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Fitness financials: Bonus time for Bally senior management, plus Nike, Sears/Kmart, Brunswick, NRF, Health Fitness Corp., Cybex

Bally gives all senior management bonuses, Nike has runaway Q3, Sears stockholders vote on Kmart merger payoff, Brunswick backs '05 guidance, NRF says February retail sales up, Health Fitness Corp. realigns operating units, and Cybex CEO on Amex top-performer webcast.

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Bonus time for Bally senior management – Toback gets $400,000
Bally Total Fitness Holding Corp. (NYSE: BFT) announced that the compensation committee of its board of directors has adopted an “inducement plan” as a means of providing equity compensation to induce individuals to become employed by the company. The plan was adopted solely because the company’s 1996 Long-Term Incentive Plan may not have sufficient shares available to provide necessary equity inducement for new employees, the company said in a statement. The inducement plan provides for the issuance of up to 600,000 shares of the company’s common stock.

But looking for ways to attract new employees isn’t keeping the struggling company from rewarding its current leadership with cash and those potentially insufficient shares.

In a form 8-K filed with the Securities Exchange Commission (SEC) on March 11, the company said the compensation committee of the board of directors of Bally Total Fitness Holding Corp. approved compensation arrangements applicable to the company’s senior officers, including the CEO and the next four most highly compensated executive officers as of the end of fiscal 2004.

Factoring in company EBITDA, as well as individual and company performance, Bally said bonuses would be distributed to the CEO and senior vice presidents based on “levels consistent with prior years at 70 percent of base salary for the CEO and 50 percent of base salary for senior vice presidents.” This formulation amounted to more than $1 million in bonuses paid to five members of the senior management team.

Paul Toback, CEO, was given a $400,000 bonus. The middle of last year, he was given a raise from $475,000 to $575,000. Given $175,000 bonuses were: William G. Fanelli, senior VP, acting CFO; John H. Wildman, senior VP, COO; and Harold Morgan, senior VP, chief administrative officer. Cary A. Gaan, senior VP, special counsel to the president, rounded out the 2004 bonuses at $100,000.

Also effective March 8, the compensation committee awarded the executives stock options and restricted stock awards under the company’s 1996 Long-Term Incentive Plan. The exercise price of the stock options was set at a 20 percent premium to the closing price of the company’s common stock on the New York Stock Exchange on March 7, 2005 or $4.21 per share. With total options and restricted stock awards numbering 640,000 the total value split among the five executives comes to close to $2.7 million.

Nike has runaway Q3
With in its highest ever Q3 revenues and growing profit margins, Nike Inc. (NYSE: NKE) had plenty to crow about when it reported revenues and earnings for the quarter ended Feb. 28, 2005. According to the company, Q3 revenues increased 14 percent to $3.3 billion, versus $2.9 billion for the same period last year. Third quarter net income totaled $273.4 million, or $1.01 per diluted share, compared to $200.3 million, or $0.74 per diluted share in the prior year.

“Today’s results mark another terrific quarter for Nike Inc.,” said William D. Perez, Nike Inc. president and CEO. “This was our sixth consecutive quarter of double-digit revenue and earnings per share growth. These consistently strong results were driven by excellent performance across geographies and brands, coupled with favorable trends in foreign exchange rates. In addition to another strong quarter for our U.S. business, emerging international markets such as China, Russia and Brazil produced significant growth.”

The success should continue for the next quarter for the company as it reported that future orders to be delivered from March 2005 through July 2005, totaling $5.2 billion, 9.6 percent higher than such orders reported for the same period last year.

Sears stockholders vote on merger payoff
Kmart Holding Corp. (Nasdaq: KMRT) and Sears, Roebuck and Co. (NYSE: S) confirmed last week that the deadline for Sears shareholders of record to make merger consideration elections in connection with the proposed merger of Kmart and Sears is March 24, 5 p.m., EST.

Sears shareholders may elect cash, shares of common stock of Sears Holdings Corporation, the new holding company created to facilitate the merger, or a combination of the two for their Sears shares. The companies said that all elections are subject to the proration procedures provided in the merger agreement designed to ensure that in the aggregate 55 percent of Sears shares will be converted into the right to receive 0.5 of a share of Sears Holdings common stock per share and 45 percent of
Sears shares will be converted into the right to receive a cash consideration of $50.00 per share, without interest, upon the merger’s completion.

Kmart and Sears said they expect to publicly announce the preliminary proration calculation on March 28, 2005. The final election results, including the consideration to be received by Sears shareholders who elect cash and who select stock, will be announced as “soon as practicable thereafter,” according to the companies.

Brunswick backs ’05 guidance
Brunswick Corp. (NYSE: BC) backed its 2005 profit outlook and said it plans to boost growth through acquisitions. The company, parent of Life Fitness, said it continues to expect year-end earnings of $3.15 to $3.30 per share — analysts are forecasting $3.28 per share. In 2004, Brunswick earned $2.77 per share. The company said its outlook assumes that the marine industry will grow by 5 percent to 6 percent, driving sales up 11 percent to 12 percent. Brunswick added that it expects acquisitions and cost reductions to add to growth during the year.

February retail sales up 4.4 percent, says NRF
The National Retail Federation (NRF) reported that retail industry sales for February (which exclude automobiles, gas stations, and restaurants) rose a solid 4.4 percent over last year and increased 0.3 percent seasonally adjusted over January. It noted that the increase was impressive, considering it was being compared with sales from last February, which were up an impressive 10.6 percent. “February’s sales were especially robust given the strong comparisons from a year ago and the persistent dreary weather last month,” said NRF Chief Economist Rosalind Wells. Also, February retail sales released by the U.S. Commerce Department show that total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) increased 0.5 percent seasonally adjusted from January and increased 5.6 percent unadjusted year-over-year.

Health Fitness realigns operating units
Health Fitness Corp. (HFIT.OB) plans to align its health and fitness management business into two operating units — Fitness Management Services and Health Management Services. With its integration of the Johnson & Johnson Health and Fitness Division acquired last year complete, the company said it is aligning the organization to best serve its clients in both fitness and health management. Health Fitness’ corporate fitness management business, which now manages worksite, community, and university fitness centers in the United States and Canada, will continue to be led by Jim Narum and Dave Hurt. They will work closely with Katherine Hamlin who has been named national vice president of account services for health management, and will assume responsibility for worksite health management locations.

Cybex CEO on Amex webcast
Cybex International Inc. (AMEX: CYB), participated in the online 2004 Top
Performers of the Amex investor conference held March 16. The webcast event, sponsored by the American Stock Exchange, featured 15 of the top performing Amex-listed companies for 2004, according to the company. Cybex Chairman and CEO John Aglialoro presented the company’s investment story and shared the company’s success in 2004 to leading analysts and institutional Â

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