Bally Discusses Future Growth at Annual Meeting


CHICAGO--Speaking at today's Annual Meeting of Shareholders in Toronto, Ontario, Canada, Lee Hillman, Chairman of the Board of Directors, CEO and President, of Bally Total Fitness Holding Corporation (NYSE: BFT - news) told shareholders that the Company exceeded all of its financial benchmarks during the past fiscal year and achieved revenues of over $1 billion for the first time in Company history.

He reviewed highlights of the Company's successful performance in 2000 and outlined the strategy for building further growth and profitability in five key areas:

Customer service

Incremental revenue

Club growth and expansion

Building and leveraging the Bally Total Fitness brand

Strengthening the balance sheet

Bally's Customer-Centric Focus

``Driving Bally's growth during the past fiscal year and the cornerstone of our strategy is a focus on enhancing the customer experience,'' said Mr. Hillman. ``The upgrading of facilities, addition of fitness activities, enhancement of membership programs along with expanded offerings of fitness related products and services is heightening customer satisfaction and a big reason why Bally has such a low attrition rate.''

``The key to the lasting success of Bally is member satisfaction,'' said Mr. Hillman as he outlined a number of new customer-centric initiatives including:

Expansion of its private-label nutritional line to include ``Rapid Results'' packs which help members achieve the results they desire

Enhanced group exercise offerings to include cutting edge classes such as Kwando Spar, Pilates, Yoga and Aqua Fitness

Providing online account access at to grant easy access to individual account information

Additional membership options, adding more flexibility to payment programs, reaching a wider audience on an introductory basis

Building Incremental Revenue

``Our customer service initiatives are also delivering increased yield from every membership,'' added Mr. Hillman. ``We are particularly enthusiastic about our highly successful and expanding personal training services and the future of our nutritional supplement business.''

Bally currently has nearly 3,300 trainers on staff and expects to double that number over the next two years. From virtually zero in 1997, products and services in 2000 generated $111 million in revenues as well as $38.6 million in operating income, a 74% increase over 1999. The Company's retail revenue is also growing at a high rate, spurred by the introduction of new Bally nutritional bars and drinks during the past year. For 2001, there will be further expansion of the product range and the pursuit of distribution outside of Bally facilities.

Club Growth and Expansion

Mr. Hillman discussed the opening of 14 new clubs in 2000 and indicated that the Company planned on opening approximately 25 facilities during 2001. The Bally club at the prestigious Eaton Centre in Toronto, which was the site of the annual meeting, is one of two new Canadian clubs opened during the past six months and builds on the Company's 1999 merger with Sports Clubs of Canada. This brings Bally's presence in the Toronto area to a total of 13 clubs, with another under construction. Bally also entered the Portland, Oregon market in 2000 with the acquisition of 13 clubs.

``Bally is already a leader in each of the top 25 U.S. markets and 45 of the top 50 metropolitan areas in the U.S. and Canada,'' continued Mr. Hillman. ``In fact, nearly two-thirds of Americans live within 10 miles of an existing Bally Total Fitness center. However, there are plenty of opportunities for further profitable expansion through new club development and acquisition. We will seek to both fill in geographic gaps and take advantage of economies of scale. Earlier this year we completed our first international franchise agreement for a club in the Bahamas and look forward to expanding this program later this year.''

Building and Leveraging the Bally Brand

Since the beginning of 2000, Bally has aggressively pursued a number of brand building initiatives. These included expanding its co-marketing partnerships with leading consumer product companies. Bally has partnered with AOL Time Warner, Kodak, Pepsi, Kraft, Sprint and Novartis among others to deliver the Bally brand name to new audiences and help these industry leaders reach the Company's approximately four million members. The Company joined forces with Sports &Leisure Technology in 2000, to expand distribution of Bally Total Fitness Products into Gart's and Zeller's, national retail chains in the U.S. and Canada. Bally also partnered with the University of Chicago Hospitals to bring full scale outpatient physical rehabilitation and therapy services to a Bally club in Chicago.

``Bally stands apart as the best platform to reach an enormous population of active lifestyle, fitness conscious consumers,'' added Mr. Hillman. ``We will continue to seek opportunities to expand the Bally name and develop co-marketing initiatives with other leading brands. At the same time we look forward to pursuing additional avenues to leverage our facilities, products and services.''

Strengthening the Balance Sheet

Mr. Hillman also discussed Bally's agreement in March of 2001 that resulted in the sale of approximately 8% of the Company's membership receivables portfolio to Household International at net book value. The sale generated initial cash proceeds of approximately $45 million and provides for future profit participation for Bally. He stated that, ``the agreement with Household demonstrated to the market the strength and value of Bally Total Fitness receivables. This transaction is one of the steps we are taking to further improve our balance sheet. It also reflects our commitment to de-leveraging our assets and focusing our resources on building our core businesses.''

Mr. Hillman concluded by telling shareholders, ``I'm proud of the work we are doing and of our people. With a focus on our core business, customer service and enhanced brand recognition, I am confident that we are well positioned to prosper in the years ahead.''

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