Lifetime Fitness 2011 Annual Report Download - page 79

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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and discussions with legal counsel, it is our opinion that the outcome of the various legal actions and claims that are
incidental to the our business will not have a material adverse impact on the consolidated financial position, results
of operations or cash flows. Such matters are subject to many uncertainties, and the outcome of individual matters
are not predictable with assurance.
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 $2.5 million, $2.0 million and $1.6 million for
the years ended December 31, 2011, 2010 and 2009, respectively.
Letters of Credit — As of December 31, 2011, we had $7.9 million in irrevocable standby letters of credit
outstanding, which were issued primarily to certain insurance carriers to guarantee payments of deductibles for
various insurance programs, such as workers’ compensation and commercial liability insurance. Such letters of
credit are secured by the collateral under our senior secured credit facility. As of December 31, 2011, no amounts
had been drawn on any of these irrevocable standby letters of credit.
As of December 31, 2011, we had posted bonds totaling $9.0 million related to construction activities and
operational licensing.
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 letter of credit ran through June 7, 2011. In May 2011, Bloomingdale LLC borrowed $7.3 million
from a bank. Each of the members separately guaranteed one-third of the outstanding loan amount. As of
December 31, 2011, the maximum amount of future payments under our one-third of the guarantee was $2.3
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.
9. Related Party Transactions
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. We paid rent pursuant to this
lease of $0.5 million, $0.5 million and $0.7 million for the years ended December 31, 2011, 2010 and 2009,
respectively.
10. 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