Lifetime Fitness 2009 Annual Report Download - page 35

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(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. 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,
2009 2008 2007 2006 2005
(In thousands)
Weighted average number of common shares
outstanding – basic ............................................. 39,297 39,002 37,518 36,118 34,592
Effect of dilutive stock options................................ 69 164 476 509 1,739
Effect of dilutive restricted stock awards ................ 504 176 133 152 8
Weighted average number of common shares
outstanding – diluted .......................................... 39,870 39,342 38,127 36,779 36,339
(5) Membership dues, enrollment fees and in-center revenue for a center are included in comparable center revenue
growth – 13 month beginning on the first day of the thirteenth full calendar month of the center’s operation and
are included in comparable center revenue growth – 37 month beginning on the first day of the thirty-seventh
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 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.
(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.
(8) 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.
(9) EBITDA 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.”