EX-99.1 2 c26044exv99w1.htm PRESS RELEASE exv99w1
 

Exhibit 99.1
(LIFETIME FITNESS LOGO)
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 FIRST QUARTER 2008 FINANCIAL RESULTS
Company Reports Revenue Growth of 20.5%, Net Income Growth of 23.1%,
and Earnings Per Diluted Share of $0.44 for the Quarter
CHANHASSEN, Minn. (April 24, 2008) — Life Time Fitness, Inc. (NYSE: LTM) today reported its operating results for the first quarter ended March 31, 2008.
          First quarter 2008 revenue grew 20.5% to $184.5 million from $153.1 million during the same period last year. Net income during the quarter grew 23.1% to $17.4 million, or $0.44 per diluted share. This compares to net income of $14.1 million, or $0.38 per diluted share, for 1Q 2007.
          “We continue to deliver against our fundamental business objectives,” said Bahram Akradi, chairman and chief executive officer. “Just as we seek to continually evolve the unparalleled experience and value we deliver to members, we continue to improve our differentiated business model and the opportunities our company has for future growth and expansion. In support of this, we remain focused on driving our member connectivity initiatives and concentrating on research and development activities in the areas of consumer and corporate wellness programming and services.”
          Life Time Fitness continued its expansion efforts during the first quarter with an opening in Parker, Colorado, representing the Company’s first location in this market. Construction is underway for the remaining ten planned openings in 2008.
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Life Time Fitness First Quarter 2008 Results — Page 2
Three Months Ended March 31, 2008, Financial Highlights:
Total revenue for the first quarter grew 20.5% to $184.5 million, driven primarily by growth in membership dues and in-center revenue.
         
(Period-over-period growth)   1Q 2008 vs. 1Q 2007
•  Memberships
  521,177 — up 9.9%
•  Membership dues
    19.0 %
•  Enrollment fees
    14.9 %
•  In-center revenue
    25.9 %
•  Same-center revenue
    4.3 %
•  Average center revenue / membership
  $363 — up 8.7%
•  Average in-center revenue / membership
  $111 — up 13.3%
Total operating expenses during 1Q 2008 totaled $148.4 million compared to $124.4 million for 1Q 2007, driven primarily by increased expenses to support new centers, membership ramp, and in-center revenue growth. Operating margin was 19.5% for 1Q 2008, compared to 18.8% in the prior-year period.
     
(Expense as a percent of total revenue)   1Q 2008 vs. 1Q 2007
•  Center operations
  58.3% vs. 58.4%
•  Advertising and marketing
  5.1% vs. 4.8%
•  General and administrative
  5.8% vs. 6.9%
•  Other operating
  2.3% vs. 2.2%
•  Depreciation and amortization
  9.0% vs. 8.9%
Net income during 1Q 2008 grew 23.1% to $17.4 million from $14.1 million in 1Q 2007, driven by continued top-line growth and improved operating margin. Net income margin for 1Q 2008 was 9.4% compared with 9.2% in 1Q 2007.
EBITDA for 1Q 2008 grew 23.8% to $52.9 million from $42.7 million in 1Q 2007. As a percentage of total revenue, EBITDA was 28.7% in 1Q 2008, compared to 27.9% in 1Q 2007.
Cash flows from operations for the first quarter grew 26.4% to $49.3 million from $39.0 million in the prior-year period.
Weighted average diluted shares for 1Q 2008 totaled 39.4 million compared to 37.4 million shares in 1Q 2007.
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Life Time Fitness First Quarter 2008 Results — Page 3
Updated 2008 Business Outlook:
The following statements are based on the Company’s current expectations for fiscal year 2008 and subject to the risks and uncertainties described below:
  •   Revenue is expected to be $780-$800 million, or approximately 19-22% growth. This year-over-year increase is driven primarily by new center growth, membership ramp at new and existing centers, and in-center revenue growth.
 
  •   Net income is expected to be $82.0-$83.5 million, or approximately 21-23% growth (up from $81.5-$83.0 million, or approximately 20-22% growth). This year-over-year increase is driven primarily by our growth strategies.
 
  •   Diluted earnings per common share is expected to be $2.06-$2.09, or approximately 16-18% growth (up from $2.05-$2.08, or approximately 15-17% growth).
          As announced on April 16, 2008, the Company will hold a conference call today at 10:00 a.m. ET to discuss first quarter 2008 results. Bahram Akradi, chairman and chief executive officer, Michael Robinson, executive vice president and chief financial officer, and Kenneth Cooper, senior director 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 consultation, 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 April 24, 2008, Life Time Fitness operated 71 centers in 16 states, including Arizona, Colorado, Florida, Georgia, Illinois, Indiana, Kansas, Maryland, Michigan, Minnesota, Nebraska, North Carolina, Ohio, Texas, Utah and Virginia. The Company also operated one satellite facility and five preview locations in existing and new markets. Life Time Fitness is headquartered in Chanhassen, Minnesota, and can be located on the Web at lifetimefitness.com. LIFE TIME FITNESS, EXPERIENCE LIFE, and the LIFE TIME FITNESS TRIATHLON SERIES are registered trademarks of Life Time Fitness, Inc. All other trademarks or registered trademarks are the property of their respective owners.

 

 

Risks & 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 identifying and acquiring suitable sites for new sports, fitness and family recreation centers, opening new sports, fitness and family recreation centers, attracting and retaining members, obtaining additional financing 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.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
                 
    March 31, 2008     December 31, 2007  
ASSETS
                
CURRENT ASSETS:
                
Cash and cash equivalents
   $ 2,459     $ 5,354  
Accounts receivable, net
     3,278       4,475  
Inventories
     13,942       14,324  
Prepaid expenses and other current assets
     13,173       15,963  
Deferred membership origination costs
     17,333       16,205  
Deferred tax asset
     1,177       1,188  
Income tax receivable
     —       5,814  
 
            
Total current assets
     51,362       63,323  
PROPERTY AND EQUIPMENT, net
     1,360,427       1,259,271  
RESTRICTED CASH
     3,515       6,767  
DEFERRED MEMBERSHIP ORIGINATION COSTS
     15,157       14,367  
OTHER ASSETS
     52,654       42,805  
 
            
TOTAL ASSETS
   $ 1,483,115     $ 1,386,533  
 
            
 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
CURRENT LIABILITIES:
                
Current maturities of long-term debt
   $ 9,314     $ 9,568  
Accounts payable
     12,148       12,872  
Construction accounts payable
     64,549       59,261  
Accrued expenses
     48,090       47,052  
Deferred revenue
     38,181       34,851  
 
            
Total current liabilities
     172,282       163,604  
LONG-TERM DEBT, net of current portion
     622,130       555,037  
DEFERRED RENT LIABILITY
     25,827       25,526  
DEFERRED INCOME TAXES
     39,456       38,607  
DEFERRED REVENUE
     18,620       17,529  
OTHER LIABILITIES
     14,839       13,673  
 
            
Total liabilities
     893,154       813,976  
 
            
SHAREHOLDERS’ EQUITY:
                
Common stock
     791       783  
Additional paid-in capital
     376,276       373,910  
Retained earnings
     217,294       199,890  
Accumulated other comprehensive loss
     (4,400 )     (2,026 )
 
            
Total shareholders’ equity
     589,961       572,557  
 
            
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   $ 1,483,115     $ 1,386,533  
 
            

 

 

LIFE TIME FITNESS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
                 
    For the  
    Three Months Ended  
    March 31,  
    2008     2007  
REVENUE:
                
Membership dues
   $ 119,648     $ 100,528  
Enrollment fees
     6,533       5,686  
In-center revenue
     55,265       43,897  
 
            
Total center revenue
     181,446       150,111  
Other revenue
     3,005       2,990  
 
            
Total revenue
     184,451       153,101  
 
            
OPERATING EXPENSES:
                
Center operations
     107,580       89,492  
Advertising and marketing
     9,498       7,369  
General and administrative
     10,672       10,488  
Other operating
     4,095       3,324  
Depreciation and amortization
     16,590       13,687  
 
            
Total operating expenses
     148,435       124,360  
 
            
Income from operations
     36,016       28,741  
 
            
OTHER INCOME (EXPENSE):
                
Interest expense, net
     (7,211 )     (5,528 )
Equity in earnings of affiliate
     323       316  
 
            
Total other income (expense)
     (6,888 )     (5,212 )
 
            
INCOME BEFORE INCOME TAXES
     29,128       23,529  
PROVISION FOR INCOME TAXES
     11,724       9,395  
 
            
NET INCOME
   $ 17,404     $ 14,134  
 
            
BASIC EARNINGS PER COMMON SHARE
   $ 0.45     $ 0.39  
 
            
DILUTED EARNINGS PER COMMON SHARE
   $ 0.44     $ 0.38  
 
            
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
               
OUTSTANDING — BASIC
     38,895       36,642  
 
            
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
               
OUTSTANDING — DILUTED
     39,363       37,392  
 
            

 

 

LIFE TIME FITNESS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
                 
    For the  
    Three Months Ended  
    March 31,  
    2008     2007  
CASH FLOWS FROM OPERATING ACTIVITIES:
                
Net income
   $ 17,404     $ 14,134  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation and amortization
     16,590       13,687  
Deferred income taxes
     3,252       1,496  
Provision for doubtful accounts
     30       (5 )
Loss on disposal of property and equipment, net
     831       39  
Amortization of deferred financing costs
     235       195  
Share-based compensation
     1,782       1,818  
Excess tax benefit from stock option exercises
     (65 )     (916 )
Change in investment in unconsolidated subsidiary
     (323 )     (316 )
Changes in operating assets and liabilities
     9,568       8,848  
Other
     18       47  
 
            
Net cash provided by operating activities
     49,322       39,027  
 
            
 
                
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Purchases of property and equipment
     (102,218 )     (84,146 )
Proceeds from sale of property and equipment
     392       35  
Proceeds from property insurance settlement
     —       48  
Increase in other assets
     (5,482 )     (1,155 )
Decrease in restricted cash
     3,252       29  
 
            
Net cash used in investing activities
     (104,056 )     (85,189 )
 
            
 
                
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Proceeds from long-term borrowings
     —       105,000  
Repayments on long-term borrowings
     (2,415 )     (3,179 )
Proceeds from (repayments on) revolving credit facility, net
     54,200       (57,700 )
Increase in deferred financing costs
     (310 )     (1,014 )
Excess tax benefit from stock option exercises
     65       916  
Proceeds from exercise of stock options
     299       1,171  
 
            
Net cash provided by financing activities
     51,839       45,194  
 
            
 
                
DECREASE IN CASH AND CASH EQUIVALENTS
     (2,895 )     (968 )
CASH AND CASH EQUIVALENTS — Beginning of period
     5,354       6,880  
 
            
CASH AND CASH EQUIVALENTS — End of period
   $ 2,459     $ 5,912  
 
            
 
                
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
                
Cash payments for interest, including capitalized interest
   $ 8,683     $ 5,721  
 
            
Cash payments for income taxes
   $ 109     $ 571  
 
            
 
                
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
                
Purchases of property and equipment financed through capital lease obligations
   $ 11,299     $ —  
 
            
Purchases of property and equipment in accounts payable
   $ 4,957     $ 273  
 
            
Non-cash share-based compensation capitalized to projects under development
   $ 228     $ 166  
 
            

 

 

Non-GAAP Financial Measures
          This release contains a non-GAAP disclosure, 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. 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 EARNINGS BEFORE INTEREST,
INCOME TAXES AND DEPRECIATION AND AMORTIZATION
(In thousands)
(Unaudited)
                 
    For the  
    Three Months Ended  
    March 31,  
    2008     2007  
 
                
Net income
   $ 17,404     $ 14,134  
Interest expense, net
     7,211       5,528  
Provision for income taxes
     11,724       9,395  
Depreciation and amortization
     16,590       13,687  
 
            
EBITDA
   $ 52,929     $ 42,744