MINNEAPOLIS, Aug. 12 /PRNewswire-FirstCall/ --
Health Fitness Corporation (OTC Bulletin Board: HFIT) today announced
financial results for the second quarter and six months ended June 30, 2002.
Revenues for the quarter ended June 30, 2002 increased $108,100, or 1.6%,
to $6,686,800, compared to $6,578,700 for the same period in 2001. Operating
income for the second quarter of 2002 remained constant at $345,800, compared
to $346,400 for the same period in 2001. Earnings before income taxes for the
second quarter of 2002 improved slightly to $242,700, compared to $235,300 for
the same period in 2001. Net earnings for the second quarter of 2002
increased to $771,200, compared to $222,200 for the same period in 2001, an
increase of $549,000. The increase in net earnings is primarily attributed to
an increase in the recognition of income tax benefits related to the reduction
of the company's deferred tax valuation allowance.
For the six months ended June 30, 2002, revenues increased $369,000, or
2.8%, to $13,374,200, compared to $13,005,200 for the same period in 2001.
Operating income for the six months ended June 30, 2002 improved slightly to
$741,800 from $736,100 for the same period in 2001. Earnings before income
taxes for the six months ended June 30, 2002 decreased to $538,400 from
$722,700 for the same period in 2001. Excluding the effect of a decrease in
goodwill amortization from 2001 to 2002 ($216,600) and the gain on sale of
subsidiary from 2001 ($228,600), this decrease in earnings before income taxes
is primarily attributed to an increase in sales and marketing expenses and
employee benefits. Net earnings for the six months ended June 30, 2002
increased to $1,558,500, compared to $679,600 for the same period in 2001, an
increase of $878,900. The increase in net earnings is primarily attributed to
an increase in the recognition of income tax benefits related to the reduction
of the company's deferred tax valuation allowance. Based upon the assessment
of future profitability, the company expects to recognize its remaining
deferred tax valuation allowance of $1,250,600 by December 31, 2002.
Jerry Noyce, Chief Executive Officer, said, "Our primary business
objective heading into 2002 was to position the company for growth. We've
accomplished this by making a significant investment in sales and marketing to
improve our competitive position. This investment includes the addition of
telemarketing sales, expanded business development resources and the addition
of a new senior vice president of marketing. However, our anticipated growth
has been constrained by the economic downturn, which has affected our
customers as well as the companies in our sales pipeline. The economy has
also slowed our short-term growth prospects.
"Despite the effects of the uncertain economy," Noyce concluded, "we
achieved our tenth straight quarter of profitability and expect this trend to
continue. We also continue to strengthen our balance sheet by reducing debt
and recognizing our deferred tax assets. This puts the company in a good
position to capitalize on strategic business opportunities. When the economy
recovers, we believe our sales and marketing investment will allow us to
capitalize on new sales opportunities and realize the company's growth
potential."
Health Fitness Corporation is the leading provider of results-oriented
fitness, wellness, and occupational health services to corporations, hospitals
and communities. HFC has been serving clients since 1975 and manages
190 sites across the U.S. and Canada.
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 belief that the investment in
sales and marketing will allow the Company to capitalize on new business
opportunities and realize its growth potential. 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. Please refer to
Management's Discussion and Analysis contained within the Company's Annual
Report on Form 10-K for the year ended December 31, 2001, as well as the
Company's quarterly report on form 10-Q for the quarter ended June 30, 2002.
HEALTH FITNESS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
Revenue $6,686,808 $6,578,716 $13,374,202 $13,005,172
Cost of Revenue 5,233,271 5,091,116 10,446,374 10,150,586
Gross Profit 1,453,537 1,487,600 2,927,828 2,854,586
Operating Expenses
Salaries 690,096 526,633 1,356,077 1,014,394
Selling, general,
and administrative 417,686 614,567 829,934 1,104,068
Total operating
expenses 1,107,782 1,141,200 2,186,011 2,118,462
Operating Income 345,755 346,400 741,817 736,124
Other Income (Expense)
Interest expense (99,504) (116,906) (198,126) (246,767)
Gain on sale of
subsidiary --- --- --- 228,613
Other, net (3,535) 5,771 (5,282) 4,753
Earnings Before
Income Taxes 242,716 235,265 538,409 722,723
Income Tax Expense (96,828) (94,087) (230,500) (289,087)
Income Tax Benefit 625,300 81,000 1,250,600 246,000
Net Earnings $771,188 $222,178 $1,558,509 $679,636
Net Earnings Per Share:
Basic $0.06 $0.02 $0.13 $0.06
Diluted 0.06 0.01 0.13 0.05
Weighted Average
Common Shares
Outstanding
Basic 12,265,250 12,165,250 12,265,250 12,165,250
Diluted 12,486,488 12,711,750 12,439,384 12,701,142
The accompanying notes are an integral part of the financial statements.
HEALTH FITNESS CORPORATION
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2002 2001
Assets
Current Assets
Cash $135,680 $221,008
Trade and other accounts receivable, less
allowance for doubtful accounts of
$84,200 and $84,700 3,815,645 3,388,856
Prepaid expenses and other 225,375 130,090
Deferred tax asset 537,500 777,300
Total current assets 4,714,200 4,517,254
Property and Equipment, net 134,231 174,912
Other Assets
Goodwill 5,308,761 5,308,761
Intangible assets, less accumulated
amortization of $734,900 and $619,100 70,939 186,737
Deferred tax asset 1,249,100 ---
Other 20,658 11,410
$11,497,889 $10,199,074
Liabilities and Stockholders' Equity
Current Liabilities
Note payable $995,827 $1,442,304
Trade accounts payable 118,005 141,736
Accrued salaries, wages, and payroll taxes 1,087,369 915,379
Other accrued liabilities 481,225 392,794
Deferred revenue 1,194,039 1,243,946
Total current liabilities 3,876,465 4,136,159
Commitments and Contingencies --- ---
Stockholders' Equity
Preferred stock, $0.01 par value;
5,000,000 shares authorized; none issued
or outstanding --- ---
Common stock, $0.01 par value; 25,000,000 shares
authorized; 12,265,250 shares issued and
outstanding 122,653 122,653
Additional paid-in capital 16,982,522 16,982,522
Accumulated deficit (9,483,751) (11,042,260)
7,621,424 6,062,915
$ 11,497,889 $10,199,074
The accompanying notes are an integral part of the financial statements.
SOURCE Health Fitness Corporation
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CONTACT:
Wes Winnekins, CFO of Health Fitness
Corporation, +1-952-897-5275, or wwinnekins@hfit.com , or Dennis
B. McGrath of McGrath Buckley Communications Counseling,
+1-651-646-4115, or dennis@mcgrath-buckley.com , for Health
Fitness Corporation
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