-----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, MfW1yAC0EyeFEI0Lx8X3VdmFyhZMW3uvWPtp3Kv2611JEph5MnmRw4hoglkEpfus QMjffLoBBY2qp5YsAzjrFw== 0000950109-98-003130.txt : 19980513 0000950109-98-003130.hdr.sgml : 19980513 ACCESSION NUMBER: 0000950109-98-003130 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980512 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: 98616681 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 March 31, 1998 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 March 31, 1998 - ---------------------------- ---------------------------------- Common stock, $.04 par value 13,986,174 HOOPER HOLMES, INC. AND SUBSIDIARIES INDEX Page No. -------- PART I - Financial Information (1997 Audited) ITEM 1 - Financial Statements Consolidated Balance Sheets 1 as of March 31, 1998 and December 31, 1997 Consolidated Statements of Income 2 for the Three Months Ended March 31, 1998 and 1997 Consolidated Statements of Cash Flows 3 for the Three Months Ended March 31, 1998 and 1997 Notes to Financial Statements 4 ITEM 2 - Management's Discussion and Analysis 5,6 of Financial Condition and Results of Operations PART II - Other Information ITEM 4 - Submission of Matters to a vote 6 of Security Holders ITEM 6 - Exhibits and Reports on Form 8-K Exhibit 27 Hooper Holmes, Inc. Consolidated Balance Sheets
03/31/98 12/31/97 --------------- ---------------- (unaudited) ASSETS Current Assets: Cash and cash equivalents $ 18,210,836 $ 13,159,431 Accounts receivable - trade 21,061,217 18,011,490 Accounts receivable - other 197,382 508,857 Refundable taxes 11,619 23,535 Other current assets 2,790,720 2,458,283 --------------- ---------------- Total current assets 42,271,774 34,161,596 Property, plant and equipment: Land and land improvements 591,213 591,213 Building 3,936,178 3,931,574 Furniture, fixtures and equipment 15,979,647 15,675,217 Leasehold improvements 300,115 300,115 --------------- ---------------- Total property, plant and equipment 20,807,153 20,498,119 Less: Accumulated depreciation 12,611,582 12,050,903 --------------- ---------------- Net property, plant and equipment 8,195,571 8,447,216 Cost in excess of net assets of acquired companies, net 14,875,010 15,089,108 Intangible assets, net 7,218,933 7,647,711 Other assets 444,230 595,486 --------------- ----------------- Total assets $ 73,005,518 $ 65,941,117 =============== ================ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current maturities of long term debt $ 0 $ 0 Accounts payable 6,938,671 5,577,158 Accrued expenses: Insurance benefits 1,815,206 1,969,403 Salaries, wages and fees 2,414,427 1,935,277 Payroll and other taxes 235,982 170,152 Income taxes payable 3,545,407 610,487 Discontinued operations 566,707 573,970 Other 2,213,087 2,944,248 --------------- ---------------- Total current liabilities 17,729,487 13,780,695 Long term debt, less current maturities 0 0 Deferred income taxes 3,472,422 3,641,051 Common stock 559,582 557,565 Additional paid-in capital 27,381,728 27,079,265 Retained earnings 23,880,801 20,901,043 --------------- ---------------- 51,822,111 48,537,873 Less: Treasury stock 18,502 18,502 --------------- ---------------- Total stockholders' equity 51,803,609 48,519,371 --------------- ---------------- Total liabilities and stockholders' equity $ 73,005,518 $ 65,941,117 =============== ================
See accompanying notes to consolidated financial statements. -1- Hooper Holmes, Inc. Consolidated Statements Of Operations (unaudited) Three months ended March 31, ------------------------------- 1998 1997 ------------- ------------- Revenues $ 46,111,306 $ 40,713,867 Cost of operations 31,613,838 29,647,270 ------------- ------------- Gross profit 14,497,468 11,066,597 SG & A expenses 8,578,592 8,103,029 ------------- ------------- Operating income 5,918,876 2,963,568 Other income (expense) Interest expense 0 (83,121) Interest income 129,538 29,532 Other (38,353) 46,064 ------------- ------------- 91,185 (7,525) ------------- ------------- Income before income taxes 6,010,061 2,956,043 Income taxes 2,821,000 1,432,000 ------------- ------------- Net income $ 3,189,061 $ 1,524,043 ============= ============= Net income per common share: Basic 0.23 0.11 Diluted $ 0.22 $ 0.11 ============= ============= Weighted average number of shares: (1) Basic 13,962,605 13,597,479 Diluted 14,742,485 13,913,594 ============= ============= (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)
Three months ended March 31, --------------------------------------- 1998 1997 ------------------ ---------------- Cash flows from operating activities: Net income $ 3,189,061 $ 1,524,043 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,237,268 1,272,089 Provision for bad debt expense 120,000 120,000 Deferred tax (benefit) expense (168,628) (168,628) Loss on sale of fixed assets 3,016 1,262 Change in assets and liabilities: Accounts receivable (2,858,251) (2,127,291) Other current assets (181,181) (157,923) Income tax receivable 11,915 51,663 Accounts payable and accrued expenses 3,948,792 2,200,189 ------------------ ---------------- Net cash provided by operating activities 5,301,992 2,715,404 ------------------ ---------------- Cash flows from investing activities: Capital expenditures, net of disposals (345,764) (158,941) ------------------ ---------------- Cash flows from financing activities: Principal payments on long term debt 0 (3,330,000) Proceeds related to the exercise of stock options 304,480 388,635 Dividends paid (209,303) (135,849) ------------------ ---------------- Net cash provided by (used in) financing activities 95,177 (3,077,214) ------------------ ---------------- Net increase (decrease) in cash and cash equivalents 5,051,405 (520,751) Cash and cash equivalents at beginning of year 13,159,431 2,936,447 ------------------ ---------------- Cash and cash equivalents at end of period $ 18,210,836 $ 2,415,696 ================== ================
See accompanying notes to consolidated financial statements. -3- HOOPER HOLMES, INC. Notes to Financial Statements March 31, 1998 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 three month period ended March 31, 1998 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 Common Share "Basic" earnings per common share equals net income divided by weighted average common shares outstanding during the period. "Diluted" earnings per common share equals net income divided by the sum of weighted average common shares outstanding during the period plus common stock equivalents. Common stock equivalents are shares assumed to be issued if outstanding stock options were exercised. - 4 - HOOPER HOLMES, INC. Management's Discussion and Analysis of Financial Condition and Results of Operation Results of Operation - Three months ended March 31, 1998 compared to Three months ended March 31, 1997 Revenues for the first quarter of 1998 were $46.1 million compared to $40.7 million for the first quarter of 1997, an increase of 13.3%. This growth results primarily from a 12% increase in the number of examinations performed and increases in revenues per unit of service. The Company's cost of operations for the first quarter of 1998 totaled $31.6 million compared to $29.6 million for the first quarter of 1997. Cost of operations as a percentage of revenues, decreased from 72.8% for the first quarter of 1997 to 68.6% for the first quarter of 1998. This percentage decrease is due to ongoing efforts to limit branch operating expense increases, and the efficiencies realized from continued branch automation initiatives. Selling, general and administrative expenses totaled $8.6 million as compared to $8.1 million for the first quarters of 1998 and 1997, respectively, and as a percentage of revenue totaled 18.6% compared to 19.9%. As a percentage of revenues, the decrease is due to ongoing efforts to control corporate level expenses. Accordingly, the Company's operating income improved to $5.9 million from $3.0 million and as a percentage of revenues, increased to 12.8% from 7.3% for the first quarter of 1998 compared to the first quarter of 1997. The Company has no long term debt, and therefore, no interest expense. Interest income increased to $.1 million, due to higher levels of invested funds. Net income and earnings per share for the first quarter of 1998 were $3.2 million or $.22 per diluted share versus $1.5 million or $.11 per diluted share for the first quarter of 1997. Average diluted shares for the respective periods were 14,742,485 and 13,913,594. - 5 - 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 first quarter of 1998 was $5.3 million compared to $2.7 million for the first quarter of 1997. The significant sources were net income of $3.2 million, $1.3 million of depreciation and amortization, $3.9 million increase in accounts payable and accrued expenses, and was offset by a $2.9 million increase in accounts receivable. The increase in accounts payable and accrued expenses was partly due to an increase of $2.7 million in income taxes payable which was partially liquidated in April 1998. The Company had no borrowings against its revolver credit facility at March 31, 1998, compared to $1.0 million at March 31, 1997. As of March 31, 1998, a total credit line of $18.3 million is available under the revolver. The Company's current ratio at the end of March 1998 stood at 2.4:1 as compared to 2.5:1 at December 31, 1997. Inflation has not, nor is it expected to have a material impact on the Company's financial results in 1998 and there have been no material commitments for capital expenditures. Year 2000 costs are not considered material. Dividends declared in January 1998 were declared 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. PART II ITEM 4 - Submission of Matters to a vote of Security Holders At a Special Meeting of Shareholders on February 24, 1998, the Shareholders approved a proposal to amend the Company's Certificate of Incorporation to increase the amount of authorized Common Stock, par value $.04 per share, from 20,000,000 shares to 80,000,000 shares. The number of votes cast FOR was 8,267,289, AGAINST was 4,375,998 and the number of ABSTENTIONS was 73,616. - 6 - 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: May 12, 1998 BY: /s/ James M. McNamee ---------------------------- James M. McNamee President and Chief Executive Officer BY: /s/ Fred Lash ---------------------------- 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 March 31, 1998 and the related consolidated statements of income and cash flows for the period ended March 31, 1998 and is qualified in its entirety by reference to such financial statements. 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 18,210,836 0 22,158,499 1,097,282 0 42,271,774 20,807,153 12,611,582 73,005,518 17,729,487 0 0 0 559,582 51,244,027 73,005,518 46,111,306 46,111,306 31,613,837 31,613,837 8,578,592 120,000 0 6,010,061 2,821,000 3,189,061 0 0 0 3,189,061 0.23 0.22
EX-27.1 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the consolidated balance sheet of Hooper Holmes, Inc. and subsidiaries as of March 31, 1997 and the related consolidated statements of income and cash flows for the period ended March 31, 1997 and is qualified in its entirety by reference to such financial statements. 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 2,415,696 0 20,810,805 838,400 0 27,495,785 19,343,963 10,320,091 61,774,056 17,085,349 1,000,000 0 0 273,120 39,223,166 61,774,056 40,713,867 40,713,867 29,647,270 29,647,270 8,103,029 120,000 83,121 2,956,043 1,432,000 1,524,043 0 0 0 1,524,043 0.11 0.11 Adjusted to reflect a two-for-one stock split effective August 22, 1997, and the adoption of Statement of Financial Accounting Standards No. 128, "Earnings per share", which became effective in 1997.
-----END PRIVACY-ENHANCED MESSAGE-----