Life Time Fitness Inc. (LTM, Financial) filed Annual Report for the period ended 2011-12-31.
Life Time Fitns has a market cap of $2.2 billion; its shares were traded at around $50.31 with a P/E ratio of 23 and P/S ratio of 2.2. Life Time Fitns had an annual average earning growth of 12.4% over the past 10 years.
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.
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.
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.
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Life Time Fitns has a market cap of $2.2 billion; its shares were traded at around $50.31 with a P/E ratio of 23 and P/S ratio of 2.2. Life Time Fitns had an annual average earning growth of 12.4% over the past 10 years.
Highlight of Business Operations:
Revenue recognition. We receive a one-time enrollment fee at the time a member joins and monthly membership dues for usage from our members. The enrollment fees are non-refundable after 14 days. Enrollment fees and related direct expenses, primarily sales commissions, are deferred and recognized on a straight-line basis over an estimated average membership life of 33 months, which is based on historical membership experience. We review the estimated average membership life on an annual basis, or more frequently if circumstances change. Changes in member behavior, competition, economic conditions and our performance may cause attrition levels to change, which could impact the estimated average membership life. Our attrition rate in 2009 improved slightly from a high of 42.7% at the end of first quarter to 40.6% at year-end, and our estimated average membership life was 30 months. During 2010, our annual attrition rate decreased from 40.6% to 36.3%. During the fourth quarter of 2010, we changed our estimated average membership life from 30 months to 33 months. During 2011, our annual attrition rate decreased from 36.3% to 35.0% and our estimated average membership life remained 33 months. If the estimated average membership life had been 36 months or 30 months for the entire year ended December 31, 2011, the impact of this change in accounting estimate on our income from continuing operations and net income would have been less than $0.1 million, and the change in accounting estimate would have had no impact on our basic and diluted earnings per common share. If the direct expenses related to the enrollment fees exceed the enrollment fees for any center, the amount of direct expenses in excess of the enrollment fees are expensed in the current period instead of deferred over the average membership life. The amount of direct expenses in excess of enrollment fees totaled $14.9 million, $14.9 million and $8.4 million for the years ended December 31, 2011, 2010 and 2009 respectively. Monthly membership dues paid in advance of a center opening are deferred until the center opens. We only offer members month-to-month memberships and recognize as revenue the monthly membership dues in the month to which they pertain.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.
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.
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.
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