SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
------------------------------------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): July 15, 1999
BALLY TOTAL FITNESS HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
Commission file number: 0-27478
Delaware 36-3228107
(State or other jurisdiction of (I.R.S. Employer
incorporation) Identification No.)
8700 West Bryn Mawr Avenue, Chicago, Illinois 60631
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (773) 380-3000
Page 1 of 2
Exhibit Index on Page 2
<PAGE>
BALLY TOTAL FITNESS HOLDING CORPORATION
FORM 8-K
Current Report
Item 5. Other Events
On August 3, 1999, Bally Total Fitness Holding Corporation
("Company") announced results for the quarter ended June 30, 1999. A
copy of the press release relating to the results for the quarter is
attached as Exhibit 99.1 hereto and is incorporated herein by
reference. All adjustments have been recorded which are, in the
opinion of management, necessary for a fair presentation of the
information included in the press release. All such adjustments were
of a normal recurring nature.
Effective July 15, 1999, the Company amended its Rights Agreement
with LaSalle National Bank Association to change the definition of
"Acquiring Person". A copy of the amendment is attached as Exhibit
99.2 hereto and incorporated by reference herein.
On July 21, 1999, the Company announced the acquisition of The
Sports Clubs of Canada. A copy of the press release relating to the
acquisition is attached as Exhibit 99.3 hereto and incorporated by
reference herein.
Item 7. Financial Statements and Exhibits
c. Exhibits
99.1 Press Release dated August 3, 1999
99.2 Amendment Agreement to Rights Agreement effective as of
July 15, 1999
99.3 Press Release dated July 21, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
BALLY TOTAL FITNESS HOLDING CORPORATION
-------------------------------------------------
Registrant
Dated: August 3, 1999 /s/ John W. Dwyer
-------------------------------------------------
John W. Dwyer
Executive Vice President, Chief Financial Officer
and Treasurer
(principal financial officer)
Page 2 of 2
EXHIBIT 99.1
FROM: BALLY TOTAL FITNESS HOLDING CORPORATION
8700 West Bryn Mawr Avenue
Chicago, IL 60631
www.BallyFitness.com
Contact: Dave Southern - Tel. (773) 399-7611
Vice President, Public & Investor Relations
THE MWW GROUP
Public Relations - Tel. (201) 507-9500
Contact: Laurie Terry Fern - Email: [email protected]
- --------------------------------------------------------------------------------
BALLY TOTAL FITNESS ANNOUNCES
SECOND QUARTER RESULTS
Operating Income Improves 82% - Earnings Per Share
$.34 Versus $.08 a Year Ago
CHICAGO, IL, August 3, 1999 - Bally Total Fitness Holding Corporation
(NYSE: BFT) today announced second quarter 1999 results - with fully diluted
earnings per share of $.34 versus $.08 in the prior year and operating income of
$21.1 million - an improvement of 82% over the 1998 quarter. Earnings before
interest, taxes, depreciation and amortization for the 1999 quarter grew to
$33.8 million, a 44% improvement over the 1998 quarter, and the positive trend
of growth in operating cash flows continued.
Commenting on achievement of another strong quarter, Lee Hillman,
President and Chief Executive Officer of Bally Total Fitness, said, "Bally
continued to demonstrate success and gain momentum as evidenced by the growth in
earnings and positive trends in cash flows. By implementing the plan we
presented two years ago, we are continuing to invest in programs that achieve
results with rapid returns. Our aggressive program of facility upgrades, new
product and service offerings and club expansion efforts are demonstrating their
value. We have now added 26 new fitness centers during 1999, including our
recent acquisition of The Sports Clubs of Canada, a profitable, upscale
10-center group in Toronto. Also, as we had expected, second quarter new member
joins grew 9% over prior year levels while seasonal attrition was 5% lower than
prior year trends." Mr. Hillman concluded, "A significant driver of our business
success, member satisfaction, is improving dramatically, as seen by these
trends. And our focus is to make the member experience still better by
continuing to execute those initiatives."
# # #
<PAGE>
COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 1999 AND 1998
Operating income for the second quarter of 1999 was $21.1 million compared
to $11.6 million in 1998. The increase of $9.5 million (82%) was due to a $28.4
million (16%) increase in revenues partially offset by an $18.0 million (11%)
increase in operating costs and an increase in depreciation and amortization of
$.9 million (8%). The operating margin before depreciation and amortization
increased to 16% from 13% in the prior year period. Operating costs and
expenses, excluding the separately discussed provision for doubtful receivables
and deferral accounting, increased $11.7 million (9%). This increase was
principally to support the revenue growth from new product and service offerings
and the incremental cost of operating additional fitness centers. Operating
income from new product and service offerings, reported net of development,
preopening and startup costs related to such offerings, grew to $3.6 million
from $2.2 million in the 1998 quarter on 64% revenue growth to $12.5 million
from $7.6 million during the prior year period.
Net revenues for the second quarter of 1999 were $209.8 million compared
to $181.4 million in 1998, an increase of $28.4 million (16%). The weighted
average number of fitness centers increased to 336 in the second quarter of 1999
from 319 in the second quarter of 1998, including an increase to a weighted
average of 16 from 10 centers operating under the Company's three upscale
brands. Net revenue and new membership joins from comparable fitness centers
increased 11% and 2%, respectively. Total new membership units sold during the
quarter increased 9% over the prior year period while the weighted average
selling price of membership contracts sold increased 7%. This increase was
almost entirely attributable to the sale of higher margin multi-club membership
plans. As a result, membership fees originated increased $15.5 million (14%),
consisting of a $17.5 million (17%) increase in financed memberships originated
offset, in part, by a planned $2.0 million (27%) decrease in paid-in-full
memberships originated. Dues collected increased $8.7 million (19%) from the
1998 quarter, reflecting both continued improvements in member retention and
pricing strategies implemented during prior periods.
Finance charges earned during the second quarter of 1999 increased $3.3
million (27%) compared to the 1998 quarter, due to the growth in size and
consistent higher quality of the receivables portfolio. The average interest
rate for finance charges to members was substantially unchanged between the
periods.
<PAGE>
The provision for doubtful receivables, included in operating costs and
expenses, for the second quarter of 1999 was $34.9 million compared to $29.3
million in 1998, an increase of $5.6 million (19%) due to the increase in
initial membership fees on financed memberships originated. The total provision
rate, inclusive of provisions for cancellations which are reflected in the
financial statements as a direct reduction of initial membership fees on
financed memberships originated, was 41% of gross financed originations during
each of the periods.
Deferral accounting reduced earnings by $5.4 million for 1999 compared to
1998. This decrease reflects the combined impact of a decrease in revenues of
$4.7 million and a $.7 million decrease in the expense offset.
COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
Operating income for the first six months of 1999 was $39.4 million
compared to $23.6 million in 1998. The increase of $15.8 million (67%) was due
to a $52.6 million (14%) increase in revenues, offset, in part, by an increase
in operating costs and expenses of $36.2 million (11%) and an increase in
depreciation and amortization of $.5 million (2%). The operating margin before
depreciation and amortization increased to 15% from 13% in the prior year
period. Operating costs and expenses, excluding the separately discussed items
consisting of the provision for doubtful receivables and deferral accounting,
increased $22.2 million (8%). This increase was principally to support the
revenue growth from new product and service offerings and the incremental cost
of operating additional fitness centers. Operating income from new product and
service offerings, reported net of development, preopening and startup costs
related to such offerings, totaled $7.1 million on revenues of $23.9 million, a
substantial increase from the prior year totals of $4.8 million and $14.5
million, respectively.
Net revenues for 1999 were $418.5 million compared to $365.9 million in
1998, an increase of $52.6 million (14%). The weighted average number of fitness
centers during 1999 increased to 332 from 317 during 1998, including an increase
to a weighted average of 15 from 8 centers operating under three upscale brands.
Net revenue and new member joins from comparable fitness centers increased 10%
and 1%, respectively. Total new membership units sold increased 7% over the
prior year period while the weighted average selling price of membership
contracts sold increased 7%. This increase was almost entirely attributable to
the sale of higher margin multi-club membership plans. As a result, membership
fees originated
<PAGE>
increased $25.8 million (11%), consisting of a $31.0 million (14%) increase in
financed memberships originated offset, in part, by a planned $5.2 million (30%)
decrease in paid-in-full memberships originated. This increase was almost
entirely attributable to the sale of higher margin multi-club membership plans.
Dues collected increased $17.1 million (17%) from the 1998 period, reflecting
both continued improvements in member retention and pricing strategies
implemented in prior periods.
Finance charges earned increased $6.1 million (26%) in 1999 due to the
growth in size and consistent higher quality of the receivables portfolio. The
average interest rate for finance charges to members was substantially unchanged
during the periods.
The provision for doubtful receivables, included in operating costs and
expenses, was $71.7 million in 1999 compared to $61.7 million in 1998, an
increase of $10.0 million (16%), due entirely to the increase in initial
membership fees on financed memberships originated. The total provision rate,
inclusive of provisions for cancellations which are reflected in the financial
statements as a direct reduction of initial membership fees on financed
memberships originated, was 41% of gross financed originations during each of
the two periods.
Deferral accounting reduced earnings by $11.9 million for 1999 compared
to 1998. This decrease reflects the combined impact of a decrease in revenues of
$8.0 million and a $3.9 million decrease in the expense offset.
CASH FLOW
Cash provided by operating activities for the six months of 1999 was $16.5
million compared to a use of $21.2 million in the 1998 period. The period over
period improvement of $37.7 million ($21.5 million for the second quarter)
principally reflects the continued growth in overall collections from
installment contracts receivable and monthly dues. Net installment contracts
receivable grew $41.4 million during the six-month period compared to $50.1
million in the 1998 period. Excluding the growth in receivables, cash provided
by operating activities improved $29.0 million ($16.3 million in the second
quarter) over the 1998 period. Consistent with the Company's plan, during the
first six months of 1999, approximately $54 million was invested in property and
equipment, including approximately $41 million related to new fitness centers
and major upgrades to existing facilities. For the remainder of 1999, a decrease
in investment for property and equipment is planned. As of
<PAGE>
June 30, 1999, the Company's $90 million revolving credit line was unused except
for outstanding letters of credit totaling $6.5 million.
Bally Total Fitness is the largest, commercial operator of fitness centers
in North America, with approximately four million members and 350 facilities
located in 27 states and Canada. With more than 120 million annual visits by
members to its fitness centers, Bally Total Fitness provides a unique platform
for distribution of products and services to active, fitness-conscious adult
consumers.
# # #
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 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. 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 and service 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; failure of entities that
provide goods and services to us to be year 2000 compliant 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.
<PAGE>
<TABLE>
BALLY TOTAL FITNESS HOLDING CORPORATION
CONSOLIDATED OPERATING SUMMARY
(In thousands, except share data)
(Unaudited)
<CAPTION>
Three months ended June 30
--------------------------
1999 1998
------------ ------------
<S> <C> <C>
Net revenues:
Membership revenues -
Initial membership fees on financed
memberships originated................. $ 118,891 $ 101,422
Initial membership fees on paid-in-full
memberships originated................. 5,435 7,443
Dues collected................................ 55,354 46,629
Changes in deferred revenues.................. (839) 3,833
------------ ------------
178,841 159,327
Finance charges earned........................ 15,477 12,184
Fees and other................................ 15,506 9,884
------------ ------------
209,824 181,395
Operating costs and expenses:
Fitness center operations...................... 115,693 104,466
Member processing and collection centers....... 9,711 9,620
Advertising.................................... 12,106 11,589
General and administrative..................... 6,203 6,319
Provision for doubtful receivables............. 34,876 29,306
Change in deferred membership origination costs (2,562) (3,292)
------------ ------------
176,027 158,008
Operating income before depreciation and
amortization ("EBITDA")........................ 33,797 23,387
Depreciation and amortization.................... 12,649 11,752
------------ ------------
Operating income................................. 21,148 11,635
Interest income.................................. 553 720
Interest expense................................. (12,446) (10,301)
------------ ------------
Income before income taxes....................... 9,255 2,054
Income tax provision............................. (180) (50)
------------ ------------
Net income....................................... $ 9,075 $ 2,004
============ ============
Basic earnings per common share.................. $ .39 $ .09
============ ============
Average common shares outstanding.............. 23,325,783 22,430,153
Diluted earnings per common share................ $ .34 $ .08
============ ============
Average diluted common shares outstanding
(includes 3,683,768 and 3,991,437 common
equivalent shares in 1999 and 1998,
respectively)................................ 27,009,551 26,421,590
</TABLE>
<PAGE>
<TABLE>
BALLY TOTAL FITNESS HOLDING CORPORATION
CONSOLIDATED OPERATING SUMMARY
(In thousands, except share data)
(Unaudited)
<CAPTION>
Six months ended June 30
--------------------------
1999 1998
------------ ------------
<S> <C> <C>
Net revenues:
Membership revenues -
Initial membership fees on financed
memberships originated................. $ 245,621 $ 214,610
Initial membership fees on paid-in-full
memberships originated................. 12,105 17,301
Dues collected................................ 115,322 98,202
Changes in deferred revenues.................. (14,276) (6,314)
------------ ------------
358,772 323,799
Finance charges earned........................ 29,460 23,331
Fees and other................................ 30,297 18,800
------------ ------------
418,529 365,930
Operating costs and expenses:
Fitness center operations...................... 228,682 207,588
Member processing and collection centers....... 20,348 20,258
Advertising.................................... 25,879 25,089
General and administrative..................... 12,891 12,624
Provision for doubtful receivables............. 71,691 61,698
Change in deferred membership origination costs (5,451) (9,384)
------------ ------------
354,040 317,873
Operating income before depreciation and
amortization ("EBITDA")........................ 64,489 48,057
Depreciation and amortization.................... 25,044 24,495
------------ ------------
Operating income................................. 39,445 23,562
Interest income.................................. 1,414 1,271
Interest expense................................. (24,743) (20,507)
------------ ------------
Income before income taxes and cumulative effect
of a change in accounting principle............ 16,116 4,326
Income tax provision............................. (330) (250)
------------ -------------
Income before cumulative effect of a change in
accounting principle........................... 15,786 4,076
Cumulative effect of a change in accounting
principle, net of income tax................... (262)
------------ ------------
Net income....................................... $ 15,524 $ 4,076
============ ============
Basic earnings per common share:
Income before cumulative effect of a change in
accounting principle......................... $ .68 $ .19
Cumulative effect of a change in accounting
principle.................................... (.01)
------------ ------------
Net income per common share.................... $ .67 $ .19
============ ============
Average common shares outstanding.............. 23,264,586 21,509,974
Diluted earnings per common share:
Income before cumulative effect of a change in
accounting principle......................... $ .59 $ .16
Cumulative effect of a change in accounting
principle.................................... (.01)
------------ ------------
Net income per common share - assuming dilution $ .58 $ .16
============ ============
Average diluted common shares outstanding
(includes 3,654,937 and 3,859,706 common
equivalent shares in 1999 and 1998,
respectively)................................ 26,919,523 25,369,680
</TABLE>
<PAGE>
<TABLE>
BALLY TOTAL FITNESS HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
(Unaudited)
<CAPTION>
June 30 December 31
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents.............................. $ 13,020 $ 64,382
Installment contracts receivable, net............. 217,234 199,979
Other current assets.............................. 36,155 34,212
---------- ----------
Total current assets............................ 266,409 298,573
Installment contracts receivable, net............... 246,278 222,147
Property and equipment, less accumulated
depreciation and amortization of $361,150
and $340,702...................................... 401,960 361,300
Intangible assets, less accumulated
amortization of $61,366 and $58,844............... 103,537 101,815
Deferred income taxes............................... 23,808 17,430
Deferred membership origination costs............... 103,727 97,901
Other assets........................................ 36,245 29,679
---------- ----------
$1,181,964 $1,128,845
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................... $ 44,171 $ 40,957
Income taxes payable............................... 2,835 2,608
Deferred income taxes.............................. 25,297 18,919
Accrued liabilities................................ 53,013 48,596
Current maturities of long-term debt............... 6,989 5,799
Deferred revenues.................................. 292,388 282,806
---------- ----------
Total current liabilities........................ 424,693 399,685
Long-term debt, less current maturities.............. 487,193 482,199
Other liabilities.................................... 6,126 6,226
Deferred revenues.................................... 85,481 78,952
Stockholders' equity................................. 178,471 161,783
---------- ----------
$1,181,964 $1,128,845
========== ==========
</TABLE>
<PAGE>
Note to the Condensed Consolidated Balance Sheet:
<TABLE>
INSTALLMENT CONTRACTS RECEIVABLE
<CAPTION>
June 30 December 31
1999 1998
----------- -----------
<S> <C> <C>
Current:
Installment contracts receivable................... $ 332,783 $ 294,880
Unearned finance charges......................... (41,992) (35,792)
Allowance for doubtful receivables
and cancellations.............................. (73,557) (59,109)
---------- ----------
$ 217,234 $ 199,979
========== ==========
Long-term:
Installment contracts receivable................... $ 326,258 $ 287,443
Unearned finance charges......................... (21,240) (18,104)
Allowance for doubtful receivables
and cancellations.............................. (58,740) (47,192)
---------- ----------
$ 246,278 $ 222,147
========== ==========
</TABLE>
<TABLE>
A summary of the allowance for doubtful receivables and cancellations activity
is as follows:
<CAPTION>
Three months ended Six months ended
June 30 June 30
-------------------- -------------------
1999 1998 1999 1998
--------- --------- -------- ---------
<S> <C> <C> <C> <C>
Balance at beginning of period..... $ 121,109 $ 95,471 $ 106,301 $ 80,531
Contract cancellations and
write-offs of uncollectible
amounts, net of recoveries....... (63,710) (49,950) (127,517) (104,717)
Provision for cancellations
(classified as a direct
reduction of revenues).......... 40,022 32,709 81,822 70,024
Provision for doubtful
receivables...................... 34,876 29,306 71,691 61,698
--------- --------- --------- ---------
Balance at end of period........... $ 132,297 $ 107,536 $ 132,297 $ 107,536
========= ========= ========= =========
</TABLE>
<PAGE>
<TABLE>
BALLY TOTAL FITNESS HOLDING CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
<CAPTION>
Six months ended June 30
--------------------------
1999 1998
------------ ------------
<S> <C> <C>
Operating:
Income before cumulative effect of a change in
accounting principle......................... $ 15,786 $ 4,076
Adjustments to reconcile -
Depreciation and amortization, including
amortization included in interest expense.. 26,603 25,602
Provision for doubtful receivables........... 71,691 61,698
Change in operating assets and liabilities... (97,550) (112,544)
------------ ------------
Cash provided by (used in) operating
activities............................. 16,530 (21,168)
Investing:
Purchases and construction of property and
equipment.................................... (54,199) (28,182)
Acquisitions of businesses and other........... (7,027) (2,073)
------------ -----------
Cash used in investing activities........ (61,226) (30,255)
Financing:
Debt transactions -
Redemption of 13% Senior Subordinated Notes
due 2003................................... (24,021)
Repayments of other long-term debt........... (3,605) (3,038)
Debt issuance and refinancing costs.......... (4,225) (307)
------------ ------------
Cash used in debt transactions........... (7,830) (27,366)
Equity transactions -
Proceeds from issuance of common stock
through public offering.................... 82,744
Proceeds from issuance of common stock under
stock purchase and options plans........... 1,164 347
------------ ------------
Cash provided by (used in) financing
activities............................. (6,666) 55,725
------------ ------------
Increase (decrease) in cash and equivalents...... (51,362) 4,302
Cash and equivalents, beginning of period........ 64,382 61,679
------------ ------------
Cash and equivalents, end of period.............. $ 13,020 $ 65,981
============ ============
</TABLE>
###
EXHIBIT 99.2
AMENDMENT AGREEMENT
BALLY TOTAL FITNESS HOLDING CORPORATION, a Delaware corporation (the
"Company"), and the LASALLE BANK NATIONAL ASSOCIATION (the "Rights Agent")
hereby enter into this amendment ("Amendment") effective as of July 15, 1999.
R E C I T A L S:
The Company and the Rights Agent entered into a Rights Agreement dated as
of January 5, 1996 ("Rights Agreement"). The Board of Directors of the Company
has determined that it is in the best interests of the Company to amend the
Rights Agreement. Capitalized terms used in this Agreement not otherwise defined
herein shall have the meanings given such terms in the Rights Agreement.
Section 1. Amendment.
1.1 The definition of "Acquiring Person" contained in Section 1(a) of the
Rights Agreement shall be amended by deleting it in toto and inserting in lieu
thereof the following:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial
Owner of 10% or more of the Common Shares then outstanding; provided, that
an Acquiring Person shall not include (i) any Exempt Person (as
hereinafter defined), (ii) any Person, together with all Affiliates and
Associates of such Person, who or which would be an Acquiring Person
solely by reason of (A) being the Beneficial Owner of common Shares, the
Beneficial Ownership of which was acquired by such Person pursuant to any
action or transaction or series of related actions or transactions
approved by the Board of Directors of the Company (but only if at the time
of such approval by the Board of Directors there are then in office not
less than a majority of directors (and in no event less than three
directors) who are Continuing Directors and such action is approved by a
majority of the Continuing Directors then in office) before such Person
otherwise became an Acquiring Person or (B) a reduction in the number of
issued and outstanding Common Shares pursuant to a transaction or a series
of related transactions approved by the Board of Directors of the Company;
or (iii) any Person specified in Rule 13d-1(b)(1)(ii) of the General Rules
and Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on July 2, 1999, who acquired the Beneficial
Ownership of Common Shares in the ordinary course of his business and not
with the purpose nor with the effect of changing or influencing the
control of the Company, nor in connection with or as a participant in any
transaction having such purpose or effect; provided, however, that in the
event a Person described in clause (ii) or (iii) does not become an
Acquiring Person by reason of clause (ii) or (iii), such person
nonetheless shall become an Acquiring Person in the event such Person
thereafter acquires Beneficial Ownership of an additional 1% of the Common
Shares, unless the acquisition of such additional Common Shares would not
result in such Person becoming an Acquiring Person by reason of clause
(ii) or (iii) of this Section 1(a), and provided further, that in no event
shall the exclusion contained in clause (iii) apply to any Person who
shall be the Beneficial Owner of 15% or more of the Common Shares then
outstanding.
<PAGE>
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith (but only if at the time of such determination by
the Board of Directors there are then in office not less than a majority
of directors (and in no event less than three directors) who are
Continuing Directors and such action is approved by a majority of the
Continuing Directors then in office) that a Person who would otherwise be
an "Acquiring Person" as defined pursuant to the foregoing provisions of
this Section 1(a) has become such inadvertently, and such Person divests
as promptly as practicable a sufficient number of shares of Common Stock
so that such Person would no longer be an "Acquiring Person" as defined
pursuant to the foregoing provisions of this Section 1(a), then such
Person shall not be deemed an "Acquiring Person" for any purposes of this
Agreement.
Section 2. General.
2.1 Except as expressly modified herein, the Rights Agreement is and
remains in full force and effect.
2.2 This Amendment will be binding upon and inure to the sole and
exclusive benefit of the Company, the Rights Agent, and the registered holders
of the Rights Certificates (and, prior to the Distribution Date, the Common
Shares).
2.3 This Amendment may be executed in any number of counterparts, and
each of such counterparts shall for all purposes be deemed an original, and all
of which shall together constitute but one and the same instrument.
2.4 This Amendment shall be deemed to be a contract under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and attested, all as of the day and year first above written.
Attest: BALLY TOTAL FITNESS HOLDING
CORPORATION
By: ________________________ By: _________________________________
Title: ________________________ Its: _________________________________
Attest: LASALLE BANK NATIONAL ASSOCIATION
By: ________________________ By: _________________________________
Title: ________________________ Its: _________________________________
"Rights Agent"
EXHIBIT 99.3
FROM: BALLY TOTAL FITNESS HOLDING CORPORATION
8700 West Bryn Mawr Avenue
Chicago, Illinois 60631
Contact: Dave Southern - Tel. (773) 399-7611
Vice President, Public and Investor Relations
Email: [email protected]
THE MWW GROUP
Public Relations
Contact: Laurie Terry - Tel. (201) 964-2409
Email: [email protected]
- --------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
BALLY TOTAL FITNESS CONTINUES TO EXPAND ACROSS NORTH
AMERICA WITH ACQUISITION OF CANADIAN FITNESS COMPANY
THE SPORTS CLUBS OF CANADA IS LATEST ADDITION TO COMPANY'S GROWING PORTFOLIO OF
UPSCALE FITNESS BRANDS
CHICAGO, July 21, 1999 - Bally Total Fitness (NYSE: BFT) today announced
the acquisition of The Sports Clubs of Canada, the leading upscale fitness club
chain in Canada. The Sports Clubs of Canada operates 10 high quality, customer
service-oriented, upscale commercial fitness, racquet and social clubs in
Toronto. Following the merger, Bally Total Fitness will own and operate 13
fitness centers in the Toronto market, bringing to more than 350 the total
number of Bally Total Fitness centers in North America.
Bally management intends to operate The Sports Clubs of Canada under its
current brand, allowing the combined Canadian operations of Bally Total Fitness
to offer the best in fitness to a wider range of potential fitness center
members in Toronto, including moderate to upscale market segments.
The combined group of fitness centers in Toronto will be managed by the
highly experienced management team of The Sports Clubs of Canada, who will lead
Bally's expansion of its Canadian operations.
Lee Hillman, President and Chief Executive Officer of Bally Total Fitness,
said, "We are enthusiastic about the combination of our businesses. The Sports
Clubs of Canada's clubs are outstanding, well-managed facilities, and we are
fortunate to have this strong management team join us to help expand our
Canadian presence."
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Bally and Sports Clubs of Canada
Take 2-2-2
"We expect the acquisition to be accretive to our earnings," Hillman
continued, "and expect to achieve certain operating economies of scale as these
clubs are quickly integrated into Bally's administrative support infrastructure.
"The strong Sports Clubs of Canada brand is a great addition to our
growing portfolio of upscale, higher-margin fitness brands, which today includes
Bally Sports Clubs, Pinnacle Fitness and Gorilla Sports." Hillman concluded,
"With these brands, Bally Total Fitness is in a great position to tailor our
product and service offerings to closely meet the needs of our members in each
market where we operate."
The Sports Clubs of Canada's President, Michael Levy, expressed excitement
for the merger, noting that, "I have been thoroughly impressed by both the
management team's vision for Bally Total Fitness and the consistently high
quality of people who make up that team. Our merger with Bally gives us the
financial resources, administrative support and depth of professional management
that will benefit both our members and employees, as well as help us further
expand The Sports Clubs of Canada."
Bally Total Fitness has added 26 new fitness centers across North America
during 1999 and expects to open at least 10 additional centers before the end of
the year.
Bally Total Fitness is the largest, and only nationwide, commercial
operator of fitness centers, with approximately 4 million members and 350
facilities located in 27 states and Canada. With more than 120 million annual
visits by members to its fitness centers, Bally Total Fitness provides a unique
platform for distribution of products and services to active, fitness-conscious
adult consumers.
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 regulation; regional weather conditions; failure of
entities that provide goods and services to us to be year 2000 compliant; 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.
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