UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

R ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-32230

Life Time Fitness, Inc.

(Exact name of Registrant as specified in its charter)

Minnesota (State or other jurisdiction of incorporation or organization)	41-1689746 (I.R.S. Employer Identification No.)
2902 Corporate Place Chanhassen, Minnesota (Address of principal executive offices)	55317 (Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $.02 par value	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes R No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes o No R

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes R No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes R No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. R

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer R Accelerated filer o Non-accelerated filer o(do not check if smaller reporting company) Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No R

The aggregate market value of the voting common stock held by non-affiliates of the registrant as of June 30, 2011, was $1,565,702,318, based on the closing sale price for the registrant’s common stock on that date.

The number of shares outstanding of the registrant's common stock as of February 16, 2012 was 42,504,948.

DOCUMENTS INCORPORATED BY REFERENCE

Document	Incorporated as to
Proxy Statement for the 2012 Annual Meeting of Shareholders	Part III

TABLE OF CONTENTS

	Page
PART I
Item 1. Business	1
Item 1A. Risk Factors	21
Item 1B. Unresolved Staff Comments	26
Item 2. Properties	26
Item 3. Legal Proceedings	29
Item 4. Mine Safety Disclosures	30
PART II
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	30
Item 6. Selected Financial Data	33
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	40
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	52
Item 8. Financial Statements and Supplementary Data	53
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	87
Item 9A. Controls and Procedures	87
Item 9B. Other Information	89
PART III
Item 10. Directors, Executive Officers and Corporate Governance	90
Item 11. Executive Compensation	92
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	92
Item 13. Certain Relationships and Related Transactions, and Director Independence	92
Item 14. Principal Accounting Fees and Services	92
PART IV
Item 15. Exhibits, Financial Statement Schedules	93

FORWARD-LOOKING STATEMENTS

This Annual Report may include “forward-looking” statements. Forward-looking statements generally involve our current expectations or beliefs regarding future matters. 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 in this Annual Report include statements about: our growth strategies, which include our intention to open new centers, increase membership and optimize membership dues and increase our in-center and corporate business products and services revenue; our expectations of the health and fitness industry; the evolution of our centers and our services; the process we use in new center site selection and construction, including our belief about our ability to fund new center development and the alignment of our cost structure with our growth plans; our strategy regarding new center and ancillary business acquisitions as well as our ability to successfully integrate these acquisitions; our beliefs regarding competition; our belief that we have the necessary licenses to conduct our business; our opinions about litigation matters; our expectations regarding the operating costs and revenue expectations of new centers; our expectations about future liquidity; and our expectations about general economic conditions. There are many factors that could cause actual results to differ materially from those in any forward-looking statement. For example, forward-looking statements can be affected by inaccurate assumptions, general economic conditions and any other factor that may impact our operations. While it is not possible to identify all factors that you should consider, forward-looking statements can also be impacted by any risks or uncertainties that we discuss throughout this Annual Report and in Part I, Section 1A of this Annual Report entitled “Risk Factors.” Consequently, no forward-looking statement can be guaranteed and actual results may vary materially.

We intend to take advantage of the protective provisions of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 regarding our forward-looking statements, and are including this sentence for the express purpose of enabling us to do so.  In addition, forward-looking statements speak only as of the date they were made. We undertake no obligation to update these statements in light of subsequent events or developments.

PART I

Item 1. Business.

Company Overview

Life Time is the Healthy Way of Life Company. We help 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, resort-like sports, professional fitness, family recreation and spa destinations, most of which operate 24 hours a day, seven days a week. Our Healthy Way of Life approach enables our customers to achieve success by providing the best places, people and programs of exceptional quality and value. As of February 28, 2012, we operated 102 centers under the LIFE TIME FITNESS® and LIFE TIME ATHLETIC^SM brands primarily in suburban locations in 26 major markets in the United States.

We believe our centers provide a desirable and unique experience for our members, resulting in a high number of memberships per center, which we manage to optimize the member experience. Of our 102 centers, we consider 81 to be of our large format design. Among these 81 centers, we consider 57 to be of our current model design. Although the size and design of our centers may vary, our business strategy and operating processes generally remain consistent across our centers. Our current model centers typically target 8,500 to 11,500 memberships by offering, on average, 113,000 square feet of multi-use sports and athletic, professional fitness, family recreation, spa amenities and programs and services in a resort-like environment.

The breadth of our programs allows us to connect and engage members in their areas of passion along with others who share the same interests. By offering best-in-class programming - both inside and outside of our centers - along with a dedicated and talented team of Life Time employees who lead each program, we help members achieve their goals by doing what they love. Life Time programs include a wide range of interest areas, such as group fitness,

1

yoga, swimming, running, racquetball, squash, tennis, pilates, mixed combat arts, kids activities and camps, adult activities and leagues, rock climbing, cycling, basketball, personal training, weight loss and nutrition initiatives, spa, medi-spa and chiropractic services. Life Time program offerings may vary by location.

Our corporate headquarters are located at 2902 Corporate Place, Chanhassen, Minnesota 55317, and our telephone number is (952) 947-0000. Our principal website is lifetimefitness.com. The information contained on our websites is not a part of this annual report.

Our History

Our Chairman, President and Chief Executive Officer, Bahram Akradi, opened the first Life Time Fitness center in 1992 with an unwavering commitment to our members and their experiences with us. From the design of our centers, to the amenities and services we provide, to the sheer breadth of programming and events we deliver, everything we do is driven from the member point of view. For example, our company has never required long-term member contracts, instead preferring to offer month-to-month agreements that provide members flexibility, while maintaining clear focus on delivering unparalleled programs and value in an effort to earn their business each and every day.

At Life Time, our mission is clear. We provide an educational, entertaining, friendly and inviting, functional and innovative experience that meets the health and fitness needs of the entire family. Over the course of two decades, Life Time has raised the standards in the health and fitness industry while also pioneering the creation of a new industry we call Healthy Way of Life. Through this, we aim to deliver best-in-class programs that help organizations, communities and individuals achieve their total health objectives, athletic aspirations and/or fitness goals by engaging in their areas of passion. Life Time is well positioned to help them do so not only by providing programs, but also, the best people and places to deliver exceptional experiences.

Today, the breadth of our programs allows us to connect and engage members in their areas of passion along with others who share the same interests. By offering best-in-class programming - both inside and outside of our centers - along with a dedicated and talented team of Life Time employees who lead each program, we help members achieve their goals by doing what they love. Life Time programs include a wide range of interest areas, such as, group fitness, yoga, swimming, running, racquetball, squash, tennis, pilates, mixed combat arts, kids activities and camps, adult activities and leagues, rock climbing, cycling, basketball, personal training, weight loss and nutrition initiatives, spa, medi-spa and chiropractic services. Life Time program offerings may vary by location.

Our offerings also include our proprietary line of nutritional products and supplements, and our award-winning magazine, Experience Life®. We also have an Athletic Events division, which now offers 140 events each year, including running, cycling and triathlon events from entry-level to ultra-endurance. Finally, we offer health assessments, along with partnerships with health insurance companies, with the goal of further extending our Healthy Way of Life mission to corporate clients. This portfolio has since evolved into our myHealthCheck service offering, which provides a comprehensive health assessment to our members at our centers as well as employees of our corporate clients.

We were incorporated in 1990 as a Minnesota corporation under the name FCA, Ltd., and subsequently registered to use the name of Life Time Fitness in 1992. We then officially changed our corporate name to Life Time Fitness, Inc. in 1998. In 2004, we completed our initial public offering. Our stock is listed on the New York Stock Exchange (Ticker: LTM).

Our Competitive Strengths

We offer comprehensive and convenient programs and services.

Unlike many traditional health clubs or gyms, which typically offer little more than rooms with equipment, most Life Time destinations operate 24 hours a day, seven days a week and offer an expansive selection of premium amenities and services, comprehensive programming with dedicated spaces, a large team of certified professionals, service and operations employees, and hundreds of pieces of state-of-the-art cardiovascular and resistance equipment and free-weights.

Our team of member-focused employees — trained through our specifically designed program of classes and/or certifications — is committed to providing an environment that is clean, educational and entertaining, friendly and inviting, and functional and innovative.

We offer a value proposition that encourages membership loyalty.

The broad range of amenities, programs and services we offer exceeds that of most other health and fitness center alternatives available to consumers. We offer different types of membership plans for individuals, couples and families. Our typical monthly membership dues range from $40 to $120 per month for an individual membership and from $80 to $260 per month for a couple or family membership. Our memberships include the primary member’s children under the age of 12 at a nominal per child monthly cost. We provide the majority of our members with a variety of services with their membership, including group fitness classes and fitness assessments, towel and locker service and an online subscription to our award-winning magazine, Experience Life®. Our membership plans include initial 14-day money back guarantees and are month-to-month, cancelable by giving up to 60 days advance notice. We believe our value proposition and member-focused approach creates loyalty among our members.

We offer a product that is convenient for our members.

Our centers are generally situated in easily-accessible areas and centrally located among the residential, business and shopping districts of the surrounding community. We design, build and operate our centers to accommodate a large and active membership base by generally providing access to the centers 24 hours a day, seven days a week. In addition, we provide sufficient parking spaces, lockers and equipment to allow our members to use our centers with little or no waiting time, even at peak hours and when centers are at targeted capacity. Our child center services are available to the majority of our members for a modest monthly fee per child for up to two hours per day. Most of our centers offer the convenience of spa and café services. Most members have access to more than one center in markets where we operate more than one location.

We have an established and profitable economic model.

Our economic model is both based and dependent on attracting a large membership base within the first three years after a new center is opened, as well as retaining those members and maintaining tight expense control. In 2011, this economic model resulted in revenue growth of 11.0%, with revenue of $1.0 billion; EBITDA growth of 7.5%, with EBITDA of $273.4 million and an EBITDA margin of 27.0%; and net income growth of 14.8%, with net income of $92.6 million.

We have a disciplined and sophisticated site selection and development process.

We have developed a disciplined and sophisticated process to evaluate metropolitan markets in which to build or lease new centers, as well as specific sites for potential future centers within those markets. This multi-step process is based upon applying our proven successful experience and analysis to predetermined physical, demographic, psychographic and competitive criteria generated from profiles of each of our existing centers. We continue to modify these criteria based upon the performance of our centers. A formal business plan is developed for each proposed new center and the plan must pass multiple stages of approval by our management and finance committee of the board of directors. By utilizing a wholly owned construction subsidiary, FCA Construction Company, LLC (“FCA Construction”) that builds and remodels our centers, we maintain maximum flexibility over the design process of our centers and control over the cost and timing of the construction process subject to financing and capital availability.

Our Growth Strategy

Our growth strategy is driven by three primary elements:

Build and acquire new centers.

We intend to expand our base of centers, primarily through new center development and acquisition. In 2011, we opened three large format centers that we designed and constructed. In December 2011, we also acquired nine centers from Lifestyle Family Fitness, Inc. ("LFF"). We expect to open three large format centers in 2012, all of which are currently under construction. In addition, in January 2012, we acquired the Racquet Club of the South, a tennis facility in the Atlanta market, which we rebranded as Life Time Tennis Atlanta. A rollforward of our center growth from 2007 through 2011 is as follows:

	For the Year Ended December 31,
	2011	2010		2009	2008	2007
Total centers, beginning of year	89	84		81	70	60
New centers – constructed	3	3		3	10	8
New centers – remodel of existing space	—	2		—	1	—
Acquired centers (1)	9	1		—	—	2
Closed center (2)	—	(1	)	—	—	—
Total centers, end of year	101	89		84	81	70

(1) In December 2011, we acquired nine facilities from LFF in Indiana, North Carolina and Ohio.

(2) In August 2010, the lease expired on our 85,630 square foot center in St. Paul, Minnesota which opened in 1997. We closed the center and transferred its memberships to our surrounding locations.

Increase membership and optimize membership dues.

Of our 101 open Life Time Fitness centers at December 31, 2011, 80 had reached maturity, which we define as the 37^th month of operations. Our goal is for a mature center to operate with at least 90% of targeted membership capacity by the end of its third year of operations. Due to the economic downturn, our mature centers, in the aggregate, are currently below our 90% target.

We have 21 centers that have not yet reached maturity. These 21 centers averaged 67% of targeted membership capacity as of December 31, 2011. We expect the continuing increase in memberships at these centers to contribute significantly to our future growth as these centers move toward our goal of 90% of targeted membership capacity by the end of their third year of operations. Our membership levels for our non-mature centers were as follows:

	As of December 31,
	2011		2010		2009		2008		2007
Non-mature centers	21		20		24		36		32
Non-mature centers percentage of targeted capacity	67.2	%	65.3	%	64.0	%	62.6	%	66.4	%

In addition to increasing the number of memberships, we focus on optimizing our membership dues through price increases and by improving the mix of our memberships. Our membership dues mix can be improved by increasing the number of members covered under a membership (for instance, an individual to a couple membership, or a couple to a family membership).

A member can also upgrade a membership to a higher plan level (for example, from Gold to Platinum).

In order to achieve and maintain our membership goals, we focus on demographics, center usage and membership trends, and employ marketing programs to effectively communicate our value proposition to existing and prospective members. We also offer a membership option, referred to as a Flex membership, for members who do not access the center, but still want to maintain certain member benefits.

Increase products, programs and services revenue.

In 2011, revenue from the sale of in-center products, programming and services grew $42.0 million, or 15.8%, to $308.5 million and we increased in-center revenue per membership to $481. We believe revenue from these areas will continue to grow. Our programming and services include individual and group personal training sessions and certification; hair, skin, nail care and massage services through LifeSpa; kids and adult activities; pilates and yoga sessions and certification; swimming instruction and teams; healthy, all-natural food offerings from LifeCafe; health and fitness assessment and coaching services through myHealthCheck; squash, racquetball and tennis leagues, programming and instruction; recreational basketball leagues through Ultimate Hoops; and athletic events. We expect to continue driving in-center revenue both by increasing sales of our current in-center products and services, while introducing new products and services to our members and customers.

Revenue from ancillary businesses grew $4.6 million, or 24.3%, to $23.3 million, which was due primarily to growth in media and athletic events. In addition, we believe revenue from the sale of our ancillary products and services will continue to grow in other new business categories for us, including training, certification and health promotion programs.

Our Industry

We participate in the large and growing health and wellness industry, which includes health clubs, fitness equipment, athletics, wellness education, nutritional products, athletic apparel, spa services and other wellness-related activities. According to International Health, Racquet & Sportclub Association (“IHRSA”), the estimated market size of the U.S. health club industry in 2010, which is a relatively small part of the health and wellness industry, was approximately $20.3 billion in revenue and 50.2 million members with approximately 29,890 clubs. Based on IHRSA membership data, the number of health club members in the U.S. increased 17.6% from 42.7 million in 2006 to 50.2 million in 2010. Over this same period, total U.S. health club industry revenues increased 15.3% from $17.6 billion to $20.3 billion.

Our Sports and Athletic, Professional Fitness, Family Recreation and Spa Centers

Size and Location

Our centers have evolved since inception. All centers are centrally located in areas that offer convenient access from residential, business and shopping districts of the surrounding community, and generally provide free and ample parking.

Of our 101 centers as of December 31, 2011, 81 are of our large format design and 57 of those conform to our current model center design. Our distinctive format is designed to provide efficient and inviting spaces that are conducive to the wide range of healthy way of life programming we deliver and that accommodate each center’s targeted capacity. Our current model centers generally target 8,500 to 11,500 memberships and our other large format centers generally target 5,500 to 11,000 memberships. This targeted capacity is designed to maximize the member experience based upon our historical understanding of membership usage, facility layout, the number of individual, couple and family memberships and pricing.

Generally, the main differences between our large format centers and those that are of the current model design are that our current model centers generally include an outdoor aquatics park, larger indoor aquatics area, larger gymnasium, up to three

additional studios and enhanced LifeSpa and LifeCafe spaces. We believe that all of our large format centers serve as all-in-one sports and athletic, professional fitness, family recreation and spa destinations. The following table provides the number and average square footage of our large format centers:

	As of December 31,
	2011	2010	2009	2008	2007
Large format centers – current model
Number of centers	57	54	51	48	38
Average square feet	113,000	113,000	113,000	113,000	110,000
Large format centers – other
Number of centers	24	24	24	24	23
Average square feet	95,000	95,000	95,000	95,000	95,000

Center Environment

Our centers generally combine modern architecture and decor with state-of-the-art amenities. Most of our current model and large format centers are freestanding buildings designed with open architecture and naturally-illuminated atriums that create a spacious, inviting atmosphere. With finishes such as limestone floors, wood lockers and granite countertops, our centers are carefully designed to create an appealing and luxurious environment that attracts and retains members and encourages them to visit the center. Moreover, we have specific staff members who are responsible for maintaining the cleanliness of the entire center. We regularly update and refurbish our centers to maintain a high-quality experience. Our commitment to quality and detail provides a similar look and feel at each of our large format centers.

The table below displays the wide assortment of amenities, services, activities and events typically found at our large format centers, including our current model centers:

Amenities	Services	Activities and Events
Basketball/Volleyball Courts	24-Hour Availability	Aquatics
Cardiovascular, Resistance and	Health and Fitness Assessments	Athletic Leagues
Free Weight Equipment	Experience Life®Magazine	Birthday Parties
Cycle Theaters	Towel Service	Eastern/Martial Arts
Group Fitness Studios	Locker Service	Kids’ Club
Lap Pool	Massage Therapy	Pilates
Racquetball/Squash Courts	Nutritional Products	Group Fitness Classes
Child Center	Personal Training	Scuba Lessons
Rock Climbing Cavern	T.E.A.M. Programs	Studio Cycling
Saunas	Weight Loss Programs	Sports Training Camps
Two-story Waterslides	Cardiovascular and Resistance Training	Summer Camps
Whirlpool Spas	Metabolic Testing	Swimming Lessons
Zero-depth Entry Swimming Pools	Nutrition Coaching	Yoga
LifePower Studio	Endurance Coaching	Educational Camps
LifeCafe	Member Advantage	Dance Classes
LifeSpa	myLT.com	Athletic Events
Pool-side Bistro		Social Events
Men’s, Women’s and Family Locker Rooms		Run Club, Cycle Club and Other Interest-Driven Clubs

Fitness Equipment and Facilities. To help members develop and maintain a healthy way of life, train for athletic events or lose weight, our centers have up to 400 pieces of cardiovascular and resistance training equipment plus free weights. Exercise equipment is arranged in spacious workout areas to allow for easy movement from machine to machine, facilitating a convenient and efficient workout. Equipment in these areas is arranged in long parallel rows that are clearly labeled by muscle group, allowing members to conveniently customize their exercise programs and reduce downtime during their workouts. Due to the large amount of equipment in each center, members rarely have to wait to use a machine. We have in-house technicians who service and maintain our equipment. In addition, we have large-screen televisions in several areas of the center.

Our current model centers have large indoor and outdoor recreation pools with zero-depth entrances and water slides, lap pools, saunas, steam baths and whirlpools. A majority of these centers also have at least two regulation-size basketball courts that can be used for various sports activities, as well as other dedicated facilities for group fitness, cycling, rock climbing, racquetball and/or squash. In addition, 13 of our current model and large format centers have tennis courts. Programs at these tennis facilities include professional instruction and leagues.

Personalized Services for Individuals and Small Groups. On average, we employ 25 personal trainers in a current model center. Our personal trainers are skilled in assessing and formulating effective individual and group exercise programs. Our personal training program aims to improve the health and fitness of our members and be considered a leader in the industry. To this end, our personal trainers are required to be certified by one of the nationally-accredited certification bodies within six months of employment and take a rigorous one-week internal certification program before providing member service.

We offer many different programs featuring our certified professional personal trainers including:

• One-On-One sessions – We offer sessions in which an individual member meets directly with a personal trainer to help him or her achieve healthy way of life goals, including losing weight, gaining weight/muscle mass, or specific event training.

• Small Group sessions– We offer sessions in which a group of two to four members meets directly with a single personal trainer to help them achieve their goals with others.

• T.E.A.M. Training Education Accountability Motivation^® and other Weight Loss and Nutrition programs – We developed a number of large group (typically eight to 12 members) programs under our proprietary T.E.A.M. platform. Our T.E.A.M. Weight Loss program focuses on exercise, education and nutrition and provides the resources and support toward long-term weight loss success. The T.E.A.M. Fitness program combines cardio exercise with strength training. Our endurance program focuses on training in the proper heart rate zones, for the proper duration of time and at the proper frequency to burn fat more efficiently while improving overall health and fitness. Our T.E.A.M. Boot Camp challenges our members to test their strength, agility and stamina. From time to time, we also offer other weight loss and nutrition programs, such as the Life Time 90-Day Weight Loss Challenge, as an opportunity for members to receive education, training and motivation that helps them set and achieve their health and fitness goals, and keep their overall health programs on track.

• Assessments – We offer various assessments for a detailed view of total health. Whether the member is an athlete or simply seeking better health, our assessments help members set and achieve health goals more efficiently and confidently by providing precise scientific data on the member’s current health and fitness.

Fitness Programs and Classes. Our centers offer fitness programs, including group fitness classes and health and fitness training seminars on subjects ranging from metabolism to personal nutrition. Each current model center has at least two group fitness studios and makes use of the indoor and outdoor pool areas for classes. These centers also offer yoga and Pilates as well as a studio dedicated to studio cycling. On average, we offer 85 group fitness classes per week at each current model center, including, for example, studio cycling, step workout, dance classes, circuit training and fitness yoga classes. These classes generally are free of charge to our members. The volume and variety of activities at each center allows members to enjoy the center, whether participating in personalized activities or with other members in group activities.

LifeCafe. Our large format centers feature a LifeCafe, which offers fresh, healthy, all-natural made-to-order and pre-prepared breakfast, lunch and dinner items, including sandwiches, salads, snacks, shakes and more. Our LifeCafe offers customers the choice of dining indoors, ordering their meals and snacks to go or, in each of our current model centers and certain of our other large format centers, dining outdoors at the poolside bistro. Generally, each LifeCafe also offers the Life Time line of nutritional products and supplements, third-party nutritional products, exercise accessories and personal care products.

LifeSpa. Our current model centers and almost all of our other large format centers also feature a LifeSpa, which is a full-

service salon and spa. Each in-center LifeSpa offers hair, body, skin care and massage therapy services, customized to each client’s individual needs. Most recently, we have begun adding medi-spa services to our offering in select locations. Each LifeSpa is located in a separate, self-contained area that provides a relaxing and rejuvenating environment.

LifeClinic Chiropractic. In select locations, we also offer LifeClinic Chiropractic services provided by licensed chiropractors. LifeClinic Chiropractic offers an innovative, non-invasive form of soft tissue and joint treatment.

Child Centers. Almost all of our centers offer on-site child centers for children from three months through 11 years of age as part of a monthly fee per child. Once a child turns 12, with the appropriate membership, he or she may use most amenities available to adults. Child center services are available for up to two hours per child per day while members use our centers. During this time, children ages one to five years can participate in enrichment programs, such as music, movement and arts and crafts while children ages six to 11 years can participate in Kids Play, which

includes gym and rock wall activities. The child center features a computer center, separate infant and toddler playrooms and numerous children's activities. We hire experienced personnel that are dedicated to working in the child centers to provide children with an enjoyable and safe experience.

Additional Programs. All of our large format centers offer a variety of additional programs for children, which may include birthday parties, school break camps, parent’s night out, sports and fitness classes and swimming lessons. For adults, we offer a variety of sports leagues.

Memberships

We define a membership as one individual, couple or family. For example, a family of three people would be considered one membership. As of December 31, 2011, we had 676,054 memberships and 1,292,587 members, an average of 1.9 members per membership. Our current model centers average approximately 2.1 members per membership, as a result of a higher family concentration for those centers.

We offer a variety of convenient month-to-month membership with no long-term contracts. Our members typically pay a one-time joining fee, which includes an initiation fee and an administrative fee, and receive an initial 14-day money back guarantee. In this document, we refer to the total cost to join as an enrollment fee.

Primary Membership Plans. We have five primary membership levels, which are Bronze, Gold, Platinum, Onyx and Diamond. Within most membership levels, a member may purchase access to only one club or, with an elite membership, access to all clubs at that membership level and below. Depending on the center classification, a member is required to have a minimum membership level. Decisions of center designation are made on a center-by-center basis and are dependent on the market presence, demographic nature, population density, initial investment in the center and available services and amenities.

All memberships, regardless of level, typically include 24-hour access, locker and towel service, group fitness classes (such as core, cycle and yoga), various educational programs, and Member Advantage (a program designed to give our members discounts at 450 select local and national partner businesses). Members may also take advantage of equipment orientations and participate in a fitness assessment which consists of fitness testing, review of exercise history, body fat measurement and goal setting.

If members upgrade their membership plan, they would typically receive enhanced benefits depending on plan level. These benefits may include access to a greater number of centers nationwide, more guest privileges, higher-end amenities and additional programs and services.

The following table compares our different membership plans, as of December 31, 2011:

	Bronze	Gold	Platinum	Onyx	Diamond
		Fitness,	Outstanding	Exceptional	Premium
	Value and	fun and	club	service	benefits, value
	affordability	relaxation	amenities	and luxury	and privileges
Number of centers	20	49	15	9	8
Joining fee	$0-150	$0-150	$0-150	$0-150	$0-225
Individual dues	$40-60	$60-70	$70-80	$90-100	$120-130
Family dues	$100-140	$130-150	$150-160	$200-240	$250-260
Center access	All Bronze centers (20)	All Bronze and Gold centers (69)	All Bronze, Gold and Platinum centers (84)	All Bronze, Gold, Platinum and Onyx centers (93)	All Life Time Fitness centers, including Life Time Athletic centers (101)

Junior and Other Membership Plans. Children under the age of 12 qualify for a junior membership, with dues of $5 to $10 per month, depending on the center. The junior membership provides access to the child care center, pools and gyms at designated times. We do not count junior memberships as reported memberships since they are already part of the family membership. We also have occasionally offered other memberships plans aimed to attract niche members.

Other Subscription Plan. We offer a Flex membership for members who choose to “freeze” rather than terminate their membership with us. Flex memberships are $10 to $20 per month, whether an individual, couple or a family. Flex members continue to have online access to myLT.com, which includes Member Advantage and interest-area content, a subscription to Experience Life® magazine and the ability to resume an access membership without paying joining fees. We do not count these Flex memberships in our membership count since they do not have access to our centers. We do not count these Flex memberships as terminations in our attrition calculation since they remain connected to Life Time Fitness and continue to receive other benefits associated with a Life Time Fitness membership. We experienced significant growth in this membership type in 2011, which we believe was due to our members’ desire to maintain a relationship with Life Time Fitness notwithstanding economic challenges. As of December 31, 2010, we had 70,302 Flex memberships. In 2011, we added more than 20,000 Flex memberships for a total of 92,806 as of December 31, 2011.

Usage

Our centers are generally open 24 hours a day, seven days a week. We typically experience the highest level of member activity at a center during the 5:00 a.m. to 11:00 a.m. and 4:00 p.m. to 8:00 p.m. time periods on weekdays and during the 8:00 a.m. to 5:00 p.m. time period on weekends. Our centers are appropriately staffed during peak and non-peak hours to provide each member with a positive experience. We have introduced a number of initiatives focused on getting our members more involved and connected with the goal of higher membership usage and increased member satisfaction. The following table reports our usage statistics:

	For the Year Ended December 31,
	2011	2010	2009	2008	2007
Total number of visits (in millions)	63.8	60.1	57.7	50.4	42.1
Average number of visits per month, per center	58,456	57,407	57,792	56,300	54,647
Average visits per year, per membership	99	98	98	94	88

New Center Site Selection and Construction

Site Selection. Our management devotes significant time and resources to analyze each prospective site (including both undeveloped land and existing facilities available for lease) on the basis of predetermined physical, demographic, psychographic and competitive criteria. We focus mainly on markets that will allow us to operate multiple centers that create certain efficiencies in marketing and branding activities, but we select each site based on whether that site can support an individual center.

After we identify a potential site, we develop a business plan for a center on that site. This requires analysis from certain functional areas of management and approval from the finance committee of our board of directors. We believe that our disciplined, structured process reduces the potential for developing a site that the market cannot support.

Design and Construction. Our wholly owned subsidiary, FCA Construction, provides us with construction management, architecture and design services and millwork fabrication. With approximately 85 employees, FCA Construction is dedicated solely to the design and construction of each new center and the remodel of existing and acquired centers.

Our architecture division has developed a series of prototypical plans and specifications that can be easily adapted to each new site. Project architects along with our construction management teams monitor quality and oversee the construction progress of each new center.

Our construction division provides construction management teams, including on-site supervision, for each new site and remodel, as well as administrative services, such as permitting, purchasing, project accounting and safety administration. The construction management teams qualify subcontractors, bid each component of our projects to ensure cost-effective pricing, and monitor cost progress for the duration of the project. By using similar materials at each center, we not only maintain a consistent look and feel, but we are also able to maximize buying power and leverage economies of scale in purchasing.

Through FCA Construction, we are able to maximize flexibility in the design process, retain control over the cost and timing of the construction process and realize potential cost savings on each project. Nearly all of FCA Construction’s costs are capitalized as a part of the overall initial investment in the new center or the remodel. Any remaining unallocated costs are recognized as an expense in the period incurred. Because FCA Construction performs services solely for us, we do not recognize any revenue or profit related to FCA Construction's operations.

Marketing and Sales

Overview of Marketing. Our in-house centralized marketing and creative design agency is responsible for promoting and differentiating the Life Time Healthy Way of Life brand so as to connect and engage existing and new customers to our centers, products and services. Our marketing and creative design initiatives focus on our comprehensive, lifestyle-oriented approach of helping people set and achieve their health and fitness goals by participating in activities that interest them - and helping them to identify new areas of passion - both inside and outside of our healthy way of life destinations. In turn, these efforts further engage existing members in our corporate business areas and generate new consumer leads for our membership sales force. Our in-house marketing and creative design agency integrates four key areas, including member acquisition and retention, media planning and analysis, creative development and production, and web, digital and social development that personalizes the Life Time brand for each member and prospective member. By delivering centralized marketing and creative design services to our centers and corporate businesses, we bring proven, experienced and innovative strategic planning, creative design, member experience and production to our existing and new markets in an efficient and effective manner. New membership, loyalty and corporate business results are tracked to gauge the effectiveness of marketing initiatives, which are adjusted, as necessary, to address changing center and corporate business needs.

Overview of Sales. We have motivated, trained and certified, commissioned member engagement advisors (sales team) in each center that are responsible for member acquisition and retention. Our member engagement advisors are responsible for prospecting potential members, setting up personalized visits and tours of our centers, and highlighting relevant programs, services and amenities that align with expressed member interests and goals. The member engagement advisors inspire action on the part of prospective members to get started on their healthy way of life and ensure they are connected to our programs and our certified experts. The member engagement advisors also serve as a primary relationship manager for new members through consistent engagement and timely follow up. During the pre-opening and grand opening phases described below, we have up to 12 member engagement managers on staff at a center. As the center matures, we reduce the number of member engagement advisors on staff to between six and eight.

Pre-Opening Phase. We generally begin selling memberships up to five months prior to a center's scheduled opening. We market to prospective members during this period primarily through a portfolio of broad-reach and targeted consumer and business-to-business media as well as referral promotions. To further attract new members during this period, we occasionally offer lower pre-opening joining fees.

Grand Opening Phase. We deploy a marketing program during the first month of a center's operation that builds on our pre-opening efforts. The advertising campaign culminates with households in a strategically designated trade area - based on local access considerations, housing density and travel patterns - receiving targeted advertising. Simultaneously, prospective members receive special invitations to grand opening activities and educational seminars designed to assist them in their orientation to the center.

Membership Growth Phase. After the grand opening phase, marketing activities and costs should decrease as drive-by visibility and word-of-mouth marketing become more influential. The goal of each center is to achieve consistent membership growth until targeted capacity is reached. Once the center has reached its targeted capacity, marketing

efforts are directed at keeping membership levels stable and at growing other in-center services to existing members. Marketing plans for each center are formulated on an annual basis and reviewed monthly by marketing and center-level sales personnel. At monthly intervals, a comprehensive situation analysis is performed to ensure sales and retention objectives are meeting the goals of the center's business plan.

Ongoing Member Retention Phase. When a new member joins, we initiate a connectivity and engagement process aimed at helping them to achieve their total health objectives, athletic aspirations and fitness goals by engaging in their areas of passion. We are in the position to help them achieve this by providing the best places, people and programs of exceptional quality and value. We have created dozens of specific interest areas, along with connectivity programs, including, but not limited to, our dedicated member website, myLT.com; our periodic offerings of various physical and social events entitled myEvents; access to 450 national and local Member Advantage discounts, a program designed to provide our members with discounts at select local and national partner businesses; and access to myLTBuck$, a member loyalty or rewards program.

Leveraging the LIFE TIME FITNESS® Brand

We continue to build our brand nationally via our centers, and by delivering products and services in the areas of exercise, education and nutrition at a high quality and value. We are further strengthening the LIFE TIME FITNESS® brand by broadening our portfolio of centers, expanding the circulation of our Experience Life®magazine, and strengthening our athletic events and nutritional products.

Centers. As of February 28, 2012, we operated 102 centers in 26 major markets under the LIFE TIME FITNESS® and LIFE TIME ATHLETIC^SM brands.

Education. Our educational initiatives include in-center classes and seminars; a vast array of online content (at lifetimefitness.com, experiencelife.com, revolutionaryact.com, myLT.com, myhealthcheckonline.com and lifetimeendurance.com), including articles, videos, blogs, e-newsletters; social media offerings; and our award-winning print magazine, Experience Life®, which is distributed to more than 550,000 of our members. The publication, with a total circulation of approximately 650,000 copies, is also available to a general consumer audience by subscription and on newsstands nationwide. Published 10 times a year, Experience Life® offers an average of 92 full-color pages of forward-thinking health and fitness wisdom, including articles on nutrition and healthy eating, health and wellness, exercise and active adventure, stress-management, personal development and many other quality-of-life topics. In addition, each issue includes about 34 pages of national advertising. The magazine is also available in a digital edition, and launched its first iPhone/iPad app, “101 Revolutionary Ways to Be Healthy,” in 2011. In continuous publication since 2001, Experience Life® is considered by many health experts to be one of the country's leading health and fitness titles, and has earned dozens of national and regional awards, including two gold Folio awards and numerous top prizes from the Minnesota Magazine and Publishing Association.

Athletic Events. We produce athletic events for members and non-members, both inside and outside our centers. The primary focus has been on endurance activities, including running, cycling and triathlon. In 2011, we produced 140 events, which served approximately 80,000 participants. Our events range from entry level to elite endurance events and draw from local, regional, national and international markets. Our larger events include the Life Time Fitness Minneapolis Triathlon, the Life Time Fitness Chicago Triathlon and the iconic Leadville Trail 100 Mountain Bike “Race Across the Sky.” In addition, we own and m

anage the Life Time Triathlon Series, which connects seven of the most prominent international distance triathlon events in the United States. Events produced during the year are primarily in markets in which we operate centers, and include themed runs such as the Torchlight 5K Run and Turkey Day 5K in Minneapolis, the Trick or Treat Trot and Rudolph Ramble in Chicago and the Run Wild 5K Fun Run & Walk in several markets. We also produce Indoor Triathlons in many of our centers, which are geared towards introducing members to the sport of triathlon.

Nutritional Products. We offer a line of nutritional products, including Men's and Women's Performance Multivitamins, Omega-3 Fish Oil, Joint Maintenance Formulation, LeanSource Soft Gels, Whey Protein Isolate, and FastFuel Complete, our meal replacement product. We believe our products deliver high quality, value and performance when it comes to helping our members achieve their health and fitness goals. Our products use high quality ingredients and are available in our LifeCafes and through our website, lifetimefitness.com. Our current

nutritional product line focuses on four areas, which are daily health, weight management, energy and athletic performance. We use experienced and professional third parties to manufacture our nutritional products.

Our Employees

Our current model centers are staffed with an average of 250 full-time and part-time employees. Approximately 11 center employees are in management positions, typically including a general manager, member services department head, operations department head and sales department head to ensure a well-managed facility and motivated work force.

All center employees are required to participate in a training program that is specifically designed to promote a friendly and inviting environment at each center and a consistent standard of performance across all of our centers. Employees also receive ongoing mentoring, and continuing education is required before they are permitted to advance to other positions within our company. Additionally, our personal trainers, registered dietitians, massage therapists and cosmetologists are required to maintain a professional license or one of their industry’s top certifications.

As of December 31, 2011, we had approximately 20,000 employees, including approximately 13,000 part-time employees and approximately 800 employees at our corporate office. We are not a party to a collective bargaining agreement with any of our employees. Although we experience turnover of non-management personnel, historically we have not experienced difficulty in obtaining adequate replacement personnel. In general, we believe relations with our employees are good.

Information Systems

In addition to our standard operating and administrative systems, we use an integrated and flexible member management system to manage the flow of member information within each of our centers and between centers and our corporate office. We have designed and developed our proprietary system to allow us to easily collect and process information. Our system enables us to, among other things, enroll new members with an electronic membership agreement, capture digital pictures of members for identification purposes and capture and maintain specific member information, including usage. The system allows us to streamline the collection of membership dues electronically, thereby offering additional convenience for our members while at the same time reducing our corporate overhead and accounts receivable. We have a customer relationship management system to enhance our marketing campaigns and management oversight regarding daily sales and marketing activities.

Competition

Due to the innovative nature of our comprehensive centers, programming, product and service offerings and events, we believe that we are well positioned in the health and fitness industry. However, this industry is highly competitive and our competition may have greater name recognition than we have or greater economies of scale. We consider the following groups to be the primary industry participants in the health and fitness industry:

• health club operators, including 24 Hour Fitness Worldwide, Inc., Equinox Holdings, Inc., LA Fitness International, LLC, Town Sports International, Inc. and Gold's Gym;

• the YMCA and similar non-profit organizations;

• physical fitness and recreational facilities established by local governments, hospitals and businesses;

• local salons, cafés and businesses offering similar ancillary services;

• exercise and small fitness clubs and studios, including Anytime Fitness, Curves International and Snap Fitness;

• racquet, tennis and other athletic clubs;

• amenity and condominium clubs;

• country clubs;

• online personal training and fitness coaching;

• the home-use fitness equipment industry;

• athletic event operators; and

• other providers of healthy way of life orientated services.

Competition in the health club industry varies from market to market and is based on several factors, including the breadth of product and service offerings, enrollment fees and membership dues, the flexibility of membership options and the overall quality of the offering. We believe that our comprehensive product offering and focus on services, amenities and value provide us with a distinct competitive advantage.

Government Regulation

Our operations and business practices are subject to regulation at federal, state and local levels, including consumer protection regulation related to our advertising, marketing, and sales efforts; health and safety regulation and licensing requirements related to our café, spa, aquatics, child care and ancillary health and fitness-related products and services; and regulation related to the collection, use and security of personal information about our members, guests and purchasers.

With respect to the health and fitness industry specifically, state statutes regulate the sale and terms of our membership contracts. State statutes often require that we:

• include certain terms in our membership contracts, including the right to cancel a membership, in most cases, within three to ten days after joining, and receive a refund of joining fees paid;

• escrow funds received from pre-opening sales or post a bond or proof of financial responsibility; and

• adhere to price or financing limitations.

Trademarks and Trade Names

We own several trademarks and service marks registered with the U.S. Patent and Trademark Office, including LIFE TIME FITNESS®, EXPERIENCE LIFE®, LIFE TIME FITNESS TRIATHLON SERIES® and T.E.A.M. TRAINING EDUCATION ACCOUNTABILITY MOTIVATION^®. We have also registered our logo and our LIFE TIME FITNESS Triathlon logo. We also registered the “LIFE TIME FITNESS” mark in certain foreign countries.

We believe our trademarks and trade names have become important components in our marketing and branding strategies. We believe that we have all licenses necessary to conduct our business. In particular, we license the mark “LIFE TIME” in connection with our nutritional products so that we can market and distribute them under the LIFE TIME FITNESS® brand.

Available Information

Our corporate website is lifetimefitness.com. We make available through our website, free of charge, all reports and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (the “SEC”).

Item 1A. Risk Factors.

We may be unable to attract and retain members, which could have a negative effect on our business.

The success of our business depends on our ability to attract and retain members, and we cannot assure you that we will be successful in our marketing efforts or that the membership levels at our centers will not materially decline, especially at those centers in operation for an extended period of time. All of our members can cancel their membership at any time upon providing advance notice. In addition, we experience attrition and must continually engage existing members and attract new members in order to maintain our membership levels and sales from in-center services. There are numerous factors that could lead to a decline in membership levels or sales of in-center services in mature centers or that could prevent us from increasing membership and in-center service revenue at newer centers where membership is generally not yet at a targeted capacity. These factors include changing desires and behaviors of consumers, changes in discretionary spending trends and general economic conditions, market maturity or saturation, a decline in our ability to deliver quality service at a competitive price, direct and indirect competition in our trade areas, advances in medical care that lead to less interest in health and fitness activities, and a decline in the public’s interest in health and fitness as well as social fears such as terror or health threats which could reduce the desire to be in a concentrated public venue. In order to increase membership levels, we may from time to time offer lower membership rates and enrollment fees. Any decrease in our average dues, reduction in enrollment fees or higher membership acquisition costs may adversely impact our operating margins.

We rely heavily on our revolving credit facility and our ability to access additional capital. If we are not able to access our credit facility, obtain additional capital or refinance existing debt, our ability to operate our business and pursue our growth strategy may be impaired.

As of December 31, 2011, we had total consolidated indebtedness of $686.3 million, of which $267.9 million was floating rate debt, consisting principally of obligations under term notes that are secured by certain of our properties, borrowings under our revolving credit facility that are secured by certain personal property, mortgage notes that are secured by certain of our centers, and obligations under capital leases.

The credit markets generally and our level of indebtedness could have important consequences to us, including the following:

• Our ability to obtain the appropriate levels of capital for working capital purposes or to finance the development of additional sites, construction of new centers or acquisitions, which may limit our growth strategy and future business opportunities;

• A significant portion of our debt has a variable rate of interest, which increases our vulnerability to interest rate fluctuations;

• We will need a substantial portion of our cash flow to pay the principal of, and interest on, our indebtedness, including indebtedness that we may incur in the future, which may reduce the funds that would otherwise be available for our operations or to pursue our growth strategy and future business opportunities;

• A substantial decrease in our cash flows from operations or a substantial increase in our investment in new centers could make it difficult for us to meet our debt service requirements and force us to modify our operations;

• We may be more highly leveraged than our competitors, which may place us at a competitive disadvantage; and

• Our debt level may make us more vulnerable and less flexible than our competitors to a downturn in our business or the economy in general.

In addition to the amount of indebtedness outstanding as of December 31, 2011, we had access to an additional $220.1 million under our credit facilities. We also have the ability to incur new debt, subject to limitations under our existing credit facilities and in our debt financing agreements. If we incur additional debt, the risks associated with our leverage, including our ability to service our debt, could intensify, and we may have to change our growth strategies as a consequence.

Finally, if cash from available sources is insufficient or unavailable, or if cash is used for unanticipated needs, we may require additional capital sooner than anticipated. In the event that we are required or choose to raise additional funds, we may be unable to do so on favorable terms or at all. Furthermore, the cost of debt financing could significantly increase, making it cost-prohibitive to borrow, which could force us to issue new equity securities. If we issue new equity securities, existing shareholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of common stock.

Any inability to access existing credit facilities, raise additional capital when required or with favorable terms or repay scheduled indebtedness at maturity could have an adverse effect on our business plans and operating results.

If we fail to comply with any of the covenants in our financing documents, we may not be able to access our existing credit facilities, we may face an accelerated obligation to repay our indebtedness.

We have entered into several financing transactions to finance the development of our centers. Certain of the loan documents contain financial and other covenants applicable to us, and certain of these loan documents contain cross-default provisions. If we fail to comply with any of the covenants, it may cause a default under one or more of our loan documents, which could limit our ability to obtain additional financing under our existing credit facilities, require us to pay higher levels of interest or accelerate our obligations to repay our indebtedness.

Our continued growth could place strains on our management, employees, information systems and internal controls which may adversely impact our business.

Over the past several years, we have experienced significant growth in our business activities and operations, including an increase in the number of our centers. Our past expansion has placed, and any accelerated future expansion may place, significant demands on our administrative, operational, financial and other resources. Any failure to manage growth effectively could seriously harm our business. To be successful, we will need to continue to implement management information systems and improve our operating, administrative, financial and accounting systems and controls. We will also need to train new employees and maintain close coordination among our executive, accounting, finance, legal, marketing, sales and operations functions. These processes are time-consuming and expensive, increase management responsibilities and divert management attention. In addition, if we seek to grow our business through acquisition, we will face risks related to identifying appropriate targets, conducting effective due diligence and integrating the acquired businesses in order for any acquisitions to be accretive to earnings over the long term.

We may be unable to successfully acquire suitable businesses or, if we do acquire them, the acquisition may disrupt our business or we may be unable to successfully integrate the business into our own, all of which may have a material adverse effect on our performance.

In order to remain competitive and to expand our business, we have acquired, and expect to continue to acquire, complementary businesses and centers.  In the future, we may not be able to find suitable acquisition candidates.  If we do find suitable candidates, we may not be able to acquire the businesses on favorable terms or at all. We may also have to incur debt or issue equity securities to pay for any acquisition, which could adversely affect our financial results or dilute our shareholders.

In addition, if we do acquire other businesses, integrating the business into our own may place significant demands on our administrative, operational, financial and other resources and may require significant management time, which may disrupt our other businesses.  Our ability to acquire and integrate larger or more significant companies is unproven.  In addition, we cannot provide any assurances that we will be able to successfully integrate any acquired, or to be acquired, business into our own business or achieve any goals relating to the acquisition.

If we fail to properly maintain the integrity of our data or to strategically implement new or upgrade or consolidate existing information systems, our reputation and business could be materially adversely affected.

As we grow our business, we increasingly use electronic means to interact with our customers and collect, maintain and store individually identifiable information, including but not limited to personal financial information and health-related information. Despite the security measures we have in place to ensure compliance with applicable laws and rules, our facilities and systems, and those of our third party service providers may be vulnerable to security breaches, acts of cyber terrorism, vandalism or theft, computer viruses, misplaced or lost data, programming and/or human errors or other similar events. Additionally, the collection, maintenance, use, disclosure and disposal

of individually identifiable data by our businesses are regulated at the federal and state levels as well as by certain financial industry groups, such as the Payment Card Industry organization. Such federal, state and financial industry groups may also consider from time to time new privacy and security requirements that may apply to our businesses. Compliance with evolving privacy and security laws, requirements, and regulations may result in cost increases due to necessary systems changes, new limitations or constraints on our business models and the development of new administrative processes. They also may impose further restrictions on our collection, disclosure and use of individually identifiable information that are housed in one or more of our databases. Noncompliance with any privacy laws, any financial industry group requirements or any security breach involving the misappropriation, loss or other unauthorized disclosure of sensitive or confidential member information, whether by us or by one of our vendors, could have a material adverse effect on our business, operations and reputation including material fines and penalties; increased financial processing fees; compensatory, special, punitive and statutory damages; adverse actions against our licenses to do business; and injunctive relief whether by court or consent order, regarding our privacy and security practices.

The health club industry is highly competitive and our competitors may have greater name recognition than we have.

We compete with other health and fitness centers, physical fitness and recreational facilities established by local non-profit organizations, governments, hospitals, and businesses, local salons, cafés and businesses offering similar ancillary services, and to a lesser extent, amenity and condominium clubs and similar non-profit organizations, exercise studios, racquet, tennis and other athletic clubs, country clubs, online personal training and fitness coaching and the home fitness equipment industry. We cannot assure you that our competitors will not attempt to copy our business model, or portions thereof, and that this will not erode our market share and brand recognition and impair our growth rate and profitability. Competitors, which may have greater name recognition than we have, may compete with us to attract members in our markets. Non-profit and government organizations in our markets may be able to obtain land and construct centers at a lower cost and collect membership fees without paying taxes, thereby allowing them to charge lower prices. Furthermore, due to the increased number of low cost health club and fitness center alternatives, we may face increased competition during periods when discretionary spending declines or unemployment remains high. This competition may limit our ability to increase membership fees, retain members, attract new members and retain qualified personnel.

Delays in new center openings could have a material adverse effect on our financial performance.

In order to meet our objectives, it is important that we open new centers on schedule. A significant amount of time and expenditure of capital is required to develop and construct new centers. If we are significantly delayed in opening new centers, our competitors may be able to open new clubs in the same market before we open our centers or improve centers currently open. This change in the competitive landscape could negatively impact our pre-opening sales of memberships and increase our investment costs. In addition, delays in opening new centers could hurt our ability to meet our growth objectives. Our ability to open new centers on schedule depends on a number of factors, many of which are beyond our control. These factors include:

• obtaining acceptable financing for construction of new sites;

• obtaining entitlements, permits and licenses necessary to complete construction of the new center on schedule;

• recruiting, training and retaining qualified management and other personnel;

• securing access to labor and materials necessary to develop and construct our centers;

• delays due to material shortages, labor issues, weather conditions or other acts of God, discovery of contaminants, accidents, deaths or injunctions; and

• general economic conditions.

We may incur rising costs related to construction of new centers and maintenance of our existing centers. If we are not able to pass these cost increases through to our members, our returns may be adversely affected.

Our centers require significant upfront and ongoing investment. If our investment is higher than we had planned, we may need to outperform our operational plan to achieve our targeted return. Over the longer term, we believe that we can offset cost increases by increasing our membership dues and other fees and improving profitability through cost

efficiencies, but higher costs in regions where we are opening new centers may be difficult to offset in the short-term.

We have significant operations concentrated in certain geographic areas, and any disruption in the operations of our centers in any of these areas could harm our operating results.

At February 28, 2012, we operated multiple centers in several metropolitan areas, including 24 in the Minneapolis/St. Paul market, nine in the Chicago market, eight in the Dallas market, six in the Detroit and Houston markets and five in the Atlanta and Phoenix markets, with future planned expansion in current and new markets. As a result, any prolonged disruption in the operations of our centers in any of these markets, whether due to technical difficulties, power failures or destruction or damage to the centers as a result of a natural disaster, fire or any other reason, could harm our operating results. In addition, our concentration in these markets increases our exposure to adverse developments related to competition, as well as economic and demographic changes in these areas.

If we are unable to identify and acquire suitable sites for new sports and athletic, professional fitness, family recreation and spa destinations, our revenue growth rate and profits may be negatively impacted.

To successfully expand our business, we must identify and acquire sites that meet the site selection criteria we have established. In addition to finding sites with the right demographic and other measures we employ in our selection process, we also need to evaluate the penetration of our competitors in the market. We face significant competition for sites that meet our criteria, and as a result we may lose those sites, our competitors could copy our format or we could be forced to pay significantly higher prices for those sites. If we are unable to identify and acquire sites for new centers, our revenue growth rate and profits may be negatively impacted. Additionally, if our analysis of the suitability of a site is incorrect, we may not be able to recover our capital investment in developing and building the new center.

If our chairman, president and chief executive officer leaves our company for any reason, it could have a material adverse effect on us.

Our growth and development to date have been driven by the services of Bahram Akradi, our Chairman of the Board of Directors, President, Chief Executive Officer and founder. We do not have any employment or non-competition agreement with Mr. Akradi. As a result, Mr. Akradi may be able to exert disproportionate influence over us because of the significant consequence of his departure.

If we cannot retain our key personnel and hire additional highly qualified personnel, we may not be able to successfully manage our operations and pursue our strategic objectives.

We are highly dependent on the services of our senior management team and other key employees at both our corporate headquarters and our centers, and on our ability to recruit, retain and motivate key personnel. Competition for such personnel is intense, and the inability to attract and retain the additional qualified employees required to expand our activities, or the loss of current key employees, could materially and adversely affect us.

The opening of new centers in existing locations may negatively impact our same-center revenue increases and our operating margins.

We currently operate centers in 21 states. We plan to open three new large format centers in 2012, one of which is in an existing market. With respect to existing markets, opening new centers in existing markets may attract some memberships away from other of our centers in those markets, thereby diminishing their revenues and lead to asset impairment. In addition, as a result of new center openings in existing markets, and because older centers will represent an increasing proportion of our center base over time, our same-center revenue increases may be lower in future periods than in the past.

Another result of opening new centers is that our center operating margins may be lower than they have been historically while the centers build membership base. We expect both the addition of pre-opening expenses and the lower revenue volumes characteristic of newly-opened centers to affect our center operating margins at these new centers. We also expect certain operating costs, particularly those related to occupancy, to be higher than in the past in some newly-entered geographic regions. As a result of the impact of these rising costs, our total center contribution and operating margins may be lower in future periods than they have been in the past.

We could be subject to claims related to health or safety risks at our centers and off-premises activities and events.

Use of our centers and participation in off-premises activities and events poses potential health or safety risks to members or guests through exertion and use of our equipment, swimming pools, rock climbing walls, waterslides, endurance events and other facilities and services. Claims may be asserted against us for injury or death suffered by someone using our facilities, services, activities and events. In addition, the child center services we offer at our centers expose us to claims related to child care. Lastly, we also face liability in connection with our construction and remodel of our centers.

We are subject to extensive government regulation, and changes in these regulations could have a negative effect on our financial condition and results of operations.

Our operations are subject to various federal and state laws and regulations, including but not limited to the following:

• federal and state consumer protection laws related to the advertising, marketing and sale of our products and services;

• state statutes that regulate the sale and terms of our membership contracts;

• state and local health or safety regulations related to various center operations, such as LifeCafe, LifeSpa or Aquatics;

• federal and state regulation of ancillary health and fitness-related products and services;

• state licensing or other regulation of our service providers, such as cosmetologists, massage therapists and registered dietitians; and

• federal and state laws and regulations governing privacy and security of information.

Any changes in such laws or regulations could have a material adverse effect on our financial condition and results of operations.

We could be subject to claims related to our ancillary health and fitness-related offerings, and the value of our brand may suffer.

We offer directly or through third parties a variety of ancillary health and fitness-related products and services, such as nutritional products, blood screenings and other fitness assessments, chiropractic services, and medi-spa services. These products and services are, or may be subject to, legal and regulatory requirements. We cannot assure you that there will be no claims against us regarding the ingredients in, manufacture of or results of using our nutritional products, or any claims against us regarding our provision of other health and fitness-related services or our relationships with third parties. Furthermore, we cannot assure you that any rights we have under indemnification provisions and/or insurance policies will be sufficient to cover any losses that might result from such claims. Any publicity surrounding such claims may negatively impact the value of our brand.

If it becomes necessary to protect or defend our intellectual property rights or if we infringe on the intellectual property rights of others, we may become involved in costly litigation or be required to pay royalties or fees.

We may have disputes with third parties to enforce our intellectual property rights, protect our trademarks, determine the validity and scope of the proprietary rights of others or defend ourselves from claims of infringement, invalidity or unenforceability. Such disputes may require us to engage in litigation. We may incur substantial costs and a diversion of resources as a result of such disputes and litigation, even if we win. In the event that we do not win, we may have to enter into royalty or licensing agreements, we may be prevented from using the marks within certain markets in connection with goods and services that are material to our business or we may be unable to prevent a third party from using our marks. We cannot assure you that we would be able to reach an agreement on reasonable terms, if at all. In particular, although we own a federal trademark registration for use of the LIFE TIME FITNESS® mark in the field of health and fitness centers, we are aware of entities in certain locations around the country that use LIFE TIME FITNESS, LIFE TIME or other similar marks in connection with goods and services related to health and fitness. The rights of these entities in such marks may predate our rights. Accordingly, if we open any centers in the areas in which these parties operate, we may be required to pay royalties or may be prevented from using the mark in such areas.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

Our corporate headquarters, located in Chanhassen, Minnesota next to our Chanhassen large format center, is a 105,000 square foot, free-standing, three-story building that we own.

As of February 28, 2012, we operated 102 centers in 21 states, of which we leased 30 sites, were parties to long-term ground leases for seven sites, owned 64 sites and were a member of a joint-venture that owned one site. We expect to open three large format centers in 2012 on sites we own or lease in various markets, all of which are currently under construction. In addition, in January 2012, we acquired Racquet Club of the South, a tennis facility in the Atlanta market, which we rebranded as Life Time Tennis Atlanta. Excluding renewal options, the terms of leased centers, including ground leases, expire at various dates from 2012 through 2049. The majority of our leases have renewal options and a few give us the right to purchase the property. The table below con

t

27

ains information about our open centers:

Location	Center Format (1)	Square Feet (2)	Date Opened (3)
102 Life Time Tennis Atlanta	Other	22,703	Jan-2012
101 Fishers (Indianapolis), IN (4)	Other	32,000	Dec-2011
100 Matthews (Charlotte), NC (4)	Other	36,594	Dec-2011
99 University (Charlotte), NC (4)	Other	35,230	Dec-2011
98 Henderson (Columbus), OH (4)	Other	35,055	Dec-2011
97 Pickerington (Columbus), OH (4)	Other	27,000	Dec-2011
96 North Meridian (Indianapolis), IN (4)	Other	44,000	Dec-2011
95 Apex (Raleigh), NC (4)	Other	35,244	Dec-2011
94 Plantation Point (Raleigh), NC (4)	Other	32,000	Dec-2011
93 Six Forks (Raleigh), NC (4)	Other	45,306	Dec-2011
92 Summerlin (Las Vegas), NV	Large/Current	143,286	May-2011
91 Colorado Springs, CO	Large/Current	112,110	May-2011
90 Syosset (Long Island), NY	Large/Current	112,110	Jan-2011
89 Centennial (Denver), CO	Large/Current	129,182	Dec-2010
88 Uptown (Mpls./St. Paul), MN	Other	12,490	Aug-2010
87 Kingwood (Houston), TX	Other	50,085	May-2010
86 Lenexa (Kansas City), KS	Large/Current	112,110	Mar-2010
85 Pima Crossing (Phoenix), AZ	Other	20,620	Feb-2010
84 Beachwood (Cleveland), OH	Large/Current	112,110	Jan-2010
83 Collierville (Memphis), TN	Large/Current	112,110	Jun-2009
82 Lake Houston (Houston), TX	Large/Current	112,110	Feb-2009
81 Berkeley Heights (New York), NJ	Large/Current	112,110	Feb-2009
80 Westminster (Denver), CO	Large/Current	112,110	Nov-2008
79 Florham Park (New York), NJ	Large/Current	109,995	Nov-2008
78 Loudoun County (D.C./Baltimore), VA	Large/Current	112,110	Oct-2008
77 Mansfield (Dallas), TX	Large/Current	129,155	Oct-2008
76 Vernon Hills (Chicago), IL	Large/Current	140,495	Sep-2008
75 CityCentre (Houston), TX	Large/Current	140,495	Sep-2008
74 Rockville (D.C./Baltimore), MD	Large	66,700	Sep-2008
73 Mountain Brook (Atlanta), GA	Large/Current	112,110	Jun-2008
72 West County (St. Louis), MO	Large/Current	112,110	Jun-2008
71 Johns Creek (Atlanta), GA	Large/Current	112,110	May-2008
70 Parker (Denver), CO	Large/Current	129,155	Jan-2008

Location	Center Format (1)	Square Feet (2)	Date Opened (3)
69 San Antonio at the Rim (San Antonio), TX	Large/Current	112,110	Dec-2007
68 Sugarloaf (Atlanta), GA	Large/Current	112,110	Nov-2007
67 Austin South (Austin), TX	Large/Current	109,045	Oct-2007
66 Premier Place (Dallas), TX	Large	62,000	Sep-2007
65 White Bear Lake (Mpls./St. Paul), MN	Large	58,782	Sep-2007
64 Deerfield Township (Cincinnati), OH	Large/Current	127,040	Jul-2007
63 Omaha, NE	Large/Current	115,030	Jun-2007
62 Lakeville (Mpls./St. Paul), MN	Large/Current	115,030	Jun-2007
61 Cary (Raleigh), NC	Large/Current	109,995	May-2007
60 Dublin (Columbus), OH	Large/Current	109,045	Apr-2007
59 Scottsdale (Phoenix), AZ	Large/Current	109,775	Dec-2006
58 Alpharetta (Atlanta), GA	Large/Current	109,720	Dec-2006
57 Goodyear - Palm Valley (Phoenix), AZ	Large/Current	109,775	Oct-2006
56 Overland Park (Kansas City), KS	Large/Current	110,080	Oct-2006
55 South Valley (Salt Lake City), UT	Large/Current	108,925	Aug-2006
54 Boca Raton (Miami/Ft. Lauderdale), FL	Large	73,688	Jul-2006
53 Bloomington South (Mpls./St. Paul), MN	Large	95,314	Jul-2006
52 Eden Prairie (Mpls./St. Paul), MN	Large	89,011	Jul-2006
51 St. Louis Park (Mpls./St. Paul), MN	Large	189,496	Jul-2006
50 Crosstown (Mpls./St. Paul), MN	Large	145,896	Jul-2006
49 Target Center (Mpls./St. Paul), MN	Large	170,925	Jul-2006
48 Fridley (Mpls./St. Paul), MN	Large	162,048	Jul-2006
47 Allen-McKinney (Dallas), TX	Large/Current	125,475	May-2006
46 Columbia (D.C./Baltimore), MD	Large/Current	110,563	Feb-2006
45 Minnetonka (Mpls./St. Paul), MN	Other	41,000	Jan-2006
44 Maple Grove (Mpls./St. Paul), MN	Large	72,500	Dec-2005
43 San Antonio, TX	Large/Current	110,563	Dec-2005
42 Romeoville (Chicago), IL	Large/Current	110,563	Sep-2005
41 Austin North (Austin), TX	Large/Current	110,563	Sep-2005
40 Chanhassen (Mpls./St. Paul), MN	Large/Current	110,563	Jul-2005
39 Cinco Ranch (Houston), TX	Large/Current	108,890	Jun-2005
38 Commerce Township (Detroit), MI	Large/Current	108,890	Mar-2005
37 Colleyville (Dallas), TX	Large/Current	108,890	Nov-2004
36 North Dallas (Dallas), TX	Large	68,982	Nov-2004
35 Flower Mound (Dallas), TX	Large/Current	108,890	Oct-2004
34 Sugar Land (Houston), TX	Large/Current	108,890	Oct-2004
33 Garland (Dallas), TX	Large/Current	108,890	Jul-2004
32 Champions (Houston), TX	Large/Current	108,890	Jun-2004
31 Plano (Dallas), TX	Large/Current	108,890	Nov-2003
30 New Hope (Mpls./St. Paul), MN	Other	44,156	Oct-2003
29 Gilbert (Phoenix), AZ	Large/Current	108,890	Oct-2003
28 Tempe (Phoenix), AZ	Large/Current	108,890	Apr-2003
27 Rochester Hills (Detroit), MI	Large/Current	108,890	Nov-2002
26 Canton Township (Detroit), MI	Large/Current	105,010	Sep-2002
25 Old Orchard (Chicago), IL	Large/Current	108,890	Aug-2002
24 Savage (Mpls./St. Paul), MN	Large	80,583	Jun-2002
23 Burr Ridge (Chicago), IL	Large/Current	105,562	Feb-2002
22 Champlin (Mpls./St. Paul), MN	Large	61,948	Oct-2001

Location	Center Format (1)	Square Feet (2)	Date Opened (3)
21 Fairfax (D.C./Baltimore), VA	Large	67,467	Oct-2001
20 Orland Park (Chicago), IL	Large/Current	108,890	Aug-2001
19 Algonquin (Chicago), IL	Large/Current	108,890	Apr-2001
18 Bloomingdale (Chicago), IL (5)	Large/Current	108,890	Feb-2001
17 Warrenville (Chicago), IL	Large/Current	114,933	Jan-2001
16 Schaumburg (Chicago), IL	Large/Current	108,890	Oct-2000
15 Minneapolis, MN (6)	Other	58,705	Sep-2000
14 Shelby Township (Detroit), MI	Large	101,680	Mar-2000
13 Centreville (D.C./Baltimore), VA	Large	90,956	Jan-2000
12 Novi (Detroit), MI	Large	90,956	Oct-1999
11 Indianapolis, IN	Large	90,956	Aug-1999
10 Columbus, OH	Large	98,047	Jul-1999
9 Apple Valley(Mpls./St. Paul), MN	Other	10,375	Jun-1999
8 Troy (Detroit), MI	Large	93,579	Jan-1999
7 Plymouth (Mpls./St. Paul), MN	Large	109,558	Jun-1997
6 Bloomington North (Mpls./St. Paul), MN	Other	47,307	Nov-1996
5 Coon Rapids (Mpls./St. Paul), MN	Other	90,262	May-1996
4 Highland Park (Mpls./St. Paul), MN (7)	Other	39,678	Nov-1995
3 Roseville (Mpls./St. Paul), MN	Other	14,000	Sep-1995
2 Woodbury (Mpls./St. Paul), MN	Large	73,050	Sep-1995
1 Eagan (Mpls./St. Paul), MN	Large	64,415	Sep-1994

(1) Generally, the main differences between our large format centers and those that are of the current model design are that our current model centers generally include an outdoor aquatics park, larger indoor aquatics area, larger gymnasium, up to three additional studios and enhanced LifeSpa and LifeCafe spaces. We believe that all of our large format centers serve as all-in-one sports and athletic, professional fitness, family recreation and spa destinations. The other center format includes smaller or specialty centers.

(2) In a few of our centers, we sublease space to third parties who operate our pro shop or climbing wall or to hospitals or physical therapy providers. The square footage figures include those subleased areas. The square footage figures exclude areas used for tennis courts, outdoor swimming pools and outdoor play areas. These figures are approximations.

(3) For acquired centers, date opened is the date we assumed operations of the center.

(4) In December 2011, we acquired nine facilities from Lifestyle Family Fitness ("LFF") in Indiana, North Carolina and Ohio.

(5) This center is a joint venture in which we have a one-third interest.

(6) We operate a separate 13,842 square foot full-service restaurant in the same building. The square footage figure in the table does not include the restaurant space.

(7) This center is located in a 109,346 square foot office building that we own.

In addition to the centers listed in the table above, we also operate five facilities which we classify as satellite locations. These include an owned 15,640 square foot tennis-only facility in Minnetonka, Minnesota, and four leased yoga centers in Detroit, Michigan.

28

Other Property Data:

	As of December 31,
	2011	2010	2009	2008	2007
	(Number of centers)
Center age
Open 1 to 12 months	12	6	3	11	10
Open 13 to 36 months	9	14	21	25	22
Open 37+ months (mature)	80	69	60	45	38
Total centers	101	89	84	81	70
Center format
Large format - current model	57	54	51	48	38
Large format - other	24	24	24	24	23
Other format	20	11	9	9	9
Total centers	101	89	84	81	70
Center ownership
Own	47	35	28	29	28
Own/ground lease	7	3	3	2	1
Own/mortgaged	17	20	23	20	18
Own/ground lease/mortgaged	—	3	3	3	3
Joint venture	1	1	1	1	1
Leased	29	27	26	26	19
Total centers	101	89	84	81	70

Item 3. Legal Proceedings.

We may be subject to litigation from time to time. Due to their nature, such legal proceedings involve inherent uncertainties, including but not limited to, court rulings, negotiations between affected parties and governmental intervention. We have established reserves for matters that are probable and estimable in amounts we believe are adequate to cover reasonable judgments not covered by insurance. Based upon the information available to us and discussions with legal counsel, it is our opinion that the outcome of the various legal actions and claims will not have a material adverse impact on our consolidated financial position, results of operations or cash flows. Such matters are subject to many uncertainties, however, and the outcome of individual matters is not predictable with assurance.

29

Item 4. Mine Safety Disclosures.

None.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchaser of Equity Securities.

Market Information

Our common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol LTM. The following table sets forth, for the periods indicated, the high and low sales prices as reported by the NYSE.

30

	High	Low
Fiscal Year Ended December 31, 2010:
First Quarter (January 1, 2010 – March 31, 2010)	$30.13	$22.05
Second Quarter (April 1, 2010 – June 30, 2010)	$40.72	$28.17
Third Quarter (July 1, 2010 – September 30, 2010)	$40.63	$30.39
Fourth Quarter (October 1, 2010 – December 31, 2010)	$42.99	$35.22
Fiscal Year Ended December 31, 2011:
First Quarter (January 1, 2011 – March 31, 2011)	$44.25	$35.00
Second Quarter (April 1, 2011 – June 30, 2011)	$40.98	$33.15
Third Quarter (July 1, 2011 – September 30, 2011)	$44.18	$33.17
Fourth Quarter (October 1, 2011 – December 31, 2011)	$48.42	$34.78

Holders

As of February 16, 2012, the number of record holders of our common stock was approximately 392, consisting of 17 record holders with our transfer agent and approximately 375 employees granted restricted stock by the Company.

Performance Graph

The following graph compares the annual change in the cumulative total shareholder return on our common stock from December 31, 2006 through December 31, 2011 with the cumulative total return on the NYSE Composite Index and Russell 2000 Index. The comparison assumes $100 was invested on December 31, 2006 in Life Time Fitness common stock and in each of the foregoing indices and assumes that dividends were reinvested when and as paid. We have not declared dividends on our common stock. You should not consider shareholder return over the indicated period to be indicative of future shareholder returns.

Comparison of Total Return

	12/31/2006		12/31/2007		12/31/2008		12/31/2009		12/31/2010		12/31/2011
Life Time Fitness		$100		$102		$27		$51		$84		$96
NYSE Composite Index	100		107		63		79		87		82
Russell 2000 Index	100		97		63		79		99		94

Dividends

We have never declared or paid any cash dividends on our common stock. We currently intend to invest all future earnings into the operation and expansion of our business and do not anticipate declaring or paying any cash dividends on our common stock in the foreseeable future. In addition, the terms of our revolving credit facility limits the amount of dividends we may pay without the consent of the lenders. The payment of any dividends in the future will be at the discretion of our board of directors and will depend upon our results of operations, earnings, capital requirements, contractual restrictions, outstanding indebtedness and other factors deemed relevant by our board.

Issuer Purchases of Equity Securities in Fourth Quarter 2011

Period	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plan (1)	Maximum Number of Shares that May Yet be Purchased Under the Plan (1)
October 1 – 31, 2011	—	$—	—	314,670
November 1 – 30, 2011	—	$—	—	314,670
December 1 – 31, 2011	—	$—	—	314,670
Total	—	$—	—	314,670

(1) In June 2006, our Board of Directors authorized the repurchase of 500,000 shares of our common stock from time to time in the open market or otherwise for the primary purpose of offsetting the dilutive effect of shares issued pursuant to our Employee Stock Purchase Plan. From June 2006 through December 2011, we have repurchased 185,330 shares. In August 2011, our Board of Directors authorized the repurchase of up to $60 million of our outstanding common stock from time to time through the open market or privately negotiated transactions. The authorization to repurchase shares terminates when the aggregate repurchase amount totals $60 million or at the close of business on August 17, 2013, whichever comes earlier. As of December 31, 2011, no shares have been repurchased under this program.

Equity Compensation Plan Information

Incorporated by reference hereunder is the information under “Equity Compensation Plan Information” in our Proxy Statement.

Item 6. Selected Financial Data.

You should read the selected consolidated financial data below in conjunction with our consolidated financial statements and the related notes and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 are prepared from our audited consolidated financial statements that are included elsewhere in this report. The consolidated statement of operations data for the years ended December 31, 2008 and 2007 and the consolidated balance sheet data as of December 31, 2009, 2008 and 2007 are derived from our audited consolidated financial statements that have been previously filed with the SEC. Historical results are not necessarily indicative of the results of operations to be expected for future periods. See Note 2 to our consolidated financial statements for a description of the method used to compute basic and diluted net earnings per share.

	For the Year Ended December 31,
	2011			2010			2009			2008			2007
	(In thousands, except per share, center and membership data)
Statement of Operations Data:
Revenue
Center revenue
Membership dues	$	663,439		$	603,231		$	564,605		$	508,927		$	434,138
Enrollment fees	18,447			24,426			26,138			26,570			24,741
In-center revenue (1)	308,474			266,426			232,834			218,198			182,215
Total center revenue	990,360			894,083			823,577			753,695			641,094
Other revenue	23,314			18,761			13,424			15,926			14,692
Total revenue	1,013,674			912,844			837,001			769,621			655,786
Operating expenses
Center operations	614,949			561,070			506,443			454,645			377,235
Advertising and marketing	36,318			27,098			26,299			31,500			24,967
General and administrative	54,736			48,060			42,776			43,749			40,820
Other operating	35,562			23,544			21,852			19,426			16,340
Depreciation and amortization	98,843			92,313			90,770			72,947			59,014
Total operating expenses (2)	840,408			752,085			688,140			622,267			518,376
Income from operations	173,266			160,759			148,861			147,354			137,410
Interest expense, net	(20,138		)	(27,795		)	(30,338		)	(29,552		)	(25,443		)
Equity in earnings of affiliate (3)	1,299			1,176			1,302			1,243			1,272
Income before income taxes	154,427			134,140			119,825			119,045			113,239
Provision for income taxes	61,810			53,448			47,441			47,224			45,220
Net income	$	92,617		$	80,692		$	72,384		$	71,821		$	68,019
Basic earnings per common share	$	2.29		$	2.03		$	1.84		$	1.84		$	1.81
Weighted average number of common shares outstanding — basic	40,358			39,809			39,297			39,002			37,518
Diluted earnings per common share	$	2.26		$	2.00		$	1.82		$	1.83		$	1.78
Weighted average number of common shares outstanding — diluted (4)	40,930			40,385			39,870			39,342			38,127
Balance Sheet Data (end of period):
Cash and cash equivalents	$	7,487		$	12,227		$	6,282		$	10,829		$	5,354
Working capital	(55,413		)	(56,513		)	(67,396		)	(107,112		)	(100,281		)
Total assets	1,915,828			1,718,480			1,631,525			1,647,703			1,386,533
Long-term debt, net of current portion	679,449			605,279			643,630			702,569			555,037
Total debt	686,298			612,544			660,346			712,904			564,605
Total shareholders’ equity	957,473			840,578			737,431			652,901			572,557
Cash Flow Data:
Net cash provided by operating activities	$	227,943		$	192,265		$	186,203		$	183,066		$	142,206
Net cash used in investing activities	(232,949		)	(149,034		)	(143,285		)	(305,995		)	(417,207		)
Net cash provided by (used in) financing activities	266			(37,286		)	(47,465		)	128,404			273,475

	For the Year Ended December 31,
	2011			2010			2009			2008			2007
	(In thousands, except per share, center and membership data)
Other Data:
Same center revenue – 13 month (5)	5.1		%	5.0		%	(3.1		%)	2.8		%	6.1		%
Same center revenue – 37 month (5)	4.3		%	2.3		%	(7.5		%)	(2.8		%)	0.8		%
Average revenue per membership (6)	$	1,543		$	1,475		$	1,414		$	1,427		$	1,360
Average in-center revenue per membership (7)	$	481		$	440		$	400		$	414		$	387
Annual attrition rate (8)	35.0		%	36.3		%	40.6		%	42.3		%	34.3		%
EBITDA (9)	$	273,408		$	254,248		$	240,933		$	221,544		$	197,696
EBITDAR (9)	$	316,218		$	296,729		$	281,174		$	248,919		$	217,072
Capital expenditures (10)	$	165,335		$	131,671		$	146,632		$	463,337		$	415,822
Free cash flows (11)	$	62,608		$	60,594		$	39,571		$	(280,271	)	$	(273,616	)
Operating Data (end of period) (12):
Centers open	101			89			84			81			70
Memberships	676,054			612,556			578,937			567,110			499,092
Center square footage (13)	9,500,442			8,810,507			8,459,540			8,109,359			6,832,814
Employees	20,000			19,000			17,400			16,700			15,000
Margins:
Center operations	39.3		%	38.5		%	39.5		%	40.9		%	42.5		%
EBITDA (14)	27.0		%	27.9		%	28.8		%	28.8		%	30.1		%
EBITDAR (15)	31.2		%	32.5		%	33.6		%	32.3		%	33.1		%
Operating income	17.1		%	17.6		%	17.8		%	19.1		%	21.0		%
Net Income	9.1		%	8.8		%	8.6		%	9.3		%	10.4		%
Stock Information:
Total common shares outstanding	42,428			41,925			41,410			39,613			39,138
Market price per share – high	$	48.42		$	42.99		$	32.05		$	50.28		$	65.09
Market price per share – close	$	46.75		$	40.99		$	24.93		$	12.95		$	49.68
Market price per share – low	$	33.15		$	22.05		$	7.07		$	8.03		$	45.89
Price/earnings ratio at year-end – diluted	20.7			20.5			13.6			7.1			27.9
Market capitalization (16)	$	1,983,509		$	1,718,505		$1,032,351			$	512,988		$	1,944,376

(1) In-center revenue includes revenue generated at our centers from fees for personal training, dietitians, group fitness training and other member activities, sales of products offered at our LifeCafe, sales of products and services offered at our LifeSpa, tennis and renting space in certain of our centers.

(2) Total operating expenses in 2008 includes expenses totaling $5.0 million associated with plans to slow the development of new centers. These expenses include severance costs, lower-of-cost-or-market adjustments in connection with assets held for sale and write-offs associated with land development canceled in the fourth quarter of 2008.

Total operating expenses in 2010 includes $5.6 million associated with performance-based restricted stock compensation expense. In June 2009, we granted performance-based restricted stock to our senior management team. In fourth quarter 2010, we determined that achieving the 2011 diluted earnings per share performance criteria required for vesting of 50% of the stock (representing approximately 450,000 shares of restricted stock) was now probable. As a result, we recognized a cumulative, non-cash performance share-based compensation expense of $5.6 million (pretax) in the quarter. Of this amount, approximately $1.2 million is reflected in center operations expense and approximately $4.4 million is reflected in general and administrative expense.

Total operating expenses in 2011 includes $10.6 million associated with performance-based restricted stock compensation expense. In fourth quarter 2011, we determined that achieving the 2012 diluted earnings per share performance criteria required for vesting of the final 50% of the stock (representing approximately 450,000 shares of restricted stock) was now probable. As a result, we recognized a cumulative, non-cash performance share-based compensation expense of $6.8 million (pretax) in the quarter, in addition to the $3.8 million (pretax) of share-based compensation expense we recognized in 2011 on the initial 50% of the grant. Of the $10.6 million amount, approximately $2.5 million is reflected in center operations expense and approximately $8.1 million is reflected in general and administrative expense.

(3) In 1999, we formed Bloomingdale LIFE TIME Fitness, L.L.C. (“Bloomingdale LLC”) with two unrelated organizations for the purpose of constructing, owning and operating a center in Bloomingdale, Illinois. Each member made an initial capital contribution of $2.0 million and owns a one-third interest in Bloomingdale LLC. The center commenced operations in February 2001. The terms of the relationship among the members are governed by an operating agreement. Bloomingdale LLC is accounted for using the equity method.

(4) The diluted weighted average number of common shares outstanding is the weighted average number of common shares plus the assumed weighted average exercise of dilutive stock options using the treasury stock method and unvested restricted stock awards using the treasury stock method. The shares issuable upon the exercise of stock options and the vesting of all restricted stock awards were dilutive.

The following table summarizes the weighted average number of common shares for basic and diluted earnings per share computations:

	December 31,
	2011	2010	2009	2008	2007
	(In thousands)
Weighted average number of common shares outstanding – basic	40,358	39,809	39,297	39,002	37,518
Effect of dilutive stock options	132	156	69	164	476
Effect of dilutive restricted stock awards	440	420	504	176	133
Weighted average number of common shares outstanding – diluted	40,930	40,385	39,870	39,342	38,127

(5) Membership dues, enrollment fees and in-center revenue for a center are included in same center revenue growth – 13 month beginning on the first day of the thirteenth full calendar month of the center’s operation and are included in same center revenue growth – 37 month beginning on the first day of the thirty-seventh full calendar month of the center’s operation.

(6) Average revenue per membership is total center revenue for the period divided by an average number of memberships for the period, where the average number of memberships for the period is derived from dividing the sum of the total memberships outstanding at the end of each month during the period by the total number of months in the period.

(7) Average in-center revenue per membership is total in-center revenue for the period divided by the average number of memberships for the period, where the average number of memberships for the period is derived from dividing the sum of the total memberships outstanding at the end of each month during the period by the total number of months in the period.

(8) Annual attrition rate (or trailing 12 month attrition rate) is calculated as follows: total terminations for the trailing 12 months (excluding frozen/Flex memberships) divided into the average beginning month membership balance for the trailing 12 months. The annual attrition rate for the years ended December 31, 2010 and 2011 includes a small positive impact due to a change in calculation methodology adopted April 1, 2010 in which we exclude potential memberships who elect to cancel during their 14-day trial as members.

(9) EBITDA is a non-GAAP non-cash measure which consists of net income plus interest expense, net, provision for income taxes and depreciation and amortization. EBITDAR adds rent expense to EBITDA. These terms, as we define them, may not be comparable to a similarly titled measures used by other companies and are not measures of performance presented in accordance with GAAP. We use EBITDA and EBITDAR as measures of operating performance. EBITDA or EBITDAR 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 funds depicted by EBITDA and EBITDAR are not necessarily available for discretionary use if they are reserved for particular capital purposes, to maintain debt covenants, to service debt or to pay taxes. Additional details related to EBITDA and EBITDAR are provided in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measures.”

The following table provides a reconciliation of net income, the most directly comparable GAAP measure, to EBITDA and EBITDAR:

	For the Year Ended December 31,
	2011		2010		2009		2008		2007
	(In thousands)
Net income	$	92,617	$	80,692	$	72,384	$	71,821	$	68,019
Interest expense, net	20,138		27,795		30,338		29,552		25,443
Provision for income taxes	61,810		53,448		47,441		47,224		45,220
Depreciation and amortization	98,843		92,313		90,770		72,947		59,014
EBITDA	$	273,408	$	254,248	$	240,933	$	221,544	$	197,696
Rent expense	42,810		42,481		40,241		27,375		19,376
EBITDAR	$	316,218	$	296,729	$	281,174	$	248,919	$	217,072

(10) Capital expenditures represent investments in our new centers, costs related to updating and maintaining our existing centers and other infrastructure investments. For purposes of deriving capital expenditures from our cash flows statement, capital expenditures include our purchases of property and equipment, excluding purchases of property and equipment in accounts payable at year-end, property and equipment purchases financed through notes payable and capital lease obligations, and non-cash share-based compensation capitalized to projects under development.

(11) 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 we define 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. We use free cash flow as a measure of cash generated after spending on property and equipment, excluding acquisitions. The funds depicted by free cash flow are not necessarily available for discretionary use if they are reserved for particular capital purposes, to maintain debt covenants, to service debt or to pay taxes. 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 “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measures.”

The following table provides a reconciliation of net cash provided by operating activities to free cash flow:

	For the Year Ended December 31,
	2011		2010		2009		2008			2007
	(In thousands)
Net cash provided by operating activities	$	227,943	$	192,265	$	186,203	$	183,066		$	142,206
Less: Purchases of property and equipment	165,335		131,671		146,632		463,337			415,822
Free cash flow	$	62,608	$	60,594	$	39,571	$	(280,271	)	$	(273,616	)

(12) The operating data presented in these items include the center owned by Bloomingdale LLC. The data presented elsewhere in this section exclude the center owned by Bloomingdale LLC.

(13) The square footage presented in this table reflects fitness square footage which we believe is the best metric for the efficiencies of a facility. We exclude outdoor swimming pools, outdoor play areas, tennis courts and satellite facility square footage. These figures are approximations.

(14) EBITDA margin is the ratio of EBITDA to total revenue.

(15) EBITDAR margin is the ratio of EBITDAR to total revenue.

(16) Market capitalization is calculated by multiplying the year-end total common shares outstanding by the year-end stock price.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

We operate distinctive and large, multi-use sports and athletic, professional fitness, family recreation and spa centers in a resort-like environment. As of February 28, 2012, we operated 102 centers primarily in residential locations across 21 states under the LIFE TIME FITNESS® and LIFE TIME ATHLETIC^SM brands.

We compare the results of our centers based on how long the centers have been open at the most recent measurement period. We include a center for same center revenue purposes beginning on the first day of the thirteenth full calendar month of the center’s operation, prior to which time we refer to the center as a new center. We include an acquired center for same center revenue purposes beginning on the first day of the thirteenth full calendar month after we assumed the center’s operations.

As we grow our presence in existing markets by opening new centers, we expect to attract some memberships away from our other existing centers in those markets, reducing revenue and initially lowering the memberships of those existing centers. In addition, as a result of new center openings in existing markets, and because older centers will represent an increasing proportion of our center base over time, our same center revenue may be lower in future periods than in the past. Of the three new large format centers we plan to open in 2012, one will be in an existing market. In addition, in January 2012, we acquired Racquet Club of the South, a tennis facility in the Atlanta market, which we rebranded as Life Time Tennis Atlanta. We do not expect that operating costs of our planned new centers will be significantly higher than centers opened in the past, and we also do not expect that the planned increase in the number of centers will have a material adverse effect on the overall financial condition or results of operations of existing centers.

During 2011, we began to see improved center operating margins, primarily due to price and membership mix, which have more than offset the growth of our in-center businesses which are lower-margin. In late 2011, we acquired six previously leased centers, which we expect will result in lower occupancy costs and improved center operating margins. This margin improvement is expected to more than offset lower margins we expect from our acquisition of the nine Lifestyle Family Fitness ("LFF") centers, which have higher occupancy costs as a result of lease expense.

In 2008 and 2009, we experienced increased member attrition and lower revenue per membership as well as higher membership acquisition costs compared to historical levels due to the challenging economic environment. Although attrition levels improved in 2010 and 2011, if the challenging economic conditions were to continue, we may face continued lower revenue and operating profit in affected centers and on a consolidated basis. Certain of our markets may be impacted more severely than others as a result of regional economic factors such as housing, competition or unemployment rates.

Our categories of new centers and existing centers do not include the center owned by Bloomingdale, LLC because it is accounted for as an investment in an unconsolidated affiliate and is not consolidated in our financial statements.

We measure performance using such key operating statistics as member satisfaction ratings, return on investment, average revenue per membership, including membership dues and enrollment fees, average in-center revenue per membership and center operating expenses, with an emphasis on payroll and occupancy costs, as a percentage of sales and same center revenue growth. We use center revenue and EBITDA margins to evaluate overall performance

and profitability on an individual center basis. In addition, we focus on several membership statistics on a center-level and system-wide basis. These metrics include change in center membership levels and growth of system-wide memberships; percentage center membership to target capacity; center membership usage; center membership mix among individual, couple and family memberships; Flex memberships and center attrition rates. During 2009 and 2010, our annual attrition rate decreased from 42.3% to 36.3%. During 2011, our annual attrition rate decreased from 36.3% to 35.0%. Over the past three years we saw our attrition rate decrease due in part to increased programming focused on member engagement and center utilization.

We have three primary sources of revenue:

• First, our largest source of revenue is membership dues (65.5% of total revenue for the year ended December 31, 2011, down from 66.1% for the year ended December 31, 2010) and enrollment fees (1.8% of total revenue for the year ended December 31, 2011, down from 2.7% for the year ended December 31, 2010) paid by our members. We recognize revenue from monthly membership dues in the month to which they pertain.

• Second, we generate revenue within a center, which we refer to as in-center revenue or in-center businesses (30.4% of total revenue for the year ended December 31, 2011, up from 29.1% for the year ended December 31, 2010), including fees for personal training, registered dietitians, group fitness training and other member activities, sales of products at our LifeCafe, sales of products and services offered at our LifeSpa, tennis programs and renting space in certain of our centers.

• Third, we have expanded the LIFE TIME FITNESS® brand into other wellness-related offerings that generate revenue, which we refer to as other revenue or corporate businesses (2.3% of total revenue for the year ended December 31, 2011, up from 2.1% for the year ended December 31, 2010), including our media, wellness and athletic events businesses. Our primary media offering is our magazine, Experience Life®. Other revenue also includes one stand-alone restaurant in the Minneapolis market and rental income from our Highland Park, Minnesota office building.

Center operations expenses consist primarily of salary, commissions, payroll taxes, benefits, real estate taxes and other occupancy costs, utilities, repairs and maintenance, supplies, administrative support and communications to operate our centers. Advertising and marketing expenses consist of our marketing department costs and media and advertising costs to support and grow center membership levels, in-center businesses, new center openings and our corporate businesses. General and administrative expenses include costs relating to our centralized support functions, such as accounting, information systems, procurement, real estate and development and member relations. Our other operating expenses include the costs associated with our media, athletic events and nutritional product businesses, one restaurant and other corporate expenses, as well as gains or losses on our dispositions of assets. Our total operating expenses may vary from period to period depending on the number of new centers opened during that period, the number of centers engaged in presale activities and the performance of our in-center businesses.

Our primary capital expenditures relate to the construction of new centers and updating and maintaining our existing centers. The land acquisition, construction and equipment costs for a current model center can vary considerably based on variability in land cost, the cost of construction labor and the size or amenities of the center, including the addition of tennis facilities, an expanded gymnasium or other facilities. We perform maintenance and make improvements on our centers and equipment throughout each year. We conduct a more thorough remodeling project at each center approximately every four to six years.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S., or GAAP, requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Ultimate results could differ from those estimates. In recording transactions and balances resulting from business operations, we use estimates based on the best information available. We use estimates for such items as depreciable lives, probability of meeting certain performance targets and tax provisions. We also use estimates for calculating the amortization period for deferred enrollment fee revenue and associated direct costs, which are based on the historical estimated average membership life. We revise the recorded estimates when better information is available, facts change or we can determine actual amounts. These

revisions can affect operating results. We have identified below the following accounting policies that we consider to be critical.

Revenue recognition. We receive a one-time enrollment fee at the time a member joins and monthly membership dues for usage from our members. The enrollment fees are non-refundable after 14 days. Enrollment fees and related direct expenses, primarily sales commissions, are deferred and recognized on a straight-line basis over an estimated average membership life of 33 months, which is based on historical membership experience. We review the estimated average membership life on an annual basis, or more frequently if circumstances change. Changes in member behavior, competition, economic conditions and our performance may cause attrition levels to change, which could impact the estimated average membership life. Our attrition rate in 2009 improved slightly from a high of 42.7% at the end of first quarter to 40.6% at year-end, and our estimated average membership life was 30 months. During 2010, our annual attrition rate decreased from 40.6% to 36.3%. During the fourth quarter of 2010, we changed our estimated average membership life from 30 months to 33 months. During 2011, our annual attrition rate decreased from 36.3% to 35.0% and our estimated average membership life remained 33 months. If the estimated average membership life had been 36 months or 30 months for the entire year ended December 31, 2011, the impact of this change in accounting estimate on our income from continuing operations and net income would have been less than $0.1 million, and the change in accounting estimate would have had no impact on our basic and diluted earnings per common share. If the direct expenses related to the enrollment fees exceed the enrollment fees for any center, the amount of direct expenses in excess of the enrollment fees are expensed in the current period instead of deferred over the average membership life. The amount of direct expenses in excess of enrollment fees totaled $14.9 million, $14.9 million and $8.4 million for the years ended December 31, 2011, 2010 and 2009 respectively. Monthly membership dues paid in advance of a center opening are deferred until the center opens. We only offer members month-to-month memberships and recognize as revenue the monthly membership dues in the month to which they pertain.

We provide services at each of our centers, including personal training, spa, café and other member services. The revenue associated with these services is recognized at the time the service is performed. Personal training revenue received in advance of training sessions and the related commissions are deferred and recognized when services are performed. Other revenue, which includes revenue generated primarily from our media, athletic events and restaurant, is recognized when realized and earned. Media advertising revenue is recognized over the duration of the advertising placement. For athletic events, revenue is generated primarily through sponsorship sales and registration fees. Athletic event revenue is recognized upon the completion of the event. Restaurant revenue is recognized at the point of sale to the customer.

Share-based compensation. We maintain share-based incentive plans, which include nonvested share awards, stock options and an employee stock purchase plan. See Note 5, Share-Based Compensation to the Notes to Consolidated Financial Statements for a complete discussion of our share-based compensation plans.

We determine the fair value of our nonvested share awards at the date of grant using the closing market price of our stock. Performance-based restricted share awards require management to make assumptions regarding the likelihood of achieving performance goals.

In June 2009 and August 2010, the Compensation Committee approved the grant of 996,000 and 20,000 shares, respectively, of long-term performance-based restricted stock to serve as an incentive to our senior management team to achieve certain diluted earnings per share (“EPS”) targets in 2011 and 2012. As of December 31, 2011, 907,000 of these shares were still outstanding. A specified EPS target was achieved for fiscal 2011 and 50% of the restricted shares vested. Since the grant was not fully vested after fiscal 2011, 50% of the shares will vest if a specified EPS target is achieved for fiscal 2012. In the event that we do not achieve the specified EPS target for fiscal 2012, the remaining restricted stock will be forfeited. The probability of reaching the targets is evaluated each reporting period. As of December 31, 2011 we determined that the second 50% vesting was probable. We anticipate recognizing the remaining portion of performance share-based compensation expense of approximately $2.7 million (pretax) ratably in 2012. If we later determine that it is not probable that the minimum diluted EPS performance threshold for 2012 will be met, no further compensation cost will be recognized and any recognized compensation cost relating to the shares that have not vested will be reversed.

Our employee stock purchase plan (“ESPP”) provides for the sale of shares of our common stock to our employees at discounted purchase prices. The cost per share under this plan is 90% of the fair market value of our common stock on the last day of the purchase period, as defined. Compensation expense under the ESPP is based on the discount of 10% at the end of the purchase period.

A 10% change in our share-based compensation expense for the year ended December 31, 2011 would have affected net income by approximately $1.2 million in fiscal 2011.

Results of Operations

The following table sets forth our consolidated statements of operations data as a percentage of total revenue for the periods indicated:

	For the Year Ended December 31,
	2011		2010		2009
REVENUE:
Membership dues	65.5	%	66.1	%	67.5	%
Enrollment fees	1.8		2.7		3.1
In-center revenue	30.4		29.1		27.8
Total center revenue	97.7		97.9		98.4
Other revenue	2.3		2.1		1.6
Total revenue	100.0		100.0		100.0
OPERATING EXPENSES:
Center operations	60.7		61.5		60.5
Advertising and marketing	3.5		3.0		3.2
General and administrative	5.4		5.2		5.1
Other operating	3.5		2.6		2.6
Depreciation and amortization	9.8		10.1		10.8
Total operating expenses	82.9		82.4		82.2
Income from operations	17.1		17.6		17.8
OTHER INCOME (EXPENSE):
Interest expense, net	(2.0	)	(3.0	)	(3.7	)
Equity in earnings of affiliate	0.1		0.1		0.2
Total other income (expense)	(1.9	)	(2.9	)	(3.5	)
INCOME BEFORE INCOME TAXES	15.2		14.7		14.3
PROVISION FOR INCOME TAXES	6.1		5.9		5.7
NET INCOME	9.1	%	8.8	%	8.6	%

Year Ended December 31, 2011 Compared to Year Ended December 31, 2010

Total revenue. Total revenue increased $100.9 million, or 11.0%, to $1,013.7 million for the year ended December 31, 2011 from $912.8 million for the year ended December 31, 2010.

Total center revenue grew $96.3 million, or 10.8%, to $990.4 million for the year ended December 31, 2011, from $894.1 million for the year ended December 31, 2010. Of the $96.3 million increase in total center revenue,

• 62.5% was from membership dues, which increased $60.2 million, or 10.0%, due to increased memberships, primarily at new and ramping centers, and higher average dues. Our number of memberships increased 10.4% to 676,054 at December 31, 2011 from 612,556 at December 31, 2010.

• 43.7% was from in-center revenue, which increased $42.0 million primarily as a result of increased sales of our LifeSpa and LifeCafe products and services and personal training. Average in-center revenue per membership increased from $440 for the year ended December 31, 2010 to $481 for the year ended December 31, 2011.

• (6.2)% was from enrollment fees, which are deferred until a center opens and recognized on a straight-line basis over our estimated average membership life. In the fourth quarter of 2010 and all of 2011, the estimated average membership life was 33 months. For the fourth quarter of 2008 through the third quarter of 2010, the estimated average membership life was 30 months. Enrollment fees decreased $6.0 million for the year ended December 31, 2011 to $18.4 million. The revenue recognized from enrollment fees was lower in 2011 as compared to 2010 primarily due to lower total enrollment fees over the deferral period.

Other revenue increased $4.6 million, or 24.3%, to $23.3 million for the year ended December 31, 2011, which was primarily due to growth in media and athletic event revenue, which increased $1.6 million and $2.2 million, respectively.

Center operations expenses. Center operations expenses totaled $614.9 million, or 62.1% of total center revenue (or 60.7% of total revenue), for the year ended December 31, 2011 compared to $561.1 million, or 62.8% of total center revenue (or 61.5% of total revenue), for the year ended December 31, 2010. This $53.8 million increase primarily consisted of an increase of $34.6 million in additional payroll-related costs to support increased memberships and in-center revenue growth at our centers. Center operations expenses decreased as a percent of total revenue due primarily to leverage provided by dues growth.

Advertising and marketing expenses. Advertising and marketing expenses were $36.3 million, or 3.5% of total revenue, for the year ended December 31, 2011, compared to $27.1 million, or 3.0% of total revenue, for the year ended December 31, 2010. These expenses increased primarily due to increased marketing activity to drive memberships and in-center businesses.

General and administrative expenses. General and administrative expenses were $54.7 million, or 5.4% of total revenue, for the year ended December 31, 2011, compared to $48.1 million, or 5.2% of total revenue, for the year ended December 31, 2010. This increase of $6.7 million is primarily related to share-based compensation for the special 2009 performance restricted stock grant, in addition to corporate initiatives to support our continued growth. For the year ended December 31, 2011, share-based compensation expense related to the special 2009 performance restricted stock grant totaled $10.6 million, of which $8.1 million was reported in general and administrative expenses.

Other operating expenses. Other operating expenses were $35.6 million for the year ended December 31, 2011, compared to $23.5 million for the year ended December 31, 2010. This increase is primarily due to the growth in our athletic events and our myHealthCheck service offering and the associated infrastructure costs.

Depreciation and amortization. Depreciation and amortization was $98.8 million for the year ended December 31, 2011, compared to $92.3 million for the year ended December 31, 2010.

Interest expense, net. Interest expense, net of interest income, was $20.1 million for the year ended December 31, 2011, compared to $27.8 million for the year ended December 31, 2010. This $7.7 million decrease was primarily the result of lower average interest rates on outstanding debt.

Provision for income taxes. The provision for income taxes was $61.8 million for the year ended December 31, 2011, compared to $53.4 million for the year ended December 31, 2010. This $8.4 million increase was due to an increase in income before income taxes of $20.3 million and a higher effective income tax rate in 2011. The effective income tax rate for the year ended December 31, 2011 was 40.0% compared to 39.8% for the year ended December 31, 2010.

Net income. As a result of the factors described above, net income was $92.6 million, or 9.1% of total revenue, for the year ended December 31, 2011 compared to $80.7 million, or 8.8% of total revenue, for the year ended December 31, 2010.

Year Ended December 31, 2010 Compared to Year Ended December 31, 2009

Total revenue. Total revenue increased $75.8 million, or 9.1%, to $912.8 million for the year ended December 31, 2010 from $837.0 million for the year ended December 31, 2009.

Total center revenue grew $70.5 million, or 8.6%, to $894.1 million for the year ended December 31, 2010, from $823.6 million for the year ended December 31, 2009. Of the $70.5 million increase in total center revenue,

• 54.8% was from membership dues, which increased $38.6 million, or 6.8%, due to increased memberships at new centers and higher average dues. Our number of memberships increased 5.8% to 612,556 at December 31, 2010 from 578,937 at December 31, 2009.

• 47.6% was from in-center revenue, which increased $33.6 million primarily as a result of increased sales of our LifeSpa and LifeCafe products and services and personal training. Average in-center revenue per membership increased from $400 for the year ended December 31, 2009 to $440 for the year ended December 31, 2010.

• (2.4)% was from enrollment fees, which are deferred until a center opens and recognized on a straight-line basis over our estimated average membership life. In the fourth quarter of 2010, the estimated average membership life was 33 months. For the fourth quarter of 2008 through the third quarter of 2010, the estimated average membership life was 30 months. For the second and third quarters of 2008, it was 33 months, and for the first quarter of 2008 and prior, it was 36 months. Enrollment fees decreased $1.7 million for the year ended December 31, 2010 to $24.4 million. Our average enrollment fee was lower in 2010 than in 2009 due primarily to increased promotional pricing activity to attract new memberships in the current economic environment.

Other revenue increased $5.3 million, or 39.8%, to $18.8 million for the year ended December 31, 2010, which was primarily due to athletic event revenue, which includes revenue from recently acquired athletic events.

Center operations expenses. Center operations expenses totaled $561.1 million, or 62.8% of total center revenue (or 61.5% of total revenue), for the year ended December 31, 2010 compared to $506.4 million, or 61.5% of total center revenue (or 60.5% of total revenue), for the year ended December 31, 2009. This $54.7 million increase primarily consisted of an increase of $32.1 million in additional payroll-related costs to support increased memberships and revenue growth at our centers and $9.8 million in occupancy-related costs, including utilities, real estate taxes and rent on leased centers. Center rent expense totaled $41.7 million for the year ended December 31, 2010 and $39.7 million for the year ended December 31, 2009. This $2.0 million increase is primarily a result of two new ground leases for future centers. Center operations expenses increased as a percent of total revenue due primarily to increases in member acquisition costs, costs associated with increased in-center revenue and costs associated with expanded program offerings intended to improve member acquisition and retention.

Advertising and marketing expenses. Advertising and marketing expenses were $27.1 million, or 3.0% of total revenue, for the year ended December 31, 2010, compared to $26.3 million, or 3.2% of total revenue, for the year ended December 31, 2009. As a percentage of revenue, these expenses decreased primarily due to more targeted and market-specific marketing campaigns.

General and administrative expenses. General and administrative expenses were $48.1 million, or 5.2% of total revenue, for the year ended December 31, 2010, compared to $42.8 million, or 5.1% of total revenue, for the year ended December 31, 2009.

Other operating expenses. Other operating expenses were $23.5 million for the year ended December 31, 2010, compared to $21.9 million for the year ended December 31, 2009.

Depreciation and amortization. Depreciation and amortization was $92.3 million for the year ended December 31, 2010, compared to $90.8 million for the year ended December 31, 2009.

Interest expense, net. Interest expense, net of interest income, was $27.8 million for the year ended December 31, 2010, compared to $30.3 million for the year ended December 31, 2009. This $2.5 million decrease was primarily the result of a reduction in debt levels.

Provision for income taxes. The provision for income taxes was $53.4 million for the year ended December 31, 2010, compared to $47.4 million for the year ended December 31, 2009. This $6.0 million increase was due to an increase in income before income taxes of $14.3 million and a higher effective income tax rate in 2010. The effective income tax rate for the year ended December 31, 2010 was 39.8% compared to 39.6% for the year ended December 31, 2009.

Net income. As a result of the factors described above, net income was $80.7 million, or 8.8% of total revenue, for the year ended December 31, 2010 compared to $72.4 million, or 8.6% of total revenue, for the year ended December 31, 2009.

Interest in an Unconsolidated Affiliated Entity

In 1999, we formed Bloomingdale LIFE TIME FITNESS, L.L.C. ("Bloomingdale LLC") with two unrelated organizations for the purpose of constructing, owning and operating a center in Bloomingdale, Illinois, which opened in February 2001. The terms of the relationship among the members are governed by an operating agreement, which expires on the earlier of December 2039 or the liquidation of Bloomingdale LLC. In December 1999, Bloomingdale LLC entered into a management agreement with us, pursuant to which we agreed to manage the day-to-day operations of the center, subject to the overall supervision by the Management Committee of Bloomingdale LLC, whichis comprised of six members, two from each of the three members of the joint venture. We have no unilateral control of the center, as all decisions essential to the accomplishments of the purpose of thejoint venture require theapproval of a majority of the members. Bloomingdale LLC is accounted for as an investment in an unconsolidated affiliate and is not consolidated in our financial statements. Additional details related to our interest in Bloomingdale LLC are provided in Note 3 to our consolidated financial statements.

Non-GAAP Financial Measures

We use EBITDA, EBITDAR and free cash flow as measures of operating performance.

EBITDA and EBITDAR should not be considered substitutes for net income, cash flows provided by operating activities, or other income or cash flow data prepared in accordance with GAAP. The funds depicted by EBITDA and EBITDAR 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.

We believe EBITDA and EBITDAR are useful to an investor in evaluating our operating performance because:

• both are widely accepted financial indicators of a company’s ability to service its debt and we are required to comply with certain covenants and borrowing limitations that are based on variations of EBITDA and EBITDAR in certain of our financing documents; and

• both are 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 our capital structure and the method by which assets were acquired.

Our management uses EBITDA and/or EBITDAR:

• as measurements of operating performance because they assist us in comparing our performance on a consistent basis;

• in presentations to the members of our board of directors to enable our 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.

We have provided reconciliations of EBITDA and EBITDAR to net income in the “Selected Financial Data” section.

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 we define 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. We use 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 "Selected Financial Data" section.

We believe free cash flow is useful to an investor in understanding our cash flow generation and liquidity because:

• free cash flow allows us to evaluate the cash generated by operations and the ability of our operations to fund investment items related to purchases of property and equipment, repay indebtedness, add to our 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.

Our management uses the measure of free cash flow:

• to monitor cash available for repayment of indebtedness; and

• in discussions with the investment community.

We have provided reconciliations of free cash flow to cash flows from operations in the “Selected Financial Data” section.

Seasonality of Business

Seasonal trends have an effect on our overall business. Generally, we have experienced greater membership growth at the beginning of the year. We also experience increased membership in certain centers during the summer pool season. During the summer months, we also experience a slight increase in in-center business activity with summer programming and operating expenses due to our outdoor aquatics operations. We experience an increased level of membership attrition during the third and fourth quarters as the summer pool season ends and we enter the holiday season. This can lead to a sequential decline in memberships d