CHICAGO, IL — Bally Total Fitness Holding Corp. reported its financial results for the quarter ended March 31, 2003, and the report was mixed.

Net income of $9.7 million ($.30 per diluted share) for the quarter plummeted from the $19.4 million ($.59 per diluted share) in the prior year quarter. Meanwhile, net revenues increased 5 percent to $253.1 million during the quarter, an increase by $12.7 million, which was offset by a $19.1 million (9 percent) increase in operating costs and expenses, Bally's said.

“Bally's results for the first quarter of 2003 show areas where we achieved success, and areas where we need improvement,” said Paul Toback, president and CEO of Bally Total Fitness Holding Corporation.

“In a quarter that experienced many significant challenges, including uncertainty related to the war in Iraq, the continuing weak economy, and the particularly harsh winter weather experienced in many of our largest markets, we remain encouraged by trends in many key areas of the business. Our successes for the quarter include a 43 percent growth in products and services revenue. In addition, we were pleased that the number of members joining our clubs during the quarter grew by 4 percent with a 1 percent increase at the same clubs compared to the same quarter a year ago. However, these successes were offset by falling short of our overall membership revenue goals for the quarter.”

This shortfall in total membership revenue of 5 percent over the prior year period (a 7 percent decline at same clubs), resulted from a 5 percent increase in dues revenue offset by a 15 percent decline in initial membership fees, the company said.

Additionally, the average committed duration of memberships originated during the first quarter of 2003 was 30.5 months vs. 31.2 months in the prior year period, a 2 percent decrease, due to an increased emphasis on monthly pay-as-you-go membership programs, Bally said.

“Because an important part of our strategy is to grow membership revenues, we are continuing to implement several new initiatives. These include a new marketing campaign, as well as expanding the marketing of our pay-as-you-go membership options,” said Toback.