Lifetime Fitness 2006 Annual Report Download - page 67

LIFE TIME FITNESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
61
that Bloomingdale LLC is charged the equivalent of the debt service for the use of the equipment. We charged $443,
$516 and $423 for the years ended December 31, 2006, 2005 and 2004.
As discussed in Note 4, in May 2001, we completed a transaction to sell and simultaneously lease back one of our
Minnesota centers. We did not recognize any material gain or loss on the sale of the center. The purchaser and
landlord in such transaction is an entity composed of four individuals, one of whom was the president of a wholly
owned subsidiary. We paid rent pursuant to the lease of $880 for the years ended December 31, 2006, 2005 and
2004.
In October 2003, we leased a center located within a shopping center that is owned by a general partnership in which
our chief executive officer has a 50% interest. In December 2003, we and the general partnership executed an
addendum to this lease whereby we leased an additional 5,000 square feet of office space on a month-to-month basis
within the shopping center, which we terminated effective January 1, 2007. We paid rent pursuant to this lease of
$540 for each of the years ended December 31, 2006, 2005 and 2004.
12. Executive Nonqualified Plan
During fiscal 2006, we implemented the Executive Nonqualified Excess Plan of Life Time Fitness, a non-qualified
deferred compensation plan. This plan was established for the benefit of our highly compensated employees, which
our plan defines as our employees whose projected compensation for the upcoming plan year would meet or exceed
the IRS limit for determining highly compensated employees. This unfunded, non-qualified deferred compensation
plan allows participants the ability to defer and grow income for retirement and significant expenses in addition to
contributions made to our company’s 401(k) plan.
All highly compensated employees eligible to participate in the Executive Nonqualified Excess Plan of Life Time
Fitness, including but not limited to our executives, may elect to defer up to 50% of their annual base salary and/or
annual bonus earnings to be paid in any coming year. The investment choices available to participants under the
non-qualified deferred compensation plan are of the same type and risk categories as those offered under our
company’s 401(k) plan and may be modified or changed by the participant or our company at any time.
Distributions can be paid out as in-service payments or at retirement. Retirement benefits can be paid out as a lump
sum or in annual installments over a term of up to 10 years. Our company may, but does not currently plan to, make
matching contributions and/or discretionary contributions to this plan. If our company did desire to make
contributions to this plan, the contributions would vest to each participant according to their years of service with
our company. At December 31, 2006, $264 had been deferred and is being held on behalf of the employees. This
amount is reflected as an other liability on the balance sheet.
13. Quarterly Financial Data (Unaudited)
The following is a condensed summary of actual quarterly results of operations for 2006 and 2005:
2006 2005
1st
Quarter 2nd
Quarter
3rd
Quarter
4th
Quarter
1st
Quarter
2nd
Quarter 3rd
Quarter
4th
Quarter
(In thousands, except for per share data)
Total revenue ........................... $115,425 $122,455 $134,741 $139,276 $89,328 $95,607 $101,612 $103,569
Income from operations ........... 21,172 23,530 27,794 28,019 17,303 20,414 21,175 22,050
Net income................................ 10,433 12,385 13,639 14,108 8,121 10,287 10,737 12,068
Earnings per share (1) ..............
Basic ..................................... $0.29 $0.34 $0.38 $0.39 $0.24 $0.30 $0.31 $0.34
Diluted .................................. 0.28 0.33 0.37 0.39 0.23 0.28 0.29 0.33
(1) See Note 2 for discussion on the computation of earnings per share.