TOWN SPORTS INTERNATIONAL INC. health club company is the largest in the Northeastern United States. TSI owns and operates the Sports Clubs Network of clubs which includes New York Sports Clubs Boston Sports Clubs Washington Sports Clubs and Philadelphia Sports Clubs. There are also three locations in Switzerland: the Forum and the Joggeli Fitness Clubs in Basel and the Luxor Club in Zurich.All Sports Clubs locations offer a multitude of options for everyone including a wide range of group exercise and fitness programs. Select facilities also offer racquet sports pools basketball courts and other recreational activities. All Clubs are fully equipped with tons of strength training equipment cardiovascular machines and other exercise equipment. Additional services such as personal training massage steam room and sauna Sports Clubs for Kids and fitness assessments are also available. Town Sports International Holdings Inc. has a market cap of $77.9 million; its shares were traded at around $3.45 with a P/E ratio of 4.5 and P/S ratio of 0.1.
Highlight of Business Operations:Our revenues, operating income and net income for the three months ended March 31, 2009 were $126.7 million, $5.6 million and $639,000, respectively and $126.3 million, $14.1 million and $4.8 million, respectively for the three months ended March 31, 2008.
Impairment of fixed assets. In the three months ended March 31, 2009, the Company tested 10 underperforming clubs and recorded impairment losses of $1.1 million on fixed assets at four of these clubs that did not sustain profitable membership levels given. These four clubs are older suburban fitness only clubs that are more susceptible to the recession and lower price competitors. Of these four clubs, one club has remaining net fixed assets of approximately $67,000 and another has $75,000 and two clubs have no remaining net fixed assets remaining as of March 31, 2009. The six clubs tested that did not have impairment charges have $4.3 million of fixed assets remaining as of March 31, 2009. The impairment losses are included as a separate line in operating income on the consolidated statement of operations. The Company expects to record early lease termination costs of between $400,000 and $500,000 related to a club closure prior to its lease expiration date expected to occur in June 2009.
Operating Activities. Net cash provided by operating activities for the three months ended March 31, 2009 was $22.6 million compared to $37.8 million for the three months ended March 31, 2008. This $15.2 million decrease is primarily related to the decrease in cash flows generated from changes in operating assets and liabilities as well as a decrease in overall earnings. The net changes in prepaid expenses and other current assets decreased $4.6 million primarily due to 2008 decreases in pre-payments made to landlords and the timing of other vendor payments. In the three months ended March 31, 2009, deferred revenue increased $497,000, while in the three months ended March 31, 2008, the increase was $4.9 million This decrease in cash generated by deferred revenue was driven by the movement in deferred personal training and deferred initiation fees. Cash paid for interest decreased $1.6 million and cash paid for taxes decreased $1.0 million.
Investing Activities. Investing activities consist primarily of construction of new clubs and the purchase of new fitness equipment. In addition, we make capital expenditures to expand and remodel our existing clubs. We finance construction and the purchase of equipment by using cash generated by operations and various borrowing arrangements. Net cash used in investing activities was $18.5 million and $22.5 million for the three months ended March 31, 2009 and 2008, respectively. For the year ending December 31, 2009, we estimate that we will invest a total of $50.0 million to $53.0 million in capital expenditures. This amount includes $23.0 million to continue to upgrade existing clubs, $8.4 million to enhance our management information systems and $4.0 million for the construction of corporate offices and the completion of our new regional laundry facility in our New York Sports Clubs market. The remainder of our 2009 capital expenditures will be committed to building, acquiring or expanding clubs. These expenditures will be funded by cash flow provided by operations, available cash on hand and, to the extent needed, borrowings from the $75.0 million Revolving Loan Facility.
Financing Activities. Net cash used in financing activities decreased $2.6 million to $6.6 million for the three months ended March 31, 2009 from $9.2 million for the same period in the prior year. In the three months ended March 31, 2009, we repurchased 2.1 million shares of common stock at a cost of $5.4 million. In addition, we had net repayments on the Revolving Loan Facility of $1.0 million compared with $9.0 million in the three months ended March 31, 2008.
The Revolving Loan Facility expires on February 27, 2012 and borrowings under the facility currently, at TSI LLCs option, bear interest at either the administrative agents base rate plus 1.25% or its Eurodollar rate plus 2.25%, each as defined in the 2007 Senior Credit Facility. TSI LLCs applicable base rate and Eurodollar rate margins, and commitment commission percentage, vary with our consolidated secured leverage ratio, as defined in the 2007 Senior Credit Facility. TSI LLC is required to pay a commitment fee of 0.50% per annum on the daily unutilized amount. As of March 31, 2009, we had $8.0 million of borrowings outstanding at the base interest rate option rate of approximately 4.5% and $10.0 million outstanding under the Eurodollar interest rate option of 2.9%. There were outstanding letters of credit issued of $14.5 million. The unutilized portion of the Revolving Loan Facility as of March 31, 2009 was $42.5 million.
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