Lifetime Fitness 2006 Annual Report Download - page 58

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LIFE TIME FITNESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
52
Interest on the amounts borrowed under the U.S. Bank Facility continues to be based on (i) a base rate, which is the
greater of (a) U.S. Bank’s prime rate and (b) the federal funds rate plus 50 basis points, or (ii) an adjusted Eurodollar
rate, plus, in either case (i) or (ii), the applicable margin within a range based on our consolidated leverage ratio. In
connection with the amendment and restatement of the U.S. Bank Facility, the applicable margin ranges were
decreased to 0 to 25 basis points (from 0 to 50 basis points) for base rate borrowings and to 75 to 175 basis points
(from 100 to 200 basis points) for Eurodollar borrowings. Additionally, we are restricted in our borrowings and in
general under the Amended and Restated Credit Agreement by certain financial covenants. We are required to
maintain a fixed coverage ratio of not less than 1.60 to 1.00, a consolidated leverage ratio of not more than 3.75 to
1.00 and a senior secured operating company leverage ratio of not more than 2.25 to 1.00. The Amended and
Restated Credit Agreement also contains covenants that, among other things, restrict our ability to enter into certain
business combinations, dispose of assets, make certain acquisitions, pay dividends, incur certain additional debt and
create certain liens.
The weighted average interest rate and debt outstanding under the revolving credit facility for the year ended
December 31, 2006 was 6.8% and $140.0 million, respectively. The weighted average interest rate and debt
outstanding under the revolving credit facility for the year ended December 31, 2005 was 5.7% and $44.5 million,
respectively.
On June 12, 2006, through a wholly owned subsidiary, we signed a promissory note in the amount of $1.7 million in
favor of a municipality. The note is secured by a mortgage on the real property purchased from the municipality on
the same date for the purpose of constructing one of our centers. The note bears no interest and is payable in two
equal payments of $0.8 million on the third and sixth anniversary dates of the opening of the center. Those dates are
expected to be June 2010 and June 2013. We recorded a $0.5 million reduction in the purchase price to reflect
imputed interest between the accounting acquisition date and the final payment of consideration.
On November 10, 2006 we signed a promissory note in the amount of $0.5 million in favor of the seller of certain
real property we purchased on the same date for the purpose of constructing one of our centers. The note is
unsecured and bears interest at 5.6%. The note is payable in various unequal installments over a three year period
following the opening of the center, currently expected to be in December 2007. In any event, the note is due and
payable no later than December 2010. We recorded a $48 reduction in the purchase price to reflect imputed interest
between the accounting acquisition date and the final payment of consideration.
We were in compliance in all material respects with all restrictive and financial covenants under our various credit
facilities as of December 31, 2006.
Aggregate annual future maturities of long-term debt (excluding capital leases) at December 31, 2006 are as follows:
2007.......................................................................................................................................... $10,204
2008.......................................................................................................................................... 6,066
2009.......................................................................................................................................... 6,615
2010.......................................................................................................................................... 8,044
2011.......................................................................................................................................... 343,245
Thereafter ................................................................................................................................. 2,521
$376,695