Non-U.S. GAAP Financial Measures
EBITDA and Adjusted EBITDA are not recognized terms under U.S. GAAP and may not be defined similarly by other companies. EBITDA and Adjusted EBITDA should not be considered alternatives to net income as indications of financial performance or as alternatives to cash flow from operations as measures of liquidity. There are limitations to using non-U.S. GAAP financial measures, including the difficulty associated with comparing companies in different industries that use similar performance measures whose calculations may differ from ours.
EBITDA and Adjusted EBITDA are key measures used in internal operating reports by management and the board of directors to evaluate the performance of our operations and are also used by analysts, investment banks and lenders for the same purpose. In 2013 and 2012, EBITDA, excluding certain deal costs, was a measure being used as a key element of the company-wide bonus incentive plan.
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.
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 facilitates comparison of our operating performance to companies in our industry. We believe that EBITDA and Adjusted EBITDA measures are 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 to 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 net revenue generating potential of the satellite.
EBITDA excludes interest income, interest expense and income taxes 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.
Adjusted EBITDA further adjusts EBITDA to exclude the loss on the early extinguishment of debt because this is not related to our primary operations. Additionally, it excludes restructuring costs, acquisition costs and integration costs as these are non-core items. Restructuring costs are costs incurred to realize efficiencies from the acquisition with GeoEye, such as reducing excess workforce, consolidating facilities and systems, and relocating ground terminals. Acquisition costs are costs incurred to effect the acquisition, such as advisory, legal, accounting, consulting and other professional fees. Integration costs consist primarily of professional fees incurred to assist us with system and process improvements associated with integrating operations. Loss on early extinguishment of debt is related to entering into the 2013 Credit Facility and Senior Notes, the proceeds of which were used to refinance our 2011 Credit Facility and fund the discharge and redemption of GeoEye's $525.0 million senior secured notes we assumed in the acquisition.
We use EBITDA and Adjusted EBITDA in conjunction with traditional U.S. GAAP operating performance measures as part of our overall assessment of our performance and we do not place undue reliance on measures as our only measures of operating performance. EBITDA and Adjusted EBITDA should not be considered as substitutes for other measures of financial performance reported in accordance with U.S. GAAP.
FINANCIAL TABLES TO FOLLOW
DigitalGlobe, Inc.
Consolidated Statements of Operations
Three months ended Year ended
December 31, December 31,
-------------------- --------------------
(in millions, except per share
amounts) 2013 2012 2013 2012
--------- --------- --------- ---------
Net revenue $ 169.7 $ 125.4 $ 612.7 $ 421.4
Costs and expenses:
Cost of revenue, excluding
depreciation and amortization 40.4 22.1 175.3 81.6
Selling, general and
administrative 52.4 45.8 257.3 149.2
Depreciation and amortization 59.1 28.1 224.8 114.6
Restructuring charges 3.1 - 40.1 -
--------- --------- --------- ---------
Income (loss) from operations 14.7 29.4 (84.8) 76.0
Loss from early extinguishment
of debt - - (17.8) -
Other (expense) income, net (0.3) 0.1 0.2 (1.0)
Interest expense, net 0.1 (1.4) (3.4) (9.1)
--------- --------- --------- ---------
Income (loss) before income
taxes 14.5 28.1 (105.8) 65.9
Income tax benefit (expense) 0.6 (11.0) 37.5 (26.9)
--------- --------- --------- ---------
Net income (loss) 15.1 17.1 (68.3) 39.0
Preferred stock dividends (1.0) - (3.6) -
--------- --------- --------- ---------
Net income (loss) less preferred
stock dividends 14.1 17.1 (71.9) 39.0
Income allocated to
participating securities (0.5) - - -
--------- --------- --------- ---------
Net income (loss) available to
common stockholders $ 13.6 $ 17.1 $ (71.9) $ 39.0
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Earnings (loss) per share:
Basic earnings (loss) per
share $ 0.18 $ 0.37 $ (1.00) $ 0.85
========= ========= ========= =========
Diluted earnings (loss) per
share $ 0.18 $ 0.36 $ (1.00) $ 0.84
========= ========= ========= =========
Weighted-average common shares
outstanding:
Basic 74.7 46.3 71.8 46.1
========= ========= ========= =========
Diluted 76.0 47.0 71.8 46.4
========= ========= ========= =========
DigitalGlobe, Inc.
Reconciliation Net Income (loss) EBITDA and Adjusted EBITDA
2013 2012
------------------------------ ---------------------------
(in millions) Mar 31 Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 Sep 30 Dec 31
------ ------ ------ ------ ------ ------ ------ ------
Net (loss)
income $(60.6) $(21.0) $ (1.8) $ 15.1 $ 3.8 $ 9.6 $ 8.5 $ 17.1
Depreciation and
amortization 47.3 59.0 59.4 59.1 29.1 28.5 28.9 28.1
Interest income
(expense), net 1.4 1.4 0.7 (0.1) 3.2 2.6 1.9 1.4
Income tax
(benefit)
expense (19.0) (14.1) (3.8) (0.6) 3.1 7.2 5.6 11.0
------ ------ ------ ------ ------ ------ ------ ------
EBITDA (30.9) 25.3 54.5 73.5 39.2 47.9 44.9 57.6
Loss on early
extinguishment
of debt 17.8 - - - - - - -
Restructuring
charges (1) 20.3 13.6 3.1 3.1 - - - -
Acquisition
costs (1) 20.8 (0.2) - - - 2.2 7.5 10.2
Integration
costs (1) 7.9 7.2 8.0 6.1 - - - -
------ ------ ------ ------ ------ ------ ------ ------
Adjusted EBITDA $ 35.9 $ 45.9 $ 65.6 $ 82.7 $ 39.2 $ 50.1 $ 52.4 $ 67.8
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