The Company

      The Company or Bally 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 March 31, 1998, the 
      Company operated approximately 320 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.

       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 access to 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.

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