RTW, Inc. Reports Second Quarter Results.MINNEAPOLIS--(BUSINESS WIRE)--July 24, 1998--RTW, Inc. (Nasdaq: RTWI RTWI Return to Work Initiative ) reported revenues of $23.9 million for the second quarter ended June 30, 1998, a 12.5 percent increase over revenues of $21.2 million reported for the second quarter of 1997. The Company also reported net income of $491,000 in the second quarter of 1998, compared to net income of $1.5 million in the second quarter of 1997, and 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. net income per share of $.04 in the second quarter of 1998 versus basic and diluted net income per share of $.12 in the second quarter of 1997. For the six months ended June 30, 1998, the Company reported revenues of $48.5 million, a 15.4 percent increase over revenues of $42.0 million for the first six months of 1997. Revenues for the six months include a refund TO REFUND. To pay back by the party who has received it, to the party who has paid it, money which ought not to have been paid. 2. On a deficiency of assets, executors and administrators cum testamento annexo, are entitled to have refunded to them legacies of approximately $2.3 million from the Minnesota 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. 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. Association which was recorded in the first quarter of 1998. Excluding the effects of this refund, revenues were $46.2 million, a 10.0 percent increase over 1997. Net loss for the six month period was $626,000, compared with net income of $2.8 million for the same period last year. Basic and diluted net loss per share was ($.05) for the six months ended June 30, 1998 versus basic net income per share of $.24 and diluted net income per share of $.23 for the six months ended June 30, 1997. Premiums in force at June 30, 1998 were $80.5 million, compared with $72.7 million at June 30, 1997 and $78.4 million at December 31, 1997. Commenting on the results, Carl Lehmann, RTW's 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. , stated, "Net income is in line with our expectations for the second quarter. Pricing pressure continues to affect premiums in force and decrease profit margins in all our markets and Minnesota premiums in force continued to decline in the second quarter." "The Minnesota Insurance Guarantee Association, an organization formed to fund Minnesota claims for insolvent INSOLVENT. This word has several meanings. It signifies a person whose estate is not sufficient to pay his debts. Civ. Code of Louisiana, art. 1980.. A person is also said to be insolvent, who is under a present inability to answer, in the ordinary course of business, the responsibility insurance companies, did not assess its members in 1998 for the workers' compensation claim liability from current or prior insolvencies. This resulted in the reversal of a 1997 pre-tax accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. of $1.1 million which was recognized by the Company as a reduction in general and administrative expenses during the 1998 second quarter. This reduction was partially offset by a pre-tax increase of $400,000 in the Minnesota Special Compensation Fund accrual for periods prior to March 31, 1998 resulting from an increased assessment declared during the second quarter of 1998. "Actions to reduce personnel costs and other operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. have been successful, resulting in a 14.0% decrease from the first quarter of 1998, exclusive of the $1.1 million accrual reversal discussed above. Expenses continue to be managed aggressively and reduced where appropriate." "Our average cost per claim increased in the second quarter due to medical inflation and an increase in the severity of claims reported. In connection with this increase, we continued to build loss reserves in the second quarter. The six month results include a $3.0 million reserve increase recorded in the first quarter of 1998 to reflect adverse development of prior period claims. Combined with pricing pressure, our loss ratio has increased." "While we expect to continue to operate in a difficult pricing environment for the remainder of 1998, we will continue to work on improving profitability in all of our offices by aggressively managing expenses, building a more effective underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. function and refining refining, any of various processes for separating impurities from crude or semifinished materials. It includes the finer processes of metallurgy, the fractional distillation of petroleum into its commercial products, and the purifying of cane, beet, and maple sugar our sales and distribution channels." "During my initial six months at 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. , I have focused on strengthening our management team. We have hired new General Managers in Minnesota, Colorado, Missouri Missouri, state, United States Missouri (mĭz  r`ē, –ə), one of the midwestern states of the United States. and Massachusetts Massachusetts (măsəch `sĭts), most populous of the New England states of the NE United States. with the skills to allow
us to grow the Company profitably over time. In addition, we have
recently hired a new Chief Financial Officer, Tim Chan, who will start
July 31. Tim was recently Vice President Finance and Controller of the
U. S. Grocery Division of Campbell Soup. Prior to that, Tim was Vice
President Finance Pillsbury Brands Group for the Pillsbury Company  Pillsbury is a brand name used by Minneapolis-based General Mills and the The J. M. Smucker Company. .
Tim's job will be to create the necessary infrastructure and
financial process to allow us to grow the organization prudently from
the entrepreneurial en·tre·pre·neur n. A person who organizes, operates, and assumes the risk for a business venture. [French, from Old French, from entreprendre, to undertake; see enterprise. foundation that exists today." 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 system, the RTW SOLUTION(R), with insurance products underwritten by an RTW subsidiary, American Compensation Insurance Company. RTW offers its services to employers in Minnesota, Colorado, Missouri, Michigan, Massachusetts, Kansas, Illinois Kansas is a village in Edgar County, Illinois, United States. The population was 842 at the 2000 census. Geography Kansas is located at (39.553627, -87.938392)GR1. , Wisconsin, Indiana, Connecticut, Rhode Island Rhode Island, island, United States Rhode Island, island, 15 mi (24 km) long and 5 mi (8 km) wide, S R.I., at the entrance to Narragansett Bay. It is the largest island in the state, with steep cliffs and excellent beaches. and New Hampshire New Hampshire, one of the New England states of the NE United States. It is bordered by Massachusetts (S), Vermont, with the Connecticut R. forming the boundary (W), the Canadian province of Quebec (NW), and Maine and a short strip of the Atlantic Ocean (E). . Clients span many industries including manufacturing, health care, hospitality, and wholesale/retail. Information included in this press release which can be identified by the use of forward-looking terminology such as "may," "will," "expect," "anticipate," or "continue" or comparable terminology constitutes forward-looking information. The following important factors, among others, in some cases have affected and in the future could affect the Company's actual results and could cause the Company's actual financial performance to differ materially from that expressed in any forward-looking statement 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. : (i) competition from traditional workers' compensation insurance carriers, (ii) the Company's ability to manage both its existing claims and new claims in an effective manner, (iii) the Company's ability to further penetrate its existing markets, (iv) 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, (v) the Company's ability to retain its existing customers at favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. beneficial premium rates when their policies renew, (vi) the Company's ability to expand into new states and attract customers in those states, and (vii) the Company's ability to successfully introduce new products and services. Please refer to the Company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for 1997, filed with the SEC, for further risk factors. Included in this press release are the Company's Consolidated Statements of Operations 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. . Announcement: Dial in to Hear Recording of RTW, Inc. Conference Call A recording of the RTW, Inc. second quarter management conference call will be accessible from 1:00 p.m. Central Time, Friday, July 24, 1998, through 11:59 p.m. on Monday, August 3, 1998. To access the recording, please call 800-475-6701 from any where in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , and use the access code 398783. This code can also be used with the International contact number for the replay at 320-365-3844. RTW, Inc. is traded on the Nasdaq National Market under the symbol RTWI. -0-
RTW, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in 000's, except per share data)
For the 3 months For the 6 months
ended June 30, ended June 30,
1998 1997 1998 1997
REVENUES:
Premiums earned $ 21,185 $ 19,652 $ 43,729 $ 38,855
Investment income 2,018 1,626 4,055 3,193
Net realized investment
gains (losses) on
sales of available-for-sale
investments 716 (16) 719 (16)
----------- ----------- ----------- --------
Total revenues 23,919 21,262 48,503 42,032
EXPENSES:
Claim and claim
settlement expenses 17,938 12,886 37,211 25,866
Policy acquisition costs 3,310 2,992 6,590 5,606
General and
administrative expenses 1,884 2,872 5,531 5,720
------------- ------------ ----------- ---------
Total expenses 23,132 18,750 49,332 37,192
------------- ------------ ----------- ---------
Income (loss)
from operations 787 2,512 (829) 4,840
Interest expense 139 196 278 392
------------- ------------- ----------- ---------
Income (loss)
before income taxes 648 2,316 (1,107) 4,448
Income tax expense
(benefit) 157 850 (481) 1,642
------------- ------------- ----------- ---------
Net income (loss) $ 491 $ 1,466 $ (626) $ 2,806
============= ============= =========== =========
Net income (loss) per share:
Basic $ 0.04 $ 0.12 $ (0.05) $ 0.24
============= ============= =========== =========
Diluted $ 0.04 $ 0.12 $ (0.05) $ 0.23
============= ============= =========== =========
Weighted average shares outstanding:
Basic 11,940 11,837 11,912 11,824
============= ============= =========== =========
Diluted 12,249 12,081 11,912 12,089
============= ============= =========== =========
CONDENSED CONSOLIDATED BALANCE SHEETS
(In 000's)
June 30, December 31,
1998 1997
(Unaudited) (Audited)
ASSETS
Available-for-sale investments,
at market value $ 127,926 $ 112,294
Cash and cash equivalents 641 5,798
Premiums receivable 7,147 5,763
Reinsurance receivable 5,156 5,374
Other assets 13,702 12,757
------------ ------------
Total assets $ 154,572 $ 141,986
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Unpaid claim and claim settlement expenses $ 72,836 $ 61,069
Unearned premiums 16,336 13,580
Accrued expenses and other liabilities 2,319 4,105
Notes payable 4,918 4,875
------------ ------------
Total liabilities 96,409 83,629
Shareholders' equity 58,163 58,357
------------ ------------
Total liabilities
and shareholders' equity $ 154,572 $ 141,986
============ ============
SUPPLEMENTAL FINANCIAL INFORMATION
(Unaudited, in 000's)
The following is a summary of amounts included in certain
financial statement lines of the Consolidated Statements of Operations
that make period to period comparison difficult. Amounts are presented
based on their effect on pre-tax income (loss) for the period
indicated:
For the 3 months For the 6 months
ended June 30, ended June 30,
1998 1997 1998 1997
Premiums earned:
Minnesota Workers'
Compensation
Reinsurance
Association refund $ - $ - $ 2,247 $ -
Claim and claim
settlement expenses:
Unpaid claim and
claim settlement
reserve adjustments - 850 (3,000) 1,525
Minnesota Special
Compensation
Fund adjustment (400) - (400) -
General and administrative expenses:
Minnesota Insurance Guarantee
Association
accrual reversal 1,076 - 1,076 -
CONTACT: RTW, Inc., Minneapolis Carl B. Lehmann, CEO or Alfred L. LaTendresse (612) 893-0403 |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion