Lifetime Fitness 2013 Annual Report Download - page 34

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reflected in center operations expense and approximately $4.4 million is reflected in general and
administrative expense.
Total operating expenses in 2011 include $10.6 million (pretax) 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 include $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 following table summarizes the weighted average number of common shares for basic and diluted
earnings per share computations:
December 31,
2013 2012 2011 2010 2009
(In thousands)
Weighted average number of common
shares outstanding – basic 41,263 41,345 40,358 39,809 39,297
Effect of dilutive stock options 85 116 132 156 69
Effect of dilutive restricted stock
awards 134 511 440 420 504
Weighted average number of common
shares outstanding – diluted 41,482 41,972 40,930 40,385 39,870
(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 center revenue per Access membership is total center revenue derived from Access memberships
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 an average derived from dividing the sum of the total
Access memberships outstanding at the beginning of the period and at the end of each month during the
period by one plus the number of months in each period. Our calculation methodology changed in 2013 to
include Access memberships only, and the 2010 through 2012 numbers above are recalculated under the
new methodology. The bifurcated membership data needed for the new calculation methodology is not
available for 2009. The 2009 average center revenue was calculated as follows: 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.