Non-GAAP Financial Measures 2013 Interactive Annual Report

The Company computes and discloses Adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial measure.

Adjusted EBITDA is defined by the Company as net 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. Management believes that Adjusted EBITDA is a useful measure of the performance of our royalty portfolio. 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. Below is a reconciliation of net income to Adjusted EBITDA:

ADJUSTED EBITDA RECONCILIATION

For The Years Ended June 30,
(Unaudited, in thousands) 2013 2012 2011 2010 2009
Net income $ 73,409 $ 98,309 $ 77,299 $ 29,422 $ 41,357
Depreciation, depletion and amortization 85,020 75,001 67,399 53,793 32,578
Non-cash employee stock compensation 5,701 6,507 6,494 7,279 2,921
Restructuring on royalty interests in mineral properties — 1,328  —  —  —
Loss on available-for-sale-securities 12,121 —  —  —  —
Royalty portfolio restructuring gain — — — — (33,714)
Interest and other income (2,902) (3,836) (5,088) (6,360) (3,192)
Interest and other expense 25,117 7,705 7,740 3,809 984
Income tax expense 63,759 54,710 38,974 14,164 21,857
Non-controlling interests in operating income of consolidated subsidiaries  (1,402) (2,108) (2,646) (2,039) (1,085)
Adjusted EBITDA  $ 260,805  $ 237,616  $ 190,172  $ 100,068 $ 61,706