8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 27, 2006

Red Lion Hotels Corporation

(Exact Name of Registrant as Specified in Charter)

Washington	001-13957	91-1032187
(State or other jurisdiction of incorporation)	(Commission file number)	(I.R.S. Employer Identification No.)

201 W. North River Drive
Suite 100
Spokane, Washington	99201
(Address of Principal Executive Offices)	(Zip Code)

(509) 459-6100

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02. Results of Operations and Financial Condition

On April 27, 2006, the registrant issued a press release setting forth its financial results for the first quarter ended March 31, 2006. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K.

ITEM 9.01. Financial Statements and Exhibits

(c) Exhibits.

The following exhibit is furnished pursuant to Item 2.02 hereof:

Exhibit No.	Exhibit
99.1	Press release dated April 27, 2006 reporting financial results for the first quarter ended March 31, 2006.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

RED LION HOTELS CORPORATION
(Registrant)

/s/ Anupam Narayan

Executive Vice President,

Chief Investment Officer and

Chief Financial Officer

(Signature)

April 27, 2006
(Date)

EXHIBIT INDEX

Exhibit No.	Exhibit
99.1	Press release dated April 27, 2006 reporting financial results for the first quarter ended March 31, 2006.

EX-99.1

EXHIBIT 99.1

PRESS RELEASE

For Immediate Release

Date:	April 27, 2006
Contact:	Red Lion Hotels Corporation
	Julie Langenheim, Investor Relations Manager
	(509) 777-6322
	InvestorRelations@RedLion.com
	or
	CCG Investor Relations
	Crocker Coulson, President
	(310) 231-8600 ext 103
	crocker.coulson@ccgir.com

Red Lion Hotels Corporation Reports First Quarter
Results

RevPAR Increases 8.7%
EBITDA from Continuing Operations Increases 30.9%

SPOKANE, WA, April 27, 2006 – Red Lion Hotels Corporation (NYSE:RLH) today announced results for the first quarter ended March 31, 2006.

Financial and Operational Highlights

• RevPAR (revenue per available room) at system-wide hotels increased 8.7%

• ADR (average daily rate) at system-wide hotels increased 9.7%

• Revenues from continuing operations increased 3.2% to $36.6 million

• Net loss from continuing operations narrowed to $2.7 million

• EBITDA from continuing operations increased 30.9%, to $2.3 million

• Completed the sale of $5.3 million in non-core real estate

• Room renovations substantially completed in 11 of 31 owned and leased hotels

• Announced divestment of real estate management business

Arthur M. Coffey, President and CEO of Red Lion Hotels Corporation, commenting on the quarter, said, “The first quarter of 2006 was very successful for our company. We increased revenues, improved our operations and achieved double-digit growth in EBITDA. Our room renovation program is well underway and on track for completion in mid-2006, in time for the busiest travel season of the year. We also recently announced the divestment of our commercial real estate management business, which will allow us to increase our focus on our core hotel business and on our strategy to enhance and expand the Red Lion brand.”

First Quarter Results:

The company’s total revenues from continuing operations during the quarter were $36.6 million, up 3.2% from the same quarter of 2005. Revenues in the hotels segment were up 2.3% to $31.0 million. Franchise and management revenues declined $0.2 million in the quarter. Higher franchise and management revenues in the previous first quarter included a $0.3 million management contract termination fee triggered by the sale of a hotel that had previously left the system. Revenues in the real estate segment increased $0.1 million in the first quarter of 2006. Revenues in the entertainment segment increased $0.6 million to $3.4 million, due mainly to differences in the type and mix of shows presented in the two quarters.

EBITDA from continuing operations was $2.3 million, up 30.9% from the first quarter of 2005, driven primarily by improved operating results in the hotel segment. Net loss from continuing operations narrowed to $2.7 million, compared to a net loss of $3.0 million in the same quarter last year. Overall net loss narrowed to $3.0 million, or $(0.22) per fully diluted share, compared to a net loss of $3.1 million, or $(0.24) per fully diluted share, in the same quarter last year. The company’s quarterly net loss includes a $0.2 million non-cash charge resulting from new accounting rules requiring the expensing of equity-based compensation.

Hotel Operations

In the first quarter of 2006, RevPAR for comparable system-wide hotels (hotels owned, leased, managed and franchised for at least one year) increased 8.7% over the same quarter of the previous year, to $38.65. This increase was the result of a 9.7% increase in ADR (average daily rate) to $74.98, which was partially offset by a 0.5 percentage point decline in average occupancy during the quarter.

Revenues from continuing operations for owned and leased hotels increased 2.3%, to $31.0 million. This increase was due to a 4.2% increase in RevPAR, which was partially offset by declines in food and beverage revenues and other incidental revenues associated with lower occupancy during the quarter. The increase in RevPAR was driven by a 9.7% increase in ADR while occupancy declined by 2.7 percentage points due mainly to the displacement impact of renovations. It should be noted that in comparing RevPAR and occupancy, the company does not exclude rooms out of service for renovation at its owned and leased hotels. During the quarter, EBITDA for the hotels segment increased $0.5 million to $1.5 million. Hotels segment direct operating margin improved to 10.2% in the first quarter of 2006, from 8.9% in the first quarter of 2005.

“Red Lion produced another quarter of RevPAR growth at system-wide hotels despite the decline in occupancy associated with a significant number of rooms being out of service for renovation at owned and leased hotels. We believe the physical improvements we are making to the hotels are driving increases in average daily rates,” commented John Taffin, Executive Vice President, Hotel Operations. “We scheduled our renovation program to take place during the slowest travel seasons of the year in order to minimize the impact of out of service rooms on our hotel operations. Although we expect to experience some additional displacement in the second quarter that will adversely impact our occupancy, upon completion of our room renovations, we will enter the peak travel season in the third quarter with an attractively updated room product.”

Capital Reinvestment Program and Renovation Update

As of March 31, 2006, the company had substantially completed room renovations at 11 of 31 owned and leased hotels. Three of those hotels substantially completed renovations in the fourth quarter of 2005: Red Lion Hotel Seattle Airport in Washington, Red Lion Hotel Boise Downtowner in Idaho and the Red Lion Hotel Kelso in Washington. Average RevPAR at these hotels increased 28.0% in the first quarter of 2006, driven by an increase of 18.5% in ADR and a 4.7 percentage point increase in occupancy. This follows average RevPAR growth in these same hotels of 14.5% in the fourth quarter of 2005. The remainder of the company’s room renovation plan is expected to be completed by mid-2006.

Other Highlights and Recent Events

In the first quarter of 2006, the company completed the sale of the Red Lion Hotel Hillsboro and the Executive Court portion of the WestCoast Ridpath Hotel. By March 31, 2006, closings under the company’s property disposition plan yielded aggregate gross proceeds of approximately $58.3 million. The company has utilized the net proceeds to fund its hotel renovation program and retire approximately $18.1 million in associated debt. The company continues to actively pursue disposition of the remaining three hotels originally identified for sale.

On March 27, 2006, the company entered into a revised credit agreement with Wells Fargo Bank, N.A. providing for a revolving credit facility with a total of $10 million in borrowing capacity for working capital purposes. This facility provides for a two-year $6 million line of credit secured by two hotels, and a one-year $4 million line of credit secured by personal property. The company has no outstanding borrowings under these lines of credit.

On April 11, 2006, the company announced an agreement to divest the real estate management portion of its real estate division in a tax-free reorganization. The divestment is expected to be completed on April 30, 2006. For the full year 2005, the real estate management business contributed $2.3 million and $0.1 million to the company’s revenue and operating income, respectively. The divested business will continue to manage the company’s office and retail assets after the divestment.

“Our results in the first quarter demonstrate that the resources we have committed to the enhancement of the Red Lion brand continue to produce positive results. As we enter the second quarter, we will continue our efforts to improve our product and enhance and expand the presence of the Red Lion brand. We look forward to the successful execution of our initiatives driving long-term growth,” Coffey concluded.

Conference Call

The company will host a conference call at 11:00 a.m. PT (2:00 p.m. ET) on Thursday, April 27, 2006 to discuss earnings for the first quarter ended March 31, 2006. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: (800) 553-0351. International callers should dial (612) 332-0819. There is no pass code required for this call. This conference call will be broadcast live over the Internet and can be accessed by all interested parties at www.redlion.com, in the Investor Relations portion of the website. To listen to the live call, please go to the Red Lion Hotels Corporation website at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software. For those unable to participate during the live broadcast, a replay will

be available beginning at 2:30 p.m. PT on April 27, 2006 through May 12, 2006 at (800) 475-6701 or (320) 365-3844 (International) access code – 827087. The replay will also be available shortly after the call on the Red Lion Hotels Corporation website for 90 days.

About Red Lion Hotels Corporation

Red Lion Hotels Corporation (NYSE: RLH) is a hospitality and leisure company primarily engaged in the ownership, management, development and franchising of midscale and upscale full service hotels under its Red Lion^® brand. As of March 31, 2006 the Red Lion hotel network was comprised of 61 hotels located in 10 states and one Canadian province, with 10,687 rooms and 521,537 square feet of meeting space. In addition, through its entertainment division, which includes its TicketsWest.com, Inc. subsidiary, it engages in event ticket distribution and promotes and presents a variety of entertainment productions.

This press release contains forward-looking statements within the meaning of federal securities law, including statements concerning plans, objectives, goals, strategies, projections of future events or performance and underlying assumptions (many of which are based, in turn, upon further assumptions). The forward-looking statements in this press release are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those expressed. Such risks and uncertainties include, among others, economic cycles; international conflicts; changes in future demand and supply for hotel rooms; competitive conditions in the lodging industry; relationships with franchisees and properties; impact of government regulations; ability to obtain financing; changes in energy, healthcare, insurance and other operating expenses; ability to sell non-core assets; ability to locate lessees for rental property and managing and leasing properties owned by third parties; dependency upon the ability and experience of executive officers and ability to retain or replace such officers as well as other matters discussed in the company’s annual report on Form 10-K for the 2005 fiscal year and in other documents filed by the company with the Securities and Exchange Commission.

# # #

Red Lion Hotels Corporation
Consolidated Statements of Operations
(unaudited)
($ in thousands, except footnotes)

	Three months ended March 31,
	2006			2005			$ Change			% Change
Revenue:
Hotels	$	31,028		$	30,342		$	686			2.3	%
Franchise and management		576			811			(235	)		-29.0	%
Entertainment		3,371			2,805			566			20.2	%
Real estate		1,340			1,229			111			9.0	%
Other		283			285			(2	)		-0.7	%
Total revenues		36,598			35,472			1,126			3.2	%
Operating expenses:
Hotels		27,876			27,649			227			0.8	%
Franchise and management		222			97			125			128.9	%
Entertainment		2,900			2,468			432			17.5	%
Real estate		916			838			78			9.3	%
Other		236			216			20			9.3	%
Depreciation and amortization		3,122			2,839			283			10.0	%
Hotel facility and land lease		1,695			1,740			(45	)		-2.6	%
Gain on asset dispositions, net		(182	)		(188	)		6			3.2	%
Undistributed corporate expenses		984			952			32			3.4	%
Total expenses		37,769			36,611			1,158			3.2	%
Operating loss		(1,171	)		(1,139	)		(32	)		-2.8	%
Other income (expense):
Interest expense		(3,491	)		(3,601	)		110			3.1	%
Minority interest in partnerships, net		(26	)		49			(75	)		-153.1	%
Other income (loss), net		360			(4	)		364			-9100.0	%
Loss from continuing operations before income taxes		(4,328	)		(4,695	)		367			7.8	%
Income tax benefit		(1,599	)		(1,695	)		96			5.6	%
Net loss from continuing operations		(2,729	)		(3,000	)		271			9.0	%
Discontinued operations:
Loss from operations of discontinued business units, net of income tax benefit of $151 and $121		(274	)		(123	)		(151	)		-122.8	%
Net gain on disposal of discontinued business units, net of income tax expense of $16		30			—			30
Loss from discontinued operations		(244	)		(123	)		(121	)		-98.4	%
Net loss	$	(2,973	)	$	(3,123	)	$	150			4.8	%
EBITDA (1)	$	1,947		$	1,912		$	35			1.8	%
EBITDA as a percentage of revenues (2)		5.1	%		4.7	%
EBITDA from continuing operations (1)	$	2,285		$	1,745		$	540			30.9	%
EBITDA from continuing operations (2) as a percentage of revenues		6.2	%		4.9	%

⁽¹⁾  The definition of “EBITDA” and how that measure relates to net income is discussed further in this release under Non-GAAP Financial Measures. EBITDA represents net income (or loss) before interest expense, income tax benefit or expense, depreciation, and amortization. EBITDA is not intended to represent net income as defined by generally accepted accounting principles in the United States and such information should not be considered as an alternative to net income, cash flows from operations or any other measure of performance prescribed by generally accepted accounting principles in the United States. We utilize EBITDA because management believes that investors find it to be a useful tool to perform more meaningful comparisons of past, present and future operating results and as a means to evaluate the results of core on-going operations. EBITDA from continuing operations is calculated in the same manner, but excludes the operating activities of business units identified as discontinued.

⁽²⁾ The calculation of EBITDA as a percentage of revenues is based upon total operating revenues, from both continuing and discontinued operations, of $38,025,000 and $40,637,000 for the three months ended March 31, 2006 and 2005, respectively. EBITDA from continuing operations as a percentage of revenues is based upon the operating results of continuing business units as presented in the statements.

Red Lion Hotels Corporation
Earnings Per Share and Hotel Statistics
(unaudited)
(Shares in thousands)

	Three months ended March 31,
	2006			2005
Earnings per common share — basic and diluted: (1)
Net loss from continuing operations	$	(0.21	)	$	(0.23	)
Loss from discontinued operations		(0.01	)		(0.01	)
Net loss	$	(0.22	)	$	(0.24	)
Weighted average shares — basic and diluted		13,235			13,078

Key Comparable System-wide Hotel Statistics: ⁽²⁾

	Three months ended March 31,
	2006			2005			$ Change		% Change
Average occupancy(3)		51.5	%		52.0	%
ADR(4)	$	74.98		$	68.34		$	6.64		9.7	%
RevPAR(5)	$	38.65		$	35.55		$	3.10		8.7	%

⁽¹⁾ For the three months ended March 31, 2006 and 2005, all of the 1,206,489 and 1,066,400 outstanding options to purchase common shares were considered anti-dilutive. For those same periods, all of the 142,663 and 286,161 convertible operating partnership (“OP”) units, respectively, were considered anti-dilutive, as were all convertible debt instruments.

⁽²⁾ Includes all hotels owned, leased, managed and franchised by Red Lion Hotels Corporation for each of the periods presented, including hotels classified as discontinued operations.

⁽³⁾Average occupancy represents total paid rooms divided by total available rooms. Total available rooms represents the number of rooms available multiplied by the number of days in the reported period and includes rooms taken out of service for renovation.

⁽⁴⁾ Average daily rate (“ADR”) represents total room revenues divided by the total number of paid rooms occupied by hotel guests.

⁽⁵⁾ Revenue per available room (“RevPAR”) represents total room and related revenues divided by total available rooms.

Red Lion Hotels Corporation
Consolidated Balance Sheets
(unaudited)
($ in thousands, except share data)

	March 31,		December 31,
	2006		2005
Assets:
Current assets:
Cash and cash equivalents	$	17,439	$	28,729
Restricted cash		8,977		8,821
Accounts receivable, net		8,779		8,755
Inventories		1,657		1,712
Prepaid expenses and other		3,175		1,610
Assets held for sale:
Assets of discontinued operations		14,753		20,217
Other assets held for sale		715		715
Total current assets		55,495		70,559
Property and equipment, net		244,592		235,444
Goodwill		28,042		28,042
Intangible assets, net		12,663		12,852
Other assets, net		8,661		8,699
Total assets	$	349,453	$	355,596
Liabilities:
Current liabilities:
Accounts payable	$	5,108	$	7,057
Accrued payroll and related benefits		4,264		5,520
Accrued interest payable		672		676
Advance deposits		541		198
Other accrued expenses		10,343		9,752
Long-term debt, due within one year		3,658		3,731
Liabilities of discontinued operations		2,663		3,089
Total current liabilities		27,249		30,023
Long-term debt, due after one year		125,768		126,633
Deferred income		7,581		7,770
Deferred income taxes		13,720		13,420
Minority interest in partnerships		6,832		9,080
Debentures due Red Lion Hotels Capital Trust		47,423		47,423
Total liabilities		228,573		234,349
Stockholders’ equity:
Preferred stock - 5,000,000 shares authorized; $0.01 par value; no shares issued or outstanding		—		—
Common stock - 50,000,000 shares authorized; $0.01 par value; 13,299,022 and 13,131,282 shares issued and outstanding		133		131
Additional paid-in capital, common stock		87,436		84,832
Retained earnings		33,311		36,284
Total stockholders’ equity		120,880		121,247
Total liabilities and stockholders’ equity	$	349,453	$	355,596

Red Lion Hotels Corporation
Consolidated Statement of Cash Flows
(unaudited)
($ in thousands)

	Three months ended March 31,
	2006			2005
Operating activities:
Net loss	$	(2,973	)	$	(3,123	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		3,123			2,874
Gain on disposition of property, equipment and other assets, net		(182	)		(94	)
Gain on disposition of discontinued operations, net		(46	)		—
Deferred income tax provision		300			300
Minority interest in partnerships		25			(50	)
Equity in investments		24			9
Compensation expense related to stock issuance		190			5
Provision for doubtful accounts		182			(28	)
Change in current assets and liabilities:
Restricted cash		(156	)		(280	)
Accounts receivable		91			(927	)
Inventories		57			23
Prepaid expenses and other		(1,512	)		(1,846	)
Accounts payable		(1,975	)		304
Accrued payroll and related benefits		(1,585	)		1,036
Accrued interest payable		2			(34	)
Other accrued expenses and advance deposits		943			3,171
Net cash provided by (used in) operating activities		(3,492	)		1,340
Investing activities:
Purchases of property and equipment		(11,971	)		(2,283	)
Proceeds from disposition of property and equipment		14			—
Proceeds from disposition of discontinued operations		5,137			—
Other, net		(106	)		58
Net cash used in investing activities		(6,926	)		(2,225	)
Financing activities:
Proceeds from note payable to bank		—			50
Repayment of note payable to bank		—			(50	)
Proceeds from long-term debt		—			3,794
Repayment of long-term debt		(1,052	)		(4,871	)
Proceeds from issuance of common stock under employee stock purchase plan		65			67
Proceeds from stock option exercises		78			33
Additions to deferred financing costs		(6	)		(270	)
Net cash used in financing activities		(915	)		(1,247	)
Net cash in discontinued operations		43			(260	)
Change in cash and cash equivalents:
Net decrease in cash and cash equivalents		(11,290	)		(2,392	)
Cash and cash equivalents at beginning of period		28,729			9,577
Cash and cash equivalents at end of period	$	17,439		$	7,185

Red Lion Hotels Corporation
Additional Hotel Statistics
(unaudited)

System-wide Hotels as of March 31, 2006

					Meeting Space
	Hotels		Rooms		(sq. ft.)
Owned and Leased Hotels: (1)
Red Lion Hotels		31		5,796		297,628
Other		3		615		30,108
		34		6,411		327,736
Managed Hotels		1		254		36,000
Red Lion Franchised Hotels		26		4,022		157,801
Total		61		10,687		521,537
Total Red Lion Hotels		57		9,818		455,429

Comparable Hotel Statistics⁽²⁾

	Three months ended March 31, 2006							Three months ended March 31, 2005
	Average							Average
	Occupancy (3)			ADR (4)		RevPAR(5)		Occupancy (3)			ADR (4)		RevPAR (5)
Owned and Leased Hotels:
Continuing Operations		51.3	%	$	73.84	$	37.90		54.0	%	$	67.33	$	36.37
Discontinued Operations		28.8	%	$	59.32	$	17.08		30.6	%	$	56.80		17.38
Combined Owned and Leased Hotels		49.1	%	$	73.02	$	35.88		51.5	%	$	66.66		34.33
System-wide (6)		51.5	%	$	74.98	$	38.65		52.0	%	$	68.34	$	35.55
Red Lion Hotels (7)		52.9	%	$	74.16	$	39.25		53.2	%	$	67.60	$	35.96

⁽¹⁾ Statistics include three hotels identified as discontinued business units, aggregating 621 rooms and 28,408 square feet of meeting space.

⁽²⁾ Includes all hotels owned, leased, managed and franchised by Red Lion Hotels Corporation for each of the periods presented.

⁽³⁾ Average occupancy represents total paid rooms divided by total available rooms. Total available rooms represents the number of rooms available multiplied by the number of days in the reported period and includes rooms taken out of service for renovation.

⁽⁴⁾ Average daily rate (“ADR”) represents total room revenues divided by the total number of paid rooms occupied by hotel guests.

⁽⁵⁾ Revenue per available room (“RevPAR”) represents total room and related revenues divided by total available rooms.

⁽⁶⁾ Includes all hotels owned, leased, managed and franchised for greater than one year by Red Lion Hotels Corporation. Includes three hotels classified as discontinued operations.

⁽⁷⁾ Includes all hotels owned, leased, managed and franchised for greater than one year operated under the Red Lion brand name. Includes one hotel classified as discontinued operations.

Red Lion Hotels Corporation
Reconciliation of EBITDA to Net Income
(unaudited)
($ in thousands)

The following is a reconciliation of EBITDA and EBITDA from continuing operations to net income for the periods presented:

	Three months ended
	March 31,
	2006			2005
EBITDA from continuing operations	$	2,285		$	1,745
Income tax benefit — continuing operations		1,599			1,695
Interest expense — continuing operations		(3,491	)		(3,601	)
Depreciation and amortization — continuing operations		(3,122	)		(2,839	)
Net loss from continuing operations		(2,729	)		(3,000	)
Loss from discontinued operations		(244	)		(123	)
Net loss	$	(2,973	)	$	(3,123	)
EBITDA	$	1,947		$	1,912
Income tax benefit		1,734			1,817
Interest expense		(3,531	)		(3,978	)
Depreciation and amortization		(3,123	)		(2,874	)
Net income	$	(2,973	)	$	(3,123	)

NON-GAAP FINANCIAL MEASURES

EBITDA is defined as net income (or loss), before interest, taxes, depreciation and amortization. EBITDA is considered a non-GAAP financial measurement. We believe it is a useful financial performance measure for us and for our shareholders and is a complement to net income and other financial performance measures provided in accordance with generally accepted accounting principles in the United States (“GAAP”). EBITDA from continuing operations is calculated in the same manner, but excludes the operating results of business units identified as discontinued under GAAP.

We use EBITDA to measure the financial performance of our owned and leased hotels because it excludes interest, taxes, depreciation and amortization, which bear little or no relationship to operating performance. By excluding interest expense, EBITDA measures our financial performance irrespective of our capital structure or how we finance our properties and operations. We generally pay federal and state income taxes on a consolidated basis, taking into account how the applicable taxing laws apply to our company in the aggregate. By excluding taxes on income, we believe EBITDA provides a basis for measuring the financial performance of our operations excluding factors that our hotels and other operations cannot control. By excluding depreciation and amortization expense, which can vary from hotel to hotel based on historical cost and other factors unrelated to the hotels’ financial performance, EBITDA measures the financial performance of our hotels without regard to their historical cost. For all of these reasons, we believe that EBITDA provides us and investors with information that is relevant and useful in evaluating our business.

However, because EBITDA excludes depreciation and amortization, it does not measure the capital we require to maintain or preserve our long-lived assets. In addition, because EBITDA does not reflect interest expense, it does not take into account the total amount of interest we pay on outstanding debt nor does it show trends in interest costs due to changes in our borrowings or changes in interest rates. EBITDA, as defined by us, may not be comparable to EBITDA as reported by other companies that do not define EBITDA exactly as we define the term. Because we use EBITDA to evaluate our financial performance, we reconcile all EBITDA measures to net income, which is the most comparable financial measure calculated and presented in accordance with GAAP. EBITDA does not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to operating income or net income determined in accordance with GAAP as an indicator of performance or as an alternative to cash flows from operating activities as an indicator of liquidity.