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Life Time Fitness Announces Fourth Quarter And Full-Year 2009 Financial Results

Company Reports Revenue Growth of 5.0% and Earnings Per Share of $0.46 for the Quarter; Full-Year Revenue Grew 8.8% and Earnings Per Share was $1.82

"In 2009, we set our minds on winning on a number of fronts and I’m pleased with our progress on many of them, including free cash flow delivery, debt reduction and cost structure improvements"

CHANHASSEN, Minn.--(BUSINESS WIRE)--Life Time Fitness, Inc. (NYSE:LTM) today reported its financial results for the fourth quarter and full year ended December 31, 2009.

Fourth quarter 2009 revenue grew 5.0% to $203.7 million from $194.0 million during the same period last year. Revenue for the year totaled $837.0 million, up 8.8% from $769.6 million in 2008.

Net income for the quarter was $18.4 million, or $0.46 per diluted share. This compares to net income of $13.0 million, or $0.33 per diluted share, for 4Q 2008. For the full year, net income was $72.4 million, or $1.82 per diluted share, compared to $71.8 million, or $1.83 per diluted share, for 2008.

“In 2009, we set our minds on winning on a number of fronts and I’m pleased with our progress on many of them, including free cash flow delivery, debt reduction and cost structure improvements,” said Bahram Akradi, Life Time Fitness chairman, president and chief executive officer. “At the same time, our same-center revenue and attrition metrics remain key areas of focus, and we saw some improvement during the year, but we are not satisfied. In 2010, we will strive to improve both of these metrics. We also remain highly committed to ongoing growth as a Healthy Way of Life Company in spite of the continuing economic headwind. Overall, I am pleased with the impact we are starting to see on many of our connectivity and growth initiatives, and with our entire team’s focus on making significant progress through the course of this year.”

In January, the Company opened a new center in Beachwood, Ohio, marking its first location in the Cleveland market and the first of three new, large format centers planned for 2010. In March, the Company expects to open its second new, large format center for the year in Lenexa, Kansas. This represents the second Life Time Fitness location in the Kansas City market. One additional large format center is expected to open in the fourth quarter. This month, the Company also plans to open a new Pilates, yoga and personal training boutique concept center in Scottsdale, Arizona.

Three and Twelve Months Ended December 31, 2009, Financial Highlights:

Total revenue for the fourth quarter grew 5.0% to $203.7 million from $194.0 million. Total revenue for the full year grew 8.8% to $837.0 million from $769.6 million in 2008.

(Period-over-period growth)	4Q 2009 vs. 4Q 2008			2009 vs. 2008
Membership dues		5.8	%	10.9	%
Enrollment fees		(1.1	%)	(1.6	%)
In-center revenue		6.6	%	6.7	%

Same-center revenue (13^th month of operation)		0.3	%	(3.1	%)
Same-center revenue (37^th month of operation)		(4.7	%)	(7.5	%)
Average center revenue per membership	$350 – up 1.6%			$1,414 – down 0.9%
Average in-center revenue per membership	$95 – up 2.4 %			$400 – down 3.4%

Memberships grew 2.1% to 578,937 at December 31, 2009, from 567,110 at December 31, 2008.

Attrition in 4Q 2009 was 10.8%, the same as the prior-year period.
Attrition improved to 40.6% in 2009 compared to 42.3% in 2008.

Total operating expenses during 4Q 2009 totaled $165.6 million compared to $164.6 million for 4Q 2008. Fourth quarter 2008 results included $5.0 million in costs primarily related to slowing the development of new centers. Full-year operating expenses were $688.1 million compared with $622.3 million in 2008.

Operating margin was 18.7% for 4Q 2009 compared to 15.1% in the prior-year period.
Full-year operating margin was 17.8% compared to 19.1% in 2008.

(Expense as a percent of total revenue)	4Q 2009 vs. 4Q 2008	2009 vs. 2008
Center operations	60.4% vs. 60.6%	60.5% vs. 59.1%
Advertising and marketing	3.0% vs. 4.1%	3.2% vs. 4.1%
General and administrative	4.8% vs. 6.7%	5.1% vs. 5.7%
Other operating	2.0% vs. 3.0%	2.6% vs. 2.5%
Depreciation and amortization	11.1% vs. 10.5%	10.8% vs. 9.5%

Net income for 4Q 2009 was $18.4 million compared with $13.0 million in 4Q 2008, and full-year net income was $72.4 million compared with $71.8 million in 2008. The effective income tax rate for 2009 was 39.6% compared with 39.7% in 2008.

EBITDA for 4Q 2009 was $61.1 million compared with $50.0 million in 4Q 2008. Full-year EBITDA was $240.9 million compared with $221.5 million in 2008.

As a percentage of total revenue, EBITDA was 30.0% in 4Q 2009 compared to 25.8% in 4Q 2008.
EBITDA margin in 2009 was 28.8%, the same as the prior year.

Cash flows from operations for the full year 2009 totaled $186.2 million compared to $183.1 million in 2008.

Weighted average diluted shares for 4Q 2009 totaled 40.3 million compared to 39.2 million in 4Q 2008. For the full year 2009, weighted average diluted shares totaled 39.9 million compared to 39.3 million in 2008.

2010 Business Outlook:

The following statements are based on the Company's current expectations for fiscal year 2010, which incorporate late 2009 operating trends and are subject to the risks and uncertainties described below:

Revenue is expected to be up 4-7%, or $870-895 million, driven primarily by membership growth at new and ramping centers.
Net income is expected to be up 4-9%, or $75-79 million, driven by revenue growth and cost efficiencies.
Diluted earnings per common share is expected to be $1.85-1.95.

As announced on February 11, 2010, the Company will hold a conference call today at 10:00 a.m. ET to discuss its fourth quarter and full-year 2009 results. Bahram Akradi, Michael Robinson, executive vice president and chief financial officer, and Kenneth Cooper, vice president of finance, will host the conference call. The conference call will be Web cast 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 the same day via the Company’s Web site beginning 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 consultation, 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 February 18, 2010, Life Time Fitness operated 85 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 or service marks 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)


			December 31, 2009			December 31, 2008
ASSETS			(Unaudited)
CURRENT ASSETS:
	Cash and cash equivalents		$	6,282		$	10,829
	Accounts receivable, net			4,026			6,114
	Inventories and center operating supplies			14,621			14,632
	Prepaid expenses and other current assets			12,938			10,994
	Deferred membership origination costs			20,278			19,877
	Deferred income taxes			660			1,365
		Total current assets		58,805			63,811
PROPERTY AND EQUIPMENT, net				1,512,993			1,515,957
RESTRICTED CASH				2,941			3,936
DEFERRED MEMBERSHIP ORIGINATION COSTS				8,716			14,210
OTHER ASSETS				48,070			49,789
		TOTAL ASSETS	$	1,631,525		$	1,647,703

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
	Current maturities of long-term debt		$	16,716		$	10,335
	Accounts payable			14,429			14,842
	Construction accounts payable			9,882			63,418
	Accrued expenses			48,235			46,230
	Deferred revenue			36,939			36,098
		Total current liabilities		126,201			170,923
LONG-TERM DEBT, net of current portion				643,630			702,569
DEFERRED RENT LIABILITY				29,048			27,925
DEFERRED INCOME TAXES				77,189			51,982
DEFERRED REVENUE				8,819			13,719
OTHER LIABILITIES				9,207			27,684
		Total liabilities		894,094			994,802
SHAREHOLDERS' EQUITY:
	Common stock			829			793
	Additional paid-in capital			395,121			385,095
	Retained earnings			344,095			271,711
	Accumulated other comprehensive loss			(2,614	)		(4,698	)
		Total shareholders' equity		737,431			652,901
		TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,631,525		$	1,647,703

LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)

			For the						For the
			Three Months Ended						Year Ended
			December 31,						December 31,
			2009			2008			2009			2008
			(Unaudited)			(Unaudited)			(Unaudited)
REVENUE:
	Membership dues		$	139,535		$	131,926		$	564,605		$	508,927
	Enrollment fees			6,508			6,579			26,138			26,570
	In-center revenue			54,153			50,813			232,834			218,198
		Total center revenue		200,196			189,318			823,577			753,695
	Other revenue			3,502			4,636			13,424			15,926
		Total revenue		203,698			193,954			837,001			769,621
OPERATING EXPENSES:
	Center operations			123,130			117,506			506,443			454,645
	Advertising and marketing			6,154			7,892			26,299			31,500
	General and administrative			9,604			13,042			42,776			43,749
	Other operating			4,061			5,730			21,852			19,426
	Depreciation and amortization			22,643			20,447			90,770			72,947
		Total operating expenses		165,592			164,617			688,140			622,267
		Income from operations		38,106			29,337			148,861			147,354
OTHER INCOME (EXPENSE):
	Interest expense, net			(7,333	)		(8,251	)		(30,338	)		(29,552	)
	Equity in earnings of affiliate			317			258			1,302			1,243
		Total other income (expense)		(7,016	)		(7,993	)		(29,036	)		(28,309	)
INCOME BEFORE INCOME TAXES				31,090			21,344			119,825			119,045
PROVISION FOR INCOME TAXES				12,713			8,329			47,441			47,224
NET INCOME			$	18,377		$	13,015		$	72,384		$	71,821
BASIC EARNINGS PER COMMON SHARE			$	0.47		$	0.33		$	1.84		$	1.84
DILUTED EARNINGS PER COMMON SHARE			$	0.46		$	0.33		$	1.82		$	1.83
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
	OUTSTANDING - BASIC			39,444			39,124			39,297			39,002
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
	OUTSTANDING - DILUTED			40,331			39,172			39,870			39,342

LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

				For the
				Year Ended
				December 31,
				2009			2008
				(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income			$	72,384		$	71,821
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization			90,770			72,947
		Deferred income taxes			23,270			14,815
		Loss on disposal of property and equipment, net			1,229			985
		Gain on sale of land held for sale			(1,132	)		-
		Amortization of deferred financing costs			2,544			1,663
		Share-based compensation			8,082			7,456
		Excess tax benefit related to share-based payment arrangements			(507	)		(103	)
		Changes in operating assets and liabilities			(10,951	)		13,543
		Other			514			(61	)
			Net cash provided by operating activities		186,203			183,066

CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchases of property and equipment				(146,632	)		(463,337	)
	Proceeds from sale of property and equipment				8			161,888
	Proceeds on sale of land held for sale				1,954			-
	Proceeds from property insurance settlement				-			318
	Decrease (increase) in other assets				390			(7,695	)
	Decrease in restricted cash				995			2,831
			Net cash used in investing activities		(143,285	)		(305,995	)

CASH FLOWS FROM FINANCING ACTIVITIES:
	Proceeds from long-term borrowings				18,151			43,272
	Repayments of long-term borrowings				(11,001	)		(13,143	)
	Proceeds from (repayments of) revolving credit facility, net				(56,500	)		101,800
	Increase in deferred financing costs				(1,092	)		(6,664	)
	Excess tax benefit related to share-based payment arrangements				507			103
	Proceeds from exercise of stock options				2,470			3,036
			Net cash provided by (used in) financing activities		(47,465	)		128,404

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS					(4,547	)		5,475
CASH AND CASH EQUIVALENTS - Beginning of period					10,829			5,354
CASH AND CASH EQUIVALENTS - End of period				$	6,282		$	10,829

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				Year Ended
	December 31,				December 31,
	2009		2008		2009		2008
Net income	$	18,377	$	13,015	$	72,384	$	71,821
Interest expense, net		7,333		8,251		30,338		29,552
Provision for income taxes		12,713		8,329		47,441		47,224
Depreciation and amortization		22,643		20,447		90,770		72,947
EBITDA	$	61,066	$	50,042	$	240,933	$	221,544

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
	Year Ended
	December 31,
	2009			2008
Net cash provided by operating activities	$	186,203		$	183,066
Less: Purchases of property and equipment		(146,632	)		(463,337	)
Free cash flow	$	39,571		$	(280,271	)

For further information: Life Time Fitness, Inc. Investor Contact: Ken Cooper, 952-229-7427 ir@lifetimefitness.com Media Contact: Jason Thunstrom, 952-229-7435 pr@lifetimefitness.com