-----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, WTnuAe0rTHXvQ+b5+ospxObXRfcAWDBmLC+M823s7H204sdKflJMtb6Go12RmQCM Wvt6Ym9U3+AoI5FdIDHwqg== 0000950109-97-006705.txt : 19971111 0000950109-97-006705.hdr.sgml : 19971111 ACCESSION NUMBER: 0000950109-97-006705 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971110 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: SEC FILE NUMBER: 001-09972 FILM NUMBER: 97711101 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 September 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 September 30, 1997 - ------------------------------ --------------------------------- Common stock, $.04 par value 13,858,798 HOOPER HOLMES, INC. AND SUBSIDIARIES INDEX Page No. -------- PART I - Financial Information ITEM 1 - Financial Statements Consolidated Balance Sheets 1 as of September 30, 1997 and December 31, 1996 Consolidated Statements of Operations 2 for the Quarter and Nine Months Ended September 30, 1997 and 1996 Consolidated Statements of Cash Flows 3 for the Nine Months Ended September 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 6 - Exhibits and Reports on Form 8-K Exhibit 27 - Hooper Holmes, Inc. Consolidated Balance Sheets
09/30/97 12/31/96 -------------------- ------------------- (unaudited) (audited) ASSETS Current Assets: Cash and cash equivalents $ 9,173,973 $ 2,936,447 Accounts receivable - trade 19,444,712 17,035,255 Accounts receivable - other 733,568 1,095,772 Refundable taxes 193,206 1,230,198 Other current assets 4,336,039 3,474,226 -------------------- ------------------- Total current assets 33,881,498 25,771,898 Property, plant and equipment: Land and land improvements 571,314 571,314 Building 3,620,515 3,545,546 Furniture, fixtures and equipment 15,157,555 14,782,996 Leasehold improvements 300,115 296,157 -------------------- ------------------- Total property, plant and equipment 19,649,499 19,196,013 Less: Accumulated depreciation 11,449,242 9,712,650 -------------------- ------------------- Net property, plant and equipment 8,200,257 9,483,363 Cost in excess of net assets of acquired companies 15,303,205 15,948,735 Intangible assets 8,076,489 9,394,485 Other assets 499,962 697,185 -------------------- ------------------- Total assets $ 65,961,411 $ 61,295,666 ==================== =================== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long term debt $ 1,250,000 $ 1,030,000 Accounts payable 5,432,649 6,168,864 Accrued expenses: Insurance benefits 2,059,730 1,536,315 Salaries, wages and fees 1,837,263 1,264,739 Payroll and other taxes 194,807 167,013 Income taxes payable 2,185,917 334,879 Discontinued operations 1,270,065 1,287,700 Other 3,172,926 2,175,651 -------------------- ------------------- Total current liabilities 17,403,357 13,965,161 Long term debt, less current maturities 0 5,250,000 Deferred income taxes 3,855,164 4,361,049 Common stock 554,487 271,658 Additional paid-in capital 25,908,094 24,645,945 Retained earnings 18,258,811 12,820,355 -------------------- ------------------- 44,721,392 37,737,958 Less: Treasury stock 18,502 18,502 -------------------- ------------------- Total stockholders' equity 44,702,890 37,719,456 -------------------- ------------------- Total liabilities and stockholders' equity $ 65,961,411 $ 61,295,666 ==================== ===================
See accompanying notes to consolidated financial statements. -1- Hooper Holmes, Inc. Consolidated Statements Of Operations (unaudited)
Three months ended September 30, Nine months ended September 30, ---------------------------------- ----------------------------------- 1997 1996 1997 1996 --------------- ---------------- ---------------- ----------------- Revenues $ 40,701,044 $ 37,907,218 $ 122,813,646 $ 116,332,041 Cost of operations 29,156,919 28,631,068 88,536,718 87,962,047 --------------- ---------------- ---------------- ----------------- Gross profit 11,544,125 9,276,150 34,276,928 28,369,994 Selling, general and administrative expenses 7,236,692 6,917,970 22,990,829 22,537,552 --------------- ---------------- ---------------- ----------------- Operating income 4,307,433 2,358,179 11,286,099 5,832,442 Other income (expense) Interest expense (26,987) (261,418) (147,724) (1,266,083) Interest income 80,464 34,501 149,723 318,328 Other 25,299 (12,687) 121,325 100,202 --------------- ---------------- ---------------- ----------------- 78,777 (239,604) 123,324 (847,553) --------------- ---------------- ---------------- ----------------- Income before income taxes 4,386,210 2,118,575 11,409,423 4,984,889 Income taxes 2,106,000 1,018,000 5,490,000 2,393,000 --------------- ---------------- ---------------- ----------------- Net income $ 2,280,210 $ 1,100,575 $ 5,919,423 $ 2,591,889 =============== ================ ================ ================= Net income per common share: Primary $ 0.16 $ 0.08 $ 0.42 $ 0.19 Fully diluted $ 0.16 $ 0.08 $ 0.41 $ 0.19 =============== ================ ================ ================= Weighted average shares outstanding: (1) Primary 14,424,705 13,431,812 14,138,297 13,426,774 Fully diluted 14,424,705 13,431,812 14,295,295 13,426,774 =============== ================ ================ =================
(1) Adjusted to reflect a two for one stock split effective August 22, 1997. See accompanying notes to consolidated financial statements. -2- Hooper Holmes, Inc. Consolidated Statements of Cash Flows (unaudited)
Nine months ended September 30, --------------------------------------------- 1997 1996 ------------------- --------------------- Cash flows from operating activities: Net income $ 5,919,423 $ 2,591,889 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,767,620 3,748,023 Provision for bad debt expense 360,000 285,000 Deferred tax (benefit) expense (505,885) 0 Issuance of stock awards 0 31,875 Loss on sale of fixed assets 53,974 13,183 Change in assets and liabilities, net of effect from acquisitions / dispositions of businesses: Accounts receivable (2,407,252) 5,719,031 Other current assets (664,591) 999,717 Income tax receivable 1,036,992 7,390,817 Accounts payable and accrued expenses 3,218,196 (8,966,008) ------------------- --------------------- Net cash provided by operating activities 10,778,477 11,813,528 ------------------- --------------------- Cash flows from investing activities: Net proceeds from dispositions 0 14,986,381 All other acquisitions 0 (30,000) Capital expenditures, net of disposals (574,962) (880,578) ------------------- --------------------- Net cash (used in) provided by investing activities (574,962) 14,075,803 ------------------- --------------------- Cash flows from financing activities: Issuance of long term debt 0 12,500,000 Principal payments on long term debt (5,030,000) (38,800,000) Proceeds from issuance of common stock 23,301 0 Proceeds related to the exercise of stock options 1,521,677 80,203 Dividends paid (480,967) (268,585) ------------------- --------------------- Net cash used in financing activities (3,965,989) (26,488,381) ------------------- --------------------- Net increase (decrease) in cash and cash equivalents 6,237,526 (599,051) Cash and cash equivalents at beginning of year 2,936,447 1,065,464 ------------------- --------------------- Cash and cash equivalents at end of period $ 9,173,973 $ 466,413 =================== =====================
See accompanying notes to consolidated financial statements. -3- HOOPER HOLMES, INC. Notes to Financial Statements September 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 nine month period ended September 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 issued the additional shares on September 5, 1997. Common share and per share amounts in the Financial Statements have been adjusted to reflect the impact of the stock split. - 4 - HOOPER HOLMES, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - Three months ended September 30, 1997 compared to Three months ended September 30, 1996 Revenues for the third quarter of 1997 were $40.7 million compared to $37.9 million for the third quarter of 1996, an increase of 7.4%. 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 third quarter of 1997 totaled $29.2 million compared to $28.6 million for the third quarter of 1996. Cost of operations as a percentage of revenues, decreased from 75.5% for the third quarter of 1996 to 71.6% for the third quarter of 1997. This decrease is due to ongoing efforts to control branch operating expenses. Selling, general and administrative expenses totaled $7.2 million as compared to $6.9 million for the third quarter of 1997 and 1996, respectively, and as a percentage of revenue totaled 17.8% compared to 18.3%. 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 $4.3 million from $2.4 million and as a percentage of revenues, increased to 10.6% from 6.2% for the third quarter of 1997 compared to the third quarter of 1996. Interest expense in the third quarter of 1997 decreased significantly from the third quarter of 1996 due to lower amounts borrowed. The Company had no revolver borrowings as of September 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 third quarter of 1997 were $2.3 million or $.16 per share on a fully dilutive basis versus $1.1 million or $0.08 per share for the third quarter of 1996. Fully dilutive shares for the respective periods were 14,424,705 and 13,431,812. - 5 - Results of Operations - Nine months ended September 30, 1997 compared to Nine months ended September 30, 1996 Revenues for the nine months ended September 30, 1997 were $122.8 million compared to $116.3 million for the nine months ended September 30, 1996, an increase of 5.6%. 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 nine months ended September 30, 1997 totaled $88.5 million compared to $88.0 million for the nine months ended September 30, 1996. Cost of operations as a percentage of revenues, decreased from 75.6% for the nine months ended September 30, 1996 to 72.1% for the nine months ended September 30, 1997. The decrease is due to ongoing efforts to control branch operating expenses. Selling, general and administrative expenses totaled $23.0 million as compared to $22.5 million for the nine months ended September 30, 1997 and 1996, respectively, and as a percentage of revenue totaled 18.7% compared to 19.4%. This decrease, as a percentage of revenues, is due to management's ongoing efforts to control corporate expense despite continued revenue growth. Accordingly, the Company's operating income improved to $11.3 million from $5.8 million and as a percentage of revenues, increased to 9.2% from 5.0% for the nine months ended September 30, 1997, and 1996, respectively. Interest expense decreased for the nine months ended September 30, 1997 to $.1 million compared to $1.3 million for the nine months ended September 30, 1996, due to lower amounts borrowed. Total debt at September 30, 1997 was $1.3 million compared to $8.8 million as of September 30, 1996. The Company had no revolver debt at September 30, 1997. Net income and earnings per share for the nine months ended September 30, 1997 were $5.9 million or $.41 per share, on a fully dilutive basis, versus $2.6 million or $.19 per share for the nine months ended September 30, 1996. Fully dilutive shares for the respective periods were 14,295,295 and 13,426,774. - 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 nine months ended September 30, 1997 was $10.8 million compared to $11.8 million for the nine months ended September 30, 1996. The significant sources were net income of $5.9 million, $3.8 million of depreciation and amortization, $3.2 million increase in accounts payable and accrued expenses, and was partially offset by a $2.4 million increase in accounts receivable. At September 30, 1997, $17.7 million of the Company's revolver credit facility of $20 million ($2.3 million committed to outstanding letters of credit) was available for use compared to the $14.3 million available at September 30, 1996. The Company's current ratio at the end of September 1997 was 1.9:1 compared to 1.8:1 at December 31, 1996. 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 April 1997 were declared at $.01 per share, and July 1997 at $.015 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 - 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: November 10, 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 SEPTEMBER 30, 1997 AND THE RELATED CONSOLIDATED STATEMENTS OF INCOME AND CASH FLOWS FOR THE PERIOD ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 9,173,973 0 20,301,722 857,010 0 33,881,498 19,649,499 11,449,242 65,961,411 17,403,357 0 0 0 554,487 44,148,402 65,961,411 122,813,646 122,813,646 88,536,718 88,536,718 22,990,829 360,000 147,724 11,409,423 5,490,000 5,919,423 0 0 0 5,919,423 .42 .41 Prior period financial data schedules have not been restated to reflect the two-for-one stock split effective August 22, 1997.
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