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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2003
--------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________ to ___________________
Commission file number: 0-25064
----------------
HEALTH FITNESS CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota 41-1580506
- --------------------------------------------------------------------------------
(State of incorporation or organization) (I.R.S. Employer Identification No.)
3600 West 80th Street, Bloomington, Minnesota 55431
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(952) 831-6830
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. [X] Yes [ ] No
The number of shares outstanding of each of the registrant's classes of
capital stock, as of May 12, 2003 was:
Common Stock, $0.01 par value, 12,322,908 shares
HEALTH FITNESS CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
TABLE OF CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (unaudited)
Consolidated Balance Sheets as of March 31, 2003 and 2
December 31, 2002
Consolidated Statements of Earnings for the three 3
months ended March 31, 2003 and 2002
Consolidated Statements of Cash Flows for the three 4
months ended March 31, 2003 and 2002
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition 7
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk 10
Item 4. Controls and Procedures 10
PART II. OTHER INFORMATION 11
Item 1. Legal Proceedings
Items 2-5. Not Applicable
Item 6. Exhibits and reports on Form 8-K
Signatures 12
Certifications Sarbanes-Oxley Section 302 certifications of Chief
Executive Officer and Chief Financial Officer 13
Exhibit Index 15
1
HEALTH FITNESS CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED )
March 31, December 31,
2003 2002
------------ ------------
ASSETS
CURRENT ASSETS
Cash $ 86,850 $ 91,658
Trade and other accounts receivable, less allowance for doubtful
accounts of $79,400 and $83,500 4,293,134 4,036,888
Prepaid expenses and other 287,797 266,734
Deferred tax assets 731,500 731,500
------------ ------------
Total current assets 5,399,281 5,126,780
PROPERTY AND EQUIPMENT, net 184,426 176,206
OTHER ASSETS
Goodwill 5,308,761 5,308,761
Deferred tax assets 2,101,872 2,254,876
Other 212,744 89,188
------------ ------------
$ 13,207,084 $ 12,955,811
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable $ 437,529 $ 304,589
Trade accounts payable 278,681 409,150
Accrued salaries, wages, and payroll taxes 1,457,000 1,072,982
Other accrued liabilities 250,721 415,856
Accrued benefits 180,010 267,042
Deferred revenue 1,245,048 1,407,437
------------ ------------
Total current liabilities 3,848,989 3,877,056
COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value; 5,000,000 shares authorized, none
issued or outstanding -- --
Common stock, $0.01 par value; 25,000,000 shares authorized; 12,322,908
and 12,297,661 shares issued and outstanding 123,229 122,977
Additional paid-in capital 17,008,475 16,997,367
Accumulated deficit (7,773,609) (8,041,589)
------------ ------------
9,358,095 9,078,755
------------ ------------
$ 13,207,084 $ 12,955,811
============ ============
See notes to consolidated financial statements
2
HEALTH FITNESS CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
Three Months Ended
March 31,
----------------------------
2003 2002
------------ ------------
REVENUE $ 7,518,205 $ 6,687,394
COSTS OF REVENUE 5,863,806 5,213,103
------------ ------------
GROSS PROFIT 1,654,399 1,474,291
OPERATING EXPENSES
Salaries 783,542 665,981
Selling, general, and administrative 409,314 412,248
------------ ------------
Total operating expenses 1,192,856 1,078,229
------------ ------------
OPERATING INCOME 461,543 396,062
OTHER INCOME (EXPENSE)
Interest expense (10,505) (98,622)
Other, net (1,028) (1,747)
------------ ------------
EARNINGS BEFORE INCOME TAXES 450,010 295,693
INCOME TAX EXPENSE (BENEFIT) 182,030 (491,628)
------------ ------------
NET EARNINGS $ 267,980 $ 787,321
============ ============
NET EARNINGS PER SHARE:
Basic $ 0.02 $ 0.06
Diluted 0.02 0.06
WEIGHTED AVERAGE COMMON SHARES
Basic 12,308,321 12,265,250
Diluted 12,404,312 12,396,891
See notes to consolidated financial statements
3
HEALTH FITNESS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
--------------------------
2003 2002
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 267,980 $ 787,321
Adjustments to reconcile net earnings to net cash provided by (used in)
operating activities:
Depreciation and amortization 18,270 62,194
Deferred taxes 153,004 (511,000)
Change in assets and liabilities:
Trade and other accounts receivable (256,246) (298,058)
Prepaid expenses and other (21,063) (14,818)
Other assets (123,556) (427)
Trade accounts payable (130,469) (30,975)
Accrued liabilities and other 131,851 509,838
Deferred revenue (162,389) (72,370)
----------- -----------
Net cash provided by (used in) operating activities (122,618) 431,705
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (26,490) (12,135)
----------- -----------
Net cash used in investing activities (26,490) (12,135)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under note payable 811,940 6,201,955
Repayments of note payable (679,000) (6,660,816)
Proceeds from the issuance of common stock 11,360 --
----------- -----------
Net cash provided by (used in) financing activities 144,300 (458,861)
----------- -----------
NET DECREASE IN CASH (4,808) (39,291)
CASH AT BEGINNING OF PERIOD 91,658 221,008
----------- -----------
CASH AT END OF PERIOD $ 86,850 $ 181,717
=========== ===========
See notes to consolidated financial statements
4
HEALTH FITNESS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
of America for interim financial information. They should be read in conjunction
with the annual financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 2002. In the opinion of management,
the interim consolidated financial statements include all adjustments
(consisting of normal recurring accruals) necessary for the fair presentation of
the results for interim periods presented. Operating results for the three
months ended March 31, 2003 are not necessarily indicative of the operating
results for the year ended December 31, 2003.
Certain reclassifications have been made to the consolidated financial
statements as of December 31, 2002 and for the three months ended March 31, 2002
to conform to the presentation used as of and for the three months ended March
31, 2003. Such reclassifications had no effect on net earnings or stockholders'
equity as previously reported.
NOTE 2. NOTE PAYABLE
On October 31, 2002, the Company entered into a revolving line of credit with
Merrill Lynch Business Financial Services, Inc. (the "Merrill Loan") to
refinance the Company's working capital facility with Coast Business Credit. The
initial maturity date for the Merrill Loan is August 31, 2003 and, subject to
certain terms, is renewable. The maximum borrowings available on the Merrill
Loan are the lesser of $2,750,000, or 80% of the Company's trade accounts
receivable less than 90 days old. The Merrill Loan bears interest at the
one-month LIBOR rate plus 2.35% (effective rate of 3.65% and 3.77% at March 31,
2003 and at December 31, 2002). Borrowings under the Merrill Loan are
collateralized by substantially all of the Company's assets. The Company is also
required to comply with certain quarterly financial covenants, including
covenants related to the Company's minimum tangible net worth, total liabilities
to tangible net worth and fixed charge coverage. The Company was in compliance
with all of its financial covenants at March 31, 2003.
NOTE 3. STOCK-BASED COMPENSATION
The Company utilizes the intrinsic value method of accounting for its stock
based employee compensation plans. All options granted had an exercise price
equal to the market value of the underlying common stock on the date of grant
and accordingly, no compensation cost is reflected in net earnings for the three
months ended March 31, 2003 and 2002. The following table illustrates the effect
on net earnings and earnings per share if the Company had applied the fair value
method of accounting for stock options:
Three Months ended
March 31,
----------------------
2003 2002
-------- -----------
Net earnings, as reported $267,980 $ 787,321
Less: Compensation expense determined under the fair value method, net of tax (12,170) (18,619)
-------- -----------
Proforma net earnings 255,810 768,702
======== ===========
Earnings per Share:
Basic-as reported $ 0.02 $ 0.06
======== ===========
Basic-proforma $ 0.02 $ 0.06
======== ===========
Diluted-as reported $ 0.02 $ 0.06
======== ===========
Diluted-proforma $ 0.02 $ 0.06
======== ===========
The proforma information above should be read in conjunction with the related
historical information.
5
The fair value of each option grant is estimated on the grant date using the
Black-Scholes option-pricing model with the following assumptions and results
for the grants:
2003 2002
-------------- --------------
Dividend yield None None
Expected volatility 90% 105%
Expected life of option 4 years 4 years
Risk-free interest rate 2.9% 5.5%
Weighted average fair value of options
on grant date $0.26 $0.47
NOTE 4. INCOME TAXES
Income taxes are calculated based on management's estimate of the Company's
effective tax rate. Income taxes for the three months ended March 31, 2002
include a reduction of the deferred tax asset valuation allowance totaling
$625,300, offset by $114,300 of income tax expense, and the recording of
management's estimate of minimum state income taxes and federal taxes due
because of alternative minimum tax calculations.
NOTE 5. RECENT ACCOUNTING PRONOUNCEMENTS
In January 2003, the Financial Accounting Standards Board issued Financial
Interpretations No. 46 (FIN 46), "Consolidation of Variable Interest Entities."
FIN 46 is an interpretation of Accounting Research Bulletin No. 51,
"Consolidated Financial Statements," and addresses consolidation by business
enterprises of variable interest entities. FIN 46 applies immediately to
variable interest entities created or obtained after January 31, 2003 and
applies in the first fiscal year or interim period beginning after June 15,
2003, to variable interest entities in which an enterprise holds a variable
interest that it acquired before February 1, 2003. This pronouncement is not
anticipated to have an impact on the Company's financial position or results of
operations.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL. Health Fitness Corporation and its wholly owned subsidiaries (the
Company), provide fitness and wellness management services and programs to
corporations, hospitals, communities and universities located in the United
States and Canada. Fitness and wellness management services include the
development, marketing and management of corporate, hospital, community and
university based fitness centers, injury prevention and work-injury management
consulting, and on-site physical therapy and occupational health services.
Programs include wellness and health programs for individual customers,
including health risk assessments, nutrition and weight loss programs, smoking
cessation, massage therapy, back care and ergonomic injury prevention.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 2003 COMPARED TO THE
QUARTER ENDED MARCH 31, 2002.
REVENUE. Revenues increased $831,000 or 12.4% to $7,518,000 for the three months
ended March 31, 2003, from $6,687,000 for the three months ended March 31, 2002.
Management fee and consulting revenues increased $783,000 or 12.2% while on-site
and occupational health services revenues increased $48,000 or 18.6% for the
three months ended March 31, 2003, compared to the same period in 2002. These
increases are attributed to the addition of new contracts.
GROSS PROFIT. Gross profit increased $180,000 or 12.2% to $1,654,000 for the
three months ended March 31, 2003, from $1,474,000 for the three months ended
March 31, 2002. Management fee and consulting gross profit increased $151,000 or
10.6% while on-site and occupational health services gross profit increased
$29,000 or 52.3% for the three months ended March 31, 2003, compared to the same
period in 2002. These increases are attributed to the addition of new contracts.
OPERATING EXPENSES AND OPERATING INCOME. Operating expenses increased $115,000
to $1,193,000 from $1,078,000 for the three months ended March 31, 2003 as
compared to the three months ended March 31, 2002. The increase is mainly due to
increased salary expense of $118,000. The increase in salary expense is
primarily attributed to increased employee benefits costs and an investment in
additional sales and marketing staff that the Company made during 2002.
Operating expenses as a percentage of revenue decreased to 15.9% for the three
months ended March 31, 2003 compared to 16.1% for the three months ended March
31, 2002.
Operating income increased $65,000 to $461,000 from $396,000 for the three
months ended March 31, 2003 as compared to the three months ended March 31,
2002. This increase is the net result of the changes in gross profit and
operating expenses discussed previously.
OTHER INCOME AND EXPENSE. Interest expense decreased $88,000 or 89.3% to $11,000
for the three months ended March 31, 2003, compared to $99,000 for the same
period in 2002. This decrease is due to decreased levels of borrowing and a
lower interest rate. The Company's cost of borrowed funds decreased from 9.0%
for the first quarter of 2002, to approximately 3.8% for the first quarter of
2003.
INCOME TAXES. Income taxes increased $674,000 to an expense of $182,000 for the
three months ended March 31, 2003 compared to a benefit of 492,000 for the same
period in 2002. The increase is primarily due to the tax benefit related to a
$625,300 reduction of the Company's deferred tax asset valuation allowance for
the three months ended March 31, 2002.
NET EARNINGS. As a result of the above, net earnings for the three months ended
March 31, 2003 decreased $519,000 to $268,000 for the three months ended March
31, 2003, compared to $787,000 for the same period in 2002.
LIQUIDITY AND CAPITAL RESOURCES The Company had working capital of $1,550,000 at
March 31, 2003, compared to working capital of $1,250,000 at December 31, 2002.
The increase in working capital is primarily due to the increase in accounts
receivable.
7
On October 31, 2002, the Company entered into a revolving line of credit with
Merrill Lynch Business Financial Services, Inc. (the "Merrill Loan") to
refinance the Company's working capital facility with Coast Business Credit. The
initial maturity date for the Merrill Loan is August 31, 2003 and, subject to
certain terms, is renewable. The maximum borrowings available on the Merrill
Loan are the lesser of $2,750,000, or 80% of the Company's trade accounts
receivable less than 90 days old. The Merrill Loan bears interest at the
one-month LIBOR rate plus 2.35% (effective rate of 3.65% and 3.77% at March 31,
2003 and at December 31, 2002). Borrowings under the Merrill Loan are
collateralized by substantially all of the Company's assets. The Company is also
required to comply with certain quarterly financial covenants, including
covenants related to the Company's minimum tangible net worth, total liabilities
to tangible net worth and fixed charge coverage. The Company was in compliance
with all of its financial covenants at March 31, 2003.
As of March 31, 2003, the Company has no off-balance sheet arrangements or
transactions with unconsolidated, limited purpose entities. Refer to the
footnotes in the Company's Annual Report on Form 10-K for the year ended
December 31, 2002 for disclosure related to the Company's "Commitments and
Contingencies."
On a short and long-term basis, the Company believes that sources of capital to
meet future obligations will be provided by cash generated through operations
and the Company's revolving line of credit. The Company does not believe that
inflation has had a significant impact on the results of its operations.
RECENTLY ISSUED ACCOUNTING POLICIES
As indicated in our notes to the financial statements, we are not aware of any
recently issued accounting pronouncements that will have a material impact on
the Company's financial position or results of operations.
RECENTLY PASSED LEGISLATION
SARBANES-OXLEY. On July 30, 2002, President Bush signed into law the
Sarbanes-Oxley Act of 2002 (the "Act"), which immediately impacts Securities and
Exchange Commission registrants, public accounting firms, lawyers and securities
analysts. This legislation is the most comprehensive securities legislation
since the passage of the Securities Acts of 1933 and 1934. It has far reaching
effects on the standards of integrity for corporate management, board of
directors, and executive management. Additional disclosures, certifications and
procedures will be required of the Company. We do not expect any material
adverse effect on the Company as a result of the passage of this legislation;
however, the full scope of the Act has not yet been determined. The Act provides
for additional regulations and requirements of publicly traded companies, which
have yet to be issued.
Refer to management's certifications contained elsewhere in this report
regarding the Company's compliance with Sections 302 and 906 of the
Sarbanes-Oxley Act of 2002.
HIPPA. The Administrative Simplification provisions of the Health Insurance
Portability and Accountability Act of 1996 ("HIPAA") require group health plans
and health care providers who conduct certain administrative and financial
transactions electronically ("Standard Transactions") to (a) comply with a
certain data format and coding standards when conducting electronic
transactions; (b) use appropriate technologies to protect the security and
integrity of individually identifiable health information transmitted or
maintained in an electronic format; and (c) protect the privacy of patient
health information. The Company's occupational health line of business, which
accounts for approximately five percent of the Company's total revenue, and the
group health plan the Company sponsors for its employees are subject to HIPAA's
requirements. The Company expects to be in compliance with HIPPA requirements
within the timeline specified for the Company's affected business areas. The
Company's corporate, hospital, community and university based fitness center
management lines of business are not subject to the requirements of HIPAA.
CAUTIONARY STATEMENT
This Form 10-Q contains forward-looking statements within the meaning of federal
securities laws. These statements include statements regarding intent, belief,
or current expectations of the Company and its management and specifically
include the statement regarding cash expected to be available from operations.
These forward-looking statements are not guarantees of the future performance
and involve a number of risks and uncertainties that may cause the Company's
actual results to differ materially from the results discussed in these
statements. Please refer to Management's Discussion and Analysis contained
within the Company's Annual Report on Form 10-K for the year ended December 31,
2002, for
8
cautionary statements on important factors to consider in evaluating the
forward-looking statements included in this Form 10-Q.
9
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has no history of, and does not anticipate in the future, investing
in derivative financial instruments, derivative commodity instruments or other
such financial instruments. Transactions with international customers are
entered into in U.S. dollars, precluding the need for foreign currency hedges.
As a result, the exposure to market risk is not material.
ITEM 4. CONTROLS AND PROCEDURES
The Company's Chief Executive Officer and Chief Financial Officer (collectively,
the "Certifying Officers") are responsible for establishing and maintaining
disclosure controls and procedures for the Company. The Certifying Officers have
concluded (based upon their evaluation of these controls and procedures as of a
date within 90 days of the filing of this report) that the Company's disclosure
controls and procedures are effective to ensure that information required to be
disclosed by the Company in this report is accumulated and communicated to the
Company's management, including its principal executive officers as appropriate,
to allow timely decisions regarding required disclosure. The Certifying Officers
also have indicated that there were no significant changes in the Company's
internal controls or other factors that could significantly affect such controls
subsequent to the date of their evaluation, and there were no corrective actions
with regard to significant deficiencies and material weaknesses.
10
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings
Refer to Item 3 (Legal Proceedings) of the Company's Annual Report on Form 10-K
for the year ended December 31, 2002
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
See Exhibit Index on page following signatures
(b) Reports on Form 8-K
None.
11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Dated: May 15, 2003 HEALTH FITNESS CORPORATION
..
By /s/ Jerry V. Noyce
---------------------------------------
Jerry V. Noyce
Chief Executive Officer
(Principal Executive Officer)
By /s/ Wesley W. Winnekins
---------------------------------------
Wesley W. Winnekins
Chief Financial Officer
(Principal Financial and
Accounting Officer)
12
SARBANES-OXLEY SECTION 302 CERTIFICATION
I, Jerry Noyce, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Health
Fitness Corporation;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: May 15, 2003
By /s/ Jerry V. Noyce
---------------------------------
Jerry V. Noyce
Chief Executive Officer
13
SARBANES-OXLEY SECTION 302 CERTIFICATION
I, Wesley Winnekins, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Health
Fitness Corporation;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: May 15, 2003
By /s/ Wesley Winnekins
-----------------------------------
Wesley Winnekins
Chief Financial Officer
14
EXHIBIT INDEX
HEALTH FITNESS CORPORATION
FORM 10-Q
Exhibit No. Description
---------- -----------
3.1 Articles of Incorporation, as amended, of the Company - incorporated by
reference to the Company's Quarterly Report on Form 10-QSB for the quarter
ended June 30, 1997
3.2 Restated By-Laws of the Company - incorporated by
reference to the Company's Registration Statement on
Form SB-2 No. 33-83784C
4.1 Specimen of Common Stock Certificate - incorporated by
reference to the Company's Registration Statement on
Form SB-2 No. 33-83784C
10.1 Standard Office Lease Agreement (Net) dated as of June
13, 1996 covering a portion of the Company's
headquarters - incorporated by reference to the
Company's Annual Report on Form 10-KSB for the year
ended December 31, 1996
10.2 Amendment dated March 1, 2001 to Standard Office Lease
Agreement (Net) dated as of June 13, 1996 covering a
portion of the Company's headquarters -incorporated by
reference to the Company's Form 10-K for the year ended
December 31, 2000
10.3 Second Amendment, dated June 12, 2002, to Standard Office Lease Agreement dated
as of June 13, 1996 - incorporated by reference to the Company's Form 10-Q for
the quarter ended June 30, 2002
*10.4 Company's 1995 Stock Option Plan - incorporated by
reference to the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1995
*10.5 Amendment to Company's 1995 Stock Option Plan -
incorporated by reference to Part II, Item 4 of the
Company's Form 10-QSB for the quarter ended June 30,
1997
*10.6 Employment agreement dated November 30, 2000 between Company and Jerry V. Noyce
- incorporated by reference to the Company's Form 10-K for the year ended
December 31, 2000
*10.7 Employment agreement dated April 21, 1995 between the
Company and James A. Narum, as amended October 19, 1999,
November 2, 2000 and March 25, 2003 - incorporated by
reference to the Company's Form 10-K for the year ended
December 31, 2002
*10.8 Employment agreement dated February 9, 2001 between Company and Wesley W.
Winnekins - incorporated by reference to the Company's Form 10-K for the year
ended December 31, 2000
*10.9 Employment agreement dated March 1, 2003 between Company and Jeanne Crawford -
incorporated by reference to the Company's Form 10-K for the year ended
December 31, 2002
10.10 WCMA Loan and Security Agreement dated October 31, 2002 between the Company and
Merrill Lynch Business Financial Services, Inc. - incorporated by reference to
the Company's Form 10-Q for the quarter ended September 30, 2002
11.0 Statement re: Computation of Earnings per Share
15
Exhibit No. Description
---------- -----------
99.1 Certification by Jerry Noyce, Chief Executive Officer, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
99.2 Certification by Wesley Winnekins, Chief Financial Officer, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
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* Indicates management contract or compensatory plan or arrangement