Bally Total Fitness Completes Another Strong Year.Business Editors CHICAGO--(BUSINESS WIRE)--Feb. 14, 2001 Net Income Per Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. Share of $2.35 for the Year, Before $0.49 Per Share Net Benefit from Unusual Items, Compared with $1.56 in Prior Year 4Q diluted EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. (exclusive of unusual items) $0.65 versus $0.53 in 1999 Bally Total Fitness Bally Total Fitness is an American health club chain with 400 gyms in 70 cities, and claims 4 million customers [1]. The chain has recently opened gyms in South Korea, China & the Bahamas. Holding Corporation (NYSE NYSE See: New York Stock Exchange : BFT (Binary File Transfer) An extension to the fax protocol that allows transmission of raw data. A page of text is transmitted faster than a bitmap of the page and is displayed at normal printer resolution at the receiving side. ) today announced results for the year and quarter ended December December: see month. 31, 2000 with diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the year of $2.35 (before the net benefit of unusual items of $13.5 million, $0.49 per diluted share) versus $1.56 in the prior year. Net income, inclusive of inclusive of prep. Taking into consideration or account; including. the effect of unusual items, totaled $78.6 million, $2.84 per diluted share for the year. Revenues exceeded $1.0 billion annually, for the first time, an increase of 17% over the prior year. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the year improved 35% to $126.4 million from $93.3 million in the prior year while earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. of $18.7 million over the prior year, before the effect of retail inventory growth of $8.6 million to support a 54% growth in retail outlets retail outlet n → punto de venta retail outlet n → point m de vente retail outlet retail n → . For the quarter, net income before the effects of a non-cash unusual item totaled $18.0 million, an increase of 25% over the prior year quarter. Operating income for the fourth quarter improved 13% to $32.5 million from $28.8 million in the prior year quarter, while EBITDA grew to $50.2 million, a 16% improvement over the prior year quarter. During the fourth quarter the company recorded a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of $6.5 million ($.24 per diluted share) to write off its third-party internet investments. During the third quarter of 2000, in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Financial Accounting Standard No. 109, Accounting for Income Taxes, the Company reduced its tax valuation allowance against net operating losses Net operating losses Losses that a firm can take advantage of to reduce taxes. realized in prior periods by $20 million. "We are pleased to continue posting gains in the key measures of our business," noted Lee Hillman Hillman was a famous British automobile marque, manufactured by the Rootes Group. It was based in Ryton-on-Dunsmore, near Coventry, England, from 1907 to 1976. Before 1907 the company had built bicycles. , Chairman of the Board of Directors, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. and President of Bally Total Fitness. "Particularly gratifying grat·i·fy tr.v. grat·i·fied, grat·i·fy·ing, grat·i·fies 1. To please or satisfy: His achievement gratified his father. See Synonyms at please. 2. is our operating success in the fourth quarter, despite the extraordinarily harsh weather conditions in the Midwest Midwest or Middle West, region of the United States centered on the western Great Lakes and the upper-middle Mississippi valley. It is a somewhat imprecise term that has been applied to the northern section of the land between the Appalachians that affected 35% of our clubs throughout December, and the year ending storm that temporarily shut down most of our operations in the Northeast “Northeastern” redirects here. For the Boston college, see Northeastern University, Boston. Northeast or north east is the ordinal direction halfway between north and east. It is the opposite of southwest. See boxing the compass. during one of our busiest periods." "While the year 2000 was another period of demonstrated increasing strength for our Company, we are particularly excited about what 2001 will bring," continued Hillman. "Our capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. for 2001 is progressing as planned, with fewer dollars overall and a greater focus on new club expansion. We came into the new year with more than 15 new club facilities under construction, including nine clubs scheduled to open during the first quarter. Our returns on new clubs continue to be quite attractive." Hillman concluded, "The Bally Total Fitness business model has shown itself to be a great generator generator, in electricity, machine used to change mechanical energy into electrical energy. It operates on the principle of electromagnetic induction, discovered (1831) by Michael Faraday. of enterprise value and we look forward to continuing to achieve the growth goals we have set for ourselves over the coming months." Comparison of the years ended December 31, 2000 and 1999 Operating income for 2000 was $126.4 million compared to $93.3 million in 1999. The increase of $33.1 million (35%) was due to a $146.1 million increase in net revenue (17%), offset, in part, by an increase in operating costs operating costs npl → gastos mpl operacionales and expenses of $100.2 million (14%) and a $12.7 million increase in depreciation and amortization. The operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: before depreciation and amortization increased to 19% from 17% for 1999. Operating income from products and services increased to $38.6 million from $21.0 million in the prior year with an operating margin of 35% in 2000 compared to 34% in 1999. The weighted-average number of fitness centers during 2000 increased to 376 from 343 during 1999, a 10% increase, including an increase in the weighted-average number of centers operating under the Company's four upscale brands from 22 to 34. Net revenue from comparable fitness centers increased 9%. New membership units sold increased 6% over the prior year while the weighted-average selling price of membership contracts sold increased 5%. Total individual memberships grew 3%, in line with expectations. As a result, membership fees originated increased $53.8 million (11%). Dues collected increased $38.6 million (16%) from 1999, reflecting continued improvements in member retention and pricing strategies There are many ways in which the price of a product can be determined. The following are the foremost strategies that businesses are likely to use. Competition-based pricing Setting the price based upon prices of the similar competitor products. and an increase attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to fitness centers operating under the Company's four upscale brands, which charge higher dues. Finance charges earned increased $9.0 million (15%) in 2000 due to the growth in size and consistent higher quality of the receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed portfolio. Average interest rates for these finance charges were substantially unchanged during the periods. The provision for doubtful receivables combined with the provision for cancellations, which is reported in the financial statements as a direct reduction of initial membership fees on financed memberships originated, totaled 41% of the gross financed portion of originations for both periods. Deferral deferral - Waiting for quiet on the Ethernet. accounting reduced earnings by $3.8 million for 2000 compared to 1999. Comparison of the three months ended December 31, 2000 and 1999 Operating income for the fourth quarter of 2000 was $32.5 million compared to $28.7 million in 1999. This increase of $3.8 million (13%) was due to a $28.1 million (13%) increase in net revenue, partially offset by a $21.2 million (12%) increase in operating costs and expenses and an increase in depreciation and amortization of $3.1 million. The operating margin before depreciation and amortization increased to 20% from 19% in the prior year period. Operating income from products and services increased to $9.9 million from $6.5 million in the 1999 quarter with an operating margin of 35% in the 2000 quarter compared to 32% during the prior year period. The weighted-average number of fitness centers increased to 382 from 360 in the fourth quarter of 1999, an increase of 6%, including an increase in the weighted-average number of centers operating under the Company's four upscale brands from 32 to 35. Net revenue from comparable fitness centers increased 6%. New membership units sold during the quarter increased 3% over the prior year period while the weighted-average selling price of membership contracts sold increased 3%. As a result, membership fees originated increased $6.8 million (6%). Dues collected increased $3.7 million (5%) from the 1999 quarter, reflecting continued improvements in member retention and pricing strategies offset by a reduction in dues prepayments Prepayments Payments made in excess of scheduled mortgage principal repayments. resulting from a strategic change in the timing of annual renewal solicitations. Finance charges earned during the fourth quarter of 2000 increased $2.8 million (19%) compared to the 1999 quarter due to the growth in size and consistent higher quality of the receivables portfolio. Average interest rates for these finance charges were substantially unchanged between the periods. The provision for doubtful receivables combined with the provision for cancellations, which is reported in the financial statements as a direct reduction of initial membership fees on financed memberships originated, totaled 41% of the gross financed portion of originations for both periods. As expected, deferral accounting increased earnings by $6.1 million in the fourth quarter of 2000 versus the 1999 quarter. Of this increase $2.3 million resulted from less deferred revenue origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real resulting from the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. reduction in dues prepayments. Cash Flow Cash flow from operating activities for 2000 was a positive $49.2 million compared to $39.1 million in 1999. The $10.1 million improvement principally reflects the continued growth in overall collections from installment contracts installment contract n. an agreement in which payments of money, delivery of goods or performance of services are to be made in a series of payments, deliveries or performances, usually on specific dates or upon certain happenings. receivable and monthly dues, partially offset by growth in inventories of $8.6 million ($7.4 million during the fourth quarter of 2000) supporting increased nutritional nutritional pertaining to or emanating from nutrition. nutritional anemia see nutritional anemia. nutritional assessment and other retail sales, including the expansion of product offerings and a 54% increase in retail outlets to a total of 339 stores by the end of 2000. Seasonally, inventories peak at year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. to support the higher volume of retail traffic associated with first quarter activities. Net installment contracts receivable grew $73.3 million during 2000. Excluding this growth in receivables and inventories, cash provided by operating activities totaled $131.1 million for 2000, a $20.8 million improvement over 1999. During 2000, the Company expanded its capacity to attract new members and better serve existing members by investing $108.4 million in property and equipment, including approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $74 million related to new fitness centers, and major upgrades and expansions, including new equipment, of existing fitness centers, and $4.8 million to purchase land and buildings for new clubs and existing leaseholds. In addition, we acquired 14 clubs with a net cash investment of $4.1 million. As of December 31, 2000, the Company had drawn $69.5 million on its $100 million revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. line and had outstanding letters of credit totaling $4.6 million. Bally Total Fitness is the largest commercial operator of fitness centers in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , with approximately four million members and more than 385 facilities located in 28 states and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of . With more than 120 million annual visits by members to its fitness centers, Bally Total Fitness provides a unique platform for distribution of products and services to active, fitness-conscious adult consumers. Forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. in this release including, without limitation, statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company's plans, strategies, objectives, expectations, intentions, and adequacy of resources, are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward-looking statements. These factors include, among others, the following: general economic and business conditions; competition; success of operating initiatives, advertising and promotional efforts; existence of adverse publicity or litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; acceptance of new product and service offerings; changes in business strategy or plans; quality of management; availability, terms, and development of capital; business abilities and judgment of personnel; changes in, or the failure to comply with, government regulations; regional weather conditions and other factors described in filings of the Company with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
BALLY TOTAL FITNESS HOLDING CORPORATION
CONSOLIDATED INCOME SUMMARY
(In thousands, except share data)
Year ended
December 31
Net revenues: 2000 1999
Membership revenues -------- --------
Initial membership fees on
financed memberships originated $518,413 $465,443
Initial membership fees on
paid-in-full memberships originated 24,576 23,721
Dues collected 281,509 242,952
Change in deferred revenues (12,395) (4,078)
-------- --------
812,103 728,038
Finance charges earned 68,462 59,449
Products and services 110,976 62,616
Miscellaneous revenue 15,607 10,995
-------- --------
1,007,148 861,098
Operating costs and expenses:
Fitness center operations 467,705 423,001
Products and services 72,364 41,570
Member processing collection centers 43,883 41,213
Advertising 51,442 47,766
General and administrative 28,946 27,169
Provision for doubtful receivables 158,729 139,627
Change in deferred membership origination costs (7,934) (5,444)
-------- --------
815,135 714,902
-------- --------
Operating income before
depreciation and amortization ("EBITDA") 192,013 146,196
Depreciation and amortization 65,605 52,857
-------- --------
Operating income 126,408 93,339
Interest income 1,760 2,369
Interest expense (62,058) (52,394)
Other (6,500) -
-------- --------
Income before income taxes and cumulative
effect of a change in accounting principle 59,610 43,314
Income tax benefit (provision) 19,000 (870)
-------- --------
Income before cumulative effect
of a change in accounting principle 78,610 42,444
Cumulative effect of a change
in accounting principle, net of income tax - (262)
-------- --------
Net income $78,610 $42,182
======== ========
Basic earnings per common share:
Income before cumulative effect
of a change in accounting principle $3.29 $1.81
Cumulative effect of a
change in accounting principle - (.01)
-------- --------
Net income per common share $3.29 $1.80
========== ==========
Average common shares outstanding 23,858,486 23,382,288
Diluted earnings per common share:
Income before cumulative
effect of a change in accounting principle $2.84 $1.56
Cumulative effect of a
change in accounting principle - (.01)
-------- --------
Net income per common share - assuming dilution $2.84 $1.55
======== ========
Average diluted common shares
outstanding (includes 3,793,551 and
3,853,543 common equivalent shares in
2000 and 1999, respectively) 27,652,037 27,235,831
BALLY TOTAL FITNESS HOLDING CORPORATION
CONSOLIDATED INCOME SUMMARY
(In thousands, except share data)
(Unaudited)
Three months
ended December 31
Net revenues: 2000 1999
Membership revenues -------- --------
Initial membership fees
on financed memberships originated $107,511 $101,054
Initial membership fees on
paid-in-full memberships originated 6,151 5,800
Dues collected 72,643 68,959
Change in deferred revenues 14,373 9,301
-------- ---------
200,678 185,114
Finance charges earned 17,700 14,903
Products and services 28,391 20,298
Miscellaneous revenue 5,446 3,814
-------- --------
252,215 224,129
Operating costs and expenses:
Fitness center operations 117,660 104,884
Products and services 18,499 13,819
Member processing collection centers 11,364 10,903
Advertising 11,193 10,240
General and administrative 8,273 7,303
Provision for doubtful receivables 34,602 32,217
Change in deferred membership origination costs 403 1,428
-------- --------
201,994 180,794
-------- --------
Operating income before
depreciation and amortization ("EBITDA") 50,221 43,335
Depreciation and amortization 17,704 14,581
-------- --------
Operating income 32,517 28,754
Interest income 351 540
Interest expense (14,558) (14,589)
Other (6,500) -
-------- --------
Income before income taxes 11,810 14,705
Income tax provision (275) (290)
-------- --------
Net income $11,535 $14,415
======== ========
Basic earnings per common share $ .48 $ .61
========== ==========
Average common shares outstanding 24,041,065 23,578,748
Diluted earnings per common share $ .41 $ .53
========== ==========
Average diluted common shares
outstanding (includes 3,876,203 and
3,869,650 common equivalent shares
in 2000 and 1999, respectively) 27,917,268 27,448,398
BALLY TOTAL FITNESS HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
December 31
2000 1999
ASSETS -------- --------
Current assets:
Cash and equivalents $13,074 $23,450
Installment contracts receivable, net 286,053 246,966
Other current assets 61,516 46,185
-------- --------
Total current assets 360,643 316,601
Installment contracts receivable, net 273,421 239,177
Property and equipment, less
accumulated depreciation and
amortization of $435,860 and $382,897 558,277 473,111
Intangible assets, less accumulated
amortization of $72,071 and $64,554 153,113 137,156
Deferred income taxes 68,115 39,444
Deferred membership origination costs 114,129 106,195
Other assets 32,926 36,873
---------- ----------
$1,560,624 $1,348,557
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 54,819 $ 49,629
Income taxes payable 3,703 3,063
Deferred income taxes 49,217 40,933
Accrued liabilities 66,566 59,197
Current maturities of long-term debt 17,589 9,505
Deferred revenues 306,493 290,123
-------- --------
Total current liabilities 498,387 452,450
Long-term debt, less current maturities 674,349 593,903
Other liabilities 7,299 6,531
Deferred revenues 82,747 83,214
Stockholders' equity 297,842 212,459
---------- ----------
$1,560,624 $1,348,557
Note to the Condensed Consolidated Balance Sheet:
Installment contracts receivable
December 31
2000 1999
Current: ---------- ---------
Installment contracts receivable $ 403,777 $ 355,029
Unearned finance charges (49,601) (41,515)
Allowance for doubtful receivables and
cancellations (68,123) (66,548)
---------- ---------
$ 286,053 $ 246,966
========== =========
Long-term:
Installment contracts receivable $ 361,812 $ 319,034
Unearned finance charges (24,237) (20,367)
Allowance for doubtful
receivables and cancellations (64,154) (59,490)
---------- ---------
$ 273,421 $ 239,177
========== =========
A summary of the allowance for doubtful receivables and cancellations
activity is as follows:
Three months ended Year ended
December 31 December 31
2000 1999 2000 1999
--------- --------- --------- ---------
Balance at beginning of
period $ 154,043 $ 136,436 $ 126,038 $ 106,301
Contract cancellations and
write-offs of uncollectible
amounts, net of recoveries (92,165) (74,946) (330,837) (272,586)
Provision for cancellations
(classified as a direct
reduction of revenues) 35,797 32,331 178,347 152,696
Provision for doubtful
receivables 34,602 32,217 158,729 139,627
--------- --------- --------- ---------
Balance at end of period $ 132,277 $ 126,038 $ 132,277 $ 126,038
========= ========= ========= =========
BALLY TOTAL FITNESS HOLDING CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
Year ended December 31
2000 1999
Operating: -------- --------
Income before cumulative effect of a
change in accounting principle $ 78,610 $ 42,444
Adjustments to reconcile -
Depreciation and amortization,
including amortization included
in interest expense 69,381 56,175
Provision for doubtful
receivables 158,729 139,627
Change in operating assets
and liabilities (257,553) (199,164)
-------- --------
Cash provided by operating
activities 49,167 39,082
Investing:
Purchases and construction of
property and equipment (108,394) (119,089)
Acquisitions of businesses
and other (4,066) (18,921)
-------- --------
Cash used in investing
activities (112,460) (138,010)
Financing:
Debt transactions -
Net borrowings under revolving
credit agreement 69,500 75,000
Repayments of other long-term debt (18,661) (11,274)
Debt issuance and refinancing costs - (6,425)
-------- --------
Cash provided by debt transactions 50,839 57,301
Equity transactions -
Proceeds from issuance of common
stock under stock purchase
and options plans 2,078 2,252
Purchases of common stock
for treasury - (1,557)
-------- --------
Cash provided by financing
activities 52,917 57,996
-------- --------
Decrease in cash and
equivalents (10,376) (40,932)
Cash and equivalents, beginning
of period 23,450 64,382
-------- --------
Cash and equivalents, end of period $ 13,074 $ 23,450
======== ========
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