Lifetime Fitness 2012 Annual Report Download - page 21

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existing credit facility and in our debt financing agreements. If we incur additional debt, the risks associated with
our leverage, including our ability to service our debt, could intensify, and we may have to change our growth
strategies as a consequence.
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 our existing credit facility, to raise additional capital when required or with favorable terms,
or to 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 facility, and 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 facility, 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, development of new businesses and acquisitions of other
businesses. 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, human
resources, risk management, marketing, sales and operations functions. These processes are time-consuming and
expensive, increase management responsibilities and divert management attention.
If we fail to properly maintain the integrity of our data or to strategically implement, 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
of individually identifiable data by our businesses are regulated at the federal and state levels as well as by certain
financial industry groups, such as the Payment Card Industry organization. Such federal, state and financial industry
groups may also consider from time to time new privacy and security requirements that may apply to our
businesses. Compliance with evolving privacy and security laws, requirements, and regulations may result in cost
increases due to necessary systems changes, new limitations or constraints on our business models and the
development of new administrative processes. They also may impose further restrictions on our collection,
disclosure and use of individually identifiable information that are housed in one or more of our databases.
Noncompliance with privacy laws, financial industry group requirements or a security breach involving the
misappropriation, loss or other unauthorized disclosure of personal, sensitive and/or confidential information,
whether by us or by one of our vendors, could have a material adverse effect on our business, operations and
reputation including material fines and penalties; increased financial processing fees; compensatory, statutory,
punitive or other damages; adverse actions against our licenses to do business; and injunctive relief whether by court
or consent order.