Digitalglobe Inc. (DGI, Financial) filed Quarterly Report for the period ended 2010-09-30.
Digitalglobe Inc. has a market cap of $1.4 billion; its shares were traded at around $30.88 with a P/E ratio of 43.6 and P/S ratio of 4.9. DGI is in the portfolios of Julian Robertson of Tiger Management, Lee Ainslie of Maverick Capital, Pioneer Investments, Jim Simons of Renaissance Technologies LLC, Jeremy Grantham of GMO LLC.
The EnhancedView SLA portion of the award is sized at $2.8 billion over the term of the contract; $250 million annually, or $20.8 million per month, for the first four contract years, commencing September 1, 2010, with an increase to $300 million annually, or $25 million per month, for the remaining six years of the contract term. The award also provides for up to $750 million for value added products, infrastructure enhancements and other services, including the option for NGA to require us to lower the altitude of WorldView-2 to an altitude of 496km at any time after September 1, 2013. DigitalGlobe will be required to meet certain service level requirements related to the operational performance of the satellites comprising the WorldView constellation and related ground systems. To support requirements under this agreement, we have begun the procurement and construction of our next satellite, WorldView-3 as well as certain other infrastructure improvements.
We recognize revenue for the $2.8 billion in services to be provided under the EnhancedView SLA using a proportional performance method based upon the capacity of our constellation provided to NGA. The contract requires the Company to increase capacity of the constellation through the installation of additional remote ground terminals, which communicate directly with our satellites, as well as the addition of an entirely new satellite, WorldView-3. Our WorldView-3 satellite is expected to be ready for launch in the second half of 2014. As capacity is added to our constellation, we recognize revenue in direct proportion to the amount of incremental capacity that is made available to NGA. For the month of September, the one month that the agreement was in place, we recognized approximately $12.5 million of revenue under the EnhancedView SLA. Given the significant amount of constellation capacity expected to be generated by WorldView-3 and the increasing percentage of capacity that NGA will acquire from us once WorldView-3 becomes operational, we anticipate a material increase in revenue once WorldView-3 reaches full operational capability.
Under the EnhancedView SLA, and assuming all option years under the agreement are exercised and funded, we will receive a consistent, monthly non refundable cash payment of approximately $20.8 million from NGA during the first four years of the EnhancedView contract, with an increase to $25.0 million per month in years five though ten. Each month is subject to a holdback, up to 10%, depending upon the Companys performance against pre-defined criteria. If we have been certified as having performed all requirements in the agreement each month, no holdback will be applied to that month. If funds are held back, those funds can be applied to future products and services or will fund a pro-rated extension beyond the current contract period. Accordingly, all amounts held back will cause the Company to defer recognition of a corresponding revenue amount until such additional products or services have been provided. For the month ended September 30, 2010, we satisfied all performance criteria under the agreement, and therefore had no holdback applied.
Total backlog was $3.1 billion as of September 30, 2010. Backlog consists of all contractual commitments, including those under the anticipated ten year term of the EnhancedView contract, amounts committed under DAP agreements, firm orders, remaining pre-paid subscriptions and task orders from our government customers. Backlog includes $2.8 billion under the EnhancedView agreement, including $152.3 million for the next 12 months. EnhancedView backlog includes anticipated revenue to be recognized over the life of the EnhancedView agreement of $2.8 billion for the SLA and a firm fixed price reimbursement for investments to greater integrate our operations with the U.S. government. The EnhancedView contract
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Digitalglobe Inc. has a market cap of $1.4 billion; its shares were traded at around $30.88 with a P/E ratio of 43.6 and P/S ratio of 4.9. DGI is in the portfolios of Julian Robertson of Tiger Management, Lee Ainslie of Maverick Capital, Pioneer Investments, Jim Simons of Renaissance Technologies LLC, Jeremy Grantham of GMO LLC.
Highlight of Business Operations:
In September 2003, we entered into the NextView agreement with the National Geospatial-Intelligence Agency (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 received 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 received upon the delivery of imagery once WorldView-1 achieved full operational capability (FOC). In January 2008, we amended the NextView agreement from image-based ordering to a service level agreement (SLA) and increased the amount we received under the NextView agreement from $265.0 million to $311.0 million (NextView SLA). On June 25, 2009, the NextView SLA agreement was further amended to extend the term from July 31, 2009 through March 31, 2010 in consideration for payment of an additional $100.0 million, payable at $12.5 million per month during the extended term. On February 9, 2010 the NextView agreement was amended to provide NGA with an option to extend the agreement for three months on the same terms from April 1, 2010 to June 30, 2010 and six additional options each for a one month period with the last option term expiring on December 31, 2010. On March 11, 2010, NGA exercised the option to extend through June 30, 2010. On June 8, 2010, NGA exercised its first monthly option to extend through July 31, 2010, and on July 13, 2010 exercised its second monthly option to extend through August 31, 2010. The Nextview SLA expired August 31, 2010.The EnhancedView SLA portion of the award is sized at $2.8 billion over the term of the contract; $250 million annually, or $20.8 million per month, for the first four contract years, commencing September 1, 2010, with an increase to $300 million annually, or $25 million per month, for the remaining six years of the contract term. The award also provides for up to $750 million for value added products, infrastructure enhancements and other services, including the option for NGA to require us to lower the altitude of WorldView-2 to an altitude of 496km at any time after September 1, 2013. DigitalGlobe will be required to meet certain service level requirements related to the operational performance of the satellites comprising the WorldView constellation and related ground systems. To support requirements under this agreement, we have begun the procurement and construction of our next satellite, WorldView-3 as well as certain other infrastructure improvements.
We recognize revenue for the $2.8 billion in services to be provided under the EnhancedView SLA using a proportional performance method based upon the capacity of our constellation provided to NGA. The contract requires the Company to increase capacity of the constellation through the installation of additional remote ground terminals, which communicate directly with our satellites, as well as the addition of an entirely new satellite, WorldView-3. Our WorldView-3 satellite is expected to be ready for launch in the second half of 2014. As capacity is added to our constellation, we recognize revenue in direct proportion to the amount of incremental capacity that is made available to NGA. For the month of September, the one month that the agreement was in place, we recognized approximately $12.5 million of revenue under the EnhancedView SLA. Given the significant amount of constellation capacity expected to be generated by WorldView-3 and the increasing percentage of capacity that NGA will acquire from us once WorldView-3 becomes operational, we anticipate a material increase in revenue once WorldView-3 reaches full operational capability.
Under the EnhancedView SLA, and assuming all option years under the agreement are exercised and funded, we will receive a consistent, monthly non refundable cash payment of approximately $20.8 million from NGA during the first four years of the EnhancedView contract, with an increase to $25.0 million per month in years five though ten. Each month is subject to a holdback, up to 10%, depending upon the Companys performance against pre-defined criteria. If we have been certified as having performed all requirements in the agreement each month, no holdback will be applied to that month. If funds are held back, those funds can be applied to future products and services or will fund a pro-rated extension beyond the current contract period. Accordingly, all amounts held back will cause the Company to defer recognition of a corresponding revenue amount until such additional products or services have been provided. For the month ended September 30, 2010, we satisfied all performance criteria under the agreement, and therefore had no holdback applied.
Total backlog was $3.1 billion as of September 30, 2010. Backlog consists of all contractual commitments, including those under the anticipated ten year term of the EnhancedView contract, amounts committed under DAP agreements, firm orders, remaining pre-paid subscriptions and task orders from our government customers. Backlog includes $2.8 billion under the EnhancedView agreement, including $152.3 million for the next 12 months. EnhancedView backlog includes anticipated revenue to be recognized over the life of the EnhancedView agreement of $2.8 billion for the SLA and a firm fixed price reimbursement for investments to greater integrate our operations with the U.S. government. The EnhancedView contract
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