Lifetime Fitness 2011 Annual Report Download - page 34

28
Total operating expenses in 2011 includes $10.6 million associated with performance-based restricted stock
compensation expense. In fourth quarter 2011, we determined that achieving the 2012 diluted earnings per
share performance criteria required for vesting of the final 50% of the stock (representing approximately
450,000 shares of restricted stock) was now probable. As a result, we recognized a cumulative, non-cash
performance share-based compensation expense of $6.8 million (pretax) in the quarter, in addition to the
$3.8 million (pretax) of share-based compensation expense we recognized in 2011 on the initial 50% of the
grant. Of the $10.6 million amount, approximately $2.5 million is reflected in center operations expense
and approximately $8.1 million is reflected in general and administrative expense.
(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 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:
Weighted average number of common
shares outstanding – basic
Effect of dilutive stock options
Effect of dilutive restricted stock
awards
Weighted average number of common
shares outstanding – diluted
December 31,
2011
(In thousands)
40,358
132
440
40,930
2010
39,809
156
420
40,385
2009
39,297
69
504
39,870
2008
39,002
164
176
39,342
2007
37,518
476
133
38,127
(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/Flex memberships) divided into the average beginning month
membership balance for the trailing 12 months. The annual attrition rate for the years ended December 31,
2010 and 2011 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.