Lifetime Fitness 2012 Annual Report Download - page 22

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Our business could be adversely affected by strong competition in the highly competitive health and wellness
industry.
We compete with the following industry participants: other health and fitness centers; physical fitness and
recreational facilities established by non-profit organizations, governments, hospitals, and businesses; local salons,
cafés and businesses offering similar ancillary services; exercise and small fitness clubs and studios; racquet, tennis
and other athletic clubs; amenity and condominium clubs; country clubs; online personal training and fitness
coaching; the home-use fitness equipment industry; athletic event operators and related suppliers; and providers of
wellness and other healthy way of life orientated products and services. We cannot assure you that our competitors
will not attempt to copy our business model, or portions thereof, and that this will not erode our market share and
brand recognition and impair our growth rate and profitability. Competitors, which may have greater name
recognition than we have, may compete with us to attract members in our markets. Non-profit and government
organizations in our markets may be able to obtain land and construct centers at a lower cost and collect membership
fees without paying taxes, thereby allowing them to charge lower prices. Furthermore, due to the increased number
of low cost health club and fitness center alternatives, we may face increased competition during periods if we
increase our price, discretionary spending declines or unemployment remains high. This competition may limit our
ability to attract and retain members.
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 conduct effective due diligence or 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 are unable to identify and acquire suitable sites for 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.
We may incur significant costs in the development and implementation of new businesses with no guarantee of
success.
In order to remain competitive and expand our business, we have developed, and expect to continue to develop, in-
center and ancillary businesses. We may incur significant costs in the development of these businesses, some of
which may be outside of our core competency. In addition, we cannot guarantee that these businesses will be
successful and contribute to earnings.
Delays in new center openings could have an adverse effect on our growth.
In order to meet our objectives, it is important that we open new centers on schedule. A significant amount of time
and expenditure of capital is required to develop and construct new centers. If we are significantly delayed in
opening new centers, our competitors may be able to open new clubs in the same market before we open our centers