CHICAGO — Bally Total Fitness narrowed its net loss and earned record revenues of $1.071 billion in 2005, according to its delayed 2005 financial filings with the Securities and Exchange Commission.
The fitness operator reported a net loss of $9.6 million in 2005, a decrease of 70 percent from its 2004 net loss of $30.3 million. The company posted a net loss of $106 million in 2003.
Bally, which has $735.2 million of debt, also filed its first quarter 2006 financials, reporting a 1 percent rise in revenues and a $4.8 million decline in operating income due to higher general and administrative and advertising costs. Bally completed the sale of Crunch Fitness on Jan. 20, which added $32.7 million of profit to the first quarter of 2006.
On a June 28 conference call, CEO Paul Toback said Bally had accomplished its goal of changing its operating model while growing its business. Bally overhauled its membership model by offering long-term contracts with a low monthly fee and a minimal downpayment as well as month-to-month memberships with a higher monthly fee but more flexibility. By implementing the Build-Your-Own-Membership Model, Bally improved its short-term attrition rate from 23 percent in early 2005 to 16.9 percent in 2006, Toback said. The number of new joining members, however, dropped 2.2 percent in the first quarter of 2006.
Bally will eliminate the discounts it traditionally gave members who renewed after 36 months — a move that could earn the company an additional $10 million over a three-year-period, Toback said.
Regarding the strategic process, Toback said many parties are interested in buying Bally, but the company plans to keep the sales process under wraps until a buyer is announced.
“I can't speculate on the timing of the sale, but it was a significant part that we were able to file our financials,” he said.
The company also announced that Toback, who was nearly ousted by dissident shareholders at the 2006 shareholder meeting, earned $3.71 million in 2005. He received a base salary of $575,000, a $900,000 bonus, $1.37 million in restricted stock awards and $878,000 in other compensation.