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 NGA and excluding the amortization of pre-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
For the three months ended
March 31,
--------------------------
2011
(in millions, except share and per share data) 2012 Revised
------------ ------------
Revenue $ 87.0 $ 77.4
Costs and expenses:
Cost of revenue, excluding depreciation and
amortization 18.0 13.1
Selling, general and administrative 29.8 30.2
Depreciation and amortization 29.1 29.2
------------ ------------
Income from operations 10.1 4.9
Other income (expense), net - 0.2
Interest income (expense), net (3.2) (7.9)
------------ ------------
Income (loss) before income taxes 6.9 (2.8)
Income tax (expense) benefit (3.1) 1.5
------------ ------------
Net income (loss) $ 3.8 $ (1.3)
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Comprehensive Income:
Net income (loss) $ 3.8 $ (1.3)
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Earnings (loss) per share:
Basic earnings (loss) per share $ 0.08 $ (0.03)
============ ============
Diluted earnings (loss) per share $ 0.08 $ (0.03)
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Weighted average common shares outstanding:
Basic 46.0 46.1
============ ============
Diluted 46.7 46.1
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DigitalGlobe, Inc.
Reconciliation of GAAP Net Income (loss) to EBITDA and Adjusted EBITDA
(unaudited)
Three months ended
March 31,
--------------------------
2011
(in millions) 2012 Revised(1)
------------ ------------
Net income (loss) $ 3.8 $ (1.3)
Depreciation and amortization 29.1 29.2
Interest (income) expense, net 3.2 7.9
Income tax expense (benefit) 3.1 (1.5)
------------ ------------
EBITDA $ 39.2 $ 34.3
Non-cash stock compensation expense 2.5 2.1
EnhancedView deferred revenue 13.4 16.5
EnhancedView outstanding invoices not yet paid
by NGA 4.6 8.3
Amortization of pre-FOC payment related to
NextView (6.4) (6.4)
------------ ------------
Adjusted EBITDA $ 53.3 $ 54.8
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(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.
