Lifetime Fitness 2006 Annual Report Download - page 30

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(2) For the year ended December 31, 2002, we recorded an asset impairment charge of $7.0 million related to our
only executive facility, which is located in downtown Minneapolis, Minnesota, and a restaurant that we
operate separately in the same building. This executive facility and restaurant differ significantly from our
standard model and the initial cash flow results have not been as high as projected. Additionally, this facility
and restaurant are located in a more costly geographic area of downtown Minneapolis. The charge represents
the difference between the fair value of the assets as determined by discounted estimated future cash flows
and the carrying amount of the assets.
(3) In 1999, we formed Bloomingdale LIFE TIME Fitness, L.L.C. (“Bloomingdale LLC”) with two unrelated
organizations for the purpose of constructing, owning and operating a center in Bloomingdale, Illinois. Each
member made an initial capital contribution of $2.0 million and owns a one-third interest in Bloomingdale
LLC. The center commenced operations in February 2001. The terms of the relationship among the members
are governed by an operating agreement. Bloomingdale LLC is accounted for as an investment in an
unconsolidated affiliate and is not consolidated in our financial statements.
(4) The diluted weighted average number of common shares outstanding is the weighted average number of
common shares plus the weighted average conversion of any dilutive common stock equivalents, such as
redeemable preferred stock, the assumed weighted average exercise of dilutive stock options using the
treasury stock method, and unvested restricted stock awards using the treasury stock method. For the year
ended December 31, 2002, only the shares issuable upon the exercise of stock options were dilutive. For the
year ended December 31, 2003, the shares issuable upon the exercise of stock options and the conversion of
redeemable preferred stock were dilutive. For the year ended December 31, 2004, the shares issuable upon
the exercise of stock options, the conversion of redeemable preferred stock and the vesting of all restricted
stock awards were dilutive. As a result of our initial public offering, the redeemable preferred stock converted
to common stock and the accretion on redeemable preferred stock discontinued. For the years ended
December 31, 2005 and December 31, 2006, the shares issuable upon the exercise of stock options and the
vesting of all restricted stock awards were dilutive.
The following table summarizes the weighted average number of common shares for basic and diluted
earnings per share computations:
December 31,
2006 2005 2004 2003 2002
(In thousands)
Weighted average number of common shares
outstanding – basic ......................................
.
36,118 34,592 24,727 16,072 15,054
Effect of dilutive stock options ..........................
.
509 1,739 1,943 1,522 1,376
Effect of dilutive restricted stock awards...........
.
152 8 2 — —
Effect of dilutive redeemable preferred shares
outstanding ...................................................
.
— — 6,453 11,018 —
Weighted average number of common shares
outstanding – diluted ....................................
.
36,779 36,339 33,125 28,612 16,430
(5) Membership dues, enrollment fees and in-center revenue for a center are included in comparable center
revenue growth beginning on the first day of the thirteenth full calendar month of the center’s operation.
(6) Average revenue per membership is total center revenue for the period divided by an average number of
memberships for the period, where average number of memberships for the period is derived from dividing
the sum of the total memberships outstanding at the end of each month during the period by the total number
of months in the period.
(7) Average in-center revenue per membership is total in-center revenue for the period divided by the average
number of memberships for the period, where the average number of memberships for the period is derived
from dividing the sum of the total memberships outstanding at the end of each month during the period by the
total number of months in the period.