The Company is exploring strategic alternatives regarding the future of its GEO communications satellite line of business and has continuously implemented actions to right size the business to maximize near-term profitability. Mature demand for satellite-based video distribution, falling satellite-based broadband pricing, and alternative LEO and MEO technologies have negatively impacted the Company's GEO communications satellite line of business. The Company has discussed these market factors and has provided updated industry outlooks in each of the Company's recent quarterly filings, as well as in its quarterly investor calls and its Investor Days in March 2018. The SSL acquisition, and the reorganization as part of its U.S. Access Plan, has also allowed the Company to begin to compete on and win attractive U.S. government space systems and commercial LEO satellite contracts that are driving growth and creating value for shareholders.
The Company's facilities in Palo Alto, CA are significantly over-sized for today's market and under-absorbed overhead costs have contributed to reduced profitability and negative cash flows in the Space Systems segment. The strategic alternatives under consideration include partnering with another satellite manufacturer to gain scale benefits, the sale of the GEO satellite line of business, or the exit of the GEO satellite line of business following completion of existing contracts in backlog and sale of its facilities. The monetization of the Company's real estate assets in Palo Alto are estimated to be in a range of $150 to $200 million. LEO small satellite production for commercial communications, remote-sensing and U.S. Government customers is expected to be relocated to the Company's facility in San Jose, CA. A decision on the future strategic direction of the GEO communications satellite business is expected to be made by the end of 2018. As a result, this line of business may be classified as a discontinued operation.
The Company expects that under certain of these scenarios, non-cash write-downs or an impairment of assets could occur as a result of lower future revenue expectations, industry outlook and overall valuation of the GEO communications satellite line of business. The Company routinely evaluates assets for impairment in the fourth quarter of each year, and in interim quarters when there is an indicator of possible impairment. As part of its preparation of its financial statements for the third quarter of 2018, the Company will, consistent with IFRS rules, estimate the recoverable amount of the GEO communications satellite line of business assets, including goodwill, other intangible assets, capitalized development, and inventory, and will recognize an impairment or non-cash write-down if the recoverable value of the assets is determined to be less than their carrying value. We believe that, given the continued decline in the GEO communications satellite business, it is possible that an impairment or write-down will be recognized in the third quarter of 2018. However, our analysis is not complete and, accordingly, we are unable to estimate the amount of the possible impairment or write-down at this time.
In addition, cash costs for certain employee severance, pension and other liabilities could be incurred. We have already implemented a series of ongoing actions to right size the business in the near term to conserve cash. During the six months ended June 30, 2018, the Company incurred employee severance and enterprise improvement costs of $12.6 million.
The Company expects to generate adequate operating cash flows to fund internal growth, make necessary capital expenditures, and to pay down debt. The Company affirmed its guidance for expected 2018 operating cash flows in a range of $300 to $400 million during its second quarter investor call. Actions are underway to achieve this guidance, including improved management of working capital and securitization of additional orbital receivables. The Company also affirmed guidance for expected 2018 capital expenditures in a range of $300 to $350 million. Expenditures are being tightly managed based on program priority and ROI. Included in capital expenditures for 2018 to 2020 is the construction of the WorldView Legion satellite constellation in the expected amount of $600 million to replace WorldView 1 and WorldView 2 as they reach end of life. WorldView Legion construction and launch costs are significantly lower than the satellites they are replacing, along with higher collection capacity, resolution and revisit capabilities. The Company also continues to pursue potential project financing as an alternative to funding satellite construction on a wholly-internal basis. Capital expenditures are expected to be reduced significantly in the 2021 to 2023 timeframe, prior to the next satellite construction program, such that free cash flows available to pay down debt will be significantly increased.
The Company has ample current liquidity. The Company has no material debt repayment requirements until 2020 and has access to an undrawn bank revolver line of credit of $600 million, as of June 30, 2018, that could be used to offset any short-term cash flow interruptions. Interest rate swaps are in place for $1 billion of long-term debt to provide more consistent interest expenses during a time of rising interest rates. Each quarter the Board of Directors reviews the Company's dividend policy in light of the Company's other financial commitments before declaring the dividend and will continue to do so going forward.
The Company expects future adoption of U.S. GAAP will have no material impact on the calculation of our bank covenants. The hedge fund's report miscalculated potential debt leverage and misled investors. The Company's credit agreement and bank covenants currently use, and are allowed to continue to use, IFRS as the accounting standard for calculation of adjusted EBITDA and leverage. The Company's calculated leverage under its credit agreement was 4.1x at the end of the second quarter of 2018, well below the current bank covenant of 5.5x. The Company expects its flexibility under the covenants to be further enhanced as a result of the aforementioned actions to increase free cash flows.
The Company adheres to established accounting policies under IFRS. The Company's financial statements are audited by its independent external auditor, KPMG LLP, who issued an unqualified opinion for the Company's accounts for the year ending December 31, 2017. Additionally, on a quarterly basis, KPMG LLP performs an interim review in accordance with professional standards and communicates to the audit committee of the Board of Directors following its review of the accounts and accounting judgments.
In addition to results reported in accordance with IFRS, the Company defines and uses certain non-IFRS financial measures as supplemental indicators of its financial and operating performance. These non-IFRS financial measures include adjusted earnings, adjusted earnings per share and adjusted EBITDA. The Company believes these supplementary financial measures reflect the Company's ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in its business. On an ongoing basis, the Company assesses its non-IFRS policies to provide useful information to investors. Excluding stock-based compensation expense and amortization of purchased intangibles expense has been a consistent long-term practice of the Company and many of its peers in reporting non-IFRS measures and has been fully disclosed in quarterly and annual filings, including a reconciliation to reported net earnings or to the most directly comparable IFRS measure on our financial statements.
The Company expects future adoption of U.S. GAAP will have no material impact on its future free cash flows. The Company will adopt GAAP in conjunction with its planned U.S. domestication, no later than the end of 2019. Certain elements of the financial statements will see changes as a result of the adoption of GAAP accounting. Under IFRS, the Company recognizes Canadian investment tax credits (ITCs) as a reduction of direct costs. Under GAAP, ITCs will be included as a credit to income taxes. The Company recognized ITCs of $32 million in 2017 and expects to recognize approximately $30 million in 2018. These amounts have been previously disclosed.
The Company capitalizes certain internally developed technology as intangible assets under IFRS. Under GAAP, certain of these expenditures on internally developed technology will be accounted for as period expenses. The Company capitalized approximately $56 million of these expenditures in 2017 and expects to capitalize approximately $60 million in 2018 under IFRS. The vast majority of these expenses relate to projects in the GEO communications satellite line of business, such as digital payload, electric propulsion and roll-out solar array development programs, and are reported in the Space Systems segment. The Company expects that future development expenses for GEO communications satellites will be significantly lower, thereby reducing the impact on future EBITDA differences between IFRS and GAAP.
