Lifetime Fitness 2013 Annual Report Download - page 69

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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)
63
In July 2013, we entered into the Second Amendment to the Third Amended and Restated Credit Agreement (the
"Credit Agreement") with U.S. Bank National Association, as administrative agent and lender, and other lenders
from time to time a party thereto. The material amendments to the Credit Agreement were (i) an increase to the
amount of our revolving credit facility from $660.0 million to $760.0 million and a new $100.0 million term loan
and (ii) an extension of the term of the facility to July 2018. The revolving credit facility may be increased by an
additional $240.0 million upon the exercise of an accordion feature if one or more lenders commit the additional
$240.0 million. The new term loan dated July 31, 2013 amortizes at the rate of 5.0% of the original term loan
amount on an annual basis. The facility remains floating rate with a spread over LIBOR or Prime. The spreads under
the leverage-based pricing grid in the facility remain unchanged, as do the financial covenant ratio thresholds.
At December 31, 2012, $454.0 million was outstanding on the revolving credit facility at a weighted average interest
rate of 2.4%. The weighted average interest rate and debt outstanding under the revolving credit facility for the year
ended December 31, 2012 was 2.6% and $390.6 million, respectively. The maximum month-end balance during the
year ended December 31, 2012 was $454.0 million.
At December 31, 2013, $510.5 million was outstanding on the revolving credit facility at a weighted average interest
rate of 2.4%, plus $9.6 million related to letters of credit. The weighted average interest rate and debt outstanding
under the revolving credit facility for the year ended December 31, 2013 was 2.5% and $411.9 million, respectively.
The maximum month-end balance during the year ended December 31, 2013 was $510.5 million.
Interest Rate Swap
In August 2011, we entered into an interest rate swap contract with J.P. Morgan Chase Bank, N.A. that effectively
fixed the rates paid on a total of $200.0 million of variable rate borrowings from our revolving credit facility at
1.32% plus the applicable spread (which depends on our EBITDAR leverage ratio) until June 2016. We pay 1.32%
and receive LIBOR on the notional amount of $200.0 million. The contract was designated a hedge against interest
rate volatility. We applied this hedge to variable rate interest debt under the U.S. Bank credit facility. Changes in the
fair market value of the swap contract were recorded in accumulated other comprehensive (loss) income. As of
December 31, 2013, the $2.3 million fair market value loss, net of tax, of the swap contract was recorded as
accumulated other comprehensive loss in the shareholders’ equity section of our consolidated balance sheets and the
$3.8 million gross fair market value of the swap contract was included in long-term debt.
Mortgage Financing
In January 2007, a wholly owned subsidiary obtained a mortgage-backed loan in the original principal amount of
$105.0 million from Goldman Sachs Commercial Mortgage Capital, L.P. pursuant to a loan agreement dated
January 2007. The mortgage financing is secured by six properties owned by the subsidiary and operated as Life
Time Fitness centers. The mortgage financing matures in February 2017. Interest on the amounts borrowed under
the mortgage financing referenced above is 6.03% per annum, with a constant monthly debt service payment of $0.6
million. As additional security for the subsidiary's obligations under this mortgage financing, the subsidiary granted
a security interest in all assets owned from time to time by the subsidiary including the properties, the revenues from
the properties and all other tangible and intangible property, and certain bank accounts belonging to the subsidiary
that the lender has required pursuant to the mortgage financing. As of December 31, 2013, $95.2 million remained
outstanding on the loan.
In February 2013, a wholly-owned subsidiary obtained a mortgage loan in the original principal amount of $75.0
million from ING Life Insurance and Annuity Company pursuant to a promissory note and related agreements. The
mortgage financing is secured by five properties and matures in March 2023. Interest on the amounts borrowed is
4.45% per annum, with a constant monthly debt service payment of $0.8 million. As of December 31, 2013, $70.5
million remained outstanding on the loan.