Bally Total Fitness Finishes Strong in 1999; Net Income for 4th Quarter Rises to $.53 Per Diluted Share Compared with $.19 in Prior Year.Business Editors CHICAGO--(BUSINESS WIRE)--Feb. 9, 2000 Net Income for the Year Increases to $1.56 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 Compared with $.51 in Prior Year; Cash Flow from Operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses Grows More than $70 Million for the Year 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 fourth quarter and year ended December December: see month. 31, 1999 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 quarter of $.53, compared to $.19 for the prior year's quarter. 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 quarter was $28.8 million - up 87% over the prior year period while operating income before depreciation and amortization (&uot;EBITDA&uot;) improved 59% to $43.3 million. Strong growth in operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. continued with cash flow from operations growing $17.6 million versus the prior year's quarter. For the full year, diluted earnings per share, before the cumulative effect of a change in accounting principle, was $1.56 compared to $.51 per share in 1998. Operating income for 1999 was $93.3 million, an improvement of 77% over the prior year, and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become grew 45% to $146.2 million. Cash flow from operations increased $71.1 million over 1998. During the first quarter of 1999, the Company, as required by AICPA AICPA See American Institute of Certified Public Accountants (AICPA). Statement of Position 98-5, Reporting Costs of Start-up Start-up The earliest stage of a new business venture. Activities, wrote off the net book value of start-up costs, reducing basic and diluted earnings per share $.01. 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. , President and Chief Executive Officer of Bally Total Fitness, noted, &uot;We are very pleased with our quarterly and full-year results and, in particular, that we have continued to deliver on our plans for improving earnings and cash flows. Since 1996, when the Company lost more than $2.00 per share, we have executed executed 1) adj. to have been completed. (Example: "it is an executed contract") 2) v. to have completed or fully performed. (Example: "he executed all the promises made in the contract") 3) v. against our business plan with earnings per share now at $1.56.&uot; Hillman continued, &uot;During 1999 we continued investing to grow our business -- opening 22 new fitness centers, upgrading and expanding dozens of our existing clubs and acquiring 24 additional fitness centers, ending the year with 363 clubs in total. Also, during the fourth quarter we launched our redesigned website and have begun a concerted effort to develop strategic web-based partnerships, which we expect to become more important in the years to come. These investments, when coupled with our expanding offerings of products and services, provide us with a dynamic foundation for continued growth and profit improvement.&uot; Looking ahead, Hillman concluded, &uot;As we move into the year 2000, Bally Total Fitness is a far different company than it was just three years ago. Today, we are developing a wide-range of new products, services and strategic relationships with top-flight corporate partners that want to reach our valuable customer base. In doing so, we are serving our customers better and delivering more value to Bally bally Adjective, adv Brit old-fashioned, slang extreme or extremely: a bally nuisance, he's too bally charming for his own good Adj. 1. members than ever before. With plans to build and open up to 25 new fitness centers this year in addition to continuing our selective acquisition of existing clubs, we are committed to building upon our formula for success for the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. .&uot; Comparison of the years ended December 31, 1999 and 1998 Operating income for 1999 was $93.3 million compared to $52.8 million in 1998. The increase of $40.5 million (77%) was due to a $116.8 million increase in net revenue (16%), offset, in part, by an increase in operating costs operating costs npl → gastos mpl operacionales and expenses of $71.6 million (11%) and a $4.7 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 17% from 14% for 1998. Operating income from products and services, net of related development, preopening and start-up costs, increased to $21.0 million from $10.1 million in the prior year with an operating margin of 34% in 1999 compared to 31% in 1998. The weighted-average number of fitness centers during 1999 increased to 343 from 320 during 1998, a 7% increase, including an increase in the weighted-average number of centers operating under the Company's four upscale brands from 11 to 22. Net revenue from comparable fitness centers increased 10%. New membership units sold increased 5% over the prior year while the weighted-average selling price of membership contracts sold increased 6%. Total individual memberships grew 2%, in line with expectations. As a result, membership fees originated increased $44.7 million (10%). Dues collected increased $37.8 million (18%) from 1998, 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 $9.3 million (19%) in 1999 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 years. Deferral deferral - Waiting for quiet on the Ethernet. accounting reduced earnings by $12.9 million for 1999 compared to 1998, reflecting the combined impact of a decrease to revenues and a decrease to the expense offset. Comparison of the three months ended December 31, 1999 and 1998 Operating income for the fourth quarter of 1999 was $28.8 million compared to $15.4 million in 1998. This increase of $13.4 million (87%) was due to a $36.0 million (19%) increase in net revenue, partially offset by a $19.8 million (12%) increase in operating costs and expenses and an increase in depreciation and amortization of $2.8 million. The operating margin before depreciation and amortization increased to 19% from 15% in the prior year period. Operating income from products and services, net of related development, preopening and start-up costs, increased to $6.5 million from $2.2 million in the 1998 quarter with an operating margin of 32% in the 1999 quarter compared to 26% during the prior year period. The weighted-average number of fitness centers increased to 360 from 323 in the fourth quarter of 1998, an increase of 11%, including an increase in the weighted-average number of centers operating under the Company's four upscale brands from 14 to 32. Net revenue from comparable fitness centers increased 12%. 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 7%. As a result, membership fees originated increased $8.4 million (9%). Dues collected increased $14.1 million (26%) from the 1998 quarter, reflecting continued improvements in member retention and pricing strategies and an increase attributable to fitness centers operating under the Company's four upscale brands. Finance charges earned during the fourth quarter of 1999 increased $1.6 million (12%) compared to the 1998 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. The net effect of the deferral accounting for revenues and expenses between the two periods was comparable. Cash Flow Cash flow from operating activities for 1999 was a positive $39.1 million compared to a use of $32.0 million in 1998. The $71.1 million improvement ($17.6 million improvement for the fourth quarter) 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. This growth in collections was partially offset by growth in inventories of $6.6 million ($3.0 million during the fourth quarter of 1999) 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 the more than doubling of retail outlets retail outlet n → punto de venta retail outlet n → point m de vente retail outlet retail n → to a total of 211 stores by the end of 1999. Net installment contracts receivable grew $64.0 million during 1999. Excluding this growth in receivables, cash provided by operating activities totaled $103.1 million for 1999, a $56.6 million improvement over 1998. During 1999, the Company expanded its capacity to attract new members and better serve existing members by investing $77 million to construct new clubs (22 were opened during 1999), acquire 24 additional clubs, and upgrade and expand over 60 existing clubs. In addition, the Company is in the later stages of its general refurbishment re·fur·bish tr.v. re·fur·bished, re·fur·bish·ing, re·fur·bish·es To make clean, bright, or fresh again; renovate. re·fur program begun two years ago, which has included the updating of equipment and decor in the majority of its fitness centers. During 1999, approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $19 million was spent to support this program. An additional $2 million was spent to add additional retail outlets to the fitness centers and $10 million was spent to acquire real estate including existing leaseholds and their property. Finally, approximately $24 million was spent during 1999 for normal capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. maintenance. As of December 31, 1999, the Company's $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 was unused except for outstanding letters of credit totaling $6.0 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 370 facilities located in 27 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; failure of entities that provide goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax. to us to be year 2000 compliant a. 1. (Computers) having dates fully and properly represented, and not susceptible to failure due to the year 2000 bug. 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 OPERATING SUMMARY
(In thousands, except share data)
Year ended December 31
-------------------------
Net revenues: 1999 1998
Membership revenues - --------- ---------
Initial membership fees
on financed memberships originated $465,443 $414,190
Initial membership fees on
paid-in-full
memberships originated 23,721 30,318
Dues collected 242,952 205,104
Changes in deferred revenues (4,078) 3,122
-------- ---------
728,038 652,734
Finance charges earned 59,449 50,160
Products and services 62,616 32,474
Miscellaneous revenue 10,995 8,976
-------- ---------
861,098 744,344
Operating costs and expenses:
Fitness center operations 423,001 401,282
Products and services 41,570 22,409
Member processing collection centers 41,213 41,024
Advertising 47,766 45,035
General and administrative 27,169 26,097
Provision for doubtful receivables 139,627 118,604
Change in deferred membership
origination costs (5,444) (11,164)
-------- ---------
714,902 643,287
-------- ---------
Operating income before depreciation and
amortization (&uot;EBITDA&uot;) 146,196 101,057
Depreciation and amortization 52,857 48,255
-------- ---------
Operating income 93,339 52,802
Interest income 2,369 2,514
Interest expense (52,394) (41,494)
-------- ---------
Income before income taxes and
cumulative effect of a change in
accounting principle 43,314 13,822
Income tax provision (870) (525)
-------- ---------
Income before cumulative effect of a
change in accounting principle 42,444 13,297
Cumulative effect of a change in
accounting principle, net of income tax (262) -
-------- ---------
Net income $42,182 $13,297
======== =========
Basic earnings per common share:
Income before cumulative effect of a
change in accounting principle $1.81 $.59
Cumulative effect of a change in
accounting principle (.01) -
-------- ---------
Net income per common share $1.80 $.59
======== =========
Average common shares outstanding 23,382,288 22,424,172
Diluted earnings per common share:
Income before cumulative effect of a
change in accounting principle $1.56 $.51
Cumulative effect of a change in
accounting principle (.01) -
-------- ---------
Net income per common share - assuming
dilution $1.55 $.51
======== =========
Average diluted common shares
outstanding (includes 3,853,543 and
3,747,232 common equivalent shares in
1999 and 1998, respectively) 27,235,831 26,171,404
-0-
BALLY TOTAL FITNESS HOLDING CORPORATION
CONSOLIDATED OPERATING SUMMARY
(In thousands, except share data)
(Unaudited)
Three months ended December 31
------------------------------
1999 1998
------------- ------------
Net revenues:
Membership revenues -
Initial membership fees on financed
memberships originated $ 101,054 $ 92,527
Initial membership fees on
paid-in-full
memberships originated 5,800 5,931
Dues collected 68,959 54,886
Changes in deferred revenues 9,301 9,619
-------- ---------
185,114 162,963
Finance charges earned 14,903 13,256
Products and services 20,298 8,723
Miscellaneous revenue 3,814 3,219
-------- ---------
224,129 188,161
Operating costs and expenses:
Fitness center operations 104,884 100,696
Products and services 13,819 6,476
Member processing collection centers 10,903 10,409
Advertising 10,240 9,191
General and administrative 7,303 6,698
Provision for doubtful receivables 32,217 26,049
Change in deferred membership
origination costs 1,428 1,449
-------- ---------
180,794 160,968
-------- ---------
Operating income before depreciation and
amortization (&uot;EBITDA&uot;) 43,335 27,193
Depreciation and amortization 14,581 11,763
-------- ---------
Operating income 28,754 15,430
Interest income 540 301
Interest expense (14,589) (10,771)
-------- ---------
Income before income taxes 14,705 4,960
Income tax provision (290) -
-------- ---------
Net income $ 14,415 $ 4,960
======== =========
Basic earnings per common share $ .61 $ .21
======== =========
Average common shares outstanding 23,578,748 23,155,209
Diluted earnings per common share $ .53 $ .19
======== =========
Average diluted common shares
outstanding (includes 3,869,650 and
3,409,016 common equivalent shares in
1999 and 1998, respectively) 27,448,398 26,564,225
-0-
BALLY TOTAL FITNESS HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
December 31
---------------------------
1999 1998
--------- ---------
ASSETS
Current assets:
Cash and equivalents $ 23,450 $ 64,382
Installment contracts receivable, net 241,450 199,979
Other current assets 46,185 34,212
--------- ---------
Total current assets 311,085 298,573
Installment contracts receivable, net 244,693 222,147
Property and equipment, less accumulated
depreciation
and amortization of $382,897 and
$340,702 473,111 361,300
Intangible assets, less accumulated
amortization
of $64,554 and $58,844 137,156 101,815
Deferred income taxes 39,444 17,430
Deferred membership origination costs 106,195 97,901
Other assets 36,873 29,679
--------- ---------
$ 1,348,557 $ 1,128,845
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 49,629 $ 40,957
Income taxes payable 3,063 2,608
Deferred income taxes 40,933 18,919
Accrued liabilities 59,197 48,596
Current maturities of long-term debt 9,505 5,799
Deferred revenues 290,123 282,806
--------- ---------
Total current liabilities 452,450 399,685
Long-term debt, less current maturities 593,903 482,199
Other liabilities 6,531 6,226
Deferred revenues 83,214 78,952
Stockholders' equity 212,459 161,783
--------- ---------
$ 1,348,557 1,128,845
=========== ===========
-0-
Note to the Condensed Consolidated Balance Sheet:
Installment contracts receivable
December 31
--------------------
1999 1998
--------- ---------
Current:
Installment contracts receivable $ 355,029 $ 294,880
Unearned finance charges (41,515) (35,792)
Allowance for doubtful receivables
and cancellations (72,064) (59,109)
--------- ---------
$ 241,450 $ 199,979
========= =========
Long-term:
Installment contracts receivable $ 319,034 $ 287,443
Unearned finance charges (20,367) (18,104)
Allowance for doubtful receivables
and cancellations (53,974) (47,192)
--------- ---------
$ 244,693 $ 222,147
========= =========
A summary of the allowance for doubtful receivables and cancellations
activity is as follows:
Three months ended Year ended
December 31 December 31
-------------------- --------------------
1999 1998 1999 1998
--------- --------- --------- ---------
Balance at beginning
of period $ 136,436 $ 116,572 $ 106,301 $ 80,531
Contract cancellations and
write-offs of uncollectible
amounts, net of recoveries (74,946) (66,161) (272,586) (227,424)
Provision for cancellations
(classified as a direct
reduction of revenues) 32,331 29,841 152,696 134,590
Provision for doubtful
receivables 32,217 26,049 139,627 118,604
--------- --------- --------- ---------
Balance at end of period $ 126,038 $ 106,301 $ 126,038 $ 106,301
========= ========= ========= =========
-0-
BALLY TOTAL FITNESS HOLDING CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
Year ended December 31
---------------------------
1999 1998
----------- ------------
Operating:
Income before cumulative effect of
a change in accounting principle $ 42,444 $ 13,297
Adjustments to reconcile -
Depreciation and amortization,
including amortization included
in interest expense 56,175 50,585
Provision for doubtful receivables 139,627 118,604
Change in operating assets
and liabilities (199,164) (214,486)
--------- ---------
Cash provided by (used in)
operating activities 39,082 (32,000)
Investing:
Purchases and construction of
property and equipment (119,089) (76,432)
Acquisitions of businesses and other (13,241) (2,521)
Other (5,680) -
--------- --------
Cash used in investing activities (138,010) (78,953)
Financing:
Debt transactions -
Proceeds from long-term borrowings 75,000 73,501
Redemption of 13% Senior
Subordinated Notes due 2003 - (24,021)
Repayments of other long-term debt (11,274) (6,850)
Debt issuance and refinancing costs (6,425) (3,362)
--------- ---------
Cash provided by debt transactions 57,301 39,268
Equity transactions -
Proceeds from issuance of common
stock through public offering - 82,744
Proceeds from issuance of common
stock under stock purchase and
options plans 2,252 1,172
Purchases of common stock for treasury (1,557) (9,528)
--------- ---------
Cash provided by financing activities 57,996 113,656
--------- ---------
(Decrease) Increase in cash and equivalents (40,932) 2,703
Cash and equivalents, beginning of period 64,382 61,679
--------- ---------
Cash and equivalents, end of period $ 23,450 $ 64,382
========= =========
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion