We conduct our operations from our headquarters in Tampa, Florida. Our central data processing facilities are located in Tampa, Florida, Columbus, Ohio, and El Monte, California. We lease these facilities, as well as all of our other facilities. We believe that our facilities are adequate for our present and anticipated business requirements.
We have derived the following selected historical financial data from our audited consolidated financial statements at December 31, 1999 and 1998 and for the years ended December 31, 1999, 1998, and 1997, which are included in this Form 10-K, and from our audited financial statements at December 31, 1997, 1996, and 1995 and for the years ended December 31, 1996 and 1995, which are not included herein. The report of PricewaterhouseCoopers LLP, our independent accountants, on our consolidated financial statements at December 31, 1999 and 1998 and for the years ended December 31, 1999, 1998, and 1997 appears elsewhere in this Form 10-K. Our selected historical financial data should be read in conjunction with the related financial statements and notes thereto appearing elsewhere in this Form 10-K.
(1) Gives effect to the recapitalization of all 19,000,000 shares of Preferred Stock (plus the right to receive dividends accrued thereon), which were exchanged for 1,397,857 shares of our Common Stock contemporaneously with the consummation of our initial public offering on May 19, 1995, for all periods presented.
Revenues for the year ended December 31, 1999 decreased $11.8 million, or 4.1%, to $277.4 million from $289.2 million in 1998. New revenues of $13.2 million and $5.9 million recognized as a result of the CENTRA and NPPN acquisitions, respectively, were offset by a decrease of $29.5 million in revenues from fully insured customers, primarily related to the transition of a block of indemnity/preferred provider organization business from The Travelers Insurance Company and United HealthCare Corporation to Seaboard Life Insurance Company (USA) products and a decrease in revenues from the block of business assumed from TMG Life Insurance Company in 1997. This reduction in fully insured revenues was partially offset by revenues from new carrier relationships. Other revenue decreases of $4.1 million were realized from self-funded customers, primarily related to the loss of twelve customers. We recognized an increase in NPPN revenues of $2.8 million for the period of June through December 1999, as compared to the same seven-month period in 1998.
We recorded $2.1 million in restructuring costs during the year ended December 31, 1998. These costs reflected employee terminations, lease terminations, and the abandonment of property and equipment associated with closing our Framingham, Massachusetts, Chicago, Illinois, and Atlanta, Georgia offices.
Other expense of $1.8 million for the year ended December 31, 1998 reflects costs of $1.4 million associated with the write-off of customer balances due to a billing system conversion and uncollectability of accounts among our self-funded customers, and costs of $0.4 million related to the start-up of new carrier business.
During 1999, we entered into an agreement to sell certain shares of HealthAxis.com, Inc. stock, resulting in a pretax gain of $4.6 million. During the year ended December 31, 1998, we sold 370,711 of our shares of Caredata.com, Inc. stock and all 200,000 of our shares of Health Risk Management, Inc. stock, resulting in pretax gains of $5.2 million and $0.2 million, respectively. On September 11, 1998, we sold our 50% interest in SHPS to Sykes Enterprises, Incorporated for $30.6 million and recognized a pretax gain on the sale of SHPS of $27.9 million.
Depreciation and amortization expense for the year ended December 31, 1999 increased $0.9 million, or 5.7%, to $16.7 million from $15.8 million for the year ended December 31, 1998. This increase related primarily to amortization of goodwill on our CENTRA and NPPN acquisitions.
We recorded our 50% share of the $23.6 million loss incurred by SHPS for the six months ended June 30, 1998. The loss was principally the result of a charge for the write-off of purchased research and development associated with acquisitions by SHPS. We sold our interest in SHPS in September 1998.
Personnel expense for the year ended December 31, 1998 increased $10.2 million, or 9.0%, to $123.3 million from $113.1 million in 1997. This increase resulted primarily from $16.0 million of personnel expense associated with the consolidation of CENTRA and NPPN. This increase was offset by reduced salaries resulting from a reduction of approximately 435 employees in our workforce and the outsourcing of care management services to SHPS. These services are now included as general and administrative expense. Our personnel expense as a percentage of total revenues was 42.6% for the year ended December 31, 1998 compared to 40.2% in 1997.
General and administrative expense for the year ended December 31, 1998 increased $16.9 million, or 30.8%, to $71.8 million from $54.9 million in 1997. This increase was primarily attributable to $12.5 million of general and administrative expense associated with the consolidation of CENTRA's and NPPN's financial results along with $6.7 million of costs associated with the outsourcing of our care management services to SHPS. Our general and administrative expense as a percentage of total revenue increased to 24.8% for the year ended December 31, 1998 from 19.5% in 1997 primarily due to the outsourcing of our care management services to SHPS.
We recorded $2.1 million in restructuring costs during the year ended December 31, 1998. These costs reflect employee terminations, lease terminations, and the abandonment of property and equipment associated with closing our Framingham, Massachusetts, Chicago, Illinois, and Atlanta, Georgia offices. There were 47, 43, and 48 employees terminated in the Framingham, Chicago, and Atlanta offices, respectively. These employees worked in management, claims administration, and information systems. In 1997, we recorded a charge of $1.4 million to reflect the cost of exiting our Framingham, Massachusetts office. This charge reflected the cost of terminating employees and abandoning property and equipment. Our restructure plan included the elimination of approximately 150 jobs in management, administration, and information systems. The administration and claims services historically performed in Framingham were assumed in our Tampa, Florida and Merrimack, New Hampshire offices.
Other expense of $1.8 million for the year ended December 31, 1998 reflects costs of $1.4 million associated with the write-off of customer balances due to a billing system conversion and uncollectability of accounts among our self-funded customers, and costs of $0.4 million related to the start-up of the Provident Indemnity and Provident American block of business.
Net interest expense for the year ended December 31, 1998 increased to $5.6 million from $2.5 million in 1997. This increase resulted primarily from our acquisitions of CENTRA and NPPN, along with our share repurchase program. During 1998, we purchased 1,276,700 shares of our stock for a collective purchase price of $28.1 million, all of which was borrowed pursuant to our credit facility.
The "Year 2000 Problem" arose because many existing computer programs use only the last two digits to refer to a year. Therefore, these computer programs do not properly recognize a year that begins with "20" instead of the familiar "19." If not corrected, many computer applications could fail or create erroneous results. The problems created by using abbreviated dates appear in hardware (such as microchips), operating systems, and other software programs. We implemented our Year 2000 ("Y2K") compliance project to prepare our business for the Year 2000. We define Y2K "compliance" to mean that the computer code will process all defined future dates properly and give accurate results.
We conducted a review of our computer systems and capabilities and created a three-pronged program for addressing issues related to the Y2K. This program includes the purchase and implementation of software packages from vendors, an upgrade of vendor packages to Y2K compliant versions, and the internal development and implementation of new software applications to increase the capabilities of our systems for the future.
accounts, the latest version of its claims processing software, which is Y2K compliant. We also upgraded our billing and administrative system to be Y2K compliant.
We did not meet certain financial performance requirements under the credit facility for the third and fourth quarters of 1999. We entered into an amendment and waiver (the "Waiver Agreement") with the lenders under the credit facility under which the lenders waived default with respect to these requirements, provided that: (a) we met certain minimum performance objectives; (b) the proposed acquisition of us by UICI was consummated on or prior to February 10, 2000; (c) the Agreement and Plan of Merger between us and UICI ("the Merger Agreement") did not otherwise terminate prior to closing of the proposed acquisition; and (d) we refrained from issuing dividends and observed certain limits on our investments and capital expenditures. The amendment and waiver also reduced the amount available under the Line of Credit from $175.0 million to $115.0 million. Our proposed acquisition had not been completed by February 10, 2000, and on February 10, 2000, we entered into a nonwaiver and standstill agreement (the "Standstill Agreement") with the lenders under the credit facility. Pursuant to the Standstill Agreement, the lenders agreed to defer their rights or remedies related to our failure to meet certain financial performance requirements under the credit facility for a period of thirty days from the execution of the amended merger agreement (February 18, 2000) between us and UICI. Additionally, in accordance with the Standstill Agreement: (a) we executed and delivered to the agency bank a supplement to the pledge agreement pledging 100% of the capital stock of HealthAxis.com; (b) we agreed to a change in the applicable margins on borrowings on LIBOR and
Under the agreed loan terms, we must maintain certain financial covenants for revenue, EBITDA, is restricted in capital expenditures, and is subject to prepayment with proceeds of certain future activities such as sale of certain assets, public offerings, etc.
Pursuant to our Line of Credit and prior to the fourth quarter of 1999, we were permitted to pay a quarterly dividend of up to $0.1375 per share of our capital stock (up to $0.55 per share on an annualized basis). During 1999, we declared dividends totaling $5.7 million. These dividends were paid on April 20, July 20, and October 19, 1999.
Effective in March 1999, we acquired the remaining 20% of the capital stock of Montgomery Management Corporation from Provident Indemnity for $1.5 million.
On May 28, 1999, we agreed to pay NPPN's former owner net consideration of approximately $6.6 million in settlement of the additional contingent consideration relating to our 1998 acquisition of NPPN. Of this net consideration, we paid approximately $2.6 million in 1999, with the remaining $4.0 million plus interest to be paid evenly on the first and second anniversaries of the settlement.
During 1999, we sold 1,415,000 of our shares of HealthAxis.com common stock, resulting in a pretax gain of $4.6 million.
We do not believe that inflation had a material effect on our results of operations for the year ended December 31, 1999 or 1998. There can be no assurance, however, that our business will not be affected by inflation in the future.
The financial statements required by this item are listed in Item 14(a)(1) and are submitted at the end of this Annual Report on Form 10-K. We are not required to file any supplementary data under this item.