Bally Total Fitness Reports Second Quarter 2001 Results With Net Income Up 21% Over Prior Year Quarter.Business Editors CHICAGO--(BUSINESS WIRE)--Aug. 7, 2001 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. for Second Quarter $.63 Versus $.58 a Year Ago 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 reported its financial results for the second quarter of 2001, with net income of $19.2 million, up 21% over the prior year quarter, and 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 $.63. Net revenues increased 11% to $281.3 million, while 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 up 8% over the prior year to $34.1 million. 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.
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, President and 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. of Bally Total Fitness, stated "Our second quarter results are further demonstration of the strength of our business model. We have grown revenues and profits despite challenging economic conditions. Our balance sheet has continued to improve, attrition Attrition The reduction in staff and employees in a company through normal means, such as retirement and resignation. This is natural in any business and industry. Notes: has remained at its low level and our portfolio of membership 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 has remained strong. We have adjusted our advertising strategy to reach new segments of prospective customers more effectively as retail conditions change. The progress made to improve the quality of our members' experience has proven invaluable to the resiliency The ability to recover from a failure. The term may be applied to hardware, software or data. of our business. While the increase in our total number of clubs has been relatively low over the past four quarters, only 3%, we have continued to have success with new club openings and look forward to 12 more new clubs before year end." Mr. Hillman continued, "We are increasing strategic activity to expand distribution of our private-label products and services to members and non-members, alike. Continued improvement to these offerings resulted in a 40% increase in products and services revenues over last year's second quarter. In the coming months, we plan to invest in expanded distribution of many products." He concluded, "All-in-all, 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. has faired pretty well in the current retail environment and we think the business is positioned to take advantage of its proven strengths in the months to come." Comparison of the three months ended June June: see month. 30, 2001 and 2000 Operating income for the second quarter of 2001 was $34.1 million compared to $31.7 million in 2000. This increase of $2.4 million (8%) was due to a $28.5 million (11%) increase in net revenue, partially offset by a $23.8 million (12%) increase in operating costs operating costs npl → gastos mpl operacionales and expenses and an increase in depreciation and amortization of $2.3 million. The operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: before depreciation and amortization was 19% in each period. The 2001 margin was negatively impacted by 2% as a result of higher energy costs and the lower margins associated with a greater number of new clubs opened over the previous 12 months. Operating income from products and services increased to $13.9 million from $9.1 million in the 2000 quarter with an operating margin of 37% in the 2001 quarter compared to 34% during the prior year period. The weighted-average number of fitness centers increased to 386 from 375 in the second quarter of 2000, an increase of 3%, including an increase in the weighted-average number of centers operating under the Company's four upscale brands from 34 to 37. Net revenue from comparable fitness centers increased 8%. New membership units sold increased by 2% over the prior year period while the weighted-average selling price of membership contracts sold was generally unchanged compared to last year as a result of the continued availability of a selection of shorter-term and seasonal membership programs designed to attract incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. members with lower average initiation initiation, the transition and attendant ceremonies, such as ordeals and rites, involved in passing from one state or status to another, often from childhood to adulthood. It was among the most important social institutions of early humans. fees than the Company's full membership plans. As a result, membership fees originated increased by $2.9 million (2%). Dues collected increased by $1.1 million despite the unusually high prepayments Prepayments Payments made in excess of scheduled mortgage principal repayments. as reported during last year's second quarter, reflecting continued improvements in member retention and pricing trends. Total dues revenue included in income, net of changes in prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. dues, increased by $6.9 million (10%)
as a result of a $5.8 million increase in deferred dues revenue, related
to the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. prepayments, realized over the prior year quarter. Finance charges earned during the second quarter of 2001 were up 1% compared to the 2000 quarter reflecting continued growth in member receivables, notwithstanding the impact of the March 2001 sale of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 8% of the Company's receivable portfolio to a major financial institution. 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. However, the provision for cancellations for the 2001 quarter was 19% compared to 21% for the second quarter of 2000 reflecting the continued improvement in the experience of actual cancellations from sales during the June 2001 quarter. Notwithstanding this improvement, which may have residual Residual See:Residual value positive effects, the provision for doubtful receivables for the second quarter of 2001 was increased to maintain a combined provision rate of 41%. The Company believes it is prudent to measure sustained collection improvements over a longer period before changing the overall provision rate. Excluding the aforementioned decrease in prepaid dues, deferral deferral - Waiting for quiet on the Ethernet. accounting increased earnings by $5.5 million for 2001 compared to an increase in earnings of $.6 million in 2000. Comparison of the six months ended June 30, 2001 and 2000 Operating income for the first six months of 2001 was $68.8 million compared to $61.5 million in 2000. This increase of $7.3 million (12%) was due to a $59.0 million (12%) increase in net revenue, partially offset by a $46.8 million (11%) increase in operating costs and expenses and an increase in depreciation and amortization of $4.9 million. The operating margin before depreciation and amortization increased to 19% from 18% in the prior year period. The 2001 margin was negatively impacted by 2% as a result of higher energy costs and the lower margins associated with a greater number of new clubs opened over the previous 12 months. Operating income from products and services increased to $27.2 million from $18.3 million in the first six months of 2000, with an operating margin of 37% in 2001 compared to 34% during the prior year period. The weighted-average number of fitness centers increased to 385 from 371 in the first six months of 2000, an increase of 4%, including an increase in the weighted-average number of centers operating under the Company's four upscale brands from 34 to 36. Net revenue from comparable fitness centers increased 9%. New membership units sold increased by 1% over the prior year period while the weighted-average selling price of membership contracts sold increased 1% as a result of the continued availability of a selection of shorter-term and seasonal membership programs. As a result, membership fees originated increased $5.5 million (2%). Dues collected increased $6.2 million (4%) from the 2000 period despite the unusually high prepayments as reported during last year's period, reflecting continued improvements in member retention and pricing trends. Total dues revenue included in income, net of changes in prepaid dues, increased by $11.8 million (9%) in part as a result of a $5.6 million increase in deferred dues revenue, related to the aforementioned prepayments, realized over the prior year period. Finance charges earned during the first six months of 2001 increased $1.7 million (5%) compared to the 2000 period reflecting continued growth in member receivables, notwithstanding the impact of the March 2001 sale of approximately 8% of the Company's receivable portfolio to a financial institution. 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. However, the provision for cancellations for the six months ended June 30, 2001 was 19% compared to 21% for the six months ended June 30, 2000 reflecting the significantly improved experience of actual cancellations from sales during the 2001 period. Notwithstanding this improvement, which may have residual positive effects, the provision for doubtful receivables for the six months ended June 30, 2001 was increased to maintain a combined provision rate of 41%. Excluding the aforementioned decrease in prepaid dues, deferral accounting increased earnings by $1.9 million for 2001 compared to a reduction in earnings of $12.9 million in 2000. Cash Flow Cash flow from operating activities was $53.2 million for the first six months in 2001 compared to $22.8 million in the 2000 period. The net effect of the sale of receivables in March 2001 was to increase cash flow from operating activities during the first six months of 2001 by $31.8 million. Exclusive of the receivables sale offset by the aforementioned change in dues prepayments of $5.6 million, cash flow from operating activities increased by 18%. Despite the $31.8 million acceleration acceleration, change in the velocity of a body with respect to time. Since velocity is a vector quantity, involving both magnitude and direction, acceleration is also a vector. In order to produce an acceleration, a force must be applied to the body. of receivables collections, as of June 30, 2001, net 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 grew $9.4 million in the preceding six months and $25.2 million in the preceding twelve months. As of June 30, 2001, the Company had drawn $8.0 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 $5.6 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 nearly 400 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 125 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. The Company will be holding a conference call to discuss its results further and respond to questions on the morning of August 7, 2001 at 11:00 am Eastern Time. Those interested may listen to this conference call via vcall.com, streetfusion.com or the Company's website at ballyfitness.com. 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; the impact of our debt structure; risks related to acquisitions; 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)
(Unaudited)
Three months ended June 30
--------------------------
2001 2000
---- ----
Net revenues:
Membership revenues -
Initial membership
fees on financed
memberships originated $ 137,381 $ 134,621
Initial membership fees
on paid-in-full
memberships originated 5,793 5,624
Dues collected 72,808 71,752
Change in
deferred revenues 5,652 (5,882)
------------ ------------
221,634 206,115
Finance charges earned 17,323 17,103
Products and services 37,564 26,765
Miscellaneous revenue 4,761 2,750
------------ ------------
281,282 252,733
Operating costs and expenses:
Fitness center operations 125,577 117,845
Products and services 23,636 17,665
Member processing and
collection centers 10,556 11,053
Advertising 16,558 14,077
General and administrative 6,956 6,674
Provision for
doubtful receivables 47,409 40,352
Change in deferred
membership origination costs (1,468) (2,279)
------------ ------------
229,224 205,387
------------ ------------
Operating income before
depreciation and
amortization ("EBITDA") 52,058 47,346
Depreciation and amortization 17,969 15,662
------------ ------------
Operating income 34,089 31,684
Interest income 218 445
Interest expense (14,675) (16,009)
------------ ------------
Income before income taxes 19,632 16,120
Income tax provision (400) (250)
------------ ------------
Net income $ 19,232 $ 15,870
============ ============
Basic earnings per
common share $ .67 $ .67
============ ============
Average common
shares outstanding 28,620,179 23,816,907
Diluted earnings per
common share $ .63 $ .58
============ ============
Average diluted common
shares outstanding
(includes 1,961,111 and
3,738,812 common
equivalent shares in
2001 and 2000, respectively) 30,581,290 27,555,719
BALLY TOTAL FITNESS HOLDING CORPORATION
CONSOLIDATED INCOME SUMMARY
(In thousands, except share data)
(Unaudited)
Six months ended June 30
------------------------
2001 2000
--------- ---------
Net revenues:
Membership revenues -
Initial membership fees
on financed
memberships originated $ 283,582 $ 279,083
Initial membership fees
on paid-in-full
memberships originated 13,355 12,341
Dues collected 145,989 139,746
Change in deferred revenues 531 (22,183)
------------ -------------
443,457 408,987
Finance charges earned 35,154 33,477
Products and services 74,000 53,380
Miscellaneous revenue 9,007 6,774
------------ -------------
561,618 502,618
Operating costs and expenses:
Fitness center operations 249,994 232,683
Products and services 46,757 35,034
Member processing and
collection centers 21,160 21,881
Advertising 32,417 28,910
General and administrative 14,199 13,819
Provision for
doubtful receivables 96,052 83,759
Change in deferred membership
origination costs (3,618) (5,912)
------------ ------------
456,961 410,174
------------ ------------
Operating income before
depreciation and
amortization ("EBITDA") 104,657 92,444
Depreciation and amortization 35,881 30,947
------------ ------------
Operating income 68,776 61,497
Interest income 484 935
Interest expense (30,633) (30,820)
------------ ------------
Income before income taxes 38,627 31,612
Income tax provision (750) (475)
------------ ------------
Net income $ 37,877 $ 31,137
============ ============
Basic earnings per common share $ 1.42 $ 1.31
============ ============
Average common shares outstanding 26,728,988 23,693,687
Diluted earnings per
common share $ 1.28 $ 1.13
============ ============
Average diluted common
shares outstanding (includes
2,941,009 and 3,777,161 common
equivalent shares in 2001
and 2000, respectively) 29,669,997 27,470,848
BALLY TOTAL FITNESS HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
June 30 December 31
2001 2000
-------- --------
(In thousands)
ASSETS
Current assets:
Cash and equivalents $ 12,137 $ 13,074
Installment contracts
receivable, net 293,347 286,053
Other current assets 66,160 61,516
-------- --------
Total current assets 371,644 360,643
Installment contracts
receivable, net 275,549 273,421
Property and equipment,
less accumulated depreciation
and amortization of $460,600
and $435,860 588,417 558,277
Intangible assets, less
accumulated amortization
of $76,130 and $72,071 151,081 153,113
Deferred income taxes 58,904 68,115
Deferred membership
origination costs 117,747 114,129
Other assets 35,316 32,926
-------- --------
$ 1,598,658 $ 1,560,624
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 53,158 $ 54,819
Income taxes payable 3,375 3,703
Deferred income taxes 39,263 49,217
Accrued liabilities 70,007 66,566
Current maturities of
long-term debt 20,192 17,589
Deferred revenues 305,489 306,493
---------- ----------
Total current liabilities 491,484 498,387
Long-term debt, less
current maturities 613,949 674,349
Other liabilities 6,841 7,299
Deferred revenues 83,220 82,747
Stockholders' equity 403,164 297,842
---------- ----------
$1,598,658 $1,560,624
========== ==========
BALLY TOTAL FITNESS HOLDING CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Six months ended June 30
------------------------
2001 2000
---- ----
(In thousands)
Operating:
Net income $ 37,877 $ 31,137
Adjustments to reconcile -
Depreciation and
amortization, including
amortization included
in interest expense 37,753 33,122
Provision for
doubtful receivables 96,052 83,759
Change in operating
assets and liabilities (118,502) (125,264)
--------- ---------
Cash provided by
operating activities 53,180 22,754
Investing:
Purchases and construction
of property and equipment (47,966) (57,245)
Acquisitions of
businesses and other (2,379) (3,327)
--------- ---------
Cash used in
investing activities (50,345) (60,572)
Financing:
Debt transactions -
Net borrowings (repayments)
under revolving
credit agreement (61,500) 36,500
Net repayments of other
long-term debt (9,956) (9,379)
--------- ---------
Cash provided by (used in)
debt transactions (71,456) 27,121
Equity transactions -
Proceeds from issuance
of common stock
through public offering 53,827
Proceeds from exercise
of warrants 11,609
Proceeds from issuance of
common stock under stock
purchase and options plans 2,248 1,555
--------- ---------
Cash provided by (used in)
financing activities (3,772) 28,676
--------- ---------
Decrease in cash and
equivalents (937) (9,142)
Cash and equivalents,
beginning of period 13,074 23,450
--------- ---------
Cash and equivalents,
end of period $ 12,137 $ 14,308
========= =========
Note to the Condensed Consolidated Balance Sheet:
Installment contracts receivable
June 30 December 31
2001 2000
---- ----
Current:
Installment contracts
receivable $ 413,802 $ 403,777
Unearned finance charges (51,395) (49,601)
Allowance for doubtful
receivables and cancellations (69,060) (68,123)
--------- ---------
$ 293,347 $ 286,053
========= =========
Long-term:
Installment contracts
receivable $ 376,516 $ 361,812
Unearned finance charges (25,115) (24,237)
Allowance for doubtful
receivables and cancellations (75,852) (64,154)
--------- ---------
$ 275,549 $ 273,421
========== =========
A summary of the allowance for doubtful receivables and
cancellations activity is as follows:
Three months Six months
ended June 30 ended June 30
------------- -------------
2001 2000 2001 2000
---- ---- ---- ----
Balance at beginning
of period $ 135,616 $ 143,236 $ 132,277 $ 126,038
Contract cancellations
and write-offs of
uncollectible amounts,
net of recoveries (78,947) (77,983) (166,583) (154,187)
Provision for
cancellations
(classified as a direct
reduction of revenues) 40,834 46,352 83,166 96,347
Provision for doubtful
receivables 47,409 40,352 96,052 83,759
--------- --------- --------- ---------
Balance at end of period $ 144,912 $ 151,957 $ 144,912 $ 151,957
========= ========= ========= =========
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion