Print Page  Close Window

SEC Filings

8-K
KEY ENERGY SERVICES INC filed this Form 8-K on 10/28/2011
Entire Document
 
 

Below is a reconciliation of income or loss from continuing operations attributable to Key as presented in accordance with United States generally accepted accounting principles (GAAP) to Adjusted EBITDA from continuing operations (a non-GAAP measure) as required under Regulation G of the Securities Exchange Act of 1934.
Reconciliations to Adjusted EBITDA from continuing operations (in thousands, except for percentages):
                                                 
    Three Months Ended  
    September 30,     % of Segment     June 30,     % of Segment     September 30,     % of Segment  
    2011     Revenue     2011     Revenue     2010     Revenue  
Income (loss) from continuing operations
  $ 43,438       8.7 %   $ 36,360       8.2 %   $ (2,280 )     (0.8 )%
Income tax expense (benefit)
    25,077       5.0 %     20,812       4.7 %     (1,383 )     (0.5 )%
(Income) loss attributable to noncontrolling interest, excluding depreciation and amortization
    397       0.1 %     (170 )     (0.0 )%     410       0.1 %
Interest expense, net of amounts capitalized
    11,236       2.2 %     10,041       2.3 %     10,626       3.7 %
Interest income
    (1 )     (0.0 )%     (2 )     (0.0 )%     (5 )     (0.0 )%
Depreciation and amortization
    42,341       8.4 %     39,852       8.9 %     32,565       11.5 %
Gain on IROC sale
          0.0 %     (4,783 )     (1.1 )%           0.0 %
 
                                   
Adjusted EBITDA from continuing operations
  $ 122,488       24.4 %   $ 102,110       22.9 %   $ 39,933       14.1 %
 
                                         
“Adjusted EBITDA from continuing operations” is defined as income or loss from continuing operations attributable to Key before interest, taxes, depreciation and amortization. In some periods, Adjusted EBITDA from continuing operations may also add back certain non-recurring items such as asset retirements and impairments, loss on debt extinguishment, and certain other gains or losses. Adjusted EBITDA from continuing operations is a non-GAAP measure that is used as a supplemental financial measure by the Company’s management and directors and by external users of the Company’s financial statements, such as investors, to assess:
 
The financial performance of the Company’s assets without regard to financing methods, capital structure or historical cost basis;
 
The ability of the Company’s assets to generate cash sufficient to pay interest on its indebtedness; and
 
The Company’s operating performance and return on invested capital as compared to those of other companies in the well services industry, without regard to financing methods and capital structure.
Adjusted EBITDA from continuing operations has limitations as an analytical tool and should not be considered an alternative to net income, operating income, cash flow from operating activities, or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA from continuing operations excludes some, but not all, items that affect net income and operating income and these measures may vary among other companies. Limitations to using Adjusted EBITDA from continuing operations as an analytical tool include:
 
Adjusted EBITDA from continuing operations does not reflect Key’s current or future requirements for capital expenditures or capital commitments;
 
Adjusted EBITDA from continuing operations does not reflect changes in, or cash requirements necessary to service interest or principal payments on Key’s debt;
 
Adjusted EBITDA from continuing operations does not reflect income taxes;
 
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA from continuing operations does not reflect any cash requirements for such replacements;
 
Other companies in Key’s industry may calculate Adjusted EBITDA from continuing operations differently than Key does, limiting its usefulness as a comparative measure; and
 
Adjusted EBITDA from continuing operations is a different calculation from earnings before interest, taxes, depreciation and amortization as defined for purposes of the financial covenants in the Company’s senior secured credit facility, and therefore should not be relied upon for assessing compliance with covenants.

 

6