Fitness financials: Fitness segment only bright spot in Brunswick's Q4, FY06, plus Life Time Fitness, Town Sports, adidas
The fitness segment was the only bright spot in Brunswick's Q4 and FY06, Life Time Fitness made a mortgage financing deal, Town Sports offered a buyback of senior notes, and adidas appointed a new North America chief.
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Fitness segment only bright spot in Brunswick’s Q4, FY06
Brunswick Corp. (NYSE: BC) swung to a loss in the fourth quarter on asset impairment charges and a hefty loss from the sale of a unit, as revenue dipped 1 percent. Additionally, a decline in its marine division was partially offset by 9 percent growth from the company’s fitness equipment business.
For the fourth quarter, the company reported net sales from continuing operations of $1.370 billion, down from $1.381 billion a year earlier. Excluding incremental sales from acquired businesses, sales declined 2 percent in the quarter.
Net earnings from continuing operations were $44.2 million, or $0.47 per diluted share, down from $83.7 million, or $0.85 per diluted share, for the fourth quarter of 2005. Net earnings per share for the fourth quarter of 2006 included tax-related benefits of $0.25 per diluted share, as well as a restructuring charge equivalent to $0.14 per diluted share.
Operating earnings for the fourth quarter of 2006 totaled $30.5 million compared to $99.6 million in the year-ago quarter, and operating margins were 2.2 percent compared with 7.2 percent in the year-ago period. Contributing to their decline was an $18.9 million pre-tax restructuring charge.
In April 2006, the company sold its Brunswick New Technologies business unit, which is being accounted for as a discontinued operation. For the fourth quarter of 2006, the company reported a net loss from discontinued operations of $97.4 million, or $1.04 per diluted share, compared with net earnings of $4.6 million, or $0.05 per diluted share, for the fourth quarter of 2005.
Fourth-quarter sales for the Life Fitness division, which manufactures and sells Life Fitness, Hammer Strength and ParaBody fitness equipment, totaled $192.8 million, up 9 percent from $176.1 million in the year-ago quarter. Operating earnings decreased 5 percent to $28.9 million from $30.4 million, and operating margins were 15.0 percent, down from 17.3 percent in the fourth quarter of 2005.
For FY 2006, Brunswick had net sales from continuing operations of $5.665 billion, up 1 percent from $5.606 billion in 2005. Excluding the benefit of acquisitions, sales were down 3 percent. The company reported a net loss from discontinued operations of $129.3 million, or $1.37 per diluted share, compared with net earnings of $14.3 million, or $0.14 per diluted share for 2005. The net loss for 2006 includes an $85.6 million, or $0.91 per diluted share, of asset impairment charges.
For the year, the Life Fitness division reported net sales of $593.1 million, up 8 percent from $551.4 million in 2005 for the full year. Operating earnings in 2006 increased 3 percent to $57.8 million from $56.1 million, and operating margins were 9.7 percent compared with 10.2 percent a year ago.
“Sales momentum grew during the year, particularly in the consumer segment where new products such as the popular elliptical line and the T5 and T7 series of treadmills fueled growth in the fourth quarter,” CEO Dustan McCoy said in a statement. “Operating earnings and margins were under some pressure due to higher spending for research and development, the shift in our mix to lower-margin strength equipment and higher freight and installation costs.”
Life Time Fitness in mortgage financing deal
Life Time Fitness (NYSE: LTM) has entered into a $105 million long-term mortgage financing agreement with Goldman Sachs Commercial Mortgage.
The 10-year, 6.03-percent loan, which was arranged by RBC Capital Advisors, is secured by first mortgages on six Life Time Fitness center properties, including Tempe, Ariz., Commerce Township, Mich. and Willowbrook, Garland and Sugarland, which are all in Texas.
“We intend to use the proceeds of the financing to partially pay down the company’s revolving line of credit, making available additional capital for the construction and development of new centers,” CFO Michael Robinson said in a statement.
Town Sports offers buyback of senior notes
Town Sports International (Nasdaq: CLUB) has initiated an offer to purchase for cash its outstanding 9 5/8 percent senior notes due in 2011. The offer will expire on Feb. 26. The aggregate principal amount of notes currently outstanding is approximately $169.9 million.
The company has hired Deutsche Bank Securities to act as the exclusive dealer manager and consent solicitation agent for the tender offer.
adidas appoints new North America chief
adidas (ADSG.DE) said longtime executive Patrik Nilsson will take over as head of its North American operations as his predecessor steps down. Rob Langstaff, the division’s head since the beginning of last year, “decided to leave the company for personal reasons,” adidas said in a statement. Nilsson, a Swedish national, previously was the managing director for the Nordic area within the company’s European division. He has been with adidas since 1991.
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