ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
¨ | 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) |
Large accelerated filer | ¨ | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ (Do not check if smaller reporting company) | Smaller reporting company | ý | |||
Emerging growth company | ¨ |
Page | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
June 30, 2018 | December 31, 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 58,611 | $ | 30,321 | |||
Accounts receivable (less allowance for doubtful accounts of $4,428 and $4,237 as of June 30, 2018 and December 31, 2017, respectively) | 2,742 | 2,216 | |||||
Prepaid corporate income taxes | 10,129 | 13,563 | |||||
Prepaid rent expense | 68 | 9,153 | |||||
Prepaid expenses and other current assets | 6,276 | 12,894 | |||||
Total current assets | 77,826 | 68,147 | |||||
Fixed assets, net | 154,497 | 151,498 | |||||
Goodwill | 9,779 | 6,217 | |||||
Intangible assets, net | 7,269 | 5,134 | |||||
Deferred membership costs | 2,522 | 959 | |||||
Other assets | 3,934 | 4,716 | |||||
Total assets | $ | 255,827 | $ | 236,671 | |||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | 12,082 | $ | 2,082 | |||
Current portion of mortgage and term loan | 253 | — | |||||
Accounts payable | 4,026 | 2,247 | |||||
Accrued expenses | 27,190 | 24,669 | |||||
Accrued interest | 64 | 118 | |||||
Current portion of capital lease liabilities | 628 | 160 | |||||
Deferred revenue | 41,018 | 33,473 | |||||
Total current liabilities | 85,261 | 62,749 | |||||
Long-term debt | 183,561 | 193,947 | |||||
Long-term mortgage and term loan | 2,106 | — | |||||
Deferred lease liabilities | 45,933 | 47,356 | |||||
Capital lease liabilities | 1,823 | — | |||||
Deferred tax liabilities | 140 | 93 | |||||
Deferred revenue | 349 | 351 | |||||
Other liabilities | 9,191 | 10,132 | |||||
Total liabilities | 328,364 | 314,628 | |||||
Commitments and Contingencies (Note 14) | |||||||
Stockholders’ deficit: | |||||||
Preferred stock, $0.001 par value; no shares issued and outstanding at both June 30, 2018 and December 31, 2017 | |||||||
Common stock, $0.001 par value; issued and outstanding 27,190,769 and 27,149,135 shares at June 30, 2018 and December 31, 2017, respectively | 25 | 25 | |||||
Additional paid-in capital | (2,805 | ) | (4,290 | ) | |||
Accumulated other comprehensive income | 1,802 | 1,201 | |||||
Accumulated deficit | (71,559 | ) | (74,893 | ) | |||
Total stockholders’ deficit | (72,537 | ) | (77,957 | ) | |||
Total liabilities and stockholders’ deficit | $ | 255,827 | $ | 236,671 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenues: | |||||||||||||||
Club operations | $ | 111,047 | $ | 98,392 | $ | 216,722 | $ | 196,063 | |||||||
Fees and other | 1,282 | 1,601 | 2,718 | 3,010 | |||||||||||
112,329 | 99,993 | 219,440 | 199,073 | ||||||||||||
Operating Expenses: | |||||||||||||||
Payroll and related | 42,396 | 37,058 | 81,870 | 74,443 | |||||||||||
Club operating | 50,131 | 44,032 | 98,495 | 89,206 | |||||||||||
General and administrative | 6,381 | 5,369 | 12,292 | 11,699 | |||||||||||
Depreciation and amortization | 9,640 | 10,016 | 18,768 | 20,325 | |||||||||||
108,548 | 96,475 | 211,425 | 195,673 | ||||||||||||
Operating income | 3,781 | 3,518 | 8,015 | 3,400 | |||||||||||
Interest expense | 3,338 | 3,155 | 6,506 | 6,263 | |||||||||||
Interest income | (45 | ) | — | (81 | ) | — | |||||||||
Equity in earnings of investee | (78 | ) | (48 | ) | (183 | ) | (140 | ) | |||||||
Income (loss) before (benefit) provision for corporate income taxes | 566 | 411 | 1,773 | (2,723 | ) | ||||||||||
(Benefit) provision for corporate income taxes | (35 | ) | 821 | 43 | 622 | ||||||||||
Net income (loss) | $ | 601 | $ | (410 | ) | $ | 1,730 | $ | (3,345 | ) | |||||
Earnings (loss) per share: | |||||||||||||||
Basic | $ | 0.02 | $ | (0.02 | ) | $ | 0.07 | $ | (0.13 | ) | |||||
Diluted | $ | 0.02 | $ | (0.02 | ) | $ | 0.07 | $ | (0.13 | ) | |||||
Weighted average number of shares used in calculating earnings (loss) per share: | |||||||||||||||
Basic | 25,844,061 | 25,238,291 | 25,776,919 | 25,140,848 | |||||||||||
Diluted | 26,584,112 | 25,238,291 | 26,515,964 | 25,140,848 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Statements of Comprehensive Income (Loss): | |||||||||||||||
Net income (loss) | $ | 601 | $ | (410 | ) | $ | 1,730 | $ | (3,345 | ) | |||||
Other comprehensive (loss) income, net of tax: | |||||||||||||||
Foreign currency translation adjustments, net of tax of $0, for each of the three and six months ended June 30, 2018 and 2017 | (128 | ) | 139 | 491 | 173 | ||||||||||
Interest rate swap, net of tax of $0, for each of the three and six months ended June 30, 2018 and 2017 | (66 | ) | 313 | 110 | 749 | ||||||||||
Total other comprehensive (loss) income, net of tax | (194 | ) | 452 | 601 | 922 | ||||||||||
Total comprehensive income (loss) | $ | 407 | $ | 42 | $ | 2,331 | $ | (2,423 | ) |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | 1,730 | $ | (3,345 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 18,768 | 20,325 | |||||
Amortization of debt discount | 483 | 465 | |||||
Amortization of debt issuance costs | 300 | 301 | |||||
Non-cash rental income, net of non-cash rental expense | (1,713 | ) | (1,665 | ) | |||
Share-based compensation expense | 1,483 | 1,082 | |||||
Net change in deferred taxes | (26 | ) | — | ||||
Net change in certain operating assets and liabilities | 23,049 | 10,598 | |||||
(Increase) decrease in deferred membership costs | (1,563 | ) | 10 | ||||
Landlord contributions to tenant improvements | 800 | 2,115 | |||||
Decrease in insurance reserves | (168 | ) | (69 | ) | |||
Other | (121 | ) | 93 | ||||
Total adjustments | 41,292 | 33,255 | |||||
Net cash provided by operating activities | 43,022 | 29,910 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (4,570 | ) | (6,804 | ) | |||
Acquisition of businesses | (7,265 | ) | — | ||||
Acquisition of assets | (3,989 | ) | — | ||||
Other | (21 | ) | (354 | ) | |||
Net cash used in investing activities | (15,845 | ) | (7,158 | ) | |||
Cash flows from financing activities: | |||||||
Principal payments on 2013 Term Loan Facility | (1,041 | ) | (1,041 | ) | |||
Principal payments on capital lease obligations | (241 | ) | — | ||||
Proceeds from mortgage and term loan | 2,380 | — | |||||
Principal payments on mortgage and term loan | (21 | ) | — | ||||
Cash dividends paid | (1 | ) | (9 | ) | |||
Proceeds from stock option exercises | 2 | 46 | |||||
Net cash provided by (used in) financing activities | 1,078 | (1,004 | ) | ||||
Effect of exchange rate changes on cash | 35 | 48 | |||||
Net increase in cash and cash equivalents | 28,290 | 21,796 | |||||
Cash and cash equivalents beginning of period | 30,321 | 45,596 | |||||
Cash and cash equivalents end of period | $ | 58,611 | $ | 67,392 | |||
Summary of the change in certain operating assets and liabilities: | |||||||
(Increase) decrease in accounts receivable | $ | (526 | ) | $ | 247 | ||
Increase in inventory | — | (43 | ) | ||||
Decrease in prepaid expenses and other current assets | 12,308 | 2,536 | |||||
Increase in accounts payable, accrued expenses and accrued interest | 4,511 | 2,791 | |||||
Change in prepaid corporate income taxes and corporate income taxes payable | 3,474 | 2,118 | |||||
Increase in deferred revenue | 3,282 | 2,949 | |||||
Net change in certain working capital components | $ | 23,049 | $ | 10,598 | |||
Supplemental disclosures of cash flow information: | |||||||
Cash payments for interest, net of capitalized interest | $ | 5,853 | $ | 5,535 | |||
Cash payments for income taxes | $ | 511 | $ | 37 |
As of June 30, 2018 | |||||||||||
Balances Without | Effect of Change | ||||||||||
Balance Sheet | As Reported | Adoption of ASC 606 | Increase/(Decrease) | ||||||||
Asset | |||||||||||
Deferred membership costs | $ | 2,522 | $ | 792 | $ | 1,730 | |||||
Equity | |||||||||||
Accumulated deficit | $ | (71,559 | ) | $ | (73,289 | ) | $ | 1,730 |
Three Months Ended June 30, 2018 | Six Months Ended June 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 | 42,396 | 42,299 | 97 | 81,870 | 81,997 | (127 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Membership dues | $ | 85,549 | $ | 76,421 | $ | 167,830 | $ | 151,908 | |||||||
Initiation and processing fees | 332 | 596 | 669 | 1,582 | |||||||||||
Membership revenue | 85,881 | 77,017 | 168,499 | 153,490 | |||||||||||
Personal training revenue | 19,179 | 17,151 | 37,432 | 33,669 | |||||||||||
Other ancillary club revenue | 5,987 | 4,224 | 10,791 | 8,904 | |||||||||||
Ancillary club revenue | 25,166 | 21,375 | 48,223 | 42,573 | |||||||||||
Fees and other revenue | 1,282 | 1,601 | 2,718 | 3,010 | |||||||||||
Total revenue | $ | 112,329 | $ | 99,993 | $ | 219,440 | $ | 199,073 |
June 30, 2018 | December 31, 2017 | ||||||
2013 Term Loan Facility outstanding principal balance | $ | 198,877 | $ | 199,918 | |||
Less: Unamortized discount | (2,429 | ) | (2,912 | ) | |||
Less: Deferred financing costs | (805 | ) | (977 | ) | |||
Less: Current portion due within one year | (12,082 | ) | (2,082 | ) | |||
Long-term portion | $ | 183,561 | $ | 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 June 30, 2018 | $ | — | $ | — | $ | — | $ | — | |||||||
Interest rate swap liability as of December 31, 2017 | $ | 184 | $ | — | $ | 184 | $ | — |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Weighted average number of common shares outstanding — basic | 25,844,061 | 25,238,291 | 25,776,919 | 25,140,848 | |||||||||||
Effect of dilutive share based awards | 740,051 | — | 739,045 | — | |||||||||||
Weighted average number of common shares outstanding — diluted | 26,584,112 | 25,238,291 | 26,515,964 | 25,140,848 | |||||||||||
Earnings (loss) per share: | |||||||||||||||
Basic | $ | 0.02 | $ | (0.02 | ) | $ | 0.07 | $ | (0.13 | ) | |||||
Diluted | $ | 0.02 | $ | (0.02 | ) | $ | 0.07 | $ | (0.13 | ) |
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 |
June 30, 2018 | ||||
Grant price | $ | 11.6 | ||
Expected term | 3 months | |||
Expected volatility | 45.89 | % | ||
Risk-free interest rate | 1.92 | % | ||
Expected dividend yield | — | % |
New York | Boston | California | 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 12 - Acquisitions) | 1,432 | 768 | 1,385 | — | — | 3,585 | |||||||||||||||||
Changes due to foreign currency exchange rate fluctuations | — | — | — | (23 | ) | — | (23 | ) | |||||||||||||||
Balance as of June 30, 2018 | $ | 6,590 | $ | 768 | $ | 1,385 | $ | 1,036 | $ | — | $ | 9,779 |
As of June 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 | $ | 13,545 | $ | (12,145 | ) | $ | 1,400 | $ | 12,744 | $ | (11,577 | ) | $ | 1,167 | |||||||||
Favorable lease commitment | 2,790 | (352 | ) | 2,438 | 2,350 | (136 | ) | 2,214 | |||||||||||||||
Non-compete agreement | 1,300 | (145 | ) | 1,155 | 900 | — | 900 | ||||||||||||||||
Trade names | 2,427 | (151 | ) | 2,276 | 900 | (47 | ) | 853 | |||||||||||||||
$ | 20,062 | $ | (12,793 | ) | $ | 7,269 | $ | 16,894 | $ | (11,760 | ) | $ | 5,134 |
April 2018 | |||
Allocation of purchase price: | |||
Fixed assets | $ | 8,064 | |
Goodwill | 1,385 | ||
Definite lived intangible assets: | |||
Favorable lease commitment | 440 | ||
Trade name | 1,527 | ||
Working capital, net | 161 | ||
Deferred revenue | (4,312 | ) | |
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 June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenue | $ | 118,089 | $ | 112,959 | $ | 230,960 | $ | 226,005 | |||||||
Net income (loss) | $ | 242 | $ | (289 | ) | $ | 1,012 | $ | (4,102 | ) | |||||
Earnings (loss) per share: | |||||||||||||||
Basic | $ | 0.01 | $ | (0.02 | ) | $ | 0.04 | $ | (0.16 | ) | |||||
Diluted | $ | 0.01 | $ | (0.02 | ) | $ | 0.04 | $ | (0.16 | ) |
• | 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 six months ended June 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 six months ended June 30, 2018, we generated 17.1% of our revenue from personal training and 4.9% 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 | |||||||||||||||
Wholly-owned clubs operated at beginning of period | 149 | 148 | 148 | 163 | 149 | 164 | 164 | ||||||||||||||
Acquired clubs | — | — | 16 | 2 | 18 | 2 | 12 | ||||||||||||||
New clubs opened | 1 | 1 | — | — | 2 | — | — | ||||||||||||||
Clubs closed (3) | (2 | ) | (1 | ) | (1 | ) | (1 | ) | (5 | ) | (2 | ) | (1 | ) | |||||||
Wholly-owned clubs operated at end of period | 148 | 148 | 163 | 164 | 164 | 164 | 175 | ||||||||||||||
Partly-owned and licensed clubs operated at end of period(1)(3) | 1 | 1 | 1 | 1 | 1 | 2 | 2 | ||||||||||||||
Total clubs operated at end of period (1)(2) | 149 | 149 | 164 | 165 | 165 | 166 | 177 |
(1) | Excludes one partly-owned club that operates under a different brand name in our Washington, D.C. region. |
(2) | Excludes three locations that are managed by us in which we do 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 | ||||||||||||
Comparable club revenue | 0.7 | % | 1.2 | % | 1.8 | % | 2.8 | % | 1.7 | % | 1.8 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||
Operating expenses: | |||||||||||
Payroll and related | 37.7 | 37.1 | 37.3 | 37.4 | |||||||
Club operating | 44.6 | 44.0 | 44.9 | 44.8 | |||||||
General and administrative | 5.7 | 5.4 | 5.6 | 5.9 | |||||||
Depreciation and amortization | 8.6 | 10.0 | 8.5 | 10.2 | |||||||
96.6 | 96.5 | 96.3 | 98.3 | ||||||||
Operating income | 3.4 | 3.5 | 3.7 | 1.7 | |||||||
Interest expense | 3.0 | 3.2 | 3.0 | 3.2 | |||||||
Equity in earnings of investee | (0.1 | ) | (0.1 | ) | (0.1 | ) | (0.1 | ) | |||
Income (loss) before provision for corporate income taxes | 0.5 | 0.4 | 0.8 | (1.4 | ) | ||||||
Provision for corporate income taxes | — | 0.8 | — | 0.3 | |||||||
Net income (loss) | 0.5 | % | (0.4 | )% | 0.8 | % | (1.7 | )% |
Three Months Ended June 30, | ||||||||||||||||
2018 | 2017 | |||||||||||||||
Revenue | % Revenue | Revenue | % Revenue | % Variance | ||||||||||||
Membership dues | $ | 85,549 | 76.2 | % | $ | 76,421 | 76.4 | % | 11.9 | % | ||||||
Initiation and processing fees | 332 | 0.3 | 596 | 0.6 | (44.3 | ) | ||||||||||
Membership revenue | 85,881 | 76.5 | 77,017 | 77.0 | 11.5 | |||||||||||
Personal training revenue | 19,179 | 17.1 | 17,151 | 17.2 | 11.8 | |||||||||||
Other ancillary club revenue (1) | 5,987 | 5.3 | 4,224 | 4.2 | 41.7 | |||||||||||
Ancillary club revenue | 25,166 | 22.4 | 21,375 | 21.4 | 17.7 | |||||||||||
Fees and other revenue (2) | 1,282 | 1.1 | 1,601 | 1.6 | (19.9 | ) | ||||||||||
Total revenue | $ | 112,329 | 100.0 | % | $ | 99,993 | 100.0 | % | 12.3 | % |
(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 consist of rental income, marketing revenue, management fees and laundry service fees. |
Three Months Ended June 30, | ||||||||||
2018 | 2017 | % Variance | ||||||||
Payroll and related | $ | 42,396 | $ | 37,058 | 14.4 | % | ||||
Club operating | 50,131 | 44,032 | 13.9 | |||||||
General and administrative | 6,381 | 5,369 | 18.8 | |||||||
Depreciation and amortization | 9,640 | 10,016 | (3.8 | ) | ||||||
Total operating expenses | $ | 108,548 | $ | 96,475 | 12.5 | % |
Six Months Ended June 30, | ||||||||||||||||
2018 | 2017 | |||||||||||||||
Revenue | % Revenue | Revenue | % Revenue | % Variance | ||||||||||||
Membership dues | $ | 167,830 | 76.5 | % | $ | 151,908 | 76.3 | % | 10.5 | % | ||||||
Initiation and processing fees | 669 | 0.3 | 1,582 | 0.8 | (57.7 | ) | ||||||||||
Membership revenue | 168,499 | 76.8 | 153,490 | 77.1 | 9.8 | |||||||||||
Personal training revenue | 37,432 | 17.1 | 33,669 | 16.9 | 11.2 | |||||||||||
Other ancillary club revenue (1) | 10,791 | 4.9 | 8,904 | 4.5 | 21.2 | |||||||||||
Ancillary club revenue | 48,223 | 22.0 | 42,573 | 21.4 | 13.3 | |||||||||||
Fees and other revenue (2) | 2,718 | 1.2 | 3,010 | 1.5 | (9.7 | ) | ||||||||||
Total revenue | $ | 219,440 | 100.0 | % | $ | 199,073 | 100.0 | % | 10.2 | % |
(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 consist of rental income, marketing revenue, management fees and laundry service fees. |
Six Months Ended June 30, | ||||||||||
2018 | 2017 | % Variance | ||||||||
Payroll and related | $ | 81,870 | $ | 74,443 | 10.0 | % | ||||
Club operating | 98,495 | 89,206 | 10.4 | |||||||
General and administrative | 12,292 | 11,699 | 5.1 | |||||||
Depreciation and amortization | 18,768 | 20,325 | (7.7 | ) | ||||||
Total operating expenses | $ | 211,425 | $ | 195,673 | 8.1 | % |
• | Cash collected for membership dues increased $13.4 million. |
• | Cash collected for personal training memberships increased $2.6 million. |
• | Cash collected for recurring annual fees increased 880,000. |
• | Cash collected for member enrollment, including the initial annual fee paid upon joining, increased by $645,000. |
• | Cash collected for tax refund increased $2.3 million. |
• | Cash paid for occupancy decreased $1.8 million due to payment timing differences offset by the increase in occupancy costs. |
• | Cash paid for payroll increased $4.8 million. |
• | Cash paid for taxes increased $474,000. |
• | Cash paid for utilities and repairs and maintenance increased $855,000. |
• | Cash paid for interest increased $318,000 primarily due to the increase in the LIBOR rate. |
• | Cash collected for landlord contributions decreased by $1.3 million. |
• | 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 principal pursuant to excess cash flow requirements and reducing our ability to use our cash flow to fund working capital, capital expenditures and acquisitions of new clubs and general corporate requirements; |
• | 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: | July 27, 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. | I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 of Town Sports International Holdings, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ Patrick Walsh | |
Patrick Walsh | ||
Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 of Town Sports International Holdings, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ Carolyn Spatafora | |
Carolyn Spatafora | ||
Chief Financial Officer |
(1) | The Quarterly Report on Form 10-Q of Town Sports International Holdings, Inc. (the “Company”) for the quarterly period ended June 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m); and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Patrick Walsh |
Patrick Walsh |
Town Sports International Holdings, Inc. |
Chief Executive Officer |
(1) | The Quarterly Report on Form 10-Q of Town Sports International Holdings, Inc. (the “Company”) for the quarterly period ended June 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m); and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Carolyn Spatafora |
Carolyn Spatafora |
Town Sports International Holdings, Inc. |
Chief Financial Officer |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jul. 23, 2018 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | TOWN SPORTS INTERNATIONAL HOLDINGS INC | |
Entity Central Index Key | 0001281774 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 27,190,769 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 4,428 | $ 4,237 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares issued (in shares) | 27,190,769 | 27,149,135 |
Common stock, shares outstanding (in shares) | 27,190,769 | 27,149,135 |
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Revenues: | ||||
Club operations | $ 111,047 | $ 98,392 | $ 216,722 | $ 196,063 |
Fees and other | 1,282 | 1,601 | 2,718 | 3,010 |
Revenues | 112,329 | 99,993 | 219,440 | 199,073 |
Operating Expenses: | ||||
Payroll and related | 42,396 | 37,058 | 81,870 | 74,443 |
Club operating | 50,131 | 44,032 | 98,495 | 89,206 |
General and administrative | 6,381 | 5,369 | 12,292 | 11,699 |
Depreciation and amortization | 9,640 | 10,016 | 18,768 | 20,325 |
Total operating expenses | 108,548 | 96,475 | 211,425 | 195,673 |
Operating income | 3,781 | 3,518 | 8,015 | 3,400 |
Interest expense | 3,338 | 3,155 | 6,506 | 6,263 |
Interest income | (45) | 0 | (81) | 0 |
Equity in earnings of investee | (78) | (48) | (183) | (140) |
Income (loss) before (benefit) provision for corporate income taxes | 566 | 411 | 1,773 | (2,723) |
(Benefit) provision for corporate income taxes | (35) | 821 | 43 | 622 |
Net income (loss) | $ 601 | $ (410) | $ 1,730 | $ (3,345) |
Earnings (loss) per share: | ||||
Basic (in dollars per share) | $ 0.02 | $ (0.02) | $ 0.07 | $ (0.13) |
Diluted (in dollars per share) | $ 0.02 | $ (0.02) | $ 0.07 | $ (0.13) |
Weighted average number of shares used in calculating earnings (loss) per share: | ||||
Basic (in shares) | 25,844,061 | 25,238,291 | 25,776,919 | 25,140,848 |
Diluted (in shares) | 26,584,112 | 25,238,291 | 26,515,964 | 25,140,848 |
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 601 | $ (410) | $ 1,730 | $ (3,345) |
Other comprehensive (loss) income, net of tax: | ||||
Foreign currency translation adjustments, net of tax of $0, for each of the three and six months ended June 30, 2018 and 2017 | (128) | 139 | 491 | 173 |
Interest rate swap, net of tax of $0, for each of the three and six months ended June 30, 2018 and 2017 | (66) | 313 | 110 | 749 |
Total other comprehensive (loss) income, net of tax | (194) | 452 | 601 | 922 |
Total comprehensive income (loss) | $ 407 | $ 42 | $ 2,331 | $ (2,423) |
Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Foreign currency translation adjustment tax | $ 0 | $ 0 | $ 0 | $ 0 |
Interest rate swap tax | $ 0 | $ 0 | $ 0 | $ 0 |
Basis of Presentation |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Town Sports International Holdings, Inc. (the “Company” or “TSI Holdings”) is a diversified holding company owning subsidiaries engaged in a number of business and investment activities. References to “TSI LLC” refer to Town Sports International, LLC, and references to “TSI Group” refer to Town Sports Group, LLC, both of which are wholly-owned operating subsidiaries of the Company. As of June 30, 2018, the Company owned and operated 177 fitness clubs (“clubs”). The clubs are comprised of 117 clubs in the New York metropolitan region (100 of which operate under the “New York Sports Clubs” brand name, 16 of which operate under the “Lucille Roberts” brand name and one of which operates under the “TMPL” brand name), including 38 locations in Manhattan. Additionally, the Company owned and operated 29 clubs in the Boston metropolitan region under the “Boston Sports Clubs” brand name, 10 clubs (one of which is partly-owned and one of which is licensed) in the Washington, D.C. metropolitan region under the “Washington Sports Clubs” brand name, five clubs in the Philadelphia metropolitan region under the “Philadelphia Sports Clubs” brand name, 12 clubs in the California region under the “Total Woman” brand name, one club in the Florida region under the “Christi’s Fitness” brand name and three clubs in Switzerland. In addition, as of June 30, 2018, the Company had one partly-owned club that operated under a different brand name in Washington, D.C. The Company’s operating segments are classified by geographical regions, which include the New York, Boston, Philadelphia, Washington, D.C., Florida, California and Switzerland regions. These operating segments are the level at which the chief operating decision makers review discrete financial information and make decisions about segment profitability based on earnings before income tax depreciation and amortization. The Company has determined that these 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”) and should be read in conjunction with the Company’s December 31, 2017 consolidated financial statements and notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The year-end condensed consolidated 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 normal and recurring adjustments which, in the opinion of management, are necessary for a fair statement of the financial position and results of operations for the interim periods set forth herein. The results for the three and six months ended June 30, 2018 are not necessarily indicative of the results for the entire year ending December 31, 2018. The Company continues to experience revenue pressure from members as the fitness industry continues to be highly competitive in the geographic regions in which the Company competes. The Company continues to strategize on improving its financial results. The Company focuses on increasing membership in existing clubs to increase revenue. The Company may consider additional actions within its control, including certain acquisitions, licensing arrangements, the closure of unprofitable clubs upon lease expiration and the sale of certain assets. The Company’s ability to continue to meet its obligations is dependent on its ability to generate positive cash flow from a combination of initiatives, including those mentioned above. Failure to continue to successfully implement these initiatives could have a material adverse effect on the Company’s liquidity and its operations, and the Company would need to implement alternative plans that could include additional asset sales, additional reductions in operating costs, additional reductions in working capital, debt restructurings and the deferral of capital expenditures. There can be no assurance that such alternatives would be available to the Company or that the Company would be successful in their implementation. |
Recent Accounting Pronouncements |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2017, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The updated standard expands the range of transactions that qualify for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess effectiveness. It is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting, and increase the transparency as to the scope and results of hedging programs. This standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s financial statements. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (A Consensus of the FASB Emerging Issues Task Force).” This ASU provides specific guidance over eight identified cash flow issues. This standard is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted. The Company adopted the updated guidance for the fiscal year beginning January 1, 2018 with no material impact on the Company’s financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This standard is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of this standard is permitted. The Company is currently in the process of evaluating its existing lease portfolio, including accumulating all of the necessary information required to properly account for the leases under the new standard. Additionally, the Company is implementing an enterprise-wide lease management system to assist in the accounting and is evaluating additional changes to our processes and internal controls to ensure they meet the standard reporting and disclosure requirements. The Company expects the guidance will result in a significant increase in long-term assets and liabilities on its consolidated balance sheets at adoption due to the recording of right-of-use assets and corresponding lease liabilities. In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (Topic 606). On January 1, 2018, the Company adopted FASB Accounting Standards Codification (“ASC”) Topic 606 and all the related amendments (the “new revenue standard”) using the modified retrospective method. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. Refer to Note 3 - Revenue for further detail. |
Revenue |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition and Deferred Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Revenue Adoption of ASU No. 2014-09, “Revenue from Contracts with Customers” (Topic 606) On January 1, 2018, the Company adopted ASU No. 2014-09 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting period beginning after January 1, 2018 are presented under ASU No. 2014-09, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under “Revenue Recognition” (Topic 605). The Company recorded a net addition to opening retained earnings of $1,604 as of January 1, 2018 due to the cumulative impact of adopting ASC Topic 606, with the impact related to membership costs requiring deferral. ASC Topic 606 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. In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our condensed consolidated balance sheet and statements of operations was as follows:
Disaggregation of Revenue The following table presents our revenue by type:
Revenue Recognition Membership dues: The Company generally receives one-time non-refundable joining fees and monthly dues from its members. The Company also offers paid-in-full memberships giving members the option to pay their membership dues in advance. The Company offers both month-to-month and commit memberships. Members can cancel their membership with a fee charged to those members still under contract. Membership dues are recognized in the period in which access to the club is provided. The Company’s membership plans allow for club members to elect to pay a per visit fee to use non-home clubs. These usage fees are recorded to membership revenue in the month the usage occurs. Initiation and processing fees: Initiation and processing fees, as well as related direct and incremental expenses of membership acquisition, which may include sales commissions, bonuses and related taxes and benefits, are deferred and recognized, on a straight-line basis, in operations over the estimated average membership life or 12 months to the extent these costs are related to the first annual fee paid within one month of enrollment. Annual fees are amortized over 12 months. The estimated average membership life was 26 months for each of the three and six months ended June 30, 2018 and the full-year of 2017. The Company monitors factors that might affect the estimated average membership life including retention trends, attrition trends, membership sales volumes, membership composition, competition, and general economic conditions, and adjusts the estimate as necessary on an annual basis. Personal training revenue: The Company recognizes revenue from personal training sessions as the services are performed (i.e., when the session occurs). Unused personal training sessions expire after a set, disclosed period of time after purchase and are not refundable or redeemable by the member for cash. The Company had approximately $12,407 and $12,456 of unused and expired personal training sessions that had not been recognized as revenue and was recorded as deferred revenue as of June 30, 2018 and December 31, 2017, respectively. The Company does not believe this amount is subject to the escheatment or abandoned property laws of any of the jurisdictions in which we conduct our business, including the State of New York. It is possible however, that one or more of these jurisdictions may not agree with the Company's position and may claim that the Company must remit all or a portion of these amounts to such jurisdiction. This could have a material adverse effect on the Company's cash flows. The State of New York has informed the Company that it is considering whether the Company is required to remit the amount received by the Company for unused, expired personal training sessions to the State of New York as unclaimed property. For a total of six jurisdictions, the Company has concluded, based on opinions from outside counsel that money held by a company for unused and expired personal training sessions are not escheatable. In addition to the prepaid personal training sessions the Company also offers a personal training membership product which consists of single or multi-session packages ranging from four to 12 sessions per month. These sessions provided by the membership product are at a discount to our stand-alone session pricing and must be used in each respective month. Revenue related to this product is recognized in each respective month. Other ancillary club revenue: Other ancillary club revenue primarily consists of Sports Clubs for Kids, Small Group Training and racquet sports. Revenues are recognized as the services are performed. Fees and other revenue: Fees and other revenue primarily consist of rental income from third party tenants, marketing revenue related to third party marketing in the Company’s club locations, management fees related to clubs the Company manages but does not wholly-own and revenue related to laundry services. Revenue generated from fees and other revenue is generally recognized at the time the related contracted services are performed. The Company generates management fees from certain club facilities that are not wholly-owned, which include three and eight managed sites as of June 30, 2018 and 2017, respectively. Management fees earned for services rendered are recognized at the time the related services are performed. Revenue generated from managed sites was $115 and $252 for the three and six months ended June 30, 2018, respectively, compared to $292 and $587 for the three and six months ended June 30, 2017, respectively. When a revenue agreement involves multiple elements, such as sales of both memberships and services in one arrangement or potentially multiple arrangements, the entire fee from the arrangement is allocated to each respective element based on its relative fair value and recognized when the revenue recognition criteria for each element is met. In connection with advance receipt of fees or dues, the Company was required to maintain bonds totaling $3,428 and $2,658 as of June 30, 2018 and December 31, 2017, respectively. Contract Liability The Company records deferred revenue when cash payments are received or due in advance of our performance. In the three and six months ended June 30, 2018, the Company recognized revenue of $5,205 and $16,356 that was included in the deferred revenue balance as of December 31, 2017. Practical Expedients and Exemptions The Company has elected to not capitalize contracts that are shorter than one year. The majority of the Company's contracts have an expected length of one year or less. The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. |
Long-Term Debt |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Long-Term Debt
2013 Senior Credit Facility On November 15, 2013, TSI LLC, an indirect, wholly-owned subsidiary, entered into a $370,000 senior secured credit facility (“2013 Senior Credit Facility”), pursuant to a credit agreement among TSI LLC, TSI Holdings II, LLC, a newly-formed, wholly-owned subsidiary of the Company (“Holdings II”), as a Guarantor, the lenders party thereto, Deutsche Bank AG, as administrative agent, and Keybank National Association, as syndication agent. The 2013 Senior Credit Facility consists of a $325,000 term loan facility maturing on November 15, 2020 (“2013 Term Loan Facility”) and a $45,000 revolving loan facility maturing on November 15, 2018 (“2013 Revolving Loan Facility”). Proceeds from the 2013 Term Loan Facility of $323,375 were issued, net of an original issue discount (“OID”) of 0.5%, or $1,625. Debt issuance costs recorded in connection with the 2013 Senior Credit Facility were $5,119 and are being amortized as interest expense and are recorded as a contra-liability to long-term debt on the accompanying condensed consolidated balance sheets. The Company also recorded additional debt discount of $4,356 related to creditor fees. The proceeds from the 2013 Term Loan Facility were used to pay off amounts outstanding under the Company’s previously outstanding long-term debt facility, and to pay related fees and expenses. None of the revolving loan facility was drawn upon as of the closing date on November 15, 2013 but loans under the 2013 Revolving Loan Facility may be drawn from time to time pursuant to the terms of the 2013 Senior Credit Facility. The borrowings under the 2013 Senior Credit Facility are guaranteed and secured by assets and pledges of capital stock by Holdings II, TSI LLC, and, subject to certain customary exceptions, the wholly-owned domestic subsidiaries of TSI LLC. Borrowings under the 2013 Term Loan Facility and the 2013 Revolving Loan Facility, at TSI LLC’s option, bear interest at either the administrative agent’s base rate plus 2.5% or a LIBOR rate adjusted for certain additional costs (the “Eurodollar Rate”) plus 3.5%, each as defined in the 2013 Senior Credit Facility. With respect to the outstanding term loans, the Eurodollar Rate has a floor of 1.00% and the base rate has a floor of 2.00%. Commencing with the last business day of the quarter ended March 31, 2014, TSI LLC is required to pay 0.25% of the principal amount of the term loans each quarter, which may be reduced by voluntary prepayments. As of June 30, 2018, TSI LLC had made a total of $25,142 in principal payments on the 2013 Term Loan Facility. On January 30, 2015, the 2013 Senior Credit Facility was amended (the “Amendment”) to permit TSI Holdings to purchase term loans under the credit agreement. Any term loans purchased by TSI Holdings will be canceled in accordance with the terms of the credit agreement, as amended by the Amendment. The Company may from time to time purchase term loans in market transactions, privately negotiated transactions or otherwise; however the Company is under no obligation to make any such purchases. Any such transactions, and the amounts involved, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. In May 2017, TSI LLC loaned $5,000 to TSI Group, a wholly-owned subsidiary of TSI Holdings, at a rate of LIBOR plus 9.55% per annum. In addition to the interest payments, TSI Group is required to repay 1.0% of the principal amount of the loan, $50 per annum, on a quarterly basis commencing September 30, 2017. The loan is secured by certain collateral. This transaction has no impact on the Company's consolidated financial statements as it is eliminated in consolidation. In October 2017, TSI LLC made a dividend distribution of $35,000 to TSI Holdings. As of June 30, 2018, TSI Group had a cash balance of approximately $13,919. The terms of the 2013 Senior Credit Facility provide for a financial covenant in the situation where the total utilization of the revolving loan commitments (other than letters of credit up to $5,500 at any time outstanding) exceeds 25% of the aggregate amount of those commitments. In such event, TSI LLC is required to maintain a total leverage ratio, as defined in the 2013 Senior Credit Facility, of no greater than 4.50:1.00. As of June 30, 2018, TSI LLC had outstanding letters of credit of $6,708 and a total leverage ratio that was below 4.50:1.00. Other than these outstanding letters of credit, TSI LLC did not have any amounts utilized on the 2013 Revolving Loan Facility. The terms of the 2013 Senior Credit Facility include a financial covenant under which the Company is not able to utilize more than 25% or $11,250 in accordance with terms of the 2013 Revolving Loan Facility if the total leverage ratio exceeds 4.50:1.00 (calculated on a proforma basis to give effect to any borrowing). The 2013 Senior Credit Facility also contains certain affirmative and negative covenants, including covenants that may limit or restrict TSI LLC and Holdings II’s ability to, among other things, incur indebtedness and other liabilities; create liens; merge or consolidate; dispose of assets; make investments; pay dividends and make payments to stockholders; make payments on certain indebtedness; and enter into sale leaseback transactions, in each case, subject to certain qualifications and exceptions. In addition, at any time when the total leverage ratio is greater than 4.50:1.00, there are additional limitations on the ability of TSI LLC and Holdings II to, among other things, make certain distributions of cash to TSI Holdings. The 2013 Senior Credit Facility also includes customary events of default (including non-compliance with the covenants or other terms of the 2013 Senior Credit Facility) which may allow the lenders to terminate the commitments under the 2013 Revolving Loan Facility and declare all outstanding term loans and revolving loans immediately due and payable and enforce its rights as a secured creditor. TSI LLC may prepay the 2013 Term Loan Facility and 2013 Revolving Loan Facility without premium or penalty in accordance with the 2013 Senior Credit Facility. Mandatory prepayments are required relating to certain asset sales, insurance recovery and incurrence of certain other debt and commencing in 2015 in certain circumstances relating to excess cash flow (as defined) for the prior fiscal year, as described below, in excess of certain expenditures. Pursuant to the terms of the 2013 Senior Credit Facility, the Company is required to apply net proceeds in excess of $30,000 from sales of assets in any fiscal year towards mandatory prepayments of outstanding borrowings. In addition, the 2013 Senior Credit Facility contains provisions that require excess cash flow payments, as defined therein, to be applied against outstanding 2013 Term Loan Facility balances. The excess cash flow is calculated annually for each fiscal year ending December 31 and paid 95 days after the fiscal year end. The applicable excess cash flow repayment percentage is applied to the excess cash flow when determining the excess cash flow payment. Earnings, changes in working capital and capital expenditure levels all impact the determination of any excess cash flow. The applicable excess cash flow repayment percentage is 50% when the total leverage ratio, as defined in the 2013 Senior Credit Facility, exceeds or is equal to 2.50:1.00; 25% when the total leverage ratio is greater than or equal to 2.00:1.00 but less than 2.50:1.00 and 0% when the total leverage ratio is less than 2.00:1.00. TSI LLC may pay dividends in the amount of cumulative retained excess cash flow to TSI Holdings as long as at the time the dividend is made, and immediately after, TSI LLC is in compliance on a pro forma basis with a total leverage ratio of less than 4.00:1.00. The excess cash flow calculation performed as of December 31, 2017 did not result in any required payments in April 2018. The next excess cash flow payment is due in April 2019, if applicable. Based on the Company’s 2018 forecast, it expects to have approximately $20,000 of excess cash flow and pay approximately $10,000 in principal payments at this time and such amount is included in Current portion of long-term debt on the Company’s accompanying condensed consolidated balance sheet as of June 30, 2018. The forecast is an estimate and subject to change. As of June 30, 2018, the 2013 Term Loan Facility has a gross principal balance of $198,877 and a balance of $195,643 net of unamortized debt discount of $2,429 and unamortized debt issuance costs of $805. As of June 30, 2018, both the unamortized balance of debt issuance costs and unamortized debt discount are recorded as a contra-liability to long-term debt on the accompanying condensed consolidated balance sheet and are being amortized as interest expense using the effective interest method. As of June 30, 2018, there were no outstanding 2013 Revolving Loan Facility borrowings and outstanding letters of credit issued totaled $6,708. The unutilized portion of the 2013 Revolving Loan Facility as of June 30, 2018 was $38,292, with borrowings under such facility subject to the conditions applicable to borrowings under the Company’s 2013 Senior Credit Facility, which conditions the Company may or may not be able to satisfy at the time of borrowing. The 2013 Revolving Loan Facility will mature on November 15, 2018. Given that the 2013 Senior Credit Facility contains a restrictive covenant on obtaining secured debt, if the Company is unable to extend, restructure or refinance the 2013 Revolving Loan Facility prior to maturity, all letters of credit that remain outstanding under the 2013 Revolving Loan Facility will become immediately due and payable upon maturity. The Company is considering alternative means to satisfy these obligations, including the cash collateralization of such obligations. Fair Market Value Based on quoted market prices, the 2013 Term Loan Facility had a fair value of approximately $197,385 and $188,173 at June 30, 2018 and December 31, 2017, respectively, and is classified within level 2 of the fair value hierarchy. Level 2 is based on quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. The fair value for the Company’s 2013 Term Loan Facility is determined using observable current market information such as the prevailing Eurodollar interest rate and Eurodollar yield curve rates and includes consideration of counterparty credit risk. For the fair market value of the Company’s interest rate swap instrument refer to Note 6 - Derivative Financial Instruments. |
Mortgage and Term Loan |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Mortgage and Term Loan | Mortgage and Term Loan On April 24, 2018, Dixie Highway Realty, LLC, a subsidiary of TSI Group, entered into promissory notes for $1,880 (the “Mortgage Note”) and $500 (the “Term Note”) with BankUnited, N.A. (the “Lender”). The Mortgage Note bears interest at a fixed rate of 5.46% and is payable in 120 monthly payments of principal and interest based on a 25 year amortization period. The first payment was due and paid on May 24, 2018. The entire principal balance of the Mortgage Note is due and payable in full on its maturity date of April 24, 2028. The Term Note bears interest at a fixed rate of 5.30% and is payable in 60 payments of principal and interest. The first payment was due and paid on May 24, 2018 and the final payment will be due to the Lender on the maturity date of April 24, 2023 for all principal and accrued interest not yet paid. In connection with the promissory notes, TSI Group or TSI Holdings must maintain a minimum relationship liquidity balance with the Lender of $500 and in the form of an operating account. The carrying amount of the mortgage and term loan approximates fair value based on Level 2 inputs. Level 2 is based on quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. |
Derivative Financial Instruments |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments The Company is exposed to market risks relating to fluctuations in interest rates. In order to minimize the possible negative impact of such fluctuations on the Company’s cash flows, the Company entered into derivative financial instruments (“derivatives”), such as interest-rate swaps. Derivatives were not entered into for trading purposes and the Company only used commonly traded instruments. The Company used derivatives solely relating to the variability of cash flows from interest rate fluctuations. The Company originally entered into an interest rate swap arrangement on July 13, 2011 in connection with the Company’s previous credit facility. In connection with entering into the 2013 Senior Credit Facility, the Company amended and restated the interest rate swap agreement initially entered into (and amended in August 2012 and November 2012). Effective as of November 15, 2013, the closing date of the 2013 Senior Credit Facility, the interest rate swap arrangement had a notional amount of $160,000 and matured on May 15, 2018. The swap effectively converted $160,000 of the outstanding principal of the total variable-rate debt under the 2013 Senior Credit Facility to a fixed rate of 0.884% plus the 3.5% applicable margin and the Eurodollar rate, which had a floor of 1%. As permitted by ASC 815, Derivatives and Hedging, the Company designated this swap as a cash flow hedge, the effects of which were reflected in the Company’s condensed consolidated financial statements for the three and six months ended June 30, 2018 and 2017. The objective of this hedge was to manage the variability of cash flows in the interest payments related to the portion of the variable-rate debt designated as being hedged. When the Company’s derivative instrument was executed, hedge accounting was deemed appropriate and it was designated as a cash flow hedge at inception with re-designation being permitted under ASC 815, Derivatives and Hedging. Interest rate swaps were designated as cash flow hedges for accounting purposes since they were being used to transform variable interest rate exposure to fixed interest rate exposure on a recognized liability (debt). The Company performed a quarterly assessment of the hedge effectiveness of the hedge relationship and measured and recognized any hedge ineffectiveness in the condensed consolidated statements of operations. For the three and six months ended June 30, 2018 (through May 15, 2018, the maturity date) and 2017, hedge ineffectiveness was evaluated using the hypothetical derivative method and there was no hedge ineffectiveness noted. Accounting guidance on fair value measurements specified a hierarchy of valuation techniques based on whether the inputs to those valuation techniques were observable or unobservable. Observable inputs reflected market data obtained from independent sources, while unobservable inputs reflected the Company’s market assumptions. These two types of inputs created the following fair value hierarchy:
This hierarchy required the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The fair value for the Company’s interest rate swap was determined using observable current market information such as the prevailing Eurodollar interest rate and Eurodollar yield curve rates and include consideration of counterparty credit risk. The following table presents the aggregate fair value of the Company’s derivative financial instrument:
There was no contract liability as of June 30, 2018. As of December 31, 2017, the swap contract liability of $184 was recorded as a component of accrued expenses with the offset to accumulated other comprehensive income ($104, net of taxes) on the accompanying condensed consolidated balance sheet. There were no significant reclassifications out of accumulated other comprehensive income during the three and six months ended June 30, 2018 and 2017 and there are no remaining amounts in accumulated other comprehensive income as of June 30, 2018 due to the maturity of the interest rate swap on May 15, 2018. |
Related Party |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party | Related Party On April 25, 2017, the Company approved the appointment of Stuart M. Steinberg as General Counsel of the Company, effective as of May 1, 2017. Furthermore, the Company and Mr. Steinberg's law firm (the “Firm”) previously entered into an engagement letter agreement (the “Agreement”) dated as of February 4, 2016, and as amended and restated effective as of May 1, 2017, pursuant to which the Company engaged the Firm to provide general legal services requested by the Company. Mr. Steinberg continues to provide services for the Firm while employed by the Company. The Agreement provides for a monthly retainer fee payable to the Firm in the amount of $21, excluding litigation services. The Company will also reimburse the Firm for any expenses incurred in connection with the Firm’s services to the Company. In connection with this arrangement, the Company incurred legal expenses payable to the Firm in the amount of $67 and $134 for the three and six months ended June 30, 2018, respectively, compared to $52 for the each of the three and six months ended June 30, 2017. These amounts were classified within general and administrative expenses on the condensed consolidated statements of operations for the three and six months ended June 30, 2018. |
Concentration of Credit Risk |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Risks and Uncertainties [Abstract] | |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents. Although the Company deposits its cash with more than one financial institution, as of June 30, 2018, $41,691 of the cash balance of $58,611 was held at one financial institution. The Company has not experienced any losses on cash and cash equivalent accounts to date, and the Company believes that, based on the credit ratings of these financial institutions, it is not exposed to any significant credit risk related to cash at this time. |
Earnings (Loss) Per Share |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per share (“EPS”) is computed by dividing net (loss) earnings applicable to common stockholders by the weighted average numbers of shares of common stock outstanding during the period. Diluted EPS is computed similarly to basic EPS, except that the denominator is increased for the assumed exercise of dilutive stock options and unvested restricted stock calculated using the treasury stock method.
For the three and six months ended June 30, 2018, there were no stock options or outstanding restricted stock awards excluded from the computation of earnings per diluted share as there were no shares with an anti-dilutive effect. For the three and six months ended June 30, 2017, there was no effect of dilutive stock options and unvested restricted common stock on the calculation of diluted EPS as the Company had a net loss for these periods. There would have been 43,033 and 47,362 anti-dilutive shares for the three and six months ended June 30, 2017, respectively, had the Company not been in a net loss position during these periods. In the three months ended June 30, 2018, the Company determined that it had incorrectly computed the number of weighted average common shares used in basic earnings per share in previously issued financial statements. This resulted in misstatements of basic EPS for the annual period of 2016 and interim and annual periods for 2017. This item also resulted in corresponding misstatements in diluted EPS in the respective periods. These errors had no impact to the Company’s revenues, operating income (loss), or net income (loss), and had no impact to the Company’s consolidated balance sheets, consolidated statements of cash flows, consolidated statements of comprehensive income (loss), or consolidated statements of stockholders’ deficit. The Company assessed the materiality of these errors on the previously issued interim and annual financial statements in accordance with SEC Staff Accounting Bulletin No. 99 and No. 108, and concluded that the errors were not material to any of the previously issued consolidated financial statements. The Company appropriately reflected the weighted average common shares calculations in the condensed consolidated statements of operations for the three and six months ended June 30, 2018 and plans to revise the comparative presentation of the financial statements in future filings. The effects of the revision had the following impacts for the respective periods:
|
Stock-Based Compensation |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation The Company’s 2006 Stock Incentive Plan, as amended and restated in April 2015 (the “2006 Plan”), authorizes the Company to issue up to 3,500,000 shares of common stock to employees, non-employee directors and consultants pursuant to awards of stock options, stock appreciation rights, restricted stock, in payment of performance shares or other stock-based awards. The Company amended the 2006 Plan to increase the aggregate number of shares of common stock issuable under the 2006 Plan by 1,000,000 shares to a total of 4,500,000 in May 2016, and by 2,000,000 shares to a total of 6,500,000 in May 2017. Under the 2006 Plan, stock options must be granted at a price not less than the fair market value of the stock on the date the option is granted, generally are not subject to re-pricing, and will not be exercisable more than ten years after the date of grant. Options granted under the 2006 Plan generally qualify as “non-qualified stock options” under the U.S. Internal Revenue Code. As of June 30, 2018, there were 2,056,373 shares available to be issued under the 2006 Plan. At June 30, 2018, the Company had 35,973 stock options outstanding and 1,344,625 shares of restricted stock outstanding under the 2006 Plan. Stock Option Awards The Company did not grant any stock options during the three and six months ended June 30, 2018. Total compensation expense, classified within Payroll and related on the condensed consolidated statements of operations, related to stock options outstanding was $5 and $10 for the three and six months ended June 30, 2017, respectively. There was no compensation expense related to stock options outstanding for the three and six months ended June 30, 2018. Restricted Stock Awards On February 1, 2018, the Company issued 13,115 shares of restricted stock under the 2006 Plan. The fair value per share for such restricted stock awards was $6.10, representing the closing stock price on the date of grant. These shares will vest in three equal installments on each of the first three anniversaries of the date of grant. The total compensation expense, classified within Payroll and related on the condensed consolidated statements of operations, related to restricted stock was $556 and $1,162 for the three and six months ended June 30, 2018, respectively, compared to $401 and $704 for the comparable prior-year periods. The Company adjusted the forfeiture estimates to reflect actual forfeitures. The forfeiture adjustment reduced stock-based compensation expense by $23 and $27 for the three and six months ended June 30, 2018, respectively, compared to $2 and $143 for the comparable prior-year periods. As of June 30, 2018, a total of $3,946 in unrecognized compensation expense related to restricted stock awards is expected to be recognized over a weighted-average period of 2.0 years. Stock Grants The Company issued 52,460 shares of common stock to members of the Company’s Board of Directors in respect of their annual retainer on February 1, 2018. The fair value of the shares issued was $6.10 per share and was expensed upon the date of grant. The total compensation expense, classified within general and administrative expenses, related to Board of Directors common stock grants was $320 and $368 for the six months ended June 30, 2018 and 2017, respectively. Management Stock Purchase Plan The Company adopted the 2018 Management Stock Purchase Plan in January 2018, and amended and restated it in March 2018 (the “MSPP”). The purpose of the MSPP is to provide eligible employees of the Company (corporate title of Director or above) an opportunity to voluntarily purchase the Company’s stock in a convenient manner. As of June 30, 2018, shares purchased under this plan did not have a material impact on the Company’s financial statements. There was no compensation expense related to MSPP for each of the three and six months ended June 30, 2018 and 2017. The following is a summary of the MSPP, which is qualified in its entirety by the terms of the MSPP. Eligible employees may elect to use up to 20% of their cash compensation (as defined in the MSPP), but in no event more than $200 in any calendar year, to purchase the Company’s common stock generally on a quarterly basis on the open market through a broker (such purchased shares being referred to as “MSPP Shares”). If the participant holds the MSPP Shares for the requisite period specified in the Plan (two years from the purchase date) and remains an employee of the Company, the participant will receive an award of shares of restricted stock under the Company’s 2006 Stock Incentive Plan, as amended, in an amount equal to the number of MSPP Shares that satisfied the holding period. The award will vest on the second anniversary of the award date so long as the participant remains an employee on the vesting date. Awards granted under the Stock Incentive Plan in any calendar year as a result of participants holding the MSPP Shares for the requisite period will be the lesser of (i) 50% of the shares available for grant under the Stock Incentive Plan and (ii) the number of MSPP Shares that have satisfied the two year holding period. Employee Stock Purchase Plan In May 2018, the Company’s shareholders approved the Town Sports International Holdings, Inc. Employee Stock Purchase Plan (the “ESPP”), effective as of June 15, 2018. Under the ESPP, an aggregate of 800,000 shares of common stock (subject to certain adjustments to reflect changes in the Company’s capitalization) are reserved and may be purchased by eligible employees who become participants in the ESPP. The purchase price per share of the common stock will be the lesser of 85% of the fair market value of a share of common stock on the offering date or 85% of the fair market value of a share of common stock on the purchase date. As of June 30, 2018, there were 800,000 shares of common stock available for issuance pursuant to the ESPP. For both the three and six months ended June 30, 2018, the Company recorded stock-based compensation expense related to the ESPP of $1. The fair value of the purchase rights granted under the ESPP for the offering period beginning June 15, 2018 was $2.82. It was estimated by applying the Black-Scholes option-pricing model to the purchase period in the offering period using the following assumptions:
Grant price - Closing stock price on the first day of the offering period. Expected Term - The expected term is based on the end date of the purchase period of each offering period, which is three months from the commencement of each new offering period. Expected volatility - The expected volatility is based on historical volatility of the Company’s stock as well as the implied volatility from publicly traded options on the Company’s stock. Risk-free interest rate - The risk-free interest rate is based on a U.S. Treasury rate in effect on the date of grant with a term equal to the expected term. |
Goodwill and Other Intangibles |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangibles | Goodwill and Other Intangibles Goodwill was allocated to reporting units that closely reflect the regions served by the Company: New York, Boston, Washington, D.C., Philadelphia, Florida, California and Switzerland, with certain more remote clubs that do not benefit from a regional cluster being considered single reporting units (“Outlier Clubs”). The Company has acquired several clubs since the third quarter of 2017 and has recorded goodwill as applicable to the appropriate regions. During the second quarter of 2018, the Company acquired Total Woman Gym and Spa business (“Total Woman”) and $1,385 of goodwill was added to the Company’s goodwill balance in the California region. For more information on these acquisitions, refer to Note 12 - Acquisitions. Goodwill for all acquisitions was recorded at fair value at the time of such acquisitions and may have changes to the balances up to one year after acquisition. As of June 30, 2018, the New York, Boston, California and Switzerland regions have a goodwill balance. The Company has historically performed its goodwill impairment test annually as of the last day of February and in the interim if a triggering event occurred. In the first quarter of 2018, the Company established August 1 to be the annual testing date for the New York and Boston regions and in the second quarter it established August 1 to be the annual testing date for the California and Switzerland regions as well, thereby aligning all of the Company’s reporting units with goodwill balances with the same annual goodwill impairment test date. The Company performed a goodwill impairment test on the Switzerland region as of February 28, 2018 in line with the historical policy. For the New York, Boston, California and Switzerland regions, the next goodwill impairment test of August 1, 2018 is within 12 months of the related acquisitions. The Company believes that performing the test annually on August 1 will alleviate the information and resource constraints that historically existed during the first quarter and will more closely align with the timing of related forecasts, reports and analysis. Additionally, the Company believes that the resulting change in the accounting principle related to the annual testing date will not delay, accelerate or avoid an impairment charge. The Company’s annual goodwill impairment test for the Switzerland region as of February 28, 2018 was performed by comparing the fair value of the Company’s reporting unit with its carrying amount and then recognizing an impairment charge, as necessary, for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit. The estimated fair value was determined by using an income approach. The income approach was based on discounted future cash flows and required significant assumptions, including estimates regarding revenue growth rates, operating margins, weighted average cost of capital, and future economic and market conditions. The February 28, 2018 annual impairment test supported the goodwill balance and as such, no impairment of goodwill was required. The changes in the carrying amount of goodwill from December 31, 2017 through June 30, 2018 are detailed in the chart below:
Amortization expense was $556 and $1,034 for the three and six months ended June 30, 2018, respectively, compared to $7 and $12 for the comparable prior-year periods. Intangible assets were acquired in connection with the Lucille Roberts and TMPL acquisitions in 2017, as well as the acquisition of Total Woman and a club in the Boston region during the six months ended June 30, 2018. Intangible assets are as follows:
|
Acquisitions |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | Acquisitions Acquisitions of businesses are accounted for in accordance with ASC 805, Business Combinations and ASU 2017-01. According to ASC 805, transactions that represent business combinations should be accounted for under the acquisition method. In addition, the ASC 805 includes a subtopic which provides guidance on transactions sometimes associated with business combinations but that do not meet the requirements to be accounted for as business combinations under the acquisition method. Under the acquisition method, the purchase price is allocated to the assets acquired and the liabilities assumed based on their respective estimated fair values as of the acquisition date. Any excess of the purchase price over the fair values of the assets acquired and liabilities assumed was allocated to goodwill. The results of operations of the clubs acquired have been included in the Company’s consolidated financial statements pro rata from the date of acquisition. Acquisition of Total Woman Gym and Spa Business In April 2018, the Company acquired substantially all of the assets of the Total Woman Gym and Spa business for a net cash purchase price of $7,265. The acquisition added 12 clubs to the Company’s portfolio in California and was accounted for as a business combination. These 12 clubs continue to operate as women only clubs under the Total Woman trade name. Acquisition costs incurred in connection with this transaction during the six months ended June 30, 2018 was $426 and is included in general and administrative expenses in the accompanying condensed consolidated statements of operations. The following table summarizes the allocation of the purchase price to the fair value of the assets and liabilities acquired. The purchase price allocation presented below has been prepared on a preliminary basis and changes to the preliminary purchase price allocations may occur as additional information concerning asset and liability valuations are finalized.
The goodwill recognized represents the excess of the purchase price over the fair value of the assets acquired and liabilities assumed. The goodwill associated with this acquisition is partially attributable to the avoided costs of acquiring the assembled workforce and is deductible for tax purposes in its entirety. The definite lived intangible assets acquired are being amortized over their estimated useful lives with the trade name amortized over its estimated useful life of 15 years and the favorable lease commitment, which expires on June 30, 2026, amortized over the remaining life of the lease. In the three and six months ended June 30, 2018, the Company recorded revenue of $4,800 and net loss of $449 related to Total Woman. Such amounts are included in the respective accompanying condensed consolidated statements of operations. Acquisition in the Boston Metropolitan Region In January 2018, the Company acquired an existing club in the Boston metropolitan region for a net cash purchase price of $2,866 and was accounted for as a business combination. Acquisition costs incurred in connection with this transaction were $106, of which $100 was incurred in the six months ended June 30, 2018 and is included in general and administrative expenses in the accompanying condensed consolidated statements of operations. The following table summarizes the allocation of the purchase price to the fair value of the assets and liabilities acquired. The purchase price allocation presented below has been prepared on a preliminary basis and changes to the preliminary purchase price allocations may occur as additional information concerning asset and liability valuations are finalized.
The goodwill recognized represents the excess of the purchase price over the fair value of the assets acquired and liabilities assumed. The goodwill associated with this acquisition is partially attributable to the avoided costs of acquiring the assembled workforce and is deductible for tax purposes in its entirety. The definite lived intangible assets acquired are being amortized over their estimated useful lives with the membership lists being amortized over the estimated average membership life of 26 months and the non-compete agreement being amortized over five years. In the three and six months ended June 30, 2018, the Company recorded revenue of $1,213 and $2,431, respectively, and a net income of $20 in the three months ended June 30, 2018 and a net loss of $4 in the six months ended June 30, 2018 related to this club. Such amounts are included in the respective accompanying condensed consolidated statements of operations. Acquisition of TMPL Gym In December 2017, the Company acquired an existing club in the New York metropolitan region under the TMPL trade name for a net cash purchase price of $5,925. TMPL is a luxury gym that features a wide variety of fitness programs and group exercises. The club continues to operate under the TMPL trade name and was accounted for as a business combination. Acquisition costs incurred in connection with this transaction were $215, of which $154 was incurred in the six months ended June 30, 2018 and is included in general and administrative expenses in the accompanying condensed consolidated statements of operations. The Company received additional information in the first quarter of 2018 and adjusted the purchase price allocation. In the six months ended June 30, 2018, the Company recorded measurement period adjustments of $1,011 to both goodwill and deferred revenue. The following table summarizes the allocation of the purchase price to the fair value of the assets and liabilities acquired. The purchase price allocation presented below has been prepared on a preliminary basis and changes to the preliminary purchase price allocations may occur as additional information concerning asset and liability valuations are finalized.
The goodwill recognized represents the excess of the purchase price over the fair value of the assets acquired and liabilities assumed. The goodwill associated with this acquisition is partially attributable to the avoided costs of acquiring the assembled workforce and is deductible for tax purposes in its entirety. The definite lived intangible assets acquired are being amortized over their estimated useful lives with the non-compete agreement amortized over five years and the trade name amortized over 15 years. In the three and six months ended June 30, 2018, the Company recorded revenue of $1,386 and $2,840, respectively, and a net loss of $252 and $663, respectively, related to TMPL. Such amounts are included in the respective accompanying condensed consolidated statements of operations. TMPL was launched as a new brand in 2016 focusing on the intersection of metabolic science, exercise and nutrition, and as expected, it will take time to mature given the age of the club. Acquisition of Lucille Roberts Health Club Business In September 2017, the Company acquired Lucille Roberts for a net cash purchase price of $9,450. The acquisition added 16 clubs to the Company’s portfolio in the New York metropolitan region and was accounted for as a business combination. These 16 clubs continue to operate under the Lucille Roberts trade name. Acquisition costs incurred in connection with this transaction was $310, of which $25 was incurred in the six months ended June 30, 2018 and is included in general and administrative expenses in the accompanying condensed consolidated statements of operations. The Company received additional information in the first quarter of 2018 and adjusted the purchase price allocation. In the six months ended June 30, 2018, the Company recorded measurement period adjustments of $421 to both goodwill and deferred revenue. The following table summarizes the allocation of the purchase price to the fair value of the assets and liabilities acquired. The purchase price allocation presented below has been prepared on a preliminary basis and changes to the preliminary purchase price allocations may occur as additional information concerning asset and liability valuations are finalized.
The goodwill recognized represents the excess of the purchase price over the fair value of the assets acquired and liabilities assumed. The goodwill associated with this acquisition is partially attributable to the avoided costs of acquiring the assembled workforce and is deductible for tax purposes in its entirety. The definite lived intangible assets acquired are being amortized over their estimated useful lives with the membership lists amortized over the estimated average membership life of 26 months, the trade name amortized over its estimated useful life of five years and the favorable lease commitments amortized over the remaining life of each respective lease, or a weighted average life of 6.3 years. In the three and six months ended June 30, 2018, the Company recorded revenue of $4,102 and $8,141, respectively, and net income of $808 and $1,638, respectively, related to the Lucille Roberts clubs. Such amounts are included in the respective accompanying condensed consolidated statements of operations. Unaudited Pro forma Results The following table provides the Company’s consolidated unaudited pro forma revenues, net income and net income per basic and diluted common share had the results of the acquired businesses’ operations been included in its operations commencing on January 1, 2017, based on available information related to the respective operations. This pro forma information is not necessarily indicative either of the combined results of operations that actually would have been realized by the Company had the acquisitions been consummated at the beginning of the period for which the pro forma information is presented, or of future results and does not account for any operational improvements to be made by the Company post-acquisition.
Asset Acquisitions In January 2018, the Company acquired a building and the land it occupies in the Florida region, as well as a single health club located on the premises for a purchase price of $4,039. Of the total purchase price, $2,691 was attributed to the building, $1,021 was attributed to the land, and the remainder of the purchase price was primarily attributed to the equipment, intangible assets and deferred revenue. This transaction was accounted for as an asset acquisition. In November 2017, the Company acquired a building and the land it occupies in the New York metropolitan region, as well as a single health club located on the premises for a purchase price of $12,600. Of the total purchase price, $2,675 was attributed to land, $9,675 was attributed to building, and the remainder of the purchase price was primarily equipment and deferred revenue. This transaction was accounted for as an asset acquisition. |
Income Taxes |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company recorded an income tax provision inclusive of valuation allowance of $43 and $622 for the six months ended June 30, 2018 and 2017, respectively, reflecting an effective income tax rate of 2% for the six months ended June 30, 2018 and a negative effective income tax rate of 23% for the six months ended June 30, 2017. For the six months ended June 30, 2018 and 2017, the Company calculated its income tax provision using the estimated annual effective tax rate methodology. On December 22, 2017, the U.S. President signed into law H.R.1, formerly known as the Tax Cuts and Jobs Act (the “Tax Legislation”). The Tax Legislation significantly revises the U.S. tax code by among other items lowering the U.S federal statutory income tax rate from 35% to 21%. The Company has computed its income tax provision for the six months ended June 30, 2018 considering this new rate. The Company also initially recorded the applicable impact of the Tax Legislation within its provision for income taxes in the year ended December 31, 2017. The Company recorded the required income tax effects under the Tax Legislation and provided disclosure pursuant to ASC 740, Income Taxes, and the SEC Staff Accounting Bulletin (“SAB”) 118, using its best estimates based on reasonable and supportable assumptions and available inputs and underlying information for the six months ended June 30, 2018 and the year ended December 31, 2017. As of both June 30, 2018 and December 31, 2017, the Company had a net deferred tax liability of $140 and $93, respectively. The Company maintained a full valuation allowance against its U.S. net deferred tax assets (other than deferred tax liabilities related to indefinite lived intangibles) as of both June 30, 2018 and December 31, 2017. As of June 30, 2018, the Company had $1,155 of unrecognized tax benefits and it is reasonably possible that the entire amount could be realized by the Company in the year ending December 31, 2018, since the related income tax returns may no longer be subject to audit in 2018. From time to time, the Company is under audit by federal, state, and local tax authorities and the Company may be liable for additional tax obligations and may incur additional costs in defending any claims that may arise. During the quarter ended June 30, 2018, the Company completed its audit by the Internal Revenue Service for federal income tax returns for the years ended December 31, 2014 and 2015, resulting in no material changes. The following state and local jurisdictions are currently examining our respective returns for the years indicated: New York State (2006 through 2014), and New York City (2006 through 2014). In particular, the Company disagrees with the proposed assessment dated December 12, 2016 from the State of New York and attended a conciliation conference with the New York State Department of Taxation and Finance Audit section on June 7, 2017. No settlement was reached at the conference and the proposed assessment was sustained. As such, in a revised letter dated November 30, 2017, the Company received from the State of New York a revised assessment related to tax years 2006-2009 for approximately $5,097, inclusive of approximately $2,419 of interest. The Company has appealed the assessment with the New York State Division of Tax Appeals. On November 17, 2017, the Company was notified that the State of New York proposed an adjustment in the amount of approximately $3,906 for the years 2010 to 2014, inclusive of approximately $757 in interest. The Company is also under examination in New York City (2006 through 2014). New York City Department of Finance has proposed an audit change notice to the Company dated May 2, 2018, for the tax years ended December 31, 2006 through December 31, 2009 for proposed general corporation tax liability in the amount of $4,797 and $4,138 in interest. The Company has responded stating its disagreement to the proposed assessment and the Company has consented to extend such assessment period through December 31, 2018. The Company has not recorded a tax reserve related to these proposed assessments. It is difficult to predict the final outcome or timing of resolution of any particular matter regarding these examinations. An estimate of the reasonably possible changes to unrecognized tax benefits within the next 12 months cannot be made. In March 2018, Commonwealth of Massachusetts began an audit of state tax filing of the company for the state of Massachusetts for the period ending December 31, 2014 through December 31, 2016. The Company has agreed to extend the assessment period for state of Massachusetts through March 31, 2019. |
Commitments and Contingencies |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies On February 7, 2007, in an action styled White Plains Plaza Realty, LLC v. TSI LLC et al., the landlord of one of TSI LLC’s former health and fitness clubs filed a lawsuit in the Appellate Division, Second Department of the Supreme Court of the State of New York against it and two of its health club subsidiaries alleging, among other things, breach of lease in connection with the decision to close the club located in a building owned by the plaintiff and leased to a subsidiary of TSI LLC, the tenant, and take additional space in a nearby facility leased by another subsidiary of TSI LLC. Following a determination of an initial award, which TSI LLC and the tenant have paid in full, the landlord appealed the trial court’s award of damages, and on August 29, 2011, an additional award (amounting to approximately $900) (the “Additional Award”), was entered against the tenant, which has recorded a liability. Separately, TSI LLC is party to an agreement with a third-party developer, which by its terms provides indemnification for the full amount of any liability of any nature arising out of the lease described above, including attorneys’ fees incurred to enforce the indemnity. As a result, the developer reimbursed TSI LLC and the tenant the amount of the initial award in installments over time and also agreed to be responsible for the payment of the Additional Award, and the tenant has recorded a receivable related to the indemnification for the Additional Award. The developer and the landlord are currently litigating the payment of the Additional Award and judgment was entered against the developer on June 5, 2013, in the amount of approximately $1,045, plus interest, which judgment was upheld by the appellate court on April 29, 2015. TSI LLC does not believe it is probable that TSI LLC will be required to pay for any amount of the Additional Award. In addition to the litigation discussed above, the Company is involved in various other lawsuits, claims and proceedings incidental to the ordinary course of business, including personal injury, construction matters, employee and member relations claims (three of which purport to represent a class) and landlord tenant disputes. The results of litigation are inherently unpredictable. Any claims against the Company, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time and result in diversion of significant resources. The results of these other lawsuits, claims and proceedings cannot be predicted with certainty. The Company establishes accruals for loss contingencies when it has determined that a loss is probable and that the amount of loss, or range of loss, can be reasonably estimated. Any such accruals are adjusted thereafter as appropriate to reflect changes in circumstances. The Company concluded that an accrual for any such matters is not required as of June 30, 2018. The Company assigned its interest, and is contingently liable, under a real estate lease. This lease expires in 2020. As of June 30, 2018, the undiscounted payments the Company could be required to make in the event of non-payment by the primary lessee was approximately $1,262. The Company has not recorded a liability with respect to this guarantee obligation as of June 30, 2018 as it concluded that payment under this lease guarantee was not probable. |
Recent Accounting Pronouncements (Policies) |
6 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |||||||||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2017, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The updated standard expands the range of transactions that qualify for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess effectiveness. It is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting, and increase the transparency as to the scope and results of hedging programs. This standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s financial statements. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (A Consensus of the FASB Emerging Issues Task Force).” This ASU provides specific guidance over eight identified cash flow issues. This standard is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted. The Company adopted the updated guidance for the fiscal year beginning January 1, 2018 with no material impact on the Company’s financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This standard is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of this standard is permitted. The Company is currently in the process of evaluating its existing lease portfolio, including accumulating all of the necessary information required to properly account for the leases under the new standard. Additionally, the Company is implementing an enterprise-wide lease management system to assist in the accounting and is evaluating additional changes to our processes and internal controls to ensure they meet the standard reporting and disclosure requirements. The Company expects the guidance will result in a significant increase in long-term assets and liabilities on its consolidated balance sheets at adoption due to the recording of right-of-use assets and corresponding lease liabilities. In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (Topic 606). On January 1, 2018, the Company adopted FASB Accounting Standards Codification (“ASC”) Topic 606 and all the related amendments (the “new revenue standard”) using the modified retrospective method. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. Refer to Note 3 - Revenue for further detail. |
||||||||||||
Revenue Recognition | Revenue Recognition Membership dues: The Company generally receives one-time non-refundable joining fees and monthly dues from its members. The Company also offers paid-in-full memberships giving members the option to pay their membership dues in advance. The Company offers both month-to-month and commit memberships. Members can cancel their membership with a fee charged to those members still under contract. Membership dues are recognized in the period in which access to the club is provided. The Company’s membership plans allow for club members to elect to pay a per visit fee to use non-home clubs. These usage fees are recorded to membership revenue in the month the usage occurs. Initiation and processing fees: Initiation and processing fees, as well as related direct and incremental expenses of membership acquisition, which may include sales commissions, bonuses and related taxes and benefits, are deferred and recognized, on a straight-line basis, in operations over the estimated average membership life or 12 months to the extent these costs are related to the first annual fee paid within one month of enrollment. Annual fees are amortized over 12 months. The estimated average membership life was 26 months for each of the three and six months ended June 30, 2018 and the full-year of 2017. The Company monitors factors that might affect the estimated average membership life including retention trends, attrition trends, membership sales volumes, membership composition, competition, and general economic conditions, and adjusts the estimate as necessary on an annual basis. Personal training revenue: The Company recognizes revenue from personal training sessions as the services are performed (i.e., when the session occurs). Unused personal training sessions expire after a set, disclosed period of time after purchase and are not refundable or redeemable by the member for cash. The Company had approximately $12,407 and $12,456 of unused and expired personal training sessions that had not been recognized as revenue and was recorded as deferred revenue as of June 30, 2018 and December 31, 2017, respectively. The Company does not believe this amount is subject to the escheatment or abandoned property laws of any of the jurisdictions in which we conduct our business, including the State of New York. It is possible however, that one or more of these jurisdictions may not agree with the Company's position and may claim that the Company must remit all or a portion of these amounts to such jurisdiction. This could have a material adverse effect on the Company's cash flows. The State of New York has informed the Company that it is considering whether the Company is required to remit the amount received by the Company for unused, expired personal training sessions to the State of New York as unclaimed property. For a total of six jurisdictions, the Company has concluded, based on opinions from outside counsel that money held by a company for unused and expired personal training sessions are not escheatable. In addition to the prepaid personal training sessions the Company also offers a personal training membership product which consists of single or multi-session packages ranging from four to 12 sessions per month. These sessions provided by the membership product are at a discount to our stand-alone session pricing and must be used in each respective month. Revenue related to this product is recognized in each respective month. Other ancillary club revenue: Other ancillary club revenue primarily consists of Sports Clubs for Kids, Small Group Training and racquet sports. Revenues are recognized as the services are performed. Fees and other revenue: Fees and other revenue primarily consist of rental income from third party tenants, marketing revenue related to third party marketing in the Company’s club locations, management fees related to clubs the Company manages but does not wholly-own and revenue related to laundry services. Revenue generated from fees and other revenue is generally recognized at the time the related contracted services are performed. The Company generates management fees from certain club facilities that are not wholly-owned, which include three and eight managed sites as of June 30, 2018 and 2017, respectively. Management fees earned for services rendered are recognized at the time the related services are performed. Revenue generated from managed sites was $115 and $252 for the three and six months ended June 30, 2018, respectively, compared to $292 and $587 for the three and six months ended June 30, 2017, respectively. When a revenue agreement involves multiple elements, such as sales of both memberships and services in one arrangement or potentially multiple arrangements, the entire fee from the arrangement is allocated to each respective element based on its relative fair value and recognized when the revenue recognition criteria for each element is met. In connection with advance receipt of fees or dues, the Company was required to maintain bonds totaling $3,428 and $2,658 as of June 30, 2018 and December 31, 2017, respectively. |
||||||||||||
Derivative Financial Instruments | When the Company’s derivative instrument was executed, hedge accounting was deemed appropriate and it was designated as a cash flow hedge at inception with re-designation being permitted under ASC 815, Derivatives and Hedging. Interest rate swaps were designated as cash flow hedges for accounting purposes since they were being used to transform variable interest rate exposure to fixed interest rate exposure on a recognized liability (debt). The Company performed a quarterly assessment of the hedge effectiveness of the hedge relationship and measured and recognized any hedge ineffectiveness in the condensed consolidated statements of operations. For the three and six months ended June 30, 2018 (through May 15, 2018, the maturity date) and 2017, hedge ineffectiveness was evaluated using the hypothetical derivative method and there was no hedge ineffectiveness noted. Accounting guidance on fair value measurements specified a hierarchy of valuation techniques based on whether the inputs to those valuation techniques were observable or unobservable. Observable inputs reflected market data obtained from independent sources, while unobservable inputs reflected the Company’s market assumptions. These two types of inputs created the following fair value hierarchy:
This hierarchy required the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. |
||||||||||||
Goodwill and Other Intangibles | The Company’s annual goodwill impairment test for the Switzerland region as of February 28, 2018 was performed by comparing the fair value of the Company’s reporting unit with its carrying amount and then recognizing an impairment charge, as necessary, for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit. The estimated fair value was determined by using an income approach. The income approach was based on discounted future cash flows and required significant assumptions, including estimates regarding revenue growth rates, operating margins, weighted average cost of capital, and future economic and market conditions. The February 28, 2018 annual impairment test supported the goodwill balance and as such, no impairment of goodwill was required. |
Revenue (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition and Deferred Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impact of ASC 606 | In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our condensed consolidated balance sheet and statements of operations was as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following table presents our revenue by type:
|
Long-Term Debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Long-Term Debt |
|
Derivative Financial Instruments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Aggregate Fair Value of Derivative Financial Instrument | The following table presents the aggregate fair value of the Company’s derivative financial instrument:
|
Earnings (Loss) Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Error Corrections and Prior Period Adjustments | The effects of the revision had the following impacts for the respective periods:
|
Stock-Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Schedule of Employee Stock Purchase Plan Valuation Assumptions | It was estimated by applying the Black-Scholes option-pricing model to the purchase period in the offering period using the following assumptions:
|
Goodwill and Other Intangibles (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | The changes in the carrying amount of goodwill from December 31, 2017 through June 30, 2018 are detailed in the chart below:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite Lived Intangible Assets | Intangible assets are as follows:
|
Acquisitions (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Assets Acquired | The following table summarizes the allocation of the purchase price to the fair value of the assets and liabilities acquired. The purchase price allocation presented below has been prepared on a preliminary basis and changes to the preliminary purchase price allocations may occur as additional information concerning asset and liability valuations are finalized.
The following table summarizes the allocation of the purchase price to the fair value of the assets and liabilities acquired. The purchase price allocation presented below has been prepared on a preliminary basis and changes to the preliminary purchase price allocations may occur as additional information concerning asset and liability valuations are finalized.
The purchase price allocation presented below has been prepared on a preliminary basis and changes to the preliminary purchase price allocations may occur as additional information concerning asset and liability valuations are finalized.
The purchase price allocation presented below has been prepared on a preliminary basis and changes to the preliminary purchase price allocations may occur as additional information concerning asset and liability valuations are finalized.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unaudited Pro Forma Results | The following table provides the Company’s consolidated unaudited pro forma revenues, net income and net income per basic and diluted common share had the results of the acquired businesses’ operations been included in its operations commencing on January 1, 2017, based on available information related to the respective operations. This pro forma information is not necessarily indicative either of the combined results of operations that actually would have been realized by the Company had the acquisitions been consummated at the beginning of the period for which the pro forma information is presented, or of future results and does not account for any operational improvements to be made by the Company post-acquisition.
|
Revenue - Impact of ASC 606 (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Asset | |||||
Deferred membership costs | $ 2,522 | $ 2,522 | $ 959 | ||
Equity | |||||
Accumulated deficit | (71,559) | (71,559) | $ (74,893) | ||
Expenses | |||||
Payroll and related | 42,396 | $ 37,058 | 81,870 | $ 74,443 | |
Accounting Standards Update 2014-09 [Member] | Balances without adoption of ASC 606 [Member] | |||||
Asset | |||||
Deferred membership costs | 792 | 792 | |||
Equity | |||||
Accumulated deficit | (73,289) | (73,289) | |||
Expenses | |||||
Payroll and related | 42,299 | 81,997 | |||
Accounting Standards Update 2014-09 [Member] | Effect of change Increase/(Decrease) [Member] | |||||
Asset | |||||
Deferred membership costs | 1,730 | 1,730 | |||
Equity | |||||
Accumulated deficit | 1,730 | 1,730 | |||
Expenses | |||||
Payroll and related | $ 97 | $ (127) |
Long-Term Debt - Schedule of Long-Term Debt (Details) - USD ($) |
Jun. 30, 2018 |
Dec. 31, 2017 |
Nov. 15, 2013 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Less: Current portion due within one year | $ (12,082,000) | $ (2,082,000) | |
Long-term portion | 183,561,000 | 193,947,000 | |
Secured Debt [Member] | 2013 Term Loan Facility [Member] | |||
Debt Instrument [Line Items] | |||
2013 Term Loan Facility outstanding principal balance | 198,877,000 | 199,918,000 | $ 325,000,000 |
Less: Unamortized discount | (2,429,000) | (2,912,000) | $ (1,625,000) |
Less: Deferred financing costs | (805,000) | (977,000) | |
Less: Current portion due within one year | (12,082,000) | (2,082,000) | |
Long-term portion | $ 183,561,000 | $ 193,947,000 |
Mortgage and Term Loan (Details) |
Apr. 24, 2018
USD ($)
payment
|
May 31, 2017
USD ($)
|
---|---|---|
Debt Instrument [Line Items] | ||
Debt instrument, face amount | $ 5,000,000 | |
Debt instrument, stated interest rate (as a percent) | 9.55% | |
Dixie Highway Realty Mortgage [Member] | ||
Debt Instrument [Line Items] | ||
Minimum required cash balance, operating account | $ 500,000 | |
Mortgage Loan Facility [Member] | Dixie Highway Realty Mortgage [Member] | ||
Debt Instrument [Line Items] | ||
Debt instrument, face amount | $ 1,880,000 | |
Debt instrument, stated interest rate (as a percent) | 5.46% | |
Debt instrument, number of monthly payments | payment | 120 | |
Debt instrument, term | 25 years | |
Term Loan [Member] | Dixie Highway Realty Mortgage [Member] | ||
Debt Instrument [Line Items] | ||
Debt instrument, face amount | $ 500,000 | |
Debt instrument, stated interest rate (as a percent) | 5.30% | |
Debt instrument, number of monthly payments | payment | 60 |
Derivative Financial Instruments (Details) - USD ($) |
3 Months Ended | 6 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
Nov. 15, 2013 |
|
Credit Derivatives [Line Items] | ||||||
Hedge ineffectiveness | $ 0 | $ 0 | $ 0 | $ 0 | ||
Interest rate swap liability | 0 | 0 | $ 184,000 | |||
Gain recognized in other comprehensive income | 104,000 | |||||
November 2013 Agreement [Member] | ||||||
Credit Derivatives [Line Items] | ||||||
Notional amount of interest rate swap | $ 160,000,000 | |||||
Amount of current outstanding principal converted | $ 160,000,000 | |||||
Fixed rate of derivative | 0.884% | |||||
Derivative, basis spread on variable rate | 3.50% | |||||
Derivative floor interest rate | 1.00% | |||||
Level 1 [Member] | ||||||
Credit Derivatives [Line Items] | ||||||
Interest rate swap liability | 0 | 0 | 0 | |||
Level 2 [Member] | ||||||
Credit Derivatives [Line Items] | ||||||
Interest rate swap liability | 0 | 0 | 184,000 | |||
Level 3 [Member] | ||||||
Credit Derivatives [Line Items] | ||||||
Interest rate swap liability | $ 0 | $ 0 | $ 0 |
Related Party (Details) - Firm [Member] - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
May 01, 2017 |
|
Related Party Transaction [Line Items] | |||||
Legal fees | $ 67,000 | $ 52,000 | $ 134,000 | $ 52,000 | |
Firm Retainer [Member] | |||||
Related Party Transaction [Line Items] | |||||
Monthly retainer fee payable | $ 21,000 |
Concentration of Credit Risk (Details) $ in Thousands |
6 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2018
USD ($)
financial_institution
|
Dec. 31, 2017
USD ($)
|
Jun. 30, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Risks and Uncertainties [Abstract] | ||||
Number of financial institutions with cash deposits held (more than 1) | financial_institution | 1 | |||
Cash and cash equivalents held at one financial institution | $ 41,691 | |||
Cash and cash equivalents | $ 58,611 | $ 30,321 | $ 67,392 | $ 45,596 |
Earnings (Loss) Per Share (Details) - $ / shares |
3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Sep. 30, 2017 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Earnings Per Share [Abstract] | ||||||||||
Weighted average number of common shares outstanding — basic (in shares) | 25,844,061 | 25,388,602 | 25,245,262 | 25,238,291 | 25,042,323 | 25,776,919 | 25,140,848 | 25,176,035 | 25,229,614 | 24,705,092 |
Effect of dilutive share based awards (in shares) | 740,051 | 637,107 | 0 | 0 | 0 | 739,045 | 0 | 0 | 719,256 | 506,364 |
Weighted average number of common shares outstanding — diluted (in shares) | 26,584,112 | 26,025,709 | 25,245,262 | 25,238,291 | 25,042,323 | 26,515,964 | 25,140,848 | 25,176,035 | 25,948,870 | 25,211,456 |
Earnings (loss) per share: | ||||||||||
Basic (in dollars per share) | $ 0.02 | $ 0.83 | $ (0.53) | $ (0.02) | $ (0.12) | $ 0.07 | $ (0.13) | $ (0.66) | $ 0.17 | $ 0.33 |
Diluted (in dollars per share) | $ 0.02 | $ 0.81 | $ (0.53) | $ (0.02) | $ (0.12) | $ 0.07 | $ (0.13) | $ (0.66) | $ 0.17 | $ 0.32 |
Antidilutive shares (in shares) | 0 | 43,033 | 0 | 47,362 |
Earnings (Loss) Per Share - Error Corrections and Prior Period Adjustments (Details) - $ / shares |
3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Sep. 30, 2017 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||||||
Weighted average number of common shares outstanding — basic (in shares) | 25,844,061 | 25,388,602 | 25,245,262 | 25,238,291 | 25,042,323 | 25,776,919 | 25,140,848 | 25,176,035 | 25,229,614 | 24,705,092 |
Effect of dilutive share based awards (in shares) | 740,051 | 637,107 | 0 | 0 | 0 | 739,045 | 0 | 0 | 719,256 | 506,364 |
Weighted average number of common shares outstanding — diluted (in shares) | 26,584,112 | 26,025,709 | 25,245,262 | 25,238,291 | 25,042,323 | 26,515,964 | 25,140,848 | 25,176,035 | 25,948,870 | 25,211,456 |
Earnings (loss) per share: | ||||||||||
Basic (in dollars per share) | $ 0.02 | $ 0.83 | $ (0.53) | $ (0.02) | $ (0.12) | $ 0.07 | $ (0.13) | $ (0.66) | $ 0.17 | $ 0.33 |
Diluted (in dollars per share) | $ 0.02 | $ 0.81 | $ (0.53) | $ (0.02) | $ (0.12) | $ 0.07 | $ (0.13) | $ (0.66) | $ 0.17 | $ 0.32 |
As Reported [Member] | ||||||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||||||
Weighted average number of common shares outstanding — basic (in shares) | 26,825,605 | 26,683,425 | 26,692,919 | 26,610,215 | 26,651,796 | 26,662,455 | 26,703,577 | 25,568,371 | ||
Effect of dilutive share based awards (in shares) | 637,107 | 0 | 0 | 0 | 0 | 0 | 719,256 | 506,364 | ||
Weighted average number of common shares outstanding — diluted (in shares) | 27,462,712 | 26,683,425 | 26,692,919 | 26,610,215 | 26,651,796 | 26,662,455 | 27,422,833 | 26,074,735 | ||
Earnings (loss) per share: | ||||||||||
Basic (in dollars per share) | $ 0.78 | $ (0.50) | $ (0.02) | $ (0.11) | $ (0.13) | $ (0.62) | $ 0.16 | $ 0.31 | ||
Diluted (in dollars per share) | $ 0.76 | $ (0.50) | $ (0.02) | $ (0.11) | $ (0.13) | $ (0.62) | $ 0.16 | $ 0.31 | ||
Adjustment [Member] | ||||||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||||||
Weighted average number of common shares outstanding — basic (in shares) | (1,437,003) | (1,438,163) | (1,454,628) | (1,567,892) | (1,510,948) | (1,486,420) | (1,473,963) | (863,279) | ||
Effect of dilutive share based awards (in shares) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
Weighted average number of common shares outstanding — diluted (in shares) | (1,437,003) | (1,438,163) | (1,454,628) | (1,567,892) | (1,510,948) | (1,486,420) | (1,473,963) | (863,279) | ||
Earnings (loss) per share: | ||||||||||
Basic (in dollars per share) | $ 0.05 | $ (0.03) | $ 0.00 | $ (0.01) | $ 0.00 | $ (0.04) | $ 0.01 | $ 0.02 | ||
Diluted (in dollars per share) | $ 0.05 | $ (0.03) | $ 0.00 | $ (0.01) | $ 0.00 | $ (0.04) | $ 0.01 | $ 0.01 |
Stock-Based Compensation (Details) - 2006 Plan [Member] - shares |
1 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
Jun. 30, 2018 |
Apr. 30, 2015 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares authorized | 6,500,000 | 4,500,000 | 3,500,000 | |
Additional shares authorized | 2,000,000 | 1,000,000 | ||
Expiration period (in years) | 10 years | |||
Shares available to be issued | 2,056,373 | |||
Stock options outstanding (in shares) | 35,973 | |||
Shares of restricted stock outstanding | 1,344,625 |
Stock-Based Compensation - Stock Option Awards (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Employee Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 0 | $ 5,000 | $ 10,000 | |
Employee Stock Purchase Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 1,000 | $ 1,000 |
Stock-Based Compensation - Stock Grants (Details) - Common Stock Grants [Member] - USD ($) $ / shares in Units, $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Feb. 01, 2018 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares (in shares) | 52,460 | ||
Price per share (in dollars per share) | $ 6.1 | ||
Share-based compensation expense | $ 320 | $ 368 |
Stock-Based Compensation - Management Stock Purchase Plan (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Management Stock Purchase Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 0 | $ 0 | $ 0 | $ 0 |
Maximum cash compensation allowed towards purchase of stock, percent | 20.00% | |||
Maximum cash compensation allowed towards purchase of stock, amount | $ 200,000 | |||
Requisite service period | 2 years | |||
2006 Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Percent of shares granted as a result of satisfying requisite period | 50.00% |
Stock-Based Compensation - Employee Stock Purchase Plan (Details) - Employee Stock Purchase Plan [Member] - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 15, 2018 |
Jun. 30, 2018 |
Jun. 30, 2018 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares authorized | 800,000 | ||
Purchase price of common stock, percent | 85.00% | ||
Shares available to be issued | 800,000 | 800,000 | |
Share-based compensation expense | $ 1 | $ 1 | |
Grant price (in dollars per share) | $ 11.6 | ||
Expected term | 3 months | ||
Expected volatility | 45.89% | ||
Risk-free interest rate | 1.92% | ||
Expected dividend yield | 0.00% | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 2.82 |
Goodwill and Other Intangibles - Additional Information (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Feb. 28, 2018 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Goodwill [Line Items] | |||||
Goodwill added during period | $ 3,585,000 | ||||
Impairment of goodwill | $ 0 | ||||
Intangible asset amortization expense | $ 556,000 | $ 7,000 | 1,034,000 | $ 12,000 | |
California [Member] | |||||
Goodwill [Line Items] | |||||
Goodwill added during period | $ 1,385,000 | $ 1,385,000 |
Goodwill and Other Intangibles - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 20,062 | $ 16,894 |
Accumulated Amortization | (12,793) | (11,760) |
Net Intangible Assets | 7,269 | 5,134 |
Membership Lists [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 13,545 | 12,744 |
Accumulated Amortization | (12,145) | (11,577) |
Net Intangible Assets | 1,400 | 1,167 |
Favorable Lease Commitment [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 2,790 | 2,350 |
Accumulated Amortization | (352) | (136) |
Net Intangible Assets | 2,438 | 2,214 |
Non-compete Agreement [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,300 | 900 |
Accumulated Amortization | (145) | 0 |
Net Intangible Assets | 1,155 | 900 |
Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 2,427 | 900 |
Accumulated Amortization | (151) | (47) |
Net Intangible Assets | $ 2,276 | $ 853 |
Acquisitions - Unaudited Pro Forma Results (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Business Combinations [Abstract] | ||||
Revenue | $ 118,089 | $ 112,959 | $ 230,960 | $ 226,005 |
Net income (loss) | $ 242 | $ (289) | $ 1,012 | $ (4,102) |
Basic (in dollars per share) | $ 0.01 | $ (0.02) | $ 0.04 | $ (0.16) |
Diluted (in dollars per share) | $ 0.01 | $ (0.02) | $ 0.04 | $ (0.16) |
Acquisitions - Asset Acquisitions (Details) - USD ($) $ in Thousands |
1 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jan. 31, 2018 |
Nov. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Asset Acquisition [Line Items] | ||||
Assets acquired | $ 3,989 | $ 0 | ||
Existing Club In Florida Region [Member] | ||||
Asset Acquisition [Line Items] | ||||
Assets acquired | $ 4,039 | |||
Existing Club In Florida Region [Member] | Building [Member] | ||||
Asset Acquisition [Line Items] | ||||
Assets acquired | 2,691 | |||
Existing Club In Florida Region [Member] | Land [Member] | ||||
Asset Acquisition [Line Items] | ||||
Assets acquired | $ 1,021 | |||
Building, Land, And Single Health Club [Member] | ||||
Asset Acquisition [Line Items] | ||||
Assets acquired | $ 12,600 | |||
Building, Land, And Single Health Club [Member] | Building [Member] | ||||
Asset Acquisition [Line Items] | ||||
Assets acquired | 9,675 | |||
Building, Land, And Single Health Club [Member] | Land [Member] | ||||
Asset Acquisition [Line Items] | ||||
Assets acquired | $ 2,675 |
Commitments and Contingencies (Details) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Jun. 05, 2013
USD ($)
|
Jun. 30, 2018
USD ($)
lawsuit
|
Aug. 29, 2011
USD ($)
|
|
Loss Contingencies [Line Items] | |||
Number of class action lawsuits | lawsuit | 3 | ||
Potential lease guarantor obligations, undiscounted payments | $ 1,262 | ||
Action Styled White Plains Realty Vs Town Sports International [Member] | |||
Loss Contingencies [Line Items] | |||
Additional damages | $ 900 | ||
Damages awarded | $ 1,045 |
O<)"B@"S/#)H,]5*
M)JQ0RJQDHA?O,SZ<"JER&1BO>\E5+[GTPJ;&)I<96V-R-J(*308FSW0WD.I0
M2J4?0:54#@;O^=!55 XA\FP@@DB0;HB[ ?FJT DW4F6!(J,&=%8"2C>&NT$)
M#\NY7BBJW.81,SIX09*7.'EGS74WE'/+A:(R/L8[T-$+DKW$V0L*5ZW-.!D+
M34?.^ \*>D=)#0T?I'\TXR>8Z[FF9"[^"UQ 8GA0@CDJ(UU<234X;]3,
M@E(4?YUVH>,^3C?9]0S;!J0S(%T =S$/FQ)%Y1^XYV5NS4CLU/N>AR=.#BGV
MI@K.V(IXA^(=>B]E '(]3B!UL,!;4/QP.>[31FD^%-/_\@MGSC
MXB]02P,$% @ 68/[3-*8^O;& 0 -P0 !D !X;"]W;W)K
M\5O2PP!]J0 "M 7_40+0&XE$#V1K(1PU4
M:Z >+3IH#8)'(X2M0?AH!-.2K7+DW41^;M*)34%:7M,E==O-HC(:#_/LZN3-
MRCE'U0*E V-EG%>C=2/7%TWK%6;T; ^TF3H(*F(&3=-]^-E!$[/-$WP3L/'<\=S&_
MV*NK:%^Z$^?2>ZW*NEO[)RF;^R#H=B=>L>Y.-+Q6WQQ$6S&IANTQZ)J6LWT?
M5)4!"<,DJ%A1^YM5/_?8;E;B+,NBYH^MUYVKBK5_'W@IKFL?_+>)I^)XDGHB
MV*P:=N0_N/S9/+9J%$Q9]D7%ZZX0M=?RP]K_"/=;0G5 K_A5\&LWN_=T*<]"
MO.C!U_W:#[4C7O*=U"F8NESXEI>ESJ1\_!F3^M,S=>#\_BW[Y[YX5E]1E'+"H#2O*2J%U.'$4)336H_DQ;.\/.6%
MBF_IR2Q&@$*H%47%A53X :4HGVIO$"^*2KT4EN<%@M_F!65&]GE!)K(*\U\Q
M**,LJO@U@P(I\0ZUX6!@_4@MPHB$ >6F,#>@J;;XT5HQ*! "+";'P%)G\0[$
MP&2L@1') %8:'T%2 5O
M11!E[NQ(W-3[7L0GWATY]J:*SM2*=(?B/7JOY>XVR]DU$LTQIRF&KV.6"(;L
M2PJ^E>+$_X+S;?A^4^$^P?>_*?Q'_L,FP2$1'/Y;XE;,GRK9JJ<:7)NFR9/*
M#B9-\LJ[#.P#3V_R*WR:]D_"M=)XU,&9VQ%O//)6^^]%#SA
M&;L$HCGF.,7P5>:+TB3G&L>
MD"8]USP"C99'3=3.R7%B!)P8T1N0IP82BPU(:$#V!M2) 1G'7K0'C>TUVX,3
MF<2QKWL(=3&^%05O18%;(6]Q5.!"Q_'9K9PYTM"1!HZ$YPAIF)4QT(D!!KPM
M>X\T&CNQT(D%!OS];/&483<)=), -QX2=TG@1HXN30H]I1^BG@(-(G 9-,*64#)DPPB= 9<28PPR0GA(S9(P ?D9]A0_JDC<<6
MF3" !.@BX4^POC2=$":0 %XD?2](I!@_&$("%)+V_808BO&IPR@28)&,[RR$
MD<:=81H)X$C6WQ5IN"M&G0D,KHB!,X9]@<$5=#D(@BFH"$>?_4'4I9I?JWG%
M9&Z!H16@\@J_\D(1,7XPV0*0+01C N,J](1IQ2P*A%DPK29(J=R-8A(%(#&<
M4X0K0[S $ H H>#Z-HR62"=T;A@8"8 )HH4B)EJ)J9*@' IFLTM,E9S2IS*-
M*D AV$Z'0'<;%B6B2BQ3 F,"UR BT2TR(!+<+/NU#$Y$N)>9&(EY0Q@5&0
MR81H,0H25)DP6B"2W.,%YD4!%"233!5&04TH, JCH$"!D5[O*D\M,VD8_X91 %G8"+TG5C;!
M0G[/K!%&JH[Q3"5=.3Y:SL2W//CW,:8( 8J9(0@/[YEGFU&@FKF-L%" >>O-
M=]D?:/5 ONO^LC=8OA*??88W$ZL]L-LN4 +WP'$/O/; [W)0H!T;1M1,VI0B
M LZ)!"TWQ4 6!)* .9YAH,^%+P'XC((L\$,0>HZ!A/L,3OH" Y62(04"+C&0
MB4F8T1(&@O,>\E%DC.+"0<3/>RU]&JEU@CH6CH"PD$LS%!)),
V95)>@N:J.C$E0-MTGY;!0[7&85'"4>ABK,>^:1#>1K.W[GS,TX>PO
M4$L#!!0 ( %F#^TQ?=I6+,@( +<& 9 >&PO=V]R:W-H965T-=!/ ^! F21>+V70PTLKN MRM
M^E4Z4NV MR(@GW"+-QI NHCO%@.-N<5[#?C-AJ0C?1?PPPW%)]SB1PJ0,^6[
MQ4"NV^CB*VYN>C^HV)>-#)ZXTA<"^]G><:Z8%HQO]/(=].5R&%1LI\QKH=]%
M=\/J!HJW_>TQ&JZPB_]02P,$% @ 68/[3.$$UL?E 0 \@0 !D !X
M;"]W;W)K
B%M_XRZUOB6>B
M[?5=ZEV^[YG?$#V7#7,.A(O+6%V9)T(X%L6#F3AIA6C3XZ3")RZ'B1C3OEGU
M$T[:H0][XY^!]"]02P,$% @ 68/[3+BT1)._ @ V H !D !X;"]W
M;W)K