Quadramed (AMEX:QD)
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QuadraMed Corporation (Amex:QD) announced today that it will report net
income of $53.6 million before preferred stock accretion for the three
months ended December 31, 2007, compared to $4.0 million for the same
period in 2006. For the twelve months ended December 31, 2007, the
Company had net income before preferred stock accretion of $59.9 million
compared to $11.9 million for the twelve months ended December 31, 2006.
Included in the three month and twelve month periods ended December 31,
2007 is an income tax benefit of $50.0 million, which includes deferred
income tax expense of $4.5 million. The Company recorded these items as
a result of management’s determination that it
is now more likely than not that most of its deferred tax assets will in
all probability be realized in future periods. Accordingly, a
substantial portion of the valuation allowance that the Company had
maintained against its deferred tax assets was released, which together
with other miscellaneous tax expense of $0.5 million, resulted in the
recording of the net income tax benefit for 2007 of $49.4 million. No
corresponding amounts of this nature were recorded in 2006. The Company
is still reviewing deferred tax assets related to its research credits,
and may recognize additional income tax benefit once that review is
complete. The Company expects to record book income tax expense in
future periods as a function of any reported pretax earnings, but does
not expect to pay substantial cash taxes for the next few years.
Income before income taxes was $3.9 million and $4.0 million for the
three month periods ended December 31, 2007 and 2006, and $10.6 million
and $12.3 million for the twelve month periods ended December 31, 2007
and 2006.
Revenues of $40.9 million for the quarter ended December 31, 2007
exceeded quarterly revenue guidance of $36 million to $39 million, and
compares to $31.2 million for the same period in 2006, an increase of
31%. For the twelve months ended December 31, 2007, revenue of $137.4
million, increased 9.7%, compared to revenue of $125.2 million in 2006.
Included in both of the 2007 periods is $5.6 million of revenue
recognized as a result of the integration of the Computerized Patient
Record (CPR) business assets during the fourth quarter. Sales bookings
for 2007 amounted to $93 million (including approximately $8 million
from CPR for the nine months prior to the acquisition), compared to
$84.5 million in 2006.
As previously announced at the UBS Global Healthcare Conference in
February, QuadraMed expects 2008 revenues to be between $146 million and
$152 million which would represent a 6% to 10% increase over 2007
revenues of $137.4 million.
Income from operations was $3.5 million for the three months ended
December 31, 2007, compared to $3.6 million for the same period in 2006.
For the twelve months ended December 31, 2007, income from operations
was $7.9 million, compared to $10.8 million for the twelve months ended
December 31, 2006. Adjusted EBITDA (Earnings Before Interest, Taxes,
Depreciation and Amortization, adjusted for stock based compensation)
was $15.9 million for the twelve months ended December 31, 2007,
compared to adjusted EBITDA of $19.8 million for the same period in
2006. The declines in income from operations and adjusted EBITDA for the
2007 periods from 2006 are due primarily to costs incurred related to
the acquisition of the CPR assets on September 23, 2007 from Misys
Healthcare, the recording of a $1.3 million expense related to the
change in wage/hour classifications of certain employees in the third
quarter of 2007, and the inclusion of $3.0 million of additional income
in 2006 that was generated from cash basis revenues originated in 2005
but not recognized until 2006.
The Company also reported net income attributable to common shareholders
of $53.9 million, or $1.22 income per share basic, and $0.75 income per
share diluted for the twelve months ended December 31, 2007. This is
compared to a net income attributable to common shareholders of $6.0
million, or income per share of $0.14 basic, and $0.13 diluted for the
same period in 2006.
Cash provided by operating activities was $12.8 million in 2007 compared
to $16.7 million for 2006. Included in the 2007 period is the effect of
paying the $1.3 million expense related to the change in wage/hour
classifications of certain employees in the third quarter of 2007, as
well as the first full quarter of activities related to the acquired CPR
assets, which amounted to a use of cash of $1.2 million. In addition,
during the fourth quarter of 2007, no monies were received from the
Veterans Administration related to $4.6 million of term licenses earned,
pending resolution of contract negotiations and Federal government
budget resolutions; however all of the $4.6 million outstanding was
subsequently received on January 6, 2008. By contrast, cash flow from
operating activities in 2006 included approximately $6 million related
to the reduction in DSO that year from 81 to 60. Cash, cash equivalents
and investments decreased $27 million during 2007 to $17.5 million,
compared to an increase of $11.2 million in 2006. The primary reason for
the decline in cash and investments during 2007 was the $33 million cash
purchase of the CPR assets during the third quarter.
The 2007 results reflect the execution of the second year tactical
initiatives from the three-year strategic plan that was implemented in
2006 by the Company’s new management team.
“2007 was a very successful year for
QuadraMed. We started growing the top line for the first time in years.
Without the acquisition we grew 5.2%, and with it our revenues were up
9.7%, which is growth in line with our peers. While delivering these
results we integrated a transformational acquisition of an award winning
clinical information system, QCPR. This product will allow us to compete
in market opportunities that our previous clinical systems could not,”
added Mr. Hagen.
Management will review these results in an investment community
conference call at 4:00 PM Eastern (1:00 PM Pacific) Thursday, March 13,
2008. To ensure fair dissemination of information, no inquiries of
management should be made regarding QuadraMed’s
results until after the conference call. A brief question and answer
period will follow management’s presentation.
The dial-in number for the conference call is 877-879-6207 domestic, and
719-325-4806 international. Callers should dial in by 3:45 PM Eastern
(12:45 PM Pacific) to register. The call will also be webcast live and
available to the public via the Investor Relations section of QuadraMed’s
webpage at www.quadramed.com.
Please note that the webcast is listen-only. Listeners should access the
website at 3:45 PM Eastern (12:45 PM Pacific) to register and to
download and install any necessary audio software. The webcast replays
will be available until 12:00 AM CT on March 20, 2008 by dialing
888-203-1112 or 719-457-0820. The replay passcode is 9024044.
Attachments
Exhibit 1
Consolidated Balance Sheets as of December 31, 2007 and December 31,
2006
Exhibit 2
Consolidated Statements of Operations for the Three Months Ended
December 31, 2007 and December 31, 2006 and Years Ended December 31,
2007 and December 31, 2006
Exhibit 3
Consolidated Statements of Cash Flows for the Three Months Ended
December 31, 2007 and December 31, 2006 and the years ended December
31, 2007 and December 31, 2006
Exhibit 4
Reconciliation of EBITDA and Non-GAAP Measurements for the Three
Months Ended December 31, 2007, September 30, 2007, June 30, 2007,
March 31, 2007 and December 31, 2006, September 30, 2006, June 30,
2006, and March 31, 2006
Exhibit 5
Reconciliation of EBITDA and Non-GAAP Measurements for the Years
Ended December 31, 2007 and December 31, 2006
About Adjusted EBITDA and other Non-GAAP
Measurements
The Company’s use and presentation of the
terms EBITDA, Adjusted EBITDA and other Non-GAAP Measurements included
in this press release and Exhibits 4 and 5 thereto, and the
reconciliations of those items to the most directly comparable GAAP
financial measure with equal or greater prominence as the non-GAAP
financial measures, have been prepared in direct response to questions
from its investors and other interested parties. Although the Company
has frequently discussed these reconciling items when they occur, both
in its filings as well in investment community conference calls that are
open to the public at large, many inquiries are still made as to the
nature of these items, and the impact of removing these items from the
GAAP financial results. As a result, the Company believes it is
important to provide these reconciliations, so that the requesting
investors will not have to perform the arithmetic themselves and so that
all interested parties will benefit from the disclosures and
reconciliations, through a straightforward and unambiguous presentation.
The Company believes that the use and presentation of the terms EBITDA,
Adjusted EBITDA and the other non-GAAP financial measures is useful
because it allows readers of its financial information to evaluate its
performance for different periods on a more comparable basis by
excluding items that are unique in nature such as non-cash compensation,
or do not relate to the ongoing operation of its core business. The
items presented in calculating Adjusted EBITDA other Non-GAAP
reconciliations represent specific events or items as follows (please
see Exhibits 4 and 5 to this press release):
Cash Severance -- costs associated with restructuring and downsizing
of the Company’s employee base during the
three-month periods ended June 30, 2006 and March 31, 2006;
Costs of Litigation -- costs associated with the settlement of a long
standing and fully disclosed litigation proceeding during the
three-month periods ended June 30, 2006 and March 31, 2006.
Non-cash Compensation – the costs of
employee stock options and restricted stock;
Tax benefit, net – the amount recorded in
the period resulting from the release of a portion of the reserve
against the Company’s deferred tax assets,
net of deferred income tax expense recorded in the period;
Strategic Initiatives – the expenses
recorded in connection with merger and acquisition activities during
the three- month period ended June 30, 2007;
Employment Matters – the cost of the Company’s
review of wage/hour classifications for certain employees during the
three month periods ended September 30, 2007 and December 31, 2007.
About QuadraMed Corporation
QuadraMed Corporation advances the success of healthcare organizations
through IT solutions that leverage quality care into positive financial
outcomes. QuadraMed provides real world solutions that help healthcare
professionals deliver outstanding patient care efficiently and cost
effectively. Behind the company’s products
and services is a staff of 650 professionals whose experience and
dedication have earned QuadraMed the trust and loyalty of clients at
over 2,000 healthcare provider facilities. For more information about
QuadraMed, visit http://www.quadramed.com.
Cautionary Statement on Risks Associated with QuadraMed
Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 by
QuadraMed that are subject to risks and uncertainties. The words
"believe," "expect," "anticipate," "intend," "plan," "estimate," "may,"
"should," "could," and similar expressions are intended to identify such
statements. Forward-looking statements are not guarantees of future
performance and are to be interpreted only as of the date on which they
are made. QuadraMed undertakes no obligation to update or revise any
forward-looking statement except as required by law. QuadraMed advises
investors that it discusses risk factors and uncertainties that could
cause QuadraMed’s actual results to differ
from forward-looking statements in its periodic reports filed with the
Securities and Exchange Commission ("SEC"). QuadraMed’s
SEC filings can be accessed through the Investor Relations section of
our website, www.quadramed.com,
or through the SEC’s EDGAR Database at www.sec.gov
(QuadraMed has EDGAR CIK No. 0001018833).
QuadraMed is a registered trademark of QuadraMed Corporation. All other
trademarks are the property of their respective holders.
Exhibit 1
QUADRAMED CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
December 31,
December 31,
ASSETS
2007
2006
Current assets
Cash and cash equivalents
$
7,119
$
32,596
Short-term investments
9,169
10,703
Accounts receivable, net of allowance for doubtful accounts of
$1,449 and $2,612, respectively
26,088
20,358
Unbilled receivables
5,183
4,253
Deferred contract expenses
6,060
5,438
Prepaid expenses and other current assets, net of allowance on
other receivables of $1,229 and $833, respectively
5,367
5,410
Deferred tax asset, net of valuation allowance
6,353
-
Total current assets
65,339
78,758
Restricted cash
2,389
2,341
Long-term investments
1,197
1,244
Property and equipment, net of accumulated depreciation and
amortization of $22,855 and $21,131, respectively
3,778
2,557
Goodwill
33,942
25,983
Other amortizable intangible assets, net of accumulated
amortization of $31,119 and $28,354, respectively
11,768
2,132
Other long-term assets
3,182
3,183
Deferred tax asset, net of valuation allowance
47,727
-
Total assets
$
169,322
$
116,198
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses
$
4,910
$
3,493
Accrued payroll and related benefits
9,602
8,720
Accrued exit cost of facility closing
1,178
1,547
Other accrued liabilities
7,537
4,119
Dividends payable
1,375
3,775
Deferred revenue
36,111
46,347
Total current liabilities
60,713
68,001
Accrued exit cost of facility closing
888
2,066
Deferred tax liability
-
1,042
Other long-term liabilities
2,722
2,618
Total liabilities
64,323
73,727
Stockholders’ equity
Preferred stock, $0.01 par, 5,000 shares authorized, 4,000 shares
issued and outstanding, respectively
96,144
93,290
Common stock, $0.01 par, 150,000 shares authorized; 45,891 and
43,678 shares issued and 45,284 and 43,221 outstanding,
respectively
459
437
Shares held in treasury, 607 and 457, respectively
(292
)
(5
)
Additional paid-in-capital
310,557
304,504
Accumulated other comprehensive loss
(80
)
(49
)
Accumulated deficit
(301,789
)
(355,706
)
Total stockholders’ equity
104,999
42,471
Total liabilities and stockholders’
equity
$
169,322
$
116,198
Exhibit 2
QUADRAMED CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three months ended,
Year ended,
December 31,
December 31,
UNAUDITED
2007
2006
2007
2006
Revenue
Services
$
6,484
$
2,799
$
19,371
$
12,767
Maintenance
17,618
13,370
59,892
55,975
Installation and other
4,005
2,708
12,328
11,823
Services and other revenue
28,107
18,877
91,591
80,565
Term licenses
8,939
6,377
31,031
25,515
Perpetual licenses
3,560
4,666
10,597
16,596
Licenses
12,499
11,043
41,628
42,111
Hardware
268
1,293
4,131
2,525
Total revenue
40,874
31,213
137,350
125,201
Cost of revenue
Cost of services and other revenue
11,303
6,552
36,737
26,456
Royalties and other
4,410
3,271
15,683
12,095
Amortization of acquired technology and capitalized software
265
702
1,090
3,401
Cost of license revenue
4,675
3,973
16,773
15,496
Cost of hardware revenue
189
876
3,722
2,007
Total cost of revenue
16,167
11,401
57,232
43,959
Gross margin
24,707
19,812
80,118
81,242
Operating expense
General and administration
5,359
3,984
18,275
19,127
Software development
9,172
6,955
32,390
31,770
Sales and marketing
5,712
4,294
18,057
15,331
Amortization of intangible assets and depreciation
963
956
3,468
4,195
Total operating expenses
21,206
16,189
72,190
70,423
Income from operations
3,501
3,623
7,928
10,819
Other income
Interest expense, includes non-cash charges of $18, $68, $122 and
$374, respectively
(20
)
(68
)
(127
)
(379
)
Interest income
364
480
2,280
1,746
Other income
8
7
511
101
Other income
352
419
2,664
1,468
Income from continuing operations before income taxes
$
3,853
$
4,042
$
10,592
$
12,287
Benefit (provision) for income taxes
49,767
(80
)
49,354
(342
)
Net income
$
53,620
$
3,962
$
59,946
$
11,945
Preferred stock accretion, dividend premium and dividends declared
(1,375
)
(1,459
)
(6,032
)
(5,978
)
Net income attributable to common shareholders
$
52,245
$
2,503
$
53,914
$
5,967
Income per share-basic
Basic
$
1.19
$
0.06
$
1.22
$
0.14
Diluted
0.68
0.05
0.75
0.13
Weighted average shares outstanding
Basic
44,006
42,825
44,061
42,057
Diluted
78,645
79,571
79,466
45,867
Exhibit 3
QUADRAMED CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the three months ended
For the Year ended
UNAUDITED
December 31, 2007
December 31, 2006
2007
2006
Cash flows from operating activities
Net income
$
53,620
$
3,962
$
59,946
$
11,945
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
1,228
1,661
4,559
7,598
Deferred compensation amortization
95
96
382
385
Stock-based compensation
928
181
2,474
879
Dividend discount amortization
-
51
50
303
Provision for bad debts
-
-
181
820
Gain on sales of investments
(3
)
-
(46
)
-
Interest income on investments
(26
)
-
(101
)
-
Interest income on letters of credit
(103
)
-
(103
)
-
Interest expense on note payable
18
18
72
72
Deferred income taxes
(49,048
)
-
(49,048
)
-
Other
-
-
-
(21
)
Changes in assets and liabilities:
Accounts receivable
(2,254
)
(1,012
)
2,544
5,911
Prepaid expenses and other
2,676
(795
)
5,663
413
Accounts payable and accrued liabilities
1,224
725
175
(4,508
)
Deferred revenue
(13,456
)
(663
)
(13,995
)
(7,135
)
Cash (used in) provided by operating activities
(5,101
)
4,224
12,753
16,662
Cash flows from investing activities
Decrease in restricted cash
(10
)
(55
)
(48
)
50
Sales of available-for-sale securities, net
6,893
4,618
51,162
7,227
Purchases of available-for-sale securities
(2,739
)
(11,106
)
(49,484
)
(17,813
)
Acquisition of businesses, net of cash acquired
(227
)
(33,901
)
-
Purchases of property and equipment
(787
)
(251
)
(2,261
)
(982
)
Other
-
(33
)
-
(28
)
Cash (used in) provided by investing activities
3,130
(6,827
)
(34,532
)
(11,546
)
Cash flows from financing activities
Payment of preferred stock dividends
(1,375
)
(1,625
)
(5,628
)
(6,500
)
Proceeds from issuance of common stock and other
23
339
2,217
938
Repurchase of common stock
(287
)
-
(287
)
-
Cash used in financing activities
(1,639
)
(1,286
)
(3,698
)
(5,562
)
Net decrease in cash and cash equivalents
(3,610
)
(3,889
)
(25,477
)
(446
)
Cash and cash equivalents, beginning of period
10,729
36,485
32,596
33,042
Cash and cash equivalents, end of period
$
7,119
$
32,596
$
7,119
$
32,596
Exhibit 4
QUADRAMED CORPORATION
RECONCILIATION OF EBITDA AND NON-GAAP MEASUREMENTS
For the Three Months Ended December 31, 2007, September 30,
2007, June 30, 2007, March 31, 2007 and December 31, 2006,
September 30, 2006, June 30, 2006 and March 31, 2006
(in thousands)
For the Three Months Ended (Unaudited)
12/31/07
9/30/07
6/30/07
3/31/07
12/31/06
9/30/06
6/30/06
3/31/06
EBITDA (Earnings Before Interest, Taxes, Depreciation and
Amortization)
Net income, as reported
$53,620
$1,502
$2,200
$2,624
$3,962
$5,979
$3,847
($1,843
)
Adjustments to Net Income for EBITDA
Interest Expense
20
24
33
50
68
85
103
123
Interest Income
(364
)
(699
)
(644
)
(573
)
(480
)
(501
)
(399
)
(366
)
Benefit (provision) for Income Taxes
(49,767
)
142
162
109
80
101
63
98
Depreciation and Amortization
1,323
802
1,326
1,490
1,757
1,878
2,133
2,215
Subtotal Non-GAAP Adjustments for EBITDA
(48,788
)
269
877
1,076
1,425
1,563
1,900
2,070
EBITDA
$4,832
$1,771
$3,077
$3,700
$5,387
$7,542
$5,747
$227
Non-cash Compensation
928
807
356
383
182
229
196
272
Adjusted Non-GAAP EBITDA
5,760
2,578
3,433
4,083
5,569
7,771
5,943
499
Non-GAAP Net Income before Preferred Stock Accretion
Net income, as reported
$53,620
$1,502
$2,200
$2,624
$3,962
$5,979
$3,847
($1,843
)
Non-GAAP adjustments to Net income
Costs of Litigation
-
-
-
-
-
-
-
1,121
Non-cash Compensation
928
807
356
383
182
229
196
272
Cash Severance
-
-
-
-
-
-
142
315
Strategic Initiatives
57
-
412
-
-
-
-
-
Tax benefit
(50,034
)
-
-
-
-
-
-
-
Employment Matters
(374
)
1,544
-
-
-
-
-
-
Subtotal Non-GAAP adjustments
(49,423
)
2,351
768
383
182
229
338
1,708
Non-GAAP net income (loss)
$4,197
$3,853
$2,968
$3,007
$4,144
$6,208
$4,185
($135
)
Other Information
Revenue
$40,874
$32,908
$34,362
$29,206
$31,213
$33,032
$32,028
$28,928
Costs of Revenue
$16,167
$14,105
$15,991
$10,969
$11,401
$10,436
$11,133
$10,989
Gross Margin
$24,707
$18,803
$18,371
$18,237
$19,812
$22,596
$20,895
$17,939
Gross Margin %
60
%
57
%
53
%
62
%
63
%
68
%
65
%
62
%
About Adjusted EBITDA and other Non-GAAP
Measurements
The Company’s use and presentation of the
terms EBITDA, Adjusted EBITDA and other Non-GAAP Measurements included
in this press release and on these Exhibits 4 and 5 thereto, and the
reconciliations of those items to the most directly comparable GAAP
financial measure with equal or greater prominence as the non-GAAP
financial measures, have been prepared in direct response to questions
from its investors and other interested parties. Although the Company
has frequently discussed these reconciling items when they occur, both
in its filings as well in investment community conference calls that are
open to the public at large, many inquiries are still made as to the
nature of these items, and the impact of removing these items from the
GAAP financial results. As a result, the Company believes it is
important to provide these reconciliations, so that the requesting
investors will not have to perform the arithmetic themselves and so that
all interested parties will benefit from the disclosures and
reconciliations, through a straightforward and unambiguous presentation.
The Company believes that the use and presentation of the terms EBITDA,
Adjusted EBITDA and the other non-GAAP financial measures is useful
because it allows readers of its financial information to evaluate its
performance for different periods on a more comparable basis by
excluding items that are unique in nature such as non-cash compensation,
or do not relate to the ongoing operation of its core business. The
items presented in calculating Adjusted EBITDA other Non-GAAP
reconciliations represent specific events or items as follows:
Cash Severance -- costs associated with restructuring and downsizing
of the Company’s employee base during the
three-month periods ended June 30, 2006 and March 31, 2006;
Costs of Litigation -- costs associated with the settlement of a long
standing and fully disclosed litigation proceeding during the
three-month periods ended June 30, 2006 and March 31, 2006.
Non-cash Compensation – the costs of
employee stock options and restricted stock;
Tax benefit, net – the amount recorded in
the period resulting from the release of a portion of the reserve
against the Company’s deferred tax assets,
net of deferred income tax expense recorded in the period;
Strategic Initiatives – the expenses
recorded in connection with merger and acquisition activities during
the three- month period ended June 30, 2007;
Employment Matters – the cost of the Company’s
review of wage/hour classifications for certain employees during the
three month periods ended September 30, 2007 and December 31, 2007.
Exhibit 5
QUADRAMED CORPORATION
RECONCILIATION OF EBITDA AND NON-GAAP MEASUREMENTS
For the Years Ended December 31, 2007 and December 31, 2006
(in thousands)
For the Year Ended (Unaudited)
12/31/2007
12/31/2006
EBITDA (Earnings Before
Interest, Taxes, Depreciation and Amortization)
Net income, as reported
$
59,946
$
11,945
Adjustments to Net Income for EBITDA
Interest Expense
127
379
Interest Income
(2,280
)
(1,746
)
Provision (Benefit) for Income Taxes
(49,354
)
342
Depreciation and Amortization
4,941
7,983
Subtotal Non-GAAP Adjustments for EBITDA
(46,566
)
6,958
EBITDA
13,380
18,903
Non-cash Compensation
2,474
879
Adjusted Non-GAAP EBITDA
15,854
19,782
Non-GAAP Net Income before
Preferred Stock Accretion
Net income, as reported
$
59,946
$
11,945
Non-GAAP adjustments to Net income
Cash Severance
-
457
Costs of Litigation
-
1,121
Non-cash Compensation
2,474
879
Tax benefit
(50,034
)
-
Strategic Initiatives
469
-
Employment Matters
1,170
-
Subtotal Non-GAAP adjustments
(45,921
)
2,457
Non-GAAP net income
$
14,025
$
14,402
Other Information
Revenue
$
137,350
$
125,201
Costs of Revenue
$
57,232
$
43,959
Gross Margin
$
80,118
$
81,242
Gross Margin %
58
%
65
%
About Adjusted EBITDA and other Non-GAAP
Measurements
The Company’s use and presentation of the
terms EBITDA, Adjusted EBITDA and other Non-GAAP Measurements included
in this press release and on these Exhibits 4 and 5 thereto, and the
reconciliations of those items to the most directly comparable GAAP
financial measure with equal or greater prominence as the non-GAAP
financial measures, have been prepared in direct response to questions
from its investors and other interested parties. Although the Company
has frequently discussed these reconciling items when they occur, both
in its filings as well in investment community conference calls that are
open to the public at large, many inquiries are still made as to the
nature of these items, and the impact of removing these items from the
GAAP financial results. As a result, the Company believes it is
important to provide these reconciliations, so that the requesting
investors will not have to perform the arithmetic themselves and so that
all interested parties will benefit from the disclosures and
reconciliations, through a straightforward and unambiguous presentation.
The Company believes that the use and presentation of the terms EBITDA,
Adjusted EBITDA and the other non-GAAP financial measures is useful
because it allows readers of its financial information to evaluate its
performance for different periods on a more comparable basis by
excluding items that are unique in nature such as non-cash compensation,
or do not relate to the ongoing operation of its core business. The
items presented in calculating Adjusted EBITDA other Non-GAAP
reconciliations represent specific events or items as follows:
Cash Severance -- costs associated with restructuring and downsizing
of the Company’s employee base during the
three-month periods ended June 30, 2006 and March 31, 2006;
Costs of Litigation -- costs associated with the settlement of a long
standing and fully disclosed litigation proceeding during the
three-month periods ended June 30, 2006 and March 31, 2006.
Non-cash Compensation – the costs of
employee stock options and restricted stock;
Tax benefit, net – the amount recorded in
the period resulting from the release of a portion of the reserve
against the Company’s deferred tax assets,
net of deferred income tax expense recorded in the period;
Strategic Initiatives – the expenses
recorded in connection with merger and acquisition activities during
the three- month period ended June 30, 2007;
Employment Matters – the cost of the Company’s
review of wage/hour classifications for certain employees during the
three month periods ended September 30, 2007 and December 31, 2007.