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8-K - 8-K - ORBCOMM Inc.d393388d8k.htm

Exhibit 99

 

LOGO

ORBCOMM ANNOUNCES SECOND QUARTER 2012 RESULTS

– Total Revenues Increased 51%; Service Revenues Increased 38% –

– Net Income of $1.9 Million or $0.04 per Share –

– Adjusted EBITDA of $4.0 Million –

– Subscribers Increased by 26,000 –

Fort Lee, NJ, August 9, 2012 – ORBCOMM Inc. (Nasdaq: ORBC), a global satellite data communications company focused on two-way Machine-to-Machine (M2M) communications, today announced financial results for the second quarter ended June 30, 2012.

The following financial highlights are in thousands of dollars, except per share amounts.

 

    

Three months ended

June 30,

    Six months ended
June 30,
 
     2012      2011     2012      2011  

Service Revenues

   $ 12,418       $ 8,980      $ 23,949       $ 16,377   

Product Sales

   $ 3,901       $ 1,829      $ 8,249       $ 2,315   

Total Revenues

   $ 16,319       $ 10,809      $ 32,198       $ 18,692   

Net Income (loss) attributable to ORBCOMM Inc. Common Stockholders

   $ 1,865       $ (541   $ 4,255       $ (1,272

Net Income (loss) per Common Share

   $ 0.04       $ (0.01   $ 0.09       $ (0.03

EBITDA (1,3)

   $ 3,450       $ 1,081      $ 7,259       $ 1,612   

Adjusted EBITDA (2,3)

   $ 4,022       $ 1,747      $ 8,231       $ 2,546   

 

(1) 

EBITDA is defined as earnings attributable to ORBCOMM Inc. before interest income (expense), provision for income taxes and depreciation and amortization.

(2) 

Adjusted EBITDA is defined as EBITDA, adjusted for stock-based compensation expense, loss on disposition of other investment in Alanco, and noncontrolling interests.

(3) 

A table presenting EBITDA and Adjusted EBITDA, reconciled to GAAP Net Income (Loss), is among other financial tables at the end of this release.

Highlights:

 

   

For the second quarter of 2012, Total Revenues increased 51% to $16.3 million, and Service Revenues increased 38% year-over-year to $12.4 million. Adjusted EBITDA for the period was $4.0 million, up from $1.7 million during the same three months last year. ORBCOMM reported EPS of $0.04 for the second quarter of 2012 compared to a loss of ($0.01) for the comparable period last year.

 

   

For the second quarter of 2012, net subscriber additions were 26,000. ORBCOMM had 715,000 billable subscriber communicators at June 30, 2012, compared to 606,000 at the end of the second quarter last year. The base of billable subscribers increased 18% year-over-year.

 

   

ORBCOMM’s AIS service was selected to be the sole provider by the European Maritime Safety Agency (EMSA), through ORBCOMM’s partner LuxSpace, awarding a multi-year framework contract to provide satellite-based Automatic Identification System (AIS) data used for ship tracking, and maritime navigation safety efforts.

 

   

Our prototype ORBCOMM Generation 2 (OG2) satellite completed several significant milestones, including the most critical environmental tests. We anticipate the satellite will be shipped to Cape Canaveral over the next few weeks to be attached to a Falcon 9 rocket and launched in October. When the OG2 constellation is fully deployed, ORBCOMM will be able to provide multiple new data offerings and we expect its superior service will result in a substantial expansion of ORBCOMM’s addressable markets.


“This quarter, ORBCOMM successfully executed on its growth strategy, which led to strong results this quarter,” said Marc Eisenberg, Chief Executive Officer of ORBCOMM. “Our AIS service got a major endorsement by EMSA to be the sole provider of AIS because our product provides the best service and value on the market. We also added two heavy equipment customers in recent months, extending our position as the leading provider of connectivity to the heavy equipment category. Additionally, both our direct channel and traditional M2M services recorded impressive net subscriber additions for the quarter.”

“We are pleased with ORBCOMM’s substantial revenue growth and continued profitability due to healthy business fundamentals in core network services, direct channel sales and AIS,” said Robert Costantini, Chief Financial Officer of ORBCOMM. “Quarterly Service Revenues grew 38% over prior year, and 8% sequentially, increasing almost $900,000 over the first quarter of 2012. Profit growth continues to be strong, illustrating the solid performance of our business model and its high operating leverage.”

Financial Results and Highlights

Revenues

For the second quarter ended June 30, 2012, Service Revenues were $12.4 million compared to $9.0 million during the same period last year. The year-over-year increase of 38% was the result of an increase of units in service, increases in satellite ARPU, contributions from StarTrak and LMS which were acquired during the past 18 months, and ORBCOMM’s AIS business that contributed $0.5 million to Service Revenues in the second quarter. For the six months ended June 30, 2012, Service Revenues were $23.9 million compared to $16.4 million during the same period last year, increasing 46%.

Product Sales during the second quarter of 2012 increased 113% to $3.9 million from $1.8 million during the second quarter last year. The increase in Product Sales was the result of higher sales at StarTrak, including a full quarter contribution from StarTrak in the second quarter of 2012, the inclusion of LMS which was acquired in January 2012, and increased sales at ORBCOMM’s Japanese subsidiary. Product Sales during the first half of 2012 increased 256% to $8.2 million from $2.3 million during the first half last year.

Total Revenues for the quarter ended June 30, 2012 were $16.3 million compared $10.8 million during the quarter ended June 30, 2011, an increase of 51%. Total Revenues for the six months ended June 30, 2012 were $32.2 million compared $18.7 million during the same period of 2011, an increase of 72%.

 

2


Costs and Expenses

Costs and Expenses for the second quarter of 2012 were $13.9 million compared to $10.8 million during the same period in 2011. Costs and Expenses for the six months ended June 30, 2012 were $28.1 million compared to $19.5 million during the same period in 2011. The increases were mostly due to costs associated with growth in the business, higher product sales, and costs and expenses related to the operations of the StarTrak and LMS that were not present in the prior year period, offset by a reduction in Acquisition-related costs.

Costs of Product Sales for the second quarter of 2012 were $2.6 million compared to $1.4 million for the three months ended June 30, 2011, an increase of 88% due to higher Product Sales. Gross margin on product sales grew to 34% in the most recent quarter from 25% in the second quarter of 2011. Costs of Service, Product Development, and Selling, General and Administrative Expenses were $11.2 million for the second quarter of 2012 compared to $8.7 million in the prior year second quarter, an increase of $2.5 million primarily related to increased business activity and the addition of operating expenses for the acquisitions. ORBCOMM’s gross margin on services expanded to 60% for the second quarter compared to 58% in the second quarter last year.

Acquisition-related Costs were $0.2 million in the second quarter of 2012 and were mostly due to the acquisition of the assets of LMS which closed in January 2012. Acquisition-related Costs were $0.8 million in the second quarter of 2011 and were related to the purchase of assets of StarTrak which closed in May 2011.

Income Before Income Taxes, Net Income, and Earnings Per Share

Income Before Income Taxes for the second quarter of 2012 was $2.4 million compared to a loss of $0.4 million for the second quarter of 2011. For the six months ended June 30, 2012, Income Before Income Taxes was $5.2 million versus a loss of $1.0 million in the prior year period.

Net Income (loss) attributable to ORBCOMM Inc. Common Stockholders was $1.9 million for the three months ended June 2012 compared to a loss of $0.5 million for the similar three month period in 2011. For the six months ended June 30, 2012, Net Income (loss) attributable to ORBCOMM Inc. Common Stockholders was $4.3 million versus a loss of $1.3 million in the prior year period.

Earnings Per Share were $0.04 for the second quarter of 2012 versus a loss of ($0.01) for the second quarter of 2011, and were $0.09 per share for the first half of 2012 versus a loss of ($0.03) for the first half of 2011.

EBITDA and Adjusted EBITDA

EBITDA for the second quarter of 2012 was $3.5 million compared to $1.1 million in the second quarter of 2011, an increase of 219%. EBITDA for the first half of 2012 was $7.3 million compared to $1.6 million in the first half of 2011, an increase of 350%.

Adjusted EBITDA for the second quarter of 2012 was $4.0 million compared to $1.7 million in the second quarter of 2011, an increase of 130%. Adjusted EBITDA margin as a percentage of Total Revenues expanded to 25% in the quarter from 16% a year ago. Adjusted EBITDA for the first half of 2012 was $8.2 million compared to $2.5 million in the first half of 2011, an increase of 223%. EBITDA and Adjusted EBITDA are non-GAAP financial measures used by the Company. Please see the financial tables at the end of the release for a reconciliation of EBITDA and Adjusted EBITDA.

 

3


Balance Sheet & Cash Flow

At June 30, 2012, Cash and Cash Equivalents, Restricted Cash, and Marketable Securities were $75.4 million, increasing from $73.8 million at March 31, 2012.

Cash provided by operating activities was $5.1 million for the first half of 2012. During the six months ended June 30, 2012, cash of $8.6 million was used for capital expenditures, including milestone payments for the OG2 satellite program, and $4.0 million was used in the purchase of LMS.

Total ORBCOMM Inc. Stockholders’ Equity was $177.7 million at June 30, 2012.

Investment Community Conference Call

ORBCOMM will host a conference call and webcast for the investment community this morning at 10:30 AM ET. Senior management will review the results, discuss ORBCOMM’s business, and address questions.

Domestic participants should dial 1-877-941-1466 at least ten minutes prior to the start of the call. International callers should dial 1-480-629-9772. To hear a live web simulcast or to listen to the archived webcast following completion of the call, please visit the Company’s website at www.orbcomm.com, select the “About us” tab, then the investor relations tab, then select “Presentations and Webcasts,” to access the link to the call. To listen to a telephone replay of the conference call, please dial 1-800-406-7325 domestically or 1-303-590-3030 internationally and enter reservation identification number 4557423. The replay will be available from approximately 12:00 PM ET on August 9, 2012, through 11:59 PM ET on August 16, 2012.

About ORBCOMM Inc.

ORBCOMM is a leading global satellite data communications company, focused on Machine-to-Machine (M2M) communications. Its customers include Caterpillar Inc., Doosan Infracore America, Hitachi Construction Machinery, and Hyundai Heavy Industries, Asset Intelligence (a subsidiary of I.D. Systems, Inc.), Komatsu Ltd., Manitowoc Crane Companies, Inc., and Volvo Construction Equipment among other industry leaders. By means of a global network of low-earth orbit (LEO) satellites and accompanying ground infrastructure, ORBCOMM’s low-cost and reliable two-way data communication services track, monitor and control mobile and fixed assets in our core markets: commercial transportation; heavy equipment; industrial fixed assets; marine and homeland security. ORBCOMM based products are installed on trucks, containers, marine vessels, locomotives, backhoes, pipelines, oil wells, utility meters, storage tanks and other assets. ORBCOMM is an innovator and leading provider of solution services for the refrigerated and transportation markets. Under its ReeferTrak,® GenTrak,TM and CargoWatch TM brands, the Company provides customers with the ability to proactively monitor, manage and remotely control their refrigerated and transportation assets. Additionally, ORBCOMM provides Automatic Identification System (AIS) data services for vessel tracking and to improve maritime safety to government and commercial customers worldwide. ORBCOMM is headquartered in Fort Lee, New Jersey and has its network control center in Dulles, Virginia. For more information, visit www.orbcomm.com.

 

4


Forward-Looking Statements

Certain statements discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to our plans, objectives and expectations for future events and include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Such forward-looking statements, including those concerning the Company’s expectations, are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from the results, projected, expected or implied by the forward-looking statements, some of which are beyond the Company’s control, that may cause the Company’s actual results, performance or achievements, or industry results, to be materially different 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: ongoing global economic instability and uncertainty; substantial losses we have incurred and may continue to incur; demand for and market acceptance of our products and services and the applications developed by our resellers; we may need additional capital to pursue our growth strategy; loss or decline or slowdown in the growth in business from our key customers, such as Caterpillar Inc., (“Caterpillar”), Komatsu Ltd., (“Komatsu”), Hitachi Construction Machinery Co., Ltd., (“Hitachi”), and Asset Intelligence, a subsidiary of I.D. Systems, Inc. (“AI”), other value added resellers or VARs and international value-added resellers or IVARs; loss or decline or slowdown in growth in business of any of the specific industry sectors the Company serves, such as transportation, heavy equipment, fixed assets, and maritime; dependence on a few significant customers; our acquisition of the assets of StarTrak Systems LLC and PAR Logistics Management Systems may expose us to additional risks; litigation proceedings; technological changes, pricing pressures and other competitive factors; the inability of our international resellers and licensees to develop markets outside the United States; the inability to obtain or maintain the necessary regulatory approvals or licenses for particular countries or to operate our satellites; market acceptance and success of our Automatic Identification System (“AIS”) business; satellite launch and construction delays and cost overruns of our next-generation satellites and launch vehicles; in-orbit satellite failures or reduced performance of our existing satellites; significant liabilities created by products we sell; the failure of our systems or reductions in levels of service due to technological malfunctions or deficiencies or other events; our inability to renew or expand our satellite constellation; political, legal regulatory, government administrative and economic conditions and developments in the United States and other countries and territories in which we operate; and changes in our business strategy. In addition, specific consideration should be given to various factors described in Part I, Item 1A. “Risk Factors” and Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2011, and other documents, on file with the Securities and Exchange Commission. The Company undertakes no obligation to publicly revise any forward-looking statements or cautionary factors, except as required by law.

 

Contacts   
Investor Inquiries:    Media Inquiries:
Robert Costantini    Jennifer Stroud
EVP and Chief Financial Officer    Vice President
ORBCOMM Inc.    The Abernathy MacGregor Group
703-433-6305    212-371-5999
   jcl@abmac.com

 

5


ORBCOMM Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share data)

(Unaudited)

 

     June 30,     December 31,  
     2012     2011  
ASSETS   

Current assets:

    

Cash and cash equivalents

   $ 29,819      $ 35,061   

Restricted cash

     —          1,000   

Marketable securities

     43,382        45,973   

Accounts receivable, net of allowances for doubtful accounts of $330 and $299

     11,107        7,946   

Inventories

     3,254        2,815   

Prepaid expenses and other current assets

     1,254        1,660   

Deferred tax assets

     892        912   
  

 

 

   

 

 

 

Total current assets

     89,708        95,367   

Satellite network and other equipment, net

     83,642        79,771   

Goodwill

     14,553        11,131   

Intangible assets, net

     8,303        7,125   

Restricted cash

     2,195        2,220   

Deferred tax assets

     132        136   

Other assets

     1,507        1,419   
  

 

 

   

 

 

 

Total assets

   $ 200,040      $ 197,169   
  

 

 

   

 

 

 
LIABILITIES AND EQUITY   

Current liabilities:

    

Accounts payable

   $ 2,272      $ 2,641   

Accrued liabilities

     9,096        14,127   

Current portion of note payable

     275        250   

Current portion of deferred revenue

     2,437        2,099   

Total current liabilities

     14,080        19,117   

Note payable — related party

     1,434        1,480   

Note payable, net of current portion

     3,237        3,376   

Deferred revenue, net of current portion

     1,872        1,570   

Deferred tax liabilities

     954        823   

Other liabilities

     949        226   
  

 

 

   

 

 

 

Total liabilities

     22,526        26,592   
  

 

 

   

 

 

 

Commitments and contingencies

    

Equity:

    

ORBCOMM Inc. stockholders’ equity

    

Preferred Stock Series A, par value $0.001; 1,000,000 shares authorized; 174,012 and 186,265 shares issued and outstanding

     1,738        1,861   

Common stock, par value $0.001; 250,000,000 shares authorized; 46,732,558 and 45,668,527 shares issued

     47        46   

Additional paid-in capital

     247,275        244,543   

Accumulated other comprehensive income

     1,123        1,352   

Accumulated deficit

     (72,374     (76,629

Less treasury stock, at cost, 29,990 shares at June 30, 2012 and 0 shares at December 31, 2011

     (96     —     
  

 

 

   

 

 

 

Total ORBCOMM Inc. stockholders’ equity

     177,713        171,173   

Noncontrolling interests

     (199     (596
  

 

 

   

 

 

 

Total equity

     177,514        170,577   
  

 

 

   

 

 

 

Total liabilities and equity

   $ 200,040      $ 197,169   
  

 

 

   

 

 

 

 

6


ORBCOMM Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(Unaudited)

 

     Three months ended     Six months ended  
     June 30,     June 30,  
     2012     2011     2012     2011  

Revenues:

        

Service revenues

   $ 12,418      $ 8,980      $ 23,949      $ 16,377   

Product sales

     3,901        1,829        8,249        2,315   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     16,319        10,809        32,198        18,692   
  

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses (1) :

        

Costs of services

     4,950        3,775        9,656        7,238   

Costs of product sales

     2,568        1,366        5,671        1,656   

Selling, general and administrative

     5,599        4,649        10,940        9,070   

Product development

     622        281        1,181        455   

Acquisition-related costs

     210        778        633        1,035   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     13,949        10,849        28,081        19,454   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

     2,370        (40     4,117        (762

Other income (expense):

        

Interest income

     23        44        50        98   

Other income (expense)

     5        (307     52        (206

Gain on extinguishment of debt, net of expenses

     —          —          1,062        —     

Interest expense

     (8     (78     (32     (126
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income (expense)

     20        (341     1,132        (234
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     2,390        (381     5,249        (996

Income taxes

     402        195        796        306   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     1,988        (576     4,453        (1,302

Less: Net income (loss) attributable to the noncontrolling interests

     106        (35     162        (30
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to ORBCOMM Inc.

   $ 1,882      $ (541   $ 4,291      $ (1,272
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to ORBCOMM Inc. common stockholders

   $ 1,865      $ (541   $ 4,255      $ (1,272
  

 

 

   

 

 

   

 

 

   

 

 

 

Per share information-basic:

        

Net income (loss) attributable to ORBCOMM Inc.

   $ 0.04      $ (0.01   $ 0.09      $ (0.03
  

 

 

   

 

 

   

 

 

   

 

 

 

Per share information-diluted:

        

Net income (loss) attributable to ORBCOMM Inc.

   $ 0.04      $ (0.01   $ 0.09      $ (0.03
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding:

        

Basic

     46,706        44,211        46,529        43,472   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     47,146        44,211        47,049        43,472   
  

 

 

   

 

 

   

 

 

   

 

 

 

(1) Stock-based compensation included in costs and expenses:

        

Costs of services

   $ 70      $ 25      $ 114      $ 60   

Costs of product sales

     1        —          9        —     

Selling, general and administrative

     352        364        623        589   

Product development

     43        7        64        10   
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 466      $ 396      $ 810      $ 659   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

7


ORBCOMM Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

     Six months ended
June 30,
 
     2012     2011  

Cash flows from operating activities:

    

Net income (loss)

   $ 4,453      $ (1,302

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

    

Change in allowance for doubtful accounts

     31        (46

Change in the fair value of acquisition-related contingent consideration

     30        —     

Amortization of the fair value adjustment related to StarTrak warranty liabilities

     (148     —     

Depreciation and amortization

     2,190        2,550   

Stock-based compensation

     810        659   

Foreign exchange gains

     (49     (10

Amortization of premium on marketable securities

     382        801   

Increase in fair value of indemnification assets

     (34     —     

Deferred income taxes

     150        65   

Gain on extinguishment of debt and accounts payable

     (1,214     —     

Amortization of transition shared services

     106        —     

Amortization of debt discount for the 6% secured promissory note issued in connection with the acquisition of StarTrak

     —          3   

Loss on disposition of other investment in Alanco

     —          305   

Accretion on note payable-related party

     —          66   

Dividend received in common stock from other investment

     —          (84

Changes in operating assets and liabilities, net of acquisitions:

    

Accounts receivable

     (1,994     (2,223

Inventories

     833        119   

Prepaid expenses and other assets

     454        (24

Accounts payable and accrued liabilities

     (1,344     (315

Deferred revenue

     556        (85

Other liabilities

     (91     (61
  

 

 

   

 

 

 

Net cash provided by operating activities

     5,121        418   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Capital expenditures

     (8,595     (3,844

Purchases of marketable securities

     (34,599     (47,497

Proceeds from maturities of marketable securities

     36,808        59,810   

Acquisition of net assets of StarTrak, net of cash acquired of $322

     —          (1,876

Change in restricted cash

     1,025        810   

Acquisition of net assets of LMS

     (4,000     —     
  

 

 

   

 

 

 

Net cash (used in) provided by investing activities

     (9,361     7,403   
  

 

 

   

 

 

 

Cash flows from financing activities

    

Purchase of noncontrolling ownership interests in Satcom International Group plc

     (199     —     

Repayment of Satcom notes payable

     (253     —     

Principal payments of note payable

     (125     (200

Principal payments of capital leases

     (228     —     

Payment upon exercise of SARs

     —          (24
  

 

 

   

 

 

 

Net cash used in financing activities

     (805     (224
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (197     95   
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     (5,242     7,692   

Cash and cash equivalents:

    

Beginning of period

     35,061        17,026   
  

 

 

   

 

 

 

End of period

   $ 29,819      $ 24,718   
  

 

 

   

 

 

 

 

8


The following table reconciles our Net Income (Loss) attributable to ORBCOMM Inc. to EBITDA and Adjusted EBITDA for the periods shown:

 

     Three months ended
June 30,
    Six months ended
June 30,
 

(in thousands)

   2012     2011     2012     2011  

Net Income (Loss) attributable to ORBCOMM Inc.

   $ 1,882      $ (541   $ 4,291      $ (1,272

Net interest (income) expense

     (15     34        (18     28   

Provision for income taxes

     402        195        796        306   

Depreciation and amortization

     1,181        1,393        2,190        2,550   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     3,450        1,081        7,259        1,612   
  

 

 

   

 

 

   

 

 

   

 

 

 

Stock-based compensation

     466        396        810        659   

Loss on disposition of other investment in Alanco

     —          305        —          305   

Noncontrolling interests

     106        (35     162        (30
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 4,022      $ 1,747      $ 8,231      $ 2,546   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA is defined as earnings attributable to ORBCOMM Inc. before interest income (expense), provision for income taxes and depreciation and amortization. ORBCOMM believes EBITDA is useful to its management and investors in evaluating operating performance because it is one of the primary measures used to evaluate the economic productivity of the Company’s operations, including its ability to obtain and maintain its customers, its ability to operate its business effectively, the efficiency of its employees and the profitability associated with their performance. It also helps ORBCOMM’s management and investors to meaningfully evaluate and compare the results of the Company’s operations from period to period on a consistent basis by removing the impact of its financing transactions and the depreciation and amortization impact of capital investments from its operating results. In addition, ORBCOMM management uses EBITDA in presentations to its board of directors to enable it to have the same measurement of operating performance used by management and for planning purposes, including the preparation of the annual operating budget. The Company also believes that EBITDA, adjusted for Stock-based compensation expense, Loss on disposition of other investment in Alanco, and Noncontrolling interests is useful to investors to evaluate the Company’s core operating results and financial performance and its capacity to fund capital expenditures, because it excludes items that are significant non-cash expenses reflected in the Condensed Consolidated Statements of Operations. EBITDA and Adjusted EBITDA are not performance measures calculated in accordance with accounting principles generally accepted in the United States, or GAAP. While ORBCOMM considers EBITDA and Adjusted EBITDA to be important measures of operating performance, they should be considered in addition to, and not as a substitute for, or superior to, Net Income (loss) or other measures of financial performance prepared in accordance with GAAP and may be different than EBITDA and Adjusted EBITDA measures presented by other companies. A reconciliation table is presented above.

 

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