Revenue recognition (Tables)

6 Months Ended

Jun. 30, 2018

Revenue from Contract with Customer [Abstract]

Schedule of Contract Liabilities

The following table reflects the change in contract liabilities between the date of adoption (January 1, 2018) and June 30, 2018,

	Contract liabilities
Balance at January 1, 2018	$	40,000
Revenue recognized that was included in the contract liability at the beginning of the year	(16,107		)
Increase, excluding amounts recognized as revenue during the period	22,548
Balance at June 30, 2018	$	46,441

Remaining Performance Obligation

The following table illustrates estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of June 30, 2018. The Company has elected to exclude short term contracts, sales and usage based royalties and any other variable consideration recognized on an "as invoiced" basis.

Contract liabilities to be recognized in:	Amount
2018	$	16,533
2019	8,035
2020	2,179
2021	2,012
2022	1,873
Thereafter	15,809
Total	$	46,441

Impact of ASC 606

The following tables reflect the impact of adoption of ASC 606 on our consolidated statements of operations for the three and six months ended June 30, 2018, cash flows from operating activities for the six months ended June 30, 2018 and our condensed consolidated balance sheet as of June 30, 2018 and the amounts as if the Previous Standards were in effect (“Amounts Under Previous Standards”):

Consolidated statement of operations

	As reported for the three months ended June 30, 2018			Total adjustments			Amounts under Previous Standards			As reported for the six months ended June 30, 2018			Total adjustments			Amounts under Previous Standards
Revenue:
Franchise	$	45,417		$	762		$	46,179		$	87,579		$	2,527		$	90,106
Commission income	1,575			—			1,575			3,563			—			3,563
National advertising fund revenue	11,158			(11,158		)	—			21,620			(21,620		)	—
Corporate-owned stores	34,252			—			34,252			66,959			—			66,959
Equipment	48,148			—			48,148			82,161			—			82,161
Total revenue	140,550			(10,396		)	130,154			261,882			(19,093		)	242,789
Operating costs and expenses:
Cost of revenue	36,744			—			36,744			63,244			—			63,244
Store operations	18,047			—			18,047			36,403			—			36,403
Selling, general and administrative	17,210			—			17,210			34,831			—			34,831
National advertising fund expense	11,158			(11,158		)	—			21,620			(21,620		)	—
Depreciation and amortization	8,619			—			8,619			17,084			—			17,084
Other loss (gain)	(39		)	—			(39		)	971			—			971
Total operating costs and expenses	91,739			(11,158		)	80,581			174,153			(21,620		)	152,533
Income from operations	48,811			762			49,573			87,729			2,527			90,256
Other expense, net:
Interest expense, net	(8,628		)	—			(8,628		)	(17,361		)	—			(17,361		)
Other (expense) income	(502		)	—			(502		)	(310		)	—			(310		)
Total other expense, net	(9,130		)	—			(9,130		)	(17,671		)	—			(17,671		)
Income before income taxes	39,681			762			40,443			70,058			2,527			72,585
Provision for income taxes	9,263			200			9,463			16,146			624			16,770
Net income	30,418			562			30,980			53,912			1,903			55,815
Less net income attributable to non-controlling interests	4,544			83			4,627			8,157			279			8,436
Net income attributable to Planet Fitness, Inc.	$	25,874		$	479		$	26,353		$	45,755		$	1,624		$	47,379
Net income per share of Class A common stock:
Basic	$	0.30					$	0.30		$	0.52					$	0.54
Diluted	$	0.29					$	0.30		$	0.52					$	0.54

Consolidated Statement of Cash Flows

	As reported June 30, 2018			Total adjustments			Amounts under Previous Standards
Cash flows from operating activities:
Net income	$	53,912		$	1,903		$	55,815
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	17,084			—			17,084
Amortization of deferred financing costs	973			—			973
Amortization of favorable leases and asset retirement obligations	186			—			186
Amortization of interest rate caps	446			—			446
Deferred tax expense	13,300			—			13,300
Gain on re-measurement of tax benefit arrangement	(354		)	—			(354		)
Provision for bad debts	(8		)	—			(8		)
Loss on reacquired franchise rights	350			—			350
Loss (gain) on disposal of property and equipment	547			—			547
Equity-based compensation	2,687			—			2,687
Changes in operating assets and liabilities, excluding effects of acquisitions:
Accounts receivable	22,281			—			22,281
Due to and due from related parties	3,375			—			3,375
Inventory	(501		)	—			(501		)
Other assets and other current assets	(3,109		)	—			(3,109		)
National advertising fund	(1,634		)	—			(1,634		)
Accounts payable and accrued expenses	(16,884		)	—			(16,884		)
Other liabilities and other current liabilities	(2,908		)	—			(2,908		)
Income taxes	131			624			755
Payable to related parties pursuant to tax benefit arrangements	(21,706		)	—			(21,706		)
Equipment deposits	2,503			—			2,503
Deferred revenue	6,229			(2,527		)	3,702
Deferred rent	1594			—			1,594
Net cash provided by operating activities	$	78,494		$	—		$	78,494

Consolidated Balance Sheet

	As reported June 30, 2018			Total adjustments			Amounts under Previous Standards
Assets
Current assets:
Cash and cash equivalents	$	147,784		$	—		$	147,784
Accounts receivable, net	14,932			—			14,932
Due from related parties	—			—			—
Inventory	3,193			—			3,193
Restricted assets – national advertising fund	73			—			73
Deferred expenses – national advertising fund	1,648			—			1,648
Prepaid expenses	3,796			—			3,796
Other receivables	23,343			—			23,343
Other current assets	5,916			—			5,916
Total current assets	200,685			—			200,685
Property and equipment, net	87,570			—			87,570
Intangible assets, net	237,092			—			237,092
Goodwill	191,038			—			191,038
Deferred income taxes	406,699			(3,285		)	403,414
Other assets, net	1,637			—			1,637
Total assets	$	1,124,721		$	(3,285	)	$	1,121,436
Liabilities and stockholders' equity (deficit)
Current liabilities:
Current maturities of long-term debt	$	7,185		$	—		$	7,185
Accounts payable	16,268			—			16,268
Accrued expenses	14,715			624			15,339
Equipment deposits	9,001			—			9,001
Restricted liabilities – national advertising fund	73			—			73
Deferred revenue, current	23,186			306			23,492
Payable pursuant to tax benefit arrangements, current	25,578			—			25,578
Other current liabilities	436			—			436
Total current liabilities	96,442			930			97,372
Long-term debt, net of current maturities	693,957			—			693,957
Deferred rent, net of current portion	7,700			—			7,700
Deferred revenue, net of current portion	23,255			(15,068		)	8,187
Deferred tax liabilities	1,389			—			1,389
Payable pursuant to tax benefit arrangements, net of current portion	391,876			—			391,876
Other liabilities	1,350			—			1,350
Total noncurrent liabilities	1,119,527			(15,068		)	1,104,459
Stockholders' equity (deficit):
Class A common stock	9			—			9
Class B common stock	1			—			1
Accumulated other comprehensive loss	(385		)	—			(385		)
Additional paid in capital	14,744			—			14,744
Accumulated deficit	(94,348		)	10,574			(83,774		)
Total stockholders' deficit attributable to Planet Fitness Inc.	(79,979		)	10,574			(69,405		)
Non-controlling interests	(11,269		)	279			(10,990		)
Total stockholders' deficit	(91,248		)	10,853			(80,395		)
Total liabilities and stockholders' deficit	$	1,124,721		$	(3,285	)	$	1,121,436

As a result of applying the modified retrospective method to transition to ASC 606, the following adjustments were made to the consolidated balance sheet as of January 1, 2018 (in millions):

	As Reported December 31,			Total adjustments			Adjusted January 1,
	2017						2018
Assets
Current assets:
Cash and cash equivalents	$	113,080		$	—		$	113,080
Accounts receivable, net	37,272			—			37,272
Due from related parties	3,020			—			3,020
Inventory	2,692			—			2,692
Restricted assets – national advertising fund	499			—			499
Prepaid expenses	3,929			—			3,929
Other receivables	9,562			—			9,562
Other current assets	6,947			—			6,947
Total current assets	177,001			—			177,001
Property and equipment, net	83,327			—			83,327
Intangible assets, net	235,657			—			235,657
Goodwill	176,981			—			176,981
Deferred income taxes	407,782			3,285			411,067
Other assets, net	11,717			—			11,717
Total assets	$	1,092,465		$	3,285		$	1,095,750
Liabilities and stockholders' equity (deficit)
Current liabilities:
Current maturities of long-term debt	$	7,185		$	—		$	7,185
Accounts payable	28,648			—			28,648
Accrued expenses	18,590			—			18,590
Equipment deposits	6,498			—			6,498
Restricted liabilities – national advertising fund	490			—			490
Deferred revenue, current	19,083			(764		)	18,319
Payable pursuant to tax benefit arrangements, current	31,062			—			31,062
Other current liabilities	474			—			474
Total current liabilities	112,030			(764		)	111,266
Long-term debt, net of current maturities	696,576			—			696,576
Deferred rent, net of current portion	6,127			—			6,127
Deferred revenue, net of current portion	8,440			13,241			21,681
Deferred tax liabilities	1,629			—			1,629
Payable pursuant to tax benefit arrangements, net of current portion	400,298			—			400,298
Other liabilities	4,302			—			4,302
Total noncurrent liabilities	1,117,372			13,241			1,130,613
Stockholders' equity (deficit):
Class A common stock	9			—			9
Class B common stock	1			—			1
Accumulated other comprehensive loss	(648		)	—			(648		)
Additional paid in capital	12,118			—			12,118
Accumulated deficit	(130,966		)	(9,192		)	(140,158		)
Total stockholders' deficit attributable to Planet Fitness Inc.	(119,486		)	(9,192		)	(128,678		)
Non-controlling interests	(17,451		)	—			(17,451		)
Total stockholders' deficit	(136,937		)	(9,192		)	(146,129		)
Total liabilities and stockholders' deficit	$	1,092,465		$	3,285		$	1,095,750