EX-99.1 2 dex991.htm PRESENTATION MATERIAL Presentation Material
HTCC Investor Presentation
for the quarter ended March 31, 2008
May 20, 2008
Martin Lea, Chief Executive Officer
Rob Bowker, Chief Financial Officer
Exhibit 99.1

2
Safe Harbor Statement
This presentation of Hungarian Telephone and Cable Corp. (the "Company") contains “forward-looking statements”, as that
term is defined in the Private Securities Litigation Reform Act of 1995. The Company claims the protection of the safe harbor
for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These and all forward-
looking
statements
are
only
predictions
or
statements
of
current
plans
that
are
constantly
under
review
by
the
Company.
Forward-looking statements by their nature address matters that are, to different degrees, uncertain. These forward-looking
statements are all based on currently available operating, financial, and competitive information and are subject to various
risks and uncertainties. Actual results could differ materially from those expressed in our forward-looking statements for a
variety of reasons, including: fluctuation in foreign exchange rates and interest rates; changes in Hungarian and Central and
Eastern European economic conditions and consumer and business spending; the rate of growth of the Internet; the amount
that the Company invests in new business opportunities and the timing of those investments; the mix of services sold;
competition; management of growth and expansion; the integration
of Invitel, Tele2 Hungary, and Memorex; future
integration of acquired businesses; the performance of our IT Systems; technological changes; the Company's significant
indebtedness; and government regulation. Additional information concerning factors that could cause actual results to differ
materially from those in the forward-looking statements is contained in the Company's filings with the Securities and
Exchange
Commission,
which
are
available
on
the
Company’s
website,
www.htcc.hu
and
on
the
SEC’s
website,
www.sec.gov. Accordingly, investors are cautioned not to place undue reliance on forward-looking statements, which speak
only as of the date on which they are made. The Company does not
undertake to update such statements to reflect the
impact of circumstances or events that arise after the date the statements are made. Investors should, however, consult any
further disclosures the Company may make in its reports filed with the SEC.

Martin Lea
Chief Executive Officer

4
Highlights
Our pro-forma* consolidated revenue in U.S. dollars increased by 5% for the quarter ended March 31, 2008
compared to the prior year.
Our pro-forma* consolidated segment gross margin in U.S. dollars increased by 10% for the quarter ended March
31, 2008 compared to the prior year’s first quarter and our pro-forma* gross margin percentage was 71% in the
first quarter in 2008 compared to 68% in the first quarter in 2007.
Our pro-forma Adjusted EBITDA** in U.S. dollars grew by 21% to $58.6 million for the quarter ended March 31, 2008
compared to the prior year’s first quarter and our pro-forma* Adjusted EBITDA margin was 41% in the first quarter
of 2008 compared to 36% in the first quarter in 2007.
The Hungarian forint appreciated against the U.S. dollar by 11% in the first quarter in 2008  compared to the
average Hungarian forint/U.S. dollar exchange rate during the same period in 2007.
On March 5, 2008 we closed the transaction to acquire 95.7% of the outstanding equity of Memorex.
We
have
completed
the
legal
merger
of
Pantel,
Hungarotel
and
Euroweb
Hungary
into
Invitel
effective
January
1,
2008.
*
Pro-forma
financial
information
in
this
presentation
assumes
that
HTCC,
Invitel,
Tele2
Hungary
and
Memorex
had
been
combined
as
of
the
beginning
of
the
applicable
period.
The   
unaudited
pro-forma
financial
information
has
not
been
prepared
in
accordance
with
Article
11
of
Regulation
S-X.
**
Pro-forma
Adjusted
EBITDA
is
a
non-GAAP
financial
measure.
See
the
reconciliation
on
slides
9
and
10.

5
Memorex –
Post Closing I.
On
March
5,
2008
we
closed
the
transaction
and
acquired
95.7%
of
the
outstanding
equity
of
Memorex.
The total purchase consideration for Memorex was EUR 101.4 million, which included: (i) the payment of cash in
the amount of EUR 17.9 million  (approximately $27.2 million at closing), (ii) the payment of cash into an escrow
account in the amount of EUR 12.1 million (approximately $18.4 million at closing), (iii) the assumption of net
debt
of
EUR
69.7
million
(approximately
$105.8
million
at
closing);
and
(iv)
transaction
costs
and
other
directly
related expenses of EUR 1.7 million (approximately $2.6 million at closing).
In connection with the acquisition, we entered into a EUR 100 million (approximately $158 million at closing)
bridge
loan
facility
agreement
and
drew
down
the
full
amount
for
the
financing
of
the
acquisition
and
the
refinancing
of
some
of
Memorex’s
debt.
We
intend
to
replace
this
bridge
loan
facility
with
longer
term
financing.
In
relation
to
this
financing
we
incurred
expenses
of
EUR
6.0
million
(approximately
$9.1
million).
We
intend
to
buy
out
the
remaining
minority
shareholders
in
Memorex
by
the
end
of
August
2008.
We
appointed
existing
Invitel
personnel,
Gregg
Betz
and
Shen
Breckon
as
CEO
and
CFO
of
Memorex.
Memorex is now under the same leadership as Invitel Wholesale and International operations.
The
combined
activity
is
now
operating
under
the
”Invitel
International”
brand.
We
expect
to
file
the
required
SEC
financial
information
with
respect
to
the
Memorex
Acquisition
in
an
amended
8-K filing prior to the filing of our second quarter financial report.

6
Memorex –
Post Closing
II.
The combined customer base is now being managed through a unified account management structure.
Pricing strategy and service portfolio has been reviewed and harmonized.
During the first quarter in 2008 the following important contracts were signed
(all contracts are to provide on-net services):
AT&T
–
annual
revenue
of
EUR
2.2
million
Dante –
annual revenue of EUR 2.3 million
UPC –
annual revenue of EUR 0.9 million
KPN –
annual revenue of EUR 0.9 million
We have already executed actions that will realize EUR 1.9 million of the EUR 3 million estimated annual
operating
cost
synergies.
These
costs
are
coming
from
savings
in
headcount
related
costs
of
EUR
0.7
million
and
network cost savings of EUR 1.2 million.
The status of the network project in Turkey is as follows:
Istanbul –
Ankara is complete
Istanbul –
Izmir is 95% complete
Izmir –
Ankara planned completion is end August

7
Hungarian Economic
and Market Overview
The forint
has
weakened
against
the
euro
during
the course
of Q1 2008 to 265
HUF/EUR
levels compared to 250 HUF/EUR
during Q4 of 2007.
The forint rallied against the euro in April and May 2008 and
currently trades
at
an
exchange
rate
of
247
HUF/EUR.
The
Hungarian Central Bank hiked its base rate in two
installments from 7.50% to 8.25 % during April 2008.
In addition,
the Hungarian Central Bank removed the trading
band of the Hungarian forint.
Government economic recovery plans show signs of success:
Current account deficit narrowed to 3.5% in 2007 from
6.0% in 2006
and there are indications of further
improvement in 2008
Budget deficit declined to 5.5% in 2007 and is on track
to fall to less than 3.0% of GDP by year end 2009
Inflation has
gradually decreased from 9% in March 2007
to 6.6% in April 2008 and is expected to fall to 3.0-4.0%
by the end of 2008
Hungarian Interest Rate Evolution
HUF / EUR Exchange Rates
240
245
250
255
260
265
270
275
280
3,00%
5,00%
7,00%
9,00%
11,00%
13,00%

8
As Internet penetration levels converge to EU levels this will further stabilize the number of fixed lines
Mobile penetration has reached saturation levels with mobile traffic growth now slowing
DSL
continues
to
remain
the
preferred
broadband
service
offering
over
cable
Source: NHH
(1)
National Statistics Office
2002
1998
1999
2000
2001
2003
2004
2005
2006
Western
Europe
(1)
Significant growth opportunity continues
in DSL
2007
34%
Trends of Fixed, Mobile and Internet Penetration in Hungary
81%
64%
66%
69%
71%
71%
73%
75%
75%
73%
71%
110%
99%
91%
83%
77%
68%
49%
30%
10%
16%
108%
25%
15%
10%
5%
2%
1%
0%
0%
0%
54%
0%
20%
40%
60%
80%
100%
Fixed-line (per household)
Mobile (of population)
Broadband Internet (per household)
ADSL
Cable

9
Pro-Forma Financial Statements
for the quarter ended March 31, 2008
Note:
The average HUF/USD
exchange
rates
were
192.61
HUF/USD
in
YTD
Q1
2007
and
173.23
HUF/USD
in
YTD
Q1
2008.
(*)  
Adjusted Operating Expenses do not include the non-recurring items presented below Adjusted EBITDA.
(**) 
EBITDA and Adjusted EBITDA are non-GAAP financial measures. See the reconciliation from EBITDA to Net income on the next slide.
(***)  EBITDA Margin %
and
Adjusted
EBITDA
Margin
%
are
EBITDA
and
Adjusted
EBITDA
as
a
percentage
of revenue.
Change
Change
Change
Change
2008
2007
%
2008
2007
%
Revenue
24 579
26 040
(1 461)
(6%)
141 889
135 193
6 696
5%
Segment Cost of Sales
(7 141)
(8 441)
1 300
15%
(41 222)
(43 825)
2 603
6%
Segment Gross Margin
17 438
17 599
(161)
(1%)
100 667
91 368
9 299
10%
Gross Margin %
71%
68%
71%
68%
(7 290)
(8 303)
1 013
12%
(42 086)
(43 107)
1 021
2%
Adjusted EBITDA**
10 148
9 296
852
9%
58 581
48 261
10 320
21%
Adjusted EBITDA Margin %***
41%
36%
41%
36%
Cost of integration and restructuring
(1 003)
(96)
(907)
(945%)
(5 792)
(499)
(5 293)
(1 061%)
Due diligence expense
(113)
(28)
(85)
(304%)
(650)
(148)
(502)
(340%)
Vacation accrual
(108)
(7)
(101)
(1 443%)
(621)
(36)
(584)
(1 608%)
Turkey start up expense
(200)
(53)
(147)
(277%)
(1 153)
(274)
(879)
(320%)
Other one-off items
(39)
(137)
98
72%
(224)
(712)
488
68%
EBITDA**
8 685
8 975
(290)
(3%)
50 142
46 592
3 550
8%
EBITDA Margin %***
35%
34%
35%
34%
For the period        
ended March 31,
(in thousands of USD)
Adjusted Operating expenses*              
(in millions of HUF)
For the period        
ended March 31,

10
Pro-Forma Financial Statements
for the quarter ended March 31, 2008
Note:
The average
HUF/USD
exchange
rates
were
192.61
HUF/USD
in
YTD
Q1
2007
and
173.23
HUF/USD
in
YTD
Q1
2008.
(*)   EBITDA is
a non-GAAP financial measure.
(**)  EBITDA Margin % is EBITDA as a percentage of revenue.
Change
Change
Change
Change
2008
2007
%
2008
2007
%
EBITDA*
8 685
8 975
(290)
(3%)
50 142
46 592
3 550
8%
EBITDA Margin %**
35%
34%
35%
34%
Depreciation and amortization
(4 765)
(4 260)
(505)
(12%)
(27 506)
(22 115)
(5 391)
(24%)
Financing expenses, net
(5 269)
(5 121)
(148)
(3%)
(30 420)
(26 586)
(3 834)
(14%)
Foreign exchange gains (losses), net
(2 681)
1 098
(3 779)
(344%)
(15 479)
5 699
(21 178)
(372%)
Gains (losses) on derivatives
5 039
(8 467)
13 506
160%
29 086
(43 960)
73 046
166%
Gains (losses) on warrants
-
(2 904)
2 904
100%
-
(15 075)
15 075
100%
Taxes on net income
(1 075)
(709)
(366)
(52%)
(6 204)
(3 679)
(2 525)
(69%)
Convertible
Pref
Stock
Dividends
(5)
(5)
-
0%
(26)
(26)
-
0%
Minority interest
(1)
-
(1)
n/a
(5)
(1)
(4)
(445%)
Net profit / (loss) for the period
(72)
(11 393)
11 321
99%
(412)
(59 151)
58 739
99%
Net profit / (loss) for the period in %
n/a
n/a
n/a
n/a
For the period                          
ended March 31,
(in thousands of USD)
(in millions of HUF)
For the period                          
ended March 31,

11
Pro-Forma Revenue Summary
for the quarter ended March 31, 2008
Notes:
The
average
HUF/USD
exchange
rates
were
192.61
HUF/USD
in
YTD
Q1
2007
and
173.23
HUF/USD
in
YTD
Q1
2008.
Mass Market Voice:
change in Mass Market Voice revenue was principally driven by the planned reduction in the number of
lower margin Tele2 carrier select customers, resulting in revenue decrease in Tele2 of 44% to HUF 1.4 billion for the period
ended March 31, 2008 compared to HUF 2.0 billion in the prior year.
Business:
change in Business revenue was largely driven by Business Voice in-concession revenue decrease by 15%, to HUF 1.1
billion
for
the
period
ended
March
31,
2008
compared
to
HUF
1.3
billion
in
the
prior
year.
Business
revenue
decreased
in
Invitel Technocom
by 21%, to HUF 0.7 billion for the period ended March 31, 2008 compared to HUF 0.9 billion in the prior
year.
This
reduction
was
offset
by
an
increase
in
data,
Internet
and
out
of
ex-concession
area
voice
revenue
to
HUF
4.6
billion
from HUF 4.5 billion in the prior year.
Wholesale:
change in Wholesale revenue was mainly driven by the planned reduction in low margin Wholesale Voice revenue
by 23%, to HUF 3.0 billion for the period ended March 31, 2008 from HUF 3.6 billion in
the prior year. The increase in higher
margin Wholesale data revenue partially offsets this decrease.
(in millions of HUF)
Change
Change
2008
2007
%
Mass Market Voice
7 266
8 087
(821)
(10%)
Gross margin %
78%
73%
Mass Market Internet
2 342
2 268
74
3%
Gross margin %
82%
77%
Business
6 445
6 724
(279)
(4%)
Gross margin %
77%
75%
Wholesale
8 526
8 961
(435)
(5%)
Gross margin %
57%
55%
Total Revenue
24 579
26 040
(1 461)
(6%)
For the period       
ended March 31,

12
Pro-Forma Segment Gross Margin Summary
for the quarter ended March 31, 2008
Notes:
The
average
HUF/USD
exchange
rates
were
192.61
HUF/USD
in
YTD
Q1
2007
and
173.23
HUF/USD
in
YTD
Q1
2008.
(in thousands of USD)
Change
Change
2008
2007
%
Mass Market Voice
32 829
30 730
2 099
7%
Mass Market Internet
11 057
9 115
1 942
21%
Business
28 550
26 158
2 392
9%
Wholesale
28 230
25 365
2 865
11%
Total Segment Gross Margin
100 666
91 368
9 298
10%
For the period       
ended March 31,
(in millions of HUF)
Change
Change
2008
2007
%
Mass Market Voice
5 687
5 919
(232)
(4%)
Mass Market Internet
1 915
1 756
159
9%
Business
4 946
5 038
(92)
(2%)
Wholesale
4 890
4 886
4
0%
Total Segment Gross Margin
17 438
17 599
(161)
(1%)
For the period       
ended March 31,

13
Mass Market Voice Segment
Number of Carrier Pre-Select
(”CPS”) and Carrier Select (”CS”)
customers
•
Decline in lower value (ex-Tele2)
CS
customers
•
Growth in higher value CPS customers
•
February and March clear out of zero
usage CPS customers
Number of Mass Market Voice In
Concession Lines and
Outgoing Traffic in Minutes
•
Lower line churn
•
Stable traffic
No. of
lines
Th. minutes
In Concession Areas
Out of Concession Areas
390 000
395 000
400 000
405 000
410 000
415 000
420 000
425 000
430 000
0
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
90 000
100 000
Number of lines
Outgoing minutes
100 000
150 000
200 000
250 000
300 000
350 000
400 000
450 000
100 000
150 000
200 000
250 000
300 000
350 000
400 000
CPS
CS
No. CPS
customers
No. of  CS
customers

14
Mass Market Internet
Segment
Mass Market Broadband DSL Growth of
Invitel vs. Market Growth
•
Invitel continues to grow faster than the
market
Number of Mass Market Broadband
ADSL Customers and Average
Revenue
Per Customer (”ARPU”)
•
Consistent growth in ADSL customer base
•
Stable ARPUs
Mass Market Internet
No. of
lines
ARPU
Mass
Market
Internet
Growth
vs.
Market
100,0%
100,5%
101,0%
101,5%
102,0%
102,5%
103,0%
HTCC Group ADSL in Hungary Growth rate (100%=prev. month) in %
ADSL in Hungary Growth rate (100%=prev. month) in %
50 000
60 000
70 000
80 000
90 000
100 000
110 000
120 000
130 000
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
9 000
10 000
Number of lines
ARPU

15
IPTV Status Update
Delivery
and
integration
of
IPTV
platform
and
related
network
equipment
are
finished
Network
upgrade
and
integration
with
the
IPTV
platform
are
finished
Billing systems upgraded and now IPTV ready
Channel line up and offering was fine tuned and finalized
Video on Demand content acquired
Over 100 customers connected to collect feedback
Friendly User Test feedback integrated into the product
All errors occurring during Friendly User Test have been fixed
Organizational changes made to prepare ourselves for operation of the service
Planned commercial launch end-May

16
Extended offering
Invitel Offering
–
2 offerings + 5 thematic pools
the user can subscribe to
–
3 premium packages (or single
HBO)
–
Network based TV
recording/replay
–
Time Shift TV (content
database of approximately
15
channels for previous 7 days)
–
value added services as part of
the basic package and
extended offer (Teletext, Radio,
Games)
–
Video on Demand
Basic offering
EPG
Electronic Programming Guide
IPTV Basic package
26 Channels + 3 Radios
Network PVR
5 Hours Storage Space
Time Shift TV
„TV Of Yesterday”
Video On Demand
Access To Video Library
EPG
Electronic Programming Guide
IPTV Extended package
48 Channels + More Radios
Network PVR
10 Hours Storage Space
Time Shift TV
„TV Of Yesterday”
Video On Demand
Access To Video Library
HBO Pak
Cinemax
Pak
HBO MaxPak
Docu
News
Lifestyle
Music
Adult
USP
USP
Add-on services
Add-on services
Thematic pools
Premium packages
Invitel’s IPTV Offering

Rob Bowker
Chief Financial
Officer

18
Pro-forma Financial Information
for the quarter ended March 31, 2008
Pro-Forma Financial Information
Amounts were translated by using 250 HUF/EUR exchange rate.
Notes:
(1) Third party debt (including non cash-pay debt)
includes short and long term debt, the 2006 PIK
Notes, but excludes liabilities relating to
derivative
financial
instruments
and
capital
leases.
(2)
Cash
pay
third
party
debt
equals
third
party
debt excluding the 2006 PIK Notes.
(3)
Annualized Pro-forma Adjusted EBITDA is
calculated by multiplying Pro-forma Adjusted
EBITDA for the quarter ended March 31, 2008 by
four.
See slides 9 and 10 for a reconciliation of Pro-
forma Adjusted EBITDA to Pro-forma Net income.
(4) Cash interest expense is interest expense of
the Senior Credit Facilities, the 2004 Notes, the
2007 Notes, the Bridge Loan and the Memorex
loans.
(5)
Net
third
party
debt
equals
third
party
debt
less cash and cash equivalents.
(6)
Cash
pay
net
third
party
debt
equals
cash-pay
third party debt less cash and cash equivalents.
(in thousands of EUR)
Balance Sheet Data (at period end):
Cash and cash equivalents
30 033
Third party debt (1)
709 318
Cash pay third party debt (2)
565 240
Other Pro-forma Financial Data:
Annualized Adjusted EBITDA (3)
162 368
Cash interest expense (4)
64 958
Net third party debt (5)
679 286
Cash pay net third party debt (6)
535 207
Ratio of Adjusted EBITDA to cash interest expense
2.5x
Ratio of net third party debt to Adjusted EBITDA
4.2x
Ratio of cash pay net third party debt to Adjusted EBITDA
3.3x

19
Annualized Interest Expense
Note: The above schedule includes cash-pay and non cash-pay debt.
* : Not hedged.
(in thousands of EUR)
Notional Amount
@ 2008/03/31
Interest rate
Effective interest
rate as a result of
hedging
Maturity date
Calculated
annualized
interest expense
2007 Notes
200 000
7,50%
10,68%
February 1, 2013
21 367
2004 Notes
142 000
10,75%
14,96%
August 15, 2012
21 236
Bridge Loan
100 000
11,50%
*
March 5, 2015
11 500
Yapi
Loan
10 000
6,50%
*
November 30, 2013
650
Preps 1 Loan
8 000
7,55%
*
August 4, 2012
604
Preps 2 Loan
3 000
7,90%
*
August 4, 2012
237
Amended Facilities Agreement HUF tranche
14 348
9,50%
10,16%
June 30, 2011
1 458
Amended Facilities Agreement EUR tranche
77 892
6,00%
9,38%
June 30, 2011
7 305
Amended Facilities Agreement EUR tranche "D"
10 000
6,00%
*
June 30, 2010
600
Total cash-pay third party debt
565 240
64 958
2006 PIK Note
144 078
12,75%
*
April 15, 2013
18 370
Total third party debt
709 318
83 328

20
Repayment of Senior Debt
Note:
The above schedule includes cash-pay debt only and excludes the repayment schedule of the 2006 PIK Notes.
(in thousands of EUR)
Secured bank
facility loan
repayments
HUF tranche
Secured bank
facility loan
repayments
EUR tranche
Secured bank
facility loan
repayments
EUR tranche "D"
2004       
Notes
2007       
Notes
Bridge     
Loan
Memorex
Austria     
Preps      
Loans
Memorex
Turkey     
Yapi       
Loan
Total debt
service
2008
2 955
16 038
18 993
2009
4 342
23 566
27 908
2010
4 945
26 839
10 000
41 784
2011
2 106
11 450
13 556
2012
142 000
11 000
153 000
2013
200 000
10 000
210 000
2014
-
2015
100 000
100 000
14 348
77 892
10 000
142 000
200 000
100 000
11 000
10 000
565 240

21
Pro-Forma Capital Expenditure
Note: Amounts were translated by using 250 HUF/EUR exchange rate.
Q1 2007
Q2 2007
Q3 2007
Q4 2007
Total
2007
Q1 2008
Variable capex
6 158
9 538
9 301
7 945
32 942
7 351
Fixed capex
1 398
1 943
2 494
2 838
8 673
588
IT capex
1 712
1 166
946
860
4 684
498
Capitalised
opex
1 135
1 008
1 053
957
4 153
954
Subtotal
10 403
13 655
13 794
12 600
50 452
9 390
As a % of revenue
11%
15%
15%
14%
14%
10%
Integration
-
817
640
4 788
6 245
1 163
IPTV
-
-
2 890
1 216
4 106
326
Billing system
-
326
1 389
1 696
3 411
849
Total Capex
10 403
14 798
18 713
20 300
64 214
11 729
As a % of revenue
11%
16%
20%
22%
17%
12%
(in thousand of EUR)
Q1 2007
Q2 2007
Q3 2007
Q4 2007
Total
2007
Q1 2008
Variable capex
1 540
2 384
2 325
1 986
8 235
1 838
Fixed capex
350
486
624
710
2 170
147
IT capex
428
291
237
215
1 171
124
Capitalised
opex
284
252
263
239
1 038
238
Subtotal
2 602
3 413
3 449
3 150
12 614
2 347
As a % of revenue
11%
15%
15%
14%
14%
10%
Integration
-
204
160
1 197
1 561
291
IPTV
-
-
722
304
1 026
82
Billing system
-
81
347
424
852
212
Total Capex
2 602
3 698
4 678
5 075
16 053
2 932
As a % of revenue
11%
16%
20%
22%
17%
12%
(in millions of HUF)

Martin Lea
Chief Executive Officer

23
2008 Key Priorities
Completion of the integration of HTCC, Invitel and Tele2
Memorex post-closing integration / synergy realization
Continue
improvement
in
gross
margin
trend
to
achieve
consistent
growth
Turnaround Business segment into sustainable growth
Preparation for migration to new integrated billing system
Successful introduction of IPTV
Exploration of mobility option
Maintain tight control over capital expenditure
Maintain
Sarbanes-Oxley compliance in our financial reporting

24
Non-GAAP Financial Measures
HTCC has included certain non-GAAP financial measures, including Pro-forma Adjusted EBITDA (for HTCC, Invitel, Tele2
Hungary and Memorex, together the ”Company”), in this presentation. Reconciliations of the differences between
Adjusted
EBITDA
for
the
Company
and
the
most
directly
comparable
financial
measure
calculated
and
presented
in
accordance with GAAP is included in this presentation on a pro-forma basis. As the business combination of the
Company and Memorex has just been recently consummated, Adjusted
EBITDA for Memorex is derived from and
reconciled to estimated Memorex revenues, based on estimates derived by HTCC management from financial
information available to HTCC management without unreasonable efforts on its part and which, as described below,
provides information that HTCC management believes is useful for
investors. The non-GAAP financial measures
presented are by definition not a measure of financial performance or financial condition under generally accepted
accounting principles and are not alternatives to operating income or net income/loss reflected in the statement of
operations and are not necessarily indicative of cash available to fund all cash flow needs. These non-GAAP financial
measures used by HTCC may not be comparable to similarly titled measures of other companies. Management uses
these non-GAAP financial measures for various purposes including: measuring and evaluating the Company’s financial
and operational performance and its financial condition; making compensation decisions; planning and budgeting
decisions; and financial planning purposes. HTCC believes that presentation of these non-GAAP financial measures is
useful to investors because it (i) reflects management’s view of core operations and cash flow generation and financial
condition
upon
which
management
bases
financial,
operational,
compensation
and
planning
decisions
and
(ii)
presents
a measurement that equity and debt investors and lending banks have indicated to management is important in
assessing HTCC's
financial performance and financial condition. While HTCC utilizes these non-GAAP financial measures
in managing its business and believes that they are useful to management and to investors for the reasons described
above, these non-GAAP financial measures have certain shortcomings. In particular, these EBITDA measurements do
not take into account changes in working capital and financial statement items below income from operations, and the
resultant effect of these items on HTCC's
cash flow. Management compensates for the shortcomings of these
measures
by utilizing them in conjunction with their comparable GAAP financial measures. The information in this presentation
should
be
read
in
conjunction
with
the
financial
statements
and
footnotes
contained
in
HTCC's
documents
filed
with
the U.S. Securities and Exchange Commission.
Appendix