EX-99.1 2 c52517exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
(LIFETIME FITNESS LOGO)
Investor Contact: Kenneth Cooper — 952-229-7427 or ir@lifetimefitness.com
Media Contact: Jason Thunstrom — 952-229-7435 or pr@lifetimefitness.com
FOR IMMEDIATE RELEASE
LIFE TIME FITNESS ANNOUNCES SECOND QUARTER 2009 FINANCIAL RESULTS
Company Reports Revenue Growth of 10.5% and Earnings Per Diluted Share of $0.46 for the Quarter
CHANHASSEN, Minn. (July 23, 2009) — Life Time Fitness, Inc. (NYSE: LTM) today reported its operating results for the second quarter ended June 30, 2009.
     Second quarter 2009 revenue grew 10.5% to $212.5 million from $192.4 million during the same period last year. Net income during the quarter was $18.3 million, or $0.46 per diluted share. This compares to net income of $19.8 million, or $0.50 per diluted share, for 2Q 2008.
     For the six months ended June 30, 2009, revenue grew 11.2% to $419.0 million from $376.9 million during the same period last year. Net income for the same period was $33.4 million, or $0.85 per diluted share, as compared with $37.2 million, or $0.95 per diluted share, for the first six months of 2008.
     “We are pleased with our second quarter operating results, which are highlighted by increased free cash flow generation, lower debt balances, double-digit membership growth and lower membership acquisition costs,” said Bahram Akradi, Life Time Fitness chairman, chief executive officer and president. “We’re also seeing progress in managing our infrastructure expense and our trailing 12-month attrition rate reduced slightly during the quarter. Member retention remains a priority for us as does maintaining a close alignment between the products and services we deliver and today’s discerning consumer. To this end, we continue to advance several connectivity and value enhancement initiatives for members, including dedicated monthly events across a wide range of interest areas at every center and a significantly enhanced myLT.com Web portal. Through this, we are establishing stronger member connections and enhancing the value we provide, making Life Time an even bigger part of members’ lives.”
     In June, Life Time Fitness opened its third and final planned center for 2009, located in Collierville, Tennessee (Memphis area). This location marks the Company’s first center in Tennessee.
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Life Time Fitness Second Quarter 2009 Results — Page 2
Three and Six Months Ended June 30, 2009, Financial Highlights:
Total revenue for the second quarter grew 10.5% to $212.5 million. Total revenue for the first six months of 2009 grew to $419.0 million from $376.9 million during the same period last year.
         
        YTD 2009 vs.
(Period-over-period growth)   2Q 2009 vs. 2Q 2008   YTD 2008
• Membership dues
   13.3%   14.0%
• Enrollment fees
   (1.5%)   (1.2%)
• In-center revenue
   7.6%   7.5%
• Same-center revenue
   (4.4%)   (3.6%)
• Average center revenue / membership
   $354 – down 2.0%   $706 – down 2.5%
• Average in-center revenue / membership
   $102 – down 5.1%   $204 – down 6.0%
Memberships increased 11.1% to 608,281 at June 30, 2009, from 547,497 at June 30, 2008.
Total operating expenses during 2Q 2009 totaled $174.3 million compared to $152.5 million for 2Q 2008. Year-to-date operating expenses totaled $348.2 million compared with $301.0 million for the same period last year.
Operating margin was 18.0% for 2Q 2009 compared with 20.7% during the prior-year period. Year-to-date operating margin was 16.9%, compared to 20.1% in the prior-year period.
         
        YTD 2009 vs.
(Expense as a percent of total revenue)   2Q 2009 vs. 2Q 2008   YTD 2008
• Center operations
   60.6% vs. 58.9%   61.1% vs. 58.6%
• Advertising and marketing
   2.9% vs. 3.5%   3.4% vs. 4.3%
• General and administrative
   5.5% vs. 5.5%   5.6% vs. 5.7%
• Other operating
   2.3% vs. 2.4%   2.3% vs. 2.3%
• Depreciation and amortization
   10.7% vs. 9.0%   10.7% vs. 9.0%
Net income during 2Q 2009 was $18.3 million compared with $19.8 million for 2Q 2008. For the six months ended June 30, 2009, net income was $33.4 million compared with $37.2 million in the prior-year period.
EBITDA for 2Q 2009 grew 6.7% to $61.2 million from $57.4 in 2Q 2008. Year-to-date EBITDA grew 5.3% to $116.1 million from $110.3 million during the same period last year.
Cash flows from operations for the first half of 2009 totaled $98.3 million compared with $105.7 million in the prior-year period.
Weighted average fully diluted shares for 2Q 2009 totaled 39.8 million compared to 39.3 million shares in 2Q 2008.
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Life Time Fitness Second Quarter 2009 Results — Page 3
Updated 2009 Business Outlook:
The following statements are based on the Company’s current expectations for fiscal year 2009 and are subject to the risks and uncertainties described below:
  •   Revenue is expected to be $830-$860 million.
 
  •   Net income is expected to be $67-$71 million (updated from $62-$68 million).
 
  •   Diluted earnings per common share is expected to be $1.65-$1.75 (updated from $1.55-$1.70).
     As announced on July 16, 2009, the Company will hold a conference call today at 10:00 a.m. ET to discuss second quarter 2009 results. Bahram Akradi, chairman, chief executive officer and president, Michael Robinson, executive vice president and chief financial officer, and Kenneth Cooper, vice president of Finance, will host the conference call. The conference call will be Web cast and may be accessed via the Company’s Investor Relations section of its Web site at lifetimefitness.com. A replay of the call will be available the same day via the Company’s Web site beginning at approximately 1:00 p.m. ET.
# # #
About Life Time Fitness, Inc.
Life Time Fitness, Inc. (NYSE:LTM) operates distinctive and large, multi-use sports and athletic, professional fitness, family recreation and resort and spa centers. The Company also provides consumers with personal training services, full-service spas and cafes, corporate wellness programs, health and nutrition education, the healthy lifestyle magazine, Experience Life, athletic events and nutritional products. As of July 23, 2009, Life Time Fitness operated 84 centers in 19 states, including Arizona, Colorado, Florida, Georgia, Illinois, Indiana, Kansas, Maryland, Michigan, Minnesota, Missouri, Nebraska, New Jersey, North Carolina, Ohio, Tennessee, Texas, Utah and Virginia. Life Time Fitness is headquartered in Chanhassen, Minnesota, and can be located on the Web at lifetimefitness.com. LIFE TIME FITNESS, LIFE TIME ATHLETIC, EXPERIENCE LIFE, and the LIFE TIME FITNESS TRIATHLON SERIES are trademarks of Life Time Fitness, Inc. All other trademarks or registered trademarks are the property of their respective owners.
Risks and Uncertainties
Certain information contained in this press release may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause the Company’s actual results in the future to differ materially from its historical results and those presently anticipated or projected. Among these factors are attracting and retaining members, risks related to our debt levels and debt covenants, our ability to access existing credit facilities and obtain additional financing, competition from other health and fitness centers, identifying and acquiring suitable sites for new centers, delays in opening new centers and other factors set forth in the Company’s filings with the Securities and Exchange Commission. Diluted earnings per share could also be affected by the number of shares outstanding, which depends on factors such as the number of shares issued upon exercise of stock options and future grants of awards pursuant to equity-based incentive plans as well as stock offerings. The Company cautions investors not to place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update such statement to reflect events or circumstances arising after such date. All remarks made during the Company’s financial results conference call will be current at the time of the call and the Company undertakes no obligation to update the replay.

 

 

LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
                 
    June 30, 2009     December 31, 2008  
    (Unaudited)          
ASSETS
                
CURRENT ASSETS:
                
Cash and cash equivalents
   $ 10,805     $ 10,829  
Accounts receivable, net
     3,681       6,114  
Inventories and center operating supplies
     14,420       14,632  
Prepaid expenses and other current assets
     16,359       10,994  
Deferred membership origination costs
     21,317       19,877  
Deferred income taxes
     2,090       1,365  
 
            
Total current assets
     68,672       63,811  
PROPERTY AND EQUIPMENT, net
     1,517,206       1,515,957  
RESTRICTED CASH
     3,439       3,936  
DEFERRED MEMBERSHIP ORIGINATION COSTS
     13,115       14,210  
OTHER ASSETS
     49,918       49,789  
 
            
TOTAL ASSETS
   $ 1,652,350     $ 1,647,703  
 
            
 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
CURRENT LIABILITIES:
                
Current maturities of long-term debt
   $ 11,945     $ 10,335  
Accounts payable
     15,690       14,842  
Construction accounts payable
     22,223       63,418  
Accrued expenses
     55,526       46,230  
Deferred revenue
     41,123       36,098  
 
            
Total current liabilities
     146,507       170,923  
LONG-TERM DEBT, net of current portion
     695,401       702,569  
DEFERRED RENT LIABILITY
     27,882       27,925  
DEFERRED INCOME TAXES
     50,079       51,982  
DEFERRED REVENUE
     12,143       13,719  
OTHER LIABILITIES
     28,817       27,684  
 
            
Total liabilities
     960,829       994,802  
 
            
SHAREHOLDERS’ EQUITY:
                
Common stock
     825       793  
Additional paid-in capital
     389,462       385,095  
Retained earnings
     305,085       271,711  
Accumulated other comprehensive loss
     (3,851 )     (4,698 )
 
            
Total shareholders’ equity
     691,521       652,901  
 
            
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   $ 1,652,350     $ 1,647,703  
 
            

 

 

LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
                                 
    For the     For the  
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2009     2008     2009     2008  
REVENUE:
                                
Membership dues
   $ 142,841     $ 126,121     $ 280,238     $ 245,769  
Enrollment fees
     6,540       6,640       13,013       13,173  
In-center revenue
     60,250       55,969       119,552       111,234  
 
                        
Total center revenue
     209,631       188,730       412,803       370,176  
Other revenue
     2,918       3,677       6,180       6,682  
 
                        
Total revenue
     212,549       192,407       418,983       376,858  
 
                        
OPERATING EXPENSES:
                                
Center operations
     128,871       113,259       255,845       220,839  
Advertising and marketing
     6,091       6,823       14,389       16,321  
General and administrative
     11,795       10,582       23,503       21,254  
Other operating
     4,887       4,675       9,774       8,770  
Depreciation and amortization
     22,635       17,190       44,699       33,780  
 
                        
Total operating expenses
     174,279       152,529       348,210       300,964  
 
                        
Income from operations
     38,270       39,878       70,773       75,894  
 
                        
OTHER INCOME (EXPENSE):
                                
Interest expense, net
     (7,880 )     (6,905 )     (15,354 )     (14,116 )
Equity in earnings of affiliate
     332       326       669       649  
 
                        
Total other income (expense)
     (7,548 )     (6,579 )     (14,685 )     (13,467 )
 
                        
INCOME BEFORE INCOME TAXES
     30,722       33,299       56,088       62,427  
PROVISION FOR INCOME TAXES
     12,462       13,471       22,714       25,195  
 
                        
NET INCOME
   $ 18,260     $ 19,828     $ 33,374     $ 37,232  
 
                        
BASIC EARNINGS PER COMMON SHARE
   $ 0.46     $ 0.51     $ 0.85     $ 0.96  
 
                        
DILUTED EARNINGS PER COMMON SHARE
   $ 0.46     $ 0.50     $ 0.85     $ 0.95  
 
                        
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC
     39,285       38,963       39,167       38,923  
 
                        
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — DILUTED
     39,763       39,325       39,475       39,372  
 
                        

 

 

LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
                 
    For the  
    Six Months Ended  
    June 30,  
    2009     2008  
CASH FLOWS FROM OPERATING ACTIVITIES:
                
Net income
   $ 33,374     $ 37,232  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation and amortization
     44,699       33,780  
Deferred income taxes
     (421 )     8,874  
Provision for doubtful accounts
     279       27  
Loss on disposal of property and equipment, net
     560       1,335  
Gain on sale of land held for sale
     (873 )     —  
Amortization of deferred financing costs
     1,301       571  
Share-based compensation
     4,027       3,895  
Excess tax benefit related to share-based payment arrangements
     —       (5 )
Equity in earnings of affiliate
     (669 )     (654 )
Changes in operating assets and liabilities
     14,245       20,555  
Other
     1,762       50  
 
            
Net cash provided by operating activities
     98,284       105,660  
 
            
 
                
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Purchases of property and equipment
     (91,725 )     (235,577 )
Proceeds from sale of property and equipment
     8       365  
Proceeds on sale of land held for sale
     1,327       —  
Proceeds from property insurance settlement
     —       270  
Increase in other assets
     (921 )     (12,140 )
Decrease (increase) in restricted cash
     497       (2,234 )
 
            
Net cash used in investing activities
     (90,814 )     (249,316 )
 
            
 
                
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Proceeds from long-term borrowings
     7,812       38,538  
Repayments of long-term borrowings
     (7,978 )     (10,588 )
Proceeds from (repayments of) revolving credit facility, net
     (6,800 )     116,200  
Increase in deferred financing costs
     (721 )     (3,641 )
Excess tax benefit related to share-based payment arrangements
     —       5  
Proceeds from exercise of stock options
     193       1,462  
 
            
Net cash provided by (used in) financing activities
     (7,494 )     141,976  
 
            
 
                
DECREASE IN CASH AND CASH EQUIVALENTS
     (24 )     (1,680 )
CASH AND CASH EQUIVALENTS — Beginning of period
     10,829       5,354  
 
            
CASH AND CASH EQUIVALENTS — End of period
   $ 10,805     $ 3,674  
 
            

 

 

Non-GAAP Financial Measures
     This release and the related conference call disclose certain non-GAAP financial measures.
EBITDA. Earnings Before Interest, Income Taxes and Depreciation and Amortization (EBITDA) is a non-GAAP disclosure consisting of net income plus interest expense, net, provision for income taxes and depreciation and amortization. This term, as the Company defines it, may not be comparable to a similarly titled measure used by other companies and is not a measure of performance presented in accordance with GAAP. The Company uses EBITDA as a measure of operating performance. The funds depicted by EBITDA are not necessarily available for discretionary use if they are reserved for particular capital purposes, to maintain compliance with debt covenants, to service debt or to pay taxes. EBITDA should not be considered as a substitute for net income, net cash provided by operating activities or other income or cash flow data prepared in accordance with GAAP. Additional details related to EBITDA are provided in the Form 8-K that the Company filed with the Securities and Exchange Commission on the date of this press release.
     The following table provides a reconciliation of net income, the most directly comparable GAAP measure, to EBITDA:
RECONCILIATION OF NET INCOME TO EBITDA
(In thousands)
(Unaudited)
                                 
    For the     For the  
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2009     2008     2009     2008  
Net income
   $ 18,260     $ 19,828     $ 33,374     $ 37,232  
Interest expense, net
     7,880       6,905       15,354       14,116  
Provision for income taxes
     12,462       13,471       22,714       25,195  
Depreciation and amortization
     22,635       17,190       44,699       33,780  
 
                        
EBITDA
   $ 61,237     $ 57,394     $ 116,141     $ 110,323  
 
                        
Free Cash Flow. Free cash flow is a non-GAAP measure consisting of net cash provided by operating activities, less purchases of property and equipment. This term, as the Company defines it, may not be comparable to a similarly titled measure used by other companies and does not represent the total increase or decrease in the cash balance presented in accordance with GAAP. The Company uses free cash flow as a measure of cash generated after spending on property and equipment. Free cash flow should not be considered as a substitute for net cash provided by operating activities prepared in accordance with GAAP.
     The following table provides a reconciliation of net cash provided by operating activities, the most directly comparable GAAP measure, to free cash flow:
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(In thousands)
(Unaudited)
                 
    For the  
    Six Months Ended  
    June 30,  
    2009     2008  
Net cash provided by operating activities
   $ 98,284     $ 105,660  
Less: Purchases of property and equipment
     (91,725 )     (235,577 )
 
            
Free cash flow
   $ 6,559     $ (129,917 )