ATLANTIC CITY, N.J. (AP) _ Bally Manufacturing Corp. will pay $3.7 million in taxes, ending an 11-year battle with the Internal Revenue Service over the company's purchase of a health and fitness chain, the company said Friday.

The dispute was over tax obligations incurred in the company's 1983 purchase of what is now Bally's Health & Tennis Corp.

The IRS had said the amount due could be as high as $32 million. But the government agreed to the lower amount after negotiations with Bally officials, said company spokesman Michael Kempner.

Bally Manufacturing is based in Chicago.