Lifetime Fitness 2006 Annual Report Download - page 50

Download and view the complete annual report

Please find page 50 of the 2006 Lifetime Fitness annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 80

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80

LIFE TIME FITNESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
44
Other Assets — We record other assets at cost. Amortization of financing costs is computed over the periods of the
related debt financing. Other assets consist of the following:
December 31,
2006 2005
Financing costs, net...................................................................... $ 4,093 $ 3,947
Investment in unconsolidated affiliate (see Note 3)..................... 2,400 2,150
Site development costs................................................................. 2,371 1,594
Lease deposits.............................................................................. 2,340 2,396
Earnest money deposits................................................................ 8,984 1,327
Intangibles.................................................................................... 4,252 2,880
Property held for sale................................................................... 5,655 —
Other ............................................................................................ — 75
$30,095 $14,369
Site development costs consist of legal, engineering, architectural, environmental, feasibility and other direct
expenditures incurred for certain new center projects. Capitalization commences when acquisition of a particular
property is deemed probable by management. Should a specific project be deemed not viable for construction, any
capitalized costs related to that project are charged to operations at the time of that determination. Costs incurred
prior to the point at which the acquisition is deemed probable are expensed as incurred. Site development costs
capitalized in the years ended December 31, 2006 and 2005 were approximately $6,101 and $4,997, respectively.
Upon completion of a project, the site development costs are classified as property and equipment and depreciated
over the useful life of the asset.
Intangible assets primarily consist of the leases acquired as part of the purchase in 2005 of the Highland Park,
Minnesota office building complex, which includes one of our centers, as well as intangible assets related to the
assumption of operations of seven leased facilities in 2006. The fair value of the intangibles associated with the lease
transaction has been recorded based upon preliminary estimates. We anticipate completing the allocation of the
purchase price during the first half of 2007, and changes to the preliminary estimates will be recorded at that time.
The final allocation of the purchase price is not anticipated to be significantly different from preliminary allocations.
Most of our intangible assets have been deemed to have indefinite lives and therefore are not subject to amortization.
We perform impairment tests annually, during the fourth quarter, and whenever events or circumstances occur
indicating that our intangible assets might be impaired. Based upon our assessment during 2006, no impairment was
deemed to have occurred.