The following table provides a reconciliation of net income attributable to the Company to EBITDA:
Three Months Ended Nine Months Ended February February February February 28, 29, 28, 29, --------- --------- --------- --------- 2013 2012 2013 2012 --------- --------- --------- --------- (dollars in thousands)Net Income attributable to the Company $ 1,599 $ 519 $ 4,300 $ 3,485Income (Loss) attributable to non-controlling interest 18 (13) 31 85Interest Income (25) (31) (89) (105)Interest Expense 287 235 792 316Income Taxes 1,048 668 2,798 2,677Depreciation and Amortization 1,436 1,126 4,165 3,075 --------- --------- --------- ---------EBITDA $ 4,363 $ 2,504 $ 11,997 $ 9,533
EBITDA consists of income attributable to the Company, less income from non-controlling interest, plus loss from non-controlling interest, minus interest income, plus interest expense (which is not related to any debt but to the accounting required for the capital lease), plus income taxes, plus depreciation and amortization. The Company uses EBITDA as a measure of operating performance. However, EBITDA is not a recognized measurement under U.S. generally accepted accounting principles, or GAAP, and when analyzing its operating performance, investors should use EBITDA in addition to, and not as an alternative for, income as determined in accordance with GAAP. Because not all companies use identical calculations, the Company's presentation of EBITDA may not be comparable to similarly titled measures of other companies and is therefore limited as a comparative measure. Furthermore, as an analytical tool, EBITDA has additional limitations, including that (a) it is not intended to be a measure of free cash flow, as it does not consider certain cash requirements such as tax payments; (b) it does not reflect changes in, or cash requirements for, its working capital needs; and (c) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements, or future requirements for capital expenditures or contractual commitments. To compensate for these limitations, the Company evaluates its profitability by considering the economic effect of the excluded expense items independently as well as in connection with its analysis of cash flows from operations and through the use of other financial measures.
The Company believes EBITDA is useful to an investor in evaluating its operating performance because it is widely used to measure a company's operating performance without regard to certain non-cash expenses (such as depreciation and amortization) and expenses that are not reflective of its core operating results over time. The Company believes EBITDA presents a meaningful measure of corporate performance exclusive of its capital structure, the method by which assets were acquired and non-cash charges, and provides us with additional useful information to measure its performance on a consistent basis, particularly with respect to changes in performance from period to period.
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National American University Holdings, Inc.
Dr. Ronald Shape
Investor Relations Counsel
The Equity Group Inc.