Lifetime Fitness 2006 Annual Report Download - page 64

LIFE TIME FITNESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
58
The options granted generally vest over a period of four to five years from the date of grant. The following table
summarizes information concerning options outstanding and exercisable as of December 31, 2006:
Range of Exercise Prices
Number
Outstanding
Weighted
Average
Remaining
Contractual Life
(Years)
Weighted
Average
Exercise
Price
Number
Exercisable
Weighted
Average
Exercise
Price
$1.66 to $8.00 ...........................................
.
392,050 4.63 $ 7.19 244,650 $6.70
$12.00 to $18.50 .......................................
.
511,357 7.35 16.75 328,557 17.09
$22.15 to $25.47 .......................................
.
573,823 8.09 25.14 149,800 24.40
$26.15 to $48.59 .......................................
.
247,369 8.89 36.17
38,848 31.46
$1.66 to $48.59 .........................................
.
1,724,599 7.20 $20.15
761,855 $15.92
Our net cash proceeds from the exercise of stock options were $15.3 million and $6.2 million for the years ended
December 31, 2006 and 2005, respectively. The actual income tax benefit realized from stock option exercises was
$10.2 million and $9.2 million, respectively, for those same periods. Prior to the adoption of SFAS 123(R), we
reported all tax benefits resulting from the exercise of stock options as cash flows from operating activities in our
consolidated statements of cash flows. In accordance with SFAS 123(R), for the year ended December 31, 2006, the
excess tax benefits from the exercise of stock options are presented as cash flows from financing activities.
Our employee stock purchase program (ESPP) provides for the sale of our common stock to our employees at
discounted purchase prices. The cost per share under this plan is currently 90% of the fair market value of our
common stock on the last day of the purchase period, as defined. The first purchase period under the ESPP began
July 1, 2006 and ended December 31, 2006. Compensation expense under the ESPP, which was $52 for 2006, is
based on the discount of 10% at the end of the purchase period, which was $4.85 per share at December 31, 2006.
$486 was withheld from employees for the purpose of purchasing shares under the ESPP. There were 1,491,500 shares of
common stock available for purchase under the ESPP as of December 31, 2006.
In June 2006, our Board of Directors authorized the repurchase of 500,000 shares of our common stock from time to time in
the open market or otherwise for the primary purpose of offsetting the dilutive effect of shares pursuant to our Employee
Stock Purchase Plan. During the fourth quarter of 2006, we repurchased 8,500 shares for approximately $421. As of
December 31, 2006, there were 491,500 remaining shares authorized to be repurchased for this purpose. The shares
repurchased to date have been purchased in the open market and, upon repurchase, became authorized, but unissued shares
of our common stock.
9. Operating Segments
Our operations are conducted mainly through our sports and athletic, professional fitness, family recreation and
resort/spa centers. We have aggregated the activities of our centers into one reportable segment as none of the
centers meet the quantitative thresholds for separate disclosure under SFAS No. 131, “Disclosures about Segments
of an Enterprise and Related Information,” and each of the centers has similar expected economic characteristics,
service and product offerings, customers and design. Our chief operating decision makers use EBITDA as the
primary measure of segment performance. For purposes of segment financial reporting and discussion of results of
operations, “Centers” represent the revenue and associated costs (including general and administrative expenses)
from membership dues and enrollment fees, all in-center activities including personal training, spa, cafe and other
activities offered to members and non-member participants and rental income generated at the centers. Included in
the “All Other” category in the table below is operating information related to nutritional products, media, athletic
events, and a restaurant, and expenses, including interest expense, and corporate assets (including depreciation and
amortization) not directly attributable to centers. The accounting policies of the “Centers” and operations classified
as “All Other” are the same as those described in the summary of significant accounting policies.