Lifetime Fitness 2010 Annual Report Download - page 48

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42
Recent Accounting Pronouncements
In June 2009, the Financial Accounting Standards Board issued new guidance on the consolidation of variable
interest entities, which was effective for us beginning January 1, 2010. The guidance amends the consolidation
guidance applicable to variable interest entities to require revised evaluations of whether entities represent variable
interest entities, ongoing assessments of control over such entities, and additional disclosures for variable interests.
The implementation did not have an impact on our consolidated financial statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We invest our excess cash in highly liquid short-term investments. These investments are not held for trading or
other speculative purposes. Changes in interest rates affect the investment income we earn on our cash and cash
equivalents and, therefore, impact our consolidated cash flows and consolidated results of operations. As of
December 31, 2010, our net floating rate indebtedness was approximately $387.6 million. If long-term floating
interest rates were to have increased by 100 basis points during the year ended December 31, 2010, our interest costs
would have increased by approximately $2.9 million. If short-term interest rates were to have increased by 100 basis
points during the year ended December 31, 2010, our interest income from cash equivalents would have increased
by approximately $0.2 million. These amounts are determined by considering the impact of the hypothetical interest
rates on our floating rate indebtedness and cash equivalents balances at December 31, 2010.