S&P: Sports Club unaffected

Standard & Poor's said Tuesday that its rating on The Sports Club Co. Inc. (CCC/negative/--) is not affected by the company's dismissal of KPMG LLP as its independent auditor.

The dismissal will be effective upon completion of KPMG's review of Sports Club's unaudited consolidated interim financial statements to be included in Sports Club's form 10-Q for the quarter ended June 30, 2004. In KPMG's audit of consolidated financial statements for the year ended Dec. 31, 2003, KPMG noted that Sports Club does not have adequate internal controls over the application of new accounting principles or the application of existing accounting principles to new transactions.

S&P said this, in conjunction with Sports Club's very strained liquidity, raises investor uncertainties.

S&P said it will closely monitor developments with regard to Sports Club's selection of a new independent auditor and the audit transition process. Further strain on the company's liquidity or negative developments in financial reporting and accounting could cause a downgrade.

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