Town Sports International (CLUBQ) 8-K Town Sports International Holdings, Inc. Announces Fourth Quarter and Full-year 2007 Financial Results

Exhibit 99.1

For Release on February 28^th, 2008

TOWN SPORTS INTERNATIONAL HOLDINGS, INC. ANNOUNCES FOURTH QUARTER AND
FULL-YEAR 2007 FINANCIAL RESULTS

• Revenue for Q4 2007 increased 7.9% to $118.9 million from $110.2 million for Q4 2006.

• Earnings per diluted share were $0.23 per share for Q4 2007, or $0.21 per share before favorable tax adjustments of $0.02 per share recorded during the quarter.

• Revenue for the year increased 9.2%, to $472.9 million for 2007 from $433.1 million for 2006.

• Earnings per diluted share were $0.51 per share for 2007, or $0.77 before the net effect of the loss on extinguishment of debt of $0.28 per share and the aforementioned favorable tax adjustments of $0.02 per share.

New York, NY — February 28, 2008— Town Sports International Holdings, Inc. (“TSI” or the “Company”) (NASDAQ: CLUB), a leading owner of health clubs located primarily in major cities from Washington, DC north through New England, operating under the brand names “New York Sports Clubs”, “Boston Sports Clubs”, “Washington Sports Clubs” and “Philadelphia Sports Clubs”, announced its results for the fourth quarter and year ended December 31, 2007.

Alex Alimanestianu, Chief Executive Officer of TSI, commented: “We are very pleased to report positive results for the fourth quarter and full-year and that our strong position in the market and our current business trends are providing us with a favorable outlook despite the current economic conditions. Our team executed nine new club openings in the fourth quarter, and our new clubs continue to perform well. In 2008, we will look to capitalize on strengths such as our corporate and group sales programs, which leverage our clustering strategy, and will continue to improve our execution at the club level.”

Quarter ended December 31, 2007 Financial Highlights:

Revenue (in $’000s) was comprised of the following:

	Quarter Ended December 31,
	2006					2007
	Revenue		% Revenue			Revenue		% Revenue			% Growth
Membership dues	$	89,041		80.8	%	$	96,094		80.8	%		7.9	%
Initiation fees		2,724		2.5	%		3,134		2.7	%		15.1	%
Membership revenue		91,765		83.3	%		99,228		83.5	%		8.1	%
Personal training revenue		12,596		11.4	%		13,460		11.3	%		6.9	%
Other ancillary club revenue		5,022		4.6	%		4,718		4.0	%		(6.1	%)
Ancillary club revenue		17,618		16.0	%		18,178		15.3	%		3.2	%
Fees and other revenue		784		0.7	%		1,468		1.2	%		87.2	%
Total revenue	$	110,167		100.0	%	$	118,874		100.0	%		7.9	%

Total revenuefor Q4 2007 increased 7.9% to $118.9 million from $110.2 million for Q4 2006. This increase was driven by growth in membership revenue and ancillary club revenue. Comparable club revenue increased 3.2% for Q4 2007. Of this increase, 1.8% was due to an increase in membership, 1.0% was due to an increase in price and 0.4% was due to an increase in ancillary club revenue and fees and other revenue.

Total operating expensesincreased 7.7% to $103.7 million for Q4 2007 compared to $96.4 million for Q4 2006.

• Payroll and related expenses increased 7.7%, or $3.2 million, to $44.7 million for Q4 2007 compared to $41.5 million for Q4 2006, in line with revenue growth.

• Club operating expenses decreased 0.8%, or $317,000, to $37.0 million for Q4 2007 compared to $37.3 million for Q4 2006.

• Advertising and marketing expenses decreased $849,000 primarily due to a shift in the timing of our advertising plans.

• Laundry expenses increased $608,000 due to an increase in the number of clubs to which we had outsourced towel laundry service in Q4 2007 as compared to Q4 2006.

• General and administrative expenses increased $2.2 million, or 29.3%, to $9.8 million for Q4 2007 from $7.6 million for Q4 2006. The primary factors were the increases in professional fees in connection with Sarbanes-Oxley initiatives and other first-time public company expenses together with increases in general liability claims encountered in the ordinary course of business. The remaining increase was due to costs to support the growth in our business in Q4 2007.

• Depreciation and amortization expenses increased $2.3 million, or 22.7%, to $12.2 million for Q4 2007 from $9.9 million for Q4 2006, principally due to new and expanded clubs.

• The Company recorded an income tax provision of $3.3 million for Q4 2007 compared to $836,000 for Q4 2006. For Q4 2007 it recognized $538,000 of favorable tax adjustments.

Net incomefor Q4 2007 was $6.0 million compared to $6.6 million for Q4 2006.

EBITDAfor Q4 2007 increased 14.8% to $27.8 million from $24.2 million for Q4 2006. EBITDA as a percentage of total revenue (“EBITDA margin) was 23.4% for Q4 2007, compared to 22.0% for Q4 2006. Please refer to the reconciliation of net income to EBITDA at the end of this release.

Year ended December 31, 2007 Financial Highlights:

Revenue (in $’000s) was comprised of the following:

	Year Ended December 31,
	2006					2007
	Revenue		% Revenue			Revenue		% Revenue			% Growth
Membership dues	$	346,201		79.9	%	$	374,631		79.2	%		8.2	%
Initiation fees		9,563		2.2	%		12,315		2.6	%		28.8	%
Membership revenue		355,764		82.1	%		386,946		81.8	%		8.8	%
Personal training revenue		49,511		11.4	%		56,106		11.9	%		13.3	%
Other ancillary club revenue		22,863		5.3	%		24,247		5.1	%		6.1	%
Ancillary club revenue		72,374		16.7	%		80,353		17.0	%		11.0	%
Fees and other revenue		4,942		1.2	%		5,616		1.2	%		13.6	%
Total revenue	$	433,080		100.0	%	$	472,915		100.0	%		9.2	%

Total revenueincreased $39.8 million, or 9.2%, to $472.9 million for the year ended December 31, 2007 from $433.1 million for the year ended December 31, 2006. Comparable club revenue increased 5.2% for the year ended December 31, 2007. Of this 5.2% increase, 2.7% was due to an increase in membership, 1.0% was due to an increase in price and 1.5% was due to an increase in ancillary club revenue and fees and other revenue.

Total operating expensesincreased 9.2%, or $35.0 million, to $415.1 million for the year ended December 30, 2007 compared to $380.1 million for the same period in 2006, in line with revenue growth.

• Payroll and related expenses increased $14.7 million, or 9.0%, to $177.4 million for the year ended December 31, 2007, from $162.7 million for the year ended December 31, 2006.

• Club operating expenses increased $10.4 million, or 7.1%, to $156.7 million for the year ended December 31, 2007, from $146.3 million for the year ended December 31, 2006.

• Rent and occupancy expenses increased $5.8 million. Rent and occupancy costs at clubs that opened after January 1, 2006, or that are currently under construction, increased $5.5 million.

• Laundry expenses increased $2.3 million due to an increase in the number of clubs to which we had outsourced towel laundry service in 2007 compared to 2006.

• General and administrative expenses increased $4.8 million, or 16.0%, to $35.1 million for the year ended December 31, 2007 from $30.3 million for the year ended December 31, 2006. The primary factors were the increases in corporate rent, professional fees in connection with Sarbanes-Oxley initiatives and other first-time public company expenses together with increases in general liability claims encountered in the ordinary course of business. The remaining increase was due to costs to support the growth in our business in 2007. Offsetting these increases was a decrease in costs related to the examination of strategic and financing alternatives of $1.2 million.

• Depreciation and amortization increased $5.1 million, or 12.5%, to $46.0 million for the year ended December 31, 2007 from $40.9 million for the year ended December 31, 2006, principally due to new and expanded clubs.

• Loss on extinguishment of debt totaled $12.5 million for the year ended December 31, 2007. The 2007 loss was due to the early termination fees, deferred financing costs written-off, and associated fees related to the tender offer and early redemption of the outstanding principal of the 9 5/8% Senior Notes issued by our wholly owned subsidiary Town Sports International, LLC. Loss on extinguishment of debt totaled $16.1 million for the year ended December 31, 2006 related to the early redemption of $85.0 million of outstanding principal of the 9 5/8% Senior Notes and the redemption of 35% of our 11% Senior Discount Notes.

• We have recorded an income tax provision of $8.1 million for the year ended December 31, 2007 compared to $715,000 for the year ended December 31, 2006.

Net incomefor the year ended December 31, 2007 was $13.6 million compared to $4.6 million for the year ended December 31, 2006.

EBITDAfor the year ended December 31, 2007 increased 10.4% to $105.6 million from $95.7 million for the year ended 2006. EBITDA margin was 22.3% for the year ended December 31, 2007, compared to 22.1% in 2006. Please refer to the reconciliation of net income to EBITDA at the end of this release.

Cash flow from operating activitiesfor the year ended December 31, 2007 increased $7.8 million, or 10.3%, to $83.0 million from $75.2 million for the year ended December 31, 2006. Cash paid for interest decreased $18.2 million to $17.1 million for the year ended December 31, 2007 and cash paid for income taxes increased $16.0 million to $20.7 million for the year ended December 31, 2007.

2008 Business Outlook:

Based upon the current business environment, our performance during the year ended December 31, 2007 and current trends in our market, we currently expect the following:

Total revenue for 2008 will be in the range of $510.0 million to $520.0 million, representing approximately 8% to 10% growth over 2007, driven primarily by club membership and ancillary revenue growth, the maturation of recently opened clubs, as well as new clubs expected to be opened during 2008.

As set forth below, we expect net income to be between $21.3 million and $22.3 million and earnings per share on a fully diluted basis to be between $0.80 and $0.84 for 2008 compared to net income of $20.5 million and earnings per share on a fully diluted basis of $0.51 per share in 2007, or $0.77 per share before the net effect of the loss on extinguishment of debt of $0.28 per share and favorable tax adjustments of $0.02 per share.

	Year-ended			Year Ending 2008
	2007			Guidance
All figures in thousands, except share and per share data				Between		And
Revenue	$	472,915		$	510,000	$	520,000
Net income	$	13,646		$	21,250	$	22,250
Loss on extinguishment of debt, net of effect of taxes		7,387			—		—
Net favorable tax adjustments(1)		(538	)		—		—
Net income before loss on extinguishment of debt, net of effect of taxes and favorable tax adjustments	$	20,495		$	21,250	$	22,250
Fully diluted share count		26,611,226			26,500,000		26,500,000
Diluted earnings per share				$	0.80	$	0.84

(1) This net discrete tax benefit represents the $538,000 of favorable tax adjustments recorded in the fourth quarter of 2007. The Company estimates that its effective tax rate for 2008 will approximate 41%.

2008 Investing Activities Outlook:

For the year ending December 31, 2008, we estimate we will invest a total of $95.0 million in capital expenditures. This amount includes $19.0 million to continue to upgrade existing clubs, $9.0 million to enhance our management information systems and $6.0 million for the construction of a new regional laundry facility in our NYSC market. The remainder of our 2008 capital expenditures will be committed to building or expanding clubs. Our plan is to open 11 new clubs in 2008.

Forward-Looking Statements:

Statements in this release that do not constitute historical facts, including, without limitation, statements under the caption “2008 Business Outlook” and “2008 Investing Activities” and other statements regarding future financial results and performance and potential sales revenue are “forward-looking” statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, without limitation, statements under the captions “2008 Business Outlook” and “2008 Investing Activities Outlook,” other statements regarding future financial results and performance and potential sales revenue, other statements that are predictive in nature or depend upon or refer to events or conditions, or that include words such as “expects,” “anticipated,” “intends,” “plans,” “believes,” “estimates” or “could”. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Company’s control, including the level of market demand for the Company’s services, competitive pressures, the ability to achieve reductions in operating costs and to continue to integrate acquisitions, the application of federal and state tax laws and regulations, and other specific factors discussed herein and in other releases and public filings made by the Company (including Forms 10-K and 10-Q filed with the Securities and Exchange Commission); accordingly, actual results could differ materially from any such forward-looking statement. The forward-looking statements speak only as of the date hereof and the Company does not intend to update this information, except as required by law, to reflect developments or information obtained after the date hereof, and the Company disclaims any legal obligation to the contrary.

About Town Sports International Holdings, Inc.:

New York-based Town Sports International Holdings, Inc. is a leading owner and operator of fitness clubs in the Northeast and mid-Atlantic regions of the United States and, through its subsidiaries, operated 161 fitness clubs as of December 31, 2007, comprising 111 New York Sports Clubs, 22 Boston Sports Clubs, 18 Washington Sports Clubs (two of which are partly-owned), seven Philadelphia Sports Clubs, and three clubs located in Switzerland. These clubs collectively served approximately 486,000 members, excluding pre-sold, short-term and seasonal memberships. For more information on TSI visithttp://www.mysportsclubs.com.

The Company will hold a conference call on Thursday, February 28, 2008 at 5:00 PM (Eastern) to discuss the fourth quarter 2007 results. Alex Alimanestianu, Chief Executive Officer, and Dan Gallagher, Senior Vice President — Finance, will host the conference call. The conference call will be Web cast and may be accessed via the Company’s Investor Relations section of its Website atwww.mysportsclubs.com. A replay and transcript of the call will be available via the Company’s Website beginning February 29, 2008.

Town Sports International Holdings, Inc., New York
Contact Information:

Investor Contact:
(212) 246-6700 extension 1650
Investor.relations@town-sports.com

or

Integrated Corporate Relations, Joseph Teklits
(203) 682-8258
joseph.teklits@icrinc.com

TOWN SPORTS INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 2006 and 2007
(All figures in $’000s)
(Unaudited)

	December 31,			December 31,
	2006			2007
ASSETS
Current assets:
Cash and cash equivalents	$	6,810		$	5,463
Accounts receivable, net		8,028			8,815
Inventory		435			230
Prepaid expenses and other current assets		14,757			11,334
Total current assets		30,030			25,842
Fixed assets, net		281,606			337,152
Goodwill		50,112			50,165
Intangible assets, net		922			477
Deferred tax assets, net		32,437			44,345
Deferred membership costs		15,703			17,974
Other assets		12,717			12,808
Total assets	$	423,527		$	488,763
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt and capital lease obligations	$	181		$	10,898
Accounts payable		9,972			10,891
Accrued expenses		33,220			34,186
Accrued interest		3,466			738
Corporate income taxes payable		2,577			811
Deferred revenue		38,980			41,798
Total current liabilities		88,396			99,322
Long-term debt and capital lease obligations		280,948			305,124
Deferred lease liabilities		54,929			61,221
Deferred revenue		5,807			7,300
Other liabilities		11,276			15,613
Total liabilities		441,356			488,580
Stockholders’ equity (deficit):
Common stock		26			26
Paid-in capital		(21,068	)		(16,977	)
Accumulated other comprehensive income (currency translation adjustment)		539			814
Retained earnings		2,674			16,320
Total stockholders’ equity (deficit)		(17,829	)		183
Total liabilities and stockholders’ equity (deficit)	$	423,527		$	488,763

TOWN SPORTS INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS
For the quarters and years ended December 31, 2006 and 2007
(All figures in $’000s except share and per share data)
(Unaudited)

	Quarters Ended December 31,						Years Ended December 31,
	2006			2007			2006			2007
Revenues:
Club operations	$	109,383		$	117,406		$	428,138		$	467,299
Fees and other		784			1,468			4,942			5,616
		110,167			118,874			433,080			472,915
Operating Expenses:
Payroll and related		41,498			44,712			162,709			177,357
Club operating		37,315			36,998			146,243			156,660
General and administrative		7,613			9,844			30,248			35,092
Depreciation and amortization		9,939			12,192			40,850			45,964
		96,365			103,746			380,050			415,073
Operating income		13,802			15,128			53,030			57,842
Loss on extinguishment of debt		—			—			16,113			12,521
Interest expense		7,025			6,498			35,496			26,400
Interest income		(262	)		(189	)		(2,124	)		(1,071	)
Equity in the earnings of investees and rental income		(446	)		(448	)		(1,817	)		(1,799	)
Income before provision for corporate income taxes		7,485			9,267			5,362			21,791
Provision for corporate income taxes		836			3,261			715			8,145
Net income	$	6,649		$	6,006		$	4,647		$	13,646
Earnings per share:
Basic	$	0.26		$	0.23		$	0.20		$	0.52
Diluted	$	0.25		$	0.23		$	0.20		$	0.51
Weighted average number of shares used in calculating earnings per share:
Basic		25,955,381			26,245,568			22,749,470			26,153,543
Diluted		26,456,701			26,525,975			23,154,812			26,611,226

TOWN SPORTS INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2006 and 2007
(All figures in $’000s)
(Unaudited)

	2006			2007
Cash flows from operating activities:
Net income	$	4,647		$	13,646
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		40,850			45,964
Non cash interest expense on Senior Discount Notes		14,417			12,460
Payment of interest on Payment-in-Kind Notes		(12,961	)		—
Amortization of debt issuance costs		1,438			815
Loss on extinguishment of debt		16,113			12,521
Noncash rental expense, net of noncash rental income		1,768			508
Compensation expense incurred in connection with stock options		1,135			913
Net change in certain working capital components		11,169			1,765
Increase in deferred tax asset		(8,059	)		(11,908	)
Increase in deferred membership costs		(4,181	)		(2,271	)
Landlord contributions to tenant improvements		6,413			5,439
Increase in insurance reserves		2,564			2,795
Other		(98	)		305
Total adjustments		70,568			69,306
Net cash provided by operating activities		75,215			82,952
Cash flows from investing activities:
Capital expenditures, net of effect of acquired businesses		(66,253	)		(93,280	)
Insurance proceeds received		—			500
Acquisition of businesses, net of cash acquired		(858	)		(4,450	)
Net cash used in investing activities		(67,111	)		(97,230	)
Cash flows from financing activities:
Proceeds from New Credit Facility		—			185,000
Costs related to issuance of New Credit Facility		—			(2,724	)
Proceeds from Initial Public Offering, net of underwriting and other costs		91,750			—
Repayment of Senior Notes		(128,684	)		(169,999	)
Proceeds from borrowings on Revolving Loan Facility		—			9,000
Premium paid on extinguishment of debt and related costs		(13,273	)		(9,309	)
Repayment of long term borrowings		(2,805	)		(1,568	)
Change in book overdraft		245			(647	)
Repurchase of common stock		(433	)		—
Tax benefit from stock option exercises		163			1,082
Proceeds from stock option exercises		439			2,096
Net cash provided by (used in) financing activities		(52,598	)		12,931
Net decrease in cash and cash equivalents		(44,494	)		(1,347	)
Cash and cash equivalents beginning of period		51,304			6,810
Cash and cash equivalents end of period	$	6,810		$	5,463
Summary of the change in certain working capital components, net of effects of acquired businesses
Increase in accounts receivable	$	(3,168	)	$	(910	)
Decrease (increase) in inventory		(13	)		205
Decrease (increase) in prepaid expenses and other current assets		(4,085	)		2,326
(Decrease) increase in accounts payable, accrued expenses and accrued interest		2,662			(2,435	)
Change in prepaid corporate income taxes and corporate income taxes payable		7,095			(1,726	)
Increase in deferred revenue		8,678			4,305
Net change in certain working capital components	$	11,169		$	1,765

TOWN SPORTS INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Net Income to EBITDA
For the quarter and year ended December 31, 2006 and 2007
(All figures in $’000s)
(Unaudited)

	Quarter Ended									Year Ended
	December 31,									December 31,
	2006			2007			% Incr.			2006			2007			% Incr.
Net income	$	6,649		$	6,006					$	4,647		$	13,646
Provision for corporate income taxes		836			3,261						715			8,145
Loss on extinguishment of debt		—			—						16,113			12,521
Interest expense, net of interest income		6,763			6,309						33,372			25,329
Depreciation and amortization		9,939			12,192						40,850			45,964
EBITDA	$	24,187		$	27,768			14.8	%	$	95,697		$	105,605			10.4	%
EBITDA margin		22.0	%		23.4	%					22.1	%		22.3	%

Non-GAAP Financial Measures:

EBITDA is defined as earnings before interest, taxes, depreciation and amortization and loss on extinguishment of debt. EBITDA provides useful information regarding the Company’s operating performance and financial condition, subject to the limitations described below. EBITDA should not be considered in isolation or as a substitute for net income, cash flows or other consolidated income (loss) or cash flow data prepared in accordance with generally accepted accounting principles in the United States of America or as a measure of the Company’s profitability or liquidity. Additionally, investors should be aware that EBITDA may not be comparable to similarly titled measures presented by other companies. EBITDA margin is defined as EBITDA as a percentage of consolidated revenue.

The Company believes that EBITDA is used by some investors, analysts and other parties to measure the Company’s performance over time. Management believes that providing this additional information is useful to understanding the Company’s ability to meet capital expenditures and working capital requirements and to better assess and understand operating performance. The measure allows investors, analysts and other parties to better evaluate the Company’s financial performance and prospects in the same manner as management.