Lifetime Fitness 2011 Annual Report Download - page 35

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(9) EBITDA is a non-GAAP non-cash measure which consists of net income plus interest expense, net,
provision for income taxes and depreciation and amortization. EBITDAR adds rent expense to EBITDA.
These terms, as we define them, may not be comparable to a similarly titled measures used by other
companies and are not measures of performance presented in accordance with GAAP. We use EBITDA and
EBITDAR as measures of operating performance. EBITDA or EBITDAR 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 and EBITDAR 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 and EBITDAR 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, the most directly comparable GAAP measure,
to EBITDA and EBITDAR:
Net income
Interest expense, net
Provision for income taxes
Depreciation and amortization
EBITDA
Rent expense
EBITDAR
For the Year Ended December 31,
2011
(In thousands)
$ 92,617
20,138
61,810
98,843
$ 273,408
42,810
$ 316,218
2010
$ 80,692
27,795
53,448
92,313
$ 254,248
42,481
$ 296,729
2009
$ 72,384
30,338
47,441
90,770
$ 240,933
40,241
$ 281,174
2008
$ 71,821
29,552
47,224
72,947
$ 221,544
27,375
$ 248,919
2007
$ 68,019
25,443
45,220
59,014
$ 197,696
19,376
$ 217,072
(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, excluding acquisitions. 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.”
The following table provides a reconciliation of net cash provided by operating activities to free cash flow:
Net cash provided by operating
activities
Less: Purchases of property and
equipment
Free cash flow
For the Year Ended December 31,
2011
(In thousands)
$ 227,943
165,335
$ 62,608
2010
$ 192,265
131,671
$ 60,594
2009
$ 186,203
146,632
$ 39,571
2008
$ 183,066
463,337
$(280,271)
2007
$ 142,206
415,822
$(273,616)