Lifetime Fitness 2006 Annual Report Download - page 41

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35
We are in compliance in all material respects with all restrictive and financial covenants under our various credit
facilities as of December 31, 2006.
Contractual Obligations
The following is a summary of our contractual obligations as of December 31, 2006 (3):
Payments due by period
Total
Less than
1 year
1-3 years
3-5 years More than
5 years
(In thousands)
Long-term debt obligations .............
.
$376,695
$ 10,204 $ 12,681 $351,289
$2,521
Capital lease obligations .................
.
12,860 5,024 1,552 429 5,855
Interest (1)........................................
.
52,348 11,604 20,267 15,991 4,486
Operating lease obligations .............
.
321,802 17,768 34,332 34,197 235,505
Purchase obligations (2) ..................
.
164,541 152,681 11,731 129
—
Other long-term liabilities................
.
264
—
—
—
264
Total contractual obligations ...........
.
$928,510
$197,281
$ 80,563 $402,035
$248,631
(1) Interest expense obligations were calculated holding interest rates constant at December 31, 2006 rates.
(2) Purchase obligations consist primarily of our contracts with construction subcontractors for the completion of
eight of our centers in 2007 and contracts for the purchase of land.
(3) On January 24, 2007 a wholly owned subsidiary obtained a commercial mortgage-backed loan in the original
principal amount of $105.0 million. Interest on the amounts borrowed under the mortgage financing is 6.03%
per annum, with a constant monthly debt service payment of $0.6 million through February 2017.
Recent Accounting Pronouncements
In December 2004, the Financial Accounting Standards Board (“FASB”) issued a revision of Statement of Financial
Accounting Standards No. 123, “Share-Based Payment” (“SFAS 123(R)”). This accounting standard revises SFAS
No. 123 and requires entities to recognize compensation expense in an amount equal to the fair value of share-based
payments granted to employees. SFAS 123(R) was effective for us on January 1, 2006. As of the required effective
date, we applied SFAS 123(R) using the modified prospective method, recognizing compensation expense for all
awards granted after the date of adoption of SFAS 123(R) and for the unvested portion of previously granted awards
that remain outstanding at the date of adoption. For more information on the adoption of SFAS 123(R), see Note 2
to our consolidated financial statements.
In July 2006, the FASB issued Financial Interpretation No. 48 (“FIN 48”). FIN 48 clarifies the application of SFAS
No. 109 by defining a criterion that an individual tax position must meet for any part of the benefit of that position to
be recognized in an enterprise’s financial statements. The criterion allows for recognition in the financial statements
of a tax position when it is more likely than not that the position will be sustained upon examination. FIN 48 was
effective for us on January 1, 2007. We are still evaluating the impact FIN 48 will have on our consolidated
financial position and consolidated results of operations.
Impact of Inflation
We believe that inflation has not had a material impact on our results of operations for any of the years in the three-
year period ended December 31, 2006. We cannot assure you that future inflation will not have an adverse impact on
our consolidated financial position and consolidated results of operations.