Life Time Fitness Announces Fourth Quarter and Full-Year 2010 Financial Results
-- Revenue Growth for the Quarter and Full-Year were 9.8% and 9.1%,
Respectively
-- For the Quarter, Diluted EPS was $0.43 and Non-GAAP Diluted EPS was
$0.52
-- For the Full Year, Diluted EPS was $2.00 and Non-GAAP Diluted EPS was
$2.08
CHANHASSEN, Minn.--(BUSINESS WIRE)-- Life Time Fitness, Inc. (NYSE:LTM) today reported its financial results for the fourth quarter and full year ended December 31, 2010.
Fourth quarter 2010 revenue grew 9.8% to $223.7 million from $203.7 million during the same period last year. Revenue for the year totaled $912.8 million, up 9.1% from $837.0 million during 2009.
In June 2009, the Company granted performance-based restricted stock to its senior management team. In fourth quarter 2010, the Company determined that achieving the 2011 diluted earnings per share performance criteria required for vesting of 50% of the stock (representing approximately 450,000 shares of restricted stock) was probable. As a result, the Company recognized a cumulative, non-cash performance share-based compensation expense of $5.6 million (pretax) in the quarter. The Company anticipates recognizing the remaining portion of performance share-based compensation expense of approximately $4.0 million (pretax) ratably in 2011.
Net income for the quarter was $17.6 million, including $5.6 million (pretax) of performance share-based compensation expense, or $0.43 per diluted share, compared to net income of $18.4 million, or $0.46 per diluted share, for 4Q 2009. Net income for the full year was $80.7 million, including $5.6 million (pretax) of performance share-based compensation expense, or $2.00 per diluted share, compared to $72.4 million, or $1.82 per diluted share, for 2009.
Non-GAAP net income for the quarter, excluding $5.6 million (pretax) of performance share-based compensation expense, was $21.0 million, or $0.52 per diluted share. For the full year, non-GAAP net income, excluding $5.6 million (pretax) of performance share-based compensation expense, was $84.1 million, or $2.08 per diluted share.
"I am pleased with our 2010 operating results, which continue to demonstrate the differentiation and power of our business model," said Bahram Akradi, Life Time Fitness chairman, president and chief executive officer. "We remained highly focused on increasing member retention and growing same center sales in 2010, and we delivered significant progress in both areas. In particular, I want to highlight our member connectivity and engagement initiatives in which we've invested over the last couple of years. Not only did these efforts contribute positively to our financial and member retention results, they also reinforce the uniqueness and value of our healthy way of life approach. By helping customers connect to and engage in their areas of interest, we help them achieve their health and fitness goals. We remain steadfast in our commitment to continually refine member connectivity and engagement in 2011. Furthermore, we are also focused on member retention and growth through the expansion of our member interest offerings. The fact that we have taken an expense in connection with the challenging performance-based restricted stock vesting metric reinforces our continued confidence, which is reflected in our 2011 business outlook."
During the quarter, Life Time opened its third planned large-format center for 2010 in Centennial, Colorado, marking the Company's third location in the Denver market. In January 2011, the Company opened a large-format center in Syosset, New York, the first Life Time location in New York. In May, the Company plans to open its second and third large-format centers planned for 2011 in Colorado Springs, Colorado, and Summerlin, Nevada. These new centers will represent the fourth Life Time location in Colorado and first in the Las Vegas market, respectively.
Three and Twelve Months Ended December 31, 2010, Financial Highlights:
Total revenue for the fourth quarter grew 9.8% to $223.7 million from $203.7 million. Total revenue for the full year grew 9.1% to $912.8 million from $837.0 million in 2009.
(Period-over-period growth) 4Q 2010 vs. 4Q 2009 2010 vs. 2009
-- Membership dues 7.4% 6.8%
-- Enrollment fees (10.1%) (6.5%)
-- In-center revenue 16.3% 14.4%
-- Same-center revenue (13th month 5.9% 5.0%
of operation)
-- Same-center revenue (37th month 4.0% 2.3%
of operation)
-- Average center revenue per $362 - up 3.3% $1,475 - up 4.3%
membership
-- Average in-center revenue per $104 - up 9.9% $440 - up 10.0%
membership
Memberships grew 5.8% to 612,556 at December 31, 2010, from 578,937 at December 31, 2009.
-- Attrition in 4Q 2010 was 9.9%, down from 10.8% in the prior-year period.
-- Attrition improved to 36.3% in 2010 compared to 40.6% in 2009.
Total operating expenses during 4Q 2010 totaled $189.1 million compared to $165.6 million for 4Q 2009. Full-year operating expenses were $752.1 million compared with $688.1 million in 2009. Excluding the $5.6 million (pretax) of performance share-based compensation expense, 4Q 2010 and full-year operating expenses were $183.5 million and $746.5 million, respectively.
-- Operating margin was 15.5% for 4Q 2010 compared to 18.7% in the
prior-year period.
-- Full-year operating margin was 17.6% compared to 17.8% in 2009.
-- Excluding the performance share-based compensation expense, 4Q 2010 and
full-year operating margin were 18.0% and 18.2%, respectively.
(Expense as a percent of total revenue) 4Q 2010 vs. 4Q 2009 2010 vs. 2009
-- Center operations (includes $1.2
million of performance share-based 60.9% vs. 60.4% 61.5% vs. 60.5%
compensation expense in 4Q 2010
and 2010)
-- Advertising and marketing 3.6% vs. 3.0% 3.0% vs. 3.2%
-- General and administrative
(includes $4.4 million of 6.8% vs. 4.7% 5.2% vs. 5.1%
performance share-based
compensation expense in 4Q 2010
and 2010)
-- Other operating 2.9% vs. 2.0% 2.6% vs. 2.6%
-- Depreciation and amortization 10.3% vs. 11.1% 10.1% vs. 10.8%
Net income for 4Q 2010 was $17.6 million, or $0.43 per diluted share, compared to net income of $18.4 million, or $0.46 per diluted share, for 4Q 2009. Net income for the full year was $80.7 million, or $2.00 per diluted share, compared to $72.4 million, or $1.82 per diluted share, for 2009.
Non-GAAP net income for the quarter, excluding the performance share-based compensation expense, was $21.0 million, or $0.52 per diluted share. For the full year, non-GAAP net income, excluding the performance share-based compensation expense, was $84.1 million, or $2.08 per diluted share.
The effective income tax rate for 2010 was 39.8% compared with 39.6% in 2009.
EBITDA for 4Q 2010 was $57.8 million compared with $61.1 million in 4Q 2009. Full-year EBITDA was $254.2 million compared with $240.9 million in 2009.
-- As a percentage of total revenue, EBITDA in 4Q 2010 was 25.8% compared
to 30.0% in 4Q 2009.
-- EBITDA margin in 2010 was 27.9% compared to 28.8% in 2009.
Adjusted EBITDA for the quarter, excluding performance share-based compensation expense, was $63.4 million. Full-year adjusted EBITDA, excluding performance share-based compensation expense, was $259.9 million.
-- As a percentage of total revenue, adjusted EBITDA in 4Q 2010 was 28.4%.
-- Adjusted EBITDA margin in 2010 was 28.5%.
Cash flows from operations for the full year 2010 totaled $192.3 million compared to $186.2 million in 2009.
Weighted average fully diluted shares for 4Q 2010 totaled 40.6 million compared to 40.3 million in 4Q 2009. For the full year 2010, weighted average fully diluted shares totaled 40.4 million compared to 39.9 million in 2009.
2011 Business Outlook:
The following statements are based on the Company's current expectations for fiscal year 2011, which incorporate 2010 operating trends and are subject to the risks and uncertainties described below:
-- Revenue is expected to be up 6-8%, or $970-990 million, driven primarily
by growth in in-center revenue and corporate businesses, as well as
membership growth in new and ramping centers.
-- Net incomeis expected to be up 13-18%, or $91.0-95.0 million, driven by
revenue growth and cost efficiencies.
-- Non-GAAP net income(excluding the impact of performance share-based
compensation expense) is expected to be $93.5-97.5 million.
-- Diluted earnings per common shareis expected to be $2.19-2.29.
-- Non-GAAP diluted earnings per common share (excluding the impact of
performance share-based compensation expense) is expected to be
$2.25-2.35.
As announced on February 10, 2011, the Company will hold a conference call today at 10:00 a.m. ET to discuss its fourth quarter and full-year 2010 results. Bahram Akradi, Michael Robinson, executive vice president and chief financial officer, and John Heller, senior director, investor relations & treasurer, will host the conference call. The conference call will be webcast and may be accessed via the Company's Investor Relations section of its website at lifetimefitness.com. A replay of the call will be available the same day via the Company's website beginning at approximately 1:00 p.m. ET.
About Life Time Fitness, Inc.
As the Healthy Way of Life Company, Life Time Fitness (NYSE: LTM) delivers the certified professionals, comprehensive businesses and incredible destinations that help people positively change their lives every day. The Company's healthy way of life approach enables its customers to achieve their health and fitness goals by engaging in their areas of interest - or discovering new passions - both inside and outside of Life Time's distinctive and large sports, professional fitness, family recreation and spa destinations. As of February 17, 2011, the Company operated 90 centers under the LIFE TIME FITNESS(R) and LIFE TIME ATHLETICSM brands primarily in suburban locations in 20 states and 24 major markets. Additional information about Life Time centers, programs and services is available at lifetimefitness.com.
Forward-Looking Statements
Certain information contained in this press release may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause the Company's actual results in the future to differ materially from its historical results and those presently anticipated or projected. Among these factors are attracting and retaining members, risks related to our debt levels and debt covenants, our ability to access existing credit facilities and obtain additional financing, strains on our business from continued growth, risks related to maintenance of our data, competition from other health and fitness centers, identifying and acquiring suitable sites for new centers, delays in opening new centers and other factors set forth in the Company's filings with the Securities and Exchange Commission. Diluted earnings per common share could also be affected by the number of shares outstanding, which depends on factors such as the number of shares issued upon exercise of stock options and future grants of awards pursuant to equity-based incentive plans as well as stock offerings. The Company's expectations for fiscal year 2011 exclude any unusual items that might occur during the fiscal year, such as litigation matters or the potential recognition of other performance share-based compensation expense related to the June 2009 grants. While the Company has determined that 2011 earnings per common share performance criteria required for vesting of 50% of the stock is probable and anticipates recognizing additional performance share-based compensation expense in 2011, the Company may not be able to meet those criteria due to risks and uncertainties, including those factors described above.
The Company cautions investors not to place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update such statement to reflect events or circumstances arising after such date. All remarks made during the Company's financial results conference call will be current at the time of the call and the Company undertakes no obligation to update the replay.
LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
2010 2009
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 12,227 $ 6,282
Accounts receivable, net 5,806 4,026
Center operating supplies and inventories 17,281 14,621
Prepaid expenses and other current assets 13,318 12,938
Deferred membership origination costs 14,728 20,278
Deferred income taxes 1,463 660
Income tax receivable 12,081 -
Total current assets 76,904 58,805
PROPERTY AND EQUIPMENT, net 1,570,234 1,512,993
RESTRICTED CASH 2,572 2,941
DEFERRED MEMBERSHIP ORIGINATION COSTS 7,251 8,716
GOODWILL 14,617 5,690
OTHER ASSETS 46,902 42,380
TOTAL ASSETS $ 1,718,480 $ 1,631,525
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 7,265 $ 16,716
Accounts payable 18,913 14,429
Construction accounts payable 24,342 9,882
Accrued expenses 50,802 48,235
Deferred revenue 32,095 36,939
Total current liabilities 133,417 126,201
LONG-TERM DEBT, net of current portion 605,279 643,630
DEFERRED RENT LIABILITY 32,187 29,048
DEFERRED INCOME TAXES 89,839 77,189
DEFERRED REVENUE 7,279 8,819
OTHER LIABILITIES 9,901 9,207
Total liabilities 877,902 894,094
SHAREHOLDERS' EQUITY:
Common stock 839 829
Additional paid-in capital 414,922 395,121
Retained earnings 424,787 344,095
Accumulated other comprehensive loss 30 (2,614 )
Total shareholders' equity 840,578 737,431
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,718,480 $ 1,631,525
LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
For the For the
Three Months Ended Year Ended
December 31, December 31,
2010 2009 2010 2009
(Unaudited) (Unaudited) (Unaudited)
REVENUE:
Membership dues $ 149,899 $ 139,535 $ 603,231 $ 564,605
Enrollment fees 5,849 6,508 24,426 26,138
In-center revenue 62,984 54,153 266,426 232,834
Total center revenue 218,732 200,196 894,083 823,577
Other revenue 4,941 3,502 18,761 13,424
Total revenue 223,673 203,698 912,844 837,001
OPERATING EXPENSES:
Center operations 136,130 123,130 561,070 506,443
Advertising and marketing 8,158 6,154 27,098 26,299
General and administrative 15,454 9,604 48,060 42,776
Other operating 6,398 4,061 23,544 21,852
Depreciation and 22,928 22,643 92,313 90,770
amortization
Total operating expenses 189,068 165,592 752,085 688,140
Income from operations 34,605 38,106 160,759 148,861
OTHER INCOME (EXPENSE):
Interest expense, net (5,989 ) (7,333 ) (27,795 ) (30,338 )
Equity in earnings of 270 317 1,176 1,302
affiliate
Total other income (5,719 ) (7,016 ) (26,619 ) (29,036 )
(expense)
INCOME BEFORE INCOME TAXES 28,886 31,090 134,140 119,825
PROVISION FOR INCOME TAXES 11,292 12,713 53,448 47,441
NET INCOME $ 17,594 $ 18,377 $ 80,692 $ 72,384
BASIC EARNINGS PER COMMON $ 0.44 $ 0.47 $ 2.03 $ 1.84
SHARE
DILUTED EARNINGS PER COMMON $ 0.43 $ 0.46 $ 2.00 $ 1.82
SHARE
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING - 40,010 39,444 39,809 39,297
BASIC
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING - 40,619 40,331 40,385 39,870
DILUTED
LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the
Year Ended
December 31,
2010 2009
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 80,692 $ 72,384
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 92,313 90,770
Deferred income taxes 6,162 23,270
Loss on disposal of property and equipment, net 2,001 1,229
Gain on sale of land held for sale (527 ) (1,132 )
Amortization of deferred financing costs 2,706 2,544
Share-based compensation 12,835 8,082
Excess tax benefit related to share-based payment (2,453 ) (507 )
arrangements
Changes in operating assets and liabilities (1,207 ) (10,951 )
Other (257 ) 514
Net cash provided by operating activities 192,265 186,203
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (131,671 ) (146,632 )
Acquisitions, net of cash acquired (16,659 ) -
Proceeds from sale of property and equipment 851 8
Proceeds from sale of land held for sale 1,019 1,954
Decrease (increase) in other assets (2,943 ) 390
Decrease in restricted cash 369 995
Net cash used in investing activities (149,034 ) (143,285 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings - 18,151
Repayments of long-term borrowings (40,394 ) (11,001 )
Repayments of revolving credit facility, net (3,900 ) (56,500 )
Increase in deferred financing costs (499 ) (1,092 )
Excess tax benefit related to share-based payment 2,453 507
arrangements
Proceeds from exercise of stock options 5,142 2,470
Proceeds from employee stock purchase plan 907 -
Stock purchased for employee stock purchase plan (995 ) -
Net cash used in financing activities (37,286 ) (47,465 )
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,945 (4,547 )
CASH AND CASH EQUIVALENTS - Beginning of period 6,282 10,829
CASH AND CASH EQUIVALENTS - End of period $ 12,227 $ 6,282
Non-GAAP Financial Measures
This release and the related conference call disclose certain non-GAAP financial measures.
EBITDA and Adjusted EBITDA. Earnings Before Interest, Income Taxes and Depreciation and Amortization (EBITDA) is a non-GAAP disclosure consisting of net income plus interest expense, net, provision for income taxes and depreciation and amortization. This term, as the Company defines it, may not be comparable to a similarly titled measure used by other companies and is not a measure of performance presented in accordance with GAAP. The Company uses EBITDA as a measure of operating performance. The funds depicted by EBITDA are not necessarily available for discretionary use if they are reserved for particular capital purposes, to maintain compliance with debt covenants, to service debt or to pay taxes. EBITDA should not be considered as a substitute for net income, net cash provided by operating activities or other income or cash flow data prepared in accordance with GAAP. Additional details related to EBITDA are provided in the Form 8-K that the Company filed with the Securities and Exchange Commission on the date of this press release.
In 4Q 2010, the Company determined that achieving a 2011 earnings per common share performance criteria required for the vesting of 50% of performance share-based restricted stock granted in June 2009 was probable. As a result, the Company recognized a cumulative performance share-based compensation expense of $5.6 million (pretax) in 4Q 2010. Adjusted EBITDA is the Company's EBITDA excluding the above compensation expense.
Additional details related to EBITDA and Adjusted EBITDA are provided in the Form 8-K that the Company filed with the Securities and Exchange Commission on the date of this press release.
The following table provides a reconciliation of net income, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA:
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA
(In thousands, except margin percentage data)
(Unaudited)
For the Three Months Ended For the Year Ended
December 31, December 31,
2010 2009 2010 2009
Net income $ 17,594 $ 18,377 $ 80,692 $ 72,384
Interest expense, net 5,989 7,333 27,795 30,338
Provision for income taxes 11,292 12,713 53,448 47,441
Depreciation and 22,928 22,643 92,313 90,770
amortization
EBITDA 57,803 61,066 254,248 240,933
Performance share-based 5,611 - 5,611 -
compensation expense
Adjusted EBITDA $ 63,414 $ 61,066 $ 259,859 $ 240,933
EBITDA margin as a
percentage of total 25.8 % 30.0 % 27.9 % 28.8 %
revenue
Performance share-based 2.6 % 0.0 % 0.6 % 0.0 %
compensation expense
Adjusted EBITDA margin as
a percentage of total 28.4 % 30.0 % 28.5 % 28.8 %
revenue
Free Cash Flow. Free cash flow is a non-GAAP measure consisting of net cash provided by operating activities, less purchases of property and equipment. This term, as the Company defines 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. The Company uses free cash flow as a measure of cash generated after spending on property and equipment. Free cash flow should not be considered as a substitute for net cash provided by operating activities prepared in accordance with GAAP. Additional details related to free cash flow are provided in the Form 8-K that the Company filed with the Securities and Exchange Commission on the date of this press release.
The following table provides a reconciliation of net cash provided by operating activities, the most directly comparable GAAP measure, to free cash flow:
RECONCILIATION OF NET CASH PROVIDED BY
OPERATING ACTIVITIES TO FREE CASH FLOW
(In thousands)
(Unaudited)
For the Three Months Ended For the Year Ended
December 31, December 31,
2010 2009 2010 2009
Net cash provided by $ 46,118 $ 47,652 $ 192,265 $ 186,203
operating activities
Less: Purchases of (45,539 ) (29,779 ) (131,671 ) (146,632 )
property and equipment
Free cash flow $ 579 $ 17,873 $ 60,594 $ 39,571
Additional Non-GAAP Financial Measures. In 4Q 2010, the Company determined that achieving a 2011 earnings per common share performance criteria required for the vesting of 50% of performance-based restricted stock granted in June 2009 was probable. As a result, the Company recognized a cumulative performance share-based compensation expense of $5.6 million (pretax) in 4Q 2010. The Company believes that in order to properly understand its short-term and long-term financial trends from operations, investors may find it useful to exclude the impact of this expense from net income, diluted earnings per common share, operating margin and operating expenses. The resulting non-GAAP financial measures may also provide useful information to investors regarding the underlying business trends and performance of the Company's ongoing operations and may be useful for period over period comparisons of such operations. Each of the tables below reconciles these non-GAAP financial measures to the most directly comparable GAAP financial measures.
Non-GAAP Net Income. Non-GAAP net income is a non-GAAP financial measure consisting of net income excluding the performance share-based compensation expense recognized in 4Q 2010. The following table provides a reconciliation of net income, the most directly comparable GAAP measure, to non-GAAP net income.
RECONCILIATION OF CONSOLIDATED NET INCOME
TO CONSOLIDATED NON-GAAP NET INCOME
(In thousands)
For the Three Months Ended For the Year Ended
December 31, December 31,
2010 2009 2010 2009
Net income $ 17,594 $ 18,377 $ 80,692 $ 72,384
Performance share-based 3,446 - 3,446 -
compensation expense
Non-GAAP net income $ 21,040 $ 18,377 $ 84,138 $ 72,384
Non-GAAP Diluted Earnings Per Common Share. Non-GAAP diluted earnings per common share is a non-GAAP financial measure consisting of diluted earnings per common share excluding the per common share impact of the performance share-based compensation expense recognized in 4Q 2010. The following table provides a reconciliation of diluted earnings per common share, the most directly comparable GAAP measure, to non-GAAP diluted earnings per common share.
RECONCILIATION OF CONSOLIDATED DILUTED EARNINGS PER COMMON SHARE
TO CONSOLIDATED NON-GAAP DILUTED EARNINGS PER COMMON SHARE
For the Three Months Ended For the Year Ended
December 31, December 31,
2010 2009 2010 2009
Diluted earnings per common $ 0.43 $ 0.46 $ 2.00 $ 1.82
share
Performance share-based 0.08 - 0.08 -
compensation expense
Non-GAAP diluted earnings per $ 0.52 * $ 0.46 $ 2.08 $ 1.82
common share
* rounding
Non-GAAP Operating Margin. Non-GAAP operating margin is a non-GAAP financial measure consisting of operating margin excluding the performance share-based compensation expense recognized in 4Q 2010. The following table provides a reconciliation of operating margin, the most directly comparable GAAP measure, to non-GAAP operating margin.
RECONCILIATION OF CONSOLIDATED OPERATING MARGIN
TO CONSOLIDATED NON-GAAP OPERATING MARGIN
(In thousands, except margin percentages)
For the Three Months Ended For the Year Ended
December 31, December 31,
2010 2009 2010 2009
Operating margin $ 34,605 $ 38,106 $ 160,759 $ 148,861
Performance share-based 5,611 - 5,611 -
compensation expense
Non-GAAP operating margin $ 40,216 $ 38,106 $ 166,370 $ 148,861
Operating margin as a
percentage of total 15.5 % 18.7 % 17.6 % 17.8 %
revenue
Performance share-based 2.5 % 0.0 % 0.6 % 0.0 %
compensation expense
Non-GAAP operating margin
as a percentage of total 18.0 % 18.7 % 18.2 % 17.8 %
revenue
Non-GAAP Operating Expenses. Non-GAAP operating expenses is a non-GAAP financial measure consisting of operating expenses excluding the performance share-based compensation expense recognized in 4Q 2010. The following table provides a reconciliation of operating expenses, the most directly comparable GAAP measure, to non-GAAP operating expenses.
RECONCILIATION OF CONSOLIDATED OPERATING EXPENSES
TO CONSOLIDATED NON-GAAP OPERATING EXPENSES
(In thousands)
For the Three Months Ended For the Year Ended
December 31, December 31,
2010 2009 2010 2009
Operating expenses $ 189,068 $ 165,592 $ 752,085 $ 688,140
Performance share-based 5,611 - 5,611 -
compensation expense
Non-GAAP operating expenses $ 183,457 $ 165,592 $ 746,474 $ 688,140
Reconciliation of 2011 Business Outlook. In 4Q 2010, the Company determined that achieving a 2011 diluted earnings per common share performance criteria required for the vesting of 50% of performance-based restricted stock granted in June 2009 was probable. As a result, the Company anticipates recognizing approximately $4.0 million (pretax) of performance share-based compensation expense in 2011 relating to the June 2009 grants. The Company believes that in order to properly understand its short-term and long-term financial trends from operations, investors may find it useful to exclude the impact of this expense from the Company's 2011 business outlook. The resulting non-GAAP financial measures may also provide useful information to investors regarding the underlying business trends and performance of the Company's ongoing operations and may be useful for period-over-period comparisons of such operations.
As a consequence, the Company's 2011 business outlook included a non-GAAP net income range, which excludes the anticipated recognition of approximately $4.0 million (pretax) of performance share-based compensation expense. The following table provides a reconciliation of the Company's anticipated range of 2011 net income to the non-GAAP net income range.
RECONCILIATION OF 2011 BUSINESS OUTLOOK RELATED TO CONSOLIDATED NET INCOME
RANGE
TO CONSOLIDATED NON-GAAP NET INCOME RANGE
(In millions)
For the Year Ended
December 31, 2011
Low High
Net income $ 91.0 $ 95.0
Performance share-based compensation expense 2.5 2.5
Non-GAAP net income $ 93.5 $ 97.5
Similarly, the Company's 2011 business outlook also included a non-GAAP diluted earnings per common share range, which excludes the per common share impact of the anticipated recognition of approximately $4.0 million (pretax) of performance share-based compensation expense. The following table provides a reconciliation of the Company's anticipated range of 2011 diluted earnings per common share to the non-GAAP diluted earnings per common share range.
RECONCILIATION OF 2011 BUSINESS OUTLOOK RELATED TO CONSOLIDATED DILUTED
EARNINGS
PER COMMON SHARE RANGE TO CONSOLIDATED NON-GAAP DILUTED EARNINGS PER
COMMON SHARE RANGE
For the Year Ended
December 31, 2011
Low High
Diluted earnings per common share $ 2.19 $ 2.29
Performance share-based compensation expense 0.06 0.06
Non-GAAP diluted earnings per common share $ 2.25 $ 2.35
Source: Life Time Fitness, Inc.
Released February 17, 2011