Lifetime Fitness 2009 Annual Report Download - page 55

LIFE TIME FITNESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
50
Property and equipment consist of the following:
Depreciable December 31,
Lives 2009 2008
Land ............................................................................................. $ 231,304 $ 235,414
Buildings and related fixtures ...................................................... 3-40 years 1,117,857 1,012,277
Leasehold improvements ............................................................. 1-20 years 118,686 110,900
Construction in progress .............................................................. 99,923 154,119
1,567,770 1,512,710
Equipment:
Fitness ...................................................................................... 5-7 years 96,045 91,457
Computer and telephone .......................................................... 3-5 years 47,846 44,554
Capitalized software ................................................................ 5 years 35,388 27,981
Decor and signage .................................................................... 5 years 14,985 13,323
Audio/visual ............................................................................. 3-5 years 26,047 22,552
Furniture and fixtures ............................................................... 7 years 13,074 12,722
Other equipment ...................................................................... 3-7 years 66,626 61,862
300,011 274,451
Property and equipment, gross ..................................................... 1,867,781 1,787,161
Less accumulated depreciation ................................................ 354,788 271,204
Property and equipment, net......................................................... $1,512,993 $1,515,957
At December 31, 2009, we had five large format centers under construction, of which three are planned to open in
2010. Construction in progress, including land for future development totaled $132.3 million at December 31, 2009
and $193.7 million at December 31, 2008.
Capitalized software includes our internally developed Web-based systems to facilitate member enrollment and
management, as well as point of sale system enhancements and our payroll and human resources software. Costs
related to these projects have been capitalized in accordance with accounting guidance.
We capitalize interest during the construction period of our centers and in accordance with accounting guidance on
the capitalization of interest costs,this capitalized interest is included in the cost of the building. We capitalized
interest of $3.6 million and $9.1 million for the years ended December 31, 2009 and 2008, respectively.
Other equipment consists primarily of cafe, spa and playground and laundry equipment.
Impairment of Long-lived Assets — The carrying value of long-lived assets is reviewed annually and whenever
events or changes in circumstances indicate that such carrying values may not be recoverable. We consider a history
of consistent and significant operating losses to be our primary indicator of potential impairment. Assets are grouped
and evaluated for impairment at the lowest level for which there are identifiable cash flows, which is generally at an
individual center level or corporate business. The determination of whether impairment has occurred is based on an
estimate of undiscounted future cash flows directly related to th-at center or corporate business, compared to the
carrying value of these assets. If an impairment has occurred, the amount of impairment recognized is determined by
estimating the fair value of these assets and recording a loss if the carrying value is greater than the fair value. Based
upon our review and analysis, no impairments on operating assets were deemed to have occurred during 2009, 2008
or 2007.