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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 28, 2019
 
 
Town Sports International Holdings, Inc.
(Exact Name of Registrant as Specified in its Charter)
 
 
 
 
Delaware
001-36803
20-0640002
(State or other Jurisdiction
of Incorporation)
(Commission
File Number)
(I.R.S. Employer
Identification No.)
1001 US North Highway 1, Suite 201, Jupiter, Florida
 
33477
(Address of Principal Executive Offices)
 
(Zip Code)
 
 
 
399 Executive Boulevard, Elmsford, New York
 
10523
(Mailing address)
 
(Zip Code)
Registrant’s telephone number, including area code: (212) 246-6700
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
 
 
 
Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act. ¨





Item 2.02 Results of Operations and Financial Condition
On February 28, 2019, Town Sports International Holdings, Inc. (the “Company”) issued a press release announcing its results for the fourth quarter and full-year of 2018. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information in this Item 2.02 and Item 9.01 of this Current Report on Form 8-K, including the attached Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (“the Exchange Act”) or otherwise subject to the liability of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
99.1 Press release issued by Town Sports International Holdings, Inc. on February 28, 2019 announcing earnings for the fourth quarter and full-year of 2018.





SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
 
 
TOWN SPORTS INTERNATIONAL HOLDINGS, INC.
 
 
 
 
(Registrant)
 
 
 
 
 
Date: February 28, 2019
 
By:
 
/s/ Carolyn Spatafora
 
 
 
 
Carolyn Spatafora
 
 
 
 
Chief Financial Officer





EXHIBIT INDEX
 
Exhibit No.
  
  Description
 
 
 
  


Exhibit


Exhibit 99.1
TOWN SPORTS INTERNATIONAL HOLDINGS, INC.
REPORTS 2018 FOURTH QUARTER AND FULL-YEAR RESULTS

New York, NY - February 28, 2019 - Town Sports International Holdings, Inc. (“TSI”) (NASDAQ: CLUB) today reported results for the fourth quarter and full-year of 2018.
TSI’s earnings for the fourth quarter and full-year of 2018 are summarized below. To become fully apprised of our results, shareholders are urged to read our Form 10-K for the full-year ended December 31, 2018 posted at https://www.townsportsinternational.com. The limited information that follows in this press release is not adequate for making informed investment decisions. The unaudited condensed consolidated Statements of Operations are included below.
Dollar amounts in this release are in thousands, except for share and per share amounts. Amounts are unaudited.
Condensed Consolidated Statements of Operations
 
Fourth Quarter
 
Full-Year
 
2018
 
2017
 
2018
 
2017
Revenues:
 
 
 
 
 
 
 
Club operations
$
111,926

 
$
104,081

 
$
437,357

 
$
397,166

Fees and other
1,555

 
1,247

 
5,737

 
5,876

 
113,481

 
105,328

 
443,094

 
403,042

Operating Expenses:
 
 
 
 
 
 
 
Payroll and related
44,337

 
34,097

 
168,315

 
145,612

Club operating
49,087

 
45,174

 
197,689

 
180,467

General and administrative
6,055

 
5,601

 
25,047

 
22,680

Depreciation and amortization
9,486

 
10,650

 
37,442

 
40,849

Impairment of fixed assets

 

 
2,082

 
6,497

 
108,965

 
95,522

 
430,575

 
396,105

Operating income
4,516

 
9,806

 
12,519

 
6,937

Interest expense
3,479

 
3,210

 
13,478

 
12,665

Interest income
(6
)
 
(42
)
 
(133
)
 
(78
)
Equity in the earnings of investees and rental income
(82
)
 
(116
)
 
(344
)
 
(333
)
Income (loss) before benefit for corporate income taxes
1,125

 
6,754

 
(482
)
 
(5,317
)
Benefit for corporate income taxes
(962
)
 
(14,236
)
 
(357
)
 
(9,686
)
Net income (loss) including non-controlling interests
2,087

 
20,990

 
(125
)
 
4,369

Less: net loss attributable to non-controlling interests
(206
)
 

 
(202
)
 

Net income attributable to TSI and subsidiaries
$
2,293

 
$
20,990

 
$
77

 
$
4,369

Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.09

 
$
0.83

 
$

 
$
0.17

Diluted
$
0.09

 
$
0.81

 
$

 
$
0.17

Weighted average number of shares used in calculating earnings per share:
 
 
 
 
 
 
 
Basic
26,027,676

 
25,388,602

 
25,858,494

 
25,229,614

Diluted
26,464,881

 
26,025,709

 
26,252,137

 
25,948,870







Reconciliation of EBITDA and Adjusted EBITDA
 
Fourth Quarter
 
Full-Year
 
2018
 
2017
 
2018
 
2017
Net income (loss) including non-controlling interests
$
2,087

 
$
20,990

 
$
(125
)
 
$
4,369

Less: net loss attributable to non-controlling interests
(206
)
 

 
(202
)
 

Net income attributable to TSI and subsidiaries
2,293

 
20,990

 
77

 
4,369

Interest expense, net of interest income
3,473

 
3,168

 
13,345

 
12,587

Benefit for corporate income taxes
(962
)
 
(14,236
)
 
(357
)
 
(9,686
)
Depreciation and amortization
9,486

 
10,650

 
37,442

 
40,849

EBITDA attributable to TSI and subsidiaries (2)
14,290

 
20,572

 
50,507

 
48,119

Impairment of fixed assets

 

 
2,082

 
6,497

Incremental expense related to the adoption of ASC 606 (1)
249

 

 
1,056

 

Net costs related to closing clubs and other cost-savings initiatives, net of landlord recovery
56

 
(848
)
 
501

 
(711
)
Separation expense related to headcount reductions and former executive officers
48

 
606

 
105

 
1,433

Personal training revenue recognized for unused and expired sessions

 
(3,557
)
 

 
(3,557
)
Adjusted EBITDA attributable to TSI and subsidiaries (2)
$
14,643

 
$
16,773

 
$
54,251

 
$
51,781

(1) On January 1, 2018, the Company adopted FASB Accounting Standards Codification Topic 606 and all the related amendments (“ASC 606”) which requires the Company to defer costs related to obtaining members and expense those costs over the estimated membership life. Under previous guidance, these membership costs were expensed at the time of the respective sale.
(2) EBITDA and Adjusted EBITDA include costs related to acquisitions of $1,378 and $192 for the fourth quarter of 2018 and 2017, respectively, and $3,114 and $468 for the full-year of 2018 and 2017, respectively.





Non-GAAP Financial Measures - EBITDA and Adjusted EBITDA
EBITDA consists of net income (loss) attributable to TSI and subsidiaries plus interest expense (net of interest income), provision (benefit) for corporate income taxes, and depreciation and amortization. Adjusted EBITDA is TSI’s EBITDA excluding certain items, such as any fixed asset or goodwill impairments, incremental expense related to the adoption of ASC 606, net costs related to closing clubs and other cost-savings initiatives, net of landlord recovery, separation expense related to headcount reductions and former executive officers, and personal training revenue recognized for unused and expired sessions. EBITDA is not a measure of liquidity or financial performance presented in accordance with GAAP. EBITDA, as we define it, may not be identical to similarly titled measures used by some other companies.
EBITDA has material limitations as an analytical tool and should not be considered in isolation or as a substitute for net income (loss) attributable to TSI and subsidiaries, operating income (loss), cash flows from operating activities or other cash flow data prepared in accordance with GAAP. The items excluded from EBITDA, but included in the calculation of reported net income attributable to TSI and subsidiaries and operating income, are significant and must be considered in performing a comprehensive assessment of our performance.
Investors or prospective investors in TSI regularly request EBITDA as a supplemental analytical measure to, and in conjunction with, our GAAP financial data. We understand that these investors use EBITDA, among other things, to assess our ability to service our existing debt and to incur debt in the future, to evaluate our executive compensation programs, to assess our ability to fund our capital expenditure program, and to gain insight into the manner in which TSI’s management and board of directors analyze our performance. We believe that investors find the inclusion of EBITDA in our press releases to be useful and helpful to them.
Our management and board of directors also use EBITDA as a supplemental measure to our GAAP financial data for purposes broadly similar to those used by investors.
Adjusted EBITDA has similar uses and limitations as EBITDA. We have excluded additional items in the calculation of Adjusted EBITDA because management believes that this metric is useful in making period to period comparisons of our performance. We do not, and investors should not, place undue reliance on EBITDA or Adjusted EBITDA as a measure of our performance.
Forward-Looking Statements
This release may contain “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements regarding future financial results and performance, potential club closures, results of cost-savings initiatives, and other statements that are predictive in nature or depend upon or refer to events or conditions, or that include words such as “may,” “should,” or the negative version of these words or other comparable words. Forward-looking statements speak only as of the date when made, and TSI undertakes no obligation to update these statements in light of subsequent events or developments. Actual results may differ materially from anticipated results or outcomes discussed in any forward-looking statement.
About Town Sports International Holdings, Inc.
Town Sports International Holdings, Inc. is a diversified holding company with subsidiaries engaged in a number of business and investment activities. The Company’s largest operating subsidiary has been involved in the fitness industry since 1973 and has grown to become one of the largest owners and operators of fitness clubs in the Northeast region of the United States. TSI’s corporate structure provides flexibility to make investments across a broad spectrum of industries in order to create long-term value for shareholders. 
Until further notice, TSI will not be hosting conference calls to discuss quarterly results. TSI intends to continue to issue press releases reporting quarterly earnings.
Investor Contact:
(917) 765-9974
Investor.relations@town-sports.com