DigitalGlobe Reports Second Quarter Results

We believe that the elimination of material non-cash, non-operating items enables a more consistent measurement of period to period performance of our operations. In addition, we believe that elimination of these items in combination with the addition of the non-refundable EnhancedView deferred revenue and EnhancedView outstanding invoices not yet paid by NGA, as well as amortization of pre-FOC payments related to NextView facilitate comparison of our operating performance to companies in our industry. We believe this Adjusted EBITDA measure is particularly important in a capital intensive industry such as ours, in which our current period depreciation is not a good indication of our current or future period capital expenditures. The cost to construct and launch a satellite and build the related ground infrastructure may vary greatly from one satellite to another, depending on the satellite’s size, type and capabilities. For example, our QuickBird satellite cost significantly less than our WorldView-1 and WorldView-2 satellites. Current depreciation expense is not indicative of the revenue generating potential of the satellite.

Adjusted EBITDA excludes interest income, interest expense, income taxes and loss on early extinguishment of debt because these items are associated with our capitalization and tax structures. Adjusted EBITDA also excludes depreciation and amortization expense because these non-cash expenses reflect the impact of prior capital expenditure decisions which are not indicative of future capital expenditure requirements. Adjusted EBITDA excludes non-cash stock compensation expense, because these items are non-cash expenses and loss on derivative instrument and disposal of assets because these are not related to our primary operations.

We use Adjusted EBITDA in conjunction with traditional GAAP operating performance measures as part of our overall assessment of our performance and we do not place undue reliance on this measure as our only measure of operating performance. Adjusted EBITDA should not be considered a substitute for other measures of financial performance reported in accordance with GAAP.

     

DigitalGlobe, Inc.

Unaudited Condensed Consolidated Statements of Operations

 
   

For the Three Months
Ended June 30,

   

For the Six Months
Ended June 30,

(in millions, except share and per share data)     2010       2011         2010       2011  
Revenue $ 81.0   $ 81.7 $ 158.1   $ 158.8
Costs and expenses:
Cost of revenue, excluding depreciation and amortization 10.1 14.4 20.2 26.2
Selling, general and administrative 28.2 33.7 53.0 63.8
Depreciation and amortization   31.0       29.2         60.1       58.4  
Income from operations 11.7 4.4 24.8 10.4
Other income (expense), net 0.1
Interest income (expense), net   (10.7 )     (5.5 )       (20.6 )     (13.2 )
Income (loss) before income taxes 1.0 (1.1 ) 4.2 (2.7 )
Income tax (expense) benefit   (0.5 )     0.7         (2.2 )     1.6  
Net income (loss) $ 0.5     $ (0.4 )     $ 2.0     $ (1.1 )
Earnings (loss) per share:
Basic earnings (loss) per share $ 0.01     $ (0.01 )     $ 0.05     $ (0.02 )
Diluted earnings (loss) per share $ 0.01     $ (0.01 )     $ 0.04     $ (0.02 )
Weighted average common shares outstanding:
Basic   44.0       46.3         43.9       46.2  
Diluted   46.1       46.3         46.1       46.2  
 
     

DigitalGlobe, Inc.

Reconciliation of GAAP Net Income to Adjusted EBITDA

(unaudited)

 
    Three months ended

June 30,

    Six months ended

June 30,

(in millions)     2010       2011         2010       2011  
Net income (loss) $ 0.5   $ (0.4 ) $ 2.0   $ (1.1 )
Depreciation and amortization 31.0 29.2 60.1 58.4
Interest (income) expense, net 10.7 5.5 20.6 13.2
Income tax expense (benefit) 0.5 (0.7 ) 2.2 (1.6 )
Non-cash stock compensation expense 1.5 7.3 2.9 9.0
EnhancedView deferred revenue 16.5 41.4
EnhancedView outstanding invoices not yet paid by NGA 8.3 8.3
Amortization of pre-FOC payment related to NextView   (6.4 )     (6.4 )       (12.8 )     (12.8 )
Adjusted EBITDA $ 37.8     $ 59.3       $ 75.0     $ 114.8  
 

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