Lifetime Fitness 2010 Annual Report Download - page 10

4
We offer a product that is convenient for our members.
Our centers are generally situated in residential areas and are easily accessed and centrally located among the
residential, business and shopping districts of the surrounding community. We design, build and operate our centers
to accommodate a large and active membership base by generally providing access to the centers 24 hours a day,
seven days a week. In addition, we provide sufficient parking spaces, lockers and equipment to allow our members
to exercise with little or no waiting time, even at peak hours and when center membership levels are at targeted
capacity. Our child center services are available to the majority of our members for a modest monthly fee per child
for up to two hours per day. Most of our centers offer the convenience of spa and cafe services. Most members have
access to more than one center in markets where we operate more than one location.
We have an established and profitable economic model.
Our economic model is both based and dependent on attracting a large membership base within the first three years
after a new center is opened, as well as retaining those members and maintaining tight expense control. In 2010, this
economic model resulted in revenue growth of 9.1%, with revenue of $912.8 million; EBITDA growth of 5.5%,
with EBITDA of $254.2 million and an EBITDA margin of 27.9%; and net income growth of 11.5%, with net
income of $80.7 million.
We have a disciplined and sophisticated site selection and development process.
We have developed a disciplined and sophisticated process to evaluate metropolitan markets in which to build or
lease new centers, as well as specific sites for potential future centers within those markets. This multi-step process
is based upon applying our proven successful experience and analysis to predetermined physical, demographic,
psychographic and competitive criteria generated from profiles of each of our existing centers. We continue to
modify these criteria based upon the performance of our centers. A formal business plan is developed for each
proposed new center and the plan must pass multiple stages of approval by our management and finance committee
of the board of directors. By utilizing a wholly owned construction subsidiary, FCA Construction Company, LLC
(“FCA Construction”), that is dedicated solely to building and remodeling our centers, we maintain maximum
flexibility over the design process of our centers and control over the cost and timing of the construction process
subject to financing and capital availability.
Our Growth Strategy
Our growth strategy is driven by three primary elements:
Open new centers.
We intend to expand our base of centers, primarily through new center development. In 2010, we opened three large
format centers that we designed and constructed, two centers that are remodels of existing space and one center that
we acquired. We expect to open three large format centers in 2011. One of these large format centers opened in
January 2011 and the remaining two large format centers are currently under construction. A rollforward of our
recent center openings is as follows:
For the Year Ended December 31,
2010 2009 2008 2007 2006
Total centers, beginning of year .................................... 84 81 70 60 46
New centers – constructed ............................................. 3 3 10 8 7
New centers – remodel of existing space ....................... 2 – 1 – 1
Acquired centers ............................................................ 1 – – 2 7
Closed centers ................................................................ (1) –––(1)
Total centers, end of year .............................................. 89 84 81 70 60
In 2006, the lease expired on our 27,000 square foot center in Brooklyn Park, Minnesota, which opened in 1992. We
closed that center because we had opened five other locations in the vicinity that continued to serve the membership
from that location. In August, 2010, the lease expired on our 85,630 square foot center in St. Paul, Minnesota which
opened in 1997. We closed the center and transferred its memberships to our surrounding locations.