Bally shares plummet after Ch. 11 bankruptcy warning
Shares of Bally Total Fitness (NYSE: BFT) lost more than half their value on Mar. 16 after the company said it may file for bankruptcy, making it the top percentage loser on the New York Stock Exchange’s Big Board.
Its stock dropped $1.24, or 62 percent, closing at 75 cents a share the day after an investor call to discuss its status. Bally’s shares have fallen more than 90 percent in the past year. The stock hit a 52-week low of 52 cents earlier and traded at a 52-week high of $9.92 last March.
On Mar. 15, Bally said it might file to reorganize its operations under Chapter 11 because it has $827 million in outstanding debt, with an additional $300 million coming due in October, and just $45 million in cash. It also has interest payments due on its public notes in April, July and October. Meanwhile, it is exploring other options to restructure its debt.
Additionally, Bally said after trading closed on Mar. 15 that it would not be able to file its annual report with the Securities and Exchange Commission “without unreasonable effort and expense.” The report for the year ended Dec. 31, 2006, was due Mar. 16. Bally management did not say when the report would be filed.
Bally also found mistakes in its membership database that could reduce its 2006 revenue.
In its 12b-25 filing with the SEC in mid-March, Bally stated that it expected to report a loss from continuing operations for 2006, and that it expects cash collections of membership revenues in 2006 to be approximately 3 percent, or more than $25 million, lower than cash collections in 2005. The trend of lower cash collections has continued in the first eleven weeks of 2007 and is expected to continue through at least the remainder of 2007.
On March 14, 2007, the company’s liquidity was reported as approximately $45 million.
The company’s availability under its amended and restated Credit Agreement, subject to compliance with the terms thereof, was approximately $2.1 million. But as of the same date, Bally had approximately $827 million in debt outstanding, which includes approximately $19 million in letters of credit. Interest payments on the company’s public notes are due in April, July and October 2007, along with the maturity of the $300 million of 9-7/8 percent Senior Subordinated Notes in October 2007.
For more details about the company’s situation and financial information, go to www.ballyfitness.com and click on Company, then Investor Information to access its SEC filings and other statements.
Gaiam posts 54 percent increase in FY ’06 revenue
For fiscal year 2006, Gaiam’s (Nasdaq: GAIA) revenue increased 54 percent from higher media sales, lower cost of goods sold associated with higher DVD sales volume and the elimination of fees previously paid for third-party distribution.
Revenue for the year was $219.5 million from $142.5 million recorded in 2005. Revenues for Gaiam’s direct-to-consumer segment increased 73.8 percent to $125.7 million. Revenues for Gaiam’s business segment increased 33.7 percent to $93.8 million.
Net income improved to $5.6 million, or $0.23 per share, versus $1.3 million, or $0.08 per share in 2005. Depreciation and amortization was $7.8 million for the year, Gaiam said.
Gaima said the number of paying members in Gaiam’s community and subscription clubs exceeded the 100,000 level. Additionally, according to Nielsen’s VideoScan, Gaiam’s market share in the fitness/wellness DVD category grew to 44.7 percent in 2006 from 41.5 percent in 2005.
For the fourth quarter, Gaiam revenue increased to $72.8 million from $64.3 million recorded in the same period last year. Net income for the fourth quarter increased to $4.3 million, or $0.16 per share, compared to $1.5 million, or $0.07 per share, for the fourth quarter of 2005. Depreciation and amortization for the quarter was $2.3 million, it said.
During the fourth quarter, Gaiam said it continued to expand its media distribution network to over 68,000 retail doors from 65,000 at the end of the third quarter and 50,000 at the end of 2005. In the fourth quarter, Gaiam also increased its branded store-within-store presentations to over 6,000 retail doors from 5,500 at the end of the third quarter and 4,500 at the end of 2005.
Also in the fourth quarter, Gaiam acquired the remaining shareholder interest of Conscious Media increasing its interest to effectively 100 percent from the 86 percent held previously. Conscious Media operates a visual media post production facility which will enable Gaiam to substantially increase video production. With control of the production schedules, Gaiam intends to double the number of programs produced in 2007 to 90, from the 45 released in 2006.
Gaiam also acquired the remaining 47 percent minority interest of media distributor Newmark Media during the quarter. Newmark Media operates primarily in the natural grocery and drugstore channels, which present a significant future growth opportunity for Gaiam’s distribution network.
Hibbett Sports Q4 profit jumps 27 percent
Hibbett Sports’ (Nasdaq: HIBB) fourth-quarter net income grew 27 percent, driven by strong sales of activewear, licensed apparel, children’s footwear and team sports equipment.
Earnings increased to $12.6 million, or $0.39 per share, from $9.9 million, or $0.29 per share, a year ago. Hibbett said a negative tax adjustment reduced net income by 3 cents in the latest quarter.
Fourth-quarter sales grew 25 percent to $151.2 million from $120.8 million a year ago. Same-store sales increased 5.9 percent in the quarter.
During the fourth quarter, the company repurchased 93,000 shares of common stock for a total expenditure of $2.7 million, bringing the total shares repurchased since the inception of the program in August 2004 to 4.3 million shares for a total expenditure of $97.3 million. After considering past stock repurchases, approximately $52.7 million of the total authorization remained for future stock repurchases at the end of fiscal 2007.
Fiscal 2006 earnings grew 13 percent to $38.1 million, or $1.17 cents per share, from $33.6 million, or 98 cents per share, a year ago. Sales rose 16 percent to $512.1 million from $440.3 million in the prior year. Same-store sales increased 3.8 percent in 2006.
For the quarter, Hibbett opened 25 new stores and closed 2 stores. For the year, Hibbett opened 74 new stores and closed 10 stores, bringing the total to 613 stores in 23 states. The company said it plans to open a net of approximately 85 to 90 new stores in fiscal 2008.
It also forecast first-quarter net income of $0.32 per share to $0.35 per share. Hibbett predicted a decrease in same-store sales of about 1 percent to 3 percent in the first quarter.
Hibbett expects fiscal 2007 earnings of $1.30 to $1.35 per share. The company expects a same-store sales increase in the range of 2 percent to 4 percent in fiscal 2007.
Stride Rite adopts new shareholder rights plan
Stride Rite Corp. (NYSE: SRR) said its board has adopted a new shareholder rights plan to replace its existing plan, which was scheduled to expire in July 2007. Stride Rite is the parent company of Saucony and Hind.
The company said the new plan raises the stock ownership, triggering threshold to 15 percent from 10 percent. It also contains a provision that requires independent directors to consider at least once every three years whether maintaining the rights plan continues to be in the best interests of shareholders.
Sport Chalet founder to retire from board
Norbert Olberz, founder and chairman emeritus of Sport Chalet (Nasdaq: SPCHA and SPCHB), has retired from the company’s board of directors. He will relinquish the title of chairman emeritus, while retaining the title of founder.
Dick’s posts first billion-dollar sales quarter
Fourth-quarter earnings were up 25 percent for Dick’s Sporting Goods (NYSE: DKS) as sales at established stores increased.
Net income for the quarter totaled $67.7 million, or $1.20 per share, from $54 million, or $1 per share, during the same period last year. Revenue grew 21 percent to $1.03 billion, from $849.5 million a year ago. Same-store sales grew 2 percent.
“The fourth quarter was our first billion-dollar sales quarter,” said Edward W. Stack, chairman and CEO, in a statement. “More importantly, we executed well through our most important quarter, delivering earnings in excess of our guidance.”
For the year, earnings grew 54 percent to $112.6 million, or $2.03 per share, from $73 million, or $1.35 per share, a year ago. Revenue increased 19 percent to $3.11 billion from $2.62 billion.
For the first quarter, Dick’s said it expects earnings per share between $0.35 and $0.38. Same-store sales are expected to grow between 4 percent and 6 percent at its stores. Dick’s guidance for the full year is net income between $2.37 and $2.40 per share, with same-store sales rising 2 percent.
Separately, Timothy E. Kullman will join the company in April as senior vice president and CFO, responsible for all areas of finance and accounting. Formerly CFO of Petsmart, Kullman succeeds Michael F. Hines, who is resigning at the end of March.
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