Lifetime Fitness 2008 Annual Report Download - page 46

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40
Contractual Obligations
The following is a summary of our contractual obligations as of December 31, 2008:
Payments due by period
Total 2009
2010 and
2011
2012 and
2013 After 2013
(In thousands)
Long-term debt obligations,
excluding capital lease obligations $ 693,219 $ 9,361 $120,522 $429,647 $133,689
Capital lease obligations ................. 19,683 974 2,056 1,837 14,816
Interest (1) ...................................... 139,524 31,913 58,471 22,709 26,431
Operating lease obligations ............. 800,648 39,799 76,815 76,064 607,970
Purchase obligations (2) ................. 86,641 73,057 13,541 43 -
Other long-term liabilities (3) ......... 995 - - - 995
Total contractual obligations .......... $1,740,710 $155,104 $271,405 $530,300 $783,901
(1) Interest expense obligations were calculated holding floating rate debt balances and interest rates constant at
December 31, 2008 rates.
(2) Purchase obligations consist primarily of our contracts with construction subcontractors for the completion of the
seven centers under construction as of December 31, 2008, as well as contracts for the purchase of land.
(3) Financial Interpretation No. 48 (“FIN 48”) obligations represent uncertain tax positions. In addition to the other
long-term liabilities presented in the table above, approximately $18.8 million of unrecognized tax benefits,
including interest and penalties, have been recorded as liabilities in accordance with FIN 48, and we are
uncertain as to if or when such amounts may be settled.
Recent Accounting Pronouncements
In March 2008, the FASB issued SFAS No. 161, “Disclosures About Derivative Instruments and Hedging Activities
— an amendment of SFAS No. 133” ("SFAS 161"). SFAS 161 requires enhanced disclosures about an entity’s
derivative and hedging activities including how and why an entity uses derivative instruments, how derivative
instruments and related hedged items are accounted for, and how derivative instruments and related hedged items
affect an entity’s financial position, financial performance and cash flows. SFAS 161 will be effective for us on
January 1, 2009. The adoption of SFAS 161 is not expected to have a material effect on our financial position or
results of operations.
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, 2008, our net floating rate indebtedness was approximately $323.8 million. If long-term floating
interest rates were to have increased by 100 basis points during the year ended December 31, 2008, our interest costs
would have increased by approximately $2.6 million. If short-term interest rates were to have increased by 100 basis
points during the year ended December 31, 2008, our interest income from cash equivalents would have increased
by less than $0.1 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, 2008.