MINNEAPOLIS, Feb. 12 /PRNewswire-FirstCall/ -- Health Fitness
Corporation (NYSE Amex: FIT), a leading provider of integrated
employee health and productivity management solutions, today
announced unaudited financial results for the fourth quarter and
the year ended December 31, 2009. As previously announced and
further explained below, Health Fitness Corporation (the "Company")
has entered into a definitive agreement with Trustmark Mutual
Holding Company pursuant to which the Company expects to be
acquired in an all-cash transaction valued at approximately $97
million. For the fourth quarter, revenues were $21.7 million,
compared to $21.7 million in the fourth quarter of 2008. Gross
profit during the quarter rose to $7.0 million, or 32.3 percent of
revenue, from $6.9 million, or 31.7 percent of revenue, in the
comparable quarter last year. Operating income totaled $1.7 million
for the quarter, down from $2.1 million for the same period in
2008. Net earnings were $1.0 million, or $0.10 per diluted share,
versus $1.2 million, or $0.12 per diluted share, in the fourth
quarter of 2008. 2009 Fourth Quarter Business Segment Information
Revenue and gross profit information by segment: Health Management
(in thousands) REVENUE Q4 2009 Q4 2008 ------- ------- Staffing
Services $4,879 $4,724 Program Services $6,917 $6,912 Total Health
Mgmt. $11,796 $11,636 GROSS PROFIT Q4 2009 Q4 2008 ------- -------
Staffing Services $1,048 $1,332 Program Services $3,354 $3,273
Total Health Mgmt. $4,402 $4,605 During the fourth quarter, health
management segment revenue grew 1.4 percent compared to the same
period in 2008. Within the segment, staffing services revenue
increased 3.3 percent, and program services revenue was comparable
to the 2008 fourth quarter. This gain was primarily driven by
staffing revenue increases at existing sites and 70 percent growth
in revenue for health coaching and advising services, which were
offset by an 18 percent revenue decrease for biometric screening
services and a 44 percent revenue decrease for flu shots. Gross
margin for the health management segment was 37.3 percent for the
quarter, down from 39.6 percent for the prior-year period. Within
the segment, gross margin for program services increased to 48.5
percent, from 47.4 percent for the prior-year period, which was
primarily driven by the introduction of our Walk This Way walking
program to certain health management customers. Gross margin for
staffing services fell to 21.5 percent for the quarter from 28.2
percent for the prior-year period, which reflects higher costs for
staff wages and benefits, as well as site maintenance services.
Fitness Management (in thousands) REVENUE Q4 2009 Q4 2008 -------
------- Staffing Services $9,407 $9,453 Program Services $506 $572
Total Fitness Mgmt. $9,913 $10,025 GROSS PROFIT Q4 2009 Q4 2008
------- ------- Staffing Services $2,443 $2,022 Program Services
$173 $246 Total Fitness Mgmt. $2,616 $2,268 During the 2009 fourth
quarter, fitness management segment revenue decreased 1.1 percent
compared to the same period last year, which primarily reflects
revenue loss related to contract terminations during 2008 and 2009.
Gross margin for the fitness management segment increased to 26.4
percent, from 22.6 percent during the prior-year period, reflecting
a higher margin for staffing services, which is attributed to lower
staff wages and site supply costs. Fourth Quarter and Fiscal
Year-end Commitments and RFPs During the quarter, the company
secured two new health management commitments representing
potential annualized revenue of $0.5 million, and one new fitness
management commitment representing potential annualized revenue of
$0.1 million. Fitness and health management contract cancellations
totaled $3.0 million for the quarter, which is comprised of $0.7
million for fitness management and $2.3 million for health
management. These cancellations reflect the continuing weakness in
the economy and the financial challenges companies have been
experiencing. During the fourth quarter, the company received 23
RFPs for health management services and 6 RFPs for fitness
management services. For the year ended December 31, 2009, the
company received a total of 13 health management commitments and
expanded services with three existing health management customers.
In addition, the company received eight fitness management
commitments. Combined commitment and service-expansion activity for
2009 may realize annualized revenue of $11.8 million, which will be
partially offset by an annualized revenue loss of $5.2 million from
contract cancellations, of which $2.5 million is attributed to
fitness management and $2.7 million is attributed to health
management. For the year, the company received 109 RFPs for health
management services and 24 RFPs for fitness management services.
Year-End 2009 Financial Results For the year ended December 31,
2009, revenue increased 2.3 percent to $79.5 million, from $77.7
million in the previous year. Gross profit rose 6.8 percent to
$25.4 million, or 31.9 percent of revenue, from $23.7 million, or
30.6 percent of revenue, for the prior year. Operating income was
$5.5 million for the year ended December 31, 2009, up from $4.8
million during the prior year, primarily reflecting a 130 basis
point increase in gross margins. For the year, net earnings
applicable to common shareholders climbed to $3.3 million from $2.7
million last year. Net earnings per diluted share totaled $0.32
compared to $0.27 last year. Balance Sheet The company ended 2009
with $6.6 million in cash, compared to $1.3 million at the end of
2008. Working capital at December 31, 2009, less cash, totaled $8.8
million, compared to $9.4 million at December 31, 2008. At December
31, 2009, the company had no balance outstanding on its $3.5
million credit facility, and had stockholders' equity of $32.6
million. The foregoing financial information has not been audited
by the Company's independent registered public accounting firm and
is subject to adjustment based upon, among other things, the
finalization of the annual audit. Trustmark to Acquire Health
Fitness Corporation On January 21, 2010, Trustmark Mutual Holding
Company and Health Fitness Corporation announced a definitive
merger agreement, pursuant to which Trustmark would acquire Health
Fitness Corporation, subject to satisfaction of customary closing
conditions, in an all-cash transaction valued at approximately $97
million, or $8.78 per share. On January 26, 2010, Trustmark filed a
Tender Offer Statement on Schedule TO with the Securities and
Exchange Commission (the "SEC") to commence a cash tender offer
through its wholly-owned subsidiary Trustco Minnesota, Inc., to
purchase all outstanding shares of common stock of Health Fitness
Corporation. The tender offer will expire at midnight on February
24, 2010, unless extended in accordance with the merger agreement
and the applicable rules and regulations of the SEC. The
transaction is expected to close in the first quarter of 2010,
subject to satisfaction of closing conditions. The Company's Board
and a special committee of disinterested directors of the Company's
Board each unanimously (i) determined that this acquisition is
advisable and fair to, and in the best interests of, the Company
and its shareholders; (ii) adopted and approved the definitive
merger agreement, and (iii) recommended that the Company's
shareholders tender their shares of common stock in the Tender
Offer. On February 5, 2010, the Company filed Amendment No. 1 to
the Solicitation/Recommendation Statement filed by the Company on
Schedule 14D-9, noting that the Federal Trade Commission had
granted early termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
Termination of the waiting period satisfies one of the conditions
to the closing of the tender offer. About HealthFitness
HealthFitness is a leading provider of integrated employee health
improvement services to Fortune 500 companies, the health care
industry and individual consumers. With 30-plus years of
experience, HealthFitness partners with employers to effectively
manage health care and productivity costs by improving individual
health and well-being. HealthFitness provides a portfolio of health
and fitness management solutions, including best-in-class
integration, INSIGHT® Health Risk Assessments, screenings,
EMPOWERED(TM) Health Coaching, and fitness facility design and
management. For more information on HealthFitness, visit
http://www.hfit.com/. Forward Looking Statements This press release
contains "forward-looking statements." Such statements include, but
are not limited to, statements about the anticipated timing and
likelihood of the closing of the transaction involving Trustmark
and the Company. In addition, the estimated annualized revenue
value of new and lost contracts and expanded services are forward
looking statements, which are based upon estimates of the
anticipated annualized revenue to be realized or lost. Such
information should be used only as an indication of the activity
the company has recently experienced in its two business segments.
These estimates, when considered together, should not be considered
an indication of the total net, incremental revenue growth the
company expects to generate in 2010 or in any year, as actual net
growth may differ from these estimates due to actual staffing
levels, participation rates and service duration, in addition to
other revenue the company may lose in the future due to customer
terminations. Any statements that are not based upon historical
facts, including the outcome of events that have not yet occurred
and the company's expectations for future performance, are
forward-looking statements. The words "potential," "believe,"
"estimate," "expect," "intend," "may," "could," "will," "plan,"
"anticipate," and similar words and expressions are intended to
identify forward-looking statements. Such statements are based upon
the current beliefs and expectations of management. Actual results
may vary materially from those contained in forward-looking
statements based on a number of factors including, without
limitation, the company's inability to deliver the health
management services demanded by major corporations and other
clients, its inability to successfully cross-sell health management
services to its fitness management clients, its inability to
successfully obtain new business opportunities, its failure to have
sufficient resources to make investments, its ability to make
investments and implement strategies successfully, continued delays
in obtaining new commitments and implementing services, the
continued deterioration of general economic conditions, contract
cancellations, governmental action on health care reform, other
factors disclosed from time to time in the company's filings with
the U.S. Securities and Exchange Commission, including our Form
10-K for 2008 as filed with the SEC, and, with respect to the
proposed transaction with Trustmark, the satisfaction of closing
conditions for the acquisition, including the tender of a majority
of the outstanding shares of our common stock, calculated on a
fully diluted basis, and the possibility that the transaction will
not be completed, or if completed, not completed on a timely basis.
The company can give no assurance that any of the transactions
related to the tender offer will be completed or that the
conditions to the tender offer and the merger will be satisfied.
You should take such factors into account when making investment
decisions and are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date on
which they are made. The company undertakes no obligation to update
any forward-looking statements as a result of new information or
future events or developments. Important Additional Information
This press release relates to the tender offer (the "Offer") by
Trustmark Mutual Holding Company ("Trustmark"), through its wholly
owned subsidiaries Trustco Holdings, Inc. ("Trustco Holdings") and
Trustco Minnesota, Inc. ("Trustco Minnesota"), to purchase each
outstanding share of common stock of Health Fitness Corporation
("HealthFitness") in exchange for $8.78 in cash. This press release
is for informational purposes only and does not constitute an offer
to purchase, or a solicitation of an offer to sell, shares of
common stock of HealthFitness, nor is it a substitute for the
Tender Offer Statement on Schedule TO (including the Offer to
Purchase, Letter of Transmittal and related tender offer documents
and as amended from time to time, the "Tender Offer Documents")
filed by Trustmark, Trustco Holdings and Trustco Minnesota with the
Securities and Exchange Commission (the "SEC") on January 26, 2010.
The Offer is being made only through the Tender Offer Documents.
Before making any decision with respect to the Offer, investors and
HealthFitness shareholders are strongly advised to read the Tender
Offer Documents, the related Solicitation/Recommendation Statement
on Schedule 14D-9 filed by HealthFitness with the SEC on January
26, 2010, and other relevant materials when they become available,
because they contain important information. Investors and
HealthFitness shareholders can obtain copies of these materials
(and all other related documents filed with the SEC) at no charge
on the SEC's website at http://www.sec.gov/. Copies can also be
obtained at no charge by directing a request to Georgeson, Inc. at
Georgeson, 199 Water Street -- 26th Floor, New York, New York 10038
or by phone at (800) 509-1038 or to Trustmark Mutual Holding
Company at Trustmark Companies, 400 Field Drive, Lake Forest,
Illinois 60045, Attention: Carol Egan, or by phone at (847)
283-2520. Investors and HealthFitness shareholders may also read
and copy any reports, statements and other information filed by
Trustmark, Trustco Holdings, Trustco Minnesota or HealthFitness
with the SEC, at the SEC public reference room at 100 F Street,
N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330
or visit the SEC's website for further information on its public
reference room. CONTACTS Company Contact: Investor Relations
Contact: Wes Winnekins, CFO Joe Dorame, Robert Blum, Joe Diaz
Health Fitness Corporation Lytham Partners, LLC (952) 897-5275
(602) 889-9700 E: Financial tables on following pages HEALTH
FITNESS CORPORATION CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2009
AND 2008 (UNAUDITED) 2009 2008 ----------- ----------- ASSETS
CURRENT ASSETS Cash $6,550,769 $1,300,620 Trade and other accounts
receivable, less allowances of $273,000 and $317,600 16,755,715
16,306,197 Inventory 234,184 347,510 Prepaid expenses and other
413,851 354,257 Deferred tax assets 243,180 288,626 -----------
----------- Total current assets 24,197,699 18,597,210 PROPERTY AND
EQUIPMENT, net 1,491,140 1,243,413 OTHER ASSETS Goodwill 14,546,250
14,546,250 Software technology, less accumulated amortization of
$1,959,000 and $1,301,300 2,233,990 1,977,071 Trademark, less
accumulated amortization of $465,900 and $438,700 27,200 54,400
Other intangible assets, less accumulated amortization of $385,400
and $313,600 143,667 215,500 ----------- ----------- $42,639,946
$36,633,844 =========== =========== LIABILITIES AND STOCKHOLDERS'
EQUITY CURRENT LIABILITIES Trade accounts payable $1,906,248
$1,470,440 Accrued salaries, wages, and payroll taxes 3,386,059
2,632,329 Other accrued liabilities 1,257,198 1,664,710 Accrued
self funded insurance 263,760 310,511 Deferred revenue 2,072,892
1,820,960 ----------- ----------- Total current liabilities
8,886,157 7,898,950 DEFERRED TAX LIABILITY 1,148,847 751,769
LONG-TERM OBLIGATIONS - - COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY Common stock, $0.01 par value; 25,000,000
shares authorized; 10,209,026 and 9,647,404 shares issued and
outstanding at December 31, 2009 and 2008 102,090 96,474 Additional
paid-in capital 29,582,509 28,263,803 Accumulated comprehensive
loss from foreign currency translation (65,127) (83,835) Retained
earnings (accumulated deficit) 2,985,470 (293,317) -----------
----------- 32,604,942 27,983,125 ----------- -----------
$42,639,946 $36,633,844 =========== =========== HEALTH FITNESS
CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three
Months Ended Twelve Months Ended December 31, December 31, 2009
2008 2009 2008 ----------- ----------- ----------- -----------
REVENUE $21,708,854 $21,660,861 $79,472,965 $77,676,409 COSTS OF
REVENUE 14,690,512 14,787,471 54,110,131 53,936,883 -----------
----------- ----------- ----------- GROSS PROFIT 7,018,342
6,873,390 25,362,834 23,739,526 OPERATING EXPENSES Salaries
3,170,426 2,903,283 12,430,060 11,852,588 Other selling, general
and administrative 2,097,698 1,856,216 7,286,443 6,937,189
Amortization of trademarks and other intangible assets 24,758
36,682 99,033 164,993 ----------- ----------- -----------
----------- Total operating expenses 5,292,882 4,796,181 19,815,536
18,954,770 ----------- ----------- ----------- -----------
OPERATING INCOME 1,725,460 2,077,209 5,547,298 4,784,756 OTHER
INCOME (EXPENSE) Interest expense - (1,104) - (21,487) Other, net -
296 1,546 708 ----------- ----------- ----------- -----------
EARNINGS BEFORE INCOME TAX EXPENSE 1,725,460 2,076,401 5,548,844
4,763,977 INCOME TAX EXPENSE 718,210 883,082 2,270,057 2,041,896
----------- ----------- ----------- ----------- NET EARNINGS
$1,007,250 $1,193,319 $3,278,787 $2,722,081 =========== ===========
=========== =========== NET EARNINGS PER COMMON SHARE: Basic $0.10
$0.12 $0.34 $0.28 Diluted $0.10 $0.12 $0.32 $0.27 WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING: Basic 9,817,119 9,620,705 9,747,212
9,783,384 Diluted 10,590,748 9,683,524 10,196,784 9,909,680 HEALTH
FITNESS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) Twelve Months Ended December 31, 2009 2008 ----------
---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings
$3,278,787 $2,722,081 Adjustment to reconcile net earnings to net
cash provided by operating activities: Common stock issued for
Board of Directors compensation 15,114 - Common stock issued for
services provided 55,177 - Stock-based compensation 616,742 761,860
Deferred taxes 442,524 760,887 Depreciation and amortization
1,170,101 1,142,290 Loss on disposal of assets - 4,706 Change in
assets and liabilities: Trade and other accounts receivable
(449,518) (1,619,318) Inventory 113,326 221,948 Prepaid expenses
and other (59,594) (127,366) Other assets - 9,807 Trade accounts
payable 454,516 (678,136) Accrued liabilities and other 299,467
(924,989) Deferred revenue 251,932 98,706 ---------- ---------- Net
cash provided by operating activities 6,188,574 2,372,476 CASH
FLOWS FROM INVESTING ACTIVITIES: Purchases of property and
equipment (661,183) (344,503) Sale of property and equipment -
12,781 Capitalized software development costs (914,531) (735,273)
---------- ---------- Net cash used in investing activities
(1,575,714) (1,066,995) CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under line of credit - 16,823,447 Repayments under line
of credit - (16,823,447) Repurchase of common stock - (2,354,923)
Proceeds from tax benefit of stock options exercised 98,081 35,729
Proceeds from the issuance of common stock 240,196 170,876 Proceeds
from the exercise of stock options 299,012 197,429 ----------
---------- Net cash provided by (used in) financing activities
637,289 (1,950,889) ---------- ---------- NET INCREASE (DECREASE)
IN CASH 5,250,149 (645,408) CASH AT BEGINNING OF PERIOD 1,300,620
1,946,028 CASH AT END OF PERIOD $6,550,769 $1,300,620 ==========
========== SUPPLEMENTAL CASH FLOW DISCLOSURES Supplemental cash
flow information: Cash paid for interest $- $15,038 Cash paid for
taxes 1,686,159 924,525 DATASOURCE: Health Fitness Corporation
CONTACT: Wes Winnekins, CFO of Health Fitness Corporation,
+1-952-897-5275; or Investor Relations, Joe Dorame, or Robert Blum,
or Joe Diaz all of Lytham Partners, LLC, +1-602-889-9700, Web Site:
http://www.hfit.com/
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