##### 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 June 30, 2009
 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(Do not check if a smaller reporting company)
Smaller reporting company o
 o þ




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##### 



TABLE OF CONTENTS
 PagePART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated Balance Sheets as of June 30, 2009 (unaudited) and December 31, 2008
    
    
    3Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2009 and 2008 (unaudited)
    
    
    4Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2009 and 2008 (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
    
    
    23Item 3.
    
    Defaults Upon Senior Securities
    
    
    23Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    23Item 5.
    
    Other Information
    
    
    23Item 6.
    
    Exhibits
    
    
    24SIGNATURES
    
    
    
    
    25EX-31.1EX-31.2EX-32




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##### Table of Contents



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)
 June 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    10,805
    
    
    $
    10,829Accounts receivable, net
    
    
    3,681
    
    
    
    6,114Inventories and center operating supplies
    
    
    14,420
    
    
    
    14,632Prepaid expenses and other current assets
    
    
    16,359
    
    
    
    10,994Deferred membership origination costs
    
    
    21,317
    
    
    
    19,877Deferred income taxes
    
    
    2,090
    
    
    
    1,365Total current assets
    
    
    68,672
    
    
    
    63,811PROPERTY AND EQUIPMENT, net
    
    
    1,517,206
    
    
    
    1,515,957RESTRICTED CASH
    
    
    3,439
    
    
    
    3,936DEFERRED MEMBERSHIP ORIGINATION COSTS
    
    
    13,115
    
    
    
    14,210OTHER ASSETS
    
    
    49,918
    
    
    
    49,789TOTAL ASSETS
    
    $
    1,652,350
    
    
    $
    1,647,703LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Current maturities of long-term debt
    
    $
    11,945
    
    
    $
    10,335Accounts payable
    
    
    15,690
    
    
    
    14,842Construction accounts payable
    
    
    22,223
    
    
    
    63,418Accrued expenses
    
    
    55,526
    
    
    
    46,230Deferred revenue
    
    
    41,123
    
    
    
    36,098Total current liabilities
    
    
    146,507
    
    
    
    170,923LONG-TERM DEBT, net of current portion
    
    
    695,401
    
    
    
    702,569DEFERRED RENT LIABILITY
    
    
    27,882
    
    
    
    27,925DEFERRED INCOME TAXES
    
    
    50,079
    
    
    
    51,982DEFERRED REVENUE
    
    
    12,143
    
    
    
    13,719OTHER LIABILITIES
    
    
    28,817
    
    
    
    27,684Total liabilities
    
    
    960,829
    
    
    
    994,802COMMITMENTS 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
and 50,000,000 shares authorized,
respectively; 41,265,085 and 39,612,775
shares issued and outstanding, respectively
    
    
    825
    
    
    
    793Additional paid-in capital
    
    
    389,462
    
    
    
    385,095Retained earnings
    
    
    305,085
    
    
    
    271,711Accumulated other comprehensive loss
    
    
    (3,851
    )
    
    
    (4,698
    )Total shareholders equity
    
    
    691,521
    
    
    
    652,901TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    1,652,350
    
    
    $
    1,647,703
  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 Ended
    
    
    For the Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008REVENUE:Membership dues
    
    $
    142,841
    
    
    $
    126,121
    
    
    $
    280,238
    
    
    $
    245,769Enrollment fees
    
    
    6,540
    
    
    
    6,640
    
    
    
    13,013
    
    
    
    13,173In-center revenue
    
    
    60,250
    
    
    
    55,969
    
    
    
    119,552
    
    
    
    111,234Total center revenue
    
    
    209,631
    
    
    
    188,730
    
    
    
    412,803
    
    
    
    370,176Other revenue
    
    
    2,918
    
    
    
    3,677
    
    
    
    6,180
    
    
    
    6,682Total revenue
    
    
    212,549
    
    
    
    192,407
    
    
    
    418,983
    
    
    
    376,858OPERATING EXPENSES:Center operations
    
    
    128,871
    
    
    
    113,259
    
    
    
    255,845
    
    
    
    220,839Advertising and marketing
    
    
    6,091
    
    
    
    6,823
    
    
    
    14,389
    
    
    
    16,321General and administrative
    
    
    11,795
    
    
    
    10,582
    
    
    
    23,503
    
    
    
    21,254Other operating
    
    
    4,887
    
    
    
    4,675
    
    
    
    9,774
    
    
    
    8,770Depreciation and amortization
    
    
    22,635
    
    
    
    17,190
    
    
    
    44,699
    
    
    
    33,780Total operating expenses
    
    
    174,279
    
    
    
    152,529
    
    
    
    348,210
    
    
    
    300,964Income from operations
    
    
    38,270
    
    
    
    39,878
    
    
    
    70,773
    
    
    
    75,894OTHER INCOME (EXPENSE):Interest expense, net of
interest income of $23, $17,
$162 and $88, respectively
    
    
    (7,880
    )
    
    
    (6,905
    )
    
    
    (15,354
    )
    
    
    (14,116
    )Equity in earnings of affiliate
    
    
    332
    
    
    
    326
    
    
    
    669
    
    
    
    649Total other income (expense)
    
    
    (7,548
    )
    
    
    (6,579
    )
    
    
    (14,685
    )
    
    
    (13,467
    )INCOME BEFORE INCOME TAXES
    
    
    30,722
    
    
    
    33,299
    
    
    
    56,088
    
    
    
    62,427PROVISION FOR INCOME TAXES
    
    
    12,462
    
    
    
    13,471
    
    
    
    22,714
    
    
    
    25,195NET INCOME
    
    $
    18,260
    
    
    $
    19,828
    
    
    $
    33,374
    
    
    $
    37,232BASIC EARNINGS PER COMMON SHARE
    
    $
    0.46
    
    
    $
    0.51
    
    
    $
    0.85
    
    
    $
    0.96DILUTED EARNINGS PER COMMON SHARE
    
    $
    0.46
    
    
    $
    0.50
    
    
    $
    0.85
    
    
    $
    0.95WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING  BASIC
    
    
    39,285
    
    
    
    38,963
    
    
    
    39,167
    
    
    
    38,923WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING  DILUTED
    
    
    39,763
    
    
    
    39,325
    
    
    
    39,475
    
    
    
    39,372
  4




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LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 For the Six Months EndedJune 30,2009
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    33,374
    
    
    $
    37,232Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    44,699
    
    
    
    33,780Deferred income taxes
    
    
    (421
    )
    
    
    8,874Provision for doubtful accounts
    
    
    279
    
    
    
    27Loss on disposal of property and equipment, net
    
    
    560
    
    
    
    1,335Gain on sale of land held for sale
    
    
    (873
    )
    
    
    Amortization of deferred financing costs
    
    
    1,301
    
    
    
    571Share-based compensation
    
    
    4,027
    
    
    
    3,895Excess tax benefit related to share-based payment arrangements
    
    
    
    
    
    
    (5
    )Equity in earnings of affiliate
    
    
    (669
    )
    
    
    (654
    )Changes in operating assets and liabilities
    
    
    14,245
    
    
    
    20,555Other
    
    
    1,762
    
    
    
    50Net cash provided by operating activities
    
    
    98,284
    
    
    
    105,660CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (91,725
    )
    
    
    (235,577
    )Proceeds from sale of property and equipment
    
    
    8
    
    
    
    365Proceeds from sale of land held for sale
    
    
    1,327
    
    
    
    Proceeds from property insurance settlements
    
    
    
    
    
    
    270Increase in other assets
    
    
    (921
    )
    
    
    (12,140
    )Decrease (increase) in restricted cash
    
    
    497
    
    
    
    (2,234
    )Net cash used in investing activities
    
    
    (90,814
    )
    
    
    (249,316
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from long-term borrowings
    
    
    7,812
    
    
    
    38,538Repayments of long-term borrowings
    
    
    (7,978
    )
    
    
    (10,588
    )Proceeds from (repayments of) revolving credit facility, net
    
    
    (6,800
    )
    
    
    116,200Increase in deferred financing costs
    
    
    (721
    )
    
    
    (3,641
    )Excess tax benefit related to share-based payment arrangements
    
    
    
    
    
    
    5Proceeds from stock option exercises
    
    
    193
    
    
    
    1,462Net cash provided by (used in) financing activities
    
    
    (7,494
    )
    
    
    141,976DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (24
    )
    
    
    (1,680
    )CASH AND CASH EQUIVALENTS  Beginning of period
    
    
    10,829
    
    
    
    5,354CASH AND CASH EQUIVALENTS  End of period
    
    $
    10,805
    
    
    $
    3,674
  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
    For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Share-based compensation expense related to
stock options
    
    $
    91
    
    
    $
    617
    
    
    $
    632
    
    
    $
    1,319Share-based compensation expense related to
restricted shares
    
    
    1,672
    
    
    
    1,458
    
    
    
    3,335
    
    
    
    2,508Share-based compensation expense related to ESPP
    
    
    30
    
    
    
    38
    
    
    
    60
    
    
    
    68Total share-based compensation expense
    
    $
    1,793
    
    
    $
    2,113
    
    
    $
    4,027
    
    
    $
    3,895
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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)
  WeightedWeighted-
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateStock
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicOptions
    
    
    Price
    
    
    Term (in years)
    
    
    ValueOutstanding at December 31, 2008
    
    
    980,929
    
    
    $
    21.65
    
    
    
    5.6Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Canceled
    
    
    (2,354
    )
    
    $
    31.06Outstanding at March 31, 2009
    
    
    978,575
    
    
    $
    21.63
    
    
    
    5.4
    
    
    $
    632Granted
    
    
    
    
    
    
    Exercised
    
    
    (24,100
    )
    
    $
    8.00Canceled
    
    
    (3,947
    )
    
    $
    29.85Outstanding at June 30, 2009
    
    
    950,528
    
    
    $
    21.94
    
    
    
    5.2
    
    
    $
    2,439Vested or Expected to Vest at June 30, 2009
    
    
    947,263
    
    
    $
    21.88
    
    
    
    5.2
    
    
    $
    2,439Exercisable at June 30, 2009
    
    
    918,831
    
    
    $
    21.30
    
    
    
    5.1
    
    
    $
    2,439
     Range of MarketRestricted
    
    Price Per ShareShares
    
    on Grant DateOutstanding at December 31, 2008
    
    
    487,203
    
    
    $
    14.31-53.95Granted
    
    
    657,315
    
    
    $
    9.72Canceled
    
    
    (2,253
    )
    
    $
    14.31-49.06Vested
    
    
    (100,136
    )
    
    $
    14.31-53.95Outstanding at March 31, 2009
    
    
    1,042,129
    
    
    $
    9.72-53.95Granted
    
    
    1,028,514
    
    
    $
    16.39-20.44Canceled
    
    
    (50,366
    )
    
    $
    9.72-50.82Vested
    
    
    (35,206
    )
    
    $
    14.31-50.82Outstanding at June 30, 2009
    
    
    1,985,071
    
    
    $
    9.72-53.95
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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
  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)
  For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income
    
    $
    18,260
    
    
    $
    19,828
    
    
    $
    33,374
    
    
    $
    37,232Weighted average number of common shares
outstanding  basic
    
    
    39,285
    
    
    
    38,963
    
    
    
    39,167
    
    
    
    38,923Effect of dilutive stock options
    
    
    85
    
    
    
    264
    
    
    
    74
    
    
    
    274Effect of dilutive restricted stock awards
    
    
    393
    
    
    
    98
    
    
    
    234
    
    
    
    175Weighted average number of common shares
outstanding  diluted
    
    
    39,763
    
    
    
    39,325
    
    
    
    39,475
    
    
    
    39,372Basic earnings per common share
    
    $
    0.46
    
    
    $
    0.51
    
    
    $
    0.85
    
    
    $
    0.96Diluted earnings per common share
    
    $
    0.46
    
    
    $
    0.50
    
    
    $
    0.85
    
    
    $
    0.95
 4. Operating Segments
   For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Membership dues
    
    $
    142,841
    
    
    $
    126,121
    
    
    $
    280,238
    
    
    $
    245,769Enrollment fees
    
    
    6,540
    
    
    
    6,640
    
    
    
    13,013
    
    
    
    13,173Personal training
    
    
    27,997
    
    
    
    26,568
    
    
    
    57,139
    
    
    
    55,149Other in-center
    
    
    32,253
    
    
    
    29,401
    
    
    
    62,413
    
    
    
    56,085Other
    
    
    2,918
    
    
    
    3,677
    
    
    
    6,180
    
    
    
    6,682Total revenue
    
    $
    212,549
    
    
    $
    192,407
    
    
    $
    418,983
    
    
    $
    376,858
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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 Six MonthsEnded June 30,2009
    
    
    2008Accounts receivable
    
    $
    2,154
    
    
    $
    648Income tax receivable
    
    
    
    
    
    
    5,819Inventories and center operating supplies
    
    
    212
    
    
    
    126Prepaid expenses and other current assets
    
    
    (1,616
    )
    
    
    (1,981
    )Deferred membership origination costs
    
    
    (346
    )
    
    
    (3,375
    )Other assets
    
    
    (1,598
    )
    
    
    Accounts payable
    
    
    1,631
    
    
    
    861Accrued expenses
    
    
    9,266
    
    
    
    10,684Deferred revenue
    
    
    3,450
    
    
    
    6,598Deferred rent liability
    
    
    (43
    )
    
    
    903Other liabilities
    
    
    1,135
    
    
    
    272Changes in operating assets and liabilities
    
    $
    14,245
    
    
    $
    20,555
    6. Commitments and Contingencies
 Litigation
 7. Recent Accounting Pronouncements
 The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles 
a replacement of FASB Statement No. 162
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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)
 Subsequent Events
 Interim Disclosures about Fair Value of Financial Instruments
 Fair Value Measurements
 8. Derivative Instruments
 Disclosures About Derivative Instruments and Hedging Activities  an amendment of SFAS No. 133
  Accounting for Derivative Instruments and Hedging Activities
  11




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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
    June 30, 2009CarryingValue
    
    
    EstimatedFair ValueFixed-rate debt
    
    $
    365,361
    
    
    $
    340,547Obligations under capital leases
    
    
    19,173
    
    
    
    18,969Floating-rate debt
    
    
    322,812
    
    
    
    299,749Total
    
    $
    707,346
    
    
    $
    659,265
      
 Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward-Looking Statements
   12




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Overview
        
    
    First, our largest source of revenue is membership dues (66.9% of total revenue for the
six months ended June 30, 2009) and enrollment fees (3.1% of total revenue for the six
months ended June 30, 2009) 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 expected average life of the membership, which we estimate to be 30 months
for the first and second quarters 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.
    
    Second, we generate revenue within a center, which we refer to as in-center revenue, or
in-center businesses (28.5% of total revenue for the six months ended June 30, 2009),
including fees for personal training, registered dieticians, 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.
    
    Third, 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 (1.5% of total revenue for the six months ended June 30, 2009), including our
media, wellness and athletic events businesses.
 13




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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.
   Critical Accounting Policies and Estimates
   14




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Results of Operations
  For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008RevenueCenter revenueMembership dues
    
    
    67.2
    %
    
    
    65.5
    %
    
    
    66.9
    %
    
    
    65.2
    %Enrollment fees
    
    
    3.1
    
    
    
    3.5
    
    
    
    3.1
    
    
    
    3.5In-center revenue
    
    
    28.3
    
    
    
    29.1
    
    
    
    28.5
    
    
    
    29.5Total center revenue
    
    
    98.6
    
    
    
    98.1
    
    
    
    98.5
    
    
    
    98.2Other revenue
    
    
    1.4
    
    
    
    1.9
    
    
    
    1.5
    
    
    
    1.8Total revenue
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0Operating expensesCenter operations
    
    
    60.6
    
    
    
    58.9
    
    
    
    61.1
    
    
    
    58.6Advertising and marketing
    
    
    2.9
    
    
    
    3.5
    
    
    
    3.4
    
    
    
    4.3General and administrative
    
    
    5.5
    
    
    
    5.5
    
    
    
    5.6
    
    
    
    5.7Other operating
    
    
    2.3
    
    
    
    2.4
    
    
    
    2.3
    
    
    
    2.3Depreciation and amortization
    
    
    10.7
    
    
    
    9.0
    
    
    
    10.7
    
    
    
    9.0Total operating expenses
    
    
    82.0
    
    
    
    79.3
    
    
    
    83.1
    
    
    
    79.9Income from operations
    
    
    18.0
    
    
    
    20.7
    
    
    
    16.9
    
    
    
    20.1Other income (expense)Interest expense, net
    
    
    (3.7
    )
    
    
    (3.6
    )
    
    
    (3.7
    )
    
    
    (3.7
    )Equity in earnings of affiliate
    
    
    0.2
    
    
    
    0.2
    
    
    
    0.2
    
    
    
    0.2Total other income (expense)
    
    
    (3.5
    )
    
    
    (3.4
    )
    
    
    (3.5
    )
    
    
    (3.5
    )Income before income taxes
    
    
    14.5
    
    
    
    17.3
    
    
    
    13.4
    
    
    
    16.6Provision for income taxes
    
    
    5.9
    
    
    
    7.0
    
    
    
    5.4
    
    
    
    6.7Net income
    
    
    8.6
    %
    
    
    10.3
    %
    
    
    8.0
    %
    
    
    9.9
    %Other financial and operating data:Comparable center revenue growth13 month (1)
    
    
    (4.4
    )%
    
    
    3.3
    %
    
    
    (3.6
    )%
    
    
    3.8
    %Comparable center revenue growth37 month (1)
    
    
    (9.0
    )%
    
    
    (2.0
    )%
    
    
    (8.4
    )%
    
    
    (1.9
    )%Average revenue per membership
    
    $
    354
    
    
    $
    361
    
    
    $
    706
    
    
    $
    724Average in-center revenue per membership
    
    $
    102
    
    
    $
    107
    
    
    $
    204
    
    
    $
    218EBITDA (in thousands)
    
    $
    61,237
    
    
    $
    57,394
    
    
    $
    116,141
    
    
    $
    110,323EBITDA margin
    
    
    28.8
    %
    
    
    29.8
    %
    
    
    27.7
    %
    
    
    29.3
    %Capital expenditures (in thousands)
    
    $
    42,825
    
    
    $
    135,092
    
    
    $
    91,725
    
    
    $
    235,577Centers open at end of period
    
    
    84
    
    
    
    74
    
    
    
    84
    
    
    
    74Number of memberships at end of period
    
    
    608,281
    
    
    
    547,497
    
    
    
    608,281
    
    
    
    547,497Total center square footage at end of period (2)
    
    
    8,445,689
    
    
    
    7,298,299
    
    
    
    8,445,689
    
    
    
    7,298,299
 
 (1)
    
    Membership dues, enrollment fees and in-center revenue for a center are included in
comparable center revenue growth  13 monthbeginning on the first day of the thirteenth full
calendar month of the centers operation and are included in comparable center revenue growth
 37 monthbeginning on the first day of the thirty-seventh full calendar month of the
centers operation, at which time it is considered a mature center.(2)
    
    The square footage presented in this table reflects fitness square footage which is the best
metric for the efficiencies of a facility. In a few of our centers, we sublease space to third
parties who operate our pro shop, salon or climbing wall or to hospitals or chiropractors that
use the space to provide physical therapy. The square footage figures include those subleased
areas. The square footage figures exclude areas used for tennis courts and outdoor swimming
pools. These figures are approximations. 15




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##### Table of Contents



Three Months Ended June 30, 2009, Compared to Three Months Ended June 30, 2008
 Total revenue.
  
    
    80.0% was from membership dues, which increased $16.7 million, or 13.3%, due to increased
memberships at new centers, junior membership programs and increased sales of 26-and-under
memberships. Our number of memberships increased 11.1% to 608,281 at June 30, 2009 from
547,497 at June 30, 2008.
    
    20.5% was from in-center revenue, which increased $4.3 million primarily as a result of
increased sales of our LifeCafe products and services and personal training. Average
in-center revenue per membership decreased from $107 for the three months ended June 30, 2008
to $102 for the three months ended June 30, 2009. We began to see slower in-center revenue
growth in the second half of 2008 and first half of 2009 due to the slower economy.
    
    (0.5)% was from enrollment fees, which are deferred until a center opens and recognized
on a straight-line basis over 30 months, our estimated average life of a membership. Since the fourth
quarter of 2008, the estimated average life of a membership 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 June
30, 2009 to $6.5 million. In 2008 and the first half of 2009, we lowered our enrollment
fees to stimulate new membership demand.
  Center operations expenses.
 Advertising and marketing expenses.
 General and administrative expenses.
 Other operating expenses.
 Depreciation and amortization.
 16




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##### Table of Contents



Interest expense, net.
 Provision for income taxes.
 Net income.
 Six Months Ended June 30, 2009, Compared to Six Months Ended June 30, 2008
 Total revenue.
  
    
    80.9% was from membership dues, which increased $34.5 million, or 14.0%, due to increased
memberships at new centers, junior membership programs and increased sales of 26-and-under
memberships. Our number of memberships increased 11.1% to 608,281 at June 30, 2009 from
547,497 at June 30, 2008.
    
    19.5% was from in-center revenue, which increased $8.3 million primarily as a result of
increased sales of our LifeCafe products and services and personal training. Average
in-center revenue per membership decreased from $218 for the six months ended June 30, 2008
to $204 for the six months ended June 30, 2009. We began to see slower in-center revenue
growth in the second half of 2008 and first half of 2009 due to the slower economy.
    
    (0.4)% was from enrollment fees, which are deferred until a center opens and recognized
on a straight-line basis over 30 months, our estimated average life of a membership. Since the fourth
quarter of 2008, the estimated  average life of a membership 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 $0.2 million for the six months ended June 30,
2009 to $13.0 million. In 2008 and the first half of 2009, we lowered our enrollment fees
to stimulate new membership demand.
  Center operations expenses.
 Advertising and marketing expenses.
 17




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##### Table of Contents



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



June 30,
    
    
    December 31,2009
    
    
    2008DebtLong-term debt
    
    $
    695,401
    
    
    $
    702,569Current maturities of long-term debt
    
    
    11,945
    
    
    
    10,335Total debt
    
    
    707,346
    
    
    
    712,904Shareholders EquityCommon stock
    
    
    825
    
    
    
    793Additional paid-in capital
    
    
    389,462
    
    
    
    385,095Retained earnings
    
    
    305,085
    
    
    
    271,711Accumulated other comprehensive loss
    
    
    (3,851
    )
    
    
    (4,698
    )Total shareholders equity
    
    
    691,521
    
    
    
    652,901Total capitalization
    
    $
    1,398,867
    
    
    $
    1,365,805
  June 30,
    
    December 31,2009
    
    2008Fixed-rate debt as a percent of total debt
    
    
    55.2
    %
    
    
    54.6
    %Weighted-average annual interest rate of total debt
    
    
    3.9
    %
    
    
    4.5
    %Total debt (net of cash) as a percent of total
capitalization (total debt (net of cash) and
total shareholders equity)
    
    
    50.2
    %
    
    
    51.8
    %Cash provided by operating activities (trailing
twelve months) as a percent of total debt
    
    
    24.8
    %
    
    
    25.7
    %
 Operating Activities
   Investing Activities
   19




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##### Table of Contents



For the Six Months EndedJune 30,2009
    
    
    2008Purchases of property and equipment
    
    $
    91,725
    
    
    $
    235,577Non-cash property and equipment financed through capital lease obligations
    
    
    
    
    
    
    12,121Changes in construction accounts payable and accounts payable related to
property and equipment
    
    
    (40,855
    )
    
    
    17,999Non-cash share-based compensation capitalized to projects under
development
    
    
    320
    
    
    
    443Total capital expenditures
    
    $
    51,190
    
    
    $
    266,140
  New center building and construction on clubs opened in 2008 and 2009
    
    $
    26,472New center building and construction on clubs to be opened in 2010 and beyond
    
    
    9,086Updating existing centers and corporate infrastructure
    
    
    15,632Total capital expenditures
    
    $
    51,190
   Financing Activities
  20




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##### Table of Contents



June 30,
    
    
    December 31,2009
    
    
    2008Term notes payable to insurance company, monthly
interest and principal payments totaling $1,273
including interest at 8.25% to June 2011
    
    $
    108,736
    
    
    $
    111,812Revolving 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
    
    
    407,800
    
    
    
    414,600Term notes payable with monthly interest and principal
payments totaling $632 including interest at 6.03% to
February 2017
    
    
    102,086
    
    
    
    102,752Other
    
    
    69,551
    
    
    
    64,056Total debt (excluding obligations under capital leases)
    
    
    688,173
    
    
    
    693,220Obligations under capital leases
    
    
    19,173
    
    
    
    19,684Total debt
    
    
    707,346
    
    
    
    712,904Less current maturities
    
    
    11,945
    
    
    
    10,335Total long-term debt
    
    $
    695,401
    
    
    $
    702,569
 Revolving Credit Facility
   New Long-Term Debt
   21




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##### Table of Contents



Debt Covenants
   Actual as of June
    
    Actual as ofCovenant
    
    Requirement
    
    
    30, 2009
    
    December 31, 2008Total Consolidated Debt to
EBITDAR
    
    Not more than 4.0 to 1.0
    
    
    3.52 to 1.0
    
    
    
    3.51 to 1.0Senior Debt to EBITDA
    
    Not more than 3.25 to
1.0
    
    
    2.14 to 1.0
    
    
    
    2.22 to 1.0Fixed Charge Coverage Ratio
    
    Not less than 1.60
    
    
    2.65 to 1.0
    
    
    
    3.16 to 1.0
   
 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
  22




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##### Table of Contents



ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Issuer Purchases of Equity Securities in Second Quarter 2009
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   Nominee
    
    For
    
    WithheldBahram Akradi
    
    
    31,958,476
    
    
    
    2,787,898Giles H. Bateman
    
    
    32,973,848
    
    
    
    1,772,526Guy C. Jackson
    
    
    31,388,639
    
    
    
    3,357,735Martha A. Morfitt
    
    
    33,940,307
    
    
    
    806,067John B. Richards
    
    
    34,485,847
    
    
    
    260,527Joseph S. Vassalluzzo
    
    
    34,482,883
    
    
    
    263,491
     
 ITEM 5. OTHER INFORMATION
  23




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##### Table of Contents



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
    
    Amended and Restated Life Time
Fitness, Inc. 2004 Long-Term
Incentive Plan (effective as of
April 23, 2009)
    
    Incorporated by
reference to Appendix B
to the Registrants
proxy statement for its
2009 Annual Meeting of
Shareholders (File No.
001-32230), filed with
the Commission on March
9, 200910.2
    
    Form of 2009 Restricted Stock
Agreement for 2004 Long-Term
Incentive Plan with long-term
performance-based vesting
component granted June 11, 2009
    
    Incorporated by
reference to Exhibit
10.1 to the Registrants
Form 8-K dated June 11,
2009 (File No.
001-32230)10.3
    
    Separation Agreement between
the Registrant and Michael J.
Gerend, dated May 1, 2009
    
    Incorporated by
reference to Exhibit
10.1 to the Registrants
Form 8-K dated May 1,
2009 (File No.
001-32230)31.1
    
    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 Officer
    
    Filed Electronically32
    
    Section 1350 Certifications
    
    Filed Electronically
 24




---



##### Table of Contents



SIGNATURES
  LIFE TIME FITNESS, INC.By:
    /s/ Bahram AkradiName:
    Bahram AkradiTitle:
    Chairman of the Board of Directors 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) 25




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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
    
    Amended and Restated Life Time
Fitness, Inc. 2004 Long-Term Incentive
Plan (effective as of April 23, 2009)
    
    Incorporated by reference to Appendix B to the
Registrants proxy statement for its 2009 Annual
Meeting of Shareholders (File No. 001-32230), filed
with the Commission on March 9, 200910.2
    
    Form of 2009 Restricted Stock
Agreement for 2004 Long-Term Incentive
Plan with long-term performance-based vesting
component granted June 11, 2009
    
    Incorporated by reference to Exhibit 10.1 to the
Registrants Form 8-K dated June 11, 2009 (File No.
001-32230)10.3
    
    Separation Agreement between the
Registrant and Michael J. Gerend,
dated May 1, 2009
    
    Incorporated by reference to Exhibit 10.1 to the
Registrants Form 8-K dated May 1, 2009 (File No. 001-32230)31.1
    
    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 Officer
    
    Filed Electronically32
    
    Section 1350 Certifications
    
    Filed Electronically
 26