DigitalGlobe Reports Second Quarter 2009 Financial Results

With our collection sources and comprehensive ImageLibrary (containing more than 730 million square kilometers of earth imagery and imagery products) we offer a range of on- and off-line products and services designed to enable customers to easily access and integrate our imagery into their business operations and applications.

DigitalGlobe is a registered trademark of DigitalGlobe.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This presentation and other of our reports, filings, and public announcements may contain or incorporate forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements relate to future events or our future financial performance. We generally identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words, although not all forward-looking statements contain these words.

Any forward-looking statements are based upon our historical performance and on our current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us that the future plans, estimates or expectations will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions. A number of important factors could cause our actual results or performance to differ materially from those indicated by such forward looking statements, including: the loss or reduction of any of our primary contracts; the failure of our WorldView-2 satellite to launch or commission successfully or as scheduled; the loss or impairment of our satellites; loss or damage to the content contained in our ImageLibrary; interruption or failure of our ground system and other infrastructure, decrease in demand for our imagery products and services; increased competition that may reduce our market share or cause us to lower our prices; our failure to obtain or maintain required regulatory approvals and licenses; changes in U.S. foreign law or regulation that may limit our ability to distribute our imagery products and services; the costs associated with being a public company; and other important factors, all as described more fully in our filings with the Securities and Exchange Commission, including our Prospectus filed with the Commission on May 14, 2009.

We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. Readers are cautioned not to place undue reliance on any of these forward looking statements.

DigitalGlobe, Inc.

Condensed Consolidated Statements of Operations

(in millions, except per share data)

(unaudited)

 

For the three months ended

June 30,

 

For the six months ended

June 30,

2008   2009 2008   2009
Revenue $ 67.4 $ 70.0 $ 136.2 $ 137.2
Costs and expenses:
Cost of revenue, excluding depreciation and amortization 7.5 8.0 14.2 14.4
Selling, general and administrative 18.3 21.5 36.7 44.1
Depreciation and amortization   18.8     18.9     37.6     37.6  
Income from operations 22.8 21.6 47.7 41.1
Loss from early extinguishment of debt - 7.7 - 7.7
Loss (gain) on derivative instruments - - - 1.8
Interest income (expense), net   (1.1 )   0.1     (2.5 )   0.1  
Income before income taxes 21.7 14.0 45.2 31.7
Income tax expense   (10.1 )   (5.6 )   (19.5 )   (12.7 )
Net income $ 11.6   $ 8.4   $ 25.7   $ 19.0  
Earnings per share:
Basic earnings per share $ 0.27   $ 0.19   $ 0.59   $ 0.43  
Diluted earnings per share $ 0.26   $ 0.19   $ 0.58   $ 0.43  
Weighted average common shares outstanding:
Basic   43,434,781     44,163,507     43,427,520     44,199,522  
Diluted   44,189,262     44,695,213     44,147,340     44,714,326  

DigitalGlobe, Inc.

Condensed Consolidated Balance Sheets

   

(in millions, except per share data)

(unaudited)

December 31,
2008

June 30,
2009

 
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 60.8 $ 132.7
Restricted cash 2.5 4.2
Accounts receivable, net of allowance for doubtful accounts of $0.9 and $1.8, respectively 44.3 52.6
Accounts receivable from related party 2.5 -
Aerial image library 4.9 4.9
Prepaid WorldView-1 insurance 2.4 1.5
Other prepaid and current assets 3.4 7.0
Deferred taxes   24.9     15.9  
Total current assets 145.7 218.8
Property and equipment, net of accumulated depreciation of $288.6 and $325.2, respectively 792.9 827.0
Goodwill 8.7 8.7
Intangibles, net of accumulated amortization of $5.4 and $6.4, respectively 3.6 2.7
Long-term deferred contract costs 5.7 28.3
Long-term deferred contract costs from related party 15.9 -
Other assets, net   7.7     10.1  
Total assets $ 980.2   $ 1,095.6  
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable 0.7 7.7
Accounts payable to related party 1.8 -
Accrued interest 3.5 6.5
Other accrued liabilities 20.1 19.6
Other accrued liabilities to related party 2.7 0.3
Current portion of deferred revenue 28.1 31.8
8.5% Cumulative mandatorily redeemable preferred stock-Series-C; $.001 par value; 50,000,000 shares authorized; 10 shares issued and outstanding; aggregate liquidation preference of $0.5 million as of December 31, 2008 and there was no balance as of June 30, 2009   0.5     -  
Total current liabilities $ 57.4 $ 65.9
Deferred revenue 214.9 231.9
Deferred revenue related party 24.7 -
Deferred lease incentive 6.3 5.9
Long-term debt 230.0 342.2
Long-term debt and accrued interest to related parties 44.6 -
Long-term deferred tax liability   -     3.5  
Total liabilities $ 577.9 $ 649.4
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.001 par value; 24,000,000 shares authorized; no shares issued and outstanding at December 31, 2008 and June 30, 2009 - -
Common stock; $.001 par value; 250,000,000 shares authorized; 43,468,941 shares issued and outstanding at December 31, 2008 and 44,891,183 shares issued and outstanding at June 30, 2009 0.2 0.2
Treasury stock, at cost; 21,555 shares at December 31, 2008 and 43,723 shares at June 30, 2009 (0.2 ) (0.7 )
Additional paid-in capital 467.2 491.1
Accumulated other comprehensive (loss) (1.5 ) -
Accumulated deficit   (63.4 )   (44.4 )
Total stockholders' equity   402.3     446.2  
Total liabilities and stockholders' equity $ 980.2   $ 1,095.6  

DigitalGlobe, Inc.

Condensed Consolidated Statements of Cash Flows

 
(in millions, except per share data)

(unaudited)

For the Six Months Ended

June 30,

2008   2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 25.7 $ 19.0
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense 37.6 37.6
Non-cash recognition of deferred revenue (12.8 ) (13.3 )
Non-cash amortization 1.9 2.5
Non-cash stock compensation expense 1.8 4.2
Amortization of debt issuance costs 0.9 -
Write off of debt financing fees - 5.3
Deferred income taxes 17.1 11.6
Changes in:
Accounts receivable, net (1.7 ) (5.5 )
Accounts receivable from related party 0.2 (0.2 )
Aerial image library 0.3 (2.5 )
Other assets 3.2 (2.2 )
Accounts payable (0.5 ) 1.1
Accounts payable and accrued liabilities to related parties (1.6 ) 3.3
Accrued liabilities 3.9 (2.6 )
Deferred contract costs from related party (5.7 ) (7.7 )
Deferred revenue (0.4 ) 7.2
Deferred revenue related party   2.4     2.1  
Net cash flows provided by operating activities   72.3     59.9  
CASH FLOWS USED IN INVESTING ACTIVITIES:
Construction in progress additions (81.5 ) (61.2 )
Other property, equipment and intangible additions (3.3 ) (4.6 )
Increase in restricted cash (0.1 ) (1.7 )
Settlements of derivative instruments   (0.3 )   (2.8 )
Net cash flows used in investing activities   (85.2 )   (70.3 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt, net of issuance costs 38.5 330.9
Proceeds from initial public offering, net of issuance costs (0.9 ) 21.7
Repayment of notes - (270.0 )
Proceeds from exercise of stock options 0.9 0.1
Repurchase of common stock   -     (0.4 )
Net cash flows provided by financing activities   38.5     82.3  
Net increase in cash and cash equivalents 25.6 71.9
Cash and cash equivalents, beginning of period   22.9     60.8  
Cash and cash equivalents, end of period $ 48.5   $ 132.7  
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest, net of amounts capitalized $ 2.3 $ -
Cash paid for income taxes 0.6 2.3
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Non-cash items capitalized in construction in progress 0.3 (4.1 )
Changes to non-cash property and equipment accruals, including interest (12.2 ) (0.7 )

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