Reconciliation of Net Loss to Adjusted EBITDA (1) EBITDA represents earnings before net interest expense, interest income, income taxes, depreciation, amortization, discontinued operations and impairments related to intangible assets. Management believes EBITDA is useful in evaluating our performance compared to that of other companies in our industry because the calculation of EBITDA generally eliminates the effects of financing and income taxes and the accounting effects of capital spending and acquisition, which items may vary for different companies for reasons unrelated to overall operating performance. Management uses Adjusted EBITDA as an internal management measure for evaluating performance and as a significant component when measuring performance under employee incentive programs. Management considers Adjusted EBITDA an important supplemental measure of our performance and believes that it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry, some of which present Adjusted EBITDA when reporting their results. Management also believes that Adjusted EBITDA is a useful tool for measuring our ability to meet its future capital expenditures and working capital requirements. EBITDA and Adjusted EBITDA are non-GAAP measures of performance. EBITDA and Adjusted EBITDA are not substitutes for GAAP net income or cash flow and do not provide a measure of our ability to fund future cash requirements. Other companies may calculate EBITDA and Adjusted EBITDA differently than we have and, therefore, EBITDA and Adjusted EBITDA have material limitations as a comparative performance measure. Furthermore, EBITDA and Adjusted EBITDA are not intended to be a measure of free cash flow for management's discretionary use, as they do not consider certain cash requirements such as tax and debt service payments. (in thousands) (unaudited) Year Ended Three Months Ended Three Months Ended Three Months Ended Six Months Ended Six Months Ended Six Months Ended December 31, June 30, June 30, June 30, June 30, 2009 2010 2009 2010 2009 Net loss attributable to Grubb & Ellis Company $ (78,838) $ (17,459) $ (32,808) $ (41,240) $ (74,310) Discontinued operations (2,486) - 961 - 470 Interest expense 15,446 2,729 5,113 5,048 8,749 Interest income (555) (116) (139) (162) (284) Depreciation and amortization 12,324 3,370 2,423 6,628 4,864 Intangible asset impairment 738 1,025 - 1,639 - Taxes (1,175) 104 629 250 310 EBITDA (1) (54,546) (10,347) (23,821) (27,837) (60,201) Gain related to the repayment of the credit facility, net (21,935) - - - - Charges related to sponsored programs 23,348 1,068 9,744 1,687 14,421 Real estate related impairment 17,372 1,553 1,950 1,823 14,222 Stock based compensation 10,876 2,778 3,217 5,797 6,181 Amortization of signing bonuses 7,535 1,742 1,862 3,549 3,815 Severance and other charges - 297 - 3,027 - Real estate operations (7,959) (1,945) (2,335) (4,011) (4,300) Other 1,319 (462) 94 (462) 94 Adjusted EBITDA (1) $ (23,990) $ (5,316) $ (9,289) $ (16,427) $ (25,768) 18 |