[unsnap_biceps]

Presume for the sake of example, a satellite costs 100 million to build and place into orbit and needs to be replaced every 5 years. During the life span of the satellite, it makes 1 million per year, growing 10% per year.

In a more typical accounting system, You would divide the cost of replacement by the lifespan and get that the satellite "costs" 20 million per year, but only earns 1 million the first year, leading to a net loss of 19 million.

With EBITDA, you treat the satellite as a fixed up front cost and then year 1 comes and you made a million dollars! You're in the green! Year 2, you made 1.1 million! Up and to the right we go!

This works great until year 6 when the satellite needs replacement. But with fancy accounting magic, you put the capital costs to replace into a different bucket and can claim that your satellites are money printing machines!

[amarcheschi]

Jesus, it sounds similar to what Intel did a few years ago when they started doing something weird to lead to a lower depreciation expense