![]() Iridium Communications Inc. RBC 2010 Technology, Media & Communications Conference Matt Desch, CEO June 10, 2010 Exhibit 99.1 |
![]() Disclaimer Safe Harbor Statement This presentation contains statements about future events and expectations known as “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these statements on our current expectations and the information currently available to us. Forward-looking statements in this presentation include statements regarding the expected duration of the existing constellation; expected growth in revenue, subscribers, Operational EBITDA and Operational EBITDA margins; the transition to the Iridium NEXT constellation; features of the Iridium NEXT system; expected Iridium NEXT project costs and deployment schedule; the availability, adequacy and terms of the Iridium NEXT financing; and hosted payload opportunities. Other forward-looking statements can be identified by the words "anticipates," "may," "can," "believes," "expects," "projects," "intends," "likely," "will," "to be" and other expressions that are predictions of or indicate future events, trends or prospects. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Iridium to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, uncertainties regarding expected Operational EBITDA and Operational EBITDA margins, growth in subscribers and revenue, overall Iridium NEXT costs, including Euro currency exchange risks, the company’s ability to finalize the Iridium NEXT financing, potential delays in the Iridium NEXT deployment, levels of demand for mobile satellite services (MSS), and the company’s ability to maintain the health, capacity and content of its satellite constellation, as well as general industry and economic conditions, and competitive, legal, governmental and technological factors. Other factors that could cause actual results to differ materially from those indicated by the forward-looking statements include those factors listed under the caption "Risk Factors" in the company's Annual Report on Form 10-K for the year ended December 31, 2009, filed with the Securities and Exchange Commission on March 16, 2010. There is no assurance that Iridium's expectations will be realized. If one or more of these risks or uncertainties materialize, or if Iridium's underlying assumptions prove incorrect, actual results may vary materially from those expected, estimated or projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to release publicly any revisions to any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise. 2 2 |
![]() Basis of Presentation 3 3 • Reporting Entity For comparison purposes, we have presented the operating results of Iridium Holdings LLC and Iridium Communications Inc. on a combined basis for the year ended December 31, 2009 along with the Iridium Holdings LLC operating results for 2008. The combined 2009 presentation is a simple mathematical addition of the pre-acquisition results of operations of Iridium Holdings LLC for the period from January 1, 2009 to September 29, 2009 and the post-acquisition results of operations of Iridium Communications Inc. for the three months ended December 31, 2009. Please note that this presentation is different from the “combined” presentation that we include in the ‘Management’s Discussion and Analysis’ section of our Form 8-K filed on May 10, 2010, which combined the pre-acquisition results of operations of Iridium Holdings LLC for the period from January 1, 2009 to September 29, 2009 with the full year 2009 results of operations of Iridium Communications Inc., both pre- and post-acquisition. Iridium Communications Inc. had no material operating activities from the date of formation of GHL Acquisition Corp. until the acquisition. There are no other adjustments made in the combined presentation. This presentation is intended to facilitate the evaluation and understanding of the financial performance of the Iridium business on a year-to-year basis. Management believes this presentation is useful in providing the users of our financial information with an understanding of our results of operations because there were no material changes to the operations or customer relationships of Iridium as a result of the acquisition of Iridium Holdings LLC by GHL Acquisition Corp. • Non-GAAP Measures In addition to disclosing financial results that are determined in accordance with U.S. GAAP, we disclose Operational EBITDA, which is a non-GAAP financial measure, as a supplemental measure to help investors evaluate our fundamental operational performance. Operational EBITDA represents earnings before interest, income taxes, depreciation and amortization, Iridium NEXT revenue and expenses (for periods prior to the commencement of operations of Iridium NEXT), stock-based compensation expenses, transaction expenses associated with the acquisition, the impact of purchase accounting adjustments, and changes in the fair value of warrants. We also present Operational EBITDA expressed as a percentage of total revenues, or Operational EBITDA margin. Operational EBITDA does not represent, and should not be considered, an alternative to GAAP measurements such as net income, and our calculations thereof may not be comparable to similarly entitled measures reported by other companies. A reconciliation of Operational EBITDA to net (loss) income, its comparable GAAP financial measure, is in the attached table. By eliminating interest, income taxes, depreciation and amortization, Iridium NEXT revenue and expenses (for periods prior to the deployment of Iridium NEXT only), stock-based compensation expenses, transaction expenses associated with the acquisition, the impact of purchase accounting adjustments and changes in fair value of the warrants, we believe the result is a useful measure across time in evaluating our fundamental core operating performance. Management also uses Operational EBITDA to manage our business, including in preparing its annual operating budget, financial projections and compensation plans. We believe that Operational EBITDA is also useful to investors because similar measures are frequently used by securities analysts, investors and other interested parties in their evaluation of companies in similar industries. As indicated, Operational EBITDA does not include interest expense on borrowed money or the payment of income taxes or depreciation expense on our capital assets, which are necessary elements of our operations. It also excludes expenses in connection with the development, deployment and financing of Iridium NEXT. Since Operational EBITDA does not account for these and other expenses, its utility as a measure of our operating performance has material limitations. Due to these limitations, our management does not view Operational EBITDA in isolation and also uses other measurements, such as net income, revenues and operating profit, to measure operating performance. |
![]() Our Company • Satellite voice and data solutions for enterprise & government • The only provider offering 100% worldwide coverage • #2 industry player by revenue • 66 satellite Low Earth Orbit (LEO) constellation plus in-orbit spares for service through Iridium NEXT • ~359,000 billable subscribers at March 31, 2010 • Anchor U.S. DoD customer – 23% of revenue for Q1 2010 (1) 4 • Complements terrestrial communications solutions • Less than 10% of the earth’s surface is served by terrestrial wireless and wireline • Key Markets: maritime, aviation, handheld, government, machine-to- machine (M2M) • Low and high speed data services growing rapidly 1) Includes direct and indirect DoD revenues and revenues from certain other governmental entities through the DoD gateway. |
![]() What Investors Need to Know • We have unique service capabilities – unlikely to be replicated – in a market projected to double by 2016 • Our subscribers, service revenue and Operational EBITDA are all growing rapidly (and did so through the recession) • We are a very attractive business with Operational EBITDA margin over 40% and significant operating leverage which will cause our margin to expand as we grow • We have a French government guarantee on a financing which will enable us to fully fund our next-generation constellation which is expected to last through 2030 • We are currently valued at 3.3x our estimate for 2010 EBITDA as strong number 2 player (vs. 10.5x for the market share leader) 5 1) Source: Northern Sky Research and other sources (1) |
![]() Unique Position in the MSS Market - Service Capabilities Not Easily Duplicated 6 |
![]() Mobile Satellite Services (MSS) Market • MSS market generated ~ $1.2B in 2009 revenue (1) • MSS Industry CAGR of 12% expected 2010 – 2015 (2) • Iridium & Inmarsat are the two largest providers • Thuraya only offers regional APAC & EMEA coverage • Globalstar satellites unable to provide reliable two-way communication • Others (ORBCOMM, SkyTerra, ICO, Terrestar) serve only specific segments (1) This estimate includes 2008 Thuraya revenues, as public financials are not available for 2009. (source: TMF Associates) (2) Northern Sky Research, 2009 (3) Based on 2009 revenue (4) Inmarsat Core (excludes Stratos) MSS Provider Relative Size (1)(3) 2009 Revenue 2006-2009 Revenue CAGR Inmarsat $695 MM (4) 12% Iridium $319 MM 15% Thuraya $127 MM (1) N/A Globalstar $64 MM -22% Orbcomm $28 MM 4% 7 |
![]() Iridium Markets & Illustrative Applications 8 |
![]() U.S. Government – The Anchor Customer • The U.S. government relies on Iridium for global communications • Significant DoD investment in proprietary gateway & equipment • DoD has been our anchor customer since 2001 • Serves all DoD branches (Army, Navy, Air Force, Marines, Special Operations) & many other government/international users • DoD views our services as being mission-critical • Five year (1) contract signed in Q1 08 • Fixed fee per user (voice) • Tiered pricing (data) • Opportunities to expand relationship (Netted, iGPS & M2M) • Other militaries & governments also use our services (e.g., UK) - included in commercial revenues 9 DoD Revenue (2) 2004 24% 2009 Total Revenue $122 million Total Revenue $319 million 1) As is customary for government contracts, Iridium’s DoD contract is structured as a five year contract with one base year and four one-year options to extend. Iridium’s contract with the DoD is currently in the second year of optional extension, making this the third year of the overall DoD contract. Two one-year option periods remain. 2) Includes direct and indirect DoD revenues and revenues from certain other governmental entities through the DoD gateway. |
![]() M2M (SBD) Data Transmission Voice Call OpenPort Session Iridium Is Used – Everywhere 10 One week plot of SBD Session, Voice Call, & OpenPort Session Origination Points week of 5/23/10-5/29/10 (Commercial Traffic Only) |
![]() Expanding Distribution Network • Wholesale distribution model minimizes costs and risks • Growing web of hundreds of total distribution partners • Partners provide “outsourced R&D” to develop specialty products for individual customer segments • >200 individual applications targeting key verticals 11 |
![]() New Core Products Accelerating our Growth 2001 2001 0 Partners 0 Partners 02 03 04 05 06 07 08 Iridium OpenPort High Functionality Handset Low Cost Handset Original Motorola Voice Handset Iridium 9505A M2M 9601 Voice & Data Modem iGPS M2M Chipset 12 M2M 9602 Iridium 9522B Iridium 9555 U.S. DOD Tactical Radio (Netted) Pre-NEXT Devices Iridium Aero OpenPort 2010 2010 09 > 200 Partners > 200 Partners |
![]() Licensing in New Markets New Geographic Opportunities • Today we have distribution presence in over 100 countries • Potential distribution presence in certain countries offering large growth opportunity: • Russia, China, India, South Africa – Population of 2.7B (1) • Currently pursuing entering these and other countries (1) July 2009 estimate according to CIA World Factbook. 13 |
![]() Growing Rapidly, Even Through Recession 14 |
![]() Continued Growth Expected 2009 1Q’10 2010 Guidance Subscribers (1) 342K Up 11.2% 359K Up 14.3% 376K – 393K Up 10 – 15% Commercial Service Revenue $160.2 M Up 20.3% $40.9 M Up 11.0% Up 10 – 12% Government Service Revenue (2) $53.7 M Up 2.4% $13.7 M Up 3.1% Up 3 – 5% Equipment Revenues $83.5 M Down 30.4% $21.8 M Up 6.5% Single Digit Growth Operational EBITDA (3) $133.9 M Up 20.5% $33.6 M Up 19.6% $145 – 155 M Up 8 – 16% 15 ~375K already as of 6/10/10! 1) Billable subscribers at the end of the respective periods, which exclude suspended subscribers who elected to suspend their accounts and were no generating any fees. 2) Voice and M2M service revenue for the U.S. government 3) Net Income in 2009 and 1Q10 were $48.5M and ($1.3M) respectively, which includes $17.0M and $18.4M of expenses related to purchase price accounting adjustments, net of tax, respectively. Operational EBITDA is defined on page 3. See pages 33 and 36 for a reconciliation of Operational EBITDA to Net Income. |
![]() Subscriber and Service Revenue Key to Earnings Growth • Growing billable subscriber base drives recurring service revenue • Enterprise and government end-users • Service revenue is predictable and growing ($M's) (000's) Robust Billable Subscriber Growth 1) Billable subscribers exclude suspended subscribers who elected to suspend their accounts and were not generating any fees at such time. $235 $201 $159 $129 Q1 03 Q1 10 16 (1) Service Revenue 16 $55 $60 |
![]() • Largely fixed cost business model • Expanding Operational EBITDA margin (1) Substantial Operating Leverage (1) Operational EBITDA is defined on slide 3. Operational EBITDA margin is defined as Operational EBITDA divided by total revenue. Operational EBITDA Operational EBITDA Margin 17 1Q10 Margin 41% - up 340bps from previous 1Q |
![]() Government Backing for Low-Cost, Flexible Financing 18 |
![]() Iridium Has a Strong Balance Sheet • Net Cash of $146M at end of 1Q10 (1) • Strong cash producing operations - 2010 Operational EBITDA guidance provided of $145 – 155M • $262M of potential warrant proceeds from $7.00 and $11.50 warrants 19 (1) Includes Cash & Restricted Cash, less indebtedness at March 31, 2010 |
![]() June 2 nd Announcement • Iridium announced a comprehensive plan for Iridium NEXT constellation and financing • Iridium signed an agreement with Thales Alenia Space (TAS) for next- generation constellation after a comprehensive competitive process • $2.1B (1) contract for 81 satellites (66 operational, 6 in-orbit spares, 9 ground spares) • TAS beginning work immediately under an Authorization to Proceed • First launch scheduled during Q1 2015 • Total NEXT cost now expected to be $2.9B to be spent through 2017 (1) • Coface, France’s export credit agency (ECA), committed to guarantee 95% of $1.8B facility 20 1) Computed at a Euro to USD exchange rate of 1.23 which will be converted to fixed rate after financing close. |
![]() • Coface, France’s export credit agency, has issued a ‘Promise of Guarantee’ which commits to cover 95% of $1.8B facility • Iridium expects an attractive fixed rate consistent with other ECA financings (1) and a flexible, long term (15 years) • Facility only drawn down through 2017 as capital required; payoff over the subsequent 7 years • With Iridium’s growth and delayed drawdown – credit statistics very manageable • Syndication underway now – expect to be completed this summer • Coface guarantee is not conditioned on Iridium raising additional debt or equity Iridium NEXT Financing 21 (1) Globalstar’s maximum potential rate is in the 6.5% range. Combined with expected cash flows, Coface-backed credit facility fully funds Iridium NEXT! |
![]() Iridium NEXT Prime Selection • TAS offers the best comprehensive solution for Iridium in terms of design, functionality, price, schedule and financing • Initial launch scheduled during Q1 2015 • Current fleet expected to provide service through transition to Iridium NEXT • Fully compatible with current constellation and customer devices to simplify network transition and customer continuity 22 • Iridium NEXT features: • Doubles current Iridium subscriber capacity for long-term growth • Supports higher data speeds – enabling the most competitive price points in the industry • Capable of supporting future product enhancements • Designed to host secondary payloads – in discussion with numerous potential candidates • Will maintain Iridium’s unique architecture and its advantages - software upgradability |
![]() Hosted Payload Opportunity • Significant interest from government and industry in sharing Iridium NEXT global networked communications infrastructure • New cash flow stream potential for Iridium • Pre-launch (2012 – 2014) and after launch (data delivery 2015 and beyond) • Potential customers appreciate the unique opportunity Iridium NEXT presents: • Unprecedented spatial and temporal coverage with 66 payloads • Real-time data acquisition from on-board sensors • Cost-effective – fraction of the cost of dedicated satellites • Thales Alenia Space has “designed in” hosted payload flexibility • Active opportunities underway with various governmental agencies 23 23 |
![]() Putting Cost of Iridium NEXT in Perspective • $2.9B constellation (current estimated total cost) (1) • Assumes constellation provides commercially acceptable service through 2030 (2) • Large cash flow potential over constellation life justifies the investment: 24 1) Computed at a Euro to USD exchange rate of 1.23. 2) Design life is expected to be 10 years. Historically, actual constellation life has significantly exceeded design life. 3) Cumulative Operational EBITDA based on midpoint of 2010 Operational EBITDA guidance previously provided by management ($150M) and assuming Operational EBITDA grows at 10% and 15% per year, respectively. For periods after the deployment of Iridium NEXT, Operational EBITDA will not exclude revenues and expenses associated with Iridium NEXT. See page 3 - Basis of Presentation. 4) The Operational EBITDA CAGRs are for illustrative purposes only and are not intended to be and should not be relied upon as management guidance or projections. |
![]() Valued at Large Discount to Peers 25 |
![]() Iridium Trading at 3.3x 2010E Operational EBITDA 26 Current Iridium Trading Valuation Note: Balance sheet data as of 3/31/10. 1) Includes shares outstanding plus the value of the outstanding warrants using the treasury stock method. 2) Cash and restricted cash, less indebtedness at March 31, 2010. 3) Represents midpoint of management guidance. 4) Source: Bloomberg as of 6/4/10; based on 2010 estimated EBITDA. (2) (1) (4) ($ in millions, except per-share data) Share Price as of 6/4/2010 $8.74 x Shares Outstanding 73.0 Market Capitalization $638 Less: Net Cash ($146) Enterprise Value $492 Divided by: 2010E Operational EBITDA (3) $150 Ent. Value / 2010E Operational EBITDA 3.3x Comparison to Inmarsat Approx. 10.5x (Primary Competitor) 26 |
![]() Iridium NEXT Financing and Equity Value 27 27 Expected Iridium NEXT Cumulative Capex Spend • $1.8B Coface-backed facility will be drawn down over time in line with capital expenditures… • While Operational EBITDA grows (1) Potential Operational EBITDA Growth (1) Significant Equity Value In All Years As We Build NEXT (1) Operational EBITDA growth for illustrative purposes only and are not intended to be and should not be relied upon as management guidance or projections (2) Midpoint of 2010 Guidance = $150M |
![]() The Iridium Success Story • Company today has a record of performance - nearly no net debt and strong and growing Operational EBITDA… • Memories gradually fading from predecessor bankruptcy twelve years ago • Extensive scrutiny through recent corporate and financial transactions validate Iridium’s business model • “Conventional wisdom” in industry about operating risks repeatedly overcome by Iridium’s track record and robust network design • $1.8 B French government guarantee to cover full financing needs with low-cost, flexible debt • Can focus now on growing operating margins and generating long term earnings and value 28 |
![]() Iridium NEXT Constellation Industry Leadership Fully Financed Summary Strong Base of Customers Positive & Growing EBITDA Leverage on Assets and Expanding Margins Distribution Model Numerous Opportunities for Growth in Fast Increasing Revenue Growing Market 29 |
![]() Appendix |
![]() (1) Subscribers as of the end of the period (2) Primarily Commercial M2M data subscribers who elected to suspend their accounts and as a result were not generating fees at such time Iridium Communications Inc. and Iridium Holdings LLC Q1 2010 Summary Highlights 31 31 Iridium Holdings LLC (In thousands) 2009 Revenue Subscribers (1) Commercial Voice and M2M data service Voice $ 32,838 219 M2M data 3,782 64 Total voice and M2M data service 36,620 283 Other 198 - Total commercial 36,818 283 Government Voice and M2M data service Voice 13,218 29 M2M data 130 2 Total voice and M2M data service 13,348 31 Engineering and support 5,120 - Total government 18,468 31 Equipment 20,503 - Total revenue and billable subscribers $ 75,789 314 Suspended subscribers (2) 14 Total subscribers 328 NM= Not Meaningful Iridium Communications Inc. 2010 % Change Revenue Subscribers (1) Revenue Subscribers $ 36,607 248 11.5% 13.2% 4,050 76 7.1% 18.8% 40,657 324 11.0% 14.5% 229 - 15.7% NM 40,886 324 11.0% 14.5% 13,494 30 2.1% 3.4% 263 5 102.3% 150.0% 13,757 35 3.1% 12.9% 5,256 - 2.7% NM 19,013 35 3.0% 12.9% 21,843 - 6.5% NM $ 81,742 359 7.9% 14.3% 31 390 18.9% For the Three Months Ended March 31, For the Three Months Ended March 31, |
![]() Iridium Communications Inc. and Iridium Holdings LLC Q1 2010 Consolidated Statements of Operations (In thousands) 32 32 Iridium Holdings LLC Iridium Communications Inc. For the Three Months Ended March 31, 2009 2010 Purchase Accounting Adjustments (1) Revenue: Services: Government $ 18,468 $ 19,013 $ - Commercial 36,818 40,886 (1,056) Subscriber equipment 20,503 21,843 - Total revenue 75,789 81,742 (1,056) Operating expenses: Cost of subscriber equipment sales 11,316 23,145 10,873 Cost of services (exclusive of depreciation and amortization) 19,697 20,361 (1,020) Research and development 12,094 4,265 - Depreciation and amortization 3,675 22,511 19,053 Selling, general and administrative 13,939 15,930 - Transaction costs 643 - - Total operating expenses 61,364 86,212 28,906 Operating profit (loss) 14,425 (4,470) (29,962) Other (expense) income: Interest income (expense), net of capitalized interest (4,639) 106 - Other income (expense), net (68) 117 Total other (expense) income (4,707) 223 - Earnings (loss) before provision (benefit) for taxes 9,718 (4,247) (29,962) Income tax (benefit) provision - (2,930) (11,558) Net income (loss) $ 9,718 $ (1,317) $ (18,404) Operational EBITDA $ 28,117 $ 33,619 $ - (1) When comparing Iridium Communications Inc.'s results of operations to that of Iridium Holdings LLC, the impact of the purchase accounting on the carrying value of inventory, property and equipment, intangible assets and accruals, increased by approximately $19.8 million, $348.2 million, $95.5 million and $29.0 million, respectively compared to Iridium Holdings LLC’s balance sheet as of September 29, 2009. Similarly, Iridium Holdings LLC's deferred revenue decreased by $7.4 million. As a result of the purchase accounting adjustments related to the acquisition, our cost of subscriber equipment sales increased in the first quarter of 2010 as compared to those costs and expenses of Iridium Holdings LLC in prior periods and the decrease in the carrying value of deferred revenue will also result in a decrease in revenue throughout 2010. In addition, the increase in accruals will result in a reduction in cost of services (exclusive of depreciation and amortization) during 2010 and future periods. The increase in property and equipment and intangible assets will result in an increase to depreciation and amortization expense during 2010 and future periods. |
![]() Iridium Communications Inc. and Iridium Holdings LLC Q1 2010 Operational EBITDA Non-GAAP reconciliation (In thousands) 33 33 Iridium Holdings LLC Iridium Communications Inc. Three Months Ended March 31, 2009 Three Months Ended March 31, 2010 Net income (loss) $ 9,718 $ (1,317) Interest expense 4,622 12 Interest income 17 (118) Income taxes - (2,930) Depreciation and amortization 3,675 22,511 Iridium NEXT expenses, net 8,849 3,370 Share-based compensation 593 1,182 Transaction expenses 643 - Purchase accounting adjustments - 10,909 Operational EBITDA $ 28,117 $ 33,619 |
![]() Iridium Communications Inc. and Iridium Holdings LLC 2009 Summary Highlights 34 34 Iridium Holdings LLC Iridium Communications Inc. (In thousands) For the Year Ended December 31, 2008 For the Year Ended December 31, 2009 % Change Revenue Subscribers (1) Revenue Subscribers (1) Revenue Subscribers Commercial Voice and M2M data service Voice $ 121,183 218 $ 143,133 238 18.1% 9.2% M2M data 11,288 59 16,462 70 45.8% 18.6% Total voice and M2M data service 132,471 277 159,595 308 20.5% 11.2% Other 776 - 648 - -16.5% NM Total commercial 133,247 277 160,243 308 20.3% 11.2% Government Voice and M2M data service Voice 52,172 29 52,956 30 1.5% 3.4% M2M data 277 2 770 4 178.0% 100.0% Total voice and M2M data service 52,449 31 53,726 34 2.4% 9.7% Engineering and support 15,310 - 21,472 - 40.2% NM Total government 67,759 31 75,198 34 11.0% 9.7% Equipment 119,938 - 83,499 - -30.4% NM Total revenue and billable subscribers $ 320,944 308 $ 318,940 342 -0.6% 11.0% Suspended subscribers (2) 12 27 Total subscribers 320 369 15.3% NM = Not Meaningful (1) Subscribers as of the end of the period (2) Primarily Commercial M2M data subscribers who elected to suspend their accounts and as a result were not generating fees at such time |
![]() Iridium Communications Inc. and Iridium Holdings LLC 2009 Consolidated Statements of Operations (In thousands) 35 Iridium Holdings LLC Iridium Communications Inc. Iridium Holdings LLC Combined Year For the Year Ended December 31, 2008 For the Three Months Ended December 31, 2009 For the Period January 1, 2009 to September 29, 2009 For the Year Ended December 31, 2009 Impact of Purchase Accounting Adjustments on 2009 results Revenue: Services: Government $ 67,759 $ 19,159 $ 56,039 $ 75,198 $ - Commercial 133,247 39,537 120,706 160,243 (1,675) Subscriber equipment 119,938 17,293 66,206 83,499 - Total revenue 320,944 75,989 242,951 318,940 (1,675) Operating expenses: Cost of subscriber equipment sales 67,570 18,657 33,265 51,922 8,899 Cost of services (exclusive of depreciation and amortization) 69,882 18,965 58,978 77,943 (1,020) Research and development 32,774 5,974 17,432 23,406 - Depreciation and amortization 12,535 22,376 10,850 33,226 18,621 Selling, general and administrative 55,105 16,307 44,505 60,812 - Transaction costs 7,959 - 12,478 12,478 - Total operating expenses 245,825 82,279 177,508 259,787 26,500 Operating profit 75,119 (6,290) 65,443 59,153 (28,175) Other (expense) income: Interest expense, net of capitalized interest (21,094) (47) (12,829) (12,876) (78) Interest income and other income (expense), net (146) 324 670 994 - Total other income (expense) (21,240) 277 (12,159) (11,882) (78) Earnings before provision (benefit) for taxes 53,879 (6,013) 53,284 47,271 (28,253) Income tax provision (benefit) - (1,038) - (1,038) (10,899) Net income $ 53,879 $ (4,975) $ 53,284 $ 48,309 $ (17,354) Operational EBITDA $ 111,103 $ 30,211 $ 103,718 $ 133,929 $ - 35 (1) See page 3 for definition of combined year. (2) When comparing Iridium Communications Inc.'s results of operations to that of Iridium Holdings LLC, the impact of the purchase accounting on the carrying value of inventory, property and equipment, intangible assets and accruals, increased by approximately $19.8 million, $348.2 million, $95.5 million and $29.0 million, respectively compared to Iridium Holdings LLC’s balance sheet as of September 29, 2009. Similarly, Iridium Holdings LLC's deferred revenue decreased by $7.4 million. As a result of the purchase accounting adjustments related to the acquisition, our cost of subscriber equipment sales will increase in the first quarter of 2010 as compared to those costs and expenses of Iridium Holdings LLC in prior periods and the decrease in the carrying value of deferred revenue will also result in a decrease in revenue throughout 2010. In addition, the increase in accruals will result in a reduction in cost of services (exclusive of depreciation and amortization) during 2010 and future periods. The increase in property and equipment and intangible assets will result in an increase to depreciation and amortization expense during 2010 and future periods. (1) (2) |
![]() Iridium Communications Inc. and Iridium Holdings LLC 2009 Operational EBITDA Non-GAAP reconciliation (In thousands) 36 Iridium Holdings LLC Iridium Communications Inc. Iridium Holdings LLC Combined Year (1) For the Year Ended December 31, 2008 Three Months Ended December 31, 2009 For the Period January 1, 2009 to September 29, 2009 For the Year Ended December 31, 2009 Net income $ 53,879 $ (4,975) $ 53,284 $ 48,309 Interest expense 21,094 47 12,829 12,876 Interest income (1,345) (298) (287) (585) Income taxes - (1,038) - (1,038) Depreciation and amortization 12,535 22,376 10,850 33,226 Iridium Next expenses, net 14,113 4,109 9,159 13,268 Stock-based compensation 2,868 436 5,405 5,841 Transaction expenses 7,959 - 12,478 12,478 Purchase accounting adjustments - 9,554 - 9,554 Operational EBITDA $ 111,103 $ 30,211 $ 103,718 $ 133,929 (1) See page 3 for definition of combined year. 36 |