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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 June 30, 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 July 31, 2020 there were 80,008,738 shares of the Registrant’s Class A Common Stock, par value $0.0001 per share, outstanding and 6,499,487 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;
as a result of COVID-19 we have experienced to date, and may continue to experience, a decrease in our net membership base; 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, our quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2020, and our other filings with the Securities and Exchange Commission.
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) 
 
 
June 30,
 
December 31,
 
 
2020
 
2019
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
423,553

 
$
436,256

Restricted cash
 
86,407

 
42,539

Accounts receivable, net of allowance for bad debts of $84 and $111 at June 30, 2020 and
December 31, 2019, respectively
 
15,251

 
42,268

Inventory
 
2,778

 
877

Deferred expenses – national advertising fund
 
7,942

 

Prepaid expenses
 
12,160

 
8,025

Other receivables
 
21,301

 
9,226

Other current assets
 
12,089

 
947

Total current assets
 
581,481

 
540,138

Property and equipment, net of accumulated depreciation of $89,417 and $73,621 at June 30, 2020
and December 31, 2019, respectively
 
149,624

 
145,481

Right-of-use assets, net
 
155,523

 
155,633

Intangible assets, net
 
225,498

 
233,921

Goodwill
 
227,821

 
227,821

Deferred income taxes
 
458,196

 
412,293

Other assets, net
 
1,894

 
1,903

Total assets
 
$
1,800,037

 
$
1,717,190

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

 
$
17,500

Accounts payable
 
11,461

 
21,267

Accrued expenses
 
19,767

 
31,623

Equipment deposits
 
3,832

 
3,008

Deferred revenue, current
 
32,147

 
27,596

Payable pursuant to tax benefit arrangements, current
 
30,912

 
26,468

Other current liabilities
 
18,959

 
18,016

Total current liabilities
 
134,578

 
145,478

Long-term debt, net of current maturities
 
1,681,953

 
1,687,505

Borrowings under Variable Funding Notes
 
75,000

 

Lease liabilities, net of current portion
 
154,501

 
152,920

Deferred revenue, net of current portion
 
33,585

 
34,458

Deferred tax liabilities
 
1,562

 
1,116

Payable pursuant to tax benefit arrangements, net of current portion
 
438,105

 
400,748

Other liabilities
 
2,453

 
2,719

Total noncurrent liabilities
 
2,387,159

 
2,279,466

Commitments and contingencies (Note 13)
 

 

Stockholders’ equity (deficit):
 
 
 
 
Class A common stock, $.0001 par value - 300,000 authorized, 79,994 and 78,525 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively
 
8

 
8

Class B common stock, $.0001 par value - 100,000 authorized, 6,500 and 8,562 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively
 
1

 
1

Accumulated other comprehensive (loss) income
 
(57
)
 
303

Additional paid in capital
 
38,900

 
29,820

Accumulated deficit
 
(757,139
)
 
(736,587
)
Total stockholders’ deficit attributable to Planet Fitness Inc.
 
(718,287
)
 
(706,455
)
Non-controlling interests
 
(3,413
)
 
(1,299
)
Total stockholders’ deficit
 
(721,700
)
 
(707,754
)
Total liabilities and stockholders’ deficit
 
$
1,800,037

 
$
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
June 30,
 
For the six months ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
Revenue:
 
 

 
 

 
 
 
 
Franchise
 
$
16,214

 
$
58,225

 
$
65,125

 
$
111,181

Commission income
 
45

 
1,065

 
435

 
2,059

National advertising fund revenue
 
4,743

 
12,522

 
13,971

 
24,334

Corporate-owned stores
 
9,419

 
39,695

 
49,935

 
77,739

Equipment
 
9,813

 
70,154

 
37,998

 
115,165

Total revenue
 
40,234

 
181,661

 
167,464

 
330,478

Operating costs and expenses:
 
 
 
 
 
 
 
 
Cost of revenue
 
8,478

 
54,391

 
30,323

 
88,877

Store operations
 
14,681

 
20,163

 
40,838

 
41,068

Selling, general and administrative
 
15,896

 
18,864

 
32,848

 
37,018

National advertising fund expense
 
10,878

 
12,522

 
26,083

 
24,334

Depreciation and amortization
 
13,008

 
10,577

 
25,800

 
20,484

Other loss (gain)
 
15

 
(122
)
 
26

 
246

Total operating costs and expenses
 
62,956

 
116,395

 
155,918

 
212,027

(Loss) income from operations
 
(22,722
)
 
65,266

 
11,546

 
118,451

Other expense, net:
 
 
 
 
 
 
 
 
Interest income
 
359

 
1,979

 
2,286

 
3,777

Interest expense
 
(20,467
)
 
(14,636
)
 
(40,708
)
 
(29,385
)
Other expense
 
(73
)
 
(1,444
)
 
(760
)
 
(4,762
)
Total other expense, net
 
(20,181
)
 
(14,101
)
 
(39,182
)
 
(30,370
)
(Loss) income before income taxes
 
(42,903
)
 
51,165

 
(27,636
)
 
88,081

(Benefit) provision for income taxes
 
(10,918
)
 
11,338

 
(6,034
)
 
16,615

Net (loss) income
 
(31,985
)
 
39,827

 
(21,602
)
 
71,466

Less net (loss) income attributable to non-controlling interests
 
(2,808
)
 
4,983

 
(1,032
)
 
9,213

Net (loss) income attributable to Planet Fitness, Inc.
 
$
(29,177
)
 
$
34,844

 
(20,570
)
 
$
62,253

Net (loss) income per share of Class A common stock:
 
 
 
 
 
 
 
 
Basic
 
$
(0.36
)
 
$
0.41

 
$
(0.26
)
 
$
0.74

Diluted
 
$
(0.36
)
 
$
0.41

 
$
(0.26
)
 
$
0.74

Weighted-average shares of Class A common stock outstanding:
 
 
 
 
 
 
 
 
Basic
 
79,966

 
84,143

 
79,532

 
83,975

Diluted
 
79,966

 
84,835

 
79,532

 
84,639

 
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
June 30,
 
For the six months ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
Net (loss) income including non-controlling interests
 
$
(31,985
)
 
$
39,827

 
$
(21,602
)
 
$
71,466

Other comprehensive income (loss), net:
 
 
 
 
 
 
 
 
Foreign currency translation adjustments
 
249

 
103

 
(360
)
 
157

Total other comprehensive income, net
 
249

 
103

 
(360
)
 
157

Total comprehensive (loss) income including non-controlling
interests
 
(31,736
)
 
39,930

 
(21,962
)
 
71,623

Less: total comprehensive (loss) income attributable to non-controlling interests
 
(2,808
)
 
4,983

 
(1,032
)
 
9,213

Total comprehensive (loss) income attributable to Planet Fitness,
Inc.
 
$
(28,928
)
 
$
34,947

 
$
(20,930
)
 
$
62,410

 
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 six months ended June 30,
 
 
2020
 
2019
Cash flows from operating activities:
 
 

 
 

Net (loss) income
 
$
(21,602
)
 
$
71,466

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
25,800

 
20,484

Amortization of deferred financing costs
 
3,187

 
2,664

Amortization of asset retirement obligations
 
33

 
168

Deferred tax (benefit) expense
 
(3,713
)
 
8,854

(Gain) loss on re-measurement of tax benefit arrangement
 
(502
)
 
4,852

Provision for bad debts
 
(28
)
 
(10
)
Equity-based compensation
 
2,493

 
2,279

Other
 
434

 
(515
)
Changes in operating assets and liabilities, excluding effects of acquisitions:
 
 
 
 
Accounts receivable
 
26,917

 
12,465

Inventory
 
(1,900
)
 
2,608

Other assets and other current assets
 
(16,323
)
 
(9,288
)
National advertising fund
 
(7,941
)
 
(5,096
)
Accounts payable and accrued expenses
 
(22,354
)
 
(20,831
)
Other liabilities and other current liabilities
 
1,472

 
1,777

Income taxes
 
(4,485
)
 
1,987

Payable pursuant to tax benefit arrangements
 

 
(17,476
)
Equipment deposits
 
824

 
(532
)
Deferred revenue
 
3,820

 
6,631

Leases and deferred rent
 
884

 
17

Net cash (used in) provided by operating activities
 
(12,984
)
 
82,504

Cash flows from investing activities:
 
 
 
 
Additions to property and equipment
 
(21,161
)
 
(18,925
)
Acquisition of franchises
 

 
(14,801
)
Proceeds from sale of property and equipment
 
169

 
54

Net cash used in investing activities
 
(20,992
)
 
(33,672
)
Cash flows from financing activities:
 
 
 
 
Principal payments on capital lease obligations
 
(84
)
 
(27
)
Proceeds from borrowings under Variable Funding Notes
 
75,000

 

Repayment of long-term debt
 
(8,750
)
 
(6,000
)
Proceeds from issuance of Class A common stock
 
1,583

 
1,520

Dividend equivalent payments
 
(174
)
 
(138
)
Distributions to Continuing LLC Members
 
(1,600
)
 
(3,742
)
Net cash provided by (used in) financing activities
 
65,975

 
(8,387
)
Effects of exchange rate changes on cash and cash equivalents
 
(834
)
 
542

Net increase in cash, cash equivalents and restricted cash
 
31,165

 
40,987

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

 
320,139

Cash, cash equivalents and restricted cash, end of period
 
$
509,960

 
$
361,126

Supplemental cash flow information:
 
 
 
 
Net cash paid for income taxes
 
$
2,155

 
$
6,530

Cash paid for interest
 
$
37,724

 
$
26,923

Non-cash investing activities:
 
 
 
 
Non-cash additions to property and equipment
 
$
2,099

 
$
1,896

 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 loss
 

 

 

 

 

 

 
(20,570
)
 
(1,032
)
 
(21,602
)
Equity-based compensation expense
 

 

 

 

 

 
2,493

 

 

 
2,493

Exchanges of Class B common stock
 
2,062

 

 
(2,062
)
 

 

 
(956
)
 

 
956

 

Exercise of stock options, vesting of restricted share units and ESPP share purchase
 
74

 

 

 

 

 
1,353

 

 

 
1,353

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
 

 

 

 

 

 

 

 
(438
)
 
(438
)
Distributions paid to members of Pla-Fit Holdings
 

 

 

 

 

 

 

 
(1,600
)
 
(1,600
)
Other
 

 

 

 

 

 

 
18

 

 
18

Other comprehensive income
 

 

 

 

 
(360
)
 

 

 

 
(360
)
Balance at June 30, 2020
 
79,994

 
$
8

 
6,500

 
$
1

 
$
(57
)
 
$
38,900

 
$
(757,139
)
 
$
(3,413
)
 
$
(721,700
)
 
 
 
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
 

 

 

 

 

 

 
62,253

 
9,213

 
71,466

Equity-based compensation expense
 

 

 

 

 

 
2,279

 

 

 
2,279

Exchanges of Class B common stock
 
866

 

 
(866
)
 

 

 
(1,172
)
 

 
1,172

 

Exercise of stock options, vesting of restricted share units and ESPP share purchase
 
69

 

 

 

 

 
1,209

 

 

 
1,209

Repurchase and retirement of Class A common stock
 
(524
)
 
(1
)
 

 

 

 
64

 

 
(64
)
 
(1
)
Tax benefit arrangement liability and deferred taxes arising from exchanges of Class B common stock
 

 

 

 

 

 
2,383

 

 

 
2,383

Non-cash adjustments to VIEs
 

 

 

 

 

 

 

 
(3,621
)
 
(3,621
)
Distributions paid to members of Pla-Fit Holdings
 

 

 

 

 

 

 

 
(3,742
)
 
(3,742
)
Cumulative effect adjustment - ASC 842
 

 

 

 

 

 

 
(1,713
)
 

 
(1,713
)
Other comprehensive income
 

 

 

 

 
157

 

 

 

 
157

Balance at June 30, 2019
 
83,995

 
$
8

 
8,582

 
$
1

 
$
251

 
$
24,495

 
$
(333,870
)
 
$
(5,257
)
 
$
(314,372
)


8

Table of Contents

 
 
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 March 31, 2020
 
79,928

 
$
8

 
6,501

 
$
1

 
$
(306
)
 
$
36,460

 
$
(727,946
)
 
$
(386
)
 
$
(692,169
)
Net loss
 

 

 

 

 

 

 
(29,177
)
 
(2,808
)
 
(31,985
)
Equity-based compensation expense
 

 

 

 

 

 
1,546

 

 

 
1,546

Exchanges of Class B common stock
 
1

 

 
(1
)
 

 

 

 

 

 

Exercise of stock options, vesting of restricted share units and ESPP share purchase
 
65

 

 

 

 

 
894

 

 

 
894

Non-cash adjustments to VIEs
 

 

 

 

 

 

 

 
(219
)
 
(219
)
Other
 

 

 

 

 

 

 
(16
)
 

 
(16
)
Other comprehensive income
 

 

 

 

 
249

 

 

 

 
249

Balance at June 30, 2020
 
79,994

 
$
8

 
6,500

 
$
1

 
$
(57
)
 
$
38,900

 
$
(757,139
)
 
$
(3,413
)
 
$
(721,700
)

 
 
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 March 31, 2019
 
84,463

 
$
9

 
8,589

 
$
1

 
$
148

 
$
22,576

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

 

 

 

 

 

 
34,844

 
4,983

 
39,827

Equity-based compensation expense
 

 

 

 

 

 
964

 

 

 
964

Exchanges of Class B common stock
 
7

 

 
(7
)
 

 

 

 

 

 

Exercise of stock options and vesting of restricted share units
 
49

 

 

 

 

 
704

 

 

 
704

Repurchase and retirement of Class A common stock
 
(524
)
 
(1
)
 

 

 

 
64

 

 
(64
)
 
(1
)
Tax benefit arrangement liability and deferred taxes arising from exchanges of Class B common stock
 

 

 

 

 

 
187

 

 

 
187

Non-cash adjustments to VIEs
 

 

 

 

 

 

 

 
(214
)
 
(214
)
Distributions paid to members of Pla-Fit Holdings
 

 

 

 

 

 

 

 
(1,900
)
 
(1,900
)
Other comprehensive income
 

 

 

 

 
103

 

 

 

 
103

Balance at June 30, 2019
 
83,995

 
$
8

 
8,582

 
$
1

 
$
251

 
$
24,495

 
$
(333,870
)
 
$
(5,257
)
 
$
(314,372
)

See accompanying notes to condensed consolidated financial statements.

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)



(1) Business Organization
Planet Fitness, Inc. (the “Company”), through its subsidiaries, is a franchisor and operator of fitness centers, with more than 15.2 million members and 2,059 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 June 30, 2020.
In March 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 June 30, 2020, 1,490 stores had reopened, of which 1,451 were franchisee-owned stores and 39 were corporate-owned stores.
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 June 30, 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 and six months ended June 30, 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

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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 signific