Lifetime Fitness 2010 Annual Report Download - page 81

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75
The following table provides a reconciliation of net income to EBITDA and EBITDAR:
2010 2009
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
(In thousands)
Net income ............... $17,836 $21,884 $23,378 $17,594 $15,114 $18,260 $20,633 $18,377
Interest expense, net .. 8,097 6,917 6,792 5,989 7,474 7,880 7,651 7,333
Provision for
income taxes ........ 12,010 14,426 15,720 11,292 10,252 12,462 12,014 12,713
Depreciation and
amortization ......... 22,765 23,218 23,402 22,928 22,064 22,635 23,428 22,643
EB IT D A .................... $60,708 $66,445 $69,292 $57,803 $54,904 $61,237 $63,726 $61,066
Rent expense ............. 10,510 10,825 10,786 10,360 9,996 10,084 10,064 10,097
EBITDAR ................. $71,218 $77,270 $80,078 $68,163 $64,900 $71,321 $73,790 $71,163
(3) Free cash flow is a non-GAAP measure consisting of net cash provided by operating activities, less purchases
of property and equipment. This term, as we define it, may not be comparable to a similarly titled measure
used by other companies and does not represent the total increase or decrease in the cash balance presented in
accordance with GAAP. We use free cash flow as a measure of cash generated after spending on property and
equipment. The funds depicted by free cash flow are not necessarily available for discretionary use if they are
reserved for particular capital purposes, to maintain debt covenants, to service debt or to pay taxes. Free cash
flow should not be considered as a substitute for net cash provided by operating activities prepared in
accordance with GAAP. Additional details related to free cash flow are provided in “Management’s
Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial
Measures.”
(4) The following table provides a reconciliation of net cash provided by operating activities to free cash flow:
2010 2009
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
(In thousands)
Net cash provided
by operating
activities ................ $53,875 $46,833 $45,439 $46,118 $49,660 $48,624 $40,267 $47,652
Less: Purchases of
property and
equipment ............... (23,039) (25,125) (37,968) (45,539) (48,900) (42,825) (25,128) (29,779)
Free cash flow .......... $30,836 $21,708 $ 7,471 $ 579 $ 760 $ 5,799 $15,139 $17,873
(4) Annual attrition rate (or trailing 12 month attrition rate) is calculated as follows: total terminations for the
trailing 12 months (excluding frozen memberships) divided into the average beginning month membership
balance for the trailing 12 months. The annual attrition rate for the year ended December 31, 2010 includes a
small positive impact due to a change in calculation methodology adopted April 1, 2010 in which we exclude
potential memberships who elect to cancel during their 14-day trial as members.
(5) The data being presented includes the center owned by Bloomingdale LLC.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.