Lifetime Fitness 2009 Annual Report Download - page 75

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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Guarantee — Bloomingdale LLC issued indebtedness in June 2000 in a taxable bond financing that is secured by a
letter of credit in an amount not to exceed $14.7 million. All of the members separately guaranteed one-third of
these obligations to the bank for the letter of credit and pledged their membership interest to the bank as security for
the guarantee. The guarantee runs through June 7, 2010 subsequently extended to June 7, 2011 by the bank as of
February 24, 2010. As of December 31, 2009, the maximum amount of future payments under our one-third of the
guarantee was $2.8 million. We have the right to recover from Bloomingdale LLC any amounts paid under the terms
of the guarantee, but only after Bloomingdale LLC’s obligations to the bank have been satisfied.
11. Related Party Transactions
We leased various fitness and office equipment from third party equipment vendors for use at the center in
Bloomingdale, Illinois. We then sublet this equipment to Bloomingdale LLC. The terms of the sublease were such
that Bloomingdale LLC was charged the equivalent of the debt service for the use of the equipment. In 2007, the
equipment was fully paid off and the leases expired, thus we did not charge Bloomingdale LLC in 2008 or 2009. We
charged Bloomingdale LLC $0.4 million for the year ended December 31, 2007.
In October 2003, we leased a center located within a shopping center that is owned by a general partnership in which
our chairman of the board of directors and 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 $0.7 million, $0.7 million and $0.5 million for the years ended December 31,
2009, 2008 and 2007, respectively.
In May 2008, we hired a construction company to complete an excavation project on the remodel of one of our
centers. Our chairman of the board of directors and chief executive officer owns 100% of the interests in such
construction company. The total cost of the project was $0.7 million, of which $0.3 million was paid by us to the
construction company in 2008, and $0.4 million was paid in 2009.
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 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 401(k)
Plan and may be modified or changed by the participant or us 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. We may, but do not currently plan to, make matching contributions and/or discretionary
contributions to this plan. If we did make contributions to this plan, the contributions would vest to each participant
according to their years of service with us. At December 31, 2009, $1.6 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.