Lifetime Fitness 2007 Annual Report Download - page 73

67
The following table provides a reconciliation of net income to EBITDA:
2006 2007
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
(In thousands, except for number of centers and per share data)
Net income..........................
.
10,433 12,385 13,639 14,108 14,134 16,485 18,350 19,050
Interest expense, net............
.
4,117 4,140 4,204 4,895 5,528 6,369 7,135 6,411
Provision for income taxes..
.
6,865 7,256 10,139 9,253 9,395 10,931 12,374 12,520
Depreciation and
amortization ........................
.
11,519 12,146 11,716 12,179 13,687 14,678 14,917 15,732
EBITDA..............................
.
$32,934 $35,927 $39,698 $40,435 $42,744 $48,463 $52,776 $53,713
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Disclosure Controls and Procedures.As of December 31, 2007, an evaluation was carried out under the supervision
and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of
the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-
15(e) and 15d-15(e) under the Exchange Act). Based upon that evaluation, our Chief Executive Officer and our
Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were
effective to ensure that information required to be disclosed by us in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules
and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and
Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Management’s Annual Report on Internal Control Over Financial Reporting. Our management is responsible for
establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a and 15d – 15f
under the Exchange Act. Our internal control system is designed to provide reasonable assurance to our management
and board of directors regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. Our internal control over financial
reporting includes those policies and procedures that:
xPertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the company;
xProvide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures
of the company are being made only in accordance with authorizations of management and directors of the
company; and
xProvide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2007. In
making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control – Integrated Framework. Based on management's assessment