Discretionary cash flow is defined as operating income plus depreciation, depletion and amortization expenses, non-cash expenses and impairments, cash portion of other income (expense) less cash interest. The following table provides a reconciliation of discretionary cash flow to operating income for the periods presented.

(In thousands)   Three Months Ended

September 30,
  Nine Months EndedSeptember 30,
2011     2010   2011     2010  
 
Operating income $ 4,225 $ 1,273 $ 10,166 $ 6,058
Depreciation, depletion and amortization 4,161 3,821 11,371 12,495
Stock-based compensation 430 358 1,499 1,205
Realized gain (loss) on derivative contracts 191 499 (1,037 ) 390
Cash interest   (867 )   (2,141 )   (3,582 )   (6,452 )
Discretionary cash flow   $ 8,140     $ 3,810     $ 18,417     $ 13,696  
 

EBITDA is defined as net income (loss) plus interest expense, depreciation, depletion and amortization expenses, deferred income taxes and other non-cash items. The following table provides a reconciliation of EBITDA to operating income for the periods presented – see consolidated statements of operations for a reconciliation of net income (loss) to operating income.
(In thousands)   Three Months Ended

September 30,
  Nine Months EndedSeptember 30,
2011   2010 2011   2010
 
Operating income $ 4,225 $ 1,273 $ 10,166 $ 6,058
Depreciation, depletion and amortization 4,161 3,821 11,371 12,495
Stock-based compensation 430 358 1,499 1,205
Realized gain (loss) on derivative contracts (a)   791   1,072   726   2,112
EBITDA   $ 9,607   $ 6,524   $ 23,762   $ 21,870
 

(a) Excludes realized gain (loss) associated with interest rate derivative contract.

 

This release also includes a discussion of “adjusted net income (loss), excluding certain non-cash items,” which is a non-GAAP financial measure as defined under SEC rules. The following table provides a reconciliation of adjusted net income (loss), excluding change in unrealized derivative contracts, to net income (loss) for the periods presented. Management believes that net income (loss) calculated in accordance with GAAP is the most directly comparable measure to adjusted net income (loss), excluding certain non-cash items.
(In thousands)   Three Months Ended

September 30,
  Nine Months EndedSeptember 30,
2011     2010   2011     2010  
 
Net income (loss) $ 20,085 $ (856 ) $ 19,003 $ 15,627
Loss (gain) on unrealized derivative contracts   (16,450 )   (332 )   (13,431 )   (17,968 )
Adjusted net income (loss), excluding certain non-cash items  

$

3,635
   

$

(1,188

)
 

$

5,572
   

$

(2,341

)
Net income (loss) per share – basic   $ 0.22     $ (0.01 )   $ 0.21     $ 0.21  
Adjusted net income (loss), excluding certain non-cash items, per share – basic

$

0.04

$

(0.02

)

$

0.06

$

(0.03

)

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