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

Business Wire, July 31, 2008

Net income for the six months ended June 30, 2008 was $11.6 million compared to $2.6 million for the six months ended June 30, 2007. This $9.0 million increase in net income was primarily due to the loss on extinguishment of debt of $7.4 million, net of taxes recorded in the six months ended June 30, 2007.

EBITDA for the six months ended June 30, 2008 increased 10.6% to $58.1 million from $52.6 million for the six months ended June 30, 2007. EBITDA margin was 22.7% for the six months ended June 30, 2008, compared to 22.4% for the six months ended June 30, 2007. Please refer to the reconciliation of net income to EBITDA at the end of this release.

Cash flow from operating activities for the six months ended June 30, 2008 increased $9.1 million, or 19.0% from the same period last year. Contributing to the cash flow increase was the increase in earnings before interest, taxes and depreciation and amortization of $5.6 million. In addition, the net changes in certain operating assets and liabilities increased $4.5 million primarily due to decreases in pre-payments made to landlords and the timing of other vendor payments. Cash paid for interest decreased $4.3 million, while cash paid for taxes increased $5.0 million.

2008 Business Outlook:

Based upon the current business environment and current trends in the market, the Company is reaffirming its previous guidance, and expects the following results for 2008:

* Total revenue for 2008 will be in the range of $510.0 million to $520.0 million, representing 8% to 10% growth over 2007.

* Net income will be between $21.3 million and $22.3 million compared to net income of $13.6 million or $20.5 million in 2007 before the net effect of the loss on extinguishment of $7.4 million and favorable tax adjustments of $538,000.

* Earnings per share on a fully diluted basis will be between $0.80 and $0.84 for 2008 compared to earnings per share on a fully diluted basis of $0.51 per share in 2007, or $0.77 per share before the net effect of the loss on extinguishment of debt of $0.28 per share and favorable tax adjustments of $0.02 per share.

2008 Investing Activities Outlook:

For the year ending December 31, 2008, the Company estimates it will invest between $90.0 and $95.0 million in capital expenditures. This amount includes approximately $21.0 million to continue to upgrade existing clubs, $9.0 million to support and enhance our management information systems and $6.0 million for the construction of a new regional laundry facility in our New York Sports Clubs market. The remainder of our 2008 capital expenditures will be committed to building or expanding clubs. The Company expects to open 11 new clubs and close four clubs in 2008. As of June 30, 2008 we have opened five clubs and closed three clubs.

Forward-Looking Statements:

Statements in this release that do not constitute historical facts, including, without limitation, statements under the caption "2008 Business Outlook" and "2008 Investing Activities Outlook" and other statements regarding future financial results and performance and potential sales revenue are "forward-looking" statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, without limitation, statements under the captions "2008 Business Outlook" and "2008 Investing Activities Outlook," other statements regarding future financial results and performance and potential sales revenue, other statements that are predictive in nature or depend upon or refer to events or conditions, or that include words such as "expects," "anticipated," "intends," "plans," "believes," "estimates" or "could". These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Company's control, including the level of market demand for the Company's services, competitive pressures, the ability to achieve reductions in operating costs and to continue to integrate acquisitions, the application of federal and state tax laws and regulations, and other specific factors discussed herein and in other releases and public filings made by the Company (including Forms 10-K and 10-Q filed with the Securities and Exchange Commission); accordingly, actual results could differ materially from any such forward-looking statement. The forward-looking statements speak only as of the date hereof and the Company does not intend to update this information, except as required by law, to reflect developments or information obtained after the date hereof, and the Company disclaims any legal obligation to the contrary.