Life Time Fitness, Inc

1. Life Time Fitness, Inc Equity Investment Presentation Richie Hartz Ha Da Jang Diana Yang Kaushik Andra Heziyou Xu Diana Yang Iris Yijin Zhang April 30, 2013

2. Agenda Introduction Company Overview Stock Performance Industry Overview Financial Analysis Valuation Recommendation Introduction Company Industry Valuation

3. Company Profile • The Healthy Way of Life Company • Designs, develops and operates sports and athletic, professional fitness, family recreation and spa centers • Helps clients achieve total health objective, athletic aspirations by doing what they love • Types of memberships: individual, couple, family • First center opened in 1992 • Headquarters: Chanhassen, Minnesota • Ticker: LTM • Market Cap: $1.89 Billion • Employees: 20,000 • Number of centers: 105 (as of Feb 28, 2013) Source: LTM 2012 Annual Report Item 1 P1-2 Introduction Company Industry Valuation

4. Company History 1992: Life Time Fitness founded, first club opened in Minnesota 2004: Life Times completed its IPO with NYSE 2012: Acquired Racquect Club of the South (RSC) 1992 2000 2001 2004 2008 2011 2012 2000: Life Time expanded offering to include proprietary line of nutritional products and supplements 2001: Life Time formalized its Athletic Events division 2008-2011: Expanded to about 15 states 2011: Opened its first location in Ontario, Canada Source: LTM offical website http://www.lifetimefitness.com/aboutlifetime/company/index.cfm?strWebAction=fact_sheet; MarketLine Report Introduction Company Industry Valuation

5. 5 Areas of program services Source: LTM offical website http://www.lifetimefitness.com/aboutlifetime/company/index.cfm?strWebAction=fact_sheet Introduction Company Industry Valuation

6. Business Competitive Strengths Source: LTM offical website http://www.lifetimefitness.com/aboutlifetime/company/index.cfm?strWebAction=fact_sheet; LTM 2012 Annual Report Item I P2-3 Introduction Company Industry Valuation

7. Business Competitive Strengths – Cont’d Source: LTM offical website http://www.lifetimefitness.com/aboutlifetime/company/index.cfm?strWebAction=fact_sheet; LTM 2012 Annual Report Item I P2-3 Introduction Company Industry Valuation

8. Revenue Decomposition Source: LTM 2012 Annual Report Introduction Company Industry Valuation

9. Growth Strategy Source: LTM 2012 Annual Report Item 1 P3-4 Introduction Company Industry Valuation

10. SWOT Analysis Source: LTM 2012 Annual Report Item 1A P19, Item 7 P38; MarketLine Report Introduction Company Industry Valuation

11. Historical Financials Source: Calculated based on LTM 2012 Annual Report Financial Statements Introduction Company Industry Valuation

12. 2013 Q1 Report Source: Calculated based on LTM 2013 Quarterly Report Financial Statements Introduction Company Industry Valuation

13. Key Financial Ratios Source: Calculated based on LTM 2012 Annual Report Financial Statements Introduction Company Industry Valuation

14. Stock Performance Source: Yahoo Finance

15. Industry Overview • Primary Industry: Fitness • Secondary industry: Leisure Facilities, Health and Fitness clubs • Major products and services offered by industry • Tennis centers, gyms and fitness centers, ice and roller rinks, dance centers, swimming pools, weight-loss supplements • No major players in this Industry • No players hold a market share larger than 5.0% • Industry Structure Highlights • Capital Structure- medium • Revenue volatility- low • Regulation level- light Source: IBISWorld Introduction Company Industry Valuation

16. U.S. Overweight and Obesity Distribution Concerns over obesity will continue to drive fitness industry Introduction Company Industry Valuation

17. Prevalenceof Obesity in U.S. Source: CDC Introduction Company Industry Valuation

18. Industry Outlook • Increasing awareness of healthy lifestyle and stabilization of U.S economy will keep industry in a growth phase • Revenue for the industry expected to rise at an average annual rate of 2.9% to $29.9 billion in 2018 • Large and growing health and wellness industry • Retiring baby boomer generation will create strong opportunities for gyms and fitness clubs • Younger than 17-market presents opportunity as childhood obesity concerns continue • Slow expansion of existing establishments • Most major markets already heavily saturated • Establishments only expected to increase at an average rate of 1.1%, primarily coming from expansions of large-scale gyms • Continued support from government • Reduction of Healthcare costs Source: IBISWorld Introduction Company Industry Valuation

19. PORTER’S FIVE FORCES Threat of New Entrants: Low Large capital investment on property, equipment, and acquisitions Threat of Substitute Products: High Traditional methods of exercise and self-instruction through online materials and alternative weight loss programs Bargaining Power of Buyers: Moderate Variety of membership packages to choose from; Attractive price and program mix to grow membership dues Bargaining Power of Sellers: Moderate Property and professional equipment Intensity of Competition: High Concentrated business operations; Other centers, clubs, profit/non-profit organizations Source: LTM 2012 Annual Report Item 1 P12, Item 1A P16 Introduction Company Industry Valuation

20. Macroeconomic Outlook • Key External Drivers • Participation in sports, per capita disposable income, number of adults aged 20-64 • Stabilization of U.S economy and modest employment growth • Minimal exposure to events in Europe • Impact of Healthcare regulation and reform • Fed will continue easy-money policies Source: IBISWorld Introduction Company Industry Valuation

21. Valuation — Trading Comparables Source: CapIQ Introduction Company Industry Valuation

22. Valuation — WACC Analysis Source: Bloomberg Introduction Company Industry Valuation

23. Discounted Cash Flow Analysis— Fair Value Fair Value Calculation DCF implies that stock is trading around its fair value Introduction Company Industry Valuation

24. Valuation Summary Lifetime is currently trading at its fair value • 52-Week High: $52.43 • 52-Week Low: $39.10 Current Price $46.19 52-Week Range $52.43 $39.10 DCF • 2.0%-4.0% Perpetuity growth rate • 8.2%-9.7% WACC • Mid-Year Convention $62.90 $28.46 • 7.0x – 9.5x LTM EBITDA of $324mm Trading LTM EBITDA $57.47 $41.91 Introduction Company Industry Valuation

25. Risks & Decision Drivers Why We Chose Lifetime • GICS Diversification • Sharp drop in stock price • Leader in U.S. Market Final Thoughts Low intrinsic Value Fragmented Industry Reliance on discretionary income of consumers Limited growth opportunities in domestic market Introduction Company Industry Valuation

26. Recommendation Watch List Introduction Company Industry Valuation

27. Life Time Fitness Questions?

28. Valuation — DCF ANALYSIS Source: LTM 2012 10-K Introduction Company Industry Valuation