Document
false--12-31Q120200001637207P1YP1YP3Y17362100081585000111000790000.00010.00010.00010.0001300000000100000000300000000100000000785250008562000799280006501000785250008562000799280006501000042000050000000000P9MP1YP1YP1YP1Y 0001637207 2020-01-01 2020-03-31 0001637207 us-gaap:CommonClassBMember 2020-05-01 0001637207 us-gaap:CommonClassAMember 2020-05-01 0001637207 2019-12-31 0001637207 us-gaap:CommonClassBMember 2020-03-31 0001637207 2020-03-31 0001637207 us-gaap:CommonClassAMember 2020-03-31 0001637207 us-gaap:CommonClassBMember 2019-12-31 0001637207 us-gaap:CommonClassAMember 2019-12-31 0001637207 2019-01-01 2019-03-31 0001637207 us-gaap:CommonClassAMember 2020-01-01 2020-03-31 0001637207 plnt:CommissionIncomeMember 2020-01-01 2020-03-31 0001637207 us-gaap:CommonClassAMember 2019-01-01 2019-03-31 0001637207 us-gaap:AdvertisingMember 2020-01-01 2020-03-31 0001637207 us-gaap:FranchiseMember 2019-01-01 2019-03-31 0001637207 us-gaap:FranchiseMember 2020-01-01 2020-03-31 0001637207 us-gaap:AdvertisingMember 2019-01-01 2019-03-31 0001637207 plnt:EquipmentRevenueMember 2019-01-01 2019-03-31 0001637207 plnt:EquipmentRevenueMember 2020-01-01 2020-03-31 0001637207 plnt:CommissionIncomeMember 2019-01-01 2019-03-31 0001637207 plnt:CorporateOwnedStoresMember 2019-01-01 2019-03-31 0001637207 plnt:CorporateOwnedStoresMember 2020-01-01 2020-03-31 0001637207 2018-12-31 0001637207 2019-03-31 0001637207 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0001637207 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2019-03-31 0001637207 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0001637207 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0001637207 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0001637207 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2019-01-01 2019-03-31 0001637207 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2019-01-01 2019-03-31 0001637207 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2018-12-31 0001637207 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2018-12-31 0001637207 us-gaap:RetainedEarningsMember 2018-12-31 0001637207 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2019-03-31 0001637207 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0001637207 us-gaap:NoncontrollingInterestMember 2019-01-01 2019-03-31 0001637207 us-gaap:NoncontrollingInterestMember 2018-12-31 0001637207 us-gaap:RetainedEarningsMember 2019-03-31 0001637207 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0001637207 us-gaap:NoncontrollingInterestMember 2019-03-31 0001637207 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0001637207 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2019-12-31 0001637207 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001637207 us-gaap:NoncontrollingInterestMember 2020-01-01 2020-03-31 0001637207 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2020-01-01 2020-03-31 0001637207 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-03-31 0001637207 us-gaap:RetainedEarningsMember 2020-01-01 2020-03-31 0001637207 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0001637207 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2020-03-31 0001637207 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0001637207 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2020-01-01 2020-03-31 0001637207 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-03-31 0001637207 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-03-31 0001637207 us-gaap:NoncontrollingInterestMember 2019-12-31 0001637207 us-gaap:NoncontrollingInterestMember 2020-03-31 0001637207 us-gaap:RetainedEarningsMember 2019-12-31 0001637207 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2020-03-31 0001637207 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2019-12-31 0001637207 us-gaap:RetainedEarningsMember 2020-03-31 0001637207 srt:MinimumMember 2020-01-01 2020-03-31 0001637207 plnt:PlaFitHoldingsLLCMember plnt:PlanetIntermediateLLCMember 2015-08-05 0001637207 plnt:PlaFitHoldingsLLCMember 2020-03-31 0001637207 plnt:PlaFitHoldingsLLCMember 2015-08-05 0001637207 plnt:PlanetIntermediateLLCMember plnt:PlanetFitnessHoldingsLLCMember 2015-08-05 0001637207 plnt:PlaFitHoldingsLLCMember plnt:HoldingsUnitsMember 2020-03-31 0001637207 plnt:PlanetFitnessNAFLLCMember 2020-01-01 2020-03-31 0001637207 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-12-31 0001637207 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2020-03-31 0001637207 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-12-31 0001637207 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2020-03-31 0001637207 2019-01-01 2019-12-31 0001637207 us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-12-31 0001637207 us-gaap:VariableInterestEntityPrimaryBeneficiaryMember plnt:PfMelvilleLlcMember 2019-12-31 0001637207 us-gaap:VariableInterestEntityPrimaryBeneficiaryMember plnt:PfMelvilleLlcMember 2020-03-31 0001637207 us-gaap:VariableInterestEntityPrimaryBeneficiaryMember plnt:MatthewMichaelRealtyLlcMember 2019-12-31 0001637207 us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2020-03-31 0001637207 us-gaap:VariableInterestEntityPrimaryBeneficiaryMember plnt:MatthewMichaelRealtyLlcMember 2020-03-31 0001637207 plnt:NewJerseyAcquisitionMember 2019-12-16 0001637207 plnt:NewJerseyAcquisitionMember us-gaap:FranchiseRightsMember 2019-12-16 0001637207 plnt:NewJerseyAcquisitionMember us-gaap:ContractBasedIntangibleAssetsMember 2019-12-16 0001637207 plnt:NewJerseyAcquisitionMember us-gaap:LicensingAgreementsMember 2019-12-16 0001637207 plnt:NewJerseyAcquisitionMember us-gaap:CustomerRelationshipsMember 2019-12-16 0001637207 plnt:MaineAcquisitionMember 2019-05-30 0001637207 plnt:MaineAcquisitionMember us-gaap:CustomerRelationshipsMember 2019-05-30 0001637207 plnt:MaineAcquisitionMember us-gaap:FranchiseRightsMember 2019-05-30 0001637207 plnt:NewJerseyAcquisitionMember 2019-12-16 2019-12-16 0001637207 plnt:MaineAcquisitionMember 2019-05-30 2019-05-30 0001637207 us-gaap:TrademarksAndTradeNamesMember 2019-12-31 0001637207 us-gaap:CustomerRelationshipsMember 2019-12-31 0001637207 us-gaap:FranchiseRightsMember 2019-12-31 0001637207 us-gaap:CustomerRelationshipsMember 2019-01-01 2019-12-31 0001637207 us-gaap:FranchiseRightsMember 2019-01-01 2019-12-31 0001637207 us-gaap:CustomerRelationshipsMember 2020-01-01 2020-03-31 0001637207 us-gaap:CustomerRelationshipsMember 2020-03-31 0001637207 us-gaap:TrademarksAndTradeNamesMember 2020-03-31 0001637207 us-gaap:FranchiseRightsMember 2020-03-31 0001637207 us-gaap:FranchiseRightsMember 2020-01-01 2020-03-31 0001637207 plnt:FixedRateSeniorSecuredNotesClassA2IIMember us-gaap:SeniorNotesMember 2018-08-01 0001637207 us-gaap:RevolvingCreditFacilityMember plnt:VariableFundingNotesMember 2018-08-01 0001637207 2019-12-03 2019-12-03 0001637207 plnt:SecuritizedSeniorNotesMember us-gaap:SecuredDebtMember 2020-03-31 0001637207 2018-08-01 2018-08-01 0001637207 us-gaap:RevolvingCreditFacilityMember plnt:VariableFundingNotesMember 2020-03-20 0001637207 plnt:FixedRateSeniorSecuredNotesClassA2IMember us-gaap:SeniorNotesMember 2018-08-01 0001637207 us-gaap:RevolvingCreditFacilityMember plnt:VariableFundingNotesMember 2018-08-01 2018-08-01 0001637207 plnt:FixedRateSeniorSecuredNotesClassA2Member us-gaap:SeniorNotesMember 2019-12-03 0001637207 us-gaap:RevolvingCreditFacilityMember plnt:VariableFundingNotesMember us-gaap:ScenarioForecastMember 2023-09-01 2023-09-30 0001637207 us-gaap:RevolvingCreditFacilityMember plnt:VariableFundingNotesMember 2020-03-31 0001637207 plnt:FixedRateSeniorSecuredNotesClassA2IIMember us-gaap:SeniorNotesMember 2020-03-31 0001637207 plnt:FixedRateSeniorSecuredNotesClassA2IMember us-gaap:SeniorNotesMember 2020-03-31 0001637207 plnt:FixedRateSeniorSecuredNotesClassA2Member us-gaap:SeniorNotesMember 2020-03-31 0001637207 us-gaap:RevolvingCreditFacilityMember plnt:VariableFundingNotesMember 2019-12-31 0001637207 plnt:FixedRateSeniorSecuredNotesClassA2Member us-gaap:SeniorNotesMember 2019-12-31 0001637207 plnt:FixedRateSeniorSecuredNotesClassA2IIMember us-gaap:SeniorNotesMember 2019-12-31 0001637207 plnt:FixedRateSeniorSecuredNotesClassA2IMember us-gaap:SeniorNotesMember 2019-12-31 0001637207 srt:MaximumMember 2020-01-01 2020-03-31 0001637207 plnt:CorporateOwnedStoresSegmentAndFranchiseSegmentMember 2020-03-31 0001637207 2019-10-01 2020-03-31 0001637207 2022-01-01 2020-03-31 0001637207 2021-01-01 2020-03-31 0001637207 2024-01-01 2020-03-31 0001637207 2020-01-01 2020-03-31 0001637207 2023-01-01 2020-03-31 0001637207 plnt:FranchiseSegmentMember 2019-01-01 2019-03-31 0001637207 plnt:EquipmentSegmentMember 2020-01-01 2020-03-31 0001637207 plnt:FranchiseSegmentMember 2020-01-01 2020-03-31 0001637207 plnt:EquipmentSegmentMember 2019-01-01 2019-03-31 0001637207 plnt:CorporateTravelMember srt:AffiliatedEntityMember 2020-01-01 2020-03-31 0001637207 plnt:AreaDevelopmentAgreementsMember 2020-03-31 0001637207 plnt:AreaDevelopmentAgreementsMember 2019-12-31 0001637207 us-gaap:AdministrativeServiceMember plnt:PlanetFitnessNAFLLCMember 2019-01-01 2019-03-31 0001637207 plnt:CivilActionBroughtByFormerEmployeeMember us-gaap:PendingLitigationMember 2020-03-31 0001637207 us-gaap:AdministrativeServiceMember plnt:PlanetFitnessNAFLLCMember 2020-01-01 2020-03-31 0001637207 plnt:AcceleratedShareRepurchaseAgreementMember us-gaap:CommonClassAMember 2019-04-30 2019-04-30 0001637207 plnt:A2019AcceleratedShareRepurchaseAgreementMember us-gaap:CommonClassAMember 2020-03-02 2020-03-02 0001637207 us-gaap:InvestorMember us-gaap:CommonClassAMember plnt:SecondaryOfferingAndExchangeMember 2020-03-31 0001637207 plnt:AcceleratedShareRepurchaseAgreementMember us-gaap:CommonClassAMember 2019-07-01 2019-09-30 0001637207 plnt:AcceleratedShareRepurchaseAgreementMember 2019-04-30 2019-04-30 0001637207 plnt:PlaFitHoldingsLLCMember 2020-01-01 2020-03-31 0001637207 plnt:PlaFitHoldingsLLCMember plnt:ContinuingLLCOwnersMember plnt:SecondaryOfferingAndExchangeMember 2020-01-01 2020-03-31 0001637207 plnt:PlaFitHoldingsLLCMember us-gaap:InvestorMember us-gaap:CommonClassAMember plnt:SecondaryOfferingAndExchangeMember 2020-03-31 0001637207 plnt:A2019AcceleratedShareRepurchaseAgreementMember 2019-12-05 2019-12-05 0001637207 2018-08-03 0001637207 us-gaap:CommonClassBMember 2020-01-01 2020-03-31 0001637207 plnt:HoldingsUnitsMember 2020-01-01 2020-03-31 0001637207 plnt:AcceleratedShareRepurchaseAgreementMember 2018-11-13 0001637207 plnt:PlaFitHoldingsLLCMember plnt:ContinuingLLCOwnersMember us-gaap:CommonClassBMember plnt:SecondaryOfferingAndExchangeMember 2020-03-31 0001637207 plnt:A2019AcceleratedShareRepurchaseAgreementMember 2019-12-04 0001637207 plnt:A2019AcceleratedShareRepurchaseAgreementMember us-gaap:CommonClassAMember 2019-12-05 2019-12-05 0001637207 plnt:AcceleratedShareRepurchaseAgreementMember 2018-11-14 2018-11-14 0001637207 plnt:HoldingsUnitsMember 2020-01-01 2020-03-31 0001637207 plnt:PlaFitHoldingsLLCMember us-gaap:InvestorMember plnt:SecondaryOfferingAndExchangeMember 2020-01-01 2020-03-31 0001637207 plnt:ContinuingLLCOwnersMember plnt:SecondaryOfferingAndExchangeMember 2020-03-31 0001637207 2019-11-05 0001637207 plnt:ContinuingLLCOwnersMember us-gaap:CommonClassBMember plnt:SecondaryOfferingAndExchangeMember 2020-03-31 0001637207 us-gaap:InvestorMember plnt:SecondaryOfferingAndExchangeMember 2020-03-31 0001637207 plnt:A2019AcceleratedShareRepurchaseAgreementMember 2020-03-02 2020-03-02 0001637207 plnt:AcceleratedShareRepurchaseAgreementMember us-gaap:CommonClassAMember 2018-11-14 2018-11-14 0001637207 us-gaap:RestrictedStockUnitsRSUMember 2019-01-01 2019-03-31 0001637207 us-gaap:RestrictedStockUnitsRSUMember 2020-01-01 2020-03-31 0001637207 us-gaap:EmployeeStockOptionMember 2019-01-01 2019-03-31 0001637207 us-gaap:EmployeeStockOptionMember 2020-01-01 2020-03-31 0001637207 us-gaap:RestrictedStockUnitsRSUMember 2020-01-01 2020-03-31 0001637207 us-gaap:EmployeeStockOptionMember 2019-01-01 2019-03-31 0001637207 us-gaap:EmployeeStockOptionMember 2020-01-01 2020-03-31 0001637207 us-gaap:EquityUnitPurchaseAgreementsMember us-gaap:CommonClassBMember 2020-01-01 2020-03-31 0001637207 us-gaap:RestrictedStockUnitsRSUMember 2019-01-01 2019-03-31 0001637207 us-gaap:EquityUnitPurchaseAgreementsMember us-gaap:CommonClassBMember 2019-01-01 2019-03-31 0001637207 plnt:TRAHoldersMember 2020-03-31 0001637207 plnt:TRAHoldersMember us-gaap:CommonClassAMember 2020-01-01 2020-03-31 0001637207 plnt:TRAHoldersMember 2020-01-01 2020-03-31 0001637207 plnt:CivilActionBroughtByFormerEmployeeMember us-gaap:PendingLitigationMember 2019-05-03 2019-05-03 0001637207 us-gaap:MaterialReconcilingItemsMember 2020-03-31 0001637207 us-gaap:OperatingSegmentsMember plnt:FranchiseSegmentMember 2020-03-31 0001637207 us-gaap:OperatingSegmentsMember plnt:CorporateOwnedStoresSegmentMember 2019-12-31 0001637207 us-gaap:OperatingSegmentsMember plnt:CorporateOwnedStoresSegmentMember 2020-03-31 0001637207 us-gaap:OperatingSegmentsMember plnt:EquipmentSegmentMember 2019-12-31 0001637207 us-gaap:MaterialReconcilingItemsMember 2019-12-31 0001637207 us-gaap:OperatingSegmentsMember plnt:FranchiseSegmentMember 2019-12-31 0001637207 us-gaap:OperatingSegmentsMember plnt:EquipmentSegmentMember 2020-03-31 0001637207 plnt:CorporateOwnedStoresSegmentMember 2019-12-31 0001637207 plnt:FranchiseSegmentMember 2019-12-31 0001637207 plnt:CorporateOwnedStoresSegmentMember 2020-03-31 0001637207 plnt:EquipmentSegmentMember 2019-12-31 0001637207 plnt:FranchiseSegmentMember 2020-03-31 0001637207 plnt:EquipmentSegmentMember 2020-03-31 0001637207 plnt:InternationalMember plnt:FranchiseSegmentMember 2019-01-01 2019-03-31 0001637207 country:US plnt:FranchiseSegmentMember 2019-01-01 2019-03-31 0001637207 country:US plnt:CorporateOwnedStoresSegmentMember 2019-01-01 2019-03-31 0001637207 plnt:InternationalMember plnt:CorporateOwnedStoresSegmentMember 2020-01-01 2020-03-31 0001637207 country:US plnt:EquipmentSegmentMember 2020-01-01 2020-03-31 0001637207 country:US plnt:CorporateOwnedStoresSegmentMember 2020-01-01 2020-03-31 0001637207 country:US plnt:EquipmentSegmentMember 2019-01-01 2019-03-31 0001637207 plnt:CorporateOwnedStoresSegmentMember 2019-01-01 2019-03-31 0001637207 plnt:InternationalMember plnt:CorporateOwnedStoresSegmentMember 2019-01-01 2019-03-31 0001637207 country:US plnt:FranchiseSegmentMember 2020-01-01 2020-03-31 0001637207 plnt:InternationalMember plnt:FranchiseSegmentMember 2020-01-01 2020-03-31 0001637207 plnt:CorporateOwnedStoresSegmentMember 2020-01-01 2020-03-31 0001637207 plnt:PlacementServicesMember plnt:FranchiseSegmentMember 2019-01-01 2019-03-31 0001637207 us-gaap:IntersegmentEliminationMember 2020-01-01 2020-03-31 0001637207 country:CA plnt:CorporateOwnedStoresSegmentMember 2019-12-31 0001637207 plnt:PlacementServicesMember plnt:FranchiseSegmentMember 2020-01-01 2020-03-31 0001637207 country:CA plnt:CorporateOwnedStoresSegmentMember 2020-03-31 0001637207 us-gaap:OperatingSegmentsMember plnt:FranchiseSegmentMember 2019-01-01 2019-03-31 0001637207 us-gaap:OperatingSegmentsMember plnt:CorporateOwnedStoresSegmentMember 2019-01-01 2019-03-31 0001637207 us-gaap:CorporateNonSegmentMember 2020-01-01 2020-03-31 0001637207 us-gaap:OperatingSegmentsMember plnt:FranchiseSegmentMember 2020-01-01 2020-03-31 0001637207 us-gaap:OperatingSegmentsMember plnt:EquipmentSegmentMember 2019-01-01 2019-03-31 0001637207 us-gaap:OperatingSegmentsMember plnt:CorporateOwnedStoresSegmentMember 2020-01-01 2020-03-31 0001637207 us-gaap:OperatingSegmentsMember plnt:EquipmentSegmentMember 2020-01-01 2020-03-31 0001637207 us-gaap:CorporateNonSegmentMember 2019-01-01 2019-03-31 0001637207 us-gaap:EntityOperatedUnitsMember 2019-01-01 2019-03-31 0001637207 us-gaap:FranchisedUnitsMember 2020-01-01 2020-03-31 0001637207 us-gaap:EntityOperatedUnitsMember 2020-03-31 0001637207 us-gaap:EntityOperatedUnitsMember 2019-03-31 0001637207 us-gaap:FranchisedUnitsMember 2020-03-31 0001637207 us-gaap:FranchisedUnitsMember 2019-01-01 2019-03-31 0001637207 us-gaap:FranchisedUnitsMember 2019-12-31 0001637207 us-gaap:EntityOperatedUnitsMember 2020-01-01 2020-03-31 0001637207 us-gaap:EntityOperatedUnitsMember 2019-12-31 0001637207 us-gaap:FranchisedUnitsMember 2019-03-31 0001637207 us-gaap:EntityOperatedUnitsMember 2018-12-31 0001637207 us-gaap:FranchisedUnitsMember 2018-12-31 0001637207 us-gaap:SubsequentEventMember 2020-05-08 plnt:extension plnt:member iso4217:USD plnt:agreement plnt:store plnt:state xbrli:shares xbrli:pure plnt:segment iso4217:USD xbrli:shares
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________to ______________
Commission file number: 001-37534
PLANET FITNESS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
 
38-3942097
(State or Other Jurisdiction of Incorporation or Organization)
 
(I.R.S. Employer Identification No.)
4 Liberty Lane West, Hampton, NH 03842
(Address of Principal Executive Offices and Zip Code)
(603) 750-0001
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act: 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A common stock, $0.0001 Par Value
PLNT
New York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes       No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes       No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
  
Accelerated filer
 
 
 
 
 
Non-accelerated filer
 
  
Smaller reporting company
 
 
 
 
 
 
 
 
Emerging growth company
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes      No  
As of May 1, 2020 there were 79,950,634 shares of the Registrant’s Class A Common Stock, par value $0.0001 per share, outstanding and 6,501,477 shares of the Registrant’s Class B Common Stock, par value $0.0001 per share, outstanding.



PLANET FITNESS, INC.
TABLE OF CONTENTS
  
 
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2


Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q, as well as information included in oral statements or other written statements made or to be made by us, contain statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, and other future conditions. Forward-looking statements can be identified by words such as “anticipate,” “believe,” “envision,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” “ongoing,” “contemplate” and other similar expressions, although not all forward-looking statements contain these identifying words. Examples of forward-looking statements include, among others, statements we make regarding:
future financial position;
business strategy;
budgets, projected costs and plans;
future industry growth;
financing sources;
potential return of capital initiatives;
the impact of litigation, government inquiries and investigations;
the impact of the novel coronavirus disease (“COVID-19”) and actions taken in response; and
all other statements regarding our intent, plans, beliefs or expectations or those of our directors or officers.
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Important factors that could cause actual results and events to differ materially from those indicated in the forward-looking statements include, among others, risks and uncertainties associated with the following:
our dependence on the operational and financial results of, and our relationships with, our franchisees and the success of their new and existing stores;
damage to our brand and reputation;
our ability to successfully implement our growth strategy, including our and our franchisees’ ability to identify and secure suitable sites for new franchise stores;
technical, operational and regulatory risks related to our third-party providers’ systems and our own information systems, including failures, interruptions or security breaches of such systems;
our and our franchisees’ ability to attract and retain members;
the high level of competition in the health club industry generally;
our reliance on a limited number of vendors, suppliers and other third-party service providers;
our substantial increased indebtedness as a result of our refinancing and securitization transactions and our ability to incur additional indebtedness or refinance that indebtedness in the future;
our future financial performance and our ability to pay principal and interest on our indebtedness;
our corporate structure and tax receivable agreements;
the duration and impact of COVID-19, which has resulted in store closures and may give rise to or heighten one or more of the other risks and uncertainties described above; and
the other factors identified under the heading “Risk Factors” herein and in our annual report on Form 10-K for the fiscal year ended December 31, 2019 filed with the Securities and Exchange Commission on February 28, 2020.
The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Report. We undertake no obligation to publicly update any forward-looking statements whether as a result of new information, future developments or otherwise.

3

Table of Contents

PART I-FINANCIAL INFORMATION
1. Financial Statements
Planet Fitness, Inc. and subsidiaries
Condensed consolidated balance sheets
(Unaudited)
(Amounts in thousands, except per share amounts) 
 
 
March 31,
 
December 31,
 
 
2020
 
2019
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
547,494

 
$
436,256

Restricted cash
 
63,226

 
42,539

Accounts receivable, net of allowance for bad debts of $79 and $111 at March 31, 2020 and
December 31, 2019, respectively
 
21,082

 
42,268

Inventory
 
2,820

 
877

Deferred expenses – national advertising fund
 
10,363

 

Prepaid expenses
 
7,263

 
8,025

Other receivables
 
9,969

 
9,226

Other current assets
 
2,253

 
947

Total current assets
 
664,470

 
540,138

Property and equipment, net of accumulated depreciation of $81,585 and $73,621 at March 31, 2020
and December 31, 2019, respectively
 
145,114

 
145,481

Right-of-use assets, net
 
150,284

 
155,633

Intangible assets, net
 
229,709

 
233,921

Goodwill
 
227,821

 
227,821

Deferred income taxes
 
456,322

 
412,293

Other assets, net
 
1,916

 
1,903

Total assets
 
$
1,875,636

 
$
1,717,190

Liabilities and stockholders’ deficit
 
 
 
 
Current liabilities:
 
 
 
 
Current maturities of long-term debt
 
$
17,500

 
$
17,500

Accounts payable
 
37,640

 
21,267

Accrued expenses
 
21,063

 
31,623

Equipment deposits
 
5,394

 
3,008

Deferred revenue, current
 
53,593

 
27,596

Payable pursuant to tax benefit arrangements, current
 
26,468

 
26,468

Other current liabilities
 
18,506

 
18,016

Total current liabilities
 
180,164

 
145,478

Long-term debt, net of current maturities
 
1,684,727

 
1,687,505

Borrowings under Variable Funding Notes
 
75,000

 

Lease liabilities, net of current portion
 
148,006

 
152,920

Deferred revenue, net of current portion
 
34,193

 
34,458

Deferred tax liabilities
 
1,139

 
1,116

Payable pursuant to tax benefit arrangements, net of current portion
 
442,243

 
400,748

Other liabilities
 
2,333

 
2,719

Total noncurrent liabilities
 
2,387,641

 
2,279,466

Commitments and contingencies (Note 13)
 

 

Stockholders’ equity (deficit):
 
 
 
 
Class A common stock, $.0001 par value - 300,000 authorized, 79,928 and 78,525 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively
 
8

 
8

Class B common stock, $.0001 par value - 100,000 authorized, 6,501 and 8,562 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively
 
1

 
1

Accumulated other comprehensive (loss) income
 
(306
)
 
303

Additional paid in capital
 
36,460

 
29,820

Accumulated deficit
 
(727,946
)
 
(736,587
)
Total stockholders’ deficit attributable to Planet Fitness Inc.
 
(691,783
)
 
(706,455
)
Non-controlling interests
 
(386
)
 
(1,299
)
Total stockholders’ deficit
 
(692,169
)
 
(707,754
)
Total liabilities and stockholders’ deficit
 
$
1,875,636

 
$
1,717,190


 See accompanying notes to condensed consolidated financial statements

4

Table of Contents

Planet Fitness, Inc. and subsidiaries
Condensed consolidated statements of operations
(Unaudited)
(Amounts in thousands, except per share amounts)
 
 
 
For the three months ended
March 31,
 
 
2020
 
2019
Revenue:
 
 

 
 

Franchise
 
$
48,910

 
$
52,956

Commission income
 
390

 
994

National advertising fund revenue
 
9,229

 
11,812

Corporate-owned stores
 
40,516

 
38,044

Equipment
 
28,186

 
45,011

Total revenue
 
127,231

 
148,817

Operating costs and expenses:
 
 
 
 
Cost of revenue
 
21,846

 
34,486

Store operations
 
26,157

 
20,905

Selling, general and administrative
 
16,953

 
18,154

National advertising fund expense
 
15,205

 
11,812

Depreciation and amortization
 
12,792

 
9,907

Other loss
 
11

 
368

Total operating costs and expenses
 
92,964

 
95,632

Income from operations
 
34,267

 
53,185

Other expense, net:
 
 
 
 
Interest income
 
1,927

 
1,798

Interest expense
 
(20,240
)
 
(14,749
)
Other expense
 
(687
)
 
(3,318
)
Total other expense, net
 
(19,000
)
 
(16,269
)
Income before income taxes
 
15,267

 
36,916

Provision for income taxes
 
4,884

 
5,277

Net income
 
10,383

 
31,639

Less net income attributable to non-controlling interests
 
1,776

 
4,230

Net income attributable to Planet Fitness, Inc.
 
$
8,607

 
$
27,409

Net income per share of Class A common stock:
 
 
 
 
Basic
 
$
0.11

 
$
0.33

Diluted
 
$
0.11

 
$
0.32

Weighted-average shares of Class A common stock outstanding:
 
 
 
 
Basic
 
79,098

 
83,806

Diluted
 
79,723

 
84,425

 
See accompanying notes to condensed consolidated financial statements.

5

Table of Contents

Planet Fitness, Inc. and subsidiaries
Condensed consolidated statements of comprehensive income (loss)
(Unaudited)
(Amounts in thousands)
 
 
 
For the three months ended
March 31,
 
 
2020
 
2019
Net income including non-controlling interests
 
$
10,383

 
$
31,639

Other comprehensive income (loss), net:
 
 
 
 
Foreign currency translation adjustments
 
(609
)
 
54

Total other comprehensive income, net
 
(609
)
 
54

Total comprehensive income including non-controlling interests
 
9,774

 
31,693

Less: total comprehensive income attributable to non-controlling interests
 
1,776

 
4,230

Total comprehensive income attributable to Planet Fitness, Inc.
 
$
7,998

 
$
27,463

 
See accompanying notes to condensed consolidated financial statements.

6

Table of Contents

Planet Fitness, Inc. and subsidiaries
Condensed consolidated statements of cash flows
(Unaudited)
(Amounts in thousands)
 
 
For the three months ended March 31,
 
 
2020
 
2019
Cash flows from operating activities:
 
 

 
 

Net income
 
$
10,383

 
$
31,639

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
12,792

 
9,907

Amortization of deferred financing costs
 
1,587

 
1,356

Amortization of asset retirement obligations
 
7

 
221

Deferred tax expense
 
4,126

 
2,165

Loss (gain) on re-measurement of tax benefit arrangement
 
(502
)
 
3,373

Provision for bad debts
 
(33
)
 
2

Equity-based compensation
 
947

 
1,315

Other
 
993

 
(269
)
Changes in operating assets and liabilities, excluding effects of acquisitions:
 
 
 
 
Accounts receivable
 
21,409

 
20,032

Inventory
 
(1,943
)
 
1,677

Other assets and other current assets
 
(250
)
 
(2,648
)
National advertising fund
 
(10,363
)
 
(6,500
)
Accounts payable and accrued expenses
 
6,381

 
(14,640
)
Other liabilities and other current liabilities
 
(249
)
 
214

Income taxes
 
(1,315
)
 
1,768

Equipment deposits
 
2,386

 
4,594

Deferred revenue
 
25,992

 
3,668

Leases and deferred rent
 
774

 
60

Net cash provided by operating activities
 
73,122

 
57,934

Cash flows from investing activities:
 
 
 
 
Additions to property and equipment
 
(9,110
)
 
(7,471
)
Proceeds from sale of property and equipment
 
135

 
21

Net cash used in investing activities
 
(8,975
)
 
(7,450
)
Cash flows from financing activities:
 
 
 
 
Principal payments on capital lease obligations
 
(41
)
 
(12
)
Proceeds from borrowings under Variable Funding Notes
 
75,000

 

Repayment of long-term debt
 
(4,375
)
 
(3,000
)
Proceeds from issuance of Class A common stock
 
491

 
607

Dividend equivalent payments
 
(57
)
 
(20
)
Distributions to Continuing LLC Members
 
(1,600
)
 
(1,842
)
Net cash (used in) provided by financing activities
 
69,418

 
(4,267
)
Effects of exchange rate changes on cash and cash equivalents
 
(1,640
)
 
250

Net increase in cash, cash equivalents and restricted cash
 
131,925

 
46,467

Cash, cash equivalents and restricted cash, beginning of period
 
478,795

 
320,139

Cash, cash equivalents and restricted cash, end of period
 
$
610,720

 
$
366,606

Supplemental cash flow information:
 
 
 
 
Net cash paid for income taxes
 
$
2,071

 
$
1,479

Cash paid for interest
 
$
18,768

 
$
13,477

Non-cash investing activities:
 
 
 
 
Non-cash additions to property and equipment
 
$
2,319

 
$
4,151

 See accompanying notes to condensed consolidated financial statements.

7

Table of Contents

Planet Fitness, Inc. and subsidiaries
Condensed consolidated statements of changes in equity (deficit)
(Unaudited)
(Amounts in thousands) 
 
 
Class A
common stock
 
Class B
common stock
 
Accumulated
other
comprehensive
(loss) income
 
Additional paid-
in capital
 
Accumulated
deficit
 
Non-controlling
interests
 
Total (deficit)
equity
 
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
Balance at December 31, 2019
 
78,525

 
$
8

 
8,562

 
$
1

 
$
303

 
$
29,820

 
$
(736,587
)
 
$
(1,299
)
 
$
(707,754
)
Net income
 

 

 

 

 

 

 
8,607

 
1,776

 
10,383

Equity-based compensation expense
 

 

 

 

 

 
947

 

 

 
947

Exchanges of Class B common stock
 
2,061

 

 
(2,061
)
 

 

 
(956
)
 

 
956

 

Exercise of stock options, vesting of restricted share units and ESPP share purchase
 
9

 

 

 

 

 
459

 

 

 
459

Repurchase and retirement of Class A common stock
 
(667
)
 

 

 

 

 

 

 

 

Tax benefit arrangement liability and deferred taxes arising from exchanges of Class B common stock
 

 

 

 

 

 
6,190

 

 

 
6,190

Non-cash adjustments to VIEs
 

 

 

 

 

 

 

 
(219
)
 
(219
)
Distributions paid to members of Pla-Fit Holdings
 

 

 

 

 

 

 

 
(1,600
)
 
(1,600
)
Forfeiture of dividend equivalents
 

 

 

 

 

 

 
34

 

 
34

Other comprehensive income
 

 

 

 

 
(609
)
 

 

 

 
(609
)
Balance at March 31, 2020
 
79,928

 
$
8

 
6,501

 
$
1

 
$
(306
)
 
$
36,460

 
$
(727,946
)
 
$
(386
)
 
$
(692,169
)
 
 
 
Class A
common stock
 
Class B
common stock
 
Accumulated
other
comprehensive
(loss) income
 
Additional paid-
in capital
 
Accumulated
deficit
 
Non-controlling
interests
 
Total (deficit)
equity
 
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
Balance at December 31, 2018
 
83,584

 
$
9

 
9,448

 
$
1

 
$
94

 
$
19,732

 
$
(394,410
)
 
$
(8,215
)
 
$
(382,789
)
Net income
 

 

 

 

 

 

 
27,409

 
4,230

 
31,639

Equity-based compensation expense
 

 

 

 

 

 
1,315

 

 

 
1,315

Exchanges of Class B common stock
 
859

 

 
(859
)
 

 


 
(1,172
)
 

 
1,172

 

Exercise of stock options, vesting of restricted share units and ESPP share purchase
 
20

 

 

 

 

 
505

 

 

 
505

Tax benefit arrangement liability and deferred taxes arising from exchanges of Class B common stock
 

 

 

 

 

 
2,196

 

 

 
2,196

Non-cash adjustments to VIEs
 

 

 

 

 

 

 

 
(3,407
)
 
(3,407
)
Distributions paid to members of Pla-Fit Holdings
 

 

 

 

 

 

 

 
(1,842
)
 
(1,842
)
Cumulative effect adjustment - ASC 842
 

 

 

 

 

 

 
(1,713
)
 

 
(1,713
)
Other comprehensive income
 

 

 

 

 
54

 

 

 


 
54

Balance at March 31, 2019
 
84,463

 
$
9

 
8,589

 
$
1

 
$
148

 
$
22,576

 
$
(368,714
)
 
$
(8,062
)
 
$
(354,042
)

See accompanying notes to condensed consolidated financial statements.

8

Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)



(1) Business Organization
Planet Fitness, Inc. (the “Company”), through its subsidiaries, is a franchisor and operator of fitness centers, with more than 15.5 million members and 2,039 owned and franchised locations (referred to as stores) in 50 states, the District of Columbia, Puerto Rico, Canada, the Dominican Republic, Panama, Mexico and Australia as of March 31, 2020.
On March 18, 2020, the Company proactively closed all of its stores system wide in response to the novel coronavirus disease (“COVID-19”) pandemic in order to promote the health and safety of its members, team members and their communities. As of March 31, 2020 all stores remained closed.
The Company serves as the reporting entity for its various subsidiaries that operate three distinct lines of business:
Licensing and selling franchises under the Planet Fitness trade name.
Owning and operating fitness centers under the Planet Fitness trade name.
Selling fitness-related equipment to franchisee-owned stores.
The Company was formed as a Delaware corporation on March 16, 2015 for the purpose of facilitating an initial public offering (the “IPO”), which was completed on August 11, 2015 and related transactions in order to carry on the business of Pla-Fit Holdings, LLC and its subsidiaries (“Pla-Fit Holdings”). As of August 5, 2015, in connection with the recapitalization transactions that occurred prior to the IPO, the Company became the sole managing member and holder of 100% of the voting power of Pla-Fit Holdings. Pla-Fit Holdings owns 100% of Planet Intermediate, LLC, which has no operations but is the 100% owner of Planet Fitness Holdings, LLC, a franchisor and operator of fitness centers through its subsidiaries. With respect to the Company, Pla-Fit Holdings and Planet Intermediate, LLC, each entity owns nothing other than the respective entity below it in the corporate structure and each entity has no other material operations.
The Company is a holding company whose principal asset is a controlling equity interest in Pla-Fit Holdings. As the sole managing member of Pla-Fit Holdings, the Company operates and controls all of the business and affairs of Pla-Fit Holdings, and through Pla-Fit Holdings, conducts its business. As a result, the Company consolidates Pla-Fit Holdings’ financial results and reports a non-controlling interest related to the portion of limited liability company units of Pla-Fit Holdings (“Holdings Units”) not owned by the Company. Unless otherwise specified, “the Company” refers to both Planet Fitness, Inc. and Pla-Fit Holdings throughout the remainder of these notes.
As of March 31, 2020, Planet Fitness, Inc. held 100.0% of the voting interest and 92.5% of the economic interest of Pla-Fit Holdings and the holders of Holdings Units of Pla-Fit Holdings (the “Continuing LLC Owners”) held the remaining 7.5% economic interest in Pla-Fit Holdings.

(2) Summary of Significant Accounting Policies
(a) Basis of presentation and consolidation
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, these interim financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented have been reflected. All significant intercompany balances and transactions have been eliminated in consolidation.
The condensed consolidated financial statements as of and for the three months ended March 31, 2020 and 2019 are unaudited. The condensed consolidated balance sheet as of December 31, 2019 has been derived from the audited financial statements at that date but does not include all of the disclosures required by U.S. GAAP. These interim condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “Annual Report”) filed with the SEC on February 28, 2020. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year.
As discussed in Note 1, Planet Fitness, Inc. consolidates Pla-Fit Holdings. The Company also consolidates entities in which it has a controlling financial interest, the usual condition of which is ownership of a majority voting interest. The Company also considers

9

Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)


for consolidation certain interests where the controlling financial interest may be achieved through arrangements that do not involve voting interests. Such an entity, known as a variable interest entity (“VIE”), is required to be consolidated by its primary beneficiary. The primary beneficiary of a VIE is considered to possess the power to direct the activities of the VIE that most significantly impact its economic performance and has the obligation to absorb losses or the rights to receive benefits from the VIE that are significant to it. The principal entities in which the Company possesses a variable interest include franchise entities and certain other entities. The Company is not deemed to be the primary beneficiary for Planet Fitness franchise entities. Therefore, these entities are not consolidated.
The results of the Company have been consolidated with Matthew Michael Realty LLC (“MMR”), PF Melville LLC (“PF Melville”), and Planet Fitness NAF, LLC (the “NAF”) based on the determination that the Company is the primary beneficiary with respect to these VIEs. MMR and PF Melville are real estate holding companies that derive a majority of their financial support from the Company through lease agreements for corporate stores. See Note 3 for further information related to the Company’s VIEs. The NAF is an advertising fund on behalf of which the Company collects 2% of gross monthly membership dues from franchisees, in accordance with the provisions of the franchise agreements, and uses the amounts received to support our national marketing campaigns, our social media platforms and the development of local advertising materials.
(b) Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results. Significant areas where estimates and judgments are relied upon by management in the preparation of the consolidated financial statements include revenue recognition, valuation of assets and liabilities in connection with acquisitions, valuation of equity-based compensation awards, the evaluation of the recoverability of goodwill and long-lived assets, including intangible assets, income taxes, including deferred tax assets and liabilities and reserves for unrecognized tax benefits, the liability for the Company’s tax benefit arrangements, and the value of the lease liability and related right-of-use asset recorded in accordance with ASC 842 (see Note 7).
(c) Fair Value
ASC 820, Fair Value Measurements and Disclosures, establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows:
Level 1—Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2—Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3—Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
 
The carrying value and estimated fair value of long-term debt as of March 31, 2020 and December 31, 2019 were as follows:
 
 
March 31, 2020
 
December 31, 2019
 
 
Carrying value
 
Estimated fair value(1)
 
Carrying value
 
Estimated fair value(1)
Long-term debt
 
$
1,730,625

 
$
1,498,371

 
$
1,735,000

 
$
1,765,805

Variable Funding Notes
 
$
75,000

 
$
75,000

 
$

 
$

(1) The Company’s Variable Funding Notes are a variable rate loan and the fair value of this loan approximates book value based on the borrowing rates currently available for variable rate loans obtained from third party lending institutions. The estimated fair value of our fixed rate long-term debt is estimated primarily based on current bid prices for our long-term debt. Judgment is required to develop these estimates. As such, the fair value of our long-term debt is classified within Level 2, as defined under U.S. GAAP.
As a result of the COVID-19 pandemic, the fair value of our long-term debt has fluctuated significantly during the first quarter and may continue to fluctuate based on market conditions and other factors.

10

Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)


(d) Recent accounting pronouncements
The FASB issued ASU No. 2017-4, Intangibles–Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, in January 2017. This guidance eliminates the requirement to calculate the implied fair value, essentially eliminating step two from the goodwill impairment test. The new standard requires goodwill impairment to be based upon the results of step one of the impairment test, which is defined as the excess of the carrying value of a reporting unit over its fair value. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. The Company adopted this guidance on January 1, 2020 noting no material impact on the Company’s consolidated financial statements.
The FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, in August 2018. The guidance helps align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The Company adopted this guidance on January 1, 2020 on a prospective basis, noting no material impact on the Company’s consolidated financial statements.
(3) Variable Interest Entities
The carrying values of VIEs included in the consolidated financial statements as of March 31, 2020 and December 31, 2019 are as follows: 
 
 
March 31, 2020
 
December 31, 2019
 
 
Assets
 
Liabilities
 
Assets
 
Liabilities
PF Melville
 
$
2,642

 
$

 
$
2,682

 
$

MMR
 
2,180

 

 
2,206

 

Total
 
$
4,822

 
$

 
$
4,888

 
$


 
The Company also has variable interests in certain franchisees mainly through the guarantee of lease agreements. The Company’s maximum obligation, as a result of its guarantees of leases, is approximately $14,478 and $10,309 as of March 31, 2020 and December 31, 2019, respectively.
The amount of the Company’s maximum obligation represents a loss that the Company could incur from the variability in credit exposure without consideration of possible recoveries through insurance or other means. In addition, the amount bears no relation to the estimated fair value of the guarantees, which is not material. In 2019, in connection with a real estate partnership, the Company began guaranteeing certain leases of its franchisees up to a maximum period of ten years with earlier expiration dates possible if certain conditions are met.

11

Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)


(4) Acquisitions
New Jersey Acquisition
On December 16, 2019, the Company purchased from one of its franchisees certain assets associated with twelve franchisee-owned stores in New Jersey for a cash payment of $37,812. As a result of the transaction, the Company incurred a loss on unfavorable reacquired franchise rights of $1,810. The loss incurred reduced the net purchase price to $36,002. The Company financed the purchase through cash on hand. The acquired stores are included in the Corporate-owned stores segment.
The purchase consideration was allocated as follows:
 
Amount
Fixed assets
$
3,044

Reacquired franchise rights
9,480

Customer relationships
940

Favorable leases, net
1,508

Reacquired area development rights
90

Other assets
314

Goodwill
21,069

Liabilities assumed, including deferred revenues
(443
)
 
$
36,002


The goodwill created through the purchase is attributable to the assumed future value of the cash flows from the stores acquired. The goodwill is amortizable and deductible for tax purposes over 15 years.
The acquisition was not material to the results of operations of the Company.
Maine Acquisition
On May 30, 2019, the Company purchased from one of its franchisees certain assets associated with four franchisee-owned stores in Maine for a cash payment of $14,801. The Company financed the purchase through cash on hand. The acquired stores are included in the Corporate-owned stores segment.
The purchase consideration was allocated as follows:
 
Amount
Fixed assets
$
999

Reacquired franchise rights
6,740

Customer relationships
30

Unfavorable leases, net
(140
)
Other assets
78

Goodwill
7,239

Liabilities assumed, including deferred revenues
(145
)
 
$
14,801


The goodwill created through the purchase is attributable to the assumed future value of the cash flows from the stores acquired. The goodwill is amortizable and deductible for tax purposes over 15 years.
The acquisition was not material to the results of operations of the Company.
Mexico Acquisition
On March 19, 2020, the franchisee in Mexico exercised a put option that will require the Company to acquire their franchisee-owned stores in Mexico. The transaction has not closed as of March 31, 2020, and therefore there is no preliminary purchase price allocation. The Company analyzed the contract and estimates that the purchase price will approximate fair value of the acquired assets.

12

Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)


(5) Goodwill and Intangible Assets
A summary of goodwill and intangible assets at March 31, 2020 and December 31, 2019 is as follows: 
March 31, 2020
 
Weighted
average
amortization
period (years)
 
Gross
carrying
amount
 
Accumulated
amortization
 
Net carrying
Amount
Customer relationships
 
11.0
 
$
174,033

 
$
(115,313
)
 
$
58,720

Reacquired franchise rights
 
8.0
 
37,660

 
(13,271
)
 
24,389

 
 
 
 
211,693

 
(128,584
)
 
83,109

Indefinite-lived intangible:
 
 
 
 
 
 
 
 
Trade and brand names
 
N/A
 
146,600

 

 
146,600

Total intangible assets
 
 
 
$
358,293

 
$
(128,584
)
 
$
229,709

Goodwill
 
 
 
$
227,821

 
$

 
$
227,821

 
December 31, 2019
 
Weighted
average
amortization
period (years)
 
Gross
carrying
amount
 
Accumulated
amortization
 
Net carrying
Amount
Customer relationships
 
11.0
 
$
174,033

 
$
(112,114
)
 
$
61,919

Reacquired franchise rights
 
8.0
 
37,660

 
(12,258
)
 
25,402

 
 
 
 
211,693

 
(124,372
)
 
87,321

Indefinite-lived intangible:
 
 
 
 
 
 
 
 
Trade and brand names
 
N/A
 
146,600

 

 
146,600

Total intangible assets
 
 
 
$
358,293

 
$
(124,372
)
 
$
233,921

Goodwill
 
 
 
$
227,821

 
$

 
$
227,821


 The Company determined that no impairment charges were required during any periods presented.
Amortization expense related to the intangible assets totaled $4,223 and $4,005 for the three months ended March 31, 2020 and 2019, respectively. The anticipated annual amortization expense related to intangible assets to be recognized in future years as of March 31, 2020 is as follows:
 
Amount
Remainder of 2020
$
12,634

2021
16,636

2022
16,728

2023
16,558

2024
14,067

Thereafter
6,486

Total
$
83,109



13

Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)


(6) Long-Term Debt
Long-term debt as of March 31, 2020 and December 31, 2019 consists of the following: 
 
 
March 31, 2020
 
December 31, 2019
2018-1 Class A-2-I notes
 
$
566,375

 
$
567,813

2018-1 Class A-2-II notes
 
615,625

 
617,187

2019-1 Class A-2 notes
 
548,625

 
550,000

Borrowings under Variable Funding Notes
 
75,000

 

Total debt, excluding deferred financing costs
 
1,805,625

 
1,735,000

Deferred financing costs, net of accumulated amortization
 
(28,398
)
 
(29,995
)
Total debt
 
1,777,227

 
1,705,005

Current portion of long-term debt
 
17,500

 
17,500

Long-term debt and borrowings under Variable Funding Notes, net of current portion
 
$
1,759,727

 
$
1,687,505


Future annual principal payments of long-term debt as of March 31, 2020 are as follows: 
 
Amount
Remainder of 2020
$
13,125

2021
17,500

2022
568,063

2023
86,750

2024
11,750

Thereafter
1,108,437

Total
$
1,805,625


On August 1, 2018, Planet Fitness Master Issuer LLC (the “Master Issuer”), a limited-purpose, bankruptcy remote, wholly-owned indirect subsidiary of Pla-Fit Holdings, LLC, entered into a base indenture and a related supplemental indenture (collectively, the “2018 Indenture”) under which the Master Issuer may issue multiple series of notes. On the same date, the Master Issuer issued Series 2018-1 4.262% Fixed Rate Senior Secured Notes, Class A-2-I (the “2018 Class A-2-I Notes”) with an initial principal amount of $575,000 and Series 2018-1 4.666% Fixed Rate Senior Secured Notes, Class A-2-II (the “2018 Class A-2-II Notes” and, together with the 2018 Class A-2-I Notes, the “2018 Notes”) with an initial principal amount of $625,000. In connection with the issuance of the 2018 Notes, the Master Issuer also entered into a revolving financing facility that allows for the incurrence of up to $75,000 in revolving loans and/or letters of credit under the Master Issuer’s Series 2018-1 Variable Funding Senior Notes, Class A-1 (the “Variable Funding Notes”). The Company fully drew down on the Variable Funding Notes on March 20, 2020. Outstanding amounts under the Variable Funding Notes bear interest at a variable rate, which is currently 2.95%. On December 3, 2019 the Master Issuer issued Series 2019-1 3.858% Fixed Rate Senior Secured Notes, Class A-2 (the “2019 Notes” and, together with the 2018 Notes, the “Notes”) with an initial principal amount of $550,000. The 2019 Notes were issued under the 2018 Indenture and a related supplemental indenture dated December 3, 2019 (together, the “Indenture”). Together the Notes and Variable Funding Notes will be referred to as the “Securitized Senior Notes”.
The Notes were issued in a securitization transaction pursuant to which most of the Company’s domestic revenue-generating assets, consisting principally of franchise-related agreements, certain corporate-owned store assets, equipment supply agreements and intellectual property and license agreements for the use of intellectual property, were assigned to the Master Issuer and certain other limited-purpose, bankruptcy remote, wholly-owned indirect subsidiaries of the Company that act as guarantors of the Securitized Senior Notes and that have pledged substantially all of their assets to secure the Securitized Senior Notes.
Interest and principal payments on the Notes are payable on a quarterly basis. The requirement to make such quarterly principal payments on the Notes is subject to certain financial conditions set forth in the Indenture. The legal final maturity date of the 2018 Notes is in September 2048, but it is anticipated that, unless earlier prepaid to the extent permitted under the Indenture, the 2018 Class A-2-I Notes will be repaid in September 2022 and the 2018 Class A-2-II Notes will be repaid in September 2025. The legal final maturity date of the 2019 Notes is in December 2049, but it is anticipated that, unless earlier prepaid to the extent permitted under the Indenture, the 2019 Notes will be repaid in December 2029 (together, the “Anticipated Repayment Dates”). If the Master

14

Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)


Issuer has not repaid or refinanced the Notes prior to the respective Anticipated Repayment Dates, additional interest will accrue pursuant to the Indenture.

As noted above, the Company borrowed the full $75,000 in Variable Funding Notes on March 20, 2020 at a current rate of 2.95%. The Variable Funding Notes accrue interest at a variable interest rate based on (i) the prime rate, (ii) overnight federal funds rates, (iii) the London interbank offered rate for U.S. Dollars, or (iv) with respect to advances made by conduit investors, the weighted average cost of, or related to, the issuance of commercial paper allocated to fund or maintain such advances, in each case plus any applicable margin and as specified in the Variable Funding Notes. There is a commitment fee on the unused portion of the Variable Funding Notes of 0.5% based on utilization. It is anticipated that the principal and interest on the Variable Funding Notes will be repaid in full on or prior to September 2023, subject to two additional one-year extension options. Following the anticipated repayment date (and any extensions thereof) additional interest will accrue on the Variable Funding Notes equal to 5.0% per year.

In connection with the issuance of the 2018 Notes and 2019 Notes, the Company incurred debt issuance costs of $27,133 and $10,577, respectively. The debt issuance costs are being amortized to “Interest expense” through the Anticipated Repayment Dates of the Notes utilizing the effective interest rate method.
The Securitized Senior Notes are subject to covenants and restrictions customary for transactions of this type, including (i) that the Master Issuer maintains specified reserve accounts to be used to make required payments in respect of the Securitized Senior Notes, (ii) provisions relating to optional and mandatory prepayments and the related payment of specified amounts, including specified make-whole payments in the case of the Notes under certain circumstances, (iii) certain indemnification payments in the event, among other things, the assets pledged as collateral for the Securitized Senior Notes are in stated ways defective or ineffective, (iv) a cap on non-securitized indebtedness of $50 million (provided that the Company may incur non-securitized indebtedness in excess of such amount, subject to the leverage ratio cap described below, under certain conditions, including if the relevant lenders execute a non-disturbance agreement that acknowledges the bankruptcy-remote status of the Master Issuer and its subsidiaries and of their respective assets), (v) a leverage ratio cap on the Company of 7.0x (calculated without regard for any indebtedness subject to the $50 million cap) and (vi) covenants relating to recordkeeping, access to information and similar matters.
Pursuant to a parent company support agreement, we have agreed to cause our subsidiary to perform each of its obligations (including any indemnity obligations) and duties under the Management Agreement and under the contribution agreements entered into in connection with the securitized financing facility, in each case as and when due. To the extent that our subsidiary has not performed any such obligation or duty within the prescribed time frame after such obligation or duty was required to be performed, we have agreed to either (i) perform such obligation or duty or (ii) cause such obligations or duties to be performed on our behalf.
The Securitized Senior Notes are also subject to customary rapid amortization events provided for in the Indenture, including events tied to failure to maintain stated debt service coverage ratios, certain manager termination events, an event of default, and the failure to repay or refinance the Notes on the applicable scheduled Anticipated Repayment Dates. The Securitized Senior Notes are also subject to certain customary events of default, including events relating to non-payment of required interest, principal, or other amounts due on or with respect to the Securitized Senior Notes, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations and warranties, failure of security interests to be effective, and certain judgments.
In accordance with the Indenture, certain cash accounts have been established with the Indenture trustee (the “Trustee”) for the benefit of the trustee and the noteholders, and are restricted in their use. The Company holds restricted cash which primarily represents cash collections held by the Trustee, interest, principal, and commitment fee reserves held by the Trustee related to the Securitized Senior Notes. As of March 31, 2020, the Company had restricted cash held by the Trustee of $63,226. Restricted cash has been combined with cash and cash equivalents when reconciling the beginning and end of period balances in the consolidated statements of cash flows.
(7) Leases
The Company leases space to operate corporate-owned stores, equipment, office, and warehouse space. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. For leases beginning in 2019 and later, we account for fixed lease and non-lease components together as a single, combined lease component. Variable lease costs, which may include common area maintenance, insurance, and taxes are not included in the lease liability and are expensed in the period incurred.
Our corporate-owned store leases generally have remaining terms of one to ten years, and typically include one or more renewal options, with renewal terms that can generally extend the lease term from three to ten years or more. The exercise of lease renewal

15

Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)


options is at our sole discretion. The Company includes options to renew in the expected term when they are reasonably certain to be exercised. The depreciable life of assets and leasehold improvements are limited by the expected lease term.
Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease ROU assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs and lease incentives. To determine the present value of lease payments not yet paid, we estimate incremental secured borrowing rates corresponding to the maturities of the leases based upon interpolated rates using our Class A-2 Notes.
The Company has certain non-real estate leases that are accounted for as finance leases under ASC 842, which is similar to the accounting for capital leases under the previous standard. These leases are immaterial, and therefore the Company has not included them in them in the tables below, except for their location on the consolidated balance sheet.
Our leases typically contain rent escalations over the lease term. We recognize expense for these leases on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce our ROU asset related to the lease. These tenant incentives are amortized as reduction of rent expense over the lease term.
Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Leases
 
Classification
 
March 31, 2020
 
December 31, 2019
Assets
 
 
 
 
 
 
Operating lease assets
 
Right of use asset, net
 
$
150,284

 
$
155,633

Finance lease assets
 
Property and equipment, net of accumulated depreciation
 
314

 
309

Total lease assets
 
 
 
$
150,598

 
$
155,942

 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
Current:
 
 
 
 
 
 
Operating
 
Other current liabilities
 
$
17,075

 
$
16,755

Noncurrent:
 
 
 
 
 
 
Operating
 
Lease liabilities, net of current portion
 
148,006

 
152,920

Financing
 
Other liabilities
 
339

 
333

Total lease liabilities
 
 
 
$
165,420

 
$
170,008

 
 
 
 
 
 
 
Weighted-average remaining lease term (years) - operating leases
 
8.4

 
 
 
 
 
 
 
 
 
Weighted-average discount rate - operating leases
 
5.0
%
 
 


During the three months ended March 31, 2020 and 2019, the components of lease cost were as follows:
 
 
Three months ended March 31, 2020
 
Three months ended March 31, 2019
Operating lease cost
 
$
6,392

 
$
4,845

Variable lease cost
 
2,372

 
1,941

Total lease cost
 
$
8,764

 
$
6,786



The Company’s costs related to short-term leases, those with a duration between one and twelve months, were immaterial.

Supplemental disclosures of cash flow information related to leases were as follows:

16

Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)


 
 
Three months ended March 31, 2020
 
Three months ended March 31, 2019
Cash paid for lease liabilities
 
$
5,798

 
$
4,647



As of March 31, 2020, maturities of lease liabilities were as follows:
 
 
Amount
Remainder of 2020
 
$
24,498

2021
 
25,373

2022
 
25,964

2023
 
25,434

2024
 
23,376

Thereafter
 
89,831

Total lease payments
 
$
214,476

Less: imputed interest
 
49,056

Present value of lease liabilities
 
$
165,420



As of March 31, 2020, operating lease payments exclude approximately $30,598 of legally binding minimum lease payments for leases signed but not yet commenced.
(8) Revenue recognition
Contract Liabilities
Contract liabilities consist primarily of deferred revenue resulting from initial and renewal franchise fees and area development agreement (“ADA”) fees paid by franchisees, as well as transfer fees, which are generally recognized on a straight-line basis over the term of the underlying franchise agreement. Also included are corporate-owned store enrollment fees, annual fees and monthly fees as well as deferred equipment rebates relating to our equipment business. We classify these contract liabilities as deferred revenue in our condensed consolidated balance sheets.
Additionally, as of March 31, 2020, due to temporary store closures as a result of the COVID-19 pandemic, the Company deferred approximately $24.6 million of corporate-owned store and franchise revenue related to monthly membership billings that it will recognize as the stores reopen.
The following table reflects the change in contract liabilities between December 31, 2019 and March 31, 2020.

 
Contract liabilities
Balance at December 31, 2019
$
62,054

Revenue recognized that was included in the contract liability at the beginning of the year
(13,511
)
Increase, excluding amounts recognized as revenue during the period
39,243

Balance at March 31, 2020
$
87,786


The following table illustrates estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2020. The Company has elected to exclude short term contracts, sales and usage based royalties and any other variable consideration recognized on an “as invoiced” basis.

17

Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)


Contract liabilities to be recognized in:
 
Amount
Remainder of 2020
 
$
51,458

2021
 
5,051

2022
 
3,540

2023
 
3,434

2024
 
3,185

Thereafter
 
21,118

Total
 
$
87,786


(9) Related Party Transactions
Amounts due from related parties of $420 as of March 31, 2020 recorded within other receivables on the condensed consolidated balance sheet relate to a potential indemnification reimbursement for an outstanding legal matter, see Note 13.
Activity with entities considered to be related parties is summarized below: 
 
 
For the three months ended
March 31,
 
 
2020
 
2019
Franchise revenue
 
$
500

 
$
523

Equipment revenue
 
93

 

Total revenue from related parties
 
$
593

 
$
523