Lifetime Fitness 2006 Annual Report Download - page 61

LIFE TIME FITNESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
55
resolution of these tax matters in a particular future period could have a material impact on our consolidated
statement of operations.
7. Initial Public Offering and Capital Stock
The registration statement filed in connection with our initial public offering was declared effective on June 29,
2004. Our shares began trading on the New York Stock Exchange on June 30, 2004. We closed this transaction and
received proceeds from the initial public offering on July 6, 2004. The initial public offering consisted of 11,385,000
shares of common stock, including the underwriters’ over-allotment option of 1,485,000 common shares. Of the
shares of common stock sold in the initial public offering, we sold 4,774,941 shares, resulting in proceeds of
$80,398, net of underwriting discounts and commissions and offering expenses payable by us of $7,684. We used a
portion of the net proceeds to repay amounts outstanding under our former revolving credit facility. We used the
remaining net proceeds to finance our growth by opening additional centers.
As a result of the our initial public offering, our previously outstanding redeemable preferred stock converted into
common stock and accretion on redeemable preferred stock discontinued.
8. Share-Based Compensation
The FCA, Ltd. 1996 Stock Option Plan (the 1996 Plan) reserved up to 2,000,000 shares of our common stock for
issuance. Under the 1996 Plan, the Board of Directors had the authority to grant incentive and nonqualified options
to purchase shares of the our common stock to eligible employees, directors, and contractors at a price of not less
than 100% of the fair market value at the time of the grant. Incentive stock options expire no later than 10 years
from the date of grant, and nonqualified stock options expire no later than 15 years from the date of grant. As of
December 31, 2006, we had granted a total of 1,700,000 options to purchase common stock under the 1996 Plan, of
which 37,000 were outstanding. In connection with approval of the Life Time Fitness, Inc. 2004 Long-Term
Incentive Plan (the 2004 Plan), as discussed below, our Board of Directors approved a resolution to cease making
additional grants under the 1996 Plan.
The LIFE TIME FITNESS, Inc. 1998 Stock Option Plan (the 1998 Plan), reserved up to 1,600,000 shares of our
common stock for issuance. Under the 1998 Plan, the Board of Directors had the authority to grant incentive and
nonqualified options to purchase shares of our common stock to eligible employees, directors and contractors at a
price of not less than 100% of the fair market value at the time of the grant. Incentive stock options expire no later
than 10 years from the date of grant, and nonqualified stock options expire no later than 15 years from the date of
grant. The 1998 Plan was amended in December 2003 by our Board of Directors and shareholders to reserve an
additional 1,500,000 shares of our common stock for issuance. As of December 31, 2006, we had granted a total of
1,957,500 options to purchase common stock under the 1998 Plan, of which 492,607 were outstanding. In
connection with approval of the 2004 Plan, as discussed below, our Board of Directors approved a resolution to
cease making additional grants under the 1998 Plan.
The 2004 Plan reserved up to 3,500,000 shares of our common stock for issuance. Under the 2004 Plan, the
Compensation Committee of our Board of Directors administers the 2004 Plan and has the power to select the
persons to receive awards and determine the type, size and terms of awards and establish objectives and conditions
for earning awards. The types of awards that may be granted under the 2004 Plan include incentive and non-
qualified options to purchase shares of common stock, stock appreciation rights, restricted shares, restricted share
units, performance awards and other types of stock-based awards. We use the term “restricted shares” to define
nonvested shares granted to employees, whereas SFAS 123(R) reserves that term for fully vested and outstanding
shares whose sale is contractually or governmentally prohibited for a specified period of time. Eligible participants
under the 2004 Plan include our officers, employees, non-employee directors and consultants. Each award
agreement will specify the number and type of award, together with any other terms and conditions as determined by
the Compensation Committee of the Board of Directors or its designees. In connection with approval of the 2004
Plan, our Board of Directors approved a resolution to cease making additional grants under the 1996 Plan and 1998
Plan. During 2006, we issued 156,164 shares of restricted stock. The value of the restricted shares was based upon