##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2004
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT
 For the transition period from  to
 Commission File Number: 1-13290
 
 The Sports Club Company, Inc.
 (
 Delaware
    
    95-4479735(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)11100 Santa Monica Blvd., Suite 300Los Angeles, California
    
    90025(Address of registrants principal executive offices)
    
    (Zip Code)Registrants
telephone number, including area code: (310) 479-5200Securities registered pursuant to Section 12(b) of the Act:
    
    Name of each exchange on whichTitle of each class
    
    registeredCommon Stock $.01 par value
    
    American Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act:
    
    None
 
 o þ
 o
 o þ
 o o




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TABLE OF CONTENTS  PART IITEM 1. BUSINESSITEM 2. PROPERTIESITEM 3. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERSPART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED MATTERSITEM 6. SELECTED CONSOLIDATED FINANCIAL DATAITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 8. FINANCIAL STATEMENTSITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURESITEM 9A. CONTROLS AND PROCEDURESPART IIIITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTITEM 11. EXECUTIVE COMPENSATIONITEM 12. SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSPART IVITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULESSIGNATURESEXHIBIT 4.20EXHIBIT 10.84EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 23.2EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2    Table of Contents  
 PART I
 
 ITEM 1. BUSINESS
 General
    Recent Events
 Sale of Assets and Debt Restructuring
  2




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Issuance of Preferred Stock
   The Sports Club/LA
  
    
    large, fully equipped gyms with state-of-the-art fitness equipment, including weight
training, cardio- vascular equipment, flexibility centers and functional performance areas,
    
    basketball, volleyball, racquetball, squash, tennis and paddle tennis courts,
    
    group exercise studios featuring classes throughout the day and evening, seven days a
week, including aerobics, yoga, dance, muscle conditioning, boxing, martial arts, pilates
and bodymind,
    
    group cycling studios,
    
    rock climbing walls,
    
    boxing studios,
    
    swimming pools, sundecks, golf practice nets and running tracks,
    
    destination city spa offering massage, facials and full body treatments,
    
    mens and womens locker rooms featuring wood lockers,
    
    steam rooms, saunas and Jacuzzis,
 3




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
    
    restaurants, sports bars, private dining/conference rooms and media centers,
    
    valet parking, pro shops, hair salons and childcare services,
    
    sports medicine and physical therapy facilities,
    
    personal trainers to develop and supervise members exercise routines,
    
    registered dietitians for nutritional consultations,
    
    FitLab assessment centers,
    
    PTS Private Trainer System nutritional programs and products,
    
    interactive childrens classes, as well as supervised age-specific junior recreation
rooms and junior programs such as gymnastics, martial arts and dance,
    
    instruction in racquet sports, golf, swimming, boxing, martial arts and rock climbing,
    
    full-time activities directors responsible for social and media events for members,
including organizing trips, lectures and charity events,
    
    sports instructors who present sports tournaments, leagues and classes, and
    
    wellness protocols such as exercise regimens designed for specific groups of members.
   nd
 4




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The SportsMed Company, Inc.
  Development of New Clubs
 Recent New Club Developments.
  Performance of Newly Developed and Acquired Clubs.
 5




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Future New Club Developments
   Sales and Marketing
 Strategy.
 Referrals, Endorsements and Advertising.
 Targeted Members.
 Corporate Programs.
 Medical Referrals.
 6




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Family Programs.
 Senior Programs.
 Employee Training
    7




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Membership Programs
   Executive Membership.
 Health Membership.
 Racquet Sports Membership.
 Competition
  8




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Trademarks and Trade Names
   Splash, For Kids Only
 Government Regulation
    9




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Employees
  Available Information
  10




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ITEM 2. PROPERTIES
   Approximate
    
    Open Date
    
    Own or LeaseClub
    
    Square Feet
    
    (1)
    
    Expiration Date
    
    Renewal OptionThe Sports Club/LA  Los Angeles (2)
    
    
    100,000
    
    
    
    1994 A
    
    
    Own
    
    N/AThe Sports Club/LA  Orange County
    
    
    130,000
    
    
    
    1994 A
    
    
    Own
    
    N/AReebok Sports Club/NY(3)
    
    
    140,000
    
    
    
    1995 O
    
    
    
    4/17/15
    
    
    Three 14-year optionsThe Sports Club/LA  Rockefeller Center
    
    
    90,000
    
    
    
    2000 O
    
    
    
    1/31/13
    
    
    Two 5-year optionsThe Sports Club/LA  Upper East Side
    
    
    140,000
    
    
    
    2000 O
    
    
    
    12/31/20
    
    
    Two 5-year optionsThe Sports Club/LA  Washington D.C.(4)
    
    
    100,000
    
    
    
    2000 O
    
    
    
    10/31/20
    
    
    Three 14-year optionsThe Sports Club/LA  Boston(4)
    
    
    100,000
    
    
    
    2001 O
    
    
    
    8/31/21
    
    
    Three 14-year optionsThe Sports Club/LA  San Francisco(5)
    
    
    90,000
    
    
    
    2001 O
    
    
    
    9/30/21
    
    
    Three 14-year optionsThe Sports Club/LA  Beverly Hills
    
    
    40,000
    
    
    
    2003 O
    
    
    
    4/30/18
    
    
    One 10-year option
 
 (1)
    
    Date of acquisition (A) or opening (O).(2)
    
    D. Michael Talla, our Chairman, has the right to 49.9% of the first $300,000 of annual
operating income from the partnership, which owns The Sports Club/LA  Los Angeles.(3)
    
    We have entered into a lease agreement with Millennium with respect to this property. We are
entitled to certain priority distributions from the partnership that owns this Club. After
payment of such priority distributions, which is expected to occur in the first half of 2005,
we are entitled to 60% of all additional profits.(4)
    
    We have entered into a lease agreement with Millennium for this Club. The lease provides
that Millennium is to receive 25% of cash flows as additional rent after we earn certain
priority distributions.(5)
    
    We have entered into a lease agreement with Millennium for this Club. The lease provides
that Millennium is to receive 60% of cash flows as additional rent after we earn certain
priority distributions.   
 ITEM 3. LEGAL PROCEEDINGS
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
  12




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PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED MATTERS
  Price Range of Common StockCalendar Quarter
    
    High
    
    LowYear Ended December 31, 2003:First Quarter
    
    $
    2.50
    
    
    $
    2.15Second Quarter
    
    
    2.87
    
    
    
    2.40Third Quarter
    
    
    3.00
    
    
    
    2.50Fourth Quarter
    
    
    2.70
    
    
    
    1.65Year Ended December 31, 2004:First Quarter
    
    
    2.35
    
    
    
    1.80Second Quarter
    
    
    1.72
    
    
    
    1.45Third Quarter
    
    
    1.75
    
    
    
    1.26Fourth Quarter
    
    
    1.84
    
    
    
    1.62Year Ending December 31, 2005:First Quarter
    
    
    1.95
    
    
    
    1.39Second Quarter
    
    
    1.95
    
    
    
    1.46Third Quarter (through September 15th)
    
    
    1.69
    
    
    
    1.37
  Company Guide
   13




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Dividend Policy
  14




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Equity Compensation Plan Information
  Number of Securitiesto be Issued Upon
    
    Weighted AverageExercise of
    
    Exercise Price of
    
    Number of SecuritiesOutstanding Options,
    
    Outstanding Options,
    
    Remaining AvailablePlan Category
    
    Warrants and Rights
    
    Warrants and Rights
    
    for Future IssuanceEquity compensation
plans approved by
security holders:The Sports Club
Company, Inc. 2001
Stock Incentive
Plan
    
    
    350,839
    
    
    
    3.1087
    
    
    
    2,149,161The Sports Club
Company, Inc. 1994
Stock Incentive
Plan (as amended
and restated June
3, 1998)
    
    
    837,494
    
    
    
    5.5054
    
    
    
    The Sports Club
Company, Inc.
Amended and
Restated 1994 Stock
Compensation Plan
(1)
    
    
    
    
    
    
    
    
    
    
    Equity compensation
plans not approved
by security
holders:No such plans
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    1,188,333
    
    
    
    4.7978
    
    
    
    2,149,161
 
 (1)
    
    50,000 shares had been reserved under this plan for issuance to non-employee directors on an
annual basis each November 15. As of 2003 all shares under the plan had been awarded and no
further action has been taken or is contemplated in connection with the plan. 15




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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
  Fiscal Year Ended December 31,2000
    
    
    2001
    
    
    2002
    
    
    2003
    
    
    2004(Dollars in thousands, except per share data)Statement of Operations Data:Revenues:Membership revenues
    
    $
    26,127
    
    
    $
    27,155
    
    
    $
    23,694
    
    
    $
    25,141
    
    
    $
    29,433Products and services
    
    
    13,462
    
    
    
    13,164
    
    
    
    11,350
    
    
    
    11,904
    
    
    
    14,239Total revenues
    
    
    39,589
    
    
    
    40,319
    
    
    
    35,044
    
    
    
    37,045
    
    
    
    43,672Operating expenses:Club operating costs
    
    
    14,750
    
    
    
    15,703
    
    
    
    11,033
    
    
    
    12,567
    
    
    
    17,647Cost of products and services
    
    
    10,583
    
    
    
    11,061
    
    
    
    8,816
    
    
    
    9,517
    
    
    
    12,398Selling and marketing
    
    
    1,364
    
    
    
    1,376
    
    
    
    936
    
    
    
    1,043
    
    
    
    1,492General and administrative
    
    
    7,112
    
    
    
    8,116
    
    
    
    7,114
    
    
    
    7,517
    
    
    
    8,148Pre-opening expenses
    
    
    125
    
    
    
    405
    
    
    
    130
    
    
    
    2,258
    
    
    
    46Impairment charge
    
    
    
    
    
    
    5,044
    
    
    
    
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    2,963
    
    
    
    3,571
    
    
    
    3,532
    
    
    
    3,706
    
    
    
    4,369Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,104Total operating expenses
    
    
    36,897
    
    
    
    45,276
    
    
    
    31,561
    
    
    
    36,608
    
    
    
    45,204Income (loss) from operations
    
    
    2,692
    
    
    
    (4,957
    )
    
    
    3,483
    
    
    
    437
    
    
    
    (1,532
    )Other income (expense):Interest, net
    
    
    (1,924
    )
    
    
    (4,616
    )
    
    
    (4,909
    )
    
    
    (5,440
    )
    
    
    (6,580
    )Minority interests
    
    
    (150
    )
    
    
    (150
    )
    
    
    (150
    )
    
    
    (150
    )
    
    
    (149
    )Other
    
    
    (3,242
    )
    
    
    
    
    
    
    97
    
    
    
    
    
    
    
    Loss from continuing operations before income taxes and
loss on discontinued operations
    
    
    (2,624
    )
    
    
    (9,723
    )
    
    
    (1,479
    )
    
    
    (5,153
    )
    
    
    (8,261
    )Provision (benefit) for income taxes
    
    
    (2,231
    )
    
    
    14,299
    
    
    
    (900
    )
    
    
    
    
    
    
    Loss from continuing operations
    
    
    (393
    )
    
    
    (24,022
    )
    
    
    (579
    )
    
    
    (5,153
    )
    
    
    (8,261
    )Loss on discontinued operations
    
    
    (12,111
    )
    
    
    (16,656
    )
    
    
    (22,168
    )
    
    
    (13,221
    )
    
    
    (12,496
    )Net loss
    
    
    (12,504
    )
    
    
    (40,678
    )
    
    
    (22,747
    )
    
    
    (18,374
    )
    
    
    (20,757
    )Dividends on Preferred Stock
    
    
    
    
    
    
    
    
    
    
    888
    
    
    
    1,400
    
    
    
    1,871Net loss attributable to common stockholders
    
    $
    (12,504
    )
    
    $
    (40,678
    )
    
    $
    (23,635
    )
    
    $
    (19,774
    )
    
    $
    (22,628
    )Net loss per share attributable to common stockholders
(basic and diluted):Discontinued operations
    
    $
    (0.68
    )
    
    $
    (0.93
    )
    
    $
    (1.23
    )
    
    $
    (0.72
    )
    
    $
    (0.67
    )Continuing operations
    
    
    (0.02
    )
    
    
    (1.34
    )
    
    
    (0.08
    )
    
    
    (0.36
    )
    
    
    (0.54
    )Net income (loss) per share
    
    $
    (0.70
    )
    
    $
    (2.27
    )
    
    $
    (1.31
    )
    
    $
    (1.08
    )
    
    $
    (1.21
    )Weighted average number of common shares outstanding:Basic and diluted
    
    
    17,773
    
    
    
    17,939
    
    
    
    18,080
    
    
    
    18,316
    
    
    
    18,733
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At December 31,2000
    
    
    2001
    
    
    2002
    
    
    2003
    
    
    2004Membership Data:Continuing Operations:Beginning Membership
    
    
    19,546
    
    
    
    20,111
    
    
    
    20,528
    
    
    
    15,522
    
    
    
    17,916New Sales
    
    
    5,877
    
    
    
    6,471
    
    
    
    4,015
    
    
    
    6,426
    
    
    
    5,466Attrition
    
    
    5,312
    
    
    
    6,054
    
    
    
    3,918
    
    
    
    4,032
    
    
    
    4,266Sold Clubs
    
    
    
    
    
    
    
    
    
    
    5,103
    
    
    
    
    
    
    
    Ending Membership
    
    
    20,111
    
    
    
    20,528
    
    
    
    15,522
    
    
    
    17,916
    
    
    
    19,116Discontinued Operations:Beginning Membership
    
    
    9,754
    
    
    
    18,463
    
    
    
    27,971
    
    
    
    33,355
    
    
    
    35,461New Sales
    
    
    11,354
    
    
    
    15,307
    
    
    
    13,097
    
    
    
    12,089
    
    
    
    12,117Attrition
    
    
    2,645
    
    
    
    5,799
    
    
    
    7,713
    
    
    
    9,983
    
    
    
    10,338Ending Membership
    
    
    18,463
    
    
    
    27,971
    
    
    
    33,355
    
    
    
    35,461
    
    
    
    37,240
 At December 31,2000
    
    
    2001
    
    
    2002
    
    
    2003
    
    
    2004(Dollars in thousands)Balance Sheet Data:Cash and cash equivalents
    
    $
    11,059
    
    
    $
    1,482
    
    
    $
    3,185
    
    
    $
    1,932
    
    
    $
    7,559Restricted cash
    
    
    6,996
    
    
    
    
    
    
    
    227
    
    
    
    4,432
    
    
    
    3,403Property and equipment, net
    
    
    70,440
    
    
    
    67,860
    
    
    
    57,788
    
    
    
    65,530
    
    
    
    63,622Assets held for sale
    
    
    135,823
    
    
    
    175,246
    
    
    
    164,278
    
    
    
    154,659
    
    
    
    143,408Total assets
    
    
    250,598
    
    
    
    261,043
    
    
    
    243,261
    
    
    
    245,498
    
    
    
    231,542Deferred membership revenue (Short and Long-Term)
    
    
    4,577
    
    
    
    4,797
    
    
    
    4,233
    
    
    
    5,499
    
    
    
    6,630Long-term debt including current installments
    
    
    110,331
    
    
    
    115,491
    
    
    
    104,040
    
    
    
    121,830
    
    
    
    119,730Liabilities related to assets held for sale
(Current and Non-Current)
    
    
    41,614
    
    
    
    85,383
    
    
    
    86,907
    
    
    
    85,347
    
    
    
    85,169Redeemable Preferred Stock (Series B and Series E)
    
    
    
    
    
    
    
    
    
    
    10,727
    
    
    
    11,761
    
    
    
    14,796Stockholders equity (deficit)
    
    
    82,793
    
    
    
    42,469
    
    
    
    24,145
    
    
    
    5,454
    
    
    
    (9,258
    )
 17




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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The following discussion of our historical results of operations and our liquidity and
capital resources should be read in conjunction with the consolidated financial statements and
related notes appearing elsewhere herein. The preparation of these financial statements requires
us to make estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses and related disclosures. On an on-going basis, we evaluate our estimates and
judgments that are based on historical experience and other assumptions that we believe to be
reasonable under the circumstances. This discussion contains forward-looking statements that
involve risks and uncertainties. Our actual results could differ materially from those anticipated
in these forward-looking statements.
 Overview
     18




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Critical Accounting Policies and Estimates
  Revenue Recognition. Revenue Arrangement with
Multiple Elements
 Allowance for doubtful accounts.
 Lease
Accounting.
 Impairment of long-lived assets.
 19




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Valuation of goodwill. Goodwill and Other Intangible Assets
 Valuation of deferred income taxes.
 Interest expense.
 Results of Operations
  Fiscal 2004 compared to Fiscal 2003
   20




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21




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Fiscal 2003 compared to Fiscal 2002
        22




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Goodwill and Other Intangible Assets
  Liquidity and Capital Resources
 Liquidity
      23




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Operating Activities
  Investing Activities
     Financing Activities
 th th
  24




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Contractual Obligations
  Payments Due By PeriodLess
    
    
    
    
    
    
    
    
    
    
    MoreThan 1
    
    
    
    
    
    
    
    
    
    
    Than 5Contractual Obligations
    
    Total
    
    
    Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    YearsSenior Secured Notes (1)
    
    $
    100,000
    
    
    $
    65,000
    
    
    $
    35,000
    
    
    $
    
    
    
    $
    Interest on Senior Secured Notes (1)
    
    
    17,063
    
    
    
    11,375
    
    
    
    5,688
    
    
    
    
    
    
    
    Mortgage note (2)
    
    
    19,550
    
    
    
    326
    
    
    
    727
    
    
    
    18,497
    
    
    
    Equipment financing loans (3)
    
    
    180
    
    
    
    118
    
    
    
    44
    
    
    
    18
    
    
    
    Operating leases (4)
    
    
    337,575
    
    
    
    24,342
    
    
    
    48,071
    
    
    
    48,701
    
    
    
    216,461Minority interest (5)
    
    
    750
    
    
    
    150
    
    
    
    600
    
    
    
    
    
    
    
    Redeemable Preferred Stock
(6)
    
    
    14,796
    
    
    
    
    
    
    
    2,000
    
    
    
    12,796
    
    
    
    Total
    
    $
    489,914
    
    
    $
    101,311
    
    
    $
    92,130
    
    
    $
    80,012
    
    
    $
    216,461
 
 (1)
    
    On April 1, 1999, we issued in a private placement $100.0 million of 11 3/8% Senior
Secured Notes due in March 2006 with interest due semi-annually.(2)
    
    On June 12, 2003, we obtained financing in the form of a secured five-year promissory loan
in the amount of $20.0 million. The loan bears interest at a fixed interest rate of 7.25%;
requires monthly principal and interest payments of $144,561; and requires a final principal
payment of $18.3 million on July 1, 2008 .(3)
    
    The equipment financing loans are secured by furniture, fixtures and equipment. The
amounts are generally repayable in monthly payments over four or five years with effective interest
rates between 7.12% and 13.1%.(4)
    
    We lease certain facilities pursuant to various operating lease agreements. Club facility
leases are generally long-term and noncancelable triple-net leases (requiring us to pay all real
estate taxes, insurance and maintenance expenses), and have an average remaining term of 42.16
years, including renewal options which are included in the lease term, with the earliest lease
expiration date of January 31, 2013. We are also obligated under lease agreements for six of our
former Spectrum Club locations. We have subleased each of these properties to the buyer of these
Clubs under sublease agreements which provide that all operating costs of these facilities be
assumed by the new owners. Amounts due for Spectrum Club leases are excluded from this table.
(See Note 8 to Consolidated Financial Statements).(5)
    
    We own a 50.1% interest in the partnership that owns The Sports Club/LA  Los Angeles, and
D. Michael Talla, our Chairman, beneficially owns the remaining 49.9%. We have the option to
redeem Mr. Tallas preferred partnership interest for $600,000, which expires on January 31, 2006.
We have included the annual preferred distribution of $149,700 to Mr. Talla in the above table for
the next year and the redemption amount is included in 2006 (Year 2). 25




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(6)
    
    On March 18, 2002, we issued 10,500 shares of Series B Preferred Stock. The stock is
redeemable by the stockholders on March 18, 2009. On September 14, 2004, we issued 20,000 shares
of Series E Preferred Stock. The stock is redeemable by the stockholders after May 31, 2006. Impact of Inflation
  Seasonality of Business
  Forward Looking Statements
  
    
    the availability and adequacy of our cash flow and financing facilities for our
requirements, including payment of the Senior Secured Notes,
    
    our ability to attract and retain members, which depends on competition, market
acceptance of new and existing sports and fitness clubs and services, demand for sports
and fitness club services generally and competitive pricing trends in the sports and
fitness market,
    
    our ability to successfully develop new sports and fitness clubs,
    
    disputes or other problems arising with our development partners or landlords,
    
    changes in economic, competitive, demographic and other conditions in the
geographic areas in which we operate, including business interruptions resulting from
earthquakes or other causes,
    
    competition,
    
    changes in personnel or compensation, and
    
    changes in statutes and regulations or legal proceedings and rulings.
  26




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##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   Senior Secured Notes
    
    $
    94,000First Mortgage Note
    
    
    19,500$
    113,500
 
 ITEM 8. FINANCIAL STATEMENTS
 Index to Consolidated Financial Statements
 PAGEReport of Independent Registered Public Accounting Firm for 2004
    
    
    F-1Report of Independent Registered Public Accounting Firm for 2002 and 2003
    
    
    F-2Consolidated Balance Sheets as of December 31, 2003 and 2004
    
    
    F-3Consolidated Statements of Operations for each of the Years in the Three-Year Period
ended December 31, 2004
    
    
    F-4Consolidated Statements of Stockholders Equity (Deficit) for each of the Years in
the Three-Year Period
ended December 31, 2004
    
    
    F-5Consolidated Statements of Cash Flows for each of the Years in the Three-Year Period
ended December 31, 2004
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7
 Consolidated Financial Statement Schedule
 Valuation and Qualifying Accounts
    
    
    F-34
  
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
   27




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##### Table of Contents



ITEM 9A. CONTROLS AND PROCEDURES
      28




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##### Table of Contents




 
 
 
 29




---



##### Table of Contents




    
    the Company has worked with an accounting firm (other than Companys independent
auditor) to consult with on accounting issues;
    
    the Company has reviewed new accounting pronouncements to determine the applicability
to the Company;
    
    the Company has subscribed to professional publications that discuss new accounting
rules and regulations;
    
    several members of Companys accounting management attended financial related seminars.
 30




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     /s/
Stonefield Josephson, Inc
 F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     Goodwill and Other Intangible Assets
  
 F-2




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##### Table of Contents



THE SPORTS CLUB COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2003 and 2004
(in thousands, except per share amounts)
 2003
    
    
    2004ASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,932
    
    
    $
    7,559Accounts receivable, net of allowance for doubtful accounts of $382 and $396 at
December 31, 2003 and 2004, respectively
    
    
    2,103
    
    
    
    2,030Inventories
    
    
    544
    
    
    
    662Prepaid expenses
    
    
    1,345
    
    
    
    993Assets held for sale
    
    
    3,688
    
    
    
    143,408Total current assets
    
    
    9,612
    
    
    
    154,652Property and equipment, net
    
    
    65,530
    
    
    
    63,622Goodwill
    
    
    7,315
    
    
    
    7,315Restricted cash
    
    
    4,432
    
    
    
    3,403Other assets
    
    
    7,638
    
    
    
    2,550Assets held for sale
    
    
    150,971
    
    
    
    $
    245,498
    
    
    $
    231,542LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current liabilities:Current installments of notes payable and equipment financing loans
    
    $
    2,099
    
    
    $
    65,444Accounts payable
    
    
    2,464
    
    
    
    2,040Accrued liabilities
    
    
    10,705
    
    
    
    9,481Deferred revenues
    
    
    4,737
    
    
    
    6,013Liabilities related to assets held for sale
    
    
    17,473
    
    
    
    85,169Total current liabilities
    
    
    37,478
    
    
    
    168,147Notes payable and equipment financing loans, less current installments
    
    
    119,731
    
    
    
    54,286Deferred lease obligations
    
    
    1,838
    
    
    
    2,354Deferred revenues
    
    
    762
    
    
    
    617Minority interest
    
    
    600
    
    
    
    600Liabilities related to assets held for sale
    
    
    67,874
    
    
    
    Total liabilities
    
    
    228,283
    
    
    
    226,004Commitments and contingencies:Redeemable
Convertible Preferred Stock, Series B, $.01 par value, 10,500 shares authorized,
issued and outstanding at December 31, 2003 and 2004
(liquidation preference of $12,198 and $13,148 at December 31, 2003 and 2004,
respectively)
    
    
    11,761
    
    
    
    12,796Redeemable Preferred Stock, Series E, $.01 par value, 20,000 shares authorized, issued and outstanding
at December 31, 2004
    
    
    
    
    
    
    2,000Stockholders equity (deficit):Preferred Stock, $.01 par value, 984,500 and 899,500 shares authorized at December 31,
2003 and 2004, respectively; no shares issued or outstanding
    
    
    
    
    
    
    Convertible Preferred Stock, Series C, $.01 par value, 5,000 shares authorized, issued and
outstanding at December 31, 2003 and 2004 (liquidation preference of $5,590 and $6,040 at
December 31, 2003 and 2004, respectively)
    
    
    5,590
    
    
    
    6,040Convertible Preferred Stock, Series D, $.01 par value, 65,000 shares authorized; issued and
outstanding at December 31, 2004 (liquidation preference of $6,971 at December 31, 2004)
    
    
    
    
    
    
    6,543Common Stock, $.01 par value, 40,000,000 shares authorized;
21,074,717 shares issued and outstanding at December 31, 2003 and 2004
    
    
    211
    
    
    
    211Additional paid-in capital
    
    
    100,348
    
    
    
    98,392Accumulated deficit
    
    
    (86,217
    )
    
    
    (106,974
    )Treasury Stock, at cost, 2,650,003 and 2,097,079 shares at
December 31, 2003 and 2004, respectively
    
    
    (14,478
    )
    
    
    (13,470
    )Total Stockholders equity (deficit)
    
    
    5,454
    
    
    
    (9,258
    )$
    245,498
    
    
    $
    231,542
  F-3




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##### Table of Contents



THE SPORTS CLUB COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three-Year Period ended December 31, 2004
(in thousands, except per share amounts)
 2002
    
    
    2003
    
    
    2004Revenues:Membership revenues
    
    $
    23,694
    
    
    $
    25,141
    
    
    $
    29,433Products and services
    
    
    11,350
    
    
    
    11,904
    
    
    
    14,239Total revenue
    
    
    35,044
    
    
    
    37,045
    
    
    
    43,672Operating expenses:Club operating costs
    
    
    11,033
    
    
    
    12,567
    
    
    
    17,647Cost of products and services
    
    
    8,816
    
    
    
    9,517
    
    
    
    12,398Selling and marketing
    
    
    936
    
    
    
    1,043
    
    
    
    1,492General and administrative
    
    
    7,114
    
    
    
    7,517
    
    
    
    8,148Pre-opening expenses
    
    
    130
    
    
    
    2,258
    
    
    
    46Depreciation and amortization
    
    
    3,532
    
    
    
    3,706
    
    
    
    4,369Other
    
    
    
    
    
    
    
    
    
    
    1,104Total operating expenses
    
    
    31,561
    
    
    
    36,608
    
    
    
    45,204Income (loss) from operations
    
    
    3,483
    
    
    
    437
    
    
    
    (1,532
    )Other income (expense):Interest, net
    
    
    (4,909
    )
    
    
    (5,440
    )
    
    
    (6,580
    )Minority interests
    
    
    (150
    )
    
    
    (150
    )
    
    
    (149
    )Other
    
    
    97
    
    
    
    
    
    
    
    Loss from continuing operations before
income tax benefit
    
    
    (1,479
    )
    
    
    (5,153
    )
    
    
    (8,261
    )Income tax benefit
    
    
    (900
    )
    
    
    
    
    
    
    Loss from continuing operations
    
    
    (579
    )
    
    
    (5,153
    )
    
    
    (8,261
    )Discontinued operations:Loss from operations of discontinued operations
    
    
    (17,034
    )
    
    
    (13,221
    )
    
    
    (11,969
    )Cumulative effect of change in accounting principle
    
    
    (5,134
    )
    
    
    
    
    
    
    Loss on disposal
    
    
    
    
    
    
    
    
    
    
    (527
    )Loss from discontinued operations
    
    
    (22,168
    )
    
    
    (13,221
    )
    
    
    (12,496
    )Net loss
    
    
    (22,747
    )
    
    
    (18,374
    )
    
    
    (20,757
    )Dividends on Preferred Stock
    
    
    888
    
    
    
    1,400
    
    
    
    1,871Net loss attributable to common stockholders
    
    $
    (23,635
    )
    
    $
    (19,774
    )
    
    $
    (22,628
    )Net loss per share  basic and diluted:Continuing operations
    
    $
    (0.08
    )
    
    $
    (0.36
    )
    
    $
    (0.54
    )Discontinued operations
    
    
    (1.23
    )
    
    
    (0.72
    )
    
    
    (0.67
    )Net loss per share
    
    $
    (1.31
    )
    
    $
    (1.08
    )
    
    $
    (1.21
    )Weighted average number of common shares outstanding:Basic and diluted
    
    
    18,080
    
    
    
    18,316
    
    
    
    18,733
  F-4




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##### Table of Contents



THE SPORTS CLUB COMPANY, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
Three-Year Period ended December 31, 2004
(in thousands)
 Preferred Stock
    
    
    Preferred Stock
    
    
    
    
    
    
    
    
    
    
    AdditionalSeries C
    
    
    Series D
    
    
    Common Stock
    
    
    Paid-in
    
    
    Accumulated
    
    
    Treasury StockShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Shares
    
    
    AmountBalance, December 31, 2001
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,061
    
    
    $
    211
    
    
    $
    102,764
    
    
    $
    (45,096
    )
    
    
    3,045
    
    
    $
    (15,410
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,747
    )
    
    
    
    
    
    
    Issuance of Series C Preferred Stock
    
    
    5
    
    
    $
    5,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of Common Stock to outside directors
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    Reissuance of Treasury Stock for employee stock
plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80
    )
    
    
    226Accretion of dividends on Series B Preferred Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (748
    )
    
    
    
    
    
    
    
    
    
    
    Accretion of issuance costs on Series B Preferred
Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (70
    )
    
    
    
    
    
    
    
    
    
    
    Accretion of dividends on Series C Preferred Stock
    
    
    
    
    
    
    140
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (140
    )
    
    
    
    
    
    
    
    
    
    
    Balance, December 31, 2002
    
    
    5
    
    
    
    5,140
    
    
    
    
    
    
    
    
    
    
    
    21,069
    
    
    
    211
    
    
    
    101,821
    
    
    
    (67,843
    )
    
    
    2,965
    
    
    
    (15,184
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,374
    )
    
    
    
    
    
    
    Issuance of Common Stock to outside directors
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    Reissuance of Treasury Stock for loan guarantee fee
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (213
    )
    
    
    472Reissuance of Treasury Stock for employee stock
plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (102
    )
    
    
    234Accretion of dividends on Series B Preferred Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (950
    )
    
    
    
    
    
    
    
    
    
    
    Accretion of dividends on Series C Preferred Stock
    
    
    
    
    
    
    450
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (450
    )
    
    
    
    
    
    
    
    
    
    
    Accretion of issuance costs on Series B Preferred
Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (85
    )
    
    
    
    
    
    
    
    
    
    
    Balance, December 31, 2003
    
    
    5
    
    
    
    5,590
    
    
    
    
    
    
    
    
    
    
    
    21,075
    
    
    
    211
    
    
    
    100,348
    
    
    
    (86,217
    )
    
    
    2,650
    
    
    
    (14,478
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    


    
    
    
    
    
    
    
    
    
    

    
    
    (20,757
    )
    
    
    
    
    
    
    Issuance of Series D Preferred Stock
    
    
    
    
    
    
    
    
    
    
    65
    
    
    
    6,072
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reissuance of Treasury Stock for loan guarantee fee
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (411
    )
    
    
    752Reissuance of Treasury Stock for employee stock
plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (142
    )
    
    
    256Accretion of dividends on Series B Preferred Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (950
    )
    
    
    
    
    
    
    
    
    
    
    Accretion of dividends on Series C Preferred Stock
    
    
    
    
    
    
    450
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (450
    )
    
    
    
    
    
    
    
    
    
    
    Accretion of
dividends on Series D Preferred    Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    471
    
    
    
    
    
    
    
    
    
    
    
    (471
    )
    
    
    
    
    
    
    
    
    
    
    Accretion of issuance costs on Series B Preferred
Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (85
    )
    
    
    
    
    
    
    
    
    
    
    Balance, December 31, 2004
    
    
    5
    
    
    $
    6,040
    
    
    
    65
    
    
    $
    6,543
    
    
    
    21,075
    
    
    $
    211
    
    
    $
    98,392
    
    
    $
    (106,974
    )
    
    
    2,097
    
    
    $
    (13,470
    )
  F-5




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##### Table of Contents



THE SPORTS CLUB COMPANY, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
Three-year Period ended December 31, 2004
(in thousands)
 2002
    
    
    2003
    
    
    2004Cash flows from operating activities:Net loss
    
    $
    (22,747
    )
    
    $
    (18,374
    )
    
    $
    (20,757
    )Adjustments to reconcile net loss to cash used in operating activities:Loss from discontinued operations
    
    
    22,168
    
    
    
    13,221
    
    
    
    12,496Loss (gain) on disposition of real estate
    
    
    (127
    )
    
    
    
    
    
    
    Depreciation and amortization
    
    
    3,532
    
    
    
    3,706
    
    
    
    4,369Related party costs settled with common stock
    
    
    241
    
    
    
    718
    
    
    
    1,008Minority interests expense
    
    
    150
    
    
    
    150
    
    
    
    150Distributions to minority interests
    
    
    (150
    )
    
    
    (150
    )
    
    
    (150
    )(Increase) decrease in:Accounts receivable, net
    
    
    529
    
    
    
    17
    
    
    
    73Inventories
    
    
    (10
    )
    
    
    163
    
    
    
    (118
    )Other current assets
    
    
    (151
    )
    
    
    (655
    )
    
    
    352Other assets, net
    
    
    (2,232
    )
    
    
    72
    
    
    
    5,088Increase (decrease) in:Accounts payable
    
    
    (233
    )
    
    
    (81
    )
    
    
    (424
    )Accrued liabilities
    
    
    (67
    )
    
    
    468
    
    
    
    (1,224
    )Deferred revenues
    
    
    (238
    )
    
    
    1,266
    
    
    
    1,131Accrued lease obligations
    
    
    
    
    
    
    135
    
    
    
    516Net cash provided by operating activities
    
    
    665
    
    
    
    656
    
    
    
    2,510Cash flows from (used in) investing activities:Capital expenditures
    
    
    (2,030
    )
    
    
    (9,573
    )
    
    
    (2,461
    )Proceeds from sale of real estate  net of costs
    
    
    3,133
    
    
    
    
    
    
    
    Proceeds from sale of The Sports Club/Las Vegas  net of costs
    
    
    6,154
    
    
    
    
    
    
    
    (Increase) decrease in restricted cash
    
    
    
    
    
    
    (4,205
    )
    
    
    1,029Net cash provided by (used in) investing activities
    
    
    7,257
    
    
    
    (13,778
    )
    
    
    (1,432
    )Cash flows from financing activities:Proceeds from issuance of Preferred Stock  net of costs
    
    
    14,908
    
    
    
    
    
    
    
    8,072Proceeds from notes payable and equipment financing loans
    
    
    21,725
    
    
    
    30,741
    
    
    
    Repayments of notes payable and equipment financing loans
    
    
    (33,176
    )
    
    
    (13,710
    )
    
    
    (2,100
    )Net cash provided by financing activities
    
    
    3,457
    
    
    
    17,031
    
    
    
    5,972Cash (used
in) discontinued operations:Proceeds from sale of SportsMed facilities
    
    
    
    
    
    
    
    
    
    
    600Capital expenditures
    
    
    (4,607
    )
    
    
    (1,024
    )
    
    
    (1,179
    )Net cash used in operating activities
    
    
    (5,069
    )
    
    
    (4,138
    )
    
    
    (844
    )Net cash used in discontinued operations
    
    
    (9,676
    )
    
    
    (5,162
    )
    
    
    (1,423
    )Net increase (decrease) in cash and cash equivalents
    
    
    1,703
    
    
    
    (1,253
    )
    
    
    5,627Cash and cash equivalents at beginning of year
    
    
    1,482
    
    
    
    3,185
    
    
    
    1,932Cash and cash equivalents at end of year
    
    $
    3,185
    
    
    $
    1,932
    
    
    $
    7,559Supplemental disclosure of cash flow information:Cash paid during the year for interest
    
    $
    11,902
    
    
    $
    12,500
    
    
    $
    12,912Cash paid during the year for income taxes
    
    $
    242
    
    
    $
    386
    
    
    $
    792
  F-6




---



##### Table of Contents



THE SPORTS CLUB COMPANY, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2002, 2003 and 2004
 1. Organization
  2. Reclassifications
 Accounting for Leases,
      F-7




---



##### Table of Contents



Consolidated Balance SheetAt December 31, 2003Discontinued
    
    
    AsAs Reported
    
    
    SFAS No. 13
    
    
    Operations
    
    
    ReclassifiedASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,932
    
    
    $
    
    
    
    $
    
    
    
    $
    1,932Accounts receivable, net of allowance for doubtful accounts
    
    
    3,923
    
    
    
    
    
    
    
    (1,820
    )
    
    
    2,103Inventories
    
    
    994
    
    
    
    
    
    
    
    (450
    )
    
    
    544Prepaid expenses
    
    
    1,789
    
    
    
    
    
    
    
    (444
    )
    
    
    1,345Assets held for sale
    
    
    
    
    
    
    
    
    
    
    3,688
    
    
    
    3,688Total current assets
    
    
    8,638
    
    
    
    
    
    
    
    974
    
    
    
    9,612Property and equipment, net
    
    
    155,173
    
    
    
    61,219
    
    
    
    (150,862
    )
    
    
    65,530Goodwill
    
    
    7,660
    
    
    
    
    
    
    
    (345
    )
    
    
    7,315Restricted cash
    
    
    4,432
    
    
    
    
    
    
    
    
    
    
    
    4,432Other assets
    
    
    8,056
    
    
    
    
    
    
    
    (418
    )
    
    
    7,638Assets held for sale
    
    
    
    
    
    
    
    
    
    
    150,971
    
    
    
    150,971$
    183,959
    
    
    $
    61,219
    
    
    $
    320
    
    
    $
    245,498LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current installments of notes payable and equipment financing loans
    
    $
    2,099
    
    
    $
    
    
    
    $
    
    
    
    $
    2,099Accounts payable
    
    
    2,464
    
    
    
    
    
    
    
    
    
    
    
    2,464Accrued liabilities
    
    
    13,713
    
    
    
    483
    
    
    
    (3,491
    )
    
    
    10,705Deferred revenues
    
    
    18,292
    
    
    
    
    
    
    
    (13,555
    )
    
    
    4,737Liabilities related to assets held for sale
    
    
    
    
    
    
    
    
    
    
    17,473
    
    
    
    17,473Total current liabilities
    
    
    36,568
    
    
    
    483
    
    
    
    427
    
    
    
    37,478Notes payable and equipment financing loans, less current installments
    
    
    119,731
    
    
    
    
    
    
    
    
    
    
    
    119,731Deferred lease obligations
    
    
    8,976
    
    
    
    60,736
    
    
    
    (67,874
    )
    
    
    1,838Deferred revenues
    
    
    869
    
    
    
    
    
    
    
    (107
    )
    
    
    762Minority interest
    
    
    600
    
    
    
    
    
    
    
    
    
    
    
    600Liabilities related to assets held for sale
    
    
    
    
    
    
    
    
    
    
    67,874
    
    
    
    67,874Total liabilities
    
    
    166,744
    
    
    
    61,219
    
    
    
    320
    
    
    
    228,283Commitments and contingenciesRedeemable
Convertible Preferred Stock, Series B
    
    
    11,761
    
    
    
    
    
    
    
    
    
    
    
    11,761Stockholders equity:Convertible Preferred Stock, Series C
    
    
    5,590
    
    
    
    
    
    
    
    
    
    
    
    5,590Common Stock
    
    
    211
    
    
    
    
    
    
    
    
    
    
    
    211Additional paid-in capital
    
    
    100,348
    
    
    
    
    
    
    
    
    
    
    
    100,348Accumulated deficit
    
    
    (86,217
    )
    
    
    
    
    
    
    
    
    
    
    (86,217
    )Treasury Stock, at cost
    
    
    (14,478
    )
    
    
    
    
    
    
    
    
    
    
    (14,478
    )Total Stockholders equity
    
    
    5,454
    
    
    
    
    
    
    
    
    
    
    
    5,454$
    183,959
    
    
    $
    61,219
    
    
    $
    320
    
    
    $
    245,498
 F-8




---



##### Table of Contents



Consolidated Statement of OperationsYear Ended December 31, 2002As
    
    
    
    
    
    
    Discontinued
    
    
    
    
    
    
    AsReported
    
    
    SFAS No. 13
    
    
    Operations
    
    
    Reformat
    
    
    ReclassifiedRevenues:Membership revenues
    
    $
    120,853
    
    
    $
    
    
    
    $
    (55,868
    )
    
    $
    (41,291
    )
    
    $
    23,694Products and services
    
    
    
    
    
    
    
    
    
    
    (29,941
    )
    
    
    41,291
    
    
    
    11,350Total revenue
    
    
    120,853
    
    
    
    
    
    
    
    (85,809
    )
    
    
    
    
    
    
    35,044Operating expenses:Direct
    
    
    100,973
    
    
    
    
    
    
    
    
    
    
    
    (100,973
    )
    
    
    Club operating costs
    
    
    
    
    
    
    (2,345
    )
    
    
    (55,637
    )
    
    
    69,015
    
    
    
    11,033Cost of products and services
    
    
    
    
    
    
    
    
    
    
    (23,142
    )
    
    
    31,958
    
    
    
    8,816Selling and marketing
    
    
    4,907
    
    
    
    
    
    
    
    (3,971
    )
    
    
    
    
    
    
    936General and administrative
    
    
    7,414
    
    
    
    
    
    
    
    (300
    )
    
    
    
    
    
    
    7,114Pre-opening expenses
    
    
    130
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    130Depreciation and amortization
    
    
    11,909
    
    
    
    2,345
    
    
    
    (10,722
    )
    
    
    
    
    
    
    3,532Total operating expenses
    
    
    125,333
    
    
    
    
    
    
    
    (93,772
    )
    
    
    
    
    
    
    31,561Income (loss) from operations
    
    
    (4,480
    )
    
    
    
    
    
    
    7,963
    
    
    
    
    
    
    
    3,483Other income (expense):Interest, net
    
    
    (13,420
    )
    
    
    
    
    
    
    8,511
    
    
    
    
    
    
    
    (4,909
    )Minority interests
    
    
    (150
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (150
    )Other
    
    
    127
    
    
    
    
    
    
    
    (30
    )
    
    
    
    
    
    
    97Loss before income taxes, cumulative effect
of change in accounting principle and loss
from discontinued operations
    
    
    (17,923
    )
    
    
    
    
    
    
    16,444
    
    
    
    
    
    
    
    (1,479
    )Income tax benefit
    
    
    (310
    )
    
    
    
    
    
    
    (590
    )
    
    
    
    
    
    
    (900
    )Loss before cumulative effect
of change in accounting principle and loss
from discontinued operations
    
    
    (17,613
    )
    
    
    
    
    
    
    17,034
    
    
    
    
    
    
    
    (579
    )Cumulative effect of change in accounting principle
    
    
    (5,134
    )
    
    
    
    
    
    
    5,134
    
    
    
    
    
    
    
    Discontinued operations:Loss from operations of discontinued operations
    
    
    
    
    
    
    
    
    
    
    (17,034
    )
    
    
    
    
    
    
    (17,034
    )Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    (5,134
    )
    
    
    
    
    
    
    (5,134
    )Loss on disposal
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (22,168
    )
    
    
    
    
    
    
    (22,168
    )Net loss
    
    
    (22,747
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,747
    )Dividends on Preferred Stock
    
    
    888
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    888Net loss attributable to common stockholders
    
    $
    (23,635
    )
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (23,635
    )Net loss per share  basic and diluted:Discontinued operations
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (0.08
    )Continuing operations
    
    
    (1.31
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.23
    )Net loss per share
    
    $
    (1.31
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (1.31
    )Weighted average number of common shares outstanding:Basic and diluted
    
    
    18,080
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,080
 F-9




---



##### Table of Contents



Consolidated Statement of OperationsYear Ended December 31, 2003As
    
    
    
    
    
    
    Discontinued
    
    
    
    
    
    
    AsReported
    
    
    SFAS No. 13
    
    
    Operations
    
    
    Reformat
    
    
    ReclassifiedRevenues:Membership revenues
    
    $
    130,988
    
    
    $
    
    
    
    $
    (60,724
    )
    
    $
    (45,123
    )
    
    $
    25,141Products and services
    
    
    
    
    
    
    
    
    
    
    (33,088
    )
    
    
    44,992
    
    
    
    11,904Management fees
    
    
    
    
    
    
    
    
    
    
    (131
    )
    
    
    131
    
    
    
    Reimbursed costs
    
    
    2,383
    
    
    
    
    
    
    
    (2,383
    )
    
    
    
    
    
    
    Total revenue
    
    
    133,371
    
    
    
    
    
    
    
    (96,326
    )
    
    
    
    
    
    
    37,045Operating expenses:Direct
    
    
    107,925
    
    
    
    
    
    
    
    
    
    
    
    (107,925
    )
    
    
    Club operating costs
    
    
    
    
    
    
    (2,350
    )
    
    
    (58,765
    )
    
    
    73,682
    
    
    
    12,567Cost of products and services
    
    
    
    
    
    
    
    
    
    
    (24,726
    )
    
    
    34,243
    
    
    
    9,517Selling and marketing
    
    
    4,902
    
    
    
    
    
    
    
    (3,859
    )
    
    
    
    
    
    
    1,043General and administrative
    
    
    7,840
    
    
    
    
    
    
    
    (323
    )
    
    
    
    
    
    
    7,517Reimbursed costs
    
    
    2,383
    
    
    
    
    
    
    
    (2,383
    )
    
    
    
    
    
    
    Pre-opening expenses
    
    
    2,258
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,258Depreciation and amortization
    
    
    12,052
    
    
    
    2,350
    
    
    
    (10,696
    )
    
    
    
    
    
    
    3,706Total operating expenses
    
    
    137,360
    
    
    
    
    
    
    
    (100,752
    )
    
    
    
    
    
    
    36,608Income (loss) from operations
    
    
    (3,989
    )
    
    
    
    
    
    
    4,426
    
    
    
    
    
    
    
    437Other income (expense):Interest, net
    
    
    (13,750
    )
    
    
    
    
    
    
    8,310
    
    
    
    
    
    
    
    (5,440
    )Minority interests
    
    
    (150
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (150
    )Loss before income taxes and loss from
discontinued operations
    
    
    (17,889
    )
    
    
    
    
    
    
    12,736
    
    
    
    
    
    
    
    (5,153
    )Income tax benefit
    
    
    485
    
    
    
    
    
    
    
    (485
    )
    
    
    
    
    
    
    Loss before loss from discontinued operations
    
    
    (18,374
    )
    
    
    
    
    
    
    13,221
    
    
    
    
    
    
    
    (5,153
    )Loss from operations of discontinued operations
    
    
    
    
    
    
    
    
    
    
    (13,221
    )
    
    
    
    
    
    
    (13,221
    )Net loss
    
    
    (18,374
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,374
    )Dividends on Preferred Stock
    
    
    1,400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,400Net loss attributable to common stockholders
    
    $
    (19,774
    )
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (19,774
    )Net loss per share  basic and diluted:Discontinued operations
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (0.36
    )Continuing operations
    
    
    (1.23
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.67
    )Net loss per share
    
    $
    (1.23
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (1.21
    )Weighted average number of common shares outstanding:Basic and diluted
    
    
    18,316
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,316
 F-10




---



##### Table of Contents



3. Liquidity/Going Concern
 See Note 7
     4. Summary of Significant Accounting Policies
 Principles of Consolidation
  F-11




---



##### Table of Contents



Revenue Recognition
 Revenue
Arrangement with Multiple Elements
  Reimbursed Costs
 Reporting Revenue Gross as a Principal versus Net as an Agent
 Allowance for Doubtful Accounts.
  Cash Equivalents and Restricted Cash
  F-12




---



##### Table of Contents



Inventories
  Advertising Costs
  Loan Costs
  Lease
Accounting
  Interest Expense
  Start-up Costs
  Comprehensive
Loss
  Long-Lived Assets
   Accounting for the Impairment or Disposal of Long-Lived Assets
 F-13




---



##### Table of Contents



Goodwill
 Business Combinations, Goodwill and
Other Intangible Assets.
 Income Taxes
   Earnings per Share
   
    
    December 31, 2004  1,741,833 stock options; 10,500 shares of Series B mandatorily
redeemable convertible Preferred Stock, (convertible into 3,636,867 shares of Common Stock
at $2.8871 per share); 5,000 shares of Series C convertible Preferred Stock, (convertible
into 1,731,842 shares of Common Stock at $2.8871 per share); and 65,000 shares of Series D
convertible Preferred Stock, (convertible into 3,250,000 shares of Common Stock at $2.00
per share).
 F-14




---



##### Table of Contents




    
    December 31, 2003  1,754,609 stock options; 10,500 shares of Series B mandatorily
redeemable convertible Preferred Stock (convertible into 3,500,000 shares of Common Stock
at $3.00 per share) and 5,000 shares of Series C convertible Preferred Stock (convertible
into 1,666,667 shares of Common Stock at $3.00 per share).
    
    December 31, 2002  1,785,333 stock options, 10,500 shares of Series B mandatorily
redeemable convertible Preferred Stock, (convertible into 3,500,000 shares of Common Stock
at $3.00 per share); and, 5,000 shares of Series C convertible Preferred Stock,
(convertible into 1,666,667 shares of Common Stock).
 Stock Based Compensation
  Year ended December 312002
    
    
    2003
    
    
    2004(in thousands, except per share data)Net loss attributable to common
stockholders, as reported
    
    $
    (23,635
    )
    
    $
    (19,774
    )
    
    $
    (22,628
    )Stock-based employee compensation expense
included in reported net loss
    
    
    
    
    
    
    
    
    
    
    Stock-based employee compensation expense
determined under fair value based method for
All awards
    
    
    (1,239
    )
    
    
    (583
    )
    
    
    (93
    )Proforma net loss attributable to common
stockholders
    
    $
    (24,874
    )
    
    $
    (20,357
    )
    
    $
    (22,721
    )Net loss per share as reported basic and
diluted
    
    $
    (1.31
    )
    
    $
    (1.08
    )
    
    $
    (1.21
    )Proforma net loss per share basic and diluted
    
    $
    (1.38
    )
    
    $
    (1.11
    )
    
    $
    (1.22
    )
 Use of Estimates
  Fair Value of Financial Instruments
  F-15




---



##### Table of Contents



Redeemable Preferred Stock
   Segment Reporting
  Impact of Recent Accounting Pronouncements
 Inventory Costs, an amendment of ARB No. 43,
Chapter 4.
 , Exchanges of Nonmonetary Assets, an amendment
of APB Opinion No. 29, Accounting for Nonmonetary Transactions.
 F-16




---



##### Table of Contents



Share-Based Payment. Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees
  5. Assets Held for Sale and Sale of Assets
    F-17




---



##### Table of Contents



Statements of Operation
 Years Ended December 31,2002
    
    
    2003
    
    
    2004(in thousands)Revenues:Membership revenues
    
    $
    55,868
    
    
    $
    60,724
    
    
    $
    64,348Products and services
    
    
    29,941
    
    
    
    33,088
    
    
    
    33,561Management fees
    
    
    
    
    
    
    131
    
    
    
    305Reimbursed costs
    
    
    
    
    
    
    2,382
    
    
    
    5,024Total revenue
    
    
    85,809
    
    
    
    96,325
    
    
    
    103,238Operating expenses:Club operating costs
    
    
    55,637
    
    
    
    58,765
    
    
    
    59,370Costs of products and services
    
    
    23,142
    
    
    
    24,726
    
    
    
    26,593Selling and marketing
    
    
    3,971
    
    
    
    3,859
    
    
    
    3,621General and administrative
    
    
    300
    
    
    
    323
    
    
    
    254Depreciation and amortization
    
    
    10,722
    
    
    
    10,696
    
    
    
    10,793Reimbursed costs
    
    
    
    
    
    
    2,382
    
    
    
    5,024Total operating expenses
    
    
    93,772
    
    
    
    100,751
    
    
    
    105,655Loss from operations
    
    
    (7,963
    )
    
    
    (4,426
    )
    
    
    (2,417
    )Other income (expense):Interest, net
    
    
    (8,511
    )
    
    
    (8,310
    )
    
    
    (8,132
    )Minority interests
    
    
    
    
    
    
    
    
    
    
    (864
    )Loss from operations of discontinued
operations before income taxes and
cumulative effect of change in
accounting principle
    
    
    (16,474
    )
    
    
    (12,736
    )
    
    
    (11,413
    )Provision for income taxes
    
    
    590
    
    
    
    485
    
    
    
    556Loss from operations of discontinued
operations
    
    
    (17,064
    )
    
    
    (13,221
    )
    
    
    (11,969
    )Cumulative effect of change in accounting principle
    
    
    (5,134
    )
    
    
    
    
    
    
    (Gain) loss on disposal of assets
    
    
    (30
    )
    
    
    
    
    
    
    527Loss from discontinued operations
    
    $
    (22,168
    )
    
    $
    (13,221
    )
    
    $
    (12,496
    )
 F-18




---



##### Table of Contents



December 31,2003
    
    
    2004(in thousands)Assets held for sale:Accounts receivable, net of allowance for doubtful accounts
    
    $
    2,140
    
    
    $
    1,320Inventories
    
    
    450
    
    
    
    442Prepaid expenses
    
    
    444
    
    
    
    433Property and equipment, net
    
    
    150,862
    
    
    
    141,015Goodwill
    
    
    345
    
    
    
    Other assets
    
    
    418
    
    
    
    198Total assets held for sale
    
    $
    154,659
    
    
    $
    143,408Liabilities related to assets held for sale:Accrued liabilities
    
    $
    3,491
    
    
    $
    3,354Deferred revenues
    
    
    13,982
    
    
    
    15,178Accrued lease obligations
    
    
    67,874
    
    
    
    65,774Minority interest
    
    
    
    
    
    
    863Total liabilities related to assets held for sale
    
    $
    85,347
    
    
    $
    85,169
 6. Property and Equipment
  At December 31,2003
    
    
    2004(in thousands)Land
    
    $
    10,621
    
    
    $
    10,621Building and leasehold improvements
    
    
    57,062
    
    
    
    57,860Furniture, fixtures and equipment
    
    
    18,937
    
    
    
    20,62386,620
    
    
    
    89,104Less accumulated depreciation and amortization
    
    
    (21,090
    )
    
    
    (25,482
    )Net property and equipment
    
    $
    65,530
    
    
    $
    63,622
  F-19




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##### Table of Contents



7. Notes Payable and Equipment Financing Loans
  At December 31,2003
    
    
    2004(in thousands)Senior secured notes (a)
    
    $
    100,000
    
    
    $
    100,000Equipment financing loans (b)
    
    
    1,975
    
    
    
    180Mortgage note (c)
    
    
    19,855
    
    
    
    19,550121,830
    
    
    
    119,730Less current installments
    
    
    2,099
    
    
    
    65,444$
    119,731
    
    
    $
    54,286
 
 (a)
    
    On April 1, 1999, the Company issued in a private placement $100.0 million of 11 3/8% Senior
Secured Notes due in March 2006 (the Senior Notes) with interest due semi-annually. In May 1999,
the Senior Notes were exchanged for registered Series B Senior Secured Notes (the Senior Secured
Notes). The Senior Secured Notes are secured by substantially all of the Companys assets, other
than certain excluded assets. In connection with the issuance of the Senior Secured Notes, the
Company entered into an indenture dated as of April 1, 1999 (the Indenture) that includes certain
covenants, which as of December 31, 2004, restrict the Companys ability, subject to certain
exceptions, to: (i) incur additional indebtedness; (ii) pay dividends or other distributions, or
repurchase capital stock or other equity interests or subordinated indebtedness; and (iii) make
certain investments. The Indenture also limits the Companys ability to: (i) enter into
transactions with affiliates, (ii) create liens on or sell certain assets, and (iii) enter into
mergers and consolidations. The Senior Notes are subject to redemption at the option of the
Company, in whole or in part, at the redemption prices (expressed as percentages of principal
amount) set forth below, plus accrued and unpaid interest thereon: Period
    
    PercentagePrior to March 15, 2005
    
    
    102.844
    %Thereafter
    
    
    100.000
    %
    
 (b)
    
    The equipment financing loans are secured by furniture, fixtures and equipment. The
amounts are generally repayable in monthly payments over four or five years with effective interest
rates between 7.12% and 13.1%.(c)
    
    The mortgage note bears interest at a fixed interest rate of 7.25%; requires monthly principal
and interest payments of $144,561; is secured by the common stock and all the assets of Irvine
Sports Club, F-20




---



##### Table of Contents



2005
    
    $
    4442006
    
    
    100,3722007
    
    
    4002008
    
    
    18,514$
    119,730
 8. Commitments and Contingencies
 Lease Commitments
  Total
    
    
    Discontinued
    
    
    ContinuingSublease
    
    
    Net Rental
    
    
    Operations
    
    
    OperationsCommitments
    
    
    Rentals
    
    
    Commitments
    
    
    Commitments
    
    
    CommitmentsYear ending December 31:2005
    
    $
    29,432
    
    
    $
    5,090
    
    
    $
    24,342
    
    
    $
    22,185
    
    
    $
    2,1572006
    
    
    29,147
    
    
    
    5,090
    
    
    
    24,057
    
    
    
    22,381
    
    
    
    1,6762007
    
    
    29,177
    
    
    
    5,162
    
    
    
    24,015
    
    
    
    22,381
    
    
    
    1,6342008
    
    
    28,899
    
    
    
    4,591
    
    
    
    24,308
    
    
    
    22,803
    
    
    
    1,5052009
    
    
    28,154
    
    
    
    3,763
    
    
    
    24,391
    
    
    
    22,841
    
    
    
    1,550Thereafter
    
    
    237,556
    
    
    
    21,094
    
    
    
    216,462
    
    
    
    201,593
    
    
    
    14,869Total minimum lease
payments
    
    $
    382,365
    
    
    $
    44,790
    
    
    $
    337,575
    
    
    $
    314,184
    
    
    $
    23,391
  Year Ended December 31,2002
    
    
    2003
    
    
    2004Continuing operations
    
    $
    877
    
    
    $
    1,323
    
    
    $
    2,755Discontinued operations
    
    
    20,079
    
    
    
    20,106
    
    
    
    20,028Total rent expense
    
    $
    20,956
    
    
    $
    21,429
    
    
    $
    22,783
 Litigation
  F-21




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##### Table of Contents



Employment Agreements
  9. Preferred Stock
 Series B Redeemable Convertible Preferred Stock
   Initial fair value, sale price of $10,500
less costs to issue of $592
    
    $
    9,908Redemption value accretion
    
    
    71Accrued and unpaid dividends accretion
    
    
    748Total carrying value at December 31, 2002
    
    
    10,727Redemption value accretion
    
    
    84Accrued and unpaid dividends accretion
    
    
    950Total carrying value at December 31, 2003
    
    
    11,761Redemption value accretion
    
    
    85Accrued and unpaid dividends accretion
    
    
    950Total carrying value at December 31, 2004
    
    $
    12,796
 F-22




---



##### Table of Contents



Series C Convertible Preferred Stock
   Initial fair value
    
    $
    5,000Accrued and unpaid dividend accretion
    
    
    590Total carrying value at December 31, 2003
    
    
    5,590Accrued and unpaid dividend accretion
    
    
    450Total carrying value at December 31, 2004
    
    $
    6,040
 Series D Convertible Preferred Stock
  F-23




---



##### Table of Contents



Initial fair value
    
    $
    6,500Issuance costs
    
    
    (428
    )Accrued and unpaid dividend accretion
    
    
    471Total carrying value
    
    $
    6,543
 Series E Redeemable Preferred Stock
  F-24




---



##### Table of Contents



10. Consolidated Statements of Operations
  Years ended December 31,2002
    
    
    2003
    
    
    2004(in thousands)Revenues:Membership revenues:Monthly dues
    
    $
    21,360
    
    
    $
    22,751
    
    
    $
    27,148Initiation fees
    
    
    1,746
    
    
    
    1,833
    
    
    
    1,684Other
    
    
    588
    
    
    
    557
    
    
    
    601Total membership revenues
    
    
    23,694
    
    
    
    25,141
    
    
    
    29,433Products and Services:Private training
    
    
    5,639
    
    
    
    5,741
    
    
    
    7,203Food and beverage
    
    
    2,537
    
    
    
    2,723
    
    
    
    3,361Spa services
    
    
    1,293
    
    
    
    1,328
    
    
    
    1,535Physical therapy
    
    
    1,506
    
    
    
    1,641
    
    
    
    1,553Other
    
    
    375
    
    
    
    471
    
    
    
    587Total products and services
    
    
    11,350
    
    
    
    11,904
    
    
    
    14,239Total revenue
    
    $
    35,044
    
    
    $
    37,045
    
    
    $
    43,672Operating expenses:Club operating costs:Payroll and benefits
    
    $
    5,304
    
    
    $
    5,948
    
    
    $
    8,171Rent
    
    
    
    
    
    
    438
    
    
    
    1,878Other operating costs
    
    
    5,729
    
    
    
    6,181
    
    
    
    7,598Total Club operating costs
    
    
    11,033
    
    
    
    12,567
    
    
    
    17,647Costs of products and services:Private training
    
    
    4,126
    
    
    
    4,614
    
    
    
    6,140Food & beverage
    
    
    2,529
    
    
    
    2,684
    
    
    
    3,488Spa services
    
    
    1,203
    
    
    
    1,215
    
    
    
    1,535Physical therapy
    
    
    902
    
    
    
    931
    
    
    
    1,162Other
    
    
    56
    
    
    
    73
    
    
    
    73Total cost of products and services
    
    
    8,816
    
    
    
    9,517
    
    
    
    12,398Sales and marketing
    
    
    936
    
    
    
    1,043
    
    
    
    1,492General and administrative
    
    
    7,114
    
    
    
    7,517
    
    
    
    8,148Pre-opening
    
    
    130
    
    
    
    2,258
    
    
    
    46Depreciation and amortization
    
    
    3,532
    
    
    
    3,706
    
    
    
    4,369Non-recurring items
    
    
    
    
    
    
    
    
    
    
    1,104Total operating expenses
    
    $
    31,561
    
    
    $
    36,608
    
    
    $
    45,204
 F-25




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##### Table of Contents



11. Income Taxes
  Years ended December 31,2002
    
    
    2003
    
    
    2004(in thousands)Continuing Operations:Current Federal
    
    $
    (900
    )
    
    $
    
    
    
    $
    Discontinued operations:Current:Federal
    
    
    (30
    )
    
    
    
    
    
    
    State
    
    
    620
    
    
    
    485
    
    
    
    237590
    
    
    
    485
    
    
    
    237Income tax provision (benefit)
    
    $
    (310
    )
    
    $
    485
    
    
    $
    237
  Years ended December 312002
    
    
    2003
    
    
    2004(in thousands)Computed expected tax benefit
    
    $
    (7,839
    )
    
    $
    (6,070
    )
    
    $
    (6,868
    )Increase (decrease) in tax resulting from:State taxes  net of federal benefit
    
    
    (482
    )
    
    
    (524
    )
    
    
    (1,145
    )Meals and entertainment
    
    
    75
    
    
    
    79
    
    
    
    96Change in valuation allowance
    
    
    9,048
    
    
    
    6,592
    
    
    
    2,983Change in
tax laws
    
    
    (900
    )
    
    
    
    
    
    
    Other, primarily NOL carry forward adjustments
    
    
    (212
    )
    
    
    408
    
    
    
    5,171Income tax expense (benefit)
    
    $
    (310
    )
    
    $
    485
    
    
    $
    237
  At December 31,2003
    
    
    2004(in thousands)Deferred tax assets:Deferred revenues
    
    $
    1,232
    
    
    $
    761Operating loss carry forwards
    
    
    31,723
    
    
    
    34,243Accrued vacation
    
    
    294
    
    
    
    336Bad debt
    
    
    186
    
    
    
    227Depreciation and amortization
    
    
    263
    
    
    
    (389
    )State taxes
    
    
    165
    
    
    
    95Other
    
    
    1,404
    
    
    
    2,977Gross deferred tax assets
    
    
    35,267
    
    
    
    38,250Valuation allowance
    
    
    (35,267
    )
    
    
    (38,250
    )Net deferred tax asset
    
    $
    
    
    
    $
    
  F-26




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##### Table of Contents



12. Other Items
  13. Employee Benefit Plans
 Stock Incentive Plans
   F-27




---



##### Table of Contents



WeightedAverage ExerciseShares
    
    
    PriceOutstanding at January 1, 2002
    
    
    1,850,275
    
    
    $
    5.37Granted
    
    
    
    
    
    
    Canceled
    
    
    (64,942
    )
    
    
    5.20Exercised
    
    
    
    
    
    
    Outstanding at December 31, 2002
    
    
    1,785,333
    
    
    
    5.38Options exercisable at December 31, 2002
    
    
    1,296,448
    
    
    
    5.61Outstanding at January 1, 2003
    
    
    1,785,333
    
    
    
    5.38Granted
    
    
    
    
    
    
    Canceled
    
    
    (30,724
    )
    
    
    8.13Exercised
    
    
    
    
    
    
    Outstanding at December 31, 2003
    
    
    1,754,609
    
    
    
    5.33Options exercisable at December 31, 2003
    
    
    1,621,965
    
    
    
    5.52Outstanding at January 1, 2004
    
    
    1,754,609
    
    
    
    5.33Granted
    
    
    
    
    
    
    Canceled
    
    
    (12,776
    )
    
    
    3.75Exercised
    
    
    
    
    
    
    Outstanding at December 31, 2004
    
    
    1,741,833
    
    
    
    5.34Options exercisable at December 31, 2004
    
    
    1,741,833
    
    
    
    5.34
  WeightedAverageRemainingExercise
    
    Number
    
    Contractual
    
    OptionsPrices
    
    Outstanding
    
    Life (Years)
    
    Exercisable$2.5625
    
    
    24,333
    
    
    
    1.41
    
    
    
    24,3332.6875
    
    
    70,000
    
    
    
    1.11
    
    
    
    70,0002.7500
    
    
    26,000
    
    
    
    1.84
    
    
    
    26,0003.0100
    
    
    277,787
    
    
    
    6.39
    
    
    
    277,7873.3110
    
    
    115,000
    
    
    
    1.39
    
    
    
    115,0003.9375
    
    
    210,000
    
    
    
    4.10
    
    
    
    210,0004.2500
    
    
    211,713
    
    
    
    5.85
    
    
    
    211,7134.3750
    
    
    60,000
    
    
    
    2.22
    
    
    
    60,0005.2500
    
    
    42,000
    
    
    
    0.24
    
    
    
    42,0005.3750
    
    
    32,000
    
    
    
    2.50
    
    
    
    32,0008.0000
    
    
    211,000
    
    
    
    3.29
    
    
    
    211,0008.0000
    
    
    450,000
    
    
    
    5.11
    
    
    
    450,0008.3750
    
    
    12,000
    
    
    
    2.85
    
    
    
    12,0001,741,833
    
    
    
    
    
    
    
    1,741,833
 F-28




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##### Table of Contents



1994 Stock Compensation Plan
  401(k) Plan
 st
 14. Related Party Transactions
   F-29




---



##### Table of Contents



th
   F-30




---



##### Table of Contents



F-31




---



##### Table of Contents



15. Concentration of Credit Risk
  16. Quarterly Summary of Information (Unaudited)
  2004March 31
    
    
    June 30
    
    
    September 30
    
    
    December 31(in thousands, except per share amounts)Total
revenue:As reported
    
    $
    37,178
    
    
    $
    37,732
    
    
    $
    36,389
    
    
    $
    As
reclassified and restated
    
    $
    10,678
    
    
    $
    10,916
    
    
    $
    10,978
    
    
    $
    11,100Total
operating expenses:As reported
    
    $
    39,198
    
    
    $
    37,717
    
    
    $
    37,634
    
    
    $
    As
reclassified and restated
    
    $
    11,947
    
    
    $
    11,108
    
    
    $
    10,877
    
    
    $
    11,272Income
(loss) from continuing operations:As reported
    
    $
    (5,914
    )
    
    $
    (4,308
    )
    
    $
    (5,149
    )
    
    $
    As
reclassified and restated
    
    $
    (2,946
    )
    
    $
    (1,868
    )
    
    $
    (1,572
    )
    
    $
    (1,875
    )Net loss
attributable to common stockholders:As reported
    
    $
    (6,295
    )
    
    $
    (4,803
    )
    
    $
    (5,657
    )
    
    $
    As
reclassified and restated
    
    $
    (6,695
    )
    
    $
    (5,203
    )
    
    $
    (5,857
    )

    
    $
    (4,873
    )Net loss per
share-basic and diluted:As reported
    
    $
    (0.34
    )
    
    $
    (0.26
    )
    
    $
    (0.30
    )
    
    $
    As
reclassified and restated
    
    $
    (0.36
    )
    
    $
    (0.28
    )
    
    $
    (0.31
    )
    
    $
    (0.26
    )
 F-32




---



##### Table of Contents



2003March 31
    
    
    June 30
    
    
    September 30
    
    
    December 31(in thousands, except per share amounts)Total revenue:As reported
    
    $
    32,661
    
    
    $
    32,629
    
    
    $
    32,054
    
    
    $
    36,027As reclassified
    
    $
    8,851
    
    
    $
    9,078
    
    
    $
    9,029
    
    
    $
    10,087Total operating expenses:As reported
    
    $
    33,046
    
    
    $
    33,641
    
    
    $
    33,726
    
    
    $
    36,947As reclassified
    
    $
    8,275
    
    
    $
    8,849
    
    
    $
    9,129
    
    
    $
    10,355Net loss attributable to
common stockholders:As reported
    
    $
    (4,243
    )
    
    $
    (4,822
    )
    
    $
    (5,618
    )
    
    $
    (5,091
    )As reclassified
    
    $
    (4,243
    )
    
    $
    (4,822
    )
    
    $
    (5,618
    )
    
    $
    (5,091
    )Net loss per share  basic and diluted:As reported
    
    $
    (0.23
    )
    
    $
    (0.26
    )
    
    $
    (0.31
    )
    
    $
    (0.28
    )As reclassified
    
    $
    (0.23
    )
    
    $
    (0.26
    )
    
    $
    (0.31
    )
    
    $
    (0.28
    )
 F-33




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##### Table of Contents



THE SPORTS CLUB COMPANY, INC.
 VALUATION AND QUALIFYING ACCOUNTS
Three-year period ended December 31, 2004
 Balance atbeginning
    
    
    
    
    
    
    
    
    
    
    Balance atDescription
    
    of period
    
    
    Additions
    
    
    Deletions
    
    
    end of periodContinuing Operations:Year ended December 31, 2002:Allowance for doubtful accounts
    
    $
    266,000
    
    
    $
    649,000
    
    
    $
    515,000
    
    
    $
    400,000Year ended December 31, 2003:Allowance for doubtful accounts
    
    $
    400,000
    
    
    $
    582,000
    
    
    $
    600,000
    
    
    $
    382,000Year ended December 31, 2004:Allowance for doubtful accounts
    
    $
    382,000
    
    
    $
    723,000
    
    
    $
    709,000
    
    
    $
    396,000Discontinued Operations:Year ended December 31, 2002:Allowance for doubtful accounts
    
    $
    52,000
    
    
    $
    149,000
    
    
    $
    67,000
    
    
    $
    134,000Year ended December 31, 2003:Allowance for doubtful accounts
    
    $
    134,000
    
    
    $
    102,000
    
    
    $
    101,000
    
    
    $
    135,000Year ended December 31, 2004:Allowance for doubtful accounts
    
    $
    135,000
    
    
    $
    98,000
    
    
    $
    29,000
    
    
    $
    204,000
 F-34




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
  Name
    
    Age
    
    PositionD. Michael Talla
    
    
    58
    
    
    Chairman of the BoardRex A. Licklider
    
    
    62
    
    
    Vice Chairman of the Board and Chief Executive OfficerNanette Pattee Francini
    
    
    56
    
    
    Executive Vice PresidentTimothy M. OBrien
    
    
    54
    
    
    Chief Financial Officer and Assistant SecretaryMark S. Spino
    
    
    51
    
    
    Senior Vice President of DevelopmentAndrew L. Turner
    
    
    58
    
    
    DirectorGeorge J. Vasilakos
    
    
    67
    
    
    DirectorCharles A. Norris
    
    
    59
    
    
    DirectorChristopher M. Jeffries
    
    
    55
    
    
    DirectorCharles J. Ferraro
    
    
    61
    
    
    Director
  D. Michael Talla
 Rex A. Licklider
 Nanette Pattee Francini
 31




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##### Table of Contents



Timothy M. OBrien
 Mark S. Spino
 Andrew L. Turner
 George J. Vasilakos
 Charles A. Norris
 Christopher M. Jeffries
 Charles J. Ferraro
 32




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##### Table of Contents



33




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##### Table of Contents



Section 16(a) Beneficial Ownership Reporting Compliance
    34




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##### Table of Contents



Code of Ethics
   
 ITEM 11. EXECUTIVE COMPENSATION
  Long-TermCompensationShares
    
    
    All OtherAnnual Compensation
    
    
    Underlying
    
    
    CompensationName & Position
    
    Year
    
    
    Salary($)
    
    
    Bonus($)
    
    
    Options Awards
    
    
    ($)(a)D. Michael Talla
    
    
    2004
    
    
    
    150,000
    (b)(d)
    
    
    
    
    
    
    
    
    
    
    16,051Chairman of the Board
    
    
    2003
    
    
    
    200,000
    (b)
    
    
    
    
    
    
    
    
    
    
    15,2812002
    
    
    
    200,000
    (b)
    
    
    
    
    
    
    
    
    
    
    17,814Rex A. Licklider
    
    
    2004
    
    
    
    200,000
    
    
    
    
    
    
    
    
    
    
    
    16,051Chief Executive Officer and
    
    
    2003
    
    
    
    200,000
    
    
    
    
    
    
    
    
    
    
    
    11,321Vice Chairman of the Board
    
    
    2002
    
    
    
    200,000
    
    
    
    
    
    
    
    
    
    
    
    14,184Philip J. Swain (c)
    
    
    2004
    
    
    
    179,100
    
    
    
    
    
    
    
    
    
    
    
    20,011President and
    
    
    2003
    
    
    
    160,000
    
    
    
    
    
    
    
    
    
    
    
    14,885Chief Operating Officer
    
    
    2002
    
    
    
    160,000
    
    
    
    20,000
    
    
    
    
    
    
    
    17,385Nanette Pattee Francini
    
    
    2004
    
    
    
    160,000
    
    
    
    
    
    
    
    
    
    
    
    13,184Executive Vice President
    
    
    2003
    
    
    
    160,000
    
    
    
    
    
    
    
    
    
    
    
    9,9252002
    
    
    
    160,000
    
    
    
    20,000
    
    
    
    
    
    
    
    11,906Mark S. Spino
    
    
    2004
    
    
    
    160,000
    
    
    
    
    
    
    
    
    
    
    
    16,933Senior Vice President of
    
    
    2003
    
    
    
    160,000
    
    
    
    
    
    
    
    
    
    
    
    14,291Development
    
    
    2002
    
    
    
    160,000
    
    
    
    20,000
    
    
    
    
    
    
    
    13,962Timothy M. OBrien
    
    
    2004
    
    
    
    160,000
    
    
    
    12,800
    
    
    
    
    
    
    
    13,439Chief Financial Officer
    
    
    2003
    
    
    
    160,000
    
    
    
    
    
    
    
    
    
    
    
    12,102and Assistant Secretary
    
    
    2002
    
    
    
    160,000
    
    
    
    20,000
    
    
    
    
    
    
    
    15,953
 35




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##### Table of Contents



(a)
    
    Represents value of (i) amounts paid by us on behalf of the Named Executive Officer and
dependents for medical and life insurance and (ii) our Common Stock contributed for the
benefit of the Named Executive Officer under the 401K Profit Sharing Plan, based upon the
December 31 closing market price each year of our Common Stock, on the American Stock
Exchange.(b)
    
    Mr. Talla also receives, on an annual basis, 49.9% of the first $300,000 of The Sports
Club/LA  Los Angeles net cash flow. This amount is not included in Mr. Tallas compensation.
See Certain Relationships and Related Transactions.(c)
    
    Mr. Swain resigned in January 2005.(d)
    
    Salary reflects amounts received through September 31, 2004 the date Mr. Talla resigned his
position as CEO. Option Grants, Exercises and Year-End Values
  Unexercised Stock Options and Fiscal Year-End Option Values
  Number of Shares Underlying
    
    
    Value of In-the-MoneyUnexercised Options at Fiscal
    
    
    Unexercised Options at FiscalYear-End(a)
    
    
    Year-End(b)Exercisable
    
    
    Unexercisable
    
    
    Exercisable
    
    
    UnexercisableName
    
    (#)
    
    
    (#)
    
    
    ($)
    
    
    ($)D. Michael Talla
    
    365,000
    
    
    -0-
    
    
    -0-
    
    
    -0-Rex A. Licklider
    
    115,000
    
    
    -0-
    
    
    -0-
    
    
    -0-Philip J. Swain
    
    220,000
    
    
    -0-
    
    
    -0-
    
    
    -0-Nanette Pattee Francini
    
    210,000
    
    
    -0-
    
    
    -0-
    
    
    -0-Mark S. Spino
    
    210,000
    
    
    -0-
    
    
    -0-
    
    
    -0-Timothy M. OBrien
    
    240,000
    
    
    -0-
    
    
    -0-
    
    
    -0-
 
 (a)
    
    All options were granted pursuant to one of our two Stock Incentive Plans.(b)
    
    The closing price of our Common Stock on the American Stock Exchange on December 31, 2004 was
$1.83. Since all options have been granted at prices above $1.83, there are no options
considered to be in-the-money. Employment Agreements
  Rex A. Licklider
    
    Chief Executive Officer
    
    $
    200,000Nanette Pattee Francini
    
    Executive Vice President
    
    $
    160,000Mark S. Spino
    
    Senior Vice President
    
    $
    160,000Timothy M. OBrien
    
    Chief Financial Officer
    
    $
    200,000
 36




---



##### Table of Contents



Compensation of Directors
  
    
    Annual retainer fee of $12,000,
    
    Annual retainer fee of $4,000 for each committee chair,
    
    $1,000 for each Board and committee meeting attended,
    
    Reimbursement of expenses for attending Board and committee meetings,
    
    Annual option award of 2,000 shares under our 2001 Incentive Stock Plan (timing of
such grant is at the discretion of the Board, and as of September 15, 2005 no option
awards have been granted).
    Year
    
    Amount2002
    
    $
    68,5022003
    
    
    112,6752004
    
    
    118,000
  Compensation Committee Interlocks and Insider Participation
  37




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##### Table of Contents



ITEM 12. SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 Stock Ownership Table
  Shares IssuableShares Issuable

    
    uponShares

    
    Upon

    
    Exercise

    
    Shares Held

    
    Total and Percent ofName and Address
    
    Owned

    
    Conversion of

    
    of Options

    
    Under

    
    Stock Ownershipof Beneficial Owner(a)
    
    Directly (b)

    
    Preferred Stock

    
    within 60 days(c)

    
    401(k) Plan(d)

    
    Number
    
    
    PercentD. Michael Talla
    
    
    3,808,439
    
    
    
    346,365
    
    
    
    115,000
    
    
    
    8,126
    
    
    
    4,277,930
    
    
    
    21.63Nanette Pattee Francini
    
    
    256,107
    
    
    
    
    
    
    
    210,000
    
    
    
    5,167
    
    
    
    471,274
    
    
    
    2.41Mark S. Spino
    
    
    227,969
    
    
    
    
    
    
    
    210,000
    
    
    
    7,474
    
    
    
    445,443
    
    
    
    2.28Philip J. Swain
    
    
    112,164
    
    
    
    
    
    
    
    
    
    
    
    8,165
    
    
    
    120,329
    
    
    
    *Timothy OBrien
    
    
    3,000
    
    
    
    
    
    
    
    240,000
    
    
    
    8,108
    
    
    
    251,108
    
    
    
    *The Licklider Living Trust
Dated May 2, 1986
    
    
    2,234,552
    
    
    
    1,192,730
    
    
    
    115,000
    
    
    
    
    
    
    
    3,542,282
    
    
    
    17.18Andrew L. Turner
    
    
    7,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,500
    
    
    
    *Charles A. Norris(e)
    
    
    3,500
    
    
    
    173,183
    
    
    
    
    
    
    
    
    
    
    
    176,683
    
    
    
    21.04George J. Vasilakos
    
    
    327,400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    327,400
    
    
    
    1.70Christopher M. Jeffries (f)
    
    
    29,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,000
    
    
    
    45.77Charles J. Ferraro
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    *All Directors and Executive Officers as a
Group (11 persons)
    
    
    7,009,631
    
    
    
    1,712,278
    
    
    
    865,000
    
    
    
    37,040
    
    
    
    9,623,949
    
    
    
    43.96Millennium (f)
    
    
    7,243,749
    
    
    
    2,942,730
    
    
    
    
    
    
    
    
    
    
    
    10,186,479
    
    
    
    45.77Kayne Anderson Capital Advisors, L.P. (e)
    
    
    797,128
    
    
    
    4,136,833
    
    
    
    
    
    
    
    
    
    
    
    4,933,961
    
    
    
    21.04
 
 *
    
    Less than 1%(a)
    
    The address of all directors and executive officers is c/o The Sports Club Company, Inc., at
11100 Santa Monica Blvd., Suite 300, Los Angeles, California 90025.(b)
    
    Includes shares for which the named person is considered the owner because: 1.
    
    the named person has sole voting and investment power,2.
    
    the named persons spouse has voting and investment power, or3.
    
    the shares are held by other members of the named persons immediate family.
 (c)
    
    Includes shares that can be acquired through stock option exercises through November 14,
2005.(d)
    
    Includes shares issued pursuant to our 401(k) Profit Sharing Plans discretionary match as of
September 15, 2005.(e)
    
    Kayne Anderson Capital Advisors, L.P. and several of their affiliates are owners of our
Convertible Preferred Stock. Kayne Anderson is deemed to be the beneficial owner of the
shares. Mr. Norris is also deemed to beneficially hold these shares because of his
affiliation with Kayne Anderson. Mr. Norris ownership has therefore been reflected (1) next
to his name so that the table accurately reflects the share ownership of our officers and
directors and (2) in the totals for Kayne Anderson so that the Kayne Anderson total accurately
reflects their joint ownership as noted below. The address of all such entities is 1800
Avenue of the Stars, Second Floor, Los Angeles, California 90067. 38




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##### Table of Contents



The Preferred Stock carries voting rights and is convertible into shares of Common Stock. The
following table reflects the ownership of the Kayne affiliates as to outstanding Common Stock
currently owned and Common Stock into which the preferred shares are convertible: OutstandingCommon
    
    
    Series B
    
    
    Series DDirectly
    
    
    Convertible
    
    
    ConvertibleOwner
    
    Held
    
    
    Preferred
    
    
    Preferred
    
    
    TotalKayne Anderson
Capital Advisors,
L.P.
    
    
    793,628
    
    
    
    3,073,990
    
    
    
    
    
    
    
    3,867,618Ric Kayne
    
    
    
    
    
    
    346,365
    
    
    
    
    
    
    
    346,365Charles Norris
    
    
    3,500
    
    
    
    173,183
    
    
    
    
    
    
    
    176,683Howard Zelikow
    
    
    
    
    
    
    34,636
    
    
    
    
    
    
    
    34,636David Shladovsky
    
    
    
    
    
    
    8,659
    
    
    
    
    
    
    
    8,659Arbco Associates, L.P.
    
    
    
    
    
    
    
    
    
    
    166,668
    
    
    
    166,668Kayne Anderson Non-
Traditional
Investments, L.P.
    
    
    
    
    
    
    
    
    
    
    166,666
    
    
    
    166,666Kayne Anderson Select
Investments A, L.P.
    
    
    
    
    
    
    
    
    
    
    166,666
    
    
    
    166,666Total
    
    
    797,128
    
    
    
    3,636,833
    
    
    
    500,000
    
    
    
    4,933,961
 (f)
    
    Millennium Entertainment Partners and several of their affiliates are owners of our Common
and our Preferred Stock. Millennium is deemed to be the beneficial owner of the shares. Mr.
Jeffries because of his position with Millennium is also deemed to be a beneficial owner of
these shares. Mr. Jeffries ownership has therefore been reflected (1) next to his name so
that the table accurately reflects the share ownership of our officers and directors, and (2)
in the totals for Millennium so that the Millennium total accurately reflects their joint
ownership as noted below. The address of all such entities is c/o Millennium Partners
Management LLC, 1995 Broadway, New York, New York, 10023.The Preferred Stock carries voting rights and is convertible into shares of Common Stock. The
following table reflects the ownership of the Millennium affiliates as to outstanding Common
Stock currently owned and Common Stock into which the preferred shares are convertible: OutstandingCommon
    
    
    Series C
    
    
    Series DDirectly
    
    
    Convertible
    
    
    ConvertibleOwner
    
    Held
    
    
    Preferred
    
    
    Preferred
    
    
    TotalChristopher M.
Jeffries
    
    
    29,000
    
    
    
    
    
    
    
    
    
    
    
    29,000Millennium Partners LLC
    
    
    2,253,863
    
    
    
    
    
    
    
    
    
    
    
    2,253,863Millennium Development
Partners L.P.
    
    
    978,900
    
    
    
    
    
    
    
    
    
    
    
    978,900MDP Ventures I LLC
    
    
    72,100
    
    
    
    
    
    
    
    
    
    
    
    72,100MDP Ventures II LLC
    
    
    3,284,886
    
    
    
    692,730
    
    
    
    2,250,000
    
    
    
    6,227,616Millennium
Entertainment Partners
L.P.
    
    
    625,000
    
    
    
    
    
    
    
    
    
    
    
    625,0007,243,749
    
    
    
    692,730
    
    
    
    2,250,000
    
    
    
    10,186,479
 39




---



##### Table of Contents



ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  Millennium.
     Mr. Talla.
 40




---



##### Table of Contents



th
 Messrs. Talla and Licklider.
  Kayne Anderson.
 Messrs. Talla and Licklider and Millennium.
  41




---



##### Table of Contents



Mr. Licklider , Millennium and Kayne Anderson.
 Messers Talla and Licklider and Kayne Anderson.
 42




---



##### Table of Contents



PART IV
 
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
   2003
    
    
    2004Audit fees(1)
    
    $
    161,500
    
    
    $
    181,000Audit related fees(2)
    
    
    3,000
    
    
    
    2,500Tax fees
    
    
    
    
    
    
    All other fees
    
    
    
    
    
    
    Total
    
    $
    164,500
    
    
    $
    183,500
 
 (1)
    
    Audit fees include fees for the audits of the Companys consolidated financial statements
and review of the unaudited condensed consolidated interim financial statements included in
quarterly reports.(2)
    
    Audit related fees are the review of debt agreements and issuance of compliance letters.   
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a)
    (1)
    
    Financial Statements filed as part of this Report are listed in Item 8 of this Report.(2)
    
    No other financial schedules have been included because they are not
applicable, not required or because required information is included in the
consolidated financial statements or notes thereto.(3)
    
    The following exhibits are filed as part of this Report.
 Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Filing Date
    
    Herewith3.1
    
    Restated Certificate of Incorporation
of the Registrant.
    
    S-1
    
    33-79552
    
    10/13/943.2
    
    Bylaws of the Registrant.
    
    S-1
    
    33-79552
    
    10/13/943.3
    
    Amendment to Bylaws dated February 1,
1995.
    
    10-K/A
    
    1-13290
    
    10/14/97
 43




---



##### Table of Contents



Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Filing Date
    
    Herewith3.4
    
    Certificate of Designation of Series
B Convertible Preferred Stock of the
Registrant.
    
    8-K
    
    1-13290
    
    03/26/023.5
    
    Corrected Certificate of Designation
of Series B Convertible Preferred
Stock of the Registrant.
    
    8-K
    
    1-13290
    
    09/09/023.6
    
    Certificate of Designation of Series
C Convertible Preferred Stock of the
Registrant.
    
    8-K
    
    1-13290
    
    09/09/023.7
    
    Amendment No. 2 to Bylaws dated July
21, 1999.
    
    10-K
    
    1-13290
    
    03/31/033.8
    
    Certificate of Designation of Series
D Convertible Preferred Stock of the
Registrant
    
    8-K
    
    1-13290
    
    03/18/043.9
    
    Certificate of Designation of Series
E Preferred Stock of the Registrant
    
    8-K
    
    1-13290
    
    09/17/044.1
    
    Specimen Common Stock Certificate.
    
    S-1
    
    33-79552
    
    10/13/944.2
    
    Rights Agreement by and between the
Registrant and American Stock
Transfer & Trust dated as of October
6, 1998.
    
    8-K
    
    1-13290
    
    10/06/984.3
    
    First Amendment to Rights Agreement
by and between the Registrant and
American Stock Transfer & Trust
entered into as of February 18, 1999.
    
    8-K
    
    1-13290
    
    03/15/994.4
    
    Indenture by and among Registrant,
U.S. Bank Trust National Association
and the Subsidiary Guarantors
referred to therein, dated as of
April 1, 1999.
    
    8-K
    
    1-13290
    
    04/14/994.5
    
    Registration Rights Agreement by and
among the Registrant, Jeffries &
Company, Inc. and CIBC Oppenheimer
Corp., dated as of April 1, 1999.
    
    8-K
    
    1-13290
    
    04/14/994.6
    
    Purchase Agreement by and among the
Registrant, Jeffries & Company, Inc.
and CIBC Oppenheimer Corp., dated
March 29, 1999.
    
    8-K
    
    1-13290
    
    04/14/99
 44




---



##### Table of Contents



Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Filing Date
    
    Herewith4.7
    
    Second Amendment to Rights Agreement
by and between the Registrant and
American Stock Transfer & Trust
entered into as of July 2, 1999.
    
    10-K
    
    1-13290
    
    03/28/004.8
    
    Third Amendment to Rights Agreement
by and between the Registrant and
American Stock Transfer & Trust made
and entered into as of April 27, 2000.
    
    10-K
    
    1-13290
    
    03/30/014.9
    
    Fourth Amendment to Rights Agreement
by and between the Registrant and
American Stock Transfer & Trust
entered into as of June 27, 2001.
    
    8-K
    
    1-13290
    
    07/17/014.10
    
    Fifth Amendment to Rights Agreement
by and between the Registrant and
American Stock Transfer & Trust
entered into as of September 6, 2002.
    
    8-K
    
    1-13290
    
    09/9/024.11
    
    Sixth Amendment to Rights Agreement
by and between the Registrant and
American Stock Transfer & Trust
entered into as of March 5, 2003.
    
    10-K
    
    1-13290
    
    03/31/034.12
    
    Seventh Amendment to Rights Agreement
by and between the Registrant and
American Stock Transfer & Trust
entered into as of April 14, 2003.
    
    8-K
    
    1-13290
    
    04/17/034.13
    
    Eighth Amendment to Rights Agreement
by and between the Registrant and
American Stock Transfer & Trust
entered into as of May 30, 2003.
    
    8-K
    
    1-13290
    
    06/02/034.14
    
    Ninth Amendment to Rights Agreement
by and between the Registrant and
American Stock Transfer & Trust
entered into as of July 30, 2003.
    
    8-K
    
    1-13290
    
    07/31/03
 45




---



##### Table of Contents



Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Filing Date
    
    Herewith4.15
    
    Tenth Amendment to Rights Agreement
by and between the Registrant and
American Stock Transfer & Trust
entered into as of September 30, 2003.
    
    8-K
    
    1-13290
    
    10/03/034.16
    
    Eleventh Amendment to Rights
Agreement by and between the
Registrant and American Stock
Transfer & Trust entered into as of
November 25, 2003.
    
    8-K
    
    1-13290
    
    12/03/034.17
    
    Twelfth Amendment to Rights Agreement
by and between the Registrant and
American Stock Transfer & Trust
entered into as of March 3, 2004.
    
    8-K
    
    1-13290
    
    03/04/044.18
    
    Thirteenth Amendment to Rights
Agreement by and between the
Registrant and American Stock
Transfer & Trust entered into as of
March 10, 2004.
    
    8-K
    
    1-13290
    
    03/18/044.19
    
    Fourteenth Amendment to Rights
Agreement by and between the
Registrant and American Stock
Transfer & Trust entered into as of
February 8, 2005.
    
    8-K
    
    1-13290
    
    02/14/054.20
    
    Fifteenth Amendment to Rights
Agreement by and between the
Registrant and American Stock
Transfer & Trust entered into as of
April 29, 2005.
    
    
    
    
    
    
    
    X9.1
    
    Voting Agreement among D. Michael
Talla, Nanette Pattee Francini, Mark
S. Spino, Peter Feinstein, Philip J.
Swain and FP II.
    
    S-1
    
    33-79552
    
    10/13/9410.1
    
    1994 Stock Incentive Plan. #
    
    S-1
    
    33-79552
    
    10/13/9410.2
    
    Form of Stock Option Agreement. #
    
    S-1
    
    33-79552
    
    10/13/9410.3
    
    Form of Stock Purchase Agreement. #
    
    S-1
    
    33-79552
    
    10/13/9410.4
    
    1994 Stock Compensation Plan. #
    
    S-1
    
    33-79552
    
    10/13/94
 46




---



##### Table of Contents



Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Filing Date
    
    Herewith10.5
    
    Form of Indemnification Agreement
between the Registrant and its
directors and certain officers.
    
    S-1
    
    33-79552
    
    10/13/9410.6
    
    Indemnification Agreement between the
Registrant and D. Michael Talla.
    
    S-1
    
    33-79552
    
    10/13/9410.7
    
    Indemnification Agreement between
Registrant and Rex A. Licklider.
    
    S-1
    
    33-79552
    
    10/13/9410.8
    
    Lease of premises for Reebok Sports
Club/NY located at 160 Columbus
Avenue, New York 10023 dated June 3,
1992.
    
    S-1
    
    33-79552
    
    10/13/9410.9
    
    Management Agreement effective as of
June 3, 1992, between R-SC/NY, Ltd.
and Pontius Realty, Inc.
    
    S-1
    
    33-79552
    
    10/13/9410.10
    
    License Agreement between Reebok
Fitness Centers, Inc. and R-SC/NY,
Ltd. dated June 3, 1992.
    
    S-1
    
    33-79552
    
    10/13/9410.11
    
    Letter Agreement regarding R-SC/NY
dated June 3, 1992.
    
    S-1
    
    33-79552
    
    10/13/9410.12
    
    Memorandum of Agreement between
Reebok Fitness Centers, Inc. and the
Company dated as of June 3, 1992.
    
    S-1
    
    33-79552
    
    10/13/9410.13
    
    Seventh Amendment and Restated
Agreement of Limited Partnership of
L.A./Irvine Sports Club, Ltd., a
California Limited Partnership, dated
as of October 12, 1994.
    
    S-1
    
    33-79552
    
    10/13/9410.14
    
    First Amendment to Seventh Amended
and Restated Agreement of Limited
Partnership of L.A./Irvine Sports
Club, Ltd., a California Limited
Partnership, dated as of October 12,
1994.
    
    S-1
    
    33-79552
    
    10/13/9410.15
    
    Form of Option Agreement by and
between D. Michael Talla, an
individual, TTO Partners, a
California Limited Partnership, and
Sports Club, Ltd., a California
Corporation, relating to L.A./Irvine
Sports Club, Ltd., a California
Limited Partnership.
    
    S-1
    
    33-79552
    
    10/13/94
 47




---



##### Table of Contents



Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Filing Date
    
    Herewith10.16
    
    Amended and Restated Agreement of
Limited Partnership of TTO Partners,
a California Limited Partnership,
dated June 30, 1992, as amended
January 1, 1993, January 4, 1993 and
February 12, 1994 and as assigned
January 1, 1993.
    
    S-1
    
    33-79552
    
    10/13/9410.17
    
    First Amended and Restated Agreement
of Limited Partnership of
Reebok-Sports Club/NY, Ltd. Dated as
of October 12, 1994.
    
    S-1
    
    33-79552
    
    10/13/9410.18
    
    Letter Agreement by and between
Reebok Fitness Centers, Inc. and the
Company dated October 12, 1994.
    
    S-1
    
    33-79552
    
    10/13/9410.19
    
    Amendment to First Amended and
Restated Agreement of Limited
Partnership of Reebok-Sports Club/NY,
Ltd. dated as of October 12, 1994.
    
    S-1
    
    33-79552
    
    10/13/9410.20
    
    Letter Agreement by and between
Reebok Fitness Centers, Inc. and the
Company, which became effective on
October 29, 1994.
    
    S-1
    
    33-79552
    
    10/13/9410.21
    
    License Agreement by and between
Reebok Fitness Centers, Inc. and the
Company, which became effective on
October 20, 1994.
    
    S-1
    
    33-79552
    
    10/13/9410.22
    
    Agreement by and among Reebok-Sports
Club/NY Ltd., Talla New York, Inc.,
RFC, Inc., LMP Health Club Co.,
Millennium Entertainment Partners,
L.P. and Registrant dated as of
December 30, 1996.
    
    10-K/A
    
    1-13290
    
    10/14/9710.23
    
    Letter Agreement between Millennium
Entertainment Partners, L.P. and the
Registrant dated as of March 13, 1997.
    
    10-K/A
    
    1-13290
    
    10/14/9710.24
    
    First Amendment to Option Agreement
between D. Michael Talla and TTO
Partners dated May 27, 1997.
    
    10-K
    
    1-13290
    
    02/26/98
 48




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##### Table of Contents



Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Filing Date
    
    Herewith10.25
    
    Amendment of Lease between Lincoln
Metrocenter Partners, L.P. and
Reebok-Sports Club/NY Ltd. as of
January 31, 1998.
    
    10-K
    
    1-13290
    
    02/26/9810.26
    
    Lease Agreement between RCPI Trust
and the Registrant as of February 27,
1998.
    
    10-K
    
    1-13290
    
    03/25/9910.27
    
    Amended and Restated Net Operating
Lease among Hirschfeld Realty Club
Corporation and 328 E. 61 Corp., and
Vertical Fitness and Racquet Club,
Ltd., dated March 26, 1985.
    
    10-K
    
    1-13290
    
    03/25/9910.28
    
    Lease Modification Agreement by and
among Hirschfeld Realty Corporation
and 328 E. 61 Corp., and Vertical
Fitness and Racquet Club, Ltd., dated
July 1, 1990.
    
    10-K
    
    1-13290
    
    03/25/9910.29
    
    Assignment and Assumption of Lease by
and between Vertical Fitness and
Racquet Club, Ltd., and Bally
Entertainment Corporation dated
January 8, 1996.
    
    10-K
    
    1-13290
    
    03/25/9910.30
    
    Assignment of Lease executed by
Hilton Hotels Corporation, as
successor to tenant, and agreed to
and accepted by the Registrant, dated
April 15, 1998.
    
    10-K
    
    1-13290
    
    03/25/9910.31
    
    Second Amendment to Amended and
Restated Net Operating Lease by and
among Hirschfeld Realty Club
Corporation and 328 E. 61 Corp., and
the Registrant dated April 15, 1998.
    
    10-K
    
    1-13290
    
    03/25/9910.32
    
    Amended and Restated 1994 Stock
Incentive Plan as of June 2, 1998. #
    
    10-K
    
    1-13290
    
    03/25/9910.33
    
    Letter Agreement between the
Registrant and Millennium Partners
LLC dated as of October 27, 1998.
    
    10-K
    
    1-13290
    
    03/25/9910.34
    
    First Amendment to Lease between RCPI
Trust and the Registrant dated
October 30,1998.
    
    10-K
    
    1-13290
    
    03/25/99
 49




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##### Table of Contents



Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Filing Date
    
    Herewith10.35
    
    Second Amendment to Lease between
RCPI Trust and the Registrant dated
March 4, 1999.
    
    10-K
    
    1-13290
    
    03/25/9910.36
    
    Lease between CB-1 Entertainment
Partners LP and S.F. Sports Club,
Inc. dated June 1, 1997.
    
    10-K
    
    1-13290
    
    03/25/9910.37
    
    Lease between 2200 M Street LLC and
Washington D.C. Sports Club, Inc.
dated March 1999.
    
    10-K
    
    1-13290
    
    03/25/9910.38
    
    Fourth Amended and Restated Loan
Agreement by and among the
Registrant, certain of its
subsidiaries and Comerica
Bank-California, dated April 1, 1999.
    
    8-K
    
    1-13290
    
    04/14/9910.39
    
    Intercreditor Agreement by and among
the Registrant, certain of its
subsidiaries, Comerica
Bank-California and U.S. Bank Trust
National Association, dated April 1,
1999.
    
    8-K
    
    1-13290
    
    04/14/9910.40
    
    Amended and Restated 1994 Stock
Compensation Plan. #
    
    10-K
    
    1-13290
    
    03/28/0010.41
    
    Lease Agreement as of September 24,
1999 between The Spectrum Club
Company, Inc. and West Hollywood
Property Limited Partnership and 2400
Willow Lane Associates Limited
Partnership.
    
    10-K
    
    1-13290
    
    03/28/0010.42
    
    Lease Agreement as of November 5,
1999 by and between New Commonwealth
Center Limited Partnership and
Washington D.C. Sports Club, Inc.
    
    10-K
    
    1-13290
    
    03/28/0010.43
    
    Letter Agreement dated March 11, 1999
amending the October 27, 1998 Letter
Agreement between the Registrant and
Millennium Partners, LLC.
    
    10-K
    
    1-13290
    
    03/28/0010.44
    
    Amendment adopted November 4, 1999 to
the Registrants 1994 Stock Incentive
Plan. #
    
    10-K
    
    1-13290
    
    03/28/00
 50




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##### Table of Contents



Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Filing Date
    
    Herewith10.45
    
    Certificate representing Series B
Senior Secured Notes.
    
    10-K
    
    1-13290
    
    03/28/0010.46
    
    First Amendment to Fourth Amended and
Restated Loan Agreement among the
Registrant and certain of its
subsidiaries and Comerica Bank -
California as of December 3, 1999.
    
    10-K
    
    1-13290
    
    03/28/0010.47
    
    Form of The Sports Club Membership
Agreements.
    
    10-K
    
    1-13290
    
    03/28/0010.48
    
    Second Amendment to Fourth Amended
and Restated Loan Agreement among the
Registrant and certain of its
subsidiaries and Comerica
Bank-California as of August 10,
2000.
    
    10-K
    
    1-13290
    
    03/30/0110.49
    
    Reaffirmation of Intercreditor and
Subordination Agreement dated as of
August 10, 2000 among the Registrant
and certain of its subsidiaries and
U.S. Bank Trust, National Association.
    
    10-K
    
    1-13290
    
    03/30/0110.50
    
    First Supplemental Agreement of Lease
made as of the 27th day of March,
2001 between CB-1 Entertainment
Partners, LP and S.F. Sports Club,
Inc.
    
    10-K
    
    1-13290
    
    03/30/0110.51
    
    First Supplemental Agreement of Lease
made as of the 27th day of March 2001
between New Commonwealth Center
Limited Partnership and Washington
D.C. Sports Club, Inc.
    
    10-K
    
    1-13290
    
    03/30/0110.52
    
    First Supplemental Agreement of Lease
made as of the 27th day of March 2001
between 2200 M Street LLC and
Washington D.C. Sports Club, Inc.
    
    10-K
    
    1-13290
    
    03/30/0110.53
    
    Third Amendment to Fourth Amended and
Restated Loan Agreement entered into
as of June 1, 2001 by and among
Registrant and various of its
subsidiaries and Comerica Bank -
California.
    
    8-K
    
    1-13290
    
    07/17/01
 51




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##### Table of Contents



Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Filing Date
    
    Herewith10.54
    
    Indemnification and Contribution
Agreement entered into as of July 3,
2001 by and among the Registrant.,
Rex A. Licklider, D. Michael Talla
and MDP Ventures II LLC.
    
    8-K
    
    1-13290
    
    07/17/0110.55
    
    The Sports Club Company, Inc. 2001
Stock Incentive Plan. #
    
    10-K
    
    1-13290
    
    03/29/0210.56
    
    Preferred Stock Purchase Agreement
made as of March 18, 2002 by and
among Registrant and the holders of
the Series B Convertible Preferred
Stock.
    
    8-K
    
    1-13290
    
    03/26/0210.57
    
    Investor Rights Agreement made as of
the 18th day of March 2002 by and
between the Registrant and the
holders of the Series B Convertible
Preferred Stock.
    
    8-K
    
    1-13290
    
    03/26/0210.58
    
    Standard Form Lease between the
Registrant and Club at 60th St., Inc.
for space located at 333 East 60th
Street, New York, dated May 4, 2001.
    
    10-K
    
    1-13290
    
    03/29/0210.59
    
    First Amendment to Lease by and among
Registrant and Club at 60th St., Inc.
dated as of March 1, 2002.
    
    10-K
    
    1-13290
    
    03/29/0210.60
    
    Waiver of Covenant Compliance Letter
Agreement between the Registrant and
Comerica Bank - California dated
March 14, 2002.
    
    10-K
    
    1-13290
    
    03/29/0210.61
    
    Fourth Amendment to Fourth Amended
and Restated Loan Agreement and First
Amendment to Amended and Restated
Revolving Loan between the Registrant
and certain of its Subsidiaries and
Comerica Bank  California dated May
31, 2002.
    
    8-K
    
    1-13290
    
    06/04/0210.62
    
    Fifth Amendment to Fourth Amended and
Restated Loan Agreement between the
Registrant and certain of its
Subsidiaries and Comerica Bank 
California dated August 30, 2002.
    
    8-K
    
    1-13290
    
    09/04/02
 52




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##### Table of Contents



Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Filing Date
    
    Herewith10.63
    
    Reaffirmation of Intercreditor and
Subordination Agreement dated as of
August 30, 2002 among the Registrant
and certain of its Subsidiaries and
U.S. Bank Trust, National Association.
    
    8-K
    
    1-13290
    
    09/04/0210.64
    
    Investors Rights Agreement made as
of September 6, 2002 by and between
the Registrant and the holders of the
Series C Convertible Preferred Stock.
    
    8-K
    
    1-13290
    
    09/09/0210.65
    
    Preferred Stock Purchase Agreement
made as of September 6, 2002 by and
among the Registrant and the holders
of the Series C Convertible Preferred
Stock.
    
    8-K
    
    1-13290
    
    09/09/0210.66
    
    Sixth Amendment to Fourth Amended and
Restated Loan Agreement by and among
the Registrant and certain of its
Subsidiaries, Comerica Bank 
California and KASCY, L.P. dated
October 31, 2002.
    
    8-K
    
    1-13290
    
    11/12/0210.67
    
    Consent and Reaffirmation of
Intercreditor and Subordination
Agreement dated as of October 31,
2002 among the Registrant and certain
of its Subsidiaries, Comerica Bank 
California and U.S. Bank Trust,
National Association.
    
    8-K
    
    1-13290
    
    11/12/0210.68
    
    Fitness Club and Spa Management and
Pre-Opening Service Agreement between
Terramark Brickell II, Ltd. and the
Registrant effective as of January 1,
2003.
    
    10-K
    
    1-13290
    
    06/21/0410.69
    
    First Supplement to Fitness Club and
Spa Management and Pre-Opening
Services Agreement effective as of
January 1, 2003.
    
    10-K
    
    1-13290
    
    06/21/0410.70
    
    Waiver of Covenant Compliance Letter
from Comerica Bank  California dated
March 26, 2003.
    
    10-K
    
    1-13290
    
    03/31/0310.71
    
    Promissory Note dated June 12, 2003
in favor of Orange Countys Credit
Union in the amount of $20,000,000.
    
    8-K
    
    1-13290
    
    06/18/03
 53




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##### Table of Contents



Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Filing Date
    
    Herewith10.72
    
    Deed of Trust, Assignment of Rents,
Security Agreement and Fixture Filing
dated as of June 12, 2003, made by
Irvine Sports Club, Inc. for the
benefit of Orange Countys Credit
Union.
    
    8-K
    
    1-13290
    
    06/18/0310.73
    
    Reserve and Security Agreement made
as of June 12, 2003 by Irvine Sports
Club, Inc. in favor of Orange
Countys Credit Union.
    
    8-K
    
    1-13290
    
    06/18/0310.74
    
    Pledge and Security Agreement made as
of June 12, 2003 by the Registrant
and Irvine Sports Club, Inc. in favor
of Orange Countys Credit Union.
    
    8-K
    
    1-13290
    
    06/18/0310.75
    
    Indemnity and Guaranty Agreement
entered into as of December 1, 2003
among the Registrant, Irvine Sports
Club, Inc., Rex A. Licklider and D.
Michael Talla.
    
    10-K
    
    1-13290
    
    06/21/0410.76
    
    Supplemental Indenture dated as of
March 28, 2003 between the
Registrant, the Subsidiary Guarantors
and U.S. Bank Trust National
Association.
    
    8-K
    
    1-13290
    
    04/04/0310.77
    
    Supplemental Indenture dated as of
February 4, 2004 between the
Registrant, the Subsidiary Guarantors
and U.S. Bank National Association.
    
    10-K
    
    1-13290
    
    06/21/0410.78
    
    Third Supplemental Indenture made as
of March 9, 2004 between the
Registrant, the Subsidiary Guarantors
and U.S. Bank National Association.
    
    8-K
    
    1-13290
    
    03/18/0410.79
    
    Investors Rights Agreement made as
of March 10, 2004, by and among the
Registrant and the holders of the
Series D Convertible Preferred Stock.
    
    8-K
    
    1-13290
    
    03/18/0410.80
    
    Preferred Stock Purchase Agreement
made as of March 10, 2004 by and
among the Registrant and the holders
of the Series D Convertible Preferred
Stock.
    
    8-K
    
    1-13290
    
    03/18/04
 54




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##### Table of Contents



Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Filing Date
    
    Herewith10.81
    
    Consent Letter dated March 10, 2004
by holders of the Series B
Convertible Preferred Stock.
    
    8-K
    
    1-13290
    
    03/18/0410.82
    
    Consent Letter dated March 10, 2004
by holders of the Series C
Convertible Preferred Stock.
    
    8-K
    
    1-13290
    
    03/18/0410.83
    
    Preferred Stock Purchase Agreement
made as of September 13, 2004 by and
among the Registrant and the holders
of the Series E Preferred Stock.
    
    8-K
    
    1-13290
    
    09/17/0410.84
    
    Fourth Supplemental Indenture made as
of February 8, 2005 by and among The
Registrant, the Subsidiary
Guarantors, and U.S. Bank Trust
National Association.
    
    
    
    
    
    
    
    X10.85
    
    Fifth Supplemental Indenture made as
of July 21, 2005 by and among The
Registrant, the Subsidiary Guarantors
and U.S. Bank Trust National
Associates.
    
    8-K
    
    1-13290
    
    08/08/0514.1
    
    Cod of Ethics for Senior Financial
Officers
    
    14-A
    
    1-13290
    
    09/29/0414.2
    
    Code of Business Conduct for Board of
Directors.
    
    14-A
    
    1-13290
    
    09/29/0421.1
    
    Subsidiaries of the Registrant.
    
    
    
    
    
    
    
    X23.1
    
    Consent of Independent Registered
Public Accounting Firm.
    
    
    
    
    
    
    
    X23.2
    
    Consent of Independent Registered
Public Accounting Firm.
    
    
    
    
    
    
    
    X31.1
    
    Certification of Rex A. Licklider
Pursuant to Section 302 of the
Sarbanes  Oxley Act of 2002.
    
    
    
    
    
    
    
    X31.2
    
    Certification of Timothy OBrien
Pursuant to Section 302 of the
Sarbanes  Oxley Act of 2002.
    
    
    
    
    
    
    
    X32.1
    
    Certification of Rex A. Licklider
Pursuant to 18 U.S.C. Section 1350,
as adopted Pursuant to Section 906 of
the Sarbanes  Oxley Act of 2002.
    
    
    
    
    
    
    
    X
 55




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##### Table of Contents



Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Filing Date
    
    Herewith32.2
    
    Certification of Timothy OBrien
Pursuant to 18 U.S.C. Section 1350,
as adopted Pursuant to Section 906 of
the Sarbanes  Oxley Act of 2002.
    
    
    
    
    
    
    
    X
 
 #
    
    Compensation agreement or plan. 56




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##### Table of Contents



ExhibitNumber
    
    Exhibit4.20
    
    Fifteenth Amendment to Rights Agreement by
and between the Registrant and American
Stock Transfer & Trust entered into as of
April 29, 2005.10.84
    
    Fourth Supplemental Indenture made as of
February 8, 2005 by and among The
Registrant, the Subsidiary Guarantors, and
U.S. Bank Trust National Association.21.1
    
    Subsidiaries of the Registrant23.1
    
    Consent of Independent Registered Public Accounting Firm.23.2
    
    Consent of Independent Registered Public Accounting Firm.31.1
    
    Certification of Rex A. Licklider Pursuant to Section 302 of the
Sarbanes  Oxley Act of 2002.31.2
    
    Certification of Timothy OBrien Pursuant to Section 302 of the
Sarbanes  Oxley Act of 2002.32.1
    
    Certification of Rex A. Licklider Pursuant to 18 U.S.C. Section
1350, as adopted Pursuant to Section 906 of the Sarbanes  Oxley Act
of 2002.32.2
    
    Certification of Timothy OBrien Pursuant to 18 U.S.C. Section 1350,
as adopted Pursuant to Section 906 of the Sarbanes  Oxley Act of
2002.
 57




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##### Table of Contents



SIGNATURES
  THE SPORTS CLUB COMPANY, INC./s/ Rex A. LickliderRex A. LickliderChief Executive Officer
  Signature
    
    Title
    
    Date/s/ Rex A. Licklider
    
    Vice Chairman of the Board
    
    September 30, 2005Rex A. Licklider
    
    and Chief Executive Officer/s/ Timothy OBrien
    
    Chief Financial Officer
    
    September 30, 2005Timothy M. OBrien
    
    (Principal Financial and
Accounting Officer)/s/ D. Michael Talla
    
    Chairman of the Board
    
    September 30, 2005D. Michael TallaDirector
    
    September 30, 2005Christopher M. Jeffries/s/ Charles Ferraro
    
    Director
    
    September 30, 2005Charles Ferraro/s/ Charles Norris
    
    Director
    
    September 30, 2005Charles Norris/s/ Andrew L. Turner
    
    Director
    
    September 30, 2005Andrew L. Turner
 58