MINNEAPOLIS, Dec. 29 /PRNewswire-FirstCall/ -- Health Fitness Corporation
("HFC") (OTC Bulletin Board: HFIT) today announced the repayment of its
$2,000,000 Secured Senior Subordinated Note (the "Note") held by Bayview
Capital Partners LP (Bayview). The Note was repaid using funds from HFC's
$6,250,000 Revolving Credit Facility with Wells Fargo Bank, N.A (the "Wells
Loan").
"The prepayment of the Bayview Note before its maturity made good
financial sense," said Wes Winnekins, CFO of HFC. "During 2004, we borrowed
and repaid $4.8 million on our Wells Loan, which was used to fund our
acquisition costs and working capital needs. Now that we have greater
borrowing capacity on our Wells Loan, it made sense to reduce our interest
cost from 12% per year with Bayview to approximately 5% per year with Wells
Fargo. Although we will take a one-time charge to earnings in 2004, we will
save approximately $206,000 of interest costs in 2005, and a total of $920,000
over the next four years."
HFC entered into the Note with Bayview on December 8, 2003, the proceeds
of which were used to acquire the business assets of the Health & Fitness
Services Business of Johnson & Johnson Health Care Systems Inc. The Note had
an interest rate of 12% per year, and was scheduled to mature on December 8,
2008. In connection with the Note repayment, HFC also paid a prepayment
penalty of $80,000, which represents 4% of the Note face value. In addition,
HFC incurred a one-time, non-cash charge to interest expense of $394,669,
representing the unamortized difference between the face value of the Note and
its assigned relative fair value, as well as unamortized financing costs. HFC
estimates that this one-time, non-cash charge, in addition to the prepayment
penalty, will decrease 2004 diluted earnings per share by approximately $0.02.
The Wells Loan was established on August 22, 2003, to provide HFC with
acquisition financing and general working capital, and will expire on June 30,
2007. At the option of HFC, the Wells Loan bears interest at prime (currently
5.25%), or the one-month LIBOR (currently 2.42%) plus a margin of 2.25%.
Borrowings under the Wells Loan are collateralized by substantially all of
HFC's assets.
Health Fitness Corporation is the leading provider of results-oriented
health improvement management services to corporations, hospitals,
universities and communities. Serving clients since 1975, HFC provides
fitness and wellness management services at more than 400 sites across the
U.S. and Canada. For more information about Health Fitness Corporation, go to
http://www.hfit.com .
This press release 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 the Company's estimate of a
decrease in diluted earnings per share for 2004. These forward-looking
statements are not guarantees of 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. These statements
should be read in conjunction with the various factors affecting the Company's
operations and financial condition discussed in the section titled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" contained within the Company's Annual Report on Form 10-K for the
year ended December 31, 2003, as well as the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 2004. There is no assurance
that the Company will be able to capitalize on any of these forward-looking
statements.
SOURCE Health Fitness Corporation
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Related links:
http://www.hfit.com
CONTACT:
Wes Winnekins, CFO, of Health Fitness
Corporation, +1-952-897-5275, wes.winnekins@hfit.com ; or Dennis
B. McGrath of McGrath Buckley Communications Counseling,
+1-651-646-4115, dennis@mcgrath-buckley.com
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