Lifetime Fitness 2008 Annual Report Download - page 56

LIFE TIME FITNESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
50
Other Assets — We record other assets at cost. Amortization of financing costs is computed over the periods of the
related debt financing. Other assets consist of the following:
December 31,
2008 2007
Financing costs, net ...................................................................... $ 9,988 $ 5,399
Investment in unconsolidated affiliate (see Note 3) ...................... 2,865 2,636
Site development costs ................................................................. 618 2,669
Lease deposits ............................................................................... 2,527 3,867
Earnest money deposits ................................................................ 1,739 9,632
Intangible assets ............................................................................ 8,596 5,505
Land held for sale ......................................................................... 21,105 10,592
Other ............................................................................................. 2,351 2,505
Total other assets .......................................................................... $49,789 $42,805
Site development costs consist of legal, engineering, architectural, environmental, feasibility and other direct
expenditures incurred for certain new center projects. Capitalization commences when acquisition of a particular
property is deemed probable by management. Should a specific project be deemed not viable for construction, any
capitalized costs related to that project are charged to operations at the time of that determination. Costs incurred
prior to the point at which the acquisition is deemed probable are expensed as incurred. Site development costs
capitalized in the years ended December 31, 2008 and 2007 were approximately $6.7 million and $10.3 million,
respectively. Upon completion of a project, the site development costs are classified as property and depreciated
over the useful life of the asset.
Land held for sale consists of excess land purchased as part of our original center site acquisitions. All land held for
sale is currently being marketed for sale. If the excess land is currently under contract for sale, the cost is reflected as
current and listed within prepaid expenses and other current assets.
Intangible assets are comprised principally of goodwill, leasehold rights at our Highland Park, Minnesota office
building and trade names. In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets,” intangible
assets determined to have an indefinite useful life, which consist of all our intangible assets, are not amortized but
instead tested for impairment at least annually.
We are required to test our intangible assets for impairment on an annual basis. We are also required to evaluate
these assets for impairment between annual tests if an event occurs or circumstances change that would more likely
than not reduce the fair value of the intangible asset below its carrying amount. An indicator of potential impairment
that could impact our intangible asset values include, but is not limited to, a significant loss of occupancy at our
rental property located in Highland Park, Minnesota. We tested to determine if the fair values of each of our
intangible assets were in excess of their respective carrying values at December 31, 2008 and December 31, 2007,
for purposes of the annual impairment test.