SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report - December 23, 1996
HEALTH FITNESS PHYSICAL THERAPY, INC.
(Exact name of registrant as specified in its charter)
Minnesota 0-25064 41-1580506
(State or other Jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
3500 West 80th Street
Suite 130
Minneapolis, Minnesota 55431
(Address of principal executive offices and zip code)
(612) 831-6830
(Registrant's telephone number, including area code)
ITEM 2. Acquisition or Disposition of Assets
On December 23, 1996 the Registrant's wholly-owned subsidiary Health
Fitness Rehab, Inc. acquired all of the outstanding capital stock of The
Preferred Companies, Inc. ("Preferred Cos."), an Arizona corporation, from
E. Jaxene Hillebert, Gary D. Hooten and James E. Davis, each an individual
resident of Arizona (the "Selling Shareholders"). The purchase price
consisted of (i) $300,000 cash paid at closing, (ii) $300,000 principal
amount of Convertible Subordinated Promissory Notes of the Registrant
payable December 23, 1998 with interest at 8% per annum and convertible at
the option of the holder into common stock of the Registrant, and (iii)
contingent "earn-out" payments over the next five years equal to a
percentage of Preferred Cos.' net income from operations, ranging from 0%
if Preferred Cos.' gross margin is less that .15, to 25% if Preferred Cos.'
gross margin is .25 or more.
The sources of the $300,000 cash paid by Registrant at closing was income
from the Registrant's operations and the Registrant's credit facility with
Norwest Bank.
In connection with the acquisition, each of the Selling Shareholders
entered into an employment agreement with Preferred Cos. pursuant to which
each Selling Shareholder will continue as an employee and officer of
Preferred Cos. for a period of five years, and each Selling Shareholder is
entitled to receive stock options to purchase 29,000 shares of the
Registrant's common stock.
As a subsidiary of the Registrant, Preferred Cos. will continue to operate
a national network of private practice physical therapists. Preferred Cos.
contracts with independent practices as a full-time representative
marketing services to managed care companies and other payor services.
Preferred Cos. offers the additional services of consulting, claims
management, and group purchasing.
ITEM 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired. Not applicable by virtue
of the fact that none of the conditions specified in Regulation S-B,
Item 310(c)(2) exceeds 20%.
(b) Pro Forma Financial Information. Not applicable by virtue of the fact
that the acquired business would not be a "significant subsidiary"
pursuant to the conditions specified in Regulation S-X, Item 1-02(w),
substituting 20% for 10% in each place it appears therein.
(c) Exhibits.
2. Agreement of Purchase and Sale dated December 23, 1996 by and
among The Preferred Companies, Inc., the shareholders of The
Preferred Companies, Inc. and Health Fitness Rehab, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HEALTH FITNESS PHYSICAL THERAPY, INC.
(Registrant)
Date: January 7, 1997 By: /s/ Loren S. Brink
Loren S. Brink, President and
Chief Executive Officer