Lifetime Fitness 2012 Annual Report Download - page 62

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 common share were 15,540 and 42,227 for the years ended December 31, 2012 and 2011, respectively, and
54,527 for the year ended December 31, 2010.
The basic and diluted earnings per share calculations are shown below:
For the Year Ended December 31,
2012 2011 2010
Net income $ 111,538 $ 92,617 $ 80,692
Weighted average number of common shares
outstanding – basic 41,345 40,358 39,809
Effect of dilutive stock options 116 132 156
Effect of dilutive restricted stock awards 511 440 420
Weighted average number of common shares
outstanding – diluted 41,972 40,930 40,385
Basic earnings per common share $ 2.70 $ 2.29 $ 2.03
Diluted earnings per common share $ 2.66 $ 2.26 $ 2.00
The number of total common shares outstanding at December 31, 2012 was 43,149,434.
Dividends — We have never declared or paid any cash dividends on our common stock. We currently intend to
invest all future earnings into the operation and expansion of our business or the repurchase of shares and do not
anticipate declaring or paying any cash dividends on our common stock in the foreseeable future. In addition, the
terms of our revolving credit facility limits the amount of dividends we may pay without the consent of the lenders.
The payment of any dividends in the future will be at the discretion of our Board of Directors and will depend upon
our results of operations, earnings, capital requirements, contractual restrictions, outstanding indebtedness and other
factors deemed relevant by our board.
Share-Based Compensation — We maintain share-based incentive plans. Under applicable accounting standards, the
fair value of share-based compensation is determined at the grant date and the recognition of the related expense is
recorded over the period in which the share-based compensation vests.
The Compensation Committee of our Board of Directors 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 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. The value of restricted shares was based upon the closing price of our stock on the dates of issue. The
restricted shares generally vest over periods ranging from one to four years. As of December 31, 2012, we had
1,455,745 shares available for grant.
We also have a performance-based incentive plans. In June 2009 and August 2010, the Compensation Committee
approved the grant of 996,000 and 20,000 shares, respectively, of long-term performance-based restricted stock to
serve as an incentive to our senior management team to achieve certain diluted EPS targets in 2011 and 2012. As of
December 31, 2012, 448,000 of these shares were still outstanding. A specified EPS target was achieved for fiscal
2011 and 50% of the restricted shares vested. A specified EPS target was achieved for fiscal 2012 and the remaining
50% of the restricted shares vested. The probability of reaching the targets was evaluated each reporting period. As
of December 31, 2011, we determined that the second 50% vesting was probable. As such, we recognized the
remaining portion of non-cash performance share-based compensation expense of approximately $2.6 million
(pretax) ratably in 2012. A total of $18.8 million (pretax) was recognized as compensation expense with respect to
this grant.