UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): August 8, 2006
THE SPORTS CLUB COMPANY, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-13290 95-4479735
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
11151 Missouri Avenue, Los Angeles, California 90025
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(310) 479-5200
11100 Santa Monica Boulevard, Suite 300, Los Angeles, California 90025
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (See General Instructions A-2 below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13 e-4(c))
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Item 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On August 8, 2006, The Sports Club Company, Inc. announced its results of
operations for the quarter and six months ended June 30, 2006. The public
announcement was made by means of a press release attached, the text of which is
being furnished to the U.S. Securities and Exchange Commission in Exhibit 99.1
hereto.
The information contained in this report and the exhibit hereto shall not be
deemed "filed" for purposes of Section 18 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or incorporated by reference in any
filing under the Securities Act of 1933, as amended, or the Exchange Act, except
as shall be expressly set forth by specific reference in such a filing.
The information in this report and the exhibit hereto may contain
"forward-looking statements" that are made pursuant to the safe-harbor
provisions of the Private Securities Litigation Reform Act of 1995 and otherwise
may be protected. Such statements are made based on the current beliefs and
expectations of the Company's management and are subject to significant risks
and uncertainties that could cause actual results to differ materially. Please
refer to the Company's annual report on Form 10-K filed on May 16, 2006 with the
Securities and Exchange Commission for information concerning risks,
uncertainties, and other factors that may affect future results.
Item 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
99.1 Press Release dated August 8, 2006
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Signatures
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Dated: August 8, 2006 THE SPORTS CLUB COMPANY, INC.
By: /s/ Timothy M. O'Brien
--------------------------------
Timothy M. O'Brien
Chief Financial Officer
INDEX TO EXHIBITS
Exhibit No. Description
99.1 Press Release dated August 8, 2006.
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EXHIBIT 99.1
NEWS RELEASE
For Immediate Release CONTACT: Timothy O'Brien
--------------------- Chief Financial Officer
The Sports Club Company, Inc.
(310) 479-5200
THE SPORTS CLUB COMPANY, INC. ANNOUNCES
OPERATING RESULTS FOR THE SECOND QUARTER AND SIX MONTHS ENDED
JUNE 30, 2006
LOS ANGELES, CA (August 08, 2006) - The Sports Club Company, Inc. (Stock Symbol:
SCYL) today announced financial results for the second quarter and six months
ended June 30, 2006.
Revenues from continuing operations for the second quarter ended June 30, 2006
were $14,776,000 compared to $14,318,000 for the second quarter ended June 30,
2005, an increase of $458,000 or 3.2%. After Preferred Stock dividends of
$500,000 and $495,000 for the second quarter ended June 30, 2006 and 2005,
respectively, the net loss attributable to common stockholders for the second
quarter ended June 30, 2006 was $1,817,000 or $0.09 per basic and diluted share,
compared to a net loss attributable to common stockholders for the second
quarter ended June 30, 2005 of $797,000 or $0.04 per basic and diluted share.
The weighted average number of basic and diluted shares outstanding for the
second quarter ended June 30, 2006 was 19,406,000 shares compared to 19,150,000
shares for the second quarter ended June 30, 2005.
Revenues from continuing operations for the six months ended June 30, 2006 were
$29,339,000 compared to $27,957,000 for the six months ended June 30, 2005, an
increase of $1,382,000 or 4.9%. After Preferred Stock dividends of $1,049,000
and $988,000 for the six months ended June 30, 2006 and 2005, respectively, the
net loss attributable to common stockholders for the six months ended June 30,
2006 was $5,038,000 or $0.26 per basic and diluted share, compared to a net loss
attributable to common stockholders for the six months ended June 30, 2005 of
$2,534,000 or $0.13 per basic and diluted share. The weighted average number of
basic and diluted shares outstanding for the six months ended June 30, 2006 was
19,406,000 shares compared to 19,141,000 shares for the six months ended June
30, 2005.
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During the six months ended June 30, 2006, the Company sold five of its nine
sports and fitness Clubs to Millennium Partners, a major stockholder of the
Company. The net sales proceeds in excess of the carrying value of the sold
assets of $24.8 million, was recorded as a capital contribution.
This press release contains forward-looking statements under the safe harbor
provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such
statements include the words "will," "expects," "anticipates," "believes,"
"estimates," "intends," "plans" and similar expressions. Such forward-looking
statements involve numerous known and unknown risks, uncertainties and other
factors that could cause actual results to be materially different from those
currently anticipated. Such factors are outlined in the Company's Annual Report
on Form 10-K filed with the Securities and Exchange Commission.
The Sports Club Company, based in Los Angeles, California operates and owns
luxury sports and fitness complexes nationwide under the brand name The Sports
Club/LA.
-Tables to Follow-
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THE SPORTS CLUB COMPANY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 2005 and June 30, 2006
(in thousands, except per share amounts)
ASSETS
December 31, June 30,
2005 2006
---- ----
(Unaudited)
Current assets:
Cash and cash equivalents.......................................................... $ 10,287 $ 4,173
Marketable securities.............................................................. -- 3,228
Restricted cash.................................................................... -- 1,803
Accounts receivable, net of allowance for doubtful accounts of $464 and $499 at
December 31, 2005 and June 30, 2006, respectively................................ 1,883 1,906
Receivable from stockholder/related party.......................................... -- 2,162
Inventories........................................................................ 435 521
Prepaid expenses................................................................... 1,353 968
Assets held for sale............................................................... 127,849 --
--------- ---------
Total current assets.......................................................... 141,807 14,761
Property and equipment, net........................................................... 60,743 61,987
Goodwill............................................................................... 7,315 7,315
Marketable securities.................................................................. -- 8,152
Restricted cash........................................................................ 1,379 1,247
Other assets........................................................................... 1,318 2,096
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$ 212,562 $ 95,558
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current installments of notes payable and equipment financing loans................ $ 100,373 $ 1,336
Accounts payable................................................................... 2,454 1,170
Accrued liabilities................................................................ 10,975 8,153
Deferred revenues.................................................................. 8,846 8,500
Liabilities related to assets held for sale........................................ 78,370 --
--------- ---------
Total current liabilities..................................................... 201,018 19,159
Notes payable and equipment financing loans, less current installments................. 18,940 77,523
Deferred lease obligations............................................................. 7,675 7,716
Deferred revenues, less current portion................................................ 286 275
Minority interest...................................................................... 600 600
--------- ---------
Total liabilities............................................................. 228,519 105,273
Commitments and contingencies
Redeemable Convertible Preferred Stock, Series B, $.01 par value, 10,500 shares
authorized, issued and outstanding at December 31, 2005 and June 30, 2006 (liquidation
preference of $14,098 and $10,580 December 31, 2005 and June 30, 2006, respectively).. 13,830 10,354
Redeemable Preferred Stock, Series E, $.01 par value, 20,000 shares authorized, issued
and outstanding at December 31, 2005 (liquidation preference of $2,295 at December 31,
2005) ................................................................................ 2,295 --
Stockholders' equity (deficit):
Preferred Stock, $.01 par value, 899,500 shares authorized at December 31,
2005 and June 30, 2006; no shares issued or outstanding........................... -- --
Convertible Preferred Stock, Series C, $.01 par value, 5,000 shares authorized,
issued and outstanding at December 31, 2005 and 4,005 shares issued and outstanding
at June 30, 2006 (liquidation preference of $6,490 and $4,035 at December 31, 2005
and June 30, 2006, respectively).................................................. 6,490 4,035
Convertible Preferred Stock, Series D, $.01 par value, 65,000 shares authorized;
issued and outstanding at December 31, 2005 and 20,000 shares issued and outstanding
at June 30,, 2006 (liquidation preference of $7,556 and $2,015 at December 31, 2005
and June 30, 2006, respectively).................................................... 7,128 1,587
Common Stock, $.01 par value, 40,000,000 shares authorized;
21,074,717 shares issued and outstanding at December 31, 2005 and June 30, 2006.. 211 211
Additional paid-in capital......................................................... 96,028 120,026
Accumulated deficit................................................................ (129,223) (133,212)
Treasury Stock, at cost, 1,668,999 shares at
December 31, 2005 and June 30, 2006.............................................. (12,716) (12,716)
---------- ----------
Total Stockholders' equity (deficit).......................................... (32,082) (20,069)
---------- ----------
$ 212,562 $ 95,558
========= ==========
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THE SPORTS CLUB COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months and Six Months Ended June 30, 2005 and 2006
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
------------------ ----------------
2005 2006 2005 2006
---- ---- ---- ----
(Reclassified*) (Reclassified*)
Revenues:
Membership revenues....................................... $ 9,533 $ 9,856 $ 18,699 $ 19,635
Products and services..................................... 4,785 4,920 9,258 9,704
----------- ----------- ----------- -----------
Total revenue........................................ 14,318 14,776 27,957 29,339
Operating expenses:
Club operating costs...................................... 6,539 6,897 13,034 13,684
Cost of products and services............................. 3,992 4,053 7,772 8,068
Selling and marketing..................................... 342 720 848 1,413
General and administrative................................ 1,995 2,196 4,043 4,444
Impairment charge......................................... -- 257 -- 970
Depreciation and amortization............................. 1,279 1,177 2,503 2,314
----------- ----------- ----------- -----------
Total operating expenses............................. 14,147 15,300 28,200 30,893
----------- ----------- ----------- -----------
Income (loss) from operations.................... 171 (524) (243) (1,554)
Other income (expense):
Interest, net............................................. (1,165) (1,363) (2,333) (3,643)
Other income.............................................. -- 611 -- 1,239
Minority interests........................................ (37) (37) (74) (74)
------------ ------------ ------------ ------------
Loss from continuing operations before income
taxes and income (loss) from discontinued
operations......................................... (1,031) (1,313) (2,650) (4,032)
Provision (benefit) for income taxes.......................... -- -- -- --
----------- ------------ ------------ ------------
Loss from continuing operations before income
(loss) from discontinued operations................ (1,031) (1,313) (2,650) (4,032)
Income (loss) from discontinued operations................. 729 (4) 1,104 43
------------- ------------ ------------ ------------
Net loss........................................... (302) (1,317) (1,546) (3,989)
Dividends on Preferred Stock.................................. 495 500 988 1,049
----------- ----------- ----------- -----------
Net loss attributable to common stockholders....... $ (797) $ (1,817) $ (2,534) $ (5,038)
============ ============ ============= ============
Net income (loss) per share attributable to common stockholders - basic and
diluted:
Discontinued operations................................. $ 0.04 $ 0.00 $ 0.06 $ 0.00
Continuing operations.................................... (0.08) (0.09) (1.19) (0.26)
------------- ------------- ------------- -------------
Net loss per share................................... $ (0.04) $ (0.09) $ (0.13) $ (0.26)
============= ============= ============= =============
Weighted average number of common shares outstanding:
Basic and diluted......................................... 19,150 19,406 19,141 19,406
============ ============ ============ ============
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*The condensed consolidated financial statements for the quarter ended and six
months ended June 30, 2005 previously reported the assets and liabilities of
The Sports Club/LA - New York at Rockefeller Center as held for sale and
reported the operations of this Club as part of discontinued operations. In
November 2005, the Company decided to retain ownership of this Club.
Accordingly, the condensed consolidated financial statements have been
revised to include the assets, liabilities and operating results of this Club
as part of continuing operations in accordance with Statement of Financial
Accounting Standards No. 144, Accounting for Impairment and Disposal of
Long-Lived Assets.
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