<PAGE>
FORM 10Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1996
Commission File No. 1-9972
Hooper Holmes, Inc.
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(Exact name of registrant as specified in
its charter)
New York 22-1659359
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
170 Mt. Airy Rd., Basking Ridge, NJ 07920
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (908) 766-5000
None
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(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
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Class Outstanding at March 31, 1996
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Common stock, $.04 per value 6,712,114
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HOOPER HOLMES, INC. AND SUBSIDIARIES
INDEX
Page No.
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PART I - Financial Information (1995 Audited)
ITEM 1 - Financial Statements
Consolidated Balance Sheets 1
as of March 31, 1996 and
December 31, 1995
Consolidated Statements of Income 2
for the Three Months Ended
March 31, 1996 and 1995
Consolidated Statements of Cash Flows 3
for the Three Months Ended
March 31, 1996 and 1995
Notes to Financial Statements 4
ITEM 2 - Management's Discussion and Analysis 5,6
of Financial Condition and Results
of Operations
PART II - Other Information
ITEM 6 - Exhibits and Reports on Form 8-K
Exhibit 27
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HOOPER HOLMES, INC.
CONSOLIDATED BALANCE SHEETS
03/31/96 12/31/95
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(Unaudited) (Audited)
ASSETS
Current Assets:
Cash and cash equivalents $ - $ 1,065,464
Accounts receivable - trade 20,346,945 21,974,398
Accounts receivable - other 1,142,190 2,387,010
Escrow funds 5,205,957 15,000,000
Refundable income taxes 8,914,734 9,264,734
Other current assets 5,008,661 4,716,328
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Total current assets 40,618,487 54,407,934
Property, plant and equipment:
Land and land improvements 570,116 570,116
Building 3,471,186 3,465,876
Furniture, fixtures and equipment 14,161,237 13,955,687
Leasehold improvements 278,676 278,676
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Total property, plant and equipment 18,481,215 18,270,355
Less: Accumulated depreciation 8,007,167 7,423,190
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Net property, plant and equipment 10,474,048 10,847,165
Cost in excess of net assets of
acquired companies 16,388,502 16,601,785
Intangible assets 10,711,148 10,589,722
Other assets 905,776 1,550,489
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Total assets $ 79,097,961 $ 93,997,095
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long term debt $ 1,350,000 $ 8,800,000
Accounts payable 7,165,821 10,677,452
Accrued expenses:
Insurance benefits 101,572 127,215
Salaries, wages and fees 374,222 596,886
Payroll and other taxes 265,013 740,678
Income taxes payable 501,591 0
Discontinued operations 3,700,234 4,380,023
Other 4,472,487 4,299,369
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Total current liabilities 17,930,940 29,621,623
Long term debt, less current maturities 22,700,000 26,250,000
Deferred income taxes 4,824,831 4,993,459
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Total other liabilities 27,524,831 31,243,459
Common stock 269,777 269,777
Additional paid-in capital 24,083,393 24,080,988
Retained earnings 9,616,703 9,138,401
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33,969,873 33,489,166
Less: Treasury stock 327,683 357,153
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Total stockholders' equity 33,642,190 33,132,013
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Total liabilities and stockholders'
equity $ 79,097,961 $ 93,997,095
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HOOPER HOLMES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
YTD March 31,
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1996 1995
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Revenues $ 38,611,000 $ 23,997,443
Cost of operations 29,413,988 17,981,211
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Gross profit 9,197,012 6,016,232
Selling, general and administrative expenses 7,823,618 4,939,508
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Operating income 1,373,394 1,076,724
Other income (expense)
Interest expense (627,014) (369,330)
Interest income 301,068 66,853
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(325,946) (302,477)
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Income before income taxes 1,047,448 774,247
Income taxes 502,000 368,190
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Income from continuing operations 545,448 406,057
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Discontinued operations:
Loss from operations, net of taxes 0 (347,606)
Loss on disposal, net of taxes 0 0
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Loss from discontinued operations 0 (347,606)
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Net income $ 545,448 $ 58,451
============= =============
Earnings (loss) per share:
Weigted average number of shares 6,712,114 6,702,502
Income from continuing operations 0.08 0.06
Loss from discontinued operations 0.00 (0.05)
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Net income $ 0.08 $ 0.01
============= =============
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HOOPER HOLMES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended March 31,
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1996 1995
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<S> <C> <C>
Cash flows from operating activities:
Income from continuing operations $ 545,448 $ 406,057
Adjustments to reconcile income from continuing operations
to net cash provided by operating activities:
Depreciation and amortization 1,316,309 527,403
Provision for bad debt expense 95,000 107,502
Issuance of stock awards 31,875 0
Change in assets and liabilities, net of effect from
acquisitions / dispositions of businesses:
Accounts receivable 2,777,274 (1,630,419)
Escrow funds 9,794,043 0
Income tax receivable 350,000 0
Other current assets (273,022) 712,725
Accounts payable and accrued expenses (3,740,398) 1,444,666
Accrued expenses -- discontinued operations (679,789) 0
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Net cash provided by operating activities of
continuing operations 10,216,740 1,567,934
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Net cash provided by operating activities of
discontinued operations 0 2,070,310
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Net cash provided by operating activities 10,216,740 3,638,244
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Cash flows from investing activities:
Capital expenditures, net of disposals (215,058) (394,856)
Net investing activities of discontinued operations 0 (238,103)
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Net cash used in investing activities (215,058) (632,959)
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Cash flows from financing activities:
Issuance of long term debt 2,500,000 2,500,000
Principal payments on long term debt (13,500,000) (7,000,000)
Dividends paid (67,146) (201,129)
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Net cash used in financing activities (11,067,146) (4,701,129)
-------------- ------------
Net decrease in cash and cash equivalents (1,065,464) (1,695,844)
Cash and cash equivalents at beginning of year 1,065,464 1,695,844
-------------- ------------
Cash and cash equivalents at end of period $ 0 $ 0
============== ============
</TABLE>
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HOOPER HOLMES, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE 1: BASIS OF PRESENTATION
The financial information included herein is unaudited unless otherwise
indicated; however, such information reflects all adjustments (consisting solely
of normal recurring adjustments) which are, in the opinion of management,
necessary for a fair statement of results for the interim periods.
The interim financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's annual report
on Form 10-K.
The results of operations for the three month period ended March 31, 1996 are
not necessarily indicative of the results to be expected for the full year. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" for additional information.
NOTE 2: EARNINGS PER SHARE
Earnings per share are computed by dividing net earnings by the weighted average
number of shares of common stock outstanding during the respective periods as
outlined in Part I.
NOTE 3: DISCONTINUED OPERATIONS
The 1995 consolidated financial statements exclude amounts for discontinued
operations from captions applicable to continuing operations and have been
restated to conform with the 1996 presentation.
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<PAGE>
HOOPER HOLMES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
RESULTS OF OPERATION - THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO
THREE MONTHS ENDED MARCH 31, 1995
Revenues for the first quarter of 1996 were $38.6 million compared to $24.0
million for the first quarter of 1995, an increase of 60.9%. Management
believes this growth results from a combination of its continued efforts to gain
marketshare and approximately $13.0 million of acquired revenue from the ASB
Meditest acquisition.
The Company's cost of operations for the first quarter of 1996 totaled $29.4
million compared to $18.0 million for the first quarter of 1995. This increase
in cost of sales results primarily from the added business of the ASB Meditest
acquisition in September 1995, and higher branch operating expenses due largely
to that acquisition. The Company believes that it may continue to realize
additional branch operating savings as the planned consolidations of the ASB
Meditest acquisition are finalized. Cost of operations as a percentage of
revenues, increased from 74.9% for the first quarter of 1995 to 76.2% for the
first quarter of 1996.
Selling, general and administrative expenses totaled $7.8 million as compared to
$4.9 million for the first quarter of 1996 and 1995, respectively, and as a
percentage of revenue totaled 20.3% compared to 20.6%. The increase of $2.9
million is largely attributed to SG&A expenses related to ongoing ASB Meditest
corporate functions. The Company believes that additional savings will be
realized as the integration of ASB Meditest continues.
Accordingly, the Company's operating income improved to $1.4 million from $1.1
million and as a percentage of revenues, decreased to 3.6% from 4.5% for the
first quarter of 1996 compared to the first quarter of 1995.
Interest expenses increased in the first quarter of 1996 to $.6 million compared
to $.4 million for the first quarter of 1995, due to higher amounts borrowed.
This increase was offset by certain other income items, primarily interest
earned on the escrowed accounts receivable sold as part of the Nurse's House
Call transaction in September 1995.
Net income and earnings per share for the first quarter of 1996 were $545,000 or
$.08 per share versus $406,000 or $.06 per share for the first quarter of 1995.
Average shares for the respective periods were 6,712,114 and 6,702,502.
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<PAGE>
FINANCIAL CONDITION
The Company has three primary sources of cash, it's bank credit facility,
internally generated funds and the escrowed cash from the Olsten/ASB Meditest
deal that closed in September 1995.
Net cash provided by operations in the first quarter ended March 31, 1996 was
$10.2 million. The primary source of this cash was $9.8 million from the escrow
cash and $2.8 million from the reduction of ongoing accounts receivables. This
was offset partly by a decrease in operating payables and accrued expenses due
to temporarily higher levels at December 31, 1995 as a result of the NHC
transaction.
Our revolver credit facility stood at $31.5 million at December 31, 1995 and was
reduced $10.7 million during the quarter. The revolver balance at March 31,
1996 was $20.8 million with a total credit line available under the revolver of
$29.3 million.
The balance of escrow cash at the start of the year was $15.0 million and at the
close of the first quarter of 1996 was $5.2 million.
Due to the loss on the sale of Nurse's House Call operations in 1995, the
Company anticipates an income tax refund in the second half of 1996 of
approximately $9.0 million.
The Company's current ratio at the end of March 1996 stood at 2.3:1 as compared
to 1.8:1 at December 31, 1995. Also, inflation has not, nor is it expected to
have a material impact on the Company's financial results in 1996 and there have
been no material commitments for capital expenditures.
Dividends declared in February and May 1996 were declared at $.01 per share.
Management believes that the combination of cash and cash equivalents, other
working capital sources, borrowings under the Company's credit facility, the
escrow cash and anticipated income tax refund, along with the anticipated cash
flows from continuing operations, will provide sufficient capital resources for
the foreseeable future.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
HOOPER HOLMES, INC.
Dated: May 13, 1996
/s/ James M. McNamee
BY: _________________________________
James M. McNamee
President and
Chief Executive Officer
/s/ Fred Lash
BY: _________________________________
Fred Lash
Senior Vice President
Chief Financial Officer &
Treasurer
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF HOOPER HOLMES, INC. AND SUBSIDIARIES AS OF MARCH
31, 1996 AND THE RELATED CONSOLIDATED STATEMENTS OF INCOME AND CASH FLOWS FOR
THE PERIOD ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 22,050,216
<ALLOWANCES> 561,081
<INVENTORY> 0
<CURRENT-ASSETS> 40,618,487
<PP&E> 18,481,215
<DEPRECIATION> 8,007,167
<TOTAL-ASSETS> 79,097,961
<CURRENT-LIABILITIES> 17,930,940
<BONDS> 0
0
0
<COMMON> 269,777
<OTHER-SE> 33,372,413
<TOTAL-LIABILITY-AND-EQUITY> 79,097,961
<SALES> 38,611,000
<TOTAL-REVENUES> 38,611,000
<CGS> 29,413,988
<TOTAL-COSTS> 29,413,988
<OTHER-EXPENSES> 7,823,618
<LOSS-PROVISION> 95,000
<INTEREST-EXPENSE> 627,014
<INCOME-PRETAX> 1,047,448
<INCOME-TAX> 502,000
<INCOME-CONTINUING> 545,448
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 545,448
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0
</TABLE>
