SafeGuard Reports Q4, Year-End Results

California-based SafeGuard Health Enterprises Inc. announced results for the fourth quarter and year ended Dec. 31, 2003.

In commenting on the 2003 results, James Buncher, SafeGuard’s president and CEO, said, “We are pleased with the progress we made during 2003 and believe our momentum will continue in 2004. The fourth quarter of 2003 included two months of combined results from our acquisition of Health Net Dental and Vision. Results for the fourth quarter of 2003 were also positively affected by fewer workdays during November and December due to the holidays and the way weekends fell on the calendar, resulting in lower than normal claims costs for the two months of combined operations. We expect the first quarter of 2004 to return to a more normal pattern of claims costs and continue to believe the Health Net Dental and Vision acquisition will result in revenue and earnings growth by the Company. We continue to pursue our going private transaction and will be filing with the SEC an amended Information Statement, which includes 2003 results.”

Revenue for the three months ended Dec. 31, 2003, was $36.8 million, compared with $21.5 million for the same period in 2002, an increase of 71 percent. The company reported income before income taxes of $1.3 million for the quarter ended Dec. 31, 2003, compared with $0.3 million for the same period last year. The company recognized an income tax benefit of $5.0 million during the fourth quarter of 2003, which was primarily due to a decrease in the valuation allowance against the company’s net deferred tax assets. The net deferred tax assets had been fully reserved since 1999. The valuation allowance was decreased because the company determined that, based on its recent profitability and future outlook, it is more likely than not that the company will realize substantially all of its net deferred tax assets.

The company reported net income of $6.3 million, or $0.14 per share, for the quarter ended Dec. 31, 2003, compared with net income of $1.1 million, or $0.03 per share, for the same period last year. Income before income taxes was $0.03 per share for the fourth quarter of 2003, compared to $0.01 per share for the same period in 2002.

Revenue for the year ended Dec. 31, 2003, was $104.9 million, compared with $83.0 million for the same period in 2002, an increase of 26 percent. There was an income tax benefit of $4.8 million during 2003, which was primarily due to a decrease in the valuation allowance against the company’s net deferred tax assets, as discussed above. Net income for the year ended Dec. 31, 2003, was $7.8 million, or $0.20 per share, compared with net income of $1.4 million, or $0.04 per share, for the same period last year.

The company provides dental and vision HMO, PPO, indemnity and ASO products to approximately 1.5 million members primarily in California, Florida and Texas.