Bally Total Fitness Reports Third Quarter 2002 Results; EPS of $.37 For Third Quarter Before Non-Recurring Charge; Net Revenue Growth of 16%.Business Editors CHICAGO--(BUSINESS WIRE)--Nov. 12, 2002 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 third quarter of 2002, with net revenues up 16% over the prior year period to $243.1 million. During the quarter, comparable club revenue grew 4%, driven primarily by increases in monthly membership dues and products and services. Net income before the effect of a special charge was $12.2 million, $.37 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, within the range estimated in the Company's business outlook announced October October: see month. 4, 2002. Pretax income pretax income Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. , inclusive of inclusive of prep. Taking into consideration or account; including. the special charge, was $9.5 million, down 20%. Assuming comparable tax rates for both the 2002 and 2001 periods, third quarter 2002 net income declined $1.8 million to $7.2 million. The income tax provisions are not comparable between periods due to an increase in the Company's effective tax rate during 2002, which resulted in a $2.3 million non-cash deferred income tax charge in the third quarter of 2002, compared to a $14.6 million non-cash deferred income tax benefit in the 2001 quarter. Net revenues increased 16% including 8% attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to Crunch (1) To process data. See number crunching. (2) To compress data. See data compression. 1. (jargon) crunch - To process, usually in a time-consuming or complicated way. Fitness acquired at the end of 2001. Cash flows from operations, on a comparable basis, were $18.7 million in the quarter versus $21.8 million in the prior year period. 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.
"Due to the challenging economic climate and falling consumer confidence levels, we continued to experience inconsistent Reciprocally contradictory or repugnant. Things are said to be inconsistent when they are contrary to each other to the extent that one implies the negation of the other. new membership sales during the quarter," commented 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 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 Holding Corporation. "Our immediate focus is to lower operating costs operating costs npl → gastos mpl operacionales , improve margins and decrease staffing levels primarily through normal employee 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: . Additionally, we will reduce 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. to a range of $50 to $55 million for 2003 from our previous target of $65 million to further our goal to be free cash flow positive in the upcoming year. In total, new membership unit originations rose 6% for the quarter, while the average price increased 2%, which on a combined basis, was slightly below our expectations. On the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. front, with the upcoming introduction of our new Weight Management Program, continued support of the popular Rapid Results promotion and the development of a new marketing campaign, we believe we can regain momentum as we enter our peak season commencing the first week of January January: see month. ." "Furthermore, in-club revenues from products and services continue to be strong, with revenue growth of 55% and EBITDA contribution of $20.7 million, up 49%," continued Hillman. "This strong trend, combined with continuing low membership attrition indicates that, in recent years, members have grown more satisfied with their 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. memberships." "Finally, while this has been a demanding year, our management team is committed to a strategy focused on growing revenues and operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: , spending less capital and reducing debt. Bally is the nation's leading provider of fitness services and products to a marketplace that continues to show growing demand. We are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about our market position and business prospects for the next several years," concluded Hillman. In the third quarter of 2002, the Company recorded a non-recurring charge of $6.5 million ($.15 per diluted share on an after tax basis) to settle a class action lawsuit class action lawsuit A lawsuit in which one party or a limited number of parties sue on behalf of a larger group to which the parties belong. For example, investors may bring a class action lawsuit against a brokerage firm that has actively promoted a tax arising in the early 1990's. In the prior year third quarter, the Company recorded a non-recurring charge of $6.7 million ($.21 per diluted share on an after tax basis) related to costs from disruptions and shutdowns of various club operations resulting from the September September: see month. 11th terrorist attacks and a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. inventory markdown Markdown The difference between the highest current bid price among broker-dealers in the market and the lower price that a dealer charges a customer. Notes: The broker offers a lower price to try stimulate trading in hopes that they will make the money back on the extra related to the Company's repositioning repositioning Laparoscopic surgery The changing of a Pt's position during a procedure to improve access or visualization of the operative field, which may be linked to complications, as it changes anatomic planes of operation. Cf Laparoscopic surgery. of in-club retail stores. In the third quarter of 2001, 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 Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, the Company reviewed the likelihood of realizing the future benefit of its unrecognized tax loss carryforwards tax loss carryforward See carryforward. . Based on consistent and growing profitability, the Company reduced its valuation allowance against tax loss carryforwards resulting in a federal tax benefit in the prior year quarter of $15 million. After the impact of the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. special charges in both years, and the tax benefit recorded in the prior year, net income per diluted share was $.22 during the third quarter of 2002 versus $.88 in the prior year quarter, and $1.29 for the first nine months of 2002 versus $2.17 in the prior year period. Comparison of the three months ended September 30, 2002 and 2001: Net revenue for the third quarter of 2002 increased by $33.3 million (16%), offset by a $35.4 million (20%) increase in operating costs and expenses, excluding special charges, and an increase in depreciation and amortization of $.4 million. Third quarter 2001 results included $1.9 million of goodwill amortization. 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. , excluding special charges, was $13.5 million, a decrease of $2.5 million (16%) from the prior year quarter. The EBITDA margin, before special charges, was 19% in the third quarter of 2002 compared to 23% in the 2001 period. This decrease is due, in part, to the initially lower margins attributable to the acquisition of 19 Crunch Fitness centers on December December: see month. 31, 2001, the growing proportion of clubs open less than three years which, due to deferred revenue accounting and their immature immature /im·ma·ture/ (im?ah-chldbomacr´) unripe or not fully developed. im·ma·ture adj. Not fully grown or developed. immature unripe or not fully developed. membership dues base, yield below-average margins compared to mature clubs, and the continuing trend of lower new membership originations at our mature clubs. Contribution from products and services increased to $20.7 million from $13.9 million in the 2001 quarter, a 49% increase (12% related to Crunch Fitness), with a margin of 36% in the 2002 quarter compared to 37% during the prior year period. The weighted-average number of fitness centers increased to 416 from 384 in the third quarter of 2001, an increase of 8%, including a 54% increase in the weighted-average number of centers operating under the Company's upscale brands from 37 to 57, largely resulting from the acquisition of Crunch Fitness. Net revenue from comparable fitness centers increased 4%, while total membership revenue increased 7% over the prior year period, including a 36% increase in dues revenue (18% related to Crunch Fitness) recognized during the period. The provision for doubtful 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 and cancellations, included as a direct reduction of membership revenue, was 41% of the gross financed portion of membership fee originations for both periods. Gross committed membership fees during the third quarter increased 8% compared to the 2001 quarter. The gross committed monthly membership fees originated during the third quarter of 2002 averaged $41 versus $39 in the year ago quarter, a 5% increase. This increase results primarily from higher monthly dues included in memberships originated at our Bally Total Fitness clubs and the addition of Crunch Fitness with its higher membership fee structure. The number of new members joining increased 6% during the third quarter of 2002 compared with the same quarter a year ago, with a 1% increase at our Bally Total Fitness clubs. The average committed duration of memberships originated during the third quarter of 2002 was 30.6 months versus 31.0 months in the prior year quarter, a 1% decrease. This decrease results primarily from the shorter commitment term of memberships offered at Crunch Fitness and the addition of five new clubs in states and provinces that limit contract duration to twelve months. Finance charges earned in excess of interest expense totaled $3.0 million in the third quarter of 2002, an increase of $.6 million over the prior year period resulting principally from lower interest rates on the Company's borrowings. Comparison of the nine months ended September 30, 2002 and 2001: Net revenue for the first nine months of 2002 increased by $89.7 million (14%), offset by a $90.9 million (17%) increase in operating costs and expenses, excluding special charges, and an increase in depreciation and amortization of $1.0 million. Included in the prior year period results was $5.7 million of goodwill amortization. Operating income, excluding special charges, was $47.5 million, a decrease of $2.2 million from the prior year period. The EBITDA margin, before special charges, was 20% in the first nine months of 2002 compared to 23% in the 2001 period. This decrease is due, in part, to the initially lower margins attributable to the Crunch Fitness centers, the growing proportion of clubs open less than three years which, due to deferred revenue accounting and their immature membership dues base, yield below-average margins compared to mature clubs, and the continuing trend of lower new membership originations at our mature clubs. Contribution from products and services increased to $59.7 million from $41.1 million in the 2001 period, a 45% increase (12% related to Crunch Fitness), with a margin of 37% in both periods. The weighted-average number of fitness centers increased to 412 from 385 in the first nine months of 2001, an increase of 7%, including a 56% increase in the weighted-average number of centers operating under the Company's upscale brands from 36 to 56, largely resulting from the acquisition of Crunch Fitness. Net revenue from comparable fitness centers increased 3%, while total membership revenue increased 7% over the prior year period, including a 30% increase in dues revenue (18% related to Crunch Fitness) recognized during the period. The provision for doubtful receivables and cancellations, included as a direct reduction of membership revenue, was 41% of the gross financed portion of membership fee originations for both periods. Gross committed membership fees increased 6% compared to the 2001 period. The gross committed monthly membership fees originated during the first nine months of 2002 averaged $43 versus $40 in the year ago period, an 8% increase. This increase results primarily from higher monthly dues included in memberships originated at our Bally Total Fitness clubs and the addition of Crunch Fitness with its higher membership fee structure. The number of new members joining increased 3% during the first nine months of 2002 compared with the same period a year ago, with a 2% reduction at our Bally Total Fitness clubs. The average committed duration of memberships originated during the first nine months of 2002 was 30.5 months versus 31.3 months in the prior year period, a 3% decrease. This decrease results primarily from the shorter committed term of memberships offered at Crunch Fitness and the addition of five new clubs in states and provinces that limit contract duration to twelve months. Finance charges earned in excess of interest expense totaled $10.0 million in the first nine months of 2002, an increase of $3.1 million over the prior year period resulting principally from lower interest rates on the Company's borrowings. At September 30, 2002, for accounting purposes, we had approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $69 million of unrecognized federal net operating loss carryforwards Net operating loss carryforwards Application of losses to offset earnings in future years. . Separately, our alternative minimum tax ("AMT See vPro. ") net operating loss carryforwards have been substantially recognized. Therefore, having fully recognized AMT net operating loss carryforwards for reporting purposes, our federal income tax rate increased to 20% during the second quarter of 2002. The 20% rate will remain in effect until such time as all of our AMT credits are fully utilized, which is not currently expected before 2004. For federal income tax payment purposes, the Company has available net operating loss carryforwards exceeding $380 million and AMT net operating loss carryforwards in excess of $224 million. Therefore, the Company currently does not expect to make any significant federal tax payments earlier than 2004. At such time, the Company will be required to pay taxes at the 20% AMT rate for periods currently estimated to extend beyond 2005, including those periods benefited by AMT credits. For accounting purposes, the 2002 federal tax provision consists entirely of non-cash deferred income tax charges. Cash Flows: Cash flows from operating activities were $35.1 million in the first nine months of 2002, compared to $118.0 million in the 2001 period which included $79.5 million of accelerated collections from the sale of 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. During the first and third quarters of 2001, the Company sold a portion of its installment contracts receivable portfolio to a major financial institution at net book value, with combined proceeds of $105 million. Excluding the impact of the sales of receivables in 2001, and net of the change in dues prepayments Prepayments Payments made in excess of scheduled mortgage principal repayments. during the periods, cash flows from operating activities were $18.7 million in third quarter 2002, compared to $21.8 million in the prior year quarter, and $73.9 million in the first nine months of 2002, versus $47.6 million in 2001, a $26.3 million increase. The following table sets forth cash flows from operating activities on a comparable basis to exclude the impact of last year's sales of receivables, to add back actual cash collections on the sold portfolios, and to reflect the impact of changes in dues prepayments during each of the periods (in thousands):
Three months ended Nine months ended
September 30 September 30
--------------------- ---------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
Cash flows from operating
activities, as reported $ 8,146 $ 64,821 $ 35,063 $ 118,001
Acceleration of
collections through
bulk sale of
installment contracts
receivable (60,000) (105,000)
Collections on
installment contracts
receivable sold 11,719 12,499 42,819 25,532
Change in dues
prepayments (1,206) 4,438 (3,968) 9,095
---------- ---------- ---------- ----------
Cash flows from operating
activities on a
comparable basis $ 18,659 $ 21,758 $ 73,914 $ 47,628
========== ========== ========== ==========
Capital expenditures totaled $62.0 million for property and equipment and $11.5 million for purchases of real estate in the first nine months of 2002. Property and equipment expenditures are expected to total approximately $16 million during the fourth quarter of 2002. The Company does not expect additional real estate purchases in 2002. As of September 30, 2002, the Company had drawn $53.9 million on its $90 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 and only nationwide, commercial operator of fitness centers, with approximately four million members and nearly 430 facilities located in 29 states, 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 , Asia and the Caribbean under the Bally Total Fitness(R), Crunch Fitness(SM), Gorilla gorilla, an ape, Gorilla gorilla, native to the lowland and mountain forests of western and central equatorial Africa. It is the largest of the apes, the males reaching a height of 5 to 6 ft (150–190 cm) with a 9-ft (144–cm) arm spread. Sports(SM), Pinnacle pinnacle (pĭn`ĭkəl), minor architectural motif of vertical tapering shape, usually crowning a pier, buttress, or gable. Although sometimes it appears in Renaissance design, as in the Certosa di Pavia, it is almost exclusively a medieval Fitness(R), Bally Sports Clubs A sports club, athletics club or sports association is an eclectic institution oriented to multiple sports, which fields many teams and has varied sports departments in several sports, working under the same umbrella organization. (R) and Sports Clubs of Canada(R) brands. With more than 150 million annual visits to its clubs, Bally offers a unique platform for distribution of a wide range of products and services targeted to active, fitness-conscious adult consumers. The Company will be holding a conference call to further discuss its results and respond to questions on the morning of November November: see month. 12, 2002 at 11:00 am Eastern Standard Time. Those interested may listen to this conference call via the Company's web site at www.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; 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)
(Unaudited)
Three months ended
September 30
----------------------------
2002 2001
------------ -----------
Net revenues:
Membership revenue $ 180,480 $ 168,665
Products and services 57,398 37,105
Miscellaneous revenue 5,228 4,081
------------ -----------
243,106 209,851
Operating costs and expenses:
Fitness center operations 140,946 121,992
Products and services 36,681 23,241
Member processing and collection centers 11,686 10,718
Advertising 12,221 11,512
General and administrative 8,443 7,151
Special charges 6,500 6,700
Depreciation and amortization 19,587 19,155
------------ -----------
236,064 200,469
------------ -----------
Operating income 7,042 9,382
Finance charges earned 16,815 16,986
Interest expense (13,796) (14,606)
Other, net (556) 161
------------ -----------
2,463 2,541
------------ -----------
Income before income taxes 9,505 11,923
Income tax benefit (provision) (2,281) 14,600
------------ -----------
Net income $ 7,224 $ 26,523
============ ===========
Basic earnings per common share $ .22 $ .92
============ ===========
Average common shares outstanding 32,379,261 28,703,778
Diluted earnings per common share $ .22 $ .88
============ ===========
Average diluted common shares outstanding
(includes 625,467 and 1,568,790 common
equivalent shares in 2002 and 2001,
respectively) 33,004,728 30,272,568
BALLY TOTAL FITNESS HOLDING CORPORATION
CONSOLIDATED INCOME SUMMARY
(In thousands, except share data)
(Unaudited)
Nine months ended
September 30
----------------------------
2002 2001
------------ -----------
Net revenues:
Membership revenue $ 551,544 $ 516,070
Products and services 163,133 111,105
Miscellaneous revenue 15,256 13,088
------------ -----------
729,933 640,263
Operating costs and expenses:
Fitness center operations 418,848 368,549
Products and services 103,466 69,998
Member processing and collection centers 33,679 31,697
Advertising 45,143 43,929
General and administrative 25,304 21,350
Special charges 6,500 6,700
Depreciation and amortization 55,995 55,036
------------ -----------
688,935 597,259
------------ -----------
Operating income 40,998 43,004
Finance charges earned 51,937 52,140
Interest expense (41,986) (45,239)
Other, net (393) 645
------------ -----------
9,558 7,546
------------ -----------
Income before income taxes 50,556 50,550
Income tax benefit (provision) (7,855) 13,850
------------ -----------
Net income $ 42,701 $ 64,400
============ ===========
Basic earnings per common share $ 1.33 $ 2.35
============ ===========
Average common shares outstanding 32,069,163 27,394,485
Diluted earnings per common share $ 1.29 $ 2.17
============ ===========
Average diluted common shares outstanding
(includes 1,021,453 and 2,306,202 common
equivalent shares in 2002 and 2001,
respectively) 33,090,616 29,700,687
BALLY TOTAL FITNESS HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
(Unaudited)
September 30 December 31
2002 2001
------------- ------------
ASSETS
Current assets:
Cash and equivalents $ 13,335 $ 9,310
Installment contracts receivable, net 336,984 284,611
Other current assets 81,719 68,899
------------- ------------
Total current assets 432,038 362,820
Installment contracts receivable, net 288,767 273,607
Property and equipment, less accumulated
depreciation and amortization
of $526,161 and $490,116 663,114 628,634
Intangible assets, less accumulated
amortization of $80,015 and $80,256 253,092 237,037
Deferred income taxes 68,938 76,104
Deferred membership origination costs 119,764 112,959
Other assets 32,402 25,729
------------- ------------
$ 1,858,115 $1,716,890
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 63,735 $ 50,471
Income taxes payable 240 1,974
Deferred income taxes 31,157 32,346
Accrued liabilities 84,297 75,309
Current maturities of long-term debt 29,048 25,302
Deferred revenues 296,305 294,930
------------- ------------
Total current liabilities 504,782 480,332
Long-term debt, less current maturities 702,018 639,869
Other liabilities 12,658 12,555
Deferred revenues 70,960 71,400
Stockholders' equity 567,697 512,734
------------- ------------
$ 1,858,115 $1,716,890
============= ============
BALLY TOTAL FITNESS HOLDING CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
Nine months ended
September 30
-----------------------------
2002 2001
------------- ------------
Operating:
Net income $ 42,701 $ 64,400
Adjustments to reconcile -
Depreciation and amortization, including
amortization included in interest
expense 58,895 57,800
Change in operating assets and
liabilities (66,533) (4,199)
------------- ------------
Cash provided by operating activities 35,063 118,001
Investing:
Purchases and construction of
property and equipment (61,991) (67,101)
Purchases of real estate (11,510)
Acquisitions of businesses and other (6,217) (2,570)
------------- ------------
Cash used in investing activities (79,718) (69,671)
Financing:
Debt transactions -
Net borrowings (repayments) under
revolving credit agreement 35,900 (55,000)
Net borrowings (repayments) of
other long-term debt 9,643 (60,686)
Debt issuance and refinancing costs (270)
------------- ------------
Cash provided by (used in) debt
transactions 45,273 (115,686)
Equity transactions -
Proceeds from sale of common stock 53,827
Proceeds from exercise of warrants 2,513 11,609
Proceeds from issuance of common
stock under stock purchase and
options plans 1,754 2,706
Purchases of common stock for treasury (860)
------------- ------------
Cash provided by (used in) financing
transactions 48,680 (47,544)
------------- ------------
Increase in cash and equivalents 4,025 786
Cash and equivalents, beginning of period 9,310 13,074
------------- ------------
Cash and equivalents, end of period $ 13,335 $ 13,860
============= ============
Changes in operating assets and
liabilities:
(Increase) decrease in installment
contracts receivable $ (67,488) $ 23,834
Increase in other current and other
assets (12,857) (3,969)
Increase in deferred membership
origination costs (6,805) (1,796)
Increase (decrease) in accounts
payable 13,264 (1,226)
Increase (decrease) in income taxes
payable and deferred income taxes 7,043 (15,319)
Increase in accrued and other liabilities 8,175 5,640
Decrease in deferred revenues (7,865) (11,363)
------------- ------------
Change in operating assets and
liabilities $ (66,533) $ (4,199)
============= ============
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(in thousands)(unaudited):
Installment contracts receivable
September 30 December 31
2002 2001
------------- ------------
Current:
Installment contracts receivable $ 443,189 $ 397,180
Unearned finance charges (42,264) (44,898)
Allowance for doubtful receivables and
cancellations (63,941) (67,671)
------------- ------------
$ 336,984 $ 284,611
============= ============
Long-term:
Installment contracts receivable $381,415 $ 358,115
Unearned finance charges (22,878) (21,675)
Allowance for doubtful receivables and
cancellations (69,770) (62,833)
------------ ------------
$ 288,767 $ 273,607
============ ============
A summary of the allowance for doubtful receivables and cancellations
activity is as follows:
Three months ended Nine months ended
September 30 September 30
---------------------- --------------------
2002 2001 2002 2001
---------- ---------- --------- ----------
Balance at beginning of
period $ 130,860 $ 144,912 $ 130,504 $ 132,277
Contract cancellations and
write-offs of
uncollectible amounts,
net of recoveries (81,268) (78,307) (258,448) (244,890)
Provision for cancellations
and doubtful receivables 84,119 84,237 261,655 263,455
----------- --------- --------- -----------
Balance at end of period $ 133,711 $ 150,842 $ 133,711 $ 150,842
=========== ========= ========= ==========
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(in thousands) (unaudited) (continued):
Products and services
Three months ended Nine months ended
September 30 September 30
--------------------- ---------------------
2002 2001 2002 2001
---------- ---------- --------- ----------
Net revenues:
Retail and nutritional
supplements--
Membership programs $ 7,305 $ 7,357 $ 22,815 $ 23,768
Direct sales 13,791 11,777 42,024 33,101
Personal training--
Membership programs 13,044 7,227 34,533 19,309
Direct sales 21,389 9,498 58,785 29,864
Financial services 1,869 1,246 4,976 5,063
---------- ---------- --------- ---------
57,398 37,105 163,133 111,105
Operating costs and
expenses:
Retail and nutritional
supplements 16,221 13,241 48,266 39,815
Personal training 20,460 10,000 55,200 30,183
---------- --------- --------- ---------
36,681 23,241 103,466 69,998
---------- --------- --------- ---------
Contribution margin $ 20,717 $ 13,864 $ 59,667 $ 41,107
========== ========= ========= =========
|
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion