The Company expects its effective cash tax rate for the second half of fiscal 2012 to be in the range of 2%-5% and, reflecting the expectation that the remaining net operating loss carryforwards will be fully utilized by the end of fiscal 2012, the Company’s fiscal 2013 tax rate is expected to be in the range of 36%-40%.
Multimedia Games cautions that market dynamics are constantly changing and as such, actual results could vary materially from the expectations noted above based on various factors, such as changes in the Company’s markets, operations, regulatory requirements, and estimates and assumptions, and on the risk factors and other items as more fully described in the section below titled “Cautionary Language,” and in our publically-filed Form 10-K’s and Form 10-Q’s.
Definitions of “cash generation,” “free cash flow,” “net cash position” and “net capital expenditures”
Cash generation, free cash flow, net cash position and net capital expenditures are non-GAAP financial measures and there are no truly comparable GAAP financial measures. Multimedia Games’ management tracks cash generation (which is cash flow from operating activities plus cash flows from investing activities), free cash flow (cash flow from operating activities less net capital expenditures), net cash position (cash and cash equivalents less long-term debt) and net capital expenditures (acquisitions of property and equipment and leased gaming equipment less transfer of leased gaming equipment to inventory) as relevant measures of the Company’s performance. Cash generation, free cash flow, net cash position and net capital expenditures are not recognized financial measures under GAAP, but we believe that each is useful in measuring our operating performance. Cash generation helps assess the performance of operations, manufacturing investments and includes the amounts received and paid for our development agreements. We believe cash generation is a more comprehensive internal metric and more representative of our ability to pay down debt. Free cash flow helps measure the efficiency of our capital expenditures.
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