##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from to
 Commission File No. 001-32230
 
 
 Life Time Fitness, Inc.
  Minnesota
(State or other jurisdiction of 
incorporation or organization)
    
    41-1689746
(I.R.S. Employer
Identification No.)2902 Corporate Place 
Chanhassen, Minnesota
(Address of principal executive offices)
    
    55317
(Zip Code)
 952-947-0000
 
 þ o
 o o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(do not check if smaller reporting company)
 o þ




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TABLE OF CONTENTS
 PagePART I.
    FINANCIAL INFORMATIONItem 1.
    Financial StatementsConsolidated Balance Sheets as of March 31, 2010 (unaudited) and December 31, 2009

    
    3Consolidated Statements of Operations for the Three Months Ended March 31, 2010 and
2009 (unaudited)

    
    4Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2010 and
2009 (unaudited)

    
    5Notes to Unaudited Consolidated Financial Statements

    
    6Item 2.
    Managements Discussion and Analysis of Financial Condition and Results of Operations

    
    12Item 3.
    Quantitative and Qualitative Disclosures about Market Risk

    
    22Item 4.
    Controls and Procedures

    
    22PART II.
    OTHER INFORMATIONItem 1.
    Legal Proceedings

    
    22Item 1A.
    Risk Factors

    
    22Item 2.
    Unregistered Sales of Equity Securities and Use of Proceeds

    
    22Item 3.
    Defaults Upon Senior Securities

    
    22Item 4.
    (Removed and Reserved)

    
    22Item 5.
    Other Information

    
    23Item 6.

Exhibits

    
    23SIGNATURES



    
    24EX-10.1EX-10.2EX-31.1EX-31.2EX-32




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PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (In thousands, except share and per share data)
 March 31,
    
    
    December 31,2010
    
    
    2009(Unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    12,955
    
    
    $
    6,282Accounts receivable, net
    
    
    3,638
    
    
    
    4,026Center operating supplies and inventories
    
    
    15,222
    
    
    
    14,621Prepaid expenses and other current assets
    
    
    16,540
    
    
    
    12,938Deferred membership origination costs
    
    
    19,435
    
    
    
    20,278Deferred income taxes
    
    
    
    
    
    
    660Total current assets
    
    
    67,790
    
    
    
    58,805PROPERTY AND EQUIPMENT, net
    
    
    1,513,385
    
    
    
    1,512,993RESTRICTED CASH
    
    
    2,434
    
    
    
    2,941DEFERRED MEMBERSHIP ORIGINATION COSTS
    
    
    7,748
    
    
    
    8,716OTHER ASSETS
    
    
    47,483
    
    
    
    48,070TOTAL ASSETS
    
    $
    1,638,840
    
    
    $
    1,631,525LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Current maturities of long-term debt
    
    $
    12,815
    
    
    $
    16,716Accounts payable
    
    
    17,453
    
    
    
    14,429Construction accounts payable
    
    
    9,499
    
    
    
    9,882Accrued expenses
    
    
    57,485
    
    
    
    48,235Deferred revenue
    
    
    38,154
    
    
    
    36,939Total current liabilities
    
    
    135,406
    
    
    
    126,201LONG-TERM DEBT, net of current portion
    
    
    622,056
    
    
    
    643,630DEFERRED RENT LIABILITY
    
    
    30,197
    
    
    
    29,048DEFERRED INCOME TAXES
    
    
    76,105
    
    
    
    77,189DEFERRED REVENUE
    
    
    8,445
    
    
    
    8,819OTHER LIABILITIES
    
    
    9,297
    
    
    
    9,207Total liabilities
    
    
    881,506
    
    
    
    894,094COMMITMENTS AND CONTINGENCIES (Note 6)SHAREHOLDERS EQUITY:Undesignated preferred stock, 10,000,000 shares authorized; none issued or outstanding
    
    
    
    
    
    
    Common stock, $.02 par value, 75,000,000 shares authorized; 41,731,529 and 41,410,367 shares issued and outstanding, respectively
    
    
    835
    
    
    
    829Additional paid-in capital
    
    
    396,413
    
    
    
    395,121Retained earnings
    
    
    361,931
    
    
    
    344,095Accumulated other comprehensive loss
    
    
    (1,845
    )
    
    
    (2,614
    )Total shareholders equity
    
    
    757,334
    
    
    
    737,431TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    1,638,840
    
    
    $
    1,631,525
  3




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LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share data)
 (Unaudited)
 For the Three Months EndedMarch 31,2010
    
    
    2009REVENUE:Membership dues
    
    $
    145,165
    
    
    $
    137,397Enrollment fees
    
    
    6,324
    
    
    
    6,473In-center revenue
    
    
    65,532
    
    
    
    59,302Total center revenue
    
    
    217,021
    
    
    
    203,172Other revenue
    
    
    2,750
    
    
    
    3,262Total revenue
    
    
    219,771
    
    
    
    206,434OPERATING EXPENSES:Center operations
    
    
    137,584
    
    
    
    126,974Advertising and marketing
    
    
    6,772
    
    
    
    8,298General and administrative
    
    
    10,700
    
    
    
    11,708Other operating
    
    
    4,308
    
    
    
    4,887Depreciation and amortization
    
    
    22,765
    
    
    
    22,064Total operating expenses
    
    
    182,129
    
    
    
    173,931Income from operations
    
    
    37,642
    
    
    
    32,503OTHER INCOME (EXPENSE):Interest expense, net of interest income of $19 and $139, respectively
    
    
    (8,097
    )
    
    
    (7,474
    )Equity in earnings of affiliate
    
    
    301
    
    
    
    337Total other income (expense)
    
    
    (7,796
    )
    
    
    (7,137
    )INCOME BEFORE INCOME TAXES
    
    
    29,846
    
    
    
    25,366PROVISION FOR INCOME TAXES
    
    
    12,010
    
    
    
    10,252NET INCOME
    
    $
    17,836
    
    
    $
    15,114BASIC EARNINGS PER COMMON SHARE
    
    $
    0.45
    
    
    $
    0.39DILUTED EARNINGS PER COMMON SHARE
    
    $
    0.44
    
    
    $
    0.38WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING  BASIC
    
    
    39,746
    
    
    
    39,226WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING  DILUTED
    
    
    40,780
    
    
    
    39,392
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LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
 For the Three Months EndedMarch 31,2010
    
    
    2009CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    17,836
    
    
    $
    15,114Adjustments to reconcile net income to net cash provided by operating
activities:Depreciation and amortization
    
    
    22,765
    
    
    
    22,064Deferred income taxes
    
    
    (1,826
    )
    
    
    303Loss on disposal of property and equipment, net
    
    
    104
    
    
    
    119Amortization of deferred financing costs
    
    
    849
    
    
    
    669Share-based compensation
    
    
    1,775
    
    
    
    2,234Equity in earnings of affiliate
    
    
    (301
    )
    
    
    (337
    )Dividend received from equity investment
    
    
    350
    
    
    
    350Changes in operating assets and liabilities
    
    
    12,238
    
    
    
    7,868Other
    
    
    85
    
    
    
    1,276Net cash provided by operating activities
    
    
    53,875
    
    
    
    49,660CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (23,039
    )
    
    
    (48,900
    )Proceeds from sale of property and equipment
    
    
    20
    
    
    
    4Increase in other assets
    
    
    (237
    )
    
    
    (1,634
    )Decrease in restricted cash
    
    
    507
    
    
    
    144Net cash used in investing activities
    
    
    (22,749
    )
    
    
    (50,386
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from long-term borrowings
    
    
    
    
    
    
    4,813Repayments of long-term borrowings
    
    
    (32,666
    )
    
    
    (3,694
    )Proceeds from (repayments of) revolving credit facility, net
    
    
    7,800
    
    
    
    (300
    )Decrease (increase) in deferred financing costs
    
    
    42
    
    
    
    (346
    )Proceeds from stock option exercises
    
    
    371
    
    
    
    Net cash provided by (used in) financing activities
    
    
    (24,453
    )
    
    
    473INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    6,673
    
    
    
    (253
    )CASH AND CASH EQUIVALENTS  Beginning of period
    
    
    6,282
    
    
    
    10,829CASH AND CASH EQUIVALENTS  End of period
    
    $
    12,955
    
    
    $
    10,576
  5




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LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
 1. Basis of Presentation
   2. Share-Based Compensation
 Stock Option and Incentive Plans
    For the Three MonthsEnded March 31,2010
    
    
    2009Share-based compensation expense related to stock options
    
    $
    31
    
    
    $
    541Share-based compensation expense related to restricted shares
    
    
    1,714
    
    
    
    1,663Share-based compensation expense related to ESPP
    
    
    30
    
    
    
    30Total share-based compensation expense
    
    $
    1,775
    
    
    $
    2,234
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LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
 Summary of Restricted Stock Activity
 Range of MarketRestricted
    
    
    Price Per ShareShares
    
    
    on Grant DateOutstanding at December 31, 2009
    
    
    1,966,672
    
    
    $
    9.72-53.95Granted
    
    
    313,561
    
    
    $
    28.79Canceled
    
    
    (15,927
    )
    
    $
    9.72-50.82Vested
    
    
    (278,828
    )
    
    $
    9.72-53.95Outstanding at March 31, 2010
    
    
    1,985,478
    
    
    $
    9.72-53.95
  Special 2009 Restricted Stock Grant
   7




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LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
 Summary of Stock Option Activity
 WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateStock
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicOptions
    
    
    Price
    
    
    Term (in years)
    
    
    ValueOutstanding at December 31, 2009
    
    
    810,578
    
    
    $
    22.93
    
    
    
    4.8
    
    
    $
    3,669Granted
    
    
    
    
    
    $
    Exercised
    
    
    (23,526
    )
    
    $
    15.75Canceled
    
    
    
    
    
    $
    Outstanding at March 31, 2010
    
    
    787,052
    
    
    $
    23.14
    
    
    
    4.5
    
    
    $
    5,315Vested or Expected to Vest at March 31, 2010
    
    
    786,657
    
    
    $
    23.13
    
    
    
    4.5
    
    
    $
    5,315Exercisable at March 31, 2010
    
    
    783,106
    
    
    $
    23.03
    
    
    
    4.5
    
    
    $
    5,315
    Employee Stock Purchase Plan and Related Share Repurchase Plan
   8




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LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
 3. Earnings per Share
   For the Three MonthsEnded March 31,2010
    
    
    2009Net income
    
    $
    17,836
    
    
    $
    15,114Weighted average number of common shares outstanding  basic
    
    
    39,746
    
    
    
    39,226Effect of dilutive stock options
    
    
    133
    
    
    
    81Effect of dilutive restricted stock awards
    
    
    901
    
    
    
    85Weighted average number of common shares outstanding  diluted
    
    
    40,780
    
    
    
    39,392Basic earnings per common share
    
    $
    0.45
    
    
    $
    0.39Diluted earnings per common share
    
    $
    0.44
    
    
    $
    0.38
 4. Operating Segments
   For the Three MonthsEnded March 31,2010
    
    
    2009Membership dues
    
    $
    145,165
    
    
    $
    137,397Enrollment fees
    
    
    6,324
    
    
    
    6,473Personal training
    
    
    32,626
    
    
    
    29,142Other in-center
    
    
    32,906
    
    
    
    30,160Other
    
    
    2,750
    
    
    
    3,262Total revenue
    
    $
    219,771
    
    
    $
    206,434
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LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
 5. Supplementary Cash Flow Information
  For the Three MonthsEnded March 31,2010
    
    
    2009Accounts receivable
    
    $
    323
    
    
    $
    2,531Center operating supplies and inventories
    
    
    (601
    )
    
    
    506Prepaid expenses and other current assets
    
    
    (3,892
    )
    
    
    (2,920
    )Deferred membership origination costs
    
    
    1,811
    
    
    
    (1,095
    )Accounts payable
    
    
    3,195
    
    
    
    (2,474
    )Accrued expenses
    
    
    9,250
    
    
    
    8,308Deferred revenue
    
    
    841
    
    
    
    2,485Deferred rent liability
    
    
    1,148
    
    
    
    (651
    )Other liabilities
    
    
    163
    
    
    
    1,178Changes in operating assets and liabilities
    
    $
    12,238
    
    
    $
    7,868
    6. Commitments and Contingencies
 Litigation
 7. Recent Accounting Pronouncements
  8. Derivative Instruments
  10




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LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
   9. Fair Value Measurements
   March 31, 2010Carrying
    
    
    EstimatedValue
    
    
    Fair ValueFixed-rate debt
    
    $
    338,727
    
    
    $
    317,428Obligations under capital leases
    
    
    18,451
    
    
    
    18,344Floating-rate debt
    
    
    277,693
    
    
    
    264,085Total
    
    $
    634,871
    
    
    $
    599,857
      11




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Item 2.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward-Looking Statements
   Overview
      12




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
    
    Our largest source of revenue is membership dues (66.1% of total revenue for the three
months ended March 31, 2010) and enrollment fees (2.9% of total revenue for the three
months ended March 31, 2010) paid by our members. We recognize revenue from monthly
membership dues in the month to which they pertain. We recognize revenue from enrollment
fees over the estimated average membership life, which we estimate to be 30 months for the
first quarter of 2010 and all of 2009 and the fourth quarter of 2008, 33 months for the
second and third quarters of 2008 and 36 months for the first quarter of 2008 and prior
periods.
    
    We generate revenue within a center, which we refer to as in-center revenue, or
in-center businesses (29.7% of total revenue for the three months ended March 31, 2010),
including fees for personal training, group fitness training and other member activities,
sales of products at our LifeCafe, sales of products and services offered at our LifeSpa,
tennis programs and renting space in certain of our centers.
    
    We have expanded the LIFE TIME FITNESS brand into other wellness-related offerings that
generate revenue, which we refer to as other revenue, or corporate businesses (1.3% of
total revenue for the three months ended March 31, 2010), including our media, wellness and
athletic events businesses. Our primary media offering is our magazine, Experience Life.
Other revenue also includes two restaurants in the Minneapolis market and rental income
from our Highland Park, Minnesota office building.
  
    
    Center operations expenses consist primarily of salary, commissions, payroll taxes,
benefits, real estate taxes and other occupancy costs, utilities, repairs and maintenance,
supplies, administrative support and communications to operate our centers.
    
    Advertising and marketing expenses consist of our marketing department costs and media
and advertising costs to support center membership levels, in-center businesses and our
corporate businesses.
    
    General and administrative expenses include costs relating to our centralized support
functions, such as accounting, information systems, procurement, real estate and
development and member relations.
    
    Other operating expenses include the costs associated with our media, athletic events
and nutritional product businesses, two restaurants and other corporate expenses, as well
as gains or losses on our dispositions of assets.
    
    Depreciation and amortization are computed primarily using the straight-line method over
estimated useful lives of the assets. Leasehold improvements are amortized using the
straight-line method over the shorter of the lease term or the estimated useful life of the
improvement.
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Critical Accounting Policies and Estimates
   14




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Results of Operations
  For the Three MonthsEnded March 31,2010
    
    
    2009RevenueCenter revenueMembership dues
    
    
    66.1
    %
    
    
    66.6
    %Enrollment fees
    
    
    2.9
    
    
    
    3.1In-center revenue
    
    
    29.7
    
    
    
    28.7Total center revenue
    
    
    98.7
    
    
    
    98.4Other revenue
    
    
    1.3
    
    
    
    1.6Total revenue
    
    
    100.0
    
    
    
    100.0Operating expensesCenter operations
    
    
    62.5
    
    
    
    61.5Advertising and marketing
    
    
    3.1
    
    
    
    4.0General and administrative
    
    
    4.9
    
    
    
    5.7Other operating
    
    
    2.0
    
    
    
    2.4Depreciation and amortization
    
    
    10.4
    
    
    
    10.7Total operating expenses
    
    
    82.9
    
    
    
    84.3Income from operations(operating margin)
    
    
    17.1
    
    
    
    15.7Other income (expense)Interest expense, net
    
    
    (3.7
    )
    
    
    (3.6
    )Equity in earnings of affiliate
    
    
    0.2
    
    
    
    0.2Total other income (expense)
    
    
    (3.5
    )
    
    
    (3.4
    )Income before income taxes
    
    
    13.6
    
    
    
    12.3Provision for income taxes
    
    
    5.5
    
    
    
    5.0Net income
    
    
    8.1
    %
    
    
    7.3
    %Other financial data:Same-center revenue growth13 month (1)
    
    
    2.6
    %
    
    
    (2.7
    %)Mature same-center revenue growth37 month (1)
    
    
    (1.2
    %)
    
    
    (7.9
    %)Average revenue per membership (2)
    
    $
    369
    
    
    $
    352Average in-center revenue per membership (3)
    
    $
    111
    
    
    $
    103Trailing 12 month attrition rate (4)
    
    
    39.3
    %
    
    
    42.7
    %Quarterly attrition rate (5)
    
    
    8.5
    %
    
    
    9.8
    %EBITDA (in thousands) (6)
    
    $
    60,708
    
    
    $
    54,904EBITDA margin (7)
    
    
    27.6
    %
    
    
    26.6
    %EBITDAR (in thousands) (6)
    
    $
    71,218
    
    
    $
    64,900EBITDAR margin (8)
    
    
    32.4
    %
    
    
    31.4
    %Capital expenditures (in thousands) (9)
    
    $
    23,039
    
    
    $
    48,900Free cash flow (in thousands) (10)
    
    $
    30,836
    
    
    $
    760Operating data (end of period) (11):Centers open
    
    
    87
    
    
    
    83Memberships
    
    
    613,882
    
    
    
    599,919Center square footage (12)
    
    
    8,704,380
    
    
    
    8,333,579
 15




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(1)
    
    Membership dues, enrollment fees and in-center revenue for a center are included in
same-center revenue growth  13 monthbeginning on the first day of the thirteenth full
calendar month of the centers operation and are included in same-center revenue growth  37
monthbeginning on the first day of the thirty-seventh full calendar month of the centers
operation.(2)
    
    Average revenue per membership is total center revenue for the period divided by an average
number of memberships for the period, where the average number of memberships for the period
is derived from dividing the sum of the total memberships outstanding at the end of each month
during the period by the total number of months in the period.(3)
    
    Average in-center revenue per membership is total in-center revenue for the period divided by
the average number of memberships for the period, where the average number of memberships for
the period is derived from dividing the sum of the total memberships outstanding at the end of
each month during the period by the total number of months in the period.(4)
    
    Trailing 12 month attrition rate (or annual attrition rate) is calculated as follows: total
terminations for the trailing 12 months (excluding frozen memberships) divided into the
average beginning month membership balance for the trailing 12 months.(5)
    
    Quarterly attrition rate is calculated as follows: total terminations for the quarter
(excluding frozen memberships) divided into the average beginning month membership balance for
the quarter.(6)
    
    EBITDA consists of net income plus interest expense, net, provision for income taxes and
depreciation and amortization. EBITDAR adds rent expense to EBITDA. These terms, as we define
them, may not be comparable to a similarly titled measures used by other companies and are not
measures of performance presented in accordance with GAAP. We use EBITDA and EBITDAR as
measures of operating performance. EBITDA or EBITDAR should not be considered as a substitute
for net income, cash flows provided by operating activities or other income or cash flow data
prepared in accordance with GAAP. The funds depicted by EBITDA and EBITDAR are not necessarily
available for discretionary use if they are reserved for particular capital purposes, to
maintain debt covenants, to service debt or to pay taxes. The following table provides a reconciliation of net income, the most directly comparable GAAP
measure, to EBITDA and EBITDAR (in thousands):
 For the Three Months EndedMarch 31,2010
    
    
    2009Net income
    
    $
    17,836
    
    
    $
    15,114Interest expense, net
    
    
    8,097
    
    
    
    7,474Provision for income taxes
    
    
    12,010
    
    
    
    10,252Depreciation and amortization
    
    
    22,765
    
    
    
    22,064EBITDA
    
    $
    60,708
    
    
    $
    54,904Rent expense
    
    
    10,510
    
    
    
    9,996EBITDAR
    
    $
    71,218
    
    
    $
    64,900
 
 (7)
    
    EBITDA margin is the ratio of EBITDA to total revenue.(8)
    
    EBITDAR margin in the ratio of EBITDAR to total revenue.(9)
    
    Capital expenditures represent investments in our new centers, costs related to updating and
maintaining our existing centers and other infrastructure investments. For purposes of
deriving capital expenditures from our cash flows statement, capital expenditures include our
purchases of property and equipment, excluding purchases of property and equipment in accounts
payable at period end, property and equipment purchases financed through notes payable and
capital lease obligations, and non-cash share-based compensation capitalized to projects under
development. 16




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##### Table of Contents



(10)
    
    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 we define 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. We use 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 to
free cash flow (in thousands):
 For the Three Months EndedMarch 31,2010
    
    
    2009Net cash provided by operating activities
    
    $
    53,875
    
    
    $
    49,660Less: Purchases of property and equipment
    
    
    (23,039
    )
    
    
    (48,900
    )Free cash flow
    
    $
    30,836
    
    
    $
    760
 
 (11)
    
    The operating data presented in these items include the center owned by Bloomingdale LLC. The
data presented elsewhere in this section exclude the center owned by Bloomingdale LLC.(12)
    
    The square footage presented in this table reflects fitness square footage which is the best
metric for the efficiencies of a facility. We exclude outdoor pool, outdoor play areas,
indoor/outdoor tennis elements and satellite facility square footage. Three Months Ended March 31, 2010 Compared to Three Months Ended March 31, 2009
 Total revenue.
  
    
    56.1% was from membership dues, which increased $7.7 million, or 5.7%, due to increased
memberships at new centers and higher average dues. Our number of memberships increased 2.3%
to 613,882 at March 31, 2010 from 599,919 at March 31, 2009.
    
    45.0% was from in-center revenue, which increased $6.2 million primarily as a result of
increased sales of our LifeSpa and LifeCafe products and services and personal training.
Average in-center revenue per membership increased from $103 for the three months ended March
31, 2009 to $111 for the three months ended March 31, 2010.
    
    (1.1%) was from enrollment fees, which are deferred until a center opens and recognized on
a straight-line basis over our estimated average membership life. Since the fourth quarter of
2008, the estimated average membership life has been 30 months. For the second and third
quarters of 2008, it was 33 months, and for the first quarter of 2008 and prior, it was 36
months. Enrollment fees decreased by $0.1 million for the three months ended March 31, 2010
to $6.3 million. Our average enrollment fee was lower in the first quarter of 2010 than in
the first quarter of 2009.
  Center operations expenses.
 17




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##### Table of Contents



Advertising and marketing expenses.
 General and administrative expenses.
 Other operating expenses.
 Depreciation and amortization.
 Interest expense, net.
 Provision for income taxes.
 Net income.
 Liquidity and Capital Resources
 Liquidity
    18




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##### Table of Contents



March 31,
    
    
    December 31,2010
    
    
    2009DebtLong-term debt
    
    $
    622,056
    
    
    $
    643,630Current maturities of long-term debt
    
    
    12,815
    
    
    
    16,716Total debt
    
    
    634,871
    
    
    
    660,346Shareholders EquityCommon stock
    
    
    835
    
    
    
    829Additional paid-in capital
    
    
    396,413
    
    
    
    395,121Retained earnings
    
    
    361,931
    
    
    
    344,095Accumulated other comprehensive loss
    
    
    (1,845
    )
    
    
    (2,614
    )Total shareholders equity
    
    
    757,334
    
    
    
    737,431Total capitalization
    
    $
    1,392,205
    
    
    $
    1,397,777
  March 31,
    
    
    December 31,2010
    
    
    2009Fixed-rate debt as a percent of total debt
    
    
    56.7
    %
    
    
    59.6
    %Weighted-average annual interest rate of total debt
    
    
    3.4
    %
    
    
    3.7
    %Total debt (net of cash) as a percent of total
capitalization (total debt (net of cash) and total
shareholders equity)
    
    
    45.1
    %
    
    
    47.0
    %Cash provided by operating activities (trailing
twelve months) as a percent of total debt
    
    
    30.0
    %
    
    
    28.2
    %
 Operating Activities
   Investing Activities
   19




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##### Table of Contents



For the Three MonthsEnded March 31,2010
    
    
    2009Purchases of property and equipment
    
    $
    23,039
    
    
    $
    48,900Non-cash property purchases in construction
accounts payable and accounts payable
    
    
    (554
    )
    
    
    (19,470
    )Non-cash share-based compensation capitalized
to projects under development
    
    
    88
    
    
    
    153Total capital expenditures
    
    $
    22,573
    
    
    $
    29,583
  New center land and construction
    
    $
    19,715Initial remodels of acquired centers
    
    
    186Maintenance of existing facilities and centralized infrastructure
    
    
    2,672Total capital expenditures
    
    $
    22,573
   Financing Activities
  20




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##### Table of Contents



March 31,
    
    
    December 31,2010
    
    
    2009Term notes payable with monthly interest and principal
payments totaling $836 and $1,273, respectively,
including interest at 8.25% to July 2011
    
    $
    73,956
    
    
    $
    105,531Revolving credit facility, interest only due monthly
at interest rates ranging from LIBOR plus 0.625% to
1.50% or base plus 0.0%, facility expires May 2012
    
    
    365,900
    
    
    
    358,100Term notes payable with monthly interest and principal
payments totaling $632 including interest at 6.03% to
February 2017
    
    
    101,050
    
    
    
    101,418Other
    
    
    75,514
    
    
    
    76,588Total debt (excluding obligations under capital leases)
    
    
    616,420
    
    
    
    641,637Obligations under capital leases
    
    
    18,451
    
    
    
    18,709Total debt
    
    
    634,871
    
    
    
    660,346Less current maturities
    
    
    12,815
    
    
    
    16,716Total long-term debt
    
    $
    622,056
    
    
    $
    643,630
 Revolving Credit Facility
   Long-Term Debt Activity
  Debt Covenants
   Actual as of
    
    Actual as ofMarch 31,
    
    December 31,Covenant
    
    Requirement
    
    2010
    
    2009Total Consolidated Debt to EBITDAR
    
    Not more than 4.00 to 1.0
    
    3.16 to 1.0
    
    3.29 to 1.0Senior Debt to EBITDA
    
    Not more than 3.25 to 1.0
    
    1.81 to 1.0
    
    1.82 to 1.0Fixed Charge Coverage Ratio
    
    Not less than 1.60
    
    2.63 to 1.0
    
    2.65 to 1.0
  21




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##### Table of Contents



Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 Item 4. CONTROLS AND PROCEDURES
  
 PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Issuer Purchases of Equity Securities in First Quarter 2010
 Total Number of
    
    Maximum Number ofAverage
    
    Shares Purchased as
    
    Shares that May YetTotal Number of
    
    Price Paid
    
    Part of Publicly
    
    be Purchased UnderPeriod
    
    Shares Purchased
    
    per Share
    
    Announced Plan (1)
    
    the Plan (1)January 1  31, 2010
    
    
    18,425
    
    
    $
    25.99
    
    
    
    18,425
    
    
    
    356,963February 1  28, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    356,963March 1  31, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    356,963Total
    
    
    18,425
    
    
    $
    25.99
    
    
    
    18,425
    
    
    
    356,963
 
 (1)
    
    In June 2006, our Board of Directors authorized the repurchase of 500,000 shares of our
common stock from time to time in the open market or otherwise for the primary purpose of
offsetting the dilutive effect of shares issued pursuant to our Employee Stock Purchase Plan. 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. (REMOVED AND RESERVED)
 22




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##### Table of Contents



ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
 Exhibits filed with this report
 Exhibit No.
    
    Description
    
    Method of Filing3.1
    
    Amended and Restated Articles of
Incorporation, as amended, of the
Registrant
    
    Incorporated by
reference to
Exhibit 3.1 to the
Registrants Form
8-K dated April 20,
2009 (File No.
001-32230)3.2
    
    Amended and Restated Bylaws of the
Registrant
    
    Incorporated by
reference to
Exhibit 3.4 to
Amendment No. 2 to
the Registrants
Registration
Statement on Form
S-1 (File No.
333-113764), filed
with the Commission
on May 21, 20044
    
    Specimen of Common Stock Certificate
    
    Incorporated by
reference to
Exhibit 4 to
Amendment No. 4 to
the Registrants
Registration
Statement of Form
S-1 (File No.
333-113764), filed
with the Commission
on June 23, 200410.1
    
    Form of 2010 Restricted Stock
Agreement (Executive) for 2004
Long-Term Incentive Plan with
performance-based vesting component
    
    Filed Electronically10.2
    
    Form of Omnibus Waiver and
Amendment to Loan Documents with
Teachers Insurance and Annuity
Association of America dated
February 23, 2010
    
    Filed Electronically31.1
    
    Rule 13a-14(a)/15d-14(a)
Certification by Principal
Executive Officer
    
    Filed Electronically31.2
    
    Rule 13a-14(a)/15d-14(a)
Certification by Principal
Financial and Accounting Officer
    
    Filed Electronically32
    
    Section 1350 Certifications
    
    Filed Electronically
 23




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##### Table of Contents



SIGNATURES
  LIFE TIME FITNESS, INC.By:
    /s/ Bahram AkradiName:
    Bahram AkradiTitle:
    Chairman of the Board of Directors, President and
Chief Executive Officer
(Principal Executive Officer and Director)By:
    /s/ Michael R. RobinsonName:
    Michael R. RobinsonTitle:
    Executive Vice President and Chief Financial Officer
(Principal Financial Officer)By:
    /s/ John M. HugoName:
    John M. HugoTitle:
    Vice President and Corporate Controller
(Principal Accounting Officer) 24




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##### Table of Contents



INDEX TO EXHIBITS
 Exhibit No.
    
    Description
    
    Method of Filing3.1
    
    Amended and Restated Articles of
Incorporation, as amended, of the
Registrant
    
    Incorporated by
reference to
Exhibit 3.1 to the
Registrants Form
8-K dated April 20,
2009 (File No.
001-32230)3.2
    
    Amended and Restated Bylaws of the
Registrant
    
    Incorporated by
reference to
Exhibit 3.4 to
Amendment No. 2 to
the Registrants
Registration
Statement on Form
S-1 (File No.
333-113764), filed
with the Commission
on May 21, 20044
    
    Specimen of Common Stock Certificate
    
    Incorporated by
reference to
Exhibit 4 to
Amendment No. 4 to
the Registrants
Registration
Statement of Form
S-1 (File No.
333-113764), filed
with the Commission
on June 23, 200410.1
    
    Form of 2010 Restricted Stock
Agreement (Executive) for 2004
Long-Term Incentive Plan with
performance-based vesting component
    
    Filed Electronically10.2
    
    Form of Omnibus Waiver and
Amendment to Loan Documents with
Teachers Insurance and Annuity
Association of America dated
February 23, 2010
    
    Filed Electronically31.1
    
    Rule 13a-14(a)/15d-14(a)
Certification by Principal
Executive Officer
    
    Filed Electronically31.2
    
    Rule 13a-14(a)/15d-14(a)
Certification by Principal
Financial and Accounting Officer
    
    Filed Electronically32
    
    Section 1350 Certifications
    
    Filed Electronically
 25