Lifetime Fitness 2012 Annual Report Download - page 82

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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11. 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 ten years. We made matching contributions to this plan during fiscal 2012. Any contributions to this plan
vest to each participant according to their years of service with us. At December 31, 2012, $4.1 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.
12. Quarterly Financial Data (Unaudited)
The following is a condensed summary of actual quarterly results of operations for 2012 and 2011:
2012 2011
1st
Quarter 2nd Quarter 3rd Quarter 4th Quarter 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
(4)
Total revenue $268,447 $288,304 $294,873 $275,323 $240,645 $256,694 $265,421 $250,914
Gross profit (1) 103,325 112,388 112,449 107,158 87,351 95,344 97,341 95,375
Income from
operations 48,322 56,583 59,408 43,915 40,263 46,255 49,880 36,868
Net income 25,672 30,292 32,144 23,430 20,836 24,947 26,991 19,843
Earnings per
share (2):
Basic (3) $ 0.62 $ 0.73 $ 0.77 $ 0.57 $ 0.52 $ 0.62 $ 0.67 $ 0.49
Diluted (3) $ 0.62 $ 0.73 $ 0.77 $ 0.56 $ 0.51 $ 0.61 $ 0.66 $ 0.48
(1) We define gross profit as total center revenue less center operations expenses.
(2) See Note 2 for discussion on the computation of earnings per share.
(3) The basic and diluted earnings per share by quarter include the impact of rounding within each quarter.
(4) In June 2009, our compensation committee approved performance-based restricted stock grants to each of
our named executive officers and other senior management to serve as an incentive to achieve fully diluted
earnings per share targets in fiscal 2011 and/or fiscal 2012. In the fourth quarter of 2011, we determined
that achieving the 2012 diluted earnings per share performance criteria for a performance-based restricted
stock grant to senior management was probable, resulting in a cumulative, share-based compensation
expense of approximately $6.8 million (pre-tax).