AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 18, 1998
REGISTRATION NO. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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BALLY TOTAL FITNESS HOLDING CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 7991 36-3228107
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) INDUSTRIAL CLASSIFICATION IDENTIFICATION
CODE NUMBER) NUMBER)
8700 West Bryn Mawr Avenue
Chicago, Illinois, 60631
(773) 380-3000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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LEE S. HILLMAN
Bally Total Fitness Holding Corporation
8700 West Bryn Mawr Avenue
Chicago, Illinois 60631
(773) 380-3000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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Copy to:
IRV BERLINER
Benesch, Friedlander, Coplan & Aronoff LLP
2300 BP America Building
200 Public Square
Cleveland, Ohio 44114
(216) 363-4500
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, as amended (the "Securities Act"), other than securities offered only
in connection with dividend or interest reinvestment plans, check the following
box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement of the earlier effective registration statement for the
same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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<PAGE>
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE(2) OFFERING PRICE(2) FEE(2)
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<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share(1) 250,000 $____________ $___________ $1,223.59
============================= ============== ================= ================= ============
<FN>
(1) Associated with the Common Stock being offered are preferred stock
purchase rights that will not be exercisable or evidence separately from
the Common Stock prior to the occurrence of certain events.
(2) Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(c) under the Securities Act, the offering price and
the registration fee applicable to the Common Stock is calculated upon the
basis of the high and low prices of the Common Stock as reported on the
New York Stock Exchange, Inc. Composite Transactions Reporting System on
September 11, 1998.
</FN>
</TABLE>
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED SEPTEMBER 18, 1998
PROSPECTUS
250,000 SHARES
[BALLY LOGO]
BALLY TOTAL FITNESS HOLDING CORPORATION
COMMON STOCK
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The 250,000 shares of common stock, $.01 par value per share ("Common
Stock"), of Bally Total Fitness Holding Corporation, a Delaware corporation
("Bally" or the "Company"), offered hereby (the "Shares") may be sold by or for
the account of a certain stockholder of the Company described herein (the
"Selling Shareholder") from time to time in one or more transactions (which may
include block transactions) on the open market in ordinary brokerage
transactions on the New York Stock Exchange (the "NYSE"), in privately
negotiated transactions or in a combination of such methods of sale, at the
prevailing market price at the time of sale, at a price related to such
prevailing market price or at a price otherwise negotiated. The Shares underlie
certain warrants (the "Warrants") to purchase shares of Common Stock at an
exercise price of $10.05 per share held by the Selling Shareholder and are being
registered under the Securities Act of 1933, as amended (the "Securities Act"),
on behalf of the Selling Shareholder in order to permit the public sale or other
distribution of the Shares after exercise of the Warrants.
The Company will not receive any of the proceeds of the sales made
hereunder. The Company has agreed to pay all fees and expenses of registration
incurred in connection with this offering. All selling expenses incurred by the
Selling Shareholder will be borne by the Selling Shareholder. The Company and
the Selling Shareholder have agreed to indemnify each other against certain
liabilities, including liabilities arising under the Securities Act, in
connection with the registration of the Shares. See "Selling Shareholder" and
"Plan of Distribution".
As of August 31, 1998, 23,518,166 shares of Common Stock were issued and
outstanding after giving effect to the exercise of the Warrants. The Common
Stock is traded on the NYSE under the symbol "BFT". On September 17, 1998, the
last reported sales price of the Common Stock on the NYSE was $19 1/8 per
share.
SEE "RISK FACTORS" BEGINNING ON PAGE 6 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
COMMON STOCK OFFERED HEREBY.
The Selling Shareholder and any brokers participating in sales of the
Shares may be deemed underwriters within the meaning of the Securities Act.
Commissions received by any such broker may be deemed to be underwriting
commissions under the Securities Act. See "Plan of Distribution".
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is September 18, 1998
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AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy and information statements and other information
with the Securities and Exchange Commission (the "SEC"). Reports, registration
statements, proxy and information statements and other information filed by the
Company with the SEC can be inspected without charge and copied, at prescribed
rates, at the public reference facility maintained by the SEC at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and the SEC's
Regional Offices, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661
and Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of
such material can also be obtained from the Public Reference Section of the SEC,
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The SEC
maintains a web site at http://www.sec.gov that contains reports, registration
statements, proxy and information statements and other information regarding
registrants, such as the Company, that file electronically with the SEC.
The Company has filed a Registration Statement on Form S-3 (the
"Registration Statement") with the SEC under the Securities Act, in respect of
the Shares offered hereby. For purposes hereof, the term "Registration
Statement" means the initial Registration Statement and any and all amendments
thereto. This Prospectus, filed as a part of the Registration Statement, omits
certain information contained in the Registration Statement as permitted by the
rules and regulations of the SEC. For further information with respect to the
Company and the Shares offered hereby, reference is made to the Registration
Statement, including the exhibits thereto. Statements herein concerning the
contents of any contract or other document are not necessarily complete, and in
each instance reference is made to such contract or other document filed with
the SEC as an exhibit to the Registration Statement, or otherwise, each such
statement being qualified by, and subject to, such reference in all respects.
Proxy statements, reports and other information concerning the Company
that are filed under the Exchange Act also can be inspected at the offices of
the NYSE, 20 Broad Street, New York, New York 10005.
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NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFERING DESCRIBED HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY SELLING SHAREHOLDER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THE
SHARES BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON
TO MAKE SUCH OFFER, SOLICITATION OR SALE. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
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<PAGE>
PROSPECTUS SUMMARY
Unless otherwise indicated, capitalized terms used in this Prospectus Summary
have the respective meanings ascribed to them elsewhere in this Prospectus. The
information contained in this Prospectus Summary contains forward-looking
statements which involve known and unknown risks, uncertainties and other
factors that 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. See
"Special Note Regarding Forward-Looking Statements" on page 6 of this
Prospectus.
THE COMPANY
The Company is the largest (and only nationwide) commercial operator of
fitness centers in the United States in terms of revenues, the number of
members, and the number and square footage of facilities. As of August 31, 1998,
the Company operated approximately 325 fitness centers concentrated in major
metropolitan areas in 27 states and Canada and had approximately four million
members. Bally's members made more than 100 million visits to its fitness
centers in each of 1996 and 1997.
The Company offers its members value by providing access to
state-of-the-art fitness facilities with affordable membership programs. Bally's
fitness centers feature an outstanding selection of cardiovascular, conditioning
and strength equipment and offer extensive aerobic training programs. In
addition, many of the Company's current fitness centers include pools, racquet
courts or other athletic facilities. The Company's new club prototype achieves
efficiency by focusing on those fitness services that receive a high degree of
member use. The Company has clustered its fitness centers in major metropolitan
areas in order to achieve marketing and operating efficiencies. These markets
include, among others, New York, Los Angeles, Chicago, Houston, Dallas, Detroit,
Baltimore, Washington, D.C., Philadelphia, Miami, Cleveland, Atlanta, Milwaukee,
Seattle, Minneapolis, Orlando, Denver, Phoenix, St. Louis, San Francisco, Boston
and Kansas City. In 1996, the Company completed the process of renaming its
fitness centers so they all use the service mark "Bally Total Fitness", thereby
enhancing brand identity, concentrating advertising and eliminating the prior
practice of using more than 25 different regional service marks and trade names.
The Company's primary target market for new members is the 18 to 34-year
old, middle income segment of the population with secondary target markets
including older and higher income segments. Bally markets itself to these
consumer segments through the use of a variety of membership options and payment
plans. The membership options offered by the Company range from single-club
memberships to premium memberships which provide additional amenities and the
use of all of Bally's fitness centers nationwide. Similarly, the Company offers
a broad range of payment alternatives. Typically, members pay an initiation fee
which can either be financed (generally for up to 36 months and subject to
downpayment requirements) or paid-in-full at the time of joining. Members are
generally required to pay monthly membership dues in order to use the Company's
fitness facilities. Management believes the various membership and payment plans
offered, in addition to Bally's strong brand identity and the convenience of its
multiple locations constitute distinct competitive advantages for the Company.
In May 1998, the Company completed an public offering of 2.8 million
shares of Common Stock (the "1998 Stock Offering") for which the Company
received net proceeds of $82.7 million.
OPERATING STRATEGIES
In October 1996, Lee S. Hillman was named President and Chief Executive
Officer of the Company. This completed the transition of senior management of
the Company from predominantly marketing oriented managers, including the
original founders of the Company, to managers with a more financial and
operational orientation. The new management team quickly implemented a business
strategy designed to improve the operating results of the Company. These efforts
have contributed to recent increases in revenues and operating income, although
the Company reported a loss before extraordinary item of $23.5 million for the
year ended December 31, 1997.
Core Business
During 1997, management developed and began implementing five strategies
to improve the underlying operations and the financial performance of the
Company. These strategies have already favorably impacted the Company's
financial results and management is committed to furthering their
implementation.
o Emphasize the Sale of All-Club Membership Plans -- Prior to a
public offering of 8,000,000 shares of Common Stock in August 1997 which
provided net proceeds of $88.4 million to the Company (the "1997 Stock
Offering"), the Company managed its commission structure to emphasize the
sale of paid-in-full membership plans to generate immediate cash for
short-term liquidity at the expense of longer-term financial returns. The
1997 Stock Offering provided additional working capital, allowing the
Company to emphasize the sale of all-club membership plans, which are
typically financed, rather than single-club membership plans.
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<PAGE>
In 1997, this new emphasis contributed to an 18% increase in the
weighted-average price of memberships sold to approximately $970 from
approximately $820 in 1996. Management believes that it can continue to
increase new member revenues through an emphasis on financed membership
plans.
o Upgrade and Expand Fitness Centers -- Using a portion of the net
proceeds from the 1997 Stock Offering and cash flow from operations, the
Company has begun to expand and upgrade its existing facilities and
equipment in order to increase its membership base and more effectively
capitalize on its streamlined marketing and administrative functions. The
Company has budgeted approximately $15 million for this initiative (over
and above normal maintenance capital expenditures), most of which has been
spent or committed.
o Increase Dues Revenues -- The Company believes that its dues are
substantially less than those charged by its competitors and that it can
continue to increase dues for its members who are beyond their initial
financing period without any material loss in membership. In addition, the
Company has reduced promotions which discounted or waived dues. In 1997,
these initiatives contributed to an increase in dues collected of
approximately $11.2 million, or 6%, over 1996. Management believes that it
can continue to raise the dues charged to its members at a rate consistent
with past periods.
o Improve Collections on Financed Contracts -- The Company is
maintaining its focus on increasing downpayments on financed membership
plans and securing payments by electronic funds transfer ("EFT"), which
the Company's experience has shown results in higher quality receivables.
This effort yielded an increase of 11% in the average down payment, from
$73 in 1996 to $81 in 1997. In addition to seeking higher down payments,
the Company continues to develop improved collection practices based on
information provided by "credit scoring" and behavioral modeling, which
management believes will also improve the yield from the receivables
portfolio.
o Continue to Leverage Fixed Cost Base -- A significant percentage
of the Company's operating costs are fixed in nature, both in terms of
fitness center operations and member processing and advertising. Over the
past several years, the Company has significantly reduced these operating
costs through aggressive cost management. As the Company pursues its
growth strategies described below, management will seek to leverage the
Company's fixed cost base to improve operating margins.
Growth Opportunities
In order to build upon the improved core operations and accelerate the
growth of the Company's business, management has identified the following
external growth opportunities:
o Develop New Fitness Centers -- Beginning in 1998, the Company
intends to increase its spending to approximately $20 million to $25
million per year to open 15 to 20 new facilities based on its new fitness
center prototype, which is designed to cost less to construct and maintain
than the Company's older facilities. The majority of the Company's new
fitness center facilities will be developed pursuant to long term lease
arrangements. The prototype model of new fitness centers developed over
the most recent years has required on average $1.3 million to fund
leasehold improvements and fitness equipment.
o Selectively Acquire Club-Related Real Estate -- The Company
operates approximately 325 fitness centers, over 90% of which are leased.
Historically, the Company has not capitalized on opportunities to buy
leased properties at attractive terms due to capital constraints. The
Company's recently improved financial condition allows the Company to take
advantage of attractive opportunities to acquire leased properties. In
addition to pursuing these opportunities, the Company will also evaluate
purchasing parcels of land in strategic locations for new club expansion.
While the Company believes that from time to time there are attractive
opportunities to acquire real estate, either for existing club sites or
new locations, management intends only to pursue real estate transactions
following a very selective set of criteria, including strategic locale and
relative market values.
o Identify and Acquire Fitness Center Operators in Strategic
Geographic Locations -- The Company maintains an operating strategy of
clustering its clubs in major metropolitan areas in order to achieve
marketing and operating efficiencies. Consistent with this strategy,
management has identified major metropolitan areas where the Company is
absent or underrepresented. In an effort to establish a cluster of clubs
quickly in strategic locations, the Company plans to identify and acquire
fitness center operators where attractive opportunities exist and internal
growth would not be as effective due to various factors, including
timeliness and availability of prime real estate.
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<PAGE>
New Business Initiatives
Management believes that the Company can increase and diversify revenues
by leveraging its strong brand identity, extensive distribution infrastructure
(approximately 325 facilities), significant member base (approximately four
million members) and frequency of visitation (in excess of 100 million member
visits in each of 1996 and 1997) by offering a number of ancillary products and
services. In order to pursue these growth opportunities, the Company has
implemented the following initiatives:
o Personal Training -- In 1997, the Company introduced a newly
developed personal training program which is now offered at most of its
fitness centers. The value of this service to members, coupled with
decreased outsourcing of this service, represents a significant profit
opportunity for the Company. In the fourth quarter of 1997, the Company
generated $2.0 million in revenues from the sale of personal training
programs. To better introduce personal training services and Bally-branded
nutritional products to its members, the Company began offering System 30
memberships at most of its fitness centers in January 1998. Members
selecting the System 30 membership receive the benefits of an all-club
membership plan plus a complete fitness analysis, a supply of
Bally-branded nutritional products and three personal training sessions
during the first month of membership.
o Private-Label Nutritional Products -- During 1997, the Company
launched the sale of an exclusive line of Bally-branded nutritional
products to the Company's members. The current line of Bally-branded
nutritionals includes meal replacement drinks, multi-vitamins, fat-free
snack wafers, a creatine mix and fat- reducing supplements. While these
products were only being introduced in 1997, sales for the year totaled
$2.2 million, including $1.0 million in the fourth quarter of 1997. The
Company continues to test market other nutritional products.
o Retail Stores -- To date, the Company has opened more than 70 BFIT
Essentials(sm) retail stores in its fitness centers. These retail stores
sell Bally-branded and complementary products from other manufacturers,
including nutritional products, workout apparel and related accessories.
The Company plans to have approximately 100 BFIT Essentials(sm) retail
stores in its fitness centers by the end of 1998.
o Outpatient Rehabilitative and Physical Therapy Services -- The
Company believes numerous opportunities exist to contract with third party
providers and managers of health care programs and services to provide
affordable, comprehensive outpatient rehabilitative and physical therapy
services in its fitness centers, and expects to offer these services to
members and non-members alike in up to 100 of its facilities within the
next three years, primarily using existing facilities and equipment.
Pursuant to an agreement with Continucare Corporation, three such
facilities are currently in operation in the Florida market, with plans
already developed to have two additional facilities operating during 1998.
<TABLE>
THE OFFERING
<S> <C>
Common Stock offered by the Selling Shareholder....... 250,000 shares
Common Stock to be outstanding after the Offering..... 23,518,166 shares (1)
Use of proceeds....................................... The Company will not receive any proceeds
from any sale of the Shares
New York Stock Exchange symbol........................ BFT
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<FN>
(1) Based on Common Stock outstanding on August 31, 1998, after giving effect to
the exercise of the Warrants. Does not give effect to any future exercise of
outstanding warrants to purchase 2,942,805 shares of Common Stock,
outstanding stock options to purchase 1,948,038 shares of Common Stock and
options to purchase an additional 1,229,726 shares of Common Stock which the
Company is able to grant under its existing stock option and purchase plans.
</FN>
</TABLE>
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The Company was a wholly-owned subsidiary of Bally Entertainment Corporation
("Entertainment") until Entertainment spun-off the Company (the "Spin-off") to
its stockholders on January 9, 1996. The Company's executive offices are located
at 8700 West Bryn Mawr Avenue, Chicago, Illinois, 60631, telephone number (773)
380-3000. As used in this Prospectus, unless the context otherwise requires, the
"Company" or "Bally" refers to Bally Total Fitness Holding Corporation and its
subsidiaries and their predecessors.
5
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
CERTAIN STATEMENTS IN THE PROSPECTUS SUMMARY AND UNDER THE HEADING "RISK
FACTORS", AND ELSEWHERE IN THIS PROSPECTUS, INCLUDING CERTAIN STATEMENTS
INCORPORATED HEREIN BY REFERENCE, CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN
THE MEANING 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; THOSE ITEMS SET FORTH UNDER THE
HEADING "RISK FACTORS"; AND OTHER FACTORS REFERENCED IN THIS PROSPECTUS.
RISK FACTORS
Prior to making an investment decision, prospective investors should
consider carefully all of the information set forth in this Prospectus and,
particularly, should evaluate the following risk factors.
NET LOSSES
The Company reported losses before extraordinary item of $23.5 million,
$24.9 million and $31.4 million for the years ended December 31, 1997, 1996 and
1995, respectively. On a pro forma basis, adjusting the income tax
provision/benefit as if the Company had filed its own separate consolidated tax
returns, the loss for 1995 would have been $38.5 million.
RISKS ASSOCIATED WITH HIGHLY-LEVERAGED FINANCIAL POSITION
In December 1996, the Company issued $160.0 million of asset-backed
securities (the "Securitization") by selling undivided interests in the H&T
Master Trust (the "Trust"). The Trust consists primarily of a portfolio of
installment contracts receivable from membership plans and the proceeds thereof.
The Company plans to refinance the Securitization in the second or third quarter
of 1999; however, there can be no assurance that the Company will be able to
refinance the Securitization or that the terms of such refinancing will be as
favorable as those of the Securitization.
The Company's long-term debt includes the Securitization, $225 million
principal amount of 9 7/8% Senior Subordinated Notes due 2007 (the "9 7/8%
Notes") and a $70 million revolving credit facility which expires in November
2000, which was unused at June 30, 1998 except for outstanding letters of credit
totaling $6.9 million. At June 30, 1998, the Company had total indebtedness of
approximately $411.3 million and a ratio of long-term debt (less current
maturities) to total capitalization of approximately 72%. In addition, interest
paid for the year ended December 31, 1997 and six months ended June 30, 1998
totaled $48.4 million and $21.5, respectively. The Company's recent losses,
total indebtedness and provisions of existing debt instruments limit the
Company's ability to raise capital or borrow money. The provisions in the
Company's existing debt instruments limit the Company's ability to borrow
additional funds and to grant security interests and require the Company to
maintain certain financial ratios, including those relating to cash flow and
interest expense. As a result of the limitations, the Company may be more
vulnerable to economic downturns, may not be able to exploit certain business
opportunities when they arise and may have less flexibility to respond to
changing economic conditions, each of which could have a material adverse effect
on the Company's financial condition and results of operations.
RISKS ASSOCIATED WITH NEW INITIATIVES
The Company has introduced a number of new initiatives to capitalize on its
strong brand identity, extensive distribution infrastructure (approximately 325
facilities), significant member base (approximately four million members) and
frequency of visitation. These initiatives include selling and marketing
nutritional products, work-out apparel and related accessories to its members in
its clubs as well as making comprehensive outpatient rehabilitative and physical
therapy services available to members and non-members. The Company has not
previously generated significant revenues from any of these new initiatives and
there can be no assurance that such initiatives will be successful. In addition,
the Company has limited experience in marketing new products to its members. The
sale and marketing of nutritional products, work-out apparel and related
accessories and the provision of rehabilitative and physical therapy services
involve significant risks of competition. See "--Competition". The provision of
rehabilitative and physical therapy services also involves risks of government
regulation. See "--Government Regulation".
6
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RISKS ASSOCIATED WITH PRICING STRATEGY
Competitive conditions in certain markets in which the Company operates may
limit the Company's ability to reduce discount pricing on paid-in-full
memberships and to increase dues significantly without a material loss in
membership.
RISKS RELATING TO ACQUISITIONS
A component of the Company's business strategy is to identify and acquire
fitness center operators in strategic geographic locations. The success of this
strategy will depend upon a number of factors, including the Company's ability
to identify acceptable acquisition candidates in suitable locations, consummate
acquisitions on favorable terms, successfully integrate acquired businesses with
the Company's existing operations and expand its membership base at acquired
locations. There can be no assurance that the Company will successfully expand
or that any expansion will result in profitability. The failure to identify,
evaluate and effectively integrate acquired businesses could adversely affect
the Company's operating results.
COMPETITION
The Company is the largest operator, or among the largest operators, of
fitness centers in every major market in which it has fitness centers. Within
each market, the Company competes with other fitness centers, physical fitness
and recreational facilities established by local governments and hospitals and
by businesses for their employees, the YMCA and similar organizations and, to a
certain extent, with racquet and other athletic clubs, country clubs, weight-
reducing salons and the home-use fitness equipment industry. The Company
believes competition has increased to some extent in certain markets, reflecting
the public's enthusiasm for fitness and a decrease in the cost of entry into the
market due to financing available from landlords and equipment manufacturers.
The Company also competes with other entertainment and retail businesses for the
discretionary income of its target market. There can be no assurance that the
Company will be able to compete effectively in the future in the markets in
which it operates.
As the Company pursues new business initiatives, particularly the sale of
nutritional products and apparel, the Company competes against large,
established companies with more experience selling such products on a retail
basis and, in some instances, with substantially greater financial resources
than the Company. There can be no assurance that the Company will be able to
compete effectively against such established companies.
SEASONAL MEMBERSHIP FEE ORIGINATIONS
Historically, the Company has experienced greater membership fee
originations in the first quarter and lower membership fee originations in the
fourth quarter. The new initiatives the Company has implemented may have the
effect of increasing the seasonality of the Company's business.
GOVERNMENT REGULATION
The operations and business practices of the Company are subject to
regulation at federal, state and, in some cases, local levels. General rules and
regulations of the Federal Trade Commission, and of state and local consumer
protection agencies, and state statutes apply to the Company's advertising,
sales and other trade practices, including the sale, financing and collection of
memberships. Although management is not aware of any proposed changes in any
statutes, rules or regulations affecting the Company, any changes could have a
material adverse effect on the Company's financial condition and results of
operations. In addition, the provision of rehabilitative and physical therapy
services and payments for such services are subject to government regulation.
POTENTIAL IMPACT OF CERTAIN ANTITAKEOVER PROVISIONS
Certain provisions of the Company's Restated Certificate of Incorporation
(the "Company Certificate") and the Company's Amended and Restated By-Laws (the
"Company Bylaws") may inhibit changes in control of the Company not approved by
the Board of Directors of the Company (the "Board"). These provisions include a
stockholders rights plan, a classified Board, advance notice provisions for
nominations for election of candidates to the Board and a "fair-price
provision". The stockholder rights plan, under which one right entitling the
holder to purchase one one-hundredth of a share of the Company's Series A Junior
Participating Preferred Stock at a price of $40 per share (subject to
adjustment) is attached to each outstanding share of Common Stock, renders an
acquisition of control of the Company in a transaction not approved by the Board
more difficult. The Company's 1996 Long-Term Incentive Plan provides for
acceleration of stock options and restricted stock awards upon a change in
control of the Company which has the effect of making an acquisition of control
of the Company more expensive. These agreements may also inhibit a change in
control of the Company and may have a negative effect on the market price of the
Common Stock. The indenture governing the 9 7/8% Notes also include change in
control provisions which provide, among other things, that upon a change in
control of the Company, the holders of the 9 7/8% Notes may require the Company
to repurchase the 9 7/8%
7
<PAGE>
Notes at 101% of the principal amount thereof, together with accrued and unpaid
interest to the repurchase date. A change in control of the Company constitutes
a default under the Company's revolving credit agreement. In addition, certain
Company officers have severance compensation agreements with the Company that
provide for substantial cash payments and acceleration of other benefits in the
event of specified corporate changes related to the Company, including a change
in control of the Company.
DIVIDEND POLICY; RESTRICTIONS ON PAYMENT OF DIVIDENDS
The Company has not made cash dividend payments on the Common Stock since
the Spin-off and does not anticipate paying cash dividends on the Common Stock
for the foreseeable future. The terms of the Company's revolving credit
agreement provide that the Company is restricted from paying dividends without
the consent of the lenders during the term of the agreement. In addition, the
indenture for the 9 7/8% Notes generally limits dividends paid by the Company to
the aggregate of 50% of consolidated net income, as defined, earned after
January 1, 1998 and the net proceeds to the Company from any stock offerings and
the exercise of outstanding stock options and warrants.
FUTURE SALE AND PRICE OF COMMON STOCK
As of August 31, 1998, 23,518,166 shares of Common Stock were outstanding,
after giving effect to the exercise of the Warrants. The Company has (i)
outstanding options to purchase 1,948,038 shares of Common Stock with a
weighted-average exercise price of $10.36 per share, and (ii) the ability to
grant options to purchase an additional 1,229,726 shares of Common Stock under
the Company's stock option and purchase plans. In addition, the Company has
outstanding warrants to purchase 2,942,805 shares of Common Stock at an exercise
price of $5.26 per share. The warrants are held by the Chairman of the Board and
the President and Chief Executive Officer of the Company and are exercisable
until December 31, 2005. The effect, if any, on the market price of the Common
Stock prevailing from time to time as a result of the additional shares of
Common Stock that would be outstanding upon the exercise of stock options and
warrants is unpredictable, and no assurance can be given that the effect will
not be adverse.
POTENTIAL IMPACT OF YEAR 2000
The Company has completed an assessment of whether its systems and those of
third parties, which could have a material impact on the Company will function
properly with respect to dates in 2000 and thereafter. The Company has
determined that two of its existing software applications require modification,
with such modifications expected to be completed in 1998 at an aggregate cost to
the Company of less than $.1 million. The Company believes that the only third
parties that could have a material impact on the Company are the major financial
institutions that process the Company's collections of installment receivables
and dues by electronic funds transfers. Management believes that these financial
institutions are currently working on modifications to their internal systems to
insure that those systems will function properly with respect to dates in 2000
and thereafter and expect that these modifications will be completed in 1998.
The Company does not anticipate that the noncompliance, if any, with Year 2000
of any of its non-information technology systems (i.e. embedded technology such
as microcontrollers) will result in material adverse effect to the Company.
Management is currently undertaking an analysis of worst case scenarios and
developing contingency plans to deal with such scenarios.
USE OF PROCEEDS
The Shares being offered are for the account of the Selling Shareholders.
Accordingly, the Company will not receive any of the proceeds from the sale of
the Shares.
8
<PAGE>
SELLING SHAREHOLDER
The following table sets forth as of August 31, 1998, certain information
with respect to the Selling Shareholder. The Shares offered hereby will be sold,
if at all, solely by and at the discretion of the Selling Shareholder, and the
Company will not receive any proceeds from any such sales. See "Plan of
Distribution". The Company believes that the beneficial owners of the Common
Stock listed below, based on information furnished by such owners, have sole
investment and voting power with respect to such shares.
On August 31, 1998, there were 23,518,166 shares of Common Stock
outstanding, after giving effect to the exercise of the Warrants.
<TABLE>
Shares of Common Stock
Owned Prior to This Shares Shares of Common Stock
Offering Offered Owned After this Offering
---------------------- ------- -------------------------
Name of Selling Shareholder Number % of Class Number Number % of Class
- --------------------------- ----------- ---------- ------- ------ ----------
<S> <C> <C> <C> <C> <C>
Ladenburg Thalmann 250,000 (3) * 250,000 0 ---
Capital Corporation(1)(2)
<FN>
* Less than one percent
(1) In July 1997, Ladenburg Thalmann Capital Corporation ("LTCC") loaned the
Company $7.5 million. The Company repaid the loan from LTCC from the net
proceeds of the 1997 Stock Offering. In connection with the loan, LTCC
received warrants to purchase 250,000 shares of Common Stock at an exercise
price of $10.05.
(2) From time to time, Ladenburg Thalmann & Co. Inc., an affiliate of LTCC, has
provided investment banking services to the Company for which they received
normal and customary fees, including in connection with the placement of the
9 7/8% Notes, the 1997 Stock Offering and the 1998 Stock Offering.
(3) Assumes exercise of the Warrants, which are exercisable by the Selling
Shareholder at $10.05 per Share.
</FN>
</TABLE>
PLAN OF DISTRIBUTION
The purpose of this Prospectus is to permit the Selling Shareholder to offer
for sale or to sell the Shares at such time and at such prices as they, in their
sole discretion, choose. The Company will not receive any of the proceeds from
these offerings or sales.
The Selling Shareholder may sell or distribute some or all of the Shares
from time to time through dealers or brokers or other agents or directly to one
or more purchasers in transactions (which may involve crosses and block
transactions) on the NYSE or other exchanges on which the Common Stock may be
listed for trading, in privately negotiated transactions (including sales
pursuant to pledges) or in the over-the-counter market, or in brokerage
transactions, or in a combination of such transactions. Such transactions may be
effected by the Selling Shareholder at market prices prevailing at the time of
sale, at prices related to such prevailing market prices, at negotiated prices,
or at fixed prices, which may be changed. Brokers, dealers, or their agents
participating in such transactions as agent may receive compensation in the form
of discounts, concessions or commissions from the Selling Shareholder (and, if
they act as agent for the purchaser of such shares, from such purchaser.) Such
discounts, concessions or commissions as to a particular broker, dealer or other
agent might be in excess of those customary in the type of transaction involved.
To the extent required, the Company will file, during any period in which offers
or sale are being made, one or more supplements to this Prospectus to set forth
any other material information with respect to the plan of distribution not
previously disclosed.
The Selling Shareholder and any such brokers, dealers or other agents that
participate in such distribution may be deemed to be "underwriters" within the
meaning of the Securities Act, and any discounts, commissions or concessions
received by any such brokers, dealers or other agents might be deemed to be
underwriting discounts and commissions under the Securities Act.
In connection with the offer and sale of the Shares, various state
securities laws and regulations require that any such offer and sale should be
made only through the use of a broker-dealer registered as such in any state
where a Selling Shareholder engages such broker-dealer and in any state where
such broker-dealer intends to offer and sell the Shares.
9
<PAGE>
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of any of the Shares may not simultaneously engage in
market activities with respect to the Common Stock for the applicable period
under Regulation M prior to the commencement of such distribution. In addition
and without limiting the foregoing, the Selling Shareholder will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including without limitation Rule 10B-5 and Regulation M, which
provisions may limit the timing of purchases and sale of any of the Shares by
the Selling Shareholders. All of the foregoing may affect the marketability of
the Shares.
The Company will pay substantially all of the expenses incident to this
offering of the Shares by the Selling Shareholder to the public other than
commissions, concessions and discounts of brokers, dealers or other agents. The
Selling Shareholder may indemnify any broker, dealer, or other agent that
participates in transactions involving sales of the Shares against certain
liabilities, including liabilities arising under the Securities Act. The Company
may agree to indemnify the Selling Shareholder and any such statutory
"underwriters" and controlling persons of such "underwriters" against certain
liabilities, including certain liabilities under the Securities Act.
The Company has agreed, subject to certain suspensions of effectiveness and
adjustments to the period of effectiveness, to keep the Registration Statement
continuously effective for a period of 360 days. The Company and the Selling
Shareholder have agreed to indemnify each other against certain liabilities,
including liabilities arising under the Securities Act, in connection with the
registration of the Shares.
LEGAL MATTERS
The validity, authorization and issuance of the Shares offered hereby will
be passed upon for the Company by Benesch, Friedlander, Coplan & Aronoff LLP of
Cleveland, Ohio. George N. Aronoff, a partner in Benesch, Friedlander, Coplan &
Aronoff LLP, owns 19,000 shares of Common Stock.
EXPERTS
The consolidated financial statements and schedule of the Company at
December 31, 1997 and 1996, and for each of the three years in the period ended
December 31, 1997, incorporated by reference in this Prospectus and the
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon incorporated herein by
reference, and are incorporated herein by reference in reliance upon such
reports given upon the authority of such firm as experts in accounting and
auditing.
10
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the SEC pursuant to the
Exchange Act are incorporated herein by reference:
(1) the Company's Annual Report on Form 10-K for the year ended December 31,
1997, as amended by Form 10-K/A filed with the Commission on April 23,
1998 (file no. 0-27478);
(2) the Company's Form 8-K filed with the Commission on May 7, 1998 (file
no. 0-27478);
(3) the description of the Common Stock contained in the Company's
Registration Statement on Form 8-A/A filed with the Commission on
March 27, 1998 (file no. 0-27478);
(4) the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998 filed with the commission on May 15, 1998 (file
no. 0-27478);
(5) the Company's Form 8-K filed with the Commission on August 6, 1998
(file no. 0-27478); and
(6) the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998 filed with the Commission on August 14, 1998 (file
no. 0-27478).
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus shall be
deemed incorporated by reference in this Prospectus and a part hereof from the
respective date of filing each such document. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company undertakes to provide, without charge, to each person, including
any beneficial owner, to whom a copy of this Prospectus has been delivered, upon
the written or oral request of any such person, a copy of any and all of the
documents referred to above that have been incorporated in this Prospectus by
reference, other than exhibits to such documents. Requests for such copies
should be directed to the Secretary, Bally Total Fitness Holding Corporation,
8700 West Bryn Mawr Avenue, Chicago, Illinois 60631, telephone (773) 380-3000.
11
<PAGE>
No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained in this Prospectus in
connection with the offering covered by this Prospectus. If given or made, such
information or representations must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, the Common Stock in any jurisdiction where, or
to any person to whom, it is unlawful to make such offer or solicitation.
Neither the delivery of this Prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that there has not been any change in
the facts set forth in this Prospectus or the affairs of the Company since the
date thereof.
----------------
TABLE OF CONTENTS
Page
----
Available Information.............. 2
Prospectus Summary................. 3
Special Note Regarding Forward-
Looking Statements............... 6
Risk Factors....................... 6
Use of Proceeds.................... 8
Selling Shareholders............... 9
Plan of Distribution............... 9
Legal Matters...................... 10
Experts............................ 10
Incorporation of Certain
Information by Reference......... 11
250,000 SHARES
BALLY TOTAL FITNESS
HOLDING CORPORATION
COMMON STOCK
---------------
PROSPECTUS
---------------
September 18, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth expenses in connection with the issuance of
the Shares being registered. All of the amounts shown are estimates, except the
registration and listing fees:
<TABLE>
<S> <C>
SEC registration fee........................................ $ 1,224
Accounting fees and expenses................................ 15,000
Legal fees and expenses .................................... 5,000
Printing expenses........................................... 500
Miscellaneous expenses ..................................... 276
----------
Total ................................................. $22,000
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("DGCL") permits the
indemnification of the directors and officers of the Company. The Company
By-laws provide that it will indemnify the officers, directors, employees and
agents of the Company to the extent permitted by the DGCL.
The Company Certificate provides for the indemnification of directors and
officers of the Company, and persons who serve or served at the request of the
Company as a director, officer, employee or agent of another corporation,
including service with respect to employee benefit plans, against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties in amounts paid or to be paid in settlement) reasonably
incurred with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, provided, however, the Company shall
indemnify any such person seeking indemnification in connection with a
proceeding initiated by such person only if such proceeding was authorized by
the Board. In the event a claim for indemnification by any person has not been
paid in full by the Company after written request has been received by the
Company, the claimant may at any time thereafter bring suit against the Company
to recover the unpaid amount of the claim and, if successful in whole or in
part, the claimant shall be entitled to be paid also the expense of prosecuting
such claim. The right to indemnification conferred in the Company Certificate is
a contract right and shall include the right to be paid by the Company the
expenses incurred in defending any such proceeding in advance of its final
disposition. The Company maintains insurance, at its expense, to protect itself
and any director, officer, employee or agent of the Company against any such
expense, liability or loss, whether or not the Company would have the power to
indemnify such person against such expense, liability or loss under state law.
The Company has entered into indemnification agreements with each of the
Company's directors and officers. The indemnification agreements require, among
other things, the Company to indemnify the officers and directors to the fullest
extent permitted by law, and to advance to such directors and officers all
related expenses, subject to reimbursement if it is subsequently determined that
indemnification is not permitted. The Company also indemnifies and advances all
expenses incurred by such directors and officers seeking to enforce their rights
under the indemnification agreements, and covers directors and officers under
the Company's directors' and officers' liability insurance. Although the
indemnification agreements offer substantially the same scope of coverage
afforded by provisions in the Company Certificate, they provide greater
assurance to directors and officers that indemnification will be available
because, as contracts, they cannot be modified unilaterally in the future by the
Board of Directors or stockholders of the Company to eliminate the rights
provided therein.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
5.1 Opinion of Benesch, Friedlander, Coplan & Aronoff LLP.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Benesch, Friedlander, Coplan & Aronoff LLP
(set forth in Exhibit 5.1 hereto).
24.1 Powers of Attorney for the Company
(set forth on the signature page).
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1)To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the SEC pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the SEC
by the registrant pursuant to Section 13 or 15(d) of the Exchange Act that are
incorporated by reference in the registration statement.
(2)That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3)To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrants
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
II-2
<PAGE>
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT ON FORM S-3 TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF CHICAGO, STATE OF ILLINOIS, ON SEPTEMBER 15,
1998.
BALLY TOTAL FITNESS HOLDING
CORPORATION
By: /s/ John W. Dwyer
-------------------------
John W. Dwyer
Executive Vice President,
Chief Financial Officer
and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that each person whose signature appears
below constitutes and appoints Lee W. Hillman and John W. Dwyer, or either of
them, his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement and additional
registration statements pursuant to Rule 462(b) of the Securities Act of 1933,
as amended, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact, agent or
their substitutes or substitute may lawfully do or cause to be done by virtue
hereof.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Arthur M. Goldberg Chairman of the Board of September 15, 1998
--------------------------- Directors
Arthur M. Goldberg
/s/ Lee S. Hillman Chief Executive Officer, September 15, 1998
--------------------------- President, and Director
Lee S. Hillman
/s/ John W. Dwyer Executive Vice President September 15, 1998
--------------------------- Chief Financial Officer
John W. Dwyer and Treasurer
/s/ Geoffrey M. Scheitlin Vice President and September 15, 1998
--------------------------- Controller
Geoffrey M. Scheitlin
/s/ Aubrey C. Lewis Director September 15, 1998
---------------------------
Aubrey C. Lewis
/s/ J. Kenneth Looloian Director September 15, 1998
---------------------------
J. Kenneth Looloian
/s/ James F. Mc Anally,M.D. Director September 15, 1998
---------------------------
James F. Mc Anally, M.D.
/s/ Liza M. Walsh Director September 15, 1998
---------------------------
Liza M. Walsh
</TABLE>
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
------- -----------
5.1 Opinion of Benesch, Friedlander, Coplan & Aronoff LLP.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Benesch, Friedlander, Coplan & Aronoff LLP
(set forth in Exhibit 5.1 hereto).
24.1 Powers of Attorney for the Company (set forth on the signature page).
Exhibit 5.1
September 17, 1998
Board of Directors
Bally Total Fitness Holding Corporation
8700 West Bryn Mawr
Chicago, Illinois 60631
Re: Registration Statement on Form S-3
Gentlemen:
Bally Total Fitness Holding Corporation, a Delaware corporation (the "Company"),
has filed with the Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended, a Registration Statement on Form S-3 (the "Registration
Statement"), which Registration Statement relates to a proposed public offering
of 250,000 shares of common stock, par value $.01 per share, of the Company
("Common Stock") issued pursuant to a Warrant Agreement dated as of July 11,
1997 between the Company and Ladenburg Thalmann Capital Corporation, as amended
(the "Warrant Agreement").
You have requested our opinion in connection with the Company's filing of the
Registration Statement. In this regard, we have examined and relied on originals
or copies, certified or otherwise identified to our satisfaction as being true
copies, of all such records of the Company, all such agreements, certificates of
officers of the Company and others, and such other documents, certificates and
corporate or other records as we have deemed necessary as a basis for the
opinion expressed in this letter including, without limitation, the Warrant
Agreement, the Warrants issued pursuant to the Warrant Agreement (the
"Warrants"), the Company's Certificate of Incorporation and the Registration
Statement.
In our examination, we have assumed the genuineness of all signatures, the legal
capacity of all natural persons, the authenticity of all documents submitted to
us as originals and the conformity to original documents of all documents
submitted to us as certified or photostatic copies. As to facts material to the
opinions expressed in this letter, we have relied on statements and certificates
of officers of the Company and of state authorities.
We have investigated such questions of law for the purpose of rendering the
opinion in this letter as we have deemed necessary. We express no opinion in
this letter concerning any law other than the General Corporation Law of the
State of Delaware.
The opinion expressed herein assumes that there is no change in the facts,
circumstances and law in effect on the date of this opinion, particularly as
they relate to corporate authority and the Company's good standing under
Delaware law.
On the basis of and in reliance on the foregoing, we are of the opinion that the
shares of Common Stock underlying the Warrants, when and if issued and paid for
in accordance with the terms of the Warrant Agreement, will be validly issued,
fully paid and nonassessable.
The opinion in this letter is rendered in connection with the filing of the
Registration Statement. We hereby consent to the filing of this letter as an
exhibit to the Registration Statement and to being named in the Registration
Statement under the heading "Legal Matters" as counsel to the Company.
Very truly yours,
BENESCH, FRIEDLANDER,
COPLAN & ARONOFF LLP
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Bally Total Fitness
Holding Corporation for the registration of 250,000 shares of its common stock
and to the incorporation by reference therein of our reports dated February 17,
1998, with respect to the consolidated financial statements of Bally Total
Fitness Holding Corporation incorporated by reference in its Annual Report (Form
10-K) for the year ended December 31, 1997 and the related financial statement
schedule included therein, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Chicago, Illinois
September 15, 1998
