As filed with the Securities and Exchange Commission on January 8, 2008

Registration No. 333-146167

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 3
to

Form S-1

REGISTRATION STATEMENT
THE SECURITIES ACT OF 1933

RiskMetrics Group, Inc.

(Exact name of registrant as specified in its charter)

Steven E. Friedman, Esq.
General Counsel
One Chase Manhattan Plaza, 44^th Floor
New York, New York 10005
(212) 981-7475

(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)

Copies to:

Approximate date of commencement of proposed sale of securities to the public: As soon as practicable after the registration statement becomes effective.

        If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. / /

        If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

        If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

        If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.    o

CALCULATION OF REGISTRATION FEE

(1)

Includes shares which the underwriters have the right to purchase to cover over-allotments.

(2)

Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(a) under the Securities Act of 1933.

(3)

Of such amount, $6,140 was previously paid.

        The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We and the selling stockholders may not sell the securities described in this document until the registration statement filed with the Securities and Exchange Commission is declared effective. This preliminary prospectus is not an offer to sell these securities and neither we nor the selling stockholders are soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JANUARY 8, 2008

PROSPECTUS

14,000,000 Shares

RiskMetrics Group, Inc.

Common Stock

        We are offering 9,964,184 shares of our common stock and the selling stockholders named in this prospectus are offering 4,035,816 shares of our common stock held by them. We will not receive any proceeds from the sale of the shares by the selling stockholders.

        This is our initial public offering and there is currently no established trading market for our shares. We currently estimate that the initial public offering price will be between $17.00 and $19.00 per share.

        The underwriters have an option to purchase a maximum of 2,100,000 additional shares of common stock from us to cover over-allotments. The underwriters can exercise this right at any time within 30 days from the date of this prospectus.

        We have applied for a listing of our common stock on the New York Stock Exchange under the symbol "RMG."

        Investing in our common stock involves risks. See "Risk Factors" beginning on page 17.

        Delivery of the shares of common stock will be made on or about              , 2008.

        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is              , 2008.

TABLE OF CONTENTS

        You should rely only on the information contained in this document or to which we have referred you. We have not authorized anyone to provide you with information that is different. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document.

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PROSPECTUS SUMMARY

        Unless the context otherwise indicates or requires, as used in this prospectus, references to "we," "us," "our" or the "company" refer to RiskMetrics Group, Inc., its subsidiaries and predecessors. References to "RiskMetrics" refer only to our subsidiary, RiskMetrics Solutions, Inc. and its subsidiaries, references to "ISS" refer only to our subsidiary Institutional Shareholder Services Holdings, Inc. and its subsidiaries, and references to "CFRA" refer only to our subsidiary RMG-CFRA, LLC, formerly CFRA Holdings, LLC, and its subsidiary.

        The following summary highlights information contained elsewhere in this prospectus. It is not complete and does not contain all of the information that you should consider before investing in our common stock. You should read the entire prospectus carefully, especially the risks of investing in our common stock discussed under "Risk Factors" and our consolidated financial statements and accompanying notes.

Company Overview

        We are a leading provider of risk management and corporate governance products and services to participants in the global financial markets. We enable clients to better understand and manage the risks associated with their financial holdings, provide greater transparency to their internal and external constituencies, satisfy regulatory and reporting requirements and make more informed investment decisions. Our offerings address multiple asset classes, markets and geographies and are sold to a diverse client base, including asset managers, hedge funds, pension funds, banks, insurance companies, financial advisors and corporations. As of September 30, 2007, we had approximately 3,500 clients located in 50 countries. Among our clients are 70 of the 100 largest investment managers, 34 of the 50 largest mutual fund companies, 41 of the 50 largest hedge funds and each of the 10 largest global investment banks.

        Our company consists of two industry leading businesses: RiskMetrics and ISS. Together, these businesses offer what we believe is the most comprehensive suite of risk management and corporate governance products and services available in our industry, covering the market, credit, portfolio, governance, accounting, legal and environmental risks associated with our clients' financial holdings.

        RiskMetrics.    RiskMetrics is a leading global provider of multi-asset, position-based risk and wealth management products and services, as measured by revenues. We provide our clients with comprehensive, interactive products and services that allow them to measure and quantify portfolio risk across security types, geographies and markets. Our flagship RiskManager market risk system integrates consistently-modeled market data with our widely adopted analytical models and robust processing capabilities to address our clients' risk reporting requirements. Our clients generally purchase RiskManager as a secure, interactive web-based application service or as a fully- outsourced risk reporting service. The breadth, performance and scalability of our RiskManager system is the result of nearly a decade of investment in research and development, which we believe provides us with a significant competitive advantage. RiskMetrics serves a diverse group of approximately 650 clients worldwide.

        ISS.    ISS is a leading provider of corporate governance and specialized financial research and analysis services to institutional investors and corporations around the world, as measured by revenues. Through ISS, which we acquired on January 11, 2007, we provide our clients with a fully-outsourced proxy research, voting and vote reporting service to assist them with their proxy voting responsibilities. Through our web-based delivery platform, clients can access our in-depth research reports and proxy voting recommendations. We offer both global security coverage and a comprehensive proxy voting solution, from policy creation to comprehensive research, vote recommendations, reliable vote execution, post-vote disclosure and reporting and analytical tools. Our Financial Research and Analysis products also provide our clients with research reports and analytical tools covering many investment criteria that have become increasingly important to investors, including companies' environmental,

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social and governance attributes and accounting and compensation polices. On August 1, 2007, in order to further supplement the Financial Research and Analysis product and service offerings of the ISS business, we acquired CFRA, a forensic accounting research firm. ISS serves approximately 2,850 clients.

        We sell our products and services primarily on an annual subscription basis and generally receive upfront subscription payments from our clients. On a pro forma basis for the year ended December 31, 2006, we generated revenues of $204.5 million, Adjusted EBITDA of $58.0 million and a net loss of $4.8 million. For a discussion of Adjusted EBITDA, see the section below entitled "Summary Consolidated Financial Information and Other Data."

Our Market Opportunity

        Our target market is a cross-section of global financial services firms. We also target other market participants, such as third-party advisors and corporations. We believe that a number of key market trends are driving the growth of our business and increasing the value we can offer to our clients:

        Growing Global Financial Markets and Investment Portfolio Complexity.    Over the past ten years, assets under management, or AUM, have increased steadily on a worldwide basis. Additionally, the variety, complexity and geographic diversity of financial assets held by investors have expanded significantly, resulting in multi-asset class, multi-national portfolios often including derivatives and other structured products.

        Increasing Demand for Transparency.    Investors increasingly need to document their risk profile on a regular basis for both internal audiences, such as risk committees, as well as external constituencies, such as limited partners and regulators. In order to satisfy these demands, comprehensive risk management and proxy voting have become essential services.

        Increasing Regulatory Requirements.    Regulatory bodies around the world continue to drive change and create opportunities in the markets we serve. Portfolio risk reporting and measurement regulations, such as the European Union's Undertakings for Collective Investments in Transferable Securities, or UCITS III, U.S. Department of Labor proxy voting requirements and corporate governance-related regulations, including the Sarbanes-Oxley Act, have increased regulatory compliance requirements and have further emphasized the need for comprehensive risk management tools.

        Increasing Focus on Corporate Governance.    During the past several years, there has been significant growth in the visibility of corporate governance and recognition of the risks associated with poor governance practices. Furthermore, investors are increasingly focusing on companies' environmental and social attributes when making investment and proxy voting decisions.

        Increasing Demand for Outsourced Products and Services.    Many financial services firms are increasingly utilizing outsourced solutions that enable them to focus on their core competencies and provide greater capabilities on a more cost effective basis than their in-house systems. In particular, an increasing number of firms are utilizing risk measurement and management solutions from external vendors. These vendors provide independent risk reporting products and services, which are often requested by the financial services firms' clients.

Our Competitive Strengths

        The competitive landscape for multi-asset class risk management and corporate governance and financial research and analysis products and services is characterized by a limited number of external third party competitors. ISS competes with firms such as Broadridge (formerly ADP Proxy Services) (which provides proxy voting services), Glass, Lewis & Co. (which provides research, voting recommendation and voting execution services) and Proxy Governance, Inc. (which provides research, voting recommendation and voting execution services). In addition, RiskMetrics competes with firms

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such as Bear Stearns' Bear Measurisk unit, BlackRock Inc.'s BlackRock Solutions unit, DST Systems Inc., Fimalac S.A.'s Algorithmics unit, Moody Corporation's KMV unit, MSCI Inc.'s Barra unit and SunGard Data Systems Inc. We also face competition from internal development at financial institutions and corporations. We compete in these markets primarily on the basis of brand recognition, market coverage, methodology and breadth of service offering. We believe that the competitive strengths outlined below provide us with significant advantages in our markets:

        Industry Leading Brands.    We believe that each of our brands is among the most established and trusted names in its respective market. Trust, reliability and confidence are of paramount importance to our clients, as they rely on our products and services to help make critical investment decisions. Our products and services are widely recognized and used throughout our industry, and we believe we are helping to establish common standards for risk management and corporate governance. We believe that the prominence of our brands, combined with our long track record, proven capabilities and well-known and thorough reporting capabilities, have helped us to create and maintain our market leadership positions.

        Comprehensive Market Coverage.    Our products and services incorporate what we believe to be among the broadest data sets of any provider in our industry. RiskMetrics' database includes over four million active global securities across 150,000 issuers, spanning 200 countries, 220 exchanges, 11,000 global benchmarks and over 750,000 market data time series updated every business day. In addition, our analytical models cover almost all of the equity, fixed income and derivative securities held in our clients' portfolios. Similarly, in 2006 ISS provided proxy research and vote recommendations for more than 38,000 shareholder meetings across approximately 100 countries and voted approximately 7.6 million ballots on behalf of our clients, representing almost 700 billion shares.

        Leading Market Risk Methodology.    We are a leader in the multi-asset class risk management market. Our transparent risk methodology was originally published in 1994 and has evolved through more than a decade of research and development, client input and collaboration with the world's foremost financial institutions and leading academics. We believe our commitment to transparency and collaboration has resulted in our methodologies being among the financial industry's most studied, trusted and implemented frameworks for risk management.

        Fully-Outsourced Products and Services.    Increasingly, many of our RiskMetrics clients rely on us for fully-outsourced risk reports, which typically includes automated importation of client positions, matching of client positions with security terms and conditions data and automatic production of risk reports. Our products and services leverage our technology and data infrastructure, which has the capacity to process millions of positions and thousands of reports each night. Similarly, we can provide our ISS clients with a fully-outsourced proxy research and voting service through our Governance Analytics platform. This service typically includes standard benchmark guidelines or custom voting policies, comprehensive research coverage, and high volume, integrated electronic proxy voting and regulatory reporting.

        Global, Diversified Client Base.    We have a global footprint, which allows us to support our highly- diversified client base across numerous geographies with in-depth analysis based on local knowledge. As of September 30, 2007, our client base included approximately 2,300 financial institutions and 1,200 corporations and professional service organizations located in 50 countries. Among our clients are 70 of the 100 largest investment managers, 34 of the 50 largest mutual fund companies and 41 of the 50 largest hedge funds, in each case measured by assets under management, 16 of 30 OECD central banks and each of the 10 largest global investment banks. No client represented more than 1.0% of our revenues during the nine months ended September 30, 2007 and our top 20 clients represented less than 11.4%. Our client base is geographically diverse as well, with 37% of our revenues during the nine months ended September 30, 2007 generated from sales to clients located outside of the Americas.

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        Attractive Business Model.    We sell our products and services primarily on an annual subscription basis and receive upfront annual payments from our clients. In addition, we typically experience high recurring revenues as a percentage of total revenues and high renewal rates. For the nine months ended September 30, 2007, our recurring revenue as a percentage of our total revenues, and renewal rates, were approximately 93% and 91%, respectively. We do not price our products and services based on our clients' assets under management. As a result, we are not subject to revenue fluctuations resulting from changes in our clients' AUM. Since many of our costs benefit from economies of scale, we have historically been able to add new clients with less than pro rata incremental expense. These factors, combined with our low capital expenditure requirements, have historically resulted in significant cash flow generation.

        Distinct Corporate Culture.    Our ability to develop new products and services has been, and will continue to be, crucial to keeping pace with evolving financial markets. Consequently, we believe that our success will continue to depend on the strength of our intellectual capital, and that our employees and distinct corporate culture provide us with significant competitive advantages. We work hard to retain our employees by ensuring that they have a challenging, rewarding and fun work environment. We also encourage our employees to follow their instincts and develop new ideas, which has resulted in many of our most important analytical and technological developments. At the same time, we strive to engender a team spirit and sense of common purpose that we believe enables us to attract and retain talented employees. Finally, we believe that all of our employees should hold an ownership stake in our company since a broad-based employee ownership structure closely-aligns the incentives of our employees and stockholders.

Our Growth Strategy

        Our growth strategy is to increase sales to our existing clients, to expand our client base and to extend and enhance our portfolio of risk management and corporate governance products and services through a multi-pronged approach:

        Increase Sales to Existing Clients.    A significant portion of our growth has been driven by our success in increasing the value of the products and services which we provide to our clients. We plan to broaden our relationships with our clients in the following ways:

•

Provide additional data, research and analytical products and services.    We intend to continue to expand RiskMetrics' coverage of asset classes and library of analytical models, and to increase ISS' global research coverage and new issue-specific research products and services.



•

Offer more products and services.    We plan to offer a higher volume of outsourced risk reporting and proxy voting services, enabled by our scalable technology and data infrastructure.



•

Leverage our combined RiskMetrics and ISS sales force.    We believe that our combined sales force will allow us to cross-sell more complete risk management and corporate governance solutions to our combined global client base. In particular, we expect to sell more products and services to our existing clients as we work with more business groups or units within their organizations as a result of our expanded suite of risk and governance products and services.

        Expand our Client Base.    We plan to continue to pursue the following initiatives to further expand our client base:

•

Sell our portfolio risk reporting products and services to new clients.    We intend to sell our fully-outsourced risk reporting services to financial services firms who currently rely on in-house risk management products and services. Over half of our new RiskMetrics sales in 2006 came from new clients.



•

Sell our Governance Services and Financial Research and Analysis offerings to new clients.    We plan to sell our fully-outsourced proxy voting services to institutional investors who currently rely

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on in-house research and voting platforms, and to also sell our financial research analysis products and services to portfolio managers, whom we have not traditionally targeted.

•

Expand our significant global presence.    We intend to build upon the globally-recognized RiskMetrics brand and international presence to sell more ISS products and services to clients outside the United States who are familiar with RiskMetrics' risk management offerings but not our governance products and services. We also expect to provide additional specialty financial research and analytical products to our clients outside the United States.

        Enhance and Extend our Products and Services.    We plan to continue to augment our suite of products and services in the following ways:

•

Enhance our product capabilities.    We intend to continue to broaden the scope of our products and services in order to address our clients' comprehensive risk management and governance needs. We will continue to enhance our analytical models, asset class coverage, product functionality and delivery mechanisms to address more of the needs of our clients.



•

Extend our service offerings.    We plan to leverage the functionality and scalability of our technology and data infrastructure in order to offer additional fully-outsourced risk reporting and electronic proxy voting services to our clients.



•

Selectively pursue acquisitions.    We intend to continue to selectively pursue acquisition opportunities to complement our product and service offerings and to provide a more comprehensive offering to our clients.

Corporate Governance and Sustainability

        We believe that strong corporate governance and sustainability policies serve to help maximize long-term shareholder value. We are committed to adopting progressive practices in these areas. Our key principles are outlined in the "Corporate Governance and Sustainability" section of this prospectus, beginning on page 114.

Selected Risk Factors

        We face a number of competitive challenges, risks and potential conflicts of interest. Investing in our common stock includes substantial risk. See "Risk Factors," beginning on page 17 and "Certain Relationships and Related Transactions" beginning on page 116 for a discussion of the factors you should consider before buying shares of our common stock. Some of the more significant risks include:

•

We may experience difficulty in completing the integration of our recent acquisitions of ISS and CFRA, and we may not realize the anticipated benefits of the acquisitions.



•

We have incurred significant indebtedness which could affect our ability to finance our operations, pursue desirable business opportunities or successfully run our businesses in the future.



•

We require highly trained and skilled management and other key employees to maintain and expand our analytical models, proxy voting recommendations and other important aspects of our product and service offerings.



•

We face competition that may cause price reductions or loss of market share.



•

Our ability to compete, succeed and generate profits depends, in part, on our ability to obtain data from third-party vendors on commercially reasonable terms.



•

Any perceived conflicts of interest resulting from providing products and services to institutional investors in addition to proxy voting recommendations, or providing products and services to corporations which are the subject of our proxy recommendations or other analytical products and services could harm our reputation and business.

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•

Upon closing of this offering, our principal stockholders will own 63.32% of our outstanding common stock. Consequently, our principal stockholders will still have the ability to significantly influence our business, which may be disadvantageous to other stockholders and adversely affect the price of our shares of common stock.



•

A portion of the net proceeds of this offering will be received by affiliates of certain of the underwriters. This may present a conflict of interest.

Additional Information

        Our principal executive offices are located at One Chase Manhattan Plaza, 44th Floor, New York, New York 10005, and our telephone number is (212) 981-7475. Our website address is www.riskmetrics.com. Information contained on our website is not part of this prospectus or the registration statement of which it forms a part and is not incorporated herein by reference, and any reference to our website is intended to be an inactive textual reference only and is not intended to create any hypertext link.

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The Offering

        We have been informed by TCV V, L.P., one of our stockholders, that they and entities affiliated with them currently intend to purchase from the underwriters shares of our common stock with an aggregate price of up to $10 million in this offering at the initial public offering price. Because this is an indication of interest and is not a binding agreement or commitment to purchase, TCV V, L.P. and its affiliated entities may elect not to purchase any shares in this offering. The underwriters will receive the same discount from any shares of our common stock purchased by TCV V, L.P. and its affiliated entities as they will from any other shares of our common stock sold to the public in this offering. We have not directed the underwriters to provide this allocation to TCV V, L.P. and its affiliated entities.

        Except as otherwise noted, all information in this prospectus:

•

assumes an initial public offering price of $18.00 per share, the midpoint of the range set forth on the cover of this prospectus; and

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•

assumes no exercise of the underwriters' over-allotment option.

        The number of shares of our common stock to be outstanding immediately after this offering excludes:

•

13,697,043 shares of common stock issuable upon the exercise of outstanding options issued under our 2007 Omnibus Incentive Compensation Plan, RiskMetrics' 2000 Stock Option Plan, RiskMetrics' 2004 Stock Option Plan and ISS' Equity Incentive Plan, which we collectively refer to as our Stock Incentive Plans;



•

347,821 shares of restricted stock which could potentially vest over the next three years;



•

1,523,500 options to be granted to our employees immediately prior to the consummation of this offering, including an aggregate of 1,011,500 options related to 2007 compensation for certain employees and an aggregate of 512,000 options for all full time employees, representing a one-time grant of 500 options to each of our employees, at an estimated exercise price of $18.00 per share, the midpoint of the range set forth on the cover page of this prospectus; and



•

2,747,186 shares of common stock reserved for future issuance under our Stock Incentive Plans.

        On May 1, 2007, we effected a 2.5 to 1 stock split. Except where indicated otherwise, all share numbers included in this prospectus have been adjusted to reflect this stock split.

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Summary Consolidated Financial Information and Other Data

        The summary consolidated statements of operations data presented for each of the years ended December 31, 2004, 2005 and 2006 and the summary consolidated balance sheet data as of December 31, 2005 and 2006 were derived from our audited consolidated financial statements included elsewhere in this prospectus. The summary consolidated statements of operations data for the years ended December 31, 2002 and 2003 and the summary consolidated balance sheet data as of December 31, 2002, 2003 and 2004 were derived from our audited consolidated financial statements which are not included in this prospectus. The summary consolidated unaudited statements of operations data presented for the nine months ended September 30, 2006 and 2007 and the summary consolidated balance sheet data as of September 30, 2007 were derived from our unaudited consolidated interim financial statements included elsewhere in this prospectus. The results of operations for the nine months ended September 30, 2007 are not necessarily indicative of the results to be expected for the full year ending December 31, 2007. The as adjusted consolidated balance sheet data give effect to the sale by us of 9,964,184 shares of common stock in this offering at an assumed initial offering price of $18.00 per share, the midpoint of the range set forth on the cover page of this prospectus, after applying the estimated net proceeds thereof, as if this offering was completed on September 30, 2007.

        On January 11, 2007, we acquired ISS and on August 1, 2007 we acquired CFRA. The consolidated statement of operations data for the nine months ended September 30, 2007 includes the impact of the acquisitions of ISS beginning on January 12, 2007 and CFRA beginning August 1, 2007. The consolidated statement of operations data for the prior periods does not include the impact of the acquisitions of ISS and CFRA. The information set forth below should be read in conjunction with the consolidated financial statements and "Management Discussion and Analysis of Financial Condition and Results Operations" included elsewhere in this prospectus.

Consolidated Statement of Operations Data

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Consolidated Balance Sheet Data

Other Financial and Operating Data

        The financial and operating data below sets forth supplementary information that we believe is useful for investors in evaluating our underlying operations:

Notes to Summary Consolidated Financial Information and Other Data

(1)

In March 2003, we acquired JPMorgan Advisory, Inc., an entity which primarily provided wealth management products and services to JPMorgan. In connection with the acquisition, we entered into a three year online services agreement under which we agreed to provide to JPMorgan a customer-specific set of Wealth Management products and services which were unrelated to our WealthBench product. This agreement was terminated as of April 30, 2006. Our results of operations reflect the revenues from the JPMorgan online services agreement through April 30, 2006. For the years ended December 31, 2003, 2004, 2005 and 2006, we derived $9.5 million, $13.0 million, $12.7 million and $4.3 million of revenue, respectively, from the JPMorgan online services agreement. We derived no revenue from the JPMorgan online services agreement in the nine months ended September 30, 2007.

(2)

In 2003 and 2004, we recorded stock-based compensation expense of $0.2 million and $2.6 million, respectively, based on Accounting Principles Board Opinion No. 25, Accounting for Stock Based

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Compensation for Employees. On January 1, 2006, we adopted Statement of Financial Accounting Standards No. 123(R), Share-Based Payment, or SFAS 123(R). As a result of this adoption, we recorded $3.6 million, $2.9 million and $4.0 million of stock-based compensation expense in the year ended December 31, 2006 and the nine months ended September 30, 2006 and 2007, respectively.

(3)

Adjusted EBITDA, as defined in our credit facilities, represents net income (loss) before interest expense, interest income, income tax expense (benefit), depreciation and amortization of property and equipment, amortization of intangible assets, non-cash stock-based compensation expense and extraordinary or non-recurring charges or expenses. It is a material metric used by our lenders in evaluating compliance with the maximum consolidated leverage ratio covenant in our credit facilities. The maximum consolidated leverage ratio covenant, as defined in our credit facilities, represents the ratio of total indebtedness as compared to Adjusted EBITDA, and can not exceed a maximum ratio range which declines from 8.50 to 3.00 over the life of the credit facilities. Non-compliance with this covenant could result in us being required to immediately repay our outstanding indebtedness under our credit facilities, which amounted to approximately $438.5 million as of September 30, 2007. Adjusted EBITDA is also a metric used by management to measure operating performance and for planning, including preparation of annual budgets, analyzing investment decisions and evaluating profitability.

We also present Adjusted EBITDA as a supplemental performance measure because we believe that this measure provides our board of directors, management and investors with additional information to measure our performance, provide comparisons from period to period by excluding potential differences caused by variations in capital structure (affecting interest expense), tax position (such as the impact on periods of changes in effective tax rates or net operating losses), the age and book depreciation of fixed assets (affecting relative depreciation expense), acquisitions (affecting amortization expense) and compensation plans (affecting stock-based compensation expense).

Adjusted EBITDA is not a measurement of our financial performance under U.S. GAAP and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with U.S. GAAP or as an alternative to cash flow from operating activities as a measure of our profitability or liquidity.

We understand that, although Adjusted EBITDA is frequently used by securities analysts, lenders and others in their evaluation of companies, Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for an analysis of our results as reported under U.S. GAAP. Some of these limitations are:

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Adjusted EBITDA does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;



•

Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;



•

Adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments on our indebtedness;



•

Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; and



•

Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

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The table below sets forth a reconciliation of Adjusted EBITDA to net income (loss) on our historical results: