UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 23, 2015
MAD CATZ INTERACTIVE, INC.
(Exact Name of Registrant as Specified in Charter)
Canada | 001-14944 | N/A | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
10680 Treena Street, Suite 500
San Diego, California 92131
(Address of Principal Executive Offices)
(858) 790-5008
(Registrants telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14.a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01. | Entry into a Material Definitive Agreement |
On June 23, 2015, Mad Catz, Inc. (MCI), a wholly-owned subsidiary of Mad Catz Interactive, Inc. (the Company), entered into an Amendment (the Amendment) to its Fourth Amended and Restated Loan Agreement (as amended, the Loan Agreement) between MCI and Wells Fargo Capital Finance, LLC (Wells Fargo). The Amendment extends the expiration of Loan Agreement to July 31, 2016, and adjusts the monthly EBITDA requirement contained in the Loan Agreement for the months of May 2015 through June 2016. Wells Fargo also provided a waiver of default related to the March 31, 2015 and April 30, 2015 EBITDA requirement, as the Companys EBITDA for the trailing twelve months ended March 31, 2015 and April 30, 2015 was lower than the required threshold.
Item 2.02. | Results of Operations and Financial Condition |
The following information is furnished pursuant to Item 2.02, Results of Operations and Financial Condition, and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.
On June 25, 2015, the Company issued a press release announcing its financial results for its fiscal year ended March 31, 2015. A copy of the press release is attached hereto as Exhibit 99.1.
The information contained in this Current Report, including the exhibit, shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Item 9.01. | Financial Statements and Exhibits |
(d) | Exhibits. |
99.1 | Press Release, dated June 25, 2015, issued by Mad Catz Interactive, Inc. , furnished pursuant to Item 2.02 of Form 8-K. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: June 25, 2015 | MAD CATZ INTERACTIVE, INC. | |||||
By: | /s/ KAREN MCGINNIS | |||||
Name: Karen McGinnis | ||||||
Its: Chief Financial Officer |
Exhibit 99.1
MAD CATZ® REPORTS FISCAL 2015 FOURTH QUARTER AND YEAR END FINANCIAL RESULTS
San Diego, CA June 25, 2015 Mad Catz Interactive, Inc. (Mad Catz or the Company) (NYSE MKT/TSX: MCZ), today announced financial results for the fiscal 2015 fourth quarter and full year ended March 31, 2015.
Key Highlights of Fiscal 2015 Fourth Quarter and Subsequent:
| Fiscal 2015 fourth quarter net sales decreased 18% to $16.6 million, driven by a 27% decrease in net sales to EMEA and a 25% decrease in net sales to APAC, partially offset by a 6% increase in net sales in the Americas; |
| Gross margin declined to 23.4% from 23.9% in the prior year quarter; |
| Total operating expenses decreased 6% from the prior year period to $6.2 million; |
| Diluted income per share was $0.09 for the fiscal 2015 fourth quarter, compared to a diluted loss per share of less than ($0.01) last year; |
| Net position of bank loan, less cash, of $2.8 million at March 31, 2015, compared to $10.7 million at December 31, 2014 and $4.1 million at March 31, 2014; |
| Announced agreement with Harmonix Music Systems to launch Rock Band 4 on PlayStation 4 and Xbox One; |
| Announced the S.U.R.F.R wireless media and game controller for Android powered smart TVs and media devices, smartphones, tablets and home theater PCs; |
| Announced the L.Y.N.X. 3 mobile wireless controller for Android smart devices, tablets and Windows PC; |
| Announced an agreement with Capcom to produce a range of next-generation licensed Street Fighter V fighting game controllers for PlayStation 4; |
| Announced agreement with Dovetail Games for the retail distribution of Microsoft Flight Simulator X: Steam Edition; |
| Appointed Mr. Carlo Chiarello to the Board of Directors; |
| Raised $3.7 million in a registered direct offering through the issuance of approximately 9.0 million shares of common stock and warrants to purchase approximately 4.5 million additional shares of common stock exercisable at $0.61 per share; |
| Extended working capital credit facility with Wells Fargo Capital Finance LLC to July 31, 2016; and |
| Received critical acclaim on Rock Band 4 at E3, including the award for Best Music Game from IGN, the worlds largest video game news site, and IGN nominations for Best PS4 Game and Best Xbox One Game. |
1
Key Financial Highlights of Fiscal 2015:
| Fiscal 2015 net sales decreased 4% to $86.2 million, driven by a 13% decrease in net sales to EMEA and a 2% decrease in net sales to the Americas, partially offset by a 50% increase in net sales in APAC; |
| Gross margin for Fiscal 2015 was 27.7% compared to 25.5% in Fiscal 2014; |
| Total operating expenses in Fiscal 2015 decreased 13% year-over-year to $25.5 million; |
| Operating loss of ($1.6 million) represented a $4.9 million improvement over the prior year; |
| Diluted income per share in Fiscal 2015 was $0.07 compared to a loss of ($0.12) in the prior year; and |
| Fiscal 2015 Adjusted EBITDA increased to $0.3 million from ($4.0 million) in Fiscal 2014. |
Summary of Financials
(in thousands, except margins and per share data)
(unaudited) Three Months Ended March 31, |
Twelve Months Ended March 31, |
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2015 | 2014 | Change | 2015 | 2014 | Change | |||||||||||||||||||
Net sales |
$ | 16,558 | $ | 20,217 | (18 | %) | $ | 86,223 | $ | 89,629 | (4 | %) | ||||||||||||
Gross profit |
3,872 | 4,838 | (20 | %) | 23,844 | 22,898 | 4 | % | ||||||||||||||||
Total operating expenses |
6,167 | 6,527 | (6 | %) | 25,487 | 29,420 | (13 | %) | ||||||||||||||||
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Operating loss |
(2,295 | ) | (1,689 | ) | 36 | % | (1,643 | ) | (6,522 | ) | (75 | %) | ||||||||||||
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Net income (loss) |
5,556 | (265 | ) | (2197 | %) | 4,747 | (7,441 | ) | (164 | %) | ||||||||||||||
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Net income (loss) per share, basic and diluted |
$ | 0.09 | $ | 0.00 | 100 | % | $ | 0.07 | ($ | 0.12 | ) | (158 | %) | |||||||||||
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Gross margin |
23.4 | % | 23.9 | % | (50 | ) bps | 27.7 | % | 25.5 | % | 220 bps | |||||||||||||
Adjusted EBITDA (loss) (1) |
($ | 1,841 | ) | ($ | 1,155 | ) | 59 | % | $ | 315 | ($ | 3,952 | ) | (108 | %) |
(1) | Definitions, disclosures and reconciliations regarding non-GAAP financial information are included on page 8. |
Commenting on the Companys Fiscal 2015 fourth quarter and full year results, Karen McGinnis, Chief Financial Officer of Mad Catz, said, Fiscal 2015 was a challenging year for Mad Catz, as net sales for the fourth quarter and full year decreased 18% and 4% from their respective prior year periods. The net sales performance in Fiscal 2015 was driven primarily by a decrease in sales of our products, primarily audio, designed for legacy consoles and universal platforms due to the launch of the PlayStation 4 and Xbox One consoles in November 2013. Although we are experiencing strong growth in products developed for these new consoles, the decline in sales of products related to the legacy consoles has been greater than we and others in the industry anticipated. Despite the net sales decline in Fiscal 2015, our focus on profitable product placements and efforts to drive additional operational efficiencies across the business resulted in a 4% increase in gross profit and a 13% decrease in operating expenses compared to the prior year. As a result, we reduced our operating loss by $4.9 million, generated positive adjusted EBITDA of $0.3 million and ended the year with a net position of bank loan less cash of
2
$2.8 million. Additionally, we recognized a tax benefit of $7.2 million, which resulted in net income of $4.7 million, or $0.07 per share, for the fiscal year. Although working capital remains tight, we believe we have positioned ourselves well to capitalize on the growth opportunities in fiscal 2016.
Summary of Key Sales Metrics
Three Months Ended March 31, |
Twelve Months Ended March 31, |
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(in thousands) | 2015 | 2014 | Change | 2015 | 2014 | Change | ||||||||||||||||||
Net Sales by Geography |
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EMEA |
$ | 9,143 | $ | 12,557 | (27 | %) | $ | 46,247 | $ | 53,132 | (13 | %) | ||||||||||||
Americas |
5,615 | 5,275 | 6 | % | 27,897 | 28,470 | (2 | %) | ||||||||||||||||
APAC |
1,800 | 2,385 | (25 | %) | 12,079 | 8,027 | 50 | % | ||||||||||||||||
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$ | 16,558 | $ | 20,217 | (18 | %) | $ | 86,223 | $ | 89,629 | (4 | %) | |||||||||||||
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Sales by Platform as a % of Gross Sales |
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PC and Mac |
52 | % | 47 | % | 46 | % | 45 | % | ||||||||||||||||
Universal |
17 | % | 25 | % | 22 | % | 29 | % | ||||||||||||||||
Next gen consoles (a) |
24 | % | 11 | % | 21 | % | 3 | % | ||||||||||||||||
Smart devices |
5 | % | 4 | % | 7 | % | 2 | % | ||||||||||||||||
Legacy consoles (b) |
2 | % | 12 | % | 4 | % | 19 | % | ||||||||||||||||
All others |
| % | 1 | % | | % | 2 | % | ||||||||||||||||
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100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||
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Sales by Category as a % of Gross Sales |
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Audio |
40 | % | 47 | % | 42 | % | 47 | % | ||||||||||||||||
Specialty controllers |
31 | % | 18 | % | 25 | % | 16 | % | ||||||||||||||||
Mice and keyboards |
22 | % | 28 | % | 23 | % | 29 | % | ||||||||||||||||
Controllers |
4 | % | 2 | % | 6 | % | 1 | % | ||||||||||||||||
Accessories |
2 | % | 3 | % | 3 | % | 5 | % | ||||||||||||||||
Games and Other |
1 | % | 2 | % | 1 | % | 2 | % | ||||||||||||||||
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100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||
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Sales by Brand as a % of Gross Sales |
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Tritton |
37 | % | 43 | % | 39 | % | 42 | % | ||||||||||||||||
Mad Catz |
34 | % | 39 | % | 34 | % | 41 | % | ||||||||||||||||
Saitek |
25 | % | 14 | % | 19 | % | 12 | % | ||||||||||||||||
Other |
4 | % | 4 | % | 8 | % | 5 | % | ||||||||||||||||
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100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||
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(a) | Includes products developed for Xbox One, PlayStation 4 and Wii U. |
(b) | Includes products developed for Xbox 360, PlayStation 3 and Wii. |
Darren Richardson, President and Chief Executive Officer of Mad Catz, commented, Although the past couple of years have been challenging for us and the industry, we are pleased with our ability to drive operational improvements while still investing in new product development in order to capitalize on growth opportunities from the ongoing console transition as well as the increasing popularity of mobile gaming. We believe fiscal 2016 will be an exciting year for Mad Catz, particularly as we work with Harmonix to launch Rock Band 4 this holiday season. The initial response from consumers and retailers to the launch announcement and new game play has been very positive, and we expect sales of Rock Band 4 products to contribute to significant sales growth, operating leverage and cash flow in Fiscal 2016.
3
The Company will host a conference call and simultaneous webcast on June 25, 2015, at 5:00 p.m. ET, which can be accessed by dialing (212) 231-2910. Following its completion, a replay of the call can be accessed for 30 days at the Companys Web site (www.madcatz.com, select About Us/Investor Relations) or for seven days via telephone at (800) 633-8284 (reservation #21769534) or, for International callers, at (402) 977-9140.
About Mad Catz
Mad Catz Interactive, Inc. (Mad Catz) (NYSE MKT/TSX: MCZ) is a global provider of innovative interactive entertainment products marketed under its Mad Catz® (gaming), Tritton® (audio), and Saitek® (simulation) brands. Mad Catz products cater to passionate gamers across multiple platforms including in-home gaming consoles, handheld gaming consoles, Windows® PC and Mac® computers, smart phones, tablets and other mobile devices. Mad Catz distributes its products through its online store as well as distribution via many leading retailers around the globe. Headquartered in San Diego, California, Mad Catz maintains offices in Europe and Asia. For additional information about Mad Catz and its products, please visit the Companys website at www.madcatz.com.
Social Media
Safe Harbor
Information in this press release that involves the Companys expectations business prospects, plans, intentions or strategies regarding its future are forward-looking statements that are not facts and that involve substantial risks and uncertainties. You can identify these statements by the use of words such as anticipate, estimate, expect, project, intend, should, plan, goal, believe, and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. Among the factors that could cause the Companys actual future results to differ materially from those expressed in the forward-looking statements set forth in this release are the following: the ability to maintain or renew the Companys licenses; competitive developments affecting the Companys current products; first-party price reductions; availability of capital under our credit facility; commercial acceptance of new in-home gaming consoles; the ability to successfully market both new and existing products domestically and internationally; difficulties or delays in manufacturing; unanticipated product delays; or a downturn in the market or industry. A further list and description of these and other factors, risks, uncertainties and other matters can be found in the Companys most recent annual report, and any subsequent quarterly reports, filed with the U.S. Securities and Exchange Commission and the Canadian Securities Administrators. The forward-looking statements in this release are based upon information available to the Company as of the date of this release, and the Company assumes no obligation to update any such forward-looking statements as a result of new information or future events or developments, except as may be require by applicable law. Forward-looking statements believed to be true when made may ultimately prove to be incorrect. These statements are not guarantees of the future performance of the Company and are subject to risks, uncertainties and other factors, some of which are beyond its control and may cause actual results to differ materially from current expectations.
Contact: | ||
Karen McGinnis | Joseph Jaffoni, Norberto Aja, Jim Leahy | |
Chief Financial Officer | JCIR | |
Mad Catz Interactive, Inc. | mcz@jcir.com or (212) 835-8500 | |
kmcginnis@madcatz.com or (858) 790-5040 |
- TABLES FOLLOW -
4
Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited) Three Months Ended March 31, |
Twelve Months Ended March 31, |
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2015 | 2014 | 2015 | 2014 | |||||||||||||
Net sales |
$ | 16,558 | $ | 20,217 | $ | 86,223 | $ | 89,629 | ||||||||
Cost of sales |
12,686 | 15,379 | 62,379 | 66,731 | ||||||||||||
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Gross profit |
3,872 | 4,838 | 23,844 | 22,898 | ||||||||||||
Operating expenses: |
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Sales and marketing |
2,691 | 2,638 | 11,253 | 12,656 | ||||||||||||
General and administrative |
2,592 | 2,746 | 10,802 | 11,649 | ||||||||||||
Research and development |
775 | 998 | 2,995 | 4,238 | ||||||||||||
Acquisition related items |
0 | 35 | | 134 | ||||||||||||
Amortization of intangible assets |
109 | 110 | 437 | 743 | ||||||||||||
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Total operating expenses |
6,167 | 6,527 | 25,487 | 29,420 | ||||||||||||
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Operating loss |
(2,295 | ) | (1,689 | ) | (1,643 | ) | (6,522 | ) | ||||||||
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Other income (expense): |
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Interest expense, net |
(212 | ) | (183 | ) | (775 | ) | (659 | ) | ||||||||
Foreign currency exchange loss, net |
(284 | ) | (162 | ) | (784 | ) | (870 | ) | ||||||||
Change in fair value of warrant liability |
542 | 84 | 598 | 74 | ||||||||||||
Other income |
80 | 41 | 172 | 142 | ||||||||||||
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Total other income (expense) |
126 | (220 | ) | (789 | ) | (1,313 | ) | |||||||||
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Loss before income taxes |
(2,169 | ) | (1,909 | ) | (2,432 | ) | (7,835 | ) | ||||||||
Income tax benefit |
7,725 | 1,644 | 7,179 | 394 | ||||||||||||
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Net income (loss) |
$ | 5,556 | ($ | 265 | ) | $ | 4,747 | ($ | 7,441 | ) | ||||||
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Net income (loss) per share: |
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Basic |
$ | 0.09 | ($ | 0.00 | ) | $ | 0.07 | ($ | 0.12 | ) | ||||||
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Diluted |
$ | 0.09 | ($ | 0.00 | ) | $ | 0.07 | ($ | 0.12 | ) | ||||||
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Shares used in per share computations: |
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Basic |
64,688,371 | 63,931,506 | 64,350,893 | 63,757,395 | ||||||||||||
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Diluted |
64,798,978 | 63,931,506 | 64,776,699 | 63,757,395 | ||||||||||||
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5
Consolidated Balance Sheets
(in thousands)
March 31, 2015 |
March 31, 2014 |
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ASSETS |
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Current assets: |
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Cash |
$ | 5,142 | $ | 1,496 | ||||
Accounts receivable, net |
7,823 | 8,059 | ||||||
Other receivables |
560 | 1,531 | ||||||
Inventories |
15,479 | 17,189 | ||||||
Deferred tax assets |
2,245 | 926 | ||||||
Income tax receivable |
967 | 895 | ||||||
Prepaid expenses and other current assets |
1,293 | 1,605 | ||||||
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Total current assets |
33,509 | 31,701 | ||||||
Deferred tax assets |
7,605 | 1,334 | ||||||
Other assets |
418 | 499 | ||||||
Property and equipment, net |
3,376 | 2,737 | ||||||
Intangible assets, net |
2,584 | 3,022 | ||||||
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Total assets |
$ | 47,492 | $ | 39,293 | ||||
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LIABILITIES AND SHAREHOLDERS EQUITY |
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Current liabilities: |
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Bank loan |
$ | 7,920 | $ | 5,612 | ||||
Accounts payable |
16,404 | 13,661 | ||||||
Accrued liabilities |
4,196 | 4,874 | ||||||
Notes payable |
1,015 | 1,336 | ||||||
Income taxes payable |
141 | 330 | ||||||
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Total current liabilities |
29,676 | 25,813 | ||||||
Notes payable, less current portion |
36 | 1,023 | ||||||
Warrant liabilities |
1,187 | 75 | ||||||
Deferred tax liabilities |
43 | 178 | ||||||
Deferred rent |
762 | 78 | ||||||
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Total liabilities |
31,704 | 27,167 | ||||||
Shareholders equity: |
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Common stock |
63,128 | 60,847 | ||||||
Accumulated other comprehensive loss |
(5,123 | ) | (1,757 | ) | ||||
Accumulated deficit |
(42,217 | ) | (46,964 | ) | ||||
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Total shareholders equity |
15,788 | 12,126 | ||||||
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Total liabilities and shareholders equity |
$ | 47,492 | $ | 39,293 | ||||
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6
Consolidated Statements of Cash Flows
(in thousands)
Twelve Months Ended March 31, |
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2015 | 2014 | |||||||
Cash flows from operating activities: |
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Net income (loss) |
$ | 4,747 | (7,441 | ) | ||||
Adjustments to reconcile net income (loss) to net cash |
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provided by operating activities: |
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Depreciation and amortization |
2,050 | 2,568 | ||||||
Accrued and unpaid interest expense on note payable |
10 | 11 | ||||||
Amortization of deferred financing fees |
87 | 39 | ||||||
(Gain) loss on disposal of assets |
(73 | ) | 79 | |||||
Stock-based compensation |
520 | 557 | ||||||
Change in fair value of contingent consideration |
| (729 | ) | |||||
Change in fair value of warrant liabilities |
(598 | ) | (74 | ) | ||||
(Benefit) provision for deferred income taxes |
(8,039 | ) | (1,607 | ) | ||||
Changes in operating assets and liabilities: |
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Accounts receivable |
141 | 6,406 | ||||||
Other receivables |
582 | (142 | ) | |||||
Inventories |
1,024 | 7,265 | ||||||
Prepaid expenses and other current assets |
187 | 1,216 | ||||||
Other assets |
47 | (153 | ) | |||||
Accounts payable |
1,627 | (1,890 | ) | |||||
Accrued liabilities |
(1,131 | ) | (1,601 | ) | ||||
Deferred rent |
410 | | ||||||
Income taxes receivable/payable |
(119 | ) | (417 | ) | ||||
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Net cash provided by operating activities |
1,472 | 4,087 | ||||||
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Cash flows from investing activities: |
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Purchases of property and equipment |
(2,067 | ) | (1,461 | ) | ||||
Purchases of intangible assets |
| (80 | ) | |||||
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Net cash used in investing activities |
(2,067 | ) | (1,541 | ) | ||||
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Cash flows from financing activities: |
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Borrowings on bank loan |
65,442 | 69,810 | ||||||
Repayments on bank loan |
(63,134 | ) | (73,086 | ) | ||||
Payment of financing fees |
(85 | ) | (40 | ) | ||||
Repayments on notes payable |
(1,434 | ) | | |||||
Proceeds from issuance of common stock |
3,399 | | ||||||
Proceeds from exercise of stock options |
236 | 188 | ||||||
Payment of contingent consideration |
| (787 | ) | |||||
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Net cash provided by (used in) financing activities |
4,424 | (3,915 | ) | |||||
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Effects of foreign currency exchange rate changes on cash |
(183 | ) | 92 | |||||
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Net increase (decrease) in cash |
3,646 | (1,277 | ) | |||||
Cash, beginning of period |
1,496 | 2,773 | ||||||
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Cash, end of period |
$ | 5,142 | $ | 1,496 | ||||
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7
Supplementary Data
Adjusted EBITDA (Loss) Reconciliation (non-GAAP)
(in thousands)
(Unaudited)
Three Months Ended March 31, |
Twelve Months Ended March 31, |
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2015 | 2014 | 2015 | 2014 | |||||||||||||
Net income (loss) |
$ | 5,556 | ($ | 265 | ) | $ | 4,747 | ($ | 7,441 | ) | ||||||
Adjustments: |
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Depreciation and amortization |
514 | 564 | 2,050 | 2,607 | ||||||||||||
Stock-based compensation |
144 | 56 | 520 | 557 | ||||||||||||
Change in fair value of warrant liability |
(542 | ) | (84 | ) | (598 | ) | (74 | ) | ||||||||
Acquisition related items |
| 35 | | 134 | ||||||||||||
Interest expense, net |
212 | 183 | 775 | 659 | ||||||||||||
Income tax benefit |
(7,725 | ) | (1,644 | ) | (7,179 | ) | (394 | ) | ||||||||
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Adjusted EBITDA (loss) |
($ | 1,841 | ) | ($ | 1,155 | ) | $ | 315 | ($ | 3,952 | ) | |||||
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Adjusted EBITDA (loss), a non-GAAP financial measure, represents net income (loss) before interest, taxes, depreciation and amortization, stock-based compensation, the gain/loss on the change in the fair value of the related warrant liability, goodwill impairment, if any, and acquisition related items. Adjusted EBITDA is not intended to represent cash flows for the period, nor is it being presented as an alternative to operating or net income (loss) as an indicator of operating performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. As defined, Adjusted EBITDA is not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the method of calculation. We believe, however, that in addition to the performance measures found in our financial statements, Adjusted EBITDA is a useful financial performance measurement for assessing our Companys operating performance. We use Adjusted EBITDA as a measurement of operating performance in comparing our performance on a consistent basis over prior periods, as it removes from operating results the impact of our capital structure, including the interest expense resulting from our outstanding debt, and our asset base, including depreciation and amortization of our capital and intangible assets. In addition, Adjusted EBITDA is an important measure for our lender.
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