Maxar Technologies reports third quarter 2017 results, declares quarterly dividend

 

Notes to limited pro forma financial information:

Note 1:  Adjustments to IFRS from US GAAP:

Under its application of IFRS, the Company imputes interest on advance payments received from customers that contain a financing element and classifies such amounts as a component of revenue.  DigitalGlobe has not historically recognized a financing element as there is no requirement to do so under US GAAP.  The Company determines the interest rate to be applied to the advance payments based on the Company's prevailing borrowing rate at contract inception and the interest rate is not updated for changes in the circumstances.  The effect of conforming DigitalGlobe's accounting policy for imputing interest on advance payments received from customers that contain a financing element is to increase deferred revenue with an offsetting charge to finance expense. When the products and services are delivered, deferred revenue and revenue are adjusted based on the delivery of the respective goods and services.  The effect of the resulting change in accounting for the financing element on advance customer payments was to increase revenue by $21.2 million (US$17.0 million) and $66.6 million (US$50.9 million) for the three and nine month periods ended September 30, 2017, respectively.

Under IFRS, the Company treats contract amendments that provide for additional services that are distinct from the original contract as modifications of the original contract.  Remaining revenue of the modified contract is recognized prospectively based on the terms of and over the remaining life of the modified contract.  Under US GAAP, DigitalGlobe accounted for such contract amendments as new arrangements and not as modifications of the original contract.  Accordingly, there was no change to the amortization of the deferred revenue related to the original contract under US GAAP.  The differences in deferred revenue recognition and method of amortization impacted the timing and amount of revenue recognized, accordingly revenue was increased by $2.7 million (US$2.1 million) and $8.3 million (US$6.4 million) for the three and nine months ended September 30, 2017, respectively, as a result of conforming this accounting policy.

Note 2:  Pro Forma Adjustments:

Revenue has been adjusted to reflect management's preliminary estimate of the impact during the pro forma period of the fair value of DigitalGlobe's deferred revenue.

Revenue and direct costs, selling, general and administration expense have been adjusted to reflect the elimination of intra entity transactions during the periods and other expense has been adjusted to reflect the elimination of transaction related expenses.

Note 3:  Adjusted EBITDA:

The Company defines adjusted EBITDA, a non-IFRS financial measure, as operating EBITDA less unallocated corporate expenses.

Table 2
Quarterly Pro Forma Financial Information

The following table summarizes limited pro forma financial information for the seven most recently completed quarters since the first quarter of 2016.

The revenues and expenses for DigitalGlobe for each quarter were translated into Canadian dollars using the average rate for the period. The revenues and adjusted EBITDA of DigitalGlobe were conformed to IFRS from US GAAP as a result of the adjustments referred to in Note 1 above.

               
 

Q3

Q2

Q1

Q4

Q3

Q2

Q1

 

2017

2017

2017

2016

2016

2016

2016

($ millions)

             
               

Pro forma revenues:

             
 

Communications

256.0

332.4

332.0

322.3

354.8

361.4

403.2

 

Surveillance and Intelligence

165.3

171.3

162.4

180.7

141.1

141.2

159.2

 

DigitalGlobe

290.8

314.0

290.7

270.7

250.4

239.0

255.3

 

712.1

817.7

785.1

773.7

746.3

741.6

817.7

               

Pro forma adjusted EBITDA:

             
 

Communications

43.0

41.1

50.5

39.5

58.2

56.2

59.5

 

Surveillance and Intelligence

46.9

53.2

38.6

53.4

26.1

40.3

37.7

 

DigitalGlobe

156.4

168.2

157.9

158.0

156.8

151.4

161.0

Pro forma operating EBITDA

246.3

262.5

247.0

250.9

241.1

247.9

258.2

Corporate expenses

(9.1)

(10.5)

(9.7)

(8.5)

(8.3)

(8.6)

(8.6)

 

237.2

252.0

237.3

242.4

232.8

239.3

249.6

               

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