<PAGE>
United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
(x) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended November 30, 1997
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Transition period from ________________ to
__________________.
Commission file number 333-40907
TOWN SPORTS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-2749906
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification Number)
888 SEVENTH AVENUE
NEW YORK, NEW YORK 10106
TELEPHONE: (212) 246-6700
(Address, zip code, and telephone number, including
area code, of registrants principal executive office.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 and 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter periods that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No ___
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date. None.
<PAGE>
TOWN SPORTS INTERNATIONAL, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED NOVEMBER 30
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) PAGE
a) Condensed Consolidated Statements of Operations
for the three and six months ended November 30,
1996 and 1997. 1
b) Condensed Consolidated Balance Sheets
as of May 31, 1997 and November 30, 1997 2
c) Condensed Statements of Cash Flow
for the six months ended November 30, 1996 and 1997 3
d) Notes to Condensed Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURE 11
Exhibit Index 12
<PAGE>
TOWN SPORTS INTERNATIONAL, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS of OPERATIONS
For the three and six months ended November 30, 1996 and 1997
All figures $'000, except share data
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
NOVEMBER 30, NOVEMBER 30,
1996 1997 1996 1997
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues:
<S> <C> <C> <C> <C>
Club operations $12,911 $18,527 $24,668 $35,055
Management fees 311 357 638 723
Rental Income 207 218 427 457
Share of net income in affiliated companies 94 17 165 82
--------------- ---------------- --------------- ----------------
13,523 19,119 25,898 36,317
--------------- ---------------- --------------- ----------------
Operating expenses
Payroll and related 5,226 7,765 10,446 14,800
Compensation expense incurred in connection
with stock options 150 179 600 339
Club operating 4,533 6,037 8,184 11,267
General and administrative 882 1,175 1,905 2,239
Depreciation and amortization 1,058 1,772 1,947 3,361
--------------- ---------------- --------------- ----------------
11,849 16,928 23,082 32,006
--------------- ---------------- --------------- ----------------
Operating income 1,674 2,191 2,816 4,311
Interest expense 216 1,795 419 2,968
Interest income (26) (302) (45) (331)
--------------- ---------------- --------------- ----------------
Income before provision for
corporate income taxes 1,484 698 2,442 1,674
Provision for corporate income taxes 696 395 1,171 845
--------------- ---------------- --------------- ----------------
Income before extraordinary item 788 303 1,271 829
Extraordinary item, net of related
income tax of $647 - (730) - (730)
--------------- ---------------- --------------- ----------------
Net income (loss) 788 (427) 1,271 99
Accreted dividends on preferred stock (100) (612) (200) (1,150)
--------------- ---------------- --------------- ----------------
Net income (loss) to
common stockholders $688 ($1,039) $1,071 ($1,051)
=============== ================ =============== ================
Pro forma per common share data:
Net loss to common stockholders before
extraordinary item ($0.30) ($0.32)
Extraordinary item (0.72) (0.72)
================ ================
Net loss to common stockholders ($1.02) ($1.04)
================ ================
Weighted average number of common shares
outstanding 1,015,714 1,012,857
================ ================
</TABLE>
See accompanying notes to the condensed consolidated financial statements
1
<PAGE>
TOWN SPORTS INTERNATIONAL, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
May 31, 1997 and November 30, 1997
All figures $'000, except share data
<TABLE>
<CAPTION>
MAY 31, NOVEMBER 30,
ASSETS: 1997 1997
(Unaudited) (Unaudited)
Current assets:
<S> <C> <C>
Cash and cash equivalents $2,468 $43,056
Accounts receivable 228 203
Inventory 327 453
Prepaid expenses 448 499
Prepaid corporate income taxes 202 -
Advances to, and amounts due from, affiliated companies 129 139
------------------- --------------------
Total current assets 3,802 44,350
------------------- --------------------
Fixed assets, net of accumulated depreciation of $13,112 and
$14,900 at May 31 and November 30, 1997 34,214 40,724
Investments in, and amounts due from, affiliated companies 420 16
Intangible assets, net of accumulated amortization of $857 and
$1,046 at May 31 and November 30, 1997 4,425 7,546
Deferred tax asset 5,972 6,821
Deferred membership costs 3,530 4,190
Other assets 456 457
------------------- --------------------
Total assets $52,819 $104,104
=================== ====================
LIABILITIES and STOCKHOLDERS' DEFICIT:
Current liabilities:
Current portion of long-term debt and capital lease obligations $1,924 $2,731
Accounts payable and accrued expenses 5,715 6,140
Deferred revenue 4,599 4,864
------------------- --------------------
Total current liabilities 12,238 13,735
Long-term debt and capital lease obligations 39,147 86,680
Deferred lease liabilities 6,625 7,749
Deferred revenue 1,036 1,625
Other liabilities 724 704
------------------- --------------------
Total liabilities 59,770 110,493
------------------- --------------------
Stockholders' deficit:
Series A preferred stock, $1.00 par value; at
liquidation value; authorized 200,000
shares, 152,455 and 153,637 shares
issued and outstanding at May 31 and November 30, 1997 16,250 17,509
Series B preferred stock, $1.00 par value; at liquidation value;
authorized 200,000 shares, 3,857 shares issued and
outstanding at May 31 and November 30, 1997 144 153
Class A voting common stock, $0.001 par value; authorized
1,150,000 shares, 1,010,000 and 1,015,714 issued and
outstanding at May 31 and November 30, 1997 1 1
Class B non-voting common stock, $0.01 par value; authorized - -
500,000 shares, none issued and outstanding
Paid-in capital - 345
Accumulated deficit (23,346) (24,397)
------------------- --------------------
Total stockholders' deficit (6,951) (6,389)
------------------- --------------------
Total liabilities and stockholders' deficit $52,819 $104,104
=================== ====================
</TABLE>
See accompanying notes to the condensed consolidated financial statements
2
<PAGE>
TOWN SPORTS INTERNATIONAL, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS of CASH FLOW
For the six months ended
November 30, 1996 and 1997
All figures $'000, except
share data
Increase in Cash and Cash Equivalents
<TABLE>
<CAPTION>
Six months ended
November 30,
1996 1997
---- ----
(Unaudited) (Unaudited)
Cash flows from operating activities:
<S> <C> <C>
Net Income $1,271 $99
---------------- ----------------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 1,947 3,361
Noncash compensation expense 600 339
Noncash rental expense, net of noncash rental income 648 1,125
Share of net income in affiliated companies (155) (82)
Amortization of debt issuance costs - 190
Change in certain working capital components 2,030 1,687
Increase in deferred tax asset (346) (848)
Increase in deferred membership costs (348) (660)
Noncash element of extraordinary item - 1,377
Other - (4)
---------------- ----------------
Total adjustments 4,376 6,485
---------------- ----------------
Net cash provided by operating activities 5,647 6,584
---------------- ----------------
Cash flows from investing activities:
Capital expenditures, net of effects of acquired businesses (5,766) (4,376)
Acquisition of businesses (988) (4,258)
Intangible and other assets (839) -
---------------- ----------------
Net cash used in investing activities (7,593) (8,634)
---------------- ----------------
Cash Flows from Financing Activities:
Proceeds from borrowings, net of expenses of issuance 4,200 85,570
Repayments of borrowings (1,646) (43,056)
Issuance of stock 6 124
---------------- ----------------
Net cash provided by financing activities 2,560 42,638
---------------- ----------------
Net increase in cash and cash equivalents 614 40,588
Cash and cash equivalents at beginning of period 928 2,468
================ ================
Cash and cash equivalents at end of period $1,542 $43,056
================ ================
Summary of the change in certain working capital components, net of effects of
acquired businesses:
Decrease in accounts receivable $313 $25
Increase in inventory (28) (126)
Decrease (increase) in prepaid expenses 20 (51)
Increase in amounts due from affiliated companies 90 457
Increase in accounts payable and accrued expenses 616 326
Increase (decrease) in corporate income taxes (124) 202
Increase in deferred revenue 1,143 854
================ ================
Net changes in working capital $2,030 $1,687
================ ================
Supplemental disclosures of cash flow information:
Cash paid for interest $422 $3,174
================ ================
Cash paid for corporate income taxes $1,625 $455
================ ================
</TABLE>
See accompanying notes to the condensed consolidated financial statements
3
<PAGE>
TOWN SPORTS INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1997 AND NOVEMBER 30, 1997
All figures $'000, except share data
1. BASIS OF PRESENTATION
The condensed consolidated financial statements included herein have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission ("SEC"). The condensed consolidated financial
statements should be read in conjunction with the Company's May 31, 1997
consolidated financial statements and notes thereto, included on Form S-4 (SEC
File Number 333-40907). The year-end condensed balance sheet data was derived
from audited financial statements, but does not include all disclosures required
by generally accepted accounting principles. Certain information and footnote
disclosures which are normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to SEC rules and regulations. The Company believes that the
disclosures made are adequate to make the information presented not misleading.
The information reflects all adjustments which, in the opinion of Management,
are necessary for a fair presentation of the financial position and results of
operations for the interim periods set forth herein. All such adjustments are
of a normal and recurring nature. The results for the six-month period ended
November 30, 1997, are not necessarily indicative of the results for the entire
fiscal year ending May 31, 1998.
2. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
MAY 31, 1997 NOVEMBER 30, 1997
------------ -----------------
(Amount in thousands)
9 3/4% Senior Notes payable - $85,000
Term loan - Bank $30,000 -
Subordinated Note payable 7,384 -
Capital lease obligations 2,317 1,895
Notes payable -Seller finance 1,370 2,516
------- ------
41,071 89,411
Less, current portion due within
one year 1,924 2,731
------- -------
Long-term portion $39,147 $86,680
------- -------
------- -------
4
<PAGE>
As of November 30, 1997, the Company has a line of credit with its principal
bank for direct borrowings and letters of credit of up to $15.0 million ("the
New Credit Facility"). The line of credit carries interest at the Company's
option based upon the Eurodollar borrowing rate plus 2.50% or the bank's prime
rate plus 1.50%, as defined. There were no outstanding borrowings against this
line of credit as of November 30, 1997; however, there were outstanding letters
of credit of $1.3 million. The unutilized portion of the line of credit as of
November 30, 1997, was $13.7 million. This line of credit matures October 15,
2002.
On October 16, 1997, the Company issued $85,000 of senior notes. The senior
notes bear interest at an annual rate of 9 3/4%, payable semi-annually, due
October 2004. The senior notes are uncollateralized. Approximately $41,500 of
the proceeds from the issuance of the senior notes were used to repay existing
indebtedness.
3. ASSET ACQUISITIONS AND COMMITMENTS
During the quarter ended November 30, 1997, the Company acquired the assets of
two fitness clubs. The purchase prices totaled $2.4 million which included $2.1
million payable at closing and the issuance of notes payable totaling $0.3
million. In connection with these fitness clubs as well as certain expansions
in preexisting facilities, the Company entered into noncancelable operating
leases expiring on or before May 31, 2018. Future minimum rental payments
required under these leases total approximately $15.4 million.
4. SUBSEQUENT EVENTS
Through January 1998, the Company acquired the assets of five fitness clubs.
The purchase prices totaled $6.0 million which included $5.6 million payable at
closing and the issuance of notes payable of $0.4 million. In connection with
these fitness clubs, the Company entered into noncancelable operating leases
expiring on or before May 31, 2014. Future minimum rental payments required
under these leases total approximately $11.3 million.
5. EXTRAORDINARY ITEM
During the quarter ended November 30, 1997, the Company completed an $85.0
million Senior Note financing. As part of this financing, the existing term
loan, line of credit and subordinated note were repaid. Accordingly, previously
capitalized fees and expenses relating to the repaid debt of $0.7 million were
written off net of taxes of $0.7 million.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The following discussion should be read in conjunction with the condensed
consolidated financial statements and notes thereto appearing elsewhere in this
Form 10-Q.
In December 1996, the Company consummated a merger (the "Merger") pursuant to
which, among other things, Bruckmann, Rosser, Sherrill & Co., L.P. and certain
of its employees and affiliates (collectively "BRS") and certain institutional
investors and certain members of the Company management acquired the Company's
newly authorized Common Stock, Series A Preferred Stock and Series B Preferred
Stock. In addition, pursuant to the Merger, the Company instituted a new option
plan granting certain members of management options to acquire newly authorized
Series B Preferred Stock and Common Stock.
RESULTS OF OPERATION
THREE MONTHS ENDED NOVEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED NOVEMBER 30,
1996
REVENUES. Revenues increased $5.6 million, or 41% to $19.1 million for the
quarter ended November 30, 1997 from $13.5 million in the quarter ended November
30, 1996. This increase resulted primarily from the continued maturation of the
three clubs opened or acquired in fiscal 1996 (approximately $0.8 million, all
due to membership growth), the six clubs opened or acquired in fiscal 1997
(approximately $2.3 million, of which $2.0 million is due to membership growth),
and the five clubs acquired in fiscal 1998 (approximately $1.6 million, of which
$1.4 million is due to membership growth). In addition, revenues increased by
$0.9 million during the quarter ended November 30, 1997 at the Company's mature
clubs resulting from membership growth.
OPERATING EXPENSES. Operating expenses increased $5.1 million, or 43% to $16.9
million for the quarter ended November 30, 1997 from $11.8 million in the
quarter ended November 30, 1996 . The increase in total operating expenses
resulted primarily from increases in: payroll related expenses ($2.5 million);
club operating expenses ($1.5 million); and depreciation and amortization ($0.7
million). This increase was primarily attributable to the six clubs opened or
acquired in fiscal 1997 (approximately $1.6 million) and the five clubs acquired
in 1998 (approximately $2.1 million).
OPERATING INCOME. Operating income increased $0.5 million, or 31% to $2.2
million for the quarter ended November 30, 1997 from $1.7 million in the quarter
ended November 30, 1996. The increase in operating income during the quarter
ended November 30, 1997 is primarily attributable to revenue growth at the 14
clubs opened or acquired since fiscal 1995. Operating income as a percentage of
revenues decreased from 12% in the quarter
6
<PAGE>
ended November 30, 1996 to 11% in the quarter ended November 30, 1997. The
decrease in operating income as a percentage of revenues is attributable to the
increased proportion of immature clubs, which generally are less profitable
during the initial years of operation until membership reaches maturity.
INTEREST EXPENSE. Interest expense increased $1.6 million to $1.8 million for
the quarter ended November 30, 1997 from $0.2 million in the quarter ended
November 30, 1996. This is primarily as a result of the new debt financing
structure put in place due to the Merger during the 1997 fiscal year and the
refinancing of that debt by the $85.0 million Senior Note placement in October
1997.
INTEREST INCOME. Interest income increased $0.3 million to $0.3 million for the
quarter ended November 30, 1997 primarily because of increased interest income
from the investment of surplus cash subsequent to the October 1997 refinancing.
INCOME TAX PROVISION. Income tax provision decreased $0.3 million to $0.4
million for the quarter ended November 30, 1997, from $0.7 million in the
quarter ended November 30, 1996, primarily as a result of decreased income due
to increased interest expense offsetting increased operating income.
EXTRAORDINARY ITEM. During the quarter ended November 30, 1997, the Company
undertook an $85.0 million Senior Note financing. As part of this financing the
existing term loan, line of credit and subordinated note were repaid.
Accordingly previously capitalized fees and expenses relating to the repaid debt
of $0.7 million were written off net of tax effect of $0.7 million.
SIX MONTHS ENDED NOVEMBER 30, 1997 COMPARED TO SIX MONTHS ENDED NOVEMBER 30,
1996
REVENUES. Revenues increased $10.4 million, or 40% to $36.3 million for the six
months ended November 30, 1997 from $25.9 million in the six months ended
November 30, 1996. This increase resulted primarily from the continued
maturation of the three clubs opened or acquired in fiscal 1996 (approximately
$1.7 million, of which $1.5 was related to membership growth), the six clubs
opened or acquired in fiscal 1997 (approximately $4.6 million, of which $4.0 was
related to membership growth and $0.6 million was related to increases in
ancillary revenue), and the five clubs acquired in fiscal 1998 (approximately
$2.3 million of which $2.0 was related to membership growth and $0.3 million was
related to increases in ancillary revenue). In addition, revenues increased by
$1.8 million during the six months ended November 30, 1997 at the Company's
mature clubs, of which $1.6 million was due to membership growth.
OPERATING EXPENSES. Operating expenses increased $8.9 million, or 39% to $32.0
million for the six months ended November 30, 1997 from $23.1 million in the six
months ended November 30, 1996 . The increase in total operating expenses
resulted primarily from increases in: payroll related expenses ($4.4 million);
club operating expenses ($3.1 million); and depreciation and amortization ($1.4
million). This increase was primarily
7
<PAGE>
attributable to the six clubs opened or acquired in fiscal 1997 (approximately
$3.7 million) and the five clubs acquired in 1998 (approximately $3.5 million).
OPERATING INCOME. Operating income increased $1.5 million, or 53% to $4.3
million for the six months ended November 30, 1997 from $2.8 million in the six
months ended November 30, 1996. Operating income as a percentage of revenues
increased from 11% in the six months ended November 30, 1996 to 12% in the six
months ended November 30, 1997. The increase in operating income during the six
months ended November 30, 1997 is primarily attributable to revenue growth at
the nine clubs opened or acquired during fiscal 1996 and 1997.
INTEREST EXPENSE. Interest expense increased $2.6 million to $3.0 million for
the six months ended November 30, 1997 from $0.4 million in the six months ended
November 30, 1996. This is primarily as a result of the new debt financing
structure put in place due to the Merger during the 1997 fiscal year and the
refinancing of that debt by the $85.0 million Senior Note placement in October
1997.
INTEREST INCOME. Interest income increased $0.3 million to $0.3 million for the
six months ended November 30, 1997 primarily because of increased interest
income from the investment of surplus cash subsequent to the October 1997
refinancing.
INCOME TAX PROVISION. Income tax provision decreased $0.3 million to $0.8
million for the six months ended November 30, 1997, from $1.2 million in the six
months ended November 30, 1996, primarily as a result of decreased income due to
increased interest expense offsetting increased operating income.
EXTRAORDINARY ITEM. During the six months ended November 30, 1997, the Company
undertook an $85.0 million Senior Note financing. As part of this financing the
existing term loan, line of credit and subordinated note were repaid.
Accordingly previously capitalized fees and expenses relating to the repaid
debt of $0.7 million were written off net of tax effect of $0.7 million.
LIQUIDITY AND CAPITAL RESOURCES
On October 16, 1997, the Company completed an $85.0 million 9 3/4% Senior Note
placement, the "Offering," and put in place a $15.0 million credit facility, the
"New Credit Facility". After repayment of existing indebtedness of $41.5
million and payment of fees and expenses of $3.3 million, $40.2 million net
proceeds were received by the Company.
The Company believes that cash generated from operations, together with the net
proceeds of the Offering and amounts available under the New Credit Facility,
will be adequate to meet its currently envisaged capital expenditures, debt
service requirements, and working capital needs for the medium term. The
Company has approximately $13.7 million in availability under the New Credit
Facility. The New Credit Facility will mature on October 15, 2002 and has no
scheduled interim amortization requirements.
8
<PAGE>
The Company's future operating performance and ability to service or refinance
the Notes and to extend or refinance the New Credit Facility will be subject to
future economic conditions generally and to financial, business and other
factors, many of which are beyond the Company's control.
Net cash provided by operating activities in the six month period ended November
30, 1997 was $6.6 million as compared with $5.6 million provided by operating
activities in the six month period ended November 30, 1996. The increase
reflects the continued maturation of recently opened facilities as well as
improved performance at its mature clubs.
The Company invested $ 8.6 million in capital expenditures and asset
acquisitions during the six months ended November 30, 1997. The Company
estimates that it will invest a total of approximately $30.0 million in capital
expenditures during the balance of fiscal 1998 and during fiscal 1999 to open or
acquire additional clubs. It is estimated that a further $1.5 million will be
expended during the balance of fiscal 1998 and $3.5 million during fiscal 1999
to maintain, upgrade and expand certain existing clubs.
FORWARD-LOOKING STATEMENTS
Forward-looking statements in this Form 10-Q including, without limitation,
statements relating to the Company's plans, strategies, objectives,
expectations, intentions and adequacy of resources, are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements involve known and unknown risks, uncertainties,
and other factors which may cause the actual results, performance or
achievements of the Company to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. These factors include, among others, the following: general
economic and business conditions; competition; success of operating initiatives,
advertising and promotional efforts; existence of adverse publicity or
litigation; acceptance of new service offerings; changes in business strategy or
plans; quality of management; availability and terms of capital; business
abilities and judgment of personnel; changes in, or the failure to comply with,
government regulations; and other factors described in filings of the Company
with the Securities and Exchange Commission. The Company undertakes no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
9
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 2. CHANGES IN SECURITIES.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
(11) Statement of Computation of Per Share Data
(27) Financial Data Schedule (to be filed electronically).
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the third quarter of 1997.
10
<PAGE>
SIGNATURE
Pursuant to requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
TOWN SPORTS INTERNATIONAL, INC.
(Registrant)
DATE: JANUARY 12, 1998 BY: /S/ RICHARD PYLE
----------------------
Richard Pyle
Chief Financial Officer
(principal financial and accounting officer)
DATE: JANUARY 12, 1998 BY: /S/ MARK SMITH
-----------------------
Mark Smith
Chief Executive Officer and
Chairman of the Board
(principal executive officer)
11
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
(11) Statement of Computation of Per Share Data.
(27) Financial Data Schedule (to be filed electronically).
12
<PAGE>
<TABLE>
<CAPTION>
Town Sports International, Inc. Exhibit 11
Statement of Computation of Per Share Data
For the three and six months ended November 30, 1997
All figures are $'000, except share data FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
NOVEMBER 30, 1997 NOVEMBER 30, 1997
------------------------------------ -----------------------------------
Fully Fully
Primary Diluted Primary Diluted
<S> <C> <C> <C> <C>
Loss to common stockholders before
extraordinary item............................ ($309) ($309) ($321) ($321)
Extraordinary item.............................. (730) (730) (730) (730)
---------------- ---------------- ---------------- ---------------
Net loss to common stockholders................. ($1,039) ($1,039) ($1,051) ($1,051)
---------------- ---------------- ---------------- ---------------
Weighted average number of common
shares outstanding............................ 1,015,714 1,015,714 1,012,857 1,012,857
Shares issuable upon exercise of outstanding
options and warrants.......................... 171,164 171,164
---------------- ---------------- ---------------- ---------------
Weighted average number of common shares used
in computing per share data................... 1,015,714 1,186,878 1,012,857 1,184,021
---------------- ---------------- --------------- ----------------
Per common share data:
Loss to common stockholders before
extraordinary item............................ ($0.30) ($0.26) ($0.32) ($0.27)
Extraordinary item.............................. (0.72) (0.62) (0.72) (0.62)
---------------- ---------------- ---------------- ---------------
Net loss per share.............................. ($1.02) ($0.88) ($1.04) ($0.89)
---------------- ---------------- ---------------- ---------------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE CONSOLIDATED BALANCE SHEET AT MAY 31, 1997 AND NOVEMBER 30, 1997, THE
CONSOLIDATED STATEMENT OF OPERATIONS AND THE CONSOLIDATED STATEMENT OF
STOCKHOLDERS' DEFICIT FOR THE YEAR ENDED MAY 31, 1997 AND FOR THE SIX MONTHS
ENDED NOVEMBER 30, 1997.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> MAY-31-1997 MAY-31-1997
<PERIOD-END> JUN-01-1996 NOV-30-1997
<CASH> 2,468 43,056
<SECURITIES> 0 0
<RECEIVABLES> 228 203
<ALLOWANCES> 0 0
<INVENTORY> 327 453
<CURRENT-ASSETS> 3,802 44,350
<PP&E> 47,326 55,624
<DEPRECIATION> 13,112 14,900
<TOTAL-ASSETS> 52,819 104,104
<CURRENT-LIABILITIES> 12,238 13,735
<BONDS> 39,147 86,680
0 0
16,394 17,662
<COMMON> 1 1
<OTHER-SE> (23,346) (24,052)
<TOTAL-LIABILITY-AND-EQUITY> 52,819 104,104
<SALES> 0 0
<TOTAL-REVENUES> 56,567 36,317
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 55,291 32,006
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 2,455 2,637
<INCOME-PRETAX> (1,179) 1,674
<INCOME-TAX> (243) 845
<INCOME-CONTINUING> (936) 829
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 (730)
<CHANGES> 0 0
<NET-INCOME> (936) 99
<EPS-PRIMARY> (2.20) (1.04)
<EPS-DILUTED> (1.88) (0.89)
</TABLE>
