Lifetime Fitness 2012 Annual Report Download - page 81

LIFE TIME FITNESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
75
under the Lease. At December 31, 2012, the future minimum lease payments due under the lease amounted to
$114.7 million.
We account for the sale-leaseback transactions as operating leases in accordance with the applicable accounting
guidance. The gains we recognized upon completion of the sale-leaseback transactions, a total of $7.4 million, have
been deferred and are being recognized over the lease term.
Purchase Commitments — We contract in advance for land purchases and construction services and materials,
among other things. The purchase commitments were $93.8 million, $71.0 million and $29.3 million at
December 31, 2012, 2011 and 2010, respectively.
Litigation — We are engaged in proceedings incidental to the normal course of business. Due to their nature, such
legal proceedings involve inherent uncertainties, including but not limited to court rulings, negotiations between
affected parties and governmental intervention. We have established reserves for matters that are probable and
estimable in amounts we believe are adequate to cover reasonable adverse judgments not covered by insurance.
These reserves are not material to our consolidated financial statements. Based upon the information available to us
and discussions with legal counsel, it is our opinion that the outcome of the various legal actions and claims that are
incidental to 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 $2.9 million, $2.5 million and $2.0 million for
the years ended December 31, 2012, 2011 and 2010, respectively.
Letters of Credit — As of December 31, 2012, we had $10.4 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, 2012, no amounts
had been drawn on any of these irrevocable standby letters of credit.
As of December 31, 2012, we had posted bonds totaling $14.8 million related to construction activities and
operational licensing.
Guarantee — 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, 2012, the maximum amount of future
payments under our one-third of the guarantee was $2.0 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.
10. 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 $0.6 million, $0.5 million and $0.5 million for the years ended December 31, 2012, 2011 and 2010,
respectively.