Attached files
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EX-31.2 - EXHIBIT 31.2 - DIGITALGLOBE, INC. | c92147exv31w2.htm |
EX-31.1 - EXHIBIT 31.1 - DIGITALGLOBE, INC. | c92147exv31w1.htm |
EX-32.1 - EXHIBIT 32.1 - DIGITALGLOBE, INC. | c92147exv32w1.htm |
Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended: September 30, 2009
OR
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 001-34299
DIGITALGLOBE, INC.
(Exact name of registrant as specified in its charter)
Delaware | 31-1420852 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
1601 Dry Creek Drive, Suite 260, Longmont, Colorado | 80503 | |
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code:
(303) 684-4000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such
files). Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act:
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). Yes o No þ
As of November 6, 2009 there were 44,949,663 shares of the registrants Common Stock, par value
$0.001 per share, outstanding.
DIGITALGLOBE, INC.
INDEX
Page | ||||||||
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3 | ||||||||
4 | ||||||||
5 | ||||||||
19 | ||||||||
26 | ||||||||
27 | ||||||||
28 | ||||||||
28 | ||||||||
28 | ||||||||
28 | ||||||||
28 | ||||||||
29 | ||||||||
29 | ||||||||
Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 32.1 |
Page 1 of 29 |
Table of Contents
PART I FINANCIAL INFORMATION
Item 1. | Financial Statements |
DigitalGlobe, Inc.
Unaudited Condensed Consolidated Income Statements
(in millions, except share and per share data)
For the three months ended | For the nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2008 | 2009 | 2008 | 2009 | |||||||||||||
Revenue |
$ | 66.8 | $ | 71.8 | $ | 203.0 | $ | 209.0 | ||||||||
Costs and expenses: |
||||||||||||||||
Cost of revenue, excluding depreciation and amortization |
5.7 | 7.8 | 19.9 | 22.2 | ||||||||||||
Selling, general and administrative |
17.8 | 21.5 | 54.5 | 65.6 | ||||||||||||
Depreciation and amortization |
18.8 | 18.6 | 56.4 | 56.2 | ||||||||||||
Income from operations |
24.5 | 23.9 | 72.2 | 65.0 | ||||||||||||
Loss from early extinguishment of debt |
| | | (7.7 | ) | |||||||||||
Loss on derivative instruments |
| | | (1.8 | ) | |||||||||||
Interest income (expense), net |
(0.7 | ) | | (3.2 | ) | 0.1 | ||||||||||
Income before income taxes |
23.8 | 23.9 | 69.0 | 55.6 | ||||||||||||
Income tax expense |
(9.5 | ) | (9.3 | ) | (29.0 | ) | (22.0 | ) | ||||||||
Net income |
$ | 14.3 | $ | 14.6 | $ | 40.0 | $ | 33.6 | ||||||||
Earnings per share: |
||||||||||||||||
Basic earnings per share |
$ | 0.33 | $ | 0.33 | $ | 0.92 | $ | 0.76 | ||||||||
Diluted earnings per share |
$ | 0.32 | $ | 0.32 | $ | 0.91 | $ | 0.75 | ||||||||
Weighted average common shares outstanding: |
||||||||||||||||
Basic |
43,459,653 | 44,679,714 | 43,438,310 | 44,152,352 | ||||||||||||
Diluted |
44,346,877 | 45,397,989 | 44,095,320 | 44,740,004 | ||||||||||||
See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.
Page 2 of 29 |
Table of Contents
DigitalGlobe, Inc.
Unaudited Condensed Consolidated Balance Sheets
(in millions, except share and per share data)
December 31, | September 30, | |||||||
2008 | 2009 | |||||||
ASSETS |
||||||||
CURRENT ASSETS: |
||||||||
Cash and cash equivalents |
$ | 60.8 | $ | 96.1 | ||||
Restricted cash |
2.5 | 8.6 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $0.9 and $1.4, respectively |
44.3 | 40.9 | ||||||
Accounts receivable from related party |
2.5 | | ||||||
Aerial image library |
4.9 | 5.5 | ||||||
Prepaid and current assets |
5.8 | 10.2 | ||||||
Deferred taxes |
24.9 | 12.6 | ||||||
Total current assets |
145.7 | 173.9 | ||||||
Property and equipment, net of accumulated depreciation of $288.6 and $343.3, respectively |
792.9 | 880.4 | ||||||
Goodwill |
8.7 | 8.7 | ||||||
Intangibles, net of accumulated amortization of $5.4 and $6.8, respectively |
3.6 | 2.2 | ||||||
Long-term restricted cash |
| 16.7 | ||||||
Long-term deferred contract costs |
5.7 | 32.8 | ||||||
Long-term deferred contract costs from related party |
15.9 | | ||||||
Other assets, net |
7.7 | 9.6 | ||||||
Total assets |
$ | 980.2 | $ | 1,124.3 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
CURRENT LIABILITIES: |
||||||||
Accounts payable |
0.7 | 4.4 | ||||||
Accounts payable to related party |
1.8 | | ||||||
Accrued interest |
3.5 | 16.0 | ||||||
Other accrued liabilities |
20.1 | 21.2 | ||||||
Other accrued liabilities to related party |
2.7 | | ||||||
Current portion of deferred revenue |
28.1 | 32.0 | ||||||
8.5% Cumulative mandatorily redeemable preferred stock-Series-C; $0.001 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
September 30, 2009 |
0.5 | | ||||||
Total current liabilities |
$ | 57.4 | $ | 73.6 | ||||
Deferred revenue |
214.9 | 230.5 | ||||||
Deferred revenue related party |
24.7 | | ||||||
Deferred lease incentive |
6.3 | 5.7 | ||||||
Long-term debt |
230.0 | 342.9 | ||||||
Long-term debt and accrued interest to related parties |
44.6 | | ||||||
Long-term deferred tax liability |
| 9.2 | ||||||
Total liabilities |
$ | 577.9 | $ | 661.9 | ||||
COMMITMENTS AND CONTINGENCIES (Note 11) |
||||||||
STOCKHOLDERS EQUITY: |
||||||||
Preferred stock, $0.001 par value; 24,000,000 shares authorized; no shares issued and
outstanding at December 31, 2008 and September 30, 2009 |
| | ||||||
Common stock; $0.001 par value; 250,000,000 shares authorized; 43,468,941 shares issued and
outstanding at December 31, 2008 and 44,934,831 shares issued and outstanding at September 30, 2009 |
0.2 | 0.2 | ||||||
Treasury stock, at cost; 21,555 shares at December 31, 2008 and 43,723 shares at September 30, 2009 |
(0.2 | ) | (0.7 | ) | ||||
Additional paid-in capital |
467.2 | 492.7 | ||||||
Accumulated other comprehensive income (loss) |
(1.5 | ) | | |||||
Accumulated deficit |
(63.4 | ) | (29.8 | ) | ||||
Total stockholders equity |
402.3 | 462.4 | ||||||
Total liabilities and stockholders equity |
$ | 980.2 | $ | 1,124.3 | ||||
See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.
Page 3 of 29 |
Table of Contents
DigitalGlobe, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in millions)
For the Nine Months Ended | ||||||||
September 30, | ||||||||
2008 | 2009 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net income |
$ | 40.0 | $ | 33.6 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization expense |
56.4 | 56.2 | ||||||
Non-cash recognition of deferred revenue |
(19.1 | ) | (19.8 | ) | ||||
Non-cash amortization |
3.1 | 4.0 | ||||||
Non-cash stock compensation expense |
2.5 | 5.5 | ||||||
Amortization of debt issuance costs |
1.3 | | ||||||
Write off of debt financing fees |
| 5.3 | ||||||
Deferred income taxes |
26.6 | 20.5 | ||||||
Changes in working capital, net of investing activities: |
||||||||
Accounts receivable, net |
14.9 | 6.1 | ||||||
Accounts receivable from related party |
(1.6 | ) | (0.2 | ) | ||||
Aerial image library |
(2.7 | ) | (4.7 | ) | ||||
Other assets |
4.5 | (4.6 | ) | |||||
Accounts payable |
1.5 | (0.8 | ) | |||||
Accounts payable and accrued liabilities to related parties |
(1.8 | ) | 3.5 | |||||
Accrued liabilities |
3.0 | (0.4 | ) | |||||
Deferred contract costs from related party |
(7.7 | ) | (11.7 | ) | ||||
Deferred revenue |
(0.9 | ) | 12.4 | |||||
Deferred revenue related party |
6.5 | 2.1 | ||||||
Deferred lease incentive |
0.8 | | ||||||
Net cash flows provided by operating activities |
127.3 | 107.0 | ||||||
CASH FLOWS USED IN INVESTING ACTIVITIES: |
||||||||
Construction in progress additions |
(100.8 | ) | (121.4 | ) | ||||
Other property, equipment and intangible additions |
(4.0 | ) | (7.2 | ) | ||||
Increase in restricted cash |
(0.1 | ) | (22.8 | ) | ||||
Settlements of derivative instruments |
(0.8 | ) | (2.8 | ) | ||||
Net cash flows used in investing activities |
(105.7 | ) | (154.2 | ) | ||||
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 |
(2.4 | ) | 21.7 | |||||
Repayment of notes |
| (270.0 | ) | |||||
Proceeds from exercise of stock options |
1.1 | 0.3 | ||||||
Repuchase of common stock |
| (0.4 | ) | |||||
Net cash flows provided by financing activities |
37.2 | 82.5 | ||||||
Net increase in cash and cash equivalents |
58.8 | 35.3 | ||||||
Cash and cash equivalents, beginning of period |
22.9 | 60.8 | ||||||
Cash and cash equivalents, end of period |
$ | 81.7 | $ | 96.1 | ||||
SUPPLEMENTAL CASH FLOW INFORMATION: |
||||||||
Cash paid for interest, net of amounts capitalized |
$ | 3.1 | $ | | ||||
Cash paid for income taxes |
2.0 | 2.4 | ||||||
NON-CASH INVESTING AND FINANCING ACTIVITIES: |
||||||||
Non-cash items capitalized in construction in progress |
| 5.5 | ||||||
Changes to non-cash property and equipment accruals, including interest |
(14.7 | ) | 8.1 |
See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.
Page 4 of 29 |
Table of Contents
NOTE 1. General Information and Financial Condition
DigitalGlobe, Inc. (DigitalGlobe, the Company or we) was originally incorporated as EarthWatch,
Incorporated on September 30, 1994 under the laws of the State of Colorado and, on August 21, 1995,
was reincorporated under the laws of the State of Delaware. We commenced development stage
operations on March 31, 1995 with the contribution of the net assets of WorldView Imaging
Corporation and certain assets of Ball Corporation. On August 22, 2002, we changed our name to
DigitalGlobe, Inc.
We are a provider of commercial high resolution earth imagery products and services. We have
customers in both the (i) defense and intelligence and (ii) commercial sectors.
We successfully launched and deployed the QuickBird satellite on October 18, 2001, and completed
initial on-orbit calibration and commissioning in February 2002, at which time we began selling
imagery collected by the satellite. Since that time, we have been operating the QuickBird satellite
and associated ground processing systems to generate 61-cm resolution black and white and
2.44-meter multi-spectral products.
In January 2007, the Company acquired GlobeXplorer, LLC and AirPhotoUSA, LLC. In January 2008, the
Company discontinued the use of the GlobeXplorer and AirPhoto USA names. All operations are now
reported under the DigitalGlobe name.
On October 18, 2007, the Company successfully launched the WorldView-1 satellite. On November 16,
2007, the National Geospatial-Intelligence Agency (NGA) of the United States government, our
largest customer, certified that the WorldView-1 satellite had satisfied the performance metrics
under the terms of the NextView agreement (described below) and declared the WorldView-1 satellite
to have achieved full operational capability (FOC).
The Company has incurred significant capital expenditures for the construction of its satellites
and estimates that the remaining costs, including unallocated contingency to achieve operational
capability of its WorldView-2 satellite, will be $38.4 million in 2009 including $13.0 million
accrual for contractual on-orbit success payments of the WorldView-2 satellite. The Company believes that its
existing cash plus anticipated cash flows from operations in 2009 will be sufficient to cover these
capital expenditures.
On May 14, 2009, the Company completed an initial public offering consisting of 14,700,000 shares
of common stock at $19.00 per share. The total shares sold in the offering included 13,333,744
shares sold by selling shareholders and 1,366,256 shares sold by the Company. Cash proceeds to the
Company amounted to $24.1 million (net of $1.8 million of underwriters discount). These proceeds
were offset in equity by $5.1 million of offering costs of which $2.7 million were paid in the
current year.
In September 2003, we entered into the NextView agreement with NGA, under which we agreed to
provide a minimum of $531.0 million of imagery products and services from our WorldView- 1
satellite. Of this amount, $266.0 million was paid between September 2003 and November 2007, the
date WorldView-1 became operational, and was used to offset the construction costs of the
satellite. The remaining $265.0 million commitment was to be paid upon the delivery of imagery once
WorldView-1 achieved FOC. On June 25, 2009, the NextView agreement was amended to extend the term
from July 31, 2009 through March 31, 2010 for payment of an additional $100.0
million, payable at $12.5 million per month during the extended term. The amendment also provides
an option for NGA to extend the agreement on the same terms for an additional nine months, from
April 1, 2010 through December 31, 2010.
NOTE 2. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of DigitalGlobe, Inc. and its wholly
owned subsidiaries. All significant intercompany transactions have been eliminated in
consolidation.
Basis of Presentation
Our accompanying unaudited consolidated financial statements for the three and nine month periods
ended September 30, 2008 and September 30, 2009, included herein have been prepared in accordance
with accounting principles generally accepted in the United States (GAAP) for interim financial
information and the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities
and Exchange Commission (SEC). All amounts included in the consolidated financial statements for
the three and nine month period ended September 30, 2008, and September 30, 2009, are unaudited.
Accordingly, they do not include all of the information and notes required by GAAP for complete
financial statements. In the opinion of management, all adjustments, including normal recurring
adjustments that are considered necessary for a fair presentation of the accompanying consolidated
financial statements, have been included. Operating results for the three and nine months ended
September 30, 2009 are not necessarily indicative of the results that may be expected for the year
ending December 31, 2009 or for any future period.
Page 5 of 29 |
Table of Contents
DigitalGlobe, Inc.
Notes to Unaudited Consolidated Financial Statements
Notes to Unaudited Consolidated Financial Statements
Certain prior year accounts have been reclassified to conform to current year presentation.
Use of Estimates
Our consolidated financial statements are based on the selection and application of GAAP that
require us to make estimates and assumptions about future events that affect the amounts reported
in our financial statements and the accompanying notes. Future events and their effects cannot be
determined with certainty. Therefore, the determination of estimates requires the exercise of
judgment. Actual results could differ from those estimates, and any such differences may be
material to our financial statements. If different assumptions or conditions were to occur, the
results could be materially different from our reported results.
Restricted Cash
The Companys restricted cash at December 31, 2008 and September 30, 2009 was comprised of
$1.3 million, respectively, of collateral for an FCC performance bond associated with a milestone
related to the launch of the WorldView-2 satellite and $1.2 million of restricted cash under the
lease agreement for our headquarters at December 31, 2008 and September 30, 2009, respectively.
During the third quarter of 2009, we funded $21.1 million of cash into restricted cash to
collateralize certain letters of credit required under certain of our Direct Access Program (DAP)
contracts, of which $15.5 million is recorded as long-term restricted cash.
Fair Value of Financial Instruments
The following table provides information about the assets and liabilities measured at fair value on
a recurring basis, as of December 31, 2008 and September 30, 2009 and indicates the valuation
technique utilized by the Company to determine the fair value.
Fair Value Measurements at December 31, 2008 Using: | ||||||||||||||||
Significant | ||||||||||||||||
Total Carrying | Quoted prices in | Significant Other | Unobservable | |||||||||||||
Value at | active markets | Observable Inputs | Inputs | |||||||||||||
(in millions) | December 31, 2008 | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Cash equivalents |
$ | 40.9 | $ | 40.9 | $ | | $ | | ||||||||
Derivative
Instruments |
1.0 | | 1.0 | |
Fair Value Measurements at September 30, 2009 Using: (unaudited) | ||||||||||||||||
Significant | ||||||||||||||||
Total Carrying | Quoted prices in | Significant Other | Unobservable | |||||||||||||
Value at | active markets | Observable Inputs | Inputs | |||||||||||||
(in millions) | September 30, 2009 | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Cash
equivalents |
$ | 69.9 | $ | 69.9 | $ | | $ | |
Valuation Techniques
Our cash equivalents consist of investments with maturity dates of less than 90 days and are quoted
from market rates and are classified within Level 1 of the valuation hierarchy. At December 31,
2008, and September 30, 2009, our cash equivalents consisted of funds held in treasury money
markets. We perform validations of our internally derived fair values reported for Level 2
financial instruments on a quarterly basis utilizing counterparty statements. The Company
additionally evaluates the counterparty creditworthiness and has not identified any circumstances
requiring that the reported values of our financial instruments be adjusted as of December 31, 2008.
During the second quarter of 2009, one of our swaps matured and the other swap contract was
terminated as a result of the repayment of the senior credit facility, discussed in Note 7. The
Company has not identified any Level 3 items at December 31, 2008 and September 30, 2009.
Page 6 of 29 |
Table of Contents
DigitalGlobe, Inc.
Notes to Unaudited Consolidated Financial Statements
Notes to Unaudited Consolidated Financial Statements
The Companys financial instruments consist primarily of cash and cash equivalents, accounts
receivable and payable and derivatives. The carrying values of cash equivalents and accounts
receivable and payable are representative of their fair values due to their short-term maturities.
The fair value of the senior credit facility was calculated using an interest rate of 9.5% at
December 31, 2008. At December 31, 2008 the fair value of the senior subordinated notes was
calculated using an interest rate of 15.75%. The derivative liability fair value was derived from
internally developed valuation methodologies. The senior credit facility and senior subordinated
notes were paid in full in April 2009. One of the derivative liabilities expired in April 2009 and
the Company paid the other derivative liability in conjunction with the debt extinguishment. Thus,
no fair value evaluation was necessary to be completed as of September 30, 2009 for these
instruments.
The senior secured notes are traded on an active market. The fair value of the senior secured notes
is obtained from a third party pricing service that tracks the trading of the notes which is then
evaluated by the Company.
December 31, 2008 | September 30, 2009 | |||||||||||||||
(in millions) | Carrying | Estimated | Carrying | Estimated | ||||||||||||
Long Term Debt | Amount | Fair Value | Amount | Fair Value | ||||||||||||
Senior Credit Facility |
$ | 230.0 | $ | 228.4 | $ | | $ | | ||||||||
Senior Subordinated Notes |
44.6 | 42.1 | | | ||||||||||||
Derivative Liability |
1.0 | 1.0 | | | ||||||||||||
Senior Secured Notes |
| | 342.9 | 363.2 |
Concentration of Credit Risk and Significant Customers
The Companys cash and cash equivalents and derivative instruments are maintained in or with
various financial institutions. We have not experienced any losses in such accounts and believe we
are not exposed to any significant credit risk in this area.
Satellite Insurance
We currently maintain $50.0 million and $220.0 million of one year in-orbit operations insurance
coverage for QuickBird and WorldView-1, respectively, and $50.0 million of two year in-orbit
insurance coverage for WorldView-1. In December 2008, we purchased $230.0 million of launch plus
initial year of operations insurance coverage and $60.0 million of launch plus first three years of
operations insurance coverage for our WorldView-2 satellite. Satellite insurance premiums,
corresponding to the launch and in-orbit commissioning period prior to the satellite reaching FOC,
are capitalized in the original cost of the satellite and are amortized over the estimated useful
life of the asset. The remainder of the insurance premiums that are not capitalized are amortized
to expense ratably over the related policy periods and are included in selling, general and
administrative costs.
New Accounting Pronouncements
In October 2009, the Financial Accounting Standards Board, or FASB, issued Accounting Standards
Update 2009-13. The Update addresses the accounting for multiple-deliverable arrangements to enable
vendors to account for products or services (deliverables) separately rather than as a combined
unit. The Update is effective prospectively for revenue arrangements entered into or materially
modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. We are
currently evaluating the effects that Update 2009-13 may have on the presentation, classification
and recognition of revenue arrangements that may be affected by this update.
NOTE 3. Information on Industry Segments and Major Customers
We conduct our business through two segments: (i) defense and intelligence and (ii) commercial. The
imagery that forms the foundation of our products and services is collected daily from our
satellites, maintained in our ImageLibrary and then processed and delivered in accordance with
customer specifications. Customers acquire our imagery either by placing tasking orders for our
satellites to collect data to their specifications or purchasing images that are archived in our
ImageLibrary.
We have organized our business around (i) the defense and intelligence and (ii) commercial segments
because we believe that customers in these two groups are identifiably similar in terms of their
areas of focus, imaging needs and purchasing habits. We deliver our products and services using the
distribution method that best suits our customers needs. There are no sales between the Companys
segments.
Page 7 of 29 |
Table of Contents
DigitalGlobe, Inc.
Notes to Unaudited Consolidated Financial Statements
Notes to Unaudited Consolidated Financial Statements
The vast majority of the dollar value of our fixed assets are the satellites and the ground based
production and support facilities that are common to all business and geographic segments. There
are no significant identifiable assets specifically dedicated to either segment.
Only those costs directly associated with the two segments are shown in cost of revenue and
selling, general and administrative expenses in those segments. All expenses which are common to
both segments and/or represent corporate operating costs are included in the unallocated cost
section. Substantially all the Companys assets are located in the United States.
Certain financial information related to our segments is as follows:
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2008 | 2009 | 2008 | 2009 | |||||||||||||
Defense and Intelligence |
||||||||||||||||
Revenue |
$ | 55.1 | $ | 57.9 | $ | 166.5 | $ | 173.5 | ||||||||
Cost of revenue excluding depreciation and amortization |
0.7 | 1.6 | 3.6 | 4.2 | ||||||||||||
Selling, general and administrative |
1.8 | 2.5 | 5.0 | 8.8 | ||||||||||||
Segment results of operations |
52.6 | 53.8 | 157.9 | 160.5 | ||||||||||||
Commercial |
||||||||||||||||
Revenue |
11.7 | 13.9 | 36.5 | 35.5 | ||||||||||||
Cost of revenue excluding depreciation and amortization |
1.4 | 1.9 | 4.5 | 5.4 | ||||||||||||
Selling, general and administrative |
2.7 | 2.9 | 7.5 | 7.5 | ||||||||||||
Segment results of operations |
7.6 | 9.1 | 24.5 | 22.6 | ||||||||||||
Unallocated Common Costs |
||||||||||||||||
Cost of revenue excluding depreciation and amortization |
3.7 | 4.3 | 11.8 | 12.6 | ||||||||||||
Selling, general and administrative |
13.2 | 16.1 | 42.0 | 49.3 | ||||||||||||
Depreciation and amortization |
18.8 | 18.6 | 56.4 | 56.2 | ||||||||||||
Unallocated costs |
35.7 | 39.0 | 110.2 | 118.1 | ||||||||||||
Income from operations |
24.5 | 23.9 | 72.2 | 65.0 | ||||||||||||
Interest income (expense), net |
(0.7 | ) | | (3.2 | ) | 0.1 | ||||||||||
Loss from early extinguishment of debt |
| | | (7.7 | ) | |||||||||||
Loss on derivative instruments |
| | | (1.8 | ) | |||||||||||
Income before income taxes |
$ | 23.8 | $ | 23.9 | $ | 69.0 | $ | 55.6 | ||||||||
Total U.S. and International sales were as follows:
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in millions) | 2008 | 2009 | 2008 | 2009 | ||||||||||||
Revenue |
||||||||||||||||
U.S. |
$ | 54.3 | $ | 58.7 | $ | 168.6 | $ | 173.1 | ||||||||
International |
12.5 | 13.1 | 34.4 | 35.9 | ||||||||||||
Total Revenue |
$ | 66.8 | $ | 71.8 | $ | 203.0 | $ | 209.0 | ||||||||
Revenue percentages from all customers whose revenue exceeded 10% of the total company revenue were
as follows:
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in millions) | 2008 | 2009 | 2008 | 2009 | ||||||||||||
NGA |
74.0 | % | 74.2 | % | 74.4 | % | 75.8 | % |
Page 8 of 29 |
Table of Contents
DigitalGlobe, Inc.
Notes to Unaudited Consolidated Financial Statements
Notes to Unaudited Consolidated Financial Statements
Percentages of accounts receivable (net of allowance for doubtful accounts) for all customers whose
receivable exceeded 10% of the net accounts receivable as of:
December 31, | September 30, | |||||||
(in millions) | 2008 | 2009 | ||||||
NGA |
64.1 | % | 42.1 | % |
NOTE 4. Property and Equipment
Property and equipment consisted of the following as of:
December 31, | September 30, | |||||||
(in millions) | 2008 | 2009 | ||||||
Construction in progress |
$ | 304.6 | $ | 434.3 | ||||
Computer equipment |
92.2 | 103.6 | ||||||
Machinery and equipment |
25.1 | 25.6 | ||||||
Furniture and fixtures |
12.0 | 12.6 | ||||||
WorldView-1 satellite |
473.2 | 473.2 | ||||||
QuickBird satellite |
174.4 | 174.4 | ||||||
Total property and equipment |
$ | 1,081.5 | $ | 1,223.7 | ||||
Accumulated depreciation
and amortization |
(288.6 | ) | (343.3 | ) | ||||
Property and equipment, net |
$ | 792.9 | $ | 880.4 | ||||
Construction in progress includes satellite construction, ground station construction, and certain
internally-developed software costs and capitalized interest. Depreciation and amortization expense
for property and equipment was $18.1 million and $18.2 million for the three months ended
September 30, 2008 and 2009, respectively, and $54.5 million and $54.8 million for the nine months
ended September 30, 2008 and 2009, respectively.
We have aligned the assessment of the useful life of our operating satellites with the timing of
our insurance renewals. We will perform an annual assessment of the useful life of the our
satellites in the third quarter of the calendar year or when events or circumstances dictate that a
reevaluation of the useful life should be done at an earlier date. The assessment evaluates the
efficiencies of the operation and the fuel level of the satellite against engineering models that
also estimate the satellites useful life. An adjustment will be made to the estimated depreciable
life of the satellite if deemed necessary by the assessment performed. Any changes to the estimated
useful life of our satellites and the related impact on depreciation expense will be accounted for
on a prospective basis on the date of the change.
As a result of our annual assessment during the third quarter of 2009, we extended the estimated
useful life of our QuickBird satellite, which results in a change in the depreciation expense
associated with the QuickBird satellite on a prospective basis beginning July 1, 2009. For the
three and nine month period ended September 30, 2009, this change resulted in reduced depreciation
expense and a corresponding increase in income from continuing operations of $1.4 million, an
increase in net income of $0.9 million and had a $0.02 impact on earnings per share for both the
three and nine month periods ended September 30, 2009. This change will result in a $2.9 million
reduction in depreciation expense for the year ended December 31, 2009.
NOTE 5. Goodwill and Intangibles
Intangible assets consisted of the following:
December 31, 2008 | September 30, 2009 | |||||||||||||||||||||||
Accumulated | Accumulated | |||||||||||||||||||||||
(in millions) | Cost | Amortization | Net | Cost | Amortization | Net | ||||||||||||||||||
Intangible assets: |
||||||||||||||||||||||||
Customer relationships |
$ | 4.3 | $ | 2.5 | $ | 1.8 | $ | 4.3 | $ | 3.3 | $ | 1.0 | ||||||||||||
Core technology |
3.1 | 1.5 | 1.6 | 3.1 | 2.1 | 1.0 | ||||||||||||||||||
Trademark/trade name |
1.1 | 1.1 | | 1.1 | 1.1 | | ||||||||||||||||||
Non-compete agreement |
0.5 | 0.3 | 0.2 | 0.5 | 0.3 | 0.2 | ||||||||||||||||||
Intangible assets |
$ | 9.0 | $ | 5.4 | $ | 3.6 | $ | 9.0 | $ | 6.8 | $ | 2.2 | ||||||||||||
Page 9 of 29 |
Table of Contents
DigitalGlobe, Inc.
Notes to Unaudited Consolidated Financial Statements
Notes to Unaudited Consolidated Financial Statements
The identifiable intangible assets are being amortized on a straight-line basis over their useful
lives, ranging from three to five years, except for customer relationships, which are being
amortized using a declining balance method over their estimated life of five years. During fourth
quarter of 2008, it was determined that the trademarks/tradenames acquired in the GlobeXplorer
acquisition were no longer being utilized by the Company. We have fully amortized the value
associated with the trademark/tradename intangible as of December 31, 2008. Goodwill is not being
amortized for financial statement purposes, but is deductible for income tax purposes.
Amortization expense for intangibles was $0.7 million and $0.4 million for the three months ended
September 30, 2008 and 2009, respectively, and $1.9 million and $1.4 million for the nine months
ended September 30, 2008 and 2009, respectively. These intangible assets will become fully
amortized in 2011. The estimated remaining aggregate amortization expense for the intangible assets
is:
Estimated | ||||
Amortization | ||||
(in millions) | Expense | |||
2009 |
$ | 0.5 | ||
2010 |
$ | 1.5 | ||
2011 |
$ | 0.2 |
A summary of the goodwill activity for the year ended December 31, 2008 and the nine months ended
September 30, 2009 is presented below:
Balance, January 1, 2008 |
$ | 8.7 | ||
Balance, December 31, 2008 |
$ | 8.7 | ||
Balance, September 30, 2009 |
$ | 8.7 |
NOTE 6. Other Accrued Liabilities
December 31, | September 30, | |||||||
(in millions) | 2008 | 2009 | ||||||
Compensation and other employee
benefits |
$ | 7.5 | $ | 7.1 | ||||
Accrued taxes |
1.5 | 0.9 | ||||||
Accrued expense |
7.0 | 6.7 | ||||||
Other |
4.1 | 6.5 | ||||||
Total other accrued liabilities |
$ | 20.1 | $ | 21.2 | ||||
NOTE 7. Debt
Letters of Credit
As of September 30, 2009, we had $22.8 million in letters of credit and performance guarantees used
in the ordinary course of business to support advanced payments from customers under certain of our
DAP contracts. These letters of credit are secured by restricted cash that has been recorded in
our financial statements as both short and long term restricted cash. The letters of credit, and
related restricted cash amounts will be released when the respective contract obligation has been
fulfilled by us.
Senior Secured Notes
We issued $355.0 million principal amount of our senior secured notes in April 2009, net of the
issuance discount of $13.2 million and fees and expenses of $10.2 million. As of September 30,
2009, we have an accreted outstanding amount of $342.9 million senior secured notes which mature on
May 1, 2014. The senior secured notes are guaranteed by our subsidiaries and secured by nearly all
of our assets, including the shares of capital stock of our subsidiaries, the QuickBird,
WorldView-1 and WorldView-2 satellites. Assets collateralizing the senior secured notes had a net
book value of $1,099.0 million as of September 30, 2009. The senior secured notes bear interest at
the rate of 10.5% per annum. Interest is payable semi-annually on May 1 and November 1 each year.
The Company is using the effective interest rate methodology to amortize the deferred financing
costs and to accrete the discount on the notes over the term of the notes.
Page 10 of 29 |
Table of Contents
DigitalGlobe, Inc.
Notes to Unaudited Consolidated Financial Statements
Notes to Unaudited Consolidated Financial Statements
We may redeem some or all of the senior secured notes after May 1, 2012, at a redemption price
equal to 105.25% of their principal amount through May 1, 2013 and 100.0% thereafter, plus, in each
case, accrued and unpaid interest. In addition, at any time on or prior to May 1, 2012, we may
redeem up to 35.0% of the aggregate principal amount of the senior secured notes with the net cash
proceeds of certain equity offerings at 110.5% of the principal amount plus accrued and unpaid
interest. In the event of certain change of control events, we must give holders of the senior
secured notes an opportunity to sell us their notes at a purchase price of 101.0% of the accreted
value of such notes, plus accrued and unpaid interest.
There was no accrued interest for the senior secured notes at December 31, 2008 and the total
accrued interest on the senior secured notes at September 30, 2009 was $16.0 million. Total
interest incurred, including accretion of debt discount and amortization of deferred financing
fees, for the three and nine months ended September 30, 2009 was $10.7 million and $18.0 million,
respectively, which was capitalized in construction costs of our satellite.
The indenture governing the senior secured notes contains a number of significant restrictions and
covenants that, among other things, limit our ability to incur additional indebtedness, make
investments, pay dividends or make distributions to our stockholders, grant liens on our assets,
sell assets, enter into a new or different line of business, enter into transactions with our
affiliates, merge or consolidate with other entities or transfer all or substantially all of our
assets, and enter into sale and leaseback transactions. Fluctuation in credit market conditions
could negatively impact our ability to obtain future financing or to refinance our outstanding
indebtedness.
Senior Credit Facility
We had outstanding a $230.0 million senior credit facility with a syndicate of financial
institutions for whom an affiliate of Morgan Stanley & Co. Incorporated served as administrative
agent. The senior credit facility was guaranteed by our subsidiaries and secured by nearly all of
our assets, including the QuickBird and WorldView-1 satellites, and our WorldView-2 satellite,
which is in final testing. Assets collateralizing the senior credit facility had a net book value
of $977.7 million as of December 31, 2008. The senior credit facility and all accrued interest was
paid in full in April of 2009.
At our election, interest under the senior credit facility was determined by reference to (i)
3-month London Interbank Offered Rate (LIBOR), plus an applicable margin of 5.5% per annum or (ii)
the higher of the prime rate posted in the Wall Street Journal and the Federal Funds effective
rate, plus an applicable margin of 4.5% per annum. Interest was payable quarterly based upon the
amount of the outstanding loan principal balance. The interest rate on the term loans was 3-month
LIBOR plus 5.5% through February 9, 2009. As a result of an amendment on February 9, 2009, the
interest rate on the term loans was 3-month LIBOR plus 6.5%. We paid a fee of $0.7 million to amend
the agreement.
The weighted average interest rate on the total outstanding debt at December 31, 2008 and
September 30, 2008 was 9.2% and 8.3%, respectively. Total accrued interest was $3.5 million at
December 31, 2008. Total interest incurred for the three and nine months ended September 30, 2008,
was $6.6 million and $20.1 million, respectively, of which $5.8 million and $16.3 million,
respectively, was capitalized in the construction costs of our satellites. There was no interest
incurred for the three months ended September 30, 2009 and $9.6 million for the nine months ended
September 30, 2009 of which $9.6 million was capitalized in the construction costs of our
satellites. Interest capitalized is higher in 2009 due to the fact total costs incurred on
WorldView-2 exceeds our outstanding debt.
With the issuance of our senior secured notes on April 28, 2009, the senior credit facility
obligations were paid in full.
Interest Rate Swaps
In April 2005, the Company entered into a series of interest rate swap agreements (the Swap) with
an affiliate of Morgan Stanley & Co. Incorporated to mitigate exposure relating to variable cash
flows associated with fluctuating interest rates on a portion of the senior credit facility
principal. Under the Swap, the Company agreed to exchange, at specified intervals, fixed interest
rate amounts specified in the agreements for variable interest amounts based on 3-month LIBOR
calculated by reference to a notional amount of $100.0 million. As a result of the Swap, the
Company had converted $100.0 million of the senior credit facility from a variable rate obligation
to a fixed rate obligation through April 2009.
On February 21, 2006, we terminated the Swap. The termination resulted in a gain of $0.8 million
which was recorded in accumulated other comprehensive income and is being amortized over the
remaining original term of the Swap. Simultaneous with the termination of the Swap, we entered into
a new swap agreement (the Second Swap) of the same notional amount at a fixed interest rate of
4.9999% from April 18, 2006 through April 18, 2009. The Company elected not to renew the Second
Swap when it expired as we entered into the Third Swap (as described below) to comply with the
covenants of the senior credit facility.
Page 11 of 29 |
Table of Contents
DigitalGlobe, Inc.
Notes to Unaudited Consolidated Financial Statements
Notes to Unaudited Consolidated Financial Statements
The Second Swap was designated and qualified as a cash flow hedge and has been accounted for as
such through February 8, 2009. On February 9, 2009, the Company amended the senior credit facility,
and as a result the Companys Swaps became ineffective and no longer qualified as cash flow hedges.
From February 9, 2009 through April 28, 2009, the fair value changes of these derivative
instruments have been recorded in the Condensed Consolidated Income Statement.
On January 8, 2009, we entered into a swap agreement (the Third Swap) with an affiliate of Morgan
Stanley & Co. Incorporated. We traded the floating 3-month LIBOR rate on $130.0 million of our
senior credit facility to a fixed rate of 2.00% until maturity of the loan on October 20, 2011. The
covenants in our senior credit facility required a minimum interest rate hedge of $100.0 million.
The Third Swap satisfied this obligation through the maturity date of the loan. A net loss of
$1.8 million was recognized on derivatives in the nine month period ended September 30, 2009. No
material gain or loss was recognized in the year ended December 31, 2008, as the related interest
expense incurred is mainly capitalized as part of the construction of our satellites.
At December 31, 2008, a current liability related to the Second Swap in the amount of $1.0 million
was included in accrued liabilities to related party. A net loss of $1.5 million was recorded in
accumulated other comprehensive income in equity at December 31, 2008. With the issuance of the
Third Swap in January 2009 and the amendment to the senior credit facility in February of 2009, all
fair value changes on the derivatives were recorded in the income statement through the expiration
of the Second Swap on April 18, 2009, and the termination of the Third Swap on April 28, 2009. Due
to the Companys payoff of the senior credit facility the Swaps were no longer required. With the
termination of the Swaps, the Company has recorded the accumulated other comprehensive income
balance as an additional cost to the WorldView-2 satellite.
Senior Subordinated Notes
In February 2008, we issued $40.0 million of senior subordinated notes due April 18, 2012. The net
proceeds of $38.5 million were used to fund construction and launch expenditures associated with
WorldView-2. The senior subordinated notes bear interest at 12.5% per annum due semi-annually on
July 31 and January 31, commencing July 31, 2008 until January 31, 2009, after which the rate
increased to 13.5% per annum. On July 31, 2008 and January 31, 2009, we elected to pay interest in
kind and issued additional senior subordinated notes.
Effective February 9, 2009, we amended our senior subordinated notes for certain items, most
notably to increase the allowable capital expenditures for the WorldView-2 satellite, increase the
maintenance capital expenditures limits, as well as change certain satellite insurance limits. The
interest rate on the loan increased to 14.75% for cash interest and 15.75% for paid in kind
interest as of the date of the amendment. We paid a 0.5% one-time in-kind fee to amend the
agreement, which was added to the principal value of the notes. With the issuance of our senior
secured notes on April 28, 2009, the senior subordinated notes and accrued interest were paid in
full.
With the issuance of our senior secured notes during the second quarter of 2009, we recorded an
early extinguishment of debt representing the expensing of the deferred financing costs of
$5.9 million related to the senior credit facility and senior subordinated notes, and a prepayment
penalty of $1.8 million related to the senior subordinated notes.
NOTE 8. Shareholders Equity and Other Comprehensive Earnings (Loss)
On May 14, 2009, the Company completed an initial public offering consisting of 14,700,000 shares
of common stock at $19.00 per share. In connection with the initial public offering, the Company
effected a 1-for-5 reverse stock split on April 28, 2009. At September 30, 2009, the Companys
Board of Directors had the authority to issue 250,000,000 shares of common stock. At September 30,
2009, 44,934,831 shares of common stock were issued and outstanding.
Other Comprehensive Earnings (Loss)
Other comprehensive earnings (loss) include the cumulative effect of realized and unrealized gains
and losses on derivative instruments receiving cash flow hedge accounting treatment during the nine
months ended September 30, 2009. With the expiration and settlement of our financial derivatives
the amounts recorded in accumulated other comprehensive earnings (loss) were capitalized to the
cost of the WorldView-2 satellite as of September 30, 2009. There is no difference between net
income and other comprehensive earnings (loss), for the three and nine month periods ended
September 30, 2009.
Page 12 of 29 |
Table of Contents
DigitalGlobe, Inc.
Notes to Unaudited Consolidated Financial Statements
Notes to Unaudited Consolidated Financial Statements
Stock-Based Compensation Programs
Pursuant to the Companys 2007 Stock Option Plan, the Company may, from time to time, issue certain
equity based awards, including stock options, restricted stock, and unrestricted shares (Equity
Awards). Equity Awards may be awarded to employees, officers, directors and certain consultants of
the Company. To date, issued Equity Awards have consisted of stock options and restricted stock.
Since the completion of the initial public offering on May 14, 2009, the Company has utilized the
daily closing stock price to determine the value of our Equity Awards. The date of grant of the
awards is used for the measurement date. The awards are valued as of the measurement date and are
amortized on a straight-line basis over the requisite vesting period.
A summary of stock option activity for the nine months ended September 30, 2009 is presented below:
Weighted | ||||||||||||||||
Average | ||||||||||||||||
Weighted | Remaining | Aggregate | ||||||||||||||
Number | Average | Contractual Term | Intrinsic Value | |||||||||||||
of Shares | Exercise Price | (in years) | (in millions)(2) | |||||||||||||
Balance December 31, 2008 |
2,758,284 | $ | 19.10 | 7.75 | 8.6 | |||||||||||
Granted |
808,813 | |||||||||||||||
Exercised(1) |
53,680 | |||||||||||||||
Forfeited/Expired |
200,492 | |||||||||||||||
Outstanding September
30, 2009 |
3,312,925 | $ | 19.52 | 7.19 | 13.2 | |||||||||||
Exercisable September
30, 2009 |
2,011,752 | $ | 17.69 | 6.03 | 11.4 | |||||||||||
(1) | Upon exercise shares are issued from the authorized but unissued shares
designated for issuance pursuant to the stock option plans. |
|
(2) | Represents the total pretax intrinsic value for stock options with an
exercise price less than the Companys calculated common stock price as of December 31, 2008
and September 30, 2009, respectively, which option holders would have realized had they
exercised their options as of that date. |
Weighted-average grant-date fair values for option awards granted was $9.07 for the nine months
ended September 30, 2009. The total fair value of options vested for the nine months ended
September 30, 2009 was $5.6 million.
The Company recognized stock-based compensation of $1.0 million and $1.5 million during the three
month period ended September 30, 2008 and 2009, respectively, of which $0.2 million and
$0.2 million, respectively, was capitalized to assets under construction, and $2.9 million and
$6.2 million for the nine month period ended September 30, 2008 and 2009, respectively, of which
$0.4 million and $0.7 million, respectively, was capitalized to assets under construction.
The fair value of each option grant was estimated on the date of grant using the Black-Scholes
option-pricing model with the following assumptions:
2009 | ||||
Expected dividend yield |
0.0 | % | ||
Expected stock price volatility |
56.6%59.0 | % | ||
Risk-free interest rate |
1.7%2.4 | % | ||
Expected life of options (years) |
5.0 | |||
Forfeiture rate |
2.0 | % |
Expected volatility is based on a variety of comparable companies within our industry, currently
looking back five years (if available). The expected life and forfeiture rate are based on the
Companys historical experience. The risk-free rate is based on the five-year Treasury note rate.
The total pre-tax intrinsic value or the difference between the exercise price and the market price
on the date of exercise, of stock options exercised during the nine months ended September 30, 2009
was $0.9 million.
As of September 30, 2009 there was a total of $11.1 million of unrecognized expense remaining to be
recognized over a weighted average period of 2.8 years.
Page 13 of 29 |
Table of Contents
DigitalGlobe, Inc.
Notes to Unaudited Consolidated Financial Statements
Notes to Unaudited Consolidated Financial Statements
Restricted Stock
On November 3, 2008, the Company granted a total of 30,000 shares of restricted stock under the
2007 Plan to executives as part of the Long Term Incentive Plan (LTIP) with a fair value of
$22.10 per share. All units granted vest 1/3 each year beginning on March 31, 2009. Upon vesting,
units are converted into shares of common stock. As of September 30, 2009, 10,000 units had vested.
A summary of restricted stock activity for the nine months ended September 30, 2009 is presented
below:
Weighted-Average | ||||||||
Non-vested Restricted Stock | No. of Shares | Grant Date Fair Value | ||||||
Non-vested at December 31,2008 |
30,000 | $ | 22.10 | |||||
Granted |
| | ||||||
Forfeited |
| |||||||
Vested |
(10,000 | ) | 22.10 | |||||
Non-vested at September 30,
2009 |
20,000 | $ | 22.10 |
As of September 30, 2009, there was $0.3 million of total unrecognized compensation cost related to
the non-vested share-based compensation arrangements. That cost is expected to be recognized over a
weighted average period of 1.5 years.
NOTE 9. Earnings Per Share
Basic EPS excludes dilution and is computed by dividing net income available to common stockholders
by the weighted average number of common shares outstanding for the period. Diluted EPS is computed
by dividing net income by the weighted average number of common shares outstanding and dilutive
potential common shares for the period. The Company includes as potential common shares the
weighted average dilutive effects of outstanding stock options using the treasury stock method.
The following table sets forth the number of weighted average shares used to compute basic and
diluted EPS:
For the Three | For the Nine | |||||||||||||||
Months Ended | Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in millions) | 2008 | 2009 | 2008 | 2009 | ||||||||||||
Basic earnings per share: |
||||||||||||||||
Net income |
$ | 14.3 | $ | 14.6 | $ | 40.0 | $ | 33.6 | ||||||||
Basic weighted average number of common shares outstanding |
43.5 | 44.7 | 43.4 | 44.2 | ||||||||||||
Assuming exercise of stock options |
0.8 | 0.7 | 0.7 | 0.5 | ||||||||||||
Diluted weighted average number of common shares outstanding, as adjusted |
44.3 | 45.4 | 44.1 | 44.7 | ||||||||||||
Earnings per share: |
||||||||||||||||
Basic |
$ | 0.33 | $ | 0.33 | $ | 0.92 | $ | 0.76 | ||||||||
Diluted |
$ | 0.32 | $ | 0.32 | $ | 0.91 | $ | 0.75 | ||||||||
The number of options that were excluded from EPS, calculated as the effects thereof were
anti-dilutive, were 1.1 million, 2.2 million, 1.0 million and 2.2 million for the three months
ended September 30, 2008 and 2009 and the nine months ended September 30, 2008 and 2009,
respectively.
NOTE 10. Related Party Transactions
As a result of the Companys initial public offering in May 2009, the Company has reevaluated
related parties due to the change in ownership and has concluded that Morgan Stanley and Beach
Point Capital Management L.P. remain its only related parties. On a prospective basis, the Company
will only update related party information for these two entities. As a result of the initial
public offering, Ball Corporation, Hitachi Ltd./Hitachi Software Engineering Co., Ltd., ITT
Industries, Inc./Eastman Kodak, MacDonald Dettwiler and Associates, and Telespazio S.p.A./Eurimage
S.p.A. are no longer related parties going forward from the initial public offering date.
Historical information pertaining to these companies will continue to be disclosed if balances and
activity for these entities is included in the financial statements presented.
Page 14 of 29 |
Table of Contents
DigitalGlobe, Inc.
Notes to Unaudited Consolidated Financial Statements
Notes to Unaudited Consolidated Financial Statements
Morgan Stanley
There were no amounts owed to Morgan Stanley in accounts payable and/or accrued liabilities to
related party at December 31, 2008. There were no amounts owed to Morgan Stanley in accrued
liabilities to related party at September 30, 2009.
The accrued interest on the Second Swap transaction owed by the Company to an affiliate of Morgan
Stanley & Co. Incorporated was $(0.1) million at December 31, 2008. There was no accrued interest
related to the Second Swap at September 30, 2008. The fair value of the Swap transactions at
December 31, 2008, was $(1.0) million. The Second Swap terminated on April 18, 2009 and the Company
paid the fair value of the Third Swap in conjunction with the repayment of our senior credit
facility and senior subordinated notes. The Company did not have any swaps at September 30, 2009.
At December 31, 2008 and September 30, 2009 Morgan Stanley & Co. Incorporated and its affiliates
held 15,968,099 and 14,365,995 shares, respectively, of the Companys common stock. Pursuant to the
Investor Agreement between us and Morgan Stanley, currently, five Morgan Stanley designees have
been duly elected to and are serving on our Board of Directors. The Directors are Mr. Zervigon, Mr.
Albert, Mr. Jenson, Mr. Whitehurst and Mr. Cyprus. Mr. Albert, Mr. Jenson, Mr. Whitehurst and Mr.
Cyprus are independent directors, as defined under the applicable rules of the New York Stock
Exchange.
In February 2008, we issued Senior Subordinated Unsecured Notes in the amount of $40.0 million
before issuance costs to Morgan Stanley & Co. Incorporated and
Post Advisory Group, LLC (now Beach Point Capital) and their
related funds and affiliates. In addition, an affiliate of Morgan Stanley & Co. Incorporated earned
fees totaling $0.4 million for the placement of these notes.
As a result of the debt repayment in April 2009, all deferred financing fees paid to Morgan Stanley
associated with this debt were expensed to the income statement in loss from early extinguishment
of debt. As a result of the early extinguishment of debt, the Company paid a penalty of
$0.9 million and $7.1 million in new deferred financing fees. In April 2009, we paid our senior
subordinated notes in full.
In April 2008, we made an initial filing of our S-1 registration statement (S-1) with the SEC. In
that filing, we named Morgan Stanley & Co. Incorporated as a book-runner manager for our proposed
Initial Public Offering (IPO).
In July 2008, the Company entered into an agreement with an affiliate of Morgan Stanley & Co.
Incorporated to provide management services for the Companys employee stock option plans.
In April 2009, Morgan Stanley & Co. Incorporated was the book-running manager for our senior
secured note offering.
In May 2009, Morgan Stanley & Co. Incorporated was the book-running manger for our IPO.
Beach Point Capital Management L.P. (assignee of Post Advisory Group LLC)
In January 2009, Beach Point Capital Management L.P. (Beach Point Capital) assumed certain rights
and obligations from Post Advisory Group LLC. In connection with that assignment, Beach Point
Capital became investment manager of certain funds that hold stock of the Company. In February
2008, we issued Senior Subordinated Unsecured Notes in the amount of $40.0 million before issuance
costs to Morgan Stanley & Co. Incorporated and funds and affiliates that are now managed by Beach
Point Capital. In addition, Beach Point Capital and their related funds and affiliates earned fees
totaling $0.4 million for the placement of these notes.
As a result of the debt repayment in April of 2009, all deferred financing fees paid to Beach Point
Capital associated with this debt were expensed to the income statement in loss from early
extinguishment of debt. As a result of the early extinguishment of debt, the Company paid a penalty
of $0.9 million. In April 2009, we paid our senior subordinated notes in full.
At December 31, 2008 and September 30, 2009, Beach Point Capital and their related funds and
affiliates held 6,487,923 and 4,751,646 shares, respectively, of the Companys common stock.
Page 15 of 29 |
Table of Contents
DigitalGlobe, Inc.
Notes to Unaudited Consolidated Financial Statements
Notes to Unaudited Consolidated Financial Statements
Ball Corporation
Under various contracts with Ball Aerospace, we incurred expenses of $4.4 million and $27.3 million
for the three and nine month periods ended September 30, 2008, respectively, which were capitalized
as part of the costs of building our WorldView-1 and 2 satellites. We incurred expenses of
$13.1 million for the year 2009 until the initial public offering date, which was capitalized as
part of the costs of building our WorldView-2 satellite. There were no amounts owed to Ball
Aerospace in accounts payable to related party at December 31, 2008. There were no amounts owed to
Ball Aerospace in accrued liabilities to related party at December 31, 2008.
At December 31, 2008, Ball Corporation and its affiliates held 2,791,090 shares of the Companys
common stock. During 2007, Ball Corporation had a designated representative serving on the Board.
This representative resigned from the Board in December 2007.
Hitachi, Ltd. Hitachi Software Engineering Co., Ltd.
Hitachi, Ltd. (Hitachi), currently is a master international distributor of the Companys products
and was the exclusive distributor in most of Asia. Its rights and obligations have been assigned to
Hitachi Software Engineering Co., Ltd. (Hitachi Software), an affiliate of Hitachi. Its exclusivity
in most of Asia was amended in January 2004 to allow DigitalGlobe access to markets outside of
Japan.
On January 28, 2005, we entered into a data distribution agreement with Hitachi Software which
appoints Hitachi Software as a reseller of our products and services and authorized Hitachi
Software to sell access time to our WorldView-2 satellite. Under the data distribution agreement we
received a payment of $10.0 million in 2005. We entered into a direct access facility purchase
agreement with Hitachi Software on March 23, 2007. Under this agreement, we will construct and sell
to Hitachi Software a direct access facility, which will allow a customer of Hitachi Software to
directly access and task our WorldView-2 satellite. In total, under our direct access facility
purchase agreement, we have received $14.7 million of payments at December 31, 2008. As of
December 31, 2008, the accumulated amount received from Hitachi Software related to the data
distribution agreement and the direct access facility purchase agreement of $24.7 million was
included in deferred revenue from related party. Engineering work associated with the agreement has
been subcontracted to MacDonald Dettwiler and Associates Ltd. (MDA), also a stockholder of the
Company.
Hitachi earned sales commissions on direct sales by the Company to customers in its region of
$0.4 million and $1.0 million for the three and nine months ended September 30, 2008, respectively.
Hitachi earned sales commissions on direct sales by the Company to customers in its region of
$0.5 million for the year 2009 until the initial public offering date. These amounts are accounted
for as a reduction of revenue in the consolidated statements of operations. Amounts owed to Hitachi
in accrued liabilities to related party totaled $0.1 million at December 31, 2008.
Hitachi Software purchased approximately $5.4 million and $8.6 million of the Companys products in
the three and nine months ended September 30, 2008 and $2.7 million for the year 2009 until the
initial public offering date. Hitachi had a balance in accounts receivable from related party of
$0.9 million at December 31, 2008.
At December 31, 2008, Hitachi and its affiliates held 3,309,145 shares of the Companys common
stock. Until January 2008, they had a designated representative serving on the board of directors.
ITT Industries, Inc./Eastman Kodak
Under various contracts with ITT Industries, we incurred expenditures of $0.2 million and
$6.7 million for the three and nine months ended September 30, 2008, and $0.8 million for the year
2009 until the initial public offering date, which were capitalized as part of the costs of
building our satellites. There were no amounts owed in accounts payable to related party at
December 31, 2008. Amounts owed to ITT Industries in accrued liabilities to related party totaled
$0.1 million at December 31, 2008.
At December 31, 2008, ITT held 770,208 shares of the Companys common stock.
MacDonald Dettwiler and Associates
Since September 1996, we have had a series of agreements with MDA, a stockholder of the Company,
for purchase of various goods, software licenses and engineering and related services.
Under various agreements we have incurred expenditures of $2.6 million and $8.2 million for the
three and nine months ended September 30, 2008, respectively, and $3.1 million for the year 2009
until the initial public offering date. Total costs incurred with MDA related to the construction
of the direct access facility for Hitachi of $13.6 million was recorded as long term deferred
contract costs to related parties at December 31, 2008. Remaining expenditures have been
capitalized in the cost of the satellites. Amounts owed to MDA in accrued liabilities to related
party totaled $1.0 million at December 31, 2008.
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DigitalGlobe, Inc.
Notes to Unaudited Consolidated Financial Statements
Notes to Unaudited Consolidated Financial Statements
At December 31, 2008, MDA and its affiliates held 27,667 shares of the Companys common stock.
Telespazio S.p.A./Eurimage S.p.A.
Telespazio S.p.A. (Telespazio), is a master reseller of our products and services in Europe.
Telespazio earned sales commissions on direct sales by the Company to customers in its region of
$0.2 million and $0.4 million for the three and nine months ended September 30, 2008, respectively
and $0.5 million for the year 2009 until the initial public offering date. Amounts owed to
Telespazio in accounts payable to related party totaled $1.8 million at December 31, 2008.
Telespazio and its reseller and subsidiary, Eurimage S.p.A. (Eurimage), purchased approximately
$1.5 million and $4.4 million of the Companys products in the three and nine months ended
September 30, 2008 and $1.6 million for the year 2009 until the initial public offering date.
Amounts owed to us by Telespazio/Eurimage in accounts receivable from related party totaled
$0.3 million at December 31, 2008.
At December 31, 2008, Telespazio and its affiliates held 794,641 shares of the Companys common
stock.
NOTE 11. Commitments and Contingencies
The Company is obligated under certain non-cancelable operating leases for office space and
equipment. We currently lease approximately 168,766 square feet of office and operations space in
Longmont, Colorado. This space includes our principal executive offices. The rent varies in amounts
per year through its expiration date in August 2015. Lease expense for the Longmont location has
been recorded straight line over the term of the lease. The Company received approximately
$8.5 million of certain rent incentives that we have deferred and are amortizing over the life of
the lease. We have $3.8 million and $3.0 million of net leasehold improvements at December 31, 2008
and September 30, 2009, respectively, which we are amortizing ratably over the life of the
leasehold improvements.
Rent expense net of sublease income approximated $0.5 million and $0.5 million for the three months
ended September 30, 2008 and 2009, respectively, and $1.7 million and $2.0 million for the nine
months ended September 30, 2008 and 2009, respectively.
We enter into agreements in the ordinary course of business with resellers and others. Most of
these agreements require us to indemnify the other party against third-party claims alleging that
one of our products infringes or misappropriates a patent, copyright, trademark, trade secret or
other intellectual property right. Certain of these agreements require us to indemnify the other
party against claims relating to property damage, personal injury or acts or omissions by us, our
employees, agents or representatives. In addition, from time to time we have made guarantees
regarding the performance of our systems to our customers.
In addition, the majority of these indemnities, commitments and guarantees do not provide for any
limitation of the maximum potential future payments the Company could be obligated to make. The
Company evaluates and estimates losses from such indemnification based on the likelihood that the
future event will confirm the loss ranging from probable to remote. To date, the Company has not
incurred any material costs as a result of such obligations and has not accrued any liabilities
related to such indemnification and guarantees in the Companys financial statements.
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DigitalGlobe, Inc.
Notes to Unaudited Consolidated Financial Statements
Notes to Unaudited Consolidated Financial Statements
NOTE 12. Subsequent Events
On October 8, 2009, the Company purchased additional insurance coverage on our WorldView-2
satellite. The additional insurance coverage of $8.0 million covers launch plus three years of
operations.
On October 8, 2009, the Company had a successful launch and deployment of our WorldView-2
satellite. The DigitalGlobe ground station received a downlink signal confirming that the satellite
successfully separated from its launch vehicle and automatically initialized its onboard
processors. On October 19, 2009, the Company publicly released imagery confirming the ability of
the WorldView-2 satellite to conduct imaging operations. WorldView-2 is currently undergoing a
verification and calibration of WorldView-2 imagery. The Company expects imagery from WorldView-2
to be commercially available approximately 90 days after launch.
Subsequent
to the end of the third quarter the Company has received payments from certain DAP
customers which are restricted as security for letters of credit, as described in Note 7.
On October 15, 2009, we placed $40.0 million of in-orbit insurance coverage on our QuickBird
satellite for a one year period ending October 18, 2010.
Our Company has evaluated and disclosed all subsequent events have occurred from September 30, 2009
through November 10, 2009, the filing date of this Quarterly
Report Form 10-Q. Other than the four
subsequent events listed above, there were no other subsequent events that required disclosure in
our financial statements.
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DigitalGlobe, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
Managements Discussion and Analysis of Financial Condition and Results of Operations
Item 2: | Managements Discussion and Analysis Of Financial Condition And Results Of Operations |
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 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.
Overview
We are a leading global provider of commercial high resolution earth imagery products and services.
We own and operate three imagery satellites; we believe that with QuickBird and WorldView-1 we
offer among the highest collection rates, resolution and among the most sophisticated technical
capabilities in the commercial market today. We launched our WorldView-2 satellite on October 8,
2009 and upon successful commissioning, we expect that the collection capacity from our
constellation will nearly double. Together, our QuickBird, WorldView-1, and WorldView-2 satellites
will be capable of collecting over 500 million square kilometers of imagery per year upon
successful commissioning of our WorldView-2 satellite. The proprietary imagery we collect is added
daily to our ImageLibrary, which currently houses more than 815 million square kilometers of high
resolution earth imagery, an area greater than five times the earths land mass. We believe that
our ImageLibrary is the largest, most up-to-date and comprehensive archive of high resolution earth
imagery commercially available.
Our products and services support a wide variety of uses such as defense and intelligence
initiatives, mapping and analysis, environmental monitoring, oil and gas exploration, and
infrastructure management. We offer a range of on- and off-line distribution options designed to
enable customers to easily access and integrate our imagery into their business operations and
applications. Our principal customers include U.S. and foreign defense and intelligence agencies
and a wide variety of commercial customers, such as internet portals, companies in the energy,
telecommunications, utility and agricultural industries, and foreign civil government agencies.
We conduct our business through two segments: (i) defense and intelligence and (ii) commercial. We
have organized our business into these two segments because we believe that customers in these two
groups are functionally similar in terms of their areas of focus and purchasing habits. Our imagery
products and services are comprised of satellite and aerial imagery that we process to varying
levels according to the customers specifications. We deliver our products and services using the
distribution method that best suits our customers needs. Customers acquire our imagery either by
placing a tasking order for our satellites to collect data to their specifications or purchasing
satellite and aerial images that are archived in our ImageLibrary.
On May 14, 2009, we completed an initial public offering consisting of 14,700,000 shares of common
stock at $19.00 per share. The total shares sold in the offering included 13,333,744 shares sold by
selling shareholders and 1,366,256 shares sold by us. After deducting payment of the underwriters
discounts and commissions and offering expenses, the net proceeds to us from the sale of the shares
in the offering were approximately $19.0 million.
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DigitalGlobe, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
Managements Discussion and Analysis of Financial Condition and Results of Operations
Revenue
Our principal source of revenue is the licensing of our earth imagery products and services to end
users, application providers and resellers.
Revenue from defense and intelligence customers accounted for 82.5% and 80.6% of our total revenue
in the three months ended September 30, 2008 and 2009, respectively, and 82.0% and 83.0% of our
total revenue in the nine months ended September 30, 2008 and 2009, respectively. Revenue from
commercial customers accounted for 17.5% and 19.4% of our total revenue in the three months ended
September 30, 2008 and 2009, respectively, 18.0% and 17.0% of our total revenue in the nine months
ended September 30, 2008 and 2009, respectively. Growth in defense and intelligence revenue as a
percentage of total revenue was due to increases in National Geospatial-Intelligence Agency (NGA)
purchases under the NextView agreement, including the start of deliveries of imagery
products and services from our WorldView-1 satellite to NGA in late 2007. We expect this trend to
continue through 2009 as a result of the NextView extension. The successful operational
commissioning of our WorldView-2 satellite, launched on October, 8, 2009, may contribute to a
continuation of this trend, depending upon, in part, the date on which WorldView-2 is fully
commissioned and we begin receiving revenue from the sales of WorldView-2 imagery, continued
funding by the U.S. government of purchases of our imagery products and services, including
WorldView-2 imagery, and the success of our Direct Access Program (DAP). Funding for U.S.
government purchases of our imagery products and services is subject to appropriation of funds by
Congress. Should appropriated funds fall below current levels, we could experience a decrease in
our defense and intelligence revenue trend. We generated approximately 84.6% and 83.5% of our
revenue in the United States and Canada for the three months ended September 30, 2008 and 2009,
respectively, and 85.4% and 84.6% of our revenue in the United States and Canada for the nine
months ended September 30, 2008 and 2009, respectively. We generated approximately 15.4% and 16.5%
of our revenue outside of the United States and Canada in the three months ended September 30, 2008
and 2009, and 14.6% and 15.4% of our revenue outside of the United States and Canada in the nine
months ended September 30, 2008 and 2009, respectively. We generated approximately 69.7% of our
revenue from paid tasking and 30.3% from our ImageLibrary for the nine month period ended
September 30, 2009 (treating all of the revenue from the Service Level Agreement (SLA) under the
NextView agreement as paid tasking and excluding amortized revenue).
We
will not recognize revenue from a DAP customer until the ground terminal is placed into operation and we can
provide contractually specified access time to our WorldView-1 and World-View-2 satellites. The
success of DAP will depend on our ability to secure contracts with potential customers and on our
ability to obtain U.S. government approval for contracts with these customers. As described in
Risk Factors Failure to obtain or maintain regulatory approvals could result in service
interruptions or could impede us from executing our business plan, in our Prospectus filed with
the SEC on May 14, 2009, our failure to obtain approval from the U.S. government for future DAP
customers could limit our sales and negatively affect our defense and intelligence revenue trend.
Defense and Intelligence Revenue
Our defense and intelligence segment consists of customers who are principally defense and
intelligence agencies of U.S. or foreign governments. The U.S. government purchases our imagery
products and services primarily through NGA, under the NextView agreement on behalf of various
agencies within the U.S. government. Other U.S. defense and intelligence customers include defense
and intelligence contractors, such as Harris Corporation and Lockheed Martin Corporation. Defense
and intelligence contractors provide an additional outlet for our imagery by providing value added
services, including advanced processing and/or combining our data with other information to deliver
a final product to a customer.
Our defense and intelligence customers focus on image quality and availability. Quality includes
resolution, accuracy, and visual clarity; availability includes frequency of area revisit and
coverage, as well as committed access to certain amounts of our capacity as they integrate our
products and services into their operational planning. Our customers in this segment prefer to
operate under contracts with purchase commitments, through which we receive quarterly or
semi-annual pre-payments in exchange for delivering specific orders to the customer. The revenue
from our defense and intelligence customers has historically been largely from tasking orders, with
a smaller portion from sales of imagery from our ImageLibrary. We believe this trend will continue.
For the nine month period ended September 30, 2009, we generated approximately 80.4% of our defense
and intelligence revenue from paid tasking and 19.6% from our ImageLibrary (treating all of the
revenue from the SLA under the NextView agreement as paid tasking and excluding amortized revenue).
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DigitalGlobe, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
Managements Discussion and Analysis of Financial Condition and Results of Operations
For the three and nine months ended September 30, 2009, we sold to our defense and intelligence
customers both directly and through resellers, with 96.9% and 96.2%, respectively, of our defense
and intelligence revenue coming from direct sales and 3.1% and 3.8%, respectively, from resellers.
For the three and nine months ended September 30, 2009, $54.6 million, or 94.2%, and
$160.9 million, or 92.7%, respectively of our defense and intelligence revenue was generated within
the United States and Canada, and $3.3 million, or 5.8%, and $12.6 million, or 7.3%, respectively
was generated from international defense and intelligence customers. For the three and nine months
ended September 30, 2009, our top five defense and intelligence customers accounted for 96.4% and
97.1%, respectively of our defense and intelligence revenue. NGA was our only customer that
accounted for more than 10% of our revenue in the three and nine months period ended September 30,
2009. NGA accounted for approximately 74.0% and 74.2% of our revenue for the three months ended
September 30, 2008 and 2009, respectively, and 74.4% and 75.8% for the nine months ended
September 30, 2008 and 2009, respectively.
Commercial Revenue
Our commercial business consists of (i) traditional customers, primarily international civil
governments and energy, telecommunications, utility and agricultural companies that use our content
for mapping, monitoring, analysis, planning activities and content aggregation, and (ii) customers
that add our content to enhance and expand the information products and services that they develop
and sell to the commercial market. We call this second type of customer an integrated information
customer.
Most of our traditional commercial customers purchase our imagery products and services on an
as-needed basis, either from the ImageLibrary or by placing tasking orders. By contrast, some of
our integrated information customers prefer contracts to maintain access to our imagery archive, or
provide subscriptions to access our ImageLibrary. The majority of revenue from the commercial
segment has historically been generated from sales of imagery products and services from our
ImageLibrary, with a smaller proportion from tasking orders. We believe this trend will continue in
2009. For the nine month period ended September 30, 2009, we generated approximately 24.7% of our
commercial revenue from paid tasking and 75.3% from our ImageLibrary.
Our commercial customers are located throughout the world. We sell to these customers both directly
and through resellers, with 63.4% and 59.1%, respectively, of our commercial revenue coming from
resellers and 36.6% and 40.9%, respectively, coming from direct sales for the three and nine month
periods ended September 30, 2009.
For the three and nine month periods ended September 30, 2009, $5.4 million, or 38.9%, and
$15.9 million, or 44.8%, respectively, of our commercial revenue was generated in the United States
and Canada and $8.5 million, or 61.1%, and $19.6 million, or 55.2%, respectively, was generated
outside of the United States and Canada. For the three and nine month periods ended September 30,
2009, our top five commercial customers accounted for 51.5% and 45.7%, respectively, of our
commercial revenue. None of these customers accounted for more than 10% of our revenue for the
three and nine month periods ended September 30, 2009. We believe that we will have additional
opportunities in some of the countries with developing economies, such as Brazil, China, India and
Russia, and, as a result, we expect that over the long-term, revenue in our commercial segment will
be higher outside of the United States and Canada.
Backlog
Total backlog was $298.4 million as of September 30, 2009. Total backlog includes $75.0 million
under the NextView agreement, substantially all of which is expected to be recognized prior to
March 31, 2010 when the NextView agreement is scheduled to expire. This represents payments under
the SLA for imagery time on WorldView- 1 that is committed to NGA. Total backlog also includes
$223.4 million of firm orders, minimum commitments under signed customer contracts, remaining
amounts under pre-paid subscriptions, amounts committed under DAP agreements and funded and
unfunded task orders from our government customers. Of this amount, we expect that $11.5 million
will be recognized over the remainder of 2009. In addition, there is $220.1 million of remaining
unamortized revenue related to pre-FOC payments from NGA, of which $6.4 million is expected to be
recognized during the remainder of 2009.
Although we believe backlog to be a reasonable representation of our firm orders and customer
commitments that will be recognized as revenue in the future, these orders and commitments are
subject to risks which could impact the timing or amount of revenue we actually realize. These
risks include order cancellations, government appropriations risk, delays due to weather and
changes in the periods over which we amortize deferred revenue. In addition, because backlog
includes amounts which have been pre-paid and classified as deferred revenue, it is not an
indication of the cash revenue we expect to receive in the future.
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DigitalGlobe, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
Managements Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
For the Three Month Period Ended September 30, 2009 Compared to the Three Month Period Ended
September 30, 2008
The following table summarizes our historical results of operations for the three month period
ended September 30, 2009 compared to the three month period ended September 30, 2008 and our
expenses as a percentage of revenue for the periods indicated:
Three Months Ended | ||||||||||||||||
September 30, | Change | |||||||||||||||
(in millions) | 2008 | 2009 | $ | Percent | ||||||||||||
Historical results of operations: |
||||||||||||||||
Defense and Intelligence revenue |
$ | 55.1 | $ | 57.9 | $ | 2.8 | 5.1 | % | ||||||||
Commercial revenue |
11.7 | 13.9 | 2.2 | 18.8 | ||||||||||||
Total revenue |
66.8 | 71.8 | 5.0 | 7.5 | ||||||||||||
Cost of revenue excluding
depreciation and amortization |
5.7 | 7.8 | 2.1 | 36.8 | ||||||||||||
Selling, general and administrative |
17.8 | 21.5 | 3.7 | 20.8 | ||||||||||||
Depreciation and amortization |
18.8 | 18.6 | (0.2 | ) | (1.1 | ) | ||||||||||
Income from operations |
24.5 | 23.9 | (0.6 | ) | (2.4 | ) | ||||||||||
Interest income (expense), net |
(0.7 | ) | | 0.7 | 100.0 | |||||||||||
Income before income taxes |
23.8 | 23.9 | 0.1 | 0.4 | ||||||||||||
Income tax expense |
(9.5 | ) | (9.3 | ) | 0.2 | 2.1 | ||||||||||
Net income |
$ | 14.3 | $ | 14.6 | $ | 0.3 | 2.1 | % | ||||||||
Three Months Ended | ||||||||
September 30, | ||||||||
2008 | 2009 | |||||||
Expenses as a percentage of revenue: |
||||||||
Total revenue |
100.0 | % | 100.0 | % | ||||
Cost of revenue excluding depreciation and
amortization |
8.5 | 10.9 | ||||||
Selling, general and administrative |
26.6 | 29.9 | ||||||
Depreciation and amortization |
28.1 | 25.9 | ||||||
Income from operations |
36.8 | 33.3 | ||||||
Interest income (expense), net |
(1.0 | ) | | |||||
Income before income taxes |
35.8 | 33.3 | ||||||
Income tax expense |
(14.2 | ) | (13.0 | ) | ||||
Net income |
21.6 | % | 20.3 | % | ||||
Domestic defense and intelligence revenue increased by $3.9 million, primarily due to $3.7 million
from NGA projects and a $0.2 million increase in domestic defense contractors and civil government
sales during the three months ended September 30, 2009. International defense and intelligence
revenue decreased by $1.1 million, due to weaker sales volumes in Europe and Asia.
The decrease in domestic commercial revenue of $0.6 million was due to a decline of sales in the
Americas. In the Americas, the lower sales were a result of lower sales volume through our
resellers. International commercial revenue increased $2.8 million primarily due to higher sales
volumes in Asia with strategic accounts.
Cost of revenue increased due to (i) a $0.9 million increase in consulting and other third-party
costs related to certain project sales, (ii) a $0.7 million increase in labor costs resulting from
increase in salaries and fringe benefit costs and overhead allocation, and (iii) a $0.4 million
increase in the amortization of purchased aerial imagery.
Selling, general and administrative expenses increased due to (i) a $3.6 million increase in
expenses from compensation, travel and related costs due to increased headcount, (ii) increased
stock compensation expense of $0.6 million resulting from stock awards and option grants made in
the second quarter of 2009, offset by $0.2 million decrease in bad debt expense, and a decrease of
$0.4 million in marketing, accounting, consulting and other professional services expenses.
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DigitalGlobe, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
Managements Discussion and Analysis of Financial Condition and Results of Operations
Depreciation and amortization for the three month period ended September 30, 2009, decreased by
$0.2 million due to a decrease of $1.4 million due to extending the life of QuickBird satellite,
offset by an increase of $1.2 million primarily due to bringing other assets into service.
The change from interest expense to interest income is primarily due to all interest expense being
capitalized in 2009, due to the fact that our total costs incurred on WorldView-2 exceeds our
outstanding debt, whereas, not all interest was capitalized in the comparable period in 2008 based
on our spending level on the satellite and other projects. Upon operational commissioning of
WorldView-2, most of our interest will no longer be capitalized and interest expense will increase.
In order to calculate our income tax expense, we performed an analysis of our projected 2009
operating results to determine an effective overall tax rate to be applied for each quarter of
2009.
For the Nine Month Period September 30, 2009 Compared to the Nine Month Period September 30, 2008
The following tables summarize our historical results of operations for the nine month period
September 30, 2009 compared to the nine month period September 30, 2008, and our expenses as a
percentage of revenue for the periods indicated:
Nine Months Ended | ||||||||||||||||
September 30, | Change | |||||||||||||||
(in millions) | 2008 | 2009 | $ | Percent | ||||||||||||
Historical results of operations: |
||||||||||||||||
Defense and Intelligence revenue |
$ | 166.5 | $ | 173.5 | $ | 7.0 | 4.2 | % | ||||||||
Commercial revenue |
36.5 | 35.5 | (1.0 | ) | (2.7 | ) | ||||||||||
Total revenue |
203.0 | 209.0 | 6.0 | 3.0 | ||||||||||||
Cost of revenue excluding
depreciation and amortization |
19.9 | 22.2 | 2.3 | 11.6 | ||||||||||||
Selling, general and administrative |
54.5 | 65.6 | 11.1 | 20.4 | ||||||||||||
Depreciation and amortization |
56.4 | 56.2 | (0.2 | ) | (0.4 | ) | ||||||||||
Income from operations |
72.2 | 65.0 | (7.2 | ) | (10.0 | ) | ||||||||||
Loss from early extinguishment of debt |
| (7.7 | ) | (7.7 | ) | (100.0 | ) | |||||||||
Loss on derivative instruments |
| (1.8 | ) | (1.8 | ) | (100.0 | ) | |||||||||
Interest income (expense), net |
(3.2 | ) | 0.1 | 3.3 | 103.1 | |||||||||||
Net income before income taxes |
69.0 | 55.6 | (13.4 | ) | (19.4 | ) | ||||||||||
Income tax expense |
(29.0 | ) | (22.0 | ) | 7.0 | 24.1 | ||||||||||
Net income |
$ | 40.0 | $ | 33.6 | $ | (6.4 | ) | (16.0 | )% | |||||||
Nine Months Ended | ||||||||
September 30, | ||||||||
2008 | 2009 | |||||||
Expenses as a percentage of revenue: |
||||||||
Total revenue |
100.0 | % | 100.0 | % | ||||
Cost of revenue excluding depreciation and
amortization |
9.8 | 10.6 | ||||||
Selling, general and administrative |
26.8 | 31.4 | ||||||
Depreciation and amortization |
27.8 | 26.9 | ||||||
Income from operations |
35.6 | 31.1 | ||||||
Loss from early extinguishment of debt |
| (3.7 | ) | |||||
Loss on derivative instruments |
| (0.9 | ) | |||||
Interest income, net of interest expense |
(1.6 | ) | | |||||
Income before income taxes |
34.0 | 26.5 | ||||||
Income tax expense |
(14.3 | ) | (10.5 | ) | ||||
Net income |
19.7 | % | 16.0 | % | ||||
Domestic defense and intelligence revenue, increased by $6.3 million, primarily due to $7.0 million
from NGA projects offset by a $0.7 million decrease in civil government revenue. International
defense and intelligence revenue increased $0.7 million, primarily due to increased revenue from
customers in Europe and the Middle East.
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DigitalGlobe, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
Managements Discussion and Analysis of Financial Condition and Results of Operations
Domestic commercial revenue decreased $2.9 million, primarily due to lower sales volumes in both
subscriptions and sales of archive imagery in the Americas. International commercial revenue
increased $1.9 million, primarily due to increased sales to customers in Asia.
The increase in cost of revenue expenses is attributable to (i) a $1.0 million increase in the
amortization of purchased aerial imagery, and (ii) an increase in labor costs, stock compensation
and bonus expense of $1.0 million and (iii) an increase in consulting, accounting and other
professional services costs of $0.3 million.
Selling, general and administrative expenses increased by (i) $7.7 million of increased expenses
from compensation, travel and related costs resulting from increased headcount, (ii) an increase in
stock compensation of $2.9 million, (iii) an increase in
third party commission of $1.3 million, (iv)
an increase in bad debt expenses of $0.8 million, and (v) an increase of $0.5 million in insurance
expense, partially offset by a decrease of $2.1 million in accounting, professional services, and
consulting costs.
Depreciation and amortization for the nine months ended September 30, 2009 decreased by
$0.2 million due to a decrease of $1.4 million as a result
of extending the life of QuickBird satellite,
offset by an increase of $1.2 million primarily due to bringing other assets into service.
The loss from early extinguishment of debt for the nine month period ended September 30, 2009, was
$7.7 million, due to our issuance of senior secured notes with a face value of $355.0 million in
April 2009 and repayment in full of our senior credit facility and our senior subordinated notes.
The early extinguishment of debt represents the expensing of the deferred financing costs of
$5.9 million related to the senior credit facility and senior subordinated notes, and includes a
prepayment penalty of $1.8 million related to the senior subordinated notes.
Due to changes made on our senior secured debt in the first quarter of 2009, our Swap arrangements
became ineffective for accounting purposes and a loss of $1.8 million was recorded through
earnings. In April 2009, in connection with the repayment of our senior secured notes our Swap was
terminated.
The change from interest expense to interest income is primarily due to all interest expense being
capitalized in 2009, due to the fact that our total costs incurred on WorldView-2 exceeds our
outstanding debt, whereas only a portion of our interest was capitalized in 2008 based on our
spending level on the satellite and other projects. Upon operational commissioning of WorldView-2,
most of our interest will no longer be capitalized and interest expense will increase.
The decrease in income tax expense is primarily due to a decrease in pre-tax income. We performed
an analysis of our projected 2009 operating results to determine an effective overall tax rate of
40% to be applied for 2009. Also, in the second quarter of 2008 the Company made an
out-of-period adjustment, which resulted in an increase in income tax expense of $1.4 million. In
connection with the preparation of the second quarter income tax provision and the 2007 federal
income tax return, the Company became aware of certain adjustments that should have been made to
release of the valuation allowance that was recorded in the fourth quarter of 2007. The net
operating loss carry forward recorded as a deferred tax asset as of December 31, 2007, and related
income tax benefit for the year ended December 31, 2007 should have been reduced by $1.4 million,
due to tax basis and related tax depreciation differences.
Liquidity and Capital Resources
We believe that the combination of funds currently available to us and funds expected to be
generated from operations will be adequate to finance our operations and development activities for
the next 12 months provided that NGA continues to purchase imagery from us at current levels. In
June 2009, we announced that we have extended the SLA at $12.5 million per month through March 31,
2010, with an option to extend similar terms through the end of December 2010. Our cash and cash
equivalents balance was $96.1 million at September 30, 2009.
In May 2009, in conjunction with our initial public offering, we received approximately
$19.0 million of net proceeds.
In April 2009, we issued $341.8 million accreted value of our senior secured notes and used
$280.3 million of the net proceeds to repay in full our senior credit facility and senior
subordinated notes and will use the remaining balance for transaction costs and general corporate
purposes. The note transaction resulted in net proceeds to us of $49.8 million, after giving effect
to the debt repayment, increased cash interest expense and an extension of debt maturities. The net
result is that our liquidity improved as of September 30, 2009. As of the issuance date of the
senior secured notes, the cumulative spending on the WorldView-2 satellite exceeds the accreted
value of our debt. Therefore, we will capitalize all of the interest expense, including the
accretion of the debt discount and amortization of debt issue costs on the notes to the WorldView-2
satellite under construction until we reach commissioning of the satellite. We launched our
WorldView-2 satellite October 8, 2009. The satellite must be calibrated and tested to confirm
operational capability, a commissioning process that we expect to take approximately 90 days.
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DigitalGlobe, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
Managements Discussion and Analysis of Financial Condition and Results of Operations
We estimate the additional costs to test and achieve operational capability of WorldView-2 will be
$38.4 million in 2009 for the remainder of 2009, including unallocated contingency, including
$13.0 million accrual related to the on-orbit success of the WorldView-2 satellite. Additional costs to
complete the final testing of WorldView-2 consist predominantly of capitalized interest, internal
labor, and third-party software.
Upon commissioning of our WorldView-2 satellite and until we commence the construction of a new
satellite, we believe that our cash flow from operations will exceed our capital expenditures and
will be sufficient to meet our current long-term liquidity needs. If we begin construction of a new
satellite, we may need to raise additional capital in order to fund a portion of the construction
and launch costs.
We expect to fully utilize our deferred tax assets and tax credits that are not subject to
limitations by the fourth quarter of 2009 and expect to begin paying cash taxes in 2009.
In summary, our cash flows were:
Nine Months Ended | ||||||||
September 30, | ||||||||
(in millions) | 2008 | 2009 | ||||||
Net cash provided by operating activities |
$ | 127.3 | $ | 107.0 | ||||
Net cash used in investing activities |
(105.7 | ) | (154.2 | ) | ||||
Net cash provided by financing activities |
$ | 37.2 | $ | 82.5 |
In the first nine months of 2009, our operating cash flow reflected net income generated during the
period of $33.6 million, adjusted for non-cash items such as depreciation and amortization expense
of $56.2 million, stock-based compensation of $5.5 million, a decrease in long-term deferred
revenue of $19.8 million primarily due to amortization of the pre-FOC payments made to us by NGA
under the NextView agreement, and non-cash deferred income tax expense of $20.5 million. Operating
cash flows include an increase in deferred revenue of $12.4 million, offset by an increase in
deferred contract costs from related party of $11.7 million and a decrease in accounts receivable
of $6.1 million.
In the first nine months of 2008, our operating cash flow reflected net income generated during the
period of $40.0 million, adjusted for non-cash items such as depreciation and amortization expense
of $56.4 million, stock-based compensation of $2.5 million a decrease in long term deferred revenue
of $19.1 million primarily due to amortization of the pre-FOC payments made to us by NGA under the
NextView agreement, and a decrease in deferred income tax assets of $26.6 million. Operating cash
flows included a decrease in accounts receivable of $14.9 million, an increase in deferred contract
costs from related party of $7.7 million, and an increase in deferred revenue from related party of
$6.5 million
Cash paid for satellite and related ground facilities construction was $100.8 million and
$121.4 million, for the nine months ended September 30, 2008 and 2009, respectively.
Cash provided by financing activities was $37.2 million and $82.5 million for the nine months ended
September 30, 2008 and 2009, respectively. In February 2009 we amended our senior credit facility
and paid a fee of $0.7 million. In April 2009, we issued senior secured notes net of discount and
net of fees of $330.9 million, which was used to repay in full the senior credit facility and
senior subordinated notes, plus accrued interest.
Senior Credit Facility and Senior Subordinated Notes
In April 2009, we repaid in full our $230.0 million senior credit facility and our $47.0 million
senior subordinated notes, including accrued interest, with the proceeds from the issuance of our
senior secured notes.
Senior Secured Notes
On April 28, 2009, we issued $355.0 million principal amount of our senior secured notes. Net
proceeds of $341.8 million were used to repay our senior credit facility and senior subordinated
notes in full and pay fees and expenses associated with the transaction. The remaining proceeds
will be used for general corporate purposes. The senior secured notes mature on May 1, 2014. The
senior secured notes are guaranteed by our subsidiaries and secured by nearly all of our assets,
including the shares of capital stock of our subsidiaries, our QuickBird, WorldView-1 and
WorldView-2 satellites. Assets collateralizing the senior secured notes had a net book value of
$1,099.0 million as of September 30, 2009. The senior secured notes bear interest at the rate of
10.5% per annum. Interest is payable semi-annually on May 1 and November 1 of each year.
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DigitalGlobe, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
Managements Discussion and Analysis of Financial Condition and Results of Operations
We may redeem some or all of the senior secured notes after May 1, 2012, at a redemption price
equal to 105.25% of their principal amount through May 1, 2013 and 100% thereafter, plus, in each
case, accrued and unpaid interest. In addition, at any time on or prior to May 1, 2012, we may
redeem up to 35% of the aggregate principal amount of the senior secured notes with the net cash
proceeds of certain equity offerings at 110.5% of the principal amount plus accrued and unpaid
interest. In the event of certain change of control events, holders of the senior secured notes
will have an opportunity to sell us their notes at a purchase price of 101% of the accreted value
of such notes, plus accrued and unpaid interest.
The indenture governing the senior secured notes contains customary events of default. If an event
of default exists under the indenture governing the senior secured notes, the trustee or holders of
at least 25.0% in aggregate principal amount at maturity of the notes then outstanding may
accelerate the maturity of the obligations outstanding under the senior secured notes and exercise
other rights and remedies. The events of default include, among other things, failure to make
payments when due, failure to make an offer to purchase upon certain change of control events,
defaults in the performance of any covenant or agreement in the indenture, certain judgments and
attachments, and impairment of security interests in collateral.
Off-Balance Sheet Arrangements and Guaranty and Indemnification Obligations
Off-Balance Sheet Arrangements
We had no off-balance sheet arrangements as of December 31, 2008 or September 30, 2009.
Guaranty and Indemnification Obligations
We enter into agreements in the ordinary course of business with resellers and others. Most of
these agreements require us to indemnify the other party against third-party claims alleging that
one of our products infringes or misappropriates a patent, copyright, trademark, trade secret or
other intellectual property right. Certain of these agreements require us to indemnify the other
party against claims relating to property damage, personal injury or acts or omissions by us, our
employees, agents or representatives. In addition, from time to time we have made guarantees
regarding the performance of our systems to our customers.
Item 3: | Quantitative and Qualitative Disclosures about Market Risk |
In the normal course of business, we have exposures to interest rate risk and foreign exchange rate
risk related to our foreign operations and foreign currency transactions. We are also exposed to
various market risks that arise from transactions entered into in the normal course of business.
Certain contractual relationships with customers and vendors mitigate risks from currency exchange
rate changes that arise from normal purchasing and normal sales activities.
We do
not currently have any material foreign currency exposure. Our
revenue contracts are primarily denominated in U.S. dollars and the
majority of our purchase contracts are denominated in U.S. dollars.
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DigitalGlobe, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
Managements Discussion and Analysis of Financial Condition and Results of Operations
Item 4: | Controls and Procedures |
We have established disclosure controls and procedures, which are designed to ensure that
information required to be disclosed in reports filed or submitted under the Securities Exchange
Act of 1934 is recorded, processed, summarized, and reported, within the time periods specified in
the Securities and Exchange Commissions rules and forms. These disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that information required
to be disclosed in the reports that we file or submit under the Act is accumulated and communicated
to management, including our Chief Executive Officer (Jill D. Smith,
Chairman, Chief Executive Officer and President) and Chief Financial
Officer (Yancey L. Spruill, Executive Vice President, Chief Financial Officer and
Treasurer), as appropriate, to allow timely decisions regarding
required disclosures.
Our
Chief Executive Officer and the Chief Financial Officer evaluated the effectiveness of our
disclosure controls and procedures as of the end of the period covered by this Form 10-Q. Based on
their evaluations, they concluded that our disclosure controls and procedures were effective as of
September 30, 2009.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting identified in connection with
the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during
the period covered by this report that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
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DigitalGlobe, Inc.
PART II OTHER INFORMATION
Item 1. | Legal Proceedings |
From time to time we are a party to various litigation matters incidental to the conduct of our
business. We are not presently party to any legal proceedings the resolution of which, we believe,
would have a material adverse effect on our business, operating results, financial condition or
cash flows.
Item 1A. | Risk Factors |
Investment in our securities involves risk. In addition to the information set forth in this Form
10-Q, you should carefully consider the risk factors described under the caption Risk Factors in
our Prospectus, filed with the Securities and Exchange Commission on May 14, 2009. There have been
no material changes to our Risk Factors since the filing of our Prospectus.
Item 2. | Changes in Securities and Use of Proceeds |
2.1 Unregistered Sales of Equity Securities
None.
2.2 Use of Proceeds from Public Offering of Common Stock
On May 13, 2009, our registration statement (File No. 333-150235) was declared effective for our
initial public offering, pursuant to which we registered the offering and sale of 1,366,256 shares
of common stock by the Company and the associated sale of 13,333,744 shares of common stock by
selling shareholders, and granted the underwriters the right to purchase an additional 2,205,000
shares from us to cover over-allotments at a public offering price of $19.00 per share. The
underwriters overallotment option was not exercised and such shares were not sold. On May 19,
2009, the offering closed for an aggregate gross offering proceeds of $25.9 million to us and
$253.3 million to the selling shareholders.
As a result of the offering, we received net proceeds of approximately $19.0 million, after
deducting underwriting fees of $1.8 million and additional offering-related expenses of
approximately $3.3 million, for total expenses to us of approximately $5.1 million. No offering
expenses were paid directly or indirectly to any of our directors or officers (or their
associates), or persons owning ten percent or more of any class of our equity securities or to any
other affiliate. There has been no material change in the planned use of proceeds from our initial
public offering from that described in the Prospectus filed with the SEC pursuant to Rule 424(b).
Proceeds of $19.0 million are currently being held in an investment account that is classified as
short term and is included in cash and cash equivalents.
Item 3. | Defaults upon Senior Securities |
None.
Item 4. | Submission of Matters to a Vote of Security Holders |
None.
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DigitalGlobe, Inc.
Item 5. | Other Information |
The Board of Directors of the Company has determined that the Companys 2010 Annual Meeting of
Stockholders will be held on Wednesday, May 19, 2010.
In order for a stockholder proposal, including the nomination of a director, to be considered
timely for the 2010 Annual Meeting, the proposal must be received by our Corporate Secretary no
later than January 22, 2010. Stockholder proposals must meet all applicable requirements set forth
in the federal securities laws and the rules and regulations promulgated thereunder and our bylaws.
Our bylaws state, among other things, that to properly bring business before an annual meeting, a
shareholder must give notice to the Secretary in proper written form not less than ninety (90) days
nor more than one hundred twenty (120) days prior to the anniversary of the immediately preceding
Annual Meeting of shareholders.
Proposals must be sent to our principal executive office: DigitalGlobe, Inc., Attn: Corporate
Secretary, 1601 Dry Creek Drive, Suite 260, Longmont, Colorado 80503.
Item 6: | Exhibits |
a: Exhibits
Exhibit No. | Description | |||
31.1 | Certificate of the Chief Executive Officer and President of DigitalGlobe, Inc. pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. |
|||
31.2 | Certificate of the Chief Financial Officer of DigitalGlobe, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|||
32.1 | Certificate of the Chief Executive Officer and the Chief Financial Officer of DigitalGlobe, Inc. pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002. |
Page 29 of 29 |
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SIGNATURE
DIGITALGLOBE, INC.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Date: November 9, 2009 | /s/ Yancey L. Spruill | |||
Yancey L. Spruill | ||||
Executive Vice President & Chief Financial Officer (Principal Financial and Accounting Officer) |
Table of Contents
EXHIBIT INDEX
Exhibit No. | Description | |||
31.1 | Certificate of the Chief Executive Officer and President of DigitalGlobe, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|||
31.2 | Certificate of the Chief Financial Officer of DigitalGlobe, Inc. pursuant to Section 302 of the Sarbanes Oxley Act of 2002. |
|||
32.1 | Certificate of the Chief Executive Officer and the Chief Financial Officer of DigitalGlobe, Inc. pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. |