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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Reading International Inc | NASDAQ:RDI | NASDAQ | Common Stock |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.04 | -2.99% | 1.30 | 1.20 | 1.75 | 1.34 | 1.285 | 1.34 | 537,690 | 23:39:14 |
From Dec 2022 to Dec 2024
President and Chief Executive Officer, Ellen Cotter said, “Building on the success of our strong second quarter, the Company continued that positive momentum into the third quarter by delivering global total revenues of $66.6 million, which grew by 30% compared to the third quarter of 2022. Compared to the third quarter of 2022, our global operating income increased by 115% to $1.0 million, and our adjusted EBITDA increased by 59% to $6.1 million. These third quarter results for global total revenue, operating income, and adjusted EBITDA each represent the highest for any third quarter since the end of 2019. These impressive results were driven primarily by our global cinema divisions, each of which delivered the highest attendance, box office, total cinema revenues, and theater level cash flow of any third quarter since the fourth quarter of 2019, due in large part to the cultural phenomenon, “Barbenheimer.”
“With the highly anticipated 2023 holiday movie line-up, including Hunger Games: The Ballad of Songbirds and Snakes, Wish, Napolean, Migration, Wonka, The Color Purple, and Aquaman and the Lost Kingdom, and the recently announced end to the SAG-AFTRA strike, we are even more confident that the year will end on a positive note delivering a marked improvement over 2022.”
Ms. Cotter continued, “Our real estate business also generated encouraging results at $5.1 million in global revenues and $0.9 million in operating income, as each country, on a local currency basis, outperformed the third quarter 2022. The U.S. Real Estate division delivered the highest revenues for any third quarter ever due to the opening in June 2023 of Petco at our 44 Union Square property in New York City.”
Ms. Cotter concluded, “Looking ahead, we are carefully navigating the current macroeconomic challenges caused substantially by our increased interest expense. And we know that the duration of the recently settled Hollywood strikes will likely impact our global cinema business in 2024 due to production delays and shifting theatrical release dates. With these conditions in mind, we are still actively pursuing the sale of certain real estate assets to achieve greater liquidity. We are confident that our ‘two business/three country’ diversified business structure will continue to enable us to deliver value to our stockholders into the future.”
Key Financial Results –Third Quarter 2023
Key Financial Results – Nine Months of 2023
Key Cinema Business Highlights
At $62.7 million, our Q3 2023 cinema segment revenue increased by 30% compared to Q3 2022. At $4.4 million, our Q3 2023 cinema segment operating income grew by $6.5 million, improved by more than 100%, compared to an operating loss of $2.1 million during Q3 2022. Cinema segment revenue for the nine months ended September 30, 2023, of $165.7 million increased by 12% compared to the same period in 2022. Cinema segment operating income for the nine months ended September 30, 2023, improved by more than 100% to an income of $4.3 million compared to a loss of $5.9 million the same period in 2022.
Other notable mentions that occurred during the third quarter were: the opening of an eight-screen boutique cinema at South City Square, Brisbane QLD that operates under the Angelika Film Center brand, our first international Angelika location, as well as a five-screen Reading Cinemas with TITAN LUXE in Busselton, Western Australia. Both new cinemas are state-of-the-art facilities with recliner seating and elevated food and beverage offerings. We have an additional cinema in the pipeline for Australia, located in Noosa (Queensland) and one additional cinema in New Zealand, each anticipated to open in 2026.
In addition, in an effort to improve the overall future profitability of the U.S. Cinema circuit, we closed two Consolidated Theatres in Hawaii in July 2023 and just recently closed a 16 screen Reading Cinema in California.
Key Real Estate Business Highlights
Real estate segment revenue for Q3 2023 increased by 24% to $5.1 million, compared to Q3 2022. Real estate segment operating income for Q3 2023 increased by over 100% to $0.9 million compared to a real estate segment operating loss of $0.1 million in Q3 2022.
Real estate segment revenue for the nine months ended September 30, 2023, increased by 25% to $15.3 million, compared to the same period in 2022. Real estate segment operating income for the nine months ended September 30, 2023, increased by over 100%, to $3.2 million, compared to a loss of $0.1 million for the same period in 2022.
The changes between the third quarter of 2023 and the third quarter of 2022 were primarily attributable to the rent recognized in Q3 2023 from Petco at 44 Union Square that did not occur in the same period of the prior year.
To support our currently anticipated liquidity needs, we have listed the following assets for sale: (i) our office building at 5995 Sepulveda Blvd. Culver City, California, and (ii) our 26-acre industrial site in Williamsport, Pennsylvania. In addition, along with our 25% minority interest partner of the Cinemas 123 in New York City, we have decided to explore a sale in whole or in part of the Cinemas 123 property or otherwise reduce our interest in that asset.
On October 25, 2023, we closed the sale of our Maitland property in NSW Australia for a purchase price of A$2.8 million. We are leasing the 4-screen Reading Cinema on that site back on a short-term basis.
Key Balance Sheet, Cash, and Liquidity Highlights
As of September 30, 2023, our cash and cash equivalents were $11.9 million. As of September 30, 2023, we had total gross debt of $208.6 million, reflecting a reduction in the outstanding debt balance as of December 31, 2022. As of September 30, 2023, our assets had a total book value of $532.6 million as compared to a book value of $587.1 million as of December 31, 2022.
On September 29, 2023, we executed a further modification of our Cinemas 123 Term Loan which extended the maturity date to October 1, 2024. On August 13, 2023, we executed an Amendment Deed to our financing arrangement with National Australia Bank that, among other things, extended our maturity date to July 31, 2025. We are working with our other lenders to restructure our existing debt and extend upcoming maturity dates.
For more information about our borrowings, please refer to Part I – Financial Information, Item 1 – Notes to Consolidated Financial Statements-- Note 12 – Borrowings of our Form 10-Q for the quarter ended September 30, 2023.
Conference Call and Webcast
We plan to post our pre-recorded conference call and audio webcast on our corporate website on Thursday, November 16, 2023, which will feature prepared remarks from Ellen Cotter, President and Chief Executive Officer; Gilbert Avanes, Executive Vice President, Chief Financial Officer and Treasurer; and Andrzej Matyczynski, Executive Vice President - Global Operations.
A pre-recorded question and answer session will follow our formal remarks. Questions and topics for consideration should be submitted to InvestorRelations@readingrdi.com by 5:00 p.m. Eastern Time on November 15, 2023. The audio webcast can be accessed by visiting https://investor.readingrdi.com/financial-information/quarterly-results on November 16, 2023.
About Reading International, Inc.
Reading International, Inc. (NASDAQ: RDI), an internationally diversified cinema and real estate company operating through various domestic and international subsidiaries, is a leading entertainment and real estate company, engaging in the development, ownership, and operation of cinemas and retail and commercial real estate in the United States, Australia, and New Zealand.
Reading’s cinema subsidiaries operate under multiple cinema brands: Reading Cinemas, Angelika Film Centers, Consolidated Theatres, and the State Cinema by Angelika. Its live theatres are owned and operated by its Liberty Theaters subsidiary, under the Orpheum and Minetta Lane names. Its signature property developments are maintained in special purpose entities and operated under the names Newmarket Village, Cannon Park, and The Belmont Common in Australia, Courtenay Central in New Zealand, and 44 Union Square in New York City.
Additional information about Reading can be obtained from our Company's website: http://www.readingrdi.com.
Cautionary Note Regarding Forward-Looking Statements
This earnings release contains forward-looking statements within the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "may," "will," "expect," "believe," "intend," "future," and "anticipate" and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding our expected operating results; our expectations regarding the success of movies released for the remainder of 2023; our expectations regarding the Hollywood strikes and their impacts on the cinema exhibition industry; our expectations regarding the effects of the SAG-AFTRA strike on our operating results for the remainder of 2023; our belief regarding our diversified business/country diversification strategy; and our expectations regarding the timing of adding new cinemas to our circuits in Australia and New Zealand. The record setting results referenced in this press release are not necessarily indicative of future results.
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include those factors discussed throughout Part I, Item 1A – Risk Factors and Part II, Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the most recently ended fiscal year and our other periodic reports filed with the Securities and Exchange Commission. Any forward-looking statement made by us in this Earnings Release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.
Reading International, Inc. and SubsidiariesUnaudited Consolidated Statements of Operations(Unaudited; U.S. dollars in thousands, except per share data)
| Quarter Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue | ||||||||||||||||
| Cinema | $ | 62,688 | $ | 48,359 | $ | 165,731 | $ | 147,476 | ||||||||
| Real estate | 3,875 | 2,837 | 11,694 | 8,432 | ||||||||||||
| Total revenue | 66,563 | 51,196 | 177,425 | 155,908 | ||||||||||||
| Costs and expenses | ||||||||||||||||
| Cinema | (53,278 | ) | (45,308 | ) | (146,297 | ) | (134,579 | ) | ||||||||
| Real estate | (2,281 | ) | (2,352 | ) | (6,600 | ) | (6,715 | ) | ||||||||
| Depreciation and amortization | (4,580 | ) | (5,010 | ) | (13,908 | ) | (15,781 | ) | ||||||||
| Impairment expense | — | — | — | (1,549 | ) | |||||||||||
| General and administrative | (5,405 | ) | (5,257 | ) | (15,693 | ) | (17,364 | ) | ||||||||
| Total costs and expenses | (65,544 | ) | (57,927 | ) | (182,498 | ) | (175,988 | ) | ||||||||
| Operating income (loss) | 1,019 | (6,731 | ) | (5,073 | ) | (20,080 | ) | |||||||||
| Interest expense, net | (5,072 | ) | (3,693 | ) | (14,063 | ) | (10,242 | ) | ||||||||
| Gain (loss) on sale of assets | — | (59 | ) | — | (59 | ) | ||||||||||
| Other income (expense) | 267 | 5,455 | 356 | 8,445 | ||||||||||||
| Income (loss) before income tax expense and equity earnings of unconsolidated joint ventures | (3,786 | ) | (5,028 | ) | (18,780 | ) | (21,936 | ) | ||||||||
| Equity earnings of unconsolidated joint ventures | 217 | 61 | 443 | 233 | ||||||||||||
| Income (loss) before income taxes | (3,569 | ) | (4,967 | ) | (18,337 | ) | (21,703 | ) | ||||||||
| Income tax benefit (expense) | (896 | ) | (332 | ) | (313 | ) | (1,492 | ) | ||||||||
| Net income (loss) | $ | (4,465 | ) | $ | (5,299 | ) | $ | (18,650 | ) | $ | (23,195 | ) | ||||
| Less: net income (loss) attributable to noncontrolling interests | (65 | ) | (122 | ) | (361 | ) | (228 | ) | ||||||||
| Net income (loss) attributable to Reading International, Inc. | $ | (4,400 | ) | $ | (5,177 | ) | $ | (18,289 | ) | $ | (22,967 | ) | ||||
| Basic earnings (loss) per share | $ | (0.20 | ) | $ | (0.23 | ) | $ | (0.82 | ) | $ | (1.04 | ) | ||||
| Diluted earnings (loss) per share | $ | (0.20 | ) | $ | (0.23 | ) | $ | (0.82 | ) | $ | (1.04 | ) | ||||
| Weighted average number of shares outstanding–basic | 22,273,423 | 22,043,823 | 22,208,757 | 22,011,755 | ||||||||||||
| Weighted average number of shares outstanding–diluted | 22,273,423 | 22,043,823 | 22,208,757 | 22,011,755 | ||||||||||||
Reading International, Inc. and SubsidiariesConsolidated Balance Sheets(U.S. dollars in thousands, except share information)
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| ASSETS | (unaudited) | |||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 11,925 | $ | 29,947 | ||||
| Restricted cash | 5,714 | 5,032 | ||||||
| Receivables | 5,779 | 6,206 | ||||||
| Inventories | 1,488 | 1,616 | ||||||
| Derivative financial instruments - current portion | 17 | 907 | ||||||
| Prepaid and other current assets | 4,243 | 3,804 | ||||||
| Land and property held for sale | 12,362 | — | ||||||
| Total current assets | 41,528 | 47,512 | ||||||
| Operating property, net | 261,614 | 286,952 | ||||||
| Operating lease right-of-use assets | 180,718 | 200,417 | ||||||
| Investment and development property, net | 8,336 | 8,792 | ||||||
| Investment in unconsolidated joint ventures | 4,488 | 4,756 | ||||||
| Goodwill | 24,597 | 25,504 | ||||||
| Intangible assets, net | 2,110 | 2,391 | ||||||
| Deferred tax asset, net | 489 | 447 | ||||||
| Other assets | 8,717 | 10,284 | ||||||
| Total assets | $ | 532,597 | $ | 587,055 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 41,896 | $ | 42,590 | ||||
| Film rent payable | 3,462 | 5,678 | ||||||
| Debt - current portion | 40,402 | 37,279 | ||||||
| Subordinated debt - current portion | 776 | 747 | ||||||
| Taxes payable - current | 2,390 | 300 | ||||||
| Deferred revenue | 8,616 | 10,286 | ||||||
| Operating lease liabilities - current portion | 22,977 | 23,971 | ||||||
| Other current liabilities | 6,673 | 813 | ||||||
| Total current liabilities | 127,192 | 121,664 | ||||||
| Debt - long-term portion | 138,560 | 148,688 | ||||||
| Subordinated debt, net | 27,117 | 26,950 | ||||||
| Noncurrent tax liabilities | 5,842 | 7,117 | ||||||
| Operating lease liabilities - non-current portion | 180,002 | 200,037 | ||||||
| Other liabilities | 11,829 | 19,320 | ||||||
| Total liabilities | $ | 490,542 | $ | 523,776 | ||||
| Commitments and contingencies (Note 15) | ||||||||
| Stockholders’ equity: | ||||||||
| Class A non-voting common shares, par value $0.01, 100,000,000 shares authorized, | ||||||||
| 33,528,994 issued and 20,592,834 outstanding at September 30, 2023 and | ||||||||
| 33,348,295 issued and 20,412,185 outstanding at December 31, 2022 | 236 | 235 | ||||||
| Class B voting common shares, par value $0.01, 20,000,000 shares authorized and | ||||||||
| 1,680,590 issued and outstanding at September 30, 2023 and December 31, 2022 | 17 | 17 | ||||||
| Nonvoting preferred shares, par value $0.01, 12,000 shares authorized and no issued | ||||||||
| or outstanding shares at September 30, 2023 and December 31, 2022 | — | — | ||||||
| Additional paid-in capital | 154,903 | 153,784 | ||||||
| Retained earnings/(deficits) | (67,104 | ) | (48,816 | ) | ||||
| Treasury shares | (40,407 | ) | (40,407 | ) | ||||
| Accumulated other comprehensive income | (5,647 | ) | (1,957 | ) | ||||
| Total Reading International, Inc. stockholders’ equity | 41,998 | 62,856 | ||||||
| Noncontrolling interests | 57 | 423 | ||||||
| Total stockholders’ equity | 42,055 | 63,279 | ||||||
| Total liabilities and stockholders’ equity | $ | 532,597 | $ | 587,055 | ||||
Reading International, Inc. and SubsidiariesSegment Results(Unaudited; U.S. dollars in thousands)
| Quarter Ended | Nine Months Ended | |||||||||||||||||||||
| September 30, | % ChangeFavorable/ | September 30, | % ChangeFavorable/ | |||||||||||||||||||
| (Dollars in thousands) | 2023 | 2022 | (Unfavorable) | 2023 | 2022 | (Unfavorable) | ||||||||||||||||
| Segment revenue | ||||||||||||||||||||||
| Cinema | ||||||||||||||||||||||
| United States | $ | 34,232 | $ | 24,676 | 39 | % | $ | 90,058 | $ | 72,532 | 24 | % | ||||||||||
| Australia | 24,186 | 20,014 | 21 | % | 64,338 | 63,797 | 1 | % | ||||||||||||||
| New Zealand | 4,270 | 3,670 | 16 | % | 11,335 | 11,147 | 2 | % | ||||||||||||||
| Total | $ | 62,688 | $ | 48,360 | 30 | % | $ | 165,731 | $ | 147,476 | 12 | % | ||||||||||
| Real estate | ||||||||||||||||||||||
| United States | $ | 1,614 | $ | 527 | >100 | % | $ | 5,002 | $ | 1,788 | >100 | % | ||||||||||
| Australia | 3,063 | 3,154 | (3) | % | 9,191 | 9,336 | (2) | % | ||||||||||||||
| New Zealand | 380 | 390 | (3) | % | 1,145 | 1,141 | — | % | ||||||||||||||
| Total | $ | 5,057 | $ | 4,071 | 24 | % | $ | 15,338 | $ | 12,265 | 25 | % | ||||||||||
| Inter-segment elimination | (1,181 | ) | (1,232 | ) | 4 | % | (3,644 | ) | (3,833 | ) | 5 | % | ||||||||||
| Total segment revenue | $ | 66,564 | $ | 51,199 | 30 | % | $ | 177,425 | $ | 155,908 | 14 | % | ||||||||||
| Segment operating income (loss) | ||||||||||||||||||||||
| Cinema | ||||||||||||||||||||||
| United States | $ | 331 | $ | (3,988 | ) | >100 | % | $ | (3,182 | ) | $ | (12,343 | ) | 74 | % | |||||||
| Australia | 3,513 | 1,577 | >100 | % | 6,372 | 5,836 | 9 | % | ||||||||||||||
| New Zealand | 551 | 274 | >100 | % | 1,066 | 605 | 76 | % | ||||||||||||||
| Total | $ | 4,395 | $ | (2,137 | ) | >100 | % | $ | 4,256 | $ | (5,902 | ) | >100 | % | ||||||||
| Real estate | ||||||||||||||||||||||
| United States | $ | (229 | ) | $ | (1,159 | ) | 80 | % | $ | (214 | ) | $ | (3,273 | ) | 93 | % | ||||||
| Australia | 1,333 | 1,351 | (1) | % | 3,972 | 4,045 | (2) | % | ||||||||||||||
| New Zealand | (184 | ) | (337 | ) | 45 | % | (546 | ) | (897 | ) | 39 | % | ||||||||||
| Total | $ | 920 | $ | (145 | ) | >100 | % | $ | 3,212 | $ | (125 | ) | >100 | % | ||||||||
| Total segment operating income (loss) (1) | $ | 5,315 | $ | (2,282 | ) | >100 | % | $ | 7,468 | $ | (6,027 | ) | >100 | % | ||||||||
(1) Total segment operating income is a non-GAAP financial measure. See the discussion of non-GAAP financial measures that follows.
Reading International, Inc. and SubsidiariesReconciliation of EBITDA and Adjusted EBITDA to Net Income (Loss)(Unaudited; U.S. dollars in thousands)
| Quarter Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| (Dollars in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Net Income (loss) attributable to Reading International, Inc. | $ | (4,400 | ) | $ | (5,177 | ) | $ | (18,289 | ) | $ | (22,967 | ) | ||||
| Add: Interest expense, net | 5,072 | 3,693 | 14,063 | 10,242 | ||||||||||||
| Add: Income tax expense (benefit) | 896 | 332 | 313 | 1,492 | ||||||||||||
| Add: Depreciation and amortization | 4,580 | 5,010 | 13,908 | 15,781 | ||||||||||||
| Adjustment for infrequent events anddiscontinued operations | — | — | — | — | ||||||||||||
| EBITDA | $ | 6,148 | $ | 3,858 | $ | 9,995 | $ | 4,548 | ||||||||
| Adjustments for: | ||||||||||||||||
| Gain on insurance recoveries | — | — | — | — | ||||||||||||
| None | — | — | — | — | ||||||||||||
| Adjusted EBITDA | $ | 6,148 | $ | 3,858 | $ | 9,995 | $ | 4,548 | ||||||||
Reading International, Inc. and SubsidiariesReconciliation of Total Segment Operating Income (Loss) to Income (Loss) before Income Taxes(Unaudited; U.S. dollars in thousands)
| Quarter Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| (Dollars in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Segment operating income (loss) | $ | 5,315 | $ | (2,282 | ) | $ | 7,468 | $ | (6,027 | ) | ||||||
| Unallocated corporate expense | ||||||||||||||||
| Depreciation and amortization expense | (172 | ) | (258 | ) | (527 | ) | (804 | ) | ||||||||
| General and administrative expense | (4,124 | ) | (4,190 | ) | (12,014 | ) | (13,249 | ) | ||||||||
| Interest expense, net | (5,072 | ) | (3,694 | ) | (14,063 | ) | (10,242 | ) | ||||||||
| Equity earnings of unconsolidated joint ventures | 217 | 61 | 443 | 233 | ||||||||||||
| Gain (loss) on sale of assets | — | (59 | ) | — | (59 | ) | ||||||||||
| Other income (expense) | 267 | 5,455 | 356 | 8,445 | ||||||||||||
| Income (loss) before income tax expense | $ | (3,569 | ) | $ | (4,967 | ) | $ | (18,337 | ) | $ | (21,703 | ) | ||||
Non-GAAP Financial Measures
This Earnings Release presents total segment operating income (loss), EBITDA, and Adjusted EBITDA, which are important financial measures for our Company, but are not financial measures defined by U.S. GAAP.
These measures should be reviewed in conjunction with the relevant U.S. GAAP financial measures and are not presented as alternative measures of earnings (loss) per share, cash flows or net income (loss) as determined in accordance with U.S. GAAP. Total segment operating income (loss) and EBITDA, as we have calculated them, may not be comparable to similarly titled measures reported by other companies.
Total segment operating income (loss) – We evaluate the performance of our business segments based on segment operating income (loss), and management uses total segment operating income (loss) as a measure of the performance of operating businesses separate from non-operating factors. We believe that information about total segment operating income (loss) assists investors by allowing them to evaluate changes in the operating results of our Company’s business separate from non-operational factors that affect net income (loss), thus providing separate insight into both operations and the other factors that affect reported results.
EBITDA – We use EBITDA in the evaluation of our Company’s performance since we believe that EBITDA provides a useful measure of financial performance and value. We believe this principally for the following reasons:
We believe that EBITDA is an accepted industry-wide comparative measure of financial performance. It is, in our experience, a measure commonly adopted by analysts and financial commentators who report upon the cinema exhibition and real estate industries, and it is also a measure used by financial institutions in underwriting the creditworthiness of companies in these industries. Accordingly, our management monitors this calculation as a method of judging our performance against our peers, market expectations, and our creditworthiness. It is widely accepted that analysts, financial commentators, and persons active in the cinema exhibition and real estate industries typically value enterprises engaged in these businesses at various multiples of EBITDA. Accordingly, we find EBITDA valuable as an indicator of the underlying value of our businesses. We expect that investors may use EBITDA to judge our ability to generate cash, as a basis of comparison to other companies engaged in the cinema exhibition and real estate businesses and as a basis to value our company against such other companies.
EBITDA is not a measurement of financial performance under generally accepted accounting principles in the United States of America and it should not be considered in isolation or construed as a substitute for net income (loss) or other operations data or cash flow data prepared in accordance with generally accepted accounting principles in the United States for purposes of analyzing our profitability. The exclusion of various components, such as interest, taxes, depreciation, and amortization, limits the usefulness of these measures when assessing our financial performance, as not all funds depicted by EBITDA are available for management’s discretionary use. For example, a substantial portion of such funds may be subject to contractual restrictions and functional requirements to service debt, to fund necessary capital expenditures, and to meet other commitments from time to time.
EBITDA also fails to take into account the cost of interest and taxes. Interest is clearly a real cost that for us is paid periodically as accrued. Taxes may or may not be a current cash item but are nevertheless real costs that, in most situations, must eventually be paid. A company that realizes taxable earnings in high tax jurisdictions may, ultimately, be less valuable than a company that realizes the same amount of taxable earnings in a low tax jurisdiction. EBITDA fails to take into account the cost of depreciation and amortization and the fact that assets will eventually wear out and have to be replaced.
Adjusted EBITDA – using the principles we consistently apply to determine our EBITDA, we further adjusted the EBITDA for certain items we believe to be external to our core business and not reflective of our costs of doing business or results of operation. Specifically, we have adjusted for (i) legal expenses relating to extraordinary litigation, and (ii) any other items that can be considered non-recurring in accordance with the two-year SEC requirement for determining an item is non-recurring, infrequent or unusual in nature.
For more information, contact: Gilbert Avanes – EVP, CFO, and Treasurer Andrzej Matyczynski – EVP Global Operations (213) 235-2240
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