Exhibit 99.1
Exhibit 99.1
Global Cash Access Reports First Quarter 2011 Results
Las Vegas, NV May 10, 2011 Global Cash Access Holdings, Inc. (the Company) (NYSE:GCA) today
announced financial results for the quarter ended March 31, 2011.
Fiscal First Quarter 2011 Results
Revenue was $134.4 million, a decrease of $24.1 million or 15.2% over the $158.5 million in revenue
recorded in the same quarter last year. This decrease was primarily attributable to the Companys
loss of its largest customer in late 2010 which accounted for approximately $20.9 million in
revenue during the first quarter of 2010. In addition, revenue during the first quarter of 2011 was
adversely impacted by the continued weakness in the gaming sector and consumer revolving credit.
Operating income was $9.3 million. In addition, there was $0.9 million in one time charges associated with
the refinancing of all of the Companys borrowings in March of 2011. Earnings before interest, taxes, depreciation and
amortization (EBITDA) (see Non- GAAP Financial Information below) were $13.1 million, a decrease
of 34.4% compared to the same period in the prior years first quarter. Income before tax in the
first quarter of 2011 was $3.2 million, which included the one-time refinancing charge discussed
above, as well $0.8 million in additional interest associated with the repayment of our senior
subordinated notes. Diluted earnings per share were $0.03 in the first quarter of 2011 (on 64.2
million diluted shares). The one-time refinancing charges discussed above represented a reduction
of approximately $0.03 of additional diluted earnings per share. Cash EPS, which is earnings per
share adjusted for non cash taxes were $0.05 in the first quarter of 2011. Excluding the one-time
refinancing charges described above, Cash EPS would have been $0.08.
2011 continues to be difficult to predict for GCA and the gaming industry as a whole but
early signs are encouraging said Scott Betts, President and Chief Executive Officer of Global Cash
Access. When we gave our previous guidance for the year, we believed that 2011 should signal the
bottom of the cycle, and while we expect the remainder of the year to continue to have some
volatility, we believe we should begin to see sequential improvement in our results as we progress
through the year. We were pleased to see our same store volumes metrics turn positive in the first
quarter the first time in over two years. We see this as an encouraging sign. When combined with
the resumption of our business in the United Kingdom in April, the opening of Galaxy, Macau in May,
our new customer product pipeline and our continued cost containment measures, we believe these
factors will translate into improving financial results in subsequent quarters.
2011 Outlook
The Company acknowledges a slower start to the year, however, given recent positive trends in same
store metrics, we believe that we may be able to recover from that later in the year; however, we
also want to allow for some volatility that may still be possible as the sector starts to
stabilize. Based on that assessment, the Company will be widening its full year range for earnings.
As a reminder, the EPS figures are all subject to the impact of the one-time expenses associated
with the recent refinancing that amounted to approximately $0.03 per share. The Company estimates
that EBITDA for fiscal year 2011 will be between approximately $58 million and $65 million as
compared to our previous guidance of estimates between $61 million and $65 million.
The Company estimates that for the fiscal year ending December 31, 2011, cash earnings per share
will be between approximately $0.38 and $0.43. Previously guidance was between approximately $0.40
and $0.43. Based upon a range for effective tax rate of between 42% and 45%, which is slightly
higher than previously announced, the Company expects full year diluted earnings per share will be
between approximately $0.20 and $0.26. Previous guidance was between $0.24 and $0.26.
The foregoing estimations reflect the following assumptions:
2011 estimated outlook assumes a slight improvement in the gaming industry for the
remainder of 2011;
Range for effective tax rate for the full year between approximately
42% to 45%;
Cash outlays for capital expenditures of between approximately $7 million and $9 million;
Fully diluted shares outstanding for the full year of between approximately 64 million
and 65 million; and
Interest expense is based upon an increase in the LIBOR curve from
0.3% to 0.9%.
Investor Conference Call and Webcast
The Company will host an investor conference call to discuss its first quarter 2011 results today
at 5:00 p.m. ET. The conference call can be accessed live over the phone by dialing (877) 941-1429
or for international callers (480) 629-9857. A replay will be available one hour after the call and
can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international callers; the
conference ID is 4436748. The call will be webcast live from the Companys website at
www.gcainc.com under the investor relations section.
Non-GAAP Financial Information
In order to enhance investor understanding of the underlying trends in our business and to provide
for better comparability between periods in different years, the Company is providing EBITDA,
adjusted EBITDA and Cash EPS on a supplemental basis. Reconciliations between GAAP measures and
non-GAAP measures and between actual results and adjusted results are provided at the end of this
press release. EBITDA, adjusted EBITDA and Cash EPS are not measures of financial performance under
United States Generally Accepted Accounting Principles (GAAP). Accordingly, they should not be
considered a substitute for net income, operating income or other income or cash flow data prepared
in accordance with GAAP.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. All statements included in this press release,
other than statements that are purely historical, are forward-looking statements. Words such as
going forward, believes, intends, expects, forecasts, anticipate, plan, seek,
estimate and similar expressions also identify forward-looking statements. Forward-looking
statements in this press release include, without limitation: (a) our estimates of 2011 diluted
earnings per share, cash earnings per share and EBITDA and the assumptions upon which they are
based; (b) our assumption that there will be a slight improvement in the gaming industry in 2011;
(c) our assumption that the range of our effective tax rate for the full year 2011 will be between
42% and 45%; (d) our assumption for 2011 that cash outlays for capital expenditures will be between
approximately $7 million and $9 million; (e) our assumption for 2011 that there will be
approximately 64 million to 65 million diluted shares outstanding; (f) our assumption that there
will be an increase in the LIBOR curve from 0.3 to 0.9 in 2011; and (g) our belief that EBITDA and
cash EPS are widely-referenced financial measures in the financial markets and our belief that
references to the foregoing are helpful to investors.
Our beliefs, expectations, forecasts, objectives, anticipations, intentions and strategies
regarding the future, including without limitation those concerning expected operating results,
revenues and earnings are not guarantees of future performance and are subject to risks and
uncertainties that could cause actual results to differ materially from results contemplated by the
forward-looking statements, including but not limited to: (a) our belief that we should begin to
see sequential improvement in our results during the remainder of 2011; (b) our belief that the
resumption of our business in the United Kingdom in April, the opening of Galaxy Macau in May, our
new customer product pipeline and our continued cost containment measures will translate into
improving financial results in subsequent quarters; (c) unexpected issues with the development or
commercialization of new products and services and the failure of gaming operators to employ such
products; (d) unexpected inability to meet customer needs or accomplish our innovation objectives;
(e) unexpected regulatory issues confronting the Company, including with QuikTicket or our
inability to timely test the product; (f) unexpected changes in the market and economic conditions;
(g) reduced demand for or increased competition with our products and services that affects our
2011 revenue, diluted earnings per share, Cash EPS and EBITDA; (h) with respect to our expectation
that the range of our effective tax rate will be between 42% and 45% for the full year 2011: (i)
incurrence of expenses that are not deductible for tax purposes, and (ii) the entry into business lines or foreign countries with tax structures different from the ones we are
currently subject to; (i) unexpected events that may require capital expenditures to materially
differ from those expected; (j) unanticipated share issuances or redemptions; (k) inaccuracies in
our assumptions as to the financial measures that investors use or the manner in which such
financial measures may be used by such investors, (l) the Companys inability to accurately predict
its taxable income, applicable tax rates and therefore its tax liabilities for future periods, (m)
the possibility that the Companys owners prior to conversion to a corporation change their
calculation of gains in connection with the conversion and file amended tax returns, requiring a
recalculation of the starting balance of the deferred tax asset and the annual amortization
thereof, and (n) unanticipated changes in applicable income tax rates or laws; or changes in the
valuation of the deferred tax asset.
The forward-looking statements in this press release are subject to additional risks and
uncertainties set forth under the heading Risk Factors and Managements Discussion and Analysis
of Financial Condition and Results of Operations in our filings with the Securities and Exchange
Commission, including, without limitation, our registration statement on Form S-1 (No. 333-133996),
our Annual Report filed on Form 10-K (No. 001-32622) on March 14, 2011, and are based on
information available to us on the date hereof. We do not intend, and assume no obligation, to
update any forward -looking statements. Readers are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date of this press release.
About Global Cash Access Holdings, Inc.
Las Vegas-based Global Cash Access, Inc. (GCA), a wholly owned subsidiary of Global Cash Access
Holdings, Inc., is a leading provider of cash access products and related services to over 1,100
casinos and other gaming properties in the United States, Europe, Canada, the Caribbean, Central
America and Asia. GCAs products and services provide gaming patrons access to cash through a
variety of methods, including ATM cash withdrawals, point-of-sale debit card transactions, credit
card cash advances, check verification and warranty services, and Western Union money transfers.
Through Western Money Systems, a wholly owned subsidiary, GCA is a leading manufacturer and
distributor of cash handling devices and related software. GCA also provides products and services
that improve credit decision-making, automate cashier operations and enhance patron marketing
activities for gaming establishments. With its proprietary database of gaming patron credit history
and transaction data on millions of gaming patrons worldwide, GCA is recognized for successfully
developing and deploying technological innovations that increase client profitability, operational
efficiency and customer loyalty. More information is available at GCAs Web site at www.gcainc.com.
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CONTACT: |
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Investor Relations
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Media Relations |
Don Duffy, ICR
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Liz Brady, ICR |
203-682-8215
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646-277-1226 |
IR@gcamail.com
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lbrady@icrinc.com |
GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
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December 31, |
|
|
|
2011 |
|
|
2010 |
|
ASSETS |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
40,531 |
|
|
$ |
60,636 |
|
Restricted cash and cash equivalents |
|
|
455 |
|
|
|
455 |
|
Settlement receivables |
|
|
5,925 |
|
|
|
10,374 |
|
Other receivables, net |
|
|
16,323 |
|
|
|
15,211 |
|
Inventory |
|
|
4,241 |
|
|
|
3,845 |
|
Prepaid and other assets |
|
|
15,503 |
|
|
|
8,200 |
|
Property, equipment and leasehold improvements, net |
|
|
15,989 |
|
|
|
16,648 |
|
Goodwill, net |
|
|
185,153 |
|
|
|
185,110 |
|
Other intangibles, net |
|
|
25,185 |
|
|
|
26,368 |
|
Deferred income taxes, net |
|
|
130,231 |
|
|
|
131,547 |
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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Total assets |
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$ |
439,536 |
|
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$ |
458,394 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
|
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LIABILITIES: |
|
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|
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Settlement liabilities |
|
$ |
44,369 |
|
|
$ |
59,741 |
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Accounts payable |
|
|
33,614 |
|
|
|
28,562 |
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Accrued expenses |
|
|
15,180 |
|
|
|
17,863 |
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Borrowings |
|
|
200,000 |
|
|
|
208,750 |
|
|
|
|
|
|
|
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Total liabilities |
|
|
293,163 |
|
|
|
314,916 |
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COMMITMENTS AND CONTINGENCIES (NOTE 5) |
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Common stock, $0.001 par value, 500,000 shares authorized
and 85,107 and 85,006 shares issued and outstanding at
March 31, 2011 and December 31, 2010, respectively. |
|
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85 |
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85 |
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|
|
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Convertible Preferred stock, $0.001 par value, 50,000 shares
authorized and 0 shares outstanding at March 31, 2011 and
December 31, 2010, respectively. |
|
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|
|
|
|
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|
|
|
|
|
|
|
|
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Additional paid in capital |
|
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198,232 |
|
|
|
197,048 |
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Retained earnings |
|
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90,538 |
|
|
|
88,796 |
|
Accumulated other comprehensive income |
|
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2,608 |
|
|
|
2,587 |
|
Treasury stock, at cost, 20,642 and 20,626 shares at
March 31, 2011 and December 31, 2010, respectively. |
|
|
(145,090 |
) |
|
|
(145,038 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total stockholders equity |
|
|
146,373 |
|
|
|
143,478 |
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity |
|
$ |
439,536 |
|
|
$ |
458,394 |
|
|
|
|
|
|
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GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands)
(unaudited)
|
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|
|
|
|
|
|
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Three Months Ended |
|
|
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March 31, |
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2011 |
|
|
2010 |
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REVENUES: |
|
|
|
|
|
|
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Cash advance |
|
$ |
50,873 |
|
|
$ |
66,013 |
|
ATM |
|
|
71,191 |
|
|
|
81,778 |
|
Check services |
|
|
6,411 |
|
|
|
7,674 |
|
Central Credit and other revenues |
|
|
5,914 |
|
|
|
3,047 |
|
|
|
|
|
|
|
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Total revenues |
|
|
134,389 |
|
|
|
158,512 |
|
Cost of revenues (exclusive of depreciation and amortization) |
|
|
(105,233 |
) |
|
|
(119,649 |
) |
Operating expenses |
|
|
(16,105 |
) |
|
|
(18,957 |
) |
Amortization |
|
|
(1,625 |
) |
|
|
(1,966 |
) |
Depreciation |
|
|
(2,121 |
) |
|
|
(2,417 |
) |
|
|
|
|
|
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OPERATING INCOME |
|
|
9,305 |
|
|
|
15,523 |
|
|
|
|
|
|
|
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INTEREST INCOME (EXPENSE), NET |
|
|
|
|
|
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Interest income |
|
|
34 |
|
|
|
42 |
|
Interest expense |
|
|
(5,181 |
) |
|
|
(4,363 |
) |
Loss on early extinguishment of debt |
|
|
(943 |
) |
|
|
|
|
|
|
|
|
|
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Total interest income (expense), net |
|
|
(6,090 |
) |
|
|
(4,321 |
) |
|
|
|
|
|
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INCOME BEFORE INCOME TAX PROVISION |
|
|
3,215 |
|
|
|
11,202 |
|
INCOME TAX PROVISION |
|
|
(1,473 |
) |
|
|
(4,257 |
) |
|
|
|
|
|
|
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NET INCOME |
|
|
1,742 |
|
|
|
6,945 |
|
PLUS: NET LOSS ATTRIBUTABLE TO MINORITY INTEREST |
|
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|
|
|
|
5 |
|
|
|
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NET INCOME ATTRIBUTABLE TO GLOBAL CASH ACCESS
HOLDINGS, INC. AND SUBSIDIARIES |
|
|
1,742 |
|
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|
6,950 |
|
|
|
|
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|
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|
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Foreign currency translation, net of tax |
|
|
21 |
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|
38 |
|
|
|
|
|
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|
|
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|
|
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COMPREHENSIVE INCOME |
|
$ |
1,763 |
|
|
$ |
6,988 |
|
|
|
|
|
|
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Earnings per share |
|
|
|
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|
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Basic |
|
$ |
0.03 |
|
|
$ |
0.10 |
|
|
|
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Diluted |
|
$ |
0.03 |
|
|
$ |
0.10 |
|
|
|
|
|
|
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|
Weighted average number of common shares outstanding |
|
|
|
|
|
|
|
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Basic |
|
|
63,952 |
|
|
|
68,268 |
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Diluted |
|
|
64,182 |
|
|
|
70,513 |
|
GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(unaudited)
|
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|
|
|
|
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|
|
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Three Months Ended |
|
|
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March 31, |
|
|
|
2011 |
|
|
2010 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
1,742 |
|
|
$ |
6,945 |
|
Adjustments to reconcile net income to cash provided
by operating activities: |
|
|
|
|
|
|
|
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Amortization of financing costs |
|
|
278 |
|
|
|
243 |
|
Amortization of intangibles |
|
|
1,625 |
|
|
|
1,966 |
|
Depreciation |
|
|
2,121 |
|
|
|
2,417 |
|
Gain on sale or disposal of assets |
|
|
(14 |
) |
|
|
(143 |
) |
Provision for bad debts |
|
|
1,487 |
|
|
|
1,452 |
|
Loss on early extinguishment of debt |
|
|
943 |
|
|
|
|
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Stock-based compensation |
|
|
1,097 |
|
|
|
2,120 |
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Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
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Settlement receivables |
|
|
4,473 |
|
|
|
18,287 |
|
Other receivables, net |
|
|
(1,714 |
) |
|
|
4,496 |
|
Inventory |
|
|
(397 |
) |
|
|
|
|
Prepaid and other assets |
|
|
(1,577 |
) |
|
|
364 |
|
Deferred income taxes |
|
|
1,319 |
|
|
|
4,105 |
|
Settlement liabilities |
|
|
(15,435 |
) |
|
|
(22,651 |
) |
Accounts payable |
|
|
5,050 |
|
|
|
6,500 |
|
Accrued expenses |
|
|
(3,037 |
) |
|
|
(4,838 |
) |
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities |
|
|
(2,039 |
) |
|
|
21,263 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
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Western Money Acquisition, net of cash |
|
|
(20 |
) |
|
|
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Purchase of property, equipment and leasehold improvements |
|
|
(1,444 |
) |
|
|
(762 |
) |
Purchase of other intangibles |
|
|
(441 |
) |
|
|
(396 |
) |
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(1,905 |
) |
|
|
(1,158 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Repayments against old credit facility |
|
|
(208,750 |
) |
|
|
(250 |
) |
Securing of new credit facility |
|
|
214,000 |
|
|
|
|
|
Issuance costs of new credit facility |
|
|
(6,941 |
) |
|
|
|
|
Repayments against new credit facility |
|
|
(14,000 |
) |
|
|
|
|
Proceeds from exercise of stock options |
|
|
87 |
|
|
|
2,190 |
|
Purchase of treasury stock |
|
|
(52 |
) |
|
|
(540 |
) |
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities |
|
|
(15,656 |
) |
|
|
1,400 |
|
|
|
|
|
|
|
|
Continued
GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2011 |
|
|
2010 |
|
NET EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS |
|
$ |
(505 |
) |
|
$ |
335 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
|
|
(20,105 |
) |
|
|
21,840 |
|
|
CASH AND CASH EQUIVALENTSBeginning of period |
|
$ |
60,636 |
|
|
$ |
84,768 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTSEnd of period |
|
$ |
40,531 |
|
|
$ |
106,608 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
6,938 |
|
|
$ |
7,422 |
|
|
|
|
|
|
|
|
Cash paid for taxes, net of refunds |
|
$ |
170 |
|
|
$ |
244 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
|
2010 |
|
|
|
|
|
|
|
|
|
|
OTHER DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate dollar amount processed (in billions): |
|
|
|
|
|
|
|
|
Cash advance |
|
$ |
1.1 |
|
|
$ |
1.3 |
|
ATM |
|
$ |
3.1 |
|
|
$ |
3.6 |
|
Check warranty |
|
$ |
0.3 |
|
|
$ |
0.3 |
|
|
|
|
|
|
|
|
|
|
Number of transactions completed (in millions): |
|
|
|
|
|
|
|
|
Cash advance |
|
|
2.1 |
|
|
|
2.8 |
|
ATM |
|
|
17.7 |
|
|
|
20.6 |
|
Check warranty |
|
|
1.1 |
|
|
|
1.3 |
|
GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Diluted Cash Earnings Per Share to Diluted Earnings Per Share
and Operating Income to EBITDA
(amounts in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
December 31, |
|
|
|
2011 |
|
|
2010 |
|
Reconciliation of income to
diluted cash earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
1,742 |
|
|
$ |
6,945 |
|
Deferred tax amortization related to acquired goodwill or tax provision (whichever is
lower) |
|
|
1,473 |
|
|
|
4,257 |
|
|
|
|
|
|
|
|
Cash earnings |
|
$ |
3,215 |
|
|
$ |
11,202 |
|
|
|
|
|
|
|
|
Diluted cash earnings per share |
|
$ |
0.05 |
|
|
$ |
0.16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of operating income to EBITDA Operating income |
|
$ |
9,305 |
|
|
$ |
15,523 |
|
Plus: amortization |
|
|
1,625 |
|
|
|
1,966 |
|
depreciation |
|
|
2,121 |
|
|
|
2,417 |
|
|
|
|
|
|
|
|
EBITDA |
|
$ |
13,051 |
|
|
$ |
19,906 |
|
|
|
|
|
|
|
|
Equity compensation expense |
|
|
1,097 |
|
|
|
2,120 |
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
14,148 |
|
|
$ |
22,026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding |
|
|
|
|
|
|
|
|
Diluted |
|
|
64,182 |
|
|
|
70,513 |
|
|
|
|
|
|
|
|
The Company provides Cash EPS in order to enhance investor understanding of the underlying
trends in the Companys business and to provide for better comparability between periods in
different years. Cash EPS is not a measure of financial performance under United States GAAP and
should not be considered a substitute for net income, operating income or other income prepared
in accordance with GAAP.
As discussed more fully in the Companys Annual Report on Form 10-K for the fiscal year ended
December 31, 2010, the Company recorded a tax asset (the deferred tax asset) upon its
conversion from a limited liability company to a corporation. The deferred tax asset was recorded
for tax purposes but not for accounting purposes. The deferred tax asset is amortized over 15
years for tax purposes, resulting in annual pretax income being lower for tax purposes than for
financial accounting purposes, subject to certain limitations. The Company computes Cash EPS by
adding to its income the lesser of the amortized portion of the deferred tax asset or the amount
of tax provisions made by the Company.