Lifetime Fitness 2013 Annual Report Download - page 25

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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 23 states and one Canadian province. We plan to open six new large format centers
in 2014, three 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.
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
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 could be subject to claims related to construction or operation of our centers and off-premises activities and
events which could have a negative effect on our financial conditions and results of operations.
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;