Lifetime Fitness 2008 Annual Report Download - page 32

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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.
(3) 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, 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, 2006, 2007 and 2008, 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,
2008 2007 2006 2005 2004
(In thousands)
Weighted average number of common shares
outstanding – basic .......................................
.
39,002 37,518 36,118 34,592 24,727
Effect of dilutive stock options ..........................
.
164 476 509 1,739 1,943
Effect of dilutive restricted stock awards ...........
.
176 133 152 8 2
Effect of dilutive redeemable preferred shares
outstanding ...................................................
.
— — — — 6,453
Weighted average number of common shares
outstanding – diluted ....................................
.
39,342 38,127 36,779
36,339 33,125
(4) 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.
(5) 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.
(6) 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.
(7) EBITDA consists of net income plus interest expense, net, provision for income taxes and depreciation and
amortization. This term, as we define 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. We use EBITDA as a
measure of operating performance. EBITDA 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 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 are provided in “Management’s Discussion and Analysis of Financial Condition and
Results of Operations — Non-GAAP Financial Measures.”