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) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common stock, $0.001 par value per share | CLUB | Nasdaq Global Market |
Large accelerated filer | ¨ | Accelerated filer | ¨ | |||
Non-accelerated filer | ý | Smaller reporting company | ý | |||
Emerging growth company | ¨ |
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Item 2. | ||
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Item 4. | ||
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Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
March 31, 2020 | December 31, 2019 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 24,669 | $ | 18,808 | |||
Accounts receivable (less allowance for doubtful accounts of $6,660 and $4,552 as of March 31, 2020 and December 31, 2019, respectively) | 1,798 | 2,980 | |||||
Prepaid corporate income taxes | 9,434 | 865 | |||||
Prepaid expenses and other current assets | 18,668 | 10,148 | |||||
Total current assets | 54,569 | 32,801 | |||||
Fixed assets, net | 96,175 | 146,884 | |||||
Operating lease right-of-use assets, net | 484,138 | 563,372 | |||||
Goodwill | 16,569 | 32,988 | |||||
Intangible assets, net | 6,538 | 8,220 | |||||
Deferred membership costs | 976 | 1,009 | |||||
Other assets | 8,147 | 9,004 | |||||
Total assets | $ | 667,112 | $ | 794,278 | |||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | 190,917 | $ | 178,433 | |||
Current portion of mortgage and term loan | 197 | 197 | |||||
Current portion of operating lease liabilities | 74,106 | 74,279 | |||||
Accounts payable | 8,729 | 4,458 | |||||
Accrued expenses | 26,613 | 34,568 | |||||
Accrued interest | 24 | 27 | |||||
Deferred revenue | 51,775 | 36,047 | |||||
Total current liabilities | 352,361 | 328,009 | |||||
Long-term debt | 3,864 | 4,358 | |||||
Long-term mortgage and term loan | 4,988 | 5,039 | |||||
Long-term operating lease liabilities | 516,681 | 532,977 | |||||
Deferred revenue | 75 | 89 | |||||
Other liabilities | 11,909 | 12,151 | |||||
Total liabilities | 889,878 | 882,623 | |||||
Commitments and Contingencies (Note 15) | |||||||
Stockholders’ deficit: | |||||||
Preferred stock, $0.001 par value; no shares issued and outstanding at both March 31, 2020 and December 31, 2019 | |||||||
Common stock, $0.001 par value; issued and outstanding 29,481,474 and 29,425,557 shares at March 31, 2020 and December 31, 2019, respectively | 27 | 26 | |||||
Additional paid-in capital | 2,979 | 1,919 | |||||
Accumulated other comprehensive income | 1,924 | 1,909 | |||||
Accumulated deficit | (228,093 | ) | (91,770 | ) | |||
Total Town Sports International Holdings, Inc. and Subsidiaries stockholders’ deficit | (223,163 | ) | (87,916 | ) | |||
Non-controlling interests | 397 | (429 | ) | ||||
Total stockholders’ deficit | (222,766 | ) | (88,345 | ) | |||
Total liabilities and stockholders’ deficit | $ | 667,112 | $ | 794,278 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Revenues: | |||||||
Club operations | $ | 96,809 | $ | 115,140 | |||
Fees and other | 1,270 | 1,458 | |||||
98,079 | 116,598 | ||||||
Operating Expenses: | |||||||
Payroll and related | 41,285 | 45,323 | |||||
Club operating | 54,201 | 53,576 | |||||
General and administrative | 9,177 | 6,870 | |||||
Depreciation and amortization | 8,704 | 9,585 | |||||
Impairment of fixed assets | 46,822 | — | |||||
Impairment of right-of-use assets | 62,865 | — | |||||
Impairment of intangible assets | 17,408 | — | |||||
240,462 | 115,354 | ||||||
Operating (loss) income | (142,383 | ) | 1,244 | ||||
Interest expense | 3,016 | 3,452 | |||||
Interest income | (8 | ) | (28 | ) | |||
Equity in the earnings of investees | (30 | ) | (55 | ) | |||
Loss before (benefit) provision for corporate income taxes | (145,361 | ) | (2,125 | ) | |||
(Benefit) provision for corporate income taxes | (8,598 | ) | 74 | ||||
Net loss including non-controlling interests | (136,763 | ) | (2,199 | ) | |||
Less: net loss attributable to non-controlling interests | (440 | ) | (150 | ) | |||
Net loss attributable to Town Sports International Holdings, Inc. and subsidiaries | $ | (136,323 | ) | $ | (2,049 | ) | |
Loss per share: | |||||||
Basic | $ | (4.98 | ) | $ | (0.08 | ) | |
Diluted | $ | (4.98 | ) | $ | (0.08 | ) | |
Weighted average number of shares used in calculating loss per share: | |||||||
Basic | 27,381,231 | 26,443,946 | |||||
Diluted | 27,381,231 | 26,443,946 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Statements of Comprehensive (Loss) Income: | |||||||
Net loss including non-controlling interests | $ | (136,763 | ) | $ | (2,199 | ) | |
Other comprehensive (loss) income, net of tax: | |||||||
Foreign currency translation adjustments, net of tax of $0, for each of the three months ended March 31, 2020 and 2019 | (15 | ) | 11 | ||||
Total other comprehensive (loss) income, net of tax | (15 | ) | 11 | ||||
Total comprehensive (loss) income including non-controlling interests | (136,778 | ) | (2,188 | ) | |||
Comprehensive (loss) income attributable to non-controlling interest | (440 | ) | (150 | ) | |||
Total comprehensive (loss) income attributable to Town Sports International Holdings, Inc. and Subsidiaries | $ | (136,338 | ) | $ | (2,038 | ) |
Common Stock ($.001 par) | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Retained Earnings (Deficit) | Total Town Sports International and Subsidiaries Stockholders’ (Deficit) Equity | Non-controlling interests | Total Stockholders’ (Deficit) Equity | ||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||||||
Balance at December 31, 2019 | 29,425,557 | $ | 26 | $ | 1,919 | $ | 1,909 | $ | (91,770 | ) | $ | (87,916 | ) | $ | (429 | ) | $ | (88,345 | ) | |||||||||||
Common stock grants | 114,285 | 1 | 238 | — | — | 239 | — | 239 | ||||||||||||||||||||||
Restricted stock grants | 40,304 | — | — | — | — | — | — | — | ||||||||||||||||||||||
Shares issued under Employee Stock Purchase Plan | 16,926 | — | 6 | — | — | 6 | — | 6 | ||||||||||||||||||||||
Forfeiture of restricted stock | (115,598 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||
Stock-based compensation | — | — | 816 | — | — | 816 | — | 816 | ||||||||||||||||||||||
Net loss | — | — | — | — | (136,323 | ) | (136,323 | ) | (440 | ) | (136,763 | ) | ||||||||||||||||||
Write-off of receivable with partnership interest | — | — | — | — | — | — | 1,266 | 1,266 | ||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | 15 | — | 15 | — | 15 | ||||||||||||||||||||||
Balance at March 31, 2020 | 29,481,474 | 27 | 2,979 | 1,924 | (228,093 | ) | (223,163 | ) | 397 | (222,766 | ) |
Balance at December 31, 2018 | 27,192,154 | 25 | (1,644 | ) | $ | 1,841 | (73,212 | ) | $ | (72,990 | ) | 293 | (72,697 | ) | ||||||||||||||||
Stock option exercises | — | 1 | — | — | — | 1 | — | 1 | ||||||||||||||||||||||
Common stock grants | 53,692 | — | 320 | — | — | 320 | — | 320 | ||||||||||||||||||||||
Restricted stock grants | 713,710 | — | — | — | — | — | — | — | ||||||||||||||||||||||
Shares issued under Employee Stock Purchase Plan | 8,410 | — | 7 | — | — | 7 | — | 7 | ||||||||||||||||||||||
Forfeiture of restricted stock | (9,834 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||
Stock-based compensation | — | — | 805 | — | — | 805 | — | 805 | ||||||||||||||||||||||
Net loss | — | — | — | — | (2,049 | ) | (2,049 | ) | (150 | ) | (2,199 | ) | ||||||||||||||||||
Foreign currency translation adjustment | — | — | — | (11 | ) | — | (11 | ) | — | (11 | ) | |||||||||||||||||||
Balance at March 31, 2019 | 27,958,132 | $ | 26 | $ | (512 | ) | $ | 1,830 | $ | (75,261 | ) | $ | (73,917 | ) | $ | 143 | $ | (73,774 | ) |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Cash flows from operating activities: | |||||||
Net loss including non-controlling interests | $ | (136,763 | ) | $ | (2,199 | ) | |
Adjustments to reconcile net loss including non-controlling interest to net cash provided by operating activities: | |||||||
Depreciation and amortization | 8,704 | 9,585 | |||||
Impairment of fixed assets | 46,822 | — | |||||
Impairment of right of use asset | 62,865 | — | |||||
Impairment of goodwill and intangible assets | 17,408 | — | |||||
Write-off of receivable with partnership interest | 1,266 | — | |||||
Amortization of debt discount | 323 | 250 | |||||
Amortization of debt issuance costs | 129 | 112 | |||||
Non-cash rental expense (income) | 130 | (136 | ) | ||||
Share-based compensation expense | 1,060 | 1,132 | |||||
Net change in certain operating assets and liabilities | 5,708 | 6,238 | |||||
Decrease in deferred membership costs | 33 | 387 | |||||
Landlord contributions to tenant improvements | — | 15 | |||||
Increase in insurance reserves | 576 | 151 | |||||
Other | (2 | ) | (131 | ) | |||
Total adjustments | 145,022 | 17,603 | |||||
Net cash provided by operating activities | 8,259 | 15,404 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (5,543 | ) | (3,873 | ) | |||
Acquisition of business | — | (21,667 | ) | ||||
Net cash used in investing activities | (5,543 | ) | (25,540 | ) | |||
Cash flows from financing activities: | |||||||
Principal payments on 2013 Term Loan Facility | (473 | ) | (520 | ) | |||
Prepayment of debt buy-back on 2013 Term Loan Facility | (8,357 | ) | — | ||||
Proceeds from borrowings on Revolving Loan Facility | 12,500 | (189 | ) | ||||
Principal payments on finance lease obligations | (463 | ) | — | ||||
Principal payments on mortgage and term loan | (51 | ) | (48 | ) | |||
Proceeds from stock option exercises | — | 1 | |||||
Net cash provided by (used in) financing activities | 3,156 | (756 | ) | ||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (11 | ) | (15 | ) | |||
Net increase (decrease) in cash and cash equivalents and restricted cash | 5,861 | (10,907 | ) | ||||
Cash, cash equivalents and restricted cash beginning of period | 21,003 | 50,061 | |||||
Cash, cash equivalents and restricted cash end of period | $ | 26,864 | $ | 39,154 | |||
Summary of the change in certain operating assets and liabilities: | |||||||
Decrease (increase) in accounts receivable | $ | 1,182 | $ | (179 | ) | ||
Increase in prepaid expenses and other current assets | (339 | ) | (347 | ) | |||
(Decrease) increase in accounts payable, accrued expenses and accrued interest | (2,301 | ) | 2,731 | ||||
Change in prepaid corporate income taxes and corporate income taxes payable | (8,548 | ) | 63 | ||||
Increase in deferred revenue | 15,714 | 3,970 | |||||
Net change in certain working capital components | $ | 5,708 | $ | 6,238 | |||
Supplemental disclosures of cash flow information: | |||||||
Cash payments for interest | $ | 2,630 | $ | 3,071 | |||
Cash payments for income taxes | $ | 14 | $ | 25 |
March 31, 2020 | December 31, 2019 | ||||||
Cash and cash equivalents | $ | 24,669 | $ | 18,808 | |||
Restricted cash included in other assets(a) | 2,195 | 2,195 | |||||
Total cash, cash equivalents and restricted cash | $ | 26,864 | $ | 21,003 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Membership dues | $ | 74,592 | $ | 88,823 | |||
Initiation and processing fees | 146 | 429 | |||||
Membership revenue | 74,738 | 89,252 | |||||
Personal training revenue | 16,391 | 19,489 | |||||
Other ancillary club revenue | 5,680 | 6,399 | |||||
Ancillary club revenue | 22,071 | 25,888 | |||||
Fees and other revenue | 1,270 | 1,458 | |||||
Total revenue | $ | 98,079 | $ | 116,598 |
March 31, 2020 | December 31, 2019 | ||||||
2013 Term Loan Facility outstanding principal balance | $ | 177,286 | $ | 177,759 | |||
2013 Revolving Credit Facility borrowings | 12,500 | — | |||||
Finance lease liabilities | 5,784 | 6,248 | |||||
Less: Unamortized discount | (598 | ) | (922 | ) | |||
Less: Deferred financing costs | (191 | ) | (294 | ) | |||
Less: Current portion due within one year | (190,917 | ) | (178,433 | ) | |||
Long-term portion | $ | 3,864 | $ | 4,358 |
Balance Sheet Classification | March 31, 2020 | |||||
Assets | ||||||
Operating lease assets, gross | Operating lease right-of-use assets, net | $ | 634,441 | |||
Accumulated lease expense | Operating lease right-of-use assets, net | (87,438 | ) | |||
Accumulated impairment | Operating lease right-of-use assets, net | (62,865 | ) | |||
Total operating lease assets | Operating lease right-of-use assets, net | 484,138 | ||||
Finance lease assets, gross | Fixed assets, net | 8,842 | ||||
Accumulated depreciation | Fixed assets, net | (2,559 | ) | |||
Total finance lease assets | Fixed assets, net | 6,283 | ||||
Total lease assets | $ | 490,421 | ||||
Liabilities | ||||||
Current | ||||||
Operating leases | Current portion of operating lease liabilities | $ | 74,106 | |||
Finance leases | Current portion of long-term debt | 1,920 | ||||
Non-current | ||||||
Operating leases | Long-term operating lease liabilities | 516,681 | ||||
Finance leases | Long-term debt | 3,864 | ||||
Total lease liabilities | $ | 596,571 |
Statement of Operations Classification | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | ||||||||
Operating lease costs | Club operating | $ | 29,504 | $ | 30,022 | |||||
Amortization of lease assets | Depreciation and amortization | 430 | 259 | |||||||
Interest on lease liabilities | Interest expense | 140 | 54 | |||||||
Finance lease costs | 570 | 313 | ||||||||
Variable lease costs | Club operating | 179 | 210 | |||||||
Sublease income | Fees and other revenue | (632 | ) | 866 | ||||||
Total lease costs | $ | 29,621 | $ | 31,411 |
Operating Leases | Finance Leases | Total | ||||||||||
2020 | $ | 89,357 | $ | 1,781 | $ | 91,138 | ||||||
2021 | 111,432 | 2,364 | 113,796 | |||||||||
2022 | 102,979 | 1,909 | 104,888 | |||||||||
2023 | 94,679 | 545 | 95,224 | |||||||||
2024 | 85,485 | — | 85,485 | |||||||||
2025 and thereafter | 352,563 | — | 352,563 | |||||||||
Total lease payments | 836,495 | 6,599 | 843,094 | |||||||||
Less: imputed interest | (245,708 | ) | (815 | ) | (246,523 | ) | ||||||
Lease liabilities | $ | 590,787 | $ | 5,784 | $ | 596,571 |
Minimum Annual Rental | ||||
Year Ending December 31, | ||||
2020 | $ | 121,113 | ||
2021 | 113,779 | |||
2022 | 104,904 | |||
2023 | 95,261 | |||
2024 | 85,540 | |||
2025 and thereafter | 348,857 | |||
Total | 869,454 |
Minimum Annual Rental | ||||
Year Ending December 31, | ||||
2020 | $ | 2,301 | ||
2021 | 1,841 | |||
2022 | 1,099 | |||
2023 | 362 | |||
2024 | 258 | |||
2025 and thereafter | 514 | |||
Total | 6,375 |
March 31, 2020 | |||
Weighted average remaining lease term | |||
Operating leases | 8.5 years | ||
Finance leases | 3.0 years | ||
Weighted average discount rate | |||
Operating leases | 8.0 | % | |
Finance leases | 9.8 | % |
Three months ended March 31, 2020 | Three months ended March 31, 2019 | |||||||
Cash paid for amounts included in the measurement of lease liabilities | ||||||||
Operating cash flows from operating leases | $ | 29,603 | $ | 29,503 | ||||
Operating cash flows from finance leases | $ | 612 | $ | 54 | ||||
Financing cash flows from finance leases | $ | 1,970 | $ | 189 | ||||
Leased assets obtained in exchange for new operating lease liabilities | $ | 1,548 | $ | 17,812 | ||||
Leased assets obtained in exchange for new finance lease liabilities | $ | 3,937 | $ | 934 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Weighted average number of common shares outstanding — basic | 27,381,231 | 26,443,946 | |||||
Effect of dilutive share based awards | — | — | |||||
Weighted average number of common shares outstanding — diluted | 27,381,231 | 26,443,946 | |||||
Loss per share: | |||||||
Basic | $ | (4.98 | ) | $ | (0.08 | ) | |
Diluted | $ | (4.98 | ) | $ | (0.08 | ) |
March 16, 2020 | ||||
Grant price | $ | 0.74 | ||
Expected term | 3 months | |||
Expected volatility | 112.98 | % | ||
Risk-free interest rate | 0.24 | % | ||
Expected dividend yield | — | % |
New York | Boston | California | Florida | Puerto Rico | Switzerland | Total | |||||||||||||||||||||
Goodwill | $ | 38,371 | $ | 23,938 | $ | 1,584 | $ | 12,704 | $ | 2,648 | $ | 1,175 | $ | 80,420 | |||||||||||||
Changes due to foreign currency exchange rate fluctuations | — | — | — | — | — | (108 | ) | (108 | ) | ||||||||||||||||||
Less: accumulated impairment of goodwill | (31,549 | ) | (15,775 | ) | — | — | — | — | (47,324 | ) | |||||||||||||||||
Balance as of December 31, 2019 | 6,822 | 8,163 | 1,584 | 12,704 | 2,648 | 1,067 | 32,988 | ||||||||||||||||||||
Impairment of goodwill | — | — | — | (12,704 | ) | (2,648 | ) | (1,074 | ) | (16,426 | ) | ||||||||||||||||
Changes due to foreign currency exchange rate fluctuations | — | — | — | — | — | 7 | 7 | ||||||||||||||||||||
Balance as of March 31, 2020 | $ | 6,822 | $ | 8,163 | $ | 1,584 | $ | — | $ | — | $ | — | $ | 16,569 |
As of March 31, 2020 | As of December 31, 2019 | ||||||||||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Impairment | Net Intangible Assets | Gross Carrying Amount | Accumulated Amortization | Impairment | Net Intangible Assets | ||||||||||||||||||||||||
Membership lists | $ | 7,652 | $ | (6,738 | ) | $ | (145 | ) | $ | 769 | $ | 7,652 | $ | (6,385 | ) | — | $ | 1,267 | |||||||||||||
Non-compete agreements | 3,761 | (1,202 | ) | — | 2,559 | 3,761 | (1,013 | ) | — | 2,748 | |||||||||||||||||||||
Trade names(1) | 5,071 | (1,023 | ) | (838 | ) | 3,210 | 5,071 | (866 | ) | — | 4,205 | ||||||||||||||||||||
$ | 16,484 | $ | (8,963 | ) | $ | (983 | ) | $ | 6,538 | $ | 16,484 | $ | (8,264 | ) | $ | — | $ | 8,220 |
(1) | In the second quarter of 2019, the Company discontinued the TMPL trade name and wrote off the remaining net balance of $180. |
February 2019 | |||
Allocation of purchase price: | |||
Fixed Assets | $ | 8,803 | |
Goodwill | 9,976 | ||
Definite lived intangible assets: | |||
Trade name | 2,221 | ||
Membership list | 610 | ||
Non-compete agreement | 1,424 | ||
Operating lease right-of-use assets | 17,812 | ||
Operating lease liabilities | (18,212 | ) | |
Deferred revenue | (967 | ) | |
Total allocation of purchase price | $ | 21,667 |
Brand | Count |
New York Sports Clubs | 99 |
Boston Sports Clubs | 31 |
Washington Sports Clubs | 9 |
Philadelphia Sports Clubs | 5 |
Lucille Roberts | 16 |
Total Woman Gym and Spa | 10 |
Palm Beach Sports Clubs | 3 |
Christi’s Fitness | 1 |
Around the Clock Fitness | 6 |
LIV Fitness | 2 |
New York Sports Clubs - Switzerland | 3 |
185 |
• | 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 76.1% of our total revenue for the three months ended March 31, 2020. 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 three months ended March 31, 2020, we generated 16.7% of our revenue from personal training and 5.8% 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. |
2019 | 2020 | ||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Full Year | Q1 | ||||||||||||
Clubs included in consolidated operating results: | |||||||||||||||||
Clubs operated at beginning of period | 183 | 187 | 188 | 185 | 183 | 184 | |||||||||||
Acquired clubs | 6 | — | — | — | 6 | — | |||||||||||
New clubs opened | — | 1 | — | — | 1 | — | |||||||||||
Club converted to licensed club(3) | — | — | — | — | — | — | |||||||||||
Clubs closed | (2 | ) | — | (3 | ) | (1 | ) | (6 | ) | (1 | ) | ||||||
Clubs operated at end of period | 187 | 188 | 185 | 184 | 184 | 183 | |||||||||||
Club included in equity investment at end of period(1) | 1 | 1 | 1 | 1 | 1 | 1 | |||||||||||
Licensed club operated at end of period(3) | 1 | 1 | 1 | 1 | 1 | 1 | |||||||||||
Total clubs operated at end of period(1)(2) | 189 | 190 | 187 | 186 | 186 | 185 |
(1) | Excludes one 20% owned club that operated under a different brand name in our Washington, D.C. region. |
(2) | Excludes locations that were managed by us in which we did not have an equity interest. As of March 31, 2020, we had one remaining managed location. |
(3) | Includes one club that transitioned to a licensed location in the first quarter of 2018 and bears the “Washington Sports Clubs” brand name. |
2019 | 2020 | ||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | |||||||||||
Comparable club revenue | (1.8 | )% | (3.4 | )% | (2.9 | )% | (1.2 | )% | (16.8 | )% |
Three Months Ended March 31, | |||||
2020 | 2019 | ||||
Revenue | 100.0 | % | 100.0 | % | |
Operating expenses: | |||||
Payroll and related | 42.1 | 38.9 | |||
Club operating | 55.3 | 45.9 | |||
General and administrative | 9.4 | 5.9 | |||
Depreciation and amortization | 8.9 | 8.2 | |||
Impairment of fixed assets | 47.7 | 0.1 | |||
Impairment of right-of-use assets | 64.1 | — | |||
Impairment of intangible assets | 17.7 | — | |||
Impairment of goodwill | — | — | |||
245.2 | 98.9 | ||||
Operating (loss) income | (145.2 | ) | 1.1 | ||
Interest expense | 3.1 | 3.0 | |||
Equity in the earnings of investees | 0.1 | — | |||
Loss before (benefit) provision for corporate income taxes | (148.2 | ) | (1.8 | ) | |
Benefit for corporate income taxes | (8.9 | ) | 0.1 | ||
Net loss including non-controlling interests | (139.3 | ) | (1.9 | ) | |
Less: net loss attributable to non-controlling interests | (0.3 | ) | (0.1 | ) | |
Net loss attributable to TSI Holdings | (139.0 | )% | (1.8 | )% |
Three Months Ended March 31, | ||||||||||||||||
2020 | 2019 | |||||||||||||||
Revenue | % Revenue | Revenue | % Revenue | % Variance | ||||||||||||
Membership dues | $ | 74,592 | 76.1 | % | $ | 88,823 | 76.2 | % | (16.0 | )% | ||||||
Initiation and processing fees | 146 | 0.1 | 429 | 0.4 | (66.0 | ) | ||||||||||
Membership revenue | 74,738 | 76.2 | 89,252 | 76.6 | (16.3 | ) | ||||||||||
Personal training revenue | 16,391 | 16.7 | 19,489 | 16.7 | (15.9 | ) | ||||||||||
Other ancillary club revenue (1) | 5,680 | 5.8 | 6,399 | 5.5 | (11.2 | ) | ||||||||||
Ancillary club revenue | 22,071 | 22.5 | 25,888 | 22.2 | (14.7 | ) | ||||||||||
Fees and other revenue (2) | 1,270 | 1.3 | 1,458 | 1.2 | (12.9 | ) | ||||||||||
Total revenue | $ | 98,079 | 100.0 | % | $ | 116,598 | 100.0 | % | (15.9 | )% |
(1) | Other ancillary club revenue primarily consisted of Sports Clubs for Kids, Small Group Training, racquet sports and spa. |
(2) | Fees and other revenue primarily consisted of rental income, marketing revenue, management fees and laundry service fees. |
Three Months Ended March 31, | ||||||||||
2020 | 2019 | % Variance | ||||||||
Payroll and related | $ | 41,285 | $ | 45,323 | (8.9 | )% | ||||
Club operating | 54,201 | 53,576 | 1.2 | |||||||
General and administrative | 9,177 | 6,870 | 33.6 | |||||||
Depreciation and amortization | 8,704 | 9,585 | (9.2 | ) | ||||||
Impairment of right-of-use assets | 62,865 | — | 100.0 | % | ||||||
Impairment of fixed assets | 46,822 | — | 100.0 | % | ||||||
Impairment of intangible assets | 983 | — | 100.0 | % | ||||||
Impairment of goodwill | 16,426 | — | 100.0 | % | ||||||
Total operating expenses | $ | 240,462 | $ | 115,354 | 108.5 | % |
• | Cash paid for occupancy decreased $9.1 million mainly due to, some timing differences of payments and the impact from the acquired and newly opened clubs. |
• | Cash paid for payroll decreased $233,000 mainly due to the impact from the acquired and newly opened clubs, timing of bonus payments as well as an increase in minimum wages requirements. |
• | Cash paid for marketing decreased $1.6 million due to less spending during the quarter mainly due to the impact of COVID-19. |
• | Cash collected for membership dues increased $1.3 million, offset by a decrease in personal training of $878,000. |
• | 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 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 at variable interest rates; |
• | limiting our ability to refinance our existing indebtedness on favorable terms before the expiration of the current 2013 Term Loan Facility, or at all; and |
• | limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate. |
• | our ability to devise, confirm and consummate a plan of reorganization satisfactory to our creditors and the bankruptcy court; |
• | the high costs of bankruptcy and related fees; |
• | our ability to obtain sufficient financing to allow the Company to operate during a bankruptcy proceeding; |
• | our ability to maintain our relationships with our suppliers, service providers, lessors, members, employees and other third parties; and |
• | the actions and decisions of our creditors and other third parties who have interests in such a bankruptcy proceeding that may be inconsistent with the Company’s plans. |
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 |
TOWN SPORTS INTERNATIONAL HOLDINGS, INC. | ||||
DATE: | September 4, 2020 | |||
By: | /s/ Phillip Juhan | |||
Phillip Juhan | ||||
Chief Financial Officer (Duly Authorized Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 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 March 31, 2020 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/ Phillip Juhan | |
Phillip Juhan | ||
Chief Financial Officer |
(1) | The Quarterly Report on Form 10-Q of Town Sports International Holdings, Inc. (the “Company”) for the quarterly period ended March 31, 2020 (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 March 31, 2020 (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/ Phillip Juhan |
Phillip Juhan |
Town Sports International Holdings, Inc. |
Chief Financial Officer |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Sep. 03, 2020 |
|
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 | Non-accelerated Filer | |
Entity Current Reporting Status | No | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 29,715,140 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 6,660 | $ 4,552 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares issued | 29,481,474 | 29,425,557 |
Common stock, shares outstanding | 29,481,474 | 29,425,557 |
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (136,763) | $ (2,199) |
Other comprehensive (loss) income, net of tax: | ||
Foreign currency translation adjustments, net of tax of $0, for each of the three months ended March 31, 2020 and 2019 | (15) | 11 |
Total other comprehensive (loss) income, net of tax | (15) | 11 |
Total comprehensive (loss) income including non-controlling interests | (136,778) | (2,188) |
Comprehensive (loss) income attributable to non-controlling interest | (440) | (150) |
Total comprehensive (loss) income attributable to Town Sports International Holdings, Inc. and Subsidiaries | $ (136,338) | $ (2,038) |
Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Statement of Comprehensive Income [Abstract] | ||
Foreign currency translation adjustment, tax | $ 0 | $ 0 |
Interest rate swap, tax | $ 0 | $ 0 |
Basis of Presentation |
3 Months Ended |
---|---|
Mar. 31, 2020 | |
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 with 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 March 31, 2020, the Company owned and operated 185 fitness clubs (“clubs”) under various brand names, primarily located in the United States of America (“United States”, “U.S.”) The Company’s operations are conducted mainly through its clubs and aggregated into one reportable segment. Each of the clubs has similar economic characteristics, services, product offerings and revenues are derived primarily from services to the Company’s members. The Company’s chief operating decision maker is the Chief Executive Officer. The operating segment is the level at which the chief operating decision maker manages the business and reviews operating performance in order to make business decisions and allocate resources. The Company determined that the business is managed and operating performance is reviewed on a consolidated company level and therefore that it has one operating segment. The condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the SEC and should be read in conjunction with the Company’s December 31, 2019 consolidated financial statements and notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. 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 months ended March 31, 2020 are not necessarily indicative of the results for the entire year ending December 31, 2020. Substantial Doubt about the Company’s Ability to Continue as a Going Concern In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, “Presentation of Financial Statements - Going Concern”, the Company’s management evaluated whether there are conditions or events that raise substantial doubt about its ability to continue as a going concern within one year after the financial statements’ issuance date. The following matters raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. Loan Maturities: The Company’s 2013 Term Loan Facility is due in its entirety on November 15, 2020 and was therefore classified as a current liability on the Company’s consolidated balance sheet as of March 31, 2020 and December 31, 2019. The Company does not have sufficient sources of cash to satisfy this obligation on the date of maturity. The Company is currently working with prospective lenders to refinance the 2013 Term Loan Facility in advance of its maturity date, however, there can be no assurance that the Company will be able to refinance its debt, or if it is able to refinance its debt, that such financing will be on terms favorable to the Company. If the Company cannot obtain refinancing, the remaining principal balance of the 2013 Term Loan of $177,286 will become payable on November 15, 2020. As discussed in the section immediately below, recent events relating to the COVID-19 pandemic have had a material adverse effect on the Company’s results of operations, cash flows and liquidity and further contribute to conditions that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. Under the terms of the 2013 Term Loan Facility, this is considered an event of default which allows the lenders to call the debt in advance of maturity. On March 13, 2020, the Company borrowed $12,500 from its 2013 Revolving Loan Facility and the Company continues to actively manage its cash flow on a daily basis. The Company is facing significant debt maturities in the near term. Our 2013 Revolving Loan Facility expired on August 14, 2020 and our 2013 Term Loan Facility is due to mature on November 15, 2020. Further, the Company is in breach of one of its covenants as of December 31, 2019 and this allows the lenders to call the debt in advance of maturity. As a result of the Company’s failure to repay all amounts outstanding under the 2013 Revolving Loan Facility prior to maturity on August 14 2020, the Company is in breach of the terms associated with this facility. Accordingly, the lenders may by written request cause the issuance of a notice of default to the Company and immediately exercise remedies under the 2013 Senior Credit Facility, including without limitation, by declaring the principal of and any accrued interest in respect of all loans, notes, and all obligations owing thereunder to be immediately due and payable. As of September 4, 2020 no lender pursuant to the Credit Agreement has commenced any legal action against the Company. As a result of the Company’s strained cash position and current inability to repay all amounts outstanding under the 2013 Term Loan Facility and 2013 Revolving Loan Facility, and the challenges of COVID-19, we currently anticipate that TSI LLC, Holdings II and certain other subsidiaries of the Company that constitute the Subsidiary Guarantors (as defined in the Credit Agreement) may be forced to file a petition for relief under the United States Bankruptcy Code (the “Bankruptcy Code”) in the near future. Such a filing would subject us to the risks and uncertainties associated with bankruptcy proceedings and may place equity holders in the Company at significant risk of losing some or all of their investment in TSI LLC, Holdings II, and such subsidiaries that constitute Subsidiary Guarantors (as defined in the Credit Agreement). In addition, it is possible that the Company may be forced to file a petition for relief under the Bankruptcy Code, which may further exacerbate the risks described herein and further increase the likelihood that our equity holders would lose some or all their investment in the Company. A bankruptcy filing by such entities, or by the Company, could cause a material adverse effect on our business, financial condition, results of operations and liquidity. In the event of such bankruptcy filing, the Company expects that it will need to raise up to approximately $80 million in financing to fund the costs associated with the bankruptcy filing, professional fees in connection with the bankruptcy and to cover operating shortfalls. COVID-19 Pandemic: On March 16, 2020, the Company was mandated to close approximately 95% of its clubs pursuant to the exercise of emergency executive authority invoked by state and local governments in order to combat the spread of the COVID-19 pandemic. The Florida clubs continued to operate but were closed on March 20, 2020. There is significant uncertainty as to when the clubs will be allowed to re-open and as such, the Company has experienced reduced customer demand, a significant increase in membership terminations and may be unable to recover these members or generate new ones. The Company has taken some immediate steps to reduce operating costs and to conserve cash. The Company informed all non-executive employees working at clubs which have been ordered to close due to the COVID-19 pandemic (as discussed below) that their employment with the Company was terminated with immediate effect. The Company has also ceased paying rent at its club locations that are subject to mandatory closure due to COVID-19. Due to the impact of the COVID-19 pandemic, the Company was further forced to close eight clubs permanently during the second fiscal quarter of 2020 and expects to permanently close additional clubs during the third fiscal quarter of 2020. Furthermore, re-opening protocols may include restrictions on capacity and activity that make it difficult for us to attract customers and generate revenue. For example, the Governor of New York announced on August 17, 2020 that fitness centers in New York will be permitted to re-open at only 33% capacity and that they must require customers to wear masks indoors at all times. In many cases, state and local governments have not provided a clear timeline for the projected further easing of restrictions, which creates uncertainty for our customers. These developments may further hinder the Company’s ability to generate operating revenue going forward. |
Recent Accounting Pronouncements |
3 Months Ended |
---|---|
Mar. 31, 2020 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2018, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract”. This new guidance requires a customer in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. Also, capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. This standard is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption of this standard is permitted. The adoption of this guidance has not had material impact on the Company's financial statements. |
Revenue |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition and Deferred Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Revenue Disaggregation of Revenue The following table presents our revenue by type:
The COVID-19 pandemic that forced the Company to close approximately 95% of our clubs on March 16, 2020 negatively impacted our first quarter 2020 revenue by $19,642 across all revenue categories including: membership dues, initiation and processing fees, personal training, ancillary club revenue, and fees and other revenue. 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 45 days of enrollment. Annual fees are amortized over 12 months. The estimated average membership life was 20 months for the three and twelve months ended March 31, 2020 and December 31, 2019, respectively. 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 (except in California and Florida) and are not refundable or redeemable by the member for cash. For six of the jurisdictions in which the Company operates, the Company has concluded, based on opinions from outside counsel, that monies paid to the Company for unused and expired personal training membership sessions were not escheatable. For the remaining jurisdictions in which the Company operates, the Company has likewise concluded that the monies paid to the Company for unused personal training sessions were not escheatable, regardless of whether they expire. However, the Company has not yet obtained opinions from outside counsel for these jurisdictions. 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. As of March 31, 2020 and December 31, 2019, the Company had approximately $13,116 and $12,792 of unused and expired personal training sessions, respectively, that had not been recognized as revenue and was recorded as deferred revenue. Approximately $11,142 of which related to the State of New York for the period ended March 31, 2020. This could have a material adverse effect on the Company’s cash flows. Specifically, 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. In addition to the prepaid personal training sessions the Company also offers a personal training membership product which generally consists of multi-session packages. These sessions provided by the membership product are at a discount to our stand-alone session pricing and are generally required to 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. 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. Contract Liability The Company records deferred revenue when cash payments are received or due in advance of our performance. In the three months ended March 31, 2020, the Company recognized revenue of $11,484 that was included in the deferred revenue balance as of December 31, 2019. Additionally, as of March 31, 2020, due to temporary club closures as a result of the COVID-19 pandemic, the Company deferred approximately $14,177 of revenue related to monthly membership billings that it will recognize as the clubs reopen. 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 |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 $15,000 revolving loan facility maturing on August 14, 2020 (“2013 Revolving Loan Facility”). Proceeds from the 2013 Term Loan Facility of $323,375 were issued, net of an original issue discount of 0.5%, or $1,625. 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. On January 30, 2015, the 2013 Senior Credit Facility was amended (the “First 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 First 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. On November 8, 2018, the 2013 Senior Credit Facility was amended (the “Second Amendment”), which modified the revolving loan facility amount from $45,000 to $15,000, and extended the maturity date from November 15, 2018 to August 14, 2020. In addition, the Second Amendment stated that the Company is not able to utilize more than 20% or $3,000 in accordance with terms of the 2013 Revolving Loan Facility if the total leverage ratio exceeds 4.00:1.00 (calculated on a proforma basis to give effect to any borrowing). Previously, the Company was 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 exceeded 4.50:1.00 (calculated on a proforma basis to give effect to any borrowing). 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. During the three months ended March 31, 2020, TSI LLC made a total of $473 in principal payments on the 2013 Term Loan Facility. In May 2017 and February 2019, TSI LLC loaned $5,000 and $2,000, respectively, to TSI Group, a wholly-owned subsidiary of TSI Holdings, at a rate of LIBOR plus 9.55% per annum. In June 2019, TSI Group repaid the outstanding loan balance of $6,900. In addition to the interest payments, TSI Group was required to repay 1.0% of the principal amount of the loan, $70 per annum, on a quarterly basis commencing September 30, 2017. The loan was 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 and June 2019, TSI LLC made dividend distributions of $35,000 and $16,000, respectively, as permitted under the 2013 Credit Facility. As of March 31, 2020, TSI Group had a cash balance of approximately $885. As of March 31, 2020, TSI LLC had outstanding letters of credit of $2,149 under the 2013 Revolving Credit Facility and a total leverage ratio that was below 4.00:1.00. On January 2, 2020, TSI LLC borrowed $8,000 under the 2013 Revolving Loan Facility to fund TSI LLC working capital and repaid the full amount on January 3, 2020. On March 16, 2020, TSI LLC borrowed $12,500 under the 2013 Revolving Loan Facility to fund TSI LLC working capital. The Company also had $2,194 in outstanding letters of credit issued that were not associated with the 2013 Revolving Credit Facility to secure certain lease obligations. The unutilized portion of the 2013 Revolving Loan Facility as of March 31, 2020 was $353, 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. In addition, the financial covenant described above, the 2013 Senior Credit Facility contains certain affirmative and negative covenants, including those 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. 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. Loan Maturities: The Company’s 2013 Term Loan Facility is due in its entirety on November 15, 2020 and was therefore classified as a current liability on the Company’s consolidated balance sheet as of March 31, 2020 and December 31, 2019. The Company does not have sufficient sources of cash to satisfy this obligation on the date of maturity. The Company is currently working with prospective lenders to refinance the 2013 Term Loan Facility in advance of its maturity date, however, there can be no assurance that the Company will be able to refinance its debt, or if it is able to refinance its debt, that such financing will be on terms favorable to the Company. If the Company cannot obtain refinancing, the remaining principal balance of the 2013 Term Loan Facility of $177,286 will become payable on November 15, 2020. Recent events relating to the COVID-19 pandemic have had a material adverse effect on the Company’s results of operations, cash flows and liquidity and further contribute to conditions that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. Under the terms of the 2013 Term Loan Facility, this is considered an event of default which allows the lenders to call the debt in advance of maturity. On March 16, 2020, the Company borrowed $12,500 from its 2013 Revolving Credit Facility and the Company continues to actively manage its cash flow on a daily basis. The Company is facing significant debt maturities in the near term. Our 2013 Revolving Loan Facility expired on August 14, 2020 and our 2013 Term Loan Facility is due to mature on November 15, 2020. Further, the Company is in breach of one of its covenants as of December 31, 2019 and this allows the lenders to call the debt in advance of maturity. As a result of the Company’s failure to repay all amounts outstanding under the 2013 Revolving Loan Facility prior to maturity on August 14 2020, the Company is in breach of the terms associated with this facility. Accordingly, the lenders may by written request cause the issuance of a notice of default to the Company and immediately exercise remedies under the 2013 Senior Credit Facility, including without limitation, by declaring the principal of and any accrued interest in respect of all loans, notes, and all obligations owing thereunder to be immediately due and payable. As of September 4, 2020, no lender pursuant to the Credit Agreement has commenced any legal action against the Company. As a result of the Company’s strained cash position and current inability to repay all amounts outstanding under the 2013 Term Loan Facility and 2013 Revolving Loan Facility, and the challenges of COVID-19, we currently anticipate that TSI LLC, Holdings II and certain other subsidiaries of the Company that constitute the Subsidiary Guarantors (as defined in the Credit Agreement) may be forced to file a petition for relief under the Bankruptcy Code in the near future. Such a filing would subject us to the risks and uncertainties associated with bankruptcy proceedings and may place equity holders in the Company at significant risk of losing some or all of their investment in TSI LLC, Holdings II, and such subsidiaries that constitute Subsidiary Guarantors (as defined in the Credit Agreement). In addition, it is possible that the Company may be forced to file a petition for relief under the Bankruptcy Code, which may further exacerbate the risks described herein and further increase the likelihood that our equity holders would lose some or all their investment in the Company. A bankruptcy filing by such entities, or by the Company, could cause a material adverse effect on our business, financial condition, results of operations and liquidity. In the event of such bankruptcy filing, the Company expects that it will need to raise up to approximately $80 million in financing to fund the costs associated with the bankruptcy filing, professional fees in connection with the bankruptcy and to cover operating shortfalls. As of March 31, 2020, the 2013 Term Loan Facility has a gross principal balance of $177,286 and a balance of $176,497 net of unamortized debt discount of $598 and unamortized debt issuance costs of $191. As of March 31, 2020, both the unamortized balance of debt issuance costs and unamortized debt discount are recorded as a contra-liability and netted with long-term debt on the accompanying condensed consolidated balance sheet and are being amortized as interest expense using the effective interest method. Fair Market Value Based on quoted market prices, the 2013 Term Loan Facility had a fair value of approximately $62,050, or 35%, and $133,319, or 75%, at March 31, 2020 and December 31, 2019, 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. As a result of the COVID-19 pandemic, the fair value of our long-term debt has fluctuated significantly during the first quarter and may continue to fluctuate based on market conditions and other factors. |
Mortgage and Term Loan |
3 Months Ended |
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Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Mortgage and Term Loan | Mortgage and Term Loan On August 3, 2018, TSI - Donald Ross Realty LLC, a subsidiary of TSI Group, entered into a mortgage note for $3,150 with BankUnited, N.A. (the “Lender”). This mortgage note bears interest at a fixed rate of 5.36% 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 September 3, 2018. The entire principal balance of this mortgage note is due and payable in full on its maturity date of August 3, 2028. As of March 31, 2020, this mortgage note had an outstanding principal balance of $3,052, net of principal payments of $98. 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 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 above mortgage and term loan notes, TSI Group or TSI Holdings must maintain a minimum relationship liquidity balance with the Lender of $500 in the form of an operating account. As of March 31, 2020, the Mortgage Note and Term Note had an outstanding principal balance of $1,809 and $324, respectively, reflecting net of principal payments of $71 for the Mortgage Note and $176 for the Term Note. The carrying amount of the mortgage notes and Term Note 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. |
Leases |
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Leases | Leases The Company leases office, warehouse and multi-recreational facilities under non-cancelable operating leases. Also, the Company has operating and finance leases for certain equipment. In addition to base rent, the facility leases generally provide for additional payments to cover common area maintenance charges incurred and to pass along increases in real estate taxes. Also, certain leases provide for additional rent based on revenue or operating results of the respective facilities. The Company accrues for any unpaid common area maintenance charges and real estate taxes on a club-by-club basis. Under the provisions of certain of these leases, the Company is required to maintain irrevocable letters of credit, which amounted to $4,343 as of March 31, 2020. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company determines if an arrangement is a lease at inception. Operating leases are recorded in operating lease right of use assets, current portion of operating lease liabilities, and long-term operating lease liabilities on its condensed consolidated balance sheet. Finance leases are recorded in fixed assets, net, current portion of long-term debt, and long-term debt on its condensed consolidated balance sheet. Operating lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. Lease expense for lease payments are recognized on a straight-line basis over the lease term. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 10 years or more. The leases expire at various times through June 30, 2038 and certain leases may be extended at the Company’s option. Escalation terms on these leases generally include fixed rent escalations, escalations based on an inflation index such as the consumer price index, and fair market value adjustments. The Company, as landlord, subleases space to third party tenants under non-cancelable operating leases and licenses. In addition to base rent, certain leases provide for additional rent based on increases in real estate taxes, indexation, utilities and defined amounts based on the operating results of the lessee. The sub-leases expire at various times through January 2023. Property and equipment and lease-related right-of-use assets, along with other long-lived assets, are evaluated for impairment periodically whenever triggering events or indicators exist that the carrying values may not be fully recoverable. As a result of the COVID-19 pandemic, the Company experienced lower than projected revenues and identified indicators of impairment for certain clubs. The Company performed undiscounted cash flow analyses over the long-lived assets of certain clubs with impairment indicators and compared it to the carrying value of those assets. Based on these undiscounted cash flow analyses, the Company determined that certain long-lived assets had carrying values that exceeded their estimated undiscounted cash flows. Fair values of the long-lived assets are estimated using an income approach based on (a) management’s forecast of future cash flows derived from continued operations and (b) the fair value of individual operating lease assets based on estimated market rental rates. Significant estimates are used in determining future cash flows of each club over its remaining lease term including our expectations of future projected cash flows which include revenues, operating expenses, and market conditions. An impairment loss is recorded if the carrying amount of the long-lived asset exceeds its fair value. As a result, the Company recognized a pre-tax charge of $62,865 for impairment of its right-of-use assets and a pre-tax charge of $46,822 for impairment of its club leasehold improvements and furniture and fixtures for the three months ended March 31, 2020. The charges for right-of-use assets were recorded in operating expenses in the consolidated statements of operations. The balance sheet classification of lease assets and liabilities was as follows:
The components of lease costs were as follows:
As of March 31, 2020, the maturities of our lease liabilities were as follows:
As of December 31, 2019, future minimum rental payments by fiscal year under non-cancelable leases and future capital lease payments are shown in the chart below.
The Company, as landlord, leases space to third party tenants under non-cancelable operating leases and licenses. Future minimum rentals receivable under non-cancelable leases are shown in the chart below.
The weighted average remaining lease term and weighted average discount rate were as follows:
Supplemental cash flow information related to leases was as follows:
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Leases | Leases The Company leases office, warehouse and multi-recreational facilities under non-cancelable operating leases. Also, the Company has operating and finance leases for certain equipment. In addition to base rent, the facility leases generally provide for additional payments to cover common area maintenance charges incurred and to pass along increases in real estate taxes. Also, certain leases provide for additional rent based on revenue or operating results of the respective facilities. The Company accrues for any unpaid common area maintenance charges and real estate taxes on a club-by-club basis. Under the provisions of certain of these leases, the Company is required to maintain irrevocable letters of credit, which amounted to $4,343 as of March 31, 2020. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company determines if an arrangement is a lease at inception. Operating leases are recorded in operating lease right of use assets, current portion of operating lease liabilities, and long-term operating lease liabilities on its condensed consolidated balance sheet. Finance leases are recorded in fixed assets, net, current portion of long-term debt, and long-term debt on its condensed consolidated balance sheet. Operating lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. Lease expense for lease payments are recognized on a straight-line basis over the lease term. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 10 years or more. The leases expire at various times through June 30, 2038 and certain leases may be extended at the Company’s option. Escalation terms on these leases generally include fixed rent escalations, escalations based on an inflation index such as the consumer price index, and fair market value adjustments. The Company, as landlord, subleases space to third party tenants under non-cancelable operating leases and licenses. In addition to base rent, certain leases provide for additional rent based on increases in real estate taxes, indexation, utilities and defined amounts based on the operating results of the lessee. The sub-leases expire at various times through January 2023. Property and equipment and lease-related right-of-use assets, along with other long-lived assets, are evaluated for impairment periodically whenever triggering events or indicators exist that the carrying values may not be fully recoverable. As a result of the COVID-19 pandemic, the Company experienced lower than projected revenues and identified indicators of impairment for certain clubs. The Company performed undiscounted cash flow analyses over the long-lived assets of certain clubs with impairment indicators and compared it to the carrying value of those assets. Based on these undiscounted cash flow analyses, the Company determined that certain long-lived assets had carrying values that exceeded their estimated undiscounted cash flows. Fair values of the long-lived assets are estimated using an income approach based on (a) management’s forecast of future cash flows derived from continued operations and (b) the fair value of individual operating lease assets based on estimated market rental rates. Significant estimates are used in determining future cash flows of each club over its remaining lease term including our expectations of future projected cash flows which include revenues, operating expenses, and market conditions. An impairment loss is recorded if the carrying amount of the long-lived asset exceeds its fair value. As a result, the Company recognized a pre-tax charge of $62,865 for impairment of its right-of-use assets and a pre-tax charge of $46,822 for impairment of its club leasehold improvements and furniture and fixtures for the three months ended March 31, 2020. The charges for right-of-use assets were recorded in operating expenses in the consolidated statements of operations. The balance sheet classification of lease assets and liabilities was as follows:
The components of lease costs were as follows:
As of March 31, 2020, the maturities of our lease liabilities were as follows:
As of December 31, 2019, future minimum rental payments by fiscal year under non-cancelable leases and future capital lease payments are shown in the chart below.
The Company, as landlord, leases space to third party tenants under non-cancelable operating leases and licenses. Future minimum rentals receivable under non-cancelable leases are shown in the chart below.
The weighted average remaining lease term and weighted average discount rate were as follows:
Supplemental cash flow information related to leases was as follows:
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Related Party |
3 Months Ended |
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Mar. 31, 2020 | |
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 $70 and $66 for the three months ended March 31, 2020 and 2019, respectively. These amounts were classified within general and administrative expenses on the condensed consolidated statements of operations for the three months ended March 31, 2020 and 2019. |
Concentration of Credit Risk |
3 Months Ended |
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Mar. 31, 2020 | |
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 March 31, 2020, $18,987 of the cash balance of $24,669 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 |
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Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) applicable to common stockholders by the weighted average numbers of shares of common stock outstanding during the period. Diluted EPS is calculated using the treasury stock method and is computed similarly to basic EPS, except that the denominator is increased for the assumed exercise of dilutive stock options and unvested restricted stock for the diluted shared based awards. The following table summarizes the weighted average common shares for basic and diluted EPS computations.
For the three months ended March 31, 2020 and 2019, 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. For the three months ended March 31, 2020, there would have been 5,044 anti-dilutive shares had the Company not been in a net loss position. For the three months ended March 31, 2020 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. |
Stock-Based Compensation |
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation The Company’s certificate of incorporation provides for 105,000,000 shares of capital stock, consisting of 5,000,000 shares of Preferred Stock, par value $0.001 per share (“Preferred Stock”) and 100,000,000 shares of Common Stock, par value $0.001 per share (“Common Stock”). 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, by 2,000,000 shares to a total of 6,500,000 in May 2017 and by 2,000,000 shares to a total of 8,500,000 in May 2019. The Company has approved an amendment to the 2006 Plan, subject to the receipt of shareholder approval at the Company's upcoming annual meeting, to increase the number of shares available for issuance thereunder from 8,500,000 to 11,500,000. 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. The exercise price of a stock option is equal to the fair market value of the Company's Common Stock on the option grant date. As of March 31, 2020, there were 1,850,684 shares available to be issued under the 2006 Plan. At March 31, 2020, the Company had 10,315 stock options outstanding and 1,970,768 shares of restricted stock outstanding under the 2006 Plan. Stock Option Awards The Company did not grant any stock options during the three months ended March 31, 2020. There was no compensation expense related to stock options outstanding for both the three months ended March 31, 2020 and 2019. Restricted Stock Awards During the three months ended March 31, 2020, the Company issued 38,095 shares of restricted stock to employees under the 2006 Plan with a per unit grant-date fair value of $2.10. These shares will vest in three equal installments on each of the first three anniversaries of the date of grant. During the three months ended March 31, 2020, the Company issued 2,209 shares of restricted stock to employees under the 2018 Management Stock Purchase Plan (as amended, the “MSPP”) with a per unit grant-date fair value of $1.05. These awards will vest on the second anniversary of the award date. The total compensation expense, classified within Payroll and related on the condensed consolidated statements of operations, related to restricted stock was $816 for the three months ended March 31, 2020, compared to $805 for the comparable prior-year period. The Company adjusted the forfeiture estimates to reflect actual forfeitures. The forfeiture adjustment reduced stock-based compensation expense by $139 and $7 for the three months ended March 31, 2020, and 2019 respectively. As of March 31, 2020, a total of $2,938 in unrecognized compensation expense related to restricted stock awards is expected to be recognized over a weighted-average period of 2.3 years. Stock Grants The Company issued 114,285 shares of common stock to members of the Company’s Board of Directors in respect of their annual retainer on February 1, 2020. The fair value of the shares issued was $2.10 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 $239 and $320 for each of the three months ended March 31, 2020 and 2019, respectively. Management Stock Purchase Plan The Company first adopted the MSPP in January 2018, and amended and restated it in March 2018. 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. Upon adoption of the MSPP, eligible employees could 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”). This amount was amended to $300, effective June 15, 2019, pursuant to Amendment No. 1 to the MSPP, approved at a Board of Directors meeting held on May 15, 2019. Subsequently, on July 14, 2020, the Board of Directors approved Amendment No. 2 to the MSPP, pursuant to which certain definitions were amended in order to provide for accelerated matching and vesting entitlements for participants in the MSPP upon a change of control. If the participant holds the MSPP Shares for the requisite period specified in the Plan (two years from the purchase date or until a change of control) 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 is 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 March 31, 2020, there were 740,642 shares of common stock available for issuance pursuant to the ESPP. Total compensation expense, classified within Payroll and related on the condensed consolidated statements of operations, related to ESPP was $0 and $7 for the three months ended March 31, 2020 and 2019, respectively. The fair value of the purchase rights granted under the ESPP for the offering period beginning March 16, 2020 was $0.28 per share. 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. |
Asset Impairment |
3 Months Ended |
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Mar. 31, 2020 | |
Asset Impairment Charges [Abstract] | |
Asset Impairment | Asset Impairment Since March 16, 2020, the Company has been required to close nearly all of its clubs for extended periods of time in order to maintain social distancing and align with the Federal guidance on minimizing the impact of COVID-19. Due to this and other factors, the Company determined as of July 6, 2020 that it was required to recognize a material impairment of the carrying values of the Company’s right of use assets, fixed assets and other long term assets including goodwill. Long-lived assets, particularly leasehold improvements, furniture and fixtures and equipment and operating lease right-of-use assets are evaluated for impairment periodically whenever events or changes in circumstances indicate that related carrying amounts may not be recoverable from undiscounted cash flows in accordance with the FASB guidance. These include, but are not limited to, material declines in operational performance, a history of losses, an expectation of future losses, adverse market conditions and club closure decisions. On at least a quarterly basis, the Company reviews for indicators of impairment at the individual club level, which is the lowest level for which there are identifiable cash flows. The key assumptions used in the Company’s undiscounted cash flow model include revenue, operating expenses and future capital expenditures. An impairment loss may be recognized when these undiscounted future cash flows are less than the carrying amount of the asset group. In the circumstance of impairment, any loss is measured as the excess of the carrying amount of the asset group over its fair value. The fair value of the asset group is determined based on the highest and best use of the asset group, which may include the consideration of market rent for the right to use leased assets included in the asset group. The Company may also utilize assumptions related to projected cash flows when estimating the fair value of impaired assets. In the three months ended March 31, 2020, the Company tested underperforming clubs and recorded an impairment charge of $46,822 on leasehold improvements and furniture and fixtures at clubs that experienced decreased profitability and sales levels below expectations. The asset impairment charges are included as a component of club operating expenses in a separate line on the accompanying condensed consolidated statements of operations. No impairment charge was recorded for the comparative 2019 period. In the three months ended March 31, 2020, the Company tested underperforming clubs and recorded an impairment charge of $62,865 on right-of-use assets at clubs that experienced decreased profitability and sales levels below expectations. The right-of-use impairment charges are included as a component of club operating expenses in a separate line on the accompanying condensed consolidated statements of operations. No impairment charge was recorded for the comparative 2019 period. In periods tested, the recoverability of fixed assets and right-of-use assets, Level 3 inputs were used in determining undiscounted cash flows, which are based on internal budgets and forecasts through the end of the life of the primary asset in the asset group which is normally the life of leasehold improvements. For the fixed asset impairment test, the most significant assumptions in those budgets and forecasts relate to estimated membership and ancillary revenue, attrition rates, discount rates, income tax rates, estimated results related to new program launches and maintenance capital expenditures. The fair value of fixed assets evaluated for impairment was determined considering a combination of a market approach and a cost approach. For the right-of-use asset impairment test, the most significant assumptions in those budgets and forecasts were based on a market analysis of the fair value of the applicable real estate operating leases. |
Goodwill and Other Intangibles |
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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, Puerto Rico and Switzerland. The Company has acquired several clubs in the first half of 2019 and has recorded goodwill as applicable to the appropriate regions. 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 March 31, 2020, the New York, Boston, California, Florida, Puerto Rico and Switzerland regions have a goodwill balance. Entities that have one or more reporting units with zero or negative carrying amounts of net assets shall disclose those reporting units with allocated goodwill and the amount of goodwill allocated to each and in which reportable segment the reporting unit is included. The Company's New York and Boston reporting units have negative carrying value as of March 31, 2020 and therefore were not subject to goodwill impairments. The Company’s annual goodwill impairment test is performed on August 1, or more frequently, should circumstances change which would indicate the fair value of goodwill is below its carrying amount. As a result of the sustained decline in the Company's market capitalization and changes in the Company's long-term projections driven largely by the impacts of the COVID-19 pandemic, the Company determined a triggering event had occurred that required an interim impairment assessment for all of its reporting units and indefinite lived intangible assets. The Company determined the fair value of each of its reporting units using a market approach, an income approach, or a combination of both, where appropriate. Relative to the prior assessment, as part of this current assessment, it was determined that an increase in the discount rate applied in the valuation was required to align with market-based assumptions and company-specific risk. This higher discount rate, in conjunction with revised long-term projection resulted in lower fair values of the reporting units. As a result, the Company recognized impairment charges of $16,426 for goodwill and $983 for other intangible assets during the first quarter of 2020. The changes in the carrying amount of goodwill from December 31, 2019 through March 31, 2020 are detailed in the chart below:
Amortization expense was $699 and $746 for the three months ended March 31, 2020 and 2019 respectively. Impairment charges for intangible assets were $983 for the three months ended March 31, 2020 while no impairment charges were recorded for the three months ended March 31, 2019. Intangible assets are as follows:
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Acquisitions |
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 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 condensed consolidated financial statements from the date of acquisition. The Company incurred acquisition-related costs of $102 and $149 in the three months ended March 31, 2020 and 2019, respectively. These costs are included in general and administrative expenses in the accompanying condensed consolidated statements of operations. Acquisition of Around the Clock Fitness In February 2019, the Company acquired Around The Clock Fitness for a purchase price of $22,222 and a net cash purchase price of $21,667. The acquisition added six clubs to the Company's portfolio in Florida. The following table summarizes the allocation of the purchase price to the fair value of the assets and liabilities acquired. No measurement period adjustments were made in the current quarter subsequent to the initial purchase price allocation.
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 over the estimated average membership life, the trade name over eight years and the non-compete agreement over the contract life of five years. In the three months ended March 31, 2020 and 2019, the Company recorded revenue of $3,052 and $1,086, respectively, and net loss of $16,596 for 2020 compared to net income of $25 for 2019. Such amounts are included in the respective accompanying condensed consolidated statements of operations. |
Income Taxes |
3 Months Ended |
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Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company recorded an income tax (benefit)provision inclusive of a valuation allowance of $(8,598) and $74 for the three months ended March 31, 2020 and 2019, respectively, reflecting a positive effective income tax rate of 6% for the three months ended March 31, 2020 and a negative effective income tax rate of 3% for the three months ended March 31, 2019. For the three months ended March 31, 2020 and 2019, the Company calculated its income tax provision using the estimated annual effective tax rate methodology. On December 22, 2017, the President of the United States 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 three months ended March 31, 2020 and 2019 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. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in the United States and has various tax provisions, including modifications to the net operating loss (NOL) limitation, which provides for a 5-year carryback for NOLs arising in taxable years beginning in 2018, 2019 and 2020. The CARES Act also classifies Qualified Improvement Property (“QIP”) as 15-year property, which was assigned as 39-year property and was not eligible for bonus depreciation under the Tax Cuts and Jobs Act. The Company as a result of the CARES Act recognized a benefit of approximately $8,652 for reclassifying QIP and other benefits derived from carrying back the losses to prior years. The Company is also evaluating potential opportunities from other tax provisions in the CARES Act, but does not expect the impact to be material. As of March 31, 2020 and December 31, 2019, the Company maintained a full valuation allowance against its net deferred tax assets. As of March 31, 2020, 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, 2020, since the related income tax returns may no longer be subject to audit in 2020. 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. 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 2017). In particular, the Company disagrees with the assessment dated November 30, 2017, from New York State related to tax years 2006 through 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 for these tax years. In a letter dated December 27, 2019, the Company was notified of an adjustment for an amount of approximately $2,749, inclusive of approximately $840 in interest for tax years 2010 through 2014. Also, in a letter dated August 16, 2019, New York State has also opened the audit period for years 2015-2017. The Company disagrees with the proposed assessment and has consented to extend such assessment period through December 31, 2020. The Company is also under examination in New York City (2006 through 2017). 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 $8,935, inclusive of $4,138 in interest. In a letter dated January 18, 2019, the New York City Department of Finance has issued a proposed general tax liability of $5,599, inclusive of $1,569 in interest for audit periods 2010 to 2014. Also, in a letter dated June 3, 2020, the New York City department of finance has also opened the audit period for the years 2015-2017. The Company disagrees with the proposed assessment and has consented to extend such assessment period through December 31, 2021. 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. |
Commitments and Contingencies |
3 Months Ended |
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Mar. 31, 2020 | |
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 $1,000, 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 April, 2020, the Company charged members their monthly charges pursuant to and in accordance with the terms of their Membership Agreements. The Attorney General’s offices for the states of Massachusetts, New York, Pennsylvania, Washington, DC and Maryland had taken the position that charging members in April 2020 at the time of the Governmental Ordered closure violated State Consumer Protection laws. The Company resolved the matter with the Attorney General’s offices by offering members various options such as upgrades to Elite status, providing members who were already Elite members with a three month guest pass, by permitting members during the periods of club closures to cancel their memberships without a cancellation fee, providing free access to members for the period charged when the clubs were not open, and by freezing all memberships during the periods of club closures free of charge. Any member who wished to cancel or freeze their memberships after the clubs reopened were charged with cancellation or freeze fees, as applicable, pursuant to the terms of their membership agreements. These resolutions are not expected in the aggregate to have a material impact on the Company’s financial statements. By reason of the Company’s failure to pay rent to many of our commercial landlords while the closure orders were in effect (and in some cases after locations were opened) we have received a number of Landlord default notices, lease terminations and in some cases lawsuits to collect outstanding rent and evictions. We have asserted defenses to the defaults, terminations and suits consisting of force majeure, impossibility of performance, compliance with governmental mandates and frustration of purpose. It is uncertain whether we will prevail on these defenses. However should the Company or certain of its subsidiaries file for bankruptcy protection, many of the leases subject to such bankruptcy proceedings are likely to be rejected and or renegotiated in bankruptcy. The Company assigned its interest, and is contingently liable, under a real estate lease. This lease expired in June 2020. As of the expiration of the lease, the undiscounted payments the Company could be required to make in the event of non-payment by the primary lessee is approximately $1,336. The Company has not recorded a liability with respect to this guarantee obligation as of March 31, 2020 as it was concluded that payment under this lease guarantee was not probable. In addition, the Company is involved in various other lawsuits, claims, investigations and proceedings incidental to the ordinary course of business, including personal injury, landlord tenant disputes, construction matters, employee and member relations (including charging members April dues during the Government Ordered closure), and Telephone Consumer Protection Act claims (a number of which purport to represent a class and one of which was brought by the Washington, D.C. Attorney General’s Office and the New York Department of Consumer Affairs). 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 March 31, 2020. |
Subsequent Events |
3 Months Ended |
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Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events 1. In April 2020, the Company purchased $23,900 principal amount of debt outstanding under the 2013 Senior Credit Facility in the open market for $8,300, or 35% of face value, which resulted in a gain on extinguishment of debt of $15,500, including the write-off of related deferred financing costs and debt discount of $249 and $707, The purchased debt was transferred to TSI LLC and canceled. 2. On April 24, 2020, TSI LLC, received funding in connection with “Small Business Loans” under the federal Paycheck Protection Program provided in Section 7(a) of the Small Business Act of 1953, as amended by the Coronavirus Aid, Relief and Economic Security Act, as amended from time to time (the “PPP”). TSI LLC borrowed $2,742 original principal amount, which was funded on April 24, 2020 (the “PPP Loan”). The PPP Loan bears interest at 1% per annum and matures in 2 years from the date of disbursement of funds under the PPP Loan. Interest and principal payments under the PPP Loan will be deferred for a period of 6 months. Under certain circumstances, all or a portion of the PPP Loan may be forgiven, however, there can be no assurance that any portion of the PPP Loan will be forgiven and that TSI LLC would not be required to repay the PPP Loan in full. The application for these funds required the Company to, in good faith, certify that the current economic uncertainty made the loan request necessary to support the ongoing operations of the Company. This certification further required the Company to take into account our business activity and ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business. Forgiveness of the PPP Loan is dependent on the Company having initially qualified for the loan and adhering to applicable forgiveness criteria set forth in the PPP Loan and in the CARES Act. 3.Currently, the Company has 55 clubs open to the public and operating in: Florida, Connecticut, Washington D.C., Massachusetts, Pennsylvania and Switzerland. Furthermore, the Company plans to re-open existing clubs in its remaining markets of California, Puerto Rico, New Jersey and New York as and when state and local authorities lift closure orders applicable to gyms and health clubs. However, the recent resurgence of COVID-19 in certain regions of the U.S. has led some state and local governments to delay the implementation of plans to re-open a variety of businesses, including fitness centers, and could lead to new closures in states like Florida where we have been permitted to re-open. Moreover re-opening protocols may include restrictions on capacity and activity that make it difficult for us to attract customers and generate revenue. For example, the Governor of New York announced on August 17, 2020 that fitness centers in New York will be permitted to re-open at only 33% capacity and that they must require customers to wear masks indoors at all times. In many cases, state and local governments have not provided a clear timeline for the projected further easing of restrictions, which creates uncertainty for our customers. These developments may further hinder the Company’s ability to generate operating revenue going forward. Due to the impact of the COVID-19 pandemic, the Company was further forced to close eight clubs permanently during the second fiscal quarter of 2020 and expects to permanently close additional clubs during the third fiscal quarter of 2020. 4. Amendment No.2 to the MSPP was adopted on July 14, 2020 in order to provide for certain accelerated matching and vesting entitlements for participants in the MSPP upon a change of control. 5. On July 15, 2020, the Company approved the appointment of Justin Lundberg to serve as a member of the Board, effectively immediately. Mr. Lundberg serves as the sole member of JSP Realty Investments, LLC (“JSP”), a company that receives annual payments from the Company of approximately $150,000 as part of a lease for real property located in Westborough, MA and for electricity credits generated by a solar array also located in Westborough. As the sole member of JSP, Mr. Lundberg is the sole beneficiary of such transactions. 6. Our 2013 Revolving Loan Facility expired on August 14, 2020 and our 2013 Term Loan Facility expires on November 15, 2020. We are currently working with prospective lenders to refinance our debt and are pursuing additional options as described below to address our liquidity needs, however, there can be no assurance that we will be able to refinance our debt, or if we are able to refinance our debt, that such financing will be on terms favorable to us. This raises substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. As a result of the Company’s strained cash position and current inability to repay all amounts outstanding under the 2013 Term Loan Facility and 2013 Revolving Loan Facility, and the challenges of COVID-19, we currently anticipate that TSI LLC, Holdings II and certain other subsidiaries of the Company that constitute the Subsidiary Guarantors (as defined in the Credit Agreement) may be forced to file a petition for relief under the Bankruptcy Code in the near future. Such a filing would subject us to the risks and uncertainties associated with bankruptcy proceedings and may place equity holders in the Company at significant risk of losing some or all of their investment in TSI LLC, Holdings II, and such subsidiaries that constitute Subsidiary Guarantors (as defined in the Credit Agreement). In addition, it is possible that the Company may be forced to file a petition for relief under the Bankruptcy Code, which may further exacerbate the risks described herein and further increase the likelihood that our equity holders would lose some or all their investment in the Company. A bankruptcy filing by such entities, or by the Company, could cause a material adverse effect on our business, financial condition, results of operations and liquidity. In the event of such bankruptcy filing, the Company expects that it will need to raise up to approximately $80 million in financing to fund the costs associated with the bankruptcy filing, professional fees in connection with the bankruptcy and to cover operating shortfalls. |
Recent Accounting Pronouncements (Policies) |
3 Months Ended |
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Mar. 31, 2020 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2018, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract”. This new guidance requires a customer in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. Also, capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. This standard is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption of this standard is permitted. The adoption of this guidance has not had material impact on the Company's financial statements. |
Revenue (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Revenue Recognition and Deferred Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following table presents our revenue by type:
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Long-Term Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Long-Term Debt |
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Leases (Tables) |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Lessee | The balance sheet classification of lease assets and liabilities was as follows:
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Supplemental Cash Flow Information | The weighted average remaining lease term and weighted average discount rate were as follows:
Supplemental cash flow information related to leases was as follows:
The components of lease costs were as follows:
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Schedule of Lease Liabilities Maturity | As of March 31, 2020, the maturities of our lease liabilities were as follows:
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Schedule of Lease Liabilities Maturity | As of March 31, 2020, the maturities of our lease liabilities were as follows:
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Schedule of Future Minimum Lease Payments for Capital Leases |
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Schedule of Future Minimum Rental Payments for Operating Leases | The Company, as landlord, leases space to third party tenants under non-cancelable operating leases and licenses. Future minimum rentals receivable under non-cancelable leases are shown in the chart below.
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Earnings (Loss) Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table summarizes the weighted average common shares for basic and diluted EPS computations.
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Stock-Based Compensation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [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:
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Goodwill and Other Intangibles (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | The changes in the carrying amount of goodwill from December 31, 2019 through March 31, 2020 are detailed in the chart below:
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Schedule of Finite Lived Intangible Assets | Intangible assets are as follows:
|
Acquisitions (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Assets Acquired | No measurement period adjustments were made in the current quarter subsequent to the initial purchase price allocation.
|
Basis of Presentation (Details) |
3 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Aug. 28, 2020
USD ($)
|
Mar. 16, 2020 |
Mar. 13, 2020
USD ($)
|
Mar. 31, 2020
USD ($)
club
segment
|
Mar. 31, 2019
USD ($)
|
Jun. 30, 2020 |
Dec. 31, 2019
USD ($)
|
Nov. 15, 2013
USD ($)
|
|
Debt Instrument [Line Items] | ||||||||
Number of clubs | club | 185 | |||||||
Number of reportable segments | segment | 1 | |||||||
Number of operating segments | segment | 1 | |||||||
Proceeds from borrowings on Revolving Loan Facility | $ 12,500,000 | $ (189,000) | ||||||
Financing associated with potential bankruptcy filing | 80,000,000 | |||||||
Clubs mandated to close | 95.00% | |||||||
Secured Debt | 2013 Term Loan Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Outstanding principal balance | $ 177,286,000 | $ 177,759,000 | $ 325,000,000 | |||||
Line of Credit | 2013 Senior Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from borrowings on Revolving Loan Facility | $ 12,500,000 | |||||||
Subsequent Event | ||||||||
Debt Instrument [Line Items] | ||||||||
Financing associated with potential bankruptcy filing | $ 80,000,000 | |||||||
Clubs permanently closed | 8 |
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 98,079 | $ 116,598 |
Membership dues | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 74,592 | 88,823 |
Initiation and processing fees | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 146 | 429 |
Membership revenue | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 74,738 | 89,252 |
Personal training revenue | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 16,391 | 19,489 |
Other ancillary club revenue | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 5,680 | 6,399 |
Ancillary club revenue | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 22,071 | 25,888 |
Fees and other revenue | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 1,270 | $ 1,458 |
Long-Term Debt - Schedule of Long-Term Debt (Details) - USD ($) |
Mar. 31, 2020 |
Dec. 31, 2019 |
Nov. 15, 2013 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Finance lease liabilities | $ 5,784,000 | $ 6,248,000 | |
Less: Deferred financing costs | (191,000) | (294,000) | |
Less: Current portion due within one year | (190,917,000) | (178,433,000) | |
Long-term portion | 3,864,000 | 4,358,000 | |
Secured Debt | 2013 Term Loan Facility | |||
Debt Instrument [Line Items] | |||
2013 Term Loan Facility outstanding principal balance | 177,286,000 | 177,759,000 | $ 325,000,000 |
Less: Unamortized discount | $ (598,000) | $ (922,000) | $ (1,625,000) |
Leases - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Lessee, Lease, Description [Line Items] | ||
Letters of credit outstanding, amount related to leases | $ 4,343 | |
Impairment of right-of-use assets | 62,865 | $ 0 |
Impairment of fixed assets | $ 46,822 | $ 0 |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Renewal terms for extending lease | 1 year | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Renewal terms for extending lease | 10 years |
Leases - Balance Sheet Classification (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Assets | ||
Operating lease assets, gross | $ 634,441 | |
Accumulated lease expense | (87,438) | |
Accumulated impairment | (62,865) | |
Total operating lease assets | 484,138 | $ 563,372 |
Finance lease assets, gross | 8,842 | |
Accumulated depreciation | (2,559) | |
Total finance lease assets | 6,283 | |
Total lease assets | 490,421 | |
Current | ||
Current portion of operating lease liabilities | 74,106 | 74,279 |
Finance leases | 1,920 | |
Non-current | ||
Long-term operating lease liabilities | 516,681 | $ 532,977 |
Finance leases | 3,864 | |
Total lease liabilities | $ 596,571 |
Leases - Components of Lease Cost (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Leases [Abstract] | ||
Operating lease costs | $ 29,504 | $ 30,022 |
Amortization of lease assets | 430 | 259 |
Interest on lease liabilities | 140 | 54 |
Finance lease costs | 570 | 313 |
Variable lease costs | 179 | 210 |
Sublease income | (632) | 866 |
Total lease costs | $ 29,621 | $ 31,411 |
Leases - Maturities (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Operating Leases | ||
2020 | $ 89,357 | |
2021 | 111,432 | |
2022 | 102,979 | |
2023 | 94,679 | |
2024 | 85,485 | |
2025 and thereafter | 352,563 | |
Total lease payments | 836,495 | |
Less: imputed interest | (245,708) | |
Lease liabilities | 590,787 | |
Finance Leases | ||
2020 | 1,781 | |
2021 | 2,364 | |
2022 | 1,909 | |
2023 | 545 | |
2024 | 0 | |
2025 and thereafter | 0 | |
Total lease payments | 6,599 | |
Less: imputed interest | (815) | |
Lease liabilities | 5,784 | $ 6,248 |
Total | ||
2020 | 91,138 | |
2021 | 113,796 | |
2022 | 104,888 | |
2023 | 95,224 | |
2024 | 85,485 | |
2025 and thereafter | 352,563 | |
Total lease payments | 843,094 | |
Less: imputed interest | (246,523) | |
Lease liabilities | $ 596,571 |
Leases - Minimum Rental Payments (Details) $ in Thousands |
Dec. 31, 2019
USD ($)
|
---|---|
Leases [Abstract] | |
2020 | $ 121,113 |
2021 | 113,779 |
2022 | 104,904 |
2023 | 95,261 |
2024 | 85,540 |
2025 and thereafter | 348,857 |
Total | $ 869,454 |
Leases - Sub-Lease Income (Details) $ in Thousands |
Dec. 31, 2019
USD ($)
|
---|---|
Leases [Abstract] | |
2020 | $ 2,301 |
2021 | 1,841 |
2022 | 1,099 |
2023 | 362 |
2024 | 258 |
2025 and thereafter | 514 |
Total | $ 6,375 |
Leases - Weighted Average (Details) |
Mar. 31, 2020 |
---|---|
Leases [Abstract] | |
Weighted average remaining lease term, operating leases | 8 years 6 months |
Weighted average remaining lease term, finance leases | 3 years |
Weighted average discount rate, operating leases | 8.00% |
Weighted average discount rate, finance leases | 9.80% |
Leases - Supplemental Cash Flow (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Cash paid for amounts included in the measurement of lease liabilities | ||
Operating cash flows from operating leases | $ 29,603 | $ 29,503 |
Operating cash flows from finance leases | 612 | 54 |
Financing cash flows from finance leases | 1,970 | 189 |
Leased assets obtained in exchange for new operating lease liabilities | 1,548 | 17,812 |
Leased assets obtained in exchange for new finance lease liabilities | $ 3,937 | $ 934 |
Related Party (Details) - Firm - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
May 01, 2017 |
|
Related Party Transaction [Line Items] | |||
Legal fees | $ 70 | $ 66 | |
Firm Retainer | |||
Related Party Transaction [Line Items] | |||
Monthly retainer fee payable | $ 21 |
Concentration of Credit Risk (Details) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020
USD ($)
financial_institution
|
Dec. 31, 2019
USD ($)
|
|
Risks and Uncertainties [Abstract] | ||
Cash and cash equivalents held at one financial institution | $ 18,987 | |
Cash and cash equivalents | $ 24,669 | $ 18,808 |
Number of financial institutions with cash deposits held | financial_institution | 1 |
Earnings (Loss) Per Share (Details) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Earnings Per Share [Abstract] | ||
Weighted average number of common shares outstanding — basic (in shares) | 27,381,231 | 26,443,946 |
Effect of dilutive share based awards (in shares) | 0 | 0 |
Weighted average number of common shares outstanding — diluted (in shares) | 27,381,231 | 26,443,946 |
Loss per share: | ||
Basic (in dollars per share) | $ (4.98) | $ (0.08) |
Diluted (in dollars per share) | $ (4.98) | $ (0.08) |
Anti-dilutive shares had the company not been in a net loss position | 5,044 |
Stock-Based Compensation - Black-Scholes Option-Pricing Model (Details) - Employee Stock Purchase Plan |
Mar. 16, 2020
$ / shares
|
---|---|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Grant price (in dollars per share) | $ 0.74 |
Expected term | 3 months |
Expected volatility | 112.98% |
Risk-free interest rate | 0.24% |
Expected dividend yield | 0.00% |
Asset Impairment (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Asset Impairment Charges [Abstract] | ||
Impairment of fixed assets | $ 46,822 | $ 0 |
Impairment of right-of-use assets | $ 62,865 | $ 0 |
Goodwill and Other Intangibles - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Impairment of goodwill | $ (16,426) | |
Impairment charge for intangible assets | 983 | $ 0 |
Amortization expense | $ 699 | $ 746 |
Goodwill and Other Intangibles - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Mar. 31, 2020 |
Dec. 31, 2019 |
|
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 16,484 | $ 16,484 | |
Accumulated Amortization | (8,963) | (8,264) | |
Impairment | 983 | 0 | |
Net Intangible Assets | 6,538 | 8,220 | |
Membership lists | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 7,652 | 7,652 | |
Accumulated Amortization | (6,738) | (6,385) | |
Impairment | 145 | 0 | |
Net Intangible Assets | 769 | 1,267 | |
Non-compete agreements | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 3,761 | 3,761 | |
Accumulated Amortization | (1,202) | (1,013) | |
Impairment | 0 | 0 | |
Net Intangible Assets | 2,559 | 2,748 | |
Trade names | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 5,071 | 5,071 | |
Accumulated Amortization | (1,023) | (866) | |
Impairment | 838 | 0 | |
Net Intangible Assets | $ 3,210 | $ 4,205 | |
Net balance write off | $ 180 |
Acquisitions - Additional Information (Details) $ in Thousands |
1 Months Ended | 3 Months Ended | |
---|---|---|---|
Feb. 28, 2019
USD ($)
club
|
Mar. 31, 2020
USD ($)
club
|
Mar. 31, 2019
USD ($)
|
|
Business Acquisition [Line Items] | |||
Acquisition costs incurred | $ 102 | $ 149 | |
Number of clubs | club | 185 | ||
Revenues | $ 98,079 | 116,598 | |
Net loss | (136,763) | (2,199) | |
Around the Clock Fitness | |||
Business Acquisition [Line Items] | |||
Total purchase price, including future consideration | $ 22,222 | ||
Total allocation of purchase price | $ 21,667 | ||
Number of clubs | club | 6 | ||
Revenues | 3,052 | 1,086 | |
Net loss | $ (16,596) | $ 25 | |
Around the Clock Fitness | Around the Clock Fitness | Trade names | |||
Business Acquisition [Line Items] | |||
Estimated useful life | 8 years | ||
Around the Clock Fitness | Around the Clock Fitness | Non-compete agreements | |||
Business Acquisition [Line Items] | |||
Estimated useful life | 5 years |
Acquisitions - Schedule of Net Assets Acquired (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Dec. 31, 2019 |
Feb. 28, 2019 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 16,569 | $ 32,988 | |
Around the Clock Fitness | |||
Business Acquisition [Line Items] | |||
Fixed assets | $ 8,803 | ||
Goodwill | 9,976 | ||
Operating lease right-of-use assets | 17,812 | ||
Operating lease liabilities | (18,212) | ||
Deferred revenue | (967) | ||
Total allocation of purchase price | 21,667 | ||
Around the Clock Fitness | Trade names | |||
Business Acquisition [Line Items] | |||
Definite lived intangible assets | 2,221 | ||
Around the Clock Fitness | Membership Lists | |||
Business Acquisition [Line Items] | |||
Definite lived intangible assets | 610 | ||
Around the Clock Fitness | Non-compete agreements | |||
Business Acquisition [Line Items] | |||
Definite lived intangible assets | $ 1,424 |
Income Taxes (Details) - USD ($) |
3 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Dec. 27, 2019 |
Jan. 18, 2019 |
May 02, 2018 |
Nov. 30, 2017 |
Mar. 31, 2020 |
Mar. 31, 2019 |
Mar. 27, 2020 |
|
Income Tax Contingency [Line Items] | |||||||
(Benefit) provision for corporate income taxes | $ (8,598,000) | $ 74,000 | |||||
Effective income tax rate | 6.00% | (3.00%) | |||||
Benefit for reclassifying QIP | $ 8,652,000 | ||||||
Unrecognized tax benefits | $ 1,155,000 | ||||||
Tax Year 2006 Though 2009 | New York State Division of Taxation and Finance | |||||||
Income Tax Contingency [Line Items] | |||||||
Proposed tax assessment | $ 5,097 | ||||||
Interest portion of the proposed tax assessment | $ 2,419 | ||||||
Tax Year 2006 Though 2009 | New York City Department Of Finance | |||||||
Income Tax Contingency [Line Items] | |||||||
Proposed tax assessment | $ 5,599 | $ 8,935,000 | |||||
Interest portion of the proposed tax assessment | $ 1,569 | $ 4,138,000 | |||||
Tax Year 2010 Though 2014 | New York State Division of Taxation and Finance | |||||||
Income Tax Contingency [Line Items] | |||||||
Proposed tax assessment | $ 2,749,000 | ||||||
Interest portion of the proposed tax assessment | $ 840,000 |
Commitments and Contingencies (Details) - USD ($) $ in Thousands |
Jun. 05, 2013 |
Mar. 31, 2020 |
Aug. 29, 2011 |
---|---|---|---|
Loss Contingencies [Line Items] | |||
Potential lease guarantor obligations, undiscounted payments | $ 1,336 | ||
Action Styled White Plains Realty Vs Town Sports International | |||
Loss Contingencies [Line Items] | |||
Additional damages | $ 900 | ||
Damages awarded | $ 1,000 |
Label | Element | Value | ||
---|---|---|---|---|
Restricted Cash | us-gaap_RestrictedCash | $ 2,195,000 | ||
Restricted Cash | us-gaap_RestrictedCash | $ 2,195,000 | ||
|
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