Maxar Technologies Inc.

David Banks - Vice President of Investor Relations Jeffrey R. Tarr - Chief Executive Officer, President and Director Yancey L.

Spruill - Chief Financial Officer, Executive Vice President and Treasurer

Peter P. Appert - Piper Jaffray Companies, Research Division Howard A.

Rubel - Jefferies & Company, Inc., Research Division Andrea James - Dougherty & Company LLC, Research Division Chris Quilty - Raymond James & Associates, Inc., Research Division Jason M. Gursky - Citigroup Inc, Research Division Brian W.

Ruttenbur - CRT Capital Group LLC, Research Division Mike Greene - The Benchmark Company, LLC, Research Division Kristine T. Liwag - BofA Merrill Lynch, Research Division James Patrick McIlree - Dominick and Dominick Securities Inc., Research Division

Thank you, Darla. Good afternoon, everyone, and thanks for joining our call today.

With me on the call are Jeff Tarr, President and Chief Executive Officer; and Yancey Spruill, Chief Financial Officer. Our remarks today will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended.

Any forward-looking statements are based upon our historical performance and our current plans, estimates and expectations. We may make forward-looking statements about, among other matters, revenue and revenue growth, EBITDA and EBITDA margins, earnings per share, cash flow, sales pipelines and strategic initiatives.

Inclusion of this forward-looking information should not be regarded as representation by us that we will achieve future plans, estimates or expectations. Such forward-looking statements are subject to various risks and uncertainties and assumptions.

A number of important factors could cause our actual results and performance to differ materially from those indicated by such forward-looking statements. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which a statement is made or to reflect occurrence of unanticipated events.

Please refer to our earnings release, which can be found in our website at www.digitalglobe.com, for a discussion of these risk factors. You should also refer to our earnings release for an explanation of the non-GAAP financial measures discussed during this call and for a reconciliation of those measures to the nearest applicable GAAP measures.

These non-GAAP measures are indicators that management uses to provide additional, meaningful comparisons between current results and prior reported results, and as a basis for planning and forecasting for future periods. For your convenience, we have posted slides on the Investor Relations section of our website at www.digitalglobe.com to give you an overview of the information we will cover today.

[Operator Instructions] With that, I'll turn the call over to Jeff.

Thank you, David. Thanks, everyone for joining us.

We know this has been a difficult week for many of you. We hope you and yours have not been personally impacted by the storm.

We appreciate you making the extra effort to join us today. Turning to our business.

I'm very pleased to report another exceptionally strong quarter. We grew revenue 31%, marking our fourth straight quarter of double-digit growth.

Again, we expanded margins, increased free cash flow and delivered a market improvement in earnings per share. Guided by our vision of becoming the leading source of information about our changing planet, we're making great progress toward becoming a $1 billion, high growth, recurring revenue geospatial information business, with an increasingly diversified revenue base.

Today, I'll provide some insight into why customers are choosing DigitalGlobe and rewarding us with sustained double-digit growth. I'll then update you on our strategic combination with GeoEye.

After that, I'll turn the call over to Yancey, who will share detailed financial results and the upward revision to our guidance. Once again, we grew both our Defense & Intelligence and Commercial segments.

Defense & Intelligence was up 24% and Commercial was up 57%. Importantly, 12 month backlog was up 20%, with Defense & Intelligence 12 month backlog also up 20% and Commercial up 24%, contributing to confidence in our future.

Growth in both segments was broad based and a testament to the value we are delivering to our customers. U.S.

Government revenue was up 28%. This reflects a step up in revenue under the Service Level Agreement as a result of the additional capacity in delivering to the National Geospatial-Intelligence Agency or NGA through the activation of 3 new Remote Ground Terminals early in the quarter.

Our performance against NGA's exacting requirements was excellent and there was no holdback in the quarter. Growth in U.S.

Government revenue also reflects continued improvement in value-added services, which grew by 44% versus last year at $8.2 million. While not a significant contributor in the quarter, we entered into a strategically important agreement with the U.S.

Air Force to provide upgrades to its Eagle Vision ground terminals in multiple locations around the world. These upgrades will provide Direct Access to WorldView-1 and WorldView-2, speeding delivery to those who need our imagery most.

This agreement, the growth and value-added services and most importantly, the strength of our relationship with the NGA are a direct result of our relentless focus on providing superior performance and value to the U.S. taxpayer and the critical role commercial imagery and geospatial intelligence play in the defense of our nation.

International Defense and Intelligence customers also contributed to our growth this quarter. This customer category was up 9%.

More than 90% of the revenue in this category came from our 5 Direct Access or DAP customers. An exciting recent development, we entered into a contract with our sixth DAP customer.

This customer will use our imagery to monitor change on and over their borders to ensure the security of their nation. This multi-year, multimillion dollar agreement will become operational and begin contributing to revenue in the second half of 2013.

We continue to actively work the DAP sales pipeline and hope to add other new customers in the coming quarters. Revenue from Location Based Services or LBS continues to thrive, up this quarter by more than 100% based on the high value that customers like Microsoft, Apple, Google, Yandex, NAVTEQ and others are placing on imagery, mapping mobility and geospatial applications.

What we do plays a critical role in creating the maps we all use every day in our cars and on our cell phones and tablets, and in addition, enhances the user experience with corresponding imagery. We are proud to be aligned with the world's leaders in this category, and look forward to future growth as we continue to innovate alongside our customers in this fast-growing space.

Revenue from our International Civil Government customers grew by 26% with the strongest growth in emerging markets where rapid change in economic development create demand for imagery and geospatial information that is used for mapping, resource, land and environmental management. Our joint venture in China and partners in Russia report demand that is driving strong double-digit growth despite increasing competition from both commercial and state-owned satellites.

Finally, revenue from other industry verticals was up 67%. From a near standing start 1.5 years ago, we built partnerships with FactSet, Bloomberg, Genscape, IHS, Esri, SAAB and others.

In many cases, our efforts with these partners are in early stages of development and hold great promise for the future, as both partners and users across a wide range of industries realize the benefits of timely, accurate imagery and analysis on a global scale. Across all customer groups, our strong organic growth puts us amongst the best performing information services companies.

And our planned combination with GeoEye will further accelerate our progress. Over the last several months, I've spoken with large customers who are looking forward to realizing the many benefits of the combination.

By optimizing orbits, coordinating scheduling and eliminating redundant imaging, we will increase capacity and improve timelines and revisit. The customers will also benefit from the security of a satellite on the ground that can be launched if needed and many other benefits that will come from bringing together the industry's most capable constellation, the GeoEye's advanced production and analytics.

To shareowners, the combination offers the benefit of a more diversified revenue base and reductions in capital intensity. We continue to believe that we'll be able to close the transaction at the end of Q4 or early in 2013.

There are 4 key prerequisites to closing: shareowner approval and 3 regulatory approvals. With regard to shareowner approval, as of yesterday, our proxy became effective and we've begun mailing.

Both companies have such shareowner meeting dates for December 3, and we anticipate a favorable outcome. The 3 governmental agencies from whom we require regulatory approval are the FCC, NOAA and DOJ.

The FCC and NOAA approvals relate to certain license transfers and are proceeding as expected. The third regulatory approval is from the Department of Justice under Hart-Scott-Rodino or HSR.

We're in the process of complying with the Second Request for information. We expect to complete our response to that request in November, after which, the Department of Justice typically has 30 days to review the additional information and the transaction.

We continue to believe that we operate in a highly competitive and rapidly changing environment and that our combination with GeoEye is pro-competitive and will be approved. In anticipation of closing at the end of this year or early next year, we've been hard at work creating a detailed integration plan.

Teams at both companies have validated synergies in excess of $1.5 billion and have mapped out detailed plans to capture them. As we've discussed in the past, most of the synergy will come from a more efficient capital spend.

Operating expense synergy will be realized primarily within 6 quarters of close. There will of course be investments required to capture those synergies.

Those investments, while significant, are included in our more than $1.5 billion synergy estimate. Recall that all of our synergy targets have always and continue to assume that only the DigitalGlobe EnhancedView SLA continues beyond November 30 of this year and that there is no further GeoEye cost share payment.

As promised, we will provide more detailed estimates including the impact on our 2013 P&L on or about the time of close. Overall, I'm proud of the progress that's being made by our team at DigitalGlobe and our future colleagues at GeoEye to ensure a smooth combination, rapid achievement of synergy and realization of the promise of this transaction for customers and shareowners alike.

I reserved some closing comments, but I'd now like to turn the call over to Yancey for a discussion of our financial results and guidance.

Thanks, Jeff. I share your enthusiasm for the quarter.

It was simply spectacular. Revenue of $107.2 million was up 31% year-over-year, driven by growth in every revenue line and customer group, and represents our fourth consecutive quarter of double-digit revenue growth.

Q3 D&I revenue was $81.1 million, up 24% year-over-year. These results include a year-over-year increase of $12.1 million from the EnhancedView Service Level Agreement of $51.4 million.

This increase in the SLA was driven by another step up in the capacity of our constellation as we activated the final 3 Remote Ground Terminals or RGTs during the third quarter. Adding these RGTs allowed us to deliver more imagery to NGA beginning in September.

Our 2-year RGT expansion plan is now complete. This capacity increase will positively impact results for the entire fourth quarter.

As a result, we expect fourth quarter SLA revenue of $56.8 million, which now represents more than 90% of the total cash receipts under the agreement. We will stay at the current level of revenue under the SLA until we add the final capacity expansion with the launch of our next satellite.

Q3 U.S. Government growth was also aided by a 44% year-over-year improvement in our value-added services revenue to $8.2 million.

We are pleased with the improving trend with value-added services. However, we continue to remain cautious on the outlook for additional growth beyond the current level during this period of U.S.

Government budget pressure. International D&I revenue was $15.1 million in Q3, up 9%, driven by DAP revenue of $14.4 million, up 19%.

We are pleased to announce that we signed our 6th Direct Access customer in the quarter. This is a long-standing customer who has bought imagery from us over many years and is now converting to our DAP model.

The new relationship is a multimillion dollar annual revenue stream and represents significant growth from the existing relationship when we bring them online, which we anticipate will be in second half of 2013. Commercial revenue was $26.1 million in the quarter, up 57% year-over-year.

Growth was strong across the board among International Civil Governments, providers of Location Based Services and other industry verticals, each of which generated double-digit growth year-over-year. Our outlook across the universe of our customers and Commercial customer base is robust.

Our forward 12-month revenue backlog increased 20% year-over-year to $366.2 million, reflecting strong momentum across our business and giving us confidence in our outlook for the balance of this year and into 2013. Backlog is reflective of both growth from existing and new customers and the transition of existing customers from lumpy, onetime revenue to a more predictable recurring revenue.

Now on to operating profitability. We generated $44.9 million of EBITDA in the quarter, which includes a $7.5 million of expenses related to the combination with GeoEye.

EBITDA margins were 41.9%, up 210 basis points compared with Q3 of last year despite being impacted by 700 basis points as a result of spending related to the combination in the quarter. Year-to-date, we have incurred approximately $9.7 million of combination-related expense.

We generated significant operating leverage in our operations year-over-year. COGS margin was 20% in the quarter, an improvement of 260 basis points year-over-year.

This came despite the impact of adding to our Remote Ground Terminal network in the quarter. SG&A margin was 37.4%, an improvement of 20 basis points year-over-year, despite being impacted by 700 basis points for spending related to the combination.

Stock compensation expense, which is included in both COGS and SG&A, was $2.5 million in the quarter. Interest expense was $1.9 million in the quarter, down from $4.1 million in the year-ago period.

This reflects the significantly lower total interest cost due to our debt refinancing in Q4 2011 and the increasing amount of interest we are now capitalizing as we continue to add to the assets under construction for EnhancedView. We capitalized approximately 76% of interest in Q3 and expect that percentage to continue to rise as we increase our EnhancedView-related investments.

Tax expense in the quarter was $5.6 million and our effective tax rate was 39.7%, slightly below our expected tax rate for the year. In the quarter, we reported net income of $8.5 million or $0.18 per share, compared with net income of $1.1 million or $0.02 per share last year.

EPS was impacted by approximately $7.5 million of combination-related expense on a pretax basis or $0.10 per diluted share after tax. Our diluted share count in the quarter was $46.5 million.

Now our free cash flow and capital spending. Free cash flow, defined as operating cash flow less investing cash flow, was $19.7 million in Q3 or $0.42 per share.

This represents an $18.9 million increase compared with third quarter 2011. Year-to-date free cash flow was $36.1 million or $0.78 per share, and represents a $68.5 million improvement from the similar period in 2011.

This turnaround reflects the organic revenue growth across our customer base and the progress we are making against our EnhancedView investments, which we continue to expect will be about 2/3 complete by the end of this year. CapEx in the quarter was approximately $53 million, excluding capitalized interest of roughly $6 million.

Year-to-date CapEx is approximately $143 million, excluding capitalized interest. We ended the quarter with $233.8 million in cash, an increase of roughly $35.3 million since the end of 2011.

Across the Board from the income statement to the balance sheet, our business has never been stronger. Now our outlook for the balance of 2012.

Our outlook continues to improve. We now expect revenue growth of 18% to 21% for the year.

This upward revision from approximately 16% growth principally reflects our strong year-to-date performance. We expect to deliver an EBITDA margin of approximately 46% for the year.

The leverage we are seeing in our core operations is being offset by approximately 400 basis points of non-recurring expenses related to the pending combination with GeoEye. Our expectations for cost related to the combination increased by approximately 100 basis points over the past quarter due primarily to our aggressive focus on delivering a comprehensive combination plan that will enable us to hit the ground running day 1 post-closing.

Increase also resulted from some incremental cost to manage the DOJ Second Request. Note that we have not included any of the combination-related success and financing fees in our expense estimates for the year as we are dependent on the actual close of the transaction as opposed to the other costs we have discussed that are being incurred through the period to close.

We expect the GAAP tax rate of approximately 42% for the year. We expect to end the year free cash flow positive including positive free cash flow in the fourth quarter.

Finally, our CapEx outlook is unchanged at approximately $200 million for the year, excluding capitalized interest. Now I will turn it back to Jeff.

Thanks, Yancey. The progress we shared today is a result of the hard work of our many talented team members.

It was only last year that we shared our aspiration of becoming a $1 billion revenue information services company, one that would be the leading source of information about our changing planet. We created, at that time, a clear statement of purpose, vision and values that have come to define how we operate as a team.

We communicated 4 strategic focus areas, EnhancedView success, profitable customer growth, investment excellence and cultural leadership. Our successful effort against each of these focus areas have enabled us to accelerate our revenue growth, expand our margins, better serve our customers and enter into the agreement to combine with GeoEye.

We look forward to joining forces with future colleagues at GeoEye and together, creating value for customers and shareowners, and further accelerating our progress towards our vision. We're now ready to open the call up for your questions.

Jeff, the Commercial revenues obviously are very impressive. Can you give us any additional granularity in terms of what's driving the visibility on these numbers going forward?

And in particular, I'm interested in new verticals and any traction you're seeing in some of these newer verticals you've talked about.

I appreciate that. First of all, this was a strong quarter for our Commercial business in absolute terms and in terms of percentage growth.

And I'm really pleased with the progress our Commercial sales teams and our operation teams have made in realizing the potential, because we're serving a growing list of customers, we're reaching more parts of the world, more industry verticals and we're doing a better job of actually scaling our operations to deliver on that demand. I do want to acknowledge that Q3 was a relatively easy compare and Q4 will be a more difficult compare.

So as we look at this sequence of quarters, it's important to keep that in mind. Although, I will say that we continue to expect this to be a double-digit growth part of our business and one that's going to contribute meaningfully to the diversification of our business over time.

In terms of where the growth is coming from, it's really very broad-based. And if you look at the Commercial growth, it's spread across, pretty evenly across, in absolute terms, across cost Location Based Services, governments and other industry verticals.

And each of them have their own distinct drivers. So LBS growth is coming from adding new accounts and expanding existing accounts, and what has really become almost a -- it's a real competitive battle out there between all these new mapping services and geospatial services, and we're playing key roles on both the front end and back end of those services around the world.

If we look at governments, that's being fueled primarily by what we're seeing in emerging markets, Russia, China, India and all the changes going on there that needs to be monitored. And then in the other verticals, clearly, very robust growth there, primarily through partners and distributors today, including our recent addition of Esri which we announced last quarter.

We see a lot of opportunity there. And over time, you might expect us to break out 1 or 2 of those industry verticals to focus on with more resource.

But for now, I think you've got -- it's actually very broad-based across a wide range of verticals.

And can I ask just a follow up for Yancey. In terms of just how you're thinking about the financing for the GeoEye deal, any thought of maybe, I'm not sure if this is practical or not in terms of refinancing some of it given the current rate environment?

We're staying very close to the markets and you're correct. Obviously, we're in an unprecedented over a long period of time market conditions.

So we're excited about getting into the market to finance the transaction. We are doing quite a bit of work to be ready to go and we'll synchronize the financing activity with our expected timing for the close of the combination with GeoEye.

But if you were doing it today, what would the rates be do you think?

I don't want to talk to that. I would say that the rates would be sort of modestly improved from the assumptions we made in the core synergies and other calculations back in the summer because the rate environment has improved significantly during that period of time.

So obviously, this is a great time to be financing the debt, and we will look forward to doing that in due course here as we get closer to closing with GeoEye.

I want to ask Yancey, maybe to add a little bit of granularity to Peter's question regarding sort of the S-4 has some pretty wonderful numbers for 2013 in terms of what you have for a forecast. And could you sort of elaborate a little bit on about how you arrived at those?

Sure. As you know, Howard, we are excited about the business.

We continue to be excited about the business over many years. I think the projections that you have reviewed in the S-4, first of all, I want to say are not guidance, although they do reflect how excited we are about the growth prospects of the business.

I think they're consistent with what we said historically, which is that we aspire driving the business to $1 billion of revenue. A large piece of that would be driven through organic growth, and obviously with the combination with GeoEye, that accelerates our ability to get to $1 billion.

So that is reflected in the S-4. Those projections were prepared about a year ago, our base case projections in connection with our normal process and the strategic planning review process we have with our Board.

And those in connection with other scenarios, some of which are in the S-4, were used as a backdrop to evaluate the combination with GeoEye, as well as other alternatives that we had. And again, we will provide specific guidance on 2013 as we get into next year and as we get through the close with GeoEye.

But let me just restate that we're very excited about the business, we continue to be. Obviously GeoEye accelerates that and we look forward to having more to say about specifics as we get closer to close.

First question. Do you use cloud [indiscernible] to see you sequestration more than anything else this year?

I was wondering can you talk about feedback that you've gotten, what your customers have communicated to you, if anything, about sequestration?

Let me say, Andrea, I think as you're aware, the EnhancedView program has already been rightsized. So there's already been changes to the program.

They didn't affect the DigitalGlobe portion of the SLA, but they did represent very substantial cuts to the program overall. And so now it's a rightsized program.

No one knows exactly what will happen with sequestration. It's our belief that as long as allocation of any cuts is left up to the agencies, i.e.

Department of Defense, NGA intelligence community, they will be able to continue to avoid cuts to the DigitalGlobe EnhancedView SLA.

And then switching over to Commercial. I think last quarter you said you had a nonrenewal from a key customer.

You didn't say who they where, and I guess my question is, does the strong Q3 include revenue from that customer or is that still some potential out there?

This is Yancey. I'll answer that.

It does not, what we said last quarter was that customer contributed in the first half of 2011. And so it was providing difficulty in comps because the contract did not renew in the second half of last year.

We still have not renewed with that customer, and so it was not contributing to the growth in Q3. In Commercial, what contributed to growth both in LBS was new customer growth, obviously we talked about Apple, existing customer growth with some other customers who will be normalized and more recurring, stable numbers that are more predictable and larger.

International Civil Governments, significant growth in emerging market countries that have been tailwinds for us in the past, China, Russia, Middle East, LatAm and South America. And then in other verticals with new and existing relationships as we continue to build those out with existing and new customers.

First, I wanted to follow up on the value-added services, understanding that, that's subject to customer budgets. We're still surprised that it was as strong as it was.

I think a little bit down sequentially, but still relatively good level. Is it your sense that customer demand trends are going to continue to drive that higher or are there absolutely budget firewalls that are going to keep that revenue at a certain level in the near term?

Certainly there is robust demand for value-added services, both the ones that we're delivering today and new ones. And we're certainly seeing that.

It really does come down to a question of availability of funds. And while we have a high degree of confidence in the EnhancedView SLA, I think you need to think of that more as -- that portion as dial tone, and the rest of what we do as being more subject to availability of funds, and we're on an unprecedented, challenging budget environment.

So for that reason, our outlook for the value-added services remains muted, and we are not relying on growth in value-added services to meet our projections.

And has there been any change in the nature of the value-added services i.e., or are they just buying more raw pixels or more value-added activities in terms of 3D mapping or other advanced services? And to what degree has the value-added services enabled some of that new demand?

By very nature, the value-added services are more than pixels and deliver higher value, more value and additional services to our customer. There has been very good adoption of the web delivery and the rapid processing that supports that web delivery.

So that's certainly there. And there are other activities, which are emerging, developing, continuing, so that is an evolving mix of services.

And final question with some of the LBS customers, some of those obviously have some pretty vast resources. Are there any concerns about a substitution effect, where they may internalize some of the services that you're providing?

Or how well-positioned do you feel you are either today or in the future in a post-merged environment to meet all of their needs and fulfill a lot of their back-end requirements?

Certainly, our Location Based Services customers have multiple options. And if you look at many of their offerings, they use Aerial, they use multiple satellite sources, you could see UAVs coming in, playing a role.

So we know that we need to continue to innovate, we need to continue to be competitive, and we're very focused on that. We believe we've got a solid offering as demonstrated by the fact that we are seeing broad adoption of what we deliver.

But we also recognize we can't stand still and we're not.

Jeff, I wanted to talk a little bit about the sales force, to get started here. How do you describe, perhaps to us, where we are with sales force, particularly on the Commercial side?

And perhaps where we're going, particularly DGI standalone and what the sales force is going to look like afterwards. Both the size and what they're focused on at this point.

I can at least partially answer your question. There's a limit to how far I can go on this call today since we're in the midst of a combination, and the future-looking ideas with regard to sales are a sensitive area.

But I will say we've made a lot of progress and that has been a contributor to the growth that you've seen. And a big step that we took about 6 months ago now was hiring a new sales leader for our Commercial segment and that's someone who came from IHS, a very talented sales leader.

We've been in the process of a program that we're calling the DigitalGlobe way, which is all about looking end-to-end at how we go to market and how we sell, everything from how do we train, how do we set quotas, who do we hire, what are our comp plans. And we are still in the early stages of that transformation but we've made very good progress.

We made some organizational changes to our sales force, which have helped us better serve our customers. So you're seeing the beginning signs of that because keep in mind we've got, on average, a 6 month sales cycle and Bert has been on board now for 6 months.

And I think we're really starting to see that, the impact of that this quarter, and we feel really good about how we're positioned for the future.

Okay, great. And then maybe just to kind of a bookkeeping-type questions.

First on the sixth DAP customer, you suggested that it was an existing customer, but that there would be growth with this customer as it transitions into becoming a DAP customer. Can you perhaps give us a little bit of granularity on the size of what you think the opportunity is here from a growth perspective?

And then, Yancey, just one for you. The stock comp expense during the recent performance of the stock, you're up 10% somewhat today, is that number going to move around on us going forward in light of the higher stock price and can you give us a little bit of sensitivity around that?

So let me start on the DAP and give you some parameters without going too far here. But we've always said we have 1 larger DAP.

And then after that, so of the 5, think about 1 that's a disproportionate share of that $50-somewhat million of revenue and then you've got 4 that are a relatively comparable size. This one is not going to displace our largest DAP, it's more in that kind of median comparable to other DAPs.

And its current revenue is not -- it's not super, it's not significant. It's a meaningful step up.

I think that's about as far as I'm going to go on that. And Yancey, on the second question?

With respect to stock comp, there's a couple of elements to that. The vast majority of our stock comp expense comes from annual grants based on performance and those are targeted around dollar values.

So what would flex is the number of shares or options granted as a part of that depending upon stock price. So you've seen that and that's by far the larger driver of overall comps expense.

There could be a little bit of fluctuation based upon new higher grants, where those may be more time-based but again, that's a smaller proportion. I think if you look over the last couple of years, where our stocks has been low and our stock has been higher, the quarterly stock comp expense with regard to a couple of onetime items, it's been pretty consistent in this $2.5 million per quarter and that reflects the mechanism in the way we make our grants.

A couple of just quick housekeeping questions. On SG&A in the quarter, it was up about $7 million from previous quarter.

What kind of level should we look at going forward into both the fourth quarter and 2013 x the merger?

Well, what I would say is there's a couple of elements to SG&A. Obviously, the big driver in growth in SG&A on an absolute basis was almost all entirely attributable to the spending for the combination with GeoEye, and that's had multiple facets in Q3.

They included quite a bit of cost to get the deal done by the end of July, including fares, opinions, legal fees, et cetera. And that included multiple prongs of regulatory approval as Jeff's laid out with shareholder to the S-4, the regulatory agencies and obviously the DOJ, so that's another stream that's again, those will be non-recurring as we get through to the close.

And then the third element is the cost to combine our companies and the plans to integrate, which we've said are our key focus areas for us. So again, that's another element that's non-recurring.

So the big piece of the SG&A growth are almost all attributable to those elements. The rest of our SG&A, what we've done is there've been growth in some areas and in other areas we've de-prioritized.

So I think you're seeing us focus our efforts to invest, to drive the business and doing that in a way that prioritizes, so we're not having absolute significant growth generating leverage on SG&A. I think we're being more effective in co-relating that to just focusing on customers and driving revenue growth.

I'm not going to talk about 2013 and what our expectations are, but I think it's important for people to understand that a lot of that incremental SG&A in Q3, and frankly, in Q4, will be related to combination-related cost. The final point is, we will see less spend in Q4 than we saw in Q3, consistent with the 400 basis points impact in total on EBITDA margins as we get closer to the close and things start to wind down.

It looks like DAP revenue increased about $1 million sequentially this quarter despite last quarter having the full run rate from your fifth DAP customer, if I remember correctly. What led to this increase?

Was there a onetime additional minutes sales in the quarter?

There's always some variability during minute sales, I mean with regard to incremental minute sales. So that's what you should expect in terms of drivers of fluctuation quarter-to-quarter.

And how much more capacity do you believe is available for additional DAP customers with your current satellite constellation? I think you've spoken about focusing more on DAP course previously, is there room for a seventh or eighth [indiscernible] there?

It depends entirely on where in the world that DAP is and what their requirements are. So there are parts of the world where we effectively don't have more capacity to sell to DAPs and there are parts of the world where we do.

Can you please illuminate the partnership you have with the Air Force and what's the history of that and do you have a separate contract to deliver imagery directly to them?

That is, Andrea, a -- they're basically these ground stations. They're moved around in trucks.

So they're mobile. They are around the world.

They -- it's a program that's existed for some time but has not had access to our imagery. And the contract that we've entered into is about upgrading those facilities, those mobile facilities so that they can receive WorldView-1 and WorldView-2 imagery and passed directly.

So think of them essentially add-backs because they are U.S. Government customers, everything is closely coordinated with the NGA with regard to access to the imagery.

But think about this as the creation of capability that puts our imagery closer to where it's needed by our men and women in uniform, and by first responders and more deeply embeds what we do into the defense and intelligent infrastructure of the nation.

Is there a separate payment plan for that or does it flow through your existing agreements?

The contract that we've signed, which is about upgrading those facilities will flow through our P&L once it's operational.

This is actually Kristine Liwag dialing in for Liz. So my question is, what's the change over the last 9 months that caused your annual revenue guidance to double from 10% to 20%?

Very strong Commercial growth is the single biggest driver.

Can you elaborate in terms of what programs you're looking at there, what customers that you're seeing or kind of demand they're going for?

Very broad-based. If you look at where our growth came from, for example, this quarter, if you look at in an absolute terms, more than half of our -- a little less than half of our growth came from the SLA.

The balance of our growth came from a very broad-based mix, Location Based Services would be the second largest driver, followed by other industry verticals, and international governments and then followed by international D&I. They have all contributed to the growth and they're all performing very well.

Sure. And then I guess as a follow-up, earlier you mentioned, you or Andrea, a [indiscernible] sequestration and you said if agencies are able to allocate the cuts that you don't think you're going to be affected.

Can you elaborate more on what is that conversation you've had with the customer about priorities?

I'm not going to go into any details on specific customer agreements but let me lay out a few facts for you that I'm very comfortable sharing. First of all, the EnhancedView program has been rightsized.

That's -- everyone's well aware of that, well it has impacted the DigitalGlobe SLA. It has impacted the overall program with the cut that is substantially larger than, on a percentage basis, than the cuts that are being talked about as part of sequestration.

Secondly, we're not involved in any discussions with regard to any further cuts to the EnhancedView program and we're not aware of anybody that's advocating for further cuts to the EnhancedView program. And then a number of very senior officials made some very public statements as of late, strongly making the case to give the agencies latitude to apply any cuts should they occur.

And I'm really not going to go through other than that to say that we believe that if they are giving that latitude, which we believe certainly is in the nation's interest for them to be giving latitude, that the EnhancedView SLA with DigitalGlobe would not be reopened for negotiation. That would be our expectation.

Regarding the Air Force partnership, I just want to make sure I understand this correctly. You're going to receive revenue from the Air Force for upgrading these mobile ground stations?

Will you also receive revenue on an ongoing basis for providing imagery to those ground stations? And then secondly, is there an opportunity to have a similar type of sale to other government customers?

So first, so this is about providing access to the imagery. Because keep in mind we have the EnhancedView SLA.

So the NGA essentially purchases imagery on behalf of the entirety of the Federal Government. So you should think about the agreement that we entered into is about access, it's about technical support and it's about the infrastructure enhancements that are required to give them access to that imagery.

So that is the way to think about it. In terms of whether we could do this with other governments, I think it really depends.

This is a special capability that certainly the U.S. Government has access to and we've not explored whether that's something that we could do with other friendly governments.

Jeff, I just want to clarify you said that the EnhancedView would apply to the entire governments, not just the DoD, that would be for the entire Federal Government?

That is exactly the role that NGA plays. So for example, FEMA, that's top of mind for many of us today, access is imagery through NGA.

And even when there are -- when it's provided directly, it's again contractually through NGA. And NGA is really responsible to make sure that all Federal Government agencies have access to the imagery where and when they need it.

Operator, I think that does conclude our Q&A. Jeff, did you want to make comments?

I just would like to thank everybody again. I know that this is, for many of you, not a convenient day to take a call and not a convenient day to issue a report.

And I really appreciate your making that time. I hope all of you and everyone listening on the phone stays safe and that the East Coast is back and running soon.

Thanks so much, everybody. We look forward to talking to you next quarter.