Lifetime Fitness 2006 Annual Report Download - page 19

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13
• requiring an escrow for funds received from pre-opening sales or the posting of a bond or proof of financial
responsibility; and
• establishing maximum prices and terms for membership contracts and limitations on the financing term of
contracts.
We are subject to federal and state regulations governing the manufacture and sale of supplement and food products
in the U.S. The U.S. Food and Drug Administration and the Federal Trade Commission are increasingly scrutinizing
claims made for supplement and food products, especially claims related to weight loss. We work with the
manufacturers of our food and supplement products to ensure that appropriate regulatory notices have been
provided, where necessary.
All laws, rules and regulations are subject to varying interpretations by a large number of state and federal
enforcement agencies and the courts. We maintain internal review procedures in order to comply with these
requirements and believe our activities are in substantial compliance with all applicable statutes, rules and decisions.
Trademarks and Trade Names
We own several trademarks and service marks registered with the U.S. Patent and Trademark Office, referred to as
the USPTO, including “LIFE TIME FITNESS®” and “EXPERIENCE LIFE®.” We have also registered our logo,
our design depicting six circles of fitness activities and our LIFE TIME FITNESS Triathlon logo. We have several
applications pending with the USPTO for trademark registrations. We also registered the “LIFE TIME FITNESS”
mark in certain foreign countries. In addition to our trademarks, we filed a patent application for one of our
nutritional products.
We believe our trademarks and trade names have become important components in our marketing and branding
strategies. We believe that we have all licenses necessary to conduct our business. In particular, we license the mark
“LIFE TIME” in connection with our nutritional products so that we can market and distribute them under the LIFE
TIME FITNESS brand.
Available Information
Our Web site is www.lifetimefitness.com. We make available through our Web site all reports and amendments to
those reports filed or furnished pursuant to Section 13(a) of the Securities and Exchange Act of 1934, as amended
(the “Exchange Act”), as soon as reasonably practicable after we electronically file such material with, or furnish it
to, the Securities and Exchange Commission (the “SEC”).
Item 1A. Risk Factors.
If we are unable to identify and acquire suitable sites for new sports and athletic, professional fitness, family
recreation and resort/spa centers, our revenue growth rate and profits may be negatively impacted.
To successfully expand our business, we must identify and acquire sites that meet the site selection criteria we have
established. In addition to finding sites with the right demographic and other measures we employ in our selection
process, we also need to evaluate the penetration of our competitors in the market. We face significant competition
for sites that meet our criteria, and as a result we may lose those sites, our competitors could copy our format or we
could be forced to pay significantly higher prices for those sites. If we are unable to identify and acquire sites for
new centers, our revenue growth rate and profits may be negatively impacted. Additionally, if our analysis of the
suitability of a site is incorrect, we may not be able to recover our capital investment in developing and building the
new center. For example, in 2002 we recorded an asset impairment charge of $7.0 million related to our executive
facility, which is located in downtown Minneapolis, Minnesota, and a restaurant that we separately operate in the
same building.
We may be unable to attract and retain members, which could have a negative effect on our business.
The success of our business depends on our ability to attract and retain members, and we cannot assure you that we
will be successful in our marketing efforts or that the membership levels at our centers will not materially decline,
especially at those centers that have been in operation for an extended period of time. All of our members can cancel