The commercial high resolution earth imagery industry is growing. According to BCC Research, the remote sensing market was $7.3 billion in 2007 and is expected to grow to $9.9 billion by 2012. The company competes in a market segment that includes earth imagery at a resolution of three meters or better and related products and services, which BCC estimates was $1.9 billion in 2007 and is expected to grow to $3.2 billion by 2012.

The major growth drivers of business segment are:

Since 1992, the U.S. commercial satellite imaging industry has developed rapidly with the strong encouragement and support of the federal government using the imagery for civilian applications, including global change detection, emergency management, planning and zoning, as well as providing an unclassified source of imagery for national security activities.

The U.S. government is increasingly relying on commercial remote sensing space capabilities to provide unclassified earth imagery for defense, intelligence, foreign policy, homeland security and civil needs.

The growing need for commercially available and readily distributable unclassified imagery is driven, in part, by globalization and the increased cooperation between U.S. and foreign governments, and between multiple state and civil agencies and organizations in endeavors such as the war on terror, disaster relief and global environmental monitoring. Many foreign governments also use commercial earth imagery to help meet their defense, intelligence, and civil needs.

The company owns and operates two imagery satellites that are among the most sophisticated in the commercial market today. The company satellites collect both black and white, and multi-spectral imagery which shows visible color and non-visible light, such as infrared. The company is able to merge lower resolution multi-spectral imagery with high resolution black and white imagery to create high resolution color imagery. The QuickBird satellite, launched in 2001, collects black and white imagery at a resolution of 61 centimeters and multi-spectral imagery at a resolution of 2.44 meters. The WorldView-1 satellite, launched in 2007, collects black and white imagery at a resolution of 50 centimeters. Together, satellites are capable of collecting nearly one million square kilometers of imagery per day, an area greater than the combined land mass of France and Germany.

The products and services provide customers and end users with up-to-date and historical earth imagery, enabling them to more efficiently map, monitor, analyze and navigate the physical world.

The company products and services are incorporated into a growing number of location-based applications, including Google Maps and Microsoft Virtual Earth, and mobile devices from vendors such as Garmin and Nokia.

This proprietary imagery is added daily to ImageLibrary, which currently houses more than 660 million square kilometers of high resolution earth imagery, an area greater than four times the earth’s land mass. The company claims that ImageLibrary is the largest, most up-to-date and comprehensive archive of high resolution earth imagery commercially available. The planned launch of WorldView-2, the third satellite, in September or early October 2009 is expected to nearly double collection capabilities to nearly two million square kilometers per day, enable intra-day revisits to a specific geographic area, and enhance ability to collect up-to-date imagery in those areas of greatest interest to customers.

The company has launched four satellites, the first of which suffered a power system failure, causing a loss of communications four days after its launch in 1997. The second of these satellites failed to achieve orbit on launch in November 2000. The loss of, or damage to, a satellite due to a launch failure could result in significant delays in anticipated revenue to be generated by that satellite. The launch of WorldView-2 satellite may or may not be successful.

In 2008 and for the first three months of 2009, approximately 17.1% and 15.4%, respectively, of revenue was derived from international sales.

The company currently maintains $50.0 million and $242.5 million of one year in-orbit operations insurance coverage for QuickBird and WorldView-1, respectively, and $50.0 million of two year in-orbit insurance coverage for WorldView-1. This insurance is not sufficient to cover the cost of an equivalent high resolution satellite.

In addition, the company maintain $230.0 million of launch plus initial year of operations insurance coverage and $60.0 million of launch plus first three years of operations insurance coverage for our WorldView-2 satellite. This insurance is not sufficient to cover the cost of an equivalent high resolution satellite.