We use certain non-GAAP financial measures, specifically Television Broadcast Cash Flow, EBITDA, Adjusted EBITDA, Free Cash Flow, Leverage, and Senior Leverage in addition to GAAP measures as supplemental financial data to assist management and the public in their analysis and valuation of our company. These measures are not in accordance with GAAP and are not meant to replace GAAP measurements. Reconciliations of certain non-GAAP measures to comparable GAAP financial measures are set forth, the calculations of which may differ from, or be inconsistent with, other companies’ calculations. The Company does not provide reconciliations on a forward-looking basis.
Certain Non-GAAP Measures:
Television Broadcast Cash Flow (BCF):
Management considers BCF to be an indicator of our television assets’ operating performance. Management also believes that multiples of BCF are frequently used by industry analysts, investors and lenders as a measure of valuation for broadcast companies.
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA):
Management considers EBITDA to be an indicator of our assets’ operating performance. Management also believes that EBITDA is frequently used by industry analysts, investors and lenders as a measure of valuation. In addition, EBITDA is the basis for calculating Adjusted EBITDA under our Bank Credit Agreement (BCA), which is used in computing our ability to borrow under the BCA.
Free Cash Flow:
Management considers Free Cash Flow to be a liquidity indicator that reflects our ability to service our debt, fund our investments and make distributions to investors. Management also believes that Free Cash Flow is a commonly used measure of liquidity for companies in the broadcast industry. In addition, this measure is frequently used by industry analysts, investors and lenders as a measure of liquidity and valuation for broadcast companies although their definitions of Free Cash Flow may differ from our definition. We believe this measure serves as a valuable assessment tool for investors to identify potential liquidity trends.
Total Indebtedness Ratio (Leverage) and Senior Indebtedness Ratio (Senior Leverage):
Leverage and Senior Leverage are defined under the BCA and are components of the maximum leverage and senior leverage ratios permitted by the BCA. Management considers Leverage and Senior Leverage to be important indicators of our ability to incur additional debt under our BCA, our ability to service our existing debt and the extent of our compliance with the leverage and senior leverage covenants in our BCA. We believe that industry analysts and investors commonly use our level of compliance with the financial covenants contained in our BCA as a measure of our ability to service existing debt and our liquidity, generally.
The following tables provide reconciliations between 1) Net Income Available to Common Shareholders and Free Cash Flow, EBITDA, Television Broadcast Cash Flow, and Adjusted EBITDA, 2) between debt on the balance sheet and Indebtedness and Senior Indebtedness, and 3) between EBITDA and Adjusted EBITDA. These non-GAAP measures should be considered in addition to, and not as a substitute for, net cash flow from operating activities, net cash flow from investing activities and financing activities, net loss or net income, operating income, and debt, as well as other measures of financial performance reported in accordance with GAAP.