##### 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, 2011
 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
    
    o Accelerated filer
    
    o Non-accelerated filer
    
    þ Smaller reporting company(Do not check if smaller reporting company)
 o þ




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##### 



FORM 10-Q
For the Quarter Ended March 31, 2011
 INDEX
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Condensed Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010
    
    
    3Condensed Consolidated Statements of Operations and Statements of Comprehensive Income (Loss) for
the three months ended March 31, 2011 and 2010
    
    
    4Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2011 and 2010
    
    
    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
    
    
    23Item 4. Controls and Procedures
    
    
    23PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    24Item 1A. Risk Factors
    
    
    25Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    25Item 3. Defaults Upon Senior Securities
    
    
    26Item 4. (Removed and Reserved)
    
    
    26Item 5. Other Information
    
    
    26Item 6. Exhibits
    
    
    26SIGNATURES
    
    
    27EX-10.2EX-31.1EX-31.2EX-32.1EX-32.2
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##### Table of Contents



TOWN SPORTS INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 2011 and December 31, 2010
(All figures in thousands except share data)
(Unaudited)
 March 31,
    
    
    December 31,2011
    
    
    2010ASSETSCurrent assets:Cash and cash equivalents
    
    $
    45,233
    
    
    $
    38,803Accounts receivable (less allowance for doubtful accounts of $2,418 and $2,565
as of March 31, 2011 and December 31, 2010, respectively)
    
    
    6,932
    
    
    
    5,258Inventory
    
    
    337
    
    
    
    217Prepaid corporate income taxes
    
    
    5,905
    
    
    
    7,342Prepaid expenses and other current assets
    
    
    8,323
    
    
    
    13,213Total current assets
    
    
    66,730
    
    
    
    64,833Fixed assets, net
    
    
    303,039
    
    
    
    309,371Goodwill
    
    
    32,820
    
    
    
    32,794Intangible assets, net
    
    
    28
    
    
    
    44Deferred tax assets, net
    
    
    41,365
    
    
    
    41,883Deferred membership costs
    
    
    7,134
    
    
    
    5,934Other assets
    
    
    8,909
    
    
    
    9,307Total assets
    
    $
    460,025
    
    
    $
    464,166LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Current portion of long-term debt
    
    $
    1,850
    
    
    $
    14,550Accounts payable
    
    
    8,268
    
    
    
    4,008Accrued expenses
    
    
    28,525
    
    
    
    27,477Accrued interest
    
    
    3,153
    
    
    
    6,579Deferred revenue
    
    
    40,318
    
    
    
    35,106Total current liabilities
    
    
    82,114
    
    
    
    87,720Long-term debt
    
    
    300,601
    
    
    
    301,963Deferred lease liabilities
    
    
    66,186
    
    
    
    67,180Deferred revenue
    
    
    5,455
    
    
    
    3,166Other liabilities
    
    
    10,374
    
    
    
    11,082Total liabilities
    
    
    464,730
    
    
    
    471,111Contingencies (Note 10)Stockholders deficit :Common stock, $.001 par value; issued and outstanding 22,791,377 and
22,667,650 shares at March 31, 2011 and December 31, 2010, respectively
    
    
    23
    
    
    
    23Paid-in capital
    
    
    (21,303
    )
    
    
    (21,788
    )Accumulated other comprehensive income (currency translation adjustment)
    
    
    2,343
    
    
    
    2,121Retained earnings
    
    
    14,232
    
    
    
    12,699Total stockholders deficit
    
    
    (4,705
    )
    
    
    (6,945
    )Total liabilities and stockholders deficit
    
    $
    460,025
    
    
    $
    464,166
  3




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TOWN SPORTS INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2011 and 2010
(All figures in thousands except share and per share data)
(Unaudited)
 Three Months EndedMarch 31,2011
    
    
    2010Revenues:Club operations
    
    $
    115,592
    
    
    $
    116,595Fees and other
    
    
    1,113
    
    
    
    1,164116,705
    
    
    
    117,759Operating Expenses:Payroll and related
    
    
    45,252
    
    
    
    48,511Club operating
    
    
    44,102
    
    
    
    43,468General and administrative
    
    
    7,420
    
    
    
    8,939Depreciation and amortization
    
    
    13,002
    
    
    
    13,654Impairment of fixed assets
    
    
    
    
    
    
    389109,776
    
    
    
    114,961Operating income
    
    
    6,929
    
    
    
    2,798Interest expense
    
    
    5,582
    
    
    
    5,184Interest income
    
    
    (71
    )
    
    
    (18
    )Equity in the earnings of investees and rental income
    
    
    (644
    )
    
    
    (536
    )Income (loss) before provision (benefit) for corporate income taxes
    
    
    2,062
    
    
    
    (1,832
    )Provision (benefit) for corporate income taxes
    
    
    529
    
    
    
    (1,100
    )Net income (loss)
    
    $
    1,533
    
    
    $
    (732
    )Earnings (loss) per share:Basic
    
    $
    0.07
    
    
    $
    (0.03
    )Diluted
    
    $
    0.07
    
    
    $
    (0.03
    )Weighted average number of shares used in calculating earnings (loss) per share:Basic
    
    
    22,710,996
    
    
    
    22,605,236Diluted
    
    
    23,073,147
    
    
    
    22,605,236Statements of Comprehensive Income (Loss)Net income (loss)
    
    $
    1,533
    
    
    $
    (732
    )Foreign currency translation adjustments
    
    
    222
    
    
    
    (129
    )Comprehensive income (loss)
    
    $
    1,755
    
    
    $
    (861
    )
  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, 2011 and 2010
(All figures in thousands)
(Unaudited)
 Three Months Ended March 31,2011
    
    
    2010Cash flows from operating activities:Net income (loss)
    
    $
    1,533
    
    
    $
    (732
    )Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    13,002
    
    
    
    13,654Impairment of fixed assets
    
    
    
    
    
    
    389Amortization of debt issuance costs
    
    
    282
    
    
    
    253Non-cash rental expense, net of non-cash rental income
    
    
    (1,120
    )
    
    
    (934
    )Compensation expense incurred in connection with stock options and common
stock grants
    
    
    348
    
    
    
    369Decrease (increase) in deferred tax asset
    
    
    518
    
    
    
    (1,899
    )Net change in certain operating assets and liabilities
    
    
    12,594
    
    
    
    5,485(Increase) decrease in deferred membership costs
    
    
    (1,200
    )
    
    
    990Landlord contributions to tenant improvements
    
    
    149
    
    
    
    100Decrease in insurance reserves
    
    
    (330
    )
    
    
    (229
    )Other
    
    
    (368
    )
    
    
    172Total adjustments
    
    
    23,875
    
    
    
    18,350Net cash provided by operating activities
    
    
    25,408
    
    
    
    17,618Net cash
used in investing activities:Capital expenditures
    
    
    (5,335
    )
    
    
    (2,809
    )Net cash used in investing activities
    
    
    (5,335
    )
    
    
    (2,809
    )Cash flows from financing activities:Repayment of long term borrowings
    
    
    (14,062
    )
    
    
    (463
    )Proceeds from exercise of stock options
    
    
    117
    
    
    
    Tax benefit from stock option exercises
    
    
    20
    
    
    
    18Net cash used in financing activities
    
    
    (13,925
    )
    
    
    (445
    )Effect of exchange rate changes on cash
    
    
    282
    
    
    
    (76
    )Net increase in cash and cash equivalents
    
    
    6,430
    
    
    
    14,288Cash and cash equivalents beginning of period
    
    
    38,803
    
    
    
    10,758Cash and cash equivalents end of period
    
    $
    45,233
    
    
    $
    25,046Summary of the change in certain operating assets and liabilities:Increase in accounts receivable
    
    $
    (1,729
    )
    
    $
    (752
    )Increase in inventory
    
    
    (120
    )
    
    
    (74
    )Decrease in prepaid expenses and other current assets
    
    
    4,589
    
    
    
    2,740Increase in accounts payable, accrued expenses and accrued interest
    
    
    4,494
    
    
    
    2,527Decrease in accrued interest on Senior Discount Notes
    
    
    (3,807
    )
    
    
    (3,807
    )Decrease in prepaid corporate income taxes
    
    
    1,437
    
    
    
    831Increase in deferred revenue
    
    
    7,730
    
    
    
    4,020Net change in certain working capital components
    
    $
    12,594
    
    
    $
    5,485Supplemental disclosures of cash flow information:Cash payments for interest
    
    $
    9,012
    
    
    $
    8,971Cash payments for income taxes
    
    $
    66
    
    
    $
    30
  5




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TOWN SPORTS INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
(Unaudited)
 1. Basis of Presentation
   2. Recent Accounting Pronouncements
  3. Long-Term Debt
 March 31,
    
    
    December 31,2011
    
    
    2010Term Loan Facility
    
    $
    164,001
    
    
    $
    178,063Senior Discount Notes
    
    
    138,450
    
    
    
    138,450302,451
    
    
    
    316,513Less: Current portion due within one year
    
    
    1,850
    
    
    
    14,550Long-term portion
    
    $
    300,601
    
    
    $
    301,963
 6




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Senior Discount Notes
  2007 Senior Credit Facility
      Fair Market Value
  7




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##### Table of Contents



4. Concentration of Credit Risk
  5. Earnings (Loss) Per Share
  Three Months EndedMarch 31,2011
    
    
    2010Weighted average number of shares of
Common Stock outstanding  basic
    
    
    22,710,996
    
    
    
    22,605,236Effect of dilutive stock options and restricted
Common Stock
    
    
    362,151
    
    
    
    Weighted average number of shares of
Common Stock outstanding  diluted
    
    
    23,073,147
    
    
    
    22,605,236Earnings (loss) per share:Basic
    
    $
    0.07
    
    
    $
    (0.03
    )Diluted
    
    $
    0.07
    
    
    $
    (0.03
    )
   6. Common Stock and Stock-Based Compensation
   8




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Option Grants
  Number of
    
    
    Exercise
    
    
    Black-Scholes
    
    
    
    
    
    
    Dividend
    
    
    Risk Free
Interest
    
    
    Expected TermDate
    
    Options
    
    
    Price
    
    
    Valuation
    
    
    Volatility
    
    
    Yield
    
    
    Rate
    
    
    (Years)February 1, 2011
    
    
    7,500
    
    
    $
    4.18
    
    
    $
    2.74
    
    
    
    79.17
    %
    
    
    0.00
    %
    
    
    2.6
    %
    
    
    6.25
   Restricted Stock Awards
    Stock Grants
  Number of
    
    
    Price Per
    
    
    Grant Date FairDate
    
    Shares
    
    
    Share
    
    
    ValueJanuary 19, 2011
    
    
    10,835
    
    
    $
    4.16
    
    
    $
    45March 25, 2011
    
    
    5,342
    
    
    $
    4.68
    
    
    
    25Total
    
    
    16,177
    
    
    
    
    
    
    $
    70
 9




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7. Fixed Asset Impairment and Club Closures
   8. Goodwill and Other Intangibles
      10




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NYSC
    
    
    BSC
    
    
    SSC
    
    
    Outlier Clubs
    
    
    TotalBalance as of January 1, 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
    
    
    
    32,636Changes due to foreign currency
exchange rate
fluctuations
    
    
    
    
    
    
    
    
    
    
    158
    
    
    
    
    
    
    
    158Balance as of December 31, 2010Goodwill
    
    
    31,403
    
    
    
    15,766
    
    
    
    1,254
    
    
    
    3,982
    
    
    
    52,405Accumulated impairment of goodwill
    
    
    
    
    
    
    (15,766
    )
    
    
    
    
    
    
    (3,845
    )
    
    
    (19,611
    )31,403
    
    
    
    
    
    
    
    1,254
    
    
    
    137
    
    
    
    32,794Changes due to foreign currency
exchange rate
fluctuations
    
    
    
    
    
    
    
    
    
    
    26
    
    
    
    
    
    
    
    26Balance as of March 31, 2011Goodwill
    
    
    31,403
    
    
    
    15,766
    
    
    
    1,280
    
    
    
    3,982
    
    
    
    52,431Accumulated impairment of goodwill
    
    
    
    
    
    
    (15,766
    )
    
    
    
    
    
    
    (3,845
    )
    
    
    (19,611
    )$
    31,403
    
    
    $
    
    
    
    $
    1,280
    
    
    $
    137
    
    
    $
    32,820
  March 31,
    
    
    December 31,2011
    
    
    2010Covenants-not-to-compete
    
    $
    1,508
    
    
    $
    1,508Accumulated amortization
    
    
    (1,480
    )
    
    
    (1,464
    )$
    28
    
    
    $
    44
 9. Income Taxes
  11




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10. 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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White Plains Plaza Realty, LLC v. TSI, LLC et al
  11. 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 78.9% of our total revenue for the three
months ended March 31, 2011. We recognize revenue from membership dues in the month when
the services are rendered. Approximately 96% 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 joining fees over the expected average life of the membership.
    
    Ancillary club revenue:For the three months ended March 31, 2011, we generated 13.4%
of our revenue from personal training and 6.7% 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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Student Membership
  Historical Club Count
  2010
    
    
    2011Q1
    
    
    Q2
    
    
    Q3
    
    
    Q4
    
    
    Full-Year
    
    
    Q1Wholly owned clubs operated at beginning of period
    
    
    159
    
    
    
    159
    
    
    
    159
    
    
    
    158
    
    
    
    159
    
    
    
    158Clubs closed, relocated or merged
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )Wholly owned clubs at end of period
    
    
    159
    
    
    
    159
    
    
    
    158
    
    
    
    158
    
    
    
    158
    
    
    
    157Total clubs operated at end of period (1)
    
    
    161
    
    
    
    161
    
    
    
    160
    
    
    
    160
    
    
    
    160
    
    
    
    159
 
 (1)
    
    Includes wholly-owned and partly-owned clubs. In addition to the above, during all periods presented, we
managed four university fitness clubs in which we did not have an equity interest. 15




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Comparable Club Revenue
   2010Three months ended March 31, 2010
    
    
    (6.0
    )%Three months ended June 30, 2010
    
    
    (4.2
    )%Three months ended September 30, 2010
    
    
    (5.0
    )%Three months ended December 31, 2010
    
    
    (1.7
    )%2011Three months ended March 31, 2011
    
    
    (0.5
    )%
  Results of Operations
  Three Months EndedMarch 31,2011
    
    
    2010Revenue
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Payroll and related
    
    
    38.8
    
    
    
    41.2Club operating
    
    
    37.8
    
    
    
    36.9General and administrative
    
    
    6.4
    
    
    
    7.6Depreciation and amortization
    
    
    11.1
    
    
    
    11.6Impairment of fixed assets
    
    
    
    
    
    
    0.394.1
    
    
    
    97.6Operating income
    
    
    5.9
    
    
    
    2.4Interest expense
    
    
    4.8
    
    
    
    4.4Interest income
    
    
    (0.1
    )
    
    
    Equity in the earnings of investees and
rental income
    
    
    (0.6
    )
    
    
    (0.5
    )Income (loss) before provision for corporate
income taxes
    
    
    1.8
    
    
    
    (1.5
    )Provision (benefit) for corporate income taxes
    
    
    0.5
    
    
    
    (0.9
    )Net income (loss)
    
    
    1.3
    %
    
    
    (0.6
    )%
 16




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##### Table of Contents



Revenue (in thousands) was comprised of the following for the periods indicated:
 Three Months Ended March 31,2011
    
    
    2010Revenue
    
    
    % Revenue
    
    
    Revenue
    
    
    % Revenue
    
    
    % VarianceMembership dues
    
    $
    90,599
    
    
    
    77.6
    %
    
    $
    92,809
    
    
    
    78.8
    %
    
    
    (2.4
    )%Joining fees
    
    
    1,447
    
    
    
    1.3
    %
    
    
    2,024
    
    
    
    1.7
    %
    
    
    (28.5
    )%Membership revenue
    
    
    92,046
    
    
    
    78.9
    %
    
    
    94,833
    
    
    
    80.5
    %
    
    
    (2.9
    )%Personal training revenue
    
    
    15,692
    
    
    
    13.4
    %
    
    
    14,799
    
    
    
    12.6
    %
    
    
    6.0
    %Other ancillary club revenue
    
    
    7,854
    
    
    
    6.7
    %
    
    
    6,963
    
    
    
    5.9
    %
    
    
    12.8
    %Ancillary club
revenue
    
    
    23,546
    
    
    
    20.1
    %
    
    
    21,762
    
    
    
    18.5
    %
    
    
    8.2
    %Fees and other revenue
    
    
    1,113
    
    
    
    1.0
    %
    
    
    1,164
    
    
    
    1.0
    %
    
    
    (4.4
    )%Total revenue
    
    $
    116,705
    
    
    
    100.0
    %
    
    $
    117,759
    
    
    
    100.0
    %
    
    
    (0.9
    )%
     Operating expenses (in thousands) were comprised of the following for the periods indicated:
 Three Months Ended March 31,2011
    
    
    2010
    
    
    % VariancePayroll and related
    
    $
    45,252
    
    
    $
    48,511
    
    
    
    (6.7
    )%Club operating
    
    
    44,102
    
    
    
    43,468
    
    
    
    1.5
    %General and administrative
    
    
    7,420
    
    
    
    8,939
    
    
    
    (17.0
    )%Depreciation and amortization
    
    
    13,002
    
    
    
    13,654
    
    
    
    (4.8
    )%Impairment of fixed assets
    
    
    
    
    
    
    389
    
    
    
    (100.0
    )%Operating expenses
    
    $
    109,776
    
    
    $
    114,961
    
    
    
    (4.5
    )%
  Payroll and related
 
    
    Payroll related to our membership consultants decreased $1.8 million. The
amount of membership consultant commissions deferred over the prior two years had been
declining with our decline in joining fees collected. We limit the amount of payroll costs
that we defer to the amount of joining fees collected. This resulted in a decrease in
 17




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membership consultant commissions expensed in the three months ended March 31, 2011 relating
to deferrals established in prior periods. Also contributing to this decrease was an
increase in the amount of payroll costs deferred in the three months ended March 31, 2011
compared to the three months ended March 31, 2010 as joining fees collected increased.
 
    
    Payroll related to club staffing, excluding membership consultants, decreased $1.2
million from staffing efficiencies realized in the three months ended March 31, 2011
compared to the same period in 2010.
    
    Payroll related to severance decreased $472,000 related to employee
reductions in the three months ended March 31, 2010.
  Club operating
 
    
    Occupancy expense increased $832,000 in the three months ended March 31,
2011 compared to the three months ended March 31, 2010.
    
    Repairs and maintenance expense increased $273,000 primarily due to snow removal costs
resulting from the increased number of major snow storms in the three months ended March
31, 2011 compared to the same period in the prior year.
    
    Partially offsetting these increases was a decrease in advertising expense of $750,000
due to efforts to spend more productively and adjusting the focus toward media advertising
beginning in the second half of 2010.
  General and administrative
  Depreciation and amortization
  Impairment of fixed assets
 Interest expense
  18




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Provision (Benefit) for Corporate Income Taxes
   Liquidity and Capital Resources
  Operating Activities.
 Investing Activities.
 Financing Activities.
  19




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
    
    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 Senior Discount Notes and the payment of principal pursuant to excess cash flow
requirements 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.
         20




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Payments Due by Period (in thousands)Less than
    
    
    
    
    
    
    
    
    
    
    AfterContractual Obligations
    
    Total
    
    
    1 Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    5 YearsLong-term debt
    
    $
    302,451
    
    
    $
    1,850
    
    
    $
    300,601
    
    
    $
    
    
    
    $
    Interest payments on
long-term debt (1)
    
    
    50,988
    
    
    
    18,675
    
    
    
    32,313
    
    
    
    
    
    
    
    Operating lease obligations (2)
    
    
    752,970
    
    
    
    80,676
    
    
    
    153,930
    
    
    
    141,720
    
    
    
    376,644Total contractual obligations
    
    $
    1,106,409
    
    
    $
    101,201
    
    
    $
    486,844
    
    
    $
    141,720
    
    
    $
    376,644
 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, 2011
of 2.11%.(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.   21




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Recent Changes in or Recently Issued Accounting Pronouncements
  Forward-Looking Statements
  22




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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:
 23




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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
 White Plains Plaza Realty, LLC v. TSI, LLC et al
  24




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##### Table of Contents



ITEM 1A. Risk Factors
  
 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
  25




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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
  26




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##### Table of Contents



SIGNATURES
  TOWN SPORTS INTERNATIONAL
HOLDINGS, INC.DATE: April 26, 2011By:
    /s/ Daniel GallagherDaniel GallagherChief Financial Officer
(principal financial and accounting officer) 27




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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
    
    2006 Stock Incentive Plan
(as amended and restated
effective March 1, 2011)
(incorporated by reference
to Exhibit A of the
Companys definitive Proxy
Statement on Schedule 14A
filed on March 29, 2011).10.2
    
    Amendment, dated March 1,
2011, to Executive
Severance Agreement between
the Company and Robert
Giardina.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.
 28