MINNEAPOLIS, March 29 /PRNewswire-FirstCall/ -- Health Fitness Corporation
(OTC Bulletin Board: HFIT) today announced financial results for the fourth
quarter and year ended December 31, 2003.
Fourth Quarter Performance
For the fourth quarter of 2003, revenue increased $1,226,860 or 16.2% to
$8,782,897, from $7,556,037 for the same period in 2002. This increase is
primarily attributable to revenue acquired in connection with the Company's
acquisition of the Health and Fitness Services Business of Johnson & Johnson
Healthcare Systems Inc. As previously announced on December 8, 2003, the
Company completed its purchase of the business assets of the Health and
Fitness Services Business of Johnson & Johnson Healthcare Systems Inc. The
assets acquired by the Company consist primarily of client contracts,
proprietary wellness, lifestyle and health promotion programs and other health
and wellness services. As part of the transaction, the Company entered into a
multi-year management contract with another subsidiary of Johnson & Johnson to
manage more than 50 Johnson & Johnson affiliate sites, making the Johnson &
Johnson family of companies the Company's largest customer.
For the fourth quarter of 2003, HFC reported a net loss applicable to
common shareholders of $600,353, compared with net earnings applicable to
common shareholders of $664,697 for the same period of 2002. This reversal in
net earnings is primarily attributable to a $714,504 increase in income tax
expense from the fourth quarter of 2002. This increase in income tax expense
is attributable to the fact that the Company reversed its remaining deferred
tax asset valuation allowance and recognized an income tax benefit in the
final quarter of 2002. Any federal tax liability due as a result of this tax
expense increase will not affect the Company's cash position as such taxes
will be offset against the Company's net operating loss carryforwards included
in deferred tax assets. Also contributing to the net loss applicable to
common shareholders is non-cash dividend expense of $659,930 that was incurred
on preferred stock the Company issued to finance its Johnson & Johnson
acquisition.
Year-end Performance
For 2003, revenue increased $3,613,825 or 13.0% to $31,478,822, from
$27,864,997 for 2002. Of this increase, $1,219,507 is attributed to the
Company's acquisition, and $2,394,318 is attributed to the addition of new
contracts and the expansion of services under existing contracts during 2002
and 2003.
For the year, HFC reported earnings before income taxes of $1,161,212,
compared to $789,028 for 2002. This increase is primarily attributable to a
$317,000 decrease in interest expense, which is due to lower debt levels for
most of 2003.
HFC also reported a net loss applicable to common shareholders of $27,254,
compared with net earnings applicable to common shareholders of $3,000,671 for
2002. This decrease is primarily attributable to a $2,740,179 increase in
income tax expense between 2003 and 2002. This increase in income tax expense
is attributable to the fact that the Company reversed its remaining deferred
tax asset valuation allowance and recognized an income tax benefit during
2002. Any federal tax liability due as a result of this tax expense increase
will not affect the Company's cash position as such taxes will be offset
against the Company's net operating loss carryforwards included in deferred
tax assets. Also contributing to the net loss applicable to common
shareholders is non-cash dividend expense of $659,930 discussed previously.
Jerry Noyce, President and Chief Executive Officer, said, "2003 was a very
pivotal year for HFC. Our acquisition of the Health & Fitness Services
Business of Johnson & Johnson Health Care Systems Inc. is a significant
achievement in the on-going development of our Company. This acquisition,
which will add approximately $21 million in annual revenue, combines the best
practices, programs and people of the largest two providers to offer our
clients an integrated suite of health improvement, fitness, and wellness
services. This integrated approach to health management services will allow
us to address the needs of a company's entire workforce, from low risk
individuals to employees managing a chronic disease. Our primary objective is
to help our customers control rising healthcare costs. I'm confident that the
new HFC is uniquely positioned to help companies achieve this objective."
Noyce noted that HFC has made significant progress in a number of other
areas during 2003, including:
-- In addition to the $1.2 million in new revenue recorded in the fourth
quarter of 2003 from the Johnson & Johnson acquisition, HFC organically
grew revenue $2.4 million, or 8.6% for all of 2003, compared to
$2.0 million, or 7.5% for all of 2002.
-- Revenue from HFC's Health Enhancement Program, a suite of ancillary
health and wellness services that were introduced during the latter
part of 2002, grew to $823,000 for 2003, compared to $223,000 for 2002.
-- The number of sites managed by HFC grew to 386 at the end of 2003, up
from 197 at the end of 2002.
-- Working capital improved $1,005,158 to $2,254,882 for 2003, compared to
$1,249,724 for 2002.
Health Fitness Corporation is the leading provider of results-oriented
health improvement management services to corporations, hospitals,
universities and communities. HFC has been serving clients since 1975 and
manages more than 390 locations 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 regarding
management's belief that the Company is well-positioned to help companies
control rising healthcare costs. 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. There is no assurance that the Company will be able to capitalize
on any of its plans regarding future results of the Company.
HEALTH FITNESS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ending Years Ending
12/31/03 12/31/02 12/31/03 12/31/02
Unaudited Unaudited
REVENUE $8,782,897 $7,556,037 $31,478,822 $27,864,997
COSTS OF REVENUE 6,949,009 5,977,702 24,943,625 21,938,385
GROSS PROFIT 1,833,888 1,578,335 6,535,197 5,926,612
OPERATING EXPENSES
Salaries 837,100 807,880 3,244,639 2,866,200
Selling, general,
and administrative 698,574 457,473 1,922,511 1,751,228
Total operating
expenses 1,535,674 1,265,353 5,167,150 4,617,428
OPERATING INCOME 298,214 312,982 1,368,047 1,309,184
OTHER INCOME (EXPENSE)
Interest expense (121,443) (222,396) (204,430) (521,106)
Other, net 32,403 9,204 (2,405) 950
EARNINGS BEFORE INCOME
TAXES 209,174 99,790 1,161,212 789,028
INCOME TAX EXPENSE
(BENEFIT) 149,597 (564,907) 528,536 (2,211,643)
NET EARNINGS 59,577 664,697 632,676 $3,000,671
Deemed dividend to
preferred
shareholders 656,096 -- 656,096 --
Dividend to preferred
shareholders 3,834 -- 3,834 --
NET EARNINGS (LOSS)
APPLICABLE TO COMMON
SHAREHOLDERS $(600,353) $664,697 $(27,254) $3,000,671
NET EARNINGS PER
COMMON SHARE
Basic $ (0.05) $ 0.05 $ 0.00 $ 0.24
Diluted (0.05) 0.05 0.00 0.24
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING
Basic 12,356,315 12,297,661 12,332,363 12,284,364
Diluted 12,356,315 12,400,022 12,332,363 12,428,440
HEALTH FITNESS CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31,
2003 2002
ASSETS
CURRENT ASSETS
Cash $281,294 $91,658
Trade and other accounts receivable, less
allowances of $131,000 and $88,900 at
December 31, 2003 and 2002 5,218,224 4,036,888
Prepaid expenses and other 187,347 266,734
Deferred tax assets 850,300 731,500
Total current assets 6,537,165 5,126,780
PROPERTY AND EQUIPMENT, net 177,217 176,206
OTHER ASSETS
Goodwill 8,725,574 5,308,761
Customer contracts, less accumulated
amortization of $67,400 at
December 31, 2003 1,662,639 --
Trademark, less accumulated amortization
of $5,800 at December 31, 2003 344,166 --
Other intangible assets, less accumulated
amortization of $4,200 and $1,300 at
December 31, 2003 and 2002 138,582 6,380
Cash held in escrow 471,999 --
Deferred tax assets 1,686,301 2,254,876
Other 64,458 82,808
$19,808,101 $12,955,811
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable $-- $304,589
Trade accounts payable 569,730 409,150
Accrued salaries, wages, and payroll taxes 1,607,157 1,072,982
Other accrued liabilities 450,255 415,856
Accrued self funded insurance 228,084 267,042
Deferred revenue 1,427,057 1,407,437
Total current liabilities 4,282,283 3,877,056
LONG-TERM OBLIGATIONS 4,350,012 --
COMMITMENTS AND CONTINGENCIES -- --
PREFERRED STOCK, $0.01 par value; 5,000,000
shares authorized, 1,003,833 issued and
outstanding 1,443,833 --
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value; 25,000,000
shares authorized; 12,357,334 and 12,297,661
shares issued and outstanding at
December 31, 2003 and 2002 123,573 122,977
Additional paid-in capital 17,671,536 16,997,367
Accumulated comprehensive income from
foreign currency translation 5,707 --
Accumulated deficit (8,068,843) (8,041,589)
9,731,973 9,078,755
$19,808,101 $12,955,811
SOURCE Health Fitness Corporation
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Related links:
http://www.hfit.com
CONTACT:
Wes Winnekins, Chief Financial Officer, of
Health Fitness Corporation, +1-952-897-5275,
wes.winnekins@hfit.com
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