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): August 13, 2004
THE SPORTS CLUB COMPANY, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-13290 95-4479735
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(Commission File Number) (IRS Employer Identification Number)
11100 Santa Monica Boulevard, Suite 300
Los Angeles, California 90025
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(Address of Principal Executive Offices)
Registrant's telephone number, including area
code: 310-479-5200
Not Applicable
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(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 Press Release Dated August 13, 2004
Item 9. Regulation FD Disclosure
On August 13, 2004, we announced the second quarter 2004 operating results.
A copy of the press release is furnished to the United States Securities and
Exchange Commission (the "Commission") with this current report on Form 8-K as
an exhibit. The information in this current report is being furnished pursuant
to Item 12 under Item 9 of Form 8-K as directed by the Commission in Release No.
34-47583.
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: August 16, 2004 THE SPORTS CLUB COMPANY, INC.
By: /s/ Timothy M. O'Brien
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Timothy M. O'Brien
Chief Financial Officer
3
EXHIBIT 99.1
NEWS RELEASE
For Immediate Release CONTACT: Timothy O'Brien
Chief Financial Officer
The Sports Club Company, Inc.
(310) 479-5200
THE SPORTS CLUB COMPANY, INC. ANNOUNCES
OPERATING RESULTS FOR THE SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 2004
LOS ANGELES, CA (August 13, 2004) - The Sports Club Company, Inc. (AMEX:SCY)
today announced financial results for the second quarter and six months ended
June 30, 2004.
Revenues for the quarter ended June 30, 2004 were $37,732,000 compared to
$32,628,000 for the quarter ended June 30, 2003, an increase of $5,104,000 or
15.6%. EBITDA(1) for the quarter ended June 30, 2004 increased to $2,704,000,
compared to $1,920,000 for the quarter ended June 30, 2003, an increase of
$784,000 or 40.8%. The net loss attributable to common shareholders for the
quarter ended June 30, 2004 was $4,803,000 or $0.26 per basic and diluted share,
compared to a net loss attributable to common shareholders for the quarter ended
June 30, 2003 of $4,822,000 or $0.26 per basic and diluted share. The weighted
average number of basic and diluted shares outstanding for the quarter ended
June 30, 2004 was 18,697,000 shares compared to 18,326,000 shares for the
quarter ended June 30, 2003.
Revenues for the six months ended June 30, 2004 increased 14.7% to $74,910,000,
compared to $65,289,000 for the six months ended June 30, 2003, an increase of
$9,621,000. EBITDA(1) for the first six months of 2004 decreased 14.3% to
$3,818,000, compared to $4,457,000 for the first six months of 2003, a decrease
of $639,000. The decrease in EBITDA was the result of the write off of $1.1
million in costs related to an abandoned "Going Private/Equity Investment"
transaction and to the recording of a $442,000 minority interest in the profits
of Reebok Sports Club/NY. The net loss
attributable to common shareholders for the six months ended June 30, 2004 was
$11,098,000 or $0.60 per basic and diluted share, compared to a net loss
attributable to common shareholders for the six months ended June 30, 2003 of
$9,065,000 or $0.50 per basic and diluted share. The weighted average number of
basic and diluted shares outstanding for the six months ended June 30, 2004 was
18,631,000 shares compared to 18,244,000 shares for the six months ended June
30, 2003.
This press release contains forward-looking statements under the safe harbor
provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such
statements include the words "will," "expects," "anticipates," "believes,"
"estimates," "intends," "plans" and similar expressions. Such forward-looking
statements involve numerous known and unknown risks, uncertainties and other
factors that could cause actual results to be materially different from those
currently anticipated. Such factors are outlined in the Company's Annual Report
on Form 10-K filed with the Securities and Exchange Commission.
The Sports Club Company, based in Los Angeles, California currently operates
nine luxury sports and fitness facilities nationwide under the brand name The
Sports Club/LA.
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(1) EBITDA is calculated by adding the income tax provision, net interest
expense and depreciation/amortization to net loss. We have included EBITDA
data because management believes that this measure is useful to an investor
to evaluate our ability to service debt and to assess our earnings ability.
However, these items should not be considered in isolation or as substitutes
for net income, cash flows from (used in) operating activities or other
statement of operations or cash flows data prepared in accordance with
generally accepted accounting principles. A reconciliation of cash flows
from (used in) operating activities to net loss and EBITDA is provided in
the tables accompanying this press release.
-Tables to Follow-
THE SPORTS CLUB COMPANY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 2003 and June 30, 2004
(Amounts in thousands)
(Unaudited)
December 31, June 30,
ASSETS 2003 2004
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Current assets:
Cash and cash equivalents............................................... $ 1,932 $ 3,723
Accounts receivable, net of allowance for doubtful accounts............. 3,923 3,232
Other current assets.................................................... 2,783 2,011
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Total current assets................................................. 8,638 8,966
Property and equipment, net ............................................... 155,173 151,676
Restricted cash............................................................ 4,432 4,381
Goodwill................................................................... 7,660 7,660
Other assets............................................................... 8,056 6,646
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$ 183,959 $ 179,329
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of notes payable and equipment
financing loans...................................................... $ 2,099 $ 1,111
Accounts payable and accrued liabilities................................ 16,177 15,820
Deferred revenues....................................................... 18,292 17,983
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Total current liabilities............................................ 36,568 34,914
Notes payable and equipment financing loans, less current
Installments......................................................... 119,731 119,492
Other long-term liabilities................................................ 10,445 11,148
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Total liabilities.................................................... 166,744 165,554
Commitments and contingencies
Redeemable preferred stock................................................. 11,761 12,278
Shareholders' equity:
Common stock............................................................ 211 211
Preferred stock......................................................... 5,590 12,063
Additional paid-in capital.............................................. 100,348 99,430
Accumulated deficit..................................................... (86,217) (96,439)
Less: treasury stock, at cost........................................... (14,478) (13,768)
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Net shareholders' equity............................................. 5,454 1,497
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$ 183,959 $ 179,329
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THE SPORTS CLUB COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
Three-months ended Six-months ended
June 30, June 30,
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2003 2004 2003 2004
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Revenues:
Membership revenues.................... $ 32,180 $ 36,486 $ 64,584 $ 72,407
Reimbursed costs....................... 448 1,246 705 2,503
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Total revenue....................... 32,628 37,732 65,289 74,910
Operating expenses:
Direct................................. 26,358 29,830 52,707 59,872
Reimbursed costs....................... 448 1,246 705 2,503
General and administrative............. 1,996 2,206 3,969 4,252
Selling................................ 1,233 1,267 2,600 2,798
Depreciation and amortization.......... 2,969 3,168 5,929 6,340
Pre-opening expenses................... 636 -- 776 46
Non-recurring items.................... -- -- -- 1,104
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Total operating expenses............ 33,640 37,717 66,686 76,915
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Profit (loss) from operations.... (1,012) 15 (1,397) (2,005)
Other income (expense):
Net interest expense................... (3,255) (3,672) (6,535) (7,360)
Minority interests..................... (37) (479) (75) (517)
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Loss before income taxes................... (4,304) (4,136) (8,007) (9,882)
Income tax provision (benefit)............. 168 172 360 340
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Net loss................................ (4,472) (4,308) (8,367) (10,222)
Dividends on preferred stock............... 350 495 698 876
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Net loss attributable to common
shareholders........................ $ (4,822) $ (4,803) $ (9,065) $ (11,098)
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Net loss per share:
Basic and diluted....................... $ (0.26) $ (0.26) $ (0.50) $ (0.60)
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Weighted average shares outstanding:
Basic and diluted....................... 18,326 18,697 18,244 18,631
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THE SPORTS CLUB COMPANY, INC.
RECONCILIATION OF NET CASH USED IN OPERATING ACTIVITIES
TO NET LOSS AND EBITDA
(Amounts in thousands)
(Unaudited)
Three-months ended Six-months ended
June 30, June 30,
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2003 2004 2003 2004
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Net loss $ (4,472) $ (4,308) $ (8,367) $ (10,222)
Net interest expense 3,255 3,672 6,535 7,360
Income tax provision (benefit) 168 172 360 340
Depreciation and amortization 2,969 3,168 5,929 6,340
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EBITDA $ 1,920 $ 2,704 $ 4,457 $ 3,818
Interest payment (175) (383) (5,955) (6,475)
Changes in working capital items and other (1,520) 311 (2,560) 2,396
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Net cash provided by (used in) operating activities $ 225 $ 2,632 $ (4,058) $ (261)
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