Lifetime Fitness 2009 Annual Report Download - page 36

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31
The following table provides a reconciliation of net income, the most directly comparable GAAP measure, to
EBITDA and EBITDAR:
For the Year Ended December 31,
2009 2008 2007 2006 2005
(In thousands)
Net income ........................................
.
$72,384 $ 71,821 $ 68,019 $ 50,565 $ 41,213
Interest expense, net ..........................
.
30,338 29,552 25,443 17,356 14,076
Provision for income taxes ................
.
47,441 47,224 45,220 33,513 26,758
Depreciation and amortization ..........
.
90,770 72,947 59,014 47,560 38,346
EBITDA ............................................
.
$240,933 $221,544 $197,696 $148,994 $120,393
Rent expense .....................................
.
40,241 27,375 19,376 13,724 10,200
EBITDAR .........................................
.
$281,174 $248,919 $217,072 $162,718 $130,593
(10) Capital expenditures represent investments in our new centers, costs related to updating and maintaining our
existing centers and other infrastructure investments. For purposes of deriving capital expenditures from our
cash flows statement, capital expenditures include our purchases of property and equipment, excluding
purchases of property and equipment in accounts payable at year-end, property and equipment purchases
financed through notes payable and capital lease obligations, and non-cash share-based compensation
capitalized to projects under development.
(11) 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. 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.”
The following table provides a reconciliation of net cash provided by operating activities to free cash flow:
For the Year Ended December 31,
2009 2008 2007 2006 2005
(In thousands)
Net cash provided by operating
activities .....................................
.
$186,203 $183,066 $142,206 $125,852 $107,952
Less: Purchases of property and
equipment ...................................
.
146,632 463,337 415,822 261,767 190,355
Free cash flow ...................................
.
$39,571 ($280,271) ($273,616) ($135,915) ($82,403)
(12) The operating data presented in these items include the center owned by Bloomingdale LLC. The data
presented elsewhere in this section exclude the center owned by Bloomingdale LLC.
(13) The square footage presented in this table reflects fitness square footage which is the best metric for the
efficiencies of a facility. We exclude outdoor pool, outdoor play areas, indoor/outdoor tennis elements and
satellite facility square footage.
(14) EBITDA margin is the ratio of EBITDA to total revenue.
(15) EBITDAR margin is the ratio of EBITDAR to total revenue.
(16) Market capitalization is calculated by multiplying the year-end total common shares outstanding by the year-
end stock price.