Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Oct. 18, 2013 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | TOWN SPORTS INTERNATIONAL HOLDINGS INC | |
Entity Central Index Key | 1281774 | |
Document Type | 10-Q | |
Document Period End Date | 30-Sep-13 | |
Amendment Flag | FALSE | |
Document Fiscal Year Focus | 2013 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 24,106,139 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (Unaudited) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $67,961 | $37,758 |
Accounts receivable (less allowance for doubtful accounts of $2,247 and $3,249 as of September 30, 2013 and December 31, 2012, respectively) | 3,429 | 6,508 |
Inventory | 417 | 438 |
Deferred tax assets, net | 22,493 | 24,897 |
Prepaid corporate income taxes | 226 | 550 |
Prepaid expenses and other current assets | 11,067 | 9,866 |
Total current assets | 105,593 | 80,017 |
Fixed assets, net | 244,831 | 256,871 |
Goodwill | 32,850 | 32,824 |
Intangible assets | 1,037 | |
Deferred tax assets, net | 4,217 | 9,296 |
Deferred membership costs | 9,194 | 10,811 |
Other assets | 11,150 | 14,091 |
Total assets | 408,872 | 403,910 |
Current liabilities: | ||
Current portion of long-term debt | 40,500 | 15,787 |
Accounts payable | 5,711 | 7,467 |
Accrued expenses | 26,460 | 27,053 |
Accrued interest | 87 | 89 |
Dividends Payable | 297 | 305 |
Deferred revenue | 36,454 | 37,138 |
Total current liabilities | 109,509 | 87,839 |
Long-term debt | 270,556 | 294,552 |
Dividends payable, noncurrent | 677 | 799 |
Deferred lease liabilities | 58,455 | 61,732 |
Deferred revenue | 2,535 | 3,889 |
Other liabilities | 7,537 | 10,595 |
Total liabilities | 449,269 | 459,406 |
Contingencies (Note 12) | ||
Stockholders' deficit: | ||
Common stock, $.001 par value; issued and outstanding 24,102,450 and 23,813,106 shares at September 30, 2013 and December 31, 2012, respectively | 24 | 24 |
Paid-in capital | -14,631 | -16,326 |
Accumulated other comprehensive income | 1,582 | 1,226 |
Accumulated deficit | -27,372 | -40,420 |
Total stockholders' deficit | -40,397 | -55,496 |
Total liabilities and stockholders' deficit | $408,872 | $403,910 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, except Share data, unless otherwise specified | ||
Current assets: | ||
Allowance for doubtful accounts receivable | $2,247 | $3,249 |
Stockholders' deficit: | ||
Common stock, par value | $0.00 | $0.00 |
Common stock, shares issued | 24,102,450 | 23,813,106 |
Common stock, shares outstanding | 24,102,450 | 23,813,106 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Income (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Revenues: | ||||
Club operations | $115,639 | $117,365 | $352,568 | $359,903 |
Fees and other | 1,403 | 2,247 | 3,750 | 4,862 |
Total revenues | 117,042 | 119,612 | 356,318 | 364,765 |
Operating Expenses: | ||||
Payroll and related | 43,433 | 43,654 | 131,986 | 136,293 |
Club operating | 45,300 | 46,270 | 133,616 | 136,012 |
General and administrative | 7,245 | 5,641 | 20,985 | 17,709 |
Depreciation and amortization | 12,549 | 12,148 | 37,108 | 37,427 |
Insurance recovery related to damaged property | -694 | -3,194 | ||
Impairment of fixed assets | 439 | 239 | 567 | 239 |
Total operating expenses | 108,272 | 107,952 | 321,068 | 327,680 |
Operating income | 8,770 | 11,660 | 35,250 | 37,085 |
Loss on extinguishment of debt | 1,010 | 1,010 | ||
Interest expense | 5,523 | 6,542 | 16,308 | 18,027 |
Interest income | -25 | -1 | -43 | |
Equity in the earnings of investees and rental income | -594 | -632 | -1,843 | -1,852 |
Income before provision for corporate income taxes | 3,841 | 4,765 | 20,786 | 19,943 |
Provision for corporate income taxes | 1,250 | 1,613 | 7,767 | 7,524 |
Net income | $2,591 | $3,152 | $13,019 | $12,419 |
Earnings per share: | ||||
Basic | $0.11 | $0.13 | $0.54 | $0.53 |
Diluted | $0.10 | $0.13 | $0.53 | $0.52 |
Weighted average number of shares used in calculating earnings per share: | ||||
Basic | 24,101,239 | 23,581,631 | 24,007,310 | 23,331,877 |
Diluted | 24,720,511 | 24,186,498 | 24,613,236 | 24,015,747 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Comprehensive Income, Net of Tax, Attributable to Parent [Abstract] | ||||
Net income | $2,591 | $3,152 | $13,019 | $12,419 |
Foreign currency translation adjustments | 158 | 22 | 102 | 55 |
Interest rate swap, net of tax | 42 | -13 | 255 | -48 |
Total other comprehensive income, net of tax | 200 | 9 | 357 | 7 |
Comprehensive income | $2,791 | $3,161 | $13,376 | $12,426 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Cash flows from operating activities: | ||
Net income | $13,019 | $12,419 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 37,108 | 37,427 |
Impairment of fixed assets | 567 | 239 |
Loss on extinguishment of debt | 1,010 | |
Insurance recovery related to damaged property | -3,194 | |
Amortization of debt discount | 717 | 311 |
Amortization of debt issuance costs | 818 | 866 |
Non-cash rental expense, net of non-cash rental income | -4,285 | -2,950 |
Share-based compensation expense | 1,592 | 787 |
Decrease in deferred tax asset | 7,287 | 7,036 |
Net change in certain operating assets and liabilities | -4,604 | -11,033 |
Decrease (increase) in deferred membership costs | 1,617 | -1,173 |
Landlord contributions to tenant improvements | 934 | 1,320 |
Decrease in insurance reserves | -1,036 | -2,124 |
Other | -59 | -187 |
Total adjustments | 37,462 | 31,529 |
Net cash provided by operating activities | 50,481 | 43,948 |
Cash flows from investing activities: | ||
Capital expenditures | -20,658 | -13,278 |
Acquisition of businesses | -2,939 | |
Insurance recovery related to damaged property | 3,194 | |
Net cash used in investing activities | -20,403 | -13,278 |
Cash flows from financing activities: | ||
Principal payments on 2011 Term Loan Facility | -36,007 | |
Proceeds from replacement 2011 Term Loan Facility lenders | 13,796 | |
Principal payments to non-consenting 2011 Term Loan Facility lenders | -13,796 | |
Term loan repricing related financing costs | -2,707 | |
Cash dividends paid | -101 | |
Proceeds from stock option exercises | 403 | 2,279 |
Tax shortfall from stock option exercise and restricted stock vesting | -220 | |
Net cash provided by (used in) financing activities | 82 | -36,435 |
Effect of exchange rate changes on cash | 43 | -7 |
Net increase in cash and cash equivalents | 30,203 | -5,772 |
Cash and cash equivalents beginning of period | 37,758 | 47,880 |
Cash and cash equivalents end of period | 67,961 | 42,108 |
Summary of the change in certain operating assets and liabilities: | ||
Decrease (increase) in accounts receivable | 3,130 | -1,306 |
Decrease (increase) in inventory | 20 | -34 |
Increase in prepaid expenses and other current assets | -1,742 | -1,705 |
Decrease in accounts payable, accrued expenses and accrued interest | -4,177 | -7,152 |
Change in prepaid corporate income taxes and corporate income taxes payable | 889 | 166 |
Decrease in deferred revenue | -2,724 | -1,002 |
Net change in certain working capital components | -4,604 | -11,033 |
Supplemental disclosures of cash flow information: | ||
Cash payments for interest | 14,706 | 17,562 |
Cash payments for income taxes | $278 | $361 |
Basis_of_Presentation
Basis of Presentation | 9 Months Ended | ||||||
Sep. 30, 2013 | |||||||
Basis of presentation [Abstract] | |||||||
Basis of Presentation | 1. Basis of Presentation | ||||||
As of September 30, 2013, Town Sports International Holdings, Inc. (the “Company” or “TSI Holdings”), through its wholly-owned subsidiary, Town Sports International, LLC (“TSI, LLC”), operated 162 fitness clubs (“clubs”), comprised of 108 clubs in the New York metropolitan market under the “New York Sports Clubs” brand name, 29 clubs in the Boston market under the “Boston Sports Clubs” brand name, 16 clubs (two of which are partly-owned) in the Washington, D.C. market under the “Washington Sports Clubs” brand name, six clubs in the Philadelphia market under the “Philadelphia Sports Clubs” brand name and three clubs in Switzerland. As of September 30, 2013, the 162 fitness club count includes one club that has remained temporarily closed due to Hurricane Sandy. The Company's operating segments are New York Sports Clubs, Boston Sports Clubs, Philadelphia Sports Clubs, Washington Sports Clubs and Swiss Sports Clubs. The Company has determined that its operating segments have similar economic characteristics and meet the criteria which permit them to be aggregated into one reportable segment. | |||||||
The condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The condensed consolidated financial statements should be read in conjunction with the Company's December 31, 2012 consolidated financial statements and notes thereto, included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012. 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 adjustments which, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the interim periods set forth herein. The results for the three and nine months ended September 30, 2013 are not necessarily indicative of the results for the entire year ending December 31, 2013. | |||||||
Change in Estimated Average Membership Life | |||||||
The Company tracks the estimated average membership life of restricted members separately from unrestricted members. The restricted membership base currently includes student memberships introduced in April 2010, teacher memberships introduced in April 2011 and first responder memberships introduced as a one-time promotional offer in September 2011. | |||||||
Joining fees and related direct and incremental expenses of membership acquisition, which include sales commissions, bonuses and related taxes and benefits, which are direct and incremental costs related to the sale of new memberships, are currently deferred and recognized, on a straight-line basis, in operations over the estimated average membership life. As of July 1, 2013, the estimated average membership life of an unrestricted member and a restricted member is 23 months and 28 months, 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 on a quarterly basis. The table below summarizes the estimated average membership life of restricted members and unrestricted members that were in effect for each quarter presented. | |||||||
Estimated Average Membership Life of an Unrestricted Member | Estimated Average Membership Life of a Restricted Member | ||||||
Period | 2013 | 2012 | 2013 | 2012 | |||
Three months ended March 31 | 25 months | 28 months | 27 months | 25 months | |||
Three months ended June 30 | 24 months | 28 months | 28 months | 27 months | |||
Three months ended September 30 | 23 months | 28 months | 28 months | 28 months | |||
Three months ended December 31 | - | 27 months | - | 27 months | |||
If the estimated average membership life for unrestricted members had remained at 24 months for the three months ended September 30, 2013, the impact would have been a decrease in revenue and net income of approximately $294 and $34, respectively. |
Recent_Accounting_Pronouncemen
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2013 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | 2. Recent Accounting Pronouncements |
In July 2013, the Financial Accounting Standards Board (“FASB”) issued updated guidance on the presentation of unrecognized tax benefits when a net operating loss carry-forward, a similar tax loss, or a tax credit carry-forward exists. The update clarifies that an unrecognized tax benefit should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carry-forward, a similar tax loss, or a tax credit carry-forward. In situations where the tax benefit is not available at the reporting date under the governing tax law or if the entity does not intend to use the deferred tax asset for such purpose, the unrecognized tax benefit should be presented as a liability and not combined with deferred tax assets. The updated guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The amendments are to be applied to all unrecognized tax benefits that exist as of the effective date and may be applied retrospectively to each prior reporting period presented. While early adoption is permitted, the Company expects to adopt the updated guidance on January 1, 2014. The adoption of this guidance is not expected to have a material impact on the Company's financial statements. | |
In July 2013, the FASB issued updated guidance permitting the Federal Funds Effective Swap Rate (or Overnight Index Swap Rate) to be used as a U.S. benchmark interest rate for hedge accounting purposes, in addition to the U.S. government rate and LIBOR. Prior to the amendment, only U.S. Treasury and the LIBOR swap rates were considered benchmark interest rates. Including the Federal Funds Effective Swap Rate as an acceptable U.S. benchmark interest rate in addition to U.S. Treasury and LIBOR rates provides a more comprehensive spectrum of interest rates to be utilized as the designated benchmark interest rate risk component under the hedge accounting guidance. The updated guidance is effective prospectively for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013. The adoption of this guidance is not expected to have a material impact on the Company's financial statements. |
LongTerm_Debt
Long-Term Debt | 9 Months Ended | |||||
Sep. 30, 2013 | ||||||
Long-Term Debt [Abstract] | ||||||
Long-Term Debt | ||||||
3. Long-Term Debt | ||||||
30-Sep-13 | 31-Dec-12 | |||||
2011 Term Loan Facility outstanding principal balance | $ | 315,743 | $ | 315,743 | ||
Less: Unamortized discount | -4,687 | -5,404 | ||||
Less: Current portion due within one year | -40,500 | -15,787 | ||||
Long-term portion | $ | 270,556 | $ | 294,552 | ||
2011 Senior Credit Facility | ||||||
On May 11, 2011, TSI, LLC entered into a $350,000 senior secured credit facility (“2011 Senior Credit Facility”). The 2011 Senior Credit Facility consisted of a $300,000 term loan facility (“2011 Term Loan Facility”) and a $50,000 revolving loan facility (“2011 Revolving Loan Facility”). The 2011 Term Loan Facility was issued at an original issue discount (“OID”) of 1.0% or $3,000. The OID was recorded as a contra-liability to long-term debt on the accompanying condensed consolidated balance sheet and is being amortized as interest expense using the effective interest method. On May 11, 2011, debt issuance costs related to the 2011 Senior Credit Facility were $8,065, of which $7,288 are being amortized as interest expense, and are included in other assets in the accompanying condensed consolidated balance sheets. The proceeds from the 2011 Term Loan Facility were used to pay off amounts outstanding under the Company's previously outstanding long-term debt facility, to pay the redemption price for all of the Company's outstanding 11% senior discount notes due in 2014, and to pay related fees and expenses. None of the revolving facility was drawn upon as of the closing date on May 11, 2011, but loans under the 2011 Revolving Loan Facility may be drawn from time to time pursuant to the terms of the 2011 Senior Credit Facility. The 2011 Term Loan Facility matures on May 11, 2018, and the 2011 Revolving Loan Facility matures on May 11, 2016. The borrowings under the 2011 Senior Credit Facility are guaranteed and secured by assets and pledges of capital stock by the Company, TSI, LLC and the wholly-owned domestic subsidiaries of TSI, LLC. | ||||||
On August 22, 2012, TSI, LLC entered into a First Amendment (the “First Amendment”) to the 2011 Senior Credit Facility. The First Amendment reduced the then-current interest rates on the 2011 Term Loan Facility by 125 basis points by reducing the applicable margin on the initial term loans from 4.50% to 3.50% for base rate loans and from 5.50% to 4.50% for Eurodollar loans and reduced the interest rate floor on the initial term loans from 2.50% to 2.25% for base rate loans and from 1.50% to 1.25% for Eurodollar loans. The First Amendment also converted the existing voluntary prepayment penalty provision from a “101 hard call” provision (which requires the payment of a 1.00% fee on the amount of any term loans that are voluntarily prepaid), originally scheduled to end in May 2013, to a “101 soft call” provision (which requires the payment of a 1.00% fee on the amount of any term loans repaid in connection with a refinancing or repricing transaction) that ended in August 2013, and was subsequently extended to November 14, 2013 by a second amendment on November 14, 2012. All other principal provisions, including maturity and covenants under the Company's existing 2011 Senior Credit Facility remained unchanged in all material respects. The First Amendment was subject to the consent of term loan lenders. Non-consenting term loan lenders with term loan principal outstanding totaling $13,796 were replaced with replacement term loan lenders in order to execute the First Amendment. In connection with the pay off of non-consenting term loan lenders, during the three months ended September 30, 2012, the Company recorded a loss on extinguishment of debt of $464 consisting of the write-offs of the related portions of unamortized debt issuance costs and OID of $260 and $204, respectively. In addition, the Company recorded additional debt discount of $2,707 related to a 1.00% amendment fee paid to consenting lenders and recognized additional interest expense totaling $1,390 related primarily to bank and legal related fees paid to third parties to execute the First Amendment. | ||||||
Subsequent to the effective date of the First Amendment, on August 28, 2012, the Company made a voluntary prepayment of $15,000 on the 2011 Term Loan Facility. In connection with this voluntary prepayment, during the three months ended September 30, 2012, the Company recorded loss on extinguishment of debt of $546, consisting of the write-offs of the related portions of unamortized debt issuance costs and debt discount of $269 and $277, respectively. | ||||||
On November 14, 2012, TSI, LLC entered into a Second Amendment (the “Second Amendment”) to the 2011 Senior Credit Facility. Under the Second Amendment, TSI, LLC borrowed an additional $60,000 incremental term loan issued at an OID of 0.50% or $300, bringing the total outstanding borrowings under the 2011 Term Loan Facility to $315,743. The $300 OID was recorded as a contra-liability to long-term debt on the accompanying consolidated balance sheet and is being amortized as interest expense using the effective interest method. The new borrowings were used, together with cash on hand, to pay a special cash dividend to the Company's stockholders, including an equivalent cash bonus payment to certain option holders, on December 11, 2012. In addition, the Second Amendment provides for a waiver of any prepayment required to be paid using the Company's excess cash flow for the period ended December 31, 2012, amends the restricted payments covenant to permit the payment of the dividend and cash bonus payments and permits adjustments to the Company's calculation of consolidated EBITDA with respect to the cash bonus payment and with respect to fees and expenses associated with certain permitted transactions. In connection with the execution of the Second Amendment, during the three months ended December 31, 2012, the Company recorded additional debt discount of $639 related to a 0.25% amendment fee, debt issuance costs of $125 and additional interest expense totaling $1,569 related primarily to bank, arrangement and legal fees paid to third parties. | ||||||
As of September 30, 2013, the 2011 Term Loan Facility has a gross principal balance of $315,743 and a balance of $311,056, net of unamortized debt discount of $4,687 which is comprised of the original issue discounts from the original debt issuance date of May 11, 2011 and the additional debt discounts recorded in connection with the First and Second Amendments. The unamortized debt discount balance is recorded as a contra-liability to long-term debt on the accompanying condensed consolidated balance sheet and is being amortized as interest expense using the effective interest method. As of September 30, 2013, the unamortized balance of debt issuance costs of $4,439 is being amortized as interest expense, and is included in other assets in the accompanying condensed consolidated balance sheets. | ||||||
As of September 30, 2013, there were no outstanding 2011 Revolving Loan Facility borrowings and outstanding letters of credit issued totaled $5,167. The unutilized portion of the 2011 Revolving Loan Facility as of September 30, 2013 was $44,833. | ||||||
Borrowings under the 2011 Term Loan Facility, at TSI, LLC's option, bear interest at either the administrative agent's base rate plus 3.5% or its Eurodollar rate plus 4.5%, each as defined in the 2011 Senior Credit Facility, as amended. The Eurodollar rate has a floor of 1.25% and the base rate has a floor of 2.25% with respect to the outstanding term loans. As of September 30, 2013, the interest rate was 5.75%. TSI, LLC is required to pay 0.25% of principal per quarter, in respect of such loans. If, as of the last day of any fiscal quarter of TSI Holdings, the total leverage ratio, as defined, is greater than 2.75:1.00, TSI, LLC is required to pay 1.25% of principal. Pursuant to the terms of the 2011 Senior Credit Facility, as amended, these regularly scheduled required quarterly principal payments may be reduced by voluntary prepayments. As a result of the $15,000 voluntary prepayment on August 28, 2012 and maintaining a leverage ratio greater than 2.75:1.00, the Company was not required to pay the regularly scheduled quarterly principal payments for the period beginning September 30, 2012 through September 30, 2013, with regularly scheduled required payments resuming on December 31, 2013. As of December 31, 2012, March 31, 2013, June 30, 2013, and September 30, 2013, TSI, LLC had a total leverage ratio of 3.00:1.00, 3.04:1.00, 2.98:1.00, and 3.08:1.00, respectively. As of September 30, 2013, TSI LLC had made a total of $44,257 in principal payments on the 2011 Term Loan Facility. | ||||||
The terms of the 2011 Senior Credit Facility, as amended, provide for financial covenants which require TSI, LLC to maintain a total leverage ratio, as defined, of no greater than 4.50:1.00 effective March 31, 2012 and thereafter; an interest expense coverage ratio, as defined, of no less than 2.00:1.00; and a covenant that limits capital expenditures to $40,000 for the four quarters ending in any quarter during which the total leverage ratio is greater than 3.00:1.00 and to $50,000 for the four quarters ending in any quarter during which the ratio is less than or equal to 3.00:1.00 but greater than 2.50:1.00. This covenant does not limit capital expenditures if the ratio is less than or equal to 2.50:1.00. TSI, LLC was in compliance with these covenants as of September 30, 2013 with a total leverage ratio of 3.08:1.00 and an interest expense coverage ratio of 4.51:1.00. For the twelve month period ending September 30, 2013, TSC, LLC had capital expenditures totaling $29,870. | ||||||
TSI, LLC may prepay the 2011 Term Loan Facility and 2011 Revolving Loan Facility without premium or penalty in accordance with the 2011 Senior Credit Facility, as amended, except that a prepayment premium of 1.0% is payable for any prepayments made prior to November 14, 2013 in connection with a repricing transaction that reduces the effective yield of the initial term loans, otherwise the 1.0% prepayment premium would not be applicable. Mandatory prepayments are required in certain circumstances relating to cash flow in excess of certain expenditures, asset sales, insurance recovery and incurrence of certain other debt. The 2011 Senior Credit Facility contains provisions that require excess cash flow payments, as defined, to be applied against outstanding 2011 Term Loan Facility balances. The excess cash flow is calculated as of December 31 and any required principal payment for excess cash flow shall be paid the following March 31. 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 flows. The applicable excess cash flow repayment percentage is 75% when the total leverage ratio, as defined in the 2011 Senior Credit Facility exceeds 3.00:1.00; 50% when the total leverage ratio is greater than 2.50:1.00 but less than or equal to 3.00:1.00; 25% when the total leverage ratio is greater than 2.00:1.00 but less than or equal to 2.50:1.00 and 0% when the total leverage ratio is less than or equal to 2.00:1.00. The calculation performed as of December 31, 2012 resulted in a total leverage ratio of 3.00:1.00. However, pursuant to the terms of the Second Amendment, a waiver was provided on the prepayment required to be paid using the Company's excess cash flow for the year ended December 31, 2012. | ||||||
Fair Market Value | ||||||
Based on quoted market prices of similar debt instruments, the 2011 Term Loan Facility had a fair value of approximately $319,295 and $322,058 at September 30, 2013 and December 31, 2012, respectively and is classified within level 2 of the fair value hierarchy. |
Financial_Instruments
Financial Instruments | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||
Derivative Financial Instruments | 4. Derivative Financial Instruments | ||||||||
In its normal operations, the Company is exposed to market risks relating to fluctuations in interest rates. In order to minimize the possible negative impact of such fluctuations on the Company's cash flows the Company may enter into derivative financial instruments (“derivatives”), such as interest-rate swaps. Any instruments are not entered into for trading purposes and the Company only uses commonly traded instruments. Currently, the Company has used derivatives solely relating to the variability of cash flows from interest rate fluctuations. | |||||||||
Effective July 13, 2011, the Company entered into an interest rate swap arrangement which effectively converted $150,000 of its variable-rate debt based on a one-month Eurodollar rate to a fixed rate of 2.0%, or a total fixed rate of 7.5%, on this $150,000 when including the applicable 5.50% margin. In August 2012, the Company amended the terms of the 2011 Senior Credit Facility to, among other things, reduce the applicable margin on Eurodollar rate loans from 5.50% to 4.50% and reduce the interest rate floor on Eurodollar rate loans from 1.50% to 1.25%. In conjunction with the First Amendment to the 2011 Senior Credit Facility in August 2012, the interest rate swap arrangement was amended to reduce the one-month Eurodollar fixed rate from 2.0% to 1.8%, or a total fixed rate of 6.3% when including the applicable 4.50% margin on Eurodollar rate loans. On November 14, 2012, the Company further amended the terms of the 2011 Senior Credit Facility to, among other things, allow for the borrowing of a $60,000 incremental term loan. In connection with the Second Amendment to the 2011 Credit Facility, the Company further amended the interest rate swap to increase the notional amount to $160,000 and extend the maturity of the swap from July 13, 2014 to May 13, 2015. In addition, the one-month Eurodollar fixed rate was lowered from 1.8% to 1.7%, or a total of 6.2% when including the applicable 4.50% margin on Eurodollar rate loans. As of the incremental term loan borrowing date, the interest rate swap arrangement covered $160,000 of the Company's total variable rate debt of $315,743. As permitted by FASB Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging, the Company has designated this swap as a cash flow hedge, the effects of which have been reflected in the Company's condensed consolidated financial statements as of and for the three and nine months ended September 30, 2013 and 2012. The objective of this hedge is to manage the variability of cash flows in the interest payments related to the portion of the variable-rate debt designated as being hedged. | |||||||||
When a derivative is executed and hedge accounting is appropriate, it is designated as a cash flow hedge at inception with re-designation being permitted under ASC 815, Derivatives and Hedging. Interest rate swaps are designated as cash flow hedges for accounting purposes since they are being used to transform variable interest rate exposure to fixed interest rate exposure on a recognized liability (debt). On an ongoing basis, the Company performs a quarterly assessment of the hedge effectiveness of the hedge relationship and measures and recognizes any hedge ineffectiveness in the condensed consolidated statements of income. For the three and nine months ended September 30, 2013, hedge ineffectiveness was evaluated using the hypothetical derivative method, with the ineffective portion of the hedge, if any, being reported in the Company's condensed consolidated statements of income. There was no hedge ineffectiveness during the three and nine months ended September 30, 2013. The amount related to hedge ineffectiveness for the three and nine months ended September 30, 2012 was de minimis. | |||||||||
Accounting guidance on fair value measurements specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. These two types of inputs create the following fair value hierarchy: | |||||||||
Level 1—Quoted prices for identical instruments in active markets. | |||||||||
Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. | |||||||||
Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. | |||||||||
This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. | |||||||||
The fair value for the Company's interest rate swap 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. The following table presents the fair value of the Company's derivative financial instrument: | |||||||||
Fair Value Measurements Using: | |||||||||
Total | Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||
Fair Value | (Level 1) | (Level 2) | (Level 3) | ||||||
Interest rate swap liability as of September 30, 2013 | $ | 1,073 | $ | - | $ | 1,073 | $ | - | |
The swap contract liability of $1,073 is recorded as a component of other liabilities with an offset to accumulated other comprehensive income ($606, net of taxes) on the accompanying condensed consolidated balance sheet as of September 30, 2013. | |||||||||
There were no significant reclassifications out of accumulated other comprehensive income during the nine months ended September 30, 2013 and 2012 and the Company does not expect that significant derivative losses included in accumulated other comprehensive income at September 30, 2013 will be reclassified into earnings within the next 12 months. |
Concentration_of_Credit_Risk
Concentration of Credit Risk | 9 Months Ended |
Sep. 30, 2013 | |
Concentration of Credit Risk [Abstract] | |
Concentration of Credit Risk | 5. Concentration of Credit Risk |
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents and the interest rate swap. Although the Company deposits its cash with more than one financial institution, as of September 30, 2013, $47,801 of the cash and cash equivalents balance of $67,961 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. | |
The counterparty to the Company's interest rate swap is a major banking institution with a credit rating of investment grade or better and no collateral is required, and there are no significant risk concentrations. The Company believes the risk of incurring losses on derivative contracts related to credit risk is unlikely. | |
Earnings_Per_Share
Earnings Per Share | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||
Earnings Per Share | 6. Earnings Per Share | |||||||||||||||
Basic earnings per share is computed by dividing net income applicable to common stockholders by the weighted average numbers of shares of common stock outstanding during the period. Diluted earnings per share is computed similarly to basic earnings per share, except that the denominator is increased for the assumed exercise of dilutive stock options and unvested restricted stock calculated using the treasury stock method. | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Weighted average number of shares outstanding — basic | 24,101,239 | 23,581,631 | 24,007,310 | 23,331,877 | ||||||||||||
Effect of dilutive share based awards | 619,272 | 604,867 | 605,926 | 683,870 | ||||||||||||
Weighted average number of common shares outstanding — diluted | 24,720,511 | 24,186,498 | 24,613,236 | 24,015,747 | ||||||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.11 | $ | 0.13 | $ | 0.54 | $ | 0.53 | ||||||||
Diluted | $ | 0.1 | $ | 0.13 | $ | 0.53 | $ | 0.52 | ||||||||
For the three and nine months ended September 30, 2013, the Company did not include stock options to purchase 269,000 shares and 272,139 shares of the Company's common stock, respectively, in the calculations of diluted EPS because the exercise prices of those options were greater than the average market price and such inclusion would be anti-dilutive. | ||||||||||||||||
For the three and nine months ended September 30, 2012, the Company did not include stock options to purchase 141,733 shares and 313,862 shares of the Company's common stock, respectively, in the calculations of diluted EPS because the exercise prices of those options were greater than the average market price and such inclusion would be anti-dilutive. |
StockBased_Compensation
Stock-Based Compensation | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Share-based Compensation [Abstract] | |||||||||
Stock-Based Compensation | 7. Stock-Based Compensation | ||||||||
The Company's 2006 Stock Incentive Plan, as amended and restated (the “2006 Plan”), authorizes the Company to issue up to 3,000,000 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. 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. Certain options granted under the Company's 2004 Common Stock Option Plan, as amended (the “2004 Plan”), generally qualify as “incentive stock options” under the U.S. Internal Revenue Code; the exercise price of a stock option granted under this plan may not be less than the fair market value of common stock on the option grant date. As of September 30, 2013, there were 354,607 shares available to be issued under the 2006 Plan. | |||||||||
At September 30, 2013, the Company had 12,460 stock options outstanding under the 2004 Plan while the 2006 Plan had 1,168,426 stock options outstanding and 498,987 shares of restricted stock outstanding. | |||||||||
Stock Option Awards | |||||||||
The Company did not issue any stock option grants during the nine months ended September 30, 2013. | |||||||||
The total compensation expense, classified within payroll and related on the condensed consolidated statements of income, related to stock options outstanding was $188 and $564 for the three and nine months ended September 30, 2013, respectively, and $113 and $409 for the three and nine months ended September 30, 2012, respectively. | |||||||||
As of September 30, 2013, a total of $334 in unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of 0.9 years. | |||||||||
Restricted Stock Awards | |||||||||
On February 22, 2013, March 11, 2013, and May 17, 2013, the Company issued 7,500, 168,000, and 3,000 shares of restricted stock, respectively, to employees. The fair value per share for the February 22, 2013, March 11, 2013 and May 17, 2013 restricted stock awards were $9.15, $9.31, and $10.79, respectively, representing the closing stock price on the respective dates of grant. These shares will vest 25% per year over four years on the anniversary dates of the respective grants. | |||||||||
The total compensation expense, classified within payroll and related on the condensed consolidated statements of income, related to restricted stock was $265 and $738 for the three and nine months ended September 30, 2013, respectively, and $105 and $262 for the three and nine months ended September 30, 2012, respectively. | |||||||||
As of September 30, 2013, a total of $3,570 in unrecognized compensation expense related to restricted stock awards is expected to be recognized over a weighted-average period of 3.0 years. | |||||||||
Stock Grants | |||||||||
In the nine months ended September 30, 2013, the Company issued shares of common stock to members of the Company's Board of Directors in respect of their annual and quarterly retainer. The total fair value of the shares issued was expensed upon the date of grant. The total compensation expense, classified within general and administrative expenses, related to Board of Director common stock grants was $15 and $290 for the three and nine months ended September 30, 2013, respectively, and $0 and $116 for the three and nine months ended September 30, 2012, respectively. Total shares issued during the nine months ended September 30, 2013 were: | |||||||||
Grant Date | Number of Shares | Price Per Share | Aggregate Grant Date Fair Value | ||||||
16-Jan-13 | 24,280 | $ | 10.09 | $ | 245 | ||||
25-Mar-13 | 1,622 | $ | 9.25 | $ | 15 | ||||
24-Jun-13 | 1,418 | $ | 10.58 | $ | 15 | ||||
24-Sep-13 | 1,208 | $ | 12.42 | $ | 15 |
Fixed_Asset_Impairment
Fixed Asset Impairment | 9 Months Ended |
Sep. 30, 2013 | |
Asset Impairment Charges [Abstract] | |
Fixed Asset Impairment | 8. Fixed Asset Impairment |
Fixed 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 FASB guidance. The Company's long-lived assets and liabilities are grouped at the individual club level, which is the lowest level for which there are identifiable cash flows. To the extent that estimated future undiscounted net cash flows attributable to the assets are less than the carrying amount, an impairment charge equal to the difference between the carrying value of such assets and their fair values, calculated using discounted cash flows, is recognized. In the three months ended September 30, 2013, the Company tested eight underperforming clubs and recorded an impairment loss of $439 on leasehold improvements and furniture and fixtures at one of these clubs that experienced decreased profitability and sales levels below expectations. The seven other clubs tested that did not have impairment charges had an aggregate of $19,895 of net leasehold improvements and furniture and fixtures remaining as of September 30, 2013. The Company will continue to monitor the results and changes in expectations of these clubs closely during the remainder of 2013 to determine if fixed asset impairment charges will be necessary. The fixed asset impairment loss is included as a component of operating expenses in a separate line on the condensed consolidated statements of income. In the nine months ended September 30, 2013, the Company recorded a total of $567 of impairment losses at two clubs compared to an impairment loss of $239 recorded at one club in the nine months ended September 30, 2012. | |
The fair values of fixed assets evaluated for impairment were calculated using Level 3 inputs using discounted cash flows, which are based on internal budgets and forecasts through the end of each respective lease. The most significant assumptions in those budgets and forecasts relate to estimated membership and ancillary revenue, attrition rates, and maintenance capital expenditures, which expenditures are estimated at approximately 1% to 3% of total revenues depending upon the conditions and needs of a given club. |
Goodwill_and_Other_Intangibles
Goodwill and Other Intangibles | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Goodwill and Other Intangibles [Abstract] | ||||||||||||||||
Goodwill and Other Intangibles | 9. Goodwill and Other Intangibles | |||||||||||||||
Goodwill has been allocated to reporting units that closely reflect the regions served by the Company's four trade names: New York Sports Clubs (“NYSC”), Boston Sports Clubs (“BSC”), Washington Sports Clubs (“WSC”) and Philadelphia Sports Clubs (“PSC”), with certain more remote clubs that do not benefit from a regional cluster being considered single reporting units (“Outlier Clubs”) and the Company's three clubs located in Switzerland being considered a single reporting unit (“SSC”). The Company has one Outlier Club with goodwill. As of September 30, 2013, the WSC and PSC regions do not have goodwill balances. | ||||||||||||||||
The Company's annual goodwill impairment tests are performed on the last day of February, or more frequently, should circumstances change which would indicate the fair value of goodwill is below its carrying amount. | ||||||||||||||||
The Company's current year annual goodwill impairment test as of February 28, 2013 was performed using the two-step goodwill impairment analysis. Under this approach, goodwill impairment testing is a two-step process. Step 1 involves comparing the fair value of the Company's reporting units to their carrying amounts. If the fair value of the reporting unit is greater than its carrying amount, there is no requirement to perform step two of the impairment test, and there is no impairment. If the reporting unit's carrying amount is greater than the fair value, the second step must be completed to measure the amount of impairment, if any. Step 2 calculates the implied fair value of goodwill by deducting the fair value of all tangible and intangible assets, excluding goodwill, of the reporting unit from the fair value of the reporting unit as determined in Step 1. The implied fair value of goodwill determined in this step is compared to the carrying value of goodwill. If the implied fair value of goodwill is less than the carrying value of goodwill, an impairment loss is recognized equal to the difference. The Company concluded that it did not have a goodwill impairment charge in the reporting units with remaining goodwill. | ||||||||||||||||
For the February 28, 2013 impairment test, fair value was determined by using a weighted combination of two market-based approaches (weighted 50% collectively) and an income approach (weighted 50%), as this combination was deemed to be the most indicative of the Company's fair value in an orderly transaction between market participants. Under the market-based approaches, the Company utilized information regarding the Company, the Company's industry as well as publicly available industry information to determine earnings multiples and sales multiples that are used to value the Company's reporting units. Under the income approach, the Company determined fair value based on estimated future cash flows of each reporting unit, discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of a reporting unit and the rate of return an outside investor would expect to earn. Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates and operating margins, discount rates and future market conditions, among others. These assumptions were determined separately for each reporting unit. The Company believes its assumptions are reasonable, however, there can be no assurance that the Company's estimates and assumptions made for purposes of the Company's goodwill impairment testing as of February 28, 2013 will prove to be accurate predictions of the future. If the Company's assumptions regarding forecasted revenue or margin growth rates of certain reporting units are not achieved, the Company may be required to record goodwill impairment charges in future periods, whether in connection with the Company's next annual impairment testing as of February 28, 2014 or prior to that, if any such change constitutes a triggering event outside the quarter when the annual goodwill impairment test is performed. It is not possible at this time to determine if any such future impairment charge would result. As of February 28, 2013, the estimated fair value of NYSC was 127% greater than book value and the estimated fair value of SSC was 120% greater than book value. | ||||||||||||||||
The Company's next annual impairment test will be performed as of February 28, 2014 or earlier, if any such change constitutes a triggering event outside the quarter when the annual goodwill impairment test is performed. There have been no triggering events since the annual impairment test as of February 28, 2013. | ||||||||||||||||
The changes in the carrying amount of goodwill from December 31, 2012 through September 30, 2013 are detailed in the charts below. | ||||||||||||||||
NYSC | BSC | SSC | Outlier Clubs | Total | ||||||||||||
Goodwill | $ | 31,403 | $ | 15,766 | $ | 1,284 | $ | 3,982 | $ | 52,435 | ||||||
Less: accumulated amortization | - | -15,766 | - | -3,845 | -19,611 | |||||||||||
Balance as December 31, 2012 | 31,403 | - | 1,284 | 137 | 32,824 | |||||||||||
Acquired goodwill (Refer to Note 10, Acquisitions) | - | 9 | - | - | 9 | |||||||||||
Changes due to foreign currency exchange rate fluctuations | - | - | 17 | - | 17 | |||||||||||
Balance as of September 30, 2013 | $ | 31,403 | $ | 9 | $ | 1,301 | $ | 137 | $ | 32,850 | ||||||
As of December 31, 2012, all intangible assets were fully amortized. Intangible assets were acquired in connection with the Company's recent acquisitions during the nine months ended September 30, 2013. Amortization expense for the three and nine months ended September 30, 2013 was $125 and $185, respectively. | ||||||||||||||||
Intangible assets as of September 30, 2013 are as follows: | ||||||||||||||||
As of September 30, 2013 | ||||||||||||||||
Gross Carrying | Accumulated | Net Intangible | ||||||||||||||
Amount | Amortization | Assets | ||||||||||||||
Membership lists | $ | 11,344 | $ | -10,580 | $ | 764 | ||||||||||
Non compete agreements | 1,508 | -1,508 | 0 | |||||||||||||
Management contracts | 250 | -16 | 234 | |||||||||||||
Trade names | 40 | -1 | 39 | |||||||||||||
Other | 23 | -23 | 0 | |||||||||||||
$ | 13,165 | $ | -12,128 | $ | 1,037 |
Acquisitions
Acquisitions | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Acquisitions [Abstract] | |||||
Acquisitions | 10. Acquisitions | ||||
The following acquisitions were completed during the nine months ended September 30, 2013 and were accounted for using the acquisition method of accounting in accordance with FASB guidance. Under the acquisition method, the purchase price was 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. None of the acquisitions individually or in the aggregate were material to the financial position, results of operations or cash flows of the Company; therefore pro forma financial information has not been presented. The results of operations of the clubs acquired have been included in the Company's consolidated financial statements from the respective dates of acquisition. | |||||
Acquisition on March 15, 2013 | |||||
On March 15, 2013, the Company acquired an existing fitness club in Manhattan, New York for a purchase price of $560. The purchase price allocation resulted in fixed assets related to leasehold improvements of $458, definite lived intangible assets related to member lists of $102 and a deferred revenue liability of $56, for a net cash purchase price of $504. Acquisition costs incurred in connection with this acquisition during the nine months ended September 30, 2013 were approximately $95 and are included in general and administrative expenses in the accompanying condensed consolidated statements of income. | |||||
Acquisition on May 17, 2013 | |||||
On May 17, 2013, the Company acquired all of the Fitcorp clubs in Boston, which includes five clubs and four managed sites for a purchase price of $3,175 and a net cash purchase price of $2,435. Acquisition costs incurred in connection with the Fitcorp acquisition during the nine months ended September 30, 2013 were approximately $213 and are included in general and administrative expenses in the accompanying condensed consolidated statements of income. The following table summarizes the allocation of the purchase price to the fair value of the assets and liabilities acquired. The purchase price allocation presented below has been prepared on a preliminary basis and changes to the preliminary allocations may occur as additional information concerning asset and liability valuations are finalized. | |||||
Acquisition on | |||||
17-May-13 | |||||
Allocation of purchase price: | |||||
Other assets | $ | 90 | |||
Fixed assets related to leasehold improvements | 2,289 | ||||
Goodwill | 9 | ||||
Definite lived intangible assets: | |||||
Membership lists | 830 | ||||
Management contracts | 250 | ||||
Trade names | 40 | ||||
Deferred revenue | -630 | ||||
Other liabilities | -443 | ||||
Total allocation of purchase price | $ | 2,435 | |||
The goodwill recognized represents the excess of the purchase price over the fair values of the assets acquired and liabilities assumed. The goodwill is primarily attributable to the avoided costs of acquiring the assembled workforce and is not deductible for tax purposes. The definite lived intangible assets acquired will be amortized in accordance with the Company's accounting policy with the membership lists amortized over the estimated average membership life of 23 months, management contracts amortized over their estimated contractual lives of between nine to 11 years and trade names amortized over their estimated useful lives. |
Income_Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2013 | |
Income Tax Uncertainties [Abstract] | |
Income Taxes | 11. Income Taxes |
The Company recorded a provision for corporate income taxes of $7,767 and $7,524 for the nine months ended September 30, 2013 and 2012, respectively, reflecting an effective income tax rate of 37% and 38%, respectively. The Company's 2013 and 2012 forecasted annual effective tax rates of 38% and 39% at September 2013 and September 2012, respectively, were favorably impacted by approximately 5% in each period due to tax benefits derived from the captive insurance arrangement. | |
As of September 30, 2013, $750 represented the amount of unrecognized tax benefits that, if recognized, would affect the Company's effective tax rate in future periods. The Company recognizes both interest accrued related to unrecognized tax benefits and penalties in income tax expense. The Company had accruals for interest net of the federal tax benefit as of September 30, 2013 and 2012 of $341 and $289, respectively. In 2013, the total amount of the unrecognized tax benefits, including related interest accruals, could be realized by the Company if the income tax returns are no longer subject to audit during 2013. | |
The Company files federal, foreign and multiple state and local jurisdiction income tax returns. The Company is no longer subject to examinations of its federal income tax returns by the Internal Revenue Service for years 2009 and prior. | |
The following state and local jurisdictions are currently examining the Company's respective returns for the years indicated: New York State (2006, 2007, 2008, and 2009), New York City (2006, 2007, and 2008), and the Commonwealth of Massachusetts (2009, 2010). It is difficult to predict the final outcome or timing of resolution of any particular matter regarding these examinations, however, it may be reasonably possible that one or more of these examinations may result in a change in the reserve for uncertain tax positions over the next twelve months. | |
As of September 30, 2013, the Company has net deferred tax assets of $26,710. The state net deferred tax asset balance as of September 30, 2013 is $20,843. Quarterly, the Company assesses the weight of all positive and negative evidence to determine whether the net deferred tax asset is realizable. The Company was profitable for the years ended December 31, 2012 and December 31, 2011 and the Company was profitable for the nine months ended September 30, 2013 and expects to be in a three year cumulative income position as of December 31, 2013 for both federal and most state jurisdictions. In addition, the Company, based on recent trends, projects future income sufficient to realize the deferred tax assets during the periods when the temporary tax deductible differences reverse. With the exception of the deductions related to our captive insurance company for state taxes, state taxable income has been and is projected to be the same as federal taxable income. Because the Company expects the captive insurance company to be discontinued in 2014, the assessment of the realizability of the state deferred tax assets is consistent with the federal tax analysis above. The Company has federal and state net operating loss carry-forwards which the Company believes will be realized within the available carry-forward period, except for a small state net operating loss carry-forward in Rhode Island due to the short carry-forward period in that state. Accordingly, the Company concluded that it is more likely than not that the deferred tax assets will be realized. If actual results do not meet the Company's forecasts and the Company incurs losses in 2013 and beyond, a valuation allowance against the deferred tax assets may be required in the future. |
Contingencies
Contingencies | 3 Months Ended |
Jun. 30, 2013 | |
Contingencies [Abstract] | |
Contingencies | 12. Commitments and Contingencies |
On or about March 1, 2005, in an action styled Sarah Cruz, et al v. Town Sports International, d/b/a New York Sports Club, plaintiffs commenced a purported class action against TSI, LLC in the Supreme Court, New York County, seeking unpaid wages and alleging that TSI, LLC violated various overtime provisions of the New York State Labor Law with respect to the payment of wages to certain trainers and assistant fitness managers. On or about June 18, 2007, the same plaintiffs commenced a second purported class action against TSI, LLC in the Supreme Court of the State of New York, New York County, seeking unpaid wages and alleging that TSI, LLC violated various wage payment and overtime provisions of the New York State Labor Law with respect to the payment of wages to all New York purported hourly employees. On September 17, 2010, TSI, LLC made motions to dismiss the class action allegations of both lawsuits for plaintiffs' failure to timely file motions to certify the class actions. The court granted the motions on January 29, 2013, dismissing the class action allegations in both lawsuits. On March 4, 2013, plaintiffs served notice of their intent to appeal that dismissal. The court has stayed the remaining, individual claims in each action pending resolution of the plaintiffs' appeal. | |
On September 22, 2009, in an action styled Town Sports International, LLC v. Ajilon Solutions, a division of Ajilon Professional Staffing LLC (Supreme Court of the State of New York, New York County, 602911-09), TSI, LLC brought an action in the Supreme Court of the State of New York, New York County, against Ajilon for, among other things, breach of contract seeking, among other things, money damages, in connection with Ajilon's failure to design and deliver to TSI, LLC a new sports club enterprise management system known as GIMS. Subsequently, on October 14, 2009, Ajilon brought a counterclaim against TSI, LLC alleging breach of contract, asserting, among other things, failure to pay outstanding invoices in the aggregate amount of approximately $2,900. Following a jury trial, a jury verdict was rendered on January 28, 2013, that awarded TSI, LLC damages against Ajilon in the amount of approximately $3,300, plus interest, and also awarded Ajilon damages against TSI, LLC in the amount of approximately $214, plus interest. After the Court granted Ajilon's motion to set aside the part of the jury verdict that had rejected the bulk of Ajilon's counterclaim, the Court increased the award of damages against TSI, LLC from approximately $214 to approximately $2,900, plus interest. The result is a net amount owed to TSI, LLC in the amount of approximately $400, plus interest. On April 8, 2013, TSI, LLC filed a notice of appeal, appealing the Court's decision to set aside the jury verdict, and on May 6, 2013, Ajilon filed its notice of appeal, appealing the verdict. The appeals were perfected and remain pending. | |
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 state court 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, and take additional space in the nearby facility leased by another subsidiary of TSI, LLC. The trial court granted the landlord damages against its tenant in the amount of approximately $700, including interest and costs (“Initial Award”). TSI, LLC was held to be jointly liable with the tenant for the amount of approximately $488, under a limited guarantee of the tenant's lease obligations. The landlord subsequently appealed the trial court's award of damages, and on December 21, 2010, the appellate court reversed, in part, the trial court's decision and ordered the case remanded to the trial court for an assessment of additional damages, of approximately $750 plus interest and costs (the “Additional Award”). On February 7, 2011, the landlord moved for re-argument of the appellate court's decision, seeking additional damages plus attorneys' fees. On April 8, 2011, the appellate court denied the landlord's motion. On August 29, 2011, the Additional Award (amounting to approximately $900), was entered against the tenant, who has recorded a liability. TSI, LLC does not believe it is probable that TSI, LLC will be held liable to pay for any amount of the Additional Award. 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. In connection with the Initial Award (and in furtherance of the indemnification agreement), TSI, LLC and the developer have entered into an agreement pursuant to which the developer has agreed to pay the amount of the Initial Award in installments over time. The indemnification agreement also covers the Additional Award, and therefore the Tenant has recorded a receivable related to the indemnification. The developer did not pay the amount of the Additional Award to the landlord, and on October 13, 2011, the landlord commenced a special proceeding in the Supreme Court of the State of New York, Westchester County, to collect the Additional Award directly from the developer. A motion to dismiss the special proceeding made by the developer was denied by the court on March 13, 2012. An appeal of that decision by the developer is pending. On March 14, 2013, the landlord moved for summary judgment on its claim to recover the Additional Award directly from the developer and on March 25, 2013, the developer cross-moved for summary judgment to dismiss the special proceeding. On May 30, 2013, the court granted summary judgment to the landlord and denied the cross-motion for summary judgment of the developer. Judgment was entered against the developer on June 5, 2013 in the amount of approximately $1,045, plus interest. On June 13, 2013, the developer filed a notice of its intent to appeal the judgment. | |
On or about October 4, 2012, in an action styled James Labbe, et al. v. Town Sports International, LLC, plaintiff commenced a purported class action in New York State court on behalf of personal trainers employed in New York State. Labbe is seeking unpaid wages and damages from TSI, LLC and alleges violations of various provisions of the New York State labor law with respect to payment of wages and TSI, LLC's notification and record-keeping obligations. On December 18, 2012, TSI, LLC filed a motion to stay the class action pending a decision on class certification in the Cruz case and to dismiss the Labbe action if the Cruz case is certified. On January 29, 2013, Labbe responded to the motion to stay and filed a cross-motion to consolidate the Labbe case with the Cruz case. On February 11, 2013, following the dismissal of the class claims in Cruz, Labbe withdrew the cross-motion to consolidate. Oral argument to stay the action until a decision is made on the appeal in the Cruz case was heard on April 10, 2013. While it is not possible to estimate the likelihood of an unfavorable outcome or a range of loss in the case of an unfavorable outcome to TSI, LLC at this time, TSI, LLC intends to contest this case vigorously. | |
In addition to the litigation discussed above, the Company is involved in various other lawsuits, claims and proceedings incidental to the ordinary course of business, including personal injury and employee relations claims. 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. While it is not feasible to predict the outcome of such proceedings, in the opinion of the Company, either the likelihood of loss is remote or any reasonably possible loss associated with the resolution of such proceedings is not expected to be material either individually or in the aggregate. |
Other
Other | 9 Months Ended |
Sep. 30, 2013 | |
Other Income and Expenses [Abstract] | |
Other | 13. Other |
During the nine months ended September 30, 2013, the Company collected $3,194 of insurance proceeds, the majority of which related to insurance claims covering certain clubs that were damaged and suffered losses in connection with Hurricane Sandy. |
Basis_of_Presentation_Table
Basis of Presentation (Table) | 9 Months Ended | ||||||
Sep. 30, 2013 | |||||||
Accounting Changes and Error Corrections [Abstract] | |||||||
Schedule of change in estimated average membership life [Table Text Block] | Estimated Average Membership Life of an Unrestricted Member | Estimated Average Membership Life of a Restricted Member | |||||
Period | 2013 | 2012 | 2013 | 2012 | |||
Three months ended March 31 | 25 months | 28 months | 27 months | 25 months | |||
Three months ended June 30 | 24 months | 28 months | 28 months | 27 months | |||
Three months ended September 30 | 23 months | 28 months | 28 months | 28 months | |||
Three months ended December 31 | - | 27 months | - | 27 months |
LongTerm_Debt_Tables
Long-Term Debt (Tables) | 9 Months Ended | |||||
Sep. 30, 2013 | ||||||
Long-Term Debt [Abstract] | ||||||
Schedule of Debt [Table Text Block] | ||||||
3. Long-Term Debt | ||||||
30-Sep-13 | 31-Dec-12 | |||||
2011 Term Loan Facility outstanding principal balance | $ | 315,743 | $ | 315,743 | ||
Less: Unamortized discount | -4,687 | -5,404 | ||||
Less: Current portion due within one year | -40,500 | -15,787 | ||||
Long-term portion | $ | 270,556 | $ | 294,552 |
Financial_Instruments_Tables
Financial Instruments (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Derivative Instrument Detail [Abstract] | |||||||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block] | Fair Value Measurements Using: | ||||||||
Total | Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||
Fair Value | (Level 1) | (Level 2) | (Level 3) | ||||||
Interest rate swap liability as of September 30, 2013 | $ | 1,073 | $ | - | $ | 1,073 | $ | - | |
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Weighted average number of shares outstanding — basic | 24,101,239 | 23,581,631 | 24,007,310 | 23,331,877 | ||||||||||||
Effect of dilutive share based awards | 619,272 | 604,867 | 605,926 | 683,870 | ||||||||||||
Weighted average number of common shares outstanding — diluted | 24,720,511 | 24,186,498 | 24,613,236 | 24,015,747 | ||||||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.11 | $ | 0.13 | $ | 0.54 | $ | 0.53 | ||||||||
Diluted | $ | 0.1 | $ | 0.13 | $ | 0.53 | $ | 0.52 |
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||
Schedule of Other Share-based Compensation, Activity [Table Text Block] | Grant Date | Number of Shares | Price Per Share | Aggregate Grant Date Fair Value | |||||
16-Jan-13 | 24,280 | $ | 10.09 | $ | 245 | ||||
25-Mar-13 | 1,622 | $ | 9.25 | $ | 15 | ||||
24-Jun-13 | 1,418 | $ | 10.58 | $ | 15 | ||||
24-Sep-13 | 1,208 | $ | 12.42 | $ | 15 |
Goodwill_and_Other_Intangibles1
Goodwill and Other Intangibles (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Goodwill and Other Intangibles [Abstract] | ||||||||||||||||
Schedule of Goodwill [Table Text Block] | NYSC | BSC | SSC | Outlier Clubs | Total | |||||||||||
Goodwill | $ | 31,403 | $ | 15,766 | $ | 1,284 | $ | 3,982 | $ | 52,435 | ||||||
Less: accumulated amortization | - | -15,766 | - | -3,845 | -19,611 | |||||||||||
Balance as December 31, 2012 | 31,403 | - | 1,284 | 137 | 32,824 | |||||||||||
Acquired goodwill (Refer to Note 10, Acquisitions) | - | 9 | - | - | 9 | |||||||||||
Changes due to foreign currency exchange rate fluctuations | - | - | 17 | - | 17 | |||||||||||
Balance as of September 30, 2013 | $ | 31,403 | $ | 9 | $ | 1,301 | $ | 137 | $ | 32,850 | ||||||
Schedule of Finite Lived Intangible Assets [Table Text Block] | Intangible assets as of September 30, 2013 are as follows: | |||||||||||||||
As of September 30, 2013 | ||||||||||||||||
Gross Carrying | Accumulated | Net Intangible | ||||||||||||||
Amount | Amortization | Assets | ||||||||||||||
Membership lists | $ | 11,344 | $ | -10,580 | $ | 764 | ||||||||||
Non compete agreements | 1,508 | -1,508 | 0 | |||||||||||||
Management contracts | 250 | -16 | 234 | |||||||||||||
Trade names | 40 | -1 | 39 | |||||||||||||
Other | 23 | -23 | 0 | |||||||||||||
$ | 13,165 | $ | -12,128 | $ | 1,037 |
Acquisitions_Table
Acquisitions (Table) | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Acquisitions [Abstract] | |||||
Schedule of Purchase Price Allocation [Table Text Block] | Acquisition on | ||||
17-May-13 | |||||
Allocation of purchase price: | |||||
Other assets | $ | 90 | |||
Fixed assets related to leasehold improvements | 2,289 | ||||
Goodwill | 9 | ||||
Definite lived intangible assets: | |||||
Membership lists | 830 | ||||
Management contracts | 250 | ||||
Trade names | 40 | ||||
Deferred revenue | -630 | ||||
Other liabilities | -443 | ||||
Total allocation of purchase price | $ | 2,435 |
Basis_of_Presentation_Details
Basis of Presentation (Details) (USD $) | 3 Months Ended | ||||||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 |
Integer | Integer | Integer | Integer | Integer | Integer | Integer | |
Basis Of Presentation [Line Items] | |||||||
Number of Stores | 162 | ||||||
Clubs temporarily closed | 1 | ||||||
Regular Member [Member] | |||||||
Basis Of Presentation [Line Items] | |||||||
Average Member Life | 23 | 24 | 25 | 27 | 28 | 28 | 28 |
Increase Decrease Revenue Net | ($294) | ||||||
Increase Decrease Net Income Loss | ($34) | ||||||
Restricted Member [Member] | |||||||
Basis Of Presentation [Line Items] | |||||||
Average Member Life | 28 | 28 | 27 | 27 | 28 | 27 | 25 |
New York Sports Clubs [Member] | |||||||
Basis Of Presentation [Line Items] | |||||||
Number of Stores | 108 | ||||||
Philadelphia Sports Clubs [Member] | |||||||
Basis Of Presentation [Line Items] | |||||||
Number of Stores | 6 | ||||||
Boston Sports Clubs [Member] | |||||||
Basis Of Presentation [Line Items] | |||||||
Number of Stores | 29 | ||||||
Washington Sports Clubs [Member] | |||||||
Basis Of Presentation [Line Items] | |||||||
Number of Stores | 16 | ||||||
Switzerland Clubs [Member] | |||||||
Basis Of Presentation [Line Items] | |||||||
Number of Stores | 3 | ||||||
Partly Owned Clubs [Member] | |||||||
Basis Of Presentation [Line Items] | |||||||
Number of Stores | 2 |
LongTerm_Debt_Details
Long-Term Debt (Details) (USD $) | 3 Months Ended | 9 Months Ended | 4 Months Ended | 9 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
In Thousands, unless otherwise specified | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | 11-May-11 | Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2012 | Dec. 31, 2012 | Sep. 30, 2013 |
Two Thousand Eleven Senior Credit Facility [Member] | Two Thousand Eleven Senior Credit Facility [Member] | Two Thousand Eleven Term Loan Facility [Member] | Two Thousand Eleven Term Loan Facility [Member] | Two Thousand Eleven Revolving Loan Facility [Member] | Related to a voluntary prepayment [Member] | First Amendment [Member] | Second Amendment [Member] | Second Amendment [Member] | |||||
Debt And Credit Facility [Line Items] | |||||||||||||
Long-term Debt, Description | On May 11, 2011, TSI, LLC entered into a $350,000 senior secured credit facility (“2011 Senior Credit Facility”). The 2011 Senior Credit Facility consisted of a $300,000 term loan facility (“2011 Term Loan Facility”) and a $50,000 revolving loan facility (“2011 Revolving Loan Facility”). The 2011 Term Loan Facility was issued at an original issue discount (“OID”) of 1.0% or $3,000. | ||||||||||||
Debt Instrument, Face Amount | $350,000 | $300,000 | $50,000 | ||||||||||
Debt Instrument, Issuance Date | 11-May-11 | ||||||||||||
Debt Instrument, Maturity Date | 11-May-18 | 11-May-16 | |||||||||||
Debt Instrument, Interest Rate Terms | Borrowings under the 2011 Term Loan Facility, at TSI, LLC’s option, bear interest at either the administrative agent’s base rate plus 3.5% or its Eurodollar rate plus 4.5%, each as defined in the 2011 Senior Credit Facility, as amended. The Eurodollar rate has a floor of 1.25% and the base rate has a floor of 2.25% with respect to the outstanding term loans. As of September 30, 2013, the interest rate was 5.75%. | ||||||||||||
Debt Instrument, Payment Terms | As of December 31, 2012, March 31, 2013, June 30, 2013, and September 30, 2013, TSI, LLC had a total leverage ratio of 3.00:1.00, 3.04:1.00, 2.98:1.00, and 3.08:1.00, respectively. As a result of the $15,000 voluntary prepayment on August 28, 2012 and maintaining a leverage ratio greater than 2.75:1.00, the Company was not required to pay the regularly scheduled quarterly principal payments for the period beginning September 30, 2012 through September 30, 2013, with regularly scheduled required payments resuming on December 31, 2013. | TSI, LLC is required to pay 0.25% of principal per quarter, in respect of such loans. If, as of the last day of any fiscal quarter of TSI Holdings, the total leverage ratio, as defined, is greater than 2.75:1.00, TSI, LLC is required to pay 1.25% of principal. TSI, LLC may prepay the 2011 Term Loan Facility and 2011 Revolving Loan Facility without premium or penalty in accordance with the 2011 Senior Credit Facility, as amended, except that a prepayment premium of 1.0% is payable for any prepayments made prior to November 14, 2013 in connection with a repricing transaction that reduces the effective yield of the initial term loans, otherwise the 1.0% prepayment premium would not be applicable. The applicable excess cash flow repayment percentage is 75% when the total leverage ratio, as defined in the 2011 Senior Credit Facility exceeds 3.00:1.00; 50% when the total leverage ratio is greater than 2.50:1.00 but less than or equal to 3.00:1.00; 25% when the total leverage ratio is greater than 2.00:1.00 but less than or equal to 2.50:1.00 and 0% when the total leverage ratio is less than or equal to 2.00:1.00. The calculation performed as of December 31, 2012 resulted in a total leverage ratio of 3.00:1.00. | As of September 30, 2013, TSI LLC had made a total of $44,257 in principal payments on the 2011 Term Loan Facility. | ||||||||||
Debt Instrument, Restrictive Covenants | The terms of the 2011 Senior Credit Facility, as amended, provide for financial covenants which require TSI, LLC to maintain a total leverage ratio, as defined, of no greater than 4.50:1.00 effective March 31, 2012 and thereafter; an interest expense coverage ratio, as defined, of no less than 2.00:1.00; and a covenant that limits capital expenditures to $40,000 for the four quarters ending in any quarter during which the total leverage ratio is greater than 3.00:1.00 and to $50,000 for the four quarters ending in any quarter during which the ratio is less than or equal to 3.00:1.00 but greater than 2.50:1.00. This covenant does not limit capital expenditures if the ratio is less than or equal to 2.50:1.00. TSI, LLC was in compliance with these covenants as of September 30, 2013 with a total leverage ratio of 3.08:1.00 and an interest expense coverage ratio of 4.51:1.00. | ||||||||||||
Long-term Debt, Fair Value | 319,295 | 322,058 | |||||||||||
Line of Credit Facility, Maximum Borrowing Capacity | 50,000 | ||||||||||||
Letters of Credit Outstanding, Amount | 5,167 | ||||||||||||
Write-off of unamortized debt issuance cost | 269 | 260 | |||||||||||
Debt Instrument, Unused Borrowing Capacity, Amount | 44,833 | ||||||||||||
Long Term Debt Noncurrent | 270,556 | 294,552 | 270,556 | 294,552 | |||||||||
Long-term Debt, Gross | 315,743 | 315,743 | 315,743 | ||||||||||
Debt Instrument, Unamortized Discount | 4,687 | 5,404 | |||||||||||
Long Term Debt Current | 40,500 | 15,787 | 40,500 | 15,787 | |||||||||
Long term debt, Gross less unamortized discount | 311,056 | ||||||||||||
Debt issuance costs | 8,065 | 125 | |||||||||||
Loss on extinguishment of debt | -1,010 | -1,010 | 546 | 464 | |||||||||
Principal payments to non-consenting 2011 Term Loan Facility lenders | 13,796 | 13,796 | |||||||||||
Percent of amendment fee paid to consenting lenders | 1.00% | 0.25% | |||||||||||
Interest expense related to bank, legal and accounting related fees paid to third parties to execute the Amendment | 1,390 | 1,569 | |||||||||||
Principal payment on 2011 Term Loan Facility | 36,007 | 15,000 | |||||||||||
Description of credit amendment | On August 22, 2012, TSI, LLC entered into a First Amendment (the “First Amendment”) to the 2011 Senior Credit Facility. The First Amendment reduced the then-current interest rates on the 2011 Term Loan Facility by 125 basis points by reducing the applicable margin on the initial term loans from 4.50% to 3.50% for base rate loans and from 5.50% to 4.50% for Eurodollar loans and reduced the interest rate floor on the initial term loans from 2.50% to 2.25% for base rate loans and from 1.50% to 1.25% for Eurodollar loans. The First Amendment also converted the existing voluntary prepayment penalty provision from a “101 hard call” provision (which requires the payment of a 1.00% fee on the amount of any term loans that are voluntarily prepaid), originally scheduled to end in May 2013, to a “101 soft call” provision (which requires the payment of a 1.00% fee on the amount of any term loans repaid in connection with a refinancing or repricing transaction) that ended in August 2013, and was subsequently extended to November 14, 2013 by a second amendment on November 14, 2012. | On November 14, 2012, TSI, LLC entered into a Second Amendment (the “Second Amendment”) to the 2011 Senior Credit Facility. Under the Second Amendment, TSI, LLC borrowed an additional $60,000 incremental term loan issued at an OID of 0.50% or $300, bringing the total outstanding borrowings under the 2011 Term Loan Facility to $315,743. | |||||||||||
Write-off of unamortized original issue discount | 277 | 204 | |||||||||||
Unamortized debt issuance costs | 7,288 | 4,439 | |||||||||||
Debt discount related to an amendment fee paid to consenting lenders | 2,707 | 639 | |||||||||||
Twelve month prior capital expenditures | $29,870 |
Financial_Instruments_Details
Financial Instruments (Details) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 |
Derivative Instrument [Line Items] | |
Derivative Instrument Gain (Loss) Recognized in Other Comprehensive Income Net of Tax | $606 |
Derivative Liability, Fair Value, Gross Liability | 1,073 |
Long-term Debt, Gross | 315,743 |
July 2011 agreement [Member] | |
Derivative Instrument [Line Items] | |
Derivative, Notional Amount | 150,000 |
Derivative, Maturity Date | 13-Jul-14 |
Derivative, Inception Date | 13-Jul-11 |
Derivative, Basis Spread on Variable Rate | 5.50% |
Derivative, Fixed Interest Rate | 2.00% |
Derivative, Total Rate | 7.50% |
Interest rate floor on Eurodollar loan | 1.50% |
August 2012 amendment [Member] | |
Derivative Instrument [Line Items] | |
Derivative, Notional Amount | 150,000 |
Derivative, Basis Spread on Variable Rate | 4.50% |
Derivative, Fixed Interest Rate | 1.80% |
Derivative, Total Rate | 6.30% |
Interest rate floor on Eurodollar loan | 1.25% |
November 2012 amendment [Member] | |
Derivative Instrument [Line Items] | |
Derivative, Notional Amount | 160,000 |
Derivative, Maturity Date | 13-May-15 |
Derivative, Basis Spread on Variable Rate | 4.50% |
Derivative, Fixed Interest Rate | 1.70% |
Derivative, Total Rate | 6.20% |
Incremental Term Loan From Amendment | $60,000 |
Concentration_of_Credit_Risk_D
Concentration of Credit Risk (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Dec. 31, 2011 |
In Thousands, unless otherwise specified | ||||
Concentration Risks, Types, No Concentration Percentage [Abstract] | ||||
Concentration Credit Risk In One Institution | $47,801 | |||
Cash And Cash Equivalents At Carrying Value | $67,961 | $37,758 | $42,108 | $47,880 |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Earnings Per Share [Abstract] | ||||
Weighted Average Number of Shares Outstanding, Basic | 24,101,239 | 23,581,631 | 24,007,310 | 23,331,877 |
Incremental Common Shares Attributable to Share-based Payment Arrangements | 619,272 | 604,867 | 605,926 | 683,870 |
Weighted Average Number of Shares Outstanding, Diluted | 24,720,511 | 24,186,498 | 24,613,236 | 24,015,747 |
Earnings Per Share Basic | $0.11 | $0.13 | $0.54 | $0.53 |
Earnings Per Share Diluted | $0.10 | $0.13 | $0.53 | $0.52 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 269,000 | 141,733 | 272,139 | 313,862 |
StockBased_Compensation_Detail
Stock-Based Compensation (Details) (USD $) | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Feb. 22, 2013 | Mar. 11, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | 17-May-13 | Sep. 30, 2013 | Sep. 30, 2012 | Jan. 16, 2013 | Sep. 30, 2013 | Mar. 25, 2013 | Jun. 24, 2013 | Sep. 24, 2013 | Sep. 30, 2013 | Sep. 30, 2012 |
In Thousands, except Share data, unless otherwise specified | Two Thousand Six Plan [Member] | Two Thousand Four Plan [Member] | Stock Options Grants [Member] | Stock Options Grants [Member] | Stock Options Grants [Member] | Stock Options Grants [Member] | Restricted Stock Grants [Member] | Restricted Stock Grants [Member] | Restricted Stock Grants [Member] | Restricted Stock Grants [Member] | Restricted Stock Grants [Member] | Restricted Stock Grants [Member] | Restricted Stock Grants [Member] | Common Stock Grants [Member] | Common Stock Grants [Member] | Common Stock Grants [Member] | Common Stock Grants [Member] | Common Stock Grants [Member] | Common Stock Grants [Member] | Common Stock Grants [Member] |
Integer | Integer | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Description | shares will vest 25% per year over four years on the anniversary dates of the respective grants. | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 3,000,000 | |||||||||||||||||||
Allocated Share-based Compensation Expense | $188 | $113 | $564 | $409 | $265 | $105 | $738 | $262 | $245 | $15 | $15 | $15 | ||||||||
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized | 334 | 334 | 3,570 | 3,570 | ||||||||||||||||
Weighted average period over which unrecognized compensation is expected to be recognized for equity-based compensation plans | 0.9 | 3 | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $9.15 | $9.31 | $10.79 | $10.09 | $9.25 | $10.58 | $12.42 | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 7,500 | 168,000 | 3,000 | 24,280 | 1,622 | 1,418 | 1,208 | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 1,168,426 | 12,460 | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, restricted stock, Outstanding, Number | 498,987 | |||||||||||||||||||
Common stock grants related to the board of directors | $15 | $290 | $116 | |||||||||||||||||
Shares available to be issued | 354,607 |
Fixed_Asset_Impairment_Details
Fixed Asset Impairment (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Jun. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Integer | |||||
Asset Impairment Charges [Abstract] | |||||
Number of Locations Evaluated For Impairments | 8 | ||||
Net Book Value Remaining For Locations Evaluated | $19,895 | $19,895 | |||
Impairment Of Long Lived Assets Held For Use | $439 | $239 | $239 | $567 | $239 |
Number Of Locations Evaluated Without Impairments | 7 |
Goodwill_and_Other_Intangibles2
Goodwill and Other Intangibles (Details) (USD $) | 3 Months Ended | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 |
Goodwill [Line Items] | |||
Goodwill, Gross | $52,435 | $52,435 | $52,435 |
Goodwill, Impaired, Accumulated Impairment Loss | -19,611 | -19,611 | -19,611 |
Acquired goodwill | 9 | ||
Goodwill, Translation Adjustments | 17 | ||
Goodwill | 32,850 | 32,850 | 32,824 |
Goodwill, Method for Fair Value Determination | Goodwill has been allocated to reporting units that closely reflect the regions served by the Company’s four trade names: New York Sports Clubs (“NYSC”), Boston Sports Clubs (“BSC”), Washington Sports Clubs (“WSC”) and Philadelphia Sports Clubs (“PSC”), with certain more remote clubs that do not benefit from a regional cluster being considered single reporting units (“Outlier Clubs”) and the Company’s three clubs located in Switzerland being considered a single reporting unit (“SSC”). As of February 28, 2013, the estimated fair value of NYSC was 127% greater than book value and the estimated fair value of SSC was 120% greater than book value. For the February 28, 2013 impairment test, fair value was determined by using a weighted combination of two market-based approaches (weighted 50% collectively) and an income approach (weighted 50%), as this combination was deemed to be the most indicative of the Company’s fair value in an orderly transaction between market participants | ||
Intangible assets [Line Items] | |||
Gross carrying amount | 13,165 | 13,165 | |
Accumulated amortization | -12,128 | -12,128 | |
Intangible assets | 1,037 | 1,037 | |
Intangible asset amortization expense | 125 | 185 | |
Membership lists [Member] | |||
Intangible assets [Line Items] | |||
Gross carrying amount | 11,344 | 11,344 | |
Accumulated amortization | -10,580 | -10,580 | |
Intangible assets | 764 | 764 | |
Non compete agreements [Member] | |||
Intangible assets [Line Items] | |||
Gross carrying amount | 1,508 | 1,508 | |
Accumulated amortization | -1,508 | -1,508 | |
Management contracts [Member] | |||
Intangible assets [Line Items] | |||
Gross carrying amount | 250 | 250 | |
Accumulated amortization | -16 | -16 | |
Intangible assets | 234 | 234 | |
Trade names [Member] | |||
Intangible assets [Line Items] | |||
Gross carrying amount | 40 | 40 | |
Accumulated amortization | -1 | -1 | |
Intangible assets | 39 | 39 | |
Other intangible assets | |||
Intangible assets [Line Items] | |||
Gross carrying amount | 23 | 23 | |
Accumulated amortization | -23 | -23 | |
New York Sports Clubs [Member] | |||
Goodwill [Line Items] | |||
Goodwill, Gross | 31,403 | 31,403 | 31,403 |
Goodwill | 31,403 | 31,403 | 31,403 |
Boston Sports Clubs [Member] | |||
Goodwill [Line Items] | |||
Goodwill, Gross | 15,766 | 15,766 | 15,766 |
Goodwill, Impaired, Accumulated Impairment Loss | -15,766 | -15,766 | -15,766 |
Acquired goodwill | 9 | ||
Goodwill | 9 | 9 | |
Switzerland Clubs [Member] | |||
Goodwill [Line Items] | |||
Goodwill, Gross | 1,284 | 1,284 | 1,284 |
Goodwill, Translation Adjustments | 17 | ||
Goodwill | 1,301 | 1,301 | 1,284 |
Outlier Clubs [Member] | |||
Goodwill [Line Items] | |||
Goodwill, Gross | 3,982 | 3,982 | 3,982 |
Goodwill, Impaired, Accumulated Impairment Loss | -3,845 | -3,845 | -3,845 |
Goodwill | $137 | $137 | $137 |
Acquisitions_Details
Acquisitions (Details) (USD $) | 9 Months Ended | 3 Months Ended | 4 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Mar. 15, 2013 | 17-May-13 | Sep. 30, 2013 |
West End Sports Club [Member] | Fitcorp [Member] | Fitcorp [Member] | ||
Integer | ||||
Acquisitions [Line Items] | ||||
Purchase price allocation, other net assets | $90 | |||
Purchase price allocation, goodwill | 9 | |||
Purchase price allocation, fixed assets | 458 | 2,289 | ||
Purchase price allocation, assets | 560 | 3,175 | ||
Purchase price allocation, cash paid | 2,939 | 504 | 2,435 | |
Purchase price allocation, membership lists | 102 | 830 | ||
Purchase price allocation, management contracts | 250 | |||
Purchase price allocation, tradenames | 40 | |||
Purchase price allocation, deferred revenue | 56 | -630 | ||
Purchase price allocation, other net liabilities | -443 | |||
Acquisition costs incurred | $95 | $213 | ||
Useful life of definite lived intangible assets acquired | The definite lived intangible assets acquired will be amortized in accordance with the Company’s accounting policy with the membership lists amortized over the estimated average membership life of 23 months, management contracts amortized over their estimated contractual lives of between nine to 11 years and trade names amortized over their estimated useful lives. | |||
Clubs acquired | 5 | |||
Managed Sites Acquired | 4 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Income Tax Uncertainties [Abstract] | ||||
Effective Income Tax Rate, Continuing Operations | 37.00% | 38.00% | ||
Income Tax Expense (Benefit) | $1,250 | $1,613 | $7,767 | $7,524 |
Deferred Tax Assets, Net | 26,710 | 26,710 | ||
State Deferred Tax Assets Net | 20,843 | 20,843 | ||
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | 750 | 750 | ||
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued | $341 | $289 | $341 | $289 |
Forecasted annual effective rate | 38.00% | 39.00% | ||
Impact on forecasted annual effective tax rate from the captive insurance arrangement | 5.00% | 5.00% |
Commitments_and_Contingencies_
Commitments and Contingencies (Details) (USD $) | Jan. 28, 2013 | Oct. 14, 2009 | Jun. 05, 2013 | Aug. 29, 2011 | Feb. 07, 2007 |
In Thousands, unless otherwise specified | Action Styled Town Sports International Vs Ajilon Solutions [Member] | Action Styled Town Sports International Vs Ajilon Solutions [Member] | Action Styled White Plains Realty Vs Town Sports International [Member] | Action Styled White Plains Realty Vs Town Sports International [Member] | Action Styled White Plains Realty Vs Town Sports International [Member] |
Loss Contingencies [Line Items] | |||||
Initial Awards | $700 | ||||
Additional Damages | 900 | ||||
Additional Awards Including Interest And Costs | 750 | ||||
Joint Liability Amounts | 488 | ||||
Counterclaim Amount | 2,900 | ||||
Damages Awarded | 3,300 | 1,045 | |||
Initial Damages Against | 214 | ||||
Damages Against | 2,900 | ||||
Net Amount Owed To Before Interest | $400 |
Other_Details
Other (Details) (USD $) | 3 Months Ended | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2013 |
Other Income and Expenses [Abstract] | ||
Insurance recovery related to damaged property | $694 | $3,194 |