Life Time Fitness Announces Third Quarter 2009 Financial Results

http://www.businesswire.com/news/home/20091022005365/en

Company Reports Revenue Growth of 7.8% and Earnings Per Diluted Share of $0.51
for the Quarter
CHANHASSEN, Minn.--(Business Wire)--
Life Time Fitness, Inc. (NYSE:LTM) today reported its operating results for the
third quarter ended September 30, 2009.

Third quarter 2009 revenue grew 7.8% to $214.3 million from $198.8 million
during the same period last year. Net income during the quarter was $20.6
million, or $0.51 per diluted share, versus $21.6 million, or $0.55 per diluted
share, for 3Q 2008. For the nine months ended September 30, 2009, revenue grew
10.0% to $633.3 million from $575.7 million during the same period last year.
Net income for the same period was $54.0 million, or $1.36 per diluted share,
compared to $58.8 million, or $1.49 per diluted share, for the first nine months
of 2008.

"During the third quarter, we expanded free cash flow delivery and saw our
trailing 12-month attrition rate improve," said Bahram Akradi, Life Time Fitness
chairman and chief executive officer. "Moving forward, we will continue to focus
on our member connectivity initiatives, prudent cost management and debt
reduction."

Three and Nine Months Ended September 30, 2009, Financial Highlights:

Total revenue for the third quarter grew 7.8% to $214.3 million. Total revenue
for the first nine months of 2009 grew to $633.3 million from $575.7 million
during the same period last year.

(Period-over-period growth) 3Q 2009 vs. 3Q 2008 YTD 2009 vs. YTD 2008

* Membership dues 10.4% 12.8%
* Enrollment fees (2.9%) (1.8%)
* In-center revenue 5.3% 6.7%
* Same-center revenue (5.4%) (4.2%)
* Average center revenue / membership $358 - down 0.2% $1,063 - down 1.7%
* Average in-center revenue / membership $100 - down 3.1% $305 - down 5.1%

$100 - down 3.1%

$305 - down 5.1%

Memberships increased 6.0% to 590,716 at September 30, 2009, from 557,164 at
September 30, 2008.

Total operating expenses during 3Q 2009 were $174.3 million compared to $156.7
million for 3Q 2008. Year-to-date operating expenses totaled $522.5 million
compared to $457.7 million for the same period last year.

Operating margin was 18.7% for 3Q 2009 compared to 21.2% in the prior-year
period. Year-to-date operating margin was 17.5% compared to 20.5% in the
prior-year period.

(Expense as a percent of total revenue) 3Q 2009 vs. 3Q 2008 YTD 2009 vs. YTD 2008

Center operations 59.5% vs. 58.4% 60.5% vs. 58.6%
Advertising and marketing 2.7% vs. 3.7% 3.2% vs. 4.1%
General and administrative 4.5% vs. 4.8% 5.2% vs. 5.3%
Other operating 3.7% vs. 2.5% 2.8% vs. 2.4%
Depreciation and amortization 10.9% vs. 9.4% 10.8% vs. 9.1%

Net income during 3Q 2009was $20.6 million compared to $21.6 million for 3Q
2008. For the nine months ended September 30, 2009, net income was $54.0 million
compared to $58.8 million in the prior-year period.

EBITDA for 3Q 2009 grew 4.2% to $63.7 million from $61.2 in 3Q 2008.
Year-to-date EBITDA grew 4.9% to $179.9 million from $171.5 million during the
same period last year.

Cash flows from operations for the first nine months of 2009 totaled $138.6
million compared to $143.5 million in the prior-year period.

Weighted average fully diluted shares for 3Q 2009 totaled 40.3 million compared
to 39.4 million shares in 3Q 2008.

Updated 2009 Business Outlook:

The following statements are based on the Company's current expectations for
fiscal year 2009 and are subject to the risks and uncertainties described
below:

* Revenue is expected to be $835-$845 million (updated from $830-$860 million).
* Net income is expected to be $71.0-$72.5 million (updated from $67.0-$71.0
million).
* Diluted earnings per common share is expected to be $1.78-$1.81 (updated from
$1.65-$1.75).

As announced on October 15, 2009, the Company will hold a conference call today
at 10:00 a.m. ET to discuss its third quarter 2009 results. Bahram Akradi,
chairman and chief executive officer, Michael Robinson, executive vice president
and chief financial officer, and Kenneth Cooper, vice president of finance, will
host the call. The conference call will be Web cast live and may be accessed via
the Company's Investor Relations section of its Web site at lifetimefitness.com.
A replay of the call will be available today at approximately 1:00 p.m. ET.

About Life Time Fitness, Inc.

Life Time Fitness, Inc. (NYSE:LTM) operates distinctive and large, multi-use
sports and athletic, professional fitness, family recreation and resort and spa
centers. The Company also provides consumers with personal training services,
full-service spas and cafes, corporate wellness programs, health and nutrition
education, the healthy lifestyle magazine, Experience Life, athletic events and
nutritional products. As of October 22, 2009, Life Time Fitness operated 84
centers in 19 states, including Arizona, Colorado, Florida, Georgia, Illinois,
Indiana, Kansas, Maryland, Michigan, Minnesota, Missouri, Nebraska, New Jersey,
North Carolina, Ohio, Tennessee, Texas, Utah and Virginia. Life Time Fitness is
headquartered in Chanhassen, Minnesota, and can be located on the Web at
lifetimefitness.com. LIFE TIME FITNESS, LIFE TIME ATHLETIC, EXPERIENCE LIFE, and
the LIFE TIME FITNESS TRIATHLON SERIES are trademarks of Life Time Fitness, Inc.
All other trademarks or registered trademarks are the property of their
respective owners.

Risks and Uncertainties

Certain information contained in this press release may be deemed to constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are subject to certain risks and
uncertainties that could cause the Company's actual results in the future to
differ materially from its historical results and those presently anticipated or
projected. Among these factors are attracting and retaining members, risks
related to our debt levels and debt covenants, our ability to access existing
credit facilities and obtain additional financing, competition from other health
and fitness centers, identifying and acquiring suitable sites for new centers,
delays in opening new centers and other factors set forth in the Company's
filings with the Securities and Exchange Commission. Diluted earnings per share
could also be affected by the number of shares outstanding, which depends on
factors such as the number of shares issued upon exercise of stock options and
future grants of awards pursuant to equity-based incentive plans as well as
stock offerings. The Company cautions investors not to place undue reliance on
any such forward-looking statements. Any forward-looking statement speaks only
as of the date on which such statement is made, and the Company undertakes no
obligation to update such statement to reflect events or circumstances arising
after such date. All remarks made during the Company`s financial results
conference call will be current at the time of the call and the Company
undertakes no obligation to update the replay.

LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)

September 30, 2009 December 31, 2008
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 8,137 $ 10,829
Accounts receivable, net 3,192 6,114
Inventories and center operating supplies 13,935 14,632
Prepaid expenses and other current assets 14,964 10,994
Deferred membership origination costs 21,497 19,877
Deferred income taxes 1,872 1,365
Total current assets 63,597 63,811
PROPERTY AND EQUIPMENT, net 1,507,073 1,515,957
RESTRICTED CASH 3,785 3,936
DEFERRED MEMBERSHIP ORIGINATION COSTS 11,726 14,210
OTHER ASSETS 49,967 49,789
TOTAL ASSETS $ 1,636,148 $ 1,647,703

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 12,130 $ 10,335
Accounts payable 16,926 14,842
Construction accounts payable 10,602 63,418
Accrued expenses 52,323 46,230
Deferred revenue 37,230 36,098
Total current liabilities 129,211 170,923
LONG-TERM DEBT, net of current portion 671,165 702,569
DEFERRED RENT LIABILITY 28,464 27,925
DEFERRED INCOME TAXES 60,252 51,982
DEFERRED REVENUE 10,622 13,719
OTHER LIABILITIES 19,390 27,684
Total liabilities 919,104 994,802
SHAREHOLDERS' EQUITY:
Common stock 828 793
Additional paid-in capital 393,864 385,095
Retained earnings 325,718 271,711
Accumulated other comprehensive loss (3,366 ) (4,698 )
Total shareholders' equity 717,044 652,901
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,636,148 $ 1,647,703

LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
For the For the
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
REVENUE:
Membership dues $ 144,832 $ 131,232 $ 425,070 $ 377,001
Enrollment fees 6,617 6,818 19,630 19,991
In-center revenue 59,129 56,151 178,681 167,385
Total center revenue 210,578 194,201 623,381 564,377
Other revenue 3,742 4,608 9,922 11,290
Total revenue 214,320 198,809 633,303 575,667
OPERATING EXPENSES:
Center operations 127,468 116,300 383,313 337,139
Advertising and marketing 5,756 7,287 20,145 23,608
General and administrative 9,669 9,453 33,172 30,707
Other operating 8,017 4,926 17,791 13,696
Depreciation and amortization 23,428 18,720 68,127 52,500
Total operating expenses 174,338 156,686 522,548 457,650
Income from operations 39,982 42,123 110,755 118,017
OTHER INCOME (EXPENSE):
Interest expense, net (7,651 ) (7,185 ) (23,005 ) (21,301 )
Equity in earnings of affiliate 316 336 985 985
Total other income (expense) (7,335 ) (6,849 ) (22,020 ) (20,316 )
INCOME BEFORE INCOME TAXES 32,647 35,274 88,735 97,701
PROVISION FOR INCOME TAXES 12,014 13,700 34,728 38,895
NET INCOME $ 20,633 $ 21,574 $ 54,007 $ 58,806
BASIC EARNINGS PER COMMON SHARE $ 0.52 $ 0.55 $ 1.38 $ 1.51
DILUTED EARNINGS PER COMMON SHARE $ 0.51 $ 0.55 $ 1.36 $ 1.49
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - BASIC 39,410 39,025 39,221 38,946
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - DILUTED 40,255 39,370 39,687 39,350

LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the
Nine Months Ended
September 30,
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 54,007 $ 58,806
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 68,127 52,500
Deferred income taxes 6,957 8,094
Provision for doubtful accounts (8 ) 15
Loss on disposal of property and equipment, net 818 1,159
Gain on sale of land held for sale (873 ) -
Amortization of deferred financing costs 1,925 1,078
Share-based compensation 5,907 5,989
Excess tax benefit related to share-based payment arrangements (433 ) (38 )
Equity in earnings of affiliate (985 ) (985 )
Changes in operating assets and liabilities 2,000 16,840
Other 1,109 54
Net cash provided by operating activities 138,551 143,512

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (116,853 ) (360,551 )
Proceeds from sale of property and equipment 8 161,885
Proceeds on sale of land held for sale 1,327 -
Proceeds from property insurance settlement - 317
Increase in other assets (213 ) (6,443 )
Decrease (increase) in restricted cash 151 (2,518 )
Net cash used in investing activities (115,580 ) (207,310 )

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 7,813 39,188
Repayments of long-term borrowings (7,755 ) (13,043 )
Proceeds from (repayments of) revolving credit facility, net (27,600 ) 42,500
Increase in deferred financing costs (745 ) (6,113 )
Excess tax benefit related to share-based payment arrangements 433 38
Proceeds from exercise of stock options 2,191 2,993
Net cash provided by (used in) financing activities (25,663 ) 65,563

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,692 ) 1,765
CASH AND CASH EQUIVALENTS - Beginning of period 10,829 5,354
CASH AND CASH EQUIVALENTS - End of period $ 8,137 $ 7,119

Non-GAAP Financial Measures

This release and the related conference call disclose certain non-GAAP financial
measures.

EBITDA. Earnings Before Interest, Income Taxes and Depreciation and Amortization
(EBITDA) is a non-GAAP disclosure consisting of net income plus interest
expense, net, provision for income taxes and depreciation and amortization. This
term, as the Company defines it, may not be comparable to a similarly titled
measure used by other companies and is not a measure of performance presented in
accordance with GAAP. The Company uses EBITDA as a measure of operating
performance. The funds depicted by EBITDA are not necessarily available for
discretionary use if they are reserved for particular capital purposes, to
maintain compliance with debt covenants, to service debt or to pay taxes. EBITDA
should not be considered as a substitute for net income, net cash provided by
operating activities or other income or cash flow data prepared in accordance
with GAAP. Additional details related to EBITDA are provided in the Form 8-K
that the Company filed with the Securities and Exchange Commission on the date
of this press release.

The following table provides a reconciliation of net income, the most directly
comparable GAAP measure, to EBITDA:

RECONCILIATION OF NET INCOME TO EBITDA
(In thousands)
(Unaudited)

For the For the
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Net income $ 20,633 $ 21,574 $ 54,007 $ 58,806
Interest expense, net 7,651 7,185 23,005 21,301
Provision for income taxes 12,014 13,700 34,728 38,895
Depreciation and amortization 23,428 18,720 68,127 52,500
EBITDA $ 63,726 $ 61,179 $ 179,867 $ 171,502

Free Cash Flow. Free cash flow is a non-GAAP measure consisting of net cash
provided by operating activities, less purchases of property and equipment. This
term, as the Company defines it, may not be comparable to a similarly titled
measure used by other companies and does not represent the total increase or
decrease in the cash balance presented in accordance with GAAP. The Company uses
free cash flow as a measure of cash generated after spending on property and
equipment. Free cash flow should not be considered as a substitute for net cash
provided by operating activities prepared in accordance with GAAP.

The following table provides a reconciliation of net cash provided by operating
activities, the most directly comparable GAAP measure, to free cash flow:

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(In thousands)
(Unaudited)

For the
Nine Months Ended
September 30,
2009 2008
Net cash provided by operating activities $ 138,551 $ 143,512
Less: Purchases of property and equipment (116,853 ) (360,551 )
Free cash flow $ 21,698 $ (217,039 )

Life Time Fitness, Inc.
Ken Cooper, 952-229-7427 (Investors)
ir@lifetimefitness.com
Jason Thunstrom, 952-229-7435 (Media)
pr@lifetimefitness.com

Copyright Business Wire 2009