SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): April 15, 2004
THE SPORTS CLUB COMPANY, INC.
-----------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware
--------------
(State or Other Jurisdiction of Incorporation)
1-13290 95-4479735
---------- --------------
(Commission File Number) (IRS Employer Identification Number)
11100 Santa Monica Boulevard, Suite 300
Los Angeles, California 90025
-------------------------------------
(Address of Principal Executive Offices)
Registrant's telephone number, including area
code: 310-479-5200
Not Applicable
------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Index of Exhibits on Page 2
1
Item 7. Financial Statements and Exhibits
(a) Financial Statements
Not Applicable
(b) Pro Forma Financial Information
Not Applicable
(c) Exhibits
99.1 News Release issued by The Sports Club Company, Inc. dated April 15,
2004
Item 9. Regulation FD Disclosure
On April 15, 2004. The Sports Club Company, Inc. (the "Company") issued a
press release announcing that it was delaying the reporting of its final
year-end and fourth quarter 2003 financial statements due to certain issues
relative to the application of Statement of Financial Accounting Standards No.
142, Goodwill and Other Intangible Assets and Statement of Financial Accounting
Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets. The Company also reported that it did not meet the prescribed April 14,
2004 extension date for filing of its Annual Report on Form 10-K with the
Securities and Exchange Commission. Preliminary operating results for the fourth
quarter and year ended December 31, 2003 without reflecting any adjustments
related to the recoverability of goodwill or impairment of fixed assets were
included in the Press Release. The Company stated it expects to file its annual
report on Form 10-K prior to May 15, 2004. A copy of the April 15, 2004 press
release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
The information in this Current Report on Form 8-K, including Exhibit 99.1,
shall not be deemed "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to
the liabilities of that Section, nor shall it be deemed incorporated by
reference in any filing under the Securities Act of 1933, as amended, or the
Exchange Act, regardless of any general incorporation language in such a filing.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: April 16, 2004 THE SPORTS CLUB COMPANY, INC.
By: /s/ Timothy O'Brien
-------------------------------
Timothy M. O'Brien
Chief Financial Officer
3
EXHIBIT 99.1
NEWS RELEASE
For Immediate Release CONTACT: Timothy M. O'Brien
Chief Financial Officer
The Sports Club Company, Inc.
(310) 479-5200
THE SPORTS CLUB COMPANY, INC.
ANNOUNCES DELAYED FINANCIAL REPORTING
LOS ANGELES, CA (April 15, 2004) - The Sports Club Company, Inc. (AMEX: SCY)
today announced that it will delay reporting its final year-end and fourth
quarter 2003 results due to certain issues relative to the application of
Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets ("FAS No. 142"), and Statement of Financial Accounting
Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets ("FAS No. 144"). Substantially all of the work required to prepare the
Company's consolidated financial statements has been completed, however the
complexities associated with accounting for the recoverability of goodwill and
the impairment of fixed assets have precluded the completion of the final
financial statements. As a result, the Company has not filed its required
financial reports with the Securities and Exchange Commission. Further, matters
raised in connection with goodwill recoverability could impact the Company's
reported results for 2002. Preliminary operating results for the fourth quarter
and year ended December 31, 2003, without reflecting any adjustments related to
the recoverability of goodwill or impairment of fixed assets, are included at
the conclusion of this press release.
4
FAS No. 142 necessitates that a company test goodwill for recoverability on a
periodic basis. Recently the Company determined that the methodology it has been
using to evaluate goodwill for recoverability was not in accordance with
generally accepted accounting principles and an alternative method must be used.
Further, it was concluded that the new methodology should be reapplied to the
2002 financial statements and such application may result in restatement of the
Company's previously issued financial statements.
FAS No. 144 requires a company to test for the impairment of fixed assets on a
periodic basis. The Company recently determined it was necessary to employ an
outside professional valuation firm to assist it in determining if the fixed
assets at certain of its locations have been impaired. The valuation firm and
the Company are currently performing this evaluation.
Because of the time required to complete the accounting evaluations required by
FAS No. 142 and FAS No. 144, management was not able to finalize the Company's
consolidated financial statements and file the Annual Report on Form 10-K for
the year ended December 31, 2003 by the prescribed extended due date of April
14, 2004. The Company expects to complete this work and file its Annual Report
prior to May 15, 2004.
All statements in this press release other than statements of historical fact
are forward looking statements within the meaning of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. These
statements are based on management's current expectations and beliefs and are
subject to a number of factors and uncertainties that could cause actual results
to differ materially from those described in this press release. The forward
looking statements speak only as of the date of this press release, and the
Company expressly disclaims any obligations to release publicly any update or
revision to any forward looking statement contained herein if there are changes
in the Company's expectations or if any events, conditions or circumstances on
which any such forward looking statement is based.
The Sports Club Company, based in Los Angeles, California owns and operates
luxury sports and fitness complexes nationwide under the brand name "The Sports
Club/LA."
###
5
The SPORTS CLUB COMPANY, INC.
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1)
For The Three Months and Twelve Months Ended December 31, 2002 and 2003
(Amounts in thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
2002 2003 2002 2003
---- ---- ---- ----
Revenues $30,744 $36,029 $120,853 $133,371
Operating expenses:
Direct 26,038 28,727 100,973 107,925
Reimbursed costs -- 1,352 -- 2,383
General and administrative 1,659 1,921 7,414 7,840
Selling 1,240 1,236 4,907 4,902
Depreciation and amortization 2,964 3,132 11,909 12,052
Pre-opening expenses (1) 581 130 2,258
------------------------------------------------
Total operating expenses 31,900 36,949 125,333 137,360
------------------------------------------------
Loss from operations (1,156) (920) (4,480) (3,989)
Other income (expense):
Net interest expense (3,389) (3,713) (13,420) (13,750)
Minority interests (38) (37) (150) (150)
Non-recurring gain -- -- 127 --
------------------------------------------------
Loss before inocme taxes (4,583) (4,670) (17,923) (17,889)
Income tax provision (benefit) 134 70 (310) 485
-------------------------------------------------
Net loss (4,717) (4,740) (17,613) (18,374)
Dividends on preferred stock 351 351 888 1,400
-------------------------------------------------
Net loss available to
common shareholders $(5,068) $(5,091) $(18,501) $(19,774)
-------------------------------------------------
-------------------------------------------------
Net loss per share:
Basic $(0.28) $(0.28) $(1.02) $(1.08)
-------------------------------------------------
-------------------------------------------------
Diluted $(0.28) $(0.28) $(1.02) $(1.08)
-------------------------------------------------
-------------------------------------------------
Weighted average shares outstanding:
Basic 18,100 18,404 18,080 18,316
-------------------------------------------------
-------------------------------------------------
Diluted 18,100 18,404 18,080 18,316
-------------------------------------------------
-------------------------------------------------
(1) The preliminary operating results for 2002 and 2003 do not reflect any
potential adverse adjustments related to the recoverability of goodwill or the
impairment of fixed assets as described in the text of this press release. The
final 2002 and 2003 operating results may vary significantly from these
preliminary operating results.
6