[LOGO OF HOOPER HOLMES APPEARS HERE]
providing alternate-site health
information
[PHOTOGRAPH APPEARS HERE]
1996 Annual Report
to shareholders
Examiner on location
Hooper
Holmes
Financial Highlights
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Years ended December 31,
(dollars in thousands except per share data) 1996 1995 1994
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Revenues $ 156,254 $ 111,313 $ 92,534
Operating income 8,576 4,059 3,803
Income from continuing operations 4,086 1,667 1,480
Income (loss) from discontinued operations -- (14,716) 1,184
Net income (loss) $ 4,086 ($13,049) $ 2,664
Earnings per share from continuing operations $ .61 $ .25 $ .22
Earnings per share from discontinued operations -- ($2.19) $ .18
Net earnings per share $ .61 ($1.94) $ .40
Cash dividends per share $ .06 $ .06 $ .30
Weighted average number of shares outstanding 6,727,719 6,707,128 6,706,713
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On the cover,
Pamela Goldberg
Miami, Florida
Hooper Holmes Inc. is the nation's leading provider of
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alternate-site
health information.
health information
Hooper Holmes Inc. is the nation's leading provider of
alternate-site health Information. Serving all 50 states,
the Company's network of experienced medical professionals
conducts physical examinations, testing and personal health
interviews, primarily for the life and health insurance
industry. Information gathered in these activities is used
by insurance underwriters to assess risks and make informed
decisions.
Hooper Holmes' customers include most of the
nation's major life and health insurers, and the
Company performed approximately 2.7 million tests on
insurance applicants in 1996 under its trade name
Portamedic. The Company offers the industry's widest
geographic coverage and up-to-date technology to
ensure timely, accurate delivery of health
information. Hooper Holmes' mission is to be
recognized as a quality service provider that meets
the needs of its customers, employees, and
shareholders. We pride ourselves on anticipating new
challenges that face our clients and finding
solutions to help them adapt to change.
Hooper Holmes' common stock trades on the
American Stock Exchange under the symbol "HH." The
Company is headquartered in Basking Ridge, New
Jersey.
1996 annual report to shareholders
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Hooper Holmes
To Our Shareholders
A year ago, we said that Hooper Holmes was committed to using our position as
the undisputed industry leader as a platform to support stronger growth and
profitability. We are pleased to report that in 1996 we delivered on that
commitment.
In a year of many achievements, we wish to highlight two that illustrate the
strength and growth potential of this Company. First, our focused efforts to
significantly reduce our bank debt has made our balance sheet stronger than it
has been in years. Second, the successful integration of ASB Meditest into the
operations of Portamedic expanded the breadth of our integrated nationwide
network, which continues to be supported by the most advanced information
technology in the industry. In short, the strong financial and operating
performance we recorded in 1996 validates Hooper Holmes' targeted efforts to
establish and maintain its position as the dominant provider of alternate-site
health information services.
FINANCIAL REVIEW
In 1996, Hooper Holmes reported record revenue and earnings. Income from
continuing operations for the year ended December 31, 1996, more than doubled to
$4.1 million, or $0.61 per share, from $1.7 million, or $0.25 per share, for
1995. We also reported a similarly dramatic increase in operating income, which
grew to $8.6 million in 1996 from $4.1 million a year earlier. Revenues rose 40%
to $156.3 million, compared to $111.3 million in 1995. The increases are largely
attributable to the ASB Meditest acquisition, which closed at the end of the
third quarter of 1995.
During 1996, operating margins improved to 5.5% for the year. This improvement
results from a combination of a comprehensive review of incoming ASB business
and the resultant changes and continued control over field expenses.
The ASB Meditest acquisition and related sale of our healthcare business
produced another benefit to the Company in 1996. With the receipt of an income
tax refund related to the transaction, along with the full release of the
escrowed purchase price upon the collection of accounts receivables, we reduced
our bank debt by $28.8 million to $6.3 million by year-end 1996. The significant
reduction in debt has strengthened our balance sheet. Our working capital
remains strong at 1.8:1, and our long-term debt-to-equity ratio improved to .14
from .79 one year ago.
REVIEW OF OPERATIONS
Our mandate in 1996 was to integrate ASB Meditest's operations into the
Portamedic network, which we successfully completed in the second quarter 1996.
The combination has made Portamedic the undisputed market leader in providing
alternate-site health information to the country's largest life and health
insurers. During 1996, we increased our share of the market from 20% to 25%.
The expanded network has enabled the Company to achieve greater efficiencies.
Since the acquisition in September 1995, we closed over 40 offices and
identified millions in cost savings.
During 1996, we also made notable progress pursuing our strategic objective of
leveraging our existing distribution network and information infrastructure.
Early in the year, Hooper Holmes entered into its first agreement with a leading
financial services
Page 2
[PHOTO OF JAMES M. MCNAMEE APPEARS HERE]
company engaged in the direct-response marketing of insurance products. The
outsourcing relationship, which builds on our health information testing
expertise and advanced information systems, supplies a new source of revenue to
the Company while enabling our customer to reduce its cost base.
In another significant development, we entered into a strategic marketing
agreement with Policy Management Systems Corporation (PMSC) in early 1997.
Through our partnership, users of PMSC's software-supported life insurance
underwriting services will have access to Portamedic's network of 7,000
examiners who perform medical examinations for life insurance applicants.
In 1996, we were saddened by the loss of Frederick D. "Ted" King, our Chairman,
who passed away in July. Ted joined the Company in 1949, was elected President
in 1996 and began serving as Chairman in 1973. His accomplishments were many.
Ted will be remembered for his steady leadership and counsel over the years, for
which the Company will forever be thankful.
OUTLOOK
As we enter into a new year, our core business, Portamedic, is strong and
growing. The integration of our operations has made us a larger, more efficient
and a more focused company--an attractive array of attributes to issuers under
continuing pressure to reduce their costs and minimize their underwriting risk.
With our stronger balance sheet, we have even greater resources and flexibility
to pursue opportunities to build on our demonstrated success as a leading health
information services provider. For example, we are optimistic that our ability
to cost-effectively support the direct marketing of insurance products will
lead to new outsourcing agreements.
Our recently formed Healthdex services group represents a highly focused effort
to utilize Hooper Holmes' historical strength as an alternate-site medical data
and information gatherer to enter new markets. Among the new development
initiatives the group is exploring are support of pharmaceutical clinical
trials, as well as providing data on covered participants in health maintenance
organizations and other risk-bearing managed care plans.
The transformation of Hooper Holmes over the past year has been dramatic. We
couldn't have done it without the dedication and hard work of our employees. We
offer our thanks and appreciation to them, as well as our customers and
shareholders. We look forward to an exciting year ahead.
/s/ James M. McNamee
-----------------------------------------
James M. McNamee
President and Chief Executive Officer
Page 3
1996 annual report to shareholders
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Hooper Holmes is the largest provider of alternate-site health information...
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we have a nationwide, integrated network,
Pat Hernandez
San Antonio, Texas
[PICTURE APPEARS HERE]
For more than 25 years, Hooper Holmes has been a leading provider of
alternate-site health information services. Each month, the Company's network
of approximately 7,000 experienced medical professionals conduct more than
225,000 medical examinations, tests, personal health interviews and other
services for the life and health insurance industry. We maintain close
relationships with 48 of the top 50 life and health insurance companies as well
as a broad base of local and regional insurance agents. With an estimated 25%
share of the market, Hooper Holmes dominates the business.
The scope of the Company's network of people and technology are unmatched in the
industry. We are able to provide a wide array of mobile paramedical services
ranging from taking personal history reports to basic physical examinations to
electrocardiograms. Within 24 hours of a request a physician, RN, LPN, ECG
technician or other medical professional will be dispatched to perform the
required service in any county in any state. Orders may be placed by phone,
fax, electronic mail , or via the Internet's World Wide Web.
In addition, many of our customers in the insurance industry receive financial
and health history information via Infolink, our automated reporting system. By
eliminating paper from key steps in the applications and underwriting process,
we are able to help our customers reduce costs, speed turnaround time, and
devote more resources to selling.
Hooper Holmes continues to be well positioned to benefit from the ongoing
pressure on our clients to obtain the timely and cost-effective delivery of
accurate health information. We are committed to enhancing our reputation for
high-quality service, leading-edge technology and the industry's best turnaround
time.
Page 4
accomodates well over 200,000 requests for service each month
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Hooper Holmes maintains strong links with customers
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we apply advanced i n f o r m a t i o n technology.
Bernard Jacobs
New York, New York
-------------------------------------
[PHOTOGRAPH OF BERNARD JACOBS APPEARS HERE]
a d v a n c e d c a p a b i l i t i e s
To maintain strong links among our customers, branches and corporate offices,
Hooper Holmes has developed an advanced information processing infrastructure.
This enables us to deliver timely, accurate health information -- when and where
it is needed -- the definition of quality in our business. The Company
recognizes that as the needs of our customers change, we must continue to make
investments in technology to create further efficiencies in application
processing and insurance underwriting and to support our anticipated entry into
additional markets.
As a result, in late 1996, Hooper Holmes began a restructuring program to more
fully integrate the three key components of our information technology
infrastructure -- MIS, our centralized management information reporting system
that ties together branches and the corporate offices; the Client Services
group, which fulfills the multiple information needs of our customers; and
Infolink, the channel that delivers financial and health information reports
electronically to customers. One key change is organizational; beginning in the
second quarter of 1997, the three divisions will function as a single entity
which allows service delivery to be coordinated and more responsive to the many
changes taking place in the industry. That capability will become increasingly
important as Hooper Holmes seeks to leverage its information infrastructure to
pursue new business opportunities.
The success of alternate-site health information is built upon convenience. We
recognize that shifting needs and new technologies are constantly redefining
convenience. As a result, we remain committed to strengthening the links among
our systems and our people.
PAGE 5
the nation's leading provider of alternative site health information
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We are leveraging our information infrastructure
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to pursue profitable g r o w t h in a changing industry
[PHOTO OF JIM NOVAK APPEARS HERE]
Chicago, Illinois
----------------------------------------
In recent years, the insurance industry has been undergoing tremendous change,
as mutual fund companies, banks and other financial services firms have, to
varying degrees, begun to offer insurance products to their customers. As
insurers face intensifying competition, they are under pressure to develop
distribution channels that reduce costs while providing high-quality service.
These pressures have led many companies to seek cost-effective solutions from
companies like Hooper Holmes. We are aggressively pursuing opportunities that
will streamline the application and underwriting process and leverage the power
of our state-of-the art information infrastructure.
In 1996, Hooper Holmes formed preferred relationships with leading marketers
that offer direct response life insurance sales. A major financial services
firm, for example, will use Hooper Holmes' online, nationwide network for
applications processing, ordering alternative-site tests, and reporting
information to underwriters.
The Company has also formed strategic alliances with major providers of
back-office systems and "smart" underwriting software. We will continue to
pursue other arrangements that make it easier for insurers using leading
software packages to order services through Portamedic or other points of access
to Hooper Holmes' electronic network.
Another key development in 1996 was the formation of Healthdex, a marketing arm
that is exploring new opportunities that are anciliary to our core business but
can utilize our existing network of branches and production personnel. We plan
to invest considerable resources in this initiative to enable us to enter
markets outside of our core business.
Page 6
accommodates well over 200,000 requests for service each month
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Hooper Holmes
In our business, accuracy and timeliness are critical...
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we have unyielding Quality standards.
[PHOTO OF LISA CLOUD APPEARS HERE]
Lisa Cloud
Seattle Washington
-----------------------
a c c u r a c y
Hooper Holmes recognizes the critical importance of accuracy,
confidentiality and timeliness in health information. As a result,
quality is monitored daily for each region and every branch location.
Our sophisticated reporting and control mechanisms enable us to pinpoint
the performance of individual examiners, branches, or entire geographic
areas. Hooper Holmes also maintains its exclusive physician data base, a
process by which credentials of all physicians who provide services
through the Company have their credentials verified.
The Company's commitment to quality is recognized in objective studies
that are regularly supplied to us by our leading customers in the life
and health insurance industry. We are proud of our reputation for
quality and are committed to finding ways to sustain and enhance our
ability to gather and communicate high-quality health information. We
are especially proud of our hard working and dedicated employees, as
well as our network of physicians, nurses, technicians and other
medically trained personnel who we believe are key factors in our
success.
PAGE 7
Management's Discussion and Analysis of Financial Condition and Results of
Operations
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Results of Operations
1996 Compared to 1995
Total revenues for 1996 increased 40.4% to $156.3 million from $111.3 million
for 1995. This growth results from a 36% unit increase in the number of
paramedical examinations performed and a 25% increase in inspection and
attending physician statement units. The overall increase stems from revenue
growth in existing offices, the acquisition of ASB Meditest in September 1995,
and the result of market share gains.
The Company's cost of operations in 1996 totaled $118.0 million compared to
$85.9 million for 1995. Cost of operations as a percentage of revenues totaled
75.5% for 1996 versus 77.2% for 1995. The dollar increase was primarily due to
higher direct costs and branch operating expenses, partly due to the ASB
Meditest acquisition. As a percentage of revenues, the decrease is due to
ongoing efforts to reach the optimum number of branches, control branch
operating expenses, and the efficiencies realized from the integration of ASB
Meditest.
Selling, general and administrative expenses increased to $29.7 million for
1996 from $21.3 million for 1995. The increase of $8.4 million is attributed to
the additional corporate staffing functions and increased depreciation and
amortization expense as a result of the ASB Meditest acquisition in September
1995.
Accordingly, the Company's operating income for 1996 increased to $8.6
million versus $4.1 million for 1995, and as a percentage of revenues, increased
to 5.5% for 1996 compared to 3.6% for 1995.
The company reduced long term debt by $28.8 million during 1996 and
therefore interest expense decreased in 1996 compared to 1995 by $.3 million.
Other income items in 1996 were primarily due to interest earned on the escrowed
funds that were part of the Nurses House Call transaction in September 1995 and
was approximately the same amount as in 1995.
As a result of the foregoing, net income from continuing operations in 1996
totaled $4.1 million or $0.61 per share compared to $1.7 million or $0.25 per
share for 1995. The 1995 net loss from discontinued operations totaled $14.7
million, or $2.19 per share.
Inflation did not have a significant effect on the Company's operations in
1996.
1995 Compared to 1994
Total revenues for 1995 increased 20.3% to $111.3 million from $92.5 million for
1994. This growth results from a 19% unit increase in the number of paramedical
examinations performed and a 26% increase in inspection and attending physician
statement units. Of the overall increase, approximately 14% reflects new revenue
provided in the fourth quarter by the acquisition of ASB Meditest and 6% stems
from revenue growth of the existing offices. Management believes this latter
increase is the result of market share gains, partially offset by pricing
pressures and volume discounting. In 1995, the Company discontinued its
healthcare operations including its occupational health operations. See Note 2
to the consolidated financial statements for information related to discontinued
operations. The results reported herein are representative of the Company's
continuing operations.
The Company's cost of operations in 1995 totaled $85.9 million compared to
$70.7 million for 1994. Cost of operations as a percentage of revenues totaled
77.2% for 1995 versus 76.4% for 1994. This increase was primarily due to
competitive pricing pressures in the marketplace and higher branch operating
expenses, partly due to the ASB Meditest acquisition. The Company believes that
additional branch operating savings will be realized as planned consolidations
of the ASB Meditest acquisition are completed.
Selling, general and administrative expenses ("SG&A") increased to $21.3
million for 1995 from $18.1 million for 1994. The increase of $3.2 million is
largely attributed to SG&A expenses related to ASB Meditest's corporate
functions which were duplicative of existing company SG&A.
The Company believes that as the integration of ASB Meditest continues,
additional cost savings may be realized.
Accordingly, the Company's operating income for 1995 increased to $4.1
million versus $3.8 million for 1994, and, as a percentage of revenues,
decreased to 3.6% for 1995 compared to 4.1% for 1994.
Interest expense increased in 1995 over 1994 due to higher amounts borrowed,
but this increase was offset by certain other income items. See Note 3 to the
consolidated financial statements.
As a result of the foregoing, net income from continuing operations in 1995
totaled $1.7 million or $0.25 per share compared to $1.5 million or $0.22 per
share for 1994. The 1995 net loss from discontinued operations totaled $14.7
million, or $2.19 per share, compared to a net income of $1.2 million, or $0.18
per share for the prior year.
The net loss for 1995 was $13.0 million compared to net income of $2.7
million for 1994. The net loss in 1995 includes a $14.7 million, or $2.19 per
share, net loss from discontinued operations. See Note 2 to the consolidated
financial statements.
In the second quarter of 1995, the Company discontinued its Nurse's House
Call healthcare business and entered into a contract to sell this business. In
the fourth quarter of 1995, the Company discontinued its occupational health
business recently acquired as part of ASB Meditest which primarily consisted of
Page 8
Management's Discussion and Analysis of Financial Conditions and Results of
Operations
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drug testing and immunizations. These disposals are in connection with the
Company's strategy to focus on its core business of providing health information
services.
Inflation did not have a significant effect on the Company's operations in
1995.
Liquidity and Financial Resources
The Company's primary sources of cash are internally generated funds and the
Company's bank credit facility. In late 1995, the Company sold its Nurse's House
Call division, and as part of that transaction, $15 million of the purchase
price was placed in escrow to be released to the Company to the extent that
certain accounts receivable sold as part of the transaction were collected.
These funds were received in 1996 in their entirety and were principally
utilized to reduce the Company's bank debt.
For the year ended December 31, 1996, the net cash provided by operating
activities of continuing operations was $16.3 million as compared to $5.6
million in 1995. The significant sources were income from continuing operations
of $4.1 million, $5.1 million of depreciation and amortization, $6.5 million of
accounts receivable reduction and $8.0 million of tax refunds, which were
partially offset by a decrease in liabilities of approximately $8.3 million.
The Company replaced its $40 million revolving credit facility with a $20
million, three year revolving facility in December 1996. The revolver loan will
accrue interest at either the bank's base rate or at LIBOR, as adjusted, at the
option of the Company. At December 31, 1996, the Company had $4 million in
revolver borrowings. The mortgage loan balance of $2.3 million is scheduled to
be fully paid by January 1998. Capital expenditures for 1997 are anticipated to
be less than $2.0 million. While the Company always considers acquisitions or
growth opportunities, it has no specific commitments or contracts at this time.
Management believes that the combination of cash and cash equivalents, other
working capital sources, and borrowings under the Company's credit facility
along with anticipated cash flows from continuing operations, will provide
sufficient capital resources for the foreseeable future.
Recently Issued Accounting Standards
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 128, Earnings Per Share
("EPS"), which is effective as of December 31, 1997. This standard changes the
way companies compute EPS to require all companies to show "basic" and
"dilutive" EPS and is to be retroactively applied, including each 1997 interim
quarter.
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Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995: Except for the historical information contained herein, the matters
discussed in this annual report are forward-looking statements which involve
risks and uncertainties, including but not limited to economic, competitive,
governmental and technological factors affecting the Company's operations,
markets, products, services and prices, and other factors discussed in the
Company's filings with the Securities and Exchange Commission.
Page 9
Consolidated Balance Sheets
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December 31,
1996 1995
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Assets
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Current assets:
Cash and cash equivalents $ 2,936,447 $ 1,065,464
Accounts receivable - trade (Note 4) 17,035,255 21,974,398
Accounts receivable - other 1,095,772 2,387,010
Escrow funds (Note 3) -- 15,000,000
Refundable taxes 1,230,198 9,264,734
Other current assets 3,474,226 4,716,328
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Total current assets 25,771,898 54,407,934
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Property, plant and equipment (Notes 5 and 6) 19,196,013 18,270,355
Less: Accumulated depreciation and amortization 9,712,650 7,423,190
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9,483,363 10,847,165
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Goodwill (net of accumulated amortization of $2,600,613 in 1996
and $1,742,563 in 1995) (Note 3) 15,948,735 16,601,785
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Intangible assets (net of accumulated amortization of $3,170,077 in 1996
and $1,365,526 in 1995) (Note 3) 9,394,485 11,088,036
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Other assets 697,185 1,052,175
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$ 61,295,666 $ 93,997,095
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Liabilities and Stockholders' Equity
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Current liabilities:
Current maturities of long-term debt $ 1,030,000 $ 8,800,000
Accounts payable 6,168,864 10,677,452
Accrued expenses:
Insurance benefits 1,536,315 1,018,517
Salaries, wages and fees 1,264,739 596,886
Payroll and other taxes 167,013 740,678
Income taxes payable 334,879 --
Discontinued operations (Note 2) 1,287,700 4,380,023
Other 2,175,651 3,408,067
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Total current liabilities 13,965,161 29,621,623
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Long-term debt, less current maturities (Note 6) 5,250,000 26,250,000
Deferred income taxes (Note 9) 4,361,049 4,993,459
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Commitments and contingencies (Notes 7 and 8)
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Stockholders' equity (Note 11):
Common stock, par value $.04 per share; authorized 20,000,000
shares, issued 6,791,459 in 1996 and 6,744,422 in 1995 271,658 269,777
Additional paid-in capital 24,645,945 24,080,988
Retained earnings 12,820,355 9,138,401
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37,737,958 33,489,166
Less: Treasury stock, 1,683 shares in 1996 and
32,308 shares in 1995, at cost 18,502 357,153
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Total stockholders' equity 37,719,456 33,132,013
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$ 61,295,666 $ 93,997,095
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See accompanying notes to consolidated financial statements.
Page 10
Consolidated Statement of Operations
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Years ended December 31,
1996 1995 1994
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Revenues $156,253,763 $111,313,005 $ 92,533,685
Cost of operations 117,959,274 85,933,510 70,677,574
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Gross profit 38,294,489 25,379,495 21,856,111
Selling, general and administrative expenses 29,718,867 21,320,852 18,053,281
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Operating income 8,575,622 4,058,643 3,802,830
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Other income (expense):
Interest expense (1,394,038) (1,673,548) (994,208)
Interest income 348,153 262,247 21,682
Other income (Note 3) 328,035 383,793 --
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(717,850) (1,027,508) (972,526)
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Income before income taxes 7,857,772 3,031,135 2,830,304
- ---------------------------------------------------------------------------------------------------------------------------
Income taxes (Note 9) 3,772,000 1,364,161 1,350,272
- ---------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 4,085,772 1,666,974 1,480,032
- ---------------------------------------------------------------------------------------------------------------------------
Discontinued operations (Note 2):
Income (loss) from operations, net of taxes -- (4,389,559) 1,183,488
Loss on disposal, net of taxes -- (10,326,068) --
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Income (loss) from discontinued operations -- (14,715,627) 1,183,488
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Net income (loss) $ 4,085,772 $ (13,048,653) $ 2,663,520
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Earnings (loss) per share (Note 10):
Weighted average number of shares 6,727,719 6,707,128 6,706,713
Income from continuing operations $ 0.61 $ 0.25 $ .22
Income (loss) from discontinued operations -- (2.19) .18
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Net income (loss) $ 0.61 $ (1.94) $ .40
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See accompanying notes to consolidated financial statements.
PAGE 11
Consolidated Statements of Stockholders' Equity
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Common Stock
--------------------- Additional
Number of Paid-in Retained Treasury
Years ended December 31, 1994, 1995 and 1996 Shares Amount Capital Earnings Stock Total
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Balance, December 31, 1993 6,744,422 $269,777 $24,143,059 $21,938,247 $(434,711) $45,916,372
Net income 2,663,520 2,663,520
Cash dividends ($.30 per share) (2,012,397) (2,012,397)
Exercise of stock options (28,649) 67,370 38,721
Purchase of treasury stock (103,808) (103,808)
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Balance, December 31, 1994 6,744,422 269,777 24,114,410 22,589,370 (471,149) 46,502,408
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Net loss (13,048,653) (13,048,653)
Cash dividends ($.06 per share) (402,316) (402,316)
Exercise of stock options (16,728) 55,959 39,231
Issuance of stock award (16,694) 58,037 41,343
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Balance, December 31, 1995 6,744,422 269,777 24,080,988 9,138,401 (357,153) 33,132,013
- ----------------------------------------------------------------------------------------------------------------------------------
Net income 4,085,772 4,085,772
Cash dividends ($.06 per share) (403,818) (403,818)
Issuance of stock award 2,405 29,470 31,875
Exercise of stock options 47,037 1,881 349,300 309,181 660,362
Exercised stock options tax benefit 213,252 213,252
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Balance, December 31, 1996 6,791,459 $271,658 $24,645,945 $12,820,355 $(18,502) $37,719,456
- ----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
Consolidated Statements of Cash Flows
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Years ended December 31,
1996 1995 1994
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Cash flows from operating activities:
Income from continuing operations $ 4,085,772 $ 1,666,974 $ 1,480,032
Adjustments to reconcile income from continuing operations
to net cash provided by (used in) operating activities:
Depreciation and amortization 5,071,692 2,469,116 1,316,040
Provision for bad debt expense 380,000 320,979 76,000
Deferred tax (benefit) expense (467,448) 362,000 (67,000)
Issuance of stock awards 31,875 41,343 --
Loss on sale of fixed assets 58,313 14,429 37,619
Change in assets and liabilities, net of effect from
acquisitions/dispositions of businesses:
Accounts receivable 6,456,636 (328,030) 39,192
Other current assets 1,038,631 (646,540) (968,992)
Income tax receivable 8,004,039 (1,269,570) --
Accounts payable and accrued expenses (8,347,222) 2,999,731 254,376
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Net cash provided by operating activities
of continuing operations 16,312,288 5,630,432 2,167,267
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Net cash used in operating activities
of discontinued operations -- (3,265,830) (13,367,913)
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Net cash provided by (used in) operating activities 16,312,288 2,364,602 (11,200,646)
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Cash flows from investing activities:
Net proceeds including escrow funds from dispositions 15,000,000 12,449,646 --
Business acquisitions (37,500) -- (23,000)
Capital expenditures, net of disposals (1,103,601) (857,126) (872,726)
Net investing activities of discontinued operations -- (797,475) 307,559
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Net cash provided by (used in) investing activities 13,858,899 10,795,045 (588,167)
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Cash flows from financing activities:
Issuance of long term debt 19,000,000 43,500,000 21,326,942
Principal payments on long term debt (47,770,000) (56,926,942) (4,350,000)
Payment of note -- -- (3,000,000)
Proceeds related to the exercise of stock options 873,614 39,231 38,721
Treasury stock acquired -- -- (103,808)
Dividends paid (403,818) (402,316) (2,012,397)
- ----------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities (28,300,204) (13,790,027) 11,899,458
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 1,870,983 (630,380) 110,645
Cash and cash equivalents at beginning of year 1,065,464 1,695,844 1,585,199
- ----------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 2,936,447 $ 1,065,464 $ 1,695,844
- ----------------------------------------------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information
Cash paid during the year for:
Interest $ 1,668,018 $ 1,446,753 $ 904,034
Income taxes $ 1,955,316 $ 1,238,356 $ 2,899,520
- ----------------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Note 1 -- Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Hooper Holmes,
Inc. and its wholly-owned subsidiaries (the "Company"). All significant
intercompany balances and transactions are eliminated in consolidation.
Description of the Business
The Company provides alternate-site health information. The Company's network of
experienced medical professionals conduct physical examinations, testing, and
personal health interviews, primarily for the life and health insurance
industry. Information gathered in these activities is used by insurance
underwriters to assess risks and make informed decisions. The Company is subject
to certain risks and uncertainties as a result of changes that could occur in
the life and health insurance industry's underwritng requirements and standards,
and in the Company's customer base.
Use of Estimates
The preparation of the consolidated financial statements requires management to
make estimates and assumptions that affect reported amounts and disclosures in
these financial statements. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers highly liquid investments with original maturities of less
than ninety days to be cash equivalents.
Long-Lived Assets
Long-lived assets consist of property, plant and equipment, goodwill, and
identifiable intangibles.
Property, Plant and Equipment
Property, plant and equipment are carried at cost. Depreciation is computed
using the straight line method over the assets estimated useful life. The cost
of maintenance and repairs is charged to income as incurred. Significant
renewals and betterments are capitalized.
Goodwill and Intangibles
Goodwill and intangible assets are being amortized using the straight line
method over lives ranging from 10-25 years and 1-15 years, respectively.
Effective January 1, 1996, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of. In accordance with SFAS No. 121,
the Company reviews long-lived assets for impairment whenever events or changes
in business circumstances occur that indicate that the carrying amount of the
assets may not be recoverable. The Company assesses the recoverability of
long-lived assets held and to be used based on undiscounted cash flows, and
measures the impairment, if any, using discounted cash flows. Adoption of SFAS
No. 121 did not have a material impact on the Company's consolidated financial
position, operating results or cash flows.
Revenues
Revenues from services rendered are recognized when services are performed.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled.
Concentration of Credit Risk
The Company's accounts receivable is due primarily from insurance companies.
Prudential Insurance Company of America continues as a major customer but due to
overall revenue growth, fell below 10% of total revenues for 1996 and 1995. In
1994, Prudential provided revenues of $11.0 million.
Fair Value of Financial Instruments
The carrying value of long-term debt approximates its fair value due to the
variable interest rate and short interest rate reset period. For all other
financial instruments, their carrying value approximates fair value, due to the
short maturity of these instruments.
Employee Stock Options
Employee stock options are granted with an exercise price equal to the market
price and, therefore, compensation expense is not recognized on the issuance of
employee stock options. Effective January 1, 1996, the Company adopted the
disclosure provisions of SFAS No. 123, Accounting for Stock-Based Compensation.
For the fair value of the employee stock options issued, see Note 11.
PAGE 14
Advertising
Costs related to space in publications are expensed the first time the
advertising occurs. Advertising expense was approximately $285,000, $318,000,
and $230,000 in 1996, 1995, and 1994, respectively.
Basis of Presentation
Certain reclassifications have been made to the prior years' financial
information to conform with the current year presentation.
Note 2 -- Discontinued Operations
In 1995, the Company transferred substantially all of the assets and business of
its Nurse's House Call health care division (the "NHC division") to Olsten
Corporation, (the "NHC Transaction"), pursuant to an Agreement of Acquisition
between the Company and Olsten, dated May 26, 1995. The transaction closed
September 29, 1995 subject to the final adjustment of the cash portion of the
purchase price as discussed below. Pursuant to the Acquisition Agreement, Olsten
transferred to the Company all of the issued and outstanding capital stock ("ASB
Meditest Stock") of American Service Bureau, Inc., engaged in the business of
providing paramedical examinations and related services to the life and health
insurance industries under the name ASB Meditest ("ASB Meditest"), $27.3 million
in cash as adjusted to reflect changes in the NHC Division Net Asset Amount
between November 30, 1994 and the Closing Date, and in the ASB Meditest Net
Asset Amount between December 31, 1994 and the Closing Date and assumed certain
specified liabilities of approximately $5.1 million relating to the NHC
Division. Included in accounts receivable other for 1995, are amounts due from
Olsten for liabilities paid by the Company on Olsten's behalf.
Net sales for the NHC Division for the period ended September 29, 1995 were
$117.2 million, and for the years ending December 1994 and 1993 were $159.3
million and $106.8 million, respectively.
Earnings (loss) from operations of such business, for the period ending
September 29, 1995, were $(4.1) million, and for the years ending December 31,
1994 and 1993 were $1.2 million and $.9 million, respectively, and are net of
taxes (benefits) of $(2.2) million for the period ending September 29, 1995, and
$1.1 million and $.7 million for the years ended December 31, 1994, and 1993,
respectively. Interest expense was allocated to discontinued operations based on
the increase in debt required to fund the NHC Division's accounts receivable
growth. Interest expense allocated to the NHC Division was approximately $1.9
million, $1.7 million, and $.3 million in 1995, 1994, and 1993, respectively.
The Company has recorded a loss in the amount of $10.3 million, net of tax
benefits of $7.6 million, on the disposal of the NHC Division. The Company
recorded a provision for certain costs related to the disposal including the
transaction loss, severance and other expenses, transaction fees, and accounts
receivable collection fees.
Consistent with the Company's decision to discontinue its healthcare
business, the Company, in the 4th quarter of 1995, also discontinued the
operations of its Occupational Health segment acquired as part of the ASB
Meditest acquisition, and has reflected in its discontinued operations, a loss,
net of taxes of $.3 million. In October 1995, the Company sold the Drug Screen
portion of its Occupational Health segment for $.7 million in cash, and a $.5
million, one year promissory note, which was paid in full in 1996. The assets
consisted primarily of computer equipment and software and customer lists. There
was no gain or loss to be recognized on this transaction. The Company concluded
its seasonal flu vaccination commitments late in 1995, and has not continued
this business.
The 1995 and 1994 figures exclude amounts for discontinued operations from
captions applicable to continuing operations.
Note 3 -- Acquisitions and Dispositions
On September 29, 1995, in connection with the NHC Transaction the Company
acquired all of the outstanding common stock of ASB Meditest, a national health
information services company. As a result of an independent valuation appraisal,
the Company has recorded goodwill of approximately $12.3 million, and intangible
assets in the amount of $10.8 million, comprised of assembled work force $2.3
million, contractor network $2.4 million, referral base $4.1 million, and a non
competition agreement valued at $2.0 million. These amounts are all being
amortized over their useful lives.
The NHC transaction called for a portion of the purchase price to be
placed in escrow until collections of the trade receivables of NHC sold to
Olsten were reduced to below $30.0 million. At that point the escrow funds were
to be released dollar for dollar until the balance is reduced to $15.0 million.
In 1996, the Company has received all $15 million of the escrowed funds.
The acquisition discussed above has been accounted for using the purchase
method of accounting and the purchase price of the acquisition has been assigned
to the net assets based on the fair value of such assets and liabilities at the
date of acquisition. The consolidated financial statements include the results
of operations of ASB Meditest from September 29, 1995.
In 1992 the Company sold its Direct Marketing business and received cash and
a six year promissory note. The Company determined that the gain on this
transaction should be recognized as note payments are received. During 1996, the
Company received $324,000 which is included in other income.
The following unaudited pro forma information has been prepared as if the
1995 acquisition of ASB Meditest had occurred on January 1, 1994, and excludes
the NHC Division. This pro forma information does not purport to be an
indication of the results that actually would have been obtained if the
operations had been combined during the periods.
PAGE 15
(dollars in thousands except per share data) 1995 1994
- ----------------------------------------------------------------------------
Revenues $170,296 $174,380
- ----------------------------------------------------------------------------
Net income $ 4 $ 743
- ----------------------------------------------------------------------------
Earnings per share $ .00 $ .11
- ----------------------------------------------------------------------------
Note 4 -- Accounts Receivable
Accounts receivable are net of an allowance for doubtful accounts in the amount
of $733,797 and $466,021 in 1996 and 1995, respectively.
Note 5 -- Property, Plant and Equipment
Property, plant and equipment consists of the following:
Estimated
December 31, December 31, Useful Life
1996 1995 In Years
- ------------------------------------------------------------------------------
Land and
improvements $ 571,314 $ 570,116 10 - 20
- ------------------------------------------------------------------------------
Building and
improvements 3,841,703 3,744,552 10 - 45
- ------------------------------------------------------------------------------
Furniture,
fixtures and
equipment 14,782,996 13,955,687 3 - 10
- ------------------------------------------------------------------------------
$19,196,013 $18,270,355
- ------------------------------------------------------------------------------
Note 6 -- Long Term Debt
Long term debt, excluding current portion:
(millions) 1996 1995
- ----------------------------------------------------------------------------
1995 Revolving loan, due January 1998 $ 0.0 $ 24.0
Mortgage, due January 1998 1.3 2.3
1996 Revolving loan, due January 2000 4.0 0.0
- ----------------------------------------------------------------------------
$ 5.3 $ 26.3
- ----------------------------------------------------------------------------
The 1995 revolving loan was refinanced in December 1996 with a $20.0 million
three year revolving loan. The 1996 revolving loan accrues interest at the
bank's base rate minus 1/4% to 1 1/4% or LIBOR plus 3/4% to 1 3/4%, at the
election of the Company. The interest rate at December 31, 1996 was 7.75% and
the maximum available credit amount was $20.0 million. Also, commitment fees of
1/4% of the unused credit are charged and the loan is unsecured. Dividend
payments are limited to maximum quarterly amounts of 30% to 40% of average
quarterly net incomes. At December 31, 1995 the interest rate on the 1995
revolving loan was 8.1%. The mortgage loan is composed of two components. One
accrues interest at 6.9% and the other at 5.65%.
The Company has entered into a one year renewable Letter of Credit to the
benefit of an insurance company relating to workers' compensation insurance. At
December 31, 1996 the amount was $2.9 million.
Note 7 -- Commitments and Contingencies
The Company leases branch field offices under a number of operating leases which
expire in various years through 2001. These leases generally contain renewal
options and require the Company to pay all executory costs (such as property
taxes, maintenance and insurance). The Company also leases telephone, computer
and other miscellaneous equipment which are classified as operating leases and
expire in the years 1997 through 2001. The following is a schedule of future
minimum lease payments for operating leases (with initial or remaining terms in
excess of one year) as of December 31, 1996:
Year Ending December 31,
- ------------------------------------------------------------------------------
1997 $ 5,552,273
1998 3,198,047
1999 1,537,935
2000 243,709
2001 6,476
- ------------------------------------------------------------------------------
Total minimum lease payments $10,538,440
- ------------------------------------------------------------------------------
Rental expenses under operating leases were $6,053,129, $3,908,709 and
$3,740,373 in 1996, 1995 and 1994, respectively.
In 1990, the Company entered into an employment retention contract with the
President for a two year period from the date a change in control occurs as
further defined in the contract and in 1996 with the remaining executive
officers of the Company.
Note 8 -- Litigation
The Company is a party to a number of legal actions arising in the ordinary
course of its business. In the opinion of management, the Company has adequate
legal defense and/or insurance coverage respecting each of these actions and
does not believe their ultimate disposition will materially affect the Company's
results of operations or financial position.
Note 9 -- Income Taxes
Income tax expense is comprised of the following:
(in thousands) 1996 1995 1994
- -----------------------------------------------------------------------------
United States Federal:
Current $ 2,948 $ 699 $1,077
Deferred (354) 362 (67)
State and local:
Current 1,292 303 340
Deferred (114) -- --
- -----------------------------------------------------------------------------
$ 3,772 $1,364 $1,350
- -----------------------------------------------------------------------------
The following reconciles the "statutory" federal income tax rates to the
effective income tax rates:
1996 1995 1994
- -------------------------------------------------------------------------------
Computed "expected"
tax expense 34 % 34 % 34 %
Increase (reduction) in tax
expense resulting from:
State tax, net of federal
income tax benefit 5 6 7
Non-tax deductible,
amortization of goodwill 10 7 5
Other (1) (2) 2
- -------------------------------------------------------------------------------
Effective income tax rates 48 % 45 % 48 %
- -------------------------------------------------------------------------------
The tax effects of temporary differences that give rise to the deferred tax
assets and liabilities at December 31, 1996 and 1995 are as follows:
(in thousands) 1996 1995
- -------------------------------------------------------------------------------
Deferred tax assets:
Discontinued operation accruals $ 541 $ 933
Receivable allowance 308 196
Intangible assets 165 191
Net operating loss carry forwards -- 365
Acquisition bases adjustment
accounts receivable 665 875
Insurance benefits 572 --
Other 261 117
- -------------------------------------------------------------------------------
2,512 2,677
- -------------------------------------------------------------------------------
Deferred tax liabilities:
Accumulated depreciation (833) (975)
Acquisition bases adjustment
primarily intangibles (4,017) (4,692)
Other (185) --
- -------------------------------------------------------------------------------
(5,035) (5,667)
- -------------------------------------------------------------------------------
Net deferred tax liability $ (2,523) $ (2,990)
- -------------------------------------------------------------------------------
Deferred tax assets (liabilities) are reflected in the consolidated balance
sheets at December 31, 1996 as follows: other current assets $1,838,000 and
deferred income taxes (noncurrent) $(4,361,000) and at December 31, 1995, other
current assets $2,003,000 and deferred income taxes (noncurrent) $(4,993,000).
No valuation allowance has been provided on deferred tax assets since
management believes that it is more likely than not that such assets will be
realized through the reversal of existing deferred tax liabilities and future
taxable income.
The principal components of the deferred tax provision in 1996 and 1995
include differences between financial and tax reporting for depreciation,
amortization, and allowance for accounts receivable.
Note 10 -- Earnings (Loss) Per Share
Earnings (loss) per share of common stock have been computed based on the
weighted average number of shares outstanding. No effect has been given in the
calculation for common stock equivalents since the equivalents are either not
materially dilutive to earnings per share or are antidilutive to loss per share.
Note 11 -- Capital Stock
Stockholder Rights Plan -- On January 23, 1990, the Board of Directors adopted a
Stockholder Rights Plan, which was amended and restated on May 10, 1991 and
further amended on July 12, 1995. The Board declared a dividend of one Common
Share Right for each outstanding share of Common Stock distributable on April 2,
1990. Such rights only become exercisable ten business days after (a) the
Company or a person or group announces that such person or group (other than
certain specified persons, such as the Company, any wholly-owned subsidiary,
employee benefit plans of the Company and persons who held at least 20% of the
Common Stock when the Rights Plan was adopted, until the occurrence of certain
events, or as the result of an acquisition of shares by the Company) has
acquired beneficial ownership of 20% or more of the Company's Common Stock or
(b) the commencement of a tender offer by a person or group to acquire 30% or
more of the Company's Common Stock (such date, the "Separation Date"). Upon the
Separation Date, each right shall constitute the right to purchase one share of
Common Stock of the Company for $24.00, subject to adjustment. After (x) the
announcement of the acquisition by a person or group of 20% or more of the
Company's Common Stock (other than in a tender offer for all shares which has
been approved by the Board of Directors), or (y) the Company enters into or
consummates a merger or other similar business transaction, or a sale of more
than 50% of the assets or earning power, each right shall be adjusted to
constitute the right to purchase that number of shares of Common Stock of the
Company or capital stock of the acquiring company, as the case may be, having an
aggregate market price on the date of such announcement of the acquisition or
such consummation or occurrence of the transaction equal to twice the exercise
price of $24.00, also subject to adjustment. The rights may be redeemed for
$0.05 per right at any time until the tenth day following public announcement
that a 20% position has been acquired. The rights will expire on March 16, 2000,
unless sooner redeemed.
Page 17
Stock Purchase Plan -- In 1993, the shareholders approved the 1993 Employee
Stock Purchase Plan which provides for granting of purchase rights to all
full-time employees, as defined, of up to 250,000 shares. This plan terminates
on December 31, 1998. The plan provides for the purchase of shares on the date
one year from the grant date. During the year after the grant date, up to 10% of
an employee's compensation is withheld for their purchase. An employee can
cancel their purchase any time during the year, without penalty. The purchase
price is 95% of the closing common stock price on the grant date. In April 1996,
the Company made a grant, of approximately 37,000 shares, and the aggregate
purchase price will be approximately $334,000. No other grants have been made
under this plan.
Stock Awards -- The Company's president is entitled to receive stock awards
based on the attainment of performance goals established for any given year. For
the years ended December 31, 1996, 1995 and 1994, awards of 2,500, 6,000 (paid
in cash at its fair value at the time of grant), and 5,250 (shares issued in
1995), respectively, have been granted.
Stock Option Plan -- The Company's stockholders approved stock option plans
totaling 300,000 and 500,000 shares, respectively, in 1988 and 1992, and 500,000
shares in 1994, which provide that options may be granted to management. Options
are granted at market value on the dates of the grants and are exercisable as
follows: 25% after two years and 25% on each of three anniversary dates
thereafter, and terminate after 10 years.
The following table summarizes stock option activity:
Under Option
------------------------------------
Shares Weighted
Available for Average Exercise
Grant Shares Price Per Share
- -------------------------------------------------------------------------------
Balance January 1, 1994 158,688 606,438 $ 12.56
Authorized 500,000 -- ---
Granted (141,000) 141,000 11.88
Exercised -- (5,813) 6.66
Cancelled 76,700 (76,700) 13.12
- -------------------------------------------------------------------------------
Balance December 31, 1994 594,388 664,925 12.40
Granted (359,850) 359,850 7.95
Exercised -- (5,062) 7.75
Cancelled 111,413 (111,413) 10.74
- -------------------------------------------------------------------------------
Balance December 31, 1995 345,951 908,300 10.87
Granted -- -- --
Exercised -- (75,162) 8.79
Cancelled 7,050 (7,050) 9.99
- -------------------------------------------------------------------------------
Balance December 31, 1996 353,001 826,088 $ 11.07
- -------------------------------------------------------------------------------
The weighted average fair value per option at the date of grant for
options granted during 1995 was $4.67. The fair value was estimated using the
Black-Scholes option pricing model, modified for dividends and based on weighted
average dividend yield of .48%, risk-free interest rate of 6.65%, expected stock
price volatility of 37.46%, and an expected term until exercise of 10 years.
There were no option grants in 1996.
Pro forma net income (loss) and earnings (loss) per share reflecting
approximate compensation cost for the fair value of stock options awarded in
1995 is as follows:
(dollars in thousands except per share data) 1996 1995
- -------------------------------------------------------------------------------
Net income (loss):
As reported $ 4,086 $ (13,049)
Pro forma 3,846 (13,165)
Earnings (loss) per share:
As reported .61 (1.94)
Pro forma .57 (1.96)
- -------------------------------------------------------------------------------
The pro forma effects on net income (loss) and earnings (loss) per share
for 1996 and 1995 may not be representative of the pro forma effects in future
years since compensation cost is allocated on a straight-line basis over the
vesting periods of the grants, which extends beyond the reported years.
The following table summarizes information concerning options outstanding
at December 31, 1996:
Options Outstanding Options Exercisable
- --------------------------------------------------------------------------------
Weighted
Average Weighted Weighted
Number Remaining Average Number Average
Range ofOutstanding Contractual Exercise Exercisable Exercise
Exercise Prices at 12/31/96Term (Years) Priceat 12/31/96Price
- ------------------------------------------------------------------------------
$ 5.50 -$ 8.38 345,100 7.9 $ 7.80 41,750 $ 6.75
11.88 - 14.94 480,988 5.8 13.41 271,219 13.53
- ------------------------------------------------------------------------------
On January 28, 1997, the Board of Directors granted 174,000 stock options
to certain employees. These options were granted under the 1994 stock option
plan with an exercise price that equalled the fair market value of the stock at
the date of grant.
Note 12 -- 401k Savings and Retirement Plan
This plan is available to all employees with at least one year
of service of greater than 1,000 hours of employment, and is administered by
Lincoln National Life Insurance Co. The Company matches up to 25% of the first
10% of employee salary contributions. The Company's payments for 1996, 1995, and
1994, were $228,000, $137,000, and $123,000, respectively.
Independent Auditors' Report
- --------------------------------------------------------------------------------
The Board of Directors and Stockholders
Hooper Holmes, Inc.
We have audited the accompanying consolidated balance sheets of Hooper Holmes,
Inc. and subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the years in the three-year period ended December 31, 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Hooper
Holmes, Inc. and subsidiaries at December 31, 1996 and 1995, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1996 in conformity with generally accepted accounting
principles.
Short Hills, New Jersey
February 20, 1997
For the years ended December 31,
(dollars in thousands except per share data) 1996 1995 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------------------------
Statement of Operations Data:
Revenues $ 156,254 $ 111,313 $ 92,534 $ 80,600 $ 68,931
Operating income 8,576 4,059 3,803 5,020 4,548
Interest expense 1,394 1,674 994 237 144
Income from continuing operations 4,086 1,667 1,480 2,739 2,779
Income (loss) from discontinued operations (2) -- (14,716) 1,184 867 2,099
Net income (loss) 4,086 (13,049) 2,664 3,606 4,878
Earnings from continuing operations per share 0.61 0.25 0.22 0.41 0.42
Earnings (loss) from discontinued
operations per share (2) -- (2.19) 0.18 0.13 0.31
Earnings (loss) per share (1) 0.61 (1.94) 0.40 0.54 0.73
Cash dividends per share (1) $ 0.06 $ 0.06 $ 0.30 $ 0.30 $ 0.25
Weighted average number of shares outstanding (1) 6,727,719 6,707,128 6,706,713 6,714,061 6,717,667
- --------------------------------------------------------------------------------------------------------------------------------
Balance Sheet Data:
Working capital $ 11,807 $ 24,786 $ 6,407 $ 4,024 $ 9,861
Total assets 61,296 93,997 103,172 88,355 52,754
Current maturities of long term debt 1,030 8,800 2,150 1,550 0
Long-term debt, less current maturities 5,250 26,250 46,327 29,950 3,000
Total long-term debt 6,280 35,050 48,477 31,500 3,000
Stockholders' equity $ 37,719 $ 33,132 $ 46,502 $ 45,916 $ 44,384
- --------------------------------------------------------------------------------------------------------------------------------
(1) Adjusted to reflect a 3 for 2 stock split effective February 28, 1992.
(2) See Note 2 to the consolidated financial statements.
Page 19
Quarterly Common Stock Price Ranges and Dividends
- -------------------------------------------------------------------------------
1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
High Low High Low
Quarter Bid Bid Dividend Bid Bid Dividend
- ---------------------------------------------------------------------------------------------------------------------------------
First 9 9/16 8 1/16 .01 10 3/4 6 1/2 .03
Second 13 7/8 8 1/4 .01 10 1/2 7 5/8 .01
Third 15 3/8 10 5/8 .02 10 6 3/4 .01
Fourth 18 1/2 14 1/2 .02 9 7/8 7 3/4 .01
- ---------------------------------------------------------------------------------------------------------------------------------
Quarterly Financial Data (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands except per share data)
Per share of common stock
--------------------------------------
Income from Loss from Income from Loss from
Gross continuing discontinued Net continuing discontinued Net
Quarter (1) Revenues profit operations operations(1) income (loss) operations operations income (loss)
- -----------------------------------------------------------------------------------------------------------------------------------
1996
Fourth $ 39,922 $ 9,924 $ 1,494 $ -- $ 1,494 $0.22 $ -- $ 0.22
Third 37,907 9,276 1,101 -- 1,101 0.17 -- 0.17
Second 39,814 9,897 946 -- 946 0.14 -- 0.14
First 38,611 9,197 545 -- 545 0.08 -- 0.08
- -----------------------------------------------------------------------------------------------------------------------------------
Total $156,254 $ 38,294 $4,086 $ -- $ 4,086 $0.61 $ -- $0.61
- -----------------------------------------------------------------------------------------------------------------------------------
1995
Fourth $ 39,736 $ 8,136 $ 421 $ (338) $ 83 $0.06 $(0.05) $ 0.01
Third 23,184 5,287 394 (720) (326) 0.06 (0.11) (0.05)
Second 24,396 5,940 446 (13,310) (12,864) 0.07 (1.98) (1.91)
First 23,997 6,016 406 (348) 58 0.06 (0.05) 0.01
- -----------------------------------------------------------------------------------------------------------------------------------
Total $111,313 $ 25,379 $1,667 $(14,716) $ (13,049) $0.25 $(2.19) $(1.94)
- -----------------------------------------------------------------------------------------------------------------------------------
(1) During 1995, the second quarter consists of after tax charges of $10.3
million for the loss on the disposal of the NHC division and $3.0 million
of operating loss. The third quarter consists of an after tax charge of $.7
million for additional NHC division operating losses. The fourth quarter
charge of $.3 million, net of tax, relates to discontinuance of the
Occupational Health segment acquired as part of the ASB Meditest
acquisition. See Note 2 to the Consolidated Financial Statements
Page 20
==================================================
Directors and Officers
- --------------------------------------------------------------------------------
Directors
Benjamin A. Currier
Senior Vice President,
Security Life of Denver Ins. Co.
Quentin J. Kennedy
Executive Vice President,
Secretary and Director
Federal Paper Board Company
Retired
Elaine L. LaMonica
Professor
Department of Nursing Education
Teachers College
Colombia University
James M. McNamee
Chairman, President, and
Chief Executive Officer
John E. Nolan, Jr.
Partner
Steptoe & Johnson
Kenneth R. Rossano
Senior Vice President
Cassidy & Associates
G. Earle Wight
Senior Vice President
Officers
James M. McNamee
Chairman, President, and
Chief Executive Officer
Paul W. Kolacki
Executive Vice President
and Chief Operating Officer
Robert William Jewett
Senior Vice President,
General Counsel and Secretary
Fred Lash
Senior Vice President,
Chief Financial Officer
and Treasurer
G. Earle Wight
Senior Vice President
Francis A. Stiner
Vice President
Stock Listing
The Company's common stock
is traded on the American Stock
Exchange (AMEX) under the
symbol "HH."
Form 10-K
Holders of the Company's common
stock may obtain, without charge, a
copy of the Hooper Holmes, Inc.
Annual Report on Form 10-K as filed
with the Securities and Exchange
Commission upon request.
Address inquiries to:
Secretary
Hooper Holmes, Inc.
170 Mt. Airy Road
Basking Ridge, NJ 07920
Independent Certified
Public Accounts
KPMG Peat Marwick LLP
Short Hills, NJ
Transfer Agents & Registrar
First City Transfer Company
Iselin, NJ
Annual Meeting
May 27, 1997
at the American Stock Exchange
New York, NY
Hooper Holmes, Inc.
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Corporate Headquarters
170 Mount Airy Road
Basking Ridge, NJ 07920
(908) 766-5000
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