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Table of Contents
Adjusted EBITDA
Adjusted EBITDA was $907.0 million for the year ended December 31, 2014 , an increase of $98.5 million , or 12.2% , compared to
$808.5 million for the year ended December 31, 2013 . As a percentage of net sales, Adjusted EBITDA was 7.5% for both the years ended
December 31, 2014 and 2013 .
We have included a reconciliation of EBITDA and Adjusted EBITDA for the years ended December 31, 2014 and 2013 in the tables
below. EBITDA is defined as consolidated net income before interest expense, income tax expense, depreciation and amortization. Adjusted
EBITDA, which is a measure defined in our credit agreements, means EBITDA adjusted for certain items which are described in the table
below. Both EBITDA and Adjusted EBITDA are considered non-GAAP financial measures. Generally, a non-GAAP financial measure is a
numerical measure of a company's performance, financial position or cash flows that either excludes or includes amounts that are not normally
included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP measures used
by the Company may differ from similar measures used by other companies, even when similar terms are used to identify such measures. We
believe that EBITDA and Adjusted EBITDA provide helpful information with respect to our operating performance and cash flows including
our ability to meet our future debt service, capital expenditures and working capital requirements. Adjusted EBITDA also provides helpful
information as it is the primary measure used in certain financial covenants contained in our credit agreements.
41
(in millions)
Years Ended December 31,
2014
2013
Net income
$
244.9
$
132.8
Amortization of intangibles
(1)
161.2
161.2
Non-cash equity-based compensation
16.4
8.6
Litigation, net
(2)
(0.6
)
(6.3
)
Net loss on extinguishments of long-term debt
90.7
64.0
Interest expense adjustment related to extinguishments of long-term
debt
(3)
(1.1
)
(7.5
)
IPO- and secondary-offering related expenses
(4)
1.4
75.0
Aggregate adjustment for income taxes
(5)
(103.0
)
(113.5
)
Non-GAAP net income
$
409.9
$
314.3
(1) Includes amortization expense for acquisition-
related intangible assets, primarily customer relationships and trade names.
(2) Relates to unusual, non-
recurring litigation matters.
(3) Reflects adjustments to interest expense resulting from debt extinguishments. Represents the difference between interest expense
previously recognized under the effective interest method and actual interest paid.
(4) IPO- and secondary-
offering related expenses consist of the following:
(in millions)
Years Ended December 31,
2014
2013
Acceleration charge for certain equity awards and
related employer payroll taxes
$
—
$
40.7
RDU Plan cash retention pool accrual
—
7.5
Management services agreement termination fee
—
24.4
Other expenses
1.4
2.4
IPO- and secondary-offering related expenses
$
1.4
$
75.0
(5)
Based on a normalized effective tax rate of 39.0%.