Lifetime Fitness 2011 Annual Report Download - page 58

Download and view the complete annual report

Please find page 58 of the 2011 Lifetime Fitness annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 92

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92

LIFE TIME FITNESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
52
Balance at December 31, 2009
Goodwill acquired
Balance at December 31, 2010
Goodwill acquired
Balance at December 31, 2011
$ 5,690
7,632
13,322
12,228
$ 25,550
In accordance with accounting guidance, goodwill is determined to have an indefinite useful life and is not
amortized but instead tested for impairment annually at September 30, or more frequently if necessary. Based upon
our review and analysis, no impairments were deemed to have occurred during 2011, 2010 or 2009.
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:
Financing costs, net
Investment in unconsolidated affiliate (see Note 3)
Intangible assets
Land held for sale
Executive nonqualified plan (see Note 10)
Other
Total other assets
December 31,
2011
$ 9,047
3,733
9,416
21,941
3,024
7,919
$ 55,080
2010
$ 6,328
3,454
7,964
23,225
3,147
4,079
$ 48,197
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 trade names, leasehold rights at our Highland Park, Minnesota office
building and curriculum-based intangible assets. In accordance with accounting guidance on intangible assets,
intangible assets determined to have an indefinite useful life, are not amortized but instead tested for impairment at
least annually.
We evaluate our intangible assets for impairment on an annual basis each September 30. 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 expect the facility to continue to be used
as a rental property with continuing lease renewals and/or replacements and there have been no legal, regulatory or
contractual provisions that would indicate that we could not renew the leases. Accordingly, the leasehold rights,
which include in-place lease value and tenant origination value, were originally determined to have an indefinite
life. However, during our quarter ended June 30, 2010, we determined it was appropriate to re-evaluate our useful
life given the recent challenging commercial real estate markets and the current economic environment. Based upon
our review, we determined our leasehold rights to have a finite life. Accordingly, we amortize the remaining carrying
value of this intangible asset prospectively over the remaining weighted average lease term for in-place lease value
and weighted average lease term plus expected renewal options for tenant origination value. We performed an
impairment analysis as of the date of our decision to change the useful life from an indefinite life to a finite life and
determined there to be no impairment.