Royal Gold, Inc. (NASDAQ: RGLD; TSX: RGL) (together with its subsidiaries, "Royal Gold" or the "Company") reports results for its third quarter of fiscal 2016 ("third quarter"), including total revenue of $93.5 million, up 26% from $74.1 million in the prior year quarter. The increase in revenue was driven by an increase in stream revenue from newly acquired streams at Pueblo Viejo, Wassa and Prestea, and Andacollo.

Third Quarter Highlights Compared with the Year-ago Quarter:
  • Revenue of $93.5 million, an increase of 26%
  • Volume of 79,025 Gold Equivalent Ounces ("GEOs" 1), an increase of 30%
  • Record quarterly dividends paid of $15 million, or $0.23 per share
  • After previously announced impairment charges, net loss was ($1.04) per share and adjusted net income 2 was $0.29 per share, excluding the impairment
  • Adjusted EBITDA 3 of $69.3 million, an increase of 20%

"Our new streams at Andacollo, Pueblo Viejo, Wassa and Prestea are delivering significant growth and contributed to a 27% increase in operating cash flow over the December quarter," commented Tony Jensen, President and CEO. "As expected, we are now receiving deliveries of silver in addition to gold from Pueblo Viejo, further enhancing our returns from this quality property. Looking forward, we anticipate production from Rainy River and Cortez Crossroads will provide additional growth and portfolio diversification in the near future."

Third quarter revenue included $63.4 million from the stream segment and $30.1 million from the royalty segment, at an average gold price of $1,183 per ounce. Stream segment gold purchases totaled approximately 40,800 ounces of gold and sales were approximately 54,300 ounces of gold. The Company had approximately 12,200 ounces of gold and 210,000 ounces of silver in inventory at March 31, 2016, as previously announced, compared to 25,700 ounces of gold at December 31, 2015.

Cost of sales was $17.9 million for the third quarter, compared to $10.5 million a year ago. The increase is primarily attributable to stream production at Pueblo Viejo, Wassa and Prestea, and Andacollo. Cost of sales is specific to our stream agreements and is the result of the Company's purchase of gold and silver for a cash payment.

General and administrative expenses increased to $7.7 million for the third quarter, up from $5.5 million a year ago. The increase was primarily due to an increase in non-cash stock based compensation of approximately $1.5 million.

Depreciation, depletion and amortization increased to $38.2 million for the third quarter, up from $24.8 million a year ago. The increase was primarily attributable to new production from the recently acquired streams at Pueblo Viejo, Andacollo, Wassa and Prestea.

Interest and other income increased to $3.1 million for the third quarter, up from $0.4 million a year ago, due to a change in fair value and gains on the sale of certain equity positions we held.

Interest and other expense increased to $8.8 million for the third quarter, up from $6.4 million a year ago, primarily due to the outstanding balance on our revolving credit facility. The Company had $300 million outstanding under the revolving credit facility at the end of the third quarter, and did not have any amounts outstanding under the revolving credit facility a year ago.

We recognized an income tax benefit totaling $8.3 million compared with income tax expense of $1.0 million in the year ago quarter. This resulted in an effective tax rate of 10.6% in the current period, compared with 4.0% in the year ago quarter. The effective tax rate was impacted by the impairment charge in the quarter and appreciation of the Canadian dollar.

Royal Gold reported a net loss attributable to Royal Gold stockholders of ($67.7) million, or ($1.04) per share for the third quarter, as compared to net income attributable to Royal Gold stockholders of $25.0 million, or $0.38 per share, for the prior year quarter. The decrease in reported net income was primarily attributable to previously disclosed impairments of royalty and stream interests and royalty receivables collectively totaling $99.0 million, the effect of which was $1.33 per share, after taxes in the third quarter. Excluding the after-tax effect of the impairments of royalty and stream interests and royalty receivables, adjusted net income attributable to Royal Gold stockholders would have been $18.9 million, or $0.29 per share for the third quarter.

Adjusted EBITDA for the third quarter was $69.3 million ($1.06 per basic share), representing 74% of revenue, compared with Adjusted EBITDA of $57.7 million ($0.89 per basic share), or 78% of revenue, for the year-ago quarter.

On March 16, 2016, the Company entered into an amendment to revise its revolving credit agreement to extend the scheduled maturity date from January 29, 2019 to March 16, 2021. At March 31, 2016, working capital totaled $151.0 million. When combined with $350 million of available liquidity under our revolving credit facility, total liquidity at March 31, 2016 was approximately $500.0 million. Cash flow from operations was $66.1 million for the third quarter.

__________________________
1     GEOs are calculated as revenue divided by the average quarterly price per ounce of gold. Net of stream payments, GEOs were 63,876 in the third quarter, compared with 52,190 net GEOs in the year-ago quarter, an increase of 22%.
2 Non-GAAP financial measure (see Schedule A).
3 Non-GAAP financial measure (see Schedule A).
 

PROPERTY HIGHLIGHTS

A summary of calendar year production estimates versus actual production at certain producing properties can be found on Table 3. Highlights at certain of the Company's principal producing and development properties during the third quarter, compared with the quarter ended March 31, 2015, are detailed in our Form 10-Q.

CORPORATE PROFILE

Royal Gold is a precious metals royalty and stream company engaged in the acquisition and management of precious metal royalties, streams, and similar production based interests. The Company owns interests on 193 properties on six continents, including interests on 38 producing mines and 24 development stage projects. Royal Gold is publicly traded on the NASDAQ Global Select Market under the symbol "RGLD," and on the Toronto Stock Exchange under the symbol "RGL." The Company's website is located at www.royalgold.com.

Note: Management's conference call reviewing the third fiscal quarter results will be held Thursday, April 28, 2016 at 10:00 a.m. Mountain Daylight Time (noon Eastern Daylight Time) and will be available by calling (855) 209-8260 (U.S.), (855) 669-9657 (Canada) or (412) 542-4106 (international), conference title "Royal Gold." The call will be simultaneously broadcast on the Company's website at www.royalgold.com under the "Presentations" section. A replay of this webcast will be available on the Company's website approximately two hours after the call ends.

Cautionary "Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995: With the exception of historical matters, the matters discussed in this press release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from projections or estimates contained herein. Such forward-looking statements include statements about operators' expectations about development, ramp-up, production and mine life; anticipated production and returns from our stream and royalty properties, including without limitation Rainy River and Cortez Crossroads and statements about the opportunities for portfolio and investment diversification and the Company's ability to pursue such opportunities. Factors that could cause actual results to differ materially from the projections include, among others, precious metals, copper and nickel prices; performance of and production at the Company's royalty and stream properties; the ability of operators of development properties to finance project construction to completion and bring projects into production as expected; operators' delays in securing or inability to secure necessary governmental permits; decisions and activities of the operators of the Company's royalty and stream properties; unanticipated grade, environmental, geological, seismic, metallurgical, processing, liquidity or other problems the operators of the mining properties may encounter; completion of feasibility studies; changes in operators' project parameters as plans continue to be refined; changes in estimates of reserves and mineralization by the operators of the Company's royalty and stream properties; contests to the Company's royalty and stream interests and title and other defects to the Company's royalty and stream properties; errors or disputes in calculating royalty and stream payments, or payments not made in accordance with royalty and stream agreements; economic and market conditions; risks associated with conducting business in foreign countries; changes in laws governing the Company and its royalty and stream properties or the operators of such properties; and other subsequent events; as well as other factors described in the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other filings with the Securities and Exchange Commission. Most of these factors are beyond the Company's ability to predict or control. The Company disclaims any obligation to update any forward-looking statement made herein. Readers are cautioned not to put undue reliance on forward-looking statements.
               

TABLE 1 Third Quarter Fiscal 2016 Revenue and Reported Production for Principal Royalty and Stream Interests Three Months Ended March 31, 2016 and March 31, 2015 (In thousands, except reported production in oz. and lbs.)
 

 

 
Three Months Ended Three Months Ended
March 31, 2016     March 31, 2015

 
    Reported     Reported

Royalty/Stream
   

Metal(s)
   

Revenue
    Production 1     Revenue     Production 1
Stream:                                      
Mount Milligan     Gold     $ 29,806     25,400   oz.     $ 29,718     24,200   oz.
Andacollo     Gold     $ 15,730     13,500   oz.       N/A     N/A    
Pueblo Viejo     Gold     $ 13,608     11,800   oz.       N/A     N/A    
Wassa/Prestea     Gold     $ 4,155     3,500   oz.       N/A     N/A    
Other     Gold     $ 140     100   oz.       N/A     N/A    
Royalty:                                      
Peñasquito       $ 5,210               $ 7,253          
Gold           120,300   oz.           177,200   oz.
Silver           4.8   Moz.           6.0   Moz.
Lead           30.2   Mlbs.           39.5   Mlbs.
      Zinc           73.1   Mlbs.           82.6   Mlbs.
Voisey's Bay       $ 2,778               $ 1,919          
Nickel           17.2   Mlbs.           17.2   Mlbs.
      Copper           39.2   Mlbs.           N/A    
Holt     Gold     $ 2,451     13,500   oz.     $ 3,208     16,700   oz.
Cortez     Gold     $ 1,853     18,400   oz.     $ 5,025     65,200   oz.
Andacollo 2     Gold     $ -     -   oz.     $ 8,507     9,500   oz.
Other     Various     $ 17,756     N/A         $ 18,480     N/A    
Total Revenue           $ 93,487               $ 74,110          
 
               

TABLE 1 Third Quarter Fiscal 2016 Revenue and Reported Production for Principal Royalty and Stream Interests Nine Months Ended March 31, 2016 and March 31, 2015 (In thousands, except reported production in oz. and lbs.)
 

 

 
Nine Months Ended Nine Months Ended
March 31, 2016     March 31, 2015

 
    Reported     Reported

Royalty/Stream
   

Metal(s)
   

Revenue
    Production 1     Revenue     Production 1
Stream:                                      
Mount Milligan     Gold     $ 95,564     85,100   oz.     $ 66,693     53,900   oz.
Andacollo     Gold     $ 32,163     28,200   oz.     N/A     N/A    
Pueblo Viejo     Gold     $ 23,008     20,600   oz.     N/A     N/A    
Wassa/Prestea     Gold     $ 17,555     15,500   oz.     N/A     N/A    
Other     Gold     $ 317     200   oz.     N/A     N/A    
Royalty:                                      
Peñasquito       $ 20,208               $ 19,936          
Gold           542,100   oz.           445,300   oz.
Silver           18.8   Moz.           17.6   Moz.
Lead           120.9   Mlbs.           110.2   Mlbs.
      Zinc           289.8   Mlbs.           252.0   Mlbs.
Voisey's Bay       $ 11,044               $ 13,645          
Nickel           78.6   Mlbs.           53.8   Mlbs.
      Copper           56.2   Mlbs.           44.0   Mlbs.
Holt     Gold     $ 7,520     44,800   oz.     $ 9,043     45,800   oz.
Cortez     Gold     $ 4,840     58,000   oz.     $ 14,761     185,100   oz.
Andacollo 2     Gold     $ -     -   oz.     $ 28,599     31,000   oz.
Other     Various     $ 53,441     N/A         $ 51,762     N/A    
Total Revenue           $ 265,660               $ 204,439          
 
               

TABLE 2 Historical Production
 

 

 

 
Reported Production For The Quarter Ended 1

Property
   

Royalty/Stream
   

Operator
    Metal(s)     Mar. 31, 2016     Dec. 31, 2015     Sep. 30, 2015     Jun. 30, 2015     Mar. 31, 2015
Stream:                                                                    
Mount Milligan     52.25% of payable gold     Thompson Creek     Gold     25,400   oz.     38,700   oz.     21,000   oz.     23,000   oz.     24,200   oz.
Andacollo     100% of gold produced     Teck     Gold     13,500   oz.     5,200   oz.     9,500   oz.     N/A         N/A    
Pueblo Viejo    

7.5% of gold produced up to990,000 ounces; 3.75% thereafter
    Barrick (60%)     Gold     11,800   oz.     8,800   oz.     N/A         N/A         N/A    
Wassa/Prestea    

8.5% of gold produced up to185,000 ounces; 5.0% thereafter
    Golden Star     Gold     3,500   oz.     8,800   oz.     3,200   oz.     N/A         N/A    
Royalty                                                                    
Peñasquito 2.0% NSR Goldcorp                                                    
Gold     120,300   oz.     195,400   oz.     226,500   oz.     296,900   oz.     177,200   oz.
Silver     4.8   Moz.     6.8   Moz.     7.3   Moz.     7.0   Moz.     6.0   Moz.
Lead     30.2   Mlbs.     41.7   Mlbs.     49.1   Mlbs.     48.2   Mlbs.     39.5   Mlbs.
                  Zinc     73.1   Mlbs.     98.0   Mlbs.     118.7   Mlbs.     88.9   Mlbs.     82.6   Mlbs.
Cortez     GSR1 and GSR2, GSR3, NVR1     Barrick     Gold     18,400   oz.     17,000   oz.     22,600   oz.     43,900   oz.     65,200   oz.
Holt    

0.00013 x quarterly averagegold price
    Kirkland Lake Gold     Gold     13,500   oz.     15,000   oz.     16,300   oz.     15,800   oz.     16,700   oz.
Voisey's Bay 2.7% NSR Vale                                                    
Nickel     17.2   Mlbs.     23.6   Mlbs.     37.8   Mlbs.     9.0   Mlbs.     17.2   Mlbs.
                  Copper     39.2   Mlbs.     15.2   Mlbs.     1.7   Mlbs.     20.8   Mlbs.     N/A   Mlbs.
Andacollo 2     75%     Teck     Gold     N/A         N/A         N/A         10,500   oz.     9,500   oz.
                         

FOOTNOTES

Tables 1 and 2

1
    Reported production relates to the amount of metal sales that are subject to our royalty and stream interests for the stated period, as reported to us by operators of the mines.
2 This royalty was terminated effective July 1, 2015.
 
       

TABLE 3 Calendar 2016 Operators' Production Estimate vs Actual Production
 
Calendar 2016 Operator's Production Estimate 1    

Calendar 2016 Operator's Production Actual 2,3
Gold     Silver     Base Metals Gold     Silver     Base Metals
Royalty/Stream     (oz.)     (oz.)     (lbs.)     (oz.)     (oz.)     (lbs.)
Andacollo 4     57,600     -     -     13,600     -       -
Cortez GSR1     119,200     -     -     16,700     -       -
Cortez GSR2     1,300     -     -     1,700     -       -
Cortez GSR3     120,500     -     -     18,400     -       -
Cortez NVR1     68,900     -     -     13,300     -       -
Mount Milligan 5     240,000-270,000     -     -     53,300     -       -
Penasquito 6,7     520,000-580,000     22-24 million     -     N/A     N/A       -
Lead                 145-155 million                   N/A
Zinc                 375-400 million                   N/A
Pueblo Viejo 8    

600,000-650,000
    Not provided           172,000     Not provided     -
Wassa/Prestea 9    

180,000-205,000
                53,000              
 
1     Production estimates received from our operators are for calendar 2016. There can be no assurance that production estimates received from our operators will be achieved. Please refer to our cautionary language regarding forward looking statements preceding Table 1 above, as well as the Risk Factors identified in Part I, Item 1A, of our Fiscal 2015 10-K for information regarding factors that could affect actual results.
2 Actual production figures shown are for the period January 1, 2016 through March 31, 2016, unless otherwise noted.
3 Actual production figures for Andacollo and Cortez are based on information provided to us by the operators, and actual production figures for Holt, Mount Milligan, Peñasquito (gold), Pueblo Viejo and Wassa and Prestea are the operators' publicly reported figures.
4 The estimated and actual production figures shown for Andacollo are contained gold in concentrate.
5 The estimated and actual production figures shown for Mount Milligan are payable gold in concentrate.
6 The Company's royalty interest at Peñasquito includes gold, silver, lead and zinc. The estimated gold and silver production figures reflect payable gold and silver in concentrate and doré, while the estimated lead and zinc production figures reflect payable metal in concentrate.
7 The actual production for silver, lead and zinc were not publicly available at the date hereof.
8 The estimated and actual production figures shown are payable gold in doré and represent Barrick's 60% interest in Pueblo Viejo.
9 The estimated production figure shown is payable gold in doré.
 
     

TABLE 4 Stream Summary
 
Three Months Ended March 31, 2016 Three Months Ended March 31, 2015 As of March 31, 2016
Gold Stream Purchases (oz.) Sales (oz.) Purchases (oz.) Sales (oz.)

Ounces in inventory
Mount Milligan 17,400 25,400 26,200 24,200 16
Wassa/Prestea 4,400 3,500 N/A N/A 1,536
Pueblo Viejo 10,600 11,800 N/A N/A 10,633
Andacollo 8,300 13,500 N/A N/A 22
Phoenix Gold 100 100 N/A N/A -
Total 40,800 54,300 26,200 24,200 12,207
 
Three Months Ended March 31, 2016 Three Months Ended March 31, 2015 As of March 31, 2016
Silver Stream Purchases (oz.) Sales (oz.) Purchases (oz.) Sales (oz.)

Ounces in inventory
Pueblo Viejo 209,800 - N/A N/A 209,800
 
 
Nine Months Ended March 31, 2016 Nine Months Ended March 31, 2015 As of March 31, 2016
Gold Stream Purchases (oz.) Sales (oz.) Purchases (oz.) Sales (oz.)

Ounces in inventory
Mount Milligan 79,800 85,100 52,900 53,900 16
Andacollo 28,200 28,200 N/A N/A 1,536
Wassa/Prestea 17,100 15,500 N/A N/A 10,633
Pueblo Viejo 31,200 20,600 N/A N/A 22
Phoenix Gold 300 200 N/A N/A -
Total 156,600 149,600 52,900 53,900 12,207
 
Nine Months Ended March 31, 2016 Nine Months Ended March 31, 2015 As of March 31, 2016
Silver Stream Purchases (oz.) Sales (oz.) Purchases (oz.) Sales (oz.)

Ounces in inventory
Pueblo Viejo 209,800 - N/A N/A 209,800
 
     

ROYAL GOLD, INC.Consolidated Balance Sheets(In thousands except share data)
 
March 31, 2016 June 30, 2015
ASSETS
Cash and equivalents $ 122,863 $ 742,849
Royalty receivables 20,233 37,681
Income tax receivable 21,578 6,422
Stream inventory 5,402 2,287
Available-for-sale securities 3,861 6,273
Prepaid expenses and other   1,243   1,511  
Total current assets 175,180 797,023
 
Royalty and stream interests, net 2,863,440 2,083,608
Other assets   60,622   44,801  
Total assets $ 3,099,242 $ 2,925,432  
 
LIABILITIES
Accounts payable 3,413 4,911
Dividends payable 15,011 14,341
Other current liabilities   5,778   5,721  
Total current liabilities 24,202 24,973
 
Debt 630,252 322,110
Deferred tax liabilities 139,861 146,603
Uncertain tax positions 17,080 15,130
Other long-term liabilities   6,489   689  
Total liabilities   817,884   509,505  
 
Commitments and contingencies
 
EQUITY

Preferred stock, $.01 par value, 10,000,000 shares authorized;and 0 shares issued
- -

Common stock, $.01 par value, 100,000,000 shares authorized;and 65,089,008 and 65,033,547 shares outstanding, respectively
651 650
Additional paid-in capital 2,178,011 2,170,643
Accumulated other comprehensive income (loss) 553 (3,292 )
Accumulated earnings   43,153   185,121  
Total Royal Gold stockholders' equity 2,222,368 2,353,122
Non-controlling interests   58,990   62,805  
Total equity   2,281,358   2,415,927  
Total liabilities and equity $ 3,099,242 $ 2,925,432  
 
     
 

ROYAL GOLD, INC.Consolidated Statements of Operations and Comprehensive (Loss) Income(In thousands except for per share data)
 
For The Three Months Ended For The Nine Months Ended
March 31,   March 31, March 31,   March 31,
  2016     2015     2016     2015  
Revenue $ 93,487 $ 74,110 $ 265,660 $ 204,439
 
Costs and expenses
Cost of sales 17,921 10,542 51,960 23,452
General and administrative 7,679 5,545 23,416 18,201
Production taxes 958 935 3,546 4,356
Exploration costs 1,851 155 6,135 155
Depreciation, depletion and amortization 38,163 24,783 105,717 67,273
Impairments of royalty and stream interests and royalty receivables   98,973     -     98,588     31,335  
Total costs and expenses   165,545     41,960     289,362     144,772  
 
Operating (loss) income (72,058 ) 32,150 (23,702 ) 59,667
 
Interest and other income 3,060 435 2,804 714
Interest and other expense   (8,762 )   (6,433 )   (23,968 )   (19,502 )
Income (loss) before income taxes (77,760 ) 26,152 (44,866 ) 40,879
 
Income tax benefit (expense)   8,262     (1,041 )   (55,655 )   (3,172 )
Net (loss) income (69,498 ) 25,111 (100,521 ) 37,707
Net loss (income) attributable to non-controlling interests   1,842     (97 )   2,932     (559 )
Net (loss) income attributable to Royal Gold common stockholders $ (67,656 ) $ 25,014     (97,589 ) $ 37,148  
 
Net (loss) income $ (69,498 ) $ 25,111 $ (100,521 ) $ 37,707
Adjustments to comprehensive income (loss) , net of tax
Unrealized change in market value of available-for-sale securities 2,383 (2,168 ) 4,521 (3,988 )
Reclassification adjustment for gains included in net income   (675 )   -     (675 )   -  
Comprehensive (loss) income (67,790 ) 22,943 (96,675 ) 33,719
Comprehensive loss (income) attributable to non-controlling interests   1,842     (97 )   2,932     (559 )
Comprehensive (loss) income attributable to Royal Gold stockholders $ (65,948 ) $ 22,846   $ (93,743 ) $ 33,160  
 
Net (loss) income per share available to Royal Gold common stockholders:
 
Basic (loss) earnings per share $ (1.04 ) $ 0.38   $ (1.50 ) $ 0.57  
Basic weighted average shares outstanding   65,085,225     65,033,547     65,069,056     64,999,331  
Diluted (loss) earnings per share $ (1.04 ) $ 0.38   $ (1.50 ) $ 0.57  
Diluted weighted average shares outstanding   65,085,225     65,129,362     65,069,056     65,122,313  
Cash dividends declared per common share $ 0.23   $ 0.22   $ 0.68   $ 0.65  
 
 
     

ROYAL GOLD, INC.Consolidated Statements of Cash Flows(In Thousands)
 
For The Three Months Ended For The Nine Months Ended
March 31,   March 31, March 31,   March 31,
  2016     2015     2016     2015  
Cash flows from operating activities:
Net (loss) income $ (69,498 ) $ 25,111 $ (100,521 ) $ 37,707
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization 38,163 24,783 105,717 67,273
Non-cash employee stock compensation expense 2,340 836 7,789 3,660
Impairments of royalty and stream interests and royalty receivables 98,973 - 98,588 31,335
Amortization of debt discount 2,759 2,611 8,142 7,624
Gain on sale of available-for-sale securities (675 ) - (675 ) -
Deferred tax benefit (5,479 ) (17,096 ) (17,246 ) (34,199 )
Tax expense (benefit) of stock-based compensation exercises - - 247 (74 )
Other - - (390 ) -
Changes in assets and liabilities:
Royalty receivables (176 ) (2,172 ) 14,976 4,172
Income taxes receivable (6,526 ) 26,969 (2,996 ) 25,191
Stream inventory 2,887 (874 ) (3,115 ) 434
Prepaid expenses and other assets (1,470 ) 2,001 1,630 4,037
Accounts payable 559 (560 ) (1,533 ) (1,742 )
Uncertain tax positions 1,144 709 1,950 1,736
Other liabilities   3,050     3,602     8,084     1,040  
Net cash provided by operating activities $ 66,051   $ 65,920   $ 120,647   $ 148,194  
 
Cash flows from investing activities:
Acquisition of royalty and stream interests (1,272 ) (21,607 ) (1,326,256 ) (60,341 )
Proceeds from sale of available-for-sale securities 6,933 - 6,933 -
Andacollo royalty termination - - 345,000 -
Golden Star term loan - - (20,000 ) -
Tulsequah stream termination - 10,000 - 10,000
Other   (31 )   446     (302 )   (71 )
Net cash provided by (used in) investing activities $ 5,630   $ (11,161 ) $ (994,625 ) $ (50,412 )
 
Cash flows from financing activities:
Repayment of revolving credit facility (50,000 ) - (50,000 ) -
Debt issuance costs (1,041 ) - (1,049 ) -
Net (payments) proceeds from issuance of common stock (174 ) - (174 ) 775
Common stock dividends (15,010 ) (14,343 ) (43,709 ) (41,712 )
Distribution to non-controlling interests (193 ) (316 ) (829 ) (1,227 )
Borrowings from revolving credit facility - - 350,000 -
Tax (benefit) expense of stock-based compensation exercises   -     -     (247 )   74  
Net cash (used in) provided by financing activities $ (66,418 ) $ (14,659 ) $ 253,992   $ (42,090 )
Net increase (decrease) in cash and equivalents 5,263 40,100 (619,986 ) 55,692
Cash and equivalents at beginning of period   117,600     675,128     742,849     659,536  
Cash and equivalents at end of period $ 122,863   $ 715,228   $ 122,863   $ 715,228  
 

SCHEDULE A

Non-GAAP Financial Measures

Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by generally accepted accounting principles (GAAP). These measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

Our management uses Adjusted EBITDA and Adjusted Net Income as measures of operating performance to assist in comparing performance from period to period on a consistent basis; as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations; in communications with the board of directors, stockholders, analysts and investors concerning our financial performance; as useful comparisons to the performance of our competitors; and as metrics of certain management incentive compensation calculations. We believe that these measures are used by and are useful to investors and other users of our financial statements in evaluating our operating performance because they provide an additional tool to evaluate our performance without regard to special and noncore items, which can vary substantially from company to company depending upon accounting methods and book value of assets and capital structure. We have provided reconciliations of all non-GAAP measures to their nearest U.S. GAAP measures and have consistently applied the adjustments within our reconciliations in arriving at each non-GAAP measure. We consider these items to be necessary adjustments for purposes of evaluating our ongoing business performance and are often considered non-recurring. Such adjustments are subjective and involve significant management judgment.

Adjusted EBITDA is defined by the Company as net (loss) income plus depreciation, depletion and amortization, non-cash charges, income tax expense, interest and other expense, and any impairment of mining assets, less non-controlling interests in operating income of consolidated subsidiaries, interest and other income, and any royalty portfolio restructuring gains or losses. Other companies may define and calculate this measure differently. Adjusted EBITDA identifies the cash generated in a given period that will be available to fund the Company's future operations, growth opportunities, shareholder dividends and to service the Company's debt obligations. This information differs from measures of performance determined in accordance with U.S. generally accepted accounting principles ("GAAP") and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. On the next page is a reconciliation of net income to Adjusted EBITDA.
     

SCHEDULE A Adjusted EBITDA Reconciliation
 
For The Three Months Ended For The Nine Months Ended
March 31, March 31,
(Unaudited, in thousands)   (Unaudited, in thousands)
   
  2016     2015     2016     2015  
 
Net (loss) income $ (69,498 ) $ 25,111 $ (100,521 ) $ 37,707
Depreciation, depletion and amortization 38,163 24,783 105,717 67,273
Non-cash employee stock compensation 2,340 836 7,789 3,660
Impairments of royalty and stream interests and royalty receivables 98,973 - 98,588 31,335
Interest and other, net 5,702 5,998 21,164 18,789
Income tax (benefit) expense (8,262 ) 1,041 55,655 3,172
Non-controlling interests in operating loss (income) of consolidated subsidiaries   1,842     (97 )   2,932     (559 )
Adjusted EBITDA $ 69,260   $ 57,672   $ 191,324   $ 161,377  
 

Adjusted Net Income

Management of the Company uses adjusted net income (loss) to evaluate the Company's operating performance, and for planning and forecasting future business operations. The Company believes the use of adjusted net income (loss) allows investors and analysts to understand the results relating to receipt of revenue from its royalty interests and purchase and sale of gold from its streaming interests by excluding certain items that have a disproportionate impact on our results for a particular period. The net income (loss) adjustments are presented net of tax generally at Company's statutory effective tax rate. Management's determination of the components of adjusted net income (loss) are evaluated periodically and based, in part, on a review of non-GAAP financial measures used by mining industry analysts. Net income (loss) attributable to Royal Gold stockholders is reconciled to adjusted net income (loss) as follows:
     

Adjusted Net Income Reconciliation
 
For The Three Months Ended For The Nine Months Ended
March 31, March 31,
(Unaudited, in thousands)   (Unaudited, in thousands)
   
  2016     2015   2016     2015
 
Net (loss) income attributable to Royal Gold common stockholders $ (67,656 ) $ 25,014 $ (97,589 ) $ 37,148
 
Impairments of royalty and stream interests and royalty receivables, net of tax 86,514 - 86,130 24,185
Tax expense on Andacollo royalty sale and Chilean subsidiary liquidation   -     -   56,000     -
Adjusted net income attributable to Royal Gold common stockholders $ 18,858 $ 25,014 $ 44,541 $ 61,333
       
Adjusted earnings per share $ 0.29   $ 0.38 $ 0.68   $ 0.94
 

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