Exhibit 99.1
Investor Contact: John Heller – 952-229-7427 orir@lifetimefitness.com
Media Contact: Jason Thunstrom – 952-229-7435 orpr@lifetimefitness.com
FOR IMMEDIATE RELEASE
LIFE TIME FITNESS ANNOUNCES FOURTH QUARTER AND
FULL-YEAR 2010 FINANCIAL RESULTS
| | • | | Revenue Growth for the Quarter and Full-Year were 9.8% and 9.1%, Respectively |
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| | • | | For the Quarter, Diluted EPS was $0.43 and Non-GAAP Diluted EPS was $0.52 |
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| | • | | For the Full Year, Diluted EPS was $2.00 and Non-GAAP Diluted EPS was $2.08 |
CHANHASSEN, Minn. (February 17, 2011)– Life Time Fitness, Inc. (NYSE: LTM) today reported its financial results for the fourth quarter and full year ended December 31, 2010.
Fourth quarter 2010 revenue grew 9.8% to $223.7 million from $203.7 million during the same period last year. Revenue for the year totaled $912.8 million, up 9.1% from $837.0 million during 2009.
In June 2009, the Company granted performance-based restricted stock to its senior management team. In fourth quarter 2010, the Company determined that achieving the 2011 diluted earnings per share performance criteria required for vesting of 50% of the stock (representing approximately 450,000 shares of restricted stock) was probable. As a result, the Company recognized a cumulative, non-cash performance share-based compensation expense of $5.6 million (pretax) in the quarter. The Company anticipates recognizing the remaining portion of performance share-based compensation expense of approximately $4.0 million (pretax) ratably in 2011.
Net income for the quarter was $17.6 million, including $5.6 million (pretax) of performance share-based compensation expense, or $0.43 per diluted share, compared to net income of $18.4 million, or $0.46 per diluted share, for 4Q 2009. Net income for the full year was $80.7 million, including $5.6 million (pretax) of performance share-based compensation expense, or $2.00 per diluted share, compared to $72.4 million, or $1.82 per diluted share, for 2009.
Non-GAAP net income for the quarter, excluding $5.6 million (pretax) of performance share-based compensation expense, was $21.0 million, or $0.52 per diluted share. For the full year, non-GAAP net income, excluding $5.6 million (pretax) of performance share-based compensation expense, was $84.1 million, or $2.08 per diluted share.
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Life Time Fitness Fourth Quarter and Full-Year 2010 Results – Page 2
“I am pleased with our 2010 operating results, which continue to demonstrate the differentiation and power of our business model,” said Bahram Akradi, Life Time Fitness chairman, president and chief executive officer. “We remained highly focused on increasing member retention and growing same center sales in 2010, and we delivered significant progress in both areas. In particular, I want to highlight our member connectivity and engagement initiatives in which we’ve invested over the last couple of years. Not only did these efforts contribute positively to our financial and member retention results, they also reinforce the uniqueness and value of our healthy way of life approach. By helping customers connect to and engage in their areas of interest, we help them achieve their health and fitness goals. We remain steadfast in our commitment to continually refine member connectivity and engagement in 2011. Furthermore, we are also focused on member retention and growth through the expansion of our member interest offerings. The fact that we have taken an expense in connection with the challenging performance-based restricted stock vesting metric reinforces our continued confidence, which is reflected in our 2011 business outlook.”
During the quarter, Life Time opened its third planned large-format center for 2010 in Centennial, Colorado, marking the Company’s third location in the Denver market. In January 2011, the Company opened a large-format center in Syosset, New York, the first Life Time location in New York. In May, the Company plans to open its second and third large-format centers planned for 2011 in Colorado Springs, Colorado, and Summerlin, Nevada. These new centers will represent the fourth Life Time location in Colorado and first in the Las Vegas market, respectively.
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Life Time Fitness Fourth Quarter and Full-Year 2010 Results – Page 3
Three and Twelve Months Ended December 31, 2010, Financial Highlights:
Total revenuefor the fourth quarter grew 9.8% to $223.7 million from $203.7 million. Total revenue for the full year grew 9.1% to $912.8 million from $837.0 million in 2009.
| | | | | | | | | | | |
| (Period-over-period growth) | | 4Q 2010 vs. 4Q 2009 | | 2010 vs. 2009 |
• | | Membership dues | | | 7.4 | % | | | 6.8 | % |
• | | Enrollment fees | | | (10.1 | %) | | | (6.5 | %) |
• | | In-center revenue | | | 16.3 | % | | | 14.4 | % |
• | | Same-center revenue (13th month of operation) | | | 5.9 | % | | | 5.0 | % |
• | | Same-center revenue (37th month of operation) | | | 4.0 | % | | | 2.3 | % |
• | | Average center revenue per membership | | $362 – up 3.3% | | $1,475 – up 4.3% |
• | | Average in-center revenue per membership | | $104 – up 9.9% | | $440 – up 10.0% |
Membershipsgrew 5.8% to 612,556 at December 31, 2010, from 578,937 at December 31, 2009.
| | • | | Attrition in 4Q 2010 was 9.9%, down from 10.8% in the prior-year period. |
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| | • | | Attrition improved to 36.3% in 2010 compared to 40.6% in 2009. |
Total operating expensesduring 4Q 2010 totaled $189.1 million compared to $165.6 million for 4Q 2009. Full-year operating expenses were $752.1 million compared with $688.1 million in 2009. Excluding the $5.6 million (pretax) of performance share-based compensation expense, 4Q 2010 and full-year operating expenses were $183.5 million and $746.5 million, respectively.
| | • | | Operating margin was 15.5% for 4Q 2010 compared to 18.7% in the prior-year period. |
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| | • | | Full-year operating margin was 17.6% compared to 17.8% in 2009. |
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| | • | | Excluding the performance share-based compensation expense, 4Q 2010 and full-year operating margin were 18.0% and 18.2%, respectively. |
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| (Expense as a percent of total revenue) | | 4Q 2010 vs. 4Q 2009 | | 2010 vs. 2009 |
| • | | Center operations (includes $1.2 million of performance share-based compensation expense in 4Q 2010 and 2010) | | 60.9% vs. 60.4% | | 61.5% vs. 60.5% |
| • | | Advertising and marketing | | 3.6% vs. 3.0% | | 3.0% vs. 3.2% |
| • | | General and administrative (includes $4.4 million of performance share-based compensation expense in 4Q 2010 and 2010) | | 6.8% vs. 4.7% | | 5.2% vs. 5.1% |
| • | | Other operating | | 2.9% vs. 2.0% | | 2.6% vs. 2.6% |
| • | | Depreciation and amortization | | 10.3% vs. 11.1% | | 10.1% vs. 10.8% |
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Life Time Fitness Fourth Quarter and Full-Year 2010 Results – Page 4
Net incomefor 4Q 2010 was $17.6 million, or $0.43 per diluted share, compared to net income of $18.4 million, or $0.46 per diluted share, for 4Q 2009. Net income for the full year was $80.7 million, or $2.00 per diluted share, compared to $72.4 million, or $1.82 per diluted share, for 2009.
Non-GAAP net incomefor the quarter, excluding the performance share-based compensation expense, was $21.0 million, or $0.52 per diluted share. For the full year, non-GAAP net income, excluding the performance share-based compensation expense, was $84.1 million, or $2.08 per diluted share.
The effective income tax ratefor 2010 was 39.8% compared with 39.6% in 2009.
EBITDAfor 4Q 2010 was $57.8 million compared with $61.1 million in 4Q 2009. Full-year EBITDA was $254.2 million compared with $240.9 million in 2009.
| | • | | As a percentage of total revenue, EBITDA in 4Q 2010 was 25.8% compared to 30.0% in 4Q 2009. |
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| | • | | EBITDA margin in 2010 was 27.9% compared to 28.8% in 2009. |
Adjusted EBITDAfor the quarter, excluding performance share-based compensation expense, was $63.4 million. Full-year adjusted EBITDA, excluding performance share-based compensation expense, was $259.9 million.
| | • | | As a percentage of total revenue, adjusted EBITDA in 4Q 2010 was 28.4%. |
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| | • | | Adjusted EBITDA margin in 2010 was 28.5%. |
Cash flows from operationsfor the full year 2010 totaled $192.3 million compared to $186.2 million in 2009.
Weighted average fully diluted sharesfor 4Q 2010 totaled 40.6��million compared to 40.3 million in 4Q 2009. For the full year 2010, weighted average fully diluted shares totaled 40.4 million compared to 39.9 million in 2009.
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Life Time Fitness Fourth Quarter and Full-Year 2010 Results – Page 5
2011 Business Outlook:
The following statements are based on the Company’s current expectations for fiscal year 2011, which incorporate 2010 operating trends and are subject to the risks and uncertainties described below:
| | • | | Revenueis expected to be up 6-8%, or $970-990 million, driven primarily by growth in in-center revenue and corporate businesses, as well as membership growth in new and ramping centers. |
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| | • | | Net incomeis expected to be up 13-18%, or $91.0-95.0 million, driven by revenue growth and cost efficiencies. |
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| | • | | Non-GAAP net income(excluding the impact of performance share-based compensation expense) is expected to be $93.5-97.5 million. |
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| | • | | Diluted earnings per common shareis expected to be $2.19-2.29. |
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| | • | | Non-GAAP diluted earnings per common share(excluding the impact of performance share-based compensation expense) is expected to be $2.25-2.35. |
As announced on February 10, 2011, the Company will hold a conference call today at 10:00 a.m. ET to discuss its fourth quarter and full-year 2010 results. Bahram Akradi, Michael Robinson, executive vice president and chief financial officer, and John Heller, senior director, investor relations & treasurer, will host the conference call. The conference call will be webcast and may be accessed via the Company’s Investor Relations section of its website at lifetimefitness.com. A replay of the call will be available the same day via the Company’s website beginning at approximately 1:00 p.m. ET.
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About Life Time Fitness, Inc.
As the Healthy Way of Life Company, Life Time Fitness (NYSE: LTM) delivers the certified professionals, comprehensive businesses and incredible destinations that help people positively change their lives every day. The Company’s healthy way of life approach enables its customers to achieve their health and fitness goals by engaging in their areas of interest — or discovering new passions — both inside and outside of Life Time’s distinctive and large sports, professional fitness, family recreation and spa destinations. As of February 17, 2011, the Company operated 90 centers under the LIFE TIME FITNESS® and LIFE TIME ATHLETICSM brands primarily in suburban locations in 20 states and 24 major markets. Additional information about Life Time centers, programs and services is available at lifetimefitness.com.
Forward-Looking Statements
Certain information contained in this press release may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause the Company’s actual results in the future to differ materially from its historical results and those presently anticipated or projected. Among these factors are attracting and retaining members, risks related to our debt levels and debt covenants, our ability to access existing credit facilities and obtain additional financing, strains on our business from continued growth, risks related to maintenance of our data, competition from other health and fitness centers, identifying and acquiring suitable sites for new centers, delays in opening new centers and other factors set forth in the Company’s filings with the Securities and Exchange Commission. Diluted earnings per common share could also be affected by the number of shares outstanding, which depends on factors such as the number of shares issued upon exercise of stock options and future grants of awards pursuant to equity-based incentive plans as well as stock offerings. The Company’s expectations for fiscal year 2011 exclude any unusual items that might occur during the fiscal year, such as litigation matters or the potential recognition of other performance share-based compensation expense related to the June 2009 grants. While the Company has determined that 2011 earnings per common share performance criteria required for vesting of 50% of the stock is probable and anticipates recognizing additional performance share-based compensation expense in 2011, the Company may not be able to meet those criteria due to risks and uncertainties, including those factors described above.
The Company cautions investors not to place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update such statement to reflect events or circumstances arising after such date. All remarks made during the Company’s financial results conference call will be current at the time of the call and the Company undertakes no obligation to update the replay.
LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
| | | | | | | | | |
| | | December 31, | | | December 31, | |
| | | 2010 | | | 2009 | |
| | | (Unaudited) | | | | | |
ASSETS | | | | | | | | |
| CURRENT ASSETS: | | | | | | | | |
| Cash and cash equivalents | | $ | 12,227 | | | $ | 6,282 | |
| Accounts receivable, net | | | 5,806 | | | | 4,026 | |
| Center operating supplies and inventories | | | 17,281 | | | | 14,621 | |
| Prepaid expenses and other current assets | | | 13,318 | | | | 12,938 | |
| Deferred membership origination costs | | | 14,728 | | | | 20,278 | |
| Deferred income taxes | | | 1,463 | | | | 660 | |
| Income tax receivable | | | 12,081 | | | | — | |
| | | | | | | |
| Total current assets | | | 76,904 | | | | 58,805 | |
| PROPERTY AND EQUIPMENT, net | | | 1,570,234 | | | | 1,512,993 | |
| RESTRICTED CASH | | | 2,572 | | | | 2,941 | |
| DEFERRED MEMBERSHIP ORIGINATION COSTS | | | 7,251 | | | | 8,716 | |
| GOODWILL | | | 14,617 | | | | 5,690 | |
| OTHER ASSETS | | | 46,902 | | | | 42,380 | |
| | | | | | | |
| TOTAL ASSETS | | $ | 1,718,480 | | | $ | 1,631,525 | |
| | | | | | | |
| | | | | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | |
| CURRENT LIABILITIES: | | | | | | | | |
| Current maturities of long-term debt | | $ | 7,265 | | | $ | 16,716 | |
| Accounts payable | | | 18,913 | | | | 14,429 | |
| Construction accounts payable | | | 24,342 | | | | 9,882 | |
| Accrued expenses | | | 50,802 | | | | 48,235 | |
| Deferred revenue | | | 32,095 | | | | 36,939 | |
| | | | | | | |
| Total current liabilities | | | 133,417 | | | | 126,201 | |
| LONG-TERM DEBT, net of current portion | | | 605,279 | | | | 643,630 | |
| DEFERRED RENT LIABILITY | | | 32,187 | | | | 29,048 | |
| DEFERRED INCOME TAXES | | | 89,839 | | | | 77,189 | |
| DEFERRED REVENUE | | | 7,279 | | | | 8,819 | |
| OTHER LIABILITIES | | | 9,901 | | | | 9,207 | |
| | | | | | | |
| Total liabilities | | | 877,902 | | | | 894,094 | |
| | | | | | | |
| SHAREHOLDERS’ EQUITY: | | | | | | | | |
| Common stock | | | 839 | | | | 829 | |
| Additional paid-in capital | | | 414,922 | | | | 395,121 | |
| Retained earnings | | | 424,787 | | | | 344,095 | |
| Accumulated other comprehensive loss | | | 30 | | | | (2,614 | ) |
| | | | | | | |
| Total shareholders’ equity | | | 840,578 | | | | 737,431 | |
| | | | | | | |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 1,718,480 | | | $ | 1,631,525 | |
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LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
| | | | | | | | | | | | | | | | | |
| | | For the | | | For the | |
| | | Three Months Ended | | | Year Ended | |
| | | December 31, | | | December 31, | |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
| | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | | | | | |
| REVENUE: | | | | | | | | | | | | | | | | |
| Membership dues | | $ | 149,899 | | | $ | 139,535 | | | $ | 603,231 | | | $ | 564,605 | |
| Enrollment fees | | | 5,849 | | | | 6,508 | | | | 24,426 | | | | 26,138 | |
| In-center revenue | | | 62,984 | | | | 54,153 | | | | 266,426 | | | | 232,834 | |
| | | | | | | | | | | | | |
| Total center revenue | | | 218,732 | | | | 200,196 | | | | 894,083 | | | | 823,577 | |
| Other revenue | | | 4,941 | | | | 3,502 | | | | 18,761 | | | | 13,424 | |
| | | | | | | | | | | | | |
| Total revenue | | | 223,673 | | | | 203,698 | | | | 912,844 | | | | 837,001 | |
| | | | | | | | | | | | | |
| OPERATING EXPENSES: | | | | | | | | | | | | | | | | |
| Center operations | | | 136,130 | | | | 123,130 | | | | 561,070 | | | | 506,443 | |
| Advertising and marketing | | | 8,158 | | | | 6,154 | | | | 27,098 | | | | 26,299 | |
| General and administrative | | | 15,454 | | | | 9,604 | | | | 48,060 | | | | 42,776 | |
| Other operating | | | 6,398 | | | | 4,061 | | | | 23,544 | | | | 21,852 | |
| Depreciation and amortization | | | 22,928 | | | | 22,643 | | | | 92,313 | | | | 90,770 | |
| | | | | | | | | | | | | |
| Total operating expenses | | | 189,068 | | | | 165,592 | | | | 752,085 | | | | 688,140 | |
| | | | | | | | | | | | | |
| Income from operations | | | 34,605 | | | | 38,106 | | | | 160,759 | | | | 148,861 | |
| | | | | | | | | | | | | |
| OTHER INCOME (EXPENSE): | | | | | | | | | | | | | | | | |
| Interest expense, net | | | (5,989 | ) | | | (7,333 | ) | | | (27,795 | ) | | | (30,338 | ) |
| Equity in earnings of affiliate | | | 270 | | | | 317 | | | | 1,176 | | | | 1,302 | |
| | | | | | | | | | | | | |
| Total other income (expense) | | | (5,719 | ) | | | (7,016 | ) | | | (26,619 | ) | | | (29,036 | ) |
| | | | | | | | | | | | | |
| INCOME BEFORE INCOME TAXES | | | 28,886 | | | | 31,090 | | | | 134,140 | | | | 119,825 | |
| PROVISION FOR INCOME TAXES | | | 11,292 | | | | 12,713 | | | | 53,448 | | | | 47,441 | |
| | | | | | | | | | | | | |
| NET INCOME | | $ | 17,594 | | | $ | 18,377 | | | $ | 80,692 | | | $ | 72,384 | |
| | | | | | | | | | | | | |
| BASIC EARNINGS PER COMMON SHARE | | $ | 0.44 | | | $ | 0.47 | | | $ | 2.03 | | | $ | 1.84 | |
| | | | | | | | | | | | | |
| DILUTED EARNINGS PER COMMON SHARE | | $ | 0.43 | | | $ | 0.46 | | | $ | 2.00 | | | $ | 1.82 | |
| | | | | | | | | | | | | |
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC | | | 40,010 | | | | 39,444 | | | | 39,809 | | | | 39,297 | |
| | | | | | | | | | | | | |
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — DILUTED | | | 40,619 | | | | 40,331 | | | | 40,385 | | | | 39,870 | |
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LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| | | | | | | | | |
| | | For the | |
| | | Year Ended | |
| | | December 31, | |
| | | 2010 | | | 2009 | |
| | | (Unaudited) | | | | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | |
| Net income | | $ | 80,692 | | | $ | 72,384 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
| Depreciation and amortization | | | 92,313 | | | | 90,770 | |
| Deferred income taxes | | | 6,162 | | | | 23,270 | |
| Loss on disposal of property and equipment, net | | | 2,001 | | | | 1,229 | |
| Gain on sale of land held for sale | | | (527 | ) | | | (1,132 | ) |
| Amortization of deferred financing costs | | | 2,706 | | | | 2,544 | |
| Share-based compensation | | | 12,835 | | | | 8,082 | |
| Excess tax benefit related to share-based payment arrangements | | | (2,453 | ) | | | (507 | ) |
| Changes in operating assets and liabilities | | | (1,207 | ) | | | (10,951 | ) |
| Other | | | (257 | ) | | | 514 | |
| | | | | | | |
| Net cash provided by operating activities | | | 192,265 | | | | 186,203 | |
| | | | | | | |
| | | | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | |
| Purchases of property and equipment | | | (131,671 | ) | | | (146,632 | ) |
| Acquisitions, net of cash acquired | | | (16,659 | ) | | | — | |
| Proceeds from sale of property and equipment | | | 851 | | | | 8 | |
| Proceeds from sale of land held for sale | | | 1,019 | | | | 1,954 | |
| Decrease (increase) in other assets | | | (2,943 | ) | | | 390 | |
| Decrease in restricted cash | | | 369 | | | | 995 | |
| | | | | | | |
| Net cash used in investing activities | | | (149,034 | ) | | | (143,285 | ) |
| | | | | | | |
| | | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | |
| Proceeds from long-term borrowings | | | — | | | | 18,151 | |
| Repayments of long-term borrowings | | | (40,394 | ) | | | (11,001 | ) |
| Repayments of revolving credit facility, net | | | (3,900 | ) | | | (56,500 | ) |
| Increase in deferred financing costs | | | (499 | ) | | | (1,092 | ) |
| Excess tax benefit related to share-based payment arrangements | | | 2,453 | | | | 507 | |
| Proceeds from exercise of stock options | | | 5,142 | | | | 2,470 | |
| Proceeds from employee stock purchase plan | | | 907 | | | | — | |
| Stock purchased for employee stock purchase plan | | | (995 | ) | | | — | |
| | | | | | | |
| Net cash used in financing activities | | | (37,286 | ) | | | (47,465 | ) |
| | | | | | | |
| | | | | | | | | |
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | | 5,945 | | | | (4,547 | ) |
| CASH AND CASH EQUIVALENTS — Beginning of period | | | 6,282 | | | | 10,829 | |
| | | | | | | |
| CASH AND CASH EQUIVALENTS — End of period | | $ | 12,227 | | | $ | 6,282 | |
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Non-GAAP Financial Measures This release and the related conference call disclose certain non-GAAP financial measures.
EBITDA and Adjusted EBITDA.Earnings Before Interest, Income Taxes and Depreciation and Amortization (EBITDA) is a non-GAAP disclosure consisting of net income plus interest expense, net, provision for income taxes and depreciation and amortization. This term, as the Company defines 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. The Company uses EBITDA as a measure of operating performance. The funds depicted by EBITDA are not necessarily available for discretionary use if they are reserved for particular capital purposes, to maintain compliance with debt covenants, to service debt or to pay taxes. EBITDA should not be considered as a substitute for net income, net cash provided by operating activities or other income or cash flow data prepared in accordance with GAAP. Additional details related to EBITDA are provided in the Form 8-K that the Company filed with the Securities and Exchange Commission on the date of this press release.
In 4Q 2010, the Company determined that achieving a 2011 earnings per common share performance criteria required for the vesting of 50% of performance share-based restricted stock granted in June 2009 was probable. As a result, the Company recognized a cumulative performance share-based compensation expense of $5.6 million (pretax) in 4Q 2010. Adjusted EBITDA is the Company’s EBITDA excluding the above compensation expense.
Additional details related to EBITDA and Adjusted EBITDA are provided in the Form 8-K that the Company filed with the Securities and Exchange Commission on the date of this press release.
The following table provides a reconciliation of net income, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA:
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA
(In thousands, except margin percentage data)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | | | For the Year Ended | |
| | | December 31, | | | December 31, | |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
| Net income | | $ | 17,594 | | | $ | 18,377 | | | $ | 80,692 | | | $ | 72,384 | |
| Interest expense, net | | | 5,989 | | | | 7,333 | | | | 27,795 | | | | 30,338 | |
| Provision for income taxes | | | 11,292 | | | | 12,713 | | | | 53,448 | | | | 47,441 | |
| Depreciation and amortization | | | 22,928 | | | | 22,643 | | | | 92,313 | | | | 90,770 | |
| | | | | | | | | | | | | |
| EBITDA | | | 57,803 | | | | 61,066 | | | | 254,248 | | | | 240,933 | |
| Performance share-based compensation expense | | | 5,611 | | | | — | | | | 5,611 | | | | — | |
| | | | | | | | | | | | | |
| Adjusted EBITDA | | $ | 63,414 | | | $ | 61,066 | | | $ | 259,859 | | | $ | 240,933 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| EBITDA margin as a percentage of total revenue | | | 25.8 | % | | | 30.0 | % | | | 27.9 | % | | | 28.8 | % |
| Performance share-based compensation expense | | | 2.6 | % | | | 0.0 | % | | | 0.6 | % | | | 0.0 | % |
| | | | | | | | | | | | | |
| Adjusted EBITDA margin as a percentage of total revenue | | | 28.4 | % | | | 30.0 | % | | | 28.5 | % | | | 28.8 | % |
| | | | | | | | | | | | | |
Free Cash Flow.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 the Company defines 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. The Company uses 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 the Form 8-K that the Company filed with the Securities and Exchange Commission on the date of this press release.
The following table provides a reconciliation of net cash provided by operating activities, the most directly comparable GAAP measure, to free cash flow:
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(In thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | | | For the Year Ended | |
| | | December 31, | | | December 31, | |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
| Net cash provided by operating activities | | $ | 46,118 | | | $ | 47,652 | | | $ | 192,265 | | | $ | 186,203 | |
| Less: Purchases of property and equipment | | | (45,539 | ) | | | (29,779 | ) | | | (131,671 | ) | | | (146,632 | ) |
| | | | | | | | | | | | | |
| Free cash flow | | $ | 579 | | | $ | 17,873 | | | $ | 60,594 | | | $ | 39,571 | |
| | | | | | | | | | | | | |
Additional Non-GAAP Financial Measures. In 4Q 2010, the Company determined that achieving a 2011 earnings per common share performance criteria required for the vesting of 50% of performance-based restricted stock granted in June 2009 was probable. As a result, the Company recognized a cumulative performance share-based compensation expense of $5.6 million (pretax) in 4Q 2010. The Company believes that in order to properly understand its short-term and long-term financial trends from operations, investors may find it useful to exclude the impact of this expense from net income, diluted earnings per common share, operating margin and operating expenses. The resulting non-GAAP financial measures may also provide useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and may be useful for period over period comparisons of such operations. Each of the tables below reconciles these non-GAAP financial measures to the most directly comparable GAAP financial measures.
Non-GAAP Net Income. Non-GAAP net income is a non-GAAP financial measure consisting of net income excluding the performance share-based compensation expense recognized in 4Q 2010. The following table provides a reconciliation of net income, the most directly comparable GAAP measure, to non-GAAP net income.
RECONCILIATION OF CONSOLIDATED NET INCOME
TO CONSOLIDATED NON-GAAP NET INCOME
(In thousands)
| | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | | | For the Year Ended | |
| | | December 31, | | | December 31, | |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
| Net income | | $ | 17,594 | | | $ | 18,377 | | | $ | 80,692 | | | $ | 72,384 | |
| Performance share-based compensation expense | | | 3,446 | | | | — | | | | 3,446 | | | | — | |
| | | | | | | | | | | | | |
| Non-GAAP net income | | $ | 21,040 | | | $ | 18,377 | | | $ | 84,138 | | | $ | 72,384 | |
| | | | | | | | | | | | | |
Non-GAAP Diluted Earnings Per Common Share.Non-GAAP diluted earnings per common share is a non-GAAP financial measure consisting of diluted earnings per common share excluding the per common share impact of the performance share-based compensation expense recognized in 4Q 2010. The following table provides a reconciliation of diluted earnings per common share, the most directly comparable GAAP measure, to non-GAAP diluted earnings per common share.
RECONCILIATION OF CONSOLIDATED DILUTED EARNINGS PER COMMON SHARE
TO CONSOLIDATED NON-GAAP DILUTED EARNINGS PER COMMON SHARE
| | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | | | For the Year Ended | |
| | | December 31, | | | December 31, | |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
| Diluted earnings per common share | | $ | 0.43 | | | $ | 0.46 | | | $ | 2.00 | | | $ | 1.82 | |
| Performance share-based compensation expense | | | 0.08 | | | | — | | | | 0.08 | | | | — | |
| | | | | | | | | | | | | |
| Non-GAAP diluted earnings per common share | | $ | 0.52 | * | | $ | 0.46 | | | $ | 2.08 | | | $ | 1.82 | |
| | | | | | | | | | | | | |
Non-GAAP Operating Margin.Non-GAAP operating margin is a non-GAAP financial measure consisting of operating margin excluding the performance share-based compensation expense recognized in 4Q 2010. The following table provides a reconciliation of operating margin, the most directly comparable GAAP measure, to non-GAAP operating margin.
RECONCILIATION OF CONSOLIDATED OPERATING MARGIN
TO CONSOLIDATED NON-GAAP OPERATING MARGIN
(In thousands, except margin percentages)
| | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | | | For the Year Ended | |
| | | December 31, | | | December 31, | |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
| Operating margin | | $ | 34,605 | | | $ | 38,106 | | | $ | 160,759 | | | $ | 148,861 | |
| Performance share-based compensation expense | | | 5,611 | | | | — | | | | 5,611 | | | | — | |
| | | | | | | | | | | | | |
| Non-GAAP operating margin | | $ | 40,216 | | | $ | 38,106 | | | $ | 166,370 | | | $ | 148,861 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Operating margin as a percentage of total revenue | | | 15.5 | % | | | 18.7 | % | | | 17.6 | % | | | 17.8 | % |
| Performance share-based compensation expense | | | 2.5 | % | | | 0.0 | % | | | 0.6 | % | | | 0.0 | % |
| | | | | | | | | | | | | |
| Non-GAAP operating margin as a percentage of total revenue | | | 18.0 | % | | | 18.7 | % | | | 18.2 | % | | | 17.8 | % |
| | | | | | | | | | | | | |
Non-GAAP Operating Expenses. Non-GAAP operating expenses is a non-GAAP financial measure consisting of operating expenses excluding the performance share-based compensation expense recognized in 4Q 2010. The following table provides a reconciliation of operating expenses, the most directly comparable GAAP measure, to non-GAAP operating expenses.
RECONCILIATION OF CONSOLIDATED OPERATING EXPENSES
TO CONSOLIDATED NON-GAAP OPERATING EXPENSES
(In thousands)
| | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | | | For the Year Ended | |
| | | December 31, | | | December 31, | |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
| Operating expenses | | $ | 189,068 | | | $ | 165,592 | | | $ | 752,085 | | | $ | 688,140 | |
| Performance share-based compensation expense | | | 5,611 | | | | — | | | | 5,611 | | | | — | |
| | | | | | | | | | | | | |
| Non-GAAP operating expenses | | $ | 183,457 | | | $ | 165,592 | | | $ | 746,474 | | | $ | 688,140 | |
| | | | | | | | | | | | | |
Reconciliation of 2011 Business Outlook. In 4Q 2010, the Company determined that achieving a 2011 diluted earnings per common share performance criteria required for the vesting of 50% of performance-based restricted stock granted in June 2009 was probable. As a result, the Company anticipates recognizing approximately $4.0 million (pretax) of performance share-based compensation expense in 2011 relating to the June 2009 grants. The Company believes that in order to properly understand its short-term and long-term financial trends from operations, investors may find it useful to exclude the impact of this expense from the Company’s 2011 business outlook. The resulting non-GAAP financial measures may also provide useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and may be useful for period-over-period comparisons of such operations.
As a consequence, the Company’s 2011 business outlook included a non-GAAP net income range, which excludes the anticipated recognition of approximately $4.0 million (pretax) of performance share-based compensation expense. The following table provides a reconciliation of the Company’s anticipated range of 2011 net income to the non-GAAP net income range.
RECONCILIATION OF 2011 BUSINESS OUTLOOK RELATED TO CONSOLIDATED NET INCOME RANGE
TO CONSOLIDATED NON-GAAP NET INCOME RANGE
(In millions)
| | | | | | | | | |
| | | For the Year Ended | |
| | | December 31, 2011 | |
| | | Low | | | High | |
| Net income | | $ | 91.0 | | | $ | 95.0 | |
| Performance share-based compensation expense | | | 2.5 | | | | 2.5 | |
| | | | | | | |
| Non-GAAP net income | | $ | 93.5 | | | $ | 97.5 | |
| | | | | | | |
Similarly, the Company’s 2011 business outlook also included a non-GAAP diluted earnings per common share range, which excludes the per common share impact of the anticipated recognition of approximately $4.0 million (pretax) of performance share-based compensation expense. The following table provides a reconciliation of the Company’s anticipated range of 2011 diluted earnings per common share to the non-GAAP diluted earnings per common share range.
RECONCILIATION OF 2011 BUSINESS OUTLOOK RELATED TO CONSOLIDATED DILUTED EARNINGS
PER COMMON SHARE RANGE TO CONSOLIDATED NON-GAAP DILUTED EARNINGS PER COMMON SHARE RANGE
| | | | | | | | | |
| | | For the Year Ended | |
| | | December 31, 2011 | |
| | | Low | | | High | |
| Diluted earnings per common share | | $ | 2.19 | | | $ | 2.29 | |
| Performance share-based compensation expense | | | 0.06 | | | | 0.06 | |
| | | | | | | |
| Non-GAAP diluted earnings per common share | | $ | 2.25 | | | $ | 2.35 | |
| | | | | | | |
