Lifetime Fitness 2010 Annual Report Download - page 35

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29
operations expense and approximately $4.4 million is reflected in general and administrative expense. We
anticipate recognizing the remaining portion of performance share-based compensation expense of
approximately $4.0 million (pretax) ratably in 2011.
(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 using the equity method.
(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, 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,
2010 2009 2008 2007 2006
(In thousands)
Weighted average number of common shares
outstanding – basic ........................................
.
39,809 39,297 39,002 37,518 36,118
Effect of dilutive stock options...........................
.
156 69 164 476 509
Effect of dilutive restricted stock awards ...........
.
420 504 176 133 152
Weighted average number of common shares
outstanding – diluted .....................................
.
40,385 39,870 39,342 38,127 36,779
(5) Membership dues, enrollment fees and in-center revenue for a center are included in same 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 same 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 (or trailing 12 month 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. The annual attrition rate for the year ended December 31, 2010 includes a
small positive impact due to a change in calculation methodology adopted April 1, 2010 in which we exclude
potential memberships who elect to cancel during their 14-day trial as members.
(9) EBITDA is a non-cash measure which 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