Wednesday February 18, 8:01 am Eastern Time
Company Press Release
SOURCE: Bally Total Fitness Holding Corporation
Bally Total Fitness Announces 1997 Fourth Quarter and Year
End Results
CHICAGO, Feb. 18 /PRNewswire/ -- Bally Total Fitness Holding Corporation (Nasdaq: BFIT - news)
today announced results for the quarter and year ended December 31, 1997. Lee S. Hillman, President and
CEO stated, ''The Company's fourth quarter operating income of $9.6 million and loss from operations of $.2
million, or $.01 per share, were better than all published Wall Street estimates as well as our own plan.''
For the fourth quarter of 1997, revenues improved 3% to $165.7 million from $160.2 million last year.
Deferred revenue accounting added $5.3 million to revenues in the 1997 quarter compared to $14.3 million in
1996. Exclusive of the change in deferred revenues, revenues for the fourth quarter of 1997 increased 10%.
Initial membership fees originated increased 22% from the 1996 quarter, demonstrating the strength of the
Company's strategy to emphasize full-priced, financed memberships. As expected, dues collected during the
fourth quarter of 1997 declined 8% from the prior year reflecting the Company's intentional avoidance of
accelerated collection efforts using discount offers. Such accelerated collection efforts were necessary in prior
years to meet operational cash needs. Operating income before depreciation and amortization (''EBITDA''),
excluding changes in deferred revenues and related costs, was $13.5 million in the 1997 quarter. Inclusive of
the effects of deferred revenue accounting, EBITDA was $21.8 million for the fourth quarter of 1997
compared to $27.3 million in the previous year. The 1997 quarter includes approximately $1.8 million of
incremental costs related to the start-up of a number of new initiatives. Additionally, the 1996 quarter was
benefited by almost $5 million of employee-benefit and other insurance-related reserve adjustments. Loss
before extraordinary item was $.2 million ($.01 per share) for the 1997 period compared to income before
extraordinary item of $4.2 million ($.35 per share) for 1996. The Company recorded an extraordinary charge
of $21.4 million ($1.04 per share) in 1997 versus an extraordinary gain of $5.7 million ($.46 per share) in
1996, both related to the early extinguishment of debt. Including extraordinary items, net loss for the fourth
quarter of 1997 was $21.6 million ($1.05 per share) versus net income of $9.9 million ($.81 per share) for the
1996 quarter.
For the full year, initial membership fees originated improved 9% and dues collected grew by 6% over 1996.
Deferred revenue accounting added $1.0 million to revenues in 1997 compared to $29.8 million in the prior
year. Exclusive of the change in deferred revenues, revenues for 1997 improved 8%. EBITDA, excluding
changes in deferred revenues and related costs, was $67.2 million for 1997 compared to $49.3 million for
1996, a 36% increase. Inclusive of the effects of deferred revenue accounting, EBITDA was $72.8 million for
1997 compared to $75.0 million for the previous year. Loss before extraordinary item was $23.5 million
($1.51 per share) for 1997 compared to $24.9 million ($2.04 per share) for 1996. Including the
aforementioned extraordinary items, net loss for 1997 was $44.9 million ($2.88 per share) compared to
$19.2 million ($1.58 per share) for 1996.
Mr. Hillman added, ''The changes our management team began implementing in late 1996 have begun to be
reflected in the Company's improved financial position. Additionally, the October 1997 refinancing of our
public notes will reduce interest expense by nearly $4 million per year and the completion of a new $70 million
revolving credit facility in November 1997 further improves the Company's financial flexibility. With the
working capital provided by the proceeds of our August 1997 stock offering, we are now emphasizing the
sale of our most popular, all-club financed membership and minimizing the sale of lower priced, single-club
paid-in-full memberships, resulting in initial membership fees growth year-over-year for the first time in five
years. When coupled with operational focus towards cleaner, higher quality clubs, management believes
member satisfaction continues to improve. Together, these initiatives are helping membership revenues grow.''
''Our goal for 1997 was not only to improve the Company's core business of membership sales and dues, but
also to introduce new profit centers. Sales of BFIT-branded nutritional supplements are growing rapidly, with
sales of almost $1 million during January 1998. We have also opened BFIT Essential(TM) retail stores in 56
of our clubs, with new stores expected almost weekly. Our rehabilitative and physical therapy service is
operational in our Florida market, with three other markets in final planning stages. In addition, a national
personal training program is now offered at most of our clubs, adding a valued service to our members and a
significant profit opportunity for the Company. These new initiatives had a limited effect on the 1997 results,
but beginning with 1998, we expect the results to be more meaningful. The changes made to Bally over the
past year are only the beginning steps toward where we want to take this company. To date, the results have
been gratifying, and in our current estimation, the outlook for the future is very bright.''
Bally Total Fitness is the largest, and only nationwide, commercial operator of fitness centers in the United
States, with approximately four million members and 320 facilities, in 27 states and Canada.
Forward-looking statements in this release including, without limitation, statements relating to the Company's
plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking
statements involve known and unknown risks, uncertainties, and other factors which may cause the actual
results, performance or achievements of the Company to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking statements. These factors
include, among others, the following: general economic and business conditions; competition; success of
operating initiatives, advertising and promotional efforts; existence of adverse publicity or litigation; acceptance
of new product offerings; changes in business strategy or plans; quality of management; availability, terms, and
development of capital; business abilities and judgment of personnel; changes in, or the failure to comply with,
government regulations; regional weather conditions; and other factors described in filings of the Company
with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information, future events or otherwise.
BALLY TOTAL FITNESS HOLDING CORPORATION
Consolidated Operating Summary
(as restated for the 1996 periods)
Year ended December 31,
1997 1996
Revenues:
Initial membership fees
originated $410,778,000 $376,002,000
Dues collected 194,084,000 182,909,000
Change in deferred revenues 961,000 29,791,000
Finance charges and other 55,214,000 50,497,000
Total revenues $661,037,000 $639,199,000
Operating income before
depreciation and amortization
("EBITDA") $ 72,815,000 $ 74,999,000
Operating income 19,937,000 19,059,000
Loss before extraordinary item (23,456,000) (24,897,000)
Extraordinary gain (loss) on
extinguishment of debt (21,414,000) 5,655,000
Net loss (44,870,000) (19,242,000)
Basic and diluted earnings (loss)
per common share:
Loss before extraordinary
item $ (1.51) $ (2.04)
Extraordinary gain (loss)
on extinguishment of debt (1.37) .46
Net loss (2.88) (1.58)
Average common shares
outstanding 15,557,491 12,174,601
Three months
ended December 31,
1997 1996
(unaudited)
Revenues:
Initial membership fees
originated $ 96,621,000 $ 79,013,000
Dues collected 49,507,000 53,627,000
Change in deferred revenues 5,333,000 14,275,000
Finance charges and other 14,206,000 13,269,000
Total revenues $165,667,000 $160,184,000
Operating income before
depreciation and amortization
("EBITDA") $ 21,805,000 $ 27,330,000
Operating income 9,630,000 12,509,000
Income (loss) before
extraordinary item (221,000) 4,234,000
Extraordinary gain (loss) on
extinguishment of debt (21,414,000) 5,655,000
Net income (loss) (21,635,000) 9,889,000
Basic earnings (loss) per common share:
Income (loss) before
extraordinary item $ (.01) $ .35
Extraordinary gain (1oss) on
extinguishment of debt (1.04) .46
Net income (loss) (1.05) .81
Average common shares
outstanding 20,569,964 12,187,824
Diluted earnings (loss) per common share:
Income (loss) before
extraordinary item $ (.01) $ .33
Extraordinary gain (loss) on
extinguishment of debt (1.04) .44
Net income (loss) 1.05 .77
Average common shares outstanding
(includes 658,549 common
equivalent shares in 1996) 20,569,964 12,846,373
NOTES:
A. The financial data presented above for the 1996 periods have been
restated to reflect a change in the Company's method of recognizing
membership revenue. In addition, interest income for the 1996 periods
has been reclassified to conform with the 1997 presentation. The
Company was an indirect wholly owned subsidiary of Bally Entertainment
Corporation ("Entertainment") until Entertainment spun-off the
Company to its stockholders on January 9, 1996.
B. Excluding the non-cash effects of changes in deferred revenues and
related deferred membership origination costs, EBITDA for the year
and quarter ended December 31, 1997 was $67.2 million and
$13.5 million compared to $49.3 million and $15.3 million for the 1996
periods, an increase of $17.9 million (36%) and a decrease of
$1.8 million (12%), respectively. The change in deferred membership
origination costs decreased operating costs and expenses by
$4.6 million and $3.0 million for the year and quarter ended
December 31, 1997, and increased operating costs and expenses by
$4.1 million and $2.3 million for the year and quarter ended
December 31, 1996.
C. The extraordinary loss on extinguishment of debt for the year and
quarter ended December 31, 1997 results from a refinancing of the
Company's public indebtedness and credit facility. The extraordinary
gain on extinguishment of debt for the year and quarter ended
December 31, 1996 consists of (i) a gain of $9.9 million ($.81 per
share) resulting from indebtedness owed Entertainment which was
forgiven as part of the December 1996 merger of Entertainment with
and into Hilton Hotels Corporation [NYSE:HLT - news] and (ii) a charge of $4.2 million
($.35 per share) resulting from the refinancing of the Company's
securitization facility.
D. In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share."
SFAS No. 128 replaced the calculation of primary and fully diluted
earnings per share with basic and diluted earnings per share. Unlike
primary earnings per share, basic earnings per share excludes any
dilutive effects of options, warrants and convertible securities.
Diluted earnings per share is computed similarly to fully diluted
earnings per share pursuant to APB Opinion No. 15. Earnings (loss)
per share amounts for all periods have been presented, and where
appropriate restated, to conform to SFAS No. 128. |
