##### 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, 2008
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 
Incorporation or Organization)
    
    (IRS Employer
Identification No.)
 1650 West 82 nd Street, Bloomington, MN 55431
(Address of Principal Executive Offices)
 Registrants telephone number (952) 831-6830
 
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer  o
(Do not check if a smaller reporting company)
    
    Smaller Reporting Company þ
 o þ




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##### 



Health Fitness Corporation
Consolidated Financial Statements
Table of Contents
 PAGEPART I. FINANCIAL INFORMATIONITEM 1. Consolidated Financial Statements (unaudited)Consolidated Balance Sheets as of June 30, 2008 and
December 31, 2007
    
    
    3Consolidated Statements of Operations for the three
and six months ended June 30, 2008 and 2007
    
    
    4Consolidated Statements of Cash Flows for the three
and six months ended June 30, 2008 and 2007
    
    
    5Notes to Consolidated Financial Statements
    
    
    6ITEM 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    14ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    20ITEM 4. Controls and Procedures
    
    
    20PART II. OTHER INFORMATION
    
    
    21ITEM 1. Legal Proceedings
    
    
    21ITEM 1A. Risk Factors
    
    
    21ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    21ITEM 3. Defaults Upon Senior Securities
    
    
    21ITEM 4. Submission of Matters to a Vote of Security Holders
    
    
    21ITEM 5. Other Information
    
    
    22ITEM 6. Exhibits
    
    
    22Signatures
    
    
    23Exhibit Index
    
    
    24Statement Re: Computation of Earnings Per Share302 Certification of President and CEO302 Certification of CFO906 Certification of President and CEO906 Certification of CFO
  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, 2008 AND DECEMBER 31, 2007
 June 30,
    
    
    December 31,2008
    
    
    2007ASSETSCURRENT ASSETSCash
    
    $
    201,722
    
    
    $
    1,946,028Trade and other accounts receivable, less allowances of $242,800 and $243,300
    
    
    13,570,650
    
    
    
    14,686,879Inventory
    
    
    589,784
    
    
    
    569,458Prepaid expenses and other
    
    
    473,885
    
    
    
    226,891Deferred tax assets
    
    
    406,367
    
    
    
    406,367Total current assets
    
    
    15,242,408
    
    
    
    17,835,623PROPERTY AND EQUIPMENT, net
    
    
    1,313,692
    
    
    
    1,400,570OTHER ASSETSGoodwill
    
    
    14,546,250
    
    
    
    14,546,250Software, less accumulated amortization of $1,033,100 and $795,100
    
    
    1,805,649
    
    
    
    1,734,920Trademark, less accumulated amortization of $395,100 and $345,500
    
    
    97,936
    
    
    
    147,561Other intangible assets, less accumulated amortization of $277,700 and $241,700
    
    
    251,417
    
    
    
    287,334Other
    
    
    1,401
    
    
    
    9,807$
    33,258,753
    
    
    $
    35,962,065LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESTrade accounts payable
    
    $
    1,012,088
    
    
    $
    2,121,154Accrued salaries, wages, and payroll taxes
    
    
    3,876,816
    
    
    
    4,011,580Other accrued liabilities
    
    
    521,904
    
    
    
    1,187,045Accrued self funded insurance
    
    
    289,357
    
    
    
    333,724Line of credit
    
    
    640,068
    
    
    
    Deferred revenue
    
    
    1,299,483
    
    
    
    1,722,254Total current liabilities
    
    
    7,639,716
    
    
    
    9,375,757DEFERRED TAX LIABILITY
    
    
    108,623
    
    
    
    108,623LONG-TERM OBLIGATIONS
    
    
    
    
    
    
    COMMITMENTS AND CONTINGENCIES
    
    
    
    
    
    
    STOCKHOLDERS EQUITYCommon stock, $0.01 par value; 50,000,000 shares authorized; 19,221,576 and
19,928,590 shares issued and outstanding at June 30, 2008 and December 31,
2007, respectively
    
    
    192,216
    
    
    
    199,285Additional paid-in capital
    
    
    27,703,966
    
    
    
    29,350,211Accumulated comprehensive loss from foreign currency translation
    
    
    (57,782
    )
    
    
    (56,413
    )Accumulated deficit
    
    
    (2,327,986
    )
    
    
    (3,015,398
    )25,510,414
    
    
    
    26,477,685$
    33,258,753
    
    
    $
    35,962,065
  3




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##### Table of Contents



HEALTH FITNESS CORPORATION
 
 CONSOLIDATED
STATEMENTS OF OPERATIONS (unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007REVENUE
    
    $
    18,815,458
    
    
    $
    16,979,167
    
    
    $
    37,518,125
    
    
    $
    33,569,200COSTS OF REVENUE
    
    
    13,278,965
    
    
    
    12,223,734
    
    
    
    26,639,367
    
    
    
    24,003,873GROSS PROFIT
    
    
    5,536,493
    
    
    
    4,755,433
    
    
    
    10,878,758
    
    
    
    9,565,327OPERATING EXPENSESSalaries
    
    
    3,026,310
    
    
    
    2,645,073
    
    
    
    5,998,687
    
    
    
    5,043,875Other selling, general and administrative
    
    
    1,832,102
    
    
    
    1,691,109
    
    
    
    3,595,767
    
    
    
    3,173,634Amortization of acquired intangible assets
    
    
    42,770
    
    
    
    42,770
    
    
    
    85,540
    
    
    
    85,540Total operating expenses
    
    
    4,901,182
    
    
    
    4,378,952
    
    
    
    9,679,994
    
    
    
    8,303,049OPERATING INCOME
    
    
    635,311
    
    
    
    376,481
    
    
    
    1,198,764
    
    
    
    1,262,278OTHER INCOME (EXPENSE)Interest expense
    
    
    (3,208
    )
    
    
    (4,591
    )
    
    
    (4,131
    )
    
    
    (6,690
    )Other, net
    
    
    (1,211
    )
    
    
    4,090
    
    
    
    1,074
    
    
    
    2,576EARNINGS BEFORE INCOME TAXES
    
    
    630,892
    
    
    
    375,980
    
    
    
    1,195,707
    
    
    
    1,258,164INCOME TAX EXPENSE
    
    
    268,192
    
    
    
    202,976
    
    
    
    508,295
    
    
    
    573,493NET EARNINGS
    
    $
    362,700
    
    
    $
    173,004
    
    
    $
    687,412
    
    
    $
    684,671NET EARNINGS PER SHARE:Basic
    
    $
    0.02
    
    
    $
    0.01
    
    
    $
    0.03
    
    
    $
    0.04Diluted
    
    
    0.02
    
    
    
    0.01
    
    
    
    0.03
    
    
    
    0.03WEIGHTED AVERAGE COMMON SHARES:Basic
    
    
    19,727,954
    
    
    
    19,702,693
    
    
    
    19,906,247
    
    
    
    19,508,107Diluted
    
    
    19,984,737
    
    
    
    20,558,007
    
    
    
    20,281,772
    
    
    
    20,415,501
  4




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##### Table of Contents



HEALTH FITNESS CORPORATION
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
 Six Months EndedJune 30,2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIES:Net earnings
    
    $
    687,412
    
    
    $
    684,671Adjustments to reconcile net earnings to net cash used in operating activities:Stock-based compensation
    
    
    411,973
    
    
    
    386,338Depreciation and amortization
    
    
    549,608
    
    
    
    457,609Change in assets and liabilities, net of assets acquired:Trade and other accounts receivable
    
    
    1,116,229
    
    
    
    (22,847
    )Inventory
    
    
    (20,326
    )
    
    
    (482,223
    )Prepaid expenses and other
    
    
    (246,994
    )
    
    
    (226,603
    )Other assets
    
    
    8,406
    
    
    
    6,671Trade accounts payable
    
    
    (1,110,435
    )
    
    
    (603,508
    )Accrued liabilities and other
    
    
    (844,272
    )
    
    
    381,047Deferred revenue
    
    
    (422,771
    )
    
    
    (453,101
    )Net cash
provided by operating activities
    
    
    128,830
    
    
    
    128,054CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (139,234
    )
    
    
    (510,978
    )Capitalized software development costs
    
    
    (308,683
    )
    
    
    (163,940
    )Business acquisition, net of cash acquired
    
    
    
    
    
    
    (20,205
    )Net cash payment made for acquisition
    
    
    
    
    
    
    (737,500
    )Net cash used in investing activities
    
    
    (447,917
    )
    
    
    (1,432,623
    )CASH FLOWS FROM FINANCING ACTIVITIES:Borrowings under line of credit
    
    
    3,003,110
    
    
    
    7,229,742Repayments under line of credit
    
    
    (2,363,042
    )
    
    
    (6,955,251
    )Costs from issuance of preferred stock
    
    
    
    
    
    
    (17,415
    )Repurchase of common stock
    
    
    (2,354,923
    )
    
    
    Proceeds from the issuance of common stock
    
    
    92,206
    
    
    
    21,249Proceeds from the exercise of stock options
    
    
    197,429
    
    
    
    170,532Net cash
(used in) provided by  financing activities
    
    
    (1,425,220
    )
    
    
    448,857NET DECREASE IN CASH
    
    
    (1,744,306
    )
    
    
    (855,712
    )CASH AT BEGINNING OF PERIOD
    
    
    1,946,028
    
    
    
    987,465CASH AT END OF PERIOD
    
    $
    201,722
    
    
    $
    131,753SUPPLEMENTAL CASH FLOW DISCLOSURESSupplemental cash flow information:Cash paid for interest
    
    $
    4,132
    
    
    $
    3,153Cash paid for taxes
    
    
    720,958
    
    
    
    101,364Noncash investing and financing activities affecting cash flows:Common stock issued for acquisition earnout
    
    
    
    
    
    
    737,500
  5




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##### Table of Contents



HEALTH FITNESS CORPORATION
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
    nd www.hfit.com
     Consolidation
 Cash
 6




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##### Table of Contents



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




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##### Table of Contents



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




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##### Table of Contents



Use of Estimates
   Segment Data:
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007REVENUE:Fitness Management RevenueStaffing Services
    
    $
    9,836,999
    
    
    $
    9,820,989
    
    
    $
    19,543,346
    
    
    $
    19,801,505Program and Consulting Services
    
    
    649,720
    
    
    
    627,712
    
    
    
    1,269,479
    
    
    
    1,321,94610,486,719
    
    
    
    10,448,701
    
    
    
    20,812,825
    
    
    
    21,123,451Health Management RevenueStaffing Services
    
    
    4,569,055
    
    
    
    3,920,775
    
    
    
    8,864,799
    
    
    
    7,600,279Program and Consulting Services
    
    
    3,759,684
    
    
    
    2,609,691
    
    
    
    7,840,501
    
    
    
    4,845,4708,328,739
    
    
    
    6,530,466
    
    
    
    16,705,300
    
    
    
    12,445,749Total RevenueStaffing Services
    
    
    14,406,054
    
    
    
    13,741,764
    
    
    
    28,408,145
    
    
    
    27,401,784Program and Consulting Services
    
    
    4,409,404
    
    
    
    3,237,403
    
    
    
    9,109,980
    
    
    
    6,167,416$
    18,815,458
    
    
    $
    16,979,167
    
    
    $
    37,518,125
    
    
    $
    33,569,200GROSS PROFIT:Fitness Management Gross ProfitStaffing Services
    
    $
    2,350,240
    
    
    $
    2,002,073
    
    
    $
    4,466,110
    
    
    $
    4,101,931Program and Consulting Services
    
    
    235,661
    
    
    
    220,999
    
    
    
    472,706
    
    
    
    583,8502,585,901
    
    
    
    2,223,072
    
    
    
    4,938,816
    
    
    
    4,685,781Health Management Gross ProfitStaffing Services
    
    
    1,237,896
    
    
    
    1,010,607
    
    
    
    2,176,803
    
    
    
    1,922,572Program and Consulting Services
    
    
    1,712,696
    
    
    
    1,521,754
    
    
    
    3,763,139
    
    
    
    2,956,9742,950,592
    
    
    
    2,532,361
    
    
    
    5,939,942
    
    
    
    4,879,546Total Gross ProfitStaffing Services
    
    
    3,588,136
    
    
    
    3,012,680
    
    
    
    6,642,913
    
    
    
    6,024,503Program and Consulting Services
    
    
    1,948,357
    
    
    
    1,742,753
    
    
    
    4,235,845
    
    
    
    3,540,824$
    5,536,493
    
    
    $
    4,755,433
    
    
    $
    10,878,758
    
    
    $
    9,565,327
 9




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##### Table of Contents



Business Combinations
 Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51
 Disclosures
about Derivative Instruments and Hedging Activities  an amendment of FASB Statement No. 133 (SFAS
133).
 The Hierarchy of
Generally Accepted Accounting Principles
 Determination of the Useful
Life of Intangible Assets Goodwill and Other Intangible Assets
 10




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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
    
    
    60,500
    
    
    
    0.87
    
    
    $
    0.39
    
    
    
    60,500
    
    
    $
    0.390.47
     0.69
    
    
    95,000
    
    
    
    2.27
    
    
    
    0.54
    
    
    
    95,000
    
    
    
    0.540.95       1.25
    
    
    174,000
    
    
    
    1.94
    
    
    
    1.19
    
    
    
    166,500
    
    
    
    1.201.26       2.27
    
    
    469,401
    
    
    
    4.42
    
    
    
    1.92
    
    
    
    436,901
    
    
    
    1.912.28       3.05
    
    
    1,345,500
    
    
    
    4.70
    
    
    
    2.69
    
    
    
    521,875
    
    
    
    2.722,144,401
    
    
    
    4.20
    
    
    $
    2.24
    
    
    
    1,280,776
    
    
    $
    1.97
  Three Months EndedJune 30,2008
    
    2007Risk-free interest rate
    
    
    2.92
    %
    
    
    4.72
    %Expected volatility
    
    
    37.4
    %
    
    
    40.0
    %Expected life (in years)
    
    
    3.0
    
    
    
    3.0Dividend yield
    
    
    
    
    
    
    
 11




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##### Table of Contents



Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    Aggregate
    
    
    AverageExercise
    
    
    Intrinsic
    
    
    RemainingOptions
    
    
    Price
    
    
    Value
    
    
    TermOutstanding at December 31, 2007
    
    
    2,338,300
    
    
    $
    1.96Granted
    
    
    498,301
    
    
    
    2.46Exercised
    
    
    (372,200
    )
    
    
    0.57Canceled/Forfeited
    
    
    (320,000
    )
    
    
    2.45Outstanding at June 30, 2008
    
    
    2,144,401
    
    
    $
    2.24
    
    
    $
    345,755
    
    
    
    3.94Exercisable at June 30, 2008
    
    
    1,280,776
    
    
    $
    1.97
    
    
    $
    338,443
    
    
    
    3.33
 Restricted Stock
  Employee
Stock Purchase Plan
 Equity Incentive Plan
 12




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##### Table of Contents



Accrued Acquisition Earnout
 Common Stock Repurchase Plan
  Additional
    
    
    Accumulated
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    Comprehensive
    
    
    Accumulated
    
    
    Stockholders
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Income
    
    
    Deficit
    
    
    Equity
    
    
    IncomeBALANCE AT DECEMBER 31, 2007
    
    
    19,928,590
    
    
    $
    199,285
    
    
    $
    29,350,211
    
    
    $
    (56,413
    )
    
    
    (3,015,398
    )
    
    $
    26,477,685Issuance of common stock through
stock purchase plan
    
    
    36,626
    
    
    
    367
    
    
    
    91,839
    
    
    
    
    
    
    
    
    
    
    
    92,206Redemption of common stock for
option exercises
    
    
    (6,582
    )
    
    
    (66
    )
    
    
    (16,243
    )
    
    
    
    
    
    
    
    
    
    
    (16,309
    )Issuance of common stock for option
exercises
    
    
    372,200
    
    
    
    3,722
    
    
    
    209,836
    
    
    
    
    
    
    
    
    
    
    
    213,558Issuance of common stock for
executive compensation
    
    
    37,983
    
    
    
    380
    
    
    
    50,699
    
    
    
    
    
    
    
    
    
    
    
    51,079Redemption of common stock for
executive compensation
    
    
    (5,880
    )
    
    
    (59
    )
    
    
    (14,642
    )
    
    
    
    
    
    
    
    
    
    
    (14,701
    )Repurchase of common stock through
common stock repurchase plan
    
    
    (1,141,361
    )
    
    
    (11,413
    )
    
    
    (2,343,509
    )
    
    
    
    
    
    
    
    
    
    
    (2,354,922
    )Executive equity compensation program
    
    
    
    
    
    
    
    
    
    
    138,137
    
    
    
    
    
    
    
    
    
    
    
    138,137Stock option compensation
    
    
    
    
    
    
    
    
    
    
    237,638
    
    
    
    
    
    
    
    
    
    
    
    237,638Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    687,412
    
    
    
    687,412
    
    
    $
    687,412Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,369
    )
    
    
    
    
    
    
    (1,369
    )
    
    
    (1,369
    )Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    686,043BALANCE AT
JUNE 30, 2008
    
    
    19,221,576
    
    
    $
    192,216
    
    
    $
    27,703,966
    
    
    $
    (57,782
    )
    
    $
    (2,327,986
    )
    
    $
    25,510,414
 .
 Legal Proceedings
 Liquidated
Damages
 13




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##### Table of Contents



Patent Matter
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 You should read the following discussion and analysis of our financial condition and results of
operations together with our financial statements and the related notes appearing under Item 1 of
Part 1. Some of the information contained in this discussion and analysis or set forth elsewhere in
this quarterly report, including information with respect to our plans and strategy for our
business and expected financial results, includes forward-looking statements that involve risks and
uncertainties. You should review the Risk Factors under Item 1A of the Companys Annual Report on
Form 10-K for the fiscal year ended December 31, 2007 for a discussion of important factors that
could cause actual results to differ materially from the results described in or implied by the
forward-looking statements contained in the following discussion and analysis.
 CRITICAL ACCOUNTING POLICIES
  BUSINESS DESCRIPTION
   14




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##### Table of Contents



RESULTS OF OPERATIONS
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007REVENUE
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %COSTS OF REVENUE
    
    
    70.6
    
    
    
    72.0
    
    
    
    71.0
    
    
    
    71.5GROSS PROFIT
    
    
    29.4
    
    
    
    28.0
    
    
    
    29.0
    
    
    
    28.5OPERATING EXPENSESSalaries
    
    
    16.1
    
    
    
    15.6
    
    
    
    16.0
    
    
    
    15.0Other selling, general and administrative
    
    
    9.8
    
    
    
    10.0
    
    
    
    9.6
    
    
    
    9.5Amortization of acquired intangible assets
    
    
    0.2
    
    
    
    0.2
    
    
    
    0.2
    
    
    
    0.2Total operating expenses
    
    
    26.1
    
    
    
    25.8
    
    
    
    25.8
    
    
    
    24.7OPERATING INCOME
    
    
    3.3
    
    
    
    2.2
    
    
    
    3.2
    
    
    
    3.8OTHER INCOME (EXPENSE)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )EARNINGS BEFORE INCOME TAXES
    
    
    3.3
    
    
    
    2.2
    
    
    
    3.2
    
    
    
    3.7INCOME TAX EXPENSE
    
    
    1.4
    
    
    
    1.2
    
    
    
    1.4
    
    
    
    1.7NET EARNINGS
    
    
    1.9
    %
    
    
    1.0
    %
    
    
    1.8
    %
    
    
    2.0
    %
 Results of Operations for the quarter ended June 30, 2008 compared to the quarter ended June 30,
2007.
 Revenue.
 .
   Gross Profit.
  15




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Operating Expenses and Operating Income.
   Other Income and Expense.
 Income Taxes.
  Net Earnings.
 16




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##### Table of Contents



Results of Operations for the six months ended June 30, 2008 compared to the six months ended June
30, 2007.
 Revenue.
 .
   Gross Profit.
    17




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##### Table of Contents



Operating Expenses and Operating Income.
   Other Income and Expense.
 Income Taxes.
  Net Earnings.
 18




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
    INFLATION
  OFF-BALANCE SHEET ARRANGEMENTS
  PRIVATE SECURITIES LITIGATION REFORM ACT
   19




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
 ITEM 4. CONTROLS AND PROCEDURES
   
 20




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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
 Issuer Purchases of Equity Securities in Second Quarter 2008
 ApproximateTotal Number of
    
    Dollar Value ofAverage
    
    Shares Purchased
    
    Shares that MayTotal Number of
    
    Price Paid
    
    as Part of Publicly
    
    Yet Be PurchasedShares Purchased
    
    per Share
    
    Announced Plan
    
    Under the PlanMay 1  31, 2008 (1)
    
    
    1,141,361
    
    
    $
    2.06
    
    
    
    1,141,361
    
    
    Not applicable
 
 (1)
    
    In March 2008, our Board of Directors authorized the repurchase of up to $2.5 million of the
companys outstanding common stock. We announced this repurchase plan on March 24, 2008. The
purchases reported herein complete this repurchase plan. 
 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
    
    
    16,969,042
    
    
    
    118,921David F. Durenberger
    
    
    16,969,042
    
    
    
    118,921K. James Ehlen, M.D
    
    
    16,966,174
    
    
    
    121,789Robert J. Marzec
    
    
    16,957,999
    
    
    
    129,964Jerry V. Noyce
    
    
    16,970,164
    
    
    
    117,799John C. Penn
    
    
    16,869,174
    
    
    
    218,789Curtis M. Selquist
    
    
    16,970,174
    
    
    
    117,789Mark W. Sheffert
    
    
    16,957,999
    
    
    
    129,964Linda Hall Whitman
    
    
    16,860,999
    
    
    
    226,964Rodney A. Young
    
    
    16,865,174
    
    
    
    222,789
 21




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ITEM 5. OTHER INFORMATION
 None
 
 ITEM 6. EXHIBITS
  22




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SIGNATURES
  Dated:  August 13, 2008
    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) 23




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##### Table of Contents



Exhibit No.
    
    Description**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 24