Lifetime Fitness 2010 Annual Report Download - page 3

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To our Shareholders,
As I refl ect upon 2010, I am pleased to report yet another strong year of performance for
our company.
We saw improvement in nearly all of our fi nancial and business metrics, including growth
in membership, square footage, average revenue per membership, operating margin,
and cash fl ow from operations. I am particularly proud of our in-center revenue growth,
which improved more than 14% from 2009, and our attrition improvement to 36.3% for
the year from 40.6% in 2009.
Additionally, we delivered $913 million of revenue and earned net income of $80.7
million, or $2.00 of diluted earnings per share – exceeding our initial targets for the year.
Excluding the effect of an after-tax, non-cash $3.4 million performance share-based
compensation expense, we achieved $84.1 million* of adjusted net income and $2.08* of
adjusted diluted earnings per share. We recognized the non-cash performance share-based
compensation expense because we now feel it is likely we will meet or exceed a 2011
performance threshold pertaining to performance-based restricted stock granted by the
board of directors in June 2009. This grant was designed deliberately to be possible, but
challenging to achieve.
These positive results are directly related to the hard work of our team members and
the strategies we deployed during the past two years. We have effectively repositioned
the company to succeed in what we think will continue to be a fundamentally different
consumer environment.
Instead of retreating, we have gone on the offensive, adding more value to our offering
rather than lowering our dues and cutting services. We also have continued to invest
in our buildings and equipment to keep them in like-new condition, as well as in our
programming and events to ensure they are best in class. And, perhaps most importantly,
we have focused intensely on connecting with our members to identify their unique areas
of interest and engaging them in our offerings in those areas. We believe so strongly in
this that we have aligned our daily operating processes and our team members’ objectives
around this initiative. It’s a combination of these factors – and many more – that continue
to differentiate Life Time as a category defi ning Healthy Way of Life Company.
As we look ahead, we won’t stop striving for excellence. We have a winning business
model. Whether it’s basic fi tness, personal training, spa or café services, or a fun day
at the pool, we uphold a concentrated and unwavering focus to provide the very best
experience and value to our members and customers.
February 28, 2011
2902 Corporate Place
Chanhassen, MN 55317
tel: 952.947.0000
fax: 952.947.0077
lifetimefi tness.com