Lifetime Fitness 2012 Annual Report Download - page 23

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17
or improve centers currently open. This change in the competitive landscape could negatively impact our pre-
opening sales of memberships and increase our investment costs. In addition, delays in opening new centers could
hurt our ability to meet our growth objectives. Our ability to open new centers on schedule depends on a number of
factors, many of which are beyond our control. These factors include:
• obtaining acceptable financing for construction of new sites;
• obtaining entitlements, permits and licenses necessary to complete construction of the new center on
schedule;
• recruiting, training and retaining qualified employees;
• securing access to labor and materials necessary to develop and construct our centers;
• delays due to material shortages, labor issues, weather conditions or other acts of God, discovery of
contaminants, accidents, deaths or injunctions; and
• general economic conditions.
We may incur rising costs related to construction of new centers and maintenance of our existing centers. If we
are not able to pass these cost increases through to our members, our returns may be adversely affected.
Our centers require significant upfront and ongoing investment. If our investment is higher than we had planned, we
may need to outperform our operational plan to achieve our targeted return. Over the longer term, we believe that we
can offset cost increases by increasing our membership dues and other fees and improving profitability through cost
efficiencies, but higher costs in regions where we are opening new centers may be difficult to offset in the short
term.
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.
At February 28, 2013, we operated multiple centers in several metropolitan areas, including 24 in the Minneapolis/
St. Paul market, nine in the Chicago market, eight in the Dallas market, six in the Atlanta, Detroit and Houston
markets and five in the Phoenix market, with future 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 our chairman, president and chief executive officer leaves our company for any reason, it could have an
adverse effect on our business.
Our growth and development to date have been driven by the services of Bahram Akradi, our Chairman of the Board
of Directors, President, Chief Executive Officer and founder. We do not have any employment or non-competition
agreement with Mr. Akradi. In addition, Mr. Akradi may be able to exert disproportionate influence over us because
of the significant consequence of his departure.
If we cannot retain our key employees and hire additional highly qualified employees, we may not be able to
successfully manage our businesses 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 employees.
Competition for such employees 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 adversely affect us.
The opening of new centers may negatively impact our operating margins. In addition, the opening of new
centers in existing markets may negatively impact our same-center revenues.
A result of opening new centers is that our center operating margins may be lower than they have been historically
while the centers build membership base. We expect both the addition of pre-opening expenses and the lower