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Bally noteholders agree to Ch. 11 reorganization plan
Bally Total Fitness (Pink Sheets: BFTH) said it has received the required number of votes in favor of its Chapter 11 reorganization plan and will file a voluntary petition for a “prepackaged” reorganization under Chapter 11 of the U.S. Bankruptcy Code.
More than 99 percent of the holders of the company’s 10-1/2 percent senior notes due 2011 and 78 percent of the holders of its 9-7/8 percent senior subordinated notes due 2007 who cast ballots prior to expiration of the solicitation period on July 27 voted in favor of the plan. Bally said the votes in favor of the plan represent 99 percent of the outstanding principal amount of the senior notes and 99 percent of the outstanding principal amount of senior subordinated notes held by noteholders who cast ballots.
Bally had previously said that the plan will reduce the principal outstanding on the senior subordinated notes by $150 million, reduce cash interest expense by as much as $30 million per year, and provide the company with $90 million in capital through issuance of new senior subordinated notes.
The company, whose stock was recently delisted by the New York Stock Exchange, also said that it was unable to reach an agreement on an alternative restructuring plan that a group of shareholders had proposed earlier in July.
The shareholders — four private equity funds — have outlined a different restructuring plan for Bally and had agreed to complete due diligence by July 20, the company said earlier.
Bally said health club operations and memberships will remain unaffected through the process.
Cybex’s Q2 earnings drop 35 percent
Second-quarter earnings for Cybex International (Nasdaq: CYBI) fell 35 percent due to higher manufacturing and marketing costs.
The company said it earned $1.1 million, or $0.06 per share, for the three months ended June 30, down from $16.1 million, or $0.96 per share, in the same quarter last year.
Excluding tax-related benefits, last year the company earned $1.7 million, or $0.06 per share, in the second quarter.
Last year’s earnings included a one-time tax-related benefit of $14.4 million, or $0.86 per diluted share, and a lower tax rate that added another $663,000, or $0.04 per share, to second-quarter earnings, the company said.
Revenue increased 16 percent to $34.7 million from $30 million in 2006, the company said. The company said the increase was driven by strong sales of both its strength and cardio products.
Additionally, the company said it is working hard to fully leverage its new manufacturing facility in Owatonna, Minn. Its investment in the facility will increase aggregate manufacturing costs in the near term, and it expects to achieve significant cost savings in the future and enable the company to meet capacity issues associated with its growth plans.
Brunswick’s Life Fitness division posts 11 percent Q2 sales increase
Despite double-digit sales growth in commercial fitness equipment, Brunswick’s (NYSE: BC) second-quarter profit fell 29 percent as the recreational boating market continued to soften. Brunswick is the parent company for the Life Fitness division, which manufactures and sells Life Fitness, Hammer Strength and ParaBody fitness equipment.
Net income dropped to $59.3 million, or $0.65 per share, versus $83.2 million, or $0.87 per share, in the prior year. Income from continuing operations slipped to $58.9 million, or $0.65 per share, compared with $94.5 million, or $0.99 per share. The company said the year-ago period benefited by $0.06 per share for tax-related items.
Revenue for the quarter dipped 1 percent to $1.52 billion from $1.54 billion.
Fitness segment sales increased 11 percent in the quarter to $144.0 million, up from $129.7 million in the year-ago quarter. Operating earnings for the quarter totaled $7.4 million, flat from the second quarter of 2006, and operating margins decreased 60 basis points to 5.1 percent from 5.7 percent a year ago.
“Sales of commercial equipment were up double digits in both the United States and in non-U.S. markets,” Chairman and CEO Dustan McCoy said in a statement. “Operating earnings were affected by higher research, development and marketing spending to support a completely new line of cardiovascular products being launched in the second half of the year.”
Boat segment sales slid 5 percent to $732.8 million, while marine engine unit revenue edged up to $669.6 million from $668.5 million. Revenue for its bowling and billiards division declined 6 percent to $103.2 million.
Life Time Fitness Q2 profit grows 33 percent on new members
Life Time Fitness (NYSE:LTM) said its second quarter profit rose 33 percent as the number of members grew and membership fees climbed.
For the quarter ended June 30, net income jumped to $16.5 million, or $0.44 per share, from $12.4 million, or $0.33 per share in the prior year period. Revenue rose 32 percent to $162.1 million from $12.5 million in the second quarter of 2006.
Membership dues rose 32 percent while memberships climbed 25 percent year-over-year, the company said. In-center revenue and enrollment fees also grew during the quarter, it added.
The company raised its financial forecast for 2007, saying it expects earnings of $65.2 million to $66.2 million, or $1.74 to $1.76 per share. Previously, the company projected profit of $64.8 million to $65.8 million, or $1.72 to $1.75 per share, for the year.
Life Time expects revenue of $645 million to $655 million, up from its prior estimate of $640 million to $650 million.
Accell Group Q2 sales up 14 percent
Second-quarter sales for Accell Group N.V., parent of Accell Fitness, Bremshey and Tunturi, increased 14 percent to EUR 275 million (USD $377.3 million). The company said organic sales growth was 10 percent, from 7 percent in the first half of 2006.
Net profit from ordinary operations increased by 52 percent to EUR 16.1 million (USD $22.0 million). The company attributes the positive results to particularly good weather conditions and an improved product mix.
By geographic region, sales were: Netherlands, EUR 132.2 million (USD $181.4 million), up 48 percent; Germany, EUR 62.1 million (USD $85.2 million), up 22 percent; France, EUR 21.2 million (USD $29.0 million), up 8 percent; other EU countries, EUR 37.4 million (USD $51.3 million), up 14 percent; and other countries EUR 22.6 million (USD $31.0 million), up 8 percent.
Sales for the company’s fitness group increased by 3 percent to EUR 19.2 million (USD $26.3 million) in the first half of the year, from EUR 18.7 million in the same period of 2006. The company said the warm weather in the first six months of the year had an adverse effect on the sale of fitness equipment, which meant sales in Europe lagged expectations. Exports to countries outside the European Union showed an increase, it added.
It added that the fitness order portfolio for the second half of 2007 is well stocked. It said the second half of the year is more important to sales than the first half because the peak of deliveries to distributors is in the fourth quarter.
For the full year 2007, barring unforeseen circumstances, Accell Group expects an increase in profit from ordinary operations of approximately 35 percent.
(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 July 24.)
Shareholder voices concern over Everlast sale
Burlingame Asset Management said it sent a letter to Everlast Worldwide’s (Nasdaq: EVST) board citing concern over how Everlast was handling the proposed sale of the company. Burlingame controls 14.3 percent of Everlast shares.
Last month, Everlast terminated a merger pact with Hidary in favor of a $33 a share offer by Brand Holdings, a unit of Sports Direct International. Hidary had bid $31.25 a share.
Burlingame said it believes Hidary’s offer was superior because it contains an option for shareholders to roll over up to 50 percent of their interest into the surviving private entity.
GSI Commerce loss widens in Q2
GSI Commerce’s (Nasdaq: GSIC) second-quarter loss widened as its operating expenses rose nearly 48 percent.
For the quarter, GSI reported a loss of $5 million, or $0.11 per share, compared with a loss of $3.6 million, or $0.08 per share, in the same period last year.
On an adjusted basis, which excludes items like a stock-based compensation expense, GSI’s loss climbed to $3.5 million, or $0.08 per share, compared with a loss of $1.7 million, or $0.04 per share, in the year-ago quarter.
The company’s net revenue grew to $131.3 million, compared with $119.6 million in the year-ago quarter.
The company’s increased gross profit was offset by higher operating expenses, which rose to $74.5 million, from $50.4 million in the same quarter last year. The company’s sales and marketing expenses added $12.4 million year-over-year, to $41.3 million, while GSI’s product development expenses added $6.3 million to $15.1 million.
GSI said it has also raised its outlook for fiscal 2007 earnings and sales. On an adjusted basis, the company anticipates earnings of $15.4 million to $16.6 million, up from a prior forecast of $12 million to $15 million. Sales are now forecast between $721 million and $751 million, compared with an earlier range of $710 million to $760 million.
In its third quarter, GSI said it expects a loss of $7.5 million to $8.1 million, or $5.8 million to $6.4 million on an adjusted basis, on sales of between $133 million and $143 million.
Crocs’ Q2 revenue shoots up 162 percent, buys Bite Footwear
Crocs (Nasdaq: CROX) reported that its second-quarter net income more than tripled, boosted by results in the United States and Europe.
Quarterly net income rose to $48.5 million, or $0.58 per share, from $15.7 million, or $0.19 per share during the same period last year. Results are adjusted for a 2-for-1 stock split in June.
Revenue more than doubled to $224.3 million, from $85.6 million a year ago.
The company said footwear and accessories did well in the United States and Canada and that distribution increased in Europe.
The company raised its yearly outlook due to higher-than-expected orders.
Crocs said because orders are better than expected, it has raised its yearly guidance.
The company expects per share earnings between $1.89 and $1.93 on revenue between $810 million and $820 million. Before a 2-for-1 stock split in June, the company previously forecast earnings of $2.90 to $2.95 per share on sales of $670 million to $680 million.
For the third quarter, Crocs expects earnings between $0.58 per share and $0.62 per share on revenue of $240 million and $250 million.
Also, Crocs said it would introduce a Crocs line of apparel made partially of Croslite for men and children. It cautioned that the apparel line would not produce significant sales this year.
In other company news: Crocs said it has agreed to acquire Bite Footwear for $1.75 million, plus up to $1.75 million more if Bite makes some earnings targets over the next three years. Crocs said it plans to use its proprietary material, Croslite, in Bite’s products. Crocs also said Bite’s OrthoSport product line will add to its RX medical line.
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