Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 23, 2018 | Jun. 30, 2017 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | TOWN SPORTS INTERNATIONAL HOLDINGS INC | ||
Entity Central Index Key | 1,281,774 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Smaller Reporting Company | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus (Q1,Q2,Q3,FY) | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 27,210,377 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 69.6 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 30,321 | $ 45,596 |
Accounts receivable, net | 2,216 | 1,221 |
Inventory | 0 | 238 |
Prepaid corporate income taxes | 13,563 | 1,505 |
Prepaid rent expense | 9,153 | 0 |
Prepaid expenses and other current assets | 12,894 | 10,274 |
Total current assets | 68,147 | 58,834 |
Fixed assets, net | 151,498 | 170,580 |
Goodwill | 6,217 | 1,008 |
Intangible assets, net | 5,134 | 135 |
Deferred membership costs | 959 | 1,092 |
Other assets | 4,716 | 4,229 |
Total assets | 236,671 | 235,878 |
Current liabilities: | ||
Current portion of long-term debt | 2,082 | 2,082 |
Accounts payable | 2,247 | 2,477 |
Accrued expenses | 24,669 | 25,907 |
Accrued interest | 118 | 119 |
Capital lease liabilities | 160 | 0 |
Deferred revenue | 33,473 | 34,572 |
Total current liabilities | 62,749 | 65,157 |
Long-term debt | 193,947 | 194,743 |
Deferred lease liabilities | 47,356 | 49,660 |
Deferred tax liabilities | 93 | 61 |
Deferred revenue | 351 | 440 |
Other liabilities | 10,132 | 11,487 |
Total liabilities | 314,628 | 321,548 |
Commitments and Contingencies (Note 16) | ||
Stockholders’ deficit: | ||
Preferred stock, $0.001 par value; no shares issued and outstanding at both December 31, 2017 and December 31, 2016 | ||
Common stock, $0.001 par value; issued and outstanding 27,149,135 and 26,560,547 shares at December 31, 2017 and 2016, respectively | 25 | 24 |
Additional paid-in capital | (4,290) | (6,261) |
Accumulated other comprehensive income (loss) | 1,201 | (168) |
Accumulated deficit | (74,893) | (79,265) |
Total stockholders’ deficit | (77,957) | (85,670) |
Total liabilities and stockholders’ deficit | $ 236,671 | $ 235,878 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares issued | 27,149,135 | 26,560,547 |
Common stock, shares outstanding | 27,149,135 | 26,560,547 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues: | |||
Club operations | $ 397,166 | $ 390,560 | $ 418,069 |
Fees and other | 5,876 | 6,361 | 6,254 |
Total revenue | 403,042 | 396,921 | 424,323 |
Operating Expenses: | |||
Payroll and related | 145,612 | 149,029 | 175,898 |
Club operating | 180,467 | 185,104 | 196,725 |
General and administrative | 22,680 | 24,702 | 30,683 |
Depreciation and amortization | 40,849 | 43,727 | 47,887 |
Impairment of fixed assets | 6,497 | 742 | 14,571 |
Impairment of goodwill | 0 | 0 | 31,558 |
Gain on sale of building | 0 | 0 | (77,146) |
Gain on lease termination | 0 | 0 | (2,967) |
Total operating expenses | 396,105 | 403,304 | 417,209 |
Operating income (loss) | 6,937 | (6,383) | 7,114 |
Gain on extinguishment of debt | 0 | (37,893) | (17,911) |
Interest expense | 12,665 | 13,940 | 20,579 |
Interest income | (78) | (2) | 0 |
Equity in the earnings of investees and rental income | (333) | (242) | (2,361) |
(Loss) income before (benefit) provision for corporate income taxes | (5,317) | 17,814 | 6,807 |
(Benefit) provision for corporate income taxes | (9,686) | 9,771 | (14,351) |
Net income | $ 4,369 | $ 8,043 | $ 21,158 |
Earnings per share: | |||
Basic (in dollars per share) | $ 0.16 | $ 0.31 | $ 0.86 |
Diluted (in dollars per share) | $ 0.16 | $ 0.31 | $ 0.84 |
Weighted average number of shares used in calculating earnings per share: | |||
Basic (in shares) | 26,703,577 | 25,568,371 | 24,630,898 |
Diluted (in shares) | 27,422,833 | 26,074,735 | 25,114,057 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||
Net income | $ 4,369 | $ 8,043 | $ 21,158 |
Other comprehensive income (loss), net of tax: | |||
Foreign currency translation adjustments, net of tax of $0 for the years ended in December 31, 2017, 2016 and 2015 | 42 | (176) | (165) |
Interest rate swap, net of tax of $0 for the years ended in December 31, 2017, 2016 and 2015 | 1,327 | 531 | (753) |
Total other comprehensive income (loss), net of tax | 1,369 | 355 | (918) |
Total comprehensive income | $ 5,738 | $ 8,398 | $ 20,240 |
Consolidated Statements of Com6
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||
Foreign currency translation adjustment, tax | $ 0 | $ 0 | $ 0 |
Interest rate swap, tax | $ 0 | $ 0 | $ 0 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficit - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Retained Earnings (Deficit) |
Shares, beginning balance at Dec. 31, 2014 | 24,322,249 | ||||
Beginning balance at Dec. 31, 2014 | $ (118,084) | $ 24 | $ (10,055) | $ 395 | $ (108,448) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock option exercises, shares | 171,718 | ||||
Stock option exercises | 283 | 283 | |||
Common stock grants, shares | 67,609 | ||||
Common stock grants | 445 | 445 | |||
Restricted stock grants, shares | 507,000 | ||||
Forfeiture of restricted stock, shares | (249,790) | ||||
Compensation related to stock options and restricted stock grants | 941 | 941 | |||
Dividend forfeitures | 176 | 176 | |||
Net income | 21,158 | 21,158 | |||
Derivative financial instruments | (753) | (753) | |||
Foreign currency translation adjustment | (165) | (165) | |||
Dividend related to registration rights | (246) | (246) | |||
Shares, ending balance at Dec. 31, 2015 | 24,818,786 | ||||
Ending balance at Dec. 31, 2015 | (96,245) | $ 24 | (8,386) | (523) | (87,360) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock option exercises, shares | 226,011 | ||||
Stock option exercises | 318 | 318 | |||
Common stock grants, shares | 206,750 | ||||
Common stock grants | 246 | 246 | |||
Restricted stock grants, shares | 1,711,000 | ||||
Forfeiture of restricted stock, shares | (402,000) | ||||
Compensation related to stock options and restricted stock grants | 1,561 | 1,561 | |||
Dividend forfeitures | 52 | 52 | |||
Net income | 8,043 | 8,043 | |||
Derivative financial instruments | 531 | 531 | |||
Foreign currency translation adjustment | (176) | (176) | |||
Shares, ending balance at Dec. 31, 2016 | 26,560,547 | ||||
Ending balance at Dec. 31, 2016 | (85,670) | $ 24 | (6,261) | (168) | (79,265) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock option exercises, shares | 44,114 | ||||
Stock option exercises | $ 111 | $ 1 | 110 | ||
Common stock grants, shares | 108,940 | ||||
Common stock grants | $ 368 | ||||
Restricted stock grants, shares | 506,200 | ||||
Forfeiture of restricted stock, shares | (70,666) | ||||
Compensation related to stock options and restricted stock grants | 1,493 | 1,493 | |||
Dividend forfeitures | 3 | 3 | |||
Net income | 4,369 | 4,369 | |||
Derivative financial instruments | 1,327 | 1,327 | |||
Foreign currency translation adjustment | 42 | 42 | |||
Shares, ending balance at Dec. 31, 2017 | 27,149,135 | ||||
Ending balance at Dec. 31, 2017 | $ (77,957) | $ 25 | $ (4,290) | $ 1,201 | $ (74,893) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | |||
Net income | $ 4,369,000 | $ 8,043,000 | $ 21,158,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 40,849,000 | 43,727,000 | 47,887,000 |
Impairment of fixed assets | 6,497,000 | 742,000 | 14,571,000 |
Impairment of goodwill | 0 | 0 | 31,558,000 |
Gain on sale of building | 0 | 0 | (77,146,000) |
Gain on extinguishment of debt | 0 | (37,893,000) | (17,911,000) |
Amortization of debt discount | 939,000 | 1,006,000 | 1,288,000 |
Amortization of debt issuance costs | 601,000 | 644,000 | 778,000 |
Amortization of building financing costs | 0 | 0 | 124,000 |
Noncash rental income, net of non-cash rental expense | (4,250,000) | (3,617,000) | (3,647,000) |
Share-based compensation expense | 1,861,000 | 1,807,000 | 1,386,000 |
Net change in deferred taxes | 32,000 | 0 | (11,519,000) |
Net change in certain operating assets and liabilities | (24,450,000) | 1,500,000 | 9,185,000 |
Decrease in membership costs | 133,000 | 1,937,000 | 4,367,000 |
Landlord contributions to tenant improvements | 2,115,000 | 2,080,000 | 1,288,000 |
Increase in insurance reserves | 552,000 | 1,130,000 | 1,087,000 |
Other | (1,049,000) | 84,000 | 416,000 |
Total adjustments | 23,830,000 | 13,147,000 | 3,712,000 |
Net cash provided by operating activities | 28,199,000 | 21,190,000 | 24,870,000 |
Cash flows from investing activities: | |||
Capital expenditures | (10,206,000) | (19,723,000) | (30,471,000) |
Acquisition of businesses | (15,375,000) | 0 | 0 |
Acquisition of assets | (12,600,000) | 0 | 0 |
Deposit paid in connection with acquisitions | (2,800,000) | 0 | 0 |
Change in restricted cash | 0 | 0 | (1,100,000) |
Other | (550,000) | (280,000) | 0 |
Net cash used in investing activities | (41,531,000) | (20,003,000) | (31,571,000) |
Cash flows from financing activities: | |||
Proceeds from building financing arrangement | 0 | 0 | 4,000,000 |
Principal payments on 2013 Term Loan Facility | (2,082,000) | (2,266,000) | (3,038,000) |
Repurchase of 2013 Term Loan Facility | 0 | (29,765,000) | (10,947,000) |
Debt issuance costs | 0 | 0 | (350,000) |
Cash dividends paid | (9,000) | (50,000) | (213,000) |
Redemption paid pursuant to the Rights Plan | 0 | 0 | (246,000) |
Proceeds from stock option exercises | 111,000 | 318,000 | 283,000 |
Net cash used in financing activities | (1,980,000) | (31,763,000) | (10,511,000) |
Effect of exchange rate changes on cash | 37,000 | (45,000) | (23,000) |
Net decrease in cash and cash equivalents | (15,275,000) | (30,621,000) | (17,235,000) |
Cash and cash equivalents beginning of period | 45,596,000 | 76,217,000 | 93,452,000 |
Cash and cash equivalents end of period | 30,321,000 | 45,596,000 | 76,217,000 |
Summary of the change in certain operating assets and liabilities: | |||
(Increase) decrease in accounts receivable | (984,000) | 763,000 | 1,446,000 |
Decrease in inventory | 238,000 | 99,000 | 219,000 |
(Increase) decrease in prepaid expenses and other current assets | (9,180,000) | 2,997,000 | 596,000 |
Increase (decrease) in accounts payable, accrued expenses and accrued interest | 143,000 | (2,298,000) | 1,011,000 |
Change in prepaid corporate income taxes and corporate income taxes payable | (12,010,000) | 5,471,000 | 4,774,000 |
(Decrease) increase in deferred revenue | (2,657,000) | (5,532,000) | 1,139,000 |
Net change in certain working capital components | $ (24,450,000) | $ 1,500,000 | $ 9,185,000 |
Basis of Presentation
Basis of Presentation | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Town Sports International Holdings, Inc. (the “Company” or “TSI Holdings”) is a diversified holding company owning subsidiaries engaged in a number of business and investment activities. References to “TSI, LLC” refer to Town Sports International, LLC, and references to “TSI Group” refer to Town Sports Group, LLC, both of which are wholly-owned operating subsidiaries of the Company. As of December 31, 2017 , the Company owned and operated 165 fitness clubs. The clubs are comprised of 119 clubs in the New York metropolitan region ( 102 of which were under the “New York Sports Clubs” brand name, 16 of which were under the “Lucille Roberts” brand name, and one of which was under the “TMPL” brand name), including 39 locations in Manhattan. Additionally, the Company owned and operated 28 clubs in the Boston metropolitan region under the “Boston Sports Clubs” brand name, 10 clubs ( one of which is partly-owned) in the Washington, D.C. metropolitan region under the “Washington Sports Clubs” brand name, five clubs in the Philadelphia metropolitan region under the “Philadelphia Sports Clubs” brand name and three clubs in Switzerland. In addition, as of December 31, 2017 , the Company has one partly-owned club that operates under a different brand name in Washington, D.C. The Company’s operating segments are classified by geographical regions, which include the New York, Boston, Philadelphia, Washington, D.C. and Switzerland regions. These operating segments are the level at which the chief operating decision makers review discrete financial information and make decisions about segment profitability based on earnings before income tax depreciation and amortization. The Company has determined that these operating segments have similar economic characteristics and meet the criteria which permit them to be aggregated into one reportable segment. The Company continues to experience revenue pressure from members as the fitness industry continues to be highly competitive in the geographic regions in which the Company competes. Also, the prior strategy of converting to a low-cost gym implemented in 2014 resulted in additional revenue pressure for the past few years. New members joined at lower monthly rates and cancellations of members paying higher rates negatively impacted the Company's results and liquidity. In response to this, the Company implemented cost-savings initiatives in 2015, 2016 and 2017, which mitigated the impact the decline in revenue had on its profitability and cash flow from operations. The Company continues to strategize on improving its financial results. The Company focuses on increasing membership in existing clubs to increase revenue. The Company may consider additional actions within its control, including certain acquisitions, license arrangements, the closure of unprofitable clubs upon lease expiration and the sale of certain assets. The Company may also consider additional strategic alternatives, including opportunities to reduce TSI, LLC’s existing debt and further cost-savings initiatives. The Company’s ability to continue to meet its obligations is dependent on its ability to generate positive cash flow from a combination of initiatives, including those mentioned above. Failure to successfully implement these initiatives could have a material adverse effect on the Company’s liquidity and operations, and the Company would need to implement alternative plans that could include additional asset sales, additional reductions in operating costs, additional reductions in working capital, debt restructurings and the deferral of capital expenditures. There can be no assurance that such alternatives would be available to the Company or that the Company would be successful in their implementation. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Principles of Consolidation The accompanying consolidated financial statements include the accounts of TSI Holdings and all wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Revenue Recognition The Company generally receives one-time non-refundable joining fees and monthly dues from its members. The Company offers both month-to-month and one-year commit memberships. Members can cancel their membership with a fee charged to those still under contract. Membership dues are recognized in the period in which access to the club is provided. The Company's membership plans allow for club members to elect to pay a per visit fee to use non-home clubs. These usage fees are recorded to membership revenue in the month the usage occurs. Usage fees recorded were $1,404 , $1,015 and $719 for the years ended December 31, 2017 , 2016 and 2015 , respectively. Initiation and processing fees, as well as related direct and incremental expenses of membership acquisition, which may include sales commissions, bonuses and related taxes and benefits, are deferred and recognized, on a straight-line basis, in operations over the estimated average membership life or 12 months to the extent these costs are related to the first annual fee paid within one month of enrollment. Annual fees are amortized over 12 months. Deferred membership costs were $959 and $1,092 at December 31, 2017 and 2016 , respectively. The average membership life was 26 months , 25 months and 22 months for the years ended December 31, 2017 , 2016 and 2015 . The Company monitors factors that might affect the estimated average membership life including retention trends, attrition trends, membership sales volumes, membership composition, competition, and general economic conditions, and adjusts the estimate as necessary on an annual basis. The Company recognizes revenue from personal training sessions as the services are performed (i.e., when the session is trained). Unused personal training sessions expire after a set, disclosed period of time after purchase and are not refundable or redeemable by the member for cash. As of December 31, 2017 and 2016 , the Company had approximately $12,456 of unused and expired personal training sessions that had not been recognized as revenue and was recorded as deferred revenue. The Company does not believe this amount is subject to the escheatment or abandoned property laws of any of the jurisdictions in which we conduct our business, including the State of New York. It is possible however, that one or more of these jurisdictions may not agree with the Company's position and may claim that the Company must remit all or a portion of these amounts to such jurisdiction. This could have a material adverse effect on the Company's cash flows. The State of New York has informed the Company that it is considering whether the Company is required to remit the amount received by the Company for unused, expired personal training sessions to the State of New York as unclaimed property. For a total of six jurisdictions, the Company has concluded, based on opinions from outside counsel, that money held by a company for unused and expired personal training sessions are not escheatable. In 2010, for three jurisdictions, the Company concluded, based on opinions from outside counsel, that monies held by a company for unused and expired personal training sessions are not escheatable. As a result, the Company recorded approximately $2,697 as personal training revenue in the fourth quarter of 2010. This amount was previously recorded in deferred revenue. In 2017, for another three jurisdictions, the Company concluded, based on opinions from outside counsel, that monies held by a company for unused and expired personal training sessions are not escheatable. As a result, the Company recorded approximately $3,557 as personal training revenue in the fourth quarter of 2017. This amount was previously recorded in deferred revenue, which was primarily related to sessions purchased prior to the year ended December 31, 2015. In addition to the prepaid personal training sessions the Company also offers a personal training membership product which consists of single or multi-session packages ranging from four to 12 sessions per month. These sessions provided by the membership product are at a discount to our stand-alone session pricing and must be used in each respective month. Members who purchase this product commit to a three month period and revenue is recognized ratably over this period. The Company generates management fees from certain club facilities that are not wholly-owned, which include four managed sites as of December 31, 2017 . Management fees earned for services rendered are recognized at the time the related services are performed. Revenue generated from managed sites was $922 , $1,892 and $1,802 for the years ended December 31, 2017 , 2016 and 2015 , respectively. When a revenue agreement involves multiple elements, such as sales of both memberships and services in one arrangement or potentially multiple arrangements, the entire fee from the arrangement is allocated to each respective element based on its relative fair value and recognized when the revenue recognition criteria for each element is met. The Company recognizes revenue from merchandise sales upon delivery to the member. In connection with advance receipts of fees or dues, the Company was required to maintain bonds totaling $2,658 and $3,112 as of December 31, 2017 and 2016 , respectively, pursuant to various state consumer protection laws. Advertising Costs Advertising costs are charged to operations during the period in which they are incurred, except for production costs related to television and radio advertisements, which are expensed when the related commercials are first aired. Total advertising costs incurred by the Company for the years ended December 31, 2017 , 2016 and 2015 totaled $2,827 , $6,384 and $11,057 , respectively, and are included in Club operating expenses in the accompanying statements of operations for each respective year. Cash and Cash Equivalents The Company considers all highly liquid instruments which have original maturities of three months or less when acquired to be cash equivalents. The carrying amounts reported in the balance sheets for cash and cash equivalents approximate fair value. The Company owns and operates a captive insurance company in the State of New York. Under the insurance laws of the State of New York, this captive insurance company is required to maintain a cash balance of at least $250 . Cash related to this wholly-owned subsidiary of $276 is included in cash and cash equivalents at both December 31, 2017 and 2016 , respectively. Deferred Lease Liabilities, Non-Cash Rental Expense and Additional Rent The Company recognizes rental expense for leases with scheduled rent increases and inclusive of rental concessions, on the straight-line basis over the life of the lease beginning upon the commencement date of the lease. Rent concessions, primarily received in the form of free rental periods, are also deferred and amortized on a straight-line basis over the life of the lease. The Company leases office, warehouse and multi-recreational facilities and certain equipment under non-cancelable operating leases. In addition to base rent, the facility leases generally provide for additional rent to cover common area maintenance charges incurred and to pass along increases in real estate taxes. The Company accrues for any unpaid common area maintenance charges and real estate taxes on a club-by-club basis. Upon entering into certain leases, the Company receives construction allowances from the landlord. These construction allowances are recorded as deferred lease liability credits on the balance sheet when the requirements for these allowances are met as stated in the respective lease and are amortized as a reduction of rent expense over the term of the lease. Amortization of deferred construction allowances were $2,884 , $3,190 and $2,920 as of December 31, 2017 , 2016 and 2015 , respectively. Certain leases provide for contingent rent based upon defined formulas of revenue, cash flows or operating results for the respective facilities. These contingent rent payments typically call for additional rent payments calculated as a percentage of the respective club’s revenue or a percentage of revenue in excess of defined break-points during a specified year. The Company records contingent rent expense over the related contingent rental period at the time the respective contingent targets are probable of being met. Contingent rent expense was $131 , $467 and $693 for the years ended December 31, 2017 , 2016 and 2015 , respectively, and is included in Club operating expenses in the accompanying consolidated statements of operations for each respective year. Lease termination gains and losses are recognized at fair value based on the expected settlement amount with the landlord when the Company terminates the contract before the lease termination date. In closing a club, the Company discontinues operating 30 days prior to giving back the space to the landlord, and uses this time to remove equipment and clean the premises. Accordingly, lease termination gains and losses related to certain club closures also include one month additional rent to the landlord. In the years ended December 31, 2017 , 2016 and 2015 , the Company recorded $201 , $329 and $1,550 of lease termination losses, respectively, which were included in Club operating expenses in the accompanying consolidated statements of operations for each respective year. In the year ended December 31, 2015, in addition to the $1,550 lease termination losses recorded in Club operating expenses in the accompanying statements of operations, the Company also recorded an additional $2,967 net gain on lease termination in a separate line item on the accompanying consolidated statements of operations related to the termination of a lease for a planned club opening that was not yet effective. The Company received one-time gross proceeds of $3,090 from a landlord related to this lease termination in November 2015. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable consists of amounts due from the Company’s membership base and was $6,453 and $4,133 at December 31, 2017 and 2016 , respectively, before the allowance for doubtful accounts. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make required payments. The Company considers factors such as: historical collection experience, the age of the receivable balance and general economic conditions that may affect a customer’s ability to pay. Following are the changes in the allowance for doubtful accounts for the years December 31, 2017 , 2016 and 2015 : Balance Beginning of the Year Additions Write-offs Net of Recoveries Balance at End of Year December 31, 2017 $ 2,912 $ 9,712 $ (8,387 ) $ 4,237 December 31, 2016 $ 3,133 $ 6,704 $ (6,925 ) $ 2,912 December 31, 2015 $ 2,511 $ 11,237 $ (10,615 ) $ 3,133 Inventory As of December 31, 2016, inventory consisted primarily of equipment parts and cleaning and locker room supplies. Inventory was valued at the lower of cost or net realizable value by the first-in, first-out method. In 2017, the Company began to pre-pay for some of these items and store them at a third-party vendor location. These prepaid assets are included in prepaid and other current assets on the accompanying consolidated balance sheet as of December 31, 2017. Fixed Assets Fixed assets are recorded at cost and depreciated on a straight-line basis over the estimated useful lives of the assets, which are 30 years for building and improvements, five years for club equipment, furniture, fixtures and computer equipment and three to five years for computer software. Leasehold improvements are amortized over the shorter of their estimated useful lives or the remaining period of the related lease. Payroll costs directly related to the construction or expansion of the Company’s locations are capitalized with leasehold improvements. Expenditures for maintenance and repairs are charged to operations as incurred. The cost and related accumulated depreciation of assets retired or sold is removed from the respective accounts and any gain or loss is recognized in operations. Third-party costs related to developing web applications, developing web pages and installing or enhancing developed applications on the web servers are capitalized and classified as computer software. Website hosting fees and maintenance costs are expensed as incurred. Intangible Assets and Debt Issuance Costs Intangible assets are stated at cost and amortized by the straight-line method over their respective estimated lives. Intangible assets currently consist of membership lists, favorable lease commitments, management contracts, trade names and non-compete agreements. Membership lists are amortized over the estimated average membership life, currently at 26 months, favorable lease commitments are amortized over the remaining life of the lease, trade names are amortized over their estimated useful lives of between five and 15 years, and non-compete agreements are amortized over five years. For the years ended December 31, 2017, 2016 and 2015, management contracts were amortized over their contractual lives of between nine and 11 years. Debt issuance costs are classified within other assets and are being amortized as additional interest expense over the life of the underlying debt, five to seven years, using the interest method. Amortization of debt issue costs was $601 , $644 and $778 , for the years ended December 31, 2017 , 2016 and 2015 , respectively. For the year ended December 31, 2015, building financing costs were classified within other assets and were being amortized as additional interest expense over the life of the underlying financing arrangement, 25 years , using the interest method. Amortization of building financing costs was $124 for the year ended December 31, 2015. There was no amortization of building financing costs in the years ended December 31, 2017 and 2016 . The balance of building financing costs of $3,005 was written off in December 2015 in connection with the termination of the future lease, which was included in Gain on sale of building in the accompanying statements of operations. Business Combinations In connection with an acquisition of a business, the Company records all assets acquired and liabilities assumed, if any, of the acquired business at their acquisition date fair value, including the recognition of contingent consideration at fair value on the acquisition date. These fair value determinations require judgment and may involve the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives, and market multiples, among other items. We may utilize independent third-party valuation firms to assist in making these fair value determinations. Fair Value Measurements 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. Accounting for the Impairment of Long-Lived Assets and Goodwill Long-lived assets, such as fixed assets and intangible assets are reviewed for impairment periodically whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable from undiscounted cash flows. Estimated undiscounted expected future cash flows are used to determine if an asset group is impaired, in which case the asset carrying value would be reduced to its fair value, calculated considering a combination of market approach and a cost approach. In determining the recoverability of fixed assets Level 3 inputs were used in determining undiscounted cash flows, which are based on internal budgets and forecasts through the end of the life of the primary asset in the asset group which is normally the life of leasehold improvements. The most significant assumptions in those budgets and forecasts relate to estimated membership and ancillary revenue, attrition rates, discount rates, income tax rates, estimated results related to new program launches and maintenance capital expenditures, which are generally estimated at approximately 2% of total revenues depending upon the conditions and needs of a given club. If the Company continues to experience competitive pressure, certain assumptions may not be accurate. Goodwill represents the excess of consideration paid over the fair value of the net identifiable business assets acquired in the acquisition of a club or group of clubs. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350-20, Intangibles – Goodwill and Other, requires goodwill to be tested for impairment on an annual basis and between annual tests in certain circumstances, and written down when impaired. The Company’s impairment review process compares the fair value of the reporting unit in which the goodwill resides to its carrying value. The Company early adopted Accounting Standards Update (“ASU”) No. 2017-04, “Simplifying the Test for Goodwill Impairment” in the first quarter of 2017. This standard eliminated the second step of the goodwill impairment test, where a determination of the fair value of individual assets and liabilities of a reporting unit was needed to measure the goodwill impairment. As a result of the updated guidance, the Company’s annual goodwill impairment test as of February 28, 2017 was performed by comparing the fair value of the Company’s reporting unit with its carrying amount and then recognizing an impairment charge, as necessary, for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit. Prior to the adoption of ASU 2017-04, the impairment test required a two-step quantitative evaluation. Step 1 involved comparing the estimated fair value of the Company’s reporting units to their carrying amounts. If the estimated fair value of the reporting unit was greater than its carrying amount, there was no requirement to perform Step 2 of the impairment test, and there was no impairment. If the reporting unit’s carrying amount was greater than the estimated fair value, the second step must be completed to measure the amount of impairment, if any. Step 2 calculated the implied fair value of goodwill by deducting the estimated fair value of all tangible and intangible assets, excluding goodwill, of the reporting unit from the estimated fair value of the reporting unit as determined in Step 1. The implied fair value of goodwill determined in this step was compared to the carrying value of goodwill. If the implied fair value of goodwill was less than the carrying value of goodwill, an impairment charge was recognized equal to the difference. For the years ended December 31, 2017 and 2016, the estimated fair value was determined using an income approach. For the year ended December 31, 2015, the estimated fair value was determined using a combined income and market approach with equal weighting on each approach. The income approach was based on discounted future cash flows and required significant assumptions, including estimates regarding revenue growth rates, operating margins, weighted average cost of capital, and future economic and market conditions. Under the market approach, 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. Solely for purposes of establishing inputs for the fair value calculation described above related to goodwill impairment testing, the Company developed long-range financial forecasts (three years) for all reporting units and assumed known changes in the existing club base. Terminal growth rates were calculated for years beyond the three year forecast. The Company has historically performed goodwill impairment test annually as of the last day of February and in the interim if a triggering event occurs. During the fourth quarter of 2017, the Company established the date of its annual goodwill impairment test for the New York region from the last day of February to August 1. The Company believes that performing the test annually on August 1 will alleviate the information and resource constraints that historically existed during the first quarter and will more closely align with the timing of related forecasts, reports and analysis. The Company will perform a goodwill impairment test on the Switzerland region as of February 28, 2018. The goodwill in the New York region was acquired in connection with the Lucille Roberts and TMPL acquisitions in the third and fourth quarters of 2017, respectively. As such, these intangible assets were recorded at fair value at the time of the acquisitions. The next goodwill impairment test for the New York region will be August 1, 2018 which is within 12 months of the acquisitions. The Company believes that the resulting change in accounting principle related to the annual testing date will not delay, accelerate or avoid an impairment charge. The Company has also determined that it is impracticable to objectively determine projected cash flows and related valuation estimates that would have been used as of August 1 for periods prior to August 1, 2018 without the use of hindsight. As such, the Company will prospectively apply the change in the annual goodwill impairment assessment date beginning August 1, 2018. Insurance The Company obtains insurance coverage for significant exposures as well as those risks required to be insured by law or contract. The Company retains a portion of risk internally related to general liability losses. Where the Company retains risk, provisions are recorded based upon the Company’s estimates of its ultimate exposure for claims, which are included in general and administrative expenses in the accompanying statements of operations. The provisions are estimated using actuarial analysis based on claims experience, an estimate of claims incurred but not yet reported and other relevant factors. In this connection, under the provision of the deductible agreement related to the payment and administration of the Company’s insurance claims, we are required to maintain irrevocable letters of credit, totaling $415 and $615 as of December 31, 2017 and 2016 , respectively. The Company maintains a self-insured health benefits plan, which provides medical benefits to employees electing coverage under the plan. The Company maintains a reserve for incurred but not reported medical claims and claim development. The reserve is an estimate based on historical experience, actuarial estimates and other assumptions, some of which are subjective. The Company will adjust its self-insured medical benefits reserve as the Company’s loss experience changes due to medical inflation, changes in the number of plan participants and an aging employee base. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The most significant assumptions and estimates relate to the useful lives of long-term assets, recoverability and impairment of fixed and intangible assets, deferred income tax valuation, valuation of and expense incurred in connection with stock options, valuation of interest-rate swap arrangements, insurance reserves, legal contingencies and the estimated average membership life and the underlying forecasts for these assumptions and estimates. Income Taxes Deferred tax liabilities and assets are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. The Company also recognizes deferred tax in relation to the U.S. taxes on the total cumulative earnings of the Company's Swiss clubs. Deferred tax liabilities and assets are determined on the basis of the difference between the financial statement and tax basis of assets and liabilities (“temporary differences”) at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. A valuation allowance is recorded to reduce deferred tax assets to the amount that is more likely than not to be realized. In assessing the need for a valuation allowance, we consider all positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. As of December 31, 2017 , the Company maintained a full valuation allowance of $38,769 against outstanding net deferred tax assets as the company had a three year cumulative loss position excluding one-time extraordinary income and expense items. The guidance related to accounting for uncertain tax positions prescribes a recognition threshold and measurement attribute for a tax position taken or expected to be taken in a tax return and also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. Statements of Cash Flows Supplemental disclosure of cash flow information: Year Ended December 31, 2017 2016 2015 Cash paid: Interest paid (net of amounts capitalized) (a) $ 11,165 $ 12,289 $ 16,749 Income taxes paid $ 3,891 $ 11,286 $ 105 Cash received: Income taxes refund $ 1,600 $ 6,985 $ 7,768 Noncash investing and financing activities: Acquisition of fixed assets included in accounts payable and accrued expenses $ 455 $ 2,058 $ 2,031 (a) Interest includes cash payments under the Initial Lease (as defined below) resulting from the sale of the East 86th Street property in the year ended December 31, 2015. See Notes 9 for additional noncash financing activities. Other Comprehensive (Loss) Income Other comprehensive (loss) income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources, including changes in the fair value of the Company’s derivative financial instrument and foreign currency translation adjustments. The Company presents other comprehensive (loss) income in its consolidated statements of comprehensive (loss) income. The Company uses a derivative financial instrument to limit exposure to changes in interest rates on the Company’s existing term loan facility. The derivative financial instrument is recorded at fair value on the balance sheet and changes in the fair value are either recognized in accumulated other comprehensive income (a component of stockholders’ equity) or net income depending on the nature of the underlying exposure, whether the hedge is formally designated as a hedge, and if designated, the extent to which the hedge is effective. The Company’s derivative financial instrument has been designated as a cash flow hedge. See Note 10 - Derivative Financial Instruments for more information on the Company’s risk management program and derivatives. At December 31, 2017 , the Company owned three Swiss clubs, which use the Swiss Franc, their local currency, as their functional currency. Assets and liabilities are translated into U.S. dollars at year-end exchange rates, while income and expense items are translated into U.S. dollars at the average exchange rate for the period. For all periods presented, foreign exchange transaction gains and losses were not material. Adjustments resulting from the translation of foreign functional currency financial statements into U.S. dollars are included in the currency translation adjustment in the consolidated statements of stockholders’ deficit and the consolidated statements of comprehensive income (loss). The effect of foreign exchange translation adjustments was $42 , net of tax of $0 ; $(176) , net of tax of $0 and $(165) , net of tax of $0 , for the years ended December 31, 2017 , 2016 and 2015 , respectively. Concentrations 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 December 31, 2017 , $19,932 of the cash balance of $30,321 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 (Loss) Per Share Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) applicable to common stockholders by the weighted average numbers of shares of common stock outstanding during the period. Diluted EPS is computed similarly to basic EPS, except that the denominator is increased for the assumed exercise of dilutive stock options and unvested restricted stock calculated using the treasury stock method. The following table summarizes the weighted average common shares for basic and diluted EPS computations. For The Year Ended December 31, 2017 2016 2015 Net income $ 4,369 $ 8,043 $ 21,158 Weighted average number of common share outstanding — basic 26,703,577 25,568,371 24,630,898 Effect of dilutive share-based awards 719,256 506,364 483,159 Weighted average number of common shares outstanding — diluted 27,422,833 26,074,735 25,114,057 Earnings per share: Basic $ 0.16 $ 0.31 $ 0.86 Diluted $ 0.16 $ 0.31 $ 0.84 For the years ended December 31, 2017, 2016 and 2015, the Company did not include options to purchase 28,681 , 810,571 and 276,846 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. Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, Compensation - Stock Compensation (“ASC 718”). ASC 718 requires that the cost resulting from all share-based payment transactions be treated as compensation and recognized in the consolidated financial statements. We record share-based payment awards at fair value on the grant date of the awards, based on the estimated number of awards that are expected to vest. The fair value of stock options is determined using the Black-Scholes option-pricing model. The assumptions in the Black-Scholes model include risk-free interest rate, the Company's expected stock price volatility over the term of the awards, |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The updated standard expands the range of transactions that qualify for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess effectiveness. It is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting, and increase the transparency as to the scope and results of hedging programs. This standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s financial statements. In January 2017, the FASB issued ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment.” This standard eliminates the second step of the goodwill impairment test, where a determination of the fair value of individual assets and liabilities of a reporting unit was needed to measure the goodwill impairment. As a result of ASU No. 2017-04, an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and then recognize an impairment charge, as necessary, for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit. This standard is effective prospectively for annual and interim periods beginning on or after December 15, 2019, and early adoption is permitted on testing dates after January 1, 2017. The Company early adopted the updated guidance for the fiscal year beginning January 1, 2017 with no impact on the Company’s financial statements. In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” This ASU clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those years, with early adoption permitted. The Company early adopted the updated guidance for the fiscal year beginning September 1, 2017 with no impact on the Company’s financial statements. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (A Consensus of the FASB Emerging Issues Task Force).” This ASU provides specific guidance over eight identified cash flow issues. This standard is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted. The adoption of this guidance will not have a material impact on the Company’s financial statements. In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting.” Under this standard, all excess tax benefits and tax deficiencies will be recorded as an income tax expense or benefit in the income statement in the period in which the awards vest or are exercised. Excess tax benefits will be classified as an operating activity in the statement of cash flows. The standard also allows an entity to elect an accounting policy to either estimate the number of forfeitures or account for forfeitures when they occur. In addition, entities can withhold up to the maximum individual statutory tax rate without classifying the awards as a liability. This standard was effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. The Company adopted the updated guidance for the fiscal year beginning January 1, 2017 with no material impact on the Company’s financial statements. The Company elected to account for forfeitures of share-based payments by recognizing forfeitures of awards as they occur. Refer to Note 13 - Stockholders’ (Deficit) Equity for further detail. In February 2016, the FASB issued ASU No. 2016-02, “Leases (topic 842),” to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This standard is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of this standard is permitted. The Company is evaluating the impact of this standard on its financial statements. Refer to Note 12 - Leases for further detail. In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (Topic 606). The standard provides a single, comprehensive revenue recognition model for all contracts with customers and supersedes current revenue recognition guidance. The revenue standard contains principles that an entity will apply to determine the measurement of revenue and timing of when it is recognized. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The new standard also includes enhanced disclosures which are significantly more comprehensive than those in existing revenue standards. In August 2015, the FASB issued ASU No. 2015-14, which defers the effective date of ASU No. 2014-09 for all entities by one year, to annual reporting periods beginning after December 15, 2017. Early adoption is permitted for annual reporting periods beginning after December 15, 2016. The standard allows for either “full retrospective” adoption, meaning the standard is applied to all of the periods presented, or “modified retrospective” adoption, meaning the standard is applied only to the most current period presented in the financial statements. In addition, the FASB issued ASU No. 2016-08, ASU No. 2016-10, and ASU No. 2016-12 in March 2016, April 2016, and May 2016, respectively, to help provide interpretive clarifications on the new guidance in FASB ASC Topic 606. The Company will adopt this guidance on January 1, 2018 using the modified retrospective method. The Company expects to record an impact to opening retained earnings as of January 1, 2018 due to the cumulative impact of adopting FASB ASC Topic 606, with the impact primarily related to how costs associated with contracts for customers are deferred and recognized. The Company is in the process of finalizing the additional disclosures that may be acquired. |
Fixed Assets
Fixed Assets | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Fixed Assets | Fixed Assets Fixed assets as of December 31, 2017 and 2016 are shown at cost, less accumulated depreciation and amortization and are summarized below: December 31, 2017 2016 Leasehold improvements $ 489,738 $ 495,515 Club equipment (a) 103,998 107,905 Furniture, fixtures and computer equipment 56,203 71,222 Computer software 19,048 25,813 Construction in progress 1,237 3,617 Building and improvements 9,575 — Land 2,675 — 682,474 704,072 Less: Accumulated depreciation and amortization (530,976 ) (533,492 ) $ 151,498 $ 170,580 (a) Included $505 of club equipment under capital lease for the year ending December 31, 2017. Depreciation and leasehold amortization expense for the years ended December 31, 2017 , 2016 and 2015 , was $40,299 , $43,691 and $47,664 , respectively. 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 the 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 asset and their fair values is recognized. In the year ended December 31, 2017 , the Company tested its underperforming clubs and recorded impairment charges of $6,497 on leasehold improvements and furniture and fixtures at clubs that experienced decreased profitability and sales levels below expectations during this period. In the years ended December 31, 2016 and December 31, 2015 , the Company recorded impairment charges of $742 and $14,571 , respectively, related to underperforming clubs. The fair value of long-lived assets is determined using the level 3 valuation technique established by the FASB. Level 3 valuation is based upon unobservable inputs that are significant to the fair value measurement. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangibles Assets | Goodwill and Intangible Assets Goodwill was allocated to reporting units that closely reflect the regions served by the Company: New York, Boston, Washington, D.C., Philadelphia and Switzerland, with certain more remote clubs that do not benefit from a regional cluster being considered single reporting units (“Outlier Clubs”). In the second half of 2017, the Company acquired the Lucille Roberts Health Club business (“Lucille Roberts”) and a single existing club under the TMPL trade name. In connection with these acquisitions, $5,158 of goodwill was added to the Company’s goodwill balance in the New York region. For more information on the Lucille Roberts and the TMPL Gym acquisitions, refer to Note 6 - Acquisitions. As of December 31, 2017, only the New York and Switzerland regions had a goodwill balance. The Company early adopted ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment” in the first quarter of 2017. This standard eliminated the second step of the goodwill impairment test, where a determination of the fair value of individual assets and liabilities of a reporting unit was needed to measure the goodwill impairment. As a result of the updated guidance, the Company’s annual goodwill impairment test as of February 28, 2017 was performed by comparing the fair value of the Company’s reporting unit with its carrying amount and then recognizing an impairment charge, as necessary, for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit. Prior to the adoption of ASU 2017-04, the impairment test required a two-step quantitative evaluation. Step 1 involved comparing the estimated fair value of the Company’s reporting units to their carrying amounts. If the estimated fair value of the reporting unit was greater than its carrying amount, there was no requirement to perform Step 2 of the impairment test, and there was no impairment. If the reporting unit’s carrying amount was greater than the estimated fair value, the second step must be completed to measure the amount of impairment, if any. Step 2 calculated the implied fair value of goodwill by deducting the estimated fair value of all tangible and intangible assets, excluding goodwill, of the reporting unit from the estimated fair value of the reporting unit as determined in Step 1. The implied fair value of goodwill determined in this step was compared to the carrying value of goodwill. If the implied fair value of goodwill was less than the carrying value of goodwill, an impairment charge was recognized equal to the difference. For the years ended December 31, 2017 and 2016, the estimated fair value was determined using an income approach. For the year ended December 31, 2015, the estimated fair value was determined using a combined income and market approach with equal weighting on each approach. The income approach was based on discounted future cash flows and required significant assumptions, including estimates regarding revenue growth rates, operating margins, weighted average cost of capital, and future economic and market conditions. Under the market approach, 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. The annual impairment tests as of the last day of February in 2017, 2016 and 2015 supported the goodwill balance and as such no impairment of goodwill was required. As a result of the significant decrease in market capitalization and a decline in our performance primarily due to existing members downgrading their memberships to those with lower monthly dues and new members enrolling at lower rates between February 28, 2015 and May 31, 2015, the Company performed an interim impairment test as of May 31, 2015. The Company concluded that there would be no remaining implied fair value of goodwill attributable to the New York and Boston regions. Accordingly, as of May 31, 2015, the Company wrote off $31,558 of goodwill associated with these reporting units. The Company did not have a goodwill impairment charge in the Switzerland region as a result of the interim test given the profitability of this unit. The Company has historically performed goodwill impairment test annually as of the last day of February and in the interim if a triggering event occurs. During the fourth quarter of 2017, the Company established the date of its annual goodwill impairment test for the New York region from the last day of February to August 1. The Company believes that performing the test annually on August 1 will alleviate the information and resource constraints that historically existed during the first quarter and will more closely align with the timing of related forecasts, reports and analysis. The Company will perform a goodwill impairment test on the Switzerland region as of February 28, 2018. The goodwill in the New York region was acquired in connection with the Lucille Roberts and TMPL acquisitions in the third and fourth quarters of 2017, respectively. As such, these intangible assets were recorded at fair value at the time of acquisitions. The next goodwill impairment test for the New York region will be August 1, 2018 which is within 12 months of the acquisitions. The Company believes that the resulting change in accounting principle related to the annual testing date will not delay, accelerate or avoid an impairment charge. The Company has also determined that it is impracticable to objectively determine projected cash flows and related valuation estimates that would have been used as of August 1 for periods prior to August 1, 2018 without the use of hindsight. As such, the Company will prospectively apply the change in the annual goodwill impairment assessment date beginning August 1, 2018. The changes in the carrying amount of goodwill from December 31, 2016 through December 31, 2017 are detailed in the charts below. New York Boston Switzerland Outlier Clubs Total Goodwill, net of accumulated amortization $ 31,549 $ 15,775 $ 1,175 $ 3,982 $ 52,481 Changes due to foreign currency exchange rate fluctuations — — (167 ) — (167 ) Less: accumulated impairment of goodwill (31,549 ) (15,775 ) — (3,982 ) (51,306 ) Balance as of December 31, 2016 — — 1,008 — 1,008 Acquired goodwill 5,158 — — — 5,158 Changes due to foreign currency exchange rate fluctuations — — 51 — 51 Balance as of December 31, 2017 $ 5,158 $ — $ 1,059 $ — $ 6,217 Intangible assets were acquired in connection with the Lucille Roberts and TMPL acquisitions in 2017. Amortization expense of intangible assets for the years ended December 31, 2017 , 2016 and 2015 was $550 , $36 and $223 respectively. Intangible assets are as follows: As of December 31, 2017 As of December 31, 2016 Gross Carrying Accumulated Net Gross Carrying Accumulated Net Membership lists $ 12,744 $ (11,577 ) $ 1,167 $ 11,344 $ (11,344 ) $ — Favorable lease commitments 2,350 (136 ) 2,214 — — — Trade names 900 (47 ) 853 40 (9 ) 31 Non-compete agreement 900 — 900 — — — Management contracts — — — 250 (146 ) 104 $ 16,894 $ (11,760 ) $ 5,134 $ 11,634 $ (11,499 ) $ 135 The aggregate amortization expense for the next five years and thereafter of the acquired intangible assets is as follows: Year Ending December 31, 2018 $ 1,377 2019 1,251 2020 731 2021 731 2022 506 2023 and thereafter 538 $ 5,134 |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions Acquisitions of businesses are accounted for in accordance with ASC 805, Business Combinations and ASU 2017-01. According to ASC 805, transactions that represent business combinations should be accounted for under the acquisition method. In addition, the ASC 805 includes a subtopic which provides guidance on transactions sometimes associated with business combinations but that do not meet the requirements to be accounted for as business combinations under the acquisition method. Under the acquisition method, the purchase price is allocated to the assets acquired and the liabilities assumed based on their respective estimated fair values as of the acquisition date. Any excess of the purchase price over the fair values of the assets acquired and liabilities assumed was allocated to goodwill. These acquisitions were not material to the financial position, results of operations or cash flows of the Company; therefore, the respective 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 pro rata from the date of acquisition. Acquisition of Lucille Roberts Health Club Business In September 2017, the Company acquired Lucille Roberts for a net cash purchase price of $9,450 . The acquisition added 16 clubs to the Company's portfolio in the New York metropolitan region and was accounted for as a business combination. These 16 clubs continue to operate under the Lucille Roberts trade name. Acquisition costs incurred in connection with this transaction during the year ended December 31, 2017 , were approximately $285 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. September 2017 Allocation of purchase price: Fixed assets $ 1,024 Goodwill 4,793 Definite lived intangible assets: Membership lists 1,400 Trade names 700 Favorable lease commitments 2,350 Deferred revenue (817 ) Total allocation of purchase price $ 9,450 The goodwill recognized represents the excess of the purchase price over the fair value of the assets acquired and liabilities assumed. The goodwill associated with this acquisition is partially attributable to the avoided costs of acquiring the assembled workforce and is deductible for tax purposes in its entirety. The definite lived intangible assets acquired are being amortized over their estimated useful lives with the membership lists amortized over the estimated average membership life of 26 months, the trade name amortized over its estimated useful life of five years and the favorable lease commitments amortized over the remaining life of each respective lease, or a weighted average life of 6.3 years. From the acquisition on September 11, 2017 through December 31, 2017, the Lucille Roberts clubs generated revenue of $3,937 and net loss of ($778) . It is impractical to disclose proforma information due to the unavailability of historical audited financial statements for Lucille Roberts. Acquisition of Assets In November 2017, the Company acquired a building and the land it occupies in the New York metropolitan region, as well as a single health club located on the premises for a purchase price of $12,600 . Of the total purchase price, $2,675 was attributed to land, $9,675 was attributed to building, and the remainder of the purchase price was primarily equipment and deferred revenue. This transaction was accounted for as an asset acquisition. Acquisition of TMPL Gym In December 2017, the Company acquired an existing club in the New York metropolitan region under the TMPL trade name for a net cash purchase price of $5,925 . TMPL is a luxury gym that features a wide variety of fitness programs and group exercises. The club continues to operate under the TMPL trade name and was accounted for as a business combination. Acquisition costs incurred in connection with this transaction during the year ended December 31, 2017 , were approximately $61 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 purchase price allocations may occur as additional information concerning asset and liability valuations are finalized. December 2017 Allocation of purchase price: Fixed assets $ 5,195 Goodwill 365 Definite lived intangible assets: Non-compete agreement 900 Trade name 200 Deferred revenue (500 ) Capital lease liability (160 ) Other liabilities (75 ) Total allocation of purchase price $ 5,925 The goodwill recognized represents the excess of the purchase price over the fair value of the assets acquired and liabilities assumed. The goodwill associated with this acquisition is partially attributable to the avoided costs of acquiring the assembled workforce and is deductible for tax purposes in its entirety. The definite lived intangible assets acquired are being amortized over their estimated useful lives with the non-compete amortized over five years and the trade name amortized over 15 years. It is impractical to disclose proforma information due to the unavailability of historical audited financial statements for TMPL. Subsequent Acquisitions In December 2017, the Company entered into an agreement to acquire an existing club in the Boston metropolitan region. In connection with this agreement, the Company deposited $250 and into an escrow account in November 2017. The remaining purchase price of $2,500 was deposited into an escrow account in December 2017. These amounts were recorded in prepaid expenses and other current assets on the balance sheet as of December 31, 2017. The fair value of the net assets acquired on the acquisition date primarily comprises property, plant and equipment, and intangible assets. This acquisition was effective in January 2018. The acquisition will be accounted for as a business combination and the purchase price allocation is pending. In December 2017, the Company entered into an agreement to acquire an existing club in the Florida region, as well as the land and building the club occupied. In connection with this agreement, the Company deposited $50 into an escrow account in November 2017. The remaining purchase price of $3,969 was made in January 2018 and the acquisition was effective at that time. The fair value of the net assets acquired on the acquisition date primarily comprises land, building, and equipment. This transaction will be accounted for as an asset acquisition in the first quarter of 2018. The above transactions were completed in January 2018 with no material impact on the Company's financial statements. The purchase price allocations are in the process of being finalized. |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2017 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued Expenses Accrued expenses as of December 31, 2017 and 2016 consisted of the following: December 31, 2017 2016 Accrued payroll and related $ 5,888 $ 6,817 Accrued occupancy costs 10,009 8,594 Accrued insurance claims 2,282 2,786 Accrued other 6,490 7,710 $ 24,669 $ 25,907 |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt as of December 31, 2017 and 2016 consisted of the following: December 31, 2017 2016 2013 Term Loan Facility $ 199,918 $ 202,000 Less: Unamortized discount (2,912 ) (3,851 ) Less: Deferred financing costs (977 ) (1,324 ) Less: Current portion due within one year (2,082 ) (2,082 ) Long-term portion $ 193,947 $ 194,743 The aggregate long-term debt obligations maturing in the next five years and thereafter are as follows: Amount Due Year Ending December 31, 2018 $ 2,082 2019 2,082 2020 195,754 2021 — 2022 — 2023 and thereafter — $ 199,918 The table above does not reflect potential commitments in connection with our outstanding letters of credit under the 2013 Revolving Loan Facility (defined below) which matures on November 15, 2018. 2013 Senior Credit Facility On November 15, 2013, TSI, LLC, an indirect, wholly-owned subsidiary, entered into a $370,000 senior secured credit facility (“2013 Senior Credit Facility”), among TSI, LLC, TSI Holdings II, LLC, a newly-formed, wholly-owned subsidiary of the Company (“Holdings II”), as a Guarantor, the lenders party thereto, Deutsche Bank AG, as administrative agent, and Keybank National Association, as syndication agent. The 2013 Senior Credit Facility consists of a $325,000 term loan facility maturing on November 15, 2020 (“2013 Term Loan Facility”) and a $45,000 revolving loan facility maturing on November 15, 2018 (“2013 Revolving Loan Facility”). Proceeds from the 2013 Term Loan Facility of $323,375 were issued, net of an original issue discount (“OID”) of 0.5% , or $1,625 . Debt issuance costs recorded in connection with the 2013 Senior Credit Facility were $5,119 and are being amortized as interest expense and are recorded as a contra-liability to long-term debt on the accompanying consolidated balance sheets. The Company also recorded additional debt discount of $4,356 related to creditor fees. The proceeds from the 2013 Term Loan Facility were used to pay off amounts outstanding under the Company’s previously outstanding long-term debt facility, and to pay related fees and expenses. None of the revolving loan facility was drawn upon as of the closing date on November 15, 2013, but loans under the 2013 Revolving Loan Facility may be drawn from time to time pursuant to the terms of the 2013 Senior Credit Facility. The borrowings under the 2013 Senior Credit Facility are guaranteed and secured by assets and pledges of capital stock by Holdings II, TSI, LLC, and, subject to certain customary exceptions, the wholly-owned domestic subsidiaries of TSI, LLC. Borrowings under the 2013 Term Loan Facility and the 2013 Revolving Loan Facility, at TSI, LLC’s option, bear interest at either the administrative agent’s base rate plus 2.5% or a LIBOR rate adjusted for certain additional costs (the “Eurodollar Rate”) plus 3.5% , each as defined in the 2013 Senior Credit Facility. With respect to the outstanding term loans, the Eurodollar Rate has a floor of 1.00% and the base rate has a floor of 2.00% . Commencing with the last business day of the quarter ended March 31, 2014, TSI, LLC is required to pay 0.25% of the principal amount of the term loans each quarter, which may be reduced by voluntary prepayments. As of December 31, 2017 , TSI LLC has made a total of $24,101 in principal payments on the 2013 Term Loan Facility. On January 30, 2015, the 2013 Senior Credit Facility was amended (the “Amendment”) to permit TSI Holdings to purchase term loans under the credit agreement. Any term loans purchased by TSI Holdings will be canceled in accordance with the terms of the credit agreement, as amended by the Amendment. The Company may from time to time purchase term loans in market transactions, privately negotiated transactions or otherwise; however the Company is under no obligation to make any such purchases. Any such transactions, and the amounts involved, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. As of December 31, 2017 , TSI Holdings had a cash balance of approximately $17,556 . In December 2015, TSI Holdings purchased $29,829 principal amount of debt outstanding under the 2013 Senior Credit Facility in the open market for $10,947 , or 36.7% of face value, which resulted in a gain on extinguishment of debt of $17,911 , including the write-off of related deferred financing costs and debt discount of $249 and $707 , respectively. On April 21, 2016, TSI Holdings settled a transaction to purchase $8,705 principal amount of debt outstanding under the 2013 Senior Credit Facility for $3,787 , or 43.5% of face value. On May 6, 2016, TSI Holdings settled another transaction to purchase $62,447 principal amount of debt outstanding under the 2013 Senior Credit Facility for $25,978 , or 41.6% of face value. The April and May transactions created total net gains on extinguishment of debt in 2016 of $37,893 with a tax effect of $13,451 . When this was netted with our operating loss, it resulted in a tax provision for 2016 of $9,771 . The gain on extinguishment of debt was net of the write-off of deferred financing costs and debt discount of $545 and $1,561 , respectively, and other costs related to the transaction. All of the above purchased debt was transferred to TSI, LLC and canceled. In May 2017, TSI, LLC loaned $5,000 to TSI Group, a newly-formed wholly-owned subsidiary of TSI Holdings, at a rate of LIBOR plus 9.55% per annum. In addition to the interest payments, TSI Group is required to repay 1.0% of the principal amount of the loan, $50 per annum, on a quarterly basis commencing September 30, 2017. The loan is secured by certain collateral. This transaction has no impact on the Company's consolidated financial statements as it is eliminated in consolidation. In October 2017, TSI, LLC made a dividend distribution of $35,000 to TSI Holdings, Inc. The terms of the 2013 Senior Credit Facility provide for a financial covenant in the situation where the total utilization of the revolving loan commitments (other than letters of credit up to $5,500 at any time outstanding) exceeds 25% of the aggregate amount of those commitments. In such event, TSI, LLC is required to maintain a total leverage ratio, as defined in the 2013 Senior Credit Facility, of no greater than 4.50 :1.00. As of December 31, 2017 , TSI, LLC had outstanding letters of credit of $7,007 and a total leverage ratio that was below 4.50 :1.00. Other than these outstanding letters of credit, TSI, LLC did not have any amounts utilized on the 2013 Revolving Loan Facility. The terms of the 2013 Senior Credit Facility include a financial covenant under which the Company is not able to utilize more than 25% or $11,250 in accordance with terms of the 2013 Revolving Loan Facility if the total leverage ratio exceeds 4.50 :1:00 (calculated on a proforma basis to give effect to any borrowing). The 2013 Senior Credit Facility also contains certain affirmative and negative covenants, including covenants that may limit or restrict TSI, LLC and Holdings II’s ability to, among other things, incur indebtedness and other liabilities; create liens; merge or consolidate; dispose of assets; make investments; pay dividends and make payments to stockholders; make payments on certain indebtedness; and enter into sale leaseback transactions, in each case, subject to certain qualifications and exceptions. In addition, at any time when the total leverage ratio is greater than 4.50 :1.00, there are additional limitations on the ability of TSI, LLC and Holdings II to, among other things, make certain distributions of cash to TSI Holdings. The 2013 Senior Credit Facility also includes customary events of default (including non-compliance with the covenants or other terms of the 2013 Senior Credit Facility) which may allow the lenders to terminate the commitments under the 2013 Revolving Loan Facility and declare all outstanding term loans and revolving loans immediately due and payable and enforce its rights as a secured creditor. TSI, LLC may prepay the 2013 Term Loan Facility and 2013 Revolving Loan Facility without premium or penalty in accordance with the 2013 Senior Credit Facility. Mandatory prepayments are required relating to certain asset sales, insurance recovery and incurrence of certain other debt and commencing in 2015 in certain circumstances relating to excess cash flow (as defined) for the prior fiscal year, as described below, in excess of certain expenditures. Pursuant to the terms of the 2013 Senior Credit Facility, the Company is required to apply net proceeds in excess of $30,000 from sales of assets in any fiscal year towards mandatory prepayments of outstanding borrowings. In addition, the 2013 Senior Credit Facility contains provisions that require excess cash flow payments, as defined therein, to be applied against outstanding 2013 Term Loan Facility balances. The excess cash flow is calculated annually for each fiscal year ending December 31 and paid 95 days after the fiscal year end. The applicable excess cash flow repayment percentage is applied to the excess cash flow when determining the excess cash flow payment. Earnings, changes in working capital and capital expenditure levels all impact the determination of any excess cash flow. The applicable excess cash flow repayment percentage is 50% when the total leverage ratio, as defined in the 2013 Senior Credit Facility, exceeds or is equal to 2.50 :1.00; 25% when the total leverage ratio is greater than or equal to 2.00 :1.00 but less than 2.50 :1.00 and 0% when the total leverage ratio is less than 2.00 :1.00. The excess cash flow calculation performed as of December 31, 2017 did not result in any required payments. As of December 31, 2017 , the 2013 Term Loan Facility has a gross principal balance of $199,918 and a balance of $196,029 net of unamortized debt discount of $2,912 and unamortized debt issuance costs of $977 . As of December 31, 2017 , both the unamortized balance of debt issuance costs and unamortized debt discount are recorded as a contra-liability to long-term debt on the accompanying condensed consolidated balance sheet and are being amortized as interest expense using the effective interest method. As of December 31, 2017 , there were no outstanding 2013 Revolving Loan Facility borrowings and outstanding letters of credit issued totaled $7,007 . The unutilized portion of the 2013 Revolving Loan Facility as of December 31, 2017 was $37,993 , with borrowings under such facility subject to the conditions applicable to borrowings under the Company’s 2013 Senior Credit Facility, which conditions the Company may or may not be able to satisfy at the time of borrowing. The 2013 Revolving Loan Facility expires on November 15, 2018. Given that the 2013 Senior Credit Facility contains a restrictive covenant on obtaining secured debt, if the Company is unable to extend, restructure or refinance the 2013 Revolving Loan Facility prior to maturity, all letters of credit that remain outstanding under the 2013 Revolving Loan Facility will become immediately due and payable upon maturity. The Company is considering alternative means to satisfy these obligations, including cash collateralization. Fair Market Value Based on quoted market prices, the 2013 Term Loan Facility had a fair value of approximately $188,173 and $163,115 at December 31, 2017 and December 31, 2016 , respectively, and is classified within level 2 of the fair value hierarchy. Level 2 is based on quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. The fair value for the Company’s 2013 Term Loan Facility is determined using observable current market information such as the prevailing Eurodollar interest rate and Eurodollar yield curve rates and includes consideration of counterparty credit risk. For the fair market value of the Company’s interest rate swap instrument refer to Note 10 - Derivative Financial Instruments. Interest Expense The Company’s interest expense and capitalized interest related to funds borrowed to finance club facilities under construction for the years ended December 31, 2017 , 2016 and 2015 were as follows: Year Ended December 31, 2017 2016 2015 Interest costs expensed $ 12,657 $ 13,904 $ 17,914 Interest costs capitalized — 28 72 Total interest expense and amounts capitalized $ 12,657 $ 13,932 $ 17,986 The table above does not include $2,666 of interest expense related to the building financing arrangement in the year ended December 31, 2015. |
Sale of Building
Sale of Building | 12 Months Ended |
Dec. 31, 2017 | |
Leases [Abstract] | |
Sale of Building | Sale of Building On September 12, 2014, the Company completed the legal sale of its property (building and land) on East 86th Street, New York City, to an unaffiliated third-party for gross proceeds of $85,650 . Concurrent with the closing of the transaction, the Company leased back the portion of the property comprising its health club (“Initial Lease”) and had agreed to vacate the property in connection with the purchaser's future development of a new luxury, high-rise multi-use building. In connection with vacating the property, the Company agreed to enter into a new lease (“New Club Lease”) for approximately 24,000 square feet in the new building for the purpose of operating a health club upon completion of construction by the purchaser/landlord. This sale-leaseback transaction was characterized as a financing arrangement for accounting purposes rather than a sale until any continuing involvement has ceased. In March 2015, the Company received the remaining proceeds that had been held in escrow of $500 . On December 23, 2015, the Company terminated the Initial Lease and the agreement to enter into the New Club Lease and received gross proceeds of $3,500 in connection with the termination. Because the lease was terminated with no continuing involvement, this sale-leaseback transaction was accounted for as a completed sale as of December 23, 2015. Under this treatment, the Company recorded a $77,146 gain, previously accounted for as a financing, on the sale of the property, recorded in Gain on sale of building in the consolidated statements of operations for the year ended December 31, 2015. |
Derivative Financial Instrument
Derivative Financial Instruments | 12 Months Ended |
Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | 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. Derivatives 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. The Company originally entered into an interest rate swap arrangement on July 13, 2011 in connection with the Company’s previous credit facility. In connection with entering into the 2013 Senior Credit Facility, the Company amended and restated the interest rate swap agreement initially entered into (and amended in August 2012 and November 2012). Effective as of November 15, 2013, the closing date of the 2013 Senior Credit Facility, the interest rate swap arrangement had a notional amount of $160,000 and will mature on May 15, 2018. The swap effectively converts $160,000 of the current outstanding principal of the total variable-rate debt under the 2013 Senior Credit Facility to a fixed rate of 0.884% plus the 3.5% applicable margin and the Eurodollar rate, which has a floor of 1% . As permitted by 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 consolidated financial statements as of and for the years ended December 31, 2017 , 2016 and 2015 . 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 the Company’s derivative instrument was executed, hedge accounting was deemed appropriate and it was designated as a cash flow hedge at inception with re-designation being permitted under ASC 815, Derivatives and Hedging. Interest rate swaps 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 consolidated statements of operations. For the years ended December 31, 2017 , 2016 and 2015 , hedge ineffectiveness was evaluated using the hypothetical derivative method. There was no hedge ineffectiveness in the years ended December 31, 2017 , 2016 and 2015 . 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 include consideration of counterparty credit risk. The following table presents the aggregate fair value of the Company’s derivative financial instrument: Fair Value Measurements Using: Total Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Interest rate swap liability as of December 31, 2017 $ 184 $ — $ 184 $ — Interest rate swap liability as of December 31, 2016 $ 1,511 $ — $ 1,511 $ — The swap contract liability of $184 and $1,511 was recorded as a component of accrued expenses as of December 31, 2017 and 2016 , respectively, with the offset to accumulated other comprehensive income ( $104 and $854 , net of taxes, as of December 31, 2017 and 2016 , respectively) on the accompanying consolidated balance sheets. There were no significant reclassifications out of accumulated other comprehensive income in 2017 , 2016 and 2015 and the Company does not expect that significant derivative losses included in accumulated other comprehensive income at December 31, 2017 will be reclassified into earnings within the next 12 months . |
Related Party
Related Party | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party | Related Party On April 25, 2017, the Company approved the appointment of Stuart M. Steinberg as General Counsel of the Company, effective as of May 1, 2017. Furthermore, the Company and Mr. Steinberg's law firm (the “Firm”) previously entered into an engagement letter agreement (the “Agreement”) dated as of February 4, 2016, and as amended and restated effective as of May 1, 2017, pursuant to which the Company engaged the Firm to provide general legal services requested by the Company. Mr. Steinberg continues to provide services for the Firm while employed by the Company. The Agreement provides for a monthly retainer fee payable to the Firm in the amount of $21 , excluding litigation services. The Company will also reimburse the Firm for any expenses incurred in connection with the Firm’s services to the Company. In connection with this arrangement, the Company incurred legal expenses payable to the Firm in the amount of $183 in the year ended December 31, 2017. These amounts were classified within general and administrative expenses on the condensed consolidated statements of operations for the year ended December 31, 2017. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2017 | |
Leases [Abstract] | |
Leases | Leases The Company leases office, warehouse and multi-recreational facilities and certain equipment under non-cancelable operating leases. In addition to base rent, the facility leases generally provide for additional rent based on operating results, increases in real estate taxes and other costs. Certain leases provide for additional rent based upon defined formulas of revenue, cash flow or operating results of the respective facilities. Under the provisions of certain of these leases, the Company is required to maintain irrevocable letters of credit, which amounted to $5,492 as of December 31, 2017 . The leases expire at various times through May 31, 2038 and certain leases may be extended at the Company’s option. Escalation terms on these leases generally include fixed rent escalations, escalations based on an inflation index such as the consumer price index, and fair market value adjustments. In the next five years, or the period from January 1, 2018 through December 31, 2022 , the Company has leases for 25 club locations that are due to expire without any renewal options, eight of which are due to expire in 2018 , and 61 club locations that are due to expire with renewal options. Future minimum rental payments under non-cancelable leases are shown in the chart below. Minimum Annual Rental Year Ending December 31, 2018 (a) $ 96,518 2019 (a) 91,208 2020 85,129 2021 75,016 2022 62,933 2023 and thereafter 247,911 (a) For the years ending December 31, 2018 and 2019, future minimum rental payments include capital lease payments of $129 and $31 , respectively. Rent expense for the years ended December 31, 2017 , 2016 and 2015 was $126,318 , $124,952 and $124,920 , respectively. Such amounts include non-base rent items of $24,881 , $25,384 and $24,767 , respectively. Including the effect of deferred lease liabilities, rent expense was $124,997 , $124,333 and $123,872 for the years ended December 31, 2017 , 2016 and 2015 . The Company, as landlord, leases space to third party tenants under non-cancelable operating leases and licenses. In addition to base rent, certain leases provide for additional rent based on increases in real estate taxes, indexation, utilities and defined amounts based on the operating results of the lessee. The sub-leases expire at various times through December 31, 2022. Future minimum rentals receivable under non-cancelable leases are shown in the chart below. Minimum Annual Rental Year Ending December 31, 2018 $ 1,367 2019 1,021 2020 761 2021 537 2022 99 2023 and thereafter — Rental income, including non-cash rental income, for the years ended December 31, 2017 , 2016 and 2015 was $2,558 , $2,338 and $4,669 , respectively. For the years ended December 31, 2017 , 2016 and 2015, such amounts included no additional rental charges above the base rent. The Company previously owned the building at the 86th Street club location which housed a rental tenant that generated rental income of approximately $1,926 for the year ended December 31, 2015. Refer to Note 9 - Sale of Building for further details. |
Stockholders' (Deficit) Equity
Stockholders' (Deficit) Equity | 12 Months Ended |
Dec. 31, 2017 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' (Deficit) Equity | Stockholders’ (Deficit) Equity The Company’s certificate of incorporation adopted in connection with the IPO provides for 105,000,000 shares of capital stock, consisting of 5,000,000 shares of Preferred Stock, par value $0.001 per share (“Preferred Stock”) and 100,000,000 shares of Common Stock, par value $0.001 per share (“Common Stock”). The Company’s 2006 Stock Incentive Plan, as amended and restated in April 2015 (the “2006 Plan”), authorizes the Company to issue up to 3,500,000 shares of Common Stock to employees, non-employee directors and consultants pursuant to awards of stock options, stock appreciation rights, restricted stock, in payment of performance shares or other stock-based awards. The Company amended the 2006 Plan to increase the aggregate number of shares of common stock issuable under the 2006 Plan by 1,000,000 shares to a total of 4,500,000 in May 2016, and by 2,000,000 shares to a total of 6,500,000 in May 2017. As of December 31, 2017 , there were 2,072,967 shares available to be issued under the 2006 Plan. In September 2016, the Chief Operating Officer’s employment with the Company was terminated. As a result of the termination, the Company partially accelerated certain share awards previously granted to the Chief Operating Officer. The Company incurred non-cash severance expense of $250 related to this acceleration. Beginning January 1, 2017, the Company adopted ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting.” As a result of this updated guidance, the Company elected to account for forfeitures of share-based payments by recognizing forfeitures of awards as they occur. In the year ended December 31, 2017 , the Company adjusted the forfeiture estimates to reflect actual forfeitures. The forfeiture adjustment reduced stock-based compensation expense by $234 in the year ended December 31, 2017 . a. Common Stock Options The outstanding Common Stock options as of December 31, 2017 were all fully vested. Stock options generally vest over a three to four year service period and expire five to ten years from the date of grant. As of December 31, 2017 , 2016 and 2015 , a total of 61,013 , 150,207 and 544,869 Common Stock options were exercisable, respectively. At December 31, 2017 , the Company had 61,013 stock options outstanding under the 2006 Plan. The Company recognizes stock option expense equal to the grant date fair value of a stock option on a straight-line basis over the requisite service period, which is generally the vesting period. The total compensation expense related to options, classified within Payroll and related on the consolidated statements of operations was $15 , $156 , and $99 for the years ended December 31, 2017 , 2016 and 2015 , respectively, and the related tax benefit was $5 , $67 and $38 for the years ended December 31, 2017 , 2016 and 2015 , respectively. Each of these 2017, 2016 and 2015 tax benefits were prior to the recognition of the valuation allowance. The following table summarizes the stock option activity for the years ended December 31, 2017 , 2016 and 2015 : Common Weighted Average Exercise Price Balance at January 1, 2015 1,030,521 $ 5.29 Granted 850,000 2.68 Exercised (171,718 ) 1.68 Canceled (313,934 ) 8.61 Balance at December 31, 2015 1,394,869 3.40 Exercised (226,011 ) 1.41 Canceled (533,484 ) 3.99 Forfeited (447,667 ) 2.71 Balance at December 31, 2016 187,707 5.78 Exercised (44,114 ) 2.50 Canceled (57,580 ) 13.32 Forfeited (25,000 ) 2.95 Balance at December 31, 2017 61,013 $ 2.19 The following table summarizes information about stock options outstanding and exercisable as of December 31, 2017 : Options Outstanding Options Exercisable Number of Options Weighted-Average Remaining Contractual Life Weighted-Average Exercise Price Number of Options Weighted-Average Exercise Price Common 2008 grants 26,208 11 months $ 2.70 26,208 $ 2.70 2009 grants 23,490 23 months $ 1.74 23,490 $ 1.74 2010 grants 11,315 30 months $ 1.91 11,315 $ 1.91 Total Grants 61,013 19 months $ 2.19 61,013 $ 2.19 At December 31, 2017 , stock options outstanding have a weighted average remaining contractual life of 1.6 years and the total intrinsic value for “in-the-money” options, based on the Company’s closing stock price of $5.55 , was $209 . At December 31, 2017 , stock options exercisable have a weighted average remaining contractual life of 1.6 years and the total intrinsic value for “in-the-money” exercisable options was $209 . The total intrinsic value of options exercised was $111 for the year ended December 31, 2017 . The aggregated intrinsic value represents the pre-tax intrinsic value (the difference between the fair value of the Company’s common stock at December 31, 2017 of $5.55 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2017 . The intrinsic value is based on the fair market value of the Company’s stock and therefore changes as the fair market value of the stock price changes. Under the 2006 Plan, stock options must be granted at a price not less than the fair market value of the stock on the date the option is granted, generally are not subject to re-pricing, and will not be exercisable more than ten years after the date of grant. Options granted under the 2006 Plan generally qualify as “non-qualified stock options” under the U.S. Internal Revenue Code. The exercise price of a stock option is equal to the fair market value of the Company’s Common Stock on the option grant date. The Company did not grant any stock options during the years ended December 31, 2017 and 2016. In the year ended December 31, 2015, the Company granted 850,000 stock options, with an aggregate grant date fair value of $2,279 . Options granted during the year ended December 31, 2015 to employees of the Company were as follows: Date Number of Shares Exercise Price Grant Date Fair Value August 19, 2015 700,000 $ 2.61 $ 1,827 October 12, 2015 50,000 $ 2.95 148 October 19, 2015 100,000 $ 3.04 304 850,000 $ 2,279 The weighted average fair value of stock options as of the grant date was $1.10 in 2015. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: Common Risk-Free Interest Rate Expected Dividend Yield Expected Term (Years) Expected Volatility 2015 Grants 1.1 % — 3.99 52.03 % The Company calculated the weighted average expected term of stock options to be 3.99 years, which represented the period of time that options were expected to be outstanding. The risk free interest rate for periods within the contractual life of the option was based on the U.S. treasury yield in effect at the time of grant. The volatility was determined based on management's estimate or historical volatilities of comparable companies. As of December 31, 2017 , there was no unrecognized compensation cost related to stock options. b. Common Stock Grants Restricted Stock Grants The following restricted stock grants were issued to employees of the Company during the year ended December 31, 2017 . Number of Shares Share Price Grant Date Fair Value March 8, 2017 26,000 $ 4.00 $ 104 December 4, 2017 480,200 $ 5.85 2,809 Total 506,200 $ 2,913 The following table summarizes the restricted stock activity for the years ended December 31, 2017 , 2016 and 2015 : Number of Shares Weighted Average Grant Date Fair Value Balance as of January 1, 2015 401,534 $ 9.38 Granted 507,000 4.27 Vested (133,874 ) 9.20 Forfeited (249,790 ) 8.19 Balance as of December 31, 2015 524,870 5.06 Granted 1,711,000 2.48 Vested (222,495 ) 4.59 Forfeited (402,000 ) 3.39 Balance as of December 31, 2016 1,611,375 2.80 Granted 506,200 5.75 Vested (534,968 ) 2.93 Forfeited (70,666 ) 3.06 Balance as of December 31, 2017 1,511,941 $ 3.73 The fair value of restricted stock is based on the closing stock price of an unrestricted share of the Company’s Common Stock on the grant date and is amortized to compensation expense on a straight-line basis over the requisite service period, which is generally the vesting period. The total compensation expense, classified within Payroll and related on the consolidated statements of operations, related to restricted stock grants was $1,478 , $1,155 and $842 for the years ended December 31, 2017 , 2016 and 2015 , respectively, and the related tax benefit was $452 , $496 and $321 for the years ended December 31, 2017 , 2016 and 2015 , respectively. Each of these 2017, 2016 and 2015 tax benefit were prior to the recognition of the valuation allowance. The restricted shares contain vesting restrictions and vest in equal installments over either three or four years on the anniversary date of the grants. In the year ended December 31, 2017 , the Company granted 506,200 restricted shares with an aggregate grant date fair value of $2,913 . In the years ended December 31, 2016 and 2015 , the Company granted 1,711,000 and 507,000 restricted shares, respectively, with an aggregate grant date fair value of $4,245 and $2,166 , respectively. As of December 31, 2017 , $5,128 of unrecognized compensation cost related to restricted stock was expected to be recognized over a weighted-average period of 2.4 years . Non-Restricted Stock Grants The Company issued 56,940 and 52,000 shares of Common Stock to members of the Company’s Board of Directors with respect to their annual retainer on February 1, 2017 and March 8, 2017 . The fair value of the shares issued on February 1, 2017 and March 8, 2017 was $2.81 and $4.00 per share, respectively, and 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 $368 in the year ended December 31, 2017 . In the years ended December 31, 2016 and 2015 , the Company issued 206,750 and 67,609 shares of Common Stock, respectively, with an aggregate grant date fair value of $246 and $445 , respectively. |
Revenues
Revenues | 12 Months Ended |
Dec. 31, 2017 | |
Other Income and Expenses [Abstract] | |
Revenues | Revenues Revenues for the years ended December 31, 2017 , 2016 and 2015 are summarized below: Years Ended December 31, 2017 2016 2015 Membership dues $ 307,966 $ 296,795 $ 309,096 Initiation and processing fees 2,268 7,636 13,644 Personal training revenue 69,735 66,487 73,191 Other ancillary club revenue(1) 17,197 19,642 22,138 Total club revenue 397,166 390,560 418,069 Fees and other revenue(2) 5,876 6,361 6,254 Total revenue $ 403,042 $ 396,921 $ 424,323 (1) Other ancillary club revenue primarily consists of Sports Clubs for Kids, Small Group Training and racquet sports. (2) Fees and other revenue primarily consist of rental income, laundry revenue, marketing revenue and management fees. |
Corporate Income Taxes
Corporate Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Corporate Income Taxes | Corporate Income Taxes On December 22, 2017, the U.S. President signed into law H.R.1, formerly known as the Tax Cuts and Jobs Act (the “Tax Legislation”). The Tax Legislation significantly revises the U.S. tax code by, (i) lowering the U.S federal statutory income tax rate from 35% to 21% , (ii) implementing a territorial tax system, (iii) imposing a one-time transition tax on deemed repatriated earnings of foreign subsidiaries (“Transition Tax”), (iv) requiring a current inclusion of global intangible low taxed income (“GILTI”) of certain earnings of controlled foreign corporations in U.S. federal taxable income, (v) creating the base erosion anti-abuse tax (“BEAT”) regime, (vi) implementing bonus depreciation that will allow for full expensing of qualified property, and (vii) limiting deductibility of interest and executive compensation expense, among other changes. The Company has computed its current tax benefit using the U.S. federal statutory rate of 35% while it has computed its deferred tax expense using the new statutory rate effective on January 1, 2018 of 21% . The Company recorded the applicable impact of the Tax Legislation within its provision for income taxes in the year ended December 31, 2017. The Company has recorded the required income tax effects under the Tax Legislation and provided disclosure pursuant to ASC 740, Income Taxes, and the SEC Staff Accounting Bulletin (“SAB”) 118, using its best estimates based on reasonable and supportable assumptions and available inputs and underlying information as of the reporting date. The three provisions that most significantly impact the Company for the year ended December 31, 2017 are (i) the impact of the U.S. federal statutory rate reduction, from 35% to 21% , on the deferred tax provision and related valuation allowance (ii) the full expensing of qualified property and (iii) the calculation of the Transition Tax. These amounts were recorded as provisional pursuant to SAB 118 since they require more detailed information before these amounts can be finalized. All amounts recorded were based on current available guidance on interpretation of the Tax Legislation, and reasonable approaches to estimating their impact. The amounts recorded in the year ended December 31, 2017, are subject to adjustment as future guidance becomes available, additional facts become known or estimation approaches are refined. Other provisions of the new legislation that are not applicable to the Company until the year ended December 31, 2018 include, but are not limited to, limiting deductibility of interest and executive compensation expense. Based on current facts and circumstances, we do not anticipate the impact of these provisions to be material to the overall financial statements. The (benefit) provision for income taxes for the years ended December 31, 2017 , 2016 and 2015 consisted of the following: Year Ended December 31, 2017 Federal Foreign State and Local Total Current $ (9,599 ) $ (63 ) $ (56 ) $ (9,718 ) Deferred 12 — 20 32 $ (9,587 ) $ (63 ) $ (36 ) $ (9,686 ) Year Ended December 31, 2016 Federal Foreign State and Local Total Current $ 9,346 $ (63 ) $ 488 $ 9,771 Deferred — — — — $ 9,346 $ (63 ) $ 488 $ 9,771 Year Ended December 31, 2015 Federal Foreign State and Local Total Current $ (3,100 ) $ 67 $ 197 $ (2,836 ) Deferred (8,262 ) — (3,253 ) (11,515 ) $ (11,362 ) $ 67 $ (3,056 ) $ (14,351 ) The components of deferred tax liabilities, net consist of the following items: December 31, 2017 2016 Deferred tax assets Basis differences in depreciation and amortization $ — $ 10,073 Deferred lease liabilities 15,638 23,527 Deferred revenue 4,590 8,247 Deferred compensation expense incurred in connection with stock options 912 994 Federal and state net operating loss carry-forwards 15,645 8,473 Accruals, reserves and other 4,942 7,297 $ 41,727 $ 58,611 Deferred tax liabilities Deferred costs $ 1,740 $ 803 Basis differences in depreciation and amortization 1,311 — Change in accounting method — 3,147 Undistributed foreign earnings and other — 529 $ 3,051 $ 4,479 Gross deferred tax assets 38,676 54,132 Valuation allowance (38,769 ) (54,193 ) Deferred tax liabilities, net $ (93 ) $ (61 ) As of December 31, 2017 and 2016 , the Company had a net deferred tax liability of $93 and $61 , respectively. In assessing the realizability of deferred tax assets, the Company evaluates whether it is more likely than not (more than 50%) that some portion or all of the deferred tax assets will be realized. A valuation allowance, if needed, reduces the deferred tax assets to the amount expected to be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in those periods in which temporary differences become deductible and/or net operating loss carryforward can be utilized. The Company evaluates all positive and negative evidence when determining the amount of the net deferred tax assets that are more likely than not to be realized. This evidence includes, but is not limited to, prior earnings history, scheduled reversal of taxable temporary differences, tax planning strategies and projected future taxable income. Significant weight is given to positive and negative evidence that is objectively verifiable. As required by the authoritative guidance on accounting for income taxes, the Company evaluates the realizability of deferred tax assets on a jurisdictional basis at each reporting date. Accounting for income taxes requires that a valuation allowance be established when it is more likely than not that all or a portion of the deferred tax assets will not be realized. In circumstances where there is sufficient negative evidence indicating that the deferred tax assets are not more likely than not realizable, we establish a valuation allowance. The Company has recorded valuation allowances in the amounts of $38,769 and $54,193 at December 31, 2017 and 2016 , respectively. Due to the change in the U.S. federal statutory income tax rate from the Tax Legislation, the deferred tax assets and liabilities of the Company were re-measured from using a 35% tax rate to a 21% tax rate. As the Company maintains a full valuation allowance against its outstanding net deferred tax assets, the change in net deferred tax assets due to the rate change was offset by a corresponding change in the valuation allowance. In recording the valuation allowance, deferred tax liabilities associated with goodwill generally cannot be used as a source of taxable income to realize deferred tax assets with a definitive loss carry forward period. The Company does not amortize goodwill for book purposes but does amortize goodwill with tax basis for tax purposes. The deferred tax liability remaining after full valuation allowance at December 31, 2017 relates to the tax effect of differences between book and tax basis of intangible assets not expected to reverse during the Company’s net operating loss carry forward period. As of December 31, 2017 , state tax net operating loss carry-forwards were $133,840 . Such amounts expire between December 31, 2018 and December 31, 2037. The Company’s foreign pre-tax earnings (loss) related to the Swiss clubs were $(262) , $(264) and $277 for the years ended December 31, 2017 , 2016 and 2015 , respectively. The related current tax provisions (benefit) were $(63) for both the years ended December 31, 2017 and 2016 , and $67 for the year ended December 31, 2015. In 2011, the Company repatriated Swiss earnings through 2010. In accordance with ASC 740-30, the Company had recognized a deferred tax liability of $529 for the incremental U.S. tax cost on the total cumulative undistributed earnings of the Swiss clubs for the period through December 31, 2016. Due to the Transition Tax, the Company expects a deemed repatriation of its foreign earnings and profits related to the Swiss clubs therefore reversing its deferred tax liability on those unrepatriated foreign earnings and profits. As the Company has a taxable loss for the current year, it expects to not pay any Transition Tax but rather it will have a corresponding reduction to its net operating loss carryforward. The differences between the U.S. Federal statutory income tax rate and the Company’s effective tax rate were as follows for the years ended December 31, 2017 , 2016 and 2015 : Years Ended December 31, 2017 2016 2015 Federal statutory tax rate 35 % 35 % 35 % State and local income taxes (net of federal tax benefit) 1 2 11 Change in state effective income tax rate — — 3 State tax (benefit) provision related to insurance premiums — — (14 ) Tax reserves — — 1 Permanent differences in fines and penalties (3 ) — 2 Permanent difference in compensation (2 ) — — 31 37 38 Valuation allowance 151 18 (249 ) 182 % 55 % (211 )% The effective tax rate on the Company’s pre-tax income or loss was 182% for 2017 , 55% for 2016 , and (211)% for 2015 , which was primarily impacted by the change in the valuation allowance. The amount of unrecognized tax benefits that, if recognized, would affect the Company's effective tax rate in any future periods were $1,155 and $1,187 as of December 31, 2017 and 2016 , respectively. Interest expense on unrecognized tax benefits was $81 for the years ended both December 31, 2017 and 2016 . The Company recognizes both interest accrued related to unrecognized tax benefits and penalties in income tax expenses. The Company had total accruals for interest as of December 31, 2017 and 2016 of $865 and $785 , respectively. A reconciliation of unrecognized tax benefits, excluding interest and penalties, is as follows: 2017 2016 2015 Balance on January 1 $ 1,187 $ 1,187 $ 1,187 Gross decreases for tax positions taken in prior years — — — Gross increases for tax positions taken in prior years — — — Decreases relating to settlements with taxing authorities — — — Reductions due to a lapse of applicable statute of limitations (32 ) — — Balance on December 31 $ 1,155 $ 1,187 $ 1,187 As of December 31, 2017 , the Company had $1,155 of unrecognized tax benefits and it is reasonably possible that the entire amount could be realized by the Company in 2018 since the income tax returns may no longer be subject to audit in 2018. 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 2013 and prior. U.S. net operating losses generated in closed years and utilized in open years are subject to adjustment by tax authorities. The Company is under examination by the Internal Revenue Service regarding federal income tax returns for years 2014 and 2015. The following state and local jurisdictions are currently examining our respective returns for the years indicated: New York State (2006 through 2014), and New York City (2006 through 2014). In particular, the Company disagrees with the proposed assessment dated December 12, 2016 from the State of New York and attended a conciliation conference with the New York State Department of Taxation and Finance Audit section on June 7, 2017. No settlement was reached at the conference and the proposed assessment was sustained. As such, in a revised letter dated November 30, 2017, the Company received from the State of New York a revised assessment related to tax years 2006-2009 for approximately $5,097 , inclusive of approximately $2,419 of interest. The Company is currently in the process of appealing the assessment with the New York State Division of Tax Appeals. The Company has not recorded a tax reserve related to the proposed assessment. It is difficult to predict the final outcome or timing of resolution of any particular matter regarding these examinations. An estimate of the reasonably possible change to unrecognized tax benefits within the next 12 months cannot be made. On November 17, 2017, the Company was notified that the State of New York proposed an adjustment in the amount of approximately $3,906 for the years 2010 to 2014, inclusive of approximately $757 in interest. The Company is also under examination in New York City (2006 through 2014), which the Company has consented to extend the assessment period through December 31, 2018. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies On February 7, 2007, in an action styled White Plains Plaza Realty, LLC v. TSI, LLC et al., the landlord of one of TSI, LLC’s former health and fitness clubs filed a lawsuit in the Appellate Division, Second Department of the Supreme Court of the State of New York against it and two of its health club subsidiaries alleging, among other things, breach of lease in connection with the decision to close the club located in a building owned by the plaintiff and leased to a subsidiary of TSI, LLC, the tenant, and take additional space in a nearby facility leased by another subsidiary of TSI, LLC. Following a determination of an initial award, which TSI, LLC and the tenant have paid in full, the landlord appealed the trial court’s award of damages, and on August 29, 2011, an additional award (amounting to approximately $900 ) (the “Additional Award”), was entered against the tenant, which has recorded a liability. Separately, TSI, LLC is party to an agreement with a third-party developer, which by its terms provides indemnification for the full amount of any liability of any nature arising out of the lease described above, including attorneys’ fees incurred to enforce the indemnity. As a result, the developer reimbursed TSI, LLC and the tenant the amount of the initial award in installments over time and also agreed to be responsible for the payment of the Additional Award, and the tenant has recorded a receivable related to the indemnification for the Additional Award. The developer and the landlord are currently litigating the payment of the Additional Award and judgment was entered against the developer on June 5, 2013, in the amount of approximately $1,045 , plus interest, which judgment was upheld by the appellate court on April 29, 2015. TSI, LLC does not believe it is probable that TSI, LLC will be required to pay for any amount of the Additional Award. In addition to the litigation discussed above, the Company is involved in various other lawsuits, claims and proceedings incidental to the ordinary course of business, including personal injury, construction matters, employee relations claims and landlord tenant disputes. The results of litigation are inherently unpredictable. Any claims against the Company, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time and result in diversion of significant resources. The results of these other lawsuits, claims and proceedings cannot be predicted with certainty. The Company establishes accruals for loss contingencies when it has determined that a loss is probable and that the amount of loss, or range of loss, can be reasonably estimated. Any such accruals are adjusted thereafter as appropriate to reflect changes in circumstances. The Company concluded that an accrual for any such matters is not required as of December 31, 2017 . |
Employee Benefit Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plan | Employee Benefit Plan The Company maintains a 401(k) defined contribution plan and is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”). The plan provides for the Company to make discretionary contributions. The plan was amended, effective January 1, 2001, to provide for an employer matching contribution in an amount equal to 25% of the participant’s contribution with a limit of five hundred dollars per individual, per annum. Effective January 1, 2016, the plan was amended to eliminate the nondiscretionary matching contribution and to provide for a discretionary matching contribution as determined by the participating employer. Employer matching contributions totaling $204 were made in March 2016 for the plan year ended December 31, 2015. |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Selected Quarterly Financial Data (Unaudited) | Selected Quarterly Financial Data (Unaudited) 2017 First Quarter Second Quarter Third Quarter Fourth Quarter (b) (c) Net revenue $ 99,080 $ 99,993 $ 98,641 $ 105,328 Operating (loss) income (118 ) 3,518 (6,269 ) 9,806 Net (loss) income (2,935 ) (410 ) (13,276 ) 20,990 (Loss) earnings per share (a) Basic $ (0.11 ) $ (0.02 ) $ (0.50 ) $ 0.78 Diluted $ (0.11 ) $ (0.02 ) $ (0.50 ) $ 0.76 2016 First Quarter Second Quarter Third Quarter Fourth Quarter (d) (e) Net revenue $ 101,345 $ 100,935 $ 98,534 $ 96,107 Operating (loss) income (3,722 ) (1,462 ) (2,624 ) 1,425 Net (loss) earnings (6,925 ) 20,733 (5,506 ) (259 ) (Loss) earnings per share (a) Basic $ (0.28 ) $ 0.81 $ (0.21 ) $ (0.01 ) Diluted $ (0.28 ) $ 0.79 $ (0.21 ) $ (0.01 ) (a) Basic and diluted (loss) earnings per share are computed independently for each quarter presented. Accordingly, the sum of the quarterly earnings per share may not agree with the calculated full year earnings per share. (b) In the third quarter of 2017, the Company recorded a pre-tax non-cash fixed asset impairment charge of $6,497 related to underperforming clubs. (c) In the fourth quarter of 2017, the Company recognized $3,557 of pre-tax personal training revenue related to unused and expired sessions in three of the states it operates clubs. (d) In the second quarter of 2016, the Company recorded a pre-tax gain on extinguishment of debt of $38,497 in connection with the purchase of $71,152 of its debt. (e) In the third quarter of 2016, the Company recorded a pre-tax non-cash fixed asset impairment charge of $742 related to underperforming clubs. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events In January 2018, the Company acquired an existing club in the Boston metropolitan region. The Company also acquired an existing club in the Florida region, as well as the land and building the club occupied. Refer to Note 6 - Acquisitions for further details. In January 2018, the Company adopted a management stock purchase plan known as the Town Sports International Holdings, Inc. 2018 Management Stock Purchase Plan. There were no stock purchases under this plan as of February 28, 2018 . On February 21, 2018, the Company entered into an agreement to acquire substantially all of the assets of the Total Woman Gym and Spa business (“Total Woman”). Once consummated, this acquisition will add another women-focused fitness brand to the Company’s growing fitness portfolio. The Company expects this transaction to be completed in the second quarter of 2018. |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of TSI Holdings and all wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. |
Revenue Recognition | Revenue Recognition The Company generally receives one-time non-refundable joining fees and monthly dues from its members. The Company offers both month-to-month and one-year commit memberships. Members can cancel their membership with a fee charged to those still under contract. Membership dues are recognized in the period in which access to the club is provided. The Company's membership plans allow for club members to elect to pay a per visit fee to use non-home clubs. These usage fees are recorded to membership revenue in the month the usage occurs. Usage fees recorded were $1,404 , $1,015 and $719 for the years ended December 31, 2017 , 2016 and 2015 , respectively. Initiation and processing fees, as well as related direct and incremental expenses of membership acquisition, which may include sales commissions, bonuses and related taxes and benefits, are deferred and recognized, on a straight-line basis, in operations over the estimated average membership life or 12 months to the extent these costs are related to the first annual fee paid within one month of enrollment. Annual fees are amortized over 12 months. Deferred membership costs were $959 and $1,092 at December 31, 2017 and 2016 , respectively. The average membership life was 26 months , 25 months and 22 months for the years ended December 31, 2017 , 2016 and 2015 . The Company monitors factors that might affect the estimated average membership life including retention trends, attrition trends, membership sales volumes, membership composition, competition, and general economic conditions, and adjusts the estimate as necessary on an annual basis. The Company recognizes revenue from personal training sessions as the services are performed (i.e., when the session is trained). Unused personal training sessions expire after a set, disclosed period of time after purchase and are not refundable or redeemable by the member for cash. As of December 31, 2017 and 2016 , the Company had approximately $12,456 of unused and expired personal training sessions that had not been recognized as revenue and was recorded as deferred revenue. The Company does not believe this amount is subject to the escheatment or abandoned property laws of any of the jurisdictions in which we conduct our business, including the State of New York. It is possible however, that one or more of these jurisdictions may not agree with the Company's position and may claim that the Company must remit all or a portion of these amounts to such jurisdiction. This could have a material adverse effect on the Company's cash flows. The State of New York has informed the Company that it is considering whether the Company is required to remit the amount received by the Company for unused, expired personal training sessions to the State of New York as unclaimed property. For a total of six jurisdictions, the Company has concluded, based on opinions from outside counsel, that money held by a company for unused and expired personal training sessions are not escheatable. In 2010, for three jurisdictions, the Company concluded, based on opinions from outside counsel, that monies held by a company for unused and expired personal training sessions are not escheatable. As a result, the Company recorded approximately $2,697 as personal training revenue in the fourth quarter of 2010. This amount was previously recorded in deferred revenue. In 2017, for another three jurisdictions, the Company concluded, based on opinions from outside counsel, that monies held by a company for unused and expired personal training sessions are not escheatable. As a result, the Company recorded approximately $3,557 as personal training revenue in the fourth quarter of 2017. This amount was previously recorded in deferred revenue, which was primarily related to sessions purchased prior to the year ended December 31, 2015. In addition to the prepaid personal training sessions the Company also offers a personal training membership product which consists of single or multi-session packages ranging from four to 12 sessions per month. These sessions provided by the membership product are at a discount to our stand-alone session pricing and must be used in each respective month. Members who purchase this product commit to a three month period and revenue is recognized ratably over this period. The Company generates management fees from certain club facilities that are not wholly-owned, which include four managed sites as of December 31, 2017 . Management fees earned for services rendered are recognized at the time the related services are performed. Revenue generated from managed sites was $922 , $1,892 and $1,802 for the years ended December 31, 2017 , 2016 and 2015 , respectively. When a revenue agreement involves multiple elements, such as sales of both memberships and services in one arrangement or potentially multiple arrangements, the entire fee from the arrangement is allocated to each respective element based on its relative fair value and recognized when the revenue recognition criteria for each element is met. The Company recognizes revenue from merchandise sales upon delivery to the member. In connection with advance receipts of fees or dues, the Company was required to maintain bonds totaling $2,658 and $3,112 as of December 31, 2017 and 2016 , respectively, pursuant to various state consumer protection laws. |
Advertising Costs | Advertising Costs Advertising costs are charged to operations during the period in which they are incurred, except for production costs related to television and radio advertisements, which are expensed when the related commercials are first aired. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid instruments which have original maturities of three months or less when acquired to be cash equivalents. The carrying amounts reported in the balance sheets for cash and cash equivalents approximate fair value. The Company owns and operates a captive insurance company in the State of New York. Under the insurance laws of the State of New York, this captive insurance company is required to maintain a cash balance of at least $250 . |
Deferred Lease Liabilities, Non-Cash Rental Expense and Additional Rent | Deferred Lease Liabilities, Non-Cash Rental Expense and Additional Rent The Company recognizes rental expense for leases with scheduled rent increases and inclusive of rental concessions, on the straight-line basis over the life of the lease beginning upon the commencement date of the lease. Rent concessions, primarily received in the form of free rental periods, are also deferred and amortized on a straight-line basis over the life of the lease. The Company leases office, warehouse and multi-recreational facilities and certain equipment under non-cancelable operating leases. In addition to base rent, the facility leases generally provide for additional rent to cover common area maintenance charges incurred and to pass along increases in real estate taxes. The Company accrues for any unpaid common area maintenance charges and real estate taxes on a club-by-club basis. Upon entering into certain leases, the Company receives construction allowances from the landlord. These construction allowances are recorded as deferred lease liability credits on the balance sheet when the requirements for these allowances are met as stated in the respective lease and are amortized as a reduction of rent expense over the term of the lease. Amortization of deferred construction allowances were $2,884 , $3,190 and $2,920 as of December 31, 2017 , 2016 and 2015 , respectively. Certain leases provide for contingent rent based upon defined formulas of revenue, cash flows or operating results for the respective facilities. These contingent rent payments typically call for additional rent payments calculated as a percentage of the respective club’s revenue or a percentage of revenue in excess of defined break-points during a specified year. The Company records contingent rent expense over the related contingent rental period at the time the respective contingent targets are probable of being met. Contingent rent expense was $131 , $467 and $693 for the years ended December 31, 2017 , 2016 and 2015 , respectively, and is included in Club operating expenses in the accompanying consolidated statements of operations for each respective year. Lease termination gains and losses are recognized at fair value based on the expected settlement amount with the landlord when the Company terminates the contract before the lease termination date. In closing a club, the Company discontinues operating 30 days prior to giving back the space to the landlord, and uses this time to remove equipment and clean the premises. Accordingly, lease termination gains and losses related to certain club closures also include one month additional rent to the landlord. In the years ended December 31, 2017 , 2016 and 2015 , the Company recorded $201 , $329 and $1,550 of lease termination losses, respectively, which were included in Club operating expenses in the accompanying consolidated statements of operations for each respective year. In the year ended December 31, 2015, in addition to the $1,550 lease termination losses recorded in Club operating expenses in the accompanying statements of operations, the Company also recorded an additional $2,967 net gain on lease termination in a separate line item on the accompanying consolidated statements of operations related to the termination of a lease for a planned club opening that was not yet effective. The Company received one-time gross proceeds of $3,090 from a landlord related to this lease termination in November 2015. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable consists of amounts due from the Company’s membership base and was $6,453 and $4,133 at December 31, 2017 and 2016 , respectively, before the allowance for doubtful accounts. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make required payments. The Company considers factors such as: historical collection experience, the age of the receivable balance and general economic conditions that may affect a customer’s ability to pay. |
Inventory | Inventory As of December 31, 2016, inventory consisted primarily of equipment parts and cleaning and locker room supplies. Inventory was valued at the lower of cost or net realizable value by the first-in, first-out method. In 2017, the Company began to pre-pay for some of these items and store them at a third-party vendor location. These prepaid assets are included in prepaid and other current assets on the accompanying consolidated balance sheet as of December 31, 2017. |
Fixed Assets | Fixed Assets Fixed assets are recorded at cost and depreciated on a straight-line basis over the estimated useful lives of the assets, which are 30 years for building and improvements, five years for club equipment, furniture, fixtures and computer equipment and three to five years for computer software. Leasehold improvements are amortized over the shorter of their estimated useful lives or the remaining period of the related lease. Payroll costs directly related to the construction or expansion of the Company’s locations are capitalized with leasehold improvements. Expenditures for maintenance and repairs are charged to operations as incurred. The cost and related accumulated depreciation of assets retired or sold is removed from the respective accounts and any gain or loss is recognized in operations. Third-party costs related to developing web applications, developing web pages and installing or enhancing developed applications on the web servers are capitalized and classified as computer software. Website hosting fees and maintenance costs are expensed as incurred. |
Intangible Assets and Debt Issuance Costs | Intangible Assets and Debt Issuance Costs Intangible assets are stated at cost and amortized by the straight-line method over their respective estimated lives. Intangible assets currently consist of membership lists, favorable lease commitments, management contracts, trade names and non-compete agreements. Membership lists are amortized over the estimated average membership life, currently at 26 months, favorable lease commitments are amortized over the remaining life of the lease, trade names are amortized over their estimated useful lives of between five and 15 years, and non-compete agreements are amortized over five years. For the years ended December 31, 2017, 2016 and 2015, management contracts were amortized over their contractual lives of between nine and 11 years. Debt issuance costs are classified within other assets and are being amortized as additional interest expense over the life of the underlying debt, five to seven years, using the interest method. Amortization of debt issue costs was $601 , $644 and $778 , for the years ended December 31, 2017 , 2016 and 2015 , respectively. For the year ended December 31, 2015, building financing costs were classified within other assets and were being amortized as additional interest expense over the life of the underlying financing arrangement, 25 years , using the interest method. Amortization of building financing costs was $124 for the year ended December 31, 2015. There was no amortization of building financing costs in the years ended December 31, 2017 and 2016 . The balance of building financing costs of $3,005 was written off in December 2015 in connection with the termination of the future lease, which was included in Gain on sale of building in the accompanying statements of operations. |
Business Combinations | Business Combinations In connection with an acquisition of a business, the Company records all assets acquired and liabilities assumed, if any, of the acquired business at their acquisition date fair value, including the recognition of contingent consideration at fair value on the acquisition date. These fair value determinations require judgment and may involve the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives, and market multiples, among other items. We may utilize independent third-party valuation firms to assist in making these fair value determinations. |
Fair Value Measurements | Fair Value Measurements 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. |
Accounting for the Impairment of Long-Lived Assets and Goodwill | Accounting for the Impairment of Long-Lived Assets and Goodwill Long-lived assets, such as fixed assets and intangible assets are reviewed for impairment periodically whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable from undiscounted cash flows. Estimated undiscounted expected future cash flows are used to determine if an asset group is impaired, in which case the asset carrying value would be reduced to its fair value, calculated considering a combination of market approach and a cost approach. In determining the recoverability of fixed assets Level 3 inputs were used in determining undiscounted cash flows, which are based on internal budgets and forecasts through the end of the life of the primary asset in the asset group which is normally the life of leasehold improvements. The most significant assumptions in those budgets and forecasts relate to estimated membership and ancillary revenue, attrition rates, discount rates, income tax rates, estimated results related to new program launches and maintenance capital expenditures, which are generally estimated at approximately 2% of total revenues depending upon the conditions and needs of a given club. If the Company continues to experience competitive pressure, certain assumptions may not be accurate. Goodwill represents the excess of consideration paid over the fair value of the net identifiable business assets acquired in the acquisition of a club or group of clubs. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350-20, Intangibles – Goodwill and Other, requires goodwill to be tested for impairment on an annual basis and between annual tests in certain circumstances, and written down when impaired. The Company’s impairment review process compares the fair value of the reporting unit in which the goodwill resides to its carrying value. The Company early adopted Accounting Standards Update (“ASU”) No. 2017-04, “Simplifying the Test for Goodwill Impairment” in the first quarter of 2017. This standard eliminated the second step of the goodwill impairment test, where a determination of the fair value of individual assets and liabilities of a reporting unit was needed to measure the goodwill impairment. As a result of the updated guidance, the Company’s annual goodwill impairment test as of February 28, 2017 was performed by comparing the fair value of the Company’s reporting unit with its carrying amount and then recognizing an impairment charge, as necessary, for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit. Prior to the adoption of ASU 2017-04, the impairment test required a two-step quantitative evaluation. Step 1 involved comparing the estimated fair value of the Company’s reporting units to their carrying amounts. If the estimated fair value of the reporting unit was greater than its carrying amount, there was no requirement to perform Step 2 of the impairment test, and there was no impairment. If the reporting unit’s carrying amount was greater than the estimated fair value, the second step must be completed to measure the amount of impairment, if any. Step 2 calculated the implied fair value of goodwill by deducting the estimated fair value of all tangible and intangible assets, excluding goodwill, of the reporting unit from the estimated fair value of the reporting unit as determined in Step 1. The implied fair value of goodwill determined in this step was compared to the carrying value of goodwill. If the implied fair value of goodwill was less than the carrying value of goodwill, an impairment charge was recognized equal to the difference. For the years ended December 31, 2017 and 2016, the estimated fair value was determined using an income approach. For the year ended December 31, 2015, the estimated fair value was determined using a combined income and market approach with equal weighting on each approach. The income approach was based on discounted future cash flows and required significant assumptions, including estimates regarding revenue growth rates, operating margins, weighted average cost of capital, and future economic and market conditions. Under the market approach, 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. Solely for purposes of establishing inputs for the fair value calculation described above related to goodwill impairment testing, the Company developed long-range financial forecasts (three years) for all reporting units and assumed known changes in the existing club base. Terminal growth rates were calculated for years beyond the three year forecast. The Company has historically performed goodwill impairment test annually as of the last day of February and in the interim if a triggering event occurs. During the fourth quarter of 2017, the Company established the date of its annual goodwill impairment test for the New York region from the last day of February to August 1. The Company believes that performing the test annually on August 1 will alleviate the information and resource constraints that historically existed during the first quarter and will more closely align with the timing of related forecasts, reports and analysis. The Company will perform a goodwill impairment test on the Switzerland region as of February 28, 2018. The goodwill in the New York region was acquired in connection with the Lucille Roberts and TMPL acquisitions in the third and fourth quarters of 2017, respectively. As such, these intangible assets were recorded at fair value at the time of the acquisitions. The next goodwill impairment test for the New York region will be August 1, 2018 which is within 12 months of the acquisitions. The Company believes that the resulting change in accounting principle related to the annual testing date will not delay, accelerate or avoid an impairment charge. The Company has also determined that it is impracticable to objectively determine projected cash flows and related valuation estimates that would have been used as of August 1 for periods prior to August 1, 2018 without the use of hindsight. As such, the Company will prospectively apply the change in the annual goodwill impairment assessment date beginning August 1, 2018. |
Insurance | Insurance The Company obtains insurance coverage for significant exposures as well as those risks required to be insured by law or contract. The Company retains a portion of risk internally related to general liability losses. Where the Company retains risk, provisions are recorded based upon the Company’s estimates of its ultimate exposure for claims, which are included in general and administrative expenses in the accompanying statements of operations. The provisions are estimated using actuarial analysis based on claims experience, an estimate of claims incurred but not yet reported and other relevant factors. In this connection, under the provision of the deductible agreement related to the payment and administration of the Company’s insurance claims, we are required to maintain irrevocable letters of credit, totaling $415 and $615 as of December 31, 2017 and 2016 , respectively. The Company maintains a self-insured health benefits plan, which provides medical benefits to employees electing coverage under the plan. The Company maintains a reserve for incurred but not reported medical claims and claim development. The reserve is an estimate based on historical experience, actuarial estimates and other assumptions, some of which are subjective. The Company will adjust its self-insured medical benefits reserve as the Company’s loss experience changes due to medical inflation, changes in the number of plan participants and an aging employee base. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The most significant assumptions and estimates relate to the useful lives of long-term assets, recoverability and impairment of fixed and intangible assets, deferred income tax valuation, valuation of and expense incurred in connection with stock options, valuation of interest-rate swap arrangements, insurance reserves, legal contingencies and the estimated average membership life and the underlying forecasts for these assumptions and estimates. |
Income Taxes | Income Taxes Deferred tax liabilities and assets are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. The Company also recognizes deferred tax in relation to the U.S. taxes on the total cumulative earnings of the Company's Swiss clubs. Deferred tax liabilities and assets are determined on the basis of the difference between the financial statement and tax basis of assets and liabilities (“temporary differences”) at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. A valuation allowance is recorded to reduce deferred tax assets to the amount that is more likely than not to be realized. In assessing the need for a valuation allowance, we consider all positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. As of December 31, 2017 , the Company maintained a full valuation allowance of $38,769 against outstanding net deferred tax assets as the company had a three year cumulative loss position excluding one-time extraordinary income and expense items. The guidance related to accounting for uncertain tax positions prescribes a recognition threshold and measurement attribute for a tax position taken or expected to be taken in a tax return and also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. |
Other Comprehensive (Loss) Income | Other Comprehensive (Loss) Income Other comprehensive (loss) income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources, including changes in the fair value of the Company’s derivative financial instrument and foreign currency translation adjustments. The Company presents other comprehensive (loss) income in its consolidated statements of comprehensive (loss) income. The Company uses a derivative financial instrument to limit exposure to changes in interest rates on the Company’s existing term loan facility. The derivative financial instrument is recorded at fair value on the balance sheet and changes in the fair value are either recognized in accumulated other comprehensive income (a component of stockholders’ equity) or net income depending on the nature of the underlying exposure, whether the hedge is formally designated as a hedge, and if designated, the extent to which the hedge is effective. The Company’s derivative financial instrument has been designated as a cash flow hedge. See Note 10 - Derivative Financial Instruments for more information on the Company’s risk management program and derivatives. |
Foreign Currency Transactions | Assets and liabilities are translated into U.S. dollars at year-end exchange rates, while income and expense items are translated into U.S. dollars at the average exchange rate for the period. For all periods presented, foreign exchange transaction gains and losses were not material. Adjustments resulting from the translation of foreign functional currency financial statements into U.S. dollars are included in the currency translation adjustment in the consolidated statements of stockholders’ deficit and the consolidated statements of comprehensive income (loss) |
Concentrations of Credit Risk | Concentrations 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 December 31, 2017 , $19,932 of the cash balance of $30,321 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 (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) applicable to common stockholders by the weighted average numbers of shares of common stock outstanding during the period. Diluted EPS is computed similarly to basic EPS, except that the denominator is increased for the assumed exercise of dilutive stock options and unvested restricted stock calculated using the treasury stock method. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, Compensation - Stock Compensation (“ASC 718”). ASC 718 requires that the cost resulting from all share-based payment transactions be treated as compensation and recognized in the consolidated financial statements. We record share-based payment awards at fair value on the grant date of the awards, based on the estimated number of awards that are expected to vest. The fair value of stock options is determined using the Black-Scholes option-pricing model. The assumptions in the Black-Scholes model include risk-free interest rate, the Company's expected stock price volatility over the term of the awards, expected term of the award, and dividend yield. The fair value of the restricted stock awards is based on the closing price of the Company’s common stock on the date of the grant. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The updated standard expands the range of transactions that qualify for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess effectiveness. It is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting, and increase the transparency as to the scope and results of hedging programs. This standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s financial statements. In January 2017, the FASB issued ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment.” This standard eliminates the second step of the goodwill impairment test, where a determination of the fair value of individual assets and liabilities of a reporting unit was needed to measure the goodwill impairment. As a result of ASU No. 2017-04, an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and then recognize an impairment charge, as necessary, for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit. This standard is effective prospectively for annual and interim periods beginning on or after December 15, 2019, and early adoption is permitted on testing dates after January 1, 2017. The Company early adopted the updated guidance for the fiscal year beginning January 1, 2017 with no impact on the Company’s financial statements. In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” This ASU clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those years, with early adoption permitted. The Company early adopted the updated guidance for the fiscal year beginning September 1, 2017 with no impact on the Company’s financial statements. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (A Consensus of the FASB Emerging Issues Task Force).” This ASU provides specific guidance over eight identified cash flow issues. This standard is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted. The adoption of this guidance will not have a material impact on the Company’s financial statements. In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting.” Under this standard, all excess tax benefits and tax deficiencies will be recorded as an income tax expense or benefit in the income statement in the period in which the awards vest or are exercised. Excess tax benefits will be classified as an operating activity in the statement of cash flows. The standard also allows an entity to elect an accounting policy to either estimate the number of forfeitures or account for forfeitures when they occur. In addition, entities can withhold up to the maximum individual statutory tax rate without classifying the awards as a liability. This standard was effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. The Company adopted the updated guidance for the fiscal year beginning January 1, 2017 with no material impact on the Company’s financial statements. The Company elected to account for forfeitures of share-based payments by recognizing forfeitures of awards as they occur. Refer to Note 13 - Stockholders’ (Deficit) Equity for further detail. In February 2016, the FASB issued ASU No. 2016-02, “Leases (topic 842),” to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This standard is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of this standard is permitted. The Company is evaluating the impact of this standard on its financial statements. Refer to Note 12 - Leases for further detail. In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (Topic 606). The standard provides a single, comprehensive revenue recognition model for all contracts with customers and supersedes current revenue recognition guidance. The revenue standard contains principles that an entity will apply to determine the measurement of revenue and timing of when it is recognized. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The new standard also includes enhanced disclosures which are significantly more comprehensive than those in existing revenue standards. In August 2015, the FASB issued ASU No. 2015-14, which defers the effective date of ASU No. 2014-09 for all entities by one year, to annual reporting periods beginning after December 15, 2017. Early adoption is permitted for annual reporting periods beginning after December 15, 2016. The standard allows for either “full retrospective” adoption, meaning the standard is applied to all of the periods presented, or “modified retrospective” adoption, meaning the standard is applied only to the most current period presented in the financial statements. In addition, the FASB issued ASU No. 2016-08, ASU No. 2016-10, and ASU No. 2016-12 in March 2016, April 2016, and May 2016, respectively, to help provide interpretive clarifications on the new guidance in FASB ASC Topic 606. The Company will adopt this guidance on January 1, 2018 using the modified retrospective method. The Company expects to record an impact to opening retained earnings as of January 1, 2018 due to the cumulative impact of adopting FASB ASC Topic 606, with the impact primarily related to how costs associated with contracts for customers are deferred and recognized. The Company is in the process of finalizing the additional disclosures that may be acquired. |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Table) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Accounts Receivable and Allowance for Doubtful Accounts | Following are the changes in the allowance for doubtful accounts for the years December 31, 2017 , 2016 and 2015 : Balance Beginning of the Year Additions Write-offs Net of Recoveries Balance at End of Year December 31, 2017 $ 2,912 $ 9,712 $ (8,387 ) $ 4,237 December 31, 2016 $ 3,133 $ 6,704 $ (6,925 ) $ 2,912 December 31, 2015 $ 2,511 $ 11,237 $ (10,615 ) $ 3,133 |
Schedule of Supplemental Disclosure of Cash Flow Information | Supplemental disclosure of cash flow information: Year Ended December 31, 2017 2016 2015 Cash paid: Interest paid (net of amounts capitalized) (a) $ 11,165 $ 12,289 $ 16,749 Income taxes paid $ 3,891 $ 11,286 $ 105 Cash received: Income taxes refund $ 1,600 $ 6,985 $ 7,768 Noncash investing and financing activities: Acquisition of fixed assets included in accounts payable and accrued expenses $ 455 $ 2,058 $ 2,031 (a) Interest includes cash payments under the Initial Lease (as defined below) resulting from the sale of the East 86th Street property in the year ended December 31, 2015. See Notes 9 for additional noncash financing activities. |
Schedule of Earnings Per Share, Basic and Diluted | The following table summarizes the weighted average common shares for basic and diluted EPS computations. For The Year Ended December 31, 2017 2016 2015 Net income $ 4,369 $ 8,043 $ 21,158 Weighted average number of common share outstanding — basic 26,703,577 25,568,371 24,630,898 Effect of dilutive share-based awards 719,256 506,364 483,159 Weighted average number of common shares outstanding — diluted 27,422,833 26,074,735 25,114,057 Earnings per share: Basic $ 0.16 $ 0.31 $ 0.86 Diluted $ 0.16 $ 0.31 $ 0.84 |
Fixed Assets (Table)
Fixed Assets (Table) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Fixed Asset Components | Fixed assets as of December 31, 2017 and 2016 are shown at cost, less accumulated depreciation and amortization and are summarized below: December 31, 2017 2016 Leasehold improvements $ 489,738 $ 495,515 Club equipment (a) 103,998 107,905 Furniture, fixtures and computer equipment 56,203 71,222 Computer software 19,048 25,813 Construction in progress 1,237 3,617 Building and improvements 9,575 — Land 2,675 — 682,474 704,072 Less: Accumulated depreciation and amortization (530,976 ) (533,492 ) $ 151,498 $ 170,580 (a) Included $505 of club equipment under capital lease for the year ending December 31, 2017. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Table) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The changes in the carrying amount of goodwill from December 31, 2016 through December 31, 2017 are detailed in the charts below. New York Boston Switzerland Outlier Clubs Total Goodwill, net of accumulated amortization $ 31,549 $ 15,775 $ 1,175 $ 3,982 $ 52,481 Changes due to foreign currency exchange rate fluctuations — — (167 ) — (167 ) Less: accumulated impairment of goodwill (31,549 ) (15,775 ) — (3,982 ) (51,306 ) Balance as of December 31, 2016 — — 1,008 — 1,008 Acquired goodwill 5,158 — — — 5,158 Changes due to foreign currency exchange rate fluctuations — — 51 — 51 Balance as of December 31, 2017 $ 5,158 $ — $ 1,059 $ — $ 6,217 |
Schedule of Finite-Lived Intangible Assets | Intangible assets are as follows: As of December 31, 2017 As of December 31, 2016 Gross Carrying Accumulated Net Gross Carrying Accumulated Net Membership lists $ 12,744 $ (11,577 ) $ 1,167 $ 11,344 $ (11,344 ) $ — Favorable lease commitments 2,350 (136 ) 2,214 — — — Trade names 900 (47 ) 853 40 (9 ) 31 Non-compete agreement 900 — 900 — — — Management contracts — — — 250 (146 ) 104 $ 16,894 $ (11,760 ) $ 5,134 $ 11,634 $ (11,499 ) $ 135 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The aggregate amortization expense for the next five years and thereafter of the acquired intangible assets is as follows: Year Ending December 31, 2018 $ 1,377 2019 1,251 2020 731 2021 731 2022 506 2023 and thereafter 538 $ 5,134 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Schedule of Net Assets | The following table summarizes the allocation of the purchase price to the fair value of the assets and liabilities acquired. September 2017 Allocation of purchase price: Fixed assets $ 1,024 Goodwill 4,793 Definite lived intangible assets: Membership lists 1,400 Trade names 700 Favorable lease commitments 2,350 Deferred revenue (817 ) Total allocation of purchase price $ 9,450 The purchase price allocation presented below has been prepared on a preliminary basis and changes to the preliminary purchase price allocations may occur as additional information concerning asset and liability valuations are finalized. December 2017 Allocation of purchase price: Fixed assets $ 5,195 Goodwill 365 Definite lived intangible assets: Non-compete agreement 900 Trade name 200 Deferred revenue (500 ) Capital lease liability (160 ) Other liabilities (75 ) Total allocation of purchase price $ 5,925 |
Accrued Expenses (Table)
Accrued Expenses (Table) | 12 Months Ended |
Dec. 31, 2017 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses as of December 31, 2017 and 2016 consisted of the following: December 31, 2017 2016 Accrued payroll and related $ 5,888 $ 6,817 Accrued occupancy costs 10,009 8,594 Accrued insurance claims 2,282 2,786 Accrued other 6,490 7,710 $ 24,669 $ 25,907 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Long-term debt as of December 31, 2017 and 2016 consisted of the following: December 31, 2017 2016 2013 Term Loan Facility $ 199,918 $ 202,000 Less: Unamortized discount (2,912 ) (3,851 ) Less: Deferred financing costs (977 ) (1,324 ) Less: Current portion due within one year (2,082 ) (2,082 ) Long-term portion $ 193,947 $ 194,743 |
Schedule of Long Term Obligations | The aggregate long-term debt obligations maturing in the next five years and thereafter are as follows: Amount Due Year Ending December 31, 2018 $ 2,082 2019 2,082 2020 195,754 2021 — 2022 — 2023 and thereafter — $ 199,918 The table above does not reflect potential commitments in connection with our outstanding letters of credit under the 2013 Revolving Loan Facility (defined below) which matures on November 15, 2018. |
Schedule of Interest Expense and Capitalized Interest | The Company’s interest expense and capitalized interest related to funds borrowed to finance club facilities under construction for the years ended December 31, 2017 , 2016 and 2015 were as follows: Year Ended December 31, 2017 2016 2015 Interest costs expensed $ 12,657 $ 13,904 $ 17,914 Interest costs capitalized — 28 72 Total interest expense and amounts capitalized $ 12,657 $ 13,932 $ 17,986 The table above does not include $2,666 of interest expense related to the building financing arrangement in the year ended December 31, 2015. |
Derivative Financial Instrume35
Derivative Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table presents the aggregate fair value of the Company’s derivative financial instrument: Fair Value Measurements Using: Total Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Interest rate swap liability as of December 31, 2017 $ 184 $ — $ 184 $ — Interest rate swap liability as of December 31, 2016 $ 1,511 $ — $ 1,511 $ — |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Leases [Abstract] | |
Schedule of Minimum Rental Payments Under Non-Cancelable Operating Leases | Future minimum rental payments under non-cancelable leases are shown in the chart below. Minimum Annual Rental Year Ending December 31, 2018 (a) $ 96,518 2019 (a) 91,208 2020 85,129 2021 75,016 2022 62,933 2023 and thereafter 247,911 (a) For the years ending December 31, 2018 and 2019, future minimum rental payments include capital lease payments of $129 and $31 , respectively. |
Schedule of Minimum Rental Receivable Under Non-Cancelable Leases | Future minimum rentals receivable under non-cancelable leases are shown in the chart below. Minimum Annual Rental Year Ending December 31, 2018 $ 1,367 2019 1,021 2020 761 2021 537 2022 99 2023 and thereafter — |
Stockholders' (Deficit) Equity
Stockholders' (Deficit) Equity (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Stock Options Activity | The following table summarizes the stock option activity for the years ended December 31, 2017 , 2016 and 2015 : Common Weighted Average Exercise Price Balance at January 1, 2015 1,030,521 $ 5.29 Granted 850,000 2.68 Exercised (171,718 ) 1.68 Canceled (313,934 ) 8.61 Balance at December 31, 2015 1,394,869 3.40 Exercised (226,011 ) 1.41 Canceled (533,484 ) 3.99 Forfeited (447,667 ) 2.71 Balance at December 31, 2016 187,707 5.78 Exercised (44,114 ) 2.50 Canceled (57,580 ) 13.32 Forfeited (25,000 ) 2.95 Balance at December 31, 2017 61,013 $ 2.19 |
Schedule of Stock Options Outstanding | The following table summarizes information about stock options outstanding and exercisable as of December 31, 2017 : Options Outstanding Options Exercisable Number of Options Weighted-Average Remaining Contractual Life Weighted-Average Exercise Price Number of Options Weighted-Average Exercise Price Common 2008 grants 26,208 11 months $ 2.70 26,208 $ 2.70 2009 grants 23,490 23 months $ 1.74 23,490 $ 1.74 2010 grants 11,315 30 months $ 1.91 11,315 $ 1.91 Total Grants 61,013 19 months $ 2.19 61,013 $ 2.19 |
Schedule of Stock Option and Non-Restricted Stock Grants Issued | Options granted during the year ended December 31, 2015 to employees of the Company were as follows: Date Number of Shares Exercise Price Grant Date Fair Value August 19, 2015 700,000 $ 2.61 $ 1,827 October 12, 2015 50,000 $ 2.95 148 October 19, 2015 100,000 $ 3.04 304 850,000 $ 2,279 |
Schedule of Fair Value Inputs | The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: Common Risk-Free Interest Rate Expected Dividend Yield Expected Term (Years) Expected Volatility 2015 Grants 1.1 % — 3.99 52.03 % |
Schedule of Restricted Stock Grants | The following restricted stock grants were issued to employees of the Company during the year ended December 31, 2017 . Number of Shares Share Price Grant Date Fair Value March 8, 2017 26,000 $ 4.00 $ 104 December 4, 2017 480,200 $ 5.85 2,809 Total 506,200 $ 2,913 The following table summarizes the restricted stock activity for the years ended December 31, 2017 , 2016 and 2015 : Number of Shares Weighted Average Grant Date Fair Value Balance as of January 1, 2015 401,534 $ 9.38 Granted 507,000 4.27 Vested (133,874 ) 9.20 Forfeited (249,790 ) 8.19 Balance as of December 31, 2015 524,870 5.06 Granted 1,711,000 2.48 Vested (222,495 ) 4.59 Forfeited (402,000 ) 3.39 Balance as of December 31, 2016 1,611,375 2.80 Granted 506,200 5.75 Vested (534,968 ) 2.93 Forfeited (70,666 ) 3.06 Balance as of December 31, 2017 1,511,941 $ 3.73 |
Revenues (Tables)
Revenues (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Other Income and Expenses [Abstract] | |
Schedule of Revenue From Club Operations | Revenues for the years ended December 31, 2017 , 2016 and 2015 are summarized below: Years Ended December 31, 2017 2016 2015 Membership dues $ 307,966 $ 296,795 $ 309,096 Initiation and processing fees 2,268 7,636 13,644 Personal training revenue 69,735 66,487 73,191 Other ancillary club revenue(1) 17,197 19,642 22,138 Total club revenue 397,166 390,560 418,069 Fees and other revenue(2) 5,876 6,361 6,254 Total revenue $ 403,042 $ 396,921 $ 424,323 (1) Other ancillary club revenue primarily consists of Sports Clubs for Kids, Small Group Training and racquet sports. (2) Fees and other revenue primarily consist of rental income, laundry revenue, marketing revenue and management fees. |
Corporate Income Taxes (Tables)
Corporate Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Corporate Income Tax Provision Components | The (benefit) provision for income taxes for the years ended December 31, 2017 , 2016 and 2015 consisted of the following: Year Ended December 31, 2017 Federal Foreign State and Local Total Current $ (9,599 ) $ (63 ) $ (56 ) $ (9,718 ) Deferred 12 — 20 32 $ (9,587 ) $ (63 ) $ (36 ) $ (9,686 ) Year Ended December 31, 2016 Federal Foreign State and Local Total Current $ 9,346 $ (63 ) $ 488 $ 9,771 Deferred — — — — $ 9,346 $ (63 ) $ 488 $ 9,771 Year Ended December 31, 2015 Federal Foreign State and Local Total Current $ (3,100 ) $ 67 $ 197 $ (2,836 ) Deferred (8,262 ) — (3,253 ) (11,515 ) $ (11,362 ) $ 67 $ (3,056 ) $ (14,351 ) |
Schedule of Components of Deferred Tax Assets, Net | The components of deferred tax liabilities, net consist of the following items: December 31, 2017 2016 Deferred tax assets Basis differences in depreciation and amortization $ — $ 10,073 Deferred lease liabilities 15,638 23,527 Deferred revenue 4,590 8,247 Deferred compensation expense incurred in connection with stock options 912 994 Federal and state net operating loss carry-forwards 15,645 8,473 Accruals, reserves and other 4,942 7,297 $ 41,727 $ 58,611 Deferred tax liabilities Deferred costs $ 1,740 $ 803 Basis differences in depreciation and amortization 1,311 — Change in accounting method — 3,147 Undistributed foreign earnings and other — 529 $ 3,051 $ 4,479 Gross deferred tax assets 38,676 54,132 Valuation allowance (38,769 ) (54,193 ) Deferred tax liabilities, net $ (93 ) $ (61 ) |
Schedule of Corporate Income Tax Rate Reconciliation | The differences between the U.S. Federal statutory income tax rate and the Company’s effective tax rate were as follows for the years ended December 31, 2017 , 2016 and 2015 : Years Ended December 31, 2017 2016 2015 Federal statutory tax rate 35 % 35 % 35 % State and local income taxes (net of federal tax benefit) 1 2 11 Change in state effective income tax rate — — 3 State tax (benefit) provision related to insurance premiums — — (14 ) Tax reserves — — 1 Permanent differences in fines and penalties (3 ) — 2 Permanent difference in compensation (2 ) — — 31 37 38 Valuation allowance 151 18 (249 ) 182 % 55 % (211 )% |
Schedule of Unrecognized Tax Benefits | A reconciliation of unrecognized tax benefits, excluding interest and penalties, is as follows: 2017 2016 2015 Balance on January 1 $ 1,187 $ 1,187 $ 1,187 Gross decreases for tax positions taken in prior years — — — Gross increases for tax positions taken in prior years — — — Decreases relating to settlements with taxing authorities — — — Reductions due to a lapse of applicable statute of limitations (32 ) — — Balance on December 31 $ 1,155 $ 1,187 $ 1,187 |
Selected Quarterly Financial 40
Selected Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | 2017 First Quarter Second Quarter Third Quarter Fourth Quarter (b) (c) Net revenue $ 99,080 $ 99,993 $ 98,641 $ 105,328 Operating (loss) income (118 ) 3,518 (6,269 ) 9,806 Net (loss) income (2,935 ) (410 ) (13,276 ) 20,990 (Loss) earnings per share (a) Basic $ (0.11 ) $ (0.02 ) $ (0.50 ) $ 0.78 Diluted $ (0.11 ) $ (0.02 ) $ (0.50 ) $ 0.76 2016 First Quarter Second Quarter Third Quarter Fourth Quarter (d) (e) Net revenue $ 101,345 $ 100,935 $ 98,534 $ 96,107 Operating (loss) income (3,722 ) (1,462 ) (2,624 ) 1,425 Net (loss) earnings (6,925 ) 20,733 (5,506 ) (259 ) (Loss) earnings per share (a) Basic $ (0.28 ) $ 0.81 $ (0.21 ) $ (0.01 ) Diluted $ (0.28 ) $ 0.79 $ (0.21 ) $ (0.01 ) (a) Basic and diluted (loss) earnings per share are computed independently for each quarter presented. Accordingly, the sum of the quarterly earnings per share may not agree with the calculated full year earnings per share. (b) In the third quarter of 2017, the Company recorded a pre-tax non-cash fixed asset impairment charge of $6,497 related to underperforming clubs. (c) In the fourth quarter of 2017, the Company recognized $3,557 of pre-tax personal training revenue related to unused and expired sessions in three of the states it operates clubs. (d) In the second quarter of 2016, the Company recorded a pre-tax gain on extinguishment of debt of $38,497 in connection with the purchase of $71,152 of its debt. (e) In the third quarter of 2016, the Company recorded a pre-tax non-cash fixed asset impairment charge of $742 related to underperforming clubs. |
Basis of Presentation (Details)
Basis of Presentation (Details) | 12 Months Ended | |
Dec. 31, 2017clubsegment | Sep. 30, 2017club | |
Basis Of Presentation [Line Items] | ||
Number of clubs | 165 | |
Number of reportable segments | segment | 1 | |
New York | ||
Basis Of Presentation [Line Items] | ||
Number of clubs | 119 | |
New York | New York Sports Clubs | ||
Basis Of Presentation [Line Items] | ||
Number of clubs | 102 | |
New York | Lucille Roberts Health Clubs | ||
Basis Of Presentation [Line Items] | ||
Number of clubs | 16 | 16 |
New York | TMPL Sports Clubs | ||
Basis Of Presentation [Line Items] | ||
Number of clubs | 1 | |
Manhattan | ||
Basis Of Presentation [Line Items] | ||
Number of clubs | 39 | |
Boston | ||
Basis Of Presentation [Line Items] | ||
Number of clubs | 28 | |
Washington | ||
Basis Of Presentation [Line Items] | ||
Number of clubs | 10 | |
Washington | Partly Owned Clubs, Washington Sports Clubs | ||
Basis Of Presentation [Line Items] | ||
Number of clubs | 1 | |
Washington | Partly Owned Clubs, Different Brand Name | ||
Basis Of Presentation [Line Items] | ||
Number of clubs | 1 | |
Philadelphia | ||
Basis Of Presentation [Line Items] | ||
Number of clubs | 5 | |
Switzerland | ||
Basis Of Presentation [Line Items] | ||
Number of clubs | 3 |
Summary of Significant Accoun42
Summary of Significant Accounting Policies - Revenue Recognition (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Sep. 30, 2017 | Dec. 31, 2017USD ($) | Dec. 31, 2010USD ($) | Dec. 31, 2017USD ($)clubsession | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Summary of Significant Accounting Policies - Revenue Recognition [Line Items] | ||||||
Usage fee revenue | $ 1,404 | $ 1,015 | $ 719 | |||
Initiation and processing fees, period of recognition (in months) | 12 months | |||||
Annual membership fees, amortization period (in months) | 12 months | |||||
Deferred membership costs | $ 959 | $ 959 | 1,092 | |||
Unused and expired personal training sessions | $ 12,456 | 12,456 | ||||
Personal training revenue recognized for unused and expired sessions | $ 3,557 | $ 2,697 | ||||
Personal training, recognition period (in months) | 3 months | |||||
Bonds outstanding pursuant to various state consumer protection laws | $ 2,658 | 3,112 | ||||
Managed Sites | ||||||
Summary of Significant Accounting Policies - Revenue Recognition [Line Items] | ||||||
Managed university sites | club | 4 | |||||
Revenues | $ 922 | $ 1,892 | $ 1,802 | |||
Minimum | ||||||
Summary of Significant Accounting Policies - Revenue Recognition [Line Items] | ||||||
Number of personal training sessions per month | session | 4 | |||||
Maximum | ||||||
Summary of Significant Accounting Policies - Revenue Recognition [Line Items] | ||||||
Number of personal training sessions per month | session | 12 | |||||
Regular Member | ||||||
Summary of Significant Accounting Policies - Revenue Recognition [Line Items] | ||||||
Average member life | 26 months | 26 months | 25 months | 22 months |
Summary of Significant Accoun43
Summary of Significant Accounting Policies - Advertising, Cash, and Deferred Lease (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Nov. 30, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Financing Receivable, Impaired [Line Items] | ||||
Advertising expense | $ 2,827,000 | $ 6,384,000 | $ 11,057,000 | |
Captive insurance required balance | 250,000 | |||
Cash related to captive insurance that was included in cash and cash equivalents | 276,000 | 276,000 | ||
Amortization of lease incentives | 2,884,000 | 3,190,000 | 2,920,000 | |
Contingent rent expense | 131,000 | 467,000 | 693,000 | |
Gain (loss) on lease termination | 0 | 0 | 2,967,000 | |
Proceeds from termination of lease by landlord | $ 3,090,000 | |||
Operating Expense | ||||
Financing Receivable, Impaired [Line Items] | ||||
Lease termination penalty | $ 201,000 | $ 329,000 | $ 1,550,000 |
Summary of Significant Accoun44
Summary of Significant Accounting Policies - Accounts Receivable and Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Accounting Policies [Abstract] | |||
Accounts receivable, gross | $ 6,453 | $ 4,133 | |
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||
Balance Beginning of the Year | 2,912 | 3,133 | $ 2,511 |
Additions | 9,712 | 6,704 | 11,237 |
Write-offs Net of Recoveries | (8,387) | (6,925) | (10,615) |
Balance at End of Year | $ 4,237 | $ 2,912 | $ 3,133 |
Summary of Significant Accoun45
Summary of Significant Accounting Policies - Fixed Assets (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Building and Building Improvements | |
Property, Plant and Equipment [Line Items] | |
Fixed asset useful life | 30 years |
Furniture and Fixtures | |
Property, Plant and Equipment [Line Items] | |
Fixed asset useful life | 5 years |
Computer Software, Intangible Asset | Minimum | |
Property, Plant and Equipment [Line Items] | |
Fixed asset useful life | 3 years |
Computer Software, Intangible Asset | Maximum | |
Property, Plant and Equipment [Line Items] | |
Fixed asset useful life | 5 years |
Summary of Significant Accoun46
Summary of Significant Accounting Policies - Intangible Assets (Details) | 1 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Noncompete Agreements | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible asset, useful life | 5 years | |||
Minimum | Trade names | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible asset, useful life | 5 years | |||
Minimum | Employment Contracts | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible asset, useful life | 9 years | |||
Maximum | Trade names | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible asset, useful life | 15 years | |||
Maximum | Employment Contracts | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible asset, useful life | 11 years | |||
Regular Member | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Average member life | 26 months | 26 months | 25 months | 22 months |
Summary of Significant Accoun47
Summary of Significant Accounting Policies - Debt Issuance Costs (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Accounting Policies [Line Items] | ||||
Amortization of debt issuance costs | $ 601,000 | $ 644,000 | $ 778,000 | |
Amortization of building financing costs | $ 0 | $ 0 | $ 124,000 | |
Write-off of unamortized debt issuance cost | $ 3,005,000 | |||
Building Financing Cost | ||||
Accounting Policies [Line Items] | ||||
Deferred building financing costs, amortization period | 25 years | |||
Minimum | Debt Issuance Cost | ||||
Accounting Policies [Line Items] | ||||
Debt issuance costs, amortization period | 5 years | |||
Maximum | Debt Issuance Cost | ||||
Accounting Policies [Line Items] | ||||
Debt issuance costs, amortization period | 7 years |
Summary of Significant Accoun48
Summary of Significant Accounting Policies - Impairment and Insurance (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | ||
Percent of revenue | 2.00% | |
Period of financial forecast | 3 years | |
Letter of credit related to insurance claims | $ 415 | $ 615 |
Summary of Significant Accoun49
Summary of Significant Accounting Policies Summary of Significant Accounting Policies - Valuation Allowance (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | ||
Valuation allowance, net of the elimination of federal effect of state deferred taxes | $ 38,769 | $ 54,193 |
Summary of Significant Accoun50
Summary of Significant Accounting Policies - Statements of Cash Flows (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash paid: | |||
Interest paid (net of amounts capitalized) | $ 11,165 | $ 12,289 | $ 16,749 |
Income Taxes Paid | 3,891 | 11,286 | 105 |
Cash received: | |||
Income taxes refund | 1,600 | 6,985 | 7,768 |
Noncash investing and financing activities: | |||
Acquisition of fixed assets included in accounts payable and accrued expenses | $ 455 | $ 2,058 | $ 2,031 |
Summary of Significant Accoun51
Summary of Significant Accounting Policies - AOCI and Concentrations of Credit Risk (Details) | 12 Months Ended | |||
Dec. 31, 2017USD ($)club | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Accounting Policies [Line Items] | ||||
Number of clubs | club | 165 | |||
Foreign currency translation adjustments, net of tax of $0 for the years ended in December 31, 2017, 2016 and 2015 | $ 42,000 | $ (176,000) | $ (165,000) | |
Foreign currency translation adjustment, tax | 0 | 0 | 0 | |
Cash and cash equivalents held at one financial institution | 19,932,000 | |||
Cash and cash equivalents | $ 30,321,000 | $ 45,596,000 | $ 76,217,000 | $ 93,452,000 |
Switzerland | ||||
Accounting Policies [Line Items] | ||||
Number of clubs | club | 3 |
Summary of Significant Accoun52
Summary of Significant Accounting Policies - Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Accounting Policies [Abstract] | |||||||||||
Net income | $ 20,990 | $ (13,276) | $ (410) | $ (2,935) | $ (259) | $ (5,506) | $ 20,733 | $ (6,925) | $ 4,369 | $ 8,043 | $ 21,158 |
Weighted average number of common share outstanding — basic | 26,703,577 | 25,568,371 | 24,630,898 | ||||||||
Effect of dilutive share-based awards (in shares) | 719,256 | 506,364 | 483,159 | ||||||||
Weighted average number of common shares outstanding — diluted | 27,422,833 | 26,074,735 | 25,114,057 | ||||||||
Earnings per share: | |||||||||||
Basic (in dollars per share) | $ 0.78 | $ (0.50) | $ (0.02) | $ (0.11) | $ (0.01) | $ (0.21) | $ 0.81 | $ (0.28) | $ 0.16 | $ 0.31 | $ 0.86 |
Diluted (in dollars per share) | $ 0.76 | $ (0.50) | $ (0.02) | $ (0.11) | $ (0.01) | $ (0.21) | $ 0.79 | $ (0.28) | $ 0.16 | $ 0.31 | $ 0.84 |
Antidilutive securities excluded (in shares) | 28,681 | 810,571 | 276,846 |
Fixed Assets - Summary of Fixed
Fixed Assets - Summary of Fixed Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Abstract] | ||
Leasehold improvements | $ 489,738 | $ 495,515 |
Club equipment | 103,998 | 107,905 |
Furniture, fixtures and computer equipment | 56,203 | 71,222 |
Computer software | 19,048 | 25,813 |
Construction in progress | 1,237 | 3,617 |
Building and improvements | 9,575 | 0 |
Land | 2,675 | 0 |
Fixed assets, gross | 682,474 | 704,072 |
Less: Accumulated depreciation and amortization | (530,976) | (533,492) |
Fixed assets, net | 151,498 | $ 170,580 |
Club equipment under capital lease | $ 505 |
Fixed Assets (Details)
Fixed Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |||||
Depreciation and leasehold amortization expense | $ 40,299 | $ 43,691 | $ 47,664 | ||
Impairment of fixed assets | $ 6,497 | $ 742 | $ 6,497 | $ 742 | $ 14,571 |
Goodwill and Intangible Asset55
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
May 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Goodwill [Line Items] | ||||
Acquired goodwill | $ 5,158 | |||
Impairment of goodwill | 0 | $ 0 | $ 31,558 | |
Amortization of intangible assets | 550 | $ 36 | $ 223 | |
New York | ||||
Goodwill [Line Items] | ||||
Acquired goodwill | $ 5,158 | |||
New York and Boston | ||||
Goodwill [Line Items] | ||||
Impairment of goodwill | $ 31,558 |
Goodwill and Intangible Asset56
Goodwill and Intangible Assets - Changes in Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill [Line Items] | ||
Goodwill, net of accumulated amortization | $ 52,481 | |
Changes due to foreign currency exchange rate fluctuations | $ 51 | (167) |
Less: accumulated impairment of goodwill | (51,306) | |
Goodwill [Roll Forward] | ||
Goodwill | 1,008 | |
Acquired goodwill | 5,158 | |
Changes due to foreign currency exchange rate fluctuations | 51 | (167) |
Goodwill | 6,217 | 1,008 |
New York | ||
Goodwill [Line Items] | ||
Goodwill, net of accumulated amortization | 31,549 | |
Changes due to foreign currency exchange rate fluctuations | 0 | 0 |
Less: accumulated impairment of goodwill | (31,549) | |
Goodwill [Roll Forward] | ||
Goodwill | 0 | |
Acquired goodwill | 5,158 | |
Changes due to foreign currency exchange rate fluctuations | 0 | 0 |
Goodwill | 5,158 | 0 |
Boston | ||
Goodwill [Line Items] | ||
Goodwill, net of accumulated amortization | 15,775 | |
Changes due to foreign currency exchange rate fluctuations | 0 | 0 |
Less: accumulated impairment of goodwill | (15,775) | |
Goodwill [Roll Forward] | ||
Goodwill | 0 | |
Acquired goodwill | 0 | |
Changes due to foreign currency exchange rate fluctuations | 0 | 0 |
Goodwill | 0 | 0 |
Switzerland | ||
Goodwill [Line Items] | ||
Goodwill, net of accumulated amortization | 1,175 | |
Changes due to foreign currency exchange rate fluctuations | 51 | (167) |
Less: accumulated impairment of goodwill | 0 | |
Goodwill [Roll Forward] | ||
Goodwill | 1,008 | |
Acquired goodwill | 0 | |
Changes due to foreign currency exchange rate fluctuations | 51 | (167) |
Goodwill | 1,059 | 1,008 |
Outlier Clubs | ||
Goodwill [Line Items] | ||
Goodwill, net of accumulated amortization | 3,982 | |
Changes due to foreign currency exchange rate fluctuations | 0 | 0 |
Less: accumulated impairment of goodwill | (3,982) | |
Goodwill [Roll Forward] | ||
Goodwill | 0 | |
Acquired goodwill | 0 | |
Changes due to foreign currency exchange rate fluctuations | 0 | 0 |
Goodwill | $ 0 | $ 0 |
Goodwill and Intangible Asset57
Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 16,894 | $ 11,634 |
Accumulated Amortization | (11,760) | (11,499) |
Net Intangibles | 5,134 | 135 |
Membership lists | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 12,744 | 11,344 |
Accumulated Amortization | (11,577) | (11,344) |
Net Intangibles | 1,167 | 0 |
Favorable lease commitments | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 2,350 | 0 |
Accumulated Amortization | (136) | 0 |
Net Intangibles | 2,214 | 0 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 900 | 40 |
Accumulated Amortization | (47) | (9) |
Net Intangibles | 853 | 31 |
Non-compete agreement | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 900 | 0 |
Accumulated Amortization | 0 | 0 |
Net Intangibles | 900 | 0 |
Management contracts | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 0 | 250 |
Accumulated Amortization | 0 | (146) |
Net Intangibles | $ 0 | $ 104 |
Goodwill and Intangible Asset58
Goodwill and Intangible Assets - Schedule of Aggregate Amortization Expense (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | ||
2,018 | $ 1,377 | |
2,019 | 1,251 | |
2,020 | 731 | |
2,021 | 731 | |
2,022 | 506 | |
2023 and thereafter | 538 | |
Net Intangibles | $ 5,134 | $ 135 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) $ in Thousands | 1 Months Ended | 4 Months Ended | 12 Months Ended | |||||
Jan. 31, 2018USD ($) | Dec. 31, 2017USD ($)club | Nov. 30, 2017USD ($) | Sep. 30, 2017USD ($)club | Dec. 31, 2017USD ($)club | Dec. 31, 2017USD ($)club | Dec. 31, 2016 | Dec. 31, 2015 | |
Business Acquisition [Line Items] | ||||||||
Number of clubs | club | 165 | 165 | 165 | |||||
Regular Member | ||||||||
Business Acquisition [Line Items] | ||||||||
Average member life | 26 months | 26 months | 25 months | 22 months | ||||
New York | ||||||||
Business Acquisition [Line Items] | ||||||||
Number of clubs | club | 119 | 119 | 119 | |||||
Lucille Roberts Health Clubs | New York | ||||||||
Business Acquisition [Line Items] | ||||||||
Number of clubs | club | 16 | 16 | 16 | 16 | ||||
Lucille Roberts Health Clubs | ||||||||
Business Acquisition [Line Items] | ||||||||
Consideration transferred | $ 9,450 | |||||||
Transaction costs | $ 285 | $ 285 | $ 285 | |||||
Revenue of acquiree since acquisition date | 3,937 | |||||||
Net loss of acquiree since acquisition date | (778) | |||||||
Lucille Roberts Health Clubs | Trade names | ||||||||
Business Acquisition [Line Items] | ||||||||
Weighted average useful life of acquired intangible assets | 5 years | |||||||
Lucille Roberts Health Clubs | Favorable lease commitments | ||||||||
Business Acquisition [Line Items] | ||||||||
Weighted average useful life of acquired intangible assets | 6 years 3 months 18 days | |||||||
Building, Land, And Single Health Club | ||||||||
Business Acquisition [Line Items] | ||||||||
Consideration transferred | $ 12,600 | |||||||
Land acquired | 2,675 | |||||||
Buildings acquired | 9,675 | |||||||
TMPL Sports Clubs | ||||||||
Business Acquisition [Line Items] | ||||||||
Consideration transferred | 5,925 | |||||||
Transaction costs | $ 61 | 61 | 61 | |||||
TMPL Sports Clubs | Trade names | ||||||||
Business Acquisition [Line Items] | ||||||||
Weighted average useful life of acquired intangible assets | 15 years | |||||||
TMPL Sports Clubs | Non-compete agreement | ||||||||
Business Acquisition [Line Items] | ||||||||
Weighted average useful life of acquired intangible assets | 5 years | |||||||
Existing Club In Boston Metropolitan Region | Prepaid Expenses and Other Current Assets | ||||||||
Business Acquisition [Line Items] | ||||||||
Escrow deposit | $ 2,500 | 250 | $ 2,500 | $ 2,500 | ||||
Existing Club In Florida Region | ||||||||
Business Acquisition [Line Items] | ||||||||
Escrow deposit | $ 50 | |||||||
Existing Club In Florida Region | Subsequent Event | ||||||||
Business Acquisition [Line Items] | ||||||||
Payments to acquire businesses | $ 3,969 |
Acquisitions - Schedule of Net
Acquisitions - Schedule of Net Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Business Acquisition [Line Items] | |||
Goodwill | $ 6,217 | $ 1,008 | |
Lucille Roberts Health Clubs | |||
Business Acquisition [Line Items] | |||
Fixed assets | $ 1,024 | ||
Goodwill | 4,793 | ||
Deferred revenue | (817) | ||
Total allocation of purchase price | 9,450 | ||
TMPL Sports Clubs | |||
Business Acquisition [Line Items] | |||
Fixed assets | 5,195 | ||
Goodwill | 365 | ||
Deferred revenue | (500) | ||
Capital lease liability | (160) | ||
Other liabilities | (75) | ||
Total allocation of purchase price | 5,925 | ||
Membership lists | Lucille Roberts Health Clubs | |||
Business Acquisition [Line Items] | |||
Definite lived intangible assets | 1,400 | ||
Non-compete agreement | TMPL Sports Clubs | |||
Business Acquisition [Line Items] | |||
Definite lived intangible assets | 900 | ||
Trade names | Lucille Roberts Health Clubs | |||
Business Acquisition [Line Items] | |||
Definite lived intangible assets | 700 | ||
Trade names | TMPL Sports Clubs | |||
Business Acquisition [Line Items] | |||
Definite lived intangible assets | $ 200 | ||
Favorable lease commitments | Lucille Roberts Health Clubs | |||
Business Acquisition [Line Items] | |||
Definite lived intangible assets | $ 2,350 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Payables and Accruals [Abstract] | ||
Accrued payroll and related | $ 5,888 | $ 6,817 |
Accrued occupancy costs | 10,009 | 8,594 |
Accrued insurance claims | 2,282 | 2,786 |
Accrued other | 6,490 | 7,710 |
Accrued Liabilities, Current | $ 24,669 | $ 25,907 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-Term Debt (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | Nov. 15, 2013 |
Debt Instrument [Line Items] | |||
Less: Current portion due within one year | $ (2,082,000) | $ (2,082,000) | |
Long-term portion | 193,947,000 | 194,743,000 | |
Secured Debt | 2013 Term Loan Facility Maturing November 15, 2020 | |||
Debt Instrument [Line Items] | |||
2013 Term Loan Facility | 199,918,000 | 202,000,000 | $ 325,000,000 |
Less: Unamortized discount | (2,912,000) | (3,851,000) | $ (1,625,000) |
Less: Deferred financing costs | (977,000) | (1,324,000) | |
Less: Current portion due within one year | (2,082,000) | (2,082,000) | |
Long-term portion | $ 193,947,000 | $ 194,743,000 |
Long-Term Debt - Maturity Table
Long-Term Debt - Maturity Table (Details) - Secured Debt - 2013 Term Loan Facility Maturing November 15, 2020 - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | Nov. 15, 2013 |
Long-term Debt, Fiscal Year Maturity [Abstract] | |||
2,018 | $ 2,082,000 | ||
2,019 | 2,082,000 | ||
2,020 | 195,754,000 | ||
2,021 | 0 | ||
2,022 | 0 | ||
2023 and thereafter | 0 | ||
2013 Term Loan Facility | $ 199,918,000 | $ 202,000,000 | $ 325,000,000 |
Long-Term Debt - 2013 Senior Cr
Long-Term Debt - 2013 Senior Credit Facility (Details) | Nov. 15, 2013USD ($) | Oct. 31, 2017USD ($) | May 31, 2017USD ($) | Dec. 31, 2015USD ($) | Jun. 30, 2016USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | May 06, 2016USD ($) | Apr. 21, 2016USD ($) |
Debt And Credit Facility [Line Items] | ||||||||||
Cash | $ 17,556,000 | |||||||||
Repurchase amount | $ 71,152,000 | |||||||||
Gain (loss) on extinguishment of debt | $ 38,497,000 | 0 | $ 37,893,000 | $ 17,911,000 | ||||||
Write-off of unamortized debt issuance cost | $ 3,005,000 | |||||||||
Gain on extinguishment of debt, tax effect | 13,451,000 | |||||||||
(Benefit) provision for corporate income taxes | $ (9,686,000) | 9,771,000 | (14,351,000) | |||||||
Debt face amount | $ 5,000,000 | |||||||||
Stated interest rate | 9.55% | |||||||||
Periodic payment on principal, percentage | 1.00% | |||||||||
Periodic payment on principal | $ 50,000 | |||||||||
Dividends | $ 35,000,000 | |||||||||
Line of Credit | 2013 Senior Credit Facility | ||||||||||
Debt And Credit Facility [Line Items] | ||||||||||
Line of credit maximum borrowing capacity | $ 370,000,000 | |||||||||
Covenant compliance, maximum percentage available on line of credit due to exceeded maximum leverage ratio | 25.00% | |||||||||
Threshold from sale of assets used towards mandatory prepayments | $ 30,000,000 | |||||||||
Line of Credit | 2013 Senior Credit Facility | Leverage Ratio, Greater Than 2.50 | ||||||||||
Debt And Credit Facility [Line Items] | ||||||||||
Covenant compliance, maximum leverage ratio | 2.50 | |||||||||
Excess cash flow repayment percentage | 50.00% | |||||||||
Line of Credit | 2013 Senior Credit Facility | Leverage Ratio, Greater than 2.00 but Less than 2.50 | ||||||||||
Debt And Credit Facility [Line Items] | ||||||||||
Covenant compliance, maximum leverage ratio | 2 | |||||||||
Excess cash flow repayment percentage | 25.00% | |||||||||
Line of Credit | 2013 Senior Credit Facility | Leverage Ratio, Less Than or Equal to 2.00 | ||||||||||
Debt And Credit Facility [Line Items] | ||||||||||
Excess cash flow repayment percentage | 0.00% | |||||||||
Line of Credit | 2013 Senior Credit Facility | Base Rate | ||||||||||
Debt And Credit Facility [Line Items] | ||||||||||
Debt basis spread on variable rate (as percent) | 2.50% | |||||||||
Line of Credit | 2013 Senior Credit Facility | LIBOR | ||||||||||
Debt And Credit Facility [Line Items] | ||||||||||
Debt basis spread on variable rate (as percent) | 3.50% | |||||||||
Secured Debt | 2013 Senior Credit Facility | ||||||||||
Debt And Credit Facility [Line Items] | ||||||||||
Debt unamortized discount | $ 4,356,000 | |||||||||
Deferred debt issuance costs | 5,119,000 | |||||||||
Secured Debt | 2013 Term Loan Facility Maturing November 15, 2020 | ||||||||||
Debt And Credit Facility [Line Items] | ||||||||||
2013 Term Loan Facility | 325,000,000 | $ 199,918,000 | 202,000,000 | |||||||
Proceeds from issuance of secured debt | $ 323,375,000 | |||||||||
Debt instrument, discount percentage | 0.50% | |||||||||
Debt unamortized discount | $ 1,625,000 | $ 2,912,000 | $ 3,851,000 | |||||||
Percent of amendment fee paid to consenting lenders | 0.25% | |||||||||
Repayment of term loan | $ 24,101,000 | |||||||||
Debt instrument, term after which excess cash flow is paid | 95 days | |||||||||
Long-term debt | $ 196,029,000 | |||||||||
Unamortized debt issuance costs | 977,000 | |||||||||
Secured Debt | 2013 Term Loan Facility Maturing November 15, 2020 | Base Rate | ||||||||||
Debt And Credit Facility [Line Items] | ||||||||||
Debt instrument, variable rate floor (as a percentage) | 2.00% | |||||||||
Secured Debt | 2013 Term Loan Facility Maturing November 15, 2020 | LIBOR | ||||||||||
Debt And Credit Facility [Line Items] | ||||||||||
Debt instrument, variable rate floor (as a percentage) | 1.00% | |||||||||
Revolving Credit Facility | 2013 Senior Credit Facility | ||||||||||
Debt And Credit Facility [Line Items] | ||||||||||
Repurchased face amount | 29,829,000 | 29,829,000 | $ 62,447,000 | $ 8,705,000 | ||||||
Repurchase amount | $ 10,947,000 | $ 10,947,000 | $ 25,978,000 | $ 3,787,000 | ||||||
Repurchase amount, percentage of face value | 36.70% | 36.70% | 41.60% | 43.50% | ||||||
Write-off of unamortized debt issuance cost | $ 249,000 | 545,000 | ||||||||
Write-off of debt discount | $ 707,000 | $ 1,561,000 | ||||||||
Revolving Credit Facility | 2013 Revolving Loan Facility Maturing November 15, 2018 | ||||||||||
Debt And Credit Facility [Line Items] | ||||||||||
Line of credit maximum borrowing capacity | $ 45,000,000 | |||||||||
Covenant compliance, maximum percentage available on line of credit due to exceeded maximum leverage ratio | 25.00% | |||||||||
Covenant compliance, maximum leverage ratio | 4.50 | |||||||||
Unused borrowing capacity based on leverage ratio | $ 11,250,000 | |||||||||
Unused borrowing capacity | 37,993,000 | |||||||||
Letter of Credit | 2013 Senior Credit Facility | ||||||||||
Debt And Credit Facility [Line Items] | ||||||||||
Line of credit maximum borrowing capacity | $ 5,500,000 | |||||||||
Letter of Credit | 2013 Revolving Loan Facility Maturing November 15, 2018 | ||||||||||
Debt And Credit Facility [Line Items] | ||||||||||
Letters of credit outstanding | $ 7,007,000 |
Long-Term Debt - Fair Value (De
Long-Term Debt - Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Secured Debt | Level 2 | 2013 Term Loan Facility Maturing November 15, 2020 | ||
Debt Instrument [Line Items] | ||
Fair market value of debt | $ 188,173 | $ 163,115 |
Long-Term Debt Long-Term Debt -
Long-Term Debt Long-Term Debt - Interest Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |||
Interest costs expensed | $ 12,657 | $ 13,904 | $ 17,914 |
Interest costs capitalized | 0 | 28 | 72 |
Total interest expense and amounts capitalized | $ 12,657 | $ 13,932 | 17,986 |
Interest expense, building financing arrangement | $ 2,666 |
Sale of Building (Details)
Sale of Building (Details) ft² in Thousands, $ in Thousands | Dec. 23, 2015USD ($) | Sep. 12, 2014USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2017USD ($)ft² | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Leases [Abstract] | ||||||
Gross proceeds from sale of building | $ 85,650 | |||||
Area of new club lease (in sq ft) | ft² | 24 | |||||
Proceeds from building financing arrangement | $ 3,500 | $ 500 | $ 0 | $ 0 | $ 4,000 | |
Gain on sale of building | $ 0 | $ 0 | $ 77,146 |
Derivative Financial Instrume68
Derivative Financial Instruments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Nov. 15, 2013 | |
Derivative Instrument [Line Items] | |||
Interest rate swap liability | $ 184 | $ 1,511 | |
Offset to accumulated other comprehensive income | 104 | 854 | |
November 2013 Agreement | |||
Derivative Instrument [Line Items] | |||
Notional amount of interest rate swap | $ 160,000 | ||
Derivative, fixed interest rate (as a percent) | 0.884% | ||
Derivative, basis spread on variable rate (as a percent) | 3.50% | ||
Derivative, floor interest rate | 1.00% | ||
Level 2 | |||
Derivative Instrument [Line Items] | |||
Interest rate swap liability | $ 184 | $ 1,511 |
Related Party (Details)
Related Party (Details) - General Counsel - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | May 01, 2017 | |
Related Party Transaction [Line Items] | ||
Legal fees | $ 183 | |
Firm Retainer | ||
Related Party Transaction [Line Items] | ||
Monthly retainer fee payable | $ 21 |
Leases - Additional Information
Leases - Additional Information (Details) | 12 Months Ended | ||
Dec. 31, 2017USD ($)lease | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Leases [Abstract] | |||
Letters of credit outstanding, amount related to leases | $ 5,492,000 | ||
Leases expiring with no renewal options, next 5 years | lease | 25 | ||
Leases expiring with no renewal options, current year | lease | 8 | ||
Leases expiring with renewal options, next 5 years | lease | 61 | ||
Rent expense excluding deferred lease liabilities | $ 126,318,000 | $ 124,952,000 | $ 124,920,000 |
Non-base rent expense | 24,881,000 | 25,384,000 | 24,767,000 |
Rent expense | 124,997,000 | 124,333,000 | 123,872,000 |
Rental income | 2,558,000 | 2,338,000 | 4,669,000 |
Rental income above base rent | $ 0 | 0 | $ 0 |
Rental income from owned property | $ 1,926,000 |
Leases Leases - Future Minimum
Leases Leases - Future Minimum Lease Payments (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Minimum Annual Rental | |
2,018 | $ 96,518 |
2,019 | 91,208 |
2,020 | 85,129 |
2,021 | 75,016 |
2,022 | 62,933 |
2023 and thereafter | 247,911 |
Capital leases, future minimum payments due in 2018 | 129 |
Capital leases, future minimum payments due in 2019 | $ 31 |
Leases - Future Lease Receivabl
Leases - Future Lease Receivables (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Operating Leases, Future Minimum Payments Receivable [Abstract] | |
2,018 | $ 1,367 |
2,019 | 1,021 |
2,020 | 761 |
2,021 | 537 |
2,021 | 99 |
2023 and thereafter | $ 0 |
Stockholders' (Deficit) Equit73
Stockholders' (Deficit) Equity - Additional Information (Details) - USD ($) | Dec. 04, 2017 | Mar. 08, 2017 | Feb. 01, 2017 | May 31, 2017 | Sep. 30, 2016 | May 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Apr. 30, 2016 | Dec. 31, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Capital stock shares authorized | 105,000,000 | ||||||||||
Preferred stock shares authorized | 5,000,000 | ||||||||||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |||||||||
Common stock shares authorized | 100,000,000 | ||||||||||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |||||||||
Options exercisable (in shares) | 61,013 | ||||||||||
Options outstanding, number of options (in shares) | 61,013 | ||||||||||
Employee Stock Option | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Award vesting period | 1 year 7 months 1 day | ||||||||||
Options exercisable (in shares) | 61,013 | 150,207 | 544,869 | ||||||||
Options outstanding, number of options (in shares) | 61,013 | 187,707 | 1,394,869 | 1,030,521 | |||||||
Stock-based compensation expense | $ 15,000 | $ 156,000 | $ 99,000 | ||||||||
Tax benefit | $ 5,000 | 67,000 | $ 38,000 | ||||||||
Share price (in dollars per share) | $ 5.55 | ||||||||||
Options outstanding, intrinsic value | $ 209,000 | ||||||||||
Vested and exercisable, weighted-average remaining contractual term | 1 year 7 months 1 day | ||||||||||
Vested and exercisable, aggregate intrinsic value | $ 209,000 | ||||||||||
Intrinsic value of options exercised | 111,000 | ||||||||||
Granted (in shares) | 850,000 | ||||||||||
Grant date fair value | $ 2,279,000 | ||||||||||
Weighted average grant date fair value (in dollars per share) | $ 1.10 | ||||||||||
Expected Term (Years) | 3 years 11 months 25 days | ||||||||||
Unrecognized compensation cost related to stock options | 0 | ||||||||||
Restricted Stock | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Stock-based compensation expense | 1,478,000 | 1,155,000 | $ 842,000 | ||||||||
Tax benefit | 452,000 | 496,000 | 321,000 | ||||||||
Grant date fair value | $ 2,809,000 | $ 104,000 | 2,913,000 | $ 4,245,000 | $ 2,166,000 | ||||||
Unrecognized compensation cost related to stock options | $ 5,128,000 | ||||||||||
Award of non-qualified options to purchase restricted stock, amount (in shares) | 480,200 | 26,000 | 506,200 | 1,711,000 | 507,000 | ||||||
Unrecognized compensation cost related to restricted stock, recognition period | 2 years 4 months 21 days | ||||||||||
Common Stock Grants | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Stock-based compensation expense | $ 368,000 | ||||||||||
Granted (in shares) | 52,000 | 56,940 | 206,750 | 67,609 | |||||||
Grant date fair value | $ 246,000 | $ 445,000 | |||||||||
Shares issued, price per share | $ 4 | $ 2.81 | |||||||||
Minimum | Employee Stock Option | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Award vesting period | 3 years | ||||||||||
Stock option term until expiration | 5 years | ||||||||||
Minimum | Restricted Stock | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Award vesting period | 3 years | ||||||||||
Maximum | Employee Stock Option | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Award vesting period | 4 years | ||||||||||
Stock option term until expiration | 10 years | ||||||||||
Maximum | Restricted Stock | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Award vesting period | 4 years | ||||||||||
Accounting Standards Update 2016-09 | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Adjustment to share-based compensation expense | $ 234,000 | ||||||||||
2006 Plan | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Number of shares authorized to be issued under the stock incentive plan | 6,500,000 | 4,500,000 | 3,500,000 | ||||||||
Number of additional shares authorized to be issued under the stock incentive plan | 2,000,000 | 1,000,000 | |||||||||
Number of shares available to be issued under the stock incentive plan | 2,072,967 | ||||||||||
2006 Plan | Employee Stock Option | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Options outstanding, number of options (in shares) | 61,013 | ||||||||||
Granted (in shares) | 0 | 0 | 850,000 | ||||||||
Grant date fair value | $ 2,279,000 | ||||||||||
Non-Plan | Chief Operating Officer | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Non-cash severance expense | $ 250,000 |
Stockholders' (Deficit) Equit74
Stockholders' (Deficit) Equity - Stock Option Activity (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Common | |||
Options Outstanding, Ending Balance (in shares) | 61,013 | ||
Weighted Average Exercise Price | |||
Ending Balance, Weighted Average Exercise Price (in dollars per share) | $ 2.19 | ||
Employee Stock Option | |||
Common | |||
Options Outstanding, Beginning Balance (in shares) | 187,707 | 1,394,869 | 1,030,521 |
Granted (in shares) | 850,000 | ||
Exercised (in shares) | (44,114) | (226,011) | (171,718) |
Canceled (in shares) | (57,580) | (533,484) | (313,934) |
Forfeited (in shares) | (25,000) | (447,667) | |
Options Outstanding, Ending Balance (in shares) | 61,013 | 187,707 | 1,394,869 |
Weighted Average Exercise Price | |||
Beginning Balance, Weighted Average Exercise Price (in dollars per share) | $ 5.78 | $ 3.40 | $ 5.29 |
Granted, Weighted Average Exercise Price (in dollars per share) | 2.68 | ||
Exercised, Weighted Average Exercise Price (in dollars per share) | 2.50 | 1.41 | 1.68 |
Canceled, Weighted Average Exercise Price (in dollars per share) | 13.32 | 3.99 | 8.61 |
Forfeited, Weighted Average Exercise Price (in dollars per share) | 2.95 | 2.71 | |
Ending Balance, Weighted Average Exercise Price (in dollars per share) | $ 2.19 | $ 5.78 | $ 3.40 |
Stockholders' (Deficit) Equit75
Stockholders' (Deficit) Equity - Stock Option Information (Details) | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options outstanding, number of options (in shares) | shares | 61,013 |
Options Outstanding, Weighted-Average Remaining Contractual Life | 19 months |
Options Outstanding, Weighted-Average Exercise Price (in dollars per share) | $ / shares | $ 2.19 |
Options Exercisable, Number of Options (in shares) | shares | 61,013 |
Options Exercisable, Weighted Average Exercise Price (in dollars per share) | $ / shares | $ 2.19 |
2008 grants | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options outstanding, number of options (in shares) | shares | 26,208 |
Options Outstanding, Weighted-Average Remaining Contractual Life | 11 months |
Options Outstanding, Weighted-Average Exercise Price (in dollars per share) | $ / shares | $ 2.70 |
Options Exercisable, Number of Options (in shares) | shares | 26,208 |
Options Exercisable, Weighted Average Exercise Price (in dollars per share) | $ / shares | $ 2.70 |
2009 grants | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options outstanding, number of options (in shares) | shares | 23,490 |
Options Outstanding, Weighted-Average Remaining Contractual Life | 23 months |
Options Outstanding, Weighted-Average Exercise Price (in dollars per share) | $ / shares | $ 1.74 |
Options Exercisable, Number of Options (in shares) | shares | 23,490 |
Options Exercisable, Weighted Average Exercise Price (in dollars per share) | $ / shares | $ 1.74 |
2010 grants | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options outstanding, number of options (in shares) | shares | 11,315 |
Options Outstanding, Weighted-Average Remaining Contractual Life | 30 months |
Options Outstanding, Weighted-Average Exercise Price (in dollars per share) | $ / shares | $ 1.91 |
Options Exercisable, Number of Options (in shares) | shares | 11,315 |
Options Exercisable, Weighted Average Exercise Price (in dollars per share) | $ / shares | $ 1.91 |
Stockholders' (Deficit) Equit76
Stockholders' (Deficit) Equity - Stock Option Grants (Details) - Employee Stock Option $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($)$ / sharesshares | |
Class of Stock [Line Items] | |
Number of Shares | shares | 850,000 |
Grant Date Fair Value | $ | $ 2,279 |
August 19, 2015 | |
Class of Stock [Line Items] | |
Number of Shares | shares | 700,000 |
Exercise Price (in dollars per share) | $ / shares | $ 2.61 |
Grant Date Fair Value | $ | $ 1,827 |
October 12, 2015 | |
Class of Stock [Line Items] | |
Number of Shares | shares | 50,000 |
Exercise Price (in dollars per share) | $ / shares | $ 2.95 |
Grant Date Fair Value | $ | $ 148 |
October 19, 2015 | |
Class of Stock [Line Items] | |
Number of Shares | shares | 100,000 |
Exercise Price (in dollars per share) | $ / shares | $ 3.04 |
Grant Date Fair Value | $ | $ 304 |
Stockholders' (Deficit) Equit77
Stockholders' (Deficit) Equity - Black-Scholes Option Pricing Model (Details) | 12 Months Ended |
Dec. 31, 2015 | |
Stockholders' Equity Note [Abstract] | |
Risk-Free Interest Rate | 1.10% |
Expected Dividend Yield | 0.00% |
Expected Volatility | 52.03% |
Stockholders' (Deficit) Equit78
Stockholders' (Deficit) Equity - Restricted Stock Grants (Details) - Restricted Stock - USD ($) $ / shares in Units, $ in Thousands | Dec. 04, 2017 | Mar. 08, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of Shares | 480,200 | 26,000 | 506,200 | 1,711,000 | 507,000 |
Share Price (in dollars per share) | $ 5.85 | $ 4 | |||
Grant Date Fair Value | $ 2,809 | $ 104 | $ 2,913 | $ 4,245 | $ 2,166 |
Stockholders' (Deficit) Equit79
Stockholders' (Deficit) Equity - Restricted Stock Activity (Details) - Restricted Stock - $ / shares | Dec. 04, 2017 | Mar. 08, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Number of Shares | |||||
Beginning balance, Number of Shares | 1,611,375 | 524,870 | 401,534 | ||
Granted, Number of Shares | 480,200 | 26,000 | 506,200 | 1,711,000 | 507,000 |
Vested, Number of Shares | (534,968) | (222,495) | (133,874) | ||
Forfeited, Number of Shares | (70,666) | (402,000) | (249,790) | ||
Ending balance, Number of Shares | 1,511,941 | 1,611,375 | 524,870 | ||
Weighted Average Grant Date Fair Value | |||||
Beginning balance, Weighted Average Grant Date Fair Value (in dollars per share) | $ 2.80 | $ 5.06 | $ 9.38 | ||
Granted, Weighted Average Grant Date Fair Value (in dollars per share) | 5.75 | 2.48 | 4.27 | ||
Vested, Weighted Average Grant Date Fair Value (in dollars per share) | 2.93 | 4.59 | 9.20 | ||
Forfeited, Weighted Average Grant Date Fair Value (in dollars per share) | 3.06 | 3.39 | 8.19 | ||
Ending balance, Weighted Average Grant Date Fair Value (in dollars per share) | $ 3.73 | $ 2.80 | $ 5.06 |
Revenues (Details)
Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Other Income and Expenses [Abstract] | |||||||||||
Membership dues | $ 307,966 | $ 296,795 | $ 309,096 | ||||||||
Initiation and processing fees | 2,268 | 7,636 | 13,644 | ||||||||
Personal training revenue | 69,735 | 66,487 | 73,191 | ||||||||
Other ancillary club revenue | 17,197 | 19,642 | 22,138 | ||||||||
Total club revenue | 397,166 | 390,560 | 418,069 | ||||||||
Fees and other revenue | 5,876 | 6,361 | 6,254 | ||||||||
Total revenue | $ 105,328 | $ 98,641 | $ 99,993 | $ 99,080 | $ 96,107 | $ 98,534 | $ 100,935 | $ 101,345 | $ 403,042 | $ 396,921 | $ 424,323 |
Corporate Income Taxes - Provis
Corporate Income Taxes - Provision for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Current | |||
Federal | $ (9,599) | $ 9,346 | $ (3,100) |
Foreign | (63) | (63) | 67 |
State and Local | (56) | 488 | 197 |
Total | (9,718) | 9,771 | (2,836) |
Deferred | |||
Federal | 12 | 0 | (8,262) |
Foreign | 0 | 0 | 0 |
State and Local | 20 | 0 | (3,253) |
Total | 32 | 0 | (11,515) |
Federal income tax expense (benefit) | (9,587) | 9,346 | (11,362) |
Foreign income tax expense (benefit) | (63) | (63) | 67 |
State and local income tax expense (benefit) | (36) | 488 | (3,056) |
Income tax expense (benefit) | $ (9,686) | $ 9,771 | $ (14,351) |
Corporate Income Taxes - Compon
Corporate Income Taxes - Components of Deferred Tax Assets, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets | ||
Basis differences in depreciation and amortization | $ 0 | $ 10,073 |
Deferred lease liabilities | 15,638 | 23,527 |
Deferred revenue | 4,590 | 8,247 |
Deferred compensation expense incurred in connection with stock options | 912 | 994 |
Federal and state net operating loss carry-forwards | 15,645 | 8,473 |
Accruals, reserves and other | 4,942 | 7,297 |
Deferred tax assets, gross | 41,727 | 58,611 |
Deferred tax liabilities | ||
Deferred costs | 1,740 | 803 |
Basis differences in depreciation and amortization | 1,311 | 0 |
Change in accounting method | 0 | 3,147 |
Undistributed foreign earnings and other | 0 | 529 |
Deferred tax liabilities, gross | 3,051 | 4,479 |
Gross deferred tax assets | 38,676 | 54,132 |
Valuation allowance | (38,769) | (54,193) |
Deferred tax liabilities, net | $ (93) | $ (61) |
Corporate Income Taxes - Additi
Corporate Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | Nov. 30, 2017 | Nov. 17, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Operating Loss Carryforwards [Line Items] | ||||||
Deferred tax liabilities, net | $ 93 | $ 61 | ||||
Valuation allowance | 38,769 | 54,193 | ||||
State tax net operating loss carry-forwards | 133,840 | |||||
Pre-tax earnings (loss) of foreign subsidiary | (262) | (264) | $ 277 | |||
Current tax provision (benefit) | (63) | (63) | $ 67 | |||
Deferred tax liability | $ 0 | $ 529 | ||||
Effective income tax rate reconciliation | 182.00% | 55.00% | (211.00%) | |||
Unrecognized tax benefits | $ 1,155 | $ 1,187 | ||||
Interest expense on unrecognized tax benefits | 81 | 81 | ||||
Total accruals for interest | 865 | 785 | ||||
Unrecognized tax benefits | $ 1,155 | $ 1,187 | $ 1,187 | $ 1,187 | ||
Tax Year 2006 Though 2009 | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Estimate of possible loss | $ 5,097 | |||||
Interest expense under examination | $ 2,419 | |||||
Tax Year 2010 Though 2014 | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Estimate of possible loss | $ 3,906 | |||||
Interest expense under examination | $ 757 |
Corporate Income Taxes - Reconc
Corporate Income Taxes - Reconciliation of Effective Income Tax Rate (Details) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Federal statutory tax rate | 35.00% | 35.00% | 35.00% |
State and local income taxes (net of federal tax benefit) | 1.00% | 2.00% | 11.00% |
Change in state effective income tax rate | 0.00% | 0.00% | 3.00% |
State tax (benefit) provision related to insurance premiums | 0.00% | 0.00% | (14.00%) |
Tax reserves | 0.00% | 0.00% | 1.00% |
Permanent differences in fines and penalties | (3.00%) | 0.00% | 2.00% |
Permanent difference in compensation | (2.00%) | (0.00%) | (0.00%) |
Effective income tax rate reconciliation before valuation allowance | 31.00% | 37.00% | 38.00% |
Valuation allowance | 151.00% | 18.00% | (249.00%) |
Effective income tax rate reconciliation | 182.00% | 55.00% | (211.00%) |
Corporate Income Taxes - Reco85
Corporate Income Taxes - Reconciliation of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reconciliation of unrecognized tax benefits excluding amounts pertaining to examined tax returns RollForward | |||
Beginning balance | $ 1,187 | $ 1,187 | $ 1,187 |
Gross decreases for tax positions taken in prior years | 0 | 0 | 0 |
Gross increases for tax positions taken in prior years | 0 | 0 | 0 |
Decreases relating to settlements with taxing authorities | 0 | 0 | 0 |
Reductions due to a lapse of applicable statute of limitations | (32) | 0 | 0 |
Ending balance | $ 1,155 | $ 1,187 | $ 1,187 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - Action Styled White Plains Realty Vs Town Sports International [Member] - USD ($) $ in Thousands | Jun. 05, 2013 | Aug. 29, 2011 |
Loss Contingencies [Line Items] | ||
Additional damages | $ 900 | |
Damages awarded | $ 1,045 |
Employee Benefit Plan (Details)
Employee Benefit Plan (Details) - USD ($) | Jan. 01, 2001 | Mar. 31, 2016 |
Retirement Benefits [Abstract] | ||
Employer matching contribution, percentage | 25.00% | |
Employer matching contribution maximum amount | $ 500 | |
Employer matching contribution | $ 204,000 |
Selected Quarterly Financial 88
Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2010 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||
Net revenue | $ 105,328 | $ 98,641 | $ 99,993 | $ 99,080 | $ 96,107 | $ 98,534 | $ 100,935 | $ 101,345 | $ 403,042 | $ 396,921 | $ 424,323 | |
Operating (loss) income | 9,806 | (6,269) | 3,518 | (118) | 1,425 | (2,624) | (1,462) | (3,722) | 6,937 | (6,383) | 7,114 | |
Net income | $ 20,990 | $ (13,276) | $ (410) | $ (2,935) | $ (259) | $ (5,506) | $ 20,733 | $ (6,925) | $ 4,369 | $ 8,043 | $ 21,158 | |
Earnings per share: | ||||||||||||
Basic (in dollars per share) | $ 0.78 | $ (0.50) | $ (0.02) | $ (0.11) | $ (0.01) | $ (0.21) | $ 0.81 | $ (0.28) | $ 0.16 | $ 0.31 | $ 0.86 | |
Diluted (in dollars per share) | $ 0.76 | $ (0.50) | $ (0.02) | $ (0.11) | $ (0.01) | $ (0.21) | $ 0.79 | $ (0.28) | $ 0.16 | $ 0.31 | $ 0.84 | |
Fixed asset impairment charge | $ 6,497 | $ 742 | $ 6,497 | $ 742 | $ 14,571 | |||||||
Personal training revenue recognized for unused and expired sessions | $ 3,557 | $ 2,697 | ||||||||||
Gain (loss) on extinguishment of debt | $ 38,497 | $ 0 | $ 37,893 | $ 17,911 | ||||||||
Repurchase amount | $ 71,152 |
Subsequent Events (Details)
Subsequent Events (Details) | 2 Months Ended |
Feb. 28, 2018shares | |
Subsequent Event | Management Stock Purchase Plan | Employee Stock Option | |
Subsequent Event [Line Items] | |
Number of shares purchased under the employee stock purchase plan | 0 |