CHICAGO — Bally Total Fitness Holding Corp. reported its financial results for the quarter ended June 30, 2003. Second quarter net revenues totaled $251.3 million, a $5 million increase over the prior year quarter (2 percent). Free cash flow, defined as cash flow from operations ($12.1 million) less cash used in investing activities ($10.8 million) was $1.3 million during the quarter bringing the year-to-date total to $10.8 million compared to deficits during the prior year periods of $24.7 million and $33.9 million, respectively. But despite the increase in revenues, Bally said earnings fell by 48 percent to $8.6 million, or 26 cents per share from $16.4 million, or 49 cents in the year-ago period. Excluding a non-cash charge, it earned $9.9 million, or 30 cents per share in the quarter.
“We made significant progress toward our objectives for 2003 this quarter including refinancing more than $400 million of debt, which extends maturities and provides additional liquidity,” commented Paul Toback, president, CEO and chairman of Bally Total Fitness. “In addition, we remain on track to grow free cash flow for 2003.”
The mixed results mirrored mixed success and failures for various aspects of Bally's business led by its products and services division, according to Toback.
“During the second quarter of 2003, we experienced a continuation of rapid growth in our products and services businesses with revenues up 39 percent over 2002. New membership joins rose 7 percent this quarter company-wide, [with] a 5 percent increase in same store joins,” said Toback. “New membership sales, however, continue to be disappointing as gross committed membership fees originated during the quarter were flat with the prior year company-wide and down 3 percent same store while membership revenues overall were down 9 percent. During the quarter we implemented a number of cost-reduction initiatives that offset planned increases in rent, utilities, insurance and other fixed costs, which should generate lasting reductions in our overall expense levels through the end of the year and into 2004.”
The company expects its branded business to continue to successfully develop with the hiring of a new chief marketing officer, Martin Pazzani, and remains generally optimistic about the company's future with internal and external factors looking up, said Toback.
“Despite the current trends in new membership originations, I remain optimistic as to the future prospects of our company when the economy begins to rebound,” said Toback. “With the increased consumer focus and attention on health and fitness, Bally is leading the right industry at the right time.”