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Reconciliation of Non-GAAP Items Reconciliation of Non-GAAP Financial MeasuresIn the company's investor presentations and other public documents, Oil States may include certain financial measures (EBITDA, EBITDA Margin and Fully-taxed EPS) which are not calculated in accordance with generally accepted accounting principles (GAAP). You should not consider these measures in isolation from or as a substitute for measures prepared in accordance with GAAP. Additionally, these financial measures may not be comparable to other similarly titled measures of other companies. Descriptions of these non-GAAP financial measures and management’s reasons for employing them are provided below. EBITDA and EBITDA Margin EBITDA is not a measure of financial performance calculated in accordance with GAAP. The GAAP financial measure that is most directly comparable to EBITDA is operating income. EBITDA represents net income plus taxes, interest, depreciation and amortization expenses. Oil States has included EBITDA as a supplemental disclosure because management believes that it provides (i) useful information regarding its ability to service debt and to fund capital expenditures, (ii) investors a helpful measure for comparing its operating performance with the performance of other companies with different capital structures or tax rates, (iii) a basis for comparing the performance of OIS’ business segments to other comparable public companies and (iv) a benchmark for the award of incentive compensation under OIS’ annual incentive compensation plan. EBITDA Margin is not a measure of financial performance calculated in accordance with GAAP. The GAAP financial measure that is most directly comparable to EBITDA Margin is operating margin, which represents operating income divided by revenues. EBITDA Margin represents EBITDA divided by revenues. Oil States has included EBITDA Margin as a supplemental disclosure because management believes that it provides a basis for comparing profit producing efficiency at any level of a business organization. Please refer to the table below that reconciles EBITDA to Net Income (U.S. dollars in thousands):
Full-taxed EPS Fully-taxed EPS is not a measure of financial performance calculated in accordance with GAAP. The GAAP financial measure that is most directly comparable to fully-taxed EPS is fully-diluted earnings per share. Oil States has included fully-taxed EPS as a supplemental disclosure because management believes this measure demonstrates the Company’s growth in earnings on a per share basis absent the utilization of net operating loss carry forwards.Please refer to the table below that shows the calculation of Fully-taxed EPS (U.S. dollars in thousands, except per share amounts):
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