EXHIBIT 99.1
FROM: Health Fitness Corporation
3600 West 80th Street, Suite 560
Minneapolis, MN 55431
952-831-6830
CONTACT: Wes Winnekins, CFO, 952-897-5275 - wwinnekins@hfit.com
-or-Dennis B. McGrath, McGrath Buckley Communications Counseling
651-646-4115; dennis@mcgrath-buckley.com
FOR IMMEDIATE RELEASE
HEALTH FITNESS ANNOUNCES SECOND QUARTER 2003 RESULTS, ACHIEVES 14%
YEAR-OVER-YEAR REVENUE GROWTH
MINNEAPOLIS, August 6, 2003 --- Health Fitness Corporation (OTC BB:
HFIT) today announced financial results for the second quarter and six months
ended June 30, 2003.
For the quarter ended June 30, 2003, revenue was $7,732,626, up
$1,045,818 or 15.6% over revenue of $6,686,808 for the same quarter last year.
Earnings before income taxes for the quarter were $356,039, an increase of
$113,323 or 46.7% from $242,716 for the same quarter last year. Net earnings for
the quarter were $217,333, down $553,855 or 71.8% from $771,188 for the same
quarter last year. The decline in net earnings is primarily due to the second
quarter of 2002 including a $625,300 deferred tax benefit related to the
reversal of a deferred tax asset valuation allowance.
For the six months ended June 30, 2003, revenue increased $1,876,629,
or 14.0%, to $15,250,831, compared to $13,374,202 for the same period in 2002.
Earnings before income taxes were $806,049, up $267,640 or 49.7% from $538,409
for the same period last year. Net earnings decreased $1,073,196 or 69.0% to
$485,313 compared to $1,558,509 for the same period in 2002. The decline in net
earnings is primarily due to the first six months of 2002 including a $1,250,600
deferred tax benefit related to the reversal of a deferred tax asset valuation
allowance.
CEO and President Jerry Noyce said the revenue growth over last year is
primarily the result of new management contracts obtained during 2002 and 2003.
He also stated the Company is beginning to see ancillary revenue growth from its
branded Health Enhancement
Programs, which promotes personal training, massage therapy, weight management
and other health and wellness programs and services. The Company began marketing
its suite of Health Enhancement Program services to existing customers at the
beginning of 2003.
"Contract gross profit as a percent of revenue fell about 1.3% for the
quarter and 0.7% year to date compared to the same periods last year," Noyce
said. "This decrease is primarily due to start-up costs for two new corporate
fitness centers where we agreed to assume full profit and loss responsibility.
As membership revenues increase at these centers, we will experience a positive
change in this profit measurement. Operating expenses, which increased on a
dollar basis as a result of strategic headcount additions to improve our sales
and marketing capabilities, are decreasing as a percent of revenue. This trend
is expected to continue as we leverage the cost of our management infrastructure
over additional contracts."
"In addition," Noyce concluded, "lower debt levels and interest rates
has resulted in substantial interest expense reductions over last year, which
has contributed to our significant improvement in earnings before taxes. Most
importantly, we continue to be on track with our revenue growth and market share
goals, as well as our profitability objectives."
Health Fitness Corporation is the leading provider of results-oriented
fitness, assessment, wellness, and occupational health services to corporations,
hospitals, universities and communities. HFC has been serving clients since 1975
and manages approximately 200 sites across the U.S. and Canada. For more
information about Health Fitness Corporation, go to www.hfit.com
This press release contains forward-looking statements within the
meaning of federal securities laws. These statements include statements
regarding anticipated revenue growth and profitability from cost leveraging, as
well as other statements of intent, belief, or current expectations of the
Company and its management. These forward-looking statements are not guarantees
of the 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. 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, 2002, as well as the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003.
There is no assurance that the Company will be able to capitalize on any of
these forward-looking statements.
Financial tables follow...
- MORE -
HEALTH FITNESS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- ----------------------------------
2003 2002 2003 2002
-------------- -------------- ------------------ ---------------
REVENUE $ 7,732,626 $ 6,686,808 $ 15,250,831 $13,374,202
COSTS OF REVENUE 6,151,484 5,233,271 12,015,290 10,446,374
-------------- -------------- ------------------ ---------------
GROSS PROFIT 1,581,142 1,453,537 3,235,541 2,927,828
OPERATING EXPENSES
Salaries 789,216 690,096 1,572,758 1,356,077
Selling, general, and administrative 421,605 417,686 830,919 829,934
-------------- -------------- ------------------ ---------------
Total operating expenses 1,210,821 1,107,782 2,403,677 2,186,011
-------------- -------------- ------------------ ---------------
OPERATING INCOME 370,321 345,755 831,864 741,817
OTHER INCOME (EXPENSE)
Interest expense (13,451) (99,504) (23,956) (198,126)
Other, net (831) (3,535) (1,859) (5,282)
-------------- -------------- ------------------ ---------------
EARNINGS BEFORE INCOME TAXES 356,039 242,716 806,049 538,409
INCOME TAX EXPENSE (BENEFIT) 138,706 (528,472) 320,736 (1,020,100)
============== ============== ================== ===============
NET EARNINGS $ 217,333 $ 771,188 $ 485,313 $ 1,558,509
============== ============== ================== ===============
NET EARNINGS PER SHARE:
Basic $ 0.02 $ 0.06 $ 0.04 $ 0.13
Diluted 0.02 0.06 0.04 0.13
WEIGHTED AVERAGE COMMON SHARES:
Basic 12,322,908 12,265,250 12,315,655 12,265,250
Diluted 12,467,821 12,486,488 12,436,254 12,439,384
See notes to consolidated financial statements.
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HEALTH FITNESS CORPORATION
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2003 2002
------------ ------------
ASSETS
CURRENT ASSETS
Cash $ 334,022 $ 91,658
Trade and other accounts receivable, less allowances of $91,200 and 4,168,078 4,036,888
Prepaid expenses and other 261,006 266,734
Deferred tax assets 731,500 731,500
------------ ------------
Total current assets 5,494,606 5,126,780
PROPERTY AND EQUIPMENT, net 238,060 176,206
OTHER ASSETS
Goodwill 5,308,761 5,308,761
Deferred tax assets 1,978,717 2,254,876
Other 306,421 89,188
------------ ------------
$ 13,326,565 $ 12,955,811
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable $ 744,227 $ 304,589
Trade accounts payable 245,035 409,150
Accrued salaries, wages, and payroll taxes 1,107,608 1,072,982
Other accrued liabilities 273,405 415,856
Accrued self funded insurance 158,701 267,042
Deferred revenue 1,222,161 1,407,437
------------ ------------
Total current liabilities 3,751,137 3,877,056
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;
12,322,908 and 12,297,661 shares issued and outstanding 123,229 122,977
Additional paid-in capital 17,008,475 16,997,367
Accumulated deficit (7,556,276) (8,041,589)
------------ ------------
9,575,428 9,078,755
------------ ------------
$ 13,326,565 $ 12,955,811
============ ============
See notes to consolidated financial statements.