Lifetime Fitness 2006 Annual Report Download - page 18

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As of December 31, 2006, we had approximately 12,350 employees, including approximately 7,950 part-time
employees. We are not a party to a collective bargaining agreement with any of our employees. Although we
experience turnover of non-management personnel, historically we have not experienced difficulty in obtaining
adequate replacement personnel. In general, we believe relations with our employees are good.
Information Systems
In addition to our standard operating and administrative systems, we utilize an integrated and flexible member
management system to manage the flow of member information within each of our centers and between centers and
our corporate office. We have designed and developed the system to allow us to collect information in a secure and
easy-to-use environment. Our system enables us to, among other things, enroll new members with a paperless
membership agreement, acquire and print digital pictures of members and capture and maintain specific member
information, including frequency of use. The system allows us to streamline the collection of membership dues
electronically, thereby offering additional convenience for our members while at the same time reducing our
corporate overhead and accounts receivable. We have a customer relationship management system to enhance our
marketing campaigns and management oversight regarding daily sales and marketing activities.
Competition
There are a number of health club industry participants that compete directly and indirectly with us that may have
significantly greater economies of scale. However, due to the innovative nature of our complete product and service
offering, we believe that there are no competitors in this industry offering the same experience and services we offer
at a comparable value. We consider the following groups to be the primary competitors in the health and fitness
industry:
• health club operators, including 24 Hour Fitness Worldwide, Inc., Bally Total Fitness Holding Corporation,
Equinox Holdings, Inc., LA Fitness International, LLC and Town Sports International, Inc.;
• the YMCA and similar non-profit organizations;
• physical fitness and recreational facilities established by local governments, hospitals and businesses;
• local salons, cafes and businesses offering similar ancillary services;
• exercise studios;
• racquet, tennis and other athletic clubs;
• amenity and condominium clubs;
• country clubs; and
• the home-use fitness equipment industry.
Competition in the health club industry varies from market to market and is based on several factors, including the
breadth of product and service offerings, the level of enrollment fees and membership dues, the flexibility of
membership options and the overall quality of the offering. We believe that our comprehensive product offering and
focus on customer service provide us with a distinct competitive advantage.
Government Regulation
All areas of our operations and business practices are subject to regulation at federal, state and local levels. The
general rules and regulations of the Federal Trade Commission and other consumer protection agencies apply to our
advertising, sales and other trade practices. State statutes and regulations affecting the health club industry have
been enacted or proposed that prescribe certain forms for, and regulate the terms and provisions of, membership
contracts, including:
• giving the member the right under various state “cooling-off” statutes to cancel, in most cases, within three
to ten days after signing, his or her membership and receive a refund of any enrollment fee paid;