Lifetime Fitness 2013 Annual Report Download - page 9

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modest per child monthly cost. In addition, we have added a new offering also for children under the age of 12 --
Life Time Kids Academy -- which includes more in-depth, skills-based programming focused on activity, learning
and fitness. This program was added in five clubs in 2013, and offers monthly dues between $20 and $90 per month.
We provide the majority of our members with a variety of services with their membership, including group fitness
classes and fitness assessments, towel and 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 generally are 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, as well as across our network of centers in the U.S. and Canada. 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 center-level economic model has been regularly refined and is both based and dependent on driving
membership growth by ramping memberships and optimizing membership mix and pricing after a new center is
opened, as well as retaining the dues stream and maintaining tight expense control once the center matures. Since
our first center opened in 1992, we have opened and operated over 100 centers, each of which utilizes this economic
model. In 2013, this economic model resulted in revenue growth of 7.0%, with revenue of $1.2 billion; EBITDA
growth of 6.2%, with EBITDA of $345.0 million and an EBITDA margin of 28.6%; and net income growth of 9.1%,
with net income of $121.7 million. EBITDA is a non-GAAP, non-cash measure which consists of net income plus
interest expense, net, provision for income taxes and depreciation and amortization. Additional details related to
EBITDA are provided in “Management’s Discussion and Analysis of Financial Condition and Results of Operations
— Non-GAAP Financial Measures.”
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 generated from profiles of our
existing centers to the market's potential base, including physical geography, drive patterns, demographics, cultural
and competitive information. We continue to modify the analysis based upon the performance of our centers
including newer centers as they mature. 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, LTF Construction Company, LLC (“Life Time Construction”),
formerly known as FCA Construction, 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.