Lifetime Fitness 2009 Annual Report Download - page 41

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36
December 31, 2009 to $26.1 million. In 2008 and 2009, we lowered our enrollment fees to stimulate new
membership demand.
Other revenue decreased $2.5 million, or 15.7%, to $13.4 million for the year ended December 31, 2009, which was
primarily due to lower media sales.
Center operations expenses. Center operations expenses totaled $506.4 million, or 61.5% of total center revenue (or
60.5% of total revenue), for the year ended December 31, 2009 compared to $454.6 million, or 60.3% of total center
revenue (or 59.1% of total revenue), for the year ended December 31, 2008. This $51.8 million increase primarily
consisted of an increase of $20.9 million in occupancy-related costs, including utilities, real estate taxes and rent on
leased centers, $13.0 million in additional payroll-related costs to support general business growth and an increase in
expenses to support in-center products and services. Center rent expense totaled $39.7 million for the year ended
December 31, 2009 and $26.8 million for the year ended December 31, 2008. This $12.9 million increase is
primarily a result of the six sale-leaseback transactions that we entered into during the second half of 2008.
Advertising and marketing expenses. Advertising and marketing expenses were $26.3 million, or 3.2% of total
revenue, for the year ended December 31, 2009, compared to $31.5 million, or 4.1% of total revenue, for the year
ended December 31, 2008. These expenses decreased primarily due to less presale activity and more targeted and
more market-specific marketing campaigns.
General and administrative expenses. General and administrative expenses were $42.8 million, or 5.1% of total
revenue, for the year ended December 31, 2009, compared to $43.7 million, or 5.7% of total revenue, for the year
ended December 31, 2008. This decrease was primarily due to increased efficiencies and productivity improvements
in 2009 and the business slowdown costs incurred in 2008, offset slightly by increased costs to support the growth in
memberships and the number of centers and unabsorbed real estate and development overhead.
Other operating expenses. Other operating expenses were $21.9 million for the year ended December 31, 2009,
compared to $19.4 million for the year ended December 31, 2008. This increase is primarily a result of construction-
related expenses associated with slower development of new centers, costs associated with the expansion of our
corporate wellness businesses and losses on the disposition of assets.
Depreciation and amortization. Depreciation and amortization was $90.8 million for the year ended December 31,
2009, compared to $72.9 million for the year ended December 31, 2008. This $17.9 million increase was due
primarily to depreciation on our new centers opened in 2008 and 2009 and the remodels of acquired centers
completed in 2008.
Interest expense, net. Interest expense, net of interest income, was $30.3 million for the year ended December 31,
2009, compared to $29.6 million for the year ended December 31, 2008. This $0.7 million increase was primarily
the result of the result of decreased capitalized interest on construction projects partially offset by a reduction in debt
levels throughout the year.
Provision for income taxes. The provision for income taxes was $47.4 million for the year ended December 31,
2009, compared to $47.2 million for the year ended December 31, 2008. This $0.2 million increase was due to
slightly higher income before income taxes partially offset by an effective income tax rate of 39.6% for the year
ended December 31, 2009 compared to 39.7% for the year ended December 31, 2008.
Net income. As a result of the factors described above, net income was $72.4 million, or 8.6% of total revenue, for
the year ended December 31, 2009 compared to $71.8 million, or 9.3% of total revenue, for the year ended
December 31, 2008.
Year Ended December 31, 2008 Compared to Year Ended December 31, 2007
Total revenue. Total revenue increased $113.8 million, or 17.4%, to $769.6 million for the year ended December 31,
2008 from $655.8 million for the year ended December 31, 2007.
Total center revenue grew $112.6 million, or 17.6%, to $753.7 million for the year ended December 31, 2008, from
$641.1 million for the year ended December 31, 2007. Comparable center revenue increased 2.8% for the year