Lifetime Fitness 2012 Annual Report Download - page 42

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36
Year Ended December 31, 2011 Compared to Year Ended December 31, 2010
Total revenue. Total revenue increased $100.9 million, or 11.0%, to $1,013.7 million for the year ended
December 31, 2011 from $912.8 million for the year ended December 31, 2010.
Total center revenue grew $96.3 million, or 10.8%, to $990.4 million for the year ended December 31, 2011, from
$894.1 million for the year ended December 31, 2010. Of the $96.3 million increase in total center revenue,
• 62.5% was from membership dues, which increased $60.2 million, or 10.0%, due to increased
memberships, primarily at new and ramping centers, and higher average dues. Our number of Access
memberships increased 10.4% to 676,054 at December 31, 2011 from 612,556 at December 31, 2010.
• 43.7% was from in-center revenue, which increased $42.0 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 $440 for the year ended December 31, 2010 to $481 for the year ended
December 31, 2011.
• (6.2)% 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 and all of 2011, the
estimated average membership life was 33 months. For the first three quarters of 2010, the estimated
average membership life was 30 months. Enrollment fees decreased $6.0 million for the year ended
December 31, 2011 to $18.4 million. The revenue recognized from enrollment fees was lower in 2011 as
compared to 2010 primarily due to lower total enrollment fees over the deferral period.
Other revenue increased $4.6 million, or 24.3%, to $23.3 million for the year ended December 31, 2011, which was
primarily due to growth in media and athletic event revenue, which increased $1.6 million and $2.2 million,
respectively.
Center operations expenses. Center operations expenses totaled $614.9 million, or 62.1% of total center revenue (or
60.7% of total revenue), for the year ended December 31, 2011, compared to $561.1 million, or 62.8% of total
center revenue (or 61.5% of total revenue), for the year ended December 31, 2010. This $53.8 million increase
primarily consisted of an increase of $34.6 million in additional payroll-related costs to support increased
memberships and in-center revenue growth at our centers. Center operations expenses decreased as a percent of total
revenue due primarily to leverage provided by dues growth.
Advertising and marketing expenses. Advertising and marketing expenses were $36.3 million, or 3.5% of total
revenue, for the year ended December 31, 2011, compared to $27.1 million, or 3.0% of total revenue, for the year
ended December 31, 2010. These expenses increased primarily due to increased marketing activity to drive
memberships and in-center businesses.
General and administrative expenses. General and administrative expenses were $54.7 million, or 5.4% of total
revenue, for the year ended December 31, 2011, compared to $48.1 million, or 5.2% of total revenue, for the year
ended December 31, 2010. This increase of $6.7 million is primarily related to share-based compensation for the
special 2009 performance restricted stock grant, in addition to corporate initiatives to support our continued growth.
For the year ended December 31, 2011, share-based compensation expense related to the special 2009 performance
restricted stock grant totaled $10.6 million, of which $8.1 million was reported in general and administrative
expenses.
Other operating expenses. Other operating expenses were $35.6 million for the year ended December 31, 2011,
compared to $23.5 million for the year ended December 31, 2010. This increase is primarily due to the growth in our
athletic events and our myHealthCheck service offering and the associated infrastructure costs.
Depreciation and amortization. Depreciation and amortization was $98.8 million for the year ended
December 31, 2011, compared to $92.3 million for the year ended December 31, 2010.
Interest expense, net. Interest expense, net of interest income, was $20.1 million for the year ended
December 31, 2011, compared to $27.8 million for the year ended December 31, 2010. This $7.7 million decrease
was primarily the result of lower average interest rates on outstanding debt.