Lifetime Fitness 2007 Annual Report Download - page 66

LIFE TIME FITNESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
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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, 2007:
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......................... 202,165 4.1 $ 7.68 145,965 $ 7.55
$12.00 to $18.50 ..................... 439,397 6.4 16.80 342,097 16.79
$22.15 to $25.47 ..................... 366,601 7.2 25.43 99,325 25.47
$26.15 to $48.59 ..................... 200,104 7.9 36.62
63,866 34.09
$1.66 to $48.59....................... 1,208,267 6.5 $ 21.17
651,253 $ 17.74
Our net cash proceeds from the exercise of stock options were $8.5 million and $15.3 million for the years ended
December 31, 2007 and 2006, respectively. The actual income tax benefit realized from stock option exercises was
$4.6 million and $10.2 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 years ended December 31, 2007
and 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 up to 1,500,000 share 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
during 2007 under the ESPP began January 1, 2007 and ended June 30, 2007. The second purchase period began
July 1, 2007 and ended December 31, 2007. Compensation expense under the ESPP, which was $0.1 million for
2007, is based on the discount of 10% at the end of the purchase period. $1.2 million was withheld from employees for
the purpose of purchasing shares under the ESPP. There were 1,478,865 shares of common stock available for purchase
under the ESPP as of December 31, 2007.
In June 2006, our Board of Directors authorized the repurchase of up to 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 2007, we repurchased 12,635 shares for approximately $0.7 million. As of
December 31, 2007, there were 478,865 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 aggregate the activities of our centers and other ancillary businesses into one reportable
segment as none of the centers or other ancillary businesses meet the quantitative thresholds for separate disclosure
under SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information.” Each of the centers
has similar expected economic characteristics, service and product offerings, customers and design. Each of the
other ancillary businesses either directly or indirectly, through advertising or branding, compliment the operations of
the centers. Our chief operating decision maker uses EBITDA as the primary measure of operating segment
performance.