FOR THE YEAR ENDED DECEMBER 31, ------------------------------------- 1998 1997 1996 ------- ------- -------
Income (loss) before minority interest 3.1 % 3.8 % (3.5)% Minority interest ..................... (0.3)% -- -- ------- ------- -------
Revenues for the year ended December 31, 1998 increased $7.6 million, or 2.7%, to $289.2 million from $281.6 million in 1997. New revenues of $20.3 million and $10.0 million recognized as a result of the CENTRA and NPPN acquisitions, respectively, were offset by a decrease in revenues from fully insured customers ($3.2 million), primarily related to the transition of the United HealthCare and Travelers block of indemnity/preferred provider organization business to Seaboard Life Insurance Company products. This reduction in fully insured revenues was partially offset by $26.1 million in revenues from the PILIC/PALHIC block of business. Other revenue decreases were realized from self-funded customers ($16.7 million), primarily related to the sale of the contracts of Diversified Group Brokerage, Inc. ("DGB"), in 1997, along with the loss of three large customers in 1998, and from alliance customers ($3.5 million) primarily related to HealthPlan Services' exiting the Kentucky alliance in 1997.
Integration expense during the year ended December 31, 1998 was $4.2 million. These costs included $2.1 million in converting the data center and three claims platforms for CENTRA and $1.9 million in converting the information systems from HealthPlan Services' Framingham, Massachusetts office to the Tampa office. Integration expense for the year ended December 31, 1997 was $4.9 million. Of this expense, $3.2 million related to the integration of information systems used by the TMG, Consolidated Group, and Harrington businesses, while $1.7 million represented other costs associated with transferring functions from certain of HealthPlan Services' offices, the consolidation of treasury functions, and employee relocations.
General and administrative expense for the year ended December 31, 1997 increased $13.4 million, or 32.2%, to $55.0 million from $41.6 million in 1996. Of this increase, $14.3 million is attributable to a full year of expenses from HealthPlan Services' 1996 acquisitions being included in HealthPlan Services' 1997 general and administrative expenses. HealthPlan Services' general and administrative expense as a percentage of total revenue decreased to 19.5% in 1997 from 21.7% in 1996. This decline is primarily attributable to savings realized in postage, communications, professional services, and printing costs and the net recovery of $1.5 million from DGB in 1997.
Interest expense for the year ended December 31, 1997 increased to $2.5 million from $0.3 million in 1996. This increase reflects the fact that HealthPlan Services' credit facility balance was outstanding for a full year in 1997, as opposed to six months in 1996.
HealthPlan Services expects that its systems and software will be Year 2000 compliant by the close of the second quarter of 1999. However, there are risks relating to the external vendors and customers with which HealthPlan Services exchanges data. Because HealthPlan Services does not control these vendors and customers or their resources,
HealthPlan Services spent $9.1 million for capital expenditures during the year ended December 31, 1998. Additionally, HealthPlan Services incurred a cash outlay of $4.2 million for integration costs related to the conversion of the data center and three claims platforms for CENTRA and the conversion of the information systems from HealthPlan Services' Framingham, Massachusetts office to the Tampa office. HealthPlan Services does not expect to incur any material integration costs in 1999.