Lifetime Fitness 2013 Annual Report Download - page 42

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36
increase in income before income taxes of $16.1 million. The effective income tax rate for the year ended
December 31, 2013 was 39.3% compared to 39.5% for the year ended December 31, 2012.
Net income. As a result of the factors described above, net income was $121.7 million, or 10.1% of total revenue, for
the year ended December 31, 2013, compared to $111.5 million, or 9.8% of total revenue, for the year ended
December 31, 2012.
Year Ended December 31, 2012 Compared to Year Ended December 31, 2011
Total revenue. Total revenue increased $113.2 million, or 11.2%, to $1,126.9 million for the year ended
December 31, 2012 from $1,013.7 million for the year ended December 31, 2011.
Total center revenue grew $100.8 million, or 10.2%, to $1,091.2 million for the year ended December 31, 2012,
from $990.4 million for the year ended December 31, 2011. Of the $100.8 million increase in total center revenue,
• 63.6% was from membership dues, which increased $64.2 million, or 9.7%, due to higher average dues and
increased memberships, primarily at new and ramping centers. Our number of Access memberships
increased 1.0% to 682,621 at December 31, 2012 from 676,054 at December 31, 2011.
• 39.5% was from in-center revenue, which increased $39.8 million primarily as a result of increased
personal training revenue, which increased $22.0 million, or 15.0%, and increased sales of our LifeSpa and
LifeCafe products and services, which increased $10.5 million, or 9.1%. Average in-center revenue per
Access membership increased from $481 for the year ended December 31, 2011 to $507 for the year ended
December 31, 2012.
• (3.1)% was from enrollment fees, which are deferred until a center opens and recognized on a straight-line
basis over our estimated average membership life. Since the fourth quarter of 2010, the estimated average
membership life has been 33 months. For the first three quarters of 2010, the estimated average
membership life was 30 months. Enrollment fees decreased $3.1 million for the year ended December 31,
2012 to $15.3 million. The revenue recognized from enrollment fees was lower in 2012 as compared to
2011 primarily due to lower total enrollment fees over the deferral period.
Other revenue increased $12.4 million, or 53.3%, to $35.7 million for the year ended December 31, 2012, which was
primarily due to revenue associated with the acquisition of race registration and timing businesses and other athletic
events.
Center operations expenses. Center operations expenses totaled $655.9 million, or 60.1% of total center revenue (or
58.2% of total revenue), for the year ended December 31, 2012, compared to $614.9 million, or 62.1% of total
center revenue (or 60.7% of total revenue), for the year ended December 31, 2011. This $41.0 million increase
primarily consisted of an increase of $26.7 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 $39.9 million, or 3.5% of total
revenue, for the year ended December 31, 2012, compared to $36.3 million, or 3.5% of total revenue, for the year
ended December 31, 2011. 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 $55.7 million, or 5.0% of total
revenue, for the year ended December 31, 2012, compared to $54.7 million, or 5.4% of total revenue, for the year
ended December 31, 2011. This increase of $1.0 million is primarily related to corporate initiatives to support our
continued growth. For the year ended December 31, 2012, share-based compensation expense related to the special
2009 performance restricted stock grant totaled $2.6 million, of which $2.1 million was reported in general and
administrative expenses. 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 $52.2 million for the year ended December 31, 2012,
compared to $35.6 million for the year ended December 31, 2011. This increase is primarily due to the growth in