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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Town Sports International Holdings Inc | NASDAQ:CLUB | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.20 | 0.204 | 0.2049 | 0 | 01:00:00 |
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|
ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|
|
|
Delaware
|
|
20-0640002
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification Number)
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|
Large accelerated filer
|
|
¨
|
|
Accelerated filer
|
|
¨
|
Non-accelerated filer
|
|
¨
(Do not check if smaller reporting company)
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|
Smaller reporting company
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|
ý
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|
|
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Emerging growth company
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¨
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Page
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Item 1.
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||
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||
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Item 2.
|
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Item 3.
|
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Item 4.
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||
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Item 1.
|
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Item 1A.
|
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Item 2.
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Item 3.
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Item 4.
|
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Item 5.
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Item 6.
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September 30, 2018
|
|
December 31, 2017
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
50,327
|
|
|
$
|
30,321
|
|
Accounts receivable (less allowance for doubtful accounts of $4,087 and $4,237 as of September 30, 2018 and December 31, 2017, respectively)
|
3,020
|
|
|
2,216
|
|
||
Prepaid corporate income taxes
|
9,427
|
|
|
13,563
|
|
||
Prepaid rent expense
|
63
|
|
|
9,153
|
|
||
Prepaid expenses and other current assets
|
10,441
|
|
|
12,894
|
|
||
Total current assets
|
73,278
|
|
|
68,147
|
|
||
Fixed assets, net
|
156,985
|
|
|
151,498
|
|
||
Goodwill
|
14,769
|
|
|
6,217
|
|
||
Intangible assets, net
|
7,805
|
|
|
5,134
|
|
||
Deferred membership costs
|
2,313
|
|
|
959
|
|
||
Other assets
|
6,788
|
|
|
4,716
|
|
||
Total assets
|
$
|
261,938
|
|
|
$
|
236,671
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of long-term debt
|
$
|
12,705
|
|
|
$
|
2,242
|
|
Current portion of mortgage and term loan
|
314
|
|
|
—
|
|
||
Accounts payable
|
3,453
|
|
|
2,247
|
|
||
Accrued expenses
|
34,143
|
|
|
24,669
|
|
||
Accrued interest
|
157
|
|
|
118
|
|
||
Deferred revenue
|
39,335
|
|
|
33,473
|
|
||
Total current liabilities
|
90,107
|
|
|
62,749
|
|
||
Long-term debt
|
185,087
|
|
|
193,947
|
|
||
Long-term mortgage and term loan
|
5,160
|
|
|
—
|
|
||
Deferred lease liabilities
|
45,027
|
|
|
47,356
|
|
||
Deferred tax liabilities
|
276
|
|
|
93
|
|
||
Deferred revenue
|
318
|
|
|
351
|
|
||
Other liabilities
|
11,353
|
|
|
10,132
|
|
||
Total liabilities
|
337,328
|
|
|
314,628
|
|
||
Commitments and Contingencies (Note 15)
|
|
|
|
|
|
||
Stockholders’ deficit:
|
|
|
|
||||
Preferred stock, $0.001 par value; no shares issued and outstanding at both September 30, 2018 and December 31, 2017
|
|
|
|
|
|
||
Common stock, $0.001 par value; issued and outstanding 27,182,288 and 27,149,135 shares at September 30, 2018 and December 31, 2017, respectively
|
25
|
|
|
25
|
|
||
Additional paid-in capital
|
(2,235
|
)
|
|
(4,290
|
)
|
||
Accumulated other comprehensive income
|
1,862
|
|
|
1,201
|
|
||
Accumulated deficit
|
(75,505
|
)
|
|
(74,893
|
)
|
||
Total Town Sports International Holdings, Inc. and Subsidiaries stockholders’ deficit
|
(75,853
|
)
|
|
(77,957
|
)
|
||
Non-controlling interests
|
463
|
|
|
—
|
|
||
Total stockholders’ deficit
|
(75,390
|
)
|
|
(77,957
|
)
|
||
Total liabilities and stockholders’ deficit
|
$
|
261,938
|
|
|
$
|
236,671
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Club operations
|
$
|
108,709
|
|
|
$
|
97,022
|
|
|
$
|
325,431
|
|
|
$
|
293,085
|
|
Fees and other
|
1,464
|
|
|
1,619
|
|
|
4,182
|
|
|
4,629
|
|
||||
|
110,173
|
|
|
98,641
|
|
|
329,613
|
|
|
297,714
|
|
||||
Operating Expenses:
|
|
|
|
|
|
|
|
||||||||
Payroll and related
|
42,108
|
|
|
37,072
|
|
|
123,978
|
|
|
111,515
|
|
||||
Club operating
|
50,107
|
|
|
46,087
|
|
|
148,602
|
|
|
135,293
|
|
||||
General and administrative
|
6,700
|
|
|
5,380
|
|
|
18,992
|
|
|
17,079
|
|
||||
Depreciation and amortization
|
9,188
|
|
|
9,874
|
|
|
27,956
|
|
|
30,199
|
|
||||
Impairment of fixed assets
|
2,082
|
|
|
6,497
|
|
|
2,082
|
|
|
6,497
|
|
||||
|
110,185
|
|
|
104,910
|
|
|
321,610
|
|
|
300,583
|
|
||||
Operating (loss) income
|
(12
|
)
|
|
(6,269
|
)
|
|
8,003
|
|
|
(2,869
|
)
|
||||
Interest expense
|
3,493
|
|
|
3,192
|
|
|
9,999
|
|
|
9,455
|
|
||||
Interest income
|
(46
|
)
|
|
(36
|
)
|
|
(127
|
)
|
|
(36
|
)
|
||||
Equity in earnings of investee
|
(79
|
)
|
|
(77
|
)
|
|
(262
|
)
|
|
(217
|
)
|
||||
Loss before provision for corporate income taxes
|
(3,380
|
)
|
|
(9,348
|
)
|
|
(1,607
|
)
|
|
(12,071
|
)
|
||||
Provision for corporate income taxes
|
562
|
|
|
3,928
|
|
|
605
|
|
|
4,550
|
|
||||
Net loss
|
(3,942
|
)
|
|
(13,276
|
)
|
|
(2,212
|
)
|
|
(16,621
|
)
|
||||
Net income attributable to non-controlling interests
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
||||
Net loss attributable to Town Sports International Holdings, Inc. and subsidiaries
|
$
|
(3,946
|
)
|
|
$
|
(13,276
|
)
|
|
$
|
(2,216
|
)
|
|
$
|
(16,621
|
)
|
Loss per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.15
|
)
|
|
$
|
(0.53
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.66
|
)
|
Diluted
|
$
|
(0.15
|
)
|
|
$
|
(0.53
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.66
|
)
|
Weighted average number of shares used in calculating loss per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
25,849,800
|
|
|
25,245,262
|
|
|
25,801,480
|
|
|
25,176,035
|
|
||||
Diluted
|
25,849,800
|
|
|
25,245,262
|
|
|
25,801,480
|
|
|
25,176,035
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Statements of Comprehensive Loss:
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(3,942
|
)
|
|
$
|
(13,276
|
)
|
|
$
|
(2,212
|
)
|
|
$
|
(16,621
|
)
|
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments, net of tax of $0, for each of the three and nine months ended September 30, 2018 and 2017
|
60
|
|
|
(77
|
)
|
|
551
|
|
|
96
|
|
||||
Interest rate swap, net of tax of $0, for each of the three and nine months ended September 30, 2018 and 2017
|
—
|
|
|
249
|
|
|
110
|
|
|
998
|
|
||||
Total other comprehensive income, net of tax
|
60
|
|
|
172
|
|
|
661
|
|
|
1,094
|
|
||||
Total comprehensive loss
|
(3,882
|
)
|
|
(13,104
|
)
|
|
(1,551
|
)
|
|
(15,527
|
)
|
||||
Comprehensive income attributable to non-controlling interests
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
||||
Total comprehensive (loss) income attributable to Town Sports International Holdings, Inc. and Subsidiaries
|
$
|
(3,886
|
)
|
|
$
|
(13,104
|
)
|
|
$
|
(1,555
|
)
|
|
$
|
(15,527
|
)
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(2,212
|
)
|
|
$
|
(16,621
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
27,956
|
|
|
30,199
|
|
||
Impairment of fixed assets
|
2,082
|
|
|
6,497
|
|
||
Amortization of debt discount
|
728
|
|
|
701
|
|
||
Amortization of debt issuance costs
|
449
|
|
|
452
|
|
||
Non-cash rental income, net of non-cash rental expense
|
(2,620
|
)
|
|
(2,766
|
)
|
||
Share-based compensation expense
|
2,040
|
|
|
1,466
|
|
||
Net change in deferred taxes
|
110
|
|
|
—
|
|
||
Net change in certain operating assets and liabilities
|
21,232
|
|
|
12,670
|
|
||
(Increase) decrease in deferred membe
rship costs
|
(1,354
|
)
|
|
97
|
|
||
Landlord contributions to tenant improvements
|
800
|
|
|
2,115
|
|
||
(Decrease) increase in insurance reserves
|
(165
|
)
|
|
157
|
|
||
Other
|
(1,292
|
)
|
|
12
|
|
||
Total adjustments
|
49,966
|
|
|
51,600
|
|
||
Net cash provided by operating activities
|
47,754
|
|
|
34,979
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(8,430
|
)
|
|
(8,827
|
)
|
||
Acquisition of businesses
|
(19,010
|
)
|
|
(9,450
|
)
|
||
Acquisition of assets
|
(3,989
|
)
|
|
—
|
|
||
Deposit paid in connection with acquisitions
|
—
|
|
|
(1,250
|
)
|
||
Other
|
99
|
|
|
(293
|
)
|
||
Net cash used in investing activities
|
(31,330
|
)
|
|
(19,820
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Principal payments on 2013 Term Loan Facility
|
(1,562
|
)
|
|
(1,561
|
)
|
||
Principal payments on capital lease obligations
|
(400
|
)
|
|
—
|
|
||
Proceeds from mortgage and term loan
|
5,530
|
|
|
—
|
|
||
Principal payments on mortgage and term loan
|
(56
|
)
|
|
—
|
|
||
Cash dividends paid
|
(2
|
)
|
|
(9
|
)
|
||
Proceeds from stock option exercises
|
15
|
|
|
72
|
|
||
Net cash provided by (used in) financing activities
|
3,525
|
|
|
(1,498
|
)
|
||
Effect of exchange rate changes on cash
|
57
|
|
|
37
|
|
||
Net increase in cash and cash equivalents
|
20,006
|
|
|
13,698
|
|
||
Cash and cash equivalents beginning of period
|
30,321
|
|
|
45,596
|
|
||
Cash and cash equivalents end of period
|
$
|
50,327
|
|
|
$
|
59,294
|
|
Summary of the change in certain operating assets and liabilities:
|
|
|
|
||||
Increase in accounts receivable
|
$
|
(697
|
)
|
|
$
|
(244
|
)
|
Increase in inventory
|
—
|
|
|
108
|
|
||
Decrease (increase) in prepaid expenses and other current assets
|
8,427
|
|
|
(1,088
|
)
|
||
Increase in accounts payable, accrued expenses and accrued interest
|
8,947
|
|
|
8,092
|
|
||
Change in prepaid corporate income taxes and corporate income taxes payable
|
4,197
|
|
|
4,669
|
|
||
Increase in deferred revenue
|
358
|
|
|
1,133
|
|
||
Net change in certain working capital components
|
$
|
21,232
|
|
|
$
|
12,670
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Cash payments for interest, net of capitalized interest
|
$
|
8,773
|
|
|
$
|
8,345
|
|
Cash payments for income taxes
|
$
|
496
|
|
|
$
|
1,480
|
|
Brand
|
Count
|
|
Region
|
New York Sports Clubs (1)
|
99
|
|
New York Metropolitan
|
Lucille Roberts (1)
|
16
|
|
New York Metropolitan
|
TMPL (1)
|
1
|
|
New York Metropolitan
|
Boston Sports Clubs
|
29
|
|
Boston Metropolitan
|
Washington Sports Clubs
|
10
|
|
Washington, D.C. Metropolitan
|
Philadelphia Sports Clubs
|
5
|
|
Philadelphia Metropolitan
|
Total Woman Gym and Spa
|
12
|
|
California
|
Palm Beach Sports Clubs
|
4
|
|
Florida
|
LIV Fitness
|
2
|
|
Puerto Rico
|
Local brands
|
3
|
|
Switzerland
|
|
181
|
|
|
|
As of September 30, 2018
|
||||||||||
|
|
|
Balances Without
|
|
Effect of Change
|
||||||
Balance Sheet
|
As Reported
|
|
Adoption of ASC 606
|
|
Increase/(Decrease)
|
||||||
Asset
|
|
|
|
|
|
||||||
Deferred membership costs
|
$
|
2,313
|
|
|
$
|
659
|
|
|
$
|
1,654
|
|
|
|
|
|
|
|
||||||
Equity
|
|
|
|
|
|
||||||
Accumulated deficit
|
$
|
(75,505
|
)
|
|
$
|
(77,159
|
)
|
|
$
|
1,654
|
|
|
Three Months Ended September 30, 2018
|
|
Nine Months Ended September 30, 2018
|
||||||||||||||
|
|
|
Balances Without
|
|
Effect of Change
|
|
|
|
Balances Without
|
|
Effect of Change
|
||||||
|
As Reported
|
|
Adoption of ASC 606
|
|
Increase/
(Decrease) |
|
As Reported
|
|
Adoption of ASC 606
|
|
Increase/
(Decrease) |
||||||
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Payroll and related
|
42,108
|
|
|
42,031
|
|
|
77
|
|
|
123,978
|
|
|
124,028
|
|
|
(50
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Membership dues
|
$
|
84,162
|
|
|
$
|
76,454
|
|
|
$
|
251,992
|
|
|
$
|
228,362
|
|
Initiation and processing fees
|
337
|
|
|
371
|
|
|
1,006
|
|
|
1,953
|
|
||||
Membership revenue
|
84,499
|
|
|
76,825
|
|
|
252,998
|
|
|
230,315
|
|
||||
Personal training revenue
|
18,019
|
|
|
15,587
|
|
|
55,451
|
|
|
49,256
|
|
||||
Other ancillary club revenue
|
6,191
|
|
|
4,610
|
|
|
16,982
|
|
|
13,514
|
|
||||
Ancillary club revenue
|
24,210
|
|
|
20,197
|
|
|
72,433
|
|
|
62,770
|
|
||||
Fees and other revenue
|
1,464
|
|
|
1,619
|
|
|
4,182
|
|
|
4,629
|
|
||||
Total revenue
|
$
|
110,173
|
|
|
$
|
98,641
|
|
|
$
|
329,613
|
|
|
$
|
297,714
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
2013 Term Loan Facility outstanding principal balance
|
$
|
198,356
|
|
|
$
|
199,918
|
|
Capital lease liabilities
|
2,339
|
|
|
160
|
|
||
Less: Unamortized discount
|
(2,184
|
)
|
|
(2,912
|
)
|
||
Less: Deferred financing costs
|
(719
|
)
|
|
(977
|
)
|
||
Less: Current portion due within one year
|
(12,705
|
)
|
|
(2,242
|
)
|
||
Long-term portion
|
$
|
185,087
|
|
|
$
|
193,947
|
|
•
|
Level 1—Quoted prices for
identical
instruments in active markets.
|
•
|
Level 2—Quoted prices for
similar
instruments in active markets; quoted prices for identical or similar instruments in markets that were not active; and model-derived valuations in which all significant inputs and significant value drivers were observable in active markets.
|
•
|
Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers were unobservable
.
|
|
|
|
Fair Value Measurements Using:
|
||||||||||||
|
Total
Fair Value |
|
Quoted Prices in
Active Markets for Identical Assets (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Interest rate swap liability as of September 30, 2018
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest rate swap liability as of December 31, 2017
|
$
|
184
|
|
|
$
|
—
|
|
|
$
|
184
|
|
|
$
|
—
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Weighted average number of common shares outstanding — basic
|
25,849,800
|
|
|
25,245,262
|
|
|
25,801,480
|
|
|
25,176,035
|
|
||||
Effect of dilutive share based awards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Weighted average number of common shares outstanding — diluted
|
25,849,800
|
|
|
25,245,262
|
|
|
25,801,480
|
|
|
25,176,035
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Loss per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.15
|
)
|
|
$
|
(0.53
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.66
|
)
|
Diluted
|
$
|
(0.15
|
)
|
|
$
|
(0.53
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.66
|
)
|
|
Twelve Months Ended December 31, 2016
|
||||||||||
|
(As Reported)
|
|
(Adjustment)
|
|
(As Revised)
|
||||||
Weighted average number of common shares outstanding — basic
|
25,568,371
|
|
|
(863,279
|
)
|
|
24,705,092
|
|
|||
Effect of dilutive share based awards
|
506,364
|
|
|
—
|
|
|
506,364
|
|
|||
Weighted average number of common shares outstanding — diluted
|
26,074,735
|
|
|
(863,279
|
)
|
|
25,211,456
|
|
|||
|
|
|
|
|
|
||||||
Earnings per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.31
|
|
|
$
|
0.02
|
|
|
$
|
0.33
|
|
Diluted
|
$
|
0.31
|
|
|
$
|
0.01
|
|
|
$
|
0.32
|
|
|
Three Months Ended March 31, 2017
|
||||||||||
|
(As Reported)
|
|
(Adjustment)
|
|
(As Revised)
|
||||||
Weighted average number of common shares outstanding — basic
|
26,610,215
|
|
|
(1,567,892
|
)
|
|
25,042,323
|
|
|||
Effect of dilutive share based awards
|
—
|
|
|
—
|
|
|
—
|
|
|||
Weighted average number of common shares outstanding — diluted
|
26,610,215
|
|
|
(1,567,892
|
)
|
|
25,042,323
|
|
|||
|
|
|
|
|
|
||||||
Loss per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
(0.11
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.12
|
)
|
Diluted
|
$
|
(0.11
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.12
|
)
|
|
Three Months Ended June 30, 2017
|
|
Six Months Ended June 30, 2017
|
||||||||||||||||||||
|
(As Reported)
|
|
(Adjustment)
|
|
(As Revised)
|
|
(As Reported)
|
|
(Adjustment)
|
|
(As Revised)
|
||||||||||||
Weighted average number of common shares outstanding — basic
|
26,692,919
|
|
|
(1,454,628
|
)
|
|
25,238,291
|
|
|
26,651,796
|
|
|
(1,510,948
|
)
|
|
25,140,848
|
|
||||||
Effect of dilutive share based awards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Weighted average number of common shares outstanding — diluted
|
26,692,919
|
|
|
(1,454,628
|
)
|
|
25,238,291
|
|
|
26,651,796
|
|
|
(1,510,948
|
)
|
|
25,140,848
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic
|
$
|
(0.02
|
)
|
|
$
|
—
|
|
|
$
|
(0.02
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
—
|
|
|
$
|
(0.13
|
)
|
Diluted
|
$
|
(0.02
|
)
|
|
$
|
—
|
|
|
$
|
(0.02
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
—
|
|
|
$
|
(0.13
|
)
|
|
Three Months Ended September 30, 2017
|
|
Nine Months Ended September 30, 2017
|
||||||||||||||||||||
|
(As Reported)
|
|
(Adjustment)
|
|
(As Revised)
|
|
(As Reported)
|
|
(Adjustment)
|
|
(As Revised)
|
||||||||||||
Weighted average number of common shares outstanding — basic
|
26,683,425
|
|
|
(1,438,163
|
)
|
|
25,245,262
|
|
|
26,662,455
|
|
|
(1,486,420
|
)
|
|
25,176,035
|
|
||||||
Effect of dilutive share based awards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Weighted average number of common shares outstanding — diluted
|
26,683,425
|
|
|
(1,438,163
|
)
|
|
25,245,262
|
|
|
26,662,455
|
|
|
(1,486,420
|
)
|
|
25,176,035
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic
|
$
|
(0.50
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.53
|
)
|
|
$
|
(0.62
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.66
|
)
|
Diluted
|
$
|
(0.50
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.53
|
)
|
|
$
|
(0.62
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.66
|
)
|
|
Three Months Ended December 31, 2017
|
|
Twelve Months Ended December 31, 2017
|
||||||||||||||||||||
|
(As Reported)
|
|
(Adjustment)
|
|
(As Revised)
|
|
(As Reported)
|
|
(Adjustment)
|
|
(As Revised)
|
||||||||||||
Weighted average number of common shares outstanding — basic
|
26,825,605
|
|
|
(1,437,003
|
)
|
|
25,388,602
|
|
|
26,703,577
|
|
|
(1,473,963
|
)
|
|
25,229,614
|
|
||||||
Effect of dilutive share based awards
|
637,107
|
|
|
—
|
|
|
637,107
|
|
|
719,256
|
|
|
—
|
|
|
719,256
|
|
||||||
Weighted average number of common shares outstanding — diluted
|
27,462,712
|
|
|
(1,437,003
|
)
|
|
26,025,709
|
|
|
27,422,833
|
|
|
(1,473,963
|
)
|
|
25,948,870
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic
|
$
|
0.78
|
|
|
$
|
0.05
|
|
|
$
|
0.83
|
|
|
$
|
0.16
|
|
|
$
|
0.01
|
|
|
$
|
0.17
|
|
Diluted
|
$
|
0.76
|
|
|
$
|
0.05
|
|
|
$
|
0.81
|
|
|
$
|
0.16
|
|
|
$
|
0.01
|
|
|
$
|
0.17
|
|
|
|
September 17, 2018
|
||
Grant price
|
|
$
|
8.25
|
|
Expected term
|
|
3 months
|
|
|
Expected volatility
|
|
64.24
|
%
|
|
Risk-free interest rate
|
|
2.14
|
%
|
|
Expected dividend yield
|
|
—
|
%
|
|
New York
|
|
Boston
|
|
California
|
|
Florida
|
|
Puerto Rico
|
|
Switzerland
|
|
Outlier
Clubs |
|
Total
|
||||||||||||||||
Goodwill
|
$
|
36,707
|
|
|
$
|
15,775
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,175
|
|
|
$
|
3,982
|
|
|
$
|
57,639
|
|
Changes due to foreign currency exchange rate fluctuations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(116
|
)
|
|
—
|
|
|
(116
|
)
|
||||||||
Less: accumulated impairment of goodwill
|
(31,549
|
)
|
|
(15,775
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,982
|
)
|
|
(51,306
|
)
|
||||||||
Balance as of December 31, 2017
|
5,158
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,059
|
|
|
—
|
|
|
6,217
|
|
||||||||
Acquired goodwill (Refer to Note 13 - Acquisitions)
|
2,025
|
|
|
768
|
|
|
1,584
|
|
|
1,991
|
|
|
2,187
|
|
|
—
|
|
|
—
|
|
|
8,555
|
|
||||||||
Changes due to foreign currency exchange rate fluctuations
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
||||||||||
Balance as of September 30, 2018
|
$
|
7,183
|
|
|
$
|
768
|
|
|
$
|
1,584
|
|
|
$
|
1,991
|
|
|
$
|
2,187
|
|
|
$
|
1,056
|
|
|
$
|
—
|
|
|
$
|
14,769
|
|
|
As of September 30, 2018
|
|
As of December 31, 2017
|
||||||||||||||||||||
|
Gross Carrying
Amount |
|
Accumulated
Amortization |
|
Net Intangible
Assets |
|
Gross Carrying
Amount |
|
Accumulated
Amortization |
|
Net Intangible
Assets |
||||||||||||
Membership lists
|
$
|
14,313
|
|
|
$
|
(12,430
|
)
|
|
$
|
1,883
|
|
|
$
|
12,744
|
|
|
$
|
(11,577
|
)
|
|
$
|
1,167
|
|
Favorable lease commitment
|
2,390
|
|
|
(467
|
)
|
|
1,923
|
|
|
2,350
|
|
|
(136
|
)
|
|
2,214
|
|
||||||
Non-compete agreement
|
1,620
|
|
|
(210
|
)
|
|
1,410
|
|
|
900
|
|
|
—
|
|
|
900
|
|
||||||
Trade names
|
2,802
|
|
|
(213
|
)
|
|
2,589
|
|
|
900
|
|
|
(47
|
)
|
|
853
|
|
||||||
|
$
|
21,125
|
|
|
$
|
(13,320
|
)
|
|
$
|
7,805
|
|
|
$
|
16,894
|
|
|
$
|
(11,760
|
)
|
|
$
|
5,134
|
|
|
September 2018
|
||
Allocation of purchase price:
|
|
||
Fixed assets
|
$
|
2,134
|
|
Goodwill
|
2,187
|
|
|
Definite lived intangible assets:
|
|
||
Membership list
|
480
|
|
|
Trade name
|
340
|
|
|
Non-compete agreement
|
320
|
|
|
Unfavorable lease commitment
|
(400
|
)
|
|
Deferred revenue
|
(131
|
)
|
|
Total allocation of purchase price
|
$
|
4,930
|
|
|
September 2018
|
||
Allocation of purchase price:
|
|
||
Fixed assets
|
$
|
237
|
|
Goodwill
|
593
|
|
|
Capital lease liabilities
|
(69
|
)
|
|
Other assets and liabilities assumed, net
|
(280
|
)
|
|
Deferred revenue
|
(258
|
)
|
|
Non-controlling interest
|
(106
|
)
|
|
Total allocation of purchase price
|
$
|
117
|
|
|
August 2018
|
||
Allocation of purchase price:
|
|
||
Fixed assets
|
$
|
5,968
|
|
Goodwill
|
1,991
|
|
|
Definite lived intangible assets:
|
|
||
Membership list
|
288
|
|
|
Amount due to seller, net
|
(610
|
)
|
|
Deferred revenue
|
(587
|
)
|
|
Non-controlling interest
|
(353
|
)
|
|
Total allocation of purchase price
|
$
|
6,697
|
|
|
April 2018
|
||
|
(as adjusted)
|
||
Allocation of purchase price:
|
|
||
Fixed assets
|
$
|
8,064
|
|
Goodwill
|
1,584
|
|
|
Definite lived intangible assets:
|
|
||
Favorable lease commitment
|
440
|
|
|
Trade name
|
1,562
|
|
|
Working capital, net
|
161
|
|
|
Deferred revenue
|
(4,546
|
)
|
|
Total allocation of purchase price
|
$
|
7,265
|
|
|
January 2018
|
||
Allocation of purchase price:
|
|
||
Fixed assets
|
$
|
982
|
|
Goodwill
|
768
|
|
|
Definite lived intangible assets:
|
|
||
Membership list
|
600
|
|
|
Non-compete agreement
|
400
|
|
|
Working capital assets
|
130
|
|
|
Deferred revenue
|
(14
|
)
|
|
Total allocation of purchase price
|
$
|
2,866
|
|
|
December 2017
|
||
|
(as adjusted)
|
||
Allocation of purchase price:
|
|
||
Fixed assets
|
$
|
5,195
|
|
Goodwill
|
1,376
|
|
|
Definite lived intangible assets:
|
|
||
Non-compete agreement
|
900
|
|
|
Trade name
|
200
|
|
|
Deferred revenue
|
(1,511
|
)
|
|
Capital lease liability
|
(160
|
)
|
|
Other liabilities
|
(75
|
)
|
|
Total allocation of purchase price
|
$
|
5,925
|
|
|
September 2017
|
||
|
(as adjusted)
|
||
Allocation of purchase price:
|
|
||
Fixed assets
|
$
|
1,024
|
|
Goodwill
|
5,214
|
|
|
Definite lived intangible assets:
|
|
||
Membership lists
|
1,400
|
|
|
Trade names
|
700
|
|
|
Favorable lease commitment
|
2,350
|
|
|
Deferred revenue
|
(1,238
|
)
|
|
Total allocation of purchase price
|
$
|
9,450
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue
|
$
|
114,184
|
|
|
$
|
115,005
|
|
|
$
|
348,132
|
|
|
$
|
349,140
|
|
Net loss
|
$
|
(4,223
|
)
|
|
$
|
(12,394
|
)
|
|
$
|
(2,166
|
)
|
|
$
|
(16,620
|
)
|
|
|
|
|
|
|
|
|
||||||||
Loss per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.16
|
)
|
|
$
|
(0.52
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.66
|
)
|
Diluted
|
$
|
(0.16
|
)
|
|
$
|
(0.52
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.66
|
)
|
Brand
|
Count
|
|
Region
|
New York Sports Clubs (1)
|
99
|
|
New York Metropolitan
|
Lucille Roberts (1)
|
16
|
|
New York Metropolitan
|
TMPL (1)
|
1
|
|
New York Metropolitan
|
Boston Sports Clubs
|
29
|
|
Boston Metropolitan
|
Washington Sports Clubs
|
10
|
|
Washington, D.C. Metropolitan
|
Philadelphia Sports Clubs
|
5
|
|
Philadelphia Metropolitan
|
Total Woman Gym and Spa
|
12
|
|
California
|
Palm Beach Sports Clubs
|
4
|
|
Florida
|
LIV Fitness
|
2
|
|
Puerto Rico
|
Local brands
|
3
|
|
Switzerland
|
|
181
|
|
|
•
|
Membership revenue:
Our largest sources of revenue are dues inclusive of monthly membership fees, annual maintenance fees, and initiation and processing fees paid by our members. In addition, we collect usage fees on a per visit basis for non-passport members using non-home clubs. These dues and fees comprised
76.8%
of our total revenue for the
nine months ended September 30, 2018
. We recognize revenue from membership dues in the month when the services are rendered. We recognize revenue from initiation and processing fees over the estimated average membership life and annual fees over a twelve month period.
|
•
|
Ancillary club revenue:
For the
nine months ended September 30, 2018
, we generated
16.8%
of our revenue from personal training and
5.2%
of our revenue from other ancillary programs and services consisting of Sports Clubs for Kids, racquet sports and Small Group Training programs. We continue to grow ancillary club revenue by building on ancillary programs such as our personal training membership product and our fee-based Small Group Training programs.
|
|
2017
|
|
2018
|
||||||||||||||||||||
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Full Year
|
|
Q1
|
|
Q2
|
|
Q3
|
|||||||||
Clubs included in consolidated operating results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Clubs operated at beginning of period
|
149
|
|
|
148
|
|
|
148
|
|
|
163
|
|
|
149
|
|
|
164
|
|
|
164
|
|
|
175
|
|
Acquired clubs
|
—
|
|
|
—
|
|
|
16
|
|
|
2
|
|
|
18
|
|
|
2
|
|
|
12
|
|
|
7
|
|
New clubs opened
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Clubs closed (3)
|
(2
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(5
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
(3
|
)
|
Clubs operated at end of period
|
148
|
|
|
148
|
|
|
163
|
|
|
164
|
|
|
164
|
|
|
164
|
|
|
175
|
|
|
179
|
|
Club included in equity investment at end of period (1)
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
Licensed club operated at end of period (3)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
1
|
|
Total clubs operated at end of period (1)(2)
|
149
|
|
|
149
|
|
|
164
|
|
|
165
|
|
|
165
|
|
|
166
|
|
|
177
|
|
|
181
|
|
(1)
|
Excludes one 20% owned club that operated under a different brand name in our Washington, D.C. region.
|
(2)
|
Excludes
three
locations that were managed by us in which we did not have an equity interest.
|
(3)
|
Includes one club that transitioned to a licensed location in the first quarter of 2018 and bears the “Washington Sports Clubs” brand name.
|
|
2017
|
|
2018
|
|||||||||||||||||
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Q1
|
|
Q2
|
|
Q3
|
||||||||
Comparable club revenue
|
0.7
|
%
|
|
1.2
|
%
|
|
1.8
|
%
|
|
2.8
|
%
|
|
1.7
|
%
|
|
1.8
|
%
|
|
1.5
|
%
|
|
Three Months Ended September 30,
|
|
|
|||||||||||||
|
2018
|
|
2017
|
|
|
|||||||||||
|
Revenue
|
|
% Revenue
|
|
Revenue
|
|
% Revenue
|
|
% Variance
|
|||||||
Membership dues
|
$
|
84,162
|
|
|
76.4
|
%
|
|
$
|
76,454
|
|
|
77.5
|
%
|
|
10.1
|
%
|
Initiation and processing fees
|
337
|
|
|
0.3
|
|
|
371
|
|
|
0.4
|
|
|
(9.2
|
)
|
||
Membership revenue
|
84,499
|
|
|
76.7
|
|
|
76,825
|
|
|
77.9
|
|
|
10.0
|
|
||
Personal training revenue
|
18,019
|
|
|
16.4
|
|
|
15,587
|
|
|
15.8
|
|
|
15.6
|
|
||
Other ancillary club revenue (1)
|
6,191
|
|
|
5.6
|
|
|
4,610
|
|
|
4.7
|
|
|
34.3
|
|
||
Ancillary club revenue
|
24,210
|
|
|
22.0
|
|
|
20,197
|
|
|
20.5
|
|
|
19.9
|
|
||
Fees and other revenue (2)
|
1,464
|
|
|
1.3
|
|
|
1,619
|
|
|
1.6
|
|
|
(9.6
|
)
|
||
Total revenue
|
$
|
110,173
|
|
|
100.0
|
%
|
|
$
|
98,641
|
|
|
100.0
|
%
|
|
11.7
|
%
|
(1)
|
Other ancillary club revenue primarily consists of Sports Clubs for Kids, Small Group Training, racquet sports and spa.
|
(2)
|
Fees and other revenue primarily consists of rental income, marketing revenue, management fees and laundry service fees.
|
|
Three Months Ended September 30,
|
|
|
|||||||
|
2018
|
|
2017
|
|
% Variance
|
|||||
Payroll and related
|
$
|
42,108
|
|
|
$
|
37,072
|
|
|
13.6
|
%
|
Club operating
|
50,107
|
|
|
46,087
|
|
|
8.7
|
|
||
General and administrative
|
6,700
|
|
|
5,380
|
|
|
24.5
|
|
||
Depreciation and amortization
|
9,188
|
|
|
9,874
|
|
|
(6.9
|
)
|
||
Impairment of fixed assets
|
2,082
|
|
|
6,497
|
|
|
(68.0
|
)
|
||
Total operating expenses
|
$
|
110,185
|
|
|
$
|
104,910
|
|
|
5.0
|
%
|
|
Nine Months Ended September 30,
|
|
|
|||||||||||||
|
2018
|
|
2017
|
|
|
|||||||||||
|
Revenue
|
|
% Revenue
|
|
Revenue
|
|
% Revenue
|
|
% Variance
|
|||||||
Membership dues
|
$
|
251,992
|
|
|
76.5
|
%
|
|
$
|
228,362
|
|
|
76.7
|
%
|
|
10.3
|
%
|
Initiation and processing fees
|
1,006
|
|
|
0.3
|
|
|
1,953
|
|
|
0.7
|
|
|
(48.5
|
)
|
||
Membership revenue
|
252,998
|
|
|
76.8
|
|
|
230,315
|
|
|
77.4
|
|
|
9.8
|
|
||
Personal training revenue
|
55,451
|
|
|
16.8
|
|
|
49,256
|
|
|
16.5
|
|
|
12.6
|
|
||
Other ancillary club revenue (1)
|
16,982
|
|
|
5.2
|
|
|
13,514
|
|
|
4.5
|
|
|
25.7
|
|
||
Ancillary club revenue
|
72,433
|
|
|
22.0
|
|
|
62,770
|
|
|
21.0
|
|
|
15.4
|
|
||
Fees and other revenue (2)
|
4,182
|
|
|
1.2
|
|
|
4,629
|
|
|
1.6
|
|
|
(9.7
|
)
|
||
Total revenue
|
$
|
329,613
|
|
|
100.0
|
%
|
|
$
|
297,714
|
|
|
100.0
|
%
|
|
10.7
|
%
|
(1)
|
Other ancillary club revenue primarily consists of Sports Clubs for Kids, Small Group Training, racquet sports and spa.
|
(2)
|
Fees and other revenue primarily consists of rental income, marketing revenue, management fees and laundry service fees.
|
|
Nine Months Ended September 30,
|
|
|
|||||||
|
2018
|
|
2017
|
|
% Variance
|
|||||
Payroll and related
|
$
|
123,978
|
|
|
$
|
111,515
|
|
|
11.2
|
%
|
Club operating
|
148,602
|
|
|
135,293
|
|
|
9.8
|
|
||
General and administrative
|
18,992
|
|
|
17,079
|
|
|
11.2
|
|
||
Depreciation and amortization
|
27,956
|
|
|
30,199
|
|
|
(7.4
|
)
|
||
Impairment of fixed assets
|
2,082
|
|
|
6,497
|
|
|
(68.0
|
)
|
||
Total operating expenses
|
$
|
321,610
|
|
|
$
|
300,583
|
|
|
7.0
|
%
|
•
|
Cash collected for membership dues increased $20.0 million.
|
•
|
Cash collected for personal training memberships increased $4.1 million.
|
•
|
Cash collected for recurring annual fees increased $1.9 million.
|
•
|
Cash collected for member enrollment, including the initial annual fee paid upon joining, increased by $537,000.
|
•
|
Cash collected for tax refund increased $2.6 million.
|
•
|
Cash paid for taxes decreased $984,000.
|
•
|
Cash paid for payroll increased $9.4 million.
|
•
|
Cash paid for occupancy increased $1.2 million due to the increase in occupancy costs.
|
•
|
Cash collected for landlord contributions decreased by $1.3 million.
|
•
|
Cash paid for utilities and repairs and maintenance increased $1.6 million.
|
•
|
Cash paid for interest increased $428,000 primarily due to the increase in the LIBOR rate.
|
•
|
making it more difficult to satisfy our obligations, including with respect to our outstanding indebtedness;
|
•
|
increasing our vulnerability to general adverse economic and industry conditions;
|
•
|
limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions of new clubs and other general corporate requirements;
|
•
|
requiring a substantial portion of our cash flow from operations for the payment of interest on our debt, which is variable on our 2013 Revolving Loan Facility and partially variable on our 2013 Term Loan Facility, and/or
|
•
|
increasing our vulnerability to interest rate fluctuations in connection with borrowings under our 2013 Senior Credit Facility, some of which are at variable interest rates;
|
•
|
limiting our ability to refinance our existing indebtedness on favorable terms, or at all; and
|
•
|
limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate.
|
|
|
|
|
TOWN SPORTS INTERNATIONAL
HOLDINGS, INC.
|
|
|
|
|
|
DATE:
|
October 25, 2018
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Carolyn Spatafora
|
|
|
|
|
Carolyn Spatafora
|
|
|
|
|
Chief Financial Officer
|
Exhibit
No.
|
|
Description of Exhibit
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
1 Year Town Sports Chart |
1 Month Town Sports Chart |
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