This press release and accompanying schedules provide certain information regarding (i) EBITDA and (ii) adjusted diluted earnings per share, both of which may be considered non-GAAP financial measures under the rules of the Securities and Exchange Commission. The non-GAAP financial measures included in the press release are reconciled to the corresponding GAAP financial measures below, as required under the rules of the Securities and Exchange Commission regarding the use of non-GAAP financial measures. We define (i) EBITDA as net income before net interest expense, income taxes, depreciation, amortization and accretion of contract rights and (ii) adjusted diluted earnings per share reflects an add-back for the non-recurring severance related charges. EBITDA and adjusted diluted earnings per share are not recognized financial measures under GAAP, but we believe that each is useful in measuring our operating performance. We believe that the use of the non-GAAP financial measure EBITDA enhances an overall understanding of the Company’s past financial performance, and provides useful information to the investor by comparing our performance across reporting periods on a consistent basis and the use of EBITDA by other companies in the gaming equipment sector as a measure of performance. We present adjusted diluted earnings per share in order to allow investors to evaluate how we would have performed had the severance related charges not been incurred during the three month period ended June 30, 2014.
Investors should not consider these measures in isolation or as a substitute for net income, operating income, or any other measure for determining the Company’s operating performance that is calculated in accordance with GAAP. In addition, because these measures are not calculated in accordance with GAAP, they may not necessarily be comparable to similarly titled measures employed by other companies.
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For the Three Months Ended
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| 2014 | 2013 | ||||||||
| (in thousands) | |||||||||
| Net income | $ | 7,632 | $ | 8,449 | |||||
| Add back: | |||||||||
| Amortization and depreciation | 11,058 | 8,900 | |||||||
| Accretion of contract rights (1) | 2,320 | 2,080 | |||||||
| Interest expense, net | 140 | 192 | |||||||
| Income tax expense | 4,762 | 5,334 | |||||||
| EBITDA (2) | $ | 25,912 | $ | 24,955 | |||||
| 1) | “Accretion of contract rights” relates to the amortization of intangible assets for development projects. These amounts are recorded net of revenues in the Consolidated Statements of Operations. | |
| 2) | EBITDA includes third-quarter severance related charges totaling $0.6 million. | |
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Adjusted Diluted Earnings Per Share |
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| For the Three Months Ended | |||||||||
| June 30, | |||||||||
| EPS Reconciliation: | 2014 |
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2013 | ||||||
| As reported | $ | 0.25 | $ | 0.28 | |||||
| Add-back of severance related charges | 0.01 | - | |||||||
| Adjusted Diluted EPS | $ | 0.26 | $ | 0.28 | |||||
