Lifetime Fitness 2006 Annual Report Download - page 9

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PART I
Item 1. Business.
Company Overview
We operate distinctive and large sports and athletic, professional fitness, family recreation and resort/spa centers
under the LIFE TIME FITNESS® brand. We design and develop our own centers, and we focus on providing our
members and customers with products and services at a compelling value in the areas of exercise, education and
nutrition.
As of February 28, 2007, we operated 60 centers primarily in residential locations across 13 states. In addition to
traditional health club offerings, most of our centers include an expansive selection of premium amenities and
services, such as indoor swimming pools with water slides, basketball and racquet courts, interactive and
entertaining child centers, full-service spas and dining services and, in many cases, climbing walls and outdoor
swimming pools with waterslides. We believe our centers provide a unique experience for our members, resulting in
a high number of memberships per center.
Over the past 15 years, as we have opened new centers, we have refined the size and design of our centers. Of our
60 centers, we consider 51 to be of our large format design, and of these 51 centers, we consider 30 to be of our
current model design. Although the size and design of our centers may vary, our business strategy and operating
processes remain consistent across all of our centers. Our current model centers generally target 8,500 to 11,500
memberships by offering, on average, 110,000 square feet of health, fitness and family recreation programs and
services. Of the centers that we have opened since 2000, 30 conform to our current model center, and each of these
centers has delivered growth in membership levels, revenue and profitability across a range of geographic markets.
Throughout our history, we have consistently grown our company by opening new centers, increasing membership,
optimizing membership dues and focusing on the sale of additional programs and services in our centers. For the
fiscal years from 2004 to 2006, we experienced annual revenue growth of 21%, 25% and 31%, respectively, with
revenue of $511.9 million in 2006; annual EBITDA growth of 20%, 25% and 24%, respectively, with EBITDA of
$149.0 million in 2006; and annual net income growth of 40%, 43% and 23%, respectively, with net income of
$50.6 million in 2006, which includes the effect of the adoption of Statement of Financial Accounting Standards No.
123, Share-Based Payment (“SFAS 123(R)”).
Our principal executive offices are located at 6442 City West Parkway, Eden Prairie, Minnesota 55344, and our
telephone number is [phone]. Our Web site is located at www.lifetimefitness.com. The information
contained on our Web site is not a part of this annual report.
Our Competitive Strengths
We offer comprehensive and convenient programs and services.
Our large format centers offer high quality programs and services in a resort-like setting and are generally situated
on a parcel of land of at least 10 acres. Unlike traditional health clubs, these centers typically offer large indoor and
outdoor family recreation pools, climbing walls and basketball and racquet/squash courts, in addition to
approximately 400 pieces of cardiovascular, free weight and resistance training equipment and an extensive offering
of health and fitness classes. Our staff of member-focused employees, each trained through our specifically designed
program of classes, is committed to providing an environment that is comfortable, clean, friendly and inviting. Our
large format centers generally include luxurious reception areas and locker rooms, child center facilities with
spacious play areas, spas offering massage and beauty services and cafes with healthy product offerings throughout
the day.