July 15, 2019
Dorvin Lively
President and Chief Financial Officer
Planet Fitness, Inc.
4 Liberty Lane West
Hampton, New Hampshire 03848
Re: Planet Fitness, Inc.
Form 10-K for the Year Ended December 31, 2018
Form 10-Q for the Quarter Ended March 31, 2019
File No. 001-37534
Dear Mr. Lively:
We have reviewed your filing and have the following comments. In some of
our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by providing
the requested
information or advise us as soon as possible when you will respond. If you do
not believe our
comments apply to your facts and circumstances, please tell us why in your
response.
After reviewing your response to these comments, we may have additional
comments.
Form 10-K for the Year Ended December 31, 2018
General, page 4
1. We note your disclosure of system-wide sales throughout the 10-K. Since
system-wide
sales include sales by franchisees that are not your revenues and you did
not generate such
revenues, please provide disclosure that adequately defines system wide
sales and clearly
states this is an operating measure not in accordance with GAAP and these
sales are not
included in your financial statements. Your presentation should be
balanced with relevant
GAAP information. Form 10-Qs and 8-K earnings releases, as applicable,
should be
similarly revised.
Our industry, page 8
2. We note that according to the IHRSA, there are 60.9 million gym members
across the
U.S. We further note that that the IHRSA states there are over 38,500
clubs across across
the U.S., of which, Planet Fitness has 1,742 or 4.5%. Please explain why
your
Dorvin Lively
FirstName LastNameDorvin Lively
Planet Fitness, Inc.
Comapany NamePlanet Fitness, Inc.
July 15, 2019
July 15, 2019 Page 2
Page 2
FirstName LastName
membership represents 12.5 million members, or 20.5% of total gym
memberships in the
U.S. when your clubs represent only 4.5% of total clubs. Please
include your definition of
"member" in your response. Additionally, we note in your disclosure on
page 13
regarding your media partnerships, where you indicate that sponsoring
Dick Clark's
Rockin' Eve with Ryan Seacrest "has allowed [you] to showcase the
Planet Fitness brand
and [y]our judgement-free philosophy to over a billion TV viewers
annually." In this
regard, the viewership for this program appears to reach anywhere from
5 to 9 million
people according to our research. Please substantiate this claim and
revise your disclosure
as necessary.
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of
Operations
Non-GAAP Financial Measures, page 47
3. Please revise to provide a substantial discussion of how management
uses Royalty
Adjusted Four-Wall EBITDA and how such measure is useful to investors.
Refer to item
10(e)(1)(i)(C) and (D) of Regulation S-K. Your Form 10-Qs and 8-K
earnings releases
should be similarly revised.
Financial Statements
Notes to Consolidated Financial Statements
(2) Summary of significant accounting policies
(e) Revenue recognition - Equipment revenue, page 80
4. You disclose that you recognize revenue from equipment sales to
franchisees on a gross
basis. In this regard, please provide us with a comprehensive analysis
regarding how you
concluded you were the principal in the arrangements. Specifically
address how you
considered the definition of control and how you are directing any
third party equipment
providers. Please refer to ASC 606-10-55-36 through 40. In your
response, please tell us
the nature of decisions franchisees can make in terms of selecting
equipment, layouts, and
placement and contrast that to the decisions made by the company.
(10) Revenue recognition, page 93
5. We note your presentation of disaggregated revenue by reportable
segment and by
location on page 109. With respect to the disclosure requirements of
ASC 606-10-50-5,
please tell us how you considered the guidance in paragraphs ASC
606-10-55-89 through
55-91 in selecting the appropriate categories to use to disaggregate
revenue. In this
regard, we note from pages 78 to 80 that the timing of transfer of
goods or services to
customers occurs both at points in time and over time. In particular,
tell us if you
considered separately disclosing new member and billing fees earned
from your franchises
and if you considered disclosing corporate-owned store revenue in
further detail (i.e.,
membership fees, enrollment fees, annual fees, retail sales, etc.).
Dorvin Lively
Planet Fitness, Inc.
July 15, 2019
Page 3
Item 10. Directors, Executive Officers and Corporate Governance, page 114
6. In the section "Board Composition and Director Independence" on page
10 of your Form
DEF 14A filed on March 19, 2019, we note your statement that Dr.
Spinelli qualifies as an
independent director under the rules of the NYSE. We further note that
Dr. Spinelli is one
of the LLC Unit holders that is a party to the Tax Receivable
Agreement per Exhibit 10.2
incorporated by reference into your Form 10-K . Given that NYSE rules
state that a
director is independent to the extent such director has no material
relationship with the
listed company, please advise how being a party to the Tax Receivable
Agreement does
not impair Dr. Spinelli's independence with regards to serving on the
audit committee.
Form 10-Q for the Quarter Ended March 31, 2019
Financial Statements
Notes to Condensed Consolidated financial statements
(12) Commitments and contingencies, page 19
7. We note a May 9, 2019 news article in which your former CFO was
awarded over $5.36
million in a judgement against Planet Fitness. In this regard, please
tell us how you
considered the need to accrue or disclose a contingent liability in
accordance with ASC
450-20 and the basis for your conclusion.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Heather Clark at 202-551-3624 or Melissa Raminpour at
202-551-3379
with any questions.
FirstName LastNameDorvin Lively Sincerely,
Comapany NamePlanet Fitness, Inc.
Division of
Corporation Finance
July 15, 2019 Page 3 Office of
Transportation and Leisure
FirstName LastName