##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2007
 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
    
    41-1689746(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)2902 Corporate Place
    
    55317Chanhassen, Minnesota
    
    (Zip Code)(Address of principal executive offices)
 952-947-0000
  Title of Each Class
    
    Name of Each Exchange on Which RegisteredCommon Stock, $.02 par value
    
    New York Stock Exchange
  þ o
 o þ
 þ o
 o
  þ o o o
 
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DOCUMENTS INCORPORATED BY REFERENCE
  FORWARD-LOOKING STATEMENTS
  1




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##### 



TABLE OF CONTENTS
 PagePART I.Item 1.
    
    Business
    
    
    3Item 1A.
    
    Risk Factors
    
    
    14Item 1B.
    
    Unresolved Staff Comments
    
    
    18Item 2.
    
    Properties
    
    
    19Item 3.
    
    Legal Proceedings
    
    
    20Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    21PART II.Item 5.
    
    Market For Registrants Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
    
    
    21Item 6.
    
    Selected Financial Data
    
    
    23Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    26Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    38Item 8.
    
    Financial Statements and Supplementary Data
    
    
    39Item 9.
    
    Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
    
    
    67Item 9A.
    
    Controls and Procedures
    
    
    67Item 9B.
    
    Other Information
    
    
    68PART III.Item 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    68Item 11.
    
    Executive Compensation
    
    
    69Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
    
    
    69Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    69Item 14.
    
    Principal Accountant Fees and Services
    
    
    69PART IV.Item 15.
    
    Exhibits and Financial Statement Schedules
    
    
    70SIGNATURESSchedule of Parties to Executive Employment AgreementAmendment to Second Amended and Restated Credit AgreementList of SubsidiariesConsentPower of AttorneyCertificationCertificationCertification
  2




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PART I
 
 Item 1. Business.
 Company Overview
 ®
    Our Competitive Strengths
 We offer comprehensive and convenient programs and services.
  3




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We offer a value proposition that encourages membership loyalty.
 Experience
Life
 We offer a product that is convenient for our members.
  We have an established and profitable economic model.
 th
 We believe we have a disciplined and sophisticated site selection and development process.
  4




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Our Growth Strategy
  Open new centers.
  Increase membership and optimize membership dues.
 th
  Increase in-center products and services revenue.
  Our Industry
  5




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Our Philosophy  A Healthy Way of Life Company
  Our Sports and Athletic, Professional Fitness, Family Recreation and Resort/Spa Centers
 Size and Location
  Center Environment
  6




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Equipment and Programs
  Amenities
    
    Services
    
    Activities and EventsBasketball/Volleyball Courts
    
    24-Hour Availability
    
    AquaticsCardiovascular Training
    
    Fitness Assessments
    
    Athletic LeaguesChild Center
    
    Educational Seminars
    
    Birthday PartiesFree Weights
    
    Subscription to Experience Life
    
    Eastern/Martial ArtsGroup Fitness Studios
    
    Towel Service
    
    Kids ClubLap Pool
    
    Use of Lockers
    
    PilatesRacquetball/ Squash Courts
    
    Massage Therapy
    
    Run ClubResistance Training
    
    Nutritional Products
    
    Scuba LessonsRock Climbing Cavern
    
    Personal Training
    
    Studio CyclingSaunas
    
    T.E.A.M. Programs
    
    Sports-specific Training CampsTwo-story Waterslides
    
    O2 Cardio Training
    
    Summer CampsWhirlpools
    
    Metabolic Testing
    
    Swimming LessonsZero-depth Entry Swimming Pools
    
    Nutrition Coaching
    
    YogaLifeStudio
    
    
    
    Educational CampsLifeCafe
    
    
    
    Dance ClassesLifeSpa
    
    
    
    Athletic EventsPool-side BistroMens, Womens and FamilyLocker Rooms
 Fitness Equipment and Facilities.
  Personalized Services for Individuals and Small Groups.
 7




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2
 Fitness Programs and Classes.
 Other Center Services.
    Membership
   8




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Bronze
    
    Gold
    
    Platinum
    
    OnyxA great experience
at our most
affordable rate
    
    Many center choices
plus benefits
outside the center
    
    Nationwide access,
premium partner
benefits and tennis
    
    The ultimate in
access, service,
amenities and benefitsCenter access
    
    All bronze centers
    
    All Bronze and Gold
centers
    
    All Bronze, Gold
and Platinum
centers
    
    All Life Time
Fitness locations
nationwide,
including Life Time
Athletic centersIn-center amenities
    
    Free towels, free
lockers and two VIP
passes per year
    
    All Bronze benefits
plus: free climbing
wall, free
racquetball and
squash and four VIP
passes per year
    
    All Gold benefits,
plus: access to
tennis centers and
six VIP passes per
year
    
    All Platinum
benefits, plus
eight VIP passes
per yearPartner benefits
    
    10+ local and
national partners
    
    500+ local and
national partners
    
    575+ local and
national partners
    
    575+ local and
national partners
  Usage
  New Center Site Selection and Construction
 Site Selection.
 9




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Design and Construction.
    Marketing and Sales
 Overview of Marketing.
 Overview of Sales.
 Pre-Opening Phase. Experience Life
 10




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Grand Opening Phase.
 Membership Growth Phase.
 Leveraging the LIFE TIME FITNESS Brand
 Experience Life
 Education. Experience Life
 Experience Life Experience Life Experience Life
 Athletic Events.
 Nutritional Products.
 11




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Our Employees
    Information Systems
  Competition
  
    
    health club operators, including 24 Hour Fitness Worldwide, Inc., Bally Total Fitness
Holding Corporation, Equinox Holdings, Inc., LA Fitness International, LLC and Town Sports
International, Inc.;
    
    the YMCA and similar non-profit organizations;
    
    physical fitness and recreational facilities established by local governments, hospitals
and businesses;
    
    local salons, cafes and businesses offering similar ancillary services;
    
    exercise and small fitness clubs and studios, including Anytime Fitness, Curves
International and Snap Fitness;
    
    racquet, tennis and other athletic clubs;
    
    amenity and condominium clubs;
    
    country clubs; and
    
    the home-use fitness equipment industry.
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Government Regulation
  
    
    giving the member the right under various state cooling-off statutes to cancel, in
most cases, within three to ten days after signing, his or her membership and receive a
refund of any enrollment fee paid;
    
    requiring an escrow for funds received from pre-opening sales or the posting of a bond
or proof of financial responsibility; and
    
    establishing maximum prices and terms for membership contracts and limitations on the
financing term of contracts.
   Trademarks and Trade Names
 ® ® ®
  Available Information
 www.lifetimefitness.com.
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Item 1A. Risk Factors.
 We may be unable to attract and retain members, which could have a negative effect on our business.
  Because of the capital-intensive nature of our business, we may have to incur additional
indebtedness or issue new equity securities and, if we are not able to obtain additional capital,
our ability to operate or expand our business may be impaired and our operating results could be
adversely affected.
  If we are unable to identify and acquire suitable sites for new sports and athletic, professional
fitness, family recreation and resort/spa centers, our revenue growth rate and profits may be
negatively impacted.
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Delays in new center openings could have a material adverse effect on our financial performance.
  
    
    obtaining acceptable financing for construction of new sites;
    
    obtaining entitlements, permits and licenses necessary to complete construction of the new
center on schedule;
    
    recruiting, training and retaining qualified management and other personnel;
    
    securing access to labor and materials necessary to develop and construct our centers;
    
    delays due to material shortages, labor issues, weather conditions or other acts of god,
discovery of contaminants, accidents, deaths or injunctions; and
    
    general economic conditions.
 We may incur rising costs related to construction of new centers and maintaining our existing
centers. If we are not able to pass these cost increases through to our members, our returns may be
adversely affected.
  The opening of new centers in existing locations may negatively impact our same-center revenue
increases and our operating margins.
   Our continued growth could place strains on our management, employees, information systems and
internal controls which may adversely impact our business and the value of your investment.
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The anticipated benefits of operating additional leased centers may not be realized.
  Our debt levels may limit our flexibility in obtaining additional financing and in pursuing other
business opportunities.
   
    
    our ability to obtain additional financing, if necessary, for capital expenditures,
working capital, acquisitions or other purposes may be impaired or such financing may not be
available on favorable terms;
    
    we will need a substantial portion of our cash flow to pay the principal of, and interest
on, our indebtedness, including indebtedness that we may incur in the future;
    
    payments on our indebtedness will reduce the funds that would otherwise be available for
our operations and future business opportunities;
    
    a substantial decrease in our cash flows from operations or a substantial increase in our
investment in new centers could make it difficult for us to meet our debt service
requirements and force us to modify our operations;
    
    we may be more highly leveraged than our competitors, which may place us at a competitive
disadvantage;
    
    our debt level may make us more vulnerable and less flexible than our competitors to a
downturn in our business or the economy in general; and
    
    some of our debt has a variable rate of interest, which increases our vulnerability to
interest rate fluctuations.
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If our founder and chief executive officer leaves our company for any reason, it could have a
material adverse effect on us.
  The health club industry is highly competitive and our competitors may have greater name
recognition than we have.
  Competitors could copy our business model and erode our market share, brand recognition and
profitability.
  We have significant operations concentrated in certain geographic areas, and any disruption in the
operations of our centers in any of these areas could harm our operating results.
  If we cannot retain our key personnel and hire additional highly qualified personnel, we may not be
able to successfully manage our operations and pursue our strategic objectives.
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We could be subject to claims related to health or safety risks at our centers.
  We are subject to extensive government regulation, and changes in these regulations could have a
negative effect on our financial condition and results of operations.
  
    
    general rules and regulations of the Federal Trade Commission, state and local consumer
protection agencies and state statutes that prescribe certain forms and provisions of
membership contracts and that govern the advertising, sale and collection of our memberships;
    
    state and local health regulations;
    
    federal regulation of health and nutritional products; and,
    
    regulation of rehabilitation service providers.
  We could be subject to claims related to our nutritional products.
  If it becomes necessary to protect or defend our intellectual property rights or if we infringe on
the intellectual property rights of others, we may become involved in costly litigation or be
required to pay royalties or fees.
 ®
 
 Item 1B. Unresolved Staff Comments.
  18




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Item 2. Properties.
   Location
    
    Center Format
    
    Square Feet (1)
    
    Date Opened (2)71
    
    
    Parker, CO
    
    Large/Current
    
    
    129,155
    
    
    Jan-0870
    
    
    NW San Antonio, TX
    
    Large/Current
    
    
    112,110
    
    
    Dec-0769
    
    
    Sugarloaf, GA
    
    Large/Current
    
    
    112,110
    
    
    Nov-0768
    
    
    South Austin, TX
    
    Large/Current
    
    
    109,045
    
    
    Oct-0767
    
    
    Dallas (Athletic), TX
    
    Large
    
    
    62,000
    
    
    Sep-0766
    
    
    White Bear Lake, MN
    
    Large
    
    
    58,782
    
    
    Sep-0765
    
    
    Deerfield Township, OH
    
    Large/Current
    
    
    127,040
    
    
    Jul-0764
    
    
    Omaha, NE
    
    Large/Current
    
    
    115,030
    
    
    Jun-0763
    
    
    Lakeville, MN
    
    Large/Current
    
    
    115,030
    
    
    Jun-0762
    
    
    Cary, NC
    
    Large/Current
    
    
    109,995
    
    
    May-0761
    
    
    Dublin, OH
    
    Large/Current
    
    
    109,045
    
    
    Apr-0760
    
    
    Scottsdale, AZ
    
    Large/Current
    
    
    109,775
    
    
    Dec-0659
    
    
    Alpharetta, GA
    
    Large/Current
    
    
    109,720
    
    
    Dec-0658
    
    
    Goodyear  Palm Valley, AZ
    
    Large/Current
    
    
    109,775
    
    
    Oct-0657
    
    
    Overland Park, KS
    
    Large/Current
    
    
    110,080
    
    
    Oct-0656
    
    
    South Valley, UT
    
    Large/Current
    
    
    108,925
    
    
    Aug-0655
    
    
    Boca Raton, FL
    
    Large
    
    
    73,688
    
    
    Jul-0654
    
    
    98th Street (Bloomington), MN
    
    Large
    
    
    95,314
    
    
    Jul-0653
    
    
    Eden Prairie, MN (center and restaurant)
    
    Large
    
    
    89,011
    
    
    Jul-0652
    
    
    St. Louis Park, MN
    
    Large
    
    
    189,496
    
    
    Jul-0651
    
    
    Crosstown (Eden Prairie), MN
    
    Large
    
    
    145,896
    
    
    Jul-0650
    
    
    Minneapolis  Target Center, MN
    
    Large
    
    
    170,925
    
    
    Jul-0649
    
    
    Moore Lake (Fridley), MN
    
    Large
    
    
    162,048
    
    
    Jul-0648
    
    
    Allen-McKinney, TX (Dallas)
    
    Large/Current
    
    
    125,475
    
    
    May-0647
    
    
    Columbia, MD
    
    Large/Current
    
    
    110,563
    
    
    Feb-0646
    
    
    Minnetonka, MN
    
    Other
    
    
    41,000
    
    
    Jan-0645
    
    
    Maple Grove, MN
    
    Large
    
    
    72,500
    
    
    Dec-0544
    
    
    San Antonio, TX
    
    Large/Current
    
    
    110,563
    
    
    Dec-0543
    
    
    Romeoville, IL
    
    Large/Current
    
    
    110,563
    
    
    Sep-0542
    
    
    Austin, TX
    
    Large/Current
    
    
    110,563
    
    
    Sep-0541
    
    
    Chanhassen, MN
    
    Large/Current
    
    
    110,563
    
    
    Jul-0540
    
    
    Cinco Ranch, TX (Houston)
    
    Large/Current
    
    
    108,890
    
    
    Jun-0539
    
    
    Commerce Township, MI
    
    Large/Current
    
    
    108,890
    
    
    Mar-0538
    
    
    Colleyville, TX (Dallas)
    
    Large/Current
    
    
    108,890
    
    
    Nov-0437
    
    
    Dallas, TX
    
    Large
    
    
    68,982
    
    
    Nov-0436
    
    
    Flower Mound, TX (Dallas)
    
    Large/Current
    
    
    108,890
    
    
    Oct-0435
    
    
    Sugar Land, TX (Houston)
    
    Large/Current
    
    
    108,890
    
    
    Oct-0434
    
    
    Garland, TX (Dallas)
    
    Large/Current
    
    
    108,890
    
    
    Jul-0433
    
    
    Willowbrook, TX (Houston)
    
    Large/Current
    
    
    108,890
    
    
    Jun-0432
    
    
    Plano, TX (Dallas)
    
    Large/Current
    
    
    108,890
    
    
    Nov-0331
    
    
    New Hope, MN
    
    Other
    
    
    44,156
    
    
    Oct-0330
    
    
    Gilbert, AZ
    
    Large/Current
    
    
    108,890
    
    
    Oct-0329
    
    
    Tempe, AZ
    
    Large/Current
    
    
    108,890
    
    
    Apr-03
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Location
    
    Center Format
    
    Square Feet (1)
    
    Date Opened (2)28
    
    
    Rochester Hills, MI
    
    Large/Current
    
    
    108,890
    
    
    Nov-0227
    
    
    Canton Township, MI
    
    Large/Current
    
    
    105,010
    
    
    Sep-0226
    
    
    Old Orchard (Skokie), IL
    
    Large/Current
    
    
    108,890
    
    
    Aug-0225
    
    
    Savage, MN
    
    Large
    
    
    80,853
    
    
    Jun-0224
    
    
    Burr Ridge, IL
    
    Large/Current
    
    
    105,562
    
    
    Feb-0223
    
    
    Champlin, MN
    
    Large
    
    
    61,948
    
    
    Oct-0122
    
    
    Fairfax City, VA
    
    Large
    
    
    67,467
    
    
    Oct-0121
    
    
    Orland Park, IL
    
    Large/Current
    
    
    108,890
    
    
    Aug-0120
    
    
    Algonquin, IL
    
    Large/Current
    
    
    108,890
    
    
    Apr-0119
    
    
    Bloomingdale, IL (3)
    
    Large/Current
    
    
    108,890
    
    
    Feb-0118
    
    
    Warrenville, IL
    
    Large/Current
    
    
    114,993
    
    
    Jan-0117
    
    
    Schaumburg, IL
    
    Large/Current
    
    
    108,890
    
    
    Oct-0016
    
    
    Minneapolis, MN (center and restaurant)
    
    Other
    
    
    72,547
    
    
    Jul-0015
    
    
    Shelby, MI
    
    Large
    
    
    101,680
    
    
    Mar-0014
    
    
    Centreville, VA
    
    Large
    
    
    90,956
    
    
    Jan-0013
    
    
    Novi, MI
    
    Large
    
    
    90,956
    
    
    Oct-9912
    
    
    Indianapolis, IN
    
    Large
    
    
    90,956
    
    
    Aug-9911
    
    
    Columbus, OH
    
    Large
    
    
    98,047
    
    
    Jul-9910
    
    
    Apple Valley, MN
    
    Other
    
    
    10,375
    
    
    Jun-999
    
    
    Troy, MI
    
    Large
    
    
    93,579
    
    
    Jan-998
    
    
    St. Paul, MN
    
    Other
    
    
    85,630
    
    
    Dec-977
    
    
    Plymouth, MN
    
    Large
    
    
    109,558
    
    
    Jun-976
    
    
    Bloomington, MN
    
    Other
    
    
    47,307
    
    
    Nov-965
    
    
    Coon Rapids, MN
    
    Other
    
    
    90,262
    
    
    May-964
    
    
    Highland Park, MN
    
    Other
    
    
    25,827
    
    
    Nov-953
    
    
    Roseville, MN
    
    Other
    
    
    14,000
    
    
    Sep-952
    
    
    Woodbury, MN
    
    Large
    
    
    73,050
    
    
    Sep-951
    
    
    Eagan, MN
    
    Large
    
    
    64,415
    
    
    Sep-94
 
 (1)
    
    In a few of our centers, we sublease space to third parties who operate our cafe, pro shop,
salon or climbing wall or to hospitals 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.(2)
    
    For acquired centers, date opened is the date we assumed operations of the center.(3)
    
    This center is a joint venture in which we have a one-third interest. 
 Item 3. Legal Proceedings.
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Item 4. Submission of Matters to a Vote of Security Holders.
  
 PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchaser of
Equity Securities.
 Market Information
  High
    
    LowFiscal Year Ended December 31, 2006:First Quarter (January 1, 2006  March 31, 2006)
    
    $
    46.85
    
    
    $
    37.84Second Quarter (April 1, 2006  June 30, 2006)
    
    
    48.86
    
    
    
    41.03Third Quarter (July 1, 2006  September 30, 2006)
    
    
    47.73
    
    
    
    41.75Fourth Quarter (October 1, 2006  December 31, 2006)
    
    
    52.58
    
    
    
    46.33Fiscal Year Ended December 31, 2007:First Quarter (January 1, 2007  March 31, 2007)
    
    $
    54.92
    
    
    $
    46.47Second Quarter (April 1, 2007  June 30, 2007)
    
    
    55.40
    
    
    
    49.29Third Quarter (July 1, 2007  September 30, 2007)
    
    
    63.90
    
    
    
    50.26Fourth Quarter (October 1, 2007  December 31, 2007)
    
    
    65.09
    
    
    
    45.89
 Holders
  Performance Graph
  21




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June 30, 
2004
    
    
    December 31, 
2004
    
    
    December 31, 2005
    
    
    December 31, 
2006
    
    
    December 31, 
2007Life Time Fitness (1)
    
    
    $
    100.00
    
    
    
    $
    123.24
    
    
    
    $
    181.38
    
    
    
    $
    231.00
    
    
    
    $
    236.57NYSE Composite Index
    
    
    
    100.00
    
    
    
    
    109.80
    
    
    
    
    117.43
    
    
    
    
    138.41
    
    
    
    
    147.51Russell 2000 Index
    
    
    
    100.00
    
    
    
    
    110.15
    
    
    
    
    113.81
    
    
    
    
    133.16
    
    
    
    
    129.50
 
 (1)
    
    For purposes of this presentation, we have used $21.00, the closing price of our common stock
on June 30, 2004, the first day our common stock began to trade publicly. Dividends
  Issuer Purchases of Equity Securities in Fourth Quarter 2007
  Equity Compensation Plan Information
  Certifications by CEO and CFO
  22




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Item 6. Selected Financial Data.
  23




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For the Year Ended December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(In thousands, except per share, center and membership data)Statement of Operations Data:RevenueCenter revenueMembership dues
    
    $
    434,138
    
    
    $
    339,623
    
    
    $
    262,989
    
    
    $
    208,893
    
    
    $
    171,596Enrollment fees
    
    
    24,741
    
    
    
    22,438
    
    
    
    20,341
    
    
    
    19,608
    
    
    
    19,198In-center revenue (1)
    
    
    182,215
    
    
    
    138,332
    
    
    
    97,710
    
    
    
    71,583
    
    
    
    55,633Total center revenue
    
    
    641,094
    
    
    
    500,393
    
    
    
    381,040
    
    
    
    300,084
    
    
    
    246,427Other revenue
    
    
    14,692
    
    
    
    11,504
    
    
    
    9,076
    
    
    
    11,949
    
    
    
    10,515Total revenue
    
    
    655,786
    
    
    
    511,897
    
    
    
    390,116
    
    
    
    312,033
    
    
    
    256,942Operating expensesCenter operations
    
    
    377,235
    
    
    
    292,273
    
    
    
    216,314
    
    
    
    164,764
    
    
    
    131,825Advertising and marketing
    
    
    24,967
    
    
    
    20,770
    
    
    
    14,446
    
    
    
    12,196
    
    
    
    11,045General and administrative
    
    
    40,820
    
    
    
    37,781
    
    
    
    27,375
    
    
    
    21,596
    
    
    
    18,554Other operating
    
    
    16,340
    
    
    
    12,998
    
    
    
    12,693
    
    
    
    18,256
    
    
    
    16,273Depreciation and amortization
    
    
    59,014
    
    
    
    47,560
    
    
    
    38,346
    
    
    
    29,655
    
    
    
    25,264Total operating expenses
    
    
    518,376
    
    
    
    411,382
    
    
    
    309,174
    
    
    
    246,467
    
    
    
    202,961Income from operations
    
    
    137,410
    
    
    
    100,515
    
    
    
    80,942
    
    
    
    65,566
    
    
    
    53,981Interest expense, net
    
    
    (25,443
    )
    
    
    (17,356
    )
    
    
    (14,076
    )
    
    
    (17,573
    )
    
    
    (19,132
    )Equity in earnings of affiliate (2)
    
    
    1,272
    
    
    
    919
    
    
    
    1,105
    
    
    
    1,034
    
    
    
    762Income before income taxes
    
    
    113,239
    
    
    
    84,078
    
    
    
    67,971
    
    
    
    49,027
    
    
    
    35,611Provision for income taxes
    
    
    45,220
    
    
    
    33,513
    
    
    
    26,758
    
    
    
    20,119
    
    
    
    15,006Net income
    
    
    68,019
    
    
    
    50,565
    
    
    
    41,213
    
    
    
    28,908
    
    
    
    20,605Accretion on redeemable preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,570
    
    
    
    6,987Net income applicable to common shareholders
    
    $
    68,019
    
    
    $
    50,565
    
    
    $
    41,213
    
    
    $
    25,338
    
    
    $
    13,618Basic earnings per share
    
    $
    1.81
    
    
    $
    1.40
    
    
    $
    1.19
    
    
    $
    1.02
    
    
    $
    0.85Weighted average number of common shares
outstanding  basic
    
    
    37,518
    
    
    
    36,118
    
    
    
    34,592
    
    
    
    24,727
    
    
    
    16,072Diluted earnings per share
    
    $
    1.78
    
    
    $
    1.37
    
    
    $
    1.13
    
    
    $
    0.87
    
    
    $
    0.72Weighted average number of shares outstanding 
diluted (3)
    
    
    38,127
    
    
    
    36,779
    
    
    
    36,339
    
    
    
    33,125
    
    
    
    28,612Balance Sheet Data (end of period):Cash and cash equivalents
    
    $
    5,354
    
    
    $
    6,880
    
    
    $
    4,680
    
    
    $
    10,211
    
    
    $
    18,446Working capital
    
    
    (100,281
    )
    
    
    (100,509
    )
    
    
    (66,123
    )
    
    
    (71,952
    )
    
    
    (15,340
    )Total assets
    
    
    1,386,533
    
    
    
    987,676
    
    
    
    723,460
    
    
    
    572,087
    
    
    
    453,346Total debt
    
    
    564,605
    
    
    
    389,555
    
    
    
    273,282
    
    
    
    209,244
    
    
    
    233,232Total redeemable preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    106,165Total shareholders equity
    
    
    572,557
    
    
    
    392,513
    
    
    
    307,844
    
    
    
    250,634
    
    
    
    32,792Cash Flow Data:Net cash provided by operating activities
    
    $
    142,206
    
    
    $
    125,852
    
    
    $
    107,952
    
    
    $
    80,431
    
    
    $
    52,576Net cash used in investing activities
    
    
    (417,207
    )
    
    
    (263,183
    )
    
    
    (180,850
    )
    
    
    (146,080
    )
    
    
    (24,476
    )Net cash provided by (used in) financing activities
    
    
    273,475
    
    
    
    139,531
    
    
    
    67,367
    
    
    
    57,414
    
    
    
    (18,514
    )Other Data:Comparable center revenue growth (4)
    
    
    6.1
    %
    
    
    7.3
    %
    
    
    7.7
    %
    
    
    9.7
    %
    
    
    13.2
    %Average revenue per membership (5)
    
    $
    1,360
    
    
    $
    1,270
    
    
    $
    1,171
    
    
    $
    1,119
    
    
    $
    1,089Average in-center revenue per membership (6)
    
    
    387
    
    
    
    351
    
    
    
    300
    
    
    
    267
    
    
    
    242EBITDA (7)
    
    
    197,696
    
    
    
    148,994
    
    
    
    120,393
    
    
    
    96,255
    
    
    
    80,007EBITDA margin (8)
    
    
    30.1
    %
    
    
    29.1
    %
    
    
    30.9
    %
    
    
    30.8
    %
    
    
    31.1
    %Capital expenditures (9)
    
    $
    415,822
    
    
    $
    261,767
    
    
    $
    190,355
    
    
    $
    145,562
    
    
    $
    41,315Operating Data (10):Centers open at end of period
    
    
    70
    
    
    
    60
    
    
    
    46
    
    
    
    39
    
    
    
    33Number of memberships at end of period
    
    
    499,092
    
    
    
    443,660
    
    
    
    358,384
    
    
    
    299,538
    
    
    
    249,192Total center square footage (11)
    
    
    6,832,814
    
    
    
    5,802,627
    
    
    
    4,077,918
    
    
    
    3,345,386
    
    
    
    2,731,954
 
 (1)
    
    In-center revenue includes revenue generated at our centers from fees for personal training,
dieticians, group fitness training and other member activities, sales of products offered at
our LifeCafe, sales of products and services offered at our LifeSpa, tennis and renting space
in certain of our centers. 24




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##### Table of Contents



(2)
    
    In 1999, we formed Bloomingdale LIFE TIME Fitness, L.L.C. (Bloomingdale LLC) with two
unrelated organizations for the purpose of constructing, owning and operating a center in
Bloomingdale, Illinois. Each member made an initial capital contribution of $2.0 million and
owns a one-third interest in Bloomingdale LLC. The center commenced operations in February
2001. The terms of the relationship among the members are governed by an operating agreement.
Bloomingdale LLC is accounted for as an investment in an unconsolidated affiliate and is not
consolidated in our financial statements.(3)
    
    The diluted weighted average number of common shares outstanding is the weighted average
number of common shares plus the weighted average conversion of any dilutive common stock
equivalents, such as redeemable preferred stock, the assumed weighted average exercise of
dilutive stock options using the treasury stock method, and unvested restricted stock awards
using the treasury stock method. For the year ended December 31, 2003, the shares issuable
upon the exercise of stock options and the conversion of redeemable preferred stock were
dilutive. For the year ended December 31, 2004, the shares issuable upon the exercise of stock
options, the conversion of redeemable preferred stock and the vesting of all restricted stock
awards were dilutive. As a result of our initial public offering, the redeemable preferred
stock converted to common stock and the accretion on redeemable preferred stock discontinued.
For the years ended December 31, 2005, 2006 and 2007, the shares issuable upon the exercise of
stock options and the vesting of all restricted stock awards were dilutive.The following table summarizes the weighted average number of common shares for basic and
diluted earnings per share computations: December 31,2007
    
    2006
    
    2005
    
    2004
    
    2003(In thousands)Weighted average number of common shares
outstanding  basic
    
    
    37,518
    
    
    
    36,118
    
    
    
    34,592
    
    
    
    24,727
    
    
    
    16,072Effect of dilutive stock options
    
    
    476
    
    
    
    509
    
    
    
    1,739
    
    
    
    1,943
    
    
    
    1,522Effect of dilutive restricted stock awards
    
    
    133
    
    
    
    152
    
    
    
    8
    
    
    
    2
    
    
    
    Effect of dilutive redeemable preferred
shares outstanding
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,453
    
    
    
    11,018Weighted average number of common shares
outstanding  diluted
    
    
    38,127
    
    
    
    36,779
    
    
    
    36,339
    
    
    
    33,125
    
    
    
    28,612
 
 (4)
    
    Membership dues, enrollment fees and in-center revenue for a center are included in
comparable center revenue growth beginning on the first day of the thirteenth full calendar
month of the centers operation.(5)
    
    Average revenue per membership is total center revenue for the period divided by an average
number of memberships for the period, where 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.(6)
    
    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.(7)
    
    EBITDA consists of net income plus interest expense, net, provision for income taxes and
depreciation and amortization. This term, as we define 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. We use EBITDA as a measure of operating performance. EBITDA 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 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. Additional
details related to EBITDA are provided in Managements Discussion and Analysis of Financial
Condition and Results of Operations  Non-GAAP Financial Measures. 25




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##### Table of Contents



The following table provides a reconciliation of net income, the most directly comparable GAAP
measure, to EBITDA: For the Year Ended December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(In thousands)Net income
    
    $
    68,019
    
    
    $
    50,565
    
    
    $
    41,213
    
    
    $
    28,908
    
    
    $
    20,605Interest expense, net
    
    
    25,443
    
    
    
    17,356
    
    
    
    14,076
    
    
    
    17,573
    
    
    
    19,132Provision for income taxes
    
    
    45,220
    
    
    
    33,513
    
    
    
    26,758
    
    
    
    20,119
    
    
    
    15,006Depreciation and amortization
    
    
    59,014
    
    
    
    47,560
    
    
    
    38,346
    
    
    
    29,655
    
    
    
    25,264EBITDA
    
    $
    197,696
    
    
    $
    148,994
    
    
    $
    120,393
    
    
    $
    96,255
    
    
    $
    80,007
 
 (8)
    
    EBITDA margin is the ratio of EBITDA 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 year-end, property and equipment purchases financed through notes payable and
capital lease obligations, and non-cash share-based compensation capitalized to projects under development.(10)
    
    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.(11)
    
    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. 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 The following discussion of our historical results of operations and our liquidity and capital
resources should be read in conjunction with the consolidated financial statements and related
notes that appear elsewhere in this report. This discussion contains forward-looking statements
that involve risks and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of various factors, including those
discussed in Risk Factors beginning on page 14 of this report.
 Overview
   26




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Experience Life
   27




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Critical Accounting Policies and Estimates
  Revenue recognition.
  Pre-opening operations.
 Impairment of long-lived assets.
 28




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Results of Operations
  For the Year Ended 
December 31,2007
    
    2006
    
    2005RevenueCenter revenueMembership dues
    
    
    66.2
    %
    
    
    66.4
    %
    
    
    67.5
    %Enrollment fees
    
    
    3.8
    
    
    
    4.4
    
    
    
    5.2In-center revenue
    
    
    27.8
    
    
    
    27.0
    
    
    
    25.0Total center revenue
    
    
    97.8
    
    
    
    97.8
    
    
    
    97.7Other revenue
    
    
    2.2
    
    
    
    2.2
    
    
    
    2.3Total revenue
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0Operating expensesCenter operations (including 0.4%, 0.4% and 0.0%
related to share- based compensation expense,
respectively)
    
    
    57.5
    
    
    
    57.1
    
    
    
    55.4Advertising and marketing
    
    
    3.8
    
    
    
    4.1
    
    
    
    3.7General and administrative (including 0.8%, 1.1% and
0.1% related to share-based compensation expense,
respectively)
    
    
    6.2
    
    
    
    7.4
    
    
    
    7.0Other operating
    
    
    2.5
    
    
    
    2.5
    
    
    
    3.3Depreciation and amortization
    
    
    9.0
    
    
    
    9.3
    
    
    
    9.9Total operating expenses
    
    
    79.0
    
    
    
    80.4
    
    
    
    79.3Income from operations
    
    
    21.0
    
    
    
    19.6
    
    
    
    20.7Other income (expense)Interest expense, net
    
    
    (3.9
    )
    
    
    (3.4
    )
    
    
    (3.6
    )Equity in earnings of affiliate
    
    
    0.2
    
    
    
    0.2
    
    
    
    0.3Total other income (expense)
    
    
    (3.7
    )
    
    
    (3.2
    )
    
    
    (3.3
    )Income before income taxes
    
    
    17.3
    
    
    
    16.4
    
    
    
    17.4Provision for income taxes
    
    
    6.9
    
    
    
    6.5
    
    
    
    6.8Net income
    
    
    10.4
    %
    
    
    9.9
    %
    
    
    10.6
    %
 Year Ended December 31, 2007 Compared to Year Ended December 31, 2006
 Total revenue.
  
    
    67.2% was from membership dues, which increased $94.5 million, or 27.8%, due to increased
memberships at new centers, junior membership programs and increased sales of value-added
memberships. Our number of memberships increased 12.5% to 499,092 at December 31, 2007 from
443,660 at December 31, 2006. Our membership growth of 12.5% was
down from a membership growth rate of 23.8% in 2006 primarily due to
our anniversary of the acquisition of seven leased centers in July
2006, our strategy to reduce memberships in centers where memberships
exceed our target capacity and the effects of a slower economy in the
fourth quarter.
    
    31.2% was from in-center revenue, which increased $43.9 million primarily as a result of
our members increased use of our personal training, member activities, LifeCafe and LifeSpa
products and services. As a result of this in-center revenue growth and our focus on
broadening our offerings to our members, average in-
 29




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##### Table of Contents



center revenue per membership increased from $351 for the year ended December 31, 2006 to $387
for the year ended December 31, 2007.
    
    1.6% was from enrollment fees, which are deferred until a center opens and recognized on a
straight-line basis over 36 months. Enrollment fees increased $2.3 million for the year ended
December 31, 2007 to $24.7 million.
  Center operations expenses.
 Advertising and marketing expenses.
 General and administrative expenses.
 Other operating expenses.
 Depreciation and amortization.
 Interest expense, net.
 Provision for income taxes.
 Net income.
 30




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##### Table of Contents



Year Ended December 31, 2006 Compared to Year Ended December 31, 2005
 Total revenue.
  
    
    64.2% was from membership dues, which increased $76.7 million, due to increased
memberships at new and existing centers, the introduction of junior membership programs and
increased sales of value-added memberships.
    
    34.0% was from in-center revenue, which increased $40.6 million primarily as a result of
our members increased use of our personal training, member activities, LifeCafe and LifeSpa
products and services. As a result of this in-center revenue growth and our focus on
broadening our offerings to our members, average in-center revenue per membership increased
from $300 to $351 for the year ended December 31, 2006.
    
    1.8% was from enrollment fees, which are deferred until a center opens and recognized on a
straight-line basis over 36 months. Enrollment fees increased $2.1 million for the year ended
December 31, 2006 to $22.4 million. Our number of memberships increased 23.8% to 443,660 at
December 31, 2006 from 358,384 at December 31, 2005.
  Center operations expenses.
 Advertising and marketing expenses.
 General and administrative expenses.
 Other operating expenses.
 Depreciation and amortization.
 31




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##### Table of Contents



Interest expense, net.
 Provision for income taxes.
 Net income.
 Interest in an Unconsolidated Affiliated Entity
  Non-GAAP Financial Measures
   
    
    it is a widely accepted financial indicator of a companys ability to service its debt and
we are required to comply with certain covenants and borrowing limitations that are based on
variations of EBITDA in certain of our financing documents; and
    
    it is widely used to measure a companys operating performance without regard to items
such as depreciation and amortization, which can vary depending upon accounting methods and
the book value of assets, and to present a meaningful measure of corporate performance
exclusive of our capital structure and the method by which assets were acquired.
  
    
    as a measurement of operating performance because it assists us in comparing our
performance on a consistent basis;
    
    in presentations to the members of our board of directors to enable our board to have the
same consistent measurement basis of operating performance used by management; and
    
    as the basis for incentive bonuses paid to selected members of senior and center-level
management.
  32




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Seasonality of Business
  Liquidity and Capital Resources
 Liquidity
  Operating Activities
    Investing Activities
  33




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##### Table of Contents



For the Year Ended December 31,2007
    
    
    2006
    
    
    2005(In thousands)Purchases of property and equipment
    
    $
    415,822
    
    
    $
    261,767
    
    
    $
    190,355Non-cash property and equipment purchases financed
through capital lease obligations
    
    
    1,445
    
    
    
    
    
    
    
    96Non-cash property purchases financed through notes
payable obligation
    
    
    95
    
    
    
    1,620
    
    
    
    Non-cash property purchases in accounts payable
    
    
    10,218
    
    
    
    22,594
    
    
    
    8,773Non-cash share-based compensation capitalized to projects under development
    
    
    744
    
    
    
    1,055
    
    
    
    Total capital expenditures
    
    $
    428,324
    
    
    $
    287,036
    
    
    $
    199,224
  For the Year Ended December 31,2007
    
    
    2006
    
    
    2005(In thousands)New center building and construction on clubs opened
through the current year
    
    $
    159,938
    
    
    $
    141,104
    
    
    $
    107,813New center land, building and construction on clubs to be
opened in the next year
    
    
    149,662
    
    
    
    102,949
    
    
    
    67,204New center land, building and construction on clubs to be
opened two years out
    
    
    20,297
    
    
    
    9,866
    
    
    
    Acquisitions, updating existing centers and corporate
infrastructure
    
    
    (1) 98,427
    
    
    
    33,117
    
    
    
    24,207Total capital expenditures
    
    $
    428,324
    
    
    $
    287,036
    
    
    $
    199,224
 
 (1)
    
    In 2007, we incurred approximately $98.4 million of capital expenditures related to
acquisitions, updating existing centers and corporate infrastructure. This was comprised of
approximately $22.2 for the regular maintenance of our existing center base, $28.0 million
for the remodels of the seven centers leased in July 2006, $23.4 million for the
construction of our corporate office building which we moved into in December 2007, and
$24.8 million for acquisitions and general corporate purposes.   Financing Activities
  34




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36




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Contractual Obligations
  Payments due by periodLess than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 years(In thousands)Long-term debt obligations excluding obligations under capital leases
    
    $
    555,323
    
    
    $
    7,985
    
    
    $
    22,273
    
    
    $
    419,252
    
    
    $
    105,813Capital lease obligations
    
    
    9,282
    
    
    
    1,583
    
    
    
    760
    
    
    
    1,459
    
    
    
    5,480Interest (1)
    
    
    256,509
    
    
    
    35,602
    
    
    
    71,403
    
    
    
    47,923
    
    
    
    101,581Operating lease obligations
    
    
    370,998
    
    
    
    17,336
    
    
    
    37,389
    
    
    
    38,007
    
    
    
    278,266Purchase obligations (2)
    
    
    156,393
    
    
    
    154,253
    
    
    
    2,132
    
    
    
    8
    
    
    
    Other long-term liabilities (3)
    
    
    812
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    812Total contractual obligations
    
    $
    1,349,317
    
    
    $
    216,759
    
    
    $
    133,957
    
    
    $
    506,649
    
    
    $
    491,952
 
 (1)
    
    Interest expense obligations were calculated holding floating rate debt balances and interest rates constant at December 31, 2007 rates.(2)
    
    Purchase obligations consist primarily of our contracts with construction subcontractors for
the completion of eleven of our centers in 2008 and three of our centers in 2009, as well as
contracts for the purchase of land.(3)
    
    Financial Interpretation No. 48 (FIN 48) obligations represent uncertain tax positions. In
addition to the other long-term liabilities presented in the table above, approximately $12.9
million of unrecognized tax benefits, including interest and penalties, have been recorded as
liabilities in accordance with FIN 48, and we are uncertain as to if or when such amounts may
be settled. Recent Accounting Pronouncements
     37




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Impact of Inflation
  
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
  38




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Item 8. Financial Statements and Supplementary Data.
 LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
 December 31,2007
    
    
    2006(In thousands, except shareand per share data)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    5,354
    
    
    $
    6,880Accounts receivable, net
    
    
    4,475
    
    
    
    2,320Inventories
    
    
    14,324
    
    
    
    8,773Prepaid expenses and other current assets
    
    
    15,963
    
    
    
    9,201Deferred membership origination costs
    
    
    16,205
    
    
    
    12,575Deferred income taxes
    
    
    1,188
    
    
    
    Income tax receivable
    
    
    5,814
    
    
    
    97Total current assets
    
    
    63,323
    
    
    
    39,846PROPERTY AND EQUIPMENT, net
    
    
    1,259,271
    
    
    
    902,122RESTRICTED CASH
    
    
    6,767
    
    
    
    4,738DEFERRED MEMBERSHIP ORIGINATION COSTS
    
    
    14,367
    
    
    
    10,875OTHER ASSETS
    
    
    42,805
    
    
    
    30,095TOTAL ASSETS
    
    $
    1,386,533
    
    
    $
    987,676LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Current maturities of long-term debt
    
    $
    9,568
    
    
    $
    15,228Accounts payable
    
    
    12,872
    
    
    
    8,878Construction accounts payable
    
    
    59,261
    
    
    
    49,285Accrued expenses
    
    
    47,052
    
    
    
    37,191Deferred revenue
    
    
    34,851
    
    
    
    29,773Total current liabilities
    
    
    163,604
    
    
    
    140,355LONG-TERM DEBT, net of current portion
    
    
    555,037
    
    
    
    374,327DEFERRED RENT LIABILITY
    
    
    25,526
    
    
    
    25,716DEFERRED INCOME TAXES
    
    
    38,607
    
    
    
    38,584DEFERRED REVENUE
    
    
    17,529
    
    
    
    15,917OTHER LIABILITIES
    
    
    13,673
    
    
    
    264Total liabilities
    
    
    813,976
    
    
    
    595,163COMMITMENTS AND CONTINGENCIES (Note 10)SHAREHOLDERS EQUITY:Undesignated preferred stock, 10,000,000 shares authorized; none
issued or outstanding
    
    
    
    
    
    
    Common stock, $.02 par value, 50,000,000 shares authorized; 39,137,947
and 36,817,199 shares issued and outstanding, respectively
    
    
    783
    
    
    
    737Additional paid-in capital
    
    
    373,910
    
    
    
    259,905Retained earnings
    
    
    199,890
    
    
    
    131,871Accumulated other comprehensive loss
    
    
    (2,026
    )
    
    
    Total shareholders equity
    
    
    572,557
    
    
    
    392,513TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    1,386,533
    
    
    $
    987,676
  39




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##### Table of Contents



LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Year EndedDecember 31,2007
    
    
    2006
    
    
    2005(In thousands, except per share data)REVENUE:Membership dues
    
    $
    434,138
    
    
    $
    339,623
    
    
    $
    262,989Enrollment fees
    
    
    24,741
    
    
    
    22,438
    
    
    
    20,341In-center revenue
    
    
    182,215
    
    
    
    138,332
    
    
    
    97,710Total center revenue
    
    
    641,094
    
    
    
    500,393
    
    
    
    381,040Other revenue
    
    
    14,692
    
    
    
    11,504
    
    
    
    9,076Total revenue
    
    
    655,786
    
    
    
    511,897
    
    
    
    390,116OPERATING EXPENSES:Center operations (including
$2,597, $2,179 and $0 related
to share-based compensation
expense, respectively)
    
    
    377,235
    
    
    
    292,273
    
    
    
    216,314Advertising and marketing
    
    
    24,967
    
    
    
    20,770
    
    
    
    14,446General and administrative
(including $5,149, $5,377 and
$388 related to share-based
compensation expense,
respectively)
    
    
    40,820
    
    
    
    37,781
    
    
    
    27,375Other operating
    
    
    16,340
    
    
    
    12,998
    
    
    
    12,693Depreciation and amortization
    
    
    59,014
    
    
    
    47,560
    
    
    
    38,346Total operating expenses
    
    
    518,376
    
    
    
    411,382
    
    
    
    309,174Income from operations
    
    
    137,410
    
    
    
    100,515
    
    
    
    80,942OTHER INCOME (EXPENSE):Interest expense, net of
interest income of $438, $269
and $259, respectively
    
    
    (25,443
    )
    
    
    (17,356
    )
    
    
    (14,076
    )Equity in earnings of affiliate
    
    
    1,272
    
    
    
    919
    
    
    
    1,105Total other income (expense)
    
    
    (24,171
    )
    
    
    (16,437
    )
    
    
    (12,971
    )INCOME BEFORE INCOME TAXES
    
    
    113,239
    
    
    
    84,078
    
    
    
    67,971PROVISION FOR INCOME TAXES
    
    
    45,220
    
    
    
    33,513
    
    
    
    26,758NET INCOME
    
    $
    68,019
    
    
    $
    50,565
    
    
    $
    41,213BASIC EARNINGS PER COMMON SHARE
    
    $
    1.81
    
    
    $
    1.40
    
    
    $
    1.19DILUTED EARNINGS PER COMMON SHARE
    
    $
    1.78
    
    
    $
    1.37
    
    
    $
    1.13WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING -
BASIC
    
    
    37,518
    
    
    
    36,118
    
    
    
    34,592WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING -
DILUTED
    
    
    38,127
    
    
    
    36,779
    
    
    
    36,339
  40




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##### Table of Contents



LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 Accumulated OtherCommon Stock
    
    
    Additional Paid-In
    
    
    Deferred
    
    
    Comprehensive
    
    
    RetainedShares
    
    
    Amount
    
    
    Capital
    
    
    Compensation
    
    
    Loss
    
    
    Earnings
    
    
    Total(In thousands, except share data)BALANCE  December 31, 2004
    
    
    33,791,61
    
    
    $
    676
    
    
    $
    209,931
    
    
    $
    (66
    )
    
    $
    
    
    
    $
    40,093
    
    
    $
    250,634Common stock issued upon
exercise of stock options
    
    
    1,698,714
    
    
    
    34
    
    
    
    6,149
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,183Grant of restricted stock
    
    
    80,243
    
    
    
    2
    
    
    
    2,625
    
    
    
    (2,627
    )
    
    
    
    
    
    
    
    
    
    
    Compensation related to stock
options and restricted stock
    
    
    
    
    
    
    
    
    
    
    255
    
    
    
    387
    
    
    
    
    
    
    
    
    
    
    
    642Tax benefit upon exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    9,172
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,172Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,213
    
    
    
    41,213BALANCE  December 31, 2005
    
    
    35,570,567
    
    
    
    712
    
    
    
    228,132
    
    
    
    (2,306
    )
    
    
    
    
    
    
    81,306
    
    
    
    307,844Reclassification of deferred
compensation to additional
paid-in capital
    
    
    
    
    
    
    
    
    
    
    (2,306
    )
    
    
    2,306
    
    
    
    
    
    
    
    
    
    
    
    Common stock issued upon
exercise of stock options
    
    
    1,090,788
    
    
    
    22
    
    
    
    15,242
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,264Grant of restricted stock
    
    
    156,164
    
    
    
    3
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeiture of restricted stock
    
    
    (320
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Compensation related to stock
options and restricted stock
    
    
    
    
    
    
    
    
    
    
    7,556
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,556Capitalized compensation
related to stock options and
restricted stock
    
    
    
    
    
    
    
    
    
    
    1,055
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,055Tax benefit upon exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    10,229
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,229Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,565
    
    
    
    50,565BALANCE  December 31, 2006
    
    
    36,817,199
    
    
    
    737
    
    
    
    259,905
    
    
    
    
    
    
    
    
    
    
    
    131,871
    
    
    
    392,513Common stock issued upon
common stock offering
    
    
    1,675,000
    
    
    
    33
    
    
    
    92,469
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    92,502Common stock issued upon
exercise of stock options
    
    
    487,075
    
    
    
    10
    
    
    
    8,444
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,454Grant of restricted stock
    
    
    162,393
    
    
    
    3
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeiture of restricted stock
    
    
    (3,720
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Compensation
related to stock options and restricted stock
    
    
    
    
    
    
    
    
    
    
    7,746
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,746Capitalized compensation
related to stock options and
restricted stock
    
    
    
    
    
    
    
    
    
    
    744
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    744Tax benefit upon exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    4,605
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,605Interest rate swap contract
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,026
    )
    
    
    
    
    
    
    (2,026
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68,019
    
    
    
    68,019BALANCE  December 31, 2007
    
    
    39,137,947
    
    
    $
    783
    
    
    $
    373,910
    
    
    $
    
    
    
    $
    (2,026
    )
    
    $
    199,890
    
    
    $
    572,557
  41




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##### Table of Contents



LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Year Ended December 31,2007
    
    
    2006
    
    
    2005(In thousands)CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    68,019
    
    
    $
    50,565
    
    
    $
    41,213Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    59,014
    
    
    
    47,560
    
    
    
    38,346Deferred income taxes
    
    
    11,505
    
    
    
    3,165
    
    
    
    3,315Loss on disposal of property and equipment, net
    
    
    354
    
    
    
    946
    
    
    
    539Amortization of deferred financing costs
    
    
    853
    
    
    
    696
    
    
    
    1,025Share-based compensation
    
    
    7,746
    
    
    
    7,556
    
    
    
    388Excess tax benefit from stock option exercises
    
    
    (4,605
    )
    
    
    (10,229
    )
    
    
    Changes in operating assets and liabilities
    
    
    (544
    )
    
    
    25,425
    
    
    
    22,870Other
    
    
    (136
    )
    
    
    168
    
    
    
    256Net cash provided by operating activities
    
    
    142,206
    
    
    
    125,852
    
    
    
    107,952CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment (excluding non-cash
purchases supplementally noted below)
    
    
    (415,822
    )
    
    
    (261,767
    )
    
    
    (190,355
    )Proceeds from sale of property and equipment
    
    
    5,054
    
    
    
    6,629
    
    
    
    4,411Proceeds from property insurance settlement
    
    
    78
    
    
    
    581
    
    
    
    Increase in other assets
    
    
    (4,488
    )
    
    
    (7,803
    )
    
    
    (3,083
    )Decrease (increase) in restricted cash
    
    
    (2,029
    )
    
    
    (823
    )
    
    
    8,177Net cash used in investing activities
    
    
    (417,207
    )
    
    
    (263,183
    )
    
    
    (180,850
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from long-term borrowings
    
    
    113,455
    
    
    
    
    
    
    
    5,652Repayments on long-term borrowings
    
    
    (11,181
    )
    
    
    (19,120
    )
    
    
    (23,971
    )Proceeds from revolving credit facility, net
    
    
    67,800
    
    
    
    134,000
    
    
    
    80,678Increase in deferred financing costs
    
    
    (2,160
    )
    
    
    (842
    )
    
    
    (1,175
    )Proceeds from common stock offering, net of underwriting
discount and offering costs
    
    
    92,502
    
    
    
    
    
    
    
    Excess tax benefit from exercise of stock options
    
    
    4,605
    
    
    
    10,229
    
    
    
    Proceeds from exercise of stock options
    
    
    8,454
    
    
    
    15,264
    
    
    
    6,183Net cash provided by financing activities
    
    
    273,475
    
    
    
    139,531
    
    
    
    67,367INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    (1,526
    )
    
    
    2,200
    
    
    
    (5,531
    )CASH AND CASH EQUIVALENTS  Beginning of period
    
    
    6,880
    
    
    
    4,680
    
    
    
    10,211CASH AND CASH EQUIVALENTS  End of period
    
    $
    5,354
    
    
    $
    6,880
    
    
    $
    4,680SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash payments for interest, net of capitalized interest of
$8,425, $5,308 and $3,965, respectively
    
    $
    30,621
    
    
    $
    22,183
    
    
    $
    17,212Cash payments for income taxes
    
    $
    33,746
    
    
    $
    17,005
    
    
    $
    13,227SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:Purchases of property and equipment purchases financed
through capital lease obligations
    
    $
    1,445
    
    
    $
    
    
    
    $
    96Purchases of property purchase financed through notes payable
    
    $
    95
    
    
    $
    1,620
    
    
    $
    Purchases of property and equipment in accounts payable
    
    $
    10,218
    
    
    $
    22,594
    
    
    $
    8,773Non-cash share-based compensation capitalized to projects
under development
    
    $
    744
    
    
    $
    1,055
    
    
    $
    
  42




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##### Table of Contents



LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
 1. Nature of Business
  2. Significant Accounting Policies
 Principles of Consolidation
 Revenue Recognition 
  Pre-Opening Operations
 Cash and Cash Equivalents
 Restricted Cash
 Accounts Receivable
 43




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##### Table of Contents



LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
  December 31,2007
    
    
    2006
    
    
    2005Allowance for Doubtful Accounts:Balance, beginning of period
    
    $
    616
    
    
    $
    187
    
    
    $
    435Provisions
    
    
    345
    
    
    
    542
    
    
    
    126Write-offs against allowance
    
    
    (206
    )
    
    
    (113
    )
    
    
    (374
    )Balance, end of period
    
    $
    755
    
    
    $
    616
    
    
    $
    187Sales Returns and Allowances:Balance, beginning of period
    
    $
    
    
    
    $
    134
    
    
    $
    289Provisions
    
    
    
    
    
    
    (52
    )
    
    
    255Write-offs against allowance
    
    
    
    
    
    
    (82
    )
    
    
    (410
    )Balance, end of period
    
    $
    
    
    
    $
    
    
    
    $
    134
  Inventories
  December 31,2007
    
    
    2006Center operations inventory
    
    $
    4,232
    
    
    $
    3,815In-center businesses inventory
    
    
    7,144
    
    
    
    3,452Apparel and uniforms
    
    
    2,693
    
    
    
    1,250Other
    
    
    255
    
    
    
    256$
    14,324
    
    
    $
    8,773
 Prepaid Expenses and Other Current Assets
  December 31,2007
    
    
    2006Land held for sale
    
    $
    5,390
    
    
    $
    Insurance deposits
    
    
    2,664
    
    
    
    2,578Deferred costs
    
    
    1,928
    
    
    
    1,480Prepaid lease obligations
    
    
    1,232
    
    
    
    1,489Due from affiliate
    
    
    490
    
    
    
    233Other prepaid expenses and current assets
    
    
    4,259
    
    
    
    3,421$
    15,963
    
    
    $
    9,201
 44




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##### Table of Contents



LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
 Property and Equipment
   Depreciable
    
    
    December 31,Lives
    
    
    2007
    
    
    2006Land
    
    
    
    
    
    $
    219,347
    
    
    $
    154,680Buildings
    
    3-40 years
    
    
    869,365
    
    
    
    630,565Leasehold improvements
    
    1-20 years
    
    
    36,253
    
    
    
    34,695Construction in progress
    
    
    
    
    
    
    137,335
    
    
    
    82,5891,262,300
    
    
    
    902,529Equipment:Fitness
    
    5-7 years
    
    
    76,620
    
    
    
    59,559Computer and telephone
    
    3-5 years
    
    
    35,792
    
    
    
    32,335Capitalized software
    
    5 years
    
    
    21,884
    
    
    
    17,345Decor and signage
    
    5 years
    
    
    8,962
    
    
    
    7,018Audio/visual
    
    3-5 years
    
    
    15,319
    
    
    
    11,349Furniture and fixtures
    
    7 years
    
    
    9,300
    
    
    
    7,579Other equipment
    
    3-7 years
    
    
    48,135
    
    
    
    33,965216,012
    
    
    
    169,150Property and equipment, gross
    
    
    
    
    
    
    1,478,312
    
    
    
    1,071,679Less accumulated depreciation
    
    
    
    
    
    
    219,041
    
    
    
    169,557Property and equipment, net
    
    
    
    
    
    $
    1,259,271
    
    
    $
    902,122
  Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use.
  45




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##### Table of Contents



LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
 Impairment of Long-lived Assets
 Derivative Instruments and Hedging Activities.
  Other Assets
 December 31,2007
    
    
    2006Financing costs, net
    
    $
    5,399
    
    
    $
    4,093Investment in unconsolidated affiliate (see Note 3)
    
    
    2,636
    
    
    
    2,400Site development costs
    
    
    2,669
    
    
    
    2,371Lease deposits
    
    
    3,867
    
    
    
    2,340Earnest money deposits
    
    
    9,632
    
    
    
    8,984Intangible assets
    
    
    5,505
    
    
    
    4,252Land held for sale
    
    
    10,592
    
    
    
    5,655Other
    
    
    2,505
    
    
    
    $
    42,805
    
    
    $
    30,095
  46




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##### Table of Contents



LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
 Goodwill and Other Intangible Assets,
   Balance at December 31, 2004
    
    $
    241Leasehold rights acquired
    
    
    2,318Trade name acquired
    
    
    321Balance at December 31, 2005
    
    
    2,880Goodwill acquired
    
    
    1,272Trade name acquired
    
    
    100Balance at December 31, 2006
    
    
    4,252Purchase
price adjustment (1)
    
    
    (1,346
    )Goodwill acquired
    

    2,599Balance at December 31, 2007
    
    $
    5,505
 
 (1)
    
    Includes adjustments related to the finalization of the purchase price allocation of 2006 acquisition transactions.  December 31,2007
    
    
    2006Goodwill
    
    $
    2,599
    
    
    $
    1,346Leasehold rights
    
    
    2,318
    
    
    
    2,318Trade names
    
    
    588
    
    
    
    588$
    5,505
    
    
    $
    4,252
 47




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##### Table of Contents



LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
 Accrued Expenses
 December 31,2007
    
    
    2006Payroll related
    
    $
    8,129
    
    
    $
    7,092Real estate taxes
    
    
    9,395
    
    
    
    8,120Center operating costs
    
    
    17,032
    
    
    
    14,126Insurance
    
    
    2,692
    
    
    
    2,112Interest
    
    
    3,185
    
    
    
    376Other
    
    
    6,619
    
    
    
    5,365$
    47,052
    
    
    $
    37,191
 Income Taxes
   ,
  Earnings per Common Share
 48




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##### Table of Contents



LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
  For the Year Ended December 31,2007
    
    
    2006
    
    
    2005Net income
    
    $
    68,019
    
    
    $
    50,565
    
    
    $
    41,213Weighted average number of common shares outstanding  basic
    
    
    37,518
    
    
    
    36,118
    
    
    
    34,592Effect of dilutive stock options
    
    
    476
    
    
    
    509
    
    
    
    1,739Effect of dilutive restricted stock awards
    
    
    133
    
    
    
    152
    
    
    
    8Weighted average number of common shares outstanding 
diluted
    
    
    38,127
    
    
    
    36,779
    
    
    
    36,339Basic earnings per common share
    
    $
    1.81
    
    
    $
    1.40
    
    
    $
    1.19Diluted earnings per common share
    
    $
    1.78
    
    
    $
    1.37
    
    
    $
    1.13
  Share-Based Compensation
  Net income applicable to common shareholders  basic:As reported
    
    $
    41,213Pro forma
    
    $
    35,870Basic earnings per common share:As reported
    
    $
    1.19Pro forma
    
    $
    1.04Net income applicable to common shareholders  diluted:As reported
    
    $
    41,213Pro forma
    
    $
    35,870Diluted earnings per common share:As reported
    
    $
    1.13Pro forma
    
    $
    0.99
 49




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##### Table of Contents



LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
   December 31,2007
    
    2006
    
    2005Risk-free interest rate
    
    
    4.7
    %
    
    
    4.8
    %
    
    
    4.0
    %Expected dividend yield
    
    
    
    
    
    
    
    
    
    
    Expected life in years
    
    
    5
    
    
    
    5
    
    
    
    6Volatility
    
    
    36.9
    %
    
    
    35.9
    %
    
    
    42.7
    %
   Dividends
 Fair Value of Financial Instruments
 Use of Estimates
 50




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##### Table of Contents



LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
 Supplemental Cash Flow Information
 For the Year Ended December 31,2007
    
    
    2006
    
    
    2005Accounts receivable
    
    $
    (2,155
    )
    
    $
    1,947
    
    
    $
    (3,080
    )Income tax receivable
    
    
    (1,112
    )
    
    
    13,643
    
    
    
    1,068Inventories
    
    
    (5,551
    )
    
    
    (3,104
    )
    
    
    (698
    )Prepaid expenses and other current assets
    
    
    (6,762
    )
    
    
    (2,014
    )
    
    
    88Deferred membership origination costs
    
    
    (7,122
    )
    
    
    (4,958
    )
    
    
    (3,159
    )Accounts payable
    
    
    4,895
    
    
    
    (132
    )
    
    
    12,623Accrued expenses
    
    
    9,861
    
    
    
    9,329
    
    
    
    8,711Deferred revenue
    
    
    6,690
    
    
    
    7,904
    
    
    
    5,503Deferred rent
    
    
    (190
    )
    
    
    2,546
    
    
    
    1,814Other liabilities
    
    
    902
    
    
    
    264
    
    
    
    $
    (544
    )
    
    $
    25,425
    
    
    $
    22,870
  For the Year Ended December 31,2007
    
    
    2006
    
    
    2005Purchases of property and equipment
    
    $
    415,822
    
    
    $
    261,767
    
    
    $
    190,355Non-cash property and equipment purchases
financed through capital lease obligations
    
    
    1,445
    
    
    
    
    
    
    
    96Non-cash property purchases financed through
notes payable obligations
    
    
    95
    
    
    
    1,620
    
    
    
    Non-cash property purchases in accounts payable
    
    
    10,218
    
    
    
    22,594
    
    
    
    8,773Non-cash share-based compensation capitalized
to projects under development
    
    
    744
    
    
    
    1,055
    
    
    
    Total capital expenditures
    
    $
    428,324
    
    
    $
    287,036
    
    
    $
    199,224
 New Accounting Pronouncements
  51




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##### Table of Contents



LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
   Comprehensive Income 
 3. Investment in Unconsolidated Affiliate
    52




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##### Table of Contents



LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
 4. Long-Term Debt
  December 31,2007
    
    
    2006Term notes payable to insurance company, monthly
interest and principal payments totaling $1,273
including interest at 8.25% to June 2011,
collateralized by certain related real estate and
buildings
    
    $
    117,597
    
    
    $
    122,498Revolving 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,
collateralized by certain personal property
    
    
    312,800
    
    
    
    245,000Term notes payable with monthly interest and principal
payments totaling $632 including interest at 6.03% to
February 2017, collateralized by certain related real
estate and buildings
    
    
    103,990
    
    
    
    Mortgage notes payable to bank, due in monthly
installments of $52 through October 2012, including
interest at approximately 6.4%, collateralized by
certain interests in related two centers
    
    
    4,461
    
    
    
    4,707Promissory note payable to a municipality,
collateralized by a mortgage on the underlying
property, due in two equal payments through June 2013,
including interest of 0.0%, (balances shown net of
imputed interest of $450 and $533, respectively)
    
    
    1,201
    
    
    
    1,118Unsecured promissory note, due in various unequal
installments, expiring December 2010, including
interest at 5.6% (balances shown net of imputed
interest of $36 and $48, respectively)
    
    
    514
    
    
    
    502Promissory note payable to lender, monthly interest
and principal payments totaling $80 including interest
at 5.78% to January 2015, collateralized by a certain
interest in secured property
    
    
    8,455
    
    
    
    Interest rate swap on notional amount of $125,000 at a
fixed annual rate of 4.825%, expiring October 2010
    
    
    3,252
    
    
    
    Special assessments payable, due in variable
semiannual installments through September 2028,
including interest at 4.25% to 7.00%, secured by the
related real estate and buildings
    
    
    3,053
    
    
    
    2,870Total debt (excluding obligations under capital leases)
    
    
    555,323
    
    
    
    376,695Obligations under capital leases (see below)
    
    
    9,282
    
    
    
    12,860Total debt
    
    
    564,605
    
    
    
    389,555Less current maturities
    
    
    9,568
    
    
    
    15,228Total long-term debt
    
    $
    555,037
    
    
    $
    374,327
  53




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LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
         54




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LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
    2008
    
    $
    7,9852009
    
    
    8,7222010
    
    
    13,5512011
    
    
    101,2822012
    
    
    317,970Thereafter
    
    
    105,813$
    555,323
  December 31,2007
    
    
    2006Land and buildings
    
    $
    6,622
    
    
    $
    6,622Equipment
    
    
    26,078
    
    
    
    35,86332,700
    
    
    
    42,485Less accumulated amortization
    
    
    21,937
    
    
    
    27,548$
    10,763
    
    
    $
    14,937
  2008
    
    $
    2,4642009
    
    
    1,1722010
    
    
    1,1692011
    
    
    1,2262012
    
    
    1,648Thereafter
    
    
    7,48015,159Less amounts representing interest
    
    
    5,877Present value of net minimum lease payments
    
    
    9,282Current portion
    
    
    1,583$
    7,699
 55




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##### Table of Contents



LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
 5. Subsequent Event
  6. Income Taxes
  December 31,2007
    
    
    2006
    
    
    2005Current tax expense
    
    $
    33,358
    
    
    $
    30,348
    
    
    $
    23,443Deferred tax expense
    
    
    8,297
    
    
    
    3,165
    
    
    
    3,315Non-current tax expense
    
    
    3,565
    
    
    
    
    
    
    
    Income tax provision
    
    $
    45,220
    
    
    $
    33,513
    
    
    $
    26,758
   December 31,2007
    
    
    2006
    
    
    2005Income tax provision at federal statutory rate
    
    $
    39,634
    
    
    $
    29,428
    
    
    $
    23,790State and local income taxes, net of federal tax benefit
    
    
    4,837
    
    
    
    3,268
    
    
    
    3,495Other, net
    
    
    749
    
    
    
    817
    
    
    
    (527
    )Income tax provision
    
    $
    45,220
    
    
    $
    33,513
    
    
    $
    26,758
  December 31,2007
    
    
    2006Property and equipment
    
    $
    (32,274
    )
    
    $
    (43,088
    )Partnership interest
    
    
    (8,967
    )
    
    
    Accrued rent expense
    
    
    2,618
    
    
    
    5,612Other comprehensive income
    
    
    1,226
    
    
    
    Costs related to deferred revenue
    
    
    (3,280
    )
    
    
    (1,904
    )Other, net
    
    
    3,258
    
    
    
    796Net deferred tax liability
    
    $
    (37,419
    )
    
    $
    (38,584
    )
 56




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##### Table of Contents



LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
  Unrecognized tax benefit  beginning balance
    
    $
    9,228Gross increases  tax positions in current period
    
    
    4,329Settlements
    
    
    (161
    )Lapse of statute of limitations
    
    
    (504
    )Unrecognized tax benefit  ending balance
    
    $
    12,892
     7. Offering of Capital Stock
  8. Share-Based Compensation
   57




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##### Table of Contents



LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
    For the Year Ended December 31,2007
    
    
    2006Share-based compensation expense related to stock options
    
    $
    3,206
    
    
    $
    5,671Share-based compensation expense related to restricted shares
    
    
    4,410
    
    
    
    1,833Share-based compensation expense related to employee stock purchase
program (ESPP)
    
    
    130
    
    
    
    52Total share-based compensation expense
    
    $
    7,746
    
    
    $
    7,556
  Range ofRestricted
    
    Market PriceShares
    
    Per Share onOutstanding
    
    Grant DateBalance  December 31, 2005
    
    
    83,634
    
    
    $
    24.75-33.14Granted
    
    
    156,164
    
    
    
    42.72-50.82Canceled
    
    
    (320
    )
    
    
    46.51Vested
    
    
    (28,584
    )
    
    
    24.75-42.72Balance  December 31, 2006
    
    
    210,894
    
    
    
    24.75-50.82Granted
    
    
    162,393
    
    
    
    49.06-53.95Canceled
    
    
    (3,720
    )
    
    
    46.51-53.95Vested
    
    
    (67,222
    )
    
    
    24.75-50.85Balance  December 31, 2007
    
    
    302,345
    
    
    $
    24.75-53.95
 58




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##### Table of Contents



LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
   WeightedWeighted-
    
    AverageAverage
    
    Remaining
    
    AggregateExercise
    
    Contractual
    
    IntrinsicOptions
    
    Shares
    
    Price
    
    Term (in years)
    
    ValueOutstanding at December 31, 2004
    
    
    3,831,108Granted
    
    
    758,900Exercised
    
    
    (1,698,714
    )Canceled
    
    
    (133,628
    )Outstanding at December 31, 2005
    
    
    2,757,666
    
    
    $
    17.01Granted
    
    
    71,954
    
    
    
    46.57Exercised
    
    
    (1,090,788
    )
    
    
    14.00Canceled
    
    
    (14,233
    )
    
    
    16.41Outstanding at December 31, 2006
    
    
    1,724,599
    
    
    $
    20.15Granted
    
    
    2,477
    
    
    
    50.85Exercised
    
    
    (487,075
    )
    
    
    17.34Canceled
    
    
    (31,734
    )
    
    
    26.82Outstanding at December 31, 2007
    
    
    1,208,267
    
    
    $
    21.17
    
    
    
    6.5
    
    
    $
    34,441Vested or Expected to Vest at
December 31, 2007
    
    
    1,155,351
    
    
    $
    20.99
    
    
    
    6.5
    
    
    $
    33,145Exercisable at December 31, 2007
    
    
    651,253
    
    
    $
    17.74
    
    
    
    6.0
    
    
    $
    20,799
  59




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LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
  Weighted Average
    
    
    
    
    
    
    
    
    
    WeightedRemaining
    
    Weighted
    
    
    
    
    
    AverageNumber
    
    Contractual Life
    
    Average
    
    Number
    
    ExerciseRange of Exercise Prices
    
    Outstanding
    
    (Years)
    
    Exercise Price
    
    Exercisable
    
    Price$1.66 to $8.00
    
    
    202,165
    
    
    
    4.1
    
    
    $
    7.68
    
    
    
    145,965
    
    
    $
    7.55$12.00 to $18.50
    
    
    439,397
    
    
    
    6.4
    
    
    
    16.80
    
    
    
    342,097
    
    
    
    16.79$22.15 to $25.47
    
    
    366,601
    
    
    
    7.2
    
    
    
    25.43
    
    
    
    99,325
    
    
    
    25.47$26.15 to $48.59
    
    
    200,104
    
    
    
    7.9
    
    
    
    36.62
    
    
    
    63,866
    
    
    
    34.09$1.66 to $48.59
    
    
    1,208,267
    
    
    
    6.5
    
    
    $
    21.17
    
    
    
    651,253
    
    
    $
    17.74
    9. Operating Segments
  60




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LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
  For the Year Ended December 31,2007
    
    
    2006
    
    
    2005Membership dues
    
    $
    434,138
    
    
    $
    339,623
    
    
    $
    262,989Enrollment fees
    
    
    24,741
    
    
    
    22,438
    
    
    
    20,341Personal training
    
    
    88,278
    
    
    
    65,191
    
    
    
    45,272Other in-center
    
    
    93,937
    
    
    
    73,141
    
    
    
    52,438Other
    
    
    14,692
    
    
    
    11,504
    
    
    
    9,076Total revenue
    
    $
    655,786
    
    
    $
    511,897
    
    
    $
    390,116
 10. Commitments and Contingencies
 Lease Commitments
 2008
    
    $
    17,3362009
    
    
    18,6792010
    
    
    18,7102011
    
    
    18,5782012
    
    
    19,429Thereafter
    
    
    278,266$
    370,998
   Purchase Commitments
 Litigation
 61




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##### Table of Contents



LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
 4 01(k) Savings and Investment Plan
 11. Related Party Transactions
     12. Executive Nonqualified Plan
   62




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LIFE TIME FITNESS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Table amounts in thousands, except share and per share data)
 13. Quarterly Financial Data (Unaudited)
  2006
    
    20071st
    
    2nd
    
    3rd
    
    4th
    
    1st
    
    2nd
    
    3rd
    
    4thQuarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    QuarterTotal revenue
    
    $
    115,425
    
    
    $
    122,455
    
    
    $
    134,741
    
    
    $
    139,276
    
    
    $
    153,101
    
    
    $
    162,137
    
    
    $
    169,450
    
    
    $
    171,098Income from
operations
    
    
    21,172
    
    
    
    23,530
    
    
    
    27,794
    
    
    
    28,019
    
    
    
    28,741
    
    
    
    33,500
    
    
    
    37,543
    
    
    
    37,626Net income
    
    
    10,433
    
    
    
    12,385
    
    
    
    13,639
    
    
    
    14,108
    
    
    
    14,134
    
    
    
    16,485
    
    
    
    18,350
    
    
    
    19,050Earnings per share
(1)Basic
    
    $
    0.29
    
    
    $
    0.34
    
    
    $
    0.38
    
    
    $
    0.39
    
    
    $
    0.39
    
    
    $
    0.45
    
    
    $
    0.49
    
    
    $
    0.48Diluted
    
    
    0.28
    
    
    
    0.33
    
    
    
    0.37
    
    
    
    0.39
    
    
    
    0.38
    
    
    
    0.44
    
    
    
    0.48
    
    
    
    0.48
 
 (1)
    
    See Note 2 for discussion on the computation of earnings per share. 63




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     Internal ControlIntegrated Framework
 DELOITTE & TOUCHE LLP
 
 64




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal Control  Integrated Framework Managements Annual Report
on Internal Control Over Financial Reporting
    Internal Control
 Integrated Framework
  DELOITTE & TOUCHE LLP
 
 65




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##### Table of Contents



Quarterly Results (Unaudited)
   2006
    
    20071st
    
    2nd
    
    3rd
    
    4th
    
    1st
    
    2nd
    
    3rd
    
    4thQuarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter(In thousands, except for number of centers and per share data)Total revenue
    
    $
    115,425
    
    
    $
    122,455
    
    
    $
    134,741
    
    
    $
    139,276
    
    
    $
    153,101
    
    
    $
    162,137
    
    
    $
    169,450
    
    
    $
    171,098Income from operations
    
    
    21,172
    
    
    
    23,530
    
    
    
    27,794
    
    
    
    28,019
    
    
    
    28,741
    
    
    
    33,500
    
    
    
    37,543
    
    
    
    37,626Net income
    
    
    10,433
    
    
    
    12,385
    
    
    
    13,639
    
    
    
    14,108
    
    
    
    14,134
    
    
    
    16,485
    
    
    
    18,350
    
    
    
    19,050Earnings per shareBasic
    
    $
    0.29
    
    
    $
    0.34
    
    
    $
    0.38
    
    
    $
    0.39
    
    
    $
    0.39
    
    
    $
    0.45
    
    
    $
    0.49
    
    
    $
    0.48Diluted
    
    
    0.28
    
    
    
    0.33
    
    
    
    0.37
    
    
    
    0.39
    
    
    
    0.38
    
    
    
    0.44
    
    
    
    0.48
    
    
    
    0.48Cash Flow Data:Net cash provided by
(used in):Operating activities
    
    
    33,813
    
    
    
    27,168
    
    
    
    42,028
    
    
    
    22,843
    
    
    
    39,027
    
    
    
    27,150
    
    
    
    41,167
    
    
    
    34,862Investing activities
    
    
    (48,149
    )
    
    
    (56,464
    )
    
    
    (70,877
    )
    
    
    (87,693
    )
    
    
    (85,189
    )
    
    
    (125,727
    )
    
    
    (103,671
    )
    
    
    (102,620
    )Financing activities
    
    
    12,204
    
    
    
    26,748
    
    
    
    35,419
    
    
    
    65,160
    
    
    
    45,197
    
    
    
    100,925
    
    
    
    55,014
    
    
    
    72,339EBITDA (1)
    
    $
    32,934
    
    
    $
    35,927
    
    
    $
    39,698
    
    
    $
    40,435
    
    
    $
    42,744
    
    
    $
    48,463
    
    
    $
    52,776
    
    
    $
    53,713Centers open at end of
quarter (2)
    
    
    48
    
    
    
    49
    
    
    
    56
    
    
    
    60
    
    
    
    60
    
    
    
    64
    
    
    
    67
    
    
    
    70
 
 (1)
    
    EBITDA consists of net income plus interest expense, net, provision for income taxes and
depreciation and amortization. This term, as we define 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. We use EBITDA as a measure of operating performance. EBITDA 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 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. Additional
details related to EBITDA are provided in Managements Discussion and Analysis of Financial
Condition and Results of Operations  Non-GAAP Financial Measures.(2)
    
    The data being presented include the center owned by Bloomingdale LLC. 66




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##### Table of Contents



2006
    
    
    20071st
    
    
    2nd
    
    
    3rd
    
    
    4th
    
    
    1st
    
    
    2nd
    
    
    3rd
    
    
    4thQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter(In thousands, except for number of centers and per share data)Net income
    
    
    10,433
    
    
    
    12,385
    
    
    
    13,639
    
    
    
    14,108
    
    
    
    14,134
    
    
    
    16,485
    
    
    
    18,350
    
    
    
    19,050Interest expense, net
    
    
    4,117
    
    
    
    4,140
    
    
    
    4,204
    
    
    
    4,895
    
    
    
    5,528
    
    
    
    6,369
    
    
    
    7,135
    
    
    
    6,411Provision for income taxes
    
    
    6,865
    
    
    
    7,256
    
    
    
    10,139
    
    
    
    9,253
    
    
    
    9,395
    
    
    
    10,931
    
    
    
    12,374
    
    
    
    12,520Depreciation and
amortization
    
    
    11,519
    
    
    
    12,146
    
    
    
    11,716
    
    
    
    12,179
    
    
    
    13,687
    
    
    
    14,678
    
    
    
    14,917
    
    
    
    15,732EBITDA
    
    $
    32,934
    
    
    $
    35,927
    
    
    $
    39,698
    
    
    $
    40,435
    
    
    $
    42,744
    
    
    $
    48,463
    
    
    $
    52,776
    
    
    $
    53,713
 
 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
  
 Item 9A. Controls and Procedures.
 Disclosure Controls and Procedures .
 Managements Annual Report on Internal Control Over Financial Reporting.
 
    
    Pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company;
    
    Provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and
    
    Provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the companys assets that could have a material effect
on the financial statements.
   67




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##### Table of Contents



Changes in Internal Control Over Financial Reporting.
 
 Item 9B. Other Information.
  
 PART III
  
 Item 10. Directors, Executive Officers and Corporate Governance.
   Name
    
    Age
    
    PositionBahram Akradi
    
    
    46
    
    
    Chairman of the Board of Directors and Chief
Executive OfficerMichael J. Gerend
    
    
    43
    
    
    President and Chief Operating OfficerMichael R. Robinson
    
    
    48
    
    
    Executive Vice President and Chief Financial OfficerEric J. Buss
    
    
    41
    
    
    Executive Vice President, General Counsel and
SecretaryMark L. Zaebst
    
    
    48
    
    
    Executive Vice PresidentJeffrey G. Zwiefel
    
    
    45
    
    
    Senior Vice President, Life Time University
 Bahram Akradi
 Michael J. Gerend
 68




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##### Table of Contents



Michael R. Robinson
 Eric J. Buss
 Mark L. Zaebst
 Jeffrey G. Zwiefel
 
 Item 11. Executive Compensation.
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence.
  
 Item 14. Principal Accountant Fees and Services.
  69




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##### Table of Contents



PART IV
 Item 15. Exhibits and Financial Statement Schedules.
     3.1
    
    Amended and Restated Articles of
Incorporation of the Registrant.
    
    Incorporated by
reference to
Exhibit 3.1 to the
Registrants Form
10-Q for the
quarter ended June
30, 2004 (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
Form S-1 (File No.
333-113764), filed
with the Commission
on May 21, 2004.4
    
    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, 2004.10.1#
    
    FCA, Ltd. 1996 Stock Option Plan.
    
    Incorporated by
reference to
Exhibit 10.1 to the
Registrants
Registration
Statement of Form
S-1 (File No.
333-113764), filed
with the Commission
on March 19, 2004.10.2#
    
    LIFE TIME FITNESS, Inc. 1998 Stock Option
Plan, as amended and restated.
    
    Incorporated by
reference to
Exhibit 10.2 to the
Registrants
Registration
Statement of Form
S-1 (File No.
333-113764), filed
with the Commission
on March 19, 2004.10.3
    
    Form of Promissory Note made in favor of
Teachers Insurance and Annuity Association of
America.
    
    Incorporated by
reference to
Exhibit 10.16 to
the Registrants
Registration
Statement of Form
S-1 (File No.
333-113764), filed
with the Commission
on March 19, 2004.10.4
    
    Schedule of terms to Form of Promissory Note
made in favor of Teachers Insurance and
Annuity Association of America.
    
    Incorporated by
reference to
Exhibit 10.17 to
the Registrants
Registration
Statement of Form
S-1 (File No.
333-113764), filed
with the Commission
on March 19, 2004.10.5
    
    Open-End Leasehold Mortgage, Assignment of
Leases and Rents, Security Agreement and
Fixtures Filing Statement made by LTF USA
Real Estate, LLC for the benefit of Teachers
Insurance and Annuity Association of America.
    
    Incorporated by
reference to
Exhibit 10.18 to
the Registrants
Registration
Statement of Form
S-1 (File No.
333-113764), filed
with the Commission
on March 19, 2004.
 70




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##### Table of Contents



10.6
    
    Form of Mortgage, Assignment of Leases and
Rents, Security Agreement and Fixture Filing
Statement made for the benefit of Teachers
Insurance and Annuity Association of America.
    
    Incorporated by
reference to
Exhibit 10.19 to
the Registrants
Registration
Statement of Form
S-1 (File No.
333-113764), filed
with the Commission
on March 19, 2004.10.7
    
    Schedule of terms to Form of Mortgage,
Assignment of Leases and Rents, Security
Agreement and Fixture Filing Statement made
for the benefit of Teachers Insurance and
Annuity Association of America.
    
    Incorporated by
reference to
Exhibit 10.20 to
the Registrants
Registration
Statement of Form
S-1 (File No.
333-113764), filed
with the Commission
on March 19, 2004.10.8
    
    Form of Second Mortgage, Assignment of Leases
and Rents, Security Agreement and Fixture
Filing Statement made for the benefit of
Teachers Insurance and Annuity Association of
America.
    
    Incorporated by
reference to
Exhibit 10.21 to
the Registrants
Registration
Statement of Form
S-1 (File No.
333-113764), filed
with the Commission
on March 19, 2004.10.9
    
    Schedule of terms to Form of Second Mortgage,
Assignment of Leases and Rents, Security
Agreement and Fixture Filing Statement made
for the benefit of Teachers Insurance and
Annuity Association of America.
    
    Incorporated by
reference to
Exhibit 10.22 to
the Registrants
Registration
Statement of Form
S-1 (File No.
333-113764), filed
with the Commission
on March 19, 2004.10.10
    
    Lease Agreement dated as of September 30,
2003, by and between LT Fitness (DE) QRS
15-53, Inc., as landlord, and Life Time
Fitness, Inc., as tenant.
    
    Incorporated by
reference to
Exhibit 10.23 to
the Registrants
Registration
Statement of Form
S-1 (File No.
333-113764), filed
with the Commission
on March 19, 2004.10.11
    
    Series A Stock Purchase Agreement dated May
7, 1996, including amendments thereto.
    
    Incorporated by
reference to
Exhibit 10.25 to
the Registrants
Registration
Statement of Form
S-1 (File No.
333-113764), filed
with the Commission
on March 19, 2004.10.12
    
    Series B Stock Purchase Agreement dated
December 8, 1998, including amendments
thereto.
    
    Incorporated by
reference to
Exhibit 10.26 to
the Registrants
Registration
Statement of Form
S-1 (File No.
333-113764), filed
with the Commission
on March 19, 2004.10.13
    
    Series C Stock Purchase Agreement dated
August 16, 2000, including amendments
thereto.
    
    Incorporated by
reference to
Exhibit 10.27 to
the Registrants
Registration
Statement of Form
S-1 (File No.
333-113764), filed
with the Commission
on March 19, 2004.10.14
    
    Series D Stock Purchase Agreement dated July
19, 2001, including amendments thereto.
    
    Incorporated by
reference to
Exhibit 10.28 to
the Registrants
Registration
Statement of Form
S-1 (File No.
333-113764), filed
with the Commission
on March 19, 2004.10.15
    
    Operating Agreement of Life Time, BSC Land,
DuPage Health Services Fitness Center 
Bloomingdale L.L.C. dated December 1, 1999 by
and between the Registrant, Bloomingdale
Sports Center Land Company and Central DuPage
Health.
    
    Incorporated by
reference to
Exhibit 10.29 to
Amendment No. 2 to
the Registrants
Form S-1 (File No.
333-113764), filed
with the Commission
on May 21, 2004.10.16#
    
    Life Time Fitness, Inc. 2004 Long-Term
Incentive Plan.
    
    Incorporated by
reference to
Exhibit 10.30 to
Amendment No. 2 to
the Registrants
Form S-1 (File No.
333-113764), filed
with the Commission
on May 21, 2004.10.17#
    
    Form of Executive Employment Agreement.
    
    Incorporated by
reference to
Exhibit 10.32 to
Amendment No. 3 to
the Registrants
Registration
Statement of Form
S-1 (File No.
333-113764), filed
with the Commission
on June 9, 2004.
 71




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##### Table of Contents



10.18
    
    Schedule of parties to Executive Employment
Agreements.
    
    Filed Electronically.10.19#
    
    Form of Incentive Stock Option for 2004
Long-Term Incentive Plan.
    
    Incorporated by
reference to Exhibit
10.19 to the
Registrants
Form10-K for the
year ended December
31, 2006 (File No.
001-32230).10.20#
    
    Form of Non-Incentive Stock Option Agreement
for 2004 Long-Term Incentive Plan.
    
    Incorporated by
reference to Exhibit
10.20 to the
Registrants
Form10-K for the
year ended December
31, 2006 (File No.
001-32230).10.21#
    
    Summary of Non-Employee Director Compensation.
    
    Incorporated by
reference to Exhibit
10.1 to the
Registrants Form
8-K dated October
24, 2006 (File No.
001-32230).10.22#
    
    2007 Key Executive Incentive Compensation Plan.
    
    Incorporated by
reference to Exhibit
10.1 to the
Registrants Form
8-K dated March 14,
2007 (File No.
001-32230).10.23
    
    Second Amended and Restated Credit Agreement,
dated as of May 31, 2007, among the Company,
U.S. Bank National Association, as
administrative agent and lead arranger, J.P.
Morgan Securities, Inc. and Royal Bank of
Canada, as co-syndication agents, BMO Capital
Markets, as documentation agent, and the banks
party thereto from time to time.
    
    Incorporated by
reference to Exhibit
10.1 to the
Registrants
Form10-Q for the
quarter ended June
30, 2007 (File No.
001-32230).10.24
    
    Security Agreement, dated as of April 15,
2005, among the Company and U.S. Bank National
Association, as administrative agent.
    
    Incorporated by
reference to Exhibit
10.2 to the
Registrants
Form 8-K dated
April 15, 2005 (File
No. 001-32230).10.25#
    
    Form of Restricted Stock Agreement (Employee)
for 2004 Long-Term Incentive Plan.
    
    Incorporated by
reference to Exhibit
10.26 to the
Registrants
Form10-K for the
year ended December
31, 2006 (File No.
001-32230).10.26#
    
    Form of Restricted Stock Agreement
(Non-Employee Director) for 2004 Long-Term
Incentive Plan.
    
    Incorporated by
reference to Exhibit
10.27 to the
Registrants
Form10-K for the
year ended December
31, 2006 (File No.
001-32230).10.27
    
    Lease Agreement with Well-Prop (Multi) LLC
dated July 26, 2006.
    
    Incorporated by
reference to Exhibit
10.1 to the
Registrants Form
10-Q for the quarter
ended September 30,
2006 (File No.
001-32230).10.28
    
    Guaranty and Suretyship Agreement with
Well-Prop (Multi) LLC dated July 26, 2006.
    
    Incorporated by
reference to Exhibit
10.2 to the
Registrants Form
10-Q for the quarter
ended September 30,
2006 (File No.
001-32230).10.29
    
    Purchase and Sale Agreement with Well-Prop
(Multi) LLC dated July 26, 2006.
    
    Incorporated by
reference to Exhibit
10.3 to the
Registrants Form
10-Q for the quarter
ended September 30,
2006 (File No.
001-32230).10.30#
    
    Form of 2006 Restricted Stock Agreement
(Executive) for 2004 Long-Term Incentive Plan
with performance-based vesting component.
    
    Incorporated by
reference to Exhibit
10.31 to the
Registrants Form
10-K for the year
ended December 31,
2006 (File No.
001-32230).
 72




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##### Table of Contents



10.31#
    
    Form of 2007 Restricted Stock Agreement
(Executive) for 2004 Long-Term Incentive Plan
with performance-based vesting component.
    
    Incorporated by
reference to Exhibit
10.2 to the
Registrants Form
8-K dated March 14,
2007 (File No.
001-32230).10.32#
    
    Executive Nonqualified Excess Plan.
    
    Incorporated by
reference to Exhibit
10.32to the
Registrants Form
10-K for the year
ended December 31,
2006 (File No.
001-32230).10.33
    
    Loan Agreement dated January 24, 2007 among
LTF CMBS I, LLC, the Company and Goldman Sachs
Commercial Mortgage Capital, L.P.
    
    Incorporated by
reference to
Exhibit 10.1 to the
Registrants
Form 8-K dated
January 24, 2007
(File
No. 001-32230).10.34
    
    Lease Agreement dated January 24, 2007 among
LTF CMBS I, LLC and LTF Club Operations
Company, Inc.
    
    Incorporated by
reference to
Exhibit 10.2 to the
Registrants
Form 8-K dated
January 24, 2007
(File
No. 001-32230).10.35
    
    Guaranty of the Loan Agreement dated
January 24, 2007 for the benefit of Goldman
Sachs Commercial Mortgage Capital, L.P.
executed by the Company.
    
    Incorporated by
reference to
Exhibit 10.3 to the
Registrants
Form 8-K dated
January 24, 2007
(File
No. 001-32230).10.36
    
    Lease Guaranty dated January 24, 2007 for the
benefit of LTF CMBS I, LLC executed by the
Company.
    
    Incorporated by
reference to
Exhibit 10.4 to the
Registrants
Form 8-K dated
January 24, 2007
(File
No. 001-32230).10.37
    
    Amendment No. 1 to Second Amended and Restated
Credit Agreement, dated as of January 24,
2008, among the Company, U.S. Bank National
Association, as administrative agent and lead
arranger, J.P. Morgan Securities, Inc. and
Royal Bank of Canada, as co-syndication
agents, BMO Capital Markets, as documentation
agent, and the banks party thereto from time
to time.
    
    Filed Electronically.21
    
    Subsidiaries of the Registrant.
    
    Filed Electronically.23
    
    Consent of Deloitte &  Touche LLP.
    
    Filed Electronically.31.1
    
    Rule 13a-14(a)/15d-14(a)
Certification by Principal Executive Officer.
    
    Filed Electronically.31.2
    
    Rule 13a-14(a)/15d-14(a)
Certification by Principal Financial and Officer.
    
    Filed Electronically.32
    
    Section 1350 Certifications.
    
    Filed Electronically.
 
 #
    
    Management contract, compensatory plan or arrangement required to be filed as an exhibit to
this Annual Report on Form 10-K. 73




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##### Table of Contents



SIGNATURES
  LIFE TIME FITNESS, INC.By:
    /s/ Bahram AkradiName:
    Bahram AkradiTitle:
    Chairman of the Board of Directorsand Chief Executive Officer 
(Principal Executive Officer and Director)By:
    /s/ Michael R. RobinsonName:
    Michael R. RobinsonTitle:
    Executive Vice Presidentand Chief Financial Officer

(Principal Financial Officer)By:
    /s/ John M. HugoName:
    John M. HugoTitle:
    Controller(Principal Accounting Officer)  Signature
    
    Title/s/ Giles H. Bateman *

Giles H. Bateman
    
    Director/s/ James F. Halpin*

James F. Halpin
    
    Director/s/ Guy C. Jackson *

Guy C. Jackson
    
    Director/s/ John B. Richards*

John B. Richards
    
    Director/s/ Stephen R. Sefton*

Stephen R. Sefton
    
    Director/s/ Joseph S. Vassalluzzo*

Joseph S. Vassalluzzo
    
    Director
 
 *
    
    Michael R. Robinson, by signing his name hereto, does hereby sign this document on behalf of
each of the above-named officers and/or directors of the Registrant pursuant to powers of
attorney duly executed by such persons. By
    
    /s/ Michael R. Robinson

Michael R. Robinson, Attorney-in-Fact
 74