Lifetime Fitness 2006 Annual Report Download - page 23

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We have significant operations concentrated in certain geographic areas, and any disruption in the operations of
our centers in any of these areas could harm our operating results.
We currently operate multiple centers in several metropolitan areas, including 22 in the Minneapolis/ St. Paul
market, eight in the Chicago market, six in both the Detroit and Dallas markets, with continued planned expansion in
current and new markets. As a result, any prolonged disruption in the operations of our centers in any of these
markets, whether due to technical difficulties, power failures or destruction or damage to the centers as a result of a
natural disaster, fire or any other reason, could harm our operating results. In addition, our concentration in these
markets increases our exposure to adverse developments related to competition, as well as economic and
demographic changes in these areas.
If we cannot retain our key personnel and hire additional highly qualified personnel, we may not be able to
successfully manage our operations and pursue our strategic objectives.
We are highly dependent on the services of our senior management team and other key employees at both our
corporate headquarters and our centers, and on our ability to recruit, retain and motivate key personnel. Competition
for such personnel is intense, and the inability to attract and retain the additional qualified employees required to
expand our activities, or the loss of current key employees, could materially and adversely affect us.
We could be subject to claims related to health or safety risks at our centers.
Use of our centers poses potential health or safety risks to members or guests through exertion and use of our
equipment, swimming pools, rock climbing walls, waterslides and other facilities and services. We cannot assure
you that claims will not be asserted against us for injury or death suffered by someone using our facilities or
services. In addition, the child center services we offer at our centers expose us to claims related to child care.
Lastly, because we construct our own centers, we also face liability in connection with the construction of these
centers.
We are subject to extensive government regulation, and changes in these regulations could have a negative effect
on our financial condition and results of operations.
Various federal and state laws and regulations govern our operations, including:
• general rules and regulations of the Federal Trade Commission, state and local consumer protection agencies
and state statutes that prescribe certain forms and provisions of membership contracts and that govern the
advertising, sale and collection of our memberships;
• state and local health regulations;
• federal regulation of health and nutritional products; and,
• regulation of rehabilitation service providers.
Any changes in such laws could have a material adverse effect on our financial condition and results of operations.
We could be subject to claims related to our nutritional products.
The nutritional products industry is currently the source of proposed federal laws and regulations, as well as
numerous lawsuits. We advertise and offer for sale proprietary nutritional products within our centers and through
our Web site. We cannot assure you that there will be no claims against us regarding the ingredients in, manufacture
of or results of using our nutritional products. Furthermore, we cannot assure you that any rights we have under
indemnification provisions or insurance policies will be sufficient to cover any losses that might result from such
claims.