Lifetime Fitness 2012 Annual Report Download - page 9

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locker service and an online subscription to our award-winning magazine, Experience Life®. Our membership plans
include initial 14-day money back guarantees and are month-to-month, cancelable by giving up to 60 days advance
notice. We believe our value proposition and member-focused approach creates loyalty among our members.
We offer a product that is convenient for our members.
Our centers are generally situated in easily accessible areas and centrally located among the residential, business and
shopping districts of the surrounding community. Many members have access to more than one center in markets
where we operate more than one location. 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 use our centers with little or
no waiting time, even at peak hours and when centers 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 café services.
We have an established and profitable economic model.
Our economic model is both based and dependent on driving membership growth by ramping memberships and
optimizing membership mix and pricing within the first three years after a new center is opened, as well as retaining
the dues stream and maintaining tight expense control once the center matures. In 2012, this economic model
resulted in revenue growth of 11.2%, with revenue of $1.1 billion; EBITDA growth of 18.8%, with EBITDA of
$324.7 million and an EBITDA margin of 28.8%; and net income growth of 20.4%, with net income of $111.5
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 evaluate specific sites for potential centers within those markets. This multi-step
process is based upon applying our proven successful experience and analysis to predetermined physical geography,
drive patterns, demographics, cultural 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”) that builds and remodels our centers as well as an in-house architectural team that designs
and produces construction drawings, we maintain maximum flexibility over the design process of our centers as well
as control over the cost and timing of the construction process.
Our Growth Strategy
Our growth strategy is driven by three primary elements:
Build and acquire new centers.
We intend to expand our base of centers, primarily through new center development and acquisition. In 2012, we
opened three large format centers that we designed and constructed. In addition, in January 2012, we acquired the
Racquet Club of the South, a tennis facility in the Atlanta market, which we rebranded as Life Time Tennis Atlanta.
We expect to open three large format centers in 2013, all of which are currently under construction. A rollforward of
our center growth from 2008 through 2012 is as follows: