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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 June 30, 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 American Boulevard West, 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
Indicate by check mark whether the issuer is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No
The number of shares outstanding of each of the registrant's classes of
capital stock, as of August 8, 2003 was:
Common Stock, $0.01 par value, 12,351,084 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 June 30, 2003 and 3
December 31, 2002
Consolidated Statements of Earnings for the three 4
and six months ended June 30, 2003 and 2002
Consolidated Statements of Cash Flows for the six 5
months ended June 30, 2003 and 2002
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of 8
Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 11
Item 4. Controls and Procedures 11
PART II. OTHER INFORMATION 12
Item 1. Legal Proceedings
Items 2-5. Not Applicable
Item 6. Exhibits and reports on Form 8-K
Signatures 13
Exhibit Index 14
2
HEALTH FITNESS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
- --------------------------------------------------------------------------------
June 30, December 31,
2003 2002
------------ ------------
ASSETS
CURRENT ASSETS
Cash $ 334,022 $ 91,658
Trade and other accounts receivable, less
allowances of $91,200 and $88,900 4,168,078 4,036,888
Prepaid expenses and other 261,006 266,734
Deferred tax assets 731,500 731,500
------------ ------------
Total current assets 5,494,606 5,126,780
PROPERTY AND EQUIPMENT, net 238,060 176,206
OTHER ASSETS
Goodwill 5,308,761 5,308,761
Deferred tax assets 1,978,717 2,254,876
Other 306,421 89,188
------------ ------------
$ 13,326,565 $ 12,955,811
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable $ 744,227 $ 304,589
Trade accounts payable 245,035 409,150
Accrued salaries, wages, and payroll taxes 1,107,608 1,072,982
Other accrued liabilities 273,405 415,856
Accrued self funded insurance 158,701 267,042
Deferred revenue 1,222,161 1,407,437
------------ ------------
Total current liabilities 3,751,137 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 (7,556,276) (8,041,589)
------------ ------------
9,575,428 9,078,755
------------ ------------
$ 13,326,565 $ 12,955,811
============ ============
See notes to consolidated financial statements.
3
HEALTH FITNESS CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
- -------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
REVENUE $ 7,732,626 $ 6,686,808 $ 15,250,831 $ 13,374,202
COSTS OF REVENUE 6,151,484 5,233,271 12,015,290 10,446,374
------------ ------------ ------------ ------------
GROSS PROFIT 1,581,142 1,453,537 3,235,541 2,927,828
OPERATING EXPENSES
Salaries 789,216 690,096 1,572,758 1,356,077
Selling, general, and administrative 421,605 417,686 830,919 829,934
------------ ------------ ------------ ------------
Total operating expenses 1,210,821 1,107,782 2,403,677 2,186,011
------------ ------------ ------------ ------------
OPERATING INCOME 370,321 345,755 831,864 741,817
OTHER INCOME (EXPENSE)
Interest expense (13,451) (99,504) (23,956) (198,126)
Other, net (831) (3,535) (1,859) (5,282)
------------ ------------ ------------ ------------
EARNINGS BEFORE INCOME TAXES 356,039 242,716 806,049 538,409
INCOME TAX EXPENSE (BENEFIT) 138,706 (528,472) 320,736 (1,020,100)
------------ ------------ ------------ ------------
NET EARNINGS $ 217,333 $ 771,188 $ 485,313 $ 1,558,509
============ ============ ============ ============
NET EARNINGS PER SHARE:
Basic $ 0.02 $ 0.06 $ 0.04 $ 0.13
Diluted 0.02 0.06 0.04 0.13
WEIGHTED AVERAGE COMMON SHARES:
Basic 12,322,908 12,265,250 12,315,655 12,265,250
Diluted 12,467,821 12,486,488 12,436,254 12,439,384
See notes to consolidated financial statements.
4
HEALTH FITNESS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
- --------------------------------------------------------------------------------
Six Months Ended
June 30,
-----------------------------
2003 2002
-----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 485,313 $ 1,558,509
Adjustments to reconcile net earnings to net
cash provided by (used in) operating activities:
Depreciation and amortization 38,864 120,036
Deferred taxes 276,159 (1,009,300)
Changes in operating assets and liabilities:
Trade and other accounts receivable (131,190) (426,789)
Prepaid expenses and other 5,728 (95,285)
Other assets (217,233) 48,917
Trade accounts payable (164,115) (23,731)
Accrued liabilities and other (216,166) 260,420
Deferred revenue (185,276) (49,907)
------------ ------------
Net cash provided by (used in) operating activities (107,916) 382,870
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (100,718) (21,721)
------------ ------------
Net cash used in investing activities (100,718) (21,721)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under note payable 1,718,638 13,178,903
Repayments of note payable (1,279,000) (13,625,380)
Proceeds from issuance of common stock 11,360 --
------------ ------------
Net cash provided by (used in) financing activities 450,998 (446,477)
------------ ------------
NET INCREASE (DECREASE) IN CASH 242,364 (85,328)
CASH AT BEGINNING OF PERIOD 91,658 221,008
------------ ------------
CASH AT END OF PERIOD $ 334,022 $ 135,680
============ ============
See notes to consolidated financial statements.
5
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 necessary
for the fair presentation of the results for interim periods presented.
Operating results for the three and six months ended June 30, 2003 are not
necessarily indicative of the operating results for the year ending December 31,
2003.
Certain reclassifications have been made to the consolidated financial
statements as of December 31, 2002 and for the three and six months ended June
30, 2002 to conform to the presentation used in 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 3.47% and 3.77% at June 30,
2003 and 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 June 30, 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
and six months ended June 30, 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 Six Months ended
June 30, June 30,
----------------------- -------------------------
2003 2002 2003 2002
-------- -------- -------- ----------
Net earnings, as reported $217,333 $771,188 $485,313 $1,558,509
Less: Compensation expense determined
under the fair value method, net of tax (25,316) (25,706) (37,306) (44,325)
-------- -------- -------- ----------
Proforma net earnings $192,197 $745,482 $448,007 $1,514,184
======== ======== ======== ==========
Earnings per Share:
Basic, as reported $ 0.02 $ 0.06 $ 0.04 $ 0.13
======== ======== ======== ==========
Basic, proforma $ 0.02 $ 0.06 $ 0.04 $ 0.12
======== ======== ======== ==========
Diluted, as reported $ 0.02 $ 0.06 $ 0.04 $ 0.13
======== ======== ======== ==========
Diluted, proforma $ 0.02 $ 0.06 $ 0.04 $ 0.12
======== ======== ======== ==========
The proforma information above should be read in conjunction with the related
historical information.
6
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 1 to 4 years 1 to 4 years
Risk-free interest rate 2.9% 5.5%
Weighted average fair value of options
on grant date $0.24 $0.32
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 and six months ended June 30,
2002 include a reduction of the deferred tax asset valuation allowance totaling
$625,300 and $1,250,600 offset by $96,800 and $230,500 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 (FASB) 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 interpretation is not
anticipated to have an impact on the Company's consolidated financial position
or results of operations.
In April 2003, the FASB issued Statement 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. Statement 149 clarifies
implementation issues and amends Statement 133, to include the conclusions
reached by the FASB on certain FASB Staff Implementation Issues that, while
inconsistent with Statement 133's conclusions, were considered by the Board to
be preferable, amends discussion of financial guarantee contracts and the
application of the shortcut method to an interest-rate swap agreement that
includes an embedded option, and amends other pronouncements. Statement 149 is
effective to contracts entered into or modified, and hedging arrangements
designated after June 30, 2003, with various exceptions as outlined in the
statement. Adoption of Statement 149 is not anticipated to have an impact on the
Company's consolidated financial position or results of operations.
In May 2003, the FASB issued Statement 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. Statement 150
changes the classification in the statement of financial position of certain
common financial instruments from either equity or mezzanine presentation to
liabilities and requires an issuer of those financial statements to recognize
changes in fair value or redemption amount, as applicable, in earnings. SFAS 150
is effective for financial instruments entered into or modified after May 31,
2003, and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003. Adoption of Statement 150 is not anticipated to
have an impact on the Company's financial position or results of operations.
7
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 of America and Canada. Fitness and wellness management services include
the development, marketing and management of corporate, hospital and 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 JUNE 30, 2003 AS COMPARED TO THE
QUARTER ENDED JUNE 30, 2002.
REVENUE. Revenue increased $1,046,000 or 15.6% to $7,733,000 for the three
months ended June 30, 2003, from $6,687,000 for the three months ended June 30,
2002. Fitness center management fee and consulting revenue increased $901,000 or
14.0% while occupational health services revenue increased $145,000 or 59.3%.
These increases are attributed to the addition of new contracts and expansion of
existing contracts.
GROSS PROFIT. Gross profit increased $128,000 or 8.8% to $1,581,000 for the
three months ended June 30, 2003, from $1,453,000 for the three months ended
June 30, 2002. Fitness center management fee and consulting gross profit
increased $60,000 or 4.3% while occupational health services gross profit
increased $68,000 or 120.7%. These increases are attributed to the addition of
new contracts and the expansion of existing contracts.
OPERATING EXPENSES AND OPERATING INCOME. Operating expenses increased $103,000
or 9.3% to $1,211,000 for the three months ended June 30, 2003 from $1,108,000
for the three months ended June 30, 2002. This increase is mainly due to
increased salary expense of $99,000. The increase in salary expense is primarily
attributed to increased employee benefit costs and an investment in additional
sales and marketing staff the Company made during 2002. Operating expenses as a
percent of revenue decreased to 15.7% for the three months ended June 30, 2003
compared to 16.6% for the three months ended June 30, 2002.
Operating income increased $24,000 to $370,000 from $346,000 for the three
months ended June 30, 2002. This increase is the net result of the change in
gross profit and operating expenses discussed previously.
OTHER INCOME AND EXPENSE. Interest expense decreased $87,000 to $13,000 for the
three months ended June 30, 2003, compared to $100,000 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 an average of 9.0% for
the second quarter of 2002 to 3.5% for the second quarter of 2003.
INCOME TAXES. Income taxes increased $667,000 to an expense of $139,000 for the
three months ended June 30, 2003 from a benefit of $528,000 for the three months
ended June 30, 2002. The increase is primarily due to the second quarter of 2002
including a $625,000 deferred tax benefit related to the reversal of a deferred
tax asset valuation allowance.
NET EARNINGS. As a result of the above, net earnings for the three months ended
June 30, 2003 decreased $554,000 to $217,000 from $771,000 for the three months
ended June 30, 2002.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2003 AS COMPARED TO THE
SIX MONTHS ENDED JUNE 30, 2002.
REVENUE. Revenue increased $1,877,000 or 14.0% to $15,251,000 for the six months
ended June 30, 2003, from $13,374,000 for the six months ended June 30, 2002.
Fitness center management fee and consulting revenue increased $1,684,000 or
13.1% while occupational health services revenue increased $193,000 or 38.4% for
the six months ended June 30, 2003 compared to the same period in 2002. These
increases are attributed to the addition of new contracts and the expansion of
existing contracts.
GROSS PROFIT. Gross profit increased $308,000 or 10.5% to $3,236,000 for the six
months ended June 30, 2003, from $2,928,000 for the six months ended June 30,
2002. Fitness center management fee and consulting gross profit increased
8
$211,000 or 7.5% while occupational health services gross profit increased
$97,000 or 86.5%. These increases are attributed to the addition of new
contracts and the expansion of existing contracts.
OPERATING EXPENSES AND OPERATING INCOME. Operating expenses increased $218,000
or 10.0% to $2,404,000 for the six months ended June 30, 2003 from $2,186,000
for the six months ended June 30, 2002. This increase is mainly due to increased
salary expense of $217,000. The increase in salary expense is primarily
attributed to increased employee benefit costs and an investment in additional
sales and marketing staff the Company made during 2002. Operating expenses as a
percentage of revenue decreased to 15.8% for the six months ended June 30, 2003
compared to 16.3% for the six months ended June 30, 2002.
Operating income increased $90,000 to $832,000 from $742,000 for the six months
ended June 30, 2002. This increase is the net result of the change in gross
profit and operating expenses discussed previously.
OTHER INCOME AND EXPENSE. Interest expense decreased $174,000 to $24,000 for the
six months ended June 30, 2003, compared to $198,000 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 an average of 9.0% for
the six months ended June 30, 2002 to 3.7% for the six months ended June 30,
2003.
INCOME TAXES. Income taxes increased $1,341,000 to an expense of $321,000 for
the six months ended June 30, 2003 from a benefit of $1,020,000 for the six
months ended June 30, 2002. The increase is primarily due to the first six
months of 2002 including a $1,251,000 deferred tax benefit related to the
reversal of a deferred tax asset valuation allowance.
NET EARNINGS. As a result of the above, net earnings for the six months ended
June 30, 2003 decreased $1,073,000 to $485,000 from $1,558,000 for the six
months ended June 30, 2002.
LIQUIDITY AND CAPITAL RESOURCES
The Company had working capital of $1,743,000 at June 30, 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 cash and accounts receivable.
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 3.47% and 3.77% at June 30,
2003 and 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 June 30, 2003.
As of June 30, 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
9
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.
HIPAA. 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 HIPAA 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 cautionary statements on important factors to consider in evaluating
the forward-looking statements included in this Form 10-Q.
10
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
the end of the period covered by this report) that the Company's disclosure
controls and procedures are effective to ensure that information required to be
disclosed by the Company in reports that it files or submits under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in the rules of the Securities and Exchange Commission. 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.
11
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
12
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: August 12, 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)
13
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
31.1 Sarbanes-Oxley Section 302 certifications of Jerry Noyce,
Chief Executive Officer
31.2 Sarbanes-Oxley Section 302 certifications of Wesley Winnekins,
Chief Financial Officer
32.1 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
32.2 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
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