##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 Form 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
 For the quarterly period ended March 31, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
 For the Transition period from                      to                     .
 Commission File Number 000-52013
 TOWN SPORTS INTERNATIONAL HOLDINGS, INC.
 (Exact name of Registrant as specified in its charter)
 Delaware
    
    20-0640002(State or other Jurisdiction of
    
    (I.R.S. EmployerIncorporation or Organization)
    
    Identification Number)
 5 Penn Plaza (4th Floor)
New York, New York 10001
Telephone: (212) 246-6700
 (Address, zip code, and telephone number, including
area code, of registrants principal executive office.)
 þ o
 o o
  o Large accelerated filer
    
    þ Accelerated filer
    
    o Non-accelerated filer
    
    o Smaller reporting company(Do not check if smaller reporting company)
 o þ




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##### 



TOWN SPORTS INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
 FORM 10-Q
For the Three Months Ended March 31, 2010
 INDEX
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Condensed Consolidated Balance Sheets as of March 31, 2010 and December 31, 2009
    
    
    3Condensed Consolidated Statements of Operations and Statements of Comprehensive (Loss) Income for
the three months ended March 31, 2010 and 2009
    
    
    4Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2010 and 2009
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    22Item 4. Controls and Procedures
    
    
    22PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    23Item 1A. Risk Factors
    
    
    23Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    23Item 3. Defaults Upon Senior Securities
    
    
    24Item 4. (Removed and Reserved)Item 5. Other Information
    
    
    24Item 6. Exhibits
    
    
    24SIGNATURES
    
    
    25EX-10.1EX-10.2EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



TOWN SPORTS INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 2010 and December 31, 2009
(All figures in $000s except share data)
(Unaudited)
 March 31,
    
    
    December 31,2010
    
    
    2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    25,046
    
    
    $
    10,758Accounts receivable (less allowance for doubtful accounts of $2,415 and
$2,410 as of March 31, 2010 and December 31, 2009, respectively)
    
    
    5,035
    
    
    
    4,295Inventory
    
    
    298
    
    
    
    224Prepaid corporate income taxes
    
    
    442
    
    
    
    1,274Prepaid expenses and other current assets
    
    
    7,383
    
    
    
    10,264Total current assets
    
    
    38,204
    
    
    
    26,815Fixed assets, net
    
    
    328,401
    
    
    
    340,277Goodwill
    
    
    32,636
    
    
    
    32,636Intangible assets, net
    
    
    100
    
    
    
    149Deferred tax assets, net
    
    
    52,480
    
    
    
    50,581Deferred membership costs
    
    
    5,089
    
    
    
    6,079Other assets
    
    
    10,466
    
    
    
    10,929Total assets
    
    $
    467,376
    
    
    $
    467,466LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Current portion of long-term debt
    
    $
    1,850
    
    
    $
    1,850Accounts payable
    
    
    4,772
    
    
    
    6,011Accrued expenses
    
    
    26,388
    
    
    
    23,656Accrued interest
    
    
    2,778
    
    
    
    6,573Deferred revenue
    
    
    38,813
    
    
    
    35,346Total current liabilities
    
    
    74,601
    
    
    
    73,436Long-term debt
    
    
    316,050
    
    
    
    316,513Deferred lease liabilities
    
    
    70,642
    
    
    
    71,438Deferred revenue
    
    
    2,040
    
    
    
    1,488Other liabilities
    
    
    12,750
    
    
    
    12,824Total liabilities
    
    
    476,083
    
    
    
    475,699Contingencies (Note 9)Stockholders deficit :Common stock, $.001 par value; issued and outstanding 22,613,748 and
22,603,199 shares at March 31, 2010 and December 31, 2009, respectively
    
    
    23
    
    
    
    23Paid-in capital
    
    
    (22,185
    )
    
    
    (22,572
    )Accumulated other comprehensive income (currency translation adjustment)
    
    
    1,198
    
    
    
    1,327Retained earnings
    
    
    12,257
    
    
    
    12,989Total stockholders deficit
    
    
    (8,707
    )
    
    
    (8,233
    )Total liabilities and stockholders deficit
    
    $
    467,376
    
    
    $
    467,466
  3




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TOWN SPORTS INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the three months ended March 31, 2010 and 2009
(All figures in $000s except share and per share data)
(Unaudited)
 Three Months Ended March 31,2010
    
    
    2009Revenues:Club operations
    
    $
    116,595
    
    
    $
    125,468Fees and other
    
    
    1,164
    
    
    
    1,241117,759
    
    
    
    126,709Operating Expenses:Payroll and related
    
    
    48,511
    
    
    
    50,747Club operating
    
    
    43,468
    
    
    
    46,610General and administrative
    
    
    8,939
    
    
    
    8,347Depreciation and amortization
    
    
    13,654
    
    
    
    14,296Impairment of fixed assets
    
    
    389
    
    
    
    1,131114,961
    
    
    
    121,131Operating income
    
    
    2,798
    
    
    
    5,578Interest expense
    
    
    5,184
    
    
    
    5,277Interest income
    
    
    (18
    )
    
    
    (1
    )Equity in the earnings of investees and rental income
    
    
    (536
    )
    
    
    (611
    )(Loss) income before provision for corporate income taxes
    
    
    (1,832
    )
    
    
    913(Benefit) provision for corporate income taxes
    
    
    (1,100
    )
    
    
    274Net (loss) income
    
    $
    (732
    )
    
    $
    639(Loss) earnings per share:Basic
    
    $
    (0.03
    )
    
    $
    0.03Diluted
    
    $
    (0.03
    )
    
    $
    0.03Weighted average number of shares used in calculating (loss) earnings per share:Basic
    
    
    22,605,236
    
    
    
    23,207,417Diluted
    
    
    22,605,236
    
    
    
    23,245,843Statements of Comprehensive (Loss) IncomeNet (loss) income
    
    $
    (732
    )
    
    $
    639Foreign currency translation adjustments
    
    
    (129
    )
    
    
    (320
    )Comprehensive (loss) income
    
    $
    (861
    )
    
    $
    319
  4




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TOWN SPORTS INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2010 and 2009
(All figures in $000s)
(Unaudited)
 Three Months Ended March 31,2010
    
    
    2009Cash flows from operating activities:Net (loss) income
    
    $
    (732
    )
    
    $
    639Adjustments to reconcile net income to net cash provided by operating activitiesDepreciation and amortization
    
    
    13,654
    
    
    
    14,296Impairment of fixed assets
    
    
    389
    
    
    
    1,131Non-cash interest expense on Senior Discount Notes
    
    
    
    
    
    
    1,203Amortization of debt issuance costs
    
    
    253
    
    
    
    200Non-cash rental expense, net of non-cash rental income
    
    
    (934
    )
    
    
    (245
    )Compensation expense incurred in connection with stock options and common stock
grants
    
    
    369
    
    
    
    415Increase in deferred tax asset
    
    
    (1,899
    )
    
    
    (1,000
    )Net change in certain operating assets and liabilities
    
    
    5,485
    
    
    
    2,042Decrease in deferred membership costs
    
    
    990
    
    
    
    469Landlord contributions to tenant improvements
    
    
    100
    
    
    
    1,958(Decrease) increase in insurance reserves
    
    
    (229
    )
    
    
    1,512Other
    
    
    172
    
    
    
    (41
    )Total adjustments
    
    
    18,350
    
    
    
    21,940Net cash provided by operating activities
    
    
    17,618
    
    
    
    22,579Cash flows from investing activities:Capital expenditures
    
    
    (2,809
    )
    
    
    (18,460
    )Net cash used in investing activities
    
    
    (2,809
    )
    
    
    (18,460
    )Cash flows from financing activities:Proceeds from borrowings on Revolving Loan Facility
    
    
    
    
    
    
    41,000Repayment of borrowings on Revolving Loan Facility
    
    
    
    
    
    
    (42,000
    )Repayment of long term borrowings
    
    
    (463
    )
    
    
    (463
    )Change in book overdraft
    
    
    
    
    
    
    174Repurchase of common stock
    
    
    
    
    
    
    (5,355
    )Tax benefit from stock option exercises
    
    
    18
    
    
    
    Net cash used in financing activities
    
    
    (445
    )
    
    
    (6,644
    )Effect of exchange rate changes on cash
    
    
    (76
    )
    
    
    (263
    )Net increase (decrease) in cash and cash equivalents
    
    
    14,288
    
    
    
    (2,788
    )Cash and cash equivalents beginning of period
    
    
    10,758
    
    
    
    10,399Cash and cash equivalents end of period
    
    $
    25,046
    
    
    $
    7,611Summary of the change in certain operating assets and liabilities:Increase in accounts receivable
    
    $
    (752
    )
    
    $
    (958
    )Increase in inventory
    
    
    (74
    )
    
    
    (179
    )Decrease in prepaid expenses and other current assets
    
    
    2,740
    
    
    
    1,148Increase (decrease) in accounts payable, accrued expenses and accrued interest
    
    
    2,527
    
    
    
    (1,550
    )(Decrease) increase in accrued interest on Senior Discount Notes
    
    
    (3,807
    )
    
    
    2,538Change in prepaid corporate income taxes and corporate income taxes payable
    
    
    831
    
    
    
    546Increase in deferred revenue
    
    
    4,020
    
    
    
    497Net change in certain working capital components
    
    $
    5,485
    
    
    $
    2,042Supplemental disclosures of cash flow information:Cash payments for interest
    
    $
    8,971
    
    
    $
    1,723Cash payments for income taxes
    
    $
    30
    
    
    $
    460
  5




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TOWN SPORTS INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In $000s except share and per share data)
(Unaudited)
 1. Basis of Presentation
  
   2. Recent Accounting Pronouncements
   6




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3. Long-Term Debt
 March 31,
    
    
    December 31,2010
    
    
    2009Term Loan Facility
    
    $
    179,450
    
    
    $
    179,91311% Senior Discount Notes
    
    
    138,450
    
    
    
    138,450317,900
    
    
    
    318,363Less: Current portion due within one year
    
    
    1,850
    
    
    
    1,850Long-term portion
    
    $
    316,050
    
    
    $
    316,513
     7




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##### Table of Contents



Fair Market Value
  4. (Loss) Earnings Per Share
   Three Months Ended March 31,2010
    
    
    2009Weighted average number of common share outstanding  basic
    
    
    22,605,236
    
    
    
    23,207,417Effect of dilutive stock options
    
    
    
    
    
    
    38,426Weighted average number of common shares outstanding  diluted
    
    
    22,605,236
    
    
    
    23,245,843(Loss) earnings per share:Basic
    
    $
    (0.03
    )
    
    $
    0.03Diluted
    
    $
    (0.03
    )
    
    $
    0.03
   5. Common Stock and Stock-Based Compensation
   8




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Option Grants
  Risk Free
    
    
    ExpectedNumber of
    
    
    Exercise
    
    
    Black-Scholes
    
    
    
    
    
    
    Dividend
    
    
    Interest
    
    
    TermDate
    
    Options
    
    
    Price
    
    
    Valuation
    
    
    Volatility
    
    
    Yield
    
    
    Rate
    
    
    (Years)January 4, 2010
    
    
    7,000
    
    
    $
    2.47
    
    
    $
    1.73
    
    
    
    83.99
    %
    
    
    0.0
    %
    
    
    2.83
    %
    
    
    5.50January 4, 2010
    
    
    7,500
    
    
    $
    2.47
    
    
    $
    1.81
    
    
    
    83.99
    %
    
    
    0.0
    %
    
    
    3.18
    %
    
    
    6.25Total
    
    
    14,500
   Restricted Stock Grants
   Non-Restricted Stock Grants
 
 Number of
    
    Price Per
    
    Grant Date FairDate
    
    Shares
    
    Share
    
    ValueMarch 25, 2010
    
    
    3,049
    
    
    $
    4.10
    
    
    $
    13
 6. Fixed Asset Impairment
   9




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Basis of Fair Value MeasurementsQuoted Prices inFair Value of
    
    Active markets for
    
    Significant Other
    
    SignificantAssets
    
    Identical Items
    
    Observable Inputs
    
    Unobservable Inputs(Liabilities)
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Fixed assets
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
  7. Goodwill and Other Intangibles
      10




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NYSC
    
    
    BSC
    
    
    SSC
    
    
    Outlier Clubs
    
    
    TotalBalance as of January 1, 2009Goodwill
    
    $
    31,403
    
    
    $
    15,766
    
    
    $
    1,070
    
    
    $
    3,982
    
    
    $
    52,221Accumulated impairment of goodwill
    
    
    
    
    
    
    (15,766
    )
    
    
    
    
    
    
    (3,845
    )
    
    
    (19,611
    )31,403
    
    
    
    
    
    
    
    1,070
    
    
    
    137
    
    
    
    32,610Changes due to foreign currency
exchange rate fluctuations
    
    
    
    
    
    
    
    
    
    
    26
    
    
    
    
    
    
    
    26Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance as of December 31, 2009Goodwill
    
    
    31,403
    
    
    
    15,766
    
    
    
    1,096
    
    
    
    3,982
    
    
    
    52,247Accumulated impairment of goodwill
    
    
    
    
    
    
    (15,766
    )
    
    
    
    
    
    
    (3,845
    )
    
    
    (19,611
    )31,403
    
    
    
    
    
    
    
    1,096
    
    
    
    137
    
    
    
    32,636Balance as of March 31, 2010Goodwill
    
    
    31,403
    
    
    
    15,766
    
    
    
    1,096
    
    
    
    3,982
    
    
    
    52,247Accumulated impairment of goodwill
    
    
    
    
    
    
    (15,766
    )
    
    
    
    
    
    
    (3,845
    )
    
    
    (19,611
    )$
    31,403
    
    
    $
    
    
    
    $
    1,096
    
    
    $
    137
    
    
    $
    32,636
  March 31,
    
    
    December 31,2010
    
    
    2009Covenants-not-to-compete
    
    $
    1,508
    
    
    $
    1,508Accumulated amortization
    
    
    (1,408
    )
    
    
    (1,359
    )$
    100
    
    
    $
    149
 8. Income Taxes
      11




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##### Table of Contents



9. Contingencies
 Sarah Cruz, et al v. Town Sports
International, d/b/a New York Sports Club
  Town Sports International, LLC v. Ajilon
Solutions
  12




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10. Subsequent Event
  13




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Item 2. Managements Discussion and Analysis of Financial Condition & Results of Operations
 Introduction
    Revenue and operating expenses
  
    
    Membership revenue:Our largest sources of revenue are
dues and initiation fees paid by our members. These dues
and fees comprised 80.5% of our total revenue for the
three months ended March 31, 2010. We recognize revenue
from membership dues in the month when the services are
rendered. Approximately 96.0% of our members pay their
monthly dues by Electronic Funds Transfer, or EFT, while
the balance is paid annually in advance. We recognize
revenue from initiation fees over the expected average
life of the membership.
    
    Ancillary club revenue:For the three months ended
March 31, 2010, we generated 12.6% of our revenue from
personal training and 5.9% of our revenue from other
ancillary programs and services consisting of
programming for children, group fitness training and
other member activities, as well as sales of
miscellaneous sports products.
  14




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Historical Club Count
  2009Full-
    
    
    2010Q1
    
    
    Q2
    
    
    Q3
    
    
    Q4
    
    
    Year
    
    
    Q1Wholly owned clubs operated at beginning of period
    
    
    164
    
    
    
    165
    
    
    
    164
    
    
    
    163
    
    
    
    164
    
    
    
    159New clubs opened
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    Clubs closed, relocated or merged
    
    
    (3
    )
    
    
    (1
    )
    
    
    (1
    )
    
    
    (4
    )
    
    
    (9
    )
    
    
    Wholly owned clubs at end of period
    
    
    165
    
    
    
    164
    
    
    
    163
    
    
    
    159
    
    
    
    159
    
    
    
    159Total clubs operated at end of period (1)
    
    
    167
    
    
    
    166
    
    
    
    165
    
    
    
    161
    
    
    
    161
    
    
    
    161
 
 (1)
    
    Includes wholly-owned and partly-owned clubs. In addition to the above,
during the first quarter of 2010 and each of the quarters in 2009, we managed
four university fitness clubs in which we did not have an equity interest. 15




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##### Table of Contents



Comparable Club Revenue
   2009:Three months ended March 31, 2009
    
    
    (2.1
    )%Three months ended June 30, 2009
    
    
    (6.3
    )%Three months ended September 30, 2009
    
    
    (7.0
    )%Three months ended December 31, 2009
    
    
    (7.1
    )%2010:Three months ended March 31, 2010
    
    
    (6.0
    )%
   Results of Operations
  Three MonthsEnded March 31,2010
    
    
    2009Revenue
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Payroll and related
    
    
    41.2
    
    
    
    40.0Club operating
    
    
    36.9
    
    
    
    36.8General and administrative
    
    
    7.6
    
    
    
    6.6Depreciation and amortization
    
    
    11.6
    
    
    
    11.3Impairment of fixed assets
    
    
    0.3
    
    
    
    0.997.6
    
    
    
    95.6Operating income
    
    
    2.4
    
    
    
    4.4Interest expense
    
    
    4.4
    
    
    
    4.2Interest income
    
    
    
    
    
    
    Equity in the earnings of investees and rental income
    
    
    (0.5
    )
    
    
    (0.5
    )(Loss) income before (benefit) provision for corporate income taxes
    
    
    (1.5
    )
    
    
    0.7(Benefit) provision for corporate income taxes
    
    
    (0.9
    )
    
    
    0.2Net (loss) income
    
    
    (0.6
    )%
    
    
    0.5
    %
 16




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THREE MONTHS ENDED MARCH 31, 2010 COMPARED TO
THREE MONTHS ENDED MARCH 31, 2009
 Revenue (in $000s) was comprised of the following for the periods indicated:
 Three Months Ended March 31,2010
    
    
    2009Revenue
    
    
    % Revenue
    
    
    Revenue
    
    
    % Revenue
    
    
    % VarianceMembership dues
    
    $
    92,809
    
    
    
    78.8
    %
    
    $
    100,708
    
    
    
    79.5
    %
    
    
    (7.8
    )%Initiation fees
    
    
    2,024
    
    
    
    1.7
    %
    
    
    3,164
    
    
    
    2.5
    %
    
    
    (36.0
    )%Membership revenue
    
    
    94,833
    
    
    
    80.5
    %
    
    
    103,872
    
    
    
    82.0
    %
    
    
    (8.7
    )%Personal training revenue
    
    
    14,799
    
    
    
    12.6
    %
    
    
    15,001
    
    
    
    11.8
    %
    
    
    (1.3
    )%Other ancillary club revenue
    
    
    6,963
    
    
    
    5.9
    %
    
    
    6,595
    
    
    
    5.2
    %
    
    
    5.6
    %Ancillary club revenue
    
    
    21,762
    
    
    
    18.5
    %
    
    
    21,596
    
    
    
    17.0
    %
    
    
    0.8
    %Fees and other revenue
    
    
    1,164
    
    
    
    1.0
    %
    
    
    1,241
    
    
    
    1.0
    %
    
    
    (6.2
    )%Total revenue
    
    $
    117,759
    
    
    
    100.0
    %
    
    $
    126,709
    
    
    
    100.0
    %
    
    
    (7.1
    )%
   Operating expenses (in $000s) were comprised of the following for the periods indicated:
 Three Months Ended March 31,2010
    
    
    2009
    
    
    % VariancePayroll and related
    
    $
    48,511
    
    
    $
    50,747
    
    
    
    (4.4
    )%Club operating
    
    
    43,468
    
    
    
    46,610
    
    
    
    (6.7
    )%General and administrative
    
    
    8,939
    
    
    
    8,347
    
    
    
    7.1
    %Depreciation and amortization
    
    
    13,654
    
    
    
    14,296
    
    
    
    (4.5
    )%Impairment of fixed assets
    
    
    389
    
    
    
    1,131
    
    
    
    (65.6
    )%Operating expenses
    
    $
    114,961
    
    
    $
    121,131
    
    
    
    (5.1
    )%
  Payroll and related
  17




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##### Table of Contents



Club operating
  General and administrative
  Depreciation and amortization
  Impairment of fixed assets
 Interest Expense
  (Benefit) Provision for Corporate Income Taxes
    18




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##### Table of Contents



Liquidity and Capital Resources
  Operating Activities.
 Investing Activities.
  Financing Activities.
  
    
    making it more difficult to satisfy our obligations;
    
    increasing our vulnerability to general adverse economic conditions;
    
    limiting our ability to obtain additional financing to fund future working capital,
capital expenditures, acquisitions of new clubs and other general corporate requirements;
    
    requiring cash flow from operations for the payment of interest on our credit facility
and our 11% Senior Discount Notes and reducing our ability to use our cash flow to fund
working capital, capital expenditures, acquisitions of new clubs and general corporate
requirements; and
    
    limiting our flexibility in planning for, or reacting to, changes in our business and
the industry in which we operate.
   19




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##### Table of Contents



20




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##### Table of Contents



Payments Due by Period (in (000s)Less than
    
    
    
    
    
    
    
    
    
    
    AfterContractual Obligations
    
    Total
    
    
    1 Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    5 YearsLong-term debt
    
    $
    317,900
    
    
    $
    1,850
    
    
    $
    3,700
    
    
    $
    312,350
    
    
    $
    Interest payments on long-term debt(1)
    
    
    72,283
    
    
    
    18,912
    
    
    
    37,709
    
    
    
    15,662
    
    
    
    Operating lease obligations(2)
    
    
    827,454
    
    
    
    82,227
    
    
    
    159,090
    
    
    
    144,730
    
    
    
    441,407Total contractual cash obligations
    
    $
    1,217,637
    
    
    $
    102,989
    
    
    $
    200,499
    
    
    $
    472,742
    
    
    $
    441,407
 Notes:
 
 (1)
    
    Includes 11% annual interest on the Senior Discount Notes and variable interest on the
2007 Term Loan Facility using the rate of as of March 31, 2010 of 2.1%.(2)
    
    Operating lease obligations include base rent only. Certain leases provide for
additional rent based on real estate taxes, common area maintenance and defined amounts
based on the operating results of the lessee.   Recent Changes in or Recently Issued Accounting Pronouncements
  21




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##### Table of Contents



Forward-Looking Statements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
   
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures:
  Changes in Internal Control Over Financial Reporting:
 22




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. Legal Proceedings.
 Sarah Cruz, et al v. Town Sports International,
d/b/a New York Sports Club
  Town Sports International, LLC v. Ajilon
Solutions
  
 ITEM 1A. Risk Factors
  
 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
  23




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##### Table of Contents



ITEM 3. Defaults Upon Senior Securities.
  
 ITEM 4. (Removed and Reserved)
 
 ITEM 5. Other Information
  
 ITEM 6. Exhibits
  http://investor.mysportsclubs.com http://investor.mysportsclubs.com
  24




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##### Table of Contents



SIGNATURES
  TOWN SPORTS INTERNATIONAL
HOLDINGS, INC.  By:
    /s/ Daniel GallagherDaniel GallagherChief Financial Officer
(principal financial and accounting officer) 25




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##### Table of Contents



INDEX TO EXHIBITS
  Exhibit No.
    
    Description of Exhibit3.1
    
    Amended and Restated Certificate of Incorporation of Town Sports International
Holdings, Inc. (incorporated by reference to Exhibit 3.1 of the Companys
Quarterly Report on Form 10-Q for the quarter ended September 30, 2006).3.2
    
    Second Amended and Restated By-laws of the Company (incorporated by reference
to Exhibit 3.1 of the Companys Current Report on Form 8-K, filed on May 19,
2008).10.1
    
    Offer Letter, dated March 18, 2010, between the Registrant and Robert Giardina.10.2
    
    Letter Agreement, dated March 19, 2010, between the Registrant and Alexander
Alimanestianu.10.3
    
    Amended and Restated Executive Severance Agreement between the Registrant and
Robert Giardina (incorporate by reference to Exhibit 10.28 to the Registrants
Annual Report on Form 10-K for the year ended December 31, 2009).31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a  14(a) and Rule
15d  14(a) of the Securities Exchange Act of 1934, as amended, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a  14(a) and Rule
15d  14(a) of the Securities Exchange Act of 1934, as amended, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer 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 Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 26