Lifetime Fitness 2008 Annual Report Download - page 68

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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)
62
5. Income Taxes
The provision for income taxes is comprised of:
December 31,
2008 2007 2006
Current tax expense ............................................................. $26,445 $33,358 $30,348
Deferred tax expense ................................................................... 14,833 8,297 3,165
Non-current tax expense ...................................................... 5,946 3,565 —
Income tax provision .......................................................... $47,224 $45,220 $33,513
The amount of deferred tax expense does not reconcile to the change in the deferred tax year end balances due to the
separate noncurrent tax liability created pursuant to the requirement of FIN 48 and the tax effect of Other
Comprehensive Income items.
The reconciliation between our effective tax rate on income from continuing operations and the statutory tax rate is
as follows:
December 31,
2008 2007 2006
Income tax provision at federal statutory rate ..................... $41,666 $39,634 $29,428
State and local income taxes, net of federal tax benefit ....... 5,236 4,837 3,268
Other, net ............................................................................. 322 749 817
Income tax provision ........................................................... $47,224 $45,220 $33,513
Deferred income taxes are the result of provisions of the tax laws that either require or permit certain items of
income or expense to be reported for tax purposes in different periods than they are reported for financial reporting.
The tax effect of temporary differences that gives rise to the deferred tax liability are as follows:
December 31,
2008 2007
Property and equipment .................................................................................
.
$(58,002) $(32,274)
Partnership interest ........................................................................................
.
(8,475) (8,967)
Accrued rent expense ....................................................................................
.
14,071 2,618
Other comprehensive income ........................................................................
.
2,843 1,226
Costs related to deferred revenue ..................................................................
.
(7,965) (3,280)
Other, net .......................................................................................................
.
6,911 3,258
Net deferred tax liability ................................................................................
.
$(50,617) $(37,419)
The following is a reconciliation of the total amounts of unrecognized tax benefits for 2008:
Unrecognized tax benefit – beginning balance ............................................... $12,892
Gross increases – tax positions in current period ............................................ 9,041
Prior year increases ......................................................................................... 419
Prior year decreases ........................................................................................ (523)
Lapse of statute of limitations ......................................................................... (3,418)
Unrecognized tax benefit – ending balance .................................................... $18,411