-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IMz09Pnk2uD+RKfBpcRGbBmXQlpSTieagW6FmLHcPQW4/yAD6yOMGr/Q/ai9DGzx wpG/YYOceyQMPRXaN1rcXA== 0000950109-97-005326.txt : 19970813 0000950109-97-005326.hdr.sgml : 19970813 ACCESSION NUMBER: 0000950109-97-005326 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970812 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOOPER HOLMES INC CENTRAL INDEX KEY: 0000741815 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HOME HEALTH CARE SERVICES [8082] IRS NUMBER: 221659359 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09972 FILM NUMBER: 97657036 BUSINESS ADDRESS: STREET 1: 170 MT AIRY RD CITY: BASKING RIDGE STATE: NJ ZIP: 07920 BUSINESS PHONE: 9087665000 MAIL ADDRESS: STREET 1: 170 MT AIRY ROAD CITY: BASKING RIDGE STATE: NJ ZIP: 07920 10-Q 1 FORM 10-Q FORM 10Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended June 30, 1997 Commission File No. 1-9972 Hooper Holmes, Inc. ------------------------------------------------------- (Exact name of registrant as specified in its charter) New York 22-1659359 - ----------------------------------------------- ----------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 170 Mt. Airy Rd., Basking Ridge, NJ 07920 - --------------------------------------- ----------------------------- (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code: (908) 766-5000 None - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. Class Outstanding at June 30, 1997 - ------------------------------- ----------------------------------- Common stock, $.04 par value 6,890,924 HOOPER HOLMES, INC. AND SUBSIDIARIES INDEX
Page No. -------- PART I - Financial Information ITEM 1 - Financial Statements Consolidated Balance Sheets 1 as of June 30, 1997 and December 31, 1996 Consolidated Statements of Operations 2 for the Quarter and Six Months Ended June 30, 1997 and 1996 Consolidated Statements of Cash Flows 3 for the Six Months Ended June 30, 1997 and 1996 Notes to Financial Statements 4 ITEM 2 - Management's Discussion and Analysis 5,6,7 of Financial Condition and Results of Operations PART II - Other Information ITEM 4 - Submission of Matters to a vote of 8 Security Holders ITEM 6 - Exhibits and Reports on Form 8-K Exhibit 27 -
Hooper Holmes, Inc. Consolidated Balance Sheets
06/30/97 12/31/96 ---------------- ---------------- (unaudited) (audited) ASSETS Current Assets: Cash and cash equivalents $ 6,376,820 $ 2,936,447 Accounts receivable - trade 18,284,637 17,035,255 Accounts receivable - other 304,077 1,095,772 Refundable taxes 1,178,046 1,230,198 Other current assets 3,431,928 3,474,226 ---------------- ---------------- Total current assets 29,575,508 25,771,898 Property, plant and equipment: Land and land improvements 571,314 571,314 Building 3,586,977 3,545,546 Furniture, fixtures and equipment 15,038,016 14,782,996 Leasehold improvements 295,286 296,157 ---------------- ---------------- Total property, plant and equipment 19,491,593 19,196,013 Less: Accumulated depreciation 10,915,863 9,712,650 ---------------- ---------------- Net property, plant and equipment 8,575,730 9,483,363 Cost in excess of net assets of acquired companies 15,517,765 15,948,735 Intangible assets 8,515,613 9,394,485 Other assets 533,379 697,185 ---------------- ---------------- Total assets $ 62,717,995 $ 61,295,666 ================ ================ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long term debt $ 1,830,000 $ 1,030,000 Accounts payable 5,638,263 6,168,864 Accrued expenses: Insurance benefits 1,959,329 1,536,315 Salaries, wages and fees 1,637,458 1,264,739 Payroll and other taxes 208,753 167,013 Income taxes payable 1,554,835 334,879 Discontinued operations 658,127 1,287,700 Other 3,059,228 2,175,651 ---------------- ---------------- Total current liabilities 16,545,993 13,965,161 Long term debt, less current maturities 0 5,250,000 Deferred income taxes 4,023,792 4,361,049 Common stock 275,664 271,658 Additional paid-in capital 25,704,850 24,645,945 Retained earnings 16,186,198 12,820,355 ---------------- ---------------- 42,166,712 37,737,958 Less: Treasury stock 18,502 18,502 ---------------- ---------------- Total stockholders' equity 42,148,210 37,719,456 ---------------- ---------------- Total liabilities and stockholders' equity $ 62,717,995 $ 61,295,666 ================ ================
See accompanying notes to consolidated financial statements. -1- Hooper Holmes, Inc. Consolidated Statements Of Operations (unaudited)
Three months ended June 30, Six months ended June 30, ----------------------------------- -------------------------------------- 1997 1996 1997 1996 ---------------- ---------------- ----------------- ----------------- Revenues $ 41,398,735 $ 39,813,823 $ 82,112,603 $ 78,424,823 Cost of operations 29,732,528 29,916,991 59,379,799 59,330,679 ---------------- ---------------- ----------------- ----------------- Gross profit 11,666,207 9,896,832 22,732,804 19,094,144 Selling, general and administrative expenses 7,651,109 7,795,964 15,754,138 15,619,582 ---------------- ---------------- ----------------- ----------------- Operating income 4,015,098 2,100,868 6,978,666 3,474,562 Other income (expense) Interest expense (37,616) (425,848) (120,738) (1,004,665) Interest income 39,727 102,394 69,259 283,828 Other 49,962 41,451 96,026 112,889 ---------------- ---------------- ----------------- ----------------- 52,073 (282,003) 44,547 (607,948) ---------------- ---------------- ----------------- ----------------- Income before income taxes 4,067,171 1,818,866 7,023,213 2,866,614 Income taxes 1,952,000 873,000 3,384,000 1,375,000 ---------------- ---------------- ----------------- ----------------- Net income $ 2,115,171 $ 945,866 $ 3,639,213 $ 1,491,614 ================ ================ ================= ================= Net income per common share: Primary $ 0.30 $ 0.14 $ 0.52 $ 0.22 Fully diluted $ 0.30 $ 0.14 $ 0.51 $ 0.22 ================ ================ ================= ================= Weighted average shares outstanding: Primary 7,043,242 6,714,614 6,997,424 6,713,378 Fully diluted 7,143,540 6,714,614 7,109,964 6,713,378 ================ ================ ================= =================
See accompanying notes to consolidated financial statements. -2- Hooper Holmes, Inc. Consolidated Statements of Cash Flows (unaudited)
Six months ended June 30, -------------------------------------------- 1997 1996 ------------------- ------------------ Cash flows from operating activities: Income from continuing operations $ 3,639,213 $ 1,491,314 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,547,538 2,512,620 Provision for bad debt expense 240,000 190,000 Deferred tax (benefit) expense (337,257) 0 Issuance of stock awards 0 31,875 Loss on sale of fixed assets 24,964 11,749 Change in assets and liabilities, net of effect from acquisitions/ dispositions of businesses: Accounts receivable (697,686) 4,230,726 Other current assets 206,104 698,770 Income tax receivable 52,152 350,000 Accounts payable and accrued expenses 1,780,831 (7,868,868) -------------------- ------------------- Net cash provided by operating activities 7,455,859 1,648,187 -------------------- ------------------- Cash flows from investing activities: Net proceeds from dispositions 0 13,953,281 Capital expenditures, net of disposals (355,027) (550,787) -------------------- ------------------- Net cash (used in) provided by investing activities (355,027) 13,402,494 -------------------- ------------------- Cash flows from financing activities: Issuance of long term debt 0 7,500,000 Principal payments on long term debt (4,450,000) (23,250,000) Proceeds from issuance of common stock 300,244 0 Proceeds related to the exercise of stock options 762,667 0 Dividends paid (273,370) (134,292) -------------------- ------------------- Net cash used in financing activities (3,660,459) (15,884,292) -------------------- ------------------- Net increase (decrease) in cash and cash equivalents 3,440,373 (833,611) Cash and cash equivalents at beginning of year 2,936,447 1,065,464 -------------------- ------------------- Cash and cash equivalents at end of period $ 6,376,820 $ 231,853 ==================== ===================
See accompanying notes to consolidated financial statements. -3- HOOPER HOLMES, INC. Notes to Financial Statements June 30, 1997 Note 1: Basis of Presentation The financial information included herein is unaudited unless otherwise indicated; however, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods. The interim financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's annual report on Form 10-K. The results of operations for the six month period ended June 30, 1997 are not necessarily indicative of the results to be expected for the full year. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for additional information. Note 2: Earnings Per Share Earnings per share is based on the weighted average number of common shares and common share equivalents resulting from options outstanding during the periods. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings per Share." The new statement replaces the calculations currently used with "basic earnings per share" that includes only actual weighted shares outstanding and "diluted earnings per share" that includes the effect of any common stock equivalents or other items that dilute earnings per share. The new rules are effective at the end of 1997 and are retroactively applied to the quarterly periods. The adoption of this statement is not expected to be material. Note 3: Stock Split On July 22, 1997 the Board of Directors approved a two-for-one stock split to all shareholders who owned shares on August 22, 1997. The Company will issue the additional shares on September 5, 1997. Common share and per share amounts in the Financial Statements do not reflect the impact of the stock split. If restated for the split, full dilutive earnings per share for the quarter ended June 30 would be $.15 in 1997 and $.07 in 1996, and for the six months ended June 30 would be $.26 in 1997 and $.11 in 1996. -4- HOOPER HOLMES, INC. Management's Discussion and Analysis of Financial Condition and Results of Operation Results of Operation - Three months ended June 30, 1997 compared to Three months ended June 30, 1996 Revenues for the second quarter of 1997 were $41.4 million compared to $39.8 million for the second quarter of 1996, an increase of 4.0%. This growth results from an increase in revenues per unit of service performed combined with the Company's efforts to gain market share. The Company's cost of operations for the second quarter of 1997 totaled $29.7 million compared to $29.9 million for the second quarter of 1996. Cost of operations as a percentage of revenues, decreased from 75.1% for the second quarter of 1996 to 71.8% for the second quarter of 1997. This decrease is due to ongoing efforts to control branch operating expenses. Selling, general and administrative expenses totaled $7.7 million as compared to $7.8 million for the second quarter of 1997 and 1996, respectively, and as a percentage of revenue totaled 18.5% compared to 19.6%. This moderate decrease, as a percentage of revenues, is due to management's ongoing efforts to control corporate level expenses. Accordingly, the Company's operating income improved to $4.0 million from $2.1 million and as a percentage of revenues, increased to 9.7% from 5.3% for the second quarter of 1997 compared to the second quarter of 1996. Interest expense in the second quarter of 1997 decreased significantly from the second quarter of 1996 due to lower amounts borrowed. The Company had no revolver borrowings as of June 30, 1997 and its remaining "mortgage" debt is classified as short term since it will be fully paid by January 1998. Net income and earnings per share for the second quarter of 1997 were $2.1 million or $.30 per share on a fully dilutive basis versus $.9 million or $0.14 per share for the second quarter of 1996. Fully dilutive shares for the respective periods were 7,143,540 and 6,714,614. -5- Results of Operation - Six months ended June 30, 1997 compared to Six months ended June 30, 1996 Revenues for the six months ended June 30, 1997 were $82.1 million compared to $78.4 million for the six months ended June 30, 1996, an increase of 4.7%. This growth results from an increase in revenues per unit of service performed combined with the Company's efforts to gain market share. The Company's cost of operations for the six months ended June 30, 1997 totaled $59.4 million compared to $59.3 million for the six months ended June 30, 1996. Cost of operations as a percentage of revenues, decreased from 75.7% for the six months ended June 30, 1996 to 72.3% for the six months ended June 30, 1997. The decrease is due to ongoing efforts to control branch operating expenses. Selling, general and administrative expenses totaled $15.8 million as compared to $15.6 million for the six months ended June 30, 1997 and 1996, respectively, and as a percentage of revenue totaled 19.2% compared to 19.9%. The slight dollar increase is due to management's efforts to closely monitor and control corporate level expenses, as 1996 included residual ASB corporate costs that were not present in 1997. Accordingly, the Company's operating income improved to $7.0 million from $3.5 million and as a percentage of revenues, increased to 8.5% from 4.4% for the six months ended June 30, 1997, and 1996, respectively. Interest expense decreased for the six months ended June 30, 1997 to $.1 million compared to $1.0 million for the six months ended June 30, 1996, due to lower amounts borrowed. Total debt at June 30, 1997 was $1.8 million compared to $19.3 million as of June 30, 1996. The Company had no revolver debt at June 30, 1997. Net income and earnings per share for the six months ended June 30, 1997 were $3.6 million or $.51 per share, on a fully dilutive basis, versus $1.5 million or $.22 per share for the six months ended June 30, 1996. Fully dilutive shares for the respective periods were 7,109,964 and 6,713,378. -6- Financial Condition The Company's primary sources of cash are internally generated funds and the Company's bank credit facility. Net cash provided by operating activities for the six months ended June 30, 1997 was $7.5 million compared to $1.6 million for the six months ended July 30, 1996. The significant sources were income from continuing operations of $3.6 million, $2.5 million of depreciation and amortization, $1.8 million increase in accounts payable and accrued expenses, and was partially offset by a $.7 million increase in accounts receivable. At June 30, 1997, $17.5 million of the Company's revolver credit facility of $20 million ($2.5 million committed to outstanding letters of credit) was available for use compared to the $3.8 million available at June 30, 1996. The Company's current ratio at the end of June 1997 and December 31, 1996 stood at 1.8:1. Also, inflation has not, nor is it expected to have a material impact on the Company's financial results in 1997 and there have been no material commitments for capital expenditures. Dividends declared in January and May 1997 were declared at $.02 per share. Management believes that the combination of cash and cash equivalents, other working capital sources, and borrowings under the Company's credit facility, along with the anticipated cash flows from continuing operations, will provide sufficient capital resources for the foreseeable future. -7- PART II - Other Information Item 4: Submission of Matters to a vote of Security Holders At the Company's Annual Meeting of Shareholders on May 27, 1997, the shareholders (1) elected John E. Nolan, Jr., Elaine L. La Monica and Quentin J. Kennedy to serve as directors until the 2000 Annual Meeting, (2) ratified the selection of KPMG Peat Marwick LLP to serve as the Company's auditors for 1997, (3) approved the 1997 Director Option Plan, (4) approved the 1997 Stock Option Plan and (5) approved the 1997 CEO Stock Option Agreement. The chart below names each director nominated for election by the shareholders at the 1997 Annual Meeting, the number of votes cast for, against or withheld and the number of broker nonvotes with respect to each such person:
Votes Cast Broker Nominee For Against Withheld Nonvotes - ------- ---------------------------- -------- John E. Nolan 6,128,209 - 18,155 0 Elaine L. La Monica 5,760,899 - 385,465 0 Quentin J. Kennedy 5,762,414 - 383,950 0
The name of each director whose term of office as a director continued after the annual meeting is as follows: James M. McNamee Kenneth R. Rossano G. Earle Wight Benjamin A. Currier With respect to the ratification of KPMG Peat Marwick LLP as auditors, the number of votes cast was 6,124,746 For, 5,724 Against, 15,894 Abstained and 0 Broker Nonvotes. With respect to the approval of the 1997 Director Option Plan, the number of votes cast was 4,082,310 For, 818,038 Against, 43,907 Abstained and 0 Broker Nonvotes. With respect to the approval of the 1997 Stock Option Plan, the number of votes cast was 4,796,374 For, 103,856 Against, 44,025 Abstained and 0 Broker Nonvotes. With respect to the approval of the 1997 CEO Stock Option Agreement, the number of votes cast was 4,379,663 For, 516,516 Against, 48,076 Abstained and 0 Broker Nonvotes. -8- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Hooper Holmes, Inc. Dated: August 11, 1997 BY: ------------------------------- James M. McNamee President and Chief Executive Officer BY: ------------------------------- Fred Lash Senior Vice President Chief Financial Officer & Treasurer EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET OF HOOPER HOLMES, INC. AND SUBSIDIARIES AS OF JUNE 30, 1997 AND THE RELATED CONSOLIDATED STATEMENTS OF INCOME AND CASH FLOWS FOR THE PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 6,376,820 0 19,168,806 884,169 0 29,575,508 19,491,593 10,915,863 62,717,995 16,545,993 0 0 0 275,664 41,872,546 42,148,210 82,112,603 82,112,603 59,379,799 59,379,799 15,754,138 240,000 120,738 7,023,213 3,384,000 3,639,213 0 0 0 3,639,213 .52 .51
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