Basis of Presentation

3 Months Ended

Mar. 31, 2012

Basis of presentation [Abstract]

Basis of Presentation

1. Basis of Presentation

As of March 31, 2012, Town Sports International Holdings, Inc. (the “Company” or “TSI Holdings”), through its wholly-owned subsidiary, Town Sports International, LLC (“TSI, LLC”), operated 160 fitness clubs (“clubs”), comprised of 108 clubs in the New York metropolitan market under the “New York Sports Clubs” brand name, 25 clubs in the Boston market under the “Boston Sports Clubs” brand name, 18 clubs (two of which are partly-owned) in the Washington, D.C. market under the “Washington Sports Clubs” brand name, six clubs in the Philadelphia market under the “Philadelphia Sports Clubs” brand name and three clubs in Switzerland. The Company's operating segments are New York Sports Clubs, Boston Sports Clubs, Philadelphia Sports Clubs, Washington Sports Clubs and Swiss Sports Clubs. The Company has determined that its operating segments have similar economic characteristics and meet the criteria which permit them to be aggregated into one reportable segment.

The condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The condensed consolidated financial statements should be read in conjunction with the Company's December 31, 2011 consolidated financial statements and notes thereto, included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011. The year-end condensed balance sheet data included within this Form 10-Q was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“US GAAP”). Certain information and footnote disclosures that are normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to SEC rules and regulations. The information reflects all adjustments which, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the interim periods set forth herein. The results for the three months endedMarch 31, 2012 are not necessarily indicative of the results for the entire year ending December 31, 2012.

Change in Estimated Average Membership Life

     Joining fees and related direct and incremental expenses of membership acquisition, which include sales commissions, bonuses and related taxes and benefits, which are direct and incremental costs related to the sale of new memberships, are currently deferred and recognized, on a straight-line basis,in operations over an estimated membership life of 28 months. In the year ended December 31, 2011, the economy stabilized further and favorable membership retention rates continued. As a result, the Company's estimated average membership life increased from 27 months as of December 31, 2010to 28 months in July 2011, and to 29 months in October 2011. During the three months ended March 31, 2012, the Company decreased the estimated average membership life back to 28 months from 29 months, based on more recent available trend data. Thischange in the estimated average membership life was due principally to a slightly unfavorable trend in membership retention rates. In particular, the membership retention trend for the Company's pool of members that joined over the prior15 to 24 month period haddecreased slightly.If the estimated average membership life had remained at 29 months for the three months ended March 31, 2012, the impact would have been a decrease in revenue and net income of approximately $140 and $17, respectively.The Company will continue to monitor attrition trends on a quarterly basis and adjust this estimated average membership life accordingly.

The Company tracks the estimated membership life of restricted members separately from unrestricted members. Until the fourth quarter of 2011, there was a lack of sufficient historical data to statistically determine an estimated average membership life for these restricted members and, therefore, the Company was using the same estimated average membership life for this population as that of its unrestricted members. The restricted membership base currently includes student memberships introduced in April 2010, teacher memberships introduced in April 2011 and first responder memberships introduced in September 2011. The Company now believes the estimated average membership life of a restricted student member is 25 months using historical data from April 2010 through March 31, 2012. This represents an increase from 24 months as of December 31, 2011. If the estimated average membership life for restricted student members had remained at 24 months for the three months ended March 31, 2012, the impact would have been an increase in revenue and net income of approximately $56 and $28, respectively.The Company will continue to monitor attrition trends of students on a quarterly basis and adjust this estimated average membership life accordingly. Since there is still a lack of sufficient historical data available for the other restricted membership types, the Company continues to use the same estimated average membership life for this population as that of its unrestricted members.