##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2007
 Commission File No. 000-25064
 
 HEALTH FITNESS CORPORATION
 (Exact name of registrant as specified in its charter)
 Minnesota
    
    No. 41-1580506(State or Other Jurisdiction of
    
    (IRS EmployerIncorporation or Organization)
    
    Identification No.)
 3600 American Boulevard West, Bloomington, Minnesota 55431
(Address of Principal Executive Offices)
 Registrants telephone number (952) 831-6830
 
 þ o
  o o þ
 o þ




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##### 



Health Fitness Corporation
Consolidated Financial Statements
 Table of Contents
 PAGEPART I. FINANCIAL INFORMATION
    
    
    3ITEM 1. Consolidated Financial Statements (unaudited)
    
    
    3Consolidated Balance Sheets as of June 30, 2007 and
December 31, 2006
    
    
    3Consolidated Statements of Operations for the three
and six months ended June 30, 2007 and 2006
    
    
    4Consolidated Statements of Cash Flows for the six
months ended June 30, 2007 and 2006
    
    
    5Notes to Consolidated Financial Statements
    
    
    6ITEM 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    15ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    22ITEM 4. Controls and Procedures
    
    
    22PART II. OTHER INFORMATION
    
    
    23ITEM 1. Legal Proceedings
    
    
    23ITEM 1A. Risk Factors
    
    
    23ITEMS 2-3. Not Applicable
    
    
    23ITEM 4. Submission of Matters to a Vote of Security Holders
    
    
    23ITEM 5. Other Information
    
    
    24ITEM 6. Exhibits
    
    
    24Signatures
    
    
    25Exhibit Index
    
    
    26Lease Agreement dated as of May 2, 2007Office Lease dated as of September 29, 2003First Amendment to Lease dated April 29, 2005Second Amendment to Lease dated January 31, 2006Third Amendment to Lease dated May 9, 2007Statement re: Computation of Earnings per ShareCertification of President and Chief Executive Officer Pursuant to Section 302Certification of Chief Financial Officer Pursuant to Section 302Certification of President and Chief Executive Officer Pursuant to Section 906Certification of Chief Financial Officer Pursuant to Section 906
  2




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##### Table of Contents



PART I.  FINANCIAL INFORMATION
 
 ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 HEALTH FITNESS CORPORATION
 
 CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 June 30,
    
    
    December 31,2007
    
    
    2006ASSETSCURRENT ASSETSCash
    
    $
    131,753
    
    
    $
    987,465Trade and other accounts receivable, less allowances of $210,500
and $283,100
    
    
    12,427,703
    
    
    
    12,404,856Inventories
    
    
    809,400
    
    
    
    326,065Prepaid expenses and other
    
    
    601,315
    
    
    
    375,824Deferred tax assets
    
    
    217,476
    
    
    
    217,476Total current assets
    
    
    14,187,647
    
    
    
    14,311,686PROPERTY AND EQUIPMENT, net
    
    
    1,123,325
    
    
    
    767,675OTHER ASSETSGoodwill
    
    
    14,529,674
    
    
    
    14,509,469Software technology, less accumulated amortization of $577,900
and $370,200
    
    
    1,614,815
    
    
    
    1,658,575Trademark, less accumulated amortization of $295,900 and $246,300
    
    
    197,185
    
    
    
    246,809Other intangible assets, less accumulated amortization of
$205,800 and $166,500
    
    
    323,250
    
    
    
    362,528Deferred tax assets
    
    
    437,010
    
    
    
    437,010Other
    
    
    17,927
    
    
    
    24,597$
    32,430,833
    
    
    $
    32,318,349LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESTrade accounts payable
    
    $
    1,229,617
    
    
    $
    1,811,939Accrued salaries, wages, and payroll taxes
    
    
    3,577,563
    
    
    
    3,249,424Accrued acquisition earnout
    
    
    
    
    
    
    1,475,000Other accrued liabilities
    
    
    177,049
    
    
    
    120,044Accrued self funded insurance
    
    
    196,956
    
    
    
    201,053Line of credit
    
    
    274,491
    
    
    
    Deferred revenue
    
    
    1,210,020
    
    
    
    1,663,121Total current liabilities
    
    
    6,665,696
    
    
    
    8,520,581LONG-TERM OBLIGATIONS
    
    
    
    
    
    
    COMMITMENTS AND CONTINGENCIES
    
    
    
    
    
    
    STOCKHOLDERS EQUITYCommon stock, $0.01 par value; 50,000,000 shares authorized;
19,803,177 and 19,220,217 shares issued and outstanding
    
    
    197,823
    
    
    
    192,202Additional paid-in capital
    
    
    27,282,030
    
    
    
    25,989,447Accumulated comprehensive income
    
    
    (50,692
    )
    
    
    (35,186
    )Accumulated deficit
    
    
    (1,664,024
    )
    
    
    (2,348,695
    )25,765,137
    
    
    
    23,797,768$
    32,430,833
    
    
    $
    32,318,349
  3




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HEALTH FITNESS CORPORATION
 
 CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006REVENUE
    
    $
    16,979,167
    
    
    $
    15,575,130
    
    
    $
    33,569,200
    
    
    $
    30,142,391COSTS OF REVENUE
    
    
    12,223,734
    
    
    
    11,415,116
    
    
    
    24,003,873
    
    
    
    22,377,897GROSS PROFIT
    
    
    4,755,433
    
    
    
    4,160,014
    
    
    
    9,565,327
    
    
    
    7,764,494OPERATING EXPENSESSalaries
    
    
    2,645,073
    
    
    
    2,146,470
    
    
    
    5,043,875
    
    
    
    4,142,369Other selling, general and administrative
    
    
    1,691,109
    
    
    
    1,219,161
    
    
    
    3,173,634
    
    
    
    2,338,337Amortization of acquired intangible assets
    
    
    42,770
    
    
    
    107,610
    
    
    
    85,540
    
    
    
    216,072Total operating expenses
    
    
    4,378,952
    
    
    
    3,473,241
    
    
    
    8,303,049
    
    
    
    6,696,778OPERATING INCOME
    
    
    376,481
    
    
    
    686,773
    
    
    
    1,262,278
    
    
    
    1,067,716OTHER INCOME (EXPENSE)Interest expense
    
    
    (4,591
    )
    
    
    (2,470
    )
    
    
    (6,690
    )
    
    
    (4,150
    )Change in fair value of warrants
    
    
    
    
    
    
    406,694
    
    
    
    
    
    
    
    841,215Other, net
    
    
    4,090
    
    
    
    14,071
    
    
    
    2,576
    
    
    
    10,061EARNINGS BEFORE INCOME TAXES
    
    
    375,980
    
    
    
    1,105,068
    
    
    
    1,258,164
    
    
    
    1,914,842INCOME TAX EXPENSE
    
    
    202,976
    
    
    
    377,594
    
    
    
    573,493
    
    
    
    527,695NET EARNINGS
    
    
    173,004
    
    
    
    727,474
    
    
    
    684,671
    
    
    
    1,387,147Dividend to preferred shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    96,410NET EARNINGS APPLICABLE TO
COMMON SHAREHOLDERS
    
    $
    173,004
    
    
    $
    727,474
    
    
    $
    684,671
    
    
    $
    1,290,737NET EARNINGS PER SHARE:Basic
    
    $
    0.01
    
    
    $
    0.04
    
    
    $
    0.04
    
    
    $
    0.08Diluted
    
    
    0.01
    
    
    
    0.02
    
    
    
    0.03
    
    
    
    0.03WEIGHTED AVERAGE COMMON SHARES:Basic
    
    
    19,702,693
    
    
    
    18,831,169
    
    
    
    19,508,107
    
    
    
    17,005,769Diluted
    
    
    20,558,007
    
    
    
    20,310,830
    
    
    
    20,415,501
    
    
    
    20,305,674
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HEALTH FITNESS CORPORATION
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 Six Months EndedJune 30,2007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIES:Net earnings
    
    $
    684,671
    
    
    $
    1,290,737Adjustments to reconcile net earnings to net cash used in operating activities:Depreciation
    
    
    368,708
    
    
    
    241,033Amortization
    
    
    88,901
    
    
    
    219,434Warrant valuation
    
    
    
    
    
    
    (841,215
    )Stock-based compensation
    
    
    386,338
    
    
    
    238,404Deferred taxes
    
    
    
    
    
    
    (1,701
    )Loss on disposal of assets
    
    
    
    
    
    
    158Change in assets and liabilities:Trade and other accounts receivable
    
    
    (22,847
    )
    
    
    (431,789
    )Inventories
    
    
    (482,223
    )
    
    
    (115,406
    )Prepaid expenses and other
    
    
    (226,603
    )
    
    
    (19,828
    )Other assets
    
    
    6,671
    
    
    
    11,671Trade accounts payable
    
    
    (603,508
    )
    
    
    (122,572
    )Accrued liabilities and other
    
    
    381,047
    
    
    
    (69,927
    )Deferred revenue
    
    
    (453,101
    )
    
    
    (115,583
    )Net cash provided by operating activities
    
    
    128,054
    
    
    
    283,416CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (674,918
    )
    
    
    (301,748
    )Business acquisition, net of cash acquired
    
    
    (20,205
    )
    
    
    Accrued acquisition earnout
    
    
    (737,500
    )
    
    
    Other
    
    
    
    
    
    
    (85,807
    )Net cash used in investing activities
    
    
    (1,432,623
    )
    
    
    (387,555
    )CASH FLOWS FROM FINANCING ACTIVITIES:Costs from issuance of preferred stock
    
    
    (17,415
    )
    
    
    (161,725
    )Proceeds from the issuance of common stock
    
    
    21,249
    
    
    
    85,698Proceeds from the exercise of stock options
    
    
    170,532
    
    
    
    3,706Borrowings under line of credit
    
    
    7,229,742
    
    
    
    Repayments under line of credit
    
    
    (6,955,251
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    448,857
    
    
    
    (72,321
    )NET DECREASE IN CASH
    
    
    (855,712
    )
    
    
    (176,460
    )CASH AT BEGINNING OF PERIOD
    
    
    987,465
    
    
    
    1,471,505CASH AT END OF PERIOD
    
    $
    131,753
    
    
    $
    1,295,045Supplemental cash flow information:Cash paid for interest
    
    $
    3,153
    
    
    $
    788Cash paid for taxes
    
    
    101,364
    
    
    
    475,817Non-cash investing and financing activities affecting cash flows:Common stock issued for accrued acquisition earnout
    
    
    737,500
    
    
    
    Conversion of warrant liability to additional paid in capital
    
    
    
    
    
    
    1,369,674
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Consolidation
 Reclassifications
 Cash
 6




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##### Table of Contents



Trade and Other Accounts Receivable
 Property and Equipment
 Software Development Costs
   Goodwill
 Intangible Assets
 7




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##### Table of Contents



Revenue Recognition 
    Net Earnings Per Common Share
 Stock-Based Compensation
 Fair Values of Financial Instruments 
 Valuation of Derivative Instruments
 Income Taxes
 8




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##### Table of Contents



Use of Estimates
    Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006REVENUE:Fitness Management RevenueStaffing Services
    
    $
    9,848,487
    
    
    $
    9,952,698
    
    
    $
    19,841,171
    
    
    $
    19,652,222Program and Consulting Services
    
    
    667,347
    
    
    
    633,926
    
    
    
    1,363,581
    
    
    
    1,199,99910,515,834
    
    
    
    10,586,624
    
    
    
    21,204,752
    
    
    
    20,852,221Health Management RevenueStaffing Services
    
    
    3,893,275
    
    
    
    3,345,243
    
    
    
    7,560,613
    
    
    
    6,415,255Program and Consulting Services
    
    
    2,570,058
    
    
    
    1,643,263
    
    
    
    4,803,835
    
    
    
    2,874,9156,463,333
    
    
    
    4,988,506
    
    
    
    12,364,448
    
    
    
    9,290,170Total RevenueStaffing Services
    
    
    13,741,762
    
    
    
    13,297,941
    
    
    
    27,401,784
    
    
    
    26,067,477Program and Consulting Services
    
    
    3,237,405
    
    
    
    2,277,189
    
    
    
    6,167,416
    
    
    
    4,074,914$
    16,979,167
    
    
    $
    15,575,130
    
    
    $
    33,569,200
    
    
    $
    30,142,391
 9




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006GROSS PROFIT:Fitness Management RevenueStaffing Services
    
    $
    2,012,802
    
    
    $
    2,007,950
    
    
    $
    4,121,983
    
    
    $
    4,002,530Program and Consulting Services
    
    
    246,668
    
    
    
    282,342
    
    
    
    611,519
    
    
    
    582,8692,259,470
    
    
    
    2,290,292
    
    
    
    4,733,502
    
    
    
    4,585,399Health Management RevenueStaffing Services
    
    
    999,876
    
    
    
    884,922
    
    
    
    1,907,113
    
    
    
    1,540,998Program and Consulting Services
    
    
    1,496,087
    
    
    
    984,800
    
    
    
    2,924,712
    
    
    
    1,638,0972,495,963
    
    
    
    1,869,722
    
    
    
    4,831,825
    
    
    
    3,179,095Total Gross ProfitStaffing Services
    
    
    3,012,678
    
    
    
    2,892,872
    
    
    
    6,029,096
    
    
    
    5,543,528Program and Consulting Services
    
    
    1,742,755
    
    
    
    1,267,142
    
    
    
    3,536,231
    
    
    
    2,220,966$
    4,755,433
    
    
    $
    4,160,014
    
    
    $
    9,565,327
    
    
    $
    7,764,494
  " " .
 "
     10




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##### Table of Contents



11




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##### Table of Contents



.
 Stock Options
     Options Outstanding
    
    Options ExercisableWeighted Average
    
    Weighted
    
    
    
    
    
    WeightedRemaining
    
    Average
    
    
    
    AverageRange of
    
    Number
    
    Contractual Life
    
    Exercise
    
    Number
    
    ExerciseExercise Prices
    
    Outstanding
    
    In Years
    
    Price
    
    Exercisable
    
    Price$0.30 - $0.39
    
    
    147,900
    
    
    
    1.12
    
    
    $
    0.39
    
    
    
    147,900
    
    
    $
    0.390.47 - 0.69
    
    
    362,900
    
    
    
    1.03
    
    
    
    0.52
    
    
    
    362,900
    
    
    
    0.520.95 - 1.25
    
    
    239,000
    
    
    
    2.76
    
    
    
    1.15
    
    
    
    179,250
    
    
    
    1.161.26 - 2.27
    
    
    451,100
    
    
    
    4.08
    
    
    
    1.85
    
    
    
    374,575
    
    
    
    1.842.28 - 3.00
    
    
    1,169,250
    
    
    
    4.42
    
    
    
    2.73
    
    
    
    377,375
    
    
    
    2.682,370,150
    
    
    
    3.47
    
    
    $
    1.92
    
    
    
    1,442,000
    
    
    $
    1.49
  Three Months EndedJune 30,2007
    
    2006Risk-free interest rate
    
    
    4.72
    %
    
    
    4.97
    %Expected volatility
    
    
    40.0
    %
    
    
    52.6
    %Expected life (in years)
    
    
    3.0
    
    
    
    3.0Dividend yield
    
    
    
    
    
    
    
 12




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Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    Aggregate
    
    
    AverageExercise
    
    
    Intrinsic
    
    
    RemainingOptions
    
    
    Price
    
    
    Value
    
    
    TermOutstanding at March 31, 2007
    
    
    2,630,650
    
    
    $
    1.90Granted
    
    
    105,000
    
    
    
    2.83Forfeited
    
    
    (30,625
    )
    
    
    2.76Exercised
    
    
    (144,875
    )
    
    
    0.63Expired
    
    
    (190,000
    )
    
    
    3.00Outstanding at June 30, 2007
    
    
    2,370,150
    
    
    $
    1.92
    
    
    $
    2,937,434
    
    
    
    3.77Exercisable at June 30, 2007
    
    
    1,442,000
    
    
    $
    1.49
    
    
    $
    2,402,248
    
    
    
    3.06
  Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    Aggregate
    
    
    AverageExercise
    
    
    Intrinsic
    
    
    RemainingOptions
    
    
    Price
    
    
    Value
    
    
    TermOutstanding at December 31, 2006
    
    
    2,250,900
    
    
    $
    1.64Granted
    
    
    610,500
    
    
    
    2.81Forfeited
    
    
    (34,375
    )
    
    
    2.75Exercised
    
    
    (266,875
    )
    
    
    0.69Expired
    
    
    (190,000
    )
    
    
    3.00Outstanding at June 30, 2007
    
    
    2,370,150
    
    
    $
    1.92
    
    
    $
    2,937,434
    
    
    
    3.77Exercisable at June 30, 2007
    
    
    1,442,000
    
    
    $
    1.49
    
    
    $
    2,402,248
    
    
    
    3.06
 Restricted Stock
 Equity Incentive Plan
 13




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##### Table of Contents



Accrued Acquisition Earnout
 .
  14




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Critical Accounting Policies.
 General.
 Results of Operations
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006REVENUE
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %COSTS OF REVENUE
    
    
    72.0
    
    
    
    73.3
    
    
    
    71.5
    
    
    
    74.2GROSS PROFIT
    
    
    28.0
    
    
    
    26.7
    
    
    
    28.5
    
    
    
    25.8OPERATING EXPENSESSalaries
    
    
    15.6
    
    
    
    13.8
    
    
    
    15.0
    
    
    
    13.7Other selling, general and administrative
    
    
    10.0
    
    
    
    7.8
    
    
    
    9.5
    
    
    
    7.8Amortization of acquired intangible assets
    
    
    0.2
    
    
    
    0.7
    
    
    
    0.3
    
    
    
    0.7Total operating expenses
    
    
    25.8
    
    
    
    22.3
    
    
    
    24.7
    
    
    
    22.2OPERATING INCOME
    
    
    2.2
    
    
    
    4.4
    
    
    
    3.8
    
    
    
    3.6OTHER INCOME (EXPENSE)
    
    
    
    
    
    
    2.7
    
    
    
    (0.1
    )
    
    
    2.8EARNINGS BEFORE INCOME TAXES
    
    
    2.2
    
    
    
    7.1
    
    
    
    3.7
    
    
    
    6.4INCOME TAX EXPENSE
    
    
    1.2
    
    
    
    2.4
    
    
    
    1.7
    
    
    
    1.8NET EARNINGS
    
    
    1.0
    
    
    
    4.7
    
    
    
    2.0
    
    
    
    4.6Dividend to preferred shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.3NET EARNINGS TO COMMON SHAREHOLDERS
    
    
    1.0
    %
    
    
    4.7
    %
    
    
    2.0
    %
    
    
    4.3
    %
 15




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##### Table of Contents



Results of Operations for the quarter ended June 30, 2007 compared to the quarter ended June
30, 2006.
 Revenue.
 .
   Gross Profit.
    Operating Expenses and Operating Income.
 16




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##### Table of Contents



Other Income and Expense.
 Valuation of Derivative Instruments,
 Income Taxes.
  Net Earnings Applicable to Common Shareholders.
 Dividends to Preferred Shareholders.
 Results of Operations for the six months ended June 30, 2007 compared to the six months ended June
30, 2006.
 Revenue.
 17




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##### Table of Contents



Gross Profit.
    Operating Expenses and Operating Income.
   18




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##### Table of Contents



Other Income and Expense.
 Valuation of Derivative Instruments,
 Income Taxes.
  Net Earnings Applicable to Common Shareholders.
 Dividends to Preferred Shareholders.
 19




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
       20




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##### Table of Contents



INFLATION
  OFF-BALANCE SHEET ARRANGEMENTS
  PRIVATE SECURITIES LITIGATION REFORM ACT
   21




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##### Table of Contents



RECENTLY PASSED LEGISLATION
 Sarbanes-Oxley.
  HIPAA.
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
 ITEM 4. CONTROLS AND PROCEDURES
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##### Table of Contents



PART II.  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   Nominee
    
    Number of Votes For
    
    Number of Votes WithheldGregg O. Lehman
    
    
    14,267,186
    
    
    
    176,103K. James Ehlen, M.D
    
    
    13,962,715
    
    
    
    480,574Robert J. Marzec
    
    
    14,076,133
    
    
    
    367,156Jerry V. Noyce
    
    
    14,267,286
    
    
    
    176,003John C. Penn
    
    
    14,262,186
    
    
    
    181,103Mark W. Sheffert
    
    
    14,076,233
    
    
    
    367,056Linda Hall Whitman
    
    
    14,267,286
    
    
    
    176,003Rodney A. Young
    
    
    14,267,186
    
    
    
    176,103
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##### Table of Contents



ITEM 5. OTHER INFORMATION
   
 ITEM 6. EXHIBITS
  24




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##### Table of Contents



SIGNATURES
  Dated: August 14, 2007
    
    HEALTH FITNESS CORPORATIONBy
    
    /s/ Gregg O. LehmanGregg O. LehmanPresident and Chief Executive Officer(Principal Executive Officer)By
    
    /s/ Wesley W. WinnekinsWesley W. WinnekinsChief Financial Officer and Treasurer(Principal Financial and Accounting Officer)
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##### Table of Contents



Exhibit No.
    
    Description**10.1
    
    Lease Agreement, dated as of May 2, 2007, by and between United Properties Investment LLC and the
Company**10.2
    
    Office Lease, dated as of September 29, 2003, by and between CMD Realty Investment Fund II, L.P.
and HealthCalc.Net, Inc.**10.3
    
    First Amendment to Lease, dated April 29, 2005, by and between Parkway Commons, L.P. (f/k/a CMD
Realty Investment Fund II, L.P.) and HealthCalc.Net, Inc.**10.4
    
    Second Amendment to Lease, dated January 31, 2006, by and between Parkway Commons, L.P. and
HealthCalc.Net, Inc.**10.5
    
    Third Amendment to Lease, dated May 9, 2007, by and between Parkway Commons, L.P. and the Company10.6
    
    Amended and Restated 2005 Stock Option Plan  incorporated by reference to Exhibit 10.1 to our
Form 8-K dated May 21, 2007 (1)10.7
    
    Form of Incentive Stock Option Agreement  incorporated by reference to Exhibit 10.2 to our Form
8-K dated May 21, 2007 (1)10.8
    
    Form of Nonqualified Stock Option Agreement  incorporated by reference to Exhibit 10.3 to our
Form 8-K dated May 21, 2007 (1)10.9
    
    2007 Equity Incentive Plan  incorporated by reference to Exhibit 10.4 to our Form 8-K dated May
21, 2007 (1)10.10
    
    Form of Restricted Stock Agreement  incorporated by reference to Exhibit 10.5 to our Form 8-K
dated May 21, 2007 (1)**11.0
    
    Statement re: Computation of Earnings per Share**31.1
    
    Certification of President and Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002**31.2
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**32.1
    
    Certification of President and Chief Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002**32.2
    
    Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 **
    
    Filed herewith(1)
    
    Indicates management contract or compensatory plan or arrangement 26