þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Minnesota (State or other jurisdiction of incorporation or organization) | 41-1689746 (I.R.S. Employer Identification No.) |
2902 Corporate Place Chanhassen, Minnesota (Address of principal executive offices) | 55317 (Zip Code) |
Large accelerated filer | þ | Accelerated filer | ¨ |
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
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March 31, | December 31, | ||||||
2012 | 2011 | ||||||
ASSETS | (Unaudited) | ||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 10,797 | $ | 7,487 | |||
Accounts receivable, net | 5,551 | 6,156 | |||||
Center operating supplies and inventories | 21,876 | 21,600 | |||||
Prepaid expenses and other current assets | 25,573 | 22,905 | |||||
Deferred membership origination costs | 12,221 | 12,525 | |||||
Deferred income taxes | 4,345 | 9,850 | |||||
Income tax receivable | 3,013 | 5,022 | |||||
Total current assets | 83,376 | 85,545 | |||||
PROPERTY AND EQUIPMENT, net | 1,755,264 | 1,740,434 | |||||
RESTRICTED CASH | 1,264 | 1,088 | |||||
DEFERRED MEMBERSHIP ORIGINATION COSTS | 8,168 | 8,131 | |||||
GOODWILL | 26,456 | 25,550 | |||||
OTHER ASSETS | 59,236 | 55,080 | |||||
TOTAL ASSETS | $ | 1,933,764 | $ | 1,915,828 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Current maturities of long-term debt | $ | 7,102 | $ | 6,849 | |||
Accounts payable | 23,105 | 22,035 | |||||
Construction accounts payable | 24,816 | 21,892 | |||||
Accrued expenses | 58,187 | 56,284 | |||||
Deferred revenue | 40,268 | 33,898 | |||||
Total current liabilities | 153,478 | 140,958 | |||||
LONG-TERM DEBT, net of current portion | 643,374 | 679,449 | |||||
DEFERRED RENT LIABILITY | 20,351 | 19,370 | |||||
DEFERRED INCOME TAXES | 100,382 | 100,582 | |||||
DEFERRED REVENUE | 8,221 | 8,203 | |||||
OTHER LIABILITIES | 10,147 | 9,793 | |||||
Total liabilities | 935,953 | 958,355 | |||||
COMMITMENTS AND CONTINGENCIES (Note 6) | |||||||
SHAREHOLDERS’ EQUITY: | |||||||
Undesignated preferred stock, 10,000,000 shares authorized; none issued or outstanding | — | — | |||||
Common stock, $.02 par value, 75,000,000 shares authorized; 42,866,712 and 42,428,265 shares issued and outstanding, respectively | 857 | 849 | |||||
Additional paid-in capital | 455,861 | 441,813 | |||||
Retained earnings | 543,076 | 517,404 | |||||
Accumulated other comprehensive loss | (1,983 | ) | (2,593 | ) | |||
Total shareholders’ equity | 997,811 | 957,473 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 1,933,764 | $ | 1,915,828 |
For the Three Months Ended | |||||||
March 31, | |||||||
2012 | 2011 | ||||||
REVENUE: | |||||||
Membership dues | $ | 175,470 | $ | 158,013 | |||
Enrollment fees | 3,954 | 5,201 | |||||
In-center revenue | 84,616 | 73,689 | |||||
Total center revenue | 264,040 | 236,903 | |||||
Other revenue | 4,407 | 3,742 | |||||
Total revenue | 268,447 | 240,645 | |||||
OPERATING EXPENSES: | |||||||
Center operations | 160,715 | 149,552 | |||||
Advertising and marketing | 10,356 | 8,563 | |||||
General and administrative | 13,703 | 12,651 | |||||
Other operating | 8,391 | 5,992 | |||||
Depreciation and amortization | 26,960 | 23,624 | |||||
Total operating expenses | 220,125 | 200,382 | |||||
Income from operations | 48,322 | 40,263 | |||||
OTHER INCOME (EXPENSE): | |||||||
Interest expense, net of interest income of $0 and $1, respectively | (6,277 | ) | (5,504 | ) | |||
Equity in earnings of affiliate | 373 | 301 | |||||
Total other income (expense) | (5,904 | ) | (5,203 | ) | |||
INCOME BEFORE INCOME TAXES | 42,418 | 35,060 | |||||
PROVISION FOR INCOME TAXES | 16,746 | 14,224 | |||||
NET INCOME | $ | 25,672 | $ | 20,836 | |||
BASIC EARNINGS PER COMMON SHARE | $ | 0.62 | $ | 0.52 | |||
DILUTED EARNINGS PER COMMON SHARE | $ | 0.62 | $ | 0.51 | |||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – BASIC | 41,174 | 40,362 | |||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – DILUTED | 41,675 | 40,949 |
For the Three Months Ended | |||||||
March 31, | |||||||
2012 | 2011 | ||||||
NET INCOME | $ | 25,672 | $ | 20,836 | |||
Other comprehensive income, net of tax: | |||||||
Foreign currency translation adjustments, net of taxes of $(287) and $(53), respectively | $ | 729 | $ | 139 | |||
Unrealized losses on cash flow hedges, net of taxes of $79 and $0, respectively | (119 | ) | — | ||||
Other comprehensive income/loss, net of tax: | 610 | 139 | |||||
COMPREHENSIVE INCOME | $ | 26,282 | $ | 20,975 |
For the Three Months Ended | |||||||
March 31, | |||||||
2012 | 2011 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 25,672 | $ | 20,836 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 26,960 | 23,624 | |||||
Deferred income taxes | 5,360 | 741 | |||||
(Gain) loss on disposal of property and equipment, net | (2 | ) | 137 | ||||
Amortization of deferred financing costs | 503 | 587 | |||||
Share-based compensation | 3,878 | 3,308 | |||||
Excess tax benefit related to share-based payment arrangements | (8,118 | ) | (2,074 | ) | |||
Changes in operating assets and liabilities | 19,789 | 13,196 | |||||
Other | (139 | ) | (232 | ) | |||
Net cash provided by operating activities | 73,903 | 60,123 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchases of property and equipment | (38,477 | ) | (38,363 | ) | |||
Acquisitions, net of cash acquired | (6,578 | ) | (1,245 | ) | |||
Proceeds from sale of property and equipment | 363 | 338 | |||||
Proceeds from property insurance settlements | 670 | — | |||||
Increase in other assets | (172 | ) | (22 | ) | |||
Increase in restricted cash | (177 | ) | (47 | ) | |||
Net cash used in investing activities | (44,371 | ) | (39,339 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Repayments of long-term borrowings | (1,441 | ) | (2,184 | ) | |||
Repayments of revolving credit facility, net | (34,600 | ) | (22,200 | ) | |||
Increase in deferred financing costs | (10 | ) | — | ||||
Excess tax benefit related to share-based payment arrangements | 8,118 | 2,074 | |||||
Proceeds from stock option exercises | 1,972 | 774 | |||||
Proceeds from employee stock purchase plan | 388 | 336 | |||||
Stock purchased for employee stock purchase plan | (649 | ) | (547 | ) | |||
Net cash used in financing activities | (26,222 | ) | (21,747 | ) | |||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 3,310 | (963 | ) | ||||
CASH AND CASH EQUIVALENTS – Beginning of period | 7,487 | 12,227 | |||||
CASH AND CASH EQUIVALENTS – End of period | $ | 10,797 | $ | 11,264 |
1. | Basis of Presentation |
2. | Share-Based Compensation |
For the Three Months Ended | |||||||
March 31, | |||||||
2012 | 2011 | ||||||
Share-based compensation expense related to restricted shares | $ | 3,848 | $ | 3,278 | |||
Share-based compensation expense related to ESPP | 30 | 30 | |||||
Total share-based compensation expense | $ | 3,878 | $ | 3,308 |
Shares | Weighted Average Grant Date Fair Value | |||
Outstanding at December 31, 2011 | 1,902,083 | $24.27 | ||
Granted | 331,750 | $50.47 | ||
Canceled | (6,970 | ) | $25.29 | |
Vested | (803,687 | ) | $21.98 | |
Outstanding at March 31, 2012 | 1,423,176 | $31.66 |
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | |||||
Outstanding at December 31, 2011 | 407,200 | $23.62 | 2.9 | $9,429 | ||||
Exercised | (101,040 | ) | $19.52 | |||||
Canceled | — | $— | ||||||
Outstanding at March 31, 2012 | 306,160 | $24.98 | 2.8 | $7,836 | ||||
Vested at March 31, 2012 | 306,160 | $24.98 | 2.8 | $7,836 |
For the Three Months Ended | |||||||
March 31, | |||||||
2012 | 2011 | ||||||
Net income | $ | 25,672 | $ | 20,836 | |||
Weighted average number of common shares outstanding – basic | 41,174 | 40,362 | |||||
Effect of dilutive stock options | 129 | 185 | |||||
Effect of dilutive restricted stock awards | 372 | 402 | |||||
Weighted average number of common shares outstanding – diluted | 41,675 | 40,949 | |||||
Basic earnings per common share | $ | 0.62 | $ | 0.52 | |||
Diluted earnings per common share | $ | 0.62 | $ | 0.51 |
4. | Operating Segment |
For the Three Months Ended | |||||||
March 31, | |||||||
2012 | 2011 | ||||||
Membership dues | $ | 175,470 | $ | 158,013 | |||
Enrollment fees | 3,954 | 5,201 | |||||
Personal training | 41,760 | 37,109 | |||||
Other in-center revenue | 42,856 | 36,580 | |||||
Other revenue | 4,407 | 3,742 | |||||
Total revenue | $ | 268,447 | $ | 240,645 |
5. | Supplementary Cash Flow Information |
For the Three Months Ended | |||||||
March 31, | |||||||
2012 | 2011 | ||||||
Accounts receivable, net | $ | 389 | $ | (1,467 | ) | ||
Center operating supplies and inventories | (276 | ) | (473 | ) | |||
Prepaid expenses and other current assets | (1,506 | ) | (5,101 | ) | |||
Income tax receivable | 2,009 | 9,916 | |||||
Deferred membership origination costs | 266 | 1,105 | |||||
Accounts payable | 1,330 | 2,547 | |||||
Accrued expenses | 9,991 | 1,592 | |||||
Deferred revenue | 6,176 | 4,170 | |||||
Deferred rent liability | 981 | 729 | |||||
Other liabilities | 429 | 178 | |||||
Changes in operating assets and liabilities | $ | 19,789 | $ | 13,196 |
6. | Commitments and Contingencies |
7. | Recent Accounting Pronouncements |
8. | Derivative Instruments |
9. | Fair Value Measurements |
March 31, 2012 | |||||||
Carrying Value | Estimated Fair Value | ||||||
Fixed-rate debt | $ | 400,655 | $ | 398,371 | |||
Obligations under capital leases | 16,332 | 16,423 | |||||
Floating-rate debt | 233,489 | 233,489 | |||||
Total | $ | 650,476 | $ | 648,283 |
• | First, our largest source of revenue is membership dues (65.4% of total revenue for the three months ended March 31, 2012, down from 65.7% for the three months ended March 31, 2011) and enrollment fees (1.5% of total revenue for the three months ended March 31, 2012, down from 2.1% for the three months ended March 31, 2011) paid by our members. We recognize revenue from monthly membership dues in the month to which they pertain. |
• | Second, we generate revenue within a center, which we refer to as in-center revenue, or in-center businesses (31.5% of total revenue for the three months ended March 31, 2012, up from 30.6% for the three months ended March 31, 2011), including fees for personal training, registered dietitians, group fitness training and other member activities, sales of products at our LifeCafe, sales of products and services offered at our LifeSpa, tennis programs and renting space in certain of our centers. |
• | Third, we have expanded the LIFE TIME FITNESS brand into other healthy way-of-life related offerings that generate revenue, which we refer to as other revenue, or corporate businesses (1.6% of total revenue for the three months ended March 31, 2012, and 1.6% for the three months ended March 31, 2011), including our media, total health and athletic events businesses. Our primary media offering is our magazine, Experience Life®. Other revenue also includes one stand-alone restaurant in the Minneapolis market and rental income from our Highland Park, Minnesota office building. |
• | Center operations expenses consist primarily of salaries, commissions, payroll taxes, benefits, real estate taxes and other occupancy costs, utilities, repairs and maintenance, supplies, administrative support and communications to operate our centers. |
• | Advertising and marketing expenses consist of our marketing department costs and media and advertising costs to support and grow center membership levels, in-center businesses, new center openings and our corporate businesses. |
• | General and administrative expenses include costs relating to our centralized support functions, such as accounting, information systems, procurement, real estate and development and member relations. |
• | Other operating expenses include the costs associated with our media, athletic events and nutritional product businesses, one restaurant and other corporate expenses, as well as gains or losses on our disposal of assets. |
• | Depreciation and amortization are computed primarily using the straight-line method over estimated useful lives of the assets. Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the estimated useful life of the improvement. |
For the Three Months Ended | |||||||
March 31, | |||||||
2012 | 2011 | ||||||
REVENUE: | |||||||
Membership dues | 65.4 | % | 65.7 | % | |||
Enrollment fees | 1.5 | 2.1 | |||||
In-center revenue | 31.5 | 30.6 | |||||
Total center revenue | 98.4 | 98.4 | |||||
Other revenue | 1.6 | 1.6 | |||||
Total revenue | 100.0 | 100.0 | |||||
OPERATING EXPENSES: | |||||||
Center operations | 59.9 | 62.1 | |||||
Advertising and marketing | 3.9 | 3.6 | |||||
General and administrative | 5.1 | 5.3 | |||||
Other operating | 3.0 | 2.5 | |||||
Depreciation and amortization | 10.1 | 9.8 | |||||
Total operating expenses | 82.0 | 83.3 | |||||
Income from operations (operating profit) | 18.0 | 16.7 | |||||
OTHER INCOME (EXPENSE): | |||||||
Interest expense, net | (2.3 | ) | (2.3 | ) | |||
Equity in earnings of affiliate | 0.1 | 0.2 | |||||
Total other income (expense) | (2.2 | ) | (2.1 | ) | |||
INCOME BEFORE INCOME TAXES | 15.8 | 14.6 | |||||
PROVISION FOR INCOME TAXES | 6.2 | 5.9 | |||||
NET INCOME | 9.6 | % | 8.7 | % | |||
Other financial data: | |||||||
Same-center revenue growth (open 13 months or longer) (1) | 5.4 | % | 5.3 | % | |||
Same-center revenue growth (open 37 months or longer) (1) | 5.0 | % | 3.8 | % | |||
Average center revenue per membership (2) | $ | 386 | $ | 379 | |||
Average in-center revenue per membership (3) | $ | 124 | $ | 118 | |||
Trailing 12-month attrition rate (4) | 35.6 | % | 36.1 | % | |||
Quarterly attrition rate (5) | 8.9 | % | 8.4 | % | |||
EBITDA (in thousands) (6) | $ | 75,655 | $ | 64,188 | |||
EBITDA margin (7) | 28.2 | % | 26.7 | % | |||
EBITDAR (in thousands) (6) | $ | 85,239 | $ | 74,747 | |||
EBITDAR margin (8) | 31.8 | % | 31.1 | % | |||
Capital expenditures (in thousands) (9) | $ | 38,477 | $ | 38,363 | |||
Free cash flow (in thousands) (10) | $ | 35,426 | $ | 21,760 | |||
Operating data (end of period) (11): | |||||||
Centers open | 103 | 90 | |||||
Memberships | 704,467 | 650,784 | |||||
Center square footage (12) | 9,669,819 | 8,922,617 |
(1) | 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. |
(2) | Average center 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. |
(3) | 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. |
(4) | Trailing 12-month attrition rate (or annual 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. |
(5) | Quarterly attrition rate is calculated as follows: total terminations for the quarter (excluding frozen/Flex memberships) divided into the average beginning month membership balance for the quarter. |
(6) | EBITDA is a non-GAAP non-cash measure which consists of net income plus interest expense, net, provision for income taxes and depreciation and amortization. EBITDAR is EBITDA net of rent expense. These terms, as we define them, may not be comparable to a similarly titled measures used by other companies and are not measures of performance presented in accordance with GAAP. We use EBITDA and EBITDAR as measures of operating performance. EBITDA or EBITDAR should not be considered as a substitute for net income, cash flows provided by operating activities or other income or cash flow data prepared in accordance with GAAP. The funds depicted by EBITDA and EBITDAR are not necessarily available for discretionary use if they are reserved for particular capital purposes, to maintain debt covenants, to service debt or to pay taxes. |
For the Three Months Ended | |||||||
March 31, | |||||||
2012 | 2011 | ||||||
Net income | $ | 25,672 | $ | 20,836 | |||
Interest expense, net | 6,277 | 5,504 | |||||
Provision for income taxes | 16,746 | 14,224 | |||||
Depreciation and amortization | 26,960 | 23,624 | |||||
EBITDA | $ | 75,655 | $ | 64,188 | |||
Rent expense | 9,584 | 10,559 | |||||
EBITDAR | $ | 85,239 | $ | 74,747 |
(7) | EBITDA margin is the ratio of EBITDA to total revenue. |
(8) | EBITDAR margin is the ratio of EBITDAR to total revenue. |
(9) | Capital expenditures represent investments in our new centers, remodeling our acquired centers, costs related to updating and maintaining our existing centers and other infrastructure investments. For purposes of deriving capital expenditures from our cash flows statement, capital expenditures include our purchases of property and equipment, excluding purchases of property and equipment in accounts payable at year-end, property and equipment purchases financed through notes payable and capital lease obligations, and non-cash share-based compensation capitalized to projects under development. |
(10) | Free cash flow is a non-GAAP measure consisting of net cash provided by operating activities, less purchases of property and equipment, excluding acquisitions. This term, as we define it, may not be comparable to a similarly titled measure used by other companies and does not represent the total increase or decrease in the cash balance presented in accordance with GAAP. We use free cash flow as a measure of cash generated after spending on property and equipment, excluding acquisitions. The funds depicted by free cash flow are not necessarily available for discretionary use if they are reserved for particular capital purposes, to maintain debt covenants, to service debt or to pay taxes. Free cash flow should not be considered as a substitute for net cash provided by operating activities prepared in accordance with GAAP. |
For the Three Months Ended | |||||||
March 31, | |||||||
2012 | 2011 | ||||||
Net cash provided by operating activities | $ | 73,903 | $ | 60,123 | |||
Less: Purchases of property and equipment | (38,477 | ) | (38,363 | ) | |||
Free cash flow | $ | 35,426 | $ | 21,760 |
(11) | The operating data presented in these items include the center owned by Bloomingdale LLC. The data presented elsewhere in this section exclude the center owned by Bloomingdale LLC. |
(12) | The square footage presented in this table reflects fitness square footage which we believe is the best metric for the efficiencies of a facility. We exclude outdoor swimming pools, outdoor play areas, tennis courts and satellite facility square footage. These figures are approximations. |
• | 64.3% was from membership dues, which increased $17.5 million, or 11.0%, due to increased memberships, primarily at new and ramping centers, and higher average dues. Our number of memberships increased 8.2% to 704,467 at March 31, 2012 from 650,784 at March 31, 2011. |
• | 40.3% was from in-center revenue, which increased $10.9 million, or 14.8%, primarily as a result of increased personal training revenue, which increased $4.7 million, or 12.5%, and increased sales of our LifeSpa and LifeCafe products and services, which increased $4.4 million, or 16.0%. Average in-center revenue per membership increased to $124 for the three months ended March 31, 2012 from $118 for the three months ended March 31, 2011. |
• | (4.6)% was from enrollment fees, which are deferred until a center opens and recognized on a straight-line basis over our estimated average membership life. Since the fourth quarter of 2010, the estimated average membership life has been 33 months. For the fourth quarter of 2008 through the third quarter of 2010, the estimated average membership life was 30 months. Enrollment fees decreased $1.2 million for the three months ended March 31, 2012 to $4.0 million. The revenue recognized from enrollment fees is lower in the first quarter of 2012 as compared to the first quarter of 2011 primarily due to lower total enrollment fees over the deferral period. |
March 31, | December 31, | ||||||
2012 | 2011 | ||||||
(In thousands) | |||||||
Debt | |||||||
Long-term debt | $ | 643,374 | $ | 679,449 | |||
Current maturities of long-term debt | 7,102 | 6,849 | |||||
Total debt | 650,476 | 686,298 | |||||
Shareholders’ Equity | |||||||
Common stock | 857 | 849 | |||||
Additional paid-in capital | 455,861 | 441,813 | |||||
Retained earnings | 543,076 | 517,404 | |||||
Accumulated other comprehensive (loss) income | (1,983 | ) | (2,593 | ) | |||
Total shareholders’ equity | 997,811 | 957,473 | |||||
Total capitalization | $ | 1,648,287 | $ | 1,643,771 |
For the Three Months Ended | |||||||
March 31, | |||||||
2012 | 2011 | ||||||
(In thousands) | |||||||
Cash purchases of property and equipment | $ | 38,477 | $ | 38,363 | |||
Non-cash change in construction accounts payable | 2,924 | (2,283 | ) | ||||
Other non-cash changes to property and equipment | (234 | ) | 100 | ||||
Total capital expenditures | $ | 41,167 | $ | 36,180 |
For the Three Months Ended | |||||||
March 31, | |||||||
2012 | 2011 | ||||||
(In thousands) | |||||||
New center land and construction | $ | 25,613 | $ | 29,673 | |||
Maintenance of existing facilities, remodels of acquired centers and corporate capital expenditures | 15,554 | 6,507 | |||||
Total capital expenditures | $ | 41,167 | $ | 36,180 |
March 31, | December 31, | ||||||
2012 | 2011 | ||||||
(In thousands) | |||||||
Revolving credit facility, interest only due monthly at interest rates ranging from LIBOR plus 1.25% to 2.25% or base plus 0.25% to 1.25%, facility expires June 2016 | $ | 397,400 | $ | 432,000 | |||
Commercial mortgage-backed notes payable with monthly interest and principal payments totaling $632 including interest at 6.03% to February 2017 | 98,098 | 98,493 | |||||
Commercial mortgage-backed notes payable with monthly interest and principal payments totaling $503 including interest at 5.75% to December 2016 | 71,587 | 71,905 | |||||
Other | 67,059 | 67,283 | |||||
Total debt (excluding obligations under capital leases) | 634,144 | 669,681 | |||||
Obligations under capital leases | 16,332 | 16,617 | |||||
Total debt | 650,476 | 686,298 | |||||
Less current maturities | 7,102 | 6,849 | |||||
Total long-term debt | $ | 643,374 | $ | 679,449 |
Actual as of | Actual as of | |||||
March 31, | December 31, | |||||
Covenant | Requirement | 2012 | 2011 | |||
Total Consolidated Debt to Adjusted EBITDAR | Not more than 4.00 to 1.00 | 2.62 to 1.00 | 2.83 to 1.00 | |||
Fixed Charge Coverage Ratio | Not less than 1.50 to 1.00 | 3.70 to 1.00 | 3.51 to 1.00 | |||
Unencumbered Asset Ratio | Not less than 1.30 to 1.00 | 3.09 to 1.00 | 2.79 to 1.00 |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plan (1) | Maximum Number of Shares that May Yet be Purchased Under the Plan (1) | ||||||||
January 1-31, 2012 | — | $— | — | 314,670 | ||||||||
February 1-29, 2012 | 12,650 | $51.32 | 12,650 | 302,020 | ||||||||
March 1-31, 2012 | — | $— | — | 302,020 | ||||||||
Total | 12,650 | $51.32 | 12,650 | 302,020 |
(1) | In June 2006, our Board of Directors authorized the repurchase of 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 issued pursuant to our Employee Stock Purchase Plan. In August 2011, our Board of Directors authorized the repurchase of up to $60 million of our outstanding common stock from time to time through open market or privately negotiated transactions. As of March 31, 2012, no shares have been repurchased under this program. |
Exhibit No. | Description | Method of Filing | ||
3.1 | Amended and Restated Articles of Incorporation of the Registrant. | Incorporated by reference to Exhibit 3.1 to the Registrant's Form 8-K dated April 20, 2009 (File No. 001-32230). | ||
3.2 | Amended and Restated Bylaws of the Registrant. | Incorporated by reference to Exhibit 3.4 to Amendment No. 2 to the Registrant's Registration Statement on Form S-1 (File No. 333-113764), filed with the Commission on May 21, 2004. | ||
4 | Specimen of common stock certificate. | Incorporated by reference to Exhibit 4 to Amendment No. 4 to the Registrant's Registration Statement of Form S-1 (File No. 333-113764), filed with the Commission on June 23, 2004. | ||
10.1 | Form of 2012 Restricted Stock Agreement (Executive) for 2011 Long-Term Incentive Plan with performance based vesting component. | Filed Electronically. | ||
31.1 | Rule 13a-14(a)/15d-14(a) Certification by Principal Executive Officer. | Filed Electronically. | ||
31.2 | Rule 13a-14(a)/15d-14(a) Certification by Principal Financial Officer. | Filed Electronically. | ||
32 | Section 1350 Certifications. | Filed Electronically. | ||
101 | The following materials from Life Time Fitness's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, formatted in eXtensible Business Reporting Language (XBRL): (i) consolidated balance sheets, (ii) consolidated statements of operations, (iii) consolidated statements of cash flows, and (iv) notes to the unaudited consolidated financial statements. | Filed Electronically. |
LIFE TIME FITNESS, INC. | |
By: | /s/ Bahram Akradi |
Name: Bahram Akradi Title: Chairman of the Board of Directors, President and Chief Executive Officer (Principal Executive Officer and Director) | |
By: | /s/ Michael R. Robinson |
Name: Michael R. Robinson Title: Executive Vice President and Chief Financial Officer (Principal Financial Officer) | |
By: | /s/ John M. Hugo |
Name: John M. Hugo Title: Vice President and Corporate Controller (Principal Accounting Officer) |
Exhibit No. | Description | Method of Filing | ||
3.1 | Amended and Restated Articles of Incorporation of the Registrant. | Incorporated by reference to Exhibit 3.1 to the Registrant's Form 8-K dated April 20, 2009 (File No. 001-32230). | ||
3.2 | Amended and Restated Bylaws of the Registrant. | Incorporated by reference to Exhibit 3.4 to Amendment No. 2 to the Registrant's Registration Statement on Form S-1 (File No. 333-113764), filed with the Commission on May 21, 2004. | ||
4 | Specimen of common stock certificate. | Incorporated by reference to Exhibit 4 to Amendment No. 4 to the Registrant's Registration Statement of Form S-1 (File No. 333-113764), filed with the Commission on June 23, 2004. | ||
10.1 | Form of 2012 Restricted Stock Agreement (Executive) for 2011 Long-Term Incentive Plan with performance based vesting component. | Filed Electronically. | ||
31.1 | Rule 13a-14(a)/15d-14(a) Certification by Principal Executive Officer. | Filed Electronically. | ||
31.2 | Rule 13a-14(a)/15d-14(a) Certification by Principal Financial Officer. | Filed Electronically. | ||
32 | Section 1350 Certifications. | Filed Electronically. | ||
101 | The following materials from Life Time Fitness's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, formatted in eXtensible Business Reporting Language (XBRL): (i) consolidated balance sheets, (ii) consolidated statements of operations, (iii) consolidated statements of cash flows, and (iv) notes to the unaudited consolidated financial statements. | Filed Electronically. |
Name of Employee: | |
No. of Shares Covered: | Date of Issuance: |
Vesting Schedule pursuant to Section 2 (Cumulative): | |
Vesting Date(s) March 1, 2013 March 1, 2014 March 1, 2015 March 1, 2016 | No. of Shares Which Become Vested as of Such Date |
2. | Vesting. The Restricted Shares that have not previously been forfeited will vest in the numbers and on the dates specified in the Vesting Schedule at the beginning of this Agreement. In addition, the Restricted Shares that have not previously vested or been forfeited will vest immediately upon the first to occur of the following events: (i) death of the Employee; (ii) Total Disability of the Employee; and, (iii) a Change of Control as defined in the Plan. Notwithstanding the foregoing, the number of Restricted Shares vesting on each date specified in the Vesting Schedule at the beginning of this Agreement may be reduced based upon the relationship of the Company’s actual fully-diluted earnings-per-share (“EPS”) for 2012 to budgeted EPS for 2012 and the achievement of positive net income for 2012, as specifically set forth on Exhibit A attached hereto, as such targets may be amended from time-to-time by the Board. The Committee shall determine whether the performance hurdle was achieved as promptly as practicable following review of the Company’s audited fiscal 2012 financial results. In the event that a reduction is applied to the Vesting Schedule at the beginning of this Agreement (a) such a reduction shall occur immediately upon determination by the Committee that the performance hurdle was not achieved and (b) if such reduction would cause the number of Restricted Shares subject to vesting on each date specified in the Vesting Schedule to be a fraction of a share, the number of Restricted Shares subject to vesting on each of the first two dates specified in the Vesting Schedule shall be rounded down to the nearest whole-share while the number of Restricted Shares subject to vesting on each of the last two dates specified in the Vesting Schedule shall be rounded up to the nearest whole-share. |
3. | Lapse of Restrictions; Issuance of Unrestricted Shares. Upon the vesting of any Restricted Shares, such vested Restricted Shares will no longer be subject to forfeiture as provided in Section 4 of this Agreement. Upon the vesting of any Restricted Shares, all restrictions on such Restricted Shares will lapse, and the Company will, subject to the provisions of the Plan, issue to the Employee a certificate evidencing the Restricted Shares that is free of any transfer or other restrictions arising under this Agreement. |
4. | Forfeiture. In the event that (i) the Employee’s employment is terminated for any reason, whether by the Company, by the Employee or otherwise, voluntarily or involuntarily, other than in the circumstances described in Section 2 of this Agreement, or (ii) the Employee attempts to sell, assign, transfer or otherwise dispose of, or mortgage, pledge or otherwise encumber any of the Restricted Shares or the Restricted Shares become subject to attachment or any similar involuntary process, |
5. | Shareholder Rights. As of the date of issuance specified at the beginning of this Agreement, the Employee shall have all of the rights of a shareholder of the Company with respect to the Restricted Shares (including voting rights and the right to receive dividends and other distributions), except as otherwise specifically provided in this Agreement. |
6. | Restrictive Legends and Stop-Transfer Orders. |
7. | Tax Consequences and Withholdings. The Employee understands that unless a proper and timely Section 83(b) election has been made as further described below, generally under Section 83 of the Code, at the time the Restricted Shares vest, the Employee will be obligated to recognize ordinary income and be taxed in an amount equal to the Fair Market Value as of the date of vesting for the Restricted Shares then vesting. The Employee shall be solely responsible for any tax obligations |
8. | Section 83(b) Election. The Employee has been informed that, with respect to the grant of Restricted Shares, an election may be filed by the Employee with the Internal Revenue Service, within 30 days of the date of issuance, electing pursuant to Section 83(b) of the Code to be taxed currently on the Fair Market Value of the Restricted Shares on the date of issuance. The Employee acknowledges that it is the Employee’s sole responsibility to timely file the election under Section 83(b) of the Code. |
9. | Discontinuance of Employment. This Agreement shall not give the Employee a right to continued employment with the Company or any parent or subsidiary of the Company, and the Company or any such parent or subsidiary employing the Employee may terminate his/her employment at any time and otherwise deal with the Employee without regard to the effect it may have upon him/her under this Agreement. |
10. | Interpretation of This Agreement. All decisions and interpretations made by the Committee with regard to any question arising hereunder or under the Plan shall be binding and conclusive upon the Company and the Employee. If there is any inconsistency between the provisions of this Agreement and the Plan, the provisions of the Plan shall govern. |
11. | Award Subject to Plan, Articles of Incorporation and By‑Laws. The Employee acknowledges that the Restricted Shares are subject to the Plan, the Articles of Incorporation, as amended from time to time, and the By‑Laws, as amended from time to time, of the Company, and any applicable federal or state laws, rules or regulations. |
12. | Binding Effect. This Agreement shall be binding in all respects on the heirs, representatives, successors and assigns of the Employee. |
13. | Choice of Law. This Agreement is entered into under the laws of the State of Minnesota and shall be construed and interpreted thereunder (without regard to its conflict of law principles). |
Actual EPS for 2012 as a Percentage | Percentage of Original Restricted Shares |
Date: | April 26, 2012 | ||
/s/ Bahram Akradi | |||
Bahram Akradi | |||
Chairman of the Board of Directors, President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Life Time Fitness, Inc.; |
Date: | April 26, 2012 | ||
/s/ Michael R. Robinson | |||
Michael R. Robinson | |||
Executive Vice President and Chief Financial Officer |
(1) | this periodic report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | the information contained in this periodic report fairly presents, in all material respects, the financial condition and results of operations of Life Time Fitness, Inc. |
Dated: | April 26, 2012 | ||
/s/ Bahram Akradi | |||
Bahram Akradi | |||
Chairman of the Board of Directors, President and Chief Executive Officer | |||
/s/ Michael R. Robinson | |||
Michael R. Robinson | |||
Executive Vice President and Chief Financial Officer |
Carrying Value and Estimated Fair Value of Long-Term Debt (Details) (USD $)
In Thousands, unless otherwise specified |
Mar. 31, 2012
|
---|---|
Carrying (Reported) Amount, Fair Value Disclosure
|
|
Fair Value, Measurement Inputs, Disclosure [Line Items] | |
Fixed-rate debt | $ 400,655 |
Obligations under capital leases | 16,332 |
Floating-rate debt | 233,489 |
Total | 650,476 |
Estimate of Fair Value, Fair Value Disclosure
|
|
Fair Value, Measurement Inputs, Disclosure [Line Items] | |
Fixed-rate debt | 398,371 |
Obligations under capital leases | 16,423 |
Floating-rate debt | 233,489 |
Total | $ 648,283 |
Summary of Restricted Stock Activity (Details) (USD $)
In Millions, except Share data, unless otherwise specified |
3 Months Ended | 1 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
Aug. 31, 2010
Performance Based Restricted Stock [Member]
|
Jun. 30, 2009
Performance Based Restricted Stock [Member]
|
Mar. 31, 2012
Performance Based Restricted Stock [Member]
|
Dec. 31, 2011
Performance Based Restricted Stock [Member]
|
Dec. 31, 2010
Performance Based Restricted Stock [Member]
|
Dec. 31, 2011
Performance Based Restricted Stock [Member]
|
Mar. 31, 2012
Restricted Stock
|
Mar. 31, 2011
Restricted Stock
|
Dec. 31, 2011
Fiscal Year 2011 [Member]
Group1 [Member]
|
Dec. 31, 2010
Fiscal Year 2011 [Member]
Group1 [Member]
|
|
Shares | |||||||||||
Outstanding at beginning of period (in shares) | 1,902,083 | ||||||||||
Granted (in shares) | 331,750 | 20,000 | 996,000 | 331,750 | 337,029 | ||||||
Canceled (in shares) | (6,970) | ||||||||||
Vested (in shares) | (803,687) | ||||||||||
Outstanding at end of period (in shares) | 1,423,176 | 451,500 | 1,423,176 | ||||||||
Weighted Average Grant Date Fair Value | |||||||||||
Outstanding at beginning of period (in dollars per share) | $ 24.27 | ||||||||||
Granted (in dollars per share) | $ 50.47 | ||||||||||
Canceled (in dollars per share) | $ 25.29 | ||||||||||
Vested (in dollars per share) | $ 21.98 | ||||||||||
Outstanding at end of period (in dollars per share) | $ 31.66 | ||||||||||
Equity instruments other than options - aggregate fair value of grant during period (in dollars) | $ 16.7 | $ 12.9 | |||||||||
Equity instruments other than options - vested in period (in dollars) | 17.7 | 6.7 | |||||||||
Unrecognized compensation expense (in dollars) | 2.0 | 35.6 | |||||||||
Unrecognized compensation, weighted average period of recognition | 2.1 | ||||||||||
Vesting percentage of the 2011 diluted EPS targets (in percent) | 50.00% | 50.00% | |||||||||
Number of shares that vested at Dec. 31, 2011 | 453,500 | ||||||||||
Non-cash share-based compensation expense (in dollars) | $ 0.7 | $ 6.8 | $ 5.6 | $ 3.9 | |||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 |
Basis of Presentation
|
3 Months Ended |
---|---|
Mar. 31, 2012
|
|
Basis of Presentation [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to fairly present financial position, results of operations and cash flows for the periods have been included. These interim consolidated financial statements and the related notes should be read in conjunction with the annual consolidated financial statements and notes included in the latest Form 10-K, as filed with the Securities and Exchange Commission (“SEC”), which includes audited consolidated financial statements for the three fiscal years ended December 31, 2011. |