Lifetime Fitness 2012 Annual Report Download - page 56

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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)
50
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.
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 2012 2011
Land $ 300,887 $ 261,740
Buildings and related fixtures 3-39 years 1,589,960 1,473,347
Leasehold improvements 1-20 years 87,951 73,158
Construction in progress 68,358 78,395
Total land, buildings, leaseholds and construction in process 2,047,156 1,886,640
Equipment:
Fitness 3-7 years 113,521 106,412
Other equipment 3-7 years 88,290 75,353
Computer and telephone 3-5 years 65,947 56,257
Capitalized software 3-5 years 68,319 51,699
Decor and signage 5 years 18,553 17,145
Audio/visual 5 years 32,223 29,961
Furniture and fixtures 5-7 years 18,197 16,251
Total equipment 405,050 353,078
Property and equipment, gross 2,452,206 2,239,718
Less accumulated depreciation 593,540 499,284
Property and equipment, net $ 1,858,666 $ 1,740,434
At December 31, 2012, we had four large format centers under construction which we plan to open in 2013 and
2014. Construction in progress, including land for future development totaled $100.3 million at December 31, 2012
and $81.4 million at December 31, 2011.
Included in the construction in progress balances are site development costs which 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. Upon completion of a project, the site development costs are classified as
property and depreciated over the useful life of the asset. Site development costs were $2.6 million and $5.9 million
at December 31, 2012 and 2011, respectively.
In 2012, we spent approximately $30.6 million in acquisition related costs, including a race timing company that
developed a radio frequency identification timing system for athletic and endurance events including run, bike and
multi-sport races. We also acquired a tennis center in the Atlanta, Georgia market which we rebranded Life Time
Tennis Atlanta. Additionally in 2012, we acquired certain athletic events which complement our existing portfolio of
athletic events.