XML 17 R12.htm IDEA: XBRL DOCUMENT  v2.3.0.11
Fixed Asset Impairment and Club Closures
6 Months Ended
Jun. 30, 2011
Asset Impairment Charges [Abstract]  
Fixed Asset Impairment and Club Closures

7. Fixed Asset Impairment and Club Closures

 

Fixed assets are evaluated for impairment periodically whenever events or changes in circumstances indicate that related carrying amounts may not be recoverable from undiscounted cash flows in accordance with FASB released guidance. The Company's long-lived assets and liabilities are grouped at the individual club level which is the lowest level for which there is identifiable cash flow. To the extent that estimated future undiscounted net cash flows attributable to the assets are less than the carrying amount, an impairment charge equal to the difference between the carrying value of such asset and its fair value is recognized. In the three months ended June 30, 2011, the Company tested 11 underperforming clubs and no impairments were found. The 11 clubs had an aggregate of $18,918 of net leasehold improvements and furniture and fixtures remaining as of June 30, 2011. In the three months ended June 30, 2010, the Company recorded a total of $2,865 of impairment charges at two clubs. The impairment charges are included as a separate line in operating income on the condensed consolidated statement of operations.

 

The fair values of fixed assets evaluated for impairment were calculated using Level 3 inputs using discounted cash flows, which are based on internal budgets and forecasts through the end of each respective lease. The most significant assumptions in those budgets and forecasts relate to estimated membership and ancillary revenue, attrition rates, and maintenance capital expenditures, which are estimated at approximately 3% of total revenues.