8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) July 22, 2010

Life Time Fitness, Inc.

(Exact name of Registrant as specified in its charter)

Minnesota	001-32230	41-1689746
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

2902 Corporate Place Chanhassen, Minnesota	55317
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (952) 947-0000

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

     On July 22, 2010, Life Time Fitness, Inc. (the “Company”) reported its financial results for its fiscal quarter ended June 30, 2010. See the Company’s press release dated July 22, 2010, which is furnished as Exhibit 99.1 and incorporated by reference in this Current Report on Form 8-K.

     The press release furnished as Exhibit 99.1 and certain information the Company intends to disclose on the conference call scheduled for 10:00 a.m. eastern time on July 22, 2010 include certain non-GAAP financial measures. The reconciliations of these measures to the most directly comparable GAAP financial measures are included in the press release. In addition to the information in the press release under the heading “Non-GAAP Financial Measures,” the Company provides the following additional information about the Company’s use of the non-GAAP financial measures presented in the press release and on the conference call.

     EBITDA. The Company believes EBITDA is useful to an investor in evaluating the Company’s operating performance and liquidity because:

• it is a widely accepted financial indicator of a company’s ability to service its debt and the Company is required to comply with certain covenants and borrowing limitations that are based on variations of EBITDA in certain of the Company’s 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 the Company’s capital structure and the method by which assets were acquired.

     The Company’s management uses EBITDA:

• as a measurement of operating performance because it assists the Company in comparing its performance on a consistent basis;

• in presentations to the members of the Company’s board of directors to enable the 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.

     Free Cash Flow. The Company believes free cash flow is useful to an investor in understanding the Company’s cash flow generation because:

• free cash flow allows the Company to evaluate the cash generated by operations and the ability of its operations to fund investment items related to purchases of property and equipment, repay indebtedness, add to the Company’s cash balance, or to use in other discretionary activities; and

• if negative, free cash flow reflects the need for incremental financing activities or use of existing cash balances.

     The Company’s management uses free cash flow:

• to monitor cash available for repayment of indebtedness; and

• in discussion with the investment community.

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Item 9.01. Financial Statements and Exhibits.

     The following Exhibit is being furnished herewith:

99.1 Press Release Announcing Second Quarter 2010 Financial Results dated July 22, 2010.

3

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	LIFE TIME FITNESS, INC.
Date: July 22, 2010	By	/s/ Michael R. Robinson
		Michael R. Robinson
		Executive Vice President and Chief Financial Officer

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EXHIBIT INDEX

No.		Exhibit	Manner of Filing
	99.1	Press Release Announcing Second Quarter 2010 Financial Results dated July 22, 2010.	Filed Electronically

EX-99.1

Exhibit 99.1

Investor Contact: Ken 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 2010 FINANCIAL RESULTS
Company Reports Revenue Growth of 8.7%, Net Income Growth of 19.8% and
Earnings Per Diluted Share of $0.53 for the Quarter

CHANHASSEN, Minn. (July 22, 2010) — Life Time Fitness, Inc. (NYSE: LTM) today reported its operating results for the second quarter ended June 30, 2010.

     Revenue for the second quarter of 2010 grew 8.7% to $231.1 million from $212.5 million during the same period last year. Net income during the quarter was $21.9 million, or $0.53 per diluted share, compared with $18.3 million, or $0.46 per diluted share, for 2Q 2009.

     For the six months ended June 30, 2010, revenue grew 7.6% to $450.9 million from $419.0 million during the same period last year. Net income for the same period was $39.7 million, or $0.98 per diluted share, as compared with $33.4 million, or $0.85 per diluted share, for the first six months of 2009.

     “During the second quarter, we continued to see good progress in our operating results despite sustained consumer headwinds,” said Bahram Akradi, chairman, president and chief executive officer. “Of particular note, we achieved our second quarter stretch goal of positive same-center revenue on our mature stores. This speaks to the unwavering focus we have placed on providing our members with high-quality, high-value services and products. Additionally, we reduced our attrition rate for the quarter to 8.4%, driven by the ongoing impact of our connectivity initiatives and relentless commitment to improve the member experience we provide. Furthermore, I am very pleased with the cohesiveness and alignment of our entire company around delivering the people, programs and places that help our members achieve their goals.”

     In August, the Company plans to open a new yoga and Pilates boutique in Minneapolis. Additionally, in December, the Company plans to open a large-format center in Centennial, Colorado, representing the third Life Time Fitness center in the Denver market.

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Life Time Fitness Second Quarter 2010 Results – Page 2

Three and Six Months Ended June 30, 2010, Financial Highlights:

Total revenue for the second quarter grew 8.7% to $231.1 million from $212.5 million in 2Q 2009. Total revenue for the first six months of 2010 grew 7.6% to $450.9 million from $419.0 million during the same period last year.

(Period-over-period growth)		2Q 2010 vs. 2Q 2009			YTD 2010 vs. YTD 2009
•	Membership dues		7.0	%		6.4	%
•	Enrollment fees		(5.6	%)		(3.9	%)
•	In-center revenue		13.6	%		12.1	%
•	Same-center revenue (13th month of operation)		4.8	%		3.7	%
•	Same-center revenue (37th month of operation)		1.8	%		0.4	%
•	Average center revenue / membership	$371 – up 5.0%			$740 – up 4.8%
•	Average in-center revenue / membership	$112 – up 9.9%			$223 – up 9.1%

Memberships increased 3.9% to 631,862 at June 30, 2010, from 608,281 at June 30, 2009.

Total operating expenses during 2Q 2010 totaled $188.2 million compared with $174.3 million for 2Q 2009. Year-to-date operating expenses totaled $370.3 million compared with $348.2 million for the same period last year.

Operating margin was 18.6% for 2Q 2010 compared with 18.0% during the prior-year period. Year-to-date operating margin was 17.9%, compared with 16.9% in the prior-year period.

(Expense as a percent of total revenue)		2Q 2010 vs. 2Q 2009	YTD 2010 vs. YTD 2009
•	Center operations	61.5% vs. 60.6%	62.0% vs. 61.1%
•	Advertising and marketing	2.6% vs. 2.9%	2.8% vs. 3.4%
•	General and administrative	4.9% vs. 5.5%	4.9% vs. 5.6%
•	Other operating	2.4% vs. 2.3%	2.2% vs. 2.3%
•	Depreciation and amortization	10.0% vs. 10.7%	10.2% vs. 10.7%

Net income during 2Q 2010 was $21.9 million compared with $18.3 million for 2Q 2009. For the six months ended June 30, 2010, net income was $39.7 million compared with $33.4 million in the prior-year period.

EBITDA for 2Q 2010 grew 8.5% to $66.4 million from $61.2 in 2Q 2009. Year-to-date EBITDA grew 9.5% to $127.2 million from $116.1 million during the same period last year.

Cash flows from operating activities for the first half of 2010 totaled $100.7 million compared with $98.3 million in the prior-year period.

Weighted average fully diluted shares for 2Q 2010 totaled 41.2 million compared with 39.8 million in 2Q 2009.

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Life Time Fitness Second Quarter 2010 Results – Page 3

Updated 2010 Business Outlook:

The following statements are based on the Company’s current expectations for fiscal year 2010 subject to the risks and uncertainties described below:

• Revenue is expected to be $890-905 million (up from $880-895 million), driven primarily by membership dues and in-center revenue growth.

• Net income is expected to be $79.0-81.0 million (up from $76.5-79.5 million), driven by revenue growth and cost efficiencies.

• Diluted earnings per common share is expected to be $1.92-1.98 (up from $1.88-1.96).

          As announced on July 15, 2010, the Company will hold a conference call today at 10:00 a.m. ET to discuss its second quarter 2010 results. Bahram Akradi, 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 webcast and may be accessed via the Company’s Investor Relations section of its website at lifetimefitness.com. A replay of the call will be available via the Company’s website beginning at approximately 1:00 p.m. ET today.

# # #

About Life Time Fitness, Inc.

Life Time Fitness, Inc. (NYSE: LTM) is a healthy way of life company based in Chanhassen, Minnesota. The Company is dedicated to providing programs and services that help its members connect and engage with their areas of interest, and achieve success with their health and fitness goals. Life Time Fitness designs and operates distinctive, multi-use sports, professional fitness, family recreation and spa/resort centers that help members lead healthy and active lives. As of July 22, 2010, the Company operated 89 centers in 19 states and 24 markets. Additional information about Life Time Fitness centers, programs and services is available at www.lifetimefitness.com.

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, strains on our business from continued growth, risks related to maintenance of our data, competition from other health and fitness centers, delays in opening new centers, identifying and acquiring suitable sites for 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’s expectations for fiscal year 2010 exclude any unusual items that might occur during the fiscal year, such as legal matters or the potential recognition of compensation expense in association with the June 2009 grant of long-term performance-based restricted stock to the Company’s senior management team. The Company cautions investors not to place undue reliance on any forward-looking statement. Any forward-looking statement speaks only as of the date on which the 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,			December 31,
	2010			2009
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	24,010		$	6,282
Accounts receivable, net		4,280			4,026
Center operating supplies and inventories		15,559			14,621
Prepaid expenses and other current assets		17,279			12,938
Deferred membership origination costs		17,660			20,278
Deferred income taxes		12			660
Total current assets		78,800			58,805
PROPERTY AND EQUIPMENT, net		1,529,539			1,512,993
RESTRICTED CASH		1,980			2,941
DEFERRED MEMBERSHIP ORIGINATION COSTS		7,715			8,716
OTHER ASSETS		54,544			48,070
TOTAL ASSETS	$	1,672,578		$	1,631,525
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	11,916		$	16,716
Accounts payable		19,023			14,429
Construction accounts payable		20,170			9,882
Accrued expenses		54,530			48,235
Deferred revenue		39,697			36,939
Total current liabilities		145,336			126,201
LONG-TERM DEBT, net of current portion		616,694			643,630
DEFERRED RENT LIABILITY		30,821			29,048
DEFERRED INCOME TAXES		76,495			77,189
DEFERRED REVENUE		7,770			8,819
OTHER LIABILITIES		9,409			9,207
Total liabilities		886,525			894,094
SHAREHOLDERS’ EQUITY:
Common stock		838			829
Additional paid-in capital		402,563			395,121
Retained earnings		383,815			344,095
Accumulated other comprehensive loss		(1,163	)		(2,614	)
Total shareholders’ equity		786,053			737,431
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,672,578		$	1,631,525

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,
	2010			2009			2010			2009
REVENUE:
Membership dues	$	152,879		$	142,841		$	298,044		$	280,238
Enrollment fees		6,175			6,540			12,499			13,013
In-center revenue		68,457			60,250			133,989			119,552
Total center revenue		227,511			209,631			444,532			412,803
Other revenue		3,577			2,918			6,327			6,180
Total revenue		231,088			212,549			450,859			418,983
OPERATING EXPENSES:
Center operations		142,151			128,871			279,734			255,845
Advertising and marketing		5,903			6,091			12,675			14,389
General and administrative		11,343			11,795			22,043			23,503
Other operating		5,549			4,887			9,858			9,774
Depreciation and amortization		23,218			22,635			45,984			44,699
Total operating expenses		188,164			174,279			370,294			348,210
Income from operations		42,924			38,270			80,565			70,773
OTHER INCOME (EXPENSE):
Interest expense, net		(6,917	)		(7,880	)		(15,013	)		(15,354	)
Equity in earnings of affiliate		303			332			603			669
Total other income (expense)		(6,614	)		(7,548	)		(14,410	)		(14,685	)
INCOME BEFORE INCOME TAXES		36,310			30,722			66,155			56,088
PROVISION FOR INCOME TAXES		14,426			12,462			26,435			22,714
NET INCOME	$	21,884		$	18,260		$	39,720		$	33,374
BASIC EARNINGS PER COMMON SHARE	$	0.55		$	0.46		$	1.01		$	0.85
DILUTED EARNINGS PER COMMON SHARE	$	0.53		$	0.46		$	0.98		$	0.85
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC		39,885			39,285			39,401			39,167
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — DILUTED		41,154			39,763			40,533			39,475

LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

	For the
	Six Months Ended
	June 30,
	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	39,720		$	33,374
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		45,984			44,699
Deferred income taxes		(3,857	)		(421	)
Loss on disposal of property and equipment, net		592			560
Gain on land held for sale		—			(873	)
Amortization of deferred financing costs		1,437			1,301
Share-based compensation		3,561			4,027
Excess tax benefit related to share-based payment arrangements		(1,697	)		—
Equity in earnings of affiliate		(603	)		(669	)
Dividend received from equity investment		350			350
Changes in operating assets and liabilities		15,150			13,895
Other		71			2,041
Net cash provided by operating activities		100,708			98,284
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(48,164	)		(91,725	)
Acquisitions, net of cash acquired		(9,414	)		—
Proceeds from sale of property and equipment		720			8
Proceeds from sale of land held for sale		—			1,327
Increase in other assets		(1,423	)		(921	)
Decrease in restricted cash		961			497
Net cash used in investing activities		(57,320	)		(90,814	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings		—			7,812
Repayments of long-term borrowings		(35,152	)		(7,978	)
Proceeds from (repayments of) revolving credit facility, net		5,101			(6,800	)
Increase in deferred financing costs		(258	)		(721	)
Excess tax benefit related to share-based payment arrangements		1,697			—
Proceeds from exercise of stock options		2,952			193
Net cash used in financing activities		(25,660	)		(7,494	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		17,728			(24	)
CASH AND CASH EQUIVALENTS — Beginning of period		6,282			10,829
CASH AND CASH EQUIVALENTS — End of period	$	24,010		$	10,805

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 Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2010		2009		2010		2009
Net income	$	21,884	$	18,260	$	39,720	$	33,374
Interest expense, net		6,917		7,880		15,013		15,354
Provision for income taxes		14,426		12,462		26,435		22,714
Depreciation and amortization		23,218		22,635		45,984		44,699
EBITDA	$	66,445	$	61,237	$	127,152	$	116,141

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. Additional details related to free cash flow are provided in the Form 8-K that the Company filed with the Securities and Exchange Commission on the date of this press release. The following table provides a reconciliation of net cash provided by operating activities, the most directly comparable GAAP measure, to free cash flow:

RECONCILIATION OF NET CASH PROVIDED BY
OPERATING ACTIVITIES TO FREE CASH FLOW
(In thousands)
(Unaudited)

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
Net cash provided by operating activities	$	46,833		$	48,624		$	100,708		$	98,284
Less: Purchases of property and equipment		(25,125	)		(42,825	)		(48,164	)		(91,725	)
Free cash flow	$	21,708		$	5,799		$	52,544		$	6,559