EX-99.1 2 exh99p1.txt Exhibit 99.1 [Cenveo logo] For Immediate Release November 1st, 2004 CENVEO OPERATIONS HAVE NINTH CONSECUTIVE QUARTER OF IMPROVED YEAR OVER YEAR PERFORMANCE ENGLEWOOD, COLO. (NOVEMBER 1ST, 2004) -- Cenveo, Inc., (NYSE: CVO) announced its results for the quarter and nine months ended September 30, 2004. Net income was $2.5 million for the quarter or $0.05 per share, and for the nine months the net loss was $16.1 million, or $0.34 per share. Sales were $428 million for the quarter and $1,261 million for the nine months ended September 30, 2004. In the third quarter of 2003, the net income was $2.2 million, or $0.04 per share, on $412 million of sales and for the nine months ended September 30, 2003, net income was $2.6 million, or $0.05 per share, on $1,247 million of sales. Cenveo's net loss for the nine months ended September 30, 2004, included a first quarter charge for early extinguishment of debt of $17.7 million. EBITDA for the third quarter of 2004 was $33.9 million compared to EBITDA of $33.5 million achieved for the same period last year, a 1.2% improvement. For the nine months ended September 30, 2004, EBITDA was $94.4 million compared to $92.1 million for the same period last year, a 2.5% improvement. This represents the ninth consecutive quarter of year over year improvement in EBITDA. An explanation of the Company's use of EBITDA for comparative purposes is provided below. Net cash provided by operating activities in the quarter ended September 30, 2004 was $19 million compared to $14 million provided during the comparable period of 2003. Paul Reilly, Chairman, President and CEO, stated, "In the third quarter we saw a definite increase in volumes of work. Our Commercial Segment had its best third quarter in sales and EBITDA since 2001. Our Resale Segment increased its market share in the office products channel. Our Strategic Sales Team continues to create numerous new opportunities for sales growth. The acquisitions we completed in the Seattle and San Francisco markets will be good catalysts for growth in those vibrant markets". "The results of the first three quarters of 2004", continued Mr. Reilly, "are in line with the lower end of the guidance we gave for the full year 2004, and given our expectations for the next quarter, we expect to remain at the low end of the full year EBITDA guidance of $135 million to $142 million." Cenveo will hold a conference call today, Monday November 1st at 1:00 p.m. Eastern Time (12 noon Central, 11:00 a.m. Mountain, 10:00 a.m. Pacific Time). To participate in the Cenveo conference call, please dial in to 1-888-639-6218 and provide conference ID 581445. Please call 5-7 minutes before the call is to begin. The conference call will also be available via webcast. To listen to the webcast, go to www.cenveo.com, www.streetevents.com, or www.fulldisclosure.com. - more - INTERNATIONAL DIAL-IN: An operator will dial out to you. Contact Cenveo Investor Relations at 303-730-8023 or email: bea.rodriguez@cenveo.com no later than 1 hour prior to the call with your telephone information. If you are unable to join the Cenveo conference call, you may access a replay of the call starting Monday, November 1st, 2004 at 3:00 pm Eastern Time until Midnight Eastern Time, November 8, 2004. To access the replay, please dial 866-219-1444 and reference the conference ID581445. EBITDA (earnings before interest, taxes, depreciation and amortization) should not be considered as an alternative to any measure of operating results as promulgated under accounting principles generally accepted (GAAP) in the United States (such as operating income or net income), nor should it be considered as an indicator of our overall financial performance. EBITDA does not fully consider the impact of investing or financing transactions as it specifically excludes depreciation and interest charges, which should also be considered in the overall evaluation of results. Additionally, our method of calculating EBITDA may be different from the method used by other companies and therefore comparability may be limited. EBITDA has not been provided as a measure of liquidity. The Supplemental Information to the press release includes the Company's Statement of Cash Flows. We use EBITDA as a supplemental measure of performance because we believe it gives the reader a more complete understanding of our operating results before the impact of investing and financing transactions. A reconciliation of net income (loss) under U.S. GAAP to EBITDA is presented in the Supplemental Information to this press release. ABOUT CENVEO Cenveo, Inc. (NYSE: CVO), www.cenveo.com, is one of North America's leading providers of visual communications with one-stop services from design through fulfillment. The company is uniquely positioned to serve both direct customers through its commercial segment, and distributors and resellers of printed office products through its Quality Park resale segment. The company's broad portfolio of services and products include e-services, envelopes, offset and digital printing, labels and business documents. Cenveo currently has approximately 10,000 employees and more than 80 production locations plus five advanced fulfillment and distribution centers throughout North America. In early 2004, Cenveo was voted second place in the printing and publishing category as Fortune Magazine's Most Admired Companies and ranked number five of the Russell 3000 companies on Corporate Governance Quotients by Institutional Shareholder Services. The company is headquartered in Englewood, Colorado. - more - This press release may contain certain forward-looking statements of management. It should be understood that all such statements are subject to various uncertainties and risks that could affect their outcome. Factors which could cause or contribute to such differences include, but are not limited to, the ability to execute strategic initiatives, economic conditions, product demand and sales, ability to obtain assumed productivity and cost savings, interest rates, foreign currency exchange rates, paper and raw material costs and the ability to pass them through to customers, waste paper prices, postage rates, union relations, competition and competitors' actions, availability of financing, and changes in the direct mail industry. Please refer to the company's 10-K, 10-Q and other SEC filings for a more detailed discussion of the risks. None of management's statements in this release should be considered an offer to sell or a solicitation of an offer to buy Cenveo securities. CONTACT: Mr. Michel P. Salbaing Senior Vice President and Chief Financial Officer Cenveo, Inc. (303) 790-8023 # # # [Cenveo logo] FINANCIAL HIGHLIGHTS (dollars in thousands, except per share data) (unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 2004 2003 2004 2003 CONSOLIDATED RESULTS -------------------- Net sales $ 428,099 $ 412,218 $ 1,261,238 $ 1,247,363 Gross profit 84,503 81,877 256,556 244,922 Operating income 21,144 22,023 54,863 56,925 Income (loss) from continuing operations 2,490 2,172 (17,341) 1,020 Loss (gain) on disposal of discontinued operations - - (1,230) (1,919) Cumulative effect of change in accounting principle - - - 322 ---------------------------------------------------------------------------------------------------------------------------------- Net income (loss) $ 2,490 $ 2,172 $ (16,111) $ 2,617 Net income (loss) per share - assuming dilution $ 0.05 $ 0.04 $ (0.34) $ 0.05 ---------------------------------------------------------------------------------------------------------------------------------- SEGMENT INFORMATION NET SALES: Commercial $ 327,365 $ 315,029 $ 958,797 $ 945,699 Resale 100,734 97,189 302,441 301,664 ---------------------------------------------------------------------------------------------------------------------------------- Total $ 428,099 $ 412,218 $ 1,261,238 $ 1,247,363 OPERATING INCOME (EXPENSE): Commercial $ 16,366 $ 16,877 $ 38,281 $ 39,643 Resale 9,469 9,946 33,291 32,256 Corporate services and other charges (4,691) (4,800) (16,709) (14,974) ---------------------------------------------------------------------------------------------------------------------------------- Total $ 21,144 $ 22,023 $ 54,863 $ 56,925 OPERATING INCOME MARGINS: Commercial 5.0% 5.4% 4.0% 4.2% Resale 9.4% 10.2% 11.0% 10.7% EBITDA (1): Commercial $ 27,215 $ 25,948 $ 69,637 $ 67,078 Resale 11,775 12,345 40,275 39,674 Corporate (5,117) (4,838) (15,546) (14,678) ---------------------------------------------------------------------------------------------------------------------------------- Total $ 33,873 $ 33,455 $ 94,366 $ 92,074 ---------------------------------------------------------------------------------------------------------------------------------- FINANCIAL POSITION SEPTEMBER 30, 2004 DECEMBER 31, 2003 Working capital $ 113,749 $ 102,773 Total assets 1,148,717 1,107,393 Total debt 769,983 748,961 Shareholders' equity 54,885 68,019 ---------------------------------------------------------------------------------------------------------------------------------- (1) See Appendix 1 in the Supplemental Information to the Press Release for the definition of EBITDA, the reconciliation of net income to EBITDA and the reason why EBITDA is a relevant non-GAAP financial measure for Cenveo.
[Cenveo logo] Supplemental Information to the Press Release For the Third Quarter Ended September 2004 Released November 1, 2004 ------------------------------------------------------------------------------- Third Quarter Ended September 30, 2004 Page Financial and Operational Summary and Recent Developments 1, 2 ------------------------------------------------------------------------------- Consolidated Balance Sheets 3 ------------------------------------------------------------------------------- Consolidated Statements of Operations 4 ------------------------------------------------------------------------------- Consolidated Cash Flow Statements 5 ------------------------------------------------------------------------------- Segment Results 6 ------------------------------------------------------------------------------- Appendix 1 - Reconciliation of Net Income to EBITDA 7, 8 ------------------------------------------------------------------------------- Financial and Operational Summary and Recent Developments ---------------------------------------------------------------------------- Three months ended September 30, 2004 Financial and Operational Summary --------------------------------- CONSOLIDATED RESULTS: Net sales increased $15.9 million in the third quarter 2004 compared to net sales in the third quarter of 2003. Operating income decreased by $0.9 million in the third quarter. Higher gross profit was offset by higher selling, general and administration expenses and higher amortization expense in the quarter. Diluted earnings per share was $0.05 in the quarter as compared to $0.04 for the same period last year. COMMERCIAL: Net sales in the third quarter of 2004 increased $12.3 million to $327.4 million compared to net sales of $315.0 million in the third quarter of 2003. RESALE: Net sales in the second quarter of 2004 increased by $3.5 million to $100.7 million compared to net sales of $97.2 million in the third quarter of 2003. DEBT: Net cash provided by operating activities was $18.7 million for the quarter and total debt was reduced by $3.0 million in the quarter. CAPITAL EXPENDITURES: During the quarter ended September 2004, capital expenditures were $7.8 million compared to $6.7 million in the same period last year. It is anticipated that full year capital expenditures will be approximately $25 million. AVAILABILITY: Credit available under our credit facility was $132.4 million based on the certificate filed for the activity ending September 2004. 1 Financial and Operational Summary and Recent Developments ---------------------------------------------------------------------------- Three months ended September 30, 2004 Recent Developments ------------------- o The Company announced on August 30, 2004 the appointment of Allen Conway to the position of president of the Resale segment. Mr. Conway was previously executive vice president for the Resale custom division of Cenveo. In addition, Bob Hart, current president of the Resale segment, has accepted a position as special assistant to the chairman and will be responsible for the implementation of key strategic initiatives. o The Company announced on August 27, 2004 the acquisition of Waller Press Inc., a high-quality web and sheetfed printer located in the San Francisco, California with annual sales of approximately $14 million. When the capabilities of Waller Press are coupled with the Cenveo Anderson Lithograph capabilities in South San Francisco, California, the company will be the largest commercial printer in the San Francisco area which has often been at the forefront of advertising, graphic design, and marketing communications. This acquisition is in line with Cenveo's(TM) strategy to invest in geographical areas where the Company can achieve significant local market share growth. o The Company announced on August 23,2004 that the former mayor of Denver, Wellington Webb, has joined its Board of Directors. o The Company announced on August 20,2004 that Paul Kocourek has joined its Board of Directors. Mr. Kocourek has been with Booz Allen & Hamilton since 1987 and is an expert in strategic roll-ups and their transition to successful integration. o The Company announced on August 16,2004 the launch of Cenveo ColorScience, an end-to-end process control solution that will enable every plant in the Commercial segment of Cenveo to deliver consistent color from digital file creation to final printed output. The benefits to the customer include dramatically reduced production cycle times; streamlined quality control for print buying; cost savings from faster makereadies and reduced spoilage; the ability to generate proofs at the customer site; and the peace of mind that comes only from working with measurable parameters that assure the desired result. o The Company announced on July 2, 2004 the acquisition of Valco Graphics Inc., a high-quality web and sheetfed printer of promotional, direct marketing and publishing products in the Seattle, Washington market with annual sales of approximately $18 million. Cenveo(TM) also announced that it would combine its existing Seattle commercial printing facility with the Valco facility. The Company plans to install two 40-inch, six and eight-color sheetfed presses at the former Valco location to increase current capabilities. 2 CONSOLIDATED BALANCE SHEETS Cenveo, Inc. and Subsidiaries (in thousands)
SEPTEMBER 30 DECEMBER 31 2004 2003 ASSETS Current assets: Cash and cash equivalents $ 379 $ 307 Accounts receivable, net 252,230 223,541 Inventories, net 115,547 91,402 Other current assets 45,711 48,135 ---------------------------------------------------------------------------------------------------------- Total current assets 413,867 363,385 ---------------------------------------------------------------------------------------------------------- Property, plant and equipment, net 372,327 388,240 Goodwill 306,097 299,392 Other intangible assets, net 15,863 19,687 Other assets, net 40,563 36,689 ---------------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 1,148,717 $ 1,107,393 ---------------------------------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 178,452 $ 140,468 Accrued compensation and related liabilities 59,960 53,209 Other current liabilities 59,442 64,360 Current maturities of long-term debt 2,264 2,575 ---------------------------------------------------------------------------------------------------------- Total current liabilities 300,118 260,612 ---------------------------------------------------------------------------------------------------------- Long-term debt, less current maturities 767,719 746,386 Deferred income taxes - 6,717 Other liabilities 25,995 25,659 ---------------------------------------------------------------------------------------------------------- Total liabilities 1,093,832 1,039,374 ---------------------------------------------------------------------------------------------------------- Shareholders' equity: Common stock 487 484 Paid-in capital 214,900 213,850 Retained deficit (166,442) (150,331) Deferred compensation (2,205) (1,714) Accumulated other comprehensive income 8,145 5,730 ---------------------------------------------------------------------------------------------------------- Total shareholders' equity 54,885 68,019 ---------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,148,717 $ 1,107,393 ----------------------------------------------------------------------------------------------------------
3 CONSOLIDATED STATEMENTS OF OPERATIONS Cenveo, Inc. and Subsidiaries (in thousands, except per share data) (unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 2004 2003 2004 2003 Net sales $428,099 $ 412,218 $ 1,261,238 $1,247,363 Cost of sales 343,596 330,341 1,004,682 1,002,441 ---------------------------------------------------------------------------------------------------------------------------------- Gross profit 84,503 81,877 256,556 244,922 ---------------------------------------------------------------------------------------------------------------------------------- Operating expenses: Selling, general and administrative expenses 62,315 59,278 196,728 185,433 Amortization of intangibles 1,313 500 4,114 1,363 Restructuring charges (269) 76 851 1,201 ---------------------------------------------------------------------------------------------------------------------------------- Operating income 21,144 22,023 54,863 56,925 ---------------------------------------------------------------------------------------------------------------------------------- Other expense: Interest expense 17,859 17,831 53,771 54,163 Loss on early extinguishment of debt - - 17,748 - Other 787 574 1,755 1,063 ---------------------------------------------------------------------------------------------------------------------------------- Income (loss) from continuing operations before income taxes and cumulative effect of a change in accounting principle 2,498 3,618 (18,411) 1,699 Income tax expense (benefit) 8 1,446 (1,070) 679 ---------------------------------------------------------------------------------------------------------------------------------- Income (loss) from continuing operations before cumulative effect of a change in accounting principle 2,490 2,172 (17,341) 1,020 Loss (gain) on disposal of discontinued operations, net of taxes of $770 in 2004 - - (1,230) (1,919) Cumulative effect of a change in accounting principle - - - 322 ---------------------------------------------------------------------------------------------------------------------------------- Net income (loss) $ 2,490 $ 2,172 $ (16,111) $ 2,617 ---------------------------------------------------------------------------------------------------------------------------------- Income (loss) per share - basic: Continuing operations $ 0.05 $ 0.05 $ (0.36) $ 0.02 Discontinued operations - - 0.02 0.04 Cumulative effect of a change in accounting principle - - - (0.01) ---------------------------------------------------------------------------------------------------------------------------------- Income (loss) per share - basic $ 0.05 $ 0.05 $ (0.34) $ 0.05 ---------------------------------------------------------------------------------------------------------------------------------- Income (loss) per share - diluted: Continuing operations $ 0.05 $ 0.04 $ (0.36) $ 0.02 Discontinued operations - - 0.02 0.04 Cumulative effect of a change in accounting principle - - - (0.01) ---------------------------------------------------------------------------------------------------------------------------------- Income (loss) per share - diluted $ 0.05 $ 0.04 $ (0.34) $ 0.05 ---------------------------------------------------------------------------------------------------------------------------------- Weighted averages shares - basic 47,753 47,689 47,742 47,677 Weighted averages shares - diluted 48,504 48,406 47,742 48,268
4 CONSOLIDATED CASH FLOW STATEMENTS Cenveo, Inc. and Subsidiaries (in thousands) (unaudited)
NINE MONTHS ENDED SEPTEMBER 30 2004 2003 Cash flows from operating activities: Income (loss) from continuing operations $ (17,341) $ 1,020 Adjustments to reconcile income (loss) from continuing operations to net cash provided by (used in) operating activities: Depreciation 35,014 34,852 Amortization 7,513 4,393 Write-off of deferred financing fees 4,220 - Deferred income tax benefit (9,718) (7,826) Loss (gain) on disposal of assets 438 891 Other noncash charges, net (1,958) 590 Changes in operating assets and liabilities, excluding effects of acquired businesses: Accounts receivable (23,941) (3,886) Inventories (21,893) 7,431 Accounts payable and accrued compensation 40,863 242 Income taxes payable (2,830) 10,888 Other working capital changes 3,762 (14,717) Other, net (132) (244) -------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 13,997 33,634 Cash flows from investing activities: Acquisitions, less cash acquired (9,803) - Capital expenditures (20,246) (19,722) Proceeds from divestitures, net 2,000 3,864 Proceeds from sales of property, plant and equipment 1,475 658 -------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (26,574) (15,200) Cash flows from financing activities: Proceeds from long-term debt 2,129,193 1,384,781 Repayment of long-term debt (2,108,171) (1,405,239) Proceeds from the issuance of common stock 1,053 16 Capitalized loan fees (9,076) (484) -------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities 12,999 (20,926) Effect of exchange rate changes on cash and cash equivalents (350) 936 -------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 72 (1,556) Cash and cash equivalents at beginning of year 307 2,650 -------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of quarter $ 379 $ 1,094 --------------------------------------------------------------------------------------------------------------
5 SEGMENT RESULTS Cenveo, Inc. and Subsidiaries (in thousands) (unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 2004 2003 2004 2003 Net sales: Commercial $ 327,365 $ 315,029 $ 958,797 $ 945,699 Resale 100,734 97,189 302,441 301,664 -------------------------------------------------------------------------------------------------------------------- Total net sales $ 428,099 $ 412,218 $1,261,238 $1,247,363 -------------------------------------------------------------------------------------------------------------------- Operating income (expense): Commercial $ 16,366 $ 16,877 $ 38,281 $ 39,643 Resale 9,469 9,946 33,291 32,256 Corporate services (4,691) (4,800) (16,709) (14,974) -------------------------------------------------------------------------------------------------------------------- Total operating income $ 21,144 $ 22,023 $ 54,863 $ 56,925 -------------------------------------------------------------------------------------------------------------------- EBITDA (1): Commercial $ 27,215 $ 25,948 $ 69,637 $ 67,078 Resale 11,775 12,345 40,275 39,674 Corporate services (5,117) (4,838) (15,546) (14,678) -------------------------------------------------------------------------------------------------------------------- Total EBITDA $ 33,873 $ 33,455 $ 94,366 $ 92,074 -------------------------------------------------------------------------------------------------------------------- Net sales by product line: Commercial printing $ 207,181 $ 194,597 $ 594,301 $ 580,419 Envelopes 172,636 167,824 515,942 515,740 Business forms and labels 48,282 49,797 150,995 151,204 -------------------------------------------------------------------------------------------------------------------- Total net sales $ 428,099 $ 412,218 $1,261,238 $1,247,363 -------------------------------------------------------------------------------------------------------------------- (1) See Appendix 1 in the Supplemental Information to the Press Release for the definition of EBITDA, the reconciliation of net income to EBITDA and the reason why EBITDA is a relevant non-GAAP financial measure for Cenveo.
6 APPENDIX 1 - RECONCILIATION OF NET INCOME TO EBITDA FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003 Cenveo, Inc. and Subsidiaries (in thousands) (unaudited)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004 COMMERCIAL RESALE CORPORATE TOTAL Net income (loss) $ 16,287 $ 9,441 $ (23,238) $ 2,490 Interest - - 17,859 17,859 Taxes - - 8 8 Depreciation 9,753 2,199 221 12,173 Amortization (excluding amortization included in interest) 1,175 135 33 1,343 -------------------------------------------------------------------------------------------------------------------------------- EBITDA $ 27,215 $ 11,775 $ (5,117) $ 33,873 FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 COMMERCIAL RESALE CORPORATE TOTAL Net income (loss) $ 16,539 $ 9,880 $ (24,247) $ 2,172 Interest - - 17,831 17,831 Taxes - - 1,446 1,446 Depreciation 9,146 2,229 131 11,506 Amortization (excluding amortization included in interest) 263 236 1 500 -------------------------------------------------------------------------------------------------------------------------------- EBITDA $ 25,948 $ 12,345 $ (4,838) $ 33,455 Note: This schedule is a reconciliation of net income to EBITDA which we define as earnings before interest, taxes, depreciation and amortization. EBITDA should not be considered as an alternative to any measure of operating results as promulgated under accounting principles generally accepted in the United States (such as operating income or net income), nor should it be considered as an indicator of our overall financial performance. EBITDA does not fully consider the impact of investing or financing transactions as it specifically excludes depreciation and interest charges, which should also be considered in the overall evaluation of results. Additionally, our method of calculating EBITDA may be different from the method used by other companies, and therefore, comparability may be limited. EBITDA has not been provided as a measure of liquidity. We believe EBITDA provides useful supplemental information to investors since it excludes the impact of investing or financing transactions on our operating results.
7 APPENDIX 1 - RECONCILIATION OF NET INCOME TO EBITDA FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003 Cenveo, Inc. and Subsidiaries (in thousands) (unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 COMMERCIAL RESALE CORPORATE TOTAL Net income (loss) $ 38,266 $ 33,194 $ (87,571) $ (16,111) Loss on early extinguishment of debt - - 17,748 17,748 Interest - - 53,771 53,771 Taxes, including taxes included in discontinued operations - - (300) (300) Depreciation 27,763 6,676 575 35,014 Amortization (excluding amortization included in interest) 3,608 405 231 4,244 -------------------------------------------------------------------------------------------------------------------------------- EBITDA $ 69,637 $ 40,275 $ (15,546) $ 94,366 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 COMMERCIAL RESALE CORPORATE TOTAL Net income (loss) $ 38,854 $ 32,090 $ (68,327) $ 2,617 Tax adjustment included in discontinued operations - - (1,919) (1,919) Cumulative effect of a change in accounting principle - - 322 322 Interest - - 54,163 54,163 Taxes - - 679 679 Depreciation 27,563 6,882 404 34,849 Amortization (excluding amortization included in interest) 661 702 - 1,363 -------------------------------------------------------------------------------------------------------------------------------- EBITDA $ 67,078 $ 39,674 $ (14,678) $ 92,074 Note: This schedule is a reconciliation of net income to EBITDA which we define as earnings before interest, taxes, depreciation and amortization and excluding the loss from the early extinguishment of debt and the income tax impact included in the gain on the disposal of discontinued operations recorded in 2004, and the tax adjustment reported as a gain on disposal of discontinued operations and the cumulative effect of a change in accounting principle in 2003. EBITDA should not be considered as an alternative to any measure of operating results as promulgated under accounting principles generally accepted in the United States (such as operating income or net income), nor should it be considered as an indicator of our overall financial performance. EBITDA does not fully consider the impact of investing or financing transactions as it specifically excludes depreciation and interest charges, which should also be considered in the overall evaluation of results. Additionally, our method of calculating EBITDA may be different from the method used by other companies, and therefore, comparability may be limited. EBITDA has not been provided as a measure of liquidity. We believe EBITDA provides useful supplemental information to investors since it excludes the impact of investing or financing transactions on our operating results.
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