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) February 16, 2006

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.)

6442 City West Parkway
Eden Prairie, Minnesota	55344
(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))

TABLE OF CONTENTS

Press Release

Item 2.02. Results of Operations and Financial Condition.

     On February 16, 2006, Life Time Fitness, Inc. (the “Company”) reported its financial results for its fiscal quarter and full year ended December 31, 2005. See the Company’s press release dated February 16, 2006, which is furnished as Exhibit 99 and incorporated by reference in this Current Report on Form 8-K.

     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.

     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;

• 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; and

• it helps investors to more meaningfully evaluate and compare the results of the Company’s operations from period to period by removing from the Company’s operating results the impact of its capital structure, primarily interest expense from the Company’s outstanding debt, and asset base, primarily depreciation and amortization of the Company’s properties.

     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, as it removes from the Company’s operating results the impact of the Company’s capital structure, which includes interest expense from the Company’s outstanding debt, and the Company’s asset base, which includes depreciation and amortization of the Company’s properties;

• 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.

     Earnings Guidance Excluding the Impact of Estimated Share-Based Compensation Expense. The Company believes that presenting guidance for fiscal 2006 with respect to net income and diluted earnings per common share, excluding the impact of estimated share-based compensation expense, enables investors to compare expected results with results for prior periods that did not include share-based compensation expense. The Company’s management uses these measures to monitor and compare operating results with expected operating performance.

Item 9.01. Financial Statements and Exhibits.

     The following Exhibit is being furnished herewith:

99 Press Release dated February 16, 2006.

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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: February 16, 2006	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	Press Release dated February 16, 2006.	Filed Electronically

EX-99

Exhibit 99

Investor Contact: Ken Cooper – 952-229-7427 or ir@lifetimefitness.com
Media Contact: Jason Thunstrom – 952-229-7435 or jthunstrom@lifetimefitness.com

FOR IMMEDIATE RELEASE

LIFE TIME FITNESS ANNOUNCES FOURTH QUARTER AND
FULL-YEAR 2005 FINANCIAL RESULTS
Company Reports Revenue Growth of 26.2% and Net Income Growth of 48.1% for the Quarter;
Full Year Revenue Grew 25.0% and Net Income Grew 42.6%

EDEN PRAIRIE, Minn. (February 16, 2006) – Life Time Fitness, Inc. (NYSE: LTM), a national operator of distinctive and large health and fitness centers, today reported its operating results for the fourth quarter and full year ended December 31, 2005.

     Fourth quarter 2005 revenue grew 26.2% to $103.6 million from $82.1 million during the same period last year. Revenue for the year totaled $390.1 million, up 25.0% from $312.0 million in 2004.

     Net income during the quarter grew 48.1% to $12.1 million, or $0.33 per diluted share on 36.7 million shares. This compares to net income of $8.1 million, or $0.23 per diluted share on 35.9 million shares, for 4Q 2004. For the year, net income grew 42.6% to $41.2 million, or $1.13 per diluted share on 36.3 million shares. This compares to net income of $28.9 million, or $0.87 per diluted share on 33.1 million shares, for 2004.

     “The Company’s fourth quarter and full year results are indicative of the continued focus and execution on our fundamental growth strategies,” said Bahram Akradi, Life Time Fitness chairman and chief executive officer. “In 2005, we opened a total of six new current model centers plus we acquired and opened one smaller facility. The fourth quarter included two openings, including the acquired Maple Grove, Minnesota center, our 17^th facility in the Twin Cities area, and the San Antonio, Texas center, our tenth facility in Texas and the first in San Antonio. We closed 2005 with 46 open centers in eight states. Thus far in 2006, we have opened one smaller center in Minnetonka, Minnesota, and a new current model center in Columbia, Maryland, representing the ninth state in which we now have operations. We have acquired the land and commenced construction on the six additional new current model centers we plan to open this year. Total memberships grew 19.6% year-over-year, ending with more than 358,000, driven primarily by the ramp at centers opened in 2004 and 2005. We also are pleased with the year-over-year in-center revenue growth of 39.3% to $25.3 million during 4Q 2005, and 36.5% to $97.7 million for the full year, which was driven primarily by membership ramp, targeted marketing programs, and new products and services.”

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Life Time Fitness Fourth Quarter and Full-Year 2005 Results – Page 2

Three and Twelve Months Ended December 31, 2005, Financial Highlights:

Total revenue for the fourth quarter grew 26.2% to $103.6 million and for the full year total revenue grew 25.0% to $390.1 million, driven primarily by growth in membership dues and in-center revenue.

(Period-over-period growth)	4Q 2005 vs. 4Q 2004	2005 vs. 2004
• Membership dues	25.6%	25.9%
• Enrollment fees	1.7%	3.7%
• In-center revenue	39.3%	36.5%
• Same-center revenue	8.5%	7.7%
• Average revenue / membership	$297 — up 5.8%	$1,171 — up 4.6%
• Average in-center revenue / membership	$75 — up 15.8%	$300 — up 12.5%

Total operating expenses during 4Q 2005 totaled $81.5 million compared to $64.3 million for 4Q 2004 and full year operating expenses were $309.2 million, compared to $246.5 million in 2004, driven primarily by increased expenses to support new centers, membership growth and presale activities. Total operating margins were 21.3% for the 4Q 2005, down from 21.7% in the prior-year period. Full year operating margins were 20.7% in 2005 compared with 21.0% in 2004.

(Expense as a percent of total revenue)	4Q 2005 vs. 4Q 2004	2005 vs. 2004
• Center operations	55.3% vs. 52.0%	55.4% vs. 52.8%
• Advertising and marketing	3.3% vs. 3.5%	3.7% vs. 3.9%
• General and administrative	6.8% vs. 7.0%	7.0% vs. 6.9%
• Other operating	3.4% vs. 5.7%	3.3% vs. 5.9%
• Depreciation and amortization	10.0% vs. 10.0%	9.8% vs. 9.5%

Net income during 4Q 2005 grew 48.1% to $12.1 million from $8.1 million in 4Q 2004 and full year net income grew 42.6% to $41.2 million from $28.9 million in 2004, driven by continued top-line growth, efficient use of capital and a lower effective tax rate.

• For the quarter, the effective income tax rate was 35.1%, compared to a 41.0% rate for the first nine months of 2005. The reduction in 4Q 2005 was driven by a business realignment that reduced state income taxes and deferred tax liabilities. For 2005, this resulted in an effective income tax rate of 39.4%, compared with 41.0% for 2004.

• Net income margin for 4Q 2005 was 11.7%, up from 9.9% in 4Q 2004. The net income margin in 2005 was 10.6%, up from 9.3% in 2004.

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Life Time Fitness Fourth Quarter and Full-Year 2005 Results – Page 3

EBITDA for 4Q 2005 grew 24.1% to $32.6 million from $26.3 million in 4Q 2004. 2005 EBITDA grew 25.1% to $120.4 million from $96.3 million in 2004.

• As a percentage of total revenue, EBITDA was 31.5% in 4Q 2005, compared to 32.1% in 4Q 2004.

• EBITDA margin in 2005 was 30.9% compared to 30.8% in 2004.

Cash flows from operations for the full year grew 33.7% to $107.5 million from $80.4 million in 2004.

Weighted average fully diluted shares for 4Q 2005 totaled 36.7 million compared to 35.9 million shares in 4Q 2004. For the full year, weighted average fully diluted shares totaled 36.3 million.

2006 Business Outlook:
The following statements are based on the Company’s expectations for fiscal year 2006, subject to the risks and uncertainties described below.

• 2006 full year total revenue is expected to be $475-$485 million (approximately 22-24% growth) driven by new center growth, membership ramp at new and existing centers, and in-center revenue growth.

• 2006 full year net income (before share-based compensation expense) is expected to be $50.7-$51.3 million (approximately 23-25% growth) driven by our growth strategies. Including share-based compensation expense (FAS 123R), net income is expected to be $46.2-$46.8 million.

• 2006 diluted earnings per common share (before share-based compensation expense) is expected to be $1.37-$1.39 (approximately 21-23% growth) driven by net income growth. Including share-based compensation expense (FAS 123R), diluted earnings per common share is expected to be $1.25-$1.27.

     As announced on February 1, 2006, the Company will hold a conference call today at 10:00 a.m. Eastern time to discuss its fourth quarter and full-year 2005 results. Bahram Akradi, chairman and chief executive officer, and Michael Robinson, executive vice president and chief financial officer, 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 Website at www.lifetimefitness.com. A replay of the call will be available via the Company’s Website beginning at 1:00 p.m. Eastern time on February 16, 2006.

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Life Time Fitness Fourth Quarter and Full-Year 2005 Results – Page 4

About Life Time Fitness, Inc.

     Life Time Fitness, Inc. (NYSE: LTM) operates distinctive and large sports and athletic, professional fitness, family recreation and resort/spa centers. As of February 16, 2006, the Company operated 48 centers in nine states, including Arizona, Illinois, Indiana, Maryland, Michigan, Minnesota, Ohio, Texas and Virginia. The Company also provides consumers with personal training consultation, full-service spas and cafés, corporate wellness programs, health and nutrition education, the healthy lifestyle magazine — Experience Life, athletic events, and nutritional products and supplements. Life Time Fitness is headquartered in Eden Prairie, Minnesota (www.lifetimefitness.com). LIFE TIME FITNESS, the LIFE TIME FITNESS logo, and EXPERIENCE LIFE are registered trademarks of Life Time Fitness, Inc. All other trademarks or registered trademarks are the property of their respective owners.

# # #

Risk & Uncertainties

     Certain information contained in this press release, which does not relate to historical financial information, including the business outlook, 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. The Company wishes to caution 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. Among these factors are identifying and acquiring suitable sites for new centers, opening new centers, attracting and retaining members 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.

     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.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

	December 31,
	2005			2004
ASSETS:
Current assets:
Cash and cash equivalents	$	4,680		$	10,211
Accounts receivable, net		4,267			1,187
Inventories		5,669			4,971
Prepaid expenses and other current assets		7,187			7,275
Deferred membership origination costs		10,082			8,271
Deferred tax asset		—			1,597
Income tax receivable		3,510			4,579
Total current assets		35,395			38,091
Property and equipment, net		661,371			503,690
Restricted cash		3,915			12,092
Deferred membership origination costs		8,410			7,061
Other assets		14,369			11,153
Total assets	$	723,460		$	572,087
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Current maturities of long-term debt	$	14,447		$	47,477
Accounts payable		9,964			5,762
Construction accounts payable		25,811			17,633
Accrued expenses		27,862			19,152
Deferred revenue		23,434			20,019
Total current liabilities		101,518			110,043
Long-term debt, net of current portion		258,835			161,767
Deferred rent liability		5,492			3,678
Deferred income taxes		35,419			33,701
Deferred revenue		14,352			12,264
Total liabilities		415,616			321,453
Shareholders’ equity:
Common stock		712			676
Additional paid-in capital		228,132			209,931
Deferred compensation		(2,306	)		(66	)
Retained earnings		81,306			40,093
Total shareholders’ equity		307,844			250,634
Total liabilities and shareholders’ equity	$	723,460		$	572,087

LIFE TIME FITNESS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per common share data)
(Unaudited)

	For the						For the
	Three Months Ended						Year Ended
	December 31,						December 31,
	2005			2004			2005			2004
REVENUE:
Membership dues	$	70,610		$	56,232		$	262,989		$	208,893
Enrollment fees		4,926			4,843			20,341			19,608
In-center revenue		25,327			18,179			97,710			71,583
Total center revenue		100,863			79,254			381,040			300,084
Other revenue		2,706			2,835			9,076			11,949
Total revenue		103,569			82,089			390,116			312,033
OPERATING EXPENSES:
Center operations		57,285			42,716			216,314			164,764
Advertising and marketing		3,374			2,904			14,446			12,196
General and administrative		7,018			5,745			27,375			21,596
Other operating		3,515			4,669			12,693			18,256
Depreciation and amortization		10,327			8,248			38,346			29,655
Total operating expenses		81,519			64,282			309,174			246,467
Income from operations		22,050			17,807			80,942			65,566
OTHER INCOME (EXPENSE):
Interest expense, net		(3,729	)		(4,227	)		(14,076	)		(17,573	)
Equity in earnings of affiliate		269			257			1,105			1,034
Total other income (expense)		(3,460	)		(3,970	)		(12,971	)		(16,539	)
INCOME BEFORE INCOME TAXES		18,590			13,837			67,971			49,027
Provision for income taxes		6,522			5,691			26,758			20,119
NET INCOME		12,068			8,146			41,213			28,908
Accretion on redeemable preferred stock		—			—			—			3,570
NET INCOME APPLICABLE TO COMMON SHAREHOLDERS	$	12,068		$	8,146		$	41,213		$	25,338
BASIC EARNINGS PER COMMON SHARE	$	0.34		$	0.24		$	1.19		$	1.02
DILUTED EARNINGS PER COMMON SHARE	$	0.33		$	0.23		$	1.13		$	0.87
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC		35,327			33,771			34,592			24,727
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — DILUTED		36,712			35,909			36,339			33,125

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

	For the
	Year Ended December 31,
	2005			2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	41,213		$	28,908
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		38,346			29,655
Deferred income taxes		3,315			14,276
Loss on disposal of property, net		539			543
Amortization of deferred financing costs		1,025			1,035
Compensation cost related to stock options		644			353
Tax benefit from exercise of stock options		9,172			869
Changes in operating assets and liabilities		13,285			4,792
Net cash provided by operating activities		107,539			80,431
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (excluding non-cash purchases supplementally noted below)		(190,528	)		(156,674	)
Increase in construction accounts payable		586			11,112
Proceeds from sale of property		4,411			2,139
Increase in other assets		(3,083	)		(1,537	)
Decrease (increase) in restricted cash		8,177			(1,120	)
Net cash used in investing activities		(180,437	)		(146,080	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings		368,481			44,853
Repayments on long-term borrowings		(306,122	)		(68,986	)
Increase in deferred financing costs		(1,175	)		—
Proceeds from initial public offering, net of underwriting discounts and offering costs		—			80,398
Proceeds from exercise of stock options		6,183			1,061
Tax benefit from expenses incurred upon initial public offering		—			88
Net cash provided by financing activities		67,367			57,414
DECREASE IN CASH AND CASH EQUIVALENTS		(5,531	)		(8,235	)
CASH AND CASH EQUIVALENTS — Beginning of period		10,211			18,446
CASH AND CASH EQUIVALENTS — End of period	$	4,680		$	10,211
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash payments for interest, net of capitalized interest	$	16,187		$	17,789
Cash payments for income taxes	$	13,227		$	8,986
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Property and equipment purchases financed through capital leases	$	96		$	145
Conversion of redeemable preferred stock to common stock upon IPO	$	—		$	109,735

Non-GAAP Financial Measures

     This release contains two non-GAAP disclosures. The first is EBITDA, which consists 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, cash flows provided by operating activities or other income or cash flow data prepared in accordance with GAAP. The second is guidance concerning diluted earnings per share, excluding the impact of share-based compensation expense. Additional details related to these non-GAAP disclosures 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 tables provide reconciliations of these non-GAAP measures to the most directly comparable GAAP measures:

RECONCILIATION OF NET INCOME TO EARNINGS BEFORE INTEREST,
INCOME TAXES AND DEPRECIATION AND AMORTIZATION
(In thousands)
(Unaudited)

	For the				For the
	Three Months Ended				Year Ended
	December 31,				December 31,
	2005		2004		2005		2004
Net Income	$	12,068	$	8,146	$	41,213	$	28,908
Interest expense, net		3,729		4,227		14,076		17,573
Provision for income taxes		6,522		5,691		26,758		20,119
Depreciation and amortization		10,327		8,248		38,346		29,655
EBITDA	$	32,646	$	26,312	$	120,393	$	96,255

RECONCILIATION OF THE IMPACT OF SHARE-BASED COMPENSATION EXPENSE
ON 2006 EARNINGS GUIDANCE
(In thousands except per common share data)
(Unaudited)

	GUIDANCE
	Fiscal 2006 - Estimated Range
	Low		High
Net Income
Estimated net income for fiscal 2006	$	46,200	$	46,800
Estimated impact of share-based compensation expense in fiscal 2006 for time-vesting options and shares		3,400		3,400
Estimated impact of share-based compensation expense in fiscal 2006 for market condition vesting of initial public offering options1		1,100		1,100
Estimated net income for fiscal 2006, excluding the impact of estimated share-based compensation expense	$	50,700	$	51,300
Diluted Earnings Per Common Share
Estimated diluted earnings per common share for fiscal 2006	$	1.25	$	1.27
Estimated impact of share-based compensation expense in fiscal 2006 for time-vesting options and shares		0.09		0.09
Estimated impact of share-based compensation expense in fiscal 2006 for market condition vesting of initial public offering options1		0.03		0.03
Estimated diluted earnings per common share for fiscal 2006, excluding the impact of estimated share-based compensation expense	$	1.37	$	1.39

¹ In connection with the Company’s initial public offering, the Company granted options to certain members of senior management, which have a market condition vesting component. Approximately 40% of these options remain unvested. Approximately half of these unvested options will vest when the Company’s stock price remains above $40 per share for sixty consecutive days. The balance of these unvested options will vest when the Company’s stock price remains above $45 per share for sixty consecutive days. If the market condition vesting criteria are achieved in fiscal 2006, the share-based compensation expense identified above will be recognized in fiscal 2006.