EX-99.1 2 radnet_8k-ex9901.htm PRESS RELEASE radnet_8k-ex9901.htm

EXHIBIT 99.1
        

 

FOR IMMEDIATE RELEASE
 
RadNet Reports Quarterly Financial Results and Reaffirms 2011 Full-Year Guidance
 
 
 
Revenue was $150.8 million, an increase of 7.7% from $140.1 million in the third quarter of 2010
     
  Adjusted EBITDA(1) was $27.0 million, a decrease of 3.7% from $28.0 million in the prior year’s third quarter;  Adjusted EBITDA(1) was negatively impacted by an estimated $1.0 million due to Hurricane Irene and a $1.0 million additional reserve for the expected 2011 reimbursement effects from the bundling of CT procedure codes of the abdomen and pelvis
     
  RadNet reports per share break-even compared to a net loss of $(0.01) in the prior year’s third  quarter
     
  Despite being negatively impacted by Hurricane Irene, same center procedural volumes increased 2.5% as compared with the third quarter of 2010
     
  RadNet reaffirms 2011 guidance levels
  
LOS ANGELES, California, November 9, 2011 – RadNet, Inc. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic imaging services through a network of 233 owned and/or operated outpatient imaging centers (inclusive of 21 facilities held in Joint Ventures), today reported financial results for its third quarter of 2011.

Third Quarter Financial Results

For the third quarter of 2011, RadNet reported Revenue, Adjusted EBITDA(1) and Net Income of $150.8 million, $27.0 million and $39,000, respectively.  Revenue increased $10.8 million (or 7.7%), Adjusted EBITDA(1) decreased $1.0 million (or 3.7%) and Net Income increased $318,000, respectively, over the third quarter of 2010.  Net Income per diluted share for the third quarter was breakeven, compared to a Net Loss of $(0.01) per diluted share in the third quarter of 2010 (based upon a weighted average number of diluted shares outstanding of 38.5 million and 37.0 million for these periods in 2011 and 2010, respectively).  Affecting revenue and Adjusted EBITDA(1) in the third quarter was an estimated $1.0 million impact from Hurricane Irene in RadNet’s Mid-Atlantic and New York Metropolitan centers, a number of which lost electric power and a $1.0 million additional reserve from revising our 2011 estimated impact from the combining of procedure codes of the CT of the abdomen and pelvis.

Affecting operating results in the third quarter of 2011 were certain non-cash expenses and non-recurring items including:  $709,000 of non-cash employee stock compensation expense resulting from the vesting of certain options and warrants; $316,000 of severance paid in connection with employee reductions related to cost savings initiatives from previously announced acquisitions; $331,000 net gain on the disposal of certain capital equipment (which primarily resulted from property and casualty insurance settlement proceeds); $719,000 of non-cash deferred financing expense related to the amortization of financing fees paid as part of our existing credit facilities; and $1.4 million fair value gain from our interest rate swaps, net of the amortization of  an accumulated comprehensive loss existing prior to April 6, 2010.
   
 
1

 
  
For the third quarter of 2011, as compared to the prior year’s third quarter, MRI volume increased 12.1%, CT volume increased 4.6% and PET/CT volume increased 0.6%.  Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 8.3% over the prior year’s third quarter.  On a same-center basis, including only those centers which were part of RadNet for both the third quarters of 2011 and 2010, MRI volume increased 2.0%, CT volume decreased 2.2% and PET/CT volume decreased 2.3%.  Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 2.5% over the prior year’s same quarter.
   
Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented, “Excluding those days affected by Hurricane Irene, our per-day volumes and revenue were strong during the third quarter.  We are particularly encouraged by strong volume trends in late September and throughout October, subsequent to the quarter’s end.  But for the impacts of Hurricane Irene and an additional reserve we made to revise our beginning-of-the-year estimate of the effect of the CT bundled codes, our EBITDA would have exceeded last year’s strong third quarter EBITDA.  Our aggregate revenue and same center procedural volumes showed growth as compared with last year’s third quarter, which we attribute to the continuing strength of our multimodality and geographically clustered operating model.”

Recently Announced Acquisition and Related Financing

Yesterday, RadNet completed an acquisition of 21 imaging facilities in Maryland, Delaware and Rhode Island, comprising the vast majority of the U.S. imaging operations of CML HealthCare Inc. (“CML”)

The acquisition consists of the purchase of two operating subsidiaries of CML, American Radiology Services (“ARS”) and The Imaging Institute (“TII”).  ARS operates 15 free-standing outpatient imaging facilities in Maryland (including two facilities held in joint ventures with hospital partners) and one facility in Delaware.  In addition to the imaging centers, ARS provides on-site staffing and professional interpretation services to five Maryland hospitals and teleradiology services to nine additional hospitals and radiology group customers.  TII operates five imaging facilities in the Cranston, Warwick and Providence local markets in Rhode Island.  On an annualized basis, ARS and TII perform over 400,000 imaging procedures at its imaging centers, and we anticipate the acquired ARS and TII operations could initially provide approximately $70 million of annualized revenue.

In conjunction with the acquisition, RadNet increased the size of its senior secured revolving credit facility by $21.25 million (“Incremental Commitments”), to $121.25 million of total borrowing capacity.  The increase in the facility size is to provide additional borrowing availability to fund further acquisitions and general working capital needs.  The existing senior secured revolving facility, including the Incremental Commitments, is a floating rate facility, and we may request the interest rate be based upon LIBOR (subject to a 2% LIBOR floor) plus an applicable LIBOR margin of 4.25%.

Dr. Berger noted, “We have commented recently about the increasing number and improving quality of M&A opportunities within the diagnostic imaging market.  Our transaction yesterday with American Radiology and The Imaging Institute is indicative of the availability of high-quality opportunities that further our strategy of growing geographically clustered regional markets, while selectively adding new platforms from which to grow.  As we continue to differentiate ourselves from our competitors by our size, quality and breadth of service offerings, we are positioned uniquely to work with health plans, hospitals and the regional medical communities to provide solutions which effectively address the growing problems within the healthcare delivery system.”

Dr. Berger added, “As we further demonstrate the benefits of our operating model, we expect to be in a position to continue to deploy capital in consolidation transactions.  We feel fortunate that we are supported by a group of capable and committed capital partners and advisors, whose additional revolver commitments yesterday have provided us with an increased capacity to grow our business in the future.”
  
 
2

 
  
Nine Month Financial Results

For the nine months ended September 30, 2011, RadNet reported Revenue, Adjusted EBITDA(1) and Net Income of $452.7 million, $83.2 million and $2.7 million, respectively.  Revenue increased $49.5 million (or 12.3%), Adjusted EBITDA(1) increased $7.2 million (or 9.5%) and Net Income increased $18.8 million, respectively, over the first nine months of 2010.  Net Income for the nine month period ended September 30, 2011 was $0.07 per diluted share, compared to a Net Loss of $(0.44) per diluted share in corresponding nine month period of 2010 (based upon a weighted average number of fully diluted shares outstanding of 39.1 million and 36.8 million for these periods in 2011 and 2010, respectively).  Affecting operating results in the first nine months of 2011 were certain non-cash expenses and non-recurring items including:  $2.5 million of non-cash employee stock compensation expense resulting from the vesting of certain options and warrants; $1.0 of severance paid in connection with employee reductions related to cost savings initiatives from previously announced acquisitions; $1.9 million net gain on the disposal of certain capital equipment, which includes property and casualty insurance settlement proceeds; $2.2 million of non-cash deferred financing expense related to the amortization of financing fees paid as part of our existing credit facilities; and $2.8 million fair value gain from our interest rate swaps, net of the amortization of  an accumulated comprehensive loss existing prior to April 6, 2010.

2011 Guidance

RadNet reaffirms its previously announced 2011 fiscal year guidance ranges as follows:

 
Revenue
$575 million - $605 million
 
 
Adjusted EBITDA(1)
$110 million - $120 million
 
 
Capital Expenditures (a)
$35 million - $40 million
 
 
Cash Interest Expense
$45 million - $49 million
 
 
Free Cash Flow Generation (b)
$25 million - $35 million
 
       
(a)
Net of proceeds from the sale of equipment.
(b)
Defined by the Company as Adjusted EBITDA(1) less total capital expenditures and cash paid for interest.
    
Conference Call for Today

Dr. Howard Berger, President and Chief Executive Officer, and Mark Stolper, Executive Vice President and Chief Financial Officer, will host a conference call to discuss its third quarter 2011 results on Wednesday, November 9th, 2011 at 7:30 a.m. Pacific Time (10:30 a.m. Eastern Time).

Conference Call Details:

Date:  Wednesday, November 9, 2011
Time:  10:30 a.m. Eastern Time
Dial In-Number:  1-888-239-5359
International Dial-In Number:  1-913-312-1437

It is recommended that participants dial in approximately 5 to 10 minutes prior to the start of the 10:30 a.m. call. An archived replay of the call will also be available and can be accessed by dialing 877-870-5176 from the U.S., or 858-384-5517 for international callers, and using the passcode 3751428.

There will also be a simultaneous live webcast of the conference call which can be accessed under "News" in the RadNet Investor Relations section of the company website at http://www.radnet.com/ or you may use the link audio feed and archived recording of the conference call available at http://viavid.net/dce.aspx?sid=00008F1B.
   
 
3

 
  
Regulation G: GAAP and Non-GAAP Financial Information

This release contains certain financial information not reported in accordance with GAAP. The Company uses both GAAP and non-GAAP metrics to measure its financial results.  The Company believes that, in addition to GAAP metrics, these non-GAAP metrics assist the Company in measuring its cash-based performance.  The Company believes this information is useful to investors and other interested parties because it removes unusual and nonrecurring charges that occur in the affected period and provides a basis for measuring the Company's financial condition against other quarters.  Such information should not be considered as a substitute for any measures calculated in accordance with GAAP, and may not be comparable to other similarly titled measures of other companies.  Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.  Reconciliation of this information to the most comparable GAAP measures is included in this release in the tables which follow.
  
About RadNet, Inc.
  
RadNet, Inc. is a national market leader providing high-quality, cost-effective diagnostic imaging services through a network of 233 owned and/or operated outpatient imaging centers (inclusive of 19 facilities held in Joint Ventures).  RadNet's core markets include California, Maryland, Delaware, Rhode Island, New Jersey and New York. Together with affiliated radiologists, and inclusive of full-time and per diem employees and technicians, RadNet has a total of approximately 5,000 employees. For more information, visit http://www.radnet.com.
  
Forward Looking Statements
 
This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning successfully integrating acquired operations, successfully achieving 2011 financial guidance, achieving cost savings, successfully developing and integrating new lines of business, continuing to grow its business by generating patient referrals and contracts with radiology practices, and receiving third-party reimbursement for diagnostic imaging services, are forward-looking statements within the meaning of the Safe Harbor. Forward-looking statements are based on management's current, preliminary expectations and are subject to risks and uncertainties, which may cause the Company's actual results to differ materially from the statements contained herein. Further information on potential risk factors that could affect RadNet's business and its financial results are detailed in its most recent Annual Report on Form 10-K, as filed with the Securities and Exchange Commission. Undue reliance should not be placed on forward-looking statements, especially guidance on future financial performance, which speaks only as of the date they are made. RadNet undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made, or to reflect the occurrence of unanticipated events.
  
CONTACTS:
 
RadNet, Inc.
Mark Stolper, 310-445-2800
Executive Vice President and Chief Financial Officer
   
 
4

 
 
PART I - FINANCIAL INFORMATION

RADNET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
        
   
September 30,
2011
   
December 31,
2010
 
   
(unaudited)
       
ASSETS
 
CURRENT ASSETS
           
Cash and cash equivalents
  $ 254     $ 627  
Accounts receivable, net
    122,036       96,094  
Prepaid expenses and other current assets
    16,303       14,304  
Total current assets
    138,593       111,025  
PROPERTY AND EQUIPMENT, NET
    191,431       194,230  
OTHER ASSETS
               
Goodwill
    153,895       143,353  
Other intangible assets
    54,389       57,348  
Deferred financing costs, net
    13,517       15,486  
Investment in joint ventures
    17,275       15,444  
Deposits and other
    3,134       2,628  
Total assets
  $ 572,234     $ 539,514  
LIABILITIES AND EQUITY DEFICIT
 
CURRENT LIABILITIES
               
Accounts payable and accrued expenses
  $ 93,840     $ 82,619  
Due to affiliates
    1,525       2,975  
Deferred revenue
    1,191       1,568  
Current portion of notes payable
    5,339       8,218  
Current portion of deferred rent
    974       745  
Current portion of obligations under capital leases
    6,556       9,139  
Total current liabilities
    109,425       105,264  
LONG-TERM LIABILITIES
               
Deferred rent, net of current portion
    12,069       10,379  
Deferred taxes
    277       277  
Line of credit
    31,300       -  
Notes payable, net of current portion
    477,877       481,578  
Obligations under capital lease, net of current portion
    2,871       5,639  
Other non-current liabilities
    14,599       18,850  
Total liabilities
    648,418       621,987  
COMMITMENTS AND CONTINGENCIES
               
                 
EQUITY DEFICIT
               
Common stock - $.0001 par value, 200,000,000 shares authorized;
37,426,460 and 37,223,475 shares issued and outstanding at
September 30, 2011 and December 31, 2010, respectively
    4       4  
Paid-in-capital
    165,185       162,444  
Accumulated other comprehensive loss
    (1,324 )     (2,137 )
Accumulated deficit
    (240,157 )     (242,841 )
Total Radnet, Inc.'s equity deficit
    (76,292 )     (82,530 )
Noncontrolling interests
    108       57  
Total equity deficit
    (76,184 )     (82,473 )
Total liabilities and equity deficit
  $ 572,234     $ 539,514  
 
The accompanying notes are an integral part of these financial statements.
   
 
5

 
 
RADNET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT SHARE DATA)
(unaudited)
     
   
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2011
   
2010
   
2011
   
2010
 
                         
NET REVENUE
  $ 150,845     $ 140,093     $ 452,693     $ 403,222  
                                 
OPERATING EXPENSES
                               
Cost of operations
    117,747       106,634       352,688       311,478  
Depreciation and amortization
    14,309       13,002       42,526       40,153  
Provision for bad debts
    8,608       8,458       25,261       24,603  
Loss (gain) on sale and disposal of equipment
    (331 )     451       (1,928 )     606  
Severance costs
    316       164       970       731  
Total operating expenses
    140,649       128,709       419,517       377,571  
                                 
INCOME FROM OPERATIONS
    10,196       11,384       33,176       25,651  
                                 
OTHER EXPENSES
                               
Interest expense
    13,242       12,781       39,307       35,477  
Loss on extinguishment of debt
    -       -       -       9,871  
Other expenses (income)
    (1,506 )     821       (3,566 )     1,971  
Total other expenses
    11,736       13,602       35,741       47,319  
                                 
LOSS BEFORE INCOME TAXES AND EQUITY
IN EARNINGS OF JOINT VENTURES
    (1,540 )     (2,218 )     (2,565 )     (21,668 )
Benefit from (provision for) income taxes
    (234 )     (317 )     (718 )     (523 )
Equity in earnings of joint ventures
    1,822       2,282       6,129       6,114  
NET INCOME (LOSS)
    48       (253 )     2,846       (16,077 )
Net income attributable to noncontrolling interests
    9       32       162       75  
NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC.
COMMON STOCKHOLDERS
  $ 39     $ (285 )   $ 2,684     $ (16,152 )
                                 
BASIC NET INCOME (LOSS) PER SHARE
ATTRIBUTABLE TO RADNET, INC.
COMMON STOCKHOLDERS
  $ 0.00     $ (0.01 )   $ 0.07     $ (0.44 )
                                 
DILUTED NET INCOME (LOSS) PER SHARE
ATTRIBUTABLE TO RADNET, INC.
COMMON STOCKHOLDERS
  $ 0.00     $ (0.01 )   $ 0.07     $ (0.44 )
                                 
WEIGHTED AVERAGE SHARES OUTSTANDING
                               
Basic
    37,426,460       36,979,725       37,347,946       36,755,781  
                                 
Diluted
    38,469,973       36,979,725       39,078,998       36,755,781  
 
The accompanying notes are an integral part of these financial statements.
    
 
6

 
 
RADNET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  (IN THOUSANDS)
(Unaudited)

   
Nine months ended
September 30,
 
   
2011
   
2010
 
CASH FLOWS FROM OPERATING ACTIVITIES
           
Net income (loss)
  $ 2,846     $ (16,077 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
               
Depreciation and amortization
    42,526       40,153  
Provision for bad debts
    25,261       24,603  
Equity in earnings of joint ventures
    (6,129 )     (6,114 )
Distributions from joint ventures
    6,408       8,339  
Deferred rent amortization
    1,919       1,875  
Amortization of deferred financing costs
    2,186       2,074  
Amortization of bond discount
    180       107  
Loss (gain) on sale and disposal of equipment
    (1,928 )     606  
Loss on extinguishment of debt
    -       9,871  
Amortization of cash flow hedge
    918       611  
Stock-based compensation
    2,499       2,820  
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions:
               
Accounts receivable
    (49,865 )     (27,678 )
Other current assets
    (2,312 )     (5,675 )
Other assets
    (464 )     (48 )
Deferred revenue
    (377 )     -  
Accounts payable and accrued expenses
    10,384       14,687  
Net cash provided by operating activities
    34,052       50,154  
CASH FLOWS FROM INVESTING ACTIVITIES
               
Purchase of imaging facilities
    (13,686 )     (34,580 )
Purchase of property and equipment
    (34,283 )     (33,135 )
Proceeds from insurance claims on damaged equipment
    2,740       -  
Proceeds from sale of equipment
    310       94  
Purchase of equity interest in joint ventures
    (1,500 )     -  
Net cash used in investing activities
    (46,419 )     (67,621 )
CASH FLOWS FROM FINANCING ACTIVITIES
               
Principal payments on notes and leases payable
    (14,397 )     (16,295 )
Repayment of debt
    -       (412,000 )
Proceeds from borrowings
    -       482,360  
Deferred financing costs
    (217 )     (17,407 )
Proceeds from, net of payments on, line of credit
    31,300       -  
Payments to counterparties of interest rate swaps, net of amounts received
    (4,874 )     (4,783 )
Distributions to noncontrolling interests
    (111 )     (84 )
Proceeds from issuance of common stock upon exercise of options/warrants
    242       49  
Net cash provided by financing activities
    11,943       31,840  
EFFECT OF EXCHANGE RATE CHANGES ON CASH
    51       (5 )
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    (373 )     14,368  
CASH AND CASH EQUIVALENTS, beginning of period
    627       10,094  
CASH AND CASH EQUIVALENTS, end of period
  $ 254     $ 24,462  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
               
Cash paid during the period for interest
  $ 30,847     $ 23,579  
  
The accompanying notes are an integral part of these financial statements.
   
 
7

 
      
RADNET, INC.
RECONCILIATION OF GAAP NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON SHAREHOLDERS TO ADJUSTED EBITDA(1)
(IN THOUSANDS)
    
   
Three Months Ended
September 30,
 
   
2011
   
2010
 
             
             
Net Income (Loss) Attributable to RadNet, Inc. Common Shareholders
  $ 39     $ (285 )
Plus Provision for Income Taxes
    234       317  
Plus Other Expenses (Income)
    (1,506 )     821  
Plus Interest Expense
    13,242       12,781  
Plus Severence Costs
    316       164  
Plus Loss (Gain) on Sale of Equipment
    (331 )     451  
Plus Depreciation and Amortization
    14,309       13,002  
Plus Non Cash Employee Stock Compensation
    709       793  
Adjusted EBITDA(1)
  $ 27,012     $ 28,044  
   
   
   
Nine Months Ended
September 30,
 
   
2011
   
2010
 
             
Net Income (Loss) Attributable to RadNet, Inc. Common Shareholders
  $ 2,684     $ (16,152 )
Plus Provision for Income Taxes
    718       523  
Plus Other Expenses (Income)
    (3,566 )     1,971  
Plus Interest Expense
    39,307       35,477  
Plus Severence Costs
    970       731  
Plus Loss (Gain) on Sale of Equipment
    (1,928 )     606  
Plus Depreciation and Amortization
    42,526       40,153  
Plus Non Cash Employee Stock Compensation
    2,499       2,820  
Plus Loss on Extinguishment of Debt
    -       9,871  
Adjusted EBITDA(1)
  $ 83,210     $ 76,000  
      
 
8

 
   
RADNET  PAYMENTS BY PAYORS *
    
 
Third Quarter
2011
 
Full Year
2010
 
Full Year
2009
           
Commercial Insurance
55.3%
 
55.7%
 
55.8%
Medicare
20.2%
 
19.3%
 
20.0%
Capitation
14.1%
 
15.3%
 
15.4%
Workers Compensation/Personal Injury
4.5%
 
4.1%
 
3.5%
Medicaid
3.5%
 
3.2%
 
3.2%
Other
2.4%
 
2.4%
 
2.1%
 
100.0%
 
100.0%
 
100.0%
           
RADNET PAYMENTS BY MODALITY *
           
 
Third Quarter
2011
 
Full Year
2010
 
Full Year
2009
           
MRI
35.4%
 
34.3%
 
34.1%
CT
16.0%
 
17.5%
 
19.1%
PET/CT
5.9%
 
6.1%
 
6.0%
X-ray
10.1%
 
10.1%
 
9.8%
Ultrasound
11.0%
 
11.0%
 
10.3%
Mammography
15.9%
 
16.0%
 
16.0%
Nuclear Medicine
1.6%
 
1.7%
 
1.7%
Other
4.1%
 
3.2%
 
3.0%
 
100.0%
 
100.0%
 
100.0%
           
RADNET AVERAGE PAYMENTS BY MODALITY *
           
 
Third Quarter
2011
 
Full Year
2010
 
Full Year
2009
           
MRI
 $              497
 
 $              501
 
 $              503
CT
                 300
 
                 306
 
                 308
PET/CT
              1,490
 
              1,494
 
              1,493
X-ray
                   41
 
                   40
 
                   38
Ultrasound
                 107
 
                 107
 
                 108
Mammography
                 134
 
                 135
 
                 135
Nuclear Medicine
                 321
 
                 322
 
                 323
Other
                 123
 
                 126
 
                 127
           
Note
         
* Based upon global payments received from consolidated Imaging Centers from that year's dates of service.
Excludes payments from hospital contracts, Breastlink, Center Management Fees and other miscellaneous operating activities.
      
 
9

 
   
Footnotes

(1) The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, each from continuing operations and adjusted for losses or gains on the sale of equipment, other income or loss, debt extinguishments and non-cash equity compensation.  Adjusted EBITDA includes equity earnings in unconsolidated operations and subtracts allocations of earnings to non-controlling interests in subsidiaries, and is adjusted for non-cash or extraordinary and one-time events taken place during the period.

Adjusted EBITDA is reconciled to its nearest comparable GAAP financial measure.  Adjusted EBITDA is a non-GAAP financial measure used as analytical indicator by RadNet management and the healthcare industry to assess business performance, and is a measure of leverage capacity and ability to service debt.  Adjusted EBITDA should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies.

(2) As noted above, the Company defines Free Cash Flow as Adjusted EBITDA less total Capital Expenditures (whether completed with cash or financed) and Cash Interest paid.  Free Cash Flow is a non-GAAP financial measure.  The Company uses Free Cash Flow because the Company believes it provides useful information for investors and management because it measures our capacity to generate cash from our operating activities. Free Cash Flow does not represent total cash flow since it does not include the cash flows generated by or used in financing activities. In addition, our definition of Free Cash Flow may differ from definitions used by other companies.

Free Cash Flow should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies.
 
 
 
 
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