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Previous: BANYAN STRATEGIC REALTY TRUST, 8-K/A, 1997-06-26 |
Next: HANCOCK JOHN INVESTMENT TRUST III, N-30D, 1997-06-26 |
<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-3
RULE 13e-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(e) OF
THE SECURITIES EXCHANGE ACT OF 1934)
AMENDMENT NO. 2
HEALTH MANAGEMENT, INC.
(NAME OF THE ISSUER)
HEALTH MANAGEMENT, INC.
TRANSWORLD HEALTHCARE, INC.
IMH ACQUISITION CORP.
(NAME OF THE PERSONS FILING STATEMENT)
------------------------
COMMON STOCK, PAR VALUE $0.03 PER SHARE
(TITLE OF CLASS OF SECURITIES)
42219 B10
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
<TABLE>
<C> <C>
W. JAMES NICOL ROBERT W. FINE
CHIEF EXECUTIVE OFFICER AND PRESIDENT PRESIDENT AND CHIEF OPERATING OFFICER
HEALTH MANAGEMENT, INC. TRANSWORLD HEALTHCARE, INC.
1371-A ABBOTT COURT 75 TERMINAL AVENUE
BUFFALO GROVE, IL 60089 CLARK, NEW JERSEY 07066
(800) 648-1975 (908) 340-1144
</TABLE>
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS ON
BEHALF OF PERSONS FILING STATEMENT)
COPY TO
<TABLE>
<C> <C>
CHERYL V. REICIN, ESQ. BRUCE L. LIEB, ESQ.
MCDERMOTT, WILL & EMERY PROSKAUER ROSE LLP
50 ROCKEFELLER PLAZA 1585 BROADWAY
NEW YORK, NEW YORK 10020-1605 NEW YORK, NEW YORK 10036-8299
(212) 547-5522 (212) 969-3320
</TABLE>
THIS STATEMENT IS FILED IN CONNECTION WITH (check the appropriate box):
a. [X] The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C or Rule 13(e)-3(c) under
the Securities Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act of
1933.
c. [ ] A tender offer.
d. [ ] None of the above.
Check the following box if the solicitation materials or information statement
referred to in checking box (a) are preliminary copies: [X]
CALCULATION OF THE FILING FEE
<TABLE>
<CAPTION>
====================================================================================
TRANSACTION VALUATION* AMOUNT OF FILING FEE
- ------------------------------------------------------------------------------------
<S> <C>
$2,799,055 $560
* For purposes of calculating fee only. Pursuant to the
proposed merger, each holder (other than Transworld and
its subsidiaries), of common stock, $0.30 par value per
share, of Health Management, Inc. ("Shares") will become
entitled to receive $0.30 per Share in cash, without
interest, for each share held. Such holders hold 9,330,182
Shares, in the aggregate. The amount of the filing fee
calculated in accordance with Regulation 240.0-11 of the
Securities Exchange Act of 1934 equals 1/50 of one
percentum of the aggregate value of the merger
consideration.
</TABLE>
[X] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
<TABLE>
<S> <C>
Amount previously paid: $2,800
Form, schedule or registration statement no.: Schedule 14A
Filing Party: Health Management, Inc.
Date Filed: February 6, 1997
</TABLE>
<PAGE> 2
INTRODUCTORY STATEMENT
This Rule 13e-3 Transaction Statement is being filed by Health Management,
Inc. (the "Company"), Transworld HealthCare, Inc., formerly Transworld Home
HealthCare, Inc. ("Transworld") and IMH Acquisition Corp., a wholly owned
subsidiary of Transworld ("IMH"), in connection with the proposed merger of IMH
with and into the Company. The Company is the issuer of the class of securities
which is the subject of the Rule 13e-3 transaction.
On June 16, 1997, the Company filed with the Securities and Exchange
Commission the Company's definitive Proxy Statement relating to the solicitation
of proxies by the Company to consider and vote upon a proposal to adopt the
Agreement and Plan of Merger, dated November 13, 1996, as amended, among
Transworld, IMH and the Company, pursuant to which (a) IMH will merge with and
into the Company, which will become a wholly owned subsidiary of Transworld, and
(b) each holder (other than Transworld and its subsidiaries) of shares of common
stock, par value $0.30 per share, of the Company ("Shares") will become entitled
to receive $0.30 in cash, without interest, for each Share held.
A copy of the definitive Proxy Statement is attached as Exhibit 17(d) to
Amendment No. 1 to the Rule 13e-3 Transaction Statement. The information
contained in the Proxy Statement is incorporated by reference in answer to the
items in this Rule 13e-3 Transaction Statement, and the Cross Reference Sheet
set forth below shows the location in the Proxy Statement of the information
required to be included in response to the items of this Rule 13e-3 Transaction
Statement.
This Amendment No. 2 to the Rule 13e-3 Transaction Statement is being filed
to include certain exhibits which were not previously filed.
1
<PAGE> 3
CROSS REFERENCE SHEET
(Pursuant to General Instruction F to Schedule 13E-3)
SCHEDULE 13E-3 ITEM
<TABLE>
<S> <C> <C>
NUMBER AND CAPTION CAPTION IN PROXY STATEMENT
ITEM 1 ISSUER AND CLASS OF SECURITY SUBJECT
TO THE TRANSACTION
(a).................................. SUMMARY--The Special Meeting; Business of the
Company; INTRODUCTION--Matters to be Considered at
the Special Meeting.
(b).................................. SUMMARY--The Special Meeting; MARKET PRICES AND
DIVIDENDS.
(c).................................. SUMMARY--Market Prices; MARKET PRICES AND DIVIDENDS.
(d).................................. SUMMARY--Market Prices; MARKET PRICES AND DIVIDENDS.
(e).................................. Not Applicable.
(f).................................. INTRODUCTION--Matters to be considered at the Special
Meeting; SPECIAL FACTORS--Purpose and Effect of the
Merger; Background of the Merger.
Item 2 IDENTITY AND BACKGROUND
This Rule 13e-3 Transaction Statement is being filed by the Company, which is the issuer of the
classes of securities subject to the Rule 13e-3 transaction, Transworld and IMH; information with
respect to each of the filing persons may be found in the Proxy Statement under the captions listed
below.
(a).................................. MANAGEMENT OF THE COMPANY; MANAGEMENT OF TRANSWORLD
AND IMH.
(b).................................. MANAGEMENT OF THE COMPANY; MANAGEMENT OF TRANSWORLD
AND IMH.
(c).................................. MANAGEMENT OF THE COMPANY; MANAGEMENT OF TRANSWORLD
AND IMH.
(d).................................. MANAGEMENT OF THE COMPANY; MANAGEMENT OF TRANSWORLD
AND IMH.
(e), (f)............................. None of the persons with respect to whom information
is provided in response to this Item was, during the
last five years, convicted in a criminal proceeding
or a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction which
resulted in the person being subject to a judgment,
decree or final order enjoining further violations
of, or prohibiting activities subject to, federal or
state securities laws or finding of any violation of
such law.
(g).................................. Each of the persons with respect to whom information
is provided in response to this Item is a citizen of
the United States of America.
Item 3 PAST CONTACTS, TRANSACTIONS OR
NEGOTIATIONS
(a)(1)............................... Not Applicable.
(a)(2)............................... INTRODUCTION--Matters to be Considered at the Special
Meeting; SPECIAL FACTORS--Purpose and Effect of the
Merger; Background of the Merger.
</TABLE>
2
<PAGE> 4
<TABLE>
<S> <C> <C>
(b).................................. INTRODUCTION--Matters to be Considered at the Special
Meeting; SPECIAL FACTORS--Purpose and Effect of the
Merger; Background of the Merger.
Item 4 TERMS OF THE TRANSACTION
(a).................................. SUMMARY--The Merger; Certain Conditions to the
Consummation of the Merger; INTRODUCTION--Matters to
be Considered at the Special Meeting; THE
MERGER--Summary of the Merger Agreement.
(b).................................. SUMMARY--The Merger; Certain Conditions to the
Consummation of the Merger; INTRODUCTION--Matters to
be Considered at the Special Meeting; SPECIAL
FACTORS--Interests of Certain Persons in the Merger;
THE MERGER--Summary of the Merger Agreement.
Item 5 PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE
(a).................................. Not Applicable.
(b).................................. Not Applicable.
(c).................................. SPECIAL FACTORS--Purpose and Effect of the Merger.
(d).................................. Not Applicable.
(e).................................. SPECIAL FACTORS--Purpose and Effect of the Merger.
(f).................................. SUMMARY--Effective Time; Surrender of Certificates;
THE MERGER--Summary of the Merger
Agreement--Effective Time of the Merger.
(g).................................. SUMMARY--Effective Time; Surrender of Certificates;
THE MERGER--Summary of the Merger
Agreement--Effective Time of the Merger.
Item 6 SOURCE AND AMOUNT OF FUNDS OR OTHER
CONSIDERATION
(a).................................. SUMMARY--Financing of the Merger; THE MERGER--
Financing of the Merger.
(b).................................. THE MERGER--Expenses--The Company; Transworld.
(c).................................. Not Applicable.
(d).................................. Not Applicable.
Item 7 PURPOSE(S), ALTERNATIVES, REASONS AND
EFFECTS
(a).................................. SUMMARY--The Merger; INTRODUCTION--Matters to be
Considered at the Special Meeting; SPECIAL FACTORS--
Purpose and Effect of the Merger.
(b).................................. SPECIAL FACTORS--Background of the Merger;
Alternatives to the Merger.
(c).................................. INTRODUCTION--Matters to be Considered at the Special
Meeting; SPECIAL FACTORS--Purpose and Effect of the
Merger; Background of the Merger.
</TABLE>
3
<PAGE> 5
<TABLE>
<S> <C> <C>
(d).................................. SUMMARY--The Merger; Effective Time; Surrender of
Certificates; Tax Consequences; INTRODUCTION--Matters
to be Considered at the Special Meeting; SPECIAL
FACTORS--Purpose and Effect of the Merger; THE
MERGER--Summary of the Merger Agreement--Effective
Time of the Merger; Federal Income Tax Consequences.
Item 8 FAIRNESS OF THE TRANSACTION
(a).................................. SUMMARY--Recommendation of the Board of Directors of
the Company; SPECIAL FACTORS--Recommendation of the
Board of Directors; Fairness of the Merger.
(b).................................. SPECIAL FACTORS--Recommendation of the Board of
Directors; Fairness of the Merger.
(c).................................. SPECIAL FACTORS--Recommendation of the Board of
Directors; Fairness of the Merger.
(d).................................. SPECIAL FACTORS--Recommendation of the Board of
Directors; Fairness of the Merger.
(e).................................. SPECIAL FACTORS--Recommendation of the Board of
Directors; Fairness of the Merger.
(f).................................. SPECIAL FACTORS--Recommendation of the Board of
Directors; Fairness of the Merger; Alternatives to
the Merger.
Item 9 REPORTS, OPINIONS, APPRAISALS AND
CERTAIN NEGOTIATIONS
(a).................................. SPECIAL FACTORS--Background of the Merger; The
Company's Financial Advisor; Transworld's Financial
Advisor.
(b).................................. SPECIAL FACTORS--Background of the Merger; The
Company's Financial Advisor; Transworld's Financial
Advisor.
(c).................................. Not Applicable.
Item 10 INTERESTS IN SECURITIES OF THE ISSUER
(a).................................. SUMMARY--Vote Required; Appraisal Rights of
Dissenting Stockholders; INTRODUCTION--Matters to be
Considered at the Special Meeting; SECURITY OWNERSHIP
OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS.
(b).................................. SPECIAL FACTORS--Background of the Merger.
Item 11 CONTRACTS, ARRANGEMENT OR
UNDERSTANDINGS WITH RESPECT TO THE
ISSUER'S SECURITIES.................. SUMMARY--Vote Required; Appraisal Rights of
Dissenting Stockholders; INTRODUCTION--Matters to be
Considered at the Special Meeting; SPECIAL
FACTORS--Background of the Merger.
</TABLE>
4
<PAGE> 6
<TABLE>
<S> <C> <C>
Item 12 PRESENT INTENTION AND RECOMMENDATION
OF CERTAIN PERSONS WITH REGARD TO THE
TRANSACTION
(a).................................. SUMMARY--Vote Required; Appraisal Rights of
Dissenting Stockholders; INTRODUCTION--Matters to be
Considered at the Special Meeting.
(b).................................. SUMMARY--Vote Required; Appraisal Rights of
Dissenting Stockholders; INTRODUCTION--Matters to be
Considered at the Special Meeting; SPECIAL
FACTORS--Recommendation of the Board of Directors;
Fairness of the Merger.
Item 13 OTHER PROVISIONS OF THE TRANSACTION
(a).................................. SUMMARY--Vote Required; Appraisal Rights of
Dissenting Stockholders; THE MERGER--Appraisal Rights
of Dissenting Stockholders.
(b).................................. Not Applicable.
(c).................................. Not Applicable.
Item 14 FINANCIAL INFORMATION
(a).................................. SUMMARY--Selected Historical Consolidated Financial
Information; SELECTED FINANCIAL DATA; AUDITED
FINANCIAL STATEMENTS; CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.
(b).................................. Not Applicable.
Item 15 PERSONS AND ASSETS EMPLOYED, RETAINED
OR UTILIZED
(a).................................. SPECIAL FACTORS--Purpose and Effect of the Merger;
Interests of Certain Persons in the Merger.
(b).................................. SPECIAL FACTORS--Background of the Merger.
Item 16 ADDITIONAL INFORMATION Not Applicable.
Item 17 MATERIAL TO BE FILED AS EXHIBITS
(a).................................. Not Applicable.
(b)(1)............................... Opinion of National Westminster Bank Plc, dated
November 12, 1996
(b)(2)............................... Valuation analysis with respect to the November 12,
1996 Opinion of National Westminster Bank Plc
(b)(3)............................... Opinion of National Westminster Bank Plc, dated
January 12, 1997
(b)(4)............................... Valuation analysis with respect to the January 12,
1997 Opinion of National Westminster Bank Plc
(b)(5)............................... Opinion of UBS Securities LLC, dated November 13,
1996.
(b)(6)............................... Projections of Health Management, Inc.
</TABLE>
5
<PAGE> 7
<TABLE>
<S> <C>
(c).................................. Agreement and Plan of Merger, dated November 13,
1996, among Transworld Healthcare, Inc., IMH
Acquisition Corp. and Health Management, Inc., and
amendments thereto, appears on Exhibit I to the
definitive Proxy Statement filed as Exhibit 17(d) to
Amendment No. 1 to the Rule 13e-3 Transaction
Statement.
(d).................................. Letter to Stockholders, Notice of Special Meeting,
preliminary Proxy Statement and Form of Proxy.
(e).................................. Section 262 of the Delaware General Corporation Law
appears as Exhibit II to the definitive Proxy
Statement filed as Exhibit 17(d) to Amendment No. 1
to the Rule 13e-3 Transaction Statement.
(f).................................. At this time no written instruction, form or other
material currently exists with respect to any oral
solicitation or recommendation that may be made on
behalf of the persons filing this statement to
security holders in connection with the Rule 13e-3
transaction. Should any such written instruction,
form or material be generated; it will be supplied to
the commission in a supplemental filing.
</TABLE>
Pursuant to Rule 12b-22 under the Securities Exchange Act of 1934, as
amended, Transworld and IMH hereby disclaim the status of affiliates of the
Company for the purposes of the requirements of this statement.
6
<PAGE> 8
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Date: June 25, 1997
HEALTH MANAGEMENT, INC.
By: /s/ W. JAMES NICOL
------------------------------------
W. James Nicol
Chief Executive Officer and
President
7
<PAGE> 9
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Date: June 25, 1997
TRANSWORLD HEALTHCARE, INC.
By: /s/ WAYNE A. PALLADINO
------------------------------------
Wayne A. Palladino
Senior Vice President and Chief
Financial Officer
IMH ACQUISITION CORP.
By: /s/ WAYNE A. PALLADINO
------------------------------------
Wayne A. Palladino
Senior Vice President and Chief
Financial Officer
8
<PAGE> 10
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. TITLE
----------- -----
<S> <C> <C>
17(b)(1) Opinion of National Westminster Bank Plc, dated November 12,
1996*
17(b)(2) Valuation analysis with respect to the November 12, 1996
opinion of Westminster Bank Plc**
17(b)(3) Opinion of National Westminster Bank Plc, dated January 12,
1997*
17(b)(4) Valuation analysis with respect to the January 12, 1997
opinion of Westminster Bank Plc**
17(b)(5) Opinion of UBS Securities LLC, dated November 13, 1996*
17(b)(6) Projections of Health Management, Inc.**
</TABLE>
- ---------------
* Previously filed.
** Pursuant to Rule 24(b)(2) under the Securities Exchange Act of 1934, as
amended, certain confidential material has been omitted from this Exhibit and
filed separately with the Securities and Exchange Commission.
9
<PAGE> 1
EXHIBIT 17(b)(2)
The enclosed materials were reviewed by NatWest Markets with the Board
of Directors of the Company in connection with the delivery of NatWest Markets'
fairness opinion letter delivered to the Board of Directors on November 12,
1996. The Opinion of NatWest Markets is however, set forth solely in its
opinion letter delivered on that date and attached to Amendment No. 1 to the
Rule 13e-3 Transaction Statement as Exhibit 17(b)(1). In connection with the
delivery of such opinion letter, NatWest Markets delivered oral presentations
to the Board of Directors discussing the methodology and assumptions underlying
its opinions and the limitations thereof. Although the enclosed materials
summarize certain studies and analyses performed by NatWest Markets, they do
not cover all aspects of NatWest Markets' studies and analyses, nor do they
reflect the inherently subjective conclusions arrived at by NatWest Markets
therefrom. Therefor, an examination of the attached materials in isolation may
lead to incomplete or incorrect conclusions as to the valuation of HMI's common
stock at the time NatWest Markets' opinion letter was delivered and the
fairness of the $1.50 per Share cash consideration to HMI's shareholders.
The Company's historical financial statements have been restated by the Company
and the projections underlying NatWest Markets' analyses and opinions have been
revised in a materially adverse manner with respect to the Company's projected
earnings and prospects. NatWest Markets has not delivered any fairness opinion
based upon such restated financial statements and projections.
<PAGE> 2
PRESENTATION TO THE MANAGEMENT COMMITTEE
NOVEMBER 6, 1996
[LOGO]
NATWEST MARKETS
<PAGE> 3
HEALTH MANAGEMENT, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
TAB
<S> <C>
NATWEST MARKETS' ENGAGEMENT.................................... I
LIST OF PARTIES CONTACTED...................................... II
PRELIMINARY FINANCIAL ANALYSIS ................................ III
PRELIMINARY FINANCIAL MODEL .............................. (a)
ACQUISITIONS IN THE INDUSTRY.............................. (b)
COMPARABLE COMPANIES...................................... (c)
PRELIMINARY VALUATION..................................... (d)
</TABLE>
<PAGE> 4
NATWEST MARKETS' ENGAGEMENT
- --------------------------------------------------------------------------------
NATWEST MARKETS HAS BEEN ENGAGED BY HEALTH MANAGEMENT, INC. TO ACT AS ITS
FINANCIAL ADVISOR TO ADVISE AND ASSIST THE COMPANY IN CONNECTION WITH:
o A POSSIBLE SALE OF SECURITIES,
o A SALE OF THE COMPANY TO A THIRD PARTY, OR
o A RESTRUCTURING OF A SIGNIFICANT PORTION OF THE COMPANY'S BORROWINGS AND
CLAIMS ARISING FROM LITIGATION.
IN CONNECTION WITH AN M&A TRANSACTION, NATWEST MARKETS' SERVICES INCLUDE:
o SEEKING TO INTRODUCE THIRD PARTIES;
o REVIEWING THE BUSINESS, OPERATIONS, FINANCIAL CONDITION AND PROSPECTS
AND ANALYZING THE RANGE OF VALUES APPLICABLE TO THE COMPANY;
o ADVISING AND ASSISTING THE COMPANY IN PRICING, STRUCTURING AND
NEGOTIATING THE TRANSACTION;
o ASSISTING IN A PRESENTATION OF THE M&A TRANSACTION TO THE COMPANY'S
BOARD OF DIRECTORS AND IN COMMUNICATING INFORMATION REGARDING THE
TRANSACTION TO THE FINANCIAL COMMUNITY; AND
o PROVIDING SUCH ADDITIONAL FINANCIAL ADVISORY SERVICES AS THE COMPANY MAY
REASONABLY REQUEST.
<PAGE> 5
The following is a list of potential acquirors for the Company that were
contacted by the Company or NatWest Markets prior to November 6, 1996. This
list does not reflect any contacts with such potential acquirors by the Company
or NatWest Markets, or responses by potential acquirors, made on or after such
date.
LIST OF PARTIES CONTACTED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
COMPANY NAME CONTACT & TITLE ADDRESS PHONE & FAX COMMENTS
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
APRIA * * * No Contact.
- ---------------------------------------------------------------------------------------------------------
BERGEN * * * * Did not respond to
BRUNSWIG messages.
- ---------------------------------------------------------------------------------------------------------
BINDLEY * * * Not contacted in light
WESTERN of litigation.
- ---------------------------------------------------------------------------------------------------------
CANYON * * * Financial buyer -
PARTNERS interested in buying out
banks and providing DIP
financing; would expect
equity to be eliminated.
- ---------------------------------------------------------------------------------------------------------
CARDINAL * * * * Did not respond to
messages.
- ---------------------------------------------------------------------------------------------------------
MEDPARTNERS * * * Held meetings with
management. Declined to
pursue.
- ---------------------------------------------------------------------------------------------------------
CHRONIMED * * * * UBS had some
discussion with company
regarding HMIS. No
further response.
- ---------------------------------------------------------------------------------------------------------
CAHILL * * * Equity Investor - would
WARNOCK be interested in
investing along side a
strategic or financial
buyer.
- ---------------------------------------------------------------------------------------------------------
</TABLE>
Pursuant to Rule 24(b)(2) under the Securities Exchange Act of
1934, as amended, confidential material has been omitted and
filed separately with the Securities and Exchange Commission.
<PAGE> 6
LIST OF PARTIES CONTACTED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
COMPANY NAME CONTACT & TITLE ADDRESS PHONE & FAX COMMENTS
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLINICAL No contact.
RESEARCH * * *
CNTR
- ---------------------------------------------------------------------------------------------------------
CORAM No contact due to pending
* * * merger with Integrated
Health Services.
- ---------------------------------------------------------------------------------------------------------
CVS/MELVILLE Held meetings with
management.
* * * Company indicated
transaction would have to
be considered in Q1
1997. Unable to focus
due to current spinout of
other retail businesses.
- ---------------------------------------------------------------------------------------------------------
EXPRESS
SCRIPTS * * * *
- ---------------------------------------------------------------------------------------------------------
GRANCARE ?
* * *
- ---------------------------------------------------------------------------------------------------------
INTERIM
* * * * met with
management.
- ---------------------------------------------------------------------------------------------------------
MAGELLAN No contact.
HEALTH * * *
SERVICES
- ---------------------------------------------------------------------------------------------------------
MCKESSON
* * * * sent information package.
- ---------------------------------------------------------------------------------------------------------
</TABLE>
Pursuant to Rule 24(b)(2) under the Securities Exchange Act of
1934, as amended, confidential material has been omitted and
filed separately with the Securities and Exchange Commission.
<PAGE> 7
LIST OF PARTIES CONTACTED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
COMPANY NAME CONTACT & TITLE ADDRESS PHONE & FAX COMMENTS
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MERCK & CO * * * No contact.
- ---------------------------------------------------------------------------------------------------------
NOVA FACTOR * * * MANAGEMENT met with Welsh
(WELSH Carson/Nova Factor.
CARSON) Would be interested in
acquiring transplant
business.
- ---------------------------------------------------------------------------------------------------------
OLSTEN * * * No response.
- ---------------------------------------------------------------------------------------------------------
ORACLE * * * Financial Investor - met
PARTNERS with management; could
have interest in
providing DIP financing
as part of bankruptcy.
- ---------------------------------------------------------------------------------------------------------
QUINTILES * * * No contact.
- ---------------------------------------------------------------------------------------------------------
SANGSTAT * * * * contacted and
MEDICAL sent information package.
- ---------------------------------------------------------------------------------------------------------
SERVICE * * * Messages left with *
MASTER - no response
- ---------------------------------------------------------------------------------------------------------
</TABLE>
Pursuant to Rule 24(b)(2) under the Securities Exchange Act of
1934, as amended, confidential material has been omitted and
filed separately with the Securities and Exchange Commission.
<PAGE> 8
LIST OF PARTIES CONTACTED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
COMPANY NAME CONTACT & TITLE ADDRESS PHONE & FAX COMMENTS
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SMITH Financial Investor -
MANAGEMENT meeting delayed due to
(RD SMITH) * * * ongoing discussions with
Transworld. Interested
in meeting with
management.
- ---------------------------------------------------------------------------------------------------------
STADTLANDER * * * Strategic Investor -
DRUG CO interested in pursuing as
part of bankruptcy filing.
- ---------------------------------------------------------------------------------------------------------
TRANSWORLD/ * * * Strategic partner -
HOME proposal for combination
HEALTHCARE in discussion.
HYPERIAN
PARTNERS
- ---------------------------------------------------------------------------------------------------------
VALUE HEALTH * * * No contact.
- ---------------------------------------------------------------------------------------------------------
</TABLE>
Pursuant to Rule 24(b)(2) under the Securities Exchange Act of
1934, as amended, confidential material has been omitted and
filed separately with the Securities and Exchange Commission.
<PAGE> 9
HMIS FINANCIAL MODEL
STATEMENTS OF OPERATIONS
($000s, except per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997
-----------------------------------------
1994A 1995A 1996A Q1A Q2E Q3E Q4E 1997E
------ ------ ------- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales 44,250 88,456 158,860 40,523 40,523 40,523 40,920 162,488
Yr-to-Yr/Qtr-to-Qtr Growth 67.7% 99.9% 79.6% n/a 0.0% 0.0% 1.0% 2.3%
CGS 28,643 63,708 117,384 30,011 30,462 30,462 30,762 121,696
GROSS MARGIN 15,606 24,748 41,476 10,512 10,061 10,061 10,158 40,792
% of Net Sales 35.3% 28.0% 26.1% 25.9% 24.8% 24.8% 24.8% 25.1%
OPERATING EXPENSES
Selling and Distribution 1,847 2,898 4,650 1,233 1,216 1,175 1,187 4,811
% of Net Sales 4.2% 3.3% 2.9% 3.0% 3.0% 2.9% 2.9% 3.0%
G&A 6,756 17,780 28,512 6,708 6,889 6,889 6,956 27,442
% of Net Sales 15.3% 20.1% 17.9% 16.6% 17.0% 17.0% 17.0% 16.9%
EBITDA 7,003 4,070 8,315 2,570 1,956 1,997 2,015 8,539
% of Net Sales 15.8% 4.6% 5.2% 6.3% 4.8% 4.9% 4.9% 5.3%
Yr-to-Yr/Qtr-to-Qtr Growth 86.0% -41.9% 104.3% n/a -23.9% 2.1% -0.1% 2.7%
Deprec. & Amort. 453 847 2,127 646 646 646 646 2,584
EBIT 6,550 3,223 6,187 1,924 1,310 1,351 1,369 5,954
% of Net Sales 14.8% 3.6% 3.9% 4.7% 3.2% 3.3% 3.3% 3.7%
Yr-to-Yr/Qtr-to-Qtr Growth 85.2% -50.8% 92.0% n/a -31.9% 3.1% 1.3% -3.8%
Interest Income 290 333 38 - 22 (29) (99) (106)
Interest Expense (88) (269) (2,717) (740) (683) (683) (683) (2,790)
Misc. Income (Expense) - - - - - - - -
PRETAX INCOME 6,752 3,287 3,508 1,184 649 638 586 3,058
% of Net Sales 15.3% 3.7% 2.2% 2.9% 1.6% 1.6% 1.4% 1.9%
Yr-to-Yr/Qtr-to-Qtr Growth 93.6% -51.3% 6.7% n/a -45.2% -1.7% -8.1% -12.8%
Income Tax Expense 2,751 1,340 (2,405) 253 266 262 240 1,021
Effective Tax Rate 40.7% 40.8% -68.6% 21.3% 41.0% 41.0% 41.0% 33.4%
NET INCOME B/F NONREC. 4,001 1,946 5,913 932 383 376 346 2,037
% of Net Sales 9.0% 2.2% 3.7% 2.3% 0.9% 0.9% 0.8% 1.3%
Yr-to-Yr/Qtr-to-Qtr Growth 81.3% -51.4% 203.8% n/a -58.9% -1.7% -8.1% -65.5%
Nonrecurring Charges - - (16,840) (500) (1,201) (7,450) (250) (9,401)
NET INCOME 4,001 1,946 (10,927) 432 (818) (7,074) 96 (7,364)
% of Net Sales 9.0% 2.2% -6.9% 1.1% -2.0% -17.5% 0.2% -4.5%
PF. PRIMARY EPS B/F NONREC. 0.54 0.21 0.22 0.10 0.02 0.02 0.02 0.13
PF. FULLY DILUTED EPS B/F NONREC. 0.53 0.21 0.22 0.10 0.02 0.02 0.02 0.13
Primary EPS After N/R 0.54 0.21 (1.16) 0.05 (0.04) (0.39) 0.01 (0.46)
Fully Diluted EPS After N/R 0.53 0.21 (1.16) 0.05 (0.04) (0.39) 0.01 (0.46)
Primary Shares 7,383 9,408 9,415 9,328 18,296 18,296 18,296 16,054
Fully Diluted Shares 7,593 9,421 9,415 9,334 18,670 18,670 18,670 16,336
</TABLE>
<TABLE>
<CAPTION>
1998E 1999E
-------------------------------- ----------------------------------
Q1 Q2 Q3 Q4 1998E Q1 Q2 Q3 Q4 1999E
------ ------ ------ ------ -------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales 41,732 43,010 44,839 47,358 176,939 50,206 53,439 57,123 61,337 222,105
Yr-to-Yr/Qtr-to-Qtr Growth 2.0% 3.1% 4.3% 5.6% 8.9% 6.0% 6.4% 6.9% 7.4% 25.5%
CGS 31,376 32,342 33,726 35,631 133,074 37,911 40,359 43,149 46,342 167,761
GROSS MARGIN 10,356 10,668 11,114 11,727 43,865 12,295 13,080 13,974 14,995 54,343
% of Net Sales 24.8% 24.8% 24.8% 24.8% 24.8% 24.5% 24.5% 24.5% 24.4% 24.5%
OPERATING EXPENSES
Selling and Distribution 1,168 1,204 1,211 1,279 4,862 1,305 1,389 1,428 1,533 5,656
% of Net Sales 2.8% 2.8% 2.7% 2.7% 2.7% 2.6% 2.6% 2.5% 2.5% 2.5%
G&A 7,094 7,312 7,623 8,051 30,080 8,535 9,085 9,711 10,427 37,758
% of Net Sales 17.0% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0%
EBITDA 2,093 2,152 2,280 2,398 8,923 2,454 2,606 2,835 3,034 10,929
% of Net Sales 5.0% 5.0% 5.1% 5.1% 5.0% 4.9% 4.9% 5.0% 4.9% 4.9%
Yr-to-Yr/Qtr-to-Qtr Growth 1.9% -0.3% 1.6% -0.5% 4.5% -3.4% -0.2% 1.8% -0.3% 22.5%
Deprec. & Amort. 675 675 675 675 2,700 675 675 675 675 2,700
EBIT 1,418 1,477 1,605 1,723 6,223 1,779 1,931 2,160 2,359 8,229
% of Net Sales 3.4% 3.4% 3.6% 3.6% 3.5% 3.5% 3.6% 3.8% 3.8% 3.7%
Yr-to-Yr/Qtr-to-Qtr Growth 3.6% 4.1% 8.7% 7.3% 4.5% 3.3% 8.5% 11.9% 9.2% 32.2%
Interest Income (33) 17 14 6 4 4 (0) (29) (64) (90)
Interest Expense (683) (683) (683) (683) (2,734) (683) (683) (683) (683) (2,734)
Misc. Income (Expense) - - - - - - - - - -
PRETAX INCOME 702 810 936 1,045 3,493 1,100 1,247 1,447 1,612 5,406
% of Net Sales 1.7% 1.9% 2.1% 2.2% 2.0% 2.2% 2.3% 2.5% 2.6% 2.4%
Yr-to-Yr/Qtr-to-Qtr Growth 19.7% 15.5% 15.5% 11.6% 14.2% 5.2% 13.4% 16.0% 11.4% 54.7%
Income Tax Expense 288 332 384 429 1,432 451 511 593 661 2,216
Effective Tax Rate 41.0% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0%
NET INCOME B/F NONREC. 414 478 552 617 2,061 649 736 854 951 3,189
% of Net Sales 1.0% 1.1% 1.2% 1.3% 1.2% 1.3% 1.4% 1.5% 1.6% 1.4%
Yr-to-Yr/Qtr-to-Qtr Growth 19.7% 15.5% 15.5% 11.6% 1.2% 5.2% 13.4% 16.0% 11.4% 54.7%
Nonrecurring Charges - - - - - - - - - -
NET INCOME 414 478 552 617 2,061 649 736 854 951 3,189
% of Net Sales 1.0% 1.1% 1.2% 1.3% 1.2% 1.3% 1.4% 1.5% 1.6% 1.4%
PF. PRIMARY EPS B/F NONREC. 0.02 0.03 0.03 0.03 0.11 0.04 0.04 0.05 0.05 0.17
PF. FULLY DILUTED EPS B/F NONREC. 0.02 0.03 0.03 0.03 0.11 0.04 0.04 0.05 0.05 0.17
Primary EPS After N/R 0.02 0.03 0.03 0.03 0.11 0.04 0.04 0.05 0.05 0.17
Fully Diluted EPS After N/R 0.02 0.03 0.03 0.03 0.11 0.04 0.04 0.05 0.05 0.17
Primary Shares 18,296 18,296 18,296 18,296 18,296 18,296 18,296 18,296 18,296 18,296
Fully Diluted Shares 18,670 18,670 18,670 18,670 18,670 18,670 18,670 18,670 18,670 18,670
</TABLE>
<PAGE> 10
HMIS FINANCIAL MODEL
QUARTERLY OPS. BY PRODUCT LINE
($000s, except per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997
--------------------------------------------------------------
1996 1Q 2Q 3Q
E Growth % of Revs. E Growth % of Revs. E Growth % of Revs. E
------- ------ --------- ------- ------ ---------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Organ Transplant $63,544 na 40.0% $16,209 na 40.0% $16,209 0.0% 40.0% $16,209
Infertility 19,857 na 12.5% 5,065 na 12.5% 5,065 0.0% 12.5% 5,065
Neurology (MS, ALS, Alz.) 6,752 na 4.3% 1,722 na 4.3% 1,722 0.0% 4.3% 1,722
Cancer 11,914 na 7.5% 3,039 na 7.5% 3,039 0.0% 7.5% 3,039
Clozaril (Drug Sales) 36,141 na 22.8% 9,219 na 22.8% 9,219 0.0% 22.8% 9,219
Clozaril (Case Mgmt/Services) 9,929 na 6.3% 2,533 na 6.3% 2,533 0.0% 6.3% 2,533
Other Schiz (Drug Sales) 1,390 na 0.9% 355 na 0.9% 355 0.0% 0.9% 355
Other Schiz (Case Mgmt/Services) 199 na 0.1% 51 na 0.1% 51 0.0% 0.1% 51
HIV/AIDS 1,986 na 1.3% 507 na 1.3% 507 0.0% 1.3% 507
Other Products 7,149 na 4.5% 1,824 na 4.5% 1,824 0.0% 4.5% 1,824
-------- --- ----- ------- ---- ------ ------- ----- -------
TOTAL REVENUES $158,860 100.0% $40,523 100.0% $40,523 100.0% $40,523
Revenue Growth 79.6% na 0.0% 0.0%
</TABLE>
<TABLE>
<CAPTION>
4Q 1997
Growth % of Revs. E Growth % of Revs. E Growth % of Revs.
------ --------- ------- ------ ---------- ------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Organ Transplant 0.0% 40.0% $16,326 0.7% 39.9% $64,953 2.2% 40.0%
Infertility 0.0% 12.5% 5,113 0.9% 12.5% 20,309 2.3% 12.5%
Neurology (MS, ALS, Alz.) 0.0% 4.3% 1,787 3.8% 4.4% 6,954 3.0% 4.3%
Cancer 0.0% 7.5% 3,154 3.8% 7.7% 12,272 3.0% 7.6%
Clozaril (Drug Sales) 0.0% 22.8% 9,219 0.0% 22.5% 36,876 2.0% 22.7%
Clozaril (Case Mgmt/Services) 0.0% 6.3% 2,533 0.0% 6.2% 10,131 2.0% 6.2%
Other Schiz (Drug Sales) 0.0% 0.9% 368 3.8% 0.9% 1,432 3.0% 0.9%
Other Schiz (Case Mgmt/Services) 0.0% 0.1% 52 3.0% 0.1% 204 2.8% 0.1%
HIV/AIDS 0.0% 1.3% 526 3.8% 1.3% 2,045 3.0% 1.3%
Other Products 0.0% 4.5% 1,842 1.0% 4.5% 7,312 2.3% 4.5%
------ ------- ------ -------- ------
TOTAL REVENUES 100.0% $40,920 100.0% $162,488 100.0%
Revenue Growth 1.0% 2.3% 2.3%
</TABLE>
<TABLE>
<CAPTION>
COGS COGS COGS
Margin % of COGS Margin % of COGS Margin % of COGSS
------ --------- ------ --------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COGS - PRODUCT
Organ Transplant $47,658 75.0% 42.5% $12,157 75.0% 42.5% $12,157 75.0% 42.5%
Infertility 14,893 75.0% 13.3% 3,799 75.0% 13.3% 3,799 75.0% 13.3%
Neurology (MS, ALS, Alz.) 5,266 78.0% 4.7% 1,343 78.0% 4.7% 1,343 78.0% 4.7%
Cancer 8,936 75.0% 8.0% 2,279 75.0% 8.0% 2,279 75.0% 8.0%
Clozaril (Drug Sales) 27,105 75.0% 24.2% 6,914 75.0% 24.2% 6,914 75.0% 24.2%
Clozaril (Case Mgmt/Services) 0 0.0% 0.0% 0 0.0% 0.0% 0 0.0% 0.0%
Other Schiz (Drug Sales) 1,084 78.0% 1.0% 277 78.0% 1.0% 277 78.0% 1.0%
Other Schiz (Case Mgmt/Services) 0 0.0% 0.0% 0 0.0% 0.0% 0 0.0% 0.0%
HIV/AIDS 1,549 78.0% 1.4% 395 78.0% 1.4% 395 78.0% 1.4%
Other Products 5,576 78.0% 5.0% 1,422 78.0% 5.0% 1,422 78.0% 5.0%
-------- ----- ----- ------- ----- ----- ------- ---- -----
TOTAL COGS - PRODUCT $112,068 100.0% $28,587 100.0% $28,587 100.0%
% of total net revenues 70.5% 70.5% 70.5%
</TABLE>
<TABLE>
<CAPTION>
COGS COGS COGS
Margin % of COGS Margin % of COGS Margin % of COGS
------ --------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COGS - PRODUCT
Organ Transplant $12,157 75.0% 42.5% $12,244 75.0% 42.4% $48,715 75.0% 42.5%
Infertility 3,799 75.0% 13.3% 3,835 75.0% 13.3% 15,232 75.0% 13.3%
Neurology (MS, ALS, Alz.) 1,343 78.0% 4.7% 1,394 78.0% 4.8% 5,424 78.0% 4.7%
Cancer 2,279 75.0% 8.0% 2,366 75.0% 8.2% 9,204 75.0% 8.0%
Clozaril (Drug Sales) 6,914 75.0% 24.2% 6,914 75.0% 23.9% 27,657 75.0% 24.1%
Clozaril (Case Mgmt/Services) 0 0.0% 0.0% 0 0.0% 0.0% 0 0.0% 0.0%
Other Schiz (Drug Sales) 277 78.0% 1.0% 287 78.0% 1.0% 1,117 78.0% 1.0%
Other Schiz (Case Mgmt/Services) 0 0.0% 0.0% 0 0.0% 0.0% 0 0.0% 0.0%
HIV/AIDS 395 78.0% 1.4% 410 78.0% 1.4% 1,595 78.0% 1.4%
Other Products 1,422 78.0% 5.0% 1,437 78.0% 5.0% 5,704 78.0% 5.0%
------- ----- ----- ------- ----- ----- -------- ----- -----
TOTAL COGS - PRODUCT $28,587 100.0% $28,887 100.0% $114,647 100.0%
% of total net revenues 70.5% 70.6% 70.6%
</TABLE>
<TABLE>
<CAPTION>
Gross Gross Gross
Margin % of GP Margin % of GP Margin % of GP
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GROSS PROFIT - PRODUCT
Organ Transplant $15,886 25.0% 34.0% $4,052 25.0% 34.0% $4,052 25.0% 34.0%
Infertility 4,964 25.0% 10.6% 1,266 25.0% 10.6% 1,266 25.0% 10.6%
Neurology (MS, ALS, Alz.) 1,485 22.0% 3.2% 379 22.0% 3.2% 379 22.0% 3.2%
Cancer 2,979 25.0% 6.4% 760 25.0% 6.4% 760 25.0% 6.4%
Clozaril (Drug Sales) 9,035 25.0% 19.3% 2,305 25.0% 19.3% 2,305 25.0% 19.3%
Clozaril (Case Mgmt/Services) 9,929 100.0% 21.2% 2,533 100.0% 21.2% 2,533 100.0% 21.2%
Other Schiz (Drug Sales) 306 22.0% 0.7% 78 22.0% 0.7% 78 22.0% 0.7%
Other Schiz (Case Mgmt/Services) 199 100.0% 0.4% 51 100.0% 0.4% 51 100.0% 0.4%
HIV/AIDS 437 22.0% 0.9% 111 22.0% 0.9% 111 22.0% 0.9%
Other Products 1,573 22.0% 3.4% 401 22.0% 3.4% 401 22.0% 3.4%
------- ----- ----- ------- ----- ----- ------- ----- ------
TOTAL GROSS PROFIT - PRODUCT $46,792 100.0% $11,936 100.0% $11,936 100.0%
Gross Margin 29.5% 29.5% 29.5%
COGS - PHARMACY OPS AND FIXED $8,156 $1,424 $1,875
% of total net revenues 5.1% 3.5% 4.6%
TOTAL GROSS PROFIT $38,636 $10,512 $10,061
Gross Margin 24.3% 25.9% 24.8%
</TABLE>
<TABLE>
<CAPTION>
Gross Gross Gross
Margin % of GP Margin % of GP Margin % of GP
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GROSS PROFIT - PRODUCT
Organ Transplant $4,052 25.0% 34.0% $4,081 25.0% 33.9% $16,238 25.0% 33.9%
Infertility 1,266 25.0% 10.6% 1,278 25.0% 10.6% 5,077 25.0% 10.6%
Neurology (MS, ALS, Alz.) 379 22.0% 3.2% 393 22.0% 3.3% 1,530 22.0% 3.2%
Cancer 760 25.0% 6.4% 789 25.0% 6.6% 3,068 25.0% 6.4%
Clozaril (Drug Sales) 2,305 25.0% 19.3% 2,305 25.0% 19.2% 9,219 25.0% 19.3%
Clozaril (Case Mgmt/Services) 2,533 100.0% 21.2% 2,533 100.0% 21.0% 10,131 100.0% 21.2%
Other Schiz (Drug Sales) 78 22.0% 0.7% 81 22.0% 0.7% 315 22.0% 0.7%
Other Schiz (Case Mgmt/Services) 51 100.0% 0.4% 52 100.0% 0.4% 204 100.0% 0.4%
HIV/AIDS 111 22.0% 0.9% 116 22.0% 1.0% 450 22.0% 0.9%
Other Products 401 22.0% 3.4% 405 22.0% 3.4% 1,609 22.0% 3.4%
------- ----- ----- ------- ----- ----- ------- ----- -----
TOTAL GROSS PROFIT - PRODUCT $11,936 100.0% $12,033 100.0% $47,841 100.0%
Gross Margin 29.5% 29.4% 29.4%
COGS - PHARMACY OPS AND FIXED $1,875 $1,875 $7,049
% of total net revenues 4.6% 4.6% 4.3%
TOTAL GROSS PROFIT $10,061 $10,158 $40,792
Gross Margin 24.8% 24.8% 25.1%
</TABLE>
<PAGE> 11
HMIS FINANCIAL MODEL
QUARTERLY OPS. BY PRODUCT LINE
($000s, except per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998
----------------------------------------------------------------------------------------
1Q 2Q 3Q
E Growth % of Revs. E Growth % of Revs. E Growth % of Revs.
------- ------ --------- ------ ------ --------- ------- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Organ Transplant $16,561 1.4% 39.7% $16,919 2.2% 39.3% $17,406 2.9% 38.8%
Infertility 5,209 1.9% 12.5% 5,356 2.8% 12.5% 5,557 3.8% 12.4%
Neurology (MS, ALS, Alz.) 1,922 7.6% 4.6% 2,140 11.3% 5.0% 2,464 15.1% 5.5%
Cancer 3,393 7.6% 8.1% 3,777 11.3% 8.8% 4,348 15.1% 9.7%
Clozaril (Drug Sales) 9,219 0.0% 22.1% 9,219 0.0% 21.4% 9,219 0.0% 20.6%
Clozaril (Case Mgmt/Services) 2,533 0.0% 6.1% 2,533 0.0% 5.9% 2,533 0.0% 5.6%
Other Schiz (Drug Sales) 396 7.6% 0.9% 441 11.3% 1.0% 507 15.1% 1.1%
Other Schiz (Case Mgmt/Services) 55 6.0% 0.1% 60 9.0% 0.1% 68 12.0% 0.2%
HIV/AIDS 565 7.6% 1.4% 630 11.3% 1.5% 725 15.1% 1.6%
Other Products 1,879 2.0% 4.5% 1,935 3.0% 4.5% 2,012 4.0% 4.5%
------- ----- ------- ----- ------- -----
TOTAL REVENUES $41,732 100.0% $43,010 100.0% $44,839 100.0%
Revenue Growth 2.0% 3.1% 4.3%
</TABLE>
<TABLE>
<CAPTION>
1998
--------------------------------------
4Q 1998
E Growth % of Revs. E Growth % of Revs.
------- ------ --------- ------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Organ Transplant $18,033 3.6% 38.1% $68,918 6.1% 39.0%
Infertility 5,819 4.7% 12.3% 21,941 8.0% 12.4%
Neurology (MS, ALS, Alz.) 2,930 18.9% 6.2% 9,457 36.0% 5.3%
Cancer 5,170 18.9% 10.9% 16,688 36.0% 9.4%
Clozaril (Drug Sales) 9,219 0.0% 19.5% 36,876 0.0% 20.8%
Clozaril (Case Mgmt/Services) 2,533 0.0% 5.3% 10,131 0.0% 5.7%
Other Schiz (Drug Sales) 603 18.9% 1.3% 1,947 36.0% 1.1%
Other Schiz (Case Mgmt/Services) 78 15.0% 0.2% 261 27.7% 0.1%
HIV/AIDS 862 18.9% 1.8% 2,781 36.0% 1.6%
Other Products 2,113 5.0% 4.5% 7,939 8.6% 4.5%
------- ----- -------- -----
TOTAL REVENUES $47,358 100.0% $176,939 100.0%
Revenue Growth 5.6% 8.9%
</TABLE>
<TABLE>
<CAPTION>
COGS COGS COGS
Margin % of COGS Margin % of COGS Margin % of COGS
----- -------- ------ --------- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COGS - PRODUCT
Organ Transplant $12,421 75.0% 42.1% $12,689 75.0% 41.6% $13,054 75.0% 41.0%
Infertility 3,907 75.0% 13.2% 4,017 75.0% 13.2% 4,168 75.0% 13.1%
Neurology (MS, ALS, Alz.) 1,500 78.0% 5.1% 1,670 78.0% 5.5% 1,922 78.0% 6.0%
Cancer 2,544 75.0% 8.6% 2,833 75.0% 9.3% 3,261 75.0% 10.2%
Clozaril (Drug Sales) 6,914 75.0% 23.4% 6,914 75.0% 22.7% 6,914 75.0% 21.7%
Clozaril (Case Mgmt/Services) 0 0.0% 0.0% 0 0.0% 0.0% 0 0.0% 0.0%
Other Schiz (Drug Sales) 309 78.0% 1.0% 344 78.0% 1.1% 396 78.0% 1.2%
Other Schiz (Case Mgmt/Services) 0 0.0% 0.0% 0 0.0% 0.0% 0 0.0% 0.0%
HIV/AIDS 441 78.0% 1.5% 491 78.0% 1.6% 565 78.0% 1.8%
Other Products 1,465 78.0% 5.0% 1,509 78.0% 5.0% 1,570 78.0% 4.9%
------- ----- ------ ------- ----- ------ ------- ----- ------
TOTAL COGS - PRODUCT $29,501 100.0% $30,467 100.0% $31,851 100.0%
% of total net revenues 70.7% 70.8% 71.0%
</TABLE>
<TABLE>
<CAPTION>
COGS COGS
Margin % of COGS Margin % of COGS
------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
COGS - PRODUCT
Organ Transplant $13,524 75.0% 40.1% $51,689 75.0% 41.2%
Infertility 4,364 75.0% 12.9% 16,456 75.0% 13.1%
Neurology (MS, ALS, Alz.) 2,285 78.0% 6.8% 7,376 78.0% 5.9%
Cancer 3,878 75.0% 11.5% 12,516 75.0% 10.0%
Clozaril (Drug Sales) 6,914 75.0% 20.5% 27,657 75.0% 22.0%
Clozaril (Case Mgmt/Services) 0 0.0% 0.0% 0 0.0% 0.0%
Other Schiz (Drug Sales) 470 78.0% 1.4% 1,519 78.0% 1.2%
Other Schiz (Case Mgmt/Services) 0 0.0% 0.0% 0 0.0% 0.0%
HIV/AIDS 672 78.0% 2.0% 2,169 78.0% 1.7%
Other Products 1,648 78.0% 4.9% 6,192 78.0% 4.9%
------- ----- ------ -------- ----- ------
TOTAL COGS - PRODUCT $33,756 100.0% $125,574 100.0%
% of total net revenues 71.3% 71.0%
</TABLE>
<TABLE>
<CAPTION>
Gross Gross Gross
Margin % of GP Margin % of GP Margin % of GP
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GROSS PROFIT - PRODUCT
Organ Transplant $4,140 25.0% 33.9% $4,230 25.0% 33.7% $4,351 25.0% 33.5%
Infertility 1,302 25.0% 10.6% 1,339 25.0% 10.7% 1,389 25.0% 10.7%
Neurology (MS, ALS, Alz.) 423 22.0% 3.5% 471 22.0% 3.8% 542 22.0% 4.2%
Cancer 848 25.0% 6.9% 944 25.0% 7.5% 1,087 25.0% 8.4%
Clozaril (Drug Sales) 2,305 25.0% 18.8% 2,305 25.0% 18.4% 2,305 25.0% 17.7%
Clozaril (Case Mgmt/Services) 2,533 100.0% 20.7% 2,533 100.0% 20.2% 2,533 100.0% 19.5%
Other Schiz (Drug Sales) 87 22.0% 0.7% 97 22.0% 0.8% 112 22.0% 0.9%
Other Schiz (Case Mgmt/Services) 55 100.0% 0.5% 60 100.0% 0.5% 68 100.0% 0.5%
HIV/AIDS 124 22.0% 1.0% 138 22.0% 1.1% 159 22.0% 1.2%
Other Products 413 22.0% 3.4% 426 22.0% 3.4% 443 22.0% 3.4%
------- ----- ------ ------- ------ ------ ------- ------ ------
TOTAL GROSS PROFIT - PRODUCT $12,231 100.0% $12,543 100.0% $12,989 100.0%
Gross Margin 29.3% 29.2% 29.0%
COGS - PHARMACY OPS AND FIXED $1,875 $1,875 $1,875
% of total net revenues 4.5% 4.4% 4.2%
TOTAL GROSS PROFIT $10,356 $10,668 $11,114
Gross Margin 24.8% 24.8% 24.8%
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Margin % of GP Margin % of GP
------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
GROSS PROFIT - PRODUCT
Organ Transplant $4,508 25.0% 33.1% $17,230 25.0% 33.5%
Infertility 1,455 25.0% 10.7% 5,485 25.0% 10.7%
Neurology (MS, ALS, Alz.) 645 22.0% 4.7% 2,080 22.0% 4.1%
Cancer 1,293 25.0% 9.5% 4,172 25.0% 8.1%
Clozaril (Drug Sales) 2,305 25.0% 16.9% 9,219 25.0% 17.9%
Clozaril (Case Mgmt/Services) 2,533 100.0% 18.6% 10,131 100.0% 19.7%
Other Schiz (Drug Sales) 133 22.0% 1.0% 428 22.0% 0.8%
Other Schiz (Case Mgmt/Services) 78 100.0% 0.6% 261 100.0% 0.5%
HIV/AIDS 190 22.0% 1.4% 612 22.0% 1.2%
Other Products 465 22.0% 3.4% 1,747 22.0% 3.4%
------- ------ ------ ------- ------ ------
TOTAL GROSS PROFIT - PRODUCT $13,602 100.0% $51,365 100.0%
Gross Margin 28.7% 29.0%
COGS - PHARMACY OPS AND FIXED $1,875 $7,500
% of total net revenues 4.0% 4.2%
TOTAL GROSS PROFIT $11,727 $43,865
Gross Margin 24.8% 24.8%
</TABLE>
<PAGE> 12
HMIS FINANCIAL MODEL
QUARTERLY OPS. BY PRODUCT LINE
($000s, except per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999
-----------------------------------------------------------------------------------------
1Q 2Q 3Q
E Growth % of Rev E Growth % of Revs. E Growth % of Revs.
------- ------ -------- ------- ------ ---------- ------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Organ Transplant $18,682 3.6% 37.2% $19,354 3.6% 36.2% $20,051 3.6% 35.1%
Infertility 6,092 4.7% 12.1% 6,378 4.7% 11.9% 6,678 4.7% 11.7%
Neurology (MS, ALS, Alz.) 3,484 18.9% 6.9% 4,142 18.9% 7.8% 4,925 18.9% 8.6%
Cancer 6,147 18.9% 12.2% 7,309 18.9% 13.7% 8,691 18.9% 15.2%
Clozaril (Drug Sales) 9,219 0.0% 18.4% 9,219 0.0% 17.3% 9,219 0.0% 16.1%
Clozaril (Case Mgmt/Services) 2,533 0.0% 5.0% 2,533 0.0% 4.7% 2,533 0.0% 4.4%
Other Schiz (Drug Sales) 717 18.9% 1.4% 853 18.9% 1.6% 1,014 18.9% 1.8%
Other Schiz (Case Mgmt/Services) 89 15.0% 0.2% 103 15.0% 0.2% 118 15.0% 0.2%
HIV/AIDS 1,025 18.9% 2.0% 1,218 18.9% 2.3% 1,448 18.9% 2.5%
Other Products 2,219 5.0% 4.4% 2,330 5.0% 4.4% 2,446 5.0% 4.3%
TOTAL REVENUES -------- ----- ------- ----- ------- -----
Revenue Growth $50,206 100.0% $53,439 100.0% $57,123 100.0%
6.0% 6.4% 6.9%
</TABLE>
<TABLE>
<CAPTION>
1999
-------------------------------------------------
4Q 1999
E Growth % of Revs. E Growth % of Revs.
------- ----- --------- ------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Organ Transplant $20,773 3.6% 33.9% $78,860 14.4% 35.5%
Infertility 6,992 4.7% 11.4% 26,141 19.1% 11.8%
Neurology (MS, ALS, Alz.) 5,856 18.9% 9.5% 18,406 94.6% 8.3%
Cancer 10,333 18.9% 16.8% 32,481 94.6% 14.6%
Clozaril (Drug Sales) 9,219 0.0% 15.0% 36,876 0.0% 16.6%
Clozaril (Case Mgmt/Services) 2,533 0.0% 4.1% 10,131 0.0% 4.6%
Other Schiz (Drug Sales) 1,206 18.9% 2.0% 3,789 94.6% 1.7%
Other Schiz (Case Mgmt/Services) 136 15.0% 0.2% 446 71.0% 0.2%
HIV/AIDS 1,722 18.9% 2.8% 5,413 94.6% 2.4%
Other Products 2,568 5.0% 4.2% 9,563 20.5% 4.3%
TOTAL REVENUES ------- ----- -------- -----
Revenue Growth $61,337 100.0% $222,105 100.0%
7.4% 25.5%
</TABLE>
<TABLE>
<CAPTION>
COGS COGS COGS
Margin % of COGS Margin % of COGS Margin % of COGS
------ --------- ----- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COGS - PRODUCT
Organ Transplant $14,011 75.0% 39.0% $14,516 75.0% 37.8% $15,038 75.0% 36.5%
Infertility 4,569 75.0% 12.7% 4,784 75.0% 12.5% 5,009 75.0% 12.2%
Neurology (MS, ALS, Alz.) 2,717 78.0% 7.6% 3,231 78.0% 8.4% 3,841 78.0% 9.3%
Cancer 4,611 75.0% 12.8% 5,482 75.0% 14.3% 6,518 75.0% 15.8%
Clozaril (Drug Sales) 6,914 75.0% 19.3% 6,914 75.0% 18.0% 6,914 75.0% 16.8%
Clozaril (Case Mgmt/Services) 0 0.0% 0.0% 0 0.0% 0.0% 0 0.0% 0.0%
Other Schiz (Drug Sales) 559 78.0% 1.6% 665 78.0% 1.7% 791 78.0% 1.9%
Other Schiz (Case Mgmt/Services) 0 0.0% 0.0% 0 0.0% 0.0% 0 0.0% 0.0%
HIV/AIDS 799 78.0% 2.2% 950 78.0% 2.5% 1,130 78.0% 2.7%
Other Products 1,731 78.0% 4.8% 1,817 78.0% 4.7% 1,908 78.0% 4.6%
------- ---- ----- ------- ---- ----- ------- ---- ------
TOTAL COGS - PRODUCT $35,911 100.0% $38,359 100.0% $41,149 100.0%
% of total net revenues 71.5% 71.8% 72.0%
</TABLE>
<TABLE>
<CAPTION>
COGS COGS
Margin % of COGS Margin % of COGS
------ -------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
COGS - PRODUCT
Organ Transplant $15,580 75.0% 35.1% $59,145 75.0% 37.0%
Infertility 5,244 75.0% 11.8% 19,605 75.0% 12.3%
Neurology (MS, ALS, Alz.) 4,567 78.0% 10.3% 14,356 78.0% 9.0%
Cancer 7,750 75.0% 17.5% 24,360 75.0% 15.2%
Clozaril (Drug Sales) 6,914 75.0% 15.6% 27,657 75.0% 17.3%
Clozaril (Case Mgmt/Services) 0 0.0% 0.0% 0 0.0% 0.0%
Other Schiz (Drug Sales) 940 78.0% 2.1% 2,956 78.0% 1.9%
Other Schiz (Case Mgmt/Services) 0 0.0% 0.0% 0 0.0% 0.0%
HIV/AIDS 1,343 78.0% 3.0% 4,222 78.0% 2.6%
Other Products 2,003 78.0% 4.5% 7,459 78.0% 4.7%
------- ---- ----- -------- ---- -----
TOTAL COGS - PRODUCT $44,342 100.0% $159,761 100.0%
% of total net revenues 72.3% 71.9%
</TABLE>
<TABLE>
<CAPTION>
Gross Gross Gross
Margin % of GP Margin % of GP Margin % of GP
----- ------ ----- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GROSS PROFIT - PRODUCT
Organ Transplant $4,670 25.0% 32.7% $4,839 25.0% 32.1% $5,013 25.0% 31.4% $5,193
Infertility 1,523 25.0% 10.7% 1,595 25.0% 10.6% 1,670 25.0% 10.5% 1,748
Neurology (MS, ALS, Alz.) 766 22.0% 5.4% 911 22.0% 6.0% 1,083 22.0% 6.8% 1,288
Cancer 1,537 25.0% 10.8% 1,827 25.0% 12.1% 2,173 25.0% 13.6% 2,583
Clozaril (Drug Sales) 2,305 25.0% 16.1% 2,305 25.0% 15.3% 2,305 25.0% 14.4% 2,305
Clozaril (Case Mgmt/Services) 2,533 100.0% 17.7% 2,533 100.0% 16.8% 2,533 100.0% 15.9% 2,533
Other Schiz (Drug Sales) 158 22.0% 1.1% 188 22.0% 1.2% 223 22.0% 1.4% 265
Other Schiz (Case Mgmt/Services) 89 100.0% 0.6% 103 100.0% 0.7% 118 100.0% 0.7% 136
HIV/AIDS 225 22.0% 1.6% 268 22.0% 1.8% 319 22.0% 2.0% 379
Other Products 488 22.0% 3.4% 513 22.0% 3.4% 538 22.0% 3.4% 565
------- ----- ----- ------ ----- ----- ------- ----- ----- -------
TOTAL GROSS PROFIT - PRODUCT $14,295 100.0% $15,080 100.0% $15,974 100.0% $16,995
Gross Margin 28.5% 28.2% 28.0% 27.7%
$2,000 $2,000 $2,000 $2,000
COGS - PHARMACY OPS AND FIXED 4.0% 3.7% 3.5% 3.3%
% of total net revenues
$12,295 $13,080 $13,974 $14,995
TOTAL GROSS PROFIT 24.5% 24.5% 24.5% 24.4%
Gross Margin
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Margin % of GP Margin % of GP
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
GROSS PROFIT - PRODUCT 25.0% 30.6% $19,715 25.0% 31.6%
Organ Transplant 25.0% 10.3% 6,535 25.0% 10.5%
Infertility 22.0% 7.6% 4,049 22.0% 6.5%
Neurology (MS, ALS, Alz.) 25.0% 15.2% 8,120 25.0% 13.0%
Cancer 25.0% 13.6% 9,219 25.0% 14.8%
Clozaril (Drug Sales) 100.0% 14.9% 10,131 100.0% 16.2%
Clozaril (Case Mgmt/Services) 22.0% 1.6% 834 22.0% 1.3%
Other Schiz (Drug Sales) 100.0% 0.8% 446 100.0% 0.7%
Other Schiz (Case Mgmt/Services) 22.0% 2.2% 1,191 22.0% 1.9%
HIV/AIDS 22.0% 3.3% 2,104 22.0% 3.4%
Other Products ----- ---- ------- ----- ----
100.0% $62,343 100.0%
TOTAL GROSS PROFIT - PRODUCT 28.1%
Gross Margin
$8,000
COGS - PHARMACY OPS AND FIXED 3.6%
% of total net revenues
$54,343
TOTAL GROSS PROFIT 24.5%
Gross Margin
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Margin % of GP Margin % of GP
------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
GROSS PROFIT - PRODUCT
Organ Transplant $4,508 25.0% 33.1% $17,230 25.0% 33.5%
Infertility 1,455 25.0% 10.7% 5,485 25.0% 10.7%
Neurology (MS, ALS, Alz.) 645 22.0% 4.7% 2,080 22.0% 4.1%
Cancer 1,293 25.0% 9.5% 4,172 25.0% 8.1%
Clozaril (Drug Sales) 2,305 25.0% 16.9% 9,219 25.0% 17.9%
Clozaril (Case Mgmt/Services) 2,533 100.0% 18.6% 10,131 100.0% 19.7%
Other Schiz (Drug Sales) 133 22.0% 1.0% 428 22.0% 0.8%
Other Schiz (Case Mgmt/Services) 78 100.0% 0.6% 261 100.0% 0.5%
HIV/AIDS 190 22.0% 1.4% 612 22.0% 1.2%
Other Products 465 22.0% 3.4% 1,747 22.0% 3.4%
------- ----- ---- ------- ----- -----
TOTAL GROSS PROFIT - PRODUCT $13,602 100.0% $51,365 100.0%
Gross Margin 28.7% 29.0%
COGS - PHARMACY OPS AND FIXED $1,875 $7,500
% of total net revenues 4.0% 4.2%
TOTAL GROSS PROFIT $11,727 $43,865
Gross Margin 24.8% 24.8%
</TABLE>
<PAGE> 13
HMIS FINANCIAL MODEL
BALANCE SHEET
($000s, except per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997
------------------------------------------
1995A 1996A Q1A Q2E Q3E Q4E 1997E
--------- ---------- --------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT:
Cash and cash equivalents $4,563 $3,280 $1,586 $1,964 $(4,654) $(4,416) $(4,416)
Accounts receivable, net 31,340 36,457 36,959 39,968 39,968 40,359 40,359
Inventories 7,788 6,801 7,212 7,010 7,010 7,079 7,079
Tax refund receivable 1,827 8,037 5,752 2,300 2,300 2,300 2,300
Deferred taxes 3,133 1,807 2,357 2,357 2,357 2,357 2,357
Prepaid expenses and other 1,164 655 404 404 404 404 404
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 49,814 57,038 54,269 54,003 47,385 48,083 48,083
IMPROVEMENTS AND EQUIPMENT, NET 2,136 3,826 3,680 3,481 3,282 3,083 3,083
GOODWILL 35,464 34,008 33,711 33,446 33,182 32,917 32,917
OTHER 1,276 1,044 1,167 1,167 1,167 1,167 1,167
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $88,690 $95,916 $92,828 $92,098 $85,015 $85,250 $85,250
============================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT:
Accounts payable $12,330 $20,715 $18,448 $12,352 $12,352 $12,473 $12,473
Accrued unusual charges 0 3,559 2,151 0 0 0 0
Accrued expenses 1,862 1,526 1,778 1,783 1,774 1,791 1,791
Current maturities of long-term debt 23,135 28,746 28,750 28,750 28,750 28,750 28,750
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 37,328 54,546 51,127 42,885 42,876 43,015 43,015
LONG-TERM DEBT, LESS CURRENT MATURITIES 3,191 4,006 3,905 3,905 3,905 3,905 3,905
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 40,519 58,552 55,032 46,790 46,781 46,920 46,920
- ----------------------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock 0 0 0 0 0 0 0
Common stock 280 280 280 549 549 549 549
Additional paid-in capital 38,020 38,139 38,139 46,200 46,200 46,200 46,200
Retained earnings (deficit) 9,872 (1,055) (623) (1,441) (8,515) (8,419) (8,419)
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 48,172 37,364 37,796 45,307 38,234 38,330 38,330
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $88,690 $95,916 $92,828 $92,098 $85,015 $85,250 $85,250
============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
1998E
----------------------------------------
Q1 Q2 Q3 Q4 1998E
------------------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT:
Cash and cash equivalents $1,390 $1,349 $936 $55 $55
Accounts receivable, net 40,245 41,478 43,242 45,672 45,672
Inventories 7,221 7,443 7,762 8,200 8,200
Tax refund receivable 0 0 0 0 0
Deferred taxes 0 0 0 0 0
Prepaid expenses and other 404 404 404 404 404
- ------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 49,260 50,673 52,344 54,330 54,330
IMPROVEMENTS AND EQUIPMENT, NET 2,872 2,661 2,450 2,240 2,240
GOODWILL 32,640 32,363 32,086 31,810 31,810
OTHER 1,167 1,167 1,167 1,167 1,167
- ------------------------------------------------------------------------------------------------
TOTAL ASSETS $85,939 $86,865 $88,048 $89,546 $89,546
================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT:
Accounts payable $12,722 $13,114 $13,675 $14,448 $14,448
Accrued unusual charges 0 0 0 0 0
Accrued expenses 1,818 1,873 1,943 2,053 2,053
Current maturities of long-term debt 28,750 28,750 28,750 28,750 28,750
- ------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 43,290 43,737 44,368 45,250 45,250
LONG-TERM DEBT, LESS CURRENT MATURITIES 3,905 3,905 3,905 3,905 3,905
- ------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 47,195 47,643 48,274 49,156 49,156
- ------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock 0 0 0 0 0
Common stock 549 549 549 549 549
Additional paid-in capital 46,200 46,200 46,200 46,200 46,200
Retained earnings (deficit) (8,005) (7,527) (6,974) (6,358) (6,358)
- ------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 38,744 39,222 39,774 40,391 40,391
- ------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $85,939 $86,865 $88,048 $89,546 $89,546
================================================================================================
</TABLE>
<TABLE>
<CAPTION>
1999E
-----------------------------------------------
Q1 Q2 Q3 Q4 1999E
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT:
Cash and cash equivalents $608 $(612) $(2,067) $(3,813) $(3,813)
Accounts receivable, net 46,767 49,778 53,210 57,136 57,136
Inventories 8,725 9,288 9,930 10,665 10,665
Tax refund receivable 0 0 0 0 0
Deferred taxes 0 0 0 0 0
Prepaid expenses and other 404 404 404 404 404
- -------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 56,503 58,859 61,478 64,391 64,391
IMPROVEMENTS AND EQUIPMENT, NET 2,029 1,818 1,607 1,397 1,397
GOODWILL 31,533 31,256 30,979 30,703 30,703
OTHER 1,167 1,167 1,167 1,167 1,167
- -------------------------------------------------------------------------------------------------------
TOTAL ASSETS $91,232 $93,100 $95,232 $97,658 $97,658
=======================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT:
Accounts payable $15,372 $16,365 $17,496 $18,791 $18,791
Accrued unusual charges 0 0 0 0 0
Accrued expenses 2,165 2,304 2,451 2,631 2,631
Current maturities of long-term debt 28,750 28,750 28,750 28,750 28,750
- -------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 46,287 47,419 48,697 50,172 50,172
LONG-TERM DEBT, LESS CURRENT MATURITIES 3,905 3,905 3,905 3,905 3,905
- -------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 50,193 51,324 52,602 54,078 54,078
- -------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock 0 0 0 0 0
Common stock 549 549 549 549 549
Additional paid-in capital 46,200 46,200 46,200 46,200 46,200
Retained earnings (deficit) (5,709) (4,973) (4,119) (3,168) (3,168)
- -------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 41,040 41,776 42,629 43,580 43,580
- -------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $91,232 $93,100 $95,232 $97,658 $97,658
=======================================================================================================
</TABLE>
<PAGE> 14
HMIS FINANCIAL MODEL
CASH FLOW STATEMENT
($000s, except per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997
------------------------------------------
1994A 1995A 1996A Q1A Q2E Q3E Q4E
-------- ----------- --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) 4,001 1,946 (10,927) 432 (818) (7,074) 96
Adj. to reconcile net income (loss) to CF fr. Ops.:
Depreciation and amortization 453 847 2,127 646 646 646 646
Provision for doubtful A/R 1,781 7,978 14,715 1,635 2,026 2,026 2,046
Deferred taxes (701) (2,516) 1,326 (550) - - -
Write-off of improvements and equipment - - 264 - - - -
Write-off of goodwill - - 552 - - - -
Write-off of organizational costs - - 134 - - - -
Loss from disposition of rental equipment - 287 - - - - -
Compensation under restricted stock 57 57 - - - - -
Common stock issued to director - 19 - - - - -
Changes in working capital:
Accounts receivable (9,625) (16,707) (19,832) (2,137) (5,035) (2,026) (2,437)
Tax refund receivable - (1,827) (6,210) 2,286 3,452 - -
Inventories 205 (1,827) 987 (411) 202 - (69)
Prepaid expenses and other (205) (976) 508 252 - - -
Other assets (249) (240) 98 (124) - - -
Accounts payable 100 4,870 8,385 (2,267) (6,096) - 122
Accrued unusual charges - - 3,559 (1,408) (2,151) - -
Acrrued expenses 203 396 (336) 252 5 (9) 17
Income taxes payable 280 (1,760) - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
NET CASH FROM (USED IN) OPERATING ACTIVITIES (3,700) (9,451) (4,650) (1,395) (7,770) (6,436) 421
- -----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash used in acquisition of CPMB - (20,630) (324) - - - -
Cash used in acquisition of Murray Group (7,500) - - - - - -
Other acquisitions (250) (2,168) - - - - -
Collection of receivable from seller of Murray - 1,444 - - - - -
Capital expenditures (566) (948) (1,492) (203) (182) (182) (182)
Proceeds from sale of rental equipment - 215 - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
NET CASH FROM (USED IN) INVESTING ACTIVITIES (8,316) (22,087) (1,816) (203) (182) (182) (182)
- -----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt - 23,000 16,450 - - - -
Principal payments on long-term debt - - (11,000) (97) - - -
Principal payments on current maturities of LTD - - - - - - -
Net payment on capital leases (44) (123) (386) - - - -
Decrease in bank loan - net (200) - - - - - -
Proceeds from issuance of common stock 21,982 - - - 8,330 - -
Cash paid for deferred borrowing fees - (722) - - - - -
Proceeds from exercise of warrants 218 427 - - - - -
Proceeds from exercise of options 13 24 120 - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 21,969 22,606 5,184 (97) 8,330 - -
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 9,953 (8,933) (1,283) (1,694) 378 (6,618) 239
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,543 13,495 4,563 3,280 1,586 1,964 (4,654)
- -----------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD 13,495 4,563 3,280 1,586 1,964 (4,654) (4,416)
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
1998E
------------------------------------------
1997E Q1 Q2 Q3 Q4 1998E
--------- --------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) (7,364) 414 478 552 617 2,061
Adj. to reconcile net income (loss) to CF fr. Ops.:
Depreciation and amortization 2,584 675 675 675 675 2,700
Provision for doubtful A/R 7,733 2,087 2,150 2,242 2,368 8,847
Deferred taxes (550) 2,357 - - - 2,357
Write-off of improvements and equipment - - - - - -
Write-off of goodwill - - - - - -
Write-off of organizational costs - - - - - -
Loss from disposition of rental equipment - - - - - -
Compensation under restricted stock - - - - - -
Common stock issued to director - - - - - -
Changes in working capital:
Accounts receivable (11,635) (1,973) (3,383) (4,007) (4,797) (14,160)
Tax refund receivable 5,737 2,300 - - - 2,300
Inventories (279) (141) (222) (318) (439) (1,121)
Prepaid expenses and other 252 - - - - -
Other assets (124) - - - - -
Accounts payable (8,242) 249 392 561 773 1,975
Accrued unusual charges (3,559) - - - - -
Acrrued expenses 265 26 56 70 109 261
Income taxes payable - - - - - -
- ------------------------------------------------------------------------------------------------------------------------
NET CASH FROM (USED IN) OPERATING ACTIVITIES (15,180) 5,993 146 (225) (694) 5,220
- ------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash used in acquisition of CPMB - - - - - -
Cash used in acquisition of Murray Group - - - - - -
Other acquisitions - - - - - -
Collection of receivable from seller of Murray - - - - - -
Capital expenditures (749) (188) (188) (188) (188) (750)
Proceeds from sale of rental equipment - - - - - -
- ------------------------------------------------------------------------------------------------------------------------
NET CASH FROM (USED IN) INVESTING ACTIVITIES (749) (188) (188) (188) (188) (750)
- ------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt - - - - - -
Principal payments on long-term debt (97) - - - - -
Principal payments on current maturities of LTD - - - - - -
Net payment on capital leases - - - - - -
Decrease in bank loan - net - - - - - -
Proceeds from issuance of common stock 8,330 - - - - -
Cash paid for deferred borrowing fees - - - - - -
Proceeds from exercise of warrants - - - - - -
Proceeds from exercise of options - - - - - -
- ------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 8,233 - - - - -
- ------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (7,696) 5,806 (41) (412) (882) 4,470
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,280 (4,416) 1,390 1,349 936 (4,416)
- ------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD (4,416) 1,390 1,349 936 55 55
========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
1999E
--------------------------------------
Q1 Q2 Q3 Q4 1999E
-------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) 649 736 854 951 3,189
Adj. to reconcile net income (loss) to CF fr. Ops.:
Depreciation and amortization 675 675 675 675 2,700
Provision for doubtful A/R 2,510 2,672 2,856 3,067 11,105
Deferred taxes - - - - -
Write-off of improvements and equipment - - - - -
Write-off of goodwill - - - - -
Write-off of organizational costs - - - - -
Loss from disposition of rental equipment - - - - -
Compensation under restricted stock - - - - -
Common stock issued to director - - - - -
Changes in working capital:
Accounts receivable (3,606) (5,683) (6,288) (6,993) (22,570)
Tax refund receivable - - - - -
Inventories (525) (563) (642) (735) (2,465)
Prepaid expenses and other - - - - -
Other assets - - - - -
Accounts payable 925 992 1,131 1,295 4,343
Accrued unusual charges - - - - -
Acrrued expenses 112 139 146 181 579
Income taxes payable - - - - -
- ---------------------------------------------------------------------------------------------------------
NET CASH FROM (USED IN) OPERATING ACTIVITIES 740 (1,032) (1,267) (1,559) (3,118)
- ---------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash used in acquisition of CPMB - - - - -
Cash used in acquisition of Murray Group - - - - -
Other acquisitions - - - - -
Collection of receivable from seller of Murray - - - - -
Capital expenditures (188) (188) (188) (188) (750)
Proceeds from sale of rental equipment - - - - -
- ---------------------------------------------------------------------------------------------------------
NET CASH FROM (USED IN) INVESTING ACTIVITIES (188) (188) (188) (188) (750)
- ---------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt - - - - -
Principal payments on long-term debt - - - - -
Principal payments on current maturities of LTD - - - - -
Net payment on capital leases - - - - -
Decrease in bank loan - net - - - - -
Proceeds from issuance of common stock - - - - -
Cash paid for deferred borrowing fees - - - - -
Proceeds from exercise of warrants - - - - -
Proceeds from exercise of options - - - - -
- ---------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES - - - - -
- ---------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 553 (1,219) (1,455) (1,747) (3,868)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 55 608 (612) (2,067) 55
- ---------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD 608 (612) (2,067) (3,813) (3,813)
=========================================================================================================
</TABLE>
<PAGE> 15
HMIS FINANCIAL MODEL
ASSUMPTIONS
($000s, except per share amounts)
- --------------------------------------------------------------------------------
SHARES OUTSTANDING AND SETTLEMENT
<TABLE>
<CAPTION>
1997
---------------------------------------
1993 1994 1995 1996 Q1 Q2 Q3 Q4
------- ------- ------- ------- ------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Non-settlement shares 5,884 7,383 9,408 9,415 9,328 9,328 9,328 9,328
Newly issued shares - - - - - 8,968 8,968 8,968
Non-settlement options 424 210 13 - 5 374 374 374
Shares to Banks - - - - - - - -
Options to Banks - - - - - - - -
Wt Avg Shares to Plaintiffs - - - - - - - -
Wt Avg Options to Plaintiffs - - - - - - - -
Shares to Suppliers - - - - - - - -
Options to Suppliers - - - - - - - -
Total settlement shares 0 0 0 0 0 0 0 0
Total settlement options 0 0 0 0 0 0 0 0
Bond Conversion Price 0.00 0.00 0.00
Shares on bond convers. - - -
Primary Shares 5,884 7,383 9,408 9,415 9,328 18,296 18,296 18,296
Fully Diluted Shares 6,309 7,593 9,421 9,415 9,334 18,670 18,670 18,670
</TABLE>
<TABLE>
<CAPTION>
1998 1999
----------------------------- ------------------------------------
1997E Q1 Q2 Q3 Q4 1998E Q1 Q2 Q3 Q4 1999E
------ ----- ----- ----- ----- ------ ----- ---- ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Non-settlement shares 9,328 9,328 9,328 9,328 9,328 9,328 9,328 9,328 9,328 9,328 9,328
Newly issued shares 8,968 8,968 8,968 8,968 8,968 8,968 8,968 8,968 8,968 8,968 8,968
Non-settlement options 374 374 374 374 374 374 374 374 374 374 374
Shares to Banks - - - - - - - - - - -
Options to Banks - - - - - - - - - - -
Wt Avg Shares to Plaintiffs - - - - - - - - - - -
Wt Avg Options to Plaintiffs - - - - - - - - - - -
Shares to Suppliers - - - - - - - - - - -
Options to Suppliers - - - - - - - - - - -
Total settlement shares 0 0 0 0 0 - - - - - -
Total settlement options 0 0 0 0 0 - - - - - -
Bond Conversion Price 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Shares on bond convers. - - - - - - - - - - -
Primary Shares 18,296 18,296 18,296 18,296 18,296 18,296 18,296 18,296 18,296 18,296 18,296
Fully Diluted Shares 18,670 18,670 18,670 18,670 18,670 18,670 18,670 18,670 18,670 18,670 18,670
</TABLE>
<TABLE>
<CAPTION>
SOURCES AND USES 1997 1998
----------------------------------- --------------------------
1996A Q1A Q2 Q3 Q4 1997E Q1 Q2 Q3 Q4 1998E
----- ----- ----- ------ ---- ------- ----- ----- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SOURCES
Debt Issuance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Convertible Debt Issuance 0 0 0 0 0 0 0 0 0 0 0
Equity Issuance 0 0 8,968 0 0 8,968 0 0 0 0 0
---- ---- ------ ---- ---- ------ ---- ---- ---- ---- ----
TOTAL $0 $0 $8,968 $0 $0 $8,968 $0 $0 $0 $0 $0
USES
Fees and Expenses (Debt) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Fees and Expenses (Equity) 0 0 638 0 0 $638 0 0 0 0 $0
Term Loan 0 0 0 0 0 $0 0 0 0 0 $0
Revolver A 0 0 0 0 0 $0 0 0 0 0 $0
Revolver B 0 0 0 0 0 $0 0 0 0 0 $0
Excess Proceeds 0 0 8,330 0 0 $8,330 0 0 0 0 $0
--- ---- ------ ---- ---- ------ ---- ---- ---- ---- ----
TOTAL $0 $0 $8,968 $0 $0 $8,968 $0 $0 $0 $0 $0
</TABLE>
<TABLE>
<CAPTION>
SOURCES AND USES 1999
---------------------------------------
Q1 Q2 Q3 Q4 1999E
------ ----- ------ ------- -------
<S> <C> <C> <C> <C> <C>
SOURCES
Debt Issuance $0 $0 $0 $0 $0
Convertible Debt Issuance 0 0 0 0 0
Equity Issuance 0 0 0 0 0
---- ---- ---- ---- ----
TOTAL $0 $0 $0 $0 $0
USES
Fees and Expenses (Debt) $0 $0 $0 $0 $0
Fees and Expenses (Equity) 0 0 0 0 $0
Term Loan 0 0 0 0 $0
Revolver A 0 0 0 0 $0
Revolver B 0 0 0 0 $0
Excess Proceeds 0 0 0 0 $0
---- ---- ---- ---- ----
TOTAL $0 $0 $0 $0 $0
</TABLE>
MISCELLANEOUS
Return on Cash 5.00%
Cost of Incr. Working Cap 8.75%
Income Tax Rate 41.0%
Bond Conversion Price $0.00
Convert. bond coupon 0.00%
Warrant Exercise Price $5.00
Receivables 90 88 85 Days' Sales Outstanding
Payables 37 37 37 Days COGS
Converts issued on 04/30/96
Litig. Secs. issued on 04/30/96
<PAGE> 16
HMIS FINANCIAL MODEL
ASSUMPTIONS
($000s, except per share amounts)
<TABLE>
<CAPTION>
DEBT AND INTEREST EXPENSE 1997
---------------------------------------
1993 1994 1995 1996 Q1 Q2 Q3 Q4 1997E
-------- -------- -------- ------- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Term Loan Outstandings 18,000 17,000 17,000 17,000 17,000 17,000
Term Loan Rate (1) 8.75% 8.75% 8.75% 8.75% 8.75% 8.75%
Term Loan Interest 372 372 372 1,116
Revolver A Outstandings 6,350 6,350 6,350 6,350 6,350 6,350
Revolver A Rate (2) 8.25% 8.25% 8.25% 8.25% 8.25% 8.25%
Revolver A Interest 131 131 131 393
Revolver B Outstandings 4,000 5,000 5,000 5,000 5,000 5,000
Revolver B Rate (3) 8.25% 8.25% 8.25% 8.25% 8.25% 8.25%
Revolver B Interest 103 103 103 309
Sub Note Outstandings 3,000 3,000 3,000 3,000 3,000 3,000
Sub Note Rate 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
Sub Note Interest 60 60 60 180
Cap Lease Outstandings 1,402 1,402 1,402 1,402 1,402 1,402
Cap Lease Rate 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
Cap Lease Interest 18 18 18 53
Equip. Note Outstandings 0 0 0 0 0 0
Equip. Note Rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Equip. Note Interest - - - -
Convertible Bonds 0 0 0 0 0 0
Convertible Bond Rate 0.00% 0.00% 0.00% 0.00%
Convertible Bond Interest - - - -
Other Outstandings -
Other Rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Other Interest - - - -
TOTAL DEBT 32,752 32,655 32,752 32,752 32,752 32,752
TOTAL INTEREST EXP 174 88 269 2,717 740 683 683 683 2,790
</TABLE>
<TABLE>
<CAPTION>
DEBT AND INTEREST EXPENSE 1998 1999
-------------------------------------- ---------------------------------------
Q1 Q2 Q3 Q4 1998E Q1 Q2 Q3 Q4 1999E
------ ------ ------ ------ ------ ------ ------ ------ ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Term Loan Outstandings 17,000 17,000 17,000 17,000 17,000 17,000 17,000 17,000 17,000 17,000
Term Loan Rate (1) 8.75% 8.75% 8.75% 8.75% 8.75% 8.75% 8.75% 8.75% 8.75% 8.75%
Term Loan Interest 372 372 372 372 1,488 372 372 372 372 1,488
Revolver A Outstandings 6,350 6,350 6,350 6,350 6,350 6,350 6,350 6,350 6,350 6,350
Revolver A Rate (2) 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25%
Revolver A Interest 131 131 131 131 524 131 131 131 131 524
Revolver B Outstandings 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
Revolver B Rate (3) 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25%
Revolver B Interest 103 103 103 103 413 103 103 103 103 413
Sub Note Outstandings 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000
Sub Note Rate 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
Sub Note Interest 60 60 60 60 240 60 60 60 60 240
Cap Lease Outstandings 1,402 1,402 1,402 1,402 1,402 1,402 1,402 1,402 1,402 1,402
Cap Lease Rate 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
Cap Lease Interest 18 18 18 18 70 18 18 18 18 70
Equip. Note Outstandings 0 0 0 0 0 0 0 0 0 0
Equip. Note Rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Equip. Note Interest - - - - - - - - - -
Convertible Bonds 0 0 0 0 0 0 0 0 0 0
Convertible Bond Rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Convertible Bond Interest - - - - - - - - - -
Other Outstandings - -
Other Rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Other Interest - - - - - - - - - -
TOTAL DEBT 32,752 32,752 32,752 32,752 32,752 32,752 32,752 32,752 32,752 32,752
TOTAL INTEREST EXP 683 683 683 683 2,734 683 683 683 683 2,734
</TABLE>
EXTRAORDINARY ITEMS
<TABLE>
<CAPTION>
1997
----------------------------------------
1993 1994 1995 1996 Q1 Q2 Q3 Q4 1997E
-------- ------- ------- ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Writedown of Revenues
Writedown of Inventories 2,840
------- ------- -------- ------ ------ ------ ------ ------ ------
Total - - - 2,840 - - - - -
Writedown of Receivables 8,400
Settlement of Litigation 7,200
Reorganization Expenses 3,600
Professional Fees 2,000 500 1,201 250 250
Other
------- ------- -------- ------ ------ ------ ------ ------ ------
Total - - - 14,000 500 1,201 7,450 250 -
</TABLE>
EXTRAORDINARY ITEMS
<TABLE>
<CAPTION>
1998 1999
-------------------------------------- --------------------------------------
Q1 Q2 Q3 Q4 1998E Q1 Q2 Q3 Q4 1999E
------- ------- ------- ------- ------- ------- ------- ------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Writedown of Revenues
Writedown of Inventories
------- ------- ------- ------- ------- ------- ------ ------ ------ -------
Total - - - - - - - - - -
Writedown of Receivables
Settlement of Litigation
Reorganization Expenses
Professional Fees
Other
------- ------- ------- ------- ------- ------- ------ ------ ------ ---------
Total - - - - - - - - - -
</TABLE>
- ----------------------------------
(1) Prime Rate + 50 B.P.
(2) Prime Rate + 0 B.P.
(3) Prime Rate + 0 B.P.
<PAGE> 17
[THE FOLLOWING IS AN ALTERNATIVE MODEL DEMONSTRATING THE PROJECTED EFFECT OF A
POSSIBLE SHORTENING OF PAYMENT TERMS BY THE COMPANY'S SUPPLIERS]
HMIS FINANCIAL MODEL
STATEMENTS OF OPERATIONS
($000S, EXCEPT PER SHARE AMOUNTS; ACCOUNTS PAYABLE - DAYS COGS OF 15 DAYS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997
-----------------------------------------
1994A 1995A 1996A Q1A Q2E Q3E Q4E 1997E
--------- --------- -------- -------- --------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales 44,250 88,456 158,860 40,523 40,523 40,523 40,920 162,488
Yr-to-Yr/Qtr-to-Qtr Growth 67.7% 99.9% 79.6% n/a - - 1.0% 2.3%
CGS 28,643 63,708 117,384 30,011 30,462 30,462 30,762 121,696
Gross Margin 15,606 24,748 41,476 10,512 10,061 10,061 10,158 40,792
% of Net Sales 35.3% 28.0% 26.1% 25.9% 24.8% 24.8% 24.8% 25.1%
Operating Expenses
Selling and Distribution 1,847 2,898 4,650 1,233 1,216 1,175 1,187 4,811
% of Net Sales 4.2% 3.3% 2.9% 3.0% 3.0% 2.9% 2.9% 3.0%
G&A 6,756 17,780 28,512 7,208 7,213 7,213 7,284 28,918
% of Net Sales 15.3% 20.1% 17.9% 17.8% 17.8% 17.8% 17.8% 17.8%
EBITDA 7,003 4,070 8,315 2,070 1,632 1,673 1,687 7,063
% of Net Sales 15.8% 4.6% 5.2% 5.1% 4.0% 4.1% 4.1% 4.3%
Yr-to-Yr/Qtr-to-Qtr Growth 86.0% -41.9% 104.3% n/a -21.2% 2.5% -0.1% -15.1%
Deprec. & Amort. 453 847 2,127 646 646 646 646 2,584
EBIT 6,550 3,223 6,187 1,424 986 1,027 1,041 4,479
% of Net Sales 14.8% 3.6% 3.9% 3.5% 2.4% 2.5% 2.5% 2.8%
Yr-to-Yr/Qtr-to-Qtr Growth 85.2% -50.8% 92.0% n/a -30.7% 4.1% 1.4% -27.6%
Interest Income 290 333 38 - (14) (45) (39) (98)
Interest Expense (88) (269) (2,717) (740) (683) (683) (683) (2,790)
Misc. Income (Expense) - - - - - - - -
Pretax Income 6,752 3,287 3,508 684 288 299 319 1,591
% of Net Sales 15.3% 3.7% 2.2% 1.7% 0.7% 0.7% 0.8% 1.0%
Yr-to-Yr/Qtr-to-Qtr Growth 93.6% -51.3% 6.7% n/a -57.9% 3.6% 6.8% -54.7%
Income Tax Expense 2,751 1,340 (2,405) 253 118 122 131 624
Effective Tax Rate 40.7% 40.8% -68.6% 36.9% 41.0% 41.0% 41.0% 39.2%
Net Income b/f Nonrec. 4,001 1,946 5,913 432 170 176 188 967
% of Net Sales 9.0% 2.2% 3.7% 1.1% 0.4% 0.4% 0.5% 0.6%
Yr-to-Yr/Qtr-to-Qtr Growth 81.3% -51.4% 203.8% n/a -60.6% 3.6% 6.8% -83.7%
Nonrecurring Charges - - (16,840) - - - - -
Net Income 4,001 1,946 (10,927) 432 170 176 188 967
% of Net Sales 9.0% 2.2% -6.9% 1.1% 0.4% 0.4% 0.5% 0.6%
Pf. Primary EPS b/f Nonrec. 0.54 0.21 0.22 0.05 0.01 0.01 0.01 0.05
Pf. Fully Diluted EPS b/f Nonrec. 0.53 0.21 0.22 0.05 0.01 0.01 0.01 0.05
Primary EPS After N/R 0.54 0.21 (1.16) 0.05 0.01 0.01 0.01 0.05
Fully Diluted EPS After N/R 0.53 0.21 (1.16) 0.05 0.01 0.01 0.01 0.05
Primary Shares 7,383 9,408 9,415 9,328 21,528 21,528 21,528 18,478
Fully Diluted Shares 7,593 9,421 9,415 9,334 24,728 24,728 24,728 20,880
</TABLE>
<TABLE>
<CAPTION>
1998E
----------------------------------------
Q1 Q2 Q3 Q4 1998E
--------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net Sales 41,732 43,010 44,839 47,358 176,939
Yr-to-Yr/Qtr-to-Qtr Growth 2.0% 3.1% 4.3% 5.6% 8.9%
CGS 31,376 32,342 33,726 35,631 133,074
Gross Margin 10,356 10,668 11,114 11,727 43,865
% of Net Sales 24.8% 24.8% 24.8% 24.8% 24.8%
Operating Expenses
Selling and Distribution 1,168 1,204 1,211 1,279 4,862
% of Net Sales 2.8% 2.8% 2.7% 2.7% 2.7%
G&A 7,261 7,484 7,802 8,240 30,787
% of Net Sales 17.4% 17.4% 17.4% 17.4% 17.4%
EBITDA 1,926 1,980 2,101 2,208 8,215
% of Net Sales 4.6% 4.6% 4.7% 4.7% 4.6%
Yr-to-Yr/Qtr-to-Qtr Growth 11.9% -0.3% 1.8% -0.5% 16.3%
Deprec. & Amort. 675 675 675 675 2,700
EBIT 1,251 1,305 1,426 1,533 5,515
% of Net Sales 3.0% 3.0% 3.2% 3.2% 3.1%
Yr-to-Yr/Qtr-to-Qtr Growth 20.1% 4.3% 9.3% 7.5% 23.1%
Interest Income (9) 17 9 (5) 12
Interest Expense (683) (683) (683) (683) (2,734)
Misc. Income (Expense) - - - - -
Pretax Income 559 638 752 844 2,793
% of Net Sales 1.3% 1.5% 1.7% 1.8% 1.6%
Yr-to-Yr/Qtr-to-Qtr Growth 75.2% 14.2% 17.8% 12.3% 75.6%
Income Tax Expense 229 262 308 346 1,145
Effective Tax Rate 41.0% 41.0% 41.0% 41.0% 41.0%
Net Income b/f Nonrec. 330 377 444 498 1,648
% of Net Sales 0.8% 0.9% 1.0% 1.1% 0.9%
Yr-to-Yr/Qtr-to-Qtr Growth 75.2% 14.2% 17.8% 12.3% 70.5%
Nonrecurring Charges (1,000) - - - (1,000)
Net Income (670) 377 444 498 648
% of Net Sales -1.6% 0.9% 1.0% 1.1% 0.4%
Pf. Primary EPS b/f Nonrec. 0.02 0.02 0.02 0.02 0.08
Pf. Fully Diluted EPS b/f Nonrec. 0.02 0.02 0.02 0.02 0.08
Primary EPS After N/R (0.03) 0.02 0.02 0.02 0.03
Fully Diluted EPS After N/R (0.03) 0.02 0.02 0.02 0.03
Primary Shares 21,528 21,528 21,528 21,528 21,528
Fully Diluted Shares 24,728 24,728 24,728 24,728 24,728
</TABLE>
<TABLE>
<CAPTION>
1999E
----------------------------------------
Q1 Q2 Q3 Q4 1999E
--------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net Sales 50,206 53,439 57,123 61,337 222,105
Yr-to-Yr/Qtr-to-Qtr Growth 6.0% 6.4% 6.9% 7.4% 25.5%
CGS 37,911 40,359 43,149 46,342 167,761
Gross Margin 12,295 13,080 13,974 14,995 54,343
% of Net Sales 24.5% 24.5% 24.5% 24.4% 24.5%
Operating Expenses
Selling and Distribution 1,305 1,389 1,428 1,533 5,656
% of Net Sales 2.6% 2.6% 2.5% 2.5% 2.5%
G&A 8,585 9,138 9,768 10,489 37,980
% of Net Sales 17.1% 17.1% 17.1% 17.1% 17.1%
EBITDA 2,404 2,552 2,778 2,973 10,707
% of Net Sales 4.8% 4.8% 4.9% 4.8% 4.8%
Yr-to-Yr/Qtr-to-Qtr Growth 2.7% -0.2% 1.8% -0.3% 30.3%
Deprec. & Amort. 675 675 675 675 2,700
EBIT 1,729 1,877 2,103 2,298 8,007
% of Net Sales 3.4% 3.5% 3.7% 3.7% 3.6%
Yr-to-Yr/Qtr-to-Qtr Growth 12.8% 8.6% 12.0% 9.3% 45.2%
Interest Income (15) (27) (52) (81) (175)
Interest Expense (683) (683) (683) (683) (2,734)
Misc. Income (Expense) - - - - -
Pretax Income 1,031 1,167 1,367 1,533 5,099
% of Net Sales 2.1% 2.2% 2.4% 2.5% 2.3%
Yr-to-Yr/Qtr-to-Qtr Growth 22.1% 13.2% 17.1% 12.1% 82.5%
Income Tax Expense 423 479 561 629 2,090
Effective Tax Rate 41.0% 41.0% 41.0% 41.0% 41.0%
Net Income b/f Nonrec. 608 689 807 905 3,008
% of Net Sales 1.2% 1.3% 1.4% 1.5% 1.4%
Yr-to-Yr/Qtr-to-Qtr Growth 22.1% 13.2% 17.1% 12.1% 82.5%
Nonrecurring Charges - - - - -
Net Income 608 689 807 905 3,008
% of Net Sales 1.2% 1.3% 1.4% 1.5% 1.4%
Pf. Primary EPS b/f Nonrec. 0.03 0.03 0.04 0.04 0.14
Pf. Fully Diluted EPS b/f Nonrec. 0.03 0.03 0.04 0.04 0.14
Primary EPS After N/R 0.03 0.03 0.04 0.04 0.14
Fully Diluted EPS After N/R 0.03 0.03 0.04 0.04 0.14
Primary Shares 21,528 21,528 21,528 21,528 21,528
Fully Diluted Shares 24,728 24,728 24,728 24,728 24,728
</TABLE>
<PAGE> 18
HMIS FINANCIAL MODEL
BALANCE SHEET
($000s, except per share amounts; Accounts Payable - Days COGS of 15 days)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997
--------------------------------------------
1995A 1996A Q1A Q2E Q3E Q4E 1997E
---------- ---------- ---------- ---------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Current:
Cash and cash equivalents $4,563 $3,280 $1,586 ($3,881) ($3,249) ($2,990) ($2,990)
Accounts receivable, net 31,340 36,457 36,959 39,968 39,968 40,359 40,359
Inventories 7,788 6,801 7,212 7,010 7,010 7,079 7,079
Tax refund receivable 1,827 8,037 5,752 2,300 2,300 2,300 2,300
Deferred taxes 3,133 1,807 2,357 2,357 2,357 2,357 2,357
Prepaid expenses and other 1,164 655 404 404 404 404 404
---------- ---------- ---------- ---------- ---------- -------- -----------
Total current assets 49,814 57,038 54,269 48,158 48,790 49,509 49,509
Improvements and equipment, net 2,136 3,826 3,680 3,481 3,282 3,083 3,083
Goodwill 35,464 34,008 33,711 33,446 33,182 32,917 32,917
Other 1,276 1,044 1,167 1,167 1,167 1,167 1,167
---------- ---------- ---------- ---------- ---------- -------- -----------
Total Assets $88,690 $95,916 $92,828 $86,253 $86,420 $86,676 $86,676
========== ========== ========== ========== ========== ======== ===========
Liabilities and Stockholders' Equity
Current:
Accounts payable $12,330 $20,715 $18,448 $5,007 $5,007 $5,057 $5,057
Accrued unusual charges 0 3,559 2,151 0 0 0 0
Accrued expenses 1,862 1,526 1,778 1,854 1,845 1,863 1,863
Current maturities of long-term debt 23,135 28,746 28,750 28,750 28,750 28,750 28,750
---------- ---------- ---------- ---------- ---------- -------- -----------
Total current liabilities 37,328 54,546 51,127 35,612 35,603 35,670 35,670
Long-term debt, less current maturities 3,191 4,006 3,905 3,905 3,905 3,905 3,905
---------- ---------- ---------- ---------- ---------- -------- -----------
Total liabilities 40,519 58,552 55,032 39,517 39,508 39,576 39,576
---------- ---------- ---------- ---------- ---------- -------- -----------
Commitments and contingencies
Stockholders' equity
Preferred stock 0 0 0 0 0 0 0
Common stock 280 280 280 646 646 646 646
Additional paid-in capital 38,020 38,139 38,139 46,543 46,543 46,543 46,543
Retained earnings (deficit) 9,872 (1,055) (623) (453) (277) (88) (88)
---------- ---------- ---------- ---------- ---------- -------- -----------
Total stockholders' equity 48,172 37,364 37,796 46,736 46,912 47,100 47,100
---------- ---------- ---------- ---------- ---------- -------- -----------
Total Liabilities and Stockholders' Equity $88,690 $95,916 $92,828 $86,253 $86,420 $86,676 $86,676
========== ========== ========== ========== ========== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
1998E
----------------------------------------------
Q1 Q2 Q3 Q4 1998E
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Assets
Current:
Cash and cash equivalents $1,548 $1,174 $321 ($1,137) ($1,137)
Accounts receivable, net 40,245 41,478 43,242 45,672 45,672
Inventories 7,221 7,443 7,762 8,200 8,200
Tax refund receivable 0 0 0 0 0
Deferred taxes 0 0 0 0 0
Prepaid expenses and other 404 404 404 404 404
---------- ---------- ---------- ---------- ----------
Total current assets 49,419 50,498 51,728 53,139 53,139
Improvements and equipment, net 2,872 2,661 2,450 2,240 2,240
Goodwill 32,640 32,363 32,086 31,810 31,810
Other 1,167 1,167 1,167 1,167 1,167
---------- ---------- ---------- ---------- ----------
Total Assets $86,097 $86,690 $87,432 $88,355 $88,355
========== ========== ========== ========== ==========
Liabilities and Stockholders' Equity
Current:
Accounts payable $5,158 $5,316 $5,544 $5,857 $5,857
Accrued unusual charges 0 0 0 0 0
Accrued expenses 1,855 1,911 1,983 2,094 2,094
Current maturities of long-term debt 28,750 28,750 28,750 28,750 28,750
---------- ---------- ---------- ---------- ----------
Total current liabilities 35,762 35,978 36,277 36,701 36,701
Long-term debt, less current maturities 3,905 3,905 3,905 3,905 3,905
---------- ---------- ---------- ---------- ----------
Total liabilities 39,668 39,883 40,182 40,607 40,607
---------- ---------- ---------- ---------- ----------
Commitments and contingencies
Stockholders' equity
Preferred stock 0 0 0 0 0
Common stock 646 646 646 646 646
Additional paid-in capital 46,543 46,543 46,543 46,543 46,543
Retained earnings (deficit) (759) (382) 61 560 560
---------- ---------- ---------- ---------- ----------
Total stockholders' equity 46,430 46,806 47,250 47,748 47,748
---------- ---------- ---------- ---------- ----------
Total Liabilities and Stockholders' Equity $86,097 $86,690 $87,432 $88,355 $88,355
========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
1999E
----------------------------------------------
Q1 Q2 Q3 Q4 1999E
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Assets
Current:
Cash and cash equivalents ($1,205) ($3,061) ($5,235) ($7,797) ($7,797)
Accounts receivable, net 46,767 49,778 53,210 57,136 57,136
Inventories 8,725 9,288 9,930 10,665 10,665
Tax refund receivable 0 0 0 0 0
Deferred taxes 0 0 0 0 0
Prepaid expenses and other 404 404 404 404 404
---------- ---------- ---------- ---------- ----------
Total current assets 54,691 56,410 58,310 60,408 60,408
Improvements and equipment, net 2,029 1,818 1,607 1,397 1,397
Goodwill 31,533 31,256 30,979 30,703 30,703
Other 1,167 1,167 1,167 1,167 1,167
---------- ---------- ---------- ---------- ----------
Total Assets $89,420 $90,651 $92,064 $93,675 $93,675
========== ========== ========== ========== ==========
Liabilities and Stockholders' Equity
Current:
Accounts payable $6,232 $6,634 $7,093 $7,618 $7,618
Accrued unusual charges 0 0 0 0 0
Accrued expenses 2,176 2,316 2,463 2,645 2,645
Current maturities of long-term debt 28,750 28,750 28,750 28,750 28,750
---------- ---------- ---------- ---------- ----------
Total current liabilities 37,158 37,700 38,306 39,013 39,013
Long-term debt, less current maturities 3,905 3,905 3,905 3,905 3,905
---------- ---------- ---------- ---------- ----------
Total liabilities 41,063 41,606 42,212 42,918 42,918
---------- ---------- ---------- ---------- ----------
Commitments and contingencies
Stockholders' equity
Preferred stock 0 0 0 0 0
Common stock 646 646 646 646 646
Additional paid-in capital 46,543 46,543 46,543 46,543 46,543
Retained earnings (deficit) 1,168 1,857 2,663 3,568 3,568
---------- ---------- ---------- ---------- ----------
Total stockholders' equity 48,357 49,045 49,852 50,757 50,757
---------- ---------- ---------- ---------- ----------
Total Liabilities and Stockholders' Equity $89,420 $90,651 $92,064 $93,675 $93,675
========== ========== ========== ========== ==========
</TABLE>
Preliminary Model Based Upon Company Projections and Assumptions
<PAGE> 19
HMIS FINANCIAL MODEL
CASH FLOW STATEMENT
($000s, except per share amounts; Accounts Payable - Days COGS of 15 days)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1994A 1995A 1996A
---------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) 4,001 1,946 (10,927)
Adj. to reconcile net income (loss) to CF fr. Ops.:
Depreciation and amortization 453 847 2,127
Provision for doubtful A/R 1,781 7,978 14,715
Deferred taxes (701) (2,516) 1,326
Write-off of improvements and equipment - - 264
Write-off of goodwill - - 552
Write-off of organizational costs - - 134
Loss from disposition of rental equipment - 287 -
Compensation under restricted stock 57 57 -
Common stock issued to director - 19 -
Changes in working capital:
Accounts receivable (9,625) (16,707) (19,832)
Tax refund receivable - (1,827) (6,210)
Inventories 205 (1,827) 987
Prepaid expenses and other (205) (976) 508
Other assets (249) (240) 98
Accounts payable 100 4,870 8,385
Accrued unusual charges - - 3,559
Acrrued expenses 203 396 (336)
Income taxes payable 280 (1,760) -
---------- ---------- ----------
Net cash from (used in) operating activities (3,700) (9,451) (4,650)
---------- ---------- ----------
Cash flows from investing activities:
Cash used in acquisition of CPMB - (20,630) (324)
Cash used in acquisition of Murray Group (7,500) - -
Other acquisitions (250) (2,168) -
Collection of receivable from seller of Murray - 1,444 -
Capital expenditures (566) (948) (1,492)
Proceeds from sale of rental equipment - 215 -
---------- ---------- ----------
Net cash from (used in) investing activities (8,316) (22,087) (1,816)
---------- ---------- ----------
Cash flows from financing activities:
Proceeds from long-term debt - 23,000 16,450
Principal payments on long-term debt - - (11,000)
Principal payments on current maturities of LTD - - -
Net payment on capital leases (44) (123) (386)
Decrease in bank loan - net (200) - -
Proceeds from issuance of common stock 21,982 - -
Cash paid for deferred borrowing fees - (722) -
Proceeds from exercise of warrants 218 427 -
Proceeds from exercise of options 13 24 120
---------- ---------- ----------
Net cash provided by (used in) financing activities 21,969 22,606 5,184
---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents 9,953 (8,933) (1,283)
Cash and cash equivalents, beginning of period 3,543 13,495 4,563
---------- ---------- ----------
Cash and cash equivalents, end of period 13,495 4,563 3,280
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
1997
----------------------------------------------
Q1A Q2E Q3E Q4E 1997E
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) 432 170 176 188 967
Adj. to reconcile net income (loss) to CF fr. Ops.:
Depreciation and amortization 646 646 646 646 2,584
Provision for doubtful A/R 1,635 2,026 2,026 2,046 7,733
Deferred taxes (550) - - - (550)
Write-off of improvements and equipment - - - - -
Write-off of goodwill - - - - -
Write-off of organizational costs - - - - -
Loss from disposition of rental equipment - - - - -
Compensation under restricted stock - - - - -
Common stock issued to director - - - - -
Changes in working capital:
Accounts receivable (2,137) (5,035) (2,026) (2,437) (11,635)
Tax refund receivable 2,286 3,452 - - 5,737
Inventories (411) 202 - (69) (279)
Prepaid expenses and other 252 - - - 252
Other assets (124) - - - (124)
Accounts payable (2,267) (13,441) - 49 (15,658)
Accrued unusual charges (1,408) (2,151) - - (3,559)
Acrrued expenses 252 76 (9) 18 337
Income taxes payable - - - - -
---------- ---------- ---------- ---------- ----------
Net cash from (used in) operating activities (1,395) (14,054) 813 441 (14,194)
---------- ---------- ---------- ---------- ----------
Cash flows from investing activities:
Cash used in acquisition of CPMB - - - - -
Cash used in acquisition of Murray Group - - - - -
Other acquisitions - - - - -
Collection of receivable from seller of Murray - - - - -
Capital expenditures (203) (182) (182) (182) (749)
Proceeds from sale of rental equipment - - - - -
---------- ---------- ---------- ---------- ----------
Net cash from (used in) investing activities (203) (182) (182) (182) (749)
---------- ---------- ---------- ---------- ----------
Cash flows from financing activities:
Proceeds from long-term debt - - - - -
Principal payments on long-term debt (97) - - - (97)
Principal payments on current maturities of LTD - - - - -
Net payment on capital leases - - - - -
Decrease in bank loan - net - - - - -
Proceeds from issuance of common stock - 8,770 - - 8,770
Cash paid for deferred borrowing fees - - - - -
Proceeds from exercise of warrants - - - - -
Proceeds from exercise of options - - - - -
---------- ---------- ---------- ---------- ----------
Net cash provided by (used in) financing activities (97) 8,770 - - 8,673
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents (1,694) (5,466) 631 259 (6,270)
Cash and cash equivalents, beginning of period 3,280 1,586 (3,881) (3,249) 3,280
---------- ---------- ---------- ---------- ----------
Cash and cash equivalents, end of period 1,586 (3,881) (3,249) (2,990) (2,990)
========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
1998E
----------------------------------------------
Q1 Q2 Q3 Q4 1998E
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) (670) 377 444 498 648
Adj. to reconcile net income (loss) to CF fr. Ops.:
Depreciation and amortization 675 675 675 675 2,700
Provision for doubtful A/R 2,087 2,150 2,242 2,368 8,847
Deferred taxes 2,357 - - - 2,357
Write-off of improvements and equipment - - - - -
Write-off of goodwill - - - - -
Write-off of organizational costs - - - - -
Loss from disposition of rental equipment - - - - -
Compensation under restricted stock - - - - -
Common stock issued to director - - - - -
Changes in working capital:
Accounts receivable (1,973) (3,383) (4,007) (4,797) (14,160)
Tax refund receivable 2,300 - - - 2,300
Inventories (141) (222) (318) (439) (1,121)
Prepaid expenses and other - - - - -
Other assets - - - - -
Accounts payable 101 159 227 313 800
Accrued unusual charges - - - - -
Acrrued expenses (9) 57 71 111 231
Income taxes payable - - - - -
---------- ---------- ---------- ---------- ----------
Net cash from (used in) operating activities 4,726 (187) (666) (1,270) 2,603
---------- ---------- ---------- ---------- ----------
Cash flows from investing activities:
Cash used in acquisition of CPMB - - - - -
Cash used in acquisition of Murray Group - - - - -
Other acquisitions - - - - -
Collection of receivable from seller of Murray - - - - -
Capital expenditures (188) (188) (188) (188) (750)
Proceeds from sale of rental equipment - - - - -
---------- ---------- ---------- ---------- ----------
Net cash from (used in) investing activities (188) (188) (188) (188) (750)
---------- ---------- ---------- ---------- ----------
Cash flows from financing activities:
Proceeds from long-term debt - - - - -
Principal payments on long-term debt - - - - -
Principal payments on current maturities of LTD - - - - -
Net payment on capital leases - - - - -
Decrease in bank loan - net - - - - -
Proceeds from issuance of common stock - - - - -
Cash paid for deferred borrowing fees - - - - -
Proceeds from exercise of warrants - - - - -
Proceeds from exercise of options - - - - -
---------- ---------- ---------- ---------- ----------
Net cash provided by (used in) financing activities - - - - -
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents 4,538 (375) (853) (1,457) 1,853
Cash and cash equivalents, beginning of period (2,990) 1,548 1,174 321 (2,990)
---------- ---------- ---------- ---------- ----------
Cash and cash equivalents, end of period 1,548 1,174 321 (1,137) (1,137)
========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
1999E
----------------------------------------------
Q1 Q2 Q3 Q4 1999E
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) 608 689 807 905 3,008
Adj. to reconcile net income (loss) to CF fr. Ops.:
Depreciation and amortization 675 675 675 675 2,700
Provision for doubtful A/R 2,510 2,672 2,856 3,067 11,105
Deferred taxes - - - - -
Write-off of improvements and equipment - - - - -
Write-off of goodwill - - - - -
Write-off of organizational costs - - - - -
Loss from disposition of rental equipment - - - - -
Compensation under restricted stock - - - - -
Common stock issued to director - - - - -
Changes in working capital:
Accounts receivable (3,606) (5,683) (6,288) (6,993) (22,570)
Tax refund receivable - - - - -
Inventories (525) (563) (642) (735) (2,465)
Prepaid expenses and other - - - - -
Other assets - - - - -
Accounts payable 375 402 459 525 1,761
Accrued unusual charges - - - - -
Acrrued expenses 82 140 147 182 551
Income taxes payable - - - - -
---------- ---------- ---------- ---------- ----------
Net cash from (used in) operating activities 119 (1,668) (1,986) (2,374) (5,910)
---------- ---------- ---------- ---------- ----------
Cash flows from investing activities:
Cash used in acquisition of CPMB - - - - -
Cash used in acquisition of Murray Group - - - - -
Other acquisitions - - - - -
Collection of receivable from seller of Murray - - - - -
Capital expenditures (188) (188) (188) (188) (750)
Proceeds from sale of rental equipment - - - - -
---------- ---------- ---------- ---------- ----------
Net cash from (used in) investing activities (188) (188) (188) (188) (750)
---------- ---------- ---------- ---------- ----------
Cash flows from financing activities:
Proceeds from long-term debt - - - - -
Principal payments on long-term debt - - - - -
Principal payments on current maturities of LTD - - - - -
Net payment on capital leases - - - - -
Decrease in bank loan - net - - - - -
Proceeds from issuance of common stock - - - - -
Cash paid for deferred borrowing fees - - - - -
Proceeds from exercise of warrants - - - - -
Proceeds from exercise of options - - - - -
---------- ---------- ---------- ---------- ----------
Net cash provided by (used in) financing activities - - - - -
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents (68) (1,856) (2,174) (2,562) (6,660)
Cash and cash equivalents, beginning of period (1,137) (1,205) (3,061) (5,235) (1,137)
---------- ---------- ---------- ---------- ----------
Cash and cash equivalents, end of period (1,205) (3,061) (5,235) (7,797) (7,797)
========== ========== ========== ========== ==========
</TABLE>
Preliminary Model Based Upon Company Projections and Assumptions
<PAGE> 20
HMIS FINANCIAL MODEL
ASSUMPTIONS
($000s, except per share amounts)
- ---------------------------------------------------------------------------
SHARES OUTSTANDING AND SETTLEMENT
<TABLE>
<CAPTION>
1993 1994 1995 1996
-------- -------- --------- --------
<S> <C> <C> <C> <C>
Non-settlement shares 5,884 7,383 9,408 9,415
Newly issued shares - - - -
Non-settlement options 424 210 13 -
Shares to Banks - - - -
Options to Banks - - - -
Wt Avg Shares to Plaintiffs - - - -
Wt Avg Options to Plaintiffs - - - -
Shares to Suppliers - - - -
Options to Suppliers - - - -
Total settlement shares 0 0 0 0
Total settlement options 0 0 0 0
Bond Conversion Price
Shares on bond convers.
Primary Shares 5,884 7,383 9,408 9,415
Fully Diluted Shares 6,309 7,593 9,421 9,415
</TABLE>
<TABLE>
<CAPTION>
1997
---------------------------------------
Q1 Q2 Q3 Q4 1997E
-------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Non-settlement shares 9,328 9,328 9,328 9,328 9,328
Newly issued shares - 10,000 10,000 10,000 10,000
Non-settlement options 5 1,000 1,000 1,000 1,000
Shares to Banks - - - - -
Options to Banks - - - - -
Wt Avg Shares to Plaintiffs - 2,200 2,200 2,200 2,200
Wt Avg Options to Plaintiffs - 2,200 2,200 2,200 2,200
Shares to Suppliers - - - - -
Options to Suppliers - - - - -
Total settlement shares - 2,200 2,200 2,200 2,200
Total settlement options - 2,200 2,200 2,200 2,200
Bond Conversion Price 0.00 0.00 0.00 0.00
Shares on bond convers. - - - -
Primary Shares 9,328 21,528 21,528 21,528 21,528
Fully Diluted Shares 9,334 24,728 24,728 24,728 24,728
</TABLE>
<TABLE>
<CAPTION>
1998
---------------------------------------
Q1 Q2 Q3 Q4 1998E
-------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Non-settlement shares 9,328 9,328 9,328 9,328 9,328
Newly issued shares 10,000 10,000 10,000 10,000 10,000
Non-settlement options 1,000 1,000 1,000 1,000 1,000
Shares to Banks - - - - -
Options to Banks - - - - -
Wt Avg Shares to Plaintiffs 2,200 2,200 2,200 2,200 2,200
Wt Avg Options to Plaintiffs 2,200 2,200 2,200 2,200 2,200
Shares to Suppliers - - - - -
Options to Suppliers - - - - -
Total settlement shares 2,200 2,200 2,200 2,200 2,200
Total settlement options 2,200 2,200 2,200 2,200 2,200
Bond Conversion Price 0.00 0.00 0.00 0.00 0.00
Shares on bond convers. - - - - -
Primary Shares 21,528 21,528 21,528 21,528 21,528
Fully Diluted Shares 24,728 24,728 24,728 24,728 24,728
</TABLE>
<TABLE>
<CAPTION>
1999
---------------------------------------
Q1 Q2 Q3 Q4 1999E
-------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Non-settlement shares 9,328 9,328 9,328 9,328 9,328
Newly issued shares 10,000 10,000 10,000 10,000 10,000
Non-settlement options 1,000 1,000 1,000 1,000 1,000
Shares to Banks - - - - -
Options to Banks - - - - -
Wt Avg Shares to Plaintiffs 2,200 2,200 2,200 2,200 2,200
Wt Avg Options to Plaintiffs 2,200 2,200 2,200 2,200 2,200
Shares to Suppliers - - - - -
Options to Suppliers - - - - -
Total settlement shares 2,200 2,200 2,200 2,200 2,200
Total settlement options 2,200 2,200 2,200 2,200 2,200
Bond Conversion Price 0.00 0.00 0.00 0.00 0.00
Shares on bond convers. - - - - -
Primary Shares 21,528 21,528 21,528 21,528 21,528
Fully Diluted Shares 24,728 24,728 24,728 24,728 24,728
</TABLE>
SOURCES AND USES
<TABLE>
<CAPTION>
1997
---------------------------------------
1996A Q1A Q2 Q3 Q4 1997E
-------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Sources
Debt Issuance $0 $0 $0 $0 $0 $0
Convertible Debt Issuance 0 0 0 0 0 0
Equity Issuance 0 0 10,000 0 0 10,000
-------- --------- -------- -------- -------- --------
TOTAL $0 $0 $10,000 $0 $0 $10,000
Uses
Fees and Expenses (Debt) $0 $0 $0 $0 $0 $0
Fees and Expenses (Equity) 0 0 1,230 0 0 $1,230
Term Loan 0 0 0 0 0 $0
Revolver A 0 0 0 0 0 $0
Revolver B 0 0 0 0 0 $0
Excess Proceeds 0 0 8,770 0 0 $8,770
-------- --------- -------- -------- -------- --------
TOTAL $0 $0 $10,000 $0 $0 $10,000
</TABLE>
<TABLE>
<CAPTION>
1998 1999
-------------------------------------- --------------------------------------
Q1 Q2 Q3 Q4 1998E Q1 Q2 Q3 Q4 1999E
-------- --------- -------- -------- -------- -------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sources
Debt Issuance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Convertible Debt Issuance 0 0 0 0 0 0 0 0 0 0
Equity Issuance 0 0 0 0 0 0 0 0 0 0
-------- --------- -------- -------- -------- -------- -------- --------- -------- --------
TOTAL $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Uses
Fees and Expenses (Debt) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Fees and Expenses (Equity) 0 0 0 0 $0 0 0 0 0 $0
Term Loan 0 0 0 0 $0 0 0 0 0 $0
Revolver A 0 0 0 0 $0 0 0 0 0 $0
Revolver B 0 0 0 0 $0 0 0 0 0 $0
Excess Proceeds 0 0 0 0 $0 0 0 0 0 $0
-------- --------- -------- -------- -------- -------- -------- --------- -------- --------
TOTAL $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
</TABLE>
<TABLE>
<CAPTION>
MISCELLANEOUS
<S> <C> <C> <C> <C>
Return on Cash 5.0%
Income Tax Rate 41.0%
Bond Conversion Price $0.00
Convert. bond coupon 0.00%
Warrant Exercise Price $5.00
Receivables 90 88 85 Days' Sales Outstanding
Payables 15 15 15 Days COGS
Converts issued on 04/30/96
Litig. Secs. issued on 04/30/96
</TABLE>
Preliminary Model Based Upon Company Projections and Assumptions
<PAGE> 21
HMIS FINANCIAL MODEL
ASSUMPTIONS
($000s, except per share amounts)
- --------------------------------------------------------------------------------
DEBT AND INTEREST EXPENSE
<TABLE>
<CAPTION>
1997
------------------------------------
1993 1994 1995 1996 Q1 Q2 Q3 Q4 1997E
------- -------- --------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Term Loan Outstandings 18,000 17,000 17,000 17,000 17,000 17,000
Term Loan Rate (1) 8.75% 8.75% 8.75% 8.75% 8.75% 8.75%
Term Loan Interest 372 372 372 1,116
Revolver A Outstandings 6,350 6,350 6,350 6,350 6,350 6,350
Revolver A Rate (2) 8.25% 8.25% 8.25% 8.25% 8.25% 8.25%
Revolver A Interest 131 131 131 393
Revolver B Outstandings 4,000 5,000 5,000 5,000 5,000 5,000
Revolver B Rate (3) 8.25% 8.25% 8.25% 8.25% 8.25% 8.25%
Revolver B Interest 103 103 103 309
Sub Note Outstandings 3,000 3,000 3,000 3,000 3,000 3,000
Sub Note Rate 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
Sub Note Interest 60 60 60 180
Cap Lease Outstandings 1,402 1,402 1,402 1,402 1,402 1,402
Cap Lease Rate 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
Cap Lease Interest 18 18 18 53
Equip. Note Outstandings 0 0 0 0 0 -
Equip. Note Rate - - - - - -
Equip. Note Interest - - - -
Convertible Bonds 0 0 0 0 0 -
Convertible Bond Rate 0.00% 0.00% 0.00% 0.00%
Convertible Bond Interest - - - -
Other Outstandings -
Other Rate 0 0 0 0 0 -
Other Interest - - - -
TOTAL DEBT 32,752 32,655 32,752 32,752 32,752 32,752
TOTAL INTEREST EXP 174 88 269 2,717 740 683 683 683 2,790
</TABLE>
<TABLE>
<CAPTION>
1998 1999
------------------------------------ -------------------------------------
Q1 Q2 Q3 Q4 1998E Q1 Q2 Q3 Q4 1999E
------- -------- --------- -------- -------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Term Loan Outstandings 17,000 17,000 17,000 17,000 17,000 17,000 17,000 17,000 17,000 17,000
Term Loan Rate (1) 8.75% 8.75% 8.75% 8.75% 8.75% 8.75% 8.75% 8.75% 8.75% 8.75%
Term Loan Interest 372 372 372 372 1,488 372 372 372 372 1,488
Revolver A Outstandings 6,350 6,350 6,350 6,350 6,350 6,350 6,350 6,350 6,350 6,350
Revolver A Rate (2) 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25%
Revolver A Interest 131 131 131 131 524 131 131 131 131 524
Revolver B Outstandings 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
Revolver B Rate (3) 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25%
Revolver B Interest 103 103 103 103 413 103 103 103 103 413
Sub Note Outstandings 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000
Sub Note Rate 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
Sub Note Interest 60 60 60 60 240 60 60 60 60 240
Cap Lease Outstandings 1,402 1,402 1,402 1,402 1,402 1,402 1,402 1,402 1,402 1,402
Cap Lease Rate 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
Cap Lease Interest 18 18 18 18 70 18 18 18 18 70
Equip. Note Outstandings 0 0 0 0 - 0 0 0 0 -
Equip. Note Rate - - - - - - - - - -
Equip. Note Interest - - - - - - - - - -
Convertible Bonds 0 0 0 0 - 0 0 0 0 -
Convertible Bond Rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Convertible Bond Interest - - - - - - - - - -
Other Outstandings - -
Other Rate - - - - - - - - - -
Other Interest - - - - - - - - - -
TOTAL DEBT 32,752 32,752 32,752 32,752 32,752 32,752 32,752 32,752 32,752 32,752
TOTAL INTEREST EXP 683 683 683 683 2,734 683 683 683 683 2,734
</TABLE>
EXTRAORDINARY ITEMS
<TABLE>
<CAPTION>
1997
------------------------------------
1993 1994 1995 1996 Q1 Q2 Q3 Q4 1997E
------- -------- --------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Writedown of Revenues
Writedown of Inventories 2,840
------- -------- --------- -------- -------- -------- -------- -------- ---------
Total - - - 2,840 - - - - -
Writedown of Receivables 8,400
Settlement of Litigation
Reorganization Expenses 3,600
Professional Fees 2,000
Other
------- -------- --------- -------- -------- -------- -------- -------- ---------
Total - - - 14,000 - - - - -
</TABLE>
<TABLE>
<CAPTION>
1998 1999
-------------------------------------- -------------------------------------
Q1 Q2 Q3 Q4 1998E Q1 Q2 Q3 Q4 1999E
------- -------- --------- -------- -------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Writedown of Revenues
Writedown of Inventories
------- -------- --------- -------- -------- -------- -------- -------- --------- --------
Total - - - - - - - - - -
Writedown of Receivables
Settlement of Litigation 1,000
Reorganization Expenses
Professional Fees
Other
------- -------- --------- -------- -------- -------- -------- -------- --------- --------
Total 1,000 - - - - - - - - -
</TABLE>
- ---------------------------
(1) Prime Rate + 50 B.P.
(2) Prime Rate + 0 B.P.
(3) Prime Rate + 0 B.P.
Preliminary Model Based Upon Company Projections and Assumptions
<PAGE> 22
[COMPARABLE ACQUISITIONS DATA]
(data in 000's)
<TABLE>
<CAPTION>
CAREMARK QUANTUM SYSTEMED
--------------------- ------------ -------------
Acquior MedPartners/Mullikin Olsten Merck & Co.
<S> <C> <C> <C>
Shares o/s 82,311 15,152 22,325
Consideration
Cash 0 0 $66,975
Debt assumed 0 0 0
Stock $1,979,477(1) $258,152(2) 0
--------------------- ------------ -------------
TOTAL CONSIDERATION $1,979,477 $258,152 $66,975
Debt remaining $371,500 $30,948 ($6,328)
Minority Interest 0 2,700 0
--------------------- ------------ -------------
TOTAL ENTERPRISE VALUE $2,350,977 $291,800 $60,647
LTM Revenues $2,823,800 $294,873 $147,210
TEV/LTM Rev 0.8x 1.0x 0.4x
LTM Net Income $83,200 $8,090 $2,270
Total Consideration / LTM Net Inco 23.8x 31.9x 29.5x
LTM EBITDA $210,500 $25,139 $6,181
TEV/LTM EBITDA 11.2x 11.6x 9.8x
</TABLE>
- --------------------
(1) MDM paid 1.21 sh/ sh at $19 7/8 per share.
(2) OLS paid .58 sh / sh at $29 3/8 per share.
<PAGE> 23
COMPARABLE COMPANIES DATA
(000s except per share data)
<TABLE>
<CAPTION>
HEALTH CAREMARK CHRONIMED,
MANAGEMENT, INC. INTERNATIONAL, INC. (1) INC.
---------------- ----------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Most Recent Fiscal Year End Apr-96 Dec-95 Jun-96
Most Recent Quarter End Jul-96 Jun-96 Jun-96
Ticker Symbol HMIS CK CHMD
Market Price as of 10/31/96 $4.625 $23.750 $14.500
52-Week High $15.625 $32.250 $25.125
52-Week Low $2.375 $17.750 $11.250
Shares Outstanding (000s) 9,330 82,311 12,455
Total Debt & Cap Leases $32,656 $419,800 $754
Cash & Cash Equivalents (1,586) (63,000) (11,434)
Market Value of Equity 43,152 1,954,897 180,591
------- ---------- --------
Total Enterprise Value $74,222 $2,311,697 $169,911
Capitalized Rent (8x Rent Expense) 12,358 213,600 5,536
------- ---------- --------
Adjusted Enterprise Value $86,580 $2,525,297 $175,447
Earnings per Share (4)
Latest 12 Months EPS $0.10 $1.10 $0.44
CY 1995 Actual EPS na 0.96 0.17
CY 1996 Projected EPS na 1.21 0.45
CY 1997 Projected EPS na 1.50 0.64
2 year CAGR na 25.0% 94.0%
Market Multiples
Market Value of Equity/LTM EPS 46.3 x 21.6 x 33.0 x
Market Value of Equity/1995 Act. EPS na 24.7 85.3
Market Value of Equity/1996 Proj. EPS na 19.6 32.2
Market Value of Equity/1997 Proj. EPS na 15.8 22.7
Adj. Enterprise Value/LTM Revenues 0.5 x 0.9 x 1.9 x
Adj. Enterprise Value/Gross Margin 2.2 x 6.0 x 6.9 x
Adj. Enterprise Value/LTM EBITDAR 10.9 12.0 18.5
Enterprise Value/LTM Revenues 0.5 x 0.8 x 1.9 x
Enterprise Value/Gross Margin 1.8 5.5 6.7
Enterprise Value/LTM EBITDA 11.6 12.6 19.3
Enterprise Value/LTM Op. Inc. (EBIT) 17.3 16.0 24.4
Book Value Per Share $4.05 $4.71 $4.59
Current Price/Book Value 1.1 x 5.0 x 3.2 x
Margins (latest twelve months)
Gross Margin 25.0% 14.9% 28.0%
EBITDAR 4.9% 7.5% 10.5%
EBITDA 4.0% 6.5% 9.7%
Operating Income (EBIT) 2.7% 5.1% 7.7%
Net Income 3.0% 2.9% 6.0%
Total Revenues
Latest 12 Months $161,089 $2,823,800 $90,512
Last Fiscal Year 158,860 2,374,300 90,512
Last Fiscal Year-1 88,456 1,775,200 62,527
Last Fiscal Year-2 44,250 1,204,000 49,027
2 yr. compounded annual rev. growth 89.5% 40.4% 35.9%
Gross Margin/% of Revenues
Latest 12 Months $40,228 25.0% $419,600 14.9% $25,359 28.0%
Last Fiscal Year 41,476 26.1% 357,900 15.1% 25,359 28.0%
Last Fiscal Year-1 24,748 28.0% 254,600 14.3% 15,546 24.9%
Last Fiscal Year-2 15,607 35.3% 202,900 16.9% 12,769 26.0%
EBITDAR/% of Revenues
Latest 12 Months $7,965 4.9% $210,500 7.5% $9,477 10.5%
Last Fiscal Year 9,859 6.2% 181,900 7.7% 9,477 10.5%
Last Fiscal Year-1 4,434 5.0% 136,500 7.7% 2,439 3.9%
Last Fiscal Year-2 7,257 16.4% 105,500 8.8% 2,565 5.2%
EBITDA/% of Revenues
Latest 12 Months $6,420 4.0% $183,800 6.5% $8,785 9.7%
Last Fiscal Year 8,314 5.2% 155,200 6.5% 8,785 9.7%
Last Fiscal Year-1 4,070 4.6% 118,600 6.7% 1,873 3.0%
Last Fiscal Year-2 7,004 15.8% 93,400 7.8% 2,108 4.3%
EBIT/% of Revenues
Latest 12 Months $4,300 2.7% $144,600 5.1% $6,974 7.7%
Last Fiscal Year 6,187 3.9% 126,600 5.3% 6,974 7.7%
Last Fiscal Year-1 3,223 3.6% 99,700 5.6% 1,054 1.7%
Last Fiscal Year-2 6,551 14.8% 82,000 6.8% 1,748 3.6%
Net Inc. From Cont. Ops. /% of Revs.
Latest 12 Months $4,756 3.0% $83,200 2.9% $5,459 6.0%
Last Fiscal Year 5,913 3.7% 72,200 3.0% 5,459 6.0%
Last Fiscal Year-1 1,947 2.2% 54,500 3.1% 1,603 2.6%
Last Fiscal Year-2 4,002 9.0% 46,900 3.9% 2,002 4.1%
Earnings Per Share From Cont. Ops. (1)
Latest 12 Months $0.10 $1.10 $0.44
Last Fiscal Year 0.22 (pf) 0.96 0.42
Last Fiscal Year-1 0.21 0.73 0.13
Last Fiscal Year-2 0.53 0.63 0.18
Capitalization as of: Jul-96 Jun-96 Jun-96
Short Term Debt $28,750 $289,600 $404
------- ---------- --------
Long Term Debt $3,905 7.2% $130,200 17.8% $350 0.6%
Convertible Debt 0 0.0% 0 0.0% 0 0.0%
Preferred Stock 0 0.0% 0 0.0% 0 0.0%
Common Equity 37,796 69.9% 388,000 53.0% 57,162 90.7%
------- ----- ---------- ----- -------- -----
Total Capitalization $41,701 77.1% $518,200 70.8% $57,512 91.2%
Capitalized Rent (8x Rent Expense) 12,358 22.9% 213,600 29.2% 5,536 8.8%
------- ----- ---------- ----- -------- -----
Adjusted Capitalization $54,059 100.0% $731,800 100.0% $63,048 100.0%
</TABLE>
<PAGE> 24
<TABLE>
<CAPTION>
CORAM
HEALTHCARE QUANTUM HEALTH AMERICAN
CORPORATION RESOURCES, INC. (2) HOMEPATIENT, INC.
---------------- ----------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Most Recent Fiscal Year End
Most Recent Quarter End Dec-95 Dec-95 Dec-95
Jun-96 Mar-96 Jun-96
Ticker Symbol
Market Price as of 10/31/96 CRH QHRI AHOM
52-Week High $4.875 $17.000 $23.750
52-Week Low $6.875 $19.625 $31.813
$2.625 $8.000 $14.000
Shares Outstanding (000s)
42,174 15,152 14,211
Total Debt & Cap Leases
Cash & Cash Equivalents $492,356 $86,250 $112,905
Market Value of Equity (33,715) (56,352) (7,224)
------- ---------- --------
Total Enterprise Value 205,599 257,586 337,502
Capitalized Rent (8x Rent Expense) $664,240 $287,484 $443,183
------- ---------- --------
Adjusted Enterprise Value 140,000 24,000 45,208
$804,240 $311,484 $488,391
Earnings per Share (4)
Latest 12 Months EPS
CY 1995 Actual EPS ($7.84) $0.51 $0.99
CY 1996 Projected EPS (8.39) 0.66 0.88
CY 1997 Projected EPS (1.30) 0.68 1.10
(0.27) 0.83 1.29
2 year CAGR
na 12.1% 21.1%
Market Multiples
Market Value of Equity/LTM EPS
Market Value of Equity/1995 Act. EPS -0.6 x 33.3 x 24.0 x
Market Value of Equity/1996 Proj. EPS -0.6 25.8 27.0
Market Value of Equity/1997 Proj. EPS -3.8 25.0 21.6
-18.1 20.5 18.4
Adj. Enterprise Value/LTM Revenues
Adj. Enterprise Value/Gross Margin 1.4 x 1.1 x 2.3 x
Adj. Enterprise Value/LTM EBITDAR 5.4 x 5.1 x 12.1 x
-4.2 12.4 9.4
Enterprise Value/LTM Revenues
Enterprise Value/Gross Margin 1.1 x 1.0 x 2.1 x
Enterprise Value/LTM EBITDA 4.5 4.7 11.0
Enterprise Value/LTM Op. Inc. (EBIT) -3.2 13.0 9.5
-2.5 18.5 16.4
Book Value Per Share
Current Price/Book Value $0.03 $7.33 $13.73
188.1 x 2.3 x 1.7 x
Margins (latest twelve months)
Gross Margin
EBITDAR 25.3% 20.8% 19.1%
EBITDA -32.9% 8.5% 24.5%
Operating Income (EBIT) -35.9% 7.5% 21.9%
Net Income -45.3% 5.3% 12.7%
-51.8% 2.7% 5.6%
Total Revenues
Latest 12 Months
Last Fiscal Year $583,190 $294,873 $212,109
Last Fiscal Year-1 602,585 286,154 162,371
Last Fiscal Year-2 450,496 274,979 90,185
462,304 201,729 61,315
2 yr. compounded annual rev. growth
14.2% 19.1% 62.7%
Gross Margin/% of Revenues
Latest 12 Months
Last Fiscal Year $147,620 25.3% $61,446 20.8% $40,412 19.1%
Last Fiscal Year-1 142,875 23.7% 61,842 21.6% 32,541 20.0%
Last Fiscal Year-2 137,314 30.5% 70,386 25.6% 19,003 21.1%
177,281 38.3% 54,174 26.9% 11,799 19.2%
EBITDAR/% of Revenues
Latest 12 Months
Last Fiscal Year ($191,664) -32.9% $25,139 8.5% $52,071 24.5%
Last Fiscal Year-1 (219,090) -36.4% 22,100 7.7% 41,163 25.4%
Last Fiscal Year-2 47,290 10.5% 42,765 15.6% 20,554 22.8%
95,683 20.7% 31,747 15.7% 1,799 2.9%
EBITDA/% of Revenues
Latest 12 Months
Last Fiscal Year ($209,164) -35.9% $22,139 7.5% $46,420 21.9%
Last Fiscal Year-1 (236,590) -39.3% 19,100 6.7% 35,512 21.9%
Last Fiscal Year-2 32,490 7.2% 40,465 14.7% 17,830 19.8%
81,383 17.6% 29,847 14.8% 10,811 17.6%
EBIT/% of Revenues
Latest 12 Months
Last Fiscal Year ($264,452) -45.3% $15,544 5.3% $26,953 12.7%
Last Fiscal Year-1 (283,912) -47.1% 12,931 4.5% 21,031 13.0%
Last Fiscal Year-2 9,619 2.1% 36,543 13.3% 11,174 12.4%
62,400 13.5% 27,446 13.6% 6,279 10.2%
Net Inc. From Cont. Ops. /% of Revs.
Latest 12 Months
Last Fiscal Year ($302,176) -51.8% $8,090 2.7% $11,918 5.6%
Last Fiscal Year-1 (334,049) -55.4% 10,185 3.6% 9,541 5.9%
Last Fiscal Year-2 8,499 1.9% 21,641 7.9% 5,596 6.2%
38,534 8.3% 16,571 8.2% 3,483 5.7%
Earnings Per Share From Cont. Ops. (1)
Latest 12 Months ($7.84) $0.51 $0.99
Last Fiscal Year (8.39) 0.66 0.88
Last Fiscal Year-1 0.22 1.31 0.67
Last Fiscal Year-2 1.02 1.07 0.46
Capitalization as of: Jun-96 Mar-96 Jun-96
Short Term Debt $230,100 $0 $11,297
------- ---------- --------
Long Term Debt $180,508 44.8% $0 0.0% $101,608 29.7%
Convertible Debt 81,748 20.3% 86,250 39.0% 0 0.0%
Preferred Stock 0 0.0% 0 0.0% 0 0.0%
Common Equity 1,093 0.3% 111,027 50.2% 195,071 57.1%
------- ----- ---------- ----- -------- -----
Total Capitalization $263,349 65.3% $197,277 89.2% $296,679 86.8%
Capitalized Rent (8x Rent Expense) 140,000 34.7% 24,000 10.8% 45,208 13.2%
------- ----- ---------- ----- -------- -----
Adjusted Capitalization $403,349 100.0% $221,277 100.0% $341,887 100.0%
</TABLE>
<PAGE> 25
<TABLE>
<CAPTION>
EXPRESS OWEN SYSTEMED,
SCRIPTS, INC. HEALTHCARE, INC. INC. (3)
---------------- ----------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Most Recent Fiscal Year End Dec-95 Nov-95 Dec-95
Most Recent Quarter End Jun-96 Aug-96 Mar-96
Ticker Symbol ESRX OWN SYSM
Market Price as of 10/31/96 $27.500 $14.875 $3.000
52-Week High $58.000 $27.625 $7.250
52-Week Low $26.500 $10.875 $2.375
Shares Outstanding (000s) 16,466 17,061 22,325
Total Debt & Cap Leases $0 $2 $6,300
Cash & Cash Equivalents (62,931) (14,606) (12,628)
Market Value of Equity 452,809 253,784 66,974
------- ---------- --------
Total Enterprise Value $389,878 $239,180 $60,646
Capitalized Rent (8x Rent Expense) 9,320 16,320 13,992
------- ---------- --------
Adjusted Enterprise Value $399,198 $255,500 $74,638
Earnings per Share (4)
Latest 12 Months EPS $1.48 $0.59 $0.10
CY 1995 Actual EPS 1.20 0.54 na
CY 1996 Projected EPS 1.59 0.59 na
CY 1997 Projected EPS 2.06 0.82 na
2 year CAGR 31.0% 23.2% na
Market Multiples
Market Value of Equity/LTM EPS 18.6 x 25.2 x 30.7 x
Market Value of Equity/1995 Act. EPS 22.9 27.5 na
Market Value of Equity/1996 Proj. EPS 17.3 25.2 na
Market Value of Equity/1997 Proj. EPS 13.3 18.1 na
Adj. Enterprise Value/LTM Revenues 0.6 x 0.6 x 0.5 x
Adj. Enterprise Value/Gross Margin 5.3 x 3.9 x 3.3 x
Adj. Enterprise Value/LTM EBITDAR 10.0 9.3 12.1
Enterprise Value/LTM Revenues 0.6 x 0.6 x 0.4 x
Enterprise Value/Gross Margin 5.2 3.7 2.7
Enterprise Value/LTM EBITDA 10.0 9.4 13.7
Enterprise Value/LTM Op. Inc. (EBIT) 11.6 14.2 26.9
Book Value Per Share $9.40 $6.87 $1.67
Current Price/Book Value 2.9 x 2.2 x 1.8 x
Margins (latest twelve months)
Gross Margin 11.7% 15.3% 15.2%
EBITDAR 6.2% 6.5% 4.2%
EBITDA 6.0% 6.0% 3.0%
Operating Income (EBIT) 5.2% 4.0% 1.5%
Net Income 3.3% 2.5% 1.5%
Total Revenues
Latest 12 Months $644,389 $422,871 $147,210
Last Fiscal Year 544,460 383,995 152,384
Last Fiscal Year-1 384,504 320,409 141,965
Last Fiscal Year-2 264,868 290,277 134,235
2 yr. compounded annual rev. growth 43.4% 15.0% 6.5%
Gross Margin/% of Revenues
Latest 12 Months $75,084 11.7% $64,860 15.3% $22,446 15.2%
Last Fiscal Year 66,177 12.2% 58,307 15.2% 25,410 16.7%
Last Fiscal Year-1 46,353 12.1% 45,272 14.1% 24,585 17.3%
Last Fiscal Year-2 28,470 10.7% 41,729 14.4% 16,326 12.2%
EBITDAR/% of Revenues
Latest 12 Months $39,987 6.2% $27,445 6.5% $6,181 4.2%
Last Fiscal Year 34,423 6.3% 24,725 6.4% 8,350 5.5%
Last Fiscal Year-1 24,960 6.5% 17,069 5.3% 7,004 4.9%
Last Fiscal Year-2 15,599 5.9% 15,061 5.2% 3,478 2.6%
EBITDA/% of Revenues
Latest 12 Months $38,822 6.0% $25,405 6.0% $4,432 3.0%
Last Fiscal Year 33,258 6.1% 22,685 5.9% 6,601 4.3%
Last Fiscal Year-1 23,795 6.2% 15,334 4.8% 5,366 3.8%
Last Fiscal Year-2 14,825 5.6% 13,405 4.6% 1,638 1.2%
EBIT/% of Revenues
Latest 12 Months $33,511 5.2% $16,840 4.0% $2,254 1.5%
Last Fiscal Year 28,877 5.3% 15,672 4.1% 4,598 3.0%
Last Fiscal Year-1 20,471 5.3% 10,221 3.2% 3,648 2.6%
Last Fiscal Year-2 12,879 4.9% 9,523 3.3% (249) -0.2%
Net Inc. From Cont. Ops. /% of Revs.
Latest 12 Months $21,519 3.3% $10,716 2.5% $2,270 1.5%
Last Fiscal Year 18,327 3.4% 8,110 2.1% 4,290 2.8%
Last Fiscal Year-1 12,723 3.3% 5,191 1.6% 3,079 2.2%
Last Fiscal Year-2 8,099 3.1% 4,803 1.7% (846) -0.6%
Earnings Per Share From Cont. Ops. (1)
Latest 12 Months $1.48 $0.59 $0.10
Last Fiscal Year 1.20 0.56 0.19
Last Fiscal Year-1 0.84 0.46 0.14
Last Fiscal Year-2 0.55 0.48 (0.04)
Capitalization as of: Jun-96 Aug-96 Mar-96
Short Term Debt $0 $2 $0
-------- ---------- --------
Long Term Debt $0 0.0% $0 0.0% $0 0.0%
Convertible Debt 0 0.0% 0 0.0% 6,300 10.9%
Preferred Stock 0 0.0% 0 0.0% 0 0.0%
Common Equity 154,800 94.3% 117,215 87.8% 37,298 64.8%
-------- ----- ---------- ----- -------- -----
Total Capitalization $154,800 94.3% $117,215 87.8% $43,598 75.7%
Capitalized Rent (8x Rent Expense) 9,320 5.7% 16,320 12.2% 13,992 24.3%
-------- ----- ---------- ----- -------- -----
Adjusted Capitalization $164,120 100.0% $133,535 100.0% $57,590 100.0%
</TABLE>
- ----------------
na = not available or not applicable.
nm = not meaningful.
(1) MedPartners/Mullikin, Inc. acquired Caremark for 1.21 MDM shares per CK
share, effective 9/5/96. $23.75 was the last reported trading price for
Caremark shares.
(2) Olsten Corporation acquired Quantum Health Resources, Inc. for 0.58 OLS
shares per QHRI share, effective 7/1/96. $17.00 per share was the last
reported trading price for Quantum shares.
(3) Merck & Co., Inc. acquired Systemed, Inc. for $3.00 per share effective
7/22/96. $2.75 per share was the last reported trading price for Systemed
shares.
(4) Source: First Call.
<PAGE> 26
COMPARABLE COMPANIES DATA
<TABLE>
<CAPTION>
ADJ. ENT. MULTIPLES ENTERPRISE MULTIPLES
-------------------------- ------------------------------
SALES GM EBITDAR SALES GM EBITDA EBIT
-------- ------- --------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Health Management, Inc. 0.5x 2.2x 10.9x 0.5x 1.8x 11.6x 17.3x
Caremark International, Inc. (1) 0.9 6.0 12.0 0.8 5.5 12.6 16.0
Chronimed, Inc. 1.9 6.9 18.5 1.9 6.7 19.3 24.4
Coram Healthcare Corp. 1.4 5.4 (4.2) 1.1 4.5 (3.2) (2.5)
Quantum Healthcare Corp. (2) 1.1 5.1 12.4 1.0 4.7 13.0 18.5
American HomePatient, Inc. 2.3 12.1 9.4 2.1 11.0 9.5 16.4
Express Scripts, Inc. 0.6 5.3 10.0 0.6 5.2 10.0 11.6
Owen Healthcare, Inc. 0.6 3.9 9.3 0.6 3.7 9.4 14.2
Systemed, Inc. (3) 0.5 3.3 12.1 0.4 2.7 13.7 26.9
-------- ------- --------- ------- ------- ------- ------
High excl. HMIS 2.3x 12.1x 18.5x 2.1x 11.0x 19.3x 26.9x
Low excl. HMIS 0.5 3.3 -4.2 0.4 2.7 -3.2 -2.5
Mean excl. HMIS, High and Low 1.1x 5.5x 10.9x 1.0x 5.0x 11.4x 16.9x
Median excl. HMIS, High and Low 1.0 5.4 11.0 0.9 4.9 11.3 16.2
-------- ------- --------- ------- ------- ------- ------
</TABLE>
<TABLE>
<CAPTION>
MARKET VALUE OF EQUITY MULTIPLES MARGINS
-------------------------------------------- ------------------------------------------
LTM EPS 1996E EPS 1997E EPS BOOK VALUE EBITDAR EBITDA EBIT NI
-------- ----------- ----------- ----------- --------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Health Management, Inc. 46.3x nax nax 1.1x 4.9% 4.0% 2.7% 3.0%
Caremark International, Inc. (1) 21.6 19.6 15.8 5.0 7.5% 6.5% 5.1% 2.9%
Chronimed, Inc. 33.0 32.2 22.7 3.2 10.5% 9.7% 7.7% 6.0%
Coram Healthcare Corp. (0.6) (3.8) (18.1) 188.1 -32.9% -35.9% -45.3% -51.8%
Quantum Healthcare Corp. (2) 33.3 25.0 20.5 2.3 8.5% 7.5% 5.3% 2.7%
American HomePatient, Inc. 24.0 21.6 18.4 1.7 24.5% 21.9% 12.7% 5.6%
Express Scripts, Inc. 18.6 17.3 13.3 2.9 6.2% 6.0% 5.2% 3.3%
Owen Healthcare, Inc. 25.2 25.2 18.1 2.2 6.5% 6.0% 4.0% 2.5%
Systemed, Inc. (3) 30.7 na na 1.8 4.2% 3.0% 1.5% 1.5%
-------- ----------- ----------- ----------- -------- ----------- ---------- ---------
High excl. HMIS 33.3x 32.2x 22.7x 188.1x 24.5% 21.9% 12.7% 6.0%
Low excl. HMIS -0.6 -3.8 -18.1 1.7 -32.9% -35.9% -45.3% -51.8%
Mean excl. HMIS, High and Low 25.5x 21.7x 17.2x 2.9x 7.2% 6.5% 4.8% 3.1%
Median excl. HMIS, High and Low 24.6 21.6 18.1 2.6 7.0% 6.3% 5.2% 2.8%
-------- ----------- ----------- ----------- -------- ----------- ---------- ---------
</TABLE>
- --------------------------
Source: 10-K's, 10-Q's, annual reports, research reports and analysts'
estimates.
(1) MedPartners/Mullikin, Inc. acquired Caremark for 1.21 MDM shares per CK
share, effective 9/5/96.
(2) Olsten Corporation acquired Quantum Health Resources, Inc. for 0.58 OLS
shares per QHRI share, effective 7/1/96.
(3) Merck & Co., Inc. acquired Systemed, Inc. for $3.00 per share effective
7/22/96.
<PAGE> 1
EXHIBIT 17(b)(4)
The enclosed materials were reviewed by NatWest Markets with the Board of
Directors of the Company in connection with the delivery of NatWest Markets'
fairness opinion letter delivered to the Board of Directors on January 12, 1997.
The opinion of NatWest Markets is however, set forth solely in its opinion
letter delivered on that date and attached hereto as Exhibit 17(b)(3). In
connection with the delivery of such opinion letter, NatWest Markets delivered
oral presentations to the Board of Directors discussing the methodology and
assumptions underlying its opinions and the limitations thereof. Although the
enclosed materials summarize certain studies and analyses performed by NatWest
Markets, they do not cover all aspects of NatWest Markets' Studies and analyses,
nor do they reflect the inherently subjective conclusions arrived at by NatWest
Markets therefrom. Therefor, an examination of the attached materials in
isolation may lead to incomplete or incorrect conclusions as to the valuation of
HMI's common stock at the time NatWest Markets' opinion letter was delivered and
the fairness of the $1.50 per Share cash consideration to HMI's shareholders.
The Company's historical financial statements have been restated by the Company
and the projections underlying NatWest Markets' analyses and opinions have been
revised in a materially adverse manner with respect to the Company's projected
earnings and prospects. NatWest Markets has not delivered any fairness opinion
based upon such restated financial statements and projections.
<PAGE> 2
HMIS FINANCIAL MODEL
STATEMENTS OF OPERATIONS
($000s, except per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997
-----------------------------------------
1994A 1995A 1996A Q1A Q2E Q3E Q4E 1997E
------ ------ ------- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales 44,250 88,456 158,860 40,523 40,523 40,523 40,920 162,488
Yr-to-Yr/Qtr-to-Qtr Growth 67.7% 99.9% 79.6% n/a 0.0% 0.0% 1.0% 2.3%
CGS 28,643 63,708 117,384 30,011 30,462 30,462 30,762 121,696
GROSS MARGIN 15,606 24,748 41,476 10,512 10,061 10,061 10,158 40,792
% of Net Sales 35.3% 28.0% 26.1% 25.9% 24.8% 24.8% 24.8% 25.1%
OPERATING EXPENSES
Selling and Distribution 1,847 2,898 4,650 1,233 1,216 1,175 1,187 4,811
% of Net Sales 4.2% 3.3% 2.9% 3.0% 3.0% 2.9% 2.9% 3.0%
G&A 6,756 17,780 28,512 6,708 6,889 6,889 6,956 27,442
% of Net Sales 15.3% 20.1% 17.9% 16.6% 17.0% 17.0% 17.0% 16.9%
EBITDA 7,003 4,070 8,315 2,570 1,956 1,997 2,015 8,539
% of Net Sales 15.8% 4.6% 5.2% 6.3% 4.8% 4.9% 4.9% 5.3%
Yr-to-Yr/Qtr-to-Qtr Growth 86.0% -41.9% 104.3% n/a -23.9% 2.1% -0.1% 2.7%
Deprec. & Amort. 453 847 2,127 646 646 646 646 2,584
EBIT 6,550 3,223 6,187 1,924 1,310 1,351 1,369 5,954
% of Net Sales 14.8% 3.6% 3.9% 4.7% 3.2% 3.3% 3.3% 3.7%
Yr-to-Yr/Qtr-to-Qtr Growth 85.2% -50.8% 92.0% n/a -31.9% 3.1% 1.3% -3.8%
Interest Income 290 333 38 - 22 (29) (99) (106)
Interest Expense (88) (269) (2,717) (740) (683) (683) (683) (2,790)
Misc. Income (Expense) - - - - - - - -
PRETAX INCOME 6,752 3,287 3,508 1,184 649 638 586 3,058
% of Net Sales 15.3% 3.7% 2.2% 2.9% 1.6% 1.6% 1.4% 1.9%
Yr-to-Yr/Qtr-to-Qtr Growth 93.6% -51.3% 6.7% n/a -45.2% -1.7% -8.1% -12.8%
Income Tax Expense 2,751 1,340 (2,405) 253 266 262 240 1,021
Effective Tax Rate 40.7% 40.8% -68.6% 21.3% 41.0% 41.0% 41.0% 33.4%
NET INCOME B/F NONREC. 4,001 1,946 5,913 932 383 376 346 2,037
% of Net Sales 9.0% 2.2% 3.7% 2.3% 0.9% 0.9% 0.8% 1.3%
Yr-to-Yr/Qtr-to-Qtr Growth 81.3% -51.4% 203.8% n/a -58.9% -1.7% -8.1% -65.5%
Nonrecurring Charges - - (16,840) (500) (1,201) (7,450) (250) (9,401)
NET INCOME 4,001 1,946 (10,927) 432 (818) (7,074) 96 (7,364)
% of Net Sales 9.0% 2.2% -6.9% 1.1% -2.0% -17.5% 0.2% -4.5%
PF. PRIMARY EPS B/F NONREC. 0.54 0.21 0.22 0.10 0.02 0.02 0.02 0.13
PF. FULLY DILUTED EPS B/F NONREC. 0.53 0.21 0.22 0.10 0.02 0.02 0.02 0.13
Primary EPS After N/R 0.54 0.21 (1.16) 0.05 (0.04) (0.39) 0.01 (0.46)
Fully Diluted EPS After N/R 0.53 0.21 (1.16) 0.05 (0.04) (0.39) 0.01 (0.46)
Primary Shares 7,383 9,408 9,415 9,328 18,296 18,296 18,296 16,054
Fully Diluted Shares 7,593 9,421 9,415 9,334 18,670 18,670 18,670 16,336
</TABLE>
<TABLE>
<CAPTION>
1998E 1999E
-------------------------------- ----------------------------------
Q1 Q2 Q3 Q4 1998E Q1 Q2 Q3 Q4 1999E
------ ------ ------ ------ -------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales 41,732 43,010 44,839 47,358 176,939 50,206 53,439 57,123 61,337 222,105
Yr-to-Yr/Qtr-to-Qtr Growth 2.0% 3.1% 4.3% 5.6% 8.9% 6.0% 6.4% 6.9% 7.4% 25.5%
CGS 31,376 32,342 33,726 35,631 133,074 37,911 40,359 43,149 46,342 167,761
GROSS MARGIN 10,356 10,668 11,114 11,727 43,865 12,295 13,080 13,974 14,995 54,343
% of Net Sales 24.8% 24.8% 24.8% 24.8% 24.8% 24.5% 24.5% 24.5% 24.4% 24.5%
OPERATING EXPENSES
Selling and Distribution 1,168 1,204 1,211 1,279 4,862 1,305 1,389 1,428 1,533 5,656
% of Net Sales 2.8% 2.8% 2.7% 2.7% 2.7% 2.6% 2.6% 2.5% 2.5% 2.5%
G&A 7,094 7,312 7,623 8,051 30,080 8,535 9,085 9,711 10,427 37,758
% of Net Sales 17.0% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0%
EBITDA 2,093 2,152 2,280 2,398 8,923 2,454 2,606 2,835 3,034 10,929
% of Net Sales 5.0% 5.0% 5.1% 5.1% 5.0% 4.9% 4.9% 5.0% 4.9% 4.9%
Yr-to-Yr/Qtr-to-Qtr Growth 1.9% -0.3% 1.6% -0.5% 4.5% -3.4% -0.2% 1.8% -0.3% 22.5%
Deprec. & Amort. 675 675 675 675 2,700 675 675 675 675 2,700
EBIT 1,418 1,477 1,605 1,723 6,223 1,779 1,931 2,160 2,359 8,229
% of Net Sales 3.4% 3.4% 3.6% 3.6% 3.5% 3.5% 3.6% 3.8% 3.8% 3.7%
Yr-to-Yr/Qtr-to-Qtr Growth 3.6% 4.1% 8.7% 7.3% 4.5% 3.3% 8.5% 11.9% 9.2% 32.2%
Interest Income (33) 17 14 6 4 4 (0) (29) (64) (90)
Interest Expense (683) (683) (683) (683) (2,734) (683) (683) (683) (683) (2,734)
Misc. Income (Expense) - - - - - - - - - -
PRETAX INCOME 702 810 936 1,045 3,493 1,100 1,247 1,447 1,612 5,406
% of Net Sales 1.7% 1.9% 2.1% 2.2% 2.0% 2.2% 2.3% 2.5% 2.6% 2.4%
Yr-to-Yr/Qtr-to-Qtr Growth 19.7% 15.5% 15.5% 11.6% 14.2% 5.2% 13.4% 16.0% 11.4% 54.7%
Income Tax Expense 288 332 384 429 1,432 451 511 593 661 2,216
Effective Tax Rate 41.0% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0%
NET INCOME B/F NONREC. 414 478 552 617 2,061 649 736 854 951 3,189
% of Net Sales 1.0% 1.1% 1.2% 1.3% 1.2% 1.3% 1.4% 1.5% 1.6% 1.4%
Yr-to-Yr/Qtr-to-Qtr Growth 19.7% 15.5% 15.5% 11.6% 1.2% 5.2% 13.4% 16.0% 11.4% 54.7%
Nonrecurring Charges - - - - - - - - - -
NET INCOME 414 478 552 617 2,061 649 736 854 951 3,189
% of Net Sales 1.0% 1.1% 1.2% 1.3% 1.2% 1.3% 1.4% 1.5% 1.6% 1.4%
PF. PRIMARY EPS B/F NONREC. 0.02 0.03 0.03 0.03 0.11 0.04 0.04 0.05 0.05 0.17
PF. FULLY DILUTED EPS B/F NONREC. 0.02 0.03 0.03 0.03 0.11 0.04 0.04 0.05 0.05 0.17
Primary EPS After N/R 0.02 0.03 0.03 0.03 0.11 0.04 0.04 0.05 0.05 0.17
Fully Diluted EPS After N/R 0.02 0.03 0.03 0.03 0.11 0.04 0.04 0.05 0.05 0.17
Primary Shares 18,296 18,296 18,296 18,296 18,296 18,296 18,296 18,296 18,296 18,296
Fully Diluted Shares 18,670 18,670 18,670 18,670 18,670 18,670 18,670 18,670 18,670 18,670
</TABLE>
<PAGE> 3
HMIS Financial Model
Balance Sheet
($000s, except per share amounts)
<TABLE>
<CAPTION>
1997
-------------------------------------
1995A 1996A Q1A Q2E Q3E Q4E 1997E
----- ----- ----- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Current:
Cash and cash equivalents $4,563 $3,280 $1,586 $2,343 ($4,333) ($4,152) ($4,152)
Accounts receivable, net 31,340 36,457 36,959 39,455 39,455 39,846 39,846
Inventories 7,788 6,801 7,212 6,918 6,918 6,987 6,987
Tax refund receivable 1,827 8,037 5,752 2,300 2,300 2,300 2,300
Deferred taxes 3,133 1,807 2,357 2,357 2,357 2,357 2,357
Prepaid expenses and other 1,164 655 404 404 404 404 404
- ------------------------------------------------------------------------------------------------------------------
Total current assets 49,814 57,038 54,269 53,777 47,101 47,742 47,742
Improvements and equipment, net 2,136 3,826 3,680 3,481 3,282 3,083 3,083
Goodwill 35,464 34,008 33,711 33,446 33,182 32,917 32,917
Other 1,276 1,044 1,167 1,167 1,167 1,167 1,167
- ------------------------------------------------------------------------------------------------------------------
Total Assets $88,690 $95,916 $92,828 $91,872 $84,732 $84,909 $84,909
==================================================================================================================
Liabilities and Stockholders' Equity
Current:
Accounts payable $12,330 $20,715 $18,448 $12,189 $12,189 $12,311 $12,311
Accrued unusual charges 0 3,559 2,151 0 0 0 0
Accrued expenses 1,862 1,526 1,778 1,780 1,771 1,788 1,788
Current maturities of long-term debt 23,135 28,746 28,750 28,750 28,750 28,750 28,750
- ------------------------------------------------------------------------------------------------------------------
Total current liabilities 37,328 54,546 51,127 42,719 42,710 42,849 42,849
Long-term debt, less current maturities 3,191 4,006 3,905 3,905 3,905 3,905 3,905
- ------------------------------------------------------------------------------------------------------------------
Total liabilities 40,519 58,552 55,032 46,624 46,616 46,755 46,755
- ------------------------------------------------------------------------------------------------------------------
Commitments and contingencies
Stockholders' equity
Preferred stock 0 0 0 0 0 0 0
Common stock 280 280 280 549 549 549 549
Additional paid-in capital 38,020 38,139 38,139 46,200 46,200 46,200 46,200
Retained earnings (deficit) 9,872 (1,055) (623) (1,501) (8,632) (8,594) (8,594)
- ------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 48,172 37,364 37,796 45,247 38,116 38,154 38,154
- ------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $88,690 $95,916 $92,828 $91,872 $84,732 $84,909 $84,909
==================================================================================================================
<CAPTION>
1998E
-------------------------------------
Q1 Q2 Q3 Q4 1998E
------ -------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
Assets
Current:
Cash and cash equivalents $1,584 $1,481 $1,007 $63 $63
Accounts receivable, net 39,744 40,976 42,741 45,170 45,170
Inventories 7,129 7,351 7,669 8,108 8,108
Tax refund receivable 0 0 0 0 0
Deferred taxes 0 0 0 0 0
Prepaid expenses and other 404 404 404 404 404
- -----------------------------------------------------------------------------------------------
Total current assets 48,860 50,212 51,821 53,745 53,745
Improvements and equipment, net 2,872 2,661 2,450 2,240 2,240
Goodwill 32,640 32,363 32,086 31,810 31,810
Other 1,167 1,167 1,167 1,167 1,167
- -----------------------------------------------------------------------------------------------
Total Assets $85,539 $86,403 $87,525 $88,961 $88,961
===============================================================================================
Liabilities and Stockholders' Equity
Current:
Accounts payable $12,560 $12,952 $13,513 $14,286 $14,286
Accrued unusual charges 0 0 0 0 0
Accrued expenses 1,815 1,870 1,940 2,049 2,049
Current maturities of long-term debt 28,750 28,750 28,750 28,750 28,750
- -----------------------------------------------------------------------------------------------
Total current liabilities 43,125 43,572 44,203 45,085 45,085
Long-term debt, less current maturities 3,905 3,905 3,905 3,905 3,905
- -----------------------------------------------------------------------------------------------
Total liabilities 47,030 47,478 48,109 48,990 48,990
- -----------------------------------------------------------------------------------------------
Commitments and contingencies
Stockholders' equity
Preferred stock 0 0 0 0 0
Common stock 549 549 549 549 549
Additional paid-in capital 46,200 46,200 46,200 46,200 46,200
Retained earnings (deficit) (8,240) (7,823) (7,332) (6,778) (6,778)
- -----------------------------------------------------------------------------------------------
Total stockholders' equity 38,509 38,926 39,416 39,971 39,971
- -----------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $85,539 $86,403 $87,525 $88,961 $88,961
===============================================================================================
<CAPTION>
1999E
------------------------------------
Q1 Q2 Q3 Q4 1999E
------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C>
Assets
Current:
Cash and cash equivalents $536 ($748) ($2,268) ($4,081) ($4,081)
Accounts receivable, net 46,283 49,294 52,726 56,652 56,652
Inventories 8,633 9,196 9,838 10,573 10,573
Tax refund receivable 0 0 0 0 0
Deferred taxes 0 0 0 0 0
Prepaid expenses and other 404 404 404 404 404
- ---------------------------------------------------------------------------------------------
Total current assets 55,855 58,146 60,700 63,547 63,547
Improvements and equipment, net 2,029 1,818 1,607 1,397 1,397
Goodwill 31,533 31,256 30,979 30,703 30,703
Other 1,167 1,167 1,167 1,167 1,167
- ---------------------------------------------------------------------------------------------
Total Assets $90,584 $92,387 $94,454 $96,814 $96,814
=============================================================================================
Liabilities and Stockholders' Equity
Current:
Accounts payable $15,210 $16,202 $17,334 $18,629 $18,629
Accrued unusual charges 0 0 0 0 0
Accrued expenses 2,162 2,301 2,448 2,628 2,628
Current maturities of long-term debt 28,750 28,750 28,750 28,750 28,750
- ---------------------------------------------------------------------------------------------
Total current liabilities 46,122 47,254 48,532 50,007 50,007
Long-term debt, less current maturities 3,905 3,905 3,905 3,905 3,905
- ---------------------------------------------------------------------------------------------
Total liabilities 50,027 51,159 52,437 53,912 53,912
- ---------------------------------------------------------------------------------------------
Commitments and contingencies
Stockholders' equity
Preferred stock 0 0 0 0 0
Common stock 549 549 549 549 549
Additional paid-in capital 46,200 46,200 46,200 46,200 46,200
Retained earnings (deficit) (6,192) (5,520) (4,732) (3,847) (3,847)
- ---------------------------------------------------------------------------------------------
Total stockholders' equity 40,557 41,228 42,017 42,901 42,901
- ---------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $90,584 $92,387 $94,454 $96,814 $96,814
=============================================================================================
</TABLE>
Preliminary Model Based Upon Company Projections and Assumptions
<PAGE> 4
HMIS Financial Model
<TABLE>
<CAPTION>
Cash Flow Statement
($000s, except per share amounts)
- ----------------------------------------------------------------------------------------------------------
1994A 1995A 1996A
----- ----- -----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) 4,001 1,946 (10,927)
Adj. to reconcile net income (loss) to CF fr. Ops.:
Depreciation and amortization 453 847 2,127
Provision for doubtful A/R 1,781 7,978 14,715
Deferred taxes (701) (2,516) 1,326
Write-off of improvements and equipment - - 264
Write-off of goodwill - - 552
Write-off of organizational costs - - 134
Loss from disposition of rental equipment - 287 -
Compensation under restricted stock 57 57 -
Common stock issued to director - 19 -
Changes in working capital:
Accounts receivable (9,625) (16,707) (19,832)
Tax refund receivable - (1,827) (6,210)
Inventories 205 (1,827) 987
Prepaid expenses and other (205) (976) 508
Other assets (249) (240) 98
Accounts payable 100 4,870 8,385
Accrued unusual charges - - 3,559
Acrrued expenses 203 396 (336)
Income taxes payable 280 (1,760) -
- ----------------------------------------------------------------------------------------------------------
Net cash from (used in) operating activities (3,700) (9,451) (4,650)
- ----------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Cash used in acquisition of CPMB - (20,630) (324)
Cash used in acquisition of Murray Group (7,500) - -
Other acquisitions (250) (2,168) -
Collection of receivable from seller of Murray - 1,444 -
Capital expenditures (566) (948) (1,492)
Proceeds from sale of rental equipment - 215 -
- ----------------------------------------------------------------------------------------------------------
Net cash from (used in) investing activities (8,316) (22,087) (1,816)
- ----------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from long-term debt - 23,000 16,450
Principal payments on long-term debt - - (11,000)
Principal payments on current maturities of LTD - - -
Net payment on capital leases (44) (123) (386)
Decrease in bank loan - net (200) - -
Proceeds from issuance of common stock 21,982 - -
Cash paid for deferred borrowing fees - (722) -
Proceeds from exercise of warrants 218 427 -
Proceeds from exercise of options 13 24 120
- ----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 21,969 22,606 5,184
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalent 9,953 (8,933) (1,283)
- ----------------------------------------------------------------------------------------------------------
Cash and cash equivalents, beginning of period 3,543 13,495 4,563
- ----------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period 13,495 4,563 3,280
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
1997
-----------------------------------
Q1A Q2E Q3E Q4E 1997E
------- ------- ------ ------ -------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) 432 (878) (7,131) 38 (7,539)
Adj. to reconcile net income (loss) to CF fr. Ops.:
Depreciation and amortization 646 646 646 646 2,584
Provision for doubtful A/R 1,635 2,000 2,000 2,020 7,655
Deferred taxes (550) - - - (550)
Write-off of improvements and equipment - - - - -
Write-off of goodwill - - - - -
Write-off of organizational costs - - - - -
Loss from disposition of rental equipment - - - - -
Compensation under restricted stock - - - - -
Common stock issued to director - - - - -
Changes in working capital:
Accounts receivable (2,137) (4,496) (2,000) (2,411) (11,044)
Tax refund receivable 2,286 3,452 - - 5,737
Inventories (411) 294 - (69) (187)
Prepaid expenses and other 252 - - - 252
Other assets (124) - - - (124)
Accounts payable (2,267) (6,259) - 122 (8,404)
Accrued unusual charges (1,408) (2,151) - - (3,559)
Acrrued expenses 252 2 (9) 17 262
Income taxes payable - - - - -
- ----------------------------------------------------------------------------------------------------------
Net cash from (used in) operating activities (1,395) (7,391) (6,494) 363 (14,916)
- ----------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Cash used in acquisition of CPMB - - - - -
Cash used in acquisition of Murray Group - - - - -
Other acquisitions - - - - -
Collection of receivable from seller of Murray - - - - -
Capital expenditures (203) (182) (182) (182) (749)
Proceeds from sale of rental equipment - - - - -
- ----------------------------------------------------------------------------------------------------------
Net cash from (used in) investing activities (203) (182) (182) (182) (749)
- ----------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from long-term debt - - - - -
Principal payments on long-term debt (97) - - - (97)
Principal payments on current maturities of LTD - - - - -
Net payment on capital leases - - - - -
Decrease in bank loan - net - - - - -
Proceeds from issuance of common stock - 8,330 - - 8,330
Cash paid for deferred borrowing fees - - - - -
Proceeds from exercise of warrants - - - - -
Proceeds from exercise of options - - - - -
- ----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (97) 8,330 - - 8,233
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalent (1,694) 757 (6,676) 181 (7,432)
- ----------------------------------------------------------------------------------------------------------
Cash and cash equivalents, beginning of period 3,280 1,586 2,343 (4,333) 3,280
- ----------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period 1,586 2,343 (4,333) (4,152) (4,152)
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
1998E
-----------------------------------
Q1 Q2 Q3 Q4 1998E
------- ------- ------ ------ -------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) 355 417 490 554 1,817
Adj. to reconcile net income (loss) to CF fr. Ops.:
Depreciation and amortization 675 675 675 675 2,700
Provision for doubtful A/R 2,061 2,124 2,216 2,342 8,743
Deferred taxes 2,357 - - - 2,357
Write-off of improvements and equipment - - - - -
Write-off of goodwill - - - - -
Write-off of organizational costs - - - - -
Loss from disposition of rental equipment - - - - -
Compensation under restricted stock - - - - -
Common stock issued to director - - - - -
Changes in working capital:
Accounts receivable (1,959) (3,357) (3,981) (4,771) (14,067)
Tax refund receivable 2,300 - - - 2,300
Inventories (141) (222) (318) (439) (1,121)
Prepaid expenses and other - - - - -
Other assets - - - - -
Accounts payable 249 392 561 773 1,975
Accrued unusual charges - - - - -
Acrrued expenses 26 56 70 109 261
Income taxes payable - - - - -
- ----------------------------------------------------------------------------------------------------------
Net cash from (used in) operating activities 5,923 85 (287) (757) 4,965
- ----------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Cash used in acquisition of CPMB - - - - -
Cash used in acquisition of Murray Group - - - - -
Other acquisitions - - - - -
Collection of receivable from seller of Murray - - - - -
Capital expenditures (188) (188) (188) (188) (750)
Proceeds from sale of rental equipment - - - - -
- ----------------------------------------------------------------------------------------------------------
Net cash from (used in) investing activities (188) (188) (188) (188) (750)
- ----------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from long-term debt - - - - -
Principal payments on long-term debt - - - - -
Principal payments on current maturities of LTD - - - - -
Net payment on capital leases - - - - -
Decrease in bank loan - net - - - - -
Proceeds from issuance of common stock - - - - -
Cash paid for deferred borrowing fees - - - - -
Proceeds from exercise of warrants - - - - -
Proceeds from exercise of options - - - - -
- ----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities - - - - -
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalent 5,736 (103) (474) (944) 4,215
- ----------------------------------------------------------------------------------------------------------
Cash and cash equivalents, beginning of period (4,152) 1,584 1,481 1,007 (4,152)
- ----------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period 1,584 1,481 1,007 63 63
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
1999E
-----------------------------------
Q1 Q2 Q3 Q4 1999E
------- ------- ------ ------ -------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) 586 672 788 885 2,931
Adj. to reconcile net income (loss) to CF fr. Ops.:
Depreciation and amortization 675 675 675 675 2,700
Provision for doubtful A/R 2,484 2,646 2,830 3,041 11,001
Deferred taxes - - - - -
Write-off of improvements and equipment - - - - -
Write-off of goodwill - - - - -
Write-off of organizational costs - - - - -
Loss from disposition of rental equipment - - - - -
Compensation under restricted stock - - - - -
Common stock issued to director - - - - -
Changes in working capital:
Accounts receivable (3,597) (5,657) (6,262) (6,967) (22,483)
Tax refund receivable - - - - -
Inventories (525) (563) (642) (735) (2,465)
Prepaid expenses and other - - - - -
Other assets - - - - -
Accounts payable 925 992 1,131 1,295 4,343
Accrued unusual charges - - - - -
Acrrued expenses 112 139 146 181 579
Income taxes payable - - - - -
- ----------------------------------------------------------------------------------------------------------
Net cash from (used in) operating activities 660 (1,096) (1,333) (1,625) (3,394)
- ----------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Cash used in acquisition of CPMB - - - - -
Cash used in acquisition of Murray Group - - - - -
Other acquisitions - - - - -
Collection of receivable from seller of Murray - - - - -
Capital expenditures (188) (188) (188) (188) (750)
Proceeds from sale of rental equipment - - - - -
- ----------------------------------------------------------------------------------------------------------
Net cash from (used in) investing activities (188) (188) (188) (188) (750)
- ----------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from long-term debt - - - - -
Principal payments on long-term debt - - - - -
Principal payments on current maturities of LTD - - - - -
Net payment on capital leases - - - - -
Decrease in bank loan - net - - - - -
Proceeds from issuance of common stock - - - - -
Cash paid for deferred borrowing fees - - - - -
Proceeds from exercise of warrants - - - - -
Proceeds from exercise of options - - - - -
- ----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities - - - - -
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalent 473 (1,284) (1,520) (1,813) (4,144)
- ----------------------------------------------------------------------------------------------------------
Cash and cash equivalents, beginning of period 63 536 (748) (2,268) 63
- ----------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period 536 (748) (2,268) (4,081) (4,081)
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Preliminary Model Based Upon Company Projections and Assumptions
<PAGE> 5
HMIS Preliminary Valuation
Estimated Valuation Matrix
($000s, except per share amounts)
NET EARNINGS PER SHARE MULTIPLE METHOD
1996 EPS MULTIPLES
<TABLE>
<CAPTION>
CY 1996 FD EPS: $0.10
1996 PER SHARE EQUITY MARKET
P/E RATIO PRICE CAPITALIZATION
-----------------------------------------------------
<S> <C> <C>
14.0x $1.41 $26,278
15.0x 1.51 28,155
16.0x 1.61 30,032
17.0x 1.71 31,908
18.0x 1.81 33,785
19.0x 1.91 35,662
20.0x 2.01 37,539
21.0x 2.11 39,416
22.0x 2.21 41,293
</TABLE>
Page 1
<PAGE> 6
1997 EPS MULTIPLES
<TABLE>
<CAPTION>
CY 1997 FD EPS: $0.08
1997 PER SHARE EQUITY MARKET
P/E RATIO PRICE CAPITALIZATION
-----------------------------------------------------
<S> <C> <C>
12.0x $1.02 $18,982
13.0x 1.10 20,564
14.0x 1.19 22,146
15.0x 1.27 23,727
16.0x 1.36 25,309
17.0x 1.44 26,891
18.0x 1.53 28,473
19.0x 1.61 30,055
20.0x 1.69 31,637
</TABLE>
Page 2
<PAGE> 7
January Valuation
HMIS PRELIMINARY VALUATION
Estimated Valuation Matrix
($000s, except per share amounts)
- --------------------------------------------------------------------------------
EBITDA MULTIPLE METHOD
1997 EBITDA MULTIPLES
<TABLE>
- --------------------------------------------------------------------------------
<CAPTION>
2Q1997 ANNUALIZED EBITDA: $7,408
Implied Total
1997 Total Equity Value Implied
EBITDA Ratio Enterprise Value Adjustments(1) per Share(2) Equity Value
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7.5x $55,558 $36,808 $1.00 $18,751
8.0x 59,262 36,808 1.20 22,454
8.5x 62,966 36,808 1.40 26,158
9.0x 66,670 36,808 1.60 29,862
9.5x 70,374 36,808 1.80 33,566
10.0x 74,077 36,808 2.00 37,270
10.5x 77,781 36,808 2.19 40,974
11.0x 81,485 36,808 2.39 44,678
11.5x 85,189 36,808 2.59 48,381
12.0x 88,893 36,808 2.79 52,085
</TABLE>
- --------------------------------------------------------------------------------
(1) Pro forma net debt at end FY1997.
(2) Assumes 18.7 million pro forma fully diluted shares outstanding at
end FY1997.
Preliminary Analysis Based upon Company Projections and Assumptions
<PAGE> 8
HMIS Preliminary Valuation
Estimated Valuation Matrix
($000s, except per share amounts)
- --------------------------------------------------------------------------------
DISCOUNTED CASH FLOW METHOD
<TABLE>
<CAPTION>
FREE CASH FLOW CALCULATION
FISCAL YEAR ENDING APRIL 30,
---------------------------------------------------
1996A 1997E 1998E 1999E
----- ----- ----- -----
<S> <C> <C> <C> <C>
Sources:
Revenues $158,860 $160,928 $174,859 $220,025
Gross Margin 41,476 40,432 43,385 53,863
EBITDA 8,315 8,225 8,500 10,502
EBIT 6,187 5,640 5,800 7,802
Income Taxes (1) (2,405) 899 1,262 2,037
-------- -------- -------- ---------
EBIAT 8,592 4,742 4,537 5,766
Depreciation & Amortization 2,127 2,584 2,700 2,700
-------- -------- -------- ---------
Total Sources 10,720 7,326 7,237 8,466
Uses:
Est. Capital Expenditures $1,492 $749 $750 $750
Non-Recurring Charges 16,840 9,401 - -
Est. Change in Working Capital (4,150) 9,961 (448) 9,024
-------- -------- -------- ---------
Total Uses 14,182 20,111 302 9,774
-------- -------- -------- ---------
Net Free Cash Flow ($3,463) ($12,786) $6,936 ($1,309)
</TABLE>
(1) Projected EBIT tax effected at 41%
<TABLE>
<CAPTION>
MARGINS
Fiscal Year Ending April 30,
---------------------------------------------------
1996A 1997E 1998E 1999E
----- ----- ----- -----
<S> <C> <C> <C> <C>
Revenue Growth Rate nm 1.3% 8.7% 25.8%
Margins (% of Revenues):
Gross Margin 26.1% 25.1% 24.8% 24.5%
EBITDA 5.2% 5.1% 4.9% 4.8%
EBIT 3.9% 3.5% 3.3% 3.5%
EBIAT 5.4% 2.9% 2.6% 2.6%
Depreciation & Amortization 1.3% 1.6% 1.5% 1.2%
Capital Expenditures 0.9% 0.5% 0.4% 0.3%
Change in Op. Working Capital -2.6% 6.2% -0.3% 4.1%
</TABLE>
Page 13
<PAGE> 9
DCF
HMIS Preliminary Valuation
Estimated Valuation Matrix
($000s, except per share amounts)
DISCOUNTED CASH FLOW METHOD
IMPLIED TOTAL ENTERPRISE VALUE AND EQUITY VALUE
<TABLE>
<CAPTION>
1999 TERMINAL MULTIPLE OF EBITDA
DISCOUNT -----------------------------------------------------------
RATE 8.0x 9.0x 10.0x 11.0x 12.0x
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
25.0% $40,619 $46,594 $52,569 $58,543 $64,518 Enterprise Value (1)
3,812 9,786 15,761 21,736 27,710 Equity Value (2)
$0.20 $0.52 $0.84 $1.16 $1.48 Equity Value per Share (3)
26.0% $39,660 $45,514 $51,368 $57,222 $63,077
2,853 8,707 14,561 20,415 26,269
$0.15 $0.47 $0.78 $1.09 $1.41
27.0% $38,727 $44,464 $50,201 $55,938 $61,675
1,920 7,657 13,393 19,130 24,867
$0.10 $0.41 $0.72 $1.02 $1.33
28.0% $37,820 $43,443 $49,066 $54,688 $60,311
1,012 6,635 12,258 17,881 23,504
$0.05 $0.36 $0.66 $0.96 $1.26
29.0% $36,937 $42,449 $47,961 $53,473 $58,984
129 5,641 11,153 16,665 22,177
$0.01 $0.30 $0.60 $0.89 $1.19
30.0% $36,078 $41,482 $46,886 $52,289 $57,693
(729) 4,674 10,078 15,482 20,886
($0.04) $0.25 $0.54 $0.83 $1.12
</TABLE>
(1) Reflects the present value of the various cash flows over
2.5 years plus the discounted terminal value.
(2) Enterprise value less pro forma net debt of $36.8 million
at 10/31/96.
(3) Equity value per share assumes 18.7 million pro forma fully
diluted shares outstanding at 10/31/96.
Page 14
<PAGE> 1
EXHIBIT 17(b)(6)
The enclosed materials were reviewed by NatWest Markets with the Board
of Directors of the Company in connection with the delivery of NatWest Markets'
fairness opinion letter delivered to the Board of Directors on November 12,
1996 and January 12, 1997. The Opinion of NatWest Markets is however, set forth
solely in its opinion letters delivered on that date and attached to Amendment
No. 1 to the Rule 13e-3 Transaction Statement as Exhibits 17(b)(1) and
17(b)(3). In connection with the delivery of such opinion letter, NatWest
Markets delivered oral presentations to the Board of Directors discussing the
methodology and assumptions underlying its opinions and the limitations
thereof. Although the enclosed materials summarize certain studies and analyses
performed by NatWest Markets, they do not cover all aspects of NatWest Markets'
studies and analyses, nor do they reflect the inherently subjective conclusions
arrived at by NatWest Markets therefrom. Therefor, an examination of the
attached materials in isolation may lead to incomplete or incorrect conclusions
as to the valuation of HMI's common stock at the time NatWest Markets' opinion
letter was delivered and the fairness of the $1.50 per Share cash consideration
to HMI's shareholders.
The Company's historical financial statements have been restated by the Company
and the projections underlying NatWest Markets' analyses and opinions have been
revised in a materially adverse manner with respect to the Company's projected
earnings and prospects. NatWest Markets has not delivered any fairness opinion
based upon such restated financial statements and projections.
HMIS FINANCIAL MODEL
STATEMENTS OF OPERATIONS
($000s, except per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997
-----------------------------------------
1994A 1995A 1996A Q1A Q2E Q3E Q4E 1997E
------ ------ ------- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales 44,250 88,456 158,860 40,523 40,523 40,523 40,920 162,488
Yr-to-Yr/Qtr-to-Qtr Growth 67.7% 99.9% 79.6% n/a 0.0% 0.0% 1.0% 2.3%
CGS 28,643 63,708 117,384 30,011 30,462 30,462 30,762 121,696
GROSS MARGIN 15,606 24,748 41,476 10,512 10,061 10,061 10,158 40,792
% of Net Sales 35.3% 28.0% 26.1% 25.9% 24.8% 24.8% 24.8% 25.1%
OPERATING EXPENSES
Selling and Distribution 1,847 2,898 4,650 1,233 1,216 1,175 1,187 4,811
% of Net Sales 4.2% 3.3% 2.9% 3.0% 3.0% 2.9% 2.9% 3.0%
G&A 6,756 17,780 28,512 6,708 6,889 6,889 6,956 27,442
% of Net Sales 15.3% 20.1% 17.9% 16.6% 17.0% 17.0% 17.0% 16.9%
EBITDA 7,003 4,070 8,315 2,570 1,956 1,997 2,015 8,539
% of Net Sales 15.8% 4.6% 5.2% 6.3% 4.8% 4.9% 4.9% 5.3%
Yr-to-Yr/Qtr-to-Qtr Growth 86.0% -41.9% 104.3% n/a -23.9% 2.1% -0.1% 2.7%
Deprec. & Amort. 453 847 2,127 646 646 646 646 2,584
EBIT 6,550 3,223 6,187 1,924 1,310 1,351 1,369 5,954
% of Net Sales 14.8% 3.6% 3.9% 4.7% 3.2% 3.3% 3.3% 3.7%
Yr-to-Yr/Qtr-to-Qtr Growth 85.2% -50.8% 92.0% n/a -31.9% 3.1% 1.3% -3.8%
Interest Income 290 333 38 - 22 (29) (99) (106)
Interest Expense (88) (269) (2,717) (740) (683) (683) (683) (2,790)
Misc. Income (Expense) - - - - - - - -
PRETAX INCOME 6,752 3,287 3,508 1,184 649 638 586 3,058
% of Net Sales 15.3% 3.7% 2.2% 2.9% 1.6% 1.6% 1.4% 1.9%
Yr-to-Yr/Qtr-to-Qtr Growth 93.6% -51.3% 6.7% n/a -45.2% -1.7% -8.1% -12.8%
Income Tax Expense 2,751 1,340 (2,405) 253 266 262 240 1,021
Effective Tax Rate 40.7% 40.8% -68.6% 21.3% 41.0% 41.0% 41.0% 33.4%
NET INCOME B/F NONREC. 4,001 1,946 5,913 932 383 376 346 2,037
% of Net Sales 9.0% 2.2% 3.7% 2.3% 0.9% 0.9% 0.8% 1.3%
Yr-to-Yr/Qtr-to-Qtr Growth 81.3% -51.4% 203.8% n/a -58.9% -1.7% -8.1% -65.5%
Nonrecurring Charges - - (16,840) (500) (1,201) (7,450) (250) (9,401)
NET INCOME 4,001 1,946 (10,927) 432 (818) (7,074) 96 (7,364)
% of Net Sales 9.0% 2.2% -6.9% 1.1% -2.0% -17.5% 0.2% -4.5%
PF. PRIMARY EPS B/F NONREC. 0.54 0.21 0.22 0.10 0.02 0.02 0.02 0.13
PF. FULLY DILUTED EPS B/F NONREC. 0.53 0.21 0.22 0.10 0.02 0.02 0.02 0.13
Primary EPS After N/R 0.54 0.21 (1.16) 0.05 (0.04) (0.39) 0.01 (0.46)
Fully Diluted EPS After N/R 0.53 0.21 (1.16) 0.05 (0.04) (0.39) 0.01 (0.46)
Primary Shares 7,383 9,408 9,415 9,328 18,296 18,296 18,296 16,054
Fully Diluted Shares 7,593 9,421 9,415 9,334 18,670 18,670 18,670 16,336
</TABLE>
<TABLE>
<CAPTION>
1998E 1999E
-------------------------------- ----------------------------------
Q1 Q2 Q3 Q4 1998E Q1 Q2 Q3 Q4 1999E
------ ------ ------ ------ -------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales 41,732 43,010 44,839 47,358 176,939 50,206 53,439 57,123 61,337 222,105
Yr-to-Yr/Qtr-to-Qtr Growth 2.0% 3.1% 4.3% 5.6% 8.9% 6.0% 6.4% 6.9% 7.4% 25.5%
CGS 31,376 32,342 33,726 35,631 133,074 37,911 40,359 43,149 46,342 167,761
GROSS MARGIN 10,356 10,668 11,114 11,727 43,865 12,295 13,080 13,974 14,995 54,343
% of Net Sales 24.8% 24.8% 24.8% 24.8% 24.8% 24.5% 24.5% 24.5% 24.4% 24.5%
OPERATING EXPENSES
Selling and Distribution 1,168 1,204 1,211 1,279 4,862 1,305 1,389 1,428 1,533 5,656
% of Net Sales 2.8% 2.8% 2.7% 2.7% 2.7% 2.6% 2.6% 2.5% 2.5% 2.5%
G&A 7,094 7,312 7,623 8,051 30,080 8,535 9,085 9,711 10,427 37,758
% of Net Sales 17.0% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0%
EBITDA 2,093 2,152 2,280 2,398 8,923 2,454 2,606 2,835 3,034 10,929
% of Net Sales 5.0% 5.0% 5.1% 5.1% 5.0% 4.9% 4.9% 5.0% 4.9% 4.9%
Yr-to-Yr/Qtr-to-Qtr Growth 1.9% -0.3% 1.6% -0.5% 4.5% -3.4% -0.2% 1.8% -0.3% 22.5%
Deprec. & Amort. 675 675 675 675 2,700 675 675 675 675 2,700
EBIT 1,418 1,477 1,605 1,723 6,223 1,779 1,931 2,160 2,359 8,229
% of Net Sales 3.4% 3.4% 3.6% 3.6% 3.5% 3.5% 3.6% 3.8% 3.8% 3.7%
Yr-to-Yr/Qtr-to-Qtr Growth 3.6% 4.1% 8.7% 7.3% 4.5% 3.3% 8.5% 11.9% 9.2% 32.2%
Interest Income (33) 17 14 6 4 4 (0) (29) (64) (90)
Interest Expense (683) (683) (683) (683) (2,734) (683) (683) (683) (683) (2,734)
Misc. Income (Expense) - - - - - - - - - -
PRETAX INCOME 702 810 936 1,045 3,493 1,100 1,247 1,447 1,612 5,406
% of Net Sales 1.7% 1.9% 2.1% 2.2% 2.0% 2.2% 2.3% 2.5% 2.6% 2.4%
Yr-to-Yr/Qtr-to-Qtr Growth 19.7% 15.5% 15.5% 11.6% 14.2% 5.2% 13.4% 16.0% 11.4% 54.7%
Income Tax Expense 288 332 384 429 1,432 451 511 593 661 2,216
Effective Tax Rate 41.0% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0%
NET INCOME B/F NONREC. 414 478 552 617 2,061 649 736 854 951 3,189
% of Net Sales 1.0% 1.1% 1.2% 1.3% 1.2% 1.3% 1.4% 1.5% 1.6% 1.4%
Yr-to-Yr/Qtr-to-Qtr Growth 19.7% 15.5% 15.5% 11.6% 1.2% 5.2% 13.4% 16.0% 11.4% 54.7%
Nonrecurring Charges - - - - - - - - - -
NET INCOME 414 478 552 617 2,061 649 736 854 951 3,189
% of Net Sales 1.0% 1.1% 1.2% 1.3% 1.2% 1.3% 1.4% 1.5% 1.6% 1.4%
PF. PRIMARY EPS B/F NONREC. 0.02 0.03 0.03 0.03 0.11 0.04 0.04 0.05 0.05 0.17
PF. FULLY DILUTED EPS B/F NONREC. 0.02 0.03 0.03 0.03 0.11 0.04 0.04 0.05 0.05 0.17
Primary EPS After N/R 0.02 0.03 0.03 0.03 0.11 0.04 0.04 0.05 0.05 0.17
Fully Diluted EPS After N/R 0.02 0.03 0.03 0.03 0.11 0.04 0.04 0.05 0.05 0.17
Primary Shares 18,296 18,296 18,296 18,296 18,296 18,296 18,296 18,296 18,296 18,296
Fully Diluted Shares 18,670 18,670 18,670 18,670 18,670 18,670 18,670 18,670 18,670 18,670
</TABLE>
<PAGE> 2
HMIS FINANCIAL MODEL
BALANCE SHEET
($000s, except per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997
------------------------------------------
1995A 1996A Q1A Q2E Q3E Q4E 1997E
--------- ---------- --------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT:
Cash and cash equivalents $4,563 $3,280 $1,586 $1,964 $(4,654) $(4,416) $(4,416)
Accounts receivable, net 31,340 36,457 36,959 39,968 39,968 40,359 40,359
Inventories 7,788 6,801 7,212 7,010 7,010 7,079 7,079
Tax refund receivable 1,827 8,037 5,752 2,300 2,300 2,300 2,300
Deferred taxes 3,133 1,807 2,357 2,357 2,357 2,357 2,357
Prepaid expenses and other 1,164 655 404 404 404 404 404
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 49,814 57,038 54,269 54,003 47,385 48,083 48,083
IMPROVEMENTS AND EQUIPMENT, NET 2,136 3,826 3,680 3,481 3,282 3,083 3,083
GOODWILL 35,464 34,008 33,711 33,446 33,182 32,917 32,917
OTHER 1,276 1,044 1,167 1,167 1,167 1,167 1,167
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $88,690 $95,916 $92,828 $92,098 $85,015 $85,250 $85,250
============================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT:
Accounts payable $12,330 $20,715 $18,448 $12,352 $12,352 $12,473 $12,473
Accrued unusual charges 0 3,559 2,151 0 0 0 0
Accrued expenses 1,862 1,526 1,778 1,783 1,774 1,791 1,791
Current maturities of long-term debt 23,135 28,746 28,750 28,750 28,750 28,750 28,750
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 37,328 54,546 51,127 42,885 42,876 43,015 43,015
LONG-TERM DEBT, LESS CURRENT MATURITIES 3,191 4,006 3,905 3,905 3,905 3,905 3,905
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 40,519 58,552 55,032 46,790 46,781 46,920 46,920
- ----------------------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock 0 0 0 0 0 0 0
Common stock 280 280 280 549 549 549 549
Additional paid-in capital 38,020 38,139 38,139 46,200 46,200 46,200 46,200
Retained earnings (deficit) 9,872 (1,055) (623) (1,441) (8,515) (8,419) (8,419)
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 48,172 37,364 37,796 45,307 38,234 38,330 38,330
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $88,690 $95,916 $92,828 $92,098 $85,015 $85,250 $85,250
============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
1998E
----------------------------------------
Q1 Q2 Q3 Q4 1998E
------------------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT:
Cash and cash equivalents $1,390 $1,349 $936 $55 $55
Accounts receivable, net 40,245 41,478 43,242 45,672 45,672
Inventories 7,221 7,443 7,762 8,200 8,200
Tax refund receivable 0 0 0 0 0
Deferred taxes 0 0 0 0 0
Prepaid expenses and other 404 404 404 404 404
- ------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 49,260 50,673 52,344 54,330 54,330
IMPROVEMENTS AND EQUIPMENT, NET 2,872 2,661 2,450 2,240 2,240
GOODWILL 32,640 32,363 32,086 31,810 31,810
OTHER 1,167 1,167 1,167 1,167 1,167
- ------------------------------------------------------------------------------------------------
TOTAL ASSETS $85,939 $86,865 $88,048 $89,546 $89,546
================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT:
Accounts payable $12,722 $13,114 $13,675 $14,448 $14,448
Accrued unusual charges 0 0 0 0 0
Accrued expenses 1,818 1,873 1,943 2,053 2,053
Current maturities of long-term debt 28,750 28,750 28,750 28,750 28,750
- ------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 43,290 43,737 44,368 45,250 45,250
LONG-TERM DEBT, LESS CURRENT MATURITIES 3,905 3,905 3,905 3,905 3,905
- ------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 47,195 47,643 48,274 49,156 49,156
- ------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock 0 0 0 0 0
Common stock 549 549 549 549 549
Additional paid-in capital 46,200 46,200 46,200 46,200 46,200
Retained earnings (deficit) (8,005) (7,527) (6,974) (6,358) (6,358)
- ------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 38,744 39,222 39,774 40,391 40,391
- ------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $85,939 $86,865 $88,048 $89,546 $89,546
================================================================================================
</TABLE>
<TABLE>
<CAPTION>
1999E
-----------------------------------------------
Q1 Q2 Q3 Q4 1999E
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT:
Cash and cash equivalents $608 $(612) $(2,067) $(3,813) $(3,813)
Accounts receivable, net 46,767 49,778 53,210 57,136 57,136
Inventories 8,725 9,288 9,930 10,665 10,665
Tax refund receivable 0 0 0 0 0
Deferred taxes 0 0 0 0 0
Prepaid expenses and other 404 404 404 404 404
- -------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 56,503 58,859 61,478 64,391 64,391
IMPROVEMENTS AND EQUIPMENT, NET 2,029 1,818 1,607 1,397 1,397
GOODWILL 31,533 31,256 30,979 30,703 30,703
OTHER 1,167 1,167 1,167 1,167 1,167
- -------------------------------------------------------------------------------------------------------
TOTAL ASSETS $91,232 $93,100 $95,232 $97,658 $97,658
=======================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT:
Accounts payable $15,372 $16,365 $17,496 $18,791 $18,791
Accrued unusual charges 0 0 0 0 0
Accrued expenses 2,165 2,304 2,451 2,631 2,631
Current maturities of long-term debt 28,750 28,750 28,750 28,750 28,750
- -------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 46,287 47,419 48,697 50,172 50,172
LONG-TERM DEBT, LESS CURRENT MATURITIES 3,905 3,905 3,905 3,905 3,905
- -------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 50,193 51,324 52,602 54,078 54,078
- -------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock 0 0 0 0 0
Common stock 549 549 549 549 549
Additional paid-in capital 46,200 46,200 46,200 46,200 46,200
Retained earnings (deficit) (5,709) (4,973) (4,119) (3,168) (3,168)
- -------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 41,040 41,776 42,629 43,580 43,580
- -------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $91,232 $93,100 $95,232 $97,658 $97,658
=======================================================================================================
</TABLE>
<PAGE> 3
HMIS FINANCIAL MODEL
QUARTERLY OPS. BY PRODUCT LINE
($000s, except per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997
--------------------------------------------------------------
1996 1Q 2Q 3Q
E Growth % of Revs. E Growth % of Revs. E Growth % of Revs. E
------- ------ --------- ------- ------ ---------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Organ Transplant $63,544 na 40.0% $16,209 na 40.0% $16,209 0.0% 40.0% $16,209
Infertility 19,857 na 12.5% 5,065 na 12.5% 5,065 0.0% 12.5% 5,065
Neurology (MS, ALS, Alz.) 6,752 na 4.3% 1,722 na 4.3% 1,722 0.0% 4.3% 1,722
Cancer 11,914 na 7.5% 3,039 na 7.5% 3,039 0.0% 7.5% 3,039
Clozaril (Drug Sales) 36,141 na 22.8% 9,219 na 22.8% 9,219 0.0% 22.8% 9,219
Clozaril (Case Mgmt/Services) 9,929 na 6.3% 2,533 na 6.3% 2,533 0.0% 6.3% 2,533
Other Schiz (Drug Sales) 1,390 na 0.9% 355 na 0.9% 355 0.0% 0.9% 355
Other Schiz (Case Mgmt/Services) 199 na 0.1% 51 na 0.1% 51 0.0% 0.1% 51
HIV/AIDS 1,986 na 1.3% 507 na 1.3% 507 0.0% 1.3% 507
Other Products 7,149 na 4.5% 1,824 na 4.5% 1,824 0.0% 4.5% 1,824
-------- --- ----- ------- ---- ------ ------- ----- -------
TOTAL REVENUES $158,860 100.0% $40,523 100.0% $40,523 100.0% $40,523
Revenue Growth 79.6% na 0.0% 0.0%
</TABLE>
<TABLE>
<CAPTION>
4Q 1997
Growth % of Revs. E Growth % of Revs. E Growth % of Revs.
------ --------- ------- ------ ---------- ------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Organ Transplant 0.0% 40.0% $16,326 0.7% 39.9% $64,953 2.2% 40.0%
Infertility 0.0% 12.5% 5,113 0.9% 12.5% 20,309 2.3% 12.5%
Neurology (MS, ALS, Alz.) 0.0% 4.3% 1,787 3.8% 4.4% 6,954 3.0% 4.3%
Cancer 0.0% 7.5% 3,154 3.8% 7.7% 12,272 3.0% 7.6%
Clozaril (Drug Sales) 0.0% 22.8% 9,219 0.0% 22.5% 36,876 2.0% 22.7%
Clozaril (Case Mgmt/Services) 0.0% 6.3% 2,533 0.0% 6.2% 10,131 2.0% 6.2%
Other Schiz (Drug Sales) 0.0% 0.9% 368 3.8% 0.9% 1,432 3.0% 0.9%
Other Schiz (Case Mgmt/Services) 0.0% 0.1% 52 3.0% 0.1% 204 2.8% 0.1%
HIV/AIDS 0.0% 1.3% 526 3.8% 1.3% 2,045 3.0% 1.3%
Other Products 0.0% 4.5% 1,842 1.0% 4.5% 7,312 2.3% 4.5%
------ ------- ------ -------- ------
TOTAL REVENUES 100.0% $40,920 100.0% $162,488 100.0%
Revenue Growth 1.0% 2.3% 2.3%
</TABLE>
<TABLE>
<CAPTION>
COGS COGS COGS
Margin % of COGS Margin % of COGS Margin % of COGSS
------ --------- ------ --------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COGS - PRODUCT
Organ Transplant $47,658 75.0% 42.5% $12,157 75.0% 42.5% $12,157 75.0% 42.5%
Infertility 14,893 75.0% 13.3% 3,799 75.0% 13.3% 3,799 75.0% 13.3%
Neurology (MS, ALS, Alz.) 5,266 78.0% 4.7% 1,343 78.0% 4.7% 1,343 78.0% 4.7%
Cancer 8,936 75.0% 8.0% 2,279 75.0% 8.0% 2,279 75.0% 8.0%
Clozaril (Drug Sales) 27,105 75.0% 24.2% 6,914 75.0% 24.2% 6,914 75.0% 24.2%
Clozaril (Case Mgmt/Services) 0 0.0% 0.0% 0 0.0% 0.0% 0 0.0% 0.0%
Other Schiz (Drug Sales) 1,084 78.0% 1.0% 277 78.0% 1.0% 277 78.0% 1.0%
Other Schiz (Case Mgmt/Services) 0 0.0% 0.0% 0 0.0% 0.0% 0 0.0% 0.0%
HIV/AIDS 1,549 78.0% 1.4% 395 78.0% 1.4% 395 78.0% 1.4%
Other Products 5,576 78.0% 5.0% 1,422 78.0% 5.0% 1,422 78.0% 5.0%
-------- ----- ----- ------- ----- ----- ------- ---- -----
TOTAL COGS - PRODUCT $112,068 100.0% $28,587 100.0% $28,587 100.0%
% of total net revenues 70.5% 70.5% 70.5%
</TABLE>
<TABLE>
<CAPTION>
COGS COGS COGS
Margin % of COGS Margin % of COGS Margin % of COGS
------ --------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COGS - PRODUCT
Organ Transplant $12,157 75.0% 42.5% $12,244 75.0% 42.4% $48,715 75.0% 42.5%
Infertility 3,799 75.0% 13.3% 3,835 75.0% 13.3% 15,232 75.0% 13.3%
Neurology (MS, ALS, Alz.) 1,343 78.0% 4.7% 1,394 78.0% 4.8% 5,424 78.0% 4.7%
Cancer 2,279 75.0% 8.0% 2,366 75.0% 8.2% 9,204 75.0% 8.0%
Clozaril (Drug Sales) 6,914 75.0% 24.2% 6,914 75.0% 23.9% 27,657 75.0% 24.1%
Clozaril (Case Mgmt/Services) 0 0.0% 0.0% 0 0.0% 0.0% 0 0.0% 0.0%
Other Schiz (Drug Sales) 277 78.0% 1.0% 287 78.0% 1.0% 1,117 78.0% 1.0%
Other Schiz (Case Mgmt/Services) 0 0.0% 0.0% 0 0.0% 0.0% 0 0.0% 0.0%
HIV/AIDS 395 78.0% 1.4% 410 78.0% 1.4% 1,595 78.0% 1.4%
Other Products 1,422 78.0% 5.0% 1,437 78.0% 5.0% 5,704 78.0% 5.0%
------- ----- ----- ------- ----- ----- -------- ----- -----
TOTAL COGS - PRODUCT $28,587 100.0% $28,887 100.0% $114,647 100.0%
% of total net revenues 70.5% 70.6% 70.6%
</TABLE>
<TABLE>
<CAPTION>
Gross Gross Gross
Margin % of GP Margin % of GP Margin % of GP
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GROSS PROFIT - PRODUCT
Organ Transplant $15,886 25.0% 34.0% $4,052 25.0% 34.0% $4,052 25.0% 34.0%
Infertility 4,964 25.0% 10.6% 1,266 25.0% 10.6% 1,266 25.0% 10.6%
Neurology (MS, ALS, Alz.) 1,485 22.0% 3.2% 379 22.0% 3.2% 379 22.0% 3.2%
Cancer 2,979 25.0% 6.4% 760 25.0% 6.4% 760 25.0% 6.4%
Clozaril (Drug Sales) 9,035 25.0% 19.3% 2,305 25.0% 19.3% 2,305 25.0% 19.3%
Clozaril (Case Mgmt/Services) 9,929 100.0% 21.2% 2,533 100.0% 21.2% 2,533 100.0% 21.2%
Other Schiz (Drug Sales) 306 22.0% 0.7% 78 22.0% 0.7% 78 22.0% 0.7%
Other Schiz (Case Mgmt/Services) 199 100.0% 0.4% 51 100.0% 0.4% 51 100.0% 0.4%
HIV/AIDS 437 22.0% 0.9% 111 22.0% 0.9% 111 22.0% 0.9%
Other Products 1,573 22.0% 3.4% 401 22.0% 3.4% 401 22.0% 3.4%
------- ----- ----- ------- ----- ----- ------- ----- ------
TOTAL GROSS PROFIT - PRODUCT $46,792 100.0% $11,936 100.0% $11,936 100.0%
Gross Margin 29.5% 29.5% 29.5%
COGS - PHARMACY OPS AND FIXED $8,156 $1,424 $1,875
% of total net revenues 5.1% 3.5% 4.6%
TOTAL GROSS PROFIT $38,636 $10,512 $10,061
Gross Margin 24.3% 25.9% 24.8%
</TABLE>
<TABLE>
<CAPTION>
Gross Gross Gross
Margin % of GP Margin % of GP Margin % of GP
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GROSS PROFIT - PRODUCT
Organ Transplant $4,052 25.0% 34.0% $4,081 25.0% 33.9% $16,238 25.0% 33.9%
Infertility 1,266 25.0% 10.6% 1,278 25.0% 10.6% 5,077 25.0% 10.6%
Neurology (MS, ALS, Alz.) 379 22.0% 3.2% 393 22.0% 3.3% 1,530 22.0% 3.2%
Cancer 760 25.0% 6.4% 789 25.0% 6.6% 3,068 25.0% 6.4%
Clozaril (Drug Sales) 2,305 25.0% 19.3% 2,305 25.0% 19.2% 9,219 25.0% 19.3%
Clozaril (Case Mgmt/Services) 2,533 100.0% 21.2% 2,533 100.0% 21.0% 10,131 100.0% 21.2%
Other Schiz (Drug Sales) 78 22.0% 0.7% 81 22.0% 0.7% 315 22.0% 0.7%
Other Schiz (Case Mgmt/Services) 51 100.0% 0.4% 52 100.0% 0.4% 204 100.0% 0.4%
HIV/AIDS 111 22.0% 0.9% 116 22.0% 1.0% 450 22.0% 0.9%
Other Products 401 22.0% 3.4% 405 22.0% 3.4% 1,609 22.0% 3.4%
------- ----- ----- ------- ----- ----- ------- ----- -----
TOTAL GROSS PROFIT - PRODUCT $11,936 100.0% $12,033 100.0% $47,841 100.0%
Gross Margin 29.5% 29.4% 29.4%
COGS - PHARMACY OPS AND FIXED $1,875 $1,875 $7,049
% of total net revenues 4.6% 4.6% 4.3%
TOTAL GROSS PROFIT $10,061 $10,158 $40,792
Gross Margin 24.8% 24.8% 25.1%
</TABLE>
<PAGE> 4
HMIS FINANCIAL MODEL
QUARTERLY OPS. BY PRODUCT LINE
($000s, except per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998
----------------------------------------------------------------------------------------
1Q 2Q 3Q
E Growth % of Revs. E Growth % of Revs. E Growth % of Revs.
------- ------ --------- ------ ------ --------- ------- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Organ Transplant $16,561 1.4% 39.7% $16,919 2.2% 39.3% $17,406 2.9% 38.8%
Infertility 5,209 1.9% 12.5% 5,356 2.8% 12.5% 5,557 3.8% 12.4%
Neurology (MS, ALS, Alz.) 1,922 7.6% 4.6% 2,140 11.3% 5.0% 2,464 15.1% 5.5%
Cancer 3,393 7.6% 8.1% 3,777 11.3% 8.8% 4,348 15.1% 9.7%
Clozaril (Drug Sales) 9,219 0.0% 22.1% 9,219 0.0% 21.4% 9,219 0.0% 20.6%
Clozaril (Case Mgmt/Services) 2,533 0.0% 6.1% 2,533 0.0% 5.9% 2,533 0.0% 5.6%
Other Schiz (Drug Sales) 396 7.6% 0.9% 441 11.3% 1.0% 507 15.1% 1.1%
Other Schiz (Case Mgmt/Services) 55 6.0% 0.1% 60 9.0% 0.1% 68 12.0% 0.2%
HIV/AIDS 565 7.6% 1.4% 630 11.3% 1.5% 725 15.1% 1.6%
Other Products 1,879 2.0% 4.5% 1,935 3.0% 4.5% 2,012 4.0% 4.5%
------- ----- ------- ----- ------- -----
TOTAL REVENUES $41,732 100.0% $43,010 100.0% $44,839 100.0%
Revenue Growth 2.0% 3.1% 4.3%
</TABLE>
<TABLE>
<CAPTION>
1998
--------------------------------------
4Q 1998
E Growth % of Revs. E Growth % of Revs.
------- ------ --------- ------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Organ Transplant $18,033 3.6% 38.1% $68,918 6.1% 39.0%
Infertility 5,819 4.7% 12.3% 21,941 8.0% 12.4%
Neurology (MS, ALS, Alz.) 2,930 18.9% 6.2% 9,457 36.0% 5.3%
Cancer 5,170 18.9% 10.9% 16,688 36.0% 9.4%
Clozaril (Drug Sales) 9,219 0.0% 19.5% 36,876 0.0% 20.8%
Clozaril (Case Mgmt/Services) 2,533 0.0% 5.3% 10,131 0.0% 5.7%
Other Schiz (Drug Sales) 603 18.9% 1.3% 1,947 36.0% 1.1%
Other Schiz (Case Mgmt/Services) 78 15.0% 0.2% 261 27.7% 0.1%
HIV/AIDS 862 18.9% 1.8% 2,781 36.0% 1.6%
Other Products 2,113 5.0% 4.5% 7,939 8.6% 4.5%
------- ----- -------- -----
TOTAL REVENUES $47,358 100.0% $176,939 100.0%
Revenue Growth 5.6% 8.9%
</TABLE>
<TABLE>
<CAPTION>
COGS COGS COGS
Margin % of COGS Margin % of COGS Margin % of COGS
----- -------- ------ --------- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COGS - PRODUCT
Organ Transplant $12,421 75.0% 42.1% $12,689 75.0% 41.6% $13,054 75.0% 41.0%
Infertility 3,907 75.0% 13.2% 4,017 75.0% 13.2% 4,168 75.0% 13.1%
Neurology (MS, ALS, Alz.) 1,500 78.0% 5.1% 1,670 78.0% 5.5% 1,922 78.0% 6.0%
Cancer 2,544 75.0% 8.6% 2,833 75.0% 9.3% 3,261 75.0% 10.2%
Clozaril (Drug Sales) 6,914 75.0% 23.4% 6,914 75.0% 22.7% 6,914 75.0% 21.7%
Clozaril (Case Mgmt/Services) 0 0.0% 0.0% 0 0.0% 0.0% 0 0.0% 0.0%
Other Schiz (Drug Sales) 309 78.0% 1.0% 344 78.0% 1.1% 396 78.0% 1.2%
Other Schiz (Case Mgmt/Services) 0 0.0% 0.0% 0 0.0% 0.0% 0 0.0% 0.0%
HIV/AIDS 441 78.0% 1.5% 491 78.0% 1.6% 565 78.0% 1.8%
Other Products 1,465 78.0% 5.0% 1,509 78.0% 5.0% 1,570 78.0% 4.9%
------- ----- ------ ------- ----- ------ ------- ----- ------
TOTAL COGS - PRODUCT $29,501 100.0% $30,467 100.0% $31,851 100.0%
% of total net revenues 70.7% 70.8% 71.0%
</TABLE>
<TABLE>
<CAPTION>
COGS COGS
Margin % of COGS Margin % of COGS
------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
COGS - PRODUCT
Organ Transplant $13,524 75.0% 40.1% $51,689 75.0% 41.2%
Infertility 4,364 75.0% 12.9% 16,456 75.0% 13.1%
Neurology (MS, ALS, Alz.) 2,285 78.0% 6.8% 7,376 78.0% 5.9%
Cancer 3,878 75.0% 11.5% 12,516 75.0% 10.0%
Clozaril (Drug Sales) 6,914 75.0% 20.5% 27,657 75.0% 22.0%
Clozaril (Case Mgmt/Services) 0 0.0% 0.0% 0 0.0% 0.0%
Other Schiz (Drug Sales) 470 78.0% 1.4% 1,519 78.0% 1.2%
Other Schiz (Case Mgmt/Services) 0 0.0% 0.0% 0 0.0% 0.0%
HIV/AIDS 672 78.0% 2.0% 2,169 78.0% 1.7%
Other Products 1,648 78.0% 4.9% 6,192 78.0% 4.9%
------- ----- ------ -------- ----- ------
TOTAL COGS - PRODUCT $33,756 100.0% $125,574 100.0%
% of total net revenues 71.3% 71.0%
</TABLE>
<TABLE>
<CAPTION>
Gross Gross Gross
Margin % of GP Margin % of GP Margin % of GP
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GROSS PROFIT - PRODUCT
Organ Transplant $4,140 25.0% 33.9% $4,230 25.0% 33.7% $4,351 25.0% 33.5%
Infertility 1,302 25.0% 10.6% 1,339 25.0% 10.7% 1,389 25.0% 10.7%
Neurology (MS, ALS, Alz.) 423 22.0% 3.5% 471 22.0% 3.8% 542 22.0% 4.2%
Cancer 848 25.0% 6.9% 944 25.0% 7.5% 1,087 25.0% 8.4%
Clozaril (Drug Sales) 2,305 25.0% 18.8% 2,305 25.0% 18.4% 2,305 25.0% 17.7%
Clozaril (Case Mgmt/Services) 2,533 100.0% 20.7% 2,533 100.0% 20.2% 2,533 100.0% 19.5%
Other Schiz (Drug Sales) 87 22.0% 0.7% 97 22.0% 0.8% 112 22.0% 0.9%
Other Schiz (Case Mgmt/Services) 55 100.0% 0.5% 60 100.0% 0.5% 68 100.0% 0.5%
HIV/AIDS 124 22.0% 1.0% 138 22.0% 1.1% 159 22.0% 1.2%
Other Products 413 22.0% 3.4% 426 22.0% 3.4% 443 22.0% 3.4%
------- ----- ------ ------- ------ ------ ------- ------ ------
TOTAL GROSS PROFIT - PRODUCT $12,231 100.0% $12,543 100.0% $12,989 100.0%
Gross Margin 29.3% 29.2% 29.0%
COGS - PHARMACY OPS AND FIXED $1,875 $1,875 $1,875
% of total net revenues 4.5% 4.4% 4.2%
TOTAL GROSS PROFIT $10,356 $10,668 $11,114
Gross Margin 24.8% 24.8% 24.8%
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Margin % of GP Margin % of GP
------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
GROSS PROFIT - PRODUCT
Organ Transplant $4,508 25.0% 33.1% $17,230 25.0% 33.5%
Infertility 1,455 25.0% 10.7% 5,485 25.0% 10.7%
Neurology (MS, ALS, Alz.) 645 22.0% 4.7% 2,080 22.0% 4.1%
Cancer 1,293 25.0% 9.5% 4,172 25.0% 8.1%
Clozaril (Drug Sales) 2,305 25.0% 16.9% 9,219 25.0% 17.9%
Clozaril (Case Mgmt/Services) 2,533 100.0% 18.6% 10,131 100.0% 19.7%
Other Schiz (Drug Sales) 133 22.0% 1.0% 428 22.0% 0.8%
Other Schiz (Case Mgmt/Services) 78 100.0% 0.6% 261 100.0% 0.5%
HIV/AIDS 190 22.0% 1.4% 612 22.0% 1.2%
Other Products 465 22.0% 3.4% 1,747 22.0% 3.4%
------- ------ ------ ------- ------ ------
TOTAL GROSS PROFIT - PRODUCT $13,602 100.0% $51,365 100.0%
Gross Margin 28.7% 29.0%
COGS - PHARMACY OPS AND FIXED $1,875 $7,500
% of total net revenues 4.0% 4.2%
TOTAL GROSS PROFIT $11,727 $43,865
Gross Margin 24.8% 24.8%
</TABLE>
<PAGE> 5
HMIS FINANCIAL MODEL
QUARTERLY OPS. BY PRODUCT LINE
($000s, except per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999
-----------------------------------------------------------------------------------------
1Q 2Q 3Q
E Growth % of Rev E Growth % of Revs. E Growth % of Revs.
------- ------ -------- ------- ------ ---------- ------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Organ Transplant $18,682 3.6% 37.2% $19,354 3.6% 36.2% $20,051 3.6% 35.1%
Infertility 6,092 4.7% 12.1% 6,378 4.7% 11.9% 6,678 4.7% 11.7%
Neurology (MS, ALS, Alz.) 3,484 18.9% 6.9% 4,142 18.9% 7.8% 4,925 18.9% 8.6%
Cancer 6,147 18.9% 12.2% 7,309 18.9% 13.7% 8,691 18.9% 15.2%
Clozaril (Drug Sales) 9,219 0.0% 18.4% 9,219 0.0% 17.3% 9,219 0.0% 16.1%
Clozaril (Case Mgmt/Services) 2,533 0.0% 5.0% 2,533 0.0% 4.7% 2,533 0.0% 4.4%
Other Schiz (Drug Sales) 717 18.9% 1.4% 853 18.9% 1.6% 1,014 18.9% 1.8%
Other Schiz (Case Mgmt/Services) 89 15.0% 0.2% 103 15.0% 0.2% 118 15.0% 0.2%
HIV/AIDS 1,025 18.9% 2.0% 1,218 18.9% 2.3% 1,448 18.9% 2.5%
Other Products 2,219 5.0% 4.4% 2,330 5.0% 4.4% 2,446 5.0% 4.3%
TOTAL REVENUES -------- ----- ------- ----- ------- -----
Revenue Growth $50,206 100.0% $53,439 100.0% $57,123 100.0%
6.0% 6.4% 6.9%
</TABLE>
<TABLE>
<CAPTION>
1999
-------------------------------------------------
4Q 1999
E Growth % of Revs. E Growth % of Revs.
------- ----- --------- ------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Organ Transplant $20,773 3.6% 33.9% $78,860 14.4% 35.5%
Infertility 6,992 4.7% 11.4% 26,141 19.1% 11.8%
Neurology (MS, ALS, Alz.) 5,856 18.9% 9.5% 18,406 94.6% 8.3%
Cancer 10,333 18.9% 16.8% 32,481 94.6% 14.6%
Clozaril (Drug Sales) 9,219 0.0% 15.0% 36,876 0.0% 16.6%
Clozaril (Case Mgmt/Services) 2,533 0.0% 4.1% 10,131 0.0% 4.6%
Other Schiz (Drug Sales) 1,206 18.9% 2.0% 3,789 94.6% 1.7%
Other Schiz (Case Mgmt/Services) 136 15.0% 0.2% 446 71.0% 0.2%
HIV/AIDS 1,722 18.9% 2.8% 5,413 94.6% 2.4%
Other Products 2,568 5.0% 4.2% 9,563 20.5% 4.3%
TOTAL REVENUES ------- ----- -------- -----
Revenue Growth $61,337 100.0% $222,105 100.0%
7.4% 25.5%
</TABLE>
<TABLE>
<CAPTION>
COGS COGS COGS
Margin % of COGS Margin % of COGS Margin % of COGS
------ --------- ----- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COGS - PRODUCT
Organ Transplant $14,011 75.0% 39.0% $14,516 75.0% 37.8% $15,038 75.0% 36.5%
Infertility 4,569 75.0% 12.7% 4,784 75.0% 12.5% 5,009 75.0% 12.2%
Neurology (MS, ALS, Alz.) 2,717 78.0% 7.6% 3,231 78.0% 8.4% 3,841 78.0% 9.3%
Cancer 4,611 75.0% 12.8% 5,482 75.0% 14.3% 6,518 75.0% 15.8%
Clozaril (Drug Sales) 6,914 75.0% 19.3% 6,914 75.0% 18.0% 6,914 75.0% 16.8%
Clozaril (Case Mgmt/Services) 0 0.0% 0.0% 0 0.0% 0.0% 0 0.0% 0.0%
Other Schiz (Drug Sales) 559 78.0% 1.6% 665 78.0% 1.7% 791 78.0% 1.9%
Other Schiz (Case Mgmt/Services) 0 0.0% 0.0% 0 0.0% 0.0% 0 0.0% 0.0%
HIV/AIDS 799 78.0% 2.2% 950 78.0% 2.5% 1,130 78.0% 2.7%
Other Products 1,731 78.0% 4.8% 1,817 78.0% 4.7% 1,908 78.0% 4.6%
------- ---- ----- ------- ---- ----- ------- ---- ------
TOTAL COGS - PRODUCT $35,911 100.0% $38,359 100.0% $41,149 100.0%
% of total net revenues 71.5% 71.8% 72.0%
</TABLE>
<TABLE>
<CAPTION>
COGS COGS
Margin % of COGS Margin % of COGS
------ -------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
COGS - PRODUCT
Organ Transplant $15,580 75.0% 35.1% $59,145 75.0% 37.0%
Infertility 5,244 75.0% 11.8% 19,605 75.0% 12.3%
Neurology (MS, ALS, Alz.) 4,567 78.0% 10.3% 14,356 78.0% 9.0%
Cancer 7,750 75.0% 17.5% 24,360 75.0% 15.2%
Clozaril (Drug Sales) 6,914 75.0% 15.6% 27,657 75.0% 17.3%
Clozaril (Case Mgmt/Services) 0 0.0% 0.0% 0 0.0% 0.0%
Other Schiz (Drug Sales) 940 78.0% 2.1% 2,956 78.0% 1.9%
Other Schiz (Case Mgmt/Services) 0 0.0% 0.0% 0 0.0% 0.0%
HIV/AIDS 1,343 78.0% 3.0% 4,222 78.0% 2.6%
Other Products 2,003 78.0% 4.5% 7,459 78.0% 4.7%
------- ---- ----- -------- ---- -----
TOTAL COGS - PRODUCT $44,342 100.0% $159,761 100.0%
% of total net revenues 72.3% 71.9%
</TABLE>
<TABLE>
<CAPTION>
Gross Gross Gross
Margin % of GP Margin % of GP Margin % of GP
----- ------ ----- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GROSS PROFIT - PRODUCT
Organ Transplant $4,670 25.0% 32.7% $4,839 25.0% 32.1% $5,013 25.0% 31.4% $5,193
Infertility 1,523 25.0% 10.7% 1,595 25.0% 10.6% 1,670 25.0% 10.5% 1,748
Neurology (MS, ALS, Alz.) 766 22.0% 5.4% 911 22.0% 6.0% 1,083 22.0% 6.8% 1,288
Cancer 1,537 25.0% 10.8% 1,827 25.0% 12.1% 2,173 25.0% 13.6% 2,583
Clozaril (Drug Sales) 2,305 25.0% 16.1% 2,305 25.0% 15.3% 2,305 25.0% 14.4% 2,305
Clozaril (Case Mgmt/Services) 2,533 100.0% 17.7% 2,533 100.0% 16.8% 2,533 100.0% 15.9% 2,533
Other Schiz (Drug Sales) 158 22.0% 1.1% 188 22.0% 1.2% 223 22.0% 1.4% 265
Other Schiz (Case Mgmt/Services) 89 100.0% 0.6% 103 100.0% 0.7% 118 100.0% 0.7% 136
HIV/AIDS 225 22.0% 1.6% 268 22.0% 1.8% 319 22.0% 2.0% 379
Other Products 488 22.0% 3.4% 513 22.0% 3.4% 538 22.0% 3.4% 565
------- ----- ----- ------ ----- ----- ------- ----- ----- -------
TOTAL GROSS PROFIT - PRODUCT $14,295 100.0% $15,080 100.0% $15,974 100.0% $16,995
Gross Margin 28.5% 28.2% 28.0% 27.7%
$2,000 $2,000 $2,000 $2,000
COGS - PHARMACY OPS AND FIXED 4.0% 3.7% 3.5% 3.3%
% of total net revenues
$12,295 $13,080 $13,974 $14,995
TOTAL GROSS PROFIT 24.5% 24.5% 24.5% 24.4%
Gross Margin
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Margin % of GP Margin % of GP
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
GROSS PROFIT - PRODUCT 25.0% 30.6% $19,715 25.0% 31.6%
Organ Transplant 25.0% 10.3% 6,535 25.0% 10.5%
Infertility 22.0% 7.6% 4,049 22.0% 6.5%
Neurology (MS, ALS, Alz.) 25.0% 15.2% 8,120 25.0% 13.0%
Cancer 25.0% 13.6% 9,219 25.0% 14.8%
Clozaril (Drug Sales) 100.0% 14.9% 10,131 100.0% 16.2%
Clozaril (Case Mgmt/Services) 22.0% 1.6% 834 22.0% 1.3%
Other Schiz (Drug Sales) 100.0% 0.8% 446 100.0% 0.7%
Other Schiz (Case Mgmt/Services) 22.0% 2.2% 1,191 22.0% 1.9%
HIV/AIDS 22.0% 3.3% 2,104 22.0% 3.4%
Other Products ----- ---- ------- ----- ----
100.0% $62,343 100.0%
TOTAL GROSS PROFIT - PRODUCT 28.1%
Gross Margin
$8,000
COGS - PHARMACY OPS AND FIXED 3.6%
% of total net revenues
$54,343
TOTAL GROSS PROFIT 24.5%
Gross Margin
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Margin % of GP Margin % of GP
------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
GROSS PROFIT - PRODUCT
Organ Transplant $4,508 25.0% 33.1% $17,230 25.0% 33.5%
Infertility 1,455 25.0% 10.7% 5,485 25.0% 10.7%
Neurology (MS, ALS, Alz.) 645 22.0% 4.7% 2,080 22.0% 4.1%
Cancer 1,293 25.0% 9.5% 4,172 25.0% 8.1%
Clozaril (Drug Sales) 2,305 25.0% 16.9% 9,219 25.0% 17.9%
Clozaril (Case Mgmt/Services) 2,533 100.0% 18.6% 10,131 100.0% 19.7%
Other Schiz (Drug Sales) 133 22.0% 1.0% 428 22.0% 0.8%
Other Schiz (Case Mgmt/Services) 78 100.0% 0.6% 261 100.0% 0.5%
HIV/AIDS 190 22.0% 1.4% 612 22.0% 1.2%
Other Products 465 22.0% 3.4% 1,747 22.0% 3.4%
------- ----- ---- ------- ----- -----
TOTAL GROSS PROFIT - PRODUCT $13,602 100.0% $51,365 100.0%
Gross Margin 28.7% 29.0%
COGS - PHARMACY OPS AND FIXED $1,875 $7,500
% of total net revenues 4.0% 4.2%
TOTAL GROSS PROFIT $11,727 $43,865
Gross Margin 24.8% 24.8%
</TABLE>
<PAGE> 6
HMIS FINANCIAL MODEL
CASH FLOW STATEMENT
($000s, except per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997
------------------------------------------
1994A 1995A 1996A Q1A Q2E Q3E Q4E
-------- ----------- --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) 4,001 1,946 (10,927) 432 (818) (7,074) 96
Adj. to reconcile net income (loss) to CF fr. Ops.:
Depreciation and amortization 453 847 2,127 646 646 646 646
Provision for doubtful A/R 1,781 7,978 14,715 1,635 2,026 2,026 2,046
Deferred taxes (701) (2,516) 1,326 (550) - - -
Write-off of improvements and equipment - - 264 - - - -
Write-off of goodwill - - 552 - - - -
Write-off of organizational costs - - 134 - - - -
Loss from disposition of rental equipment - 287 - - - - -
Compensation under restricted stock 57 57 - - - - -
Common stock issued to director - 19 - - - - -
Changes in working capital:
Accounts receivable (9,625) (16,707) (19,832) (2,137) (5,035) (2,026) (2,437)
Tax refund receivable - (1,827) (6,210) 2,286 3,452 - -
Inventories 205 (1,827) 987 (411) 202 - (69)
Prepaid expenses and other (205) (976) 508 252 - - -
Other assets (249) (240) 98 (124) - - -
Accounts payable 100 4,870 8,385 (2,267) (6,096) - 122
Accrued unusual charges - - 3,559 (1,408) (2,151) - -
Acrrued expenses 203 396 (336) 252 5 (9) 17
Income taxes payable 280 (1,760) - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
NET CASH FROM (USED IN) OPERATING ACTIVITIES (3,700) (9,451) (4,650) (1,395) (7,770) (6,436) 421
- -----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash used in acquisition of CPMB - (20,630) (324) - - - -
Cash used in acquisition of Murray Group (7,500) - - - - - -
Other acquisitions (250) (2,168) - - - - -
Collection of receivable from seller of Murray - 1,444 - - - - -
Capital expenditures (566) (948) (1,492) (203) (182) (182) (182)
Proceeds from sale of rental equipment - 215 - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
NET CASH FROM (USED IN) INVESTING ACTIVITIES (8,316) (22,087) (1,816) (203) (182) (182) (182)
- -----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt - 23,000 16,450 - - - -
Principal payments on long-term debt - - (11,000) (97) - - -
Principal payments on current maturities of LTD - - - - - - -
Net payment on capital leases (44) (123) (386) - - - -
Decrease in bank loan - net (200) - - - - - -
Proceeds from issuance of common stock 21,982 - - - 8,330 - -
Cash paid for deferred borrowing fees - (722) - - - - -
Proceeds from exercise of warrants 218 427 - - - - -
Proceeds from exercise of options 13 24 120 - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 21,969 22,606 5,184 (97) 8,330 - -
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 9,953 (8,933) (1,283) (1,694) 378 (6,618) 239
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,543 13,495 4,563 3,280 1,586 1,964 (4,654)
- -----------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD 13,495 4,563 3,280 1,586 1,964 (4,654) (4,416)
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
1998E
------------------------------------------
1997E Q1 Q2 Q3 Q4 1998E
--------- --------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) (7,364) 414 478 552 617 2,061
Adj. to reconcile net income (loss) to CF fr. Ops.:
Depreciation and amortization 2,584 675 675 675 675 2,700
Provision for doubtful A/R 7,733 2,087 2,150 2,242 2,368 8,847
Deferred taxes (550) 2,357 - - - 2,357
Write-off of improvements and equipment - - - - - -
Write-off of goodwill - - - - - -
Write-off of organizational costs - - - - - -
Loss from disposition of rental equipment - - - - - -
Compensation under restricted stock - - - - - -
Common stock issued to director - - - - - -
Changes in working capital:
Accounts receivable (11,635) (1,973) (3,383) (4,007) (4,797) (14,160)
Tax refund receivable 5,737 2,300 - - - 2,300
Inventories (279) (141) (222) (318) (439) (1,121)
Prepaid expenses and other 252 - - - - -
Other assets (124) - - - - -
Accounts payable (8,242) 249 392 561 773 1,975
Accrued unusual charges (3,559) - - - - -
Acrrued expenses 265 26 56 70 109 261
Income taxes payable - - - - - -
- ------------------------------------------------------------------------------------------------------------------------
NET CASH FROM (USED IN) OPERATING ACTIVITIES (15,180) 5,993 146 (225) (694) 5,220
- ------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash used in acquisition of CPMB - - - - - -
Cash used in acquisition of Murray Group - - - - - -
Other acquisitions - - - - - -
Collection of receivable from seller of Murray - - - - - -
Capital expenditures (749) (188) (188) (188) (188) (750)
Proceeds from sale of rental equipment - - - - - -
- ------------------------------------------------------------------------------------------------------------------------
NET CASH FROM (USED IN) INVESTING ACTIVITIES (749) (188) (188) (188) (188) (750)
- ------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt - - - - - -
Principal payments on long-term debt (97) - - - - -
Principal payments on current maturities of LTD - - - - - -
Net payment on capital leases - - - - - -
Decrease in bank loan - net - - - - - -
Proceeds from issuance of common stock 8,330 - - - - -
Cash paid for deferred borrowing fees - - - - - -
Proceeds from exercise of warrants - - - - - -
Proceeds from exercise of options - - - - - -
- ------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 8,233 - - - - -
- ------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (7,696) 5,806 (41) (412) (882) 4,470
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,280 (4,416) 1,390 1,349 936 (4,416)
- ------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD (4,416) 1,390 1,349 936 55 55
========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
1999E
--------------------------------------
Q1 Q2 Q3 Q4 1999E
-------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) 649 736 854 951 3,189
Adj. to reconcile net income (loss) to CF fr. Ops.:
Depreciation and amortization 675 675 675 675 2,700
Provision for doubtful A/R 2,510 2,672 2,856 3,067 11,105
Deferred taxes - - - - -
Write-off of improvements and equipment - - - - -
Write-off of goodwill - - - - -
Write-off of organizational costs - - - - -
Loss from disposition of rental equipment - - - - -
Compensation under restricted stock - - - - -
Common stock issued to director - - - - -
Changes in working capital:
Accounts receivable (3,606) (5,683) (6,288) (6,993) (22,570)
Tax refund receivable - - - - -
Inventories (525) (563) (642) (735) (2,465)
Prepaid expenses and other - - - - -
Other assets - - - - -
Accounts payable 925 992 1,131 1,295 4,343
Accrued unusual charges - - - - -
Acrrued expenses 112 139 146 181 579
Income taxes payable - - - - -
- ---------------------------------------------------------------------------------------------------------
NET CASH FROM (USED IN) OPERATING ACTIVITIES 740 (1,032) (1,267) (1,559) (3,118)
- ---------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash used in acquisition of CPMB - - - - -
Cash used in acquisition of Murray Group - - - - -
Other acquisitions - - - - -
Collection of receivable from seller of Murray - - - - -
Capital expenditures (188) (188) (188) (188) (750)
Proceeds from sale of rental equipment - - - - -
- ---------------------------------------------------------------------------------------------------------
NET CASH FROM (USED IN) INVESTING ACTIVITIES (188) (188) (188) (188) (750)
- ---------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt - - - - -
Principal payments on long-term debt - - - - -
Principal payments on current maturities of LTD - - - - -
Net payment on capital leases - - - - -
Decrease in bank loan - net - - - - -
Proceeds from issuance of common stock - - - - -
Cash paid for deferred borrowing fees - - - - -
Proceeds from exercise of warrants - - - - -
Proceeds from exercise of options - - - - -
- ---------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES - - - - -
- ---------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 553 (1,219) (1,455) (1,747) (3,868)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 55 608 (612) (2,067) 55
- ---------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD 608 (612) (2,067) (3,813) (3,813)
=========================================================================================================
</TABLE>
<PAGE> 7
HMIS FINANCIAL MODEL
ASSUMPTIONS
($000s, except per share amounts)
- ---------------------------------------------------------------------------
SHARES OUTSTANDING AND SETTLEMENT
<TABLE>
<CAPTION>
1993 1994 1995 1996
-------- -------- --------- --------
<S> <C> <C> <C> <C>
Non-settlement shares 5,884 7,383 9,408 9,415
Newly issued shares - - - -
Non-settlement options 424 210 13 -
Shares to Banks - - - -
Options to Banks - - - -
Wt Avg Shares to Plaintiffs - - - -
Wt Avg Options to Plaintiffs - - - -
Shares to Suppliers - - - -
Options to Suppliers - - - -
Total settlement shares 0 0 0 0
Total settlement options 0 0 0 0
Bond Conversion Price
Shares on bond convers.
Primary Shares 5,884 7,383 9,408 9,415
Fully Diluted Shares 6,309 7,593 9,421 9,415
</TABLE>
<TABLE>
<CAPTION>
1997
---------------------------------------
Q1 Q2 Q3 Q4 1997E
-------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Non-settlement shares 9,328 9,328 9,328 9,328 9,328
Newly issued shares - 10,000 10,000 10,000 10,000
Non-settlement options 5 1,000 1,000 1,000 1,000
Shares to Banks - - - - -
Options to Banks - - - - -
Wt Avg Shares to Plaintiffs - 2,200 2,200 2,200 2,200
Wt Avg Options to Plaintiffs - 2,200 2,200 2,200 2,200
Shares to Suppliers - - - - -
Options to Suppliers - - - - -
Total settlement shares - 2,200 2,200 2,200 2,200
Total settlement options - 2,200 2,200 2,200 2,200
Bond Conversion Price 0.00 0.00 0.00 0.00
Shares on bond convers. - - - -
Primary Shares 9,328 21,528 21,528 21,528 21,528
Fully Diluted Shares 9,334 24,728 24,728 24,728 24,728
</TABLE>
<TABLE>
<CAPTION>
1998
---------------------------------------
Q1 Q2 Q3 Q4 1998E
-------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Non-settlement shares 9,328 9,328 9,328 9,328 9,328
Newly issued shares 10,000 10,000 10,000 10,000 10,000
Non-settlement options 1,000 1,000 1,000 1,000 1,000
Shares to Banks - - - - -
Options to Banks - - - - -
Wt Avg Shares to Plaintiffs 2,200 2,200 2,200 2,200 2,200
Wt Avg Options to Plaintiffs 2,200 2,200 2,200 2,200 2,200
Shares to Suppliers - - - - -
Options to Suppliers - - - - -
Total settlement shares 2,200 2,200 2,200 2,200 2,200
Total settlement options 2,200 2,200 2,200 2,200 2,200
Bond Conversion Price 0.00 0.00 0.00 0.00 0.00
Shares on bond convers. - - - - -
Primary Shares 21,528 21,528 21,528 21,528 21,528
Fully Diluted Shares 24,728 24,728 24,728 24,728 24,728
</TABLE>
<TABLE>
<CAPTION>
1999
---------------------------------------
Q1 Q2 Q3 Q4 1999E
-------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Non-settlement shares 9,328 9,328 9,328 9,328 9,328
Newly issued shares 10,000 10,000 10,000 10,000 10,000
Non-settlement options 1,000 1,000 1,000 1,000 1,000
Shares to Banks - - - - -
Options to Banks - - - - -
Wt Avg Shares to Plaintiffs 2,200 2,200 2,200 2,200 2,200
Wt Avg Options to Plaintiffs 2,200 2,200 2,200 2,200 2,200
Shares to Suppliers - - - - -
Options to Suppliers - - - - -
Total settlement shares 2,200 2,200 2,200 2,200 2,200
Total settlement options 2,200 2,200 2,200 2,200 2,200
Bond Conversion Price 0.00 0.00 0.00 0.00 0.00
Shares on bond convers. - - - - -
Primary Shares 21,528 21,528 21,528 21,528 21,528
Fully Diluted Shares 24,728 24,728 24,728 24,728 24,728
</TABLE>
SOURCES AND USES
<TABLE>
<CAPTION>
1997
---------------------------------------
1996A Q1A Q2 Q3 Q4 1997E
-------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Sources
Debt Issuance $0 $0 $0 $0 $0 $0
Convertible Debt Issuance 0 0 0 0 0 0
Equity Issuance 0 0 10,000 0 0 10,000
-------- --------- -------- -------- -------- --------
TOTAL $0 $0 $10,000 $0 $0 $10,000
Uses
Fees and Expenses (Debt) $0 $0 $0 $0 $0 $0
Fees and Expenses (Equity) 0 0 1,230 0 0 $1,230
Term Loan 0 0 0 0 0 $0
Revolver A 0 0 0 0 0 $0
Revolver B 0 0 0 0 0 $0
Excess Proceeds 0 0 8,770 0 0 $8,770
-------- --------- -------- -------- -------- --------
TOTAL $0 $0 $10,000 $0 $0 $10,000
</TABLE>
<TABLE>
<CAPTION>
1998 1999
-------------------------------------- --------------------------------------
Q1 Q2 Q3 Q4 1998E Q1 Q2 Q3 Q4 1999E
-------- --------- -------- -------- -------- -------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sources
Debt Issuance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Convertible Debt Issuance 0 0 0 0 0 0 0 0 0 0
Equity Issuance 0 0 0 0 0 0 0 0 0 0
-------- --------- -------- -------- -------- -------- -------- --------- -------- --------
TOTAL $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Uses
Fees and Expenses (Debt) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Fees and Expenses (Equity) 0 0 0 0 $0 0 0 0 0 $0
Term Loan 0 0 0 0 $0 0 0 0 0 $0
Revolver A 0 0 0 0 $0 0 0 0 0 $0
Revolver B 0 0 0 0 $0 0 0 0 0 $0
Excess Proceeds 0 0 0 0 $0 0 0 0 0 $0
-------- --------- -------- -------- -------- -------- -------- --------- -------- --------
TOTAL $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
</TABLE>
<TABLE>
<CAPTION>
MISCELLANEOUS
<S> <C> <C> <C> <C>
Return on Cash 5.0%
Income Tax Rate 41.0%
Bond Conversion Price $0.00
Convert. bond coupon 0.00%
Warrant Exercise Price $5.00
Receivables 90 88 85 Days' Sales Outstanding
Payables 15 15 15 Days COGS
Converts issued on 04/30/96
Litig. Secs. issued on 04/30/96
</TABLE>
Preliminary Model Based Upon Company Projections and Assumptions
<PAGE> 8
HMIS FINANCIAL MODEL
ASSUMPTIONS
($000s, except per share amounts)
- --------------------------------------------------------------------------------
DEBT AND INTEREST EXPENSE
<TABLE>
<CAPTION>
1997
------------------------------------
1993 1994 1995 1996 Q1 Q2 Q3 Q4 1997E
------- -------- --------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Term Loan Outstandings 18,000 17,000 17,000 17,000 17,000 17,000
Term Loan Rate (1) 8.75% 8.75% 8.75% 8.75% 8.75% 8.75%
Term Loan Interest 372 372 372 1,116
Revolver A Outstandings 6,350 6,350 6,350 6,350 6,350 6,350
Revolver A Rate (2) 8.25% 8.25% 8.25% 8.25% 8.25% 8.25%
Revolver A Interest 131 131 131 393
Revolver B Outstandings 4,000 5,000 5,000 5,000 5,000 5,000
Revolver B Rate (3) 8.25% 8.25% 8.25% 8.25% 8.25% 8.25%
Revolver B Interest 103 103 103 309
Sub Note Outstandings 3,000 3,000 3,000 3,000 3,000 3,000
Sub Note Rate 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
Sub Note Interest 60 60 60 180
Cap Lease Outstandings 1,402 1,402 1,402 1,402 1,402 1,402
Cap Lease Rate 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
Cap Lease Interest 18 18 18 53
Equip. Note Outstandings 0 0 0 0 0 -
Equip. Note Rate - - - - - -
Equip. Note Interest - - - -
Convertible Bonds 0 0 0 0 0 -
Convertible Bond Rate 0.00% 0.00% 0.00% 0.00%
Convertible Bond Interest - - - -
Other Outstandings -
Other Rate 0 0 0 0 0 -
Other Interest - - - -
TOTAL DEBT 32,752 32,655 32,752 32,752 32,752 32,752
TOTAL INTEREST EXP 174 88 269 2,717 740 683 683 683 2,790
</TABLE>
<TABLE>
<CAPTION>
1998 1999
------------------------------------ -------------------------------------
Q1 Q2 Q3 Q4 1998E Q1 Q2 Q3 Q4 1999E
------- -------- --------- -------- -------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Term Loan Outstandings 17,000 17,000 17,000 17,000 17,000 17,000 17,000 17,000 17,000 17,000
Term Loan Rate (1) 8.75% 8.75% 8.75% 8.75% 8.75% 8.75% 8.75% 8.75% 8.75% 8.75%
Term Loan Interest 372 372 372 372 1,488 372 372 372 372 1,488
Revolver A Outstandings 6,350 6,350 6,350 6,350 6,350 6,350 6,350 6,350 6,350 6,350
Revolver A Rate (2) 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25%
Revolver A Interest 131 131 131 131 524 131 131 131 131 524
Revolver B Outstandings 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
Revolver B Rate (3) 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25%
Revolver B Interest 103 103 103 103 413 103 103 103 103 413
Sub Note Outstandings 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000
Sub Note Rate 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
Sub Note Interest 60 60 60 60 240 60 60 60 60 240
Cap Lease Outstandings 1,402 1,402 1,402 1,402 1,402 1,402 1,402 1,402 1,402 1,402
Cap Lease Rate 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
Cap Lease Interest 18 18 18 18 70 18 18 18 18 70
Equip. Note Outstandings 0 0 0 0 - 0 0 0 0 -
Equip. Note Rate - - - - - - - - - -
Equip. Note Interest - - - - - - - - - -
Convertible Bonds 0 0 0 0 - 0 0 0 0 -
Convertible Bond Rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Convertible Bond Interest - - - - - - - - - -
Other Outstandings - -
Other Rate - - - - - - - - - -
Other Interest - - - - - - - - - -
TOTAL DEBT 32,752 32,752 32,752 32,752 32,752 32,752 32,752 32,752 32,752 32,752
TOTAL INTEREST EXP 683 683 683 683 2,734 683 683 683 683 2,734
</TABLE>
EXTRAORDINARY ITEMS
<TABLE>
<CAPTION>
1997
------------------------------------
1993 1994 1995 1996 Q1 Q2 Q3 Q4 1997E
------- -------- --------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Writedown of Revenues
Writedown of Inventories 2,840
------- -------- --------- -------- -------- -------- -------- -------- ---------
Total - - - 2,840 - - - - -
Writedown of Receivables 8,400
Settlement of Litigation
Reorganization Expenses 3,600
Professional Fees 2,000
Other
------- -------- --------- -------- -------- -------- -------- -------- ---------
Total - - - 14,000 - - - - -
</TABLE>
<TABLE>
<CAPTION>
1998 1999
-------------------------------------- -------------------------------------
Q1 Q2 Q3 Q4 1998E Q1 Q2 Q3 Q4 1999E
------- -------- --------- -------- -------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Writedown of Revenues
Writedown of Inventories
------- -------- --------- -------- -------- -------- -------- -------- --------- --------
Total - - - - - - - - - -
Writedown of Receivables
Settlement of Litigation 1,000
Reorganization Expenses
Professional Fees
Other
------- -------- --------- -------- -------- -------- -------- -------- --------- --------
Total 1,000 - - - - - - - - -
</TABLE>
- ---------------------------
(1) Prime Rate + 50 B.P.
(2) Prime Rate + 0 B.P.
(3) Prime Rate + 0 B.P.
Preliminary Model Based Upon Company Projections and Assumptions
<PAGE> 9
HMIS Financial Model
Balance Sheet
($000s, except per share amounts)
<TABLE>
<CAPTION>
1997
-------------------------------------
1995A 1996A Q1A Q2E Q3E Q4E 1997E
----- ----- ----- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Current:
Cash and cash equivalents $4,563 $3,280 $1,586 $2,343 ($4,333) ($4,152) ($4,152)
Accounts receivable, net 31,340 36,457 36,959 39,455 39,455 39,846 39,846
Inventories 7,788 6,801 7,212 6,918 6,918 6,987 6,987
Tax refund receivable 1,827 8,037 5,752 2,300 2,300 2,300 2,300
Deferred taxes 3,133 1,807 2,357 2,357 2,357 2,357 2,357
Prepaid expenses and other 1,164 655 404 404 404 404 404
- ------------------------------------------------------------------------------------------------------------------
Total current assets 49,814 57,038 54,269 53,777 47,101 47,742 47,742
Improvements and equipment, net 2,136 3,826 3,680 3,481 3,282 3,083 3,083
Goodwill 35,464 34,008 33,711 33,446 33,182 32,917 32,917
Other 1,276 1,044 1,167 1,167 1,167 1,167 1,167
- ------------------------------------------------------------------------------------------------------------------
Total Assets $88,690 $95,916 $92,828 $91,872 $84,732 $84,909 $84,909
==================================================================================================================
Liabilities and Stockholders' Equity
Current:
Accounts payable $12,330 $20,715 $18,448 $12,189 $12,189 $12,311 $12,311
Accrued unusual charges 0 3,559 2,151 0 0 0 0
Accrued expenses 1,862 1,526 1,778 1,780 1,771 1,788 1,788
Current maturities of long-term debt 23,135 28,746 28,750 28,750 28,750 28,750 28,750
- ------------------------------------------------------------------------------------------------------------------
Total current liabilities 37,328 54,546 51,127 42,719 42,710 42,849 42,849
Long-term debt, less current maturities 3,191 4,006 3,905 3,905 3,905 3,905 3,905
- ------------------------------------------------------------------------------------------------------------------
Total liabilities 40,519 58,552 55,032 46,624 46,616 46,755 46,755
- ------------------------------------------------------------------------------------------------------------------
Commitments and contingencies
Stockholders' equity
Preferred stock 0 0 0 0 0 0 0
Common stock 280 280 280 549 549 549 549
Additional paid-in capital 38,020 38,139 38,139 46,200 46,200 46,200 46,200
Retained earnings (deficit) 9,872 (1,055) (623) (1,501) (8,632) (8,594) (8,594)
- ------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 48,172 37,364 37,796 45,247 38,116 38,154 38,154
- ------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $88,690 $95,916 $92,828 $91,872 $84,732 $84,909 $84,909
==================================================================================================================
<CAPTION>
1998E
-------------------------------------
Q1 Q2 Q3 Q4 1998E
------ -------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
Assets
Current:
Cash and cash equivalents $1,584 $1,481 $1,007 $63 $63
Accounts receivable, net 39,744 40,976 42,741 45,170 45,170
Inventories 7,129 7,351 7,669 8,108 8,108
Tax refund receivable 0 0 0 0 0
Deferred taxes 0 0 0 0 0
Prepaid expenses and other 404 404 404 404 404
- -----------------------------------------------------------------------------------------------
Total current assets 48,860 50,212 51,821 53,745 53,745
Improvements and equipment, net 2,872 2,661 2,450 2,240 2,240
Goodwill 32,640 32,363 32,086 31,810 31,810
Other 1,167 1,167 1,167 1,167 1,167
- -----------------------------------------------------------------------------------------------
Total Assets $85,539 $86,403 $87,525 $88,961 $88,961
===============================================================================================
Liabilities and Stockholders' Equity
Current:
Accounts payable $12,560 $12,952 $13,513 $14,286 $14,286
Accrued unusual charges 0 0 0 0 0
Accrued expenses 1,815 1,870 1,940 2,049 2,049
Current maturities of long-term debt 28,750 28,750 28,750 28,750 28,750
- -----------------------------------------------------------------------------------------------
Total current liabilities 43,125 43,572 44,203 45,085 45,085
Long-term debt, less current maturities 3,905 3,905 3,905 3,905 3,905
- -----------------------------------------------------------------------------------------------
Total liabilities 47,030 47,478 48,109 48,990 48,990
- -----------------------------------------------------------------------------------------------
Commitments and contingencies
Stockholders' equity
Preferred stock 0 0 0 0 0
Common stock 549 549 549 549 549
Additional paid-in capital 46,200 46,200 46,200 46,200 46,200
Retained earnings (deficit) (8,240) (7,823) (7,332) (6,778) (6,778)
- -----------------------------------------------------------------------------------------------
Total stockholders' equity 38,509 38,926 39,416 39,971 39,971
- -----------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $85,539 $86,403 $87,525 $88,961 $88,961
===============================================================================================
<CAPTION>
1999E
------------------------------------
Q1 Q2 Q3 Q4 1999E
------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C>
Assets
Current:
Cash and cash equivalents $536 ($748) ($2,268) ($4,081) ($4,081)
Accounts receivable, net 46,283 49,294 52,726 56,652 56,652
Inventories 8,633 9,196 9,838 10,573 10,573
Tax refund receivable 0 0 0 0 0
Deferred taxes 0 0 0 0 0
Prepaid expenses and other 404 404 404 404 404
- ---------------------------------------------------------------------------------------------
Total current assets 55,855 58,146 60,700 63,547 63,547
Improvements and equipment, net 2,029 1,818 1,607 1,397 1,397
Goodwill 31,533 31,256 30,979 30,703 30,703
Other 1,167 1,167 1,167 1,167 1,167
- ---------------------------------------------------------------------------------------------
Total Assets $90,584 $92,387 $94,454 $96,814 $96,814
=============================================================================================
Liabilities and Stockholders' Equity
Current:
Accounts payable $15,210 $16,202 $17,334 $18,629 $18,629
Accrued unusual charges 0 0 0 0 0
Accrued expenses 2,162 2,301 2,448 2,628 2,628
Current maturities of long-term debt 28,750 28,750 28,750 28,750 28,750
- ---------------------------------------------------------------------------------------------
Total current liabilities 46,122 47,254 48,532 50,007 50,007
Long-term debt, less current maturities 3,905 3,905 3,905 3,905 3,905
- ---------------------------------------------------------------------------------------------
Total liabilities 50,027 51,159 52,437 53,912 53,912
- ---------------------------------------------------------------------------------------------
Commitments and contingencies
Stockholders' equity
Preferred stock 0 0 0 0 0
Common stock 549 549 549 549 549
Additional paid-in capital 46,200 46,200 46,200 46,200 46,200
Retained earnings (deficit) (6,192) (5,520) (4,732) (3,847) (3,847)
- ---------------------------------------------------------------------------------------------
Total stockholders' equity 40,557 41,228 42,017 42,901 42,901
- ---------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $90,584 $92,387 $94,454 $96,814 $96,814
=============================================================================================
</TABLE>
Preliminary Model Based Upon Company Projections and Assumptions
<PAGE> 10
HMIS Financial Model
<TABLE>
<CAPTION>
Cash Flow Statement
($000s, except per share amounts)
- ----------------------------------------------------------------------------------------------------------
1994A 1995A 1996A
----- ----- -----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) 4,001 1,946 (10,927)
Adj. to reconcile net income (loss) to CF fr. Ops.:
Depreciation and amortization 453 847 2,127
Provision for doubtful A/R 1,781 7,978 14,715
Deferred taxes (701) (2,516) 1,326
Write-off of improvements and equipment - - 264
Write-off of goodwill - - 552
Write-off of organizational costs - - 134
Loss from disposition of rental equipment - 287 -
Compensation under restricted stock 57 57 -
Common stock issued to director - 19 -
Changes in working capital:
Accounts receivable (9,625) (16,707) (19,832)
Tax refund receivable - (1,827) (6,210)
Inventories 205 (1,827) 987
Prepaid expenses and other (205) (976) 508
Other assets (249) (240) 98
Accounts payable 100 4,870 8,385
Accrued unusual charges - - 3,559
Acrrued expenses 203 396 (336)
Income taxes payable 280 (1,760) -
- ----------------------------------------------------------------------------------------------------------
Net cash from (used in) operating activities (3,700) (9,451) (4,650)
- ----------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Cash used in acquisition of CPMB - (20,630) (324)
Cash used in acquisition of Murray Group (7,500) - -
Other acquisitions (250) (2,168) -
Collection of receivable from seller of Murray - 1,444 -
Capital expenditures (566) (948) (1,492)
Proceeds from sale of rental equipment - 215 -
- ----------------------------------------------------------------------------------------------------------
Net cash from (used in) investing activities (8,316) (22,087) (1,816)
- ----------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from long-term debt - 23,000 16,450
Principal payments on long-term debt - - (11,000)
Principal payments on current maturities of LTD - - -
Net payment on capital leases (44) (123) (386)
Decrease in bank loan - net (200) - -
Proceeds from issuance of common stock 21,982 - -
Cash paid for deferred borrowing fees - (722) -
Proceeds from exercise of warrants 218 427 -
Proceeds from exercise of options 13 24 120
- ----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 21,969 22,606 5,184
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalent 9,953 (8,933) (1,283)
- ----------------------------------------------------------------------------------------------------------
Cash and cash equivalents, beginning of period 3,543 13,495 4,563
- ----------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period 13,495 4,563 3,280
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
1997
-----------------------------------
Q1A Q2E Q3E Q4E 1997E
------- ------- ------ ------ -------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) 432 (878) (7,131) 38 (7,539)
Adj. to reconcile net income (loss) to CF fr. Ops.:
Depreciation and amortization 646 646 646 646 2,584
Provision for doubtful A/R 1,635 2,000 2,000 2,020 7,655
Deferred taxes (550) - - - (550)
Write-off of improvements and equipment - - - - -
Write-off of goodwill - - - - -
Write-off of organizational costs - - - - -
Loss from disposition of rental equipment - - - - -
Compensation under restricted stock - - - - -
Common stock issued to director - - - - -
Changes in working capital:
Accounts receivable (2,137) (4,496) (2,000) (2,411) (11,044)
Tax refund receivable 2,286 3,452 - - 5,737
Inventories (411) 294 - (69) (187)
Prepaid expenses and other 252 - - - 252
Other assets (124) - - - (124)
Accounts payable (2,267) (6,259) - 122 (8,404)
Accrued unusual charges (1,408) (2,151) - - (3,559)
Acrrued expenses 252 2 (9) 17 262
Income taxes payable - - - - -
- ----------------------------------------------------------------------------------------------------------
Net cash from (used in) operating activities (1,395) (7,391) (6,494) 363 (14,916)
- ----------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Cash used in acquisition of CPMB - - - - -
Cash used in acquisition of Murray Group - - - - -
Other acquisitions - - - - -
Collection of receivable from seller of Murray - - - - -
Capital expenditures (203) (182) (182) (182) (749)
Proceeds from sale of rental equipment - - - - -
- ----------------------------------------------------------------------------------------------------------
Net cash from (used in) investing activities (203) (182) (182) (182) (749)
- ----------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from long-term debt - - - - -
Principal payments on long-term debt (97) - - - (97)
Principal payments on current maturities of LTD - - - - -
Net payment on capital leases - - - - -
Decrease in bank loan - net - - - - -
Proceeds from issuance of common stock - 8,330 - - 8,330
Cash paid for deferred borrowing fees - - - - -
Proceeds from exercise of warrants - - - - -
Proceeds from exercise of options - - - - -
- ----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (97) 8,330 - - 8,233
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalent (1,694) 757 (6,676) 181 (7,432)
- ----------------------------------------------------------------------------------------------------------
Cash and cash equivalents, beginning of period 3,280 1,586 2,343 (4,333) 3,280
- ----------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period 1,586 2,343 (4,333) (4,152) (4,152)
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
1998E
-----------------------------------
Q1 Q2 Q3 Q4 1998E
------- ------- ------ ------ -------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) 355 417 490 554 1,817
Adj. to reconcile net income (loss) to CF fr. Ops.:
Depreciation and amortization 675 675 675 675 2,700
Provision for doubtful A/R 2,061 2,124 2,216 2,342 8,743
Deferred taxes 2,357 - - - 2,357
Write-off of improvements and equipment - - - - -
Write-off of goodwill - - - - -
Write-off of organizational costs - - - - -
Loss from disposition of rental equipment - - - - -
Compensation under restricted stock - - - - -
Common stock issued to director - - - - -
Changes in working capital:
Accounts receivable (1,959) (3,357) (3,981) (4,771) (14,067)
Tax refund receivable 2,300 - - - 2,300
Inventories (141) (222) (318) (439) (1,121)
Prepaid expenses and other - - - - -
Other assets - - - - -
Accounts payable 249 392 561 773 1,975
Accrued unusual charges - - - - -
Acrrued expenses 26 56 70 109 261
Income taxes payable - - - - -
- ----------------------------------------------------------------------------------------------------------
Net cash from (used in) operating activities 5,923 85 (287) (757) 4,965
- ----------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Cash used in acquisition of CPMB - - - - -
Cash used in acquisition of Murray Group - - - - -
Other acquisitions - - - - -
Collection of receivable from seller of Murray - - - - -
Capital expenditures (188) (188) (188) (188) (750)
Proceeds from sale of rental equipment - - - - -
- ----------------------------------------------------------------------------------------------------------
Net cash from (used in) investing activities (188) (188) (188) (188) (750)
- ----------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from long-term debt - - - - -
Principal payments on long-term debt - - - - -
Principal payments on current maturities of LTD - - - - -
Net payment on capital leases - - - - -
Decrease in bank loan - net - - - - -
Proceeds from issuance of common stock - - - - -
Cash paid for deferred borrowing fees - - - - -
Proceeds from exercise of warrants - - - - -
Proceeds from exercise of options - - - - -
- ----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities - - - - -
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalent 5,736 (103) (474) (944) 4,215
- ----------------------------------------------------------------------------------------------------------
Cash and cash equivalents, beginning of period (4,152) 1,584 1,481 1,007 (4,152)
- ----------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period 1,584 1,481 1,007 63 63
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
1999E
-----------------------------------
Q1 Q2 Q3 Q4 1999E
------- ------- ------ ------ -------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) 586 672 788 885 2,931
Adj. to reconcile net income (loss) to CF fr. Ops.:
Depreciation and amortization 675 675 675 675 2,700
Provision for doubtful A/R 2,484 2,646 2,830 3,041 11,001
Deferred taxes - - - - -
Write-off of improvements and equipment - - - - -
Write-off of goodwill - - - - -
Write-off of organizational costs - - - - -
Loss from disposition of rental equipment - - - - -
Compensation under restricted stock - - - - -
Common stock issued to director - - - - -
Changes in working capital:
Accounts receivable (3,597) (5,657) (6,262) (6,967) (22,483)
Tax refund receivable - - - - -
Inventories (525) (563) (642) (735) (2,465)
Prepaid expenses and other - - - - -
Other assets - - - - -
Accounts payable 925 992 1,131 1,295 4,343
Accrued unusual charges - - - - -
Acrrued expenses 112 139 146 181 579
Income taxes payable - - - - -
- ----------------------------------------------------------------------------------------------------------
Net cash from (used in) operating activities 660 (1,096) (1,333) (1,625) (3,394)
- ----------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Cash used in acquisition of CPMB - - - - -
Cash used in acquisition of Murray Group - - - - -
Other acquisitions - - - - -
Collection of receivable from seller of Murray - - - - -
Capital expenditures (188) (188) (188) (188) (750)
Proceeds from sale of rental equipment - - - - -
- ----------------------------------------------------------------------------------------------------------
Net cash from (used in) investing activities (188) (188) (188) (188) (750)
- ----------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from long-term debt - - - - -
Principal payments on long-term debt - - - - -
Principal payments on current maturities of LTD - - - - -
Net payment on capital leases - - - - -
Decrease in bank loan - net - - - - -
Proceeds from issuance of common stock - - - - -
Cash paid for deferred borrowing fees - - - - -
Proceeds from exercise of warrants - - - - -
Proceeds from exercise of options - - - - -
- ----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities - - - - -
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalent 473 (1,284) (1,520) (1,813) (4,144)
- ----------------------------------------------------------------------------------------------------------
Cash and cash equivalents, beginning of period 63 536 (748) (2,268) 63
- ----------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period 536 (748) (2,268) (4,081) (4,081)
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Preliminary Model Based Upon Company Projections and Assumptions
<PAGE> 11
HMIS Financial Model
Assumptions
($000s, except per share amounts)
- --------------------------------------------------------------------------------
SHARES OUTSTANDING AND SETTLEMENT
<TABLE>
<CAPTION>
1997
--------------------------------
1993 1994 1995 1996 Q1 Q2 Q3 Q4 1997E
------- ------- ------- ------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Non-settlement shares 5,884 7,383 9,408 9,415 9,328 9,328 9,328 9,328 9,328
Newly issued shares - - - - - 8,968 8,968 8,968 8,968
Non-settlement options 424 210 13 - 5 374 374 374 374
Shares to Banks - - - - - - - - -
Options to Banks - - - - - - - - -
Wt Avg Shares to Plaintiffs - - - - - - - - -
Wt Avg Options to Plaintiffs - - - - - - - - -
Shares to Suppliers - - - - - - - - -
Options to Suppliers - - - - - - - - -
Total settlement shares 0 0 0 0 0 0 0 0 0
Total settlement options 0 0 0 0 0 0 0 0 0
Bond Conversion Price 0.00 0.00 0.00 0.00
Shares on bond convers. - - - -
Primary Shares 5,884 7,383 9,408 9,415 9,328 18,296 18,296 18,296 18,296
Fully Diluted Shares 6,309 7,593 9,421 9,415 9,334 18,670 18,670 18,670 18,670
<CAPTION>
1998 1999
--------------------------------- -------------------------------
Q1 Q2 Q3 Q4 1998E Q1 Q2 Q3 Q4 1999E
------- ------- ------- ------- ------- ------- ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Non-settlement shares 9,328 9,328 9,328 9,328 9,328 9,328 9,328 9,328 9,328 9,328
Newly issued shares 8,968 8,968 8,968 8,968 8,968 8,968 8,968 8,968 8,968 8,968
Non-settlement options 374 374 374 374 374 374 374 374 374 374
Shares to Banks - - - - - - - - - -
Options to Banks - - - - - - - - - -
Wt Avg Shares to Plaintiffs - - - - - - - - - -
Wt Avg Options to Plaintiffs - - - - - - - - - -
Shares to Suppliers - - - - - - - - - -
Options to Suppliers - - - - - - - - - -
Total settlement shares 0 0 0 0 - - - - - -
Total settlement options 0 0 0 0 - - - - - -
Bond Conversion Price 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Shares on bond convers. - - - - - - - - - -
Primary Shares 18,296 18,296 18,296 18,296 18,296 18,296 18,296 18,296 18,296 18,296
Fully Diluted Shares 18,670 18,670 18,670 18,670 18,670 18,670 18,670 18,670 18,670 18,670
</TABLE>
<TABLE>
<CAPTION>
SOURCES AND USES 1997
----------------------------------
1996A Q1A Q2 Q3 Q4 1997E
Sources ----- ------ ------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
Debt Issuance $0 $0 $0 $0 $0 $0
Convertible Debt Issuance 0 0 0 0 0 0
Equity Issuance 0 0 8,968 0 0 8,968
TOTAL $0 $0 $8,968 $0 $0 $8,968
Uses
Fees and Expenses (Debt) $0 $0 $0 $0 $0 $0
Fees and Expenses (Equity) 0 0 638 0 0 $638
Term Loan 0 0 0 0 0 $0
Revolver A 0 0 0 0 0 $0
Revolver B 0 0 0 0 0 $0
Excess Proceeds 0 0 8,330 0 0 $8,330
TOTAL $0 $0 $8,968 $0 $0 $8,968
<CAPTION>
SOURCES AND USES
1998 1999
------------------------------ -----------------------------
Q1 Q2 Q3 Q4 1998E Q1 Q2 Q3 Q4 1999E
---- ----- ------ ------- ------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sources
Debt Issuance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Convertible Debt Issuance 0 0 0 0 0 0 0 0 0 0
Equity Issuance 0 0 0 0 0 0 0 0 0 0
---- ---- ---- ---- ---- ---- ---- ---- ----- ----
TOTAL $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Uses
Fees and Expenses (Debt) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Fees and Expenses (Equity) 0 0 0 0 $0 0 0 0 0 $0
Term Loan 0 0 0 0 $0 0 0 0 0 $0
Revolver A 0 0 0 0 $0 0 0 0 0 $0
Revolver B 0 0 0 0 $0 0 0 0 0 $0
Excess Proceeds 0 0 0 0 $0 0 0 0 0 $0
---- ---- ---- ---- ---- ---- ---- ---- ----- ----
TOTAL $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
</TABLE>
<TABLE>
<CAPTION>
MISCELLANEOUS
<S> <C> <C> <C> <C>
Return on Cash 5.00%
Cost of Incr. Working Cap 8.75%
Income Tax Rate 41.0%
Bond Conversion Price $0.00
Convert. bond coupon 0.00%
Warrant Exercise Price $5.00
Receivables 90 88 85 Days' Sales Outstanding
Payables 37 37 37 Days COGS
Converts issued on 6/30/96
Litig. Secs. issued on 6/30/96
</TABLE>
Preliminary Model Based Upon Company Projections and Assumptions
<PAGE> 12
HMIS Financial Model
Assumptions
($000s, except per share amounts)
<TABLE>
<CAPTION>
DEBT AND INTEREST EXPENSE 1997 1998
-------------------------------- ---------------
1993 1994 1995 1996 Q1 Q2 Q3 Q4 1997E Q1 Q2
------ ------ ------ ------ ------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Term Loan Outstandings 18,000 17,000 17,000 17,000 17,000 17,000 17,000 17,000
Term Loan Rate (1) 8.75% 8.75% 8.75% 8.75% 8.75% 8.75% 8.75% 8.75%
Term Loan Interest 372 372 372 1,116 372 372
Revolver A Outstandings 6,350 6,350 6,350 6,350 6,350 6,350 6,350 6,350
Revolver A Rate (2) 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25%
Revolver A Interest 131 131 131 393 131 131
Revolver B Outstandings 4,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
Revolver B Rate (3) 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25%
Revolver B Interest 103 103 103 309 103 103
Sub Note Outstandings 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000
Sub Note Rate 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
Sub Note Interest 60 60 60 180 60 60
Cap Lease Outstandings 1,402 1,402 1,402 1,402 1,402 1,402 1,402 1,402
Cap Lease Rate 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
Cap Lease Interest 18 18 18 53 18 18
Equip. Note Outstandings - - - - - - - -
Equip. Note Rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Equip. Note Interest - - - - - -
Convertible Bonds - - - - - - - -
Convertible Bond Rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Convertible Bond Interest - - - - - -
Other Outstandings -
Other Rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Other Interest - - - - - -
TOTAL DEBT 32,752 32,655 32,752 32,752 32,752 32,752 32,752 32,752
TOTAL INTEREST EXP 174 88 269 * 2,717 740 683 683 683 2,790 683 683
<CAPTION>
DEBT AND INTEREST EXPENSE 1998 1999
---------------- ----------------------------------
Q3 Q4 1998E Q1 Q2 Q3 Q4 1999E
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Term Loan Outstandings 17,000 17,000 17,000 17,000 17,000 17,000 17,000 17,000
Term Loan Rate (1) 8.75% 8.75% 8.75% 8.75% 8.75% 8.75% 8.75% 8.75%
Term Loan Interest 372 372 1,488 372 372 372 372 1,488
Revolver A Outstandings 6,350 6,350 6,350 6,350 6,350 6,350 6,350 6,350
Revolver A Rate (2) 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25%
Revolver A Interest 131 131 524 131 131 131 131 524
Revolver B Outstandings 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
Revolver B Rate (3) 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25%
Revolver B Interest 103 103 413 103 103 103 103 413
Sub Note Outstandings 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000
Sub Note Rate 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
Sub Note Interest 60 60 240 60 60 60 60 240
Cap Lease Outstandings 1,402 1,402 1,402 1,402 1,402 1,402 1,402 1,402
Cap Lease Rate 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
Cap Lease Interest 18 18 70 18 18 18 18 70
Equip. Note Outstandings - - - - - - - -
Equip. Note Rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Equip. Note Interest - - - - - - - -
Convertible Bonds - - - - - - - -
Convertible Bond Rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Convertible Bond Interest - - - - - - - -
Other Outstandings - -
Other Rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Other Interest - - - - - - - -
TOTAL DEBT 32,752 32,752 32,752 32,752 32,752 32,752 32,752 32,752
TOTAL INTEREST EXP 683 683 2,734 683 683 683 683 2,734
EXTRAORDINARY ITEMS
1997
--------------------------------
1993 1994 1995 1996 Q1 Q2 Q3 Q4 1997E
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Writedown of Revenues
Writedown of Inventories 2,840
------ ------ ------ ------ ------ ------ ------ ------ ------
Total - - - 2,840 - - - - -
Writedown of Receivables 8,400
Settlement of Litigation 7,200
Reorganization Expenses 3,600
Professional Fees 2,000 500 1,201 250 250
Other
------ ------ ------ ------ ------ ------ ------ ------ ------
Total - - - 14,000 500 1,201 7,450 250 -
<CAPTION>
1998 1999
-------------------------------- --------------------------------
Q1 Q2 Q3 Q4 1998E Q1 Q2 Q3 Q4 1999E
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Writedown of Revenues
Writedown of Inventories
------ ------ ------ ------ ------ ------ ------ ------ ----- ------
Total - - - - - - - - - -
Writedown of Receivables
Settlement of Litigation
Reorganization Expenses
Professional Fees
Other
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total - - - - - - - - - -
</TABLE>
- --------------
(1) Prime Rate + 50 B.P.
(2) Prime Rate + 0 B.P.
(3) Prime Rate + 0 B.P.
Preliminary Model Based Upon Company Projections and Assumptions
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