Lifetime Fitness 2011 Annual Report Download - page 22

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Finally, if cash from available sources is insufficient or unavailable, or if cash is used for unanticipated needs, we
may require additional capital sooner than anticipated. In the event that we are required or choose to raise additional
funds, we may be unable to do so on favorable terms or at all. Furthermore, the cost of debt financing could
significantly increase, making it cost-prohibitive to borrow, which could force us to issue new equity securities. If
we issue new equity securities, existing shareholders may experience additional dilution or the new equity securities
may have rights, preferences or privileges senior to those of existing holders of common stock.
Any inability to access existing credit facilities, raise additional capital when required or with favorable terms or
repay scheduled indebtedness at maturity could have an adverse effect on our business plans and operating results.
If we fail to comply with any of the covenants in our financing documents, we may not be able to access our
existing credit facilities, we may face an accelerated obligation to repay our indebtedness.
We have entered into several financing transactions to finance the development of our centers. Certain of the loan
documents contain financial and other covenants applicable to us, and certain of these loan documents contain cross-
default provisions. If we fail to comply with any of the covenants, it may cause a default under one or more of our
loan documents, which could limit our ability to obtain additional financing under our existing credit facilities,
require us to pay higher levels of interest or accelerate our obligations to repay our indebtedness.
Our continued growth could place strains on our management, employees, information systems and internal
controls which may adversely impact our business.
Over the past several years, we have experienced significant growth in our business activities and operations,
including an increase in the number of our centers. Our past expansion has placed, and any accelerated future
expansion may place, significant demands on our administrative, operational, financial and other resources. Any
failure to manage growth effectively could seriously harm our business. To be successful, we will need to continue
to implement management information systems and improve our operating, administrative, financial and accounting
systems and controls. We will also need to train new employees and maintain close coordination among our
executive, accounting, finance, legal, marketing, sales and operations functions. These processes are time-
consuming and expensive, increase management responsibilities and divert management attention. In addition, if we
seek to grow our business through acquisition, we will face risks related to identifying appropriate targets,
conducting effective due diligence and integrating the acquired businesses in order for any acquisitions to be
accretive to earnings over the long term.
We may be unable to successfully acquire suitable businesses or, if we do acquire them, the acquisition may
disrupt our business or we may be unable to successfully integrate the business into our own, all of which may
have a material adverse effect on our performance.
In order to remain competitive and to expand our business, we have acquired, and expect to continue to acquire,
complementary businesses and centers. In the future, we may not be able to find suitable acquisition candidates. If
we do find suitable candidates, we may not be able to acquire the businesses on favorable terms or at all. We may
also have to incur debt or issue equity securities to pay for any acquisition, which could adversely affect our
financial results or dilute our shareholders.
In addition, if we do acquire other businesses, integrating the business into our own may place significant demands
on our administrative, operational, financial and other resources and may require significant management time,
which may disrupt our other businesses. Our ability to acquire and integrate larger or more significant companies is
unproven. In addition, we cannot provide any assurances that we will be able to successfully integrate any acquired,
or to be acquired, business into our own business or achieve any goals relating to the acquisition.
If we fail to properly maintain the integrity of our data or to strategically implement new or upgrade or
consolidate existing information systems, our reputation and business could be materially adversely affected.
As we grow our business, we increasingly use electronic means to interact with our customers and collect, maintain
and store individually identifiable information, including but not limited to personal financial information and
health-related information. Despite the security measures we have in place to ensure compliance with applicable
laws and rules, our facilities and systems, and those of our third party service providers may be vulnerable to
security breaches, acts of cyber terrorism, vandalism or theft, computer viruses, misplaced or lost data, programming
and/or human errors or other similar events. Additionally, the collection, maintenance, use, disclosure and disposal