Fitness financials: Bally completes additional sale/leaseback transactions, reports annual meeting results, plus Nike, Cybex, Amer Sports, Finish Line, Wal-Mart
Fitness financials: Bally completes additional sale/leaseback transactions, reports annual meeting results. Nike Q2 surges on strong worldwide sales. Ryan Beck & Co. remains confident in Cybex. Amer Sports exercise of 2002 and 2003 warrants, offers 2004 stock options. Finish Line reports Q3 loss. Wal-Mart releases early Dec sales forecast.
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Bally completes additional sale/leaseback transactions, reports annual meeting results
On Dec 29, Bally Total Fitness (NYSE: BFT) said that it closed on two additional sale/leaseback transactions with respect to four properties, generating approximately $13.5 million in net proceeds. On Oct. 25, 2006, the company previously closed on a sale/leaseback transaction with respect to four properties, generating approximately $8.9 million in net proceeds.
“With the completion of these transactions, we satisfied the senior credit facility requirement that Bally raise at least $20 million in additional liquidity by year-end,” Don Kornstein, Bally’s interim chairman, said in a statement. “These transactions mark another significant milestone in Bally’s ongoing efforts to recapitalize, and we remain committed to further improving our financial structure in 2007.”
Prior to that, Bally reported the results of its annual meeting on Dec. 19 in Chicago. Stockholders re-elected Don Kornstein to serve as a Class I Director for a three-year term expiring in 2009. At the meeting, stockholders also voted to ratify the appointment of KPMG LLP as independent auditor for the company and to approve the 2007 Omnibus Equity Compensation Plan.
Separately, as required by New York Stock Exchange rules, Bally reported the grant of stock options under the company’s Inducement Plan adopted in 2005 to new employees Jerry Rezabek, AVP, accounting; and Stephanie Burnham, senior director, market research. Rezabek received 5,000 stock options and Burnham received 4,000 stock options. These inducement stock options vest in three equal annual installments on the anniversary of the grant date and are subject to forfeiture in the event of resignation or termination for cause prior to vesting.
Nike Q2 surges on strong worldwide sales
A tax break from the Dutch, surging demand in China and the enduring popularity of the Converse shoe brand now owned by Nike (NYSE:NKE) helped the company boost profit in its second quarter.
For the second quarter ended Nov. 26, 2006, Nike reported earnings of $325.6 million, or $1.28 per share, from $301.1 million, or $1.14 per share, during the same period last year.
During the quarter, Nike also finalized a new long-term tax agreement with the Dutch government, which included a retroactive tax benefit for fiscal 2006 and the first half of fiscal 2007, contributing $0.13 per diluted share to results for the quarter.
Sales increased 10 percent to $3.82 billion for the quarter, up from $3.47 billion in the same period last year. Changes in currency exchange rates increased revenue growth by 1 percentage point for the quarter. The company reported that revenue was up nearly 50 percent for Converse shoes, contributing to the company’s overall bottom line results.
During the second quarter, U.S. revenues increased 8 percent to $1.4 billion versus $1.3 billion for the second quarter of fiscal 2006. U.S. athletic footwear revenues increased 8 percent to $879.4 million; apparel revenues increased 10 percent to $475.4 million; and equipment revenues increased 2 percent to $63.2 million. U.S. pre-tax income increased slightly to $266.0 million from $265.7 million a year ago.
Second-quarter revenues for the European region grew 6 percent to $1.0 billion from $977.4 million for the same period last year. Changes in currency exchange rates increased revenue growth by 3 percentage points. Footwear revenues were up 2 percent to $541.4 million from $533.2 million last year. Apparel revenues increased 11 percent to $421.0 million and equipment revenues increased 14 percent to $73.8 million. Pre-tax income declined 18 percent to $158.8 million, reflecting lower gross margins and increased demand creation spending versus relatively low levels in the prior year.
The second-quarter revenues in the Asia Pacific region grew 15 percent to $578.2 million compared to $503.3 million a year ago. Changes in currency exchange rates did not have a significant impact on revenue growth, the company said. Footwear revenues were up 13 percent to $277.4 million, apparel revenues increased 17 percent to $250.6 million and equipment revenues grew 16 percent to $50.2 million. Pre-tax income increased 21 percent to $139.9 million.
Revenues in the Americas region increased 4 percent to $262.5 million, an improvement from $252.1 million in the second quarter of fiscal 2006. Currency exchange rates contributed 1 percentage point to this growth rate. Footwear revenues were up 4 percent to $185.1 million, apparel revenues increased 1 percent to $55.7 million and equipment revenues grew 17 percent to $21.7 million. Pre-tax income was up 4 percent to $59.8 million.
During the second quarter, the company purchased a total of 1,478,800 shares for approximately $126 million in conjunction with its four-year $3 billion share repurchase program approved by the board of directors in June 2006.
Ryan Beck & Co. remains confident in Cybex
After meeting with Cybex International (Nasdaq: CYBI) management in New York City at the end of December, Ryan Beck & Co. analyst Mark Rupe reported in a research note that “Cybex is outperforming the industry from a product standpoint and operationally.” Rupe said he continues to recommend Cybex shares, rating it as an “outperform,” and made no changes to his estimates.
Ryan Beck’s $8 price target is based on an EV/EBITDA multiple of 8x its 2007 EBITDA estimate of $16.6 million. The valuation reflects a multiple more in line with its peer group, which trades at 8.1x, the report said.
Amer Sports exercise of 2002 and 2003 warrants, offers 2004 stock options
A total of 49,170 Amer Sports’ shares have been subscribed for as a result of an exercise of its 2002 warrants and 1,494 shares as a result of an exercise of its 2003 warrants. The corresponding increase in the company’s share capital amounting to Euro 202,656 (USD $267,561) was registered Dec. 19, 2006.
As a result of this increase, Amer Sports’ share capital now totals Euro 286.7 million (USD $378.6 million) and the total number of shares in issue is 71,697,624. Shareholder rights commence from the registration date Dec. 19. The new shares were listed on the Helsinki Exchanges on Dec. 20.
Additionally, the stock options related to the year 2004 stock option arrangement for Amer Sports’ key staff will be subject to trading on the Helsinki Stock Exchange main list as of Jan. 2, 2007. The total number of stock options is 361,650. Each stock option entitles the holder of the stock option to subscribe for three shares of Amer Sports with an accounting par value of Euro 4 (USD $5.28) per share. The subscription price for stock options is Euro 13.53 (USD $17.86) per share. The share subscription period for stock options began on Jan. 1, 2007, and it will end on Dec. 31, 2009.
As a result of the subscriptions, the number of shares of Amer Sports can increase by a maximum of 1,084,950 new shares and the share capital can increase by a maximum of Euro 4.33 million (USD $5.72 million).
Amer Sports’ brands include Salomon, Wilson, Precor, Atomic and Suunto.
(Conversion of Euros into U.S. dollars is for information only, is not necessarily relative to earnings, and is based on the currency rate as of Dec. 20.)
Finish Line reports Q3 loss
Weighed down by expenses, Finish Line (Nasdaq: FINL) said it swung to a loss in the third quarter. For the quarter, the company reported a loss of $3 million, or $0.06 per share, compared with a profit of $845,000, or $0.02 per share during the same period last year.
Revenue increased 3 percent to $281.5 million from $274 million in the year-ago quarter. The cost of sales rose 4 percent to $203.6 million, and selling, general and administrative expenses rose 8 percent to $82.7 million year-over-year. Same-store sales deceased 3.3 percent, compared with a 3.6 percent drop last year.
Wal-Mart releases early Dec sales forecast
Wal-Mart Stores (NYSE: WMT) forecast December same-store sales ahead of prior expectations. It said it expects to post a 1.6 percent gain in sales at stores open longer than a year for the five-week period ended Dec. 29. Wal-Mart had previously targeted a December same-store sales gain of 1 percent.
The company — and most retailers — are scheduled to report December same-store sales results on Jan. 4.
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