Town Sports International Holdings, Inc. Announces Second Quarter 2008 Financial Results

Business Wire, July 31, 2008

Maintains Fiscal 2008 Guidance

NEW YORK -- Town Sports International Holdings, Inc. ("TSI" or the "Company") (NASDAQ: CLUB), a leading owner and operator of health clubs located primarily in major cities from Washington, DC north through New England, operating under the brand names "New York Sports Clubs", "Boston Sports Clubs", "Washington Sports Clubs" and "Philadelphia Sports Clubs", announced its results for the second quarter ended June 30, 2008.

2(nd) Quarter Highlights:

* Revenues increased 8.0% to $129.4 million.

* Comparable club revenue increased 3.2%.

* Diluted earnings per share increased 8.3% to $0.26.

* EBITDA increased 8.1% to $30.9 million.

* Personal training revenues grew 7.9%, to $16.7 million.

* Membership attrition averaged 3.2% per month.

Alex Alimanestianu, Chief Executive Officer of TSI, commented: "We are pleased with our 2nd quarter performance, and we are once again reaffirming our guidance for the year. As we have said before, we believe that our core customer base in major northeastern metropolitan areas will remain committed to their health and fitness goals despite any additional economic strains that may arise. Our 3.2% monthly attrition rate in the second quarter was better than the levels experienced in the second quarter of 2007, which we believe reflects the resiliency of our business as well as the focus we are putting on the member experience in our clubs. We are also very pleased that our new club portfolio continues to exceed expectations and generate strong returns."

Quarter Ended June 30, 2008 Financial Highlights:

Revenue (in $'000s) was comprised of the following:

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Total revenue for Q2 2008 increased 8.0% compared to Q2 2007 driven by growth in membership and personal training revenue. Revenue at clubs operated by us for over 12 months ("comparable club revenue") increased 3.2% during the three months ended June 30, 2008. Of this 3.2% increase, 1.5% was due to an increase in membership, 1.0% was due to an increase in price and 0.7% was due to an increase in ancillary club revenue and fees and other revenue.

Operating expenses (in $'000s) were comprised of the following:

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Total operating expenses increased 9.3% to $112.9 million for Q2 2008 compared to Q2 2007. Operating margin was 12.7% for Q2 2008 and 13.7% in Q2 2007.

* The increases in payroll and related and club operating expenses were principally attributable to a 7.8% increase in the total months of club operation from 448 in Q2 2007 to 483 in Q2 2008. There was a net increase of eleven clubs in the twelve months ended June 30, 2008.

* The increase in depreciation and amortization expenses was principally due to clubs opened after April 1, 2007. In addition, during the six months ended June 30, 2008, we recorded an impairment loss of $755,000 on fixed assets of a remote club that did not benefit from being part of a regional cluster and therefore experienced a decline in asset fair value, and an impairment loss of $387,000 related to an agreement to close a club prior to its lease expiration. Offsetting these increases are insurance proceeds of approximately $600,000 received for fixed asset damages at two of our clubs.

Net income for Q2 2008 was $6.8 million compared to a net income of $6.4 million for Q2 2007.

EBITDA for Q2 2008 increased 8.1% to $30.9 million from $28.6 million for Q2 2007. EBITDA as a percentage of total revenue ("EBITDA margin") was 23.9% for Q2 2008 and Q2 2007. Please refer to the reconciliation of net income to EBITDA at the end of this release.

Six Months Ended June 30, 2008 Financial Highlights:

Revenue (in $'000s) was comprised of the following:

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Total revenue for the six months ended June 30, 2008 increased 8.7% compared to the six months ended June 30, 2007 driven by growth in membership and personal training revenue. Comparable club revenue increased 3.8% during the six months ended June 30, 2008. Of this 3.8% increase, 1.6% was due to an increase in membership, 1.2% was due to an increase in price and 1.0% was due to an increase in ancillary club revenue and fees and other revenue.

Operating expenses (in $'000s) were comprised of the following:

[TABLE OMITTED]

Total operating expenses increased 9.1% for the six months ended June 30, 2008 compared to the six months ended June 30, 2007. Operating margin was 11.9% for the six months ended June 30, 2008 and 12.2% for the six months ended June 30, 2007.

* The increases in payroll and related and club operating expenses were attributed to a 7.9% increase in the total months of club operation to 960 for the six months ended June 30, 2008 from 890 for the same period last year. There was a net increase of eleven clubs in the last twelve months.

* The increase in depreciation and amortization expenses was principally due to clubs opened after April 1, 2007. In addition, during the six months ended June 30, 2008, we recorded an impairment loss of $755,000 on fixed assets of a remote club that did not benefit from being part of a regional cluster and therefore experienced a decline in asset fair value, and an impairment loss of $387,000 related to the agreement to close a club prior to the lease expiration. Offsetting these increases are insurance proceeds of approximately $600,000 received for fixed asset damages at two of our clubs.