Chanhassen, MN — Even as Life Time Fitness announced continued growth in the third quarter, its CEO, Bahram Akradi, announced that the company would slow its growth in response to the weakened economy.

The announcement came in an earnings call with analysts last month in which Akradi also spoke briefly about the sale of 582,000 shares of his Life Time stock — worth roughly $11 million — by one of the financial institutions that made some of the loans to cover Akradi's obligations. About 1.5 million shares of his company stock were sold between Oct. 9 and Oct. 22 to cover margin loss, he said. After the sales, about 2.6 million of Akradi's 2.8 million shares in Life Time remain pledged against those loans, Akradi said.

“I continue to have confidence in the long-term prospect of Life Time Fitness,” Akradi said.

In terms of its capital structure, the company has raised $265 million over the last five months, Chief Financial Officer Michael Robinson said in the call.

Life Time opened three clubs in third quarter 2008 and plans to open four more clubs in the fourth quarter, two of which are already opened, Robinson said. The company plans to end the year with 81 clubs. In 2009, the company plans to open six clubs, and in 2010, it plans to open another six clubs, which is a smaller expansion than it originally had planned.

“As we look to the near-term future, the current credit environment has given us pause,” Robinson said. The company reviewed its “sensitivities” related to its expansion efforts and determined that in an unpredictable environment, it was fiscally responsible and prudent to lower its expansion plans starting in 2009, Robinson said. By slowing the club opening schedule, he says the company will be able to drive profitable growth but not put pressure on the capital structure.

Total revenue for the third quarter 2008 grew 17.3 percent to $198.8 million from $169.5 million during the same period last year, driven primarily by growth in membership dues and in-center revenue. Total revenue for the first nine months of 2008 grew to $575.7 million from $484.7 million during the same period last year.

Net income during third quarter 2008 grew 17.6 percent to $21.6 million from $18.4 million in third quarter 2007. For the nine months ended Sept. 30, 2008, net income grew to $58.8 million compared with $49 million in the prior-year period.

Akradi said the growth in total revenue and net income was good in the recent economic environment but was still below the company's expectations.

The company's expectations for fiscal year 2008 are down from what they were after second quarter 2008. Revenue is expected to be $775 million to $780 million, or about 18 to 19 percent growth. That's down from 19 to 22 percent, or about $780 million to $800 million that the company previously expected. Also, net income is expected to be $79 million to $80.5 million, or about 16 to 18 percent growth. That's down from 21 to 23 percent, or about $82 million to $83.5 million.

Although the company's spa business has been affected the most from the slower economic environment, attrition rates are slightly higher, too, Robinson said, primarily due to low-use members cancelling their memberships at a higher rate than they did before.

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