MINNEAPOLIS, Nov. 12 /PRNewswire/ -- Health Fitness Corporation
(OTC Bulletin Board: HFIT) today reported a net loss for the third quarter
ended September 30, 1999 of $(941,000), or $(0.08) per share, compared to
$(1,653,000), or $(0.14) per share, for the same period a year ago. The 1999
net loss included $(333,000) of re-engineering costs and a loss of $(360,000)
primarily related to the previously announced sale of the Isernhagen and PTPA
divisions. The 1998 net loss included a $(1,393,000) loss from discontinued
operations.
Revenues for the third quarter were $6,467,000 compared to $6,713,000 for
the same period last year. The decline was largely due to lower sales from
the Isernhagen division and the subsequent disposition of the PTPA and
Isernhagen divisions, which occurred on August 31. Revenues from the
company's core business of fitness center management did not decline.
Gross margin declined slightly to 23.0% in the third quarter of 1999,
compared to 23.9% during the same period last year. The decline was largely
attributable to lower margin sales from the Isernhagen division during the two
months that this division was included in the quarter.
Operating loss during the quarter was ($272,000) compared to an operating
loss of ($132,000) in the third quarter of 1998. The operating loss was
directly related to re-engineering costs of $(333,000) incurred during the
quarter which included consulting and non-compete fees related to the
company's re-engineering actions.
For the nine months ended September 30, 1999, the company reported a net
loss of $(2,680,000), or $(0.22) per share, compared to a net loss of
($2,208,000), or ($0.21) per share, in the first nine months of 1998.
Revenues for the nine-month period increased $640,000, or 3.3%, to $19,765,000
compared to $19,125,000 reported for the first nine months of 1998. The
revenue increase was partially offset by a decline in revenues from the
company's consulting and Isernhagen divisions.
Operating income for the first nine months of 1999 declined to $99,000
from $680,000 during the same period in 1998 due to re-engineering costs of
$605,000 and decreased revenues from the company's consulting and Isernhagen
divisions. Re-engineering costs included consulting and non-compete fees.
Charles J.B. Mitchell, Jr., acting chief executive officer, said, "Health
Fitness has made progress in its efforts to strengthen its financial position
by reducing its line of credit by approximately $3.8 million since the
beginning of the year and consolidating its assets to focus on its core
business of managing corporate and hospital fitness centers. During the third
quarter, the company completed the sales of its remaining non-strategic
physical therapy and equipment divisions. It also initiated its strategy to
pursue strategic options for the company, which include a merger, partnership,
or sale of the company, in order to strengthen its presence in the corporate
fitness market."
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 preventive health care services to
corporations.
This press release contains forward-looking statements regarding the
company's anticipated future operations and financial condition; 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, 1998.
HEALTH FITNESS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ending Nine Months Ending
9/30/99 9/30/98 9/30/99 9/30/98
Revenues $6,467,000 $6,713,000 $19,765,000 $19,125,000
Costs of revenue 4,982,000 5,109,000 15,178,000 14,344,000
Gross profit 1,485,000 1,604,000 4,587,000 4,781,000
Operating expenses:
Salaries 456,000 566,000 1,395,000 1,469,000
Selling, general and
administrative 968,000 1,170,000 2,487,000 2,633,000
Re-engineering 333,000 -- 605,000 --
Total operating
expenses 1,757,000 1,736,000 4,488,000 4,102,000
Operating income
(loss) (272,000) (132,000) 99,000 679,000
Interest expense (302,000) (202,000) (780,000) (483,000)
Other income (expense) (361,000) 74,000 (568,000) 272,000
Income (loss) from
continuing operations
before income taxes (935,000) (260,000) (1,249,000) 468,000
Income taxes 6,000 -- 6,000 --
Income (loss) from
continuing
operations (947,000) (260,000) (1,255,000) 468,000
Loss from discontinued
operations -- (1,393,000) (1,425,000) (2,676,000)
Net loss $(941,000) $(1,653,000) $(2,680,000) $(2,208,000)
Basic net income
(loss) per share $(0.08) $(0.14) $(0.22) $(0.21)
Diluted net income
(loss) per share $(0.08) $(0.14) $(0.22) $(0.21)
Basic weighted average
common shares
Outstanding 11,982,132 11,769,808 11,939,001 10,754,077
Diluted weighted
average common
shares
Outstanding 11,982,132 11,769,808 12,383,445 10,754,077
HEALTH FITNESS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
1999 1998
ASSETS (Unaudited)
CURRENT ASSETS:
Cash $209,648 $29,598
Trade accounts and notes receivable,
less allowance for doubtful accounts
of $261,071 and $1,101,211 3,797,573 4,344,438
Inventories 2,365 26,459
Prepaid expenses and other 315,776 61,145
Total current assets 4,325,362 4,461,640
PROPERTY AND EQUIPMENT, net 699,416 1,049,626
OTHER ASSETS:
Goodwill, less accumulated amortization
of $1,664,287 and $1,580,098,
respectively 6,200,464 7,568,809
Noncompete agreements, less accumulated
amortization of $267,590 and $374,478,
respectively 259,260 592,373
Copyrights, less accumulated amortization
of $0 and $85,608, respectively -- 584,392
Trade names, less accumulated amortization
of $6,222 and $20,613, respectively 63,778 189,386
Contracts, less accumulated amortization
of $53,333 and $23,334, respectively 26,667 56,667
Trade accounts and notes receivable, less
allowance for doubtful accounts of
$0 and $29,843, respectively 406,716 922,966
Deferred financing costs, less
accumulated amortization of $1,421,342
and $836,082, respectively -- 585,260
Other 93,811 65,983
Net assets of discontinued operations (4,034) 4,537,716
$12,071,440 $20,614,818
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Checks written in excess of
bank balance $ -- $47,099
Notes payable 3,128,817 6,939,692
Current maturities of long-term debt 454,330 572,227
Trade accounts payable 1,070,759 2,335,509
Accrued salaries, wages, and
payroll taxes 1,183,176 1,405,382
Accrued earn-out 117,029 309,962
Other accrued liabilities 901,467 631,525
Deferred revenue 1,220,195 1,629,192
Total current liabilities 8,075,773 13,870,588
LONG-TERM DEBT, less current portion 572,979 900,148
SUBORDINATED DEBT 115,000 --
COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value;
authorized 5,000,000 shares, none issued
or outstanding -- --
Common stock, $.01 par value; 25,000,000
shares authorized; 11,957,720 and 12,112,015
shares issued and outstanding,
respectively 121,120 118,844
Additional paid-in capital 16,855,438 16,725,126
Accumulated deficit (13,631,392) (10,951,526)
3,345,166 5,892,444
Stockholder note and interest
receivable (37,478) (48,362)
3,307,688 5,844,082
$12,071,440 $20,614,818
SOURCE Health Fitness Corporation
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