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): April 18, 2005
THE SPORTS CLUB COMPANY, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-13290 95-4479735
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
11100 Santa Monica Boulevard, Suite 300, Los Angeles, California 90025
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(Address of principal executive offices) (Zip Code)
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)
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))
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Item 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On April 18, 2005, The Sports Club Company, Inc. announced its results of
operations for the quarter ended December 31, 2004. The public announcement was
made by means of a press release attached, 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 April 18, 2005
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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: April 18, 2005 THE SPORTS CLUB COMPANY, INC.
By: /s/ Timothy M. O'Brien
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Timothy M. O'Brien
Chief Financial Officer
INDEX TO EXHIBITS
Exhibit No. Description
99.1 Press Release dated April 18, 2005.
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EXHIBIT 99.1
THE SPORTS CLUB COMPANY, INC.
ANNOUNCES DELAYED FINANCIAL REPORTING
LOS ANGELES, CA (April 18, 2005) - The Sports Club Company, Inc. (AMEX: SCY)
today announced that it will delay reporting its final year-end and fourth
quarter 2004 results due to certain issues relative to the application of
Statement of Financial Accounting Standards No. 13, Accounting for Leases ("FAS
No. 13"), 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 and reporting of landlord incentives under operating leases
and assets held for sale 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, these matters will
result in several reclassifications of the Company's reported results for 2003.
Preliminary operating results for the fourth quarter and year ended December 31,
2004, are included at the conclusion of this press release.
FAS No. 13 requires that leasehold improvements made by a lessee that are funded
by landlord incentives under an operating lease should be recorded by the lessee
as leasehold improvement assets and amortized over their appropriate life and
the incentives should be recorded as deferred rent and amortized to lease
expense over the lease term. The Company had previously recorded landlord
allowances as a reduction of the leasehold improvement asset. The new
methodology will be applied to both the 2003 and 2004 financial statements and
will require the Company to increase its depreciation expense and reduce rent
expense. Since the amount of these adjustments will be the same, there will be
no change to the Company's income (loss) from operations.
FAS No. 144 requires that the results of operations of an entity that has been
disposed of or is classified as held for sale shall be reported in discontinued
operations. On February 10, 2005, the Company announced that it had entered into
a letter of intent to sell six of its nine sports and fitness complexes for
$65.0 million. In accordance with FAS No. 144 these assets will be classified as
held for sale and the 2003 and 2004 operating statements will include the
results of these Clubs as discontinued operations.
Because of the time required to complete the accounting evaluations required by
FAS No. 13 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, 2004 by the prescribed extended due date of April
15, 2005. The Company expects to complete this work and file its Annual Report
prior to May 16, 2005.
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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, 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."
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THE SPORTS CLUB COMPANY, INC.
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1)
For the Three Months and Twelve Months Ended December 31, 2003 and 2004
(Amounts in thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2004 2003 2004
---- ---- ---- ----
Revenues:
Membership revenues $ 6,935 $ 7,492 $ 25,141 $ 29,233
Products and services 3,152 3,709 11,904 15,039
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Total revenues 10,087 11,201 37,045 44,272
Operating expenses:
Club operating costs 4,002 4,470 12,579 17,694
Cost of products and services 2,607 2,979 9,517 12,398
Selling and marketing 295 320 1,043 1,492
General and administrative 1,837 2,185 7,517 8,148
Pre-opening expenses 581 -- 2,258 46
Depreciations and amortization 1,033 1,107 3,694 4,322
Non-recurring items -- -- -- 1,104
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Total operating expenses 10,355 11,061 36,608 45,204
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Income (loss) from operations (268) 140 437 (932)
Other income (expense):
Interest, net (3,666) (3,692) (13,486) (14,626)
Minority interests (37) (37) (150) (149)
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(Loss) from continuing operations before income taxes and
loss on discontinued operations (3,971) (3,589) (13,199) (15,707)
Provision for income taxes -- -- -- --
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(Loss) from continuing operations before loss on
discontinued operations (3,971) (3,589) (13,199) (15,707)
Discontinued operations:
(Loss) from discontinued operations (769) (588) (5,175) (3,323)
(Loss) on disposal -- -- -- (527)
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Net (loss) from discontinued operations (769) (588) (5,175) (3,850)
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Net loss (4,740) (4,177) (18,374) (19,557)
Dividends on Preferred Stock 351 498 1,400 1,871
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Net loss attributable to common shareholders $ (5,091) $ (4,675) $ (19,774) $ (21,428)
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Net (loss) per share attributable to common shareholders:
Basic and diluted $ (0.28) $ (0.25) $ (1.08) $ (1.14)
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Weighted average number of common shares outstanding:
Basic and diluted 18,404 18,885 18,316 18,733
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(1) The preliminary operating results for 2004 have been prepared in accordance
with the text of this press release. The final 2004 operating results may vary
significantly from these preliminary operating results.
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