periods than in the past. Of the eleven new centers we have opened or plan to open in 2008, eight will be in existing markets. 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. Another result of opening new centers, as well as the assumption of operations of seven leased facilities in 2006, the assumption of operations of one leased facility in 2007 and the six facilities we sold and leased back in 2008, is that our center operating margins may be lower than they have been historically, particularly as newly opened centers build membership. We expect both the addition of pre-opening expenses and the lower revenue volumes characteristic of newly-opened centers, as well as the occupancy costs for the eight leased centers and the lease costs for facilities which we financed through sale leaseback transactions, to affect our center operating margins at these centers and on a consolidated basis. As the economy continues to slow, we also expect increased member attrition and lower in-center revenue per membership, which may result in lower total revenue and operating profit in affected centers. Our categories of new centers and existing centers do not include the center owned by Bloomingdale LIFE TIME Fitness, L.L.C. because it is accounted for as an investment in an unconsolidated affiliate and is not consolidated in our financial statements.
As of June 30, 2008, we had planned to open eleven current model centers in 2009. As a result of the tight credit market and the slowing in the current economic environment, we decided to reduce the number of planned openings in 2009 from eleven to six centers. If we see the credit markets improve and we are able to secure additional capital, we will consider opening additional centers. We measure performance using such key operating statistics as 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 comparable 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 and center attrition rates. During 2008, our attrition rate increased, driven primarily by inactive members leaving earlier than in the past.
We have three primary sources of revenue. First, our largest source of revenue is membership dues (65.5% of total revenue for the nine months ended September 30, 2008) and enrollment fees (3.4% of total revenue for the nine months ended September 30, 2008) paid by our members. We recognize revenue from monthly membership dues in the month to which they pertain. We recognize revenue from enrollment fees over the expected average life of the membership, which we estimate to be 33 months for the second and third quarters of 2008 and 36 months for the first quarter of 2008 and prior periods. Second, we generate revenue within a center, which we refer to as in-center revenue, or in-center businesses (29.1% of total revenue for the nine months ended September 30, 2008), including fees for personal training, dieticians, 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. And 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 (2.0% of total revenue for the nine months ended September 30, 2008), including our media, wellness and athletic events businesses. Our primary media offering is our magazine, Experience Life. Other revenue also includes two restaurants 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 center membership levels, in-center businesses 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, two restaurants 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 the 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 and the cost of construction labor, as well as whether or not a tennis area is included or whether or not we expand the gymnasium or add other facilities. The average cost for the current model centers opened in 2007 was approximately $31 million. We expect the average cost of new centers constructed in 2008 to be approximately $35 million, reflecting higher location costs and higher costs for the new 3-story centers opened in 2008. 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, volatility factors, expected lives and rate of return in determining fair value of option grants, tax provisions and provisions for uncollectible receivables. We also use estimates for calculating the amortization period for deferred enrollment fee revenue and associated direct costs, which are based on the historical average expected life of center memberships. We revise the recorded estimates when better information is available, facts change or we can determine actual amounts. These revisions can affect operating results.
Our critical accounting policies and use of estimates are discussed in and should be read in conjunction with the annual consolidated financial statements and notes included in the latest Form 10-K, as filed with the SEC, which includes audited consolidated financial statements for our three fiscal years ended December 31, 2007.

Results of Operations
The following table sets forth our statement of operations data as a percentage
of total revenue and also sets forth other financial and operating data:

                                                      For the Three                          For the Nine
                                                       Months Ended                          Months Ended
                                                      September 30,                         September 30,
                                                 2008               2007               2008               2007
Revenue
Center revenue
Membership dues                                      66.0 %             66.0 %             65.5 %             65.8 %
Enrollment fees                                       3.5                3.8                3.4                3.8
In-center revenue                                    28.2               28.0               29.1               28.4

Total center revenue                                 97.7               97.8               98.0               98.0
Other revenue                                         2.3                2.2                2.0                2.0

Total revenue                                       100.0              100.0              100.0              100.0

Operating expenses
Center operations                                    58.4               57.6               58.6               58.0
Advertising and marketing                             3.7                3.2                4.1                3.8
General and administrative                            4.8                5.8                5.3                6.4
Other operating                                       2.5                2.5                2.4                2.3
Depreciation and amortization                         9.4                8.8                9.1                8.9

Total operating expenses                             78.8               77.9               79.5               79.4

Income from operations                               21.2               22.1               20.5               20.6

Other income (expense)
Interest expense, net                                (3.6 )             (4.2 )             (3.7 )             (3.9 )
Equity in earnings of affiliate                       0.2                0.2                0.2                0.2

Total other income (expense)                         (3.4 )             (4.0 )             (3.5 )             (3.7 )

Income before income taxes                           17.8               18.1               17.0               16.9
Provision for income taxes                            6.9                7.3                6.8                6.8

Net income                                           10.9 %             10.8 %             10.2 %             10.1 %


Other financial and operating data
Average center revenue per membership         $       358        $       345        $     1,082        $     1,016
Average in-center revenue per membership      $       104        $        99        $       321        $       294
Centers open at end of period                          77                 67                 77                 67
Number of memberships at end of period            557,164            492,410            557,164            492,410
Total center square footage at end of
period (1)                                      7,645,989          6,499,549          7,645,989          6,499,549

(1) The square footage presented in this table reflects fitness square footage which is the best metric for the efficiencies of a facility. We exclude outdoor pool, outdoor play areas and indoor/outdoor tennis elements.

Three Months Ended September 30, 2008, Compared to Three Months Ended September 30, 2007
Total revenue. Total revenue increased $29.3 million, or 17.3%, to $198.8 million for the three months ended September 30, 2008, from $169.5 million for the three months ended September 30, 2007.
Total center revenue grew $28.4 million, or 17.2%, to $194.2 million for the three months ended September 30, 2008, from $165.8 million for the three months ended September 30, 2007. Comparable center revenue increased 3.9% for the three months ended September 30, 2008 compared to the three months ended September 30, 2007. Of the $28.4 million increase in total center revenue,
• 68.5% was from membership dues, which increased $19.5 million, or 17.4%, due to increased memberships at new centers, junior membership programs and increased sales of value-added memberships. Our number of memberships increased 13.2% to 557,164 at September 30, 2008 from 492,410 at September 30, 2007. The membership growth of 13.2% was down from membership growth of 15.1% from September 30, 2007 over September 30, 2006, primarily due to the second anniversary of our acquisition of seven leased centers in July 2006, and the effects of a slower economy in the fourth quarter of 2007 and the first nine months of 2008.

• 30.4% was from in-center revenue, which increased $8.6 million primarily as a result of our members' use of our personal training, member activities, LifeCafe and LifeSpa products and services. As a result of this in-center revenue growth and our focus on broadening our offerings to our members, average in-center revenue per membership increased from $99 for the three months ended September 30, 2007 to $104 for the three months ended September 30, 2008. Overall, in-center revenue growth slowed from 11.4% the first half of 2008 to 4.8% in the third quarter driven primarily by reduced consumer spending on in-center services in the current slower economy.

• 1.1% was from enrollment fees, which are deferred until a center opens and recognized on a straight-line basis over 33 months for the second and third quarters of 2008 and 36 months for the first quarter of 2008 and prior periods. Enrollment fees increased $0.3 million for the three months ended September 30, 2008 to $6.8 million. In 2008, we lowered our enrollment fees to stimulate new membership demand.

Other revenue increased $0.9 million, or 24.9%, to $4.6 million for the three months ended September 30, 2008, which was primarily due to increased advertising revenue from our media business.
Center operations expenses. Center operations expenses totaled $116.3 million, or 59.9% of total center revenue (or 58.4% of total revenue), for the three months ended September 30, 2008 compared to $97.6 million, or 58.9% of total center revenue (or 57.6% of total revenue), for the three months ended September 30, 2007. This $18.7 million increase primarily consisted of $10.5 million in additional payroll-related costs to support increased memberships at new centers and increases in membership acquisition costs, an increase of $3.9 million in occupancy-related costs, including utilities, real estate taxes, rent on leased centers and an increase in expenses to support in-center products and services.
Advertising and marketing expenses. Advertising and marketing expenses were $7.3 million, or 3.7% of total revenue, for the three months ended September 30, 2008, compared to $5.4 million, or 3.2% of total revenue, for the three months ended September 30, 2007. These expenses increased primarily due to broader advertising for existing and new centers and those centers engaging in presale activities to stimulate new membership demand.
General and administrative expenses. General and administrative expenses were $9.5 million, or 4.8% of total revenue, for the three months ended September 30, 2008, compared to $9.8 million, or 5.8% of total revenue, for the three months ended September 30, 2007. This decrease as a percentage of revenue was primarily due to increased efficiencies and productivity improvements, as well as the elimination of lease costs for our former corporate office.
Other operating expenses. Other operating expenses were $4.9 million for the three months ended September 30, 2008, compared to $4.3 million for the three months ended September 30, 2007. This increase is primarily a result of losses on the disposition of property and equipment.
Depreciation and amortization. Depreciation and amortization was $18.7 million for the three months ended September 30, 2008, compared to $14.9 million for the three months ended September 30, 2007. This $3.8 million increase was due primarily to depreciation on our new centers and new headquarters opened in 2007 and the first nine months of 2008 and the completed remodels of our leased centers acquired in July 2006.

Interest expense, net. Interest expense, net of interest income, was $7.2 million for the three months ended September 30, 2008, compared to $7.1 million for the three months ended September 30, 2007. This $0.1 million increase was primarily the result of increased average debt balances on floating rate debt.
Provision for income taxes. The provision for income taxes was $13.7 million for the three months ended September 30, 2008, compared to $12.4 million for the three months ended September 30, 2007. This $1.3 million increase was due to an increase in income before income taxes of $4.6 million which was partially offset by a decrease in effective tax rate during the third quarter of 2007 compared to the same period of 2008.
Net income. As a result of the factors described above, net income was $21.6 million, or 10.9% of total revenue, for the three months ended September 30, 2008, compared to $18.4 million, or 10.8% of total revenue, for the three months ended September 30, 2007.
Nine Months Ended September 30, 2008, Compared to Nine Months Ended September 30, 2007
Total revenue. Total revenue increased $91.0 million, or 18.8%, to $575.7 million for the nine months ended September 30, 2008, from $484.7 million for the nine months ended September 30, 2007.
Total center revenue grew $89.6 million, or 18.9%, to $564.4 million for the nine months ended September 30, 2008, from $474.8 million for the nine months ended September 30, 2007. Comparable center revenue increased 3.8% for the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007. Of the $89.6 million increase in total center revenue,
• 64.8% was from membership dues, which increased $58.1 million, or 18.2%, due to increased memberships at new centers, junior membership programs and increased sales of value-added memberships. Our number of memberships increased 13.2% to 557,164 at September 30, 2008 from 492,410 at September 30, 2007. The membership growth of 13.2% was down from membership growth of 15.1% from September 30, 2007 over September 30, 2006, primarily due to the second anniversary of our acquisition of seven leased centers in July 2006, our strategy to reduce memberships in centers where memberships exceed our target capacity and the effects of a slower economy in the fourth quarter of 2007 and the first nine months of 2008.

• 33.6% was from in-center revenue, which increased $30.1 million primarily as a result of our members' increased use of our personal training, member activities, LifeCafe and LifeSpa products and services. As a result of this in-center revenue growth and our focus on broadening our offerings to our members, average in-center revenue per membership increased from $294 for the nine months ended September 30, 2007 to $321 for the nine months ended September 30, 2008.

• 1.6% was from enrollment fees, which are deferred until a center opens and recognized on a straight-line basis over 33 months for the second and third quarters of 2008 and 36 months for the first quarter of 2008 and prior periods. Enrollment fees increased $1.4 million for the nine months ended September 30, 2008 to $20.0 million. In 2008, we lowered our enrollment fees to stimulate new membership demand.

Other revenue increased $1.4 million, or 14.3%, to $11.3 million for the nine months ended September 30, 2008, which was primarily due to increased advertising revenue from our media business.
Center operations expenses. Center operations expenses totaled $337.1 million, or 59.7% of total center revenue (or 58.6% of total revenue), for the nine months ended September 30, 2008 compared to $281.2 million, or 59.2% of total center revenue (or 58.0% of total revenue), for the nine months ended September 30, 2007. This $55.9 million increase primarily consisted of $30.9 million in additional payroll-related costs to support increased memberships at new centers and increases in membership acquisition costs, an increase of $12.6 million in occupancy-related costs, including utilities, real estate taxes, rent on leased centers and an increase in expenses to support in-center products and services.
Advertising and marketing expenses. Advertising and marketing expenses were $23.6 million, or 4.1% of total revenue, for the nine months ended September 30, 2008, compared to $18.2 million, or 3.8% of total revenue, for the nine months ended September 30, 2007. These expenses increased primarily due to broader advertising for existing and new centers and those centers engaging in presale activities to stimulate new membership demand.
General and administrative expenses. General and administrative expenses were $30.7 million, or 5.3% of total revenue, for the nine months ended September 30, 2008, compared to $30.9 million, or 6.4% of total revenue,

for the nine months ended September 30, 2007. These expenses decreased as a percentage of revenue primarily due to increased efficiencies and productivity improvements, as well as the elimination of lease costs for our former corporate office.
Other operating expenses. Other operating expenses were $13.7 million for the nine months ended September 30, 2008, compared to $11.4 million for the nine months ended September 30, 2007. This increase is primarily a result of losses on the disposition of property and equipment.
Depreciation and amortization. Depreciation and amortization was $52.5 million for the nine months ended September 30, 2008, compared to $43.3 million for the nine months ended September 30, 2007. This $9.2 million increase was due primarily to depreciation on our new centers and new headquarters opened in 2007 and the first nine months of 2008 and the completed remodels of our leased centers acquired in July 2006.
Interest expense, net. Interest expense, net of interest income, was $21.3 million for the nine months ended September 30, 2008, compared to $19.0 million for the nine months ended September 30, 2007. This $2.3 million increase was primarily the result of increased average debt balances on floating rate debt.
Provision for income taxes. The provision for income taxes was $38.9 million for the nine months ended September 30, 2008, compared to $32.7 million for the nine months ended September 30, 2007. This $6.2 million increase was due to an increase in income before income taxes of $16.0 million.
Net income. As a result of the factors described above, net income was $58.8 million, or 10.2% of total revenue, for the nine months ended September 30, 2008, compared to $49.0 million, or 10.1% of total revenue, for the nine months ended September 30, 2007. Liquidity and Capital Resources
Liquidity
Historically, we have satisfied our liquidity needs through various debt and sale leaseback arrangements, sales of equity and cash provided by operations. Principal liquidity needs have included the development of new centers, debt service requirements and expenditures necessary to maintain and update our existing centers and their related fitness equipment. We believe that we can satisfy our current and longer-term debt service obligations and capital expenditure requirements with cash flow from operations, by the extension of the terms of or refinancing our existing debt facilities, through sale leaseback transactions and by continuing to raise long-term debt or equity capital, although there can be no assurance that such actions can or will be completed. We plan to fund our revised center growth plan for 2009 primarily with cash flows from operations and available debt from our revolving credit facility; however, we will continue to pursue appropriately-priced long-term financing, mainly in the forms of mortgages and sale-leasebacks. Our business model operates with negative working capital because we carry minimal accounts receivable due to our ability to have monthly membership dues paid by electronic draft, we defer enrollment fee revenue and we fund the construction of our new centers under standard arrangements with our vendors that are paid with proceeds from long-term debt.
Operating Activities
As of September 30, 2008, we had total cash and cash equivalents of $7.1 million and $9.3 million of restricted cash that serves as collateral for certain of our debt arrangements. We also had $105.1 million available under the existing terms . . .