Lifetime Fitness 2005 Annual Report Download - page 10

FREQUENTLY ASKED QUESTIONS
Q. What does it mean to be a
“healthy way of life”company?
A. It means we provide the programming, services
and products that address the key elements of good
health — exercise, education and nutrition. We
educate members on the benefits of a regular exercise
program, balanced diet and a well-rounded lifestyle
and then make it easy and convenient for them to
practice good habits. It also means that our team
members model healthy behaviors to ensure our
philosophy is genuine.
Q. How will you grow your in-center businesses?
A. We have three key initiatives: 1) Encourage increased
service and product usage among our existing
membership through better awareness and education
within the centers; 2) Roll out new programs and
services for our members, such as our T.E.A.M.
Weight Loss program and a new Marketplace
concept in our LifeCafes; and 3) Drive operational
improvement through the consistent application of
performance metrics and training.
Q. How will you finance your growth?
Will you begin to lease more of your centers?
A. For the near-term, three elements will fund our
growth: 1) Our strong operating cash flow; 2)
Our $200 million credit facility with a $50 million
accordion feature; and 3) Our ability to obtain
mortgages or use other forms of long-term debt.
Our goal is to finance growth with alternatives
that provide flexibility and a low cost of capital.
We regularly analyze a variety of alternatives, such
as sale leasebacks, equity and convertible debt to
ensure an optimal cost of capital is achieved.
Q. How extensive is your construction
subsidiary and why do you have one?
A. Our construction subsidiary acts as a general
contractor, so we have very few construction fixed
assets. By utilizing this wholly owned subsidiary
— dedicated to building and maintaining our
centers — we gain maximum flexibility over
the design process of our centers, and control
over the cost and timing of construction.
Plus, we achieve cost efficiencies because
we do not incur general contractor fees.
Q. Where do you see the HMO and PPO
partnerships heading?
A. We see continued opportunity in expanding our
relationships with HMOs and PPOs. Through
these agreements, the health plans provide their
members with dues rebates when they visit our
centers a set number of times each month. The
rebates are a logical way to motivate people to
exercise regularly, contributing to better health.
We believe this component of our business will
grow gradually over time.
Q. To whom do you compare yourselves?
A. We’ve set the bar as high as possible by
comparing ourselves to well-known Fortune 500
leaders across many industries that uphold
world-class, best practices in such areas as:
customer service, operations, optimization of
square footage, and employee relations.
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