Life Time Fitness Announces Fourth Quarter and Full-Year 2012 Financial Results Exercises by - 21 February 20130 CHANHASSEN, Minn.–(BUSINESS WIRE)–Life Time Fitness, Inc. (LTM), The Healthy Way of Life Company, today reported its financial results for the fourth quarter and full year ended December 31, 2012.Fourth quarter 2012 revenue grew 9.7% to $275.3 million from $250.9 million during the same period last year. Total revenue for the year grew 11.2% to $1.127 billion from $1.014 billion in 2011.Net income for the quarter was $23.4 million, or $0.56 per diluted share, compared to net income of $19.8 million, or $0.48 per diluted share, for 4Q 2011. Net income for the year was $111.5 million, or $2.66 per diluted share, compared to net income of $92.6 million, or $2.26 per diluted share, in 2011.“For 2012, I am pleased to report double-digit growth in revenue, operating profit, net income, and earnings per share,” said Bahram Akradi, chairman, president and chief executive officer. “We also saw total-center revenue growth above 10%, along with solid revenue-per-membership and same-store-sales. Looking ahead, we are positioning our company for top-line growth through center expansion, new membership and programming initiatives, and expanded products and services. For 2013, we plan to open one new center in the first half of the year, our first in Alabama, and two in the second half, including one in Virginia and one in New Jersey. We also have initial plans to double our center openings in 2014, led by openings in New York and California early in the year.”Three and Twelve Months Ended December 31, 2012, Financial Highlights:Total revenue for the fourth quarter grew 9.7% to $275.3 million from $250.9 million in 4Q 2011. Total revenue for the year grew 11.2% to $1.127 billion from $1.014 billion in 2011.(Period-over-period growth) 4Q 2012 vs. 4Q 2011(in millions except revenue per membership data)Membership dues$179.7 vs. $166.9 (up 7.6%)In-center revenue$83.0 vs. $73.7 (up 12.5%)Other revenue$9.1 vs. $6.1 (up 48.6%) Average center revenue per membership (up 4.5% to $399 excluding the Lifestyle Family Fitness transaction (“LFF”))$393 vs. $380 (up 3.5%)Average in-center revenue per membership (up 8.1% to $125 excluding LFF)$122 vs. $114 (up 7.1%)Same-center revenue (open 13 months or longer)Up 3.6%Same-center revenue (open 37 months or longer)Up 3.0%(Period-over-period growth) 2012 vs. 2011(in millions except revenue per membership data)Membership dues$727.6 vs. $663.4 (up 9.7%)In-center revenue$348.3 vs. $308.5 (up 12.9%)Other revenue$35.7 vs. $23.3 (up 53.3%) Average center revenue per membership (up 4.7% to $1,618 excluding LFF)$1,587 vs. $1,543 (up 2.9%)Average in-center revenue per membership (up 7.6% to $518 excluding LFF)$507 vs. $481 (up 5.4%)Same-center revenue (open 13 months or longer)Up 4.3%Same-center revenue (open 37 months or longer)Up 3.7%Memberships grew 1.0% to 682,621 at December 31, 2012, from 676,054 at December 31, 2011.Excluding memberships acquired in connection with LFF, memberships grew 2.4%.Attrition in 4Q 2012 was 10.4% compared to 9.6% in the prior-year period. Excluding LFF, 4Q 2012 attrition was 10.1%.Attrition for the trailing 12-month period ended December 31, 2012, was 38.2% compared to trailing 12-month attrition of 35.0% at December 31, 2011. Excluding LFF, trailing 12-month attrition was 36.9%.Total operating expenses during 4Q 2012 were $231.4 million compared to $214.0 million for 4Q 2011. Total operating expenses for the year were $918.7 million compared to $840.4 million in 2011.Income from operations margin was 16.0% for 4Q 2012 compared to 14.7% in the prior-year period.Income from operations margin for the year was 18.5% compared to 17.1% in 2011.(Expense as a percent of total revenue) 4Q 2012 vs. 4Q 2011 2012 vs. 2011Center operations57.8% vs. 59.6%58.2% vs. 60.7%Advertising and marketing4.0% vs. 3.9%3.5% vs. 3.5%General and administrative5.3% vs. 6.9%5.0% vs. 5.4%Other operating6.1% vs. 4.8%4.6% vs. 3.5%Depreciation and amortization10.8% vs. 10.1%10.2% vs. 9.8%Net income for 4Q 2012 was $23.4 million, or $0.56 per diluted share, compared to net income of $19.8 million, or $0.48 per diluted share, for 4Q 2011. Net income for the year was $111.5 million, or $2.66 per diluted share, compared to net income of $92.6 million, or $2.26 per diluted share, in 2011.EBITDA for 4Q 2012 was $74.1 million compared to $62.4 million in 4Q 2011. For the year, EBITDA was $324.7 million compared to $273.4 million in 2011.As a percentage of total revenue, EBITDA in 4Q 2012 was 26.9% compared to 24.9% in 4Q 2011.For the year, EBITDA, as a percentage of total revenue, was 28.8% compared to 27.0% in 2011.Cash flows from operating activities for the year totaled $255.7 million compared to $227.9 million in 2011.Weighted average fully diluted shares for 4Q 2012 totaled 42.0 million compared to 41.3 million in 4Q 2011. For the year, weighted average fully diluted shares totaled 42.0 million compared to 40.9 million in 2011.2013 Business Outlook:The following statements are based on the Company’s current expectations for fiscal year 2013 and incorporate 2012 operating trends. These 2013 expectations are subject to the risks and uncertainties further described in the Company’s forward-looking statements:Revenue is expected to be up 6.5-8%, or $1.200-1.220 billion, driven primarily by price and mix optimization, and growth in in-center and ancillary business revenue.Net income is expected to be up 8-11%, or $120.0-124.0 million, driven by revenue growth and cost efficiencies.Diluted earnings per common share is expected to be $2.85-2.95.As announced on February 14, 2013, the Company will hold a conference call today at 10:00 a.m. ET to discuss its fourth quarter and full-year 2012 results. Bahram Akradi, Michael Robinson, executive vice president and chief financial officer, and John Heller, senior director, investor relations & treasurer, 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 the same day via the Company’s website beginning at approximately 2:00 p.m. ET.About Life Time Fitness, Inc.As The Healthy Way of Life Company, Life Time Fitness (LTM) helps organizations, communities and individuals achieve their total health objectives, athletic aspirations and fitness goals by engaging in their areas of interest – or discovering new passions – both inside and outside of Life Time’s distinctive and large sports, professional fitness, family recreation and spa destinations, most of which operate 24 hours a day, seven days a week. The Company’s Healthy Way of Life approach enables customers to achieve this by providing the best programs, people and places of uncompromising quality and value. As of February 21, 2013, the Company operated 105 centers under the LIFE TIME FITNESS® and LIFE TIME ATHLETIC℠ brands in the United States and Canada. Additional information about Life Time centers, programs and services is available at lifetimefitness.com.Forward-Looking StatementsThis press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can usually be identified by the use of terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “evolve,” “expect,” “forecast,” “intend,” “looking ahead,” “may,” “opinion,” “plan,” “possible,” “potential,” “project,” “should,” “will” and similar words or expressions. Forward-looking 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, the ability to access our existing credit facility and obtain additional financing, strains on our business from continued and future growth, including potential acquisitions and other strategic initiatives, risks related to maintenance and security of our data, potential recognition of compensation expense related to performance-based stock grants, 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 risk factor section of the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission.The Company cautions investors not to place undue reliance on any such forward-looking statements, which speak only as of the date on which such statements were made. The Company undertakes no obligation to update such statements to reflect events or circumstances arising after such date. All remarks made during the Company’s preliminary financial results webcast will be current at the time of the webcast and the Company is under no obligation to update the recording.LIFE TIME FITNESS, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In thousands) December 31,2012December 31,2011(Unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents$16,499$7,487Accounts receivable, net9,2726,156Center operating supplies and inventories27,24021,600Prepaid expenses and other current assets26,82622,905Deferred membership origination costs11,66412,525Deferred income taxes8,8139,850Income tax receivable – 5,022 Total current assets100,31485,545PROPERTY AND EQUIPMENT, net1,858,6661,740,434RESTRICTED CASH2,0871,088DEFERRED MEMBERSHIP ORIGINATION COSTS6,8208,131GOODWILL37,17625,550OTHER ASSETS 67,111 55,080 TOTAL ASSETS$2,072,174 $1,915,828 LIABILITIES AND SHAREHOLDERS’ EQUITYCURRENT LIABILITIES:Current maturities of long-term debt$12,603$6,849Accounts payable32,14022,035Construction accounts payable25,20821,892Accrued expenses63,33356,284Deferred revenue 34,753 33,898 Total current liabilities168,037140,958LONG-TERM DEBT, net of current portion691,867679,449DEFERRED RENT LIABILITY22,49019,370DEFERRED INCOME TAXES95,509100,582DEFERRED REVENUE6,8408,203OTHER LIABILITIES 14,514 9,793 Total liabilities 999,257 958,355 SHAREHOLDERS’ EQUITY:Common stock864849Additional paid-in capital447,912441,813Retained earnings628,942517,404Accumulated other comprehensive loss (4,801) (2,593)Total shareholders’ equity 1,072,917 957,473 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$2,072,174 $1,915,828 LIFE TIME FITNESS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(In thousands except per share data) For the Three Months EndedDecember 31,For the Year EndedDecember 31,2012201120122011(Unaudited)(Unaudited)(Unaudited)REVENUE:Membership dues$179,663$166,909$727,596$663,439Enrollment fees3,6044,15715,34618,447In-center revenue 82,988 73,745 348,265 308,474 Total center revenue266,255244,8111,091,207990,360Other revenue 9,068 6,103 35,740 23,314 Total revenue 275,323 250,914 1,126,947 1,013,674 OPERATING EXPENSES:Center operations159,097149,436655,887614,949Advertising and marketing11,0609,81839,93136,318General and administrative14,52517,42955,71554,736Other operating16,92712,16552,17035,562Depreciation and amortization 29,799 25,198 115,016 98,843 Total operating expenses 231,408 214,046 918,719 840,408 Income from operations 43,915 36,868 208,228 173,266 OTHER INCOME (EXPENSE):Interest expense, net(6,143)(4,865)(25,475)(20,138)Equity in earnings of affiliate 339 326 1,482 1,299 Total other income (expense) (5,804) (4,539) (23,993) (18,839)INCOME BEFORE INCOME TAXES38,11132,329184,235154,427PROVISION FOR INCOME TAXES 14,681 12,486 72,697 61,810 NET INCOME$23,430 $19,843 $111,538 $92,617 BASIC EARNINGS PER COMMON SHARE$0.57 $0.49 $2.70 $2.29 DILUTED EARNINGS PER COMMON SHARE$0.56 $0.48 $2.66 $2.26 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – BASIC 41,260 40,487 41,345 40,358 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – DILUTED 42,015 41,342 41,972 40,930 LIFE TIME FITNESS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands) For the Year EndedDecember 31,20122011(Unaudited)CASH FLOWS FROM OPERATING ACTIVITIES:Net income$111,538$92,617Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization115,01698,843Deferred income taxes(2,832)5,557Loss on disposal of property and equipment, net1,0861,779Gain on sale of land held for sale(196)–Amortization of deferred financing costs2,0032,269Share-based compensation14,68619,767Excess tax benefit related to share-based compensation(8,502)(3,537)Changes in operating assets and liabilities22,99910,277Other (53) 371 Net cash provided by operating activities 255,745 227,943 CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment(224,194)(165,335)Acquisitions, net of cash acquired(30,614)(70,264)Proceeds from sale of property and equipment969794Proceeds from sale of land held for sale1,758–Proceeds from property insurance settlements909464Increase in other assets(333)(92)Decrease in restricted cash 102 1,484 Net cash used in investing activities (251,403) (232,949) CASH FLOWS FROM FINANCING ACTIVITIES:Repayments of long-term borrowings(6,929)(79,192)Proceeds from revolving credit facility, net22,00077,800Increase in deferred financing costs(914)(4,989)Excess tax benefit related to share-based compensation8,5023,537Proceeds from stock option exercises2,3423,162Proceeds from employee stock purchase plan1,2061,061Stock purchased for employee stock purchase plan(1,290)(1,113)Repurchases of common stock (19,099) – Net cash provided by financing activities 5,818 266 Effect of exchange rates on cash and cash equivalents (1,148) – INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS9,012(4,740)CASH AND CASH EQUIVALENTS – Beginning of period 7,487 12,227 CASH AND CASH EQUIVALENTS – End of period$16,499 $7,487 Non-GAAP Financial MeasuresThis 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 EndedDecember 31,For the Year EndedDecember 31,2012201120122011Net income$23,430$19,843$111,538$92,617Interest expense, net6,1434,86525,47520,138Provision for income taxes14,68112,48672,69761,810Depreciation and amortization 29,799 25,198 115,016 98,843EBITDA$74,053$62,392$324,726$273,408 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, excluding acquisitions. 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 operat