EBITDA is a measure of our current period operating performance, excluding charges for depreciation related to prior period capital expenditures and items which are generally non-core in nature. Adjusted EBITDA is a measure of our current period operating performance, excluding charges for capital, depreciation related to prior period capital expenditures and items which are generally non-core in nature, and including EnhancedView deferred revenue and EnhancedView outstanding invoices not yet paid by the National Geospatial-Intelligence Agency (NGA) and excluding the amortization of pre-Final Operation-Capability (FOC) payments related to our NextView contract. EnhancedView outstanding invoices not yet paid by NGA represent an irrevocable right to be paid in cash by NGA.
EBITDA
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 facilitate comparison of our operating performance to companies in our industry. We believe this 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, which we are currently depreciating, 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.
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. 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. EBITDA excludes loss on derivative instrument and disposal of assets because these are not related to our primary operations.
We use 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. EBITDA should not be considered a substitute for other measures of financial performance reported in accordance with GAAP.
Adjusted EBITDA
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 nonrefundable EnhancedView deferred revenue and EnhancedView outstanding invoices not yet paid by NGA as well as the elimination of 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, which we are currently depreciating, 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.
FINANCIAL TABLES TO FOLLOW
DigitalGlobe, Inc.
Unaudited Condensed Consolidated Statements of Operations
and Comprehensive Income (Loss)
For the three months ended For the six months ended
June 30, June 30,
-------------------------- ------------------------
(in millions, except 2011 2011
per share data) 2012 Revised(1) 2012 Revised(1)
------------ ------------ ----------- -----------
Revenue $ 101.8 $ 82.5 $ 188.8 $ 159.9
Costs and expenses:
Cost of revenue,
excluding
depreciation and
amortization 20.0 15.4 38.0 28.5
Selling, general and
administrative 33.5 34.2 63.3 64.4
Depreciation and
amortization 28.5 29.2 57.6 58.4
------------ ------------ ----------- -----------
Income from operations 19.8 3.7 29.9 8.6
Other income
(expense), net (0.4) - (0.4) 0.2
Interest income
(expense), net (2.6) (5.7) (5.8) (13.6)
------------ ------------ ----------- -----------
Income (loss) before
income taxes 16.8 (2.0) 23.7 (4.8)
Income tax (expense)
benefit (7.2) 1.1 (10.3) 2.6
------------ ------------ ----------- -----------
Net income (loss) $ 9.6 $ (0.9) $ 13.4 $ (2.2)
------------ ------------ ----------- -----------
Comprehensive Income:
Net income (loss) $ 9.6 $ (0.9) $ 13.4 $ (2.2)
------------ ------------ ----------- -----------
Earnings (loss) per
share:
Basic earnings
(loss) per share $ 0.21 $ (0.02) $ 0.29 $ (0.5)
------------ ------------ ----------- -----------
Diluted earnings
(loss) per share $ 0.21 $ (0.02) $ 0.29 $ (0.5)
------------ ------------ ----------- -----------
Weighted average
common shares
outstanding:
Basic 46.0 46.3 46.0 46.2
------------ ------------ ----------- -----------
Diluted 46.2 46.3 46.1 46.2
------------ ------------ ----------- -----------
(1) The Company revised its financial information for the first three
quarters of 2011 as a result of the full-year 2011 audit completed in
February 2012. Please refer to the company's 2011 Annual Report on Form
10-K for detail.
DigitalGlobe, Inc.
Reconciliation of GAAP Net Income (Loss) to EBITDA and Adjusted EBITDA
(unaudited)
Three months ended Six months ended
June 30, June 30,
---------------------- ----------------------
2011 2011
(in millions) 2012 Revised(1) 2012 Revised(1)
---------- ---------- ---------- ----------
Net income (loss) $ 9.6 $ (0.9) $ 13.4 $ (2.2)
Depreciation and
amortization 28.5 29.2 57.6 58.4
Interest (income) expense,
net 2.6 5.7 5.8 13.6
Income tax expense (benefit) 7.2 (1.1) 10.3 (2.6)
---------- ---------- ---------- ----------
EBITDA $ 47.9 $ 32.9 $ 87.1 $ 67.2
Non-cash stock compensation
expense 2.2 7.4 4.7 9.5
EnhancedView deferred
revenue 9.2 16.5 27.2 41.3
EnhancedView outstanding
invoices not yet paid by
NGA 4.6 8.3 4.6 8.3
Amortization of pre-FOC
payment related to NextView (6.4) (6.4) (12.8) (12.8)
---------- ---------- ---------- ----------
Adjusted EBITDA $ 57.5 $ 58.7 $ 110.8 $ 113.5
---------- ---------- ---------- ----------
(2) The Company revised its financial information for the first three
quarters of 2011 as a result of the full-year 2011 audit completed in
February 2012. Please refer to the company's 2011 Annual Report on form
10-K for detail.
