-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PE4S7ZV52Ec57Spdjl/mTuFqnn874wUOf2vfJO+m7uCZAZW53GGpyFXL8HqPrI7l xkd7fLLWAJdpt0myckTZ2A== 0000950123-03-002823.txt : 20030314 0000950123-03-002823.hdr.sgml : 20030314 20030314103734 ACCESSION NUMBER: 0000950123-03-002823 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20030314 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOWN SPORTS INTERNATIONAL INC CENTRAL INDEX KEY: 0001029787 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 132749906 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-40907 FILM NUMBER: 03603282 BUSINESS ADDRESS: STREET 1: 888 SEVENTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10106 BUSINESS PHONE: 2122466700 MAIL ADDRESS: STREET 1: 888 SEVENTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10106 10-Q/A 1 y84423ae10vqza.txt AMENDMENT NO. 1 TO FORM 10-Q - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-Q/A AMENDMENT NO. 1 TO THE QUARTERLY REPORT [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002 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)
NEW YORK 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. [X] Yes [ ] No Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. 1,028,698. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TOWN SPORTS INTERNATIONAL, INC. AND SUBSIDIARIES FORM 10-Q/A AMENDMENT NO. 1 TO THE QUARTERLY REPORT FOR THE QUARTER ENDED SEPTEMBER 30, 2002 INDEX
PAGE ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) a) Condensed Consolidated Balance Sheets as of December 31, 2001 and September 30, 2002..................... 2 b) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2001 and 2002............................................ 3 c) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2001 and 2002... 4 d) Notes to Condensed Consolidated Financial Statements.......................................... 5 Item 4. Controls and Procedures............................ 8 Item 6. Exhibits and Reports on Form 8-K................... 9 SIGNATURES................................................ 10 Sarbanes-Oxley Section 302(a) certification............... 11
1 TOWN SPORTS INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ALL FIGURES $'000, EXCEPT SHARE DATA DECEMBER 31, 2001 AND SEPTEMBER 30, 2002
DECEMBER 31, SEPTEMBER 30, 2001 2002 ------------ ------------- (SEE NOTE 6) (AS RESTATED ------------ SEE NOTE 6) (UNAUDITED) ASSETS Current assets: Cash and cash equivalents................................. $ 5,458 $ 5,063 Accounts receivable....................................... 1,355 664 Inventory................................................. 1,326 1,443 Prepaid expenses and other current assets................. 3,113 4,635 -------- -------- Total current assets............................... 11,252 11,805 Fixed assets, net of accumulated depreciation of $78,680 and $98,013 at December 31, 2001 and September 30, 2002, respectively.............................................. 200,120 208,358 Goodwill, net of accumulated amortization of $13,557 and $12,988 at December 31, 2001 and September 30, 2002, respectively.............................................. 42,145 41,457 Intangible assets, net of accumulated amortization of $15,325 and $17,760 at December 31, 2001 and September 30, 2002, respectively........................................ 6,515 4,352 Deferred tax asset.......................................... 19,092 21,577 Deferred membership costs................................... 14,748 15,166 Other assets................................................ 2,133 1,846 -------- -------- Total assets....................................... $296,005 $304,561 ======== ======== LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT Current liabilities: Current portion of long-term debt and capital lease obligations............................................. $ 4,015 $ 4,580 Accounts payable.......................................... 7,615 3,159 Accrued expenses.......................................... 18,474 24,783 Corporate income taxes payable............................ 444 182 Deferred revenue.......................................... 23,269 27,622 -------- -------- Total current liabilities.......................... 53,817 60,326 Long-term debt and capital lease obligations................ 159,964 148,929 Deferred lease liabilities.................................. 21,510 23,136 Deferred revenue............................................ 3,609 3,798 Other liabilities........................................... 4,783 7,755 -------- -------- Total liabilities.................................. 243,683 243,944 -------- -------- Redeemable preferred stock: Redeemable senior preferred stock, $1.00 par value; liquidation value $57,416 and $62,668 at December 31, 2001, and September 30, 2002, respectively; authorized 100,000 shares; 40,000 shares issued and outstanding at December 31, 2001 and September 30, 2002.................. 54,687 60,194 Series A redeemable preferred stock, at liquidation value (see Note 6).............................................. 30,432 33,702 -------- -------- 85,119 93,896 -------- -------- Stockholders' (deficit) equity: Series B preferred stock, at liquidation value............ 265 294 Class A voting common stock, $.001 par value; 1,028,698 shares issued and outstanding........................... 1 1 Paid-in capital........................................... 11,695 12,538 Unearned compensation..................................... (422) (364) Foreign currency translation adjustment................... 21 163 Accumulated deficit....................................... (44,357) (45,911) -------- -------- Total stockholders' deficit........................ (32,797) (33,279) -------- -------- Total liabilities, redeemable preferred stock and stockholders' deficit............................ $296,005 $304,561 ======== ========
See notes to the condensed consolidated financial statements. 2 TOWN SPORTS INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2002 ALL FIGURES $'000
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, -------------------------- -------------------------- 2001 2002 2001 2002 ----------- ----------- ----------- ----------- (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) Revenues: Club operations............................ $71,269 $80,678 $208,150 $236,598 Fees and other............................. 1,119 1,093 2,743 2,935 ------- ------- -------- -------- 72,388 81,771 210,893 239,533 ------- ------- -------- -------- Operating expenses: Payroll and related........................ 28,724 32,893 83,366 97,333 Club operating............................. 23,455 27,443 65,854 75,785 General and administrative................. 5,033 5,040 14,034 14,924 Depreciation and amortization.............. 8,047 7,824 23,802 23,768 ------- ------- -------- -------- 65,259 73,200 187,056 211,810 ------- ------- -------- -------- Operating income........................... 7,129 8,571 23,837 27,723 Interest expense............................. 3,713 4,112 11,278 12,398 Interest income.............................. (84) (38) (347) (116) ------- ------- -------- -------- Income before provision for corporate income tax and cumulative effect of change in accounting principle.......... 3,500 4,497 12,906 15,441 Provision for corporate income tax........... 1,856 2,368 6,398 7,498 ------- ------- -------- -------- Income before cumulative effect of a change in accounting principle................. 1,644 2,129 6,508 7,943 Cumulative effect of a change in accounting principle, net of income tax benefit of $612.................................... -- -- -- 689 ------- ------- -------- -------- Net income................................. 1,644 2,129 6,508 7,254 Accreted dividends on preferred stock........ (2,612) (2,958) (7,555) (8,552) ------- ------- -------- -------- Net loss attributable to common stockholders............................ $ (968) $ (829) $ (1,047) $ (1,298) ======= ======= ======== ========
See notes to the condensed consolidated financial statements. 3 TOWN SPORTS INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2002 ALL FIGURES $'000
NINE MONTHS ENDED SEPTEMBER 30, -------------------------- 2001 2002 ----------- ----------- (UNAUDITED) (UNAUDITED) Cash flows from operating activities: Net income................................................ $ 6,508 $ 7,254 -------- -------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization............................. 23,802 23,768 Goodwill impairment write-off............................. -- 1,301 Club closure costs........................................ -- 1,095 Compensation expense in connection with stock options..... 898 901 Noncash rental expense, net of noncash rental income...... 2,330 1,278 Share of net income in affiliated companies............... (581) (523) Amortization of debt issuance costs....................... 1,412 1,435 Change in certain working capital components.............. 10,295 9,804 Increase in deferred tax asset............................ (3,171) (2,485) Increase in deferred membership costs..................... (1,797) (418) Other..................................................... 96 136 -------- -------- Total adjustments....................................... 33,284 36,292 -------- -------- Net cash provided by operating activities............... 39,792 43,546 -------- -------- Cash flows from investing activities: Capital expenditures, net of effects of acquired businesses.............................................. (36,494) (34,324) Acquisition of businesses................................. (1,201) (348) Intangible and other assets............................... (245) 287 Landlord contributions.................................... 275 3,467 -------- -------- Net cash used in investing activities................... (37,665) (30,918) -------- -------- Cash flows from financing activities: Net line of credit (repayment)............................ (1,000) (12,000) Subordinated credit borrowings, net of expenses........... -- 2,810 Repayments of notes for acquired businesses and capital lease obligations borrowings............................ (2,332) (3,833) -------- -------- Net cash used in financing activities................... (3,332) (13,023) -------- -------- Net decrease in cash and cash equivalents............... (1,205) (395) Cash and cash equivalents at beginning of period............ 3,365 5,458 -------- -------- Cash and cash equivalents at end of period.............. $ 2,160 $ 5,063 ======== ======== Summary of change in certain working capital components, net of effects of acquired businesses: (Increase) decrease in accounts receivable................ $ (105) $ 384 Increase in inventory..................................... (350) (117) Decrease (increase) in prepaid expenses, prepaid income taxes and other current assets.......................... 1,303 (999) Increase in accounts payable and accrued expenses......... 6,310 6,159 Increase in deferred revenue.............................. 3,137 4,377 -------- -------- Net changes in working capital.......................... $ 10,295 $ 9,804 ======== ======== Supplemental disclosures of cash flow information:
Noncash investing and financing activities: The Company assumed $445 of long-term debt in connection with a club acquisition during the nine months ended September 30, 2002. The Company acquired $1,889 and $1,565 of club equipment financed by lessors during the nine months ended September 30, 2002 and September 30, 2001, respectively. See notes to the condensed consolidated financial statements. 4 TOWN SPORTS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2001 AND SEPTEMBER 30, 2002 (UNAUDITED) 1. BASIS OF PRESENTATION The condensed consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The condensed consolidated financial statements should be read in conjunction with our December 31, 2001 consolidated financial statements and notes thereto, included on Form 10-K. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. Certain information and footnote disclosures which are normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to SEC rules and regulations. We believe that the disclosures made are adequate to make the information presented not misleading. The information reflects all adjustments which, in the opinion of Management, are necessary for a fair presentation of the financial position and results of operations for the interim periods set forth herein. All such adjustments, except for the cumulative effect of a change in accounting principle and the club closure costs, are of a normal and recurring nature. The results for the three and the nine months ended September 30, 2002 are not necessarily indicative of the results for the entire fiscal year ending December 31, 2002. 2. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
DECEMBER 31, SEPTEMBER 30, 2001 2002 ($'000) ($'000) ------------ ------------- Series B 9 3/4% Senior Notes, due 2004...................... $125,000 $125,000 Line of credit borrowings................................... 22,745 10,771 Subordinated credit borrowings.............................. 6,000 9,000 Notes payable for acquired businesses....................... 2,931 2,232 Capital lease obligations................................... 7,303 6,506 -------- -------- 163,979 153,509 Less, Current portion due within one year................... 4,015 4,580 -------- -------- Long-term portion........................................... $159,964 $148,929 ======== ========
We have a line of credit, with our principal banks for direct borrowings and letters of credit of up to $25.0 million. The line of credit carries interest at our option, based upon the Eurodollar borrowing rate plus 2.50% or the bank's prime rate plus 1.50%, as defined. There were $10.8 million of Eurodollar borrowings outstanding as of September 30, 2002 and outstanding letters of credit issued totaled $1.9 million. As of September 30, 2002 the interest rate charged on the outstanding Eurodollar borrowings was 4.38%. The unutilized portion of the line of credit as of September 30, 2002 was $12.4 million. This line of credit expires on July 15, 2004. The line of credit contains various covenants including interest coverage and a leverage ratio as well as restrictions on the payment of dividends. In November 2000, we entered into a Subordinated Credit Agreement (the "Agreement") which provides for up to $20.0 million of principal borrowings and expires December 31, 2004. The interest on principal borrowings accrues at the greater of 12.75% or the bank's prime rate plus 3.0% per annum. On a monthly basis, 9.75% is payable and the remaining 3.0% is accruable or payable at our option. As of September 30, 2002 there were $9.0 million of outstanding borrowings under the agreement and the rate in effect was 12.75%. The Agreement contains similar, but less restrictive covenants than those of the line of credit. The unutilized portion of this Agreement was $11.0 million as of September 30, 2002. 5 3. SEPTEMBER 11 EVENTS The terrorist attacks of September 11, 2001 ("the September 11 events"), resulted in a tremendous loss of life and property. Secondarily, those events interrupted the operations at four of our clubs located in downtown Manhattan. Three of the effected four clubs and were back in operation by October 2001, while the fourth club was reopened in September 2002. We carry business interruption insurance to mitigate certain lost revenue and profits experienced with the September 11 events. In this regard in the third quarter of 2001 a $175,000 insurance receivable was recorded representing our estimate of costs incurred in September 2001. Such costs include rent, payroll, benefits, and other club operating costs incurred during periods of club closure. In February 2002 we received an initial policy payment of $350,000 from our insurance carrier covering the receivable and a payment in reimbursement of business interruption losses. In August 2002, a second policy payment of $250,000 was received. Although we have business interruption insurance to cover certain lost profits at all four clubs, we cannot predict with any degree of certainty what future amounts will actually be received from the insurance carrier. Furthermore we cannot, at this time, determine whether the assets related to the fourth club location have been permanently impaired. We will continue to gather information to better assess whether or not the assets of this club have been permanently impaired. We are communicating with our insurance carrier on an ongoing basis in order to better assess the relief we could expect to receive for such coverage. 4. CLUB CLOSURE COSTS In the quarter ended September 30, 2002 we recorded a $1.1 million net write-off of fixed assets related to a club that has been scheduled for closure November 30, 2002. This club has been operating under a short term lease and we have not been able to extend the lease on acceptable economic terms. These club closure costs have been included with club operating expenses. 5. RECENT ACCOUNTING PRONOUNCEMENTS In July, 2002, the Financial Accounting Standards Board ("FASB") issued Statement No. 146, ("SFAS 146") Accounting for Costs Associated with Exit or Disposal Activities, which we are required to adopt on January 1, 2003. SFAS 146 requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. We do not expect that adoption of the standard will have a material adverse effect on our consolidated financial position or results of operations. In April 2002, the FASB issued Statement No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." ("SFAS 145"). SFAS 145 rescinds SFAS No. 4, Reporting Gains and Losses from Extinguishment of Debt, and SFAS No. 64, Extinguishment of Debt Made to Satisfy Sinking-Fund Requirements. The provisions of this statement are effective January 1, 2003. This Statement also amends SFAS No. 13, Accounting for Leases, to require sale-leaseback accounting for certain lease modifications that have economic impact similar to sale-leaseback transactions and amends certain other authoritative pronouncements. These provisions of SFAS No. 145, adopted in May 2002, had no impact on our consolidated financial position or results of operations. In the event we extinguish our long-term debt obligations prior to their original maturities, the related debt extinguishment costs will be reported within operating income, rather than an extraordinary item. In July 2001, the FASB issued Statement No. 141, Business Combinations ("SFAS 141") and Statement No. 142, Goodwill and Other Intangible Assets ("SFAS 142"). These statements significantly affect the financial accounting and the reporting for business combinations, goodwill and intangible assets. SFAS 142 requires that goodwill be allocated to reporting units and that goodwill and intangibles assets with indefinite useful lives not be amortized over their useful lives, but rather be tested for impairment upon implementation of this standard and at least annually thereafter. Amortizable intangible assets will be subject to the impairment provisions of Statement No. 144 Accounting for the Impairment or Disposal of Long-Lived Assets ("SFAS 144"). SFAS 142 required that the useful lives of these amortizable intangible assets be 6 reassessed. These statements apply to all business combinations that are initiated or completed after June 30, 2001 and the effective date of these pronouncements is January 1, 2002. Effective January 1, 2002 we implemented SFAS 142. There were no changes to the estimated useful lives of amortizable intangible assets due to the SFAS 142 implementation. In connection with the SFAS 142 transition impairment test we recorded a $1.3 million write-off of goodwill. A deferred tax benefit of $612,000 was recorded as a result of this goodwill write-off, resulting in a net cumulative effect of change in accounting principle of $689,000, in the first quarter of 2002. The write-off of goodwill related to four, remote underperforming clubs. The impairment test was performed with discounted estimated future cash flows as the criteria for determining fair market value. Goodwill has been allocated to reporting units that closely reflect the regions served by our four trade names; New York Sports Club, Boston Sports Club, Washington Sports Club and Philadelphia Sports Club, with certain more remote clubs that do not benefit from a regional cluster being considered single reporting units. A reconciliation of reported net income for the three and nine month periods September 30, 2001 to net income adjusted for the impact of SFAS 142 over that same period is as follows:
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, 2001 SEPTEMBER 30, 2001 (000'S) (000'S) ------------------ ------------------ Net income as reported..................................... $1,644 $6,508 Goodwill amortization...................................... 1,080 3,247 Deferred tax benefit....................................... (328) (984) ------ ------ Net income as adjusted..................................... $2,396 $8,771 ====== ======
A summary of our acquired amortizable intangible assets as of September 30, 2002 is as follows:
AS OF SEPTEMBER 30, 2002 (000'S) ------------------------------------------------------------------ GROSS CARRYING AMOUNT ACCUMULATED AMORTIZATION NET INTANGIBLES ACQUIRED INTANGIBLE ASSETS --------------------- ------------------------ --------------- Membership Lists...................... $ 9,834 $ (9,691) $143 Covenants-not-to-compete.............. 1,276 (1,067) 209 Beneficial Lease...................... 223 (160) 63 ------- -------- ---- $11,333 $(10,918) $415 ======= ======== ====
The amortization expense of the above acquired intangible assets for each of the five years ending December 31, 2006 will be as follows:
AGGREGATE AMORTIZATION EXPENSE (000'S) -------------------------------------- For the year ended 12/31/02(a).............................. $1,071 For the year ended 12/31/03................................. 265 For the year ended 12/31/04................................. 19 For the year ended 12/31/05................................. 11 For the year ended 12/31/06................................. 10 ------ $1,376 ======
- --------------- (a) Amortization expense of acquired intangible assets for the three and nine months ended September 30, 2002 amounted to $100 and $961, respectively. 7 6. RESTATEMENT AT SEPTEMBER 30, 2002 AND RECLASSIFICATION OF PRIOR PERIOD RELATED TO SERIES A PREFERRED STOCK At December 31, 2001 and September 30, 2002, the Company has issued and outstanding 153,637 shares of Series A Redeemable Preferred Stock ("Series A"). The Company has restated its condensed balance sheet at September 30, 2002 to account for a redemption feature included in the Series A stock in accordance with the guidance in EITF Topic No. D-98: Classification and Measurement of Redeemable Securities ("EITF Topic No. D-98"). EITF Topic No. D-98 provided additional guidance on the appropriate classification of redeemable preferred stock upon the occurrence of an event that is not solely within the control of an issuer. The Company has restated the condensed balance sheet at September 30, 2002 as EITF Topic No. D-98 was required to be applied in the first quarter ending March 31, 2002. EITF Topic No. D-98 also required retroactive application by reclassifying the financial statements of prior periods. The carrying value of the Series A stock at December 31, 2001, which was previously presented as a component of stockholders' deficit, has been reclassified as redeemable preferred stock outside of stockholders' deficit. The reclassification at December 31, 2001 and the restatement at September 30, 2002 for the Series A stock had no effect on the Company's net income, net loss attributable to common stockholders or total assets. The following sets forth the overall effect of the reclassification/restatement on the Company's stockholders' deficit at December 31, 2001 and September 30, 2002:
DECEMBER 31, SEPTEMBER 30, 2001 2002 ------------ ------------- Stockholders' equity (deficit) prior to reclassification and restatement, respectively................................. $ (2,365) $ 423 Reclassification and restatement, of Series A stock, respectively.............................................. $(30,432) $(33,702) Stockholders' deficit after reclassification and restatement, respectively................................. $(32,797) $(33,279)
ITEM 4. CONTROLS AND PROCEDURES. (a) Within the 90 days prior to the date of filing this Form 10-Q/A, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chairman and Chief Executive Officer along with the Company's Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the Company's Chief Executive Officer along with the Company's Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company's periodic SEC filings. (b) There have been no significant changes in the Company's internal controls or in other factors which could significantly affect internal controls subsequent to the date the Company carried out its evaluation. 8 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. a) Exhibits Exhibit 99.1 Certification of Chief Executive Officer. Exhibit 99.2 Certification of Chief Financial Officer. 9 SIGNATURES 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: March 14, 2003 By: /s/ RICHARD PYLE -------------------------------------------------------- Richard Pyle Chief Financial Officer, Office of the President (principal financial, accounting officer) DATE: March 14, 2003 By: /s/ ROBERT GIARDINA -------------------------------------------------------- Robert Giardina Chief Executive Officer (principal executive officer)
10 I, Robert Giardina, Chief Executive Officer of Town Sports International, Inc., certify that: 1. I have reviewed this quarterly report on Form 10-Q/A of Town Sports International, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: (a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and (c) Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors: (a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: March 14, 2003 By: /s/ ROBERT GIARDINA ---------------------------------- Robert Giardina Chief Executive Officer 11 I, Richard Pyle, Chief Financial Officer of Town Sports International, Inc., certify that: 1. I have reviewed this quarterly report on Form 10-Q/A of Town Sports International, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: (a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and (c) Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors: (a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: March 14, 2003 By: /s/ RICHARD PYLE ---------------------------------- Richard Pyle Chief Financial Officer 12 EX-99.1 3 y84423aexv99w1.txt CERTIFICATION OF CHIEF EXECUTIVE OFFICER Exhibit 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Town Sports International, Inc. (the "Company") on Form 10-Q/A for the period ending September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Robert Giardina, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. (Section Mark)1350, as adopted pursuant to (Section Mark)906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ ROBERT GIARDINA Town Sports International, Inc. Chief Executive Officer March 14, 2003 EX-99.2 4 y84423aexv99w2.txt CERTIFICATION OF CHIEF FINANCIAL OFFICER Exhibit 99.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Town Sports International, Inc. (the "Company") on Form 10-Q/A for the period ending September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Richard Pyle, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. (Section Mark)1350, as adopted pursuant to (Section Mark)906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ RICHARD PYLE Town Sports International, Inc. Chief Financial Officer March 14, 2003 -----END PRIVACY-ENHANCED MESSAGE-----