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Table of Contents
Non-GAAP Financial Measures
In addition to our financial information presented in accordance with U.S. generally accepted accounting principles (“GAAP”
),
management uses certain “non-GAAP financial measures”
within the meaning of the SEC Regulation G, to clarify and enhance understanding of
past performance and prospects for the future. Generally, a non-GAAP financial measure is a numerical measure of a company’
s operating
performance, financial position or cash flows that excludes or includes amounts that are included in or excluded from the most directly
comparable measure calculated and presented in accordance with GAAP. Set forth below is a discussion of the presentation and use of Adjusted
EBITDA and Unlevered Free Cash Flow, the non-GAAP financial measures used by management.
Adjusted EBITDA is defined as net income
before interest expense and other, net, income tax provision (benefit), depreciation and
amortization, stock-based compensation, impairment of goodwill and intangible assets, and restructuring, acquisition and integration-
related
costs. Unlevered Free Cash Flow is defined as net income before interest expense and other, net, income tax provision (benefit), depreciation
and amortization, stock-based compensation, impairment of goodwill and intangible assets, and restructuring, acquisition and integration-
related
costs, less cash used for purchases of property and equipment.
These non-
GAAP financial measures are commonly used in the industry and are presented because management believes they provide
relevant and useful information to investors. Management uses these non-
GAAP financial measures to evaluate the performance of its business.
Management also uses Unlevered Free Cash Flow to assess its ability to fund capital expenditures, fund growth and service debt. Management
believes that excluding the effects of certain non-cash and non-
operating items enables investors to better understand and analyze the current
period’s results and provides a better measure of comparability.
There are limitations to using these non-
GAAP financial measures. Adjusted EBITDA and Unlevered Free Cash Flow are not indicative
of cash provided or used by operating activities and may differ from comparable information provided by other companies. Adjusted EBITDA
and Unlevered Free Cash Flow should not be considered in isolation, as an alternative to, or more meaningful than measures of financial
performance determined in accordance with U.S. GAAP.
The following table presents a reconciliation of Adjusted EBITDA to the most closely related financial measure reported under GAAP
for the years ended December 31, 2010, 2011 and 2012 :
51
Year Ended December 31,
2010
2011
2012
(in thousands)
Net income
$
81,480
$
34,567
$
7,520
Interest expense and other, net
23,409
70,640
63,416
Income tax provision (benefit)
56,804
19,902
(2,931
)
Depreciation and amortization
23,390
160,083
183,304
Stock-based compensation expense
9,959
13,466
10,462
Impairment of intangible assets
1,711
—
—
Restructuring, acquisition and integration-related costs
22,368
32,068
18,244
Adjusted EBITDA
$
219,121
$
330,726
$
280,015