NEW YORK -- First quarter revenue for Town Sports International (TSI), New York, increased 0.3 percent to $126.7 million, but net income for the quarter dropped to $639,000 compared to $4.8 million in the first quarter of 2008, according to TSI’s financial statement for the quarter.

For the quarter, revenues increased $7.9 million at the 25 TSI clubs opened or acquired subsequent to March 31, 2007. This increase in revenue was offset by decreases in revenue of $5.9 million at clubs opened or acquired prior to March 31, 2007, and $1.5 million related to the seven clubs that TSI closed subsequent to March 31, 2007.

Revenue at clubs operated for more than 12 months (comparable club revenue) decreased 2.1 percent during the first quarter of 2009 compared to the first quarter of 2008. Of this 2.1 percent decrease, 0.5 percent was due to a decrease in prices, 0.1 percent was due to a decrease in membership and 1.5 percent was due to a decrease in ancillary club revenue and fees and other revenue.

TSI had decreased its initiation fees to attract members in the first quarter, according to Alex Alimanestianu, TSI CEO. Initiation fees in the first quarter were $3.16 million, down from $3.4 million in the same quarter last year.

TSI’s member count increased by 6,000 members, or 1.2 percent from first quarter 2008, to 518,000. Membership attrition averaged 3.6 percent per month in the first quarter, slightly higher than the 3 percent attrition in the same period last year. Member usage increased by 13.6 percent.

TSI’s personal training revenue was $15 million compared to $16.1 million in first quarter 2008.

“As anticipated, our operating performance has been impacted by the recession,” Alimanestianu said in a company statement. “However, we are well-prepared to weather the storm, and we continue to move forward on our key initiatives. While we are feeling pressure on total membership and personal training revenue, our club usage is increasing, positive feedback from our members continues to grow, and we generated operating cash flow of $22.6 million during the quarter. Our goals for the year remain the same – to preserve liquidity, deliver an increasingly positive experience to our members, and to position the company to deliver superior financial results over the long term.”

TSI opened four clubs and closed three clubs in the first quarter. Dan Gallagher, TSI CFO, told analysts in a financial call this week that the company does not plan to open any further clubs in 2009 and the company is evaluating clubs to determine which unprofitable facilities might be closed. A release from the company says that it plans to close two more clubs in 2009.

For the second quarter of 2009, Gallagher says that TSI expects revenue of between $123 million and $125 million compared to the $129.4 million the company had in the second quarter of 2008.

The company still plans to invest in its clubs, estimating it will spend between $50 million and $53 million on capital expenditures. This amount includes approximately $23 million to continue to upgrade existing clubs, $8.6 million to support and enhance its management information systems and $4 million for the completion of a new regional laundry facility and corporate office in the New York Sports Clubs market. The remainder of TSI’s capital expenditures principally relates to 2008 and 2009 new club openings.

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