thereat, unless it is agreed 
that the meeting has been properly called by (i) in the case of an annual       
general meeting, all of the shareholders entitled to attend and vote at such    
meeting or (ii) in the case of a special general meeting, shareholders holding  
at least 95% of the shares given the right to attend and vote at such meeting.  

    Under Bermuda law, the number of shareholders constituting a quorum at any
general meeting of shareholders is determined by the Bye-laws of a company.     
IWCL's Bye-Laws provide that the presence of two persons present in person and  
representing in person or by proxy in excess of 50% of the total issued voting  
shares in IWCL throughout the meeting shall constitute a quorum.                

Access to Books and Records and Dissemination of Information                    

Members of the general public have the right to inspect the public    
documents of a company available at the office of the Registrar of Companies in 
Bermuda. These documents include IWCL's Memorandum of Association (including its
objects and powers) and any alteration to IWCL's Memorandum of Association. The 
shareholders have the additional right to inspect the Bye-Laws of IWCL, minutes 
of general meetings and IWCL's audited financial statements, which must be      
presented at the annual general meeting. The register of shareholders of a      
company is also open to inspection by shareholders without charge and to members
of the general public on the payment of a fee. A company is required to maintain
its share register in Bermuda but may, subject to the provisions of the Bermuda 
Act, establish a branch register outside Bermuda. A company is required to keep 
at its registered office a register of its directors and officers which is open 
for inspection for not less than two hours in each day by members of the public 
without charge. Bermuda law does not, however, provide a general right for      
shareholders to inspect or obtain copies of any other corporate records.        

Election or Removal of Directors                                                

    Under Bermuda law and IWCL's Bye-Laws, directors are elected at the annual
general meeting or at any special general meeting called for the purpose and    
shall hold office for such term as the shareholders may determine, or in the    
absence of such determination, until the next annual general meeting or until   
their successors are elected or appointed, unless they are earlier removed or   
resign.                                                                         

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    Under Bermuda law and the Bye-Laws of IWCL, a Director may be removed at a
special general meeting of shareholders specifically called for that purpose,   
provided that the director was served with at least 14 days' notice. The        
Director has a right to be heard at the meeting. Any vacancy created by the     
removal of a Director at a special general meeting may be filled at such meeting
by the election of another director in his or her place or, in the absence of   
any such election, by the IWCL Board of Directors.                              

Amendment of Memorandum of Association and Bye-Laws                             

     Bermuda law provides that the Memorandum of Association of a company may be
amended by a resolution passed at a general meeting of shareholders of which due
notice has been given. An amendment to the Memorandum of Association other than 
an amendment which alters or reduces a company's share capital as provided in   
the Bermuda Act, also requires the approval of the Bermuda Minister of Finance, 
who may grant or withhold approval at his discretion. The Bye-Laws of IWCL      
provide that no Bye-Law shall be rescinded, altered or amended and no new       
Bye-Law shall be made unless it has been approved by a resolution of the IWCL   
Board of Directors and by a resolution of the shareholders.                     

    Under Bermuda law, the holders of an aggregate or not less than 20% in par
value of a company's issued share capital have the right to apply to a court of 
appropriate jurisdiction in Bermuda (a "Bermuda Court") for an annulment of any 
amendment of the Memorandum of Association adopted by shareholders at any       
general meeting, other than an amendment which alters or reduces a company's    
share capital as provided in the Bermuda Act. Where such an application is made,
the amendment becomes effective only to the extent that it is confirmed by the  
Bermuda Court. An application for amendment of the Memorandum of Association    
must be made within 21 days after the date on which the resolution altering     
IWCL's Memorandum of Association is passed and may be made on behalf of the     
persons entitled to make the application by one or more of their number as they 
may appoint in writing for the purpose. No such application may be made by      
persons voting in favor of the amendment.                                       

Appraisal Rights and Shareholder Suits                                          

Under Bermuda law, in the event of an amalgamation of two Bermuda     
companies, a shareholder who is not satisfied that fair value has been paid for 
his shares may apply to a Bermuda Court to appraise the fair value of his       
shares. The amalgamation of a company with another company requires the         
amalgamation agreement to be approved by the board of directors and by a meeting
of the holders of shares of the amalgamating company of which they are directors
and of the holders of each class of such shares. Under Bermuda law, an          
amalgamation also requires the consent of the Bermuda Minister of Finance, who  
may grant or withhold consent at his discretion.                                

Class actions and derivative actions are generally not available to   
shareholders under Bermuda law. The Bermuda Courts, however, would ordinarily be
expected to permit a shareholder to commence an action in the name of a company 
to remedy a wrong done to the company where the act complained of is alleged to 
be beyond the corporate power of the company or is illegal or would result in   
the violation of the company's Memorandum of Association or Bye-Laws.           
Furthermore, consideration would be given by a Bermuda Court to acts that are   
alleged to constitute a fraud against the minority shareholders or, for         
instance, where an act requires the approval of a greater percentage of the     
company's shareholders than those who actually approved it.                     

     When the affairs of a company are being conducted in a manner oppressive or
prejudicial to the interests of some part of the shareholders, one or more      
shareholders may apply to a Bermuda Court for an order regulating the company's 
conduct of affairs in the future or ordering the purchase of the shares by any  
shareholder, by other shareholders or by the company.                           

REGISTRAR AND TRANSFER AGENT                                                    

  A register of holders of the class A common stock is maintained by Codan
Services Limited in Bermuda and by the Bank of New York in the United States.   
The Bank of the New York acts as transfer agent with respect to the class A     
common stock.                                                                   
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CERTAIN PROVISIONS OF BERMUDA LAW                                               

   IWCL has been designated as a non-resident under the Exchange Control Act
of 1972 (the "Control Act") by the Bermuda Monetary Authority (the "Authority") 
whose permission for the issue of shares of class A common stock of IWCL has    
been obtained. This designation allows IWCL to engage in transactions in        
currencies other than the Bermuda dollar. Approvals or permissions received from
the Authority do not constitute a guarantee by the Authority as to the          
performance or creditworthiness of IWCL.                                        

     Prior to the Offerings, this prospectus will be filed with the Registrar of
Companies in Bermuda in accordance with Bermuda law.                            

  In granting such permission and in accepting this prospectus for filing,
neither the Authority nor the Registrar of Companies in Bermuda accepts any     
responsibility for the financial soundness of IWCL or the correctness of any of 
the statements made or opinions expressed in this prospectus.                   

     The transfer of shares between persons regarded as resident outside Bermuda
for exchange control purposes and the issue of shares after the completion of   
the Offerings to or by such persons may be effected without specific consent    
under the Control Act and regulations thereunder. Issues and transfers of shares
involving any person regarded as resident in Bermuda for exchange control       
purposes require specific prior approval under the Control Act.                 

Non-Bermuda owners of IWCL's shares of class A common stock are not   
restricted in the exercise of the rights to hold or vote their shares. Because  
IWCL has been designated as a non-resident for Bermuda exchange control         
purposes, IWCL is permitted to engage in transaction in all currencies other    
than the Bermuda dollar and there are no restrictions on its ability to transfer
funds (other than funds denominated in Bermuda dollars) in and out of Bermuda or
to pay dividends to United States residents who are holders of IWCL's class A   
common stock.                                                                   

   In accordance with Bermuda law, share certificates are only issued in the
names of corporations, partnerships or individuals. In the case of an applicant 
acting in a special capacity (for example as a trustee), certificates may, at   
the request of the applicant, record the capacity in which the applicant is     
acting. Notwithstanding the recording of any such special capacity IWCL is not  
bound to investigate or incur any responsibility in respect of the proper       
administration of any such trust.                                               

IWCL will take no notice of any trust applicable to any of its shares 
whether or not it had notice of such trust.                                     

   As an "exempted company", IWCL is exempt from Bermuda laws which restrict
the percentage of share capital that may be held by non-Bermudians, but as an   
exempted company IWCL may not participate in certain business transactions      
including: (i) the acquisition or holding of land in Bermuda (except that       
required for its business and held by way of lease or tenancy for terms of not  
more than 21 years); (ii) the taking of mortgages on land in Bermuda to secure  
an amount in excess of $50,000 without the consent of the Minister of Finance of
Bermuda; (iii) the acquisition of securities created or issued by, or any       
interest in any local company or business, other than certain types of Bermuda  
government securities of another "exempted" company, partnership or other       
corporation resident in Bermuda but incorporated abroad; or (iv) the carrying on
of business of any kind in Bermuda, except in furtherance of the business of    
IWCL carried on outside Bermuda or under a license granted by the Minister of   
Finance of Bermuda.                                                             

RELATIONSHIP BETWEEN IWCL AND IRIDIUM 

   The following is a summary of certain aspects of the relationship between
IWCL and Iridium. You should review the documents incorporated by reference in  
this prospectus for further discussion of the rights of IWCL stockholders, the  
rights of Iridium class 1 interest holders and the various contractual          
relationships between IWCL and Iridium. See "Where You Can Find More            
Information".                                                                   

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GOVERNANCE OF IWCL                                                              

The power and authority to conduct and manage the business of IWCL is 
vested in IWCL's Board of Directors, which is comprised of seven members, a     
majority of whom also are executive officers of Iridium or one of Iridium's     
members. At least two members of the IWCL Board of Directors will at all times  
be persons not currently employed by Iridium or affiliated with Motorola or any 
other member of Iridium owning more than five percent of the outstanding class 1
interests. These Directors are referred to as the "independent directors".      

IWCL'S PARTICIPATION IN THE GOVERNANCE OF IRIDIUM                               

Iridium is governed by the Iridium Board of Directors. The members of 
Iridium may manage Iridium only through their election of Directors, and have no
authority, in their capacity as members, to act on behalf of Iridium. IWCL has  
waived the limitation on liability provided by the Delaware Limited Liability   
Company Act. The other members of Iridium have not waived this limitation and do
not have liability with respect to the debts or obligations of Iridium beyond   
their investment in their interests in Iridium. Notwithstanding IWCL's unlimited
liability with respect to Iridium, the holders of class A common stock do not   
have liability under Bermuda law with respect to their shares of class A common 
stock other than the possible loss in the value of those shares.                

  IWCL was formed to act as a special-purpose member of Iridium. Iridium's
LLC agreement provides that IWCL has certain special membership rights during   
the period that commenced on the first date that IWCL's class 1 interests       
represent five percent or more of the total outstanding class 1 interests (which
was June 13, 1997, the date IWCL's initial public offering was consummated) and 
ending on the date of delivery by Iridium of notice of the termination of IWCL's
special rights following (i) the sale or other disposition by IWCL of class 1   
interests, if, as a result of such sale or other disposition, IWCL's class 1    
interests represent less than five percent of the total outstanding class 1     
interests or (ii) following the occurrence of a change in control. A change of  
control means an event or series of events not approved either by members of    
Iridium owning a majority of the class 1 interests or by a majority of the      
Iridium Board of Directors, at a time when IWCL owns class 1 interests          
representing less than 50% of the outstanding class 1 interests, as a result of 
which (a) any "person" or "group" (as such terms are defined in Section 12(d)   
and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act")) other    
than Iridium becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5  
under the Exchange Act), directly or indirectly, of more than 30% of IWCL's     
outstanding common stock (or equivalent securities), (b) IWCL consolidates with 
or merges into another corporation or conveys, transfers or leases all or       
substantially all of its assets to any person, or any corporation consolidates  
with or merges into IWCL, in either event pursuant to a transaction in which    
IWCL's outstanding common stock is changed into or exchanged for cash,          
securities or other property, other than any transaction (i) between IWCL and   
either Iridium, an affiliate of Iridium or a wholly-owned subsidiary of Iridium,
or (ii) after which the shareholders who beneficially owned IWCL's common stock 
immediately before such transaction beneficially own at least 50% of the        
outstanding voting stock of the surviving entity and no person beneficially owns
more than 30% of the outstanding voting stock of the surviving entity, or (c)   
during any period of two consecutive years, individuals who at the beginning of 
such period constituted IWCL Board of Directors (together with any new directors
whose election by IWCL Board of Directors or whose nomination for election was  
approved by a vote of 66 2/3% of the members of IWCL Board of Directors then    
still in office who were either directors at the beginning of such period or    
whose election or nomination for election was previously so approved) cease for 
any reason to constitute a majority of IWCL Board of Directors then in office.  

   During the IWCL's special rights period (i) IWCL is entitled to designate
two independent directors as Directors of Iridium, (ii) one Director of Iridium 
designated by IWCL must be elected Vice Chairman of the Iridium Board of        
Directors and (iii) one Director of Iridium designated by IWCL must be a member 
of each committee of the Iridium Board of Directors. Pursuant to Iridium's LLC  
agreement, IWCL is not entitled to appoint more than two Directors to the       
Iridium Board of Directors even if its ownership interest increases and it would
otherwise have been entitled to additional appointment rights. In addition to   
any other voting rights which IWCL has under Iridium's LLC agreement, under the 
Delaware Limited Liability Company Act or                                       
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otherwise, during the IWCL's special rights period, Iridium may not take any of 
the following actions, or permit any of the following actions or events to      
occur, without the consent of one of the independent directors: (i) make any    
material amendments or modifications to the LLC agreement; (ii) approve any     
business plan of Iridium that would result in any material change in the purpose
of Iridium as set forth in the LLC agreement or otherwise change Iridium's      
business so that it varies materially from the business purpose contemplated by 
the LLC agreement; (iii) acquire, other than in the ordinary course of business 
of Iridium, (a) a controlling interest or a majority of the voting stock or     
equity of, any corporation or other entity that would be a Significant          
Subsidiary (as such term is defined in the rules under the Securities Act of    
1933) or (b) any other assets if the aggregate fair market value thereof is     
greater than $50 million; (iv) sell, lease (as lessor), exchange or otherwise   
dispose of all or substantially all of the assets of Iridium (other than to a   
person controlled by Iridium); (v) cause the dissolution and/or liquidation of  
Iridium; or (vi) take certain bankruptcy or insolvency related actions with     
respect to Iridium.                                                             

EXCHANGE RIGHTS OF IRIDIUM MEMBERS                                              

  Pursuant to an interest exchange agreement between Iridium and IWCL (the
"exchange agreement"), IWCL has agreed that after the exchange date (defined    
below) and subject to the restrictions on transfer in the LLC agreement it will 
permit holders of class 1 interests of Iridium to exchange those interests for  
shares of class A common stock at a ratio of one share of class A common stock  
for each class 1 interest (subject to anti-dilution adjustments). No exchange   
may take place unless it is approved by Iridium, pursuant to authorization of   
Directors representing at least 66 2/3% of the Iridium Board of Directors. The  
exchange date is the 90th day following the first fiscal quarter in which       
Iridium has achieved positive earnings before interest, taxes, depreciation and 
amortization. In order to exercise its rights under the exchange agreement, a   
holder of class 1 interests and its affiliates must be in full compliance with  
the LLC agreement.                                                              

  Under the exchange agreement, IWCL has agreed that at any time after the
exchange date, IWCL will, at the request of class 1 holders and holders of class
A common stock acquired under the exchange agreement, representing not less than
5% of the fully diluted class A shares (defined below), file a registration     
statement and use its reasonable best efforts to have that registration         
statement remain effective for a period of up to six months, permitting such    
holders to sell shares of class A common stock in the manner specified by those 
holders. IWCL has certain rights to defer the filing of such a registration     
statement or to cause holders to stop distributing securities under an effective
registration statement. Registering holders are required to pay their pro rata  
portion of the costs of registration. "Fully diluted class A shares" means all  
shares of class A common stock actually outstanding and the aggregate number of 
shares of class A common stock issuable under the exchange agreement in exchange
for class 1 interests at the then applicable exchange rate, whether or not the  
class 1 interests are then exchangeable. At the request of Iridium, acting      
pursuant to authorization of Directors representing at least 66 2/3% of the     
Iridium Board of Directors, IWCL will take all reasonable steps to register     
pursuant to these provisions any other shares of class A common stock acquired  
under the exchange agreement specified by Iridium. See "Shares Eligible For     
Future Sale".                                                                   

MANAGEMENT SERVICES AGREEMENT                                                   

     IWCL and Iridium are parties to a management services agreement pursuant to
which Iridium supervises and manages the day-to-day operations of IWCL and IWCL 
allows Iridium to do so. Iridium implements or causes to be implemented all     
policy decisions relating to the operations of IWCL approved by the IWCL Board  
of Directors and conducts or causes to be conducted the ordinary and usual      
business and affairs of IWCL. The IWCL Board of Directors has the right to give 
Iridium written instructions, not inconsistent with the terms of the management 
services agreement, with respect to matters arising under the agreement and     
Iridium is required to follow such instructions. Among other things, Iridium is 
responsible for administering the following functions of IWCL: treasury,        
accounting, legal, tax, insurance, licenses and permits, investor relations,    
public relations and securities law compliance and stock listing compliance.    
Iridium has no authority under the management services agreement to give any    
notice or to approve any matter under the LLC agreement on behalf of IWCL,      
including, but not limited to IWCL's special rights consent. Iridium also       
advances funds to IWCL, under certain conditions, to enable IWCL to pay any     
income tax liability that                                                       

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cannot be satisfied by distributions to IWCL on its class 1 interests. Iridium  
receives no fees or expense reimbursement for its services under the management 
services agreement. The management services agreement is only terminable with   
the consent of both Iridium and IWCL, except that Iridium has the right to      
terminate the agreement after the occurrence of an IWCL change of control.      

TAX CONSIDERATIONS

UNITED STATES FEDERAL INCOME TAXATION                                           

The following is a summary of certain United States federal income tax
consequences of the ownership of class A common stock by an investor that       
purchases such class A common stock in connection with the Offerings and holds  
the class A common stock as capital assets. This summary does not purport to    
address all material tax consequences of the ownership of class A common stock, 
and does not take into account the specific circumstances of any particular     
investors (such as tax-exempt entities, certain insurance companies,            
broker-dealers, regulated investment companies, traders in securities that elect
to mark to market, banks, investors liable for alternative minimum tax,         
investors that actually or constructively own 10% or more of the voting stock of
IWCL, investors that hold class A common stock as part of a straddle or a       
hedging or conversion transaction or investors whose functional currency is not 
the U.S. dollar), some of which may be subject to special rules. This summary is
based on the tax laws of the United States (including the Internal Revenue Code 
of 1986, as amended, its legislative history, existing and proposed regulations 
thereunder, published rulings and court decisions) as in effect on the date     
hereof, all of which are subject to change (or changes in interpretation),      
possibly with retroactive effect. This summary does not address any aspects of  
United States taxation other than federal income taxation. Each holder should   
consult its own tax advisor as to the United States federal, state and local tax
consequences of the ownership and disposition of class A common stock.          

     For purposes of this discussion, a "U.S. holder" is any beneficial owner of
class A common stock that is (i) a citizen or resident of the United States,    
(ii) a corporation organized under the laws of the United States or any State,  
(iii) an estate the income of which is subject to United States federal income  
tax without regard to its source or (iv) a trust if a court within the United   
States is able to exercise primary supervision over the administration of the   
trust and one or more United States persons have the authority to control all   
substantial decisions of the trust. A "Non-U.S. holder" is any beneficial owner 
of class A common stock that is not a United States person for United States    
federal income tax purposes.                                                    

U.S. HOLDERS                                                                    

Taxation of Dividends and Stock Distributions                                   

     Under the United States federal income tax laws, and subject to the passive
foreign investment company, or "PFIC", rules discussed below, distributions by  
IWCL with respect to its class A common stock will be includible in the gross   
income of a U.S. holder as ordinary dividend income to the extent paid out of   
current or accumulated earnings and profits of IWCL, as determined for United   
States federal income tax purposes. Dividends will not be eligible for the      
dividends-received deduction generally allowed to U.S. holders that are         
corporations.                                                                   

    Any dividends paid in foreign currency will be includible in the income of
a U.S. holder in a U.S. dollar amount calculated by reference to the prevailing 
market exchange rate in effect on the date the dividends become includible in   
the U.S. holder's income. Generally, any gain or loss resulting from currency   
exchange fluctuations during the period from the date that the dividend becomes 
includible in the U.S. holder's income to the date that the foreign currency is 
converted into U.S. dollars will be treated as ordinary income or loss.         

   If less than 25% of IWCL's gross income for the three years preceding the
year in which a dividend is declared (or for the portion of the three-year      
period during which IWCL has been in existence, if shorter) was                 

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effectively connected with the conduct of a U.S. trade or business, the dividend
generally will constitute foreign source "passive income" (or in the case of    
certain holders, "financial services income") for U.S. foreign tax credit       
purposes. If 25% or more of IWCL's gross income for such period was "effectively
connected" income, the dividend will be United States source in the same        
proportion that IWCL's "effectively connected" income for such period bears to  
IWCL's total gross income for the period, and the remainder will constitute     
foreign source "passive income" (or in the case of certain holders, "financial  
services income") for U.S. foreign tax credit purposes.                         

    Distributions of additional shares of class A common stock to U.S. holders
with respect to shares of class A common stock that are part of a pro rata      
distribution to all shareholders of IWCL generally will not be subject to U.S.  
federal income tax.                                                             

Taxation of Capital Gains                                                       

     Subject to the PFIC rules discussed below, upon a sale or other disposition
of class A common stock, a U.S. holder will recognize gain or loss for United   
States federal income tax purposes in an amount equal to the difference between 
the U.S. dollar value of the amount realized and the U.S. holder's tax basis    
(determined in U.S. dollars) in such class A common stock. Generally, such gain 
or loss will be capital gain or loss, will be long-term capital gain or loss if 
the U.S. holder's holding period for such class A common stock exceeds one year 
and any such gain will be income from sources within the United States for      
foreign tax credit limitation purposes.                                         

Passive Foreign Investment Company Rules                                        

     Under the PFIC rules, a foreign corporation will generally be a PFIC in any
taxable year of the foreign corporation in which either at least 75 percent of  
its gross income is "passive income" or at least 50 percent of its assets are   
"passive assets". For purposes of the PFIC tests, passive income generally      
includes interest, dividends, rents and royalties (other than rents and         
royalties derived in the active conduct of a trade or business and not derived  
from a related person), annuities and gains from the sale or disposition of     
assets that produce passive income, and passive assets generally include assets 
producing or held for the production of such income. The following discussion   
assumes that IWCL should, under current law, be treated for the purposes of the 
PFIC tests as owning its share of Iridium's gross assets and as earning directly
its share of Iridium gross income. IWCL would be a PFIC if it were not permitted
to treat itself as owning its share of Iridium's assets and earning directly its
share of Iridium's gross income for the purposes of the PFIC tests.             

    IWCL believes that shares of class A common stock should not be treated as
stock in a PFIC for United States federal income tax purposes. However, since   
the determination of whether the shares of class A common stock constitute      
shares of a PFIC must be made annually based upon the composition of the income 
and assets of IWCL, Iridium and any corporation in which IWCL or Iridium holds a
25-percent-or-more interest, there can be no assurance that the shares of class 
A common stock will not be considered shares of a PFIC for any taxable year.    

  Generally, if a share of class A common stock were treated as stock of a
PFIC for any taxable year during which a U.S. holder held such share, the entire
gain recognized by such U.S. holder on a sale or other disposition of the share 
would be allocated ratably to each day in the U.S. holder's holding period for  
the share. The amounts allocated to the taxable year of the sale or other       
disposition and to any year before IWCL became a PFIC would be taxed as ordinary
income. The amount allocated to each other taxable year would be subject to tax 
at the highest applicable ordinary income rate in effect for such taxable year, 
and an interest charge would be imposed on the amount allocated to such taxable 
year. All such tax and interest would be included in the U.S. holder's U.S.     
federal income tax liability for the taxable year in which the sale or other    
disposition took place. Further, any distribution in respect of shares of class 
A common stock in excess of 125 percent of the average of the annual            
distributions on shares of class A common stock received by the U.S. holder     
during the preceding three years or the portion of the U.S. holder's holding    
period before the relevant taxable year, whichever is shorter, would be subject 
to taxation as described above.                                                 
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    The special PFIC tax rules described above will not apply to a U.S. holder
if (i) the U.S. holder elects to have IWCL treated as a "qualified electing     
fund" (a "QEF election") for each taxable year during the U.S. holder's holding 
period in which IWCL is a PFIC and (ii) IWCL provides certain information       
necessary to enable the U.S. holder to make a QEF election. IWCL currently      
intends to provide the information necessary to make a QEF election upon the    
request of any U.S. holder.                                                     

     A U.S. holder that makes a QEF election generally will be currently taxable
on its pro rata share of IWCL's ordinary earnings and net capital gain (at      
ordinary and capital gain rates, respectively) for each taxable year of IWCL,   
regardless of whether or not distributions were received. However, a U.S. holder
that makes a QEF election covering each taxable year of IWCL during the U.S.    
holder's holding period in which IWCL is a PFIC will not be currently taxable on
its pro rata share of IWCL's undistributed ordinary earnings and net capital    
gain in any year in which IWCL is not a PFIC.                                   

     If a U.S. holder is taxed on its pro rata share of IWCL's ordinary earnings
and net capital gain, the U.S. holder's basis in shares of class A common stock 
will be increased to reflect taxed but undistributed income. Distributions that 
have been taxed previously will result in a corresponding reduction of basis in 
shares of class A common stock and will not be taxed again as a distribution to 
the U.S. holder.                                                                

    A U.S. holder of shares of stock in a PFIC that are treated as "marketable
stock" may also make a mark-to-market election. An electing shareholder will not
be subject to the PFIC rules described above. Instead, in general, an electing  
shareholder will include in each year as ordinary income the excess, if any, of 
the fair market value of the class A common stock at the end of the taxable year
over its adjusted basis and will be permitted an ordinary loss in respect of the
excess, if any, of the adjusted basis of the class A common stock over its fair 
market value at the end of the taxable year (but only to the extent of the net  
amount of previously included income as a result of the mark-to-market          
election). The basis in the class A common stock of a U.S. holder making the    
mark-to-market election will be adjusted to reflect any such income or loss     
amounts.                                                                        

  A U.S. holder who owns shares of class A common stock during any year in
which IWCL is a PFIC must file Internal Revenue Service Form 8621.              

NON-U.S. HOLDERS                                                                

    A Non-U.S. holder of shares of class A common stock will not be subject to
U.S. federal income tax on dividends paid with respect to, or gains realized on 
the sale or other disposition of, shares of class A common stock, unless (i)    
such dividend or gain is effectively connected with the conduct by the holder of
a trade or business in the United States (and is attributable to a permanent    
establishment maintained in the United States by such Non-U.S. holder, if an    
applicable income tax treaty so requires as a condition for such Non-U.S. holder
to be subject to U.S. taxation on a net income basis in respect of income from  
or gain from the sale of shares of class A common stock), in which case the     
Non-U.S. holder generally will be subject to tax in respect of such income or   
gains in the same manner as a U.S. holder, or (ii) in the case of gain realized 
by an individual holder, the holder is present in the United States for 183 days
or more during the taxable year of the sale and certain other conditions are    
met. Effectively connected income realized by a corporate Non-U.S. holder may   
also, under certain circumstances, be subject to an additional "branch profits  
tax" at a 30% rate or such lower rate as may be specified by an applicable      
income tax treaty. If dividends paid with respect to shares of class A common   
stock are not subject to U.S. federal income tax as described above, that       
portion of the dividends received by a Non-U.S. holder that is attributable to  
the conduct by Iridium of a trade or business within the United States will be  
subject to a 30% withholding tax if, for the three-year period ending with the  
close of IWCL's taxable year preceding the declaration of such dividends, or for
such part of that period as IWCL was in existence, 25% or more of IWCL's gross  
income was effectively connected with the conduct of a trade or business within 
the United States, although IWCL believes that this 25% test will not be met    
and, accordingly, that dividends paid to Non-U.S. holders will not be subject to
the withholding tax described above.                                            

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BACKUP WITHHOLDING AND INFORMATION REPORTING                                    

In general, information reporting requirements will apply to dividend 
payments (or other taxable distributions) in respect of shares of class A common
stock made within the United States to a non-corporate United States person, and
"backup withholding" at the rate of 31% will apply to such payments if the      
holder or beneficial owner fails to provide an accurate taxpayer identification 
number in the manner required by United States law and applicable regulations,  
if there has been notification from the Internal Revenue Service of a failure by
the holder or beneficial owner to report all interest or dividends required to  
be shown on its federal income tax returns or, in certain circumstances, if the 
holder or beneficial owner fails to comply with applicable certification        
requirements. Certain corporations and persons that are not United States       
persons may be required to establish their exemption from information reporting 
and backup withholding by certifying their status on Internal Revenue Service   
Forms W-8 or W-9.                                                               

In general, payment of the proceeds from the sale of shares of class A
common stock to or through a United States office of a broker is subject to both
United States backup withholding and information reporting unless the holder or 
beneficial owner certifies its non-United States status under penalties of      
perjury or otherwise establishes an exemption. United States information        
reporting and backup withholding generally will not apply to a payment made     
outside the United States of the proceeds of a sale of shares of class A common 
stock through an office outside the United States of a non-United States broker.
However, United States information reporting requirements (but not backup       
withholding) will apply to a payment made outside the United States of the      
proceeds of a sale of shares of class A common stock through an office outside  
the United States of a broker (i) that is a United States person, (ii) that     
derives 50% or more of its gross income for a specified three-year period from  
the conduct of a trade or business in the United States, (iii) that is a        
"controlled foreign corporation" as to the United States, or (iv) with respect  
to payments made after December 31, 1999, that is a foreign partnership, if at  
any time during its tax year, one or more of its partners are U.S. persons (as  
defined in U.S. Treasury regulations) who in the aggregate hold more than 50% of
the income or capital interest in the partnership or if, at any time during its 
tax year, such foreign partnership is engaged in a United States trade or       
business, unless the broker has documentary evidence in its files that the      
holder or beneficial owner is a non-United States person or the holder or       
beneficial owner otherwise establishes an exemption.                            

     Amounts withheld under the backup withholding rules may be credited against
a holder's tax liability, and a holder may obtain a refund of any excess amounts
withheld under the backup withholding rules by filing the appropriate claim for 
refund with the United States Internal Revenue Service.                         

TAXATION OF IWCL                                                                

Iridium is intended to be treated as a partnership for United States  
federal income tax purposes. As a class 1 member of Iridium, IWCL will be       
subject to United States federal income tax on its distributive share of the    
income of Iridium that is effectively connected with the conduct of a trade or  
business in the United States, without regard to whether any distribution has   
been received from Iridium. IWCL's share of Iridium's effectively connected     
income may also under certain circumstances be subject to "branch profits tax"  
at a 30% rate.                                                                  

SHARES ELIGIBLE FOR FUTURE SALE 

 After giving pro forma effect to the Offerings, the number of shares of
class A common stock outstanding as of December 15, 1998 would have been        
19,680,648 (20,805,648 shares if the U.S. underwriters' and international       
managers' over-allotment options are exercised in full).                        

   In addition to the shares of class A common stock outstanding on December
15, 1998, there are outstanding options and warrants to purchase IWCL class A   
common stock, class B common stock that is convertible into class A common      
stock, interests in Iridium that are convertible into class A common stock      

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and outstanding warrants to purchase interest in Iridium that would be          
convertible into class A commons stock, as described below. IWCL is authorized  
to issue up to 50,000,000 shares of class A common stock. This authorization may
be increased under certain conditions.                                          

IWCL Warrants to Purchase Class A Common Stock                                  

As of December 15, 1998, there were outstanding 1,461,200 warrants to 
purchase 1,461,200 shares of class A common stock of IWCL at an exercise price  
of $20.90 per share of class A common stock. In connection with the original    
issuance of the IWCL warrants, IWCL purchased a warrant from Iridium that       
operates so that, when an IWCL warrant is exercised, IWCL uses the proceeds     
received from its exercise to purchase one class 1 interest in Iridium for each 
share of class A common stock issued upon exercise of the IWCL warrant. These   
warrants expire on July 15, 2005.                                               

Shares Eligible for Future Sale Upon Exchange of Class 1 Interests in Iridium   

 IWCL has agreed with Iridium in a contract called the interest exchange
agreement that, under certain conditions, it will exchange shares of class A    
common stock for class 1 interests at the rate of one share of class A common   
stock for each class 1 interest (subject to anti-dilution adjustments) and will 
register those shares of class A common stock for sale with the Securities and  
Exchange Commission. Holders of class 1 interests are not permitted to exchange 
their class 1 interests for shares of class A common stock prior to the day that
is 90 days after the first fiscal quarter in which Iridium achieves positive    
earnings before interest, taxes, depreciation and amortization (the "exchange   
date"). In addition, no exchanges will be permitted unless they are approved by 
at least 66 2/3% of the Iridium Board of Directors. Based upon the number of    
class 1 interests outstanding at December 15, 1998, a maximum of 129,219,180    
shares of class A common stock would be issuable upon such exchange. If all     
class 1 interests which could be issuable in the future based upon warrants,    
options and convertible interests outstanding at December 15, 1998 and other    
outstanding commitments to members of Iridium (excluding warrants Motorola is   
expected to earn under the Motorola ARG after December 15, 1998) are considered,
a maximum of 173,304,941 shares of class A common stock would be issuable.      

In addition, pursuant to the Motorola ARG, Motorola has earned, and is
expected to earn, substantial compensation in the form of warrants to purchase  
class 1 interests (or, under certain conditions, warrants to purchase class A   
common stock) for providing guarantees, deferral rights and other credit support
to Iridium. Through December 15, 1998, under these arrangements, Motorola had   
earned warrants to purchase 7,741,346 class 1 interest at a price of            
approximately $0.00013 per interest and warrants to purchase 39,828 class 1     
interests at a price of $20.90 per interest. Payments under the Motorola ARG are
based on the amount and duration of Motorola exposure (which generally includes 
the aggregate amount guaranteed or permitted to be deferred). The amount of     
daily warrant compensation due under the Motorola ARG is significant and        
increases substantially after October 1, 1999 any time the Motorola exposure is 
greater than $275 million. While Iridium has agreed with Motorola that it will  
use its best efforts to reduce the Motorola exposure to $275 million or less as 
soon as possible, Iridium's ability to repay or replace borrowings guaranteed by
Motorola or pay or finance (without a Motorola guarantee) deferrals of amounts  
due to Motorola depends on a variety of factors, including Iridium's ability to 
generate revenues and factors beyond Iridium's control such as the condition of 
the bank lending and securities markets. If Iridium reduces the Motorola        
exposure to $275 million for the period from October 1, 1999 through December   
31, 2000 ($275 million of Motorola exposure for approximately 15 months),       
Motorola would earn warrants to purchase approximately 84,000 class 1 interests 
(or shares of class A common stock) at a price of $20.90 per interest (or share)
plus cash interest. However, if Iridium draws all amounts available under the   
$750 million guaranteed credit facilities and defers the payment of an aggregate
of $400 million under the O&M contract and this Motorola exposure remains in    
place in full from October 1, 1999 through December 31, 2000 ($1.15 billion of  
Motorola exposure for approximately 15 months), Motorola would earn warrants to 
purchase approximately 12.9 million class 1 interests at a price of             
approximately $0.00013 per interest pursuant to the Motorola ARG and a          
substantial additional amount of class 1 interests would be available for       
exchange for shares of class A common stock.                                    

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 Under the interest exchange agreement, IWCL has agreed that at any time
after the exchange date, IWCL will, at the request of class 1 holders and       
holders of class A common stock acquired under the interest exchange agreement, 
representing not less than two percent of the class A common stock (on a fully  
diluted basis), file with the Securities and Exchange Commission a registration 
statement and use its reasonable best efforts to have that registration         
statement remain effective for a period of up to six months, permitting such    
holders to sell shares of class A common stock in the manner specified by those 
holders. If the shares of class A common stock issuable upon exchange are so    
registered, the shares will be freely transferable. See "Relationship Between   
IWCL and Iridium -- Exchange Rights of Iridium Members".                        

Shares Eligible for Future Sale Upon Conversion of Class B Common Stock (the    
NOMAD Program)                                                                  

IWCL has authorized the issuance of up to 2,500,000 shares of class B 
common stock at a price of $13.33 per share, and has issued 20,625 shares of    
class B common stock in connection with Iridium's NOMAD program for promoting   
the authorization and use of the Iridium system by governments. Iridium expects 
that up to an aggregate of 1,750,000 shares of class B common stock will be     
issued in connection with the NOMAD program. These shares of class B common     
stock are exchangeable for class A common stock on a share for share basis      
(subject to anti-dilution adjustments) after the satisfaction of certain        
conditions, but in no event earlier than one year after they have been fully    
paid for by their purchaser. Iridium has issued to IWCL one class 1 interest in 
respect of each share of class B common stock issued in the NOMAD program and   
has agreed to issue class 1 interests on a one-for-one basis (subject to        
anti-dilution adjustments) in respect of future issuances of shares of class B  
common stock in the NOMAD program.                                              

Shares Eligible for Future Sale Upon Exercise of Options Granted Under the      
Iridium Option Plan                                                             

Under the option plan, employees and outside directors of Iridium have
been, and may be, granted stock options that are exercisable for shares of class
A common stock. The exercise price of each option is the fair market value of a 
share of the class A common stock on the date of grant. A committee of the      
Iridium Board of Directors administers the plan and may establish the terms of  
the option grants, including the number of shares for which an option may be    
exercised, the term of the option (up to ten years), the vesting schedule, and  
other terms and conditions. As of December 15, 1998, options to purchase        
2,472,109 shares of class A common stock were outstanding, and exercisable      
options covered 817,909 shares of class A common stock. Additional options to   
purchase a maximum of 3,071,043 shares of class A common stock may be issued    
under the option plan.                                                          

Shares Eligible for Future Sale Upon Direction of Iridium                       

IWCL has agreed with Iridium in a contract called a share issuance    
agreement that, under certain conditions, Iridium can direct IWCL to sell shares
of class A common stock (or other securities) and be required to use the        
proceeds to purchase class 1 interests (or other securities) in Iridium.        

Restrictions on Certain Class A Common Stock Received on Exchange               

  The class A common stock acquired upon exchange of class 1 interests and
upon exchange of class B common stock will constitute "restricted securities"   
within the meaning of Rule 144 and unless registered under the Securities Act   
may only be sold if an exemption from registration is available. Pursuant to    
Rule 144 under the Securities Act, a person, including an "affiliate" (as that  
term is defined in Rule 144) of the issuer, may sell restricted securities if a 
minimum of one year has elapsed between the later of the date of acquisition of 
the restricted securities from the issuer or from an affiliate of the issuer.   
Such a person will be entitled to sell, within any three-month period, a number 
of shares that does not exceed the greater of (i) the average weekly trading    
volume of the class of stock being sold during the four calendar weeks preceding
the filing of a notice of sale with the Securities and Exchange Commission or,  
if no such notice is required, the sale date or (ii) one percent of the then    
outstanding shares of the class of stock being sold. Sales pursuant to Rule 144 
are also subject to certain requirements as to the manner of sale, notice filing
and availability of current public                                              
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information about IWCL. A person who is deemed not to have been an affiliate of 
IWCL at any time during the 90 days preceding a sale by such person and who has 
beneficially owned the restricted securities for at least two years is entitled 
to sell those shares under Rule 144 without regard to the volume limitation,    
manner of sale restrictions or notice filing requirements of Rule 144. In       
certain circumstances, a holder may "tack" the holding period for the restricted
securities converted into or exchanged for the restricted securities for        
purposes of computing the one year and two year holding periods. Shares of class
A common stock may also be sold pursuant to any exemption from registration     
which might be available without compliance with the requirements of Rule 144.  

Issuances of substantial amounts of class A common stock, or the      
expectation of such issuances, could adversely affect the market price of the   
class A common stock. See "Risk Factors -- The Price of Class A Common Stock May
Decline Due to Shares Eligible for Future Sale".                                

Restrictions on Sale of Class A Common Stock                                    

    Subject to certain limited exceptions, the Chairman of the Board and Chief
Executive Officer of IWCL has agreed not to sell, offer to sell or otherwise    
dispose of any shares of class A common stock without the prior written consent 
of Merrill Lynch, Pierce, Fenner & Smith Incorporated for a period of 120 days  
after the date of this prospectus.                                              

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UNDERWRITING

   Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co.,
NationsBanc Montgomery Securities LLC, Salomon Smith Barney Inc. and SoundView  
Technology Group, Inc. are acting as representatives of the U.S. underwriters.  
Subject to the terms and conditions contained in a U.S. purchase agreement among
IWCL, Iridium LLC, Iridium Operating LLC and each of the U.S. underwriters named
below, and concurrently with the sale of 1,500,000 shares of class A common     
stock to the international managers as discussed below, we have agreed to sell  
to each of the U.S. underwriters, and each of the U.S. underwriters severally   
has agreed to purchase from us, the number of shares of class A common stock set
forth opposite its name below.                                                  

                                                                [Download Table]

                                                              NUMBER OF
                     U.S. UNDERWRITERS                         SHARES  
                     -----------------                        ---------
                                                                       
Merrill Lynch, Pierce, Fenner & Smith                                  
             Incorporated...................................  1,540,000
Goldman, Sachs & Co.........................................    990,000
NationsBanc Montgomery Securities LLC.......................    770,000
Salomon Smith Barney Inc....................................    770,000
SoundView Technology Group, Inc.............................    330,000
ABN AMRO Incorporated.......................................     80,000
BancBoston Robertson Stephens...............................     80,000
CIBC Oppenheimer Corp.......................................     80,000
Chase Securities Inc........................................     80,000
Credit Suisse First Boston Corporation......................     80,000
Deutsche Bank Securities Inc................................     80,000
Donaldson, Lufkin & Jenrette Securities Corporation.........     80,000
Dresdner Kleinwort Benson North America LLC.................     80,000
Lazard Freres & Co. LLC.....................................     80,000
Lehman Brothers Inc.........................................     80,000
Morgan Stanley & Co. Incorporated...........................     80,000
C.E. Unterberg, Towbin, a California Limited Partnership....     80,000
Wasserstein Perella Securities, Inc.........................     80,000
Arnhold and S. Bleichroeder, Inc............................     40,000
Dain Rauscher, Wessels, a division of Dain Rauscher                    
  Incorporated..............................................     40,000
Friedman, Billings, Ramsey & Co., Inc.......................     40,000
Gabelli & Company, Inc......................................     40,000
Gerard Klauer Mattison & Co., Inc...........................     40,000
Jefferies & Company, Inc....................................     40,000
Johnston, Lemon & Co. Incorporated..........................     40,000
Legg Mason Wood Walker, Incorporated........................     40,000
Ormes Capital Markets, Inc..................................     40,000
Brad Peery Inc..............................................     40,000
Pryor, McClendon, Counts & Co., Inc.........................     40,000
Ragen MacKenzie Incorporated................................     40,000
Southeast Research Partners, Inc............................     40,000
Utendahl Capital Partners, L.P..............................     40,000
                                                              ---------
             Total..........................................  6,000,000
                                                              =========

IWCL, Iridium LLC and Iridium Operating LLC have also entered into a  
purchase agreement with certain underwriters outside the United States and      
Canada, collectively the international managers, for whom Merrill Lynch         
International, Goldman Sachs International, NationsBanc Montgomery Securities   
LLC, Salomon Brothers International Limited and SoundView Technology Group, Inc.
are acting as representatives. Subject to the terms and conditions set forth in 
the international purchase agreement, and concurrently                          

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with the sale of 6,000,000 shares of class A common stock to the U.S.           
underwriters pursuant to the U.S. purchase agreement, IWCL has agreed to sell to
the international managers, and the international managers have severally agreed
to purchase from IWCL, an aggregate of 1,500,000 shares of class A common stock.
The public offering price per share of class A common stock and the underwriting
discount per share of class A common stock are identical under the U.S. purchase
agreement and the international purchase agreement.                             

  In the U.S. purchase agreement and the international purchase agreement,
the several U.S. underwriters and the several international managers,           
respectively, have agreed, subject to the terms and conditions set forth        
therein, to purchase all of the shares of class A common stock being sold       
pursuant to each such agreement if any of the shares of class A common stock    
being sold pursuant to such agreement are purchased. Under certain              
circumstances, the commitments of non-defaulting U.S. underwriters or           
international managers (as the case may be) may be increased. The purchase of   
shares of class A common stock by the U.S. underwriters is conditioned upon the 
purchase of shares of class A common stock by the international managers, and   
vice versa.                                                                     

   The U.S. underwriters and the international managers have entered into an
intersyndicate agreement to coordinate their activities. The U.S. underwriters  
and international managers are permitted to sell shares of class A common stock 
to each other for purposes of resale at the public offering price, less an      
amount not greater than the selling concession. Under the terms of the          
intersyndicate agreement, the U.S. underwriters and any dealer to whom they sell
shares of class A common stock will not offer to sell or sell shares of class A 
common stock to persons who are non-U.S. or non-Canadian persons or to persons  
they believe intend to resell to persons who are non-U.S. or non-Canadian       
persons, and the international managers and any dealer to whom they sell shares 
of class A common stock will not offer to sell or sell shares of class A common 
stock to U.S. persons or to Canadian persons or to persons they believe intend  
to resell to U.S. persons or Canadian persons, except in the case of            
transactions pursuant to the intersyndicate agreement.                          

The U.S. representatives have advised IWCL, Iridium LLC and Iridium   
Operating LLC that the U.S. underwriters propose initially to offer the class A 
common stock to the public at the public offering price set forth on the cover  
page of this prospectus, and to certain dealers at such price less a concession 
not in excess of $.68 per share. The U.S. underwriters may allow, and such      
dealers may reallow, a discount not in excess of $.10 per share to certain other
dealers. After the public offering, the public offering price, concession and   
discount may be changed.                                                        

IWCL and Iridium LLC have granted an option to the U.S. underwriters, 
exercisable during the 30-day period after the date of this prospectus, to      
purchase up to an aggregate of 900,000 additional shares of class A common stock
at the public offering price set forth on the cover page of this prospectus,    
less the underwriting discount. The U.S. underwriters may exercise this option  
only to cover over-allotments, if any. To the extent that the U.S. underwriters 
exercise this option, each U.S. underwriter will be obligated, subject to       
certain conditions, to purchase a number of additional shares of class A common 
stock proportionate to such U.S. underwriter's initial amount reflected in the  
foregoing table. We have also granted an option to the international managers,  
exercisable within 30 days after the date of this prospectus, to purchase up to 
an aggregate of 225,000 additional shares of class A common stock to cover      
over-allotments, if any, on terms similar to those granted to the U.S.          
underwriters.                                                                   

    The following table shows the per share and total underwriting discount we
will pay to the U.S. underwriters and international managers. The amounts are   
shown assuming both no exercise and full exercise of the U.S. underwriters' and 
international managers' options to purchase 1,125,000 additional shares of class
A common stock.                                                                 

                                                        [Enlarge/Download Table]

                                                                      WITHOUT         WITH    
                                                         PER SHARE     OPTION        OPTION   
                                                         ---------  ------------  ------------
                                                                                              
Public Offering Price...................................  $33.50    $251,250,000  $288,937,500
Underwriting Discount...................................  $ 1.18    $  8,850,000  $ 10,177,500

Iridium LLC expects to incur expenses of approximately $850,000 in    
connection with the Offerings.                                                  

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    Until the distribution of the shares of class A common stock is completed,
certain rules of the Securities and Exchange Commission may limit the ability of
the underwriters to bid for and purchase shares of class A common stock. As an  
exception to these rules, the representatives are permitted to engage in certain
transactions that stabilize the price of the class A common stock. Such         
transactions consist of bids or purchases for the purpose of pegging, fixing or 
maintaining the price of the class A common stock.                              

If the U.S. underwriters or the international managers create a short 
position in the class A common stock in connection with this offering (i.e., if 
they sell more shares of class A common stock than are set forth on the cover   
page of this prospectus), the representatives may reduce that short position by 
purchasing shares in the open market. The representatives may also elect to     
reduce any short position through the exercise of all or part of the            
over-allotment option described above.                                          

    In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than 
it might be in the absence of such purchases.                                   

Neither IWCL, Iridium LLC or Iridium Operating LLC nor the U.S.       
underwriters or international managers makes any representation or prediction as
to the direction or magnitude of any effect that the transactions described     
above might have on the price of the shares. In addition, neither IWCL, Iridium 
LLC or Iridium Operating LLC nor any of the U.S. underwriters or the            
international managers make any representation that the representatives will    
engage in such transactions or that such transactions, once commenced, will not 
be discontinued without notice.                                                 

  IWCL, Iridium LLC and Iridium Operating LLC have agreed to indemnify the
U.S. underwriters and the international managers against certain liabilities,   
including liabilities under the Securities Act of 1933, as amended, or if       
indemnification is not allowed, to contribute to payments the underwriters may  
be required to make because of those liabilities.                               

  The U.S. underwriters have agreed to reimburse Iridium Operating LLC for
certain expenses associated with the Offerings.                                 

IWCL and Iridium LLC have agreed, without the prior written consent of
Merrill Lynch, for a period of 120 days after the date of this prospectus, not  
to, directly or indirectly, (i) offer, pledge, sell, contract to sell, sell any 
option or contract to purchase, purchase any option or contract to sell, grant  
any option, right or warrant to purchase or otherwise transfer or dispose of any
shares of the class A common stock or any securities convertible into or        
exchangeable or exercisable for class A common stock or file any registration   
statement under the Securities Act, with respect to any of the foregoing or (ii)
enter into any swap or any other agreement or any transaction that transfers, in
whole or in part, directly or indirectly, the economic consequence of ownership 
of the class A common stock, whether any such swap or transaction is to be      
settled by delivery of class A common stock or other securities, in cash or     
otherwise. The foregoing restriction does not apply to the shares of class A    
common stock to be sold in the Offerings, under the NOMAD program, the Iridium  
benefit plans, to fund pending acquisitions or the issuance of warrants to      
purchase class A common stock in connection with an offering of debt securities 
by certain affiliates of Iridium LLC under certain circumstances. See "Shares   
Eligible for Future Sale" for a discussion of certain limitations on the rights 
of holders of interests in Iridium to exchange such interests for shares of     
class A common stock.                                                           

  Certain of the U.S. underwriters and the international managers or their
affiliates from time to time provide investment banking and financial advisory  
services to us and our affiliates, including Iridium and Motorola. Certain of   
the U.S. underwriters and the international managers also acted as a            
representative of various other underwriters in connection with public and      
private offerings of our class A common stock and debt securities of our        
affiliates.                                                                     

   Merrill Lynch, Pierce, Fenner & Smith, Inc., is the syndication agent and
its affiliates, Merrill Lynch Capital Corporation, Merrill Lynch Prime Rate     
Portfolio, Merrill Lynch Global Investment Series: Income Strategy Portfolio and
Merrill Lynch Senior Floating Rate Fund, Inc., are lenders under the secured    
bank facility. Goldman Sachs Credit Partners, L.P., an affiliate of Goldman,    
Sachs & Co., is a lender under the secured bank facility. Bank of America       
National Trust and Savings Association, an affiliate of NationsBanc Montgomery  
Securities LLC, is a lender under the secured bank facility and the guaranteed  
bank facilities.                                                                
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Citibank, N.A., an affiliate of Salomon Smith Barney Inc., is a lender under the
secured bank facility and the guaranteed bank facilities. The Chase Manhattan   
Bank, an affiliate of Chase Securities Inc., is the administrative agent and a  
lender under the secured bank facility and the guaranteed bank facilities.      
Affiliates of certain other U.S. underwriters are also lenders under the secured
bank facility and guaranteed bank facilities. Each of the above-mentioned       
parties will receive customary fees under the secured bank facility and the     
guaranteed bank facilities, as applicable. Additionally, Bank of America        
National Trust and Savings Association, Citibank, N.A., The Chase Manhattan Bank
and the affiliates of any other U.S. underwriters that are lenders under the    
revolving portion of the guaranteed bank facilities will receive a proportionate
share of the temporary repayment by Iridium of amounts outstanding under the    
facilities. See "Use of Proceeds".                                              

Under Conduct Rule 2710(c)(8) ("Rule 2710(c)(8)") of the National     
Association of Security Dealers, Inc. ("NASD"), where more than 10% of the net  
offering proceeds, not including underwriting compensation, are intended to be  
paid to members participating in the distribution of the offering or associated 
or affiliated persons of such members, such offering must be conducted in       
accordance with the applicable provisions of Rule 2710(c)(8). A portion of the  
proceeds from the Offerings may be used to temporarily reduce borrowings under  
the revolving portion of the guaranteed bank facilities. This may result in more
than 10% of the net proceeds of the Offerings being paid to NASD members or     
associated or affiliated persons of such members. Consequently, the Offerings   
are being conducted in accordance with the applicable provisions of Rule        
2710(c)(8).                                                                     

VALIDITY OF THE CLASS A COMMON STOCK

     The validity of the class A common stock offered hereby will be passed upon
for IWCL and Iridium by Conyers Dill & Pearman, Bermuda. IWCL and Iridium also  
are being represented by Sullivan & Cromwell, New York, New York. Certain legal 
matters will be passed upon for the U.S. underwriters and international managers
by Milbank, Tweed, Hadley & McCloy, New York, New York.                         

EXPERTS 

    The financial statements of IWCL as of December 31, 1997 and 1996, and for
the year ended December 31, 1997, and for the period December 12, 1996          
(Inception) through December 31, 1996, and the consolidated financial statements
and schedule of Iridium as of December 31, 1997 and 1996, and for each of the   
years in the three-year period ended December 31, 1997, and for the period June 
14, 1991 (Inception) through December 31, 1997, have been incorporated by       
reference into this prospectus and included herein and in the registration      
statement of which this prospectus forms a part in reliance upon the reports of 
KPMG LLP, independent certified public accountants, and upon the authority of   
said firm as experts in accounting and auditing.                                

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                                                                         ANNEX A

GLOSSARY

                                                        [Enlarge/Download Table]
                                                                                           
"AMPS"....................................... Advanced Mobile Phone Service -- a           
                                              transmission protocol used by some cellular  
                                              operators primarily in the Americas          
"antenna beams".............................. tightly focused radio beams transmitted by   
                                              the Iridium satellites                       
"Big LEO".................................... LEO MSS systems operating in the bands       
                                              1610-1626.5 MHZ/2483.5-2500 MHZ              
"CDMA"....................................... Code Division Multiple Access -- a           
                                              transmission protocol used by some cellular  
                                              networks that is derived from spread spectrum
                                              techniques of the military                   
"cellular"................................... land-based terrestrial wireless services,    
                                              including GSM, PCS and IS-41 networks        
"coordination"............................... the process of negotiation and agreement     
                                              between ITU member nations by which cases of 
                                              potential harmful interference by services   
                                              duly authorized by ITU member nations are    
                                              resolved                                     
"cross-link antennas"........................ antennas used by the satellites to           
                                              communicate with one another                 
"dB"......................................... decibel -- a unit used to express relative   
                                              difference in power                          
"earth terminals"............................ land based units which communicate with the  
                                              Iridium satellite constellation              
"excusable delay"............................ has the meaning assigned thereto in the space
                                              system contract                              
"feeder links"............................... communications links between gateways and    
                                              satellites used to relay message data; these 
                                              links use the K-Band on the Iridium system;  
                                              sometimes referred to as "gateway links"     
FDMA/TDMA.................................... Frequency Division Multiple Access/Time      
                                              Division Multiple Access -- a transmission   
                                              protocol used by some cellular networks      
"gateways"................................... terrestrial interconnection points between   
                                              the Iridium satellite constellation and PSTNs
"gateway links".............................. communications links between gateways and    
                                              satellites used to relay message data; these 
                                              links use the K-Band on the Iridium system;  
                                              sometimes referred to as "feeder links"      
"GHz"........................................ gigahertz -- one billion cycles per second   
"global roaming"............................. the ability to travel worldwide, subject to  
                                              certain limitations, and receive and make    
                                              telephone calls from a handheld mobile phone 
"GMPCS"...................................... Global Mobile Personal Communication Services
"GSM"........................................ Global System for Mobile Communications -- a 
                                              transmission protocol used by cellular       
                                              networks including most of Europe and parts  
                                              of Asia                                      
"Inmarsat"................................... the International Maritime Satellite         
                                              Organization                                 

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                                                        [Enlarge/Download Table]
                                                                                           
"Intelsat"................................... the International Telecommunications         
                                              Satellite Organization                       
"intersatellite links"....................... communications links among the satellites in 
                                              the Iridium satellite constellation          
"IS-41"...................................... International Standard-41 -- a transmission  
                                              protocol used by cellular networks including 
                                              most of North America and South America      
"ITU"........................................ International Telecommunication Union        
"landline"................................... terrestrially-based telephone line           
"LEO" (low earth orbit)...................... earth orbit at a relatively low (e.g., 780   
                                              kilometers)altitude                          
"link margin"................................ the amount (usually expressed in dB) by which
                                              a received signal exceeds a predetermined    
                                              lower limit for desired message quality      
"main mission antennas'...................... the antennas used by Iridium satellites to   
                                              communicate with subscriber equipment (phased
                                              array antennas)                              
"MHz"........................................ megahertz -- one million cycles per second   
"MSS"........................................ mobile satellite services                    
"multi-mode phone"........................... a phone designed to operate both with a      
                                              cellular system and with the Iridium system; 
                                              Motorola is designing a multi-mode phone     
                                              which, through the use of interchangeable    
                                              TRCs will work with various different        
                                              cellular networks                            
"orbital plane".............................. generally, the flight path of a satellite    
"L-Band".....................................                                              
"phone"...................................... a handset that can be used to provide Iridium
                                              voice services                               
"primary".................................... in the context of spectrum allocation, an    
                                              allocation to a service that is granted      
                                              protection from harmful interference from    
                                              stations of a secondary service              
"protocol"................................... technical standard used by a wireless        
                                              communications system permitting             
                                              communications, customer authentication and  
                                              billing                                      
"PSTN"....................................... public switched telephone network            
"secondary".................................. in the context of spectrum allocation, an    
                                              allocation to a service that (i) cannot cause
                                              harmful interference to stations of primary  
                                              or permitted services to which frequencies   
                                              are already assigned or to which frequencies 
                                              may be assigned at a later date and (ii)     
                                              cannot claim protection from harmful         
                                              interference from stations of a primary or   
                                              permitted service to which frequencies are   
                                              already assigned or may be assigned at a     
                                              later date                                   
"service provider"........................... the retail link in the Iridium system        
                                              distribution chain -- Iridium service        
                                              providers are expected to market Iridium     
                                              World Services to, provide services for, and 
                                              ultimately bill the consumers of, Iridium    
                                              World Services. Gateway operators may or may 
                                              not act as service providers                 
"SIM Card"................................... a subscriber identity module which, when     
                                              inserted into a phone, will permit the phone 
                                              to identify a subscriber to the Iridium      
                                              system                                       

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                                                        [Enlarge/Download Table]
                                                                                           
"SNOC"....................................... the Satellite and Network Operations Center, 
                                              the primary facility from which the Iridium  
                                              constellation of satellites and the Iridium  
                                              system are managed                           
"spectrum"................................... the radio frequency spectrum                 
"tail charge"................................ the cost charged by local telephone systems  
                                              for connecting a telephone call              
"TDMA"....................................... Time Division Multiple Access -- a           
                                              transmission protocol used by some cellular  
                                              networks                                     
"telemetry".................................. the science of automatic measurement and     
                                              transmission of data from remote sources for 
                                              recording and analysis                       
"TRCs"....................................... Terrestrial Radio Cassettes being designed by
                                              Motorola for use with multi-mode phones to   
                                              permit those phones to operate with one or   
                                              more cellular protocols                      
"WRCs"....................................... World Radiocommunication Conferences         
                                              (formerly known as World Administrative Radio
                                              Conferences -- WARCs)                        

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INDEX TO FINANCIAL STATEMENTS 

                                                                [Download Table]

                                                              PAGE
                                                              ----
                                                                  
IRIDIUM WORLD COMMUNICATIONS LTD.                                 
Independent Auditors' Report................................   F-2
Balance Sheets as of December 31, 1996 and 1997.............   F-3
Statements of Loss for the year ended December 31, 1997, and      
  for the period December 12, 1996 (Inception) through            
  December 31, 1996.........................................   F-4
Statements of Stockholders' Equity for the period from            
  December 12, 1996 (Inception) through December 31, 1996,        
  and the year ended December 31, 1997......................   F-5
Statements of Cash Flows for the period from December 12,         
  1996 (Inception) through December 31, 1996 and for the          
  year ended December 31, 1997..............................   F-6
Notes to Financial Statements...............................   F-7
Condensed Balance Sheets as of December 31, 1997 and              
  September 30, 1998 (unaudited)............................  F-11
Unaudited Condensed Statements of Loss for the three and          
  nine months ended September 30,                                 
  1997 and 1998.............................................  F-12
Unaudited Condensed Statements of Cash Flows for the nine         
  months ended September 30, 1997 and 1998..................  F-13
Notes to Unaudited Condensed Financial Statements...........  F-14
IRIDIUM LLC                                                       
Independent Auditors' Report................................  F-16
Consolidated Balance Sheets as of December 31, 1996 and           
  1997......................................................  F-17
Consolidated Statements of Loss for each of the years in the      
  three-year period ended December 31, 1997, and for the          
  period from June 14, 1991 (Inception) through December 31,      
  1997......................................................  F-18
Consolidated Statements of Members' Equity (Deficit) for          
  each of the years in the three-year period ended December       
  31, 1997 and for the period from June 14, 1991 (Inception)      
  through December 31, 1997.................................  F-19
Consolidated Statements of Cash Flows for the years ended         
  December 31, 1995, 1996 and 1997, and the period from June      
  14, 1991 (Inception) through December 31, 1997............  F-20
Notes to Consolidated Financial Statements..................  F-21
Condensed Consolidated Balance Sheets as of December 31,          
  1997 and                                                        
  September 30, 1998 (unaudited)............................  F-39
Unaudited Condensed Consolidated Statements of Loss for the       
  three and nine months ended September 30, 1997 and 1998         
  and for the period from June 14, 1991 (Inception) through       
  September 30, 1998........................................  F-40
Unaudited Condensed Consolidated Statements of Cash Flows         
  for the nine months ended September 30, 1997 and 1998 and       
  for the period from June 14, 1991 (Inception) through           
  September 30, 1998........................................  F-41
Notes to Unaudited Condensed Consolidated Financial               
  Statements................................................  F-42

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INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders                                         
Iridium World Communications Ltd.:                                              

We have audited the accompanying balance sheets of Iridium World      
Communications Ltd. as of December 31, 1997 and 1996, and the related statements
of loss, stockholders' equity, and cash flows for the year ended December 31,   
1997 and for the period December 12, 1996 (inception) through December 31, 1996.
These financial statements are the responsibility of the Company's management.  
Our responsibility is to express an opinion on these financial statements based 
on our audits.                                                                  

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain 
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting 
the amounts and disclosures in the financial statements. An audit also includes 
assessing the accounting principles used and significant estimates made by      
management, as well as evaluating the overall financial statement presentation. 
We believe that our audits provide a reasonable basis for our opinion.          

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Iridium World Communications
Ltd. as of December 31, 1997 and 1996, and the results of its operations and its
cash flows for the year ended December 31, 1997, and for the period December 12,
1996 (inception) through December 31, 1996, in conformity with generally        
accepted accounting principles.                                                 

            KPMG LLP

McLean, Virginia                                                                
January 16, 1998                                                                

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IRIDIUM WORLD COMMUNICATIONS LTD. 

BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)

                                                                [Download Table]

                                                                DECEMBER 31,   
                                                              ---------------- 
                                                              1996      1997   
                                                              -----   -------- 
                                                                               
                                    ASSETS                                     
Cash........................................................  $--     $     -- 
Investment in Iridium LLC...................................   --      223,922 
                                                              -----   -------- 
          Total Assets......................................  $--     $223,922 
                                                              =====   ======== 
                     LIABILITIES AND STOCKHOLDERS' EQUITY                      
Liabilities.................................................  $--     $     -- 
Stockholders' equity:                                                          
  Class B Common Stock, non-voting, par value $0.01;                           
     2,500,000 shares authorized; none issued or                               
     outstanding............................................   --           -- 
  Class A Common stock, voting, par value $0.01; 50,000,000                    
     shares authorized; 1,200,000 and 12,003,262 issued and                    
     outstanding............................................     12        120 
Additional paid-in-capital..................................   --      242,636 
Subscription receivable.....................................    (12)        -- 
Accumulated deficit.........................................   --      (18,834)
                                                              -----   -------- 
          Total liabilities and stockholders' equity........  $--     $223,922 
                                                              =====   ======== 

The accompanying notes are an integral part of these financial statements.

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IRIDIUM WORLD COMMUNICATIONS LTD. 

STATEMENTS OF LOSS
(IN THOUSANDS EXCEPT SHARE DATA)

                                                        [Enlarge/Download Table]

                                                                 PERIOD FROM                      
                                                              DECEMBER 12, 1996                   
                                                               (INCEPTION) TO       YEAR ENDED    
                                                                DECEMBER 31,       DECEMBER 31,   
                                                                    1996               1997       
                                                              -----------------  -----------------
                                                                                                  
Equity in loss of Iridium LLC...............................        $ --            $   18,834    
                                                                    -----           ----------    
Loss before income taxes....................................          --            $   18,834    
Income taxes................................................          --                    --    
                                                                    -----           ----------    
Net loss....................................................        $ --            $   18,834    
                                                                    =====           ==========    
Net loss per Class A Common share -- basic and diluted......        $ --            $     2.79    
                                                                    -----           ----------    
Weighted average shares used in computing net loss per Class                                      
  A Common share -- basic and diluted.......................          --             6,739,726    
                                                                    =====           ==========    

The accompanying notes are an integral part of these financial statements.

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IRIDIUM WORLD COMMUNICATIONS LTD. 

STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS EXCEPT SHARE DATA)

                                                        [Enlarge/Download Table]

                                      CLASS A                                                        
                                   COMMON STOCK                                                      
                                -------------------  ADDITIONAL                                      
                                                      PAID-IN    SUBSCRIPTION  ACCUMULATED           
                                  SHARES     AMOUNT   CAPITAL     RECEIVABLE     DEFICIT     TOTAL   
                                ----------   ------  ----------  ------------  -----------  -------- 
                                                                                                     
Inception, December 12,                                                                              
  1996........................          --    $--     $     --     $ --         $     --    $     -- 
Class A Common Stock                                                                                 
  subscribed..................   1,200,000      12          --          (12)          --          -- 
                                ----------    ----    --------     --------     --------    -------- 
BALANCE, December 31, 1996....   1,200,000      12          --           12           --          -- 
Retire subscribed Class A                                                                            
  Common Stock................  (1,200,000)    (12)         --           12           --          -- 
Equity offering...............  12,000,000     120     225,480       --               --     225,600 
Warrants issued in conjunction                                                                       
  with Iridium LLC Series A                                                                          
  Senior Notes................          --    --        17,113       --               --      17,113 
Exercise of stock options.....       3,262    --            43       --               --          43 
Net loss......................          --    --            --       --          (18,834)    (18,834)
                                ----------    ----    --------     --------     --------    -------- 
BALANCE, December 31, 1997....  12,003,262    $120    $242,636     $ --         $(18,834)   $223,922 
                                ==========    ====    ========     ========     ========    ======== 

The accompanying notes are an integral part of these financial statements.

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IRIDIUM WORLD COMMUNICATIONS LTD. 

STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                PERIOD FROM                      
                                                             DECEMBER 12, 1996                   
                                                              (INCEPTION) TO       YEAR ENDED    
                                                               DECEMBER 31,       DECEMBER 31,   
                                                                   1996               1997       
                                                             -----------------  -----------------
                                                                                                 
CASH FLOWS FROM OPERATING ACTIVITIES:                                                            
Net loss....................................................     $--                $ (18,834)   
Adjustments to reconcile net loss to net cash used in                                            
  operating activities--                                                                         
Equity in loss of Iridium LLC...............................      --                   18,834    
                                                                 ---------          ---------    
Net cash used in operating activities.......................      --                 --          
                                                                 ---------          ---------    
CASH FLOWS FROM INVESTING ACTIVITIES:                                                            
Investments in Iridium LLC..................................      --                 (242,756)   
                                                                 ---------          ---------    
Net cash used in investing activities.......................      --                 (242,756)   
                                                                 ---------          ---------    
CASH FLOWS FROM FINANCING ACTIVITIES:                                                            
Net proceeds from equity offering...........................      --                  225,600    
Proceeds from Warrants issued in conjunction with Iridium                                        
  LLC, Series A Senior Notes................................      --                   17,113    
Proceeds from Class A Common Stock subscribed...............      --                       12    
Retirement and cancellation of Class A Common Stock.........      --                      (12)   
Proceeds from exercise of stock options.....................      --                       43    
                                                                 ---------          ---------    
Net cash provided by financing activities...................      --                  242,756    
                                                                 ---------          ---------    
Increase (decrease) in cash.................................      --                       --    
CASH, beginning of period...................................      --                       --    
                                                                 ---------          ---------    
CASH, end of period.........................................     $--                $      --    
                                                                 =========          =========    

The accompanying notes are an integral part of these financial statements.

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IRIDIUM WORLD COMMUNICATIONS LTD. 

NOTES TO FINANCIAL STATEMENTS 

1.  ORGANIZATION AND BUSINESS                                                   

    Iridium World Communications Ltd. ("IWCL") was incorporated under the laws
of Bermuda on December 12, 1996. At inception, IWCL was wholly owned by Iridium 
LLC, a limited liability company. In June 1997, IWCL registered with the        
Securities and Exchange Commission a total of 13,800,000 shares of its Class A  
Common Stock ("Class A Common Stock") for sale in an initial public offering    
(the "Offering"), and on June 13, 1997 IWCL consummated the Offering and issued 
12,000,000 shares of Class A Common Stock. Pursuant to the 1997 Subscription    
Agreement between IWCL and Iridium LLC, approximately $225 million in net       
proceeds from the Offering were invested in Class 1 Membership Interests of     
Iridium LLC ("Class 1 Interests"), at which time the outstanding shares of Class
A Common Stock held by Iridium LLC were retired, and IWCL became a member of    
Iridium LLC.                                                                    

Iridium LLC through its wholly-owned subsidiary Iridium Operating LLC 
("Iridium"), a Delaware limited liability company, is currently devoting        
substantially all of its efforts to establishing and commercializing the IRIDIUM
communications system (the "IRIDIUM System").                                   

   IWCL's sole asset is its investment in Iridium LLC. At December 31, 1997,
IWCL's investment was approximately 8.5% of the total outstanding Membership    
Interests in Iridium LLC.                                                       

2.  SIGNIFICANT ACCOUNTING POLICIES                                             

INVESTMENT IN IRIDIUM LLC                                                       

    The investment in Iridium LLC is accounted for using the equity method. In
accordance with the equity method of accounting, IWCL's carrying amount of the  
investment in an affiliate is initially recorded at cost and is increased to    
reflect its share of the affiliate's income and is reduced to reflect its share 
of the affiliate's losses each period since the initial investment.             

   At December 31, 1997, Iridium LLC had total assets, total liabilities and
total members' equity of approximately $3,646,000,000, $2,011,000,000 and       
$1,635,000,000, respectively. At December 31, 1996, Iridium LLC had total       
assets, total liabilities and total members' equity of $2,434,000,000,          
$862,000,000 and $1,572,000,000, respectively. Iridium LLC reported a net loss  
of $293,553,000 and $73,598,000 for the years ended December 31, 1997 and 1996, 
respectively.                                                                   

MANAGEMENT ESTIMATES                                                            

The preparation of financial statements in conformity with generally  
accepted accounting principles requires management to make estimates and        
assumptions that affect the reported amounts of assets and liabilities and      
disclosure of contingent assets and liabilities at the date of the financial    
statements and the reported amounts of revenues and expenses during the reported
periods. Actual results could differ from those estimates.                      

INCOME TAXES                                                                    

  IWCL recognizes income taxes using the asset and liability method. Under
the asset and liability method, deferred tax assets and liabilities are         
recognized for the future tax consequences attributable to differences between  
the financial statement carrying amounts of existing assets and liabilities and 
their respective tax bases. Deferred tax assets and liabilities are measured    
using enacted tax rates expected to apply to taxable income in the years in     
which those temporary differences are expected to be recovered or settled. The  
effect on deferred tax assets and liabilities of a change in tax rates is       
recognized in income in the period that includes the enactment date.            

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IRIDIUM WORLD COMMUNICATIONS LTD. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

3.  STOCKHOLDERS' EQUITY                                                        

 On July 16, 1997, Iridium LLC and Iridium Capital Corporation, a wholly
owned subsidiary of Iridium, completed an offering (the "High Yield Offering")  
of (i) 300,000 units, each consisting of $1,000 principal amount of Iridium LLC 
13% Senior Notes due 2005, Series A ("Series A Notes"), and one IWCL Warrant,   
representing the right to purchase 5.2 shares of Class A Common Stock of IWCL   
and (ii) $500 million aggregate principal amount of Iridium LLC 14% Senior Notes
due 2005, Series B ("Series B Notes"). Iridium was subsequently substituted for 
Iridium LLC as obligor under the Series A Notes and the Series B Notes. The     
Series A Notes and Series B Notes are guaranteed by Iridium Roaming LLC and     
Iridium IP LLC, also wholly-owned subsidiaries of Iridium. IWCL is not an       
obligor or guarantor of the Series A Notes or Series B Notes. The IWCL Warrants 
represent, in aggregate, the right to purchase 1,560,000 shares of Class A      
Common Stock of IWCL. Approximately $17,113,000 of the proceeds of the High     
Yield Offering was allocated to the fair value of the purchase price of the IWCL
Warrants. The exercise price of each IWCL Warrant is $20.90 per share. The IWCL 
Warrants are exercisable at anytime on or after one year from the date of       
original issuance and expire on July 15, 2005. Concurrent with the issuance of  
the IWCL Warrants in the High Yield Offering, Iridium LLC issued to IWCL        
1,560,000 LLC Interest Warrants, each exercisable for one Iridium LLC Class 1   
Interest at an exercise price of $20.90 per LLC Interest Warrant. IWCL and      
Iridium LLC have agreed that IWCL will exercise one LLC Interest Warrant upon   
the exercise of each IWCL Warrant.                                              

EXCHANGE RIGHTS OF IRIDIUM LLC MEMBERS                                          

 Concurrent with the Offering, IWCL and Iridium LLC executed an Interest
Exchange Agreement that conditionally permits holders of Class 1 Interests in   
Iridium LLC to exchange those interests, subject to the restrictions on transfer
in the Iridium LLC Limited Liability Agreement, for shares of Class A Common    
Stock in IWCL at a ratio of one share of Class A Common Stock for each Iridium  
LLC Class 1 Interest, subject to anti-dilution adjustments. Under the Interest  
Exchange Agreement no exchanges of Iridium LLC Class 1 Interests are permitted  
until 90 days after Iridium LLC has achieved one full quarter of positive       
earnings before interest, taxes, depreciation and amortization. In addition, no 
exchange shall take place unless approved pursuant to authorization of Directors
representing at least 66 2/3% of the Iridium LLC Board of Directors.            

GLOBAL OWNERSHIP PROGRAM                                                        

     IWCL and Iridium LLC intend to commence a Global Ownership Program which is
designed to offer up to an aggregate of 2,500,000 shares of IWCL's Class B      
Common Stock at a purchase price of $13.33 per share to certain governmental    
telecommunication administrations and related entities as part of a             
comprehensive program to enhance market access, improve the competitive standing
of the Iridium System and achieve appropriate regulatory approvals. At the time 
of issuance, purchasers of Class B Common Stock will be required to pay only an 
amount equal to the per share par value of the Class B Common Stock; $.01 per   
share. The balance of the purchase price will be payable through the withholding
of dividends, if any, which would otherwise be payable on the shares of Class B 
Common Stock. A holder of Class B Common Stock may elect to pay the purchase    
price in cash at any time. Class B Common Stock is convertible to Class A Common
Stock on a one-for-one basis, subject to anti-dilution adjustments, once certain
conditions are met, including full payment for the shares and expiration of a   
minimum holding period. The proceeds generated from each sale of Class B Common 
Stock will be used to purchase Class 1 Interests in Iridium LLC. The payment    
terms with respect to such Iridium LLC Class 1 Interests will mirror the payment
terms on the Class B Common Stock. As of December 31, 1997, no shares of Class B
Common Stock had been issued under this program.                                

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IRIDIUM WORLD COMMUNICATIONS LTD. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

3.  STOCKHOLDERS' EQUITY -- (CONTINUED)                                         
SHARE ISSUANCE AGREEMENT                                                        

  IWCL and Iridium LLC have also executed a Share Issuance Agreement which
provides that all net proceeds from future primary offerings of securities by   
IWCL will be invested in Class 1 Interests in Iridium LLC.                      

VOTING RIGHTS                                                                   

     The holders of Class A Common Stock are entitled to one vote per share. The
holders of Class B Common Stock have no voting rights, except as required by    
Bermuda law in connection with matters involving a variation in terms of the    
Class B Common Stock.                                                           

PARTICIPATION IN THE GOVERNANCE OF IRIDIUM                                      

  Providing that IWCL's Interest in Iridium LLC represents five percent or
more of the total outstanding Class 1 Interests of Iridium LLC (which occurred  
upon the consummation of the IWCL IPO), IWCL shall be entitled to designate two 
Independent Company Directors as Directors of Iridium LLC.                      

STOCK OPTION PLAN OF IRIDIUM LLC                                                

     Iridium LLC has established a plan under which executive officers, managers
and independent directors of Iridium LLC are awarded options to purchase Class A
Common Stock of IWCL (the "Option Plan"). The Option Plan covers 2,625,000      
shares of Class A Common Stock. The Option Plan also permits the award of stock 
appreciation rights in connection with any grant of options. As of December 31, 
1997, options covering 2,004,556 shares of Class A Common Stock are outstanding 
with exercise prices ranging from $13.33 to $52.50. As of December 31, 1997,    
there are 397,145 options exercisable at a weighted average exercise price of   
$13.33. As of that date no stock appreciation rights had been granted. The right
to exercise the options vest, pro rata, over a period of five years. Pursuant to
the Share Issuance Agreement, IWCL has agreed that upon the exercise of any     
options, it will issue to Iridium LLC, for delivery to an exercising option     
holder, the number of shares of Class A Common Stock covered by the exercised   
options and Iridium LLC has agreed to simultaneously deliver to IWCL a like     
number of Iridium LLC Class 1 Interests, subject to anti-dilution adjustments.  
The exercise price of the option is paid to Iridium LLC and represents payment  
for the Class A Common Stock by the exercising option holder and for the Iridium
LLC Class 1 Interests by IWCL. During the year ended December 31, 1997, options 
to acquire 3,262 shares of Class A Common Stock were exercised. IWCL issued such
shares in the names of the optionees and Iridium LLC issued 3,262 Class 1       
Interests to IWCL.                                                              

MANAGEMENT SERVICES AGREEMENT                                                   

In connection with the IWCL IPO, Iridium LLC and IWCL entered into a  
Management Services Agreement. Pursuant to the Management Services Agreement,   
Iridium LLC has agreed to supervise and manage the day-to-day operations of     
IWCL. Among other things, Iridium LLC is responsible for administering the      
following functions of IWCL: treasury, accounting, legal, tax, insurance,       
licenses and permits and securities law compliance. Iridium LLC receives no fees
or reimbursement from IWCL for its services to IWCL under the Management        
Services Agreement. Operating costs incurred by IWCL during the period since    
inception and paid for by Iridium LLC have not been significant.                

4.  EARNINGS PER SHARE                                                          

     In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share ("Statement 128"). Statement 128 supersedes         
Accounting Principles Board Opinion No. 15, Earnings                            
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IRIDIUM WORLD COMMUNICATIONS LTD. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4.  EARNINGS PER SHARE -- (CONTINUED)                                           
per Share ("APB 15") and its related interpretations, and promulgates new       
accounting standards for the computation and manner of presentation of earnings 
(loss) per share data. Statement 128 requires the presentation of basic and     
diluted earnings (loss) per share data. Basic earnings (loss) per Class A Common
share is calculated by dividing net income (loss) by the weighted average number
of Class A Common shares outstanding during the period. Diluted earnings (loss) 
per share is calculated by dividing net income (loss) by the weighted average   
number of Class A Common shares and, to the extent dilutive, other potentially  
dilutive securities outstanding during the period. Potentially dilutive         
securities are comprised of warrants to purchase Class A Common Stock issued in 
conjunction with the Series A Notes and stock options. Due to the loss incurred 
during the year ended December 31, 1997, the impact of the warrants and stock   
options is anti-dilutive and is not included in the diluted earnings (loss) per 
share calculation. The adoption of Statement 128 had no effect on earnings      
(loss) per share as previously presented.                                       

5.  INCOME TAXES                                                                

    IWCL is subject to income taxation based on its ratable portion of Iridium
LLC's income or loss. During the year ended December 31, 1997 and the period    
December 12, 1996 (inception) to December 31, 1996, IWCL recognized no current  
or deferred income tax expense or benefit. As of December 31, 1997, IWCL's only 
deferred tax asset relates entirely to its investment in Iridium LLC and        
amounted to approximately $7,446,000 for which a full valuation allowance has   
been established.                                                               

     In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax 
asset will be realized. The ultimate realization of the deferred tax asset is   
dependent upon the generation of future taxable income during the periods in    
which temporary differences become deductible. Management considers scheduled   
reversals of deferred tax liabilities, projected future taxable income, and tax 
planning strategies that can be implemented in making this assessment.          

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IRIDIUM WORLD COMMUNICATIONS LTD. 

CONDENSED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)

                                                        [Enlarge/Download Table]

                                                              DECEMBER 31,  SEPTEMBER 30,
                                                                  1997          1998     
                                                              ------------  -------------
                                                                             (UNAUDITED) 
                                                                                         
                                          ASSETS                                         
Cash........................................................    $     --      $     --   
Investment in Iridium LLC...................................     223,922       157,294   
                                                                --------      --------   
          Total assets......................................    $$223,922     $157,294   
                                                                ========      ========   
                           LIABILITIES AND STOCKHOLDERS' EQUITY                          
Liabilities.................................................    $     --      $     --   
Stockholders' equity:                                                                    
  Class B Common Stock, non-voting par value $0.01;                                      
     2,500,000 shares authorized; none and 20,625 issued and                             
     outstanding............................................          --            --   
  Class A Common stock, voting par value $0.01; 50,000,000                               
     shares authorized; 12,003,262 and 12,175,690 issued and                             
     outstanding............................................         120           122   
Additional paid-in-capital..................................     242,636       245,980   
                                                                --------      --------   
Accumulated deficit.........................................     (18,834)      (88,808)  
                                                                --------      --------   
          Total liabilities and stockholders' equity........    $223,922      $157,294   
                                                                ========      ========   

The accompanying notes are an integral part of these unaudited condensed
financial statements. 

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IRIDIUM WORLD COMMUNICATIONS LTD. 

UNAUDITED CONDENSED STATEMENTS OF LOSS
(IN THOUSANDS EXCEPT SHARE DATA)

                                                        [Enlarge/Download Table]

                                                THREE MONTHS ENDED         NINE MONTHS ENDED    
                                                   SEPTEMBER 30,             SEPTEMBER 30,      
                                             -------------------------  ------------------------
                                                1997          1998         1997         1998    
                                             -----------   -----------  ----------   -----------
                                                                                                
Equity in loss of Iridium LLC..............  $     7,260   $    31,615  $    8,039   $    69,974
                                             -----------   -----------  ----------   -----------
Loss before income taxes...................        7,260        31,615       8,039        69,974
Income taxes...............................           --            --          --            --
                                             -----------   -----------  ----------   -----------
Net loss...................................  $     7,260   $    31,615  $    8,039   $    69,974
                                             ===========   ===========  ==========   ===========
Net loss per Class A Common share -- basic                                                      
  and diluted..............................  $      0.61   $      2.62  $     1.62   $      5.81
                                             -----------   -----------  ----------   -----------
Weighted average shares used in computing                                                       
  net loss per Class A Common share --basic                                                     
  and diluted..............................   12,000,000    12,084,446   4,967,033    12,050,913
                                             ===========   ===========  ==========   ===========

The accompanying notes are an integral part of these unaudited condensed
financial statements. 

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IRIDIUM WORLD COMMUNICATIONS LTD. 

UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

                                                                [Download Table]

                                                              NINE MONTHS ENDED   
                                                                SEPTEMBER 30,     
                                                             -------------------- 
                                                               1997        1998   
                                                             ---------   -------- 
                                                                                  
CASH FLOWS FROM OPERATING ACTIVITIES:                                             
  Net loss.................................................. $  (8,039)  $(69,974)
Adjustments to reconcile net loss to net cash used in                             
  operating activities --...................................     8,039     69,974 
                                                             ---------   -------- 
  Equity in loss of Iridium LLC.............................        --         -- 
                                                             ---------   -------- 
Net cash used in operating activities.......................        --         -- 
                                                             ---------   -------- 
CASH FLOWS FROM INVESTING ACTIVITIES:                                             
Investments in Iridium LLC..................................  (242,713)    (3,346)
CASH FLOWS FROM FINANCING ACTIVITIES:                                             
  Net proceeds from equity offering.........................   225,600         -- 
  Proceeds from Class B Common Stock........................        --        275 
  Proceeds from Class A Common Stock subscribed.............        12         -- 
  Retirement of Class A Common Stock........................       (12)        -- 
  Proceeds from warrants issued in conjunction with Iridium                       
  LLC Series A                                                                    
    Senior Notes............................................    17,113         -- 
  Proceeds from warrants exercised in conjunction with                            
  Iridium LLC Series A                                                            
    Senior Notes............................................        --      2,065 
  Proceeds from exercise of stock options...................        --      1,006 
                                                             ---------   -------- 
Net cash provided by financing activities...................   242,713      3,346 
                                                             ---------   -------- 
Increase (decrease) in cash.................................        --         -- 
CASH, beginning of period...................................        --         -- 
                                                             ---------   -------- 
CASH, end of period......................................... $      --   $     -- 
                                                             =========   ======== 

The accompanying notes are an integral part of these unaudited condensed
financial statements. 

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IRIDIUM WORLD COMMUNICATIONS LTD. 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS 

1.  ORGANIZATION AND BUSINESS                                                   

    Iridium World Communications Ltd. ("IWCL") was incorporated under the laws
of Bermuda on December 12, 1996. At inception, IWCL was wholly owned by Iridium 
LLC, which was a development stage limited liability company at that time. In   
June 1997, IWCL registered with the Securities and Exchange Commission a total  
of 13,800,000 shares of its Class A Common Stock ("Class A Common Stock") for   
sale in an initial public offering (the "Offering"), and on June 13, 1997, IWCL 
consummated the Offering and issued 12,000,000 shares of Class A Common Stock.  
Pursuant to the 1997 Subscription Agreement between IWCL and Iridium LLC,       
approximately $225 million in net proceeds from the Offering was invested in    
12,000,000 Class 1 Membership Interests of Iridium LLC ("Class 1 Interests"), at
which time the outstanding shares of Class A Common Stock held by Iridium LLC   
were retired, and IWCL became a member of Iridium LLC.                          

On July 13, 1997, in connection with the issuance of Series A Notes by
Iridium LLC, IWCL issued 300,000 warrants to purchase up to 1,560,000 shares of 
Class A Common Stock and applied the net proceeds to purchase warrants to       
acquire up to 1,560,000 Class 1 Interests from Iridium LLC. When a warrant to   
purchase Class A Common Stock is exercised, IWCL is required to exercise a      
corresponding warrant to purchase Class 1 Interests. As of September 30, 1998,  
19,000 warrants were exercised to purchase 98,800 shares of Class A Common Stock
resulting in net proceeds of approximately $2 million to IWCL. The net proceeds 
from the exercise of these 19,000 warrants were used by IWCL to exercise        
warrants to purchase 98,800 Class 1 Interests of Iridium LLC.                   

Iridium LLC through its wholly-owned subsidiary Iridium Operating LLC 
("Iridium"), a Delaware limited liability company, is devoting substantially all
of its efforts to commercializing the Iridium communications system (the        
"Iridium System").                                                              

 IWCL's sole assets are its investments in Iridium LLC. At September 30,
1998, IWCL owned approximately 8.62% of the total outstanding Class 1 Interests 
in Iridium LLC.                                                                 

2.  BASIS OF PRESENTATION                                                       

In the opinion of management, the accompanying unaudited condensed    
financial statements reflect all adjustments necessary for a fair presentation  
of the financial position of IWCL as of September 30, 1998 and its results of   
operations for the three and nine month periods ended September 30, 1998 and    
1997, and its cash flows for the nine month periods ended September 30, 1998 and
1997. These condensed financial statements are unaudited and do not include all 
related footnote disclosures. These financial statements should be read in      
conjunction with the audited financial statements of IWCL and footnotes thereto 
included in the Annual Report on Form 10-K and the audited consolidated         
financial statements of Iridium LLC and the footnotes thereto included in the   
Annual Report on Form 10-K.                                                     

   Since its inception on December 12, 1996 through September 30, 1998, IWCL
has not entered into any operating transactions or incurred any operating       
expenses. The results of operations for the three and nine months ended         
September 30, 1998 are not necessarily indicative of the results of operations  
expected in the future.                                                         

3.  STOCKHOLDERS' EQUITY                                                        

NOMAD PROGRAM                                                                   

  IWCL and Iridium LLC have commenced a NOMAD Program which is designed to
offer up to an aggregate of 2,500,000 shares of IWCL's Class B Common Stock at a
purchase price of $13.33 per share to certain governmental telecommunication    
administrations and related entities as part of a comprehensive program to      
enhance market access, improve the competitive standing of the Iridium System   
and achieve                                                                     

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IRIDIUM WORLD COMMUNICATIONS LTD. 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)

3.  STOCKHOLDERS' EQUITY -- (CONTINUED)                                         
appropriate regulatory approvals. At the time of issuance, purchasers of Class B
Common Stock are required to pay only a minimum amount equal to the per share   
par value of the Class B Common Stock; $.01 per share. The balance of the       
purchase price is payable through the withholding of dividends, if any, which   
would otherwise be payable on the shares of Class B Common Stock. However, a    
holder of Class B Common Stock may elect to pay the entire purchase price in    
cash at any time. Class B Common Stock is convertible to Class A Common Stock on
a one-for-one basis, subject to anti-dilution adjustments, once certain         
conditions are met, including full payment for the shares and expiration of a   
minimum holding period. The proceeds generated from each sale of Class B Common 
Stock are used to purchase Class 1 Interests in Iridium LLC. The payment terms  
with respect to such Iridium LLC Class 1 Interests mirror the payment terms on  
the Class B Common Stock. As of September 30, 1998, 20,625 shares of Class B    
Common Stock had been issued under this program resulting in net proceeds of    
$275,000 to IWCL. The shares were recognized at a fair value of $33.88 per share
(the trading price of the Class A Common Stock at the date of issue) with a     
corresponding increase in IWCL's investment in Iridium LLC. In accordance with  
the Share Issuance Agreement, the net proceeds were invested in Class 1         
Interests of Iridium LLC.                                                       

4.  EARNINGS (LOSS) PER SHARE                                                   

  Basic earnings (loss) per Class A Common share is calculated by dividing
net income (loss) by the weighted average number of Class A Common shares       
outstanding during the period. Diluted earnings (loss) per share is calculated  
by dividing net income (loss) by the weighted average number of Class A Common  
shares and, to the extent dilutive, other potentially dilutive securities       
outstanding during the period. Potentially dilutive securities are comprised of 
warrants to purchase Class A Common Stock issued in conjunction with the Series 
A Notes, stock options and Class B Common Stock. Due to the losses incurred     
during the three and nine months ended September 30, 1998 and 1997, the impact  
of the warrants, stock options and Class B Common Stock is anti-dilutive and is 
not included in the diluted earnings (loss) per share calculations.             

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INDEPENDENT AUDITORS' REPORT

The Board of Directors and Members                                              
Iridium LLC and subsidiaries:                                                   

     We have audited the accompanying consolidated balance sheets of Iridium LLC
and subsidiaries (a development stage limited liability company) as of December 
3l, 1997 and 1996, and the related consolidated statements of loss, members'    
equity (deficit), and cash flows for each of the years in the three-year period 
ended December 31, 1997, and for the period June 14, 1991 (inception) through   
December 31, 1997. 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 conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain 
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting 
the amounts and disclosures in the financial statements, An audit also includes 
assessing the accounting principles used and significant estimates made by      
management, as well as evaluating the overall financial statement presentation. 
We believe that our audits provide a reasonable basis for our opinion.          

 In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Iridium LLC 
and subsidiaries (a development stage limited liability company) as of December 
31, 1997 and 1996, and the results of their operations and their cash flows for 
each of the years in the three-year period ended December 31, 1997, and for the 
period June 14, 1991 (inception) through December 31, 1997, in conformity with  
generally accepted accounting principles.                                       

            KPMG LLP

McLean, Virginia                                                                
January 16, 1998                                                                

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

CONSOLIDATED BALANCE SHEETS 
(IN THOUSANDS EXCEPT MEMBER INTEREST DATA)

                                                        [Enlarge/Download Table]

                                                                    DECEMBER 31,        
                                                              ------------------------- 
                                                                  1996          1997    
                                                              ------------   ---------- 
                                                                                        
                                        ASSETS                                          
Current assets:                                                                         
     Cash and cash equivalents..............................   $    1,889    $    9,040 
     Restricted cash (Note 2)...............................           --       350,220 
     Due from affiliates....................................        3,476        13,604 
     Prepaid expenses and other current assets..............        7,154         6,612 
                                                               ----------    ---------- 
          Total current assets..............................       12,519       379,476 
Property and equipment, net (Note 4)........................        2,065     1,526,326 
System under construction (Note 7)..........................    2,388,320     1,625,054 
Other assets (Note 2).......................................       31,177       114,831 
                                                               ----------    ---------- 
          Total assets......................................   $2,434,081    $3,645,687 
                                                               ==========    ========== 
                            LIABILITIES AND MEMBERS' EQUITY                             
Current liabilities:                                                                    
     Accounts payable and accrued expenses..................   $   17,937    $  106,794 
     Accounts payable to Member (Note 7)....................      100,563        10,601 
     Bank facilities, current portion (Note 5)..............           --       350,000 
                                                               ----------    ---------- 
          Total current liabilities.........................      118,500       467,395 
Bank facilities, net of current portion (Note 5)............      505,000       210,000 
Long-term debt due to Members (Note 5)......................      230,904       273,302 
Notes payable, $1,000,000 principal amount (Note 5).........           --     1,054,288 
Other liabilities (Note 8)..................................        7,648         6,065 
                                                               ----------    ---------- 
          Total liabilities.................................      862,052     2,011,050 
                                                               ----------    ---------- 
Commitments and Contingencies (Notes 1, 3, 5, 7, 8 and 10)                              
Members' equity (Notes 1, 3, 5, 7 and 8):                                               
     Class 2 Interests, authorized 50,000 interests for                                 
      Series M; authorized an aggregate of 300,000 interests                            
      for Series A, Series B and Series C:                                              
          Series M, convertible, no interests issued and                                
            outstanding.....................................           --            -- 
          Series A, redeemable, convertible, 46,977 and                                 
            39,907 interests issued and outstanding;                                    
            liquidation value of $46,977 and $39,907........       46,977        39,907 
          Series B, redeemable, 1 interest issued and                                   
            outstanding.....................................           --            -- 
          Series C, redeemable, 75 interests issued and                                 
            outstanding.....................................           --            -- 
     Class 1 Interests, authorized 225,000,000 interests,                               
      120,836,025 and 141,222,442 interests issued and                                  
      outstanding...........................................    1,659,625     2,024,220 
Deferred Class 1 Interest compensation......................           --        (1,454)
Adjustment for minimum pension liability (Note 8)...........         (733)         (643)
Deficit accumulated during the development stage............     (133,840)     (427,393)
                                                               ----------    ---------- 
          Total members' equity.............................    1,572,029     1,634,637 
                                                               ----------    ---------- 
          Total liabilities and members' equity.............   $2,434,081    $3,645,687 
                                                               ==========    ========== 

The accompanying notes are an integral part of these consolidated financial 
statements. 

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

CONSOLIDATED STATEMENTS OF LOSS 
(IN THOUSANDS EXCEPT MEMBER INTEREST DATA)

                                                        [Enlarge/Download Table]

                                                                                         PERIOD FROM 
                                                                                        JUNE 14, 1991
                                                                                         (INCEPTION) 
                                                       YEAR ENDED DECEMBER 31,             THROUGH   
                                                --------------------------------------  DECEMBER 31, 
                                                   1995         1996          1997          1997     
                                                ----------   -----------   -----------  -------------
                                                                                                     
OPERATING EXPENSES                                                                                   
Sales, general and administrative (Notes 5, 7,                                                       
  8 and 10).................................... $   26,436   $    70,730   $   177,474    $313,301   
Depreciation and amortization..................        751           674       119,124     121,429   
                                                ----------   -----------   -----------    --------   
         Total operating expenses..............     27,187        71,404       296,598     434,730   
                                                ==========   ===========   ===========    ========   
OTHER INCOME                                                                                    --   
Interest income................................      5,226         2,395         3,045      15,308   
                                                ----------   -----------   -----------    --------   
Loss before provision for income taxes.........     21,961        69,009       293,553     419,422   
Provision for income taxes (Note 6)............      1,684         4,589            --       7,971   
                                                ----------   -----------   -----------    --------   
Net loss.......................................     23,645        73,598       293,553     427,393   
                                                ==========   ===========   ===========    ========   
Preferred dividend requirement (Note 3)........         --         3,652         5,703               
                                                ----------   -----------   -----------               
Net loss applicable to Class 1                                                                       
  Interests.................................... $   23,645   $    77,250   $   299,256               
                                                ==========   ===========   ===========               
Net loss per Class 1 Interest -- basic and                                                           
  diluted...................................... $     0.27   $      0.64   $      2.25               
                                                ==========   ===========   ===========               
Weighted average interests used in computing                                                         
  net loss per Class 1 Interest -- basic and                                                         
  diluted...................................... 88,162,875   120,115,575   132,879,976               
                                                ==========   ===========   ===========               

The accompanying notes are an integral part of these consolidated financial 
statements. 

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY (DEFICIT)
(IN THOUSANDS EXCEPT INTEREST DATA) 

                                                        [Enlarge/Download Table]

                                                              CLASS 2                                       DEFERRED  
                                                             INTERESTS,                CLASS 1              CLASS 1   
                                                             ALL SERIES               INTERESTS            INTERESTS  
                                                        --------------------   ------------------------   ------------
                                                         NUMBER                  NUMBER                               
                                                           OF                      OF                                 
                                                        INTERESTS    AMOUNT     INTERESTS      AMOUNT     COMPENSATION
                                                        ---------   --------   -----------   ----------   ------------
                                                                                                                      
Inception June 14, 1991................................       --    $     --            --   $       --     $    --   
Net loss...............................................       --          --            --           --          --   
                                                         -------    --------   -----------   ----------     -------   
BALANCE, December 31, 1991.............................       --          --            --           --          --   
Net loss...............................................       --          --            --           --          --   
                                                         -------    --------   -----------   ----------     -------   
BALANCE, December 31, 1992.............................       --          --            --           --          --   
Net loss...............................................       --          --            --           --          --   
                                                         -------    --------   -----------   ----------     -------   
BALANCE, July 29, 1993.................................       --          --            --           --          --   
Class 1 Interests subscribed, July 29, 1993............       --          --    60,000,000           --          --   
Subscribed Class 1 Interests issued for cash at $13.33                                                                
  per interest.........................................       --          --            --      324,167          --   
Costs of raising equity................................       --          --            --       (8,096)         --   
Net loss...............................................       --          --            --           --          --   
                                                         -------    --------   -----------   ----------     -------   
BALANCE, December 31, 1993.............................       --          --    60,000,000      316,071          --   
Class 1 Interests subscribed...........................       --          --    59,458,350           --          --   
Subscribed Class 1 Interests issued for cash at $13.33                                                                
  per interest.........................................       --          --            --      518,202          --   
Costs of raising equity................................       --          --            --       (1,863)         --   
Net loss...............................................       --          --            --           --          --   
                                                         -------    --------   -----------   ----------     -------   
BALANCE, December 31, 1994.............................       --          --   119,458,350      832,410          --   
Subscribed Class 1 Interests issued for cash at $13.33                                                                
  per interest.........................................       --          --            --      633,514          --   
Cost of raising equity.................................       --          --            --           (7)         --   
Net loss...............................................       --          --            --           --          --   
Adjustment for minimum pension liability...............       --          --            --           --          --   
                                                         -------    --------   -----------   ----------     -------   
BALANCE, December 31, 1995.............................       --          --   119,458,350    1,465,917          --   
Subscribed Class 1 Interests issued for cash at $13.33                                                                
  per interest.........................................       --          --     1,377,675      140,131          --   
Class 2 interest issued for cash at $13.33 per                                                                        
  interest.............................................   43,401      43,325            --           --          --   
Series A, Class 2 Interests issued in dividends........    3,652       3,652            --       (3,652)         --   
Costs of raising equity................................       --          --            --         (251)         --   
Warrants to purchase Class 1 Interests issued in                                                                      
  connection with 14.5% Senior subordinated notes......       --          --            --       31,761          --   
Warrants to purchase Class 1 Interests issued in                                                                      
  connection with debt guarantee.......................       --          --            --       25,719          --   
Net loss...............................................       --          --            --           --          --   
Adjustment for minimum pension liability...............       --          --            --           --          --   
                                                         -------    --------   -----------   ----------     -------   
BALANCE, December 31, 1996.............................   47,053      46,977   120,836,025    1,659,625          --   
Subscribed Class 1 Interests issued for cash at $13.33                                                                
  per interest.........................................       --          --      7,500,00       59,248          --   
Exercise of employee stock options.....................       --          --         3,262           43          --   
Initial Public offering................................                         12,000,000      240,000          --   
Class 2 Interests converted to Class 1 Interests.......  (12,773)    (12,773)      883,155       12,773          --   
Series A, Class 2 Interests issued in dividends........    5,703       5,703            --       (5,703)         --   
Costs of raising equity................................       --          --            --      (16,100)         --   
Warrants to purchase Class 1 Interests issued in                                                                      
  connection with 13% Senior notes, Series A...........       --          --            --       17,113          --   
Warrants to purchase Class 1 Interests issued in                                                                      
  connection with debt guarantee.......................       --          --            --       55,615          --   
Deferred Class 1 Interests compensation................       --          --            --        1,606      (1,454)  
Net loss...............................................       --          --            --           --          --   
Adjustment for minimum pension liability...............       --          --            --           --          --   
                                                         -------    --------   -----------   ----------     -------   
BALANCE, December 31, 1997.............................   39,983    $ 39,907   141,222,442   $2,024,220     $(1,454)  
                                                         =======    ========   ===========   ==========     =======   



                                                                        DEFICIT                                       
                                                        ADJUSTMENT    ACCUMULATED                                     
                                                        FOR MINIMUM   DURING THE                                      
                                                          PENSION     DEVELOPMENT                                     
                                                         LIABILITY       STAGE        TOTAL                           
                                                        -----------   -----------   ----------                        
                                                                                                                      
Inception June 14, 1991................................   $    --      $      --    $       --                        
Net loss...............................................        --           (757)         (757)                       
                                                          -------      ---------    ----------                        
BALANCE, December 31, 1991.............................        --           (757)         (757)                       
Net loss...............................................        --         (8,773)       (8,773)                       
                                                          -------      ---------    ----------                        
BALANCE, December 31, 1992.............................        --         (9,530)       (9,530)                       
Net loss...............................................        --         (5,309)       (5,309)                       
                                                          -------      ---------    ----------                        
BALANCE, July 29, 1993.................................        --        (14,839)      (14,839)                       
Class 1 Interests subscribed, July 29, 1993............        --             --            --                        
Subscribed Class 1 Interests issued for cash at $13.33                                                                
  per interest.........................................        --             --       324,167                        
Costs of raising equity................................        --             --        (8,096)                       
Net loss...............................................        --         (6,924)       (6,924)                       
                                                          -------      ---------    ----------                        
BALANCE, December 31, 1993.............................        --        (21,763)      294,308                        
Class 1 Interests subscribed...........................        --             --            --                        
Subscribed Class 1 Interests issued for cash at $13.33                                                                
  per interest.........................................        --             --       518,202                        
Costs of raising equity................................        --             --        (1,863)                       
Net loss...............................................        --        (14,834)      (14,834)                       
                                                          -------      ---------    ----------                        
BALANCE, December 31, 1994.............................        --        (36,597)      795,813                        
Subscribed Class 1 Interests issued for cash at $13.33                                                                
  per interest.........................................        --             --       633,514                        
Cost of raising equity.................................        --             --            (7)                       
Net loss...............................................        --        (23,645)      (23,645)                       
Adjustment for minimum pension liability...............    (1,065)            --        (1,065)                       
                                                          -------      ---------    ----------                        
BALANCE, December 31, 1995.............................    (1,065)       (60,242)    1,404,610                        
Subscribed Class 1 Interests issued for cash at $13.33                                                                
  per interest.........................................        --             --       140,131                        
Class 2 interest issued for cash at $13.33 per                                                                        
  interest.............................................        --             --        43,325                        
Series A, Class 2 Interests issued in dividends........        --             --            --                        
Costs of raising equity................................        --             --          (251)                       
Warrants to purchase Class 1 Interests issued in                                                                      
  connection with 14.5% Senior subordinated notes......        --             --        31,761                        
Warrants to purchase Class 1 Interests issued in                                                                      
  connection with debt guarantee.......................        --             --        25,719                        
Net loss...............................................        --        (73,598)      (73,598)                       
Adjustment for minimum pension liability...............       332             --           332                        
                                                          -------      ---------    ----------                        
BALANCE, December 31, 1996.............................      (733)      (133,840)    1,572,029                        
Subscribed Class 1 Interests issued for cash at $13.33                                                                
  per interest.........................................        --             --        59,248                        
Exercise of employee stock options.....................        --             --            43                        
Initial Public offering................................        --             --       240,000                        
Class 2 Interests converted to Class 1 Interests.......        --             --            --                        
Series A, Class 2 Interests issued in dividends........        --             --            --                        
Costs of raising equity................................        --             --       (16,100)                       
Warrants to purchase Class 1 Interests issued in                                                                      
  connection with 13% Senior notes, Series A...........        --             --        17,113                        
Warrants to purchase Class 1 Interests issued in                                                                      
  connection with debt guarantee.......................        --             --        55,615                        
Deferred Class 1 Interests compensation................        --             --           152                        
Net loss...............................................        --       (293,553)    (293,5453)                       
Adjustment for minimum pension liability...............        90             --            90                        
                                                          -------      ---------    ----------                        
BALANCE, December 31, 1997.............................   $  (643)     $(427,393)   $1,634,637                        
                                                          =======      =========    ==========                        

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

CONSOLIDATED STATEMENTS OF CASH FLOWS 
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                                                   PERIOD FROM 
                                                                                                  JUNE 14, 1991
                                                                                                   (INCEPTION) 
                                                                                                     THROUGH   
                                                                                                  DECEMBER 31, 
                                                               1995        1996         1997          1997     
                                                             ---------   ---------   ----------   -------------
                                                                                                               
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                          
    Net loss................................................ $ (23,645)  $ (73,598)  $ (293,553)   $  (427,393)
    Adjustment to reconcile net loss to net cash used in                                                       
      operating activities:                                                                                    
      Depreciation and amortization.........................       751         674      119,124        121,429 
      Expense recognized for warrants issued in connection                                                     
        with debt guarantee.................................        --      25,719       55,615         81,334 
      Employee Class 1 Interests Compensation...............        --          --          152            152 
      Loss on disposal of assets............................        --          --           87             87 
      Changes in assets and liabilities:                                                                       
        Decrease (Increase) in prepaid expenses and other                                                      
          current assets....................................      (171)     (6,281)         542         (6,612)
        Increase in due from affiliates.....................        --      (3,476)     (10,128)       (13,604)
        Increase in other assets............................    (1,633)     (4,079)      (2,286)       (18,659)
        Increase in accounts payable and accrued expenses...     1,586      12,968       30,857         48,794 
        (Decrease) Increase in other liabilities............     2,126       2,739       (1,493)         5,985 
                                                             ---------   ---------   ----------    ----------- 
            Net cash used in operating activities...........   (20,986)    (45,334)    (101,083)      (208,487)
                                                             ---------   ---------   ----------    ----------- 
CASH FLOWS FROM INVESTING ACTIVITIES:                                                                          
    Purchases of property and equipment.....................      (493)     (1,475)     (18,885)       (23,255)
    Additions to system under construction..................  (762,000)   (900,757)    (842,678)    (3,091,435)
                                                             ---------   ---------   ----------    ----------- 
            Net cash used in investing activities...........  (762,493)   (902,232)    (861,563)    (3,114,690)
                                                             ---------   ---------   ----------    ----------- 
CASH FLOWS FROM FINANCING ACTIVITIES:                                                                          
    Net proceeds from issuance of Class 1 and Class 2                                                          
      Interests.............................................   633,514     183,205      283,191      1,932,319 
    Net proceeds from issuance of senior notes and                                                             
      warrants..............................................        --     238,453    1,039,189      1,277,642 
    Borrowings under guaranteed bank line of credit.........        --     505,000      655,000      1,160,000 
    Payments under guaranteed bank line of credit...........        --          --     (950,000)      (950,000)
    Borrowings under senior secured line of credit..........        --          --      350,000        350,000 
    Increase in restricted cash.............................        --          --     (350,220)      (350,220)
    Deferred financing costs................................    (1,094)    (28,535)     (57,363)       (87,524)
                                                             ---------   ---------   ----------    ----------- 
        Net cash provided by financing activities...........   632,420     898,123      969,797      3,332,217 
                                                             ---------   ---------   ----------    ----------- 
    Increase(decrease) in cash and cash equivalents.........  (151,059)    (49,443)       7,151          9,040 
CASH AND CASH EQUIVALENTS beginning of period...............   202,391      51,332        1,889             -- 
                                                             ---------   ---------   ----------    ----------- 
CASH AND CASH EQUIVALENTS, end of period.................... $  51,332   $   1,889   $    9,040    $     9,040 
                                                             =========   =========   ==========    =========== 

The accompanying notes are an integral part of these consolidated financial 
statements. 

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  ORGANIZATION AND BUSINESS                                                   

    Iridium LLC (the "Parent") and its subsidiaries are devoting their present
efforts to developing and commercializing a global wireless system -- the       
Iridium(R) Communications System (the "IRIDIUM System") -- that will enable     
subscribers to send and receive telephone calls virtually anywhere in the       
world -- all with one phone, one phone number and one customer bill.            

    Iridium, Inc. was incorporated on June 14, 1991. Iridium, Inc. operated as
a wholly-owned subsidiary of Motorola, Inc. ("Motorola") until July 29, 1993. On
July 29, 1993, Iridium, Inc. closed on, and had its first capital draw under, a 
private placement of shares of Common Stock, subscribed to by U.S. and foreign  
investors. As a result of three private placements of equity, five supplemental 
private placements with certain additional equity investors and proceeds        
received from the initial public offering of common stock of Iridium World      
Communications Ltd. ("IWCL") (See Note 3), Motorola's direct and indirect Class 
1 Membership Interest in the Parent has been reduced to approximately 18% as of 
December 31, 1997, before considering unexercised warrants held by Motorola.    

 On July 29, 1996, the Parent was formed as a limited liability company,
under the terms and conditions of the limited liability agreement ("LLC         
Agreement"), pursuant to the provisions of the Delaware limited liability       
company act. Also on July 29, 1996, Iridium, Inc. was merged with and into the  
Parent, with the Parent as the surviving entity. Concurrent with the merger, all
shares of Common Stock of Iridium, Inc. were exchanged for Class 1 membership   
interests in the Parent ("Class 1 Interests").                                  

On December 18, 1997, the Parent entered into an asset drop-down      
transaction (the "Asset Drop-Down Transaction") with Iridium Operating LLC      
("Iridium"), a newly formed wholly-owned subsidiary of the Parent. Pursuant to  
the Asset Drop-Down Transaction, substantially all of the assets and liabilities
of the Parent were transferred to Iridium, including, without limitation, all   
liabilities with respect to the outstanding 13% Senior Notes due 2005, Series A 
and 14% Senior Notes due 2005, Series B and the 11 1/4% Senior Notes due 2005,  
Series C (collectively, the "Senior Notes"). Pursuant to the indentures relating
to the Senior Notes, Iridium has been substituted for the Parent, and the Parent
has been released from all obligations under the indentures relating to the     
Senior Notes. All assets and liabilities were transferred to Iridium at the     
Parent's carrying value. Accordingly, unless otherwise specified, references    
within these notes to Iridium that relate to any action prior to the date of the
Asset Drop-Down Transaction should be construed as references to Parent, as     
predecessor of Iridium. As a result of the Asset Drop-Down Transaction, the     
Parent's only significant asset is its investment in Iridium.                   

Iridium has contracted with Motorola to design, develop, produce and  
deliver into orbit the space segment component of the IRIDIUM System. The       
scheduled date for delivery of the $3.45 billion space segment is in 1998.      
Iridium plans to begin its commercial operations in September 1998. During 1997,
46 of the 66 satellites in the IRIDIUM System were successfully placed in orbit.

   The Iridium Communications System is subject to regulation by the Federal
Communications Commission ("FCC"), and by foreign administrations and regulatory
bodies. On January 31, 1995, Motorola obtained a license from the FCC to        
construct, launch and operate the Iridium System, subject to certain conditions.

2.  SIGNIFICANT ACCOUNTING POLICIES                                             

PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION                           

  The consolidated financial statements include the accounts of the Parent
and its wholly-owned subsidiary, Iridium, and Iridium's wholly-owned            
subsidiaries, Iridium Capital Corporation, Iridium Roaming LLC and Iridium IP   
LLC. All significant intercompany transactions have been eliminated.            

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

2.  SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)                              
DEVELOPMENT STAGE ENTERPRISE                                                    

  The Parent, through Iridium, is currently devoting its entire efforts to
establishing and commercializing the IRIDIUM System. On December 18, 1997, the  
Parent and Iridium entered into an Asset Drop-Down Transaction whereby          
substantially all of the assets and liabilities of the Parent were transferred  
to Iridium. The purpose of the Asset Drop-Down Transaction was to facilitate the
pledge of substantially all of the assets of the Parent in connection with the  
establishment of secured bank financing for the development and construction of 
the IRIDIUM System. At December 31, 1997, the Parent's ownership interest in    
Iridium constituted substantially all of the Parent's assets. Accordingly,      
Iridium's current principal activities relate to managing the design,           
construction and development of the system and preparing for its day-to-day     
operations.                                                                     

MANAGEMENT ESTIMATES                                                            

 The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates  
and assumptions that affect the reported amounts of assets and liabilities and  
disclosure of contingent assets and liabilities at the date of the consolidated 
financial statements and the reported amounts of revenues and expenses during   
the reporting periods. Actual results could differ from those estimates.        

CASH AND CASH EQUIVALENTS                                                       

The Parent considers all highly liquid investments with an original   
maturity of three months or less at the date of purchase to be cash equivalents.

RESTRICTED CASH                                                                 

Restricted cash consists of the first stage of borrowing under the $1 
billion secured credit facility with a syndicate of lenders, led by Chase       
Securities, Inc., and Barclays Capital, a division of Barclays Bank PLC. The    
funds are restricted subject to Iridium meeting specified milestones.           

PROPERTY AND EQUIPMENT                                                          

Property and equipment is carried at historical cost less accumulated 
depreciation and amortization. Depreciation and amortization is calculated using
the straight-line method over the following estimated useful lives:             

                                                                [Download Table]
                                                                                   
Satellites in service....................................... 5 years               
Furniture, fixtures and equipment........................... 5 years               
Leasehold improvements...................................... Shorter of 5 years or 
                                                               remaining lease term

The costs of constructing and placing satellites into service are     
capitalized. Losses from satellite failures for which Iridium has financial     
responsibility under its contractual arrangements with Motorola are recognized  
currently. Motorola bears the risk of loss for launch failures and satellite    
failures before a satellite is placed into service.                             

SYSTEM UNDER CONSTRUCTION                                                       

System under construction includes all costs incurred related to the  
construction of the space and ground components of the IRIDIUM System.          
Depreciation expense is recognized on a satellite-by-satellite basis as         

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(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

2.  SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)                              
the satellites are placed into service following delivery of each satellite to  
its mission orbit. Depreciation related to the ground control stations will     
commence with the placement in service of each such station.                    

   Interest costs incurred during the construction of the IRIDIUM System are
capitalized. Total interest cost incurred and capitalized for the years ended   
December 31, 1996 and 1997 was approximately $28,127,000 and $163,747,000,      
respectively. Interest paid for the years ended December 31, 1996 and 1997 was  
approximately $1,485,000 and $30,191,000, respectively. No interest was         
incurred, paid or capitalized for the year ended December 31, 1995.             

     During 1996, the Parent adopted Statement of Financial Accounting Standards
No. 121, Accounting for the Impairment of Long-lived Assets and for Long-lived  
Assets to be Disposed of ("Statement 121"). Statement 121 requires that         
long-lived assets to be held and used be reviewed for impairment 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 net  
cash flows associated with the asset are less than the asset's carrying amount. 
Impairment losses, if any, are measured as the excess of the carrying amount of 
the asset over its estimated fair market valued. The adoption of Statement 121  
did not have a material impact on the Parent's results of operations for the    
years ended December 31, 1996 and 1997.                                         

MEMBER INTEREST-BASED COMPENSATION                                              

     During 1996, the Parent adopted Statement of Financial Accounting Standards
No. 123, Accounting for Stock-Based Compensation ("Statement 123"), which       
encourages, but does not require, the recognition of member interest-based      
employee compensation at fair value. The Parent has elected to continue to      
account for member interest-based employee compensation using the intrinsic     
value method prescribed in Accounting Principles Board Opinion No. 25,          
Accounting for Stock Issued to Employees and related interpretations.           
Accordingly, compensation cost for options to purchase Class A Common Stock of  
IWCL granted to employees is measured as the excess, if any, of the fair value  
of Class 1 Interests at the date of the grant over the exercise price an        
employee must pay to acquire the interest. Compensation expense, if any, is     
recognized over the period earned by the employee and was $152,000 for the year 
ended December 31, 1997. No compensation expense was recognized for the year    
ended December 31, 1996 as all options to acquire Class 1 Interests were granted
at an exercise price equal to the fair market value as of the date of grant.    

Warrants or options to purchase member interests granted to other than
employees as consideration for goods or services rendered are recognized at fair
market value.                                                                   

EQUITY ISSUANCE COSTS                                                           

     The Parent classifies all costs incurred in connection with the issuance of
equity as a reduction of members' equity. These costs include fees paid to      
investment bankers, attorneys and others in connection with the issuance of     
equity.                                                                         

DEFERRED FINANCING COSTS                                                        

 All costs incurred in connection with securing debt financing have been
deferred and are amortized over the terms of the related debt in a manner that  
approximates the effective yield method. Costs for future debt financing are    
also deferred and are included in other non-current assets in the accompanying  
consolidated balance sheets. Total deferred financing costs are approximately   
$30,200,000 and $113,394,000 at December 31, 1996 and 1997, respectively.       

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

2.  SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)                              
 During October 1995, the Parent withdrew an intended public offering of
certain subordinated debt financing. Accordingly, the Parent wrote-off          
approximately $3,200,000 of deferred costs associated with the intended         
financing. Such costs are included in operating expenses in the accompanying    
consolidated statement of loss for the year ended December 31, 1995.            

INCOME TAXES                                                                    

Iridium, Inc. was subject to Federal, state and local income taxes    
directly. As a result of the merger of Iridium, Inc. with and into the Parent,  
the Parent became a limited liability company. As a limited liability company,  
the Parent is no longer subject to U. S. federal income tax directly. Rather,   
each Class 1 member is subject to U.S. federal income taxation based on its     
ratable portion of the Parent's income or loss. However, the Parent's primary   
operations are in the District of Columbia which does not recognize the limited 
liability status for tax purposes. Accordingly, the Parent is subject to        
District of Columbia franchise taxes directly. The Parent recognizes its        
provision for income taxes under the asset and liability method. Under the asset
and liability method deferred tax assets and deferred tax liabilities are       
recognized for the future tax consequences attributable to differences between  
the financial statement carrying amounts of existing assets and liabilities and 
their respective tax bases. Deferred tax assets and liabilities are measured    
using tax rates expected to apply to taxable income in the years in which these 
temporary differences are expected to be recovered or settled. The effect on    
deferred tax assets and liabilities of a change in tax rates is recognized in   
income in the period that includes the enactment date.                          

NET INCOME (LOSS) PER CLASS 1 INTEREST                                          

     In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share ("Statement 128"). Statement 128, supersedes        
Accounting Principles Board Opinion No. 15, Earnings per Share ("APB 15") and   
its related interpretations, and promulgates new accounting standards for the   
computation and manner of presentation of the Parent's loss per Class 1 Interest
data. Statement 128 requires the presentation of basic and diluted earnings     
(loss) per interest data. Basic earnings (loss) per Class 1 interest is         
calculated by dividing net income (loss), after considering required dividends  
on Class 2 Interests, by the weighted average number of Class 1 Interests       
outstanding during the period. Diluted earnings (loss) per share is calculated  
by dividing net income (loss), after considering required dividends on Class 2  
Interests, by the weighted average number of Class 1 Interests and, to the      
extent dilutive, other potentially dilutive securities outstanding during the   
period. Potentially dilutive securities are comprised of options, warrants, and 
convertible Class 2 Interests. Due to the losses incurred during the years ended
December 31, 1995, 1996, and 1997, the impact of other potentially dilutive     
securities is anti-dilutive and is not included in the diluted earnings (loss)  
per Class 1 Interest calculation. The adoption of Statement 128 had no effect on
earnings (loss) per Class 1 Interest as previously presented.                   

NEW ACCOUNTING PRONOUNCEMENT                                                    

     In June 1997, the Financial Accounting Standards Board issued Statement No.
130, Reporting Comprehensive Income ("Statement 130"). Statement 130 establishes
standards for the reporting and display of comprehensive income and its         
components in the consolidated financial statements. The Parent is required to  
adopt the provisions of Statement 130 for the year ending December 31, 1998.    
Earlier application is permitted; however, upon adoption of Statement 130, the  
Parent will be required to reclassify previously reported annual and interim    
consolidated financial statements. The disclosure of comprehensive income in    
accordance with the provisions of Statement 130 will impact the manner of       
presentation of the Parent's consolidated financial statements as currently and 
previously reported.                                                            

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

2.  SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)                              
RECLASSIFICATIONS                                                               

     Certain 1995 and 1996 amounts have been reclassified to conform to the 1997
presentation.                                                                   

3.  MEMBERS' EQUITY                                                             

CLASSES OF MEMBERSHIP INTERESTS                                                 

    The members' interests in the Parent are divided into two classes: Class 1
Interests which represent the common equity and Class 2 Interests which         
represent the preferred equity. The LLC Agreement authorizes the Parent to issue
225,000,000 Class 1 Interests, 50,000 Series M Class 2 Interests, and 300,000   
additional Class 2 Interests. A description of each of the classes of membership
interests follows:                                                              

         CLASS 1 INTERESTS.  Subject to the rights of holders of any series of
     Class 2 Interests, all voting rights of the members are vested in the Class
1 Interests. Each member is entitled to appoint one Director for each 
    5,250,000 Class 1 Interests owned. Class 1 members in any aggregate any or
   all of their Class 1 Interests with other Class 1 members and appoint one
   Director for each 5,250,000 Class 1 Interests owned in the aggregate. The
   members may manage the Parent only through their designated Directors and
 have no authority, in their capacity as members, to act on behalf of or
bind the Parent.                                                      

     The LLC Agreement contains a reserve capital call provision under
    which certain members have agreed to purchase additional Class 1 Interests
    (the "Reserve Capital Call"). If the Board elects to exercise this option,
the Parent could raise up to an additional $243 million for 18,206,550
   Class 1 Interests. However, the Reserve Capital Call is pledged to secure
the Secured Bank Facility (See Note 5).                               

    SERIES M CLASS 2 INTERESTS.  Motorola owns a warrant to purchase
  Series M Class 2 Interests in an amount that is convertible into 2.5% of
  the outstanding Class 1 Interests at the time of exercise of the warrant
 (calculated on a fully diluted basis) at a price of $1,000 per Series M
Class 2 Interest. Each Series M Class 2 Interest is non-voting and    
currently convertible into 75 Class 1 Interests. The initial Series M 
 Conversion Price is $13.33, but is subject to anti-dilution adjustments
   from time to time. Dividends on Series M Class 2 Interests are cumulative
   and accrue at the rate of 8% per annum. No Series M Class 2 Interests are
outstanding.                                                          

   SERIES A CLASS 2 INTERESTS.  The Series A Class 2 Interests are
     convertible preferred interests that pay dividends at a rate of 14 1/2% per
annum. Dividends on the Series A Class 2 Interests are payable, either
     in-kind or in cash, at the option of the Parent, through February 28, 2001.
   Commencing March 1, 2001, dividends on the Series A Class 2 Interests are
  payable only in cash. Dividends in the Series A Class 2 Interests accrue
     whether or not they have been declared and whether or not there are profits
or other funds of the Parent legally available for the payment of such
  dividends. No dividend may be declared and paid on the Class 1 Interests
  unless all accrued dividends on the Series A Class 2 Interests have been
     paid in full. The Series A Class 2 Interests are non-voting and convertible
   Class 1 Interests at any time at the option of the holder. Currently each
  Series A Class 2 Interest may be converted into 18.51 Class 1 Interests.
     The Series A Class 2 Interests are redeemable, at the option of the Parent,
   at anytime after March 1, 2001, subject to a Premium if redeemed prior to
March 1, 2005.                                                        

SERIES B AND SERIES C CLASS 2 INTERESTS.  In connection with
  Motorola's guarantee of the $450 million credit facility (the "Guarantee
    Agreement") (See Note 5), the Parent issued to Motorola one Series B Class
     2 Interest and 75 Series C Class 2 Interests. The Series B Class 2 Interest
     and Series C Class 2 Interests do not pay any dividends. The Series B Class
2 Interest entitles Motorola to one seat on the Board of Directors in 
addition to Directors it may appoint as the owner of Class 1          
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(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

3.  MEMBERS' EQUITY -- (CONTINUED)                                              
  interests and Series M Class 2 Interests. The Series C Class 2 Interests
 entitle Motorola to appoint a majority of the Board of Directors in the
event of certain events of default. The Series B and Series C Class 2 
   Interests are redeemable at the option of the Parent at $.01 per interest
upon the later of (i) the termination or expiration of the Guarantee  
Agreement and (ii) the reimbursement of any payments made by Motorola 
pursuant to the Guarantee Agreement (See Note 5).                     

       The LLC Agreement provides that the Parent may merge or consolidate
with one or more limited liability companies, corporations, or similar
entities provided that the transaction is approved by the Board of    
Directors and Class 1 members holding not less than 66 2/3% of the    
   outstanding Class 1 Interests. In the event of a merger, members who hold
     interests and do not vote in favor of, or consent in writing to, the merger
are entitled to appraisal and repurchase rights of their interests as 
specified in the LLC Agreement.                                       

DIVIDEND AND LIQUIDATION RIGHTS                                                 

    Class 1 members are entitled to receive dividends, as and when declared by
the Board of Directors, in its discretion. Class 2 members are entitled to      
receive dividends, if any, in accordance with the terms of the relevant series  
of Class 2 Interests, as and when declared by the Board of Directors. The Class 
2 Interests rank senior to the Class 1 Interests as to dividends and            
distributions upon the liquidation, dissolution and winding-up of the Parent.   

     The LLC Agreement requires the Board of Directors, to the extent of legally
available funds, to declare and pay a dividend sufficient to assure that each   
non-U. S. Class 1 Member receives an amount at least equal to the amount of such
member's U. S. federal, state and local income tax liability resulting from     
allocations of the Parent's taxable income to such member. Parent's only current
source of funds is from dividend distributions from Iridium, and Iridium is     
required to declare and pay a dividend to the Parent in the same amount as      
required by the LLC Agreement. However, Iridium is restricted by the terms of   
certain of its debt obligations from declaring and paying dividends in excess of
those required to be made to the Parent.                                        

 The LLC Agreement contains significant restrictions on the ability of a
member to transfer any interests in the Parent, including but not limited to the
conditions that: (i) a majority of the Directors approve the transfer, and (ii) 
the transfer not result in any member beneficially owning, or having the right  
to beneficially own, more than 45% of the outstanding Class 1 Interests.        

EXCHANGE RIGHTS OF IRIDIUM LLC MEMBERS                                          

    Concurrent with the initial public offering, IWCL and Iridium LLC executed
an Interest Exchange Agreement that conditionally permits holders of Class 1    
Interests in Iridium LLC to exchange those interests, subject to the            
restrictions on transfer in the Iridium LLC Limited Liability Agreement, for    
shares of Class A Common Stock in IWCL at a ratio of one share of Class A Common
Stock for each Iridium LLC Class 1 Interest, subject to anti-dilution           
adjustments. Under the Interest Exchange Agreement no exchanges of Iridium LLC  
Class 1 Interests are permitted until 90 days after Iridium has achieved one    
full quarter of positive earnings before interest, taxes, depreciation and      
amortization. In addition, no exchange shall take place unless approved pursuant
to authorization of Directors representing at least 66 2/3% of the Iridium LLC  
Board of Directors.                                                             

GLOBAL OWNERSHIP PROGRAM                                                        

The Parent, in conjunction with IWCL, has commenced a Global Ownership
Program which is designed to offer up to an aggregate of 2,500,000 shares of    
IWCL's Class B Common Stock at a purchase price of                              
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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

3.  MEMBERS' EQUITY -- (CONTINUED)                                              
$13.33 per share to certain governmental telecommunication administrations and  
related entities as part of a comprehensive program to enhance market access,   
improve the competitive standing of the IRIDIUM System and achieve appropriate  
regulatory approvals. As of December 31, 1997, no shares had been issued under  
this program.                                                                   

LIMITATIONS ON LIABILITY                                                        

    Members are generally not liable for the debts, obligations or liabilities
of the Parent.                                                                  

RECENT EQUITY TRANSACTIONS                                                      

     On April 16, 1997, the LLC Agreement was amended to increase the authorized
number of Class 1 Interests from 3,000,000 to 225,000,000. On May 9, 1997, the  
Parent effected a 75 for 1 subdivision of its Class 1 Membership Interests      
whereby each existing Class 1 Interest was subdivided into 75 Class 1 Interests.
All interest and per interest data appearing in the consolidated financial      
statements and notes thereto have been retroactively adjusted for the           
subdivision.                                                                    

   On May 9, 1997, the Parent entered into a definitive agreement with South
Pacific Iridium Holdings Limited ("SPI"), an affiliate of P. T. Bakrie          
Communications Corporation, pursuant to which SPI acquired from Parent 7,500,000
Class 1 Interests at $13.33 per interest. The transaction closed on May 30, 1997
with 40% of the total purchase price paid on that date and the remainder due on 
or before May 1998. Through December 31, 1997, the Parent has received an       
aggregate of $59.2 million from SPI in satisfaction of the commitment.          

   On June 13,1997, IWCL, a wholly-owned subsidiary of the Parent as of that
date, consummated an initial public offering (the "Offering") of 12,000,000     
shares of its Class A Common Stock which resulted in proceeds of approximately  
$225 million to IWCL (expenses of the offering were paid by the Parent).        
Pursuant to the 1997 Subscription Agreement between the Parent and IWCL, such   
proceeds were used to purchase 12,000,000 Class 1 Interests in the Parent. Upon 
consummation of the Offering, all of the outstanding shares of IWCL held by the 
Parent were retired and canceled, and IWCL became a member of the Parent.       

4.  PROPERTY AND EQUIPMENT                                                      

Property and equipment at December 31, 1996 and 1997, consists of the 
following (in thousands):                                                       

                                                                [Download Table]

                                                          1996        1997    
                                                         -------   ---------- 
                                                                              
Space System in service................................  $    --   $1,624,120 
Office equipment and furniture.........................    3,113       13,920 
Trade show booth.......................................      826           -- 
Leasehold improvements.................................      405        8,424 
                                                         -------   ---------- 
                                                           4,344    1,646,464 
Less -- accumulated depreciation and amortization......   (2,279)    (120,138)
                                                         -------   ---------- 
Property and equipment, net............................  $ 2,065   $1,526,326 
                                                         =======   ========== 

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

5.  DEBT                                                                        

GUARANTEED BANK FACILITY                                                        

     On August 21, 1996, the Parent entered into a $750 million credit agreement
with a group of banks led by The Chase Manhattan Bank, NA and Barclays Bank,    
PLC. On the same date, the Parent entered into the Guarantee Agreement whereby  
Motorola agreed to guarantee the entire $750 million commitment amount (the     
"Motorola Guarantee"). In connection with the Asset Drop-Down Transaction, the  
Parent's obligations under the Guaranteed Bank Facility were assigned to        
Iridium. The Guaranteed Bank Facility provides that Iridium may elect to borrow 
amounts at the then current short-term Eurodollar rate plus  1/4% or at the then
current Base Rate (generally, the higher of the Federal Funds Rate as           
established by the Federal Reserve Bank of New York plus 0.50% or The Chase     
Manhattan Bank's prime commercial lending rate). Iridium also pays a commitment 
fee of 1/10 of 1% on any unused portion of the $750 million credit facility.    
Interest rates on the Guaranteed Bank Facility ranged from 5.63% to 8.50% during
1997 and from 5.75% to 5.94% during 1996. On July 21, 1997, the commitment of   
the bank lenders under the Guaranteed Bank Facility was permanently reduced from
$750 million to $655 million. On October 22, 1997, the commitment of the bank   
lenders under the Guaranteed Bank Facility was further permanently reduced to   
$450 million. Depending on market conditions, Iridium may make additional senior
note offerings in order to further reduce the Guaranteed Bank Facility. The     
Guaranteed Bank Facility matures on June 30, 1999.                              

    Under the Guarantee Agreement, the Parent is required to issue warrants to
Motorola to purchase up to 150,000 Class 1 Interests. As consideration for its  
guarantee, Motorola earns 82,500 warrants for each year the $750 million        
guarantee is outstanding. As a result of the permanent reductions in the        
Guaranteed Bank Facility, the maximum number of warrants Motorola may earn as   
compensation for their guarantee of that facility until maturity in June 1999 is
131,377 warrants to purchase approximately 9,853,275 Class 1 Interests. Warrants
earned are issued to Motorola on a quarterly basis. Each warrant entitles       
Motorola to purchase 75 Class 1 Interests at an exercise price of $.01 per      
interest, subject to anti-dilution adjustments. The warrants may be exercised   
after five years from date of issuance and expire ten years from date of        
issuance. Motorola earned 29,836 and 64,518 warrants to purchase Class 1        
Interests in accordance with the Guarantee Agreement during the years ended     
December 31, 1996 and 1997, respectively. The Parent recognized $25,719,000 and 
$55,615,000 as an expense to reflect the fair market value of the warrants      
earned by Motorola for the years ended December 31, 1996 and 1997, respectively.
At December 31, 1996 and 1997, $505,000,000 and $210,000,000, respectively, was 
outstanding under the Guaranteed Bank Facility.                                 

SENIOR SECURED BANK LINE OF CREDIT                                              

     Iridium has entered into a Credit Agreement with Chase Securities Inc., The
Chase Manhattan Bank, Barclays Bank PLC and Barclays Capital, the investment    
banking division of Barclays Bank PLC, and a syndicate of lenders (the "Secured 
Lenders") for a senior bank facility in a principal amount of $1 billion (the   
"Secured Bank Facility"), of which $250 million is not available for borrowings 
prior to the commercial activation date. The Secured Bank Facility is secured by
substantially all of Iridium's assets. The Secured Bank Facility is further     
secured by the Reserve Capital Call and all of the Parent's membership interests
in Iridium. The availability of the Secured Bank Facility is subject to         
significant conditions, including technical conditions relating to the IRIDIUM  
System, conditions relating to regulatory approvals and conditions relating to  
other financing sources. Borrowings under the Secured Bank Facility mature on   
September 30, 1998, subject to Iridium's right to extend such maturity until up 
to June 30, 1999 if it can demonstrate by July 1, 1998 that it has sufficient   
available or committed financing for its budgeted project costs through such    
extended maturity. At December 31, 1997, $350,000,000 was outstanding under the 
Secured Bank Facility.                                                          

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

5.  DEBT -- (CONTINUED)                                                         
NOTES PAYABLE                                                                   

On July 16, 1997, the Parent, IWCL and Iridium Capital Corporation    
completed an offering (the "High Yield Offering") of (i) 300,000 units, each    
consisting of $1,000 principal amount of 13% Senior Notes due 2005, Series A    
("Series A Notes"), and one IWCL Warrant representing the right to purchase 5.2 
shares of Class A Common Stock of IWCL, and (ii) $500 million aggregate         
principal amount of 14% Senior Notes due 2005, Series B ("Series B Notes").     
Concurrent with the Asset Drop-Down Transaction, the Parent's obligations under 
the Series A Notes and Series B Notes were assigned to Iridium. The Series A    
Notes and Series B Notes are guaranteed by Iridium Roaming LLC and Iridium IP   
LLC. The aggregate net proceeds received was approximately $746 million.        
Interest on the Series A Notes and Series B Notes is payable in cash            
semi-annually on January 15th and July 15th of each year, commencing on January 
15, 1998. The notes are redeemable at the option of Iridium, in whole or in     
part, at any time on or after July 15, 2002. The Series A and Series B Notes    
mature on July 15, 2005. The IWCL Warrants represent, in aggregate, the right to
purchase 1,560,000 shares of Class A Common Stock of IWCL. The exercise price of
each IWCL Warrant is $20.90 per share. The IWCL Warrants are exercisable at any 
time on or after one year from the date of the original issuance and expire on  
July 15, 2005. Concurrent with the issuance of IWCL Warrants in the High Yield  
Offering, the Parent issued to IWCL 1,560,000 LLC Interest Warrants, each       
exercisable for one Class 1 Interest at an exercise price of $20.90 per LLC     
Interest Warrant. IWCL and the Parent have agreed that one LLC Interest Warrant 
must be exercised upon the exercise of each IWCL Warrant. Approximately         
$17,113,000 of the proceeds of the High Yield Offering was allocated to the     
purchase price of the LLC Interest Warrants.                                    

   On October 17, 1997, the Parent and Iridium Capital Corporation completed
an offering of $300 million principal amount of 11 1/4% Senior Notes due 2005,  
Series C ("Series C Notes"). Concurrent with the Asset Drop-Down Transaction,   
the Parent's obligations under the Series C Notes were assigned to Iridium. The 
Series C Notes are guaranteed by Iridium Roaming LLC and Iridium IP LLC. The net
proceeds received were approximately $293 million. Interest on the Series C     
Notes is payable in cash semi-annually on January 15th and July 15th of each    
year, commencing on January 15, 1998. The Series C Notes are redeemable at the  
option of Iridium, in whole or in part, at any time on or after July 15, 2002.  
The Series C Notes mature on July 15, 2005.                                     

Notes payable, net of discounts, for the year ended December 31, 1997 
consists of the following (in thousands):                                       

                                                                [Download Table]

                                                                 1997   
                                                              ----------
                                                                        
13% Senior Notes due 2005, Series A.........................  $  276,439
14% Senior Notes due 2005, Series B.........................     477,849
11 1/4% Senior Notes due 2005, Series C.....................     300,000
                                                              ----------
                                                              $1,054,288
                                                              ==========

LONG-TERM DEBT DUE TO MEMBERS                                                   

During 1996, the Parent sold units to certain of its members and their
affiliates; each unit consisting of $1,000 principal amount at maturity 14 1/2% 
Senior Subordinated Discount Notes due 2006 (the "Notes") and one warrant to    
purchase 10.40775 Class 1 Interests, for aggregate proceeds of approximately    
$238,453,000. Concurrent with the Asset Drop-Down Transaction, the Parent's     
obligations under the Notes were assigned to Iridium. The Notes are unsecured   
and are subordinate to all senior debt of Iridium. The Notes fully accrete to an
aggregate face value of $480,150,000 on March 1, 2001 and mature on March 1,    
2006. Each Note accrues                                                         

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

5.  DEBT -- (CONTINUED)                                                         
cash interest at a rate of 14 1/2% per annum, payable semi-annually commencing  
on September 1, 2001. The Notes will be subject to redemption, at the option of 
Iridium, at any time on or after March 1, 2001. The warrants entitle the holder 
to purchase Class 1 Interests at an exercise price of $.01 per interest, are    
exercisable on March 1, 2001 and expire on March 1, 2006. The Parent recognized 
the estimated fair market value of these warrants of $31,761,000 as an addition 
to members' equity.                                                             

6.  INCOME TAXES                                                                

 From inception through July 29, 1996, Iridium, Inc. was subject to U.S.
federal and state and local income taxes directly, and accordingly, recognized  
provisions for income taxes for U.S. federal and for all state and local        
jurisdictions. Subsequent to the merger of Iridium, Inc. into a limited         
liability company, the Parent is no longer subject to U.S. federal income tax   
directly; however, the Parent is subject to District of Columbia franchise      
taxes.                                                                          

  The Parent's provision for income taxes for the years ended December 31,
1995, 1996, and 1997 consists of the following (in thousands):                  

                                                                [Download Table]

                                                       1995     1996     1997 
                                                      ------   ------   ------
                                                                              
Current                                                                       
-- Federal..........................................  $1,258   $3,435   $ --  
-- State and Local..................................     426    1,154     --  
Deferred                                                                      
-- Federal..........................................      --       --     --  
-- State and Local..................................      --       --     --  
                                                      ------   ------   ------
                                                      $1,684   $4,589   $ --  
                                                      ======   ======   ======

The primary reconciling differences between income tax expense and the
amount of tax benefit that would be expected to result by applying the Federal  
statutory rate of 35% to the loss before income taxes for the years ended       
December 31, 1995 and the period from January 1, 1996 to July 29, 1996 (the date
of the merger of Iridium, Inc. into Iridium) relate primarily to the            
capitalization for tax purposes of certain start-up expenditures, and state and 
local taxes. The capitalization of start-up expenditures resulted in Iridium,   
Inc.'s only significant deferred tax asset of $19,944,000 at December 31, 1995, 
for which a 100% valuation allowance was established. Subsequent to the date of 
the merger of Iridium, Inc. into the Parent, the Parent recognizes deferred     
taxes for those jurisdictions for which the Parent is taxed directly, resulting 
in a deferred tax asset for capitalized start-up expenditures of $4,774,000 and 
$34,599,000 at December 31, 1996 and 1997, respectively, for which a 100%       
valuation allowance has been established.                                       

     In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax 
asset will be realized. The ultimate realization of the deferred tax asset is   
dependent upon the generation of future taxable income during the periods in    
which temporary differences become deductible. Management considers scheduled   
reversals of deferred tax liabilities, projected future taxable income, and tax 
planning strategies that can be implemented in making this assessment.          

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

7.  TRANSACTIONS WITH MEMBERS                                                   

MANAGEMENT SERVICES AGREEMENT                                                   

In connection with the IWCL IPO, the Parent and IWCL entered into a   
Management Services Agreement. The Management Services Agreement was amended and
restated in connection with the Asset Drop-Down Transaction to add Iridium as a 
party.                                                                          

 Pursuant to the Management Services Agreement, the Parent has agreed to
supervise and manage the day-to-day activities of Iridium. Among other things,  
the Parent is responsible for administering the following functions of Iridium: 
contract administration (including the Space System Contract, the TNDC and the  
O&M Contract), treasury, accounting, legal, tax, insurance, licenses and permits
and securities law compliance. The Parent similarly has agreed to supervise and 
manage the day-to-day operations of IWCL. Among other things, the Parent is     
responsible for administering the following functions of IWCL: treasury,        
accounting, legal, tax, insurance, licenses and permits and securities law      
compliance. In addition, Parent has agreed to advance funds to IWCL in the event
that IWCL does not have sufficient funds to pay income or similar taxes. The    
Parent does not receive fees or reimbursement from IWCL for its services to IWCL
under the Management Services Agreement; however, the cost of such services     
provided to IWCL to date is not significant.                                    

In return for such services, Iridium has agreed to provide sufficient 
funds, on a cost reimbursable basis, to the Parent to enable the Parent to      
manage the business and operations of each of Iridium and IWCL, including       
payments of Parent's obligations to its employees, consultants and directors,   
and payments for Parent's office space and equipment, sales, general operating  
and administrative expenses, insurance and its obligations under certain        
contracts.                                                                      

SUPPORT AGREEMENT                                                               

Under a Support Agreement, Motorola provides certain general and      
administrative support to the Parent and its subsidiaries. On a cost            
reimbursable basis, Motorola has provided payroll processing and related        
benefits to the Parent employees, processed payments to certain contractors     
providing support to the Parent, and provided other administrative support. In  
connection with the Asset Drop-Down Transaction, the Parent assigned the Support
Agreement to Iridium. The amounts and nature of such costs for the years ended  
December 31, 1995, 1996 and 1997 consist of the following (in thousands):       

                                                                [Download Table]

                                                          1995   1996   1997
                                                          ----   ----   ----
                                                                            
Consulting..............................................  $603   $826   $643
Other...................................................     1     26      5
                                                          ----   ----   ----
                                                          $604   $852   $648
                                                          ====   ====   ====

  As of December 31, 1996, and 1997, the balance payable to Motorola under
the Support Agreement was approximately $563,000 and $0, respectively.          

SPACE SYSTEM CONTRACT                                                           

    The Parent entered into the Space System Contract with Motorola to design,
develop, produce and deliver the Space Segment component of the IRIDIUM System. 
In connection with the Asset Drop-Down Transaction, the Parent assigned the     
Space System Contract to Iridium. Under this fixed priced contract, Motorola    
will construct the space vehicles and place them into low-earth orbits for a    
contract price of $3.45 billion (subject to certain adjustments). The scheduled 
date of commencement of commercial operations is September 1998. For the years  
ended December 31, 1995, 1996 and 1997, $802 million,                           

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

7.  TRANSACTIONS WITH MEMBERS -- (CONTINUED)                                    
$836 million, and $577 million, respectively, was incurred under the Space      
System Contract. Such costs are capitalized as system under construction in the 
accompanying consolidated balance sheets and are transferred to property and    
equipment as the underlying assets are placed into service. As of December 31,  
1996 and 1997, the balance payable to Motorola under the Space System Contract  
was $100 million and $0, respectively.                                          

   The aggregate fixed and determinable portion of all remaining obligations
under the Space System Contract is $589 million expected to be payable in 1998. 

TERRESTRIAL NETWORK DEVELOPMENT CONTRACT                                        

The Parent entered into the Terrestrial Network Development Contract  
("TNDC") with Motorola for an original amount of $160 million. In connection    
with the Asset Drop-Down Transaction, the Parent assigned the TNDC to Iridium.  
Under the TNDC, Motorola is designing and developing the terrestrial gateway    
hardware and software. The payments under the original contract are tied to the 
completion of milestones specified in the contract. During 1996, the TNDC was   
amended to obligate Motorola to provide additional services and support under   
the TNDC in exchange for an additional $18.9 million. In lieu of a cash payment 
for the $18.9 million from Iridium, the Parent may, at its election, issue 5,545
warrants to purchase Class 1 Interests to Motorola. The warrants, if issued,    
have an exercise price of $.01 and may be exercised beginning March 1, 2001 and 
will expire on March 1, 2006. During 1997, the TNDC was further amended to      
obligate Motorola to provide additional services and support bringing the total 
contract price of the TNDC to $284 million. Certain of the Parent's members will
own the individual gateways and will have no obligation to Iridium or the Parent
for any of the amounts due to Motorola under the TNDC. For the years ended      
December 31, 1996 and 1997, Iridium incurred $64 million and $74 million,       
respectively, under the TNDC. Such costs are capitalized as system under        
construction in the accompanying consolidated balance sheets. As of December 31,
1996 and 1997, the balance payable to Motorola under the TNDC was $0 and $11    
million, respectively.                                                          

   The aggregate fixed and determinable portion of all remaining obligations
under the TNDC, assuming that all obligations are settled in cash, is as follows
(in thousands):                                                                 

                                                                [Download Table]

                       YEAR ENDING DECEMBER 31,                       
                       ------------------------                       
                                                                      
1998........................................................  $139,405
1999........................................................     6,000
                                                              --------
                                                              $145,405
                                                              --------

OPERATIONS AND MAINTENANCE CONTRACT                                             

 To provide for the operations and maintenance of the space segment upon
completion of the Space System Contract, the Parent entered into the Operations 
and Maintenance Contract ("O&M") with Motorola. In connection with the Asset    
Drop-Down Transaction, the Parent assigned the O&M contract to Iridium. This    
contract obligates Motorola for a period of five years after completion of the  
final milestone under the Space System Contract to operate the Space System, and
to exert its best efforts to monitor, upgrade and replace hardware and software 
of the space segment (including the individual space vehicles) at specified     
levels, in exchange for specified quarterly payments. Such payments are expected
to begin in 1998 and to aggregate approximately $2.88 billion. During 1996, a   
two-year option agreement was entered into for the extension of the O&M contract
with Motorola after the completion of the initial five-year term. If such option
is exercised, Iridium will be obligated to make quarterly payments expected to  
aggregate an additional $1.33 billion. Upon commencement of the O&M, Iridium    
will capitalize the portion of the costs incurred that                          

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

7.  TRANSACTIONS WITH MEMBERS -- (CONTINUED)                                    
pertain to hardware and software components of the space segment that extend its
useful life. The portion of the costs of the O&M associated with day-to-day     
operations will be expensed as incurred. Assuming that commercial operations    
commence in September 1998, the aggregate fixed and determinable portion of all 
obligations under the O&M is expected to be as follows (in thousands):          

                                                                [Download Table]

                                                                AMOUNT  
                                                              ----------
YEAR ENDING DECEMBER 31,                                                
------------------------------------------------------------            
                                                                        
1998........................................................  $  129,000
1999........................................................     537,000
2000........................................................     558,000
2001........................................................     581,000
2002........................................................     605,000
2003........................................................     472,000
                                                              ----------
                                                              $2,882,000
                                                              ==========

GATEWAY OWNERS INCENTIVES                                                       

The Parent has agreed to issue warrants to purchase 300,000 Class 1   
Interests to each gateway owner whose specified gateway activities are completed
on schedule, and warrants to purchase 7,500 Class 1 Interests for each $1       
million of cumulative IRIDIUM System service revenue generated within 15 months 
of commercial activation, but in no event will warrants to purchase more than an
aggregate of 9,165,000 Class 1 Interests be issued to all gateway owners. The   
warrants will have terms identical to those issued to Motorola under the        
Guarantee Agreement (see Note 5). IWCL and Iridium LLC have executed a Share    
Issuance Agreement which provides that all net proceeds from future primary     
offerings of securities by IWCL will be invested in Class 1 Interests in Iridium
LLC.                                                                            

8.  EMPLOYEE BENEFITS                                                           

     The Parent has adopted a comprehensive performance incentive and retirement
benefit package. The performance incentive program became effective in 1993,    
while the various retirement plans became effective on February 1, 1994.        

INCENTIVE PROGRAMS                                                              

  The Parent has established short and long-term incentive plans primarily
based on employee performance. Effective December 3l, 1995, the Parent          
terminated the long-term incentive plan. The remaining liability of the         
long-term incentive plan is approximately $2,426,000 and $1,738,000 as of       
December 31, 1996 and 1997, respectively, and is expected to be paid in 1999.   
Under these plans, the Parent incurred expenses of approximately $1,300,000,    
$1,252,000 and $3,412,000 for the years ended December 31, 1995, 1996, and 1997,
respectively.                                                                   

401(K) EMPLOYEE RETIREMENT SAVINGS PLAN                                         

The Parent adopted a 401(k) employee retirement savings plan in 1994  
covering all employees. The Parent makes matching contributions to this         
qualified plan on behalf of participating employees up to 3% of employees'      
compensation. Employee contributions to the plan vest immediately. The Parent's 
contributions vest ratably over a seven-year period, including service credit   
for any prior employment with Motorola. Under                                   

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

8.  EMPLOYEE BENEFITS -- (CONTINUED)                                            
this plan, the Parent has incurred approximately $161,000, $288,000 and $558,000
during the years ended December 31, 1995, 1996 and 1997, respectively.          

RETIREMENT PLANS                                                                

All employees of the Parent are covered by a non-contributory defined 
benefit retirement plan. Vesting in plan benefits generally occurs after five   
years. Benefits under the plan are based on years of credited service (including
any prior employment with Motorola), age at retirement and the average earnings 
over the last four years. The plan is funded annually in accordance with the    
Employee Retirement Income Security Act of 1974.                                

In early 1995, the Parent adopted a non-qualified defined benefit plan
covering employees earnings in excess of the maximum amounts which may be       
considered under the qualified plan, excluding those executives participating in
the supplemental executive plans described below, who also participate in the   
qualified defined benefit plan.                                                 

SUPPLEMENTAL EXECUTIVE PLANS                                                    

The Parent maintains a non-qualified benefit plan for selected senior 
officers. Vesting in these plans generally occurs upon the attainment of age 55 
with five years of service. Benefits under these plans are based on average     
annual compensation prior to retirement. The Parent has also agreed to provide  
for the payment of certain taxes associated with plan benefits. The supplemental
executive plans are not funded. The net periodic pension cost recognized under  
the plans was approximately $1,256,000, $1,925,000, and $2,420,000 for the years
ended December 31, 1995, 1996, and 1997, respectively. For the years ended      
December 31, 1996 and 1997, the amounts provided to cover taxes associated with 
the plan benefits were $736,000 and $639,000, respectively. In addition, the    
Parent recorded an additional minimum pension liability adjustment of $332,000  
and $90,000 for the years ended December 31, 1996 and 1997, respectively, for   
its non-qualified plans. The additional minimum pension liability is included as
a reduction to members' equity.                                                 

SUMMARY OF DEFINED BENEFIT PLANS                                                

   Pension cost for the qualified and non-qualified defined benefit plans in
total for the years ended December 31, 1995, 1996 and 1997, are as follows (in  
thousands):                                                                     

                                                        [Enlarge/Download Table]

                                 1995                   1996                   1997         
                         ---------------------  ---------------------  ---------------------
                                       NON-                   NON-                   NON-   
                         QUALIFIED   QUALIFIED  QUALIFIED   QUALIFIED  QUALIFIED   QUALIFIED
                         ---------   ---------  ---------   ---------  ---------   ---------
                                                                                            
Service cost............   $372        $377       $789       $  438     $1,292      $  512  
Interest cost on                                                                            
  projected benefit                                                                         
  obligation............     70         246        133          339        206         285  
Actual return on                                                                            
  assets................    (66)       --          (82)       --          (138)      --     
Amortization of                                                                             
  actuarial loss........   --          --         --             51      --              6  
Amortization of                                                                             
  transition                                                                                
  obligation............     19         238         19          238         19         238  
                           ----        ----       ----       ------     ------      ------  
Net periodic cost.......   $395        $861       $859       $1,066     $1,379      $1,041  
                           ====        ====       ====       ======     ======      ======  

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

8.  EMPLOYEE BENEFITS -- (CONTINUED)                                            
  The following table describes the funded status of the plans at December
31, 1996 and 1997 (in thousands). The actuarial calculations were determined by 
the Parent's consulting actuaries:                                              

                                                        [Enlarge/Download Table]

                                                  1996                   1997         
                                          ---------------------  ---------------------
                                                        NON-                   NON-   
                                          QUALIFIED   QUALIFIED  QUALIFIED   QUALIFIED
                                          ---------   ---------  ---------   ---------
                                                                                      
Accumulated present value of                                                          
  obligations:                                                                        
Accumulated benefit obligation,                                                       
  including vested benefits.............   $(1,828)    $(2,746)   $(3,334)    $(2,269)
                                           =======     =======    =======     ======= 
Projected benefit obligation for service                                              
  rendered to date......................   $(2,554)    $(5,179)   $(4,772)    $(5,039)
Plan assets at fair value...............     1,931          --      3,757          -- 
                                           -------     -------    -------     ------- 
Projected benefit obligation in excess                                                
  of plan assets........................      (623)     (5,179)      (965)     (5,039)
Unrecognized transition obligation......       320       2,360        302       2,123 
Unrecognized net (gain) loss............      (227)        609        118         870 
                                           -------     -------    -------     ------- 
Accrued pension cost....................      (530)     (2,210)      (545)     (2,046)
Adjustment required to recognize minimum                                              
  liability.............................        --        (733)        --        (643)
                                           -------     -------    -------     ------- 
Pension liability.......................   $  (530)    $(2,943)   $  (545)    $(2,689)
                                           =======     =======    =======     ======= 
Actuarial assumptions:                                                                
Discount rate...........................       7.5%        7.5%         7%          7%
Long-term rate of return................         8%          8%         8%          8%
Salary increases........................         5%        7.5%         5%        7.5%

OPTION PLAN OF IRIDIUM LLC                                                      

The Parent has established a plan under which executive officers and  
managers of the Parent are awarded options to purchase Class A Common Stock (the
"Option Plan") of IWCL. The Option Plan covers 2,625,000 shares of Class A      
Common Stock of IWCL. The Option Plan also permits the award of stock           
appreciation rights in connection with any grant of options. As of December 31, 
1997, options covering 2,004,556 shares of Class A Common Stock of IWCL had been
granted. As of that date, no stock appreciation awards had been granted. The    
right to exercise the options vests, pro rata, over a period of five years.     
Pursuant to the Share Issuance Agreement, IWCL has agreed that upon the exercise
of any options, it will issue to the Parent, for delivery to an exercising      
option holder, the number of shares of Class A Common Stock of IWCL covered by  
the exercised options and the Parent has agreed to simultaneously deliver to    
IWCL a like number of Class 1 Interests, subject to anti-dilution adjustments.  
The exercise price of the option will be paid to the Parent and will represent  
payment for the Class A Common Stock by the exercising option holder and for the
Class 1 Interests by IWCL.                                                      

 As of December 31, 1996 and 1997, 2,625,000 Class 1 Interests have been
reserved for issuance to IWCL in connection with the Option Plan. As permitted  
by Statement 123, the Parent applies the intrinsic value method in accounting   
for compensation cost under this plan. Accordingly, no compensation expense is  
recognized for options to acquire Class A Common Stock of IWCL granted at an    
exercise price equal to or exceeding the fair market value as of the date of    
grant. For the year ended December 31, 1997, the Parent recognized $152,000 in  
compensation expense for options to acquire Class A Common Stock of IWCL        

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

8.  EMPLOYEE BENEFITS -- (CONTINUED)                                            
granted at an exercise price that was below fair market value at the date of    
grant. Had compensation cost been determined consistent with the fair value     
method of Statement 123, the parent's net loss and net loss per Class 1 Interest
would have been increased to the pro forma amounts indicated below (in thousands
except per interest data) for the years ended December 31, 1996 and 1997:       

                                                                [Download Table]

                                                           1996       1997    
                                                         --------   --------- 
                                                                              
Net loss                                                                      
     As reported.......................................  $(73,598)  $(293,553)
     Pro forma.........................................   (74,172)   (296,132)
Net loss per Class 1 Interest                                                 
     As reported.......................................  $    .64   $    2.25 
     Pro forma.........................................       .65        2.27 

  During 1996 and 1997, the fair value of options granted are estimated on
the dates of the grants using the Black-Scholes Option Pricing Model with the   
following weighted-average assumptions: dividend yield of 0.0%, expected        
volatility of 45%, risk-free interest rates from 5.97% to 6.76%, and expected   
life of five years. The effects on compensation cost as determined under        
Statement 123 on net loss in 1996 and 1997 may not be representative of the     
effects on pro forma net income (loss) for future periods. The weighted-average 
contractual life for options outstanding at December 31, 1996 and 1997 was 9.39 
and 8.92 years, respectively.                                                   

  A summary of the Parent's stock option activity, and related information
for the years ended December 31, 1996 and 1997 follows:                         

                                                                [Download Table]

                                                   WEIGHTED             WEIGHTED
                                        INTERESTS  AVERAGE   INTERESTS  AVERAGE 
                                          UNDER    EXERCISE    UNDER    EXERCISE
                                         OPTION     PRICE     OPTION     PRICE  
                                        ---------  --------  ---------  --------
                                                                                
Outstanding -- beginning of year.......       --        --    729,750    $13.33 
  Granted..............................  729,750    $13.33   1,309,775    14.24 
  Exercised............................       --        --     (3,262)    13.33 
  Forfeited............................       --        --    (31,707)    13.33 
                                         -------    ------   --------    ------ 
Outstanding -- end of year.............  729,750    $13.33   2,004,556   $13.92 
                                         =======    ======   ========    ====== 
Options exercisable at end of year.....       --        --    397,145    $13.33 
Weighted-average fair value of options                                          
  during the year......................  $  6.50             $   8.35           

  The range of exercise prices of options outstanding at December 31, 1997
was $13.33 to $52.50.                                                           

9.  FAIR VALUE OF FINANCIAL INSTRUMENTS                                         

     The following table presents the carrying amounts and estimated fair values
of financial instruments as of December 31, 1996 and 1997 (in thousands):       

                                                                [Download Table]

                                          1996                    1997          
                                  ---------------------  -----------------------
                                  CARRYING                CARRYING              
                                   AMOUNT    FAIR VALUE    AMOUNT     FAIR VALUE
                                  --------   ----------  ----------   ----------
                                                                                
Bank facilities.................. $505,000    $505,000   $  560,000   $  560,000
Long-term debt due to Members....  230,904     230,904      273,302      273,302
Senior Notes, Series A, B, and                                                  
  C..............................       --          --    1,054,288    1,156,000

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

9.  FAIR VALUE OF FINANCIAL INSTRUMENTS -- (CONTINUED)                          
  The fair value of long-term debt is estimated based on the current rates
offered for similar debt. The carrying amounts of due from affiliates and       
accounts payable and accrued expenses approximate their fair market value as of 
December 31, 1996 and 1997 because of the relatively short duration of these    
assets.                                                                         

10.  OPERATING LEASE COMMITMENTS                                                

    The Parent leases its corporate headquarters office space and other office
space and equipment under non-cancelable operating lease agreements. The initial
lease term for the corporate headquarters office space is seven years. Future   
minimum payments under all operating lease arrangements are as follows (in      
thousands):                                                                     

                                                                [Download Table]

                  YEAR ENDING DECEMBER 31,                    AMOUNT 
                  ------------------------                    -------
                                                                     
1998........................................................  $ 8,417
1999........................................................    8,459
2000........................................................    8,440
2001........................................................    5,755
2002........................................................    4,951
2003 and beyond.............................................    7,985
                                                              -------
                                                              $44,007
                                                              =======

Rental expense under operating leases for the years ended December 31,
1995, 1996 and 1997 was approximately $1,025,000, $1,194,000, and $7,821,000,   
respectively.                                                                   

11.  QUARTERLY FINANCIAL INFORMATION (UNAUDITED)                                

In thousands, except member interest data:                                      

    The following is a summary of results of operations for each of the fiscal
quarters during 1995:                                                           

                                                                [Download Table]

                                         FIRST   SECOND    THIRD   FOURTH    TOTAL 
                                        QUARTER  QUARTER  QUARTER  QUARTER   YEAR  
                                        -------  -------  -------  -------  -------
                                                                                   
Operating expenses..................... $5,753   $6,083   $5,911   $9,440   $27,187
Net loss...............................  4,528    5,033    5,092    8,992    23,645
Net loss applicable to Class 1                                                     
  Interests............................  4,528    5,033    5,092    8,992    23,645
Net loss per Class 1 Interest..........   0.07     0.07     0.06     0.09      0.27

    The following is a summary of results of operations for each of the fiscal
quarters during 1996:                                                           

                                                                [Download Table]

                                      FIRST   SECOND    THIRD   FOURTH    TOTAL 
                                     QUARTER  QUARTER  QUARTER  QUARTER   YEAR  
                                     -------  -------  -------  -------  -------
                                                                                
Operating expenses.................. $8,410   $10,321  $19,621  $33,052  $71,404
Net loss............................  7,663     9,840   24,232   31,863   73,598
Net loss applicable to Class 1                                                  
  Interests.........................  7,663    10,679   25,812   33,096   77,250
Net loss per Class 1 Interest.......   0.07      0.09     0.21     0.28     0.64

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

11.  QUARTERLY FINANCIAL INFORMATION (UNAUDITED) -- (CONTINUED)                 
    The following is a summary of results of operations for each of the fiscal
quarters during 1997:                                                           

                                                                [Download Table]

                                   FIRST   SECOND    THIRD    FOURTH    TOTAL  
                                  QUARTER  QUARTER  QUARTER  QUARTER     YEAR  
                                  -------  -------  -------  --------  --------
                                                                               
Operating expenses............... $36,054  $48,414  $84,997  $127,133  $296,598
Net loss.........................  35,928   47,926   84,095   125,604   293,553
Net loss applicable to Class 1                                                 
  Interests......................  37,602   49,242   85,412   127,000   299,256
Net loss per Class 1 Interest....    0.31     0.40     0.60      0.90      2.25

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

CONDENSED CONSOLIDATED BALANCE SHEETS 
(IN THOUSANDS EXCEPT MEMBER INTEREST DATA)

                                                        [Enlarge/Download Table]

                                                              DECEMBER 31,  SEPTEMBER 30,
                                                                  1997          1998     
                                                              ------------  -------------
                                                                             (UNAUDITED) 
                                                                                         
                                          ASSETS                                         
Current assets:                                                                          
     Cash and cash equivalents..............................   $    9,040    $    65,207 
     Restricted cash........................................      350,220             -- 
     Due from affiliates....................................       13,604         20,667 
     Prepaid expenses and other current assets..............        6,612         18,407 
                                                               ----------    ----------- 
          Total current assets..............................   $  379,476    $   104,281 
Property and equipment, net.................................    1,526,326      2,865,070 
System under construction...................................    1,625,054        523,739 
Other assets................................................      114,831         71,512 
                                                               ----------    ----------- 
          Total assets......................................   $3,645,687    $ 3,564,602 
                                                               ==========    =========== 
                             LIABILITIES AND MEMBERS' EQUITY                             
Current liabilities:                                                                     
     Accounts payable and accrued expenses..................   $  106,794    $   101,036 
     Accounts payable to Member.............................       10,601        221,765 
     Bank facilities, current portion.......................      350,000        681,500 
                                                               ----------    ----------- 
          Total current liabilities.........................   $  467,395    $ 1,004,301 
Bank facilities, net of current portion.....................      210,000             -- 
Long-term debt due to Members...............................      273,302        310,149 
Notes payable, $1,450,000 principal amount as of September                               
  30, 1998..................................................    1,054,288      1,404,742 
Other liabilities...........................................        6,065         11,169 
                                                               ----------    ----------- 
          Total liabilities.................................   $2,011,050    $ 2,730,361 
                                                               ----------    ----------- 
Commitments and Contingencies                                                            
Members' equity:                                                                         
     Class 2 Interests, authorized 50,000 interests for                                  
      Series M; authorized an aggregate of 300,000 interests                             
      for Series A, Series B and Series C:                                               
          Series M, convertible, no interests issued and                                 
            outstanding.....................................           --             -- 
          Series A, redeemable, convertible, 39,907 and                                  
            $44,406 interest issued and outstanding;                                     
            liquidation value of $39,907 and $44,406........       39,907         44,406 
          Series B, redeemable, 1 interest and                                           
            outstanding.....................................           --             -- 
          Series C, redeemable, 79 interests issued and                                  
            outstanding.....................................           --             -- 
     Class 1 Interests, authorized 225,000,000 interests,                                
      141,222,442 and 141,415,495 interest issued and                                    
      outstanding...........................................    2,024,220      2,031,835 
     Deferred Class 1 Interest compensation.................       (1,454)        (1,242)
     Adjustment for minimum pension liability...............         (643)          (643)
     Deficit accumulated during the development stage.......     (427,393)    (1,240,115)
                                                               ----------    ----------- 
          Total members' equity.............................    1,634,637        834,241 
                                                               ----------    ----------- 
          Total liabilities and members' equity.............   $3,645,687    $ 3,564,602 
                                                               ==========    =========== 

The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF LOSS 
(IN THOUSANDS EXCEPT MEMBER INTEREST DATA)

                                                        [Enlarge/Download Table]

                                                                                       PERIOD FROM 
                                                                                      JUNE 14, 1991
                                   THREE MONTHS ENDED          NINE MONTHS ENDED       (INCEPTION) 
                                      SEPTEMBER 30,              SEPTEMBER 30,           THROUGH   
                                -------------------------  -------------------------  SEPTEMBER 30,
                                   1997          1998         1997          1998          1998     
                                -----------   -----------  -----------   -----------  -------------
                                                                                                   
OPERATING EXPENSES                                                                                 
Sales, general and                                                                                 
  administrative..............  $    39,061   $   129,099  $   122,926   $   261,261   $  574,652  
Depreciation and                                                                                   
  amortization................       45,936       152,627       46,539       378,276      499,705  
                                -----------   -----------  -----------   -----------   ----------  
     Total operating                                                                               
       expenses...............       84,997       281,726      169,465       639,537    1,074,267  
OTHER INCOME                                                                                       
Interest expense (income),                                                                         
  net.........................         (902)       82,655       (1,516)      173,185      157,877  
                                -----------   -----------  -----------   -----------   ----------  
Loss before provision for                                                                          
  income taxes................       84,095       364,381      167,949       812,722    1,232,144  
Provision for income taxes....           --            --           --            --        7,971  
                                -----------   -----------  -----------   -----------   ----------  
Net loss......................  $    84,095   $   364,381  $   167,949   $   812,722   $1,240,115  
                                ===========   ===========  ===========   ===========   ==========  
Preferred dividend                                                                                 
  requirement.................        1,317         1,553        4,924         4,499               
Net Loss applicable to Class 1                                                                     
  Interests...................  $    85,412   $   365,934  $   172,873   $   817,221               
                                ===========   ===========  ===========   ===========               
Net loss per Class 1                                                                               
Interest -- basic and                                                                              
  diluted.....................  $      0.60   $      2.59  $      1.33   $      5.78               
                                ===========   ===========  ===========   ===========               
Weighted average interest used                                                                     
  in computing net loss per                                                                        
  Class 1 Interest -- basic                                                                        
  and diluted.................  141,219,180   141,324,251  130,065,304   141,289,887               
                                ===========   ===========  ===========   ===========               

The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                                      PERIOD FROM 
                                                                                     JUNE 14, 1991
                                                               NINE MONTHS ENDED      (INCEPTION) 
                                                                 SEPTEMBER 30,          THROUGH   
                                                             ---------------------   SEPTEMBER 30,
                                                               1997        1998          1998     
                                                             ---------   ---------   -------------
                                                                                                  
CASH FLOWS FROM OPERATING ACTIVITIES:                                                             
  Net loss.................................................. $(167,949)   (812,722)   $(1,240,115)
Adjustments to reconcile net loss to net cash used in                                             
  operating activities -                                                                          
    Depreciation and amortization...........................    46,539     378,276        499,705 
    Interest converted to additional debt...................        --      52,570         52,570 
    Expense recognized for warrants issued in connection                                          
       with debt guarantee..................................    48,631       8,344         89,678 
    Employee Class 1 Interest compensation..................        38         212            364 
    Loss on disposal of assets..............................        --          --             87 
    Changes in assets and liabilities:                                                            
       Increase in prepaid expenses and other current                                             
         assets.............................................    (7,699)     (4,266)       (10,878)
       Increase in due from affiliates......................   (10,142)     (7,063)       (20,667)
       Decrease (Increase) in other assets..................   (36,825)       (582)       (19,241)
       (Decrease) Increase in accounts payable and accrued                                        
         expenses...........................................    33,232       5,278         54,072 
       Increase (Decrease) in other liabilities.............      (676)      5,104         11,089 
                                                             ---------   ---------    ----------- 
         Net cash used in operating activities..............   (94,851)   (374,849)      (583,336)
                                                             ---------   ---------    ----------- 
CASH FLOWS FROM INVESTING ACTIVITIES:                                                             
  Purchases of property and equipment.......................    (4,189)    (15,954)       (39,209)
  Additions to system under construction....................  (614,045)   (365,386)    (3,456,821)
                                                             ---------   ---------    ----------- 
         Net cash used in investing activities..............  (618,234)   (381,340)    (3,496,030)
                                                             ---------   ---------    ----------- 
CASH FLOWS FROM FINANCING ACTIVITIES:                                                             
  Net proceeds from issuance of Class 1 and Class 2                                               
    Interests...............................................   283,666       3,346      1,935,665 
  Net proceeds from issuance of senior notes and warrants...   745,939     341,742      1,619,384 
  Borrowings under guaranteed bank line of credit...........   410,000     346,500      1,506,500 
  Payments under guaranteed bank line of credit.............  (680,000)   (285,000)    (1,235,000)
  Borrowings under senior secured line of credit............        --      60,000        410,000 
  Decrease in restricted cash...............................        --     350,220             -- 
  Deferred financing costs..................................   (39,220)     (4,452)       (91,976)
                                                             ---------   ---------    ----------- 
         Net cash provided by financing activities..........   720,385     812,356      4,144,573 
                                                             ---------   ---------    ----------- 
Increase in cash and cash equivalents.......................     7,300      56,167         65,207 
CASH AND CASH EQUIVALENTS, beginning of period..............     1,889       9,040             -- 
                                                             ---------   ---------    ----------- 
CASH AND CASH EQUIVALENTS, end of period.................... $   9,189   $  65,207    $    65,207 
                                                             =========   =========    =========== 

The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.  ORGANIZATION AND BUSINESS                                                   

    Iridium LLC (the "Parent") and its subsidiaries are devoting substantially
all of their efforts to establishing and commercializing a global wireless      
system -- the Iridium(R) Communications System (the "Iridium System") -- that   
will enable subscribers to send and receive telephone calls virtually anywhere  
in the world -- all with one phone, one phone number and one customer bill.     

     Iridium, Inc. was incorporated on June 14, 1991.  Iridium, Inc. operated as
a wholly-owned subsidiary of Motorola, Inc. ("Motorola") until July 29, 1993. On
July 29, 1993, Iridium, Inc. closed on, and had its first capital draw under, a 
private placement of shares of Common Stock, subscribed to by U.S. and foreign  
investors. As a result of three private placements of equity, five supplemental 
private placements with certain additional equity investors and proceeds        
received from the initial public offering of common stock of Iridium World      
Communications Ltd. ("IWCL"), Motorola's direct and indirect Class 1 Membership 
Interest in the Parent has been reduced to approximately 19.3% as of September  
30, 1998, before considering unexercised warrants held by Motorola.             

 On July 29, 1996, the Parent was formed as a limited liability company,
under the terms and conditions of the limited liability agreement ("LLC         
Agreement"), pursuant to the provisions of the Delaware limited liability       
company act. Also on July 29, 1996, Iridium, Inc. was merged with and into the  
Parent, with the Parent as the surviving entity. Concurrent with the merger, all
shares of Common Stock of Iridium, Inc. were exchanged for Class 1 Membership   
Interests in the Parent ("Class 1 Interests").                                  

On December 18, 1997, the Parent entered into an asset drop-down      
transaction ("the Asset Drop-Down Transaction") with Iridium Operating LLC      
("Iridium"), a newly formed wholly-owned subsidiary of the Parent. Pursuant to  
the Asset Drop-Down Transaction, substantially all of the assets and liabilities
of the Parent were transferred to Iridium, including, without limitation, all   
liabilities with respect to the outstanding 13% Senior Notes due 2005, Series A 
and 14% Senior Notes due 2005, Series B and the 11/4% Senior Notes due 2005,    
Series C (collectively, the "Senior Notes"). Pursuant to the indentures relating
to the Senior Notes, Iridium has been substituted for the Parent, and the Parent
has been released from all obligations under the indentures relating to the     
Senior Notes. All assets and liabilities were transferred to Iridium at the     
Parent's carrying value. Accordingly, unless otherwise specified, references    
within these notes to Iridium that relate to any action prior to the date of the
Asset Drop-Down Transaction should be construed as references to Parent, as     
predecessor of Iridium. As a result of the Asset Drop-Down Transaction, the     
Parent's only significant asset is its investment in Iridium.                   

2.  BASIS OF PRESENTATION                                                       

In the opinion of management, the accompanying unaudited condensed    
consolidated financial statements reflect all adjustments, consisting of only   
normal recurring accruals, necessary for a fair presentation of the financial   
position of the Parent and subsidiaries as of September 30, 1998, and the       
results of their operations for the three and nine month periods ended September
30, 1998 and 1997, and the period from June 14, 1991 (inception) through        
September 30, 1998, and their cash flows for the nine month periods ended       
September 30, 1998 and 1997, and the period from June 14, 1991 (inception)      
through September 30, 1998. These condensed consolidated financial statements   
are unaudited, and do not include all related footnote disclosures. The results 
of operations for the three and nine months ended September 30, 1998 are not    
necessarily indicative of the results of operations expected in the future,     
although the Parent continued to be a development stage limited liability       
company until the commencement of commercial operations and anticipates a net   
loss for the year. These financial statements should be read in conjunction with
the Parent's audited consolidated financial statements and footnotes thereto    
included in the Annual Report on Form 10-K.                                     

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

3.  MEMBERS' EQUITY                                                             

The Parent declared approximately $1,553,000 and $1,317,000 of in-kind
dividends to holders of Series A Class 2 Membership interests during the three  
month periods ended September 30, 1998 and 1997, respectively, and $4,499,000   
and $4,924,000 for the nine month periods ended September 30, 1998 and 1997,    
respectively.                                                                   

NOMAD PROGRAM                                                                   

   The Parent, in conjunction with IWCL, has commenced a NOMAD Program which
is designed to offer up to an aggregate of 2,500,000 shares of IWCL's Class B   
Common Stock at a purchase price of $13.33 per share to certain governmental    
telecommunication administrations and related entities as part of a             
comprehensive program to enhance market access, improve the competitive standing
of the Iridium System and achieve appropriate regulatory approvals. As of       
September 30, 1998, 20,625 shares of Class B Common Stock had been issued under 
this program resulting in net proceeds of $275,000 to IWCL. In accordance with  
the Share Issuance Agreement, IWCL invested the net proceeds in Parent in       
exchange for 20,625 Class 1 Interests. The shares were recognized at a fair     
value of $33.88 per share (the trading price of IWCL's Class A Common Stock at  
the date of issue) with the difference between the purchase price and fair value
capitalized as license costs. During the nine months ended September 30, 1998,  
$424,000 was capitalized to license costs under this program. No amounts were   
capitalized during the nine months ended September 30, 1997.                    

4.  SUPPLEMENTAL CASH FLOW INFORMATION                                          

    During the nine months ended September 30, 1998 and 1997, $247,438,000 and
$80,970,000, respectively, of interest costs were incurred. Interest expensed   
for the nine months ended September 30, 1998 was $168,169,000 with the remaining
interest capitalized to the system under construction. For the nine months ended
September 30, 1997, all interest expense was capitalized to the system under    
construction. Interest paid was $181,422,000 and $24,344,000 during the nine    
months ended September 30, 1998 and 1997, respectively.                         

5.  TRANSACTIONS WITH MEMBERS                                                   

GUARANTEED BANK FACILITY                                                        

In accordance with the Second Amended and Restated Agreement Regarding
Guarantee, dated May 11, 1998, among the Parent, Iridium and Motorola, pursuant 
to which Motorola guaranteed Iridium's obligations under the Guaranteed Bank    
Facility, an additional 9,209 and 56,416 warrants to purchase 690,675 and       
4,231,200 Class 1 Interests, respectively, were earned by Motorola during the   
nine months ended September 30, 1998 and 1997, respectively. The Parent         
recognized $8,344,000 and $48,631,000 as expense during the nine months ended   
September 30, 1998 and 1997, respectively, in connection with the warrants      
earned by Motorola. Warrant expense for the three months ended September 30,    
1998 and 1997 was $459,000 and $13,364,000, respectively.                       

The Second Amended and Restated Agreement Regarding Guarantee provides
that, when the Guaranteed Bank Facility and Motorola's Guarantee have been      
permanently reduced to $275 million or less, the Parent and Iridium have the    
option to compensate Motorola for its Guarantee by having the Parent continue to
pay warrant compensation at the existing rate or (i) having Iridium pay interest
on the guaranteed amount at a rate based on the difference between the interest 
rate on the Guaranteed Bank Facility and the interest rate on the Series A and  
Series B Senior Notes plus (ii) having the Parent pay substantially reduced     
warrant compensation based on the number of warrants issued in connection with  
the offering of the Series A Notes                                              

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

5.  TRANSACTIONS WITH MEMBERS -- (CONTINUED)                                    
(the "High Yield Compensation"). Interest incurred on the guaranteed amount was 
$5,094,000 and $7,927,000 for the three and nine months ended September 30,     
1998, respectively.                                                             

 On May 13, 1998, Iridium permanently reduced the commitment of the bank
lenders under the Guaranteed Bank Facility from $450 million to $275 million. As
a result of the reduction, the maximum number of warrants Motorola is expected  
to earn as compensation for their guarantee of that facility from inception     
until the expected maturity in June 1999 is 104,229 warrants to purchase        
approximately 7,817,000 Class 1 Interests (assuming Iridium and Parent pay High 
Yield Compensation, including interest on the guaranteed amount, through        
maturity).                                                                      

   Currently, Iridium and the Parent have elected to pay Motorola High Yield
Compensation. While the Parent and Iridium expect that electing to pay High     
Yield Compensation will reduce the effective cost of the Motorola Guarantee,    
there can be no assurance that such expectation will prove correct or that the  
Motorola Guarantee will not exceed $275 million.                                

STANDBY PURCHASE AGREEMENT                                                      

   In an effort to ensure that sufficient quantities of hand-held phones and
pagers are available for distribution in advance of the commencement of         
commercial operations, Parent has signed with Motorola and intends to enter into
with Kyocera Corporation, standby commitments to purchase an aggregate of up to 
$400 million in subscriber equipment. The Motorola commitment would be triggered
on or after January 1, 1999, but only to the extent such subscriber equipment is
not purchased by and shipped to gateway operators or service providers prior to 
January 1, 1999, and the Kyocera commitment is expected to contain similar      
provisions triggered on or after February 8, 1999.                              

6.  LONG TERM DEBT                                                              

On May 13, 1998, Iridium and Iridium Capital Corporation completed an 
offering of $350 million principal amount of 10 7/8% Senior Notes due 2005,     
Series D ("Series D Notes"). The Series D Notes are guaranteed by Iridium       
Roaming LLC Iridium IP LLC and Iridium Facilities Corporation. The Series D     
Notes have substantially the same terms as the Senior Notes other than interest 
rate and issue date. The net proceeds received were approximately $342 million. 
Interest on the Series D Notes is payable in cash semi-annually on January 15   
and July 15 of each year, commencing on July 15, 1998. The Series D Notes are   
redeemable at the option of Iridium, in whole or in part, at any time on or     
after July 15, 2002. The Series D Notes mature on July 15, 2005.                

7.  EARNINGS PER SHARE                                                          

  Basic earnings (loss) per Class 1 Interest is calculated by dividing net
income (loss), after considering required dividends on Class 2 Interests, by the
weighted average number of Class 1 Interests outstanding during the period.     
Diluted earnings (loss) per share is calculated by dividing net income (loss),  
after considering required dividends on Class 2 Interests, by the weighted      
average number of Class 1 Interests and, to the extend dilutive, other          
potentially dilutive securities outstanding during the period. Potentially      
dilutive securities are comprised of options, warrants, and convertible Class 2 
Interests. Due to the losses incurred during the three and nine months ended    
September 30, 1998, the impact of other potentially dilutive securities is      
anti-dilutive and is not included in the diluted earnings (loss) per Class 1    
Interest calculations.                                                          

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IRIDIUM LLC 
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY) 
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

8.  COMPREHENSIVE INCOME                                                        

     In June 1997, the Financial Accounting Standards Board issued Statement No.
130, Reporting Comprehensive Income. Accumulated other comprehensive income     
(loss) consists entirely of the minimum pension liability. The new disclosure   
requirements with respect to comprehensive income are as follows:               

                                                                [Download Table]

                                       THREE MONTHS            NINE MONTHS      
                                   ENDED SEPTEMBER 30,     ENDED SEPTEMBER 30,  
                                   --------------------   --------------------- 
                                     1997       1998        1997        1998    
                                   --------   ---------   ---------   --------- 
                                                                                
Comprehensive income (loss):                                                    
Net loss, as reported............  $(84,095)  $(364,381)  $(167,949)  $(812,722)
Other comprehensive income                                                      
  (loss).........................        --          --          --          -- 
                                   --------   ---------   ---------   --------- 
          Total..................  $(84,095)  $(364,381)  $(167,949)  $(812,722)
                                   ========   =========   =========   ========= 
Accumulated other comprehensive                                                 
  income (loss):                                                                
Beginning of period..............  $   (733)  $    (643)  $    (733)  $    (643)
                                   ========   =========   =========   ========= 
End of period....................  $   (733)  $    (643)  $    (733)  $    (643)
                                   ========   =========   =========   ========= 

9.  IRIDIUM SUBSIDIARIES                                                        

Iridium Promotions, Inc. ("Promotions"), a Delaware Corporation and a 
wholly-owned subsidiary of the Parent, was formed on September 11, 1998. Iridium
Geolink LLC ("Geolink"), a Delaware limited liability company and a wholly-owned
subsidiary of the Parent, was formed on August 25, 1998. Promotions and Geolink 
have no assets or liabilities and have not engaged in any business activities.  

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[PHOTO-PICTURE OF BRIEFCASE CONTAINING IRIDIUM PHONE BY MOTOROLA; 
FOREGROUND INCLUDES IRIDIUM PAGER BY MOTOROLA AND VARIOUS ITEMS 
USUALLY FOUND IN A BRIEFCASE] 

THE GLOBAL BRIEFCASE                                                            

It used to be that when you left the office on a                                
long-distance business trip, you said goodbye to                                
productivity and connectivity. Now the business                                 
traveler's mobile productivity has been enhanced by                             
a new level of connectivity. The Iridium global                                 
mobile-phone, global pager, and world calling card                              
now enable you to stay in touch virtually anywhere                              
on Earth.                                                                       

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--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
7,500,000 SHARES

[IRIDIUM LOGO]

IRIDIUM WORLD COMMUNICATIONS LTD. 

CLASS A COMMON STOCK

----------------------- 
PROSPECTUS
----------------------- 

MERRILL LYNCH & CO. 
GOLDMAN, SACHS & CO.
NATIONSBANC MONTGOMERY SECURITIES LLC 
SALOMON SMITH BARNEY
SOUNDVIEW TECHNOLOGY GROUP

JANUARY 21, 1999

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘424B4’ Filing		Date		First		Last			Other Filings
		3/1/06		138		141
		7/15/05		11		153
		3/1/05		134
		1/1/05		86
		7/31/03		82
		7/15/02		138		153
		12/31/01		10		51
		9/1/01		139
		3/1/01		54		141
		2/28/01		134
		12/31/00		34		100
		12/29/00		10		52
		6/30/00		87
		12/31/99		49		99
		10/1/99		11		100
		9/30/99		12		51
		9/1/99		49		51
		6/30/99		18		137			NT 10-Q
		5/18/99		75					DEF 14A
		3/31/99		17		51			10-K405,  10-Q
		2/8/99		153
		1/27/99		1					8-K
Filed on:		1/25/99							8-K
		1/22/99		44		50
		1/21/99		1		156
		1/1/99		38		153
		12/31/98		5		133			10-K405,  424B5
		12/30/98		14		48			8-K
		12/23/98		10		76
		12/22/98		6		58			8-K
		12/15/98		5		101
		11/15/98		5		57
		11/4/98		14					8-K
		11/1/98		5		57
		9/30/98		14		153			10-Q
		9/11/98		87		154
		8/25/98		154
		7/15/98		153					S-3/A
		7/1/98		137
		6/30/98		14					10-Q
		5/13/98		153
		5/11/98		152
		3/31/98		14					10-Q
		1/16/98		111		125
		1/15/98		138
		12/31/97		14		146			10-K405
		12/18/97		130		151
		10/22/97		137
		10/17/97		138					S-8
		9/30/97		53		152			10-Q
		8/1/97		76
		7/21/97		137					8-K,  S-4
		7/16/97		117		138
		7/13/97		123
		7/1/97		88
		6/13/97		94		123
		6/9/97		40					POS462B,  S-1MEF
		6/2/97		14					8-A12G
		5/30/97		136
		5/9/97		136					S-1/A
		5/5/97		84
		4/30/97		77
		4/16/97		136
		1/2/97		76
		1/1/97		77
		12/31/96		47		146
		12/12/96		47		123
		8/21/96		137
		7/29/96		130		151
		1/1/96		139
		12/31/95		110		146
		1/31/95		130
		12/31/94		128
		10/25/94		87
		2/1/94		142
		12/31/93		128
		7/29/93		10		151
		7/28/93		46
		1/1/93		46
		12/31/92		128
		1/31/92		76
									List all Filings