Lifetime Fitness 2008 Annual Report Download - page 54

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LIFE TIME FITNESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
48
Property and Equipment — Property, equipment and leasehold improvements are recorded at cost. Improvements
are capitalized, while repair and maintenance costs are charged to operations when incurred. The cost and
accumulated depreciation of property and equipment retired and other items disposed of are removed from the
related accounts, and any residual values are charged or credited to income.
Depreciation is computed primarily using the straight-line method over estimated useful lives of the assets.
Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the
estimated useful life of the improvement. Accelerated depreciation methods are used for tax reporting purposes.
Property and equipment consist of the following:
Depreciable December 31,
Lives 2008 2007
Land ............................................................................. $ 235,414 $ 219,347
Buildings and related fixtures ...................................... 3-40 years 1,012,277 869,365
Leasehold improvements ............................................. 1-20 years 110,900 36,253
Construction in progress .............................................. 154,119 137,335
1,512,710 1,262,300
Equipment:
Fitness ...................................................................... 5-7 years 91,457 76,620
Computer and telephone .......................................... 3-5 years 44,554 35,792
Capitalized software ................................................ 5 years 27,981 21,884
Decor and signage ................................................... 5 years 13,323 8,962
Audio/visual ............................................................ 3-5 years 22,552 15,319
Furniture and fixtures .............................................. 7 years 12,722 9,300
Other equipment ...................................................... 3-7 years 61,862 48,135
274,451 216,012
Property and equipment, gross ..................................... 1,787,161 1,478,312
Less accumulated depreciation ................................ 271,204 219,041
Property and equipment, net ........................................ $1,515,957 $1,259,271
At December 31, 2008, we had eight centers under construction, of which up to six are planned to open in 2009.
Construction in progress, including land purchased for future development totaled $195.7 million at December 31,
2008 and $206.3 million at December 31, 2007.
Capitalized software is our internally developed Web-based systems to facilitate member enrollment and
management, as well as point of sale system enhancements. Costs related to these projects have been capitalized in
accordance with Statement of Position No. 98-1, Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use.
We capitalize interest during the construction period of our centers and in accordance with Statement of Financial
Accounting Standards No. 34, Capitalization of Interest Cost, this capitalized interest is included in the cost of the
building. We capitalized interest of $9.1 million and $8.4 million for the years ended December 31, 2008 and 2007,
respectively.
Other equipment consists primarily of cafe, spa and playground and laundry equipment.