RTW, Inc. Reports Profitable Second Quarter; Fully Diluted Earnings Of 3 Cents Per Share Vs. Year-Earlier Loss Of 16 Cents Per Share.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--July 24, 2002 RTW (Release/Released To Web) A version of software that is ready to be sent, or has been sent, to a Web server for downloading by the public. See RTM. , Inc. (Nasdaq:RTWI RTWI Return to Work Initiative ), a leading provider of products and services for cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. management of workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work. programs, today reported net income for the second quarter ended June June: see month. 30, 2002, of $323,000, or $0.03 per basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to a net loss of $1.7 million, or $0.16 per basic and diluted share in the second quarter of 2001. J. Alexander Fjelstad III, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of RTW, said, "We are pleased with our operating performance in the second quarter. We continued to make solid progress in positioning RTW for sustainable profitability. In addition, we announced a significant strategic initiative with the extension of our established and successful workers' compensation product and service offerings to self-insured self-insured Self fund Health insurance adjective Referring to the practice of carrying an individual health insurance policy for oneself; self insurance is usually more expensive than group insurance employers and other alternative markets. We intend to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. our proven expertise in exceptional case and claims management by rolling out a new product offering that delivers high quality service and economic benefits to self-insured employers and associations, and provides us with a new growth vehicle and a source of additional long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. profitability." For the second quarter, total revenue was $5.5 million, compared to $1.9 million last year. Included in total revenue is investment income of $1.1 million, compared to $1.6 million last year, and a net realized investment loss of $12,000, compared to net realized investment gains of $28,000 in the second quarter of last year. Premiums in force at June 30, 2002, were $59.1 million, compared with $99.4 million at June 30, 2001 and $83.7 million at December 31, 2001. Gross premiums earned followed the decrease in premiums in force decreasing to $14.4 million for the second quarter of 2002 from $25.8 million for the same period in the prior year and decreasing to $32.2 million for the six months ended June 30, 2002 from $51.9 million for the same period in the prior year. "During the second quarter, we continued our planned transition by market, further eliminating and reducing premiums in force in Missouri Missouri, state, United States Missouri (mĭz  r`ē, –ə), one of the midwestern states of the United States. and New England New England, name applied to the region comprising six states of the NE United States—Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. The region is thought to have been so named by Capt. as they provide an inadequate return,"
Fjelstad said. "We continue to see trends that will favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. affect our results as we move to the second half of the year. Renewal pricing continued to increase in the second quarter of 2002, increasing 4.3% over the prior year. We are also continuing to experience a reduction in the frequency of claims reported and continue to aggressively manage claims to closure. Given the upward trend in pricing, the improving trend in new claims reported and our emphasis on aggressive claims management, we continue to expect improved operating results going forward." For the six months ended June 30, 2002, RTW reported net income of $3.4 million, or $0.33 per basic and diluted share, compared to a net loss of $914,000, or $0.09 per basic and diluted share, in the comparable six-month period of 2001. Six-month results include a $3.0 million benefit, recorded in the first quarter, from reducing the accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. for the Minnesota Special Compensation Fund included in unpaid claim and claim settlement expenses. Last year's six-month results includes a $3.6 million increase in claim and claim settlement expenses recorded in the first quarter of 2001 to reflect strengthening of 2000 and prior accident year reserves due to unfavorable claims experience in the first quarter of 2001. Total revenue for the six-month period was $11.5 million, compared to $28.5 million last year. The decrease in total revenue is primarily attributable to the Company's successful actions to decrease premiums in force. Included in total revenue is investment income of $2.3 million, compared to $3.0 million last year, and net realized investment gains of $1.4 million, compared to $1.1 million last year. RTW, Inc., based in Minneapolis, Minnesota “Minneapolis” redirects here. For other uses, see Minneapolis (disambiguation). Minneapolis (pronounced IPA: /ˌmɪniˈæpəlɪs/) is the largest city in the U.S. , manages disability products and services for employers. Primary among its disability products and services is a workers' compensation management system designed to lower employers' costs and return injured in·jure tr.v. in·jured, in·jur·ing, in·jures 1. To cause physical harm to; hurt. 2. To cause damage to; impair. 3. employees to work as soon as possible. RTW, Inc. combines its proprietary management systems, the RTW SOLUTION(R) and ID15(R), with insurance products underwritten by its subsidiary, American Compensation Insurance Company. RTW offers its services to employers in Minnesota, Wisconsin Wisconsin, state, United States Wisconsin (wĭskŏn`sən, –sĭn), upper midwestern state of the United States. It is bounded by Lake Superior and the Upper Peninsula of Michigan, from which it is divided by the Menominee , South Dakota South Dakota (dəkō`tə), state in the N central United States. It is bordered by North Dakota (N), Minnesota and Iowa (E), Nebraska (S), and Wyoming and Montana (W). , Colorado, Michigan Michigan (mĭsh`ĭgən), upper midwestern state of the United States. It consists of two peninsulas thrusting into the Great Lakes and has borders with Ohio and Indiana (S), Wisconsin (W), and the Canadian province of Ontario (N,E). and Indiana Indiana, state, United States Indiana, midwestern state in the N central United States. It is bordered by Lake Michigan and the state of Michigan (N), Ohio (E), Kentucky, across the Ohio R. (S), and Illinois (W). . Clients span many industries, including manufacturing, health care, hospitality and wholesale/retail. RTW, Inc. is traded on the Nasdaq National Market under the symbol RTWI. For more information on RTW, Inc., please visit www.rtwi.com Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement: Some of the statements made in this News Release, as well as statements made by the Company in periodic press releases and oral statements made by the Company's officials to analysts and shareholders in the course of presentations about the Company, constitute "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among other things: (i) the Company's ability to retain renewing policies and write new business with a B- (Unsecure) rating from A.M. Best; (ii) the Company's ability to continue to increase pricing in the markets in which it remains; (iii) the ability of the Company's reinsurers to honor As a verb, to accept a bill of exchange, or to pay a note, check, or accepted bill, at maturity. To pay or to accept and pay, or, where a credit so engages, to purchase or discount a draft complying with the terms of the draft. their obligations; (iv) the Company's ability to accurately predict claim development; (v) the Company's ability to manage both its existing claims and new claims in an effective manner; (vi) the Company's experience with claims frequency and severity; (vii) competition and the regulatory environment in which the Company operates; (viii) general economic and business conditions; (ix) the Company's ability to obtain and retain reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. at a reasonable cost; (x) changes in workers' compensation regulation by states, including changes in mandated benefits mandated benefit Managed care A benefit that a health plan is required by law to provide Examples In vitro fertilization, defined days of inpatient mental health or substance abuse treatment, special-condition treatments. See Benefit, ERISA. or insurance company regulation; (xi) interest rate changes; and (xii) other factors as noted in the Company's other filings with the SEC. This discussion of uncertainties is by no means exhaustive but is designed to highlight important factors that may impact the Company's future performance. Included in this press release are the Company's Consolidated Statements of Income and Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. Consolidated Balance Sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. . RTW, Inc. is traded on the Nasdaq National Market under the symbol RTWI.
RTW, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in 000's, except share and per share data)
For the three months For the six months
ended June 30, ended June 30,
------------------------ ------------------------
2002 2001 2002 2001
----------- ----------- ----------- -----------
REVENUES:
Gross premiums
earned $ 14,367 $ 25,803 $ 32,210 $ 51,926
Premiums ceded:
Excess of loss
treaties 14 (3,238) (864) (7,352)
Quota share
treaty (10,004) (22,281) (23,574) (22,281)
----------- ----------- ----------- -----------
Premiums
earned 4,377 284 7,772 22,293
Investment income 1,129 1,575 2,261 3,032
Net realized
investment
(losses) gains (12) 28 1,439 1,107
Other income -- -- -- 2,088
----------- ----------- ----------- -----------
Total
revenues 5,494 1,887 11,472 28,520
EXPENSES:
Claim and claim
settlement
expenses before
quota share
treaty 11,311 19,828 23,008 38,818
Claim and claim
settlement
expenses ceded
under quota share
treaty (5,883) (13,146) (13,905) (13,146)
----------- ----------- ----------- -----------
Net claim and
claim
settlement
expenses 5,428 6,682 9,103 25,672
Policy acquisition
costs 1,608 3,565 3,794 7,191
Ceding commissions
under quota share
treaty (4,102) (9,135) (9,666) (9,135)
----------- ----------- ----------- -----------
Net policy
acquisition
costs (2,494) (5,570) (5,872) (1,944)
General and
administrative
expenses 2,024 3,202 4,563 6,018
----------- ----------- ----------- -----------
Total
expenses 4,958 4,314 7,794 29,746
----------- ----------- ----------- -----------
Income (loss)
from
operations 536 (2,427) 3,678 (1,226)
Interest expense 45 129 99 282
----------- ----------- ----------- -----------
Income (loss)
before income
taxes 491 (2,556) 3,579 (1,508)
Income tax expense
(benefit) 168 (865) 197 (594)
----------- ----------- ----------- -----------
Net income
(loss) $ 323 $ (1,691) $ 3,382 $ (914)
=========== =========== =========== ===========
Net income (loss)
per share:
Basic $ .03 $ (0.16) $ 0.33 $ (0.09)
=========== =========== =========== ===========
Diluted $ .03 $ (0.16) $ 0.33 $ (0.09)
=========== =========== =========== ===========
Weighted average
shares outstanding:
Basic 10,310,000 10,309,000 10,306,000 10,301,000
=========== =========== =========== ===========
Diluted 10,375,000 10,309,000 10,338,000 10,301,000
=========== =========== =========== ===========
RTW, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In 000's)
June 30, Dec. 31,
2002 2001
-------- --------
(Unaudited) (Audited)
ASSETS
Available-for-sale investments, at market value $ 78,991 $ 89,166
Cash and cash equivalents 4,382 3,425
Premiums receivable 5,147 6,665
Reinsurance recoverable:
On unpaid claim and claim settlement expenses 105,774 108,687
On paid claim and claim settlement expenses 3,973 3,039
Prepaid reinsurance premiums 8,260 7,790
Other assets 7,954 8,262
-------- --------
Total assets $214,481 $227,034
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Unpaid claim and claim settlement expenses $172,079 $181,310
Unearned premiums 10,192 9,738
Accrued expenses and other liabilities 10,205 15,744
Notes payable 3,000 4,500
-------- --------
Total liabilities 195,476 211,292
Shareholders' equity 19,005 15,742
-------- --------
Total liabilities and shareholders' equity $214,481 $227,034
======== ========
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