Lifetime Fitness 2007 Annual Report Download - page 68

LIFE TIME FITNESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
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401(k) Savings and Investment Plan — We offer a 401(k) savings and investment plan (the 401(k) Plan) to
substantially all full-time employees who have at least six months of service and are at least 21 years of age. We
made discretionary contributions to the 401(k) Plan in the amount of $1.5 million, $1.1 million and $0.8 million for
the years ended December 31, 2007, 2006 and 2005, respectively.
11. Related Party Transactions
We reimburse a general contractor that is primarily owned by the former president of a wholly owned subsidiary for
a car allowance, car insurance premiums, executive medical benefits and life insurance premiums provided by the
general contractor to such person. Such former president incurred expenses totaling less than $0.1 million for each
of the years ended December 31, 2007, 2006 and 2005. We made payments to the general contractor in the amounts
of less than $0.1 million during each of the years ended December 31, 2007, 2006 and 2005 for expenses incurred
during these and certain prior years.
We lease various fitness and office equipment from third party equipment vendors for use at the center in
Bloomingdale, Illinois. We then sublease this equipment to Bloomingdale LLC. The terms of the sublease are such
that Bloomingdale LLC is charged the equivalent of the debt service for the use of the equipment. We charged $0.4
million, $0.4 million and $0.5 million for the years ended December 31, 2007, 2006 and 2005, respectively.
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 $0.9 million for each of the years ended December 31, 2007, 2006 and 2005.
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
$0.5 million for each of the years ended December 31, 2007, 2006 and 2005.
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, 2007, $0.8 million had been deferred and is being held on behalf of the employees.
This amount is reflected as an other liability on the balance sheet.