MINNEAPOLIS, Nov. 12 /PRNewswire-FirstCall/ --
Health Fitness Corporation (OTC Bulletin Board: HFIT.OB) today announced
financial results for the third quarter and nine months ended September 30,
2002.
Revenues
Revenues for the quarter ended September 30, 2002 increased $578,300, or
9.1%, to $6,934,800, compared with $6,356,500 for the same period in 2001.
For the nine months ended September 30, 2002, revenues increased $947,300, or
4.9%, to $20,309,000, compared with $19,361,700 for the same period in 2001.
Revenue growth has resulted from new contracts, as well as the expansion of
existing contracts.
Earnings
Although revenues increased for both the third quarter and for the nine
months year-to-date, the Company reported that operating income for the third
quarter of 2002 decreased $68,600 to $254,400, compared with $323,000 for the
same period in 2001, and that operating income for the nine months ended
September 30, 2002 decreased $62,900 to $996,200, compared with $1,059,100 for
the same period in 2001. The primary reasons for this decrease were higher
direct costs to manage certain contracts and higher employee salaries and
benefits. As a result, earnings before income taxes for the third quarter and
year-to-date also decreased, in the case of the third quarter by $47,200, to
$150,800, compared with $198,000 for the same period in 2001, and in the case
of the nine months ended September 30, 2002, by $231,500 to $689,200, compared
with $920,800 for the same period in 2001. However, net earnings for the
third quarter of 2002 increased $594,600 to $777,500, compared with $182,900
for the same period in 2001, and increased by $1,473,500 for the nine months
ended September 30, 2002, to $2,336,000, compared with $862,500 for the same
period in 2001. 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 $625,000 by December 31, 2002.
Jerry Noyce, Chief Executive Officer, said, "Despite a challenging
business to business economy, the revenue growth we have been working hard to
achieve is beginning to materialize. When you consider that year-over-year
revenue growth for our company has been flat the last two years, achieving a
9% quarterly revenue increase over 2001, and 5% growth year-to-date, is
confirmation that we are making good progress.
"From a cost perspective," Noyce concluded, "we have seen our cost of
sales increase at a higher rate than our increase in revenue. This is
primarily due to increased salaries and benefits and also to a new corporate
contract where we agreed to assume complete cost responsibility for 24 fitness
centers. Assuming complete cost responsibility for a corporate fitness
program is a new business model for this company. However, we see this type
of corporate model being a profit opportunity for us on a long-term basis. In
the face of current economic conditions, we are pleased with the revenue and
profitability results we have achieved."
Health Fitness Corporation (HFC) 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. For more information, visit the
company's website at http://www.hfit.com .
This press release contains forward-looking statements within the meaning
of federal securities laws. These statements include statements regarding
expectations as to financial results for the balance of 2002, statements
regarding the profit opportunity created by the company's new model for
managing corporate fitness centers, and other statements regarding intent,
belief, or current expectations of the Company and its management. 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 September 30, 2002.
HEALTH FITNESS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
Revenue $6,934,758 $6,356,489 $20,308,959 $19,361,661
Cost of Revenue 5,514,309 4,837,067 15,960,684 14,987,667
Gross Profit 1,420,449 1,519,422 4,348,275 4,373,994
Operating Expenses
Salaries 702,243 595,037 2,058,319 1,609,431
Selling, general,
and administrative 463,824 601,416 1,293,757 1,705,471
Total operating
expenses 1,166,067 1,196,453 3,352,076 3,314,902
Operating Income 254,382 322,969 996,199 1,059,092
Other Income (Expense)
Interest expense (100,586) (108,188) (298,710) (354,955)
Gain on sale of
subsidiary --- --- --- 228,613
Other, net (2,967) (16,736) (8,254) (11,988)
Earnings Before
Income Taxes 150,829 198,045 689,235 920,762
Income Tax Expense (28,664) (79,169) (259,161) (368,256)
Income Tax Benefit 655,300 64,000 1,905,900 310,000
Net Earnings $777,465 $182,876 $2,335,974 $862,506
Net Earnings Per Share
Basic $0.06 $0.01 $0.19 $0.07
Diluted 0.06 0.01 0.19 0.07
Weighted Average Common
Shares Outstanding
Basic 12,289,558 12,264,163 12,173,442 12,198,583
Diluted 12,413,530 12,503,377 12,332,195 12,400,063
The accompanying notes are an integral part of the financial statements.
HEALTH FITNESS CORPORATION
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2002 2001
Assets
Current Assets
Cash $132,539 $221,008
Trade and other accounts receivable,
less allowance for doubtful accounts
of $84,200 and $84,700 4,019,148 3,388,856
Prepaid expenses and other 150,016 130,090
Deferred tax asset 537,500 777,300
Total current assets 4,839,203 4,517,254
Property and Equipment, net 111,971 174,912
Other Assets
Goodwill 5,308,761 5,308,761
Intangible assets, less accumulated
amortization of $768,600 and $619,100 87,248 186,737
Deferred tax asset 1,894,100 ---
Other 1,044 11,410
$12,242,327 $10,199,074
Liabilities and Stockholders' Equity
Current Liabilities
Note payable $436,185 $1,442,304
Trade accounts payable 176,423 141,736
Accrued salaries, wages, and payroll taxes 1,382,428 915,379
Other accrued liabilities 545,287 392,794
Deferred revenue 1,287,946 1,243,946
Total current liabilities 3,828,269 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; 12,297,661 and
12,265,250 shares issued and outstanding 122,977 122,653
Additional paid-in capital 16,997,367 16,982,522
Accumulated deficit (8,706,286) (11,042,260)
8,414,058 6,062,915
$12,242,327 $10,199,074
The accompanying notes are an integral part of the financial statements.
SOURCE Health Fitness Corporation
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Related links:
http://www.hfit.com
Company News On-Call:
http://www.prnewswire.com/gh/cnoc/comp/000921.html
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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