Non-GAAP Financial Measures 2012 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) 2012 2011 2010 2009 2008
Net income $ 98,309 $ 77,299 $ 29,422 $ 41,357 $ 25,395
Depreciation, depletion and amortization 75,001 67,399 53,793 32,578 18,364
Non-cash employee stock compensation 6,507 6,494 7,279 2,921 2,869
Restructuring on royalty interests in mineral properties 1,328 —  —  —  —
Royalty portfolio restructuring gain — — — (33,714) —
Interest and other income (3,836) (5,088) (6,360) (3,192) (6,742)
Interest and other expense 7,705 7,740 3,809 984 1,729
Income tax expense 54,710 38,974 14,164 21,857 12,050
Loss from equity investment  — —   —  — 550
Non-controlling interests in operating income of consolidated subsidiaries  (2,108) (2,646) (2,039) (1,085) (1,352)
Adjusted EBITDA  $ 237,616  $ 190,172  $ 100,068  $ 61,706 $ 52,863