Form 10-Q

-----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, QxcWK8eUQ4CCQsAqkxvZmqKyVAlg2O2qJKxX2RGuAD8IGZjeZxZ5dAWEJP2/NoNB KAB1TEDQrYNH49gOpiFbvA== 0001193125-03-036980.txt : 20030814 0001193125-03-036980.hdr.sgml : 20030814 20030814094343 ACCESSION NUMBER: 0001193125-03-036980 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOOPER HOLMES INC CENTRAL INDEX KEY: 0000741815 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISC HEALTH & ALLIED SERVICES, NEC [8090] 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: 03843660 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 d10q.htm FORM 10-Q 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, 2003

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 incorporation or organization)		(I.R.S. Employer 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 o

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Securities Exchange Act Rule 12b-2).

Yes x

No o

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, 2003

Common stock, $.04 par value		64,786,423

HOOPER HOLMES, INC. AND SUBSIDIARIES

INDEX

	Page No.

PART I – Financial Information (unaudited)

ITEM 1 – Financial Statements

Consolidated Balance Sheets as of June 30, 2003 and December 31, 2002	1

Consolidated Statements of Income for the Three and Six Months Ended June 30, 2003 and 2002	2

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2003 and 2002	3

Notes to Consolidated Financial Statements	4-12

ITEM 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	12-25

ITEM 3 – Quantitative and Qualitative Disclosures About Market Risk	25

ITEM 4 – Controls and Procedures	26

Part II – Other Information

ITEM 4 – Submission of matters to a vote of Security Holders	26

ITEM 5 – Other Information	27

ITEM 6 – Exhibits and Reports on Form 8-K	28

Signatures	29

Hooper Holmes, Inc.

Notes to Unaudited Consolidated Financial Statements

Hooper Holmes, Inc.
Consolidated Balance Sheets
(unaudited)

	06/30/2003		12/31/2002

ASSETS
Current Assets:
Cash and cash equivalents	$	16,599,187	$	23,298,151
Marketable securities		20,436,074		22,761,101
Accounts receivable, net		33,886,096		27,809,521
Other current assets		5,621,515		6,823,818

Total current assets		76,542,872		80,692,591
Property, plant and equipment:
Land and land improvements		627,672		627,672
Building		4,882,663		4,882,663
Furniture, fixtures and equipment		25,686,310		24,446,393
Leasehold improvements		671,477		663,419

Total property, plant and equipment		31,868,122		30,620,147
Less: Accumulated depreciation and amortization		22,993,284		21,924,363

Property, plant and equipment, net		8,874,838		8,695,784
Goodwill		129,754,897		117,075,544
Intangible assets, net		30,510,296		28,474,439
Other assets		984,270		1,291,172

Total assets	$	246,667,173	$	236,229,530

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt	$	1,000,000	$	172,776
Accounts payable		10,146,313		10,436,388
Accrued expenses:
Insurance benefits		29,613		484,748
Salaries, wages and fees		1,523,109		1,816,791
Payroll and other taxes		542,800		449,093
Income taxes payable		1,652,189		2,703,713
Other		7,481,531		5,853,132

Total current liabilities		22,375,555		21,916,641
Long term debt, less current maturities		2,051,343		3,313,983
Other long term liabilities		4,567,638		806,195
Deferred income taxes		3,339,344		3,483,114
Minority interest		226,556		902,650
Commitments and contingencies
Stockholders’ equity:
Common stock, par value $.04 per share; authorized 240,000,000 shares, issued 67,499,074 in 2003 and 2002.		2,699,963		2,699,963
Additional paid-in capital		127,677,528		128,079,363
Accumulated other comprehensive income		148,732		160,873
Retained earnings		104,142,365		96,009,551

		234,668,588		226,949,750
Less: Treasury stock at cost (2,712,651 and 2,754,151 shares)		20,561,851		21,142,803

Total stockholders’ equity		214,106,737		205,806,947

Total liabilities and stockholders’ equity	$	246,667,173	$	236,229,530

See accompanying notes to unaudited consolidated financial statements.

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Hooper Holmes, Inc.
Consolidated Statements Of Income
(unaudited)

	Three months ended June 30,						Six months ended June 30,

	2003			2002			2003			2002

Revenues	$	76,170,351		$	66,015,123		$	151,020,284		$	132,504,956
Cost of operations		53,839,079			47,034,682			105,938,179			92,935,271

Gross profit		22,331,272			18,980,441			45,082,105			39,569,685
Selling, general and administrative expenses		13,976,194			11,288,646			28,925,576			22,525,049
Loss on investment		0			1,630,000			0			1,630,000

Operating income		8,355,078			6,061,795			16,156,529			15,414,636
Other income (expense):
Interest expense		(115,358	)		(28,675	)		(175,517	)		(57,514	)
Interest income		257,408			717,296			471,959			1,272,892
Other Income (expense), net		(188,662	)		(238,073	)		(513,803	)		(428,328	)

		(46,612	)		450,548			(217,361	)		787,050

Income before income taxes		8,308,466			6,512,343			15,939,168			16,201,686

Income taxes		3,213,246			2,592,000			6,186,246			6,468,000

Net income	$	5,095,220		$	3,920,343		$	9,752,922		$	9,733,686

Earnings per share:
Basic	$	0.08		$	0.06		$	0.15		$	0.15
Diluted	$	0.08		$	0.06		$	0.15		$	0.14

Weighted average number of shares:
Basic		64,756,409			65,265,493			64,750,322			65,069,706
Diluted		66,694,179			68,087,145			66,458,515			67,905,998

See accompanying notes to unaudited consolidated financial statements.

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Hooper Holmes, Inc.
Consolidated Statements of Cash Flows
(unaudited)

	Six months ended June 30,

	2003			2002

Cash flows from operating activities:
Net income	$	9,752,922		$	9,733,686
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3,248,449			2,504,498
Loss on investment		0			1,630,000
Provision for bad debt expense		90,000			150,000
Deferred tax benefit		(144,537	)		(180,836	)
Net realized gain on marketable securities available for sale		(134,646	)		22,007
Issuance of stock awards		164,100			0
Loss on sale of fixed assets		(20,499	)		14,140
Change in assets and liabilities:
Accounts receivable		(4,320,394	)		(4,335,495	)
Other current assets		1,550,134			(764,858	)
Accounts payable and accrued expenses		1,999,692			(751,807	)

Net cash provided by operating activities		12,185,221			8,021,335

Cash flows from investing activities:
Purchases of marketable securities		(18,303,230	)		(16,196,668	)
Redemptions of marketable securities		20,690,095			11,618,587
Business acquisition, net of cash acquired		(17,811,428	)		(3,651,770	)
Investment in e-nable.com		0			(1,093,750	)
Capital expenditures		(1,316,753	)		(838,480	)

Net cash used in investing activities		(16,741,316	)		(10,162,081	)

Cash flows from financing activities:
Principal payments on long term debt		(435,416	)		(48,615	)
Proceeds from employee stock purchase plan		0			551,821
Proceeds related to the exercise of stock options		329,264			1,431,192
Treasury stock acquired		(418,248	)		(1,238,489	)
Dividends paid		(1,620,107	)		(1,299,821	)

Net cash used in financing activities		(2,144,507	)		(603,912	)

Effect of exchange rate changes on cash		1,638			0

Net decrease in cash and cash equivalents		(6,698,964	)		(2,744,658	)
Cash and cash equivalents at beginning of year		23,298,151			52,571,616

Cash and cash equivalents at end of period	$	16,599,187		$	49,826,958

Supplemental disclosure of non-cash investing activity
Change in net unrealized gain on marketable secutiries available for sale	$	(119,358	)	$	(58,673	)
Supplemental disclosure of cash flow information
Cash paid during the quarter for:
Interest	$	106,245		$	61,030
Income taxes	$	7,193,252		$	4,451,210

See accompanying notes to unaudited consolidated financial statements.

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June 30, 2003

Note 1: Basis of Presentation

The financial information included herein is unaudited 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 consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K.

The results of operations for the three and six month periods ended June 30, 2003 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

“Basic” earnings per share equals net income divided by weighted average common shares outstanding during the period. “Diluted” earnings per share equals net income divided by the sum of weighted average common shares outstanding during the period plus dilutive common stock equivalents. Common stock equivalents (1,937,770 and 2,821,652 for the three months ended and 1,708,193 and 2,836,292 for the six months ended June 30, 2003 and 2002, respectively) are shares assumed to be issued if outstanding stock options were exercised.

Options to purchase 3,935,925 and 1,499,500 shares of common stock were excluded from the calculation of diluted earnings per share for the three months ended June 30, 2003 and 2002, respectively, and 4,623,388 and 1,500,625 shares for the six months ended June 30, 2003 and 2002, respectively, because their exercise prices exceeded the average market price of outstanding common shares for the period and were therefore antidilutive.

Note 3: Stock-Based Compensation

At June 30, 2003, the Company had stock-based employee compensation plans. The Company accounts for those plans using the intrinsic value-based method of accounting under the recognition and measurement principles of Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations. No stock-based compensation cost is reflected in net income for stock options, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of the grant. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”) to stock-based employee compensation:

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	Three Months Ended June 30				Six Months Ended June 30

(thousands of dollars, except per share data)	2003		2002		2003		2002

Net earnings, as reported	$	5,095	$	3,920	$	9,753	$	9,734
Add: Stock based employee compensation expense included in reported net income, net of related tax effect		0		0		100		0
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		732		763		1,575		1,514

Pro forma net earnings	$	4,363	$	3,157	$	8,278	$	8,220

Net earnings per share:
Basic, as reported	$	.08	$	.06	$	.15	$	.15
Basic, pro forma	$	.07	$	.05	$	.13	$	.13
Diluted, as reported	$	.08	$	.06	$	.15	$	.14
Diluted, pro forma	$	.07	$	.05	$	.13	$	.12

The fair value of each stock option granted during the quarter ended March 31, 2003 is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions. There were no grants during the second quarter of 2003 and during the six month period end June 30, 2002.

Expected life (years)		9.8
Expected volatility		51.02	%
Expected dividend yield		.71	%
Risk-free interest rate		1.75	%
Weighted average fair value of
Options granted during the year	$	3.05

On January 28, 2003, a Board resolution was passed to award non-employee directors of the Company up to a maximum of 15,000 shares of the Company’s common stock as compensation for future services. Each director was awarded 5,000 shares on January 31, 2003, and will be awarded 5,000 shares on January 31, 2004, and 5,000 shares on January 31, 2005, subject to certain conditions. All shares awarded will be restricted under SEC Rule 144, and may not be sold or transferred by the outside director until four years from the date of issue. During the first quarter of 2003, the Company expensed the fair value of the 30,000 shares awarded on January 31, 2003 and such amount is included in SG&A expenses in the consolidated Statement of Income. The total charge was $164,000.

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Note 4: Comprehensive Income

Comprehensive income includes net income and other comprehensive income (loss) which refers to those revenues, expenses, gains and losses which are excluded from net income. Other comprehensive income includes unrealized gains and losses on marketable securities classified as available-for-sale and foreign currency translation adjustments.

	Three Month Period Ended						Six Month Period Ended

	June 30, 2003			June 30, 2002			June 30, 2003			June 30, 2002

Net Income	$	5,095,220		$	3,920,343		$	9,752,922		$	9,733,686
Other comprehensive income:
Unrealized holding gains (losses) arising during period		54,058			79,293			61,838			(80,681	)
Less: reclassification adjustment for (gains) losses included in net income		(110,350	)		(4,697	)		(134,646	)		22,007

Net unrealized gain (loss) on securities		(56,292	)		74,596			(72,808	)		(58,674	)

Foreign currency translation		92,211			0			60,667			0

Total comprehensive income	$	5,131,139		$	3,994,939		$	9,740,781		$	9,675,012

Note 5: Marketable Securities

The amortized cost, gross unrealized holding gains, gross unrealized holding losses and fair value of available-for sale securities by major security type and class of security at June 30, 2003 and December 31, 2002, were as follows:

	Amortized Cost		Gross Unrealized Holding Gain		Gross Unrealized Holding Loss			Estimated Fair Value

At June 30, 2003
Bank certificates of deposit	$	196,000	$	18	$	0		$	196,018
Government agencies		2,668,339		4,123		(1,964	)		2,670,498
Government bonds & notes		4,844,271		20,579		(31	)		4,864,819
Corporate debt securities		12,627,433		97,186		(19,880	)		12,704,739

Total	$	20,336,043	$	121,906	$	(21,875)		$	20,436,074

At December 31, 2002
Bank certificates of deposit	$	590,000	$	0	$	0		$	590,000
Government agencies		3,295,847		12,082		0			3,307,929
Government bonds & notes		5,080,240		35,244		0			5,115,484
Corporate debt securities		13,575,625		173,021		(958	)		13,747,688

Total	$	22,541,712	$	220,347	$	(958	)	$	22,761,101

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Maturities of debt securities classified as available-for-sale were as follows at June 30, 2003 (maturities of mortgage-backed securities and collateralized mortgage obligations have been presented based upon estimated cash flows, assuming no change in the current interest rate environment):

	Amortized Cost		Fair Value

Due within one year	$	9,206,199	$	9,259,937
Due after one year through five years		9,100,333		9,149,506
Due after five years through ten		2,029,511		2,026,631

	$	20,336,043	$	20,436,074

Proceeds from the sale of investment securities available for sale were $20,690,095 and $11,618,587 in the six months ended June 30, 2003 and 2002, respectively. Gross realized gains included in income in the six months ended June 30, 2003 and 2002 were $135,320 and $15,862 respectively, and gross realized losses included in income in the six months ended June 30, 2003 and 2002 were $674 and $37,869, respectively.

Note 6: Capital Stock

The net tax benefit derived from the exercise of stock options was $ 0.1 million and $1.9 million for the six months ended June 30, 2003 and 2002, respectively. Options exercised for the six months ended June 30, 2003 and June 30, 2002, totaled 101,300 shares and 733,700 shares, respectively, all of which were issued from Treasury Stock.

On May 30, 2000, the Board of Directors authorized the repurchase in any calendar year of up to 2.5 million shares of the Company’s common stock for an aggregate purchase price not to exceed $ 25 million. For the six months ended June 30, 2003 and June 30, 2002, the Company purchased 89,800 and 149,300 shares at a total cost of approximately $0.4 and $ 1.2 million, respectively.

Note 7: Goodwill and Intangible Assets

In July 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 142, “Goodwill and Other Intangible Assets.” Under the new rules, the Company was required to evaluate its existing intangible assets and goodwill that were acquired in purchase business combinations, and to make any necessary reclassifications in order to conform with the new classification criteria in SFAS No. 141 “Business Combinations,” for recognition separate from goodwill. Effective January 1, 2002, the Company adopted SFAS 142. The Company completed its annual impairment test as of December 31, 2002 and did not have any impairment loss.

The Company has two reportable operating segments: the Health Information Business Unit (HIBU) and the Diversified Business Unit (DBU).

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HIBU includes our core health information operations: Portamedic, Infolink, Heritage Labs and Medicals Direct. It provides a full range of paramedical services to the life insurance industry in the U.S. and the United Kingdom. The DBU operating segment provides Independent Medical Examinations (IME) case-management services primarily for property and casualty insurers and claims reviewers.

The changes in the carrying amount of goodwill for the six months ended June 30, 2003, are as follows:

	HIBU			DBU		Total

Balance as of December 31, 2002	$	98,449,094		$	18,626,450	$	117,075,544

Acquisition goodwill	$	12,681,037			—		12,681,037
Foreign currency translation adjustment		(1,684	)		—		(1,684	)

Balance as of June 30, 2003	$	111,128,447		$	18,626,450	$	129,754,897

The aggregate amortization expense for intangible assets for the six months ended June 30, 2003, and 2002, was approximately $2,009,000 and $1,362,000, respectively. The estimated intangible amortization expense for the fiscal years ending December 31, 2003 to December 31, 2007 is $4,278,000, $4,363,000, $3,732,000, $3,279,000 and $2,010,000, respectively.

All intangible assets are being amortized over their estimated useful lives, as indicated below. Intangible assets consist of:

(in thousands)	Weighted Average Useful Life (Years)		Gross Carrying Amount		Accumulated Amortization			Net Balance

At June 30, 2003
Non-Competition agreements		4.7	$	9,488	$	(5,970	)	$	3,518
Referral base		12.4		28,555		(5,828	)		22,727
Contractor network		7.2		6,120		(4,204	)		1,916
Trademarks and tradenames		18.6		2,559		(210	)		2,349

			$	46,722	$	(16,212	)	$	30,510

At December 31, 2002
Non-Competition agreements		4.9	$	8,405	$	(5,327	)	$	3,078
Referral base		13.4		25,594		(4,784	)		20,810
Contractor network		7.3		6,120		(3,955	)		2,165
Trademarks and tradenames		19.0		2,559		(138	)		2,421

			$	42,678	$	(14,204	)	$	28,474

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Note 8: Investment

On January 31, 2001, the Company entered into a marketing and equity investment agreement with e-Nable Corporation (enable), at a total initial cost of $ 5.0 million. Enable provides Internet-based business processing solutions that allow integration of data sources, underwriting intelligence, distribution channels and insurance products. In August 2001, the Company executed a convertible promissory note agreement with enable, to provide additional financing for up to $1.75 million, all of which had been funded by August 2002. The Company has no commitment to provide additional funds to enable Under the cost method of accounting, investments are carried at cost and are adjusted only for other-than-temporary declines in fair value, distributions of earnings and additional investments.

During the second quarter of 2002, the Company recorded a 25% write down of the carrying value of its investment in and advances to enable Corporation, which resulted in a pre-tax charge of $ 1.6 million, or $1.0 million after tax. The adjustment was estimated based on an assessment of the fair value of the investment and was mainly the result of the difficulty enable has had in securing additional capital in the capital markets. During the third quarter of 2002, the company wrote off the remaining carrying value of its investment in, and advances to, enable Corporation, which resulted in a pretax charge of $5.1 million, or $3.1 million after tax. The adjustment was based on the continuing assessment of the carrying value of the investment, given that enable has been unsuccessful in its attempt to secure additional capital.

Note 9: Commitments and Contingencies

On June 20, 2002, the Company, (and subsequently its three principal competitors), was notified by the California Department of Health Services (DHS) that it was in violation of the California Business and Professions Code with respect to the drawing of blood by phlebotomists on a mobile basis. The Company disagreed with the DHS’s interpretation of the law, retained legal counsel, and began working with its three competitors to develop a reasonable interpretation of the law and a plan that will allow the industry to continue using phlebotomists to draw blood. The paramedical companies retained a lobbyist and legislation was introduced, which if enacted into law, would exempt the Company and its competitors from being licensed by the DHS as a clinical laboratory. The legislation has passed the California Assembly and is now before the Senate. The Company continues to service it customers in the State of California without interruption.

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entitled to relief under applicable tax laws (Section 530 of the Revenue Act of 1978). The Company and its advisors are continuing to review this determination. Management believes that the Company qualifies for relief under Section 530 and, therefore, that the ultimate outcome of this matter will not have a material effect on the Company’s consolidated financial position, results of operations and liquidity.

The Company is a party to a number of legal actions arising in the ordinary course of its business. In the opinion of management, the Company, has substantial legal defenses and/or insurance coverage with respect to all of its pending legal actions. Accordingly, none of these actions is expected to have a material adverse effect on the Company’s liquidity, its consolidated results of operations or its consolidated financial position.

In connection with an acquisition during the second quarter of 2003, the Company deferred the payment of a portion of the purchase price and is required to make these payments of $1.7 million in April 2005, and $2.8 million in July 2006. These amounts are included within Other long-term liabilities on the consolidated balance sheet and are accruing interest at a weighted average rate of 5%.

Effective May 23, 2003, the Company entered into an employment agreement with James M. McNamee, the Company’s President and Chief Executive Officer. The employment agreement is filed as exhibit 10.1 to this filing.

Note 10: Acquisitions and Dispositions

For the six months ended June 30, 2003, the Company acquired specific assets and liabilities of eight health information services companies, and purchased the 45% minority interest in Heritage Labs, that it did not previously own, to bring its ownership interest to 100%. The aggregate purchase price of these acquisitions, including acquisition costs, was approximately $17.8 million. These acquisitions resulted in total costs in excess of net assets acquired of $12.7 million, identifiable tangible assets of $2.0 million, identifiable intangible assets of $2.9 million, non-competition agreements of approximately $1.1 million and liabilities of $0.9 million. Identifiable intangible assets are being amortized on a straight line basis over a period of 9 years and non-competition agreements are being amortized on a straight line basis over a weighted average useful life of 4.0 years. In accordance with SFAS No. 142, which the Company adopted on January 1, 2002, goodwill is no longer amortized. The 2003 acquisitions are not material to the consolidated financial statements and therefore individually or in the aggregate do not require pro forma information.

Note 11: Operating Segments

Effective January 1, 2003, the Company has two reportable operating segments: the Health Information Business Unit (HIBU) and the Diversified Business Unit (DBU).

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The segments’ accounting policies are the same as those described in the summary of significant accounting policies except that interest expense and non-operating income and expenses are not allocated to the individual operating segment when determining segment profit or loss.

A summary of segment information as of and for the three and six month periods ended June 30, 2003 is presented below (in thousands).

	As of and for the Three Months Ended June 30, 2003						As of and for the Six Months Ended June 30, 2003

	HIBU		DBU		Total		HIBU		DBU		Total

Revenue	$	67,564	$	8,606	$	76,170	$	133,661	$	17,359	$	151,020
Operating Income	$	6,708	$	1,647	$	8,355	$	12,686	$	3,471	$	16,156
Total Assets	$	232,195	$	14,472	$	246,667	$	232,195	$	14,472	$	246,667

Note 12: Recently Issued Accounting Standards

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations (“SFAS No. 143”). SFAS No. 143 requires companies to record the fair value of an asset retirement obligation as a liability in the period in which they incur a legal obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development and/or normal use of the assets. Companies also record a corresponding asset which is depreciated over the life of the asset. Subsequent to the initial measurement of the asset retirement obligation, the obligation will be adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation. The Company adopted SFAS No. 143 on January 1, 2003. This statement did not have a material impact on the Company’s consolidated financial statements.

In June 2002, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 146 (SFAS 146”), Accounting for Costs associated with Exit or Disposal Activities.” The standard requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. The Company adopted SFAS 146 effective January 1, 2003, and the adoption had no effect on the Company’s consolidated financial statements.

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In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others, an interpretation of FASB Statements No. 5, 57 and 107 and a rescission of FASB Interpretation No. 34.” This Interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees issued. The Interpretation also clarifies that a guarantor is required to recognize, at inception of a guarantee, a liability for the fair value of the obligation undertaken. The initial recognition and measurement provisions of the Interpretation are applicable to guarantees issued or modified after December 31, 2002. Adoption did not have a material effect on the Company’s consolidated financial statements.

In April 2003, the Financial Accounting Standards Board (FASB) released Statement of Financial Accounting Standards (SFAS) No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS No. 149 clarifies under what circumstances a contract with an initial net investment meets the characteristics of a derivative, amends the definition of an underlying contract, and clarifies when a derivative contains a financing component in order to increase the comparability of accounting practices under SFAS No. 133. The statement is effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003. The adoption of SFAS No. 149 is not expected to have a material impact on the Company’s consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. This statement requires that an issuer classify a financial instrument that is within its scope as a liability. The provisions of this statement are effective for financial instruments entered into or modified after May 31, 2003. As of June 30, 2003, management believes that SFAS No. 150 will have no significant effect on the Company’s consolidated financial statements.

In May 2003, the Emerging Issues Task Force (EITF) issued EITF Issue No. 00-21, Revenue Arrangements with Multiple Deliverables. Issue No. 00-21 addresses certain aspects of the accounting by a vendor for arrangements under which it will perform multiple revenue-generating activities. The provisions are effective for revenue arrangements entered into in reporting periods beginning after June 15, 2003. As of June 30, 2003, management believes that Issue No. 00-21 will have no significant effect on the Company’s consolidated financial statements.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

Results of Operation -

Three months ended June 30, 2003 compared to three months ended June 30, 2002

Overview:

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Hooper Holmes is one of the nation’s leading providers of outsourced risk assessment services to the life and health insurance industry and medical evaluation and claims management services to the automobile insurance industry and the workers’ compensation industry. We provide paramedical and medical examinations, independent medical examinations, personal health interviews and record collection, and laboratory testing, which help life insurance companies evaluate the risks associated with underwriting policies and evaluate physical injuries for property and casualty insurers. Our business is composed of two segments: the Health Information Business Unit (HIBU) and the Diversified Business Unit (DBU).

HIBU consists of the Company’s Portamedic, Infolink and Heritage Labs divisions and the August 2002 acquisition of the Medicals Direct Group. It provides paramedical, laboratory, Attending Physician Statement, inspection report and underwriting services used to underwrite life, health and disability insurance. DBU consists of D&D Associates, which provides outsourced claims management services to automobile and workers’ compensation insurance carriers.

Revenues:

Comparative Revenues are set forth below:

	QUARTER ENDED JUNE 30

(in millions)		2003		2002

Portamedic	$	53.2	$	58.1
Infolink		5.5		5.1
Heritage Labs		3.8		2.8
Medicals Direct		5.1		—

Total HIBU segment		67.6		66.0
DBU segment		8.6		—

Total Revenues	$	76.2	$	66.0

Total consolidated revenues for 2003 increased 15% to $76.2 million for the second quarter of 2003, compared to $66.0 million for second quarter of 2002.

- 13 -

Revenues for the HIBU segment increased $1.6 million to $67.6 million for the second quarter 2003, compared to $66.0 million for the second quarter 2002. Within this segment, revenue for the Portamedic business decreased $4.9 million to $53.2 million for the second quarter of 2003, compared to $58.1 million for the second quarter of 2002, and revenue for the Infolink business increased 7% to $5.5 million for the second quarter of 2003, compared to $5.1 million for the second quarter of 2002. The number of paramedical examinations performed decreased 10% from 772,000 to 697,000. The decrease in the number of paramedical examinations performed is the result of reduced life insurance application activity in the second quarter of 2003, compared to the second quarter of 2002. The MIB Group, Inc., a provider of information and database management services, reported that life insurance applications were down 6.7% in the second quarter of 2003 compared to the second quarter of 2002. The decrease in the number of examinations was partially offset by an increase in the average revenue per examination of approximately 3%. Management believes the percentage increase in the average revenue per examination is due to higher prices per examination based on selling value added services such as Portamedic Select and Portamedic F.A.S.T. The number of Infolink reports increased to 121,000 for the second quarter of 2003, from 113,000 for the second quarter 2002. Management believes that the increase in the number of Infolink reports is due to increased volume from existing clients brought on by the Company’s Portamedic F.A.S.T. technology, which provides clients with a quicker turnaround for Attending Physician Statements (APS’s), and the Company’s acquisition in May 2003 of a high volume APS producer.

Also, within this segment, Heritage Labs revenue grew 35% for the second quarter 2003 to $3.8 million, from $2.8 million for the second quarter 2002. The number of samples tested increased 45% to 179,000 samples for the second quarter 2003, from 123,000 samples for the second quarter 2002. The Company believes that Heritage Labs’ growth is the result of aggressive competitive pricing, coupled with offering insurance companies the convenience of a one-stop shop for their health information needs. Offering combined laboratory and paramedical pricing and services is increasingly more common in this competitive landscape.

Additionally, the second quarter of 2003, includes $5.1 million of revenue from the August 2002 acquisition of Medicals Direct Group. There was no Medicals Direct revenue in the second quarter 2002.

Our future revenue stream is dependent upon the life insurance industry and the number of new policies being written which require medical underwriting information. Management expects insurance application activity to resume more traditional levels throughout the remainder of 2003. The MIB Group Inc. has reported that life insurance applications in June 2003 increased 2.8% over June 2002. While this one month increase is positive, it may not be indicative of a trend. We are confident we will hold our market share. Pricing of our services has become a significant factor in our competitive environment but we are confident that our field owned branch structure, and branch and automation efficiencies will allow us to continue reporting improved results for the remainder of 2003.

Revenues for the Diversified Business Unit (DBU) segment, totaled $8.6 million for the second quarter 2003. The DBU consists of D&D Associates, which was acquired by the Company in the fourth quarter of 2002. Consequently, there was no DBU revenue in the second quarter of 2002.

Cost of Operations:

The Company’s consolidated cost of operations for the second quarter of 2003 totaled $53.8 million compared to $47.0 million for the second quarter of 2002. As a percentage of revenues, cost of operations decreased to 70.7% for the second quarter of 2003 compared to 71.3% for the second quarter of 2002.

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Cost of operations for the HIBU segment totaled $48.3 million for the second quarter of 2003, compared to $47.0 for the second quarter of 2002, an increase of $1.3 million, and as percentage of revenues, totaled 71.5% for the second quarter of 2003, compared to 71.3% for the second quarter of 2002.

Within the HIBU segment, cost of operations for the Portamedic and Infolink businesses totaled $42.2 million for the second quarter of 2003, compared to $45.2 million for the second quarter of 2002. This dollar decrease is due to lower revenue levels in the second quarter 2003. As a percentage of paramedical and Infolink revenue, cost of operations remained relatively flat totaling 71.8% and 71.6% for the second quarter of 2003, and 2002, respectively.

Cost of operations for Heritage Labs increased to $2.5 million for the second quarter of 2003, compared to $1.8 million for the second quarter of 2002. The dollar increase is due to higher revenue levels in the second quarter of 2003.

Cost of operations for Medicals Direct, totaled $3.6 million for the second quarter of 2003, and as a percentage of Medicals Direct revenues totaled 71.6%. There was no Medicals Direct cost of sales in the second quarter of 2002.

Cost of operations for the DBU segment, comprised of D&D Associates, totaled $5.5 million for the second quarter of 2003, and as a percentage of D&D revenues totaled 64.4%.

Selling, General and Administrative Expenses:

Consolidated selling, general and administrative (SG&A) expenses totaled $14.0 million for the second quarter of 2003, compared to $11.3 million for the second quarter of 2002, and as a percentage of revenues totaled 18.4% compared to 17.1%, respectively. SG&A for the HIBU segment, increased $1.3 million to $12.6 million for the second quarter of 2003, compared to $11.3 million for the second quarter 2002. As a percentage of revenues, SG&A totaled 18.6% compared to 17.1 % for the second quarter 2003, and second quarter 2002, respectively. The increase is due to additional SG&A costs associated with Medicals Direct of approximately $0.8 million and additional costs of $0.5 million from the paramedical, Infolink and Heritage Labs businesses. The areas of increased costs are employee benefits, insurance, and intangible asset amortization expense; these were partially offset by reduced incentive expense due to our shortfall in field objectives.

SG&A for the DBU totaled $1.4 million for the second quarter of 2003, and as a percentage of revenues, was 16.4%. There were no DBU SG&A costs in the second quarter of 2002.

Operating income:

Accordingly, the Company’s consolidated operating income increased 37.8% to $8.4 million for the second quarter of 2003 from $6.1 million for the second quarter of 2002, and as a percentage of revenues, increased to 11.0% compared to 9.2%, respectively.

Operating income for the HIBU segment increased 10.7% to $6.7 million for the second quarter of 2003 from $6.1 million for the second quarter of 2002, and as a percentage of revenues, increased to 9.9% compared to 9.2%, respectively.

Operating income for the DBU segment was $1.6 million and as a percentage of revenues, was 19.1%.

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Operating income was impacted in the second quarter 2002 by a pre-tax charge of $1.6 million ($1.0 million net of taxes) related to the Company’s write down of the carrying value of its investment in e-nable corporation.

Other:

Interest expense increased to $0.1 million for the second quarter of 2003, compared to $0.03 million for the second quarter of 2002. This increase is due to interest accruing on the deferred purchase price for the Heritage Labs acquisition in the second quarter of 2003, and interest on the financing of Medicals Direct accounts receivable. Interest income for the second quarter of 2003 decreased to $.3 million from $.7 million for the second quarter of 2002 due to lower interest rates and lower levels of invested funds. Other expense for the second quarter of 2003 and 2002 was $0.2 million.

The effective tax rate was 38% and 39% for the second quarter of 2003 and 2002, respectively. The rate is lower in 2003 due to the increased profitability of Heritage Labs, and the lower tax rate applied to the profits of Medicals Direct Group, which operates in the United Kingdom.

Net income for the second quarter of 2003 was $5.1 million or $.08 per diluted share versus $3.9 million or $.06 per diluted share for the second quarter of 2002.
Inflation did not have a significant effect on the Company’s operations in the second quarter of 2003.

Results of Operation –

Six months ended June 30, 2003 compared to six months ended June 30, 2002

Revenues:

Comparative Revenues are set forth below:

	SIX MONTHS ENDED JUNE 30

(in millions)	2003		2002

Portamedic	$	107.6	$	117.4
Infolink		10.4		9.7
Heritage Labs		7.3		5.4
Medicals Direct		8.3		—

Total HIBU segment		133.6		132.5
DBU segment		17.4		—

Total Revenues	$	151.0	$	132.5

- 16 -

Total consolidated revenues for 2003 increased 14% to $151.0 million for the six months ended June 30, 2003, compared to $132.5 million for the six months ended June 30, 2002.Revenues for the HIBU segment increased $1.2 million to $133.6 million for the six months ended June 30, 2003, compared to $132.5 million for the six months ended June 30, 2002. Within this segment, revenue for the Portamedic business decreased $9.8 million to $107.6 million for the six months ended June 30, 2003, compared to $117.4 million for the six months ended June 30, 2002, and revenue for the Infolink business increased 7% to $10.4 million for the six months ended June 30, 2003, compared to $9.7 million for the six months ended June 30, 2002. The number of paramedical examinations performed decreased 10% from 1,559,000 for the six months ended June 30, 2002 to 1,400,000 for the six months ended June 30, 2003. The decrease in the number of paramedical examinations performed is the result of reduced life insurance application activity in the six months ended June 30, 2003, compared to the six months ended June 30, 2002. The MIB Group, Inc., a provider of information and database management services, reported that life insurance applications were down 6.5% in the six months ended June 30, 2003 compared to the six months ended June 30, 2002. The decrease in the number of examinations was partially offset by an increase in the average revenue perexamination of approximately 3%. Management believes the percentage increase in the average revenue per examination is due to higher prices per examination based on selling value added services such as Portamedic Select and Portamedic F.A.S.T. The number of Infolink reports increased to 229,000 for the six months ended June 30, 2003, from 219,000 for the six months ended June 30, 2002. Management believes that the increase

- 17 -

in the number of Infolink reports is due to increased volume from existing clients brought on by the Company’s Portamedic F.A.S.T. technology, which provides clients with a quicker turnaround for Attending Physician Statements (APS’s), and the Company’s acquisition in May 2003 of a high volume APS producer.

Also, within this segment, Heritage Labs revenue grew 35% for the six months ended June 30, 2003 to $7.3 million, from $5.4 million for the six months ended June 30, 2002. The number of samples tested increased 44% to 336,000 samples for the six months ended June 30, 2003, from 234,000 samples for the six months ended June 30, 2002. The Company believes that Heritage Labs’ growth is the result of aggressive competitive pricing, coupled with offering insurance companies the convenience of a one-stop shop for their health information needs. Offering combined laboratory and paramedical pricing and services is increasingly more common in this competitive landscape. For the six months ended June 30, 2003, the average price per sample tested decreased to $13.25 compared to $14.33 for the six months ended June 30, 2002.

Additionally, the six months ended June 30, 2003, includes $8.3 million of revenue from the August 2002 acquisition of Medicals Direct Group. There was no Medicals Direct revenue in the six months ended June 30, 2002.

Our future revenue stream is dependent upon the life insurance industry and the number of new policies being written which require medical underwriting information. Management expects insurance application activity to resume to more traditional levels throughout the remainder of 2003. The MIB Group Inc. has reported that life insurance applications in June 2003 increased 2.8% over June 2002. While this one month increase is positive, it may not be indicative of a continuing trend. We are confident we will hold our market share. Pricing of our services has become a significant factor in our competitive environment but we are confident that our field owned branch structure, and branch and automation efficiencies will allow us to continue reporting improved results.

Revenues for the Diversified Business Unit (DBU) segment totaled $17.4 million for the second quarter 2003. The DBU consists of D&D Associates, which was acquired by the Company in the fourth quarter of 2002. Consequently, there was no DBU revenue in the second quarter of 2002.

Cost of Operations:

The Company’s consolidated cost of operations for the six months ended June 30, 2003 totaled $105.9 million compared to $92.9 million for the six months ended June 30, 2002. As a percentage of revenues, cost of operations remained relatively flat at 70.2% for the six months ended June 30, 2003 compared to 70.1% for the six months ended June 30, 2002.

- 18 -

Cost of operations for the HIBU segment totaled $94.8 million for the six months ended June 30, 2003, compared to $92.9 for the six months ended June 30, 2002, an increase of $1.9 million, and as percentage of revenues, totaled 70.9% for the six months ended June 30, 2003, compared to 70.1% for the six months ended June 30, 2002. Within the HIBU segment, cost of operations for the Portamedic and Infolink businesses totaled $84.1 million for the six months ended June 30, 2003, compared to $89.5 million for the six months ended June 30, 2002. This dollar decrease is due to lower revenue levels for the six months ended June 30, 2003. As a percentage of paramedical and Infolink revenue, cost of operations totaled 71.3% and 70.4% for the six months ended June 30, 2003, and 2002, respectively. As a percentage of revenues, the increase is due to lower revenue levels for the six months ended June 30, 2003, higher specimen collection kit prices, and an increase in specimen kit purchases during the first quarter of 2003.

Cost of operations for Heritage Labs increased to $4.8 million for the six months ended June 30, 2003, compared to $3.4 million for the six months ended June 30, 2002, and as a percentage of revenues totaled 65.5% for the six months ended June 30, 2003, compared to 63.1% for the six months ended June 30, 2002. The dollar increase is due to higher revenue levels for the six months ended June 30, 2003. As a percentage of revenue, the increase is due to aggressive pricing resulting from offering customers the convenience of a one-stop shop for their health information needs.

Cost of operations for Medicals Direct, totaled $5.9 million for the six months ended June 30, 2003, and as a percentage of Medicals Direct revenues totaled 70.0%. There was no Medicals Direct cost of sales in the six months ended June 30, 2002.

Cost of operations for the DBU segment, comprised of D&D Associates, totaled $11.1 million for the six months ended June 30, 2003, and as a percentage of D&D revenues totaled 64.3%.

Selling, General and Administrative Expenses:

Consolidated selling, general and administrative (SG&A) expenses totaled $28.9 million for the six months ended June 30, 2003, compared to $22.5 million for the six months ended June 30, 2002, and as a percentage of revenues totaled 19.2% compared to 17.0% respectively.

SG&A for the HIBU segment, increased $3.7 million to $26.2 million for the six months ended June 30, 2003, compared to $22.5 million for the six months ended June 30, 2002. As a percentage of revenues, SG&A totaled 19.6% compared to 17.0% for the six months ended June 30, 2003, and six months ended June 30, 2002, respectively. The increase is due to additional SG&A costs associated with Medicals Direct of approximately $1.5 million and additional costs of $2.2 million from the paramedical, Infolink and Heritage Labs businesses. The areas of increased costs are employee benefits, insurance, intangible asset amortization expense, national meeting costs, and Directors’ stock awards, and was offset by reduced incentive expense due to our shortfall in field objectives.

Operating income:

Accordingly, the Company’s consolidated operating income increased 4.8% to $16.2 million for the six months ended June 30, 2003 from $15.4 million for the six months ended June 30, 2002, and as a percentage of revenues, decreased to 10.7% compared to 11.6%, respectively.

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Operating income for the HIBU segment decreased 17.7% to $12.7 million for the six months ended June 30, 2003 from $15.4 million for the six months ended June 30, 2002, and as a percentage of revenues, decreased to 9.5% compared to 11.6%, respectively.

Operating income for the DBU segment was $3.5 million and as a percentage of revenues, was 20.0%.

Other:

Interest expense increased to $0.2 million for the six months ended June 30, 2003, compared to $0.06 million for the six months ended June 30, 2002. This increase is due to interest accruing on the deferred purchase price for the Heritage Labs acquisition in the second quarter of 2003, and interest on the financing of Medicals Direct accounts receivable. Interest income for the six months ended June 30, 2003 decreased to $0.5 million from $1.3 million for the six months ended June 30, 2002 due to lower interest rates and lower levels of invested funds. Other expense for the six months ended June 30, 2003 and 2002 was $0.5 million and $0.4 million respectively.

The effective tax rate was 38% and 39% for the six months ended June 30, 2003 and 2002, respectively. The rate is lower in 2003 due to the increased profitability of Heritage Labs, and the lower tax rate applied to the profits of Medicals Direct Group, which operates in the U.K.

Net income for the six months ended June 30, 2003 was $9.8 million or $.15 per diluted share versus $9.7 million or $.14 per diluted share for the six months ended June 30, 2002.

Inflation did not have a significant effect on the Company’s operations in the second quarter of 2003.

Liquidity and Financial Resources

The Company’s primary sources of cash are internally generated funds, cash equivalents, marketable securities and the Company’s credit facility.

- 20 -

Net cash provided by operating activities for the six months ended June 30, 2003 was $12.2 million as compared to $8.0 million for the six months ended June 30, 2002. The significant sources were net income of $9.8 million, $3.2 million of depreciation and amortization, a decrease of $1.6 million in other current assets, an increase in accounts payable and accrued expenses of $2.0 million, and were offset by an increase in accounts receivable of $4.3 million. The increase in accounts receivable at June 30, 2003 compared to December 31, 2002, is due to anticipated strong collections at December 31, 2002. This is a seasonal ocurrence and accounts receivable balances are now at more normal levels. The Medicals Direct Group accounts receivable increased $1.3 million due to increased revenue, and from acquisitions completed in the second quarter 2003. Days sales outstanding, measured on a rolling 90 day basis, was 40.7 days at June 30, 2002, compared to 40.0 days at June 30, 2003, and 36.1 at December 31, 2002.

On May 30, 2000, the Board of Directors authorized the repurchase in any calendar year of up to 2.5 million shares of the Company’s common stock for an aggregate purchase price not to exceed $25 million per year. For the six months ended June 30, 2003 the Company purchased 89,800 shares at a total cost of $0.4 million.

As of June 30, 2003, the Company has $3.0 million outstanding against its term loan, and in March 2003, Heritage Labs repaid its oustanding bank note in the amount of $0.4 million.

Our current ratio as of June 30, 2003 was 3.4 to 1 compared to 3.7 to 1 December 31, 2002. Also, inflation has not had, nor is it expected to have, a material impact on our consolidated financial results. We have no material commitments for capital expenditures.

Quarterly dividends paid in February and May 2003 were $.0125 per share, and totaled $1.6 million. At its July 31, 2003 board meeting, the Company declared a quarterly dividend of $.0125 per share.

Management believes that the combination of current cash, cash equivalents, marketable securities and available borrowings under our senior credit facility, along with anticipated cash flows from operations, will provide sufficient capital resources to satisfy both our short-term and foreseeable long-term needs.

- 21 -

On July 11, 2003, the Company received a determination from the Internal Revenue Service that one individual the Company contracted with as an independent contractor, should have been classified as an employee in 2002. This ruling also applies to any other individuals engaged by the Company under similar circumstances. The ruling also states that the Company may not be subject to adverse consequences as the Company may be entitled to relief under applicable tax laws (Section 530 of the Revenue Act of 1978). The Company and its advisors are continuing to review this determination. Management believes that the Company qualifies for relief under Section 530 and, therefore, that the ultimate outcome of this matter will not have a material effect on the Company’s consolidated financial position, results of operations and liquidity.

Critical Accounting Policies

There were no changes to the Company’s critical accounting policies during the three and six months ended June 30, 2003. Such policies are described in the Company’s 2002 Annual Report on Form 10-K.

Recently Issued Accounting Standards

- 22 -

Forward Looking Statements

- 23 -

Certain written and oral statements made by our Company or with the approval of an authorized executive officer of our Company may constitute “forward-looking statements” as defined under the Private Securities Litigation Reform Act of 1995, including statements made in this report and other filings with the Securities and Exchange Commission. These statements generally are not historical in nature and can be identified by words such as “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will,” “may,” “should,” “could” and similar expressions. These statements involve risks and uncertainties that could cause actual results to differ materially from our Company’s historical experience and our present expectations or projections. These statements are not guarantees of future performance or results.

The following are some of the factors that could cause our Company’s actual results to differ materially from those described in forward-looking statements:

Trends and other developments affecting the life insurance industry - We currently derive nearly all of our revenues from life insurance companies. The demand for our services is largely dependent on the demand for life insurance policies, policy amounts, the type of health information services requested, general economic conditions, and other factors beyond our control. Any decreases in demand for health information services by life insurance companies could substantially harm our business.

Loss of customers - Our relationships with most insurance company customers are not covered by formal written agreements, and we have exclusive relationships with only a small number of customers. Our ability to retain these customers will depend on our continued ability to serve their needs and to distinguish us from our competitors. The loss of one or more customers could materially impact our business.

Changes in the health information services business environment - These include changes in the types of products demanded by insurance companies, competitive product and pricing pressures, including technological advancements by competitors, and our ability to gain or maintain market share notwithstanding the actions of our competitors. Factors such as these could adversely impact our earnings and growth.

Continued growth of alternative distribution channels - Our continued growth will depend in part on increased use of the Internet and other alternative distribution channels by our customers to sell their life insurance products. Rapid growth in the use of these distribution channels may not continue. Reduction or replacement of these channels could limit any growth in the number of applications for life insurance policies, which could substantially harm our business.

Need to enhance and expand our technology and infrastructure - We need to continually adapt to the technological needs of our insurance company customers by enhancing and expanding our technology and network infrastructure to accommodate our customers’ changing needs. Our failure to do so could substantially harm our business.

Loss of key management - Our continued success is materially dependent upon our key management team. With the exception of the Company’s President and Chief Executive Officer, James M. McNamee, none of the Company’s officers and employees has an employment agreement. If we lose one or more of our executive officers, an inability to successfully recruit and retain additional highly skilled and experienced management, or to successfully train and promote existing personnel to serve in a managerial capacity, could substantially harm our business.

Acquisitions and other strategic investments - Our growth strategy has included acquiring other businesses and making strategic investments. There is no guarantee that these activities will be profitable, or that we will continue growing through these types of activities or otherwise.

- 24 - -

Changes in laws and regulations, including changes in accounting standards, taxation requirements and environmental laws.

The effectiveness of our sales, advertising and marketing programs.

Our ability to achieve earnings forecasts, which are primarily based on projected numbers of examinations to be performed.

Economic and political conditions in the United States.

The uncertainties of litigation, as well as other risks and uncertainties detailed from time to time in our Securities and Exchange Commission filings.

Other factors not identified could also cause actual results to materially differ from those described in forward-looking statements. Caution should be taken not to place undue reliance on any forward-looking statements made in this report or otherwise since such statements speak only as of the date when made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company’s exposure to market risk for changes in interest rates relates primarily to the Company’s investment portfolio. The Company places its investments with high quality issuers and, by policy, limits the amount of credit exposure to any one issuer. The Company does not invest in portfolio equity securities or commodities or use financial derivatives for trading purposes. The Company’s debt security portfolio represents funds held temporarily pending use in our business and operations. The Company mitigates this risk by investing in only high credit quality securities that it believes to be low risk and by positioning its portfolio to respond to a significant reduction in a credit rating of any investment issuer or guarantor. The portfolio includes only marketable securities with active secondary or resale markets to ensure portfolio liquidity.

- 25 -

The table below presents the principal amounts and related weighted average interest rates by year of maturity for our investment portfolio as of June 30, 2003.

(in thousands)	2003			2004			2005			2006			2007			2008 & thereafter			Total			Estimated Fair Value

Fixed Rate Investments	$	5,746		$	5,817		$	4,404		$	1,955		$	0		$	1,925		$	19,847		$	20,436
Average Interest Rates		0.92	%		4.27	%		4.32	%		4.94	%		0.00	%		4.13	%		3.36	%

Item 4. Controls and Procedures

Within 90 days prior to the date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-14 under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be included in the Company’s periodic SEC filings.

There have been no significant changes in the Company’s internal controls or in other factors which could significantly affect internal controls subsequent to the date the Company carried out its evaluation.

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 20, 2003, the shareholders elected Quentin J. Kennedy and John E. Nolan to serve as directors until the 2006 Annual Meeting, ratified the selection of KPMG LLP to serve as the Company’s independent auditors for 2003 and approved the 2004 Employee Stock Purchase Plan.

The chart below names each director nominated for election by the shareholders at the 2003 Annual Meeting, the number of votes cast for, against or withheld and the number of broker nonvotes with respect to each such person:

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	Votes Cast
					Broker Withheld
Nominee	For		Against		Broker Withheld		Nonvotes		Abstained

Quentin J. Kennedy		52,964,815		—		6,718,478		0		0
John E. Nolan		45,628,670		—		14,054,623		0		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
Elaine L. Rigolosi

With respect to the ratification of KPMG LLP as independent auditors, the number of votes cast was 40,484,996 For, 19,129,433 Against, 68,364 Abstained and 0 Broker Nonvotes.

With respect to the approval of the 2004 Employee Stock Purchase Plan, the number of votes cast was 55,915,973 For, 2,233,803 Against, 1,533,517 Abstained and 0 Broker Nonvotes.

Item 5: Other Information

Employment Agreement for James M. McNamee:
Effective May 23, 2003, the Company entered into an employment agreement with James M. McNamee, the Company’s President and Chief Executive Officer. For contract specifics, please see the attached exhibit 10.1 included in this filing.

- 27 -

Item 6 – Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit No.		Description of Exhibit

10.1		Employment Agreement dated May 23, 2003, by and between Hooper Holmes, Inc. and James M. McNamee.

31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

32.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.

32.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.

(b) Reports on Form 8-K

(i)	A report on Form 8-K, filed April 30, 2003, regarding a press release issued on April 24, 2003, announcing the Company’s financial results for the first quarter of 2003.

- 28 -

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 14, 2003

	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

- 29 -

EX-10.1 3 dex101.htm EMPLOYMENT AGREEMENT DATED MAY 23, 2003 Employment Agreement dated May 23, 2003

EXHIBIT 10.1

EMPLOYMENT AGREEMENT

HOOPER HOLMES, INC. (Company), and JAMES M. McNAMEE (Executive) agree to enter into this EMPLOYMENT AGREEMENT dated as of May 23, 2003 as follows:

1. Supercession of Prior Agreements.

The parties originally entered into an Employee Retention Agreement dated as of January 24, 1990 (the “1990 Agreement”). The parties have agreed that the terms and conditions set forth in this Agreement shall supersede any and all provisions of the 1990 Agreement and any other existing oral or written agreements, representations, or warranties, between Executive and the Company, and that such agreements shall be null and void and of no further force and effect, except as otherwise specifically provided in this Agreement.

2. Employment.

The Company hereby agrees to continue to employ Executive, and Executive hereby agrees to continue to be employed by the Company, upon the terms and subject to the conditions set forth in this Agreement.

3. Term of Employment.

The period of Executive’s employment under this Agreement shall begin as of January 1, 2003 and shall continue until terminated in accordance with Section 6 below. As used in this Agreement, the phrase “Employment Term” refers to Executive’s period of employment from the date of this Agreement until the date his employment is terminated.

4. Duties and Responsibilities.

(a)	The Company shall employ Executive as its President and Chief Executive Officer. In such capacity, Executive shall perform the customary duties and have the customary responsibilities of such positions and such other duties as may be assigned to Executive from time to time by the Company’s Board of Directors (the “Board”).

(b)	During the Employment Term, the Company shall use its best efforts to cause Executive to be elected as a member of the Board and shall include him in the management slate for election as a director at any stockholder’s meeting at which his term otherwise would expire.

(c)	Executive’s duties shall not require him to live or to perform a substantial portion of his duties outside of New Jersey. Executive’s services shall be performed primarily at the same location as where Executive performed his duties immediately prior to the date of this Agreement or at any other office or location within 25 miles of such current location and not more than an additional 10 miles of commuting distance in comparison to Executive’s commuting distance to the current location.

(d)	Executive agrees to faithfully serve the Company, devote his full working time, attention and energies to the business of the Company, its subsidiaries and affiliated entities, and perform the duties under this Agreement to the best of his abilities. Executive may (i) serve on corporate, civic or charitable boards or committees, (ii) deliver lectures, fulfill speaking engagements or teach at educational institutions and (iii) manage personal investments, so long as such activities

	do not significantly interfere with Executive’s performance of his duties and responsibilities under this Agreement.

(e)	Executive agrees (i) to comply with all applicable laws, rules and regulations, and all requirements of all applicable regulatory, self-regulatory, and administrative bodies; (ii) to comply with the Company’s rules, procedures, policies, requirements, and directions; and (iii) not to engage in any other business or employment without the written consent of the Company except as otherwise specifically provided herein.

5. Compensation and Benefits.

(a)	Base Salary. During the Employment Term, the Company shall pay Executive a base salary at the annual rate of $700,000 per year or such higher rate (“Base Salary”) as may be determined from time to time by the Executive Compensation Committee (the “Compensation Committee”). Such Base Salary shall be paid in accordance with the Company’s standard payroll practice for senior executives.

(b)	Annual Bonus. During the Employment Term, the Company shall pay the Executive:

	(i)	An annual Cash Bonus in such amount as may be determined by the Compensation Committee.

	(ii)	A Stock Award (shares of stock), determined by the Compensation Committee, for continued satisfactory performance.

	(iii)	A Stock Bonus pursuant to the formula set forth in Exhibit A attached hereto.

	At the sole discretion of the Compensation Committee the Stock Award and Stock Bonus may be paid in whole or in part in cash in lieu of stock. For purposes of determining the value of any stock for payment in cash in lieu of stock, the closing price of the Company’s common stock on the day that final year end financials are determined shall be used.

(c)	Vacations. During the Employment Term, Executive will be entitled to six (6) weeks of vacation in any calendar year.

(d)	Company-Provided Automobile. During the Employment Term, the Company shall provide Executive with the full-time use of an automobile that is similar in style and cost as that afforded to the President and Chief Executive Officer of other similarly situated publicly-traded corporations.

(e)	Financial Planning. During the Employment Term, the Company shall pay for, or reimburse Executive for the cost of, financial counseling and tax/estate planning services up to a maximum amount of $10,000 per calendar year.

(f)	Other Benefit Plans and Fringe Benefits. Executive shall be eligible to participate in or receive benefits under any pension plan, 401(k) savings plan, nonqualified deferred compensation plan, supplemental executive retirement plan, medical and dental benefits plan, life insurance plan, short-term and long-term disability plans, supplemental and/or incentive compensation plans, or any other employee benefit or fringe benefit plan, generally made available by the Company to senior executives in accordance with the eligibility requirements of such plans and subject to the terms and conditions set forth in this Agreement.

(g)	Expense Reimbursement. The Company shall promptly reimburse Executive for the ordinary and necessary business expenses incurred by Executive in the performance of the duties under this Agreement in accordance with the Company’s customary practices applicable to senior executives, provided that such expenses are incurred and accounted for in accordance with the Company’s policy.

(h)	Office and Administrative Support. During the Employment Term, Executive shall be entitled to an office or offices of a size and with furnishings and other accouterments, and to secretarial and other assistance, at a level that is at least as favorable as that provided prior to the date of this Agreement.

(i)	Retiree Health Benefits. The Company will provide the following health benefits to Executive following his termination of employment for any reason, other than termination by the Company for Cause under Section 6(c) under this Agreement, as follows:

	(i)	The Company completely at its expense will continue for Executive and his spouse all medical, dental, vision, and prescription drug plans, programs or arrangements, whether group or individual, in which he was entitled to participate prior to his last day of employment until his death. If Executive’s spouse survives him, the Company will continue her health benefits during her lifetime. In the event that Executive’s participation in any such plan, program, or arrangement of the Company is prohibited, the Company will arrange to provide Executive with benefits substantially similar to those which he would have been entitled to receive under such plan, program, or arrangement, for such period.

	(ii)	Any health benefits paid to the Executive hereunder will be offset by any payment to Executive or his spouse by Medicare.

	(iii)	For purposes of determining the benefits to be provided under this Section 5(i) after the date Executive or his spouse first becomes eligible for Medicare coverage by reason of attaining normal social security retirement age but prior to Executive’s or his spouse’s enrollment in Medicare, Executive and his spouse will be assumed to have received an amount from Medicare that would have been payable if he or she had enrolled in Medicare on the earliest date any Medicare coverage would have become effective for him or her.

(j)	Supplemental Executive Retirement Plan. In the event that Executive’s employment is terminated for any reason other than 1) death, 2) for Cause prior to his attaining age 65 or 3) termination by executive other than for good reason under Section 6(f) under this agreement prior to the age of 65, the Company shall continue to pay the full premiums of the life insurance policy in force with respect to Executive under the Company’s Supplemental Executive Retirement Plan as of the date of this Agreement until Executive attains age 65 or, if earlier, Executive’s death.

6. Termination of Employment.

Executive’s employment under this Agreement may be terminated under any of the circumstances set forth in this Section 6. Upon termination, Executive (or his beneficiary or estate, as the case may be) shall be entitled to receive the compensation and benefits described in Section 7 below, and, if applicable, Section 8 or 9 below.

(a)

Death. Executive’s employment shall terminate upon Executive’s death.

(b)	Total Disability. The Company may terminate Executive’s employment upon his becoming “Totally Disabled.” For purposes of this Agreement, Executive shall be “Totally Disabled” if Executive is physically or mentally incapacitated so as to render Executive incapable of performing his usual and customary duties under this Agreement. Executive’s receipt of disability benefits under the Company’s long-term disability benefits plan or receipt of Social Security disability benefits shall be deemed conclusive evidence of Total Disability for purpose of this Agreement; provided, however, that in the absence of Executive’s receipt of such long-term disability benefits or Social Security benefits, the Board may, in its reasonable discretion (but based upon appropriate medical evidence), determine that Executive is Totally Disabled.

(c)	Termination by the Company for Cause. The Company may terminate Executive’s employment for “Cause” at any time after providing written notice to Executive.

	(i)	For purposes of this Agreement, the term “Cause” shall mean any of the following: (A) conviction of a crime (including conviction on a nolo contendere plea) involving the commission by Executive of a felony or of a criminal act involving, in the good faith judgment of the Board, fraud, dishonesty, or moral turpitude but excluding any conviction which results solely from Executive’s title or position with the Company and is not based on his personal conduct; (B) deliberate and continual refusal to perform employment duties reasonably requested by the Company or an affiliate after thirty (30) days’ written notice by certified mail of such failure to perform, specifying that the failure constitutes cause (other than as a result of vacation, sickness, illness or injury); (C) fraud or embezzlement determined in accordance with the Company’s normal, internal investigative procedures consistently applied in comparable circumstances; (D) gross misconduct or gross negligence in connection with the business of the Company or an affiliate which has a substantial adverse effect on the Company or the affiliate; or (E) breach of any of the covenants set forth in Section 10 of this Agreement.

	(ii)	Executive’s employment shall in no event be considered to have been terminated by the Company for Cause if the act or failure to act upon which such termination is based: (A) was done or omitted to be done as a result of bad judgment on Executive’s part, or without intent of gaining therefrom directly or indirectly a profit to which Executive was not legally entitled, or (B) as a result of his good faith belief that such act or failure to act was not opposed to the interests of the Company.

	(iii)	Any determination of Cause under this Agreement shall be made by resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board of Directors, other than the Executive, at a meeting of the Board called and held for that purpose. Executive shall be provided with reasonable notice of such meeting and shall be given the opportunity to be heard before such vote is taken by the Board.

(d)	Termination by the Company without Cause. The Company may terminate Executive’s employment under this Agreement without Cause after providing written notice to Executive.

(e)	Termination by Executive for Good Reason. Executive may terminate his employment under this Agreement for “Good Reason” after providing thirty (30) days’ written notice to the Company. Termination of employment by Executive for “Good Reason” shall be deemed to have occurred, if Executive terminates his employment following the occurrence of any of the following:

	(i)	Without Executive’s express written consent, a change in Executive’s responsibilities, status, or titles or offices which represents a material diminution of the Executive’s responsibilities, status, or titles or offices, or any removal of Executive from, or any failure to re-elect Executive to, any of such titles or offices, except in connection with the termination of Executive’s employment as a result of his death, or by the Company for Total Disability or Cause, or by Executive other than for Good Reason.

	(ii)	The Company’s failure to comply with its obligations under this Agreement in any material respect if such failure shall continue for thirty (30) days after notice in writing from Executive specifying such failure.

	(iii)	The failure by the Company to obtain an assumption of the obligations of the Company under this Agreement by any successor to the Company.

(f)	Termination by Executive other than for Good Reason. Executive may terminate his employment under this Agreement for any reason other than “Good Reason” pursuant to Section 6(e) above after providing thirty (30) days’ written notice to the Company.

(g)	Notice of Termination. Any termination by the Company or by Executive under this Agreement, other than the death of the Executive, shall be communicated by notice of termination to the other party hereto. For purposes of this Agreement, a Notice of Termination shall mean a notice in writing which shall indicate the specific termination provision in this Agreement relied upon to terminate Executive’s employment and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated.

(h)	Termination Date. Termination Date means (i) the date specified in the Notice of Termination, or (ii) if Executive’s employment is terminated because of his death, the date of death.

7. Compensation Following Termination of Employment.

Upon termination of Executive’s employment under this Agreement, Executive (or his designated beneficiary or estate, as the case may be) shall be entitled to receive the following compensation:

(a)	Earned but Unpaid Compensation. The Company shall pay Executive any accrued but unpaid Base Salary for services rendered to the Termination Date, the amount of any unpaid portion of any bonus earned for any fiscal year ending coincident with or prior to the Termination Date, any accrued but unpaid expenses required to be reimbursed under this Agreement, all compensation previously deferred, but not yet paid to, Executive, and any vacation accrued to the Termination Date.

(b)	Additional Compensation Payable Following Termination due to Death or Total Disability. In the event that Executive’s employment is terminated by reason of his death or Total Disability pursuant to Section 6(b) above, the Company shall pay Executive (or his beneficiary) an amount equal to a pro-rated portion of the amount of the Stock Bonus determined under Section 5(b)(iii) for the fiscal year in which his employment is terminated. Such proration shall be based upon the number of days elapsed prior to the date of termination in the year in which such termination occurs. Such amount shall be paid within ninety (90) days after the end of the fiscal year following Executive’s death or Total Disability.

(c)	Retiree Health Benefits and Supplemental Retirement Benefits. Executive shall be entitled to retiree health benefits and supplemental retirement benefits pursuant to Section 5 (i) and (j) above.

(d)	Other Compensation and Benefits. Except as may be provided under this Agreement,

	(i)	any benefits to which Executive may be entitled pursuant to the plans, policies and arrangements referred to in Section 5(f) above shall be determined and paid in accordance with the terms of such plans, policies and arrangements, and

	(ii)	Executive shall have no right to receive any other compensation, or to participate in any other plan, arrangement or benefit, with respect to future periods after such termination or resignation, except as may be provided pursuant to the terms of such plans, policies and arrangements.

8. Additional Compensation Payable Following Termination Without Cause or Termination for Good Reason.

(a)	Requirements for Additional Compensation. In addition to the compensation and benefits set forth in Section 7 above, Executive will receive the additional compensation and benefits set forth in paragraph (b) below if:

	(i)	Executive’s employment is terminated by (A) the Company pursuant to Section 6(d) above for reasons other than death, Total Disability, or Cause, or (B) Executive terminates employment for Good Reason pursuant to Section 6(e) above; and

	(ii)	Section 9 below does not apply.

(b)	Additional Compensation. The Company will provide Executive with the following compensation and benefits in addition to the compensation and benefits described in Section 7 above:

	(i)	Lump Sum Payment. The Company shall pay Executive an amount equal to the product of TWO TIMES the sum of (A) and (B) below:

		(A)	Base Salary as determined under Section 5(a) at the rate in effect immediately prior to his Termination Date; and

		(B)	An amount equal to the amount of the bonus determined under Section 5(b)(i) and (ii) for the fiscal year immediately preceding the fiscal year in which his Termination Date occurs plus a pro-rated portion of the bonus determined under Section 5(b)(iii) for the fiscal year in which his Termination Date occurs. Such proration shall be based upon the number of days elapsed prior to the date of termination in the year in which such termination occurs.

		This amount will be paid to Executive in a single lump sum within sixty (60) days after his Termination Date except that the amount payable in respect of Section 5(b)(iii) shall be paid within ninety (90) days after the end of the fiscal year in which Executive’s termination occurs.

(ii)

Welfare Benefits. In addition to the Retiree Health Benefits provided under Section 5(i) of this Agreement, the Company shall provide for Executive’s continued coverage under all life, disability, and other employee welfare benefit plans, programs, or arrangements, whether group or individual, in which Executive was entitled to participate immediately prior to the date of his termination, until the earliest to occur of: (A) the end of the 24-month period following the Termination Date; or (B) Executive’s death (provided that benefits payable to his beneficiaries shall continue until the end of the 24-month period following the Termination Date). In the event that Executive’s participation in any such employee welfare benefit plan, program, or arrangement of the Company is prohibited, the Company shall arrange to provide Executive with benefits substantially similar to those which Executive would have been entitled to receive from the Company under such plan, program, or arrangement, for such period.

9. Additional Compensation Payable Following Termination on or After a Change in Control.

(a)	Requirements for Additional Compensation. In addition to the compensation and benefits set forth in Section 7 above, Executive will receive the additional compensation and benefits set forth in paragraph (b) below if a Change in Control occurs and either

	(i)	Executive’s employment is terminated at any time prior to the end of the twenty-four (24) month period beginning on the date of the Change in Control by (A) the Company pursuant to Section 6(d) above for reasons other than death, Total Disability, or Cause, or (B) Executive terminates employment for Good Reason pursuant to Section 6(e) above; or

	(ii)	Executive’s employment is terminated prior to the date of the Change in Control and it is reasonably demonstrated that such termination (A) occurred at the request of a third party who has taken steps reasonably calculated to effect a Change in Control or (B) otherwise arose in connection with or in anticipation of a Change in Control.

(b)	Additional Compensation. The Company will provide Executive with the following compensation and benefits in addition to the compensation and benefits described in Section 7 above:

	(i)	Lump Sum Payment. The Company shall pay Executive an amount equal to the product of THREE TIMES the sum of (A) and (B) below:

		(A)	Executive’s annual Base Salary at the highest rate in effect at any time prior to his Termination Date; and

		(B)	An amount equal to the amount of the bonus determined under Section 5(b)(i) and (ii) for the fiscal year immediately preceding the fiscal year in which his Termination Date occurs plus a pro-rated portion of the bonus determined under Section (b)(iii) for the fiscal year in which his Termination Date occurs.

		This amount will be paid to Executive in a single lump sum within sixty (60) days after his Termination Date except the amount payable in respect of Section 5(b)(iii) shall be paid within ninety (90) days of the end of the fiscal year in which Executive’s termination occurs.

	(ii)	Welfare Benefits. In addition to the Retiree Health Benefits provided under Section 5(i) of this Agreement, the Company shall provide for Executive’s continued coverage under all life, disability, and other employee welfare benefit plans, programs, or arrangements, whether group or individual, in which Executive was entitled to participate immediately prior to the date of his termination, until the earliest to occur of: (A) the end of the 36-month period following the Termination Date; or (B) Executive’s death (provided that benefits payable to his beneficiaries shall continue until the end of the 36-month period following the Termination Date). In the event that Executive’s participation in any such employee welfare benefit plan, program, or arrangement of the Company is prohibited, the Company shall arrange to provide Executive with benefits substantially similar to those which Executive would have been entitled to receive from the Company under such plan, program, or arrangement, for such period.

(c)	Excise Tax.

	(i)	Limitation or Additional Payment. In the event that any portion of the payments and benefits provided to Executive under this Agreement (without regard to any amount payable under this Section 9(c)) and any other payments and benefits under any other agreement with or plan of the Company (in the aggregate, “Total Payments”) would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code (the “Excise Tax”), then (A) or (B) below shall apply:

		(A)	In the event that the Total Payments (without regard to this Section 9(c)) do not exceed 115% of the maximum amount that could be paid to Executive without becoming subject to the Excise Tax, then notwithstanding anything in this Agreement to the contrary the amount payable to Executive under Section 9(b) above shall be reduced such that the value of the aggregate Total Payments that Executive are entitled to receive shall be one dollar ($1) less than such maximum amount.

		(B)	In the event that the Total Payments (without regard to this Section 9(c)) exceed 115% of the maximum amount that could be paid to Executive without becoming subject to the Excise Tax, then Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, Executive retain an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Total Payments.

	(ii)	Determination by Accounting Firm. Subject to the provisions of Section 9(c)(iii) below, all determinations required to be made under this Section 9(c), including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Company’s independent auditors or such other certified public accounting firm reasonably acceptable to Executive as may be designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and Executive. All fees and expenses of the Accounting Firm shall be paid solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 9(c), shall be paid by the Company to Executive not later than the due date for the payment of any Excise Tax. Any determination by the Accounting Firm shall be binding

	upon the Company and Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 9(c)(iii) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for Executive’s benefit.

(iii)	The Company’s Right to Contest Excise Tax. Executive agrees to notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which Executive gave such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive agrees to:

	(A)	give the Company any information reasonably requested by the Company relating to such claim;

	(B)	take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company;

	(C)	cooperate with the Company in good faith in order to effectively contest such claim; and

	(D)	permit the Company to participate in any proceedings relating to such claim;

	provided, however, that the Company agrees to bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 9(c)(iii), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearing and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to Executive, on an interest-free basis and shall

		indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for Executive’s taxable year with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

	(iv)	Repayment to the Company. If, after the receipt by Executive of an amount advanced by the Company pursuant to Section 9(c), Executive becomes entitled to receive any refund with respect to such claim, Executive agrees to promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by Executive of an amount advanced by the Company pursuant to Section 9(c), a determination is made that Executive is not entitled to any refund with respect to such claim and the Company does not notify Executive in writing of its intent to contest such denial of refund prior to the expiration of thirty (30) days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

(d)	Non-Competition Covenant Does Not Apply. The restrictive covenants prohibiting non-solicitation and competitive activities set forth in Section 10(b) and 10 (c) respectively below shall not be applicable to Executive notwithstanding the reasons for termination of Executive’s employment.

(e)	Definition of Change in Control. For purposes of this Section 9, “Change in Control” shall occur or be deemed to have occurred only if any of the following events occur:

	(i)	Any “person” as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding securities (other than as a result of acquisitions of such securities from the Company).

	(ii)	Individuals who, as of the date hereof, constitute the Board of Directors (as of the date hereof of the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors provided that any person becoming a director subsequent to the date hereof whose election or nomination for election by the Company’s shareholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of this office is in connection with an actual or threatened election contest relating to the election of the Directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be, for purposes of

		this Agreement, considered as though such person were a member of the Incumbent Board.

	(iii)	The stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power to the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or (B) a merger of consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no “person” (as hereinabove defined) acquires more than 20% of the combined voting power of the Company’s then outstanding securities.

	(iv)	The stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s asset.

10. RESTRICTIVE COVENANTS.

(a)	Non-Disclosure of Trade Secrets and Confidential Information.

	(i)	Executive understands and agrees that Company is engaged in the highly competitive business. Company’s involvement in this business has required and continues to require the expenditure of substantial amounts of time, money and resources, and the use of skills, knowledge and expertise developed over a long period of time. As a result, Company has developed and will continue to develop certain valuable Trade Secrets and Confidential Information that are unique and valuable to Company’s business, and the disclosure of which to others by Executive would cause Company great and irreparable harm. Such Trade Secrets and Confidential Information will be disclosed to Executive, in whole or in part, during Executive’s employment by Company.

		(A)	The term “Trade Secrets” means any scientific or technical information, design, process, procedure, formula or improvement that is valuable and not generally known to Company’s competitors including, without limitation, information and documentation pertaining to the design, specifications, capacity, testing, installation, implementation, techniques and procedures concerning Company’s present and future Products and services.

		(B)	The term “Confidential Information” means any data or information and documentation, other than Trade Secrets, which is valuable to Company and not generally known to the public, including but not limited to: (I) Financial information, including but not limited to earnings, assets, debts, prices, fee structures, volumes of purchases or sales, or other financial data, whether relating to Company generally, or to particular products, services, geographic areas, or time periods; (II) Supply and service information, including but not limited to information concerning the goods and services utilized or purchased by Company, the names and addresses of suppliers, terms of supplier service contracts, or of particular transactions, or related information about potential suppliers, to the extent that such information is not generally known to the public, and to the extent that the combination of suppliers or use of particular

			suppliers, though generally known or available, yields advantages to Company the details of which are not generally known; (III) Marketing information, including but not limited to details about ongoing or proposed marketing programs or agreements by or on behalf of Company, marketing forecasts, results of marketing efforts or information about impending transactions; (IV) Personnel information, including but not limited to employees’ personal or medical histories, compensation or other terms of employment, actual or proposed promotions, hiring, resignations, disciplinary actions, terminations or reasons therefore, training methods, performance or other employee information; and (V) Customer information, including but not limited to any compilations of past, existing or prospective customers, customer proposals or agreements between customers and Company, status of customer accounts or credit, or related information about actual or prospective customer.

	(ii)	Company agrees to provide Executive with assistance and access to Confidential Information and Trade Secrets necessary to perform Executive’s job with Company. Executive agrees, except as specifically required in the performance of Executive’s duties for Company, that Executive will not, during the course of Executive’s employment by Company and for so long thereafter as the pertinent information or documentation remain Trade Secrets, directly or indirectly use, disclose or disseminate to any other person, organization or entity or otherwise employ any Trade Secrets. Executive further agrees except as specifically required in the performance of Executive’s duties for Company, that Executive will not, during the course of Executive’s employment by Company and for two (2) years after the cessation of that employment for any reason, disclose or disseminate to any other person, organization or entity or otherwise employ any Confidential Information. These obligations, however, shall not apply to any Trade Secrets or Confidential Information, which shall have become generally known to competitors of Company through no act or omission of Executive.

(b)	Non-Solicitation of Customers.

	(i)	Executive agrees that while employed by Company, Executive will have contact with and become aware of Company’s customers and the representatives of those customers, their names and addresses, specific customer needs and requirements, and leads and references to prospective customers, as well as Confidential Information and Trade Secrets. Executive further agrees that loss of such customers and misuse of Confidential Information and Trade Secrets will cause Company great and irreparable harm.

	(ii)	Executive agrees that for 12 months after the cessation of employment with Company Executive will not directly or indirectly solicit, contact, call upon, communicate with or attempt to communicate with any customer of Company. For the purposes of this paragraph, “contact” means interaction between Executive and the customer which takes place to further the business relationship, or performing services for the customer, on behalf of Company

(c)	Competitive Activity. Executive recognizes that in each of the highly competitive businesses in which the Company is engaged, personal contact is of primary importance in securing new customers and in retaining the accounts and goodwill of present customers and protecting the business of the Company. Executive, therefore, covenants and agrees that at all times during the Employment Term and for a period of two (2) years thereafter, he shall not, without the written consent of the Board of Directors, directly or indirectly, engage in, assist, or have any active

	interest or involvement (whether as an employee, agent, consultant, creditor, advisor, officer, director, stockholder (excluding holding of less that 1% of the stock of a public company), partner, proprietor or any type of principal whatsoever in any person, firm, or business entity which, directly or indirectly, is engaged in any business (i) engaged in by the Company on the date of termination (ii) manufacturing, selling, leasing or distributing machinery, equipment or products used or produced in connection with the activities described in clause (i) or (ii) above, or (iii) any other material business engaged in by the Company, which is located within 100 miles of the principal place of business of the Company, the principal place of business of any corporation or other entity owned, controlled by (or otherwise affiliated with) the Company by which he may also be employed or served by him as an officer or director, or any other geographic location in which Executive has specifically represented the interests of the Company or such other affiliated entity, in any of the businesses described above during the twelve (12) months prior to the termination of his employment.

(d)	Non-Solicitation of Executives. Executive agrees that for as long as Executive is employed by Company and for twelve (12) months after the cessation of employment with Company Executive will not recruit, or attempt to recruit, directly or by assisting others, any other employee of Company with whom Executive had contact during Executive’s employment with Company. For the purposes of this paragraph, “contact” means any interaction whatsoever between Executive and the other employee.

(e)	Non-Disparagement. Executive covenants and agrees that during the course of his employment by the Company or at any time thereafter, Executive shall not, directly or indirectly, in public or private, deprecate, impugn, disparage, or make any remarks that would tend to or be construed to tend to defame the Company or any of its employees, members of its board of directors or agents, nor shall Executive assist any other person, firm or company in so doing.

(f)	Return of Documents and Other Materials. Executive shall promptly deliver to the Company, upon termination of his employment, or at any other time as the Company may so request, all lists of customers, leads and customer pricing, data processing programs and documentation, employee information, memoranda, notes, records, reports, tapes, manuals, drawings, blueprints, programs, and any other documents and other materials (and all copies thereof) relating to the Company’ business or that of its customers, and all property associated therewith, which Executive may then possess or have under his control.

11. Enforcement of Covenants.

(a)	Termination of Employment and Forfeiture of Compensation. Executive agrees that in the event that the Company determines that he has breached any of the covenants set forth in Section 10 above during his employment, the Company shall have the right to terminate his employment for Cause. In addition, Executive agrees that if the Company determines that he has breached any of the covenants set forth in Section 10 at any time, the Company shall have the right to discontinue any or all remaining benefits payable pursuant to Section 8 above, as applicable. Such termination of employment or discontinuance of benefits shall be in addition to and shall not limit any and all other rights and remedies that the Company may have against Executive.

(b)	Right to Injunction. Executive acknowledges that a breach of the covenants set forth in Section 10 above will cause irreparable damage to the Company with respect to which the Company’ remedy at law for damages will be inadequate. Therefore, in the event of breach or anticipatory breach of the covenants set forth in this section by Executive, Executive and the Company agree that the Company shall be entitled to the following particular forms of relief, in addition to

	remedies otherwise available to it at law or equity: injunctions, both preliminary and permanent, enjoining or retraining such breach or anticipatory breach and Executive hereby consents to the issuance thereof forthwith and without bond by any court of competent jurisdiction.

(c)	Separability of Covenants. The covenants contained in Section 10 above constitute a series of separate covenants, one for each applicable State in the United States and the District of Columbia, and one for each applicable foreign country. If in any judicial proceeding, a court shall hold that any of the covenants set forth in Section 10 permitted by applicable laws, Executive and the Company agree that such provisions shall and are hereby reformed to the maximum time, geographic, or occupational limitations permitted by such laws. Further, in the event a court shall hold unenforceable any of the separate covenants deemed included herein, then such unenforceable covenant or covenants shall be deemed eliminated from the provisions of this Agreement for the purpose of such proceeding to the extent necessary to permit the remaining separate covenants to be enforced in such proceeding. Executive and the Company further agree that the covenants in Section 10 shall each be construed as a separate agreement independent of any other provisions of this Agreement, and the existence of any claim or cause of action by Executive against the Company whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of any of the covenants set forth in Section 10.

12. Withholding of Taxes.

The Company shall withhold from any compensation and benefits payable under this Agreement all applicable federal, state, local, or other taxes.

13. Resolution of Disputes.

(a)	Negotiation and Arbitration. The parties shall attempt in good faith to resolve any dispute arising out of or relating to this Agreement by negotiation. If the dispute has not been resolved by negotiation within thirty (30) days, the parties shall endeavor to resolve it by mediation. Unless the parties otherwise agree, the mediator shall be selected from the CPR Panel of Distinguished Neutrals. Any dispute which remains unresolved thirty (30) days after the appointment of a mediator shall be settled by arbitration by a sole arbitrator in accordance with the CPR Rules for Non-Administered Arbitration, and judgment upon the award rendered by the arbitrator may be entered by any court having jurisdiction thereof.

(b)	Payment of Legal Fees. To the extent permitted by law, the Company shall pay all legal fees, costs of litigation, prejudgment interest, and other expenses incurred in good faith by Executive as a result of the Company’s refusal to provide the benefits to which Executive’s becomes entitled under this Agreement, or as a result of the Company’s contesting the validity, enforceability, or interpretation of this Agreement, or as a result of any conflict between the parties pertaining to this Agreement.

14. No Claim Against Assets.

Nothing in this Agreement shall be construed as giving Executive any claim against any specific assets of the Company or as imposing any trustee relationship upon the Company in respect of Executive. The Company shall not be required to establish a special or separate fund or to segregate any of its assets in order to provide for the satisfaction of its obligations under this Agreement. Executive’s rights under this Agreement shall be limited to those of an unsecured general creditor of the Company and its affiliates.

15. Successors and Assignment.

Except as otherwise provided in this Agreement, this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, representatives, successors and assigns.

(a)	Company Successor. The Company shall require any person (or persons acting as a group) who acquires ownership or effective control of the Company or ownership of a substantial portion of the business or assets of the Company (whether direct or indirect, by purchase, merger, consolidation or otherwise), by agreement in form and substance satisfactory to Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Company would be required to perform it if no such acquisition had taken place. As used in this Agreement, “the Company” shall mean the Company as defined in the first sentence of this Agreement and any person (or group) who acquires ownership or effective control of the Company or ownership of a substantial portion of the business or assets of the Company or which otherwise becomes bound by all the terms and provisions of this Agreement, whether by the terms hereof, by operation of law or otherwise.

(b)	Assignment by Executive. The rights and benefits of Executive under this Agreement are personal to him and no such right or benefit shall be subject to voluntary or involuntary alienation, assignment or transfer; provided, however, that nothing in this Section 16 shall preclude Executive from designating a beneficiary or beneficiaries to receive any benefit payable on his death.

16. Entire Agreement; Amendment.

This Agreement shall supersede any and all existing oral or written agreements, representations, or warranties between Executive and the Company or any of its subsidiaries or affiliated entities relating to the terms of Executive’s employment. It may not be amended except by a written agreement signed by both parties.

17. Governing Law.

This Agreement shall be governed by and construed in accordance with the domestic substantive laws of the State of New York, without giving effect to any conflicts or choice of laws rule or provision that would result in the application of the domestic substantive laws of any other jurisdiction.

18. Notices.

Any notice, consent, request or other communication made or given in connection with this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by registered or certified mail, return receipt requested, or by facsimile or by hand delivery, to those listed below at their following respective addresses or at such other address as each may specify by notice to the others:

To the Company:

	Hooper Holmes, Inc.
	170 Mt. Airy Road
	Basking Ridge, New Jersey 07920
	Attention: Corporate Secretary

To Executive:

	James M. McNamee
	Mary Knoll Drive
	P.O. Box 520
	New Vernon, New Jersey 07967

19. Miscellaneous.

(a)	Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver thereof or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

(b)	Separability. If any term or provision of this Agreement is declared illegal or unenforceable by any court of competent jurisdiction and cannot be modified to be enforceable, such term or provision shall immediately become null and void, leaving the remainder of this Agreement in full force and effect.

(c)	Headings. Section headings are used herein for convenience of reference only and shall not affect the meaning of any provision of this Agreement.

(d)	Rules of Construction. Whenever the context so requires, the use of the singular shall be deemed to include the plural and vice versa.

(e)	Counterparts. This Agreement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, and such counterparts will together constitute but one Agreement.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year set forth below.

HOOPER HOLMES, INC.			EXECUTIVE

By:	/s/ ROBERT WILLIAM JEWETT		/s/ JAMES M. MCNAMEE

Name:	Robert William Jewett		James M. McNamee

Title:	Secretary and General Counsel	Date:	May 23, 2003

Date:	May 23, 2003

EX-31.1 4 dex311.htm CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13A-14(A). Certification of Chief Executive Officer pursuant to Rule 13a-14(a).

EXHIBIT 31.1

CERTIFICATIONS

I, James M. McNamee, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Hooper Holmes Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and we have:

a) designed such disclosure controls and procedures or caused such disclosure control and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report the ( “Evaluation Date”); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

	/s/ JAMES M. MCNAMEE

	James M. McNamee Chairman, President and Chief Executive Officer August 14, 2003

EX-31.2 5 dex312.htm CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14(A). Certification of Chief Financial Officer pursuant to Rule 13a-14(a).

EXHIBIT 31.2

CERTIFICATIONS

I, Fred Lash, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Hooper Holmes Inc.;

	/s/ FRED LASH
	Fred Lash Senior Vice President, CFO & Treasurer August 14, 2003

EX-32.1 6 dex321.htm CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13A-14(B). Certification of Chief Executive Officer pursuant to Rule 13a-14(b).

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Hooper Holmes, Inc., (the “Company”) on Form 10-Q for the period ended June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I James M. McNamee, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(i) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 14, 2003

	/s/ JAMES M. MCNAMEE
	James M. McNamee Chairman, President and Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to Hooper Holmes, Inc. and will be retained by Hooper Holmes, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2 7 dex322.htm CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14(B). Certification of Chief Financial Officer pursuant to Rule 13a-14(b).

EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Hooper Holmes, Inc., (the “Company”) on Form 10-Q for the period ended June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I Fred Lash, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(i) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 14, 2003

	/s/ FRED LASH
	Fred Lash Senior Vice President, Treasurer and Chief Financial Officer

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