Lifetime Fitness 2012 Annual Report Download - page 34

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Total operating expenses in 2011 include $10.6 million associated with non-cash 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 448,000 shares of restricted stock) was 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.
Total operating expenses in 2012 includes $2.6 million associated with performance-based restricted stock
compensation expense. Of the $2.6 million, approximately $0.5 million is reflected in center operations
expense and approximately $2.1 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:
December 31,
2012 2011 2010 2009 2008
(In thousands)
Weighted average number of common
shares outstanding – basic 41,345 40,358 39,809 39,297 39,002
Effect of dilutive stock options 116 132 156 69 164
Effect of dilutive restricted stock
awards 511 440 420 504 176
Weighted average number of common
shares outstanding – diluted 41,972 40,930 40,385 39,870 39,342
(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
Access memberships for the period, where the average number of Access memberships for the period is
derived from dividing the sum of the total Access 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 Access membership is total in-center revenue for the period divided by the
average number of Access memberships for the period, where the average number of Access memberships
for the period is derived from dividing the sum of the total Access 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 membership
terminations for the trailing 12 months divided into the average beginning month Access 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.