-----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, WiZEUjThQi8Z1+UNcEFGwlwt/8yosRJjaZ9L4yZPvY+60j5StPEUwLZ68uKGE4mH ynwbcYdDekK4tSz5x3y15g== 0000950109-00-002140.txt : 20000515 0000950109-00-002140.hdr.sgml : 20000515 ACCESSION NUMBER: 0000950109-00-002140 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 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: 628245 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, 2000 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, 2000 - --------------------------------- -------------------------------- Common stock, $.04 par value 66,103,288 HOOPER HOLMES, INC. AND SUBSIDIARIES INDEX Page No. -------- PART I - Financial Information ITEM 1 - Financial Statements Consolidated Balance Sheets 1 as of March 31, 2000 and December 31, 1999 Consolidated Statements of Income 2 for the Three Months Ended March 31, 2000 and 1999 Consolidated Statements of Cash Flows 3 for the Three Months Ended March 31, 2000 and 1999 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
03/31/00 12/31/99 ------------ ------------ (unaudited) ASSETS Current Assets: Cash and cash equivalents $ 84,409,516 $ 41,363,019 Accounts receivable 39,185,880 36,836,412 Other current assets 5,585,234 5,233,884 ------------ ------------ Total current assets 129,180,631 83,433,315 Property, plant and equipment: Land and land improvements 618,972 618,972 Building 4,504,324 4,502,638 Furniture, fixtures and equipment 21,364,196 21,020,009 Leasehold improvements 328,983 324,328 ------------ ------------ Total property, plant and equipment 26,816,475 26,465,947 Less: Accumulated depreciation 16,682,616 16,075,132 ------------ ------------ Net property, plant and equipment 10,133,859 10,390,815 Goodwill, net 72,481,980 73,276,965 Intangible assets, net 15,684,597 16,523,290 Other assets 640,145 846,943 ------------ ------------ Total assets $228,121,212 $184,471,328 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long term debt $ 101,784 $ 142,953 Accounts payable 11,838,423 11,543,665 Accrued expenses: Insurance benefits 1,355,245 1,559,552 Salaries, wages and fees 414,526 3,209,031 Payroll and other taxes 492,325 357,029 Income taxes payable 4,587,425 5,033,946 Discontinued operations 289,011 293,736 Other 3,182,493 5,217,684 ------------ ------------ Total current liabilities 22,261,232 27,357,596 Long term debt, less current maturities 15,307,047 65,307,047 Deferred income taxes 1,753,648 1,911,027 Minority interest 204,302 203,962 Stockholders' equity: Common stock, par value $.04 per share; authorized 240,000,000 2,652,478 2,335,642 shares issued 66,311,952 in 2000, and 58,391,052 in 1999 Additional paid-in capital 127,482,843 36,357,092 Retained earnings 59,432,302 51,971,602 ------------ ------------ 189,567,623 90,664,336 Less: Treasury stock at cost, 208,664 shares in 2000 and 1999 972,640 972,640 ------------ ------------ Total stockholders' equity 188,594,983 89,691,696 ------------ ------------ Total liabilities and stockholders' equity $228,121,212 $184,471,328 ============ ============
See accompanying notes to unaudited consolidated financial statements. -1- Hooper Holmes, Inc. Consolidated Statements Of Income (unaudited)
Three months ended March 31, ---------------------------------- 2000 1999 ------------ ------------ Revenues $ 85,772,679 $ 52,939,420 Cost of operations 59,973,330 35,890,332 ------------ ------------ Gross profit 25,799,349 17,049,088 Selling, general and administrative expenses 11,627,736 8,570,415 ------------ ------------ Operating income 14,171,613 8,478,673 Other income (expense): Interest expense (919,726) (9,528) Interest income 642,583 205,477 Other Income, net (39,214) 3,186 ------------ ------------ (316,357) 199,135 ------------ ------------ Income before income taxes 13,855,256 8,677,808 Income taxes 5,958,000 3,927,000 ------------ ------------ Net income $ 7,897,256 $ 4,750,808 ============ ============ Earnings per share: Basic 0.13 0.08 Diluted $ 0.12 $ 0.08 ============ ============ Weighted average number of shares: (1) Basic 60,944,892 56,783,466 Diluted 64,953,758 60,569,312 ============ ============
(1) Adjusted to reflect a two for one stock split effective April 26, 2000. See accompanying notes to unaudited consolidated financial statements. -2- Hooper Holmes, Inc. Consolidated Statements of Cash Flows (unaudited)
Three months ended March 31, ---------------------------------- 2000 1999 ------------ ------------ Cash flows from operating activities: Net income $ 7,897,256 $ 4,750,808 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,251,561 1,074,967 Minority interest 0 (40,247) Deferred tax benefit (157,378) (168,629) Issuance of stock awards 153,750 64,050 Loss on sale of fixed assets 2,030 0 Change in assets and liabilities: Accounts receivable (2,349,468) (6,420,205) Other current assets (144,552) (275,114) Accounts payable and accrued expenses (1,823,857) 2,289,041 ------------ ------------ Net cash provided by operating activities 5,829,342 1,274,671 ------------ ------------ Cash flows from investing activities: Business acquisition, net of cash acquired 0 (177,792) Capital expenditures (362,957) (597,958) ------------ ------------ Net cash used in investing activities (362,957) (775,750) ------------ ------------ Cash flows from financing activities: Issuance of long term debt 0 100,000 Principal payments on long term debt (50,041,169) (100,000) Proceeds from offering of common stock, net 86,964,126 0 Proceeds related to the exercise of stock options 1,093,711 865,323 Dividends paid (436,556) (353,927) ------------ ------------ Net cash provided by financing activities 37,580,112 511,396 ------------ ------------ Net increase in cash and cash equivalents 43,046,497 1,010,317 Cash and cash equivalents at beginning of year 41,363,019 29,752,361 ------------ ------------ Cash and cash equivalents at end of period $ 84,409,516 $ 30,762,678 ============ ============
See accompanying notes to unaudited consolidated financial statements. -3- HOOPER HOLMES, INC. Notes to Unaudited Consolidated Financial Statements March 30, 2000 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, 2000 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" net income 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 (4,008,866 and 3,785,846 for March 31, 2000 and 1999, respectively) are shares assumed to be issued if outstanding stock options were exercised. All appropriate share and per share amounts have been restated for the April 26, 2000 two for one stock split. Note 3: Capital Stock On February 29, 2000 the Company successfully completed a 3,675,000 share offering of common stock, at an offering price of $ 25.125 per share and provided net proceeds of approximately $ 87 million to the Company. In conjunction with this offering, the Company repaid $50 million of the $65 million borrowed against the term loan used to finance the acquisition of PSA. The Company declared a two for one stock split effective April 26, 2000. The net tax benefit derived from the exercise of stock options was $3.2 million, for the three months ended March 30, 2000. Options exercised during the first quarter 2000 were 560,900 shares. -4- Item 2 HOOPER HOLMES, INC. Management's Discussion and Analysis of Financial Condition and Results of Operation Results of Operation - Three months ended March 31, 2000 compared to Three months ended March 31, 1999 Revenues for the first quarter 2000 increased 62% to $85.8 million from $52.9 million for the first quarter 1999. This growth resulted in a 58.0% increase in the number of paramedical examinations performed to 1,054,000 from 667,000, and is the result of the acquisition of Paramedical Services of America, Inc. (PSA) on November 1, 1999, a one time positive impact from revenue generated due to a life insurance regulatory phenomenon referred to a "Triple X," which appears to have caused a rush to buy certain policies before a rate increase or change in premium structure went into effect, an increase in services performed per examination, an increase in the number of Infolink reports to 110,000 from 82,000 and a modest price increase. The increase in Infolink reports resulted from management reemphasizing branch generation of Infolink reports The Company's cost of operations for the first quarter of 2000 totaled $60.0 million compared to $35.9 million for the first quarter of 1999. Cost of operations as a percentage of revenues, increased to 69.9% for the first quarter of 2000 from 67.8% for the first quarter of 1999. This percentage increase is primarily due to slightly higher direct costs associated with contractor affiliate revenue acquired as a result of the PSA acquisition. Selling, general and administrative expenses totaled $11.6 million for the first quarter of 2000 compared to $ 8.6 million for the first quarter of 1999, and as a percentage of revenue totaled 13.6% compared to 16.2%, respectively. This dollar increase is attributable to costs associated with the acquisition of PSA, largely, amortization of goodwill and intangibles, and additional corporate resources needed to handle the PSA acquisition. Accordingly, the Company's operating income improved to $14.2 million from $8.5 million and as a percentage of revenues, increased to 16.5% from 16.0% for the first quarter of 2000 compared to the first quarter of 1999. The effective tax rate was 43% and 45% for the quarters ended March 31, 2000 and 1999, respectively. The decrease is the result of increased profitability which lessened the impact of non-tax deductible goodwill amortization. Interest expense increased to $.9 million for the first quarter 2000, as a result of the borrowings against the Company's term loan, used to finance the acquisition of PSA. Interest income increased to $.6 million, due to higher levels of invested funds. Net income and earnings per share for the first quarter of 2000 were $7.9 million or $.12 per diluted share versus $4.8 million or $.08 per diluted share for the first quarter of 1999. Average diluted shares for the respective periods were 64,953,758 and 60,569,312. -5- Liquidity and Financial Resources The Company's primary sources of cash are internally generated funds and cash and cash equivalents, as well as the company's bank credit facility. On February 29, 2000 the Company successfully completed a 3,675,000 share offering of common stock, at an offering price of $ 25.125 per share and provided net proceeds of approximately $ 87 million to the Company. In conjunction with this offering, the Company repaid $50 million of the $65 million borrowed against the term loan used to finance the acquisition of PSA. Net cash provided by operating activities for the first quarter of 2000 was $5.8 million compared to $1.3 million for the first quarter of 1999. In the first quarter of 2000, the significant sources were net income of $7.9 million, $2.3 million of depreciation and amortization and was partially offset by a $2.3 million increase in accounts receivable, and a $1.8 million decrease in accounts payable and accrued expenses. Accounts Receivable increased $2.3 million during the first quarter 2000, compared to year end 1999, and is primarily due to revenue growth of $9.9 million during the first quarter 2000, compared to the fourth quarter 1999. Days Sales Outstanding (DSO) for the quarter ended March 31, 2000 was 41.3 days, compared to 43.7 days for the quarter ended December 31, 1999. As of March 31, 2000, the Company has outstanding borrowings against the term loan in the amount of $ 15 million, and has no borrowings against the $ 35 million revolving loan. The Company's current ratio at the end of March 2000 stood at 5.6:1 as compared to 3.0:1 at December 31, 1999. Inflation has not, nor is it expected to have a material impact on the Company's financial results in 2000 and there have been no material commitments for capital expenditures. Dividends declared in January 2000 were declared at $.0075 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 operations, will provide sufficient capital resources for the foreseeable future. Recently Issued Accounting Standards In June 1998, the Financial Accounting Standards Board issued statement of Financial Accounting Standards (SFAS) No. 133. Accounting for Derivative Instruments and Hedging Activities, which, as amended, becomes effective for our financial statements beginning January 1, 2001. SFAS No. 133 requires a company to recognize all derivative instruments as assets or liabilities in its balance sheet and measure them at fair value. The Company does not expect the adoption of this Statement to have a material impact on its consolidated financial statements. -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, 2000 BY: /s/ James M. McNamee ---------------------------------- James M. McNamee Chairman, President and Chief Executive Officer BY: /s/ Fred Lash ---------------------------------- Fred Lash Senior Vice President Chief Financial Officer & Treasurer -7- 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, 2000 AND THE RELATED CONSOLIDATED STATEMENTS OF INCOME AND CASH FLOWS FOR THE PERIOD ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-2000 JAN-31-2000 MAR-31-2000 84,409,516 0 40,195,875 1,009,995 0 129,180,631 26,816,475 16,682,616 228,121,212 22,261,232 0 2,652,478 0 0 185,942,505 228,121,212 85,772,679 85,772,679 59,973,330 59,973,330 11,627,736 0 919,727 13,855,256 5,958,000 7,897,256 0 0 0 7,897,256 .13 .12
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, 1999 AND THE RELATED CONSOLIDATED STATEMENTS OF INCOME AND CASH FLOWS FOR THE PERIOD ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1999 JAN-31-1999 MAR-31-1999 30,762,678 0 23,477,345 1,088,716 0 60,898,237 23,095,563 14,621,821 92,422,803 20,645,546 0 2,292,530 0 0 66,789,675 92,422,803 52,939,420 52,939,420 35,890,332 35,890,332 8,570,415 0 9,528 8,677,808 3,927,000 4,750,808 0 0 0 4,750,808 .08 .08 Adjusted to reflect a two for one stock split effective April 26, 2000.
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