Attached files
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| 8-K - CURRENT REPORT - National American University Holdings, Inc. | nauh_8k.htm |
Exhibit 99.1
NATIONAL
AMERICAN UNIVERSITY HOLDINGS, INC. REPORTS
FISCAL 2018 THIRD QUARTER AND NINE MONTHS RESULTS
Company to host conference call on April 5, 2018, at 11:00 a.m.
ET
Financial and Operational Highlights
*
Combined enrollment
in graduate and doctoral programs increased 4.1% to 504 students
during the FY 2018 third quarter (winter 2017-18 term) from the
prior-year quarter. The Company saw year-over-year growth in its
military, online, graduate and Canada credit hour
enrollments.
*
Students enrolled
in 57,434 credit hours in the FY 2018
third quarter, an 8.3% decrease from 62,607 credit hours
during the prior winter term. Enrollment by total headcount decreased 18.2% from
the prior-year period, to 5,981 students as of February 28, 2018,
as a result of a decrease in continuing education and undergraduate
& diploma students. Continuing education enrollment numbers
have steadily decreased in recent terms due to the discontinuation
of NAU’s workforce development initiative to allow greater
focus on other long-term enrollment growth areas. Excluding these
students who enrolled in one-off courses, enrollment decreased
15.9% year over year. However, credit hours per student increased
to 9.6 in the winter 2017-18 term, compared to 8.6 in the prior
winter term and 9.5 in the fall 2017 term.
*
During the winter
2017-18 term, NAU accepted and enrolled 450 students in accordance
with the previously announced transfer agreement with Zenith
Education Group, which operates Altierus Career College and Everest
University. NAU is providing degree completion opportunities for
former Zenith students who enrolled in approximately 6,000 credit
hours during the term.
*
The Company
completed the Henley-Putnam University asset purchase transaction
in March 2018.
*
The Company is
consolidating several underutilized physical locations into
existing operations, which is expected to have minimal impact on
the student population and is anticipated to result in
approximately $11.6 million in annual savings based on January 2018
expense levels and pending exits of lease obligations.
*
FY 2018 third
quarter total revenue was $18.2 million, compared to $21.3 million
in the prior-year period. The Company’s total academic
segment revenue was $17.9 million in the FY 2018 third quarter,
compared to $21.0 million in the prior-year period.
*
FY 2018 third
quarter net loss attributable to the Company was $(3.7) million,
compared to $(2.5) million in the prior-year period, primarily as a
result of decreased revenue on lower enrollment, investments in
strategic growth initiatives, and $1.1 million in asset impairment
charges primarily related to leasehold improvements at certain
locations.
*
Balance sheet at
February 28, 2018, included cash and cash equivalents and
investments of $4.6 million, taxes receivable of $2.4 million,
working capital of $1.3 million, no outstanding long-term debt, and
stockholders’ equity of $17.8 million.
Rapid City, South Dakota, April 4, 2018 — National American
University Holdings, Inc. (the “Company”) (NASDAQ:
NAUH), which through its wholly owned subsidiary operates
National American University (“NAU” or the “University”), a
regionally accredited, proprietary, multi-location institution of
higher learning, today reported unaudited financial results for its
fiscal 2018 third quarter and nine months ended February 28,
2018.
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National
American University Holdings Inc.
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2
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April 4
2018
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Management Commentary
Ronald
L. Shape, Ed.D., President and Chief Executive Officer of the
Company, stated, “During the winter 2017-18 term, we worked
diligently with Zenith Education Group to enroll 450 students into
NAU and are in touch with additional students who have expressed
interest in completing their studies at our institution. We
continued to see year-over-year growth in graduate and doctoral
enrollments, and were pleased to welcome another new cohort of
doctoral candidates in Ohio in the winter term. Last month, we
completed the Henley-Putnam University asset purchase transaction.
We are excited to now offer high-demand course offerings in the
areas of intelligence, counterterrorism, and strategic security
through NAU’s Henley-Putnam School of Strategic Security,
which is now part of the College of Military Studies. We are
supporting students who were active in their Henley-Putnam
coursework as of the date of closing and will work to transition
students into the new NAU format as this next term begins. We
anticipate everything to be fully integrated and transitioned by
June 1, and look forward to supporting these new students through
their academic journeys. Stabilizing and increasing enrollments has
continued to be a major focus, and we expect the additional
students from the recent developments with Zenith and
Henley-Putnam, combined with the continued growth in our military,
online, graduate, and Canada operations, to have a positive impact
on future terms. Our second online enrollment center in Kansas
City, Missouri, is now fully operational, and we anticipate this
will help to drive growth in online, which our student population
has increasingly gravitated towards.”
Dr.
Shape continued, “On a related note, we recently announced
strategic operational consolidations of several underutilized
physical locations, which we expect will result in approximately
$11.6 million in annual savings once we are able to exit the lease
obligations. In doing so, we eliminated a majority of the expense
related to lease obligations for these locations and made related
staffing reductions, which accounts for approximately $3 million in
savings annually. There was minimal disruption to affected
students, and we have successfully transitioned students impacted
by these consolidations into existing operations. We continue
working to ensure students are receiving quality academic
programming with the necessary support services they need to
graduate and to succeed in the workplace after graduation. We
believe the institution is now better positioned to capitalize on
the growth in our enrollment drivers, which will pave the way for
the Company to achieve positive cash flow and return to
profitability.”
Operating Review
Enrollment Update
Total
NAU student enrollment for the winter 2017-18 term was 5,981
students, compared to 7,314 during the prior winter term. Students
enrolled in 57,434 credit hours, compared to 62,607 credit hours
during the prior winter term. The
current average age of NAU’s students continues to be in the
mid-30s, with those seeking undergraduate degrees remaining the
highest portion of NAU’s student
population.
The following is a summary of student enrollment at February 28,
2018, and February 28, 2017, by degree level and by instructional
delivery method:
|
|
February 28, 2018
(Winter ’17-’18 Term)
|
February 28, 2017
(Winter ’16-’17 Term)
|
||
|
|
No. of Students
|
% of Total
|
No. of Students
|
% of Total
|
|
Continuing
Ed
|
-
|
0.0%
|
202
|
2.8%
|
|
Doctoral
|
111
|
1.9%
|
98
|
1.3%
|
|
Graduate
|
393
|
6.6%
|
386
|
5.3%
|
|
Undergraduate
& Diploma
|
5,477
|
91.6%
|
6,628
|
90.6%
|
|
|
|
|
|
|
|
Total
|
5,981
|
100.0%
|
7,314
|
100.0%
|
|
|
No. of Credits
|
% of Total
|
No. of Credits
|
% of Total
|
|
On-Campus
|
5,910
|
10.3%
|
11,642
|
18.6%
|
|
Online
|
46,229
|
80.5%
|
46,491
|
74.3%
|
|
Hybrid
|
5,295
|
9.2%
|
4,474
|
7.1%
|
|
|
|
|
|
|
|
Total
|
57,434
|
100.0%
|
62,607
|
100.0%
|
Financial Review
The
Company, through its wholly owned subsidiary, operates in two
business segments: academics, which consists of NAU’s
undergraduate, graduate, and doctoral education programs and
contributes the primary portion of the Company’s revenue; and
ownership in and development of multiple apartments and condominium
complexes from which it derives sales and rental income. The real
estate operations generated approximately 1.9% of the
Company’s revenue for the quarter ended February 28,
2018.
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National
American University Holdings Inc.
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3
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April 4
2018
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Fiscal 2018 Third Quarter Financial Results
●
Total revenue for
the FY 2018 third quarter was $18.2 million, compared to $21.3
million in the prior-year period. Of this amount, academic tuition
revenue was $16.9 million, compared to $20.2 million in the
prior-year period, and auxiliary (bookstore) revenue was $1.0
million for the FY 2018 third quarter, compared to $0.9 million in
the prior-year period. This decrease in academic revenue was
primarily a result of a decrease in enrollment, which was partially
offset by the new NAU Tuition Advantage plan that was approved by
NAU’s board of governors in November 2016 and became
effective in March 2017.
●
Educational
services expense for the FY 2018 third quarter decreased to $6.2
million, or 34.9% of total academic segment revenue, from $7.6
million, or 36.2%, in the prior-year period. Educational services
expense specifically relates to academics and includes salaries and
benefits of faculty and academic administrators, costs of
educational supplies, faculty reference and support material and
related academic costs.
●
SG&A expenses
for the FY 2018 third quarter decreased to $13.8 million, or 75.8%
of total revenue, from $15.3 million, or 71.8%, in the prior-year
period. The percentage increase was primarily a result of fixed
costs on a decreasing revenue base and additional expense to launch
new programs and transfer programs for closing institutions.
Expenses related to growth initiatives such as the College of
Military Studies, Canada enrollments, and the new online enrollment
center totaled $1.8 million in the FY 2018 third quarter, compared
to $0.5 million for the same initiatives in the prior-year
period.
●
Loss before income
taxes and non-controlling interest for the FY 2018 third quarter
was $(3.8) million, compared to $(2.4) million in the prior-year
period, primarily as a result of decreased revenue on lower
enrollment, as well as increased operating expenses related to $1.1
million in asset impairment charges primarily related to the
strategic consolidations of several underutilized physical
locations.
●
Net loss
attributable to the Company for the FY 2018 third quarter was
$(3.7) million, or ($0.15) per diluted share based on 24.3 million
shares outstanding, compared to net loss attributable to the
Company of $(2.5) million, or ($0.10) per diluted share based on
24.2 million shares outstanding, in the prior-year period,
primarily as a result of the reasons mentioned above.
●
Losses before
interest, tax, and depreciation and amortization
(“LBITDA”) for the FY 2018 third quarter were ($2.4)
million, compared to LBITDA of ($0.9) million in the prior-year
period. A table reconciling EBITDA/LBITDA to net loss can be found
at the end of this release.
●
Adjusted LBITDA,
which excludes loss on disposition of property, for the FY 2018
third quarter was $(1.4) million, compared to LBITDA of ($0.9)
million in the prior-year period. A table reconciling Adjusted
EBITDA/LBITDA to net loss can be found at the end of this
release.
Fiscal 2018 Nine Months Financial Results
●
Total revenues for
the first nine months of FY 2018 were $58.0 million, compared to
$64.4 million in the prior-year period. Of this amount, total
academic segment revenue was $56.5 million, compared to $63.6
million in the prior-year period, as a result of the decrease in
enrollment. The Company continues to execute on its strategic plan,
which includes growing enrollments at its current existing
locations by investing in new program development and expansion,
academic advisor support, and student retention initiatives, while
adjusting operation size to be in line with the needs of its
student population.
●
NAU’s
educational services expense for the first nine months of FY 2018
was $19.5 million, or 34.6% of the total academic segment revenue,
compared to $20.6 million, or 32.4%, in the prior-year
period.
●
During the first
nine months of FY 2018, SG&A expenses decreased to $44.6
million, or 76.9% of total revenues, compared to $47.2 million, or
73.3%, in the prior-year period.
●
Loss before income
taxes and non-controlling interest for the first nine months of FY
2018 was $(11.5) million, compared to loss before income taxes and
non-controlling interest of $(6.6) million in the prior-year
period, primarily as a result of decreased revenues offset by lower
SG&A expenses.
●
Net loss
attributable to the Company during the first nine months of FY 2018
was $(11.3) million, or $(0.47) per diluted share based on 24.2
million shares outstanding, compared to net loss attributable to
the Company of $(5.3) million, or $(0.22) per diluted share based
on 24.1 million shares outstanding, in the prior-year
period.
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American University Holdings Inc.
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4
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April 4
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●
LBITDA for the
first nine months of FY 2018 was $(7.4) million, compared to LBITDA
of $(2.1) million in the prior-year period. A table reconciling
EBITDA/LBITDA to net loss can be found at the end of this
release.
●
Adjusted LBITDA,
which excludes loss on disposition of property, for the first nine
months of FY 2018 was $(5.3) million, compared to LBITDA of ($2.1)
million in the prior-year period. A table reconciling Adjusted
EBITDA/LBITDA to net loss can be found at the end of this
release.
Balance Sheet Highlights
|
(in millions except for percentages)
|
2/28/2018
|
5/31/2017
|
% Change
|
|
Cash
and Cash Equivalents/Investments
|
$4.6*
|
$16.2
|
(71.3)%
|
|
Working
Capital
|
1.3
|
11.2
|
(88.3)%
|
|
Other
Long-term Liabilities
|
2.9
|
4.0
|
(28.4)%
|
|
Stockholders’
Equity
|
17.8
|
29.9
|
(40.7)%
|
*Decrease
in cash was primarily the result of expenditures related to lease
terminations, operating loss, and dividends.
Conference Call Information
Management
will discuss these results in a conference call (with accompanying
presentation) on Thursday, April 5, 2018, at 11:00 a.m.
ET.
The
dial-in numbers are:
(877)
407-9078 (U.S.)
(201)
493-6745 (International)
Accompanying Slide Presentation and Webcast
The
Company will have an accompanying slide presentation available in
PDF format at the “Investor Relations” section of the
NAU website at http://investors.national.edu.
The presentation will be made available 30 minutes prior to the
conference call. In addition, the call will be simultaneously
webcast over the Internet via the “Investor Relations”
section of the NAU website or by clicking on the conference call
link: http://national.equisolvewebcast.com/q3-2018.
About National American University Holdings, Inc.
National American University Holdings, Inc., through its wholly
owned subsidiary, operates National American University, a
regionally accredited, proprietary, multi-location institution of
higher learning offering associate, bachelor’s,
master’s, and doctoral degree programs in technical and
professional disciplines. Accredited by the Higher Learning
Commission, NAU has been providing technical and professional
career education since 1941. NAU opened its first location in Rapid
City, South Dakota, and has since grown to multiple locations in
several U.S. states. In 1998, NAU began offering online courses.
Today, NAU offers degree programs in traditional, online, and
hybrid formats, which provide students increased flexibility to
take courses at times and places convenient to their busy
lifestyles.
Forward Looking Statements
This press release may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
regarding the Company's business. Statements made in this release,
other than those concerning historical financial information, may
be considered forward-looking statements, which speak only as of
the date of this release and are based on current beliefs and
expectations and involve a number of assumptions. These
forward-looking statements include outlooks or expectations for
earnings, revenue, expenses or other future financial or business
performance, strategies or expectations, or the impact of legal or
regulatory matters on business, results of operations or financial
condition. Specifically, forward-looking statements may include
statements relating to the future financial performance of the
Company; the ability to continue to receive Title IV funds; the
growth of the market for the Company’s services; expansion
plans and opportunities; consolidation in the market for the
Company’s services generally; and other statements preceded
by, followed by or that include the words “estimate,”
“plan,” “project,” “forecast,”
“intend,” “expect,”
“anticipate,” “believe,”
“seek,” “target” or similar expressions.
These forward-looking statements involve a number of known and
unknown risks and uncertainties or other assumptions that may cause
actual results or performance to be materially different from those
expressed or implied by those forward-looking statements. Other
factors that could cause the Company’s results to differ
materially from those contained in its forward-looking statements
are included under, among others, the heading “Risk
Factors” in the Company’s Annual Report on Form 10-K,
which the Company filed on August 4, 2017, and in its other filings
with the Securities and Exchange Commission. The Company assumes no
obligation to update the information contained in this
release.
Contact
Information:
National American University Holdings, Inc.
Dr.
Ronald Shape
605-721-5220
rshape@national.edu
Investor
Relations Counsel
The Equity Group Inc.
415-568-2255
csohn@equityny.com
Adam
Prior
212-836-9606
aprior@equityny.com
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National
American University Holdings Inc.
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April 4
2018
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NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC. AND
SUBSIDIARIES
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME
|
||||
|
FOR THE NINE MONTHS AND THREE MONTHS ENDED FEBRUARY 28, 2018 AND
2017
|
||||
|
(In thousands, except share and per share amounts)
|
|
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|
|
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Three Months Ended
|
Nine Months Ended
|
||
|
|
February
28,
|
February
28,
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||
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|
2018
|
2017
|
2018
|
2017
|
|
REVENUE:
|
|
|
|
|
|
Academic
revenue
|
$16,923
|
$20,158
|
$53,607
|
$59,872
|
|
Auxiliary
revenue
|
955
|
891
|
2,930
|
3,699
|
|
Rental
income — apartments
|
349
|
282
|
1,049
|
873
|
|
Condominium
sales
|
-
|
-
|
455
|
-
|
|
|
|
|
|
|
|
Total
revenue
|
18,227
|
21,331
|
58,041
|
64,444
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
Cost
of educational services
|
6,234
|
7,629
|
19,545
|
20,594
|
|
Selling,
general and administrative
|
13,817
|
15,321
|
44,633
|
47,228
|
|
Auxiliary
expense
|
686
|
591
|
2,079
|
2,694
|
|
Cost
of condominium sales
|
-
|
-
|
427
|
-
|
|
Loss
on lease termination
|
-
|
-
|
362
|
-
|
|
Loss
on impairment and disposition of property
|
1,076
|
2
|
2,071
|
8
|
|
|
|
|
|
|
|
Total
operating expenses
|
21,813
|
23,543
|
69,117
|
70,524
|
|
|
|
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OPERATING
LOSS
|
(3,586)
|
(2,212)
|
(11,076)
|
(6,080)
|
|
|
|
|
|
|
|
OTHER
INCOME (EXPENSE):
|
|
|
|
|
|
Interest
income
|
14
|
28
|
63
|
77
|
|
Interest
expense
|
(211)
|
(211)
|
(628)
|
(639)
|
|
Other
income — net
|
8
|
14
|
95
|
83
|
|
|
|
|
|
|
|
Total
other expense
|
(189)
|
(169)
|
(470)
|
(479)
|
|
|
|
|
|
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LOSS
BEFORE INCOME TAXES
|
(3,775)
|
(2,381)
|
(11,546)
|
(6,559)
|
|
|
|
|
|
|
|
INCOME
TAX BENEFIT (EXPENSE)
|
83
|
(143)
|
268
|
1,254
|
|
|
|
|
|
|
|
NET
LOSS
|
(3,692)
|
(2,524)
|
(11,278)
|
(5,305)
|
|
|
|
|
|
|
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NET
INCOME ATTRIBUTABLE TO NON-CONTROLLING
|
(15)
|
(12)
|
(34)
|
(39)
|
|
INTEREST
|
|
|
|
|
|
|
|
|
|
|
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NET
LOSS ATTRIBUTABLE TO NATIONAL AMERICAN
|
|
|
|
|
|
UNIVERSITY
HOLDINGS, INC. AND SUBSIDIARIES
|
(3,707)
|
(2,536)
|
(11,312)
|
(5,344)
|
|
|
|
|
|
|
|
OTHER
COMPREHENSIVE (LOSS) INCOME, NET OF TAX
|
|
|
|
|
|
Unrealized
gains (losses) on investments, net of tax benefit
(expense)
|
11
|
3
|
4
|
(2)
|
|
COMPREHENSIVE
LOSS ATTRIBUTABLE TO
|
|
|
|
|
|
NATIONAL
AMERICAN UNIVERSITY HOLDINGS, INC.
|
$(3,696)
|
$(2,533)
|
$(11,308)
|
$(5,346)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
net loss attributable to National American University
|
$(0.15)
|
$(0.10)
|
$(0.47)
|
$(0.22)
|
|
Holdings,
Inc.
|
|
|
|
|
|
Diluted
net loss attributable to National American University
|
$(0.15)
|
$(0.10)
|
$(0.47)
|
$(0.22)
|
|
Holdings,
Inc.
|
|
|
|
|
|
Basic
weighted average shares outstanding
|
24,269,158
|
24,177,979
|
24,222,864
|
24,146,643
|
|
Diluted
weighted average shares outstanding
|
24,269,158
|
24,177,979
|
24,222,864
|
24,146,643
|
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National
American University Holdings Inc.
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Page
6
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April 4
2018
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NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC. AND
SUBSIDIARIES
|
|
|
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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
AS OF FEBRUARY 28, 2018 AND MAY 31, 2017
|
|
|
|
(In thousands, except share and per share amounts)
|
|
|
|
|
February 28,
|
May 31,
|
|
|
2018
|
2017
|
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash
and cash equivalents
|
$4,638
|
$11,974
|
|
Available
for sale investments
|
$-
|
$4,183
|
|
Student
receivables — net of allowance of $686 and $1,195 at February
28, 2018
|
|
|
|
and
May 31, 2017, respectively
|
$3,586
|
$2,895
|
|
Other
receivables
|
$724
|
$458
|
|
Income
taxes receivable
|
$2,397
|
$2,301
|
|
Prepaid
and other current assets
|
$1,638
|
$1,649
|
|
Total
current assets
|
$12,983
|
$23,460
|
|
Total
property and equipment - net
|
$27,194
|
$31,318
|
|
OTHER
ASSETS:
|
|
|
|
Restricted
certificate of deposit
|
$1,250
|
$-
|
|
Condominium
inventory
|
$190
|
$621
|
|
Land
held for future development
|
$229
|
$229
|
|
Course
development — net of accumulated amortization of $3,465 and
$3,322 at
|
|
|
|
February
28, 2018 and May 31, 2017,
respectively
|
$812
|
$1,111
|
|
Other
|
$597
|
$853
|
|
Total
other assets
|
$3,078
|
$2,814
|
|
TOTAL
|
$43,255
|
$57,592
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Current
portion of capital lease payable
|
$367
|
$331
|
|
Accounts
payable
|
$2,643
|
$3,076
|
|
Dividends
payable
|
$-
|
$1,094
|
|
Income
taxes payable
|
$105
|
$113
|
|
Deferred
income
|
$3,312
|
$1,691
|
|
Accrued
and other liabilities
|
$5,240
|
$5,906
|
|
Total
current liabilities
|
$11,667
|
$12,211
|
|
DEFERRED
INCOME TAXES
|
$-
|
$194
|
|
OTHER
LONG-TERM LIABILITIES
|
$2,870
|
$4,010
|
|
CAPITAL
LEASE PAYABLE, NET OF CURRENT PORTION
|
$10,957
|
$11,237
|
|
COMMITMENTS
AND CONTINGENCIES (Note 9)
|
|
|
|
STOCKHOLDERS'
EQUITY:
|
|
|
|
Common
stock, $0.0001 par value (50,000,000 authorized; 28,670,095 issued
and
|
|
|
|
24,330,914
outstanding as of February 28, 2018; 28,557,968 issued and
24,224,924
|
|
|
|
outstanding
as of May 31, 2017)
|
$3
|
$3
|
|
Additional
paid-in capital
|
$59,258
|
$59,060
|
|
Accumulated
deficit
|
$(19,024)
|
$(6,622)
|
|
Treasury stock, at cost
(4,339,181 shares
at February 28, 2018 and 4,333,044
|
|
|
|
shares
at May 31, 2017)
|
$(22,494)
|
$(22,481)
|
|
Accumulated
other comprehensive loss, net of taxes - unrealized
loss
|
|
|
|
on
available for sale securities
|
$-
|
$(4)
|
|
Total
National American University Holdings, Inc. stockholders'
equity
|
$17,743
|
$29,956
|
|
Non-controlling
interest
|
$18
|
$(16)
|
|
Total
stockholders' equity
|
$17,761
|
$29,940
|
|
TOTAL
|
$43,255
|
$57,592
|
|
|
|
|
|
National
American University Holdings Inc.
|
Page
7
|
|
April 4
2018
|
|
The following table provides a reconciliation of net loss
attributable to the Company to EBITDA/LBITDA and Adjusted
EBITDA/LBITDA:
|
|
Three Months Ended
February 28,
|
Nine Months Ended
February 28,
|
||
|
|
2018
|
2017
|
2018
|
2017
|
|
|
(dollars in thousands)
|
|||
|
Net
Loss attributable to the Company
|
$(3,707)
|
$(2,536)
|
$(11,312)
|
$(5,344)
|
|
Income
attributable to non-controlling interest
|
15
|
12
|
34
|
39
|
|
Interest
Income
|
(14)
|
(28)
|
(63)
|
(77)
|
|
Interest
Expense
|
211
|
211
|
628
|
639
|
|
Income
Tax (Benefit) Expense
|
(83)
|
143
|
(268)
|
(1,254)
|
|
Depreciation
and Amortization
|
1,137
|
1,260
|
3,577
|
3,857
|
|
|
|
|
|
|
|
EBITDA
(LBITDA)
|
$(2,441)
|
$(938)
|
$(7,404)
|
$(2,140)
|
|
|
|
|
|
|
|
Loss
on disposition of property
|
1,076
|
2
|
2,071
|
8
|
|
Adjusted
EBITDA (LBITDA)
|
$(1,365)
|
$(936)
|
$(5,333)
|
$(2,132)
|
|
|
|
|
|
|
EBITDA/LBITDA consists of income attributable to the Company, less
income from non-controlling interest, plus loss from
non-controlling interest, minus interest income, plus interest
expense (which is not related to any debt but to the accounting
required for the capital lease), plus income taxes, plus
depreciation and amortization. The Company uses EBITDA/LBITDA as a
measure of operating performance. Adjusted EBITDA/LBITDA consists
of EBITDA/LBITDA plus loss on disposition of property. However,
neither EBITDA/LBITDA nor Adjusted EBITDA/LBITDA is a recognized
measurement under U.S. generally accepted accounting principles, or
GAAP, and when analyzing its operating performance, investors
should use EBITDA/LBITDA and Adjusted EBITDA/LBITDA in addition to,
and not as alternatives for, income as determined in accordance
with GAAP. Because not all companies use identical calculations,
the Company’s presentation of EBITDA/LBITDA and Adjusted
EBITDA/LBITDA may not be comparable to similarly titled measures of
other companies and is therefore limited as a comparative measure.
Furthermore, as an analytical tool, EBITDA/LBITDA and Adjusted
EBITDA/LBITDA have additional limitations, including that (a) they
are not intended to be a measure of free cash flow, as they do not
consider certain cash requirements such as tax payments; (b) they
do not reflect changes in, or cash requirements for, its working
capital needs; and (c) although depreciation and amortization are
non-cash charges, the assets being depreciated and amortized often
will have to be replaced in the future, and EBITDA/LBITDA and
Adjusted EBITDA/LBITDA do not reflect any cash requirements for
such replacements, or future requirements for capital expenditures
or contractual commitments. To compensate for these limitations,
the Company evaluates its profitability by considering the economic
effect of the excluded expense items independently as well as in
connection with its analysis of cash flows from operations and
through the use of other financial measures.
The Company believes EBITDA/LBITDA and Adjusted EBITDA/LBITDA to be
useful to an investor in evaluating its operating performance
because they are widely used to measure a company’s operating
performance without regard to certain non-cash expenses (such as
depreciation and amortization) and expenses that are not reflective
of its core operating results over time. The Company believes
EBITDA/LBITDA and Adjusted EBITDA/LBITDA present meaningful
measures of corporate performance exclusive of its capital
structure, the method by which assets were acquired and non-cash
charges, and provides us with additional useful information to
measure its performance on a consistent basis, particularly with
respect to changes in performance from period to
period.