Fitness financials: Life Time Fitness’ Q3 sales up 11.2 percent, plus Bally, Big 5, Sport Chalet

In-center revenue and same-center sales helped boost Life Time Fitness’ total revenue by 11.2 percent in the third quarter. Plus, a proposed settlement in Bally class-action suit to be heard in court, and both Big 5 and Sport Chalet renegotiate their credit lines.
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Life Time Fitness’ Q3 sales up 11.2 percent

In-center revenue and same-center sales helped boost Life Time Fitness’ (NYSE: LTM) total revenue by 11.2 percent in the third quarter.

For the quarter ended Sept. 30, revenue was $238.3 million versus $214.3 million during the same period last year.

Net income for the quarter was $23.4 million, or $0.57 per diluted share, versus $20.6 million, or $0.51 per diluted share, last year.

Memberships increased 5.4 percent to 622,698 versus 590,716 in 2009.

Total operating expenses were $192.7 million compared to $174.3 million for 3Q 2009. Operating margin was 19.1 percent for the quarter compared to 18.7 percent in the prior-year period.

EBITDA grew 8.7 percent to $69.3 million from $63.7 million.

In August, the company opened a new yoga and Pilates boutique in Minneapolis. Additionally, in December, the company plans to open a large-format center in Centennial, Colo., which will be the third Life Time Fitness center in the Denver market.

Proposed settlement reached in Bally class-action suit

A hearing will be held Nov. 18 in the U.S. District Court, Northern District of Illinois, to determine if a proposed settlement in the Bally Total Fitness class-action lawsuit will be accepted by the court, finally closing a multi-year case. 

“The settlement resolves a lawsuit concerning whether Bally Total Fitness Holding Corp., certain of its former officers, and its outside auditor Ernst & Young LLP, misled investors about Bally’s financials statements, including its net income, revenues and expenses,” according to court documents. A Sept. 21 press release stated, "If you are a class member, your rights may be affected by the settlement of this litigation," and referred all stock-holders between 1999 and 2004 to contact, or call the claims administrator at 1-800-335-2852. 

The former officers listed in the class action are Paul Toback, chairman, CEO and president; Lee Hillman, former chairman, CEO and president; and executive vice president and chief financial officer John W. Dwyer. Hillman and Dwyer were previously employed by the company's former auditors, Ernst & Young, and were partners on the engagement teams that audited Bally's former parent company for several years prior to joining the company. (Click here to read a June 4, 2004, SNEWS story and here for a Feb. 11, 2005, SNEWS story about the lawsuit.)

The settlement will provide $2 million in cash to pay claims from investors who reportedly suffered damages from acquiring Bally’s common stock between Aug. 3, 1999, and April 28, 2004, according to court documents.

Big 5 enters into new credit agreement

Big 5 Sporting Goods (Nasdaq: BGFV) has entered into a new credit agreement, saying it now has access to $140 million with the option to access up to a maximum of $200 million.

The company said it used the initial proceeds to repay in full all of its outstanding debts under its prior financing agreement with The CIT Group/Business Credit and a syndicate of other lenders.

The new credit agreement provides for a revolving credit facility with aggregate availability of up to $140 million, which can increased at the option of Big 5 up to a maximum of $165 million. 

Big 5 can also request additional increases in aggregate availability, which the lenders have the option to provide, up to a maximum of $200 million. The credit facility includes a $50 million sublimit for the issuance of letters of credit and a $20 million sublimit for swingline loans. 

The agreement was arranged by Wells Fargo Capital Finance, with Wells Fargo Bank, as administrative agent and collateral agent, Bank of America, as documentation agent, PNC Bank and Union Bank. 

The initial termination date of the new credit facility is Oct. 18, 2014. 

Sport Chalet renegotiates credit line

Sport Chalet (Nasdaq: SPCHA and SPCHB) has signed a new four-year $65 million credit agreement with Bank of America, saying its another step in its long-term business strategy plans.

The company said it was able to borrow on more favorable terms and conditions, increasing its credit facility availability to $65 million from $45 million. It also has revised financial covenants, giving the company greater financial flexibility.

The new facility also reduces the interest rate, which is expected to reduce interest expense by approximately $800,000 on an annualized basis, based on current borrowing forecasts.

The seasonal revolving credit line, from Sept. 1 to Dec. 31, remains unchanged at $70 million. The new agreement extends the expiration date to October 2014.

--Compiled by Wendy Geister

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