MINNEAPOLIS, Aug. 10 /PRNewswire/ --
Health Fitness Corporation (OTC Bulletin Board: HFIT) today reported it
has significantly improved its operating results, made changes in company
management, obtained a new $5.0 million bank loan, and terminated its letter
of intent with a potential merger partner.
For the three months ended June 30, 2000, Health Fitness reported net
income of $202,787, or $0.02 per diluted share outstanding compared to a net
loss of $586,869, or $(0.05) per diluted share outstanding, for the same
period in 1999. Revenues for the three-month period decreased 1.0 percent to
$6,284,961 compared to $6,350,508 reported in 1999. Operating income for the
second quarter of 2000 increased to $394,813 compared to an operating loss of
$347,330 during the same period in 1999.
For the six-month period ending June 30, 2000 the company reported net
income of $630,348, or $0.05 per diluted share outstanding, compared to a net
loss of $1,738,810, or $(0.14) per diluted share outstanding, for the first
six months of 1999. Revenues for the first six months of 2000 decreased
2.1 percent to $13,024,142 compared to $13,298,166 in the first six months of
1999. Operating income increased to $961,593 in the first six months of 2000
compared to $135,839 in the same period a year ago.
Revenues increased during the three-month and six-month period in the
company's core business of fitness center management contracts, but were
offset by decreases in the company's occupational health and physical therapy
network businesses due to the divestiture of those businesses in 1999.
Operating income increased in both the three-month and six-month periods
primarily due to decreased operating expenses and lower bad debt write-offs.
James A. Bernards, chairman, said, "Health Fitness has significantly and
consistently improved its financial performance and balance sheet through the
combined efforts of Manchester Companies, Inc. and the Health Fitness team.
We have executed our turnaround strategy to focus on our core business, divest
unrelated assets, and strengthen the financial position of the company. The
results of the second quarter are a reflection of our efforts, and we believe
the trend will continue."
The Company announced that its founder, Loren S. Brink, has resigned his
position as President of Sales and a Director of the Board to pursue other
interests. The company's management team will handle his duties until a
replacement is hired. Bernards said, "On behalf of the board of directors,
management, and employees of Health Fitness, I want to thank Loren for his
entrepreneurial vision and for building Health Fitness into the market force
that it is today. We wish him the best as he embarks on his new endeavors."
Health Fitness Corporation also announced that it recently increased its
borrowing capacity and significantly lowered its interest expenses by entering
into a new $5.0 million working capital facility with Coast Business Credit.
Initial proceeds of the loan were used to pay its former lender and
subordinated debt holders.
Health Fitness previously announced that it had entered into a letter of
intent to merge with HealthTrax International. This letter of intent has been
terminated, which allows Health Fitness to engage in discussions with other
interested parties and to consider other strategic options. Dialogue between
Health Fitness and HealthTrax International may continue as a part of Health
Fitness' plan to review all of its strategic options.
Health Fitness Corporation of Minneapolis, Minn. manages corporate fitness
centers and hospital-based fitness centers throughout the United States and
provides a wide range of additional health and wellness services to
corporations.
This press release contains forward-looking statements regarding
management's belief that a turnaround trend will continue into the future,
that the company's core business has been strengthened for future growth, and
that the Company will continue to review strategic options. These statements
should be read in conjunction with the various factors affecting the company's
operations and financial condition discussed in the Management's Discussion
and Analysis of Financial Condition and Results of Operations portion of the
company's Annual Report on Form 10-K for the year ended December 31, 1999.
There is no assurance that the company will be able to implement any of the
noted strategic options under consideration.
HEALTH FITNESS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ending Six Months Ending
6/30/00 6/30/99 6/30/00 6/30/99
Revenue $6,284,961 $6,350,508 $13,024,142 $13,298,166
Costs of revenue 4,749,313 5,013,382 9,693,651 10,195,477
Gross profit 1,535,648 1,337,126 3,330,491 3,102,689
Operating expenses 1,140,835 1,684,456 2,368,898 2,966,850
Operating income
(loss) 394,813 (347,330) 961,593 135,839
Interest expense (200,990) (236,380) (365,842) (477,624)
Other income (expense) 8,875 (3,159) 29,734 28,806
Income from continuing
operations before
income taxes 202,698 (586,869) 625,485 (312,979)
Income taxes (89) -- (4,863) 831
Income (loss) from
continuing operations 202,787 (586,869) 630,348 (313,810)
Loss from discontinued
operations -- -- -- (1,425,000)
Net income (loss) $202,787 $(586,869) $630,348 $(1,738,810)
Basic net income
(loss) per share $0.02 $(0.05) $0.05 $(0.15)
Diluted net income
(loss) per share $0.02 $(0.05) $0.05 $(0.14)
Basic weighted average
common shares
Outstanding 12,139,906 11,949,383 12,130,831 11,917,078
Diluted weighted
average common
shares Outstanding 12,541,911 11,949,383 12,532,836 12,583,744
HEALTH FITNESS CORPORATION
CONSOLIDATED BALANCE SHEETS
6/30/00 12/31/99
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $94,228 $139,852
Net trade accounts receivable 3,010,427 3,406,552
Trade and other notes receivable 48,252 308,841
Prepaid expenses and other 173,519 10,939
Total current assets 3,326,426 3,866,184
PROPERTY AND EQUIPMENT, net 426,738 554,885
OTHER ASSETS
Net intangible assets 6,239,650 6,481,712
Trade and other notes receivable 25,128 340,731
Other 6,765 80,043
$10,024,707 $11,323,555
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable $2,636,738 $2,862,128
Current maturities of long-term obligations 117,858 341,133
Subordinated notes payable 115,000 115,000
Trade accounts payable 129,800 672,322
Accrued salaries, wages, and payroll taxes 928,427 924,135
Accrued earn-out 31,662 186,425
Other accrued liabilities 809,624 407,997
Deferred revenue 804,831 1,381,752
Net liabilities of discontinued operations 527,795 810,987
Total current liabilities 6,101,735 7,701,879
LONG-TERM OBLIGATIONS, less current maturities 69,368 423,548
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value;
5,000,000 shares authorized, none
issued or outstanding -- --
Common stock, $.01 par value; 25,000,000 shares
authorized; 12,147,690 and 12,112,015 shares
issued and outstanding, respectively 121,477 121,120
Additional paid-in capital 16,880,208 16,855,438
Accumulated deficit (13,148,081) (13,778,430)
3,853,604 3,198,128
$10,024,707 $11,323,555
SOURCE Health Fitness Corporation
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800-758-5804, ext. 000921
CONTACT:
Tana DeBoer of Manchester Companies,
612-338-4722, for Health Fitness Corporation
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