UNITED STATES
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): November 15, 2004
THE SPORTS CLUB COMPANY, INC.
-----------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-13290 95-4479735
-------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
11100 Santa Monica Boulevard, Suite 300, Los Angeles, California 90025
-------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(310) 479-5200
Not Applicable
--------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (See General Instructions A-2 below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13 e-4(c))
1
Item 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On November 15, 2004, The Sports Club Company, Inc. announced its results of
operations for the quarter ended September 30, 2004. The public announcement was
made by means of a press release, the text of which is being furnished to the
U.S. Securities and Exchange Commission in Exhibit 99.1 hereto.
The information contained in this report and the exhibit hereto shall not be
deemed "filed" for purposes of Section 18 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or incorporated by reference in any
filing under the Securities Act of 1933, as amended, or the Exchange Act, except
as shall be expressly set forth by specific reference in such a filing.
The information in this report and the exhibit hereto may contain
"forward-looking statements" that are made pursuant to the safe-harbor
provisions of the Private Securities Litigation Reform Act of 1995 and otherwise
may be protected. Such statements are made based on the current beliefs and
expectations of the Company's management and are subject to significant risks
and uncertainties that could cause actual results to differ materially. Please
refer to the Company's annual report on Form 10-K/A filed on August 18, 2004
with the Securities and Exchange Commission for information concerning risks,
uncertainties, and other factors that may affect future results.
Item 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
99.1 Press Release dated November 15, 2004
2
Signatures
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Dated: November 16, 2004 THE SPORTS CLUB COMPANY, INC.
By: /s/ Timothy M. O'Brien
-----------------------------
Timothy M. O'Brien
Chief Financial Officer
INDEX TO EXHIBITS
Exhibit No. Description
99.1 Press Release dated November 15, 2004.
3
EXHIBIT 99.1
THE SPORTS CLUB COMPANY, INC. ANNOUNCES
OPERATING RESULTS FOR THE THIRD QUARTER AND NINE MONTHS ENDED
SEPTEMBER 30, 2004
LOS ANGELES, CA (November 15, 2004) - The Sports Club Company, Inc. (AMEX:SCY)
today announced financial results for the third quarter and nine months ended
September 30, 2004.
Revenues for the quarter ended September 30, 2004 were $36,389,000 compared to
$32,055,000 for the quarter ended September 30, 2003, an increase of $4,334,000
or 13.5%. EBITDA(1) for the quarter ended September 30, 2004 increased to
$1,755,000, compared to $1,283,000 for the quarter ended September 30, 2003, an
increase of $472,000 or 36.8%. The net loss attributable to common shareholders
for the quarter ended September 30, 2004 was $5,657,000 or $0.30 per basic and
diluted share, compared to a net loss attributable to common shareholders for
the quarter ended September 30, 2003 of $5,618,000 or $0.31 per basic and
diluted share. The weighted average number of basic and diluted shares
outstanding for the quarter ended September 30, 2004 was 18,784,000 shares
compared to 18,370,000 shares for the quarter ended September 30, 2003.
Revenues for the nine months ended September 30, 2004 increased 14.3% to
$111,299,000, compared to $97,343,000 for the nine months ended September 30,
2003, an increase of $13,956,000. EBITDA(1) for the first nine months of 2004
decreased 2.9% to $5,573,000, compared to $5,738,000 for the first nine months
of 2003, a decrease of $165,000. The decrease in EBITDA was the result of $1.5
million of costs related to various capital raising transactions, recording of a
$604,000 minority interest in the profits of Reebok Sports Club/NY and the
recording of a $527,000 loss on the sale of three SportsMed physical therapy
facilities. The net loss attributable to common shareholders for the nine months
ended September 30, 2004 was $16,754,000 or $0.90 per basic and diluted share,
compared to a net loss attributable to common shareholders for the nine months
ended September 30, 2003 of $14,683,000 or $0.80 per basic and diluted share.
The weighted average number of basic and diluted shares outstanding for the nine
months ended September 30, 2004 was 18,682,000 shares compared to 18,286,000
shares for the nine months ended September 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/A filed with the Securities and Exchange Commission.
4
The Sports Club Company, based in Los Angeles, California operates and owns
luxury sports and fitness complexes nationwide under the brand name The Sports
Club/LA.
-----------------
(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
in evaluating 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-
5
THE SPORTS CLUB COMPANY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 2003 and September 30, 2004
(Amounts in thousands)
(Unaudited)
December 31, September 30,
ASSETS 2003 2004
---- ----
Current assets:
Cash and cash equivalents............................................... $ 1,932 $ 2,385
Accounts receivable, net of allowance for doubtful accounts............. 3,923 3,372
Other current assets.................................................... 2,783 4,491
------------- -------------
Total current assets................................................. 8,638 10,248
Property and equipment, net ............................................... 155,173 149,481
Restricted cash............................................................ 4,432 3,391
Goodwill................................................................... 7,660 7,315
Other assets............................................................... 8,056 3,058
------------- --------------
$ 183,959 $ 173,493
============= ==============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current installments of notes payable and equipment
financing loans...................................................... $ 2,099 $ 779
Accounts payable and accrued liabilities................................ 16,177 13,226
Deferred revenues....................................................... 18,292 18,081
------------- -------------
Total current liabilities............................................ 36,568 32,086
Notes payable and equipment financing loans, less current
Installments......................................................... 119,731 119,382
Other long-term liabilities................................................ 10,445 11,398
Redeemable preferred stock - Series E...................................... -- 2,010
------------- -------------
Total liabilities.................................................... 166,744 164,876
Commitments and contingencies
Redeemable preferred stock - Series B...................................... 11,761 12,537
Shareholders' equity (deficit):
Common stock............................................................ 211 211
Preferred stock - Series C and D........................................ 5,590 12,323
Additional paid-in capital.............................................. 100,348 98,901
Accumulated deficit..................................................... (86,217) (101,587)
Less: treasury stock, at cost........................................... (14,478) (13,768)
------------- -------------
Net shareholders' equity (deficit)................................... 5,454 (3,920)
------------- --------------
$ 183,959 $ 173,493
============= ==============
6
THE SPORTS CLUB COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
Three-months ended Nine-months ended
September 30, September 30,
------------- -------------
2003 2004 2003 2004
---- ---- ---- ----
Revenues:
Membership revenues.................... $ 31,728 $ 35,122 $ 96,311 $ 107,529
Reimbursed costs....................... 327 1,267 1,032 3,770
---------------- ------------- ------------- -------------
Total revenue....................... 32,055 36,389 97,343 111,299
Operating expenses:
Direct................................. 26,491 29,504 79,198 89,376
General and administrative............. 1,949 1,898 5,919 6,150
Selling................................ 1,066 1,238 3,666 4,037
Reimbursed costs....................... 327 1,267 1,032 3,770
Depreciation and amortization.......... 2,992 3,200 8,920 9,539
Pre-opening expenses................... 902 -- 1,677 46
Non-recurring items.................... -- -- -- 1,104
---------------- ------------- ------------- ----------------
Total operating expenses............ 33,727 37,107 100,412 114,022
---------------- ------------- ------------- -------------
Loss from operations............. (1,672) (718) (3,069) (2,723)
Other income (expense):
Net interest expense................... (3,502) (3,656) (10,037) (11,017)
Minority interests..................... (37) (200) (113) (716)
Loss on sale of subsidiary assets...... -- (527) -- (527)
---------------- ------------- ------------ -------------
Loss before income taxes............. (5,211) (5,101) (13,219) (14,983)
Income tax provision....................... 56 48 415 387
---------------- ------------- ------------- -------------
Net loss............................. (5,267) (5,149) (13,634) (15,370)
Dividends on preferred stock............... 351 508 1,049 1,384
---------------- ------------- ------------- -------------
Net loss attributable to common
shareholders........................ $ (5,618) $ (5,657) $ (14,683) $ (16,754)
================ =============== =============== ===============
Net loss per share:
Basic and diluted....................... $ (0.31) $ (0.30) $ (0.80) $ (0.90)
================ ============== ============== ===============
Weighted average shares outstanding:
Basic and diluted....................... 18,370 18,784 18,286 18,682
================ ============== =============== =============
7
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 Nine-months ended
September 30, September 30,
------------- -------------
2003 2004 2003 2004
---- ---- ---- ----
Net loss......................................... $ (5,267) $ (5,149) $ (13,634) $ (15,370)
Net interest expense......................... 3,502 3,656 10,037 11,017
Income tax provision (benefit)............... 56 48 415 387
Depreciation and amortization................ 2,992 3,200 8,920 9,539
--------------- --------------- --------------- ---------------
EBITDA........................................... $ 1,283 $ 1,755 $ 5,738 $ 5,573
Interest payment............................. (6,120) (6,072) (12,075) (12,547)
Changes in working capital items and other .. 3,286 1,486 728 3,882
---------------- ----------------- --------------- ----------------
Net cash (used in) operating activities.......... $ (1,551) $ (2,831) $ (5,609) $ (3,092)
================= ================= ================ ================
8