Bally's Looking Unfit

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Shares of fitness center operator and buxom-actress employer Bally Total Fitness (NYSE: BFT) fell more than 7% yesterday on the news that it will postpone releasing its first-half financial results (and filing its six-month 10-Q report) pending "an examination of certain accounting issues."

A delayed SEC filing is never good news, and this one in particular looks like a sure bet to further irritate the many already-rankled Bally shareholders. (How upset are they? The company's shares, well off the pace of the S&P 500 over the last 12 months, have picked up somewhat since June, but only because an activist investor group demanded that the company shake up its board and management structure, as well as remove a takeover defense. That little pickup was pretty much erased yesterday.)

They're angry because only a few months ago the company restated years of earnings following "errors" concerning accelerated recognition of non-obligatory prepaid membership dues. While announcing in late April that the SEC's enforcement division was investigating its policies, Bally said at the same time that it had changed its systems and "believes its current controls over such systems and processes are effective."

And perhaps they are -- at least with regard to those dues. Yesterday's release, meanwhile, detailed more planned and possible restatements to do with different issues. In short, the problems just aren't going away at Bally. So while the company can talk of solid member growth and stable committed monthly fees per member -- as it did in yesterday's release -- investors have lots more on their minds, as yesterday's move indicates.

Fool contributor Dave Marino-Nachison doesn't own shares of Bally.