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Bally delays filing annual report, board OKs bonus for CEO Toback
Bally Total Fitness (NYSE: BFT) missed the March 16 deadline to file its 2005 annual report and said it expects to have it in to the SEC in April. The delay of its annual 10-K report stems primarily from a delay in completing a 2004 audit and restatements of prior periods, the company explained.
The company also said its board authorized financial advisors — J.P. Morgan Securities and The Blackstone Group — to engage in talks with interested parties related to its exploration of strategic alternatives (click here to see Dec. 2, 2005, SNEWSÂ® story, “Bally looking to sell or merge amid flurry of restatement disclosures”).
Bally said that the delay in the filing of its Form 10-K is due principally to the delay until Nov. 30, 2005, in completing the audit of the 2004 financial statements and the restatements of prior periods. This contributed to difficulties in updating legacy systems and delays in the company completing the required testing and management’s assessment of the company’s internal controls as required by the Sarbanes-Oxley Act.
As a result of Bally’s efforts to restate its financial statements for 2000-2003 and file audited financial statements for 2002-2004 and its Form 10-K for the year ended Dec. 31, 2004, the company was unable to test and assess many of its internal controls during 2005. There have been no material changes in 2005 to the methodologies employed in connection with preparation of the 2002-2004 financial statements.
Bally’s Chairman and CEO Paul Toback said in a statement, “While we successfully completed the restatement of our financial results on Nov. 30, 2005, it was an enormous and demanding task, particularly given our legacy systems, that has impacted our ability to finalize financial information for 2005 and complete the necessary Sarbanes-Oxley Act testing in time. We are continuing to work diligently in an effort to complete the work as soon as possible.”
Bally said the delay would result in a covenant default under its public bond indentures, but it does not constitute a default event without notice and expiration of a 30-day cure period. It added that it would be in default under its senior credit facility if it does not deliver audited financial statements to certain lenders by March 31, and that it is in preliminary talks with its lenders to seek a waiver of related provisions.
In other news, despite his near overthrow during the company’s last annual shareholder meeting (click here to see Jan. 27, 2006, SNEWSÂ® story, “Bally shareholder meeting: Dissident hedge funds make strides, but Toback keeps job”), Bally’s board has approved a $700,000 bonus for Toback. A filing with the SEC said Toback will receive an additional $200,000 once the company files its annual report for the year.
And, although Bally has more than doubled its stock price since last summer, it has lost ground since the February truce between management and large shareholders. Since then, its shares are down about 11 percent, to $7.82. Marketocracy’s top-performing stock pickers last week bought up a new position in Bally, eager to cash in on a possible future acquisition.
Lastly, Schwab Equity reported on March 10 that it had raised its rating on Bally from “Hold” to “Outperform/Buy.” Schwab said the basis for its upgrade included efficient management of working capital, recent short seller sentiment change and recent price performance versus the market.
Nautilus to re-file 2005 results with SEC
In a filing with the U.S. Securities and Exchange Commission, Nautilus (NYSE: NLS) said it will adjust its preliminary fourth-quarter and full-year 2005 results reported in February, and will report two material weaknesses in its internal controls in its annual report to the SEC.
Nautilus added that for the fourth quarter it would report an increase in net sales of $700,000 and about $2 million in increased costs. As a result it will report full-year net sales of $631.3 million, net income of $23.0 million, and earnings of 68 cents per fully diluted share.
Separately, Nautilus was not among Banc of America Securities recent favored picks in the healthy lifestyle sector. Rather, it received a “neutral” rating with a $15 price target.
Sports Authority proposed sale OK’d by U.S. antitrust authorities
The Sports Authority (NYSE: TSA) is getting one step closer to being a private company as U.S. antitrust authorities said they had approved the proposed buyout of the retailer by an affiliate of private equity firm Leonard Green & Partners. Officials completed their investigation of the potentially $1.3 billion deal without taking action, the Federal Trade Commission said in a notice. The pending sale, which was announced in late January, comes nearly three years after Sports Authority merged with Gart Sports and follows a recent effort to improve profits and boost its stock price.
Gaiam Q4 and FY 05 revenue jumps
With a boost from its acquisition last year of GoodTimes Entertainment, Gaiam (Nasdaq: GAIA) reported huge revenue jumps for both the fourth quarter and for 2005.
For the fourth quarter, mind-body specialist Gaiam generated revenue of $64.3 million, an increase of 84.7 percent over the $34.8 million recorded in the same period last year. Gaiam said its strong revenue growth in the fourth quarter was due to a combination of strong internal growth and sales of media titles acquired from GoodTimes Entertainment in September 2005.
Net income for the fourth quarter was $1.5 million, or $0.07 per share, as compared to a net loss of $564,000, or minus 4 cents per share, for the fourth quarter of 2004. Included in the fourth quarter results was a one-time non-cash charge of $646,000, or $0.02 per share, related to Gaiam’s minority interest in LIME Media.
Internal revenue growth was 16.2 percent for the fourth quarter, 14.4 percent for the business segment and 17.4 percent in the direct to consumer segment. Revenues for Gaiam’s overall direct to consumer segment, including growth from acquisitions, increased 65.2 percent to $30.8 million in the fourth quarter. Gaiam’s business segment, including growth from acquisitions, increased 107.1 percent to $33.5 million in the fourth quarter.
For all of 2005, Gaiam reported net income of $1.3 million, or $0.08 per share, on revenue of $142.5 million. That compares with a net loss of $4.6 million, or minus $0.32 per share, on revenue of $96.7 million in 2004. Revenues for Gaiam’s overall direct to consumer segment, including growth from acquisitions, increased 38 percent to $72.3 million. Gaiam’s business segment, including growth from acquisitions, increased 58.6 percent to $70.2 million in 2005.
At the end of 2005, according to Nielsen’s VideoScan, Gaiam’s market share was ranked fifth in overall U.S. non-theatrical DVDs, up from 13 at the end of 2004. As of year-end, Gaiam’s market share in the fitness/wellness DVD category was approximately 30 percent, up from 15 percent last year. Including titles acquired in the GoodTimes transaction, Gaiam’s market share of the fitness/wellness DVD category for 2005 was over 40 percent.
Amer Sports holds annual general meeting
Amer Sports, parent of Precor, held its annual general meeting to discuss 2005’s profit and loss and appoint board members, among other things.
During the meeting, the profit and loss account and the balance sheet, as well as the consolidated profit and loss account and the consolidated balance sheet of Amer were approved. Also, the members of the board of directors and the company’s president were discharged from liability for the financial year 2005. A dividend of Euro 0.50 per share (USD $0.60) for the 2005 financial year was approved to shareholders of record on March 20, 2006, and be paid on March 27, 2006.
According to the nominations committee’s proposal the number of board members was confirmed to be six and that Ilkka Brotherus, Felix BjÃ¶rklund, Tuomo LÃ¤hdesmÃ¤ki, Timo Maasilta, Anssi Vanjoki and Roger Talermo (president and CEO) be re-elected as members of the board until the end of 2007.
In its first meeting immediately following the general meeting, the board elected Vanjoki as chairman and Brotherus as vice chairman. Vanjoki, BjÃ¶rklund and LÃ¤hdesmÃ¤ki were elected as members of the remuneration committee. Brotherus, Maasilta and BjÃ¶rklund were elected as members of the nomination committee. LÃ¤hdesmÃ¤ki, Brotherus and Maasilta were elected as members of the audit committee.
PricewaterhouseCoopers Oy was elected to act as an auditor of the company, with GÃ¶ran Lindell put in charge.
Sara Lee holds forecast for annual sales growth
With a range of brands that includes Champion, Sara Lee Corp. (NYSE: SLE) said it is holding its forecast for sales growth over the next four years amid plans to retool its business during an analyst conference in New York,
L.M. de Kool, Sara Lee’s executive vice president and chief financial and administrative officer, shared with the audience the company’s achievements against each of the transformation’s three pillars: organizing business operations around consumers, customers and geographic markets; achieving operational efficiency to fund growth; and focusing the portfolio.
“In just 13 months, we have made significant progress toward transforming Sara Lee into a world-class, integrated, growth-oriented consumer products company,” said de Kool. “We have the right people and the right plan in place to successfully achieve our goal of delivering long-term, consistent results for our shareholders.”
de Kool reiterated that the company anticipates sales growing at a compound annual rate of between 4 percent and 5 percent per year leading up to fiscal 2010, which is when the company expects to complete the transformation.
In addition, de Kool said Sara Lee still anticipates a 12 percent operating margin by fiscal 2010, driven by margin growth in all of the company’s business segments, especially North American retail meats, North American retail bakery and international bakery.
“During our transformation, Sara Lee will continue to return value to its shareholders by paying a healthy dividend, repurchasing $2 billion in stock and, over the next two years, repaying more than $1.5 billion of debt,” added de Kool. “And, we are confident in our ability to generate the cash needed to support those commitments.”
Life Time Fitness appoints new board member
Life Time Fitness (NYSE:LTM) said that Giles H. Bateman has been elected to its board of directors. Additionally, the board of directors expects to elect Bateman as a member of the Compensation Committee and Audit Committee during its 2006 annual meeting of shareholders.
Bateman was one of four co-founders of Price Club in 1976 and served as chief financial officer and vice chairman there until 1991. He also served as non-executive chairman of CompUSA from 1994 until he retired in 2000. Bateman serves as a director, and the chair of the audit committee, of WD-40 Company and Tuesday Morning Corp. He also serves as a director of four private companies.
Under Armour switches up senior management
Under Armour (Nasdaq: UARM) has promoted two key senior executives and added two new members to its management team.
Wayne Marino has been promoted to executive vice president and chief financial officer, overseeing the company’s sales operations and production planning units. He will continue to be responsible for the accounting and finance, information technology, distribution, facilities and human resources departments.
William Kraus has been named senior vice president of marketing, and will assume the senior leadership position for the product creation and merchandising functions and will also oversee the brand marketing and sports marketing teams.
Also, Richard Zielinski has joined Under Armour as vice president, technical services, overseeing fabric development, product development and quality assurance, and Tony O’Neill has joined the company as sales director, Europe.
Scott Gilbertson, senior vice president of merchandising, and Mark Mackay, vice president of international sales, have both left the company.
Sears Holdings doubles Q4 earnings
Despite a sales drop at its Sears department stores, Sears Holdings Corp. (Nasdaq: SHLD) more than doubled its fourth-quarter profit to $648 million, benefiting from continued cost-cutting and the addition of Sears’ results to Kmart’s, it said.
The better-than-expected results propelled its shares to their biggest single-day gain since the company was formed a year ago when Kmart bought Sears, Roebuck and Co. Sears Holdings’ stock jumped $15.02, or 13 percent, to close at $132.29 on the Nasdaq Stock Market.
Sales at Sears stores continued to decline sharply during the quarter, even as they gained slightly at Kmart for the first time since that retailer emerged from bankruptcy three years ago. Same-store sales dropped 12.2 percent at Sears stores, which the company attributed to its decision to forgo costly promotions and to weaker-than-usual results from apparel. Kmart stores registered a 0.9 percent comparable sales increase, its first since the second quarter of 2001.
Net income for the November-through-January period amounted to $4.03 a share, up from $309 million, or $3.09 a share, a year earlier. Fourth-quarter revenue rose to $16 billion from $6 billion.
Full-year net income fell to $858 million, or $5.59 a share, from $1.1 billion, or $11 a share, a year earlier. Revenue rose to $49.1 billion from $19.8 billion. The company’s report includes results from Sears only after the close of Kmart’s acquisition on March 24, 2005.
On a pro forma basis, which reports the results as if Kmart had purchased Sears at the beginning of fiscal 2004, Sears said its full-year net income fell to $789 million, or $4.85 per share, from $884 million, or $5.40 per share, in the previous year. Full-year pro-forma revenue slipped to $54.2 billion from $55.9 billion.
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