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Life Time Fitness Announces Second Quarter 2013 Financial Results

  Life Time Fitness Announces Second Quarter 2013 Financial Results

      Revenue Grew 6.9%, Net Income Grew 9.6% and Diluted EPS was $0.80

Business Wire

CHANHASSEN, Minn. -- July 25, 2013

Life Time Fitness, Inc. (NYSE: LTM), The Healthy Way of Life Company, today
reported its financial results for the second quarter ended June30, 2013.

Second quarter 2013 revenue grew 6.9% to $308.1 million from $288.3 million
during the same period last year. Total revenue for the first six months of
2013 grew 7.6% to $598.9 million from $556.8 million during the same period
last year.

Net income for the quarter was $33.2 million, or $0.80 per diluted share,
compared to net income of $30.3 million, or $0.73 per diluted share, for 2Q
2012. Net income for the first six months of 2013 was $61.3 million, or $1.47
per diluted share, compared to net income of $56.0 million, or $1.34 per
diluted share for the prior-year period.

“Our unrelenting focus on the member experience continues to differentiate the
high quality of our centers and programs, and emphasizes our strong business
model,” said Bahram Akradi, chairman, president and chief executive officer.
“As our company has evolved so has the precision with which we operate our
centers and serve our members. This has allowed us to deliver strong business
results and created a solid platform for future growth through new center
expansion and our portfolio of healthy way of life programs and services
delivered both inside and outside of our destinations.”

During the quarter, the Company opened its first center in Alabama, located in
Vestavia Hills (Birmingham market). Two additional centers are planned for
opening in 2013, including Reston, Virginia (Washington D.C. market), in
September, and Montvale, New Jersey (Greater New York area market), in
November. These represent the Company’s fourth and third centers in Virginia
and New Jersey, respectively. In 2014, plans call for six new center openings,
led by locations in Harrison, New York (Greater New York area market) and
Laguna Niguel, California (Orange County market) during the first quarter.

Three and Six Months Ended June30, 2013, Financial Highlights:

Total revenue for the second quarter grew 6.9% to $308.1 million from $288.3
million in 2Q 2012. Total revenue for the first six months of 2013 grew 7.6%
to $598.9 million from $556.8 million during the prior-year period.

                                               2Q 2013 vs. 2Q 2012
(Period-over-period growth)                  
                                               (in millions except revenue per
                                               membership data)
  *Membership dues                            $194.8 vs. $184.9 (up 5.4%)
  *In-center revenue                          $97.3 vs. $90.1 (up 7.9%)
  *Other revenue                              $12.4 vs. $9.4 (up 32.9%)
                                               
  *Average center revenue per Access          $416 vs. $396 (up 5.2%)
    membership
  *Average in-center revenue per Access       $139 vs. $129 (up 7.2%)
    membership
  *Same-center revenue (open 13 months or     Up 4.8%
    longer)
  *Same-center revenue (open 37 months or     Up 3.8%
    longer)

                                               YTD 2013 vs. YTD 2012
(Period-over-period growth)                  
                                               (in millions except revenue per
                                               membership data)
  *Membership dues                            $381.2 vs. $360.4 (up 5.8%)
  *In-center revenue                          $189.2 vs. $174.7 (up 8.3%)
  *Other revenue                              $21.5 vs. $13.8 (up 55.8%)
                                               
  *Average center revenue per Access          $821 vs. $778 (up 5.5%)
    membership
  *Average in-center revenue per Access       $272 vs. $253 (up 7.6%)
    membership
  *Same-center revenue (open 13 months or     Up 4.2%
    longer)
  *Same-center revenue (open 37 months or     Up 3.4%
    longer)

Total memberships grew 1.2% to 812,866 at June30, 2013, from 802,889 at
June30, 2012.

  *Access memberships grew 0.6% to 713,138 at June30, 2013, from 708,585 at
    June30, 2012.
  *Non-Access memberships grew 5.8% to 99,728 at June30, 2013, from 94,304
    at June30, 2012.
  *Attrition in 2Q 2013 was 8.2% compared to 7.6% in the prior-year period.
    Attrition for the trailing 12-month period ended June30, 2013, was 34.5%
    compared to trailing 12-month attrition of 31.9% at June30, 2012. The
    second quarter year-over-year attrition increase was driven primarily by
    Non-Access membership terminations. The trailing 12-month attrition
    increase was driven primarily by Non-Access membership terminations and
    the Lifestyle Family Fitness acquisition.

Total operating expenses during 2Q 2013 were $247.4 million compared to $231.7
million for 2Q 2012. Total operating expenses for the first six months of 2013
were $485.8 million compared to $451.8 million in 2012.

  *Income from operations margin was 19.8% for 2Q 2013, up from 19.6% for 2Q
    2012.
  *Income from operations margin was 18.9% for the first six months of 2013
    compared to 18.8% for 2012.

                                                               
(Expense as a percent of   2Q 2013  vs.  2Q 2012   YTD 2013  vs.  YTD 2012
total revenue)
Center operations          57.4%     vs.   57.8%     57.9%      vs.   58.8%
Advertising and            3.1%      vs.   3.4%      3.4%       vs.   3.6%
marketing
General and                5.1%      vs.   4.8%      5.2%       vs.   4.9%
administrative
Other operating            4.9%      vs.   4.4%      4.7%       vs.   3.8%
Depreciation and           9.7%      vs.   10.0%     9.9%       vs.   10.1%
amortization

Net income for 2Q 2013 was $33.2 million, or $0.80 per diluted share, compared
to net income of $30.3 million, or $0.73 per diluted share, for 2Q 2012. Net
income for the first six months of 2013 was $61.3 million, or $1.47 per
diluted share, compared to net income of $56.0 million, or $1.34 per diluted
share, for the prior-year period.

EBITDA for 2Q 2013 was $91.1 million compared to $85.8 million in 2Q 2012. For
the first six months of 2013, EBITDA was $173.1 million compared with $161.5
million in the prior-year period.

  *As a percentage of total revenue, EBITDA in 2Q 2013 was 29.6% in 2Q 2013
    and 29.8% in 2Q 2012.
  *For the first six months of 2013, EBITDA, as a percentage of total
    revenue, was 28.9% compared to 29.0% in the prior-year period.

Cash flows from operating activities for the first six months of 2013 totaled
$124.5 million compared to $142.2 million in the prior-year period. This
reduction is driven primarily by the timing of income and real estate tax
payments, and lower growth in operating liabilities this year.

Weighted average fully diluted shares for 2Q 2013 totaled 41.7 million
compared to 41.8 million in 2Q 2012. For the first six months of 2013,
weighted average fully diluted shares totaled 41.6 million compared to 41.8
million for the prior-year period.

2013 Business Outlook:

The following statements are based on the Company’s current expectations for
fiscal year 2013 and incorporate 2013 operating trends. These 2013
expectations are subject to the risks and uncertainties further described in
the Company’s forward-looking statements:

  *Revenue is expected to be up 7-8%, or $1.205-1.220 billion, driven
    primarily by price and mix optimization, square foot expansion, and growth
    in in-center and ancillary business revenue.
  *Net income is expected to be up 8.5-11%, or $121.0-124.0 million, driven
    by revenue growth and cost efficiencies.
  *Diluted earnings per common share is expected to be $2.89-2.95 (updated
    from $2.87-2.95).

As announced on July18, 2013, the Company will hold a conference call today
at 10:00 a.m. ET to discuss its second quarter 2013 results. Bahram Akradi,
Michael Robinson, executive vice president and chief financial officer, and
John Heller, senior director, investor relations & treasurer, will host the
conference call. The conference call will be webcast and may be accessed via
the Company’s Investor Relations section of its website at
lifetimefitness.com. A replay of the call will be available the same day via
the Company’s website beginning at approximately 2:00 p.m. ET.

About Life Time Fitness, Inc.

As The Healthy Way of Life Company, Life Time Fitness (NYSE: LTM) helps
organizations, communities and individuals achieve their total health
objectives, athletic aspirations and fitness goals by engaging in their areas
of interest - or discovering new passions - both inside and outside of Life
Time’s distinctive and large sports, professional fitness, family recreation
and spa destinations, most of which operate 24 hours a day, seven days a week.
The Company’s Healthy Way of Life approach enables customers to achieve this
by providing the best programs, people and places of uncompromising quality
and value. As of July25, 2013, the Company operated 106 centers under the
LIFE TIME FITNESS® and LIFE TIME ATHLETIC® brands in the United States and
Canada. Additional information about Life Time centers, programs and services
is available at lifetimefitness.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Forward-looking
statements can usually be identified by the use of terminology such as
“anticipate,” “believe,” “continue,” “could,” “estimate,” “evolve,” “expect,”
“forecast,” “intend,” “looking ahead,” “may,” “opinion,” “plan,” “possible,”
“potential,” “project,” “should,” “will” and similar words or expressions.
Forward-looking 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, the ability to access our existing credit
facility and obtain additional financing, strains on our business from
continued and future growth, including potential acquisitions and other
strategic initiatives, risks related to maintenance and security of our data,
potential recognition of compensation expense related to performance-based
stock grants, 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 risk factor section of the Company’s annual
report on Form 10-K filed with the Securities and Exchange Commission.

The Company cautions investors not to place undue reliance on any such
forward-looking statements, which speak only as of the date on which such
statements were made. The Company undertakes no obligation to update such
statements to reflect events or circumstances arising after such date. All
remarks made during the Company’s preliminary financial results webcast will
be current at the time of the webcast and the Company is under no obligation
to update the recording.

                                           
LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
                                                          
                                             June 30,        December 31,
                                             2013            2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                    $ 13,126        $ 16,499
Accounts receivable, net                       8,151           9,272
Center operating supplies and inventories      30,195          27,240
Prepaid expenses and other current assets      28,881          26,826
Deferred membership origination costs          11,438          11,664
Deferred income taxes                          2,912           8,813
Income tax receivable                         1,813         -         
Total current assets                           96,516          100,314
PROPERTY AND EQUIPMENT, net                    1,952,894       1,858,666
RESTRICTED CASH                                447             2,087
DEFERRED MEMBERSHIP ORIGINATION COSTS          6,740           6,820
GOODWILL                                       40,198          37,176
OTHER ASSETS                                  66,134        67,111    
TOTAL ASSETS                                 $ 2,162,929    $ 2,072,174 
                                                             
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt         $ 12,288        $ 12,603
Accounts payable                               24,243          32,140
Construction accounts payable                  40,163          25,208
Accrued expenses                               64,191          63,333
Deferred revenue                              42,555        34,753    
Total current liabilities                      183,440         168,037
LONG-TERM DEBT, net of current portion         723,133         691,867
DEFERRED RENT LIABILITY                        23,810          22,490
DEFERRED INCOME TAXES                          91,204          95,509
DEFERRED REVENUE                               6,783           6,840
OTHER LIABILITIES                             20,830        14,514    
Total liabilities                             1,049,200     999,257   
SHAREHOLDERS' EQUITY:
Common stock                                   858             864
Additional paid-in capital                     427,761         447,912
Retained earnings                              690,230         628,942
Accumulated other comprehensive loss          (5,120    )    (4,801    )
Total equity                                  1,113,729     1,072,917 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 2,162,929    $ 2,072,174 
                                                             

                      
LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
                                                              
                        For the Three Months Ended   For the Six Months Ended
                        June 30,                     June 30,
                          2013        2012        2013        2012    
REVENUE:
Membership dues         $  194,816     $ 184,895     $ 381,190     $ 360,365
Enrollment fees            3,573         3,929         6,969         7,883
In-center revenue         97,275      90,118      189,246     174,734 
Total center revenue       295,664       278,942       577,405       542,982
Other revenue             12,444      9,362       21,450      13,769  
Total revenue             308,108     288,304     598,855     556,751 
OPERATING EXPENSES:
Center operations          176,798       166,554       346,760       327,269
Advertising and            9,629         9,689         20,588        20,045
marketing
General and                15,713        13,856        31,069        27,559
administrative
Other operating            15,225        12,761        28,059        21,152
Depreciation and          30,017      28,861      59,279      55,821  
amortization
Total operating           247,382     231,721     485,755     451,846 
expenses
Income from               60,726      56,583      113,100     104,905 
operations
OTHER INCOME
(EXPENSE):
Interest expense, net      (6,434  )     (6,545  )     (12,563 )     (12,822 )
Equity in earnings of     378         395         724         768     
affiliate
Total other income        (6,056  )    (6,150  )    (11,839 )    (12,054 )
(expense)
INCOME BEFORE INCOME       54,670        50,433        101,261       92,851
TAXES
PROVISION FOR INCOME      21,483      20,141      39,973      36,887  
TAXES
NET INCOME              $  33,187     $ 30,292     $ 61,288     $ 55,964  
                                                                   
BASIC EARNINGS PER      $  0.80       $ 0.73       $ 1.48       $ 1.35    
COMMON SHARE
DILUTED EARNINGS PER    $  0.80       $ 0.73       $ 1.47       $ 1.34    
COMMON SHARE
WEIGHTED AVERAGE
NUMBER OF COMMON          41,456      41,462      41,376      41,313  
SHARES OUTSTANDING -
BASIC
WEIGHTED AVERAGE
NUMBER OF COMMON          41,659      41,750      41,644      41,777  
SHARES OUTSTANDING -
DILUTED
                                                                   

                                                 
LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
                                                   For the Six Months Ended
                                                   June 30,
                                                    2013        2012     
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                         $ 61,288       $ 55,964
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization                        59,279         55,821
Deferred income taxes                                671            (1,073   )
(Gain) loss on disposal of property and              (216     )     579
equipment, net
Amortization of deferred financing costs             1,100          1,006
Share-based compensation                             6,286          7,312
Excess tax benefit related to share-based            (4,564   )     (8,365   )
compensation
Changes in operating assets and liabilities          1,726          31,450
Other                                               (1,116   )    (504     )
Net cash provided by operating activities           124,454      142,190  
                                                                  
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment                  (137,433 )     (106,102 )
Acquisitions, net of cash acquired                   (437     )     (26,415  )
Proceeds from sale of property and equipment         763            362
Proceeds from property insurance settlements         175            790
Increase in other assets                             (736     )     (250     )
Decrease in restricted cash                         1,640        651      
Net cash used in investing activities               (136,028 )    (130,964 )
                                                                  
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings                   75,000         -
Repayments of long-term borrowings                   (28,272  )     (3,521   )
Repayments of revolving credit facility, net         (13,500  )     (10,000  )
Increase in deferred financing costs                 (976     )     (256     )
Excess tax benefit related to share-based            4,564          8,365
compensation
Proceeds from stock option exercises                 1,108          1,982
Proceeds from employee stock purchase plan           607            590
Stock purchased for employee stock purchase plan     (569     )     (649     )
Repurchases of common stock                         (28,157  )    -        
Net cash provided by (used in) financing            9,805        (3,489   )
activities
                                                                  
Effect of exchange rates on cash and cash           (1,604   )    275      
equivalents
                                                                  
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS     (3,373   )     8,012
CASH AND CASH EQUIVALENTS - Beginning of period     16,499       7,487    
CASH AND CASH EQUIVALENTS - End of period          $ 13,126      $ 15,499   
                                                                  

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 measure 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 Three Months Ended   For the Six Months Ended
                         June 30,                     June 30,
                         2013            2012         2013           2012
Net income               $   33,187      $  30,292    $  61,288      $ 55,964
Interest expense, net        6,434          6,545        12,563        12,822
Provision for income         21,483         20,141       39,973        36,887
taxes
Depreciation and            30,017        28,861      59,279       55,821
amortization
EBITDA                   $   91,121      $  85,839    $  173,103     $ 161,494
                                                                     

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,
excluding acquisitions. 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. Additional details related to free cash flow
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 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 Three Months Ended   For the Six Months Ended
                      June 30,                     June 30,
                      2013       2012         2013          2012       
Net cash provided
by operating          $  48,223      $ 68,287      $ 124,454      $ 142,190
activities
Less: Purchases of
property and            (78,288 )    (67,625 )    (137,433 )    (106,102 )
equipment
Free cash flow        $  (30,065 )   $ 662        $ (12,979  )   $ 36,088   

Contact:

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