Fitness financials: Bally files FY '05, Q1 '06 reports with SEC, plus Gaiam, Stride Rite, Life Time Fitness, Wal-Mart, Costco

Bally files FY ’05, Q1 ’06 reports with SEC
Slightly ahead of schedule, Bally Total Fitness (NYSE: BFT) filed its 2005 annual report and its quarterly report for the first quarter 2006 with the SEC. Additionally, it reported fourth-quarter financial results for 2005, which had a narrower loss compared to the previous year.

The company, which had delayed the filings as it restated results for 2000 through 2003, reported a net loss of $15.6 million, or $0.45 per share, for the fourth quarter of 2005, compared with a net loss of $17 million, or $0.52 per share, a year earlier. Fourth-quarter net revenue of $258.3 million was even with the fourth quarter in 2004.

For FY 2005, net revenues for the year increased to a record $1.07 billion, up 2.2 percent, from $1.04 billion in 2004. It had a net loss of $9.6 million, or $0.28 per share, versus a net loss of $30.3 million, or $0.92 per share, in 2004.

Operating income for FY 2005 increased 98.0 percent to $75.7 million from $38.2 million in 2004, driven by $23.0 million in revenue growth and a $14.4 million, or 1.4 percent, reduction in operating costs and expenses.

Bally said it uses EBITDA plus non-cash impairment charges as a measure of operating performance. This performance measurement for 2005 was $149.6 million, up 21.4 percent, or $26.4 million, compared to $123.2 million in 2004.

For the first quarter of 2006, Bally’s net income rose to $32.7 million, or $0.87 a share, from $4.6 million, or $0.14 a share, a year earlier, reflecting a $38.4 million gain on the sale of its Crunch Fitness unit. Net revenues for the first quarter increased 1 percent to $255.2 million from $253.8 million in first quarter of 2005.

Commenting on the financial results in a statement, Paul Toback, chairman and CEO, said, “Our new business model drives growth through stable membership sales, improved retention, higher average monthly revenue per member and lower costs. We are also seeing that members joining stay longer, as short term attrition has already improved by over 25 percent from 23 percent at the beginning of 2005 to 16.9 percent today. This combination of improved retention and built in price increases will drive future average yield per member.”

The company said it continues, along with financial advisers J.P. Morgan and Blackstone Group, to consider its strategic options, including a possible sale.

In other news: Pardus Capital Management raised its stake in Bally, according to a filing with the SEC. Pardus acquired 275,000 shares in the open market, raising its stake to nearly 5.9 million shares, according to the filing. Bally had about 34.1 million shares outstanding as of March 31.

Gaiam added to Russell 3000 Index
Gaiam (Nasdaq: GAIA) has been added to the Russell 3000 Index. The Index, which represents approximately 98 percent of the investable U.S. equity market, measures the performance of the 3,000 largest U.S. companies based on total market capitalization.

At the close of trading on June 30, when the reconstitution of the Russell indexes was finalized, Gaiam’s market capitalization was approximately $294 million. Index membership is effective July 3, and will remain in place for one year.

The company noted in a statement that being added to the Russell 3000 Index should increase its visibility in the investment community and expand its investor base.

Stride Rite Q2 profit up 44 percent
Second-quarter profit for Stride Rite (NYSE: SRR) , parent of Saucony and Hind, jumped 44 percent, as the company paid a lower tax rate and higher sales of its kids’ and running shoes offset weakness in other brands.

The company’s net income for the quarter increased to $16.9 million, or $0.45 per share, from $11.8 million, or $0.32 per share, in the previous year. Sales grew 22 percent to $194 million from $159.6 million. Excluding acquisition and related integration costs, the company said it earned $0.46 per share in the quarter.

During the quarter, a tax audit’s favorable outcome meant the company paid a tax rate of 19.3 percent, compared with 36.1 percent in the previous year’s second quarter. The company expects to pay an annual rate of about 32 percent for the full year.

The company noted that the Saucony brand was one of two divisions that performed especially well for the quarter.

Life Time Fitness OKs employee stock purchase plan
After shareholder approval at its annual meeting, Life Time Fitness (NYSE:LTM) implemented an employee stock purchase plan (ESPP) at the beginning of July. In connection with the program, Life Time Fitness’ board of directors has authorized purchases by the company of up to 500,000 shares of its common stock from time to time in the open market or otherwise for the primary purpose of offsetting the dilutive effect of shares issued pursuant to the ESPP. As of March 31, there were approximately 37 million shares of the company’s common stock outstanding.

June same-store sales for Wal-Mart and Costco
For June, Wal-Mart Store (NYSE: WMT) reported a same-store sales increase of 1.2 percent, below the estimates of analysts, who predicted a gain of 2 percent. Wal-Mart said it expects second-quarter earnings results will be in line with its forecasts.

Costco (Nasdaq: COST) reported same-store sales increase of 6 percent, below the 6.9 percent estimate.

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