Lifetime Fitness 2012 Annual Report Download - page 48

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Recent Accounting Pronouncements
In September 2011, the Financial Accounting Standards Board ("FASB") issued guidance on goodwill impairment
testing. The guidance became effective for us in fiscal 2012. The guidance allows companies to first assess
qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment
test. An entity no longer will be required to calculate the fair value of a reporting unit unless the entity determines,
based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount.
The guidance also includes examples of the types of factors to consider in conducting the qualitative assessment.
The implementation of the guidance did not have a material impact on our consolidated financial statements.
In June 2011, the FASB updated guidance on presentation of comprehensive income. The FASB subsequently
deferred the effective date of certain provisions of this standard pertaining to the reclassification of items out of
accumulated other comprehensive income, pending the issuance of further guidance on that matter. The new
guidance eliminates the current option to report other comprehensive income and its components in the statement of
changes in equity. Instead, an entity is required to present either a continuous statement of net income and other
comprehensive income or two separate but consecutive statements. As this guidance relates to presentation only, the
adoption did not have a material impact on our consolidated financial statements.
In July 2012, the FASB updated guidance on intangible asset impairment testing. The guidance will become
effective for us in fiscal 2013. The amendments in this update allow companies to first assess qualitative factors to
determine whether it is necessary to perform a quantitative impairment test. Under the update, a company will not be
required to calculate the fair value of an indefinite-lived intangible asset unless the company determines, based on
qualitative assessment, that it is not more likely than not, that the indefinite-lived intangible asset is impaired. The
amendments include a number of events and circumstances for an entity to consider in conducting the qualitative
assessment. We do not expect the implementation of the guidance to have a material impact on our consolidated
financial statements.
In February 2013, the FASB issued guidance adding new disclosure requirements for items reclassified out of
accumulated other comprehensive income ("AOCI"), which will become effective for us in fiscal 2013. The
guidance is intended to help entities improve the transparency of changes in other comprehensive income ("OCI")
and items reclassified out of AOCI in their financial statements. It does not amend any existing requirements for
reporting net income or OCI in the financial statements. We do not expect the implementation of the guidance to
have a material impact on our consolidated financial statements.
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, 2012, our net floating rate indebtedness was approximately $292.4 million. If long-term floating
interest rates were to have increased by 100 basis points during the year ended December 31, 2012, our interest costs
would have increased by approximately $2.3 million. If short-term interest rates were to have increased by 100 basis
points during the year ended December 31, 2012, 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, 2012.