EX-99.1 2 c47204exv99w1.htm EX-99.1: PRESS RELEASE EX-99.1
Exhibit 99.1
(LIFETIME 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 THIRD QUARTER 2008 FINANCIAL RESULTS
Company Reports Revenue Growth of 17.3%, Net Income Growth of 17.6%,
and Earnings Per Diluted Share of $0.55 for the Quarter
CHANHASSEN, Minn. (October 23, 2008) – Life Time Fitness, Inc. (NYSE: LTM) today reported its operating results for the third quarter ended September 30, 2008.
          Third quarter 2008 revenue grew 17.3% to $198.8 million from $169.5 million during the same period last year. Net income during the quarter grew 17.6% to $21.6 million, or $0.55 per diluted share. This compares to net income of $18.4 million, or $0.48 per diluted share, for 3Q 2007. For the nine months ended September 30, 2008, revenue grew 18.8% to $575.7 million from $484.7 million during the same period last year. Net income grew 20.1% for the same period to $58.8 million, or $1.49 per diluted share, from $49.0 million, or $1.30 per diluted share, for the first nine months of 2007.
          “In the face of pressures impacting all segments of our economy, we are pleased with our third quarter results, which are indicative of continued execution on our key business strategies,” said Bahram Akradi, Life Time Fitness chairman and chief executive officer. “Our unique member service and program offerings led to more than 18% in-center revenue growth. We also saw an increase in annual membership growth from the second quarter to third quarter, indicating consumer demand for our facilities and services in spite of challenging economic conditions.”
          During the third quarter, Life Time Fitness continued its expansion efforts with openings in Rockville, its second location in Maryland; CityCentre, its fourth location in Houston; and Vernon Hills, its ninth location in Illinois. In October, the Company held grand opening events at Mansfield, its eighth location in Dallas, and Loudoun County, its third location in Virginia. Life Time Fitness will hold its final two planned 2008 grand openings in November at Florham Park, its first location in New Jersey, and Westminster, its second location in Colorado.
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Life Time Fitness Third Quarter 2008 Results – Page 2
Three and Nine Months Ended September 30, 2008, Financial Highlights:
Total revenue for the third quarter grew 17.3% to $198.8 million, driven primarily by growth in membership dues and in-center revenue. Total revenue for the first nine months of 2008 grew to $575.7 million from $484.7 million during the same period last year.
                 
            YTD 2008 vs.
(Period-over-period growth)   3Q 2008 vs. 3Q 2007   YTD 2007
• Membership dues
     17.4 %     18.2 %
• Enrollment fees
     4.9 %     7.7 %
• In-center revenue
     18.2 %     21.9 %
 
                
• Same-center revenue
     3.9 %     3.8 %
• Average center revenue / membership
   $358 – up 3.9%   $1,082 – up 6.5%
• Average in-center revenue /membership
   $104 – up 4.8%   $321 – up 9.2%
Memberships increased 13.2% to 557,164 at September 30, 2008, from 492,410 at September 30, 2007.
Total operating expenses during 3Q 2008 were $156.7 million compared to $131.9 million for 3Q 2007, driven primarily by increased expenses to support new centers, membership growth, and presale activities. Year-to-date operating expenses totaled $457.7 million, compared to $384.9 million for the same period last year.
Operating margin was 21.2% for 3Q 2008 compared to 22.1% in the prior-year period. Year-to-date operating margin was 20.5%, compared to 20.6% in the prior-year period.
                 
            YTD 2008 vs.
(Expense as a percent of total revenue)   3Q 2008 vs. 3Q 2007   YTD 2007
• Center operations
   58.5% vs. 57.6%   58.6% vs. 58.0%
• Advertising and marketing
   3.7% vs. 3.2%   4.1% vs. 3.8%
• General and administrative
   4.8% vs. 5.8%   5.3% vs. 6.4%
• Other operating
   2.5% vs. 2.5%   2.4% vs. 2.3%
• Depreciation and amortization
   9.4% vs. 8.8%   9.1% vs. 8.9%
Net income during 3Q 2008 grew 17.6% to $21.6 million from $18.4 million in 3Q 2007. For the nine months ended September 30, 2008, net income grew to $58.8 million compared with $49.0 million in the prior-year period.
EBITDA for 3Q 2008 grew 15.9% to $61.2 million from $52.8 million in 3Q 2007. Year-to-date EBITDA grew 19.1% to $171.5 million from $144.0 million for the same period last year.
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Life Time Fitness Third Quarter 2008 Results – Page 3
Cash flows from operations for the first nine months of 2008 totaled $151.0 million, up 40.7% compared with $107.3 million in the prior-year period.
Weighted average fully diluted shares for 3Q 2008 totaled 39.4 million compared to 38.3 million shares in 3Q 2007.
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 $775-$780 million, or approximately 18-19% growth (down from 19-22%, or approximately $780-$800 million), driven primarily by new center growth, membership ramp at new and existing centers, and in-center revenue growth.
 
  •   Net income is expected to be $79.0-$80.5 million, or approximately 16-18% growth (down from 21-23%, or approximately $82.0-$83.5 million), driven primarily by our growth strategies.
 
  •   Diluted earnings per common share is expected to be $2.01-$2.04, or approximately 13-15% growth (down from 16-18%, or approximately $2.06-$2.09 per share).
          The Company will hold a conference call today at 10:00 a.m. ET to discuss its third quarter 2008 results. Bahram Akradi, chairman and chief executive officer, Michael Robinson, executive vice president and chief financial officer, and Kenneth Cooper, vice president of finance, will host the call. The conference call will be Web cast live 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 today 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 October 23, 2008, Life Time Fitness operated 79 centers in 17 states, including Arizona, Colorado, Florida, Georgia, Illinois, Indiana, Kansas, Maryland, Michigan, Minnesota, Missouri, Nebraska, North Carolina, Ohio, 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, 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.
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Life Time Fitness Third Quarter 2008 Results – Page 4
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. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
                 
    September 30, 2008     December 31, 2007  
    (Unaudited)          
ASSETS
                
CURRENT ASSETS:
                
Cash and cash equivalents
   $ 7,119     $ 5,354  
Accounts receivable, net
     5,318       4,475  
Inventories
     14,739       14,324  
Prepaid expenses and other current assets
     15,510       15,963  
Deferred membership origination costs
     19,280       16,205  
Deferred income taxes
     2,126       1,188  
Income tax receivable
     —       5,814  
 
            
Total current assets
     64,092       63,323  
PROPERTY AND EQUIPMENT, net
     1,451,641       1,259,271  
RESTRICTED CASH
     9,285       6,767  
DEFERRED MEMBERSHIP ORIGINATION COSTS
     14,895       14,367  
OTHER ASSETS
     56,012       42,805  
 
            
TOTAL ASSETS
   $ 1,595,925     $ 1,386,533  
 
            
 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
CURRENT LIABILITIES:
                
Current maturities of long-term debt
   $ 10,222     $ 9,568  
Accounts payable
     15,921       12,872  
Construction accounts payable
     86,744       59,261  
Accrued expenses
     55,430       47,052  
Deferred revenue
     37,146       34,851  
 
            
Total current liabilities
     205,463       163,604  
LONG-TERM DEBT, net of current portion
     636,898       555,037  
DEFERRED RENT LIABILITY
     26,906       25,526  
DEFERRED INCOME TAXES
     48,931       38,607  
DEFERRED REVENUE
     15,415       17,529  
OTHER LIABILITIES
     21,888       13,673  
 
            
Total liabilities
     955,501       813,976  
 
            
SHAREHOLDERS’ EQUITY:
                
Common stock
     794       783  
Additional paid-in capital
     383,470       373,910  
Retained earnings
     258,696       199,890  
Accumulated other comprehensive loss
     (2,536 )     (2,026 )
 
            
Total shareholders’ equity
     640,424       572,557  
 
            
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   $ 1,595,925     $ 1,386,533  
 
            

 

 

LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
                                 
    For the     For the  
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2008     2007     2008     2007  
REVENUE:
                                
Membership dues
   $ 131,232     $ 111,744     $ 377,001     $ 318,939  
Enrollment fees
     6,818       6,501       19,991       18,565  
In-center revenue
     56,151       47,517       167,385       137,305  
 
                        
Total center revenue
     194,201       165,762       564,377       474,809  
Other revenue
     4,608       3,688       11,290       9,879  
 
                        
Total revenue
     198,809       169,450       575,667       484,688  
 
                        
OPERATING EXPENSES:
                                
Center operations
     116,300       97,626       337,139       281,153  
Advertising and marketing
     7,287       5,359       23,608       18,167  
General and administrative
     9,453       9,750       30,707       30,931  
Other operating
     4,926       4,255       13,696       11,371  
Depreciation and amortization
     18,720       14,917       52,500       43,282  
 
                        
Total operating expenses
     156,686       131,907       457,650       384,904  
 
                        
Income from operations
     42,123       37,543       118,017       99,784  
 
                        
OTHER INCOME (EXPENSE):
                                
Interest expense, net
     (7,185 )     (7,135 )     (21,301 )     (19,032 )
Equity in earnings of affiliate
     336       316       985       917  
 
                        
Total other income (expense)
     (6,849 )     (6,819 )     (20,316 )     (18,115 )
 
                        
INCOME BEFORE INCOME TAXES
     35,274       30,724       97,701       81,669  
PROVISION FOR INCOME TAXES
     13,700       12,374       38,895       32,700  
 
                        
NET INCOME
   $ 21,574     $ 18,350     $ 58,806     $ 48,969  
 
                        
BASIC EARNINGS PER COMMON SHARE
   $ 0.55     $ 0.49     $ 1.51     $ 1.32  
 
                        
DILUTED EARNINGS PER COMMON SHARE
   $ 0.55     $ 0.48     $ 1.49     $ 1.30  
 
                        
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC
     39,025       37,630       38,946       37,061  
 
                        
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — DILUTED
     39,370       38,309       39,350       37,651  
 
                        

 

 

LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
                 
    For the Nine Months Ended  
    September 30,  
    2008     2007  
CASH FLOWS FROM OPERATING ACTIVITIES:
                
Net income
   $ 58,806     $ 48,969  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation and amortization
     52,500       43,282  
Deferred income taxes
     8,094       4,856  
Provision for doubtful accounts
     15       105  
Loss on disposal of property and equipment, net
     1,159       281  
Amortization of deferred financing costs
     1,078       628  
Share-based compensation
     5,989       5,671  
Excess tax benefit from stock option exercises
     (38 )     (4,501 )
Equity in earnings of affiliate
     (985 )     (917 )
Changes in operating assets and liabilities
     24,328       8,953  
Other
     54       17  
 
            
Net cash provided by operating activities
     151,000       107,344  
 
            
 
                
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Purchases of property and equipment (excluding non-cash purchases supplementally noted below)
     (360,551 )     (310,478 )
Proceeds from sale of property and equipment
     161,885       4,664  
Gain on sale leaseback transactions
     (7,488 )     —  
Proceeds from property insurance settlements
     317       48  
Increase in other assets
     (6,443 )     (6,568 )
Increase in restricted cash
     (2,518 )     (2,253 )
 
            
Net cash used in investing activities
     (214,798 )     (314,587 )
 
            
 
                
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Proceeds from long-term borrowings
     39,188       105,000  
Repayments of long-term borrowings
     (13,043 )     (9,279 )
Proceeds from revolving credit facility, net
     42,500       2,800  
Increase in deferred financing costs
     (6,113 )     (2,008 )
Proceeds from common stock offering, net of underwriting discount and offering costs
     —       92,510  
Excess tax benefit from stock option exercises
     38       4,501  
Proceeds from stock option exercises
     2,993       7,612  
 
            
Net cash provided by financing activities
     65,563       201,136  
 
            
 
                
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
     1,765       (6,107 )
CASH AND CASH EQUIVALENTS — Beginning of period
     5,354       6,880  
 
            
CASH AND CASH EQUIVALENTS — End of period
   $ 7,119     $ 773  
 
            
 
                
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
                
Cash payments for interest, net of capitalized interest
   $ 19,555     $ 17,845  
 
            
Cash payments for income taxes
   $ 18,839     $ 24,982  
 
            
 
                
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
                
Purchases of property and equipment financed through capital lease obligations
   $ 12,294     $ —  
 
            
Purchases of property and equipment in accounts payable
   $ 28,909     $ 2,548  
 
            
Non-cash share-based compensation capitalized to projects under development
   $ 552     $ 522  
 
            

 

 

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     For the  
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2008     2007     2008     2007  
Net income
   $ 21,574     $ 18,350     $ 58,806     $ 48,969  
Interest expense, net
     7,185       7,135       21,301       19,032  
Provision for income taxes
     13,700       12,374       38,895       32,700  
Depreciation and amortization
     18,720       14,917       52,500       43,282  
 
                        
EBITDA
   $ 61,179     $ 52,776     $ 171,502     $ 143,983