Lifetime Fitness 2012 Annual Report Download - page 24

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revenue volumes characteristic of newly opened centers to affect our center operating margins at these new centers.
We also expect certain operating costs, particularly those related to occupancy, to be higher than in the past in some
newly entered geographic regions. As a result of the impact of these rising costs, our total center contribution and
operating margins may be lower in future periods than they have been in the past.
We currently operate centers in 22 states and one Canadian province. We plan to open three new large format centers
in 2013, two of which are in existing markets. Opening new centers in existing markets may attract some
memberships away from other centers in those markets, thereby leading to diminished revenue and profitability. In
addition, as a result of new center openings in existing markets, and because older centers will represent an
increasing proportion of our center base over time, our same-center revenue increases may be lower in future
periods than in the past.
We could be subject to claims related to construction or operation of our centers and off-premises activities and
events.
Use of our centers and participation in off-premises activities and events pose potential health or safety risks to
members or guests through exertion and use of our equipment, swimming pools, rock climbing walls, waterslides,
endurance events and other facilities and services. Claims may be asserted against us for injury or death suffered by
someone using our facilities, services, activities and events, including a minor child. We could also face claims in
connection with our construction and remodel of our centers. While we carry insurance generally applicable to such
claims, we face exposure for losses within any self-insured retention or for uninsured damages.
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.
Our operations are subject to various federal and state laws and regulations, including but not limited to the
following:
• federal and state consumer protection laws related to the advertising, marketing and sale of our products
and services;
• state statutes that regulate the sale and terms of our membership contracts;
• state and local health or safety regulations related to various center operations, such as child centers,
LifeCafe, LifeSpa or Aquatics;
• federal and state regulation of ancillary health and fitness-related products and services;
• state licensing or other regulation of our service providers, such as cosmetologists, massage therapists and
registered dietitians; and
• federal and state laws and regulations governing privacy and security of information.
Any changes in such laws or regulations could have a material adverse effect on our financial condition and results
of operations.
We could be subject to claims related to our ancillary health and fitness-related offerings, and the value of our
brand may suffer.
We offer directly or through third parties a variety of ancillary health and fitness-related products and services, such
as nutritional products, blood screenings and other fitness assessments, chiropractic services, and medi-spa services.
These products and services are, or may be subject to, legal and regulatory requirements. 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, or any claims against us regarding our provision of other health and fitness-related services or our
relationships with third parties. Furthermore, we cannot assure you that any rights we have under indemnification
provisions and/or insurance policies will be sufficient to cover any losses that might result from such claims. Any
publicity surrounding such claims may negatively impact the value of our brand.