Lifetime Fitness 2011 Annual Report Download - page 41

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35
• 54.8% was from membership dues, which increased $38.6 million, or 6.8%, due to increased memberships
at new centers and higher average dues. Our number of memberships increased 5.8% to 612,556 at
December 31, 2010 from 578,937 at December 31, 2009.
• 47.6% was from in-center revenue, which increased $33.6 million primarily as a result of increased sales of
our LifeSpa and LifeCafe products and services and personal training. Average in-center revenue per
membership increased from $400 for the year ended December 31, 2009 to $440 for the year ended
December 31, 2010.
• (2.4)% was from enrollment fees, which are deferred until a center opens and recognized on a straight-line
basis over our estimated average membership life. In the fourth quarter of 2010, the estimated average
membership life was 33 months. For the fourth quarter of 2008 through the third quarter of 2010, the
estimated average membership life was 30 months. For the second and third quarters of 2008, it was 33
months, and for the first quarter of 2008 and prior, it was 36 months. Enrollment fees decreased $1.7
million for the year ended December 31, 2010 to $24.4 million. Our average enrollment fee was lower in
2010 than in 2009 due primarily to increased promotional pricing activity to attract new memberships in
the current economic environment.
Other revenue increased $5.3 million, or 39.8%, to $18.8 million for the year ended December 31, 2010, which was
primarily due to athletic event revenue, which includes revenue from recently acquired athletic events.
Center operations expenses. Center operations expenses totaled $561.1 million, or 62.8% of total center revenue (or
61.5% of total revenue), for the year ended December 31, 2010 compared to $506.4 million, or 61.5% of total center
revenue (or 60.5% of total revenue), for the year ended December 31, 2009. This $54.7 million increase primarily
consisted of an increase of $32.1 million in additional payroll-related costs to support increased memberships and
revenue growth at our centers and $9.8 million in occupancy-related costs, including utilities, real estate taxes and
rent on leased centers. Center rent expense totaled $41.7 million for the year ended December 31, 2010 and $39.7
million for the year ended December 31, 2009. This $2.0 million increase is primarily a result of two new ground
leases for future centers. Center operations expenses increased as a percent of total revenue due primarily to
increases in member acquisition costs, costs associated with increased in-center revenue and costs associated with
expanded program offerings intended to improve member acquisition and retention.
Advertising and marketing expenses. Advertising and marketing expenses were $27.1 million, or 3.0% of total
revenue, for the year ended December 31, 2010, compared to $26.3 million, or 3.2% of total revenue, for the year
ended December 31, 2009. As a percentage of revenue, these expenses decreased primarily due to more targeted and
market-specific marketing campaigns.
General and administrative expenses. General and administrative expenses were $48.1 million, or 5.2% of total
revenue, for the year ended December 31, 2010, compared to $42.8 million, or 5.1% of total revenue, for the year
ended December 31, 2009.
Other operating expenses. Other operating expenses were $23.5 million for the year ended December 31, 2010,
compared to $21.9 million for the year ended December 31, 2009.
Depreciation and amortization. Depreciation and amortization was $92.3 million for the year ended December 31,
2010, compared to $90.8 million for the year ended December 31, 2009.
Interest expense, net. Interest expense, net of interest income, was $27.8 million for the year ended December 31,
2010, compared to $30.3 million for the year ended December 31, 2009. This $2.5 million decrease was primarily
the result of a reduction in debt levels.
Provision for income taxes. The provision for income taxes was $53.4 million for the year ended December 31,
2010, compared to $47.4 million for the year ended December 31, 2009. This $6.0 million increase was due to an
increase in income before income taxes of $14.3 million and a higher effective income tax rate in 2010. The
effective income tax rate for the year ended December 31, 2010 was 39.8% compared to 39.6% for the year ended
December 31, 2009.