Lifetime Fitness 2009 Annual Report Download - page 61

Download and view the complete annual report

Please find page 61 of the 2009 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 92

  • 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
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92

LIFE TIME FITNESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
56
Comprehensive Income — We follow the accounting guidance which established standards for reporting and
displaying of comprehensive income (loss) and its components. Comprehensive income (loss) reflects the change in
equity of a business enterprise during a period from transactions and other events and circumstances from nonowner
sources. For us, the difference between net income as reported on the consolidated statements of operations and
comprehensive income is a gain of $3.4 million, net of tax of $1.3 million, related to our outstanding interest rate
swap contract. For more information, see Note 4.
3. Investment in Unconsolidated Affiliate
In December 1999, we, together with two unrelated organizations, formed an Illinois limited liability company
named LIFE TIME Fitness Bloomingdale L.L.C. (“Bloomingdale LLC”) for the purpose of constructing and
operating a center in Bloomingdale, Illinois. The center opened for business in February 2001. Each of the three
members maintains an equal interest in Bloomingdale LLC. Pursuant to the terms of the agreement that governs the
formation and operation of Bloomingdale LLC (the “Operating Agreement”), each of the three members contributed
$2.0 million to Bloomingdale LLC. We have no unilateral control of the center, as all decisions essential to the
accomplishments of the purpose of Bloomingdale LLC require the consent of the other members of Bloomingdale
LLC. The Operating Agreement expires on the earlier of December 2039 or the liquidation of Bloomingdale LLC.
We account for our interest in Bloomingdale LLC using the equity method.
Bloomingdale LLC issued indebtedness in June 2000 in a taxable bond financing that is secured by a letter of credit
in an amount not to exceed $14.7 million. All of the members separately guaranteed one-third of these obligations to
the bank for the letter of credit and pledged their membership interest to the bank as security for the guarantee. The
guarantee runs through June 7, 2010 subsequently extended to June 7, 2011 by the bank as of February 24, 2010. As of
December 31, 2009, the maximum amount of future payments under our one-third of the guarantee was $2.8 million. We
have the right to recover from Bloomingdale LLC any amounts paid under the terms of the guarantee, but only after
Bloomingdale LLC’s obligations to the bank have been satisfied.
Pursuant to the terms of the Operating Agreement, beginning in March 2002 and continuing throughout the term of
such agreement, the members are entitled to receive monthly cash distributions from Bloomingdale LLC. The
amount of this monthly distribution is, and will continue to be throughout the term of the agreement, approximately
$0.1 million per member. In the event that Bloomingdale LLC does not generate sufficient cash flow through its
own operations to make the required monthly distributions, we are obligated to make such payments to each of the
other two members. To date, Bloomingdale LLC has generated cash flows sufficient to make all such payments.
Each of the three members had the right to receive distributions from Bloomingdale LLC in the amount of $0.7
million for each of the three years 2009, 2008 and 2007.