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Table of Contents
Adjusted EBITDA
Adjusted EBITDA was $808.5 million in 2013, an increase of $41.9 million, or 5.5%, compared to $766.6 million in 2012. As a
percentage of net sales, Adjusted EBITDA was 7.5% and 7.6% in 2013 and 2012, respectively.
We have included a reconciliation of EBITDA and Adjusted EBITDA for 2013 and 2012 in the table 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.
48
(in millions)
Years Ended December 31,
2013
2012
Net income
$
132.8
$
119.0
Amortization of intangibles
(1)
161.2
163.7
Non-cash equity-based compensation
8.6
22.1
Litigation, net
(2)
(6.3
)
—
Net loss on extinguishments of long-term debt
64.0
17.2
Interest expense adjustment related to extinguishments of long-term
debt
(3)
(7.5
)
(3.3
)
IPO- and secondary-offering related expenses
(4)
75.0
—
Aggregate adjustment for income taxes
(5)
(113.5
)
(71.6
)
Non-GAAP net income
$
314.3
$
247.1
(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,
2013
2012
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
2.4
—
IPO- and secondary-offering related expenses
$
75.0
$
—
(5)
Based on a normalized effective tax rate of 39.0%.