Lifetime Fitness 2009 Annual Report Download - page 80

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75
(3) EBITDA consists of net income plus interest expense, net, provision for income taxes and depreciation and
amortization. This term, as we define it, may not be comparable to a similarly titled measure used by other
companies and is not a measure of performance presented in accordance with GAAP. We use EBITDA as a
measure of operating performance. EBITDA should not be considered as a substitute for net income, cash flows
provided by operating activities, or other income or cash flow data prepared in accordance with GAAP. The
funds depicted by EBITDA 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. Additional details related to
EBITDA 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 income to EBITDA:
2008 2009
1st 2nd 3rd 4th 1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
(In thousands)
Net income ............... $17,404 $19,828 $21,574 $13,015 $15,114 $18,260 $20,633 $18,377
Interest expense, net .. 7,211 6,905 7,185 8,251 7,474 7,880 7,651 7,333
Provision for
income taxes ........ 11,724 13,471 13,700 8,329 10,252 12,462 12,014 12,713
Depreciation and
amortization ......... 16,590 17,190 18,720 20,447 22,064 22,635 23,428 22,643
EB IT DA .................... $52,929 $57,394 $61,179 $50,042 $54,904 $61,237 $63,726 $61,066
(4) 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:
2008 2009
1st 2nd 3rd 4th 1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
(In thousands)
Net cash provided
by operating
activities .................... $49,322 $56,338 $37,852 $39,554 $49,660 $48,624 $40,267 $47,652
Less: Purchases of
property and
equipment ............... (100,485) (135,092) (124,974) (102,786) (48,900) (42,825) (25,128) (29,779)
Free cash flow .......... ($51,163) ($78,754) ($87,122) ($63,232) $ 760 $ 5,799 $15,139 $17,873
(5) Annual 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.
(6) The data being presented includes the center owned by Bloomingdale LLC.