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Press release from GlobeNewswire (a Nasdaq OMX company)

American Railcar Industries, Inc. Reports Another Record Quarter and a Record Year of Earnings

Wednesday, February 20, 2013

American Railcar Industries, Inc. Reports Another Record Quarter and a Record Year of Earnings16:13 EST Wednesday, February 20, 2013Fourth Quarter 2012 HighlightsRevenues of $207.7 million were the highest quarterly revenues since Q3 of 2008 Adjusted EBITDA of $48.0 million was a quarterly recordNet earnings of $24.5 million, or $1.14 per share, were a quarterly recordRailcar shipments were approximately 2,000 railcars, including 390 railcars to leasing customersSecured $199.8 million of lease fleet financing with attractive interest rates ST. CHARLES, Mo., Feb. 20, 2013 (GLOBE NEWSWIRE) -- American Railcar Industries, Inc. (ARI or the Company) (Nasdaq:ARII) today reported its fourth quarter 2012 financial results. "We are pleased with our record financial performance, operating results and ability to leverage our growing fleet of leased railcars with financing at attractive terms," said James Cowan, President and CEO of ARI. "The shipments for tank railcars remained strong, which provided us with a favorable sales mix during the quarter. Strong tank railcar volumes generated operational leverage and efficiencies that were partially offset by lower shipments of hopper railcars. During the quarter we received orders for 1,430 railcars, resulting in a backlog of 7,060 railcars."Fourth Quarter Results Consolidated revenues for the fourth quarter of 2012 were $207.7 million, up 6% when compared to the $196.8 million for the fourth quarter of 2011. The increase in revenues was primarily due to an increase in revenues for the manufacturing and leasing segments. Manufacturing segment revenues were $236.5 million for the fourth quarter of 2012, an increase of 14% over the $207.9 million for the fourth quarter of 2011. The primary reason for the increase was a shift in the sales mix to more tank railcars, partially offset by a decrease in the volume of hopper railcar shipments. Manufacturing segment revenues for the fourth quarter of 2012 included estimated revenues of $49.2 million related to railcars built for the Company's lease fleet, compared to estimated revenues of $26.0 million in the fourth quarter of 2011. Such revenues are based on an estimated fair market value of the leased railcars as if they had been sold to a third party, and are eliminated in consolidation. Revenues for railcars built for the Company's lease fleet are not recognized in consolidated revenues as a railcar sale, but are recognized over the term of the lease in accordance with the monthly lease revenues. Railcars built for the lease fleet represented 20% of ARI's railcar shipments during the fourth quarter of 2012 compared to 12% for the same period in 2011. Leasing segment revenues were $5.1 million for the fourth quarter of 2012, an increase of $4.7 million over the $0.4 million for the fourth quarter of 2011. The primary reason for the increase in revenue was an increase in the number of railcars on lease. We had approximately 2,590 railcars in the Company's lease fleet at the end of 2012, compared to approximately 490 railcars at the end of 2011. Consolidated earnings from operations for the fourth quarter of 2012 set a quarterly record of $41.3 million, an increase of 185% over the $14.5 million for the same period in 2011. Operating margins were 20% for the fourth quarter of 2012 compared to 7% for the comparable quarter of 2011. The increase in consolidated earnings was primarily due to an increase in manufacturing earnings from operations. Manufacturing earnings from operations were $47.0 million for the fourth quarter of 2012 compared to $24.5 million for the same period in 2011. This increase was due primarily to a higher mix of tank railcars as well as operating leverage and efficiencies achieved as a result of strong tank railcar production volumes, partially offset by lower hopper railcar shipments. The Company also continued to benefit from cost savings achieved by the vertical integration projects put in place during the past several years. Manufacturing earnings from operations for the fourth quarter of 2012 included $7.1 million of estimated profit on railcars built for the Company's lease fleet, which is eliminated in consolidation and is based on an estimated fair market value of revenues as if the railcars had been sold to a third party, less the cost to manufacture. Adjusted EBITDA, which excludes stock based compensation and other income on short-term investments, was a quarterly record of $48.0 million for the fourth quarter of 2012, compared to $23.7 million for the fourth quarter of 2011. Stock based compensation expense was $0.9 million for the fourth quarter of 2012, compared to $4.7 million for the same period in 2011. Stock based compensation fluctuates with changes in the Company's stock price. Other income on short-term investments was $1.9 million in the fourth quarter of 2012, as the Company sold approximately 70% of the investment it held in Greenbrier stock. In January 2013, the Company sold its remaining position in Greenbrier stock. Interest expense was $3.1 million for the fourth quarter of 2012 compared to $5.1 million for the same period in 2011. The $2.0 million decrease was primarily the result of the Company's redemption of $100.0 million of its 7.5% senior unsecured notes due in 2014 (the Notes). The Company has announced the redemption of the remaining $175 million of outstanding Notes on March 1, 2013. The effective tax rate for the fourth quarter of 2012 was 39.3% compared to 46.2% for the same period in 2011. The effective tax rate decrease in 2012 compared to 2011 was primarily attributable to significantly higher earnings before income taxes in 2012. Net earnings for the fourth quarter of 2012 were a quarterly record of $24.5 million, or $1.14 per share; compared to $5.1 million, or $0.24 per share, for the fourth quarter of 2011 as a result of strong manufacturing earnings and higher profits from leasing.2012 Full Year HighlightsRecord adjusted EBITDA of $149.5 millionRecord operating margins of 17%Record net earnings of $63.8 million, or $2.99 per share2012 Results Consolidated revenues for 2012 were $711.7 million compared to $519.4 million in 2011. The increase in revenues was primarily due to an increase in manufacturing segment revenues. The Company shipped approximately 7,880 railcars, including approximately 2,100 railcars to leasing customers, during 2012, which was 51% higher than the approximately 5,230 railcars shipped during 2011, of which approximately 350 were to leasing customers. Manufacturing segment revenues were $853.0 million for 2012 compared to $488.8 million for 2011. The primary reasons for the increase include a shift in the sales mix to more tank railcars and increased volumes of shipments. The increase in shipments included railcars shipped for our leasing business. Manufacturing segment revenues for 2012 included estimated revenues of $219.5 million relating to railcars built for the lease fleet, compared to $35.7 million in the comparable period in 2011. As noted above, such revenues are eliminated in consolidation. Railcars built for the lease fleet represented over 26% of ARI's railcar shipments in 2012 compared to 7% for 2011. Leasing segment revenues were $13.4 million for 2012 compared to $1.1 million for 2011. The primary reason for the increase in revenue was an increase in the number of railcars on lease, as described above. Consolidated earnings from operations for 2012 were $121.4 million and up substantially from $32.7 million in 2011. Operating margins were 17% in 2012 compared to 6% in 2011. The increase in consolidated earnings was primarily due to an increase in manufacturing earnings from operations. Manufacturing earnings from operations were $156.0 million in 2012 compared to $40.9 million in 2011. This increase was due predominately to improved sales mix, increased volumes, and operating leverage and efficiencies as a result of strong production volumes. The Company also continued to benefit from cost savings achieved by the vertical integration projects put in place during the past several years. The increase in volumes included railcars produced for our leasing business. Manufacturing earnings from operations in 2012 included $35.7 million of profit on railcars built for the lease fleet that is eliminated in consolidation. The Company recorded a $0.5 million loss from joint ventures in 2012 compared to a loss of $7.9 million in 2011. The improvement was due largely to increased production levels at our castings and axle manufacturing joint ventures in 2012 compared to 2011. Adjusted EBITDA was $149.5 million in 2012, and almost three times the $50.5 million in 2011. Stock based compensation expense was $4.7 million in 2012, compared to $3.5 million in 2011. Other income on short-term investments was $1.9 million in 2012, as the Company sold approximately 70% of the investment it held in Greenbrier stock. Net earnings in 2012 were $63.8 million, or $2.99 per share, compared to $4.3 million, or $0.20 per share, in 2011.Backlog At December 31, 2012, the Company's backlog consisted of approximately 5,250 railcars to be manufactured for direct sale and 1,810 railcars to be manufactured for lease. The estimated market value of the direct sale and lease railcars was $662.8 million and $227.0 million, respectively.Cash Flow and Liquidity The Company's record earnings have contributed to strong cash flow from operations. Cash flow from operations for 2012 was $121.4 million, which helped to fund the growth of the Company's lease fleet. As of December 31, 2012, the Company's lease fleet was approximately 2,590 railcars. In December, the Company finalized a financing of approximately $199.8 million in a delayed draw facility that is secured by certain assets of its railcar leasing business (Lease Fleet Financing). In conjunction with finalizing the Lease Fleet Financing, $100.0 million was drawn on the facility with availability to draw up to an additional $99.8 million by May 15, 2013, subject to the terms and conditions of the loan, including the sufficiency of the Company's lease fleet borrowing base. Using our existing cash balance and availability under the Lease Fleet Financing, the Company delivered notice that it will redeem the remaining $175.0 million of outstanding Notes. The Notes will be redeemed at par plus accrued and unpaid interest on March 1, 2013. The Company also paid a dividend of $0.25 per share of common stock of ARI, approximately $5.3 million, in December. At the board meeting in February, the Company's board of directors declared a cash dividend of $0.25 per share of common stock of the Company to shareholders of record as of March 18, 2013 that will be paid on March 28, 2013.Segment and Non-GAAP Financial Measures A reconciliation of the Company's segment revenues and earnings (loss) from operations, used for corporate management and resource allocation purposes, to the consolidated revenues and earnings (loss) from operations is set forth in the supplemental disclosure attached to this press release. A reconciliation of the Company's net earnings to EBITDA and Adjusted EBITDA (both non-GAAP financial measures) is set forth in the supplemental disclosure attached to this press release.Conference Call and Webcast ARI will host a webcast and conference call on Thursday, February 21, 2013 at 10:00 am (Eastern Time) to discuss the Company's fourth quarter 2012 financial results. To participate in the webcast, please log-on to ARI's investor relations page through the ARI website at www.americanrailcar.com. To participate in the conference call, please dial 877-745-9389. Participants are asked to log-on to the ARI website or dial in to the conference call approximately 10 to 15 minutes prior to the start time. An audio replay of the call will also be available on the Company's website promptly following the earnings call.About ARI ARI is a leading North American designer and manufacturer of hopper and tank railcars. ARI and its subsidiaries lease railcars manufactured by the Company to certain markets. In addition, ARI repairs and refurbishes railcars, provides fleet management services and designs and manufactures certain railcar and industrial components. ARI provides its railcar customers with integrated solutions through a comprehensive set of high quality products and related services. More information about American Railcar Industries, Inc. is available on its website at www.americanrailcar.com.Forward Looking Statement Disclaimer This press release contains statements relating to expected financial performance and/or future business prospects, events and plans that are forward-looking statements. Forward-looking statements represent the Company's estimates and assumptions only as of the date of this press release. Such statements include, without limitation, statements regarding customer demand for the Company's products, the Company's strategic objectives and long-term strategies, the growth of the Company's leasing business, anticipated future production rates, the Company's plans regarding future dividends, the Company's joint ventures, the Company's backlog and any implication that the Company's backlog may be indicative of future revenues. These forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from the results described in or anticipated by the Company's forward-looking statements. The payment of future dividends, if any, and the amount thereof, will be at the discretion of ARI's board of directors and will depend upon the Company's operating results, strategic plans, capital requirements, financial condition, provisions of its borrowing arrangements, applicable law and other factors the Company's board of directors considers relevant. Other potential risks and uncertainties include, among other things: the impact of an economic downturn, adverse market conditions and restricted credit markets; ARI's reliance upon a small number of customers that represent a large percentage of revenues and backlog; the health of and prospects for the overall railcar industry; prospects in light of the cyclical nature of the railcar manufacturing business and the current economic environment; anticipated trends relating to shipments, leasing, railcar services, revenues, financial condition or results of operations; the Company's ability to manage overhead and variations in production rates; the highly competitive nature of the railcar manufacturing industry; fluctuating costs of raw materials, including steel and railcar components and delays in the delivery of such raw materials and components; fluctuations in the supply of components and raw materials that ARI uses in railcar manufacturing; anticipated production schedules for products and the anticipated financing needs, construction and production schedules of ARI's joint ventures; the risks associated with potential joint ventures, potential acquisitions or new business endeavors; the implementation, integration with other systems or ongoing management of the Company's new enterprise resource planning system; the international economic and political risks related to ARI's joint ventures' current and potential international operations; the risk of the lack of acceptance of new railcar offerings by ARI's customers and the risk of initial production costs for the Company's new railcar offerings being significantly higher than expected; the sufficiency of the Company's liquidity and capital resources; the conversion of ARI's railcar backlog into revenues; compliance with covenants contained in the Company's Lease Fleet Financing; the impact and anticipated benefits of any acquisitions ARI may complete; the impact and costs and expenses of any litigation ARI may be subject to now or in the future; the ongoing benefits and risks related to the Company's relationship with Mr. Carl Icahn (the chairman of the Company's board of directors and, through his holdings of Icahn Enterprises L.P., the Company's principal beneficial stockholder) and certain of his affiliates; and the additional risk factors described in ARI's filings with the Securities and Exchange Commission. The Company expressly disclaims any duty to provide updates to any forward-looking statements made in this press release, whether as a result of new information, future events or otherwise.  AMERICAN RAILCAR INDUSTRIES, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts)      December 31,  20122011Assets     Current assets:     Cash and cash equivalents  $ 205,045  $ 307,172 Short-term investments - available for sale securities  12,557  -- Accounts receivable, net  36,100  33,626 Accounts receivable, due from related parties  3,539  6,106 Income taxes receivable  --  4,074 Inventories, net  110,075  95,827 Deferred tax assets  4,114  3,203 Prepaid expenses and other current assets  3,917  4,539 Total current assets  375,347  454,547       Property, plant and equipment, net  155,893  155,643 Railcars on operating lease, net  220,282  38,599 Deferred debt issuance costs  2,374  1,335 Interest receivable, due from related parties  --  292 Goodwill  7,169  7,169 Investments in and loans to joint ventures  44,536  45,122 Other assets  4,157  1,063 Total assets  $ 809,758  $ 703,770      Liabilities and Stockholders' Equity     Current liabilities:     Accounts payable  $ 64,971  $ 62,318 Accounts payable, due to related parties  2,831  800 Accrued expenses and taxes  8,432  5,879 Accrued compensation  17,940  14,446 Accrued interest expense  4,465  6,875 Short-term debt, including current portion of long-term debt  2,755  -- Total current liabilities  101,394  90,318       Long-term debt, net of current portion  272,245  275,000 Deferred tax liability  53,466  14,923 Pension and post-retirement liabilities  9,518  9,280 Other liabilities  3,670  4,080 Total liabilities  440,293  393,601       Stockholders' equity:     Common stock, $0.01 par value, 50,000,000 shares authorized, 21,352,297 shares issued and outstanding as of December 31, 2012 and 2011  213  213 Additional paid-in capital  239,609  239,609 Retained earnings  130,030  71,545 Accumulated other comprehensive loss  (387)  (1,198) Total stockholders' equity  369,465  310,169 Total liabilities and stockholders' equity  $ 809,758  $ 703,770  AMERICAN RAILCAR INDUSTRIES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts, unaudited)        For the Three Months Ended  December 31,  20122011     Revenues:     Manufacturing (including revenues from affiliates of $42,820 and $9 for the three months ended December 31, 2012 and 2011, respectively)  $ 187,274  $ 181,832 Railcar leasing  5,129  427 Railcar services (including revenues from affiliates of $4,584 and $5,681 for the three months ended December 31, 2012 and 2011, respectively)  15,277  14,586 Total revenues  207,680  196,845       Cost of revenues:     Manufacturing   (145,576)  (159,762) Railcar leasing  (1,710)  (336) Railcar services  (12,534)  (12,106) Total cost of revenues  (159,820)  (172,204) Gross profit  47,860  24,641       Selling, general and administrative (including costs to a related party of $145 and $146 for the three months ended December 31, 2012 and 2011, respectively)  (6,543)  (10,169) Earnings from operations  41,317  14,472       Interest income (including income from related parties of $701 and $728 for the three months ended December 31, 2012 and 2011, respectively)  706  789 Interest expense  (3,135)  (5,148) Other income (loss) (including income from a related party of $5 for both the three months ended December 31, 2012 and 2011)  1,868  (34) Loss from joint ventures  (482)  (659) Earnings before income taxes  40,274  9,420 Income tax expense  (15,826)  (4,350)Net earnings  $ 24,448  $ 5,070       Net earnings per common share - basic and diluted  $ 1.14  $ 0.24 Weighted average common shares outstanding - basic and diluted  21,352  21,352      AMERICAN RAILCAR INDUSTRIES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts)        For the Year Ended  December 31,  20122011     Revenues:     Manufacturing (including revenues from affiliates of $103,679 and $1,230 for the year ended December 31, 2012 and 2011, respectively)  $ 633,547  $ 453,092 Railcar leasing  13,444  1,075 Railcar services (including revenues from affiliates of $21,442 and $24,730 for the year ended December 31, 2012 and 2011, respectively)  64,732  65,218 Total revenues  711,723  519,385       Cost of revenues:     Manufacturing   (506,083)  (410,308) Railcar leasing  (5,906)  (682) Railcar services  (51,383)  (50,599) Total cost of revenues  (563,372)  (461,589)       Gross profit  148,351  57,796       Selling, general and administrative (including costs to a related party of $586 and $582 for the year ended December 31, 2012 and 2011, respectively)  (26,931)  (25,047) Earnings from operations  121,420  32,749       Interest income (including income from related parties of $2,902 and $2,839 for the year ended December 31, 2012 and 2011, respectively)  3,003  3,654 Interest expense  (17,765)  (20,291) Loss on debt extinguishment  (2,267)  -- Other income (loss) (including income from a related party of $15 and $16 for the year ended December 31, 2012 and 2011, respectively)  1,905  (10) Loss from joint ventures  (451)  (7,900) Earnings before income taxes  105,845  8,202 Income tax expense  (42,022)  (3,866)Net earnings  $ 63,823  $ 4,336       Net earnings per common share - basic and diluted  $ 2.99  $ 0.20 Weighted average common shares outstanding - basic and diluted  21,352  21,352      AMERICAN RAILCAR INDUSTRIES, INC. AND SUBSIDIARIESSEGMENT DATA (In thousands, unaudited)                RevenuesEarnings (Loss) from Operations  External Intersegment TotalExternal Intersegment TotalFor the Three Months Ended December 31, 2012       Manufacturing   $ 187,274  $ 49,232  $ 236,506  $ 39,931  $ 7,082  $ 47,013 Railcar Leasing  5,129  --   5,129  3,377  10  3,387 Railcar Services  15,277  54  15,331  2,024  (3)  2,021 Corporate  --   --   --   (4,015)  --   (4,015) Eliminations  --   (49,286)  (49,286)  --   (7,089)  (7,089) Total Consolidated  $ 207,680  $ --   $ 207,680  $ 41,317  $ --   $ 41,317For the Three Months Ended December 31, 2011       Manufacturing   $ 181,832  $ 26,041  $ 207,873  $ 19,820  $ 4,633  $ 24,453 Railcar Leasing  427  --   427  51  20  71 Railcar Services  14,586  68  14,654  1,841  29  1,870 Corporate  --   --   --   (7,240)  --   (7,240) Eliminations  --   (26,109)  (26,109)  --   (4,682)  (4,682) Total Consolidated  $ 196,845  $ --   $ 196,845  $ 14,472  $ --   $ 14,472For the Year Ended December 31, 2012       Manufacturing   $ 633,547  $ 219,499  $ 853,046  $ 120,623  $ 35,362  $ 155,985 Railcar Leasing  13,444  --   13,444  7,371  29  7,400 Railcar Services  64,732  495  65,227  10,718  (99)  10,619 Corporate  --   --   --   (17,292)  --   (17,292) Eliminations  --   (219,994)  (219,994)  --   (35,292)  (35,292) Total Consolidated  $ 711,723  $ --   $ 711,723  $ 121,420  $ --   $ 121,420For the Year Ended December 31, 2011       Manufacturing   $ 453,092  $ 35,658  $ 488,750  $ 36,075  $ 4,860  $ 40,935 Railcar Leasing  1,075  --   1,075  239  20  259 Railcar Services  65,218  285  65,503  12,476  19  12,495 Corporate  --   --   --   (16,041)  --   (16,041) Eliminations  --   (35,943)  (35,943)  --   (4,899)  (4,899) Total Consolidated  $ 519,385  $ --   $ 519,385  $ 32,749  $ --   $ 32,749              AMERICAN RAILCAR INDUSTRIES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)        For the Year Ended  December 31,  20122011Operating activities:     Net earnings  $ 63,823  $ 4,336       Adjustments to reconcile net earnings to net cash provided by operating activities:     Depreciation  23,850  22,167 Amortization of deferred costs  605  699 Loss on disposal of property, plant and equipment  37  171 Stock-based compensation  4,668  3,537 Change in interest receivable, due from related parties  292  (105) Loss from joint ventures  451  7,900 Provision for deferred income taxes  37,113  6,533 Adjustment to provision for losses on accounts receivable  90  (22) Item related to investing activities:     Realized gain on sale of short-term investments - available for sale securities  (1,863)  -- Item related to financing activities:     Loss on debt extinguishment  2,267  -- Changes in operating assets and liabilities:     Accounts receivable, net  (2,568)  (12,616) Accounts receivable, due from related parties  2,588  (1,170) Income taxes receivable  4,057  10,590 Inventories, net  (14,224)  (45,813) Prepaid expenses and other current assets  621  (1,885) Accounts payable  2,653  32,988 Accounts payable, due to related parties  2,031  525 Accrued expenses and taxes  (2,135)  207 Other  (2,978)  81Net cash provided by operating activities  121,378  28,123Investing activities:     Purchases of property, plant and equipment  (19,962)  (6,202) Capital expenditures - leased railcars  (185,918)  (29,444) Proceeds from the sale of property, plant and equipment  259  122 Purchase of short-term investments - available for sale securities  (40,334)  -- Proceeds from sale of short-term investments - available for sale securities  31,506  -- Proceeds from the repayments of loans by joint ventures  1,908  775 Investments in and loans to joint ventures  (1,856)  (5,711)Net cash used in investing activities  (214,397)  (40,460)Financing activities:     Repayment of long-term debt  (100,000)  -- Proceeds from long-term debt  100,000  -- Premium on debt redemption  (1,875)  -- Payment of common stock dividends  (5,338)  -- Debt issuance costs  (1,917)  -- Proceeds from stock option exercises  --  756Net cash (used in) provided by financing activities  (9,130)  756 Effect of exchange rate changes on cash and cash equivalents  22  (5)Decrease in cash and cash equivalents  (102,127)  (11,586) Cash and cash equivalents at beginning of period  307,172  318,758 Cash and cash equivalents at end of period  $ 205,045  $ 307,172      AMERICAN RAILCAR INDUSTRIES, INC. AND SUBSIDIARIESRECONCILIATION OF NET EARNINGS TO EBITDA AND ADJUSTED EBITDA (In thousands, unaudited)  For the Three Months Ended For the Year Ended   December 31,December 31,  2012201120122011                     Net earnings  $ 24,448  $ 5,070  $ 63,823  $ 4,336 Income tax expense  15,826  4,350  42,022  3,866 Interest expense  3,135  5,148  17,765  20,291 Loss on debt extinguishment  --  --  2,267  -- Interest income  (706)  (789)  (3,003)  (3,654) Depreciation  6,344  5,295  23,850  22,167 EBITDA   $ 49,047  $ 19,074  $ 146,724  $ 47,006 Other income related to our short-term investments  (1,863)  --  (1,863)  -- Expense related to stock appreciation rights compensation 1  858  4,665  4,668  3,537 Adjusted EBITDA  $ 48,042  $ 23,739  $ 149,529  $ 50,543          1 SARs are cash settled at time of exercise         EBITDA represents net earnings before income tax expense, interest expense (income), loss on debt extinguishment and depreciation of property, plant and equipment. The Company believes EBITDA is useful to investors in evaluating ARI's operating performance compared to that of other companies in the same industry. In addition, ARI's management uses EBITDA to evaluate operating performance. The calculation of EBITDA eliminates the effects of financing, income taxes and the accounting effects of capital spending. These items may vary for different companies for reasons unrelated to the overall operating performance of a company's business. EBITDA is not a financial measure presented in accordance with U.S. generally accepted accounting principles (U.S. GAAP). Accordingly, when analyzing the Company's operating performance, investors should not consider EBITDA in isolation or as a substitute for net earnings, cash flows provided by operating activities or other statement of operations or cash flow data prepared in accordance with U.S. GAAP. The calculation of EBITDA is not necessarily comparable to that of other similarly titled measures reported by other companies. Adjusted EBITDA represents EBITDA before stock based compensation related to stock appreciation rights (SARs) and other income related to our short-term investments. Management believes that Adjusted EBITDA is useful to investors in evaluating the Company's operating performance, and therefore uses Adjusted EBITDA for that purpose. The Company's SARs, which settle in cash, are revalued each period based primarily upon changes in ARI's stock price. Management believes that eliminating the expense associated with stock-based compensation and income associated with short-term investments allows management and ARI's investors to understand better the operating results independent of financial changes caused by the fluctuating price and value of the Company's common stock and short-term investments.  Adjusted EBITDA is not a financial measure presented in accordance with U.S. GAAP. Accordingly, when analyzing operating performance, investors should not consider Adjusted EBITDA in isolation or as a substitute for net earnings, cash flows provided by (used in) operating activities or other statements of operations or cash flow data prepared in accordance with U.S. GAAP. The Company's calculation of Adjusted EBITDA is not necessarily comparable to that of other similarly titled measures reported by other companies.CONTACT: Dale C. Davies Michael Obertop 636.940.6000