HILTON HOTELS CORPORATION
Financial Highlights (Unaudited)
(in millions, except per share amounts)
Three Months
Ended
March 31,
2006 2007 % Change
------ ------ ---------
Revenue
Owned hotels
$507 $571 13 %
Leased hotels
189 455 141
Management and franchise fees
152 176 16
Timeshare and other income
211 164 (22)
------ ------
1,059 1,366 29
Other revenue from managed and franchised
properties
382 498 30
------ ------
1,441 1,864 29
Expenses
Owned hotels
380 429 13
Leased hotels
169 413 144
Depreciation and amortization
85 113 33
Other operating expenses
171 157 (8)
Corporate expense
44 46
5
------ ------
849 1,158 36
Other expenses from managed and franchised
properties
376 492 31
------ ------
1,225 1,650 35
Operating income from unconsolidated
affiliates
10 14 40
------ ------
Operating income
226 228 1
Interest and dividend income
11 5 (55)
Interest expense
(96) (116) 21
Net interest from unconsolidated affiliates
and
non-controlled interests
(9) (12) 33
Net gain (loss) on foreign currency
transactions
18 (8) -
Net other gain
4 30
-
Loss from non-operating affiliates
(4) (4) -
------ ------
Income before taxes and minority and
non-controlled interests
150 123 (18)
Provision for income taxes
(50) (43) (14)
Minority and non-controlled interests, net
(2) (2) -
------ ------
Income from continuing operations
98 78 (20)
Discontinued operations, net of tax
6 17
-
------ ------
Net Income
$104 $95 (9)%
====== ======
Net income per share (1)
----------------------------------------------
Basic Earnings Per Share
Continuing operations
$.26 $.20 (23)%
Discontinued operations
.02 .04 100
------ ------
$.27 $.24 (11)%
====== ======
Diluted Earnings Per Share
Continuing operations
$.24 $.19 (21)%
Discontinued operations
.01 .04 -
------ ------
$.26 $.23 (12)%
====== ======
Average shares - basic
383 389 2 %
====== ======
Average shares - diluted
418 424 1 %
====== ======
(1) Total reported EPS in the 2006 quarter differs from
the sum of EPS
from continuing and discontinued operations due
to the required
method of computing EPS.
HILTON
HOTELS CORPORATION
Comparable Systemwide Statistics (1)
Brand Summary
Three Months Ended
March 31,
2006 2007 Change
--------- --------- --------
Hilton
-----------------------------------------
Occupancy
69.3 % 69.5 % 0.2 pts
Average Rate
$143.61 $157.85 9.9 %
RevPAR
$99.54 $109.79 10.3 %
Hilton Garden Inn
-----------------------------------------
Occupancy
67.8 % 69.1 % 1.3 pts
Average Rate
$110.86 $117.40 5.9 %
RevPAR
$75.17 $81.09 7.9 %
Doubletree
-----------------------------------------
Occupancy
68.3 % 68.8 % 0.5 pts
Average Rate
$117.35 $126.81 8.1 %
RevPAR
$80.17 $87.24 8.8 %
Embassy Suites
-----------------------------------------
Occupancy
73.4 % 72.8 % (0.6)pts
Average Rate
$138.77 $148.79 7.2 %
RevPAR
$101.90 $108.31 6.3 %
Homewood Suites by Hilton
-----------------------------------------
Occupancy
73.1 % 73.9 % 0.8 pts
Average Rate
$108.27 $115.74 6.9 %
RevPAR
$79.17 $85.53 8.0 %
Hampton
-----------------------------------------
Occupancy
68.7 % 69.0 % 0.3 pts
Average Rate
$94.05 $101.01 7.4 %
RevPAR
$64.64 $69.68 7.8 %
Conrad
-----------------------------------------
Occupancy
66.0 % 65.9 % (0.1)pts
Average Rate
$175.03 $198.46 13.4 %
RevPAR
$115.51 $130.70 13.2 %
Other
-----------------------------------------
Occupancy
72.4 % 70.8 % (1.6)pts
Average Rate
$120.69 $135.92 12.6 %
RevPAR
$87.40 $96.19 10.1 %
Total
-----------------------------------------
Occupancy
69.5 % 69.7 % 0.2 pts
Average Rate
$121.95 $132.32 8.5 %
RevPAR
$84.73 $92.29 8.9 %
(1) Statistics are presented pro forma as if the acquisition
of Hilton
International had occurred January 1, 2006. Includes
hotels in the
system as of March 31, 2007 which were in the system
of HHC or HI
since January 1, 2006. Excludes hotels that left
the system in April
2007 in connection with the Scandic sale, data
for HI franchise
hotels and an owned hotel in New Orleans.
HILTON HOTELS CORPORATION
Comparable Systemwide Statistics (1)
Regional Summary
Three Months Ended
March 31,
2006 2007 Change
--------- --------- --------
North America (US & Canada)
-----------------------------------------
Occupancy
69.6 % 69.8 % 0.2 pts
Average Rate
$118.20 $126.38 6.9 %
RevPAR
$82.22 $88.28 7.4 %
United Kingdom & Ireland
-----------------------------------------
Occupancy
72.5 % 70.2 % (2.3)pts
Average Rate
$154.44 $185.80 20.3 %
RevPAR
$112.01 $130.50 16.5 %
Continental Europe
-----------------------------------------
Occupancy
60.0 % 60.5 % 0.5 pts
Average Rate
$146.46 $170.48 16.4 %
RevPAR
$87.88 $103.13 17.4 %
Africa
-----------------------------------------
Occupancy
66.3 % 71.9 % 5.6 pts
Average Rate
$132.70 $149.51 12.7 %
RevPAR
$88.04 $107.50 22.1 %
Middle East
-----------------------------------------
Occupancy
73.3 % 72.8 % (0.5)pts
Average Rate
$109.18 $117.73 7.8 %
RevPAR
$80.01 $85.72 7.1 %
Asia Pacific
-----------------------------------------
Occupancy
75.4 % 77.3 % 1.9 pts
Average Rate
$137.23 $152.94 11.4 %
RevPAR
$103.43 $118.23 14.3 %
Latin America & Caribbean
-----------------------------------------
Occupancy
73.0 % 72.3 % (0.7)pts
Average Rate
$139.15 $157.62 13.3 %
RevPAR
$101.56 $113.94 12.2 %
Total
-----------------------------------------
Occupancy
69.5 % 69.7 % 0.2 pts
Average Rate
$121.95 $132.32 8.5 %
RevPAR
$84.73 $92.29 8.9 %
(1) Statistics are presented pro forma as if the acquisition
of Hilton
International had occurred January 1, 2006. Includes
hotels in the
system as of March 31, 2007 which were in the system
of HHC or HI
since January 1, 2006. Excludes hotels that left
the system in April
2007 in connection with the Scandic sale, data
for HI franchise
hotels and an owned hotel in New Orleans.
HILTON HOTELS CORPORATION
Comparable Owned Statistics (1)
Three Months Ended
March 31,
2006 2007 Change
--------- --------- --------
Worldwide - 56 Hotels
----------------------------------------
Hilton
---------------------------------------
Occupancy
72.3 % 71.9 % (0.4)pts
Average Rate
$180.07 $193.52 7.5 %
RevPAR
$130.20 $139.05 6.8 %
All Other
---------------------------------------
Occupancy
76.2 % 77.3 % 1.1 pts
Average Rate
$116.56 $130.92 12.3 %
RevPAR
$88.82 $101.15 13.9 %
Total
---------------------------------------
Occupancy
72.7 % 72.4 % (0.3)pts
Average Rate
$173.36 $186.79 7.7 %
RevPAR
$126.03 $135.23 7.3 %
North America - 26 Hotels
----------------------------------------
Hilton
---------------------------------------
Occupancy
74.9 % 74.2 % (0.7)pts
Average Rate
$193.98 $206.12 6.3 %
RevPAR
$145.32 $152.94 5.2 %
All Other
---------------------------------------
Occupancy
75.0 % 75.5 % 0.5 pts
Average Rate
$127.99 $144.62 13.0 %
RevPAR
$96.01 $109.21 13.7 %
Total
---------------------------------------
Occupancy
74.9 % 74.4 % (0.5)pts
Average Rate
$185.59 $198.19 6.8 %
RevPAR
$139.06 $147.39 6.0 %
International - 30 Hotels
----------------------------------------
Hilton
---------------------------------------
Occupancy
66.7 % 66.8 % 0.1 pts
Average Rate
$146.79 $163.72 11.5 %
RevPAR
$97.97 $109.44 11.7 %
All Other
---------------------------------------
Occupancy
85.2 % 90.4 % 5.2 pts
Average Rate
$40.57 $44.51 9.7 %
RevPAR
$34.55 $40.24 16.5 %
Total
---------------------------------------
Occupancy
67.5 % 67.8 % 0.3 pts
Average Rate
$141.51 $157.45 11.3 %
RevPAR
$95.47 $106.72 11.8 %
(1) Statistics are presented pro forma as if the acquisition
of Hilton
International had occurred January 1, 2006. Includes
hotels owned as
of March 31, 2007 which were owned by HHC or HI
since January 1,
2006. Excludes hotels that left the system in April
2007 in
connection with the Scandic sale and an owned hotel
in New Orleans.
HILTON HOTELS CORPORATION
Comparable Leased Statistics (1)
Three Months Ended
March 31,
2006 2007 Change
--------- --------- --------
Worldwide - 82 Hotels
-----------------------------------------
Hilton
----------------------------------------
Occupancy
69.3 % 68.4 % (0.9)pts
Average Rate
$143.19 $169.35 18.3 %
RevPAR
$99.24 $115.76 16.6 %
All Other
----------------------------------------
Occupancy
71.4 % 69.8 % (1.6)pts
Average Rate
$121.57 $141.37 16.3 %
RevPAR
$86.74 $98.65 13.7 %
Total
----------------------------------------
Occupancy
69.5 % 68.5 % (1.0)pts
Average Rate
$141.32 $166.95 18.1 %
RevPAR
$98.19 $114.32 16.4 %
(1) Statistics are presented pro forma as if the acquisition
of Hilton
International had occurred January 1, 2006. Includes
hotels leased as
of March 31, 2007 which were leased by HHC or HI
since January 1,
2006. Excludes hotels that left the system in April
2007 in
connection with the Scandic sale.
HILTON HOTELS CORPORATION
Supplementary Statistical Information (1)
March
-----------------------------------------
2006
2007
Number of
Number of
Properties Rooms Properties Rooms
-------------------- --------------------
Hilton
----------------------------
Owned
55 31,009
47 26,345
Leased
77 23,007
78 23,257
Joint Venture
14 6,156
14 6,156
Managed
143 52,756
153 57,355
Franchised
199 56,600
210 60,793
-------------------- --------------------
488 169,528 502
173,906
Hilton Garden Inn
----------------------------
Owned
1 162
1 162
Joint Venture
1 128
1 128
Managed
7 886
8 1,200
Franchised
257 35,275
299 41,255
-------------------- --------------------
266 36,451
309 42,745
Doubletree
----------------------------
Owned
3 1,349
3 1,349
Leased
5 1,746
4 1,554
Joint Venture
14 4,306
12 3,761
Managed
28 7,742
27 7,485
Franchised
115 28,146
127 30,802
-------------------- --------------------
165 43,289
173 44,951
Embassy Suites
----------------------------
Owned
3 663
3 664
Joint Venture
25 6,586
21 5,325
Managed
56 14,788
55 14,724
Franchised
97 22,145 106
24,577
-------------------- --------------------
181 44,182
185 45,290
Homewood Suites by Hilton
----------------------------
Owned
1 140
1 140
Managed
41 4,706
39 4,450
Franchised
127 13,795
156 16,981
-------------------- --------------------
169 18,641
196 21,571
Hampton
----------------------------
Owned
1 133
1 133
Managed
35 4,607
24 3,236
Franchised
1,313 130,241 1,384 136,577
-------------------- --------------------
1,349 134,981 1,409 139,946
Conrad
----------------------------
Joint Venture
3 1,399
3 1,399
Managed
13 3,901
12 3,752
-------------------- --------------------
16 5,300
15 5,151
Other
----------------------------
Owned
2 630
1 323
Leased
3 1,069
2 532
Managed
7 3,253
10 4,130
Franchised
8 2,602
3 771
-------------------- --------------------
20 7,554
16 5,756
Timeshare
40 4,272
33 3,774
----------------------------
Total
----------------------------
Owned
66 34,086
57 29,116
Leased
85 25,822
84 25,343
Joint Venture
57 18,575
51 16,769
Managed
330 92,639
328 96,332
Franchised
2,116 288,804 2,285 311,756
Timeshare
40 4,272
33 3,774
-------------------- --------------------
TOTAL PROPERTIES
2,694 464,198 2,838 483,090
==================== ====================
Change to
---------------------------------------
March 2006 December 2006
Number of Number
of
Properties Rooms Properties Rooms
------------------- -------------------
Hilton
------------------------------
Owned
(8) (4,664) -
(2)
Leased
1 250
- (111)
Joint Venture
- -
- -
Managed
10 4,599
1 722
Franchised
11 4,193
3 692
------------------- -------------------
14 4,378
4 1,301
Hilton Garden Inn
------------------------------
Owned
- -
- -
Joint Venture
- -
- -
Managed
1 314
1 314
Franchised
42 5,980
6 762
------------------- -------------------
43 6,294
7 1,076
Doubletree
------------------------------
Owned
- -
- -
Leased
(1) (192)
- -
Joint Venture
(2) (545)
- -
Managed
(1) (257)
- (2)
Franchised
12 2,656
- (166)
------------------- -------------------
8 1,662
- (168)
Embassy Suites
------------------------------
Owned
- 1
- -
Joint Venture
(4) (1,261) (2)
(463)
Managed
(1) (64)
(1) (194)
Franchised
9 2,432
3 775
------------------- -------------------
4 1,108
- 118
Homewood Suites by Hilton
------------------------------
Owned
- -
- -
Managed
(2) (256) (2)
(256)
Franchised
29 3,186
6 686
------------------- -------------------
27 2,930
4 430
Hampton
------------------------------
Owned
- -
- -
Managed
(11) (1,371) (10) (1,211)
Franchised
71 6,336
27 2,670
------------------- -------------------
60 4,965
17 1,459
Conrad
------------------------------
Joint Venture
- -
- -
Managed
(1) (149)
- (1)
------------------- -------------------
(1) (149)
- (1)
Other
------------------------------
Owned
(1) (307)
- (1)
Leased
(1) (537)
- -
Managed
3 877
- (1)
Franchised
(5) (1,831) (1)
(254)
------------------- -------------------
(4) (1,798) (1)
(256)
Timeshare
(7) (498) (1)
34
------------------------------
Total
------------------------------
Owned
(9) (4,970) -
(3)
Leased
(1) (479)
- (111)
Joint Venture
(6) (1,806) (2)
(463)
Managed
(2) 3,693 (11)
(629)
Franchised
169 22,952
44 5,165
Timeshare
(7) (498) (1)
34
------------------- -------------------
TOTAL PROPERTIES
144 18,892
30 3,993
=================== ===================
(1) Excludes 129 properties and 22,701 rooms at March
31, 2007 that
left the system in April 2007 in connection with
the Scandic sale
(128 properties and 22,569 rooms at March 31, 2006).
HILTON HOTELS CORPORATION
Supplemental Financial Information (Unaudited)
Reconciliation of Adjusted
EBITDA to EBITDA and Net Income
Historical Data
($ in millions)
Three Months Ended
March 31,
2006
---------------------------------
Continuing Discontinued
Operations Operations Total
----------- ------------- -------
Adjusted EBITDA
$318 $10
$328
Proportionate share of depreciation
and amortization of unconsolidated
affiliates
(8) -
(8)
Operating interest and dividend
income
(2) -
(2)
Operating income of non-controlled
interests
3
- 3
Net gain (loss) on foreign currency
transactions
18 (1)
17
Net other gain
4
- 4
Loss from non-operating affiliates
(4) -
(4)
Minority and non-controlled
interests, net
(2) -
(2)
----------- ------------- -------
EBITDA
327
9 336
Depreciation and amortization
(85) (1)
(86)
Interest expense, net
(94)
- (94)
Provision for income taxes
(50) (2)
(52)
----------- ------------- -------
Net income
$98 $6
$104
=========== ============= =======
Three Months Ended
March 31,
2007
% Change
-------------------------------- ---------
Continuing Discontinued
Operations Operations Total
----------- ------------- ------
Adjusted EBITDA
$346 $25
$371 13 %
Proportionate share of
depreciation and
amortization of
unconsolidated
affiliates
(7) -
(7) (13)
Operating interest and
dividend income
(1) -
(1) (50)
Operating income of non-
controlled interests
3
- 3
-
Net gain (loss) on
foreign currency
transactions
(8) 1
(7) -
Net other gain
30
- 30
-
Loss from non-operating
affiliates
(4) -
(4) -
Minority and non-
controlled interests,
net
(2) -
(2) -
----------- ------------- ------
EBITDA
357 26
383 14
Depreciation and
amortization
(113) (5)
(118) 37
Interest expense, net
(123)
- (123) 31
Provision for income
taxes
(43) (4)
(47) (10)
----------- ------------- ------
Net income
$78 $17
$95 (9)%
=========== ============= ======
Reconciliation of Adjusted
EBITDA to EBITDA and Net Income
Future Performance - Full Year 2007 Outlook
($ in millions, except per share amounts)
Estimated Estimated
Full Year Full Year
2007 2007
Low End High End
--------- ---------
Adjusted EBITDA
$1,685 $1,725
Proportionate share of depreciation and
amortization of unconsolidated affiliates
(31) (31)
Operating interest and dividend income
(3) (3)
Operating income of non-controlled interests
11 11
Net loss on foreign currency transactions
(8) (8)
Net other gain
30 30
Loss from non-operating affiliates
(16) (16)
Minority and non-controlled interests, net
(5) (5)
--------- ---------
EBITDA
1,663 1,703
Depreciation and amortization
(476) (476)
Interest expense, net
(462) (461)
Provision for income taxes
(255) (270)
--------- ---------
Income from continuing operations
470 496
Discontinued operations, net of tax
20 20
--------- ---------
Net income
$490 $516
========= =========
Diluted EPS
$1.18 $1.24
========= =========
Diluted EPS - Recurring
$1.15 $1.21
========= =========
HILTON HOTELS CORPORATION
Supplemental Financial Information (Unaudited)
Pro Forma Revenue and Expenses
($ in millions)
Owned Hotels
----------------------------------------------------------------------
Three
Months
Ended % or
March 31, basis
point
2006 2007 Change
-------------------
Revenue
------------------------------------------------
Total Owned Hotel Revenue
$508 $577
Discontinued operations
(1) (6)
----- -----
Continuing Operations
507 571
Less sold hotels and non-comparable
(76) (34)
Less HI comparable, as
reported
(52) (135)
----- -----
Pro Forma Comparable Owned - North America
379 402 6%
Plus HI International,
net (1)
122 135 11%
----- -----
Pro Forma Comparable Owned - Worldwide
$501 $537 7%
===== =====
Expenses
------------------------------------------------
Total Owned Hotel Expenses
$380 $433
Discontinued operations
- (4)
----- -----
Continuing Operations
380 429
Less sold hotels and non-comparable
(55) (20)
Less HI comparable, as
reported
(39) (105)
----- -----
Pro Forma Comparable Owned - North America
286 304 6%
Plus HI International,
net (1)
96 105 9%
----- -----
Pro Forma Comparable Owned - Worldwide
$382 $409 7%
===== =====
Margins
------------------------------------------------
Pro Forma Comparable Owned - North America
24.5% 24.4%(10) bps
Pro Forma Comparable Owned - International
21.3% 22.2% 90 bps
Pro Forma Comparable Owned - Worldwide
23.8% 23.8% - bps
Leased Hotels
----------------------------------------------------------------------
Three
Months
Ended % or
March 31, basis
point
2006 2007 Change
-------------------
Revenue
------------------------------------------------
Total Leased Hotel Revenue
$266 $670
Discontinued operations
(77) (215)
----- -----
Continuing Operations
189 455
Less sold hotels and non-comparable
(10) (14)
Less HI comparable, as
reported
(156) (416)
Plus HI, net (1)
366 416 14%
----- -----
Pro Forma Comparable Leased - Worldwide
$389 $441 13%
===== =====
Expenses
------------------------------------------------
Total Leased Hotel Expenses
$230 $586
Discontinued operations
(61) (173)
----- -----
Continuing Operations
169 413
Less sold hotels and non-comparable
(6) (13)
Less HI comparable, as
reported
(142) (378)
Plus HI, net (1)
342 378 11%
----- -----
Pro Forma Comparable Leased - Worldwide
$363 $400 10%
===== =====
Margins
------------------------------------------------
Pro Forma Comparable Leased - Worldwide
6.7% 9.3%260 bps
Management and Franchise Fees
----------------------------------------------------------------------
Three
Months
Ended
March 31, %
2006 2007 Change
-------------------
Total Management and Franchise Fees
$152 $176
Discontinued operations
- -
----- -----
Continuing Operations
152 176
Less HI reported
(11) (38)
Plus HI, net (1)
24 38 58%
----- -----
Pro Forma - Worldwide
$165 $176 7%
===== =====
(1) Pro forma for the entities acquired with Hilton International
as
if they had been acquired on January 1, 2006. Excludes
non-comparable
hotels.
NON-GAAP FINANCIAL MEASURES
----------------------------------------------------------------------
Regulation G, "Conditions for Use of Non-GAAP Financial
Measures,"
prescribes the conditions for use of non-GAAP financial
information
in public disclosures. We believe that our presentation
of EBITDA and
Adjusted EBITDA, which are non-GAAP financial measures,
are important
supplemental measures of operating performance
to investors. The
following discussion defines these terms and why
we believe they are
useful measures of our performance.
EBITDA and Adjusted EBITDA
----------------------------------------------------------------------
Earnings before interest, taxes, depreciation and amortization
(EBITDA) is a commonly used measure of performance
in our industry
which we believe, when considered with measures
calculated in
accordance with United States Generally Accepted
Accounting
Principles (GAAP), gives investors a more complete
understanding of
operating results before the impact of investing
and financing
transactions and income taxes and facilitates comparisons
between us
and our competitors. Management has historically
adjusted EBITDA when
evaluating operating performance because we believe
that the
inclusion or exclusion of certain recurring and
non-recurring items
described below is necessary to provide the most
accurate measure of
our core operating results and as a means to evaluate
period-to-
period results. We have chosen to provide this
information to
investors to enable them to perform more meaningful
comparisons of
past, present and future operating results and
as a means to evaluate
the results of core on-going operations. We do
not reflect such items
when calculating EBITDA, however, we adjust for
these items and refer
to this measure as Adjusted EBITDA. We have historically
reported
this measure to our investors and believe that
the continued
inclusion of Adjusted EBITDA provides consistency
in our financial
reporting. We use Adjusted EBITDA in this press
release because we
believe it is useful to investors in allowing greater
transparency
related to a significant measure used by management
in its financial
and operational decision-making. Adjusted EBITDA
is among the more
significant factors in management's internal evaluation
of total
company and individual property performance and
in the evaluation of
incentive compensation related to property management.
Management
also uses Adjusted EBITDA as a measure in determining
the value of
acquisitions and dispositions. Adjusted EBITDA
is also widely used by
management in the annual budget process. Externally,
we believe these
measures continue to be used by investors in their
assessment of our
operating performance and the valuation of our
company. Adjusted
EBITDA reflects EBITDA adjusted for the following
items:
Gains and Losses on Asset Dispositions and Non-Recurring
Items
----------------------------------------------------------------------
We exclude from Adjusted EBITDA the effect of gains
and losses on
asset dispositions and non-recurring items,
such as asset write-
downs and impairment losses. We believe
the inclusion of these
items is not consistent with reflecting
the on-going performance of
our assets. Management believes it is useful
to exclude gains and
losses on asset dispositions as these amounts
are not reflective of
our operating performance or the performance
of our assets and the
amount of such items can vary dramatically
from period to period.
The timing and selection of an asset for
disposition is subject to
a number of variables that are generally
unrelated to our on-going
operations.
Proportionate Share of Depreciation and Amortization
of
Unconsolidated Affiliates
----------------------------------------------------------------------
Our consolidated results include the equity earnings
from our
unconsolidated affiliates after the deduction
of our proportionate
share of depreciation and amortization expense
from unconsolidated
affiliates. We exclude our proportionate
share of depreciation and
amortization expense from unconsolidated
affiliates from Adjusted
EBITDA to provide a more accurate measure
of our proportionate
share of core operating results before investing
activities and to
provide consistency with the performance
measure we use for our
consolidated properties.
Operating Interest and Dividend Income
----------------------------------------------------------------------
Interest and dividend income from investments related
to operating
activities is included in our calculation
of Adjusted EBITDA. We
consider this income, primarily interest
on notes receivable issued
to properties we manage or franchise and
dividend income from
investments related to the development of
our core businesses, to
be a part of our core operating results.
Non-Controlled Interest
----------------------------------------------------------------------
We exclude from Adjusted EBITDA the operating income,
net interest
expense, tax provision and non-controlled
interest reported on our
income statement to the extent we have no
ownership interest. These
exclusions are shown in their respective
lines on the
Reconciliation of Adjusted EBITDA to EBITDA
and Net Income.
Minority Interest, Net
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We exclude the minority interest in the income or loss
of our
consolidated joint ventures because these amounts
effectively include
our minority partners' proportionate share of depreciation,
amortization, interest and taxes, which are excluded
from EBITDA.
Limitations on the Use of Non-GAAP Measures
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The use of EBITDA and Adjusted EBITDA has certain limitations.
Our
presentation of EBITDA and Adjusted EBITDA may
be different from the
presentation used by other companies and therefore
comparability may
be limited. Depreciation expense for various long-term
assets,
interest expense, income taxes and other items
have been and will be
incurred and are not reflected in the presentation
of EBITDA or
Adjusted EBITDA. Each of these items should also
be considered in the
overall evaluation of our results. Additionally,
EBITDA and Adjusted
EBITDA do not consider capital expenditures and
other investing
activities and should not be considered as a measure
of our
liquidity. We compensate for these limitations
by providing the
relevant disclosure of our depreciation, interest
and income tax
expense, capital expenditures and other items both
in our
reconciliations to the GAAP financial measures
and in our
consolidated financial statements, all of which
should be considered
when evaluating our performance.
EBITDA and Adjusted EBITDA are used in addition to and
in conjunction
with results presented in accordance with GAAP.
EBITDA and Adjusted
EBITDA should not be considered as an alternative
to net income,
operating income, or any other operating performance
measure
prescribed by GAAP, nor should these measures be
relied upon to the
exclusion of GAAP financial measures. EBITDA and
Adjusted EBITDA
reflect additional ways of viewing our operations
that we believe,
when viewed with our GAAP results and the reconciliations
to the
corresponding GAAP financial measures, provide
a more complete
understanding of factors and trends affecting our
business than could
be obtained absent this disclosure. Management
strongly encourages
investors to review our financial information in
its entirety and not
to rely on a single financial measure. |